United States Securities And Exchange Commission
Washington, DC 20549
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SCHEDULE 14A
(Rule 14a-101)
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-5(d) (1))
PROVECTUS PHARMACEUTICALS, INC.
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
[ ] Fee previously paid with preliminary materials.
[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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PROVECTUS 7327 Oak Ridge Highway, Suite A
PHARMACEUTICALS, INC. Knoxville, TN 37931
phone 865/769-4011
fax 865/769-4013
Notice of 2004 Annual Meeting of Stockholders
To Be Held on May 27, 2004
To Our Stockholders:
We will hold the 2004 annual meeting of the stockholders of Provectus
Pharmaceuticals, Inc. on Thursday, May 27, 2004, beginning at 3:00 p.m. Eastern
time, at the offices of Baker, Donelson, Bearman, Caldwell & Berkowitz located
at Riverview Tower, Suite 2200, 900 South Gay Street, Knoxville, Tennessee
37902. The annual meeting is being held for the following purposes:
1. To elect four directors to serve on our Board of Directors for a
one-year term; and
2. To approve an amendment to our Amended and Restated 2002 Stock Plan to
increase the number of shares reserved for issuance from 2,000,000 to
3,000,000
3. To transact any other business that properly comes before the annual
meeting.
Only stockholders of record as of the close of business on April 20, 2004
will be entitled to notice of and to vote at the annual meeting.
You are cordially invited to attend the annual meeting. Regardless of
whether you plan to attend the annual meeting in person, please complete, sign
and date the enclosed proxy card and return it promptly in the accompanying
postage-paid envelope.
By order of the Board of Directors,
Peter R. Culpepper
Secretary
April 29, 2004
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YOUR VOTE IS IMPORTANT
TO ENSURE THAT YOU ARE REPRESENTED AT THE ANNUAL MEETING, PLEASE COMPLETE, SIGN,
DATE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE,
REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON. NO
ADDITIONAL POSTAGE IS NECESSARY IF THE PROXY IS MAILED IN THE UNITED STATES. YOU
MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED AT THE MEETING.
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PROVECTUS 7327 Oak Ridge Highway, Suite A
PHARMACEUTICALS, INC. Knoxville, TN 37931
phone 865/769-4011
fax 865/769-4013
PROXY Statement for
2004 Annual Meeting of Stockholders
to be held on May 27, 2004
We are delivering these proxy materials to solicit proxies on behalf of the
Board of Directors of Provectus Pharmaceuticals, Inc., for the annual meeting of
stockholders to be held on Thursday, May 27, 2004, beginning at 3:00 p.m.
Eastern time, at Riverview Tower, Suite 2200, 900 South Gay Street, Knoxville,
Tennessee.
We are mailing this proxy statement, together with a form of proxy and our
annual report on Form 10-KSB for the year ended December 31, 2003, beginning on
April 29, 2004.
ABOUT THE ANNUAL MEETING
What is the purpose of the Annual Meeting?
At the annual meeting, stockholders will act upon the following matters:
o The election of four directors to serve on our Board of Directors
for a one-year term.
o The approval of an increase in the number of shares reserved for
issuance under our 2002 Stock Plan from 2,000,000 to 3,000,000.
Who is entitled to vote?
Only stockholders of record at the close of business on April 20, 2004, the
record date for the annual meeting, are entitled to receive notice of the annual
meeting and to vote the shares of common stock that they held on that date at
the annual meeting. Each outstanding share of common stock entitles its holder
to cast one vote on each matter to be voted on at the annual meeting.
What constitutes a quorum?
The presence at the annual meeting, in person or by proxy, of the holders
of a majority of the shares of the common stock outstanding on the record date
will constitute a quorum. As of the record date, there were 13,507,030
outstanding shares of common stock. Shares held by stockholders present at the
annual meeting who elect to abstain from voting nonetheless will be included in
the calculation of the number of shares considered present at the annual
meeting.
How do I vote?
If you complete and properly sign the accompanying proxy card and return it
to us, the proxy holders named on the proxy card will vote your shares as you
direct. If you are a registered stockholder and attend the annual meeting, you
may deliver your completed proxy card or vote in person at the meeting. If you
hold your shares in a brokerage account or in "street name" and you wish to vote
at the annual meeting, you will need to obtain a proxy from the broker or other
nominee who holds your shares.
Can I change my vote after I return my proxy card?
Yes. Even after you have submitted your proxy card, you may change your
vote at any time before the proxy is exercised by filing with the Secretary
either a notice of revocation or a duly executed proxy card bearing a
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later date. "Street name" stockholders must contact your broker or other nominee
and follow its instructions if they wish to change their votes. The powers of
the proxy holders will be suspended if you attend the annual meeting in person
and so request, although your attendance at the annual meeting will not by
itself revoke a previously granted proxy.
What are the Board's recommendations?
Unless you give other instructions on your proxy card, the persons named as
proxies on the proxy card will vote your shares in accordance with the
recommendations of the Board of Directors. The Board recommends a vote FOR
election of each of the four candidates nominated to serve on our Board of
Directors for a one-year term and FOR approval of the proposed amendment to our
2002 Stock Plan to increase the number of shares reserved for issuance from
2,000,000 to 3,000,000.
If any other business is properly brought before the annual meeting, the
proxies will vote your shares as the Board of Directors recommends. If the Board
does not give a recommendation, the proxies will vote your shares as they may
determine in their own discretion.
What vote is required to approve each item?
Election of Directors
The affirmative vote of a plurality of the votes cast at the annual meeting
is required for the election of directors. If you are present at the meeting and
you abstain from voting for one or more directors, your shares will not be
counted in the vote for any nominee, although they will be counted for the
purpose of determining whether there is a quorum present. A properly executed
proxy card marked "WITHHOLD AUTHORITY" with respect to the election of one or
more directors will not be voted with respect to the director or directors
indicated and will be treated as an abstention with respect to voting on the
director or directors.
Approval of the Amendment to the Amended and Restated 2002 Stock
Plan and Other Items
For approval of the amendment to the 2002 Stock Plan and for any other item
of business that properly comes before the annual meeting, the affirmative vote
of the holders of a majority of the common stock present at the annual meeting,
in person or by proxy, and entitled to vote will be required for approval. The
shares of any stockholder present at the meeting who abstains from voting on the
proposed ratification or on any other item will not be counted in the vote,
although they will be counted for the purpose of determining whether there is a
quorum at the annual meeting. An abstention, therefore, will have the effect of
a negative vote. A properly executed proxy card marked "ABSTAIN" with respect to
any such matter will not be voted and will be treated as an abstention with
respect to that matter.
In general, if you hold shares of common stock in "street name" through a
broker or other nominee, and if your broker or other nominee is not instructed
or otherwise empowered to vote your shares at a meeting with respect to a
particular matter, then your shares will constitute "broker non-votes" as to the
matter. In the election of directors, brokers generally have discretion to vote
your shares even in the absence of express instructions from you. As to all
matters, a broker non-vote will have the same effect as an abstention.
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STOCK OWNERSHIP
The table below shows the amount of our common stock beneficially owned
as of April 20, 2004 by each of our directors and officers, each person whom we
believe beneficially owns more than 5% of our outstanding voting stock, and all
executive officers and directors as a group.
Amount and Nature of Percentage
Name and Address (1) Beneficial Ownership (2) of Class (3)
-------------------- ------------------------ ------------
H. Craig Dees................................................. 1,516,609 (4) 11.1%
Timothy C. Scott.............................................. 1,516,269 (5) 11.1
Eric A. Wachter............................................... 1,528,849 (6) 11.2
Peter R. Culpepper............................................ 0 0
Stuart Fuchs.................................................. 826,418 (7) 6.1
Gryffindor Capital Partners I, L.L.C.......................... 452,919 (8) 3.4
150 North Wacker Drive, Suite 800
Chicago, IL 60606
Walter G. Fisher.............................................. 802,315 (9) 5.9
2009 Still Water Lane
Knoxville, TN 37922
John Smolik................................................... 897,339 (10) 6.6
119 Tanasi Court
Loudon, TN 37774
All directors and executive officers as a group
(5 persons)................................................ 5,388,145 (11) 38.8
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(1) If no address is given, the named individual is an executive officer or
director of Provectus Pharmaceuticals, Inc., whose business address is 7327
Oak Ridge Highway, Suite A, Knoxville, TN 37931.
(2) Shares of common stock that a person has the right to acquire within 60
days of April 20, 2004 are deemed outstanding for computing the percentage
ownership of the person having the right to acquire such shares, but are
not deemed outstanding for computing the percentage ownership of any other
person. Except as indicated by a note, each stockholder listed in the table
has sole voting and investment power as to the shares owned by that person.
(3) As of April 20, 2004, there were 13,507,030 shares of common stock issued
and outstanding.
(4) Dr. Dees' beneficial ownership includes 536 shares held by Dees Family
Foundation, an entity established for the benefit of Dr. Dees' family, and
118,750 shares subject to options which are exercisable within 60 days.
(5) Dr. Scott's beneficial ownership includes 55,996 shares held by Scott
Family Investment Limited Partnership, a limited partnership established
for the benefit of Dr. Scott's family, and 118,750 shares subject to
options which are exercisable within 60 days.
(6) Dr. Wachter's beneficial ownership includes 4,867 shares held by the Eric
A. Wachter 1998 Charitable Remainder Unitrust and 118,750 shares subject to
options which are exercisable within 60 days.
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(7) Mr. Fuchs's beneficial ownership includes 226,459 shares held by SFF
Limited Partnership, a limited partnership of which Mr. Fuchs is the
general partner; 348,499 shares an IRA of Mr. Fuch; 25,000 shares subject
to options which are exercisable within 60 days and 226,460 shares held by
Gryffindor Capital Partners I, L.L.C., a Delaware limited liability company
of which Mr. Fuchs is the managing principal ("Gryffindor"). Our
relationship with Gryffindor is discussed in more detail below under the
heading "Certain Relationships and Related Transactions-Investment by
Gryffindor."
(8) Dr. Fisher's beneficial ownership includes 55,577 shares held by Fisher
Family Investment Limited Partnership and 9,734 shares held by the Walt
Fisher 1998 Charitable Remainder Unitrust.
(9) Mr. Smolik's beneficial ownership includes 48,666 shares held by Smolik
Family LLP.
(10) Gryffindor's beneficial ownership includes 226,459 shares held by SFF
Limited Partnership, a limited partnership of which Stuart Fuchs, one of
our directors, is the general partner. Gryffindor disclaims beneficial
ownership of these shares.
(11) Includes 381,250 shares subject to options which are exercisable within 60
days.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The federal securities laws require our directors and executive officers and
persons who beneficially own more than 10% of a registered class of our equity
securities to file with the SEC initial reports of ownership and reports of
changes in ownership of our securities. Based solely on our review of the copies
of these forms received by us or representations from certain reporting persons,
we believe that SEC beneficial ownership reporting requirements for 2003 were
met.
PROPOSAL 1:
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ELECTION OF DIRECTORS
The persons listed below have been nominated by the Board of Directors to
serve as directors for a one-year term expiring at the annual meeting of
stockholders occurring in 2005. Each nominee has consented to serve on the Board
of Directors. If any nominee were to become unavailable to serve as a director,
the Board of Directors may designate a substitute nominee. In that case, the
persons named as proxies on the accompanying proxy card will vote for the
substitute nominee designated by the Board of Directors.
H. Craig Dees, Ph.D., 52, has served as our Chief Executive Officer and as
a member of our Board of Directors since we acquired PPI on April 23, 2002.
Before joining us, from 1997 to 2002 he served as senior member of the
management team of Photogen Technologies, Inc., including serving as a member of
the Board of Directors of Photogen from 1997 to 2000. Prior to joining Photogen,
Dr. Dees served as a Group Leader at the Oak Ridge National Laboratory, and as a
senior member of the management teams of LipoGen Inc., a medical diagnostic
company which used genetic engineering technologies to manufacture and
distribute diagnostic assay kits for auto-immune diseases, and TechAmerica Group
Inc., now a part of Boehringer Ingelheim Vetmedica, Inc., the U.S. animal health
subsidiary of Boehringer Ingelhem GmbH, an international chemical and
pharmaceutical company headquartered in Germany. He earned a Ph.D. in Molecular
Virology from the University of Wisconsin - Madison in 1984.
Timothy C. Scott, Ph.D., 46, has served as our President and as a member of
our Board of Directors since we acquired PPI on April 23, 2002. Prior to joining
us, Dr. Scott was as a senior member of the Photogen management team from 1997
to 2002, including serving as Photogen's Chief Operating Officer from 1999 to
2002, as a director of Photogen from 1997 to 2000, and as interim CEO for a
period in 2000. Before joining Photogen, he served as senior management of
Genase LLC, a developer of enzymes for fabric treatment, and held senior
research and management positions at Oak Ridge National Laboratory. Dr. Scott
earned a Ph.D. in Chemical Engineering from the University of Wisconsin -
Madison in 1985.
Eric A. Wachter, Ph.D., 41, has served as our Vice President -
Pharmaceuticals and as a member of our Board of Directors since we acquired PPI
on April 23, 2002. Prior to joining us, from 1997 to 2002 he was a senior member
of the management team of Photogen, including serving as Secretary and a
director of Photogen since 1997
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and as Vice President and Secretary and a director of Photogen since 1999. Prior
to joining Photogen, Dr. Wachter served as a senior research staff member with
Oak Ridge National Laboratory. He earned a Ph.D. in Chemistry from the
University of Wisconsin - Madison in 1988.
Stuart Fuchs, 57, has served as a member of our Board of Directors since
January 23, 2003. He is the co-founder and managing principal of Gryffindor
since January 2000, a Chicago-based venture capital firm. Before joining
Gryffindor, he was a founding stockholder of several biotech companies,
including Angiogen LLC (since 1998), which develops combinations of drugs to
stimulate in vivo production of factors that inhibit the growth of blood vessels
in tumors, and Nace Pharma LLC (since 1996), which develops drugs that employ
novel drug delivery technologies. Through Nace Resources Inc., a Delaware
corporation providing strategic and financial advice to companies in the
technology sector, Mr. Fuchs has formed or participated in groups of investors
on behalf of several companies, including Miicro Inc., Celsion Corp. and
Photogen. Before founding Nace Resources Inc., he served for 19 years as an
investment banker with Goldman, Sachs & Co., where he co-managed the firm's
public finance activities for the Midwest region. Before joining Goldman, Sachs
& Co., Mr. Fuchs was a lawyer in private practice with Barrett Smith Schapiro &
Simon in New York. Mr. Fuchs holds an A.B. degree from Harvard College and a
J.D. from Harvard Law School and is a member of the Association of the Bar of
the City of New York.
The Board of Directors recommends that the stockholders vote FOR each of
the nominees for election to the Board of Directors named above.
PROPOSAL 2:
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AMENDMENT TO THE AMENDED AND RESTATED 2002 STOCK PLAN
The Board of Directors has approved an amendment to our Amended and
Restated 2002 Stock Plan, subject to stockholder approval to increase the number
of shares reserved for issuance under the Plan from 2,000,000 shares to
3,000,000. The Plan was last approved by the stockholders at the annual meeting
in 2003. Our Board has determined that an increase in the reserve of shares is
necessary, especially in light of the fact that as of April 20, 2004, only
500,000 shares remain in the reserve. The Board believes that we must offer a
competitive equity compensation program if we are to continue to successfully
attract and retain the most qualified candidates as employees, directors and
consultants. The Board expects that the Plan, as amended, will be an important
factor in attracting and retaining the personnel essential to our success and in
motivating these individuals to strive to enhance our growth and profitability.
The opportunity to acquire an equity interest will align the economic interest
of these individuals with those of other stockholders, thereby benefiting all of
our stockholders. The Plan remains unchanged in all other respects.
The Plan provides for the grant of stock options, stock appreciation
rights, rights to purchase restricted stock and long-term performance awards.
Our employees, consultants and directors who are not employees whose present and
potential contributions are important to our continued success are eligible to
receive awards. The Plan is administered by the Board of Directors which has the
power to authorize awards and determine their terms and conditions. The Plan
will remain in effect until all awards under the Plan have been issued, expired
or otherwise terminated or the Plan is terminated by the Board of Directors.
However, no award may be granted more than ten years after the date of the
Plan's approval (2013). Generally, a participant's awards issued under the Plan
are not transferable except by will or by the laws of descent and distribution.
The Board of Directors recommends that the stockholders vote FOR the
adoption of this proposal.
INFORMATION ABOUT THE BOARD OF DIRECTORS
How often did the Board of Directors meet in 2003?
The Board of Directors met once and took action by unanimous written
consent 11 times during 2003. Each Board member attended more than 75% of the
total number of meetings of the Board and its committees on which he served.
Members of the Board of Directors are encouraged to attend the annual meeting.
All members of our Board attended the 2003 annual meeting of stockholders.
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How does the Board of Directors operate?
Because the Board of Directors consists of only four members and our
operations remain amenable to oversight by a limited number of directors, the
Board has not delegated any of its functions to committees. None of the members
of our Board of Directors is considered independent. The Board has not adopted
either a nominating or audit committee charter.
The entire Board of Directors acts as our audit committee as permitted
under Section 3(a)(58)(B) of the Securities Exchange Act of 1934 and as our
nominating committee. The Board views its duties as an audit committee as
follows:
o Review recommendations of independent auditors concerning our
accounting principles, internal controls and accounting
procedures and practices;
o Review the scope of the annual audit;
o Approve or disapprove each professional service or type of
service other than standard auditing services to be provided by
the auditors; and
o Review and discuss with the independent auditors the audited
financial statements.
The entire Board of Directors acts as our nominating committee. The Board
has no set procedures or policy on the selection of nominees or evaluation of
shareholder recommendations and will consider these issues on a case-by-case
basis. The Board will consider shareholder recommendations for director nominees
that are properly received in accordance with our bylaws and the applicable
rules and regulations of the Securities and Exchange Commission. For more
information, please see the section entitled "Stockholder Proposals for 2005
Annual Meeting of Stockholders" below. Stockholders who wish to contact the
members of the Board of Directors may do so by sending an e-mail addressed to
them at info@pvct.com.
How are directors compensated?
Three of our four directors, Drs. Dees, Scott and Wachter, are also
full-time employees. As discussed below under the heading "EXECUTIVE OFFICER
COMPENSATION," they are compensated for their service in those roles. They are
not separately compensated for their service as directors.
We reimburse Mr. Fuchs for expenses he incurs in fulfilling his duties as a
director, including attending meetings of the Board of Directors. We do not
otherwise compensate Mr. Fuchs for his services as a director.
On the date of each annual meeting of shareholders, each member of the
Board receives options exercisable for 25,000 shares of our common stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Acquisition of Provectus Pharmaceuticals, Inc.
On April 23, 2002, we acquired Provectus Pharmaceuticals, Inc., (a
privately held company which we refer to as "PPI") by issuing 6,680,000 shares
of our common stock to its stockholders in exchange for all of the issued and
outstanding stock of PPI. As a result of this transaction, PPI became our wholly
owned subsidiary. H. Craig Dees, our Chief Executive Officer and one of our
directors, was the Chief Executive Officer, a director and a stockholder of PPI.
Timothy C. Scott, our President and one of our directors, was the President, a
director and a stockholder of PPI. Eric A. Wachter, our Vice President -
Pharmaceuticals and one of our directors, was the Vice President -
Pharmaceuticals, a director and a stockholder of PPI. Drs. Dees, Scott and
Wachter had no relationship with us Company prior to the acquisition of PPI. We
believe that the terms of the acquisition of PPI were obtained by arms-length
bargaining.
Agreement with Nace Pharma
On June 7, 2002, we entered into a letter agreement with Nace Pharma under
which Nace Pharma has agreed to act as our representative to introduce us and
our products to certain designated major pharmaceutical
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companies such as Pfizer Inc. and Bayer A.G. In the letter agreement, we granted
Nace Pharma warrants for the purchase of 100,000 shares of our common stock at
an exercise price of approximately $2.29 per share. These warrants will become
exercisable only when and if Nace Pharma successfully introduces us to one of
the designated major pharmaceutical companies and that introduction results in a
transaction with an estimated value to us of at least $10 million, and will
expire on June 7, 2005 if not exercised before that date. In addition to the
warrants, the letter agreement provides that we will pay Nace a portion of any
revenues we receive from any of the designated major pharmaceutical companies:
2.5% of the first $50 million in cumulative revenues, and 5.0% of any revenues
beyond $50 million. Since we signed the letter agreement with Nace Pharma,
Stuart Fuchs, one of the principals of Nace Pharma, has become one of our
directors. We believe that the terms of our agreement with Nace Pharma were
obtained by arms-length bargaining prior to the time Mr. Fuchs became a
director.
Agreement with Nace Resources
On August 29, 2002, we entered into a letter agreement with Nace Resources
under which Nace Resources has agreed to provide us with certain investment
banking services focusing on obtaining investment in our business through a
private placement of our securities. If Nace Resources assists us in obtaining a
successful investment, the letter agreement provides that we will be obligated
to pay Nace Resources 5% of any cash consideration we receive in the investment
transaction, as well as warrants for the purchase of our common stock at an
exercise price equal to the price per share paid by investors in the investment
transaction. The number of shares of our common stock that would be subject to
these warrants would be equal to 5% of the number of shares issued or issuable
to investors in the investment transaction. Since we signed the letter agreement
with Nace Resources, Stuart Fuchs, one of its principals, has become one of our
directors. We believe that the terms of our agreement with Nace Resources were
obtained by arms-length bargaining prior to the time Mr. Fuchs became one of our
directors.
Acquisition of Valley Pharmaceuticals, Inc.
On November 19, 2002, we acquired Valley Pharmaceuticals, Inc. by merging
PPI with and into Valley. As a result of this transaction, Valley became our
wholly owned subsidiary and changed its name to "Xantech Pharmaceuticals, Inc."
As consideration for the acquisition of Valley, we issued an aggregate of
500,007 shares of common stock to the Valley stockholders, who were the five
scientists who initially founded Valley (under the name Photogen, Inc.). Drs.
Dees, Scott and Wachter were officers and directors and stockholders of Valley.
We believe that the terms of the transaction are no less favorable to us than
terms that could have been determined through arms-length bargaining.
Investment by Gryffindor
On November 26, 2002, Gryffindor purchased our $1 million Convertible
Secured Promissory Note dated November 26, 2002. This Note bears interest at 8%
per annum, payable quarterly in arrears, and is due and payable in full on
November 26, 2004. Subject to certain exceptions, the Note is convertible into
shares of our common stock on or after November 26, 2003, at which time the
principal amount of the Note is convertible into common stock at the rate of one
share for each $0.737 of principal so converted and any accrued but unpaid
interest on the Note is convertible at the rate of one share for each $0.55 of
accrued but unpaid interest so converted. Our obligations under the Note are
secured by a first priority security interest in all of our assets, including
the capital stock of our wholly owned subsidiary Xantech. In addition, our
obligations to Gryffindor are guaranteed by Xantech, and Xantech's guarantee is
secured by a first priority security interest in all of Xantech's assets.
Pursuant to our agreement with Gryffindor, we also issued to Gryffindor and to
Stuart Fuchs, the managing principal of Gryffindor, Common Stock Purchase
Warrants dated November 26, 2002, entitling Gryffindor and Mr. Fuchs to
purchase, in the aggregate, up to 452,919 shares of common stock at a price of
$0.001 per share. Simultaneously with the completion of the these transactions,
Gryffindor and Mr. Fuchs exercised the warrants in their entirety, and we issued
226,460 shares of our common stock to Gryffindor and 226,459 shares to Mr.
Fuchs. On January 23, 2003, as required by our agreement with Gryffindor, Mr.
Fuchs became one of our directors. We believe that the terms of these
transactions were obtained by arms-length bargaining prior to the time Mr. Fuchs
became one of our directors.
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EXECUTIVE OFFICER COMPENSATION
The table below shows the compensation for services in all capacities we
paid during the year ended December 31, 2003 to our Chief Executive Officer and
the other executive officers during the year ended December 31, 2003 who
received more than $100,000:
Summary Compensation Table
Long Term
Annual Compensation Compensation
Securities Underlying All Other
Name and Position Year Salary ($) Bonus($) Options/SARs(#) Compensation(1)
----------------- ---- ---------- -------- --------------- ---------------
H. Craig Dees........... 2003 131,250 -- 100,000 --
Chief Executive Officer 2002 18,750 -- $18,750
Timothy C. Scott........ 2003 131,250 -- 100,000 --
President 2002 18,750 -- $18,750
Eric A. Wachter......... 2003 131,250 -- 100,000 --
Vice 2002 18,750 -- $18,750
President--Pharmaceuticals
(1) Drs. Dees, Scott and Wachter served without salary from April 23, 2002
until November 16, 2002. Beginning November 16, 2002, we began paying them
their respective regular salaries. From November 16, 2002 to December 31,
2002, we also paid them an amount equal to their salary for that period as
compensation for their earlier service without salary.
Other Executive Officer
Serving as an executive officer in addition to those listed above is Peter
R. Culpepper who was appointed to serve as our Chief Financial Officer in
February 2004. Previously, Mr. Culpepper served as Chief Financial Officer for
Felix Culpepper International, Inc. from 2001 to 2004; was a Registered
Representative with AXA Advisors, LLC from 2002 to 2003; has served as Chief
Accounting Officer and Corporate Controller for Neptec, Inc. from 2000 to 2001;
has served in various Senior Director positions with Metromedia Affiliated
Companies from 1998 to 2000; has served in various Senior Director and other
financial positions with Paging Network, Inc. from 1993 to 1998; and has served
in a variety of financial roles in public accounting and industry from 1982 to
1993. He earned a Masters in Business Administration in Finance from the
University of Maryland - College Park in 1992 and an undergraduate degree from
the College of William and Mary - Williamsburg, Virginia in 1982. He is a
licensed Certified Public Accountant in both Tennessee and Maryland and is a
faculty member with the University of Phoenix.
Option Grants in Last Fiscal Year
% of total options
Number of shares granted to employees Exercise Expiration
Name underlying options in fiscal year price ($/sh) Date
---- ------------------ -------------- ----------- ----
H. Craig Dees.................. 75,000 17.6 0.32 2013
25,000 5.9 0.60 2013
Timothy C. Scott............... 75,000 17.6 0.32 2013
25,000 5.9 0.60 2013
Eric A. Wachter................ 75,000 17.6 0.32 2013
25,000 5.9 0.60 2013
Aggregated Option/SAR Exercises in Last Fiscal Year And Fiscal Year-End
Option/SAR Values
8
The following table discloses information regarding stock options held at
the end of or exercised in the year 2003 for each of the executive officers
listed in the Summary Compensation Table above.
Shares Securities underlying Value of unexercised
acquired on Value unexercised options in-the-money options
Name exercise(1) realized (1) at December 31, 2003 at December 31, 2003 (2)
---- ----------- ------------ -------------------- ------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
H. Craig Dees........ --- --- 43,750 56,250 $35,875 $55,125
Timothy C. Scott .... --- --- 43,750 56,250 $35,875 $55,125
Eric A. Wachter...... --- --- 43,750 56,250 $35,875 $55,125
-----------------
(1) As of December 31, 2003, no options have been exercised by the executive
officers under the Amended and Restated 2002 Stock Option Plan.
(2) Based on the closing price of the OTCC Bulletin Board of $1.30 per share as
of April 20, 2004.
Employment Agreements
As a condition to the loan we obtained from Gryffindor which we described
above under the section entitled "Certain Relationships and Related
Transactions," we entered into Confidentiality, Inventions and Non-Competition
Agreements with Drs. Dees, Scott, and Wachter. These agreements prohibit Drs.
Dees, Scott, and Wachter each from disclosing our confidential information at
any time while he is employed by us or during the five-year period after his
employment ends for any reason. These agreements also provide that any invention
or development that Dr. Dees, Dr. Scott, or Dr. Wachter may invent as a result
of the work he does for us during his employment or during the one-year period
after his employment ends for any reason belongs to us. Finally, these
agreements prevent each of Drs. Dees, Scott, or Wachter from engaging in certain
kinds of competition with us for a period of 18 months after his employment ends
for any reason. We believe that these provisions are prudent practice for
technology-intensive businesses such as ours, and similar provisions are
included in the employment agreements of executive officers of most
biopharmaceutical companies.
Equity Compensation Plan Information
The table below sets forth certain information regarding shares available
as of December 31, 2003 for issuance under our equity compensation plans:
(a) (b) (c)
Number of
securities
remaining
available for future
Number of issuance under
securities to be equity
issued upon Weighted-average compensation
exercise of exercise price of plans
outstanding outstanding (excluding
options, warrants options, warrants securities reflected
Category and rights and rights in column (a))
Equity compensation plans approved by
stockholders............................... 356,250 $ 0.40 1,643,750
Equity compensation plans not approved by
stockholders (1)(2)........................ 180,000 $ 1.49 -
------- ---------
Total.................................. 536,250 1,643,750
======= =========
------------
(1) In connection with our acquisition of Pure-ific, L.L.C. ("Pure-ific"), we
agreed to issue warrants to the former owners of Pure-ific entitling them
to purchase an aggregate of 80,000 shares of our common stock at an
exercise price of $0.50 per share (the closing price of our common stock on
December 5, 2002). We will issue these warrants upon (i) the achievement of
certain targets for sales of Pure-ific personal sanitizing sprays; and (ii)
December 5, 2003, 2004 and 2005. These warrants have not been approved by
the stockholders.
9
(2) We have granted Nace Pharma warrants for the purchase of an aggregate of
100,000 shares of our common stock at an exercise price of approximately
$2.29 per share. These warrants will become exercisable only when and if
Nace Pharma successfully introduces us to one of the designated major
pharmaceutical companies and that introduction results in a transaction
with an estimated value to us of at least $10 million, and will expire on
June 7, 2005 if not exercised before that date. Our agreement with Nace
Pharma is discussed in more detail above under the heading "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS-Agreement with Nace Pharma." These
warrants have not been approved by the stockholders.
REPORT OF THE BOARD OF DIRECTORS ACTING AS THE AUDIT COMMITTEE
The Board of Directors serves as our audit committee. None of the members
of the Board are independent. The Board acting as audit committee reviews our
financial reporting process. In this context, the Board
o has reviewed and discussed with management the audited financial statements
for the year ended December 31, 2003.
o has discussed with BDO Seidman, LLP, our independent auditors, the matters
required to be discussed by Statement on auditing Standards No. 61, as
modified or supplemented.
o has received the written disclosures and the letter from BDO Seidman, LLP,
required by Independence Standards Board Standard No. 1 ("Independence
Discussions with Audit Committees"), as modified or supplemented, and has
discussed with BDO Seidman, LLP, the independent accountant's independence.
Based on this review and the discussions referred to above, the Board
determined that the audited financial statements be included in our Annual
Report on Form 10-KSB for the year ended December 31, 2003, for filing with the
Securities and Exchange Commission. The Board also appointed BDO Seidman, LLP,
as our independent auditor for 2004.
This report is submitted on behalf of the members of the Board of Directors
acting as the Audit Committee:
H. Craig Dees Timothy C. Scott
Eric A. Wachter Stuart Fuchs
The Report of the Board acting as the Audit Committee set out above shall
not be deemed "soliciting material" or to be "filed" with the Securities and
Exchange Commission, nor shall it be incorporated by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, except to the extent that we specifically incorporate this information
by reference and shall not otherwise be deemed filed under these Acts.
AUDIT FEES
The firm of BDO Seidman, LLP, served as our independent auditors and
audited our financial statements for 2003. We expect that representatives of BDO
Seidman, LLP, will be present at the annual meeting. They will be given an
opportunity to make a statement if they so desire and will be available to
respond to appropriate questions. The table below sets out the fees we paid to
BDO Seidman, LLP, our independent auditors for 2002 and 2003.
2002 2003
------- -------
Audit fees..................................... $28,000 $53,400
Audit-related fees............................. -- --
Tax fees....................................... -- --
All other fees................................. -- --
-------- -------
Total....................................... $28,000 $53,400
======== =======
10
It is the policy of the Board of Directors to pre-approve all audit and
non-audit services provided by the Company's independent auditor. The Board of
Directors has considered whether the provision by BDO Seidman, LLP, of services
of the varieties described above is compatible with maintaining the independence
of BDO Seidman, LLP. In view of the fact that BDO Seidman, LLP, provides no
services to us other than audit services, the Board of Directors believes that
such services do not jeopardize the independence of BDO Seidman, LLP.
Change in Certifying Accountant
As reported previously, during the fourth quarter of 2002, we engaged BDO
Seidman, LLP, to prepare the annual audit of our financial statements for the
year ended December 31, 2002 and we notified our former accountants, Bierwolf,
Nilson & Associates, of this engagement on January 3, 2003.
During our engagement of Bierwolf, which began October 30, 2000, there were
no disagreements with Bierwolf on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Bierwolf, would have
caused that firm to make reference to the subject matter of the disagreement in
connection with its reports. No report of Bierwolf on our financial statements
has contained an adverse opinion or a disclaimer of opinion, nor was any such
report qualified or modified as to uncertainty, audit scope or accounting
principles, except as follows:
o The report of Bierwolf with respect to our financial statements at
December 31, 2001 and for the 12-month period then ended stated, "The
Company has an accumulated deficit and a negative net worth at
December 31, 2001. These factors raise substantial doubt about the
Company's ability to continue as a going concern." Further, the report
of Bierwolf with respect to those financial statements noted that our
audited financial statements did not include any adjustments that
might result from the outcome of the uncertainty as to our ability to
continue as a going concern.
o The report of Bierwolf with respect to our financial statements at
December 31, 2000 and for the 12-month period then ended stated, "The
Company has an accumulated deficit and a negative net worth at
December 31, 2000. These factors raise substantial doubt about the
Company's ability to continue as a going concern." Further, the report
of Bierwolf with respect to those financial statements noted that our
audited financial statements did not include any adjustments that
might result from the outcome of the uncertainty as to our ability to
continue as a going concern.
During our fiscal years ended December 31, 2000 and 2001, and during the
period from January 1, 2002 to our engagement of BDO Seidman, neither we nor
anyone acting on our behalf consulted with BDO Seidman regarding either (1) the
application of accounting principles to a specified transaction or the type of
audit opinion that might be rendered on our financial statements or (ii) any
matter that was the subject of a disagreement with Bierwolf.
We previously provided Bierwolf with a copy of this disclosure. Bierwolf's
response was previously filed with the Securities and Exchange Commission as an
exhibit to our Current Report on Form 8-K dated December 20, 2002 and is
incorporated herein by reference.
OTHER MATTERS
As of the date of this proxy statement, we know of no other business that
will be presented for consideration at the annual meeting other than the items
referred to above. If any other matter properly is brought before the annual
meeting for action by the stockholders, the persons named in the proxies will
vote the shares of common stock represented by proxies as recommended by the
Board of Directors or, if the Board gives no recommendation, as they may
determine in their own discretion.
ADDITIONAL INFORMATION
Solicitation of Proxies and Cost
We will bear the cost of soliciting proxies for the annual meeting. In
addition to solicitation of proxies by use of the mails, our employees, without
extra remuneration, may solicit proxies personally or by telecommunications. We
will reimburse brokerage firms, nominees, custodians and fiduciaries for their
out-of-pocket expenses for forwarding proxy materials to beneficial owners and
seeking instruction with respect thereto.
11
Stockholder Proposals for 2005 Annual Meeting of Stockholders
Stockholders interested in presenting a proposal for consideration at our
annual meeting of stockholders in 2005 may do so by following the procedures
prescribed in Rule 14a-8 under the Securities Exchange Act of 1934 and our
bylaws. To be eligible for inclusion, stockholder proposals must be received by
our Secretary no later than December 31, 2004.
BY ORDER OF THE BOARD OF DIRECTORS
PETER R. CULPEPPER
Secretary
Knoxville, Tennessee
April 29, 2004
12
2004 Annual Meeting of Stockholders
to be held on May 27, 2004
This Proxy Is Solicited On Behalf Of The Board Of Directors
The 2004 Annual Meeting of Stockholders of Provectus Pharmaceuticals, Inc.
a Nevada corporation (the "Company") will be held at the offices of Baker,
Donelson, Bearman, Caldwell & Berkowitz, the Company's counsel, located at
Riverview Tower, Suite 2200, 900 South Gay Street, Knoxville, Tennessee 37902,
on Thursday, May 27, 2004, beginning at 3:00 p.m. Eastern time. The undersigned
hereby acknowledges receipt of the combined Notice of 2004 Annual Meeting of
Stockholders and Proxy Statement dated April 29, 2004, accompanying this proxy,
to which reference is hereby made for further information regarding the meeting
and the matters to be considered and voted on by the stockholders at the
meeting.
The undersigned hereby appoints Peter R. Culpepper and Linda M.
Crouch-McCreadie, and each of them, attorneys and agents, with full power of
substitution, to vote as proxy all shares of common stock of the Company owned
of record by the undersigned as of the record date and otherwise to act on
behalf of the undersigned at the meeting and any postponement or adjournment
thereof, in accordance with the instructions set forth herein and with
discretionary authority with respect to any other business, not known or
determined at the time of the solicitation of this proxy, that properly comes
before such meeting or any postponement or adjournment thereof.
The undersigned hereby revokes any proxy heretofore given and directs said
attorneys and agents to vote or act as indicated on the reverse side hereof. If
no instruction is given, this proxy will be voted FOR proposals 1, and 2.
(continued on reverse side)
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
PROVECTUS 7327 Oak Ridge Highway, Suite A
PHARMACEUTICALS, INC. Knoxville, TN 37931
phone 865/769-4011
fax 865/769-4013
April 29, 2004
Dear Stockholder:
It is a great pleasure to have this opportunity to provide you with our
2003 Annual Report and the Proxy Statement for our 2004 Annual Meeting of
Stockholders. The Annual Report discusses our performance in fiscal 2003 as well
as our business strategy for the future. The Proxy Statement provides you with
information relating to the business to be conducted at our annual meeting on
May 27, 2004.
YOUR VOTE IS IMPORTANT!
You can vote by completing, signing, dating, and returning your proxy card
in the accompanying envelope.
Thank you for your continued interest in, and ownership of, Provectus
Pharmaceuticals, Inc.
Sincerely,
/S/ Craig
H. Craig Dees,
Ph.D. Chief Executive Officer
This proxy is solicited on behalf of the Board of Directors of the Company
and will be voted in accordance with the undersigned's instructions set forth
herein. If no instructions are provided, this proxy will be voted FOR each of
the proposals described below. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR THE PROPOSALS.
1. As to the election to the Board of Directors of the nominees named in the
proxy statement delivered in connection with the Annual Meeting of
Stockholders, each for a one-year term expiring at the 2004 Annual Meeting
of Stockholders:
[ ] FOR all nominees listed below:
H. Craig Dees, Ph.D. Timothy C. Scott, Ph.D.
Stuart Fuchs Eric A. Wachter, Ph.D.
[ ] WITHHOLD AUTHORITY for all nominees
Instruction: To withhold authority to vote for any director nominee,
mark this box and draw a line through the name of the nominee in the
list above.
2. As to the approval of the amendment to the Amended and Restated 2002 Stock
Plan to increase the number of shares reserved under the Plan from
2,000,000 to 3,000,000:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
With respect to any other item of business that properly comes before the
meeting, the proxy holders are authorized to vote the undersigned's shares in
accordance with their best judgment.
Date: , 2003
--------------------------------------
[X] PLEASE MARK YOUR VOTES --------------------------------------------
AS INDICATED IN THIS EXAMPLE. Signature of stockholder
--------------------------------------------
Signature of stockholder, if held jointly
Please sign your name as it appears on this proxy. Joint
owners each should sign. When signing as trustee,
administrator, executor, attorney, etc., please indicate
your full title as such. Corporations should sign in full
corporate name by President or other authorized officer.
Partnerships should sign in full partnership name by
authorized partner.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
Vote by Mail
Mark, sign, and date your proxy card and return it in the enclosed postage-paid
envelope.
THANK YOU FOR VOTING