|
·
|
amend
the Company’s Certificate of Incorporation so as to (a) designate 20,825
shares of our authorized preferred stock as Series D-1 Convertible
Preferred Stock, which will be convertible into shares of Common
Stock at
a conversion price of $0.95 per share (the “Series D-1 Preferred Shares”),
and (b) reduce the conversion price of the Series B-1 Preferred Stock
and
the Series C-1 Preferred Stock from $1.5338 per share to $0.95 per
share
(the “Charter Amendments”);
|
|
·
|
exchange
the STAR Notes for (a) the Company’s Secured Convertible 12% Notes Due
2010 (the “Convertible Notes”) in an aggregate principal amount equal to
the principal amount of the STAR Notes plus accrued interest thereon
through the date of such exchange, which will be convertible into
shares
of Common Stock at a conversion price of $0.95 per share, and (b)
5-year
warrants (the “New Warrants”) to purchase an aggregate of 1,842,103 shares
of Common Stock at an exercise price of $0.95 per share (this transaction
also being sometimes referred to as the “STAR Note Exchange”);
and
|
|
·
|
exchange
all of the outstanding shares of the Series B-1 Preferred Stock and
the
Series C-1 Preferred Stock (all of which are owned by Tullis and
Aisling)
for the Series D-1 Preferred Shares (this transaction also being
sometimes
referred to as the “Preferred Stock
Exchange”).
|
|
o
|
66,190,000
shares of Common Stock,
|
|
o
|
10,000
shares of Series B-1 Preferred
Stock,
|
|
o
|
10,000
shares of Series C-1 Preferred Stock,
and
|
|
o
|
279,208
shares of Series C Preferred
Stock..
|
|
Class
or Series
|
Votes
Approving
The
Financing Transactions (1)
|
Total
Outstanding Shares of Such Class or Series
|
Percentage
of Total Shares of Such Class or Series Approving the Financing
Transactions
|
|
Common
Stock
|
46,124,780
|
66,190,000
|
69.69%
(3)
|
|
Series
B-1 Preferred Stock
|
0
|
10,000
(2)
|
0%
|
|
Series
C-1 Preferred Stock
|
0
|
10,000
(2)
|
0%
|
|
Series
C Preferred Stock
|
0
|
279,208
|
0%
|
|
·
|
a
$22,500,000 revolving credit
facility;
|
|
·
|
a
$12,000,000 real estate term loan;
|
|
·
|
a
$3,500,000 machinery and equipment term loan;
and
|
|
·
|
a
$3,500,000 additional/future capital expenditure facility.
|
|
·
|
Issuance
of the Sutaria Note.
On November 7, 2007, Dr. Maganlal K. Sutaria, the Chairman of the
Company’s Board of Directors, and Vimla M. Sutaria, his wife, loaned
$3,000,000 to the Company which loan is evidenced by the Sutaria
Note.
Interest of 12% per annum on the Sutaria Note is payable quarterly
in
arrears, and for the first 12 months of that Note’s term may be paid in
cash or, at the Company’s option, in additional notes (“PIK Notes”).
Thereafter, the Company is required to pay at least 8% interest in
cash
and the balance, at the Company’s option, in cash or PIK Notes. Repayment
of the Sutaria Note (and any PIK Notes issued in lieu of cash interest
payments on the Sutaria Note) is secured by third priority liens
on
substantially all of the Company’s property and real estate. Pursuant to
intercreditor agreements, the Sutaria Note (and any such PIK Notes)
are
subordinated to the liens held by WFBC pursuant to the Senior Credit
Agreement and by the holders of the STAR Notes described below. The
terms
of the Sutaria Note are summarized below in the section of this
Information Statement entitled “DESCRIPTION
OF SECURITIES-The Sutaria Note.”
|
|
·
|
Issuance
of the STAR Notes.
On November 14, 2007, the Company issued and sold $5,000,000 principal
amount of the STAR Notesas follows:
|
|
Tullis-Dickerson
Capital Focus III, L.P. (“Tullis”)
|
$
|
833,333
|
||
|
Aisling
Capital II, L.P. (“Aisling”)
|
$
|
833,333
|
||
|
Cameron
Reid (“Reid”)
|
$
|
833,333
|
||
|
Sutaria
Family Realty, LLC (“SFR”)
|
$
|
2,500,000
|
|
·
|
The
Warrant Exchange.
In
May and September of 2006, in conjunction with issuing the Series
B-1
Preferred Stock and the Series C-1 Preferred Stock to Tullis and
Aisling,
respectively, we also issued the B-1 Warrants to Tullis and the C-1
Warrants to Aisling. As noted above, the B-1 Warrants entitled Tullis,
and
the C-1 Warrants entitled Aisling, to purchase 2,281,914 shares of
our
Common Stock at a per share exercise price of $1.639. As part of
the
consideration for Tullis and Aisling entering into the Consent and
Waiver
with the Company, and in exchange for the B-1 and C-1 Warrants, on
November 14, 2007 we issued to each of Tullis and Aisling an Amended
and
Restated Warrant, entitling the holder to purchase 2,281,914 shares
of the
Company’s Common Stock at a reduced exercise price of $0.95 per share
instead of $1.639 per share.
|
|
·
|
The
Charter Amendments.
As
indicated above, and in addition to the Warrant Exchange, in consideration
of Tullis and Aisling entering into the Consent and Waiver (which
was
necessary in order for us to sell the Sutaria Note and the STAR Notes
and
thereby fully meet Wells Fargo’s requirement under the Forbearance
Agreement that the Company raise an additional $8,000,000 in financing)
the Company agreed to (a) file with the Secretary of State of Delaware
a
Certificate of Designations, Preferences and Rights for a new series
of
our preferred stock, the Series D-1 Convertible Preferred Stock,
which
filing will have the effect under the Delaware General Corporation
Law of
amending the Company’s Certificate of Incorporation, and (b) further amend
the Certificate of Incorporation so as to reduce the conversion price of
the Series B-1 Preferred Stock and Series C-1 Preferred Stock in
each case
to $0.95 per share. Pursuant to the Consent and Waiver these filings
(the
“Charter Filings”) shall be made no earlier than January 18, 2008, and no
later than February 28, 2008 (or such later date as may be necessary
to
address any SEC comments with respect to this Information Statement).
|
|
·
|
The
STAR Note Exchange.
Pursuant to the Securities Purchase Agreement, upon completing the
process
of obtaining the Stockholder Approval (which, pursuant to the Consent
and
Waiver, consists of filing with the SEC a Preliminary Information
Statement on Schedule 14C relating to the Financing Transactionsand
filing
a Definitive Information Statement on Schedule 14C with the SEC and
disseminating the same to those of our shareholders who, as of the
Record
Date, would have been entitled to vote on the Financing Transactions
had a
shareholders’ meeting been called) the STAR Notes will be exchanged for
(a) the Company’s Secured Convertible 12% Notes Due 2010 (which we also
have referred to as the “Convertible Notes”) in an aggregate original
principal amount equal to the principal and accrued interest on the
STAR
Notes through the date of such exchange, and (b) the New Warrants,
which
will entitle the holders to purchase up to an aggregate of 1,842,103
shares of our Common Stock at an exercise price of $0.95 per share.
|
| · |
The
Preferred Stock Exchange.
Pursuant to the Consent and Waiver, and as consideration for Tullis
and
Aisling entering into that agreement, upon completing the Stockholder
Approval process and filing the Charter Amendments, the Series B-1
Preferred Stock and Series C-1 Preferred Stock held by Tullis and
Aisling
will be exchanged for shares of our new Series D-1 Preferred Stock.
The
exchange will be at the rate of 1.04125 Series D-1 shares for each
Series
B-1 or Series C-1 share, as the case may be. The Series D-1 Preferred
Stock will be substantially similar to the Series B-1 and C-1 Preferred
Stock, except that (a) the conversion price of the Series D-1 Preferred
Stock will be $0.95 per share instead of $1.5338 per share, and (b)
the
Series D-1 Preferred Stock will have anti-dilution protection with
respect
to issuances of Common Stock or Common Stock equivalents at less
than
$0.95 per share (“Dilutive Shares”), pursuant to which their conversion or
exercise prices will, in those cases, automatically be re-set to
a price
equal to 90% of the price at which the Dilutive Shares are deemed
to have
been issued.
|
|
·
|
Maganlal
Sutaria, M.D.,
is a member of the Company’s Board of Directors and serves as our Chairman
of the Board. Dr. Sutaria and his wife, Vimla Sutaria, are the purchasers
of the Sutaria Note, pursuant to which they have loaned $3,000,000
to the
Company as part of the Financing Transactions.
|
|
·
|
Raj
Sutaria,
a
son of Maganlal Sutaria and brother of Perry Sutaria, M.D., is an
Executive Vice President of the Company, and a 33 1/3% equity holder
of
Sutaria Family Realty, LLC (“SFR”), which has purchased $2,500,000
principal amount of the STAR Notes. As such, Mr. Sutaria may be deemed
to
have indirectly loaned $833,333 to
the Company in the Financing Transactions. As an investor in the
STAR
Notes, SFR will receive approximately one-half in principal amount
of the
Convertible Notes and one-half of the New Warrants in the STAR Note
Exchange. If the Convertible Notes and New Warrants to be issued
to SFR in
the STAR Note Exchange were fully converted and exercised, SFR would
receive approximately 3,553,000 shares of our Common Stock. To the
extent
of his equity interest in SFR, Raj Sutaria will be an indirect beneficiary
of the STAR Note Exchange.
|
|
·
|
Perry
Sutaria, M.D.,
a
son of Maganlal Sutaria and brother of Raj Sutaria, was elected as
a
member of the Company’s Board of Directors on December 18, 2007. Dr.
Sutaria is the beneficial owner of 66.62% of the Company’s outstanding
Common Stock and is a 33 1/3% equity holder of Sutaria Family Realty,
LLC
(“SFR”), which has purchased $2,500,000 principal amount of the STAR
Notes. As such, Dr. Sutaria may be deemed to have indirectly loaned
$833,333 to
the Company in the Financing Transactions. As an investor in the
STAR
Notes, SFR will receive approximately one-half in principal amount
of the
Convertible Notes and one-half of the New Warrants in the STAR Note
Exchange. If the Convertible Notes and New Warrants to be issued
to SFR in
the STAR Note Exchange were fully converted and exercised, SFR would
receive approximately 3,553,000 shares of our Common Stock. To the
extent
of his equity interest in SFR, Perry Sutaria will be an indirect
beneficiary of the STAR Note
Exchange.
|
|
·
|
Joan
P. Neuscheler
is
a member of the Company’s Board of Directors and the President of
Tullis-Dickerson Capital Focus III, L.P., which has purchased $833,333
principal amount of the STAR Notes, will receive a ratable one-sixth
portion of the Convertible Notes and New Warrants in the STAR Note
Exchange, and will receive one-half of the Series D-1 Preferred Stock
and
of the Amended and Restated Warrants. If the Convertible Notes, New
Warrants, Series D-1 Preferred Stock and Amended and Restated Warrants
to
be issued to Tullis in the STAR Note Exchange, Warrant Exchange and
Preferred Stock Exchange were fully converted and exercised, Tullis
would
receive approximately 14,426,000 shares of our Common
Stock.
|
|
·
|
Cameron
Reid
is
the Company’s Chief Executive Officer, the purchaser of $833,333 principal
amount of the STAR Notes, and will receive a ratable one-sixth portion
of
the Convertible Notes and New Warrants in the STAR Note Exchange.
If the
Convertible Notes and New Warrants to be issued to Reid were all
fully
converted and exercised, Reid would receive 1,184,210 shares of our
Common
Stock.
|
|
Name
and
|
|
Amount
and
|
|
|||||||
|
Address
of
|
Title
of
|
Nature
of Beneficial
|
Percent
of
|
|||||||
|
Beneficial
Owner
|
Class
|
Ownership
|
Class
(1)
|
|||||||
|
|
|
|
|
|||||||
|
Maganlal
K. Sutaria
|
Common
Stock
|
1,243,000
(2
|
)
|
1.86
|
%
|
|||||
|
75
Adams Avenue
|
||||||||||
|
Hauppauge,
NY 11788
|
||||||||||
|
|
||||||||||
|
Rajs
Holdings I, LLC(3)
|
Common
Stock
|
15,526,000
(3
|
)
|
23.46
|
%
|
|||||
|
75
Adams Avenue
|
||||||||||
|
Hauppauge,
NY 11788
|
||||||||||
|
|
||||||||||
|
Bhupatlal
K. Sutaria
|
Common
Stock
|
804,000
(4
|
)
|
1.20
|
%
|
|||||
|
75
Adams Avenue
|
||||||||||
|
Hauppauge,
NY 11788
|
||||||||||
|
|
||||||||||
|
Rametra
Holdings I, LLC
|
Common
Stock
|
8,015,000
(5
|
)
|
12.11
|
%
|
|||||
|
75
Adams Avenue
|
||||||||||
|
Hauppauge,
NY 11788
|
||||||||||
|
David
Reback
|
Common
Stock
|
61,000
(6
|
)
|
*
|
||||||
|
75
Adams Avenue
|
||||||||||
|
Hauppauge,
NY 11788
|
||||||||||
|
|
||||||||||
|
Stewart
Benjamin
|
Common
Stock
|
46,000
(7
|
)
|
*
|
||||||
|
75
Adams Avenue
|
||||||||||
|
Hauppauge,
NY 11788
|
||||||||||
|
|
||||||||||
|
Ravis
Holdings I, LLC
|
Common
Stock
|
10,519,000
(8
|
)
|
15.89
|
%
|
|||||
|
75
Adams Avenue
|
||||||||||
|
Hauppauge,
NY 11788
|
||||||||||
|
|
||||||||||
|
Perry
Sutaria
|
Common
Stock
|
44,094,000
(9
|
)
|
66.62
|
%
|
|||||
|
75
Adams Avenue
|
||||||||||
|
Hauppauge,
NY 11788
|
||||||||||
|
|
||||||||||
|
Kennith
C. Johnson
|
Common
Stock
|
50,000
(10
|
)
|
*
|
||||||
|
75
Adams Avenue
|
||||||||||
|
Hauppauge,
NY 11788
|
||||||||||
|
Cameron
Reid
|
Common
Stock
|
3,175,000
(11
|
)
|
4.59
|
%
|
|||||
|
75
Adams Avenue
|
||||||||||
|
Hauppauge,
NY 11788
|
||||||||||
|
|
||||||||||
|
P&K
Holdings, LLC
|
Common
Stock
|
8,015,000
(12
|
)
|
12.11
|
%
|
|||||
|
75
Adams Avenue
|
||||||||||
|
Hauppauge,
NY 11788
|
||||||||||
|
|
||||||||||
|
Richard
J. Miller
|
Common
Stock
|
25,000
(13
|
)
|
*
|
||||||
|
75
Adams Avenue
|
||||||||||
|
Hauppauge,
NY 11788
|
||||||||||
|
|
||||||||||
|
Joan
P. Neuscheler
|
Common
Stock
|
9,310,000
(14
|
)
|
12.40
|
%
|
|||||
|
c/o
Tullis Dickerson Co., Inc.
|
||||||||||
|
Two
Greenwich Plaza
|
||||||||||
|
Greenwich,
Connecticut 06830
|
||||||||||
|
|
||||||||||
|
Tullis
Dickerson Capital Focus III, L.P.
|
Common
Stock
|
9,285,000
(15
|
)
|
12.37
|
%
|
|||||
|
Two
Greenwich Plaza
|
||||||||||
|
Greenwich,
Connecticut 06830
|
||||||||||
|
|
||||||||||
|
Aisling
Capital II, L.P.
|
Common
Stock
|
9,046,000
(16
|
)
|
12.02
|
%
|
|||||
|
888
Seventh Avenue, 30th Floor
|
||||||||||
|
New
York, New York 10106
|
|
George
Aronson
|
Common
Stock
|
72,000
|
*
|
|||||||
|
75
Adams Avenue
|
||||||||||
|
Hauppauge,
NY 11788
|
||||||||||
|
|
||||||||||
|
Peter
Giallorenzo
|
Common
Stock
|
20,000
(17
|
)
|
*
|
||||||
|
75
Adams Avenue
|
||||||||||
|
Hauppauge,
NY 11788
|
||||||||||
|
|
||||||||||
|
Kenneth
Cappel
|
Common
Stock
|
126,000
(18
|
)
|
*
|
||||||
|
75
Adams Avenue
|
||||||||||
|
Hauppauge,
NY 11788
|
||||||||||
|
|
||||||||||
|
Jeffrey
Weiss
|
Common
Stock
|
236,000
(19
|
)
|
*
|
||||||
|
75
Adams Avenue
|
||||||||||
|
Hauppauge,
NY 11788
|
||||||||||
|
|
||||||||||
|
All
Directors and
|
Common
Stock
|
17,784,000
(20
|
)
|
22.05
|
%
|
|||||
|
Officers
as a
|
||||||||||
|
Group
(13 persons)
|
|
Name
and 'Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
Awards ($) (1)
|
|
Option
Awards ($) (2)
|
|
Non-Equity
Incentive Plan Compensation ($) (3)
|
|
Change
in Pension Value and Nonqualified Deferred Compensation Earnings
($)
(4)
|
|
All
Other Compensation ($) (5)
|
|
Total
($)
|
|
|||||||||
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
|||||||||
|
Cameron
Reid
|
|
|
2007
|
|
$
|
300
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
13
|
|
$
|
313
|
|
|
Chief
Executive Officer
|
|
|
2006
|
|
$
|
297
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
297
|
|
|
|
|
|
2005
|
|
$
|
76
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
76
|
|
|
Bhupatlal
Sutaria
|
|
|
2007
|
|
$
|
275
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
13
|
|
$
|
288
|
|
|
President
|
|
|
2006
|
|
$
|
271
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
22
|
|
$
|
293
|
|
|
|
|
|
2005
|
|
$
|
198
|
|
$
|
15
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
21
|
|
$
|
234
|
|
|
Peter
Giallarenzo
|
|
|
2007
|
|
$
|
110
|
|
$
|
-
|
|
$
|
-
|
|
$
|
117
|
|
$
|
-
|
|
$
|
-
|
|
$
|
5
|
|
$
|
232
|
|
|
Chief
Financial Officer
|
|
|
2006
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
2005
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
Jeffrey
Weiss
|
|
|
2007
|
|
$
|
236
|
|
$
|
-
|
|
$
|
-
|
|
$
|
15
|
|
$
|
-
|
|
$
|
-
|
|
$
|
12
|
|
$
|
263
|
|
|
Executive
Vice President
|
|
|
2006
|
|
$
|
225
|
|
$
|
460
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
25
|
|
$
|
710
|
|
|
|
|
|
2005
|
|
$
|
78
|
|
$
|
-
|
|
$
|
-
|
|
$
|
244
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
322
|
|
|
Ken
Cappel
|
|
|
2007
|
|
$
|
250
|
|
$
|
-
|
|
$
|
-
|
|
$
|
13
|
|
$
|
-
|
|
$
|
-
|
|
$
|
12
|
|
$
|
275
|
|
|
General
Counsel
|
|
|
2006
|
|
$
|
232
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
25
|
|
$
|
257
|
|
|
|
|
|
2005
|
|
$
|
118
|
|
$
|
-
|
|
$
|
-
|
|
$
|
330
|
|
$
|
-
|
|
$
|
-
|
|
$
|
10
|
|
$
|
458
|
|
|
George
Aronson
|
|
|
2007
|
|
$
|
236
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
13
|
|
$
|
249
|
|
|
Chief
Financial Officer
|
|
|
2006
|
|
$
|
221
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
21
|
|
$
|
242
|
|
|
|
|
|
2005
|
|
$
|
148
|
|
$
|
15
|
|
$
|
-
|
|
$
|
136
|
|
$
|
-
|
|
$
|
-
|
|
$
|
9
|
|
$
|
308
|
|
|
Munish
Rametra
|
|
|
2007
|
|
$
|
250
|
|
$
|
-
|
12
|
|
262
|
||||||||||||||||
|
General
Counsel
|
|
|
2006
|
|
$
|
252
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
19
|
|
$
|
271
|
|
|
|
|
|
2005
|
|
$
|
165
|
|
$
|
15
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
30
|
|
$
|
210
|
|
|
(1)
|
The
amounts
in column (e) reflect
the dollar amounts recognized for financial statement reporting purposes
in accordance with SFAS 123(R) for unvested restricted stock held by
each executive officer.
|
|
|
(2)
|
The
amounts in column (f) reflect the dollar amounts recognized for
financial statement reporting purposes in accordance with SFAS 123(R)
for unvested stock options held by each executive officer. Pursuant
to SEC
rules, the amounts shown exclude the impact of estimated forfeitures
related to service-based vesting
conditions.
|
|
(3)
|
The
amounts in column (g) reflect actual cash incentives awarded to each
executive officer.
|
|
|
(4)
|
The
amounts in column (h) represent earnings in the Company’s 401(k) that
were contributed by the Company. We do not maintain a pension plan
or a
defined benefit plan.
|
|
(5)
|
The
amounts in column (i) reflect the amount for auto
allowances.
|
|
GRANTS
OF PLAN-BASED AWARDS
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
All
Other
|
|
All
Other
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
Exercise
|
|
Grant
Date
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
|
|
or
Base
|
|
Fair
|
|
|||||||||
|
|
|
Estimated
Future Payouts Under
|
|
Number
of
|
|
Number
of
|
|
|
|
Price
of
|
|
Value
of
|
|
|||||||||||||||
|
|
|
Equity
Incentive Plan Awards
|
|
Shares
of
|
|
Securities
|
|
|
|
Option
|
|
Stock
|
|
|||||||||||||||
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Stocks
or
|
|
Underlying
|
|
|
|
Awards
|
|
and
Option
|
|
|||||||||
|
Name
|
|
Date
|
|
(#)
|
|
(#)
|
|
(#)
|
|
Units
(#)
|
|
Options
(#) (1)
|
|
|
|
($/Sh)
(2)
|
|
Awards
($)(3)
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Cameron
Reid
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Bob
Sutaria
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Peter
Giallarenzo
|
|
|
03/20/07
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
100
|
|
|
(4
|
)
|
$
|
1.62
|
|
$
|
117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Jeff
Weiss
|
|
|
03/20/07
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
17
|
|
|
(5
|
)
|
$
|
1.62
|
|
$
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Ken
Cappel
|
|
|
03/20/07
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
14
|
|
|
(5
|
)
|
$
|
1.62
|
|
$
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George
Aronson
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
$
|
-
|
|
$
|
-
|
|
|
(1)
|
Grant
of non performance-based stock options.
|
|
(2)
|
Fair
Market Value of stock on the date of grant
|
|
(3)
|
Amounts
represent the full grant date fair value as determined under SFAS
123(R).
The value of stock options granted is based on the
|
|
|
grant
date present value as calculated using a Black-Scholes option pricing
model.
|
|
(4)
|
Options
have a ten-year term and are scheduled to vest 20% each on January
8,
2008, 2009, 2010, 2011 and 2012.
|
|
(5)
|
Options
have an approximate five-year term and are scheduled to vest 25%
each on
June 30, 2007, 2008, 2009 and 2010.
|
|
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
|
||||||||||||||||||||||||||||||||||
|
|
|
OPTION
AWARDS
|
|
STOCK
AWARDS
|
|
|||||||||||||||||||||||||||||
|
Name
|
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
|
|
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
|
|
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options (#)
|
|
Option
Exercise Price ($)
|
|
Option
Expiration Date
|
|
Number
of Shares of Units of Stock That Have Not Vested
(#)
|
|
Market
Value of Shares of Units of Stock That Have Not Vested
($)
|
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units of Other
Rights
That Have Not Vested (#)
|
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares,
Units or
Other Rights That Have Not Vested (#)
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cameron
Reid
|
|
|
3,000
|
|
|
1
|
|
|
-
|
|
|
|
|
|
-
|
|
$
|
1.23
|
|
|
06/30/10
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
Weiss
|
|
|
60
|
|
|
2
|
|
|
90
|
|
|
3
|
|
|
-
|
|
$
|
1.23
|
|
|
06/30/10
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
47
|
|
|
2
|
|
|
47
|
|
|
3
|
|
|
-
|
|
$
|
1.23
|
|
|
06/30/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
2
|
|
|
12
|
|
|
3
|
|
|
-
|
|
$
|
1.62
|
|
|
06/30/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bhupatlal
K. Sutaria
|
|
|
500
|
|
|
4
|
|
|
200
|
|
|
4
|
|
|
-
|
|
$
|
0.68
|
|
|
05/30/13
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter
Giallarenzo
|
|
|
-
|
|
|
|
|
|
100
|
|
|
5
|
|
|
-
|
|
$
|
1.62
|
|
|
03/20/17
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth
Cappel
|
|
|
84
|
|
|
6
|
|
|
66
|
|
|
7
|
|
|
-
|
|
$
|
1.23
|
|
|
06/30/10
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
38
|
|
|
6
|
|
|
38
|
|
|
7
|
|
|
-
|
|
$
|
1.23
|
|
|
06/30/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
6
|
|
|
10
|
|
|
7
|
|
|
-
|
|
$
|
1.62
|
|
|
06/30/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George
Aronson
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estate
of Munish Rametra
|
|
|
450
|
|
|
8
|
|
|
-
|
|
|
|
|
|
-
|
|
$
|
0.68
|
|
|
03/31/09
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1)
Represents fully vested options that: (i) are exercisable at $1.23
per
share through June 30, 2010 and (ii) were repriced as follows:
|
|
options
to purchase 2,000 shares of common stock originally granted at $2.24
per
share were repriced to $1.23 per share and options to purchase 1,000
shares of common stock originally granted at $3.97 per share were
repriced
to $1.23 per share at June 30, 2005.
|
|
|
|
(2)
Represents 60 options that are exercisable at $1.23 per share through
June
30, 2015, 47 options that are exercisable at $1.23 per share through
June
30, 2011, and 4 options that are exercisable at $1.62 through June
30,
2012.
|
|
|
|
(3)
Represents 90 options exercisable at $1.23 per share that have various
vesting dates through June 30, 2010 and are exercisable through June
30,
2015, 47 options exercisable at $1.23 per share through June 30,
2011 and
12 options exercisable at $1.62 that have various vesting dates through
June 30, 2012.
|
|
|
|
(4)
Represents options that are exercisable at $0.682 per share. These
options
have the following vesting provisions: 25% of the options vested
on
January 1, 2005, December 31, 2005, and December 31, 2006, respectively
and an additional 25% will vest on December 31, 2007.
|
|
|
|
(5)
Represents options that are exercisable at $1.46 per share. The shares
have various vesting dates through January 8, 2012 and are exercisable
through March 20, 2017.
|
|
|
|
(6)
Represents 84,000 fully vested repriced options that are exercisable
at
$1.23 per share through June 30, 2010, 38,250 options exercisable
at $1.23
per share through June 30, 2011 and 3,375 options that are exercisable
at
$1.62 through June 30, 2012. The June 30, 2005 repriced options were
originally granted at $1.94 per share.
|
|
|
|
(7)
Represents (a) 104 options that are exercisable at $1.23 per share
and
vest 41 on June 30, 2008 and June 30, 2009, respectively, and 22
options
that vest on June 30, 2010 and (b) 10 options that are exercisable
at
$1.62 per share and vest 3 on June 30, 2008, June 30, 2009 and 4
on June
30, 2010.
|
|
|
|
(8)
Represents 450 fully vested options that are exercisable at $0.68
per
share through March 31, 2009.
|
|
OPTION
EXERCISES AND STOCK VESTED
|
|
||||||||||||||||||
|
|
|
OPTION
AWARDS
|
|
|
|
STOCK
AWARDS
|
|
||||||||||||
|
Name
|
|
Number
of Shares Aquired On Exercise (#)
|
|
|
|
Value
Realized
on
Exercise ($)
|
|
|
|
Number
of Shares Aquired On
Vesting
(#)
|
|
Value
Realized on Vesting ($)
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Cameron
Reid
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey
Weiss
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bhupatlal
K. Sutaria
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter
Giallarenzo
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth
Cappel
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George
Aronson
|
|
|
72
|
|
|
(1
|
)
|
$
|
120
|
|
|
(1
|
)
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estate
of Munish Rametra
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
-
|
|
|
(1)
Represents cashless exercises of 302 options to purchase our common
stock.
Of the total amount exercised, 108 options
were
|
|
Incentive
Stock Options resulting in the acquisition of 28 shares having a
value of
$47, and 194 options were Nonqualified Options
|
|
resulting
in the acquisition of 44 shares and having a value of
$73.
|
|
·
|
15,000
fully vested stock options as of the date of appointment to the
Board;
|
|
·
|
10,000
options as of the first day of a year
served;
|
|
·
|
An
annual retainer of $10,000;
|
|
·
|
$1,500
for each meeting day of the Board of Directors attended (in
person);
|
|
·
|
A
fee of not greater than $500 for each meeting day of the Board of
Directors attended (by telephone) and determined by the Compensation
Committee Chairperson;
|
|
·
|
$750
for each committee meeting attended (in person or by
telephone);
|
|
DIRECTOR
COMPENSATION
|
|
||||||||||||||||||||||||
|
Name
|
|
Fees
Earned or Paid in Cash ($) (1)
|
|
Stock
Awards ($)
|
|
Option
Awards ($) (2)
|
|
Non-Equity
Incentive Plan Compensation ($)
|
|
Change
in Pension Value and Nonqualified Deferred Compensation Earnings
($)
|
|
All
Other Compensation ($)
|
|
|
|
Total
($)
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stewart
Benjamin
|
|
$
|
34
|
|
$
|
-
|
|
$
|
25
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
$
|
59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kennith
Johnson
|
|
$
|
48
|
|
$
|
-
|
|
$
|
49
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
$
|
97
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
Reback
|
|
$
|
38
|
|
$
|
-
|
|
$
|
25
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
$
|
63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
Miller
|
|
$
|
30
|
|
$
|
-
|
|
$
|
24
|
|
$
|
-
|
|
$
|
-
|
|
$
|
112
|
|
|
(3
|
)
|
$
|
166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joan
Neuscheler
|
|
$
|
23
|
|
$
|
-
|
|
$
|
24
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
$
|
47
|
|
|
(1)
|
Amounts
represent fees paid for Board Meetings and sub-committee meetings,
as well
as fees for Board membership and membership in certain
sub-committees.
|
|
(2)
|
Amounts
represent the full grant date fair value as determined under SFAS
123(R).
The value of stock options granted is based on grant date present
value as
calculated using a Black-Scholes option pricing model.
|
|
(3)
|
Amount
represents monies paid to a consulting firm of which Mr. Miller is
a
principal.
|
|
ITEM
|
DESCRIPTION
|
|
Title
|
Junior
Subordinated Secured 12% Note Due 2010
|
|
Principal
Amount
|
$3,000,000
|
|
Interest
Rate and Payment of Interest
|
12%
per annum, payable quarterly in arrears. For the first 12 months,
interest
is payable in cash or additional promissory notes in a principal
amount
equal to the interest then due and payable (“PIK Notes”), at the Company’s
option. Thereafter, unless the holder otherwise consents, two-thirds
of
said interest (8%) shall be paid in cash, and the remaining one-third
(4%)
is payable in cash or PIK Notes, at the Company’s option. PIK Notes accrue
interest at the same rate as the Sutaria Note and are in all other
respects identical to the Sutaria Note.
|
|
Payment
of Principal
|
The
outstanding principal balance, together with any then accrued but
unpaid
interest, is due and payable on the Maturity Date.
|
|
Maturity
Date
|
November
7, 2010
|
|
Default
Provisions
|
In
addition to customary default provisions, the Sutaria Note provides
that a
default under the Wells Fargo Senior Credit Agreement constitutes
a
default under the Sutaria Note.
|
|
Pre-payment
|
The
Company may, in whole or in part, pre-pay the principal amount of,
plus
all accrued, but unpaid interest on, the Sutaria Note at any time
on 30
days’ prior notice to the holder.
|
|
Security,
Security Interest and Priority
|
The
Company’s obligations under the Sutaria Note are secured by a third
priority security interest in and lien on substantially all of the
Company’s property and real estate, subordinated to the Company’s
obligations under the WFBC Credit Facility, and the STAR Notes and
Convertible Notes.
|
|
Conversion
Rights
|
None
|
|
ITEM
|
DESCRIPTION
|
|
Title
|
Secured
12% Notes Due 2009
|
|
Aggregate
Principal Amount
|
$5,000,000
|
|
Interest
Rate and Payment of Interest
|
12%
per annum, payable quarterly in arrears. The STAR Notes are payable,
at
the Company’s option, either in cash, additional promissory notes in a
principal amount equal to the interest then due and payable (“PIK Notes”)
or, in lieu of a PIK Note, by adding the amount of such then due
and
payable interest to the principal amount of the STAR Note. PIK Notes
accrue interest at the same rate as, and in all other respects are
identical to, the STAR Notes.
|
|
Payment
of Principal
|
The
outstanding principal balance, together with any then accrued but
unpaid
interest, is due and payable on the Maturity Date.
|
|
Maturity
Date
|
November
14, 2009
|
|
Default
Provisions
|
In
addition to customary default provisions, the STAR Notes provide
that a
default under the Wells Fargo Senior Credit Agreement also constitutes
a
default under the STAR Notes.
|
|
Pre-payment
|
The
STAR Notes may not be pre-paid.
|
|
Conversion
Rights
|
None.
|
|
Exchange
for Convertible Notes and Warrants
|
Upon
the filing with the SEC of a Definitive Information Statement on
Schedule
14C relating to the Financing Transactions, which shall occur no
sooner
than January 18, 2008 and no later than February 28, 2008 (or such
later
date as may be necessary to address and clear any SEC comments regarding
any Preliminary Information Statement on Schedule 14C filed by the
Company, the STAR Notes shall be exchanged for (a)
the Company’s Secured Convertible 12% Promissory Notes Due 2010 ( the
“Convertible Notes”) in an aggregate original principal amount equal to
the principal and accrued interest on the STAR Notes through the
date of
such exchange, and (b) warrants (the “New Warrants”) to purchase up to an
aggregate of 1,842,103 shares of our Common Stock at an exercise
price of
$0.95 per share. The terms of the Convertible Notes and the New Warrants
are more fully summarized below in the tables entitled “The Convertible
Notes” and “The New Warrants.”
|
|
Security,
Security Interest and Priority
|
The
Company’s obligations under the STAR Notes are secured by a second
priority security interest in and lien on substantially all of the
Company’s property and real estate, subordinated to the Company’s
obligations under the WFBC Credit Facility, but senior to the Sutaria
Note.
|
|
ITEM
|
DESCRIPTION
|
|
Title
|
Secured
Convertible 12% Notes Due 2010_
|
|
Aggregate
Principal Amount
|
The
aggregate principal amount of the Convertible Notes will be equal
to the
outstanding principal and accrued interest on the STAR Notes through
the
date on which they are issued in exchange for the STAR
Notes.
|
|
Interest
Rate and Payment of Interest
|
When
issued, the Convertible Notes will bear interest at the rate of 12%
per
annum, payable quarterly in arrears. When issued, the Convertible
Notes
will be payable, at the Company’s option, either in cash, additional
promissory notes in a principal amount equal to the interest then
due and
payable (“PIK Notes”) or, in lieu of a PIK Note, by adding the amount of
such then due and payable interest to the principal amount of the
Convertible Note. Such PIK Notes, when and if issued, will accrue
interest
at the same rate as, and in all other respects will be identical
to, the
Convertible Notes.
|
|
Payment
of Principal
|
The
outstanding principal balance, together with any then accrued but
unpaid
interest, will be due and payable on the Maturity Date.
|
|
Maturity
Date
|
The
Convertible Notes will mature 2 years from their date of
issuance.
|
|
Default
Provisions
|
In
addition to customary default provisions, the Convertible Notes will
provide that a default under the Wells Fargo Senior Credit Agreement
will
also constitute a default under the Convertible Notes.
|
|
Prepayment
|
The
Company may, in whole or in part, pre-pay the principal amount of,
plus
all accrued but unpaid interest on, the Convertible Notes at any
time on
30 days’ prior notice to the holder.
|
|
Conversion
Rights
|
The
Convertible Notes, once issued, will be convertible, at the option
of the
holder, into shares of the Company’s Common Stock at the conversion price
of $0.95 per share (the “Conversion Price”).
|
|
Anti-Dilution
Protection
|
In
the event the Company issues or is deemed to have issued Common Stock
(other than certain excluded issuances) at a purchase price per share
that
is less than the Conversion Price, the Conversion Price will be re-set
to
a price equal to 90% of the price at which such shares of Common
Stock
were or are deemed to have been issued.
|
|
Security,
Security Interest and Priority
|
The
Company’s obligations under the Convertible Notes will be secured by a
second priority security interest in and lien on substantially all
of the
Company’s property and real estate, subordinated to the Company’s
obligations under the WFBC Credit Facility, but senior to the Sutaria
Note.
|
|
ITEM
|
DESCRIPTION
|
|
Warrant
Shares
|
When
issued in the STAR Note Exchange, the New Warrants will be exercisable
for
a total aggregate of 1,842,103 shares of Common Stock (each, a “Warrant
Share” and together, the “Warrant Shares”).
|
|
Holders
|
The
New Warrants will be issued to the holders of the STAR Notes, ratably
in
proportion to their respective percentages of the aggregate principal
amount of the STAR Notes.
|
|
Exercise
Price
|
$0.95
per share (the “Exercise Price”).
|
|
Exercise
Period
|
When
issued, the New Warrants will be exercisable, in whole or in part,
at any
time and from time to time during the period beginning on the date
of
issuance and ending on the fifth anniversary date of such
issuance.
|
|
Payment
for Warrant Shares
|
Upon
each exercise of the New Warrants, payment for the number of Warrant
Shares to which that exercise pertains will be in cash, except that
if a
registration statement covering those Warrant Shares is not effective
at
the time of exercise, then the exercise may, at the holder’s option, be on
a cashless basis.
|
|
Anti-Dilution
Protection
|
In
the event the Company issues or is deemed to have issued Common Stock
(other than certain excluded issuances) at a purchase price per share
that
is less than the Exercise Price, the Exercise Price will be re-set
to a
price equal to 90% of the price at which such shares of Common Stock
were
or are deemed to have been issued.
|
|
ITEM
|
DESCRIPTION
|
|
Warrant
Shares
|
Each
of the two Amended and Restated Warrants issued in the Warrant Exchange
entitles the holder to purchase up to 2,281,914 shares of Common
Stock
(each, a “Warrant Share” and together, the “Warrant
Shares”).
|
|
Holders
|
The
Amended and Restated Warrants were issued to Tullis and to Aisling
in
exchange for the B-1 Warrants and the C-1 Warrants, each of which
was,
except for its exercise price of $1.639 per share, identical in its
terms
to the Amended and Restated Warrants.
|
|
Exercise
Price
|
$0.95
per share (the “Exercise Price”).
|
|
Exercise
Period
|
The
Amended and Restated Warrants are exercisable, in whole or in part,
at any
time and from time to time during the period beginning on the date
of
issuance and ending on the fifth anniversary date of such
issuance.
|
|
Payment
for Warrant Shares
|
Upon
each exercise of the Amended and Restated Warrants, payment for the
number
of Warrant Shares to which that exercise pertains will be in cash,
or at
the holder’s option any such exercise may be on a cashless
basis.
|
|
Anti-Dilution
Protection
|
In
the event the Company issues or is deemed to have issued Common Stock
(other than certain excluded issuances) at a purchase price per share
that
is less than the Exercise Price, the Exercise Price will be re-set
to a
price equal to 90% of the price at which such shares of Common Stock
were
or are deemed to have been issued.
|
|
ITEM
|
DESCRIPTION
|
|
Title
|
Series
D-1 Convertible Preferred Stock, par value $0.01 per
share
|
|
Voting
Rights
|
Each
share of the Series D-1 Preferred Stock will vote with the Company’s
Common Stock, and will have that number of votes as is equal to the
number
of shares of Common Stock into which it is convertible on the record
date
of the action to be voted upon or consented to, as the case may
be.
|
|
Liquidation
Preference
|
Upon
certain liquidation events set forth in the Certificate of Designations,
Preferences and Rights of the Series D-1 Preferred Stock, each share
thereof will be entitled to a liquidation payment of $1,000 plus
accrued
but unpaid dividends.
|
|
Dividend
Rights
|
Dividends
per share of Series D-1 Preferred Stock will accrue at the rate of
8.25%
per annum, payable quarterly in arrears either in cash or, at the
Company’s option, in shares of restricted Common Stock.
|
|
Redemption
Provisions
|
The
Company will be required to redeem the Series D-1 Preferred Stock
upon the
occurrence of certain specified events, including but not limited
to a
change in control of the Company, a going private transaction, failure
to
pay dividends, or a failure to allow conversion.
|
|
Number
of Shares Authorized
|
20,825
shares
|
|
Number
of Shares to be Issued
|
20,825
shares
|
|
Conversion
Rights
|
The
Series D-1 Preferred Stock, including any accrued but unpaid dividends
thereon, will be convertible by the holder into that number of shares
of
Common Stock determined by dividing the dollar amount (at the Stated
Value
of $1,000 per share) to be converted by $0.95 (the “Conversion
Price”).
|
|
Registration
Rights
|
The
holders of the Series D-1 Preferred Stock have demand registration
rights
pursuant to which the Company must file a registration statement
to cover
the shares of Common Stock into which the Series D-1 Preferred Stock
is
convertible within 60 days of the request to do so.
|
|
Right
to Appoint a Director
|
For
so long as Tullis-Dickerson Capital Focus III, L.P. or any of its
affiliates holds at least 25% of the Series D-1 Preferred Stock,
it will
have the right to appoint one member of the Company’s Board of
Directors.
|
|
Anti-Dilution
Protection
|
In
the event the Company issues or is deemed to have issued Common Stock
(other than certain excluded issuances) at a purchase price per share
that
is less than the Conversion Price, the Conversion Price will be re-set
to
a price equal to 90% of the price at which such shares of Common
Stock
were or are deemed to have been
issued.
|
|
P&K
HOLDINGS
I,
LLC
|
||
|
By:
|
/s/ Perry Sutaria
|
|
|
Perry
Sutaria, Managing Member
|
||
|
RAMETRA
HOLDINGS
I,
LLC
|
||
|
By:
|
/s/
Perry Sutaria
|
|
|
Perry
Sutaria, Managing Member
|
||
|
RAJS
HOLDINGS I,
LLC
|
||
|
By:
|
/s/
Perry Sutaria
|
|
|
Perry
Sutaria, Managing Member
|
||
|
|
||
|
RAVIS
HOLDINGS I, LLC
|
||
|
|
||
|
By:
|
/s/
Perry Sutaria
|
|
|
Perry
Sutaria, Managing Member
|
||
|
/s/
Perry Sutaria
|
||
|
PERRY
SUTARIA
|
||
|
|
||
|
/s/ Raj Sutaria
|
||
|
RAJ
SUTARIA
|
||