NOTICE OF ADJOURNED SESSION OF ANNUAL MEETING OF STOCKHOLDERS
The enclosed Supplement to the Proxy Statement of Procept, Inc. ("Procept")
dated April 30, 1997 is being furnished to stockholders of Procept in connection
with the solicitation of proxies by Procept for use at an adjourned session of
its annual meeting of stockholders which was commenced on June 16, 1997. The
adjourned session will be held at the offices of Procept, 840 Memorial Drive,
Cambridge, Massachusetts at 10:00 a.m. on Tuesday, July 15, 1997.
The annual meeting commenced at the offices of Procept, 840 Memorial Drive,
Cambridge, Massachusetts, at 10:00 a.m. on Monday, June 16, 1997. On June 16,
1997, the stockholders voted to: (i) elect four directors; (ii) approve a
proposed amendment to Procept's 1989 Stock Plan that increased the number of
shares of Procept's Common Stock, $0.01 par value per share (the "Common
Stock"), covered by that plan by 500,000 shares; (iii) approve a proposed
amendment to Procept's 1994 Employee Stock Purchase Plan that increased the
number of shares of Common Stock covered by that plan by 250,000 shares; and
(iv) approve a proposed amendment to Procept's 1994 Director Stock Option Plan
that increased the number of shares of Common Stock covered by that plan by
150,000 shares. The meeting was then adjourned until a later session for a vote
upon an amendment and restatement of Procept's Restated Certificate of
Incorporation to authorize 1,000,000 shares of preferred stock (the "Preferred
Stock Proposal") and to transact such other business as may properly come before
the meeting. The purpose of the adjournment was to permit Procept to solicit
additional proxies on the Preferred Stock Proposal to obtain a vote in favor of
such proposal representing at least a majority of the outstanding shares.
The enclosed Supplement is being sent to you in connection with the
Preferred Stock Proposal. Subsequent to April 30, 1997, the date the Proxy
Statement was first given or sent to stockholders, Procept has entered into a
set of agreements which, contingent upon Procept's stockholders approving the
Preferred Stock Vote, contemplate the issuance of shares of preferred stock.
Only stockholders of record at the close of business on April 21, 1997 (the
"Record Date") are entitled to vote at the meeting. On the Record Date there
were 13,720,338 shares of outstanding Common Stock.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ADJOURNED SESSION OF
THE MEETING. THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND SUCH SESSION, PLEASE
COMPLETE YOUR PROXY IF YOU HAVE NOT ALREADY DONE SO. IF YOU ATTEND THE SESSION
AND WISH TO VOTE IN PERSON, YOUR PROXY WILL NOT BE USED. IF, IN LIGHT OF THE
INFORMATION CONTAINED IN THE ENCLOSED SUPPLEMENT OR FOR ANY OTHER REASON, YOU
WISH TO REVOKE OR ALTER A PREVIOUSLY SUBMITTED PROXY WITH RESPECT TO THE
PREFERRED STOCK PROPOSAL, YOU ARE ENTITLED TO DO SO AT OR BEFORE THE ADJOURNED
SESSION OF THE MEETING OR ANY SUBSEQUENT ADJOURNMENT. TO OBTAIN A NEW PROXY
CARD, PLEASE CONTACT MICHAEL J. HIGGINS AT (617) 491-1100.
By Order of the Board of Directors
Lynnette C. Fallon
Secretary
July 3, 1997
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PROCEPT, INC.
840 Memorial Drive, Cambridge, Massachusetts 02139
(617) 491-1100
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PROXY STATEMENT SUPPLEMENT
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INTRODUCTION
This Proxy Statement Supplement (this "Supplement") is furnished by the
Board of Directors of Procept, Inc. ("Procept" or the "Company"). It modifies
and supplements the Proxy Statement of Procept dated April 30, 1997, which was
first sent or given to stockholders on or about April 30, 1997 (the "Proxy
Statement"). The approximate date on which this Supplement is first being sent
or given to stockholders is July 3, 1997.
This Supplement is being furnished to stockholders in connection with the
solicitation of proxies for use at an adjourned session of Procept's annual
meeting of stockholders scheduled for July 15, 1997 and any further adjournments
or postponements thereof. This Supplement provides information relating to the
proposal to approve an amendment and restatement of Procept's Restated
Certificate of Incorporation to authorize 1,000,000 shares of preferred stock
(the "Preferred Stock Proposal"). Attached as Annex 1 hereto is a copy of
Procept's Restated Certificate of Incorporation as proposed to be amended and
restated.
RECENT DEVELOPMENTS
On June 30, 1997, Procept entered into a letter of intent with a placement
agent (the "Placement Agent") regarding proposed transactions in Procept
preferred stock. On June 30, 1997, Procept and two funds (together, the
"Purchasers"), both affiliates of the Placement Agent, entered into definitive
agreements (the "Financing Agreements") regarding a purchase of Procept
securities. Under the Financing Agreements, Procept raised $3,000,000 by selling
to the Purchasers shares of Procept's Common Stock, $0.01 par value per share
(the "Common Stock"), warrants to purchase additional shares of Common Stock and
$200,000 in principal amount of notes.
Pursuant to the terms of the Financing Agreements, if Procept's
stockholders approve the Preferred Stock Proposal, the Purchasers will have the
right to require the Company to authorize and file a Certificate of Designations
for Series A Convertible Preferred Stock and to put the shares of Common Stock
purchased pursuant to the Financing Agreements to the Company in exchange for
shares of the Series A Convertible Preferred Stock at the ratio that is the
reciprocal of the conversion rate of the Series A Convertible Preferred Stock in
effect at such time. The Certificate of Designations initially provides for
30,000 shares of Series A Convertible Preferred Stock. Each share of Series A
Convertible Preferred Stock would initially be convertible into approximately
169 shares of Common Stock. After the earliest of (i) September 30, 1997, (ii)
the satisfaction of Rule 4460 of the National Association of Securities Dealers
Marketplace Rules or (iii) such time as such rule no longer applies (the
earliest of which is the "Approval Date"), the rate of conversion of Series A
Convertible Preferred Stock to Common Stock would be based on a price per Common
Stock share equal to the lower of (i) $0.30 or (ii) a 50% discount to the lowest
per share marketprice on particular reference dates. The shares of Series A
Convertible Preferred Stock would accrue dividends, payable in shares of Common
Stock (valued at the conversion price) upon conversion, at a rate of 10% per
year.
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Holders of the Series A Convertible Preferred Stock would generally be
entitled to vote together with holders of Common Stock, with the number of votes
allocated to each share of Series A Convertible Preferred Stock being determined
by reference to the number of shares of Common Stock into which such share is
convertible. However, until the Approval Date, the holders of the Series A
Preferred Stock would not be entitled to vote in any election of the directors
of the Company except that they may appoint up to three directors of the
Company. Additionally, certain actions, such as an amendment to the Company's
Certificate of Incorporation or By-Laws, would require approval by the Series A
Convertible Preferred Stock voting as a separate class. The Certificate of
Designations would also contain significant anti-dilution protection, restrict
certain Company actions, such as the payment of dividends, and provide a
liquidation preference equal to $140.00 per share.
If the Preferred Stock Proposal is not approved, or if certain other
approvals are not obtained, by September 30, 1997, the Purchasers will have a
10-year right to require the Company to repurchase the shares of Common Stock
issued to the Purchasers under the Financing Agreements for 140% of the original
per share purchase price. In addition, in such case the Company will be required
to make a payment of $500,000 to the Placement Agent as a break-up fee.
On June 29, 1997, Procept's Board of Directors voted to increase the size
of Procept's Board of Directors to five members and to elect Michael A. Weiss as
Chairman of the Board of Directors (subject to the closing of the transactions
contemplated by the Financing Agreements). Mr. Weiss was selected by the
Purchasers and appointed pursuant to the Financing Agreements. |
