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SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Check the appropriate box:
<TABLE>
<S> <C>
/X/ Preliminary Information Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14c-5(d)(2))
/ / Definitive Information Statement
</TABLE>
SECTOR ASSOCIATES, INC.
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(Name of Registrant As Specified in Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14c-5(g).
/ / Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
COMMON STOCK
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(2) Aggregate number of securities to which transaction applies:
20,000,000 Shares
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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):
$.01 per share
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(4) Proposed maximum aggregate value of transaction:
n/a
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(5) Total fee paid:
$125
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/ / Fee paid previously with preliminary materials
n/a
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/ / 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:
n/a
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(2) Form, Schedule or Registration Statement No.:
n/a
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(3) Filing Party:
n/a
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(4) Date Filed:
n/a
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SECTOR ASSOCIATES, LTD.
2343 West 76th Street
Hialeah, Florida 33016
INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY,
AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
GENERAL
This Information Statement is being furnished to the stockholders of
Sector Associates, Ltd., a Delaware corporation (the "Company"), in connection
with the proposed adoption of a Certificate of Amendment to the Company's
Certificate of Incorporation (the "Amendment") by the written consent of the
holders of a majority in interest of the Company's voting capital stock ("Voting
Capital Stock") consisting of the Company's outstanding Common Stock ("Common
Stock") and Series B Convertible Preferred Stock (the "Series B Preferred
Stock"). The Company's Board of Directors on January 8, 1996, approved and
recommended that the Certificate of Incorporation be amended in order to (i)
change the par value of the Company's Common Stock from $.10 par value to $.01
par value; (ii) change the name of the Company from Sector Associates, Ltd.
to Viragen (Europe) Ltd.; and (iii) effectuate a one for fourteen (1 for 14)
reverse stock split of the Company's outstanding shares of Common Stock. The
proposed Amendment to the Certificate of Incorporation will become effective
upon (i) a written consent of the holders of not less than a majority of
the Company's outstanding Voting Capital Stock approving the Amendment and
(ii) the filing of the Certificate of Amendment to the Certificate of
Incorporation with the Secretary of State of the State of Delaware.
The Company anticipates that the filing of the written consent will occur on
or about March 6, 1996 (the "Effective Date"). If the proposed Amendment
were not adopted by written consent, it would have been required to be
considered by the Company's stockholders at a special stockholders' meeting
convened for the specific purpose of approving the Amendment.
The elimination of the need for a special meeting of stockholders to
approve the Amendment is made possible by Section 228 of the Delaware General
Coporation Law (the "Delaware Law") which provides that the written consent of
the holders of outstanding shares of voting capital stock, having not less
than the minimum number of votes which would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted, may be substituted for such a special meeting. Pursuant to
Section 242 of the Delaware Law, a majority of the outstanding shares of voting
capital stock entitled to vote thereon is required in order to
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amend the Company's Certificate of Incorporation. In order to eliminate the
costs and management time involved in holding a special meeting in order to
effect the Amendment as early as possible in order to accomplish the purposes
of the Company as hereafter described, the Board of Directors of the Company
voted to utilize the written consent of the holders of a majority in interest
of the Voting Capital Stock of the Company. As discussed hereafter, the Board
of Directors has recommemded the Amendment in order to permit the conversion of
outstanding convertible preferred stock of the Company which cannot be
converted or exercised at the present time based on the present authorized
capitalization of the Company.
Viragen, Inc., which owns in the aggregate approximately 1,785,715
shares of Class B Convertible Preferred Stock of the Company, representing
approximately 84% (as of January 8, 1996) of the outstanding Voting Capital
Stock of the Company entitled to vote on the Amendment, has indicated that it
intends to give its written consent to the adoption of the Amendment described
in this Information Statement. The written consent of such persons to
the Amendment will become effective upon the filing of their written consents
with the Secretary of the Company. The Company anticipates that the filing
of such written consents will occur on or about March 6, 1996, following
which the Company will prepare and file a Certificate of Amendment to its
Certificate of Incorporation with the State of Delaware effecting (i)
changing the par value of the Company's Common Stock from $.10 par value to
$.01 par value; (ii) changing the name of the Company from Sector Associates,
Ltd. to Viragen (Europe) Ltd.; and (iii) effectuating a one for fourteen (1 for
14) reverse stock split of the Company's outstanding shares of Common Stock.
A copy of the proposed Amendment to the Company's Certificate of Incorporation
is set forth as Exhibit A to this Information Statement. The date on which
this Information Statement was first sent to the stockholders is on or
about February 12, 1996. The record date established by the Company for
purposes of determining the number of outstanding shares of Voting Capital
Stock of the Company entitled to vote on the proposed Amendment is February 5,
1996 (the "Record Date").
Pursuant to Section 228 of the Delaware Law, the Company is required
to provide prompt notice of the taking of the corporate action without a meeting
to stockholders who have not consented in writing to such action. Inasmuch as
the Company will have provided to its stockholders of record this Information
Statement, the Company will notify its stockholders at the time of distribution
of its next Quarterly Report on Form 10-QSB of the effective date of the
Amendment. No additional action will be undertaken pursuant to such written
consents, and no dissenters' rights under the Delaware Law are afforded to the
Company's stockholders as a result of the adoption of the Amendment.
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EXECUTIVE OFFICES
The Company's principal executive offices have been moved from 401
City Avenue, Suite 725, Bala Cynwyd, Pennsylvania 19004 to 2343 West 76th
Street, Hialeah, Florida 33016. Its new telephone number is (305) 823-0269.
OUTSTANDING VOTING STOCK OF THE COMPANY
As of the Record Date, there were ______________ shares of Common
Stock outstanding and 2,000,000 shares of Series B Preferred Stock outstanding,
which are convertible into an aggregate of 78,400,000 shares of Common Stock.
The Common Stock and Series B Preferred Stock constitute the sole classes of
voting securities of the Company. Each share of Common Stock entitles the
holder thereof to one vote on all matters submitted to stockholders. Each share
of Series B Preferred Stock entitles the holder thereof to 39.2 votes of all
matters submitted to stockholders.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth Common Stock ownership information as
of January 8, 1996, with respect to (i) each person known to the Company to be
the beneficial owner of more than 5% of the Company's Common Stock; (ii) each
director of the Company; (iii) each person intending to file a written consent
to the adoption of the Amendment described herein; and (iv) all directors,
executive officers and designated stockholders of the Company as a group. This
information as to beneficial ownership was furnished to the Company by or on
behalf of the persons named. Unless otherwise indicated, the business address
of each person listed is 2343 West 76th Street, Hialeah, Florida 33016.
Information with respect to the percent of class is based on 5,959,830 issued
and outstanding as of January 8, 1996, after giving effect to the (i) reverse
stock split described in this Information Statement and (ii) conversion of the
Series B convertible Preferred Stock. The address of each of the persons
named below is 2343 West 76th Street, Hialeah, Florida 33016.
<TABLE>
<CAPTION>
Shares
Beneficially Percent
Name Owned(1) of Class
- ---- ------------ --------
<S> <C> <C>
Gerald Smith(2) 100,000 1.68%
Dennis W. Healey(3) 100,000 1.68%
Robert H. Zeiger(4) 100,000 1.68%
Viragen, Inc. 5,000,000 83.90%
</TABLE>
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<TABLE>
<S> <C> <C>
All executive officers, directors and
designated stockholders as a group 5,300,000 88.94%
(4 persons)
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</TABLE>
(1) Except as otherwise indicated in the footnotes below, each stockholder
has sole power to vote and dispose of all shares of Common Stock
listed opposite his name.
(2) On December 8, 1995, Mr. Smith was elected as the Chairman of the
Board of Directors of the Company and as its President and Chief
Executive Officer.
(3) On January 8, 1996, Mr. Healey was appointed a Director of the
Company. On December 8, 1995, he was appointed the Company's
Treasurer and Secretary.
(4) On January 8, 1996, Mr. Zeiger was appointed a Director of the
Company.
AMENDMENTS TO CERTIFICATE OF INCORPORATION
CHANGE THE PAR VALUE OF THE COMPANY'S COMMON STOCK
The Board of Directors proposes to reduce the par value of its Common
Stock from $.10 to $.01. The Board of Directors of the Company believe that
reduction in the par value of the Company as contemplated herein will not
impair the conduct or operations of the Company. Additionally, the Company is
obligated to pay franchise taxes to the State of Delaware on an annual basis
which is computed in part based on the par value of the Company's securities.
The Company anticipates that such franchise tax will increase in subsequent
years based on the increase in total assets of the Company as well as possible
increases in the formula for calculating taxes in Delaware. A reduction in the
par value of the Common Stock of the Company will enable the Company to reduce
the amount of payments that will be required in order to satisfy its franchise
tax obligations to the State of Delaware.
PROPOSAL TO CHANGE THE NAME OF THE COMPANY
The Board of Directors proposes to amend the Company's Certificate of
Incorporation to change its name from "Sector Associates, Ltd." to "Viragen
(Europe) Ltd." The Company believes that the new name will promote public
recognition of the Company and enable the public and those already familiar
with the Company to reflect the Company's holdings ownership in Viragen
(Scotland) Ltd.
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AMENDMENT TO CERTIFICATE TO EFFECT A 1 FOR 14 REVERSE STOCK SPLIT
Generally
The Board of Directors of the Company proposes to amend the Company's
Certificate of Incorporation to effect a one-for-fourteen reverse stock split
of the issued and outstanding Common Stock of the Company on the basis of one
(1) newly issued Common Stock ("New Common Stock") share for each fourteen (14)
shares of the Company's presently issued and outstanding Common Stock (the
"Reverse Stock Split"). The par value of the Common Stock would be changed
from $.10 to $.01 as described above. No fractional share or scrip
representing a fractional share will be issued upon the Reverse Stock Split.
Fractional shares of .5 of New Common Stock will be rounded up to the next
highest share, and fractional interest of less than .5 of New Common Stock will
be reduced down to the next nearest share. Any stockholder whose aggregate
stockholding is reduced to a fraction of one (1) share will receive one (1)
share of New Common Stock. The Board of Directors reserve the right without
further action by the stockholders, to not proceed with the Reverse Stock
Split, if, at any time prior to filing the Amendment with the Secretary of
State of the State of Delaware, the Board of Directors, in their sole
discretion, determines that the Reverse Stock Split is no longer in the best
interests of the Company and its stockholders.
The Company is currently authorized to issue 20,000,000 shares of
Common Stock, $.10 par value, of which 5,037,617 (pre-split) shares were
issued and outstanding at the close of business on the Record Date. In
addition, up to 78,400,000 (pre-split and 5,600,000 post-split) shares may be
issued in connection with the conversion of the Company's Series B Convertible
Preferred Stock. All of the Series B Preferred Stock was initially issued to
Viragen, Inc. in connection with the Company's recently concluded Stock
Purchase and Exchange Agreement with Viragen (Scotland) Ltd. All of the
current holders of the Series B Convertible Preferred Stock have agreed to not
exercise their respective conversion rights until after the Reverse Stock Split
has been effectuated so as not to require an increase in the amount of
authorized capital stock of the Company. The failure to secure authorization
of this proposal and the filing of the Amendment could result in the election
by Viragen, Inc. to rescind the Stock Purchase and Exchange Agreement pursuant
to which the Company acquired Viragen (Scotland) Ltd. A description of that
transaction is included in the Company's Current Report on Form 8-K which is
included as Exhibit B to this Information Statement. Stockholders of the
Company will not be entitled to dissenters' rights under the Delaware Law in
connection with this proposed amendment to the Certificate of Incorporation.
As proposed, the Reverse Stock Split would reduce the number of the
Company's outstanding shares to approximately 5,959,830 (assuming conversion of
the Series B Convertible Preferred Stock by Viragen). The proposed Reverse
Stock Split would not affect any stockholder's proportionate equity interest in
the Company, except to the extent that any fractional shares are rounded up to
the next whole number.
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Reasons for the Proposed Stock Split
The Board of Directors of the Company believes that the Reverse Stock
Split is necessary to provide a manageable number of shares of Common Stock and
to effectively insure the marketability of the Company's New Common Stock.
There can be no assurances, however, that the trading market for the Common
Stock will increase or improve, nor can the Board of Directors of the Company
predict what effect, if any, the Reverse Stock Split will have on the market
price of the Common Stock. The Board of Directors is hopeful that a decrease
in the number of shares of Commom Stock outstanding, as a consequence of the
proposed Reverse Stock Split, and the anticipated corresponding increased price
per share will stimulate interest in the Company's Common Stock and possibly
promote greater liquidity for the Company's Common Stockholders with
respect to those shares presently held by them. However, the possibility
does exist that such liquidity could be adversely affected by the reduced
number of shares which would be outstanding if the proposed Reverse Stock
Split is effected.
The Company does not propose to modify the number of authorized shares
of Common Stock or Series B Convertible Preferred Stock. It is estimated that
after the Reverse Stock Split (and giving effect to the conversion of the
Series B Convertible Preferred Stock, post-split) approximately 14,040,170
authorized but unissued shares of Common Stock will remain, which shares will
be available for future corporate purposes.
The Reverse Stock Split is not intended to change the proportionate
equity interests of the Company's stockholders; however, some incidental change
can be expected to occur in connection with the rounding up or down of
fractional shares (see "The Reverse Stock Split - Fractional Shares"). Voting
rights and other rights of the stockholders will not be altered by the Reverse
Stock Split.
Management of the Company is not aware of any present efforts of any
persons to accumulate Common Stock or to obtain control of the Company, and
the proposed Reverse Stock Split of Common Stock is not intended to be an
anti-takeover device. The amendment is being sought solely to enhance the
image of the Company, its corporate flexibility, and to be more acceptable to
the brokerage community, and to investors generally.
Exchange of Stock Certificates
The Reverse Stock Split will be effected by the filing of an amendment
to the Company's Certificate of Incorporation with the Secretary of State of
the State of Delaware. The Company plans to file the amendment as soon as
practicable. The Amendment will become effective at the close of business on
the date of filing, unless the Company specifies otherwise. The record date for
the Reverse Stock Split will be the effective date of the Amendment to the
Certificate of Incorporation (the "Reverse
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Stock Split Date") and the stockholders will be notified on or about the
Reverse Stock Split Date that the Reverse Stock Split has been effected. The
Company's transfer agent will act as its exchange agent (the "Exchange Agent")
to act for holders of Common Stock in implementing the exchange of their
certificates.
As soon as practicable after the Reverse Stock Split, stockholders will
be notified and requested to surrender their certificates representing shares
of Common Stock to the Exchange Agent in exchange for certificates representing
New Common Stock. One share of New Common Stock will be issued in exchange for
each 14 presently issued and outstanding shares of Common Stock. Beginning on
the Reverse Stock Split Date, each certificate representing shares of the
Company's Common Stock will be deemed for all corporate purposes to evidence
ownership of shares of New Common Stock. To the extent a stockholder holds a
number of shares not evenly divisible by 14, the Company will issue one whole
share for fractional interests as desxribed below.
Fractional Shares
No scrip or fractional certificates will be issued in connection with
the Reverse Stock Split. Fractional shares of .5 of New Common Stock will be
rounded up to the next highest share, and fractional interest of less than .5
of New Common Stock will be reduced down to the next nearest share. Any
stockholder whose aggregate stockholding is reduced to a fraction of one (1)
share will receive one (1) share of New Common Stock. No service charge will
be payable by stockholders in connection with the exchange of certificates, and
the costs will be borne and paid by the Company.
Federal Income Tax Consequences
The Reverse Stock Split should not result in the recognition of gain or
loss. The holding period shares of New Common Stock will include the
stockholders holding period for the shares of Common Stock exchanged therefore,
provided that the shares of Common Stock were held as a capital asset. The
adjusted basis of the shares of New Common Stock will be the same as the
adjusted basis of the Common Stock exchanged therefore, reduced by the basis
applicable to the receipt of one whole share in lieu of fractional shares
described below.
No Dissenter's Rights
Under Delaware law, stockholders are not entitled to dissenter's rights
of appraisal with respect to the Company's proposed amendment to the Company's
Certificate of Incorporation to effect the Reverse Stock Split.
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The complete text of the proposed amendment to the Certificate of
Incorporation is set forth as Exhibit A to this Information Statement.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Gerald Smith
-----------------------
Gerald Smith, President
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EXHIBIT A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SECTOR ASSOCIATES, LTD.
Sector Associates, Ltd. a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware, (the
"Corporation"), DOES HEREBY CERTIFY:
FIRST: By the unanimous consent of the directors of Sector
Associates, Ltd., a resolution was duly adopted setting forth a
proposed amendment to the Certificate of Incorporation of said
corporation, declaring said amendment to be advisable and seeking the
consent of the majority of the shareholders of said corporation to
adopt such amendment to the Certificate of Incorporation, pursuant to
Sections 228 and 242 of the Delaware General Corporation Law. The
resolution setting forth the proposed amendment is as follows:
RESOLVED, that subject to the approval of the stockholders, that
ARTICLE FIRST of the Articles of Incorporation of the Corporation be amended in
its entirety to read as follows:
FIRST: The name of the corporation is Viragen (Europe) Ltd.
RESOLVED, that subject to the approval of the stockholders, that
ARTICLE FOURTH be amended to read as follows:
1. Twenty Million (20,000,000) shares of common stock, each share
of which shall have a par value of one tenth of one cent ($.001).
FURTHER RESOLVED, that ARTICLE FOURTH, SECTION 4.A.1 be amended to
read as follows
1. "Common Stock" means the Corporation's Common Stock, par value
$.01 per share.
FURTHER RESOLVED, that ARTICLE FOURTH, SECTION 4.6 be amended in its
entirety to read as follows:
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6. Effective as of the effective date of this Amendment, each
fourteen (14) shares of Common Stock, $.10 par value per share,
outstanding before the effective date of the Amendment will be changed
into one (1) fully paid and nonassessable share of Common Stock, $.01
par value per share; and that after the effective date of the
Amendment, each holder of record of one or more certificates
representing shares of the old Common Stock shall be entitled to
receive one or more certificates representing the proportionate number
of shares of new Common Stock on surrender of a stockholder's old
certificates for cancellation. If a stockholder shall be entitled to
a number of new shares of Common Stock which is not a whole number,
then the number of new shares of Common Stock issued to the
Stockholder shall be rounded upward to the nearest whole number.
SECOND: that a majority of the Stockholders have given their written
consent to the above amendments in lieu of a meeting in accordance
with the provisions of Section 228 of the Delaware General Corporation
Law;
THIRD: that the aforesaid amendment shall be duly adopted in
accordance with the applicable Section 242 and 228 of the Delaware
General Corporation Law.
FOURTH: that the capital of the Corporation shall not be reduced
under or by reason of said amendment.
FIFTH: that this amendment shall become effective upon its filing in
the office of the Secretary of State of Delaware, and therefore being,
the record date of a one (1) for fourteen (14) (1:14) reverse stock
split of the Company's issued and outstanding shares of Common Stock.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to
be hereunto affixed and this Certificate to be signed by its President and
Secretary, this ___ day of ______________, 1996.
SECTOR ASSOCIATES, LTD.
Attest: BY:
---------------------------- -----------------------------
Dennis W. Healey, Secretary Gerald Smith, President
