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:
[X] Preliminary Proxy Statement [ ] Confidential for Use of
the Commission Only
(as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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.
[X] 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): Maximum aggregate value of consideration
to be received by Registrant: $3,500,000. One fiftieth
of one percent equals $700.
(4) Proposed maximum aggregate value of
transaction: $3,500,000
(5) Total fee paid: $700.00
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee
was paid previously. Identify the previous filing
by registration statement number, or the form or
schedule and the date of its filing.
(1) Amount previously paid: _____________________________
(2) Form, Schedule or Registration Statement No.:____________________
(3) Filing Party: _______________________________________
(4) Date Filed: _________________________________________
<PAGE>
[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,
Margaret van Boldrik
Director and Vice President
<PAGE>
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, NOVEMBER 8, 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 Wednesday, November 8, 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,
Madison, Wisconsin Susan 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 SHAREHOLDERS
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 10
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 12
BUYER 12
PURCHASE PRICE 13
EXPECTED PROCEEDS OF THE ASSET SALE 13
EXPECTED TIMING OF THE ASSET SALE 14
REPRESENTATIONS AND WARRANTIES; CLOSING CONDITIONS 14
INDEMNIFICATION BY SELLER 14
TERMINATION OF THE PURCHASE AGREEMENT 15
GOVERNMENT APPROVALS 15
NO APPRAISAL RIGHTS 15
ACCOUNTING TREATMENT OF THE ASSET SALE 16
FEDERAL INCOME TAX CONSEQUENCES OF THE ASSET SALE 16
<PAGE>
PRICE RANGE OF COMMON STOCK AND WARRANTS 16
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON 17
VOTE REQUIRED 18
RECOMMENDATION OF THE BOARD 18
PROPOSAL TWO - APPROVAL OF THE DISSOLUTION 18
PROPOSED STOCKHOLDER ACTION 18
DESCRIPTION OF THE PLAN OF DISSOLUTION 18
BACKGROUND AND REASONS FOR THE DISSOLUTION 19
RISK FACTORS 19
DISSOLUTION AND LIQUIDATION PROCEDURE 19
ABANDONMENT OF THE PLAN OF DISSOLUTION 19
CONDUCT OF THE COMPANY FOLLOWING DISSOLUTION 20
SALE OF REMAINING ASSETS 20
PAYMENT OF CLAIMS AND OBLIGATIONS 20
DISTRIBUTIONS TO STOCKHOLDERS 21
LIQUIDATION TRUST 21
DELISTING AND TRADING OF THE COMMON STOCK AFTER DISSOLUTION 22
CONTINUING LIABILITY OF STOCKHOLDERS AFTER DISSOLUTION 22
NO APPRAISAL RIGHTS 22
REGULATORY MATTERS 22
CERTAIN FEDERAL INCOME TAX CONSEQUENCES 23
GENERAL 23
CONSEQUENCES TO THE COMPANY 23
CONSEQUENCES TO STOCKHOLDERS 24
VOTE REQUIRED 25
RECOMMENDATION OF THE BOARD 25
OTHER MATTERS 25
OTHER INFORMATION REGARDING THE COMPANY 25
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF 25
CHANGES IN CONTROL 27
SELECTED FINANCIAL DATA, INCLUDING PRO FORMA INFORMATION 27
NOTES TO PRO FORMA FINANCIAL STATEMENTS 30
STOCKHOLDER PROPOSALS 31
WHERE YOU CAN FIND MORE INFORMATION 31
INFORMATION INCORPORATED BY REFERENCE 32
SIGNATURE 33
<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 Wednesday, November 8, 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 6, 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.
The Purchase Agreement & Price At closing Promega will pay Ophidian $1.25
<PAGE>
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 On the second business day after
the Asset Sale 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 The Asset Sale will not result in
Consequences 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 Under Delaware law, after
of Ophidian dissolution Ophidian will continue
to exist for three years solely
for the
<PAGE>
purpose of winding up its
affairs. During this time 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 alternate
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 & Before distributing any assets to
Obligations 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 Once adequate provisions have been
Stockholders 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
<PAGE>
distributions. Uncertainties as
to the net value of the assets and
the ultimate amount of the
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 Under Delaware law, a
Stockholders 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 Until the winding up and
Consequences 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
<PAGE>
pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted 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 SHAREHOLDERS 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. Shareholders,
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
<PAGE>
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 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.
Shareholders are advised to read the entire Purchase
Agreement.
As described in detail in the Purchase Agreement and
the schedules attached thereto, 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
<PAGE>
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 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 mores
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
<PAGE>
offset for indemnifiable damages or other obligations of
the Company to Promega as provided in the Purchase Agreement; and
* 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.
<PAGE>
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 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
<PAGE>
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.
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
<PAGE>
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.
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 1,986 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
<PAGE>
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 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
<PAGE>
Dissolution is attached to this Proxy Statement
as Exhibit B. Stockholders should carefully read the
Plan of Dissolution in its entirety.
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.
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
<PAGE>
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
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.
<PAGE>
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.
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.
<PAGE>
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.
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
<PAGE>
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, 1,933,088 of 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 Boldrik (3) 169,350 14.6
Eli Lilly and Company
Lilly Corporate Center,
Indianapolis, IN 46285 87,412 7.6
Dr. Peter Model (4) 68,190 5.6 45,000 2.3
Mr. William A. Linton (5) 64,125 5.5
Mr. Rex J. Bates (6) 55,350 4.8 9,150 * 500,000 50.0
Mr. Davis U. Merwin 54,706 4.7 9,150 * 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) 252,456 20.7 63,300 3.3 1,000,000 100.0
</TABLE>
<PAGE>
*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
158,100 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.
(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
<PAGE>
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.
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 -
Deferred 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
Sale 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,
<PAGE>
Chicago, Illinois 60661. Copies of such material can be
obtained from the Public Reference 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
<PAGE>
THE COMPANY, 5445 EAST CHERYL PARKWAY,
MADISON, WI 53711, TELEPHONE (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
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 8, 2000
The undersigned stockholder of Ophidian
Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), hereby 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 8, 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.
