UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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 [X]
Filed by a Party other than the Registrant [ ]
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[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 Pursuant to ss. 240.14a-12
WATER CHEF, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
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PRELIMINARY COPY SUBJECT TO COMPLETION
DATED [ ], 2004
Water Chef, Inc.
1007 Glen Cove Avenue
Glen Head, NY 11545
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON [ , 2004]
Dear Stockholders:
You are cordially invited to attend a special meeting of stockholders on [
, 2004] at 10:00 a.m. local time at our corporate headquarters, located at 1007
Glen Cove Avenue, Glen Head, NY, 11545.
The purpose of this special meeting is to consider and vote on the
following matters:
a proposal to amend our Restated Certificate of Incorporation to increase
the authorized capital stock of Water Chef, Inc. from 100,000,000 shares to
200,000,000 shares, consisting of 190,000,000 shares of common stock and
10,000,000 shares of preferred stock, which Certificate of Amendment was
approved by the Board of Directors on August 20, 2002; and
such other business as may properly come before the special meeting, or any
adjournment thereof.
The Board of Directors has fixed the close of business on [ , 2004] as the
record time for determining which stockholders are entitled to notice of, and to
vote at, this special meeting, or any adjournment thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING, YOU ARE URGED TO FILL
IN, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT TO US USING THE SELF
ADDRESSED STAMPED ENVELOPE PROVIDED.
By Order of the Board of Directors,
Marshall S. Sterman
Member of the Board of Directors and
Acting Secretary
Glen Head, New York
[ , 2004]
TABLE OF CONTENTS
Page
----
QUESTIONS AND ANSWERS ABOUT THE MEETING.......................................1
SECURITY OWNERSHIP............................................................4
PROPOSAL 1: APPROVING THE AMENDMENT TO OUR
RESTATED CERTIFICATE OF INCORPORATION.........................................4
Introduction.........................................................4
Description of the Common Stock, Warrants, Convertible Securities
and Convertible Notes..............................................7
Principal Reasons for Increasing the Number of Authorized Shares
of Common Stock ...................................................8
Vote Required........................................................9
Recommendation of the Board..........................................9
OTHER MATTERS.................................................................9
ANNUAL AND QUARTERLY REPORT...................................................9
EXHIBIT A - Certificate of Amendment to the Water Chef, Inc. Restated
Certificate of Incorporation
EXHIBIT B - Water Chef, Inc.'s Annual Report on Form 10-KSB/A for the Fiscal
Year Ended December 31, 2002.
EXHIBIT C - Water Chef, Inc.'s Quarterly Report on Form 10-QSB for the Period
Ended September 30, 2003.
WATER CHEF, INC.
1007 Glen Cove Avenue
Glen Head, NY 11545
PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION
DATED [ ], 2004
This proxy statement is being furnished to you in connection with the
solicitation by the Board of Directors of proxies for use at our special meeting
of stockholders scheduled for [ , 2004] at our corporate headquarters, located
at 1007 Glen Cove Avenue, Glen Head, NY, 11545, at 10:00 a.m. local time, and
any adjournment thereof. This proxy statement, and the accompanying proxy card,
are first being mailed to stockholders on or about [ , 2004.]
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING
WHAT IS THE PURPOSE OF THE SPECIAL MEETING?
The purpose of the special meeting is to consider and vote upon the following
matters;
a proposal to amend our Restated Certificate of Incorporation to increase the
authorized capital stock of Water Chef, Inc. (the "Company") from 100,000,000
shares to 200,000,000 shares, consisting of 190,000,000 shares of common stock
and 10,000,000 shares of preferred stock, which Certificate of Amendment was
approved by the Board of Directors on August 20, 2002 ("Proposal No. 1").
such other business as may properly come before the special meeting or any
adjournment thereof.
At the special meeting, a representative of Marcum & Kliegman LLP, our
independent auditors for the year ending December 31, 2002, will be
available to report on our current operations and answer stockholder
questions.
WHY AM I RECEIVING THIS PROXY STATEMENT AND PROXY CARD?
You are receiving this proxy statement and the enclosed proxy card because the
Board of Directors is soliciting your proxy to vote your shares of common stock
or preferred stock, as the case may be, at the special meeting. To assist you in
your decision-making process, this proxy statement contains pertinent
information about us, the special meeting and the proposal to be considered.
WHEN AND WHERE WILL THE MEETING BE HELD?
The special meeting of stockholders will be held at our corporate headquarters,
located at 1007 Glen Cove Avenue, Glen Head, NY 11545 on [ , 2004] at 10:00 a.m.
local time.
WHO IS ENTITLED TO NOTICE OF AND TO VOTE AT THE SPECIAL MEETING?
All stockholders of record at the close of business on [ , 2004] are entitled to
notice of, and to vote at, the special meeting. Each share of our common stock
and each share of each class of our preferred stock entitle its holder to one
vote on each matter properly submitted to stockholders. On the record date,
there were (i) 89,564,286 outstanding shares of our common stock, held by a
total of 848 stockholders, (ii) 52,500 outstanding shares of our Series A
Preferred Stock, held by a total of 11 stockholders, (iii) 218,750 outstanding
shares of our Series C Preferred Stock, held by a total of 11 shareholders, (iv)
93,000 outstanding shares of our Series D Preferred Stock, held by a total of 23
stockholders, and (v) 484,916 outstanding shares of our Series F preferred
Stock, held by a total of 43 shareholders.
1
HOW DO I VOTE?
By properly completing, signing and returning the enclosed proxy card, your
shares will be voted as directed. If no directions are specified on your
properly signed and returned proxy card, your shares will be voted for the
proposal set forth below, and with regard to any additional matters that come
before the special meeting, in the discretion of the persons named as proxies.
If you are a registered stockholder; that is, if you hold your shares of stock
in certificate form, and you attend the meeting, you may either mail in your
completed proxy card or deliver it to us in person. If you hold your shares of
stock in "street name;" that is, if you hold your shares of stock through a
broker or other nominee, and you wish to vote in person at the special meeting,
you will need to obtain a proxy card from the institution holding your stock.
CAN I VOTE BY TELEPHONE OR ELECTRONICALLY?
No. At the present time we have not established procedures for telephonic or
electronic voting. We may establish such procedures in the future, should we
determine that their added convenience justifies their additional cost. At this
time, you may only vote by returning a properly executed proxy card, or voting
in person at the special meeting.
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
It means that you have multiple accounts at the transfer agent and/or with
stockbrokers. Please sign and return all proxy cards to ensure that all of your
shares are voted.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. Even after submitting your proxy card, you can revoke it and/or change your
vote prior to the special meeting. To revoke or change your vote prior to the
special meeting, simply (i) file a written notice of revocation with our
secretary, (ii) send us a duly executed proxy card bearing a later date than the
prior one submitted or (iii) attend the special meeting and vote in person.
Please note, however, that while the giving of a proxy does not affect your
right to vote in person at the special meeting, attendance alone will not revoke
a previously granted proxy.
WHAT IS A "QUORUM?"
A quorum is the number of people required to be present before a meeting can
conduct business. Pursuant to our Bylaws, the presence at the special meeting of
at least a majority of the outstanding shares of our capital stock (45,206,727
shares) as of the record date, whether in person or by proxy, is necessary for
there to be a "quorum." If you submit a properly executed proxy card, even if
you abstain from voting, you will be considered part of the quorum. Shares
represented by broker "non-votes" will also be considered part of the quorum.
WHAT VOTE IS REQUIRED TO APPROVE PROPOSAL No. 1?
Approval of the proposal to amend our Restated Certificate of Incorporation to
increase the authorized capital stock of the Company from 100,000,000 to
200,000,000, consisting of 190,000,000 shares of common stock and 10,000,000
shares of preferred stock, as approved by the Board of Directors on August 20,
2002, requires the affirmative vote of a majority of the issued and outstanding
shares of our common stock and preferred stock voting together as one class of
capital stock.
Properly executed proxy cards marked "ABSTAIN" and broker "non-votes"
will not be voted. Accordingly, abstentions and broker "non-votes" are
tantamount to negative votes.
2
WHAT IS THE BOARD OF DIRECTORS' RECOMMENDATION?
The Board of Directors recommends that you vote:
for the amendment to the Certificate of Amendment to the Restated Certificate of
Incorporation increasing the authorized capital stock from 100,000,000 shares to
200,000,000 shares, consisting of 190,000,000 shares of common stock and
10,000,000 shares of preferred stock, which Certificate of Amendment was
approved by the Board of Directors on August 20, 2002.
If Proposal No. 1 is approved by the stockholders, David A. Conway, the
President and Chief Executive Officer of the Company, will be issued
10,0954,186 of the 24,003,149 shares that are to be reissued (as more fully
discussed below). Because of this potential conflict of interest, he did
not participate in the vote of the Board of Directors to approve the
increase of the authorized capital of the Company, or provide his opinion
to the Board as to whether the Board should recommend Proposal No. 1 to the
stockholders.
Unless otherwise instructed, the shares of stock represented by your signed
and returned proxy card will be voted in accordance with the
recommendations of the Board of Directors. With respect to other matters
that may properly come before the special meeting, the proxy holder(s) will
vote in accordance with the Board of Directors' recommendations or, if no
recommendation is given, at their discretion.
WHO IS PAYING THE COST FOR THIS PROXY SOLICITATION AND HOW IS THE SOLICITATION
PROCESS BEING CONDUCTED?
We will pay the costs associated with this proxy solicitation. We do not
anticipate that such costs will exceed those normally associated with similar
proxy solicitations. We will also, upon request, reimburse brokers, banks and
similar organizations for reasonable out-of-pocket expenses incurred in
forwarding these proxy materials to clients.
In addition to soliciting of proxies through the mail, our directors and
employees may solicit proxies in person, by telephone or other electronic
means. None of our directors or employees will receive additional
compensation for any such efforts.
DO I HAVE DISSENTER'S RIGHTS?
No. The action proposed to be taken at the special meeting does not entitle
dissenting stockholders to any appraisal rights under the Delaware General
Corporation Law.
WHEN ARE STOCKHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING OF STOCKHOLDERS DUE?
For stockholder proposals to be considered for inclusion in the proxy statement
for our next annual meeting, they must be submitted to us in writing, within a
reasonable time before we begin printing and mailing our annual meeting proxy
materials. We have not yet set the date for our next annual meeting. Please
note, however, that all proposals submitted must comply with applicable laws and
regulations and follow the procedures set forth in Rule 14a-8 of the Securities
Exchange Act of 1934, as amended, to be considered for inclusion in our proxy
materials.
HOW DO I OBTAIN MORE INFORMATION ABOUT US?
We file annual, quarterly and special reports and other information with the
Securities and Exchange Commission (the "SEC"). You may read and copy any of
these documents at the SEC's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at (800)-SEC-0330 for further
information. Copies of this material may also be obtained from the SEC's web
site at HTTP://WWW.SEC.GOV, by contacting our chief financial officer at (516)
656-0059 or by writing to us at 1007 Glen Cove Avenue, Glen Head, NY 11545.
3
SECURITY OWNERSHIP
The following table sets forth information concerning ownership of our
common stock and preferred stock, as of the record date, by (i) each person
known to be the beneficial owner of more than five percent of our outstanding
common stock and preferred stock, (ii) each director and executive officer
required to be named hereunder and (iii) all of our directors and executive
officers as a group. Unless otherwise indicated, we believe that each
stockholder has sole voting power and dispositive power with respect to the
shares of capital stock beneficially owned by him.
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Common Stock Beneficially
Owned(1)
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David A. Conway (2)(3)
Water Chef, Inc. 14,156,596 15.8%
1007 Glen Cove Ave.
Glen Head, NY 11545
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Marshall S. Sterman(4) 1,300,000 1.4%
The Mayflower Group
68 Phillips Beach Road
Swampscott, MA 1907
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All executive officers and 15,456,596 17.2%
Directors as a Group
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A person is deemed to be the beneficial owner of voting securities that can be
acquired by such person within 60 days after the record date upon the exercise
of options and warrants and the conversion of convertible securities. Each
beneficial owner's percentage ownership is calculated under the assumption that
all options, warrants or convertible securities held by such person (but not
those held by any other person) that are currently exercisable or convertible
(i.e., that are exercisable or convertible within 60 days after the record date)
have been exercised or converted.
Includes 6,310,464 shares held in an IRA trust.
(3) Does not include 10,954,186 shares to be re-issued to Mr. Conway and his
affiliates if Proposal No. 1 is approved by the stockholders.
(4) Includes 500,000 shares issuable upon the conversion of 12,500 shares
Series F Convertible Preferred Stock of the Company which shall be
convertible any time after there is authorized but unissued shares of
common stock available for issuance.
PROPOSAL NO. 1 -APPROVING THE AMENDMENT TO OUR RESTATED CERTIFICATE OF
INCORPORATION
Introduction
On February 22, 2002, the Board of Directors of the Company approved a
Certificate of Amendment to our Restated Certificate of Incorporation increasing
the authorized capital stock of the Company to 200,000,000, which was filed with
the Secretary of State of the State of Delaware on March 22, 2002. After filing
such Certificate of Amendment, the Company issued 24,003,149 shares of our
common stock in the following transactions:
4
Number of Shares
----------------
Name of Common Stock Consideration
---- --------------- -------------
D.A. Conway 6,769,583(1) -
D.A. Conway IRA Tr. 4,184,603(2) -
J.S. Conway 1,984,886(2) -
C.S. Conway 1,984,886(2) -
M.S. Sterman 800,000(3) $64,000
R. Hart 225,000(4) $18,000
J.J. Clark 100,000(5) $ 5,000
R. Breeding 125,000(6) $12,500
E. Roberts 50,000(7) $ 2,500
R. Monette 29,191(8) $ 2,043
D.M. Strazzula 500,000(9) -
F.A. Hertzka Trust 250,000(9) -
M.P. Claudette 250,000(9) -
C.L. Gelfand 250,000(9) -
C.C. Griffin 250,000(9) -
J.R. Fichtl 500,000(9) -
K.T. Decoster 300,000(9) -
H.O. Harris 100,000(9) -
A. Harris 100,000(9) -
M.B. Hayden 250,000(9) -
K.T. Decoster 250,000(9) -
J.J. Clark 500,000(10) -
E. Brown 250,000(10) -
G.F. Frank 1,000,000(11) $50,000
P. Brady 500,000(11) $25,000
P.G. Hall 500,000(11) $25,000
E.E. Ellis 2,000,000(11) $100,000
5
(1) Issued pursuant to anti-dilution rights granted to David Conway in
consideration of his $1,500,000 equity investment in the Company made in
June 1997.
Issued pursuant to anti-dilution rights granted to David Conway, an affiliate
and transferor of shares to the holder.
(3) Issued in connection with fund raising services and financial advisory
services rendered to the Company valued at $64,000.
(4) Issued in connection with Scientific Advisory Board services rendered to
the Company valued at $18,000.
(5) Issued in connection with fund raising services rendered to the Company
valued at $5,000.
(6) Issued in connection with marketing services rendered to the Company valued
at $12,500.
(7) Issued in connection with web site design services rendered to the Company
valued at $2,500.
(8) Issued in connection with printing services rendered to the Company valued
at $2,043.
(9) Pursuant to a settlement agreement discussed below with certain debenture
holders who brought an action against the Company, the Company issued an
aggregate of 3,000,000 shares of common stock to such debenture holders
valued at $497,500.
(10) The Company issued an aggregate of 750,000 shares of common stock valued at
$45,226 to certain debenture holders who were not party to the litigation
settlement agreement discussed below.
(11) Issued in connection with a private placement of common stock at a price
per share equal to $0.05.
Under Delaware General Corporation Law, the March 22, 2002 filing of the
Certificate of Amendment and the issuance of the 24,003,149 shares of common
stock were void acts of the Company since the requisite stockholder approval was
neither solicited nor received. Even though stock certificates representing the
24,003,149 shares have been issued by the Company, the shares represented
thereby are not validly issued and outstanding shares of the Company, and such
certificates will be cancelled.
Since the issuance of the 24,003,149 shares of common stock was void, the
Company breached its settlement agreement with the debenture holders, and its
agreements with the purchasers of 4,000,000 shares of common stock in the
private sale discussed above. However, the Company believes that as long as such
shares are validly issued to such parties, the Company will be in compliance
with those agreements, with respect to such issuances, and the Company and its
stockholders will not be materially adversely impacted by such breaches.
However, if Proposal No.1 is not approved by the stockholders, the Company will
be in material breach of the settlement agreement and private placement purchase
agreements; in which case, the Company will attempt to negotiate settlements
with the parties to those agreements. If the Company is not able to complete
such settlements, its financial condition and operations will be materially
adversely effected.
In an effort to comply with Delaware General Corporation Law, on August 20,
2002, the Board of Directors approved: (i) a Certificate of Amendment to the
Restated Certificate of Incorporation, a form of which is attached hereto as
Exhibit A, that would increase the number of shares of our capital stock
authorized for issuance from 100,000,000 to 200,000,000; and (ii) the
re-issuance of the 24,003,149 shares of our common stock which were not validly
issued, and which the Company intends to re-issue if Proposal No. 1 is approved.
6
In connection with the re-issuance of the 24,003,149 shares of our common stock,
the Company accrued a liability of $500,000. This is not an additional
liability. Rather, it reflects the Company's obligation to validly issue common
stock in connection with the settlement agreement between the Company and former
debenture holders. In addition, those shares of common stock which were not
validly issued will not be entitled to vote on this proposal.
The stockholders are being asked to approve this proposed amendment. The
shares of the Company's common stock, including the additional shares proposed
for authorization, do not have preemptive or similar rights. If approved by the
stockholders, Article 4 of the Company's Restated Certificate of Incorporation
would be amended to provide as follows:
4: The total authorized capital stock of the Corporation shall be two
hundred million (200,000,000) shares, each with a par value of $0.001
per share, as follows:
1. Common Stock: The Corporation is authorized to issue up to one
hundred and ninety million (190,000,000) shares of Common Stock.
2. Preferred Stock: The Corporation is further authorized to issue
up to ten million (10,000,000) shares of preference stock to be
known as "Preferred Stock." Authority is hereby expressly vested
in the Board of Directors of the Corporation to divide said
Preferred Stock into series and fix and determine the voting
powers, designations, preferences and relative participating,
optional or special rights and qualifications, limitations or
restrictions of the shares of each series so established, as
provided by Section 151 of the Delaware General Corporation Law.
Description of the Common Stock, Warrants, Convertible Debentures and
Convertible Notes
Except as to certain matters discussed below or as proscribed by applicable
law, the holders of shares of the capital stock of the Company vote together as
a single class. The holders of our capital stock do not have cumulative voting
rights, which means that the holders of more than 50% of the outstanding shares,
voting for the election of directors, can elect all of the directors to be
elected, if they so choose, and, in that event, the holders of the remaining
shares will not be able to elect any of our directors.
Description of the Common Stock
-------------------------------
Prior to filing the Certificate of Amendment on March 22, 2002 increasing
our authorized capital stock to 200,000,000, we were authorized to issue up to
100,000,000 shares of capital stock, consisting of up to 90,000,000 shares of
common stock and up to 10,000,000 shares of preferred stock. Not including the
24,003,149 shares of common stock which were not validly issued, there are
presently 89,564,284 shares of common stock outstanding. The Company is also
obligated to issue 1,666,667 shares of common stock upon the exercise of
warrants, an additional 14,787,377 pursuant to the settlement agreement
discussed below and 32,430,142 of shares common stock upon the conversion of
other securities outstanding. The holders of common stock: (i) have equal
ratable rights to dividends from funds legally available if and when declared by
our Board of Directors after all accrued but unpaid dividends have been paid to
the holders of the outstanding capital stock ranking senior to the common stock
as to dividends; (ii) are entitled to share ratably in all of our assets
available for distribution to the holders of common stock upon liquidation,
dissolution or winding up of our affairs; and (iii) do not have preemptive,
subscription or conversion rights, and there are no redemption or sinking fund
provisions or rights.
7
Description of Warrants
-----------------------
There are 1,666,667 Series D Warrants to purchase common stock outstanding
that are exercisable at $0.15 per share at anytime prior to March 27, 2002,
which were extended to March 27, 2004 pursuant to the court actions brought by
certain 12% subordinated debenture holders, discussed below. The holders of the
warrants shall have the right, subject to certain limitation, to have the shares
of common stock issuable upon the exercise of such warrants included in any
registration statement requesting the public sale of common stock of the Company
which is to be filed with the SEC prior to May 4, 2004. The warrants are subject
to adjustment in certain circumstances, including stock splits, dividends,
recapitalizations and issuances of common stock or securities convertible into
common stock, for no consideration. The warrants do not confer upon the holder
any voting or other rights of a stockholder.
Description of Subordinated Debentures
--------------------------------------
There is an aggregate of $350,000 of 12% subordinated debentures
outstanding, which convert into 2,333,334 shares of common stock, and were due
on October 1, 1997. These debentures are presently in default. As more fully
discussed below, the Company has entered into settlement agreements, settling
certain claims of all of the holders of these subordinated debentures. All but
two debenture holders were party to a legal proceeding in connection with these
debentures. However, all holders, including the two holders not party to that
action have agreed to settle their claims and potential claims against the
Company. Pursuant to those settlement agreements, in exchange for 17,787,671
shares of common stock, the holders of the subordinated debentures will tender
the subordinated debentures to the Company. The subordinated debentures do not
confer upon the holders any voting or other rights of a stockholder.
Description of Convertible Notes
--------------------------------
There is a 10% convertible note issued to 4 Clean Waters, Ltd. outstanding,
the principal amount of which is $200,000. The note is not presently convertible
into common stock. The note was convertible into common stock after the 4 Clean
Waters, Ltd. loaned $300,000 to the Company, which has not occurred. The Company
is in default of the note and 4 Clean Waters, Ltd. has obtained a judgment in
the amount of $245,893.89 against the Company. The Company has not paid the
judgment and is in discussions with 4 Clean Waters, Ltd. to negotiate a
settlement.
Principal Reasons for Increasing the Number of Authorized Shares of Common Stock
The Company does not have sufficient liquidity to finance its operations
and has used its common stock to pay for goods, services and to repay past
debts. As a condition to a settlement agreement, dated as of June 20, 2002,
settling certain claims and counterclaims between the Company and certain of its
investors who acquired subordinated debentures (the aggregate principal amount
of which is $300,000) and warrants to purchase an aggregate of 1,666,667 shares
of common stock of the Company which were exercisable at $0.15 per share until
March 27, 2002, (i) the Company is required to (a) issue to such investors a
total of 17,037,671 shares of common stock (which includes 3,000,000 shares of
common stock that was not validly issued and included in the 24,003,149, which
the Company intends to reissue), and (b) extend the exercise term of the
warrants to purchase common stock for an additional twenty-four (24) months,
until March 27, 2004; and (ii) the investors shall surrender their subordinated
debentures to the Company. The Company has also agreed to apply for listing, and
register the resale of such shares. The Company also is required to issue
750,000 shares to two debenture holders who held notes in the principal amount
of $50,000 who were not party to the settlement agreement to settle any
potential claims they may have.
8
The Company is also seeking approval of Proposal No. 1 because as
previously discussed, the Company did not validly issue a total of 24,003,149
shares of common stock as required. Therefore, if Proposal No. 1 is approved,
the Company intends to re-issue those shares of common stock.
The Board of Directors of the Company believes that it is advisable and in
the best interests of the Company to have additional authorized but unissued
shares of common stock available in an amount adequate to provide for the future
needs of the Company. The increase in authorized common stock will not have any
immediate effect on the rights of existing stockholders. However, the additional
shares will be available for issuance from time to time for a stock split or
dividend, raising capital through the sale of common stock and attracting and
retaining valuable employees by issuing additional stock options.
Other than the 24,003,149 shares of common stock the Company intends to
re-issue, shares to be issued in connection with the litigation and claims of
certain debenture holders discussed above and common stock the Company is
required to issue in connection with the exchange, conversion or exercise of the
Company's outstanding options, warrants and other convertible securities as
described above, the Company has no commitments, undertakings or agreements for
the issuance or use of the proposed additional shares of capital stock. However,
to the extent possible, the Company intends to issue its common stock to fund
its operations and continue as a going concern. The Board of Directors believes
that if an increase in the authorized number of shares of capital stock were to
be postponed until specific needs for such shares arose, the delay and expense
incident to obtaining the approval of the Company's stockholders at that time
could significantly impair the Company's ability to meet financing requirements
or other objectives.
The issuance of the additional shares of capital stock could have the
effect of diluting earnings per share and book value per share, which could
adversely affect the Company's existing stockholders. Issuing additional shares
of capital stock may also have the effect of delaying or preventing a change of
control of the Company. The Company's authorized but unissued capital stock
could be issued in one or more transactions that would make more difficult or
costly, and less likely, a takeover of the Company. The ratification of the
Certificate of Amendment to the Company's Restated Certificate of Incorporation
is not being recommended in response to any specific effort of which the Company
is aware to obtain control of the Company, and the Board of Directors has no
current intention to use the additional shares of capital stock in order to
impede a takeover attempt.
Vote Required
The affirmative vote of the holders of a majority of our outstanding
capital stock is required to amend our Restated Certificate of Incorporation.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT.
If Proposal No. 1 is approved by the stockholders, David A. Conway, the
President and Chief Executive Officer of the Company, and his affiliates will be
issued 10,954,186 of the 24,003,149 shares that are to be reissued. Because of
this potential conflict of interest, he did not participate in the vote of the
Board of Directors to approve the increase of the authorized capital of the
Company or provide his opinion as to whether the Board should recommend Proposal
No. 1 to the stockholders.
OTHER MATTERS
The Board of Directors does not know of any matter, other than Proposal No.
1 described above that may be presented for action at the special meeting. If
any other matter or proposal should be presented and should properly come before
the meeting for action, the persons named in the accompanying proxy will vote
upon such matter or proposal in accordance with their best judgment.
ANNUAL AND QUARTERLY REPORT
All stockholders of record as of the record date, are being sent herewith a
copy of the Company's (i) Annual Report on Form 10-KSB/A for the year ended
December 31, 2002, which contains certified financial statements of the Company
for the year then ended and (ii) Quarterly Reports on Form 10-QSB for the
quarters ended March 31, 2003, June 30, 2003 and September 30, 2003. This Proxy
incorporates by reference the Financial Statements and Management's Discussion
and Analysis of Financial Condition and Results of Operations contained in such
reports.
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Appendix A
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PRELIMINARY COPY SUBJECT TO COMPLETION
DATED [ ], 2004
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS OF
WATER CHEF, INC.
Proxy - Special Meeting of Stockholders
[ ] , 2004
The undersigned, a holder of common stock or preferred stock of Water Chef,
Inc., a Delaware corporation (the "Company"), does hereby appoint [ ] and [ ],
and each of them, the true and lawful attorneys and proxies with full power of
substitution, for and in the name, place and stead of the undersigned, to vote
all of the shares of common stock or preferred stock of the Company that the
undersigned would be entitled to vote if personally present at the Special
Meeting of Stockholders of the Company to be held at 10:00 a.m., local time, [
__, 2004] at the corporate headquarters of the Company, located at 1007 Glen
Cove Avenue, Glen Head, NY, 11545, or at any adjournment or adjournments
thereof.
This proxy will be voted in accordance with any directions given herein. Unless
otherwise specified, this proxy when executed and returned to the Company will
be voted to approve the proposed amendment to the restated certificate of
incorporation.
1. To approve the proposed amendment to the Restated Certificate of
Incorporation to increase the authorized shares of capital stock of the
Company from 100,000,000 to 200,000,000.
FOR [___] AGAINST[___] ABSTAIN[___]
NOTE: Your signature should appear the same as your name appears hereon. If
signing as attorney, executor, administrator, trustee or guardian, please
indicate the capacity in which you are signing. When signing as joint tenants,
all parties in the joint tenancy must sign. When a proxy is given by a
corporation, it should be signed by an authorized officer.
Signature:___________________________ Date: __________________, 2004
Signature:_______________________ Date: __________________, 2004
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