UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [x]
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 Under Rule 14a-12
EQUIDYNE CORPORATION
(Name of Registrant as Specified in its Charter)
MFC BANCORP LTD.
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check appropriate box):
[x] No fee required.
[ ] 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 (Set forth the amount on
which the filing fee is calculated and state how it was
determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
PRELIMINARY COPY, SUBJECT TO COMPLETION; MATERIALS DATED AUGUST [12], 2003
August [12], 2003
PROXY STATEMENT
OF
MFC BANCORP LTD.
RELATING TO THE
2003 ANNUAL MEETING OF STOCKHOLDERS OF
EQUIDYNE CORPORATION
PLEASE SIGN, DATE AND RETURN THE ENCLOSED GREEN PROXY CARD
TO THE STOCKHOLDERS OF EQUIDYNE CORPORATION:
This proxy statement (the "Proxy Statement") and the enclosed green proxy card
are being furnished by MFC Bancorp Ltd. ("MFC", "we" or "us") for the
solicitation of proxies from you, the holders of the shares of common stock of
Equidyne Corporation ("Equidyne" or the "Company"), to be voted at Equidyne's
2003 annual meeting of stockholders to be held at 10:00 a.m. local time on
---------------------------
September 9, 2003 at the offices of Richards, Layton & Finger, P.A., One Rodney
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Square, 3rd Floor, Wilmington, Delaware 19899, including any adjournments,
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postponements, continuance or rescheduling thereof and any special meeting
called in lieu thereof (the "Annual Meeting").
We are soliciting your proxy to vote for the following proposals (the
"Proposals"):
ELECTION OF DIRECTORS: To elect Michael J. Smith, Roy Zanatta,
Mark Steinley and Greg Elderkin (the "MFC Nominees") to serve as
---
the directors of the Company until their respective successors
are duly elected and qualified or their earlier resignation or
removal; and
REVOCATION OF BYLAWS: To adopt the following stockholders'
-
resolution (which we will refer to as the "Bylaw Revocation
Proposal"):
RESOLVED, that each and every provision of the Amended and
Restated Bylaws (the "Bylaws") of Equidyne Corporation
adopted on or after May 1, 2003 and prior to the adoption
of this resolution is hereby repealed.
RATIFICATION OF ACCOUNTANTS: To vote for the ratification of KBA
----------------------------------------------------------------
Group LLP ("KBA") as Equidyne's independent public accountants
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for the fiscal year ending July 31, 2003.
-----------------------------------------
THIS SOLICITATION IS BEING MADE BY MFC AND NOT ON BEHALF
---
OF EQUIDYNE OR THE CURRENT BOARD OF DIRECTORS
MFC is not aware of any other proposals to be brought before the Annual Meeting.
However, should other proposals be properly brought before the Annual Meeting,
--------
the proxies named on the enclosed green proxy card will vote on such matters in
their discretion.
We are soliciting proxies for use at the Annual Meeting. Equidyne's current
board of directors (the "Current Board") announced the date of the Annual
Meeting to be September 9, 2003 and the record date for determining those
stockholders entitled to receive notice of and vote at the Annual Meeting to be
July 14, 2003 (the "Record Date"). Stockholders of record at the close of
business on the Record Date will be entitled to one vote at the Annual Meeting
for each share of Equidyne common stock held on the Record Date. We are asking
you to mark, sign and date the enclosed green proxy card and return it in the
enclosed, postage-paid envelope to our proxy solicitor, Georgeson Shareholder
Communications Inc., as set forth below. We beneficially own approximately 8.7%
of the Company's common stock and intend to vote our shares for the Proposals.
ANY PERSON WHO HELD SHARES OF EQUIDYNE COMMON STOCK ON THE RECORD DATE MAY GIVE
A PROXY. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, WE URGE YOU TO
SIGN AND DATE THE ENCLOSED GREEN PROXY CARD AND RETURN IT IN THE POSTAGE-PAID
ENVELOPE PROVIDED.
YOUR LATEST-DATED PROXY IS THE ONLY ONE THAT COUNTS, SO YOU MAY RETURN THE GREEN
PROXY CARD EVEN IF YOU HAVE ALREADY DELIVERED A PROXY. WE URGE YOU NOT TO
RETURN ANY WHITE PROXY CARD SENT TO YOU BY EQUIDYNE OR THE CURRENT BOARD.
----- ----
This Proxy Statement and the enclosed green proxy card are first being sent or
given to stockholders of Equidyne on or about August [*], 2003.
YOUR VOTE IS IMPORTANT!
TO VOTE FOR THE PROPOSALS, PLEASE DO THE FOLLOWING:
---
* If you hold your shares of Equidyne common stock in your own name, please
SIGN, DATE and MAIL or hand-deliver the enclosed green proxy card today in the
enclosed postage-paid envelope to our proxy solicitor, Georgeson Shareholder
Communications Inc., at the address below.
* If you hold your shares of Equidyne common stock in the name of one or
more brokerage firms, banks or nominees, only they can exercise voting rights
with respect to your shares, and then only upon receipt of your specific
instructions. Accordingly, it is critical that you promptly contact the person
responsible for your account and give instructions to SIGN, DATE and MAIL (or
fax both sides of) the GREEN proxy card representing your shares to our proxy
solicitor. We urge you to confirm in writing your instructions to the person
responsible for your account and to provide a copy of those instructions to us
in care of Georgeson Shareholder Communications Inc., who is assisting in this
solicitation, at the address and telephone numbers below and on the back cover
of this proxy statement, so that we will be aware of all instructions and can
attempt to ensure that such instructions are followed.
IF YOU HAVE ANY QUESTIONS OR REQUIRE ANY ASSISTANCE IN EXECUTING OR DELIVERING
YOUR PROXY OR VOTING INSTRUCTIONS, PLEASE WRITE OR CALL:
Georgeson Shareholder Communications Inc.
17 State Street, 10th Floor
New York, New York 10004
Stockholders Call Toll Free: (877) 668-1646
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Banks and Brokerage Firms, Please Call Collect: (212) 440-9800
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TABLE OF CONTENTS
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ITEM PAGE
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Questions and Answers about this Proxy Statement 1
Information Regarding Forward-Looking Statements 7
Reasons for this Proxy Solicitation 7
Poor Recent Operating Results 8
Excessive Management Compensation 9
Lack of Stock Ownership By Management 9
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Management Entrenchment 10
We Believe New Leadership Can Make Equidyne Succeed 11
Additional Information Regarding the Proposals 11
Proposal 1: Election of the MFC Nominees 11
Proposal 2: Repeal of Bylaws Adopted on or
after May 1, 2003 13
--
Proposal 3: Ratification of KBA as Equidyne's
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Independent Accountants for Fiscal 2003 13
---------------------------------------- --
Information About the MFC Nominees 15
Voting Securities 16
Litigation 17
Solicitation 17
Stockholder Proposals 19
Appraisal Rights 19
Reimbursement of Costs 19
Special Instructions 19
Other Matters to be Voted Upon 20
Further Information 21
Annex I - Information Concerning The Company I-1
Annex II - Security Ownership of Certain Beneficial
Owners and the Company's Officers and Directors II-1
Annex III - Information Concerning MFC Bancorp Ltd.
and the MFC Nominees III-1
Appendix - Green Proxy Card
QUESTIONS AND ANSWERS ABOUT THIS PROXY STATEMENT
Q: WHO IS MAKING THE PROXY SOLICITATION?
A: This proxy solicitation is being made by MFC. MFC beneficially owns
approximately 8.7% of the Company's common stock. For more information about
MFC, please refer to Annex III hereto. For more information on Equidyne, please
refer to Annex I hereto.
Q: WHAT ARE WE PROPOSING?
A: You are being asked for a proxy to be voted in favor of:
* Electing the MFC Nominees to serve as the directors of Equidyne. The MFC
Nominees together have over 40 years of management experience advising and
restructuring troubled enterprises;
* Approving the following resolution:
RESOLVED, that each and every provision of the Amended and
Restated Bylaws of Equidyne adopted on or after May 1, 2003
and prior to the adoption of this resolution, is hereby repealed.
* Ratifying the appointment of KBA as Equidyne's independent
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public accountants for the fiscal year ending July 31, 2003.
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Q: WHY ARE WE SOLICITING YOUR PROXY?
A: We are soliciting your proxy to replace Equidyne's Current Board, whom we
believe are at least partially responsible for the Company's poor performance.
Our beliefs are based on the following, among other things:
* For the nine months ended April 30, 2003, the Company's net sales were only
$65,000, which we believe indicates a minimal level of business activity.
Nonetheless, the Company continued to incur losses throughout the 2003 fiscal
year, including an operating loss of $687,000 for the three months ended April
30, 2003 and an operating loss of $2,584,000 for the nine months ended April 30,
2003.(1)
- ----
* The Company's stock price has decreased by approximately 50% since
December 31, 2001, the date Marcus R. Rowan became the Chief Executive
---------
Officer and Mark Myers became President.(2) Since Mr. Rowan
----------------
took over as the Company's CEO, the Company's market
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capitalization decreased from more than $14 million to
--
approximately $7.3 million as at July 31, 2003.(3)
-------------------------------------
* Management and the Current Board together own only 148,300 Equidyne shares
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of record, representing less than 1% of Equidyne's issued and outstanding
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stock.(4)
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* We believe that management compensation is excessive for a company with
--------------------------------------------
the size and circumstances of Equidyne. The Company's Chief Executive Officer,
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President and Chief Financial Officer received more than $800,000 in aggregate
----------------------------------------
salary and bonuses for the fiscal year ended July 31, 2003.(5) Mr. Rowan's
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total compensation for 2003 was $355,451.(6) His base salary was increased by
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more than $115,000 in January 2003 to over $260,000.(7) Mr. Rowan was also paid
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a bonus of over $102,000 in fiscal 2003,(8) as well as a bonus of $120,000(9)
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for services to the Current Board in the first five months of fiscal 2002,(10)
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and a signing bonus of $80,000 when he was appointed Chief Executive Officer in
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December 2001.(11) Mr. Myers' base salary was nearly doubled to $198,000 in
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2003, and with a bonus of $77,000,(12) his total compensation for 2003 was
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$268,782.(13)
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* The Company, in our belief, has performed very poorly, but despite this in
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January 2003 the Current Board issued to the Company's Chief Executive Officer
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and President an aggregate of 630,000 stock options at an exercise price of only
- ------------------------------------------------------- ----
$0.34 per share.(14)
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- ---------------
(1) Source: Quarterly Report on Form 10-QSB for the period ended April 30,
2003 filed by Equidyne June 13, 2003.
(2) Source: American Stock Exchange website.
(3) Source: Based on 14,984,803 shares outstanding as of December 31,
------------------------------- ------------
2001, as reported in the Company's Quarterly Reports on Form 10-QSB
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filed on December 17, 2001 and March 18, 2002 and a share price of
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$0.95 per share on December 31, 2001 and 14,984,803 shares
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outstanding as of July 31, 2003 as reported in the Preliminary Proxy
-----------------
Statement on Schedule 14A filed by Equidyne on August 1, 2003 and
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a share price of $0.49 per share on July 31, 2003.
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(4) Source: Preliminary Proxy Statement on Schedule 14A filed by
- -- --------------------------------------------------------------
Equidyne on August 1, 2003.
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(5) Source: Preliminary Proxy Statement on Schedule 14A filed by
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Equidyne on August 1, 2003.
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(6) Source: Preliminary Proxy Statement on Schedule 14A filed by
- -- --------------------------------------------------------------
Equidyne on August 1, 2003.
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(7) Source: Preliminary Proxy Statement on Schedule 14A filed by Equidyne
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on August 1, 2003.
---------------------
(8) Source: Preliminary Proxy Statement on Schedule 14A filed by Equidyne
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on August 1, 2003.
---------------------
(9) Source: Quarterly Report on Form 10-QSB for the period ended January
------
31, 2002 filed by Equidyne on March 14, 2003.
------------------------------------------------
(10) Source: Annual Report on Form 10-KSB for the fiscal year ended July
31, 2002 filed by Equidyne on October 28, 2002.
---------
(11) Source: Annual Report on Form 10-KSB for the fiscal year ended July
31, 2002 filed by Equidyne on October 28, 2002.
(12) Source: Preliminary Proxy Statement on Schedule 14A filed by Equidyne
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on August 1, 2003.
---------------------
(13) Source: Preliminary Proxy Statement on Schedule 14A filed by Equidyne
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on August 1, 2003.
---------------------
(14) Source: Form 4 filed by Marcus Rowan and Form 4 filed by Mark Myers
on January 30, 2003.
2
This price equals approximately one-third of the Company's book value per share
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as set out in the Quarterly Report on Form 10-QSB for the period ended January
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31, 2003, and is among the lowest market values of the shares for the entire
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month of January, 2003. This issuance is in addition to an issuance of
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1,050,000 options to the same two persons in December 2001 when they were
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appointed to their positions.(15)
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* Since the management changes in December 2001, management has failed to
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generate new revenue streams from the Company's existing technologies or to
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successfully develop new business opportunities for the Company. Though the
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Company has announced that it is seeking diversification strategies not
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necessarily related to the medical field,(16) it has not announced any
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transactions or material developments in this regard. In the meantime, overhead
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expenses and losses, which we believe are excessive given the Company's total
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revenues, have continued to deplete its capital base. For example, total
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operating expenses were 49 times greater than sales for the three months ended
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April 30, 2003 ($682,000 in operating expenses against only $14,000 in net
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sales)(17) and 40 times greater than sales for the nine months ended April 30,
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2003 ($2,579,000 in operating expenses against only $65,000 in net sales).(18)
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Further, management has not explained what investment expertise it purports to
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have. If the Company pursues an investment strategy to create stockholder
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value, we believe it should be overseen by directors with substantial investment
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expertise such as the MFC Nominees.
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* On January 21, 2003 the Current Board amended the Amended and Restated
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Bylaws of Equidyne (the "Bylaws"), revoking stockholders' right to call a
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special meeting and reducing the maximum permitted number of directors from ten
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to seven, among other changes. We believe these changes disadvantage
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stockholders by making it more difficult to unseat entrenched leadership.(19)
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Q: WHO ARE THE MFC NOMINEES?
A: The MFC Nominees are Michael J. Smith, Roy Zanatta, Mark Steinley and
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Greg Elderkin. None of the MFC Nominees presently serves the Company in any
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capacity. The principal occupation and business experience of each MFC Nominee
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is set forth in this Proxy Statement under the section entitled "Information
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About the MFC Nominees" on page 15, which we urge you to read. As shown therein,
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the MFC Nominees are qualified individuals who, combined, possess over 40 years
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of management experience advising and restructuring troubled enterprises.
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- ---------------
(15) Source: Annual Report on Form 10-KSB for the fiscal year ended July
31, 2002 filed by Equidyne on October 28, 2002.
(16) Source: Annual Report on Form 10-KSB for the fiscal year ended July
-----------------------------------------------------------------------
31, 2002 filed by Equidyne on October 28, 2003.
-------------------------------------------------------
(17) Source: Quarterly Report on Form 10-QSB for the period ended April
30, 2003 filed by Equidyne on June 13, 2003.
(18) Source: Quarterly Report on Form 10-QSB for the period ended April
-----------------------------------------------------------------------
30, 2003 filed by Equidyne on June 13, 2003.
----------------------------------------------------
(19) MFC had no ownership interest in Equidyne on January 21, 2003 and
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acquired its beneficial ownership interest of the shares of
------------------------------------------------------------------
Equidyne with knowledge of the By1aw amendments. See the discussion
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of the Bylaw Revocation Proposal at page 13 for additional
----------------------------------------------------------
information.
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3
Q: IF THE MFC NOMINEES ARE ELECTED, WHO WILL BE THE OFFICERS OF THE COMPANY
AND WHAT WILL THEIR COMPENSATION BE?
A: If the MFC Nominees are elected, we expect that they will terminate the
employment of Marcus R. Rowan as Equidyne's Chief Executive Officer and Mark C.
Myers as its President. According to Equidyne's SEC filings, Mr. Rowan's annual
- -----
base salary is $260,000 and Mr. Myers' annual base salary is $198,000.(20) For
-----------------------------------------------------------
the fiscal year ended July 31, 2003 Equidyne reported that Mr. Rowan received
---- ---------
$355,451 in total cash compensation for services to the Company(21) and options
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to purchase 450,000 shares at an exercise price of only $0.34 per share.(22) Mr.
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Myers received approximately $268,782 in total cash compensation(23) and options
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to purchase 180,000 shares at an exercise price of only $0.34 per share.(24)
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We expect that the MFC Nominees would appoint Michael Smith as Chairman and
Chief Executive Officer and Roy Zanatta as Secretary. Neither Mr. Smith nor Mr.
Zanatta would draw a salary or accrue any compensation until at least such time
as the Company consummates a transaction or becomes active in a new business
venture or activity.
Q: HOW WOULD THE MFC NOMINEES AND NEW MANAGEMENT IMPROVE THE COMPANY'S
PERFORMANCE?
A: The MFC Nominees have extensive business experience, particularly in the
restructuring of troubled companies. For a discussion of the background of the
MFC Nominees, please refer to "Information About the MFC Nominees" on page 15.
-------
If elected, the MFC Nominees will attempt to enhance stockholder value by:
-----------
* preserving the Company's cash by minimizing overhead expenses through the
elimination of excessive management salaries and the minimization of other
overhead expenses;
* discontinuing investments and expenses related to the needle free
industry, other than those which the MFC Nominees believe will realistically
produce an attractive return through the realization of value from the Company's
---
existing technologies; and
---
* seeking new business opportunities, investments and acquisitions so as to
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utilize the Company's capital and public listing to earn a return on the
Company's capital.
If elected, the MFC Nominees will owe a fiduciary duty to the Company and its
stockholders, and therefore cannot guarantee that these fiduciary duties will
- ------------
not prevent the implementation of plans that are currently proposed.
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(20) Source: Preliminary Proxy Statement on Schedule 14A filed by Equidyne
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on August 1, 2003.
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(21) Source: Preliminary Proxy Statement on Schedule 14A filed by Equidyne
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on August 1, 2003.
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(22) Source: Form 4 filed by Marcus Rowan on January 30, 2003.
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(23) Source: Preliminary Proxy Statement on Schedule 14A filed by
----------------------------------------------------------------
Equidyne on August 1, 2003.
------------------------------
(24) Source: Form 4 filed by Mark Myers on January 30, 2003.
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4
Q: WHO CAN VOTE AT THE ANNUAL MEETING?
A: The Record Date is July 14, 2003. If you owned shares of the Company on
July 14, 2003 you have the right to vote at the Annual Meeting, even if you
disposed of some or all of your shares after that date.
Q: HOW MANY SHARES MUST BE VOTED IN FAVOR OF THE PROPOSALS TO ADOPT THEM?
A: When a quorum is present, all elections or questions other than the
election of directors are decided by a majority of votes cast of shares present
in person or represented by proxy. Thus the Bylaw Revocation Proposal and the
--------
ratification of KBA require majority approval at the Annual Meeting. Candidates
- -------------------
for director receiving the highest number of votes will be elected, even if such
candidates do not receive a majority of votes cast. The Bylaws provide that when
a quorum is present at a meeting for the election of directors, a plurality of
votes cast of shares present in person or represented by proxy at the meeting
and entitled to vote for the election of directors shall be sufficient to elect
directors.
A majority in voting power of the issued and outstanding shares of stock
entitled to vote, either in person or represented by proxy, constitutes a
quorum. The Company reported 14,984,803 shares of common stock outstanding as of
the Record Date. Therefore, at least 7,492,402 shares must be present in person
-----------
or represented by proxy at the Annual Meeting to constitute a quorum. We
beneficially own approximately 8.7% of the Company's issued and outstanding
shares and will vote for the MFC Nominees,the Bylaw Revocation Proposal, and the
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ratification of KBA as the Company's independent public accountants.
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Q: HOW DO I VOTE?
A: If you hold your shares of Equidyne common stock in your own name, please
SIGN, DATE and MAIL or hand-deliver the enclosed GREEN proxy card today in the
enclosed postage-paid envelope to our proxy solicitor, Georgeson Shareholder
Communications Inc. at 17 State Street, 10th Floor, New York, New York, 10004.
If you hold your shares of Equidyne common stock in the name of one or more
brokerage firms, banks or nominees, only they can exercise voting rights with
respect to your shares, and then only upon receipt of your specific
instructions. Accordingly, it is critical that you promptly contact the person
responsible for your account and give instructions to SIGN, DATE and MAIL the
GREEN proxy card representing your shares to Georgeson Shareholder
Communications Inc. We urge you to confirm in writing your instructions to the
person responsible for your account and to provide a copy of those instructions
to us in care of Georgeson Shareholder Communications Inc., who is assisting in
this solicitation, at the address and telephone numbers set forth below and on
the back cover of this proxy statement, so that we will be aware of all
instructions and can attempt to ensure that such instructions are followed.
5
Q: CAN I REVOKE MY PROXY?
A: You may revoke an executed proxy card at any time before the Annual
Meeting by:
* marking, dating, signing and delivering a written revocation to our proxy
solicitor, Georgeson Shareholder Communications Inc., at 17 State Street, 10th
Floor, New York, New York, 10004, with a copy to MFC Bancorp Ltd. at Suite 1620
- - 400 Burrard Street, Vancouver, British Columbia, V6C 3A6, Attention: Roy
Zanatta/Rene Randall, facsimile (604) 683-3205. A revocation may be in any
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written form signed by the record holder as long as it clearly states that the
proxy previously given is no longer effective;
* delivering a subsequent and properly completed and dated proxy in
opposition to an earlier proxy; or
* attending the Annual Meeting and voting your shares in person.
Although a revocation is also effective if delivered to the Company, we request
that either the original or photostatic copies of all revocations of proxies be
promptly mailed or delivered to our proxy solicitor at the address or facsimile
number on page 18 of this Proxy Statement or proxy solicitation so that we will
be aware of all revocations. Revocations sent to the Company may be delivered to
its business office which, according to its SEC filings, is located at 11300
Sorrento Valley Road, Suite 255, San Diego, CA 92121, or to any other address
provided by the Company.
Q: WHOM CAN I CALL WITH QUESTIONS ABOUT THE PROXY SOLICITATION OR THE
----
PROPOSALS?
A: Please call Georgeson Shareholder Communications Inc. toll free at (877)
----
668-1646.
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6
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This Proxy Statement may contain forward-looking statements. Forward-looking
statements give our current expectations or forecasts of future events. You can
identify these statements by the fact that they do not relate strictly to
historical or current information. They use words such as "anticipate,"
"estimate," "expect," "project," "intend," "plan," "believe," and other words
- - - - - -
and terms of similar meaning in connection with any discussion of future
operating or financial performance. In particular, these include statements
relating to:
* future actions;
* prospective services;
* future performance or results of anticipated sales efforts;
* potential growth and performance of Equidyne; and
* projected operating results.
Any and all forward-looking statements in this Proxy Statement can be affected
by inaccurate assumptions we might make or by known or unknown risks and
uncertainties. Consequently, no forward-looking statement can be guaranteed.
Because these statements are subject to risks and uncertainties, actual results
may differ materially from those expressed or implied by the forward-looking
statements. We caution you not to place undue reliance on the statements, which
speak only as of the date of this Proxy Statement. The cautionary statements
contained or referred to in this section should be considered in connection with
any subsequent written or oral forward-looking statements that we or persons
acting on our behalf may issue.
REASONS FOR THIS PROXY SOLICITATION
On May 2, 2003, we advised Equidyne of our intention to nominate directors and
otherwise solicit proxies for the upcoming Annual Meeting. On May 9, 2003,
Equidyne advised that it will mail our materials in connection with such
solicitation. On May 24, 2003, the Current Board and the Company were again
advised of our intention to nominate a new slate of persons for election as
directors. In that letter we also demanded that the Current Board: (i) agree
not to undertake any steps outside of the ordinary course until the conclusion
of the Annual Meeting; (ii) announce a date for the Annual Meeting; (iii)
co-operate in the selection of an independent chairman and scrutineer for the
Annual Meeting; and (iv) provide us a list of stockholders and non-objecting
beneficial holders. On May 26, 2003, we formally demanded the right to inspect
and make copies of the books and records of Equidyne, including its
stockholders' list and other materials. Having received no response to our
various demands and requests, further letters were sent on June 12, 2003 and
July 11, 2003 reiterating our request for the stockholders' list and other
materials.
On June 24, 2003, we made an application to the Delaware Court of Chancery (the
"220/211 Application") to seek an order requiring Equidyne to: (i) schedule an
annual meeting pursuant to Section 211 of the Delaware General Corporation Law
--------------------------------
("DGCL"); and (ii) produce information regarding the Company's stockholders
- -------
pursuant to Section 220 of the DGCL. On June 26, 2003, the Company announced
that the Annual Meeting will be held September 9, 2003, with a Record Date of
----
July 14, 2003. On July 22, 2003 Equidyne agreed to provide MFC with the
stockholder information
7
and MFC withdrew its Section 220 claim. The Section 211 matter was heard on July
30, 2003 by Vice Chancellor Leo E. Strine, Jr., who has not issued a
----------------------
ruling as of the date hereof.
---------------------
We are soliciting your proxy to vote for the Proposals because we believe, based
in part on the following, that the Current Board and senior management are at
least partially responsible for the Company's recent poor performance and should
be replaced.
POOR RECENT OPERATING RESULTS
As noted above, we believe the Company's recent financial performance has been
poor, as evidenced by the following:
* For the nine months ended April 30, 2003 the Company's net sales were only
$65,000, which we believe indicates a minimal level of business activity.
-
Nonetheless, the Company continued to incur losses throughout the 2003 fiscal
year, including an operating loss of $687,000 for the three months ended April
--------------------------------------------------------------
30, 2003 and an operating loss of $2,584,000 for the nine months ended April 30,
- --------------------------------------------------------------------------------
2003.(25)
- ---------
* The Company's stock price has decreased by approximately 50% since
---------------------------------------------------------------------------
December 31, 2001, the date Marcus R. Rowan became the CEO
-- ---
and Mark Myers became President.(26) Since Mr. Rowan took over as the
------------------------------------------------
Company's CEO, the Company's market capitalization decreased from more than
- --------------
$14 million to approximately $7.3 million as at July 31, 2003.(27)
---- ------------------------
* While many factors, some of which are external to the Company, can impact
share price, we believe that management's decisions are at least partly
responsible for the Company's poor stock performance. For example, Equidyne's
management spent over $5 million in fiscal 2001 and 2002 building automated,
high-volume production systems to manufacture products.(28) Equidyne almost
-------------
immediately determined that it had no current use for the production systems and
took an asset impairment charge of $5.2 million to write down the entire
carrying value of the equipment in the second quarter of fiscal 2002.(29)
---------
* Since the management changes in December 2001, management has failed to
- --------------------------------------------------------------------------------
generate new revenue streams from the Company's existing technologies or to
- --------------------------------------------------------------------------------
successfully develop new business opportunities for the Company.
- ------------
Though the Company has announced that it is seeking
diversification strategies not necessarily related
to the medical field,(30) it has not announced any transactions or material
---------
developments in this regard. In the meantime, overhead expenses and losses,
which we believe are excessive given the Company's total revenues, have
continued to deplete its capital base. For example, total operating expenses
were 49 times greater than sales for the three months ended April 30, 2003
($682,000 in operating expenses against only $14,000 in net sales)(31) and 40
----------
times greater than sales for the nine months ended April 30, 2003 ($2,579,000 in
operating expenses against only $65,000 in net sales).(32) Further, management
---- ----------
has not explained what investment expertise it purports to have. If the Company
pursues an investment strategy to create stockholder value, we believe it should
be overseen by directors with substantial investment expertise such as the MFC
Nominees.
- ---------------
(25) Source: Quarterly Report on Form 10-QSB for the period ended April
- --- ---------------------------------------------------------
30, 2003 filed by Equidyne on June 13, 2003.
-----------------------------------------
(26) Source: American Stock Exchange website.
- ---
(27) Source: Based on 14,984,803 shares outstanding as of December 31,
- --- ---------- ------------
2001, as reported in the Company's Quarterly Reports on Form 10-QSB
----- -------
filed on December 17, 2001 and March 18, 2002 and a share price of
------------------------ --------
$0.95 per share on December 31, 2001, and 14,984,803 shares
----- --------------------
outstanding as of July 31, 2003 as reported in the Preliminary Proxy
---- -----------------
Statement on Schedule 14A filed by Equidyne on August 1, 2003 and
---------------------------------------------------------------
a share price of $0.49 per share on July 31, 2003.
----------
(28) Source: Annual Report on Form 10-KSB for the fiscal year ended July
- ----
31, 2001 filed by Equidyne on November 19, 2001.
(29) Source: Annual Report on Form 10-KSB for the fiscal year ended July
31, 2002 filed by Equidyne on October 28, 2002.
(30) Source: Annual Report on Form 10-KSB for the fiscal year ended July
- --- ----------------------------------------------------------------------
31, 2002 filed by Equidyne on October 28, 2002.
-------------------------------------------------------
(31) Source: Quarterly Report on Form 10-QSB for the period ended April
- ---- -----------------------------------------------------------------------
30, 2003 filed by Equidyne on June 13, 2003.
----------------------------------------------------
(32) Source: Quarterly Report on Form 10-QSB for the period ended April
- --- -----------------------------------------------------------------------
30, 2003 filed by Equidyne on June 13, 2003.
----------------------------------------------------
8
EXCESSIVE MANAGEMENT COMPENSATION
* We believe that management compensation is excessive for a company with
-----------
the size and circumstances of Equidyne. The Company's Chief Executive Officer,
President and Chief Financial Officer received more than $800,000 in aggregate
----------------------------------------
salary and bonuses for the fiscal year ended July 31, 2003. Mr. Rowan's total
- --------------------------------------------------------------------------------
compensation for 2003 was $355,451 and his base salary was increased by more
- --------------------------------------------------------------------------------
than $115,000 in January 2003 to over $260,000.(33) In addition, Mr. Rowan was
- --------------------------------------------------------------------------------
paid a bonus of over $102,000 in fiscal 2003,(34) as well as a bonus of
- --------------------------------------------------------------------------------
$120,000(35) for his services to the Current Board in the first five months of
- ----------------------
fiscal 2002,(36) and a signing bonus of $80,000 when he was appointed Chief
--------------
Executive Officer in December 2001.(37) Mr. Myers' base salary was nearly
----------------------------------------------
doubled to $198,000 in 2003. With a bonus of $77,000,(38) his total compensation
- --------------------------------------------------------------------------------
for 2003 was $268,782.(39)
- -----------------------------
* The Company, in our belief, has performed very poorly, but despite this in
-
January 2003 the Current Board issued to the Company's Chief Executive Officer
and President an aggregate of 630,000 stock options at an exercise price of only
$0.34 per share.(40) This price equals approximately one-third of the Company's
--------------- ------
book value per share as set out in the Quarterly Report on Form 10-QSB for the
period ended January 31, 2003 and is among the lowest market values of the
shares in the entire month of January, 2003. This issuance is in addition to an
issuance of 1,050,000 options to the same two persons in December 2001 when they
were appointed to their positions.(41)
--------------
LACK OF STOCK OWNERSHIP BY MANAGEMENT
- -------------------------------------
* Management and the Current Board together own 148,300 shares of record,
- --------------------------------------------------------------------------------
representing less than 1% of Equidyne's issued and outstanding stock. MFC's
- --------------------------------------------------------------------------------
interest in Equidyne consists of beneficial ownership of 1,304,233 shares,
- --------------------------------------------------------------------------------
consisting of an economic interest in 100 shares of which MFC is the registered
- --------------------------------------------------------------------------------
holder and 1,304,133 shares owned by Concord Effekten AG ("Concord") over which
- --------------------------------------------------------------------------------
MFC exercises voting rights. MFC is also funding this solicitation and is
- --------------------------------------------------------------------------------
assuming the risks and financial responsibility of any potential litigation
- --------------------------------------------------------------------------------
which may arise in connection with such solicitation. MFC also has an option to
- --------------------------------------------------------------------------------
acquire 485,844 Shares of Equidyne from Concord for an exercise price of $0.45
- --------------------------------------------------------------------------------
per share.
- -----------
- ---------------
(33) Source: Preliminary Proxy Statement on Schedule 14A filed by Equidyne
- ---- -----------------------------------------------------
on August 1, 2003.
---------------------
(34) Source: Preliminary Proxy Statement on Schedule 14A filed by Equidyne
- --- ------------------------------------------------------------------------
on August 1, 2003.
---------------------
(35) Source: Quarterly Report on Form 10-QSB for the period ended January
- ----
31, 2003 filed by Equidyne on March 14, 2003.
(36) Source: Annual Report on Form 10-KSB for the fiscal year ended July
- ----
31, 2002 filed by Equidyne on October 28, 2002.
(37) Source: Annual Report on Form 10-KSB for the fiscal year ended July
- ---- -----------------------------------------------------------------------
31, 2002 filed by Equidyne on October 28, 2002.
-------------------------------------------------------
(38) Source: Preliminary Proxy Statement on Schedule 14A filed by Equidyne
- --- -----------------------------------------------------------------------
on August 1, 2003.
---------------------
(39) Source: Preliminary Proxy Statement on Schedule 14A filed by Equidyne
- ---- -----------------------------------------------------------------------
on August 1, 2003.
---------------------
(40) Source: Form 4 filed by Marcus Rowan and Form 4 filed by Mark Myers
- ---
on January 30, 2003.
(41) Source: Annual Report on Form 10-KSB for the fiscal year ended July
- ----
31, 2002 filed by Equidyne on October 28, 2002.
----
9
Although there can be no assurance that our MFC Nominees will succeed in their
efforts, we believe they can create stockholder value by drawing from their
experience restructuring troubled enterprises. We believe that we can create
long term stockholder value by minimizing overhead expenses and pursuing new
business activities and acquisitions.
MANAGEMENT ENTRENCHMENT
On January 21, 2003 the Current Board approved changes to the Bylaws which we
believe reduced the Current Board's accountability to the stockholders.(42)
-----------------
Among other changes, the Current Board:
* eliminated the Bylaws' requirement that the annual meetings of
stockholders be held (an annual meeting must now be held only if required by
applicable law);
* eliminated stockholders' power to call a special meeting;
* eliminated stockholders' power to set the number of directors by
resolution; and
* reduced the maximum number of directors from ten (10) to seven (7).(43)
------
We believe the Bylaws were amended as an entrenchment technique and
----- -------
diminish stockholder value by discouraging leadership changes that could be
beneficial to Equidyne's share price or business operations. We believe that,
by amending the Bylaws, the Current Board has taken significant defensive steps
to entrench itself and to ward off challenges, which may not be in the best
interests of stockholders.
- ---------------
(42) MFC had no ownership interest in Equidyne on January 21, 2003 and
- ---- -----------------------------------------------------------------------
acquired its beneficial ownership interest of the shares of
------------------------------------------------------------------
Equidyne with knowledge of the By1aw amendments. See the discussion
----------------------------------------------------------------------
of the Bylaw Revocation Proposal at page 13 for additional
-------------------------------------------------------------
information.
------------
(43) Source: Exhibit 3.2 of the Form 8-K filed by Equidyne on January 27,
- ---- -----------------------------------------------------------------------
2003.
-----
10
WE BELIEVE NEW LEADERSHIP CAN MAKE EQUIDYNE SUCCEED
We believe that the Current Board has totally failed to preserve or enhance
stockholder value. Most recently, Equidyne reported an operating loss of
$2,854,000 for the nine months ended April 30, 2003 in its Quarterly Report on
Form 10-QSB filed with the SEC on June 13, 2003.
If elected, the MFC Nominees intend to seek new business opportunities for
Equidyne. Although the MFC Nominees have indicated that they will implement this
strategic business plan if elected, we cannot guarantee that the Company's
operating performance will improve or that its profitability will be restored.
In addition, if elected, the MFC Nominees will owe a fiduciary duty to the
Company and the stockholders, and therefore, cannot guarantee that these
----------------------
fiduciary duties will not prevent the implementation of plans that are currently
proposed.
ADDITIONAL INFORMATION REGARDING THE PROPOSALS
PROPOSAL 1: ELECTION OF THE MFC NOMINEES
MFC is proposing that Equidyne's stockholders elect the MFC Nominees to
Equidyne's board of directors at the Annual Meeting. Each MFC Nominee has
--------------------
consented to being named in this Proxy Statement and our other solicitation
- --------------------------------------------------------------------------------
materials and to serve as a director, if elected, until the next annual meeting
- --------------------------------------------------------------------------------
of the Company's stockholders or until his successor has been elected and
- --------------------------------------------------------------------------------
qualified. The Bylaws provide that the board of directors shall determine the
- --------------------------------------------------------------------------------
number of directors eligible for election, which is currently four according to
- --------------------------------------------------------------------------------
Equidyne's preliminary proxy statement on Schedule 14A filed August 1, 2003 (the
- --------------------------------------------------------------------------------
"Preliminary Management Proxy"). The Bylaws also provide that a single class of
- --------------------------------------------------------------------------------
directors will be elected at each annual meeting and hold office until the
- --------------------------------------------------------------------------------
following annual meeting or until their successors are elected and qualified. If
- --------------------------------------------------------------------------------
elected, the MFC Nominees would serve together as a single class of directors in
- --------------------------------------------------------------------------------
accordance with the Bylaws.
- ------------------------------
Our primary purpose in seeking to elect the MFC Nominees is to help turn
- --------------------------------------------------------------------------------
Equidyne around and enhance the value of the Company for the benefit of all
- --------------------------------------------------------------------------------
stockholders. If elected, the MFC Nominees would be responsible for appointing
- --------------------------------------------------------------------------------
new management to operate Equidyne. In addition the MFC ominees will owe a
- --------------------------------------------------------------------------------
fiduciary duty to the Company and its stockholders if elected, and therefore
- --------------------------------------------------------------------------------
11
cannot guarantee that these fiduciary duties will not prevent the implementation
of plans that are currently proposed.
Although each MFC Nominee has consented to serve as a director if elected and we
have no reason to believe that any of the MFC Nominees may be unable or
unwilling to serve, if any MFC Nominee is unable to serve as a director of
Equidyne due to death, disability or otherwise, the remaining MFC Nominees may
designate another person or persons to replace the nominee or nominees unable to
serve.
The name, age and present principal occupation of each of the MFC Nominees is as
follows:
Michael J. Smith, age 55, is the President and Chief Executive Officer and a
director of MFC. Mr. Smith's principal business address is Floor 21, Millennium
------------
Tower, Handelskai 94-96, A-1200, Vienna, Austria.
Roy Zanatta, age 39, is Secretary of MFC. Mr. Zanatta's principal business
- --------------------------------------------------------------------------------
address is 1620-400 Burrard Street, Vancouver, British Columbia, Canada.
- --------------------------------------------------------------------------------
Mark Steinley, age 40, is an independent consultant. Mr. Steinley's principal
business address is 3915 East Broadway Boulevard, Fourth Floor, Tucson, AZ
----------
85711.
Greg Elderkin, age 39, is the Executive Vice-President and a director of and the
designated real estate broker at Pacific West Brokerage, Inc. Mr. Elderkin's
principal business address is 555 South Renton Village Place, Suite 700, Renton,
WA 98055.
In addition, if the MFC Nominees are elected, it is expected that Mr. Smith, age
55, will be appointed to serve as Equidyne's Chief Executive Officer. Mr. Smith,
as the President and Chief Executive Officer of MFC, has extensive experience in
restructuring companies in order to enhance stockholder value. For further
information about MFC and Mr. Smith please refer to Annex III hereto.
The foregoing information has been furnished to us by the respective MFC
Nominees. Annex III contains additional information about the MFC Nominees
required to be disclosed under Regulation 14A of the Securities Exchange Act of
1934, as amended. It is expected that each MFC Nominee, if elected, will
thereafter be reimbursed by Equidyne for reasonable out-of-pocket expenses
incurred in the performance of his services as a director. The MFC Nominees
will also be entitled to indemnification by the Company in accordance with the
Bylaws and the DGCL.
The green proxy card delivered with this Proxy Statement provides each
stockholder with the opportunity to designate any of the MFC Nominees whom he or
- -----------
she does not desire to elect. WE URGE YOU TO VOTE FOR ALL OF THE MFC NOMINEES
ON THE GREEN PROXY CARD DELIVERED WITH THIS PROXY STATEMENT.
WE BELIEVE THAT IS IN THE BEST INTERESTS OF THE STOCKHOLDERS OF EQUIDYNE TO
------------
ELECT THE MFC NOMINEES AT THE ANNUAL MEETING. WE STRONGLY RECOMMEND THAT YOU
VOTE "FOR" THE ELECTION OF THE MFC NOMINEES.
12
PROPOSAL 2: REPEAL OF BYLAWS ADOPTED ON OR AFTER MAY 1, 2003
The Company's stockholders are being asked to adopt the following resolution,
which would repeal any amendments to the Bylaws adopted by the Current Board on
or after May 1, 2003 and prior the adoption of this resolution:
RESOLVED, that each and every provision of the Amended and Restated
Bylaws of Equidyne Corporation adopted on or after May 1, 2003 and
prior to the adoption of this resolution is hereby repealed.
We do not intend to exercise discretion in this regard. Although this Bylaw
Revocation Proposal, if adopted, will repeal every Bylaw amendment adopted by
the Current Board since May 1, 2003, it is not part of a plan to remove all
anti-takeover devices available to the Company, and we believe the MFC Nominees
do not have any present intention to make other proposals which would remove
other anti-takeover measures. Rather, it is designed to prevent the Current
Board from taking actions to amend the Bylaws to attempt to nullify or delay the
actions taken by you under this Proxy Statement or to create new obstacles to
your ability to freely elect a board which we believe represents your best
interests. We chose the May 1, 2003 date because on May 2, 2003 we gave our
notice of intention to bring business before the Annual Meeting to the Company
in accordance with the Bylaws. Based on publicly available information, we are
not aware of any amendments to the Bylaws that have been adopted or proposed
since May 1, 2003. The Bylaws in force on May 1, 2003 were last amended on
January 21, 2003 and filed as Exhibit 3.2 to the Company's current report on
Form 8-K on January 27, 2003. MFC acquired beneficial ownership of its shares
of the Company with knowledge of the Bylaw amendments. We do not seek to repeal
the January 21, 2003 Bylaw amendments.
The approval of the Bylaw Revocation Proposal could result in the repeal of
newly adopted Bylaws which may be in the best interests of stockholders,
although we believe that such a possibility is unlikely in view of the fact that
the Current Board has not disclosed any such Bylaw amendments. Except for the
proposed actions described in this Proxy Statement, the MFC Nominees, if
elected, do not intend to take any other action that would remove other
anti-takeover measures or render them ineffective. MFC intends to distribute to
the stockholders of the Company supplemental materials in the event that the
Current Board amends the Bylaws after the date of this Proxy Statement and such
amendments are made available to us or the general public (which amendments the
Bylaw Revocation Proposal, if approved, would repeal).
WE RECOMMEND THAT STOCKHOLDERS OF EQUIDYNE VOTE "FOR" THE APPROVAL OF THE BYLAW
------------
REVOCATION PROPOSAL.
PROPOSAL 3: RATIFICATION OF KBA AS EQUIDNYE'S INDEPENDENT
- -----------------------------------------------------------------
ACCOUNTANTS FOR FISCAL 2003
- --------------------------------------------
The Preliminary Management Proxy sets forth a proposal that the Company's
- --------------------------------------------------------------------------------
stockholders vote at the Annual Meeting to ratify the appointment of KBA
- --------------------------------------------------------------------------
as Equidyne's independent auditors. According to the Preliminary Management
- --------------------------------------------------------------------------------
Proxy, Equidyne's audit committee has selected KBA as Equidyne's independent
- --------------------------------------------------------------------------------
public accountants for the fiscal year ending July 31, 2003. The Preliminary
- --------------------------------------------------------------------------------
Management Proxy states that stockholder ratification is not required for the
- --------------------------------------------------------------------------------
selection of KBA since the Audit Committee has the responsibility for selecting
- --------------------------------------------------------------------------------
Equidyne's independent auditors, but that the selection is nonetheless being
- --------------------------------------------------------------------------------
submitted to the stockholders for ratification at the Annual Meeting. According
- --------------------------------------------------------------------------------
to the Preliminary Management Proxy, if the appointment of KBA is not ratified
- --------------------------------------------------------------------------------
by the stockholders, the Audit Committee will reevaluate its
- --------------------------------------------------------------------
13
decision. For more information about the appointment and
- ---------------------------------------------------------------
ratification of KBA, please see the Preliminary Management Proxy.
- -------------------------------------------------------------------------
WE RECOMMEND THAT THE STOCKHOLDERS OF EQUIDYNE VOTE "FOR" THE APPROVAL OF KBA
- --------------------------------------------------------------------------------
AS EQUIDYNE'S INDEPENDENT ACCOUNTANTS.
- -----------------------------------------
14
INFORMATION ABOUT
THE MFC NOMINEES
The following table sets forth the principal business address, present
occupation or employment and the number and percentage of outstanding shares of
the Company's common stock beneficially owned by us and each of the other MFC
Nominees as of the Record Date. Each of the MFC Nominees has provided written
consent to: (i) participate as a nominee in MFC's solicitation of proxies from
the stockholders of Equidyne in connection with the Annual Meeting; (ii) be
nominated for election as a director at the Annual Meeting and any adjournment,
postponement, continuance or rescheduling thereof; and (iii) serve as a director
of Equidyne if elected at the Annual Meeting and/or any adjournment,
postponement, continuance or rescheduling thereof.
NAME,
AGE AND PRESENT PRINCIPAL OCCUPATION NUMBER OF SHARES PERCENTAGE
BUSINESS ADDRESS AND FIVE YEAR BUSINESS EXPERIENCE BENEFICIALLY OWNED OF CLASS
- ---------------- --------------------------------- ------------------ -----------
Michael J. Smith (55) Mr. Smith is the President, Chief 1,304,233(1) 8.7%
Floor 21 Executive Officer and a director ----
Millenium Tower of MFC, a Nasdaq National Market
Handelskai 94-96 quoted company. Mr. Smith has
A-1200 Vienna, been the President and Chief
Austria Executive Officer of MFC since
1996 and a director since 1986.
Mr. Smith is also a director of
TriMaine Holdings, Inc., (which
is listed on the OTC), the
President, Chief Executive
Officer, Chief Financial Officer
and a director of Cybernet Internet
Services, Inc. and a member of the
management board of DTA Holding
Aktiengesellschaft, a Nasdaq
Smallcap Market quoted company.
Roy Zanatta (39) Mr. Zanatta is the Secretary of MFC. 1,304,233(1) 8.7%
--- ---
1620 - 400 Burrard Mr. Zanatta has been an employee of
Street MFC since 1993 and has been the
Vancouver, Secretary of MFC since 1996. Mr. Zanatta
British Columbia is also a director of TriMaine
Canada V6C 3A6 Holdings, Inc. Formerly, Mr. Zanatta
consulted for and held positions with
the British Columbia Hydro and Power
Authority, the Canadian Standards
Association and Atomic Energy of
Canada Ltd. Mr. Zanatta earned a
B.A.Sc. degree in 1987 from the
University of British Columbia (Canada)
and an MBA in 1991 from McGill
University (Canada).
15
NAME,
AGE AND PRESENT PRINCIPAL OCCUPATION NUMBER OF SHARES PERCENTAGE
BUSINESS ADDRESS AND FIVE YEAR BUSINESS EXPERIENCE BENEFICIALLY OWNED OF CLASS
- ---------------- --------------------------------- ------------------ -----------
Mark Steinley (40) Mr. Steinley is an independent None N/A
3915 E Broadway consultant with experience in private
Boulevard, equity and both the traditional
Fourth Floor and alternative energy generation
Tucson AZ 85711 industries. Mr. Steinley has an MBA
from the Marriott School of Management
at Brigham Young University and a
Bachelor of Science in Electrical
Engineering from the University of
Saskatchewan. Previously, Mr. Steinley
was a Partner with KBM Energy Partners,
President and Chief Executive Officer of
Angstrom Power Inc., the Director of
Equity Investments at Chrysalix Energy
L.P. and the Director of Project
Development and Equity Investment at
ABB Equity Ventures.
Greg Elderkin (39) Elderkin is the Executive None N/A
555 S. Renton Vice-President, a director of
--
Village Place and the designated real estate
Suite 700 broker at Pacific West Brokerage,
Renton, Washington Inc. Mr. Elderkin has held
98055 these positions since 1989. In
addition, Mr. Elderkin is a
co-founder and director of the SFG
Funds, a private real estate lending
organization, and a director of Med Net
International Ltd., a Toronto Stock
Exchange listed company and a member
of the supervisory board of DTA Holding
Aktiengesellschaft, a Nasdaq Smallcap
Market quoted company.
- ------------
(1) MFC owns 100 of these shares directly and has the right to vote 1,304,133
-------- ------------
shares owned by Concord Effekten AG pursuant to a voting
--------------------------------
agreement. For more information on this agreement, please refer to
Annex III hereto. MFC has an option to purchase 485,844 of Concord's
--------------------------------------------------
shares at an exercise price of $0.45 per share, but at this time has
-------------------------------------------------------------------------
no other economic interest in Concord's shares.
-----------------------------------------------
Under applicable regulations of the SEC, MFC and the MFC Nominees are deemed
"participants" in this proxy solicitation. Certain other information about MFC
and the MFC Nominees and any transactions between any of them and the Company
are set forth in the attached Annex III. No persons other than those named in
this Proxy Statement will participate in the proxy solicitation. Concord may
also be deemed to be a "participant" as a result of an agreement it entered into
with MFC pursuant to which MFC was granted the voting rights over the shares of
common stock of Equidyne beneficially owned by Concord. On April 30, 2003, MFC
and Concord entered into an agreement pursuant to which Concord agreed that,
with relation to the Annual Meeting of stockholders of Equidyne and any other
meeting of the Company or any adjournment or postponement held prior to June 30,
2004, Concord would provide to MFC, upon request, any proxies or otherwise take
such actions as may be required or desirable to vote the common stock of
Equidyne owned by Concord at the time of such meeting in favor of any nominees
for election as directors of Equidyne put forth by MFC and otherwise vote such
common stock as directed by MFC with respect to any proposal before the
stockholders of the Company. In addition to being granted the voting rights
- ------------
over the shares held by Concord, MFC was also granted an option to purchase up
to 485,844 of the shares held by Concord which option is exercisable at any time
until earlier of the date that is 60 days after the date of the Annual Meeting
and August 31, 2003 for an exercise price of $0.45 per share. MFC was also
granted
16
a right of first refusal pursuant to and for the term of the agreement to
purchase all, but not less than all, of any shares which Concord proposes to
sell to an arm's length purchaser.
-
The MFC Nominees will not receive any compensation from MFC for their services
as directors of Equidyne. MFC has agreed to indemnify all of the MFC Nominees
against any costs, expenses and other liabilities associated with their
nomination and the election contest.
The MFC Nominees will owe a fiduciary duty to the Company and its stockholders
------------
if elected, and therefore cannot guarantee that these fiduciary duties will not
prevent the implementation of plans that are currently proposed.
According to the Company's public filings with the SEC, directors of Equidyne
who are not employees of the Company receive $2,000 for each meeting attended
and all directors of the Company are reimbursed by the Company for travel and
other expenses incurred in connection with their services as directors. MFC
disclaims any responsibility for the accuracy of the foregoing information,
which has been extracted from the Company's public filings with the SEC.
MFC does not expect that any of the MFC Nominees will be unable to stand for
election, but in that event, the shares represented by the enclosed green proxy
card will be voted in each such case for a substitute nominee selected by MFC.
MFC reserves the right to nominate substitute or additional persons if the
Company makes or announces any changes to its Bylaws or takes or announces any
other action that has, or if consummated would have, the effect of disqualifying
any or all of the MFC Nominees. MFC expressly reserves this right without
prejudice to any position MFC may take which may claim that any such action by
--------------
Equidyne or its board of directors constitutes an unlawful manipulation of
- -----------------
Equidyne's corporate machinery to disenfranchise the Company's stockholders. In
any such case, shares represented by the enclosed green proxy card will be voted
for all such substitute or additional nominees selected by MFC.
In accordance with applicable regulations of the SEC, the green proxy card
affords each stockholder the opportunity to designate the names of any of the
MFC Nominees whom he or she does not wish to elect. Notwithstanding the
foregoing, we urge stockholders to vote for all of the MFC Nominees on the
enclosed green proxy card. The persons named as proxies in the enclosed green
proxy card will vote, in their discretion, for each of the MFC Nominees who is
nominated for election and for whom authority has not been withheld.
VOTING SECURITIES
According to the Company's certificate of incorporation, Equidyne's shares of
common stock constitute its only class of outstanding voting securities.
Accordingly, only the holders of the Company's common stock as of the Record
Date are entitled to execute proxies. The Record Date for determining
stockholders entitled to vote is July 14, 2003. As of the Record Date, there
were 14,984,803 shares of the Company's common stock issued and outstanding
according to the Company's SEC filings. We believe that there are no other
- -------------------------------------------
classes of common stock and no shares of preferred stock outstanding. Each
outstanding share of common stock as of the Record Date is entitled to one vote
at the Annual Meeting. Stockholders of Equidyne do not have cumulative voting
rights, which means that your shares are voted separately for each Proposal.
Pursuant to Article III, Section 2 and Article II, Section 7 of the Bylaws, at
each meeting of stockholders of the Company for the election of directors at
which a quorum is present, the persons
17
receiving a plurality of votes cast of persons present in person or represented
by proxy at the meeting and entitled to vote for the election of directors shall
be elected as directors. All other matters require approval of a majority of
shares represented at the meeting in person or by proxy and entitled to vote on
the matter.
Abstentions and broker non-votes will have the same effect as votes against the
Bylaw Revocation Proposal and the ratification of KBA Group LLP as the Company's
--------------------------------------------------
independent public accountants, and will each be included in determining the
- ---------------------------
number of shares present for purposes of determining the presence of a
quorum.
Pursuant to an agreement between MFC and Concord dated April 30, 2003, we
exercise voting control over 1,304,233 shares of the Company's common stock as
of the date hereof, representing approximately 8.7% of the issued and
outstanding shares. Under this agreement, MFC also has the option to purchase
up to 485,844 shares of common stock of Equidyne. We intend to vote for the MFC
Nominees, the Bylaw Revocation Proposal and the ratification of KBA as
- ------------------------------
Equidyne's independent public accountants for fiscal 2003.
- ----------------------------------------------------------
For more information about the security ownership of certain beneficial owners
and the Company's officers and directors, please refer to Annex II attached
hereto.
LITIGATION
As of the date of this Proxy Statement, other than the 220/211 Application there
are no material pending legal proceedings in which MFC, any MFC Nominee or
Georgeson Shareholder Communications Inc. or any of their respective associates
is a party adverse to Equidyne or any of its affiliates, or in which MFC, any
MFC Nominee or any solicitor or any of their respective associates has an
interest adverse to Equidyne or any of its affiliates.
SOLICITATION
The solicitation of proxies pursuant to this Proxy Statement is being made by
MFC. The MFC Nominees may also assist us in soliciting proxies from the
Company's stockholders. Proxies may be solicited by mail, advertisement,
telephone or telecopier and in person. No one will receive additional
compensation for such solicitation.
In addition, we have retained Georgeson Shareholder Communications Inc. as our
proxy solicitor to assist in the solicitation, for which services Georgeson
Shareholder Communications Inc. will be paid an initial fee of $25,000, plus
$2,500 for tabulation expenses and a $10,000 success fee and will be reimbursed
for its reasonable out-of-pocket expenses. It is anticipated that Georgeson
Shareholder Communications Inc. will employ approximately 25 persons to solicit
Equidyne stockholders.
Banks, brokers, custodians, the MFC Nominees and fiduciaries will be requested
to forward solicitation material to the beneficial owners of shares of the
Company's common stock. We will reimburse banks, brokers, custodians, the MFC
Nominees and fiduciaries for their reasonable expenses for sending solicitation
material to the beneficial owners. The cost of the solicitation of proxies will
initially be borne by us. We intend to seek reimbursement from the Company for
the costs of this proxy solicitation if we are successful in obtaining the
requisite proxies for the Proposals since we believe the purpose of the
Proposals in this Proxy Statement is to advance the interests of all of the
Company's stockholders. If such reimbursement is sought, the question of whether
such reimbursement will be made will not be submitted to stockholders but will
be submitted to the board of directors for final decision. Any MFC employees or
directors serving on the Equidyne board at the time will
18
abstain from any board vote on this matter. Greg Elderkin and Mark Steinley are
independent of MFC and, if elected, could vote with regard to reimbursement of
expenses incurred in the solicitation. Costs related to the solicitation of
proxies include expenditures for attorneys, proxy solicitors, litigation,
printing, postage, and related expenses and filing fees and are expected to
aggregate approximately $275,000, of which approximately $75,000 has been spent
to date. The portion of such costs allocable solely to the solicitation of
proxies to the Proposals is not readily determinable.
STOCKHOLDER PROPOSALS
Equidyne's definitive Proxy Statement on Schedule 14A, dated May 1, 2002, set
July 30, 2002 as the deadline by which proposals by the Company's stockholders
that are intended to be presented by such stockholders at the Annual Meeting
were to be received by the Company in order to be considered for inclusion in
Equidyne's proxy statement and form of proxy relating to the Annual Meeting.
- ----------
However, in the event that the Annual Meeting is held more than 30 days after
May 28, 2003, the deadline is required to be extended until a reasonable time
before the Company begins to print and mail its proxy materials. In its press
------------
release announcing that the Annual Meeting will be held September 9, 2003,
- --------------------------------------------------------------------------------
Equidyne stated that stockholder notice of intention to bring business before
- --------------------------------------------------------------------------------
the Annual Meeting would be considered untimely unless delivered on or before
- --------------------------------------------------------------------------------
July 11, 2003. According to the Preliminary Management Proxy, as of July 31,
- -------------------------------------------------------------------------------
2003 Equidyne did not know of any matters to be brought before the Annual
- --------------------------------------------------------------------------------
Meeting by stockholders other than those brought by MFC.
- ----------------------------------------------------------------
APPRAISAL RIGHTS
Holders of Equidyne common stock do not have dissenters' appraisal rights under
Delaware law in connection with the election of directors, the Bylaw Revocation
Proposal, or the ratification of the appointment of KBA as Equidyne's
------------------------------------------------------------------
independent public accountants for fiscal 2003.
- -----------------------------------------------
REIMBURSEMENT OF COSTS
If the MFC Nominees are elected, we intend to seek reimbursement from the
Company for our costs since we believe the purpose of this Proxy Statement is to
advance the interests of all of the Company's stockholders. We estimate that the
cost of our solicitation efforts will be approximately $275,000. If such
reimbursement was to occur, it would have the effect of a one-time,
non-recurring expense and would reduce the Company's working capital.
Other than the foregoing, we are not aware of any other adverse consequences
that would result from the election of the MFC Nominees pursuant to this Proxy
Statement.
SPECIAL INSTRUCTIONS
IMPORTANT: IF YOU HOLD SHARES THROUGH A BROKER OR BANK, ONLY THEY CAN EXECUTE A
PROXY ON YOUR BEHALF. PLEASE CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND
INSTRUCT THEM TO EXECUTE A PROXY ON YOUR BEHALF TODAY.
If your shares of the Company's common stock are held in "street-name" only your
bank or broker can execute a proxy on your behalf, and then only upon receipt of
your specific instructions. Please SIGN, DATE and RETURN the enclosed GREEN
proxy instruction form to your bank or broker today in the postage-paid envelope
provided. To ensure that your proxy is effective, please also contact the
persons responsible for your account and instruct them to execute a green proxy
card on your behalf. We urge
19
you to confirm your instructions in writing to the person responsible for your
account and provide a copy of those instructions to us in care of Georgeson
Shareholder Communications Inc. at the address set forth below so that we will
be aware of all instructions given and can attempt to ensure that such
instructions are followed.
We urge you NOT to sign any white proxy card for Equidyne's Current Board and
management. If you have already signed a white proxy card you may revoke it by
signing a green proxy card in favour of the election of the MFC Nominees, the
-
Bylaw Revocation Proposal and the ratification of KBA as Equidyne's
-------------------------------------------------------
independent public accountants for fiscal 2003.
- -----------------------------------------------
WE URGE YOU TO DATE, SIGN AND RETURN THE ENCLOSED GREEN PROXY IN THE ENCLOSED
ENVELOPE.
YOUR VOTE IS IMPORTANT. PLEASE MARK, SIGN, AND DATE THE ENCLOSED GREEN PROXY AND
RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE PROMPTLY OR MAIL THE CARD TODAY
AT THE ADDRESS STATED BELOW.
OTHER MATTERS TO BE VOTED UPON
Except for the election of directors of Equidyne, the approval of the Bylaw
-
Revocation Proposal and the ratification of KBA, MFC is not aware of any other
---------------------------
matter to be presented for consideration at the Annual Meeting. However, if any
other matter properly comes before the Annual Meeting, the persons named as
proxies by MFC will exercise their discretionary authority to vote on such
matters in accordance with their best judgment. As of the date of this Proxy
Statement, Equidyne has not yet filed its definitive proxy materials, in which
- ----------
management may propose additional matters to be voted on at the Annual Meeting.
Equidyne's Bylaws provide that any stockholder intending to
- ------------------------------------------------------------------
bring business before the annual meeting must deliver notice of such intention
- --------------------------------------------------------------------------------
to the Equidyne not less than 60 days before the date of the Annual Meeting. In
- --------------------------------------------------------------------------------
its press release announcing that the Annual Meeting will be held September 9,
- --------------------------------------------------------------------------------
2003, Equidyne stated that such stockholder notices would be considered untimely
- --------------------------------------------------------------------------------
unless delivered on or before July 11, 2003. Equidyne stated that, other than
- --------------------------------------------------------------------------------
matters discussed in the Preliminary Management Proxy, as of July 31, 2003 it
- --------------------------------------------------------------------------------
does not intend to bring any other matter before the Annual Meeting and does not
- --------------------------------------------------------------------------------
know of any other matter to be brought before the meeting.
- --------------------------------------------------------------------
20
FURTHER INFORMATION
If you have any questions or require any assistance in executing or delivering
your consent, please write to, or call:
Georgeson Shareholder Communications Inc.
17 State Street, 10th Floor
New York, New York 10004
Toll Free: (877) 668-1646
---------------
or
MFC Bancorp Ltd.
c/o 1620 - 400 Burrard Street
Vancouver, British Columbia
Canada V6A 3A6
Telephone: (604) 683-8286
Dated: August [12], 2003
----
21
ANNEX I
INFORMATION CONCERNING THE COMPANY
According to the Company's public filings with the SEC, Equidyne's business
--------------------------
address is:
Equidyne Corporation
11300 Sorrento Valley Road
Suite 255
San Diego, California 92121
Equidyne's definitive proxy statement is required to set forth information
regarding: (i) the beneficial ownership of securities of Equidyne by: (A) any
person known to Equidyne to beneficially own 5% or more of any class of voting
securities of Equidyne; (B) each director and executive officer of Equidyne; and
(C) all directors and executive officers of Equidyne as a group; (ii) Equidyne's
directors and management, including information relating to management
compensation; and (iii) the procedures for submitting stockholder proposals for
consideration at the 2004 annual meeting of stockholders of Equidyne. Except as
is otherwise disclosed herein, reference is hereby made to such afore-mentioned
information which, to the extent it may be deemed required, is incorporated
herein.
Except as otherwise noted herein, the information in the Proxy Statement
concerning Equidyne has been taken from or is based upon documents and records
on file with the SEC and other publicly available information. Although MFC
does not have any knowledge indicating that any statement contained herein is
untrue, we do not take any responsibility for the accuracy or completeness of
statements taken from public documents and records that were not prepared by, or
on behalf of, MFC, or for any failure by Equidyne to disclose events that may
affect the significance or accuracy of such information.
I-1
ANNEX II
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
THE COMPANY'S OFFICERS AND DIRECTORS
The following table sets forth certain information with regard to the beneficial
ownership of the Company's common stock as of July 31, 2003 so far as can be
--------
determined from Equidyne's public filings with the SEC, by: (i) each stockholder
who is known by the Company to beneficially own in excess of 5% of the
outstanding shares of common stock; (ii) each director; and (iii) the Company's
Chief Executive Officer, Executive President and Secretary; and Vice President,
Chief Financial Officer and Treasurer.
TITLE OF NAME AND ADDRESS AMOUNT AND NATURE PERCENTAGE OF
CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS
- ------- ------------------- ----------------------- -------------
Common stock, Concord Effekten AG 1,304,133(1) 8.7%
par value 9, 60311 Frankfurt, Germany
$0.10 per share
Common stock, MFC Bancorp Ltd. 1,304,233(2) 8.7%
par value Floor 21, Millennium Tower
$0.10 per share Handelskai 94-96, A-1200,
Vienna, Austria
Common stock, Jim Fukushima 1,206,800(3) 7.9%
par value 17660 Irvine Blvd. Ste. 20 ------------ ----
$0.10 per share Tustin, CA 92780
Common stock, Thomas A. Slamecka 978,258(4) 6.2%
par value 2 Shannon Court ---
$0.10 per share Andersen, South Carolina 29626
Common stock, Marcus R. Rowan 1,195,500(5) 7.5%
par value -- ----------- ----
$0.10 per share 11770 Bernardo Plaza Ct.,
Suite 351
San Diego, CA 92128
Common stock, Lloyd I. Miller III 863,500(6) 5.8%
par value 4550 Gordon Dr.
$0.10 per share Naples, Florida 34102
Common stock, Mark C. Myers 378,000(7) 2.5%
par value 11770 Bernardo Plaza Ct., ---------- ----
$0.10 per share Suite 351
San Diego, CA 92128
Common stock, Jeffrey B. Weinress 120,313(8) 0.8%
par value 11770 Bernardo Plaza Ct., --------- ----
$0.10 per share Suite 351
San Diego, CA 92128
Common stock, Dr. James R. Gavin 155,000(9) 1.0%
par value 11300 Sorrento Valley Rd., ---------- ----
$0.10 per share Suite 255
San Diego, CA 92121
Common stock, Harry P. Yergey 7,000(10) 0%
- ------------- --------------- --------- ---
par value 1230 Peachtree Street NE
- --------- ------------------------
$0.10 per share Atlanta, GA 30309
- --------------- -----------------
Common stock, All executive officers and 1,855,813(11) 11.1%
par value directors as a group (5 persons) ------------ -----
$0.10 per share
- ---------------
(1) These are the same shares deemed to be beneficially owned by MFC (see
note 2) pursuant to an agreement under which Concord granted MFC the voting
rights over these shares for the Annual Meeting. Concord retains investment
control over the shares. Any two of Concord board members Thomas Stevens, Bernd
------------------------------------------------------
Groebler and Dirk Schaper, acting together, have the authority to vote or sell
- --------------------------------------------------------------------------------
Concord's shares of Equidyne. See Annex III for a description of the terms of
- -------------------------------
the agreement.
(2) Except for 100 shares owned of record by MFC, these are the same shares
beneficially owned by Concord and over which Concord retains investment control
(see note 1). Michael Smith or Roy Zanatta, each of whom is an executive
officer of MFC, will exercise voting control over the shares at the Annual
Meeting pursuant to his appointment as proxyholder. See Annex III for a
description of the terms of the agreement pursuant to which Concord granted MFC
the voting rights over these shares.
(3) This figure was reported in the Preliminary Management Proxy. According
--------------------------------------------
to the Preliminary Management Proxy, this figure includes presently exercisable
- ------------------------------------
options for 307,000 shares of common stock.
-------
(4) This figure includes presently exercisable options for 807,258 shares of
common stock, as reported in Equidyne's Annual Report on Form 10-KSB filed on
October 28, 2002.
(5) This figure was reported in the Preliminary Management Proxy. According
----------------------------
to the Preliminary Management Proxy, this figure includes presently exercisable
----------------------------
options to purchase 1,047,000 shares of common stock.
---------
(6) This figure is taken from a Schedule 13G filed by Mr. Miller on January
17, 2003. Mr. Miller shares dispositive and voting power with respect to
361,600 shares of common stock.
(7) This figure was reported in the Preliminary Management Proxy. According
----------------------------
to the Preliminary Management Proxy, this figure consists of presently
-------------------------------
exercisable options to purchase 378,000 shares of common stock.
-------
(8) This figure was reported in the Preliminary Management Proxy. According
----------------------------
to the Preliminary Management Proxy, this figure includes presently exercisable
-----------------------------
options to purchase 120,313 shares of common stock.
-------
(9) This figure was reported in the Preliminary Management Proxy. According
----------------------------
to the Preliminary Management Proxy, this figure includes presently exercisable
-----------------------------
options for 155,000 shares of common stock.
-------
(10) This figure was reported in the Preliminary Management Proxy.
---------------------------------------------------------------------
According to the Preliminary Management Proxy, this figure includes presently
- --------------------------------------------------------------------------------
exercisable options for 7,000 shares of common stock.
- ------------------------------------------------------------
(11) This includes presently exercisable options and warrants for common
----
stock as discussed in notes 3, 5, 7, 8, 9 and 10 above. The Preliminary
---------------------------------
Management Proxy reports 1,856,113 shares for all executive officers and
- --------------------------------------------------------------------------------
directors as a group. We cannot determine how management calculated this
- --------------------------------------------------------------------------------
figure.
- -------
II-1
ANNEX III
INFORMATION CONCERNING MFC BANCORP LTD.
AND THE MFC NOMINEES
The following persons are or may be deemed to be participants (the
"Participants," and each a "Participant") in the solicitation of proxies in
-
support of electing the nominees of MFC to the board of directors of Equidyne:
(i) MFC; (ii) the MFC Nominees: Michael J. Smith, Roy Zanatta, Mark Steinley and
---
Greg Elderkin; and (iii) Concord. Information set forth herein about each
Participant was provided by that Participant.
MFC is a public corporation organized under the laws of the Yukon Territory,
Canada, with its common shares quoted on the Nasdaq National Market and on the
Frankfurt Stock Exchange. MFC operates in the financial services industry,
specializing in merchant banking internationally, and has an address at Floor
21, Millennium Tower, Handelskai 94-96, A-1200, Vienna, Austria.
A description of each MFC Nominee, including his name, business address, age,
present principal occupation and five-year business experience, is described in
MFC's Proxy Statement under the heading "Information About the MFC Nominees."
-
SECURITY OWNERSHIP
The beneficial ownership of securities of Equidyne by the Participants is
described in the following table. No Participant and no associate of any
Participant (within the meaning of Regulation 14A under the Securities Exchange
Act of 1934, as amended) beneficially owns any securities of Equidyne other than
common stock as described in the following table. No Participant beneficially
owns any securities of any parent or subsidiary of Equidyne. No Participant has
record but not beneficial ownership with respect to any securities of Equidyne.
APPROXIMATE SHARES
BENEFICIALLY OWNED PERCENTAGE OF CLASS
NAME COMMON STOCK COMMON STOCK
- ---- ------------------ -------------------
MFC Bancorp Ltd.(1) 1,304,233(2) 8.7%
- ------------------ ------------------ -------------------
Concord Effekten AG 1,304,133(3) 8.7%
- -------------------- ------------------- ------------------------------
- ---------------
(1) MFC is a public corporation with its common shares quoted on the Nasdaq
National Market and on the Frankfurt Stock Exchange. Based solely upon public
records and filings, Peter Kellogg directly and/or indirectly owns approximately
25% of the common shares of MFC. Mr. Kellogg disclaims beneficial ownership of
approximately 92% of such common shares.
(2) MFC owns 100 common shares of Equidyne directly and has the right to
----
vote 1,304,133 common shares of Equidyne pursuant to an agreement with Concord.
Other than MFC's option to purchase 485,844 shares from Concord for an exercise
- --------------------------------------------------------------------------------
price of $0.45 per share, MFC has no economic interest in the Equidyne shares
- --------------------------------------------------------------------------------
owned by Concord. See below for a description of the terms of such agreement.
- --------------------------------------------------------------------------------
(3) Concord has granted MFC the right to vote such shares pursuant to an
agreement date April 30, 2003. This figure is taken from a Schedule 13D/A filed
on May 9, 2003 by Concord.
III-1
TRANSACTIONS IN EQUIDYNE SECURITIES
Other than the transactions described below, no Participant has purchased or
sold any securities of Equidyne in the past two years.
TRANSACTIONS IN SECURITIES BY MFC
DATE OF TRANSACTION NATURE OF TRANSACTION
- ------------------- ---------------------
January 30, 2003 Purchased 100 shares of Equidyne common stock
--------
April 30, 2003 Acquired, among other things, the right
to vote 1,304,133 shares of Equidyne
common stock owned by Concord(1)
- ---------------
(1) On April 30, 2003, MFC and Concord entered into an agreement pursuant to
which Concord agreed that, with relation to the Annual Meeting of stockholders
of Equidyne and any other meeting of the Company or any adjournment or
postponement held prior to June 30, 2004, Concord would provide to MFC, upon
request, any proxies or otherwise take such actions as may be required or
desirable to vote the common stock of Equidyne owned by Concord at the time of
such meeting in favor of any nominees for election as directors of Equidyne put
forth by MFC and otherwise vote such common stock as directed by MFC with
respect to any proposal before the stockholders of the Company. In addition to
------------
being granted the voting rights over the shares held by Concord, MFC was also
granted an option to purchase up to 485,844 of the shares held by Concord which
option is exercisable at any time until earlier of the date that is 60 days
after the date of the Annual Meeting and August 31, 2003 for an exercise price
of $0.45 per share. MFC was also granted a right of first refusal pursuant to
and for the term of the agreement to purchase all, but not less than all, of any
shares which Concord proposes to sell to an arm's length purchaser.
TRANSACTIONS IN SECURITIES BY CONCORD
DATE OF TRANSACTION NATURE OF TRANSACTION
- ------------------- ---------------------
April 1, 1999 through Open market purchases and sales
to February 5, 2002 ---------
of Equidyne common stock resulting
--------
in ownership
February 5, 2002 through Open market purchases and sales of
to July 11, 2003 Equidyne common stock resulting
--------
in ownership of 1,304,133 shares of
common stock
ARRANGEMENTS, INTERESTS AND TRANSACTIONS
(a) Except for the shares of Equidyne common stock owned beneficially and/or
of record by MFC, none of the MFC Nominees or, to the knowledge of MFC, any
other Participant or any associate of MFC or the MFC Nominees directly or
-----------
indirectly owns any securities of Equidyne or any subsidiary of Equidyne
beneficially or of record, has the right to acquire beneficial ownership within
60 days, or has purchased or sold such securities within the past two years.
(b) None of the MFC Nominees or, to the knowledge of MFC, any other
Participant has any substantial interest, direct or indirect, by security
- -----------
holdings or otherwise, in any matter to be acted upon at the Annual Meeting,
except for the election of directors.
(c) Except for the agreement between MFC and Concord dated April 30, 2003
giving MFC the right to vote 1,304,133 shares of Equidyne common stock owned by
Concord, a copy of which is attached as an exhibit to MFC's Schedule 13D filed
with the SEC on May 2, 2003, none of MFC, the MFC Nominees or, to the knowledge
of MFC, any other Participant is, or
-----------
III-2
within the past year has been, a party to any contract, arrangement or
understanding with any person with respect to any securities of Equidyne. Under
this agreement, MFC also has the option to purchase up to 485,844 shares of
common stock of Equidyne.
(d) None of the MFC Nominees or, to the knowledge of MFC, any other
Participant, has engaged in any transaction or series of transactions since the
- -----------
beginning of Equidyne's last fiscal year, or has currently proposed any
----------
transaction, to which Equidyne or any of its subsidiaries is a party, where the
amount involved exceeded $60,000.
(e) None of the MFC Nominees or, to the knowledge of MFC, any other
Participant, has been indebted to Equidyne or any of its subsidiaries at any
- -----------
time since the beginning of Equidyne's last fiscal year.
----------
(f) None of the MFC Nominees or, to the knowledge of MFC, any other
Participant, has been convicted in a criminal proceeding (excluding traffic
- -----------
violations or similar misdemeanors) during the last ten years.
(g) Other than the 220/221 Application, there are no material pending legal
proceedings in which any of the MFC Nominees or any of their associates or, to
the knowledge of MFC, any other Participant, is a party adverse to Equidyne or
-----------
any of its affiliates or in which any of the MFC Nominees or any of their
associates or, to the knowledge of MFC, any other Participant, has an interest
-----------
adverse to Equidyne of any of its affiliates.
(h) Except as set forth in this Proxy Statement, none of the MFC Nominees
or, to the knowledge of MFC, any other Participant or any associate thereof has
-----------
any arrangement or understanding with any person: (i) with respect to any future
employment with Equidyne; or (ii) with respect to any future transactions to
which Equidyne or any of the affiliates will or may be a party.
(i) None of the MFC Nominees or, to the knowledge of MFC, any other
Participant holds any position or office with Equidyne or any parent,
- -----------
subsidiary, or affiliate of Equidyne, and none of the MFC Nominees or, to the
knowledge of MFC, any other Participant has ever served as a director of
-----------
Equidyne or any parent, subsidiary, or affiliate of Equidyne.
(j) None of the MFC Nominees or, to the knowledge of MFC, any other
Participant has any family relationship, by blood, marriage, or adoption, to any
- -----------
director, executive officer, or person nominated or chosen by Equidyne to become
a director or executive officer of Equidyne. During the last three fiscal years,
no compensation was awarded to, earned by, or paid to MFC or, to the knowledge
of MFC, any of the MFC Nominees or any other Participant by any person for any
-----------
services rendered in any capacity to Equidyne or its subsidiaries.
(k) Except as set forth in this Proxy Statement, none of the MFC Nominees
or, to the knowledge of MFC, any other Participant has any arrangement or
-----------
understanding with any MFC Nominee or any other person pursuant to which the
nominations were made, other than each MFC Nominee's consent to be nominated, to
---------
serve as a director if elected and to participate in our proxy solicitation.
III-3
(l) None of the MFC Nominees or, to the knowledge of MFC, any other
Participant, is, or during the last fiscal year has been, an executive officer
- -----------
of, or owned of record or beneficially in excess of ten percent equity interest
in, any business or professional entity that has made during Equidyne's last
full fiscal year, or proposes to make during Equidyne's current fiscal year,
payments to Equidyne or its subsidiaries for property or services in excess of
five percent of Equidyne's consolidated gross revenues for its last full fiscal
year or the other entity's consolidated gross revenues for its last full fiscal
year.
(m) None of the MFC Nominees or, to the knowledge of MFC, any other
Participant, is, or during the last fiscal year has been, an executive officer
- ------------
of, or owns, or during the last fiscal year has owned, of record or beneficially
in excess of ten percent equity interest in any business or professional entity
to which Equidyne or its subsidiaries has made during Equidyne's last full
fiscal year, or proposes to make during Equidyne's current fiscal year, payments
for property or services in excess of five percent of: (i) Equidyne's
consolidated gross revenues for its last full fiscal year; or (ii) the other
entity's consolidated gross revenues for its last full fiscal year.
(n) None of the MFC Nominees or, to the knowledge of MFC, any other
Participant, is, or during the last fiscal year has been, an executive officer
- -----------
of, or owns, or during the last fiscal year has owned, of record or beneficially
in excess of ten percent equity interest in, any business or professional entity
to which Equidyne or its subsidiaries was indebted at the end of the Equidyne's
last full fiscal year in an aggregate amount in excess of five percent of
Equidyne's total consolidated assets at the end of such fiscal year.
(o) None of the MFC Nominees or, to the knowledge of MFC, any other
Participant, is, or during the last fiscal year has been, a member of, or of
- -----------
counsel to, a law firm that Equidyne has retained during the last fiscal year or
proposes to retain during the current fiscal year.
(p) None of the MFC Nominees or, to the knowledge of MFC, any other
Participant, is, or during the last fiscal year has been, a partner or executive
- ------------
officer of any investment banking firm that has performed services for Equidyne
during the last fiscal year or that Equidyne proposes to have perform services
during the current year.
(q) None of the MFC Nominees or, to the knowledge of MFC, any other
Participant, has any other relationships that MFC is aware of between the MFC
- -----------
Nominee and Equidyne that are substantially similar in nature and scope to those
relationships listed in paragraphs (l) through (p).
The information concerning Equidyne and Concord contained in this Annex has been
taken from, and is based upon, publicly available information, including
Equidyne's press releases and its public filings with the SEC.
MFC has or may be deemed to have interests in the solicitation of proxies in
support of the MFC Nominees from its beneficial ownership of the common stock of
Equidyne. The MFC Nominees may also have an interest in the solicitation
through the forms of compensation described in the Proxy Statement.
III-4
APPENDIX
--------
PROXY CARD
----------
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY OR HOW FEW SHARES YOU OWN.
- --------------------------------------------------------------------------------
1. If your shares are registered in your own name, please sign, date and
- --------------------------------------------------------------------------------
mail the enclosed GREEN Proxy Card to Georgeson Shareholder Communications Inc.
- --------------------------------------------------------------------------------
in the postage paid envelope provided today.
- --------------------------------------------------
2. If your shares are held in the name of a brokerage firm, bank nominee or
- --------------------------------------------------------------------------------
other institution, only it can sign a GREEN Proxy Card with respect to your
- --------------------------------------------------------------------------------
shares and only after receiving your specific instructions. Accordingly, please
- --------------------------------------------------------------------------------
sign, date and mail the enclosed GREEN Proxy Card in the postage-paid envelope
- --------------------------------------------------------------------------------
provided, and to ensure that your shares are voted, you should also contact the
- --------------------------------------------------------------------------------
person responsible for your account and give instructions for a GREEN Proxy Card
- --------------------------------------------------------------------------------
to be issued representing your shares.
- -------------------------------------------
3. After signing the enclosed GREEN Proxy Card do not sign or return the
- --------------------------------------------------------------------------------
White proxy card. Remember - only your latest dated proxy will determine how
- --------------------------------------------------------------------------------
your shares are to be voted at the meeting. IF YOU VOTED A WHITE PROXY CARD AND
- --------------------------------------------------------------------------------
WANT TO CHANGE YOUR VOTE, YOU CAN DO SO NOW BY SENDING IN THIS GREEN PROXY CARD.
- --------------------------------------------------------------------------------
4. If you have any questions or need further assistance in voting your
- --------------------------------------------------------------------------------
shares, please contact our proxy solicitor.
- ------------------------------------------------
GEORGESON SHAREHOLDER COMMUNICATIONS INC.
-----------------------------------------
17 State Street, 10th Floor
--------------------------
New York, NY 10004
-------------------
Banks and Brokers: (212) 4140-9800
-----------------------------------
SHAREHOLDERS CALL TOLL FREE: (877) 668-1646
--------------------------------------------
PLEASE DETACH PROXY CARD HERE
-----------------------------
PROXY CARD
-----------
PROXY SOLICITATION BY MFC BANCORP LTD.
--------------------------------------
WITH RESPECT TO EQUIDYNE CORPORATION
------------------------------------
The undersigned, a stockholder of record of Equidyne Corporation ("Equidyne) as
- --------------------------------------------------------------------------------
of the close of business on July 14, 2003 (the "Record Date"), hereby
- --------------------------------------------------------------------------------
constitutes and appoints Michael J. Smith, Roy Zanatta or Rene Randall and any
- --------------------------------------------------------------------------------
of them jointly, or severally, each with the full power of substitution, to vote
- --------------------------------------------------------------------------------
all shares of common stock of which the undersigned would be entitled to vote at
- --------------------------------------------------------------------------------
the annual meeting of stockholders of Equidyne to be held on September 9, 2003,
- --------------------------------------------------------------------------------
and at any adjournments, postponements, continuances or rescheduling thereof,
- --------------------------------------------------------------------------------
hereby revoking any proxy or proxies heretofore given and ratifying or
- --------------------------------------------------------------------------------
confirming all that said proxy or proxies may do or cause to be done by virtue
- --------------------------------------------------------------------------------
thereof with respect to the matters on the reverse side of this proxy card.
- --------------------------------------------------------------------------------
The undersigned hereby revokes any other proxy or proxies heretofore given to
- --------------------------------------------------------------------------------
vote or act with respect to the shares of common stock of Equidyne held by the
- --------------------------------------------------------------------------------
undersigned, and hereby ratifies and confirms all action the herein named
- --------------------------------------------------------------------------------
proxies, their substitutes, or any of them may lawfully take by virtue hereof.
- --------------------------------------------------------------------------------
IF PROPERLY EXECUTED, THIS PROXY CARD WILL BE VOTED AS DIRECTED. IF NO
- --------------------------------------------------------------------------
DIRECTION IS INDICATED WITH RESPECT TO THE PROPOSALS, THIS PROXY WILL BE VOTED
- --------------------------------------------------------------------------------
FOR THE ELECTION OF ALL MFC NOMINEES AND FOR THE PROPOSALS SET FORTH IN ITEMS 2
- --------------------------------------------------------------------------------
AND 3, EXCEPT THAT YOU WILL NOT BE DEEMED TO VOTE FOR THE ELECTION OF ANY
- --------------------------------------------------------------------------------
NOMINEE WHOSE NAME IS WRITTEN IN THE SPACE PROVIDED.
- ------------------------------------------------------------
IN THEIR DISCRETION, THE PROXIES NAMED ABOVE ARE AUTHORIZED TO VOTE UPON
- ---------------------------------------------------------------------------
SUCH OTHER BUSINESS AS MAY BE PROPERLY PRESENTED TO THE MEETING OR IS UNKNOWN TO
- --------------------------------------------------------------------------------
MFC BANCORP LTD. AND THEIR REPRESENTATIVES A REASONABLE TIME BEFORE THE
- --------------------------------------------------------------------------------
COMMENCEMENT OF THE SOLICITATION OF PROXIES BY MFC BANCORP LTD. MFC Bancorp
- --------------------------------------------------------------------------------
Ltd. intends to distribute to the stockholders of the Company supplemental
- --------------------------------------------------------------------------------
materials in the event that the current board of directors of Equidyne amends
- --------------------------------------------------------------------------------
the Bylaws after the date of MFC Bancorp Ltd.'s definitive proxy statement
- --------------------------------------------------------------------------------
(which amendment the proposal set froth in Item 2, if approved, would repeal).
- --------------------------------------------------------------------------------
CONTINUED ON REVERSE SIDE
-------------------------
YOUR VOTE IS IMPORTANAT
------------------------
PLEASE SIGN, DATE AND MAIL
--------------------------
YOUR GREEN PAROXY CARD TODAY
----------------------------
[X] Please mark votes as
- ---------------------------
in this example.
------------------
1. To elect Michael J. Smith, Roy Zanatta, Mark Steinly and Greg Elderkin
- --------------------------------------------------------------------------------
(the "MFC Nominees") to serve as the directors of Equidyne until their
- --------------------------------------------------------------------------------
respective successors are duly elected and qualified or their earlier
- ---------------------------------------------------------------------
resignation or removal.
- ------------------------
FOR [ ] WITHHOLD AUTHORITY [ ]
------------- ------------------------------
all nominees
-------------
(except as
-----------
indicated)
----------
MFC NOMINEES: Michael J. Smith, Roy Zanatta, Mark Steinley and Greg Elderkin
- -----------------------------------------------------------------------------
INSTRUCTION: IF YOU WISH TO VOTE FOR THE ELECTION OF CERTAIN OF THE
- --------------------------------------------------------------------------
PERSONS NAMED ABOVE, BUT NOT ALL OF THEM, CHECK THE "FOR" BOX ABOVE AND WRITE
- --------------------------------------------------------------------------------
THE NAME OF EACH SUCH PERSON YOU DO NOT WISH ELECTED IN THE FOLLOWING SPACE:
- --------------------------------------------------------------------------------
2. RESOLVED, that each and every provision of the Amended and Restated
- -------------------------------------------------------------------------------
Bylaws of Equidyne Corporation adopted on or after May 1, 2003 is
- ---------------------------------------------------------------------------
hereby repealed.
- ----------------
FOR [ ] AGAINST [ ] ABSTAINED [ ]
----------------------------------------------------------------
3. To ratify the appointment of KBA Group LLP as Equidyne's independent
- --------------------------------------------------------------------------------
accountants for fiscal 2003.
- -------------------------------
FOR [ ] AGAINST [ ] ABSTAINED [ ]
----------------------------------------------------------------
4. In their discretion with respect to any other matters as may properly
- --------------------------------------------------------------------------------
come before the 2003 annual meeting.
- -----------------------------------------
FOR [ ] AGAINST [ ] ABSTAINED [ ]
----------------------------------------------------------------
In order for your proxy to be valid, it
---------------------------------------
must be dated. Please mark, sign, date
---------------------------------------
and mail your proxy promptly in the
-----------------------------------
enclosed postage-paid envelope.
-------------------------------
Dated
----- -------------------------------------
Print Name
----------- -------------------------------
Signature(s)
----------- -------------------------------
Signature(s)
------------ ------------------------------
Authority
--------- ---------------------------------
Please sign exactly as the name
--------------------------------
appears on the stock certificate
--------------------------------
or on the attached label. If
------------------------------
the shares are held by joint
----------------------------
tenants, both should sign. In
------------------------------
the case of joint owners, each
------------------------------
joint owner must sign. When
----------------------------
signing as attorney, executor,
------------------------------
administrator, trustee, guardian,
---------------------------------
corporate officer, etc., please
-------------------------------
give full title.
-----------------