sec document
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant / /
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permitted by Rule 14a-6(e)(2))
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/ / Soliciting Material Under Rule 14a-12
ELITE PHARMACEUTICALS, INC.
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(Name of Registrant as Specified in Its Charter)
THE ELITE VALUE COMMITTEE
HARRIS FREEDMAN
BRIDGE VENTURES, INC.
BRIDGE VENTURES, INC. EMPLOYEE PENSION PLAN
SMACS HOLDING CORP.
SHARON WILL
SAGGI CAPITAL CORP.
SAGGI CAPITAL CORP. MONEY PURCHASE PLAN
SAGGI CAPITAL CORP. PROFIT SHARING PLAN
MICHAEL H. FREEDMAN
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THE ELITE VALUE COMMITTEE
August 26, 2002
Dear Fellow Stockholder:
Through the attached Consent Solicitation Statement, The Elite Value
Committee (the "Committee") is providing you with an opportunity to remove and
replace a majority of the members of the Board of Directors of Elite
Pharmaceuticals, Inc. ("Elite") with the Committee's slate of nominees (the
"Slate"). All Elite stockholders are being asked to express their consent to our
proposals by marking, signing and dating the enclosed WHITE Consent Card and
returning it in the enclosed, postage-paid envelope, to MacKenzie Partners,
Inc., as set forth in the Consent Solicitation Statement.
IF YOU ELECT THE MEMBERS OF OUR SLATE, THEY, SUBJECT TO THEIR
FIDUCIARY DUTIES, WILL EXPLORE ALTERNATIVES TO MAXIMIZE STOCKHOLDER VALUE
INCLUDING, BUT NOT LIMITED TO, ENGAGING A NATIONALLY RECOGNIZED INVESTMENT
BANKING FIRM TO ASSIST IN THE REVIEW AND IMPLEMENTATION OF THE ALTERNATIVES THE
SLATE BELIEVES WILL MAXIMIZE STOCKHOLDER VALUE FOR ALL OF ELITE'S STOCKHOLDERS,
ENGAGING AN EXPERIENCED CHIEF FINANCIAL OFFICER AND CHIEF OPERATING OFFICER AND
EXTENDING THE EXPIRATION DATE OF ELITE'S OUTSTANDING CLASS A WARRANTS. THERE CAN
BE NO ASSURANCE THAT THE ELECTION OF THE SLATE WILL MAXIMIZE OR OTHERWISE
ENHANCE STOCKHOLDER VALUE.
OUR GOAL IS TO MAXIMIZE THE VALUE OF YOUR SHARES
The Committee beneficially owns approximately 8.6% of Elite's issued
and outstanding shares of common stock (the "Shares"). As a significant
stockholder, the Committee has a vested interest in maximizing the value of the
Shares. The Committee believes that the removal of a majority of the existing
Board of Directors, without cause, and the election of the Slate represents the
best means for Elite's stockholders to maximize the value of their Shares. There
can be no assurance that the election of the Slate will maximize or otherwise
enhance stockholder value.
THE COMMITTEE CAN ONLY IMPLEMENT ITS PLAN WITH YOUR HELP
The Committee believes it can increase stockholder value by
providing better management of Elite's business operations. The Committee is
asking you to replace three current directors, Donald S. Pearson, Harmon Aronson
and Eric L. Sichel, and any person or persons elected to the Board of Directors
to fill any vacancy arising since the last annual meeting of stockholders or any
newly created directorships, with Harris Freedman, Sharon Will and Michael H.
Freedman. A biographical summary of each member of the Slate is included for
your review in the Consent Solicitation Statement.
THE COMMITTEE URGES YOU TO TAKE ADVANTAGE OF THIS OPPORTUNITY TO
CHANGE THE COMPOSITION OF THE BOARD OF DIRECTORS WHICH THE COMMITTEE BELIEVES
WILL BENEFIT ELITE. IF WE FAIL IN THIS EFFORT, THERE MAY NOT BE ANOTHER
OPPORTUNITY.
PLEASE MARK, SIGN, DATE AND RETURN YOUR WHITE CONSENT CARD TODAY.
Thank you for your support,
Harris Freedman
On behalf of The Elite Value Committee
CONSENT SOLICITATION STATEMENT
OF
THE ELITE VALUE COMMITTEE
The Elite Value Committee (the "Committee") is the beneficial owner
of approximately 8.6% of the issued and outstanding shares of common stock of
Elite Pharmaceuticals, Inc., a Delaware corporation ("Elite"). The Committee
believes that a thorough investigation of strategic alternatives and a greater
dedication to maximizing stockholder value will be best achieved by removing and
replacing a majority of the members of the Elite Board of Directors (the "Elite
Board") with the Committee's slate of director nominees (the "Slate").
This Consent Solicitation Statement and the accompanying form of
written consent are furnished by the Committee in connection with the
solicitation by the Committee of written consents from the holders of common
stock, $.01 par value per share (the "Common Stock" or the "Shares"), of Elite,
to take the following actions (each individually, a "Proposal" and collectively,
the "Proposals"), without a meeting of stockholders, as permitted by Delaware
law:
1. Removal of three present members of the Elite Board without
cause, Donald S. Pearson, Harmon Aronson and Eric L. Sichel
and any person or persons elected to the Elite Board to fill
any vacancy arising since the last annual meeting of
stockholders or any newly created directorships; and
2. Election of the Committee's Slate, Harris Freedman, Sharon
Will and Michael H. Freedman, to the Board of Directors to
fill the newly created vacancies on the Board, and to serve
until their respective successors are duly elected and
qualify.
This Consent Solicitation Statement, the accompanying letter to
stockholders and the WHITE Consent Card are first being furnished to
stockholders on or about August 26, 2002.
Approval of the Proposals requires the written consent of the
holders of a majority of the outstanding Shares as of August 5, 2002 (the
"Record Date"). Stockholders of record as of the close of business on the Record
Date will be entitled to one vote for each share of Common Stock. The Committee
has set September 12, 2002 as the goal for the submission of written consents;
however, the last day for the submission of written consents to Elite under
Delaware law will be October 4, 2002. Based on publicly available information
filed by Elite with the Securities and Exchange Commission, as of the Record
Date there were 9,728,116 Shares issued and outstanding.
On the Record Date, the Committee was the beneficial owner of an
aggregate of 859,470 Shares, which represented approximately 8.6% of the issued
and outstanding Shares. The Committee is comprised of the Slate and entities
affiliated with the Slate. Bridge Ventures, Inc., an entity affiliated with
Harris Freedman, provided financial consulting services to Elite from August 1,
1997 to December 31, 2001. Saggi Capital Corp., an entity affiliated with Sharon
Will, provided investor relations services to Elite from August 1, 1997 to March
31, 2002. Both entities received a monthly fee and warrants to purchase Elite
Common Stock. Michael H. Freedman served as Secretary of Elite from 1998 to
1999. See "Slate" and "Participant Information."
THE COMMITTEE BELIEVES THAT THE ACTIONS DESCRIBED FURTHER HEREIN
WILL DELIVER MAXIMUM VALUE FOR YOUR SHARES OF COMMON STOCK, ALTHOUGH THERE CAN
BE NO ASSURANCE THAT THE ACTIONS WILL RESULT IN MAXIMUM VALUE. TO CARRY OUT THE
ACTIONS, THE COMMITTEE BELIEVES THAT CERTAIN INCUMBENT MEMBERS OF THE ELITE
BOARD MUST BE REPLACED. REPRESENTATION BY THE SLATE CAN BE ACHIEVED ONLY IF THE
PROPOSED CORPORATE ACTIONS ARE ADOPTED. ACCORDINGLY, YOU ARE URGED TO CONSENT TO
THE REMOVAL OF THREE INCUMBENT MEMBERS OF THE ELITE BOARD AND TO THE ELECTION OF
THE SLATE BY MARKING, SIGNING, DATING AND RETURNING PROMPTLY THE ENCLOSED WHITE
CONSENT CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED.
As a consent to corporate action is effective only if executed by
holders of record of a majority of the total number of Shares outstanding on the
Record Date, the failure to execute a consent has the same effect as withholding
of consent for any Proposal.
The principal executive offices of Elite are located at 165 Ludlow
Avenue, Northvale, New Jersey 07647 and its telephone number is (201) 750-2646.
-2-
IMPORTANT
YOUR CONSENT IS IMPORTANT, NO MATTER HOW MANY OR HOW FEW SHARES YOU
OWN. THE COMMITTEE URGES YOU TO SIGN, DATE, AND RETURN THE ENCLOSED WHITE
CONSENT CARD TODAY TO VOTE FOR THE ELECTION OF THE SLATE.
The members of the Slate are committed, subject to their fiduciary
duty to Elite's stockholders, to giving all Elite's stockholders the opportunity
to receive the maximum value for their Shares. A vote FOR the Slate will enable
you - as the owners of Elite - to send a message to the Elite Board that you are
committed to maximizing the value of your Shares.
o If your Shares are registered in your own name, please sign and date
the enclosed WHITE Consent Card and return it to the Committee, c/o
MacKenzie Partners, Inc., in the enclosed envelope today.
o If any of your Shares are held in the name of a brokerage firm,
bank, bank nominee or other institution on the Record Date, only it
can vote such Shares and only upon receipt of your specific
instructions. Accordingly, please contact the person responsible for
your account and instruct that person to execute on your behalf the
WHITE Consent Card. The Committee urges you to confirm your
instructions in writing to the person responsible for your account
and to provide a copy of such instructions to the Committee at the
address and telephone numbers set forth below, and on the back cover
of this Consent Solicitation Statement, so that we may be aware of
all instructions and can attempt to ensure that such instructions
are followed.
IF YOU HAVE ANY QUESTIONS ABOUT GIVING YOUR CONSENT,
PLEASE CALL:
HARRIS FREEDMAN
575 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
TEL. (212) 572-0763
FAX (212) 572-0760
OR
SHARON WILL
9 PROSPECT HILL ROAD EXT.
PINE PLAINS, NEW YORK 12567
TEL. (518) 398-7830
FAX (518) 398-6369
-3-
REASONS FOR THE SOLICITATION
We are asking you to:
o remove three incumbent directors; and
o elect to the Elite Board three representatives nominated by the
Committee.
As further described below, the Committee believes that the election
of the Slate represents the best means for Elite's stockholders to maximize the
value of their Shares. As a significant stockholder of Elite, the Committee has
a vested interest in maximizing the value of the Shares. Additionally, the
Committee believes that the members of the Slate have extensive experience in
private and public investment and business management. If elected to the Board,
the members of the Slate will use their collective experience to explore
alternatives to maximize stockholder value including, but not limited to,
engaging a nationally recognized investment banking firm to assist in the review
and implementation of the alternatives the Slate believes will maximize
stockholder value for all of Elite's stockholders. There can be no assurance
that the election of the Slate will maximize or otherwise enhance stockholder
value.
WE BELIEVE THAT THE ELITE BOARD HAS FAILED TO MAXIMIZE STOCKHOLDER VALUE.
In the Committee's opinion, the existing Elite Board has failed to
maximize stockholder value as described below:
1. Declining Stock Price
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According to Elite's Form 10-K for the fiscal year ended March 31,
2002 (the "Form 10-K"), during the fiscal year ended March 31, 2002, the Common
Stock traded on The American Stock Exchange at a high of $11.50 per Share and a
low of $4.85 per Share. As of August 2, 2002, the Share price closed at $3.51, a
decrease of over 27% from the $4.85 low reported for the prior fiscal year.
According to Elite's Form 10-K, during the fiscal year ended March
31, 2002, Elite's Class A Warrants (the "Warrants") traded on the OTC Bulletin
Board at a high of $6.21 per Warrant and a low of $.86 per Warrant. The Warrant
price reached its low during Elite's last fiscal quarter ended March 31, 2002.
As of August 2, 2002, the Warrant price closed at $.30, a decrease of over 65%
from the $.86 low reported for the prior fiscal year.
The high and low prices presented in the preceding two paragraphs as
a basis of comparison for Elite's recent Common Stock and Warrant prices were
extracted from a table in the Form 10-K which sets forth the high and low bid
prices of the Common Stock and Warrants during each quarter of the last two
fiscal years as required by disclosure rules promulgated by the Securities and
Exchange Commission.
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2. Failure to Consummate Material Business Agreements
--------------------------------------------------
According to its public filings, Elite has not entered into any new
material licensing agreements or joint ventures since June 2001. It has also
failed to enter into any agreements with a nationally recognized investment
banking firm or agreements with a strategic partner. We question how management
intends to achieve growth and profitability of the Elite business without new
business agreements and joint ventures or the services of a nationally
recognized investment banking firm.
3. Failure to File Any Treatment IND, ANDA or NDA with the Food
and Drug Administration
------------------------------------------------------------
According to its public filings, Elite has not filed any
investigational new drug ("IND") application, abbreviated new drug application
("ANDA") or new drug application ("NDA") with the Food and Drug Administration
since Elite became a public company in 1997.
4. Lack of Management Expertise
----------------------------
According to its public filings, Elite has not engaged a Chief
Operating Officer or Chief Financial Officer.
WE BELIEVE THAT THE ELITE BOARD SHOULD APPOINT A QUALIFIED CHIEF FINANCIAL
OFFICER AND CHIEF OPERATING OFFICER.
The Committee believes that there are alarming gaps in Elite's
executive management. According to the preliminary consent revocation statement
filed by Elite on August 20, 2002, Atul Mehta is Elite's President and Chief
Executive Officer and Mark Gittelman serves as part-time Chief Financial
Officer, Secretary and Treasurer. Other than Mr. Mehta, there are no other
full-time executive officers of Elite. The Committee believes that the operation
and management of a public company require more than one full-time executive
officer. The Committee believes that it is critical for a publicly held company
to engage a full-time Chief Financial Officer in order to oversee the company's
financial reporting obligations under federal securities laws, review company
policy relating to accounting and internal controls and act as a liaison with
the company's auditors. If Mr. Gittelman is informally taking on the role of
Chief Financial Officer, the Committee believes his part-time assistance is
inadequate. We also believe that the services of a qualified Chief Operating
Officer are crucial in overseeing the day-to-day operations of a public company.
If Mr. Mehta is informally taking on the role of Chief Operating Officer, the
Committee believes that he lacks the necessary skills and time to effectively
serve both positions. The Committee believes Elite would be better served with a
team of professional management. Accordingly, if elected, the Slate will conduct
a search for a qualified Chief Financial Officer and Chief Operating Officer.
-5-
WE DISAGREE WITH THE ELITE BOARD'S DECISION NOT TO EXTEND THE EXPIRATION DATE OF
OUTSTANDING CLASS A WARRANTS.
Certain members of the Committee and other significant
stockholders of Elite currently own Warrants to purchase Common Stock at a price
of $6.00 per share. As a majority of these Warrants expire on November 30, 2002
and the Warrants are currently out-of-the-money, certain members of the
Committee had requested that the Elite Board extend the expiration date of the
Warrants. On July 24, 2002, Elite filed a Current Report on Form 8-K with the
Securities and Exchange Commission denying this request.
The Warrants may provide substantial capital resources to Elite if
and when Elite's stock price rises. Assuming that, to date, none of the
1,525,000 Warrants affected by the Elite Board decision have been exercised, the
Elite Board decision foregoes potential financing proceeds to Elite of
$9,150,000, if the Warrants were exercised. These proceeds would be available to
Elite at minimal additional cost. The Committee has been advised by the Elite
Board that a Warrant extension would require Elite to record a loss of
approximately $1,900,000. As Elite has no earnings to date, we believe that such
a non-cash charge in its financial statements is immaterial when weighed against
terminating such a significant potential capital resource. To obtain additional
capital without this resource, Elite would likely incur substantial cost and
expense. Also, there can be no assurance that Elite would be able to obtain
additional financing, when needed. The members of the Slate and their affiliates
beneficially own an aggregate of 285,250 Warrants, a majority of which expire on
November 30, 2002. If the Slate is elected and the expiration date of the
Warrants is extended, the members of the Slate and their affiliates will benefit
from such extension to the extent the price of Elite Common Stock rises above
$6.00 per Share, the exercise price of the Warrants. There can be no assurance
that the price of Elite's Common Stock will ever rise above $6.00 per Share.
WE BELIEVE THAT THE ELITE BOARD MUST PROMPTLY EXPLORE OTHER ALTERNATIVES TO
MAXIMIZE STOCKHOLDER VALUE.
The Committee believes that the value of Elite has not been
maximized by the Elite Board and believes that the election of the Slate would
significantly increase the potential for stockholders to maximize the value of
their Shares. Harris Freedman would bring to the Elite Board over 30 years of
experience working as a business consultant for private and public companies,
including coordinating strategic alliances and capital raising. Sharon Will has
approximately 15 years of experience in investor relations for private and
public companies. Harris Freedman and Sharon Will both served as consultants for
Elite. Michael H. Freedman has been an attorney for over twelve years and
specializes in securities and corporate law. He served as Secretary of Elite
from 1998 to 1999. For further information regarding the background and
qualifications of the members of the Slate, see "The Slate." If elected, the
members of the Slate will, subject to their fiduciary duties, explore all
available alternatives to maximize stockholder value including, but not limited
to (a) engaging a nationally recognized investment banking firm to advise the
Board on strategic alternatives to enhance stockholder value, which may include
(i) an extraordinary corporate
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transaction, such as a merger or strategic alliance involving Elite or any of
its subsidiaries; (ii) material changes in the present capitalization of Elite;
and (iii) other material changes in Elite's business or corporate structure; and
(b) engage consultants to provide information to the business community
regarding Elite's business plan and product projections.
We wish to provide the stockholders, the true owners of Elite, with
the opportunity to elect directors who are unaffiliated with the existing Elite
Board. Your decision to elect the Slate does not constitute a vote in favor of
our value enhancing plans. Your decision to elect the Slate will have the legal
effect of replacing three incumbent directors with our nominees. However, if
elected, the Slate will seek stockholder approval for any value enhancing plan
to the extent required by applicable law.
Neither we (nor to our knowledge, any other person on our behalf)
has made or undertaken any analysis or reports as to whether stockholder value
will be maximized as a result of this solicitation or has obtained reports from
consultants or other outside parties as to whether the proposals presented
herein would have an effect on stockholder value. There can be no assurance that
stockholder value will be maximized as a result of this solicitation or the
election of the Slate.
THE SLATE
Set forth below are the name, business address, present principal
occupation and employment and material occupations, positions, offices, or
employments for the past five years of each member of the Slate. This
information has been furnished to the Committee by the Slate. Where no date is
given for the commencement of the indicated office or position, such office or
position was assumed prior to August 1, 1997. The members of the Slate have
agreed to serve as directors of Elite if duly elected, and have consented to
being named herein. Each person listed below is a citizen of the United States
of America.
HARRIS FREEDMAN (68) has been a business consultant for over 30
years and has been engaged by numerous public and private companies. Bridge
Ventures, Inc. was a business consultant for Elite from August 1997 to December
2001. Mr. Freedman serves as the Secretary of Bridge Ventures, Inc. and SMACS
Holding Corp., family-owned equity finance companies. Mr. Freedman is Michael H.
Freedman's father. As of the Record Date, Mr. Freedman beneficially owned
595,170 Shares, 369,970 of which were owned by Bridge Ventures, Inc., 102,200 of
which were owned by Bridge Ventures, Inc. Employee Pension Plan, 121,000 of
which were owned by SMACS Holding Corp., and 2,000 of which were owned by him
individually. The business address of Mr. Freedman is 1241 Gulf of Mexico Drive,
Sarasota, FL 34228. For information regarding Mr. Freedman's purchases and sales
of securities of Elite during the past two years, see Schedule I.
SHARON WILL (43) is the President of Saggi Capital Corp., which
performs investor relation services for smallcap public companies and has
performed these services for over 15 years. Saggi Capital Corp. is also a
private investor in smallcap companies. Saggi Capital Corp. was engaged by Elite
from 1997 to 2002. As of the Record Date, Ms. Will beneficially owned 240,800
Shares,
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217,500 of which were owned by Saggi Capital Corp., 7,450 of which were owned by
Saggi Capital Corp. Money Purchase Plan, and 8,350 of which were owned by Saggi
Capital Corp. Profit Sharing Plan. The business address of Ms. Will is 9
Prospect Hill Road Ext., Pine Plains, NY 12567. For information regarding Ms.
Will's purchases and sales of securities of Elite during the past two years, see
Schedule I.
MICHAEL H. FREEDMAN (40) has been an attorney with the Law Offices
of Michael H. Freedman since December 1999. From 1996 to 1999, he was an
associate with the law firm Silverman Sklar Byrne Shin & Byrne P.C. Mr. Freedman
specializes in securities and corporate law. From 1998 to 1999, he served as
Secretary of Elite. Mr. Freedman is the son of Harris Freedman. As of the Record
Date, Mr. Freedman beneficially owned 23,500 Shares. The business address of Mr.
Freedman is 200 East 89th Street, Suite 17A, New York, NY 10128.
The Slate will not receive any compensation from the Committee for
their services as directors of Elite. Harris Freedman and Sharon Will may
receive proceeds from the exercise of Warrants held by them or their affiliates
if the expiration date of the Warrants is extended. On August 5, 2002, the
members of the Slate and the remaining participants in this consent solicitation
entered into a Joint Filing Agreement, in which, among other things, (i) the
parties agreed to the joint filing on behalf of each of them of statements on
Schedule 13D with respect to the Common Stock of Elite, (ii) the parties agreed
to form the Committee for the purpose of soliciting written consents or proxies
to, among other things, elect the Slate to the Board by the written consent of
stockholders or at the next annual meeting of stockholders or other meeting of
stockholders held for such purpose, (iii) the members of the Slate agreed to
serve as directors of Elite if duly elected, and (iv) Bridge Ventures, Inc.
agreed to bear all expenses incurred in connection with the Committee's
activities, including approved expenses incurred by any of the parties in the
solicitation of written consents or proxies by the Committee. Other than as
stated above, there are no arrangements or understandings between the Committee
and any member of the Slate or any other person or persons in connection with
this consent solicitation. No member of the Slate has been convicted in any
criminal proceedings (excluding traffic violations or similar misdemeanors) over
the past 10 years. No member of the Slate is a party adverse to Elite or any of
its subsidiaries or has a material interest adverse to Elite or any of its
subsidiaries in any material pending legal proceedings.
The Committee does not believe that any members of the Slate will be
unable to stand for election, but, in the event that such persons are unable to
serve or for good cause will not serve, the Shares represented by the enclosed
WHITE Consent Card will be voted for substitute nominees. In addition, the
Committee reserves the right to nominate substitute persons if Elite makes or
announces any changes in its Bylaws or takes or announces any other action that
has, or if consummated would have, the effect of disqualifying any member of the
Slate. In any such case, Shares represented by the enclosed WHITE Consent Card
will be voted for such substitute nominees. Notwithstanding the Committee's
ability to vote consents for substitute nominees, the enclosed WHITE Consent
Card can only be voted for up to three directors.
-8-
If the consent solicitation is unsuccessful, the Committee will
consider all available options, including nominating a slate of director
nominees for election at Elite's next annual meeting of stockholders.
BACKGROUND TO SOLICITATION
On August 1, 1997, Bridge Ventures, Inc. ("Bridge"), a participant
in this solicitation controlled by Harris Freedman, and Elite entered into a
consulting agreement whereby Bridge would provide financial consulting services.
Elite and Bridge mutually agreed to terminate this agreement on December 31,
2001. Pursuant to this agreement, Bridge received 250,000 warrants to purchase
Shares at an exercise price of $6.00 per Share.
On August 1, 1997, Saggi Capital Corp. ("Saggi"), a participant in
this solicitation controlled by Sharon Will, and Elite entered into a consulting
agreement whereby Saggi would provide investor relations services. Elite
terminated this agreement on March 31, 2002. Pursuant to this agreement, Saggi
received 100,000 warrants to purchase Shares at an exercise price of $6.00 per
Share. Elite terminated the agreement stating that it desired to pursue a more
formal consulting arrangement for a broader scope of services.
On December 31, 2001, the date of termination of Bridge's consulting
agreement with Elite, Elite's Share price closed at $6.50. On July 15, 2002, the
Share price closed at $3.60, representing a decrease in price of over 44%. In
response to this decline in Share price, Bridge and Saggi delivered a letter to
Dr. Atul Mehta and Elite's Board of Directors on July 16, 2002 ("July 16
Letter") questioning management's execution of its business plan and urging
management to appoint additional senior level management, including a business
development expert, an investor relations firm, and an investment banking firm.
The July 16 Letter also expressed concerns regarding Elite's inability to
consummate any licensing, joint venture, or other agreements with third parties.
Bridge and Saggi requested a meeting with the Elite Board to discuss these and
other matters. On July 17, 2002, Dr. Mehta and the Elite Board delivered a
letter to Bridge and Saggi denying the request.
On July 18, 2002, Harris Freedman filed a Schedule 13D with the
Securities and Exchange Commission with respect to his ownership of Elite Common
Stock disclosing his intention to seek changes in the Elite Board and to take
other possible actions.
On July 18, 2002, Elite's attorneys, James McElroy & Diehl, P.A.,
delivered a letter to Harris Freedman ("July 18 Letter") alleging certain acts
by Mr. Freedman detrimental to Elite and explaining the rationale for the Elite
Board's decision not to extend the expiration date of the Warrants. On July 24,
2002, Elite filed a Current Report on Form 8-K with the Securities and Exchange
Commission stating that it would not extend the expiration date of the Warrants.
On July 31, 2002, Harris Freedman's attorneys, Olshan Grundman Frome Rosenzweig
& Wolosky LLP, delivered a letter to Elite's attorneys generally denying all
allegations set forth in the July 18 Letter.
-9-
On August 5, 2002, Bridge delivered to the Elite Board its written
consent and a demand letter to inspect Elite's stockholders list and other
records. On or around August 5, 2002, the Committee filed a preliminary consent
solicitation statement and amended Schedule 13D with the Securities and Exchange
Commission. The members of the Slate and the remaining participants in this
consent solicitation also entered into a Joint Filing Agreement, in which, among
other things, (i) the parties agreed to the joint filing on behalf of each of
them of statements on Schedule 13D with respect to the Common Stock of Elite,
(ii) the parties agreed to form the Committee for the purpose of soliciting
written consents or proxies to, among other things, elect the Slate to the Board
by the written consent of stockholders or at the next annual meeting of
stockholders or other meeting of stockholders held for such purpose, (iii) the
members of the Slate agreed to serve as directors of Elite if duly elected, and
(iv) Bridge agreed to bear all expenses incurred in connection with the
Committee's activities, including approved expenses incurred by any of the
parties in the solicitation of written consents or proxies by the Committee.
CONSENT PROCEDURES
GENERAL EFFECTIVENESS OF CONSENTS
Elite is a Delaware corporation and is, therefore, subject to the
Delaware General Corporate Law (the "Delaware GCL"). Section 228 of the Delaware
GCL provides that, unless otherwise provided in the certificate of incorporation
of a corporation, any action required to be or that may be taken at a meeting of
stockholders may be taken without a meeting, without prior notice and without a
vote, if written consents, setting forth the action so taken, are signed and
delivered to the corporation by the holders of outstanding shares having not
less than the minimum number of votes that would be necessary to take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Elite's Certificate of Incorporation does not prohibit stockholder
action by written consent.
The Proposals will become effective when the Committee submits to
Elite properly completed, unrevoked and effective WHITE Consent Cards (or other
forms of consent) indicating consent to the Proposals, signed by the holders of
record on the Record Date of a majority of the Shares outstanding as of the
Record Date. Under Section 228 of the Delaware GCL, such consents must be
delivered within 60 days of the earliest dated consent delivered to Elite, which
was August 5, 2002. Accordingly, this consent solicitation must be completed by
October 4, 2002. However, the Committee has established September 12, 2002 as
the goal for the submission of written consents to the Committee. If the
Proposals are adopted pursuant to this consent solicitation, prompt notice will
be given pursuant to Section 228(d) of the Delaware GCL to stockholders who have
not executed and returned a WHITE Consent Card.
Because the Proposals will become effective only if executed
consents representing a majority of the Shares outstanding as of the Record Date
are returned by holders of record on the Record Date, the following actions will
have the same effect as withholding consent to the Proposals: (a) failing to
execute and return a WHITE Consent Card or (b) executing and returning
-10-
a written consent marked "CONSENT WITHHELD" or "ABSTAINS" as to any Proposal. If
returned WHITE Consent Cards are executed and dated but not marked with respect
to any Proposal, the stockholder returning such card will be deemed to have
consented to such Proposal. A broker non-vote will be counted as a vote against
the Proposals.
We are asking you to elect three of our nominees who, if elected,
will constitute a majority of the four-member Elite Board. The enclosed WHITE
Consent Card may only be voted for our three nominees and does not confer voting
power with respect to the remaining directorship.
PROCEDURAL INSTRUCTIONS
If a stockholder is a record holder of Shares as of the close of
business on the Record Date, such stockholder may elect to consent, withhold
consent or abstain with respect to a Proposal by marking the "CONSENTS,"
"CONSENT WITHHELD" or "ABSTAINS" box, as applicable, underneath the Proposal on
the accompanying WHITE Consent Card and signing, dating and returning it
promptly in the enclosed postage-paid envelope.
UNDER THE DELAWARE GCL, ONLY STOCKHOLDERS OF RECORD ON THE RECORD
DATE ARE ELIGIBLE TO GIVE THEIR CONSENT TO THE PROPOSALS. THEREFORE, EACH
STOCKHOLDER IS URGED, EVEN IF SUCH STOCKHOLDER HAS SOLD ITS SHARES SUBSEQUENT TO
THE RECORD DATE, TO GRANT ITS CONSENT PURSUANT TO THE ENCLOSED WHITE CONSENT
CARD WITH RESPECT TO ALL SHARES HELD AS OF THE RECORD DATE. A STOCKHOLDER'S
FAILURE TO CONSENT MAY ADVERSELY AFFECT THOSE WHO CONTINUE TO BE STOCKHOLDERS.
IN ADDITION, ANY STOCKHOLDER OWNING SHARES BENEFICIALLY (BUT NOT OF RECORD),
SUCH AS A PERSON WHOSE OWNERSHIP OF SHARES IS THROUGH A BROKER, BANK OR OTHER
FINANCIAL INSTITUTION, SHOULD CONTACT THAT BROKER, BANK OR FINANCIAL INSTITUTION
WITH INSTRUCTIONS TO EXECUTE THE WHITE CONSENT CARD ON SUCH STOCKHOLDER'S BEHALF
OR TO HAVE THE BROKER, BANK OR FINANCIAL INSTITUTION'S NOMINEE EXECUTE THE
CONSENT. EACH STOCKHOLDER IS URGED TO ENSURE THAT THE RECORD HOLDER OF SUCH
STOCKHOLDER'S SHARES MARKS, SIGNS, DATES AND RETURNS THE ENCLOSED WHITE CONSENT
CARD AS SOON AS POSSIBLE. EACH STOCKHOLDER IS FURTHER URGED TO CONFIRM IN
WRITING ANY INSTRUCTIONS GIVEN AND PROVIDE A COPY OF SUCH INSTRUCTIONS TO THE
COMMITTEE, SO THAT THE COMMITTEE MAY ALSO ATTEMPT TO ENSURE SUCH INSTRUCTIONS
ARE FOLLOWED.
REVOCATION OF CONSENTS
Executed written consents may be revoked at any time, provided that
a written, dated revocation that clearly identifies the consent being revoked is
executed and delivered either to (a) the Committee in care of MacKenzie
Partners, Inc., 105 Madison Avenue, New York, New York 10016, or (b) the
principal executive offices of Elite at 165 Ludlow Avenue, Northvale, New Jersey
07647, in either case, prior to the time that the Proposals become effective. A
revocation may be in any written form validly signed by the record holder as of
the Record Date as long as it clearly states that the written consent previously
given is no longer effective. The Committee requests that a copy of any
revocation sent to Elite also be given to MacKenzie Partners, Inc. at the above
address so that the Committee may more accurately determine if and when written
consent to each Proposal has
-11-
been received from the holders of record on the Record Date of a majority of the
Shares then outstanding. THE COMMITTEE URGES YOU NOT TO SIGN ANY REVOCATION OF
CONSENT CARD THAT MAY BE SENT TO YOU BY ELITE. IF YOU HAVE DONE SO, YOU MAY
REVOKE THAT REVOCATION OF CONSENT BY DELIVERING A LATER DATED WHITE CONSENT CARD
TO THE COMMITTEE, C/O MACKENZIE PARTNERS, INC., OR TO THE SECRETARY OF ELITE.
SOLICITATION OF CONSENTS
The solicitation of consents pursuant to this consent solicitation
is being made by the Committee. Consents may be solicited by mail, facsimile,
telephone, telegraph, in person and by advertisements. The Committee will not
solicit consents via the Internet.
The Committee has retained MacKenzie Partners, Inc. ("MacKenzie")
for advisory services in connection with this solicitation, for which MacKenzie
will receive a fee not to exceed $15,000, together with reimbursement of its
reasonable out-of-pocket expenses, and will be indemnified against certain
liabilities and expenses, including certain liabilities under the federal
securities laws. In addition, under certain circumstances, MacKenzie may receive
additional amounts. The Committee will solicit consents from individuals,
brokers, banks, bank nominees and other institutional holders. The Committee has
requested banks, brokerage houses and other custodians, nominees and fiduciaries
to forward all solicitation materials to the beneficial owners of the Shares
they hold of record. The Committee will reimburse these record holders for their
reasonable out-of-pocket expenses in so doing. It is anticipated that MacKenzie
will employ approximately 20 persons in connection with its services to the
Committee.
The entire expense of soliciting consents is being borne by the
Committee. If the Slate is elected to the Elite Board, the Committee intends to
seek reimbursement of the costs of this solicitation from Elite. Unless
otherwise required by law, the Committee does not currently intend to submit the
question of reimbursement of the costs of this solicitation to a stockholder
vote. The costs of this consent solicitation are currently estimated to be
approximately $100,000. The Committee estimates that through the date hereof,
its expenses in connection with this solicitation are approximately $50,000.
-12-
PARTICIPANT INFORMATION
Bridge, a Florida corporation, and SMACS Holding Corp., a Florida
corporation ("SMACS"), are private equity financing companies controlled by
Harris Freedman. The principal business address of Bridge and SMACS is 1241 Gulf
of Mexico Drive, Sarasota, FL 24228. By virtue of his positions with Bridge and
SMACS, Harris Freedman has the sole power to vote and dispose of the Shares
owned by each of Bridge and SMACS. As of the date hereof, Bridge and SMACS
beneficially owned 369,970 and 121,000 Shares, respectively. For information
regarding Bridge and SMACS purchases and sales of securities of Elite during the
past two years, see Schedule I.
Bridge Ventures, Inc. Employee Pension Plan ("Bridge Pension Plan")
is an employee benefit plan for the benefit of Harris Freedman. The principal
business address of Bridge Pension Plan is 1241 Gulf of Mexico Drive, Sarasota,
FL 24228. Harris Freedman and Annelies Freedman, Mr. Freedman's spouse, are the
Trustees of Bridge Pension Plan. By virtue of their positions with Bridge
Pension Plan, Harris Freedman and Annelies Freedman have shared power to vote
and dispose of the Shares owned by Bridge Pension Plan. As of the date hereof,
Bridge Pension Plan beneficially owned 102,200 Shares. For information regarding
Bridge Pension Plan purchases and sales of securities of Elite during the past
two years, see Schedule I.
Annelies Freedman, an associate of Harris Freedman, does not
beneficially own any securities of Elite other than the 102,200 Shares owned by
Bridge Pension Plan. The principal business address of Annelies Freedman is 1241
Gulf of Mexico Drive, Sarasota, FL 24228.
Saggi, a New York corporation, is a private equity financing company
owned and controlled by Sharon Will. The principal business address of Saggi is
9 Prospect Hill Road Ext., Pine Plains, NY 12567. Ms. Will is the sole executive
officer and director of Saggi. By virtue of her positions with Saggi, Ms. Will
has the sole power to vote and dispose of the Shares owned by Saggi. As of the
date hereof, Saggi beneficially owned 217,500 Shares. For information regarding
Saggi purchases and sales of securities of Elite during the past two years, see
Schedule I.
Saggi Capital Corp. Money Purchase Plan ("Saggi Purchase Plan") and
Saggi Capital Corp. Profit Sharing Plan ("Saggi Sharing Plan") are employee
benefit plans for the benefit of Sharon Will and other eligible Saggi employees.
The principal business address of Saggi Purchase Plan and Saggi Sharing Plan is
9 Prospect Hill Road Ext., Pine Plains, NY 12567. Ms. Will is the sole Trustee
of each of Saggi Purchase Plan and Saggi Sharing Plan. By virtue of her
positions with Saggi Purchase Plan and Saggi Sharing Plan, Ms. Will has the sole
power to vote and dispose of the Shares owned by each of Saggi Purchase Plan and
Saggi Sharing Plan. As of the date hereof, Saggi Purchase Plan and Saggi Sharing
Plan beneficially owned 7,450 and 8,350 Shares, respectively. For information
regarding Saggi Purchase Plan and Saggi Sharing Plan purchases and sales of
securities of Elite during the past two years, see Schedule I.
-13-
Sharon Will is the sole beneficiary of The Dutchess Foundation
Vaduz, a foreign trust and associate of Sharon Will ("Dutchess"). Dutchess is
the beneficial owner of 235,984 Shares. Ms. Will has no voting or dispositive
power with respect to the securities of Elite owned by Dutchess and is not
deemed to be the beneficial owner of such securities. The principal business
address of Dutchess is c/o Prager Driefuss, Muhlebachstrasse 6, CH-8008 Zurich,
Switzerland.
CERTAIN TRANSACTIONS BETWEEN THE COMMITTEE AND ELITE
Bridge entered into a Consulting Agreement with Elite on August 1,
1997 under which Bridge agreed to provide Elite with marketing and management
consulting services for consideration in the amount of $10,000 per month.
Effective August 1, 2000, the parties agreed to reduce the monthly payments to
$5,000 per month. On August 1, 2001, the fee was further reduced to $2,500 per
month. The Consulting Agreement was terminated on December 31, 2001. Pursuant to
this agreement, Bridge received 250,000 warrants to purchase Shares at an
exercise price of $6.00 per Share.
Saggi entered into an Agreement with Elite on August 1, 1997 under
which Saggi agreed to provide investor relation services to Elite for
consideration in the amount of $5,000 per month. The Agreement was terminated on
March 31, 2002. Pursuant to this agreement, Saggi received 100,000 warrants to
purchase Shares at an exercise price of $6.00 per Share.
Except as set forth in this Consent Solicitation Statement
(including the Schedules hereto), neither the Committee nor any of the other
participants in this solicitation, or any of their respective associates: (i)
directly or indirectly beneficially owns any Shares or any securities of Elite;
(ii) has had any relationship with Elite in any capacity other than as a
stockholder, or is or has been a party to any transactions, or series of similar
transactions, or is indebted to Elite during the past year with respect to any
Shares or securities of Elite; or (iii) knows of any transactions during the
past year, currently proposed transactions, or series of similar transactions,
to which Elite or any of its subsidiaries was or is to be a party, in which the
amount involved exceeds $60,000 and in which any of them or their respective
affiliates had, or will have, a direct or indirect material interest. In
addition, other than as set forth herein, there are no contracts, arrangements
or understandings entered into by the Committee or any other participant in this
solicitation or any of their respective associates within the past year with any
person with respect to any of Elite's securities, including, but not limited to,
joint ventures, loan or option arrangements, puts or calls, guarantees against
loss or guarantees of profit, division of losses or profits, or the giving or
withholding of proxies.
Except as set forth in this Consent Solicitation Statement
(including the Schedules hereto), neither the Committee nor any of the other
participants in this solicitation, or any of their respective associates, has
entered into any agreement or understanding with any person with respect to (i)
any future employment by Elite or its affiliates or (ii) any future transactions
to which Elite or any of its affiliates will or may be a party. However, the
Committee has reviewed, and will continue to review, on the basis of publicly
available information, various possible business strategies that it might
consider in the event that the Slate is elected to the Board. In addition, if
and to the extent that the
-14-
Committee acquires control of Elite, the Committee intends to conduct a detailed
review of Elite and its assets, financial projections, corporate structure,
dividend policy, capitalization, operations, properties, policies, management
and personnel and consider and determine what, if any, changes would be
desirable in light of the circumstances which then exist.
See Schedule II for information regarding persons who beneficially
own more than 5% of the Common Stock and the ownership of the Common Stock by
the management of Elite.
The factual information concerning Elite contained in this Consent
Solicitation Statement and the Schedules attached hereto has been taken from, or
is based upon, publicly available information.
THE ELITE VALUE COMMITTEE
August 26, 2002
-15-
SCHEDULE I
TRANSACTIONS IN SECURITIES OF ELITE DURING THE PAST TWO YEARS
Shares of Securities Price Per Date of
Type of Security Purchased/(Sold) Share($) Purchase/(Sale)
---------------- ---------------- ---------- ---------------
BRIDGE VENTURES, INC.
---------------------
Common Stock 7,000 10.10 6/29/00
Warrant 5,500 6.10 6/29/00
Common Stock 500 5.21 3/14/01
Warrant 10,000 2.03 4/17/01
Common Stock 20,000 6.75 6/5/01
Common Stock 5,500 10.07 6/20/01
Common Stock 5,500 10.06 6/20/01
Common Stock 1,500 10.60 7/20/01
Common Stock 3,100 10.55 7/25/01
Common Stock 3,400 10.54 7/26/01
Common Stock 5,000 10.78 7/26/01
Warrant 3,500 4.67 8/3/01
Common Stock 2,000 10.67 8/7/01
Warrant (10,000) 3.58 (8/16/01)
Common Stock 1,000 8.10 9/10/01
Common Stock 1,000 7.58 9/10/01
Common Stock 2,000 8.00 9/10/01
Common Stock 3,000 8.12 9/10/01
Common Stock 12,500 6.59 9/18/01
Common Stock 2,500 6.11 9/19/01
Common Stock 5,000 6.06 9/21/01
Common Stock 400 6.15 9/24/01
Common Stock 3,000 7.20 10/27/01
Common Stock 8,200 6.43 10/29/01
Common Stock 5,000 6.11 12/12/01
-16-
Common Stock 5,000 6.08 12/13/01
Common Stock 1,100 5.89 2/8/02
Common Stock 3,500 6.04 2/8/02
Common Stock 1,000 6.05 2/8/02
Common Stock 5,000 6.03 2/11/02
Common Stock (5,000) 8.08 (2/15/02)
Common Stock (5,000) 8.07 (2/15/02)
Common Stock 10,000 7.28 2/20/02
Common Stock 1,000 5.48 6/11/02
Common Stock 2,500 5.23 6/11/02
Common Stock 1,000 5.53 6/13/02
Common Stock 7,000 5.07 6/13/02
Common Stock 5,000 5.14 6/21/02
Common Stock 9,000 4.85 6/24/02
Common Stock 3,000 4.98 6/25/02
Common Stock (3,000) 3.75 (7/11/02)
Common Stock (10,000) 3.06 (7/22/02)
Common Stock (4,000) 3.17 (7/22/02)
Common Stock (2,000) (1) (8/1/02)
BRIDGE VENTURES, INC.
EMPLOYEE PENSION PLAN
---------------------
Common Stock 10,000 6.25 1/3/01
Common Stock 5,300 6.27 1/5/01
Common Stock 5,000 7.03 2/13/01
Common Stock 10,000 4.83 3/15/01
Common Stock 10,000 5.02 3/27/01
Common Stock 1,000 5.50 3/29/01
Common Stock 4,000 5.30 3/29/01
Common Stock 5,000 5.50 4/11/01
Common Stock 2,000 5.55 4/17/01
Common Stock 1,000 7.35 4/27/01
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Common Stock 3,000 10.55 7/31/01
Common Stock 1,500 10.61 7/31/01
Warrant 10,000 3.61 8/16/01
Common Stock 1,000 7.05 9/17/01
Common Stock 3,500 5.00 7/5/02
Common Stock 10,200 4.00 7/10/02
Common Stock (3,000) 3.75 (7/11/02)
Common Stock 7,000 3.12 7/22/02
Common Stock 10,000 3.06 7/22/02
Common Stock 4,000 3.17 7/22/02
SAGGI CAPITAL CORP.
-------------------
Common Stock 5,000 5.00 3/13/01
Common Stock 2,500 5.40 3/21/01
Common Stock (3,000) 7.40 (5/23/01)
Common Stock 20,000 6.75 6/5/01
Common Stock 1,000 5.85 2/6/02
Common Stock (1,000) 7.85 (2/14/02)
Common Stock 5,000 5.00 6/13/02
Common Stock 1,000 5.05 6/26/02
SHARON WILL
-----------
Common Stock 3,000 6.30 1/2/01
Common Stock 500 6.60 1/2/01
Common Stock 5,000 7.03 2/16/01
Common Stock (1,000) 5.40 (6/14/02)
SMACS HOLDING CORP.
-------------------
Common Stock 1,666 10.60 7/31/01
SAGGI CAPITAL CORP. MONEY PURCHASE PLAN
---------------------------------------
Common Stock 1,400 5.20 3/28/01
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Common Stock 1,350 5.20 3/30/01
Common Stock 5,000 5.20 8/28/01
Common Stock 1,100 6.05 9/24/01
SAGGI CAPITAL CORP. PROFIT SHARING PLAN
---------------------------------------
Common Stock 1,800 5.20 3/21/01
Common Stock 500 5.20 3/22/01
Common Stock 500 5.20 3/23/01
Common Stock 5,000 8.25 8/23/01
Common Stock 550 6.00 9/19/01
HARRIS FREEDMAN
---------------
Common Stock 2,000 (1) 8/1/02
MICHAEL H. FREEDMAN
-------------------
Common Stock (1,000) 6.25 (3/6/01)
Common Stock (1,000) 7.20 (5/2/01)
Common Stock (2,000) 7.05 (6/7/01)
Common Stock (1,000) 9.30 (7/3/01)
Common Stock (1,000) 10.55 (7/26/01)
Common Stock (1,000) 8.35 (8/31/01)
Common Stock (1,000) 8.45 (8/31/01)
Common Stock (1,500) 11.50 (9/21/01)
Common Stock (1,000) 7.15 (1/10/02)
Common Stock (1,000) 6.50 (1/25/02)
Common Stock (1,000) 6.50 (1/29/02)
Common Stock (500) 7.50 (2/28/02)
Common Stock (500) 7.20 (3/4/02)
Common Stock (500) 7.72 (3/8/02)
Common Stock (500) 7.51 (4/5/02)
Common Stock (1,000) 7.41 (4/23/02)
Common Stock (500) 6.81 (5/9/02)
-----------------------------
(1) On August 1, 2002, 2,000 Shares were transferred from the account of
Bridge Ventures, Inc. to the account of Harris Freedman.
-19-
SCHEDULE II
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
THE FOLLOWING IS BASED SOLELY ON INFORMATION PROVIDED IN ELITE'S
PRELIMINARY CONSENT REVOCATION STATEMENT FILED AUGUST 20, 2002:
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Shown in the table below is any person (including any "group") known
to the Company to be the beneficial owner of more than five percent (5%) of any
class of the Company's voting securities as of August 16, 2002.
Name and Address of Amount and Nature of
Title of Class Beneficial Owner Beneficial Ownership Percent of Class
-------------- ---------------- -------------------- ----------------
Common Dr. Atul M. Mehta, 2,962,701(1) 26.4%
Director/Officer Direct and Indirect
165 Ludlow Avenue
Northvale New Jersey 07647
Common Jerome Belson 928,00[_](2) 9.2%
495 Broadway Direct and Indirect
New York, NY 10012
Common John de Neufville and Mely 766,100(3) 7.6%
Rahn, Trustees Direct and Indirect
Margaret de Neufville
Revocable Trusts
197 Meister Avenue
North Branch, NJ 08876
Common Bakul and Dilip Mehta 630,000 6.5%
P.O. Box 438 Direct
Muscat, Sultanate of Oman
Common Bridge Ventures, Inc. 859,470(4) 8.6%
1241 Gulf of Mexico Drive Direct and Indirect
Longboat Key, FL 24228
SMACS Holding Corp.
1241 Gulf of Mexico Drive
Longboat Key, FL 24228
-20-
Name and Address of Amount and Nature of
Title of Class Beneficial Owner Beneficial Ownership Percent of Class
-------------- ---------------- -------------------- ----------------
Bridge Ventures, Inc.
Employee Pension Plan
1241 Gulf of Mexico Drive
Longboat Key, FL 24228
Saggi Capital Corp.
9 Prospect Hill Road Ext.
Pine Plains, NY 12567
Saggi Capital Corp.
Money Purchase Plan
9 Prospect Hill Road Ext.
Pine Plains, NY 12567
Saggi Capital Corp.
Profit Sharing Plan
9 Prospect Hill Road Ext.
Pine Plains, NY 12567
Harris Freedman
1241 Gulf of Mexico Drive
Longboat Key, FL 24228
Sharon Will
9 Prospect Hill Road Ext.
Pine Plains, NY 12567
Michael H. Freedman
200 East 89th Street
Suite 17A
New York, NY 10128
(1) Includes (i) 6,300 shares held by Dr. and Mrs. Mehta as custodians
for Amar Mehta; (ii) 6,300 shares held by Dr. and Mrs. Mehta as
custodians for Anand Mehta; (iii) 200,000 shares held by Mehta
Partners, LP; and (iv) options to purchase 1,475,000 shares of
common stock held by Dr. Mehta (including options for 400,000 shares
which do not begin vesting until December 31, 2002 and then vest
100,000 shares on that date and 100,000 shares annually thereafter
for three years and options for 50,000 shares which begin vesting on
December 31, 2002 and then vest 10,000 shares on that date and
10,000 shares annually thereafter for four years).
(2) Includes (i) 35,000 shares held by Maxine Belson, wife of Jerome
Belson; (ii) 50,000 shares by the Jerome Belson Foundation; and
(iii) 28,000 shares owned by the Grandchildren of Jerome Belson; and
(iv) warrants for 256,000 shares.
-21-
(3) Represents (i) 331,000 shares held in trust for the benefit of John
P. de Neufville; (ii) 410,000 shares held in trust for David T. de
Neufville; and (iii) options personally held by John P. de Neufville
to purchase 25,000 shares.
(4) Based on information contained in a Schedule 13D, as amended, filed
by the foregoing persons on August 13, 2002 who have formed a group
within the meaning of Section 13(d) of the Securities Exchange Act
of 1934. Consists of (a) 2,000 shares of common stock owned by
Harris Freedman, (b) 369,970 shares of common stock owned by Bridge
Ventures, Inc. (including 85,250 shares of common stock issuable
upon exercise of warrants owned by Bridge Ventures, Inc.), (c)
121,000 shares of common stock owned by SMACS Holding Corp.
(including 75,000 shares of common stock issuable upon exercise of
warrants owned by SMACS Holding Corp.), (d) 102,200 shares of common
stock owned by Bridge Ventures, Inc. Employee Pension Plan
(including 10,000 shares of common stock issuable upon exercise of
warrants owned by Bridge Ventures, Inc. Employee Pension Plan), (e)
7,500 shares of common stock owned by Sharon Will, (f) 217,500
shares of common stock owned by Saggi Capital Corp. (including
110,000 shares of common stock issuable upon exercise of warrants
owned by Saggi Capital Corp.), (g) 7,450 shares of common stock
owned by Saggi Capital Corp. Money Purchase Plan, (h) 8,350 shares
of common stock owned by Saggi Capital Corp. Profit Sharing Plan,
and (i) 23,500 shares of common stock owned by Michael H. Freedman
(including 5,000 shares of common stock issuable upon exercise of
warrants owned by Michael H. Freedman).
The Company is informed and believes that as of August 16, 2002,
Cede & Co. held 6,544,413 shares of the Company's common stock and 1,200,120
Class A Warrants for shares of the common stock of the Company as nominee for
Depository Trust Company, 55 Water Street, New York, New York 10004. It is the
Compan[y]'s understanding that Cede & Co. and Depository Trust Company both
disclaim any beneficial ownership therein and that such shares are held for the
account of numerous other persons, no one of whom is believed to beneficially
own five percent or more of the common stock of the Company.
SECURITY OWNERSHIP OF MANAGEMENT
Shown below, as of August 15, 2002, are the shares of the Company
beneficially owned by all directors, by the executive officers and by the
directors and executive officers of the Company as a group.
Name and Address of Amount and Nature of
Title of Class Beneficial Owner Beneficial Ownership Percent of Class
-------------- ---------------- -------------------- ----------------
Common Dr. Atul M. Mehta, 2,962,700(1) 26.4%
Director/Officer Direct and Indirect
165 Ludlow Avenue
Northvale NJ 07647
-22-
Name and Address of Amount and Nature of
Title of Class Beneficial Owner Beneficial Ownership Percent of Class
-------------- ---------------- -------------------- ----------------
Common Donald S. Pearson, 78,750(2) 0.8%
Director Direct
1305 Peabody Avenue
Memphis, TN 38104
Common Harmon Aronson, 60,000(3) 0.6%
Director Direct
26 Monterey Drive
Wayne, NJ 07470
Common Eric L. Sichel, 30,000(4) 0.3%
Director Direct
411 Highview Road
Englewood, NJ 07631
Common Mark I. Gittelman, 10,000(5) 0.1%
Chief Financial Officer, Direct
Treasurer and Secretary
300 Colfax Avenue
Clifton, NJ 07013
Common Officers and Directors as a 3,141,450 27.7%
Group Direct and Indirect
(1) Includes (i) 6,300 shares held by Dr. and Mrs. Mehta as custodians
for Amar Mehta; (ii) 6,300 shares held by Dr. and Mrs. Mehta as
custodians for Anand Mehta; (iii) 200,000 shares held by Mehta
Partners, LP; and (iv) options to purchase 1,475,000 shares of
common stock held by Dr. Mehta (including options for 400,000 shares
which do not begin vesting until December 31, 2002 and then vest
100,000 shares on that date and 100,000 shares annually thereafter
for three years and options for 50,000 shares which do begin vesting
until December 31, 2002 and then vest 10,000 shares on that date and
10,000 shares annually thereafter for four years).
(2) Includes options to purchase 60,000 shares. Options for 40,000
shares are vested. The remaining options vest in increments of
10,000 shares each on September 1, 2002 and January 2, 2003.
(3) Comprised of options to purchase 60,000 shares. Options for 40,000
shares are vested. The remaining options vest in increments of
10,000 shares each on September 1, 2002 and January 2, 2003.
(4) Comprised of options to purchase 30,000 shares. Options for 10,000
shares are vested. Options for the remaining shares vest in
increments of 10,000 each on August 2, 2003 and August 2, 2004.
(5) Comprised of options to purchase 10,000 shares.
Information on the stock ownership of these persons was provided to
the Company by the persons.
-23-
IMPORTANT
1. If your Shares are kept at your brokerage firm or bank,
and they are registered in your brokerage firm's or your
bank's name, please send back only the enclosed WHITE
Consent Card in the special envelope provided.
2. If your Shares are registered in your own name, please
sign, date and return the enclosed WHITE Consent Card to
MacKenzie Partners, Inc.
3. Time is critically short. Only your latest dated WHITE
Consent Card will count.
4. If your Shares are held in the name of a brokerage firm,
bank nominee or other institution, only it can sign a
WHITE Consent Card with respect to your Shares.
Accordingly, please contact the person responsible for
your account and give instructions for a WHITE Consent
Card to be signed representing your Shares.
If you have any questions about giving your consent or require
assistance in voting your Shares, please call:
HARRIS FREEDMAN
575 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
TEL. (212) 572-0763
FAX (212) 572-0760
OR
SHARON WILL
9 PROSPECT HILL ROAD EXT.
PINE PLAINS, NEW YORK 12567
TEL. (518) 398-7830
FAX (518) 398-6369
CONSENT CARD
Consent by Stockholders of Elite Pharmaceuticals, Inc.
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To Action Without a Meeting
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THIS CONSENT IS SOLICITED BY THE ELITE VALUE COMMITTEE
The undersigned, a stockholder of record of Elite Pharmaceuticals,
Inc. ("Elite") hereby consents, pursuant to Section 228 of the Delaware General
Corporation Law, with respect to all shares of Common Stock, par value $.01 per
share, of Elite which the undersigned is entitled to vote in all capacities, to
the following action without a meeting, without prior notice and without a vote:
RESOLVED, that, in the best interests of Elite, the
removal without cause of directors of Elite, Donald S.
Pearson, Harmon Aronson and Eric L. Sichel, and any
person or persons elected to the Elite Board of
Directors to fill any vacancy arising since the last
annual meeting of stockholders, or any newly created
directorships, is hereby approved.
CONSENTS CONSENT WITHHELD ABSTAINS
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TO WITHHOLD CONSENT TO THE REMOVAL OF ANY DIRECTOR, WRITE HIS/HER NAME IN THE
FOLLOWING SPACE:
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RESOLVED, that the slate of The Elite Value Committee,
Harris Freedman, Sharon Will and Michael H. Freedman
(the "Slate"), is hereby elected to the Elite Board of
Directors to fill the newly created vacancies on the
Board of Directors, and the members of the Slate shall
serve until their respective successors are duly
elected and qualify.
CONSENTS CONSENT WITHHELD ABSTAINS
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TO WITHHOLD CONSENT TO THE ELECTION OF ANY MEMBER OF THE SLATE, WRITE HIS/HER
NAME IN THE FOLLOWING SPACE:
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INSTRUCTIONS
CHECK THE APPROPRIATE BOX ABOVE TO CONSENT OR WITHHOLD CONSENT TO, OR ABSTAIN
FROM, THE FOREGOING RESOLUTIONS.
IF NO BOX IS MARKED WITH RESPECT TO EITHER OR EACH OF THE ABOVE RESOLUTIONS,
THE UNDERSIGNED WILL BE DEEMED TO CONSENT TO SUCH RESOLUTION OR RESOLUTIONS.
IN WITNESS WHEREOF, the undersigned has executed this stockholder
consent on the date set forth below.
Date:
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Signature of Stockholder
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Signature (if held jointly)
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Name and Title of Representative (if applicable)
IMPORTANT NOTE TO STOCKHOLDERS:
Please sign exactly as your shares are
registered. Joint owners should both sign.
When signing as executor, trustee,
administrator, guardian, officer of a
corporation, attorney-in-fact or in any other
fiduciary or representative capacity, please
give your full name. This consent, when
executed, will vote all shares held in all
capacities. Be sure to date this Consent Card.
**THIS IS YOUR CONSENT CARD**