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Hollis-Eden remedies previous non-compliance with Nasdaq rule
By Lisa Kerner
Erie, Pa., Feb. 1 - Hollis-Eden Pharmaceuticals, Inc. received notice from the Nasdaq Listing Qualifications Department indicating that the company has remedied its previous non-compliance with the stockholder approval requirements of Nasdaq Marketplace Rule 4350.
This rule relates to certain stock option grants issued to two new members of the company's board of directors in June, 2004, according to a company news release.
The stock option grants issued to Marc Sarni and Jerome Hauer, in connection with their appointment to Hollis-Eden's board of directors, could not be considered "inducement grants" for purposes of relying on the inducement grant exemption to shareholder approval set forth in Nasdaq rules.
The grants were approved by the company's board of directors, appropriate notifications were sent and relevant filings were made to the Securities and Exchange Commission.
However, the Nasdaq staff's interpretation of Nasdaq rules does not allow the use of the inducement grant exemption to shareholder approval for stock option grants to new directors in connection with their appointment as directors.
At the direction of Nasdaq, the company promptly rescinded the options, both of which remained unexercised, and issued new options to Sarni and Hauer pursuant to the company's 2005 Non-Employee Directors' Equity Incentive Plan, which was approved by the company's stockholders in April 2005.
Nasdaq has agreed that the actions taken by Hollis-Eden have remedied the company's non-compliance and that the matter is now closed.
Hollis-Eden is a development-stage pharmaceutical company based in San Diego.
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