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SCHEDULE 14A
(RULE 14a-101)
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:
<TABLE>
<S> <C>
[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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
BIO-PLEXUS, INC.
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(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:
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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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BIO-PLEXUS, INC.
129 RESERVOIR ROAD,
VERNON, CONNECTICUT 06066
November 29, 1999
Dear Bio-Plexus Stockholder:
I am writing on behalf of the Bio-Plexus Board of Directors to invite you
to attend a Special Meeting of the stockholders of Bio-Plexus, Inc. The meeting
will be held at 1:00 p.m. on Wednesday, December 29, 1999, at Rensselaer at
Hartford, 275 Windsor Street, Hartford, Connecticut 06120. Directions to the
Special Meeting are enclosed.
Bio-Plexus is hosting this Special Meeting because of the recently
announced $17.5 million financing commitment (the "Investment") from Appaloosa
Management L.P., of Chatham, New Jersey. The proposed Investment consists of
$16.75 million zero-coupon secured notes, initially convertible into
approximately 5.6 million shares, and a 250,000 share equity investment, plus
additional warrants. Appaloosa manages investment partnerships with combined
capital of approximately $1.7 billion. As a holder of Bio-Plexus Common Stock as
of the close of business on November 1, 1999, you are entitled and encouraged to
vote at the Special Meeting.
I have enclosed the following materials for your review:
- Notice of Special Meeting of Stockholders
- Proxy Statement
- Proxy Card
- Directions to the Special Meeting
I encourage you to read this Proxy Statement carefully. It contains a
description of and other important information regarding the proposed
Investment.
At Bio-Plexus, we believe that the proposed Investment will permit us to
implement the growth stage of our business plan. From its inception, Bio-Plexus
made a commitment to safety and we continue to be a leader in setting the safety
standard. Now that safety has become nationally mandated by federal OSHA, we
believe that we have the technology, and with this capital infusion would have
the financial means to deliver that technology to all healthcare workers.
Proceeds of the funding will be used to launch new safety needle products,
expanded sales and marketing programs, increased production capacity, and
repaying outstanding debt. We believe that the needle market's shift to safety
products, driven by federal OSHA's regulatory change, provides Bio-Plexus with a
unique opportunity for dramatic growth. Bio-Plexus already successfully competes
with much larger entities, and we are confident that this infusion of capital
will give the company the leverage it needs to become a significant competitor
in the medical device market.
Approval of the Investment and related Charter Amendment each requires the
affirmative vote of the holders of a majority of the shares of Common Stock
present in person or represented by proxy and voting on such proposals at the
Special Meeting. All directors and executive officers of the Company holding
shares of Common Stock as of the record date have stated their present
intentions to vote all of such shares in favor of approval and adoption of the
Investment Proposal and the Charter Amendment Proposal. These directors and
executive officer, in the aggregate, own as of the record date approximately 27%
of the outstanding shares of Common Stock. The Board of Directors has carefully
reviewed and considered the terms and conditions of the Investment. Both the
Board and I recommend that you vote "FOR" the proposals.
Your vote is important regardless of how many shares you own. Whether or
not you plan to attend the Special Meeting, please complete, sign, and date the
enclosed Proxy Card and return it in the enclosed
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envelope so that it will be received no later than 5:00 p.m., December 28, 1999.
You may attend the Special Meeting and vote in person even if you have
previously returned your Proxy Card.
I look forward to seeing you at the Special Meeting. In the meantime,
thank you for continued support of Bio-Plexus.
Sincerely,
CARL R. SAHI
President & CEO
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BIO-PLEXUS, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 29, 1999
TO THE STOCKHOLDERS OF BIO-PLEXUS, INC.:
NOTICE IS HEREBY GIVEN that a special meeting (the "Special Meeting") of
the stockholders of Bio-Plexus, Inc., a Connecticut corporation (the "Company"),
will be held at 1:00 p.m. local time on Wednesday, December 29, 1999, at
Rensselaer at Hartford, 275 Windsor Street, Hartford, Connecticut 06120.
The Special Meeting is called for the purpose of considering and voting
upon the following proposals:
1. To approve the issuance and sale of convertible notes of the
Company due 2004 with a face value of $16.75 million (the "Notes") and an
initial conversion price of $3.00 per share, 250,000 shares of the
Company's common stock, without par value (the "Common Stock") at a price
of $3.00 per share, and warrants to purchase 1.5 million shares of Common
Stock (the "Warrants") at an initial exercise price of $7.00 per share,
including the reservation and subsequent issuance of the shares of Common
Stock issuable upon conversion of the notes and exercise of the warrants
(the foregoing issuance and sale, the "Investment") by one or more entities
affiliated with Appaloosa Management L.P. (collectively, the "Purchasers"),
and to approve and adopt the Convertible Note Purchase Agreement, Warrants,
Registration Rights Agreement and Security Agreement (collectively, the
"Transaction Documents") and the transactions contemplated by the
Transaction Documents. While the Company and the Purchasers have agreed to
the forms of the Transaction Documents, their final terms are subject to
further changes, none of which is expected to be significant. Copies of the
Transaction Documents are included as Exhibits to the Proxy Statement
accompanying this Notice. Approval of the Investment will be deemed to
constitute approval of the Transaction Documents and the transactions
contemplated by the Investment;
2. To amend the Company's Certificate of Incorporation to increase to
40 million (40,000,000) the number of shares of Common Stock that the
Company is authorized to issue, which proposal is being proposed, in part,
to ensure that there are sufficient shares of Common Stock reserved for the
subsequent issuance of shares of Common Stock upon conversion of the Notes
and exercise of the Warrants (the "Charter Amendment"); and
3. To transact such other business as may properly come before the
Special Meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice and which forms a part of this Notice and is
incorporated herein by reference. The Board of Directors knows of no matters to
be brought before the Special Meeting other than those referred to herein. If
any other business should properly come before the Special Meeting, the persons
named in the Proxy Card will vote in accordance with their best judgment.
The Board of Directors has fixed the close of business on November 1, 1999,
as the record date for the determination of the stockholders entitled to notice
of and to vote at the Special Meeting and any adjournments or postponements
thereof. Only holders of record of Common Stock on the record date are entitled
to vote at the Special Meeting.
In order to vote your shares at the Special Meeting, if your shares are
held by a broker, bank, or other nominee, you must obtain from such person a
Proxy Card in your name. You can ensure that your shares are voted at the
Special Meeting by promptly completing, signing and dating the enclosed Proxy
Card and returning it in the envelope provided, which requires no postage if
mailed in the United States. Sending in a signed Proxy Card will not affect your
right to attend the Special Meeting and vote in person. You may revoke your
Proxy Card at any time before it is voted by notifying the Secretary of the
Company in writing delivered
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by registered mail before the Special Meeting, or by executing a subsequent
Proxy Card, which revokes your previously executed Proxy Card.
The Board of Directors has carefully reviewed and considered the terms and
conditions of the Investment and the Charter Amendment, determined that they are
in the best interests of the Company and its stockholders, and recommends that
you vote "FOR" the Investment and the Charter Amendment proposals.
THE ENCLOSED PROXY CARD IS SOLICITED BY THE BOARD OF DIRECTORS WHICH
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSALS TO APPROVE THE
INVESTMENT AND THE CHARTER AMENDMENT.
TO CONSTITUTE A QUORUM FOR THE TRANSACTION OF BUSINESS AT THE SPECIAL
MEETING, THERE MUST BE PRESENT, IN PERSON OR BY PROXY, THE HOLDERS OF A MAJORITY
OF THE VOTING POWER OF THE ISSUED AND OUTSTANDING SHARES OF VOTING STOCK OF THE
COMPANY.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND, WE URGE YOU
TO COMPLETE, SIGN, AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN
THE ENVELOPE PROVIDED.
The Company's Proxy Statement and Proxy Card are submitted herewith.
By Order of the Board of Directors,
NANCY S. LAUTENBACH
Secretary
Vernon, Connecticut
November 29, 1999
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BIO-PLEXUS, INC.
129 RESERVOIR ROAD,
VERNON, CONNECTICUT 06066
------------------------
PROXY STATEMENT
------------------------
FOR A SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, DECEMBER 29, 1999
GENERAL
The enclosed Proxy Card is solicited by and on behalf of the Board of
Directors of Bio-Plexus, Inc., a Connecticut corporation having its principal
offices at 129 Reservoir Road, Vernon, Connecticut 06066 (the "Company"), for
use at a special meeting of stockholders (the "Special Meeting") to be held on
Wednesday, December 29, 1999, at 1:00 p.m. local time at Rensselaer at Hartford,
275 Windsor Street, Hartford, Connecticut 06120 and at any adjournments or
postponements thereof, for the purposes set forth in the accompanying Notice of
Special Meeting. This Proxy Statement and the accompanying Proxy Card are first
being mailed to stockholders on or about November 29, 1999.
SOLICITATION
The Company will bear the entire cost of solicitation, including
preparation, assembly, printing, and mailing of this Proxy Statement, the Proxy
Card, and any additional materials furnished to the stockholders. Copies of the
solicitation materials will also be furnished to brokerage houses, fiduciaries,
and custodians holding in their names shares which are beneficially owned by
others to be forwarded to such beneficial owners. The Company may reimburse such
persons for their cost of forwarding the solicitation materials to such
beneficial owners. Original solicitations of Proxy Cards by mail may be
supplemented by telephone, telegram, facsimile, or personal solicitation by
directors, officers, or employees of the Company. No additional compensation
will be paid for such services. Except as described above, the Company does not
intend to solicit proxies other than by mail.
REVOCABILITY OF PROXY
Any person giving a Proxy Card in the form accompanying this Proxy
Statement has the power to revoke such Proxy Card at any time before it is
exercised. Proxy Cards may be revoked by either (i) sending to the Secretary of
the Company, Nancy S. Lautenbach, a duly executed written instrument of
revocation or a duly executed Proxy Card bearing a date later than that on the
Proxy Card being revoked, or (ii) attending the Special Meeting and voting in
person. Attendance at the Special Meeting will not in and of itself constitute
revocation of a Proxy Card.
RECORD DATE; VOTING AT THE SPECIAL MEETING
Monday, November 1, 1999, has been fixed as the record date (the "Record
Date") for the determination of stockholders entitled to notice of and to vote
at the Special Meeting. Accordingly, only stockholders of record at the close of
business on the Record Date will be entitled to vote at the Special Meeting. At
the close of business on the Record Date, there were 13,647,704 shares of the
Company's common stock, without par value (the "Common Stock"), outstanding and
entitled to vote. Stockholders of record on the Record Date are entitled to one
vote per share, in person or by properly executed Proxy Card, upon each matter
properly submitted for the vote of stockholders at the Special Meeting. If not
revoked, properly executed Proxy Cards will be voted in accordance with the
instructions contained thereon. Unless a
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contrary specification is made thereon, it is the intention of the persons named
on the accompanying Proxy Card to vote "FOR" each one of the proposals on the
accompanying Notice of Special Meeting.
VOTE REQUIRED
The rules of The Nasdaq Stock Market ("Nasdaq") require that Proposal No. 1
(the "Investment Proposal") be approved by the holders of a majority of the
Common Stock present in person or represented by proxy and voting on such
proposal at the Special Meeting. The Connecticut Business Corporation Act
("CBCA") requires Proposal No. 2 (the "Charter Amendment Proposal" and together
with the Investment Proposal, the "Proposals") be approved by the same vote. It
is also a condition to the Company's obligations under the terms and conditions
of the Investment (as defined herein) that the Investment Proposal and the
Charter Amendment Proposal be similarly approved.
All directors and executive officers of the Company holding shares of
Common Stock as of the Record Date, namely Messrs. Richard Ribakove, Carl Sahi,
David Himick, and Herman Gross, have stated their present intentions to vote all
of such shares in favor of approval and adoption of the Investment Proposal and
the Charter Amendment Proposal. These directors and executive officer as of the
Record Date own, in the aggregate, approximately 27% of the outstanding shares
of Common Stock.
VOTING PROCEDURES; QUORUM; ABSTENTIONS AND BROKER NON-VOTES
All votes will be tabulated by the inspector of election appointed for the
Special Meeting, who will separately tabulate affirmative and negative votes,
abstentions, and broker "non-votes" (proxies that are returned by the record
holder, typically a brokerage house, but not voted on a particular matter
because no instructions were received from the beneficial owner). Pursuant to
the CBCA and the Company's By-Laws, to constitute a quorum for the transaction
of business at any meeting of stockholders, there must be present, in person or
by proxy, the holders of a majority of the voting power of the issued and
outstanding shares of voting stock of the Company. Once a share is represented
for any purpose at the meeting, it is deemed present for quorum purposes for the
remainder of the meeting. In certain circumstances, a stockholder will be
considered to be present at the Special Meeting for quorum purposes, but will
not be deemed to have voted on the matters presented for approval at the
meeting. Such circumstances will exist where a stockholder is present but
specifically abstains from voting, or where shares are represented at a meeting
by a proxy conferring authority to vote on certain matters but not on other
matters (i.e., broker non-votes). Under the CBCA, such abstentions and non-votes
have a neutral effect on the approval or disapproval of the matters presented
for stockholder action. As of the Record Date, Common Stock was the only
outstanding voting security of the Company.
NO APPRAISAL OR DISSENTERS' RIGHTS; NO PREEMPTIVE RIGHTS
Under the CBCA, stockholders are not entitled to any statutory dissenters'
rights or appraisal of their shares of Common Stock in connection with the
Investment Proposal or the Charter Amendment Proposal. Existing stockholders
have no preemptive rights in respect of any of the securities to be issued in
connection with the Investment or any other securities issuances by the Company.
PURPOSE OF THE SPECIAL MEETING
At the Special Meeting, holders of shares of Common Stock will be asked to
consider and vote upon the following Proposals:
1. The Investment Proposal: To approve the issuance and sale of
convertible notes of the Company due 2004, with a face value of $16.75
million (the "Notes") and an initial conversion price of $3.00 per share,
250,000 shares of Common Stock (the "Shares") at a price of $3.00 per
share, and warrants to purchase 1.5 million shares of Common Stock (the
"Warrants") at an initial exercise price of $7.00 per share, including the
reservation and subsequent issuance of the shares of Common Stock issuable
upon conversion of the Notes and exercise of the Warrants (the foregoing
issuance and sale, the "Investment")
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by one or more entities affiliated with Appaloosa Management L.P.
(collectively, the "Purchasers"), and to approve and adopt the Convertible
Note Purchase Agreement, Warrants, Registration Rights Agreement and
Security Agreement (collectively, the "Transaction Documents") and the
transactions contemplated by the Transaction Documents. While the Company
and the Purchasers have agreed to the forms of the Transaction Documents,
their final terms are subject to further changes, none of which is expected
to be significant. Approval of the Investment will be deemed to constitute
approval of the Transaction Documents and the transactions contemplated by
the Investment;
2. The Charter Amendment Proposal: To amend the Company's Certificate
of Incorporation to increase to 40 million (40,000,000) the number of
shares of Common Stock that the Company is authorized to issue, which
proposal is being proposed, in part, to ensure that there are sufficient
shares of Common Stock reserved for the subsequent issuance of shares of
Common Stock upon conversion of the Notes and exercise of the Warrants; and
3. To transact such other business as may properly come before the
Special Meeting.
PROPOSAL NO. 1: THE INVESTMENT PROPOSAL
The Investment is the second stage of a two-part financing entered into by
the Company with Appaloosa. The first stage was consummated on October 21, 1999,
whereby, pending completion of the Investment, the Purchasers provided $3.0
million interim note financing to the Company (the "Bridge"). See "-- The Bridge
Transaction." If the Proposals are approved by the stockholders, and subject to
the satisfaction or waiver of the conditions specified in the Convertible Note
Purchase Agreement (the "Purchase Agreement"), the Company anticipates this
second stage of the Appaloosa financing, will be consummated within five (5)
business days after such stockholder approval.
BACKGROUND OF THE FINANCING
In the first half of 1999, legislation mandating the use of safety needles
passed in several states, including California, Tennessee and Texas. Further,
one or more bills were being considered at such time by Congress for federal
legislation requiring the use of safety needles. In addition, the federal
Occupational Safety and Health Administration ("OSHA") began to step up
enforcement of its Bloodborne Pathogens Standard and indicated that it would be
considering a national standard for the use of safe needles by healthcare
workers (and on November 5, 1999, OSHA issued a directive requiring the use of
safety needle devices that reduce the risk of accidental needlesticks to the
"lowest feasible extent").
In response to this growing mandate for safety needle products at the
regulatory and legislative levels, the Company determined that it needed to
develop a more aggressive expansion program. This aggressive expansion meant
that the Company would require large amounts of additional capital very quickly,
both for immediate short-term needs and to implement its longer-term business
plan. The longer-term plans include expanding the Company's sales force,
increasing its marketing efforts, expanding its production capacity, and
introducing additional safety needle products and accessories to supplement its
existing blood collection needle line. In order to implement this new business
plan and take advantage of the growing market opportunity, the Company
determined it would need to seek financing on a substantially greater level than
had traditionally been available.
The Company therefore initiated a search for financing from a variety of
sources. The Company investigated debt financing through its bank and other
traditional lending sources. The Company also investigated venture capital
financing and other sources through firms like Ramius Capital Group ("Ramius"),
a private investment firm involved in the Company's private placement of 6%
convertible debentures due 2004 (the "Convertible Debentures") in April 1999. In
July 1999, during the course of the search, Richard Ribakove, the Company's
Chairman of the Board of Directors, introduced the Company to Appaloosa
Management L.P. ("Appaloosa"), another private investment fund. On June 30, 1999
the Company entered into a confidentiality agreement with Appaloosa, and
initiated discussions and negotiations concerning a term sheet for a possible
financing.
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As a result of the negotiations with Appaloosa, Appaloosa presented the
Company with a preliminary term sheet. At that time, the Company also determined
that it should seek the advice and assistance of an outside financial advisor to
help review and evaluate the proposed Appaloosa financing and any other
financing proposals the Company might receive.
On September 9, 1999, the Company met with a representative of Pali Capital
LLC ("Pali") to discuss the preliminary term sheet received from Appaloosa. Pali
had previously introduced the Company to Ramius. Following the meeting, the
Company appointed Pali its financial advisor in connection with any proposed
financing transaction with the Purchasers. At that time, Pali was asked to
evaluate the proposed Appaloosa financing and alternative sources of financing.
Over the next two weeks, Pali reviewed the preliminary term sheet and
certain information concerning the Company, and researched and made inquiries
concerning alternative sources of financing for the Company, including the
possibility of a public offering, joint ventures, and private placements. Those
inquiries included a possible private placement with Ramius and possible joint
venture opportunities. Several telephone conferences took place between a
representative of Pali and directors and officers of the Company during that
time, discussing the various financing alternatives available to the Company.
The topics of those discussions included a possible additional private placement
with Ramius, as well as near-term opportunities for possible joint ventures with
large medical device companies.
As a result of these discussions, Pali conveyed to Mr. Richard Higgins, a
director and officer of the Company, Pali's assessment of the Appaloosa
financing. Pali advised the Company that, in light of the funding level
contemplated by the longer-term business plan, the Investment was the most
beneficial financing alternative available to the Company at that time. Pali
concluded that (i) in light of the Company's financial condition, it was not the
most opportune time for the Company to seek capital in the public equity market,
and (ii) any other sources including a possible additional private placement
financing or possible joint ventures would either not be available quickly
enough or would fall short of the funding level necessary to implement the
Company's longer-term business plan.
On September 21, 1999, the Board of Directors met to discuss the proposed
Appaloosa financing. The Board was informed by Mr. Higgins of the view of Pali
(and the reasoning therefor) that the Appaloosa financing was the most
beneficial financing alternative available to the Company at that time. After
reviewing and discussing the terms of the proposed Appaloosa financing,
including the positive and negative factors inherent in the proposed financing,
considering alternative proposals, and assessing Appaloosa's business acumen and
its ability to consummate financing of the type contemplated by the Investment,
the Board authorized the Company to execute the final term sheet and enter into
the Bridge and, subject to obtaining the requisite stockholder approval, the
Investment. See "-- Reasons for the Board's Recommendation."
On September 24, 1999, the Company and Appaloosa executed a final term
sheet with respect to the Investment involving the issuance and sale of the
Notes, Shares, and Warrants, and which also included a provision to provide the
Bridge as interim financing to the Company pending stockholder approval and
completion of the documentation to consummate the Investment.
On October 7, a representative of Pali met with the Mr. Carl Sahi, a
director and the Company's President, to discuss the terms of the Bridge. On
October 18, 1999, the Board of Directors met to discuss the Bridge transaction.
After reviewing the Bridge transaction documents and the executed term sheet,
the Board directed the appropriate officers of the Company to negotiate,
execute, and deliver the Bridge transaction documents, with such changes which,
in the opinion of such officers, were necessary, desirable, or expedient to
protect the interests of the Company. On October 21, 1999, the Company
consummated the Bridge, pursuant to which the Company received proceeds of $3.0
million. See "-- The Bridge Transaction."
On November 16, 1999, the Board of Directors met to discuss the
solicitation of the requisite stockholder vote necessary to approve the
Investment Proposal and Charter Amendment Proposal. The Board reviewed,
discussed, and approved of the preliminary Proxy Statement and directed the
authorized officers to file it with the Securities and Exchange Commission (the
"Commission"), with such changes which, in the opinion of such officers, were
necessary, desirable, or expedient to protect the interests of the Company.
5
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THE PURCHASERS
Appaloosa, with headquarters in Chatham, New Jersey, is a private
investment firm investing in, among other things, high-yield bonds, bank loans,
equities, and emerging-markets securities. Appaloosa manages investment
partnerships with combined capital of approximately $1.7 billion. The general
partner of Appaloosa is Appaloosa Partners Inc., of which David Tepper is the
sole stockholder and President. Appaloosa is general partner of Appaloosa
Investment Limited Partnership I, a Delaware limited partnership. Appaloosa acts
as an investment adviser to the Purchasers (which is expected to include
Appaloosa Investment Limited Partnership I, Tersk LLC, a Delaware limited
liability corporation, and Palomino Fund Ltd, a British Virgin Islands
corporation).
THE BRIDGE TRANSACTION
Upon the closing of the Bridge on October 21, 1999, the Company issued and
sold to the Purchasers $3.0 million aggregate principal amount of 7.5% secured
notes (the "Bridge Notes"). The Bridge Notes mature on the earlier of December
31, 1999 or the closing of the Investment. They are secured by a first priority
lien on substantially all of the assets of the Company, including its patents.
In addition, the Company issued to the Purchasers warrants to purchase, in the
aggregate, 1.0 million shares of Common Stock at an initial exercise price of
$3.00 per share (the "$3 Warrants"), and warrants to purchase, in the aggregate,
1.5 million shares of Common Stock at an initial exercise price of $5.00 per
share (the "$5 Warrants" and, together with the $3 Warrants, the "Bridge
Warrants"). The exercise price of the $3 Warrants will automatically increase to
$5.00 per share and the exercise price of the $5 Warrants will automatically
increase to $7.00 per share, in each case on the earlier of the closing of the
Investment or October 21, 2000. The $3 Warrants may each be redeemed at the
Company's option for $.01 if the Common Stock trades at or above $10 per share
for periods of 90 and 180 consecutive trading days.
SUMMARY OF THE INVESTMENT TRANSACTION
Set forth below is a summary of the material terms of the Investment and
does not purport to be complete. This discussion is qualified in its entirety by
reference to the complete text of the forms of the Transaction Documents, which
are attached as Exhibits to this Proxy Statement. Stockholders are urged to read
this Proxy Statement and the Exhibits hereto in their entirety. Stockholders are
also reminded that the forms of Transaction Documents are subject to further
changes, none of which is expected to be significant. Only Transaction Documents
in draft form have been prepared as of the date hereof. The Company and
Appaloosa are presently determining the final provisions of the definitive
Transaction Documents. Following stockholder approval of the Investment
Proposal, the definitive Transaction Documents will be executed by the
respective parties. Stockholders are further reminded that approval of the
Investment will be deemed to constitute approval of the Transaction Documents
and the transactions contemplated by the Investment.
The Purchase Agreement.
The form of the Purchase Agreement is attached to this Proxy Statement as
Exhibit A. Capitalized terms used but not defined herein under "-- The Purchase
Agreement" shall have the respective meanings given to them in the Purchase
Agreement.
Terms. At the closing of the Investment, the Purchasers will be issued the
Notes, the Shares, and the Warrants. The Notes are issued at a discount to par,
such that interest accretes at a semi-annual compound rate of 7.5%. The Notes
mature in five years and will accrete to an aggregate of approximately
$24,204,486 at maturity. The Notes are initially convertible into an aggregate
of approximately 5.6 million shares of Common Stock at a conversion price of
$3.00 per share. Upon maturity, assuming that the Notes have not been repaid or
redeemed, the Notes will be convertible into approximately 8.1 million shares of
Common Stock. The Shares are being issued to the Purchasers at $3.00 per share.
The Warrants entitle the holders thereof to purchase from the Company an
aggregate of 1.5 million shares of Common Stock at a price of $7.00 per share
for the 9 years following the date of issuance and are immediately exercisable.
Following the closing of the
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Investment and assuming the immediate conversion of the Notes and the exercise
of the Warrants and Bridge Warrants, the Purchasers will own approximately 42%
of the aggregate outstanding Common Stock. Similarly, assuming conversion of the
Notes at maturity, and assuming further that the Notes have not been repaid or
redeemed and there has been no change to the Company's capital structure between
the date hereof and such time, the Purchasers will own approximately 47% of the
aggregate outstanding Common Stock. Each of the foregoing calculations do not
contemplate the application of anti-dilution adjustments.
Closing. Unless the Investment is terminated and the transactions
contemplated thereby are abandoned, the closing will take place within five (5)
business days following approval by the stockholders but in no event later than
December 31, 1999 (the "Closing").
Representations and Warranties. The Purchase Agreement contains various
customary representations and warranties of the Company and the Purchasers
subject, in certain cases, to specified exceptions.
Covenants. The Purchase Agreement contains various covenants of the
Company subject, in certain cases, to specified exceptions. With limited
exceptions, all covenants, agreements, representations and warranties contained
in the Purchase Agreement terminate when all the Notes and amounts due
thereunder have been paid in full.
Of special importance are the following covenants:
(i) Financial Covenants. The Company is required to exceed certain
levels of operating profit and product sales revenues and not to exceed
certain levels of consolidated capital expenditures. The actual levels will
be based upon the Company's business plan and determined in consultation
with Appaloosa.
(ii) Restricted Use of Proceeds. The Company shall use net proceeds
from the Investment for the purposes set forth in this Proxy Statement. See
"-- Use of Proceeds." The remaining net proceeds will be disbursed in such
manner as determined by the Company and Appaloosa. The Company must remain
in compliance with the terms of the Notes in order for the remaining net
proceeds to be released.
(iii) Right to Designate Board Members. The size of the Board of
Directors will be expanded by the Board from five to seven members. The
Purchasers will have the right to designate two of the seven directors (the
"Purchaser Designees"). The Board will then appoint the two Purchaser
Designees to fill the newly-created vacancies. Thereafter the Board will
nominate the Purchaser Designees and use its best efforts to cause them to
be elected by the stockholders at any annual meeting of stockholders. The
Company will also cause the Purchaser Designees to be appointed to any
committee of the Board, the board of directors of any subsidiary, or any
committee thereof.
Appaloosa has informed the Company that it intends to appoint James E.
Bolin and Scott Tepper as the Purchaser Designees.
Mr. Bolin, age 41, has been a Vice President and Secretary of
Appaloosa Partners Inc. since 1995. He has previously been a Vice President
and Director of Corporate Bond Research at Goldman, Sachs & Co. He also
worked at Smith Barney, Harris Upham in the Fixed Income Research
Department. Mr. Bolin holds a Bachelor of Arts from Washington University
in St. Louis and an MBA in accounting and finance from University of
Missouri-St. Louis. Mr. Bolin has also served as a director of INAMED
Corporation since March 18, 1999.
Mr. Tepper is the founder and lead integration consultant for KST
Consulting, a healthcare and healthcare technology consulting firm, since
July, 1994. From August 1994 to June 1998, Mr. Tepper served as the Senior
Vice President for Medisolution Ltd., a healthcare company in Canada. Prior
to that, Mr. Tepper was a Senior Director for Foxmeyer Health, a
pharmaceutical distribution and product logistics firm.
(iv) Non-Voting Observer. The Purchasers will be entitled to
designate a Non-Voting Observer to attend and participate in (but not vote
at) all meetings of the Board of Directors and its committees, and the
board of directors of any subsidiary, or any committee thereof.
7
<PAGE> 12
(v) Executive Officers. Any change in, or appointment of, key
executive officers of the Company, including, but not limited to, the Chief
Executive Officer, the Chief Financial Officer, Executive Vice President,
Chief Operating Officer, General Counsel or similar positions must be
satisfactory to the Purchaser Designees.
(vi) Redemption of Notes. Subject to the Purchasers' right to convert
the Notes at any time, the Company has the right, at its sole option and
election, to redeem the Notes, in whole or in part, two (2) years after the
Closing at a redemption price of 145% of the accreted value of the Notes
and three (3) years after the Closing at a redemption price of 110% of the
accreted value of the Notes.
(vii) Redemption of the Debentures. The Company shall cause all of
its outstanding Convertible Debentures to be redeemed in accordance with
the terms and conditions thereof.
(viii) Conversion Price Adjustment. The price at which the Notes are
converted into shares of Common Stock is subject to adjustment for
customary anti-dilution events such as stock splits, stock dividends,
recapitalizations, and reorganizations.
(ix) Change of Control. The Company shall make an offer to acquire
the Notes for cash at a redemption price of 110% of the accreted value of
the Notes in the event of a change of control, a merger, consolidation or
other combination involving the Company.
(x) Indemnification. The Company shall indemnify and hold harmless
each Purchaser, each subsequent holder of the Notes and each of their
respective affiliates from any and all liabilities in connection with or
arising out of the transactions contemplated under the Notes or any other
Transaction Document. This indemnification shall survive the repayment in
full of the Notes.
(xi) Limitation on Stock Issuances; Dividends. The Company may not
offer or issue any shares of Preferred Stock or Common Stock, except for
Common Stock issuable upon either the exercise of the Warrants or the
conversion of the Notes in connection with the Purchase Agreement, or for
other approved purposes. In addition, the Company will not declare any
dividends on any shares of its capital stock, nor set aside assets toward
the purchase, redemption, retirement, exchange or other acquisition of any
shares of its capital stock.
In the event of a default in the performance of any agreement or covenant
in the Purchase Agreement or in the event any representation or warranty was
false in any material respect on the date as of which it was made or deemed
made, the Purchasers have the right to accelerate the maturity date of the
Notes.
In addition to stockholder approval (see "-- Why the Company is Requesting
Stockholder Approval"), the consummation of the Investment is expected to be
subject to the satisfaction or waiver of certain customary conditions to
closing, including there having been no enactment, issuance, promulgation,
enforcement or entering into of any law by a governmental entity (defined to
include self-regulatory organizations) that effects or has the effect of making
all or any terms of the Investment illegal or otherwise restraining or
prohibiting such transactions. In the event that a governmental entity shall
determine that any of the transactions contemplated by the Investment violate
any applicable rules or regulations of such governmental entity, Appaloosa may,
at its sole discretion, either (i) abandon the Investment or (ii) modify the
structure of the Investment in a manner to comply with such rule or regulation.
The Warrants.
Pursuant to the Purchase Agreement, on the closing of the Investment, the
Company will issue the Warrants to the Purchasers. The form of the Warrants is
attached to this Proxy Statement as Exhibit B. The Warrants entitle the holders
thereof to purchase from the Company an aggregate of 1.5 million shares of
Common Stock at a price of $7.00 per share for the 9 years following the date of
issuance and are immediately exercisable. The number of shares of Common Stock
for which the Warrant is exercisable and the warrant price will be subject to
customary anti-dilution adjustments.
The Registration Rights Agreement.
The Company will enter into the Registration Rights Agreement with the
Purchasers at the Closing of the Investment. The form of such Registration
Rights Agreement is attached to this Proxy Statement as Exhibit C.
8
<PAGE> 13
The Purchasers have the right to require the Company to effect the
registration under the Securities Act of 1933, as amended (the "Securities
Act"), of all or part of their Registrable Securities on three (3) occasions.
Registrable Securities are defined to mean (i) the shares of Common Stock
issuable upon conversion of the Notes, (ii) the Shares, (iii) the shares of
Common Stock issuable upon exercise of the Warrants and the Bridge Warrants and
(iv) any other additional shares of Common Stock the Purchasers may otherwise
acquire. In an underwritten offering, no securities other than Registrable
Securities shall be included among the securities covered by such demand
registrations unless (i) such inclusion is pursuant to and subject to the terms
of the applicable underwriting agreement or arrangements and, (ii) in the
opinion of the underwriter, the inclusion of such securities will not have a
material adverse effect on the offering (including, without limitation, on the
pricing of the offering). If the offering is not an underwritten offering, there
is no limitation on the inclusion of other securities therein.
The Purchasers and subsequent holders of Registrable Securities are also
entitled to request inclusion in any registration of securities by the Company,
of all or part of their Registrable Securities. If the number of Registrable
Securities requested to be included in such registration would materially
adversely affect an underwritten offering (as determined by the underwriter),
then the Company will include in such registration, first, the securities
proposed by the Company to be sold for its own account, and, second, the
Registrable Securities and all other securities of the Company to be included in
such registration to the extent of the number and type approved by the
underwriter, pro rata among the participating holders of Registrable Securities
and such other holders of securities requesting such registration.
The Company has agreed to pay all registration expenses incident to the
registration and disposition of the securities registered pursuant to the
Registration Rights Agreement (other than underwriting discounts and commissions
in respect thereof, which shall be paid by the holders of Registrable
Securities); provided, however, that with respect to demand registrations, only
in connection with the first three demand registrations.
The Registration Rights Agreement contains customary provisions relating to
registration procedures and indemnification and contribution relating to the
exercise by the holders of Registrable Securities of their registration rights
thereunder.
The Security Agreement.
The Company will enter into the Security Agreement with the Purchasers at
the Closing of the Investment. The form of such Security Agreement is attached
to this Proxy Statement as Exhibit D.
The Company will grant a first priority security interest to Appaloosa, as
the collateral agent, for the ratable benefit of the Purchasers as holders of
the Notes, in all of the assets of the Company (including all its patents) not
encumbered by certain First Mortgage Notes Payable in which Victor and Margaret
Demattia have a perfected first priority security interest or certain Equipment
Lease Facilities, dated May 15, 1995, June 22, 1995 and June 28, 1996, between
the Company and Finova Capital Corporation in which Finova has a perfected first
priority security interest. In these latter assets, the Company will grant a
second priority security interest to Appaloosa, as the collateral agent, for the
ratable benefit of the Purchasers.
WHY THE COMPANY IS REQUESTING STOCKHOLDER APPROVAL
The Company's listing agreement regarding the quotation of the Common Stock
on the Nasdaq SmallCap Market requires the Company to comply with certain
"non-quantitative designation criteria." These criteria include the requirement
that, with certain exceptions, issuers whose securities are listed on the Nasdaq
SmallCap Market obtain stockholder approval of the issuance of discounted or
potentially discounted shares of Common Stock equal to 20% or more of the number
of shares or voting power then outstanding. Stockholder approval is also
required for transactions which result in "change in control." Although the
Company is not certain that the terms of the Investment, including the issuances
and sales of shares of Common Stock contemplated by the Investment, constitute a
"change in control" under the Nasdaq's rules, if the transactions were to be so
construed, the approval sought hereby would also be effective to satisfy the
stockholder vote required for that purpose as well.
9
<PAGE> 14
CONSEQUENCES IF STOCKHOLDER APPROVAL NOT OBTAINED
If the Investment Proposal and the Charter Amendment Proposal are not
approved by the stockholders on or before December 31, 1999, the Investment will
not be consummated and the Company will be in default under the Bridge Note.
Consequently, Appaloosa shall have the right to declare all amounts due under
the Bridge Note to become immediately due and payable, and the Company will be
liable to Appaloosa for its fees and expenses incurred in connection with the
proposed Investment. In addition, the Company will be obligated to register for
resale the shares of Common Stock underlying the Bridge Warrants. There can be
no assurance that the Company will have the financial resources to repay the
Bridge Note at that time, in which case the Purchasers will have the right to
foreclose on the assets of the Company, including its patents. In addition,
without the funds provided by the Investment, the Company will be unable to
implement its business plan.
POSSIBLE DISADVANTAGES OF APPROVING THE INVESTMENT PROPOSAL
Potential for Increased Dilution of Common Stockholders. If the Company's
stockholders approve the Investment Proposal and the Charter Amendment Proposal,
the Shares, together with shares of Common Stock that may ultimately be issued
upon the conversion of the Notes and the exercise of the Warrants and the Bridge
Warrants, may reduce (possibly to a significant extent) the percentage ownership
of the current holders of the Common Stock. Although the earnings that the
Company may derive from expansion of its products could reduce (or even possibly
offset) any economic dilution, there can be no assurance that this will occur.
Following the closing of the Investment and assuming the immediate conversion of
the Notes and the exercise of the Warrants and Bridge Warrants, the Purchasers
will own approximately 42% of the aggregate outstanding Common Stock.
Potential for Increased Number of Shares Available for Sale. The approval
of the Investment Proposal and Charter Amendment Proposal could result in a
greater number of shares of Common Stock becoming eligible for sale into the
public market. The Company is required to keep in effect a registration
statement under the Securities Act that allows the public sale of the Shares and
all of the shares of Common Stock issued upon conversion of the Notes and
exercise of the Warrants and the Bridge Warrants. See "-- Registration Rights
Agreement." Such sales, or the possibility of such sales, could depress the
market price of the Common Stock.
Potential Effects on the Company's Ability to Obtain Equity Capital. The
approval of the Investment Proposal and the Charter Amendment Proposal may
inhibit the Company's ability to obtain additional equity capital. The greater
market capitalization and possible dilution may inhibit the Company's
opportunities for public and private equity funding. In addition, the
Purchasers' power to veto certain Board of Directors decisions, preemptive
rights, and anti-dilution protection may equally hinder efforts to obtain equity
capital.
Potential for a Change of Control. The approval of the Investment Proposal
and Charter Amendment Proposal will result in the issuance of a large number of
shares of Common Stock, thereby possibly resulting in a change of control of the
Company if the converting holders were to retain such shares of Common Stock
rather than sell them. In addition, the board seats held by the Purchaser
Designees, the power to veto certain Board of Directors decisions, the
membership in all Board committees, and other contractual rights contained in
the covenants (e.g., the approval of executive officers) may, in the aggregate,
result in a change of control of the Company.
Potential for Discouraging Certain Changes of Control. The potential for
the issuance of a larger number of shares of Common Stock following stockholder
approval of the Investment Proposal and Charter Amendment Proposal might tend to
have the effect of delaying, deferring or preventing a change in control of the
Company or discouraging tender offers for the Company because of the greater
market capitalization and the concentration of voting power in a small number of
affiliated entities.
The Board of Directors considered these potential disadvantages, and
concluded that they are outweighed by the advantages of the Investment. See
"-- Recommendation of the Board."
10
<PAGE> 15
USE OF PROCEEDS
The Company estimates that its net proceeds from the sale of the Notes, the
Shares and the Warrants offered by the Company to the Purchasers will be
approximately $17,050,000 after deducting the estimated financing fees and
expenses payable by the Company.
The Company intends to use the net proceeds from the Investment primarily
for working capital to support the growth of its business and to reduce its
debt.
The following table sets forth our estimated allocation of the net
proceeds:
<TABLE>
<S> <C>
Redemption of Convertible Debentures
(amount outstanding as of November 17, 1999).......... $ 2,336,000
Repayment of Bridge Notes............................... $ 3,000,000
Working Capital......................................... $11,714,000
Total Net Proceeds...................................... $17,050,000
</TABLE>
The Company shall use the net proceeds from the Investment for the purposes
set forth above. The remaining net proceeds will be placed in a restricted
account and disbursed in such manner as determined by the Company and Appaloosa.
The Company must remain in compliance with the terms of the Notes in order for
the remaining net proceeds to be released. Pending the release of funds, the
remaining net proceeds from the Investment will be invested in short-term,
investment grade interest bearing securities.
RECOMMENDATION OF THE BOARD OF DIRECTORS
On September 21, 1999, by unanimous vote, the Board of Directors: (i)
determined that the Appaloosa financing was the financing alternative most
beneficial to the Company and its stockholders, (ii) approved the Bridge and the
Investment (subject to stockholder approval), and (iii) resolved to recommend
that the stockholders vote in favor of the Investment Proposal and the Charter
Amendment Proposal.
The factors that the Board of Directors considered as positive in its
decision to proceed with the Proposals included:
1. There would be an enhancement of the Company's strategic position
in the manufacture of bio-medical products and certain other companies in
the industry had greater financial resources. If the Company did not
consummate the Investment, it would have to defer the growth stage of its
business plan and, as a result of such delays, may lose certain business
opportunities.
2. The funds received as a result of the sale of the Bridge Notes
would help satisfy the Company's immediate capital requirements.
3. The Company had had preliminary discussions with alternative
sources of financing, including other companies in the same industry, but
it had received no other proposal that would have yielded the funds
necessary for the Company to implement its longer-term business plan. In
addition, the Board of Directors concluded that such other proposals were
unlikely to be concluded in a timely manner or to result in more favorable
terms.
4. The Company could expect an additional capital infusion upon the
potential exercise of the $3 Warrants. The Company's option to redeem the
$3 Warrants in the event that the Common Stock trades above a certain price
provides the Company with the ability to force exercise (at its option) and
receive additional capital infusion.
5. The advice of Pali, to the effect that the Appaloosa financing was
the most beneficial financing alternative available to the Company and its
stockholders at this time.
6. The Board of Directors considered Appaloosa's business acumen and
its ability to consummate financing of the type contemplated by the
Investment Proposal.
11
<PAGE> 16
7. The Board of Directors took into consideration the fact that
stockholders would continue to have the opportunity to participate in any
future growth of the Company following consummation of the Appaloosa
financing, including any future growth resulting from the effects of the
financing, although such participation could be at a diluted rate. See
"-- Dilution of Holders of Common Stock as a Result of the Transaction."
The factors that the Board of Directors considered as negative in its
decision to proceed with the Proposals included:
1. The Investment may inhibit the Company's ability to raise
additional equity capital in the public or private markets. In addition,
the Purchasers' power to veto certain Board of Directors decisions,
preemptive rights, and anti-dilution protection may equally hinder efforts
to obtain equity capital.
2. There could be extensive dilution of the Company's existing
stockholders by the potential issuance of a large number of shares of
Common Stock. Although the earnings that the Company may derive from
expansion of its products could reduce (or even possibly offset) any
economic dilution, there can be no assurance that this will occur.
Following the closing of the Investment and assuming the immediate
conversion of the Notes and the exercise of the Warrants and Bridge
Warrants, the Purchasers will own approximately 42% of the aggregate
outstanding Common Stock.
3. The Board of Directors considered the restrictive covenants
provided in the final term sheet and the prospect of paying as a break-up
fee the Bridge Warrants in the event the Investment is not consummated. The
Board noted that such restrictive covenants and the break-up fee were
agreed to by the Company as part of a complex negotiation of all of the
terms of the Appaloosa financing.
4. A large number of shares of Common Stock could become available for
sale into the public market and could depress the Company's stock prices.
5. The issuance of a large number of shares of Common Stock could
result in a change of control if the converting holders were to retain such
shares of Common Stock rather than sell them. In addition, the board seats
held by the Purchaser Designees, the power to veto certain Board of
Directors decisions, the membership in all Board committees, and other
contractual rights contained in the covenants (e.g., the approval of
executive officers) may, in the aggregate, result in a change of control of
the Company.
6. The potential for the issuance of a larger number of shares of
Common Stock might tend to have the effect of delaying, deferring, or
preventing a change in control of the Company or discouraging tender offers
for the Company because of the greater market capitalization and the
concentration of voting power in a small number of affiliated entities.
THE BOARD OF DIRECTORS DETERMINED THAT, TAKEN AS A WHOLE, THE POSITIVE
FACTORS OUTWEIGHED THESE NEGATIVE FACTORS.
INTERESTS OF CERTAIN PERSONS
None of the Purchasers or Appaloosa was or is an executive officer or
director of the Company or, to the Company's knowledge, an affiliate of any such
officer or director. The Purchasers beneficially owned approximately 15.5% of
the Common Stock following the Bridge and before the Investment. However, such
ownership consists solely of unexercised Bridge Warrants which have no voting
rights. Appaloosa and the Purchasers will not be voting on the Proposals.
FINANCIAL INFORMATION
Selected Consolidated Financial Data. The following table sets forth
selected historical consolidated financial and other data of the Company as of
the dates and for the periods indicated. The balance sheet data as of, and the
statement of operations data for, each of the years in the five-year period
ended December 31, 1998 have been derived from the financial statements of the
Company which have been audited by PricewaterhouseCoopers, LLP and Mahoney Sabol
& Company, LLP, the Company's independent account-
12
<PAGE> 17
ants during the periods 1994 to 1996, and 1997 to the present, respectively. The
selected consolidated financial data set forth below for the Company as of
September 30, 1999 and for the nine-month periods ended September 30, 1998 and
1999 are unaudited but have been prepared on the same basis as the audited
consolidated financial statements and contain all adjustments, consisting of
only normal recurring accruals, that the Company considers necessary for a fair
presentation of the financial position and results of operations for the periods
presented. Operating results for the nine months ended September 30, 1999 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1999. The selected consolidated financial data should be
read in conjunction with the Company's consolidated financial statements and
related footnotes included in the Company's Annual Report on Form 10-K, which is
incorporated herein by reference.
SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT
THE SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
(UNAUDITED) FOR THE YEAR ENDED DECEMBER 31,
------------------------- ---------------------------------------------------------------
STATEMENT OF OPERATIONS DATA 1999 1998 1998 1997 1996 1995 1994
- ---------------------------- ----------- ----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Total revenue............. $ 5,038 $ 6,869 $ 9,307 $ 5,042 $ 2,743 $ 914 $ 267
Costs and expenses:
Research and development.. 846 376 463 1,044 1,511 1,668 1,466
Other operating and
engineering costs....... 2,229 3,846 6,905 6,024 5,656 4,864 3,829
Selling, general and
administrative.......... 3,472 3,480 4,310 6,500 6,949 5,964 3,442
Total operating costs and
expenses................ 6,547 7,702 11,678 13,568 14,116 12,496 8,737
Financing expenses, net... 573 454 589 3,786 1,497 1,455 1,174
Net loss before
extraordinary items..... $ (2,082) $ (1,287) $ (2,960) $ (12,312) $ (12,870) $ (13,037) $ (9,644)
Extraordinary item:.......
Loss on early extinguishment
of Debt, net of income
taxes of nil............ -- -- -- -- -- 979 --
Net loss after extraordinary
item.................... (2,082) (1,287) (2,960) (12,312) (12,870) (14,016) (9,644)
Less: Imputed dividend on
preferred stock......... -- -- -- (500) -- -- --
Net loss applicable to
common stock............ $ (2,082) $ (1,287) $ (2,960) (12,812) $ (12,870) $ (14,016) (9,644)
Net loss (basic and diluted)
per common share before
extraordinary item...... $ (0.15) $ (0.11) $ (0.24) $ (1.37) $ (1.89) $ (2.48) $ (2.86)
Net loss (basic and diluted)
per common share after
extraordinary item...... -- -- -- -- -- $ (2.67) --
Weighted average common
shares outstanding (basic
and diluted)............ 13,449,889 12,160,987 12,263,870 9,320,800 6,815,936 5,256,997 3,366,424
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, ------------------------------------------------
BALANCE SHEET DATA (UNAUDITED): 1999 1998 1997 1996 1995 1994
- ------------------------------- ------------- ----- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Working capital (deficiency)............ 1,284 $(754) $ (33) $(1,413) $12,017 $6,152
Total assets............................ 8,718 9,152 11,688 12,820 23,389 14,739
Long-term debt.......................... 2,496 2,403 3,204 7,407 9,099 6,715
Total shareholders' equity (deficit).... 4,023 2,477 4,158 (713) 10,751 4,690
</TABLE>
13
<PAGE> 18
Pro Forma Financial Information. The following unaudited pro forma
condensed consolidated balance sheet sets forth the balance sheet of the
Company: (i) as of September 30, 1999, (ii) as adjusted to give effect to the
Bridge, and (iii) as further adjusted to give effect to the closing of the
Investment. The unaudited pro forma condensed consolidated balance sheet as of
September 30, 1999 has been prepared to give effect to the Bridge and the
Investment as though the Bridge and the Investment occurred as of September 30,
1999. The pro forma adjustments are based upon available information and certain
assumptions that the Company believes are reasonable. The unaudited pro forma
condensed consolidated balance sheet is presented for illustrative purposes
only, is not necessarily indicative of the Company's financial condition that
might have occurred had such transactions been completed as of the date
specified, and does not purport to indicate the Company's financial position for
any future date.
PRO FORMA SELECTED FINANCIAL INFORMATION
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
-----------------------------------------------
PRO FORMA PRO FORMA
AS ADJUSTED AS ADJUSTED FOR
BALANCE SHEET DATA (UNAUDITED) ACTUAL (1) FOR BRIDGE (2) INVESTMENT (3)
- ------------------------------ ---------- -------------- ---------------
<S> <C> <C> <C>
Cash....................................... $ 195,000 $ 3,145,000 $14,250,000
Working capital............................ 1,284,000 1,234,000 15,339,000
Total assets............................... 8,718,000 11,668,000 23,173,000
Long-term debt............................. 2,496,000 2,496,000 16,829,000
Total stockholder's equity................. 4,023,000 3,973,000 4,145,000
</TABLE>
- ---------------
(1) Actual as of September 30, 1999.
(2) September 30, 1999 pro forma as adjusted to give effect to the issuance of
the Bridge Note (net of $50,000 in financing costs) and the Bridge Warrants.
(3) September 30, 1999 pro forma as adjusted to give effect to the Investment
(issuance of the Notes, net of approximately $450,000 in financing costs,
and issuance of the Shares) and redemption of the Convertible Debentures.
Pro forma results do not include the effect of the Warrants issued in
connection with the Investment.
REQUIRED VOTE OF STOCKHOLDERS
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or represented by proxy and voting on such proposal at
the Special Meeting is required to approve the Investment Proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
INVESTMENT PROPOSAL
PROPOSAL NO. 2:
APPROVAL OF CHARTER AMENDMENT
TO THE COMPANY'S CERTIFICATE OF INCORPORATION
INTRODUCTION
The stockholders are being asked to approve an amendment to the Company's
Certificate of Incorporation to increase to 40 million (40,000,000) the number
of shares of Common Stock that the Company is authorized to issue.
14
<PAGE> 19
CURRENT CAPITALIZATION
The authorized capital stock of the Company currently consists of
25,000,000 shares of Common Stock, of which, as of the Record Date, there were
(i) 13,647,704 shares of Common Stock issued and outstanding, (ii) 3,907,974
shares of Common Stock subject to outstanding warrants, (iii) 809,750 shares of
Common Stock reserved for issuance under the Incentive Plan and Directors' Plan,
which are either subject to outstanding options or reserved for future grants,
(iv) 2,472,876 shares of Common Stock reserved for issuance upon the conversion
of the Convertible Debentures, and (v) 3,000,000 shares of Preferred Stock, no
par value, of which, as of the date hereof, no shares were issued and
outstanding.
REASONS FOR THE AMENDMENT
The Board of Directors has authorized the amendment to provide additional
shares of Common Stock for issuance to satisfy the Company's contractual
obligations with respect to the Investment. In addition, the shares of Common
Stock are needed so that the Company may take part in future financings in order
to fund future operations and to expand its product lines.
PREEMPTIVE RIGHTS
The holders of shares of Common Stock do not have preemptive rights to
purchase any shares of authorized stock of the Company.
POSSIBLE ANTI-TAKEOVER EFFECTS
Once the additional shares of Common Stock are authorized by the
stockholders, the Board of Directors of the Company can, in many cases, issue
such shares of Common Stock without further stockholder action. However, except
in limited circumstances, as a result of the Investment, the Company is
prohibited from issuing Preferred Stock or Common Stock of the Company without
the approval of the Purchasers. The effect of issuing shares of Common Stock may
be to deter or thwart the accomplishment of a business combination involving a
merger or other change in control of the Company that may at the time be
advantageous to some stockholders, and possibly to render more secure the
position of incumbent management. While the Board of Directors is presently
unaware that any such attempt at assumption of control of the Company may be
made, and presently does not intend to authorize the issuance of shares of
Common Stock of the Company to frustrate or block any such effort, stockholders
should be aware when voting on the proposal to increase the authorized number of
Common Stock that such an action may be viewed by some as a potential
anti-takeover measure by the Company.
RESOLUTION
The resolution to approve the amendment is as follows:
RESOLVED, that the Certificate of Incorporation of the Corporation be, and
hereby is, amended as follows:
FIRST: Article III, Capitalization, is amended to increase the number of
authorized shares of Common Stock. Article III shall read as follows:
ARTICLE III
CAPITALIZATION
The aggregate number of shares which the Corporation shall have authority
to issue is Forty-Three Million (43,000,000), which are divided into two
classes: (i) Three Million (3,000,000) shares of Preferred Stock, without par
value (the "Preferred Stock"); and (ii) Forty Million (40,000,000) shares of
Common Stock, without par value (the "Common Stock").
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<PAGE> 20
REQUIRED VOTE OF STOCKHOLDERS
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or represented by proxy and voting on such proposal at
the Special Meeting is required to approve the Charter Amendment Proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
CHARTER AMENDMENT PROPOSAL.
RELATIONSHIP OF PROPOSAL NOS. 1 AND 2
Although the Investment Proposal and the Charter Amendment Proposal are
separate proposals, the stockholders' approval of the Investment is a necessary
precondition to the Charter Amendment and the Charter Amendment is a necessary
precondition to the Investment. If the Investment Proposal is approved, but the
Charter Amendment Proposal is not approved, the Company will be in default under
the Investment because it will not have a sufficient number of shares validly
reserved for issuance upon conversion of the Notes and Warrants. See
"-- Consequences if Stockholder Approval Not Obtained."
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of shares of Common Stock as of the Record Date, by (i) each person
known to the Company to beneficially own 5% or more of the Common Stock, (ii)
each director, and (iii) all executive officers and directors of the Company as
a group. For purposes of the following table, each person's "beneficial
ownership" has been determined in accordance with the rules of the SEC. The
number of shares of Common Stock shown as owned assumes the exercise of all
options and conversion of all convertible securities currently exercisable or
convertible, or exercisable or convertible within sixty (60) days, held by the
applicable person or group, and the percentages shown assume such exercises and
conversions, and assume that no options or convertible securities held by others
are exercised or converted, as the case may be. Unless otherwise indicated, such
persons have sole voting and investment power with respect to the number of
shares set forth opposite their respective names.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF CLASS
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNERSHIP(2) BENEFICIALLY OWNED
- --------------------------------------- ----------------- ------------------
<S> <C> <C>
Appaloosa Management, L.P. and David A.
Tepper(3)................................ 2,500,000 15.5%
Herman Gross(4)............................ 1,672,110 12.2%
Richard L. Higgins(5)...................... 180,000 1.3%
Carl R. Sahi............................... 500,970 3.7%
David Himick(6)............................ 1,604,396 11.7%
Kimberley A. Cady(7)....................... 37,500 *
Richard D. Ribakove(8)..................... 62,614 *
Thomas K. Sutton(9)........................ 32,500 *
All directors and executive officers as a
group (7 persons)........................ 4,130,090 29.0%
</TABLE>
- ---------------
* Less than 1% of the class.
(1) Unless otherwise indicated, the address of each named holder is c/o
Bio-Plexus, Inc., 129 Reservoir Road, Vernon, Connecticut 06066.
(2) Beneficial ownership is determined in accordance with the rules of the
Commission and generally includes voting or investment power with respect to
securities. Shares of Common Stock subject to options, warrants and
convertible notes currently exercisable or convertible, or exercisable or
convertible within sixty (60) days, are deemed outstanding for computing the
percentage of the person or group holding such options but are not deemed
outstanding for computing the percentage of any other person. Except as
indicated by footnote, and subject to community property laws where
applicable, the persons
16
<PAGE> 21
named in the table have sole voting and investment power with respect to all
shares of common stock shown as beneficially owned by them.
(3) Based on the Schedule 13D filed jointly with the Commission on November 1,
1999 by Appaloosa and David A. Tepper. Includes 1 million shares of Common
Stock issuable upon the exercise of the $3 Warrants and 1.5 million shares
of Common Stock issuable upon exercise of the $5 Warrants issued to the
Purchasers upon the closing of the Bridge. None of Appaloosa, Mr. Tepper, or
the Purchasers will be voting on the Investment Proposal or the Charter
Amendment Proposal.
(4) Includes 75,000 shares issuable upon the exercise of warrants and 2000
shares issuable upon the exercise of options owned by Mr. Gross which are
presently exercisable.
(5) Includes 180,000 shares of Common Stock issuable upon the exercise of
options owned by Mr. Higgins which are presently exercisable.
(6) Includes 145,378 shares owned jointly by Mr. Himick and his wife and as to
which they share voting and investment power and 77,000 shares issuable upon
the exercise of warrants and options owned by Mr. Himick which are presently
exercisable.
(7) Includes 37,500 shares of Common Stock issuable upon the exercise of options
owned by Ms. Cady which are presently exercisable.
(8) Includes 28,430 shares owned jointly by Mr. Ribakove and his wife in tenancy
by their entirety. As to such shares, Mr. Ribakove and his wife share voting
and investment power. Also includes 29,000 shares of Common Stock issuable
upon the exercise of warrants and options owned by Mr. Ribakove which are
presently exerciseable, and 600 shares held in custodial accounts for the
Ribakoves' minor children.
(9) Includes 32,500 shares of Common Stock issuable upon the exercise of options
owned by Mr. Sutton which are presently exercisable.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files periodic reports, proxy statements, and other information with
the Commission. The reports, proxy statements, and other information filed by
the Company with the Commission may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and also are available for inspection at the
Commission's Regional Offices at Seven World Trade Center, Suite 1300, New York,
New York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material also may be obtained, at prescribed rates, from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, the Company is required to file electronic
versions of certain material with the Commission through the Commission's
Electronic Data Gathering, Analysis and Retrieval (EDGAR) system. The Commission
maintains a site on the Internet's World Wide Web at http://www.sec.gov that
contains reports, proxy and information statements, and other information
regarding registrants that file electronically with the Commission.
NO PERSON IS AUTHORIZED TO PROVIDE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS WITH RESPECT TO THE MATTERS DESCRIBED IN THIS PROXY STATEMENT
OTHER THAN THOSE CONTAINED HEREIN OR IN THE DOCUMENTS INCORPORATED BY REFERENCE
HEREIN. ANY INFORMATION OR REPRESENTATIONS WITH RESPECT TO SUCH MATTERS NOT
CONTAINED HEREIN OR THEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY
THE COMPANY. THE DELIVERY OF THIS PROXY STATEMENT SHALL NOT, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
IN THIS PROXY STATEMENT OR IN THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THEREOF, AS THE CASE MAY
BE.
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<PAGE> 22
FORWARD-LOOKING STATEMENTS
Certain information contained or incorporated by reference in this Proxy
Statement, including statements as to the future financial or operating
performance of the Company, may constitute "forward-looking statements," which
can be identified by the use of such forward-looking terminology as "believes,"
"expects," "may," "will," "should," or "anticipates" or the negative thereof or
other variations thereon or comparable terminology, or discussions of strategy
that involves risks and uncertainties. The Private Securities Litigation Reform
Act of 1995 provides certain "safe harbor" protections for forward-looking
statements in order to encourage companies to provide prospective information
about their businesses. Forward-looking statements include statements concerning
plans, objectives, goals, strategies, future events or performance, and
underlying assumptions and other statements which are other than statements of
historical facts. Forward-looking statements contained or incorporated by
reference in this Proxy Statement were not prepared in compliance with the
published guidelines of the American Institute of Certified Public Accountants
regarding projections or financial forecasts.
The forward-looking statements set forth or incorporated by reference in
this Proxy Statement are based upon various assumptions, many of which are
based, in turn, upon further assumptions, including without limitation,
management's examination of historical operating trends, data contained in the
Company's records and other data available from third parties. Although the
Company believes that such assumptions were reasonable when made, because such
assumptions are inherently subject to significant uncertainties and
contingencies which are difficult or impossible to predict and are beyond the
Company's control, there can be no assurance, and no representation or warranty
is made, that management's expectations, beliefs or projections will result or
be achieved or accomplished. In addition to the other factors and matters
discussed elsewhere herein and in the documents incorporated by reference
herein, factors that, in the view of the Company, could cause actual results to
differ materially from those discussed in the forward-looking statements
include: (i) changes in economic conditions; (ii) wars; (iii) changes in
management or control of the Company; (iv) the inability to obtain new customers
or retain existing customers; (v) significant changes in competitive factors
affecting the Company; (vi) governmental/regulatory actions and initiatives,
including those affecting investments and environmental/safety requirements;
(vii) significant changes from expectations in actual capital expenditures and
operating expenses and unanticipated project delays; (viii) occurrences
affecting the Company's ability to obtain funds from operations, debt or equity
to finance needed capital expenditures and other investments; (ix) changes in
foreign trade and monetary policies, laws and regulations related to foreign
operations, political governmental changes, inflation and exchange rates, taxes
and operating conditions; (x) significant changes in tax rates or policies or in
rates of inflation or interest; (xi) significant changes in the Company's
relationship with its employees and the potential adverse effects if labor
disputes or grievances were to occur; (xii) changes in accounting principles
and/or the application of such principles by the Company; (xiii) the
difficulties of predicting synergies from the integration of businesses
following a change of control; and (xiv) natural disasters and other occurrences
beyond the control of the Company.
Neither the Company nor any of its agents, employees, or advisors intend or
have any duty or obligation to supplement, amend, update, or revise any of the
forward-looking statements contained or incorporated by reference in this Proxy
Statement. The Company's independent auditors have not examined or compiled such
statements or applied any procedures with respect to such statements.
Accordingly, such auditors have not expressed any opinion or other form of
assurance with respect to such statements.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's 2000 Annual
Meeting must meet the requirements of Rule 14a-8 promulgated by the Commission
and must be received by the Secretary of the Company, Nancy S. Lautenbach, no
later than February 19, 2000 in order to be eligible for inclusion in the proxy
statement and form of proxy card related to that meeting. Also, if notice of a
matter intended to be presented at the 2000 Annual Meeting but not included in
the Company's proxy statement and proxy card is received by the Company after
May 4, 2000, then management named in the
18
<PAGE> 23
Company's proxy card for the 2000 Annual Meeting will have discretionary
authority to vote shares represented by such proxies on such matters, if
presented at the meeting, without including information about the matters in the
Company's proxy materials.
INDEPENDENT ACCOUNTANTS
The audited financial statements incorporated in this Proxy Statement by
reference to the Company's Annual Report on Form 10-K for the year ended
December 31, 1998 have been audited by Mahoney Sabol & Company, LLP, independent
accountants, as stated in their report, which also is incorporated herein by
reference.
Representatives of Mahoney Sabol & Company, LLP will attend the Special
Meeting and will have an opportunity to make a statement and to respond to
appropriate questions from stockholders.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company (File No.
0-1412) with the Commission under the Exchange Act, are incorporated herein by
reference:
(a) The Company's Annual Report on Form 10-K for the year ended December
31, 1998.
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999.
All documents filed with the Commission by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and
prior to the date of the Special Meeting shall be deemed to be incorporated by
reference herein and to be a part hereof from the date any such document is
filed.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document that also is or is deemed to be incorporated
by reference herein) modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part hereof. All information appearing in this Proxy Statement
is qualified in its entirety by the information and financial statements
(including the notes thereto) contained in the documents incorporated herein by
reference, except to the extent set forth in the immediately preceding sentence.
TO THE EXTENT THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE THAT ARE
NOT PRESENTED HEREIN OR DELIVERED HEREWITH, THE COMPANY WILL PROVIDE WITHOUT
CHARGE TO EACH PERSON TO WHOM A COPY OF THIS PROXY STATEMENT IS DELIVERED, UPON
THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, BY FIRST-CLASS MAIL OR OTHER EQUALLY
PROMPT MEANS WITHIN ONE BUSINESS DAY OF RECEIPT OF SUCH REQUEST, A COPY OF ANY
OR ALL OF THE DOCUMENTS THAT ARE INCORPORATED BY REFERENCE HEREIN (OTHER THAN
EXHIBITS TO SUCH DOCUMENTS THAT ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE
HEREIN). REQUESTS SHOULD BE DIRECTED TO CORPORATE SECRETARY, BIO-PLEXUS, INC.,
129 RESERVOIR ROAD, VERNON, CONNECTICUT 06066 (TELEPHONE NUMBER (860) 870-6112).
IN ORDER TO ENSURE TIMELY DELIVERY OF THE REQUESTED DOCUMENTS, ANY REQUEST
SHOULD BE MADE BY DECEMBER 22, 1999, THE DATE WHICH IS FIVE (5) BUSINESS DAYS
PRIOR TO THE DATE OF THE COMPANY'S SPECIAL MEETING.
OTHER MATTERS
Management knows of no matters to be brought before the Special Meeting
other than those referred to herein. If any other business should properly come
before the Special Meeting, the persons named in the Proxy Card will vote in
accordance with their best judgment.
19
<PAGE> 24
BIO-PLEXUS, INC.
129 Reservoir Road, Vernon, Connecticut 06066 (860) 870-6112
PROXY SOLICITED BY THE BOARD OF DIRECTORS
Special Meeting of Stockholders - December __, 1999
The undersigned, as a stockholder of BIO-PLEXUS, INC. (the "Company"),
hereby appoints Carl R. Sahi and Richard L. Higgins or any one of them, the true
and lawful proxies and attorneys in fact of the undersigned, with full power of
substitution, to attend the Special Meeting of the Stockholders of the Company
to be held December __, 1999, at 1:00 p.m. local time at Rensselaer at Hartford,
275 Windsor Street, Hartford, Connecticut 06120 and any adjournments or
postponements thereof, and any of them to vote, as designated below, the number
of shares which the undersigned would be entitled to vote, as fully and with the
same effect as the undersigned might do if personally present, on the following
matters as set forth in the accompanying Proxy Statement and Notice of Special
Meeting dated November __, 1999.
THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS
PROXY CARD WILL BE VOTED "FOR" PROPOSALS 1 AND 2 SET FORTH ON THE REVERSE SIDE,
AND UPON ALL OTHER MATTERS, THE PROXIES SHALL VOTE IN ACCORDANCE WITH THEIR BEST
JUDGMENT.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
[ SEE REVERSE ]
[ SIDE ]
- -----------------------------------------------------------------------------
[X] Please mark votes as shown in this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
1. To approve the issuance and sale of convertible notes of the Company due 2004
with a face value of $16.75 million (the "Notes") and an initial conversion
price of $3.00 per share, 250,000 shares of the Company's common stock, without
par value (the "Common Stock") at a price of $3.00 per share, and warrants to
purchase 1.5 million shares of Common Stock (the "Warrants") at an initial
exercise price of $7.00 per share, including the reservation and subsequent
issuance of the shares of Common Stock issuable upon conversion of the notes and
exercise of the warrants (the foregoing issuance and sale, the "Investment") by
one or more entities affiliated with Appaloosa Management L.P. (collectively,
the "Purchasers"), and to
<PAGE> 25
approve and adopt the Convertible Note Purchase Agreement, Warrants,
Registration Rights Agreement and Security Agreement (collectively, the
"Transaction Documents") and the transactions contemplated by the Transaction
Documents. While the Company and the Purchasers have agreed to the forms of the
Transaction Documents, their final terms are subject to further changes, none of
which is expected to be significant. Copies of the Transaction Documents are
included as Exhibits to the Proxy Statement accompanying this Proxy Card.
Approval of the Investment will be deemed to constitute approval of the
Transaction Documents and the transactions contemplated by the Investment.
[ ] For [ ] Against [ ] Abstain
2. To amend the Company's Certificate of Incorporation to increase to
40 million (40,000,000) the number of shares of Common Stock that the Company is
authorized to issue, which proposal is being proposed, in part, to ensure that
there are sufficient shares of Common Stock reserved for the subsequent issuance
of shares of Common Stock upon conversion of the Notes and exercise of the
Warrants (the "Charter Amendment").
[ ] For [ ] Against [ ] Abstain
3. To transact such other business as may properly come before the
Special Meeting.
This Proxy Card is revocable and the undersigned reserves the right to
attend the Special Meeting and vote in person. The undersigned hereby revokes
any Proxy Card heretofore given in respect of the shares of the Company.
Please sign exactly as the name(s) appear on your Stock Certificate.
When attorney, executor, administrator, trustee, or guardian, please give full
title as such. If a corporation, please sign in full corporate name by an
authorized officer. If a partnership, please sign in partnership name by an
authorized person. If more than one name is shown, as in the case of joint
tenancy, each party should sign.
THE BOARD OF DIRECTORS URGES THAT YOU FILL IN, SIGN AND DATE THE PROXY CARD AND
RETURN IT PROMPTLY BY MAIL IN THE ENCLOSED ENVELOPE.
Signature:________________ Date:_______ Signature:________________ Date:_______
