-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KpKiOye1spTU3bawgemXwFoL0t07CK98dEUTjrdoHYcyIJ3cGlmB6+eEOAV40cph rs3GDb7deNtHj13nC2tgCQ== 0000719135-98-000008.txt : 19980616 0000719135-98-000008.hdr.sgml : 19980616 ACCESSION NUMBER: 0000719135-98-000008 CONFORMED SUBMISSION TYPE: PRE 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980724 FILED AS OF DATE: 19980615 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: AN CON GENETICS INC CENTRAL INDEX KEY: 0000719135 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL ORGANIC CHEMICALS [2860] IRS NUMBER: 112644611 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: PRE 14A SEC ACT: SEC FILE NUMBER: 000-12183 FILM NUMBER: 98648164 BUSINESS ADDRESS: STREET 1: ONE HUNTINGTON QUADRANGLE STREET 2: STE 1N11 CITY: MELVILLE STATE: NY ZIP: 11747 BUSINESS PHONE: 5166948470 MAIL ADDRESS: STREET 1: ONE HUNTINGTON QUADDRANGLE CITY: MELVILLE STATE: NY ZIP: 11747 PRE 14A 1 AN-CON GENETICS, INC. 734 WALT WHITMAN ROAD SUITE 207 MELVILLE, NY 11747 (516) 421-5452 Notice of Special Meeting of Shareholders To be Held July 24, 1998 At 10:00 A.M. To our Shareholders: A Special Meeting of Shareholders of An-Con Genetics,Inc. (the "Company") will be held at 734 Walt Whitman Road, Suite 207, Melville, New York on July 24, 1998 at 10:00 a.m. to consider and take action on the following matters: 1. Authorize an increase in the capitalization of the Company from a total of 15,000,000 shares having a par value $.001 per share to 60,000,000 shares having a par value of $.001 per share of which 50,000,000 shares shall be common stock par value $.001 per share and 10,000,000 shares shall be Preferred Stock, par value $.001 per share; 2. Change the name of the Company to Bovie medical Corporation; 3. Ratify the Company's 1998 Non - statutory Stock Purchase and Option Plan. 4. Transact such other business as may properly come before the meeting or any adjournments thereof. Only holders of record of shares of common stock at the close of business on May 31, 1998 are entitled to notice of and to vote at the Special Meeting. A Proxy Statement explaining the matters to be acted upon at the Special meeting follows. Please read it carefully. WHETHER OR NOT YOU EXPECT TO BE PERSONALLY PRESENT AT THE MEETING, PLEASE BE SURE THAT THE ENCLOSED PROXY IS PROPERLY COMPLETED, DATED, SIGNED AND RETURNED WITHOUT DELAY IN THE ENCLOSED ENVELOPE. ANY PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED BY FOLLOWING THE INSTRUCTIONS SET FORTH ON PAGE ONE OF THE ACCOMPANYING PROXY STATEMENT. BY ORDER OF THE BOARD OF DIRECTORS ANDREW MAKRIDES PRESIDENT AN-CON GENETICS, INC. 734 Walt Whitman Road Suite 207 Melville, NY 11747 (516) 421-5452 PROXY STATEMENT Special Meeting of Shareholders To Be Held on July 24,1998 June 15, 1998 Solicitation and Voting of Proxies This Proxy Statement is furnished in connection with the solicitation on behalf of AN-CON GENETICS, INC. (the "Company" or An-Con) of proxies to be voted at the Special Meeting of Shareholders to be held on July 24, 1998, at 734 Walt Whitman Rd, Suite 207, Melville, New York at 10 A.M. The Board of Directors of the Company has fixed the close of business on May 29, 1998 as the record date for the determination of holders of shares of outstanding common stock entitled to notice of and to vote at the Special Meeting. On May 29, 1998, there were outstanding 13,629,93 shares of the Company's common stock, the holders of which will be entitled to one vote per share for each matter submitted to a vote at the Meeting. The presence, in person or by proxy, of the holders of a majority of the issued and outstanding shares entitled to vote will constitute a quorum for the transaction of business. A proxy in the accompanying form which is properly signed, dated and returned to the Company and not revoked will be voted in accordance with the instructions contained therein. If no instructions are indicated, proxies will be voted as recommended by the Board of Directors. Shareholders who execute proxies may revoke them at any time prior to their being exercised by delivering written notice to the Secretary of the Company or by subsequently executing and delivering another proxy at any time prior to the voting. Mere attendance at the Meeting will not revoke the proxy, but a shareholder present at the Meeting may revoke his proxy and vote in person. As of the date of this Proxy Statement, the only business which the management of the Company intends to present at the Meeting are the matters set forth in the accompanying Notice of Special Meeting. Management has no knowledge of any other business to be presented at the Meeting. If other business is brought before the Meeting, the persons named in the enclosed form of proxy will vote according to their discretion. Expenses of Solicitation The cost of soliciting proxies is estimated not to exceed $20,000 and will be borne by the Company, including expenses in connection with the preparation and mailing of this Proxy Statement and all papers which now accompany or may hereafter supplement it. The solicitation will be made by mail. The Company will supply brokers or persons holding shares of record in their names or in the names of nominees for other persons, as beneficial owners, with such additional copies of proxies, proxy materials and Annual Reports as may reasonably be requested in order for such record holders to send one copy to each beneficial owner, and will upon request of such record holders, reimburse them for their reasonable expenses in mailing such material. Certain directors, officers and employees of the Company, not especially employed for this purpose, may solicit Proxies, without additional remuneration therefor, by mail, telephone, telegraph or personal interview. Directors and Executive Officers As of March 31, 1998, the Company s Executive Officers and directors were as follows: Name Age Position Director since J. Robert Saron 45 Chairman of the Board August, 1994 Chief Executive Officer, Director Andrew Makrides 56 President December, 1982 Joseph F. Valenti 81 Director October, 1995 George W. Kromer 56 Director October, 1995 Delton Cunningham 33 Secretary, Treasurer Vice President/CFO Moshe Citronowicz 45 Executive Vice President Chief Operating Officer _________________________ On April 14, Alfred V. Greco, age 62, a principal of Alfred V. Greco, P.C., counsel to the Company, was elected an additional director of the Company to serve until the next annual meeting of shareholders presently scheduled for October, 1998. On May 8, 1998, Kenneth W. Davidson, age 51, Chairman of the Board and Chief Executive Officer of Maxxim Medical, Inc, a Delaware corporation the shares of which are traded on the New York Stock Exchange was duly elected as an additional director of the Company to serve until the next annual meeting of shareholders. J. Robert Saron, Chairman of the Board and Chief Executive Officer, holds a Bachelors degree in Social and Behavioral Science from the University of South Florida. From 1988 to present Mr. Saron has served as President and director of Aaron Medical Industries, Inc. (formerly Suncoast Medical Manufacturing, Inc.). In March, 1995 Mr. Saron was elected Chairman and Chief Executive Officer of An-Con Genetics, Inc. Andrew Makrides, Esq., President, member of the Board of Directors, and former Chairman, received a Bachelor of Arts degree in Psychology from Hofstra University and a Juris Doctor Degree from Brooklyn Law School. He is a member of the New York Bar and has practiced law from 1968 until joining An-Con Genetics, Inc. as Executive Vice President and director, in 1982. Mr. Makrides became President of the Company in 1985 and served as such to date. Joseph F. Valenti, filled a vacancy on the Board of Directors and became a member of the Board of Directors on October 1, 1995. He is the former Vice-President of the International Division of Aaron Medical Industries, Inc. and retired as of January 1, 1995, from that position. He continues to be the principal shareholder and chief executive officer of Valpex International Corporation, a company which, is wholly owned by him, engaged in the import of products. This import company is a major supplier of the Company's light bulbs which, are used in the Company's various manufactured lighting products. The prices paid by the company for the products are competitive with those from other sources. He received a Bachelor of Arts Degree in Languages from the College of the City of New York in 1939. He has been associated with Aaron Medical Industries, Inc. and its predecessor companies since 1980 and was charged with developing the international sales department and increasing exports sales on behalf of Aaron. See Certain Transactions . George W. Kromer, Jr., filled a vacancy on the Board of Directors and became a director on October 1, 1995. Mr. Kromer is a Senior Financial Correspondent for "Today's Investor" and is utilized as a consultant by other companies whose shares are listed on the American Stock Exchange and Over-the-Counter Exchange. An-Con has also retained Mr. Kromer on a month-to-month basis as a consultant in addition to his capacity as a director. He received a Master's Degree in 1976 from Long Island University in Health Administration. He also holds a Bachelor of Science Degree from Long Island University's Brooklyn Campus and an Associate in Applied Science Degree from New York City Community College, Brooklyn, New York. See Certain Transactions . Moshe Citronowicz, is a graduate of the University of Be'er Sheva, Be'er Sheva, Israel, with a Bachelor of Science degree in electrical engineering. He has also received certificates from Worcester Polytech, Lowell University and the American Management Association for completion of seminars in MRP, master scheduling, purchasing SPC, JIT, accounting and plant management. Since coming to the United States in 1978, Mr. Citronowicz has worked in a variety of manufacturing and high tech industries. In October 1993, Mr. Citronowicz joined the Company as Vice President of Operations. He is responsible for all areas of manufacturing, purchasing, product re-design, as well as new product design. In September 1997, Mr. Citronowicz was appointed by the board of directors to the position of Executive Vice President and Chief Operating Officer. Delton N. Cunningham, Vice President and Chief Financial Officer of the Company, holds a Bachelor of Science in Accounting from the University of Florida. He is a Certified Public Accountant and is a member of the American Institute of Certified Public Accountants and the Florida Institute of Certified Public Accountants. Mr. Cunningham began his career with the Miami office of Arthur Anderson & Company. In June of 1991 Mr. Cunningham joined Aaron Medical Industries, Inc., as the Company's Chief Financial Officer. In June of 1992 Mr. Cunningham became Vice President of Aaron Medical Industries, Inc. and in April of 1993, he was elected Corporate Secretary of Aaron by the Board of Directors. REMUNERATION Item 10. The following table sets forth the compensation paid to the executive officers of the registrant for the three years ended December 31, 1997: Summary Compensation Table Annual Compensation Name and Principal Annual Position Year Salary Bonus(a) J.Robert Saron CEO/Chairman 1997$155,865 $ 2,460 1996 143,000 42,600 1995 116,000 39,600 Andrew Makrides President 1997 103,382 1,784 1996 90,000 8,400 1995 77,000 11,800 Moshe Citronowicz Executive Vice President- Chief Operating 1997 107,044 1,921 Officer1996 104,600 11,200 1995 97,000 11,800 Delton Cunningham Secretary, Treasurer, Vice President/ CFO 1997 90,325 1,516 1996 86,000 8,400 1995 82,900 8,800 (a) In 1997, the officers waived their right to 1996 bonuses and the bonuses were cancelled. REMUNERATION(CONTINUED) Long Term Compensation Awards Pay-outs Securities Restricted underlying Other(b) Stock Options/ Year Compensation Awards SARS(#) Pay-outs J.Robert Saron CEO/Chairman 1997 $9,352 -- -- -- 1996 8,100 -- 90,000 -- 1995 23,700 -- -- -- Andrew Makrides President 1997 9,598 -- -- -- 1996 9,700 -- 70,000 -- 1995 8,000 -- -- -- Moshe Citronowicz Executive Vice President- Chief Operating 1997 9,352 -- -- -- Officer 1996 8,100 -- 25,000 -- 1995 8,000 -- -- -- Delton Cunningham Secretary, Treasurer, Vice President/ CFO 1997 9,262 -- -- -- 1996 7,400 -- 55,000 -- 1995 8,000 -- -- -- (b) Other compensation consists of medical, insurance and auto. Option/SAR Grants Table Values of securities Number ofunderlying shares unexercised Acquired Options on Value FY-End(#)sar/s at Name and Principal PositionYear Exercise Realized Exercisable J. Robert Saron CEO 1997 -- -- -- 1996 -- -- 101,250 1995 -- -- -- Andrew Makrides President1997 -- -- -- 1996 -- -- 78,750 1995 -- -- -- Moshe Citronowicz Vice 1997 -- -- -- President 1996 -- -- 28,125 Operations1995 -- -- -- Delton Cunningham Vice, President/ CFO 1997 -- -- -- Secretary,1996 -- -- 61,875 Treasurer,1995 -- -- -- Outside Directors are compensated in their capacities as Board members through option grants. Through the year 1997, the Company's Board of Directors presently consisted of J.Robert Saron, the CEO, Andrew Makrides, President, Joseph F. Valenti and George W. Kromer, Jr. Mr. Saron is also President and CEO of Aaron. Mr. Kromer has been retained on a month-to-month basis pursuant to verbal agreement as a financial and public relations consultant by An-Con for the past year at an average monthly fee of $950. In 1996 and 1997 George Kromer and Joseph Valenti were awarded 105,000 and 120,000 options each for five to ten years to purchase An-Con stock from $.75 to $1.125 per share. There have been no changes in the pricing of any options previously or currently awarded. As of the 1st day of January, 1998, the Company cancelled its prior employment agreements with its officers and entered into a new employment agreement with them. The agreements vary in terms over a period of between 2 and 5 years and provide for compensation in amounts varying from $51,100 for the lowest paid officer to $136,000 for the highest paid executive officer per year, plus additional amounts for automobile allowance ($500 to $600 per month). Each new agreement also provides for annual cost of living percentage increases as to salary and automobile allowance. In addition to the foregoing, each agreement for the company's executive officers provides for customary executive benefits, indemnification for corporate accounts and may be terminated (a) upon death, or (b) on thirty (30) days notice by the officer to terminate, or (c) by the Company, (i) without cause, upon the majority approval of the Board of Directors on thirty (30) days written notice (wherein the Company shall be obligated to pay the employee compensation under the agreement for the balance term of the agreement) and (ii) the employee may elect, in lieu of (i) above, to cancel his agreement and obtain severance payments equal to three times the annual salary and bonus in effect during the month preceding such termination; or (d) by the Company for cause, if during the time of employment, the employee violates the covenant not to compete provisions of the agreement, or is found guilty of a felony or crime of moral turpitude. The agreement also provides for a covenant not to compete directly or indirectly against the Company for a period of one year and cost of living increases and a 71/2 percent salary increase per year subject to approval of the board. In May of 1997 the officers as a group waived their right to the bonuses as set forth in their contracts. The board of directors will determine future bonuses. Item 11. Security Ownership of Certain Beneficial Owners and Management of An-Con. The following table sets forth certain information as of December 31, 1997, with respect to the beneficial ownership of the Company's common stock by all persons known by the Company to be the beneficial owners of more than 5% of its outstanding shares, by directors who own common stock and by all officers and directors as a group. Number ofNature Percentage of Name and Title Shares of outstanding Address of Class ownedownership(i) shares(i) 5% Beneficial Owners Robert Speiser(iii)Common 753,333 Includes 5.3% 1340 Boca Ciega Stock shares only Isle Drive St. Petersburg, Florida 33706 Directors J. Robert Saron Common 523,805 Includes 3.7% (iii) Stock 90,000 shares Ashley Drive reserved for Seminole, FL 34642 options J.Valenti Common 177,205 Includes 1.3% 5700 Mariner Drive Stock shares 120,000 Tampa, Florida 33609 reserved for options G. Kromer Common 105,000 Includes .7% P.O. Box 188 Stock 105,000 shares Farmingdale, NY 11738 reserved for options A.Makrides Common 390,000 Includes 2.7% (iv) Stock 70,000 shares 20 Damin Circle reserved for St. James, NY 11780 options Officers and Directors as a Group Common 1,499,034 Includes 10.6% Stock 465,000 shares reserved for options _______________________________ (i) Based on 14,116,274 shares outstanding on a fully diluted basis. Officers and directors have 465,000 options to acquire shares at March 31, 1998. (ii) Mr. Robert Speiser resigned as the Company Chairman and Chief Executive Officer on March 20, 1995. (iii) Robert Saron, who replaced Mr. Speiser as Chairman, is the President and a director of Aaron Medical Industries, Inc. As a result of the exchange of shares pursuant to the Aaron Acquisition Agreement, Mr. Saron is the beneficial owner of 408,805 additional shares of An-Con (in addition to the 25,000 shares he had received prior to the merger). Mr. Saron also has the option to acquire an additional 90,000 shares. (iv) Includes an option to acquire 70,000 shares at varying prices. (v) During 1996, one transaction took place that materially changed shareholders' control of the Company: Aaron shareholders received their shares on November 25, 1996 from the escrow agent, which gave them 37.7% of the outstanding shares of the Company at that time. See "Certain Relationships and Related Transactions". Certain Relationships and Related Transactions Valpex International Corporation ("Valpex"), a Company owned and operated by Mr. Joseph Valenti, was a supplier of vacuum and Krypton bulbs and vinyl pouches to Aaron for several years. In 1996, Mr. Valenti joined An-Con as a director. On May 10, 1996, Valpex and Aaron entered a three year agreement that allows Aaron to purchase products directly from Valpex's manufacturers and suppliers. In exchange, Aaron agreed to pay a commission to Valpex on purchases from the agreed upon list of Valpex's suppliers. In 1997 and 1996, respectively, the equivalent sales of Valpex to Aaron were $117,700 and $126,000, respectively. George Kromer, a director, also serves as a consultant to the Company with average consulting compensation of approximately $950 per month. Directors' Compensation Independent (unaffiliated) directors, who are not employees, do not receive compensation for attending meetings. However the company pays their expenses for attending meetings of the Board. Approximately $5,000 was paid to cover expenses of independent directors attending Board of Director meetings during the year ended December 31, 1997. Independent directors are compensated essentially in the form of stock options under the Company s 1996 Employee and Consultant Stock Option Plan. A total of 195,000 stock options were granted to directors in fiscal 1997. INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON Except to the extent that officers and directors of the Company have become recipients of stock options pursuant to the Company s 1998 Non-Statutory Stock Purchase and Non-Statutory Option Plan, and except to the extent that additional shares will be required to be authorized to provide shares issuable on exercise of options granted under the plan, no officer, director or principal shareholder of the Company has any direct or indirect interest in any of the matters covered in the shareholder proposals. On May 8, 1998, Kenneth W. Davidson, Chief Executive Officer of Maxxim Medical, Inc., a Delaware corporation the shares of which are traded on the New York Stock Exchange, was elected a director of the Company to serve until the next annual meeting of shareholders. Pursuant to the Company s asset acquisition agreement with Maxxim, hereinafter discussed, the Company is required to deliver 3,000,000 shares of common stock in exchange for the Company s outstanding convertible promissory note for $3,000,000. Accordingly as CEO of Maxxim, Mr. Davidson is interested in increasing the authorized capitalization which, among other things, will enable the Company to deliver the 3,000,000 shares of common stock (and convert and cancel the 3,000,000 promissory note) pursuant to the agreement. See Maxxim Medical Asset Acquisition, Supply and License Agreement. Proposal 1 Amendment to the Company's Certificate of Incorporation to Increase Authorized Capitalization Increasing Number of Common Shares Issuable and creating a Blank Preferred Stock As of May 31, 1998 there were 13,629,693 shares of common stock issued and outstanding, 1,144,255 shares of common stock reserved for issuance upon future exercise of outstanding stock options and/or grants. A total of 14,773,948 shares will be issued and outstanding if all of the aforementioned options and grants are exercised. The Company is currently seeking to increase its authorized capitalization from 15,000,000 shares to 60,000,000 shares essentially in order to enable it, (a) to effectively conclude the intended terms of the Company s existing agreements with Advanced Refractory Technologies, Inc. and with Maxxim Medical, Inc. discussed below; to pursue its current acquisition policy to acquire additional assets or companies having assets and/or operations which are compatible with the Company's business; and (c) to provide additional shares for funding and growth. Management believes that this policy of growth through acquisition can best be pursued through utilization of equity (Common Stock) or Preferred Stock of the Company as opposed to cash. The Company is constantly in need of its cash reserves for materials, operations and for internal growth as sales of its products continue to increase and new products are brought to market. The proposed increase in capitalization is deemed necessary by management to provide a sufficient amount of shares and/or Preferred Stock that will enable the Company to raise capital, to be flexible in proposals to acquisition candidates and to consider significant acquisitions. The increase will provide the wherewithal for management to consider and aggressively pursue a desirable acquisition candidate or asset situation (of relatively significant size) without the necessity of further requesting shareholders to authorize an increase in the capitalization with the statutory and regulatory delays which are usually occasioned thereby. In many instances, such a delay could result in loss of opportunity. The proposed increase in capitalization is deemed by management to enable it to meet potential anticipated operational objectives by providing shares for future funding, if necessary or warranted and to provide shares for continued growth by acquisition. In addition the increased capitalization will give management the flexibility to issue stock dividends to shareholders, as deemed appropriate. General Observations Possible Adverse Aspects for Shareholders In addition to enabling management to issue additional shares without shareholder approval and thereby diluting the percentage ownership of existing shareholders of the Company, a further consequence of increasing the authorized shares of Common Stock of the Company is that management will have the potential ability to make more difficult, or to stave off hostile and/or friendly takeover attempts by third parties. The forgoing will be applicable even if such a transaction may appear on its face to be favorable to the interests of the shareholders. Such anti-takeover measures may include declaring a dividend and issuing shares to the existing shareholders of the Company, or selling the shares, with stockholders consent, to a friendly investor (a person or other entity whose interests are not opposed to those of the Company and its shareholders) or taking other measures with its authorized but unissued shares within its corporate powers to stave off takeover attempts. There are currently no "anti-takeover" measures included in any debt agreement, By-law or provision of the Company's Certificate of Incorporation or any amendment thereto. The increase in the authorized number of shares together with other factors may also make the removal of management more difficult even if such removal would appear to be beneficial to shareholders generally, and may have the effect of limiting shareholder participation in certain transactions such as mergers or tender offers whether or not such transactions are favored by incumbent management. However, it is essential to note that whatever course of action management chooses to pursue, it is required to do so in the best interests of the shareholders. As of May 31, 1998 the Company had 13,629,693 shares issued and outstanding without giving effect to outstanding options or other derivative securities. The Company's certificate presently authorizes 15,000,000 shares of common stock. Accordingly, based upon the aforementioned reasons and the Company s current acquisition policy, Management has determined to request shareholder approval of its resolution to increase the authorized shares from 15,000,000 to 60,000,000 shares of stock of which 50,000,000 shares shall be common stock and 10 million shares shall be blank preferred stock. Advanced Refractory Technologies, Inc. ( ART ) and BSD Development Beta Corporation ( BSD ) Asset and Corporate Acquisitions On February 9, 1998 the Company entered into a series of contemporaneous agreements ( Contemporaneous ) and transactions involving two non-affiliated companies, Advanced Refractory Technologies, Inc. ("ART") a privately held New York corporation engaged in research and development of a certain patented diamond-like nanocomposite technology for the coating of products ("DYLYN Technology"), and BSD Development Beta Corporation, a privately held Delaware corporation. As a result of the aforesaid transactions, the registrant acquired certain jobcoating equipment valued at $2,000,000 and consisting of two DYLYN deposition reactors inclusive of components and two electro-blade surgical mounting fixtures (the "Equipment") for coating electro-surgical blades and other specified medical devices utilizing the DYLYN Technology. The aforesaid, in addition to the acquisition by the Company of the Equipment, resulted in the acquisition by it of an exclusive 10-year license to use the DYLYN Technology to jobcoat specified medical products together with a manufacturing arrangement with ART whereby ART will operate and maintain the Equipment for the use of the DYLYN Technology under the License Agreement at ART's location in Buffalo, New York. The Company acquired all of the outstanding securities of BSD which is now a wholly owned subsidiary of registrant. The license is an exclusive 10-year license to use the DYLYN technology to jobcoat specified medical products for marketing anywhere in the world. It provides essentially for payment of a royalty to ART based upon net revenues derived by the registrant directly or indirectly from the sale of products or fees from sub- licensees utilizing the DYLYN Technology. The exclusivity of the license is contingent upon ART receiving minimum jobcoating fees of $200,000 in the first contract year (estimated to commence August 1, 1998) and increasing by $100,000 per year for each succeeding contract year up to a minimum of $500,000 in the fourth contract year and each succeeding year thereafter. The 10-year license is renewable for an additional 10- year period upon notice prior to 180 days of expiration, plus the payment by the registrant of $2 Million in cash or in shares of common stock of registrant having a fair market value aggregating $2 Million. The license may be terminated by ART in the event of (a) registrant's failure to pay any fee due, (b) breach or default by registrant of any material term of the License Agreement or other related agreements between ART, BSD and or registrant; (c) breach or default of the Manufacturing Agreement; (d) registrant files a petition in bankruptcy or for an arrangement under any federal or state bankruptcy laws or is adjudicated insolvent; or (e) a petition is filed proposing adjudication of registrant as bankruptcy or insolvent, and such petition is not dismissed within 90 days after filing thereof. Manufacturing Agreement Pursuant to the Contemporaneous Agreements, the Company was assigned a Manufacturing Agreement dated February 9, 1998, which provides that ART will jobcoat products pursuant to the registrant's specifications for a fee based upon its base cost as defined plus a percentage thereof, unless otherwise agreed. The Manufacturing Agreement which is for a term of 5-years and renewable for an additional 5-years at the option of the registrant also provides for minimum annual job-coating fees which are to be offset against fees payable by the registrant to maintain exclusivity under the License Agreement. Maintenance of exclusivity of the License will satisfy and obviate the minimum annual jobcoating fees payable under the Manufacturing Agreement. Exchange of Shares Pursuant to the Contemporaneous Agreements, the Company issued 2,000,000 shares of its common stock to ART and acquired all of the outstanding shares of common stock of BSD and an 8% Convertible Debenture of BSD in the principal amount of $750,000 in exchange for 3,000,000 shares of common stock of the Company. Upon completion of such transactions, the Company issued a total of 5,000,000 shares and the owned all of the outstanding securities of BSD which had licensing and manufacturing rights to operate the Equipment (which rights have been assigned to the Company), $250,000 in cash and a $750,000 secured note receivable. Future Obligation of the Company Pursuant to the Contemporaneous Agreements, ART is entitled to exchange the 2,000,000 common shares of the Company for 2,000,000 shares of the Company s Series A Preferred Stock containing specified rights and preferences (Preferred Stock), on or before September 6, 1998, subject to the approval of shareholders of a Certificate of Amendment of registrant's Certificate of Incorporation authorizing the issuance of such shares of Preferred Stock. The Preferred Stock is to be convertible into 2,000,000 shares of common stock of An- Con and shall have certain preferences on liquidation and anti-dilution aspects. In the event the Company is unable, for any reason, to deliver the Preferred Stock to ART on or before September 6, 1998, then, prior to September 15, 1998, An-Con is to issue and deliver, without payment of any additional consideration by ART, an additional number of shares of An-Con's common stock having an aggregate fair market value of $500,000. Furthermore, in the event An-Con should issue any shares of any series or class of its preferred stock having substantially the same rights and preferences as the Preferred Stock without the prior consent of ART (which shall not be unreasonably witheld), then An-Con is to issue and deliver to ART, without payment of any additional consideration by ART, an additional number of shares of An-Con's common stock having an aggregate fair market value equal to $500,000 However, as indicated heretofore, subject to the approval of shareholders, the Company will authorize and issue 2,000,000 shares of preferred stock (the "Preferred Stock") to ART in exchange for the 2,000,000 shares of common stock of the Company issued to Art under the Contemporaneous Agreements. The Preferred Stock is to have the following characteristics: (a) An-Con will not authorize or issue any Preferred Stock which will be entitled to any rights or preferences senior to the Preferred Stock to be issued to Art. (b) In the event An-Con issues Preferred Stock having rights and preferences substantially equal to those of the Preferred Stock to be granted to Art ( Art Preferred Stock ) it will do so only on consent of ART or it shall issue to Art at no additional cost to Art shares of An-Con s common stock having a current market value equal to $500,000. (c) The Art Preferred Stock will be entitled to dividends and preference to dividends on any other class or series of common stock or Preferred Stock on a fully Participating basis with the common stock. (d) The Preferred Stock will be convertible into 2,000,000 shares of An-Con s common stock unless pursuant to its terms the number of shares of common stock into which it is convertible is otherwise adjusted due to sales of common stock at less than $1.00 per share, merger, acquisition, stock split, subdivision of shares prior thereto. There will be anti-dilution protection in the event of corporate reorganizations and similar transactions. There will be anti-dilution protection in the event the corporation issues common stock, or securities convertible into common stock, at a price per share less than the conversion rate applicable to the Art Preferred Stock which is presently $1.00 per share. (e) Subject to adjustment in conversion rate in the case of sales by An-Con of common stock at prices less than $1.00 per share merger, consolidation, stock split or subdivision of shares, the Preferred Stock shall be converted into common stock at An-Con s option ("compulsory conversion") in the event the aggregate fair market value of the common stock acquirable upon conversion of the Preferred Stock exceeds four times the then current fair market value of the common stock as evidenced by the minimum bonafide bids at that time of at least one independent market maker for a period of 45 consecutive days immediately preceding the date of such compulsory conversion. (f) Subject to adjustment of the conversion rate in the case of conversion, or adjustment in the number of shares into which the Preferred Stock would be entitled to be converted in the event of merger, consolidation, stock split or subdivision of shares, the Preferred Stock will be entitled to vote with all the common stock of the corporation and will be entitled to the number of votes to which it would be entitled assuming it had been converted into common stock immediately prior to the occasion of voting. (g) The Preferred Stock shall have $2,000,000 minimum liquidation value and have a preference on liquidation. (h) The Preferred Stockholders will be entitled to receive reports made generally available to common stockholders. Maxxim Medical, Inc. Asset Acquisition, Supply and License Agreement On May 8, 1998, the Company entered into and consummated a strategic alliance agreement with Maxxim Medical, Inc., ( Maxxim ), a Delaware corporation the shares of which are listed on the New York Stock Exchange, which agreement provided for the acquisition by the Company of the trademark Bovie , a supply, license and distributorship arrangement concerning electrosurgical devices and the acquisition of Maxxim s electrosurgical generator product line in exchange for 3,000,000 shares of common stock of An-Con. More specifically, the agreement provides for (a) an irrevocable royalty-free sub-license to Maxxim to use the Bovie name on any electrosurgical products marketed by Maxxim; (b) a 2-year exclusive distributorship in Maxxim to resell the Bovie electrosurgical generator product line anywhere in the world, and (c) a non-exclusive right to sell An-Con products anywhere in the world. The distributorship arrangement provides for anticipated cooperation between Maxxim and An-Con with respect to research and development of new products and Maxxim s option to become the exclusive distributor thereof. Maxxim also agreed to certain minimum purchase orders for the Bovie generator product line, the Aaron 1200 generators and other An-Con products and accessories aggregating $3,000,000 during the initial 5-year term of the agreement, subject to quality control and An-Con s ability to meet commercially reasonable purchase orders of Maxxim. Kenneth Davidson, the chairman of the Board of Maxxim, has been appointed a member of the Board of Directors of An-Con. As consideration for the foregoing, the Company agreed to exchange 3,000,000 shares of common stock for the Bovie Electrosurgical Generator line, the Bovie trademark and tradename, and entered into agreements for the aforementioned supply, license, and distributorship arrangement involving Maxxim s commitments to purchase the Company s current and future products. Due to the Company s exhaustion of its authorized shares, in lieu of common stock, the Company has issued a secured convertible promissory note to Maxxim in the principal amount of $3,000,000 due on May 7, 2008, bearing interest at the rate of 1% above the prime lending rate in effect at Nations Banc Montgomery Securities LLC which provides for ten annual payments of principal and interest commencing May 7, 1999. This note is secured by the Company s equipment and machinery, inventory including raw materials, work in process, finished goods, and accessories thereto and accounts receivable. The nature of the secured convertible promissory note is such that, subject to the approval of shareholders, upon the filing of an amendment of the Certificate of Incorporation with the Secretary of State of Delaware effecting the increased authorized capitalization, such note, subject to adjustment in the event of intervening merger, acquisitions, stock splits or subdivisions, shall be automatically converted into 3,000,000 shares of common stock of the Company. In the event, the shareholders fail to authorize the increase as requested, the Company will be forced to seek alternate financing to meet its obligations under the note. No assurance can be given it will be successful in such endeavor. Based upon the foregoing and in the light of Company's acquisition program, the Company is seeking shareholder approval to amend the certificate of incorporation to provide for a total of 60,000,000 shares, of which 50,000,000 shares shall be common stock and 10,000,000 shares shall preferred stock. The increased authorized common stock, in addition to enabling the Company s acquisition program to continue, will permit the Company to complete the Maxxim asset acquisition and cancel the outstanding note for $3 Million. Of the 10,000,000 shares of preferred stock, authorized, 2,000,000 shares of the preferred stock will be issued exchanged for common stock pursuant to the agreement with ART and will have the aforementioned designated rights and preferences. The Company is presently seeking an authorization for a total 10,000,000 shares of blank preferred stock in order to give management the necessary flexibility in dealing with other potential opportunities requiring preferred stock and specified rights and preferences therefor. Although the proposed amendment to the certificate of incorporation deals with blank preferred stock, subject to shareholder approval, the Company will file an appropriate Certificate of Designation of Rights and Preferences for 2,000,000 shares of such preferred stock as required pursuant to the ART transaction, heretofore described. PROPOSED AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED SHARES AND CREATE A BLANK PREFERRED STOCK Article Fourth of the Company's Certificate of Incorporation presently reads: FOURTH: The corporation shall be authorized to issue the following shares: Number of Class Shares Par Value Common 15,000,000 $0.001 Subject to the approval of shareholders, the Board of Directors intends to amend the Company's Certificate of Incorporation to provide for a new Article (Fourth) thereof, as follows: "FOURTH: The corporation shall be authorized to issue the following shares: Number of Class Shares Par Value Common 50,000,000 $0.001 Preferred 10,000,000 $0.001 The total number of shares of capital stock of all classifications which the Corporation shall have the authority to issue is 60,000,000 shares, of which (1) FIFTY MILLION (50,000,000) shares shall be designated common stock, having a par value of $.001 per share, and (ii) TEN MILLION (10,000,000) shares shall be designated "Preferred Stock" having a par value of $.001 per share. (a) All shares of common stock will be equal to each other and shall have all the rights granted to stockholder under the General Corporation Law of the State of Delaware, as amended, and the Certificate of Incorporation, including, without limitation, one vote for each share outstanding in the name of each holder, the power to elect directors or consent or dissent to any action to take place at any regular or special meeting of stockholders, and the right to receive dividends and distributions subject to the rights and preferences of any outstanding shares of Preferred Stock authorized hereby. (b) The Preferred Stock may be issued from time to time in one or more classes and one or more series of each class with specified serial designations, shares of each series of any class shall have equal rights and shall be identical in all respects, and (1) may have specified voting powers, full or limited or may be without voting power, (2) may be subject to redemption at such time or times as may be designated, and at designated prices; (3) may be entitled to receive dividends (which may be cumulative or non- cumulative) at designated rates, on such conditions and specified times, and payable in any other class or classes of stock; (4) may have such rights upon the dissolution of, or upon any distribution of the assets of, the corporation; (5) may be made convertible into, or exchangeable for shares of any other class or classes or of any other series of the same or any other class or classes of stock of the Corporation, at such price or prices or at specified rates of exchange and with specified designated adjustments; and (6) may contain such other special rights and qualification, as shall hereafter be stated and expressed in the resolution or resolutions providing for the issue of such Preferred Stock from time to time adopted by the Board of Directors pursuant to the authority so to do which is hereby granted and expressly vested in the Board of Directors. The Board of Directors shall have authority to cause the Corporation to issue from time to time, without any vote or other action by the stockholders, any or all shares of stock of the corporation of any class or series at any time authorized, and any securities convertible into or exchangeable for any such shares, and any options, rights or warrants to purchase or acquire any such shares, in each case to such persons and on such terms (including as a dividend or distribution on or with respect to, or in connection with a split or combination of, the outstanding shares of stock of the same or any other class or series) as the Board of Directors from time to time in its discretion lawfully may determine; provided, that the consideration for the issuance of shares of stock of the corporation (unless issued as such a dividend or distribution or in connection with such a split or combination) shall not be less than the par value of such shares. Shares so issued shall be full-paid stock, and the holders of such stock shall not be liable to any further calls or assessments thereon." Subject to the approval of shareholders, upon the filing of such Certificate of Amendment, the Board of Directors will cause a Certificate of Designation of Rights and Preferences to be filed, outlining the rights and preferences of the class of Preferred Stock issuable to ART as heretofore described. Effect on Future Shareholder Rights The increase in the number of authorized shares of common stock, when and if issued, will not in any way change the inherent rights of existing or future common shareholders. If and when issued, each share of additional authorized Common Stock will continue to: (1) entitle the holder to one vote per share on matters to be voted upon by the shareholders; (2) not entitle the holder to any cumulative voting, cumulative dividends, preemptive, subscription or redemption rights; (3) entitle the holder to receive dividends from available funds, if and when declared by the Company's Board of Directors; (4) entitle the holder to share ratably in the assets of the Company legally available for distribution to shareholders in the event of liquidation, dissolution or winding up of the Company. The proposed 2,000,000 shares of Preferred Stock to be authorized and issued to ART, subject to shareholder approval, shall give the holder a priority in liquidation of the Company, up to $2,000,000. If such liquidation were to occur shortly after approval by shareholders, a substantial amount of the net proceeds derived from such liquidation would be allocable to the Preferred Stockholder (approximately $2,000,000) prior to any funds being allocable to common stockholders. Inasmuch as the Preferred Stock to be issued to ART is votable, the percentage of voting control now enjoyed by common stockholders will be commensurately diminished by up to 2,000,000 shares or approximately fifteen percent. In addition by virtue of the conversion privilege and the anti-dilution aspects of the Preferred Stock, it is not likely that ART will convert the Preferred Stock into common stock unless ART has a need to avail itself of liquidation of its investment or the market value of the common stock is otherwise at a level deemed favorable to ART to convert into common stock. Adverse Aspects to Increased Authorized Capitalization of Common Stock and Creation of Blank Preferred Stock. Since the present issued and outstanding shares of the Company's Common Stock do not have any preemptive rights, the present shareholders of the Company risk dilution of the book value per share of their Common Stock should the newly authorized stock be issued by the Company for a consideration less than current book value which was $.25 per share as of December 31, 1997. In addition, the percentage ownership of the common stock of present shareholders will be diminished with each future issuance of additional shares of common stock. Furthermore, no shareholder approval may be required to issue such shares. Any additional dilution factor is presently incalculable in that it is not yet determined at what price the securities will be offered both publicly and/or privately in the future, if offered at all, or for what price they will be exchanged as consideration for an acquisition candidate, if one is found. The proposed amendment also authorizes the Board of Directors to issue Preferred Stock of different classes (in addition to those heretofore discussed in connection with the ART transaction). The proposed authority gives the Board of Directors maximum discretion to fashion rights and preferences for future Preferred Stock to be issued. This is deemed necessary by management to give it the broad latitude to act quickly when an acquisition opportunity presents itself and be able to fashion preferred stock containing rights and preferences in a variety of ways. Such possible future issuances (with no requirement to obtain shareholder approval prior thereto) may be specifically fashioned by management in a manner which will increase the likelihood of achieving the corporate objective for an acquisition of assets or acquisition of another company; however such newly issued preferred stock may also have an adverse effect on the interests of common stockholders due to provisions therein which may provide for voting, anti-dilution, conversion, priority in liquidation and possibly other factors not yet predictable or calculable. Required Vote for Adoption Under Delaware Law the affirmative vote of a majority of the outstanding shares of the Company's Common Stock is required for the approval of the proposed amendment to the Company's Certificate of Incorporation which increases the authorized shares available for issuance. Once given effect, a majority vote of the Company's Common Stock at a properly called meeting at which a quorum is present will be required to repeal or modify the amendment. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSED AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION WHICH INCREASES THE AUTHORIZED CAPITALIZATION OF THE COMPANY FROM FIFTEEN (15) MILLION SHARES OF COMMON STOCK TO SIXTY (60) MILLION SHARES CONSISTING OF 50,000,000 SHARES OF COMMON STOCK PAR VALUE $.001 AND 10,000,000 SHARES OF PREFERRED STOCK PAR VALUE $.001. Proposal 2 Amend the Certificate of Incorporation to Change of Name of Corporation Since the Company has not engaged in any aspect of genetic analysis for number of years, management proposes that the name of the Company be changed. As all shareholders are aware, the Company is currently engaged in the manufacture and sale of a line of electro-surgical and other medical products together with industrial lighting. In addition the Company has recently acquired a new medical generator product line sold under the tradename Bovie , a highly respected and well known name in the electro medical device industry. Accordingly management believes that the name "Bovie Medical Corporation" will provide the benefits of a well known and highly respected name in the medical device field, preserve the product identity of the corporation and remove the misleading characteristic of it being a genetics company. Management anticipates a need to change the Company's trading symbol for its shares which are presently traded on the OTC electronic bulletin board under the symbol "AGNT" and, subject to shareholder approval for the change of name, has proposed a new symbol for the OTC Bulletin Board. As of the date hereof no symbol has been determined nor has any application therfor been submitted to the OTC Bulletin Board. Amendment of Certificate of Incorporation Article "First" of the Company's certificate of incorporation presently reads: "First: the name of the corporation is "An-Con Genetics, Inc." Subject to the approval of shareholders, the Board of Directors has resolved to amend the Company's certificate of incorporation to provide for a new article First thereof to read as follows: "First: the name of the corporation is: Bovie Medical Corporation . Required Vote for Adoption Under Delaware Law the affirmative vote of a majority of the outstanding shares of the Company's Common Stock is required for the approval of the proposed amendment to the Company's Certificate of Incorporation which increases the authorized shares available for issuance. Once given effect, a majority vote of the Company's Common Stock at a properly called meeting at which a quorum is present will be required to repeal or modify the amendment. Recommendation of Management THE BOARD OF DIRECTORS RECOMMENDS VOTE APPROVING THE PROPOSED AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO CHANGE THE NAME OF THE CORPORATION FROM AN-CON GENETICS, INC. TO "Bovie Medical Corporation". Proposal 3 Ratification of Company s 1998 Non-Statutory Stock Purchase and Option Plan In January, 1998, the Board of Directors adopted a new stock option plan for the purpose of acquiring, retaining and incentivizing executive and other key employees and consultants of the Company and its subsidiary, Aaron Medical Industries, Inc. The Company s 1998 Non-Statutory Stock Purchase and Option Plan (the Plan ) authorizes the issuance of options to employees and consultants of the corporation to purchase up to a total of 1,200,000 shares thereunder. The Plan requires that options may be issued at an exercise price equal to at least 80% of the market price for the Company s shares in the over-the-counter market (on the Electronic Bulletin Board). Any options issuable to officers or directors under the Plan must be issued at an exercise price equal to no less than the then current market price for the shares in the over- the-counter market. The determination for grant of options is made by the Board of Directors under the Plan. The options are non-transferable. The Option shall terminate and expire on the expiration date of the option. In addition each option shall automatically terminate upon the earlier of: (i) The termination of the Optionee's employment with the Company for cause (as defined under the Plan); (ii) The expiration of twelve (12) months from the date of termination of the Optionee's employment with the company for any reason other than death, without cause; provided, that if the Optionee dies within such twelve- month period, subclause (iii) below shall apply; or (iii) The expiration of fifteen (15) months after the date of death of the Optionee. Potential Adverse Aspects of the Plan: Although management believes it is in the interests of shareholders that the Plan be approved in order to attract and retain qualified employees and consultants, since the Plan authorizes the grant of options to purchase up to 1,200,000 shares, the future grant and exercise of the options would tend to dilute the percentage ownership of shareholders in the Company. Furthermore, the nature of the options is such that the options would be exercised at a time that the Company would be able to derive a higher price for Company shares than the exercise price. Recommendation of Management MANAGEMENT BELIEVES THAT IT IS ESSENTIAL TO HAVE THE PLAN IN ORDER TO ATTRACT AND RETAIN ITS OFFICERS, DIRECTORS AND CONSULTANTS AND RECOMMENDS THAT THE SHAREHOLDERS VOTE TO RATIFY THE COMPANY S 1998 NON- STATUTORY STOCK PURCHASE AND OPTION PLAN. Other Matters The Board of Directors of the Company knows of no other matters to come before the Meeting, other than that which is set forth herein and in the accompanying Notice of Special Meeting. However, if any other matters should properly come before the Meeting, it is the intention of the persons named in the accompanying Proxy to vote such Proxies as in their discretion they may deem advisable. Rights of Dissenting Shareholders Dissenting shareholders do not have any rights of appraisal with respect to the proposals to which this Proxy Statement relates. Any negative vote with respect to any specific proposal, will, of course, be duly noted and recorded in the computation to determine whether majority approval has been obtained. By Order of the Board of Directors President Melville, New York May , 1998 PROXY CARD AN-CON GENETICS, INC. PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS The undersigned hereby appoints Andrew Makrides and Delton Cunningham each with the power to appoint his or her substitutes, and hereby authorizes them to represent and to vote, as designated above, all the shares of common stock of An-Con Genetics, Inc. held of record by the undersigned on May 31, 1998, at the meeting of shareholders to be held on July ____, 1998 or any adjournment thereof. In their discretion the proxies are authorized to vote upon such other business as may properly come before the meeting. This proxy, when properly executed will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, this proxy will be voted FOR Proposals 1, 2 and 3. Please sign exactly as your name appears on the reverse side. When shares are held by joint tenants, both should sign.* *When signing as attorney, as executor, administrator, trustee or guardian, please give full title as such. If shareholder is a corporation, please sign in full corporate name by President or other authorized officer. If shareholders is a partnership, please sign in partnership name by authorized person. (To Be Signed on Reverse Side.) FRONT OF CARD PROXY CARD AN-CON GENETICS, INC. A Please mark your votes as in this example. Vote For Against Withhold 1. Proposal to increase the authorized capitalization from 15,000,000 shares par value $.001 to 60,000,000 shares, par value $.001 of which 50,000,000 shares shall be common Stock, par value $.001 per share. 2. Proposal to change the name of the Corporation to Bovie Medical Corporation. 1. Proposal to ratify the Company s 1998 Non-Statutory Stock Purchase and Option Plan. ____ SIGNATURE(S) _____________________________ DATE __________________ NOTE: Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator trustee or guardian, please give full title as such. 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