SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT
TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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|_| Filed by a Party Other than the Registrant
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for use of the Commission Only (as permitted by Rule
14a-6(e)(2)
|x| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
HelpMate Robotics Inc.
(Name of Registrant as Specified in its Charter)
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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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 off its filing.
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HELPMATE ROBOTICS INC.
Shelter Rock Lane
Danbury, Connecticut 06810
----------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 18, 1998
---------------------------------------------------
The 1998 Annual Meeting of the Shareholders of HelpMate Robotics Inc. will
be held at the Company's headquarters, Shelter Rock Lane, Danbury, Connecticut
on Thursday, June 18, 1998 at 10:00 a.m. for the following purposes:
1. To elect five (5) directors for a term to expire at the 1999 Annual
Meeting.
2. To consider and vote upon a proposal to ratify the appointment of Arthur
Andersen LLP as the Company's independent auditors for fiscal 1998.
3. To consider and vote upon a proposal to amend the Amended and Restated
1995 Stock Option Plan in order to increase the number of shares for which
options may be granted thereunder from 500,000 to 700,000 (as described in
the attached Proxy Statement).
4. To act upon any and all matters incident to the foregoing and transact
such other business as may properly come before the meeting and any and
all adjournments or postponements thereof.
The proposals to be acted upon at the meeting is further described in detail in
the attached Proxy Statement. Only shareholders of record at the close of
business on May 6, 1998 (the "Record Date") will be entitled to notice of and to
vote at the meeting and any adjournments or postponement thereof.
If your shares are held of record by a broker, bank or other nominee and you
wish to attend the meeting, you must obtain a letter from the broker, bank or
other nominee confirming your beneficial ownership of the shares and bring it to
the meeting. In order to vote your shares at the meeting, you must obtain from
the record holder a proxy issued in your name.
IMPORTANT: WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED, REGARDLESS OF THE NUMBER OF SHARES YOU HOLD.
ACCORDINGLY, YOU ARE ENCOURAGED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD
IN THE REPLY ENVELOPE PROVIDED AS SOON AS POSSIBLE. THANK YOU FOR ACTING
PROMPTLY.
By Order of the Board of Directors,
Prudence Shepard
Assistant Secretary
May 22, 1998
HELPMATE ROBOTICS INC.
Shelter Rock Lane
Danbury, Connecticut 06810
(203) 798-8988
PROXY STATEMENT
Introduction
This proxy statement is furnished in connection with the solicitation of proxies
on behalf of the Board of Directors (the "Board") of HelpMate Robotics Inc., a
Connecticut corporation (the "Company"). Proxies are being solicited for use at
the Annual Meeting of Shareholders to be held at 10:00 a.m., local time, on
Thursday, June 18, 1998, at the offices of the Company, Shelter Rock Lane,
Danbury, Connecticut 06810, and for all adjournments and postponements thereof
(the "Annual Meeting").
Only shareholders of record (the "Shareholders") as of the close of business on
May 6, 1998, the record date for the Special Meeting (the "Record Date"), will
be entitled to notice of and to vote at the Annual Meeting. At the close of
business on the Record Date, 12,045,719 shares of the Company's Common Stock
were outstanding and entitled to vote at the Annual Meeting. Each share of
Common Stock is entitled to one vote.
The Notice of Annual Meeting, this proxy statement, and the accompanying proxy
are first being mailed on or about May 22, 1998 to shareholders of record as of
the close of business on the Record Date.
You can ensure that your shares are voted at the Annual Meeting by signing,
dating and promptly returning the enclosed proxy in the envelope provided.
Sending in a signed proxy will not affect your right to attend the meeting and
vote in person. You may revoke your proxy at any time before it is voted by
notifying the Company's Transfer Agent, American Stock Transfer & Trust Company,
40 Wall Street, New York, New York 10005 in writing or by executing a subsequent
proxy, which revokes any previously executed proxy or by voting in person at the
meeting.
The Company's principal executive offices are located at Shelter Rock Lane,
Danbury, Connecticut, 06810.
Voting of Proxies and Outstanding Voting Securities
Proxies will be voted as specified by the shareholders. Where specific choices
are not indicated, proxies will be voted for proposals 1, 2 and 3. Abstentions,
broker non-votes or in the case of proposal 1 only, instructions on the
accompanying proxy card to withhold authority to vote for the nominated
directors will result in such proposal receiving fewer votes. An affirmative
vote of the holders of at least a majority of the outstanding shares of Common
Stock entitled to vote and present, in person or by properly executed proxy,
will be required to approve all three proposals. The total shares issued and
outstanding at the close of business on the Record Date was 12,045,719 shares of
Common Stock, each share of which is entitled to one vote. If no direction is
made proxies will be voted for the election of directors as set forth below, in
favor
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of the ratification of the appointment of the independent auditors and for the
approval of the amendment to the Amended and Restated 1995 Stock Option Plan as
set forth below.
Information Concerning Solicitation and Voting
In order to constitute a quorum for the conduct of business at the Annual
Meeting, a majority of the outstanding shares of Common Stock entitled to vote
at the Annual Meeting must be represented at the Annual Meeting. If a share is
represented for any purpose at the Annual Meeting, it is deemed to be present
for all other matters. Shares represented by proxies that reflect abstentions or
broker non-votes will be counted as shares that are present and entitled to vote
for purposes of determining the presence of a quorum. Abstentions, broker
non-votes and votes withheld are not treated as votes cast at the Annual
Meeting, but will have the effect of a negative vote on Proposals 1, 2 and 3
however, since the Company's certificate of incorporation requires the
affirmative vote of a majority of the shares represented at the Annual Meeting
and entitled to vote in order to approve an action.
Shareholders are encouraged to specify the way they wish to vote their shares by
marking the appropriate boxes on the enclosed proxy. All shares represented by
each properly executed, unrevoked proxy received in time for the Annual Meeting
will be voted in the manner specified therein. If the manner of voting with
respect to a proposal is not specified in an executed proxy received by the
Company, the proxy will be voted FOR approval of such proposal. Sending in a
signed proxy will not affect a Shareholder's right to attend the meeting and
vote in person. Any Shareholder giving a proxy in the form accompanying this
proxy statement has the power to revoke the proxy prior to its exercise. A proxy
may be revoked at any time before it is exercised by the Shareholder's
delivering a written instrument of revocation to the Company's Transfer Agent,
American Stock Transfer & Trust Company, 40 Wall Street, New York, New York
10005. A Shareholder may also revoke the proxy by presenting at the Annual
Meeting a duly executed proxy bearing a later date or time than the date or time
of the proxy being revoked. Finally, a proxy may be revoked if the Shareholder
is present at the Annual Meeting and elects to vote in person. Mere attendance
at the Annual Meeting will not serve to revoke a proxy.
The expense of soliciting proxies will be borne by the Company. The solicitation
will be by mail. Expenses include reimbursement paid to brokerage firms and
others for their expenses incurred in forwarding solicitation material regarding
the Annual Meeting to beneficial owners of the Company's Common Stock. Further
solicitation of proxies may be made by telephone or oral communication with
Shareholders by directors, officers and other employees of the Company who will
not receive additional compensation for the solicitation.
The Board does not intend to present any matters for a vote at the meeting
except for Proposals 1, 2 and 3 described in this Proxy Statement. The persons
named in the proxy will, however, have discretionary voting authority regarding
any other business that may properly come before the Annual Meeting.
Information About Certain Beneficial Owners of Common Stock
The following table sets forth information based upon the Company's records and
Securities and Exchange Commission filings with respect to each executive
officer, each director and nominee for director, each person known to be a
beneficial owner of more than 5% of the Common Stock of the Corporation and all
executive officers and directors as a group as of May 12, 1998. Under the rules
and regulations of the Securities and Exchange Commission, a person is deemed to
own beneficially all securities of which that
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person owns or shares voting or investment power as well as all securities which
may be acquired through the exercise of currently available conversion, warrant
or option rights. Unless otherwise indicated, each such person possesses sole
voting and investment power with respect to the shares owned by him.
4
Address Shares Percent
------- ------ -------
Connecticut Financial c/o Prospect Street Connecticut Capital Inc. 1,014,188 8.42%
Developments, LP 250 Park Avenue, 17th Floor
New York, NY 10177
Transitions Two c/o Landmark Partners Inc. 467,593 3.86%
Limited Partnership(2) 760 Hopmeadow Street
Simsbury, CT 06070
Robert Gault(3) 91 Shelby Street 806,060 6.58%
Eminence, KY 40019
Gabriel Kaplan(4) 9551 Hidden Valley Road 1,209,090 9.79%
Beverly Hills, CA 90210
Joseph F. Engelberger(5) HelpMate Robotics Inc. 2,045,605 16.28%
Shelter Rock Lane
Danbury, CT 06810
Thomas K. Sweeny(6) HelpMate Robotics Inc. 484,488 3.79%
Shelter Rock Lane
Danbury, CT 06810
Joseph G. Cote(7) Prospect Street Connecticut Capital Inc. 0 0
Exchange Place, 37th Floor
Boston, MA 02109
John F. Barry(7) Prospect Street Connecticut Capital Inc. 0 0
250 Park Avenue, 17th Floor
New York, NY 10177
Theodore Sall(8) 47 Lake View Drive 13,000 (9)
Old Tappan, NJ 07675
Sheldon Sandler(8) 11131 Taylor Court 10,000 (9)
Lawrenceville, NJ 08648
All Directors and Executive
Officers as a
Group(5)(6)(7)(8) 2,553,093 20.07%
- ----------
(1) Does not include beneficial ownership of securities of Connecticut
Innovations Incorporated, 999 West Street, Rocky Hill, CT 06067, including
securities to be issued as described under the heading "Certain
Relationships and Related Transactions -- CII Restructuring." Does not
include beneficial ownership of securities of the Boston Group LLP, 545
Madison Avenue, 14th Floor, New York, NY 10022, including securities to be
issued as described under the heading "Certain Relationships and Related
Transactions -- Transactions Related to the Private Placement."
(2) Includes warrants to purchase 57,326 shares.
(3) Includes warrants to purchase 200,000 shares.
(4) Includes warrants to purchase 300,000 shares.
(5) Includes 72,589 shares of common stock owned by Mr. Engelberger's wife,
Margaret Engelberger, but does not include shares beneficially owned by
Mr. Engelberger's adult children or his brother. Also includes 311,616
shares and warrants to purchase 119,500 shares owned by the Joseph F.
Engelberger Foundation. Also includes warrants to
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purchase 326,361 shares, and options to purchase 71,052 shares.
(6) Includes options to purchase 72,522 shares and warrants to purchase 62,649
shares.
(7) Does not include shares beneficially owned by his employer, Prospect
Street Connecticut Capital Inc.
(8) Includes options to purchase 10,000 shares owned by such person.
(9) Less than one percent.
Certain Relationships and Related Transactions
Transactions Related to the Private Placement
The securities owned by Messrs. Gault and Kaplan as indicated on the beneficial
ownership table above were acquired as part of a private placement (the "Private
Placement") of Units consisting of a convertible notes and warrants which was
concluded in February 1998. On April 26, 1998, the convertible notes were
converted into shares of the Company's Common Stock.
In consideration for its services to the Company in connection with the Private
Placement, the Boston Group, LP will be issued a warrant expiring December 31,
2001 to purchase up to approximately 2,400,000 shares of Common Stock at an
exercise price of $.33 per share. The number of warrant shares will be
determined as of the close of the transactions with Connecticut Innovations,
Incorporated ("CII") described below, and will be based upon, among other
things, the gross proceeds of the Private Placement, and the dollar amount of
certain payables and other creditor payments liquidated, including to CII
described herein. In addition, the Company also paid the Boston Group, LP
commissions and a non-accountable expense allowance in connection with the
Private Placement in the amount of $191,000.
In November, 1997, Brookehill Equities, Inc. ("Brookehill") made a demand loan
to the Company in the amount of $150,000, as evidenced by a note bearing
interest at a rate of fifteen percent (15%) per annum. The Company has
subsequently repaid this loan. In consideration of this loan, in January 1998,
the Company issued to Brookehill warrants expiring December 31, 2001 to purchase
25,000 shares of Common Stock at an exercise price of $.33 per share.
Transactions Involving Company Management
In November 1997, the Company's Chairman and director, Joseph F. Engelberger,
(and a foundation established by Mr. Engelberger), made a demand loan to the
Company in the amount of $150,000. Mr. Engelberger is the Company's co-founder,
its Chairman, and a director. In exchange for that loan, the Company issued two
demand notes bearing interest at a rate of fifteen percent (15%) per annum
(collectively the "1997 Engelberger Note"). In consideration for this loan, in
January 1998, the Company issued to Mr. Engelberger (and the foundation)
warrants expiring December 31, 2001 to purchase collectively 25,000 shares of
Common Stock at an exercise price of $.33 per share. In January 1998, the 1997
Engelberger Note was converted into 467,424 shares of the Company's Common Stock
at a rate of one share of Common Stock for every $.33 of principal and interest
outstanding under the 1997 Engelberger Note. In consideration of Mr.
Engelberger's agreement to convert the 1997 Engelberger Note, the Company issued
to Mr. Engelberger warrants expiring December 31, 2001 to purchase 154,250
shares of Common Stock at an exercise price of $.33 per share.
The Company was also indebted to Mr. Engelberger pursuant to a term note dated
May 26, 1995 bearing interest at a rate of 10% per annum ("1995 Engelberger
Note"). The 1995 Engelberger Note required
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payments of interest only for one year, and then equal payments of principal and
interest for 48 months, through June, 2000. Pursuant to an agreement made in
January 1998, the 1995 Engelberger Note was converted in April 1998 into 534,552
shares of the Company's Common Stock. In addition, the Company issued to Mr.
Engelberger warrants expiring December 31, 2001 to purchase 176,402 shares of
Common Stock at an exercise price of $.33 per share for each dollar of
indebtedness liquidated.
In July 1997, the Company's President and director, Thomas K. Sweeny, made a
demand loan to the Company in the amount of $60,000 evidenced by a note bearing
interest at a rate of eight and one-half percent (8.5%) per annum. In January
1998, that note was converted into 189,845 shares of the Company's Common Stock
at a rate of one share of Common Stock for every $.33 of principal and interest
outstanding thereunder. In consideration of Mr. Sweeny's agreement to convert
that note, the Company issued to Mr. Sweeny warrants expiring December 31, 2001
to purchase 62,649 shares of Common Stock at an exercise price of $.33 per
share.
CII Restructuring
In January 1998, the Company reached an agreement in principle with CII, a
security- holder and creditor of the Company, pursuant to which CII has agreed
to convert the Company's loan indebtedness and certain accrued royalty payments
to CII into shares of Common Stock and warrants to purchase Common Stock, and to
accept shares of Common Stock and warrants in lieu of certain royalty payments
which may come due during the calendar year 1998.
The Company's loan indebtedness to CII is evidenced by a note dated June 14,
1995 ("CII Note") bearing interest at a rate of 10% per annum. The CII Note
requires payments of interest only for one year, and then equal payments of
principal and interest for 48 months, through June, 2000, and is secured by a
security interest in all of the Company's intellectual property relating the
HelpMate in the North and South American markets. As of January 31, 1998, the
outstanding principal and interest due under the CII Loan was $454,545. Under
the CII loan agreements, the Company is also required, among other things, to
retain its principal place of business and a majority of its employees and
operations in the State of Connecticut ("Connecticut Presence Requirements")
until June, 2001.
The Company also has certain royalty obligations to CII under a Development
Agreement dated December 29, 1986, pursuant to which CII reimbursed the Company
for certain development costs related to the HelpMate robotics courier system
("Sponsored Products"). Under the Development Agreement, the Company must pay
royalties to CII equal to (i) a specified percentage ("Company Percentage Rate")
of the Company's net sales of Sponsored Products, (ii) fifty percent of license
fees paid to the Company under licenses granting to third parties the rights to
produce or sell the Sponsored Products, and (iii) fifty percent of any royalties
received by the Company on net sales of Sponsored Products by third-party
licensees of the Company. During the two-year period ending February 1998
("Reduced Royalty Term"), the Company Percentage Rate was equal to the greater
of (i) one and one-half percent of the net sales of Sponsored Products or (ii)
twenty percent (20%) of the Company's pre-tax profits (but in no event more than
five percent of net sales of Sponsored Products). After February 1998, the
Company Percentage Rate increases to five percent of the Company's net sales of
Sponsored Products. Subject to the satisfaction of certain conditions, at the
expiration of the Reduced Royalty Term, the Company will be credited with an
additional $300,000 in royalty payments against the Royalty Threshold described
below. The Company must pay royalties at the rate described above until the
total royalties paid or credited have aggregated $2,205,000 ("Royalty
Threshold"). Once royalties paid or credited have reached the Royalty Threshold,
the Company
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must thereafter pay royalties for a period equal to the period of time taken to
reach the Royalty Threshold except that the Company Percentage Rate during that
period would be reduced to one-half of one percent. Royalties payable only to
the extent that sales and license fees are realized. Through December 31, 1997,
the Company has paid approximately $265,000 in royalties to CII.
CII has agreed to convert the outstanding indebtedness under the CII Note and
royalty payments accrued under the Development Agreement through December 31,
1997 into shares of the Company's Common Stock and such amounts will be
liquidated at the rate of one share of Common Stock for each $.33 of
indebtedness and royalty liquidated. In addition, the Company will issue to CII
warrants expiring December 31, 2001 ("CII Warrants") exercisable for shares of
Common Stock at an exercise price of $.33 per CII Warrant Share for each dollar
of indebtedness and royalty liquidated. The number of CII Shares and CII
Warrants to be issued will be determined as of the date of conversion.
As part of its agreement with CII the Company must agree to extend the
Connecticut Presence Requirements to a term ending ten years from the date of
closing. In the event the Company violates the Connecticut Presence
Requirements, CII can (a) demand immediate payment of the balance of the Royalty
Threshold; and (b) require the Company to repurchase its Company Securities. The
security interest previously granted to CII in the intellectual property
relating to HelpMate in the North and South American markets will be extended so
that it also secures the Company's obligations to make the royalty payments
under the Development Agreement. In addition, a representative of CII would
continue to have the right to attend meetings of the Company's board of
directors so long as CII owns shares of the Company's stock and the Company has
any outstanding obligations under the Development Agreement.
Other Relationships
The Company currently employs Mr. Engelberger's brother, John Engelberger, as a
part-time Senior Sales Executive. Under the terms of John Engelberger's
employment agreement, he is currently entitled a commission of $5,000 per
robotic courier system that he sells or rents and is successfully installed. He
is also eligible to participate in the Company's regular bonus plans and fringe
benefit programs. Total compensation paid to John Engelberger for the years
ended December 31, 1997 and 1996 was $47,534 and $79,000, respectively.
The Company also employs Mr. Engelberger's daughter, Gay Engelberger, as the
Director of Marketing. Ms. Engelberger receives an annual salary of $70,000 and
is eligible to participate in the Company's regular bonus plans and fringe
benefit programs.
Proposal 1. Election of Directors
The Board of Directors recommends a vote FOR the election of directors which is
designated as proposal No. 1 on the enclosed proxy card.
At the meeting five directors are to be elected to serve for a term to expire at
the 1999 Annual Meeting of the Shareholders. The nominees for these positions
are: Joseph F. Engelberger, Thomas K. Sweeny, Joseph G. Cote, Theodore Sall, and
Sheldon Sandler. The accompanying proxy will be voted for the election of the
Board's nominees unless contrary instructions are given. If one or more of the
Board's nominees is unable to serve, which is not anticipated, the persons named
as proxies intend to vote, unless the number of nominees
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is reduced by the Board of Directors, for such other person or persons as the
Board of Directors may designate. The nominees for the these positions are as
follows:
Name Age Position with Company
- ---- --- ---------------------
Joseph F. Engelberger 72 Chairman and Director
Thomas K. Sweeny 60 President, Chief Executive
Officer, Treasurer and Director
Joseph G. Cote 56 Director
Theodore Sall 71 Director
Sheldon Sandler 53 Director
Mr. Engelberger co-founded the Company in 1984 and has served as a Director and
the Chairman since that time. Prior to that, Mr. Engelberger founded and served
as the first president of Unimation, Inc., the first industrial robotics
company, which was acquired by Westinghouse Electric Corporation. He also
founded and was the first president of Consolidated Controls Corporation, which
was ultimately acquired by Eaton Corporation. Mr. Engelberger has written
extensively on the subjects of instrumentation and robotics. Mr. Engelberger is
the father of Gay Engelberger, the Company's director of marketing. Mr.
Engelberger formerly served as a director of Anderson Group, Inc. and currently
serves as a director of EDO Corporation.
Mr. Sweeny, a director of the Company since 1987, joined its management team in
February 1995. From 1987 to February, 1995, Mr. Sweeny had been a partner and a
managing director at Landmark Ventures Inc., a venture capital firm and, through
an affiliate, one of the original investors in the Company. While at Landmark,
Mr. Sweeny served as a director of eleven companies, including Infodex, Inc. and
Nova Technologies, Inc., and acted in the capacity of CEO for Vortech Data
Systems, Inc. and occupied the office of the president at Metallon Engineered
Materials, Inc. From 1986 to 1987, Mr. Sweeny was employed by the Holley
Division of Coltec Industries as Vice President of Joint Ventures and
Acquisitions and later as Vice President of Engineering. From 1981 until 1986 he
was employed by the Diesel Systems Division of United Technologies Corporation.
He is also a past Chairman and past President of the Connecticut Venture Group
and the founder and first Chairman of the Connecticut Venture Fair.
Mr. Cote has been a Director of the Company since August 1997. Mr. Cote is
currently co-president and chief operating officer of Prospect Street Ventures,
a position he has held since 1989.
Dr. Sall has been a director of the Company since March 1996. He currently is a
Professor Emeritus at Ramapo College of New Jersey. Prior to holding this
position, Dr. Sall was an Adjunct Professor of Clinical Medicine at the
University of Medicine and Dentistry, New Jersey School of Nursing from 1991 to
July 1995. Dr. Sall is also a Director of International Vitamin Corporation and
Fluro Scan Inc.
Mr. Sandler has been a director of the Company since March 1996. He has been the
Managing Director of Corporate Finance for Ladenburg Thalmann & Co., Inc., an
investment banking firm located in New York City since 1991. Prior to joining
Ladenburg, Mr. Sandler was the Managing Partner of two investment firms,
Carnegie Securities and Sandler, Trench & Co., both located in Princeton, New
Jersey. Mr. Sandler was also a chief examiner at the Securities and Exchange
Commission.
9
Board of Directors - General. The Board of Directors held four meetings in 1997.
All of the current directors attended at least 75% of the meetings of the board
and the respective committees of the Board of which they were a member during
1997 with the exception of Mr. Barry, who did not attend three Board meetings.
In May, 1997 the Board of Directors voted to reduce the size of the Board of
Directors from 8 to 5 members. The Board of Directors has an Audit Committee, a
Compensation Committee and a Stock Option Committee.
Audit Committee. The Audit Committee, which met once in 1997, consists of two
directors of the Company, all of whom are independent. The Audit Committee is
responsible for the engagement of the Company's independent auditors and reviews
with them the scope and timing of their audit services and any other services
which they are asked to perform, their report on the Company's accounts
following completion of the audit and the Company's policies and procedures with
respect to internal accounting and financial control. The board of directors has
appointed Messrs. Sall and Sandler as the members of the Audit Committee.
Compensation Committee. The Compensation Committee, which met three times in
1997, is responsible for making recommendations to the board of directors with
respect to compensation and benefit levels of executive officers of the Company.
The board has appointed Mr. Sall as the members of the Compensation Committee.
There is currently a vacancy on this committee.
Stock Option Committee. The Stock Option Committee is responsible for
administering the Company's 1984, 1988 and 1995 Stock Option Plans. The board
has appointed Messrs. Cote and Sall to the Stock Option Committee.
Compensation. The Company does not pay any additional remuneration to employees
serving as directors nor does it pay any such remuneration to non-employee
directors. Directors' out-of-pocket expenses are not reimbursed by the Company.
Compliance with Section 16(a) of the Exchange Act. Mr. Engelberger did not file
reports as required by Section 16(a) of the Exchange Act ("Section 16 Reports")
by (a) February 15, 1998 with respect to the grant by the Company of options to
purchase 30,000 shares of common stock at an exercise price of $1.31 per share
granted on March 7, 1997 and of options to purchase 25,000 shares of common
stock at an exercise price of $.20 per share granted on May 20, 1997; and (b) by
May 10, 1998 with respect to the conversion of a promissory note from the
Company into 534,552 shares of Common Stock and his acquisition of warrants to
purchase 176,402 shares of Common Stock at an exercise price of $.33 per share
in April 1998. Mr. Sweeny did not file Section 16 Reports by February 15, 1998
with respect to the grant by the Company of options to purchase 30,000 shares of
common stock at an exercise price of $1.31 per share granted on March 7, 1997
and of options to purchase, 28,125 shares of common stock at an exercise price
of $.20 per share granted on May 20, 1997. The foregoing Section 16 Reports were
filed May 20, 1998.
Executive Compensation
The following table sets forth certain information regarding compensation
awarded to, earned by, or paid to the Company's chief executive officer and each
other executive officer and employee whose salary and bonus for the fiscal year
ended December 31, 1997 exceeded $100,000.
10
Securities Underlying
Name and Position Fiscal Year Salary Options
----------------- ----------- ------ -------
Joseph F. Engelberger 1997 $100,000 55,000
Chairman of the Board
1996 100,000 0
1995 113,333 32,345
Thomas K. Sweeny 1997 $150,000 58,125
President/Chief
Executive Officer 1996 $150,000 0
1995 $37,500 24,680
Fred Cordano 1997 103,000 22,745
Director of
Manufacturing 1996 101,750 0
1995 98,000 805
The Company has entered into employment agreements with Messrs. Engelberger and
Sweeny. Each of these agreements contains noncompetition, nondisclosure and
noninterference provisions.
Mr. Engelberger's employment agreement initially runs until December 31, 1998
and is automatically renewable from year to year thereafter. Mr. Engelberger is
employed at fifty percent of normal working hours and, effective April 1, 1998,
receives an annual salary of $75,000. After the initial term, the agreement may
be terminated by Mr. Engelberger at any time and by the Company with at least
twelve months prior notice. If the Company provides less than twelve months
notice, it must continue to compensate Mr. Engelberger through the twelve-month
period.
Mr. Sweeny's employment agreement initially runs until December 31, 1998 and is
automatically renewable from year to year thereafter. His annual base salary
under the agreement is $150,000, and he is eligible for performance bonuses in
amounts determined by the board of directors in its sole discretion. The
agreement may be terminated by the Company for cause at any time with thirty
days prior notice; after December 31, 1998, either party may terminate the
agreement without cause with thirty days prior notice, provided, however, that
if the Company terminates the agreement without cause, Mr. Sweeny is entitled to
continue receiving his salary for a period of twelve months.
The following table sets forth information on the exercise of stock options and
warrants issued to individuals named in the executive compensation table.
11
Shares Acquired Number of Securities
Upon Exercise of Underlying Unexercised Value of Unexercised in the
Options During Options at money Options at
Fiscal 1997 December 31, 1997 December 31, 1997
----------- ----------------- ------------------
Number Value Exercisable Unexerciseable Exercisable Unexerciseable
------ ----- ----------- -------------- ----------- --------------
Joseph F. Engelberger 0 $0 44,329 33,949 $13,058 0
Thomas K. Sweeny 0 $0 37,997 44,808 $11,476 0
Fred Cordano 0 $0 23,659 15,000 $3,848 0
THE BOARD RECOMMENDS A VOTE FOR PROPOSAL 1.
Proposal 2. Appointment of Auditors
The Board of Directors recommends a vote FOR the ratification of the appointment
of auditors which is designated as proposal No. 2 on the enclosed proxy card.
On the recommendation of the Audit Committee of the Board of Directors, the
Board has appointed Arthur Andersen LLP as auditors for the fiscal year ended
December 31, 1997, subject to ratification by Shareholders. Arthur Andersen LLP
was engaged in 1998 and audited the Company's financial statements for the year
ended December 31, 1997. Representatives of Arthur Anderson LLP are expected to
attend the 1998 Annual Meeting, where they will have the opportunity to make a
statement if they wish to do so and will be available to answer appropriate
questions from the Shareholders. If the foregoing proposal is not approved at
the meeting, or if prior to the 1999 Annual Meeting, Arthur Andersen LLP shall
decline to act or otherwise become incapable of acting, or if its engagement
shall otherwise be discontinued by the Board of Directors, then in any such
case, the Board of Directors will appoint other independent auditors whose
engagement for any period subsequent to the 1998 Annual Meeting will be subject
to ratification by the Shareholders at the 1999 Annual Meeting.
In order to reduce its auditing expenses, on January 21, 1998, the Company
appointed Arthur Andersen LLP as auditors for the fiscal year ended December 31,
1997 and terminated the appointment of Ernst & Young LLP as its auditors for
that year. Ernst & Young LLP had audited the Company's financial statements
since 1985.The reports of Ernst & Young on the financial statements of the
Company as of December 31, 1996 and 1995 did not contain an adverse opinion or a
disclaimer of opinion, or was qualified or modified as to uncertainty, audit
scope or accounting principles. In connection with the audits of the Company's
financial statements for each of the two years ended December 31, 1996 and in
the subsequent interim period, there were no disagreements with Ernst & Young on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope and procedures, which disagreements, if not
resolved to the satisfaction of Ernst &Young would have caused it to make
reference to the subject matter of the disagreement in their reports. The
decision to change accountants was ratified by the Audit Committee and by the
Board of Directors in May 1998.
12
THE BOARD RECOMMENDS A VOTE FOR PROPOSAL 2.
Proposal 3. Approval of Amendment to the Amended and Restated 1995 Stock Option
Plan
The Board of Directors recommends a vote FOR the approval of the amendment to
the Amended and Restated 1995 Stock Option Plan which is designated as proposal
No. 3 on the enclosed proxy card.
Purpose. The Company is proposing to amend the Company's existing 1995 Amended
and Restated Stock Option Plan (the "Plan") in order to increase the number of
shares of Common Stock for which options may be granted under the Plan for
500,000 to 700,000 shares. The Plan provides for the grant to eligible employees
of options which qualify as incentive stock options under Section 422A of the
Internal Revenue Code ("ISO's") and for the grant of options which are not so
qualified ("Nonqualified Options") to employees and eligible directors of the
Company.
The Plan is designed to promote the interests of the Company and its
shareholders by providing eligible employees and eligible directors with
incentives to enable the Company to attract and retain qualified personnel and
directors. The Board of Directors believes that the Plan will further the
long-term growth of the Company by providing incentives and rewards to those
employees and directors of the Company who are in positions to contribute
significantly to the achievement and growth of the Company. Currently, the Plan
authorizes the granting of options to purchase up to 500,000 shares of Common
Stock and such shares have been reserved for issuance by the Company. Of those
shares, 400,874 are currently subject to outstanding options. The Board believes
that additional shares must be made available for grants under the Plan in order
to achieve the Plan's purposes. Accordingly the Board has approved, subject to
the approval of the Shareholders at the Annual Meeting, an amendment to the Plan
to increase the number of shares of Common Stock for which options may be
granted under the Plan from 500,000 to 700,000 shares. The Board of Directors
urges Shareholders to vote FOR this proposal, and proxies will be so voted
unless a Shareholder specifies otherwise. The affirmative vote of a majority of
shares voting on the matter will be necessary to approve this proposal
Description of the Plan. The principal provisions of the Plan are summarized
below. Under the Plan, the Board of Directors may grant ISO's to employees of
the Company who have demonstrated significant potential to contribute to the
successful performance of the Company. The Board may also grant Nonqualified
Options to eligible directors and employees. The Plan is administered by the
Board which determines which of the eligible employees and eligible directors
will receive options, the number of shares which may be purchased under each
option, and, subject to the Plan's provisions, the duration and exercise price
of such options.
The purchase price for shares subject to ISO's must not be less than 100% of the
fair market value of the Common Stock on the date the option is granted, and not
less than 110% of the fair market value, if the option is granted to a person
("Ten Percent Holder") owning stock possessing more than 10% of the total
combined voting power of the stock of the Company. The purchase price for shares
subject to Nonqualified Options will be the price established by the Board at
the time of the grant. In the case of ISO's, the aggregate fair market value of
stock for which incentive stock options may be granted during any calendar year
to any employee under the Plan and any other incentive stock option plan
maintained by the Company is $100,000, plus certain carryover amounts from prior
years.
13
One-fifth of the total number of shares covered by options granted to employees
shall vest upon the employee's completion of one year of continuous service with
the Company after the grant of the options; thereafter, an additional one-fifth
of the total number of shares covered by the options shall vest upon such
employee's completion of two, three, four and five years of continuous service
to the Company. Nonqualified Options granted to eligible directors fully vest
upon the completion of one-year of continuous service as a director, provided
however, that such options will vest immediately upon the death of such
director. The Board has the discretion to provide for a different vesting
schedule for options.
No option under the Plan is exercisable after the expiration of ten years from
the date of grant or after five years from the date of grant if such grant is to
a Ten Percent Holder. In addition, an employee's options will terminate, at the
option of the Board, thirty days from the date on which the employee terminates
employment with the Company, unless the termination is due to the employee's (i)
death, (ii) disability (as defined in the Plan), or (iii) normal retirement (as
defined in the Plan). In the event of a termination pursuant to clause (i), the
executors, administrators, legatees or distributees of the grantee's estate
shall have the right to exercise the option for a period of one year (but not
beyond their stated term). In the event of a termination pursuant to clauses
(ii) or (iii), ISO's may only be exercised during the 90 days following the
termination (but not beyond their stated term). Moreover, an employee's options
will terminate immediately if the reason the optionee ceases to be employed is
(i) optionee's termination "for cause" pursuant to any written employment
agreement or, (ii) absent such agreement, determined by the Committee to be
directly attributable to the optionee's commission of fraud, dishonesty,
negligence or malfeasance in connection with the optionee's duties to the
Company. Finally, a director's options will automatically terminate if the
director is removed as a director by the shareholders "for cause."
Options are exercisable by giving written notice to the Company, in the form
specified by the Company, stating the number of shares as to which the option is
being exercised. The option price must be paid in cash, by the delivery of
shares of common stock having a fair market value equal to the exercise price,
by delivery of instructions to the Company to withhold from the shares which
would otherwise be deliverable upon such exercise that number of shares issuable
upon such exercise whose fair market value less exercise price is equal to the
option exercise price of the shares to be delivered to the grantee, or any
combination of the foregoing.
Options are not transferable other than by will or by the laws of descent and
distribution and during a grantee's lifetime shall be exercisable only by the
grantee.
The Plan provides that the Board of Directors may amend or terminate the Plan in
any respect except that, without further approval of the shareholders, the Board
of Directors may not increase the number of shares that may be issued under the
Plan or change the eligibility of employees (or the class of employees) to whom
ISO's may be granted. The Board may, at the request of an optionee, take such
action as may be necessary to convert the optionee's unexercised ISO's into
Nonqualified Options. In the event of a dissolution or liquidation of the
Company or, generally, of certain mergers or reorganizations of the Company,
then, at the discretion of the Board of Directors and as permitted by law, (a)
any surviving corporation will assume any options outstanding under the Plan or
will substitute similar options for those outstanding under the Plan, (b) the
time during which options may be exercised shall be accelerated and the options
terminated if not exercised prior to such event or (c) options shall continue in
full force and effect.
The grant of an ISO has no immediate tax consequences to the Company or to the
employee. A holder of shares purchased pursuant to the exercise of an ISO
realizes no taxable income at the time of exercise
14
although the amount by which the fair market value at the time of exercise
exceeds the option price would be an item of "tax preference" for purposes of
computing the alternative minimum tax on individuals. If the employee holds the
shares for at least two years from the date of the grant of the ISO and at least
one year from the date of exercise, he will realize taxable long-term capital
gain or long-term capital loss upon a subsequent sale of the shares at a price
different from the option price. If these holding period requirements are not
met, the optionee will recognize ordinary income at the time of sale equal to
(i) the lower of the net proceeds at the time of sale or the fair market value
of the stock at the time of exercise less (ii) the exercise price. Any gain in
excess of the amount so calculated will be long-or short-term, depending on the
length of time the stock was held. The Company will not receive any deduction
for federal income tax purposes with respect to ISO's except when, and to the
extent that, an optionee recognizes ordinary income.
The recipient of a Nonqualified Option should not realize any income at the time
of grant. Upon exercise of the option, the excess of the fair market value of
the shares on the date of exercise over the option price will be taxable as
ordinary income to the recipient. When the shares acquired by exercise of a
Nonqualified Option are sold, the difference between the price received for the
shares and the fair market value of such shares at the date of exercise will be
treated as long- or short-term capital gain or loss, depending on the holding
period of the stock. The Company will generally be allowed a deduction for
federal income tax purposes when, and to the extent, an optionee recognizes
ordinary income.
Under certain circumstances, Section 162(m) of the Internal Revenue Code
restricts the Company's deduction for compensation in excess of $1,000,000 for
certain specified employees. In addition, the Company will be required to follow
applicable federal and state withholding and reporting requirements with regard
to any amount included in the optionee's income.
The following table sets forth the number of options to purchase shares of
Common Stock which have been granted and are outstanding under the Plan through
May 12, 1998 to the persons listed on the executive compensation table above, to
all current directors who are not executive officers, and to all employees,
other than executive officers, as a group.
Name or Group Number of Options
- ------------- -----------------
Joseph E. Engelberger 73,750
Thomas K. Sweeny 86,250
Fred Cordano 33,025
Joseph G. Cote 0
John F. Barry 0
Theodore Sall 10,000
Sheldon Sandler 10,000
All Employees, other than 187,849
Executive Officers, as a group
The 18 employees and 3 directors are eligible to options under the Plan. To
date, options to purchase 400,874 shares of Common Stock have been granted and
are outstanding under the Plan. On May 14, 1998, last sales
15
price for the shares of Common Stock as reported on the Nasdaq Bulletin Board
was $.21875
THE BOARD RECOMMENDS A VOTE FOR PROPOSAL 3.
Solicitation of Proxies
The cost of soliciting proxies for the 1998 Annual Meeting will be borne by the
Company. In addition to solicitation by mail, solicitations may also be made by
personal interview, telecopier, telegram and telephone. The Company will use the
services of American Stock Transfer & Trust Company to assist in soliciting
proxies, and expects to pay a nominal fee for such services. Arrangements will
be made with brokerage houses and other custodians, nominees and fiduciaries to
send proxies and proxy material to their principals. Consistent with the
Company's confidential voting procedure, directors, officers and other regular
employees of the Company, as yet undesigned, may also request the return of
proxies by telephone, telecopier, telegram or in person.
Shareholder Proposals
As more fully explained in the Company's Bylaws, shareholder proposals intended
to be presented at and Annual Meeting, including proposals for the nomination of
directors, removal of directors, amendments to the Company's Certificate of
Incorporation or Bylaws or the repeal of a bylaw, must be received in writing by
the Company's Secretary, no later than 50 days in advance of the annual meeting
of shareholders, or, if fewer than 50 days notice or prior public disclosure of
the meeting date is given or made by the Company, not later than the seventh day
after which notice was mailed or such public disclosure was made.
Other Business
The Board does not intend to bring any matters before the Annual Meeting other
than those set forth in the accompanying notice. The Board of Directors does not
know of any matter other than those described in this proxy statement that will
be presented for action at the meeting. If other matters properly come before
the meeting, the persons named as proxies intend to vote the shares they
represent in accordance with their judgment.
By Order of the Board of Directors,
Prudence Shepard
Assistant Secretary
May 22, 1998
16
PROXY
HELPMATE ROBOTICS INC.
Shelter Rock Lane, Danbury, Connecticut 06810
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Joseph F. Engelberger and Thomas K. Sweeny
as proxies each with the power to appoint his or her substitute and hereby
authorizes each of them to vote, as designated on the reverse side, all the
shares of Common Stock of Helpmate Robotics Inc. held of record by the
undersigned on May 6, 1998 at the Annual Meeting of Shareholders to be held on
June 18, 1998, or any adjournment or postponement thereof.
(To be Signed on Reverse Side)
1. Election of Directors
_____ FOR all nominees listed at right (except as marked to the
contrary below)
_____ WITHHOLD AUTHORITY to vote for Nominees: Joseph F. Engelberger
all nominees listed at right. Thomas K. Sweeny
Joseph G. Cole
Theodore Sall
Sheldon Sandler
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list at right.)
2. Proposal to ratify the appointment of Arthur Andersen LLP as the
independent auditors of HelpMate Robotics Inc.
3. Approval of the amendment to the Amended and Restated 1995 Stock Option
Plan.
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3.
PLEASE VOTE, SIGN, DATE AND RETURN THE PROXY CARD USING THE ENCLOSED ENVELOPE.
Signature:
----------------------------------------------------------------------
Dated: (Signature if held jointly)
Dated:
Note: Please sign exactly as name appears above. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator,, trustee or guardian, please give full title as such. If a
corporation, please sign full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.