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 / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / 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
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(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials:
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/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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THE ELITE VALUE COMMITTEE
October __, 2002
Dear Fellow Stockholder:
The Elite Value Committee (the "Committee") is the beneficial owner
of 859,470 shares of common stock of Elite Pharmaceuticals, Inc. ("Elite"),
representing approximately 8.6% of the issued and outstanding common stock. We
do not believe that the current Board of Directors is acting in your best
interests, and we are therefore seeking your support for the election of our
slate of nominees (the "Slate") to the Elite Board of Directors at the annual
meeting of stockholders scheduled to be held at the _____________________
located at _________________________, New York, New York on October 31, 2002, at
_____ A.M.
We urge you to carefully consider the information contained in the
attached Proxy Statement and then support the Committee's efforts to maximize
value for all stockholders by signing, dating and returning the enclosed WHITE
proxy today. The attached Proxy Statement and the enclosed WHITE proxy card are
first being furnished to the stockholders on or about October ___, 2002.
If you have already voted for the incumbent management slate, you
have every right to change your vote by signing and returning a later dated
proxy.
If you have any questions or require any assistance with your vote
please contact myself or Sharon Will, at the address and telephone numbers
below.
Thank you for your support,
Harris Freedman
On behalf of The Elite Value Committee
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
ANNUAL MEETING OF STOCKHOLDERS
OF
ELITE PHARMACEUTICALS, INC.
-------------------------
PROXY STATEMENT
OF
THE ELITE VALUE COMMITTEE
-------------------------
PLEASE MAIL THE ENCLOSED WHITE PROXY CARD
The Elite Value Committee (the "Committee") is the beneficial owner of 859,470
shares of Elite Pharmaceuticals, Inc., a Delaware corporation ("Elite," or the
"Company") common stock, representing approximately 8.6% of Elite's issued and
outstanding shares. The Committee is writing to you in connection with the
election of three directors to Elite's Board of Directors at the annual meeting
of stockholders scheduled to be held at the _____________ located at
____________________________, New York, New York on October 31, 2002, at ____
A.M., including any adjournments or postponements thereof and any meeting which
may be called in lieu thereof (the "Annual Meeting"). The Committee has
nominated three directors in opposition to three of Elite's incumbent director
nominees, Donald S. Pearson, Harmon Aronson and Eric L. Sichel, whose terms
expire at the Annual Meeting. The Committee believes that recent actions of the
Board of Directors of Elite (the "Elite Board") have not been in the best
interests of Elite's stockholders. As further described herein, the Committee
believes that a thorough investigation of strategic alternatives, a greater
dedication to maximizing stockholder value, and improving corporate governance
policies will be best achieved by removing and replacing the three members of
the Elite Board with the Committee's slate of director nominees (the "Slate").
There can be no assurance that the election of the Committee's Slate will
maximize or otherwise enhance stockholder value or improve corporate governance.
This proxy statement (the "Proxy Statement") and the enclosed WHITE
proxy card is being furnished to stockholders of Elite by the Committee in
connection with the solicitation of proxies from Elite's stockholders to be used
at the Annual Meeting to elect the Committee's Slate, Harris Freedman, Sharon
Will and Michael Freedman, to the Elite Board. This Proxy Statement and the
WHITE proxy card are first being furnished to Elite's stockholders on or about
October __, 2002.
Elite has set the record date for determining stockholders entitled
to notice of and to vote at the Annual Meeting as of September 3, 2002 (the
"Record Date"). The principal executive offices of Elite are located at 165
Ludlow Avenue, Northvale, New Jersey 07647 and its telephone number is (201)
750-2646. Stockholders of record at the close of business on the Record Date
will be entitled to vote at the Annual Meeting. According to Elite, as of the
Record Date, there were _____________ shares of common stock (the "Shares"),
outstanding and entitled to vote at the Annual Meeting. The Committee, along
with all of the participants in this solicitation, is the
beneficial owner of an aggregate of 859,470 Shares, representing approximately
8.6% of the Shares outstanding. The participants in this solicitation intend to
vote such Shares for the election of the Slate.
THIS SOLICITATION IS BEING MADE BY THE COMMITTEE AND NOT ON BEHALF
OF THE BOARD OF DIRECTORS OR MANAGEMENT OF ELITE. THE COMMITTEE IS NOT AWARE OF
ANY OTHER MATTERS TO BE BROUGHT BEFORE THE ANNUAL MEETING OTHER THAN THE
RATIFICATION OF THE APPOINTMENT OF THE COMPANY'S AUDITORS. SHOULD OTHER MATTERS,
WHICH THE COMMITTEE IS NOT AWARE OF A REASONABLE TIME BEFORE THIS SOLICITATION,
BE BROUGHT BEFORE THE ANNUAL MEETING, THE PERSONS NAMED AS PROXIES IN THE
ENCLOSED WHITE PROXY CARD WILL VOTE ON SUCH MATTERS IN THEIR DISCRETION.
WE URGE YOU TO SIGN, DATE AND RETURN THE WHITE PROXY CARD IN FAVOR
OF THE ELECTION OF THE SLATE DESCRIBED IN THIS PROXY STATEMENT.
IF YOU HAVE ALREADY SENT A PROXY CARD FURNISHED BY ELITE MANAGEMENT
TO THE ELITE BOARD, YOU MAY REVOKE THAT PROXY AND VOTE AGAINST THE ELECTION OF
ELITE'S NOMINEES BY SIGNING, DATING AND RETURNING THE ENCLOSED WHITE PROXY CARD.
THE LATEST DATED PROXY IS THE ONLY ONE THAT COUNTS. ANY PROXY MAY BE REVOKED AT
ANY TIME PRIOR TO THE ANNUAL MEETING BY DELIVERING A WRITTEN NOTICE OF
REVOCATION OR A LATER DATED PROXY FOR THE ANNUAL MEETING TO THE COMMITTEE, C/O
MACKENZIE PARTNERS, INC. WHO IS ASSISTING IN THIS SOLICITATION, OR TO THE
SECRETARY OF ELITE, OR BY VOTING IN PERSON AT THE ANNUAL MEETING.
IMPORTANT
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY OR HOW FEW SHARES YOU
OWN. THE COMMITTEE URGES YOU TO SIGN, DATE, AND RETURN THE ENCLOSED WHITE PROXY
CARD TODAY TO VOTE FOR THE ELECTION OF THE NOMINEE.
o The Slate is committed, subject to their fiduciary duties 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 proxy 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 proxy 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 proxy 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 proxy,
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
PROPOSAL 1 - ELECTION OF DIRECTORS
REASONS FOR THE SOLICITATION.
We are asking you to elect three representatives nominated by the
Committee to the Elite Board.
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. 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.
As a group, we do not seek permanent company positions. If elected,
we intend to hire management support to work alongside Dr. Atul Mehta, Elite's
President, CEO and Chairman. We are prepared to add new directors with industry
experience at the earliest possible opportunity, although we have not identified
any persons at this date. We bring over thirty years of business experience in
the public markets to bear in instituting our goals. We believe that the current
Board has limited or no business experience in these areas, and that Elite has
suffered as a result.
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 September 24, 2002, the Share price closed at
$2.74, a decrease of over 43% 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 September 24, 2002, the Warrant price closed at $.25, a decrease of over
70% 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.
2. Failure to Consummate Material Business Agreements
--------------------------------------------------
According to its public filings, prior to the Committee's Consent
Solicitation, Elite had not entered into any new material licensing agreements
or joint ventures since June 2001. Subsequent to the Committee's Consent
Solicitation, Elite announced a developmental manufacturing agreement with
Ethypharm S.A. for a new prescription drug whereby Elite has received an initial
manufacturing fee. Though few material terms of the contract have been
disclosed, once again Elite is working on a contractual basis rather than
licensing one of its proprietary drugs. Elite 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 a greater number of material
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
-------------------------------------------------------
Extremely discouraging to the Committee, according to Elite's 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 Consent Revocation Statement filed by
Elite on September 16, 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.
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.
What's good for the goose is apparently not good for the gander.
According to Elite's public filings, in December 2000 the Board extended the
expiration date of 425,000 options held by Dr. Mehta for an additional five
years. Why were Dr. Mehta's options extended, while warrants held by Elite's
loyal investors are not? To make matters worse, Dr. Mehta's options were "in the
money." When the Board extended his options on December 15, 2000, the stock
closed at $7.50, while the exercise price was $7.00. Had Dr. Mehta been forced
to exercise, the Company would have received $2.975 million in proceeds. We
question the wisdom and fairness of directors who extend an employee's "in the
money" warrants, while refusing to extend "out of the money" warrants for public
warrantholders.
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. 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 Committee believes that a Warrant extension will result in a
non-cash charge of approximately $1,000,000 to Elite's financial statements.
This charge will not reduce Elite's cash balance and, we believe, is irrelevant
when weighed against the significant potential future proceeds. Elite has
continually misrepresented this point to its stockholders, suggesting that the
"charge" will deplete Elite's assets. Why not extend the expiration date of the
warrants and obtain potentially $9,000,000 in proceeds, if the Company's cash
will not be depleted?
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.
THE ELITE BOARD'S DECISIONS BENEFIT DR. MEHTA TO THE DETRIMENT OF ELITE'S
STOCKHOLDERS.
Elite's public filings illustrate board decisions that have favored
Dr. Mehta. In addition to the extension of Dr. Mehta's 425,000 stock options as
discussed above, the Elite Board purchased 20,214 common stock options from Dr.
Mehta in January 2001 for $83,896. The exercise price of these options was $2.00
per share. By buying the options directly from Dr. Mehta, Elite lost the right
to receive $40,428 in cash on their exercise, plus it incurred a cost of $83,896
to buy shares from Dr. Mehta. According to SEC records, Dr. Mehta has never
filed a Form 4 reporting this transaction, even though Elite's Form 10-K
reported that all such forms had been filed. Does Dr. Mehta have something to
hide?
In fiscal 2002, the Board granted Dr. Mehta a $30,000 year-end
bonus. Elite has not explained what, if any, performance objectives Dr. Mehta
achieved to receive this bonus. Considering Elite's declining stock price, Dr.
Mehta's $272,855 salary, as well as his five-year contract, we question the
wisdom of granting any bonus. If our nominees are elected, they will ensure that
any bonus is tied to performance.
On July 18, 2002, the Board amended Dr. Mehta's five-year employment
agreement to provide for additional compensation to Dr. Mehta in the event of a
"change in control," as defined in the agreement. The Board's action occurred
the same day the Elite Board denied extending the expiration date of the Class A
warrants. This amendment, like Dr. Mehta's current contract, has never been
filed with the SEC. According to Elite, the amendment provides Dr. Mehta with a
large cash payment if Elite's stockholders determine that the current Board is
deficient and elect a majority of new directors. We question the integrity of
directors who would penalize their own Company and reward Dr. Mehta, based
solely on the stockholders' conclusion that the directors should be replaced.
Indeed, while claiming to the public that Dr. Mehta is critical to the Company,
the existing Board has modified his five-year employment contract to permit
early termination, so that Dr. Mehta would receive several years of compensation
without doing any work. The current Board has not offered any explanation as to
how this arrangement benefits Elite or its stockholders. We ask: Are these
directors representing your interests -- or their own and Dr. Mehta's?
We believe that the Board's action represents a breach of its
fiduciary duty to Elite stockholders, and violates Delaware Law by giving the
existing Board special powers that stockholder elected directors will not have.
The Committee will vigorously oppose any payments pursuant to this amendment
and, if any payments are made to Dr. Mehta, will seek appropriate relief from
all responsible parties.
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 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 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 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 Proxyed 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, 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 Proxy Statement
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 Proxy Statement. 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 Proxy 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 Proxy Card
will be voted for such substitute nominees. Notwithstanding the Committee's
ability to vote for substitute nominees, the enclosed WHITE Proxy Card can only
be voted for up to three directors.
If the proxy solicitation is unsuccessful, the Committee will
consider all available options, including nominating a slate of director
nominees for election by written consent under Delaware Law.
YOU ARE URGED TO VOTE FOR THE SLATE ON THE ENCLOSED WHITE PROXY
CARD.
PROPOSAL 2 - RATIFICATION OF AUDITORS
The Committee has no objection to the ratification of the
appointment of ____________ as independent accountants for Elite for the fiscal
year ending March 31, 2003. Please see the Management Proxy Statement for a
description of this proposal.
BACKGROUND TO PROXY SOLICITATION
On August 1, 1997, Bridge Ventures, Inc. ("Bridge"), a participant
in this 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 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.
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
Proxy 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 consent or proxies by the Committee.
On August ___, 2002, Elite informed the Committee that it would deny
the Committee's request to inspect Elite's stockholder list. Elite's reason was
that the Committee's request for an "improper purpose." The Committee believes
that Elite's refusal to provide a stockholder list violates Delaware Law.
On August 26, 2002, the Committee filed a definitive consent
solicitation statement with the Securities and Exchange Commission in order to
solicit written consents from Elite stockholders (a) to remove Donald S.
Pearson, Harmon Aronson and Eric L. Sichel from Elite's Board without cause and
any person or persons elected to the Elite Board to fill any vacancy arising
since the last annual meeting of Elite's stockholders, or newly created
directorships and (b) to elect the Committee's slate of nominees, Harris
Freedman, Sharon Will and Michael Freedman to the Elite Board, and to serve
until their respective successors are duly elected and qualify.
On August 27, 2002, Elite commenced an action in the Court against
the Committee, and other named and unnamed individuals, seeking to enjoin the
Committee's consent solicitation. The complaint seeks injunctive relief against
the Committee on the basis that it has violated the federal securities laws and
the rules promulgated by the SEC thereunder by, among other things, filing a
Schedule 13D more than ten days after the Committee formed a "group" for
purposes of Section 13(d) of the Securities Exchange Act of 1934 (the "Act"), by
failing to disclose all persons acting in concert with the Committee and by
acquiring additional shares of our stock during a period that is prohibited by
the Act .
Elite also alleges that the Committee violated Section 14(a) of the
Act by filing a false and misleading proxy solicitation which failed to identify
all the participants of the Committee's solicitation. The complaint also alleges
that the Committee is violating the SEC's proxy rules in conducting their
consent solicitation by representing to Elite stockholders the outcome of the
consent solicitation process. Elite contends that the Committee violated these
stockholder-protection provisions of the federal securities laws in order to
advance its efforts to take control of the Company. The Committee believes this
suit is without merit and is merely a tactical device to deny the Committee its
rights as stockholders to participate in corporate governance.
On August 27, 2002, Elite applied to the United States District
Court for the District of New Jersey (the "Court") for a temporary restraining
order barring the Committee from any contact with Elite's stockholders. On
September 6, 2002, the Court denied this application.
VOTING AND PROXY PROCEDURES
Only stockholders of record on the Record Date will be entitled to
notice of and to vote at the Annual Meeting. Each Share is entitled to one vote.
Stockholders who sell Shares before the Record Date (or acquire them without
voting rights after the Record Date) may not vote such Shares. Stockholders of
record on the Record Date will retain their voting rights in connection with the
Annual Meeting even if they sell such Shares after the Record Date. Based on
publicly available information, the Committee believes that the only outstanding
class of securities of Elite entitled to vote at the Annual Meeting is the
Shares.
Shares represented by properly executed WHITE proxy cards will be
voted at the Annual Meeting as marked and, in the absence of specific
instructions, will be voted FOR the election of the Slate to the Board, FOR the
proposal to ratify the appointment of ______________ as independent accountants
of Elite for the fiscal year ending March 31, 2003, and in the discretion of the
persons named as proxies on all other matters as may properly come before the
Annual Meeting.
We are asking you to elect our Nominee in opposition to three
incumbent nominees whose terms expire at the Annual Meeting. The enclosed WHITE
proxy card may only be voted for our Slate and does not confer voting power with
respect to the remaining directorship. Accordingly, you will not have the
opportunity to vote for Elite's nominees. You can only vote for Elite's nominees
by signing and returning a proxy card provided by Elite. Stockholders should
refer to the Management Proxy Statement for the names, background,
qualifications and other information concerning the Elite's nominees. The
Committee intends to vote all of its Shares in favor of its Slate and will not
vote its Shares in favor of any of Elite nominees in order to fill the remaining
directorship.
QUORUM
In order to conduct any business at the Annual Meeting, a quorum
must be present in person or represented by valid proxies. A quorum consists of
a majority of the Shares issued and outstanding on the Record Date. All Shares
that are voted "FOR", "AGAINST" or "ABSTAIN" on any matter will count for
purposes of establishing a quorum and will be treated as Shares entitled to vote
at the Annual Meeting (the "Votes Present").
ABSTENTIONS
Abstentions will count as Votes Present and shall have the same
effect as a vote against a matter (other than in the election for the Board of
Directors). While there is no definitive statutory or case law authority in
Delaware, the Company's state of incorporation, as to the proper treatment of
abstentions, the Committee believes that abstentions should be counted for
purposes of determining both: (i) the total number of Votes Present, for the
purpose of determining whether a quorum is present; and (ii) the total number of
Votes Present that are cast ("Votes Cast") with respect to a matter (other than
in the election of the Board of Directors).
BROKER NON-VOTES
Shares held in street name that are present by proxy will be
considered as Votes Present for purposes of determining whether a quorum is
present. With regard to certain proposals, the holder of record of Shares held
in street name is permitted to vote as it determines, in its discretion, in the
absence of direction from the beneficial holder of the Shares.
The term "broker non-vote" refers to shares held in street name that
are not voted with respect to a particular matter, generally because the
beneficial owner did not give any instructions to the broker as to how to vote
such shares and the broker is not permitted under applicable rules to vote such
shares in its discretion because of the subject matter of the proposal, but
whose shares are present on at least one matter. Such shares shall be counted as
Votes Present for the purpose of determining whether a quorum is present. Broker
non-votes will not be counted as Votes Cast with respect to matters as to which
the record holder has expressly not voted. Accordingly, the Committee believes
that broker non-votes will have no effect upon the outcome of voting on any of
the business matters set forth in this Proxy Statement.
VOTES REQUIRED FOR APPROVAL
Election of Directors
A plurality of the total Votes Cast by holders of the Shares is
required for the election of directors and the nominees who receive the most
votes will be elected (assuming a quorum is present). A vote to "WITHHOLD" for
any nominee for director will be counted for purposes of determining the Votes
Present, but will have no other effect on the outcome of the vote on the
election of directors. Each stockholder entitled to vote shall have the right to
cast one vote per share outstanding in the name of such stockholder, for as many
persons as there are directors to be elected. A stockholder may cast such votes
for the Slate either by so marking the ballot at the meeting or by specific
voting instructions sent with a signed proxy to either the Committee in care of
MacKenzie Partners, Inc. at or to Elite at 165 Ludlow Avenue, Northvale, New
Jersey 07647, or any other address provided by Elite.
Other Proposals
Other than the election of directors, the vote required for all
other business matters set forth in this Proxy Statement is the affirmative vote
of a majority of the Votes Cast.
REVOCATION OF PROXIES
Elite stockholders may revoke their proxies at any time prior to
exercise by attending the Annual Meeting and voting in person (although
attendance at the Annual Meeting will not in and of itself constitute revocation
of a proxy) or by delivering a written notice of revocation. The delivery of a
subsequently dated proxy which is properly completed will constitute a
revocation of any earlier proxy. The revocation may be delivered either to the
Committee in care of MacKenzie Partners, Inc. at 105 Madison Avenue, New York,
New York 10016 or to Elite at 165 Ludlow
Avenue, Northvale, New Jersey 07647 or any other address provided by Elite.
Although a revocation is effective if delivered to Elite, the Committee requests
that either the original or photostatic copies of all revocations be mailed to
the Committee in care of MacKenzie Partners, Inc. at 105 Madison Avenue, New
York, New York 10016 so that the Committee will be aware of all revocations and
can more accurately determine if and when proxies have been received from the
holders of record on the Record Date of a majority of the outstanding Shares.
Additionally, the Committee may use this information to contact stockholders who
have revoked their proxies in order to solicit later dated proxies for the
election of the Slate.
IF YOU WISH TO VOTE FOR THE ELECTION OF THE NOMINEE TO THE ELITE
BOARD, PLEASE SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED WHITE PROXY CARD IN
THE POSTAGE-PAID ENVELOPE PROVIDED.
SOLICITATION OF VOTES
The solicitation of votes pursuant to this Proxy Statement is being
made by the Committee. Votes may be solicited by mail, facsimile, telephone,
telegraph, in person and by advertisements. The Committee will not solicit votes
via the Internet.
The Committee has retained MacKenzie Partners, Inc. ("MacKenzie")
for advisory services in connection with this proxy 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 votes 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 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 votes 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 from Elite. Unless otherwise required by
law, the Committee does not currently intend to submit the question of
reimbursement of the costs of this to a stockholder vote. The costs of this
Proxy Statement are currently estimated to be approximately $_______. The
Committee estimates that through the date hereof, its expenses in connection
with this Proxy Statement are approximately $50,000.
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.
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
July 9, 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 Proxy 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 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 Proxy Statement (including the Schedules
hereto), neither the Committee nor any of the other participants in this , 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 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 Proxy
Statement and the Schedules attached hereto has been taken from, or is based
upon, publicly available information.
THE ELITE VALUE COMMITTEE
October ___, 2002
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
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
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
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.
SCHEDULE II
-----------
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following is based solely on information provided in Elite's
preliminary Proxy 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 October ___, 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
Bridge Ventures, Inc.
Employee Pension Plan
1241 Gulf of Mexico Drive
Longboat Key, FL 24228
Name and Address of Amount and Nature of
Title of Class Beneficial Owner Beneficial Ownership Percent of Class
-------------- ---------------- -------------------- ----------------
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.
(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 October __, 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
Company'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 October __, 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
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
Name and Address of Amount and Nature of
Title of Class Beneficial Owner Beneficial Ownership Percent of Class
-------------- ---------------- -------------------- ----------------
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.
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
Proxy Card in the special envelope provided.
2. If your Shares are registered in your own name, please
sign, date and return the enclosed WHITE Proxy Card to
MacKenzie Partners, Inc.
3. Time is critically short. Only your latest dated WHITE
Proxy 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 Proxy Card with respect to your Shares.
Accordingly, please contact the person responsible for
your account and give instructions for a WHITE Proxy
Card to be signed representing your Shares.
If you have any questions about giving your Proxy 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
ELITE PHARMACEUTICALS, INC. ANNUAL MEETING OF STOCKHOLDERS
------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE ELITE VALUE COMMITTEE
THE BOARD OF DIRECTORS OF ELITE PHARMACEUTICALS, INC. IS NOT
SOLICITING THIS PROXY
The undersigned appoints Harris Freedman, attorney and agent with
full power of substitution to vote all shares of common stock of Elite
Pharmaceuticals, Inc. (the "Company") which the undersigned would be entitled to
vote if personally present at the Annual Meeting of Stockholders of the Company,
and including at any adjournments or postponements thereof and at any meeting
called in lieu thereof, as follows:
1. ELECTION OF DIRECTOR:
A total of two Directors will be elected at the Annual Meeting of
Stockholders of the Company. This Proxy can only be voted for one of the two
Directors being elected at the Annual Meeting. Accordingly, this Proxy does not
confer voting power with respect to the remaining directorship.
FOR WITHHOLD
Harris Freedman [ ] [ ]
Sharon Will [ ] [ ]
Michael H. Freedman [ ] [ ]
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS:
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. IN THEIR DISCRETION WITH RESPECT TO ANY OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE ANNUAL MEETING.
The undersigned hereby revokes any other proxy or proxies heretofore
given to vote or act with respect to the shares of Common Stock of the Company
held by the undersigned, and hereby ratifies and confirms all actions the herein
named attorney and proxy, his substitutes, or any of them may lawfully take by
virtue hereof. If properly executed, this Proxy will be voted as directed above.
IF NO DIRECTION IS INDICATED WITH RESPECT TO THE ABOVE PROPOSALS,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE SLATE, OR ANY SUBSTITUTIONS
THERETO, AND FOR THE RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS.
This proxy will be valid until the sooner of one year from the date
indicated below and the completion of the Annual Meeting.
DATED: ____________________________
PLEASE SIGN EXACTLY AS NAME APPEARS ON THIS PROXY.
------------------------------------
(Signature)
------------------------------------
(Signature, if held jointly)
------------------------------------
(Title)
WHEN SHARES ARE HELD JOINTLY, JOINT OWNERS SHOULD EACH SIGN.
EXECUTORS, ADMINISTRATORS, TRUSTEES, ETC., SHOULD INDICATE THE
CAPACITY IN WHICH SIGNING.
IMPORTANT: PLEASE SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY!