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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, For Use of the
Commission Only(as Permitted by Rule
14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BENTHOS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
PRELIMINARY COPY AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
FEBRUARY 25, 1997
[LOGO] BENTHOS
BENTHOS, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
FRIDAY, APRIL 11, 1997
10:00 A.M.
To Benthos Stockholders:
A Special Meeting in Lieu of the Annual Meeting of Stockholders of Benthos,
Inc. will be held on Friday, April 11, 1997 at 10:00 a.m., local time, at the
Sea Crest Resort, 350 Quaker Road, North Falmouth, Massachusetts, for the
following purposes:
1. To elect one Class I member of the Board of Directors of the Company to
serve until the 2000 Annual Meeting of Stockholders and until his
successor is duly elected.
2. To consider and act upon a proposal to approve the appointment of Arthur
Andersen LLP as the Company's auditors for the 1997 fiscal year.
3. To consider and act upon a proposal to amend the articles of
organization of the Company as described in the accompanying Proxy
Statement.
4. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Only stockholders of record at the close of business on February 14, 1997
are entitled to notice of and to vote at this meeting.
By Order of the Board of Directors
John T. Lynch, Clerk
North Falmouth, Massachusetts
March 5, 1997
IMPORTANT
It is important that your shares be represented at the meeting.
Accordingly, whether or not you expect to attend the meeting, please sign,
date and promptly return the attached proxy in the enclosed envelope.
49 Edgerton Drive, North Falmouth, Massachusetts 02556-2826 USA
Tel: (508) 563-1000 Fax: (508) 563-6444
<PAGE>
BENTHOS, INC.
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
APRIL 11, 1997
This proxy statement and the accompanying Notice of Special Meeting of
Stockholders is furnished to stockholders of Benthos, Inc., a Massachusetts
corporation (the "Company"), in connection with the solicitation by the Board
of Directors of proxies to be used at the Special Meeting in Lieu of the
Annual Meeting of Stockholders of the Company to be held on April 11, 1997 at
the time and place set forth in the accompanying notice and at any and all
adjournments thereof. The approximate date on which this proxy statement and
accompanying proxy form are being sent to stockholders is March 5, 1997.
INFORMATION AS TO VOTING SECURITIES
Only stockholders of record at the close of business on February 14, 1997
(the "record date") will be entitled to vote at the meeting. On that date the
Company had outstanding and entitled to vote 824,060 shares of Common Stock.
Each share of Common Stock outstanding on the record date is entitled to one
vote. Under the By-Laws, the presence in person or by proxy of a majority in
interest of all shares of Common Stock issued, outstanding and entitled to
vote at the meeting shall constitute a quorum. When a quorum is present, a
director may be elected by a plurality of the votes properly cast. The
approval of the auditors will require the favorable vote of a majority of the
votes properly cast and the approval of the amendment to the articles of
organization will require the favorable vote of a majority of the issued and
outstanding shares of Common Stock. Votes withheld from any nominee for
election as a director, abstentions and broker "non-votes" are counted as
present or represented for purposes of determining the presence of a quorum
for the meeting. Therefore, abstentions and broker "non-votes" will have the
effect of "against" votes. Broker "non-votes" occur when a nominee holding
shares for a beneficial owner votes on one proposal, but does not vote on
another proposal because the nominee does not have discretionary voting power
and has not received instructions from the beneficial owner. Usually, this
would occur when brokers holding stock in "street name" have not received any
instructions from clients, in which case the brokers (as holders of record)
are permitted to vote on "routine" proposals but not on non-routine matters.
The election of directors and auditors are considered routine matters. An
amendment to the articles of organization is considered a non-routine matter.
Missing votes on non-routine matters are "broker non-votes."
PROXY SOLICITATION
The expenses of solicitation of proxies will be borne by the Company. It is
expected that the solicitation will be made primarily by mail, but officers
and employees of the Company may also solicit proxies by telephone, fax and in
person.
The Company's principal executive offices are at 49 Edgerton Drive, North
Falmouth, Massachusetts 02556-2826.
Any person giving a proxy in the form accompanying this statement has the
power to revoke it at any time before its exercise. It may be revoked by
filing with the Clerk of the Company an instrument of revocation or a duly
executed proxy bearing a later date. It may also be revoked by attendance at
the meeting and election to vote in person.
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DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The current directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Samuel O. Raymond.............. 67 Chairman Emeritus of the Board of Directors
and Director of Research
John L. Coughlin............... 45 President and Chief Executive Officer and
Director
Stephen D. Fantone............. 43 Chairman of the Board of Directors
A. Theodore Mollegen, Jr. ..... 59 Director
Thurman F. Naylor.............. 77 Director
Francis E. Dunne, Jr. ......... 50 Treasurer and Chief Financial Officer
</TABLE>
The Company's board of directors is classified into three classes, with the
members of the respective classes serving for staggered three-year terms. The
first class, consisting of Mr. Coughlin, is eligible for re-election at the
1997 annual meeting; the second class, consisting of Mr. Mollegen and Dr.
Fantone, is eligible for re-election at the 1998 annual meeting; the third
class, consisting of Messrs. Raymond and Naylor, is eligible for re-election
at the 1999 annual meeting. Officers of the Company serve at the pleasure of
the Board of Directors.
The following information is provided with respect to the business
experience of each director and executive officer of the Company:
Mr. Raymond founded the Company in 1962 and served as its President for
twenty years. He previously served as Chairman of the Board from 1965-1982 and
from 1989 to January 1997. Mr. Raymond most recently served as the President
and Chief Executive Officer of the Company from June 1995 to April 1996. Mr.
Raymond has served as a director of the Company since 1965. In January 1997,
Mr. Raymond was elected as Chairman Emeritus of the Board of Directors and
Director of Research of the Company. Mr. Raymond has a B.S. in Mechanical
Engineering from M.I.T. and was instrumental in the development and marketing
of many of the Company's original products in both the Company's Undersea
Systems Division and the Container Inspection Systems Division.
Mr. Coughlin has served as President, Chief Executive Officer and a director
of the Company since April 1996 and as Treasurer from October 1996 to February
1997. Prior to joining the Company, he was President (1993-1996) and Vice
President of Sales and Marketing (1990-1993) of Dynisco Instruments, an
operating division of Dynisco, Inc., a wholly-owned subsidiary of Berwind
Industries. Dynisco Instruments is a manufacturer of pressure and temperature
measurement products for the plastics industry. He holds a B.S. in Physics
from Georgetown University and an M.S. in Physics from Northeastern
University.
Dr. Fantone became a director of the Company in March 1995 and was elected
Chairman of the Board of Directors in January 1997. Since 1982, he has been
President of Optikos Corporation, an optical engineering firm which he founded
and which specializes in the design of optical products and instrumentation
and optical test equipment. He has B.S. degrees in Electrical Engineering and
Management from M.I.T. and a Ph.D. in optics from the Institute of Optics at
the University of Rochester. Dr. Fantone has been awarded over 25 patents and
is the author of numerous technical papers and articles on optical technology.
He is also currently a Senior Lecturer in the Mechanical Engineering
Department at M.I.T.
Mr. Mollegen has served as a director of the Company since 1985. He is the
President and Chief Executive Officer of Allied Resources Corporation, a
company which provides technical training, engineering, health management, and
safety management services to industrial firms. Prior to joining Allied
Resources in 1993, Mr. Mollegen was Chairman and Chief Executive Officer of
Analysis & Technology, Inc., a provider of engineering and technical services
to the U.S. Navy. Mr. Mollegen has a B.E. in Electrical Engineering from Yale
University and is the author of over 90 technical papers and reports on
undersea topics. He is a member of the board of
2
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Technology for Connecticut (TECHCONN), Inc. and of the Southeast Area
Technology Development Center (SEATECH). He is also a member of the Forum of
Connecticut College and a member of the Advisory Committee of the University
of New Haven Southeast Branch.
Mr. Naylor is President of Cameras and Images International, Inc. (a dealer
in photographic images and equipment), is the owner and founder of the Naylor
Museum of Photography in Brookline, Massachusetts, and has served as a
director of the Company since 1987. Mr. Naylor is an internationally
recognized authority on photographic history, processes, and technology. Mr.
Naylor is the former Chairman, President and CEO of Standard-Thomson
Corporation, a manufacturer of temperature and pressure controls and
electronic equipment. Mr. Naylor was also the former Chairman, President and
CEO of Thomson International Corporation (1959-1989), a manufacturer of
temperature controls with engineering and manufacturing facilities in twelve
countries. Mr. Naylor has a B.A. in Economics from Fordham University and a
B.S. in Mechanical Engineering from The Johns Hopkins University. Mr. Naylor
is also a member of the Board of Directors of Analysis & Technology, Inc.,
Sandler Productions, Inc. (motion picture and television production) and
Summit Industries, Inc. (a manufacturer of x-ray equipment).
Francis E. Dunne, Jr. was appointed Treasurer and Chief Financial Officer of
the Company on February 1, 1997. Prior to joining the Company, he was Chief
Financial Officer of Kinney Vacuum Company, an operating division of General
Signal Corporation (1993-1996). Kinney Vacuum Company is a manufacturer of
industrial vacuum pumps and pump systems for the food packaging, chemical and
pharmaceutical, heat treating, automotive, and other industries. Prior to
joining Kinney, Mr. Dunne was Director of Planning and Analysis at General
Signal Corporation (1990-1993). General Signal Corporation is a manufacturer
of products serving the process controls, electrical controls, and industrial
technology industries. Mr. Dunne has a B.S. degree in Public Accounting from
St. John's University, an M.B.A. in Finance from Long Island University, and
is a Certified Public Accountant.
There are no family relationships among the directors or executive officers
of the Company.
BOARD AND COMMITTEE MEETINGS
Four meetings of the Board of Directors were held during the fiscal year
ended September 30, 1996. The Board of Directors serves as the Company's
Nominating Committee.
The Audit Committee is a committee of the Board of Directors which reviews
and discusses the plan for and the results of the annual audit with the
Company's independent auditors and approves non-audit services provided by
them. The Audit Committee also reviews the Company's internal auditing,
control and accounting system. In addition, the committee makes
recommendations to the Board concerning the selection of the independent
auditors. The present members of the Committee, which met once during the past
fiscal year, are Messrs. Mollegen, Naylor and Fantone.
The ESOP Committee is appointed by the Board of Directors and administers
the Company's Employee Stock Ownership Plan. Messrs. Coughlin, Naylor and
Fantone are the current members of the ESOP Committee. The ESOP Committee met
once during the past fiscal year.
The Compensation and Incentive Stock Option Plan Committee (the
"Compensation Committee") is a committee of the Board of Directors which
establishes salaries of senior officers and issues options under the Company's
employee stock option plan. The current members of the Compensation Committee
are Messrs. Mollegen, Naylor and Fantone. The committee met once during the
past fiscal year.
All directors attended 100% percent of the meetings of the Board of
Directors and the committees of which they were members during the fiscal year
ended September 30, 1996.
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<PAGE>
PRINCIPAL HOLDERS OF VOTING SECURITIES AND SECURITY OWNERSHIP OF MANAGEMENT
The following information is furnished as of March 1, 1997 with respect to
the beneficial ownership of shares of Common Stock of the Company by the
directors and executive officers of the Company, all of the directors and
officers of the Company as a group and all persons known to be the beneficial
owners of more than five percent of such outstanding stock. Unless otherwise
indicated, each of the persons named below held sole voting and investment
power over the shares listed below as of March 1, 1997.
In accordance with the rules of the Securities and Exchange Commission,
shares which an individual has the right to acquire pursuant to stock options
which are exercisable within sixty days are considered to be beneficially
owned and for purposes of calculating the percentage ownership of stock for an
individual who holds exercisable stock options, such shares are also
considered to be outstanding. Reference should be made to the footnotes below
for further information as to each individual listed.
<TABLE>
<CAPTION>
SHARES PERCENT OF OUTSTANDING
NAME AND ADDRESS(1) BENEFICIALLY OWNED COMMON STOCK
------------------- ------------------ ----------------------
<S> <C> <C>
Samuel O. Raymond.................... 173,269(2) 21.0%
Ronald K. Church..................... 85,500(3) 10.4%
State Street Bank and Trust Company,
Trustee of the Benthos, Inc.
Employee Stock Ownership Plan
("ESOP")............................ 37,363(4) 4.5%
John L. Coughlin..................... 12,500(5) 1.5%
Stephen D. Fantone................... 18,000(6) 2.2%
A. Theodore Mollegen, Jr. ........... 15,000 1.8%
Thurman F. Naylor.................... 15,000(7) 1.8%
Francis E. Dunne, Jr. ............... -- --
All directors and officers as a group
(6 persons)......................... 233,769(8) 27.6%
</TABLE>
- --------
(1) Except as set forth below, the address of each of the individuals set
forth in the table is c/o Benthos, Inc., 49 Edgerton Drive, North
Falmouth, Massachusetts 02556. The address of Ronald K. Church is 46
Riddle Hill Road, Falmouth, Massachusetts 02540. The address of State
Street Bank and Trust Company is 225 Franklin Street, Boston,
Massachusetts 02110.
(2) Includes 1,496 shares owned by the Company's ESOP, over which Mr. Raymond
has sole voting power. Also includes 37,618 shares owned by Mr. Raymond's
children, as to which shares Mr. Raymond disclaims beneficial ownership.
(3) Includes 12,000 shares owned by Mr. Church's wife, as to which shares Mr.
Church disclaims beneficial ownership.
(4) Pursuant to the terms of the plan, plan participants are entitled to
direct the Trustee as to the manner in which all shares allocated to such
participants' accounts are to be voted.
(5) Consists of 12,500 shares which Mr. Coughlin has the right to acquire
through the exercise of a stock option for 50,000 shares granted April 8,
1996.
(6) Includes 10,000 shares which Dr. Fantone has the right to acquire through
the exercise of a stock option for 15,000 shares granted January 19, 1995.
(7) Consists of 15,000 shares which Mr. Naylor has the right to acquire
through the exercise of a stock option granted January 29, 1993.
(8) Includes an aggregate of 37,500 shares which the directors and officers
have the right to acquire through the exercise of certain options.
4
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company for the
Company's last three fiscal years to the two persons who served as Company's
chief executive officer during the Company's fiscal year ended September 30,
1996. No other executive officers received an annual salary and bonus
exceeding $100,000.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
NAME AND FISCAL -------------------- ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1)
------------------ ------ ---------- ------------------------
<S> <C> <C> <C> <C>
Samuel O. Raymond................. 1996 $ 85,176 30,000 $ 2,687
Chairman, Chief Scientist,
President and 1995 85,176 494 606
Chief Executive Officer(2) 1994 85,800 6,000 456
John L. Coughlin.................. 1996 $ 66,462 20,000 --
President and Chief Executive
Officer(3)
All directors and officers as a
group (6 in all)................. 1996 236,170 80,620 5,374
1995 273,024 1,097 172,772
1994 280,778 40,300 2,316
</TABLE>
- --------
(1) Includes amounts contributed to individual accounts with the Company's
ESOP and 401(k) Retirement Plan. Amounts to be contributed with respect to
the ESOP for fiscal 1996 have not been determined at the date hereof. Also
includes $171,523 in severance pay to a former officer incurred with
respect to fiscal 1995.
(2) Mr. Raymond served as Chief Scientist and Chairman of the Board of
Directors throughout the last three fiscal years. In addition, he served
as President and Chief Executive Officer from June 1995 to April 1996.
(3) Mr. Coughlin has served as President and Chief Executive Officer since
April 8, 1996.
The Company's policy is to pay each of its non-employee directors a fee of
$750 for each directors' meeting attended and to reimburse travel expenses
when incurred. The Company intends to continue this policy in the future.
On April 8, 1996, the Company granted to John L. Coughlin an option to
purchase 50,000 shares of the Company's Common Stock, expiring April 7, 2006,
at an exercise price of $6.50 per share, vesting in four annual installments
commencing on the first anniversary of the date of grant. This option
represented 84% of the number of shares subject to stock options granted to
all employees during the 1996 fiscal year.
No stock options were granted to or exercised by any of the executive
officers named in the Summary Compensation Table above during the fiscal year
ended September 30, 1996 and no such executive officer held any unexercised
options as of that date.
Employment Contracts
In 1990, the Company entered into an employment agreement with Samuel O.
Raymond. Under this agreement, as amended, Mr. Raymond will be employed as the
Director of Research of the Company at a salary of $72,000 per year and will
serve as the Chairman Emeritus of the Board of Directors for as long as he is
elected to that position. This agreement commenced on August 1, 1990 and will
expire on July 31, 2005. After the expiration of the initial term, the
agreement will automatically be renewed annually as of August 1, 2005 and each
August 1 thereafter. The agreement also provides that if a change in control
of the Company should occur during the first, second or last five years of the
initial term of the agreement, Mr. Raymond is entitled to receive $427,974,
$335,504, or $199,636, respectively, from the Company. The Company has also
agreed to pay the premiums on a $1,500,000 life insurance policy on Mr.
Raymond's life under a split dollar plan.
The Company has entered into an employment agreement with John L. Coughlin,
effective April 8, 1996, pursuant to which Mr. Coughlin agrees to serve as the
President and Chief Executive Officer of the Company. The agreement provides
for an initial base salary of $144,000 and an initial minimum bonus of $20,000
payable October 1, 1996. In accordance with the agreement, the Board of
Directors has adjusted Mr. Coughlin's base
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<PAGE>
salary to $154,000 per year, effective October 1, 1996 and has adopted an
annual incentive compensation program for Mr. Coughlin based upon the
attainment of quantitative and qualitative objectives to be set by the
Compensation Committee at the beginning of each fiscal year. In addition,
pursuant to the agreement, Mr. Coughlin was granted an incentive stock option
to purchase 50,000 shares of the Company's Common Stock at an exercise price
of $6.50 per share, vesting in four equal annual installments commencing on
the first anniversary of the date of grant.
CERTAIN TRANSACTIONS
The Company is currently negotiating an agreement with a corporation wholly
owned by Dr. Stephen D. Fantone, Chairman of the Board of Directors of the
Company, with respect to the concept of utilizing optical means for assessing
beverage container height of fill. Under the proposed agreement, the Company
will pay the development costs to Dr. Fantone's corporation. If the technology
is developed, the proprietary rights will be owned by Dr. Fantone's
corporation, which will grant an exclusive license to the Company for the use
of the technology upon terms and conditions (including royalties) to be
determined by negotiation. John L. Coughlin, President and Chief Executive
Officer of the Company is negotiating the contract with Dr. Fantone. The
Company's policy with respect to business relationships with officers,
directors, or affiliates is that any such relationships must be fully
disclosed to the Board of Directors and must be upon terms not less favorable
to the Company than those available from third parties dealing at arm's
length.
ELECTION OF DIRECTORS
The Board of Directors of the Company is classified into three classes, of
which Class I consists of one director and Classes II and III each consist of
two directors. One class of directors is elected each year for a term of three
years. The term of the Class I director, John L. Coughlin, expires at the 1997
annual meeting. The Board of Directors has nominated Mr. Coughlin to continue
to serve as a Class I director for a term expiring at the 2000 annual meeting.
Unless otherwise specified therein, shares represented by the enclosed proxy
will be voted at the stockholders meeting to elect John L. Coughlin as a Class
I director for a three-year term until the 2000 annual meeting of stockholders
and until his successor shall be duly elected. In the event that Mr. Coughlin
is unable to stand for election (which event is not now contemplated), the
holders of the enclosed proxy will vote for the election of a nominee or
nominees acceptable to the remaining members of the Company's Board of
Directors.
The Board of Directors recommends that stockholders vote "FOR" the proposal
to elect Mr. Coughlin as a director.
APPROVAL OF AUDITORS
The Board of Directors has appointed Arthur Andersen LLP as independent
public accountants to examine the financial statements of the Company and its
subsidiary for the fiscal year ending September 30, 1997. Representatives of
Arthur Andersen LLP are expected to be present at the stockholders meeting,
will have opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions.
The Board of Directors recommends that stockholders vote "FOR" the proposal
to approve the appointment of Arthur Andersen LLP as independent public
accountants.
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<PAGE>
AMENDMENT TO ARTICLES OF ORGANIZATION
There will be submitted to stockholders at the meeting a proposal to amend
Article Six of the articles of organization of the Company by adding certain
special provisions respecting the powers of the Board of Directors to make,
amend, or repeal by-laws, the power of the Company to hold stockholder
meetings anywhere in the United States, the power of the Company to become a
partner in a business enterprise and the ability of the Company to enter into
contracts with directors.
The text of the proposed amendment is as follows:
"ONE: All corporate powers of the Corporation shall be exercised by the
Board of Directors except as otherwise provided by law. In furtherance and
not in limitation of the powers conferred by statute, the Board of
Directors is expressly authorized to make, amend or repeal the By-Laws of
the Corporation in whole or in part, except with respect to any provision
thereof which by law or the By-Laws requires action by the stockholders,
and subject to the power of the stockholders to amend or repeal any By-Law
adopted by the Board of Directors.
TWO: Meetings of the stockholders of the Corporation may be held anywhere
within the United States.
THREE: The Corporation may be a partner in any business enterprise which
it would have power to conduct by itself.
FOUR: In the absence of fraud, no contract or other transaction of the
Corporation shall be affected or invalidated by the fact that any of the
directors of the Corporation are in any way interested in or connected with
any other party to such contract or transaction or are themselves parties
to such contract or transaction, provided that the interest in any such
contract or transaction of any such director shall at the time be fully
disclosed or otherwise known to the Board of Directors. Any director of the
Corporation may be counted in determining the existence of a quorum at any
meeting of the Board of Directors which shall authorize such contract or
transaction and may vote and act upon any matter, contract or transaction
between the Corporation and any other person without regard to the fact
that he is also a stockholder, director or officer of, or has any interest
in, such other person with the same force and effect as if he were not such
stockholder, director or officer or not so interested. Any contract or
other transaction of the Corporation or of the Board of Directors or of any
committee thereof which shall be ratified by a majority of the holders of
the issued and outstanding stock entitled to vote at any annual meeting or
any special meeting called for that purpose shall be as valid and as
binding as though ratified by every stockholder of the Corporation;
provided, however, that any failure of the stockholders to approve or
ratify such contract or other transaction, when and if submitted, shall not
be deemed in any way to render the same invalid or deprive the directors
and officers of their right to proceed with such contract or other
transaction."
The Board of Directors believes that the proposed amendments will provide
the Company with additional flexibility to manage its business and are thus in
the best interests of the Company. The Company has been advised by its
counsel, Davis, Malm & D'Agostine, P.C., Boston, that the proposed amendments
are standard provisions included in most modern corporate charters of
corporations formed under the Massachusetts Business Corporation Law.
Section ONE of the proposed amendment confirms the traditional role of the
Board of Directors set forth in Section 47 of the Massachusetts Business
Corporation Law and specifically authorizes the Board of Directors to make,
amend and repeal the By-Laws. Under Massachusetts law, authorization for
directors to make, amend, or repeal by-laws must be set forth in the articles
of organization. The present articles of organization lack such a provision.
The Board of Directors believes that it is advisable that the board be able to
amend the Company's By-Laws to respond to changes in circumstances without the
delay and expense of calling a stockholders meeting. Under Massachusetts law,
the stockholders retain the power to amend or repeal any by- law adopted by
the Board of Directors. Moreover, the Company is required to give notice to
stockholders, not later than the time of giving notice of the next meeting of
stockholders, of the making, amendment or repeal by the directors of any by-
law, stating the substance of such change.
7
<PAGE>
Section TWO of the proposed amendment relates to the ability of the Company
to hold meetings of stockholders anywhere in the United States. At present,
the Company is precluded by Massachusetts law from holding meetings of
stockholders outside the Commonwealth of Massachusetts. Although the Company
has no present plans or intentions to hold stockholders meetings outside of
Massachusetts, the Board of Directors believes it would be useful to have the
flexibility to do so in the future.
Section THREE of the proposed amendment relates to the power of the Company
to be a partner in a business enterprise. At present, the Company is precluded
from Massachusetts law from doing so. Although the Company has no present
plans or intentions to enter into a specific partnership relationship, the
Board of Directors believes it would be useful to have the flexibility to do
so in the future.
Section FOUR of the proposed amendment regulates the authority of the
Company to enter into transactions with directors. This section would require
that the interest of any director of the Company in any contract or
transaction with the Company be fully disclosed to or otherwise known by the
Board of Directors and provide that any interested director may be counted in
determining the existence of a quorum and may vote upon any matter in which be
is interested at any directors meeting. Any contract or other transactions
with a director may be ratified by a majority of the stockholders. Except for
the proposed contract with an affiliate of Dr. Fantone described under
"Certain Transactions" above, the Board of Directors is not aware of any
present or proposed transaction in which any director is an interested party.
The adoption of the proposed amendment to the articles of organization is not
a prerequisite to the approval by the Company of that contract.
The Company does not believe that the adoption of the proposed amendment to
the articles of organization will have the effect of deterring or restricting
the possibility of a change in control of the Company.
The Board of Directors recommends that stockholders vote "FOR" the proposal
to amend the Company's articles of organization.
OTHER MATTERS COMING BEFORE THE MEETING
As of the date of this Proxy Statement, management does not know of any
matters to be presented to the meeting other than the matters set forth in the
attached Notice of Special Meeting of Stockholders. If any other matters
properly come before the meeting, the persons named in the enclosed proxy will
vote thereon according to their best judgment.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than
10% of a registered class of the Company's equity securities, to file reports
of ownership and changes of ownership with the Securities and Exchange
Commission. Copies of those reports are to be furnished to the Company. The
Company was not subject to these filing requirements during the fiscal year
ended September 30, 1996.
8
<PAGE>
STOCKHOLDER PROPOSALS
Under the By-laws of the Company, written notice to the Clerk stating the
business to be brought by stockholders before an annual meeting of
stockholders or a special meeting in lieu of the annual meeting shall be given
sixty days prior to the anniversary date of the immediately preceding annual
meeting and within ten days of the written notice of any special meeting of
stockholders not in lieu of the annual meeting. Similar written notice to the
Clerk stating stockholder nominations for the election of directors, other
than those recommended by the Board of Directors, shall be given sixty days
prior to the anniversary date of the immediately preceding annual meeting of
stockholders and within ten days of the written notice of any special meeting
of stockholders to elect directors. Proposals which stockholders intend to
present at the 1998 annual meeting must be received by the Company for
inclusion in the Company's proxy statement and form of proxy relating to that
meeting no later than February 10, 1998.
OTHER MATTERS
THE COMPANY FILES AN ANNUAL REPORT WITH THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-KSB WHICH INCLUDES ADDITIONAL INFORMATION ABOUT THE
COMPANY. A COPY OF THE FORM 10-KSB, INCLUDING THE FINANCIAL STATEMENTS, MAY BE
OBTAINED WITHOUT CHARGE, AND COPIES OF THE EXHIBITS WHICH ARE LISTED THEREIN
WILL BE FURNISHED UPON PAYMENT OF THE COMPANY'S COSTS OF REPRODUCTION AND
MAILING OF SUCH EXHIBITS. ALL SUCH REQUESTS SHOULD BE DIRECTED TO FRANCIS E.
DUNNE, JR., CHIEF FINANCIAL OFFICER, 49 EDGERTON DRIVE, NORTH FALMOUTH,
MASSACHUSETTS 02556 (TEL: 508-563-1000).
By Order of the Board of Directors
John T. Lynch, Clerk
North Falmouth, Massachusetts
March 5, 1997
9
<PAGE>
BENTHOS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 11, 1997
The undersigned holder of Common Stock of BENTHOS, INC. (the "Corporation")
acknowledges receipt of the Notice of Special Meeting of Stockholders dated
March 5, 1997 and the accompanying Proxy Statement and hereby appoints John L.
Coughlin, Francis E. Dunne, Jr. and John T. Lynch and each of them, proxies,
agents and attorneys-in-fact of the undersigned (with full power of
substitution) to attend the above stockholders meeting and all adjournments
thereof (the "Meeting") and there to vote all shares of Common Stock of the
Corporation that the undersigned would be entitled to vote, if personally
present, in regard to all matters which may come before the Meeting, ratifying
and confirming all that said proxies or their substitutes may lawfully do in
place of the undersigned as indicated on the reverse hereof.
IMPORTANT: SIGNATURE REQUIRED ON REVERSE SIDE.
A [X] Please mark your vote as in this example.
1. To elect as a Class I director of the Company.
[_] FOR [_] WITHHOLD AUTHORITY TO VOTE
Nominee: John L. Coughlin
2. To approve Arthur Anderson LLP as independent public accountants of the
Company for the 1997 fiscal year.
[_] FOR [_] AGAINST [_] ABSTAIN
3. To approve the amendment to the Company's articles of organization
described in the accompanying proxy statement.
[_] FOR [_] AGAINST [_] ABSTAIN
The undersigned hereby confers upon the Proxies and each of them,
discretionary authority with respect to other matters properly presented for
consideration at the Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER SPECIFIED
HEREIN. IF NO SPECIFICATION IS MADE, THE PROXIES INTEND TO VOTE FOR THE
ELECTION OF THE LISTED NOMINEE AND FOR EACH OF THE PROPOSALS 2 AND 3
IDENTIFIED ABOVE.
Dated: ______________________________
-------------------------------------
-------------------------------------
IF HELD JOINTLY
NOTE: FOR SHARES HELD JOINTLY, EACH
JOINT OWNER SHOULD PERSONALLY SIGN.
IF SIGNING AS EXECUTOR, OR IN ANY
OTHER REPRESENTATIVE CAPACITY, OR AS
AN OFFICER OF A CORPORATION, PLEASE
INDICATE YOUR FULL TITLE AS SUCH.
