What More is There to Add?
Sounds like a winner to me. Sushi, indeed! ;^)
Razor
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Proposal 3. Proposed Amendment to the Articles of Incorporation to Increase the
Authorized Capital Stock by Increasing the Authorized Shares of
Common Stock from 100 Million to 200 Million.
The Board of Directors has adopted, subject to shareholder approval, an
amendment to Article IV of the Articles of Incorporation to increase authorized
capital by increasing the number of authorized shares of Common Stock from
100,000,000 to 200,000,000 shares
The Company's authorized capital stock is 107 million shares, consisting
of 100 million shares of Common Stock, ("Common Stock"), and 7 million shares
of 8% cumulative convertible preferred stock, par value $3.00 ("Preferred
Stock"). As of the Record Date, 66,784,943 shares of Common Stock were issued
and outstanding. An additional 31,815,947 shares of Common Stock are reserved
for issuance upon conversion of the 14% Convertible Debentures and 5%
Convertible Secured Debentures and upon exercise of 5,538,000 outstanding
options held by the Company's officers and directors, with exercise prices
ranging from $.50 to $2.00 per share, and 8,758,796 warrants with exercise
prices ranging from $.40 to $2.59 per share of which 3% are less than $1.07 and
90% are above $1.99. No shares of Preferred Stock are outstanding.
The additional 100 million shares of Common Stock to be authorized would
provide the Board with flexibility for future financial and capital
requirements, for acquisitions, to facilitate efforts to obtain a strategic
partner and financing for projects in Kazakstan and other desirable locations,
and to facilitate the growth and expansion of the Company. The additional
shares also would be available for stock options and other employee benefit
plans, for stock splits and dividends, and for issuance upon conversion of its
outstanding convertible debt securities. The Company does not currently have
any plans, agreements or commitments or understandings for the issuance of
additional shares of Common Stock, except upon exercise of outstanding warrants
and options, pursuant to employee benefit plans, or upon conversion of
outstanding debt securities. Depending on the circumstances, issuance of
additional shares of Common Stock could affect the existing holders of shares
by diluting the voting power of the outstanding shares. The shareholders do not
have preemptive rights under the Articles of Incorporation and will not have
such rights with respect to the additional authorized shares of Common Stock.
Although the Company's Board of Directors does not consider the proposed
amendment to the Company's Articles of Incorporation to be an antitakeover
proposal, the ability to issue additional shares of Common Stock could also be
used to discourage hostile takeover attempts of the Company. Among other
things, the additional shares could be privately placed thereby diluting the
stock ownership of persons seeking to obtain control of the Company, or the
Board could adopt a stockholders' rights plan that would provide for the
issuance of additional shares of Common stock in the event of certain purchases
not approved by the Board of Directors.
Although the Board of Directors has no current plans to propose measures
to the Company's stockholders that may have the effect of discouraging
takeovers, such measures may be proposed if warranted from time to time in the
judgment of the Board of Directors. In addition, the Board of Directors may,
from time to time, adopt other measures or enter into agreements that could
have the effect of discouraging takeovers, but that do not require stockholder
approval.
Approval of this amendment to the Articles of Incorporation requires
approval by a majority of the outstanding shares of Common Stock entitled to
vote thereon. As a result, any shares not voted (whether by abstention, broker
non-vote or otherwise) will have the same effect as a vote against the
proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 3.
Proposal 4. To Approve the Issuance, If Necessary, Upon Conversion of 14%
Convertible Notes of More Than 9,807,150 Shares of Common Stock, as
Required by Nasdaq Rules.
Nasdaq rules require the Company to obtain shareholder approval for the
issuance of securities involving the sale of 20% or more of its Common Stock at
less than fair market value. Nasdaq may delist the securities of any issuer
that fails to obtain such stockholder approval before the issuance of such
securities.
In April and May 1998, the Company sold an aggregate of $12 million
principal amount of its 14% Convertible Notes due April 21, 2000 (the "Notes"),
together with warrants to purchase 1,400,000 shares of its
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Common Stock to four institutional investors for a total purchase price of $12
million. The exercise price of these warrants is $2.00 per share. The Notes are
convertible into shares of Common Stock at the option of the holder thereof,
subject to the limitations discussed below.
The number of shares of Common Stock into which the Notes may be converted
is equal to the outstanding principal balance of the Notes at any given time,
divided by the conversion price. The conversion price is equal to 85% of the
lowest five consecutive day weighted average sale price of the Common Stock on
the Nasdaq Stock Market during the 40 trading days preceding the date of
conversion. There is no minimum conversion price. Consequently, the lower the
market price of the Common Stock, the greater the number of shares of Common
Stock a holder of the Notes will receive upon conversion. No holder may convert
the Notes to the extent such conversion would result in the holders as a group
becoming the beneficial owner of more than 9.9% percent of the then outstanding
Common Stock, or the holders in the aggregate acquiring more than 9,807,150
shares of Common Stock, representing 19.9% of the number of shares of Common
Stock outstanding on the date upon which the Notes were initially issued,
unless such issuance is approved by shareholders.
The conversion price and the number of shares of Common Stock that may be
acquired upon conversion of the Debenture is subject to adjustment in the event
of a stock split, stock dividend, reorganization or reclassification, or the
issuance of Common Stock (or securities convertible into, or exercisable or
exchangeable for Common Stock) at less than market value.
The conversion, or the potential conversion of the Notes at a discount of
approximately 15% of the then prevailing market price of the Common Stock and
the immediate resale of the shares of Common Stock acquired upon conversion
into the public market may depress the market price of the Common Stock and
will have a dilutive impact on other shareholders.
If this proposal is not approved by shareholders, upon any conversion
that, together with prior conversions, would result in the issuance of more
than 9,807,150 shares of Common Stock, but for the limitation discussed above,
the Company will be required to pay the holder requesting conversion an amount
in cash equal to the closing price of the Common Stock on the date of
conversion times the number of shares in excess of 9,807,150 shares. The number
of shares available for conversion without exceeding this number is currently
1,142,493 shares. As of the date hereof, the Company had either redeemed or
converted an aggregate principal amount of $9,664,554, leaving an outstanding
principle balance of only $2,335,446 on the Notes. The Company's ability to
make such cash payments will depend on its available cash resources at the time
of a request for conversion. The payment of such amounts instead of the
issuance of shares of Common Stock upon conversion may adversely affect the
liquidity and financial condition of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 4.
Proposal 5. To Approve the Issuance, If Necessary, Upon Conversion of 5%
Convertible Secured Debenture of More Than 13,243,377 Shares of
Common Stock, as Required by Nasdaq Rules.
Nasdaq rules require the Company to obtain shareholder approval for the
issuance of securities involving the sale of 20% or more of its Common Stock at
less than fair market value. Nasdaq may delist the securities of any issuer
that fails to obtain such stockholder approval before the issuance of such
securities.
On February 18, 1999, the Company sold $10 million principal amount of its
5% Convertible General Debenture due February 18, 2004 (the "Debenture"),
together with a warrant to purchase 2,000,000 shares of its Common Stock, at an
exercise price of $2.59 per share, to a single investor for a purchase price of
$10 million. The Debenture is convertible into shares of Common Stock at any
time on or after August 8, 1999 (or earlier if the market price of the Common
Stock is at least $1.55 for five consecutive trading days), at the option of
the holder thereof, subject to the limitations discussed below.
The number of shares of Common Stock into which the Debenture may be
converted is equal to the outstanding principal balance of the Debenture at any
given time, divided by the conversion price. The conversion price is equal to
the lower of $1.288 and 85% of the lowest weighted average sale price of the
Common Stock on the Nasdaq Stock Market during the three trading days preceding
the date of conversion. There is no minimum conversion price. Consequently, the
lower the market price of the Common Stock, the greater the number of shares of
Common Stock the holder of the Debenture will receive upon conversion. No
holder may convert the Debenture to the extent such conversion would result in
a holder becoming the beneficial owner of more
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than five percent of the then outstanding Common Stock, or the holders in the
aggregate acquiring more than 13,243,377 shares of Common Stock, representing
19.9% of the number of shares of Common Stock outstanding on the date upon
which the Debenture was issued, unless such issuance is approved by
shareholders.
The conversion price and the number of shares of Common Stock that may be
acquired upon conversion of the Debenture is subject to adjustment in the event
of a stock split, stock dividend, reorganization or reclassification. In
addition, if prior to February 18, 2000, the Company issues shares of Common
Stock (or securities convertible into, or exercisable or exchangeable, for
Common Stock) in a private placement at less than the discount, or if lower,
the $1.288 ceiling price, specified in the Debenture, the conversion price of
the Debenture will be adjusted to such lower price.
The conversion, or the potential conversion of the Debenture at a discount
of approximately 15% of the then prevailing market price of the Common Stock
and the immediate resale of the shares of Common Stock acquired upon conversion
into the public market may depress the market price of the Common Stock and
will have a dilutive impact on other shareholders.
If this proposal is not approved by shareholders, upon any conversion
that, together with prior conversions, would result in the issuance of more
than 13,243,377 shares of Common Stock, but for the limitation discussed above,
the Company will be required to redeem in cash the principal amount that may
not be converted at 125% of the principal amount plus accrued interest and
penalty interest. The Company's ability to make such cash payments will depend
on its available cash resources at the time of a request for conversion. The
payment of such amounts instead of the issuance of shares of Common Stock upon
conversion may adversely affect the liquidity and financial condition of the
Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 5. |
