October______, 2004
Dear Stockholder:
We are writing to you today to request your authorization to make a portion of
our authorized and unissued Biophan shares preferred, to facilitate a potential
transaction between Biophan and a large biomedical device company. The
transaction with this potential strategic partner, which is in an advanced stage
of negotiation, may include license fees, milestone payments, and royalties, on
several product lines already in the market, with sizeable upside potential for
us. Part of the package being discussed involves an equity investment,
potentially at a premium over market, which will provide us an alternative to
the current financing package that we have available.
We have been informed by the prospective partner that any investment that it may
make must be in preferred stock. As you know, this gives a preference in the
event of a sale or liquidation. While the terms of the preferred stock will be
fixed in the future, we expect any preferred stock issued in the currently
contemplated transaction to be identical to common stock except for the
liquidation preference (i.e., it will have no special voting rights, etc.). At
the recent Biophan annual meeting the stockholders approved additional shares to
allow us to achieve corporate purposes including taking all or part of the SBI
financing, and/or a strategic investment. The shares already registered for
potential sale to SBI cannot be used for a sale to the strategic partner.
What we are seeking is your approval for us to substitute shares of preferred
stock for a portion of the shares of common stock that were authorized at the
annual meeting. We do not anticipate needing more than about 10 million shares
of preferred stock for the potential transaction currently being considered, but
to be safe, and because there is interest from other large companies, we are
requesting that you authorize up to 15 million of the CURRENTLY AUTHORIZED
shares to be authorized as preferred shares to provide the Board with
flexibility as it seeks to effect strategic transactions.
By getting your approval now, in advance, we can avoid the delays and
uncertainty associated with requiring a stockholders meeting at the time we want
to enter into a strategic transaction. If the potential transaction that is
currently contemplated does not occur, the preferred shares will be available
for similar transactions that may occur in the future.
Our recent announcement of the joint agreement with NASA on the biothermal
battery, our achieving a total of 80 patents issued, pending or licensed in, and
most importantly, the potential transaction being negotiated about which we are
writing to you, are exciting developments in our business.
-2-
It is only with your continued, ongoing support that we have been able to make
this progress, and on behalf of our employees, board members, and future
customers, we thank you again.
Enclosed with this letter is a notice of a stockholders meeting and a proxy
statement describing in more detail the proposed authorization of preferred
stock. Please vote in the affirmative on the enclosed proxy card and return it
in the prepaid envelope.
Sincerely,
Michael L. Weiner
Chief Executive Officer
Guenter H. Jaensch
Chairman of the Board
BIOPHAN TECHNOLOGIES, INC.
150 LUCIUS GORDON DRIVE
WEST HENRIETTA, NEW YORK 14586
---------------------------
PROXY STATEMENT
---------------------------
SPECIAL MEETING OF STOCKHOLDERS
NOVEMBER 11, 2004
INFORMATION CONCERNING VOTING AND PROXY SOLICITATION
GENERAL
This Proxy Statement is being furnished to the stockholders of BIOPHAN
TECHNOLOGIES, INC. ("Biophan" or the "Company") in connection with the
solicitation of proxies by the Board of Directors of the Company (the "Board").
The proxies are for use at the Special Meeting of Stockholders of the Company to
be held on Thursday, November 11, 2004, at 10:00 a.m., local time, or at any
adjournment thereof (the "Special Meeting"). The Special Meeting will be held at
the Company's principal executive offices, 150 Lucius Gordon Drive, West
Henrietta, New York 14586. Our telephone number is (585) 214-2441.
The shares represented by your proxy, if the proxy is properly executed and
returned, and not revoked, will be voted at the Special Meeting as therein
specified. You may revoke your proxy at any time before the proxy is exercised
by delivering to the Secretary of the Company a written revocation or a duly
executed proxy bearing a later date. You may also revoke your proxy by attending
the Special Meeting and voting in person.
The shares represented by your proxy will be voted as indicated on your properly
executed proxy. If no directions are given on the proxy, the shares represented
by your proxy will be voted:
FOR amending the Company's Articles of Incorporation to decrease the
number of shares of Common Stock authorized to be issued from
125,000,000 shares to 110,000,000 shares and to authorize for issuance
up to 15,000,000 shares of Preferred Stock.
The Company knows of no other matters to be submitted to the Special Meeting. If
any other matters properly come before the Special Meeting, it is the intention
of the persons named in the accompanying form of proxy to vote the shares they
represent as the Board may recommend.
These proxy solicitation materials are first being mailed to stockholders on or
about October ___________, 2004.
RECORD DATE AND VOTING SECURITIES
Stockholders of record at the close of business on September 22, 2004 (the
"Record Date") are entitled to notice of and to vote at the Special Meeting. At
the Record Date, ____________________ shares of the Company's Common Stock,
$.005 par value (the "Common Stock"), were issued and outstanding and held of
record by approximately 360 stockholders.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date or by attending the Special Meeting and voting in person. Attending the
Special Meeting in and of itself will not constitute a revocation of a proxy.
VOTING AND SOLICITATION
Each stockholder is entitled to one vote for each share held as of the Record
Date.
The cost of soliciting proxies will be borne by the Company. The Company expects
to reimburse brokerage firms and other persons representing beneficial owners of
shares for their expense in forwarding solicitation material to such beneficial
owners. Proxies may be solicited by certain of the Company's directors, officers
and regular employees, without additional compensation, in person or by
telephone, e-mail or facsimile.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
Holders of a majority of the outstanding shares entitled to vote must be
present, in person or by proxy, at the Special Meeting in order to have the
required quorum for the transaction of business. Votes cast by proxy or in
person at the Special Meeting will be tabulated by the Inspector of Elections,
appointed for the Special Meeting, who, with the assistance of Continental Stock
Transfer & Trust Company, the Company's transfer agent, will determine whether
or not a quorum is present. If the shares present, in person and by proxy, at
the Special Meeting do not constitute the required quorum, the Special Meeting
may be adjourned to a subsequent date for the purpose of obtaining a quorum.
Shares that are voted "FOR," "AGAINST" or "ABSTAIN" are treated as being present
at the Special Meeting for purposes of establishing a quorum. Shares that are
voted "FOR," "AGAINST" or "ABSTAIN" with respect to a matter will also be
treated as shares entitled to vote (the "Votes Cast") with respect to such
matter. While no definitive statutory or case law authority exists in Nevada as
to the proper treatment of abstentions, the Company believes that abstentions
should be counted for purposes of determining both (i) the presence or absence
of a quorum for the transaction of business and (ii) the number of Votes Cast
with respect to a proposal (other than the election of directors). In the
absence of a controlling precedent to the contrary, the Company intends to treat
abstentions in this manner. Accordingly, abstentions will have the same effect
as a vote "AGAINST" the proposal.
Broker non-votes (i.e., votes from shares held of record by brokers as to which
the beneficial owners have given no voting instructions) will be counted for
purposes of determining the presence or absence of a quorum for the transaction
of business, but will not be counted for purposes of determining the number of
Votes Cast with respect to the particular proposal on which the broker has
expressly not voted. Accordingly, broker non-votes will not affect the outcome
of the voting on a proposal that requires a majority of the Votes Cast. With
respect to a proposal that requires a majority of the outstanding shares (such
as the Proposal for approval of an amendment to the certificate of incorporation
to decrease the authorized number of shares of Common Stock and provide for
authorized shares of Preferred Stock ), however, a broker non-vote has the same
effect as a vote "AGAINST" the proposal.
NO DISSENTER'S RIGHTS
Nevada Law does not provide for dissenter's rights with respect to the Proposal,
and we will not independently provide our stockholders with any such right.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS TO BE PRESENTED AT THE 2005 ANNUAL
MEETING
In order for any stockholder proposal submitted pursuant to Rule 14a-8
promulgated under the Securities Exchange Act of 1934, as amended (the "Act"),
to be included in the Company's Proxy Statement to be issued in connection with
the 2005 Annual Meeting of Stockholders, such proposal must be received by the
Company no later than April 22, 2005. Any notice of a proposal submitted outside
the processes of Rule 14a-8 promulgated under the Act, which a stockholder
intends to bring forth at the Company's 2005 Annual Meeting of Stockholders,
will be untimely for purposes of Rule 14a-4 of the Act and the By-laws of the
Company if received by the Company after May 4, 2005.
2
PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION TO DECREASE THE NUMBER
OF SHARES OF COMMON STOCK AUTHORIZED TO BE ISSUED FROM 125,000,000 SHARES TO
110,000,000 SHARES AND TO AUTHORIZE FOR ISSUANCE UP TO 15,000,000 SHARES OF
PREFERRED STOCK
The Company's Articles of Incorporation as currently in effect (the "Articles")
provide that the Company is authorized to issue one hundred twenty five million
shares of Common Stock, with a par value of $.005 per share. The stockholders
are being asked to approve amendments to the Articles to decrease the number of
shares of Common Stock authorized by 15,000,000 and to authorize the issuance of
up to 15,000,000 shares of Preferred Stock. The Articles have not previously
provided for a Preferred class of stock.
Preferred stock generally provides priority over common stock for dividend
payments and for distribution of assets in the event of liquidation of the
Company. The terms of the proposed Preferred Stock cannot be stated at this time
as no specific offering of the shares is imminent. If this amendment to the
Company's Articles of Incorporation is approved, the Company's Board of
Directors will have the authority to establish the voting powers, designations,
preferences, limitations, restrictions, relative rights and distinguishing
designation of any series issued, including dividend rights, conversion rights,
voting rights, redemption terms, liquidation preferences and the number of
shares in any series, without any further approval by the Company's
stockholders.
In the opinion of the Board, having the ability to issue Preferred Stock will
benefit the Company by providing flexibility to the Board in its negotiations
with certain strategic investors. The Company is currently in negotiations with
several entities, including a large biomedical device company, regarding
possible strategic investments in the Company. While no definitive agreements
have been reached, one of the potential strategic investors has indicated that
any investment, if made, would require the Company to issue Preferred Stock.
These discussions are ongoing and the specific terms of any Preferred Stock have
not been determined. A strategic investment, if made, would allow the Company to
reduce its reliance on financing from SBI Brightline Consulting, LLC under the
terms of its existing stock purchase agreement. The Company can make no
assurances that it will be successful in entering into any financing transaction
with any strategic investors. By taking this action now, we expedite our ability
to close a transaction, and implement it. Therefore, the Board is requesting
your support of this action. By reducing the Common shares previously
authorized, there is no increase in the number of authorized shares.
There will be no preemptive rights with respect to the Company's Preferred Stock
and, accordingly, existing stockholders would not have any preferential right to
purchase any of the shares of Preferred Stock and could incur dilution, if and
when issued.
Although the Board would only authorize the issuance of Preferred Stock based on
its judgment as to the best interests of the Company and its stockholders, the
issuance of Preferred Stock could have the effect of diluting the voting power
or book value per share of the outstanding Common Stock. The Board (if
consistent with its fiduciary responsibilities) could also attempt to deter
future takeover attempts by using Preferred Stock to dilute the ownership of
persons seeking to gain control of the Company. The Company, however, is not
aware of any such attempt and has no plans or arrangements with respect to
deterring future takeover attempts. The issuance of any Preferred Stock will be
on terms deemed to be in the best interests of the Company and its stockholders.
If the Amendment is approved by the stockholders at the Special Meeting, the
decrease in the number of Common shares authorized for issuance and the
authorization of Preferred shares would become effective upon the filing of the
Certificate of Amendment to the Certificate of Incorporation with the Nevada
Secretary of State, which filing would take place shortly after the Special
Meeting.
Approval of this Proposal requires the affirmative vote of the holders of a
majority of the outstanding Common Stock entitled to vote at the Special
Meeting. Abstentions and broker non-votes are not considered Votes Cast and
therefore will have the same effect as a vote against the Proposal.
3
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSED
AMENDMENT TO THE ARTICLES OF INCORPORATION. UNLESS OTHERWISE DIRECTED THEREIN,
THE SHARES REPRESENTED BY YOUR PROXY, IF PROPERLY EXECUTED AND RETURNED, AND NOT
REVOKED, WILL BE VOTED FOR SUCH PROPOSAL.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The table below lists the beneficial ownership of our common stock, as of August
31, 2004 by each person known by us to be the beneficial owner of more than 5%
of our common stock, by each of our directors and officers and by all of our
directors and officers as a group.
Name and Address of Number of Shares
Beneficial Owner Beneficially Owned Percent of Class(2)
(1)(2)
---------------------------- ------------------- -------------------
+Guenter H. Jaensch (3) 801,667 1.14%
964 Allamanda Drive
Delray Beach, FL 33483
+Michael L. Weiner (4) 7,058,029 9.86%
693 Summit Drive
Webster, NY 14580
Wilson Greatbatch (5) 3,639,468 5.19%
5935 Davison Road
Akron, NY 14001
+Robert S. Bramson (6) 65,000 *
1100 East Hector Street
Suite 410
Consohocken, PA 19428
+Ross B. Kenzie (7) 65,000 *
Cyclorama Bldg. Suite 100
369 Franklin Street
Buffalo, NY 14202
+Steven Katz (8) 120,000 *
20 Rebel Run Drive
East Brunswick, NJ 08816
Robert J. Wood (9) 214,583 *
12 Peachtree Lane
Pittsford, NY 14534
Stuart G. MacDonald (10) 266,667 *
4663 East Lake Road
Pultneyville, NY 14538
Jeffrey H. Helfer (11) 287,367 *
1153 Hidden Valley Trail
Webster, NY 14580
4
Technology Innovations, 5,656,501 7.96%
LLC(12)
150 Lucius Gordon Drive
Suite 215
West Henrietta, NY 14586
Biomed Solutions, LLC(13) 5,355,857 7. 54%
150 Lucius Gordon Drive
Suite 215
West Henrietta, NY 14586
All Officers and Directors as 8,878,313 12.23%
a group (8 persons)
* Denotes less than one percent.
+ Denotes Member of the Board of Directors.
(1) Except as may be set forth below, the persons named in the table have sole
voting and investment power with respect to all shares shown as beneficially
owned by them.
(2) Applicable percentage of ownership is based on 69,888,685 shares outstanding
as of August 31, 2004, together with applicable options for such shareholder.
Beneficial ownership is determined in accordance with the rules of the SEC and
includes voting and investment power with respect to shares. Shares subject to
options or warrants currently exercisable or exercisable within 60 days after
August 31, 2004 are included in the number of shares beneficially owned and are
deemed outstanding for purposes of computing the percentage ownership of the
person holding such options or warrants, but are not deemed outstanding for
computing the percentage of any other stockholder.
(3) Includes 351,667 shares issuable upon exercise of options granted to Dr.
Jaensch.
(4) Michael L. Weiner is a member and the Manager of Technology Innovations,
LLC, which is the majority owner of Biomed Solutions, LLC. Mr. Weiner is also
the Manager of Biomed. Mr. Weiner's calculation includes 4,175,857 shares owned
beneficially and of record by Biomed and 300,644 shares owned beneficially and
of record by Technology Innovations. Includes 1,180,000 shares issuable upon
exercise of warrants held by Biomed and 491,667 shares issuable upon exercise of
options held by Mr. Weiner.
(5) Includes 3,389,468 shares owned of record and beneficially by Greatbatch
Gen-Aid, Ltd., an entity owned by Wilson Greatbatch. Also includes 250,000
shares issuable upon exercise of options held by Mr. Greatbatch.
(6) Includes 65,000 shares issuable upon exercise of options held by Mr.
Bramson.
(7) Includes 65,000 shares issuable upon exercise of options held by Mr. Kenzie.
Does not include shares owned beneficially or of record by Biomed or by
Technology Innovations. Mr. Kenzie is the Manager and an equity member of
Biophan Ventures, LLC, which is the 43% equity member in Biomed; he is also the
Manager of Patent Ventures LLC, which is the Class A Member of Technology
Innovations. Mr. Kenzie and Mr. Weiner comprise the Board of Members of Biomed;
Mr. Kenzie serves on the Board of Members of Technology Innovations.
(8) Includes 120,000 shares issuable upon exercise of options held by Mr. Katz.
(9) Includes 124,583 shares issuable upon exercise of options held by Mr. Wood.
(10) Includes 176,667 shares issuable upon exercise of options held by Mr.
MacDonald.
5
(11) Includes 156,667 shares issuable upon exercise of options held by Mr.
Helfer.
(12) Includes 4,175,857 shares owned beneficially and of record by Biomed and
1,180,000 shares issuable upon exercise of warrants held by Biomed. Technology
Innovations, LLC is the majority owner of Biomed Solutions, LLC.
(13) Includes 1,180,000 shares issuable upon exercise of warrants held by
Biomed.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires our executive officers and directors, and persons who own more
than ten percent of our Common Stock, to file reports of ownership and changes
in ownership with the SEC. Such executive officers, directors, and greater than
ten percent stockholders are also required by SEC rules to furnish us with
copies of all Section 16(a) forms they file. Based upon our records and other
information, the Company believes that, with respect to the year ended February
29, 2004, all filings applicable to our executive officers, directors and
greater than ten percent stockholders required by Section 16(a) have been made
in a timely manner.
OTHER INFORMATION
Additional information concerning the Company is available on the Company's
website, www.biophan.com. These materials are also available free of charge in
print to investors who request them in writing from the Company's Secretary (at
the address on the cover page). Filings which the Company makes with the
Securities and Exchange Commission also contain additional information and may
be obtained on the SEC's website at www.sec.gov.
BY ORDER OF THE BOARD OF DIRECTORS
Guenter H. Jaensch
Chairman of the Board
Dated: October _________, 2004
West Henrietta, New York
6
BIOPHAN TECHNOLOGIES, INC.
--------------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 11, 2004
-------------------------------
TO THE STOCKHOLDERS OF BIOPHAN TECHNOLOGIES, INC.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of BIOPHAN
TECHNOLOGIES, INC., a Nevada corporation (the "Company"), will be held on
November 11, 2004, at 10:00 a.m., local time, at the Company's principal
executive offices, 150 Lucius Gordon Drive, West Henrietta, NY 14586, for the
following purposes (as more fully described in the Proxy Statement accompanying
this Notice):
1. To amend the Company's Articles of Incorporation to decrease the
number of shares of Common Stock authorized to be issued from
125,000,000 shares to 110,000,000 shares and to authorize for
issuance up to 15,000,000 shares of Preferred Stock.
2. To transact such other business as may properly come before the
Special Meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy Statement
accompanying this Notice.
Only stockholders of record at the close of business on September 22, 2004 are
entitled to notice of and to vote at the Special Meeting or any adjournment
thereof.
WE HOPE YOU WILL ATTEND THIS SPECIAL MEETING IN PERSON, BUT IF YOU CANNOT,
PLEASE SIGN AND DATE THE ENCLOSED PROXY. RETURN THE PROXY IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE SPECIAL MEETING, YOU MAY VOTE IN PERSON EVEN IF YOU HAVE RETURNED A
PROXY.
BY ORDER OF THE BOARD OF DIRECTORS
Guenter H. Jaensch
Chairman of the Board
West Henrietta, New York
Date: October ____, 2004
PROXY
BIOPHAN TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINTS MICHAEL L. WEINER AND ROBERT J. WOOD, OR EITHER
OF THEM, WITH FULL POWER OF SUBSTITUTION, AS PROXIES TO VOTE AT A SPECIAL
MEETING OF STOCKHOLDERS OF BIOPHAN TECHNOLOGIES, INC. (THE "COMPANY") TO BE HELD
ON NOVEMBER 11, 2004 AT 10:00 A.M., LOCAL TIME, AND AT ANY ADJOURNMENT OR
ADJOURNMENTS THEREOF, HEREBY REVOKING ANY PROXIES HERETOFORE GIVEN, TO VOTE ALL
SHARES OF COMMON STOCK OF THE COMPANY HELD OR OWNED BY THE UNDERSIGNED AS
DIRECTED ON THE REVERSE SIDE OF THIS PROXY CARD, AND, IN THEIR DISCRETION, UPON
SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING. IF NO DIRECTION IS MADE,
SHARES WILL BE VOTED FOR THE PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF
INCORPORATION. IN ADDITION, THE SHARES WILL BE VOTED AS THE BOARD OF DIRECTORS
OF THE COMPANY MAY RECOMMEND WITH RESPECT TO ANY OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
FOR AGAINST ABSTAIN
-------------------------------
Proposal to amend the Company's [_] [_] [_]
Articles of Incorporation to
decrease the number of shares of
Common Stock authorized to be
issued from 125,000,000 shares to
110,000,000 shares and to
authorize for issuance up to
15,000,000 shares of Preferred
Stock.
FOR AGAINST ABSTAIN
-------------------------------
Transaction of such other business [_] [_] [_]
as may properly come before the
meeting or any adjournment
thereof.
(Continued and to be signed on reverse side)
I will [_] will not [_] attend the Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Dated: _________________, 2004
-------------------------------- -----------------------------
Signature Signature
IMPORTANT: Sign the Proxy exactly as your name or names appear
on your Common Stock certificate; in the case of Common Stock
held in joint tenancy, each joint tenant must sign.
Fiduciaries should indicate their full titles and the capacity
in which they sign. Please complete, sign, date, and return
this Proxy promptly in the enclosed envelope.