UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment No. )
Exchange Act of 1934 (Amendment No. )
| Filed by the Registrant x | |
| Filed by a Party other than the Registrant o | |
| Check the appropriate box: |
| x Preliminary Proxy Statement | |
| o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| o Definitive Proxy Statement | |
| o Definitive Additional Materials | |
| o Soliciting Material Pursuant to 240.14a-12 |
Palatin Technologies, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if
other than the Registrant)
Payment of Filing Fee
(Check the appropriate box):
| x No fee required. | |
| o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| 1) Title of each class of securities to which transaction applies: |
| 2) Aggregate number of securities to which transaction applies: |
| 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| 4) Proposed maximum aggregate value of transaction: |
| 5) Total fee paid: |
| o Fee paid previously with preliminary materials. |
| o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| 1) Amount Previously Paid: |
| 2) Form, Schedule or Registration Statement No.: |
| 3) Filing Party: |
| 4) Date Filed: |
PALATIN
TECHNOLOGIES,
INC.
Annual
Meeting of Stockholders
to
be held on May 13, 2010
Dear
Palatin Stockholder:
Palatin Technologies, Inc. will hold
its Annual Meeting of Stockholders on Thursday, May 13, 2010, at 9:30 a.m.
Eastern Time. The meeting will be held at our headquarters, located
at 4C Cedar Brook Drive, Cranbury, New Jersey 08512.
The enclosed Notice of Annual Meeting
of Stockholders and the Proxy Statement describe the various matters to be acted
upon during the meeting. We encourage you to review these materials
carefully.
Your vote is important, regardless of
the number of shares that you hold. Whether or not you plan to attend
the meeting, please vote by following the instructions on the enclosed proxy
card. If you attend the meeting, you may continue to have your shares
voted as instructed in the proxy, or you may withdraw your proxy at the meeting
and vote your shares in person.
Recent press releases and presentations
on Palatin’s programs and product development strategies are available on our
website, www.palatin.com. The Notice of Annual Meeting of
Stockholders and other proxy materials are also available at
www.vfnotice.com/Palatin.
Thank you for your ongoing support of
and continued interest in Palatin Technologies, as well as your participation in
this Annual Meeting.
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Sincerely,
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 |
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Carl
Spana
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President
and Chief Executive Officer
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April
6, 2010
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PALATIN
TECHNOLOGIES, INC.
4C
Cedar Brook Drive
Cranbury,
New Jersey 08512
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
|
date
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May
13, 2010
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time
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9:30
a.m., Eastern Time
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place
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Palatin’s
offices, Cedar Brook Corporate Center, 4C Cedar Brook Drive, Cranbury, New
Jersey 08512
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record
date
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April
5, 2010
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items of business
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(1)
election of directors;
(2)
ratification of appointment of our independent registered public
accounting firm for the fiscal year ending June 30, 2010;
(3) approval
of an amendment to our restated certificate of incorporation which will
increase the number of authorized shares of common stock from 150,000,000
to 400,000,000;
(4) approval
of an amendment to our restated certificate of incorporation which will
effect a reverse stock split of our common stock, depending on a
determination by our board of directors that the reverse stock split is in
the best interests of the company and its stockholders; and
(5)
any other matters properly brought before the meeting.
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stockholder
list
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A
list of all stockholders entitled to vote at the meeting will be available
for examination by any stockholder, for any purpose germane to the
meeting, during ordinary business hours for 10 days before the meeting, at
our offices, Cedar Brook Corporate Center, 4C Cedar Brook Drive, Cranbury,
New Jersey 08512.
|
By order of the board of
directors,
Stephen T. Wills, Secretary
April 6, 2010
PALATIN
TECHNOLOGIES, INC.
ANNUAL
MEETING 2010
table
of contents
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Notice
of Annual Meeting of Stockholders
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1
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Voting
Procedures and Solicitation
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3
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Item
One: Election of Directors
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8
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The
Nominees
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8
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Item
Two: Ratification of Appointment of KPMG LLP as Our
Independent
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Registered
Public Accounting Firm
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11
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Report of the Audit
Committee
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12
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Item
Three: Approval of an Amendment to our Restated Certificate of
Incorporation
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to
Increase the Number of Authorized Shares of Common
Stock
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14
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Item
Four: Approval of an Amendment to Our Restated Certificate of
Incorporation
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to
Effect a Reverse Stock Split
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16
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Corporate
Governance
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22
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Executive
Officers
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26
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Executive
Compensation
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27
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Stock
Ownership Information
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33
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Section
16(a) Beneficial Ownership Reporting Compliance
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33
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Beneficial
Ownership of Management and Others
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33
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Certain
Relationships and Related Transactions, and Director
Independence
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36
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Other
Items of Business
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36
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Stockholder
Proposals for Next Annual Meeting
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36
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Availability
of Annual Report
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37
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Appendix
A: Text of Increased Authorized Share Amendment
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38
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Appendix
B: Text of Reverse Split Amendment
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40
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PROXY
STATEMENT, PAGE 2
PRELIMINARY
COPIES FILED PURSUANT TO RULE 14a-6(a)
PALATIN
TECHNOLOGIES, INC.
4C Cedar
Brook Drive
Cranbury,
New Jersey 08512
(609)
495-2200
PROXY
STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON MAY 13, 2010
VOTING
PROCEDURES AND SOLICITATION
Important
Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting
to Be Held on May 13, 2010. The proxy statement and annual report to security
holders are available at www.vfnotice.com/Palatin.
YOUR
VOTE IS IMPORTANT
Whether or not you plan to attend the
meeting, please complete and return the enclosed proxy card. Your prompt voting
may save us the expense of following up with a second mailing. We are sending
these proxy materials to stockholders beginning on or about April 6,
2010.
METHODS
OF VOTING
Stockholders of record may vote by
signing and returning the enclosed proxy card. If your shares are registered
directly in your name with our transfer agent, American Stock Transfer &
Trust Company, LLC (“American Stock”), you are considered, with respect to those
shares, the “stockholder of record.” These proxy materials and the proxy card
have been sent directly to you by American Stock.
If you send in a proxy card and also
attend the meeting in person, the proxy holders will vote your shares as you
previously instructed unless you inform the Secretary at the meeting that you
wish to vote in person.
If your shares are held in a stock
brokerage account or by a bank or other holder of record, you are considered the
“beneficial owner” of the shares held in street name. These proxy materials have
been forwarded to you by your broker, bank or other holder of record who is
considered, with respect to those shares, the stockholder of record. As the
beneficial owner, you have the right to direct your broker, bank or other holder
of record how to vote your shares by following the voting instructions provided
by your broker, bank or other holder of record.
PROXY
STATEMENT, PAGE 3
REVOKING
OR CHANGING A PROXY
If you are the stockholder of record,
you may revoke your proxy or change your vote by:
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•
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signing
and returning another proxy card on a later
date;
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•
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sending
written notice of revocation or change to the Secretary at our offices, 4C
Cedar Brook Drive, Cranbury, New Jersey 08512;
or
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•
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informing
the Secretary and voting in person at the
meeting.
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To be
effective, a later-dated proxy or written revocation or change must arrive at
our corporate offices before the start of the meeting.
If you are a beneficial owner, you may
revoke your proxy or change your vote only by following the instructions from
the broker, bank or other holder of record that holds your shares, or by
obtaining a legal proxy from the broker, bank or holder of record that holds
your shares giving you the right to vote the shares. You may vote in person at
the meeting only if you are the stockholder of record or if you are a beneficial
owner and have obtained a legal proxy from the broker, bank or holder of record
that holds your shares.
PROXY
SOLICITATION
We are soliciting proxies on behalf of
the board of directors, and we will pay all costs of preparing, assembling and
mailing the proxy materials. In addition to mailing out proxy materials, our
officers and employees may solicit proxies by telephone or fax, without
receiving any additional compensation for their services. We have requested
brokers, banks and other fiduciaries to forward proxy materials to the
beneficial owners of our stock. We have engaged The Proxy Advisory
Group, LLC to assist in the solicitation of proxies and provide related advice
and informational support, for a services fee and the reimbursement of customary
disbursements that are not expected to exceed $10,000 in the
aggregate.
HOW
PROXIES ARE VOTED
The proxy holders are Carl Spana,
Ph.D., our chief executive officer, president and a director, and Stephen T.
Wills, our chief financial officer, executive vice president of operations,
secretary and treasurer. The proxy holders will vote your shares according to
your instructions on the proxy card or your telephone instructions. If a signed
proxy card does not contain instructions, the proxy holders will vote the shares
FOR the election of the director nominees listed on the card; FOR ratifying the
appointment of KPMG LLP as our independent registered public accounting firm for
the fiscal year ending June 30, 2010; FOR the amendment to our restated
certificate of incorporation to increase the number of authorized shares of
common stock; FOR the amendment of our restated certificate of incorporation to
effect a reverse stock split; and in their discretion on any other business
which may properly come before the meeting.
PROXY
STATEMENT, PAGE 4
QUORUM
AND VOTES REQUIRED
A majority of the votes of outstanding
shares of common stock and Series A preferred stock, represented at the meeting
in person or by proxy, constitutes a quorum. Abstentions and broker non-votes
will count towards the quorum. If your shares are held in street name
and you do not provide voting instructions to the bank, broker or other holder
of record that holds your shares, the bank, broker or other holder of record has
the authority to vote your unvoted shares on Proposals 2, 3 and 4 even if it
does not receive instructions from you. A broker non-vote occurs when a broker,
bank or other holder of record holding shares for a beneficial owner does not
vote on a particular proposal because the broker, bank or other holder of record
does not have discretionary voting power for that particular item, or chooses
not to vote, and has not received instructions from the beneficial owner. Common
stock and Series A preferred stock will vote together as one class on the items
of business listed on the proxy card. The votes required are as
follows:
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•
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Item
One: Directors are elected by a plurality of votes cast,
so the eight nominees receiving the most votes will be elected.
Stockholders who do not wish to vote for one or more of the individual
nominees may withhold their authority to vote in the manner provided on
the proxy card. Brokerage firms do not have authority to vote customers’
unvoted shares held by firms in street name for the election of directors.
As a result, any shares not voted by a beneficial owner will be treated as
a broker non-vote. Such broker non-votes will have no effect on the
results of this vote.
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•
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Item
Two: Ratifying the appointment of our independent
registered public accounting firm for the fiscal year ending June 30, 2010
requires a majority of the votes cast on that item. Brokerage firms have
authority to vote customers’ unvoted shares held by firms in street name
on this proposal. Abstentions and broker non-votes will count neither for
nor against ratification. We are not required to obtain the approval of
our stockholders to select our independent registered public accounting
firm. However, if our stockholders do not ratify the selection of KPMG LLP
as our independent registered public accounting firm for 2010, our Audit
Committee will reconsider its
selection.
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•
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Item
Three: Approval of the amendment of our restated
certificate of incorporation to effect an increase in the number of shares
of authorized common stock requires a majority of all stock entitled to
vote at the meeting. Brokerage firms have authority to vote
customers’ unvoted shares held by firms in street name on this proposal.
Abstentions and broker non-votes will count against the
proposal.
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•
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Item
Four: Approval of the amendment of our restated
certificate of incorporation to effect a reverse stock split requires a
majority of all stock entitled to vote at the
meeting. Brokerage firms have authority to vote customers’
unvoted shares held by firms in street name on this proposal. Abstentions
and broker non-votes will count against the
proposal.
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PROXY
STATEMENT, PAGE 5
WHAT
IS THE EFFECT OF NOT CASTING YOUR VOTE?
If you hold your shares in street name
it is critical that you cast your vote if you want to be counted for the
election of directors in Proposal 1 of this proxy statement. In the past, if you
held your shares in street name and you did not indicate how you wanted your
shares voted in the election of directors, your bank, broker or other holder of
record was allowed to vote these shares on your behalf in the election of
directors as it felt appropriate.
Recent changes in regulations were made
to take away the ability of your bank, broker or other holder of record to vote
your uninstructed shares in the election of directors on a discretionary basis.
Thus, if you hold your shares in street name and you do not instruct your bank,
broker or other holder of record how to vote in the election of directors, no
votes will be cast on this proposal on your behalf. Your bank, broker or other
holder of record will, however, continue to have discretion to vote any
uninstructed shares on the ratification of the appointment of our independent
registered public accounting firm, the approval to the amendment of our restated
certificate of incorporation to increase the number of shares of authorized
common stock and the approval to the amendment to our restated certificate of
incorporation to effect a reverse stock split. If you are a shareholder of
record and you do not cast your vote, no votes will be cast on your behalf on
any of the items of business at the annual meeting.
IS
VOTING CONFIDENTIAL?
We will keep all the proxies, ballots
and voting tabulations private. We only let our Inspectors of Election, American
Stock, examine
these documents. Management will not know how you voted on a specific proposal
unless it is necessary to meet legal requirements. We will, however, forward to
management any written comments you make on the proxy card or
elsewhere.
VOTING
RIGHTS, SHARES OUTSTANDING AND VOTES PER SHARE
Holders of common stock and of Series A
preferred stock at the close of business on the record date of April 5, 2010 are
entitled to vote at the meeting.
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•
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Common
stock: 107,029,249 shares outstanding, one vote per
share
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•
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Series
A preferred stock: 4,997 shares outstanding with approximately
50 votes per share, a total of 248,606
votes
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There are
no rights of appraisal or similar rights of dissenters with respect to the items
of business at this meeting.
HOUSEHOLDING
OF ANNUAL DISCLOSURE DOCUMENTS
In December 2000, the Securities and
Exchange Commission (“SEC”) adopted a rule concerning the delivery of annual
disclosure documents. The rule allows us or your broker to send a single set of
our annual report and proxy statement to any household at which two or more of
our stockholders reside, if we or your broker believe that the stockholders are
members of the same family. This practice, referred to as “householding,”
benefits both you and us. It reduces
PROXY
STATEMENT, PAGE 6
the
volume of duplicate information received at your household and helps to reduce
our expenses. The rule applies to our annual reports, proxy statements and
information statements. Once you receive notice from your broker or from us that
communications to your address will be “householded,” the practice will continue
until you are otherwise notified or until you revoke your consent to the
practice. Each stockholder will continue to receive a separate proxy card or
voting instruction card.
If you are a stockholder of record and
your household received a single set of disclosure documents this year, but you
would prefer to receive your own copy, please contact our transfer agent,
American Stock, by calling their toll free number, 1-800-776-9437.
If you do not wish to participate in
“householding” and would like to receive your own set of Palatin’s annual
disclosure documents in future years, follow the instructions described below.
Conversely, if you share an address with another Palatin’s stockholder and
together both of you would like to receive only a single set of our annual
disclosure documents, follow these instructions:
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•
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If
your Palatin shares are registered in your own name, please contact our
transfer agent, American Stock, and inform them of your request by calling
them at 1-800-776-9437 or writing them at 59 Maiden Lane, Plaza Level, New
York, NY 10038.
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•
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If
a broker or other nominee holds your Palatin shares, please contact the
broker or other nominee directly and inform them of your request. Be sure
to include your name, the name of your brokerage firm and your account
number.
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PROXY
STATEMENT, PAGE 7
ITEM
ONE: ELECTION OF DIRECTORS
Our Nominating and Corporate Governance
Committee has nominated the eight persons listed below to serve as directors. A
stockholder who wishes to suggest a nominee to the Nominating and Corporate
Governance Committee may do so in the manner and within the time frame explained
under “Nomination of Directors” below. We recommend voting FOR these eight
nominees. At the meeting, the eight nominees who receive the most votes will be
elected as directors to serve until the next annual meeting, or until their
successors are elected and qualified. Each of the nominees is currently a
director and was elected at our last annual stockholders’ meeting on May 13,
2009. If any of the nominees should become unavailable to serve on the board,
the proxy holders will vote your shares for a board-approved substitute, or the
board may reduce the number of directors.
THE
NOMINEES
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Name
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Age
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Position with Palatin
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Carl
Spana, Ph.D.
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47
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Chief
executive officer, president and a director
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John
K.A. Prendergast, Ph.D.
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56
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Director,
chairman of the board of directors
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Perry
B. Molinoff, M.D.
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69
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Director
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Robert
K. deVeer, Jr. (1) (2) (3)
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63
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Director
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Zola
P. Horovitz, Ph.D. (1) (2) (3)
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75
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Director
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Robert
I. Taber, Ph.D. (1) (2)
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73
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Director
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Errol
De Souza, Ph.D. (2) (3)
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56
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Director
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J.
Stanley Hull
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57
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Director
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(1) Member
of the audit committee.
(2) Member
of the compensation committee.
(3) Member
of the nominating and corporate governance
committee.
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||
CARL SPANA, Ph.D., co-founder of
Palatin, has been our chief executive officer and president since June 14, 2000.
He has been a director of Palatin since June 1996 and has been a director of our
wholly-owned subsidiary, RhoMed Incorporated, since July 1995. From June 1996
through June 14, 2000, Dr. Spana served as an executive vice president and our
chief technical officer. From June 1993 to June 1996, Dr. Spana was vice
president of Paramount Capital Investments, LLC, a biotechnology and
biopharmaceutical merchant banking firm, and of The Castle Group Ltd., a medical
venture capital firm. Through his work at Paramount Capital Investments and The
Castle Group, Dr. Spana co-founded and acquired several private biotechnology
firms. From July 1991 to June 1993, Dr. Spana was a Research Associate at
Bristol-Myers Squibb, a publicly-held pharmaceutical company, where he was
involved in scientific research in the field of immunology. Dr. Spana is a
director of AVAX Technologies,
PROXY
STATEMENT, PAGE 8
Inc., a
publicly-held life science company. Dr. Spana received his Ph.D. in molecular
biology from The Johns Hopkins University and his B.S. in biochemistry from
Rutgers University.
JOHN K.A. PRENDERGAST, Ph.D.,
co-founder of Palatin, has been chairman of the board since June 14, 2000, and a
director since August 1996. Dr. Prendergast has been president and sole
stockholder of Summercloud Bay, Inc., an independent consulting firm providing
services to the biotechnology industry, since 1993. He is a member of the board
of the following publicly-held life science companies: AVAX Technologies, Inc.
and MediciNova, Inc. Currently he is the chairman of AVAX Technologies, Inc. and
executive chairman of the board of directors of Antyra, Inc., a privately-held
biopharmaceutical firm. From October 1991 through December 1997, Dr. Prendergast
was a managing director of The Castle Group Ltd., a medical venture capital
firm. Dr. Prendergast received his M.Sc. and Ph.D. from the University of New
South Wales, Sydney, Australia and a C.S.S. in administration and management
from Harvard University.
PERRY B. MOLINOFF, M.D. has been a
director since November 2001. He served as our executive vice president for
research and development from September 2001 until November 3, 2003, when he
resigned to accept a position as Vice Provost for Research at the University of
Pennsylvania, which he held from November 2003 through September 2006. He is
also a director of Cypress Bioscience, Inc., a publicly-held life science
company. Dr. Molinoff has more than 30 years of experience in both the
industrial and educational sectors. From 1981 to 1994, he was a professor of
pharmacology and chairman of the Department of Pharmacology at the University of
Pennsylvania School of Medicine in Philadelphia. From January 1995 until March
2001, he was vice president of neuroscience and genitourinary drug discovery for
the Bristol-Myers Squibb Pharmaceutical Research Institute, where he was
responsible for directing and implementing the Institute’s research efforts. Dr.
Molinoff earned his medical degree from Harvard Medical School.
ROBERT K. deVEER, Jr. has been a
director since November 1998. Since January 1997, Mr. deVeer has been the
president of deVeer Capital LLC, a private investment company. He is also a
director of Solutia Inc., a publicly-held chemical-based materials company. From
1995 until his retirement in 1996, Mr. deVeer served as Managing Director, Head
of Industrial Group, at New York-based Lehman Brothers. From 1973 to 1995, he
held increasingly responsible positions at New York-based CS First Boston,
including Head of Project Finance, Head of Industrials and Head of Natural
Resources. He was a managing director, member of the investment banking
committee and a trustee of the First Boston Foundation. He received a B.A. in
economics from Yale University and an M.B.A. in finance from Stanford Graduate
School of Business.
ZOLA P. HOROVITZ, Ph.D. has been a
director since February 2001. Before he retired from Bristol-Myers Squibb in
1994, Dr. Horovitz spent 34 years in various positions, including associate
director of the Squibb Institute for Medical Research, vice president of
development, vice president, scientific liaison, vice president of licensing,
and vice president of business development and planning for the pharmaceutical
division of Bristol-Myers Squibb. He held advisory positions at the University
of Pittsburgh, Rutgers College of Pharmacy and Princeton University. He is also
currently a director of the following publicly-held life science companies:
BioCryst Pharmaceuticals, Inc., DOV Pharmaceutical, Inc. and GenVec, Inc. Dr.
Horovitz earned his Ph.D. in pharmacology from the University of
Pittsburgh.
PROXY
STATEMENT, PAGE 9
ROBERT I. TABER, Ph.D. has been a
director since May 2001. Dr. Taber began his career in the pharmaceutical
industry in 1962, holding a succession of positions within Schering
Corporation’s biological research group before leaving in 1982 as director of
biological research. He has also held a number of increasingly important
positions with DuPont Pharmaceuticals and the DuPont Merck Pharmaceutical
Company, including director of pharmaceutical research, director of
pharmaceutical and biotechnology research, vice president of pharmaceutical
research and vice president of extramural research and development. From 1994 to
1998, Dr. Taber held the position of senior vice president of research and
development at Synaptic Pharmaceuticals Corporation before founding Message
Pharmaceuticals, Inc. in 1998, serving as president and chief executive officer
until 2000. Dr. Taber earned his Ph.D. in pharmacology from the Medical College
of Virginia.
ERROL DE SOUZA, Ph.D. has been a
director since April 2003. Dr. De Souza has nearly two decades of experience in
the field of drug discovery and development. Since January 2009, Dr. De Souza
has been a pharmaceutical and biotechnology consultant. From April 2003 to
January 2009, Dr. De Souza was president and chief executive officer of Archemix
Corporation, a biopharmaceutical company focused on aptamer therapeutics. From
September 2002 to March 2003, he was president and chief executive officer and a
director of Synaptic Pharmaceuticals. As a result of a merger effective March
2003, Synaptic Pharmaceuticals became a wholly-owned subsidiary of H. Lundbeck
A/S, an international pharmaceutical company. Prior to that, Dr. De Souza held
senior management positions with Aventis, and its predecessor company Hoechst
Marion Roussel Pharmaceuticals, and was co-founder of Neurocrine Biosciences,
Inc. He is currently a director of Targacept, Inc., a publicly-held life
sciences company, and Bionomics Limited, an Australian life science company
publicly traded on the Australian Stock Exchange. Dr. De Souza received his B.A.
(Honors) in physiology and his Ph.D. in neuroendocrinology from the University
of Toronto and he received his postdoctoral fellowship in neuroscience from The
Johns Hopkins University School of Medicine.
J. STANLEY HULL has been a director
since September 2005. Mr. Hull has over three decades of experience in the field
of sales and marketing. Mr. Hull joined GlaxoSmithKline, a research-based
pharmaceutical company, in October 1987 and will retire as Senior Vice
President, Pharmaceuticals in April 2010, having previously served in the
R&D organization of GlaxoSmithKline as Vice President and Worldwide Director
of Therapeutic Development and Product Strategy – Neurology and Psychiatry.
Prior to that, he was Vice President of Marketing – Infectious Diseases and
Gastroenterology for Glaxo Wellcome Inc. Mr. Hull started his career in the
pharmaceutical industry with SmithKline and French Laboratories in 1978. Mr.
Hull received his B.S. in business administration from the University of North
Carolina at Greensboro.
RECOMMENDATION
OF THE BOARD
The board recommends a vote FOR the
election of the eight nominees listed above.
[END OF
ITEM 1]
PROXY
STATEMENT, PAGE 10
ITEM
TWO: RATIFICATION OF APPOINTMENT OF KPMG LLP
AS
OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We recommend voting FOR the
ratification of the appointment of KPMG LLP as our independent registered public
accounting firm for the fiscal year ending June 30, 2010. KPMG served as our
independent registered public accounting firm for the fiscal year ended June 30,
2009. We expect that a representative of KPMG will attend the annual meeting.
The representative will have an opportunity to make a statement, if he or she
desires, and will be available to respond to appropriate questions from
stockholders.
Audit Fees. For the fiscal
year ended June 30, 2009, KPMG billed us a total of $210,000 for professional
services rendered for the audit of our annual consolidated financial statements,
review of our consolidated financial statements in our Forms 10-Q and services
provided in connection with regulatory filings. For the fiscal year ended June
30, 2008, the total billed for the same services and the audit of our internal
control over financial reporting was $233,000.
Audit-Related Fees. For the
fiscal years ended June 30, 2009 and 2008, KPMG did not perform or bill us for
any audit-related services.
Tax Fees. For the fiscal year
ended June 30, 2009, KPMG billed us a total of $15,500 for professional services
rendered for tax compliance, tax advice and tax planning. For the fiscal year
ended June 30, 2008, KPMG billed us $15,500 for professional services rendered
for tax compliance, tax advice and tax planning.
All Other Fees. KPMG did not
perform or bill us for any services other than those described above for the
fiscal years ended June 30, 2009 and 2008.
Policy on Audit Committee
Pre-Approval of Audit and Permissible Non-audit Services of Independent
Auditors. Consistent with SEC policies regarding auditor independence,
the Audit Committee has responsibility for appointing, setting compensation for
and overseeing the work of the independent registered public accounting firm. In
recognition of this responsibility, the Audit Committee has established a policy
to pre-approve all audit and permissible non-audit services provided by the
independent registered public accounting firm.
Before engaging the independent
registered public accounting firm for the next year’s audit, management will
submit to the Audit Committee for approval an estimate of fees for services
expected to be rendered during that year in each of four
categories:
1. Audit
services, including work that generally only our independent registered public
accounting firm can reasonably be expected to provide, such as services provided
in connection with regulatory filings, statutory audits and attest services and
consultation regarding financial accounting and/or reporting
standards;
2.
Audit-related services, including assurance and related services that are
traditionally performed by the independent registered public accounting firm,
including due diligence related to mergers and acquisitions, employee benefit
plan audits and special procedures required to meet certain regulatory
requirements;
3. Tax
services, including services performed by our independent registered public
accounting firm’s tax personnel except those services specifically related to
the audit of
PROXY
STATEMENT, PAGE 11
the
consolidated financial statements, including fees in the areas of tax
compliance, tax planning and tax advice; and
4. All
other services not described in the preceding categories. We generally do not
request other services from our independent registered public accounting
firm.
The Audit
Committee pre-approves fees for each category of service. The fees are budgeted
and the Audit Committee requires the independent registered public accounting
firm and management to report actual fees versus the budget periodically
throughout the year by category of service. During the year, circumstances may
arise when it may become necessary to engage the independent registered public
accounting firm for additional services not contemplated in the original
pre-approval. In those instances, the Audit Committee requires specific
pre-approval before engaging the independent registered public accounting
firm.
The Audit Committee may delegate
pre-approval authority to one or more of its members. The member to whom such
authority is delegated must report, for informational purposes only, any
pre-approval decisions to the Audit Committee at its next scheduled
meeting.
In the event the stockholders do not
ratify the appointment of KPMG LLP as our independent registered public
accounting firm, the Audit Committee will reconsider its
appointment.
REPORT
OF THE AUDIT COMMITTEE
The Audit Committee of the board of
directors, which consists entirely of directors who meet the independence and
experience requirements of the NYSE Amex LLC (the “NYSE Amex”), has furnished
the following report:
The Audit
Committee assists the Board in overseeing and monitoring the integrity of its
financial reporting process, compliance with legal and regulatory requirements
and the quality of internal and external audit processes. This committee reviews
and reassesses our charter annually and recommends any changes to the Board for
approval. The Audit Committee is responsible for overseeing our overall
financial reporting process, and for the appointment, compensation, retention,
and oversight of the work of KPMG LLP.
The Audit Committee has reviewed and
discussed the audited consolidated financial statements for the fiscal year
ended June 30, 2009 with Palatin’s management and has discussed with KPMG LLP
the matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees. In addition, the Audit Committee has
received from KPMG LLP the written disclosures and the letter from KPMG LLP
regarding its independence as required by applicable requirements of the Public
Company Accounting Oversight Board regarding KPMG LLP communications with the
Audit Committee, and the Audit Committee further discussed with KPMG LLP their
independence. The Audit Committee also considered the status of pending
litigation, taxation matters and other areas of oversight relating to the
financial reporting and audit process that the committee determined
appropriate.
Based on these reviews and discussions,
we recommended to the board of directors that the audited consolidated financial
statements be included in Palatin’s annual report on Form 10-K for the fiscal
year ended June 30, 2009.
PROXY
STATEMENT, PAGE 12
The
Audit Committee
Robert K.
deVeer, Jr., Chairman
Zola P.
Horovitz, Ph.D.
Robert I. Taber, Ph.D.
RECOMMENDATION
OF THE BOARD
The board recommends a vote FOR the
ratification of the appointment of KPMG LLP as our independent registered public
accounting firm.
[END OF
ITEM 2]
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
PROXY
STATEMENT, PAGE 13
ITEM
THREE: APPROVAL OF AN AMENDMENT TO OUR RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK
Increase in authorized capital
resolution and amendment. On March 9, 2010, the board of directors
adopted a resolution which authorizes, subject to stockholder approval, an
amendment to our restated certificate of incorporation to increase our
authorized common stock, $0.01 par value per share, from 150,000,000 shares to
400,000,000 shares. The additional common stock to be authorized by adoption of
this amendment would have rights identical to our currently authorized and
outstanding common stock. The number of authorized shares of our preferred
stock, 10,000,000 shares, will not be affected by this amendment.
Text of the increase in authorized
capital resolution and amendment. The complete text of the increase in
authorized capital resolution and amendment is set forth as Appendix A to this
proxy statement.
Purpose and background of increase
in authorized capital. The increase in authorized capital would increase
the number of shares of our common stock available to be issued. The following
table shows our common stock outstanding and issuable or reserved for issuance
as of March 31, 2010.
|
Common
stock outstanding or
reserved
|
|
|
Common
stock outstanding
|
107,029,249
|
|
Shares
of common stock issuable upon conversion of Series A Preferred
Stock
|
248,606
|
|
Shares
of common stock issuable upon exercise of outstanding options and
warrants
|
23,528,301
|
|
Shares
of common stock issuable under our 2005 Stock Plan
|
4,488,560
|
|
Total
|
135,294,716
|
Accordingly,
out of our currently authorized 150,000,000 shares of common stock, 14,705,284
shares are available for future issuance.
The board of directors believes it is
in the best interests of Palatin and its stockholders to have sufficient
additional authorized but unissued shares of common stock available in order to
provide flexibility for corporate action in the future. Management believes that
the availability of additional authorized shares for issuance from time to time
in the board's discretion, such as in connection with future financings,
possible acquisitions of other companies, investment opportunities or for other
corporate purposes, is desirable in order to avoid repeated separate amendments
to our restated certificate of incorporation and the delay and expense incurred
in holding special meetings of the stockholders to approve such
amendments.
We currently have no specific
understandings, arrangements, agreements or other plans to issue, in connection
with future financings, acquisitions or otherwise, any of the
additional
PROXY
STATEMENT, PAGE 14
authorized
but unissued shares that would be available as a result of the proposed increase
in the number of authorized shares of our common stock. However, the board
believes that the currently available unissued shares do not provide sufficient
flexibility for corporate action in the future, including future financings. We
will require additional funding within the next year if we are to continue
operations at the current levels, and it is likely we will seek additional funds
through public or private equity financings.
Even if the stockholders approve an
increase in the number of Palatin's authorized common stock shares, Palatin
reserves the right not to amend the restated certificate of incorporation if the
board does not deem such amendment to be in the best interests of Palatin and
its stockholders following the annual meeting.
An increase in the number of authorized
shares of our common stock could have the effect of making it more difficult to,
or discouraging an attempt to, obtaining control of Palatin by means of a
takeover bid that our board determines is not in our best interests and the best
interests of our stockholders. However, our board does not intend or view the
proposed increase in authorized common stock as an anti-takeover measure and is
not proposing the increase in response to any attempt or plan to obtain control
of Palatin.
We will not solicit further
authorization by vote of the stockholders for the issuance of the additional
shares of common stock proposed to be authorized, except as required by law,
regulatory authorities or the rules of the NYSE Amex or any other stock exchange
on which our shares may then be listed. The issuance of additional shares of
common stock could have the effect of diluting existing stockholder earnings per
share, book value per share and voting power. Our stockholders do not have any
preemptive right to purchase or subscribe for any part of any new or additional
issuance of our securities.
Relationship between Increase in
Authorized Capital and Reverse Stock Split. Item Three seeks
authorization for an increase in common stock, and Item Four seeks authorization
for a reverse stock split. If both Item Three and Item Four are approved by the
stockholders and the board proceeds to amend the restated certificate of
incorporation prior to implementing a stock split, then in the event that the
board later determines to implement the stock split the number of shares of
authorized common stock will be proportionately reduced. If Item Four, the
reverse stock split, is implemented first, then the number of shares of
authorized common stock will not be proportionately reduced, and the board will
not thereafter implement Item Three, the increase in authorized common
stock.
RECOMMENDATION
OF THE BOARD
The board recommends a vote FOR the
Increased Common Stock Authorization. The affirmative vote of a majority of the
outstanding shares of common stock is required for approval of an Amendment to
Our Restated Certificate of Incorporation to Increase the Number of Authorized
Shares of Common Stock.
[END OF
ITEM 3]
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
PROXY
STATEMENT, PAGE 15
ITEM
FOUR: APPROVAL OF AN AMENDMENT TO OUR
RESTATED
CERTIFICATE OF INCORPORATION TO EFFECT
A
REVERSE STOCK SPLIT
Prior authorization for reverse
split amendment. At the stockholders meeting held on May 13,
2009, the stockholders authorized the board of directors to implement, at any
time before May 13, 2010, a reverse stock split substantially similar to this
Item Four, which would combine between two and fifteen shares of outstanding
common stock into one share of common stock (a
one-for-two to one-for-fifteen reverse split). The board does
not believe it likely that it will implement the reverse split authorized at the
meeting of May 13, 2009 before the expiration of that
authorization. As discussed below, the board considers a number of
factors in deciding whether to implement a reverse split, including additional
funding requirements, the amount of our authorized but unissued common stock,
market conditions, and existing and expected trading prices of our common
stock. The board views it as unlikely that those factors will result
in a decision to implement the reverse split before May 13,
2010. Additionally, we have agreed with the
purchasers in a sale of our common stock which closed on March 2, 2010 that we
will not implement a reverse stock split through April 30,
2010. However, based upon both our trading price and NYSE Amex
requirements as discussed below, the board continues to recommend that the
stockholders authorize the reverse stock split.
Reverse split resolution and
amendment. On March 9, 2010, the board of directors adopted a resolution
which authorizes, subject to stockholder approval, an amendment to our restated
certificate of incorporation to effect a reverse stock split of our common
stock, but only if the board determines that the reverse split is in the best
interests of Palatin and its stockholders. The amendment allows a single reverse
split which will combine between two and fifteen shares of outstanding common
stock into one share of new common stock (the “New Common Stock”) at any time
after May 13, 2010 (the date of this annual meeting) and before May 13, 2011. If
the board decides to proceed with the reverse split, the board will determine
the exact reverse split ratio and the effective date. We will be able to file
only one reverse split amendment and effect only one reverse split pursuant to
this proposal.
Text of the reverse split resolution
and amendment. The complete text of the reverse split resolution and
amendment is set forth as Appendix B to this proxy statement.
Purpose and background of reverse
split. A reverse split would decrease the number of shares of our common
stock outstanding and issuable pursuant to options, warrants and convertible
preferred stock. We expect this to result in a higher market price for the New
Common Stock than for our current common stock. The board believes the reverse
split is important for the two reasons described below: first, to keep our stock
listed on a national stock exchange, and second, to facilitate raising capital
through equity financings.
NYSE Amex listing
requirements. On March 3, 2010, we received notice from the NYSE Amex
that because of our common stock low trading price, the NYSE Amex deemed it
appropriate for us to effect a reverse stock split within a
reasonable amount of time in accordance with Section 1003(f)(v) of
the NYSE Amex’s Company Guide. Over the twelve months ended February 28, 2010,
the trading price for our common stock has ranged from a high of $0.48 to a low
of $0.06 per share. On March 18, 2010, the closing sales price was $0.26 per
share. If we do not complete a reverse stock split within a reasonable amount of
time, the NYSE Amex may consider suspending
PROXY
STATEMENT, PAGE 16
dealings
in our common stock or remove our common stock from the list. If our common
stock ceases to be listed on the NYSE Amex, this could result in reduced news
media coverage of our activities and a lack of investment analyst interest in
our common stock, which could then result in lower trading volume and a lower
market price.
Raising capital. The reverse
split would reduce the number of shares of our common stock outstanding without
reducing the total number of authorized shares of common stock. As a result, we
would have a larger number of authorized but unissued shares from which to issue
additional shares of common stock, or securities convertible or exercisable into
shares of common stock, in equity financing transactions. We currently have no
plans for an equity financing transaction or other transaction in which we would
issue shares that will be newly available for issuance as a result of the
reverse stock split.
No guarantee of success. We
believe it is likely that the per share market price of our common stock will
increase after a reverse split. However, we cannot guarantee that our common
stock price will increase, and even if it does, we cannot guarantee that the
price increase:
• will
be proportionate to the reverse split ratio;
|
|
•
|
will
last in the marketplace for any length of
time;
|
|
|
•
|
will
be sufficient to meet the listing requirements of the NYSE Amex;
or
|
|
|
•
|
will
be sufficient to facilitate raising
capital.
|
Criteria to be used in deciding to
apply the reverse split. If the stockholders approve this Item Four, the
board or a committee of the board will have the authority to proceed with the
reverse split. In determining whether to proceed with the reverse split and
setting the exact ratio of the split, if any, the board or committee will
consider a number of factors, including additional funding requirements, the
amount of our authorized but unissued common stock, market conditions, existing
and expected trading prices of our common stock and NYSE Amex listing
requirements. We anticipate that the reverse split, if the board or committee
determines to proceed with the reverse split, will be implemented in conjunction
with an equity financing or other transaction.
Range of exchange ratios. The
purpose of seeking stockholder approval of a range of exchange ratios from
one-for-two to one-for-fifteen (rather than a fixed exchange ratio) is to
provide us with the flexibility to achieve the desired results of the reverse
split. If the stockholders approve this proposal, the board would implement the
reverse split only upon the board’s determination that the reverse split would
be in the best interests of Palatin and its stockholders at that
time.
Effective date of reverse
split. If the stockholders approve the amendment, and if the board then
determines to proceed with the reverse split, it will become effective when we
file the reverse split amendment with the Delaware Secretary of State. This
could be on any date the board chooses after this annual meeting and before May
13, 2011. If the board determines not to proceed with the reverse split, the
board may abandon the reverse split amendment pursuant to Section 242(c) of the
Delaware General Corporation Law.
PROXY
STATEMENT, PAGE 17
No appraisal rights.
Stockholders will not have dissenters’ or appraisal rights under the Delaware
General Corporation Law or under the restated certificate of incorporation, as
amended, in connection with the proposed reverse stock split.
Material effects of the reverse
split. The following table shows the approximately numerical effect of
the reverse split on shares of our common stock as of March 31, 2010, at the
minimum split ratio of one-for-two and at the maximum split ratio of
one-for-fifteen, assuming that Item Three, the increase in authorized common
stock, is either not adopted or not implemented. The actual reverse split ratio
could fall anywhere on or between those two endpoints.
|
Effect
of Reverse Split, Assuming No Increase in Authorized
Capital
|
|||
|
New
Common Stock
|
|||
|
Common
stock authorized, outstanding or reserved
|
One-for-two
split ratio
|
One-for-fifteen
split ratio
|
|
|
Common
stock authorized
|
150,000,000
|
150,000,000
|
150,000,000
|
|
Common
stock outstanding
|
107,029,249
|
53,514,624
|
7,135,283
|
|
Shares
of common stock issuable upon conversion of Series A Preferred
Stock
|
248,606
|
124,303
|
16,573
|
|
Shares
of common stock issuable upon exercise of outstanding options and
warrants
|
23,528,301
|
11,764,150
|
1,568,553
|
|
Shares
of common stock issuable under our 2005 Stock Plan
|
4,488,560
|
2,244,280
|
299,237
|
The following table shows the
approximately numerical effect of the reverse split on shares of our common
stock as of March 31, 2010, at the minimum split ratio of one-for-two and at the
maximum split ratio of one-for-fifteen, assuming that Item Three, the increase
in authorized common stock, is adopted and implemented prior to the reverse
split. The actual reverse split ratio could fall anywhere on or between those
two endpoints.
PROXY
STATEMENT, PAGE 18
|
Effect
of Reverse Split, Assuming Increase in Authorized
Capital
|
|||
|
New
Common Stock
|
|||
|
Common
stock authorized, outstanding or reserved
|
One-for-two
split ratio
|
One-for-fifteen
split ratio
|
|
|
Common
stock authorized
|
400,000,000
|
200,000,000
|
26,666,666
|
|
Common
stock outstanding
|
107,029,249
|
53,514,624
|
7,135,283
|
|
Shares
of common stock issuable upon conversion of Series A Preferred
Stock
|
248,606
|
124,303
|
16,573
|
|
Shares
of common stock issuable upon exercise of outstanding options and
warrants
|
23,528,301
|
11,764,150
|
1,568,553
|
|
Shares
of common stock issuable under our 2005 Stock Plan
|
4,488,560
|
2,244,280
|
299,237
|
The number of shares of common stock
issuable upon exercise, vesting or conversion of all outstanding options,
warrants and convertible preferred stock will automatically be reduced by a
factor equal to the split ratio. The reverse stock split will also increase the
exercise price of options and warrants by a factor of from two to fifteen,
depending on the actual reverse split ratio. The reverse split would not affect
any stockholder’s proportionate equity interest in Palatin, except for the
effect on certain stockholders receiving cash in lieu of fractional shares. The
reverse stock split will not otherwise affect any rights of holders of our
securities.
The reverse split will have no effect
on the number of our authorized shares of common stock or preferred stock or on
the par value of the stock. The shares of New Common Stock will be fully paid
and non-assessable. The reverse split will not affect the voting and other
rights of common or preferred stock. The reverse stock split will not result in
any change in Palatin’s business, management, assets, liabilities or net
worth.
The reverse stock split will result in
some stockholders holding odd lots of the New Common Stock (blocks of less than
100 shares). Because broker/dealers typically charge a higher commission to
complete trades in odd lots of securities, the transaction costs may increase
for those stockholders who will hold odd lots after the reverse stock
split.
Relationship between Increase in
Authorized Capital and Reverse Stock Split. Item Four seeks
authorization for a reverse stock split, and Item Three seeks authorization for
an increase in common stock. If both Item Three and Item Four are approved by
the stockholders and the board proceeds to amend the restated certificate of
incorporation prior to implementing a
PROXY
STATEMENT, PAGE 19
stock
split, then in the event that the board later determines to implement the stock
split the number of shares of authorized common stock will be proportionately
reduced. If Item Four, the reverse stock split, is implemented first, then the
number of shares of authorized common stock will not be proportionately reduced,
and the board will not thereafter implement Item Three, the increase in
authorized common stock.
No fractional shares. We will
not issue any fractional shares that would result from the reverse split.
Instead, we will pay the cash value of fractions of a share determined by the
average closing price of the common stock for the five (5) trading days
immediately preceding the effective date of the reverse split, multiplied by the
fractional interest.
Mechanics of the reverse
split. Assuming the reverse stock split is approved by our stockholders,
this is how it will work:
|
|
•
|
If
your shares are held in “street name” – that is, through an account at a
brokerage firm, bank or other holder of record – the number of shares you
hold will automatically be adjusted to reflect the reverse stock
split.
|
|
|
•
|
If
your shares are registered directly in your name with American Stock and
your shares are held in book-entry form (i.e. your shares are not
represented by a physical stock certificate), the number of shares you
hold will automatically be adjusted to reflect the reverse stock split.
You will be sent a transmittal letter by American Stock. You will need to
return a properly completed and duly executed transmittal letter to
American Stock in order to receive any cash payment in lieu of fractional
shares or any other distributions, if any, that may be declared and
payable to holders of record.
|
|
|
•
|
If
your shares are registered directly in your name with American Stock and
your shares are held in certificated form (that is, your shares are
represented by one or more physical stock certificates), you will receive
a transmittal letter asking you to surrender your certificate(s)
representing pre-split shares in exchange for a New Common Stock
certificate representing post-split shares. You will need to return a
properly completed and duly executed transmittal letter, together with
your certificate(s) representing pre-split shares, to American Stock in
order to receive a New Common Stock certificate and any cash payment in
lieu of fractional shares or any other distributions, if any, that may be
declared and payable to holders of record following the reverse stock
split.
|
Whether your shares are held in street
name or directly, we will not issue fractional shares of common stock to you as
described above under the heading “No fractional shares”. If
your shares are held in street name, payment for the fractional shares will be
deposited directly into your account with the organization holding your
shares.
Federal income tax
consequences. The following is a summary of the material anticipated
Federal income tax consequences of the reverse split to our stockholders. This
summary is based on the Federal income tax laws as now in effect and as
currently interpreted; it does not take into account possible changes in the tax
laws or interpretations, including amendments to applicable statutes,
regulations and proposed regulations or changes in judicial or administrative
rulings, some of which may have retroactive effect. This summary does not
purport to address all aspects of the possible Federal income tax consequences
of the reverse
PROXY
STATEMENT, PAGE 20
split and
is not intended as tax advice to any person. In particular, and without limiting
the foregoing, this summary does not consider the Federal income tax
consequences to stockholders in light of their individual investment
circumstances or to holders subject to special treatment under the Federal
income tax laws (for example, life insurance companies, financial institutions,
tax-exempt organizations, regulated investment companies and foreign
taxpayers).
The summary does not address any
consequence of the reverse split under any state, local or foreign tax
laws.
We will not obtain a ruling from the
Internal Revenue Service regarding the Federal income tax consequences to our
stockholders as a result of the reverse split. Accordingly, WE ENCOURAGE EACH
STOCKHOLDER TO CONSULT THEIR TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES
OF THE POTENTIAL REVERSE SPLIT, INCLUDING THE APPLICATION AND EFFECT OF STATE,
LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS.
The reverse split is intended to
qualify as a “recapitalization” as described in Section 368(a)(1) of the Code.
Consequently, neither we nor any stockholder will recognize any gain or loss.
For exchanging stockholders, the aggregate basis of the shares of New Common
Stock received (excluding any fractional share for which cash is received) will
be the same as the aggregate basis of common stock surrendered in the exchange.
Similarly, the holding period for New Common Stock received as a result of the
reverse stock split will include the holding period of the shares of common
stock surrendered in exchange thereof.
RECOMMENDATION
OF THE BOARD
The board recommends a vote FOR
the Reverse Split Amendment. The affirmative vote of a majority of the
outstanding shares of common stock is required for approval of the Reverse Split
Amendment.
[END OF
ITEM 4]
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
PROXY
STATEMENT, PAGE 21
CORPORATE
GOVERNANCE
NOMINATION
OF DIRECTORS
The Nominating and Corporate Governance
Committee conducts an annual director performance evaluation process and
proposes nominees for election as directors. Nominees must be well-regarded and
experienced participants in their field(s) of specialty, familiar at the time of
their appointment with our business, willing to devote the time and attention
necessary to deepen and refine their understanding of Palatin and the issues we
face, and must have an understanding of the demands and responsibilities of
service on a public company board of directors. The committee considers
individual merits, such as personal integrity and sound judgment, business and
professional skills and experience, independence, knowledge of the industry in
which we operate, possible conflicts of interest, diversity, the extent to which
the candidate would fill a present need on the board and concern for the
long-term interests of the stockholders. The committee also considers each
candidate in relation to existing or other potential members of the board, with
a view to establishing a well-rounded, diverse, knowledgeable, and experienced
board.
The committee will consider stockholder
recommendations of nominees if they are accompanied by a comprehensive written
resume of the recommended nominee’s business experience and background, and a
signed consent from the recommended nominee stating that he or she is willing to
be considered as a nominee and, if nominated and elected, will serve as a
director. The committee will consider candidates recommended by stockholders on
the same basis as candidates from other sources. The committee may retain
outside consultants to assist in identifying suitable director candidates.
Stockholders may send their written recommendations with the required
documentation to our executive offices at 4C Cedar Brook Drive, Cranbury, NJ
08512, Attention: Secretary, no later than the deadline for stockholder
proposals to be included in the proxy statement as specified under “Stockholder
Proposals for Next Annual Meeting” on page 36.
DIRECTOR
INDEPENDENCE
The board of directors has determined
that all of the directors and nominees except for Dr. Spana (our chief executive
officer and president) are independent directors, as defined in Section 803 of
the Company Guide of the NYSE Amex, on which our common stock is
listed.
THE
BOARD AND ITS COMMITTEES
Committees and meetings. The
board has an Audit Committee, a Compensation Committee and a Nominating and
Corporate Governance Committee. During the fiscal year ended June 30, 2009, the
board met four times, the Audit Committee met four times, the Compensation
Committee met twice and the Nominating and Corporate Governance Committee met
once. Each director has attended at least 75% of the total number of meetings of
the board and committees of the board on which he served. With the exception of
Drs. Prendergast and Spana, the directors did not attend the 2009 annual meeting
of stockholders.
Audit Committee. The Audit
Committee reviews the engagement of the independent registered public accounting
firm and reviews the independence of the independent registered
PROXY
STATEMENT, PAGE 22
public
accounting firm. The Audit Committee also reviews the audit and non-audit fees
of the independent registered public accounting firm and the adequacy of our
internal control procedures. The Audit Committee is currently composed of three
non-employee directors, Mr. deVeer, Dr. Horovitz and Dr. Taber. The board has
determined that the members of the Audit Committee are independent, as defined
in Section 803 of the Company Guide of the NYSE Amex, and satisfy the
requirements of the NYSE Amex as to financial literacy and expertise. The board
has determined that at least one member of the committee, Mr. deVeer, is the
Audit Committee financial expert as defined by Item 407 of Regulation S-K. The
responsibilities of the Audit Committee are set forth in a written charter
adopted by the board, a copy of which is available on our web site at
www.palatin.com. The report of the Audit Committee appears under Item Two
above.
Compensation Committee. The
Compensation Committee reviews and recommends to the board on an annual basis
employment agreements and compensation for our officers, directors and some
employees, and administers our 2005 Stock Plan and the options still outstanding
which were granted under previous stock option plans. The Compensation Committee
is composed of Mr. deVeer, Dr. Horovitz, Dr. Taber and Dr. De Souza. The report
of the Compensation Committee appears below, in our discussion of executive
compensation.
The Compensation Committee does not
have a written charter. The committee administers our 2005 Stock Plan, under
which it may delegate to an officer its authority to grant stock options and
rights to officers and employees in accordance with Delaware law, except that it
cannot authorize an officer to make grants to himself. Our chief financial
officer and our Director of Human Resources and Administration support the
committee in its work by gathering, analyzing and presenting data on Palatin’s
compensation arrangements and compensation in the marketplace.
Nominating and Corporate Governance
Committee. The Nominating and Corporate Governance Committee assists the
board in recommending nominees as described above, and in determining the
composition of committees. It also reviews, assesses and makes recommendations
to the board concerning policies and guidelines for corporate governance,
including relationships of the board, the stockholders and management in
determining Palatin’s direction and performance. The responsibilities of the
Nominating and Corporate Governance Committee are set forth in a written charter
adopted by the board, a copy of which is available on our web site at
www.palatin.com. The Nominating and Corporate Governance Committee is composed
of Mr. deVeer, Dr. Horovitz and Dr. De Souza, each of whom meets the
independence requirements currently established by the NYSE Amex.
Duration of office. Unless a
director resigns, all directors hold office until the next annual meeting of
stockholders or until their successors have been elected and qualified.
Directors serve as members of committees as the board determines from time to
time.
STOCKHOLDER
COMMUNICATION WITH DIRECTORS
Generally, stockholders who have
questions or concerns should contact Stephen T. Wills, Secretary, Palatin
Technologies, Inc., 4C Cedar Brook Drive, Cranbury, NJ 08512. However, any
stockholder who wishes to address questions regarding our business directly to
the board of directors, or any individual director, can direct questions to the
board or a director by regular
PROXY
STATEMENT, PAGE 23
mail to
the Secretary at the address above or by e-mail to boardofdirectors@palatin.com.
You may submit your concern anonymously or confidentially by postal mail. You
may also indicate whether you are a shareholder, customer, supplier, or other
interested party.
Communications are distributed to the
board, or to any individual directors as appropriate, depending on the facts and
circumstances outlined in the communication, unless the Secretary determines
that the communication is unrelated to the duties and responsibilities of the
board, such as product inquiries, resumes, advertisements or other promotional
material. Communications that are unduly hostile, threatening, illegal or
similarly unsuitable will also not be distributed to the board or any director.
All communications excluded from distribution will be retained and made
available to any non-management director upon request.
CODE
OF CORPORATE CONDUCT AND ETHICS
We have adopted a code of corporate
conduct and ethics that applies to all of our directors, officers and employees,
including our chief executive officer and chief financial officer. You can view
the code of corporate conduct and ethics at our website, www.palatin.com. We
will disclose any amendments to, or waivers from, provisions of the code of
corporate conduct and ethics that apply to our directors, principal executive
and financial officers in a current report on Form 8-K, unless the rules of the
NYSE Amex permit website posting of any such amendments or waivers.
DIRECTOR
COMPENSATION
Non-employee directors’ option
grants. Non-employee directors receive an annual option grant on the
first day of each fiscal year. The amount of the annual option grant may vary
from year to year. The exercise price of these options is the closing price of
our common stock on the date of grant. They vest in twelve equal monthly
installments beginning one month from the date of grant, and they expire ten
years from the date of grant. They also provide for accelerated vesting in the
event of involuntarily termination as a director following a change in control,
with exercise permitted following accelerated vesting for up to the earlier of
one year after termination or the expiration date of the option.
On July 1, 2008, the first day of our
last completed fiscal year, the chairman of the board received an option to
purchase 75,000 shares of common stock and each other non-employee director
received an option to purchase 40,000 shares of common stock, with an exercise
price of $0.18 per share.
On July 1, 2009, the first day of the
current fiscal year, the chairman of the board received an option to purchase
60,000 shares of common stock and each other non-employee director received an
option to purchase 40,000 shares of common stock, with an exercise price of
$0.28 per share. In addition, on the same date Mr. deVeer received an
additional option to purchase 35,000 shares of common stock, with an exercise
price of $0.28 per share, relating to his services as member and chairman of the
Audit Committee and as an Audit Committee financial expert. The
additional option granted to Mr. deVeer vests in four annual installments on the
anniversary of the date of grant, expires ten years from the date of grant and
provides for accelerated vesting in the event of involuntary termination as a
director following a change in
PROXY
STATEMENT, PAGE 24
control,
with exercise permitted following accelerated vesting for up to the earlier of
one year after termination or the expiration of the option.
Non-employee directors’ cash
compensation. Dr. Prendergast serves as chairman of the board and
receives an annual retainer of $60,000, payable quarterly. Other non-employee
directors receive an annual retainer of $30,000, payable on a quarterly basis,
with the Audit Committee chairperson and Compensation Committee chairperson
receiving an additional $4,000 and $2,000, respectively, payable on a quarterly
basis.
Non-employee directors’
expenses. Non-employee directors are reimbursed for expenses incurred in
performing their duties as directors, including attending all meetings of the
board and any committees on which they serve.
Employee directors. Employee
directors are not separately compensated for services as directors, but are
reimbursed for expenses incurred in performing their duties as directors,
including attending all meetings of the board and any committees on which they
serve.
Director compensation table.
The following table sets forth the compensation we paid to all directors during
the fiscal year ended June 30, 2009, except for Dr. Spana, whose compensation is
set forth under Executive Compensation below. He did not receive any separate
compensation for his services as a director.
Director
Compensation in Fiscal 2009
|
Name
|
Fees
earned or paid in cash ($)
|
Option
awards
($)
(1) (2)
|
Total
($)
|
|
John
K.A. Prendergast, Ph.D.
|
60,000
|
21,151
|
81,151
|
|
Perry
B. Molinoff, M.D.
|
30,000
|
11,921
|
41,921
|
|
Robert
K. deVeer, Jr.
|
34,000
|
11,921
|
45,921
|
|
Zola
P. Horovitz, Ph.D.
|
30,000
|
11,921
|
41,921
|
|
Robert
I. Taber, Ph.D.
|
32,000
|
11,921
|
43,921
|
|
Errol
De Souza, Ph.D.
|
30,000
|
11,921
|
41,921
|
|
J.
Stanley Hull
|
30,000
|
19,267
|
49,267
|
|
(1)
|
Amounts
in this column represent compensation expense which we recognized in
fiscal 2009. For a description of the assumptions we used to calculate
these amounts, see Note 9 to the consolidated financial statements
included in our Annual Report on Form 10-K for the fiscal year ended June
30, 2009.
|
|
(2)
|
The
aggregate number of shares underlying option awards outstanding at June
30, 2009 for each director was:
|
Dr.
Prendergast 761,000
Dr.
Molinoff 524,583
Mr.
deVeer 448,533
PROXY
STATEMENT, PAGE 25
Dr.
Horovitz 355,000
Dr.
Taber 350,000
Dr. De
Souza 308,750
Mr.
Hull
266,667
EXECUTIVE
OFFICERS
|
Name
|
Age
|
Position with Palatin
|
|
Carl
Spana, Ph.D.
|
47
|
President,
chief executive officer and director
|
|
Stephen
T. Wills, CPA
|
53
|
Executive
vice president - operations and chief financial officer, secretary and
treasurer
|
|
Trevor
Hallam, Ph.D.
|
51
|
Executive
vice president - research and
development
|
Executive officers are appointed by the
board and serve at the discretion of the board. Each executive officer holds
office under an employment agreement.
Additional information about Dr. Spana
is included under Item One: Election of Directors.
STEPHEN T. WILLS, MST, CPA, has been
vice president, secretary, treasurer and chief financial officer since 1997 and
has been executive vice president of operations since 2005. From July 1997 to
August 2000, Mr. Wills was also a vice president and the chief financial officer
of Derma Sciences, Inc., a publicly-held company which provides wound and skin
care products, and currently serves as lead director of Derma. Mr. Wills is also
a director of U.S. Helicopter Corp., a publicly-held company. From 1991 to
August 2000, he was the president and chief operating officer of Golomb, Wills
& Company, P.C., a public accounting firm. Mr. Wills, a certified public
accountant, received his B.S. in accounting from West Chester University, and an
M.S. in taxation from Temple University.
TREVOR HALLAM, Ph.D., has been
executive vice president of research and development since May 2005. From 1996
to 2005, Dr. Hallam held senior management positions within AstraZeneca R&D,
including vice president of biologics based out of the UK, vice president of
respiratory and inflammation research based in Sweden and vice president of
medical affairs within the US. From 1985 to 1995, Dr. Hallam served in senior
management positions within Smith Kline and French Research, Glaxo Group
Research and Roche Research. Dr. Hallam joined the pharmaceutical industry after
a postdoctoral fellowship at the Physiological Laboratory, University of
Cambridge, UK. He earned his Ph.D. in biochemistry from the University of London
and his B.Sc. from the University of Leeds.
PROXY
STATEMENT, PAGE 26
EXECUTIVE
COMPENSATION
SUMMARY
COMPENSATION TABLE
The following table summarizes the
compensation earned by or paid to our principal executive officer, principal
financial officer and our one other executive officer (our named executive
officers) for our fiscal years ended June 30, 2009 and 2008. We have no
non-equity incentive plan, no defined benefit or actuarial pension plan, and no
deferred compensation plan.
|
Name
and Principal Position
|
Fiscal
Year
|
Salary
($)
|
Bonus
(1)
($)
|
Stock
awards
(2)
($)
|
Option
awards
(2)
($)
|
All
other
compen-
sation
(3)
($)
|
Total
($)
|
|
Carl
Spana, Ph.D., chief executive officer and president
|
2009
|
390,000
|
25,000
|
245,397
|
106,404
|
9,750
|
776,551
|
|
2008
|
390,000
|
0
|
281,750
|
66,013
|
5,688
|
743,451
|
|
|
Stephen
T. Wills, MST, CPA, chief financial officer and executive vice president
of operations
|
2009
|
321,000
|
25,000
|
198,740
|
81,994
|
11,500
|
638,234
|
|
2008
|
321,000
|
0
|
217,000
|
52,811
|
14,700
|
605,511
|
|
|
Trevor
Hallam, Ph.D., executive vice president of research and
development
|
2009
|
321,000
|
25,000
|
198,740
|
66,354
|
11,500
|
622,594
|
|
2008
|
321,000
|
0
|
217,000
|
52,811
|
14,700
|
605,511
|
|
(1)
|
Fiscal
year 2009 bonus amounts were paid on December 31, 2008. There were no
bonuses awarded to any of our executive officers for fiscal year
2008.
|
|
(2)
|
Amounts
in these columns represent compensation expense which we recognized in the
fiscal year shown. For a description of the assumptions we used to
calculate these amounts, see Note 9 to the consolidated financial
statements included in our Annual Report on Form 10-K for the fiscal year
ended June 30, 2009.
|
|
(3)
|
Consists
of matching contributions to 401(k) plan
accounts.
|
EMPLOYMENT
AGREEMENTS
On June 5, 2007, we entered into
employment agreements with Dr. Spana, Mr. Wills and Dr. Hallam, which continue
through June 30, 2010 unless terminated earlier. Under these agreements, Dr.
Spana is serving as chief executive officer and president at a current salary of
$390,000 per year; Mr. Wills is serving as executive vice president of
operations and chief financial officer at a current salary of $321,000 per year;
and Dr. Hallam is serving as executive vice president of research and
development at a current salary of $321,000 per year. Each agreement also
provides for:
|
·
|
annual
discretionary bonus compensation, in an amount to be decided by the
Compensation Committee and approved by the board, based on achievement of
yearly objectives; and
|
PROXY
STATEMENT, PAGE 27
|
·
|
participation
in all benefit programs that we establish, to the extent the executive’s
position, tenure, salary, age, health and other qualifications make him
eligible to participate.
|
The Compensation Committee awarded a
discretionary bonus of $25,000 to each of our named executive officers at the
end of our second fiscal quarter based on our performance during the first half
of our 2009 fiscal year, but determined not to award any further discretionary
bonuses to our named executive officers or to authorize any increase in our
named executive officers’ salaries for fiscal 2009, based on events transpiring
during fiscal 2009, including our financial condition and the decrease in our
common stock price.
Each
agreement allows us or the executive to terminate the agreement upon written
notice, and contains other provisions for termination by us for “cause,” or by
the employee for “good reason” or due to a “change in control” (as these terms
are defined in the employment agreements and set forth below). Early termination
may, in some circumstances, result in severance pay at the salary then in
effect, plus continuation of medical and dental benefits then in effect for a
period of two years (Dr. Spana) or 18 months (Mr. Wills and Dr. Hallam).
Arrangements with our named executive officers in connection with a termination
following a change in control are described below. Each agreement includes
non-competition, non-solicitation and confidentiality covenants.
STOCK OPTION AND RESTRICTED STOCK
UNIT GRANTS
In
October 2006, we granted 375,000, 300,000 and 300,000 restricted stock units to
Dr. Spana, Mr. Wills and Dr. Hallam, respectively, which vest on March 26, 2010,
provided that the executive remains employed by us through such date, subject to
earlier vesting in the event of a change in control or termination of employment
other than a voluntary termination or termination for cause. The restricted
stock units also require that each executive retain ownership of at least 33% of
the vested stock for the duration of the executive’s employment with us unless
there is a change in control or for hardship as determined by the board of
directors.
In
connection with the grant of the restricted stock units to our named executive
officers in October 2006, we determined at such time that the named executive
officers would not receive any further stock options or stock awards during the
remainder of fiscal year 2007 or the next three fiscal years thereafter,
subject, however, to annual review by the Compensation Committee, which is
authorized to make additional grants if warranted based on market conditions,
our common stock price, the need to retain our executive officers, and the
interests of our stockholders. In 2008, the Compensation Committee determined
that additional stock option grants were necessary in order to motivate and
retain our named executive officers, and on March 26, 2008, Dr. Spana, Mr.
Wills, and Dr. Hallam were granted options to purchase 375,000, 300,000 and
300,000 shares of common stock, respectively. Twenty-five percent of the shares
underlying each option were granted at an exercise price in excess of the fair
market value on the date of grant in order to incentivize the executive to
improve our financial condition.
In 2009,
the Compensation Committee determined that additional stock option grants were
necessary in order to motivate and retain our named executive officers, and
effective July 1, 2009, the first day of the current fiscal year, Dr. Spana, Mr.
Wills and Dr. Hallam were granted
PROXY
STATEMENT, PAGE 28
options
to purchase 250,000, 200,000 and 200,000 shares of common stock, respectively,
at the closing price of our common stock on such date.
Outstanding
Equity Awards at 2009 Fiscal Year-End
The following table summarizes all of
the outstanding equity awards granted to our named executive officers as of June
30, 2009, the end of our fiscal year.
|
Option
awards (1)
|
Stock
awards (2)
|
|||||||
|
Name
|
Option
or
stock
award
grant
date
|
Number
of
securities
underlying
unexercised
options
(#)
exercisable
|
Number
of
securities
underlying
unexercised
options
(#)
unexercisable
|
Option
exercise
price
($)
|
Option
expiration
date
|
Number
of shares or units of stock that have not vested
(#)
|
Market
value of shares or units of stock that have not vested
($) (3)
|
|
|
Carl
Spana
|
07/08/99
|
75,000
|
0
|
4.875
|
07/08/09
|
|||
|
10/05/99
|
150,000
|
0
|
3.0625
|
10/05/09
|
||||
|
08/01/00
|
140,000
|
0
|
5.125
|
08/01/10
|
||||
|
10/01/01
|
100,000
|
0
|
3.19
|
10/01/11
|
||||
|
12/11/02
|
100,000
|
0
|
2.00
|
12/11/12
|
||||
|
07/16/03
|
100,000
|
0
|
3.24
|
07/16/13
|
||||
|
07/01/05
|
56,250
|
18,750
|
3.75
|
07/01/15
|
||||
|
07/01/05
|
83,000
|
0
|
1.75
|
07/01/15
|
||||
|
10/06/06
|
62,500
|
62,500
|
2.49
|
10/06/16
|
||||
|
10/06/06
|
375,000
|
93,750
|
||||||
|
03/26/08
|
70,312
|
210,938
|
0.28
|
03/26/18
|
||||
|
03/26/08
|
11,718
|
35,157
|
0.50
|
03/26/18
|
||||
|
03/26/08
|
11,718
|
35,157
|
0.66
|
03/26/18
|
||||
|
07/01/08
|
0
|
250,000
|
0.18
|
07/01/18
|
||||
|
12/10/08
|
250,000
|
62,500
|
||||||
|
Stephen
T. Wills
|
07/08/99
|
50,000
|
0
|
4.875
|
07/08/09
|
|||
|
10/05/99
|
150,000
|
0
|
3.0625
|
10/05/09
|
||||
|
08/01/00
|
65,000
|
0
|
5.125
|
08/01/10
|
||||
|
10/01/01
|
70,000
|
0
|
3.19
|
10/01/11
|
||||
PROXY
STATEMENT, PAGE 29
|
Option
awards (1)
|
Stock
awards (2)
|
|||||||
|
Name
|
Option
or
stock
award
grant
date
|
Number
of
securities
underlying
unexercised
options
(#)
exercisable
|
Number
of
securities
underlying
unexercised
options
(#)
unexercisable
|
Option
exercise
price
($)
|
Option
expiration
date
|
Number
of shares or units of stock that have not vested
(#)
|
Market
value of shares or units of stock that have not vested
($) (3)
|
|
|
12/11/02
|
80,000
|
0
|
2.00
|
12/11/12
|
||||
|
07/16/03
|
80,000
|
0
|
3.24
|
07/16/13
|
||||
|
07/01/05
|
37,500
|
12,500
|
3.75
|
07/01/15
|
||||
|
07/01/05
|
73,000
|
0
|
1.75
|
07/01/15
|
||||
|
10/06/06
|
50,000
|
50,000
|
2.49
|
10/06/16
|
||||
|
10/06/06
|
300,000
|
75,000
|
||||||
|
03/26/08
|
56,250
|
168,750
|
0.28
|
03/26/18
|
||||
|
03/26/08
|
9,375
|
28,125
|
0.50
|
03/26/18
|
||||
|
03/26/08
|
9,375
|
28,125
|
0.66
|
03/26/18
|
||||
|
07/01/08
|
0
|
200,000
|
0.18
|
07/01/18
|
||||
|
12/10/08
|
250,000
|
62,500
|
||||||
|
Trevor
Hallam
|
05/09/05
|
350,000
|
0
|
1.99
|
05/09/15
|
|||
|
10/06/06
|
50,000
|
50,000
|
2.49
|
10/06/16
|
||||
|
10/06/06
|
300,000
|
75,000
|
||||||
|
03/26/08
|
56,250
|
168,750
|
0.28
|
03/26/18
|
||||
|
03/26/08
|
9,375
|
28,125
|
0.50
|
03/26/18
|
||||
|
03/26/08
|
9,375
|
28,125
|
0.66
|
03/26/18
|
||||
|
07/01/08
|
0
|
200,000
|
0.18
|
07/01/18
|
||||
|
12/10/08
|
250,000
|
62,500
|
||||||
|
(1)
|
Stock option vesting
schedules: all options granted before July 1, 2005 have fully
vested. Options granted on or after July 1, 2005 have the following
vesting schedules:
|
PROXY
STATEMENT, PAGE 30
|
Grant
date:
|
Exercise
Price:
|
Vesting
schedule:
|
|
07/01/05
|
$3.75
|
vests
over four years with ¼ of the shares vesting per year starting on the
first anniversary of the grant date
|
|
07/01/05
|
$1.75
|
vested
over three years with ¼ of the shares vesting on the grant date and ¼ of
the shares vesting each year thereafter starting on the first anniversary
of the grant date
|
|
10/06/06
|
$2.49
|
vests
over four years with ¼ of the shares vesting per year starting on the
first anniversary of the grant date
|
|
03/26/08
|
$0.28,
$0.50 and $0.66
|
vests
over four years with ¼ of the shares vesting per year starting on the
first anniversary of the grant date
|
|
07/01/08
|
$0.18
|
vests
over four years with ¼ of the shares vesting per year starting on the
first anniversary of the grant date
|
|
(2)
|
Stock
awards consist of restricted stock units granted on October 6, 2006 which
vest on March 26, 2010 and restricted stock units granted on December 10,
2008 which vest on December 31, 2009, provided that the named executive
officer remains continuously employed by us through such dates, and which
provide for accelerated vesting on a “change in control” or termination of
employment other than for “cause” or at the election of the named
executive officers (as these terms are defined in employment agreements
with the named executive officers). If the named executive officer is
terminated for cause or voluntarily terminates employment, all unvested
restricted stock units are immediately
forfeited.
|
|
(3)
|
Calculated
by multiplying the number of restricted stock units by $0.25, the closing
market price of our common stock on June 30, 2009, the last trading day of
our most recently completed fiscal
year.
|
TERMINATION
AND CHANGE-IN-CONTROL ARRANGEMENTS
The employment agreements and
restricted stock unit agreements with Dr. Spana, Mr. Wills and Dr. Hallam
contain the following provisions concerning severance compensation and the
vesting of stock options and restricted stock units upon termination of
employment or upon a change in control. The executive’s entitlement to
severance, payment of health benefits and accelerated vesting of options is
contingent on the executive executing a general release of claims against
us.
Termination without severance
compensation. Regardless of whether there has been a change in control,
if we terminate employment for cause or the executive terminates employment
without good reason (as those terms are defined in the employment agreement and
set forth below), then the executive receives only his accrued salary and
vacation benefits through the date of termination. He may also elect to receive
medical and dental benefits pursuant to COBRA for up to two years, but must
remit the cost of coverage to us. Under the terms of our outstanding options and
restricted stock units, all unvested options and restricted stock units would
terminate immediately, and vested options would be exercisable for three months
after termination.
PROXY
STATEMENT, PAGE 31
Severance compensation without a
change in control. If we terminate or fail to extend the employment
agreement without cause, or the executive terminates employment with good
reason, then the executive will receive as severance pay his salary then in
effect, paid on our regular pay schedule, plus medical and dental benefits at
our expense, for a period of two years (Dr. Spana) or 18 months (Mr. Wills and
Dr. Hallam) after the termination date. All unvested options would immediately
vest and be exercisable for two years after the termination date. All unvested
restricted stock units would terminate immediately.
Severance compensation after a
change in control. If, within one year after a change in control, we
terminate employment or the executive terminates employment with good reason,
then the executive will receive as severance pay 200% (Dr. Spana) or 150% (Mr.
Wills and Dr. Hallam) of his salary then in effect, paid in a lump sum, plus
medical and dental benefits at our expense, for a period of two years (Dr.
Spana) or 18 months (Mr. Wills and Dr. Hallam) after the termination date. We
would also reimburse the executive for up to $25,000 in fees and expenses during
the six months following termination, for locating employment. We would also
reimburse the executive for any excise tax he might incur on “excess parachute
payments” (as defined in Section 280G(b) of the Internal Revenue Code). All
unvested options would immediately vest and be exercisable for two years after
the termination date. All unvested restricted stock units will vest upon a
change in control, without regard to whether the executive’s employment is
terminated.
Option vesting upon a change in
control. A change in control by itself does not change compensation or
benefits while the employment agreement remains in effect. However, if any
options are to be terminated in connection with a change in control, those
options will vest in full immediately before the change in control.
Definitions. Under the
employment agreements, a “change in control,” “cause” and “good reason” are
defined as follows:
A “change in control” occurs
when:
|
|
(a)
|
some
person or entity acquires more than 50% of the voting power of our
outstanding securities;
|
|
|
(b)
|
the
individuals who, during any twelve month period, constitute our board of
directors cease to constitute at least a majority of the board of
directors;
|
|
|
(c)
|
we
enter into a merger or consolidation;
or
|
(d) we
sell substantially all our assets.
|
|
The
term “cause” means:
|
|
|
(a)
|
the
occurrence of (i) the executive’s material breach of, or habitual neglect
or failure to perform the material duties which he is required to perform
under, the terms of his employment agreement; (ii) the executive’s
material failure to follow the reasonable directives or policies
established by or at the direction of our board of directors; or (iii) the
executive’s engaging in conduct that is materially detrimental to our
interests such that we sustain a material loss or injury as a result
thereof, provided that the breach or failure of performance is not cured,
to the extent cure is possible, within ten days of the delivery to the
executive of written notice
thereof;
|
PROXY
STATEMENT, PAGE 32
|
|
(b)
|
the
willful breach by the executive of his obligations to us with respect to
confidentiality, invention and non-disclosure, non-competition or
non-solicitation; or
|
|
|
(c)
|
the
conviction of the executive of, or the entry of a pleading of guilty or
nolo contendere by the executive to, any crime involving moral turpitude
or any felony.
|
The term “good reason” means the
occurrence of any of the following, with our failure to cure such circumstances
within 30 days of the delivery to us of written notice by the executive of such
circumstances:
|
|
(a)
|
any
material adverse change in the executive’s duties, authority or
responsibilities, which causes the executive’s position with us to become
of significantly less responsibility, or assignment of duties and
responsibilities inconsistent with the executive’s
position;
|
|
|
(b)
|
a
material reduction in the executive’s
salary;
|
|
|
(c)
|
our
failure to continue in effect any material compensation or benefit plan in
which the executive participates, unless an equitable arrangement has been
made with respect to such plan, or our failure to continue the executive’s
participation therein (or in a substitute or alternative plan) on a basis
not materially less favorable, both in terms of the amount of benefits
provided and the level of the executive’s participation relative to other
participants;
|
|
|
(d)
|
our
failure to continue to provide the executive with benefits substantially
similar to those enjoyed by the executive under any of the company’s
health and welfare insurance, retirement and other fringe-benefit plans
insurance, the taking of any action by us which would directly or
indirectly materially reduce any of such benefits, or our failure to
provide the executive with the number of paid vacation days to which he is
entitled; or
|
|
|
(e)
|
the
relocation of the executive to a location which is a material distance
from Cranbury, New Jersey.
|
STOCK
OWNERSHIP INFORMATION
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The rules of the SEC require us to
disclose late filings of reports of stock ownership and changes in stock
ownership by our directors and officers. To the best of our knowledge, all of
the filings for our directors and officers were made on a timely basis in the
fiscal year ended June 30, 2009.
BENEFICIAL OWNERSHIP OF MANAGEMENT
AND OTHERS
Beneficial ownership tables.
The tables below show the beneficial stock ownership and voting power, as of
March 31, 2010, of:
PROXY
STATEMENT, PAGE 33
· each
director, each of the named executive officers, and all current directors and
officers as a group; and
|
|
·
|
all
persons who, to our knowledge, beneficially own more than five percent of
the common stock or Series A preferred
stock.
|
“Beneficial
ownership” here means direct or indirect voting or investment power over
outstanding stock and stock which a person has the right to acquire now or
within 60 days after March 31, 2010. See the footnotes for more detailed
explanations of the holdings. To our knowledge, the persons named in the tables
beneficially own and have sole voting and investment power over all shares
listed.
The
common stock has one vote per share and the Series A preferred stock has
approximately 50 votes per share. Voting power is calculated on the basis of the
aggregate of common stock and Series A preferred stock outstanding as of March
31, 2010, on which date 107,029,249 shares of common stock and 4,997 shares of
Series A preferred stock were outstanding.
The
address for all members of our management is c/o Palatin Technologies, Inc., 4C
Cedar Brook Drive, Cranbury, NJ 08512. Addresses of other beneficial owners are
in the table.
MANAGEMENT:
|
Class
|
Name
of Beneficial Owner
|
Amount
and Nature of Beneficial Ownership
|
Percent
of
Class
|
Percent
of Total Voting
Power
|
|
Common
|
Carl
Spana, Ph.D.
|
1,405,287
(1)
|
1.3%
|
*
|
|
Common
|
Stephen
T. Wills
|
1,103,428
(2)
|
1.0%
|
*
|
|
Common
|
Trevor
Hallam, Ph.D.
|
1,009,428
(3)
|
*
|
*
|
|
Common
|
John
K.A. Prendergast, Ph.D.
|
581,173
(4)
|
*
|
*
|
|
Common
|
Perry
B. Molinoff, M.D.
|
455,416
(5)
|
*
|
*
|
|
Common
|
Robert
K. deVeer, Jr.
|
310,366
(6)
|
*
|
*
|
|
Common
|
Zola
P. Horovitz, Ph.D.
|
280,833
(7)
|
*
|
*
|
|
Common
|
Robert
I. Taber, Ph.D.
|
275,833
(8)
|
*
|
*
|
|
Common
|
Errol
De Souza, Ph.D.
|
229,583
(9)
|
*
|
*
|
|
Common
|
J.
Stanley Hull
|
187,500
(10)
|
*
|
*
|
|
All
current directors and executive officers as a group (ten
persons)
|
5,838,847
(11)
|
5.2%
|
1.2%
|
*Less
than one percent.
|
(1)
|
Includes 941,750
shares which Dr. Spana has the right to acquire under
options.
|
|
(2)
|
Includes 693,000
shares which Mr. Wills has the right to acquire under
options.
|
|
(3)
|
Includes
625,000 shares which Dr. Hallam has the right to acquire under
options.
|
|
(4)
|
Includes 563,500
shares which Dr. Prendergast has the right to acquire under
options.
|
PROXY
STATEMENT, PAGE 34
|
(5)
|
Includes 445,416
shares which Dr. Molinoff has the right to acquire under
options.
|
|
(6)
|
Includes 309,366
shares which Mr. deVeer has the right to acquire under
options.
|
|
(7)
|
Includes 275,833
shares which Dr. Horovitz has the right to acquire under
options.
|
|
(8)
|
Includes 270,833
shares which Dr. Taber has the right to acquire under
options.
|
|
(9)
|
Includes
229,583 shares which Dr. De Souza has the right to acquire under
options.
|
|
(10)
|
Includes
187,500 shares which Mr. Hull has the right to acquire under
options.
|
|
(11)
|
Includes
4,541,781 shares
which directors and officers have the right to acquire under
options.
|
MORE
THAN 5% BENEFICIAL OWNERS:
|
Class
|
Name
and Address of Beneficial Owner
|
Amount
and Nature of Beneficial Ownership
|
Percent
of
Class
|
Percent
of Total Voting
Power
|
|
Common
|
King
Pharmaceuticals, Inc.
501
Fifth Street
Bristol,
TN 37620
|
5,675,471
|
5.3%
|
5.3%
|
|
Series
A
Preferred
|
Tokenhouse
PTE LTD
9 –
11 Reitergasse
Zurich 8027
SWITZERLAND
|
667
|
13.3%
|
*
|
|
Series
A
Preferred
|
Steven
N. Ostrovsky
43
Nikki Ct.
Morganville,
NJ 07751
|
500
|
10.0%
|
*
|
|
Series
A
Preferred
|
Thomas
L. Cassidy IRA Rollover
38
Canaan Close
New
Canaan, CT 06840
|
500
|
10.0%
|
*
|
|
Series
A
Preferred
|
Jonathan
E. Rothschild
300
Mercer St., #28F
New
York, NY 10003
|
500
|
10.0%
|
*
|
|
Series
A
Preferred
|
103336
Canada Inc.
168
Forest Hill Rd.
Toronto,
Ontario, M5P2M9
|
300
|
6.0%
|
*
|
|
Series
A
Preferred
|
Arthur
J. Nagle
19
Garden Avenue
Bronxville,
NY 10708
|
250
|
5.0%
|
*
|
|
Series
A
Preferred
|
Thomas
P. and Mary E. Heiser, JTWROS
10
Ridge Road
Hopkinton,
MA 01748
|
250
|
5.0%
|
*
|
|
Series
A
Preferred
|
Carl
F. Schwartz
31
West 87th St.
New
York, NY 10016
|
250
|
5.0%
|
*
|
|
Series
A
Preferred
|
Michael
J. Wrubel
3650
N. 36 Avenue, #39
Hollywood,
FL 33021
|
250
|
5.0%
|
*
|
PROXY
STATEMENT, PAGE 35
MORE
THAN 5% BENEFICIAL OWNERS:
|
Class
|
Name
and Address of Beneficial Owner
|
Amount
and Nature of Beneficial Ownership
|
Percent
of
Class
|
Percent
of Total Voting
Power
|
|
Series
A
Preferred
|
Myron
M. Teitelbaum, M.D.
175
Burton Lane
Lawrence,
NY 11559
|
250
|
5.0%
|
*
|
|
Series
A
Preferred
|
Laura
Gold Galleries Ltd. Profit Sharing Trust Park South Gallery at Carnegie
Hall
154
West 57th Street, Suite 114
New
York, NY 10019-3321
|
250
|
5.0%
|
*
|
|
Series
A
Preferred
|
Laura
Gold
180
W. 58th Street
New
York, NY 10019
|
250
|
5.0%
|
*
|
|
|
*Less
than one percent.
|
|
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
|
As a condition of employment, we
require all employees to disclose in writing actual or potential conflicts of
interest, including related party transactions. Our code of corporate conduct
and ethics, which applies to employees, officers and directors, requires that
the Audit Committee review and approve related party transactions. Since
July 1, 2008, there have been no transactions or proposed transactions in
which we were or are to be a participant, in which any related person had or
will have a direct or indirect material interest.
OTHER
ITEMS OF BUSINESS
We are not aware of any matters, other
than the items of business discussed in this proxy statement, which may come
before the meeting. If other items of business properly come before the meeting,
the proxy holders will vote shares in accordance with their
judgment.
STOCKHOLDER
PROPOSALS FOR NEXT ANNUAL MEETING
Stockholders may submit proposals on
matters appropriate for stockholder action at annual meetings in accordance with
regulations adopted by the SEC. To be considered for inclusion in the proxy
statement and form of proxy relating to the next annual meeting of stockholders,
such proposals must be received no later than December 10, 2010. To be
considered for presentation at the 2011 annual meeting, although not included in
the proxy statement, proposals must be received no earlier than January 24, 2011
and no later than February 23, 2011. Proposals that are not received in a timely
manner will not be voted on at the 2011 annual meeting. If a proposal is
received on time, the proxies that management solicits for the meeting may still
exercise discretionary voting authority on the proposal under circumstances
consistent with the proxy rules of the SEC. All stockholder proposals should be
marked for the attention of the Secretary at our executive offices, 4C Cedar
Brook Drive, Cranbury, NJ 08512.
PROXY
STATEMENT, PAGE 36
AVAILABILITY
OF ANNUAL REPORT
A copy of our annual report on Form
10-K for the fiscal year ended June 30, 2009, as filed with the SEC, including
the consolidated financial statements and schedules but excluding exhibits, is
being sent with this proxy statement without charge to each person whose proxy
is being solicited. It is also available free of charge upon written request to
Palatin Technologies, Inc., Attn: Investor Relations, 4C Cedar Brook Drive,
Cranbury, New Jersey 08512, or by calling (609) 495-2200, or at
www.vfnotice.com/Palatin.
Your cooperation in giving this matter
your immediate attention and returning your proxy card or voting by telephone is
greatly appreciated.
By order of the board of
directors,
Stephen T. Wills, Secretary
April 6, 2010
PROXY
STATEMENT, PAGE 37
APPENDIX
A
CERTIFICATE
OF AMENDMENT
OF
RESTATED
CERTIFICATE OF INCORPORATION
OF
PALATIN
TECHNOLOGIES, INC.
Palatin
Technologies, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware, does hereby certify:
FIRST:
The name of the corporation (hereinafter called the “Corporation”)
is Palatin Technologies, Inc.
SECOND:
The date of filing of the Certificate of Incorporation of the Corporation with
the Secretary of State of the State of Delaware was November 21, 1986 under
the name Cinedco, Inc. A Restated Certificate of Incorporation was
filed on November 1, 1993 which contained a change of the name of the
corporation to Interfilm, Inc. Thereafter a Certificate of Amendment was
filed on July 19, 1996 which changed the name of the Corporation to Palatin
Technologies, Inc., a Certificate of Amendment was filed on September 5, 1997,
and a Certificate of Amendment was filed on May 4, 2005.
THIRD:
That at a meeting of the Board of Directors of Palatin Technologies, Inc.,
resolutions were duly adopted setting forth a proposed amendment of the Restated
Certificate of Incorporation, as amended, of said Corporation, declaring said
amendment to be advisable and calling a meeting of the stockholders of said
Corporation for consideration thereof.
FOURTH:
That this Certificate of Amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware by the Board of Directors and stockholders of the
Corporation.
FIFTH:
That the capital of the Corporation shall not be reduced under or by reason of
this Certificate of Amendment.
SIXTH:
That upon the effectiveness of this Certificate of Amendment, Section 1 of the
Article thereof numbered "IV" of the Restated Certificate of Incorporation, as
amended, is hereby amended such that, as amended, said Section 1 shall read in
its entirety as follows:
Section
1. Authorized Capital Stock. The Corporation shall be authorized to
issue two classes of shares of capital stock to be designated, respectively,
“Preferred Stock” and “Common Stock.” The total number of shares of capital
stock which the Corporation shall have the authority to issue is 410,000,000,
comprised of 400,000,000 shares of Common Stock, par value $.01 per share, and
10,000,000 shares of Preferred Stock, par value $.01 per share.
Appendix
A – Page 38
IN WITNESS WHEREOF, said Corporation
has caused this Certificate of Amendment to be signed this ___ day of _______
20___.
By: _____________________
Name: Stephen T.
Wills
Title: Executive Vice
President and
Chief Financial Officer
[END OF
APPENDIX A]
Appendix
A – Page 39
APPENDIX B
CERTIFICATE
OF AMENDMENT
OF
RESTATED
CERTIFICATE OF INCORPORATION
OF
PALATIN
TECHNOLOGIES, INC.
Palatin
Technologies, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware, does hereby certify:
FIRST:
The name of the corporation (hereinafter called the “Corporation”)
is Palatin Technologies, Inc.
SECOND:
The date of filing of the Certificate of Incorporation of the Corporation with
the Secretary of State of the State of Delaware was November 21, 1986 under
the name Cinedco, Inc. A Restated Certificate of Incorporation was
filed on November 1, 1993 which contained a change of the name of the
corporation to Interfilm, Inc. Thereafter a Certificate of Amendment was
filed on July 19, 1996 which changed the name of the Corporation to Palatin
Technologies, Inc., a Certificate of Amendment was filed on September 5, 1997,
and a Certificate of Amendment was filed on May 4, 2005.
THIRD:
That at a meeting of the Board of Directors of Palatin Technologies, Inc.,
resolutions were duly adopted setting forth a proposed amendment of the Restated
Certificate of Incorporation, as amended, of said Corporation, declaring said
amendment to be advisable and calling a meeting of the stockholders of said
Corporation for consideration thereof.
FOURTH:
That this Certificate of Amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware by the Board of Directors and stockholders of the
Corporation.
FIFTH:
That the capital of the Corporation shall not be reduced under or by reason of
this Certificate of Amendment.
SIXTH:
That upon the effectiveness of this Certificate of Amendment, Section 1 of the
Article thereof numbered "IV" of the Restated Certificate of Incorporation, as
amended, is hereby amended such that, as amended, said Section 1 shall read in
its entirety as follows:
Section
1. Authorized Capital Stock. The Corporation shall be authorized to
issue two classes of shares of capital stock to be designated, respectively,
“Preferred Stock” and “Common Stock.” The total number of shares of capital
stock which the Corporation shall have the authority to issue is
[ ],
comprised of
[ ]
shares of Common Stock, par value $.01 per share, and 10,000,000 shares of
Preferred Stock, par value $.01 per share.
Appendix B
– Page 40
On
________ __, 20__, at 12:01 a.m. Eastern Time (the “Effective Date”), each
[ ] shares of Common Stock, par value $0.01
per share, issued and outstanding at such time shall be combined into one (1)
share of Common Stock, par value $0.01 per share (the “Reverse Stock Split”). No
fractional share shall be issued upon the Reverse Stock Split. All shares of
Common Stock (including fractions thereof) issuable upon the Reverse Stock Split
to a given holder shall be aggregated for purposes of determining whether the
Reverse Stock Split would result in the issuance of any fractional share. If,
after the aforementioned aggregation, the Reverse Stock Split would result in
the issuance of a fraction of a share of Common Stock, the Corporation shall, in
lieu of issuing any such fractional share, pay the holder otherwise entitled to
such fraction a sum in cash equal to the fraction multiplied by the fair market
value per share of the Common Stock as determined in a reasonable manner by the
Board of Directors. Following the Effective Date, certificates representing the
shares of Common Stock to be outstanding thereafter shall be exchanged for
certificates now outstanding pursuant to procedures adopted by the Corporation’s
Board of Directors and communicated to those who are to receive new
certificates.
IN WITNESS WHEREOF, said Corporation
has caused this Certificate of Amendment to be signed this ___ day of _______
20___.
By: _____________________
Name: Stephen T.
Wills
Title: Executive Vice
President and
Chief Financial Officer
[END OF
APPENDIX B]
Appendix B
– Page 41
[proxy card front]
ANNUAL MEETING OF STOCKHOLDERS
OF
PALATIN TECHNOLOGIES,
INC.
May 13, 2010
| NOTICE OF INTERNET
AVAILABILITY OF PROXY MATERIAL: The Notice of Meeting, proxy statement and proxy card are available at www.vfnotice.com/Palatin. |
| Please sign, date and
mail your proxy card in the envelope provided as soon as possible. |
Please detach along
perforated line and mail in the envelope provided.
| THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND
"FOR" PROPOSALS 2, 3, 4 AND 5. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x |
|||||||
| 1. Election of Directors: | 2. To ratify the appointment of KPMG LLP as Palatin's independent auditors for the fiscal year ending June 30, 2010. | FOR o |
AGAINST o |
ABSTAIN o |
||||
| NOMINEES o Carl Spana, Ph.D. o John K.A. Prendergast, Ph.D. o Perry B. Molinoff, M.D. o Robert K. deVeer, Jr. o Zola P. Horovitz, Ph.D. o Robert I. Taber, Ph.D. o Errol De Souza, Ph.D. o J. Stanley Hull |
||||||||
| o FOR ALL NOMINEES |
3. To approve an amendment
to our restated certificate of incorporation which will increase the
number of authorized shares of common stock from 150,000,000 to
400,000,000.
|
FOR o |
AGAINST o |
ABSTAIN o |
||||
| 4. To approve an amendment to our restated certificate of incorporation which will effect a reverse stock split of our common stock, depending on a determination by Palatin's board of directors that the reverse stock split is in the best interest of Palatin and its stockholders. | FOR o |
AGAINST o |
ABSTAIN o |
|||||
| o WITHHOLD
AUTHORITY FOR ALL NOMINEES |
||||||||
| 5. In their discretion, the proxy holders are authorized to vote upon such other matters as may properly come before the meeting or any postponement or adjournment of the meeting. | FOR o |
AGAINST o |
ABSTAIN o |
|||||
| o FOR ALL EXCEPT (See instructions below) |
||||||||
| The proxy holders will vote the shares of the undersigned stockholder as instructed above. If no choice is specified by the stockholder, the proxy holders will vote the shares FOR proposals no. 1, 2, 3, 4 and 5 and on any other matter coming before the meeting in the discretion of the proxy holders. | ||||||||
| The undersigned revokes any proxy previously given to vote or act with respect to such shares and ratifies and confirms all actions which the proxy holders or their substitutes may lawfully do in accordance with the instructions on this proxy card. | ||||||||
| Please complete, sign, date and return this proxy card in the enclosed envelope. No postage is required if mailed in the United States. | ||||||||
| (INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark "FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to withhold, as shown here: n | ||||||||
| |
||||||||
| To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. | o | |||||||
| Signature of stockholder | Date: | Signature of stockholder | Date: |
| NOTE: | Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. |
[proxy card back]
PALATIN TECHNOLOGIES, INC.
4C CEDAR BROOK DRIVE
CRANBURY, NEW JERSEY 08512
CRANBURY, NEW JERSEY 08512
ANNUAL MEETING OF STOCKHOLDERS - MAY
13, 2010
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned appoints
Carl Spana, Ph.D. and Stephen T. Wills (each with full power to act without the
other) as proxy holders with full power of substitution, to vote all shares of
common stock and Series A Convertible Preferred Stock of Palatin Technologies,
Inc., a Delaware corporation, held of record by the undersigned as of April 5,
2010 at Palatin's annual meeting of stockholders to be held Thursday, May 13,
2010 and at any postponement or adjournment of the meeting.
(Continued and to be signed on
reverse side)