SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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
AMERICAN BIOGENETIC SCIENCES, 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)(1) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
AMERICAN BIOGENETIC SCIENCES, INC.
1375 AKRON STREET
COPIAGUE, NEW YORK 11726
NOTICE OF SOLICITATION OF CONSENTS
To the Stockholders of American Biogenetic Sciences, Inc.:
This Notice of Solicitation of Consents and accompanying Consent
Solicitation Statement (the "Consent Statement") are furnished to you by
American Biogenetic Sciences, Inc. (the "Company") in connection with its
solicitation of written consents ("Consents") from the holders of the Company's
Class A Common Stock and Class B Common Stock (collectively, the "Common Stock")
to take action without a stockholders' meeting.
Specifically, the Company is asking holders of its Common Stock to
consent to amend the Company's Restated Certificate of Incorporation in order to
effect a stock combination (reverse split) pursuant to which the Company's
outstanding shares of Class A Common Stock and Class B Common Stock would be
exchanged for new shares of Class A Common Stock and Class B Common Stock,
respectively, in an exchange ratio to be approved by the Board of Directors,
ranging from one newly issued share for each two outstanding shares to one newly
issued share for each eight outstanding shares.
The Board of Directors requests that you indicate your written consent
to the proposed corporate action by marking, signing and dating the enclosed
consent card, and promptly mailing it in the enclosed envelope (which needs no
postage if mailed in the United States) so that it will be received by the
Company on or before September 21, 1999. The Board of Directors has established
the close of business on August 24, 1999 as the record date for determining
stockholders entitled to submit Consents (the "Record Date"). The proposed
corporate action may be taken only if holders of record on the Record Date of
shares representing at least a majority of the votes represented by all
outstanding shares of Class A Common Stock and Class B Common Stock voting
together as one class, with Class A Common Stock having one vote per share and
Class B Common Stock having ten votes per share, submit to the Company a written
consent to such action within 60 days after the earliest dated Consent is
delivered to the Company. It is planned, however, that Consents will be finally
tabulated on September 21, 1999. Accordingly, for Consents to the proposed
Amendment to be included in the tabulation, they should be received by the
Company on or before September 21, 1999. The Company retains the right to extend
such date, subject to the limitations discussed above. See "General Information
About Solicitation of Consents."
If your shares of Common Stock are held in the name of a brokerage
firm, bank nominee or other institution, only that entity can execute a Consent
with respect to your shares. Accordingly, please contact the person responsible
for your account and give instructions for a Consent to be signed representing
your shares.
The Board of Directors unanimously recommends that you vote FOR the
proposed amendment to the Company's Restated Certificate of Incorporation.
By Order of the Board of Directors
Timothy J. Roach, Secretary
August __, 1999
<PAGE>
AMERICAN BIOGENETIC SCIENCES, INC.
1375 AKRON STREET
COPIAGUE, NEW YORK 11726
CONSENT SOLICITATION STATEMENT
TO AUTHORIZE AN AMENDMENT TO THE COMPANY'S
RESTATED CERTIFICATE OF INCORPORATION TO
ENABLE THE BOARD OF DIRECTORS TO EFFECT
A REVERSE SPLIT OF EACH CLASS OF COMMON STOCK
Approximate date of Mailing of this Consent Statement: August __, 1999
GENERAL
The Company's Board of Directors (the "Board") has unanimously adopted
resolutions proposing, declaring advisable and recommending that stockholders
authorize an Amendment to the Company's Restated Certificate of Incorporation
(the "Amendment") to (i) effect a combination (reverse stock split) of the
Company's outstanding shares of each of its Class A Common Stock and Class B
Common Stock (the "Reverse Split") and (ii) provide for the payment of cash in
lieu of fractional shares otherwise issuable in connection therewith. There will
be no change in the number of the Company's authorized shares of Class A Common
Stock or Class B Common Stock and no change in the par value of either class.
If the Reverse Split is approved, the Board will have authority,
without further stockholder approval, to effect the Reverse Split pursuant to
which the Company's outstanding shares (the "Old Shares") of Class A Common
Stock and Class B Common Stock would be exchanged for new shares (the "New
Shares") of Class A Common Stock and Class B Common Stock, respectively, in an
exchange ratio to be approved by the Board, ranging from one New Share for each
two Old Shares to one New Share for each eight Old Shares. The number of Old
Shares for which each New Share is to be exchanged is referred to as the
"Exchange Number." The Exchange Number may, within such range, be a whole number
or a whole number and fraction of a whole number. The Reverse Split will be
effected simultaneously for each of the Class A Common Stock and Class B Common
Stock and the Exchange Number will be the same for each class.
In addition, the Board will have the authority to determine the exact
timing of the effective date and time of the Reverse Split, which may be any
time prior to May 31, 2000, without further stockholder approval. Such timing
and Exchange Number will be determined in the judgment of the Board, with the
intention of maximizing the Company's ability to raise financing and remain in
compliance with the continued listing maintenance requirements of The Nasdaq
Stock Market, Inc. ("Nasdaq") and other intended benefits of the Reverse Split.
See "The Proposal--Purposes of the Reverse Split," below. The text of the
proposed Amendment (subject to inserting the effective time of the Reverse Split
and the Exchange Number) is set forth in Exhibit A to this Consent Solicitation
Statement.
The Board also reserves the right, notwithstanding stockholder approval
and without further action by stockholders, to not proceed with the Reverse
Split if, at any time prior to filing the Amendment with the
<PAGE>
Secretary of State of the State of Delaware, the Board, in its sole discretion,
determines that the Reverse Split is no longer in the best interests of the
Company and its stockholders. The Board may consider a variety of factors in
determining whether or not to implement the Reverse Split and in determining the
Exchange Number including, but not limited to, overall trends in the stock
market, recent changes and anticipated trends in the market price per share of
the Company's Class A Common Stock, business and transactional developments and
the Company's actual and projected financial performance.
THE PROPOSAL
PURPOSES OF THE REVERSE SPLIT
The Company's Class A Common Stock has traded at market prices ranging
from approximately $0.40 to approximately $1.94 since November 1, 1998. This has
reduced the attractiveness of using the Company's Class A Common Stock in order
to raise financing to support the Company's operations and to increase the
Company's net worth and as consideration for potential acquisitions (which, when
coupled with the Company's reduced level of cash and need to deploy its
available cash for operations, has rendered acquisitions difficult to
negotiate).
Furthermore, the Company believes that maintaining the Company's
Nasdaq/NMS listing may provide the Company with a broader market for its Class A
Common Stock and, therefore, facilitate the use of the Class A Common Stock in
acquisitions and financing transactions in which the Company may engage. In
order for the Class A Common Stock to continue to be quoted on Nasdaq's National
Market ("Nasdaq/NMS"), the Company and its Class A Common Stock are required to
continue to comply with various listing maintenance standards established by
Nasdaq. Among other things, as such requirements pertain to the Company, the
Company is required to maintain net tangible assets of at least $4,000,000 (at
June 30, 1999 the Company's net tangible assets, as defined by Nasdaq, was
approximately $3,141,000) and its Class A Common Stock must (a) have an
aggregate market value of shares held by persons other than officers and
directors ("public float") of at least $5,000,000, (b) be held by at least 400
persons who own at least 100 shares and (c) have a minimum bid price of at least
$1.00 per share.
Under Nasdaq's listing maintenance standards, if the closing bid price
of the Class A Common Stock is under $1.00 per share for a thirty consecutive
business days and does not thereafter regain compliance for a minimum of ten
consecutive business days during the ninety calendar days following notification
by Nasdaq, Nasdaq may delist the Class A Common Stock from trading on the
Nasdaq/NMS.
The Company understands that it is Nasdaq's position that an ability to
demonstrate sustained compliance is also required to achieve compliance with its
various requirements. If a delisting were to occur, the Class A Common Stock
would trade 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.
The purpose of the Reverse Split would be to increase the market price
of the Company's Class A Common Stock in order to (i) make the Company's Class A
Common Stock more attractive to raise financing (and, therefore, both raise cash
to support the Company's operations and increase the Company's net tangible
assets to facilitate compliance with Nasdaq/NMS requirements), and as a possible
currency for acquisitions and other transactions and (ii) increase the market
price of the Class A Common Stock above the Nasdaq minimum bid requirement.
There can be no assurance, however, that, even after effectuating the Reverse
Split, the
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<PAGE>
Company will be able to utilize its Class A Common Stock in order to effectuate
financing or acquisition transactions or to continue to meet the minimum bid
price and otherwise meet the requirements of Nasdaq for continued inclusion for
trading on Nasdaq/NMS.
Giving the Board authority to implement the Reverse Split will avoid
the need to call a special meeting of stockholders under time constraints to
authorize a reverse split should it become necessary in order to seek to
effectuate a financing or acquisition transaction (none of which are presently
pending) or to meet Nasdaq's listing maintenance criteria.
The Reverse Split will not change the proportionate equity interests of
the Company's stockholders, nor will the respective voting rights and other
rights of stockholders be altered, except for possible immaterial changes due to
the Company's purchase of fractional shares and the potential effect of the
Company being able to issue additional shares of Class B Common Stock. The
Common Stock issued pursuant to the Reverse Split will remain fully paid and
nonassessable. The Company will continue to be subject to the periodic reporting
requirements of the Securities Exchange Act of 1934.
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<PAGE>
CERTAIN EFFECTS OF THE REVERSE SPLIT
The following table illustrates the principal effects of the Reverse Split on
the Company's Common Stock:
<TABLE>
<CAPTION>
Prior to After 1-for-2 After 1-for-4 After 1-for-6 After 1-for-8
Reverse Reverse Reverse Reverse Reverse
Stock Stock Stock Stock Stock
Number of Shares Split Split Split Split Split
- ---------------- -------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Class A Common Stock:
Authorized..................... 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000
Outstanding (1)............... 36,305,380 18,152,690 9,076,345 6,050,896 4,538,172
Available for Future
Issuance................. 63,694,620 81,847,310 90,923,655 93,949,104 95,461,828
Class B Common Stock:
Authorized..................... 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000
Outstanding .................. 3,000,000 1,500,000 750,000 500,000 375,000
Available for Future
Issuance................ 0 1,500,000 2,250,000 2,500,000 2,625,000
Financial Data (2)
- --------------
Stockholders' Equity
Class A Common Stock.......... $ 36,000 18,000 $ 9,000 $ 6,000 $ 4,000
Class B Common Stock.......... 3,000 1,000 1,000 0 0
Additional Paid-in Capital.... 63,694,000 63,714,000 63,723,000 63,727,000 63,729,000
Deficit Accumulated During
Development Stage............. (59,984,000) (59,984,000) (59,984,000) (59,984,000) (59,984,000)
-------------- -------------- -------------- ------------- -------------
Total Stockholders' Equity.... $ 3,749,000 $ 3,749,000 $ 3,749,000 $ 3,749,000 $ 3,749,000
============== ============== ============== ============= =============
Net Loss per Common share:
Six months ended June 30,
1999..................... $(0.08) $(0.16) $(0.31) $(0.47) $(0.62)
Year ended December 31,
1998.................... $(0.29) $(0.59) $(1.17) $(1.76) $(2.35)
Book Value Per Common $0.10 $0.21 $0.41 $0.62 $0.83
Share at June 30, 1999..
-----------------------------
</TABLE>
(1) Gives effect to the Reverse Split as if it occurred on June 30, 1999,
subject to adjustment resulting from the repurchase of fractional shares.
Excludes, on a pre-Reverse Split basis, 3,000,000 shares of Class A Common
Stock subject to potential issuance upon conversion of the outstanding
shares of Class B Common Stock; 6,294,795 shares of Class A Common Stock
which were subject to outstanding options and warrants; and 1,953,250
additional shares of Class A Common Stock which were available for the
grant of future options under the Company's stock option plans. Upon
effectiveness of the Reverse Split, each option and warrant would entitle
the holder to acquire a number of shares equal to the number of shares
which the holder
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<PAGE>
was entitled to acquire prior to the Reverse Split divided by the Exchange
Number at the exercise price in effect immediately prior to the Reverse
Split multiplied by the Exchange Number.
(2) Rounded to the nearest one thousand dollars. Balance sheet data gives
effect to the Reverse Split as if it occurred on June 30, 1999, subject to
adjustment resulting from the repurchase of fractional shares.
Stockholders should recognize that, if the Reverse Split is
effectuated, they will own a fewer number of shares than they presently own (a
number equal to the number of shares owned immediately prior to the filing of
the Amendment divided by the Exchange Number). While the Company expects that
the Reverse Split will result in an increase in the market price of the Class A
Common Stock, there can be no assurance that the Reverse Split will increase the
market price of the Class A Common Stock by a multiple equal to the Exchange
Number or result in a permanent increase in the market price (which is dependent
upon many factors, including the Company's performance and prospects). Also,
should the market price of the Company's Class A Common Stock decline after the
reverse split, the percentage decline may be greater than would pertain in the
absence of a Reverse Split. Furthermore, the possibility exists that liquidity
in the market price of the Class A Common Stock could be adversely affected by
the reduced number of shares that would be outstanding after the Reverse Split.
In addition, the Reverse Split will increase the number of stockholders of the
Company who own odd-lots (less than 100 shares). Stockholders who hold odd-lots
typically will experience an increase in the cost of selling their shares, as
well as greater difficulty in effecting such sales. In addition, an increase in
the number of odd-lot holders will reduce the number of holders of round lots
(100 or more shares), which could adversely affect the Nasdaq listing
requirement that the Company have at least 400 round lot holders. Consequently,
there can be no assurance that the Reverse Split will achieve the desired
results that have been outlined above.
Stockholders should also recognize that, as indicated in the foregoing
table, there will be an increase in the number of shares which the Company will
be able to issue from authorized but unissued shares of both Class A Common
Stock (which has one vote per share) and Class B Common Stock (which has ten
votes per share and, under the Company's Restated Certificate of Incorporation,
can only be held by Alfred J. Roach, a trust principally for his benefit or a
partnership or corporation a majority of the beneficial ownership of which is
held by Mr. Roach). As a result of any issuance of shares, the equity and voting
rights of holders of outstanding shares may be diluted.
PROCEDURE FOR EFFECTING REVERSE SPLIT AND EXCHANGE OF STOCK CERTIFICATES
If the Amendment is approved by the Company's stockholders, and if the
Board still believes that the Reverse Split is in the best interests of the
Company and its stockholders, the Company will file the Amendment with the
Secretary of State of the State of Delaware at such time as the Board has
determined the appropriate Exchange Number and the appropriate effective time
for such split. The Board may delay effecting the Reverse Split until as late as
May 31, 2000 without resoliciting stockholder approval. The Reverse Split will
become effective on the date of filing the Amendment at the time specified in
the Amendment (the "Effective Time"). Beginning at the Effective Time, each
certificate representing Old Shares will be deemed for all corporate purposes to
evidence ownership of New Shares.
As soon as practicable after the Effective Time, stockholders will be
notified that the Reverse Split has been effected and of the exact Exchange
Number. The Company expects that its transfer agent will act as exchange agent
(the "Exchange Agent") for purposes of implementing the exchange of stock
certificates. Holders of Old Shares will be asked to surrender to the Exchange
Agent certificates representing Old Shares in exchange for certificates
representing New Shares in accordance with the procedures to be set forth in a
letter of transmittal
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<PAGE>
to be sent by the Company. No new certificates will be issued to a stockholder
until such stockholder has surren dered such stockholder's outstanding
certificate(s) together with the properly completed and executed letter of
transmittal to the Exchange Agent. Any Old Shares submitted for transfer,
whether pursuant to a sale or other disposition, or otherwise, will
automatically be exchanged for New Shares at the Exchange Ratio. STOCKHOLDERS
SHOULD NOT DESTROY ANY STOCK CERTIFICATE AND SHOULD NOT SUBMIT ANY CERTIFICATES
UNTIL REQUESTED TO DO SO.
FRACTIONAL SHARES
No scrip or fractional certificates will be issued in connection with
the Reverse Split. Stockholders of record who otherwise would be entitled to
receive fractional shares because they hold a number of Old Shares not evenly
divisible by the Exchange Number, will be entitled, upon surrender to the
Exchange Agent of certificates representing such shares, to a cash payment in
lieu thereof at a price equal to the fraction to which the stockholder would
otherwise be entitled multiplied by the closing price of the Class A Common
Stock, as reported in The Wall Street Journal, on the last trading day prior to
the Effective Time (or if such price is not available, the average of the last
bid and ask prices of the Class A Common Stock on such day or other price
determined by the Board). The ownership of a fractional interest will not give
the holder thereof any voting, dividend, or other rights except to receive
payment therefor as described herein.
Stockholders should be aware that, under the escheat laws of the
various jurisdictions where stockholders reside, where the Company is domiciled,
and where the funds will be deposited, sums due for fractional interests that
are not timely claimed after the Effective Time may be required to be paid to
the designated agent for each such jurisdiction, unless correspondence has been
received by the Company or the Exchange Agent concerning ownership of such funds
within the time permitted in such jurisdiction. Thereafter, stockholders
otherwise entitled to receive such funds will have to seek to obtain them
directly from the state to which they were paid.
NO DISSENTER'S RIGHTS
Under Delaware law, stockholders are not entitled to dissenter's rights
with respect to the proposed Amendment.
FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE SPLIT
The following is a summary of certain material federal income tax
consequences of the Reverse Split, and does not purport to be complete. It does
not discuss any state, local, foreign or minimum income or other U.S. federal
tax consequences. Also, it does not address the tax consequences to holders that
are subject to special tax rules, such as banks, insurance companies, regulated
investment companies, personal holding companies, foreign entities, nonresident
alien individuals, broker-dealers and tax-exempt entities. The discussion is
based on the provisions of the United States federal income tax law as of the
date hereof, which is subject to change retroactively as well as prospectively.
This summary also assumes that the Old Shares were, and the New Shares will be,
held as a "capital asset," as defined in the Internal Revenue Code of 1986, as
amended (generally, property held for investment). The tax treatment of a
stockholder may vary depending upon the particular facts and circumstances of
such stockholder. EACH STOCKHOLDER SHOULD CONSULT WITH SUCH STOCKHOLDER'S OWN
TAX ADVISOR WITH RESPECT TO THE CONSEQUENCES OF THE REVERSE SPLIT.
No gain or loss should be recognized by a stockholder of the Company
upon such stockholder's exchange of Old Shares for New Shares pursuant to the
Reverse Split (except to the extent of any cash received in lieu of a fraction
of a New Share). Cash payments in lieu of a fractional New Share should be
treated as if the fractional
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<PAGE>
share were issued to the stockholder and then redeemed by the Company for cash.
A Company stockholder receiving such payment should recognize gain or loss equal
to the difference, if any, between the amount of cash received and the
stockholder's basis in the fractional share (determined as provided below). Such
gain or loss will be capital gain or loss if the payment of cash in lieu of the
fractional share is a mere mechanical rounding off of fractions and not
separately bargained for consideration, and the payment is "not essentially
equivalent to a dividend" with respect to the stockholder under the federal
income tax law. For this purpose, a payment is not essentially equivalent to a
dividend if it results in a "meaningful reduction" in the stockholder's
percentage interest in the Company, taking into account the constructive
ownership rules and redemptions of fractional shares from all the stockholders.
The Internal Revenue Service has ruled publicly that any reduction in the
percentage interest of a small minority stockholder in a publicly-held
corporation who exercises no control over corporate affairs should constitute a
meaningful reduction.
The aggregate tax basis of the New Shares received in the Reverse Split
(including any fraction of a New Share deemed to have been received) will be the
same as the stockholder's aggregate tax basis in the Old Shares exchanged
therefor. The stockholder's holding period for the New Shares will include the
period during which the stockholder held the Old Shares surrendered in the
Reverse Split.
GENERAL INFORMATION ABOUT SOLICITATION OF CONSENTS
CONSENT PROCEDURE; EFFECTIVENESS; RECORD DATE
Section 228 of the Delaware General Corporation Law ("DGCL") states
that, unless otherwise provided in a corporation's certificate of incorporation,
any action that may be taken at any annual or special meeting of stockholders,
may be taken without a meeting, without prior notice and without a vote, if
consents in writing, setting forth the action so taken, shall be signed and
dated by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted, and
those consents are delivered to the corporation by delivery to its registered
offices in Delaware, its principal place of business, or an officer or agent of
the corporation having custody of the books in which proceedings of meetings of
stockholders are recorded. The Company's Restated Certificate of Incorporation
does not prohibit the use of such consents.
The Board has established the close of business on August 24, 1999 as
the Record Date for determining stockholders of record entitled to submit
Consents.
The Amendment proposed herein will, subject to approval by the Board,
be adopted if properly completed, dated and unrevoked Consents approving the
Amendment from the holders of record on the Record Date of shares of Common
Stock representing at least a majority of the votes represented by all then
outstanding shares of Class A Common Stock and Class B Common Stock, voting
together as one class, with Class A Common Stock having one vote per share and
Class B Common Stock having ten votes per share, are delivered to the Secretary
of the Company at the Company's principal place of business, 1375 Akron Street,
Copiague, New York 11726 within 60 days after the earliest dated Consent is
delivered to the Company. It is planned, however, that Consents will be finally
tabulated on September 21, 1999. Accordingly, for Consents to the proposed
Amendment to be included in the tabulation, they should be received by the
Company on or before September 21, 1999. The Company retains the right to extend
such date, subject to the limitations discussed above.
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<PAGE>
If the Amendment is adopted by less than unanimous consent of the
Company's stockholders, the Company will give prompt notice of the adoption of
the Amendment to those stockholders who have not returned executed Consents to
the Amendment to the Company and who, if the action had been taken at a meeting,
would have been entitled to notice of such meeting if the record date for such
meeting had been the date that written consents signed by a sufficient number of
holders to take the action were delivered to the Company.
VOTING RIGHTS
The unrevoked, signed and dated Consents representing at least a
majority of the votes of all outstanding shares of Class A Common Stock and
Class B Common Stock on the Record Date, voting together as one class, with
Class A Common Stock having one vote per share and Class B Common Stock having
ten votes per share, are necessary to effect the Amendment. On the Record Date,
the Company had outstanding and entitled to vote 36,305,380 shares of Class A
Common Stock and 3,000,000 shares of Class B Common Stock, each entitled to vote
upon matters to be acted upon by stockholder vote.
SOLICITATIONS OF CONSENTS
Solicitations of Consents will be made by the Company. The Company will
bear all expenses of this solicitation. Consents will be solicited by mail,
telephone or telecopy and in person. No employee of the Company will receive any
additional compensation for such solicitation.
Brokers, custodians, nominees and fiduciaries will be requested to
forward solicitation material to beneficial owners of the Common Stock. The
Company will reimburse brokers, custodians, nominees and fiduciaries for their
reasonable expenses for sending solicitation material to the beneficial owners
of Common Stock.
REVOCATION OF CONSENTS
An executed Consent may be revoked by a properly signed and dated
written revocation delivered to the Company at any time before sufficient
Consents have been delivered to the Company to authorize the Amendment. A
revocation may be in any written form signed by the record holder as long as it
clearly states that the Consent previously given is no longer effective. The
delivery of a subsequently dated Consent which is properly completed and timely
delivered will also constitute a revocation of any earlier Consent. The
revocation should be delivered to the Secretary of the Company at 1375 Akron
Street, Copiague, New York 11726 or any party who may oppose this solicitation.
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<PAGE>
SECURITY HOLDINGS OF CERTAIN
STOCKHOLDERS, MANAGEMENT AND NOMINEES
The following table sets forth information as at July 31, 1999 with
respect to the beneficial ownership of the Company's Class A Common Stock and
Class B Common Stock by (i) each person known by the Company to beneficially own
more than 5% of the outstanding shares of Class A Common Stock or Class B Common
Stock, (ii) each director of the Company, (iii) each person who served as the
Company's Chief Executive Officer in 1998 and each other executive officer whose
annual cash compensation for 1998 exceeded $100,000 and (iv) all executive
officers and directors of the Company as a group. Each share of Class A Common
Stock is entitled to one vote per share while each share of Class B Common Stock
is entitled to ten votes per share. The Company understands that, except as
noted below, each beneficial owner has sole voting and investment power with
respect to all shares attributable to such owner.
<TABLE>
<CAPTION>
Class A Common Stock(1) Class B Common Stock
----------------------- --------------------
Percent Percent
Beneficial Owner No. Shares of Class No. Shares of Class
- ---------------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Alfred J. Roach (2)............. 8,760,250 (2) 21.6% 3,000,000 (2) 100%
John S. North................... 99,000 * --- ---
Josef C. Schoell................ 136,500 (3) * --- ---
Glenna M. Crooks................ 7,750 (3) * --- ---
Ellena M. Byrne................. 425,000 (3) (4) 1.2% --- ---
Timothy J. Roach................ 630,000 (3) 1.7% --- ---
Gustav V. R. Born............... 38,750 (3) * --- ---
Joseph C. Hogan................. 35,000 (3) * --- ---
William G. Sharwell............. 35,000 (3) * --- ---
All executive officers and
directors as a group (11
persons, including the
foregoing)...................... 10,319,000 (5) 24.8% 3,000,000 100%
</TABLE>
- ----------------------------
(1) Asterisk indicates less than one percent. Shares of Class A Common Stock
subject to issuance upon conversion of Class B Common Stock into Class A
Common Stock and upon exercise of options that were exercisable on, or
become exercisable within 60 days after, July 31, 1999 are considered
owned by the holder thereof and outstanding for purposes of computing the
percentage of outstanding Class A Common Stock that would be beneficially
owned by such person, but (except for the computation of beneficial
ownership by all executive officers and directors as a group) are not
considered outstanding for purposes of computing the percentage of
outstanding Class A Common Stock owned by any other person.
(2) The businesss address of Mr. Roach is 1375 Akron Street, Copiague, New
York 11726. Beneficial ownership of Class A Common Stock includes
3,000,000 shares of Class A Common Stock issuable upon 1375 Akron Street,
Copiague, New York 11726.
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<PAGE>
conversion of the same number of shares of Class B Common Stock and
1,185,000 shares of Class ACommon Stock subject to outstanding options.
(3) Includes shares of Class A Common Stock subject to options as follows:
Josef C. Schoell, 127,500; Glenna M. Crooks, 6,250; Ellena M. Byrne,
185,000 (including 25,000 shares subject to options held by her husband);
Timothy J. Roach, 620,000; Gustav V.R. Born, 38,750; Joseph C. Hogan,
25,000; and William G. Sharwell, 25,000.
(4) Includes 115,000 shares owned by Ms. Byrne's son. The inclusion of these
shares should not be construed as an admission that Ms. Byrne is the
beneficial owner of these shares.
(5) Includes 3,000,000 shares of Class A Common Stock issuable upon conversion
of the same number of shares of Class B Common Stock and 2,346,250 shares
of Class A Common Stock subject to outstanding options.
VOTING INSTRUCTIONS
If you wish to Consent to the Amendment and were a record holder of
Common Stock on the Record Date, please mark the appropriate "Consent" box on
the accompanying consent card and sign, date and mail it promptly to the
Secretary of the Company in the enclosed envelope.
If you do not wish to Consent to the Amendment and were a record holder
of Common Stock on the Record Date, you may mark the appropriate "Consent
Withheld" or "Abstain" box on the accompanying consent card, and sign, date and
mail the card in the enclosed envelope. In addition, by not returning a consent
card, a holder of Common Stock will be deemed not to have consented to the
Amendment.
When a stockholder whose Consent is solicited specifies a choice with
respect to the Amendment, the Consent shall be given in accordance with the
specifications so made. If the stockholder has failed to check a box marked
"Consent Withheld" or "Abstain" with respect to the proposed Amendment, such
stockholder shall be deemed to be a "Consent" to the Amendment.
Since the holders of record on the Record Date of shares representing
at least a majority of the votes represented by all outstanding shares of Class
A Common Stock and Class B Common Stock must consent to the proposed Amendment
in order for such proposal to be adopted, a direction to withhold consent, an
abstention or a broker non-vote has the same effect as a "no" vote with respect
to the proposed Amendment.
If your shares of Common Stock are held in the name of a brokerage
firm, bank nominee or other institution, only it can sign a Consent with respect
to your shares. Accordingly, please contact the person responsible for your
account and give instructions for a Consent to be signed representing your
shares.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU CONSENT TO THE PROPOSED
AMENDMENT.
STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
From time to time stockholders may present proposals which may be
proper subjects for inclusion in the proxy statement and form of proxy relating
to that meeting. In order to be considered, such proposals must be submitted in
writing on a timely basis. Stockholder proposals intended to be included in the
Board of Directors'
-10-
<PAGE>
proxy statement and form of proxy relating to the Company's next Annual Meeting
of Stockholders must be received by January 16, 2000. As to any proposals
intended to be presented by a stockholder without inclusion in the Board of
Directors' proxy statement and form of proxy for the Company's next Annual
Meeting of Stockholders, the proxies named in the Board of Directors' form of
proxy for that meeting will be entitled to exercise discretionary authority on
that proposal unless the Company receives notice of the matter on or before
April 1, 2000. However, even if such notice is timely received, such proxies
nevertheless may be entitled to exercise discretionary authority on that matter
to the extent permitted by Securities and Exchange Commission regulations. Any
such proposals, as well as any questions relating thereto, should be directed to
the Secretary of the Company at 1375 Akron Street, Copiague, New York 11726.
By Order of the Board of Directors
Timothy J. Roach, Secretary
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<PAGE>
EXHIBIT A
Article 4 of the Company's Restated Certificate of Incorporation, as
amended, is to be amended to add the following immediately after the present
first paragraph thereof (which sets forth the number and par value of the
Company's authorized capital stock, none of which is being amended):
"Effective 12:01 a.m. on * (the "Effective Time"),
each + ( ) shares of Class A Common Stock then issued shall be
automatically combined into one share of Class A Common Stock
of the Corporation and each + ( ) shares of Class B Common
Stock then issued shall be automatically combined into one
share of Class B Common Stock of the Corporation. There shall
be no fractional shares issued. A holder of record of Class A
or Class B Common Stock at the Effective Time who would
otherwise be entitled to a fraction of a share shall, in lieu
thereof, be entitled to receive a cash payment in an amount
equal to the fraction to which the stockholder would otherwise
be entitled multiplied by the closing price of the Class A
Common Stock, as reported in The Wall Street Journal, on the
last trading day prior to the Effective Time (or if such price
is not available, the average of the last bid and ask prices
of the Class A Common Stock on such day or other price
determined by the Board of Directors)."
- ------------------
* Insert the date of the Effective Time of the Amendment determined by
the Company's Board of Directors.
+ Insert Exchange Number, ranging from two to eight, determined by the
Company's Board of Directors.
<PAGE>
AMERICAN BIOGENETIC SCIENCES, INC.
CONSENT
THIS CONSENT IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (i) acknowledges receipt of the notice dated
August __, 1999, of the solicitation of consents from the stockholders of
American Biogenetic Sciences, Inc., a Delaware corporation (the "Company"), and
the Consent Solicitation Statement related thereto and (ii) votes all shares of
the capital stock of the Company held of record by the undersigned on August 24,
1999, in the manner designated on the reverse side hereof.
THIS CONSENT WHEN PROPERLY EXECUTED WILL BE VOTED IN ACCORDANCE WITH
THE SPECIFICATION MADE ON THE REVERSE SIDE HEREOF. IF NO SPECIFICATION IS MADE,
THIS CONSENT WILL BE VOTED FOR THE PROPOSAL.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
PROPOSAL. PLEASE REVIEW CAREFULLY THE CONSENT SOLICITATION STATEMENT DELIVERED
WITH THIS CONSENT.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
1. To authorize an Amendment to the Company's Restated Certificate of
Incorporation in order to effect a stock combination (reverse split)
pursuant to which the Company's outstanding shares of Class A Common
Stock and Class B Common Stock would be exchanged for new shares of
Class A Common Stock and Class B Common Stock, respectively, in an
exchange ratio to be approved by the Board of Directors, ranging from
one newly issued share for each two outstanding shares to one newly
issued share for each eight outstanding shares, all as more fully
described in the Consent Statement.
CONSENT CONSENT ABSTAIN
WITHHELD
[ ] [ ] [ ]
Dated: _________________ , 1999
___________________________
(SIGNATURE OF STOCKHOLDER)
___________________________
(SIGNATURE OF STOCKHOLDER)
NOTE: PLEASE DATE THIS CONSENT AND
SIGN YOUR NAME OR NAMES EXACTLY AS
SET FORTH HEREON. FOR JOINTLY OWNED
SHARES, EACH OWNER SHOULD SIGN. IF
SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE INDICATE THE CAPACITY IN
WHICH YOU ARE ACTING. CONSENTS
EXECUTED BY CORPORATIONS SHOULD BE
SIGNED BY A DULY AUTHORIZED OFFICER
AND SHOULD BEAR THE CORPORATE SEAL.
PLEASE DATE AND SIGN THIS CONSENT AND MAIL IT PROMPTLY
IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES.
