SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a- 12
- --------------------------------------------------------------------
Avitar, Inc. (File No. 0-20316)
(Name of Registrant as Specified In Its Charter)
- ------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(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
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/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
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previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
AVITAR, INC.
65 Dan Road
Canton, Massachusetts 02021
May 23, 2003
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of the Stockholders
of Avitar, Inc., a Delaware corporation ("Avitar"), at Avitar's offices at 65
Dan Road, Canton, Massachusetts 02021, on June 24, 2003 at 11:00 a.m.
At the meeting you will be asked to consider and vote upon (1) the election
of five Directors to Avitar's Board of Directors; (2) the approval of the
issuance and reservation of shares of common stock, as described on page __ of
this Proxy Statement; (3) the adoption of an Amendment of the Certificate of
Incorporation to increase the authorized shares of common stock from 100,000,000
to 150,000,000; (4) the re-appointment of BDO Seidman, LLP as Avitar's
independent auditors for the fiscal year ending September 30, 2003; and (5) any
other business that properly comes before the meeting or any adjournments or
postponements thereof, including a shareholder proposal described on page __ of
this Proxy Statement.
The Board of Directors recommends that shareholders vote FOR Items 1, 2, 3
and 4 and AGAINST the proposal in Item 5.
Your vote is important. We urge you to complete, sign, date and return the
enclosed proxy card promptly in the accompanying prepaid envelope. You may, of
course, attend the Meeting and vote in person, even if you have previously
returned your proxy card.
Sincerely yours,
Peter P. Phildius,
Chairman and Chief Executive Officer
Avitar, Inc.
65 Dan Road
Canton, Massachusetts 02021
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on June 24, 2003
To the Stockholders of Avitar, Inc.
Notice is hereby given that the Annual Meeting of Stockholders of Avitar,
Inc., a Delaware corporation ("Avitar") will be held at 11:00 a.m., local time,
on June 24, 2003 at Avitar's offices at 65 Dan Road, Canton, Massachusetts, for
the following purposes:
(1) To consider and vote upon the election of the Board of Directors consisting
of five persons to serve until the next annual meeting of the stockholders;
(2) To consider and vote upon the approval of the issuance and reservation of
all shares of Common Stock issued or issuable in connection with the Private
Placement described on page __ of this Proxy Statement;
(3) To consider and vote upon the Amendment of the Certificate of Incorporation
of Avitar to increase the authorized shares of Common Stock from 100,000,000 to
150,000,000;
(4) To consider and vote upon a proposal to ratify the selection of BDO Seidman,
LLP as Avitar's independent auditors for the fiscal year ending September 30,
2003; and
(5) To conduct such other business as may properly come before the Annual
Meeting or any adjournments or postponements thereof, including the shareholder
proposal described on page __ of this Proxy Statement.
Only record holders of Common Stock at the close of business on May 9,
2003 are entitled to notice of and to vote at the Annual Meeting and any
adjournments or postponements thereof. To ensure that your vote will be counted,
please complete, sign, date and return the Proxy in the enclosed prepaid
envelope whether or not you plan to attend the Annual Meeting. You may revoke
your proxy by notifying the Secretary of the Company in writing at any time
before it has been voted at the Annual Meeting.
By Order of the Board of Directors
May 23, 2003 Jay C. Leatherman, Secretary, Avitar,
Inc.
Canton, Massachusetts
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY CARD PROMPTLY WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE ANNUAL MEETING.
Avitar, Inc.
-----------------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 24, 2003
------------------------------------
THE ACCOMPANYING PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
AVITAR, INC.
If properly signed and returned and not revoked, the proxy will be voted in
accordance with the instructions it contains. The persons named in the
accompanying proxy will vote the proxy for the Board of Directors' slate of
directors and for the other matters listed on the proxy, but against Item 5, in
each case as recommended by the Board of Directors unless contrary instructions
are given. At any time before it is voted, each proxy granted may be revoked by
the stockholder by a later dated proxy, by written revocation addressed to the
Secretary of Avitar, Inc. at the address below or by voting by ballot at the
Annual Meeting.
The Company's principal executive offices are located at 65 Dan Road,
Canton, Massachusetts 02021. This proxy statement and the accompanying proxy are
being sent to stockholders on or about May 23, 2003. ANY PROXY MAY BE REVOKED IN
PERSON AT THE ANNUAL MEETING, BY SUBMITTING A PROXY DATED LATER THAN THE PROXY
TO BE REVOKED OR BY NOTIFYING THE SECRETARY OF THE COMPANY IN WRITING AT ANY
TIME PRIOR TO THE TIME THE PROXY IS VOTED.
VOTING SECURITIES
The Board has fixed the close of business on May 9, 2003 as the record date
(the "Record Date") for determination of stockholders entitled to receive notice
of and to vote at the Annual Meeting or any adjournment thereof. Only
stockholders of record at the close of business on the Record Date will be
entitled to notice of and to vote at the Annual Meeting. On the Record Date, the
Company had outstanding 72,108,143 shares of Common Stock and 136,202 shares of
Preferred Stock, of which 7,228 were shares of Series B Preferred Stock and
93,333 were shares of Series D Preferred Stock. Stockholders are entitled to one
vote for each share of Common Stock (including 10 shares underlying each share
of Series D Preferred Stock) and each share of Series B Preferred Stock on the
election of members of the Board of Directors and other business as may properly
come before the meeting or any adjournments thereof. The holders of a majority
of the outstanding voting shares constitute a quorum. Abstentions from voting
and broker non-votes on a particular Proposal will be counted for purposes of
determining the presence of a quorum but will not be counted as affirmative or
negative votes on the Proposals.
As of the Record Date, the directors and executive officers of Avitar as a
group held 5,623,522 voting shares, representing 7.7 % of the shares eligible to
vote at the Annual Meeting. (In addition, also as of the Record Date, beneficial
owners of approximately 5% or more of Common Stock, as listed in the table on
page __ of this Proxy Statement, held in the aggregate 16,201,765 voting shares,
representing 22.2% of the shares eligible to vote at the Annual Meeting.)
ACTION TO BE TAKEN UNDER PROXY
All proxies for stockholders in the accompanying form that are properly
executed and returned will be voted at the Annual Meeting and any adjournments
thereof in accordance with any specifications thereon or, if no specifications
are made, will be voted for the election of the five nominees described herein
and for Items 2, 3 and 4, but against Item 5.
SOLICITATION
Avitar will bear the entire cost of the solicitation of proxies from its
stockholders, including preparation, assembly, printing and mailing of this
Proxy Statement, the proxy card and any additional information furnished to
stockholders. Copies of solicitation materials will be furnished to banks,
brokerage houses, fiduciaries and custodians holding in their names shares
beneficially owned by others to forward to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, facsimile,
telegram or personal solicitation by directors, officers or other regular
employees of Avitar. No additional compensation will be paid to such persons for
such services. Avitar may also employ the services of a professional
solicitation company to assist with solicitation of stockholders; but as of May
23, 2003 Avitar has not determined to retain a solicitation company. If such a
company were subsequently retained, Avitar would bear the entire cost.
ITEM NO. 1
ELECTION OF DIRECTORS
Five (5) directors will be elected to hold office until the next Annual
Meeting of Stockholders and until their successors have been elected and duly
qualified. The persons named on the accompanying proxy will vote all shares for
which they have received proxies for the election of the nominees named below
unless contrary instructions are given. In the event that any nominee should
become unavailable, shares will be voted for a substitute nominee unless the
number of directors constituting a full board is reduced. Directors are elected
by plurality vote.
NOMINEES
The name, age and position with Avitar of each nominee for director is
listed below, followed by summaries of their background and principal
occupations.
Name Age Title
- ---- --- -----
Peter P. Phildius 73 Chairman of the Board/Chief Executive
Officer
Douglas W. Scott 56 President and Chief Operating Officer
/Director
Neil R. Gordon (1)(2) 55 Director
James Groth (1)(2) 64 Director
Charles R. McCarthy, Jr. 64 Director
(1)(2)
1. Member of Audit Committee.
2. Member of Compensation Committee.
PETER P. PHILDIUS
Mr. Phildius has been Chairman of the Board of Directors since October 1990
and Chief Executive Officer since July 1996. He has been a general partner in
Phildius Kenyon & Scott, a partnership ("PKS"), since that firm's founding in
1985. Prior to 1985, Mr. Phildius was an independent consultant and Chairman and
co-founder of Nutritional Management, Inc., a company that operated weight loss
clinics (1983 - 1985), President and Chief Operating Officer of Delmed, Inc., a
medical products company (1982 - 1983), President and Chief Operating Officer of
National Medical Care, Inc., a dialysis and medical products company (1979-1981)
and held a variety of senior management positions with Baxter Laboratories, Inc.
("Baxter"), a hospital supply company and the predecessor of Baxter Healthcare
Corporation. During the last eight years of his 18 year career at Baxter (1961 -
1979), Mr. Phildius was Group Vice President and President of the Parenteral
Division, President of the Artificial Organs Division and President of the
Fenwal Division.
DOUGLAS W. SCOTT
Mr. Scott has been the Chief Operating Officer since July 1996, was the
Chief Executive Officer from August 1989 until July 1996 and has been a director
since August 1989. Mr. Scott has been a general partner in PK&S since its
founding in 1985. Prior to 1985, Mr. Scott was Executive Vice President of
Nutritional Management, Inc. (1983 - 1985); Senior Vice President, Operations of
Delmed, Inc. (1982 - 1983); Vice President, Quality Assurance of Frito-Lay,
Inc., a consumer products company (1980 - 1982); and held several senior
positions at Baxter from 1970 to 1980. The last two of these senior positions at
Baxter were General Manager of the Vicra Division and General Manager of Irish
Operations. Mr. Scott is also a director of Candela Corporation, a
publicly-traded company in the business of manufacturing and marketing medical
lasers. Mr. Scott received an M.B.A. from the Harvard Business School.
JAMES GROTH
Mr. Groth has served as a director since January 1990. Mr. Groth has been
President of Mountainside Corporation, a provider of corporate sponsored
functions, for over the past 15 years.
NEIL R. GORDON
Mr. Gordon has served as a director since June 1997. He has been President
of N.R. Gordon & Company, Inc., a company that provides a broad range of
financial consulting services, since 1995. From 1981 to 1995, he was associated
with Ekco Group, Inc. and served as its Treasurer from 1987 to 1995. Mr. Gordon
has also served as Director of Financing and Accounting for Empire of Carolina,
Inc. He received a Bachelor of Science Degree from the Pennsylvania State
University.
CHARLES R. McCARTHY, JR.
Mr. McCarthy was elected as a director in February 1999. He has been a
counsel in the Washington D.C. law firm, O'Connor & Hannan, since 1993.
Previously, Mr. McCarthy was General Counsel to the National Association of
Corporate Directors, served as a trial attorney with the Securities and Exchange
Commission, was Blue Sky Securities Commissioner for the District of Columbia
and was a law professor teaching securities law topics and served as a Board
member of and counsel to a number of public companies over the last 30 years.
NUMBER OF DIRECTORS
The Company's Bylaws allow the Board to fix the number of Board members
between 3 and 7. The number has been fixed, at present, at 5. The Board can
increase the number to 7 at any time without stockholder approval. There are no
family relationships between any Director or Executive Officer of Avitar and any
other Director or Executive Officer of Avitar.
TERM
Directors hold office for a period of one year from the Annual Meeting of
Stockholders at which they are elected or until their successors are duly
elected and qualified. Officers are appointed by the Board of Directors and hold
office at the will of the Board.
BOARD MEETINGS AND COMMITTEES
The Board held 4 meetings during the fiscal year ended September 30, 2002.
The Board has two standing committees: the Audit Committee and the
Compensation Committee. The Board does not have a standing nominating committee
or any committee performing the function of such a committee. During fiscal year
2002, each Board member attended at least 75% of the aggregate number of
meetings of the Board and the Committee of the Board on which he served.
AUDIT COMMITTEE.
The Audit Committee meets with the independent auditors, at a minimum
annually, to review the results of the annual audit and discuss the financial
statements; recommends to the Board the independent auditors to be retained; and
receives and considers the accountants' comments as to controls, adequacy of
staff and management performance and procedures in connection with audit and
financial records. Management has primary responsibility for financial
statements and the reporting process, including the systems of internal
controls, and has represented to the Audit Committee that Avitar's 2002
consolidated financial statements are in accordance with generally accepted
accounting principles. The Audit Committee, comprised of Mr. Gordon, Mr. Groth
and Mr. McCarthy, held 2 telephone meetings concerning fiscal year 2002
(although both meetings were held during the first quarter after fiscal year
2002). In addition, the Audit Committee reviewed and approved the financial
statements that were included in each of the quarterly reports on Form 10-QSB
during the year ended September 30, 2002.
AUDIT COMMITTEE REPORT
In connection with the fiscal 2002 audit, the Audit Committee has:
- - reviewed and discussed with management Avitar's audited consolidated
financial statements included in our annual report on Form 10-KSB for the
year ended September 30, 2002,
- - discussed with BDO Seidman, LLP the matters required to be discussed by
Statement of Auditing Standards No. 61,
- - discussed with BDO Seidman, LLP whether various other services performed
for Avitar during 2002 were compatible with BDO Seidman, LLP maintaining
its independence, and
- - received from and discussed with BDO Seidman, LLP the written disclosures
and the letter from BDO Seidman, LLP required by the Independence Standards
Board Standard No. 1 and discussed with BDO Seidman, LLP its independence.
Based on the review and the discussions described above, the Audit
Committee recommended to the Board of Directors that the audited consolidated
financial statements be included in our annual report on Form 10-KSB for the
year ended September 30, 2002 for filing with the Securities and Exchange
Commission.
The Board of Directors has approved a written charter, a copy of which was
attached to the 2001 Proxy Statement. Two members of the Audit Committee have
been determined to be independent in accordance with the requirements of Section
121(A) of the American Stock Exchange listing standards.
Fiscal 2002 Audit Firm Fee Summary. During fiscal year 2002, Avitar
retained its principal auditor, BDO Seidman, LLP to provide services in the
following categories and amounts:
Audit Fees, including review of quarterly 10-QSB filings...............$106,290
All Other Fees..........................................................$18,100
The Audit Committee has considered whether the provision of non-audit
services by the Company's principal auditor was compatible with maintaining
auditor independence and has determined such services were not incompatible with
maintaining auditor independence.
THE AUDIT COMMITTEE
Neil R. Gordon
James Groth
Charles R. McCarthy, Jr.
The Audit Committee Report shall not be deemed incorporated by reference by
any general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934 (together, the "Acts"), except to the extent Avitar specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
COMPENSATION COMMITTEE.
The Compensation Committee makes recommendations to the Board concerning
salaries and incentive compensation, awards stock options to employees and
consultants and otherwise determines compensation levels and performs such other
functions regarding compensation as the Board may delegate. The Compensation
Committee, comprised of Mr. Gordon, Mr. Groth and Mr. McCarthy, held no meetings
in fiscal year 2002.
DIRECTOR COMPENSATION
During Fiscal 2002, in accordance with a plan approved by the Company on
September 25, 2001, the Company compensated its non-management directors with a
$5,000 annual retainer, $1,000 for each board meeting attended and $500 for each
committee meeting attended. In addition, this plan provides for each
non-management director to be granted options covering 100,000 shares of the
Company's common stock upon initial election to the Board and 30,000 shares of
the Company's common stock for each year in which he/she was selected to serve
as a director. Under the plan approved by the Company on September 25, 2001,
non-management directors received option grants covering 90,000 shares of the
Company's common stock on March 31, 2002. These options have an exercise price
of $.76 per share, vest over three years and will expire in March 31, 2012.
For information on compensation to management directors, see
"Management-Executive Compensation" below.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of the Common Stock
beneficially owned as of May 9, 2003 by (i) each person believed by Avitar to be
the beneficial owner of more than 5% of the Common Stock; (ii) each director;
(iii) the Chief Executive Officer and its four most highly compensated executive
officers (other than the Chief Executive Officer) who earn over $100,000 a year;
and (iv) all directors and executive officers as a group. Beneficial ownership
by the stockholders has been determined in accordance with the rules promulgated
under Section 13(d) of the Securities Exchange Act of 1934, as amended. All
shares of the Common Stock are owned both of record and beneficially, unless
otherwise indicated.
Name and Address of Beneficial Owner (1) No. Owned %
- ---------------------------------- --------- ----
Peter P. Phildius (2)(3)(10)(14) 4,877,811 6.6
Douglas W. Scott (2)(4)(10)(15) 3,454,200 4.7
Phildius, Kenyon & Scott("PK&S") (2)(10) 1,792,595 2.5
Jay C. Leatherman, Jr.(2)(5) 289,380 *
Carl Good (2) (18) 284,708 *
Douglas Lewis (2)(6)(16) 1,019,017 1.4
James Groth (2)(7)(17) 207,199 *
Neil R.Gordon (2)(8) 289,097 *
Charles R. McCarthy (2)(9) 233,489 *
GIN99 LLC (11) 6,462,515 9.0
David Brown (12) 8,682,056 11.7
Alan Aker (13) 3,557,194 4.8
All directors and executive officers
as a group (3)(4)(5)(6)(7)(8)(9)(10)
(14)(15)(16)(17)(18) 8,862,306 11.8
* Indicates beneficial ownership of less than one (1%) percent.
(1) Information with respect to holders of more than five (5%) percent of the
outstanding shares of the Company's Common Stock was derived from, to the extent
available, Schedules 13D and the amendments thereto on file with the Commission
and the Company's records regarding stock issuances.
(2) The business address of such persons, for the purpose hereof, is c/o Avitar,
Inc., 65 Dan Road, Canton, MA 02021.
(3) Includes 1,668,120 shares of the Company's Common Stock, options and
warrants to purchase 1,417,096 shares of the Company's Common Stock. Also
includes the securities of the Company beneficially owned by PK&S as described
below in Note 10.
(4) Includes 715,501 shares of the Company's Common Stock and options to
purchase 946,104 shares of the Company's Common Stock. Also includes the
securities of the Company beneficially owned by PK&S as described below in Note
10.
(5) Includes 5,630 shares of the Company's Common Stock, and options to purchase
283,750 shares of the Company's Common Stock.
(6) Includes 919,017 shares of the Company's Common Stock, and options to
purchase 100,000 shares of the Company's Common Stock.
(7) Includes 74,699 shares of the Company's Common Stock and options to purchase
132,500 shares of the Company's Common Stock.
(8) Includes 90,597 shares of the Company's Common Stock, warrants to purchase
90,000 shares of the Company's Common Stock granted to such director under a
consulting agreement to provide services to the Company and options to purchase
108,500 shares of the Company's Common Stock.
(9) Includes 172,655 shares of the Common Stock and options to purchase 60,834
shares of the Common Stock.
(10) Represents ownership of 1,732,595 shares of the Company's Common Stock,
options and warrants to purchase 60,000 shares of the Company's Common Stock.
PK&S is a partnership of which Mr. Phildius and Mr. Scott are general partners.
(11) The address for such entity is c/o Clifford Chance, Rogers & Wells LLP, 200
Park Avenue, New York, NY 10166. Represents 6,462,515 shares of the Company's
Common Stock.
(12) The business address for such person is 4101 Evans Avenue, Fort Meyers, FL
33901. Represents 7,432,056 shares of the Company's Common Stock and warrants to
purchase 1,250,000 shares of the Common Stock.
(13) The business address for such person is 1445 Northwest Boca Raton, Boca
Raton, FL 33432. Represents ownership of 2,307,194 shares of the Company's
common stock and warrants to purchase 1,250,000 shares of the Common Stock.
(14) Does not include 33,600 shares of the Common Stock owned by Mr. Phildius'
wife, all of which he disclaims beneficial ownership.
(15) Does not include 15,000 shares of the Common Stock owned by Mr. Scott's
children, all of which he disclaims beneficial ownership.
(16) Does not include 1,035,983 shares of the Common Stock owned by Mr. Lewis'
wife, all of which he disclaims beneficial ownership.
(17) Does not include 10,929 shares of the Company's Common Stock owned by a
trust established for Mr. Groth's children, all of which he disclaims beneficial
ownership.
(18) Includes 244,708 shares of the Company's Common Stock, and options to
purchase 40,000 shares of the Company's Common Stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the officers
and directors, and persons who own more than 10% of a registered class of equity
securities to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC"). Officers, directors and greater than
10% stockholders are required by SEC regulation to furnish Avitar with copies of
all Section 16(a) forms they file.
Based on its review of the copies of such forms received by it or its
written representations from certain reporting persons, the Company believes
that, during Fiscal 2002, all filing requirements applicable to its officers,
directors and greater than ten-percent shareholders were met except the
following failures to file timely reports by Section 16(a):
o One report (Form 4) covering 1 transaction was filed late by Neil Gordon.
o One report (Form 4) covering 1 transaction was filed late by Charles
McCarthy.
o One report (Form 4) covering 1 transaction was filed late by James Groth.
o One report (Form 4) covering 1 transaction was filed late by Peter
Phildius.
o One report (Form 4) covering 1 transaction was filed late by Douglas Scott.
o One report (Form 4) covering 1 transaction was filed late by Jay
Leatherman.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PK&S, a 3.8 % beneficial owner of the Company, provided consulting services
to the Company from September 1989 to May 1995. On May 28, 1992, the Company
entered into a written consulting agreement with PK&S, which reflected the
provisions of a previous oral agreement approved by the Company's Board of
Directors in October 1990. Pursuant to its arrangement with the Company, PK&S
provided the services of each of Messrs. Phildius and Scott to the Company for
approximately 20 hours per week.
On May 19, 1995, the Company's Consulting Agreement ended and was replaced
by the Employment Agreements with Messrs. Phildius and Scott (See "Employment
Agreements"). As requested by Messrs. Phildius and Scott and approved by the
Company's Board of Directors, the salary and benefits provided under the
Employment Agreements will be paid directly to PK&S. Under the terms of the
current employment agreements with Peter Phildius and Douglas Scott described
above, the Company pays their salaries and related expenses directly to PK&S.
The aggregate of salaries, fringe benefits and reimbursement of expenses paid to
PK&S by the Company on behalf of Messrs. Phildius and Scott for fiscal years
2002 and 2001 totaled $448,727 and $467,344 respectively.
In October 1996, the Company entered into a consulting agreement with N.R.
Gordon & Company, Inc. Neil Gordon, a member of the Company's Board of
Directors, is the President of N.R. Gordon and Company, Inc. Under this
agreement, N.R. Gordon & Company, Inc. provided financial consulting services
for which it received 50,000 warrants at an exercise price of $0.93 per share
and was paid $100.00 per hour for all services performed. In addition, N.R.
Gordon & Company, Inc. was entitled to receive commissions for certain capital
raising services. During Fiscal 1998, the Company canceled the 50,000 warrants
granted to N.R. Gordon & Company in 1996 and replaced them with 100,000 warrants
(of which 50,000 where exercised in October 2001 and the remaining 50,000 do not
expire until 2003) to purchase the Company's Common Stock for $.25 per share. No
services were provided to the Company under this Agreement during Fiscal 1999
and Fiscal 2000. In March 2001, the Company entered into a new consulting
agreement with N.R. Gordon & Company, Inc. for financial consulting services.
Under this new agreement, N.R. Gordon and Company, Inc. received warrants to
purchase 40,000 shares of the Company's common stock at an exercise price of
$.79 per share until February 2006 and it is to be paid $100.00 per hour for
services rendered to the Company. Expenses incurred for N.R. Gordon & Company,
Inc. amounted to $4,082 in Fiscal 2002 and $3,617 in Fiscal 2001.
Management believes each of the foregoing transactions was entered into on
terms at least as favorable to the Company as could be obtained from unrelated
parties negotiating at arms-length.
MANAGEMENT
The executive officers of the Company and their respective
ages and positions with the Company, as of May 9, 2003, along with certain
biographical information (based solely on information supplied by them), are as
follows:
Name Age Title
Peter P. Phildius 73 Chairman of the Board/Chief Executive Officer
Douglas W. Scott 56 President and Chief Operating Officer
Jay C. Leatherman Jr. 59 Vice President, Chief Financial Officer
and Secretary
Carl M. Good, III 59 Vice President of Research and Development
Douglas Lewis 59 Vice President, President of USDTL
PETER P. PHILDIUS
Biographical information of Mr. Phildius is included under "Proposal No. 1,
Election of Directors -- Nominees" in this Proxy Statement.
DOUGLAS W. SCOTT
Biological information of Mr. Scott is included under "Proposal No. 1,
Election of Directors -- Nominees" in this Proxy Statement.
JAY C. LEATHERMAN, JR.
Mr. Leatherman has served as the Company's Chief Financial Officer since
October 1992 and its Secretary since July 1994. He has over 26 years experience
in financial management in the health care, medical products and medical
diagnostic fields. Mr. Leatherman served as Vice President and Chief Financial
Officer of 3030 Park, Inc. and 3030 Park Management Company from 1985 to 1992,
responsible for financial, management information services and business
development functions for this continuing care retirement community and
management company. He served as Director of Finance and Business Services for
the Visiting Nurses Association of New Haven, Inc. from 1977 to 1985. In
addition, he served in a variety of accounting and financial positions with
Westinghouse Electric Corporation from 1969 to 1977. Mr. Leatherman has a B.B.A
in accounting from the University of Hawaii.
CARL M. GOOD, III
Dr. Good has served as the Company's Vice President of Research and
Development since February 1997 and as a consultant and member of the Company's
Scientific Board since October 1996. He has over 30 years of experience in
product development and operating management experience in the medical
diagnostics industry. Dr. Good has held technology management positions with
Millipore Corporation and most recently, worked in the development of
sophisticated medical diagnostic products at Cambridge Biotech Corporation. He
has received a Ph. D. in Microbial Genetics from Iowa State University and has
completed Postdoctoral Study in Enzymology at the University of Wisconsin
Medical School and the University of Massachusetts.
DOUGLAS LEWIS
Mr. Lewis had been the President of USDTL since 1990 and was appointed Vice
President of the Company upon the acquisition of USDTL by the Company. He has
over 25 years experience in the operation and management of laboratories, which
specialize in diagnostic testing for drugs of abuse. Mr. Lewis has held senior
level management and consulting positions with various hospital and private
laboratories in the Chicago, Illinois area. He received a Bachelor of Arts
Degree in Chemistry from Grinnell College and was a Pre-Doctoral Fellow at the
University of Illinois.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE.
The following table sets forth compensation earned by or paid to the Chief
Executive Officer, Chief Operating Officer and other executive officers for
fiscal year 2002 and, to the extent required by applicable Commission rules, the
preceding two fiscal years. All of the compensation in the table below for the
Chief Executive Officer and Chief Operating Officer represents management
consulting fees and salary paid by Avitar to PK&S for the services of Mr.
Phildius and Mr. Scott.
Annual Compensation Long-Term
Name/Position Year Salary(1) Bonus Compensation Options
- ------------- ---- --------- ----- ---------------------
Peter P. Phildius 2002 $200,000 0 26,000(2)
(Chairman of the Board/ 2001 $200,000 0 252,000(3)
Chief Executive Officer) 2000 $170,833 0 0
Douglas W. Scott 2002 $180,000 0 66,000(2)
(President/ 2001 $180,000 0 132,000(3)
Chief Operating Officer) 2000 $162,500 0 0
Jay C. Leatherman, Jr. 2002 $131,230 0 43,250(2)
(Chief Financial Officer) 2001 $125,000 0 87,500(3)
2000 $108,239 0 0
Carl M. Good, III 2002 (5) 0 400,000(4)
(Vice President of 2001 (5) 0 0
Research & Development) 2000 $117,981 0 0
Douglas Lewis 2002 $126,000 0 0
(Vice President/President 2001 $126,000 0 0
of USDTL) 2000 $126,000 0 0
(1) Does not include amounts reimbursed for business-related expenses incurred
by the executive officers on behalf of the Company.
(2) Reflects additional stock options granted to executive officers by the
Company's Board of Directors in January 2002.
(3) Reflects additional stock options granted to executive officers by the
Company's Board of Directors in September 2001.
(4) Reflects stock options granted to executive officer by the Company's Board
of Directors in June 2002.
(5) Compensation did not equal or exceed $100,000.
PK&S is a partnership, two of whose general partners are Messrs. Phildius
and Scott. PK&S provided management consulting services to the Company through
May 18, 1995 pursuant to a written consulting agreement effective May 28, 1992.
Under this agreement, Messrs. Phildius and Scott each devoted approximately 20
hours per week to the Company's affairs for which the Company paid a monthly
consulting fee of $14,500 and reimbursed expenses. Since May 19, 1995, the
Company has paid PK&S the salary and employee benefit amounts provided under the
terms of the Company's employment agreements with Messrs. Phildius and Scott.
See "Employment Agreements" below and "Certain Relationships and Related
Transactions" above.
STOCK OPTION GRANTS IN LAST FISCAL YEAR.
In January 2002, the Outside Directors of the Company's Board of Directors
granted options to purchase the Company's common stock in the amount of 126,000
(representing 7.8% of total options granted in Fiscal 2002) to Peter Phildius,
66,000 (representing 4.1% of total options granted in Fiscal 2002) to Douglas
Scott and 43,250 (representing 2.7% of total options granted in Fiscal 2002) to
Jay Leatherman. Such options, which have an exercise price of $1.34 per share,
will become exercisable at the rate of 20% per year for five years and will
expire on January 18, 2012. In June 2002, the Company's Board of Directors
granted options to purchase the Company's common stock in the amount of 400,000
to Carl M. Good which represented 25% of the total options granted in Fiscal
2002. Mr. Good's options, which have an exercise price of $.46 and will expire
on June 3, 2012, will become exercisable as follows: 200,000 shares at the rate
of 20% per year for five years and 200,000 shares at the earlier of nine and
one-half years or upon achieving certain performance objectives established for
managers and executive officers.
OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES.
No stock options or stock appreciation rights were exercised by the
executive officers in fiscal year 2002.
As of September 30, 2002, the executive officers held options as follows, of
which 52,500 were in the money:
Options Value of Options
----------------------------
Total Options Exercisable Exercisable Not Exercisable
Peter Phildius 2,178,000 968,400 $ 0 $ 0
Douglas Scott 1,398,000 764,400 0 0
Jay Leatherman 651,250 231,250 1,575 0
Carl Good 400,000 0 0 0
Douglas Lewis 250,000 75,000 0 0
EMPLOYMENT AGREEMENTS.
Messrs. Phildius and Scott are covered by Employment Agreements (the
"Employment Agreements") that commenced on May 19, 1995. Pursuant to the
Employment Agreements, if Messrs. Phildius and/or Scott are terminated without
"Cause" (as such term is defined in the Employment Agreements) by the Company or
if Messrs. Phildius and/or Scott terminate their employment as a result of a
breach by the Company of its obligations under such Agreements, he will be
entitled to receive his annual base salary ($200,000 for Mr. Phildius and
$180,000 for Mr. Scott) for a period of up to 18 months following such
termination. In addition, if there is a "Change of Control" of the Company (as
such term is defined in the Employment Agreements) and, within two years
following such "Change of Control", either of Messrs. Phildius or Scott is
terminated without cause by the Company or terminates his employment as a result
of a breach by the Company, such executive will be entitled to certain payments
and benefits, including the payment, in a lump sum, of an amount equal to up to
two times the sum of (i) the executive's annual base salary and (ii) the
executive's most recent annual bonus (if any). In addition, pursuant to the
Employment Agreements, which have a three-year term (subject to extension),
Messrs. Phildius and Scott are each entitled to annual bonus payments of up to
$150,000 if the Company achieves certain levels of pre-tax income (as such term
is defined in such Agreements) or alternative net income objectives established
by the Board of Directors.
REQUIRED VOTE
Election of each of the five nominees for director requires, under Avitar's
Bylaws, the affirmative vote of the holders of a majority of the Avitar Common
Stock and Series B and D Preferred Stock present in person or by proxy at the
Avitar Annual Meeting (assuming a quorum exists) and entitled to vote thereon.
BOARD RECOMMENDATION
The Avitar Board of Directors unanimously recommends a vote FOR election of
all of the five nominees for director.
ITEM NO. 2
APPROVAL OF THE ISSUANCE OF THE MAXIMUM NUMBER OF SHARES OF THE COMPANY'S COMMON
STOCK ISSUED OR ISSUABLE IN CONNECTION WITH THE PRIVATE PLACEMENT COMMENCED IN
FEBRUARY 2003, INCLUDING SHARES ISSUABLE UPON CONVERSION OF OUTSTANDING
SUBORDINATED NOTES.
The Board of Directors has unanimously approved, and is hereby soliciting
stockholder approval of, the issuance and reservation of the maximum number of
shares of common stock issued and issuable in connection with the private
placement described below.
BACKGROUND
In February 2003, the Company through a placement agent, Brenner/HCFP
Securities, LLC. ("HCFP") commenced a private placement, which was a best
efforts offering with a minimum of $850,000 and a maximum of $1,850,000 (the
"Private Placement"). During that month, the Company entered into Subscription
Agreements with accredited investors (collectively, the "Purchasers") raising
gross proceeds of $955,000 and the Private Placement terminated without further
subscriptions on April 15, 2003. The Purchasers acquired units (or fractions
thereof) at a price per unit of $50,000. Each "Unit" consisted of (a) a $50,000
15% Senior Subordinated Promissory Note ("Subordinated Note") and (b) 300,000
shares of common stock. The Company sold and issued an aggregate of $955,000
Subordinated Notes and 5,730,000 shares of common stock. The net proceeds were
used to make scheduled principal repayments on outstanding debt, to pay debt
interest when due, to pay accounts payable and otherwise to provide working
capital.
REASONS FOR THIS PROPOSAL
In the Private Placement, and to comply with applicable rules of The
American Stock Exchange (AMEX), the Company agreed to seek the approval of its
shareholders for both (a) the issuance and reservation of all shares of common
stock issued or issuable in connection with the Private Placement and (b) the
increase in its authorized shares of common stock from 100,000,000 to at least
125,000,000 and the Board of Directors has determined to increase the authorized
shares of common stock to 150,000,000 ("Shareholder Approval"). (The proposed
increase of authorized shares is discussed in Item No.3 below.)
The Company's common stock trades on AMEX. According to AMEX Listing
Standard Section 713, the Company is required to obtain stockholder approval of
the sale, issuance or potential issuance of the Company's common stock, or
securities convertible into the Company's common stock, if the aggregate number
of shares to be issued or could be issued in the transaction and related
transactions equals or exceeds 20% of the Company's then outstanding shares of
common stock on the date of issuance (the "Share Limit") and the purchase price
for such securities is less than the greater of the book value or market value
of the common stock on the date of issuance (the "Value Limit").
As of the commencement and initial closing of the Private Placement, the
aggregate number of shares of common stock that may be issuable in the Private
Placement, including upon conversion of the Subordinated Notes, exceeded the
Share Limit and the purchase price was less than the Value Limit. Therefore, in
accordance with AMEX Listing Standard Section 713, the Company is asking its
stockholders to approve the issuance and reservation of the maximum number of
shares of Common Stock issuable in the Private Placement.
TOTAL SHARES ISSUED AND COULD BE ISSUED IN THE PRIVATE PLACEMENT
Compensation shares issued to HCFP in November 2002 200,000
Shares issued to investors (February 2003) 5,730,000
Shares underlying Subordinated Notes (February 2003) 4,613,527
when convertible after Shareholder Approval
Additional shares underlying Subordinated Notes after
anticipated adjustment (estimate based 6,000,000
upon anticipated issuances, at approximately
one half of initial conversion price)
Shares issued to HCFP as compensation on Private Placement 573,000
Shares underlying warrants issued to HCFP as compensation 461,353
on Private Placement
Additional shares underlying warrants issued to HCFP as 600,000
compensation on Private Placement after anticipated
adjustment (estimate based upon anticipated issuances,
at approximately one half of initial conversion price)
Penalty shares; if Registration Statement is not effective 1,814,500
by target date and remaining not effective over
19-month period (estimate based on average recent
market prices, approximately 5% of which may
now be due); __________
19,992,380
KEY TERMS OF THE PRIVATE PLACEMENT AND SUBORDINATED NOTES
Registration of Shares of Common Stock. The Company has agreed to register
the shares of common stock issued or issuable in connection with the Private
Placement, including shares issuable upon conversion of the Subordinated Notes.
As part of its compensation, the Placement Agent received (a) 10% of the shares
of common stock issued and (b) Warrants to purchase 10% of the common stock
issuable on conversion of the Subordinated Notes, exercisable at the conversion
price of the Subordinated Notes, and all of these shares are to be registered.
If the Company failed to file its Registration Statement on time or if the
Registration Statement did not become effective by 90 days after the final
closing of the Private Placement, the Company will be obligated under certain
circumstances to issue additional shares as liquidated damages ("Penalty
Shares"). If Shareholder Approval is not obtained, with Penalty Shares, it is
possible that the Company may exceed the Share Limit and therefore be subject to
delisting.
Optional Conversion of Subordinated Notes. Subject to Shareholder Approval,
the Subordinated Notes, including accrued but unpaid interest, will be
convertible, at the option of the holders, into shares of common stock initially
at $0.207 per share. The conversion price will be subject to standard
adjustments and, in addition, if shares (or derivative securities) are issued at
a price (or with exercise or conversion prices) less than the conversion price,
the conversion price will be automatically reduced to that lower price. If all
the Subordinated Notes were converted and in view of anticipated additional
issuances to date of shares at prices less than the conversion price, an
estimated 10.6 million shares would be issued for the principal amount alone.
While the Subordinated Notes bear 15% per annum, 10% is payable quarterly and 5%
accrues until maturity.
Subordination. The Subordinated Notes are subordinate only to the senior
indebtedness in the amount of approximately $1.5 million outstanding at the time
of issuance, but senior to all other debt of the Company.
Holders of Subordinated Notes Right to Demand Prepayment if Shareholder
Approval is Not Obtained. If Shareholder Approval is not obtained, the holders
of the Subordinated Notes will have the right to demand pre-payment of the
Subordinated Notes. There can be no assurance that the Company will be able to
repay upon such demand.
REQUIRED VOTE
Approval of the issuance and reservation of the maximum number of shares of
common stock issued or issuable in connection with the Private Placement
requires the affirmative vote of the holders of a majority of the Avitar Common
Stock and Series B and D Preferred Stock present in person or by proxy at the
Avitar Annual Meeting (assuming a quorum exists) and entitled to vote thereon.
(The holders of the 6,303,000 shares of Common Stock previously issued in the
Private Placement, if present in person or by proxy at the duly convened Annual
Meeting, will be entitled to vote on all matters that properly come before the
meeting, including this Item No. 2.)
BOARD RECOMMENDATION
The Board of Directors of Avitar unanimously recommends a vote FOR approval of
the issuance and reservation of the maximum number of shares issued or issuable
in connection with the Private Placement.
ITEM NO. 3
APPROVAL OF AMENDMENT OF CERTIFICATE OF INCORPORATION TO EFFECT AN INCREASE OF
AUTHORIZED SHARES OF COMMON STOCK FROM 100,000,000 TO 150,000,000
The Board of Directors has unanimously approved, and is hereby soliciting
stockholder approval of, an amendment to the Certificate of Incorporation (the
"Amendment"), effecting an increase in the number of authorized shares of Common
Stock from 100,000,000 to 150,000,000.
The Certificate of Incorporation now provides for 100,000,000 authorized
shares of Common Stock, par value $.01 per share, of which 72,108,143 were
issued and outstanding as of the Record Date; and 5,000,000 shares of Preferred
Stock, par value $.01, of which 136,202 were issued and outstanding as of the
Record Date. The Amendment would increase the number of authorized shares of
Common Stock to 150,000,000.
REASONS FOR THE INCREASE
In the Private Placement, and to comply with applicable rules of The
American Stock Exchange (AMEX), the Company agreed to seek the approval of its
shareholders for both (a) the issuance and reservation of all shares of common
stock issued or issuable in connection with the Private Placement and (b) the
increase in its authorized shares of common stock, as determined by the Board of
Directors, from 100,000,000 to 150,000,000 ("Shareholder Approval").
Subject to Shareholder Approval and in view of anticipated adjustments, the
outstanding Subordinated Notes will be convertible in the aggregate into
approximately 10.6 million shares of common stock for the principal amount
alone. In addition, outstanding shares of Preferred Stock are now convertible in
the aggregate into approximately 2,446,000 shares of Common Stock. Further,
holders of outstanding warrants are entitled to purchase approximately 14
million shares of Common Stock at prices ranging from $.01to $3.83. Finally,
there are outstanding employee stock options (approximately 45% vested) to
purchase approximately 10.5 million shares of Common Stock at prices ranging
primarily from $.20 to $3.11 and an additional 1.5 million shares have been
reserved for future employee stock options and an additional approximately
950,000 shares of Common Stock are reserved for the 2001 Employee Stock Purchase
Plan. Therefore, on a fully diluted basis and in view of anticipated
adjustments, the Company requires 112 million shares.
The majority of the proposed increase to 150,000,000 authorized shares of
Common Stock will be shares reserved for the conversion of the outstanding
Subordinated Notes, conversions of Preferred Stock, exercises of the outstanding
warrants and options, future financings to grow the business and completion of
acquisitions as described below.
Proceeds from any exercises of outstanding warrants and options are
anticipated to be used primarily to provide the necessary working capital to
operate Avitar. For the balance of fiscal year 2003, Avitar's cash requirements
are expected to include primarily the funding of operating losses, the payment
of outstanding accounts payable and the repayment of certain notes payable and,
to the extent available, the funding of operating capital to grow Avitar's rapid
diagnostic testing and other lines of business.
The Board of Directors determined to increase the authorized Common Stock
to 150,000,000 shares as required pursuant to the Subscription Agreements to
ensure that sufficient shares of Common Stock were authorized and available to
cover the outstanding convertible Subordinated Notes ($955,000 in principal
amount), Preferred Stock, warrants and options and any additional shares of
Common or Preferred Stock and warrants or options which it may determine to
issue or grant in the future. Avitar is actively seeking additional funding and
additional shares are expected to be required in such financings.
Further, Avitar may explore possible acquisitions, which would likely
involve the issuance of some or all of the additional authorized shares of
Common Stock as all or a portion of the purchase prices of any acquisitions of
companies, businesses and/or assets it may effect in the future. In such an
event, Avitar's stockholders would not need to be solicited for any specific
acquisitions if they approve the current proposal to increase Avitar's
authorized Common Stock. Accordingly, Avitar's stockholders' only opportunity to
specifically vote on and approve any such acquisitions could be their vote on
the current proposal to increase Avitar's authorized Common Stock. Except as
disclosed above, Avitar does not believe that the increase in its authorized
Common Stock will have any significant effects on the stockholders of Avitar,
nor does it believe that such increase will have any significant benefits to the
officers, directors or affiliates of Avitar.
In order to effect the increase, the stockholders are being asked to
approve the Amendment. The Board of Directors believes that the increase is in
the best interests of Avitar and has unanimously approved the increase. The
Board of Directors may make any and all changes to the Amendment that it deems
necessary in order to file the Amendment with the Delaware Secretary of State
and give effect to the increase.
NO DISSENTERS' RIGHTS
Dissenting stockholders have no appraisal rights under Delaware law or
under the Company's Certificate of Incorporation or Bylaws in connection with
the increase.
REQUIRED VOTE
Pursuant to the Delaware General Corporation Law, the approval of the
Amendment to Avitar's Certificate of Incorporation to provide for the increase
in number of authorized shares of Common Stock requires the affirmative vote of
the holders of a majority of the outstanding shares of Avitar Common Stock and
Series B and D Preferred Stock.
BOARD RECOMMENDATION
The Board of Directors of Avitar unanimously recommends a vote FOR the
Amendment to the Company's Certificate of Incorporation to increase the number
of authorized shares of Common Stock from 100,000,000 to 150,000,000.
ITEM NO. 4
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors of Avitar selected BDO Seidman, LLP as auditors for
the fiscal year ending September 30, 2003, subject to stockholder approval by
ratification. BDO Seidman, LLP has been the independent auditors for Avitar
since December 1992. A representative of BDO Seidman, LLP is expected to be
present at the Annual Meeting, at which time he or she will be afforded an
opportunity to make a statement, and will be available to respond to questions.
The Board of Directors of Avitar may, in its discretion, direct appointment
of new independent auditors at any time during the fiscal year if the Board
believes such change would be in the best interests of Avitar and its
stockholders. No such change is anticipated.
REQUIRED VOTE
Approval of ratification of BDO Seidman, LLP requires the affirmative vote
of the holders of a majority of the Avitar Common Stock and Series B and D
Preferred Stock present in person or by proxy at the Avitar Annual Meeting
(assuming a quorum exists) and entitled to vote thereon.
BOARD RECOMMENDATION
The Board of Directors of Avitar unanimously recommends a vote FOR the
ratification of BDO Seidman, LLP as auditors for the fiscal year ending
September 30, 2003.
SHAREHOLDER PROPOSAL
ITEM NO. 5 ON PROXY CARD
The shareholder named below has told us that it intends to have the following
proposal presented at the Annual Meeting. Approval of the shareholder proposal
requires the affirmative vote of a majority of eligible shares present at the
Annual Meeting, in person or by proxy, and voting on the matter. The Board of
Directors has concluded that it cannot support this proposal for the reasons
given.
Item 5 on Proxy Card
GIN99, LLC, 668 North Coast Highway, #225, Laguna Beach, CA 92651, owner of
6,462,515 shares of the Company's common stock, proposes the following:
"Proposal
RESOLVED: In an effort to address the serious concerns raised by the
Sarbanes-Oxley Act of 2002 (the "Act") and the corporate governance and
compliance issues attendant thereto, the shareholders have determined that:
The positions of Chief Executive Officer and Chairman of the Board be
segregated so that these positions are from this time forward held by two
different individuals."
BOARD OF DIRECTORS' POSITION:
The Board of Directors believes that the establishment of a Chairman of the
Board different from the Chief Executive Officer will create another personnel
requirement without sufficient corresponding benefit to the Company. In the
Board's opinion, the segregation of the positions of Chairman and Chief
Executive Officer is impractical and excessively expensive for Avitar or any
company similar in size and nature to Avitar.
The Board of Directors believes that segregation of the Chairman and CEO is not
in the best interests of Avitar and its shareholders.
The Board of Directors recommends a vote AGAINST this proposal.
OTHER BUSINESS
The proxy confers discretionary authority on the proxies with respect to
any other business , which may come before the Annual Meeting. The Board of
Directors of Avitar knows of no other matters to be presented at the Annual
Meeting. The persons named in the proxy will vote the shares for which they hold
proxies according to their best judgment if any matters not included in this
Proxy Statement properly come before the meeting.
STOCKHOLDER PROPOSALS
Any stockholder proposal to be included in the proxy statement and form of
proxy relating to the 2004 Annual Meeting of Avitar Stockholders must be
received by the close of business on February 1, 2004 and must comply in all
other respects with the rules and regulations of the Securities and Exchange
Commission. Proposals should be addressed to: Corporate Secretary, Avitar, Inc.,
65 Dan Road, Canton, Massachusetts 02021.
SHARES AVITAR, INC. PROXY NO.
65 Dan Road, Canton, Massachusetts 02021
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Peter P. Phildius and Douglas W. Scott as
Proxies, each with the power to appoint his substitute and hereby authorizes
them to represent and to vote, as designated below and on the reverse hereof,
all shares of common stock of Avitar, Inc. ("Avitar") or shares of Series B, C
or D Preferred Stock of Avitar held of record by the undersigned on May 9, 2003
at the Annual Meeting of stockholders of Avitar to be held on June 24, 2003 or
any adjournments thereof.
The undersigned hereby revokes any proxies heretofore given to vote said
shares.
The undersigned hereby acknowledges receipt of Avitar's Annual Report for
2002 and of the Notice of Annual Meeting of Stockholders and attached Proxy
Statement dated May 23, 2003.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR Items 1, 2, 3 and 4, and against Item 5. Please sign exactly as
your name appears to the left hereof. When signing as corporate officer,
partner, attorney, administrator, trustee or guardian, please give your full
title as such.
Dated , 2003
Authorized Signature
Title
Please mark boxes on reverse hereof in blue or black ink. Please date, sign and
return this Proxy Card promptly using the enclosed envelope.
1. Election of Directors.
For all nominees listed below (except as marked to the contrary listed below)
[_ ]
Withhold Authority to vote for all nominees marked to the contrary below [ _ ]
(Instruction: To withhold authority to vote for any individual nominee strike a
line through the nominee's name below.)
Peter P. Phildius Douglas W. Scott Neil R.Gordon
James Groth Charles R. McCarthy, Jr.
2. To approve the issuance and reservation of shares of common stock
issuable in connection with the Private Placement as described in the
Proxy Statement.
For Against Abstain
---------------- ---------------- -------------
3. To adopt the Amendment to the Certificate of Incorporation to increase
the number of authorized shares of common stock from 100,000,000 to
150,000,000.
For Against Abstain
-------------- ----------------- --------------
4. To ratify the appointment of BDO Seidman, LLP as independent public
accountants for Avitar for the fiscal year ending September 30, 2003.
For Against Abstain
---------------- ---------------- -------------
5. To approve the Shareholder Proposal described on page __ of the Proxy
Statement.
For Against Abstain
---------------- ----------------- --------------