OPHIDIAN
Pharmaceuticals, Inc.
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:
[ ] Preliminary Proxy Statement [ ] Confidential for Use of
the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
OPHIDIAN PHARMACEUTICALS, 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)
[ ] 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:
[X] Fee paid previously with preliminary materials: $700
<PAGE>
[ ] 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>
[Ophidian Pharmaceuticals, Inc. Letterhead]
5445 East Cheryl Parkway
Madison, WI 53711
Dear Ophidian Stockholder:
As you may know, Ophidian closed down its operations this May for
lack of adequate financing. For several months, the Company's
management and Board of Directors have diligently sought
proposals for a merger and/or an asset sale transaction from a
number of parties and considered a variety of possible
transactions. As described in detail in the accompanying Notice
of Special Meeting and attached Proxy Statement, the Board of
Directors is seeking your consideration of, and strongly urging
you to vote "FOR", the following two proposals, which are the
culmination of that search: (1) to sell substantially all of the
Company's assets to Promega Corporation, (the "Asset Sale") and
(2) to authorize the Board of Directors to dissolve the Company,
wind down its affairs, and effect the proposed Plan of
Dissolution and Liquidation (the "Plan of Dissolution").
All of the members of the Board of Directors are firmly committed
to the proposed Asset Sale and Plan of Dissolution, both of which
were unanimously approved by the Board after careful
consideration. We strongly believe that there is no better
alternative currently available to preserve the Company's
remaining cash and, more importantly, to maximize value for
Ophidian's stockholders and creditors. We also believe that
failure to approve the proposed Asset Sale and Plan of
Dissolution, will, in all likelihood, increase costs to the
Company and reduce or eliminate the amount of any possible
distribution to stockholders.
Your vote on each of these matters is very important. Under
Delaware law, the proposed Asset Sale and Plan of Dissolution
cannot be completed unless the holders of at least a majority of
the outstanding shares of the Company's Common Stock vote in
favor of each proposal. All unreturned proxies and abstentions
will have the same effect as votes against the two proposals.
Therefore, and whether or not you plan to attend the Special
Meeting, please take the time to vote and return the enclosed
proxy card in the accompanying postage-paid envelope. The Board
of Directors unanimously and strongly urges you to vote "FOR"
both proposals, and we encourage you to read the entire Proxy
Statement.
Your participation is extremely important. Your early response
will be greatly appreciated and will allow us to effect the
proposals at the lowest possible cost to you and the Company.
Sincerely,
/s/ Margaret van Boldrik
Margaret van Boldrik
Director and Vice President
<PAGE>
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, NOVEMBER 9, 2000
TO THE STOCKHOLDERS:
Notice is hereby given that a Special Meeting of
Stockholders of Ophidian Pharmaceuticals, Inc., a Delaware
corporation (the "Company" or "Ophidian"), will be held on
Thursday, November 9, 2000, at 10:00 a.m., central standard time,
in the auditorium of the BioPharmaceutical Technology Center at
5445 East Cheryl Parkway, Madison, Wisconsin 53711, for the
following purposes:
1. to consider and vote upon the proposed sale of
substantially all of the Company's assets (the "Asset
Sale") to Promega Corporation, a Wisconsin corporation
("Promega") pursuant to the terms of the Asset Purchase
Agreement dated as of September 1, 2000, by and between
the Company as seller and Promega as buyer (the "Purchase
Agreement"), a copy of which is attached to the
accompanying Proxy Statement as Exhibit A; and
2. to consider and vote upon the proposed authorization to
the Company's Board of Directors to effect the
dissolution and liquidation of the Company as described
in the proposed Plan of Dissolution and Liquidation (the
"Plan of Dissolution"), a copy of which is attached to
the accompanying Proxy Statement as Exhibit B; and
to transact such other business as may properly come before
the meeting or any postponements or adjournments thereof.
The foregoing items of business are more fully described in the
Proxy Statement accompanying this Notice. Pursuant to the
Company's bylaws, the Board of Directors has fixed the close of
business on September 29, 2000, as the record date for the
determination of stockholders entitled to notice of and to vote
at the meeting (the "Record Date"). Only stockholders of record
at that time will be entitled to vote at the meeting or any
postponement or adjournment thereof.
All stockholders are cordially invited to attend the meeting in
person. However, to assure your representation at the meeting,
you are urged to mark, sign, date, and return the enclosed proxy
as promptly as possible in the postage-prepaid envelope enclosed
for that purpose. Any stockholder attending the meeting may vote
in person even if such stockholder previously signed and returned
a proxy.
By Order of the Board of Directors,
/s/ Susan P. Maynard
Madison, Wisconsin Susan P. Maynard
September 29, 2000 Secretary
<PAGE>
Ophidian Pharmaceuticals, Inc. - Proxy Statement
Table of Contents
PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS 1
SUMMARY TERM SHEETS 1
THE ASSET SALE 1
THE DISSOLUTION AND PLAN OF DISSOLUTION AND LIQUIDATION 3
INFORMATION CONCERNING SOLICITATION, REVOCATION, AND VOTING OF PROXIES 6
RECORD DATE AND SHARES OUTSTANDING 6
VOTING, QUORUM; ABSTENTIONS; AND BROKER NON-VOTES 6
PROXY SOLICITATION 6
VOTING AND REVOCABILITY OF PROXIES 6
ADJOURNMENTS 7
INFORMATION ABOUT FORWARD-LOOKING STATEMENTS 7
RISK FACTORS RELATING TO THE ASSET SALE AND THE PLAN OF DISSOLUTION 8
ESTIMATES OF THE NET PROCEEDS FROM THE ASSET SALE AND DISTRIBUTIONS
TO BE RECEIVED BY STOCKHOLDERS MAY NOT BE REALIZED 8
THE COMPANY WOULD INCUR COSTS IF THE PURCHASE AGREEMENT WERE
TERMINATED BECAUSE OF THE RECEIPT BY THE COMPANY OF A
SUPERIOR PROPOSAL 9
THE ASSET SALE MAY NOT BE CONSUMMATED 9
ANTICIPATED TIMING OF PLAN OF DISSOLUTION MAY NOT BE ACHIEVED 9
THERE CAN BE NO ASSURANCE THAT THE ASSET SALE AND THE PLAN OF
DISSOLUTION WILL RESULT IN GREATER RETURNS TO STOCKHOLDERS
THAN A CONTINUATION OF THE COMPANY AS CURRENTLY OPERATED 9
THE BOARD MAY AMEND, DELAY IMPLEMENTATION OF, OR TERMINATE
THE PLAN OF DISSOLUTION EVEN IF IT IS APPROVED BY THE STOCKHOLDERS 10
STOCKHOLDERS COULD BE LIABLE TO THE EXTENT OF ANY
DISTRIBUTIONS TO THEM IF CONTINGENT RESERVES ARE INSUFFICIENT
TO SATISFY THE COMPANY'S LIABILITIES 10
PROPOSAL ONE - TO APPROVE THE ASSET SALE 11
DESCRIPTION OF THE ASSET SALE 11
GENERAL OVERVIEW 11
BACKGROUND AND HISTORY OF THE ASSET SALE 11
BUYER 12
PURCHASE PRICE 12
EXPECTED PROCEEDS OF THE ASSET SALE 13
EXPECTED TIMING OF THE ASSET SALE 13
REPRESENTATIONS AND WARRANTIES; CLOSING CONDITIONS 13
INDEMNIFICATION BY SELLER 14
TERMINATION OF THE PURCHASE AGREEMENT 14
GOVERNMENT APPROVALS 15
NO APPRAISAL RIGHTS 15
ACCOUNTING TREATMENT OF THE ASSET SALE 15
FEDERAL INCOME TAX CONSEQUENCES OF THE ASSET SALE 15
<PAGE>
PRICE RANGE OF COMMON STOCK AND WARRANTS 16
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON 16
VOTE REQUIRED 17
RECOMMENDATION OF THE BOARD 17
PROPOSAL TWO - APPROVAL OF THE DISSOLUTION 17
PROPOSED STOCKHOLDER ACTION 17
DESCRIPTION OF THE PLAN OF DISSOLUTION 17
BACKGROUND AND REASONS FOR THE DISSOLUTION 18
RISK FACTORS 18
DISSOLUTION AND LIQUIDATION PROCEDURE 18
ABANDONMENT OF THE PLAN OF DISSOLUTION 18
CONDUCT OF THE COMPANY FOLLOWING DISSOLUTION 19
SALE OF REMAINING ASSETS 19
PAYMENT OF CLAIMS AND OBLIGATIONS. 19
DISTRIBUTIONS TO STOCKHOLDERS 20
LIQUIDATION TRUST 21
DELISTING AND TRADING OF THE COMMON STOCK AFTER DISSOLUTION 21
CONTINUING LIABILITY OF STOCKHOLDERS AFTER DISSOLUTION 21
NO APPRAISAL RIGHTS 22
REGULATORY MATTERS 22
CERTAIN FEDERAL INCOME TAX CONSEQUENCES 22
GENERAL 22
CONSEQUENCES TO THE COMPANY 23
CONSEQUENCES TO STOCKHOLDERS 23
VOTE REQUIRED 24
RECOMMENDATION OF THE BOARD 24
OTHER MATTERS 24
OTHER INFORMATION REGARDING THE COMPANY 24
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF 24
CHANGES IN CONTROL 26
SELECTED FINANCIAL DATA, INCLUDING PRO FORMA INFORMATION 26
NOTES TO PRO FORMA FINANCIAL STATEMENTS 29
STOCKHOLDER PROPOSALS 30
WHERE YOU CAN FIND MORE INFORMATION 30
INFORMATION INCORPORATED BY REFERENCE 31
SIGNATURE 32
<PAGE>
OPHIDIAN
Pharmaceuticals, Inc.
PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS
The enclosed Proxy is solicited on behalf of the Board of
Directors of Ophidian Pharmaceuticals, Inc. (the "Company" or
"Ophidian") for use in connection with a Special Meeting of the
Stockholders (the "Special Meeting") to be held Thursday,
November 9, 2000, at 10:00 a.m., central standard time, or at any
adjournments or postponements of the Special Meeting. The
Special Meeting will be held in the auditorium of the
BioPharmaceutical Technology Center at 5445 East Cheryl Parkway,
Madison, Wisconsin 53711. The Company's principal executive
offices are also located at this site. The Company's telephone
number is (608) 271-0878. These proxy solicitation materials
were mailed on or about October 10, 2000, to all stockholders
entitled to vote at the Special Meeting.
SUMMARY TERM SHEETS
The following summary terms sheet highlight selected information
from this Proxy Statement and may not contain all of the
information that is important to every stockholder. To
understand the transactions fully and for a more complete
description of the legal terms of the transactions, stockholders
should read carefully this entire Proxy Statement and the
attached documents.
The Asset Sale
Note, a copy of the "Asset Purchase Agreement" (referred to
hereafter as the "Purchase Agreement") is attached to this Proxy
Statement as Exhibit A.
The Parties to the Asset Sale
Ophidian Pharmaceuticals, Inc. Ophidian, a development stage
5445 East Cheryl Parkway corporation, was founded in 1989
Madison, WI 53711 to discover, develop, and
(608) 271-0878 commercialize therapeutic products
for human and animal use with a
principal focus on products for
infectious disease prevention and
treatment. See "Where You Can
Find More Information."
Promega Corporation Founded in 1978, Promega provides
2800 Woods Hollow Road products and technical support for
Madison, WI 53711-5399 the life sciences industry
(608) 274-4330 worldwide and has annual sales in
excess of $100 million.
<PAGE>
The Purchase Agreement & Price At closing Promega will pay
Ophidian $1.25 million in cash,
and deliver a promissory note for
an additional $250,000, payable
within 90 days of closing, subject
to offset for any post-closing
adjustments. Promega will also
assume Ophidian's obligations
under (a) two senior secured notes
in the total original principal
amount of $2 million and (b) the
Company's office/lab and
manufacturing leases. In
exchange, Ophidian will transfer
to Promega substantially all of
its assets.
Anticipated Closing of the Asset Sale On the second business day after
Ophidian satisfies, or Promega
waives, all the conditions
precedent to Promega's obligation
to close, but not later than
November 30, 2000.
Conditions to Closing The Purchase Agreement contains
conditions to closing, including:
(a) approval by a majority of
Ophidian's stockholders and (b)
other conditions customary for
transactions of this type. See
"Proposal One-Representations and
Warranties; Closing Conditions".
Indemnification Ophidian has agreed to indemnify
Promega for any losses and
expenses resulting from any
inaccuracy, breach, or default of
Ophidian's representations,
warranties, covenants,
obligations, or agreements in the
Purchase Agreement, or Ophidian's
use of its assets prior to
closing. The amount of the
indemnification is limited to
$250,000, which may be offset
against Promega's purchase price
promissory note in the same amount.
Termination The Purchase Agreement may be
terminated prior to closing as
follows:
* by Promega if the closing has
not occurred by November 30, 2000;
* by Promega during the first
45 days based upon Promega's due
diligence investigation;
* by either party if the other
party is in breach;
* by Ophidian if it has
received a "Superior Proposal,
complied with the notice
provisions to Promega in the
Purchase Agreement and paid
Promega a "Termination Fee" of
$100,000; and
* by mutual consent of the parties.
See "Proposal One - Termination of
the Purchase
<PAGE>
Agreement".
Government Approvals No federal or state regulatory
requirements or approvals are
required for the Asset Sale other
than compliance with applicable
state corporate law and federal
and state securities laws.
Appraisal Rights Stockholders will have no
appraisal rights in connection
with the Asset Sale.
Accounting Treatment The Asset Sale will be treated as
a sale of assets and liabilities
for accounting purposes.
Federal Income Tax Consequences The Asset Sale will not result in
any federal income tax
consequences to the stockholders,
but the sale will be a taxable
transaction to Ophidian. However,
Ophidian does not expect to incur
any significant federal income tax
liability because of its net
operating loss carry-forwards
available to offset any gain on
the Asset Sale.
The Dissolution and Plan of Dissolution and Liquidation
Note, the "Plan of Dissolution and Liquidation" (hereafter, the
"Plan" or "Plan of Dissolution") is attached, in its entirety, to
this Proxy Statement as Exhibit B.
Timing & Procedure Upon approval by the stockholders
and completion of the Asset Sale,
if completed by November 30, 2000,
Ophidian will file a Certificate
of Dissolution with the Secretary
of State for Delaware and the
Company will thereafter take steps
to wind up its affairs, including
liquidation of any remaining
assets and payment of outstanding
claims, at such times as the Board
of Directors deems necessary,
appropriate, or advisable. The
Board of Directors may delay the
dissolution upon completion of the
Asset Sale or an alternative asset sale.
Abandonment of the Plan The Board of Directors may abandon
the Plan entirely without further
stockholder action if it
determines that dissolution and
liquidation are not in the best
interests of the stockholders.
Post-Dissolution Conduct of Ophidian Under Delaware law, after
dissolution Ophidian will continue
to exist for three years solely
for the purpose of winding up its
affairs. During this time
<PAGE>
the Company's Board of Directors and
officers will oversee the
liquidation of the Company's
assets, but will not continue its
business. They will:
* settle and close the
Company's business;
* convert to cash, by sales, as
much of the Company' non-cash
assets as possible;
* withdraw from any
jurisdiction where the Company is
qualified to do business;
* pay or make provision to pay
the Company's expenses and other
liabilities;
* prosecute and defend any lawsuits;
* distribute the Company's
remaining assets to the
stockholders;
* do any other act necessary to
wind up and liquidate the
Company's business and affairs.
See "Proposal Two-Conduct of the
Company Following Dissolution."
Sale of Remaining Assets Although the Board of Directors is
seeking separate approval at the
Special Meeting for the Asset
Sale, if the Plan of Dissolution
is approved by the stockholders,
the Board of Directors will be
authorized to sell all of the
Company's assets in alternative
transactions after the Company's
dissolution and without further
stockholder action or approval
even if the stockholders fail to
approve the Asset Sale or the
Asset Sale is not completed as
contemplated. See "Proposal Two-
Sale of Remaining Assets."
Payment of Claims & Obligations Before distributing any assets to
stockholders, the Company will pay
and discharge, or make provisions
reasonably likely to provide
sufficient compensation for all
claims and obligations of the
Company, including claims that are
contingent, conditional, or
unmatured, pending, or that have
not arisen but are likely to arise
within ten years after the
Company's dissolution. See
"Proposal Two-Payment of Claims
and Obligations."
Distributions to Stockholders Once adequate provisions have been
made for payment of all the
Company's claims and obligations,
all of the Company's remaining
assets will be distributed to
stockholders in one or more
distributions. Uncertainties as
to the net value of the assets and
the ultimate amount of the
<PAGE>
Company's liabilities make it
impossible to predict with
certainty the amount that will be
distributed to stockholders, but
the Company currently estimates
that it will distribute
approximately $1.00 per share in a
single distribution in the first
quarter of calendar year 2001.
See "Proposal Two -Distributions
to Stockholders."
Liquidating Trust The Board of Directors may, in its
absolute discretion, transfer the
Company's assets to a liquidating
trust after dissolution. See
"Proposal Two-Liquidating Trust."
Delisting of the Common Stock After dissolution, the Board of
Directors will determine when to
delist the Common Stock and the
warrants from the NASDAQ SmallCap
System and Pacific Exchange.
Continuing Liability of Stockholders Under Delaware law, a
stockholder's maximum liability
for any claim against the Company
that has not been paid or
otherwise provided for will not
exceed the amount actually
distributed to the stockholder in
dissolution. See "Proposal Two-
Continuing Liability of
Stockholders After Dissolution."
Appraisal Rights Under Delaware law, stockholders
are not entitled to appraisal
rights in connection with the
dissolution and Plan of
Dissolution.
Regulatory Matters Following stockholder approval,
the Company is not subject to any
federal or state regulatory
requirements in dissolving the
Company other than the requirement
to file a Certificate of Dissolution.
Federal Income Tax Consequences Until the winding up and
liquidation of the Company is
completed, the Company will remain
subject to income tax on its
taxable income. Each stockholder
will recognize a capital gain or loss
equal to the difference between
the amount distributed to them and
their adjusted tax basis in the
their shares. See "Proposal Two-
Certain Federal Income Tax Consequences.
<PAGE>
INFORMATION CONCERNING SOLICITATION,
REVOCATION, AND VOTING OF PROXIES
RECORD DATE AND SHARES OUTSTANDING
Stockholders of record at the close of business on September 29,
2000 (the "Record Date"), are entitled to notice of, and to vote
at, the Special Meeting. At the Record Date, of the 22,400,000
authorized shares of the Company's common stock, $0.0025 par
value per share (the "Common Stock"), 1,158,249 shares of such
Common Stock were issued, outstanding, and entitled to vote at
the Special Meeting.
VOTING, QUORUM; ABSTENTIONS; AND BROKER NON-VOTES
Every stockholder of record on the Record Date is entitled, for
each share of Common Stock held, to one vote for or against each
matter presented at the Special Meeting . The required quorum
for the transaction of business at the Special Meeting is a
majority of the shares outstanding on the Record Date. Broker
non-votes and shares held by persons abstaining and any other
shares represented for any purpose, other than objecting to
holding the meeting or transacting business at the meeting, will
be counted in determining whether a quorum is present. Under
Delaware law, the affirmative vote of at least a majority of the
outstanding shares of Common Stock is required for approval of
both the Asset Sale and the authorization to dissolve the Company
and liquidate its assets pursuant to the Plan of Dissolution.
Because the affirmative vote of at least a majority of all
outstanding shares of Common Stock is required for approval of
both proposals, broker non-votes, abstentions, and shares as to
which proxy authority has been withheld all will have the same
effect as votes against the two proposals.
PROXY SOLICITATION
The enclosed proxy is being solicited by the Company's Board of
Directors, and the cost of this solicitation will be borne by the
Company. The Company may reimburse expenses incurred by
brokerage firms and other persons representing beneficial owners
of shares in forwarding solicitation material to the beneficial
owners. The Company has selected Continental Stock Transfer &
Trust Company, its transfer agent, and may also retain a
professional proxy solicitation firm, to assist it and its
stockholders in connection with the Special Meeting. Proxies may
also be solicited by certain of the Company's directors,
officers, and regular employees, without additional compensation,
personally, by telephone, facsimile, e-mail, or telegram.
VOTING AND REVOCABILITY OF PROXIES
When proxies are properly executed, dated, and returned, the
shares they represent will be voted at the Special Meeting in
accordance with the instructions of the stockholders. If no
specific instructions are given, the shares will be voted (a)
"FOR" the approval of the Asset Sale; (b) "FOR" the authorization
to dissolve the Company and liquidate its assets pursuant to the
Plan of Dissolution; and (c) in the discretion of the proxy
holders, upon such other matters not know known or determined
which may properly come before the Special Meeting. Any proxy
given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted
<PAGE>
by (a) delivering a written notice to the Secretary of the
Company or the acting secretary of the Special Meeting; or (b)
giving oral notice to the presiding officer during the Special
Meeting; or (c) duly executing a proxy bearing a later date; or
(d) attending the Special Meeting and voting in person. The mere
presence at the Special Meeting of a stockholder who has filed a
proxy will not constitute a revocation.
ADJOURNMENTS
In the event that sufficient votes in favor of the proposals set
forth in the Notice of Special Meeting of Stockholders are not
received by the date of the Special Meeting, the Board of
Directors may propose one or more adjournments of the Special
Meeting for a period or periods of not more than 45 days in the
aggregate to permit further solicitation of proxies, even though
a quorum is present. Any such adjournment will require the
affirmative vote of a majority of the votes cast on the question
in person or by proxy at the session of the Special Meeting to be
adjourned. The proxy holders will vote the shares they represent
by proxy in favor of such adjournment. The costs of any such
additional solicitation and of any adjourned session will be
borne by the Company.
INFORMATION ABOUT FORWARD-LOOKING STATEMENTS
Certain sections of this Proxy Statement contain forward-looking
statements that are based on current beliefs, estimates and
assumptions concerning the operations and future results of the
Company, the Asset Sale, the Plan of Dissolution, estimated costs
and expenses, the amount of cash expected to be distributed to
stockholders and the timing of such distributions. All statements
that address events or developments that are anticipated to occur
in the future, including statements related to future revenues,
expenses, income, earnings per share, and anticipated
distributions, or statements expressing general optimism about
future results, are forward-looking statements. In addition,
words such as "expects," "anticipates," "intends," "plans,"
"believes," "estimates," and variations of such words and similar
expressions are intended to identify forward-looking statements.
The statements described in the preceding paragraph, and the
sections of this Proxy Statement referred to therein, constitute
"forward-looking statements" within the meaning of Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Because these statements are based on a number of
beliefs, estimates, and assumptions that could cause actual
results to materially differ from those in the forward-looking
statements, there can be no assurance that the forward-looking
statements will prove to be accurate.
Any number of factors could affect the Company's operations and
future results and the amount and timing of cash expected to be
distributed to stockholders, including the actions of third
parties (including the other parties to the Asset Sale), the
timely consummation of the Asset Sale, the timing and method of
implementation of the Plan of Dissolution, general industry and
economic conditions, changes in applicable laws, rules and
regulations (including changes in tax laws) and those specific
risks that are discussed in the Risk Factors detailed herein and
in the Company's previous filings with the Securities and
Exchange Commission.
<PAGE>
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of
this Proxy Statement. The Company undertakes no obligation to
update any forward-looking statements, whether as a result of new
information or future events.
RISK FACTORS RELATING TO THE ASSET SALE
AND THE PLAN OF DISSOLUTION
In addition to the other information included elsewhere in this
Proxy Statement, the following factors should be considered
carefully in determining whether to vote in favor of the
proposals to approve the Asset Sale and the Plan of Dissolution.
ESTIMATES OF THE NET PROCEEDS FROM THE ASSET SALE AND
DISTRIBUTIONS TO BE RECEIVED BY STOCKHOLDERS MAY NOT BE REALIZED
There can be no assurance that the Asset Sale will be consummated
or that any of the estimates set forth in this Proxy Statement
will be realized. Stockholders, in determining whether to vote
in favor of the proposals to approve the Asset Sale and the Plan
of Dissolution, are cautioned not to attribute undue certainty to
any estimates set forth herein. Such estimates are based on a
variety of assumptions relating to the likelihood of closing the
Asset Sale, the value of the Company's other remaining assets,
the amount of the Company's liabilities and expenses to be paid
in the future, general business and economic conditions, and
other matters. The amount of proceeds from the Asset Sale and
the amount to be distributed to stockholders are based on the
Company's current estimates and are subject to various and
significant uncertainties, many of which are beyond the Company's
control, that could cause the actual results to differ materially
from the Company's expectations. See "Proposal Two -
Distributions to Stockholders" below. Examples of uncertainties
that could cause the amount of proceeds from the Asset Sale and
distributions to stockholders to be less than the Company's
estimates include the following:
* The Company's estimates of net proceeds from the Asset Sale
and the amount of the initial cash distribution are based on
estimates of the costs and expenses of the Asset Sale and the
dissolution. If actual costs and expenses exceed the Company's
estimates, actual net proceeds and distributions to stockholders
could be less than estimated.
* If liabilities of the Company that are unknown or contingent
at the time of the mailing of this Proxy Statement later arise or
become fixed in amount and must be satisfied or reserved for as
part of the dissolution, the amount of distributions to
stockholders could be reduced.
* Termination of the Asset Sale or delays in consummating the
Asset Sale or the Plan of Dissolution, such as delays in the
closing of the Purchase Agreement, could result in additional
expenses and result in lower actual distributions to stockholders
than the amounts estimated by the Company. See "The Asset Sale
May Not Be Consummated" and "Anticipated Timing of the Plan of
Dissolution May Not be Achieved" below.
<PAGE>
For the foregoing reasons, the actual distributions to
stockholders could vary materially from the Company's estimate
and may be substantially less. See "Information About Forward-
Looking Statements" above.
THE COMPANY WOULD INCUR COSTS IF THE PURCHASE AGREEMENT WERE
TERMINATED BECAUSE OF THE RECEIPT BY THE COMPANY OF A SUPERIOR
PROPOSAL
If the Company terminates the Purchase Agreement because it has
received a "Superior Proposal" (as defined in the Purchase
Agreement), the Company is obligated under the Purchase Agreement
to (a) pay Promega a termination fee of $100,000 and (b)
reimburse Promega for all out-of-pocket fees and expenses
incurred by or on behalf of Promega in connection with the
Purchase Agreement, including all reasonable fees of counsel,
accountants, and consultants. In addition, the Company has
incurred, and expects to continue to incur, substantial costs on
its own behalf in connection with the Asset Sale.
THE ASSET SALE MAY NOT BE CONSUMMATED
The consummation of the Asset Sale is subject to numerous
conditions. Even if the stockholders vote to approve the Asset
Sale, there can be no assurance, that the Asset Sale will be
consummated. If the Asset Sale is not consummated, the Company
may not be able to sell its assets on terms as favorable as those
provided in the Purchase Agreement, which would mean that less
cash would be available for distribution to stockholders than if
the Asset Sale had been consummated.
ANTICIPATED TIMING OF PLAN OF DISSOLUTION MAY NOT BE ACHIEVED
Even if the stockholders vote to approve the Plan of Dissolution,
the Board has reserved the right, in its sole discretion, to
amend, delay implementation of, or terminate the Plan of
Dissolution unless it determines that such action would
materially and adversely affect the stockholders' interests.
Although the board of directors presently intends to dissolve the
Company and implement the Plan of Dissolution as soon as
practicable after the consummation of the Asset Sale, the
occurrence of certain contingencies may require the board of
directors to delay the Company's dissolution. For example, the
filing of any stockholder litigation or additional claims by
creditors may require the Company to delay its dissolution. Any
such delay would likely increase the Company's costs and reduce
the amount available for distribution to stockholders.
THERE CAN BE NO ASSURANCE THAT THE ASSET SALE AND THE PLAN OF
DISSOLUTION WILL RESULT IN GREATER RETURNS TO STOCKHOLDERS THAN A
CONTINUATION OF THE COMPANY AS CURRENTLY OPERATED
If the Asset Sale and the Plan of Dissolution are not approved,
the Board intends to continue to manage the Company and its
assets substantially as they are currently being managed and may
entertain and consider indications of interest from third parties
to acquire the Company or all or a portion of its assets. There
can be no assurance that the Asset Sale and Plan of Dissolution
will result in greater returns to the stockholders than a
continuation of the Company as described
<PAGE>
above. Because the purchase price for the Company's assets under
the Purchase Agreement is fixed, the Company will not be able to
realize the benefits from any improvements in economic and market
conditions that would increase the market value of the Company's assets.
THE BOARD MAY AMEND, DELAY IMPLEMENTATION OF, OR TERMINATE THE
PLAN OF DISSOLUTION EVEN IF IT IS APPROVED BY THE STOCKHOLDERS
Even if the stockholders vote to approve the Plan of Dissolution,
the Board has reserved the right, in its sole discretion, to
amend, delay implementation of, or terminate the Dissolution Plan
unless it determines that such action would materially and
adversely affect the stockholders' interests.
STOCKHOLDERS COULD BE LIABLE TO THE EXTENT OF ANY DISTRIBUTIONS
TO THEM IF CONTINGENT RESERVES ARE INSUFFICIENT TO SATISFY THE
COMPANY'S LIABILITIES
Pursuant to the terms of the Plan of Dissolution, the Company
will pay its expenses and fixed or other known liabilities, and,
if and to the extent deemed necessary, appropriate, or desirable
by the Board of Directors, in its absolute discretion, the
Company may set aside assets in a contingency reserve for payment
of any remaining liabilities. There can be no assurance,
however, that the contingency reserve will, in fact, be
sufficient. Under Delaware law, if the Company (or a liquidating
trust to which the Company's assets are transferred under the
Plan of Dissolution) has inadequate reserves for payment of the
Company's expenses, obligations, and liabilities, each
stockholder could be held personally liable for his or her pro
rata share of any additional amounts owed creditors, but only to
the extent of total distributions received by each stockholder.
In addition, if a court holds at any time that the Company has
failed to make adequate provision for its obligations and
liabilities or if the amount ultimately required to be paid in
respect of such liabilities exceeds the amount available from the
contingency reserves and the assets of the liquidating trust, a
creditor of the Company could seek an injunction against the
making of distributions under the Plan of Dissolution on the
grounds that the amounts to be distributed are needed to provide
for the payment of the Company's expenses and liabilities. Any
such action could delay or substantially diminish the cash
distributions to be made to stockholders and/or holders of
beneficial interests of the liquidating trust under the Plan of
Dissolution.
<PAGE>
PROPOSAL ONE - TO APPROVE THE ASSET SALE
Description of the Asset Sale
GENERAL OVERVIEW
This Proxy Statement contains a brief summary of the material
aspects of the Asset Sale and of the Purchase Agreement. This
summary is qualified in all respects by the text of the Purchase
Agreement, a copy of which is attached to this Proxy Statement as
Exhibit A. Stockholders are advised to read the entire Purchase
Agreement.
As described in detail in the Purchase Agreement, the Asset Sale
provides for the sale to Promega of the following assets of the
Company (the "Purchased Assets"):
* all of the Company's intellectual property, including all
licenses and sublicenses granted or obtained with respect
thereto;
* all of the Company's real estate assets, including all
leaseholds, subleaseholds, security deposits, improvements,
construction in progress, fixtures, and appurtenances thereto;
* all of the Company's equipment, including all laboratory,
farm, building, and office equipment, machinery, parts, furniture
(except free-standing office filing cabinets), appliances,
laboratory computers and printers (excluding office computer
equipment), and laboratory and office supplies;
* all of the Company's rights with respect to its contracts; and
* all of the Company's rights with respect to any governmental
permits, filings, qualifications, registrations, licenses,
privileges, franchises, authorizations, and approvals.
Under the Purchase Agreement, the Company will retain any cash on
hand at the time the Asset Sale is completed, subject to certain
contingent adjustments and pro-rations described below.
BACKGROUND AND HISTORY OF THE ASSET SALE
In 1999 the Company began Phase II Clinical Testing for its lead
drug candidate for Clostridium difficile-associated disease and
undertook construction of a pilot manufacturing facility capable
of producing sufficient quantities of proprietary antibody,
drugs, and other products for the Company's clinical and
commercial use. As previously announced, the rate of patient
enrollment in the clinical testing was slower than previously
anticipated. In the following months, the Company has actively
sought a merger or development partner that would provide the
Company with sufficient operating capital, product development
capabilities, and marketing resources. The Company has been
unsuccessful in acquiring such a partner.
On May 19, 2000, the Company announced that its Board of
Directors had concluded that new financing required to continue
the clinical trials and bring the nearly-completed manufacturing
facility to profitability was unlikely to be obtained prior to
the exhaustion of the Company's remaining cash reserves and that
the Company was evaluating options to conserve those reserves
<PAGE>
by reducing expenses by curtailing or discontinuing various
activities, including product development, clinical trials, and
prototype manufacturing.
On May 26, 2000, the Company announced that it was suspending
laboratory, product development, and related operations of the
Company, and was focusing on finding a merger partner,
development partner, or one or more purchasers for the Company's
intellectual property and manufacturing assets. The Company's
work force was reduced initially by 18 full time employees.
Since this reduction in force, the Company's operations have
focused on finding a merger partner, development partner, or one
or more purchasers for the Company's assets. The Company has
engaged numerous parties in discussions regarding such
transactions.
Promega was one of these parties, and in May it made an offer to
purchase substantially all of the Company's assets. Following
the Company's further review of other potential merger partners
and/or buyers for the Company's assets and additional
negotiations between the Company and Promega, the Asset Sale to
Promega was approved by the Board of Directors, and the Purchase
Agreement was executed by the parties on September 1, 2000, and
subject to stockholder approval and other contingencies as set
forth in the Purchase Agreement.
BUYER
The buyer is Promega Corporation, a privately held Wisconsin
corporation, whose principal offices are located at 2800 Woods
Hollow Road, Madison, WI 53711-5399. Promega provides products
and technical support services in the life sciences industry,
including genomic research, molecular and cell biology, molecular
diagnostics, drug discovery, and human identification. Promega
was founded in 1978, and its annual sales exceed $100 million.
Promega owns 32,813 shares or 2.8% of the Company's outstanding
Common Stock. In addition, Promega's Chairman, President, and
Chief Executive Officer, William A. Linton, is a former Chairman
and director of the Company and beneficial owner of 64,125 shares
or 5.5% of the Company's outstanding Common Stock, of which
32,813 shares are those owned by Promega over which Mr. Linton
may be deemed to have voting and investment power. See "Interest
of Certain Persons in Matters to be Acted Upon," below, for a
further discussion of the current and former relationships
between Promega, Mr. Linton, and the Company.
PURCHASE PRICE
The purchase price to be paid by Promega to the Company pursuant
to the Purchase Agreement is $3,500,000, payable at the closing
of the Asset Sale as follows:
* the assumption by Promega of two senior secured notes of the
Company, which together have an original principal balance of
$2,000,000;
* the delivery of a promissory note from Promega to the
Company in the amount of $250,000, payable in a single
installment ninety days after closing and subject to any offset
for indemnifiable damages or other obligations of the Company to
Promega as provided in the Purchase Agreement; and
<PAGE>
* a cash payment from Promega to the Company of $1,250,000.
EXPECTED PROCEEDS OF THE ASSET SALE
As set forth above, the Company expects to receive total cash
proceeds from the Asset Sale of approximately $1,500,000. This
amount does not reflect any deductions, not to exceed $250,000,
from the proceeds that may be made for breaches of
representations and warranties discovered before or within ninety
days after the closing. In addition to the estimated proceeds
from the Asset Sale, the Company will also have other assets at
the time of the closing of the Asset Sale, consisting primarily
of cash and cash equivalents. As of June 30, 2000, the latest
period for which the Company has announced its financial results,
the value of this cash and cash equivalents was approximately
$990,000 before the payment of liabilities. See "Pro Forma
Financial Information-Pro Form Balance Sheet" below.
From these other assets as they may exist at the time of the
closing, the Company must retain sufficient funds to meet its
obligations, including its then existing and contingent
liabilities, as well as its costs of dissolution. Assets will be
retained to cover (a) known or contingent and future claims, (b)
professional fees and other expenses of management and
dissolution, and (c) various other liabilities, expenses and
obligations of the Company that will be incurred by the Company
and any liquidating trust. See "Proposal Two-Distributions to
Stockholders" below. After deducting (a) an estimated $500,000
to cover the above described costs and accrued expenses; and (b)
up to $250,000 pursuant to the Company's obligation to indemnify
Promega for ninety days after the closing for any breach of the
Purchase Agreement and other liabilities, from the sum of the gross
proceeds and the Company's remaining cash and cash equivalents,
the Company anticipates that the total amount available for
distribution to the stockholders in a single distribution upon
completion of the Asset Sale and the Plan of Dissolution will be
approximately $1.00 per share of the Company's outstanding common
stock ($1,158,249.00 in the aggregate). See "Proposal Two-
Distributions to Stockholders" below.
EXPECTED TIMING OF THE ASSET SALE
The Purchase Agreement provides that the closing is to occur on
the second business day following the satisfaction by the Company
or waiver by the Buyer of all conditions precedent to the Buyer's
obligation to consummate the Asset Sale, including stockholder
approval pursuant to this proxy solicitation, and in all events
not later than November 30, 2000.
REPRESENTATIONS AND WARRANTIES; CLOSING CONDITIONS
The Purchase Agreement contains representations and warranties by
the Company to Promega customary for transactions of this type,
including representations regarding the Company and its assets.
The parties' obligations to consummate the Asset Sale are subject
to the satisfaction or waiver of conditions customary for
transactions of this type, including: (a) approval by the
Company's stockholders, (b) there being no court order or other
governmental prohibition or restraint preventing the consummation
of the transactions, (c) each of the parties having complied with
or performed all required obligations (except any for which a
failure to comply or perform does not
<PAGE>
have a material adverse effect on the transaction); and (d) the
representations and warranties of the other party being true and
correct, with certain materiality exceptions.
INDEMNIFICATION BY SELLER
The Purchase Agreement provides that the Company shall indemnify
Promega in an amount not to exceed $250,000, which amount Promega
may offset against the $250,000 purchase price promissory note
from Promega to the Company, for any losses and expenses suffered
by Promega resulting from (a) the inaccuracy or breach of any
representation or warranty of the Company in the Purchase
Agreement, (b) any breaches or default in the performance of the
Company of any of its covenants, obligations, or agreements in
the Purchase Agreement, (c) any liability of the Company not
expressly assumed by Promega pursuant to the Purchase Agreement,
or (d) the ownership or use of the Company's assets prior to the
closing of the Asset Sale or any incident, occurrence, condition,
or claim existing, arising, or accruing prior to the closing of
the Asset Sale and relating to the operation or conduct of the
Company's business, other than any liability or obligation
expressly assumed by Promega pursuant to the Purchase Agreement.
TERMINATION OF THE PURCHASE AGREEMENT
The Purchase Agreement may be terminated at any time prior to the
closing of the Asset Sale, as follows:
* by mutual written consent of both parties;
* by either the Company or Promega if the other party is in
breach of any representation, warranty, or covenant under the
Purchase Agreement and the terminating party is not then in
breach;
* by Promega within the first 45 days following the date of
the Purchase Agreement based upon Promega's due diligence
investigation;
* by Promega if the Asset Sale shall not have closed on or
before November 30, 2000; or
* by the Company if it enters into a merger, acquisition, or
other agreement to effect a "Superior Proposal," as that term is
defined in the Purchase Agreement, provided that in such event
the Company shall (a) deliver notice of its intent to enter into
an agreement to effect the Superior Proposal, (b) allow ten
business days to elapse after delivery of such notice, (c)
cooperate with Promega during such ten business days with the
intent of allowing Promega to agree to modify the Purchase
Agreement, (d) at the end of the ten business days, and acting
through its Board of Directors, continue to reasonably believe
that the alternative business combination constitutes a Superior
Proposal to the Asset Sale to Promega, taking into account any
modifications to the terms of the Purchase Agreement as may have
been proposed by Promega, and (e) pay a "Termination Fee" of
$100,000 to Promega.
<PAGE>
GOVERNMENT APPROVALS
No federal or state regulatory requirements or approvals must be
complied with or obtained in connection with the Asset Sale other
than compliance with applicable state corporate law and federal
and state securities laws.
NO APPRAISAL RIGHTS
Under Delaware law, the Company's stockholders have no right in
connection with the Asset Sale to dissent and seek appraisal of
their shares of Common Stock.
ACCOUNTING TREATMENT OF THE ASSET SALE
The Asset Sale will be reflected on the Company's financial
statements as a sale of assets and certain liabilities for
accounting purposes, with a gain or loss recognized in the year
in which the Asset Sale is consummated in the amount of the
difference between the purchase price and the aggregate net book
value of the assets sold to Promega.
FEDERAL INCOME TAX CONSEQUENCES OF THE ASSET SALE
The following summary of the material federal income tax
consequences of the Asset Sale is not intended to be tax advice
to any person, nor is it binding upon the Internal Revenue
Service. In addition, no information is provided herein with
respect to the tax consequences of the Asset Sale under
applicable state, local, or foreign tax laws.
The Company will recognize gain or loss from the Asset Sale in an
amount equal to the difference between the amount realized by the
Company from the Asset Sale and the Company's adjusted tax basis
in the assets sold. The amount realized by the Company from the
Asset Sale will equal the sum of (a) the money received by the
Company from Promega, (b) the amount of the liabilities assumed
by Promega, and (c) the aggregate amount of liabilities to which
the sold assets are subject, if any. The Company will be subject
to federal income tax on any gain it recognizes from the Asset
Sale. However, because the Company has significant net operating
loss carry-forwards available to it to offset any gain from the
Asset Sale, the Company does not expect to incur any significant
federal tax liability as a result of the Asset Sale.
The Company's stockholders receiving liquidating distributions
pursuant to the Plan of Dissolution should generally be
unaffected by any gain or loss recognized by the Company on the
Asset Sale. Liquidating distributions received by stockholders
pursuant to the Plan of Dissolution should be treated as full
payment for such stockholder's shares. Consequently, each
stockholder receiving liquidating distributions will recognize
gain or loss (which generally should qualify for capital gain or
loss treatment) equal to the difference between the amount of the
distribution and the stockholder's basis in the Company's shares.
As each stockholder will have a different basis in his/her/its
shares, each stockholder will be responsible for calculating
his/her/its own gain or loss in connection with the liquidating
distributions it receives from the Company. See "Federal Income
Tax Consequences of Dissolution and Liquidation" below.
<PAGE>
Price Range of Common Stock and Warrants
Preceding Announcement of Asset Sale
The Asset Sale was publicly announced by the Company on September
5, 2000. The high and low sale prices are shown below for the
Company's Common Stock and Warrants on September 1, 2000, the
last trading day before the announcement.
Common Stock Warrants
High Low High Low
$1.125 $0.75 $0.0938 $0.0625
Interest of Certain Persons in Matters to be Acted Upon
Promega's Chairman, President, and Chief Executive Officer,
William A. Linton, is a former Chairman and director of the
Company. Mr. Linton resigned as Chairman and a director of the
Company at the Company's Annual Shareholders' Meeting on March
23, 1999. Neither the Asset Sale nor the Plan of Dissolution
were considered by the Company's Board of Directors during the
time that Mr. Linton was Chairman and a director of the Company.
As of September 29, 2000, Mr. Linton beneficially owns 64,125
shares of the Company's Common Stock, representing 5.5% of the
outstanding Common Stock of the Company, and which includes
32,813 shares owned by Promega over which Mr. Linton may be
deemed to have voting and investment power.
Fitchburg Research Park Associates Limited Partnership, a
Wisconsin limited partnership of which Mr. Linton is the sole
general partner and with a 50% ownership interest, holds a Stock
Warrant entitling it to purchase one share of the Company's
Common Stock for every four shares issued to employees pursuant
to the Company's Stock Option Plans. Currently, under the terms
of this Stock Warrant, the partnership may purchase an additional
131 shares at an exercise price of $0.02 per share.
In September 1991, Promega agreed to purchase shares of the
Company's Common Stock conditioned upon its receipt of an
exclusive and confidential first right, for a period of 10 years,
to review any technology developed by the Company that is
incidental to the human and animal therapeutic and diagnostic
markets. "Incidental" refers to those markets that are not human
or animal therapeutics or diagnostics. Promega serves various
incidental markets, such as research products or food testing.
The arrangement was established so that the Company's core
business interests would not be encumbered by the agreement with
Promega and a market could be established in incidental markets.
Promega has 60 days after disclosure of a technology to review
the technology and notify the Company in writing of its interest
in developing the technology. The parties will then negotiate in
good faith for up to 60 days thereafter regarding terms on which
Promega might obtain the right to use the technology. If Promega
and the Company fail to enter into an agreement within 60 days
after notice of Promega's interest in the technology, the Company
may attempt to license or assign the rights to the product to a
third party, subject to Promega's right to first refuse the price
and terms offered by a third party, exercisable within 15 days
after notice thereof to Promega. The agreement with Promega will
<PAGE>
terminate at any time that Promega's ownership of the Company
falls below one percent of the outstanding shares. Promega
currently owns 32,813 shares of the Company's Common Stock, or
2.8% of the outstanding shares.
On January 1, 1994, the Company entered into a Lease with Promega
for a 10,000 square foot office/research laboratory and
production facility at 5445 East Cheryl Parkway, Madison,
Wisconsin. The lease provides for a five-year lease term with an
option to renew the lease for an additional five-year term. In
June 1998, the Company exercised this option. The facility lease
described above gives Promega the right to terminate in case of a
broad range of events of default by the Company, in which event
the Company would lose the value of improvements and may be
liable for the remaining rent even if its rights to use the
premises are terminated.
Vote Required
Under Delaware law, the affirmative vote of the holders of a
majority of the outstanding shares of the Company's Common Stock
is required to approve the Asset Sale.
Recommendation of the Board
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
THE PROPOSAL TO APPROVE THE ASSET SALE.
PROPOSAL TWO - APPROVAL OF THE DISSOLUTION
AND LIQUIDATION OF THE COMPANY
Proposed Stockholder Action
The Company's Board of Directors (the "Board") unanimously
approved the proposed dissolution and Plan of Dissolution &
Liquidation (collectively and hereafter referred to as the "Plan
of Dissolution") on August 28, 2000, subject to the approval of
the stockholders at the Special Meeting. The Plan of Dissolution
provides that upon its approval by the stockholders, the Board,
without further action by the stockholders, may (a) dissolve the
Company, (b) liquidate its assets, (c) pay, or provide for the
payment of, any remaining, legally enforceable obligations of the
Company, and (d) distribute any remaining assets to the
stockholders. Under Delaware law, approval by the holders of a
majority of the outstanding shares of the Company's Common Stock
is required to approve the Plan of Dissolution
Description of the Plan of Dissolution
Certain material features of the Plan of Dissolution are
summarized below. This summary is qualified in its entirety by
reference to the complete text of the Plan of Dissolution and the
relevant portions of the General Corporation Law of Delaware. A
complete copy of the Plan of Dissolution is attached to this
Proxy Statement as Exhibit B. Stockholders should carefully read
the Plan of Dissolution in its entirety.
<PAGE>
BACKGROUND AND REASONS FOR THE DISSOLUTION
After an extensive exploration and evaluation of various
strategic alternatives that would protect the rights of creditors
and enhance stockholder value, the Board adopted a resolution
approving the Plan of Dissolution. The Board believes that the
dissolution and liquidation of the Company would protect the
Company's creditors and enhance stockholder value and is in the
best interests of the Company and its stockholders.
RISK FACTORS
Before deciding whether to vote in favor of this proposal to
dissolve and liquidate the Company pursuant to the Plan of
Dissolution, stockholders should consider certain risk factors,
including:
* stockholder liability to the extent of any distributions if
the contingency reserve is insufficient to satisfy the Company's
liabilities; and
* the distribution(s) to stockholders may be delayed or less
than projected.
See "Risk Factors Relating to the Asset Sale and Plan of
Dissolution," above, for a more complete discussion of the
considerations that stockholders should take into account before
deciding whether to vote in favor of this proposal to dissolve
and liquidate the Company.
DISSOLUTION AND LIQUIDATION PROCEDURE
Following approval of the Plan of Dissolution by the holders of a
majority of the Common Stock and completion of the Asset Sale,
the Company will file a certificate of dissolution with the
Secretary of State of the State of Delaware and the dissolution
will be effective. Once the certificate of dissolution is filed
and the Plan of Dissolution is effective, the steps taken to wind
up the Company's affairs as described below will be completed at
such times as the Board, in its absolute discretion, deems
necessary, appropriate, or advisable to maximize the value of the
Company's assets upon liquidation; provided that such steps may
not be delayed longer than is permitted by applicable law.
ABANDONMENT OF THE PLAN OF DISSOLUTION
By approving the Plan of Dissolution, stockholders will also be
granting the Board the authority, notwithstanding the
stockholders' approval of the Plan of Dissolution, to abandon the
Plan of Dissolution without further stockholder action, to the
extent permitted by Delaware law, if the Board of directors
determines that dissolution and liquidation are not in the best
interests of the Company and its stockholders.
<PAGE>
CONDUCT OF THE COMPANY FOLLOWING DISSOLUTION
Once the Company's certificate of dissolution is filed and
effective, the Company will cease to exist for the purpose of
continuing its business, but will nevertheless continue, for a
term of three years or such longer period as the Delaware Court
of Chancery directs, for the purpose of winding up the Company's
affairs. During this time, the Company will undertake the
following tasks:
* settle and close its business;
* convert to cash, by sales, as much of the Company's
remaining non-cash assets as possible;
* withdraw from any jurisdiction where it is qualified to do
business;
* pay or make provision for the payment of all of the
Company's expenses and liabilities;
* prosecute and defend lawsuits, if any
* distribute the Company's remaining assets, which should be
primarily cash, but which may consist of other financial assets,
to the stockholders; and
* do any other act necessary to wind up and liquidate the
Company's business and affairs.
The Board and the remaining officers of the Company will oversee
the Company's dissolution and liquidation.
SALE OF REMAINING ASSETS
The Plan of Dissolution gives the Board, to the fullest extent
permitted by law, the authority to sell all of the Company's
assets. Accordingly, stockholder approval of the Plan of
Dissolution will constitute, to the fullest extent permitted by
law, approval of the Company's sale of any and all of its assets
remaining after the dissolution, on such terms and conditions as
the Board, in its absolute discretion and without further
stockholder approval, may determine. Notwithstanding the
separate approval the Board is seeking at the Special Meeting for
the Asset Sale, the Board will have the authority to sell all of
the Company's assets in alternate transactions after the
Company's dissolution pursuant to stockholder approval of the
Plan of Dissolution, without further stockholder action or
approval, even if either of the following should occur:
* the stockholders fail to approve the Asset Sale; or
* the Asset Sale is not consummated as contemplated.
PAYMENT OF CLAIMS AND OBLIGATIONS.
In accordance with Delaware law, before distributing any assets
to stockholders, the Company will pay and discharge, or make
provisions as will be reasonably likely to provide sufficient
compensation for the following:
* all claims and obligations, including all contingent,
conditional, or unmatured contractual claims known to the
Company;
<PAGE>
* any claim against the Company which is the subject of a
pending action, suit, or proceeding to which the Company is a
party; and
* claims that have not been made known to the Company or that
have not arisen, but that, based on facts known to the Company,
are likely to arise or become known to the Company within ten
years after the certificate of dissolution becomes effective.
DISTRIBUTIONS TO STOCKHOLDERS
Claims, liabilities, and expenses from operations, including
operating costs, salaries, income taxes, payroll and local taxes,
and miscellaneous office expenses, will continue to occur
following approval of the Plan of Dissolution. The Company
anticipates that expenses for professional fees and other
expenses of liquidation will be significant. These expenses will
reduce the amount of assets available for ultimate distribution
to stockholders. Before making any distribution to stockholders,
the Board must first make adequate provision for the payment,
satisfaction, and discharge of all known, unascertained, or
contingent debts and liabilities, including costs and expenses
incurred and anticipated to be incurred in connection with the
sale of any assets remaining after the dissolution.
The Board will determine, in its sole discretion and in
accordance with applicable law, the timing of, the amount, the
kind of, and the record date for any distribution made to
stockholders. Liquidating distributions will be made to
stockholders on a pro rata basis. The Company is not required to
pay all of its liabilities and obligations prior to making
distributions to stockholders, but instead, will reserve assets
in a contingency reserve deemed by management and the Board to be
adequate to provide for such liabilities and obligations when
due. Although the Board has not established a firm timetable for
any distribution to stockholders, after the dissolution has
become effective, the Board will, subject to exigencies inherent
in winding up the Company's business, make a final distribution
as promptly as practicable.
Uncertainties as to the precise net value of the Company's assets
and the ultimate amount of its liabilities make it impossible to
predict with certainty the aggregate net values that will
ultimately be distributed to stockholders or the timing of any
distribution. Based on information presently available, the
Company estimates that it will distribute an aggregate of $1.00
per share in a single distribution to holders of the Company's
Common Stock. The Company anticipates that this distribution to
stockholders will occur in the first quarter of calendar year
2001. See "Pro Forma Financial Information" below.
Stockholders should not send their stock certificates with the
enclosed proxy. Following the Company's dissolution,
stockholders will be sent additional instructions for receiving
distributions.
In addition to the Company's outstanding Common Stock, the
Company has outstanding warrants for the purchase of
approximately 241,636 shares of Common Stock, which warrants are
listed and traded on the NASDAQ SmallCap System and the Pacific
Exchange (the "Warrants"). As a result of the one-for-eight
reverse stock split on September 20, 1999, and other adjustments
to the exercise price, the current exercise price of the Warrants
is $55.615 per share. As of the date hereof, it is not
anticipated that the price of the Common Stock will reach or
surpass this amount at any time prior to the Company's
dissolution. No distribution will paid
<PAGE>
with respect to the Warrants, which will be cancelled as of the
record date for any distribution to stockholders.
ALL DISCUSSION IN THIS PROXY STATEMENT CONCERNING THE AMOUNT PER
SHARE OF COMMON STOCK OF ASSET SALE PROCEEDS AND OF EXPECTED
DISTRIBUTIONS, INCLUDING ALL PRO FORMA FINANCIAL STATEMENT
PRESENTATION OF THESE ITEMS, ASSUMES THAT NO WARRANTS WILL BE
EXERCISED FOR PURCHASE OF THE COMMON STOCK. IF THE PRICE OF THE
COMMON STOCK WERE TO RISE SUFFICIENTLY TO PUT THE OUTSTANDING
WARRANTS "IN THE MONEY" AND HOLDERS THEREOF EXERCISED THEIR
WARRANTS, THE NUMBER OF SHARES OF OUTSTANDING COMMON STOCK WOULD
INCREASE AND THE AMOUNT AVAILABLE FOR DISTRIBUTION PER SHARE OF
OUTSTANDING COMMON STOCK WOULD DECREASE PROPORTIONALLY.
LIQUIDATION TRUST
If deemed advisable by the Board for any reason, the Company may,
following dissolution, transfer any of its assets to a trust
established for the benefit of stockholders, subject to the
claims of creditors. Thereafter, these assets will be sold or
distributed on terms approved by the trustees. In any event, if
all of the Company's assets have not otherwise been distributed
within three years after dissolution, the Company will transfer
all of its remaining assets to the liquidating trust. The Board
is authorized to appoint one or more trustees of the liquidating
trust and to cause the Company to enter into a liquidating trust
agreement with the trustee(s) on such terms and conditions as may
be approved by the Board. Stockholder approval of the Plan of
Dissolution will also constitute approval of any such appointment
and any liquidating trust agreement.
DELISTING AND TRADING OF THE COMMON STOCK AFTER DISSOLUTION
The Company's Common Stock and warrants are listed for trading on
the NASDAQ Stock Market's SmallCap System and the Pacific
Exchange. Following dissolution, the Board will determine the
appropriate time to delist the Common Stock and warrants from
these exchanges. Thereafter, trading, if any, in the Common Stock
and warrants would be conducted in the over-the-counter market in
the so-called "pink sheets" or the NASD's "Electronic Bulletin
Board." As a consequence of such delisting, an investor would
likely find it more difficult to dispose of, or obtain quotations
as to the price of, the Common Stock and warrants. Delisting of
the Common Stock and warrants may result in lower prices for
these securities than would otherwise prevail.
CONTINUING LIABILITY OF STOCKHOLDERS AFTER DISSOLUTION
Following the Company's dissolution and liquidation, it is
possible that some claims may still exist that could be asserted
against the Company. Delaware law provides that, if the assets
of a corporation are distributed in connection with the
dissolution of a corporation, a stockholder may be liable for
claim(s) against the corporation. In such event, a stockholder's
potential liability for any such claim against the Company would
be limited to the lesser of (a) the stockholder's pro
<PAGE>
rata share of such claim or (b) the actual amount distributed to
the stockholder in connection with the dissolution.
An individual stockholder's total liability for any claims
against the Company after it is dissolved will not exceed the
amount actually distributed to that stockholder in the
dissolution.
NO APPRAISAL RIGHTS
Under Delaware law, stockholders are not entitled to dissenters'
or appraisal rights with respect to the Plan of Dissolution.
REGULATORY MATTERS
Except for the Company's filing of the certificate of dissolution
with the Secretary of State of the State of Delaware, the Company
is not subject to any federal or state regulatory requirements
nor is it required to obtain any federal or state approval in
order to consummate the dissolution.
Certain Federal Income Tax Consequences
GENERAL
The following discussion is a general summary of the federal
income tax consequences that may result from the dissolution and
liquidation of the Company and the distribution of its assets to
its stockholders pursuant to the Plan of Dissolution. This
summary is based on the provisions of the Internal Revenue Code
as currently in force, but which is subject to change. Any such
change may be applied retroactively.
This summary does not discuss all aspects of federal income
taxation that may be relevant to a particular stockholder or to
certain types of persons subject to special treatment under
federal income tax laws, such as corporations and non-US persons,
nor does it address any aspects of state, local or foreign tax
laws. Because any distributions made pursuant to the Plan of
Dissolution may occur at various times and in more than one tax
year, no assurances can be given that the tax treatment described
herein will continue to apply unchanged at the time of later
distributions.
We have not requested a ruling from the IRS or obtained an
opinion of counsel with respect to the anticipated tax treatment
of the Plan of Dissolution. If any of the conclusions stated
under "Certain Federal Income Tax Consequences" proves to be
incorrect, the result could be increased taxation at the
corporate and/or stockholder level, thus reducing the benefit to
the creditors and possibly stockholders and the Company from the
liquidation. This summary does not address tax consequences that
may vary with, or are contingent on, individual circumstances.
Accordingly, this summary does not constitute legal advice to any
stockholder.
The Company recommends that each stockholder consult his or her
personal tax advisor regarding the specific federal, state and
local tax consequences of the Plan of Dissolution.
<PAGE>
CONSEQUENCES TO THE COMPANY
After the Plan of Dissolution becomes effective and until the
liquidation is completed, the Company will continue to be subject
to income tax on its taxable income. The Company will recognize
gain or loss on sales of its property pursuant to the Plan of
Dissolution. Upon distributions, if any, of property, other than
cash, to stockholders pursuant to the Plan of Dissolution, the
Company will recognize gain or loss as if such property was sold
to stockholders at its fair market value, unless certain
exceptions to the recognition of loss apply. As it is
anticipated that no such exception will apply, the Company should
recognize gain or loss on any distribution of property to
stockholders pursuant to the Plan of Dissolution.
The Company may discharge its liabilities at less than the face
amount of such liabilities. The discharge of liabilities, at less
than face amount, may result in the Company's realization of
income to the extent of the excess of the face amount of the
liabilities over the amount paid in satisfaction thereof.
CONSEQUENCES TO STOCKHOLDERS
As a result of the Company's liquidation, stockholders will
recognize gain or loss equal to the difference between (a) the
sum of the amount of cash distributed to them and the fair market
value (at the time of distribution) of property distributed to
them, and (b) their adjusted tax basis of their shares. The
adjusted tax basis in a stockholder's shares will depend upon
various factors, including the cost of the shares and the amount
and nature of any distributions received from the Company with
respect to the stock.
Gain or loss recognized by a stockholder will be capital gain or
loss, provided the shares are held as capital assets. Capital
gains are long term if the stock is held for more than twelve
months. For individuals, the maximum federal income tax rate
applicable to long term capital gains is generally 20%.
Deductions for capital losses, whether short or long term, are
subject to various limitations.
In the unlikely event that the Company makes any distribution of
property other than cash, a stockholder's tax basis in such
property immediately after the distribution will be the fair
market value of such property as of the time of distribution.
The gain or loss realized upon a stockholder's future sale of
that property will be measured by the difference between the
stockholder's tax basis in the property at the time of such sale
and the sales proceeds.
After the close of the Company's taxable year, the Company will
provide stockholders and the IRS with a statement of the amount
of cash distributed to them and the Company's best estimate as to
the value of the property, if any, distributed to stockholders
during that year. In the case of property, the Company will
determine the fair market value based upon reports by independent
appraisers or such other evidence as the Company shall elect.
There is no assurance that the IRS will not challenge such
valuation. As a result of such a challenge, the amount of gain
or loss recognized by a stockholder might be changed.
Distributions of property other than cash to a stockholder could
result in a stockholder's tax liability exceeding the amount of
cash he or she received, requiring him or her to meet the tax
obligations from other sources.
<PAGE>
If the Company transfers assets to a liquidating trust,
beneficial ownership in the trust will be distributed to the
stockholders. For federal income tax purposes, stockholders
would be treated at the time of transfer as having received their
pro rata share of assets transferred to the liquidating trust,
reduced by the amount of known liabilities assumed by the
liquidating trust or to which the assets are subject. The
liquidating trust itself should not be subject to tax. After
formation of the liquidating trust, the stockholders must take
into account, for federal income tax purposes each year, their
allocable portion of any income, expense, gain or loss recognized
by the trust. As a result of the transfer of property to the
trust and ongoing operations of the trust, stockholders should be
aware that they may be subject to tax, whether or not they have
received any actual distributions from the liquidating trust with
which to pay the tax.
Vote Required
Under Delaware law, the affirmative vote of the holders of a
majority of the outstanding shares of the Company's Common Stock
is required to approve the Plan of Dissolution. If the requisite
number of stockholders approve the Plan of Dissolution, the
Company will be dissolved and liquidated in accordance with the
Plan of Dissolution even though individual stockholders may have
voted against the proposal. The Plan of Dissolution may be
amended or terminated, either before or after stockholder
approval has been obtained, unless the Board determines that such
amendment or termination would materially and adversely affect
the stockholders' interests.
Recommendation of the Board
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" THE PROPOSAL TO APPROVE THE PLAN OF DISSOLUTION.
OTHER MATTERS
The Company knows of no other matters to be submitted at the
meeting. If any other matters properly come before the meeting,
the proxy holders will vote the shares they represent as the
Board of directors may recommend.
OTHER INFORMATION REGARDING THE COMPANY
The following additional information about the Company is
provided as required by Regulation and Schedule 14A of the
General Rules and Regulations under the Securities and Exchange
Act of 1934, as amended.
Voting Securities and Principal Holders Thereof
The following table sets forth the beneficial ownership of the
Company's securities as of September 29, 2000, by (a) each person
known by the Company to be the beneficial owner of more than 5%
of any class of the Company's securities, (b) the directors of
the Company, (c) the executive officers of the Company, and (d)
all directors and executive officers as a group. As of September
29, 2000, a total of 1,158,249 shares of the Company's Common
Stock, 241,636 of
<PAGE>
the Company's Common Stock ($7.32) Purchase Warrants, and
125,000 of the Company's Common Stock ($2.00) Purchase
Warrants were issued and outstanding.
<TABLE>
Number of Number of
Number of $7.32 $2.00
Shares Warrants Warrants
Name and Address of Beneficially Percentage Beneficially Percentage Beneficially Percentage
Beneficial Owner Owned (1) Owned Owned (2) Owned Owned (2) Owned
<S> <C> <C> <C> <C> <C> <C>
Dr. Margaret B. van Boldrick (3) 167,350 14.4
Eli Lilly and Company
Lilly Corporate Center,
Indianapolis, IN 46285 87,412 7.6
Dr. Peter Model (4) 68,190 5.6 5,625 2.3
Mr. William A. Linton 64,125 5.5
Mr. Rex J. Bates (6) 55,350 4.8 1,144 * 500,000 50.0
Mr. Davis U. Merwin 54,706 4.7 1,144 * 500,000 50.0
Dr. W. Leigh Thompson (7) 2,630 *
Ms. Susan P. Maynard (8) 2,286 *
All Directors and Officers as a
Group (4 persons) (9)(10) 240,456 20.8 7,913 3.3 1,000,000 100.0
</TABLE>
*Less than 1%.
(1) Includes ownership of shares of Common Stock plus options
exercisable within 60 days of September 29, 2000. Shares of
Common Stock subject to outstanding options are deemed
outstanding for purposes of computing the percentage of ownership
of the person holding such options but are not deemed outstanding
for computing the percentage ownership for any other persons.
(2) The exercise prices listed reflect the original exercise
prices for these warrants prior to the eight-for-one reverse
split of the Company's Common Stock effective September 20, 1999
(the "Reverse Split"). Following the Reverse Split, and pursuant
to the underlying warrant agreements governing the exercise and
other terms of the Company's warrants, the per share exercise
prices are now $55.615 and $16.00, respectively, for the $7.32
and $2.00 Common Stock purchase warrants.
(3) Dr. van Boldrik's beneficial ownership includes 156,100
shares owned by Dr. van Boldrik, 5,625 shares held by the Willem
Erin Samburu Carroll van Boldrik Trust A and 5,625 shares held by
the Jan Patrick Jabiru van Boldrik Carroll Trust A. Dr. van
Boldrik is the sole trustee for both trusts.
(4) Includes 56,875 shares held by the Model Charitable Lead
Trust and Peter Model Trust II, for which Dr. Model is one of two
co-trustees, and options to purchase 668 shares currently vested
in the 1992 Stock Option Plan, which options expire in January
2007, and options to purchase 1,250 shares currently vested in
the 1992 Stock Option Plan, which options expire in November
2009.
(5) Includes 32,813 shares owned by Promega Corporation of which
Mr. Linton is Chairman, President, and Chief Executive Officer
and may be deemed to have voting and investment power over the
shares.
(6) Includes (a) options to purchase 3,125 shares currently
vested in the 1992 Stock Option Plan, which options expire in
July 2006; (b) options to purchase 625 shares currently vested in
the 1992 Stock Option Plan, which options expire in January 2006;
(c) options to purchase 625 shares currently vested in the 1992
Stock Option Plan, which options expire in January 2007; and (d)
options to purchase 1,250 shares currently vested in the 1992
Stock Option Plan, which options expire in November 2009.
(7) Includes (a) options to purchase 665 shares currently vested
in the 1992 Stock Option Plan, which options expire in January
2006; (b) options to purchase 625 shares currently vested in the
1992 Stock Option Plan, which options expire in January 2007; and
(c) options to purchase 1,250 shares currently vested in the 1992
Stock Option Plan, which options expire in November 2009.
<PAGE>
(8) Includes options to purchase 2,224 shares currently vested
in the 1998 Incentive Stock Option Plan, which options expire in
November 2009.
(9) Address is 5445 East Cheryl Parkway, Madison, Wisconsin
53711.
(10) Includes options to purchase a total of 12,307 shares, which
options have vested, or will vest, within 60 days of September
29, 2000.
Changes in Control
On February 10, 1999, Dr. Sean Carroll, then an owner of 15.8% of
the Common Stock of the Company, completed a sale of a total of
115,000 of his shares, approximately 10% of the Company's
outstanding Common Stock. The purchasers were the Rex James
Bates Trust, Davis U. Merwin, the Model Charitable Lead Trust,
Dr. Peter Model, and the Peter Model Trust No. 2. Peter Model is
the Company's Chairman and a director of the Company and a
trustee for the respective trusts. Davis U. Merwin is an
existing stockholder of the Company. Upon completion of the
transaction, none of the purchasers were the beneficial owner of
10% or more of the Company's Common Stock.
On June 7, 1999, the Company entered into separate Promissory
Note and Loan Agreements with Rex J. Bates, then a director and
currently a stockholder, and Davis U. Merwin, a stockholder,
pursuant to which the Company borrowed $2 million on October 14,
1999, in exchange for ten-year, 10%, senior notes with warrants.
The assets of the Company secure the notes. Interest on the
notes for the first three years is payable in Common Stock of the
Company at the then market value and thereafter in cash. The
warrants for the purchase of 125,000 shares of Common Stock are
exercisable for five years at $16.00 per share.
Other than the above-described transactions and the proposed
Asset Sale, the Company is not aware of any arrangement or plan
by, with, or among any party or parties that would result in a
change in control of the Company or whereby one or more persons
would act in concert with respect to any matter affecting the
Company.
Selected Financial Data, Including Pro Forma Information
The following tables set forth selected financial data on a
historical basis and on a pro forma basis for the Company after
giving effect to (a) the Asset Sale and (b) certain prior
property dispositions. The financial data should be read in
conjunction with the Company's financial statements and notes
thereto incorporated by reference into this Proxy Statement. The
historical financial data as of June 30, 2000, and for the nine
months then ended, has been derived from unaudited financial
statements, which, in the opinion of the Company's management,
include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of the results for
the unaudited interim periods.
The unaudited pro forma balance sheet as of June 30, 2000, is
presented as if the transactions had occurred on June 30, 2000.
The unaudited pro forma operating data for the nine months ended
June 30, 2000, is presented as if (a) the Asset Sale and (b)
certain prior property dispositions had occurred on October 1, 1999.
<PAGE>
The pro forma information included in "Selected Financial Data"
is based upon assumptions that are included in the "Notes to the
Pro Forma Financial Statements" set forth below. The pro forma
information is unaudited and is not necessarily indicative of
what the financial position and results of operations of the
Company would have been as of and for the dates or periods
indicated, nor does it purport to represent the future financial
position and results of operations for future dates or periods.
<PAGE>
PRO FORMA FINANCIAL INFORMATION
OPHIDIAN PHARMACEUTICALS, INC.
PRO FORMA BALANCE SHEET
JUNE 30, 2000
(UNAUDITED)
HISTORICAL PRO FORMA
(June 30, 2000) ASSET SALE (June 30, 2000)
ASSETS
Cash and cash equivalents $ 990,179 $ 1,250,000 A $ 2,240,179
Promissory note receivable - 250,000 A 250,000
Equipment and leasehold
improvements, net 4,254,361 (4,254,361) B -
Patent costs, net 1,535,983 (1,535,983) C -
Other assets 8,294 - 8,294
_______________________________________________
Total assets $ 6,788,817 $(4,290,344) $ 2,498,473
===============================================
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable $ 306,554 $ - $ 306,554
Accrued liabilities 197,847 - 197,847
Capital leases 10,500 (10,500) D -
Senior notes 1,628,494 (1,628,494) E -
Deffered revenue 354,310 (354,310) F -
_______________________________________________
Total liabilities 2,497,705 (1,993,304) 504,401
===============================================
Common stock 2,895 - 2,895
Additional paid-in-capital 22,507,322 - 22,507,322
Accumulated deficit (18,219,105) (2,297,040) (20,516,145)
_______________________________________________
Total stockholders' equity 4,291,112 (2,297,040) 1,994,072
===============================================
Total liabilities and _______________________________________________
stockholders' equity $ 6,788,817 $(4,290,344) $ 2,498,473
===============================================
See accompanying notes
<PAGE>
OPHIDIAN PHARMACEUTICALS, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
HISTORICAL PRO FORMA
(June 30, 2000) ASSET SALE (June 30, 2000)
Revenues
Sales of patents $ 1,300,000 $ - $ 1,300,000
Other 14,224 354,310 F 368,534
_____________________________________________
Total revenues 1,314,224 354,310 1,668,534
Operating expenses
Cost of patents sold 83,481 - 83,481
Research and development 1,875,074 - 1,875,074
General and administrative 1,352,147 - 1,352,147
Loss on sale of assets - 2,279,844 G 2,279,844
_____________________________________________
Total operating expenses 3,310,702 2,279,844 5,590,546
Operating loss (1,996,478) (1,925,534) (3,922,012)
Non-operating income, net 89,951 - 89,951
_____________________________________________
Loss before extraordinary item (1,906,527) (1,925,534) (3,832,061)
Extraordinary item - early
extinguishment of debt - (371,506) E (371,506)
_____________________________________________
Net loss $ (1,906,527) $(2,297,040) (4,203,567)
=============================================
_____________________________________________
Net loss per share - basic
and diluted $ (1.65) $ (1.98) $ (3.63)
=============================================
See accompanying notes
Notes to Pro Forma Financial Statements
A The adjustment to cash and cash equivalents and promissory
note receivable reflects the estimated gross proceeds of
approximately $1,500,000 from the proposed Asset Sale. This
amount does not reflect any deductions, not to exceed
$250,000, from the gross proceeds that may be made pursuant
to the Company's obligation, as set forth in the Purchase
Agreement, to indemnify Promega for any "Indemnifiable
Damages" incurred by Promega within 90 days of the closing of
the Asset Sale. The Company also expects to incur an
additional $500,000 of expenses for accrued taxes and other
accrued costs,
<PAGE>
and estimated legal, accounting, closing,
insurance, stockholder communications, and related expenses
of officers and employees assigned to complete the
dissolution and liquidation. The actual costs incurred could
vary significantly due to uncertainties related to the timing
and closing of the Asset Sale, the length of time required to
complete the Plan of Dissolution, and complexities that may
arise in disposing of the Company's assets if the Asset Sale
is not completed. All such costs will be paid before any
distribution will be made to stockholders.
B The adjustment to equipment and leasehold improvements
represents the carrying value of the equipment and leasehold
improvements sold.
C. The adjustment to patents represents the carrying value of
the patents sold.
D. The adjustment to capital leases represents the carrying
value of the leases assumed by Promega.
E. The adjustment to senior notes represents $2,000,000 of debt
assumed by Promega Corporation, offset by the $371,506 debt
discount, which will be expensed upon early extinguishment of
the senior notes
F. The adjustment to deferred revenue represents the recognition
of patent reimbursements acquisition costs that were to be
recognized after issuance of certain patents. As all patents
and pending patents are being sold, $354,310 of deferred
revenue should be recognized.
G. Represents the estimated loss on the Asset Sale.
Stockholder Proposals
If the Asset Sale and the Plan of Dissolution are approved and
the Asset Sale and Plan of Dissolution are consummated in a
timely manner, the Company does not intend to hold an annual
stockholders meeting in 2001 or thereafter. If the Asset Sale
and the Plan of Dissolution are not approved or if the
dissolution of the Company is delayed or the Plan of Dissolution
abandoned by the Board in their discretion to the extent
permitted by the terms of the Plan of Dissolution and Delaware
law, and if a stockholder desires to present any proposal for
consideration at the Company's 2001 Annual Meeting of
Stockholders, the stockholder must, in addition to satisfying any
other applicable requirements, submit such proposal to the
Company so that it is received at the Company's principal offices
not later than September 30, 2000.
Where You Can Find More Information
The Company is subject to the informational requirements of the
Exchange Act, and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange
Commission (the "SEC"). Such reports, proxy statements and other
information filed by the Company may be inspected and copied at
the public reference facilities maintained by the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the regional
offices of the SEC located at 75 Park Place, New York, New York
10007 and 500 West Madison Street, Chicago, Illinois 60661.
Copies of such material can be obtained from the Public Reference
<PAGE>
Section of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition, most of the documents
filed by the Company with the SEC are available through the SEC's
Electronic Data Gathering and Retrieval System ("EDGAR") at the
SEC's Internet site at http://www.sec.gov.
The Company furnishes stockholders with annual reports containing
consolidated financial statements audited by independent
certified public accountants. The Company's 1999 Annual Report,
which integrated information from the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1999, was sent
to shareholders on or about February 23, 2000.
Stockholders should rely only on the information contained in
this Proxy Statement. No person is authorized to give any
information or to make any representations other than the
information or representations contained herein and, if given or
made, such information or representations should not be relied
upon as having been authorized. This Proxy Statement does not
constitute the solicitation of a proxy in any jurisdiction where,
or to any person to whom, it is unlawful to make such a
solicitation. This Proxy Statement is dated October 8, 2000.
Stockholders should not assume that the information contained in
this Proxy Statement is accurate as of any later date, and the
mailing and delivery of this Proxy Statement shall not, under any
circumstances, create any implication to the contrary.
Information Incorporated by Reference
The Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1999, Quarterly Report on Form 10-Q for the
fiscal quarter ended December 31, 1999, Quarterly Report on Form
10-Q for the fiscal quarter ended March 31, 2000, Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 2000 (a
copy of which is being delivered to stockholders concurrently
with this Proxy Statement) and Current Reports on Forms 8-K filed
with the SEC on April 12, 2000, and May 26, 2000, are hereby
incorporated by reference into this Proxy Statement. All
documents filed by the Company with the SEC pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this Proxy Statement and prior to the completion of the vote at
the Meeting shall be deemed to be incorporated by reference into
this Proxy Statement and to be a part hereof from the date of
filing of such documents. 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 of this
Proxy Statement 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 such statement so modified or
superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Proxy Statement.
THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY
SUCH DOCUMENTS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH ARE
NOT SPECIFICALLY INCORPORATED BY REFERENCE HEREIN, ARE AVAILABLE
WITHOUT CHARGE TO ANY PERSON, INCLUDING ANY STOCKHOLDER, TO WHOM
THIS PROXY STATEMENT IS DELIVERED, UPON WRITTEN OR ORAL REQUEST
TO THE COMPANY, 5445 EAST CHERYL PARKWAY, MADISON, WI 53711,
TELEPHONE
<PAGE>
(608) 271-0878. IN ORDER TO ASSURE TIMELY DELIVERY OF
THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BEFORE OCTOBER 31, 2000.
SIGNATURE
Pursuant to the requirements of Section 14 of the Securities and
Exchange Act of 1934, as amended, and Regulation 14A thereunder,
the Company has caused this Proxy Statement to be mailed to the
stockholders of the Common Stock and filed with the Securities
and Exchange Commission.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Susan P. Maynard
Susan P. Maynard
Secretary
<PAGE>
OPHIDIAN
Pharmaceuticals, Inc.
5445 East Cheryl Parkway
Madison, WI 53711
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 9, 2000
The undersigned stockholder of Ophidian Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), hereby acknowledges receipt
of the Notice of Special Meeting of Stockholders and Proxy
Statement for the Special Meeting of Stockholders to be held
November 9, 2000, and appoints Peter Model and Susan Maynard, and
each of them individually, proxies, each with full power of
substitution, to vote, as specified below, all shares of Common
Stock of the Company held of record by the undersigned on
September 29, 2000, at the Special Meeting of Stockholders of the
Company to be held on November 9, 2000, at 10:00 a.m. central
standard time, at 5445 East Cheryl Parkway, Madison, Wisconsin
and any adjournments or postponements thereof.
Please complete, date, sign, and return this proxy promptly in the
envelope provided, whether you plan to attend the Special Meeting
or not. If you do plan to attend, you may, of course, vote your
shares in person. This proxy will be voted as directed or, if no
direction is indicated, will be voted in favor of the proposed
items of business.
Please mark vote in box, using dark ink only, in the following
manner: /X/
1. To approve the proposed sale of substantially all of the
Company's assets to Promega Corporation, a Wisconsin corporation,
pursuant to the terms of the Asset Purchase Agreement dated as of
September 1, 2000.
/ / For / / Against / / Abstain
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL.
2. To approve the proposed authorization to the Company's Board
of Directors to effect the dissolution and liquidation of the
Company as described in the proposed Plan of Dissolution and
Liquidation.
/ / For / / Against / / Abstain
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL.
Please complete, date, and sign this proxy and return it promptly
in the accompanying envelope.
Date: _________________________
Signature(s): _____________________________ _________________________
(title/capacity): _________________________ _________________________
Note: Please sign exactly as your name appears on this proxy. If
signing for an estate, trust, or corporation, your title and/or
capacity should be so stated. If shares are held jointly, at
least one joint owner must sign.
