Company Name: Palatin Technologies, Inc.
Public Availability Date: October 1, 2003
Document Sections:
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
INQUIRY LETTER
STAFF REPLY LETTER
[INQUIRY LETTER]
August 15, 2003
Securities and Exchange Commission
450 Fifth Street NW
Washington, DC 20549
Re: Exclusion of Proposal from Shareholder James B. Scott
Ladies and gentlemen:
Pursuant to Rule 14a-8(j)(1) under the Securities Exchange Act of 1934, we are
filing our reasons for excluding a shareholder proposal from our proxy materials
relating to our 2003 annual shareholders' meeting to be held late fall of 2003.
We enclose the following items:
Mr. Scott's original proposal letter dated June 5, 2003 and faxed to us the
same day;
Our response to Mr. Scott dated June 10, 2003, advising Mr. Scott of the
procedural deficiencies in his proposal;
Mr. Scott's revised proposal dated June 12, 2003.
We intend to exclude Mr. Scott's proposal, as revised, for failure to follow the
eligibility and format requirements of Rule 14a-8, as provided in Rule 14a-8(f).
We have set forth our reasons below.
1. Eligibility - stock ownership. Mr. Scott has not provided information about
his stock ownership necessary for us to determine his eligibility to submit a
proposal. His original proposal states after his signature, "(owner since 1999
of 5,300 shares of Palatin)." Our transfer agent informed us that as of June 5,
2003, Mr. Scott was not and had never been a holder of record of Palatin common
stock. According to our own records, Mr. Scott has not purchased stock in any of
our private stock offerings, and is not and has never been a holder of our
convertible preferred stock. We searched SEC filings of Schedules 13D and 13G,
and Forms 3, 4 and 5 relating to Palatin and found no filings under the name of,
or referring to, James B. Scott. According to Rule 14a-8(b)(2), a shareholder
who is not a shareholder of record nor a report filer must prove his eligibility
by submitting a written statement of his ownership from the holder of record,
verifying that he has continuously held the requisite amount of securities for
at least one year. We advised Mr. Scott that he had not provided the information
necessary for us to determine his eligibility, and referred him to 14a-8(b)(2).
In his revised proposal, Mr. Scott stated that "I am the owner, in my trust and
in street name since 1999, of 5,300 shares of Palatin. See attached monthly
statement regarding my current ownership of 5,300 shares of Palatin." He
attached a statement (included with the copy of his letter) for the period
04/26/03 to 05/30/03 noting current ownership of 5,300 shares of Palatin common
stock. The statement provides no information as to the length of time Mr. Scott
has held the securities. We therefore do not have verification from the holder
of record that Mr. Scott has held the securities for at least one year.
2. Eligibility - intent to hold securities. Rule 14a-8(b)(2)(i) further provides
that the proposing shareholder must include his own written statement that he
intends to continue holding the securities through the date of the shareholder
meeting. Mr. Scott did not provide such a statement with either his original or
his revised proposal. We therefore have no verification of his intent.
3. Multiple proposals. We believe that Mr. Scott has submitted more than one
proposal, contrary to Rule 14a-8(c). His original proposal was set forth in two
parts. The first related to both voting rights for and sale restrictions on
options and warrants, the second to limiting exercise prices for options and
warrants. We advised Mr. Scott that he had submitted multiple proposals and
referred him to Rule 14a-8(c). Mr. Scott's revised proposal contained only the
first section of his original proposal, but still relates to both voting rights
and sale restrictions. We believe that the question of voting rights for options
and warrants is sufficiently distinct from the question of sale restrictions on
options and warrants that the two questions should be treated as separate
proposals.
Aside from the above procedural deficiencies related to Mr. Scott's multiple
proposals, the actual proposals by Mr. Scott are in one instance moot and in the
other problematic. Mr. Scott's first proposal calls for "all options or warrants
shall not have voting rights." None of the options or warrants issued by Palatin
contain any voting rights. The second proposal by Mr. Scott states that options
or warrants "shall not be salable for two years from the date of purchase." This
proposed "lock-up" would interfere with Palatin's Board and senior executive
management's ability to properly conduct the business of the company by not
allowing them the flexibility to make decisions based on multiple and/or current
factors.
For the procedural reasons set forth above, we intend to exclude Mr. Scott's
revised proposal from our proxy statement for the 2003 annual meeting. We will
be happy to provide you with any further information you may require for the
purpose of reviewing this exclusion.
Very truly yours,
/s/
Stephen T. Wills
Chief Financial Officer
[INQUIRY LETTER]
June 5, 2003
Secretary, Board of Directors
Palatin Technologies, Inc.
4 C Cedar Brook Drive
Cranbury, NJ 08512
Subject: Stockholder proposal for next annual meeting
This proposal is also being forwarded to the SEC because of what happened last
year when I wrote you for information regarding placement of a stockholder
proposal. I am also sending this proposal by email and by FAX to you and the
SEC.
"Resolved, that the shareholders of Palatin Technologies, Inc., assembled in
Annual Meeting in person and by proxy, hereby request that the Board of
Directors establish:
A) That all options or warrants (to purchase any class of shares in Palatin
stock) shall not have voting rights nor shall be salable for two years from the
date of issue.
B) The exercise price of such options or warrants shall be ten percent per share
greater than the average price, (for the shares corresponding to such options
and warrants) during the month prior to the month that the options or warrants
are awarded or issued."
Supporting Statement:
1. Additional funds have been required (because of unexpected delays for various
reasons). Therefore, it has been necessary to sell additional stock in order to
obtain those additional funds.
2. Palatin management has substantially diluted the equity interest of existing
shareholders by issuing warrants and/or stock options (at little or no cost) in
conjunction with sizable secondary stock offerings.
3. Palatin management has compounded such dilution of existing stock by issuing
warrants and/or stock options (at little or no cost) to officers of the company,
in spite of the fact that management has consistently failed to meet deadlines
or commitments made (or implied) to shareholders.
4. The market price of Palatin shares has been established and maintained
primarily by non-employee minority shareholders, who have not received such
"bonus" warrants and/or stock options. In order to end discrimination against
such shareholders (to protect their legitimate interests), reasonable
restrictions should be placed on the voting and sale of such "bonus" warrants
and/or stock options."
/s/
James B. Scott (owner since 1999 of 5,300 shares of Palatin).
CC: SEC
[INQUIRY LETTER]
June 10, 2003
James B. Scott
J. B. Scott & Associates
3601 West 5th St.
Anacortes, WA 98221
Dear Mr. Scott:
We have received your proposal dated June 5, 2003. We believe your proposal does
not meet the procedural requirements of the SEC regulations governing
shareholder proposals for the following reasons:
1. You have not provided the information necessary for us to determine your
eligibility. Please see the regulations at 17 Code of Federal Regulations,
Section 240.14a-8(b)(2).
2. You have presented more than one proposal. Please see the regulations at 17
Code of Federal Regulations, Section 240.14a-8(c).
Very truly yours,
/s/
Stephen T. Wills, CPA/MST
Chief Financial Officer
STW/jen
[INQUIRY LETTER]
June 12, 2003
Secretary, Board of Directors
Palatin Technologies, Inc.
4 C Cedar Brook Drive
Cranbury, NJ 08512
Subject: Stockholder proposal for next annual meeting
This proposal is also being forwarded to the SEC because of what happened last
year when I wrote you for information regarding placement of a stockholder
proposal. I am also sending this proposal by email and by FAX to you and the
SEC.
"Resolved, that the shareholders of Palatin Technologies, Inc., assembled in
Annual Meeting in person and by proxy, hereby request that the Board of
Directors establish: That all options or warrants (to be used to purchase any
class of shares in Palatin stock) shall not have voting rights nor shall be
salable for two years from the date of purchase."
Supporting Statement:
1. Additional funds have been required (because of unexpected delays for various
reasons). Therefore, it has been necessary to sell additional stock in order to
obtain those additional funds.
2. Palatin management has substantially diluted the equity interest of existing
shareholders by issuing warrants and/or stock options (at little or no cost) in
conjunction with sizable secondary stock offerings.
3. Palatin management has compounded such dilution of existing stock by issuing
warrants and/or stock options (at little or no cost) to officers of the company,
in spite of the fact that management has consistently failed to meet deadlines
or commitments made (or implied) to shareholders.
4. The market price of Palatin shares has been established and maintained
primarily by non-employee minority shareholders, who have not received such
"bonus" warrants and/or stock options. In order to end discrimination against
such shareholders (to protect their legitimate interests), reasonable
restrictions should be placed on the voting and sale of such "bonus" warrants
and/or stock options."
Note: I am the owner, in my trust and in street name since 1999, of 5,300 shares
of Palatin. See attached monthly statement regarding my current ownership of
5,300 shares of Palatin.
/s/
James B. Scott
Copy: SEC
[STAFF REPLY LETTER]
October 1, 2003
Response of the Office of Chief Counsel Division of Corporation Finance
Re: Palatin Technologies, Inc.
Incoming letter dated August 15, 2003
The proposal relates establishing that "all options and warrants (to purchase
any class of shares in Palatin stock) shall not have voting rights nor shall be
salable for two years from the date of issue."
Rules 14a-8(b) and 14a-8(f) require a proponent to provide documentary support
of a claim of beneficial ownership upon request. Rule 14a-8(b) also requires a
written statement that the proponent intends to hold the company's stock through
the date of the shareholder meeting. While it appears that the proponent did
provide some indication that he owned shares, it appears that he has not
provided a statement from the record holder evidencing documentary support of
continuous beneficial ownership of at least $2,000, or 1%, in market value of
Palatin's voting securities, for at least one year prior to submission of the
proposal. It also appears that the proponent failed to provide a written
statement of intent to hold those securities through the date of the annual
meeting. We note, however, that Palatin failed to inform the proponent of what
would constitute appropriate documentation under rule 14a-8(b), failed to inform
the proponent of his obligation to furnish a written statement of intent to hold
the company's stock, and also failed to clarify that the proponent's response
must be postmarked, or transmitted electronically, no later than 14 days from
the date the proponent received your notification under rule 14a-8(f) in
Palatin's request for additional information from the proponent. Accordingly,
unless the proponent provides Palatin with appropriate documentary support of
ownership and a written statement of his intent to hold the company's
securities, within seven calendar days after receiving this letter, we will not
recommend enforcement action to the Commission if Palatin omits the proposal
from its proxy materials in reliance on rules 14a-8(b) and 14a-8(f).
We are unable to concur in your view that Palatin may exclude the proposal under
rule 14a-8(c). Accordingly, we do not believe that Palatin may omit the proposal
from its proxy materials in reliance on rule 14a-8(c).
Sincerely,
/s/
Grace K. Lee
Special Counsel |
