SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Soliciting Material Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.)
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[X] Soliciting Material Pursuant to Rule 14a-12
ELITE PHARMACEUTICALS, INC.
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(Name of Registrant as Specified In Its Charter)
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[Elite Letterhead]
September 9, 2002
FREEDMAN GROUP SEEKS "VALUE" ONLY FOR ITSELF
Dear Stockholder:
Harris Freedman, Sharon Will, Michael H. Freedman and the other entities
that they control (the "Freedman Group") have initiated a disruptive and costly
solicitation contest to remove -- without cause --- all of the independent
members of your Board of Directors and to install themselves in their place. The
Freedman Group refers to themselves as the "Elite Value Committee", but the
Freedman Group is not affiliated with your Company, and its members do not seek
"value" for anyone other than themselves.
WE CAUTION YOU NOT TO SIGN ANY CONSENT CARD YOU MAY RECEIVE FROM THE
FREEDMAN GROUP BEFORE YOU CONSIDER ALL OF THE PERTINENT INFORMATION.
Your Board of Directors is writing this letter to correct some of the
numerous mistakes and omissions from the Freedman Group's solicitation materials
and to provide you with information that should be considered before you decide
how to vote.
Your Board of Directors believes that the real purpose of the Freedman
Group's solicitation is to extend the term of warrants, a substantial portion of
which are held by members of the Freedman Group, thereby increasing the value of
their warrants, at a significant cost to other stockholders. In the opinion of
two independent outside accounting firms, extending the warrants as contemplated
by the Freedman Group would result in a charge of at least $1,000,000, nearly as
much as the Company's total revenues during fiscal 2002. Your Board of Directors
believes that the Freedman Group, which has no experience in the management and
operation of a pharmaceutical discovery and development company, is not
interested in the business and prospects of the Company.
The Freedman Group attempts to disguise their real objective by calling on
the Company to take various actions, many of which are already being considered
by your Board of Directors. When boiled down to its essential elements, the
Freedman Group's solicitation is nothing more than a blatant attempt to take
control of your company so that the members of the Freedman Group can enrich
themselves at the expense of other stockholders.
WHAT YOU SHOULD KNOW
Your Board of Directors has already addressed most of the "proposals" made
by the Freedman Group:
Freedman Group "Proposal" Company Action
Increase management depth by For more than six months, the Company
appointing qualified business has been searching for a qualified
development, operating and business development executive with
financial personnel relevant industry experience. The
Company has a qualified chief financial
officer in place. If and when the
Company's operations grow
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to a point that the services of a
full-time CFO are required, the Company
will hire one. Similarly, the Company
plans to hire a full-time operations
person once the Company's operations
have grown to a level that justifies the
position.
Expand the expertise of the Board The Company has been and continues to be
of Directors open to expanding the Board of Directors
to include qualified, truly independent
candidates whose skills complement those
of the existing members of your Board.
Retain an investment bank The Company has met with representatives
from numerous investment banks and has
entered into discussions regarding the
potential engagement of a financial
advisor.
The Freedman Group's solicitation materials are misleading and hide Mr.
Freedman's true agenda. The Company has instituted litigation against the
members of the Freedman Group and certain related parties in the United States
District Court for the District of New Jersey.
The Freedman Group's solicitation materials contain numerous omissions and
mistakes, including the following:
What the Freedman Group Says What They Don't Tell You
Extending the term of the warrants The Freedman Group will profit from the
will provide substantial capital extension of the warrants even if the
resources to Elite if its stock warrants are never exercised.
price rises.
The Freedman Group would have no
obligation to exercise their warrants
and can sell them in the open market,
thereby enriching themselves with no
benefit to the Company.
Extending the warrants will cause the
Company to incur a charge of more than
$1,000,000, thereby potentially
negatively impacting the stock price.
Depending on the price of the Company's
stock, additional capital, if needed,
could be raised more cheaply through
other methods, such as a rights offering
to existing stockholders or a secondary
offering to the public.
Members of the Freedman Group have Harris Freedman was convicted of
extensive experience in private and securities fraud.
public investment and business
management. Harris Freedman was convicted of
directly misleading investors.
Harris Freedman was barred from
associating with
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a broker dealer because of securities
law violations, including misleading
investors.
Harris Freedman has served as a
"promoter" of a number of companies.
Harris Freedman has been sued by
investors of companies he promoted for
securities fraud.
No member of the Freedman Group has
experience in the operations or
management of a pharmaceutical discovery
and development company.
Entities affiliated with Harris The consulting arrangements with Mr.
Freedman and Sharon Will provided Freedman and Ms. Will were terminated as
financial consulting and investor a result of poor performance and concern
relations services to the Company over Mr. Freedman's and Ms. Will's prior
activities and motivations.
The Freedman Group is committed to The Freedman Group's only real interest
maximizing stockholder value. is in enriching themselves at the
expense of other stockholders by
extending the terms of the warrants.
The Freedman Group has instituted a
costly and unproductive consent
solicitation two months before the
Company's annual meeting rather than
seek to have stockholders elect a new
slate of directors at the annual
meeting. According to the filed
solicitation materials, the overall
costs of the solicitation for both sides
will be approximately $300,000. Harris
Freedman has stated that he will seek
reimbursement from the Company for his
expenses if his solicitation is
successful.
Adopting all of the Freedman Group's
proposals would result in significant
charges and expenses for the Company at
a time when the Company needs to husband
its resources.
Harris Freedman has threatened to "wreck
the Company" if his solicitation is
unsuccessful.
The Freedman Group says that their nominees can do a better job of managing
the Company than your independent, duly elected Board of Directors. However,
over the past two years, Elite's stock price has outperformed that of two other
companies Harris Freedman and Sharon Will have been associated with, Amplidyne,
Inc. (AMPD) and Hemispherx Biopharma, Inc. (HEB). We urge you to examine the
performance of these companies in your evaluation of the purported capabilities
of the Freedman Group.
Are these the types of individuals you want running your company? Your
current Board is fighting vigorously to ensure the future of Elite, but WE NEED
YOUR HELP!
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On behalf of the Board of Directors, thank you for your continued interest
and support in your company.
Very truly yours,
/s/ Atul M. Mehta
Atul M. Mehta, Ph.D.
President and Chief Executive Officer
For The Board of Directors
THIS LETTER IS NOT A CONSENT REVOCATION STATEMENT. THE BOARD OF DIRECTORS IS NOT
SOLICITING ANY AUTHORIZATION, CONSENT OR REVOCATION THROUGH THIS LETTER. ON
SEPTEMBER 4, 2002, THE COMPANY FILED A REVISED PRELIMINARY CONSENT REVOCATION
STATEMENT WITH THE SECURITIES AND EXCHANGE COMMISSION ("SEC"). THE BOARD OF
DIRECTORS EXPECTS TO FILE A DEFINITIVE CONSENT REVOCATION STATEMENT WITH THE SEC
IN THE NEAR FUTURE. PLEASE READ THE DEFINITIVE CONSENT REVOCATION STATEMENT
CAREFULLY WHEN IT IS AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION.
YOU MAY OBTAIN FOR FREE A COPY OF THE REVISED PRELIMINARY CONSENT REVOCATION
STATEMENT, THE DEFINITIVE CONSENT REVOCATION STATEMENT (WHEN IT IS AVAILABLE)
AND ANY OTHER RELEVANT DOCUMENTS AT THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV.
YOU ALSO MAY OBTAIN A FREE COPY OF THE DEFINITIVE CONSENT REVOCATION STATEMENT
AND CONSENT REVOCATION (WHEN THEY ARE AVAILABLE) FROM THE COMPANY AT:
GEORGESON SHAREHOLDER COMMUNICATIONS INC.
17 STATE STREET, NEW YORK, NEW YORK 10004
TOLL FREE TEL: 866-297-1267
FAX: 212-440-9009.
INFORMATION REGARDING THE NAMES, AFFILIATIONS AND INTERESTS OF PERSONS WHO MAY
BE DEEMED TO BE PARTICIPANTS IN OUR SOLICITATION OF CONSENT REVOCATIONS FROM THE
COMPANY'S STOCKHOLDERS IS AVAILABLE IN THE REVISED PRELIMINARY CONSENT
REVOCATION STATEMENT FILED WITH THE SEC ON SEPTEMBER 4, 2002.
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