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 |_|
Check the appropriate box:
| | Preliminary proxy statement
|X| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
GreenMan Technologies, Inc.
(Name of Registrant as Specified in its Charter)
GreenMan Technologies, Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0- 11:
(4) Proposed maximum aggregate value of transaction:
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
GREENMAN TECHNOLOGIES, INC.
7 Kimball Lane, Building A
Lynnfield, Massachusetts 01940
(781) 224-2411
--------------------------
NOTICE OF SPECIAL MEETING IN LIEU OF ANNUAL
MEETING OF STOCKHOLDERS
March 12, 1998
----------------------
TO THE STOCKHOLDERS:
A Special Meeting in Lieu of Annual Meeting of Stockholders (the
"Meeting") of GreenMan Technologies, Inc., a Delaware corporation, will be held
on Thursday, March 12, 1998, at 9:00 a.m., at The Sky Club, 200 Park Avenue,
56th Floor, New York, New York 10166, for the following purposes:
1. To elect six (6) members of the Board of Directors.
2. To approve amendments to the Company's Certificate of
Incorporation and By-Laws to create three classes of directors
to serve for staggered terms.
3. To approve an amendment to the Company's Certificate of
Incorporation to effect a reverse split of the Company's
Common Stock, $.01 par value per share (the "Common Stock"),
pursuant to which each five shares of Common Stock then
outstanding will be converted into one share.
4. To approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of
the Company's Common Stock from 20,000,000 to 50,000,000.
5. To consider and act upon a proposal to ratify the selection of
the firm of Wolf & Company, P.C. as independent auditors for
the fiscal year ending May 31, 1998.
6. To transact such other business as may properly come before
the meeting and any adjournments thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on January 15,
1998 are entitled to notice of and to vote at the Meeting.
All stockholders are cordially invited to attend the Meeting in person.
However, to assure your representation at the Meeting, you are urged to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the Meeting may vote in person even if he or she has returned a proxy.
By Order of the Board of Directors,
ROBERT H. DAVIS
Chief Executive Officer
February 13, 1998
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN THE ENCLOSED PROXY CARD AND RETURN
IT PROMPTLY IN THE ENCLOSED STAMPED ENVELOPE BY RETURN MAIL.
GREENMAN TECHNOLOGIES, INC.
7 Kimball Lane, Building A
Lynnfield, Massachusetts 01940
(781) 224-2411
--------------------------
PROXY STATEMENT
--------------------------
February 13, 1998
Proxies in the form enclosed with this proxy statement are solicited by
the Board of Directors of GreenMan Technologies, Inc. (the "Company") for use at
the Special Meeting in Lieu of Annual Meeting of Stockholders (the "Meeting") to
be held on Thursday, March 12, 1998, at 9:00 a.m., at The Sky Club, 200 Park
Avenue, 56th Floor, New York, New York 10166.
Only stockholders of record as of January 15, 1998 will be entitled to
vote at the Meeting and any adjournments thereof. As of that date, 10,846,281
shares of Common Stock, $.01 par value, (the "Common Stock") of the Company were
issued and outstanding. The holders of Common Stock are entitled to one vote per
share on any proposal presented at the Meeting. Stockholders may vote in person
or by proxy.
Execution of a proxy will not in any way affect a stockholder's right
to attend the Meeting and vote in person. Any stockholder giving a proxy has the
right to revoke it by notice to the Secretary of the Company at any time before
it is exercised.
The persons named as attorneys in the proxies are directors and
officers of the Company. All properly executed proxies returned in time to be
counted at the Meeting will be voted and, with respect to the election of the
Board of Directors, will be voted as stated below under "Election of Directors."
Any stockholder submitting a proxy has the right to withhold authority to vote
for any individual nominee to the Board of Directors by writing that nominee's
name on the space provided on the proxy. In addition to the election of
Directors, the stockholders will consider and vote upon proposals: (i) to
approve an amendment to the Company's Certificate of Incorporation and ByLaws to
create three classes of directors to serve for staggered terms; (ii) to approve
an amendment to the Company's Certificate of Incorporation to effect a reverse
split of the Company's Common Stock, pursuant to which each five shares of
Common Stock then outstanding will be converted into one share; (iii) to approve
an amendment to the Company's Certificate of Incorporation to increase the
number of authorized shares of the Company's Common Stock from 20,000,000 to
50,000,000; and (iii) to ratify the selection of Wolf & Company, P.C. as
auditors, as further described in this proxy statement. Where a choice has been
specified on the proxy with respect to the foregoing matters, the shares
represented by the proxy will be voted in accordance with the specification and
will be voted FOR if no specification is made.
The representation in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote at the Meeting is necessary
to establish a quorum for the transaction of business. Votes withheld from any
nominee, abstentions and broker non-votes are counted as present or represented
for purposes of determining the presence or absence of a quorum. A "non-vote"
occurs when a broker holding shares for a beneficial owner votes on one
proposal, but does not vote on another proposal because the broker does not have
discretionary voting power and has not received instructions from the beneficial
owner. Directors are elected by a plurality of the votes cast by stockholders
entitled to vote at the Meeting. The affirmative vote of the holders of a
majority of the Common Stock issued and outstanding is required for approval of
the proposed amendments to the Company's Certificate of Incorporation. All other
matters being submitted to stockholders require the affirmative vote of the
majority of shares present in person or represented by proxy at the Meeting. An
automated system administered by the Company's transfer agent tabulates the
votes. The vote on each matter submitted to stockholders is tabulated
separately. Abstentions are included in the number of shares present or
represented and voting on each matter.
The Board of Directors knows of no other matter to be presented at the
Meeting. If any other matter should be presented at the meeting upon which a
vote properly may be taken, shares represented by all proxies received by the
Company will be voted with respect thereto in accordance with the judgment of
the persons named as attorneys in the proxies.
The Company's Annual Report, containing financial statements for the
fiscal year ended May 31, 1997, is being mailed contemporaneously with this
proxy statement to all stockholders entitled to vote. This proxy statement and
the form of proxy were first mailed to stockholders on or about the date above.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of January 15, 1998: (i) by each
person who is known by the Company to own beneficially 5% or more of the
outstanding shares of Common Stock; (ii) by each director and officer of the
Company (including any "group" as used in Section 13(d)(3) of the Securities
Exchange Act of 1934); and (iii) by all directors and officers of the Company as
a group. Unless otherwise indicated below, to the knowledge of the Company, all
persons listed below have sole voting and investment power with respect to their
shares of Common Stock, except to the extent authority is shared by spouses
under applicable law. As of January 15, 1998, there were issued and outstanding
10,846,281 shares of Common Stock.
Number of Shares Percentage of
Name (1) Beneficially Owned(2) Class
- -------- --------------------- -----
Palomar Medical Technologies, Inc. (3)........... 1,490,000 13.74%
45 Hartwell Ave., Lexington, MA 02173
Maurice E. Needham (4)........................... 2,628,914 23.85%
Joseph E. Levangie (5)........................... 896,929 8.23%
Lew F. Boyd (6).................................. 25,000 --
Robert D. Maust(7)............................... 544,449 5.10%
Robert H. Davis.................................. -- --
All officers and directors as a group
(5 persons)(4,5,6,7)....................... 4,495,592 40.21%
- -----------------------------------------
<FN>
* Less than 1% of the outstanding Common Stock.
(1) Each person's address is care of GreenMan Technologies, Inc.,7 Kimball Lane, Building A,
Lynnfield, MA 01940.
(2) Pursuant to the rules of the Securities and Exchange Commission, shares of Common Stock
that an individual or group has a right to acquire within 60 days pursuant to the exercise
of options or warrants are deemed to be outstanding for the purpose of computing the
percentage ownership of such individual or group, but are not deemed to be outstanding for
the purpose of computing the percentage ownership of any other person shown in the table.
(3) Consists of shares issuable upon conversion of the outstanding principal and accrued
interest on a 10% secured convertible promissory note and upon exercise of warrants to
purchase Common Stock.
(4) Includes 178,200 shares of Common Stock issuable pursuant to immediately exercisable stock
options and warrants. Also includes 2,125,714 shares issuable upon conversion of the
Company's Convertible Notes due October 30, 1998 at a price of $.30625 (70% of the closing
bid price of the Company's Common Stock on January 15, 1998) and 20,000 shares of Common
Stock owned by Mr. Needham's wife. Does not include 386,500 shares of Common Stock issuable
pursuant to outstanding stock options and warrants that are not currently exercisable and
60,000 shares owned by Mr. Needham's adult children, as to which he disclaims beneficial
ownership.
(5) Includes 45,500 shares of Common Stock issuable pursuant to immediately exercisable stock
options and warrants. Also includes 2,125,714 shares issuable upon conversion of the
Company's Convertible Notes due October 30, 1998 at a price of $.30625 (70% of the closing
bid price of the Company's Common Stock on January 15, 1998). Does not include 334,000
shares of Common Stock issuable pursuant to outstanding stock options and warrants that are
not currently exercisable and 40,000 shares owned by Mr. Levangie's adult children, as to
which he disclaims beneficial ownership.
(6) Includes 25,000 shares of Common Stock issuable pursuant to immediately exercisable
options. Does not include 85,000 shares of Common Stock issuable pursuant to outstanding
stock options that are not currently exercisable.
(7) Represents shares issuable upon conversion of the Company's Convertible Notes due October
30, 1998 at a price of $.30625 (70% of the closing bid price of the Company's Common Stock
on January 15, 1998).
</FN>
-2-
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's By-Laws currently provide that the Board of Directors
shall consist of no less than five members who shall be elected at the annual
meeting of stockholders of the Company. Pursuant to Proposal No. 1, the six (6)
nominees listed below will be nominated to serve until the next Annual Meeting
of Stockholders and until their successors are elected. However, if Proposal No.
2 is adopted and implemented, the Company's Certificate of Incorporation and
By-Laws will provide that the members of the Board of Directors (the "Board")
shall be classified as nearly as possible into three classes, each with, as near
as possible, one-third of the members of the Board. Under Proposal No. 2, if
adopted by the stockholders, Robert D. Maust and Jagruti Oza shall be classified
as Class I directors and shall serve until the 1999 Annual Meeting; Maurice E.
Needham and Robert H. Davis shall be classified as Class II directors and serve
until the 2000 Annual Meeting; and Joseph E. Levangie and Lew F. Boyd shall be
classified as Class III directors and serve until the 2001 Annual Meeting. At
each annual meeting following this initial classification and election, the
successors to the class of directors whose terms expire at that meeting would be
elected for a term of office to expire at the third succeeding annual meeting
after their election and until their successors have been duly elected by the
stockholders. Directors chosen to fill vacancies on a classified board shall
hold office until the next election of the class for which directors shall have
been chosen, and until their successors are duly elected by the stockholders.
Officers are elected by and serve at the discretion of the Board of Directors,
subject to their employment contracts.
Shares represented by all proxies received by the Board of Directors
and not so marked to withhold authority to vote for any individual nominee will
be voted (unless one or both nominees are unable or unwilling to serve) FOR the
election of nominees. The Board of Directors knows of no reason why any such
nominees should be unable or unwilling to serve, but if such should be the case,
proxies may be voted for the election of some other person or for fixing the
number of directors at a lesser number.
The following table sets forth for each nominee to be elected at the
Meeting and for each director whose term of office will extend beyond the
Meeting, the year each such nominee or director was first elected a director,
the positions currently held by each nominee or director with the Company, the
year each nominee's or director's term will expire and the class of director for
each nominee or director.
Nominee's or Director's Name
and Year Nominee or Year Term Class of
Director First Became Director Position(s) Held Will Expire Director
- ------------------------------ ---------------- ----------- --------
Maurice E. Needham................ Chairman of the Board 2000 II
1993
Robert H. Davis................... Chief Executive Officer, 2000 II
1997 President and Director
Joseph E. Levangie................ Chief Financial Officer, 2001 III
1993 Treasurer, Secretary and
Director
Robert D. Maust................... Vice President of Operations 1999 I
1997 and Director
Lew F. Boyd....................... Director 2001 III
1992
Jagruti Oza....................... Director Nominee 1999 I
1998
-3-
OCCUPATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth all of the directors to be elected at the
Meeting, and the executive officers of the Company, their ages, and the
positions currently held by each such person with the Company.
Name Age Position
---- --- --------
Maurice E. Needham (1)................... 57 Chairman of the Board of Directors
Robert H. Davis ........................ 55 Chief Executive Officer; President; Director
Joseph E. Levangie (2)................... 52 Chief Financial Officer; Treasurer;
Secretary; Director
Robert D. Maust.......................... 59 Vice President of Operations; Director
Lew F. Boyd (1)(2)....................... 52 Director
Jagruti Oza.............................. 37 Director Nominee
- --------------------
<FN>
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
</FN>
MAURICE E. NEEDHAM has been Chairman of the Company since June 1993.
From June 1993 to July 21, 1997, Mr. Needham also served as Chief Executive
Officer of the Company. He also serves as Chairman of Dynaco Corporation
("Dynaco"), a manufacturer of flexible printed circuit boards which he founded
in 1987. Dynaco filed for an orderly liquidation under bankruptcy protection in
July 1993 and emerged from such protection in February 1994, as a division of
Palomar Medical Technologies, Inc., a Lexington, Massachusetts company engaged
in the development of advanced medical equipment. Prior to 1987, Mr. Needham
spent 17 years at Hadco Corporation, a printed circuit board manufacturer, where
he served as President, Chief Operating Officer and Director.
ROBERT H. DAVIS has been Chief Executive Officer of the Company since
July 21, 1997, President of the Company since January 1, 1998 and a Director of
the Company since July 30, 1997. Prior to joining the Company, Mr. Davis served
as Vice President of Recycling for Browning-Ferris Industries, Inc. of Houston,
Texas ("BFI") since 1990. As an early leader of BFI's recycling division, Mr.
Davis grew that operation from startup to $650 million per year in profitable
revenues. A 25-year veteran of the recycling industry, Mr. Davis has also held
executive positions with Fibres International, Garden State Paper Company, and
SCS Engineers, Inc.
JOSEPH E. LEVANGIE has been Chief Financial Officer and a Director of
the Company since its inception and Treasurer and Secretary since June 1993. Mr.
Levangie is the founder and has been since its inception in 1981, the Chief
Executive Officer of JEL & Associates, which specializes in corporate finance
and business strategy and development. Mr. Levangie serves as a Director of
Nexar, Inc., a publicly traded company.
LEW F. BOYD has been a Director of the Company since August 1994. Mr.
Boyd is the founder and has been since 1986 the Chief Executive Officer of
Coastal International, Inc., an international business development and
technology transfer firm.
ROBERT D. MAUST has been Vice President of Operations since August 1997
and was President of the Company's Recycling Operation from December 1996 to
August 1997 and a Director of the Company since July 30, 1997. Prior to joining
the Company, Mr. Maust was Vice President for BFI's tire recycling operations
from July 1991 to 1996 and was instrumental in growing that operation from 5
million tires per year to 22 million tires per year over a five year period. An
entrepreneur/manager with over ten years experience in tire recycling, Mr. Maust
was President of Maust Tire Recycling from 1988 to 1991, when he sold the
business to BFI and joined BFI as Vice President.
JAGRUTI OZA has been since March 1995 the Vice President - Corporate
Planning of Public Service Enterprise Group ("PSEG") a holding company with $6
billion in annual revenues whose businesses include electric and gas utility
(Public Service Electric and Gas Company), international power development and
retail energy services. Since joining PSEG in 1991, Ms. Oza has held various
managerial positions including Regional Manager Fossil Generation, overseeing
the operation of three power plants. Prior to joining PSEG, Ms. Oza was a
management consultant with Bain and Company (from 1987 to 1990) providing
strategic management services to multinational companies in the chemical
consumer products and retail service industries.
-4-
Board Meetings and Committees
The Board of Directors met one time during the fiscal year ended May
31, 1997. None of the Directors attended fewer than 75% of the meetings held
during the period. The Board of Directors also took action by unanimous written
consent in lieu of a meeting on 12 occasions during the fiscal year ended May
31, 1997. On July 30, 1997, the Board of Directors established a Compensation
Committee, consisting of Messrs. Needham and Boyd. The Compensation Committee,
sets the compensation of the Chief Executive Officer, reviews and approves the
compensation arrangements for all other officers of the Company. The
Compensation Committee did not meet during the fiscal year ended May 31, 1997.
On July 30, 1997, the Board of Directors established an Audit Committee
consisting of Messrs. Levangie and Boyd. The Audit Committee reviews all
financial functions of the Company, including matters relating to the
appointment and activities of the Company's auditors. The Audit Committee did
not meet during the fiscal year ended May 31, 1997. The Board of Directors does
not currently have a standing nominating committee.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Executive Compensation
The following table summarizes the compensation paid or accrued by the
Company for services rendered during the years indicated to the Company's
Chairman and Chief Executive Officer, and its President. The Company did not
grant any restricted stock awards or stock appreciation rights or make any
long-term plan payouts during the years indicated.
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
------------------- ------------
Fiscal Year Securities
Name and Ended Other Annual Underlying All Other
Principal Position May 31, Salary Bonus Compensation Options Compensation(2)
------------------ ------ ------ ----- ------------- -------- ---------------
Maurice E. Needham............ 1997 $72,691 $ -- -- 387,500 (3) $3,600
Chairman.................... 1996 42,924 -- $ 18,000 (1) -- --
1995 -- -- 36,000 (1) -- 2,850
James F. Barker (4)........... 1997 $83,600 $25,000 -- 175,000 (3) 11,764
President 1996 81,057 -- -- -- 7,804
1995 66,000 -- -- -- 3,383
- ----------
<FN>
(1) Represents consulting fees paid or accrued.
(2) Represents payments made to or on behalf of Mr. Barker in fiscal 1997 and 1996 for health insurance and auto
allowances. Represents payments in fiscal 1997 to Mr. Needham for auto allowances. In August 1994, the
Company forgave stock subscriptions receivable from Messrs. Needham and Barker for services rendered during
the Company's start-up operations.
(3) Represents options granted in July 1996. These options were repriced in December 1996. Does not include
111,000 warrants to purchase shares of common stock granted to Mr. Needham pursuant to the terms of a loan
made to the Company by Mr. Needham.
(4) Mr. Barker resigned as a director and officer of the Company effective January 1, 1998.
</FN>
The following table sets forth information concerning the value of
unexercised options as of May 31, 1997 held by the executives named in the
Summary Compensation Table above. No options were exercised by such executive
officers during the fiscal year ended May 31, 1997.
-5-
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES(1)
Value of Unexercised
Number of Unexercised In-the-Money Options
Options at May 31, 1997 (1) at May 31, 1997 (2)
--------------------------- -------------------
Name Exercisable Unexercisable Exercisable Unexercisable
----- ----------- -------------- ------------ -------------
Maurice E. Needham.......................... 147,000 411,500 $28,440 $ 18,960
James F. Barker............................. 36,000 199,000 28,440 18,960
- ----------
<FN>
(1) There were no options exercised by any of the executive officers named in the Summary Compensation Table in
the twelve months ended May 31, 1997. The options granted to the executive officers became exercisable
commencing June 10, 1994, at an annual rate of 20% of the underlying shares of Common Stock. Includes
111,000 immediately exercisable warrants to purchase shares of common stock granted to Mr. Needham pursuant
to the terms of a loan made to the Company by Mr. Needham.
(2) Assumes that the value of shares of Common Stock is equal to $.88 per share, which was the closing bid price
of the Company's Common Stock as reported by NASDAQ on May 31, 1997.
</FN>
Employment Agreements
In October 1995, the Company entered into three-year employment
agreements with each of Messrs. Needham, Barker and Levangie pursuant to which
Messrs. Needham and Levangie will receive a salary of $72,000 per annum and Mr.
Barker will receive a salary of $80,000 per annum. Any increases or bonuses will
be made at the discretion of the Board of Directors upon the recommendation of
the Compensation Committee. The agreements provide for the payment of six months
salary as a severance payment for termination without cause. Prior thereto,
Messrs. Needham and Levangie were compensated through consulting fees paid or
accrued by the Company for their services as officers of the Company.
In December 1996, the Company entered into a three-year employment
agreement with Mr. Robert D. Maust pursuant to which Mr. Maust will receive a
salary of $125,000 per annum. Any increases or bonuses will be made at the
discretion of the Board of Directors upon the recommendation of the Compensation
Committee. The agreement provides for the payment of twelve months salary as a
severance payment for termination without cause.
All of the Company's executive employees have executed confidentiality
and non-disclosure agreements concerning the Company's proprietary processes.
Stock Option Plan
The Company's 1993 Stock Option Plan (the "Plan") was adopted by the
Board of Directors on June 10, 1993 and approved by the stockholders on June 10,
1993.
Options granted under the Plan may be either (i) options intended to
qualify as "incentive stock options" under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Internal Revenue Code"), or (ii) non-qualified
stock options. Incentive stock options may be granted under the Plan to
employees, including officers and directors who are employees. Non-qualified
options may be granted to employees, directors and consultants of the Company.
The Plan is administered by the Board of Directors. Under the Plan, the
Board has the authority to determine the persons to whom options will be
granted, the number of shares to be covered by each option, whether the options
granted are intended to be incentive stock options, the manner of exercise, and
the time, manner and form of payment upon exercise of an option. On June 7, 1996
a Special Meeting of Stockholders was held and the Company increased the total
number of shares of Common Stock reserved for issuance under the Plan to
1,000,000.
Incentive stock options granted under the Plan may not be granted at a
price less than the fair market value of the Common Stock on the date of grant
(or less than 110% of fair market value in the case of persons holding 10% or
more of the voting stock of the Company). Non-qualified stock options may be
granted at an exercise price established by the Board which may not be less than
85% of fair market value of the shares on the date of grant. Incentive stock
options granted under the Plan must expire no more than ten years from the date
of grant, and no more than five years from the date of grant in the case of
incentive stock options granted to an employee holding 10% or more of the voting
stock of the Company.
-6-
As of May 31, 1997, there were 716,700 options granted and outstanding
under the Plan of which 137,500 options were exercisable at prices ranging from
$.09 to $1.00.
Non-Employee Director Stock Option Plan
On January 24, 1996, the Board of Directors of the Company adopted the
1996 Non-Employee Director Stock Option Plan ("Director Plan") and the Company's
stockholders' approved the Director Plan on June 7, 1996. The purpose of the
Director Plan is to promote the interests of the Company by providing an
inducement to obtain and retain the services of qualified persons who are not
officers or employees of the Company to serve as members of the Board of
Directors. The Board of Directors has reserved 300,000 shares of common stock
for issuance and as of May 31, 1997, options to purchase 30,000 shares of Common
Stock have been granted under the Director Plan.
Each person who was a member of the Board of Directors on January 24,
1996, and was not an officer or employee of the Company, was automatically
granted an option to purchase 10,000 shares of the Company's Common Stock. In
addition, after an individual's initial election to the Board of Directors, any
director who is not an officer or employee of the Company who continues to serve
as a director will automatically be granted on the date of the Annual Meeting of
Stockholders an additional option to purchase 10,000 shares of the Company's
Common Stock. The exercise price per share of options granted under the Director
Plan is 100% of the fair-market value of the Company's Common Stock on the
business day immediately prior to the date of the grant. Each option granted
under the 1996 Director Plan is immediately exercisable for a period of ten
years from the date of the grant.
SECTION 16 REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and officers, and persons who
own more than 10% of a registered class of the Company's equity securities, to
file initial reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission (the "SEC"). Such persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on the Company's review of the copies of such forms
received by it or written representations from certain reporting persons, the
Company believe that during the year ended May 31, 1997, all filing requirements
applicable to its directors, executive officers and greater-than-10% beneficial
owners were met.
PROPOSAL NO. 2
TO APPROVE AN AMENDMENT TO THE COMPANY'S CERTIFICATE
OF INCORPORATION AND BY-LAWS TO CREATE THREE CLASSES OF DIRECTORS
On July 30, 1997, subject to stockholder approval, the Board of
Directors voted to amend (the "Amendments") the Certificate of Incorporation and
By-Laws of the Corporation to establish three classes of directors, each class
ordinarily to serve for three year terms. As proposed, the Class I directors
will serve until the Annual Meeting of Stockholders to be held in 1999, the
Class II directors will serve until the Annual Meeting of Stockholders to be
held in 2000 and the Class III directors will serve until the Annual Meeting of
Stockholders to be held in 2001.
The Amendments, if approved by the stockholders, would become effective
upon the filing of a Certificate of Amendment with the Secretary of State of
Delaware, which is expected to be made shortly following the adoption of the
Amendments at the meeting. If the Amendment is approved, the Certificate of
Incorporation and By-Laws will be amended to carry out the purposes of the
Amendment and to eliminate provisions in the Certificate of Incorporation and
By-Laws that are inconsistent with the purposes of the Amendment. Approval of
the Amendments by the stockholders will constitute their approval and adoption
of such changes to the Certificate of Incorporation and ByLaws.
THE BOARD BELIEVES THAT ADOPTION OF THESE AMENDMENTS ARE IN THE BEST INTEREST OF
THE STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
APPROVAL OF THE AMENDMENTS.
-7-
Purposes and Effects of the Amendments. The Amendments are designed to
make it more time-consuming to change majority control of the Board without its
consent, and thus to reduce the vulnerability of the Company to an unsolicited
takeover proposal that does not contemplate the acquisition of all of the
Company's outstanding shares, or to an unsolicited proposal for the
restructuring or sale of all or part of the Company. The Board believes that the
Amendments will serve to encourage any person intending to attempt such a
takeover to negotiate with the Board and that the Board will therefore be better
able to protect the interests of the stockholders.
The Amendments are intended to encourage persons seeking to acquire
control of the Company to initiate such an acquisition through arm's length
negotiations with the Board. The Amendments could also have the effect of
discouraging a third party from making a partial tender offer, including an
offer at a substantial premium over the then-prevailing market value of those
shares of capital stock of the Company then issued and outstanding and entitled
to vote on such matters (the "Voting Stock"), or otherwise attempting to obtain
control of the Company, even though such an attempt might be beneficial to the
Company and its stockholders. In addition, since the Amendments are designed to
discourage accumulations of large blocks of the Voting Stock by purchasers whose
objective is to have such Voting Stock repurchased by the Company at a premium,
adoption of the Amendments could tend to reduce any temporary fluctuations in
the market price of the Voting Stock which are caused by such accumulations.
Accordingly, stockholders could be deprived of certain opportunities to sell
their stock at a temporarily higher market price. The Amendments may also
discourage or make more difficult or expensive a proxy contest or merger
involving the Company or a tender offer, open market purchase program or other
purchases of Voting Stock which a majority of stockholders may deem to be in
their best interests or which may give stockholders the opportunity to realize a
premium over the prevailing market price of their stock.
Description of the Amendments. The full text of the Amendments to the
Certificate of Incorporation and ByLaws, are included in this Proxy Statement as
Exhibits I and II, respectively. The following description of the Amendments is
qualified in its entirety by reference to Exhibits I and II.
Classification of the Board. The Company's By-Laws currently provide
that the number of directors which shall constitute the whole Board shall not be
less than one (1) and that the number of directors shall be determined by
resolution of the Board. The By-Laws currently provide that all directors are to
be elected to the Board annually for a term of one (1) year.
The Amendments provide that the Board shall be divided into three
classes of directors, each class to be as equal as possible in number of
directors. In the event of any change in the authorized number of directors, the
number of directors in each class shall be adjusted in the discretion of the
Board, so that thereafter each of the three classes shall be composed, as nearly
as may be possible, of one-third of the authorized number of directors, provided
that no change in the number of directors constituting the entire Board shall
shorten the term of any incumbent director, and any decrease in the authorized
number of directors constituting the entire Board shall become effective only as
and when the term or terms of office of the class or classes of directors
affected thereby shall expire, or a vacancy or vacancies in such class or
classes shall occur.
The By-Laws currently provide that a vacancy on the Board, including a
vacancy created by an increase in the authorized number of directors or by
reason of death, resignation, retirement, or other cause, may be filled by a
majority of the directors then in office, and that the director so chosen shall
serve until the annual meeting next after his election, and until his successor
is elected and qualified. If the Amendments are adopted, the Certificate of
Incorporation will provide, and the By-Laws will retain the provision, that a
vacancy on the Board which occurs, including a vacancy created by an increase in
the number of directors or by reason of death, resignation, retirement,
disqualification, removal from office or other cause, may be filed by a majority
of the remaining directors. However, the Certificate of Incorporation and the
By-Laws, as amended, will provide that any new director elected to fill a
vacancy on the Board will serve for the remainder of the term of the class in
which the vacancy occurred rather than until the next election of directors.
-8-
PROPOSAL NO. 3
APPROVAL OF AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO EFFECT ONE-FOR-FIVE REVERSE STOCK SPLIT
The Board of Directors has adopted a resolution declaring the
advisability of, and submitting to the stockholders for approval, a proposal to
amend the Company's Certificate of Incorporation (the "Proposed Amendment") to
effect a reverse split of the Company's Common Stock, pursuant to which each
five shares of Common Stock will be automatically converted into one share
without any action on the part of the stockholder (the "Reverse Split"). The
text of the Proposed Amendment is set forth in Exhibit III to this Proxy
Statement.
Consummation of the Reverse Split will not change the number of shares
of Common Stock authorized by the Company's Certificate of Incorporation, which
will remain at 20,000,000 shares or the par value of the Common Stock per share.
The Reverse Split will become effective as of 5:00 p.m., Boston time (the
"Effective Date"), on the date that the certificate of amendment to the
Company's Certificate of Incorporation is filed with the Secretary of State of
Delaware. If for any reason the Board of Directors deems it advisable, the
Proposed Amendment may be abandoned at any time before the Effective Date,
whether before or after the Meeting (even if such proposal has been approved by
the Stockholders).
In lieu of issuing less than one whole share resulting from the Reverse
Split to holders of an odd number of shares, the Company will determine the fair
value of each outstanding share of Common Stock held on the Effective Date of
the Reverse Split (the "Fractional Share Purchase Price"). The Company currently
anticipates that the Fractional Share Purchase price will be based on the
average daily closing bid price per share of the Common Stock as reported by the
primary trading market for the Company's Common Stock for the ten (10) trading
days immediately preceding the Effective Date. In the event the Company
determines that unusual trading activity would cause such amount to be an
inappropriate measure of the fair value of the Common Stock, the Company may
base the Fractional Share Purchase Price on the fair market value of the Common
Stock as reasonably determined in good faith by the Board of Directors of the
Company. Stockholders who hold an odd number of shares on the Effective Date
will be entitled to receive, in lieu of the less than one whole share arising as
a result of the Reverse Split, cash in the amount of the relevant portion of the
Fractional Share Purchase Price.
As soon as practical after the Effective Date, the Company will mail a
letter of transmittal to each holder of record of a stock certificate or
certificates which represent issued Common Stock outstanding on the Effective
Date. The letter of transmittal will contain instructions for the surrender of
such certificate or certificates to the Company's designated exchange agent in
exchange for certificates representing the number of whole shares of Common
Stock (plus the relevant portion of the Fractional Share Purchase price, if any)
into which the shares of Common Stock have been converted as a result of the
Reverse Split. No cash payment will be made or new certificate issued to a
stockholder until he has surrendered his outstanding certificates together with
the letter of transmittal to the Company's exchange agent. See "--Exchange of
Stock Certificates."
THE BOARD OF DIRECTORS BELIEVES THE ADOPTION OF THE PROPOSED AMENDMENT IS IN THE
BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" THE PROPOSED AMENDMENT.
Purpose of the Reverse Split
The Company's shares of Common Stock have been listed, and have traded,
on the Nasdaq Small Cap Market ("Nasdaq") since October 1995 when the Company
completed its initial public offering. On December 23, 1997, the Company
received a notice from The Nasdaq Stock Market, Inc. ("NASDAQ") stating that the
Company's securities would be delisted from Nasdaq if in the 90 day period
ending March 23, 1998, the Company could not demonstrate compliance with the
minimum $1.00 bid price for ten consecutive trading days.
The Company is currently exploring a number of potential transactions
designed to enable the Company to meet this criteria. However, there can be no
assurance that the Company will consummate any of such transactions or that the
consummation of any of such transactions would result in the Company complying
with the maintenance requirements.
-9-
The Company believes that if the Reverse Split is approved by the
stockholders at the Meeting, and the Reverse Split is effectuated, the Company's
shares of Common Stock will have a minimum bid price in excess of $1.00 per
share, and therefore will satisfy one of the aforementioned listing maintenance
criteria.
If the Reverse Split is not approved by the stockholders at the
Meeting, then it is unlikely that the Company will meet the new listing
criteria. The delisting of the Company's Common Stock from Nasdaq could
adversely affect the liquidity of the Company's Common Stock and the ability of
the Company to raise capital. In such event, the shares of Common Stock will
likely be quoted in the "pink sheets" maintained by the National Quotation
Bureau, Inc. or the NASD Electronic Bulletin Board and the spread between the
bid and ask prices of the shares of Common Stock is likely to be greater than at
present and stockholders may experience a greater degree of difficulty in
engaging in trades of shares of Common Stock.
In addition, the Board of Directors further believes that low trading
prices of the Company's Common Stock may have an adverse impact upon the
efficient operation of the trading market in the securities. In particular,
brokerage firms often charge a greater percentage commission on low-priced
shares than that which would be charged on a transaction in the same dollar
amount of securities with a higher per share price. A number of brokerage firms
will not recommend purchases of low-priced stocks to their clients or make a
market in such shares, which tendencies may adversely affect the Company.
Stockholders should note that the effect of the Reverse Split upon the
market prices for the Company's Common Stock cannot be accurately predicted. In
particular, there is no assurance that prices for shares of the Common Stock
after the Reverse Split will be five times the prices for shares of the Common
Stock immediately prior to the Reverse Split. Furthermore, there can be no
assurance that the proposed Reverse Split will achieve the desired results which
have been outlined above, nor can there be any assurance that the Reverse Split
will not adversely impact the market price of the Common Stock or,
alternatively, that any increased price per share of the Common Stock
immediately after the proposed Reverse Split will be sustained for any prolonged
period of time. In addition, the Reverse Split may have the effect of creating
odd lots of stock for some stockholders and such odd lots may be more difficult
to sell or have higher brokerage commissions associated with the sale of such
odd lots.
Effect of the Reverse Split
As a result of the Reverse Split, the number of whole shares of Common
Stock held by stockholders of record as of the close of business on the
Effective Date will be equal to the number of shares of Common Stock held
immediately prior to the close of business on the Effective Date divided by
five, plus cash in lieu of any fractional share. The Reverse Split will not
affect a stockholder's percentage ownership interest in the Company or
proportional voting power, except for minor differences resulting from the
payment of cash in lieu of fractional shares. The rights and privileges of the
holders of shares of Common Stock will be unaffected by the Reverse Split. The
par value of the Common Stock will remain at $.01 per share following the
Effective Date of the Reverse Split, and the number of shares of Common Stock
issued will be reduced. Consequently, the aggregate par value of the issued
Common Stock also will be reduced. In addition, the number of authorized but
unissued shares of Common Stock will be increased by the Reverse Split, the
issuance of which may have the effect of diluting the earnings per share and
book value per share, as well as the stock ownership and voting rights, of
outstanding Common Stock. As the Reverse Split will increase the number of
authorized but unissued shares of Common Stock, it may be construed as having an
anti-takeover effect by permitting the issuance of shares to purchasers who
might oppose a hostile takeover bid or oppose any efforts to amend or repeal
certain provisions of the Company's Certificate of Incorporation or By-Laws.
Stockholders have no right under Delaware law or under the Company's
Certificate of Incorporation or ByLaws to dissent from the Reverse Split.
The Common Stock is currently registered under Section 12(g) of the
Exchange Act and as a result, the Company is subject to the periodic reporting
and other requirements of the Exchange Act. The Reverse Split will not affect
the registration of the Common Stock under the Exchange Act, and the Company has
no current intention of terminating its registration under the Exchange Act.
-10-
Upon consummation of the Reverse Split, the total number of shares
currently reserved for grants of stock options and all stock options previously
granted would be decreased proportionately. The cash consideration payable per
share upon exercise of the stock options would be increased proportionately.
Exchange of Stock Certificates
As soon as practicable after the Effective Date, the Company intends to
require stockholders to exchange their stock certificates ("Old Certificates")
for new certificates ("New Certificates") representing the number of whole
shares of Common Stock into which their shares of Common Stock have been
converted as a result of the Reverse Split (as well as cash in lieu of
fractional shares resulting from the reverse split). Stockholders will be
furnished with the necessary materials and instructions for the surrender and
exchange of stock certificates at the appropriate time by the Company's transfer
agent. Stockholders will not be required to pay a transfer or other fee in
connection with the exchange of certificates. STOCKHOLDERS SHOULD NOT SUBMIT ANY
CERTIFICATES TO THE TRANSFER AGENT UNTIL REQUESTED TO DO SO.
Federal Income Tax Consequences of the Reverse Split
The following description of the material federal income tax
consequences of the Reverse Split is based upon the Internal Revenue Code of
1986, as amended, the applicable Treasury Regulations promulgated thereunder,
judicial authority and current administrative rulings and practices all as in
effect on the date of this Proxy Statement. The Company has not sought and will
not seek an opinion of counsel or a ruling from the Internal Revenue Service
regarding the federal income tax consequences of the Reverse Split. This
discussion is for general information only and does not discuss consequences
which may apply to special classes of taxpayers (e.g., non-resident aliens,
broker-dealers or insurance companies) and does not discuss the tax consequences
under the laws of any foreign, state or local jurisdictions. Stockholders are
urged to consult their own tax advisors to determine the particular consequences
to them.
In general, the federal income tax consequences of the proposed Reverse
Split will vary among stockholders depending upon whether they receive the
Fractional Share Purchase Price or solely New Certificates in exchange for Old
Certificates. The Company believes that because the Reverse Split is not part of
a plan to increase periodically a stockholder's proportionate interest in the
Company's assets or earnings and profits, the Reverse Split probably will have
the following federal income tax effects:
1. A stockholder who receives solely New Certificates will not
recognize gain or loss on the exchange. In the aggregate, the stockholder's
basis in the Common Stock represented by New Certificates will equal the
holder's basis in the Common Stock represented by Old Certificates.
2. A stockholder who receives a portion of the Fractional Share
Purchase Price as a result of the Reverse Split will generally be treated as
having received the payment as a distribution in redemption of the Fractional
Share, as provided in Section 302(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). Each affected stockholder will be required to consult such
stockholder's own tax advisor for the tax effect of such redemption (i.e.,
exchange or dividend treatment) in light of such stockholder's particular facts
and circumstances.
3. The Reverse Split will constitute a reorganization within the
meaning of Section 368(a)(1)(E) of the Code, and the Company will not recognize
any gain or loss as a result of the Reverse Split.
PROPOSAL NO. 4
PROPOSAL TO INCREASE AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has resolved to recommend to the stockholders
that the Company amend the Company's Certificate of Incorporation to increase
the number of authorized shares of Common Stock from 20,000,000 to 50,000,000
shares. Shares of the Company's Common Stock, including the additional shares
proposed for authorization, do not have preemptive or similar rights. It is the
intent of the Board of Directors that the proposed increase in the authorized
Common Stock will be abandoned by the Board of Directors if Proposal No. 3 is
approved by the Stockholders. The text of the proposed amendment is set forth in
Exhibit IV to this Proxy Statement.
-11-
If this proposal is approved and after giving effect to shares reserved
for issuance under the Company's stock plans, and shares reserved for issuance
upon the exercise of outstanding warrants, options and other commitments, the
Board of Directors will have the authority to issue approximately an additional
22,000,000 (as of November 30, 1997) shares of Common Stock without further
stockholder approval. The Board of Directors of the Company believes that the
increase in the number of authorized shares of Common Stock is in the best
interests of the Company and its stockholders. The Board of Directors believes
that the authorized Common Stock should be increased to provide sufficient
shares for such corporate purposes as may be determined by the Board of
Directors to be necessary or for such corporate purposes as may be determined by
the Board of Directors to be necessary or desirable. These purposes may include
facilitating broader ownership of the Company's Common Stock by effecting a
stock split or issuing a stock dividend, raising capital or acquiring technology
rights through the sale of stock, or attracting or retaining valuable employees
by the issuance of stock options, although the Company at present has no
commitments, agreements or undertakings obligating the Company to issue any such
additional shares. The Board of Directors, however, considers the authorization
of additional shares of Common Stock advisable to ensure prompt availability of
shares for issuance should the occasion arise.
Under the Delaware General Corporation Law, the Board of Directors
generally may issue authorized but unissued shares of Common Stock without
further stockholder approval. The Board of Directors does not currently intend
to seek stockholder approval prior to any future issuance of additional shares
of Common Stock, unless stockholder action is required in a specific case by
applicable law, the rules of any exchange or market on which the Company's
securities may then be listed, or the Certificate of Incorporation or By-Laws of
the Company then in effect. Frequently, opportunities arise that require prompt
action, and the Company believes that delay necessitated for stockholder
approval of a specific issuance could be to the detriment of the Company and its
stockholders.
The Board of Directors believes that the increase in the number of
authorized shares of undesignated Common Stock is in the best interests of the
Company and its stockholders, since the complexity of modern business financing
requires greater flexibility in the Company's capital structure than now exists.
The additional Common Stock to be authorized would be available for issuance
from time to time for any proper corporate purpose, including public or private
sale for cash as a means of obtaining capital for the use in the Company's
business or for the acquisition by the Company of other businesses or assets.
The Board of Directors believes that having additional shares of Common Stock
will provide the flexibility and facility for finding financing sources quickly
consummating any such transaction. Additionally, from time to time, the Company
is involved in various discussions with other companies relating to the
acquisition of complementary products or services, or other forms of business
combinations involving the Company. However, the Company has no present
commitments or agreements relating to any potential acquisitions or financing.
The Board of Directors, however, consider the authorization of such additional
shares advisable to ensure prompt availability of shares for issuance should the
occasion arise.
The additional shares of Common Stock authorized for issuance pursuant
to this proposal will have the rights and privileges which the presently
outstanding shares of Common Stock possess under the Company's Certificate of
Incorporation. The increase in authorized shares would not affect the terms or
rights of holders of existing shares of Common Stock. The rights of the holders
of Common Stock, however, are subordinate to the rights of the holders of the
Preferred Stock in certain instances. All outstanding shares of Common Stock
would continue to have one vote per share on all matters to be voted on by the
stockholders, including the election of directors.
The issuance of any additional shares of Common Stock by the Company
may, depending on the circumstances under which those shares are issued, reduce
stockholders' equity per share and may reduce the percentage ownership of Common
Stock of existing stockholders. The Company expects, however, to receive
consideration for any additional shares of Common Stock issued, thereby reducing
or eliminating the economic effect to each stockholder of such dilution.
The authorized but unissued shares of Common Stock could be used to
make more difficult a change in control of the Company. For example, such shares
could be sold to purchasers who might side with the Board of Directors in
opposing a takeover bid that the Board determines not to be in the best
interests of the Company and its stockholders. Such a sale could have the effect
of discouraging an attempt by another person or entity, through the acquisition
of a substantial number of shares of the Company's Common Stock, to acquire
-12-
control of the Company, since the issuance of new shares could be used to dilute
the stock ownership of the acquirer. Neither the Certificate of Incorporation
nor By-Laws of the Company now contain any provisions that are generally
considered to have an anti-takeover effect, and the Board of Directors does not
now plan to propose any anti-takeover measures in future proxy solicitations.
The Company is not aware of any pending or threatened efforts to obtain control
of the Company, and the Board of Directors has no current intention to use the
additional shares of Common Stock to impede a takeover attempt.
Approval of the amendment to increase the number of authorized shares
of Common Stock will require the affirmative vote of the holders of a majority
of the outstanding shares of Common Stock of the Company represented in person
or by proxy and entitled to vote at the Meeting. Abstentions will have the same
effect as a vote against the proposal; broker non-votes will have no outcome on
the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER
OF AUTHORIZED SHARES OF COMMON STOCK FROM 20,000,000 TO 50,000,000 SHARES.
PROPOSAL NO. 5
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of Wolf & Company, P.C.,
independent certified public accountants, to serve as auditors for the fiscal
year ending May 31, 1998. Wolf & Company, P.C. has acted as the Company's
independent auditor since its inception. It is expected that a member of Wolf &
Company, P.C. will be present at the Meeting with the opportunity to make a
statement if so desired and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF ITS
SELECTION OF WOLF & COMPANY, P.C. AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING MAY 31, 1998.
TRANSACTION OF OTHER BUSINESS
The Board of Directors of the Company knows of no other matters which
may be brought before the Meeting. If any other matters properly come before the
Meeting, or any adjournment thereof, it is the intention of the persons named in
the accompanying form of Proxy to vote the Proxy on such matters in accordance
with their best judgment.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended for inclusion in the proxy statement
to be mailed to all stockholders entitled to vote at the next annual meeting of
stockholders of the Company must be received at the Company's principal
executive offices not later than May 31, 1998. In order to curtail controversy
as to the date on which a proposal was received by the Company, it is suggested
that proponents submit their proposals by Certified Mail Return Receipt
Requested.
EXPENSES AND SOLICITATION
The cost of solicitation by proxies will be borne by the Company, and
in addition to directly soliciting stockholders by mail, the Company may request
banks and brokers to solicit their customers who have stock of the Company
registered in the name of a nominee and, if so, will reimburse such banks and
brokers for their reasonable out-of-pocket costs. Solicitation by officers and
employees of the Company may be made of some stockholders in person or by mail
or telephone.
-13-
EXHIBIT I
Text of Proposed Amendment to
Certificate of Incorporation
to Create Staggered Board
RESOLVED: That the Certificate of Incorporation be amended by adding a new
Section THIRTEENTH in the following form:
"THIRTEENTH: This Article is inserted for the management of the
business and for the conduct of the affairs of the Corporation, and it is
expressly provided that it is intended to be in furtherance and not in
limitation or exclusion of the powers conferred by the statutes of the State of
Delaware.
1. Number of Directors. The number of directors which shall constitute
the whole Board of Directors shall be determined by resolution of a majority of
the Board of Directors, but in no event shall be less than five. The number of
directors may be decreased at any time and from time to time by a majority of
the directors then in office, but only to eliminate vacancies existing by reason
of death, resignation, removal or expiration of the term of one or more
directors. The directors shall be elected at the annual meeting of the
stockholders by such stockholders as have the right to vote on such election.
Directors need not be stockholders of the Corporation.
2. Classes of Directors. The Board of Directors shall be and is divided
into three classes: Class I, Class II and Class III. No on class shall have more
than one director more than any other class. If a fraction is contained in the
quotient arrived at by dividing the authorized number of directors by three,
then, if such fraction is one-third, the extra director shall be a member of
Class III and, if such fraction is two-thirds, one of the extra directors shall
be a member of Class III and the other extra director shall be a member of Class
II, unless otherwise provided for from time to time by resolution adopted by a
majority of the Board of Directors.
3. Election of Directors. Elections of directors need not be by written
ballot except as and to the extent provided in the By-Laws of the Corporation.
4. Term of Office. Each director shall serve for a term ending on the
date of the third annual meeting following the annual meeting at which such
director was elected; provided, however, that each initial director in Class I
shall serve for a term ending on the date of the annual meeting to be held in
calendar year 1999; each initial Class II director shall serve for a term ending
on the date of the annual meeting to be held in calendar year 2000; and each
initial director in Class III shall serve for a term ending on the date of the
annual meeting to be held in calendar year 2001.
5. Allocation of Directors Among Classes in the Event of Increases or
Decreases in the Number of Directors. In the event of any increase or decrease
in the authorized number of directors, (i) each director then serving as such
shall nevertheless continue as director of the class of which he or she is a
member until the expiration of his or her current term or his or her prior
death, retirement, or resignation and (ii) the newly created or eliminated
directorships resulting from such increase or decrease shall be apportioned by
the Board of Directors among the three classes of directors so as to ensure that
no one class has more than one director more than any other class. To the extent
possible, consistent with the foregoing rule, any newly created directorships
shall be added to those classes whose terms of office are to expire at the
latest dates following such allocation, and any newly eliminated directorships
shall be subtracted from those classes whose terms of office are to expire at
the earliest dates following such allocation, unless otherwise provided for from
time to time by resolution adopted by a majority of the directors then in
office, although less than a quorum.
6. Tenure. Notwithstanding any provisions to the contrary contained
herein, each director shall hold office until his or her successor is elected
and qualified, or until his or her earlier death, resignation or removal.
7. Vacancies. Any vacancy in the Board of Directors, however occurring,
including a vacancy resulting from an enlargement of the Board, may be filled
only by vote of a majority of the directors then in office, although less than a
quorum, or by a sole remaining director. A director elected to fill a vacancy
shall be elected for the unexpired term of his predecessor in office, if
-14-
applicable, and a director chosen to fill a position resulting from an increase
in the number of directors shall hold office until the next election of the
class for which such director shall have been chosen and until his or her
successor is elected and qualified, or until his or her earlier death,
resignation or removal.
8. Quorum. A majority of the total number of the whole Board of
Directors shall constitute a quorum at all meetings of the Board of Directors.
In the event one or more of the directors shall be disqualified to vote at any
meeting, then the required quorum shall be reduced by one for each such director
so disqualified; provided, however, that in no case shall less than one-third
(1/3) of the number so fixed constitute a quorum. In the absence of a quorum at
any such meeting, a majority of the directors present may adjourn the meeting
from time to time without further notice other than announcement at the meeting,
until a quorum shall be present.
9. Action at Meeting. At any meeting of the Board of Directors at which
a quorum is present, the vote of a majority of those present shall be sufficient
to take any action, unless a different vote is specified by law or the
Corporation's Certificate of Incorporation or By-Laws.
10 Removal. Any one or more of all the directors may be removed, with
or without cause, by the holder of at least sixty-six and two-third percent (66
2/3%) of the shares then entitled to vote at an election of directors, except
that the directors elected by the holders of a particular class or series of
stock may be removed without cause only by vote of the holders of a majority of
the outstanding shares of such class or series.
11. Stockholder Nominations and Introductions of Business, Etc. Advance
notice of stockholder nominations for election of directors and other business
to be brought by stockholders before a meeting of stockholders shall be given
int he manner provided in the By-Laws of the Corporation."
-15-
EXHIBIT II
Text of Proposed Amendment to
By-Laws to
Create Staggered Board
RESOLVED: That the By-Laws of the Corporation be amended by deleting Article 2
of the By-Laws in the present form and substituting therefor a new
Article 2 in the following form:
"ARTICLE 2 - Directors
2.1 General Powers. The business and affairs of the corporation shall
be managed by or under the direction of a Board of Directors, who may exercise
all of the powers of the corporation except as otherwise provided by law, the
Certificate of Incorporation or these By-Laws. In the event of a vacancy in the
Board of Directors, the remaining directors, except as otherwise provided by
law, may exercise the powers of the full Board until the vacancy is filled.
2.2 Number; Election and Qualification. The number of directors which
shall constitute the whole Board of Directors shall be determined by resolution
of the stockholders or the Board of Directors, but in no event shall be less
than five. The number of directors may be decreased at any time and from time to
time either by the stockholders or by a majority of the directors then in
office, but only to eliminate vacancies existing by reason of the death,
resignation, removal or expiration of the term of one or more directors. The
directors shall be elected at the annual meeting of stockholders by such
stockholders as have the right to vote on such election. Directors need not be
stockholders of the corporation.
2.3 Classes of Directors. The Board of Directors shall be and is
divided into three classes: Class I, Class II and Class III. No one class shall
have more than one director more than any other class. If a fraction is
contained in the quotient arrived at by dividing the authorized number of
directors by three, then, if such fraction is one-third, the extra director
shall be a member of Class III and, if such fraction is two-thirds, one of the
extra directors shall be a member of Class III and the other extra director
shall be a member of Class II, unless otherwise provided for from time to time
by resolution adopted by a majority of the Board of Directors.
2.4 Terms in Office. Each director shall serve for a term ending on the
date of the third annual meeting following the annual meeting at which such
director was elected; provided, however, that each initial director in Class I
shall serve for a term ending on the date of the annual meeting to be held in
calendar year 1999; each initial Class II director shall serve for a term ending
on the date of the annual meeting to be held in calendar year 2000; and each
initial director in Class III shall serve for a term ending on the date of the
annual meeting to be held in calendar year 2001.
2.5 Allocation of Directors Among Classes in the Event of Increases or
Decreases in the Number of Directors. In the event of any increase or decrease
in the authorized number of directors, (i) each director then serving as such
shall nevertheless continue as director of the class of which he or she is a
member until the expiration of his or her current term or his or her prior
death, retirement, or resignation and (ii) the newly created or eliminated
directorships resulting from such increase of decrease shall be apportioned by
the Board of Directors among the three classes of directors so as to ensure that
no one class has more than one director more than any other class. To the extent
possible, consistent with the foregoing rule, any newly created directorships
shall be added to those classes whose terms of office are to expire at the
latest dates following such allocation, and any newly eliminated directorships
shall be subtracted from those classes whose terms of office are to expire at
the earliest dates following such allocation, unless otherwise provided for from
time to time by resolution adopted by a majority of the directors then in
office, although less than a quorum.
2.6 Tenure. Notwithstanding any provisions to the contrary contained
herein, each director shall hold office until the next annual meeting and until
his successor is elected and qualified, or until his earlier death, resignation
or removal.
2.7 Vacancies. Unless and until filled by the stockholders, any vacancy
in the Board of Directors, however occurring, including a vacancy resulting from
an enlargement of the Board, may be filled by vote of a majority of the
directors then in office, although less than a quorum, or by a sole remaining
-16-
director. A director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office, and a director chosen to fill a
position resulting from an increase in the number of directors shall hold office
until the next annual meeting of stockholders and until his successor is elected
and qualified, or until his earlier death, resignation or removal.
2.8 Resignation. Any director may resign by delivering his written
resignation to the corporation at its principal office or to the President or
Secretary. Such resignation shall be effective upon receipt unless it is
specified to be effective at some other time or upon the happening of some other
event.
2.9 Regular Meetings. Regular meetings of the Board of Directors may be
held without notice at such time and place, either within or without the State
of Delaware, as shall be determined from time to time by the Board of Directors;
provided that any director who is absent when such a determination is made shall
be given notice of the determination. A regular meeting of the Board of
Directors may be held without notice immediately after and at the same place as
the annual meeting of stockholders.
2.10 Special Meetings. Special meetings of the Board of Directors may
be held at any time and place, within or without the State of Delaware,
designated in a call by the Chairman of the Board, the President or by a
majority of the directors then in office.
2.11 Notice of Special Meetings. Notice of any special meeting of
directors shall be given to each director by the Secretary or by the officer or
one of the directors calling the meeting. Notice shall be duly given to each
director (i) by giving notice to such director in person or by telephone at
least 48 hours in advance of the meeting, (ii) by sending a telecopy, telegram
or telex, or delivering written notice by hand, to his last known business or
home address at least 48 hours in advance of the meeting, or (iii) by mailing
written notice to his last known business or home address at least 72 hours in
advance of the meeting. A notice or waiver of notice of a meeting of the Board
of Directors need not specify the purposes of the meeting.
2.12 Meetings by Telephone Conference Calls. Directors or any members
of any committee designated by the directors may participate in meetings of the
Board of Directors or such committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation by such means shall constitute
presence in person at such meeting.
2.13 Quorum. A majority of the total number of the whole Board of
Directors shall constitute a quorum at all meetings of the Board of Directors.
In the event one or more of the directors shall be disqualified to vote at any
meeting, then the required quorum shall be reduced by one for each such director
so disqualified: provided, however, that in no case shall less than one-third
(1/3) of the number so fixed constitute a quorum. In the absence of a quorum at
any such meeting, a majority of the directors present may adjourn the meeting
from time to time without further notice other than announcement at the meeting,
until a quorum shall be present.
2.14 Action at Meeting. At any meeting of the Board of Directors at
which a quorum is present, the vote of a majority those present shall be
sufficient to take any action, unless a different vote is specified by law, the
Certificate of Incorporation or these By-Laws.
2.15 Action by Consent. Any action required or permitted be taken at
any meeting of the Board of Directors or of any committee of the Board of
Directors may be taken without a meeting, if all members of the Board or
committee, as the case may be, consent to the action in writing, and the written
consents are filed with the minutes of proceedings of the Board or committee.
2.16 Removal. Any one or more or all of the directors may be removed,
with or without cause, by the holders of at least sixty-six and two-third
percent (66 2/3%) of the shares then entitled to vote at an election of
directors, except that the directors elected by the holders of a particular
class or series of stock may be removed without cause only by vote of the
holders of a majority of the outstanding shares of such class or series.
-17-
2.17 Committees. The Board of Directors may appoint a Compensation
Committee, an Executive Committee and an Audit Committee, and such other
committees as the Board may, by resolution passed by a majority of the whole
Board, designate. Each committee shall consist of one or more of the directors
of the corporation. The Board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of a member of
a committee, the member or members of the committee present at any meeting and
not disqualified from voting, whether or not he, she or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors
and subject to the provisions of the General Corporation Law of the State of
Delaware, shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the corporation
and may authorize the seal of the corporation to be affixed to all papers which
may require it. Each such committee shall keep minutes and make such reports as
the Board of Directors may from time to time request. Except as the Board of
Directors may otherwise determine, any committee may make rules for the conduct
of its business, but unless otherwise provided by the directors or in such
rules, its business shall be conducted as nearly as possible in the same manner
as is provided in these By-Laws for the Board of Directors.
2.18 Compensation of Directors. Directors may be paid such compensation
for their services and such reimbursement for expenses of attendance at meetings
as the Board of Directors may from time to time determine. No such payment shall
preclude any director from serving the corporation or any of its parent or
subsidiary corporations in any other capacity and receiving compensation for
such service.
2.19 Nominations. Notwithstanding the provision of Section 1.10 of
these By-Laws (dealing with business at meetings of stockholders), nominations
for the election of directors may be made by the Board of Directors, a committee
appointed by the Board of Directors or by any stockholder of record entitled to
vote on the election of directors who is a stockholder at the record date of the
meeting and also on the date of the meeting which directors are to be elected,
provided such stockholder provides timely written notice to the Secretary of the
Corporation in accordance with the following requirements:
(1) To be timely, a stockholder's notice must be delivered to,
or mailed and received at, the principal executive offices of the Corporation
(i) in the case of an annual meeting that is called for a date that is within 30
days before or after the anniversary date of the immediately preceding annual
meeting of stockholders, not less than 60 days nor more than 90 days prior to
such anniversary date, and (ii) in the case of an annual meeting that is called
for a date that is not within 30 days before or after the anniversary date of
the immediately preceding annual meeting, or in the case of a special meeting of
stockholders called for the purpose of electing directors, not later than the
close of business on the tenth day following the day on which notice of the date
of the meeting was mailed or public disclosure of the date of the meeting was
made, whichever occurs first; and
(2) Each such written notice must set forth: (i) the name and
address of the stockholder who intends to make the nomination; (ii) the name and
address of the person or persons to be nominated; (iii) a representation that
the stockholder is a holder of record of the stock of the Corporation entitled
to vote at such meeting and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice; (iv) a
description of all arrangements or understandings between the stockholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
stockholder; (v) such other information regarding each nominee proposed by such
stockholder as would have been required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission had
the nominee been nominated, or intended to be nominated, by the Board of
Directors; and (vi) the consent of each nominee to serve as a director of the
Corporation if so elected. The presiding officer of the meeting may refuse, in
his or her sole discretion, to acknowledge the nomination of any person not made
in compliance with the foregoing procedure.
2.20 Amendments to Article. Notwithstanding any other provisions of
law, the Certificate of Incorporation or these By-Laws, and notwithstanding the
fact that a lesser percentage may be specified by law, the affirmative vote of
the holders of at least sixty-six and two-thirds percent (66 2/3%) of the votes
which all the stockholders would be entitled to cast at any annual election of
directors or class of directors shall be required to amend or repeal, or to
adopt any provision inconsistent with, this Article 2."
-18-
EXHIBIT III
Text of Proposed Amendment
to the Certificate of Incorporation
to Effect a 5 to 1 Reverse Stock Split
RESOLVED: That the Certificate of Incorporation of the Corporation is amended
by adding after paragraphs A and B of Article Fourth a new paragraph
C in the following form:
"C. At the same time as the filing of this Amendment to the Certificate
of Incorporation of the corporation with the Secretary of the State of Delaware
becomes effective, each five (5) shares of common stock $0.01 par value per
share of the corporation (the "Old Common Stock"), issued and outstanding or
held in the treasury of the Corporation immediately prior to the effectiveness
of such filing, shall be combined, reclassified and changed into one (1) fully
paid and nonassessable share of Common Stock.
Each holder of record of a certificate or certificates for one or more
shares of the Old Common Stock shall be entitled to receive as soon as
practicable, upon surrender of such certificate, a certificate or certificates
representing the largest whole number of shares of Common Stock to which such
holder shall be entitled pursuant to the provisions of the immediately preceding
paragraph. Any certificate for one or more shares of the Old Common Stock not so
surrendered shall be deemed to represent one share of the Common Stock for each
five (5) shares of the Old Common Stock previously represented by such
certificate.
No fractional share of Common Stock or scrip representing fractional
shares shall be issued upon such combination and reclassification of the Old
Common Stock into shares of Common Stock. Instead of there being issued any
fractional shares of Common Stock which would otherwise be issuable upon such
combination and reclassification, the corporation shall pay to the holders of
the shares of Old Common Stock which were thus combined and reclassified cash in
respect of such fraction in an amount equal to the same fraction of the market
price per share of the Common Stock (as determined in a manner prescribed by the
Board of Directors) at the close of business on the date such combination and
reclassification becomes effective."
-19-
EXHIBIT IV
Text of Proposed Amendment
to the
Certificate of Incorporation
to
Increase Authorized Stock
RESOLVED: That the Certificate of Incorporation of the Corporation be amended
by deleting Article Fourth of the Certificate of Incorporation in its
present form and substituting therefor a new Article Fourth in
the following form:
"FOURTH. This corporation is authorized to issue two classes of stock, to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares this corporation is authorized to issue is Fifty-One Million
(51,000,000) shares of capital stock.
Of such authorized shares, Fifty Million (50,000,000) shares shall be
designated "Common Stock" and have a par value of $0.01 per share. One Million
(1,000,000) shares shall be designated "Preferred Stock" and have a par value of
$1.00 per share.
A. COMMON STOCK
1. General. The voting, dividend and liquidation rights of the holders
of the Common Stock are subject to and qualified by the rights of the holders of
the Preferred Stock of any series as may be designated by this Board of
Directors upon any issuance of the Preferred Stock of any series.
2. Voting. The holders of the Common Stock are entitled to one vote for
each share held at all meetings of stockholders (and written actions in lieu of
meetings). There shall be no cumulative voting.
3. Dividends. Dividends may be declared and paid on the Common Stock
from funds lawfully available therefor as and when determined by the Board of
Directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock.
4. Liquidation. Upon the dissolution or liquidation of the Corporation,
whether voluntary or involuntary, holders of Common Stock will be entitled to
receive all assets of the Corporation available for distribution to its
stockholders, subject to any preferential rights of any then outstanding
Preferred Stock.
B. PREFERRED STOCK
Preferred Stock may be issued from time to time in one or more series,
each of such series to have such terms as stated or expressed herein and in the
resolution or resolutions providing for the issue of such series adopted by the
Board of Directors of the Corporation as hereinafter provided. Any shares of
Preferred Stock which may be redeemed, purchased or acquired by the Corporation
may be reissued except as otherwise provided by law. Different series of
Preferred Stock shall not be construed to constitute different classes of shares
for the purpose of voting by classes unless expressly provided.
Authority is hereby expressly granted to the Board of Directors from
time to time to issue the Preferred Stock in one or more series and in
connection with the creation of any such series, by resolution or resolutions
providing for the issue of the shares thereof, to determine and fix such voting
powers, full or limited, or no voting powers, and such designations, preferences
and relative participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, including without
limitation thereof, dividend rights, conversion rights, redemption privileges
and liquidation preferences, as shall be stated and expressed in such
resolutions, all to the full extent now or hereafter permitted by the General
Corporation Law of Delaware. Without limiting the generality of the foregoing,
the resolutions providing for issuance of any series of Preferred Stock may
provide that such series shall be superior or rank equally or be junior to the
Preferred Stock of any other series to the extent permitted by law. No vote of
the holders of the Preferred Stock or Common Stock shall be a prerequisite to
the issuance of any shares of any series of the Preferred Stock authorized by
and complying with the conditions of the Certificate of Incorporation, the right
to have such vote being expressly waived by all present and future holders of
the capital stock of the Corporation.
-20-
SOLICITED BY THE BOARD OF DIRECTORS
GREENMAN TECHNOLOGIES, INC.
SPECIAL MEETING IN LIEU OF ANNUAL MEETING OF STOCKHOLDERS
March 12, 1998
PROXY
The undersigned stockholder of GreenMan Technologies, Inc. (the "Company")
hereby appoints Robert H. Davis and Joseph E. Levangie, and each of them acting
singly, with power of substitution, the attorneys and proxies of the undersigned
and authorizes them to represent and vote on behalf of the undersigned, as
designated, all of the shares of capital stock of the Company that the
undersigned is entitled to vote at the Special Meeting in Lieu of Annual Meeting
of Stockholders of the Company to be held on March 12, 1998, and at any
adjournment or postponement of such meeting for the purposes identified on the
reverse side of this proxy and with discretionary authority as to any other
matters that properly come before the Special Meeting, in accordance with and as
described in the Notice of Special Meeting of Stockholders and Proxy Statement.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If this proxy is returned without direction being
given, this proxy will be voted FOR all proposals.
SEE REVERSE
(IMPORTANT - TO BE SIGNED AND DATED ON REVERSE SIDE) SIDE
|X| Please mark
votes as in
this example.
The Board of Directors recommends a vote FOR proposals 1, 2, 3, 4 and 5.
FOR WITHHOLD
1. Election of six Directors: |_| |_|
Nominees: Maurice E. Needham WITHHOLD FOR NOMINEE BELOW:
Robert H. Davis
Joseph E. Levangie
Robert D. Maust
Lew F. Boyd
Jagruti Oza
FOR AGAINST ABSTAIN
2. Approve Amendments to the Company's |_| |_| |_|
Certificate of Incorporation and By-Laws
to create three classes of directors
to serve for staggered terms.
3. Approve an amendment to the Company's |_| |_| |_|
Certificate of Incorporation authorizing a
one for five reverse stock split.
4. Approve an amendment to the Company's |_| |_| |_|
Certificate of Incorporation increasing the
authorized shares of Common Stock
5. Ratify the appointment of Wolf & Company, |_| |_| |_|
P.C. as independent auditors.
MARK HERE FOR MARK
ADDRESS CHANGE |_| HERE FOR |_|
AND NOTE BELOW COMMENTS
Please sign exactly as your name appears on stock certificate. If acting as
attorney, executor, trustee, guardian or in other representative capacity, sign
name and title. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person. If held jointly, both parties must sign
and date.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Signature:____________________________________ Date:______________________
Signature:____________________________________ Date:______________________