UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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Securities Exchange Act of 1934 (Amendment No. )
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PROVECTUS PHARMACEUTICALS, INC.
(Name of Registrant as Specified in Its Charter)
Not Applicable
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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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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(3) Filing party:
Date filed: April 21, 2005
[PROVECTUS PHARMACEUTICALS, INC. LOGO] 7327 Oak Ridge Highway, Suite A
Knoxville, TN 37931
phone 865/769-4011
fax 865/769-4013
Notice of 2005 Annual Meeting of Stockholders
To Be Held on May 19, 2005
To Our Stockholders:
We will hold the 2005 annual meeting of the stockholders of
Provectus Pharmaceuticals, Inc. on Thursday, May 19, 2005, 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;
2. To approve an amendment to our Amended and Restated 2002 Stock
Plan to increase the number of shares reserved for issuance from
3,000,000 to 5,000,000; and
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 13,
2005 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,
/s/ Peter R. Culpepper
Peter R. Culpepper
Secretary
April 21, 2005
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.
[PROVECTUS PHARMACEUTICALS, INC. LOGO] 7327 Oak Ridge Highway, Suite A
Knoxville, TN 37931
phone 865/769-4011
fax 865/769-4013
PROXY STATEMENT FOR
2005 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 19, 2005
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 19, 2005, 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, 2004, beginning
on April 21, 2005.
About the Annual Meeting
What is the purpose of the Annual Meeting?
At the annual meeting, stockholders will act upon the following
matters:
- The election of four directors to serve on our Board
of Directors for a one-year term.
- The approval of an increase in the number of shares
reserved for issuance under our 2002 Stock Plan from
3,000,000 to 5,000,000.
Who is entitled to vote?
Only stockholders of record at the close of business on April 13, 2005,
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
16,644,275 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.
1
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 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 Amended and Restated 2002 Stock Plan to increase the number of shares
reserved for issuance from 3,000,000 to 5,000,000.
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 Amended and Restated 2002 Stock
Plan and 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.
2
STOCK OWNERSHIP
The table below shows the amount of our common stock beneficially owned
as of April 13, 2005 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................................................. 1,654,109 (4) 9.8%
Timothy C. Scott.............................................. 1,653,769 (5) 9.8%
Eric A. Wachter............................................... 1,666,349 (6) 9.9%
Peter R. Culpepper............................................ 100,000 (7) 0.6%
Stuart Fuchs.................................................. 851,418 (8) 5.1%
Richard Smithline............................................. 4,166,665 (9) 20.0%
830 Third Avenue, 14th Floor
New York, NY 10022
Thomas E. Sandell............................................. 1,614,462 (10) 8.8%
40 West 57th Street, 26th Floor
New York, NY 10019
Gryffindor Capital Partners I, L.L.C.......................... 1,152,919 (11) 6.6%
150 North Wacker Drive, Suite 800
Chicago, IL 60606
John Smolik................................................... 897,339 (12) 5.4%
119 Tanasi Court
Loudon, TN 37774
All directors and executive officers as a group
(5 persons)................................................ 5,925,645 (13) 33.7%
---------------------------------------
(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 13, 2005 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 13, 2005, there were 16,644,275 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
256,250 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 256,250 shares subject to
options which are exercisable within 60 days.
3
(6) Dr. Wachter's beneficial ownership includes 4,867 shares held by the
Eric A. Wachter 1998 Charitable Remainder Unitrust and 256,250 shares
subject to options which are exercisable within 60 days.
(7) Mr. Culpepper's beneficial ownership includes 100,000 shares subject to
options which are exercisable within 60 days.
(8) 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; 50,000 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").
(9) Mr. Smithline's beneficial ownership includes 4,166,665 shares of Common
Stock comprised of 1,333,333 shares of Common Stock underlying Convertible
Debentures held by DCOFI Master LDC, of which Mr. Smithline is a director,
2,266,666 shares of Common Stock underlying Warrants held by DCOFI Master
LDC, of which Mr. Smithline is a director, and 566,666 shares of Common
Stock underlying Warrants held by DC Asset Management, LLC, of which Mr.
Smithline is the Managing Member.
(10) Mr. Sandell's beneficial ownership includes 1,614,462 shares of Common
Stock comprised of 962,962 shares of Common Stock, and warrants exercisable
for 651,500 shares of Common Stock. Mr. Sandell beneficially owns this
Common Stock jointly with Castlerigg Master Investments, Castlerigg
International, Castlerigg Holdings, and Sandell Asset Management Corp.,
each of which Mr. Sandell is a Director, and together with Mr. Sandell are
referred to as "The Reporting Persons." The Reporting Persons disclaim
beneficial ownership of 311,462 shares of Common Stock.
(11) Gryffindor's beneficial ownership includes 226,460 shares directly held
and 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 the shares held by SFF Limited
Partnership. Gryffindor's beneficial ownership also includes 700,000 shares
of Common Stock underlying Warrants.
(12) Mr. Smolik's beneficial ownership includes 48,666 shares held by Smolik
Family LLP.
(13) Includes 918,750 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
2004 were met.
4
Proposal 1:
-------------
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 2006. 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., 53, 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., 47, 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., 42, 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 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, 58, 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.
5
Proposal 2:
-----------
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 3,000,000 shares to
5,000,000. The Plan was approved by the stockholders at the annual meeting in
2003 and was amended at the annual meeting in 2004. Our Board has determined
that an increase in the reserve of shares is necessary, especially in light of
the fact that as of April 13, 2005, only 75,000 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.
6
Information about the Board of Directors
How often did the Board of Directors meet in 2004?
The Board of Directors met once and took action by unanimous written
consent 8 times during 2004. 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 2004 annual meeting of stockholders.
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:
- Review recommendations of independent auditors concerning our
accounting principles, internal controls and accounting
procedures and practices;
- Review the scope of the annual audit;
- Approve or disapprove each professional service or type of service
other than standard auditing services to be provided by the
auditors; and
- 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. The Board
screens all potential candidates in the same manner. The Board's review will
typically be based on all information provided with respect to the potential
candidate. The Board has not established specific minimum qualifications that
must be met by a nominee for a position on the Board or specific qualities and
skills for a director. For more information, please see the section entitled
"Stockholder Proposals for 2006 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
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"EXECUTIVE OFFICER COMPENSATION," they are compensated for their service in
those roles. They are not separately compensated for their service as directors.
Mr. Fuchs does not receive cash compensation for his service as a member of
the Board of Directors, although he is reimbursed for expenses incurred in
fulfilling his duties as a director, including attending meetings.
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.
8
Executive Officer Compensation
The table below shows the compensation for services in all capacities
we paid during the year ended December 31, 2004 to our Chief Executive Officer
and the other executive officers during the year ended December 31, 2004 who
received more than $100,000:
Summary Compensation Table
Long Term
Annual Compensation Compensation
------------------- ------------
Securities Underlying All Other Compensation(1)
Name and Position Year Salary ($) Bonus($) Options/SARs(#) ----------------------
----------------- ---- ---------- -------- ---------------------
H. Craig Dees........... 2004 175,000 -- 325,000 $91,666
Chief Executive Officer 2003 131,250 -- 100,000 --
2002 18,750 -- -- 18,750
Timothy C. Scott........ 2004 175,000 -- 325,000 $77,083
President 2003 131,250 -- 100,000 --
2002 18,750 -- -- 18,750
Eric A. Wachter......... 2004 175,000 -- 325,000 $70,833
Vice 2003 131,250 -- 100,000 --
President-Pharmaceuticals 2002 18,750 -- -- 18,750
Peter R. Culpepper...... 2004 118,750 -- 400,000 --
Chief Financial Officer 2003 -- -- -- --
2002 -- -- -- --
-------------------
(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. During 2004 we paid
them a portion of their accrued compensation relating to the period April
23, 2002 until November 16, 2002.
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.................. 300,000 21.8 1.10 2014
25,000 1.8 0.95 2014
Timothy C. Scott............... 300,000 21.8 1.10 2014
25,000 1.8 0.95 2014
Eric A. Wachter................ 300,000 21.8 1.10 2014
25,000 1.8 0.95 2014
Peter R. Culpepper............. 300,000 21.8 1.10 2014
100,000 7.3 1.25 2014
9
Aggregated Option/SAR Exercises in Last Fiscal Year And
Fiscal Year-End Option/SAR Values
The following table discloses information regarding stock options held
at the end of or exercised in the year 2004 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, 2004 at December 31, 2004 (2)
---- ------------ ------------ ---------------------- ------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
H. Craig Dees........ --- --- 162,500 262,500 $19,875 $16,125
Timothy C. Scott .... --- --- 162,500 262,500 $19,875 $16,125
Eric A. Wachter...... -- -- 162,500 262,500 $19,875 $16,125
Peter R. Culpepper... -- -- 25,000 375,000 -- --
----------------
(1) As of December 31, 2004, 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 $0.75 per share as
of April 13, 2005.
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.
Drs. Dees, Scott, Wachter and Mr. Culpepper each entered into an
employment contract with the company on January 4th, 2005 for a period of one
year with automatic annual renewals.
Equity Compensation Plan Information
The table below sets forth certain information regarding shares
available as of December 31, 2004 for issuance under our equity compensation
plans:
(a) (b) (c)
Number of securities
remaining available for
Number of securities future issuance under
to be issued upon Weighted-average equity
exercise of exercise price of compensation plans
outstanding options, outstanding options, (excluding securities
Category warrants and rights warrants and rights reflected in column (a))
-------- --------------------- -------------------- ------------------------
Equity compensation plans approved by
stockholders........................... 1,725,000 $ 0.97 1,275,000
Equity compensation plans not approved by
stockholders........................... 0 $ -- ________
Total.............................. 1,725,000 1,275,000
10
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
- has reviewed and discussed with management the audited financial
statements for the year ended December 31, 2004.
- 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.
- 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, 2004, for filing with
the Securities and Exchange Commission. The Board also appointed BDO
Seidman, LLP, as our independent auditor for 2005.
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.
We do not currently have an "audit committee financial expert," as
defined under the rules of the SEC. Because the Board consists of only four
members and operations remain amendable to oversight by a limited number
of directors, the Board has not delegated any of its functions to committees.
The entire Board acts as our audit committee as permitted under Section 3(a)
(58)(B) of the Securities Exchange Act of 1934. We believe that all members
of our Board are qualified to serve as the committee and have the experience
and knowledge to perform the duties required of the committee. We do not have
any independent directors who would qualify as an audit committee financial
expert, as defined. We believe that it has been, and may continue to be,
impractical to recruit such a director unless and until we are significantly
larger.
Audit Fees
The firm of BDO Seidman, LLP, served as our independent auditors and
audited our financial statements for 2004. 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 2003 and 2004.
2003 2004
Audit fees........................................................... $53,400 $98,300
Audit-related fees................................................... -- --
Tax fees............................................................. -- --
All other fees....................................................... -- --
Total....................................................... $53,400 $98,300
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
11
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.
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 SFF Limited
Partnership, a limited partnership of which Mr. Fuchs is the general partner, 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 SFF Limited Partnership exercised the warrants in their entirety,
and we issued 226,460 shares of our common stock to Gryffindor and 226,459
shares to SFF Limited Partnership. 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.
The Convertible Secured Promissory Note was amended on January 31, 2003 by
Senior Secured Convertible Note in the principal amount of $1,025,959. Pursuant
to an agreement dated November 26, 2004 between the Company and Gryffindor, the
Company amended the Senior Secured Convertible Note and issued Gryffindor a
Second Amended and Restated Senior Secured Convertible Note dated November 26,
2004 in the amended principal amount of $1,185,959 which included the original
note principal plus accrued interest. The Second Amended and Restated Senior
Secured Convertible Note bears interest at 8% per annum, payable quarterly in
arrears, is due and payable in full on November 26, 2005, and amends and
restates the Senior Secured Convertible Note in its entirety. Subject to certain
exceptions, the Note is convertible into shares of the Company's common stock on
or after November 26, 2004, 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. The Company issued warrants to Gryffindor to purchase up
to 525,000 shares of the Company's common stock at an exercise price of $1.00
per share as consideration for extending the maturity date and accepting the
Second Amended and Restated Senior Secured Convertible Note dated November 26,
2004 in substitution thereof.
The Second Amended and Restated Senior Secured Convertible Note provides
that the Company will issue Gryffindor warrants to purchase common stock for
each calendar month the Second Amended and Restated Note remains outstanding
after March 1, 2005. On March 26, 2005, pursuant to the terms of the Second
Amended and Restated Senior Secured Convertible Note, the Company issued
warrants to Gryffindor to purchase 100,000 shares of the Company's common stock
at an exercise price of $1.00 per share and warrants to purchase 75,000 shares
of the Company's common stock at an exercise price of $1.25 per share.
Loan by Wachter
During 2002, Eric A. Wachter, Vice-President of Pharmaceuticals and a
Director of the Company, loaned the Company $109,000. During 2003, Wachter
loaned the Company an additional $40,000. Interest on the loan is 5%, compounded
monthly. Principal is due on December 31, 2009 and interest is payable quarterly
in arrears beginning June 30, 2003. Accrued interest was $15,434 and $7,431 at
December 31, 2004 and 2003 respectively. Interest expense was $8,003 and $7,431
at December 31, 2004 and 2003, respectively.
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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.
Stockholder Proposals for 2006 Annual Meeting of Stockholders
Stockholders interested in presenting a proposal for consideration at
our annual meeting of stockholders in 2006 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, 2005.
By Order of the Board of Directors
/s/ Peter R. Culpepper
Peter R. Culpepper
Secretary
Knoxville, Tennessee
April 21, 2005
13
Provectus Pharmaceuticals, Inc.
2005 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 19, 2005
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The 2005 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 19, 2005, beginning at 3:00 p.m. Eastern time. The undersigned
hereby acknowledges receipt of the combined Notice of 2005 Annual Meeting
of Stockholders and Proxy Statement dated April 21, 2005, 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 Pharmaceuticals, Inc. Logo 7327 Oak Ridge Highway, Suite A
Knoxville, TN 37931
phone 865/769-4011
fax 865/769-4013
April 21, 2005
Dear Stockholder:
It is a great pleasure to have this opportunity to provide
you with our 2004 Annual Report and the Proxy Statement for our 2005
Annual Meeting of Stockholders. The Annual Report discusses our
performance in fiscal 2004 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 19, 2005.
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/ H. Craig Dees
H. Craig Dees, Ph.D.
Chief Executive Officer
14
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.
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
2005 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.
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 3,000,000 to 5,000,000:
|_| 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: , 2005
-------------------------------------------
|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.
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