SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14A--INFORMATION REQUIRED
IN A PROXY STATEMENT
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
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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
Equidyne Corporation
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
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(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 Rules 0-11 (Set forth the amount on which the
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[ ] Fee Paid previously with preliminary materials.
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[ ] 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>
EQUIDYNE CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 11, 2001
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Equidyne Corporation, a Delaware corporation (the "Company"), will
be held at the Westford Regency Inn, 219 Littleton Road, Westford, Massachusetts
, on Thursday, January 11, 2001, at 9:00 a.m., local time, for the following
purposes:
1. To elect a Board of seven Directors;
2. To approve an amendment to the Company's 1996 Stock Option Plan to
increase the number of shares of Common Stock reserved for issuance
pursuant to the exercise of stock options thereunder from 700,000
shares to 1,500,000 shares; and
3. To transact such other business as may properly come before the
Meeting or at any adjournment thereof.
A Proxy Statement describing the matters to be considered at the Meeting is
attached to this Notice. Only stockholders of record of Common Stock, $.10 par
value, of the Company at the close of business on November 15, 2000, which has
been fixed as the record date for the Meeting, shall be entitled to notice of,
and to vote at, the Meeting and any adjournments thereof. All stockholders are
cordially invited to attend the Meeting in person.
By order of the Board of Directors
Matthew Slepian
Secretary
November 28, 2000
Westford, Massachusetts
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WISH YOUR SHARES OF COMMON
STOCK TO BE VOTED, YOU ARE REQUESTED TO SIGN AND MAIL PROMPTLY THE ENCLOSED
PROXY WHICH IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. A RETURN
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES IS ENCLOSED
FOR THAT PURPOSE.
<PAGE>
EQUIDYNE CORPORATION
238 LITTLETON ROAD
WESTFORD, MASSACHUSETTS 01886
--------------------
PROXY STATEMENT
--------------------
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 11, 2001
This Proxy Statement and the accompanying proxy card are furnished in
connection with the solicitation of proxies by the Board of Directors of
EQUIDYNE CORPORATION, a Delaware corporation (the "Company"), to be voted at the
Annual Meeting of Stockholders of the Company (the "Meeting") to be held at the
Westford Regency Inn, 219 Littleton Road, Westford, Massachusetts, at 9:00 a.m.,
local time on January 11, 2001, or at such other time or place to which the
Meeting may be adjourned, for the purposes set forth in the accompanying Notice
of Annual Meeting of Stockholders and in this Proxy Statement.
The approximate date on which this Proxy Statement, Notice and accompanying
Proxy will first be sent or given to stockholders is December 15, 2000.
A copy of the Company's Annual Report for the fiscal year ended July 31,
2000 accompanies this Proxy Statement.
VOTING SECURITIES AND VOTE REQUIRED
Only stockholders of record as of the close of business on November 15,
2000 (the "Record Date") will be entitled to notice of, and to vote the shares
of common stock, $.10 par value (the "Common Stock"), of the Company held by
them on such date, at the Meeting and at any adjournments thereof. On the Record
Date, there were issued and outstanding 16,347,959 shares of Common Stock. The
Common Stock constitutes the only outstanding class of voting securities of the
Company to be voted at the Meeting.
Each share of Common Stock held by a stockholder entitles such holder to
one vote on each matter that is voted upon at the Meeting or any adjournments
thereof.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum at the
Meeting. Broker "non-votes" and the shares as to which a stockholder abstains
from voting are included for purposes of determining whether a quorum of shares
is present at a meeting. A broker "non-vote" occurs when a nominee holding
shares for a beneficial owner does not vote on a particular proposal because the
nominee does not have discretionary voting power with respect to that item and
has not received instructions from the beneficial owner.
A plurality of the total votes cast by holders of Common Stock is required
for the election of directors. In tabulating the vote on the election of
directors, abstentions and broker "non-votes" will be disregarded and will have
no effect on the outcome of such vote.
The affirmative vote of a majority of the votes cast by holders of Common
Stock is required to approve the proposal to increase the number of shares of
Common Stock reserved for issuance under the Company's 1996 Stock Option Plan
(the "Stock Option Plan Amendment"). In tabulating the votes on the proposal to
<PAGE>
approve the Stock Option Plan Amendment, shares as to which a stockholder
abstains are considered shares entitled to vote on the applicable proposal and
therefore an abstention would have the effect of a vote against such proposal.
Broker non-votes, however, are not considered shares entitled to vote on the
proposal and are not included in determining whether the Stock Option Plan
Amendment is approved.
If the accompanying Proxy is properly signed and returned to the Company
and not revoked, it will be voted in accordance with the instructions contained
therein. Unless contrary instructions are given, the persons designated as proxy
holders in the accompanying Proxy will vote "FOR" the Board of Directors' slate
of nominees, the Stock Option Plan Amendment and as recommended by the Board of
Directors with regard to any other matter or if no such recommendation is given,
in their own discretion. Each Proxy granted by a stockholder may be revoked by
such stockholder at any time thereafter by writing to the Secretary of the
Company prior to the Meeting, or by execution and delivery of a subsequent Proxy
or by attendance and voting in person at the Meeting, except as to any matter or
matters upon which, prior to such revocation, a vote shall have been cast
pursuant to the authority conferred by such Proxy.
The cost of soliciting these Proxies, consisting of the printing, handling
and mailing of the Proxy and related material, and the actual expense incurred
by brokerage houses, custodians, nominees and fiduciaries in forwarding proxy
material to the beneficial owners of stock, will be paid by the Company.
In order to assure that there is a quorum, it may be necessary for certain
officers, directors, regular employees and other representatives of the Company
to solicit Proxies by telephone or telegraph or in person. These persons will
receive no extra compensation for their services. The Company has retained
Georgeson Shareholder Communications Inc. to aid in the solicitation of proxies
for the Meeting for which they will receive a fee of $10,000 plus expenses. Your
cooperation in promptly signing and returning the enclosed proxy card will help
to avoid additional expense.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of the Record Date concerning
(i) persons known to management to be the beneficial owners of more than 5% of
the Company's Common Stock on such date, (ii) the ownership interest of each
director and executive officer and (iii) the ownership interest of all directors
and executive officers as a group.
BENEFICIAL OWNERSHIP (*)
NAME STATUS SHARES PERCENTAGE
---- ------ ------ ----------
Jim Fukushima Director and Vice 1,689,000 (1) 9.7%
Chairman
Concord Effekten AG(2) Stockholder 1,523,333 9.3%
Thomas A. Slamecka Director 968,258 (3) 5.6%
Joseph R. Nelson Director, Chairman of 613,600 (4) 3.6%
the Board, President and
Chief Executive Officer
Michael T. Pieniazek Director, Executive Vice 340,361 (5) 2.1%
President, Chief
Financial Officer and
Treasurer
Marcus R. Rowan Director 317,000 (6) 1.9%
Blake C. Davenport Director 136,700 (7) 0.8%
Dr. James R. Gavin III Director 20,000 (8) 0.1%
All executive officers 4,084,919 (9) 21.4%
and directors as a group
(7 persons)
-----------------
* Includes voting and investment power, except where otherwise noted. The
number of shares beneficially owned includes shares each beneficial owner
and the group has the right to acquire within 60 days of the Record Date
pursuant to stock options, warrants and convertible securities.
(1) Includes presently exercisable options and warrants for 1,050,000 shares of
Common Stock.
(2) Concord Effekten AG is an investment banking firm based in Frankfurt,
Germany.
(3) Includes presently exercisable options for 797,258 shares of Common Stock.
(4) Includes presently exercisable options for 600,000 shares of Common Stock.
(5) Includes presently exercisable options for 63,611 shares of Common Stock.
(6) Includes presently exercisable options for 135,000 shares of Common Stock.
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(7) Includes presently exercisable options for 100,000 shares of Common Stock.
(8) Includes presently exercisable options for 20,000 shares of Common Stock.
(9) Includes presently exercisable options and warrants for Common Stock listed
in notes 1, 3, 4, 5, 6, 7 and 8 above.
PROPOSAL I
ELECTION OF DIRECTORS
---------------------
At the Meeting, seven Directors will be elected to serve until the next
annual meeting and until their successors are elected and qualified. The Board
of Directors will vote all Proxies received by them in the accompanying form for
the nominees listed below. The current size of the Board of Directors is seven,
and all nominees are presently Directors of the Company. At the 1999 Annual
Meeting six persons were elected as directors. In January 2000, the Board of
Directors increased the number of directors to seven persons and elected Joseph
R. Nelson to fill the vacancy created by the increase. Andy Rosch resigned as a
director in March 2000, and the Board of Directors elected Dr. James R. Gavin
III to fill the vacancy. In the event any nominee is unable to or declines to
serve at the time of the Meeting, the Proxies will be voted for an alternative
nominee who shall be designated by the present Board of Directors to fill the
vacancy. As of the date of this Proxy Statement, the Board of Directors is not
aware of any nominee who is unable or will decline to serve as a Director.
The following sets forth information about each nominee for elected to the
Board of Directors:
Name Age Position Year Became
---- --- -------- Director
--------
Joseph R. Nelson 47 Director, Chairman of the Board 2000
of Directors, President and Chief
Executive Officer
Jim Fukushima 56 Vice Chairman and Director 1999
Michael T. Pieniazek 42 Director, Executive Vice 1999
President, Chief Financial
Officer and Treasurer
Thomas A. Slamecka 60 Director 1996
Marcus R. Rowan 39 Director 1996
Blake C. Davenport 33 Director 1997
Dr. James R. Gavin III 55 Director 2000
The terms of the Board of Directors will expire at the next annual meeting
of stockholders. The officers are elected by the Board of Directors and hold
office at the will of the Board.
Joseph R. Nelson became the Chairman of the Board in August 2000, and has
served as President and Chief Executive Officer since January 2000. Mr. Nelson
was President and Chief Executive Officer of LXN Corp., a developer and
manufacturer of diabetes testing systems located in San Diego, California, from
February 1998 through December 1999. From January 1994 through January 1998, Mr.
Nelson was Director of Marketing for Eli Lilly & Co.'s U.S. Diabetes Care
Business Unit.
Michael T. Pieniazek has served as Executive Vice President since December
1999 and has served as Chief Financial Officer and Treasurer since July 1995.
Mr. Pieniazek had served as President from April 1997 through December 1999 and
Secretary from January 1996 to December 1999. From 1987 to 1995, Mr. Pieniazek
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served in various executive positions, the last having been Executive Vice
President and Chief Financial Officer, for Organogenesis Inc., a
Massachusetts-based, biotechnology company. From 1980 to 1987, Mr. Pieniazek was
an auditor with Price Waterhouse Coopers LLP.
Jim Fukushima became Vice Chairman in October 1999. Since 1995, he has been
President of HNS International, Inc., Tustin, California, which he wholly-owns,
which is engaged in the distribution of medical and automotive products.
Blake C. Davenport has been the President and owner of Davenport Interests,
Inc., Dallas, Texas, a private investment company, for more than the past five
years.
Dr. James R. Gavin III has been a Senior Scientific Officer of the Howard
Hughes Medical Institute located in Chevy Chase, Maryland, since 1991. Dr. Gavin
is a member of the National Board of Directors of the American Diabetics
Association and has served as a past president of this organization.
Marcus R. Rowan has been President of Berkshire Interests, Inc., Dallas,
Texas, which specializes in commercial real estate and investments, for more
than the past five years.
Thomas A. Slamecka has been a consultant to Mr. Nelson since August 2000,
having served as Chairman of the Board of the Company from February 1997 to July
2000. Mr. Slamecka was President of the ConAgra Poultry Company, Inc., Duluth,
Georgia, from 1995 to February 1997, and from 1990 to 1994, he was President and
Chief Executive Officer of CEEC Inc., Atlanta, Georgia.
There is no family relationship among the directors or executive officers.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF EACH NAMED NOMINEE.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of 13 meetings during
the fiscal year ended July 31, 2000, including actions by unanimous written
action. No Director attended fewer than 75% of the aggregate of all meetings of
the Board of Directors. The only Board Committee is an Audit Committee
consisting of Messrs. Davenport, Rowan and Gavin. The Audit Committee has
general responsibility for oversight of financial controls and for accounting
and audit activities of the Company, including reviews with the Company's
independent accountants. The Audit Committee met once during the fiscal year
ended July 31, 2000.
COMPENSATION OF DIRECTORS
In March 2000, the Company granted to Messrs. Rowan, Davenport and Gavin,
five-year options to purchase 75,000, 50,000 and 20,000 shares, respectively, of
the Company's Common Stock at $7.00 per share. Options granted to directors
during Fiscal 2000 were not issued under the 1996 Stock Option Plan. Also in
March 2000, the Company compensated Messrs. Rowan and Davenport in the amount of
$175,000 and $125,000, respectively, for their services as Directors since 1996
and 1997, respectively. Non-employee Directors receive compensation of $2,000
per meeting attended, and are reimbursed for travel expenses.
5
<PAGE>
EXECUTIVE COMPENSATION AND EMPLOYMENT AGREEMENTS
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning all cash and
non-cash compensation awarded to, earned by or paid to the Company's Chief
Executive Officer and the other executive officers whose total compensation was
in excess of $100,000 during the fiscal year ended July 31, 2000:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
LONG-TERM
COMPENSATION
AWARDS
SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS
<S> <C> <C> <C> <C> <C>
Joseph R. Nelson 2000 $196,331 -- -- 600,000
President and Chief
Executive Officer (1)
Thomas A. Slamecka 2000 52,404 $220,000 $894,000 (3) 250,000
Chairman of the Board 1999 100,000 -- -- 237,985
1998 100,000 -- -- 618,550
Michael T. Pieniazek 2000 146,111 250,000 334,500 (4) 50,000
Executive Vice President, 1999 125,000 -- -- 166,334
Chief Financial Officer and 1998 125,000 -- -- 402,750
Treasurer (2)
</TABLE>
-----------------
(1) Mr. Nelson became President and Chief Executive Officer in January 2000.
(2) Mr. Pieniazek served as President from April 1997 through December 1999,
and continues to serve as Executive Vice President, Chief Financial Officer
and Treasurer.
(3) Other compensation consists of (1) 100,000 shares of Common Stock issued
pursuant to Mr. Slamecka's Employment Agreement, valued at $6.69 per share,
and (2) lump sum cash payment in lieu of salary and expenses of $225,000,
paid pursuant to Mr. Slamecka's Termination Agreement.
(4) Other compensation consists of 50,000 shares of Common Stock issued
pursuant to Mr. Pieniazek's Employment Agreement, valued at $6.69 per
share.
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Joseph R. Nelson to
serve as President and Chief Executive Officer for an initial term from January
2000 through December 2002, subject to annual renewals. Mr. Nelson receives
annual base salary of $250,000, plus an annual profits bonus equal to 5% of the
amount that consolidated net after-tax operating profits exceeds $1 million,
provided for such year the Company's earns a 12% return on its common stock
equity, and may also receive a supplemental bonus. In addition, the Company
agreed to make available interest-free loans to Mr. Nelson of up to $150,000, to
be forgiven over a three-year period, provided Mr. Nelson remains an employee of
the Company. As of July 31, 2000, the Company's outstanding loan to Mr. Nelson
is $150,000. The Employment Agreement also provided for the grant of options to
purchase up to 600,000 shares of Common Stock at an exercise price of $1.125 per
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<PAGE>
share, which was the fair market value on the date of the grant. Such options
vested immediately, subject to continuation of employment for a minimum of six
months.
Mr. Nelson's Employment Agreement further provides for a lump sum
termination payment of the greater of (A) the amount of his then current annual
base salary or (B) the continuation of his base salary for the balance of the
current term of his Employment Agreement, plus continuation of health benefits
for 12 months. Should the termination result from a change in control of the
Company, as defined, the termination payment would be two times Mr. Nelson's
then current base salary, plus continuation of health benefits for 12 months.
On June 15, 2000, the Company entered into a Termination Agreement with Mr.
Slamecka, under which Mr. Slamecka's employment under his Amended and Restated
Employment Agreement with the Company terminated as of that date. Mr. Slamecka
agreed to remain as the Chairman of the Board through July 31, 2000, and
thereafter to serve as a consultant to the Company without any compensation,
other than the reimbursement of his direct, out-of-pocket expenses. Pursuant to
the Termination Agreement, Mr. Slamecka was paid $46,300 in cash, representing
pre-payment of $17,500 for his then current annual salary of $75,000 through
July 31, 2000, and $28,800 for his annual expenses and was paid $225,000 in cash
representing a lump sum payment in lieu of salary and expenses otherwise payable
to him under his Amended and Restated Employment Agreement. Mr. Slamecka also
received $220,000 in cash, representing partial payment of the profits bonus for
the fiscal year 2000. Mr. Slamecka is also entitled to a profits bonus for
fiscal year 2001, provided, however, this bonus shall now not exceed $500,000.
In addition, the Termination Agreement provided for a payment to Mr. Slamecka of
$250,000 in cash, representing partial payment of the profits bonus for fiscal
year 2001, upon the Company's disposal of additional shares of Rosch AG during
Fiscal 2001 resulting in net proceeds to the Company in excess of $5,000,000.
This payment was made in September 2000. Upon a change of control of the
Company, the maximum amount of the profits bonus for fiscal years 2000 and 2001,
shall be paid by the Company to Mr. Slamecka. The Termination Agreement also
provides that the Company maintain health insurance for Mr. Slamecka and his
spouse through December 31, 2003.
As of August 31, 1999, the Company amended Mr. Slamecka's prior Employment
Agreement so that no further salary or loans would be provided to him. Under
this amendment, Mr. Slamecka was granted an option to purchase 250,000 shares of
Common Stock at an exercise price of $1.25 per share, exercisable six months
after grant and terminating after five years. As of January 1, 2000, the Company
entered into an Amended and Restated Employment Agreement with Mr. Slamecka to
serve as Chairman of the Board for an initial term thereunder terminating on
December 31, 2003, subject to annual renewals, and his prior Employment
Agreement was terminated. Mr. Slamecka received an annual base salary of
$75,000, plus a profits bonus equal to 5% of consolidated pre-tax profits in
excess of $500,000 for the first two years under the Amended and Restated
Employment Agreement commencing with the fiscal year ended July 31, 2000. This
profits bonus is not to exceed $275,000 in the first fiscal year and $785,000 in
the second fiscal year. On February 17, 2000, the Company awarded 100,000 shares
of Common Stock to Mr. Slamecka pursuant to the terms of his Amended and
Restated Employment Agreement which provided that Mr. Slamecka was entitled to
these bonus shares after the price of the Common Stock exceeded $6.20 per share.
7
<PAGE>
As of January 1, 2000, the Company entered into an Amended and Restated
Employment Agreement with Mr. Pieniazek to serve as Executive Vice President and
Chief Financial Officer for an initial term terminating on December 31, 2003,
subject to annual renewals, and his prior Employment Agreement was terminated.
Mr. Pieniazek received an annual base salary of $150,000, increasing to $165,000
upon the successful completion of the initial public offering of Rosch AG
Medizintechnik in February 2000, plus a profits bonus equal to 5% of
consolidated pre-tax profits in excess of $500,000 for the first two years
commencing with the fiscal year ended July 31, 2000. This profits bonus was not
to exceed $275,000 in the first fiscal year and $785,000 in the second fiscal
year. On February 17, 2000, the Company awarded 50,000 shares of Common Stock to
Mr. Pieniazek pursuant to the terms of his Amended and Restated Employment
Agreement which provided that Mr. Pieniazek was entitled to these bonus shares
after the price of the Common Stock exceeded $6.20 per share.
On June 15, 2000, the Company entered into a Termination Agreement with Mr.
Pieniazek, which provides that Mr. Pieniazek's employment at the Company will
terminate on a date chosen by Mr. Pieniazek, but the date was not to be later
than October 31, 2000. Mr. Pieniazek will continue to receive his annual base
salary of $165,000 determined under his Amended and Restated Employment
Agreement until the date that his employment with the Company is terminated. In
addition, if Mr. Pieniazek's employment is terminated after July 31, 2000, he
shall not be entitled to receive a pro rata portion of the profits bonus for
Fiscal Year 2001. Upon execution of the Termination Agreement, Mr. Pieniazek was
paid $200,000 in cash, in lieu of any Profits Bonus that may have become payable
for any and all fiscal years pursuant to Mr. Pieniazek's prior Employment
Agreements with the Company. On the date that Mr. Pieniazek's employment
terminates with the Company, the Termination Agreement provides that he is
entitled to an amount of $400,000 in cash, if the date of employment termination
is prior to September 1, 2000, however, the Company may, in its sole discretion,
pay Mr. Pieniazek $475,000 in cash, if a new Chief Financial Officer has been
chosen to replace Mr. Pieniazek and, in the Company's business judgment, a new
successful transition has been made to the new Chief Financial Officer, or
$475,000 in cash, if the date of Mr. Pieniazek's employment termination is after
September 1, 2000. The Termination Agreement also provides that the Company will
maintain health insurance and dental insurance for Mr. Pieniazek for one year
from the date of the Termination Agreement, except that such coverage will
terminate if Mr. Pieniazek becomes eligible to be covered by a similar plan
through another employment agreement or consulting arrangement during this
period.
On September 1, 2000, the Company entered into an Addendum to Mr.
Pieniazek's Termination Agreement, which provides that Mr. Pieniazek's
employment at the Company will terminate on a date chosen by Mr. Pieniazek, but
the date is not to be later than February 28, 2001. In addition, the addendum
provides that Mr. Pieniazek is entitled to a profits bonus for fiscal year 2001,
provided, however, that this bonus not exceed $500,000. Since Mr. Pieniazek's
employment at the Company will in all events terminate prior to the end of
Fiscal Year 2001, the amount of Mr. Pieniazek's profits bonus for Fiscal Year
2001, after he is paid the partial payment discussed herein, will equal the
amount of the profits bonus that Mr. Pieniazek would have been entitled to
receive for the Fiscal Year 2001, multiplied by a fraction, the numerator of
which will be the number of days during the Fiscal Year 2001 that Mr. Pieniazek
was employed by the Company and the denominator of which shall be three hundred
sixty-five (365). In addition, the Addendum provided for a payment to Mr.
Pieniazek of $250,000 in cash, representing partial payment of the profits bonus
for fiscal year 2001, upon the Company's disposal of additional shares of Rosch
AG during Fiscal 2001 resulting in net proceeds to the Company in excess of
$5,000,000. This payment was made in September 2000. Upon a change of control of
the Company, the maximum amount of the profits bonus for fiscal year 2001 shall
be paid by the Company to Mr. Pieniazek.
8
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OPTION GRANTS
The following table sets forth certain information regarding grants of
stock options made during the fiscal year ended July 31, 2000 to the named
executive officers.
<TABLE>
<CAPTION>
OPTIONS GRANTED IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
INDIVIDUAL GRANTS STOCK APPRECIATION FOR
OPTION TERM (3)
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO EXERCISE
UNDERLYING EMPLOYEES IN OR BASE
OPTIONS FISCAL YEAR PRICE EXPIRATION
NAME GRANTED (1) (2) ($/SHARE) DATE 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
Joseph R.
Nelson 600,000 36.7% $1.125 December $184,000 $411,000
2004
Thomas A.
Slamecka 250,000 15.3% $1.25 August 2004 $87,500 $190,000
Michael T.
Pieniazek 50,000 3.1% $1.25 August 2004 $17,500 $38,000
</TABLE>
-----------------
(1) Options were not granted under the 1996 Stock Option Plan (see "Stock
Option Plan", below).
(2) Based on an aggregate of 1,633,000 options granted by the Company to
employees in the fiscal year ended July 31, 2000.
(3) Amounts represent hypothetical gains that could achieved for the respective
options if exercised at the end of the option term. These gains are based
on assumed rates of stock appreciation of 5% and 10% compounded annually
from the date the respective options were granted to their expiration date
and are not intended to forecast possible future appreciation, if any, in
the price of the Common Stock. The gains show are net of the option
exercise price, but do not include deductions for taxes or other expenses
associated with the exercise of the options or the sale of the underlying
shares.
STOCK OPTION PLAN
In October 1996, the Company's stockholders approved the 1996 Stock Option
Plan providing for the issuance of up to 300,000 shares of the Company's Common
Stock, which amount was increased to 700,000 shares in December 1999. The 1996
Stock Option Plan is administered by the Board of Directors or an Option
Committee. Options granted under this Plan are either incentive stock options or
non-qualified stock options which would be granted to employees, officers,
directors and other persons who perform services for or on behalf of the Company
and its subsidiaries. Options are exercisable as determined at the time of grant
except options to officers or directors may not vest earlier than six months
from the date of grant, and the exercise price of all the option cannot be less
than the fair market value at the date of grant. At July 31, 2000, options for
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<PAGE>
an aggregate of 696,827 shares were granted, of which options for 666,827 shares
were exercised and options for 30,000 remaining outstanding. The 30,000
outstanding options have an exercise price of $4.38 per share and expire in
October 2001. Pursuant to Employment Agreements with Messrs. Nelson, Slamecka
and Pieniazek, the Company has granted stock options to such persons. See
"Employment Agreements" herein. One proposal at the Meeting is an increase in
the number of shares of Common Stock underlying the 1996 Stock Option Plan, see
Proposal 2.
In addition to the foregoing, during fiscal 2000 the Board of Directors has
granted certain stock options to the Company's executives outside of the 1996
Stock Option Plan. See "Option Grants", above.
AGGREGATE OPTION EXERCISES IN FISCAL 2000 AND FISCAL YEAR-END OPTION VALUES
The following table provides information on options exercised during the
fiscal year ended July 31, 2000, and the value of unexercised stock options
owned by the executive officers named in the Summary Compensation Table as of
July 31, 2000.
<TABLE>
<CAPTION>
SHARES
ACQUIRED VALUE OF UNEXERCISED
ON VALUE NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
EXERCISE REALIZED OPTIONS AT JULY 31, 2000 JULY 31, 2000(1)
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Joseph R. Nelson -- -- 600,000 -- $1,237,500 --
Thomas A. Slamecka 175,000 $1,458,484 807,258 -- $1,344,830 --
Michael T. Pieniazek 274,750 $2,305,849 205,439 -- $447,566 --
</TABLE>
-----------------
(1) Fair market value of the Common Stock on the last trading date of the
fiscal year ended July 31, 2000, less the applicable exercise prices,
multiplied by the number of shares underlying the options.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act"),
as amended, requires the Company's executive officers and directors, and persons
who own more than 10% of a registered class of the Company's equity securities,
to file reports of ownership on Form 3 and changes in ownership on Form 4 or
Form 5 with the Securities and Exchange Commission ("SEC"). Such officers,
directors and 10% stockholders are also required by SEC rules to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on its
review of the copies of such forms received by it, or written representations
from certain reporting persons, the Company believes that, during the fiscal
year ended July 31, 2000, five (5) executive officers and directors filed late
reports. All of these executive officers and directors subsequently filed their
required reports. All of the Company's executive officers and directors are
currently in compliance with all of their Section 16(a) filing requirements.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of July 31, 2000, the Company had loaned Joseph R. Nelson, President and
Chief Executive Officer, an aggregate of $150,000 pursuant to his Employment
Agreement. The Employment Agreement provides that the Company make available to
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Mr. Nelson interest-free loans up to $150,000, to be forgiven over a three-year
period, provided Mr. Nelson remains an employee of the Company.
Effective November 15, 1999, the Company sold to Jim Fukushima, Vice
Chairman and a Director, 800,000 shares of Common Stock at a price of $.50 per
share and warrants to purchase up to 300,000 shares of Common Stock at an
exercise price of $2.00 per share exercisable for three years, and also a 5%
interest in Rosch GmbH, through a sub-participation contract for an aggregate of
$2,000,000.
During the fiscal year ended July 31, 1999, the Company entered into a
distribution agreement with HNS International Inc. ("HNS"), of which Mr.
Fukushima is the president and a principal stockholder, providing HNS with
exclusive distribution rights for the Injex(TM) System throughout Japan, Asia
and Australia. In April 1999, HNS purchased 500,000 shares of the Company's
Common Stock and was issued warrants to purchase up to 500,000 shares of Common
Stock at an exercise price of $2.50 per share, expiring in April 2002. In
September 1999, Mr. Fukushima was elected to the Company's Board of Directors
and was issued a five year option to purchase 50,000 shares of Common Stock at
$1.09 per share exercisable after six months. In October 1999, Mr. Fukushima was
elected Vice Chairman and was granted a five year option to purchase 200,000
shares of Common Stock at $1.90 per share.
PROPOSAL 2
AMENDMENT TO 1996 STOCK OPTION PLAN
-----------------------------------
The Board of Directors of the Company has unanimously approved for
submission to a vote of the stockholders a proposal to amend the 1996 Stock
Option Plan to increase from 700,000 shares of Common Stock to 1,500,000 shares
of Common Stock the number of shares reserved for issuance pursuant to the
exercise of options granted thereunder. The purposes of the Plan are to attract
and retain the best available personnel for positions of responsibility within
the Company, to provide additional incentives to employees of the Company and to
promote the success of the Company's business through the grant of options to
purchase Common Stock. Each option granted pursuant to the Plan shall be
designated at the time of grant as either an "incentive stock option" or as a
"non-qualified option." The 1996 Stock Option Plan, as proposed to be amended,
would authorize the issuance of a maximum of 1,500,000 shares of Common Stock
pursuant to the exercise of options granted thereunder. As of October 31, 2000,
stock options to purchase 696,827 shares of Common Stock under the 1996 Stock
Option Plan have been granted and 30,000 were outstanding, including options to
purchase 20,000 shares to executive officers and Directors of the Company, and
666,827 options have been exercised. In addition, the Board of Directors has had
to grant options outside of the 1996 Stock Option Plan to executive officers and
directors to compensate and incentivize them for their services to the Company.
ADMINISTRATION
The 1996 Stock Option Plan is administered by Board of Directors or an
Option Committee. The Board of Directors or the Option Committee has authority
to select the individuals who are to be granted options from among those
eligible to participate in the 1996 Stock Option Plan and to establish the
number of shares which may be issued under each option. The Company does not
presently have an Option Committee.
ELIGIBILITY
Options may be granted only to (i) individuals who are employees of the
Company and its subsidiaries, including officers and directors who are also
employees at the time the Option is granted, (ii) individuals who are directors
but not also employees of the Company and its subsidiaries ("Non-Employee
Directors"), and (iii) any other persons who perform services for or on behalf
of the Company and its subsidiaries, affiliates or any entity in which the
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<PAGE>
Company has an interest, or who are deemed by the Board of Directors to be in a
position to perform such services in the future. Options that constitute
incentive stock option ("ISOs") may only be granted to employees described in
clause (i) above, and Non-Employee Directors shall only be granted non-qualified
stock options ("NQSOs"). No Options may be granted under the 1996 Stock Option
Plan after August 9, 2006.
OPTION PRICE AND TERMS
Options granted under the 1996 Stock Option Plan may be either ISOs or
NQSOs The option price of each share of Common Stock subject to an option will
be fixed by the Board of Directors or the Option Committee but shall not be less
than the fair market value of the Common Stock on the date of grant of the
option. Under the 1996 Stock Option Plan, the fair market value with respect to
such shares shall be equal to the last reported sales prices of the Common Stock
on the OTC Electronic Bulletin Board (or other interdealer quotation system or
exchange) on the day on which an option is granted. An option designated as an
ISO is intended to qualify as such under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"). Thus, the aggregate fair market value,
determined at the time of grant, of the shares with respect to which ISO's are
exercisable for the first time by an individual during any calendar year may not
exceed $100,000. NQSOs are not subject to this requirement. Certain adjustments
in the option price may be made for extraordinary dividend distributions. The
Board of Directors or the Option Committee shall determine the option period,
provided it is not longer than five years, in the case of ISOs, or 10 years, in
the case of NQSOs, subject to earlier termination, the vesting period and the
payment terms. In the event of termination of employment, the Optionee may
exercise his options at any time within one year of the termination, but in no
event later than the expiration date of the option; however, if the employee is
terminated "for cause," the option expires immediately. All unvested options
vest upon a "change of control" of the Company. Upon exercise of an option,
payment for shares may be made in cash, or, if the option agreement so provides,
in shares of Common Stock calculated based upon their fair market value as of
the date of their delivery or, a combination of stock and cash.
TRANSFERABILITY
Options granted under the 1996 Stock Option Plan are not transferable by
the Optionee otherwise than by will or the laws of descent and distribution, to
the Optionee's spouse or his children, grandchildren or parents. Options are
exercisable during the lifetime of the Optionee only by the Optionee or by the
Optionee's guardian or legal representative.
TERMINATION. SUSPENSION OR MODIFICATION OF THE 1996 STOCK OPTION PLAN
The Board of Directors may terminate, suspend, or modify the 1996 Stock
Option Plan at any time but may not, without authorization of the Company's
stockholders, effect any change which under Section 16(b) of the Securities
Exchange Act of 1934, as amended, applicable Delaware law or tax law, or the
rules of any national securities exchange or national quotation system on which
the Common Stock is then listed or traded requires the prior approval of
stockholders.
FEDERAL INCOME TAX CONSEQUENCES
A participant under the 1996 Stock Option Plan does not realize income for
federal income tax purposes as a result of (i) the grant of an ISO under the
1996 Stock Option Plan or (ii) the exercise of an ISO under the 1996 Stock
Option Plan. The Company is not entitled to a federal income tax deduction upon
the grant or exercise of an ISO. Long-term capital gains tax rates will apply to
the gain (excess of the amount received for the shares over the amount paid for
the shares) at the time that the participant disposes of the shares provided
that certain holding requirements discussed below are met. The spread between
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<PAGE>
the exercise price and the fair market value of the transferred shares at the
time of the exercise of an ISO is included in alternative minimum taxable income
subject to the alternative minimum tax for the taxable year in which such
transfer occurs. If the shares are disposed of in the same taxable year and the
amount realized is less than that fair market value at the time of exercise, the
amount included in the alternative minimum taxable income will not exceed the
amount realized over the adjusted basis of the shares.
The availability of the income tax treatment discussed in the foregoing
paragraph is subject to two conditions. First, the optionee must continue to be
an employee of the Company or a parent or subsidiary of the Company at all times
during the period beginning on the date that the ISO was granted and ending
(with exceptions for disability and death) on the date three months before the
option is exercised. Second, such income tax treatment is available only if the
optionee does not dispose of the shares acquired pursuant to the exercise of the
ISO (i) within two years from the date of granting of the option nor (ii) within
one year after the shares were issued pursuant to the exercise of the option. If
the optionee disposes of the shares prior to the expiration of the required
holding period, the optionee realizes ordinary income in the year of disposition
equal to the excess of the fair market value of the shares at the time of the
exercise over the option exercise price and the same amount is then deductible
by the Company. In addition, the optionee will recognize short-term or long-term
capital gain on the excess, if any, of the disposition price over the exercise
price.
An optionee realizes no income as a result of the grant of a NQSO under the
1996 Stock Option Plan. However, an optionee realizes ordinary income upon the
exercise of the NQSO (or at the later date described below) equal to the excess
of the fair market value of the shares at the time of exercise (or at such later
date) over the option exercise price. The Company is not entitled to a federal
income tax deduction upon the grant of the NQSO, but upon transfer of the shares
to such optionee upon its exercise (or at the later date described below) an
amount corresponding to the optionee's taxable income becomes deductible by the
Company. The amount of income recognized at the time of exercise is added to the
option price to determine the optionee's basis in the shares, and any further
appreciation upon ultimate sale of the shares is taxable as short- or long-term
capital gains (with the holding period measured from the date of exercise). If
the shares received upon exercise are not transferable and are subject to a
substantial risk of forfeiture, the realization of compensation income is
postponed until the earlier of the lapse of the forfeiture restrictions or the
making of an "IRC 83(b) election." For such purposes, potential liability by
Company insiders under securities laws with respect to short swing trading
constitutes a substantial risk of forfeiture. Where other shares of stock have
been purchased within six months of exercise of the option, recognition of the
compensation attributable to such exercise may be postponed for a period of six
months from the date of purchase of such other shares of stock due to such
liability.
The foregoing is only a summary of the principal tax consequences to the
Company and the optionees from the grant and exercise of options under the 1996
Stock Option Plan.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" FOR APPROVAL OF THE
PROPOSAL TO AMEND THE 1996 STOCK OPTION PLAN
INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of Ernst & Young LLP, the Company's independent public
accountants for the fiscal year ended July 31, 2000, are expected to attend the
Meeting and will be available to respond to appropriate questions. Such
representatives will also be given an opportunity to make a statement if they so
desire. The Board of Directors has selected Ernst & Young LLP as its accountants
for the fiscal year ending July 31, 2001.
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<PAGE>
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Stockholders who desire to submit proposals for inclusion in the Company's
proxy statement for the 2001 Annual Meeting of Stockholders of the Company must
submit such proposals to the Secretary of the Company at the Company's principal
executive office by July 31, 2001. If such proposal is in compliance with all
the requirements of Rule 14a-8 under the Exchange Act, it will be included in
the Company's proxy statement and the form of proxy for such meeting.
OTHER MATTERS
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH BENEFICIAL HOLDER OF ITS
COMMON STOCK ON THE RECORD DATE WHO DID NOT RECEIVE A COPY OF THE COMPANY'S
ANNUAL REPORT, ON THE WRITTEN REQUEST OF SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT OF FORM 10-KSB FOR THE FISCAL YEAR ENDED JULY 31, 2000 AS FILED
WITH THE SEC. ANY SUCH REQUEST SHOULD BE MADE IN WRITING TO THE SECRETARY OF THE
COMPANY, 238 LITTLETON ROAD, WESTFORD, MASSACHUSETTS 01886.
As of the date of this Proxy Statement, the Board of Directors of the
Company does not know of any other matters to be brought before the Meeting
other than as set forth in this Proxy Statement. However, if any other matters
not mentioned in the Proxy Statement are properly brought before the Meeting or
any adjournments thereof, the persons named in the enclosed Proxy or their
substitutes will have discretionary authority to vote proxies given in said
form, or otherwise act, in respect of such matters in accordance with their best
judgment.
BY ORDER OF THE BOARD OF DIRECTORS
Matthew Slepian,
Secretary
November 28, 2000
STOCKHOLDERS ARE URGED TO DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE
APPRECIATED.
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<PAGE>
EQUIDYNE CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 11, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Equidyne Corporation, a Delaware corporation
(the "Company"), acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, dated November 28, 2000, and hereby
constitutes and appoints Joseph R. Nelson or Michael T. Pieniazek, and either
jointly or severally, to vote all shares of Common Stock of which the
undersigned would be entitled to vote at the 2000 Annual Meeting of Stockholders
(the "Meeting"), and at any adjournment or adjournments thereof, hereby revoking
any proxy or proxies heretofore given and ratifying and confirming all that said
proxies may do or cause to be done by virtue thereof with respect to the
following matters:
1. The election of seven (7) directors nominated by the Board of
Directors.
FOR all nominees listed below WITHHOLD AUTHORITY
(except as indicated) [ ] to vote for all nominees listed below [ ]
NOMINEES: Blake C. Davenport, Jim Fukushima, Dr. James R. Gavin III,
Joseph R. Nelson, Michael T Pieniazek, Marcus R. Rowan and
Thomas A. Slamecka
(INSTRUCTION: To withhold authority to vote for any individual nominee or
nominees, write such nominee's or nominees' name(s) in the
space provided below.)
-------------------------------------------------------------------------------
2. Approve an amendment to the 1996 Stock Option Plan to increase the
number of shares reserved for issuance thereunder to 1,500,000 shares.
FOR AGAINST ABSTAIN
-- -- --
3. Other matters as may properly come before the Meeting or any
adjournment or adjournments thereof.
This Proxy, when properly executed, will be voted as directed. If no
direction is indicated, the Proxy will be voted FOR the above proposal.
Dated: , 200
----------- -
(L.S.)
----------------------
(L.S.)
----------------------
Please sign your name exactly as it
appears hereon. When signing as
attorney, executor, administrator,
trustee or guardian, please give your
full title as it appears hereon. When
signing as joint tenants, all parties in
the joint tenancy must sign. When a
proxy is given by a corporation, it
should be signed by an authorized
officer and the corporate seal affixed.
No postage is required if returned in
the enclosed envelope and mailed in the
United States.
PLEASE SIGN, DATE AND MAIL THIS PROXY
IMMEDIATELY IN THE ENCLOSED ENVELOPE.
