PRELIMINARY COPY SCHEDULE 14A
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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to SectionPROXY STATEMENT PURSUANT TO SECTION 14(a) of the Securities
Exchange Act ofOF THE
SECURITIES EXCHANGE ACT OF 1934 (Amendment No. )
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[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Cryomedical
Sciences,Biolife Solutions, Inc.
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(Name of Registrant as Specified in Its Charter)
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PRELIMINARY COPY
CRYOMEDICAL SCIENCES,BIOLIFE SOLUTIONS, INC.
1300 Piccard Drive, Suite 102
Rockville, Maryland 20850
_______________171 Front Street
Owego, NY 13827
--------------
NOTICE OF SPECIALANNUAL MEETING OF STOCKHOLDERS
To Be Held on December 16, 1998TO BE HELD ON SEPTEMBER 28, 2005
To the Stockholders of
CRYOMEDICAL SCIENCES,BIOLIFE SOLUTIONS, INC.
You areNotice is hereby notifiedgiven that a Specialthe Annual Meeting of Stockholders of Cryomedical Sciences,BioLife
Solutions, Inc., a Delaware corporation (the "Company"), will be held at the
offices of the
Company, 1300 Piccard Drive, Suite 102, Rockville, Maryland
20850,Breslow & Walker, LLP, 767 Third Avenue, New York, NY 10017, on
December 16, 1998,September 28, 2005, at 10:00 a.m., Maryland time,am, Eastern Standard Time, for the following
purposes:
1. To elect a board of four directors to (i) ratifyserve until the next Annual
Meeting of Stockholders and until their successors are duly
elected and qualified.
2. To approve each of the matters contained in a Plan of
Recapitalization and Financing (the "Plan") adopted and approved
by the Company's Board of Directors pursuant to the terms and
conditions of a Stock Purchase Agreement with ValorInvest, Ltd.
and required by the terms thereof to be submittedan amendment to the Company's stockholdersCertificate of
Incorporation to increase the number of authorized shares of
common stock from 25,000,000 to 100,000,000.
3. To approve an amendment to the Company's 1998 Stock Option Plan to
increase the number of shares of common stock reserved for
their approval, and (ii)issuance thereunder from 4,000,000 to 10,000,000.
4. To ratify the appointment of Aronson & Company to serve as
independent auditors for the year ending December 31, 2005.
5. To transact such other business as may properly come before the
meeting andor any and allpostponements or adjournments thereof.
The Plan is comprised of each of the matters to be voted
on at the Meeting, and provides that the Company (i) amend its
Certificate of Incorporation to (a) effect a (1) one-for-five, (2) one
for six, (3) one for seven, (4) one for eight, (5) one for nine, (6)
one for ten, (7) one for eleven, (8) one for twelve, (9) one for
thirteen, (10) one for fourteen, (11) one for fifteen, or (12) one for
sixteen reverse stock split of the issued and outstanding shares of
common stock of the Company, par value $.001 per share
("Common Stock"), each of such alternatives to be approved by
the stockholders of the Company and one of such approved
alternatives to be chosen by the Board of Directors of the
Company, (b) reduce the number of authorized shares of Common
Stock from 50,000,000 shares to 25,000,000 shares, and (c) reduce
the authorized number of shares of Preferred Stock, par value
$.001 per share, from 9,378,800 shares to 1,000,000 shares, (ii)
adopt a 1998 Stock Option Plan, (iii) grant stock options/warrants
for approximately 19,780,000 shares (pre-reverse stock split) (of
which stock options/warrants for 19,155,000 shares (pre-reverse
stock split) have been granted, subject to stockholder approval),
exercisable at $.25 per share (pre-reverse stock split) to
management, others who have provided services to the Company,
and directors, to appropriately incentivize and compensate them,
and (iv) prepare and file a registration statement with the Securities
and Exchange Commission for the sale of securities by the
Company. Each matter in the Plan will be voted on separately
and, if approved, may be effectuated by the Company. However,
for the Plan to be approved, each matter in the Plan must be
approved. THE FAILURE TO APPROVE EACH MATTER IN
THE PLAN, AND THEREFORE THE PLAN, COULD HAVE
A MATERIAL ADVERSE EFFECT ON THE BUSINESS AND
FINANCIAL CONDITION OF THE COMPANY. SEE
"PROXY STATEMENT - BACKGROUND." Approval of a
matter requires a "FOR" vote on the accompanying proxy. If no
choice is specified in the accompanying Proxy, the Proxy will be
voted "FOR" the matter. A vote to "ABSTAIN" with respect to
a matter will have the same effect as a vote "AGAINST" the
matter.
The foregoing items of business are more fully described
in the Proxy Statement accompanying this Notice.
The Board of Directors has fixed the close of business on October 23, 1998August 19, 2005 as the
record date for the determination of stockholders entitled to notice of and to
vote at the SpecialAnnual Meeting or any adjournments thereof.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE SPECIALANNUAL MEETING. WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO COMPLETE, SIGN, AND DATE
THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU
ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON IF YOU WISH TO DO SO,
EVEN IF YOU HAVE SIGNED AND RETURNED YOUR PROXY CARD.
By Order of the Board of Directors,
Richard J. Reinhart, Ph.D.,-------------------------------
John G. Baust, President
and Chief Executive Officer
Rockville, Maryland
November 2, 1998Owego, New York
August 26, 2005
IT IS IMPORTANT THAT THE ENCLOSED PROXY FORM
BE COMPLETED AND RETURNED PROMPTLY
PRELIMINARY COPY
CRYOMEDICAL SCIENCES,BIOLIFE SOLUTIONS, INC.
1300 Piccard Drive, Suite 102
Rockville, Maryland 20850
_______________171 FRONT STREET
OWEGO, NY 13827
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PROXY STATEMENT
_______________
SPECIAL---------------
ANNUAL MEETING OF STOCKHOLDERS
December 16, 1998TO BE HELD SEPTEMBER 28, 2005
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Cryomedical Sciences,BioLife Solutions, Inc., a Delaware corporation (the
"Company"), of proxies to be voted at a Specialthe Annual Meeting of Stockholders of the
Company to be held on December 16, 1998September 28, 2005 (the "Meeting"), at 10:00 a.m., Maryland time,Eastern
Standard Time, at the offices of the Company, 1300 Piccard
Drive, Suite 102, Rockville, Maryland 20850,Breslow & Walker, LLP, 767 Third Avenue, New
York, NY 10017, and at any adjournments thereof.
The close of business on October 23, 1998 has been
fixed as the record date for the determination of stockholders
entitled to notice of and to vote at the Meeting. On that date
there were 33,454,302 shares of the Company's common stock,
par value $.001 per share ("Common Stock"), issued and
outstanding, each of which has one vote on each matter to be
presented at the Meeting (the "Proposals"), and 128 shares of the
Company's Series E Convertible Preferred Stock, par value
$.001 per share ("Preferred Stock"), issued and outstanding,
each of which has 10,000 votes on each Proposal. The holders
of Common Stock and the holders of Preferred Stock will vote
together on the Proposals as if they held one class of stock. The
holders of stock representing a majority of the votes entitled to
be cast at the Meeting, present in person or by proxy, will
constitute a quorum for the transaction of business at the Meeting
and any adjournments thereof. Approval of the Proposals to
amend the Company's Certificate of Incorporation (the
"Charter") to (i) effect a one-for-five, one-for-six, one-for-seven,
one-for-eight, one-for-nine, one-for-ten, one-for-eleven, one-for-
twelve, one-for-thirteen, one-for-fourteen, one-for-fifteen, or
one-for-sixteen reverse stock split of the issued and outstanding
Common Stock, with one of such approved alternatives to be
chosen by the Board of Directors of the Company (the "Reverse
Stock Split"), (ii) reduce the number of authorized shares of
Common Stock from 50,000,000 shares to 25,000,000 shares
(the "Common Stock Reduction"), and (iii) reduce the number
of authorized shares of Preferred Stock from 9,378,800 shares
to 1,000,000 shares (the Preferred Stock Reduction"), requires
the affirmative vote of the holders of stock representing a
majority of the votes entitled to be cast at the Meeting. Approval
of the Proposals to (i) ratify and approve the Company's 1998
Stock Option Plan (the "1998 Stock Option Plan"), (ii) ratify and
approve the grant of stock options/warrants to purchase
19,155,000 shares (pre-Reverse Stock Split) of Common Stock,
exercisable at $.25 per share (pre-Reverse Stock Split) to
management, others who have performed services for the
Company, and directors, to appropriately incentivize and/or
compensate them for the services provided to the Company (the
"Stock Option/Warrant Grant"), and (iii) approve the preparation
and filing of a registration statement with the Securities and
Exchange Commission for the sale of securities by the Company
(the "SEC Filing"), requires the affirmative vote of the holders
of stock representing a majority of shares present in person or
represented by proxy at the Meeting and entitled to vote thereon.
All votes will be tabulated by the inspector(s) of election
appointed for the Meeting, who will separately tabulate
affirmative and negative votes, abstentions and broker non-votes.
Abstentions will be counted towards the tabulation of votes cast
on the Proposals and will have the same effect as negative votes.
Broker non-votes are counted towards a quorum, but are not
counted for any purpose in determining whether a Proposal has
been approved.
A form of proxy is enclosed for use at the Meeting. The proxy may be revoked by
a stockholder at any time before it is voted by execution of a proxy bearing a
later date or by written notice to the Secretary of the Company before the
Meeting, and any stockholder present at the Meeting may revoke his or her proxy
thereat and vote in person if he or she desires. When such proxy is properly
executed and returned, the shares of Common Stock, orSeries F Preferred Stock, and
Series G Preferred Stock it represents will be voted at the Meeting in
accordance with any instructions noted thereon. If no direction is indicated,
all shares of Common Stock, Series F Preferred Stock, and Series G Preferred
Stock represented by valid proxies received pursuant to this solicitation (and
not revoked prior to exercise) will be voted (i) FOR the proposed amendment toelection of the
Charter to effect
the Reverse Stock Split,nominees for directors named in this Proxy Statement, (ii) FOR the proposed
amendment to the CharterCertificate of Incorporation to effectincrease the Commonnumber of
authorized shares of common stock from 25,000,000 to 100,000,000 (the "Common
Stock Reduction,Increase"), (iii) FOR the proposed amendment to the CharterCompany's 1998 Stock
Option Plan to effectincrease the Preferrednumber of shares of Common Stock Reduction,reserved for
issuance thereunder from 4,000,000 to 10,000,000 (the "Plan Increase"), and (iv)
FOR the ratification and approval of the 1998
Stock Option Plan,appointment of Aronson & Company to serve as
independent auditors for the year ending December 31, 2005, and (v) FORin
accordance with the ratification and approvaljudgment of the Stock Option/Warrant Grant, and (vi) FORpersons named in the approval ofproxy as to such other
matters as may properly come before the SEC Filing.Meeting.
The cost for soliciting proxies on behalf of the Board of Directors will be
borne by the Company. In addition to solicitation by mail, proxies may be
solicited in person or by telephone, telefax, or cable by personnel of the
Company who will not receive any additional compensation for such solicitation.
The Company may reimburse brokers or other persons holding stock in their names
or the names of their nominees for the expenses of forwarding soliciting
material to their principals and obtaining their proxies. The approximate date
of mailing of this Proxy Statement and accompanying form of proxy is November 2, 1998.August 26,
2005.
BACKGROUND
In connection withThe close of business on August 19, 2005 has been fixed as the record date for
the determination of stockholders entitled to notice of and to vote at the
Meeting. On that date there were 12,413,209 shares of the Company's efforts to raise capital,
the Company entered into aCommon
Stock, Purchase Agreement (the
"Stock Purchase Agreement") with ValorInvest, Ltd.par value $.001 per share ("ValorInvest"), a Geneva Switzerland based corporation
unrelated to the Company, pursuant to which, among other
things, ValorInvest (i) purchased from the Company, 128 Series
E Units at a price of $1,562.50 per Unit (an aggregate of
$200,000), and (ii) agreed to purchase, on or before December
28,1998, an additional 256 Series E Units at a price of
$1,562.50 per Unit (an aggregate of $400,000). Each Unit
consists of one share of Series E Convertible Preferred Stock
("Series E PreferredCommon Stock"), convertible into 10,000issued and outstanding, each
of which has one vote on each matter to be presented at the Meeting (the
"Proposals"), 12,000 shares of Common Stock, and a warrant ("Series E Warrant") to purchase
5,000 shares of Common Stock at $.25 per share, the exercise
of which is subject to the consummation of a public offering of
(a), in the event the Common Stock is trading at a price of $.50
or more (pre-Reverse Stock Split), 16,000,000 shares (pre-
Reverse Stock Split) of Common Stock at not less than $.50 per
share (pre-Reverse Stock Split), or (b), in the event the Common
Stock is trading at a price of less than $.50 per share (pre-
Reverse Stock Split), 16,000 Series F Units at $500 per Series
F Unit. Each Series F Unit shall consist of one share ofCompany's Series F Convertible Preferred
Stock, (to be authorized at such time)par value $.001 ("Series F Preferred Stock"), convertible into 1,000issued and outstanding,
each of which has four hundred (400) votes on each Proposal, and 55.125 shares
(pre-Reverseof the Company's Series G Convertible Preferred Stock, Split)par value $.001 ("Series
G Preferred Stock"), issued and outstanding, each of which has three hundred
twelve thousand five hundred (312,500) votes on each Proposal. The holders of
Common Stock, the holders of Series F Preferred Stock, and the holders of Series
G Preferred Stock will vote together on the proposals as if they held one class
of stock. The holders of stock representing a majority of the votes entitled to
one votebe cast at the Meeting, present in person or by proxy, will constitute a quorum
for each sharethe transaction of Common
Stock into which it is convertible,business at the Meeting and automatically convertible
into Common Stock ifany adjournments thereof.
Election of the closingDirectors requires a plurality of the votes entitled to be cast
by holders of stock represented in person or bid priceby proxy at the Meeting. Approval
of the Common Stock on any day is $.50 or more (pre-Reverse Stock Split), and
a warrant to purchase 250 shares (pre-Reverse Stock Split) of
Common Stock at $.75 per share (pre-Reverse Stock Split).
The Stock Purchase Agreement requires the Board of
Directors of the Company to adopt a Plan of Recapitalization and
Financing (the "Plan") and to submit the Plan to the Company's
stockholders for their approval. Subject to the adoption by the
Company and its stockholders of the Plan, ValorInvest has
agreed to use its best efforts to arrange for a public offering
("Public Offering") (contemplated to be in Europe) of the
Company's securities through an underwriter (the "Underwriter")
to be designated or approved by ValorInvest. Through
ValorInvest, the Company has obtained a letter of interest for a
Public Offering from a German Underwriter. The letter does not
contain any commitment for a Public Offering, and any Public
Offering by such Underwriter, at the very least, would be subject
to the completion of due diligence by such Underwriter and
market conditions. The terms of a Public Offering, if any,
would be as negotiated between the Company and the
Underwriter. There can be no assurance that the Public
Offering, if consummated, would be on the terms set forth
above, or that a Public Offering would be consummated at all.
In the event the Plan is not approved by the Company
and its stockholders, there would be no requirement on the part
of ValorInvest to use its best efforts to arrange for the Public
Offering. In addition, if the Plan is not approved by the
Company's stockholders by January 27, 1999, then, at the
request of ValorInvest, the Company must redeem the Series E
Units at a per Unit price equal to the price paid therefor plus an
additional amount determined by multiplying the price paid
therefor by a fraction, the denominator of which is the number
"120" and the numerator of which is the number of months
(rounded to a higher whole number) elapsed between September
30, 1998 and the redemption date. Any such request by
ValorInvest would have a material adverse effect on the
business and financial condition of the Company.
The Plan is comprised of each of the matters to be
voted on, including the Reverse Stock Split, the Common
Stock Reduction, the Preferred Stock Reduction, the 1998
Stock Option Plan, the Stock Option/Warrant Grant and the
SEC Filing. Each matter in the Plan will be voted on separately
and, if approved, may be effectuated by the Company.
However, for the Plan to be approved, each matter in the Plan
must be approved. THE FAILURE TO APPROVE EACH
MATTER CONTAINED IN THE PLAN, AND THEREFORE
THE PLAN, COULD HAVE A MATERIAL ADVERSE
EFFECT ON THE BUSINESS AND FINANCIAL
CONDITION OF THE COMPANY.
On August 31, 1998, the Board of Directors of the
Company unanimously approved the Plan. The Plan is now
being submitted for approval by the Company's stockholders.
APPROVAL OF A MATTER REQUIRES A "FOR"
VOTE ON THE ACCOMPANYING PROXY. IF NO
CHOICE IS SPECIFIED IN THE ACCOMPANYING
PROXY, THE PROXY WILL BE VOTED "FOR" THE
MATTER. A VOTE TO "ABSTAIN" WITH RESPECT TO
A MATTER WILL HAVE THE SAME EFFECT AS A
VOTE "AGAINST" THE MATTER.
PROPOSAL TO AMEND THE CERTIFICATE OF
INCORPORATION
TO EFFECT THE REVERSE STOCK SPLIT
Reason for Submission to Stockholders
ThisIncrease Proposal is being submitted to stockholders to
comply with the terms of the Stock Purchase Agreement and to
satisfy the requirements of the Delaware General Corporation
Law. The Proposal is one of the matters contained in the Plan
of Recapitalization and Financing (the "Plan") which, pursuant
to the Stock Purchase Agreement, is to be adopted by the
Company and submitted to the Company's stockholders for their
approval. The failure of the Company's stockholders to
approve this Proposal would constitute a failure to approve
the Plan and could have a material adverse effect on the
business and financial condition of the Company. See
"Background."
Reasons for the Reverse Stock Split
The principal reasons to effectuate the Reverse Stock
Split are to increase the number of authorized but unissued
shares of Common Stock, to reduce the number of shares of
Common Stock that are outstanding, and to increase the price per
share of the Common Stock.
The Company currently is authorized to issue 50,000,000
shares of Common Stock, of which 33,454,302 shares of
Common Stock are issued and outstanding. There also are
outstanding 128 shares of Series E Preferred Stock and 128
Series E Warrants which are convertible/exercisable into
1,280,000 shares of Common Stock and 640,000 shares of
Common Stock, respectively, and other options and warrants to
purchase 2,096,400 shares of Common Stock. In addition, in
accordance with the Stock Purchase Agreement, the Company (i)
is required to issue to ValorInvest an additional 256 shares of
Series E Preferred Stock, convertible into 2,560,000 shares of
Common Stock, and Series E Warrants to purchase 1,280,000
shares of Common Stock, and (ii) has granted to management,
others who have provided services to the Company, and
directors an aggregate of 19,155,000 stock options/warrants (pre-
Reverse Stock Split) to appropriately incentivize and/or
compensate them, in each case subject to the approval of the
Plan by the Company's stockholders. Thus, the Company may
be required to issue a number of shares of Common Stock,
which, together with the Company's issued and outstanding
shares of Common Stock, would exceed its current authorized
capital of 50,000,000 shares of Common Stock. Lastly, there
currently is an insufficient number of authorized but unissued
shares of Common Stock available to allow the Company to
complete the contemplated Public Offering.
The Company contemplates that the Reverse Stock Split
will be a minimum of one-for-ten (with the final determination
to be based upon the price of the Common Stock at the time of
the Reverse Stock Split and negotiations with the Underwriter,
if any). After a one-for-ten Reverse Stock Split, there would be
outstanding approximately 3,345,430 shares of Common Stock,
Series E Preferred Stock convertible into 128,000 shares of
Common Stock, Series E Warrants to purchase 64,000 shares of
Common Stock, other options and warrants to purchase
2,125,140 shares of Common Stock (assuming ratification and
approval of the Stock Option/Warrant Grant), and a contractual
commitment to issue to ValorInvest additional Series E Preferred
Stock and Series E Warrants convertible/exercisable into an
aggregate of 384,000 shares of Common Stock, for an aggregate
of approximately 6,046,570 shares of Common Stock issued and
outstanding or required to be reserved for issuance. Therefore,
the Reverse Stock Split will enable the Company to issue shares
of Common Stock pursuant to the conversion of outstanding and
contracted for shares of Series E Convertible Preferred Stock and
the exercise of outstanding warrants and options, and to
consummate a Public Offering.
The Company also believes that the higher share price
which may result from the Reverse Stock Split will help to
generate interest in the Company among investors, thereby
facilitating future financings. In addition, the Company
anticipates, but there can be no assurance, that the Reverse Stock
Split will enable the Common Stock to maintain its listing on the
NASDAQ Stock Market, for which a minimum $1.00 bid price
is required. There can be no assurance, however, that a higher
share price will have such effect or that any financings will be
consummated in the future.
Fractional Shares
No fractional shares of Common Stock or scrip
representing fractional shares of Common Stock will be issued
in connection with the Reverse Stock Split. In lieu of issuing
fractional shares, each fractional share will be rounded up to the
next highest whole share of Common Stock.
Effects of the Reverse Stock Split
Upon the effectiveness of the Reverse Stock Split, the
number of shares owned by each holder of Common Stock shall
be reduced by the ratio of a minimum of 5 to 1 and a maximum
of 16 to 1, so that each such stockholder will thereafter own one
share of Common Stock for every 5 or 6 or 7 or 8 or 9 or 10 or
11 or 12 or 13 or 14 or 15 or 16 shares of Common Stock he or
she owned immediately prior to the Reverse Stock Split.
It is contemplated that the Reverse Stock Split will be a
minimum of one-for-10 (with the final determination to be based
upon the price of the Common Stock at the time of the Reverse
Stock Split and negotiations with the Underwriter, if any).
Assuming a one-for-10 Reverse Stock Split, the principal effect
of the Reverse Stock Split will be that (i) the number of shares
of Common Stock issued and outstanding will be reduced from
33,454,302 shares to approximately 3,345,430 shares, (ii) all
outstanding shares of Series E Preferred Stock entitling holders
thereof to receive, upon conversion, shares of Common Stock
will enable such holders to receive, upon conversion thereof,
1/10th of the number of shares of Common Stock which such
holders would have received upon conversion thereof
immediately preceding the Reverse Stock Split, (iii) all
outstanding options and warrants entitling the holders thereof to
purchase shares of Common Stock will enable such holders to
purchase, upon exercise of their options and warrants, 1/10 of
the number of shares of Common Stock which such holders
would have been able to purchase upon exercise of their options
or warrants immediately preceding the Reverse Stock Split at the
same aggregate price required to be paid therefor upon exercise
thereof immediately preceding the Reverse Stock Split, and (iv)
the number of shares included in the Company's 1998 Stock
Option Plan will be reduced to 1/10th of the number of shares
currently included in such Stock Option Plan. The Reverse
Stock Split will not alter the percentage ownership interest in the
Company of any stockholder, except to the extent that the
Reverse Stock Split results in a stockholder of the Company
owning a fractional share (see "Reverse Stock Split - Fractional
Shares"). Voting and other rights accompanying the Common
Stock will not be altered.
Pursuant to the Reverse Stock Split, the par value of the
Common Stock will remain $0.001 per share. As a result, on
the effective date of the Reverse Stock Split, the stated capital on
the Company's balance sheet attributable to the Common Stock
will be reduced to 1/10th of its present amount (assuming a one-
for-ten Reverse Stock Split), and the additional paid-in capital
account shall be credited with the amount by which the stated
capital is reduced.
Exchange of Shares
The Reverse Stock Split will be effective at the close of
business on the date of filing of the appropriate certificate of
amendment to the Charter with the Secretary of State of the State
of Delaware, unless the Company specifies otherwise. The
record date for the Reverse Stock Split will be the effective date
of the amendment to the Charter (the "Record Date"). On or
about the Record Date, notice of the Reverse Stock Split (the
"Split Notice") will be mailed to each stockholder of record at
the most recent address of such stockholder appearing on the
Company's records. The Split Notice shall be accompanied by
a Letter of Transmittal and shall request that each stockholder
surrender his or her existing stock certificate(s) (the "Old
Certificate") evidencing ownership of the pre-Reverse Stock Split
Common Stock (the "Old Common Stock"), together with the
Letter of Transmittal, to American Stock Transfer and Trust
Company to be exchanged for a new stock certificate(s)
evidencing ownership of the number of shares of Common Stock
resulting from the Reverse Stock Split (the "New Common
Stock"). From and after the Record Date, all Old Certificates
will be deemed to represent only that number of shares of New
Common Stock resulting from the Reverse Stock Split.
Federal Income Tax Consequences
The Company believes that the federal income tax
consequences of the Reverse Stock Split will be as follows:
(i) Except as explained in (v) below, no
income gain or loss will be recognized
by stockholders on the surrender of their
Old Common Stock or the receipt of
their New Common Stock.
(ii) Except as explained in (v) below, the
tax basis of the New Common Stock
will equal the tax basis of the Old
Common Stock exchanged therefor.
(iii) Except as explained in (v) below, the holding
period of the New Common Stock will include
the holding period of the Old Common Stock if
such shares were held as capital assets.
(iv) The conversion of the Old Common Stock into
the New Common Stock will produce no taxable
income or gain or loss to the Company.
(v) The federal income tax treatment of the
receipt of the additional fractional
interest by a stockholder is not clear and
may result in tax liability not material in
amount in view of the low value of such
fractional interest.
The foregoing summary represents the Company's
opinion only and is based on the existing provisions of the
Internal Revenue Code of 1986, as amended, and existing
administrative interpretations thereof, any of which may be
revised retroactively. The Company's opinion is not binding
upon the Internal Revenue Service or the courts, and there can
be no assurance that the Internal Revenue Service or the courts
would accept the positions expressed above.
The state and local tax consequences of the Reverse
Stock Split may vary significantly as to each stockholder,
depending upon the state in which he/she resides. Stockholders
are urged to consult their own tax advisors with respect to the
federal, state, and local tax consequences of the Reverse Stock
Split.
No Right of Appraisal
Under the Delaware General Corporation Law,
dissenting stockholders are not entitled to appraisal rights with
respect to the Company's proposed amendment to the Charter to
effect the Reverse Stock Split, and the Company will not provide
stockholders with any such right.
Voting Requirement
Approval of the Proposal for the Reverse Stock Split requires the affirmative vote of the
holders of stock representing a majority of the votes entitled to be cast at the
Meeting. Approval of the Plan Increase Proposal and the ratification of the
independent auditors requires the affirmative vote of the holders of stock
representing a majority of shares present in person or represented by proxy at
the Meeting and entitled to vote thereon.
All votes will be tabulated by the inspector(s) of election appointed for the
Meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions and broker non-votes shall each be
included as shares present and voting for the purpose of determining whether a
quorum is present at the Meeting. Abstentions will be counted toward the
tabulation of votes cast on the Proposals and will have the same effect as
negative votes. Broker non-votes are not counted in determining whether a
Proposal has been approved.
2
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
- --------------------------------------
NOMINEES
Four persons, all of whom are members of the present Board of Directors, are
nominees for election at the Annual Meeting to hold office until the next annual
meeting and until their respective successors are elected and qualified. Unless
authority to vote for any director is withheld in a proxy, it is intended that
each proxy will be voted for the four nominees named below.
It is expected that all nominees will be able and willing to serve as directors.
However, in the event that any nominee is unable or declines to serve as a
director at the time of the Annual Meeting, the proxies will be voted for any
nominee who shall be designated by the present Board of Directors to fill the
vacancy. The Board of Directors recommendshas no reason to believe that any of the persons
named will be unable or unwilling to serve as director if elected.
REASON FOR SUBMISSION TO STOCKHOLDERS
This Proposal is being submitted to stockholders to satisfy the requirements of
the Delaware General Corporation Law.
REQUIRED VOTE
Approval of the nominees for election to the Board of Directors will require the
affirmative vote of the holders of stock representing a plurality of the votes
present at the Annual Meeting in person or by proxy and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF
ALL NOMINEES LISTED TO THE BOARD OF DIRECTORS.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
Name Age Present Office or Position
---- --- --------------------------
John G. Baust, Ph.D. 62 Director, Chief Executive Officer
Howard S. Breslow 65 Director, Secretary
Roderick de Greef 43 Director
Thomas Girschweiler 47 Director
The following information is submitted concerning the nominees named for
election as directors based upon information received by the Company from such
persons.
3
John G. Baust, Ph.D., has been the President and Chief Executive Officer of the
Company since July 2002. Previously he was Senior Vice President of Cryomedical
Sciences, Inc. ("CMSI"), the Company's predecessor, since January 1995, Chief
Scientific Officer since August 1993, Vice President, Research and Development
from July 1990 to January 1995, and a consultant from April 1990 to July 1990.
Dr. Baust became a director of CMSI on October 13, 2000. Since 1987, Dr. Baust
has also been a Professor and the Director of the Center for Cryobiological
Research at the State University of New York at Binghamton, and since July 1994,
Dr. Baust has also been Adjunct Professor of Surgery, Medical College of
Pennsylvania. From 1984 to 1987, he was a Professor at, and the Director of, the
Institute of Low Temperature Biology at the University of Houston.
Howard S. Breslow has served as a director of the Company since July 1988. He
has been a practicing attorney in New York City for 40 years and is a member of
the law firm of Breslow & Walker, LLP, New York, New York, which firm serves as
general counsel to the Company. Mr. Breslow currently serves as a director of
Excel Technology, Inc., a publicly-held company engaged in the manufacture and
marketing of photonics-based solutions, consisting of laser systems and
electro-optical components, primarily for industrial and scientific
applications, and Lucille Farms, Inc., a company engaged in the manufacture and
marketing of dairy products.
Roderick de Greef has served as a director of the Company since June 19, 2000.
From March 2001 to present, Mr. de Greef has served as Executive Vice President,
Chief Financial Officer and Secretary of Cardiac Sciences, Inc., a public
company traded on NASDAQ, under the ticker "DFIB". Since 1995 Mr. de Greef has
provided corporate finance advisory services to a number of early stage
companies, including the Company, where he was instrumental in securing the
Company's equity capital beginning in June 2000, and advising on merger and
acquisition activity. From 1989 to 1995, Mr. de Greef was Vice President and
Chief Financial Officer of BioAnalogics, Inc. and International BioAnalogics,
Inc., publicly held, development stage medical technology companies located in
Portland, Oregon. From 1986 to 1989, Mr. de Greef was Controller and then Chief
Financial Officer of Brentwood Instruments, Inc., a publicly held cardiology
products distribution company based in Torrance, California. Mr. de Greef has a
B.A. in Economics and International Relations from California State University
at San Francisco and an M.BA. from the University of Oregon.
Thomas Girschweiler joined the Board in 2003. Mr. Girschweiler has been engaged
in corporate financing activities on his own behalf since 1996. From 1981 to
1996 he was an investment banker with Union Bank of Switzerland. Thomas
Girschweiler was graduated at the Swiss Banking School.
DIRECTOR COMPENSATION
The Company has not compensated its directors for their services in such
capacity, except that on May 12, 2005, each of the directors received a ten-year
fully vested non-incentive stock option to purchase 250,000 shares of the
Company's common stock at $0.08 per share.
4
BOARD MEETINGS
The Board of Directors held meetings or acted by unanimous consent on fourteen
(14) occasions during the twelve months ended December 31, 2004. Meetings were
attended by all directors. Although the Company does not have a formal policy
regarding attendance by the Board of Directors at the Company's Annual Meeting
of Stockholders, it strongly encourages directors to attend. Because of
financial constraints, the Company did not hold an Annual Meeting of
Stockholders last year.
BOARD COMMITTEES
AUDIT COMMITTEE. The Board of Directors does not have an audit committee or an
audit committee financial expert. The Company does believe, based on its current
operations, that the stockholders vote FOR the proposed amendmentfailure to have such a committee or expert is material to
the Charterintegrity of the financial statements of the Company.
COMPENSATION COMMITTEE. The Board of Directors does not have a compensation
committee. Management compensation for fiscal year 2004 was determined by the
non-employee members of the Board of Directors.
NOMINATING COMMITTEE. The Board of Directors has no standing nominating
committee. The Company believes that obtaining input from all of its directors
in connection with Board nominations enhances the nomination process. The
Company currently does not have a charter with regard to effect the Reversenomination process.
The nominations of the directors standing for election or re-election at the
Meeting were unanimously recommended for selection by the independent directors
(as defined by NASDAQ rules), and were unanimously approved by the Board of
Directors.
The Company does not have a formal policy concerning stockholder recommendations
of nominees to the Board of Directors. The need for such a policy has not arisen
since, to date, the Company has not received any recommendations from
stockholders requesting that the Board of Directors consider a candidate for
inclusion among the Board's slate of nominees in the Company's proxy statement.
The absence of such a policy does not mean, however, that a recommendation would
not have been considered had one been received. The Company will consider
director candidates recommended by stockholders. Any stockholder desiring to
make such a recommendation should send the recommendation, in writing, to the
Corporate Secretary at the address of the Company set forth on the first page of
this Proxy Statement, no later than the date by which stockholder proposals for
action must be submitted. The recommendation should include the recommended
candidate's biographical data, and should be accompanied by the candidate's
written consent to nomination and to serving as a director, if elected.
The Company's goal is to assemble a Board of Directors that brings to the
Company a variety of perspectives and skills derived from business and
professional experience. The Company does not have any formal rules or policies
regarding minimum qualifications for nominees, but expects that its candidates
be of the highest ethical character, share the values of the Company, have
reputations, both personal and professional, consistent with the image and
reputation of the
5
Company, be highly accomplished in their respective field, and possess the
relevant expertise and experience necessary to assist the Board of Directors and
the Company to increase stockholder value.
The Board of Directors identifies nominees by first evaluating the current
members of the Board of Directors willing to continue in service. Current
members of the Board with skills and experience that are relevant to the
Company's business and who are willing to continue in service are considered for
re-nomination, balancing the value of continuity of service by existing members
of the Board with that of obtaining a new perspective. If any member of the
Board does not wish to continue in service or if the Board of Directors decides
not to re-nominate a member for re-election, the Board of Directors will seek to
identify nominees that possess the characteristics outlined above. Current
members of the Board of Directors are polled for suggestions. Research also may
be performed to identify qualified individuals. To date, the Company has not
engaged third parties to identify, evaluate, or assist in identifying potential
nominees, although the Company reserves the right in the future to retain a
third party search firm, if necessary.
In evaluating director nominees, the Board of Directors may consider the
following factors:
o the appropriate size and the diversity of the Company's Board of
Directors;
o the needs of the Company with respect to the particular talents and
experience of its directors;
o the knowledge, skills and experience of nominees, including experience
in technology, business, or finance, in light of prevailing business
conditions and the knowledge, skills and experience already possessed by
other members of the Board;
o familiarity with national and international business matters;
o experience with accounting rules and practices; and
o the need to satisfy governance and other standards set by the SEC.
The Board of Directors may also consider such other factors as it may deem to be
in the best interests of the Company and its stockholders.
COMMUNICATING WITH DIRECTORS
Stockholders may contact any of our directors or our Board of Directors as a
group by writing to them c/o BioLife Solutions, Inc., 171 Front Street, Owego,
NY 13827, Att: Dr. John G. Baust. All communications will be received, processed
and forwarded to the directors by the Corporate Secretary. You will receive a
written acknowledgement from the Corporate Secretary upon receipt of your
communication if you include a return address.
6
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company are as follows:
Name Age Present Office or Position
---- --- --------------------------
John G. Baust, Ph.D. 62 Chief Executive Officer, President
Officers are appointed by, and hold office at the pleasure of, the Board of
Directors. Officers serve at the discretion of the Board of Directors and are
elected at the annual meeting of the Board of Directors.
7
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the compensation
paid by the Company to its Chief Executive Officer and to each of its executive
officers (other than the Chief Executive Officer) who received salary and bonus
payments in excess of $100,000 during the fiscal year ended December 31, 2004
(collectively the "Named Executive Officers").
Annual Compensation Long Term Compensation
-------------------------------------- --------------------------------------------------
Awards Payouts
----------------------- ------------------------
Other Annual Restricted
Name and Principal Fiscal Salary Bonus Compensation Stock Options/ LTIP All Other
Positions Year ($) ($) ($) Award(s) SARs (#) Payouts Compensation
- ------------------------ --------- --------- --------- -------------- --------- ---------- -------- -------------
John G. Baust, Ph.D 2004 240,000(1) -- -- -- -- -- --
Chief Executive
Office,r 2003 240,000(2) -- 7,490 (3) -- -- -- --
President, and 2002 202,369 50,000 3,600 (3) -- 1,000,000 -- --
Director
Alan Rich 2004 174,587(4) -- 7,200(3) -- -- -- --
VP Sales & Marketing 2003 150,000(5) -- -- -- 100,000 -- --
2002 15,000 -- -- -- -- -- --
(1) Consists of $176,490 paid compensation and $63,510 accrued salary paid in
2005.
(2) Consists of $170,654 paid compensation, $53,125 paid in 2.125 units of
Series G Preferred Stock, Split.and $16,221 accrued salary paid in 2004.
(3) Represents auto allowance.
(4) Consists of $150,000 paid compensation, $20,248 paid commissions, and
$4,339 accrued commissions paid in 2005.
(5) Consists of $103,846 paid compensation, $12,500 paid in 1.0 units of Series
G Preferred Stock, and $33,654 accrued salary paid in 2004.
OPTION/SAR GRANTS IN YEAR-ENDED DECEMBER 31, 2004
In 2004, the Company issued no options to purchase shares of Common Stock to its
Named Executive Officers.
8
AGGREGATED OPTION/SAR EXERCISES DURING THE 2004 FISCAL YEAR AND THE 2004 FISCAL
YEAR OPTION/SAR VALUES
The following table provides information related to options exercised by each of
the Named Executive Officers during the 2004 fiscal year and the number and
value of options held at December 31, 2004. The Company does not have any
outstanding stock appreciation rights. None of the options were in the money at
December 31, 2004.
Number of Securities Value of Unexercised
Underlying Unexercised in the money
Options/SAR at Fiscal Options/SAR at Fiscal
Year End (#) Year End ($)(1)
-------------------------- ---------------------------
Shares Acquired Value
Name On Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---------- --------------- ----------- ----------- ------------- ----------- -------------
John G. Baust, Ph.D. -- -- 1,542,000 1,000,000 -- --
Alan F. Rich -- -- -- -- -- --
- ----------------------------------------
(1) The closing price for the Common Stock as reported on the OTC Bulletin
Board on December 31, 2004 was $0.09. Value is calculated on the basis
of the difference between the option exercise price and $0.09
multiplied by the number of shares of Common Stock underlying the
option.
(2) Mr. Rich's employment relationship with the Company ended in February
2005.
EMPLOYMENT AGREEMENTS
The Company has an employment agreement with its President and Chief Executive
Officer, dated July 1, 2002, which was to expire on June 30, 2004, but which was
automatically renewed for a one-year term. The agreement provides for a salary
of $20,000 per month and an incentive bonus based on certain milestones, as
determined by the Board of Directors. The officer also received a $50,000
signing bonus in 2002 and ten-year incentive stock options to purchase 1,000,000
shares of Common Stock, which options vest ratably over five years on the
anniversary date of the grant. The agreement also provides an automobile
allowance of $600 per month.
The Company had an employment agreement with its Vice President, Sales and
Marketing which expired on October 31, 2004. The agreement provided for a salary
of $12,500 per month, an incentive bonus based on certain milestones, as
determined by the Board of Directors, ten-year incentive stock options to
purchase 400,000 shares of Common Stock vesting ratably over four years on the
anniversary date of the grant, and an automobile allowance of $600 per month.
Mr. Rich's employment relationship with the Company ended in February 2005.
Every officer of the Company has executed a Proprietary Information and
Inventions Agreement pursuant to which each agreed, among other things, to keep
the Company's information confidential and assigned all inventions to the
Company, except for certain personal inventions not related to the Company's
work, whether existing or later developed.
9
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Management compensation for fiscal year 2004 was determined by the non-employee
members of the Board. There were no compensation committee interlocks.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Until 2004, the Company conducted its internal research through Small Business
Innovative Research ("SBIR") grants awarded by the National Institutes of
Health. In 2004, the Company elected to not continue to directly engage in the
SBIR grant program. Accordingly, the Company entered into a Research Agreement
with Cell Preservation Services, Inc. ("CPSI") to outsource to CPSI all BioLife
research currently funded through SBIR grants. CPSI is owned by Dr. John M.
Baust, a recognized expert in cell preservation, a former employee of BioLife
and the son of John G. Baust, the CEO of BioLife. Robert Van Buskirk, formerly
Vice President, Business Development of BioLife and the person primarily
responsible for processing applications for SBIR grants for BioLife, also has
left the employ of BioLife and joined CPSI. The Research Agreement, which was
negotiated on an arms length basis and designed to comply with the rules and
regulations applicable to the performance of research with respect to SBIR
grants, establishes a format pursuant to which CPSI will (a) take over the
processing of existing applications for SBIR grants applied for by BioLife
("Current Projects"), (b) apply for additional SBIR grants for future research
projects ("Future Projects"), (c) perform a substantial portion of the principal
work to be done, in terms of (i) time spent, and (ii) research, in connection
with Current Projects and Future Projects (the "Research"), and (d) utilize
BioLife personnel as consultants with respect to such Research. In conjunction
therewith BioLife has granted to CPSI a non-exclusive, royalty free license
(with no right to sublicense) to use BioLife's technology solely for the purpose
of conducting the research in connection with the Current Projects and Future
Projects. Pursuant to the Research Contract, (x) BioLife will, among other
matters, provide CPSI with (i) suitable facilities in which to conduct the
Research, including basic research equipment and office equipment
("Facilities"), and (ii) management services ("Management Services"), and (y)
CPSI will (i) accept assignment of Current Projects, (ii) be responsible for
conducting Research with respect to Current Projects and Future Projects, (iii)
as mutually agreed to by the parties and within the confines of the rules and
regulations applicable to the performance of Research with respect to SBIR
grants, utilize BioLife's personnel as consultants, (iv) provide suitable
experienced personnel, including, without limitation, a principal
investigator/program director, to conduct the Research, (v) comply with all
federal laws, rules and regulations applicable to SBIR grants and file all
necessary forms and reports with the federal agency awarding the SBIR grants,
and (vi) utilize the Facilities and Management Services and pay BioLife fees
with respect thereto. BioLife is to own all right, title and interest in and to
any technology, inventions, designs, ideas, and the like (whether or not
patentable) that emanates from the Current Projects, Future Projects and
Research.
Howard S. Breslow, a director of the Company, is a member of Breslow & Walker,
LLP, general
10
counsel to the Company. Mr. Breslow currently owns 53,600 shares of Common Stock
of the Company and directly or indirectly owns options and warrants to purchase
an aggregate of 2,477,910 additional shares. The Company incurred $80,118 in
legal fees during the year ended December 31, 2004 for services provided by
Breslow & Walker, LLP. At December 31, 2004 accounts payable includes $28,027
due to Breslow & Walker, LLP.
Thomas Girschweiler, a director of the Company, loaned the Company, in the form
of notes, $250,000, $100,000 and $100,000 in March 2002, March 2003 and May
2003, respectively. The notes accrued interest at the rate of 10% per annum. On
March 1, 2004, the Company paid Mr. Girschweiler $515,418, including principal
and accrued interest, in satisfaction of the outstanding notes.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
COMPENSATION GUIDELINES
The Company is engaged in a highly competitive industry and must attain
high levels of quality and safety in the formulation and production of its
products. To succeed, the Company believes that it must offer executive
compensation that reflects competitive pay practices of other companies and job
responsibility, and enables the Company to attract, retain, and reward
qualified, experienced executives. The Company also believes that any
competitive pay package should be structured, in part, to align management's
interests with the success of the Company by making a portion of compensation
dependent on operating achievements and, to a lesser extent, on stock
performance. The non-employee members of the Board of Directors have determined
that these objectives are best met by offering the Company's executive officers
competitive base salaries, stock options that vest over time, and, where
appropriate, bonuses based on the achievement of milestones, as determined by
the Board of Directors.
CHIEF EXECUTIVE OFFICER COMPENSATION
Based on the criteria described above, the non-employee members of the
Board of Directors ratified the automatic renewal provision of Dr. Baust's
employment contract in 2004. In making the determination, the non-employee
directors considered several factors including the Company's revenues, losses,
and cash-flow and future business prospects. Dr. Baust did not receive a bonus
in 2004.
Howard S. Breslow
Roderick deGreef
Thomas Girschweiler
11
BENEFICIAL OWNERSHIP OF THE COMPANY'S SECURITIES
The following table sets forth, as of August 15, 2005, certain information
regarding the beneficial ownership of Common Stock and Series F Preferred Stock
and Series G Preferred Stock by (i) each stockholder known by the Company to be
the beneficial owner of more than 5% of the outstanding shares thereof; (ii)
each director of the Company; (iii) each Named Executive Officer of the Company;
and (iv) all of the Company's current directors and executive officers as a
group.
Name and Address Common Stock Series F Preferred Series G Preferred
of Beneficial Owner (% of class) (1) (% of class) (% of class)
- -------------------------------------------- --------------------- -------------------- ---------------------
John G. Baust (Director, Executive Officer)
c/o BioLife Solutions, Inc.
171 Front Street 3,640,525 (22.7%)(2) -- 2.125 (3.9%)
Owego, NY 13827
Howard S. Breslow, Esq. (Director)
c/o Breslow & Walker, LLP
767 Third Avenue 2,531,510 (17.0%)(3) -- -
New York, NY 10017
Roderick de Greef (Director)
c/o BioLife Solutions, Inc.
171 Front Street 4,514,699 (27.4%)(4) 1,000 (8.3%) 4.0 (7.3%)
Owego, NY 13827
Walter Villiger
Hurdnerstrasse 10
P.O. Box 1474 17,072,314 (58.7%)(5) 5,000 (41.7%) 18.0 (32.7%)
CH-8649 Hurden, Switzerland
Thomas Girschweiler (Director)
Wissmannstrasse 15 12,854,278 (52.0%)(6) 3,450 (28.8%) 10.0 (18.1%)
8057 Zurich, Switzerland
Karl-Heinz Illenseer
Wissmannstrasse 15 3,910,714 (24.0%)(7) -- 6.0 (10.9%)
8057 Zurich, Switzerland
Clariden Bank
Claridenstrasse 26
Postfach 5080 2,520,513 (17.8%)(8) 2,000 (16.7%) --
CH-8022 Zurich, Switzerland
Richard Molinsky
c/o BioLife Solutions, Inc.
171 Front Street 2,583,333 (17.2%)(9) -- 4.0 (7.3%)
Owego, NY 13827
Francois Illenseer
Wissmannstrasse 15 2,607,143 (17.4%)(10) -- 4.0 (7.3%)
8057 Zurich, Switzerland
Charlotte Illenseer
Wissmannstrasse 15 2,607,143 (17.4%)(11) -- 4.0 (7.3%)
8057 Zurich, Switzerland
Robert Van Buskirk 1,095,935 (8.1%)(12) -- 1 (1.8%)
c/o CPSI, 2 Court Street
Owego, New York 13827
12
Name and Address Common Stock Series F Preferred Series G Preferred
of Beneficial Owner (% of class) (1) (% of class) (% of class)
- -------------------------------------------- --------------------- -------------------- ---------------------
John M. Baust 1,085,340(8.0%)(13) -- 1 (1.8%)
c/o CPSI, 2 Court Street
Owego, New York 13827
All officers and directors as a group
(four persons) 23,541,012 (67.9%) 4,450 (37.1%) 16.125 (29.3%)
- ----------
(1) Shares of Common Stock subject to options and warrants currently
exercisable or exercisable within 60 days of July 31, 2005 are deemed
outstanding for computing the number of shares and the percentage of
the outstanding shares held by a person holding such options or
warrants, but are not deemed outstanding for computing the percentage
of any other person. Except as indicated by footnote, and subject to
community property laws where applicable, the Company believes that
the persons named in the table have sole voting and investment power
with respect to all shares shown as beneficially owned by them.
(2) Includes 1,942,000 shares of Common Stock issuable upon the exercise
of outstanding stock options under the Company's 1988 and 1998 Stock
Option Plans, 664,063 shares of Common Stock issuable upon the
conversion of Series G Preferred Stock, 990,618 shares of Common Stock
issuable upon the exercise of outstanding warrants, and 43,844 shares
of Common Stock, 39,844 of which were earned as dividend on Preferred
Stock.
(3) Includes 399,000 shares of Common Stock issuable upon the exercise of
outstanding stock options under the Company's 1988 and 1998 Stock
Option Plans, 2,078,910 shares of Common Stock issuable upon the
exercise of outstanding warrants owned of record by Breslow & Walker,
LLP (1,358,910) and B & W Investments (720,000), both of which are
entities in which Mr. Breslow is a partner, and 53,600 common shares.
(4) Includes 250,000 shares of Common Stock issuable upon the exercise of
outstanding stock options under the Company's 1988 and 1998 Stock
Option Plans, 400,000 shares of Common Stock issuable upon the
conversion of Series F Preferred Stock, 1,250,000 shares of Common
Stock issuable upon the conversion of Series G Preferred Stock,
1,814,000 shares of Common Stock issuable upon the exercise of
outstanding warrants, and 800,699 shares of Common Stock, 367,399 of
which were earned as dividend on Preferred Stock.
(5) Includes 2,000,000 shares of Common Stock issuable upon the conversion
of Series F Preferred Stock, 5,625,000 shares of Common Stock issuable
upon the conversion of Series G Preferred Stock, 7,375,000 shares of
Common Stock issuable upon the exercise of outstanding warrants, and
2,072,314 shares of Common Stock, 1,672,314 of which were earned as
dividend on Preferred Stock.
(6) Includes 250,000 shares of Common Stock issuable upon the exercise of
outstanding stock options under the Company's 1988 and 1998 Stock
Option Plans, 1,380,000 shares of Common Stock issuable upon the
conversion of Series F Preferred Stock, 3,125,000 shares of Common
Stock issuable upon the conversion of Series G Preferred Stock,
6,455,000 shares of Common Stock issuable upon the exercise of
outstanding warrants, and 1,644,278 shares of Common Stock, 1,106,218
of which were earned as dividend on Preferred Stock.
(7) Includes 1,875,000 shares of Common Stock issuable upon the conversion
of Series G Preferred Stock, 1,875,000 shares of Common Stock issuable
upon the exercise of outstanding warrants, and 160,714 shares of
Common Stock earned as dividend on Preferred Stock.
(8) Includes 800,000 shares of Common Stock, 800,000 shares of Common
Stock issuable upon the conversion of Series F Preferred Stock,
400,000 shares of Common Stock issuable upon the exercise of
outstanding warrants, and 520,513 shares of Common Stock earned as
dividend on Preferred Stock.
(9) Includes 1,250,000 shares of Common Stock issuable upon the conversion
of Series G Preferred Stock, 1,250,000 shares of Common Stock issuable
upon the exercise of outstanding warrants, and 83,333 shares of Common
Stock earned as dividend on Preferred Stock.
(10) Includes 1,250,000 shares of Common Stock issuable upon the conversion
of Series G Preferred Stock, 1,250,000 shares of Common Stock issuable
upon the exercise of outstanding warrants, and 107,143 shares of
Common Stock earned as dividend on Preferred Stock.
(11) Includes 1,250,000 shares of Common Stock issuable upon the conversion
of Series G Preferred Stock, 1,250,000 shares of Common Stock issuable
upon the exercise of outstanding warrants, and 107,143 shares of
Common Stock earned as dividend on Preferred Stock.
(12) Includes 275,000 shares of Common Stock issuable upon the exercise of
outstanding stock options under the Company's 1988 and 1998 Stock
Option Plans, 312,500 shares of Common Stock issuable upon the
conversion of Series G Preferred Stock, 489,685 shares of Common Stock
issuable upon the exercise of outstanding warrants, and 18,750 shares
of Common Stock earned as dividend on Preferred Stock.
(13) Includes 250,000 shares of Common Stock issuable upon the exercise of
outstanding stock options under the Company's 1988 and 1998 Stock
Option Plans, 312,500 shares of Common Stock issuable upon the
conversion of Series G Preferred Stock, 504,090 shares of Common Stock
issuable upon the exercise of outstanding warrants, and 18,750 shares
of Common Stock earned as dividend on Preferred Stock.
13
COMPARISON OF CUMULATIVE TOTAL STOCKHOLDER RETURN
The following chart compares the percentage change in the cumulative total
stockholder return on the Common Stock during the period from December 31, 1999
through the year ended December 31, 2004 with the cumulative total return on the
NASDAQ Composite Index and the Company Peer Group. The comparison assumes $100
was invested in the Common Stock on December 31, 1999, and in each of the stocks
included in the NASDAQ Composite Index and the Company Peer Group.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG BIOLIFE SOLUTIONS, INC.,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
[GRAPHIC OMITTED]
ASSUMES $100 INVESTED ON DEC. 31, 1999
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 2004
- --------------------------------------------------------------------------------------------------------------
---------------------------- FISCAL YEAR ENDING ---------------------------
COMPANY/INDEX/MARKET 12/31/1999 12/29/2000 12/31/2001 12/31/2002 12/31/2003 12/31/2004
BIOLIFE SOLUTIONS, INC 100.00 312.50 131.25 75.00 68.75 56.25
CUSTOMER SELECTED STOCK LIST 100.00 177.16 201.11 142.50 212.07 227.24
NASDAQ MARKET INDEX 100.00 62.85 50.10 34.95 52.55 56.97
- --------------------------------------------------------------------------------------------------------------
14
PROPOSAL TONO. 2 - AMEND THE CERTIFICATE OF INCORPORATION TO EFFECT THE COMMON
STOCK REDUCTION
Reason for SubmissionINCREASE
REASON FOR SUBMISSION TO STOCKHOLDERS
The Board of Directors unanimously adopted a resolution proposing that Article
Four of the Company's Certificate of Incorporation be amended to Stockholdersincrease the
number of shares of Common Stock that the Company is authorized to issue from
25,000,000 to 100,000,000 shares. This Proposalproposal is being submitted to
stockholders to
comply with the terms of the Stock Purchase Agreement and to satisfy the requirements of the Delaware General Corporation
Law.
The Proposal is one of the matters contained in the Plan
of Recapitalization and Financing (the "Plan") which, pursuant
to the Stock Purchase Agreement, is to be adopted by the
Company and submitted to the Company's stockholders for their
approval. The failure of the Company's stockholders to
approve this Proposal would constitute a failure to approve
the Plan and could have a material adverse effect on the
business and financial condition of the Company. See
"Background."
Reasons for Reducing the Number of Authorized Shares of
Common StockREASONS FOR INCREASING THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
Presently, the Chartercharter authorizes the issuance of 50,000,00025,000,000 shares of Common
Stock, of which 33,454,30212,413,209 shares of Common Stock are issued and outstanding.
There alsoAlso, there are outstanding (i) shares of Series EF Preferred Stock convertible
into 4,800,000 shares of Common Stock, (ii) shares of Series G Preferred Stock
convertible into 17,226,563 shares of Common Stock, (iii) warrants and Series E Warrants
convertible/options
exercisable into 1,280,000an aggregate of 30,777,858 shares of Common Stock, and 640,000(iv)
4,365,432 shares of Common Stock respectively, and other
optionsearned as dividends on Preferred Stock.
Assuming the conversion/exercise of all outstanding Series F Preferred Stock,
Series G Preferred Stock, and warrants to purchase 2,096,400 shares of Common
Stock. In addition, in accordance with the Stock Purchase
Agreement, the Company (i) is required to issue to ValorInvest
an additional 256 shares of Series E Preferred Stock, convertible
into 2,560,000 shares of Common Stock, and Series E Warrants
to purchase 1,280,000 shares of Common Stock, and (ii) has
granted to management, others who have provided services to the
Company, and directors an aggregate of 19,155,000 stock
options/warrants (pre-Reverse Stock Split) to appropriately
incentivize and/or compensate them, in each case subject to the
approval of the Plan by the Company's stockholders. Assuming
a minimum one-for-ten Reverse Stock Split,options, there would be outstanding a maximum of approximately 3,345,430 shares of
Common Stock, Series E Preferred Stock convertible into
128,000 shares of Common Stock, Series E Warrants to
purchase 64,000 shares of Common Stock, other options and
warrants to purchase 2,125,140 shares of Common Stock
(assuming ratification and approval of the Stock Option/Warrant
Grant), and a contractual commitment to issue to ValorInvest
additional Series E Preferred Stock and Series E Warrants
convertible/exercisable into an aggregate of 384,000 shares of
Common Stock, for an aggregate of approximately 6,046,57069,583,062
shares of Common Stock issued and outstanding or required to
be reserved for issuance. In such case, anoutstanding. Thus, there are not a sufficient
number of authorized capital of
50,000,000 shares of Common Stock would be unnecessary.
Rather,available for the Board of Directors believes that an authorized capital
of 25,000,000 shares of Common Stock would be sufficient to
ensure that the Company has enough shares of Common Stock
available to meet
its outstanding commitments as well as to provide the Company with flexibility
in connection with various corporate purposes, including the Public Offering, if any, and
possible future
financings and acquisitions requiringstock option grants. In connection with the issuance of various
securities convertible/exercisable into shares of Common Stock.
EffectStock, the Company
undertook to amend its certificate of incorporation to increase the Reduction
The reductionnumber of
authorized shares of Common Stock so as to meet its commitments upon the
conversion/exercise of such securities (the "Committed Shares").
EFFECTS OF THE COMMON STOCK INCREASE
The Common Stock Increase will not alter the par value of the Common Stock or
the rights of stockholders. No RightIt will allow the Company to meet its commitments to
those security holders who are entitled to the Committed Shares. To the extent
the Company issued shares of Appraisalcommon stock over and above the amount required to
satisfy its commitments to current security holders, such issuances would reduce
the proportionate interests in the Company held by current stockholders as well
as those who receive the Committed Shares.
NO RIGHT OF APPRAISAL
Under the Delaware General Corporation Law, dissenting stockholders are not
entitled to appraisal rights with respect to the Company's proposed amendment to the Charter to
effect the Common Stock Reduction,Increase, and the
Company will not provide stockholders with any such right.
Voting Requirement
In accordance with the Charter, approval of the Proposal
for the Common Stock Reduction requires the affirmative vote
of the holders of stock representing a majority of the votes
entitled to be cast at the Meeting.
The Board of Directors recommends that the
stockholders vote FOR the proposed amendment to the
Charter to effect the Common Stock Reduction.
PROPOSAL15
METHOD OF EFFECTING THE AMENDMENT TO AMEND THE CERTIFICATE OF INCORPORATION
TO EFFECT THE PREFERRED STOCK REDUCTION
Reason for Submission to Stockholders
This Proposal is being submitted to stockholders to
comply with the terms of the Stock Purchase Agreement and to
satisfy the requirements of the Delaware General Corporation
Law. The Proposal is one of the matters contained in the Plan
of Recapitalization and Financing (the "Plan") which, pursuant
to the Stock Purchase Agreement, is to be adopted by the
Company and submitted to the Company's stockholders for their
approval. The failure of the Company's stockholders to
approve this Proposal would constitute a failure to approve
the Plan and could have a material adverse effect on the
business and financial condition of the Company. See
"Background."
Reasons for Reducing the Number of Authorized Shares of
Preferred Stock
Presently the Charter authorizes the issuance of
9,378,800 shares of Preferred Stock, of which 128 shares,
designated as Series E Convertible Preferred Stock, are issued
and outstanding. Under such circumstances, authorized capital
of 9,378,800 shares of Preferred Stock is unnecessary. Rather,
the Board of Directors believes that an authorized capital of
1,000,000 shares of Preferred Stock would be sufficient to
ensure that the Company has enough shares of Preferred Stock
available to meet its outstanding commitments as well as to
provide the Company with flexibility in connection with various
corporate purposes, including the Public Offering, if any, and
possible future financings and acquisitions requiring the issuance
of Preferred Stock.
Effect of the Reduction
The reduction of authorized shares of Preferred Stock
will not alter the par value of the Preferred Stock or the rights
of stockholders.
No Right of Appraisal
Under the Delaware General Corporation Law,
dissenting stockholders are not entitle to appraisal rights with
respect to the Company's proposed amendment to the Charter to
effect the Preferred Stock Reduction, and the Company will not
provide stockholders with any such right.
Voting Requirement
In accordance with the Charter, approval of the Proposal
for the Preferred Stock Reduction requires the affirmative vote
of the holders of stock representing a majority of the votes
entitled to be cast at the Meeting.
The Board of Directors recommends that the
stockholders vote FOR the proposed amendment to the
Charter to effect the Preferred Stock Reduction.
Method of Effecting the Charter Amendments
The Reverse Stock Split, the Common Stock Reduction
and the Preferred Stock ReductionIncrease shall become effective, automatically and without
further action by the stockholders, upon the filing with the Delaware Secretary
of State of an appropriate certificateCertificate of amendmentAmendment to the Charter (the "Charter
Filing").Certificate of
Incorporation. The complete text of such amendment is set forth in Exhibit A
hereto.
At any time prior to the effectivenessVOTING REQUIREMENT
Approval of the Charter Filing (or, if no Charter Filing has been made, priorCommon Stock Increase requires the affirmative vote of the
holders of stock representing a majority of the votes entitled to be cast at the
Charter Filing), the Board of Directors may abandon the
Charter Amendments without further action by the stockholders.Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE PROPOSED
AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO EFFECT THE COMMON STOCK
INCREASE.
16
PROPOSAL TO APPROVE AND RATIFYNO. 3 - AMEND THE 1998 STOCK OPTION PLAN
Reason for Submission to Stockholder
This Proposal is being submitted to stockholders to
comply with the terms of the Stock Purchase Agreement, to
satisfy requirements of the Internal Revenue Code of 1986, as
amended (the "Code"), and to satisfy the requirements of the
NASDAQ Stock Market.REASONS FOR THE PLAN INCREASE
The Proposal is one of the matters
contained in the Plan of Recapitalization and Financing (the
"Plan") which, pursuant to the Stock Purchase Agreement, is to
be adopted by the Company and submitted to the Company's
stockholders for their approval. The failure of the Company's
stockholders to approve this Proposal would constitute a
failure to approve the Plan and could have a material adverse
effect on the business and financial condition of the
Company. See "Background."
Description of the 1998 Stock Option Plan
On August 31, 1998, the Board of Directors, subject to
stockholder approval, adopted the 1998 Stock Option Plan for
employees, including officers, and directors of, and consultants
and advisors to, the Company or any subsidiary corporation
(aggregating approximately 27 persons as of October 1, 1998).
A summary of the 1998 Stock Option Plan (the "Stock Option
Plan""Plan") is set forth below. The summary is qualifiedwas adopted by the Board of
Directors in its
entiretyAugust 1998 and approved by reference tostockholders at a special meeting in
December 1998. Currently, the full textPlan allows for a maximum of the Stock Option Plan, a
copy of which is attached hereto as Exhibit B.
The Stock Option Plan covers 20,000,0004,000,000 shares of
Common Stock (subject to adjustment to cover stock splits, stock dividends,
recapitalizations, and other capital adjustments,
includingadjustments) to be issued pursuant to the
ReversePlan. In contemplation of increasing the number of shares of Common Stock
Split)covered by the Plan, and subject to approval of the Plan Increase by the
stockholders of the Company, options were granted to employees and directors of
and consultants to the Company over and above those currently authorized by the
Plan. In order to honor the commitments made in connection with such grants, and
to provide the Company with sufficient flexibility for future grants, the Board
of Directors amended the Plan, subject to the approval of the Company's
stockholders, to increase to 10,000,000 the maximum number of shares of Common
Stock that may be issued pursuant to the Plan (subject to adjustment to cover
stock splits, stock dividends, recapitalizations, and other capital
adjustments). The proposal to approve the Plan Increase is now being submitted
to stockholders for their approval.
A summary of the Plan as proposed to be amended is set forth below. The summary
does not purport to be complete and is qualified in its entirety by the text of
the Plan as proposed to be amended, a copy of which is attached to this Proxy
Statement as Annex B.
SUMMARY OF PLAN
The Plan covers 10,000,000 shares of Common Stock (subject to adjustment to
cover stock splits, stock dividends, recapitalizations, and other capital
adjustments). The options granted under the Stock Option Plan will beare designated as incentive
stock options or non-incentive stock options by the Board of Directors or a
committee thereof, which also will have discretion as to the persons to be granted
options, the number of shares subject to the options, and the terms of the
option agreements. Only employees (including officers) of the Company and its
affiliates may be granted incentive stock options. The options to be granted
under the
Stock Option Plan and designated as incentive stock options are intended to receive
incentive stock option tax treatment pursuant to Section 422 of the Code.Internal
Revenue Code of 1986, as amended (the "Code").
The Stock Option Plan provides that all options thereunder shall be exercisable during a
period of no more than ten years from the date of grant (five years for options
granted to holders who own more than 10% of the total combined voting power of
all classes of stock of the Company), depending upon the specific stock option
agreement, and that the option exercise price for incentive stock options shall
be at least equal to 100% of the fair market value of the Common Stock at the
time of grant (110% for options granted to holders who own more than 10% of the
total combined voting power of all classes of stock of the Company). In
addition, the aggregate fair market value (determined on the date of grant) of
the Common Stock with respect to which incentive stock options are exercisable
for the first time by an employee during any calendar year shall not exceed
$100,000.
The Stock Option Plan permits optionees whose employment is terminated without cause and
other than by
17
reason of death, disability or retirement at age 65, to exercise their options
prior to the expiration thereof or within three months, or such longer period as
the Board of Directors (or a committee thereof) may decide on a case by case
basis, of termination, whichever is earlier, but only to the extent the holder
had the right to exercise such options on the date of termination. If the
employment of an optionee is terminated for cause and other than by reason of
death, disability or retirement at age 65, any options granted to the optionee
will terminate automatically. If employment is terminated by reason of
disability or retirement at age 65, the optionee may exercise his options at any
time prior to the expiration thereof or within one year from the date of
termination (three months from the date of termination in the event of
termination by reason of retirement at age 65), whichever is earlier, but only
to the extent the holder had the right to exercise such options on the date of
termination. If employment is terminated by death, the person or persons to whom
the optionee's rights under the option are transferred by will or the laws of
descent and distribution have similar rights of exercise within three months
after such death (but not after the expiration of the option). Options are not
transferable otherwise than by will or the laws of descent and distribution, or
pursuant to a qualified domestic relations order as defined under the Code or
Title I of the Employee Retirement Income Security Act or the rules thereunder,
and are exercisable during the optionee's lifetime only by the optionee. Shares
subject to options which expire or terminate may be the subject of future
options. The Stock Option Plan terminates on August 30, 2008.
If shares are issued to the holder of a non-incentive option under the Stock Option Plan (a)
no income will be recognized by the holder at the time of grant of the option;
(b) except as stated below, upon exercise of the option, the holder will
recognize taxable ordinary income in an amount equal to the excess of the fair
market value of the shares over the option price; (c) if the holder exercising
the option is restricted from selling the shares so acquired because the holder
is an officer or director of the Company and would be subject to liability under
Section 16(b) of the Exchange Act, then, unless the holder makes an election to
be taxed under the rule of clause (b) above, the holder will recognize taxable
ordinary income, at the time such Section 16(b) restriction terminates, equal to
the excess of the fair market value of the shares at that time over the option
price, and any dividends he or she receives on the shares before that time will
be taxable to him or her as income; (d) the Company will be entitled to a
deduction at the same time and in the same amount as the holder has income under
clause (b) or (c); and (e) upon a sale of shares so acquired, the holder may
have additional short-term or long-term capital gain or loss.
If shares are issued to the holder of an incentive stock option under the Stock Option Plan,
(a) no income will be recognized by such holder at the time of the grant of the
option or the transfer of shares to the holder pursuant to his or her exercise
of the option; (b) the difference between the option price and the fair market
value of the shares at the time of exercise will be treated as an item of tax
preference to the holder; (c) no deduction will be allowed to the Company for
federal income tax purposes in connection with the grant or exercise of the
option; and (d) upon a sale or exchange of the shares after the later of (i) one
year from the date of transfer of the shares to the original holder, or (ii) two
years from the date of grant of the option, any amount realized by the holder in
excess of the option price will be taxed to the holder as a long-
termlong-term capital
gain, and any loss sustained by the holder will be a long-term capital loss. If
the shares are disposed of before the holding period requirements described in
the preceding sentence are satisfied, (aa) the holder will recognize taxable
ordinary income in the year of disposition in an amount determined under the
rules of the Code; (bb) the Company will be entitled to a deduction for such
year in the amount
18
of the ordinary income so recognized; (cc) the holder may have additional
long-term or short-term capital gain or loss; and (dd) the tax preference
provision might not be applicable.
The Stock Option Plan provides for the cashless payment of the exercise price of options
granted under the Stock Option Plan by (a) delivery to the Company of shares of Common Stock
having a fair market value equal to such purchase price, (b) irrevocable
instructions to a broker to sell shares of Common Stock to be issued upon
exercise of the option, followed by delivery to the Company of the amount of
sale proceeds necessary to pay such purchase price, and delivery of the
remaining cash proceeds less commissions and brokerage fees to the optionee or
delivery of the remaining shares of Common Stock to the optionee, or (c) by any
combination of the methods of payment described in (a) and (b) above.
Voting Requirement
ApprovalThe Plan also provides that in the event any distribution consists of securities
(including common stock) held by the Company in any subsidiary or any other
company, then (i) with respect to securities of a subsidiary, each holder of
options under the Plan on the record date for such distribution shall be
entitled to receive options to purchase such number of such securities as is
equal to the number of securities such holder would have received had he
exercised all of his options under the Plan (vested and unvested) and owned the
common stock in the Company underlying such options, which options in the
subsidiary shall be vested or shall vest to the same extent as such holder's
options in the Company, and, generally, shall contain such provisions as to put
such holder in the same equitable position such holder was in prior to the
distribution, including an allocation of the proposalexercise price for the options
issued under this Plan to ratifyboth such option and approve the Stock
Optionoptions in the subsidiary,
and (ii) with respect to securities of another company, each holder of options
under the Plan requires affirmative voteon the record date for such distribution shall be entitled to
receive such number of securities as such holder would have received had he
exercised all of his options under the holders ofPlan (vested and unvested) and owned the
common stock representing a majority ofin the Company underlying such options, which securities shall be
vested or shall vest to the same extent as such holder's options in the Company.
To the extent such securities do not vest in the holder, they shall be retained
by the Company.
If the shares presentof Common Stock outstanding are changed in personnumber, kind, or representedclass
by proxy atreason of a stock split, combination, merger, consolidation, reorganization,
reclassification, exchange, or any capital adjustment, including a stock
dividend, or if any distribution is made to stockholders other than a cash
dividend and the Meeting and entitled to vote thereon.
The Board of Directors recommends(or Committee) deems it appropriate to make
an adjustment, then (i) the aggregate number and class of shares that may be
issued under the stockholders vote FOR ratificationPlan, (ii) the number and approvalclass of shares which are issuable
under outstanding options, and (iii) the Plan.
PROPOSAL TO APPROVE THE STOCK
OPTION/WARRANT GRANT
Reason for Submissionpurchase price to Stockholders
This Proposal is being submitted to stockholders to
comply with the terms of the Stock Purchase Agreement and to
satisfy the requirements of the NASDAQ Stock Market. The
Proposal is one of the matters containedbe paid per share
under outstanding options, shall be adjusted in a Plan of
Recapitalizationproportionate and Financing (the "Plan") which, pursuant to
the Stock Purchase Agreement, is to be adopted by the
Company's Board of Directors and submitted to the Company's
stockholders for their approval. The failure of the Company's
stockholders to approve this Proposal would constitute a
failure to approve the Plan and could have a material adverse
effect on the business and financial condition of the
Company. See "Background."
Reason for the Stock Option/Warrant Grant
In connection with the adoption and approval of the Planequitable
manner by the Board of Directors, andDirectors.
In the event of a liquidation of the Company, or a merger, reorganization, or
consolidation of the Company with any other corporation in which the Company is
not the surviving corporation or the Company becomes a wholly-owned subsidiary
of another corporation, any unexercised options theretofore granted under the
Plan shall be deemed canceled unless the surviving corporation in any such
merger, reorganization, or consolidation elects to assume the options under the
Plan or to issue substitute options in place thereof; provided, however, if such
options would otherwise be canceled in accordance with the foregoing, the
optionee shall have the right,
19
exercisable during a ten-day period immediately prior to such liquidation,
merger, or consolidation, to exercise the option, in whole or in part. The
granting of an option pursuant to the terms thereof,Plan shall not affect in any way the Boardright
or power of Directors granted, on a pre-Reverse Stock Split basis:
(i)the Company to make adjustments, reorganizations, reclassifications,
or changes of its capital or business structure or to merge, consolidate,
dissolve, liquidate, or sell or transfer all or any part of its business or
assets.
NEW PLAN BENEFITS
For each of the Named Executive Officers and the various indicated groups, the
table below shows the benefits that will be allocated to each of the following
under the 1998 Stock Option Plan, stock options to purchase
an aggregate of 13,300,000 shares of Common Stock, at $.25
per share, to: Richard J. Reinhart, Ph.D.,plan being acted upon.
NUMBER OF
NAME AND PRINCIPAL POSITION OPTION SHARES (1) DOLLAR VALUE
- ---------------------------------------- ----------------- ------------
John G. Baust
President and Chief Executive Officer and Director1,000,000 $80,000
Executive group (1 persons) 1,000,000 $80,000
Non-executive director group (3 persons) 750,000 $60,000
Non-executive officer employee group
(7 persons) 910,000 $72,800
- 7,200,000; John Baust, Ph.D.,
Senior Vice President and Chief Scientific Officer - 2,160,000;
Alan F. Rich, Vice President - Sales and Marketing - 1,100,000;
an aggregate of 14 employees - 775,000,; Howard S. Breslow,
Director - 720,000 and J. Donald Hill, Director - 720,000, (ii)
warrants to purchase 2,880,000 shares of----------
(1) Stock options exercisable at $.08 per share
The closing price per share for the Common Stock at
$.25 per share,as reported on the OTC Bulletin
Board on July 25, 2005 was $0.16.
20
EQUITY COMPENSATION PLAN INFORMATION
Number of
securities
available for
Number of future issuance
securities to Breslow & Walker, LLP, the Company's
general counsel,be under equity
issued upon Weighted average compensation plans
exercise of which Howard S. Breslow, a directorexercise price of the
Company is a member,(excluding
outstanding outstanding securities
options, warrants options, warrants reflected in
Plan Category and (iii) warrants to purchase 3,600,000
shares of Common Stock, at $.25 per share, to BWM
Investments, of which Howard S. Breslow, a director of the
Company, is a partner, to appropriately incentivize and/or
compensate them for services provided to the Company.rights and rights column (a)
- ------------- ----------------- ----------------- ------------------
(a) (b) (c)
Equity compensation
plan approved by
shareholders 2,906,000 $0.52 -0-
Equity compensation
plan not approved
by shareholders 29,926,858 $0.19 4,449,000
---------- ----- ---------
Total 32,832,858 $0.22 4,449,000
========== ===== =========
VOTING REQUIREMENT
The Company believes that it has been only through the efforts of
management, the Board of Directors, and the Company's legal
counsel (and its affiliates) that the Company has maintained its
viability under some very trying and difficult circumstances.
Approval of the Stock Option/Warrant GrantPlan Increase requires the affirmative vote of the holders of stock
representing a majority of shares present in person or represented by proxy at
the Meeting and entitled to vote thereon.
Voting RequirementTHE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE PROPOSED
AMENDMENT TO THE PLAN TO EFFECT THE PLAN INCREASE.
21
PROPOSAL NO. 4 - RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors recommends thathas selected the stockholders vote FORaccounting firm of Aronson & Company to
serve as the Company's independent auditors for the year ending December 31,
2005 and proposes the ratification of such decision.
Aronson & Company has audited the Company's financial statements for the year
ended December 31, 2004. Representatives of Aronson & Company are expected to be
present at the Annual Meeting, with the opportunity to make a statement if they
desire to do so, and approvalto respond to appropriate questions.
During 2004, Aronson & Company acted as the independent auditors for the
Company. The following table sets forth the aggregate fees billed by Aronson &
Company for audit and review services rendered in connection with the financial
statements and reports for the years ending December 31, 2004 and December 31,
2003 and for other services rendered during the years ending December 31, 2004
and December 31, 2003 on behalf of the Stock
Option/Warrant Grant.
PROPOSAL TO APPROVE THE SEC FILING
Reason for Submission to Stockholders
This Proposal is being submitted to stockholders to
comply with the termsCompany:
2004 2003
------- -------
Audit Fees $49,275 $64,317
Audit-related fees -0- -0-
Tax fees 6,775 17,163
All other fees 475 -0-
------- -------
Total $56,525 $81,480
The Board of the Stock Purchase Agreement. The
Proposal is one of the matters contained in a Plan of
RecapitalizationDirectors pre-approves all audit and Financing (the "Plan") which, pursuant to
the Stock Purchase Agreement, isnon-audit services to be
adoptedperformed by the Company's Board of Directors and submitted to the Company's
stockholders for their approval. The failureindependent auditors.
VOTING REQUIREMENT
Ratification of the Company's
stockholders to approve this Proposal would constitute a
failure to approve the Plan and could have a material adverse
effect on the business and financial conditionappointment of the Company. See "Background." The failure of the Company's
stockholders to approve this Proposal would not preclude the
Company from filing a registration statement with the Securities
and Exchange Commission ("SEC") for the sale of securities by
the Company.
Reason for the SEC Filing
Subject to the adoption of the Plan by the Company and
its stockholders, ValorInvest has agreed to use its best efforts to
arrange for a public offering ("Public Offering") (contemplated
to be in Europe) of the Company's securities through an
underwriter (the "Underwriter"), to be designated or approved
by ValorInvest. Through ValorInvest, the Company has
obtained a letter of interest for a Public Offering from a German
Underwriter. The letter does not contain any commitment for a
Public Offering, and any Public Offering by such Underwriter,
at the very least, would be subject to the completion of due
diligence by such Underwriter and market conditions. The terms
of a Public Offering, if any, would be as negotiated between the
Company and the Underwriter. There can be no assurance that
a Public Offering will be consummated.
The consummation of the Public Offering would require
the filing of a registration statement with the SEC. In addition,
the Company has covenanted to include the shares of Common
Stock issuable upon conversion of the Series E Preferred Stock
purchased pursuant to the Stock Purchase Agreement in the
registration statement at the Company's cost and expense, and to
keep such registration statement effective until such time or such
shares of Common Stock may be sold pursuant to an exemption
from registration pursuant to the Securities Act of 1933, as
amended. Accordingly, the Plan contains an undertaking by the
Company that it will prepare and file a registration statement
with the SEC for the sale of securities of the Company on such
terms and conditions as may be mutually agreed to between the
Company and an underwriter to be designated or approved by
ValorInvest.
Voting Requirement
Approval of the SEC Filingindependent auditors requires the
affirmative vote of the holders of stock representing a majority of shares
present in person or represented by proxy at the Meeting and entitled to vote
thereon.
The Board of Directors recommends that the
stockholders voteTHE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR ratification and approval of the SEC
Filing.THE
RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT AUDITORS.
22
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of October 1, 1998,
certain information regarding the beneficial ownership of
Common Stock and Preferred Stock by (i) each stockholder
known by the Company to be the beneficial owner of more than
5% of the outstanding shares thereof; (ii) each director of the
Company; (iii) each executive officer of the Company; and (iv)
all of the Company's directors and executive officers as a group.
Title of ClassName and Address of
Beneficial Owner
S
Amount and Nature of
Beneficial Ownership(1)
S
Percentage of Class (1)
Common Stock
Richard R. Reinhart, Ph.D.*/**
1300 Piccard Drive, Suite 102
Rockville, MD 20850
1,000,000(2)
2.9%
Common Stock John G. Baust, Ph.D.*
1300 Piccard Drive, Suite 102
Rockville, MD 20850
400,000(3) 1.1% Common Stock Alan F. Rich*
1300 Piccard Drive, Suite 102
Rockville, MD 20850
185,500(4) *** Common Stock Howard S. Breslow, Esq. **
c/o Breslow & Walker, LLP
767 Third Avenue
New York, NY 10017
268,000(5) *** Common Stock J. Donald Hill**
1300 Piccard Drive, Suite 102
Rockville, MD 20850
75,000(6) *** Preferred
Stock
ValorInvest, Ltd.
29 Quai des Berges
1201 Geneva, Switzerland
128 100% Common Stock All officers and directors as
a group (five persons)
1,928,500(7) 5.6% Preferred
Stock
All officers and directors as a
group (five persons)
- - 0 - - 0 -____________________
(1) Shares of Common Stock subject to options and warrants
currently exercisable or exercisable within 60 days are
deemed outstanding for computing the number of shares and
the percentage of the outstanding shares held by a person
holding such options or warrants, but are not deemed
outstanding for computing the percentage of any other
person. Except as indicated by footnote, and subject to
community property laws where applicable, the Company
believes that the persons named in the table have sole voting
and investment power with respect to all shares of Common
Stock shown as beneficially owned by them.
(2) Includes 1,000,000 shares of Common Stock issuable upon
the exercise of outstanding stock options.
(3) Includes 380,000 shares of Common Stock issuable upon
the exercise of outstanding stock options.
(4) Includes 180,000 shares of Common Stock issuable upon
the exercise of outstanding stock options.
(5) Includes 100,000 shares of Common Stock issuable upon
the exercise of outstanding stock options.
(6) Consists of 75,000 shares of Common Stock issuable upon
the exercise of outstanding stock options.
(7) Includes 1,735,000 shares of Common Stock issuable upon
the exercise of outstanding stock options.
* Executive Officer.
** Director.
***Less than 1%.
INTEREST OF CERTAIN PERSONS The Stock Purchase Agreement with ValorInvest requiresIN MATTERS TO BE ACTED UPON
John G. Baust, the Chief Executive Officer of the Company, and Messrs. Breslow,
deGreef and Girschweiler, directors of the Company, have an interest in the
approval of the Plan Increase. On May 12, 2005, the Board of Directors of the
Company granted to adopt a Plan of
Recapitalization and Financing (the "Plan") and to submit the
Plan to stockholders for their approval. In connection with the
adoption and approval by the Board of Directors of the Plan, and
pursuant to the terms thereof, the Board of Directors granted, on
a pre-Reverse Stock Split basis: (i) under the 1998 Stock Option
Plan, stock(a) Dr. Baust ten-year options to purchase an aggregate of 13,300,0001,000,000 shares
of Common Stock at $.25a price of $.08 per share, including grantswhich options shall vest to the
following executive officers and directorsextent of 250,000 shares on the first day of the Company:
Richard J. Reinhart, Ph.D., President, Chief Executive Officermonth following the first
anniversary date of the grant (the "First Vesting Date") and Director - 7,200,000; John G. Baust, Ph.D.,Senior Vice
President20,833 on the first
day of each of the next 36 months following the First Vesting Date, and Chief Scientific Officer - 2,160,000; Alan F. Rich,
Vice President-Sales and Marketing - 1,100,000; Howard S.
Breslow, Director - 720,000; and J. Donald Hill, Director -
720,000, (ii) warrants(b) to
each of the aforesaid directors a ten-year, fully vested non-incentive stock
option to purchase 2,880,000250,000 shares of Common Stock at $.25a price of $0.08 per share,share;
provided, however, that such stock options may not be exercised until such time
as (x) the amendment to Breslow & Walker, LLP, the Company's general counsel,Stock Option Plan, approved by the
Company's Board of Directors on October 12, 2004, increasing the number of
shares of Common Stock covered by Plan from 4,000,000 shares to 7,500,000 shares
(subsequently increased to 10,000,000 shares) is approved by the Company's
stockholders, which Howard S. Breslow, a
directorapproval must take place on or before October 12, 2005 (and
in the event such approval does not take place on or before October 12, 2005,
the options are rescinded), and (y) the certificate of incorporation of the
Company is a member, and (iii) warrantsamended to purchase 3,600,000increase the authorized number of shares of Common Stock,common stock
to a number that is sufficient to accommodate the exercise of all options
granted to them.
STOCKHOLDER PROPOSALS
Stockholder proposals for action at $.25 per share,
to BWM Investments,the Company's Annual Meeting of which Howard S. Breslow, a director
ofStockholders
for the Company, is a partner, to appropriately incentivize and/or
compensate them for services providedfiscal year ending December 31, 2004 must be submitted in writing to the
Company at its address set forth on the first page of this Proxy Statement and
received by the Company no later than June 1, 2005 in each
case subjectorder that they may be
considered for inclusion in the proxy statement and form of proxy relating to
approvalthat meeting. Stockholders who intend to present a proposal at the Company's
Annual Meeting of Stockholders for the year ending December 31, 2004 without
inclusion of such proposal in the Company's proxy materials are required to
provide notice of such proposal to the Company no later than August 1, 2005. The
Company reserves the right to reject, rule out of order, or take other
appropriate action with respect to any proposal that does not comply with these
and other applicable requirements.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
The Company's officers, directors and beneficial owners of more than 10% of any
class of its equity securities registered pursuant to Section 12 of the
Plan by the stockholdersSecurities Exchange Act of 1934 ("Reporting Persons") are required under that
Act to file reports of ownership and changes in beneficial ownership of the
Company's equity securities with the Securities and Exchange Commission. Copies
of those reports must also be furnished to the Company. Based solely on a review
of the copies of reports furnished to the Company pursuant to that Act, the
Company believes that during the fiscal year ended December 31, 2004, all filing
requirements applicable to Reporting Persons were complied with.
23
OTHER MATTERS
The Board of Directors of the Company does not know of any other matters that
are to be presented for action at the Meeting. Should any other matters properly
come before the Meeting or any adjournments thereof, the persons named in the
enclosed proxy will have the discretionary authority to vote all proxies
received with respect to such matters in accordance with their judgment.
STOCKHOLDER PROPOSALS TO BE PRESENTED AT
THE COMPANY'S NEXT ANNUAL MEETING OF
STOCKHOLDERS
Stockholder proposals intended to be presented at the next
Annual Meeting of Stockholders of the Company must be
received by the Company, at its principal executive offices,
within a reasonable time prior to the solicitation of proxies in
connection with such meeting in order for such proposals to be
included in the Proxy Statement and Proxy relating to such
meeting.
This Proxy Statement is sent by order of the Board of Directors of the Company.
Richard J. Reinhart, Ph.D.,--------------------------
John G. Baust
President and
Chief Executive Officer
Rockville, Maryland
November 2, 1998Owego, New York
August 26, 2005
STOCKHOLDERS ARE URGED TO SPECIFY THEIR CHOICES AND DATE, SIGN, AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. A PROMPT RESPONSE IS HELPFUL AND YOUR
COOPERATION WILL BE APPRECIATED.
24
EXHIBITANNEX A
- -------
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
CRYOMEDICAL SCIENCES,BIOLIFE SOLUTIONS, INC.
-----------------------
(Pursuant to Section 242
of the General Corporation Law of the State of Delaware)
Cryomedical Sciences,BioLife Solutions, Inc. (the "Corporation"), a corpo-
rationcorporation organized and
existing under the General Corporation Law of the State of Delaware (the "GCL"),
certifies as follows:
1. The name of the Corporation is Cryomedical
Sciences,BioLife Solutions, Inc.
2. The date of filing of the Corporation's certificate of incorporation
(the "Certificate of Incorporation") with the Secretary of State of the State of
Delaware was November 5, 1987.
3. Subdivision (a) of Article Fourth of the Certificate of Incorporation
is hereby amended so that it shall now read as follows:
"FOURTH: (a) The totalaggregate number of shares of stock which the
Corporation shall have the authority to issue is
25,000,000shall be:
One hundred million (100,000,000) shares of common stock,
each having a par value of $.001 (the "Common Stock"), and 1,000,000one
million (1,000,000) shares of preferred stock, each having a par
value of $.001 (the "Preferred Stock"). The Board of Directors,
is expressly
authorizedin its sole discretion, shall have full and complete authority,
by resolution, from time to provide for the issuance of
alltime, to establish one or anymore series
or classes and to issue shares of Preferred Stock, in
one or more classes or series, and to fix,
for each such class or series suchdetermine and vary the voting powers, full or limited, or non-voting
powers, and such distinctiverights, designations, preferences,
restrictions, qualifications, privileges, limitation, options,
conversion rights and relative, participating,
optional, or other special rights of each series or
class of Preferred Stock, including, but not limited to, dividend
rates and such
qualifications, limitations,manner of payment, preferential amounts payable upon
voluntary or restrictions
thereof, as shall be statedinvoluntary liquidation, voting rights, conversion
rights, redemption prices, terms and expressed
in the resolution or resolutions adopted
by the Board of Directors providing for
the issuance of such class or series and as
may be permitted by the GCL, including,
without limitation, the authority to
provide that any such class or series may
be (i) subject to redemption at such time
or times and at such price or prices; (ii)
entitled to receive dividends (which may
be cumulative or non-cumulative) at such
rates, on such conditions, and at such
times,sinking fund
and payable in preference to, or in
such relation to, the dividends payable on
any other class or classes or any other
series; (iii) entitled to such rights upon
the dissolution of, or upon any
distribution of the assets of, the
Corporation; or (iv) convertible into, or
exchangeable for, shares of any other
classes of stock of the Corporation at
such price orpurchase prices, or at such rates of
exchangeterms and with such adjustments; all
as may be stated in such resolution or
resolutions.conditions."
4. Upon the filing in the Office of the Secretary of
State of the State of Delaware of a Certificate of Amendment to
the Certificate of Incorporation of the Corporation whereby this
Article Fourth is amended to read as set forth herein (the
"Filing"), each ___________ shares of Common Stock issued
and outstanding and held of record by each stockholder of the
Corporation immediately prior to the Filing shall, automatically
and without the need for any further action on the part of any
stockholder, be combined into one (1) validly issued, fully paid,
and non-assessable share of Common Stock, par value $.001 per
share. No scrip or fractional shares will be issued by reason of
this amendment, but, in lieu thereof, one whole share will be
issued to those stockholders who would otherwise be entitled to
receive fractional shares.
5. This Certificate of Amendment to the Certificate of Incorporation was
authorized by the affirmative vote of the holders of a majority of the
outstanding shares entitled to vote thereon at a meeting of stockholders
pursuant to Sections 222 and 242 of the GCL.
IN WITNESS WHEREOF, I hereunto sign my name and affirm that the statements
made herein are true under penalties of perjury this ____ day of
_________________, 1998.
CRYOMEDICAL SCIENCES,2005.
BIOLIFE SOLUTIONS, INC.
By
Richard J. Reinhart, Ph.D.,By: ____________________________
John G. Baust, President and
Chief Executive Officer
2
EXHIBITANNEX B
CRYOMEDICAL SCIENCES,-------
BIOLIFE SOLUTIONS, INC.
1998 STOCK OPTION PLAN
(as amended May 10, 2001)
1. Purpose of Plan.PURPOSE OF PLAN. The purpose of this 1998 Stock Option Plan (the "Plan")
is to further the growth and development of Cryomedical Sciences,BioLife Solutions, Inc. (the
"Company") by encouraging and enabling employees, officers, and directors of,
and consultants and advisors to, the Company to obtain a proprietary interest in
the Company through the ownership of stock (thereby providing such persons with
an added incentive to continue in the employ or service of the Company and to
stimulate their efforts in promoting the growth, efficiency, and profitability
of the Company), and affording the Company a means of attracting to its service
persons of outstanding quality.
2. Shares of Stock Subject to the Plan.SHARES OF STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section
12 hereof, an aggregate of 20,000,00010,000,000 shares of the common stock, par value
$.001 per share, of the Company ("Common Stock") shall be reserved for issuance
upon the exercise of options which may be granted from time to time in
accordance with the Plan. As the Board of Directors of the Company ("Board of
Directors") shall from time to time determine, such shares may be, in whole or
in part, authorized but unissued shares or issued shares which have been
reacquired by the Company. If, for any reason, an option shall lapse, expire, or
terminate without having been exercised in full, the unpurchased shares
underlying such option shall (unless the Plan shall have been terminated) again
be available for issuance pursuant to the Plan.
3. Administration.ADMINISTRATION.
(a) The Board of Directors shall administer the Plan and, subject to
the provisions of the Plan, shall have authority to determine and designate from
time to time those persons eligible for a grant of options under the Plan, those
persons to whom options are to be granted, the purchase price of the shares
covered by each option, the time or times at which options shall be granted, and
the manner in which said options are exercisable. In making such determination,
the Board of Directors may take into account the nature of the services rendered
by the respective persons, their present and potential contributions to the
Company's success, and such other factors as the Board of Directors in its sole
discretion shall deem rele-
vant.relevant. Subject to the express provisions of the Plan,
the Board of Directors also shall have authority to interpret the Plan, to
prescribe, amend, and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the instruments by which options shall be
evidenced (which shall not be inconsistent with the terms of the Plan), and to
make all other determinations necessary or advisable for the administration of
the Plan, all of which determinations shall be final, binding, and conclusive.
(b) The Board of Directors may, at its discretion, in accordance with
the provisions of the Company's By-Laws, appoint from among its members a Stock
Option or Compensation Committee (the "Committee"). The Committee shall be
composed of two or more directors and shall have and may exercise any and all of
the powers relating to the administration of the Plan and
the grant of options hereunder as are set forth above in Section 3(a), as the
Board of Directors shall confer and delegate. The Board of Directors shall have
the power at any time to fill vacancies in, to change the membership of, or to
discharge, the Committee. The Committee shall select one of its members as its
Chairman and shall hold its meetings at such time and at such places as it shall
deem advisable. A majority of the Committee shall constitute a quorum and such
majority shall determine its action. The Committee shall keep minutes of its
proceedings and shall report the same to the Board of Directors at the meeting
next succeeding. No director or member of the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
option granted thereunder.
4. Persons To Whom Shares May Be Granted.PERSONS TO WHOM SHARES MAY BE GRANTED.
(a) Options may be granted to persons who are, at the time of the
grant, employees (including part-time employees), officers, and directors of, or
consultants or advisors to, the Company or any subsidiary corporation (as
defined in Section 425 of the Internal Revenue Code of 1986, as amended (the
"Code"), a "Subsidiary") as the Board of Directors (or Committee) shall select
from time to time from among those nominated by the Board of Directors (or
Committee). For the purposes of the Plan, options only may be granted to those
consultants and advisors who shall render bona fide services to the Company and
such services must not be in connection with the offer or sale of securities in
a capital raising transaction. Subject to the provisions hereinafter set forth,
options granted under the Plan shall be designated either (i) "Incentive Stock
Options" (which term, as used herein, shall mean options intended to be
"incentive stock options" within the meaning of Section 422 of the Code) or (ii)
"Non-Incentive Stock Options" (which term, as used herein, shall mean options
not intended to be incentive stock options" within the meaning of Section 422 of
the Code). Each option granted to a person who is solely a director of, or
consultant or advisor to, the Company or a Subsidiary on the date of the grant
shall be designated a Non-Incentive Stock Option.
(b) The Board of Directors (or Committee) may grant, at any time, new
options to a person who has previously received options, whether such prior
options are still outstanding, have previously been exercised in whole or in
part, have expired, or are canceled in connection with the issuance of new
options. The purchase price of the new options may be established by the Board
of Directors (or Committee) without regard to the existing option price.
5. Option Price.OPTION PRICE.
(a) The purchase price of the Common Stock underlying each option
shall be determined by the Board of Directors (or Committee), which
determination shall be final, binding, and conclusive; provided, however, in no
event shall the purchase price of Incentive Stock Options be less than 100%
(110% in the case of optionees who own more than 10% of the total combined
voting power of all classes of stock of the Company) of the fair market value of
the Common Stock on the date the option is granted. In determining such fair
market value, the Board of Directors (or Committee) shall consider (i) the last
sale price of the Common Stock on the date on which the option is granted or, if
no such reported sale takes place on such day, the last reported bid price on
such day, on NASDAQ or on the principal national securities exchange on which
the Common
2
Stock is admitted to trading or listed, or (ii) if not listed or admitted to
trading on NASDAQ or a national securities exchange, the closing bid price as
quoted by the National Quotation Bureau or a recognized dealer in the Common
Stock on the date of grant. If the Common Stock is not publicly traded at the
time an option is granted, the Board of Directors (or Committee) shall deem fair
market value to be the fair value of the Common Stock after taking into account
appropriate factors which may be relevant under applicable federal tax laws and
Internal Revenue rules and regulations. For purposes of the Plan, the date of
grant of an option shall be the date specified by the Board of Directors (or
Committee) at the time it grants such option; provided, however, such date shall
not be prior to the date on which the Board of Directors (or Committee) acts to
approve the grant.
(b) The aggregate fair market value (determined at the time the
Incentive Stock Options are granted) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by an employee during
any calendar year shall not exceed $100,000. Non-Incentive Stock Options shall
not be subject to the limitations of this paragraph 5(b).
6. Exercise of Options.EXERCISE OF OPTIONS.
(a) The number of shares which are issued pursuant to the exercise of
an option shall be charged against the maximum limitations on shares set forth
in Section 2 hereof.
(b) The exercise of an option shall be made contingent upon receipt by
the Company from the holder thereof of (i) if deemed necessary by the Company, a
written representation and acknowledgement that (1) at the time of such exercise
it is the holder's then present intention to acquire the option shares for
investment and not with a view to distribution or resale thereof, (2) the holder
knows that the Company is not obligated to register the option shares and that
the option shares may have to be held indefinitely unless an exemption from the
registration requirements of the Securities Act of 1933, as amended (the "Act"),
is available or the Company has registered the shares underlying the options,
and (3) the Company may place a legend on the certificate(s) evidencing the
option shares reflecting the fact that they were acquired for investment and
cannot be sold or transferred unless registered under the Act, and (ii) payment
in full of the purchase price of the shares being purchased. Payment may be made
in cash; by certified check payable to the order of the Company in the amount of
such purchase price; by delivery to the Company of shares of Common Stock having
a fair market value equal to such purchase price; by irrevocable instructions to
a broker to sell shares of Common Stock to be issued upon exercise of the option
and to deliver to the Company the amount of sale proceeds necessary to pay such
purchase price and to deliver the remaining cash proceeds, less commissions and
brokerage fees, to the optionee; or by any combination of such methods of
payment.
7. Term of Options.TERM OF OPTIONS. The period during which each option granted hereunder
shall be exercisable shall be determined by the Board of Directors (or
Committee); provided, however, no option shall be exercisable for a period
exceeding ten (10) years from the date such option is granted.
8. Non-Transferability of Options.NON-TRANSFERABILITY OF OPTIONS. No option granted pursuant to the Plan
shall be subject to
3
anticipation, sale, assignment, pledge, encumbrance, or charge, or shall be
otherwise transferable except by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order (as defined by the Code or
Title I of the Employee Retirement Income Security Act or the rules thereunder),
and an option shall be exercisable during the lifetime of the holder thereof
only by such holder.
9. Termination of Services.TERMINATION OF SERVICES. If an employee, officer, or director to whom an
option has been granted under the Plan shall cease to be an employee, officer,
or director of the Company or a Subsidiary by reason of a termination of such
relationship without cause and other than by reason of death or disability, such
holder may exercise such option at any time prior to the expiration date of the
optionoptions or within three months (or such longer period as the Board of Directors
(or Committee) may decide on a case by case basis) after the date of
termination, whichever is earlier, but only to the extent the holder had the
right to exercise such option on the date of termination. If an employee,
officer, or director to whom an option has been granted under the Plan shall
cease to be an employee, officer, or director of the Company or a Subsidiary by
reason of a termination of such relationship for cause and other than by reason
of death or disability, such options shall terminate, lapse, and expire
forthwith and automatically. So long as the holder of an option shall continue
to be in the employ, or continue to be a director, of the Company or one or more
of its Subsidiaries, such holder's option shall not be affected by any change of
duties or position. Absence on leave approved by the employing corporation shall
not be considered an interruption of employment for any purpose under the Plan.
The granting of an option in any one year shall not give the holder of the
option any rights to similar grants in future years or any right to be retained
in the employ or service of the Company or any of its Subsidiaries or interfere
in any way with the right of the Company or any such Subsidiary to terminate
such holder's employment or services at any time. Notwithstanding the foregoing,
no option may be exercised after ten years from the date of its grant.
10. Disability of Holder of Option.DISABILITY OF HOLDER OF OPTION. If any employee, officer, or director to
whom an option has been granted under the Plan shall cease to be an employee,
officer, or director of the Company or a Subsidiary by reason of disability,
such holder may exercise such option at any time prior to the expiration date of
the option or within one year after the date of termination for such reason,
whichever is earlier, but only to the extent the holder had the right to
exercise such option on the date of termination. Notwithstanding the foregoing,
no option may be exercised after ten years from the date of its grant. For the
purposes of the Plan, "disability" shall mean "permanent and total disability"
as defined in Section 22(e)(3) of the Code.
11. Death of Holder of Option.DEATH OF HOLDER OF OPTION. If any employee, officer, or director to whom
an option has been granted under the Plan shall cease to be an employee,
officer, or director of the Company or a Subsidiary by reason of death, or such
holder of an option shall die within three months after termination, or in the
case of the death of an advisor or consultant to whom an option has been granted
under the Plan, the option may be exercised by the person or persons to whom the
optionee's rights under the option are transferred by will or by the laws of
descent and distribution at any time prior to the expiration date of the option
or, in the case of an employee, officer, or director, within three months from
the date of death, whichever is earlier, but only to the extent the holder of
the option had the right to exercise such option on the date of such
termination. Notwithstanding the foregoing, no option may be exercised after ten
years from the date of its grant.
4
12. Adjustments Upon Changes in Capitalization.ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
(a) If the shares of Common Stock outstanding are changed in number,
kind, or class by reason of a stock split, combination, merger, consolidation,
reorganization, reclassification, exchange, or any capital adjustment, including
a stock dividend, or if any distribution is made to stockholders other than a
cash dividend and the Board of Directors (or Committee) deems it appropriate to
make an adjustment, then (i) the aggregate number and class of shares that may
be issued or transferred pursuant to Section 2, (ii) the number and class of
shares which are issuable under outstanding options, and (iii) the purchase
price to be paid per share under outstanding options, shall be adjusted as
hereinafter provided. In the event any distribution consists of common stock
held by the Company in any subsidiary, then each holder of options under this
Plan on the record date for such distribution shall be entitled to receive
options to purchase such number of shares of such common stock as is equal to
the number of shares of common stock such holder would have received had such
holder exercised all of such holder's options under this Plan (vested and
unvested) and owned the common stock in the Company underlying such options,
which options in the subsidiary shall be vested or shall vest to the same extent
as such holder's options in the Company, and, generally, shall contain such
provisions as to put such holder in the same equitable position such holder was
in prior to the distribution, including an allocation of the exercise price for
the options issued under this Plan to both such options and the options in the
subsidiary.
(b) Adjustments under this Section 12 shall be made in a proportionate
and equitable manner by the Board of Directors (or Committee), whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding, and conclusive. In the event that a fraction of a share
results from the foregoing adjustment, said fraction shall be eliminated and the
price per share of the remaining shares subject to the option adjusted
accordingly.
(c) In the event of a liquidation of the Company, or a merger,
reorganization, or consolidation of the Company with any other corporation in
which the Company is not the surviving corporation or the Company becomes a
wholly-owned subsidiary of another corporation, any unexercised options
theretofore granted under the Plan shall be deemed canceled unless the surviving
corporation in any such merger, reorganization, or consolidation elects to
assume the options under the Plan or to issue substitute options in place
thereof; provided, however, if such options would otherwise be canceled in
accordance with the foregoing, the optionee shall have the right, exercisable
during a ten-day period immediately prior to such liquid-
ation,liquidation, merger, or
consolidation, to exercise the option, in whole or in part. The granting of an
option pursuant to the Plan shall not affect in any way the right or power of
the Company to make adjustments, reorganizations, reclassifications, or changes
of its capital or business structure or to merge, consolidate, dissolve,
liquidate, or sell or transfer all or any part of its business or assets.
13. Vesting of Rights Under Options.VESTING OF RIGHTS UNDER OPTIONS. Nothing contained in the Plan or in any
resolution adopted or to be adopted by the Board of Directors (or Committee) or
the stockholders of the Company shall constitute the vesting of any rights under
any option. The vesting of such rights shall take place only when a written
agreement shall be duly executed and delivered by and on
5
behalf of the Company to the person to whom the option shall be granted.
14. Rights as a Stockholder.RIGHTS AS A STOCKHOLDER. A holder of an option shall have no rights of a
stockholder with respect to any shares covered by such holder's option until the
date of issuance of a stock certificate to such holder for such shares.
15. Termination and Amendment.TERMINATION AND AMENDMENT. The Plan was adopted by the Board of Directors
on August 31, 1998, subject, with respect to the validation of Incentive Stock
Options granted under the Plan, to approval of the Plan by the stockholders of
the Company at the next Meeting of Stockholders or, in lieu thereof, by written
consent. If the approval of stockholders is not obtained prior to August 30
1999, any grants of Incentive Stock Options under the Plan made prior to that
date will be rescinded. The Plan shall expire at the end of the day on August
30, 2008 (except as to options outstanding on that date). Options may be granted
under the Plan prior to the date of stockholder approval of the Plan. The Board
of Directors (or Committee) may terminate or amend the Plan in any respect at
any time, except that, without the approval of the stockholders obtained within
12 months before or after the Board of Directors (or Committee) adopts a
resolution authorizing any of the following actions, (a) the total number of
shares that may be issued under the Plan may not be increased (except by
adjustment pursuant to paragraph 12); (b) the provisions regarding eligibility
for grants of Incentive Stock Options may not be modified; (c) the provisions
regarding the exercise price at which shares may be offered pursuant to
Incentive Stock Options may not be modified (except by adjustment pursuant to
paragraph 12), and (d) the expiration date of the Plan may not be extended.
Except as otherwise provided in this paragraph 15, in no event may action of the
Board of Directors (or Committee) or stockholders alter or impair the rights of
an optionee, without such optionee's consent, under any option previously
granted to such optionee.
16. Modification, Extension and Renewal of Options.MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to the terms and
conditions and within the limita-
tionslimitations of the Plan, the Board of Directors (or
Committee) may modify, extend, or renew outstanding options granted under the
Plan, or accept the surrender of outstanding options (to the extent not
theretofore exercised) and authorize the granting of new options in substitution
therefor. Notwithstanding the foregoing, no modification of an option shall,
without the consent of the holder thereof, alter or impair any rights or
obligations under any option theretofore granted under the Plan.
17. Conversion of Incentive Stock Options into Non-
Qualified Options.CONVERSION OF INCENTIVE STOCK OPTIONS INTO NON-QUALIFIED OPTIONS. Without
the prior written consent of the holder of an Incentive Stock Option, the Board
of Directors (or Committee) shall not alter the terms of such Incentive Stock
Option (including the means of exercising such Incentive Stock Option) if such
alteration would constitute a modification within the meaning of Section
424(h)(3) of the Code. The Board of Directors (or Committee), at the written
request or with the written consent of any optionee, may in its discretion take
such actions as may be necessary to convert such optionee's Incentive Stock
Options (or any installments or portions of installments thereof) that have not
been exercised on the date of conversion into Non-
IncentiveNon-Incentive Stock Options at any
time prior to the expiration of such Incentive Stock Options, regardless of
whether the optionee is an employee of the Company at the time of such
conversion. Such actions may include, but shall not be limited to, extending the
exercise period or reducing the exercise price of the appropriate installments
of such Incentive Stock Options. At the time of such conversion, the
6
Board of Directors (or Committee) (with the consent of the optionee) may impose
such conditions on the exercise of the resulting Non-Incentive Stock Options as
the Board of Directors (or Committee) in its discretion may determine, provided
that such conditions shall not be inconsistent with the Plan. Nothing in the
Plan shall be deemed to give any optionee the right to have such optionee's
Incentive Stock Options converted into Non-
IncentiveNon-Incentive Stock Options, and no such
conversion shall occur until and unless the Board of Directors (or Committee)
takes appropriate action.
18. Withholding of Additional Income Taxes.WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a
Non-Incentive Stock Option, the transfer of a Non-Incentive Stock Option
pursuant to an arm's length transaction, the making of a Disqualifying
Disposition (as described in Sections 421, 422 and 424 of the Code and
regulations thereunder), the vesting of transfer of restricted stock or
securities acquired on the exercise of an option hereunder, or the making of a
distribution or other payment with respect to such stock or securities, the
Company may withhold taxes in respect of amounts that constitute compensation
includible in gross income. The Board of Directors (or Committee) in its
discretion may condition the exercise of an option, the transfer of a
Non-Incentive Stock Option, or the vesting or transferability of restricted
stock or securities acquired by exercising an option on the optionee's making
satisfactory arrangement for such withholding. Such arrangement may include
payment by the optionee in cash or by check of the amount of the withholding
taxes or, at the discretion of the Board of Directors (or Committee), by the
optionee's delivery of previously held shares of Common Stock or the withholding
from the shares of Common Stock otherwise deliverable upon exercise of option
shares having an aggregate fair market value equal to the amount of such
withholding taxes.
19. Indemnification.INDEMNIFICATION. In addition to such other rights of indemnification as
they may have as members of the Board of Directors (or Committee), the members
of the Board of Directors (or Committee) administering the Plan shall be
indemnified by the Company against reasonable expenses, including attorneys'
fees, actually and necessarily incurred in connection with the defense of any
action, suit, or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan or any option granted thereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any action, suit, or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit, or
proceeding that such member is liable for negligence or misconduct in the
performance of his duties, and provided that within 60 days after institution of
any such action, suit, or proceeding, the member shall in writing offer the
Company the opportunity, at its own expense, to handle and defend the same.
20. Governing Law.GOVERNING LAW. The validity and construction of the Plan and the
instruments evidencing options shall be governed by the laws of Delaware, or the
laws of any jurisdiction in which the Company or its successors in interest may
be organized.
7
PRELIMINARY COPYBIOLIFE SOLUTIONS, INC.
171 FRONT STREET
OWEGO, NY 13827
THIS PROXY CRYOMEDICAL SCIENCES, INC.
1300 Piccard Drive, Suite 102
Rockville, Maryland 20850
This Proxy is solicited on behalf of the Board of DirectorsIS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, acknowledging receipt of the proxy statement dated
November 2, 1998August 26, 2005 of Cryomedical Sciences,BioLife Solutions, Inc., hereby constitutes and appoints Richard J. ReinhartJohn
G. Baust and J. Donald Hill,Howard S. Breslow and each or any of them, attorney, agent and
proxy of the undersigned, with full power of substitution to each of them, for
and in the name, place and stead of the undersigned on the books of said
corporation, to appear and vote all the shares of stock of Cryomedical Sciences,BioLife Solutions,
Inc., standing in the name of the undersigned on the books of said corporation on
October 23,
1998August 19, 2005, at the SpecialAnnual Meeting of Stockholders of Cryomedical Sciences,BioLife Solutions,
Inc., to be held at the offices of the Company, 1300 Piccard Drive,
Suite 102, Rockville, Maryland 20850,Breslow & Walker, LLP, 767 Third Avenue, New York, NY 10017
on December 16, 1998September 28, 2005, at 10:00 a.m.A.M., Maryland time,Eastern Standard Time, and any and all
adjournments thereof.
When properly executed, this proxy will be voted as designated by the
undersigned. If no choice is specified, thisthe proxy will be voted (i) FOR approval of the
proposed Amendmentfollowing proposals, which are set forth in the Proxy Statement.
1. ELECTION OF DIRECTORS
_______ For all nominees listed below
(except as marked to the Company's Certificate
of Incorporation ("Charter")contrary below)
_______ Withhold Authority to effectvote for all nominees
listed below
John G. Baust
Howard S. Breslow
Rod de Greef
Thomas Girschweiler
(INSTRUCTION: to withhold authority to vote for any individual nominee, strike a
one-for-five, one for six,
one for seven, one for eight, one for nine, one for ten, one for
eleven, one for twelve, one for thirteen, one for fourteen, one for
fifteen,line through or one for sixteen reverse stock split ofotherwise strike nominee's name in the issued and
outstanding shares of Common Stock, with one of such approved
alternatives to be chosen by the Board of Directors of the Company
(the "Reverse Stock Split"list above.), (ii) FOR the approval of the proposed
amendment to the Charter to reduce the number of authorized
shares of Common Stock from 50,000,000 shares to 25,000,000
shares (the "Common Stock Reduction"), (iii) FOR the approval of
the proposed amendment to the Charter to reduce the number of
authorized shares of Preferred Stock of the Company, par value
$.001 per share ("Preferred Stock"), from 9,378,800 shares to
1,000,000 shares (the "Preferred Stock Reduction"), (iv) FOR
ratification and approval of the Company's 1998 Stock Option Plan
(the "1998 Stock Option Plan"), (v) FOR ratification and approval
of the grant of stock options/warrants for 19,155,000 shares (pre-
Reverse Stock Split), exercisable at $.25 per share (pre-Reverse
Stock Split) to management, others who have performed services
for the Company, and directors, to appropriately incentivize and
compensate them (the Stock Option/Warrant Grant"), and (vi)
FOR approval of the preparation and filing of a registration
statement with the Securities and Exchange Commission for the sale
of securities by the Company (the "SEC Filing"). A vote to
ABSTAIN with respect to a particular matter will have the same
effect as a vote AGAINST a particular matter.
1. PROPOSAL TO AMEND THE CHARTER TO EFFECT
THE REVERSE STOCK SPLIT.
( ) FOR ( ) AGAINST ( ) ABSTAIN
2. PROPOSAL TO AMEND CHARTERAPPROVE AN AMENDMENT TO EFFECT THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK REDUCTION.
( ) FOR ( ) AGAINST ( ) ABSTAINFROM
25,000,000 TO 100,000,000.
FOR____ AGAINST____ ABSTAIN____
3. PROPOSAL TO AMEND CHARTERAPPROVE AN AMENDMENT TO EFFECT THE PREFERREDCOMPANY'S 1998 STOCK REDUCTION.
( )OPTION PLAN TO
INCREASE THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR ( ) AGAINST ( ) ABSTAINISSUANCE THEREUNDER
FORM 4,000,000 TO 10,000,000.
FOR____ AGAINST____ ABSTAIN____
4. PROPOSAL TO RATIFY AND APPROVE THE 1998
STOCK OPTION PLAN.
( )APPOINTMENT OF ARONSON & COMPANY TO SERVE AS
INDEPENDENT AUDITORS FOR ( ) AGAINST ( ) ABSTAINTHE YEAR ENDING DECEMBER 31, 2005.
FOR____ AGAINST____ ABSTAIN____
5. PROPOSAL TO APPROVEVOTE, IN THE STOCK
OPTION/WARRANT GRANT.
( ) FOR ( ) AGAINST ( ) ABSTAIN
6. PROPOSAL TO APPROVEDISCRETION OF THE SEC FILING.
( ) FOR ( ) AGAINST ( ) ABSTAIN
7. FORPROXIES, ON SUCH OTHER MATTERS THAT MAY
PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS THEREOF.
Date
Print Name
Signature
Signature, if held jointlyPlease sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
DATED: ,2005
------------------
------------------------------
Signature
-------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THISTHE PROXY CARD PROMPTLY IN THE
ENCLOSED ENVELOPE.
Dear Shareholder:
Since the announcement of the Company's Plan of
Recapitalization and Financing (the "Plan"), I have been
inundated with calls from stockholders with questions about
the Plan. The Plan was adopted by the Board of Directors
of the Company in accordance with the terms and
conditions of a Stock Purchase Agreement (the
"Agreement") with ValorInvest, Ltd. ("ValorInvest"). The
Agreement requires that the Plan be submitted to the
Company's stockholders for their approval.
The enclosed proxy material contains a great deal
of information regarding the Plan. We hope that this
material will answer any questions you may have.
However, if you still have questions regarding the Plan
after you have reviewed the proxy material, please give me
a call at the Company at (301) 417-7070 extension 222.
This is an important enough issue that I am going to make
myself available over the next several weeks to answer any
questions you may have. If I am unable to take your call
immediately, please leave a message containing your name,
telephone number and a time that I can get back to you.
Due to the fact that the Company is unable to
contact its many shareholders on a one on one basis I am
taking this opportunity to make you aware of the primary
consideration that the Company has in regard to the
approval of the Plan. It is most important that you realize
the following:
21. The Plan consists of six individual matters.
22. Each matter is individually itemized on the
proxy voting card.
23. In order for the Plan to be "approved",
all six of these matters must be approved.
24. If you elect to abstain or vote against any
one of these matters your overall vote will
be considered to be "against" the Plan.
It is important that you understand that if the Plan
is not approved by the Company's stockholders, then, at
the request of ValorInvest, the Company must redeem the
Series E Units purchased by ValorInvest pursuant to the
Agreement at the price paid therefor plus a penalty. ANY
SUCH REQUEST BY VALORINVEST WOULD HAVE A
MATERIAL ADVERSE EFFECT ON THE BUSINESS
AND FINANCIAL CONDITION OF THE COMPANY.
Your management team, together with the Board of
Directors and the Company's counsel, have worked very
hard to maintain the viability of the Company over the past
year. It is imperative that we get stockholder approval
of the Plan. We look forward to your support.
Sincerely,
Richard J. Reinhart, Ph.D.
President and CEOENVELOPE