<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:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
Interferon Sciences, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class 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:
<PAGE> 2
INTERFERON SCIENCES, INC.
783 JERSEY AVENUE
NEW BRUNSWICK, NEW JERSEY 08901
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD , 1997
TO THE STOCKHOLDERS:
A Special Meeting of Stockholders of Interferon Sciences, Inc. (the
"Company") will be held at the offices of National Patent Development
Corporation, 9 West 57th Street, Suite 4170, New York, New York on the day
of , 1997 at 10:00 A.M., New York City time, for the following
purposes:
1. To consider and act upon a proposal to amend the Company's Restated
Certificate of Incorporation to effect a reverse stock split in which each
four shares of issued common stock, par value $.01 per share, of the
Company, whether issued and outstanding or held in treasury, will be
reclassified and changed into one share of new common stock, par value $.01
per share, of the Company.
2. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only stockholders of record as of the close of business on ,
1997 are entitled to receive notice of and to vote at the meeting. A list of
such stockholders shall be open to the examination of any stockholder during
ordinary business hours, for a period of ten days prior to the meeting, at the
place where the meeting is to be held.
BY ORDER OF THE BOARD OF DIRECTORS
DONALD W. ANDERSON
Secretary
New Brunswick, New Jersey
, 1997
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING, PLEASE FILL IN, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE.
<PAGE> 3
INTERFERON SCIENCES, INC.
783 JERSEY AVENUE
NEW BRUNSWICK, NEW JERSEY 08901
----------------
New Brunswick, New Jersey
, 1997
PROXY STATEMENT
The accompanying Proxy is solicited by and on behalf of the Board of
Directors of Interferon Sciences, Inc., a Delaware corporation (the "Company"),
in connection with a Special Meeting of Stockholders (the "Special Meeting") to
be held at the offices of National Patent Development Corporation ("NPDC"), 9
West 57th Street, Suite 4170, New York, New York on the day of ,
1997, at 10:00 A.M., New York City time, and at any adjournments thereof. The
approximate date on which this Proxy Statement and the accompanying Proxy were
first given or sent to security holders was , 1997.
Each Proxy executed and returned by a stockholder may be revoked at any
time thereafter, by written notice to that effect to the Company, attention of
the Secretary, prior to the Special Meeting, or to the Inspectors of Election,
at the Special Meeting, or by the execution and return of a later-dated Proxy,
except as to any matter voted upon prior to such revocation.
The Proxies in the accompanying form will be voted in accordance with the
specification made and, where no specification is given, such Proxies will be
voted FOR the proposal to amend the Company's Restated Certificate of
Incorporation to effect a reverse stock split (the "Reverse Stock Split") in
which each four shares of issued common stock, par value $.01 per share (the
"Common Stock"), of the Company, whether issued and outstanding or held in
treasury, will be reclassified and changed into one share of new common stock,
par value $.01 per share (the "New Common Stock"), of the Company. In the
discretion of the proxy holders, the Proxies will also be voted FOR or AGAINST
such other matters as may properly come before the Special Meeting. The
management of the Company is not aware that any other matter is to be presented
for action at the Special Meeting. Approval of the Reverse Stock Split will
require the affirmative vote of the holders of a majority of the outstanding
shares of Common Stock. Accordingly, an abstention or a broker "non-vote" (which
results when a broker holding shares for a beneficial owner has not received
timely voting instructions on certain matters from such beneficial owner) will
have the same affect on the outcome of the vote as a negative vote with respect
to the approval of the Reverse Stock Split.
VOTING SECURITIES
The Board of Directors has fixed the close of business on ,
1997 as the record date for the determination of stockholders entitled to
receive notice of and to vote at the Special Meeting. The issued and outstanding
stock of the Company on , 1997 consisted of 49,104,779 shares of
Common Stock, each entitled to one vote. A quorum of the stockholders is
constituted by the presence, in person or by proxy, of holders of record of
Common Stock representing a majority of the number of votes entitled to be cast.
NPDC, which beneficially owns 7,417,148 shares of the outstanding Common Stock
(representing approximately 15.1% of the votes entitled to be cast at the
Special Meeting), has advised the Company that it currently intends to vote all
of the shares of Common Stock it beneficially owns FOR the Reverse Stock Split.
<PAGE> 4
PRINCIPAL STOCKHOLDERS
The following table sets forth the number of shares of the Common Stock
beneficially owned as of February , 1997 by each person who is known by the
Company to own beneficially more than 5% of the Company's outstanding Common
Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENTAGE
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS(1)
- ----------------------------------------------------------- ------------------ -----------
<S> <C> <C>
National Patent Development Corporation.................... 7,417,148(2) 15.1%
Martin M. Pollak........................................... 7,979,648(2)(3) 16.1%
Jerome I. Feldman.......................................... 7,993,598(2)(4) 16.1%
Chancellor LGT Asset Management, Inc. ..................... 5,574,200(5) 11.4%
</TABLE>
- ---------------
(1) The percentage of class calculation assumes for each beneficial owner that
all of the options or warrants are exercised in full only by the named
beneficial owner and that no other options or warrants are deemed to be
exercised by any other stockholders.
(2) Includes (i) 5,242,148 shares of Common Stock owned by NPDC, (ii) 1,359,375
shares of Common Stock owned by Five Star Group, Inc. ("FSGI"), and (iii)
815,625 shares of Common Stock owned by MXL Industries, Inc. ("MXL"). FSGI
and MXL each is a wholly-owned subsidiary of NPDC. Based upon the common
stock and Class B Stock of NPDC outstanding at December 17, 1996, Martin M.
Pollak and Jerome I. Feldman, officers and directors of NPDC, and directors
of the Company, controlled in the aggregate approximately 9.2% of the voting
power of all voting securities of NPDC. This percentage for Mr. Pollak and
Mr. Feldman would increase to approximately 48.8% if they exercised all of
the presently outstanding and currently exercisable stock options to
purchase shares of the common stock and Class B Stock of NPDC held by them.
Accordingly, Messrs. Pollak and Feldman, through their ownership of NPDC
common stock, may be deemed to beneficially own the shares of Common Stock
beneficially owned by NPDC, FSGI, and MXL. However, Messrs. Pollak and
Feldman disclaim beneficial ownership of such 7,417,148 shares. 6,975,148 of
the shares of Common Stock owned by NPDC, FSGI, and MXL have been pledged to
a bank as collateral to secure indebtedness owed to such bank. The address
of NPDC and Messrs. Pollak and Feldman is 9 West 57th Street, Suite 4170,
New York, New York 10019.
(3) Includes (i) 7,417,148 shares of Common Stock beneficially owned by NPDC,
(ii) 1,000 shares of Common Stock held by Mr. Pollak's wife, and (iii)
510,000 shares of Common Stock issuable upon exercise of currently
exercisable stock options held by Mr. Pollak. Mr. Pollak disclaims
beneficial ownership of the shares of Common Stock owned by NPDC and his
wife.
(4) Includes (i) 7,417,148 shares of Common Stock beneficially owned by NPDC,
(ii) 2,950 shares of Common Stock held by certain members of Mr. Feldman's
family, and (iii) 510,000 shares of Common Stock issuable upon exercise of
currently exercisable stock options held by Mr. Feldman. Mr. Feldman
disclaims beneficial ownership of the shares of Common Stock owned by NPDC
and his family.
(5) Shares owned by funds managed by Chancellor LGT Asset Management, Inc.,
which has voting and dispositive power with respect to such shares. The
address of Chancellor LGT Asset Management, Inc. is 50 California Street,
San Francisco, California 94111.
2
<PAGE> 5
SECURITY OWNERSHIP OF DIRECTORS AND CERTAIN EXECUTIVE OFFICERS
The following table sets forth as of February , 1997 beneficial ownership
of shares of Common Stock of the Company by each director, each of certain
executive officers, and all directors and executive officers as a group.
<TABLE>
<CAPTION>
OF TOTAL NUMBER OF
TOTAL NUMBER OF PERCENT OF SHARES BENEFICIALLY OWNED,
SHARES BENEFICIALLY COMMON STOCK SHARES WHICH MAY BE
NAME OWNED OWNED ACQUIRED WITHIN 60 DAYS
- ------------------------------------------- ------------------- ------------ --------------------------
<S> <C> <C> <C>
Martin M. Pollak(1)........................ 7,979,648 16.1% 510,000
Jerome I. Feldman(2)....................... 7,993,598 16.1% 510,000
Samuel H. Ronel, Ph.D.(3).................. 361,000 * 335,500
Lawrence M. Gordon......................... 271,500 * 246,500
Stanley G. Schutzbank, Ph.D................ 386,000 * 355,500
Drew Stoudt................................ 118,000 * 109,000
Mei-June Liao.............................. 32,500 * 25,000
Scott N. Greenberg......................... 219,500 * 189,000
Leon Botstein, Ph.D........................ 20,000 * 20,000
Roald Hoffmann, Ph.D....................... 5,000 * 5,000
Sheldon L. Glashow......................... 5,000 * 5,000
Directors and Executive Officers as a Group
(14 persons)............................. 10,050,098 19.5% 2,386,000
</TABLE>
- ---------------
* The number of shares owned is less than one percent of the outstanding shares
of Common Stock.
(1) See footnotes (2) and (3) to Principal Stockholders table.
(2) See footnotes (2) and (4) to Principal Stockholders table.
(3) Includes 10,000 shares of Common Stock held by Dr. Ronel's wife. Dr. Ronel
disclaims beneficial ownership of the shares of Common Stock owned by his
wife.
3
<PAGE> 6
PROPOSAL TO AMEND THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION
TO EFFECT THE ONE-FOR-FOUR REVERSE COMMON STOCK SPLIT
On , 1997, the last reported sale price of the Common Stock on
the NASDAQ SmallCap Market was $ per share. The Board of Directors
believes that the recent per share price of the Common Stock has affected the
marketability of the existing shares, increased the amount and percentage of
transaction costs paid by individual stockholders, and affected the potential
ability of the Company to raise capital by issuing additional shares. The
Company believes there are several reasons for these effects, as summarized
below.
As a means of improving marketability of the Common Stock, reducing
stockholders' transaction costs, increasing the number of shares available for
future issuances, and other considerations, on , 1997, the Board of
Directors approved, subject to the stockholder approval solicited hereby, a
proposal to amend the Restated Certificate of Incorporation to effect the
Reverse Stock Split.
Although the Company's Board of Directors believes as of the date of this
Proxy Statement that the one-for-four Reverse Stock Split is advisable, the
Reverse Stock Split may be abandoned by the Board of Directors at any time
before, during, or after the Special Meeting. In addition, depending upon
prevailing market conditions, the Board of Directors may deem it advisable to
implement the Reverse Stock Split and concurrently declare a stock-for-stock
dividend in a ratio to be determined, the latter of which does not require
stockholder approval. Depending upon the amount of any such stock-for-stock
dividend, this would partially offset the decrease in the number of issued
shares resulting from the one-for-four Reverse Stock Split, potentially to the
extent that the result will be the same as if a one-for-three, one-for-two, or
other reverse stock split ratio had been approved by the Company's stockholders.
The net effect of implementation of the Reverse Stock Split and any subsequent
dividend declarations described herein will not result in more than four shares
being surrendered for each share of New Common Stock.
REASONS FOR THE REVERSE STOCK SPLIT PROPOSAL
Effective August 3, 1995, the trading market for the Common Stock was
changed from the NASDAQ National Market System to the NASDAQ SmallCap Market
because of the failure of the Company to satisfy the listing requirements for
the NASDAQ National Market System. The Board of Directors believes that this
change may have had a negative impact on the marketability of the Common Stock
and the prestige of the Company in the financial community. In addition, it has
resulted in the Company no longer qualifying for certain exemptions from most
state securities laws. The Company believes that it currently satisfies the
requirements to resume the listing of the Common Stock on the NASDAQ National
Market System, other than the requirement that the market price of the listed
security be at least $3 (which has been proposed to be increased to $5) per
share. The Company anticipates that the increased share price expected to result
from the Reverse Stock Split will enable the Company to list the New Common
Stock on the NASDAQ National Market System. However, there can be no assurance
that the market price of the New Common Stock will increase to at least $3 (or
$5) per share after the Reverse Stock Split or, even if it does, that the
Company will be able to list the New Common Stock on the NASDAQ National Market
System.
In addition, the Board of Directors believes that the relatively low per
share market price of the Common Stock may impair the acceptability of the
Common Stock to certain institutional investors and other members of the
investing public. Theoretically, the number of shares outstanding should not, by
itself, affect the marketability of the stock, the type of investor who acquires
it, or the Company's reputation in the financial community. However, in practice
this is not necessarily the case, as certain investors view low-priced stock as
unattractive or, as a matter of policy, will not extend margin credit on stock
trading at low prices, although certain other investors may be attracted to
low-priced stock because of the greater trading volatility sometimes associated
with such securities. Many brokerage houses are reluctant to recommend
lower-priced stock to their clients or to hold it in their own portfolios.
Further, a variety of brokerage house policies and practices
4
<PAGE> 7
discourage individual brokers within those firms from dealing in low-priced
stock because of the time-consuming procedures that make the handling of
low-priced stock unattractive to brokerage houses from an economic standpoint.
Also, since the broker's commissions on low-priced stock generally
represent a higher percentage of the stock price than commissions on higher
priced stock, the current share price of the Common Stock can result in
individual stockholders paying transaction costs (commissions, markups, or
markdowns) which are a higher percentage of their total share value than would
be the case if the share price were substantially higher. This factor is also
believed to limit the willingness of institutions to purchase the Common Stock
at its current relatively low per share market price. If implemented, the
Reverse Stock Split may result in some stockholders owning "odd-lots" of less
than 100 shares of New Common Stock. Brokerage commissions and other costs of
transactions in odd-lots may be higher, particularly on a per-share basis, than
the cost of transactions in even multiples of 100 shares.
The Board of Directors believes that the decrease in the number of shares
outstanding as a consequence of the proposed Reverse Stock Split and the
resulting anticipated increased price level of the New Common Stock compared to
the Common Stock will encourage greater interest in the New Common Stock
compared to the Common Stock by the financial community and the investment
public and possibly promote greater liquidity for the Company's stockholders,
although it is possible that such liquidity could be affected adversely by the
reduced number of shares outstanding after the Reverse Stock Split. Also,
although any increase in the market price of the New Common Stock resulting from
the Reverse Stock Split may be proportionately less than the decrease in the
number of shares outstanding, the proposed Reverse Stock Split could result in a
market price for the shares that would be high enough to overcome the
reluctance, policies and practices of brokerage houses and investors referred to
above and to diminish the adverse impact of correspondingly higher trading
commissions on the market for the shares.
There can be no assurance, however, that the foregoing effects will occur
or that the market price of the New Common Stock immediately after
implementation of the proposed Reverse Stock Split will be maintained for any
period of time, that such market price will approximate four times (or some
other multiple of) the market price of the Common Stock before the proposed
Reverse Stock Split, or that such market price of the New Common Stock will
exceed or remain in excess of the current market price of the Common Stock.
Another reason for the Reverse Stock Split is to increase the number of
shares available for future issuances. The Company is authorized to issue
55,000,000 shares of Common Stock. As of February , 1997, 49,104,779 shares
of Common Stock, and options and warrants to purchase an additional 6,316,688
shares of Common Stock, were outstanding. The Reverse Stock Split, by decreasing
the number of outstanding shares of Common Stock and the number of shares of
Common Stock the holders of outstanding options and warrants are entitled to
purchase, but not changing the number of authorized shares, has the effect of
increasing the number of shares available for future issuances. If the Reverse
Stock Split is not implemented, the Company intends to seek the approval of its
stockholders to increase the number of authorized shares of Common Stock. The
Company's ability to finance its operations will be materially adversely
affected if neither the Reverse Stock Split nor the increase in the number of
authorized shares is implemented.
If the Reverse Stock Split is approved, the total number of shares of
Common Stock held by each stockholder would be converted automatically into a
right to receive a number of shares of New Common Stock equal to the number of
shares of Common Stock owned immediately prior to the Reverse Stock Split
divided by four. No fractional shares or scrip would be issued and, in lieu
thereof, each stockholder who would otherwise have been entitled to a fraction
of a share of New Common Stock would be paid an amount in cash determined by
multiplying such fraction by the last reported sale price of New Common Stock on
the NASDAQ SmallCap Market on the first day of trading after the Effective Time
(as hereinafter defined).
5
<PAGE> 8
Approval of the Reverse Stock Split would not affect any stockholder's
percentage ownership interest in the Company or proportional voting power,
except for minor differences resulting from fractional shares. The Reverse Stock
Split should not reduce the number of stockholders of the Company other than
stockholders owning less than four shares of Common Stock. The shares of New
Common Stock which will be issued upon approval of the Reverse Stock Split will
be fully paid and nonassessable. The voting rights and other privileges of the
holders of Common Stock would not be affected substantially by adoption of the
Reverse Stock Split or subsequent implementation thereof. If for any reason the
Board of Directors deems it advisable to do so, the Reverse Stock Split may be
abandoned by the Board of Directors at any time before, during, or after the
Special Meeting and prior to filing of the amendment to the Restated Certificate
of Incorporation with the Secretary of State of the State of Delaware, pursuant
to Section 242(c) of the Delaware General Corporation Law, without further
action by the stockholders of the Company. In addition, the effect of the
Reverse Stock Split may be partially offset if the Board of Directors elects to
declare a stock-for-stock dividend as described above.
EFFECTIVE TIME
If the Reverse Stock Split is approved by the stockholders at the Special
Meeting, and upon a determination by the Board of Directors that the Reverse
Stock Split is in the best interest of the Company and its stockholders, an
amendment to Article 4 of the Restated Certificate of Incorporation would be
filed with the Secretary of State of the State of Delaware on any date selected
by the Board of Directors on or prior to the Company's next Annual Meeting of
Stockholders, providing that the Reverse Stock Split would become effective as
of 5:00 p.m. New York City time on the date of such filing (the "Effective
Time"). Without any further action on the part of the Company or the
stockholders, the shares of Common Stock held by stockholders of record as of
the Effective Time will be converted at the Effective Time into the right to
receive a number of shares of New Common Stock equal to the number of their
shares of Common Stock divided by four, with cash paid in lieu of any fractional
share.
EXCHANGE OF STOCK CERTIFICATES
As soon as practicable after the Effective Time, the Company will send a
letter of transmittal to each stockholder of record at the Effective Time for
use in transmitting certificates representing shares of Common Stock ("old
certificates") to the Company's transfer agent, Harris Trust Company (the
"Exchange Agent"). The letter of transmittal will contain instructions for the
surrender of old certificates to the Exchange Agent in exchange for certificates
representing the appropriate number of whole shares of New Common Stock and cash
in lieu of any fractional share. No new certificates will be issued to a
stockholder until such stockholder has surrendered all old certificates together
with a properly completed and executed letter of transmittal to the Exchange
Agent.
Upon proper completion and execution of the letter of transmittal and
return thereof to the Exchange Agent, together with all old certificates,
stockholders will receive a new certificate or certificates representing the
number of whole shares of New Common Stock into which their shares of Common
Stock represented by the old certificates have been converted as a result of the
Reverse Stock Split and cash in lieu of any fractional share. Until surrendered,
outstanding old certificates held by stockholders will be deemed for all
purposes to represent the number of whole shares of New Common Stock to which
such stockholders are entitled as a result of the Reverse Stock Split.
Stockholders should not send their old certificates to the Exchange Agent until
they have received the letter of transmittal. Shares not presented for surrender
as soon as is practicable after the letter of transmittal is sent shall be
exchanged at the first time they are presented for transfer.
No service charges will be payable by stockholders in connection with the
exchange of certificates, all expenses of which will be borne by the Company.
6
<PAGE> 9
EFFECT OF THE REVERSE STOCK SPLIT
If the Reverse Stock Split is approved at the Special Meeting and the
Company's Board of Directors subsequently determines that it is advisable to
proceed with the Reverse Stock Split, the result (without giving effect to the
stock dividend, if any, referred to above) would be that each Company
stockholder who owns four or more shares of Common Stock will receive one share
of New Common Stock for each four shares of Common Stock held at the Effective
Time, and, if such stockholder would otherwise be entitled to receive a
fractional share of New Common Stock, cash in lieu of the issuance of such
fractional share. Each Company stockholder who owns fewer than four shares of
Common Stock at the Effective Time will be entitled to receive cash in lieu of
receiving a fractional share resulting from the Reverse Stock Split.
If the Reverse Stock Split is implemented, no stock-for-stock dividend is
declared, and no shares, options, or warrants are issued between February ,
1997 and the Effective Time, at the Effective Time approximately 12,276,000
shares of New Common Stock will be outstanding, approximately 1,579,000 shares
will be reserved for issuance upon exercise of outstanding options and warrants,
and approximately 41,145,000 shares will be available for future issuances.
Dissenting stockholders have no appraisal rights under Delaware law or
under the Company's Restated Certificate of Incorporation or Bylaws in
connection with the Reverse Stock Split.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material anticipated Federal income tax
consequences of the Reverse Stock Split to stockholders of the Company. This
summary is based on the Federal income tax laws now in effect and as currently
interpreted; it does not take into account possible changes in such laws or
interpretations, including amendments to applicable statutes, regulations, and
proposed regulations or changes in judicial or administrative rulings, some of
which may have retroactive effect. This summary is provided for general
information only and does not purport to address all aspects of the possible
Federal income tax consequences of the Reverse Stock Split and IS NOT INTENDED
AS TAX ADVICE TO ANY PERSON. In particular, and without limiting the foregoing,
this summary does not consider the Federal income tax consequences to
stockholders of the Company in light of their individual investment
circumstances or to holders subject to special treatment under the Federal
income tax laws (for example, life insurance companies, regulated investment
companies, and foreign taxpayers). The summary does not address any consequence
of the Reverse Stock Split under any state, local, or foreign tax laws.
No ruling from the Internal Revenue Service ("Service") or opinion of
counsel will be obtained regarding the Federal income tax consequences to the
stockholders of the Company as a result of the Reverse Stock Split. ACCORDINGLY,
EACH STOCKHOLDER IS ENCOURAGED TO CONSULT HIS OR HER TAX ADVISOR REGARDING THE
SPECIFIC TAX CONSEQUENCES OF THE PROPOSED TRANSACTION TO SUCH STOCKHOLDER,
INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL, AND FOREIGN INCOME AND
OTHER TAX LAWS.
The Company believes that the Reverse Stock Split would be a tax-free
recapitalization to the Company and its stockholders. If the Reverse Stock Split
qualifies as a recapitalization under Section 368(a)(1)(E) of the Internal
Revenue Code of 1986, as amended, a stockholder of the Company who exchanges his
or her Common Stock solely for New Common Stock should recognize no gain or loss
for Federal income tax purposes. A stockholder's aggregate tax basis in his or
her shares of New Common Stock received from the Company should be the same as
his or her aggregate tax basis in the Common Stock exchanged therefor. The
holding period of the New Common Stock received by such stockholder should
include the period during which the Common Stock surrendered in exchange
therefor was held, provided all such Common Stock was held as a capital asset at
the Effective Time.
7
<PAGE> 10
Cash received by a stockholder in lieu of a fractional share is treated as
if the Company actually issued the fractional share and redeemed it for cash. A
portion of the stockholder's aggregate tax basis in the Common Stock is
allocated to the fractional share of New Common Stock. Gain or loss is
recognized measured by the difference between the cash received in lieu of the
fractional share and the basis allocated to it, and such gain or loss will be a
capital gain or loss if the Common Stock was held as a capital asset at the
Effective Time.
VOTE REQUIRED
In order to effect the Reverse Stock Split, the Restated Certificate of
Incorporation must be amended, which requires, under Delaware law, the
affirmative vote of holders of a majority of the outstanding shares of Common
Stock.
The Board of Directors recommends that you vote FOR the proposal to amend
the Restated Certificate of Incorporation to effect the one-for-four Reverse
Stock Split.
STOCKHOLDER PROPOSALS
Stockholders were permitted to present proposals for inclusion in the proxy
statement for the 1997 Annual Meeting of Stockholders provided they were
received by the Company no later than January 13, 1997 and were otherwise in
compliance with applicable Securities and Exchange Commission regulations.
GENERAL
So far as is now known, there is no business other than that described
above to be presented for action by the stockholders at the meeting, but it is
intended that the proxies will be voted upon any other matters and proposals
that may legally come before the meeting and any adjournments thereof in
accordance with the discretion of the persons named therein.
COST OF SOLICITATION
The cost of solicitation of proxies will be borne by the Company. It is
expected that the solicitations will be made primarily by mail, but regular
employees or representatives of the Company may also solicit proxies by
telephone or telegraph and in person, and arrange for brokerage houses and other
custodians, nominees, and fiduciaries to send proxy material to their principals
at the expense of the Company.
DONALD W. ANDERSON
Secretary
8
<PAGE> 11
INTERFERON SCIENCES, INC.
COMMON STOCK PROXY
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD , 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Revoking any such prior appointment, the undersigned, a stockholder of
Interferon Sciences, Inc., hereby appoints Jerome I. Feldman and Martin M.
Pollak, and each of them, attorneys and agents of the undersigned, with full
power of substitution, to vote all shares of the Common Stock of the undersigned
in said Company at the Special Meeting of Stockholders of said Company to be
held at National Patent Development Corporation, 9 West 57th Street, Suite 4170,
New York, New York on , 1997, at 10:00 A.M. New York City time and
at any adjournments thereof, as fully and effectually as the undersigned could
do if personally present and voting, hereby approving, ratifying, and confirming
all that said attorneys and agents or their substitutes may lawfully do in place
of the undersigned as indicated below.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
INDICATED, THIS PROXY WILL BE VOTED FOR PROPOSAL (1).
<PAGE> 12
1. Proposal to approve an amendment to the Company's Restated Certificate of
Incorporation to effect a reverse stock split in which each four shares of
issued Common Stock will be reclassified and changed into one share of new
Common Stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Upon any other matters which may properly come before the meeting or any
adjournments thereof.
Please sign exactly as name appears below.
Dated , 1997
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Signature
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Signature if held jointly
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When shares are held by joint tenants
both should sign. When signing as
attorney, as executor, administrator,
trustee or guardian, please give full
title as such. If a corporation,
please sign in full corporate name by
President or other authorized officer.
If an entity other than a corporation,
please sign in entity name by
authorized person.
Please mark, sign, date, and return the proxy card promptly using the enclosed
envelope.
