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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
POLYDEX PHARMACEUTICALS LIMITED
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] 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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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POLYDEX PHARMACEUTICALS LIMITED
Sandringham House, 83 Shirley Street, Nassau, Bahamas
TO OUR MEMBERS:
The 1998 Annual General Meeting of the Members will be held at 10:00
a.m., local time, on Friday, June 19, 1998, at the offices of the Company, c/o
Higgs & Johnson, Sandringham House, 83 Shirley Street, Nassau, Bahamas. At the
Annual General Meeting, Members will elect two Directors, the names of whom are
set forth in the accompanying Proxy Statement, to serve until the Annual General
Meeting in 2001 or until their successors are elected. Members will also vote on
a proposal to authorize the Board of Directors to appoint the Company's
independent public accountants and fix their remuneration. In addition, Members
will vote on a proposal to amend the Articles of Association to set forth the
rights and characteristics of the Class B Preferred Shares. Members will also
vote on a proposal to amend the Articles of Association to increase the quorum
necessary to transact business at any General Meeting of the Members to members
present holding or represented by proxy between them not less than one-third
(1/3) of all Common Shares which are issued at the date not more than sixty (60)
days prior to the date of the meeting fixed as a record date by the directors
and which entitle the holder thereof to vote. Management will also report on
fiscal year 1998 results. We urge you to attend the meeting and to vote for
these proposals. These matters are described in more detail in the attached
Proxy Statement, which we encourage you to read carefully.
The formal notice of the Annual General Meeting and the Proxy Statement
containing information relative to the meeting follow this letter.
Whether or not you plan to attend the meeting, please complete, date
and sign the enclosed proxy card and return it in the envelope provided to
assure that your shares will be voted. If you do attend the meeting, and the
Board of Directors joins me in hoping you will, there will be an opportunity to
revoke your proxy and to vote in person.
Sincerely,
George G. Usher
Chairman of the Board, President
and Chief Executive Officer
May 18, 1998
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POLYDEX PHARMACEUTICALS LIMITED
Sandringham House, 83 Shirley Street, Nassau, Bahamas
NOTICE OF 1998 ANNUAL GENERAL MEETING OF THE MEMBERS
May 18, 1998
NOTICE IS HEREBY GIVEN that the 1998 Annual General Meeting of the
Members of Polydex Pharmaceuticals Limited (the "Company") will be held at the
offices of the Company, c/o Higgs & Johnson, Sandringham House, 83 Shirley
Street, Nassau, Bahamas, on Friday, June 19, 1998, at 10:00 a.m., local time,
for the following purposes:
1. To vote on the proposal to elect two directors to the Company's Board
of Directors, the names of whom are set forth in the accompanying Proxy
Statement, to serve until the Annual General Meeting of the Members in
2001 or until their successors are elected;
2. To vote on the proposal to authorize the Board of Directors to appoint
the Company's independent public accountants and fix their
remuneration;
3. To vote on the proposal to amend the Company's Articles of Association
to set forth the rights and characteristics of the Class B Preferred
Shares;
4. To vote on the proposal to amend the Company's Articles of Association
to increase the quorum necessary to transact business at any General
Meeting of the Members to members present holding or represented by
proxy between them not less than one-third (1/3) of all Common Shares
which are issued at the date not more than sixty (60) days prior to the
date of the meeting fixed as a record date by the directors and which
entitle the holder thereof to vote; and
5. To transact such further or other business as may properly come before
the meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on May 6, 1998,
as the date for the determination of the Members entitled to notice of, and to
vote at, the meeting and any adjournment thereof (the "Record Date"). Only
holders of the Common Shares and the Class B Preferred Shares of record at the
close of business on the Record Date are entitled to notice of, and to vote at,
the 1998 Annual General Meeting. The Company's Annual Report to Shareholders for
the year ended January 31, 1998, is being mailed to Members with the Proxy
Statement.
The Proxy Statement which accompanies this Notice contains additional
information regarding the proposals to be considered and voted upon at the
Annual General Meeting, and Members are encouraged to read it in its entirety.
You are cordially invited to attend the 1998 Annual General Meeting.
Whether or not you expect to be present at the Annual General Meeting, please
complete, date and sign the enclosed proxy card and return it promptly in the
envelope provided. If you do attend the Annual General Meeting, you may revoke
your Proxy in accordance with the methods described in the Proxy Statement under
the heading "Solicitation and Revocability of Proxies" and vote your shares in
person.
BY ORDER OF THE BOARD OF DIRECTORS,
Sharon L. Wardlaw
Secretary
May 18, 1998
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POLYDEX PHARMACEUTICALS LIMITED
Sandringham House, 83 Shirley Street, Nassau, Bahamas
PROXY STATEMENT
1998 Annual General Meeting, June 19, 1998
SOLICITATION AND This Proxy Statement ("Proxy Statement") is expected to be
REVOCABILITY OF mailed on or about May 18, 1998, to the holders of the
PROXIES Common Shares and the Class B Preferred Shares (the
"Members") of Polydex Pharmaceuticals Limited (the "Company") in connection with
the solicitation by the Board of Directors of the Company for the 1998 Annual
General Meeting of the Members ("Annual Meeting") to be held at 10:00 a.m.,
local time, on Friday, June 19, 1998 at the Company's Bahamian offices, c/o
Higgs & Johnson, Sandringham House, 83 Shirley Street, Nassau, Bahamas.
Although the Company believes that the solicitation of proxies will be
primarily by mail, proxies may also be solicited personally or by telephone by
officers and employees of the Company who will not receive additional
compensation for such solicitation. The cost of solicitation of proxies will be
borne directly by the Company. All dollar amounts in this proxy statement are
stated in U.S. dollars unless otherwise indicated.
Proxies given by Members for use at the Annual Meeting may be revoked
at any time prior to their use. In addition to revocation in any manner
permitted by Bahamian law, a proxy may be revoked in any one of the following
ways:
(a) by signing a form of proxy bearing a later date and depositing
with the Secretary of the Company prior to the Annual Meeting;
(b) as to any matter on which a vote has not already been cast
pursuant to the authority conferred by such proxy, by signing
written notice of revocation and delivering it to either the
Secretary of the Company or the Chairman of the Annual
Meeting;
(c) by attending the Annual Meeting in person and personally
voting the shares represented by the proxy; or
(d) by instrument in writing executed by the Member or by his
attorney authorized in writing, or, if the Member is a
corporation, under its corporate seal, or by an officer or
attorney thereof duly authorized, and deposited either at the
head office of the Company at any time up to and including the
last business day preceding the day of the Annual Meeting, or
any adjournment thereof, at which the proxy is to be used, or
with the Chairman of such Annual Meeting on the day of the
meeting, or any adjournment thereof.
PURPOSES OF The Annual Meeting has been called for the purposes of (1)
ANNUAL MEETING electing directors, (2) authorizing the Board of Directors
to appoint the Company's independent public accountants and fix their
remuneration, (3) amending the Articles of Association to set forth the rights
and characteristics of the Class B Preferred Shares, (4) amending the Articles
of Association to increase the quorum necessary to transact business at any
General Meeting of the Members, and (5) transacting such other business as may
properly come before the meeting.
VOTING OF The Board of Directors has fixed the close of business on
SECURITIES May 6, 1998, as the date for determining the Members
entitled to notice of, and to vote at, the Annual Meeting and any adjournment
thereof (the "Record Date"). A total of 2,996,897 Common Shares of a par value
of U.S. $0.0166 (the six recurring) each (the "Common Shares") and 899,400 Class
B Preferred Shares of a par value of U.S. $0.0166 (the six recurring) each (the
"Class B Preferred Shares") were outstanding at the close of business on that
date. Each Common Share and each Class B Preferred Share is entitled to one vote
on any matter presented
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at the Annual Meeting for consideration and action by the Members. In addition,
the Company has authorized 100,000 Class A Preferred Shares of a par value of
U.S. $0.10 each (the "Class A Preferred Shares"), none of which are outstanding.
A quorum for the transaction of business at the meeting shall be two
holders, present in person or by proxy, of not less than one Common Share or
Class B Preferred Share each. Voting of Common Shares and Class B Preferred
Shares is on a non-cumulative basis. Assuming the presence of a quorum, the
affirmative vote of the holders of a majority of the Common Shares and Class B
Preferred Shares voting at the meeting is required for approval of (i) the
election of each of the nominees for director, (ii) the authorization for the
Board of Directors to appoint the Company's independent public accountants and
fix their remuneration, (iii) the amendment to set forth the rights and
characteristics of the Class B Preferred Shares, and (iv) the amendment to
increase the quorum necessary to transact business at any General Meeting of the
Members.
All valid proxies received in response to this solicitation will be
voted in accordance with the instructions indicated thereon by the Members
giving such proxies. IF NO CONTRARY INSTRUCTIONS ARE GIVEN, SUCH PROXIES WILL BE
VOTED FOR (1) THE ELECTION OF THE NOMINEES FOR DIRECTOR NAMED IN THIS PROXY
STATEMENT, (2) THE AUTHORIZATION FOR THE BOARD OF DIRECTORS TO APPOINT THE
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS AND FIX THEIR REMUNERATION, (3) THE
AMENDMENT TO SET FORTH THE RIGHTS AND CHARACTERISTICS OF THE CLASS B PREFERRED
SHARES, AND (4) THE AMENDMENT TO INCREASE THE QUORUM NECESSARY TO TRANSACT
BUSINESS AT ANY GENERAL MEETING OF THE MEMBERS.
For voting purposes, abstentions will be counted for the purpose of
establishing a quorum and will not be voted. Broker non-votes will not be
counted for the purpose of establishing a quorum and will not be voted.
OWNERSHIP OF The following table sets forth certain information regarding
VOTING beneficial ownership of the Common Shares and the Class B
Preferred Shares, as of May 6, 1998, by SECURITIES (i)
persons owning beneficially 5% or more of the Class B Preferred Shares and/or
the Common Shares, (ii) each of the Company's directors and certain of its
executive officers, and (iii) all directors and executive officers as a group:
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership(1) of Class (2)
- -------------- ---------------- ----------------------- ------------
Class B George G. Usher 599,400 66.7%
Preferred Shares Chairman of the Board,
Director, President and CEO
RR 1, Kettleby, Ontario
Canada, L0G 1J0
Class B Thomas C. Usher 300,000 33.3%
Preferred Shares Vice-Chairman and
Director
P.O. Box N7525
Nassau, Bahamas
Common Shares Joseph Buchman 101,736 (3) 3.39%
Director
46 Belmont Drive West
Roslyn, NY 11577
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Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership(1) of Class (2)
- -------------- ---------------- ----------------------- ------------
Common Shares Derek John Michael Lederer none ----
Director
17280 Weston Rd.
Kettleby, Ontario
Canada L0G 1J0
Common Shares Natu Patel 14,900 (4) *
Director
9767 Sun Pointe Drive
Boynton Beach, FL 33437
Common Shares Thomas R. Ulie 66,100 (5) 2.21%
Director
8843 Southeast 77th Place
Mercer Island, WA 98040
Common Shares George G. Usher 126,335 (6) 4.22%
Chairman of the Board,
Director, President and CEO
RR 1, Kettleby, Ontario
Canada, L0G 1J0
Common Shares Ruth L. Usher 692,472 (7) 23.11% (11)
Director
P.O. Box N7525
Nassau, Bahamas
Common Shares Thomas C. Usher 692,472 (8) 23.11% (11)
Vice-Chairman and
Director
P.O. Box N7525
Nassau, Bahamas
Common Shares Sharon L. Wardlaw 4,240 (9) *
Secretary and Treasurer
5 Gondola Crescent
Scarborough, Ontario
Canada M1G 2J2
Common Shares Alec D. Keith 219,681 (10) 7.33%
4802 N. Greentree Drive
Litchfield Park, AZ 85340
Common Shares All Executive Officers and 1,002,273 (13) 33.44% (13)
Directors as a Group
(8 persons) (12)
<FN>
- ---------------------------------------------------------
* Less than one percent (1%).
(1) Reflects the Company's completion on June 19, 1997 of a one-for-ten reverse stock split of its Common
Shares and Class B Preferred Shares.
</FN>
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(2) As of May 6, 1998, the Record Date, the Company had outstanding 899,400 Class B Preferred Shares
and 2,996,897 Common Shares and options exercisable within sixty (60) days to purchase an
additional 169,173 Common Shares, for a total of 3,166,070 Common Shares.
(3) Includes 91,736 shares owned directly by Joseph Buchman's wife, Josette Buchman, and 10,000
shares under option to Joseph Buchman, subject to acquisition within sixty (60) days.
(4) Includes 3,900 shares owned directly by Natu Patel and 11,000 shares under option to Natu
Patel subject to acquisition within sixty (60) days.
(5) Includes 66,100 shares owned directly by Thomas R. Ulie.
(6) Includes 12,772 shares owned directly by George G. Usher, 100,000 shares owned by a company
controlled by George G. Usher, and 7,100, shares under option to George G. Usher, subject
to acquisition within sixty (60) days. Also included 6,463 shares owned directly by his wife,
Shelagh Usher, as to which George G. Usher disclaims beneficial ownership.
(7) Includes 127,141 shares owned directly by Ruth L. Usher and 50,000 shares under option to
Ruth L. Usher, subject to acquisition within sixty (60) days. Also includes 457,754 shares
owned directly by her husband, Thomas C. Usher, and 57,577 shares under option to Thomas C.
Usher subject to acquisition within sixty (60) days, as to all of which Ruth L. Usher
disclaims beneficial ownership.
(8) Includes 457,754 shares owned directly by Thomas C. Usher and 57,577 shares under option to
Thomas C. Usher subject to acquisition within sixty (60) days. Also includes 127,141 shares
owned directly by his wife, Ruth L. Usher and 50,000 shares under option to Ruth L. Usher,
subject to acquisition within sixty (60) days, as to all of which Thomas C. Usher disclaims
beneficial ownership. Does not include shares owned by George G. Usher, his son, or by the
family of George G. Usher.
(9) Includes 2,040 shares owned directly by Sharon L. Wardlaw and 2,200 shares under option to
Sharon L. Wardlaw subject to acquisition within sixty (60) days.
(10) Includes 219,681 shares owned directly by Alec D. Keith.
(11) Percent of class of the combined holdings of both Ruth L. Usher and Thomas C. Usher, each of
whom disclaims beneficial ownership as to the holdings of the other.
(12) Includes ownership of Common Shares only. George G. Usher and Thomas C. Usher own all of the
outstanding Class B Preferred Shares, as outlined above.
(13) Includes 101,736 shares beneficially owned by Joseph Buchman, 14,900 shares beneficially
owned by Natu Patel, 66,100 shares beneficially owned by Thomas R. Ulie, 126,335 shares
beneficially owned by George G. Usher (including 6,463 shares owned directly by his wife,
Shelagh Usher, as to which George G. Usher disclaims beneficial ownership), 692,472 shares
beneficially owned in total by Ruth L. Usher and Thomas C. Usher (each of whom disclaims
beneficial ownership as to the holdings of the other), and 4,240 shares beneficially owned
by Sharon L. Wardlaw.
BOARD OF The Board of Directors currently consists of seven members. The
DIRECTORS directors of the Company are divided into three classes,
designated as Class I, Class II and Class III. At each Annual Meeting, one class
of directors is elected to serve for a three-year term or until their respective
successors are duly elected and qualified. On February 9, 1998, Derek John
Michael Lederer was appointed by the Board of Directors as a Class II Director.
Alec D. Keith resigned as a Class I Director and Chairman of the Board effective
January 27, 1998. George G. Usher was appointed Chairman of the Board by the
Board of Directors effective January 27, 1998. On October 6, 1997, Thomas R.
Ulie was appointed by the Board of Directors as a Class I Director.
No director was compensated for serving on the Board for the fiscal
year ending January 31, 1998. Derek John Michael Lederer will receive
compensation of $5,000 for serving as Chair of the Audit Committee of the Board
during the Company's fiscal year ending January 31, 1999. George G. Usher,
Thomas C. Usher and Natu Patel, all of whom are directors, receive payment as
officers and employees of the Company. Prior to his resignation as Chairman of
the Board, Alec D. Keith received payment as an officer of the Company. Family
relationships among the Company's officers and directors: Thomas C. Usher and
George G. Usher are father and son, and Thomas C. Usher and Ruth L. Usher are
husband and wife.
The following provides, as of May 6, 1998, the continuing directors
whose terms of office will continue after the Annual Meeting, their principal
occupation and employment, age, the year in which each became a director of the
Company, and directorships in companies having securities registered pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
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CONTINUING DIRECTORS WHOSE TERMS EXPIRE AT THE
ANNUAL MEETING IN 1999 (CLASS II DIRECTORS)
-------------------------------------------
Year First
Elected
Name and Occupation Age Director
------------------- --- --------
DEREK JOHN MICHAEL LEDERER, Chartered Accountant. 56 1998
Principal of Derek Lederer, C.A., a public
accounting firm, since 1970.
NATU PATEL, Vice President (Research & 52 1987
Development) of the Company and the President of
Chemdex, Inc., a subsidiary of the Company since
1994. Previously employed by the Company in
various positions since 1972. Founder of Novadex,
Inc., a company controlled by Thomas C. Usher,
which performed scientific research for the
Company.
RUTH L. USHER, Retiree since 1991. 83 1979
CONTINUING DIRECTORS WHOSE TERMS EXPIRE AT THE
ANNUAL MEETING IN 2000 (CLASS III DIRECTORS)
--------------------------------------------
Year First
Elected
Name and Occupation Age Director
------------------- --- --------
GEORGE G. USHER, Chairman of the Board since 39 1988
January 27, 1998. President and Chief Executive
Officer of the Company since 1993 and 1996,
respectively. Vice President of Dextran Products
Limited, a subsidiary of the Company, since 1987.
Previously employed by the Company in various
positions since 1982.
THOMAS C. USHER, Vice-Chairman of the Company 83 1979
since November 1996. Chairman and Chief Executive
Officer of the Company from May 1972 to November
1996. Chairman of Dextran Products Limited and of
all of the Company's other subsidiaries since
their formation.
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PROPOSAL NO. 1
ELECTION OF BOARD MEMBERS
NOMINEES FOR TERMS
EXPIRING AT THE ANNUAL MEETING IN 2001 (CLASS I DIRECTORS)
----------------------------------------------------------
The following two persons, each of whom is currently serving as a
director, have been nominated for re-election by the Board of Directors to serve
as directors for a term expiring at the Annual Meeting in 2001:
Name and Occupation
Year First
Elected
Name and Occupation Age Director
------------------- --- --------
JOSEPH BUCHMAN, Senior Account Executive with the 58 1981
Metropolitan Life Insurance Company since 1979.
THOMAS R. ULIE, CEO of T.R. Ulie & Associates, 50 1997
Inc., an NASD broker/dealer, since 1994 and
President of Gray*Star Inc., a manufacturing
company, since 1993. Previously employed as a
Senior Managing Director of Stamford Company, an
NYSE broker/dealer, from 1992-1994.
All nominees for director have indicated their willingness to serve.
The Board of Directors has no reason to believe that any of the director
nominees will be unable to serve as a director. In the event, however, of the
death or unavailability of any director nominee or nominees, the proxy to that
extent will be voted for such other person or persons as the Board of Directors
may recommend.
VOTE REQUIRED. The affirmative vote of the holders of a majority of the
Common Shares and the Class B Preferred Shares present, in person or by proxy,
and entitled to vote at the Annual Meeting is required to elect each of the
nominees for director. All proxies will be voted to elect each of the nominees
for director unless a contrary vote is indicated on the enclosed proxy card.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH
OF THE NOMINEES FOR DIRECTOR.
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PROPOSAL NO. 2
AUTHORIZATION FOR THE BOARD OF DIRECTORS TO APPOINT THE
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS AND FIX THEIR REMUNERATION
GENERAL. Ernst & Young Chartered Accountants (the "Accountant") has
been nominated for re-appointment by the Board of Directors to serve as the
independent public accountants of the Company. The Company first engaged the
Accountant as the independent public accountants of the Company on December 18,
1996. The Accountant has indicated its willingness to continue to serve as the
independent public accountants of the Company.
VOTE REQUIRED. The affirmative vote of the holders of a majority of the
Common Shares and the Class B Preferred Shares present, in person or by proxy,
and entitled to vote at the Annual Meeting is required to authorize the Board of
Directors to appoint Ernst & Young Chartered Accountants as the independent
public accountants of the Company and to fix their remuneration.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" AUTHORIZATION FOR THE
BOARD OF DIRECTORS TO APPOINT ERNST & YOUNG CHARTERED ACCOUNTANTS AS INDEPENDENT
PUBLIC ACCOUNTANTS OF THE COMPANY AND TO FIX THEIR REMUNERATION.
PROPOSAL NO. 3
AMENDMENT TO ARTICLES OF ASSOCIATION TO SET FORTH THE
RIGHTS AND CHARACTERISTICS OF THE CLASS B PREFERRED SHARES
GENERAL. Currently, Article 2 of the Articles of Association of the
Company (the "Articles") states the share capital of the Company and the rights
and characteristics of the Class A Preferred Shares. On April 6, 1998, the Board
of Directors adopted a resolution to amend Article 2 of the Articles to set
forth the rights and characteristics of the Class B Preferred Shares (the "Class
B Preferred Shares Amendment").
At a meeting held on December 24, 1993, the Board of Directors of the
Company unanimously passed the Class B Preferred Stock Resolution establishing
the rights and characteristics of the Class B Preferred Shares, as follows:
1. The Corporation shall be entitled from time to time and at
any time prior to the commencement of the winding up of the Corporation
to redeem part or the whole of the B Preferred Shares by notice to the
holders thereof without the consent of the holders and provided that in
no event shall redemption be effected at an amount in excess of the
consideration for which the B Preferred Shares were originally issued.
2. The B Preferred Shares shall bestow upon the holders
thereof no rights in respect of dividends, shall bestow no rights in
respect of any convertibility into any other class of shares and, in
winding up of the corporation, shall rank behind both the A Preferred
Shares and the Ordinary Shares.
3. The B Preferred Shares shall bestow upon the holders
thereof the right of one vote per share, which may be increased to five
votes per share upon the consent of the majority of the holders of the
Ordinary Shares and the B Preferred Shares.
At a meeting held on October 6, 1997, the Board of Directors of the
Company unanimously passed a resolution deleting Clause 1 from the Class B
Preferred Stock Resolution of December 24, 1993.
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As of the date hereof, George G. Usher owns 599,400 Class B Preferred
Shares, representing 66.7% of those Class B Preferred Shares authorized and
outstanding, and Thomas C. Usher owns 300,000 Class B Preferred Shares, which
represents 33.3% of those Class B Preferred Shares authorized and outstanding.
TEXT OF CLASS B PREFERRED SHARES AMENDMENT. The Class B Preferred
Shares Amendment will be formally implemented by amending the present Article 2
of the Articles as follows:
Re-lettering subsections (d) and (e) to read as subsections (e) and
(f), respectively, and adding the following new Article 2, subsection
(d):
SHARE CAPITAL
2.
(d) The Class B Preferred Shares shall have the following rights and
characteristics, that is:
(1) the Class B Preferred Shares shall bestow upon the holders
thereof no rights in respect of dividends, shall bestow no rights in
respect of any convertibility into any other class of shares and, in
winding up of the corporation, shall rank behind both the Class A
Preferred Shares and the Common Shares;
(2) the Class B Preferred Shares shall bestow upon the holders
thereof the right of one vote per share, which may be increased to five
votes per share upon the consent of the majority of the holders of the
Common Shares and the Class B Preferred Shares.
REASONS FOR THE CLASS B PREFERRED SHARES AMENDMENT. The purposes of the
Class B Preferred Shares Amendment are to state the existing rights and
characteristics of the Class B Preferred Shares, and to ratify the prior actions
of the Board of Directors with respect thereto.
EFFECT OF THE CLASS B PREFERRED SHARES AMENDMENT. Upon Member approval
of the Class B Preferred Shares Amendment, Article 2 (d) of the Articles will
set forth the existing rights and characteristics of the Class B Preferred
Shares, and serve to ratify the prior actions of the Board of Directors with
respect thereto.
VOTE REQUIRED. The affirmative vote of the holders of a majority of the
Common Shares and the Class B Preferred Shares present, in person or by proxy,
and entitled to vote at the Annual Meeting is required to approve the Class B
Preferred Shares Amendment. All proxies will be voted to approve the Class B
Preferred Shares Amendment unless a contrary vote is indicated on the enclosed
proxy card.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE CLASS
B PREFERRED SHARES AMENDMENT TO SET FORTH IN THE ARTICLES THE RIGHTS AND
CHARACTERISTICS OF THE CLASS B PREFERRED SHARES.
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PROPOSAL NO. 4
AMENDMENT TO ARTICLES OF ASSOCIATION TO INCREASE
QUORUM NECESSARY TO TRANSACT BUSINESS AT
ANY GENERAL MEETING OF THE MEMBERS
GENERAL. Currently, Article 33 of the Articles provides that a quorum
for the transaction of business at any General Meeting of the Members shall be
two persons present and holding or representing by proxy not less than one share
each. On April 6, 1998, the Board of Directors adopted a resolution to amend
Article 33 of the Articles to increase the quorum necessary to transact business
at any General Meeting of the Members to members present holding or represented
by proxy between them not less than one-third (1/3) of all Common Shares which
are issued at the date not more than sixty (60) days prior to the date of the
meeting fixed as a record date by the directors and which entitle the holder
thereof to vote (the "Quorum Amendment").
TEXT OF QUORUM AMENDMENT. The Quorum Amendment will be formally
implemented by amending the present Article 33 of the Articles as follows:
Delete the second sentence of Article 33 in its entirety and substitute
therefor the following new second sentence of Article 33:
Except as may be otherwise required by law, a quorum for the
transaction of business at any general meeting of the members shall be
members present holding or represented by proxy between them not less
than one-third (1/3) of all Common Shares which are issued at the date
not more than sixty (60) days prior to the date of the meeting fixed as
a record date by the directors and which entitle the holder thereof to
vote.
REASONS FOR THE QUORUM AMENDMENT. The purpose of the Quorum Amendment
is to conform the Articles to the issuer listing criteria of The Nasdaq Stock
Market, Inc. ("Nasdaq"). Nasdaq Rule 4320(e)(21)(E) states, "[e]ach issuer shall
provide for a quorum as specified in its by-laws for any meeting of the holders
of common stock; provided, however, that in no case shall such quorum be less
than 33 1/3 percent of the outstanding shares of the company's common voting
stock."
EFFECT OF THE QUORUM AMENDMENT. Upon Member approval of the Quorum
Amendment, a quorum for the transaction of business at any general meeting of
the members shall be members present holding or represented by proxy between
them not less than one-third (1/3) of all Common Shares which are issued at the
date not more than sixty (60) days prior to the date of the meeting fixed as a
record date by the directors and which entitle the holder thereof to vote.
VOTE REQUIRED. The affirmative vote of the holders of a majority of the
Common Shares and the Class B Preferred Shares present, in person or by proxy,
and entitled to vote at the Annual Meeting is required to approve the Quorum
Amendment. All proxies will be voted to approve the Quorum Amendment unless a
contrary vote is indicated on the enclosed proxy card.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
QUORUM AMENDMENT TO INCREASE THE QUORUM NECESSARY FOR THE TRANSACTION OF
BUSINESS AT ANY GENERAL MEETING OF THE MEMBERS.
BOARD During the fiscal year ended January 31, 1998, there were
MEETINGS AND fifteen meetings of the Board of Directors and action was
COMMITTEES taken on seven occasions by unanimous written consent of the
Board of Directors in lieu of a meeting. Each director attended at least 75% of
the aggregate number of meetings held by the Board of Directors. During the
fiscal year ended January 31, 1998, the Company did not have nor had it
previously had any standing nominating, audit or compensation committees of the
Board, nor were there any committees which performed similar functions. An Audit
Committee, consisting of Directors Derek John Michael Lederer (Chair), Thomas R.
Ulie and George G.
-10-
13
Usher, was appointed by the Board of Directors on February 19, 1998. The Audit
Committee makes recommendations to the Board as to the engagement of independent
auditors to perform audit and non-audit services, reviews the scope and results
of their services, oversees the internal audit function, and reviews the systems
of internal control and audit with management and the independent auditors.
Compensation decisions, including the granting of options, are made by Thomas C.
Usher, Vice-Chairman, in his sole discretion, with the advice of George G.
Usher, the Company's Chairman of the Board, President and Chief Executive
Officer.
COMPENSATION Shown below is information concerning the annual and
OF EXECUTIVE long-term compensation for services in all capacities to the
OFFICERS Company for the fiscal years ended January 31, 1998, 1997
and 1996 of those persons who were, at January 31, 1998 (i) the chief executive
officer and (ii) the three other executive officers of the Company who had total
annual salary plus bonus that exceeded $100,000 for the year ended January 31,
1998 (the "Named Officers"). No other officers of the Company has total annual
salary plus bonus that exceeded $100,000 for the year ended January 31, 1998.
SUMMARY COMPENSATION TABLE
ANNUAL LONG TERM
COMPENSATION COMPENSATION
------------ ------------
Common Shares
Underlying
Name and Fiscal Option
Principal Position Year Salary Bonus Awards (1)
- ------------------ ---- ------ ----- ----------
George G. Usher 1998 $ 110,000 none 57,100
Chairman of the 1997 $ 108,211 none 571,000
Board (2), President 1996 $ 75,800 none 571,000
and Chief Executive
Officer
Thomas C. Usher 1998 $ 120,000 none 107,577
Vice-Chairman 1997 $ 120,000 none 1,275,766
1996 $ 120,000 none 1,275,766
Natu Patel 1998 $ 110,000 none 11,000
Vice President 1997 $ 110,000 none 110,000
1996 $ 110,000 none 110,000
Alec D. Keith 1998 $ 100,000 none none
Chairman of 1997 $ 25,000 none 300,000
the Board (3) 1996 ---- ---- ----
- -------------------------------------
<FN>
(1) Reflects the Company's completion on June 19, 1997 of a one-for-ten reverse
stock split of its Common Shares and Class B Preferred Shares.
(2) George G. Usher was appointed Chairman of the Board effective January 27,
1998.
(3) Alec D. Keith resigned as Chairman of the Board effective January 27, 1998.
</FN>
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14
OPTION GRANTS IN FISCAL YEAR 1998
The following table sets forth information with respect to the
stock options granted to the four Named Officers during the fiscal year
ended January 31, 1998.
Number of
Securities Percent of Total
Underlying Options Granted Price on Potential Realizable Value at Assumed
Options to Employees in Exercise Date of Expiration Annual Rate of Stock Price Appreciation
Name Granted Fiscal Year (1) Price Grant Date 0% 5% 10%
- ---- ------- --------------- ----- ----- ---- -----------------------------
George G. Usher 7,100 2.64% $ 7.50 $6.75 6/30/98 ---- ---- ----
50,000 18.58% $10.00 $6.75 6/30/00 ---- ---- ----
Thomas C. Usher 57,577 21.39% $ 7.50 $6.75 6/30/98 ---- ---- ----
50,000 18.58% $10.00 $6.75 6/30/00 ---- ---- ----
Natu Patel 11,000 4.09% $ 7.50 $6.75 6/30/98 ---- ---- ----
Alec D. Keith none ---- ---- ---- ---- ---- ---- ----
<FN>
(1) A total of 269,173 stock options were granted by the Company during the fiscal year ended
January 31, 1998.
</FN>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998 AND
1998 FISCAL YEAR-END OPTION VALUES
The following table sets forth, for each of the four Named
Officers, the exercise of options to purchase Common Shares during the
fiscal year ended January 31, 1998, and the year-end value of
unexercised options to purchase Common Shares held by the four Named
Officers at January 31, 1998.
Number of Secu-
rities Underlying Value of Unexercised
Shares Unexercised Options In-the-Money Options
Acquired on Value at Fiscal Year End; at Fiscal Year End;
Name Exercise Realized All Exercisable All Exercisable (1)
---- ---------- -------- ----------------- --------------------
George G. Usher none ---- 57,100 ----
Thomas C. Usher none ---- 107,577 ----
Natu Patel none ---- 11,000 ----
Alec D. Keith none ---- none ----
<FN>
(1) The market price of the Common Shares at January 30, 1998, the last trading day preceding the
Company's fiscal year end, was $6.875 per share.
</FN>
-12-
15
EXECUTIVE As of January 31, 1998, the following persons served as
OFFICERS executive officers of the Company. All executive officers
serve for a one-year term or until their successors are elected or appointed at
the meeting of the Board of Directors immediately following the Annual Meeting.
Name Age Title
- ---- --- -----
George G. Usher (1) (2) 39 Chairman of the Board, President
and Chief Executive Officer
Thomas C. Usher (1) 83 Vice-Chairman of the Board
Natu Patel (1) 52 Vice President
Sharon L. Wardlaw (3) 45 Chief Financial Officer, Secretary and
Treasurer
<FN>
- ------------------------------------------
(1) See "Board of Directors" for biographical information and period of service.
(2) George G. Usher was appointed Chairman of the Board effective January 27, 1998.
(3) Sharon L. Wardlaw has served as the Chief Financial Officer, Secretary and
Treasurer of the Company since 1994. She also currently serves as the President
of Dextran Products Limited, a subsidiary of the Company. Since joining the
Company in 1984, she has been employed in various capacities.
</FN>
EMPLOYMENT George G. Usher, Thomas C. Usher and Natu Patel are employed
AGREEMENTS by the Company pursuant to employment agreements. On
December 22, 1993, the Company entered into an employment agreement with George
G. Usher which provided for his employment as President of the Company for a
five-year term commencing February 1, 1994 at an annual salary of $65,000. This
Employment Agreement was amended on June 4, 1996 to provide for his employment
as Chief Executive Officer of the Company commencing June 4, 1996 at an annual
salary of $100,000. George G. Usher was appointed Chairman of the Board of the
Company by the Board of Directors effective January 27, 1998.
On December 22, 1993, the Company entered into an employment agreement
with Thomas C. Usher which provided for his employment as Chairman and Chief
Executive Officer of the Company for a five-year term commencing February 1,
1994 at an annual salary of $120,000 subject to CPI adjustments. This Employment
Agreement was amended on November 1, 1996 to provide for his employment as
Vice-Chairman of the Company commencing November 1, 1996 at an annual salary of
$120,000.
On December 12, 1990, the Company entered into an employment agreement
with Natu Patel which provided for his employment as Vice President of the
Company for a five-year term commencing January 1, 1991 at an annual salary of
$110,000. This Employment Agreement was renewed on January 1, 1996 on the same
terms.
TRANSACTIONS Since February 1, 1997, with the exception of Thomas C.
WITH THE Usher, none of the Company's directors, executive officers,
COMPANY nominees for election as directors or certain relatives or
associates of such persons has been indebted to the Company in an aggregate
amount in excess of $60,000. As of the end of the Company's 1998 fiscal year,
Thomas C. Usher was indebted to the Company in an aggregate amount of $691,150.
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SECTION 16(a) Section 16(a) of the Exchange Act, requires the Company's
BENEFICIAL directors, executive officers and any person who
OWNERSHIP beneficially owns more than ten percent of the Common
REPORTING Shares to file with the SEC, Nasdaq and the Boston Stock
COMPLIANCE Exchange an initial report of ownership
and reports of changes in ownership of Common Shares. Officers, directors and
greater-than-ten percent beneficial owners are required by SEC regulation to
furnish the Company with copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely upon a review of Forms 3, 4
and 5 and amendments thereto furnished to the Company and written representation
that no other reports were required, all filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were complied with
during the year ended January 31, 1998, except that Dr. Alec D. Keith, Mr.
George G. Usher and Ms. Sharon L. Wardlaw each inadvertently failed to file a
single Form 4 on a timely basis to report one transaction.
The above transactions were subsequently reported on Form 5 reports
filed with the SEC in a timely manner.
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17
COMPANY STOCK
PERFORMANCE
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
POLYDEX PHARMACEUTICALS LIMITED
The following performance graph compares the cumulative total returns of the
Company's Common Shares, the Nasdaq Stock Market Index and the Nasdaq
Pharmaceuticals Stock Index over a five year period ended January 31, 1998.
[GRAPH]
LEGEND
CRSP Total Returns Index for: 01/29/93 01/31/94 01/31/95 01/31/96 01/31/97 01/30/98
- ----------------------------- -------- -------- -------- -------- -------- --------
POLYDEX PHARMACEUTICALS LIMITED 100.00 92.7 25.0 42.7 27.1 22.9
Nasdaq Stock Market (US & Foreign) 100.00 116.0 109.4 154.2 201.0 236.5
Nasdaq Pharmaceuticals Stocks 100.00 98.8 76.2 143.6 143.6 135.4
<FN>
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 01/29/93.
</FN>
-15-
18
There can be no assurances that the Company's stock performance will
continue into the future with the same or similar trends depicted in the
performance graph above. The Company does not make or endorse any predictions as
to future stock performance.
INDEPENDENT On March 7, 1996, the Company was advised by its independent
PUBLIC public accountants, KPMG (formerly KPMG Peat Marwick Thorne)
ACCOUNTANT (the "Former Accountant"), that it would decline to stand
for re-election after the completion of the audit for the fiscal year ended
January 31, 1996. The decision to engage a new independent public accountant was
not recommended or approved by the board of directors of the Company.
No report of the Former Accountant on the financial
statements of the Company for either of the past two fiscal years contained any
adverse opinion or disclaimer of opinion, or was qualified or modified as to
uncertainty, audit scope or accounting principles.
During the Company's 1994 and 1995 fiscal years, ended on
January 31, 1994 and January 31, 1995, respectively, or in the interim period
from February 1, 1996 (the start of the Company's 1997 fiscal year) through
April 30, 1996 (the date of the report from the Former Accountant to the Company
for its audit of the Company's fiscal year ended January 31, 1996) there were no
disagreements with the Former Accountant on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or procedure.
During the Company's 1994 and 1995 fiscal years, ended on
January 31, 1994 and January 31, 1995, respectively, or in the interim period
from February 1, 1996 (the start of the Company's 1997 fiscal year) through
April 30, 1996 (the date of the report from the Former Accountant to the Company
for its audit of the Company's fiscal year ended January 31, 1996) there were no
reportable events as defined by SEC rules and regulations.
At the 1996 Annual Meeting, the Members authorized the Board
of Directors to engage either Ernst & Young Chartered Accountants or Arthur
Andersen LLP following adjournment of the Annual Meeting. On December 18, 1996,
the Company engaged Ernst & Young Chartered Accountants as independent public
accountants of the Company. Representatives of Ernst & Young Chartered
Accountants are not expected to be present at the meeting.
FINANCIAL The consolidated balance sheet, consolidated income
STATEMENTS statement and other financial statements together with
the notes thereto for the fiscal year ended January 31, 1998 are included in the
Company's 1998 Annual Report which accompanies this Proxy Statement.
1998 ANNUAL The Company will provide without charge to each person
REPORT AND solicited by this Proxy Statement, upon the written
FORM 10-K request of such person, a copy of the Company's Annual
Report on Form 10-K, which includes financial statements, for the fiscal year
ended January 31, 1998. Such requests should be directed to Debbie MacAskill,
Polydex Pharmaceuticals Limited, 421 Comstock Road, Toronto, Ontario, Canada M1L
2H5.
1999 The 1999 Annual Meeting will be held on or about June
MEMBER 18, 1999. The deadline for Members to submit proposals
PROPOSALS to the Company Secretary for inclusion in the Proxy
Statement for the 1999 Annual Meeting is expected to be February 18, 1999. The
inclusion of any proposal will be subject to applicable rules of the SEC. In the
event, however, that the date of the 1999 Annual Meeting is changed by more than
30 calendar days from the date currently contemplated, a proposal must be
received by the Company within a reasonable time before the solicitation in
connection with the meeting is made.
-16-
19
OTHER BUSINESS Management knows of no business which will be presented
for consideration at the Annual Meeting other than as stated in the Notice of
Meeting. If, however, other matters are properly brought before the Annual
Meeting, it is the intention of the Board designated proxy holders George G.
Usher and Peter J. Higgs to vote the shares represented thereby on such matters
in accordance with their judgment.
By Order of the Board of Directors,
Sharon L. Wardlaw
Secretary
May 18, 1998
-17-
20
PROXY
POLYDEX PHARMACEUTICALS LIMITED
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned member hereby appoints Peter J. Higgs and George G. Usher
proxies, with power to act without the other and with power of substitution, and
hereby authorizes them to represent and vote, as designated on the other side,
all the shares of Polydex Pharmaceuticals Limited standing in the name of the
undersigned with all powers which the undersigned would possess if present at
the Annual General Meeting of Members of the Company to be held on June 19, 1998
or any adjournment thereof. IF NO SPECIFICATION IS MADE, THE PROXY WILL BE VOTED
FOR THE ELECTION AS DIRECTORS OF THE NOMINEES LISTED ON THE REVERSE SIDE, FOR
AUTHORIZATION FOR THE BOARD OF DIRECTORS TO APPOINT INDEPENDENT PUBLIC
ACCOUNTANTS AND FIX THEIR REMUNERATION, IN FAVOR OF THE PROPOSAL TO AMEND THE
ARTICLES OF ASSOCIATION TO SET FORTH THE RIGHTS AND CHARACTERISTICS OF THE CLASS
B PREFERRED SHARES, AND IN FAVOR OF THE PROPOSAL TO AMEND THE ARTICLES OF
ASSOCIATION TO INCREASE THE QUORUM NECESSARY TO TRANSACT BUSINESS AT ANY GENERAL
MEETING OF THE MEMBERS, AS TO ANY OTHER MATTER OR IF ANY OF SAID NOMINEES IS NOT
AVAILABLE FOR ELECTION, THE PROXIES SHALL VOTE IN ACCORDANCE WITH THEIR BEST
JUDGMENT.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
21
- --------------------------------------------------------------------------------
(CONTINUED FROM OTHER SIDE)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3 AND 4. Please mark
your votes as [ X ]
indicated in
this example
Item 1-ELECTION OF DIRECTORS Nominees: Joseph Buchman and Thomas R. Ulie Item 2-AUTHORIZATION FOR THE BOARD OF
DIRECTORS TO APPOINT INDEPENDENT
FOR both WITHHOLD PUBLIC ACCOUNTANTS AND FIX THEIR
nominees AUTHORITY WITHHELD FOR: (Write that nominee's name in the REMUNERATION
listed FOR ALL space provided below.)
FOR AGAINST ABSTAIN
[ ] [ ] _______________________________________________ [ ] [ ] [ ]
Item 3-PROPOSAL TO AMEND ARTICLES OF ASSOCIATION Item 4-PROPOSAL TO AMEND ARTICLES OF ASSOCIATION TO
TO SET FORTH THE RIGHTS AND CHARACTERISTICS INCREASE THE QUORUM NECESSARY TO TRANSACT BUSINESS
OF THE CLASS B PREFERRED SHARES AT ANY GENERAL MEETING OF THE MEMBERS
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ]
------
|
|
|
SIGNATURE ______________________________________________ SIGNATURE ______________________________________________ DATE_____________
PLEASE DATE, SIGN AS NAME APPEARS HEREON AND RETURN PROMPTLY. JOINT OWNERS SHOULD EACH SIGN. WHEN SIGNING AS CORPORATE OFFICER,
PARTNER, ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE. PLEASE NOTE ANY CHANGES IN YOUR ADDRESS
ALONGSIDE THE ADDRESS AS IT APPEARS IN THE PROXY.
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *