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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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
NU-TECH BIO-MED, INC.
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(Name of Registrant as Specified In Its Charter)
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(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
NU-TECH BIO-MED, INC.
SOLICITATION OF CONSENTS
To The Stockholders of
Nu-Tech Bio-Med, Inc.:
The Board of Directors of Nu-Tech Bio-Med, Inc. (the "Company") requests
your consent in writing, without a meeting, to the following:
(1) Authorization of an amendment to Article FOURTH of the Company's
Amended and Restated Certificate of Incorporation (hereinafter referred to
as the "Certificate of Incorporation") that will effect a 1-for-70 reverse
stock split of the Company's issued and outstanding Common Stock, par value
$.01 per share (the "Common Stock"), whereby each 70 issued and outstanding
shares of Common Stock will be changed into one share of Common Stock.
(2) Authorization of an amendment to Article FIRST of the Certificate
of Incorporation changing the name of the Company to "United Diagnostic,
Inc."
Only holders of Common Stock of record as of the close of business on June
9, 1998 (the "Record Date") are entitled to receive the accompanying Consent
Solicitation Statement and Consent card and to consent to Proposals No. 1 and
No. 2. Each stockholder is urged to sign, date and mail the accompanying Consent
card as promptly as possible in the postage prepaid envelope enclosed to the
Company's transfer agent, American Stock Transfer & Trust Company, 40 Wall
Street, 46th Floor, New York 10005.
By Order of the Board of Directors
David A. Sterling
Secretary
June 12, 1998
Wakefield, Rhode Island
YOUR CONSENT IS IMPORTANT
TO ENSURE YOUR CONSENT BEING COUNTED, YOU ARE REQUESTED TO COMPLETE, SIGN AND
DATE THE ENCLOSED CONSENT CARD AS PROMPTLY AS POSSIBLE AND MAIL IT IN THE
ENCLOSED ENVELOPE.
<PAGE> 3
NU-TECH BIO-MED, INC.
476 MAIN STREET
WAKEFIELD, RHODE ISLAND 02879
------------------------
CONSENT SOLICITATION STATEMENT
GENERAL
The Board of Directors of Nu-Tech Bio-Med, Inc. (the "Company") hereby
requests consent from the holders of the Company's Common Stock, par value $.01
per share ("Common Stock"). Please indicate your consent by SIGNING, DATING and
MAILING the enclosed Consent card ("Consent") to the Company's transfer agent,
American Stock Transfer & Trust Co., 40 Wall Street, 46th Floor, New York, New
York 10005.
This Consent Solicitation Statement and the accompanying form of Consent
are first being mailed on or about June 12, 1998 to holders of record of Common
Stock as of the close of business on June 9, 1998 (the "Record Date").
Requests for information or documents may be directed to the attention of
Lee Ann DeRita at (401) 789-9995 or by delivery in writing to the Company at its
principal executive office located at 476 Main Street, Wakefield, Rhode Island
02879.
CONTENTS
The Board of Directors of the Company has proposed an amendment to Article
FOURTH of the Company's Amended and Restated Certificate of Incorporation
("Certificate of Incorporation") to effectuate a 1-for-70 reverse stock split
("Reverse Split") of the Common Stock whereby each 70 shares of issued and
outstanding Common Stock will be changed into one share of Common Stock. See
"Proposal No. 1 -- Reverse Split of Common Stock" below for a more complete
description of the proposed amendment and the reasons therefor.
The Board of Directors has also proposed that the name of the Company be
changed to "United Diagnostic, Inc.," which name change also requires an
amendment to the Certificate of Incorporation. See "Proposal No. 2 -- Change in
Company Name" below for further information regarding this Proposal.
The General Corporation Law of Delaware requires that amendments to a
corporation's certificate of incorporation be approved by stockholders entitled
to vote thereon, as well as the Board of Directors. Accordingly, the Company is
hereby soliciting consent from the holders of its Common Stock to Proposals No.
1 and No. 2. Each of Proposal No. 1 and Proposal No. 2 requires the consent of
persons holding not less than a majority of the issued and outstanding Common
Stock on the Record Date.
SOLICITATION, VOTING AND REVOCABILITY OF CONSENTS
As of the Record Date, an aggregate of 47,783,423 shares of Common Stock
were issued and outstanding. Only holders of record of Common Stock as of the
close of business on the Record Date are entitled to consent to Proposals No. 1
and No. 2. Each share of Common Stock is entitled to one vote on each of
Proposals No. 1 and No. 2. The shares of Common Stock for which properly
executed Consents in the accompanying form are received will, if no contrary
instruction is received, be deemed submitted FOR Proposals No. 1 and No. 2.
SECTION 228(c) OF THE GENERAL CORPORATION LAW OF DELAWARE REQUIRES THAT
EACH CONSENT HAVE A DATED SIGNATURE OF EACH STOCKHOLDER WHO SIGNS THE CONSENT.
AN UNDATED CONSENT CANNOT BE USED. In addition, under Section 228(c), none of
the Consents will be effective to approve Proposal No. 1 or Proposal No. 2
unless Consents from holders of record on the Record Date owning the minimum
number of shares required to approve such proposal have been received within the
60 day period following the first dated Consent which is received with
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respect to such proposal (the "Consent Solicitation Period"). The Consent card
provided may be executed by the record holder or pursuant to authority given by
the written proxy of any record holder.
Any Consent given pursuant to this solicitation is considered revocable by
the person giving it at any time before it is used by the Company. If, prior to
the earlier of the date on which the Company has received Consents from persons
holding the minimum number of shares of Common Stock required to approve either
Proposal No. 1 or Proposal No. 2 or the end of the Consent Solicitation Period,
the Company receives a written notice of revocation of a Consent or receives a
duly executed Consent bearing a later date, any earlier dated Consent will be
revoked.
The Company will bear the cost of the solicitation of Consents by the Board
of Directors. The Company may use the services of its executive officers and
certain Directors to solicit Consents from stockholders in person and by mail,
telephone and facsimile. Arrangements may also be made with brokers,
fiduciaries, custodians and nominees to send Consent cards, Consent Solicitation
Statements and other material to the beneficial owners of the Company's Common
Stock held of record by such persons, and the Company may reimburse them for
reasonable out-of-pocket expenses incurred by them in so doing.
VOTING SECURITIES AND SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is certain information as of the Record Date with respect
to the ownership of Common Stock by (i) the persons (including any "group" as
that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended), known by the Company to be the beneficial owner of more than five
percent of the Common Stock (calculated based upon 47,783,423 shares of Common
Stock outstanding as of the Record Date), (ii) each director and each executive
officer of the Company, and (iii) directors and executive officers as a group.
Except to the extent indicated in the footnotes to the following table, each of
the individuals listed below possesses sole voting power with respect to the
securities listed opposite such individual's name.
<TABLE>
<CAPTION>
AMOUNT OF AND NATURE OF PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------------------------ ----------------------- ----------
<S> <C> <C>
J. Marvin Feigenbaum................................. 745,316(1) 1.5%
476 Main Street
Wakefield, RI 02879
David A. Sterling.................................... 14,809(2) *
476 Main Street
Wakefield, RI 02879
Chriss W. Street..................................... 10,309(3) *
Chriss Street & Company
1111 Bayside Drive Suite 100
Corona del Mar, CA 92625
Robert B. Fagenson................................... 10,309(3) *
19 Rector Street
New York, NY 10006
All Executive Officers and Directors as a Group
(4 persons in number).............................. 780,743(4) 1.6%
</TABLE>
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* Less than 1%.
(1) Includes (i) 9,999 shares of Common Stock owned by Mr. Feigenbaum; (ii)
45,316 shares of Common Stock held in a trust for the benefit of a minor
child of Mr. Feigenbaum, as to which shares Mr. Feigenbaum disclaims
beneficial ownership; (iii) 54,500 options owned by the Feigenbaum
Foundation, as to which options Mr. Feigenbaum disclaims a beneficial
interest in; and (iv) options and warrants to purchase an aggregate of
595,500 shares of Common Stock. The number of shares subject to options and
warrants held by Mr. Feigenbaum and related parties, and the respective
exercise prices per share (as well as all other outstanding options and
warrants), would be adjusted pursuant to the Reverse Split.
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(2) Includes options to purchase 13,309 shares of Common Stock under the
Corporation's Non-Employee Director Plan.
(3) Constitutes options to purchase 10,309 shares of Common Stock under the
Corporation's Non-Employee Director Plan.
(4) Includes the shares subject to options referred to in (1), (2) and (3)
above.
PROPOSAL NO. 1
REVERSE SPLIT OF COMMON STOCK
GENERAL
The Board of Directors has unanimously approved, and recommended
stockholder approval of, an amendment to Article FOURTH of the Certificate of
Incorporation that will effect the Reverse Split. The text of the amendment is
set forth on Exhibit A attached hereto. The amendment, if adopted, will be
effected through the filing of a Certificate of Amendment with the Secretary of
State of the State of Delaware. Such filing shall be made on such date as the
Board, in its sole discretion, determines (but in any event not later than
December 31, 1998) and will be effective at 5:00 p.m. Eastern Time, on the date
of filing.
As a result of the Reverse Split, the number of shares of Common Stock held
by each stockholder at the effective time of the Reverse Split will be
automatically converted into the number of whole shares of Common Stock equal to
the number of shares of Common Stock owned immediately prior to the Reverse
Split divided by 70. In addition, shares of Common Stock that are reserved for
issuance upon the exercise of outstanding options and warrants, and the
respective exercise prices per share, would be adjusted pursuant to the Reverse
Split, such that the number of shares would be decreased and the exercise price
would be increased accordingly.
Notwithstanding receipt of Consents sufficient to approve the Reverse
Split, if, for any reason, the Board of Directors deems it advisable to do so,
the Company may abandon the Reverse Split at any time prior to the filing with
the Secretary of State of the State of Delaware of the Certificate of Amendment
effecting the Reverse Split without further action by the stockholders of the
Company.
REASONS FOR PROPOSAL
The Reverse Split is being proposed primarily to rectify the existing
shortage of authorized and unissued shares of Common Stock which are needed to
satisfy the future conversion of currently issued and outstanding shares of the
Company's Series A Convertible Preferred Stock, par value $.01 per share
("Series A Preferred Stock"). During November and December 1996, the Company
completed a private placement of an aggregate of 14,000 shares of Series A
Preferred Stock in which gross proceeds of $14 million were raised. Each share
of Series A Preferred Stock, under the terms of the Certificate of Designations
applicable to the Series A Preferred Stock, is convertible into such number of
shares of Common Stock as shall equal $1,000 divided by a conversion rate
("Conversion Rate") equal to the lesser of (ii) $17.50 and (ii) 75% of the
average of the closing bid prices of a share of Common Stock as reported by the
Nasdaq SmallCap Market for the five trading days prior to the date that the
holder's notice of conversion and certificates for the shares of Series A
Preferred Stock to be converted are received by the Company. Through the Record
Date, an aggregate of 45,099,336 shares of Common Stock were issued upon
conversion of approximately 11,174 shares of Series A Preferred Stock. Although
the Common Stock was delisted from the Nasdaq SmallCap Market as of the close of
business on June 1, 1998 and is not currently listed for trading on any
established trading market (see "Recent Delisting of Common Stock from Nasdaq"
below), based upon an assumed Conversion Rate of $.036 (i.e., 75% of the average
of the last sales prices of the Common Stock for the period from June 2, 1998 to
June 8, 1998 in the over-the-counter market, as obtained by the Company from
National Quotation Bureau, Inc.), the Company would be obligated to issue
approximately 79,000,000 shares of Common Stock upon conversion of the remaining
shares of Series A Preferred Stock issued and outstanding. The Company is
presently authorized to issue 50,000,000 shares of Common Stock. As of the
Record Date, the Company had
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47,783,423 shares of Common Stock issued and outstanding; an additional
1,723,395 shares are reserved for issuance under options, warrants and other
rights to purchase Common Stock. In view of the number of shares of Common Stock
that are presently issued and outstanding and reserved for issuance, the
Company, under the provisions of its Certificate of Incorporation, does not have
a sufficient number of authorized and unissued shares of Common Stock to issue
upon future conversions of the issued and outstanding Series A Preferred Stock.
As a result, the Company has been advising holders of Series A Preferred Stock
who have requested conversion of their shares that it cannot legally comply with
these requests.
The Company believes that the Reverse Split will eliminate this problem.
The Company estimates that, because the Reverse Split will reduce the issued and
outstanding shares of Common Stock of the Company to approximately 683,000,
there will be approximately 49,000,000 unreserved shares of Common Stock
available following the Reverse Split for future issuances, including conversion
of the remaining Series A Preferred Stock. In addition, because the Reverse
Split should increase the prevailing market price for the Common Stock (although
not necessarily in proportion to the 1:70 ratio of the Reverse Split), the
number of shares of Common Stock required to satisfy conversion of the remaining
Series A Preferred Stock should correspondingly decrease. Accordingly, unless
the prevailing price of the Company following the Reverse Split falls
significantly below $1.00 per share, the Company should have a sufficient number
of authorized but unissued shares following the Reverse Split to satisfy all
future conversions.
RECENT DELISTING OF COMMON STOCK FROM NASDAQ
From December 20, 1994 until June 1, 1998, the Company's Common Stock was
listed on the Nasdaq SmallCap Market. On June 1, 1998, The Nasdaq Stock Market
advised the Company that it was delisting the Common Stock from the SmallCap
Market effective at the close of business on that date. Nasdaq had commenced
delisting proceedings in April 1998 following the failure of the Company to file
with the Securities and Exchange Commission (the "Commission") and Nasdaq its
Annual Report on Form 10-KSB for the year ended December 31, 1997 (the "1997
Form 10-KSB"), which was required to be filed by April 15, 1998. The inability
of the Company to file the 1997 Form 10-KSB had been caused by a delay in the
Company engaging new independent accountants who will audit the Company's
financial statements for the year ended December 31, 1997. As of the date
hereof, the Company has not yet filed the 1997 Form 10-KSB or its Quarterly
Report on Form 10-QSB for the quarter ended March 31, 1998 (the "March 31, 1998
Form 10-QSB"), which was required to be filed by May 15, 1998. Nasdaq also cited
as a reason for delisting the fact that the bid price of the Common Stock had
failed to equal or exceed $1.00 since February 23, 1998, the date on which new
Nasdaq rules went into effect requiring, as a condition to continued listing of
securities on the SmallCap Market, that the minimum bid price of the security
equal or exceed $1.00.
The Company, in the event that it can achieve compliance with the initial
listing standards for the Nasdaq SmallCap Market, may seek to apply to list the
Common Stock again on such market in the future. Management believes that the
Reverse Split, which should cause the price of the Common Stock to increase, may
help position the Company for such a future listing. It is unlikely, however,
that the Common Stock will be listed again on Nasdaq in the near future and
there can be no assurance that the Common Stock will trade on Nasdaq or any
other established public market for securities in the foreseeable future.
TREATMENT OF FRACTIONAL SHARES
No certificates or scrip representing fractional shares of Common Stock
will be issued to stockholders because of the Reverse Split. Rather, each
stockholder who would otherwise receive a fractional share of Common Stock as a
result of the Reverse Split will receive, in lieu of such fractional share
interest, an amount of cash equal to the average of the last sale prices of the
Common Stock, as obtained by the Company from National Quotation Bureau (or
other source of trading information concerning the Common Stock as the Company
deems reasonable), for the five trading days immediately prior to, and
including, the effective date of the Reverse Split multiplied by the number of
shares of Common Stock held by such holder that would otherwise have been
exchanged for each fractional share.
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EFFECTS ON PERCENTAGE OWNERSHIP OF COMMON STOCK;
POTENTIAL DILUTION RESULTING FROM OTHER POSSIBLE ISSUANCES
The Reverse Split will not, in and of itself, affect the percentage
ownership interest of any holder of Common Stock in the Company, except for
minor differences resulting from fractional shares.
However, because holders of Series A Preferred Stock would, following the
Reverse Split, again be entitled to convert their shares of Series A Preferred
Stock into Common Stock, existing holders of Common Stock are likely to
experience substantial dilution as a result thereof. The following table
illustrates the number of additional shares of Common Stock that would
potentially be issuable to the holders of the remaining Series A Preferred Stock
at various stock prices following the Reverse Split:
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
(ON A POST-REVERSE SPLIT BASIS)
IF POST-REVERSE SPLIT ISSUABLE TO HOLDERS OF
PRICE IS: SERIES A PREFERRED STOCK
--------------------- -------------------------------
<S> <C>
$6.00................................... 627,931
$5.00................................... 753,518
$4.00................................... 941,897
$3.00................................... 1,255,863
$2.00................................... 1,883,795
$1.00................................... 3,767,590
$ .50................................... 7,535,181
$ .25................................... 15,070,362
</TABLE>
Furthermore, the Company may be obligated to issue additional shares of
Common Stock to the holders of Series A Preferred Stock under the terms of the
Certificate of Designations applicable to the Series A Preferred Stock, and a
registration rights agreement entered into by the Company and the individual
purchasers of the Series A Preferred Stock at the time of original issuance of
the Series A Preferred Stock. Pursuant to those documents, the Company agreed
that it would use its best efforts to file with, and have declared effective by,
the Commission a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the shares of Common Stock
issuable upon conversion of the Series A Preferred Stock (the "Conversion
Shares") within 120 days of receipt of a demand notice from the holders of a
majority of the shares of Series A Preferred Stock outstanding. Under the
Certificate of Designations, in the event the registration statement was not
declared effective within such 120 day period, the then applicable Conversion
Rate would be reduced by multiplying the five day average price by 65% rather
than 75%. In addition, for each 30 day period beyond the 120-day period that the
registration statement was not declared effective, the percentage multiplier
applicable in determining the Conversion Rate was subject to a further reduction
of 2%, up to an aggregate of 12%.
The Company filed a registration statement relating to the Conversion
Shares in December 1996, but withdrew the registration statement in February
1997. The Company subsequently filed a new registration statement in April 1997
relating to the Conversion Shares, which was declared effective by the
Commission on July 23, 1997. In October 1997, the Company notified holders of
the Series A Preferred Stock that it was suspending further sales of Conversion
Shares pursuant to the registration statement pending the preparation and filing
by the Company of a post-effective amendment to the registration statement that
includes current information relating to the acquisition by the Company of
Physicians Clinical Laboratory, Inc., which acquisition was consummated on
October 3, 1997. As of the date hereof, no post-effective amendment to the
registration statement has been filed.
The Company believes that the filing of both the December 1996 and April
1997 registration statements was made without having a requisite demand made
upon it and, accordingly, that no adjustment to the Conversion Rate is required.
There is no assurance that this position, if challenged in a court of law, will
prevail.
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Two entities holding an aggregate of 900 shares of the issued and
outstanding Series A Preferred Stock have commenced an action against the
Company, its President and Chief Executive Officer and a director in the United
States District Court for the Southern District of New York (Gorra Holding and
Barras Investment v. Nu-Tech Bio-Med, Inc. et al., 98 Civ. 764) seeking damages
arising out of the alleged failure of the Company to meet certain obligations to
register the Conversion Shares.
Although sales of Conversion Shares may not currently be made pursuant to
any registration statement, holders of Conversion Shares may be entitled to sell
such shares publicly pursuant to Rule 144 promulgated under the Securities Act
("Rule 144"). Under Rule 144, holders of Conversion Shares may sell, during any
three month period prior to the second anniversary of the sale of the shares of
Series A Preferred Stock which were converted into such Conversion Shares, the
greater of 1% of the total number of shares of Common Stock issued and
outstanding and the average weekly trading volume of the Common Stock for the
four full calendar weeks preceding the date of sale. Commencing on the second
anniversary of the date of sale of the Series A Preferred Stock, holders who are
not affiliates of the Company may sell Conversion Shares without being subject
to the volume limitation or any other applicable requirements of Rule 144.
However, in order for a holder of Conversion Shares to sell any such shares
pursuant to Rule 144 prior to the second anniversary of the date of sale of the
Series A Preferred Stock to which such Conversion Shares relate, the Company
must be current in its filings under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") with the Commission. As noted above, the Company is
not current in its filings at this time because of its failure to file the 1997
Form 10-KSB and the March 31, 1998 Form 10-QSB. Consequently, the Company will
not honor attempted sales of Conversion Shares pursuant to Rule 144 until such
time as the 1997 Form 10-KSB, the March 31, 1998 Form 10-QSB and any other
report subsequently required to be filed by the Company under the Exchange Act
is filed with the Commission.
In addition to the potential issuance of additional shares of Common Stock
as a result of conversion of Series A Preferred Stock following the Reverse
Split, the Company may issue additional shares of Common Stock as a result of a
price adjustment provision relating to the purchase, effective October 21, 1996,
of the assets of Prompt Medical Billing, Inc. ("Prompt Medical"), the Company's
billing subsidiary. Pursuant to the purchase agreement with the seller of Prompt
Medical, a portion of the consideration paid consisted of 37,504 shares of
restricted Common Stock. However, the agreement requires the Company, in the
event the market value of those shares is less than $500,000 on October 21,
1998, either to (i) issue such number of additional shares of Common Stock as
may be required to increase the fair market value of the total number of shares
delivered to the seller to $500,000 or (ii) pay additional cash consideration in
an amount equal to the difference between $500,000 and the fair market value of
the 37,504 shares (which number of shares shall be adjusted for the Reverse
Split, if it is effectuated) on October 21, 1998. The fair market value of the
37,504 shares of Common Stock, based on the currently prevailing price for the
Common Stock, is approximately $1,800. Management is unable to predict at this
time whether the Company, if the fair market value of the 37,504 shares issued
to the seller is less than $500,000 on October 21, 1998, will satisfy its
obligation through the delivery of additional shares of Common Stock or payment
of cash. In the event the Company elects to satisfy its obligation through the
issuance of additional shares, the percentage ownership of each holder of Common
Stock at the time will be further diluted.
OTHER EFFECTS OF REVERSE SPLIT
The Company has previously issued, and has outstanding, various options,
warrants and rights to purchase an aggregate of 1,723,395 shares of its Common
Stock. If the Reverse Split is implemented, both the exercise price per share
and the number of shares subject to each option, warrant and right will be
appropriately adjusted. All of the outstanding options, warrants and rights are
currently substantially "out-of-the-money". The Company has agreed to issue,
following effectiveness of the Reverse Split, to a person who loaned the Company
$250,000 in March 1998 warrants to purchase 44,000 shares of Common Stock
(stated on a post-Reverse Split basis) at an exercise price equal to the closing
bid price of the Common Stock on the first business day following effectiveness
of the Reverse Split. In addition, the Company has agreed to reduce the exercise
prices of warrants to purchase an aggregate of 100,000 shares of Common Stock
held by certain persons related to the lender (or 1,428 shares, stated on a
post-Reverse Split basis) to the same price.
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The Reverse Split is likely to result in some stockholders owning
"odd-lots" of less than 100 shares of Common Stock. Brokerage commissions and
other costs of transactions in odd-lots are generally somewhat higher than the
costs of transaction on "round-lots" of even multiples of 100 shares.
Stockholders have no right under Delaware law or under the Company's
Certificate of Incorporation or By-laws to dissent to the Reverse Split.
There will be no change to the number of shares of authorized Preferred
Stock, par value $.01 per share, in connection with the Reverse Split. There are
currently 2,000,000 shares of Preferred Stock authorized.
FEDERAL INCOME TAX CONSEQUENCES
The following description of federal income tax consequences is for general
information only and does not address foreign, state or local tax consequences
that may be relevant to a particular stockholder. Accordingly, each stockholder
is urged to consult his or her own tax adviser to determine the particular
consequences to such stockholder of the Reverse Split.
The Reverse Split should not result in the recognition of gain or loss
(except with respect to cash received for fractional shares as described below).
The holding period of the shares of post-Reverse Split Common Stock will include
the holding period for the shares of pre-Reverse Split Common Stock exchanged
therefor, provided that the shares of Common Stock were held as a capital asset.
The adjusted basis of the shares of post-Reverse Split Common Stock will be the
same as the adjusted basis of the Common Stock exchanged therefor, reduced by
the basis applicable to the receipt of cash in lieu of fractional shares
described below.
A stockholder who receives cash in lieu of fractional shares will be
treated as if the Company has issued fractional shares to such stockholder and
then immediately redeemed such shares for cash. Such stockholder should
generally recognize gain or loss to the extent of the difference between the
amount of cash received and the basis allocable to the fractional share.
STATUTORY ACCOUNTING CONSEQUENCES
The par value of the Common Stock will remain at $.01 per share following
the Reverse Split. Consequently, the reduction in the number of shares issued
and outstanding as a result of the Reverse Split will cause the aggregate par
value of the outstanding Common Stock to be reduced, while the aggregate capital
in excess of par value attributable to the outstanding Common Stock will be
correspondingly increased for statutory accounting purposes under the Delaware
General Corporation Law. Although it is currently expected that this increase in
capital in excess of par value will continue to be treated as capital for
statutory accounting purposes, the Board of Directors of the Company has the
authority to transfer some or all of such increased capital in excess of par
value from its statutory capital account to surplus. The additional statutory
surplus created thereby would then be available for general corporate purposes
without any further action by the stockholders. The Company currently has no
plans to use any surplus so created.
EXCHANGE OF STOCK CERTIFICATES
As soon as practicable after the effective date of the Reverse Split, the
Company will send a letter of transmittal to each stockholder of record as of
the close of business on the effective date for use in transmitting certificates
representing shares of Common Stock ("old certificates") to the Company's
transfer agent, American Stock Transfer & 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
approximate number of whole shares of post-Reverse Split 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 Common Stock into which their shares of Common Stock
represented by the
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<PAGE> 10
old certificates have been converted as a result of the Reverse Split, plus a
check for the amount due in lieu of fractional shares, if any. Until
surrendered, outstanding old certificates held by stockholders will be deemed
for all purposes to represent the number of whole shares of Common Stock to
which such stockholders are entitled as a result of the Reverse 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.
MANAGEMENT RECOMMENDS A CONSENT FOR PROPOSAL NO. 1
PROPOSAL 2
CHANGE IN COMPANY NAME
The Board of Directors of the Company has unanimously approved a proposal
to change the name of the Company from "Nu-Tech Bio-Med, Inc." to "United
Diagnostic, Inc."
The Board of Directors believes that the Company's present name does not
adequately reflect the current state of the Company's business and prospects.
Since adoption of the existing corporate name in 1994, the Company's business
has evolved from one related principally to the marketing of the FCA
chemosensitivity assay to one that is now principally focused on the Company's
ownership of an interest in Physicians Clinical Laboratory, Inc., a full service
clinical laboratory operating in California, and opportunities for augmenting
that business. The Board believes that the proposed corporate name more
appropriately reflects the present and future scope of the Company's business
operations.
Assuming the name change is approved, it will be effected by the filing of
a Certificate of Amendment to the Certificate of Incorporation amending Article
FIRST thereof. Approval of the Reverse Split (see "Proposal No. 1") is not a
condition to effectuation of the name change.
If the name change is effected, all new share certificates issued by the
Company will be printed with the new name. Those stockholders who submit their
certificates for exchange in connection with the Reverse Split will also receive
new share certificates with the new corporate name.
Consents from the holders of record of a majority of the shares of Common
Stock issued and outstanding on the Record Date is required for approval of
Proposal 2.
MANAGEMENT RECOMMENDS THAT YOU CONSENT TO PROPOSAL 2
By order of the Board of Directors
David Sterling
Secretary
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EXHIBIT A
Article FOURTH of the Amended and Restated Certificate of Incorporation is
proposed to be further amended by adding a new paragraph at the end thereof
reading as follows:
"2. Reverse Stock Split. Upon the filing of this Amendment with the
Secretary of State of Delaware, and effective as of 5:00 p.m., EST on the
date of filing (referred to herein as the "Effective Time"), every 70
shares of Common Stock issued and outstanding as of the Effective Time
shall automatically, and without any action on the part of the
stockholders, be converted and combined into one share of validly issued,
fully payable and non-assessable share of Common Stock, par value $.01 (the
"Reverse Split"). In the case of a holder of shares not evenly divisible by
70, such holder shall receive, in lieu of any fraction of a share, a cash
payment equal to the average of the last sale price of the Common Stock, as
obtained by the Company from a national quotation service or such other
source as the Company deems reasonable, on the five trading days ending on
the day of the Effective Time multiplied by that number of shares of Common
Stock that would otherwise have been converted into such fraction of a
share. As of the Effective Time and thereafter, a certificate(s)
representing shares of Common Stock prior to the Reverse Split shall be
deemed to represent the number of new shares into which the old shares are
convertible and the right to recover a cash payment in lieu of any
fractional shares."
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NU-TECH BIO-MED, INC.
CONSENT
THIS CONSENT IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Stockholders should not send any Stock Certificates with this
Consent card. Stockholders are urged to mark, sign, date and mail promptly this
Consent card in the envelope provided.
THIS CONSENT CARD IS INTENDED TO OBTAIN CONSENT, AND THIS CARD
SHALL BE DEEMED TO INDICATE A CONSENT ON, PROPOSALS NO. 1 AND NO. 2 IF NOT
INDICATED TO THE CONTRARY.
EACH CONSENT MUST BE SIGNED AND DATED. Sign exactly as addressed
to you. Joint owners should each sign. If signing as executor, administrator,
attorney, trustee, or guardian, give title as such. If a corporation, sign in
full corporate name by authorized officer. If a partnership, sign in the name of
authorized person. Please do not forget to sign and date this Consent card.
The Board of Directors of Nu-Tech Bio-Med, Inc. RECOMMENDS
CONSENT on Proposals No. 1 and No. 2.
[See Reverse Side]
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PLEASE INDICATE CONSENT BELOW to the following Proposals:
PROPOSAL NO. 1. Amendment to Article FOURTH of the Company's
Amended and Restated Certificate of Incorporation providing for a 1-for-70
reverse split of the Common Stock.
[ ] CONSENT [ ] CONSENT WITHHELD [ ] ABSTAIN
PROPOSAL NO. 2. Amendment to Article FIRST of the Company's Amended
and Restated Certificate of Incorporation changing the name of the Company to
United Diagnostic, Inc.
[ ] CONSENT [ ] CONSENT WITHHELD [ ] ABSTAIN
SIGNATURE(S)
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Date: ..............., 1998
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