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 ss.240.14a-11(c) or ss.240.14a-12
Surgical Laser Technologies, Inc.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(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:
.......................................................
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 the
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of
its filing.
1) Amount Previously Paid: __________________________________________
2) Form, Schedule or Registration Statement No.: ____________________
3) Filing Party: ____________________________________________________
4) Date Filed: ______________________________________________________
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[LOGO]
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
DECEMBER 18, 1998
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of
Surgical Laser Technologies, Inc., a Delaware corporation (the "Company"), will
be held on Friday, December 18, 1998 at 10:00 a.m., local time, at the offices
of the Company's counsel, Duane, Morris & Heckscher LLP, 4200 One Liberty Place,
1650 Market Street, Philadelphia, Pennsylvania 19103, 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 five 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 and any adjournment thereof.
Only stockholders of record at the close of business on November 13,
1998 are entitled to notice of and to vote at the meeting and any adjournment
thereof.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if he or she has returned a proxy.
By Order of the Board of Directors,
Davis Woodward
Secretary
Montgomeryville, Pennsylvania
November 16, 1998
<PAGE>
SURGICAL LASER TECHNOLOGIES, INC.
PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors of
Surgical Laser Technologies, Inc. (the "Company") for use at the Special Meeting
of Stockholders to be held Friday, December 18, 1998 at 10:00 a.m., local time,
and at any adjournment thereof (the "Special Meeting"), for the purposes set
forth in the accompanying Notice of Special Meeting of Stockholders. The Special
Meeting will be held at the offices of the Company's counsel, Duane, Morris &
Heckscher LLP, 4200 One Liberty Place, 1650 Market Street, Philadelphia,
Pennsylvania 19103. The Company's executive offices are located at 147 Keystone
Drive, Montgomeryville, Pennsylvania 18936. The Company's telephone number at
that location is (215) 619-3600.
These proxy solicitation materials were first mailed on or about
November 16, 1998 to all stockholders entitled to vote at the Special Meeting.
Record Date and Principal Share Ownership
Stockholders of record at the close of business on November 13, 1998
are entitled to receive notice of and to vote at the Special Meeting. At the
record date, 9,889,323 shares of the Company's Common Stock, par value $.01 per
share (the "Common Stock") were issued and outstanding.
As of November 13, 1998, the following persons were known to the
Company to be the beneficial owners of more than 5% of the Company's Common
Stock:
<TABLE>
<CAPTION>
Number of Percent
Name and Address Shares of Class
---------------- --------- --------
<S> <C> <C>
Kontron Instruments Holding N.V.......................................... 695,652 7.03%
Julianaplein 22
Curacao, Netherlands Antilles
Steven T. Newby.......................................................... 601,801 6.09%
6116 Executive Boulevard, Suite 701
Rockville, MD 20852
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</TABLE>
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Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Secretary of
the Company a written notice of revocation or a duly executed proxy bearing a
later date or by attending the Special Meeting and voting in person. Any such
notice of revocation should be sent to: Surgical Laser Technologies, Inc., 147
Keystone Drive, Montgomeryville, Pennsylvania 18936, attention: Davis Woodward,
Secretary.
Voting and Solicitation
On all matters presented to the Company's stockholders for a vote, the
holders of Common Stock vote as a single class, and the holder of each share of
Common Stock is entitled to one vote per share. The affirmative vote of the
holders of a majority of the outstanding shares of the Company's Common Stock is
required for approval of the proposal (the "Proposal") to amend the Company's
Restated Certificate of Incorporation to effect a reverse stock split (the
"Reverse Split") in which each five shares of issued Common Stock, 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"). Abstention from voting and broker non-votes will have the practical
effect of voting against the Proposal since an abstention represents one less
vote for the Proposal.
The cost of this solicitation will be borne by the Company. The Company
may reimburse brokerage firms and other persons representing beneficial owners
of shares for their expenses in forwarding solicitation material to such
beneficial owners. Proxies may also be solicited on behalf of the Company by
certain of the Company's directors, officers and regular employees, without
additional compensation, personally or by telephone or telegram.
Deadline for Receipt of Stockholder Proposals
Proposals of stockholders of the Company which are intended to be
presented by such stockholders at the 1999 Annual Meeting of Stockholders must
be received by the Company no later than February 25, 1999 in order that they
may be included, subject to compliance with applicable federal securities laws
and regulations, in the proxy statement and form of proxy relating to the Annual
Meeting.
Security Ownership of Management
The following table sets forth the beneficial ownership of the Common
Stock of the Company as of November 13, 1998 by each director, the Company's
chief executive officer and the other three executive officers of the Company
whose annual salary and bonus in 1997 exceeded $100,000 and by all directors and
executive officers as a group. The persons named in the table below have sole
voting and investment power with respect to all shares of Common Stock shown as
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beneficially owned by them, subject to community property laws where applicable,
and the information contained in the table and notes thereto.
<TABLE>
<CAPTION>
Shares Beneficially Owned
-------------------------
Name Number Percent
---- ------ -------
<S> <C> <C>
Richard J. DePiano................................................... 312,250(1) 3.11%
Jay L. Federman...................................................... 302,703(2) 3.04%
Sheldon M. Bonovitz.................................................. 241,131(3) 2.42%
W. Keith Stoneback................................................... 220,000(4) 2.18%
Davis Woodward....................................................... 116,447(5) 1.17%
Michael R. Stewart................................................... 114,796(6) 1.15%
Vincenzo Morelli..................................................... 50,000(7) *
Glenn H. Stahl....................................................... 33,000(8) *
All directors and executive officers as a group (8) persons.......... 1,390,327 13.06%
</TABLE>
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* Less than one percent
(1) Includes 147,250 shares which Mr. DePiano has the right to acquire under
outstanding stock options exercisable within 60 days after November 13,
1998. Also includes 90,000 shares owned by Mr. DePiano's wife. Mr. DePiano
disclaims beneficial ownership of such 90,000 shares.
(2) Includes 68,500 shares which Dr. Federman has the right to acquire under
outstanding stock options exercisable within 60 days after November 13,
1998 and 12,499 shares owned by Dr. Federman's child. Dr. Federman
disclaims beneficial ownership of such 12,499 shares.
(3) Includes 87,250 shares which Mr. Bonovitz has the right to acquire under
outstanding stock options exercisable within 60 days after November 13,
1998, 25,027 shares owned by Mr. Bonovitz' wife and 29,238 shares owned by
trusts of which Mr. Bonovitz is trustee for the benefit of Mr. Bonovitz'
children. Mr. Bonovitz disclaims beneficial ownership of the 48,265 shares
owned by his wife and such trusts. Also includes 29,119 shares owned by the
Marital Trust Under the Will of Robert H. Fleisher, Deceased. Mr. Bonovitz
is one of the four trustees of such trust and disclaims beneficial
ownership of such 29,119 shares. Also includes 25,500 shares owned by a
pension trust of which Mr. Bonovitz is the beneficiary.
(4) Includes 200,000 shares which Mr. Stoneback has the right to acquire under
outstanding stock options exercisable within 60 days after November 13,
1998.
(5) Includes 92,533 shares which Mr. Woodward has the right to acquire under
outstanding stock options exercisable within 60 days after November 13,
1998.
(6) Includes 108,366 shares which Mr. Stewart has the right to acquire under
outstanding stock options exercisable within 60 days after November 13,
1998.
(7) Includes 15,000 shares held of record by Olive Branch Corp., a Liberian
corporation controlled by members of Mr. Morelli's family. Mr. Morelli
disclaims beneficial ownership of such shares. Also includes 30,000 shares
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which Mr. Morelli has the right to acquire under outstanding stock options
exercisable within 60 days after November 13, 1998.
(8) Represents 8,000 shares owned jointly with his spouse and 25,000 shares
which Mr. Stahl has the right to acquire under outstanding stock options
exercisable within 60 days after November 13, 1998.
(9) Includes 758,899 shares which such persons have the right to acquire under
stock options exercisable within 60 days after November 13, 1998.
PROPOSAL TO AMEND THE COMPANY'S RESTATED CERTIFICATE
OF INCORPORATION TO EFFECT THE ONE-FOR-FIVE REVERSE
COMMON STOCK SPLIT
On November 13, 1998, the last reported sale price of the Common Stock
on the Nasdaq National Market was $____ per share. As discussed below, the
recent per share price of the Common Stock has raised concerns that the Common
Stock may be delisted from the Nasdaq National Market. In addition, 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 increasing the market price of the Common Stock to a
level sufficient to maintain the listing of the Common Stock on the Nasdaq
National Market, improving marketability of the Common Stock, reducing the
stockholders' transaction costs, increasing the number of shares available for
future issuances, and other considerations, on October 12, 1998, 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 Split.
Although the Company's Board of Directors believes as of the date of
this Proxy Statement that the one-for-five Reverse Split is advisable, the
Reverse 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 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-five Reverse Split, potentially to the extent that the result will be
the same as if a one-for-four, 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 Split and any subsequent dividend
declarations described herein will not result in more than five shares being
surrendered for each such share of New Common Stock.
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<PAGE>
Reasons for the Reverse Split Proposal
The trading market for the Common Stock is currently the Nasdaq
National Market. One of the requirements for continued listing on the Nasdaq
National Market is a minimum bid price of $1 per share. On August 19, 1998, the
Company received a letter from Nasdaq stating that the Common Stock would be
delisted from the Nasdaq National Market at the opening of business on November
18, 1998 if, during the period from August 19, 1998 to November 16, 1998, the
closing bid price of the Common Stock is not at least $1 for a minimum of ten
consecutive trading days. From August 19, 1998 to date, the closing bid price of
the Common Stock has remained below $1. If the Common Stock were delisted from
the Nasdaq National Market for failure to meet the minimum share price
requirement, it would probably also fail to meet the $1 minimum share price
requirement for continued listing on the Nasdaq SmallCap Market, and as a result
would trade on the OTC Bulletin Board.
The Board of Directors believes that the delisting of the Common Stock
from the Nasdaq National Market would have a negative impact on the
marketability of the Common Stock and the prestige of the Company in the
financial community. In addition, it would result in the Company no longer
qualifying for certain exceptions from most state securities laws. The Company
anticipates that the increased share price expected to result from the Reverse
Split will enable the Company to meet the minimum share price requirement for
continued listing of the New Common Stock on the Nasdaq National Market.
However, there can be no assurance that the market price of the New Common Stock
will increase to at least $1 per share after the Stock Split, or even if it
does, that the Company will be able to maintain the listing of the New Common
Stock on the Nasdaq National Market.
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 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
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<PAGE>
believed to limit the willingness of institutions to purchase the Common Stock
at its current relatively low per share market price. On the other hand, if
implemented, the Reverse 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 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 Split. Also, although any
increase in the market price of the New Common Stock resulting from the Reverse
Split may be proportionately less than the decrease in the number of shares
outstanding, the proposed Reverse 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 Split will be maintained for any period
of time, that such market price will approximate five times (or some other
multiple of) the market price of the Common Stock before the proposed Reverse
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 effect of the Reverse Split is to increase the number of shares
available for future issuances. The Company is authorized to issue 30,000,000
shares of Common Stock. As of November 13, 1998, _____ shares of Common Stock,
and options and warrants to purchase an additional _____ shares of Common Stock,
were outstanding. The Reverse 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, will have the effect of increasing the number of
shares available for future issuances.
If the Reverse 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 Split divided by five. 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
National Market on the first day of trading after the Effective Time (as
hereinafter defined).
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Approval of the Reverse 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 Split
should not reduce the number of stockholders of the Company other than
stockholders owning fewer than five shares of Common Stock. The shares of New
Common Stock that will be issued upon approval of the Reverse Split will be
fully paid and nonassessable. The voting rights and other privileges of the
holders of Common Stock would not be substantially affected by adoption of the
Reverse Split or subsequent implementation thereof. If for any reason the Board
of Directors deems it advisable to do so, the Reverse 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 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 Split is approved by the stockholders at the Special
Meeting, and upon a determination by the Board of Directors that the Reverse
Split is in the best interest of the Company and its stockholders, an amendment
to Article Four 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, provided that the Reverse 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 five, 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, American Stock Transfer and
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,
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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 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
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 charge will be payable by stockholders in connection with
the exchange of certificates, all expenses of which will be borne by the
Company.
Effect of the Reverse Split
If the Reverse 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 Split, the result (without giving effect to the stock
dividend, if any, referred to above) would be that each Company stockholder who
owns five or more shares of Common Stock will receive one share of New Common
Stock for each five 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 five 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 Split.
If the Reverse Split is implemented, no stock-for-stock dividend is
declared, and no shares, options, or warrants are issued between November 13,
1998 and the Effective Time, at the Effective Time approximately ______ shares
of New Common Stock will be outstanding, approximately _______ shares will be
reserved for issuance upon exercise of outstanding options and warrants, and
approximately ______ shares will be available for future issuances.
Stockholders who do not vote in favor of the Proposal will have no
appraisal rights under Delaware law or under the Company's Restated Certificate
of Incorporation or Bylaws in connection with the Reverse Split.
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Federal Income Tax Consequences
The following is a summary of the material anticipated Federal income
tax consequences of the Reverse 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 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 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 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 Split would be a tax-free
recapitalization to the Company and its stockholders. If the Reverse 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.
Cash received by a stockholder in lieu of a fractional share is treated
as if the Company had 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.
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Vote Required
In order to effect the Reverse 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-five
Reverse Split.
OTHER MATTERS
The Company knows of no other matters to be submitted to the Special
Meeting. If any other matters properly come before the Special Meeting, it is
the intention of the persons named in the enclosed form of Proxy to vote the
shares they represent as the Board of Directors may recommend.
It is important that your stock be represented at the Special Meeting,
regardless of the number of shares which you hold. You are, therefore, urged to
execute and return, at your earliest convenience, the accompanying proxy in the
envelope which has been enclosed.
By Order of the Board of Directors,
Davis Woodward
Secretary
November 16, 1998
