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Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
AMNEX, 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)(1) 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 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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PRELIMINARY COPY
AMNEX, INC.
145 Huguenot Street
Suite 401
New Rochelle, New York 10801
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
APRIL 29, 1999
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To the Shareholders of AMNEX, Inc.:
NOTICE IS HEREBY GIVEN that the Special Meeting of Shareholders (the
"Meeting") of AMNEX, INC., a New York corporation (the "Company" or "AMNEX"),
will be held at its offices located at 145 Huguenot Street, Suite 401, New
Rochelle, New York on April 29, 1999 at 10:00 A.M., local time, for the
following purpose:
To approve an amendment to the Company's Certificate of Incorporation
to effect a one-for-ten reverse split of the Company's Common Shares (the
"Reverse Split").
Only shareholders of record at the close of business on March 30, 1999
are entitled to notice of and to vote at the Meeting or any adjournment
thereof.
By Order of the AMNEX Board of Directors
/s/ Guy A. Longobardo
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Guy A. Longobardo
Secretary
New Rochelle, New York
March 31, 1999
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WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, WE URGE YOU TO
DATE AND SIGN THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF
DIRECTORS OF AMNEX, AND RETURN IT IN THE PRE-ADDRESSED ENVELOPE PROVIDED
FOR THAT PURPOSE. A SHAREHOLDER MAY REVOKE HIS PROXY AT ANY TIME BEFORE THE
MEETING BY WRITTEN NOTICE TO SUCH EFFECT, BY SUBMITTING A SUBSEQUENTLY
DATED PROXY OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
============================================================================
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PRELIMINARY COPY
AMNEX, INC.
145 Huguenot Street
Suite 401
New Rochelle, New York 10801
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PROXY STATEMENT
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Soliciting, Voting and Revocability of Proxy
This Proxy Statement is being mailed to all shareholders of record of
AMNEX, Inc. (the "Company" or "AMNEX") at the close of business, New York time,
on March 30, 1999 in connection with the solicitation by the Board of Directors
of Proxies to be voted at the Special Meeting of Shareholders (the "Meeting")
to be held on April 29, 1999 at 10:00 A.M., local time, or any adjournment
thereof, to be held at the offices of the Company located at 145 Huguenot
Street, Suite 401, New Rochelle, New York 10801. The Proxy and the Proxy
Statement are being mailed to shareholders on or about March 31, 1999.
All Common Shares represented by Proxies duly executed and received
will be voted on the matters presented at the Meeting in accordance with the
instructions specified in such Proxies. Proxies so received without specified
instructions will be voted FOR the proposal to approve an amendment to the
Company's Certificate of Incorporation to effect a one-for-ten reverse split of
the Company's Common Shares (the "Reverse Split"). No other matters may be
brought before the Meeting.
Shareholders may expressly abstain from voting on the proposal by so
indicating in the Proxy. Abstentions and broker non-votes are counted for
purposes of determining the presence or absence of a quorum for the transaction
of business. Abstentions are counted as present in the tabulation of votes on
the proposal presented to shareholders. Broker non-votes are not counted for
the purpose of determining whether the proposal has been approved. Since the
proposed Reverse Split requires the approval of a majority of the number of
votes of the outstanding Common Shares (as defined below), abstentions and
broker non-votes will have the effect of negative votes.
Any person giving a Proxy in the form accompanying this Proxy
Statement has the power to revoke it at any time before its exercise. The Proxy
may be revoked by filing with AMNEX written notice of revocation or a fully
executed Proxy bearing a later date. The Proxy may also be revoked by
affirmatively electing to vote in person while in attendance at the Meeting.
However, a shareholder who attends the Meeting need not revoke a Proxy given
and vote in person unless the shareholder wishes to do so. Written revocations
or amended Proxies should be sent to AMNEX at 145 Huguenot Street, Suite 401,
New Rochelle, New York 10801, Attention: Corporate Secretary.
The total number of shares of common stock, par value $.001 per share,
of AMNEX (the "Common Shares") outstanding as of March 1, 1999 was 45,494,271.
Each Common Share is entitled to one noncumulative vote. The total number of
shares of Series M Convertible Preferred Stock, par value $.001 per share, of
AMNEX (the "Series M Preferred Shares") outstanding as of March 1, 1999 was
535. The holders of Series M Preferred Shares only have voting rights provided
by the New York Business Corporation Law or the Company's Certificate of
Incorporation, with such rights primarily arising in connection with, among
other things, shareholder authorization of an action adversely affecting such
preferred shareholders' rights or involving an extraordinary
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event such as a proposed dissolution of the Company or sale of
substantially all of its assets. However, holders of Series M Preferred Shares
have no voting rights with respect to the matter proposed herein. Accordingly,
the holders of Common Shares are the only outstanding class of securities of
AMNEX entitled to vote at the Meeting or any adjournment thereof. Only
shareholders of record as of the close of business on March 30, 1999 will be
entitled to vote. A majority of the number of votes that may be cast in respect
of the Common Shares outstanding and entitled to vote as of March 30, 1999 must
be present at the Meeting in person or by Proxy in order to constitute a quorum
for the transaction of business. Rights of dissenting shareholders set forth
under Section 806(6) of the New York Business Corporation Law are not
applicable with respect to the matter proposed herein.
This Proxy is being solicited by the AMNEX Board of Directors. AMNEX
will bear the cost of the solicitation of Proxies, including the charges and
expenses of brokerage firms and other custodians, nominees and fiduciaries for
forwarding Proxy materials to beneficial owners of Common Shares. Solicitations
will be made primarily by mail, but certain Directors, officers or employees of
AMNEX may solicit Proxies in person or by telephone, telecopier or telegram
without special compensation.
A list of shareholders entitled to vote at the Meeting will be
available for examination by any shareholder at the Meeting.
PROPOSAL: AMENDMENT TO CERTIFICATE OF INCORPORATION TO
EFFECT ONE-FOR-TEN REVERSE SPLIT
Introduction
The Board of Directors of the Company has recommended to amend the
Company's Certificate of Incorporation to effect the Reverse Split. Upon
consummation of the proposed Reverse Split, the total number of Common Shares
held by each shareholder will be automatically converted into that number of
whole Common Shares equal to the number of Common Shares owned immediately
prior to the Reverse Split divided by ten, adjusted, as described below, for
any fractional shares.
If the proposal is adopted by the Company's shareholders, each
shareholder's percentage ownership interest in the Company and proportional
voting power will remain unchanged, except for minor differences resulting from
adjustments for fractional shares.
Reasons
The purposes of the Reverse Split are as follows: (i) to comply with
the Nasdaq SmallCap Market continued listing maintenance requirements; (ii) to
prevent the triggering of certain mandatory repurchase or redemption rights
relating to certain outstanding convertible indebtedness and the Series M
Preferred Shares upon delisting of the Common Shares from the Nasdaq SmallCap
Market and (iii) to increase the marketability of the Common Shares.
Compliance with Nasdaq SmallCap Market Continued Listing Requirements
The Common Shares are quoted on the Nasdaq SmallCap Market. Nasdaq
rules impose initial listing and continued listing maintenance requirements.
For continued listing on the Nasdaq SmallCap Market, a company is required to
maintain the following: (i)(A) net tangible assets of $2,000,000, or (B) market
capitalization of $35,000,000 or (C) net income of $500,000 in the most
recently completed fiscal year or in two of the last three most recently
completed fiscal years; (ii) a public float (shares) of 500,000; (iii) a market
value of public float of $1,000,000; (iv) a minimum bid price of $1.00 per
share; (v) two market makers and (vi) 300 shareholders holding 100 shares or
more. Nasdaq has notified the Company that it has failed to maintain the net
tangible asset
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and the minimum bid price continued listing requirements. Nasdaq has also
advised the Company that continued failure to meet these maintenance
requirements will result in the Common Shares being delisted from the Nasdaq
SmallCap Market, with the result that the Company's securities would trade only
on the OTC Bulletin Board or in the "pink sheets" maintained by the National
Quotation Bureau, Inc. Such alternatives are generally considered to be less
efficient markets. Although there can be no assurance, it is anticipated that
the bid price of the Common Shares will be greater than $1.00 immediately
following the Reverse Split.
Prevention of Mandatory Redemption and Repurchase Rights upon
Delisting of the Common Shares
On September 30, 1997, the Company issued 8 1/2% Convertible
Subordinated Notes due 2002 (the "Notes") in the aggregate principal amount of
$15,000,000. The Notes are convertible, at the option of the holder, into
Common Shares, at a conversion price of $ 27.844 ($2.7844 pre-Reverse Split)
per share.
A delisting of the Common Shares from the Nasdaq SmallCap Market would
trigger mandatory repurchase of the Notes by the Company at the option of the
holders thereof at a purchase price equal to 101% of their principal amount. In
addition, delisting would also trigger mandatory redemption of the outstanding
Series M Preferred Shares at prices significantly in excess of the current
trading price. The Company does not currently have the cash resources or access
to capital sufficient to support repurchase of the Notes or the Series M
Preferred Shares.
Increased Marketability for AMNEX Common Shares
The Board of Directors believes that the Reverse Split will facilitate
future financing by the Company because it believes that a low per share market
price for the Common Shares may impair the acceptability of such securities by
the financial community and the investing public. Theoretically, the number of
shares outstanding and per share price should not, by themselves, affect
marketability, the type of investor, or a company's reputation in the financial
community. However, in practice, this is not necessarily the case, as many
investors look upon low-priced stocks as unduly speculative in nature and, as a
matter of policy, avoid investment in such securities. The Board of Directors
is aware of the reluctance of many leading brokerage firms to recommend
low-priced stocks to their clients. Further, a variety of brokerage house
policies and practices tend to discourage individual brokers within those firms
from dealing in low-priced stocks. Institutional investors typically are
restricted from investing in companies whose stocks trade at less than five
dollars per share. Stockbrokers are also subject to restrictions on their
ability to recommend stocks trading at less than five dollars per share because
of the general presumption that such securities may be highly speculative.
While the Reverse Split will not result in a trading price above five dollars
per share, it will increase the trading price and should lessen broker
resistance. In addition, the structure of trading commissions tends to have an
adverse impact upon holders of low-priced stocks because the brokerage
commission on sale of such securities generally represents a higher percentage
of the sales price than the commission on a relatively higher-priced issue.
The Reverse Split is intended to result in a price level for the
Common Shares that will increase investor interest and lessen the resistance of
brokerage firms. On March 18, 1999, the closing bid and asked prices for the
Common Shares, as reported by the Nasdaq SmallCap Market, were $ 0.25 and
$0.3125, respectively. No assurances can be given that the market price for the
Common Shares will increase in the same proportion as the Reverse Split or, if
increased, that such price will be maintained.
Effect of the Reverse Split
The Reverse Split will have the following effects:
1. Assuming that a total of 45,494,271 Common Shares are outstanding
immediately prior to the filing of the Certificate of Amendment of the
Company's Certificate of Incorporation that gives effect to the Reverse Split
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(the "Certificate of Amendment"), a total of 4,549,427 Common Shares will be
outstanding following such filing (without accounting for rounding of
fractional shares)
2. The bid price for the Common Shares should increase above the
minimum bid price requirement of $1.00 per share under the Nasdaq SmallCap
Market continued listing requirements, thus avoiding delisting from the Nasdaq
SmallCap Market and preventing the triggering of any mandatory repurchase or
redemption provisions of the Notes and the Series M Preferred Shares as a
result of such delisting.
3. As of March 1, 1999 there were outstanding options and warrants for
the purchase of an aggregate of approximately 7,836,215 Common Shares at
exercise prices ranging from approximately $0.3125 to $5.29 per share. Upon the
filing of the Certificate of Amendment, such options and warrants will evidence
the right to purchase an aggregate of approximately 783,622 Common Shares at
exercise prices equal to ten times the respective exercise prices set forth
above.
4. As of March 1, 1999, the Notes were convertible into an aggregate of
5,387,157 Common Shares (an effective conversion price of $ 2.7844 per share).
Upon the filing of the Certificate of Amendment, such principal amount of
indebtedness will be convertible into an aggregate of approximately 538,716
Common Shares (an effective conversion price of $27.844 per share).
5. As of March 1, 1999, there were 535 Series M Preferred Shares
outstanding, which were convertible into an aggregate of 1,747,224 Common
Shares assuming a conversion price of $0.31 per share. Upon the filing of the
Certificate of Amendment, the Series M Preferred Shares will be convertible
into an aggregate of 241,000 Common Shares, assuming a conversion price of $2.50
per share, i.e. $0.25 multiplied by 10.
6. As a result of the reduction in the number of outstanding Common
Shares, upon the filing of the Certificate of Amendment, based on a total of
45,494,271 Common Shares being outstanding, the stated capital of the Company's
Common Shares will be reduced by $40,944.85 from $45,494.27 to $4,549.42. Such
reduction will be transferred to the Company's capital in excess of par value
account.
7. If approved, the Reverse Split will result in some shareholders
owning "odd-lots" of less than 100 Common Shares. Brokerage commissions and
other costs of transactions in odd-lots are generally somewhat higher than the
costs of transactions in "round-lots" of even multiples of 100 shares.
Fractional Shares
In lieu of any fractional Common Shares that would otherwise be
issuable in connection with the Reverse Split, the Company shall pay cash to
the holder thereof equal to the product of such fraction multiplied by the
closing bid price of one Common Share immediatley prior to the Reverse Split.
Filing of Certificate of Amendment and Delivery of New Certificates
If the proposed Certificate of Amendment is approved, the required
filing with the Secretary of State of the State of New York is expected to be
made promptly following the Meeting. Shareholders will be required to surrender
their certificates representing the current Common Shares of the Company ("Old
Shares") in order to receive new certificates representing the Common Shares
after the Reverse Split ("New Shares").
Following the filing of the Certificate of Amendment, shareholders
will be sent a confirmation thereof and a form letter of transmittal for
forwarding stock certificates representing the Old Shares. The Company will,
after receipt of a properly executed letter of transmittal and the certificate
or certificates representing the Old Shares, deliver to each shareholder a
certificate or certificates representing the New Shares.
SHAREHOLDERS SHOULD
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NOT SUBMIT ANY CERTIFICATE UNTIL REQUESTED TO DO SO.
Tax Consequences
The proposed Reverse Split is being presented for approval based upon
the expectation that, among other things, no gain or loss will be recognized by
the holders of the Company's Common Shares or by the Company.
Each shareholder will have a basis in the New Shares equal to the
basis of the Old Shares. For purposes of determining whether gain or loss on a
subsequent disposition is long-term or short-term, the holding period of the
New Shares will include the period during which the corresponding Old Shares
were held as a capital asset on the date of filing of the Certificate of
Amendment.
No ruling has been requested from the Internal Revenue Service with
respect to the foregoing tax matters. Shareholders should consult their own tax
advisors as to the effect of the Reverse Split on their holdings of Common
Shares under applicable tax laws.
Recommendation and Vote
The affirmative vote of the holders of a majority of all the
outstanding Common Shares is required for approval of this proposal. The Board
recommends a vote FOR the adoption of the proposed Certificate of Amendment.
OTHER BUSINESS
The accompanying Notice of Special Meeting of Shareholders does not
provide for the transaction of other business before the Meeting. Accordingly,
no matters may be presented at the Meeting other than the proposed Reverse
Split.
By Order of the AMNEX Board
/s/ Guy A. Longobardo
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Guy A. Longobardo
Secretary
New Rochelle, New York
March 31, 1999
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AMNEX, INC.
145 Huguenot Street
Suite 401
New Rochelle, New York 10801
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints ALAN J. ROSSI, PETER M. IZZO, JR. and GUY A.
LONGOBARDO as Proxies, each with the Power to appoint his substitute, and
hereby authorizes them, and each of them, to represent and vote, as designated
below, all the Common Shares of AMNEX, INC. (the "Company") held of record by
the undersigned on March 30, 1999 at the Special Meeting of the Shareholders to
be held on April 29, 1999 or any adjournment or adjournments thereof.
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this Proxy will be
voted for the Proposal and in favor of any proposal to adjourn the meeting in
order to allow the Company additional time to obtain sufficient Proxies with
regard thereto.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL:
Proposal to approve an amendment to the Company's Certificate
of Incorporation to effect a one-for-ten reverse split.
/ / FOR / / AGAINST / / ABSTAIN
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DATED: ................................., 1999
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the President or other
authorized officer. If a partnership, please sign in full partnership name
by general partner or other authorized person. If a limited liability
company, please sign in full limited liability company name by manager or
other authorized person.
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Signature
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Signature if held jointly
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Print Name(s)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE
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