SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
/ / Definitive proxy statement by Rule 14a-6(e)(2))
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CHROMATICS COLOR SCIENCES INTERNATIONAL, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
/x/ No fee required
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
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/ / Fee paid previously with preliminary materials:
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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CHROMATICS COLOR SCIENCES INTERNATIONAL, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 20, 2001
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The Special Meeting of Shareholders of Chromatics Color Sciences
International, Inc. (the "Company"), a New York corporation, will be held at the
Legends Hotel & Resort, located at Route 17 North, near the intersection of
Route 94 North, in McAfee, New Jersey 07428, on Thursday, September 20, 2001, at
10:00 A.M., for the following purposes:
1. To obtain shareholder approval for an amendment to the Company's
Certificate of Incorporation to effect a one share for up to forty shares
reverse stock split of the Company's issued and outstanding shares of
common stock, as determined by the Company's Board of Directors;
2. To obtain shareholder approval for an amendment to the Company's
Certificate of Incorporation to increase the number of authorized shares of
common stock, $.001 par value per share, from 50,000,000 to 450,000,000;
and
3. To transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.
The approval and adoption of each matter to be presented to the
shareholders is independent of the approval and adoption of each other matter to
be presented to the shareholders. Only shareholders of record at the close of
business on August 9, 2001 are entitled to notice of and to vote at the meeting,
including any adjournments or postponements thereof.
By order of the Board of Directors
Darby S. Macfarlane
Chairperson of the Board of Directors
New York, New York
August 31, 2001
IMPORTANT:
Whether or not you expect to attend in person, we urge you to sign, date,
and return the enclosed Proxy at your earliest convenience. This will ensure the
presence of a quorum at the meeting. PROMPTLY SIGNING, DATING, AND RETURNING THE
PROXY WILL SAVE THE COMPANY THE EXPENSES AND EXTRA WORK OF AN ADDITIONAL
SOLICITATION. An addressed envelope for which no postage is required if mailed
in the United States is enclosed for that purpose. Sending in your proxy will
not prevent you from voting your stock at the meeting if you desire to do so, as
your Proxy is revocable at your option.
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CHROMATICS COLOR SCIENCES INTERNATIONAL, INC.
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PROXY STATEMENT
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FOR SPECIAL MEETING OF SHAREHOLDERS
SEPTEMBER 20, 2001
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of CHROMATICS COLOR SCIENCES INTERNATIONAL,
INC., a New York corporation (the "Company"), for use at the Special Meeting of
Shareholders of the Company (the "Meeting") which will be held at the Legends
Hotel & Resort, located at Route 517 North, near the intersection of Route 94
North, in McAfee, New Jersey 07428, on Thursday, September 20, 2001, at 10:00
A.M., including any adjournments or postponements thereof.
Shareholders who execute proxies retain the right to revoke them at any
time by notice in writing to the Secretary of the Company, by revocation in
person at the Meeting or by presenting a later dated proxy. Unless so revoked,
the shares represented by such proxies will be voted at the Meeting in
accordance with the directions given therein. Shareholders vote at the Meeting
by casting ballots (in person or by proxy), which are tabulated by a person who
is appointed by the Board of Directors before the Meeting to serve as inspector
of election at the Meeting and who has executed and verified an oath of office.
Under New York law and the Company's Bylaws, the presence in person or by proxy
of a majority of the outstanding shares of the Company's common stock is
necessary to constitute a quorum at the Meeting. Abstentions and broker
"non-votes" are included in the determination of the number of shares present at
the Meeting for quorum purposes but are not counted in the tabulations of the
votes cast on proposals presented to shareholders. A broker "non-vote" occurs
when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting power
with respect to that item and has not received instructions from the beneficial
owner.
The principal executive offices of the Company are located at 5 East 80th
Street, New York, New York 10021. The approximate date on which this Proxy
Statement and the enclosed form of proxy will first be sent or given to
shareholders is August 31, 2001.
Shareholders of record of the common stock at the close of business on
August 9, 2001 shall be entitled to one vote for each share then held. On August
9, 2001, there were 19,991,952 shares of common stock issued and outstanding.
Only shareholders of record at the close of business on August 9, 2001 are
entitled to notice of and to vote at the meeting, including any adjournments or
postponements thereof.
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PROPOSAL 1 -
AMENDMENT TO THE CERTIFICATE OF
INCORPORATION TO EFFECT REVERSE STOCK SPLIT
Proposal
The Board has unanimously approved, and recommends to the holders of the
common stock that they approve, a one-for-up to forty reverse stock split of the
common stock (the "Reverse Stock Split"). If approved by the shareholders, the
Reverse Stock Split may be effected in the manner described below at the
sole option of the Board. In determining the ratio of the Reverse Stock Split,
the Board will assess numerous factors including, but not limited to, analysis
of our most recent fiscal quarter, general economic conditions, the existing and
expected marketability and liquidity of our common stock and our listing status
on the Nasdaq SmallCap Market. The Board believes that approval of a range of
reverse stock split ratios, rather than approval of a specific reverse split
ratio, provides the Board with maximum flexibility to achieve the purposes of
the Reverse Stock Split. The Reverse Stock Split will reduce the number of
issued and outstanding shares of Common Stock by the ratio determined by the
Board to be in our best interests, but will not increase the par value of the
Common Stock and will not change the number of authorized shares of Common
Stock.
Reasons for Proposed Reverse Stock Split
The Company's common stock is quoted on the Nasdaq SmallCap Market under
our current symbol "CCSI." In order for the common stock to continue to be
quoted on the Nasdaq Stock Market, the Company must satisfy various listing
maintenance standards established by Nasdaq.
Under Nasdaq's listing maintenance standards, if the closing bid price of
the Company's common stock is under $1.00 per share for thirty consecutive
trading days and does not thereafter regain compliance with the rule during the
ninety calendar days following notification by Nasdaq, Nasdaq may delist the
Company's common stock from trading on the Nasdaq Stock Market. If a delisting
were to occur, the Company's common stock would trade on the OTC Bulletin Board
or in the "pink sheets" maintained by the National Quotation Bureau, Inc.
The Company received letters from Nasdaq advising that the Company's stock
had not met Nasdaq's minimum bid price closing requirement for thirty
consecutive trading days and that, if the Company were unable to demonstrate
compliance with this requirement during the ninety calendar days ending June 25,
2001, its common stock would be delisted. Nasdaq subsequently notified the
Company that its stock would be delisted. The Company has, however, applied to
Nasdaq for a hearing, and the delisting is stayed pending the hearing. The
hearing was scheduled for August 16, 2001, and at this time the Nasdaq Hearing
Committee has requested additional information to be submitted by the Company
regarding the Company's plans to meet the Net Tangible Asset Requirement.
In addition, many institutional investors have policies prohibiting them
from holding lower-priced stocks in their own portfolios, which reduces the
number of potential buyers of our common stock. Analysts at many leading
brokerage firms are reluctant to recommend lower-priced stocks to their clients
or monitor the activity of lower-priced stocks. A variety of brokerage house
policies and practices also tend to discourage individual brokers within those
firms from dealing in lower-priced stocks. Some of those policies and practices
pertain to the payment of brokers' commissions and to time-consuming procedures
that function to make the handling of lower-priced stocks unattractive to
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brokers from an economic standpoint. Additionally, because brokers' commissions
on lower-priced stocks generally represent a higher percentage of the stock
price than commissions on higher-priced stocks, the current share price of our
common stock can result in an individual stockholder paying transaction costs
that represent a higher percentage of total share value than would be the case
if our share price were substantially higher. This factor may also limit the
willingness of institutions to purchase our stock.
The Company believes that the Reverse Stock Split will improve the price
level of the common stock so that it will be able to comply with the Nasdaq
listing standards. The Company also believes that the higher share price that
should result from the Reverse Stock Split will help generate interest among
investors. Furthermore, the Company believes that maintaining the Nasdaq
SmallCap Market listing may provide it with a broader market for its common
stock and facilitate the use of the common stock in financing transactions in
which the Company may engage. The Company's Board of Directors has considered
the potential harm to it of a delisting from Nasdaq, and has determined that the
Reverse Stock Split is the best way of achieving compliance with Nasdaq's
listing standards.
The exact ratio of the Reverse Stock Split will be the ratio that the
Company believes will effectuate the purpose of the Reverse Stock Split, which
is to improve the price level of the common stock so that it will be able to
comply with, and remain in compliance with, the Nasdaq listing standards. Such
determination shall also be based upon existing and expected marketability and
liquidity of our common stock, analysis of our then most recent fiscal quarter,
prevailing market conditions and the likely effect on the market price of our
common stock.
For the reasons set forth above, the Board believes that the Reverse Stock
Split is in the best interests of the Company and its shareholders. The Company
cannot assure you that the Reverse Stock Split will have any of the foregoing
effects. The Company anticipates that, following consummation of the Reverse
Stock Split, the common stock will trade at a price per share that is higher
than the current market price per share of the common stock. HOWEVER, THERE CAN
BE NO ASSURANCE THAT THE TOTAL MARKET CAPITALIZATION AND AGGREGATE VALUE OF THE
PUBLIC FLOAT OF THE common stock AFTER THE PROPOSED REVERSE STOCK SPLIT WILL BE
EQUAL TO THE TOTAL MARKET CAPITALIZATION AND THE AGGREGATE VALUE OF THE PUBLIC
FLOAT BEFORE THE PROPOSED REVERSE STOCK SPLIT OR THAT THE MARKET PRICE OF THE
COMMON STOCK FOLLOWING THE REVERSE STOCK SPLIT WILL EITHER EXCEED OR REMAIN IN
EXCESS OF THE CURRENT MARKET PRICE OF THE COMMON STOCK. IN SOME CASES, THE TOTAL
MARKET CAPITALIZATION OF A COMPANY FOLLOWING A REVERSE STOCK SPLIT IS LOWER, AND
MAY BE SUBSTANTIALLY LOWER, THAN THE TOTAL MARKET CAPITALIZATION OF THE COMPANY
BEFORE THE REVERSE STOCK SPLIT. IN ADDITION, THE FEWER NUMBER OF SHARES THAT
WILL BE AVAILABLE TO TRADE WILL CAUSE THE TRADING MARKET OF THE common stock TO
BECOME LESS LIQUID, WHICH COULD HAVE AN ADVERSE EFFECT ON THE PRICE OF THE
COMMON STOCK.
Procedure for Reverse Stock Split
Upon the approval of this proposal by the shareholders of the Company and
at the election of the Board, the proposed Certificate of Amendment of the
Company's Certificate of Incorporation (the "Certificate of Amendment"), as set
forth in ANNEX A to this Proxy Statement, will be filed with the Secretary of
State of the State of New York to effectuate the Reverse Stock Split. Except for
any changes as a result of the repurchase by the Company of fractional shares,
each shareholder of the Company will hold the same percentage of common stock
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outstanding immediately following the Reverse Stock Split as such shareholder
did immediately prior to the Reverse Stock Split. Subject to the receipt of the
requisite shareholder approval, the Reverse Stock Split would be effective on
the date on which the Certificate of Amendment is filed with the Secretary of
State of the State of New York (the "Effective Date"), which is expected to
occur promptly following the Meeting. At the Effective Date, each up to forty
shares of common stock issued and outstanding will, automatically and without
further action by the Board or shareholders of the Company, be reclassified and
converted into one share of common stock. Fractional shares will not be issued
as a result of the Reverse Stock Split, but will be repurchased by the Company
for cash at the current fair market value of the fractional share interest. The
cash payment for the fractional share interest will be calculated by multiplying
the fractional share by the fair market value per share of common stock, which
will be the closing sale price per share of common stock on the Nasdaq SmallCap
Market (or any other listing or quotation system on which the shares of common
stock are then listed or quoted) on the trading day prior to the Effective Date.
Immediately after the effectiveness of the Reverse Stock Split, each
shareholder would own a fraction (depending on the magnitude of the Reverse
Stock Split) of the aggregate number of shares of common stock such shareholder
owned immediately prior to the Reverse Stock Split, but will own the same
percentage of the outstanding shares of common stock of the Company, except for
the effects of the Company's repurchase of fractional share interests at the
then current fair market value. The number of shares of common stock that may be
purchased upon the exercise or conversion of outstanding options, warrants, and
other securities convertible into or exchangeable for shares of common stock of
the Company (collectively, the "Convertible Securities") and the per share
exercise or conversion price per share will be adjusted appropriately so that,
as of the Effective Date, the aggregate number of shares of common stock
issuable in respect of Convertible Securities immediately following the
Effective Date will be equal to the aggregate number of shares issuable in
respect thereof immediately prior to the Effective Date multiplied by a fraction
the numerator of which is 1 and the denominator of which is the number of shares
which are converted into one share in the Reverse Stock Split, and the aggregate
exercise and conversion prices thereunder will remain unchanged. As a result of
the Reverse Stock Split, certain shareholders may own "odd lots" of fewer than
one hundred (100) shares of common stock. Brokerage commissions and other costs
of transactions for odd lots may be higher than for "round lot" transactions,
particularly on a per-share basis. The par value of the common stock of $.001
per share will remain unchanged as a result of the Reverse Stock Split. The
aggregate number of outstanding shares of common stock immediately prior to the
Effective Date will be reduced by the aggregate number of shares converted in
the Reverse Stock Split and by such additional number to account for the
repurchase by the Company of fractional share interests that otherwise would
result from the Reverse Stock Split. Accordingly, the aggregate par value of the
issued and outstanding shares of common stock, and therefore the stated capital
associated with the common stock, will be reduced, and the additional paid-in
capital (capital paid in excess of the par value) will be increased in a
corresponding amount for statutory and accounting purposes. If the Reverse Stock
Split is effected, all share and per-share information in the Company's
financial statements will be restated to reflect the Reverse Stock Split for all
periods presented in future filings after the Effective Date with the Securities
and Exchange Commission and the Nasdaq Stock Market.
Exchange of Stock Certificates; No Fractional Shares
If the Reverse Stock Split is approved by the shareholders of the Company,
the combination and reclassification of shares of common stock pursuant to the
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Reverse Stock Split will automatically occur on the Effective Date without any
further action on the part of the shareholders and regardless of the date on
which the certificates representing the share of common stock are physically
surrendered to the Company for exchange. Every up to forty issued and
outstanding shares of common stock would be converted and reclassified into one
share of common stock in the Reverse Stock Split, and any fractional share
interests resulting from such reclassification and combination would be
repurchased by the Company for cash at a price equal to the fair market value of
the common stock multiplied by such fractional share interest. The "fair market
value" of the common stock means the closing price per share as reported on the
Nasdaq SmallCap Market (or on such other quotation system or exchange on which
the common stock is then quoted or listed for trading) on the business day
immediately preceding the Effective Date. The ownership of a fractional share
interest in a share of common stock will not give the holder thereof any voting,
dividend or other rights except the right to receive payment therefore as
described herein.
As soon as practicable after the Effective Date, transmittal forms will be
mailed to each holder of record of common stock for use in forwarding to the
Company stock certificates for surrender and exchange for certificates
representing the number of shares of common stock to which such holder is
entitled and the cash payment (to be paid by check) for any fractional share
interest. The transmittal forms will be accompanied by instructions specifying
the details of the exchange. Upon receipt of the transmittal form, each
shareholder should surrender the certificates representing shares of common
stock prior to the effectiveness of the Reverse Stock Split, in accordance with
the applicable instructions. Each holder who surrenders certificates will
receive new certificates representing the whole number of shares of common stock
to which such holder is entitled as a result of the Reverse Stock Split, and a
check for the cash payment to which such holder is entitled as a result of the
repurchase by the Company of fractional share interests, if any. SHAREHOLDERS
SHOULD NOT SEND THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE A TRANSMITTAL FORM
FROM THE COMPANY.
As of the Effective Date, each certificate representing shares of common
stock outstanding prior to the Effective Date (an "existing certificate") will
be deemed only to evidence ownership of the number of shares of common stock
into which the shares of common stock evidenced by such existing certificates
have been converted by the Reverse Stock Split.
Federal Income Tax Consequences
The following is a summary of the material federal income tax consequences
to shareholders of the Company of the Reverse Stock Split. The following summary
discussion is based upon the Internal Revenue Code of 1986 (the "Code"),
treasury regulations thereunder, judicial decisions, and current administrative
rulings and practices, all as in effect on the date hereof and all of which
could be repealed, overruled, or modified at any time, possibly with retroactive
effect. There can be no assurance that such changes will not adversely affect
the matters discussed in this summary. No ruling from the Internal Revenue
Service ("IRS") with respect to the matters discussed herein has been requested,
and there is no assurance that the IRS would agree with the conclusions set
forth in this discussion. This discussion may not address certain federal income
tax consequences that may be relevant to particular shareholders in light of
their personal circumstances or to certain types of shareholders (such as
dealers in securities, insurance companies, foreign individuals and entities,
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financial institutions, and tax-exempt entities) who may be subject to special
treatment under the federal income tax laws. This discussion also does not
address any tax consequences under state, local or foreign laws. SHAREHOLDERS
ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO
THEM OF THE REVERSE STOCK SPLIT.
The Company believes that the Reverse Stock Split will qualify as a
"recapitalization" under Section 368(a)(1)(E) of the Code and as a
stock-for-stock exchange under Section 1036(a) of the Code. As a result, the
Company believes that no gain or loss should be recognized by a shareholder in
the Reverse Stock Split, except with respect to any cash received in lieu of
fractional share interests. The aggregate tax basis of the shares of common
stock held by a shareholder following the Reverse Stock Split will equal the
shareholder's aggregate basis in the common stock held immediately prior to the
Reverse Stock Split. Generally, the aggregate tax basis will be allocated among
the shares of common stock held following the Reverse Stock Split on a pro rata
basis. Shareholders who have used the specific identification method to identify
their basis in shares of common stock combined in the Reverse Stock Split should
consult their own tax advisors to determine their basis in the shares of common
stock received in exchange in the Reverse Stock Split. Shares of common stock
received should have the same holding period as the common stock surrendered.
Each shareholder who receives cash, if any, in lieu of fractional share
interests will recognize capital gain or loss equal to the difference between
the amount of cash received and the shareholder's tax basis allocable to such
fractional shares.
The foregoing discussion under this section "Federal Income Tax
Consequences" is only a general summary of the material federal income tax
consequences of the Reverse Stock Split. It is not a complete analysis of all
potential tax effects relevant to the Reverse Stock Split. The discussion does
not address any consequences arising under any state, local or foreign
jurisdiction. The discussion is based on current provisions of the Code,
Treasury Regulations promulgated thereunder, judicial opinions, published
positions of the Internal Revenue Service, and all other applicable authorities,
all of which are subject to change (possibly with retroactive effect). The
Company's view regarding the tax consequence of the Reverse Stock Split is not
binding on the Internal Revenue Service or the courts.
WE URGE YOU TO CONSULT YOUR OWN TAX ADVISOR CONCERNING THE U.S. FEDERAL,
STATE AND LOCAL, AND FOREIGN TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT.
Vote Required and Recommendation of Board
The proposal for the Reverse Stock Split shall be adopted if approved by a
majority of all outstanding shares of common stock entitled to vote at the
Meeting. If this proposal is approved by the shareholders, it will become
effective if the Company files the Certificate of Amendment with the Secretary
of State of the State of New York. IF THIS PROPOSAL IS NOT APPROVED, THE REVERSE
STOCK SPLIT WILL NOT BE IMPLEMENTED. THE BOARD UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE APPROVAL OF THE PROPOSED CERTIFICATE OF AMENDMENT TO
EFFECT THE REVERSE STOCK SPLIT. Notwithstanding the approval of the proposal by
the shareholders of the Company, the Board may elect not to implement, or to
delay the implementation of, the Reverse Stock Split if the Board determines
that the Reverse Stock Split would not be in the best interests of the Company
and its shareholders. The Board shall re-solicit shareholder approval in the
event that it wishes to implement the proposal after 120 days have elapsed since
the Meeting Date.
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PROPOSAL 2
AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO EFFECT
INCREASE IN SHARES OF AUTHORIZED COMMON STOCK
Proposal
The Board of Directors recommends that the Company increase its shares
of authorized common stock. At present, the Company's Certificate of
Incorporation, as amended, authorizes the issuance of 50,000,000 shares of
common stock, par value $.001 per share. 19,991,952 of those shares of common
stock are issued and outstanding and 30,008,048 shares were authorized but
unissued. The Board of Directors proposes to amend the Company's Certificate of
Incorporation to authorize the issuance of 450,000,000 shares of common stock,
par value $.001 per share.
Share Currently Reserved for Issuance
As of August 9, 2001, there were 19,991,952 shares of common stock
issued and outstanding and 30,008,048 shares were authorized but unissued. Of
the 30,008,048 authorized but unissued shares, 28,286,252 are reserved for
issuance as follows:
1. Conversion Securities including Warrants 24,810,252
2. Stock Options (Employee Stock Option Plan) 3,476,000
Accordingly, the amount of authorized shares of common stock that are
not reserved for issuance and are available for future issuance is currently
1,721,796. If you approve the increase in authorized shares, the amount will be
401,721,796.
Commitments to Issue Shares
In addition to the aforementioned authorized but unissued shares
reserved for issuance, there are approximately 10,600,000 shares to be reserved
for conversion rights for certain securities and financing agreements, which
will result in a reduction of shares otherwise available for future issuance.
Furthermore, waivers of anti-dilution rights may be necessary from holders of
certain securities of the Company in order to effect future financings. Such
arrangements are described below.
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Approximately 3,996,390 of the 10,600,000 shares to be reserved for
conversion rights are related to the Company's private placement financing
agreements with Crescent International, Ltd. ("Crescent"). Crescent provided a
$2,000,000 private placement for the Company on October 31, 2000. There is no
other affiliation with Crescent and the Company. In addition to the 3,996,390
shares, there are 270,000 incentive warrants exercisable at $1.00 per share of
common stock and 80 Series 4 Preferred Shares convertible into common stock if
Crescent elects to convert such securities but only if shareholders approve in a
future vote that those securities, if representing in excess of 20% of the
current total outstanding shares, is acceptable. If you approve this proposal,
3,996,390 shares will be issuable by the Company to Crescent if Crescent elects
to exercise these securities (and these shares, plus previously issued shares to
Crescent, as yet unsold by Crescent, do not represent securities in excess of
20% of the total outstanding current shares). Any remaining shares will require
your further approval in the event that Crescent elects to exercise in excess of
20% of the Company's current total shares outstanding. If the Company's shares
are delisted by Nasdaq, your approval in this circumstance would not be
required. If such issuance would result in a change of control of the Company,
the Company would require approval whether or not the Company's shares are
delisted by Nasdaq. The Preferred Shares are convertible into common stock, if
Crescent elects to convert such securities, based on the following formula:
Each share of the Series 4 Preferred Stock owned by Crescent will be
convertible into the number of shares of common stock determined by
dividing $10,000 by the lower of $.82 and 92% of the average of the lowest
3 consecutive closing bid prices of the common stock during the 22 trading
day period immediately preceding the date the conversion is requested.
Approximately 2,163,951 of the 10,600,000 shares to be further reserved
for issuance under conversion rights relate to the Company's financing
agreements with LB I Group, Inc. ("LBI"). LBI provided a total $8,000,000
private placement for the Company as follows: (i) $4,000,000 was received on
June 11, 1999; and (ii) $4,000,000 was received on February 11, 2000. There is
no other affiliation with LBI and the Company. However, Fredrick Frank, Vice
Chairman of Lehman Brothers, acts as a consultant to the Company for it's health
care applications. Lehman Brothers is affiliated with LBI. The total number of
common shares is calculated by the following formula:
The number of preferred shares yet to be converted subject to reserve
by the Company for issuance (currently 65,000) x $100 per share, divided by
$4.68.
Therefore, 1,388,889 shares of common stock in addition to 575,062
warrants exercisable at $4.68 and 200,000 warrants exercisable at $1.50 would be
reserved for issuance by the Company to LBI if LBI elected to exercise these
warrants and/or convert their Preferred Shares under the conversion rights of
LBI's Class B Series 2 and 3 Preferred Stock if you approve this proposal.
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Approximately 3,996,390 of the 10,600,000 shares to be reserved for
conversion rights relate to the Company's financing agreements with Millennium
Partners ("Millennium"). Millennium provided a $3,000,000 private placement for
the Company on August 16, 2000. There is no other affiliation with Millennium
and the Company. In addition to the 3,996,390 shares there are shares to be
reserved for 150,000 warrants exercisable at $5.26 per share. If you approve
this proposal, 3,996,390 shares of common stock would be reserved for issuance
by the Company to Millennium if Millennium elects to exercise these warrants
under the conversion rights of Millennium's Adjustable Warrant and 150,000
shares for the warrants exercisable at $5.26 per share; and these shares, plus
previously issued shares to Millennium, as yet unsold by Millennium, do not
represent securities in excess of 20% of the total current outstanding shares,
which would require shareholder approval. This Adjustable Warrant is exercisable
into common stock based on the following formula:
(Applicable Share Number) x [(Purchase Price/.87) - (Adjustment Period Price)]
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Adjustment Period Price.
The Adjustment Period Price is the average of the 10 lowest Per Share
Market Values (currently the closing bid price on Nasdaq) over the previous 40
trading days from November 1, 2001. Currently, the Applicable Share Number is
427,351 and the Purchase Price is $4.68. The Applicable Share Number is the
number of shares remaining to be converted (currently 427,351) and would vary
depending on the amount of these remaining shares elected to be exercised. The
Purchase Price of $4.68 does not vary.
When such securities are issued at a discount to market price, a
floating conversion ratio based on the discount from the common stock price
means that, the lower the price of your common stock at the time the holder
decides to convert, the more common shares the holder receives.
When such securities are issued at a discount to market price, to the
extent that the security holders convert their securities and sell the
underlying common stock, the common stock price may decrease even further due to
the additional shares in the market, allowing holders to convert their
securities into greater amounts of common stock and further depressing the
market.
When such securities are issued at a discount to market price, issuance
of these securities, subject to conversion rights of the holders, may result in
a change in control of the Company. However, if the issuance would result in a
change of control of the Company, shareholder approval in this circumstance
would be required.
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Potential Dilutive Effect of the Above Convertible Securities Using a Reasonable Range of Market Prices
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Assumed average price per share of the lowest Closing Bid Price for 3
consecutive days in the 22 days prior to exercise, of which 92% does not exceed
$0.82 for the Crescent Adjustable Warrant, and the average of the 10 lowest Per
Share Market Values (currently the closing bid price on Nasdaq) over the
previous 40 trading days for Millennium Adjustable Warrant, potential dilution
is as follows:
----------------------------------------------------------------------------------------------
at $0.10 per share at $0.50 per share at $1.00 per share
------------------------------- ------------------------------- ----------------------------
(A) (B) (A) (B) (A) (B)
-------------- -------------- -------------- -------------- -------------- -------------
LB 1 Preferred Shares 1,388,889 0 1,388,889 0 1,388,889 0
LB 1 Warrants exercisable at 575,062 0 575,062 0 575,062 0
$4.68 per share
LB 1 Warrants exercisable at 200,000 0 200,000 0 200,000 0
$1.50 per share
Crescent Adjustable Warrant 3,996,390 (1) 10,786,219(1) 2,956,522 (2) 0 1,658,537 0
Crescent Warrants exercisable 270,000 0 270,000 0 270,000 0
at $1.00 per share
Millennium Adjustable Warrant 3,996,390 18,564,778 3,996,390 173,963 1,871,501 0
Millennium Warrants 150,000 0 150,000 0 150,000 0
exercisable at $5.26 per share
-------------- -------------- -------------- -------------- -------------- -------------
Total shares* 10,576,731 29,350,997 9,536,863 173,963 6,113,989 0
============== ============== ============== ============== ============== =============
Column (A): Dilution possible with shareholder approval of Proposal 1 in this
proxy
Column (B): Additional dilution possible with shareholder approval of
Proposal 1 in this proxy and further shareholder approval for
securities in excess of 20% of total outstanding current shares
(1) subject to subtraction of 1,311,304 previously issued shares as yet
unsold by Crescent as of the Record Date
(2) subject to subtraction of 271,436 of the 1,311,304 previously issued
shares as yet unsold by Crescent as of the Record Date
-13-
Note: The Millennium financing agreement provides that they will not elect to
convert more shares than would cause their ownership of shares yet unsold
to equal 5% of the total current issued and outstanding shares of the
Company. The Crescent financing agreement provides that they will not elect
to convert more shares than would cause their ownership of shares yet
unsold to equal 10% of the total current issued and outstanding shares of
the Company.
Issuances Requiring Shareholder Approval
Your approval for such an issuance of additional shares may be required
under the following circumstances:
- The establishment of stock option or purchase plans or other
arrangements, pursuant to which the Company's common stock may be
acquired by officers or directors of the Company, except for warrants
or rights issued generally to security holders of the Company or
broadly based plans or arrangements including other employees. Your
approval in this circumstance is required pursuant to the Nasdaq
Marketplace Rules. The Company would not require your approval in this
circumstance if the Company's shares are delisted by Nasdaq.
- When the issuance will result in a change of control of the Company.
Your approval in this circumstance is required pursuant to the New
York Business Corporation Law and the Nasdaq Marketplace Rules. The
Company would require your approval in this circumstance whether or
not the Company's shares are delisted by Nasdaq.
- In connection with certain acquisitions of the stock or assets of
another company. Your approval in this circumstance is required
pursuant to the New York Business Corporation Law and the Nasdaq
Marketplace Rules. The Company would require your approval in this
circumstance whether or not the Company's shares are delisted by
Nasdaq.
- In connection with a transaction other than a public offering
involving the issuance of common stock, or securities convertible into
or exercisable for common stock, equal to 20% or more of the Company's
common stock or 20% or more of the voting power outstanding before the
issuance at a price (or in the case of conversion securities, a
conversion price) less than the greater of book or market value of the
Company's common stock. Your approval in this circumstance is required
pursuant to the Nasdaq Marketplace Rules. The Company would not
require your approval in this circumstance if the Company's shares are
delisted by Nasdaq.
-14-
Potential Dilutive Effect
The additional shares which the Board would be authorized to issue upon
approval of this Proposal, if so issued, would have a dilutive effect upon the
percentage of our equity owned by present stockholders. The issuance of the
additional shares might be disadvantageous to current stockholders in that any
additional issuances would potentially reduce per share dividends, if any.
Stockholders should consider, however, that the possible impact upon dividends
is likely to be minimal in view of the fact that we have never paid dividends on
shares of our common stock and we do not intend to pay any cash dividends in the
foreseeable future. We instead intend to retain earnings, if any, for investment
and use in business operations.
Potential Anti-takeover Effect
The increased proportion of unissued authorized shares to issued shares
could, under certain circumstances, have an anti-takeover effect. The Proposal,
if approved, would strengthen the position of the Board and might make the
removal of the Board more difficult, even if the removal would be generally
beneficial to our stockholders. The authorization to issue the additional shares
of Common Stock would provide the Board with a capacity to negate the efforts of
unfriendly tender offerors through the issuance of securities to others who are
friendly or desirable to the Board.
This proposal, however, is not being proposed in response to any effort of
which we are aware to accumulate the Company's shares of common stock or obtain
control of the Company, nor is it part of a plan by management to recommend a
series of similar amendments to the Company's Board of Directors and
stockholders. Other than the reverse stock split proposal, the Company's Board
of Directors does not currently contemplate recommending the adoption of any
other amendments to the Company's Certificate of Incorporation that could be
construed to affect the ability of third parties to take over or change the
control of the Company. The Company has no plans to implement measures having
anti-takeover effects in the foreseeable future.
Current Anti-takeover Provisions
In addition to the anti-takeover effects described above, certain
provisions of the Company's Amended Certificate of Incorporation (the
"Certificate of Incorporation") and Bylaws currently in effect may be considered
to have an anti-takeover effect and may delay, defer or prevent a tender offer
or takeover attempt that a shareholder of the Company might consider in his or
her best interest, including those attempts that might result in a premium over
the market price for the Company's common stock.
-15-
The Certificate of Incorporation and Bylaws do not permit shareholders to
call special meetings. Moreover, the Company's Certificate of Incorporation
authorizes the Board of Directors to issue, without shareholder approval, up to
10,000,000 shares of preferred stock. The issuance of preferred stock could
decrease the amount of assets and earnings available for distribution to our
other stockholders. Preferred stockholders could receive voting rights and
rights to payments on liquidation or of dividends or other rights which are
greater than the rights of the holders of our common stock. In addition, the
issuance of preferred stock may make it more difficult for a third party to
acquire, or may discourage a third party from acquiring, voting control of our
stock. This provision could also discourage an unsolicited acquisition and could
make it less likely that stockholders receive a premium for their shares as a
result of any unsolicited acquisition proposal. The Company has issued shares of
such preferred stock, whose holders have rights that could prevent or otherwise
restrict a third party from acquiring a controlling interest in the Company.
Reasons for the Increase in Authorized Common Shares
The primary purpose for the increase in authorized shares is to have a
sufficient amount of shares to facilitate the issuance of up to 400,000,000
shares of common stock pursuant to one or more proposed financings, including a
possible private placement, a rights offering, and/or other potential offerings.
In addition, the Board believes that the approval of this proposal is essential
to our growth and development.
The Company has begun discussions with potential investors and placement
agents including certain principal shareholders of the Company, including
Janssen Partners, Inc.,, but as of yet has not reached definitive terms agreed
upon by the parties. The details of principal shareholders holdings are provided
in the table under the section titled, "Security Ownership of Certain Beneficial
Owners and Management." The material proposals entail an approximately $6
million private placement whereby the Company's stock would be sold at a
discount to market price to be determined, in addition to certain placement
agent compensation and registration rights subject to negotiation. The private
placement would be followed by a rights offering by the Company to shareholders
of record prior to the private placement offering, at the same discount to
market as the private placement, under terms yet to be finalized.
The Company is requesting the authorizing of additional shares of our
common stock for the following additional reasons: securing additional financing
for our operations through the issuance of additional shares or other
equity-based securities, effecting acquisitions of other business or properties,
establishing strategic relationships with other companies, providing equity
incentives to employees, officers or directors, and additional flexibility to
declare stock splits or dividends. The flexibility inherent in having the
authority to issue shares of common stock, will, in the opinion of the Board of
Directors, be advantageous to the Company in any future negotiations involving
the issuance of such stock.
If this proposal is adopted, no additional action or authorization by the
Company's shareholders will be necessary for the issuance of such additional
shares, unless required by applicable law or regulation, or unless deemed
desirable or advisable by the Board of Directors. The increase in the authorized
shares of common stock of the Company will not, in and of itself, affect rights
of holders' shares of common stock that are presently issued and outstanding.
-16-
Under the Company's Certificate of Incorporation, as amended, the shareholders
of the Company do not have preemptive rights with respect to common stock. Thus,
if the Board of Directors elects to issue additional shares of common stock,
existing shareholders would not have any preferential rights to purchase such
additional shares of stock.
At present, all outstanding shares of common stock are fully paid and
nonassessable. Each share of the outstanding common stock is entitled to
participate equally in dividends as and when declared by the Board of Directors
and is entitled to participate equally in any distribution of net assets made to
the shareholders upon liquidation of the Company. There are no redemption,
sinking fund, conversion or preemptive rights with respect to the shares of
common stock. All shares of common stock have equal rights and preferences. The
holders of common stock are entitled to one vote for each share held of record
on all matters voted upon by shareholders and may not cumulate votes for the
election of directors. The Company has not declared or paid any cash dividends
on the common stock and does not intend to pay any dividends for the foreseeable
future.
Vote Required and Recommendation of Board
The proposal for the increase in authorized common stock shall be adopted
if approved by a majority of all outstanding shares of common stock entitled to
vote at the Meeting. If this proposal is approved by the shareholders, it will
become effective if the Company files the Certificate of Amendment with the
Secretary of State of the State of New York. IF THIS PROPOSAL IS NOT APPROVED,
THE INCREASE IN AUTHORIZED COMMON STOCK WILL NOT BE IMPLEMENTED. THE BOARD
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE APPROVAL OF THE INCREASE
IN AUTHORIZED COMMON STOCK.
ADDITIONAL DISCLOSURE ITEMS
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of August 9, 2001, the beneficial
ownership of the common stock: (i) by each shareholder known by the Company to
beneficially own more than 5% of the common stock; (ii) by each director of the
Company; (iii) by the Company's Chief Executive Officer; and (iv) by all
executive officers and directors of the Company as a group. Except as otherwise
indicated below, each named beneficial owner has sole voting and investment
power with respect to the shares of common stock listed.
-17-
================================================================================
Name and Address of common stock Percent of
Beneficial Owner Number of Shares Class
--------------------------------------------------------------------------------
Darby Simpson Macfarlane 3,611,895(1) 15.88%
10 Old Jackson Avenue, #28
Hastings-on-Hudson, NY 10706
David Kenneth Macfarlane 3,611,895(2) 15.88%
5 East 80th Street
New York, NY 10021
Brian T. Fitzpatrick 199,033(3) *
c/o Gordon Laboratories, Inc.
751 East Artesia Boulevard
Carson, CA 90746
Leslie Foglesong 265,000(4) 1.31%
116 Lafayette Avenue
Brooklyn, NY 11217
Edmund Vimond 50,833(5) *
6967 Country Lakes Circles
Sarasota, FL 34243
Edward Mahoney 50,833(6) *
140 Jones Creek Dr.
Jupiter, FL 33458
James Berquist 6,000 *
c/o Chromatics Color Sciences
International, Inc.
5 East 80th Street
New York, NY 10021
Robert Shapiro 51,000 *
c/o Chromatics Color Sciences
International. Inc.
5 East 80th Street
New York, NY 10021
Gary W. Schreiner 1,498,967(7) 7.06%
2126 Melvin Drive
Rock Falls, IL 61071
LB I Group, Inc. 2,163,951(8) 9.77%
3 World Financial Center
New York, NY 10285
-18-
TABLE (continued)
================================================================================
Name and Address of common stock Percent of
Beneficial Owner Number of Shares Class
--------------------------------------------------------------------------------
Peter Janssen 1,636,250(9) 7.79%
C/o Janssen Partners, Inc.
1345 Old Northern Blvd.
Roslyn, NY 11576
Janssen Partners, Inc. 1,636,250(10) 7.79%
1345 Old Northern Blvd.
Roslyn, NY 11576
Crescent International, Ltd. 1,581,304(11) 7.80%
c/o The Robinson-Humphrey
Company LLC
3333 Peachtree Road, N.E
Atlanta, GA 30326
GAC-LABS,LLC 1,600,000(12) 7.41%
c/o Webster & Partners, LLC
1936 Lee Road
Winter Park, FL 32789
--------------------------------------------------------------------------------
All directors and executive 4,234,594(13) 18.27%
officers as a group (8 persons)
================================================================================
* Indicates less than 1%.
(1) Includes 861,895 issued and outstanding shares of the common stock
beneficially owned by Mrs. Macfarlane, 2,000,000 warrants which are
currently exercisable, 450,000 shares issuable upon the exercise of options
granted to Mrs. Macfarlane and 300,000 shares issuable upon the exercise of
options granted to Mr. Macfarlane which options are currently exercisable.
As a result of a certain voting agreement between them, Mrs. Macfarlane is
entitled to sole voting power and sole power of disposition over all shares
of common stock held or acquired by Mr. Macfarlane.
(2) Includes 861,895 issued and outstanding shares of common stock and
2,000,000 warrants which are currently exercisable beneficially owned by
Mrs. Macfarlane, 450,000 shares issuable upon the exercise of options
granted to Mrs. Macfarlane and 300,000 shares issuable upon the exercise of
options granted to Mr. Macfarlane which options are currently exercisable.
(3) Includes 83,333 shares of common stock issuable upon the exercise of
options, which are currently exercisable.
-19-
(4) Includes 250,000 shares of common stock issuable upon the exercise of
options which are currently exercisable.
(5) Represents 50,833 shares of common stock issuable upon the exercise of
options which are currently exercisable.
(6) Represents 50,833 shares of common stock issuable upon the exercise of
options which are currently exercisable.
(7) Represents 1,298,167 shares of common stock issuable upon the conversion of
Class B Series 5 Convertible Preferred Stock and 200,000 shares of common
stock issuable upon the exercise of warrants which are currently
exercisable.
(8) Represents 1,388,889 shares of common stock issuable upon the conversion of
Class B Series 2 and Class B Series 3 Convertible Preferred Stock and
775,062 shares of common stock issuable upon the exercise of currently
exercisable warrants.
(9) Represents 636,250 shares of common stock and 1,000,000 warrants, which are
currently exercisable, all of which are owned by Peter Janssen. Mr. Janssen
is the principal shareholder of Janssen Partners, Inc.
(10) Represents 636,250 shares of common stock and 1,000,000 warrants, which are
currently exercisable, all of which are owned by Peter Janssen. Mr. Janssen
is the principal shareholder of Janssen Partners, Inc.
(11) Includes 270,000 warrants, which are currently exercisable.
(12) Represents 1,600,000 warrants, which are currently exercisable.
(13) Includes 3,184,999 options and warrants, which are currently exercisable.
Other Business
The Board of Directors of the Company does not intend to present, and does
not have any reason to believe that others intend to present, any matter or
business at the Meeting other than that set forth in the accompanying Notice of
Special Meeting of Shareholders. If, however, other matters properly come before
the Meeting, it is the intention of the persons named in the enclosed form of
proxy to vote any proxies in accordance with their judgment.
The Company will bear the cost of preparing, assembling and mailing the
enclosed form of proxy, this Proxy Statement and other materials which may be
sent to shareholders in connection with the solicitation. Solicitation may be
made by mail, telephone and personal interview. The Company may reimburse
persons holding shares in their names or in the names of nominees for their
reasonable expenses in sending proxies and proxy materials to their principals.
Darby S. Macfarlane
Chairperson of the Board of Directors
New York, New York
August 31, 2001
-20-
PROXY
CHROMATICS COLOR SCIENCES INTERNATIONAL, INC.
This Proxy Is Solicited on Behalf of the Board of Directors
The undersigned shareholder of Chromatics Color Sciences International,
Inc. (the "Company") hereby appoints Darby S. Macfarlane and Leslie Foglesong,
or either of them, attorneys and proxies, with full power of substitution, to
represent the undersigned and vote all shares of the common stock of the Company
which the undersigned is entitled to vote, with all powers the undersigned would
possess if personally present, at the Special Meeting of Shareholders of the
Company to be held at the Legends Hotel & Resort, located at Route 517 North,
near the intersection of Route 94 North, in McAfee, New Jersey 07428, at 10:00
A.M., on Thursday, September 20, 2001, with respect to the proposals hereinafter
set forth and upon such other matters as may properly come before the Meeting
and any adjournments thereof.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1 THROUGH
3, AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO ALL OTHER MATTERS WHICH
MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS THEREOF. THE
UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE ACCOMPANYING PROXY STATEMENT.
PROPOSAL 1. Reverse Stock Split. Amendment of the Company's
Certificate of Incorporation to effect a one share for up to forty shares
reverse stock split of the Company's issued and outstanding shares of
common stock, as determined by the Company's Board of Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL 2. Increase Shares of Authorized common stock. Amendment of
the Company's Certificate of Incorporation to increase the number of
authorized common stock to 450,000,000 shares of common stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL 3. All Other Business. To vote, in the discretion of the
Proxies, on such other matters as might properly come before the meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PLEASE SIGN EXACTLY AS NAME APPEARS ON THIS PROXY.
IF SHARES ARE HELD BY JOINT TENANTS, BOTH HOLDERS
SHOULD SIGN.
Dated: , 2001
-------------------------------------------
Signature:
-------------------------------------------
-21-
Print Name:
-------------------------------------------
Signature if held jointly:
-------------------------------------------
NOTE: When shares are held by joint tenants,
both should sign. When signing as attorney,
executor, administrator, trustee, custodian,
guardian or corporate officer, please give
your full title as such. If a corporation,
please sign full corporate name by
authorized officer. If a partnership, please
sign in partnership name by authorized
person.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY CARD PROMPTLY
-22-
ANNEX "A"
Certificate of Incorporation
CERTIFICATE OF INCORPORATION
OF
CHROMATICS COLOR SCIENCES INTERNATIONAL, INC.
---------------------------------------------
Under Section 805 of the Business Corporation Law
It is hereby certified that:
FIRST: The name of the corporation (the "Corporation") is CHROMATICS COLOR
SCIENCES INTERNATIONAL, INC.
SECOND: The Certificate of Incorporation of the Corporation was filed by
the Department of State on March 30, 1984. The Corporation was formed under the
name Chromatics International, Inc.
THIRD: The Certificate of Incorporation of the Corporation, as heretofore
amended, is hereby further amended to effect a one share for ____ shares reverse
stock split of the Company's issued and outstanding shares of common stock, par
value $0.001 per share.
FOURTH: To accomplish the foregoing, Paragraph A of Article FOURTH of the
Certificate of Incorporation of the Corporation shall be amended to read in full
as follows:
"A. Authorization. The Corporation shall have the authority to issue
(i) 450,000,000 shares of common stock (the "common stock"), par value
$0.001 per share and (ii) 11,400,000 shares of preferred stock (the
"Preferred Stock"), of which 1,400,000 shares shall be designated as Class
A Preferred Stock, having a par value of $0.01 per share, and 10,000,000
shares shall be designated as Class B Preferred Stock, having no par value.
Each ____ shares of common stock issued and outstanding immediately
prior to the effective date of the filing of this Certificate of Amendment
of the Corporation's Certificate of Incorporation is hereby reclassified
and changed into one fully paid and nonassessable share of common stock,
$0.001 par value, of the Corporation, and each holder of record of a
certificate for ____ or more shares of common stock as of the close of
business on the effective date of the filing of this amendment to the
Corporation's Certificate of Incorporation shall be entitled to receive, as
soon as practicable, upon surrender of such certificate, a certificate or
certificates representing one share of common stock for each ____ shares of
common stock represented by the certificate of such holder, and any
fractional shares resulting will be rounded up to the next whole share.
Until such time as the certificates representing the common stock to be
reverse split pursuant hereto shall have been surrendered, the certificates
representing the common stock shall represent the shares of common stock
issuable upon the reverse stock split of such common stock.
The relative rights, preferences and limitations of the shares of
-23-
common stock, Class A Preferred Stock and Class B Preferred Stock shall be
as hereinafter provided in Article FOURTH."
FIFTH: The foregoing Amendment of the Certificate of Incorporation of the
Corporation was authorized by unanimous consent of the Board of Directors of the
Corporation, followed by the affirmative vote of a majority of the outstanding
shares of common stock of the Corporation entitled to vote thereon.
Signed on:
-------------- ---------------------------
Date Darby S. Macfarlane
Chairperson of the Board
-24-