<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, For Use of The
Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
POLYDEX PHARMACEUTICALS LIMITED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously 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:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
POLYDEX PHARMACEUTICALS LIMITED
Sandringham House, 83 Shirley Street, Nassau, Bahamas
TO OUR MEMBERS:
The 1997 Annual General Meeting of Members will be held at 10:00 a.m.,
local time, on Thursday, June 19, 1997, at the offices of the Company, c/o Higgs
& Johnson, Sandringham House, 83 Shirley Street, Nassau, Bahamas. At the Annual
General Meeting, Members will elect two Directors, the names of whom are set
forth in the accompanying Proxy Statement, to serve until the Annual General
Meeting in 2000 or until their successors are elected. In addition, Members will
vote on a proposal to amend the Articles of Association to increase the maximum
number of members of the Board of Directors to nine. Members will also vote on a
proposal to amend the Articles of Association to effect a one-for-ten reverse
stock split of the Company's Common Shares and Class B Preferred Shares.
Management will also report on fiscal year 1997 results. We urge you to attend
the meeting and to vote for these proposals. These matters are described in more
detail in the attached Proxy Statement, which we encourage you to read
carefully.
The formal notice of the Annual General Meeting and the Proxy Statement
containing information relative to the meeting follow this letter.
Whether or not you plan to attend the meeting, please complete, date
and sign the enclosed proxy card and return it in the envelope provided to
assure that your shares will be voted. If you do attend the meeting, and the
Board of Directors joins me in hoping you will, there will be an opportunity to
revoke your proxy and to vote in person.
Sincerely,
George G. Usher
President and Chief Executive Officer
May 16, 1997
<PAGE> 3
POLYDEX PHARMACEUTICALS LIMITED
Sandringham House, 83 Shirley Street, Nassau, Bahamas
NOTICE OF 1997 ANNUAL GENERAL MEETING OF MEMBERS
May 16, 1997
NOTICE IS HEREBY GIVEN that the 1997 Annual General Meeting of the
Members of Polydex Pharmaceuticals Limited (the "Company") will be held at the
offices of the Company, c/o Higgs & Johnson, Sandringham House, 83 Shirley
Street, Nassau, Bahamas, on Thursday, June 19, 1997, at 10:00 a.m., local time,
for the following purposes:
1. To vote on the proposal to elect two directors to the Company's Board
of Directors, the names of whom are set forth in the accompanying Proxy
Statement, to serve until the Annual General Meeting of Members in 2000
or until their successors are elected;
2. To vote on the proposal to amend the Company's Articles of Association
to increase the maximum number of members of the Board of Directors
from six members to nine members;
3. To vote on the proposal to amend the Company's Articles of Association
to effect a one-for-ten reverse stock split of the Company's Common
Shares and Class B Preferred Shares; and
4. To transact such further or other business as may properly come before
the meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on May 6, 1997,
as the date for the determination of the Members entitled to notice of, and to
vote at, the meeting and any adjournment thereof (the "Record Date"). Only
holders of the Common Shares and the Class B Preferred Shares of record at the
close of business on the Record Date are entitled to notice and to vote at the
1997 Annual General Meeting. The Company's Annual Report to Shareholders for the
year ended January 31, 1997, is being mailed to Members with the Proxy
Statement.
The Proxy Statement which accompanies this Notice contains additional
information regarding the proposals to be considered and voted upon at the
Annual General Meeting, and Members are encouraged to read it in its entirety.
You are cordially invited to attend the 1997 Annual General Meeting.
Whether or not you expect to be present at the Annual General Meeting, please
complete, date and sign the enclosed proxy card and return it promptly in the
envelope provided. If you do attend the Annual General Meeting, you may revoke
your Proxy in accordance with the methods described in the Proxy Statement under
the heading "Solicitation and Revocability of Proxies" and vote your shares in
person.
BY ORDER OF THE BOARD OF DIRECTORS,
SHARON WARDLAW
Secretary
May 16, 1997
<PAGE> 4
POLYDEX PHARMACEUTICALS LIMITED
Sandringham House, 83 Shirley Street, Nassau, Bahamas
PROXY STATEMENT
1997 Annual General Meeting, June 19, 1997
SOLICITATION AND This Proxy Statement ("Proxy Statement") is expected to be
REVOCABILITY OF mailed on or about May 16, 1997, to the holders of the
PROXIES Common Shares and the Class B Preferred Shares (the
"Members") of Polydex Pharmaceuticals Limited (the
"Company") in connection with the solicitation by the Board of Directors of the
Company for the 1997 Annual General Meeting of the Members ("Annual Meeting") to
be held at 10:00 a.m., local time, on Thursday, June 19, 1997 at the Company's
Bahamian offices, c/o Higgs & Johnson, Sandringham House, 83 Shirley Street,
Nassau, Bahamas.
Although the Company believes that the solicitation of proxies will be
primarily by mail, proxies may also be solicited personally or by telephone by
officers and employees of the Company who will not receive additional
compensation for such solicitation. The cost of solicitation of proxies will be
borne directly by the Company. All dollar amounts in this proxy statement are
stated in U.S. dollars unless otherwise indicated.
Proxies given by Members for use at the Annual Meeting may be revoked
at any time prior to their use. In addition to revocation in any manner
permitted by Bahamian law, a proxy may be revoked in any one of the following
ways:
(a) by signing a form of proxy bearing a later date and depositing
it with the Secretary of the Company prior to the Annual
Meeting;
(b) as to any matter on which a vote has not already been cast
pursuant to the authority conferred by such proxy, by signing
written notice of revocation and delivering it to either the
Secretary of the Company or the Chairman of the Annual
Meeting;
(c) by attending the Annual Meeting in person and personally
voting the shares represented by the proxy; or
(d) by instrument in writing executed by the Member or by his
attorney authorized in writing, or, if the Member is a
corporation, under its corporate seal, or by an officer or
attorney thereof duly authorized, and deposited either at the
head office of the Company at any time up to and including the
last business day preceding the day of the Annual Meeting, or
any adjournment thereof, at which the proxy is to be used, or
with the Chairman of such Annual Meeting on the day of the
meeting, or any adjournment thereof.
PURPOSES OF The Annual Meeting has been called for the purposes of (1)
ANNUAL MEETING electing directors, (2) amending the Articles of
Association to increase the maximum number of members of
the Board of Directors, (3) amending the Articles of Association to effect a
one-for-ten reverse stock split of the Company's Common Shares and Class B
Preferred Shares and (4) transacting such other business as may properly come
before the meeting.
<PAGE> 5
VOTING OF The Board of Directors has fixed the close of business on
SECURITIES May 6, 1997, as the date for determining the Members
entitled to notice of, and to vote at, the Annual Meeting
and any adjournment thereof (the "Record Date"). A total of [28,252,182] Common
Shares of a par value of U.S. $.00167 each (the "Common Shares") and 8,994,000
Class B Preferred Shares of a par value of $.00167 each (the "Class B Preferred
Shares") were outstanding at the close of business on that date. Each Common
Share and each Class B Preferred Share is entitled to one vote for any matter
presented at the Annual Meeting for consideration and action by the Members. In
addition, the Company has authorized 1,000,000 Class A Preferred Shares of a par
value of U.S. $0.01 each (the "Class A Preferred Shares"), none of which are
outstanding.
The presence, in person or by proxy, of the holders of a majority of
Common Shares and Class B Preferred Shares entitled to vote will constitute a
quorum for the meeting. Voting of Common Shares and Class B Preferred Shares is
on a non-cumulative basis. Assuming the presence of a quorum, the affirmative
vote of the holders of a majority of the Common Shares and Class B Preferred
Shares voting at the meeting is required for approval of (i) the election of
each of the nominees for director, (ii) the amendment to increase the maximum
number of members of the Board of Directors and (iii) the amendment to effect a
one-for-ten reverse stock split of the Common Shares and the Class B Preferred
Shares.
All valid proxies received in response to this solicitation will be
voted in accordance with the instructions indicated thereon by the Members
giving such proxies. IF NO CONTRARY INSTRUCTIONS ARE GIVEN, SUCH PROXIES WILL BE
VOTED FOR (1) THE ELECTION OF THE NOMINEES FOR DIRECTOR NAMED IN THIS PROXY
STATEMENT, (2) THE AMENDMENT TO INCREASE THE MAXIMUM NUMBER OF MEMBERS OF THE
BOARD OF DIRECTORS AND (3) THE AMENDMENT TO EFFECT A ONE-FOR-TEN REVERSE STOCK
SPLIT OF THE COMMON SHARES AND CLASS B PREFERRED SHARES.
For voting purposes, abstentions will be counted for the purpose of
establishing a quorum and will not be voted. Broker non-votes will not be
counted for the purpose of establishing a quorum and will not be voted.
OWNERSHIP OF The following table sets forth certain information regarding
VOTING beneficial ownership of the Common Shares and the Class B
SECURITIES Preferred Shares, as of May 6, 1997, by (i) persons owning
beneficially 5% or more of the Class B Preferred Shares
and/or the Common Shares, (ii) each of the Company's directors and certain of
its executive officers, and (iii) all directors and executive officers as a
group:
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class (8)
- -------------- --------------------- -------------------- ------------
<S> <C> <C> <C>
Class B George G. Usher, 5,994,000 66.7%
Preferred Shares Director, President
and CEO
RR 1, Kettleby, Ontario
Canada, L0G LJ0
Class B Thomas C. Usher 3,000,000 33.3%
Preferred Shares Vice Chairman and
Director
P.O. Box N7525
Nassau, Bahamas
Common Shares Joseph Buchman [1,017,351](1) [3.9%]
Director
46 Belmont Drive West
Roslyn, NY 11577
Common Shares Natu Patel [113,900](2) *
Director
9767 Sun Pointe Drive
Beynton Beach, FL 33437
</TABLE>
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<PAGE> 6
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class (8)
- -------------- --------------------- -------------------- ------------
<S> <C> <C> <C>
Common Shares George G. Usher [863,342] (3) [3.0%]
Director, President
and CEO
RR 1, Kettleby, Ontario
Canada, LOG LJ0
Common Shares Ruth L. Usher [1,771,397](4) [6.3%]
Director
P.O. Box N7525
Nassau, Bahamas
Common Shares Thomas C. Usher [7,173,364](5) [25.3%]
Vice Chairman and
Director
P.O. Box N7525
Nassau, Bahamas
Common Shares Sharon D. Wardlaw, [12,400](6) *
Secretary and Treasurer
5 Gondola Crescent
Scarborough, Ontario
Canada M1G 2J2
Common Shares Alec D. Keith [800,000](7) [2.8%]
Chairman and Director
4802 N. Greentree Drive
Litchfield Park, AZ 85340
All Executive Officers and [11,848,413] [41.9%]
Directors as a Group
(7 persons) (9)
</TABLE>
- -----------------------------
*Less than one (1%) percent.
(1) Includes [503,977] shares owned directly by Joseph Buchman and
[413,374] shares owned directly by Josette Buchman, his wife, and
[100,000] shares under option to Joseph Buchman, subject to acquisition
within sixty (60) days.
(2) Includes [3,900] shares owned by Natu Patel and [110,000] shares under
option to Natu Patel subject to acquisition within sixty (60) days.
(3) Includes [227,713] shares owned directly by George G. Usher, [64,629]
shares owned directly by his wife, Shelagh Usher, and [571,000] shares
under option to George G. Usher, subject to acquisition by George G.
Usher within sixty (60) days.
(4) Includes [1,271,397] shares owned directly by Ruth L. Usher, and
[500,000] shares under option to Ruth L. Usher, which are subject to
acquisition within sixty (60) days. Also included in share holdings
of Thomas C. Usher, her husband. See Note 5 below.
(5) Includes [1,058,549] shares owned directly by Thomas C. Usher,
[3,267,652] shares owned by companies controlled by Thomas C.
Usher, [1,075,766] shares under option subject to acquisition by
Thomas C. Usher within sixty (60) days, [1,271,397] shares owned
directly by Ruth L. Usher, his wife, and [500,000] Common Shares under
option, subject to acquisition by Ruth L. Usher within sixty (60)
days. Does not include shares owned by George G. Usher, his son, or by
the family of George G. Usher.
(6) Includes [400] shares owned directly by Sharon Wardlaw and [12,000]
shares under option to her, subject to acquisition within sixty (60)
days.
-3-
<PAGE> 7
(7) Includes [500,000] shares owned directly by Alec D. Keith and
[300,000] shares under option to him, subject to acquisition within
sixty (60) days.
(8) As of May 6, 1997, the Record Date, the Company had outstanding
8,994,000 Class B Preferred Shares and [28,252,182] Common Shares and
options exercisable within sixty (60) days to purchase an additional
[3,170,766] Common Shares, for a total of [31,442,948] Common Shares.
(9) Includes ownership of Common Shares only. George G. Usher and Thomas C.
Usher own all of the outstanding Class B Preferred Shares, as outlined
above.
BOARD OF The Board of Directors currently consists of six members.
DIRECTORS The directors of the Company are divided into three classes,
each consisting of two directors, designated as Class I,
Class II and Class III. At each Annual Meeting, one class of directors is
elected to serve for a three-year term or until their respective successors are
duly elected and qualified. James F. Grandy resigned as a Class I Director
effective October 30, 1996. On November 1, 1996, Thomas C. Usher resigned from
the position of Chairman of the Board and was appointed Vice Chairman of the
Board of Directors. On November 1, 1996, Alec D. Keith was appointed by the
Board of Directors as a Class I Director and Chairman of the Board.
No director is compensated for serving on the Board. George G. Usher,
Thomas C. Usher and Natu Patel, all of whom are directors, receive payment as
officers and employees of the Company. Family relationships among the Company's
officers and directors include: Thomas C. Usher and George G. Usher are father
and son, and Thomas C. Usher and Ruth L. Usher are husband and wife.
The following provides, as of May 6, 1997, the continuing directors
whose terms of office will continue after the Annual Meeting, their principal
occupation and employment, age, the year in which each became a director of the
Company, and directorships in companies having securities registered pursuant to
the Securities Exchange Act of 1934, as amended.
CONTINUING DIRECTORS WHOSE TERMS EXPIRE AT THE
ANNUAL MEETING IN 1998 (CLASS I DIRECTORS)
------------------------------------------
<TABLE>
<CAPTION>
Year First
Elected
Name and Occupation Age Director
------------------- --- --------
<S> <C> <C>
JOSEPH BUCHMAN, Senior Account 57 1981
Executive with the Metropolitan Life
Insurance Company since 1979.
ALEC D. KEITH, Chairman of the Board 64 1996
since November 1996. He formerly served
as Chairman of Watson Pharmaceuticals, Inc.
from 1991 to 1996. He continues
to serve as a director of Watson
Pharmaceuticals, Inc. He also served
as Chairman and CEO at
Zetachron Inc. from 1984 to _____.
</TABLE>
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<PAGE> 8
CONTINUING DIRECTORS WHOSE TERMS EXPIRE AT THE
ANNUAL MEETING IN 1999 (CLASS II DIRECTORS)
-------------------------------------------
<TABLE>
<CAPTION>
Year First
Elected
Name and Occupation Age Director
------------------- --- --------
<S> <C> <C>
NATU PATEL, Vice President (Production) 51 1987
of the Company and the Chairman of
Chemdex, Inc., a subsidiary of the
Company, since 1994. Previously
employed by the Company in various
positions since 1972. Founder of Novadex,
Inc., a Florida based company which
performs scientific research for the
company.
RUTH L. USHER, Retiree since 1991. 82 1979
</TABLE>
PROPOSALS
PROPOSAL NO. 1
ELECTION OF BOARD MEMBERS
NOMINEES FOR TERMS
EXPIRING AT THE ANNUAL MEETING IN 2000 (CLASS III DIRECTORS)
------------------------------------------------------------
The following two persons, each of whom is currently serving as a
director, have been nominated for re-election by the Board of Directors to serve
as directors for a term expiring at the Annual Meeting in 2000:
<TABLE>
<CAPTION>
Year First
Elected
Name and Occupation Age Director
------------------- --- --------
<S> <C> <C>
GEORGE G. USHER, President and Chief 38 1988
Executive Officer of the Company since
1993 and 1996, respectively. Vice
President of Dextran Products Limited, a
subsidiary of the Company, since
1987. Previously employed by
the Company in various positions since
1982.
THOMAS C. USHER, Vice Chairman of 82 1979
the Company since November 1996.
Chairman of the Company and Chief
Executive Officer from May 1972
to November 1996. Chairman of Dextran
Products Limited and of all of the
Company's other subsidiaries since their
formation.
</TABLE>
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<PAGE> 9
All nominees for director have indicated their willingness to serve. The
Board of Directors has no reason to believe that any of the director nominees
will be unable to serve as a director. In the event, however, of the death or
unavailability of any director nominee or nominees, the proxy to that extent
will be voted for such other person or persons as the Board of Directors may
recommend.
VOTE REQUIRED. The affirmative vote of the holders of a majority of the
Common Shares and the Class B Preferred Shares present, in person or by poxy,
and entitled to vote at the Annual Meeting is required to elect each of the
nominees for director. All proxies will be voted to elect each of the nominees
for director unless a contrary vote is indicated on the enclosed proxy card.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH
OF THE NOMINEES FOR DIRECTOR.
PROPOSAL NO. 2
AMENDMENT TO ARTICLES OF ASSOCIATION TO
INCREASE SIZE OF BOARD OF DIRECTORS
GENERAL. Currently, Article 53 of the Articles of Association of the
Company (the "Articles") provides that the authorized number of directors shall
not be less than three nor more than six and that the Members may by ordinary
resolution from time to time increase or reduce the maximum or minimum number of
directors. To date, the Members have authorized a maximum of six directors. On
April 2, 1997, the Board of Directors adopted a resolution to amend Article 53
of the Articles to increase the maximum number of directors to nine (the
"Authorized Directors Amendment").
TEXT OF AUTHORIZED DIRECTOR AMENDMENT. The Authorized Directors
Amendment will be formally implemented by amending the present Article 53 of the
Articles as follows:
Delete the first sentence of Article 53 in its entirety and substitute
with the following new first sentence of Article 53:
Subject as hereinafter provided, the Directors shall not be less than
three (3) nor more than nine (9).
REASONS FOR THE AUTHORIZED DIRECTORS AMENDMENT. The purpose of the
Authorized Directors Amendment is to provide more flexibility to the Board with
respect to determining the number of directors on the Board. With the ability to
fix the number of directors at a number greater than six, the Company may retain
additional directors whose skills and experience will benefit the Company and
the conduct and operations of the Board, without subjecting the Company or its
Members to the additional expense and effort required to amend the Articles
each time the Company wishes to add a new director.
EFFECT OF THE AUTHORIZED DIRECTORS AMENDMENT. Upon Member approval of
the Authorized Directors Amendment, the authorized number of directors shall not
be less than three nor more than nine. As a result, there will be a vacancy of
three members of the Board of Directors. In addition, the size of each of the
three classes of directors will be increased to three members.
At present, the Board of Directors has no intention of nominating
individuals at the Annual Meeting to fill any of the vacancies resulting from
the approval of the Authorized Directors Amendment. The Board will retain the
authority granted to it under Article 68 of the Articles to fill the three
vacancies at a later date without obtaining Member approval.
VOTE REQUIRED. The affirmative vote of the holders of a majority of the
Common Shares and the Class B Preferred Shares present, in person or by proxy,
and entitled to vote at the Annual Meeting is
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<PAGE> 10
required to approve the Authorized Directors Amendment. All proxies will be
voted to approve the Authorized Directors Amendment unless a contrary vote is
indicated on the enclosed proxy card.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
AUTHORIZED DIRECTORS AMENDMENT TO INCREASE THE MAXIMUM NUMBER OF MEMBERS OF THE
BOARD OF DIRECTORS.
PROPOSAL NO. 3
AMENDMENT TO ARTICLES OF ASSOCIATION TO EFFECT A REVERSE STOCK SPLIT
DESCRIPTION OF THE REVERSE STOCK SPLIT. On April 2, 1997, the Board of
Directors adopted a resolution proposing that the Articles be amended to effect
a one-for-ten reverse stock split of the authorized and outstanding Common
Shares and Class B Preferred Shares (the "Reverse Split"). If the Reverse Split
is approved by the requisite vote of the Company's Members, upon the filing of a
certified copy of the resolution authorizing amendment to the Articles with the
Bahamian Registrar (the "Reverse Split Amendment"), the Reverse Split will be
deemed effective on the date of such filing (the "Reverse Split Effective
Date").
Without any further action on the part of the Company or the Members,
after the Reverse Split, each certificate representing Common Shares and Class B
Preferred Shares outstanding immediately prior to the Reverse Split (the "Old
Shares") will be deemed to represent one tenth of the number of Common Shares
and Class B Preferred Shares after the Reverse Split (the "New Shares").
The Company has authorized 1,000,000 Class A Preferred Shares of $0.01
par value each. As of the Record Date, the Company has not issued any Class A
Preferred Shares. Currently, each Class A Preferred Share is convertible into
one Common Share. Neither the conversion ratio nor the other rights of the Class
A Preferred Shares will be affected by the Reverse Split. However, the aggregate
number of Common Shares into which the authorized Class A Preferred Shares are
convertible will be reduced by a factor of ten.
Accordingly, the number of Common Shares authorized by the Articles will
be reduced from 40,000,000 to 4,000,000 as a result of the Reverse Split. In
addition, the number of Common Shares into which each Class A Preferred Share
is convertible will be reduced from 1,000,000 to 100,000. Also, the number of
Class B Preferred Shares authorized by the Articles will be reduced from
8,994,000 to 899,400 as a result of the Reverse Split. Finally, the number of
Class A Preferred Shares authorized by the Articles will be reduced from
1,000,000 to 100,000.
No certificates or scrip representing fractional shares of the Common
Shares and Class B Preferred Shares will be issued to Members because of the
Reverse Split. Nor will Members receive cash for any fraction of shares. In lieu
thereof, each Member whose Old Shares are not evenly divisible by 10 will
receive one additional New Share for the fractional New Share that such Member
would otherwise be entitled to receive as a result of the Reverse Split. If a
Member owns fewer than ten Common Shares, that Member will be entitled to one
whole New Share. This method will cause a slight increase in the total number of
New Shares outstanding after the Reverse Split from the numbers stated below.
The actual number of New Shares cannot be determined at this time.
REASONS FOR THE REVERSE STOCK SPLIT. The Board of Directors believes
that the Reverse Split is in the best interests of the Company and its Members
for several reasons. First, the Board of Directors expects the Reverse Split to
help the Company maintain its current listing on the Nasdaq Small
Capitalization Market (the "Small Cap Market"). On average, the Common Shares
trade at $_____ per share. Under existing rules, Small Cap issuers with
securities trading below $1 per share may remain listed if they meet the
following alternative test: (i) $1 million in market value of public float and
(ii) $2 million in capital and surplus. The Nasdaq has recently announced that
it has submitted more stringent
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<PAGE> 11
continued listing requirements for the Small Cap Market to the Securities and
Exchange Commission (the "SEC") for its approval.
If the proposed listing requirements are adopted by the SEC in their
present form, all Small Cap Market issuers will be required to maintain a $1
minimum per share price to maintain their current listing. Furthermore, the
alternative test for listing will be eliminated and may no longer be relied upon
by Small Cap Market issuers. The listing requirements are expected to be
approved by the SEC some time later this year. Thereafter, Small Cap Market
issuers will have a specified period to bring themselves into compliance before
being delisted.
Consequently, the Common Shares are in danger of being delisted from the
Small Cap Market. Management believes that if the Reverse Split is approved by
the Members at the Annual Meeting, and the Reverse Split is effected, then the
Common Shares will have a minimum bid price in excess of $1.00 per share and,
therefore, continue to be listed and traded on the Small Cap Market.
If the Reverse Split is not approved by the Members at the Annual
Meeting, then it is highly likely that the Common Shares will cease to be listed
and traded on the Small Cap Market. In such event, any trading of the Common
Shares will likely be conducted in the over-the-counter market of the OTC
Bulletin Board. Consequently, an investor may find the Common Shares less
liquid, therefore being more difficult to dispose of, or to obtain accurate
quotations as to the price of the Common Shares. At present, the bid price of
the Common Shares is below $1.00. The Reverse Split is necessary to keep the
Company in compliance with Nasdaq's continued listing requirements. Management
believes that a reverse split of the Common Shares is the best strategy to keep
the Company in compliance with the proposed continued listing requirements of
the Nasdaq Small Cap Market.
Secondly, the Reverse Split should enhance the acceptance of the Common
Shares by the financial community and investing public. The reduction in the
number of issued and outstanding Common Shares caused by the Reverse Split and
the anticipated increase in the bid price after giving effect to the Reverse
Split is expected to result in a broader market for the Common Shares than that
which currently exists.
A variety of brokerage house policies and practices tend to discourage
individual brokers within those firms from dealing with lower priced stocks.
Some of those policies and practices pertain to the payment of broker's
commissions and to time consuming procedures that function to make the handling
of lower priced stocks economically unattractive to brokers. In addition, the
structuring of trading commissions also tends to have an adverse impact upon
holders of lower priced stock because the brokerage commission on a sale of
lower price stock generally represents a higher percentage of the sales price
than the commission on a relatively higher priced issue. The Reverse Split
should result in a price level for the Common Shares that will reduce, to some
extent, the effect of the above-referenced practices and policies of brokerage
firms and diminish the adverse impact of trading commissions on the market for
the Common Shares. The expected increased price level may also encourage
interest and trading in the Common Shares and possibly promote greater liquidity
for the Company's Members, although such liquidity could be adversely affected
by the reduced number of Common Shares outstanding after the Reverse Split
Effective Date.
HOWEVER, THERE CAN BE NO ASSURANCE THAT ANY OR ALL OF THESE EFFECTS WILL
OCCUR; INCLUDING, WITHOUT LIMITATION, THAT THE MARKET PRICE PER NEW SHARE OF
COMMON SHARES AFTER THE REVERSE SPLIT WILL BE TEN (10) TIMES THE MARKET PRICE
PER OLD SHARE OF COMMON SHARES BEFORE THE REVERSE SPLIT, OR THAT SUCH PRICE WILL
EITHER EXCEED OR REMAIN IN EXCESS OF THE CURRENT MARKET PRICE OR THE MINIMUM
PER SHARE PRICE TO MAINTAIN LISTING ON THE SMALL CAP MARKET. FURTHER, THERE IS
NO ASSURANCE THAT THE MARKET FOR THE COMMON SHARES WILL BE IMPROVED. MEMBERS
SHOULD NOTE THAT THE BOARD OF DIRECTORS CANNOT PREDICT WHAT EFFECT THE REVERSE
SPLIT WILL HAVE ON THE MARKET PRICE OF THE COMMON SHARES.
-8-
<PAGE> 12
The Common Shares are currently registered under Section 12(b) of the
Exchange Act and as a result, the Company is subject to the periodic reporting
and other requirements of the Exchange Act. The Reverse Split will not affect
the registration of the Common Shares under the Exchange Act.
EFFECT OF REVERSE SPLIT ON MEMBERS. The principal effect of the Reverse
Split will be to decrease the number of Common Shares and Class B Preferred
Shares authorized and outstanding by a factor of ten and increase the par value
of the Common Shares and Class B Preferred Shares by a factor of ten. In
addition, the number of Common Shares subject to options and the number of
Common Shares into which each Class A Preferred Share is convertible will be
reduced by a factor of ten. The Reverse Stock Split also would increase the
exercise price of such options by a factor of ten.
As of the Record Date, there were [28,252,182] Common Shares and 8,994,
000 Class B Preferred Shares outstanding. If the Reverse Split is effected,
there will be approximately [2,825,219] Common Shares and 899,400 Class B
Preferred Shares outstanding. In addition, as of the Record Date, [3,225,766]
Common Shares were subject to outstanding options granted during the 1996 and
1997 fiscal years. After the Reverse Split Effective Date, [317,077] Common
Shares will be subject to outstanding options.
The par value of the Common Shares will be increased from $0.00167 to
$0.0167 following the Reverse Split Effective Date. Similarly, the par value of
the Class B Preferred Shares will be increased tenfold from $0.00167 to $0.0167
and the par value of the Class A Preferred Shares will be increased from $0.01
to $0.10 following the Reverse Split Effective Date.
The New Shares issued pursuant to the Reverse Split will be fully paid
and nonassessable. The voting and other rights that presently characterize the
Common Shares and Class B Preferred Shares will not be altered by the Reverse
Split. Assuming the Reverse Split is approved by the Company's Members at the
Annual Meeting, each Member's percentage ownership interest in the Company and
proportional voting power will remain unchanged, except for minor differences
resulting from adjustments for fractional shares.
Members have no right under Bahamian law or under the Articles to
dissent from the Reverse Split or to dissent from the rounding to the nearest
whole share of any fractional share resulting from the Reverse Split in lieu of
issuing fractional shares.
The Reverse Split may result in some Members owning "odd-lots" of less
than 100 Common Shares. Brokerage commissions and other costs of transactions in
odd-lots are generally somewhat higher than the costs of transactions in
"round-lots" of even multiples of 100 shares.
EXCHANGE PROCEDURES. As soon as practicable after the Reverse Split
Effective Date, the Company will send a letter of transmittal to each holder of
record of Old Shares outstanding on the Reverse Split Effective Date. The letter
of transmittal will contain instructions for the surrender of certificate(s)
representing Old Shares to ChaseMellon Shareholder Services, the Company's
exchange agent (the "Exchange Agent"). Upon completion and execution of the
letter of transmittal and return thereof to the Exchange Agent, together with
certificate(s) representing Old Shares, a Member will be entitled to receive a
certificate representing the number of New Shares into which his Old Shares have
been reclassified and changed as a result of the Reverse Split.
MEMBERS SHOULD NOT SUBMIT ANY CERTIFICATES UNTIL REQUESTED TO DO SO. No
new certificate will be issued to a Member until he has surrendered his
outstanding certificate(s) together with the properly completed and executed
letter of transmittal to the Exchange Agent.
-9-
<PAGE> 13
TEXT OF REVERSE SPLIT AMENDMENT. The Reverse Split will be formally
implemented by amending the present Article 2(a) of the Articles as follows:
Delete the first paragraph of Article 2(a) in its entirety and
substitute the following new first paragraph of Article 2(a):
That the 40,000,000 Common Shares of $0.0016 (the 6 recurring) par value
each be consolidated such that for every ten (10) Common Shares thereof one (1)
Common Share of par value of $0.016 be obtained. The 8,994,000 Class B Preferred
Shares of $0.0016 (the 6 recurring) par value be consolidated such that for
every ten Class B Preferred Shares thereof one Class B Preferred Share par value
of $0.016 be obtained. The 1,000,000 Class A Preferred Shares of $0.01 par value
be consolidated such that for every ten Class A Preferred Shares they may
hereafter be converted into one Common Share and that the Class A Preferred
Share par value of $0.10 be obtained.
That the authorized share capital of the Company be restated as U.S.
$91,650 divided into 4,000,000 Common Shares of $0.016 par value each, 100,000
Class A Preferred Shares of $0.10 par value each, and 899,400 Class B Preferred
Shares of $0.016 par value each.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. The following is a
summary of the material anticipated United States federal income tax
consequences of the Reverse Split to Members of the Company who are United
States Persons as defined in Section 7701(a)(30) of the Internal Revenue Code
of 1986, as amended (the "Code"). This summary is based on the United States
federal income tax laws as now in effect and as currently interpreted; it does
not take into account possible changes in such tax laws or interpretations,
including amendments to applicable statutes, regulations and proposed
regulations or changes in judicial or administrative rulings, some of which may
be retroactive effect. This summary does not purport to address all aspects of
the possible United States federal income tax consequences of the Reverse Split
and is not intended as tax advice to any person. In particular, and without
limiting the foregoing, this summary does not consider the United States
federal income tax consequences to United States Persons which are Members of
the Company in light of their individual investment circumstances, to United
States Persons; if any, who are treated under the Code as having held, either
directly or by attribution, ten percent or more of the total combined voting
power of the Company at the time during the past five years or to United States
Persons which are subject to special treatment under the United States federal
income tax laws (for example, life insurance companies, financial
institutions, tax-exempt organizations, regulated investment companies and
foreign taxpayers). The summary does not address any consequence of the
Reverse Split of Class B Preferred Shares nor does it address any consequences
of the Reverse Split under any state, local or foreign tax laws.
The Company has not sought and will not seek an opinion of counsel or a
ruling from the Internal Revenue Service (the "Service") regarding the United
States federal income tax consequences of the Reverse Split of the Common
Shares. The Company, however, believes that because the Reverse Split of the
Common Shares is not part of a plan to periodically increase a Member's
proportionate share in the assets or earnings and profits of the Company, the
Reverse Split of the Common Shares will have the following United States
federal income tax effects:
1. A Member will not recognize gain or loss on the exchange.
In the aggregate, the Member's basis in the New Shares
will equal his basis in the Old Shares.
2. A Member's holding period for the New Shares will be the
same as the holding period of the Old Shares exchanged
therefor.
3. Assuming that any required disclosure is made by the Members
under Section 367 of the Code, the Reverse Split of the Common
Shares will constitute a reorganization within the meaning of
Section 368(a)(1)(E) of the Code.
THE ABOVE DISCUSSION OF TAX CONSEQUENCES IS FOR GENERAL INFORMATION
ONLY. ACCORDINGLY, EACH MEMBER IS ENCOURAGED TO CONSULT HIS OR HER TAX
ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES OF THE REVERSE SPLIT TO SUCH
MEMBER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN
INCOME TAX AND OTHER LAWS.
MISCELLANEOUS. The Board of Directors may abandon the Reverse Split at
any time prior to the Reverse Split Effective Date if for any reason the Board
of Directors deems it advisable to abandon the proposal. The Board of Directors
may consider abandoning the Reverse Split if it determines, in its sole
discretion, that the Reverse Split would adversely affect the ability of the
Company to raise capital or the liquidity of the Common Shares, among other
things.
VOTE REQUIRED. The affirmative vote of the holders of a majority of the
Common Shares and the Class B Preferred Shares present, in person or by proxy,
and entitled to vote at the Annual Meeting is required to approve the Reverse
Split Amendment. All proxies will be voted to approve the Reverse Split
Amendment unless a contrary vote is indicated on the enclosed proxy card.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF AMENDMENT
TO ARTICLES OF ASSOCIATION TO EFFECT A ONE-FOR-TEN REVERSE STOCK SPLIT OF THE
COMMON SHARES AND CLASS B PREFERRED SHARES.
-10-
<PAGE> 14
BOARD During the fiscal year ended January 31, 1997, there were
MEETINGS AND four meetings of the Board of Directors and action was
COMMITTEES taken on three occasions by unanimous written consent of
the Board of Directors in lieu of meeting. With the
exception of Joseph Buchman and James Grandy, each director attended at least
75% of the aggregate number of meetings held by the Board of Directors. The
Company does not have nor has it had any standing nominating, audit or
compensation committees of the Board nor are there any committees which perform
similar functions. Compensation decisions, including the granting of options,
are made by Thomas C. Usher, Vice Chairman, in his sole discretion, with the
advice of George G. Usher, the Company's President and Chief Executive Officer.
COMPENSATION Shown below is information concerning the annual and
OF EXECUTIVE long-term compensation for services in all capacities to the
OFFICERS Company for the fiscal years ended January 31, 1997, 1996
and 1995 of those persons who were, at January 31, 1997 (i)
the chief executive officer and (ii) the two other executive officers of the
Company who had total annual salary plus bonus that exceeded $100,000 for the
year ended January 31, 1997 (the "Named Officers"). No other officers of the
Company had total annual salary plus bonus that exceeded $100,000 for the year
ended January 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG TERM
COMPENSATION COMPENSATION
------------ ------------
Common Shares
Other Underlying
Name and Fiscal Annual Option
Principal Position Year Salary(1) Bonus Compensation(2) Awards
- ------------------ ---- --------- ----- --------------- ------
<S> <C> <C> <C> <C> <C>
George G. Usher 1997 $108,211 none ______ 571,000
President and 1996 $ 75,800 none ______ 571,000
Chief Executive 1995 $ 65,000 none ______ 571,000
Officer
Thomas C. Usher 1997 $120,000 none ______ 1,275,766
Vice Chairman 1996 $120,000 none ______ 1,275,766
1995 $120,000 $50,000 ______ 1,275,766
Natu Patel 1997 $110,000 none ______ 110,000
Vice President 1996 $110,000 none ______ 110,000
1995 none none ______ 110,000
</TABLE>
- ----------------
(1)
(2)
-11-
<PAGE> 15
OPTION GRANTS IN FISCAL YEAR 1997
The following table sets forth information with respect to the stock
options granted to the Named Officers during the fiscal year ended January 31,
1997.
<TABLE>
<CAPTION>
Number of
Securities Percent of Total
Underlying Options Granted Price on Potential Realizable Value At Assumed
Options to Employees in Exercise Date of Expiration Annual Rates of Stock Price Appreciation
Name Granted Fiscal Year (1) Price (2) Grant Date 0% 5% 10%
- ---- ---------- ---------------- --------- -------- ------------ -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
George G. Usher 71,000 6.56% $.75 $1.031 6/30/97 $19,951.00 $23,611.05 $27,271.10
Thomas C. Usher 775,766 71.77% $.75 $1.031 6/30/97 $217,993.06 $257,980.98 $297,971.72
Natu Patel 110,000 10.17% $.75 $1.031 6/30/97 $30,910.00 $36,580.50 $42,251.00
- ----------------------
<FN>
(1) A total of 1,080,766 stock options were granted by the Company during the
fiscal year ended January 31, 1997.
(2) The market price of the Common Shares at June 28, 1996, the date of the
grant, was $1.031 per share.
</TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997 AND
1997 FISCAL YEAR-END OPTION VALUES
The following table sets forth, for each of the three Named Officers,
the exercise of options to purchase Common Shares during the fiscal year ended
January 31, 1997, and the year-end value of unexercised options to purchase
Common Shares held by the three Named Officers at January 31, 1997.
<TABLE>
<CAPTION>
Number of Secu-
rities Underlying Value of Unexercised
Shares Unexercised Options In-the-Money Options
Acquired on Value at Fiscal Year End; at Fiscal Year End;
Exercise Realized All Exercisable All Exercisable (1)
------------ -------- ---------------------- -------------------
Name
- ----
<S> <C> <C> <C> <C>
George G. Usher none none 571,000 $35,973.00
Thomas C. Usher 200,000 $150,000 1,075,766 $67,773.26
Natu Patel none none 110,000 $6,930.00
- ----------------------
<FN>
(1) The market price of the Common Shares at January 31, 1997 was $0.813 per
share.
</TABLE>
-12-
<PAGE> 16
EXECUTIVE As of January 31, 1997, the following persons served as
OFFICERS executive officers of the Company. All executive officers
serve for a one-year term or until their successors are
elected or appointed at the meeting of the Board of Directors immediately
following the Annual Meeting.
<TABLE>
<CAPTION>
Name Age Title
- ---- --- -----
<S> <C> <C>
Alec D. Keith* 64 Chairman of the Board
George G. Usher* 38 President, CEO and
Director
Thomas C. Usher* 82 Vice Chairman of the
Board
Natu Patel* 51 Vice President and
Director
Sharon D. Wardlaw** 44 Secretary and Treasurer
<FN>
*See "Board of Directors" for biographical information and period of service.
**Sharon D. Wardlaw has served as the Chief Financial Officer of the Company since
1994. She also serves as the President of Dextran Products, a subsidiary of the
Company.
</TABLE>
EMPLOYMENT George G. Usher and Thomas C. Usher are employed by the
AGREEMENTS Company pursuant to employment agreements. On December 22,
1993, the Company entered into an employment agreement with
George G. Usher which provided for his employment as President of the Company
for a five-year term commencing February 1, 1994 at an annual salary of
$65,000.
On December 22, 1993, the Company entered into an employment agreement
with Thomas C. Usher which provided for his employment as Chairman and Chief
Executive Officer of the Company for a five-year term commencing February 1,
1994 at an annual salary of $120,000 subject to CPI adjustments. On November 1,
1996, the Company entered into an amended employment agreement with Thomas C.
Usher which provided for his resignation as Chairman of the Board and Chief
Executive Officer and employment as Vice Chairman of the Company for the
remainder of his five year term.
SECTION 16(A) Section 16(a) of the Exchange Act, requires the Company's
BENEFICIAL directors, executive officers and any person who
OWNERSHIP beneficially owns more than ten percent of the Common Shares
REPORTING to file with the SEC an initial report of ownership and
COMPLIANCE reports of changes in ownership of Common Shares. Officers,
directors and greater-than-ten percent Members are required
by SEC regulation to furnish the Company with copies of all Section 16(a)
reports they file.
To the Company's knowledge, based solely upon a review of Forms 3, 4
and 5 and amendments thereto furnished to the Company and written
representations that no other reports were required, during the year ended
January 31, 1997, Messrs. Buchman, Patel, Grandy and George G. Usher and Ms.
Wardlaw each inadvertently failed to file a Form 4 on a timely basis to report a
single grant of options to acquire Common Shares.
Mr. Thomas C. Usher and Mrs. Ruth L. Usher each inadvertently failed to
file three Form 4s on a timely basis to report six transactions involving four
dispositions of shares by Mr. Thomas C. Usher, and two grants of stock options
to acquire Common Shares.
-13-
<PAGE> 17
The above transactions were subsequently reported on Form 5s filed with
the SEC in a timely manner. All other Section 16(a) filing requirements were met
in a timely manner.
COMPANY STOCK
PERFORMANCE
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
POLYDEX PHARMACEUTICALS LIMITED
The following performance graph compares the five-year cumulative total
returns
There can be no assurances that the Company's stock performance will
continue into the future with the same or similar trends depicted in the
performance graph above. The Company does not make or endorse any predictions as
to future stock performance.
-14-
<PAGE> 18
INDEPENDENT Historically, KPMG (formerly KPMG Peat Marwick Thorne)
PUBLIC (the "Former Accountant") has been engaged as the principal
ACCOUNTANT accountant to audit the Company's financial statements. On
March 7, 1996, the Company was advised by its Former
Accountant that it would decline to stand for re-election after the completion
of the audit for the fiscal year ended January 31, 1996.
No report of the Former Accountant on the financial statements of the
Company for either of the past two fiscal years contained any adverse opinion or
disclaimer of opinion, or was qualified or modified as to uncertainty, audit
scope, or accounting principles.
During the Company's past two fiscal years, or in the interim period
from February 1, 1996 (the start of the Company's most recent fiscal year)
through April 30, 1996 (the date of the report from the Former Accountant to the
Company for its audit of the Company's fiscal year ended January 31, 1996) there
were no reportable events as defined by SEC rules and regulations.
At the 1996 Annual Meeting, the Members authorized the Board of
Directors to engage either Ernst & Young LLP or Arthur Andersen LLP following
adjournment of the Annual Meeting. On December 18, 1996, the Company engaged
Ernst & Young LLP as independent public accountants of the Company for the
1997 fiscal year. Members are not being asked to approve their selection
because such approval is not required under the Articles.
Representatives of Ernst & Young LLP are not expected to be
present at the meeting.
FINANCIAL The consolidated balance sheet, consolidated income
STATEMENTS statement and other financial statements together with the
notes thereto for the fiscal year ended January 31,
1997 are included in the Company's 1997 Annual Report
which accompanies this Proxy Statement.
1997 ANNUAL The Company will provide without charge to each person
REPORT AND solicited by this Proxy Statement, upon the written request
FORM 10-K of such person, a copy of the Company's Annual Report on
Form 10-K, which includes financial statements, for the
fiscal year ended January 31, 1997. Such requests should be directed to
Secretary, Polydex Pharmaceuticals Limited, 421 Comstock Road, Scarborough,
Ontario, Canada M1L 2H5.
1998 The 1998 Annual Meeting will be held on or about June 26,
MEMBER 1998. The deadline for Members to submit proposals to the
PROPOSALS Company Secretary for inclusion in the Proxy Statement for
the 1998 Annual Meeting is expected to be February 26,
1998. The inclusion of any proposal will be subject to applicable rules of the
SEC. In the event, however, that the date of the 1998 Annual Meeting is changed
by more than 30 calendar days from the date currently contemplated, a proposal
must be received by the Company within a reasonable time before the solicitation
in connection with the meeting is made.
OTHER BUSINESS Management knows of no business which will be presented for
consideration at the Annual Meeting other than as stated in
the Notice of Meeting. If, however, other matters are properly brought before
the Annual Meeting, it is the intention of the Board designated proxy holders
(George G. Usher and Peter J. Higgs) to vote the shares represented thereby on
such matters in accordance with their judgment.
By Order of the Board of Directors,
SHARON WARDLAW
Secretary
May 16, 1997
<PAGE> 19
PROXY
POLYDEX PHARMACEUTICALS LIMITED
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned member hereby appoints Peter J. Higgs and George G.
Usher proxies, with power to act without the other and with power of
substitution, and hereby authorizes them to represent and vote, as designated on
the other side, all the shares of Polydex Pharmaceuticals Limited standing in
the name of the undersigned with all powers which the undersigned would possess
if present at the Annual General Meeting of Members of the Company to be held on
June 19, 1997 or any adjournment thereof. IF NO SPECIFICATION IS MADE, THE PROXY
WILL BE VOTED FOR THE ELECTION AS DIRECTORS OF THE NOMINEES LISTED ON THE
REVERSE SIDE, IN FAVOR OF THE PROPOSAL TO AMEND THE ARTICLES OF ASSOCIATION TO
INCREASE THE MAXIMUM NUMBER OF DIRECTORS, AND IN FAVOR OF THE PROPOSAL TO AMEND
THE ARTICLES OF ASSOCIATION TO EFFECT A ONE-FOR-TEN REVERSE STOCK SPLIT OF
COMMON SHARES AND CLASS B PREFERRED SHARES. AS TO ANY OTHER MATTER OR IF ANY OF
SAID NOMINEES IS NOT AVAILABLE FOR ELECTION, THE PROXIES SHALL VOTE IN
ACCORDANCE WITH THEIR BEST JUDGMENT.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
- - - - - - - - - - -- - - - - - - - - - - - - - - - - -- - - - - - - - - - - - -
- FOLD AND DETACH HERE -
<PAGE> 20
Pleas mark
your votes as [X]
indicated in
this example.
(Continued from other side)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
<TABLE>
<CAPTION>
<S> <C> <C>
Item 1 - ELECTION OF DIRECTORS Nominees: Thomas C. Usher and George G. Usher
FOR ALL WITHHOLD WITHHELD FOR: (WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
NOMINEES AUTHORITY FOR
LISTED ALL
[ ] [ ] ----------------------------------------------
Item 2 - PROPOSAL TO AMEND ARTICLES OF ASSOCIATION TO INCREASE MAXIMUM NUMBER OF DIRECTORS
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Item 3 - PROPOSAL TO AMEND ARTICLES OF ASSOCIATION TO EFFECT A ONE-FOR-TEN REVERSE STOCK SPLIT
OF COMMON SHARES AND CLASS B PREFERRED SHARES.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Dated: , 1997
----------------------------------------------
--------------------------------------------------------
Signature(s)
--------------------------------------------------------
Signature(s)
Please date, sign as name appears hereon, and
return promptly. Joint owners should each
sign. When signing as corporate officer,
partner, attorney, executor, administrator,
trustee or guardian, please give full title.
Please note any changes in your address
alongside the address as it appears in the
proxy.
</TABLE>
- - - - - - - - - - -- - - - - - - - - - - - - - - - - -- - - - - - - - - - - - -
- FOLD AND DETACH HERE -
