SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
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 240.14a-11(c) or 240.14a-12
GENERAL KINETICS INCORPORATED
------------------------------------------------
(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):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-(6)(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
- ---------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- ---------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
- ---------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- ---------------------------------------------------------------------------
(5) Total fee paid:
- ---------------------------------------------------------------------------
<PAGE>
/X/ 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: $125
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(2) Form, Schedule or Registration Statement no.: Preliminary Proxy
Statement
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(3) Filing Party: General Kinetics Incorporated
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(4) Date Filed: September 22, 1995
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<PAGE>
<PAGE>
GENERAL KINETICS INCORPORATED
14130-C SULLYFIELD CIRCLE
CHANTILLY, VIRGINIA 22021
-----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 14, 1995 AT 9:00 A.M., LOCAL TIME
-----------------
Notice is hereby given that the 1995 Annual Meeting of
Shareholders of General Kinetics Incorporated (the "Company")
will be held at Marriott Suites, Washington Dulles, 13101 Worldgate
Drive, Herndon, Virginia 22070, on Friday, November 14,
1995 at 9:00 a.m., local time, for the following purposes:
1. To elect one director, in Class I, for a term
expiring in 1998.
2. To approve an amendment to the Company's Restated
Articles of Incorporation and authorize management to
implement a one-for-three reverse stock split of the Company's
common stock.
3. To consider and take action upon a proposal to ratify
the selection of BDO Seidman, independent certified public
accountants, as auditors for the Company for the fiscal year 1995.
4. To transact such other business as may properly come
before the meeting, or any adjournment or adjournments
thereof.
Holders of common stock of the Company are entitled to
vote on each of the matters set forth above.
The stock transfer books of the Company will not be
closed. The Board of Directors has fixed the close of business on
October 6, 1995 as the record date for the determination of
shareholders entitled to notice of, and to vote at, the Annual
Meeting and any adjournments thereof.
You are cordially invited to be present. Shareholders who
do not expect to attend in person are requested to sign and return
the enclosed form of Proxy in the envelope provided. At any time
prior to their being voted, proxies are revocable by written notice
to the Secretary of the Company or by voting at the meeting in
person.
By Order of the Board of Directors
Sandy B. Sewitch, Secretary
October 6, 1995
<PAGE>
<PAGE>
GENERAL KINETICS INCORPORATED
14130-C SULLYFIELD CIRCLE
CHANTILLY, VIRGINIA 22021
PROXY STATEMENT
-------------
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD NOVEMBER 14, 1995
-------------
This statement is furnished in connection with the
solicitation of proxies by the Board of Directors of General
Kinetics Incorporated (the "Company") from holders of the Company's
outstanding shares of common stock ("Common Stock") entitled
to vote at the 1995 Annual Meeting of Shareholders of the Company
(and at any and all adjournments thereof) for the purposes
referred to below and set forth in the accompanying Notice of
Annual Meeting of Shareholders.
A proxy card ("Proxy") for use at the Meeting is enclosed.
Any shareholder who executes and delivers a Proxy retains
the right to revoke it at any time prior to the voting thereof by
giving notice to the Secretary of the Company in writing or by duly
executing a Proxy bearing a later date. A Proxy may also be
revoked by attendance at the Meeting and election to vote thereat.
Unless so revoked, the shares represented by such Proxy will be
voted, in the manner specified therein, at the Meeting and any
adjournment thereof. The record date for shareholders entitled to
notice of and to vote at the Meeting was the close of business on
October 6, 1995. As of the record date, the Company had
6,508,925 shares of Common Stock, $.25 par value per share,
outstanding (except as otherwise indicated, all share amounts
set forth in this proxy statement shall be calculated before giving
effect to the one-for-three reverse stock split proposed herein).
Each holder of Common Stock will be entitled to one vote, in person
or by Proxy, for each share of Common Stock of the Company standing
in such holder's name on the books of the Company as of the record
date for the Meeting on any matter submitted to the vote of the
shareholders.
This Proxy Statement and Proxy are being sent to
shareholders of the Company on or about October 12, 1995. This
solicitation is made by the Board of Directors, and the Company
will bear the costs of solicitation. It is contemplated that the
Proxies will be solicited through the mail, but directors, officers
and regular employees of the Company may solicit Proxies
personally or by telephone. Although there is no formal agreement
to do so, the Company may reimburse banks, brokerage houses, and
other custodians, nominees, and fiduciaries for their reasonable
expenses in forwarding these proxy materials to their principals.
In addition, although it has no current plans to do so, the Company
may pay for and utilize the services of individuals or companies
not regularly employed by the Company in connection with the
solicitation of Proxies if the Board of Directors considers that
this is advisable.
PROPOSAL 1.
ELECTION OF DIRECTOR
Pursuant to the Company's Certificate of Incorporation,
the Board of Directors is divided into three separate classes of
directors, Class I, Class II and Class III, which are required, in
all respects, to be as nearly equal as practicable. At each annual
meeting of shareholders, one class of directors is elected to a
term of three years. This year represents the beginning of a new
three-year term for Class I directors; however, in May of 1995 Carl
R. Sax, who had previously served as the sole Class I director,
resigned as a director and officer of the Company leaving a vacancy
in Class I of the directors. In order to accommodate this
change and in an effort to more nearly equalize the number of
directors in each class, the Board has elected to restructure the
current Board by nominating Mr. Heimendinger to serve as a Class
I director so as to have Board representation within each Class,
including Class I.
Larry M. Heimendinger and Robert K. Gardner presently
serve as Class III directors for the Company and Mr. Gardner's
term is scheduled to expire at the 1997 Annual Meeting of
Shareholders. Effective upon the shareholder vote with respect to
his election as a Class I director, Mr. Heimendinger intends to
resign as a Class III director. Marc E. Cotnoir and Richard J.
McConnell presently serve as Class II directors which term will
continue until the 1996 Annual Meeting of Shareholders. Each
of Messrs. Heimendinger, Gardner, McConnell and Cotnoir were
elected to the Board of Directors by Board action in March of
1994 and their election was ratified at the 1994 Annual Meeting of
shareholders.
At the Meeting, holders of Common Stock shall be entitled
to elect one (1) director. Unless otherwise directed, Proxies
received will be voted in favor of the election of Larry
Heimendinger to serve as director as provided in the Amended and
Restated Bylaws of the Company (the "Bylaws"). If elected, he
shall serve in Class I and for a term of three years or until his
successor shall be elected and qualified.
The Bylaws currently provide that the number of directors
of the Company shall be not fewer than three nor more than
eleven and that the Board of Directors may determine the size of
the Board from time to time within these limits. The Bylaws
further provide that the Board of Directors may, by majority vote,
increase the size of the Board within this range by up to two
directors between annual meetings of shareholders, and may fill the
vacancies thus created; however, under the Virginia Stock
Corporation Act, the Board is further limited to only increase or
decrease by 30% or less the number of directors last elected
by the shareholders. The size of the Board of Directors is
currently fixed at five members and the Board presently expects to
maintain it at that size pending the ultimate resolution of
whether, and the extent to which, new directors may be appointed to
fill the current vacancy or any potential newly created director
position.
Proxies in the enclosed form received from holders of
Common Stock will be voted for the election of Mr. Heimendinger
as the Class I nominee as a director of the Company unless
shareholders indicate otherwise. If the nominee is unable to serve
for any reason (which event is not anticipated), the shares
represented by the enclosed Proxy may be voted for such other
person or persons as may be determined by the holders of such Proxy
unless shareholders indicate otherwise.
The Board of Directors recommends a vote FOR the election
of Mr. Heimendinger. Proxies solicited by the Board of Directors
will be so voted unless shareholders specify a contrary vote. This
resolution may be adopted by a plurality of the votes entitled to
be cast with respect thereto. The following information includes
the name of the nominee of the Board of Directors for the office of
Class I director, and other individuals who will continue service
as Class II and Class III directors, together with certain
additional information concerning each individual. If the nominee
should be unable or unwilling to serve (which event is not
anticipated), the persons authorized by the Proxy to vote shall,
pursuant to the authority granted to them by the Board of
Directors, have the discretion to select and vote for a substituted
nominee (unless shareholders indicate otherwise, as noted above).
The Board of Directors has no reason to believe that the nominee
will be unable or unwilling to serve.
DIRECTORS (AND NOMINEE)
<TABLE>
<CAPTION>
Name and Position Business Experience Director
with the Company Age During the Last Five Years Since
- ----------------- --- -------------------------- --------
<S> <C> <C> <C>
Robert K. Gardner 47 Mr. Gardner has been the March, 1994
Vice Chairman of principal of Robert K.
the Board Gardner & Associates for
seventeen years. Robert
K. Gardner & Associates
is a consulting business
that provides planning
and marketing services
for development stage
technology companies
serving industrial and
government markets. Mr.
Gardner also served as
Vice President and
General Manager of the
Secure Communications
Division of the Company
through May 1995. Mr.
Gardner is a member of
Class III of the Board of
Directors.
<PAGE>
Larry M. Heimendinger 49 Mr. Heimendinger has acted March, 1994
Chairman of the as the Chairman of the
Board Board of Directors of the
(Nominee for Class 1) Company since he was
elected to that position
in March of 1994. In
accordance with the
Amended and Restated
Bylaws of the Company,
Mr. Heimendinger has been
performing the duties of
the President and chief
executive officer through
his position as Chairman
of the Board and will
continue to do so until
such time as a
replacement for President
and chief executive
officer is elected and
qualified. From 1989
through 1992, Mr.
Heimendinger was
President and chief
operating officer of
Nantucket Corp., a
privately held software
company which was
purchased in 1992 by
Computer Associates
International, a company
also involved in software
development. After that
acquisition and until
sustaining a serious
accident in September,
1992, Mr. Heimendinger
was associated with
Computer Associates
International, most
recently as its Director
of Product Strategy. For
several years through
1988, Mr. Heimendinger
was the President and CEO
of Origin, Inc., a
company that produced and
marketed personal
computer software for the
banking industry. Mr.
Heimendinger is the
author of dBase IV and
Clipper, books published
by Brady Books, and is a
computer industry
conference and seminar
speaker worldwide. Mr.
Heimendinger is currently
a member of Class III of
the Board of Directors,
and has been nominated
for election as a Class I
director. He intends to
resign his position as a
Class III director
effective upon the
shareholder vote at the
annual meeting.
Marc E. Cotnoir 46 Mr. Cotnoir has been an March, 1994
independent consultant,
providing business and
strategic planning
support and systems
engineering consulting,
for a wide range of
clients since 1988.
Prior to 1988, Mr.
Cotnoir had extensive
experience, both within
private industry and in
the U.S. Air Force, with
computer and
communications
technology. Mr. Cotnoir
is a member of Class II
of the Board of
Directors.
Richard J. McConnell 31 Mr. McConnell has been March, 1994
the President of Present
Square Systems,
Inc., a research and
development firm
specializing in advanced
software systems, since
1986. Mr. McConnell has
been involved in research
and development in the
computer software
industry since 1981. Mr.
McConnell is a member of
Class II of the Board of
Directors.
</TABLE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR THE ELECTION OF THE CLASS I NOMINEE.
Six meetings of the Board of Directors were held during
the year ended May 31, 1995 ("fiscal year 1995"). The Board
of Directors has established a standing Audit and Compensation
Committee, as well as a Strategic Planning and a Financial
Operations Committee. The Audit Committee, which met twice in
fiscal year 1995, consisted of Messrs. Larry Heimendinger,
Marc Cotnoir and Richard McConnell. The Audit Committee reviews
all financial matters related to the Company's operations,
recommends to the Board of Directors independent auditors for
selection by the Company, discusses with the Company's
independent auditors the scope and results of audits and approves
and reviews any non-audit services performed by such
independent auditors.
The Compensation Committee, which met three times in
fiscal year 1995, consisted of Messrs. Larry Heimendinger and
Marc Cotnoir. The Compensation Committee reviews and establishes
compensation for the officers of the Company and administers the
compensation and benefits plans of the Company for officers of the
Company.
The Board had also had a Strategic Planning Committee
consisting of Messrs. Robert Gardner, Larry Heimendinger and
Richard McConnell and a Financial Operations Committee consisting
of Messrs. Larry Heimendinger and Robert Gardner. Neither
the Strategic Planning nor the Financial Operations committee had
formal meetings during the last fiscal year, and their functions
have been undertaken by the full Board at present.
All present directors attended at least 75 percent of the
meetings of the Board of Directors and Committees on which they
served during fiscal year 1995.
The following table sets forth the beneficial ownership of
Common Stock as of October 11, 1995 of each of the current
directors and other directors who served during the past fiscal
year and each of the executive officers named in the Summary
Compensation Table below.
<PAGE>
<TABLE>
<CAPTION>
Shares of Percentage of
Common Stock Outstanding
Name Beneficially Owned(1)(2) Common Stock
- ---- ------------------------ -------------
<S> <C> <C>
Mark E. Cotnoir 37,500 *
Robert K. Gardner 32,500 *
Larry M. Heimendinger 46,875 *
Richard J. McConnell 37,500 *
Carl R. Sax 10,110 *
All Directors and named
Executive Officers as a
group (eight persons) 215,933 3.2%
</TABLE>
(1) Beneficial ownership also includes shares of Common Stock
which may be acquired within 60 days of October 12, 1995,
through the exercise of warrants, options, or otherwise, as
follows: Mr. Cotnoir, 37,500 shares; Mr. Gardner, 32,500 shares;
Mr. Heimendinger, 46,875 shares; Mr. McConnell, 37,500 shares; and
all Directors and Officers as a group, 202,797 shares.
Does not include currently unallocated shares held by the ESOP of
which Mr. Heimendinger is a trustee. Additionally, each of
Messrs. Cotnoir and McConnell were granted options to purchase
100,000 shares, Mr. Heimendinger was granted an option to
purchase 125,000 shares and Mr. Gardner was granted an option to
purchase 33,333 shares, each of which options will only
vest if the stock price reaches certain stipulated multiples of
base price of $1.0026 (for ten consecutive trading days).
(2) Includes shares of common stock beneficially owned by Carl
R. Sax who resigned as a director and officer of the Company
effective May 1, 1995.
* Indicates less than 1 percent.
COMPENSATION OF DIRECTORS
Each nonemployee director other than Mr. Heimendinger has
received a monthly retainer of $1,500 since November 1994.
Mr. Gardner received a monthly retainer of $500 while he was an
officer of the Company through May 1995.
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
During the course of the last fiscal year, Present Square
Systems, Inc., provided consulting services to the Company with
respect to the Company's software systems and received an aggregate
of $20,000 in fees for such services. Richard J.
McConnell, a director of the Company, is President of Present
Square Systems, Inc.<PAGE>
EXECUTIVE OFFICERS AND CERTAIN
SIGNIFICANT EMPLOYEES OF THE COMPANY
The names, ages, and positions of the executive officers
of the Company are listed below.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Larry M. Heimendinger 49 Chairman of the Board
(performing duties
of President)
Robert K. Gardner 47 Vice Chairman of the Board
Shirl Lakeway, Jr. 38 Vice President and General Manager
of Food Technology Corporation, a
subsidiary of the Company
Richard E. Munczenski 53 Vice President and General Manager
Sandy B. Sewitch 38 Chief Financial Officer
</TABLE>
Larry M. Heimendinger has acted as the Chairman of the
Board of Directors since March of 1994 and, in accordance with
the Amended and Restated Bylaws of the Company, he has been
performing the duties of the President and chief executive
officer through his position as Chairman of the Board and will
continue to do so until a replacement for President and chief
executive officer is elected and qualified.
Robert K. Gardner joined the Company as a director in
March 1994 and an employee in May 1994. He was Vice President
and General Manager of the Secure Communications Division of the
Company through May 1995, and currently is a consultant
to the Company for VSLAN technology sales activities and government
customer relations activities.
Shirl Lakeway, Jr., Vice President and General Manager of
Food Technology Corporation, a wholly owned subsidiary of
the Company, joined the Company in 1986.
Richard E. Munczenski, Vice President and General Manager,
joined the Company in August of 1969.
Sandy B. Sewitch, Chief Financial Officer, joined the
Company in April 1993.
The officers of the Company hold office at the discretion
of the Board of Directors of the Company.
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's directors and officers, and
persons who beneficially own more than 10% of its Common Stock, to
file with the Securities and Exchange Commission and
the American Stock Exchange reports of ownership and changes in
ownership of the Company's equity securities. Officers,
directors and greater than 10% shareholders are also required to
furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of
such reports furnished to the Company, during the fiscal year
ended May 31, 1995, all Section 16(a) filing requirements
applicable to its officers, directors and greater than 10%
shareholders
were complied with, except certain inadvertent filing delinquencies
which have since been corrected, as set forth blow:
Messrs. Shirl Lakeway and Richard Munczenski did not
timely make reports on Form 3 with respect to their ascension to
reporting officer status. Under Rule 16a-3(f) every person who at
any time during the fiscal year was subject to Section 16 is
required to file a Form 5 within 45 days after fiscal year end,
unless all transactions otherwise required to be reported on Form
5 have been reported before the due date of such form. Messrs.
Lakeway, Munczenski and Sewitch did not timely make reports
with respect to stock options which were granted to them during the
last fiscal year under the Company's 1994 Stock Option
Plan. Mr. Gardner did not timely make reports with respect to
certain stock options which were granted to him in respect of his
services as a director and general manager of the Company under the
Company's 1994 Stock Option Plan and 1994
Non-employee and Directors Stock Option Plan. During fiscal year
1995, Messrs. Heimendinger, Cotnoir, McConnell and Sax
did not timely report the respective stock options granted to them
under the Company's 1994 Nonemployee and Directors Stock
Option Plan in the last fiscal year. As of the date of this Proxy
Statement, these Section 16(a) reporting delinquencies have now
been corrected and the Company is currently undertaking steps to
assist its directors and officers in meeting their Section 16(a)
reporting responsibilities.
EXECUTIVE COMPENSATION
The information under this heading relates to the chief
executive officer. The information is presented in compliance with
the rules and regulations of the Securities and Exchange Commission
applicable to those companies, such as General Kinetics
Incorporated, that meet the definition of a "small business
issuer".
Executive officers are appointed each year by the Board of
Directors at its annual meeting following the annual meeting
of shareholders and serve for one year or until their successors
are chosen and qualify in their stead. There are no family
relationships among the executive officers, or any arrangement or
understanding between any officer and any person pursuant
to which the officer was elected.
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------- ----------------------
Name and Principal Other Annual Number of All Other
Position(1) Year Salary Bonus Compensation Options Compensation
- ------------------ --- ------ ----- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Larry M. Heimendinger(2) 1995 $ 0 $ 0 $ 0 187,500 $ 0
Chairman of the Board 1994 0 0 0 0 0
1993 -- -- -- -- --
Robert K. Gardner(3) 1995 120,000 0 3,500 71,666 0
Vice Chairman of the 1994 29,000 0 62,500 0 0
Board 1993 -- -- -- -- --
</TABLE>
(1) No executive officer of the Company, other than Mr.
Gardner, serving at the end of fiscal year 1995 received
compensation in excess of $100,000 in value for fiscal year 1995.
(2) Larry Heimendinger serves as the Company's Chairman of the
Board, for which he has received no salary compensation
since being elected to that position in March 1994. Since the
resignation of the Company's former President, in March, 1994,
the Company has no current President. In accordance with the
Company's Bylaws, until a new President is elected and qualified,
the Company's Chairman performs the duties of that office.
(3) Mr. Gardner serves as the Company's Vice Chairman of the
Board. As a director, he received a monthly retainer of $500
during fiscal 1995 since November 1994. He was Vice President and
General Manager of the Secure Communications of the Company through
May 1995 for which he received $120,000 in salary, and currently is
a consultant to the Company for VSLAN Technology sales activities
and government customer relations activities. During fiscal 1994
he received an aggregate of $62,500 in consulting fees prior to
becoming a director in March, and $29,000 subsequent to that date.
<PAGE>
INDIVIDUAL OPTION GRANTS TO EXECUTIVE OFFICERS
DURING FISCAL YEAR 1995
<TABLE>
<CAPTION>
Potential of Realizable
Percent Value at assumed annual
of Total rates of stock price
Options appreciation for
Number of Granted to options term
Options Employees Exercise Expiration -----------------------
Name of Executive Officer Granted in FY 1995 Price Date 5% 10%
- ------------------------- -------- ---------- -------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Larry M. Heimendinger 62,500(1) 21.6%(3) .6875 8/28/04 27,023 68,481
125,000(2) 43.2%(3) .6875 8/28/04 -0- -0-
Robert K. Gardner 8,333(1) 8.2% .6875 8/28/04 12,992 32,924
15,000(1) 14.8% .375 8/28/04 3,538 8,965
33,333(2) 32.8% .6875 8/28/04 -0- -0-
15,000 14.8% .375 8/28/04 3,538 8,965
</TABLE>
(1) 50% of such options have vested and are currently
exercisable. An additional 25% will vest on November 30, 1995 and
the remaining 25% on May 31, 1996.
(2) Incentive stock options which only vest if stock prices
reach stipulated multiples of base price of $1.0026 (for ten
consecutive trading days) as follows: upon 300% increase in price,
25% vest; upon 400% increase in price, 50% vest; upon 500% increase
in price, 75% vest; upon 600% increase in price, 100% vest.
(3) Larry Heimendinger is not an employee of the Company. For
purposes of the calculation of Mr. Heimendinger's percentages only,
his options have been included in the aggregate total employee
options granted.
FY-1995 OPTIONS EXERCISE AND FY-1995 YEAR-END VALUE TABLE
<TABLE>
<CAPTION>
Number of Number of Options In-The-Money Options
Shares At End-FY 1995 At End-FY 1995
---------------------------- ---------------------------
Acquired Unexer- Unexer-
Name of Executive Officer On Exercise Exercisable cisable Exercisable cisable
- ------------------------- ----------- ----------- ------- ----------- -------
<S> <C> <C> <C> <C> <C>
Larry M. Heimendinger 0 31,250 94,250 -- --
Robert K. Gardner 0 15,767 55,899 -- --
</TABLE>
<PAGE>
PRINCIPAL SHAREHOLDERS
As of October 6, 1995, approximately 52.5% percent of the
Company's outstanding Common Stock was believed to be
beneficially owned by Gutzwiller & Partner, AG ("Gutzwiller"). The
following table sets forth the beneficial ownership of Common
Stock as of October 6, 1995 of Gutzwiller, the only person or
entity believed by the Company to be the beneficial owner of more
than 5 percent of such class of securities.
<TABLE>
<CAPTION>
Percent of Name and Address of Shares of Common Stock Outstanding
Beneficial Owner Beneficially Owned Common Stock
---------------- ---------------------- ------------
<S> <C> <C>
Gutzwiller & Partner AG 3,418,100 52.5%
Schindlerstrasse 26
CH-8035 Zurich/Switzerland
</TABLE>
-------------
* Based on information provided by Gutzwiller, a Swiss
investment advisory firm. As of September 20, 1995, Gutzwiller
has reported that it has the power to vote, and discretionary power
to dispose of, 3,418,100 shares of Common Stock issued
and outstanding as of the record date. It is the Company's
understanding that Gutzwiller has discretionary authority to
dispose of or convert Convertible Debentures of the Company which
are convertible into 18,370,000 shares of Common Stock, and
would have the power to vote or dispose of the 18,370,000 shares of
Common Stock issuable upon conversion thereof. After such a
conversion, Gutzwiller would hold 21,788,100 shares which would
represent 73.8% of the then outstanding Common Stock. This
calculation does not include 100,000 shares held of record by BAB
General Consultants for the benefit of Dr. August Schubiger, a
director of and attorney for Gutzwiller, or 100,000 shares held of
record by Gutzwiller for the benefit of an unaffiliated third
party.
<PAGE>
<PAGE>
PROPOSAL NO. 2
AMENDMENT TO THE COMPANY'S
RESTATED ARTICLES OF INCORPORATION
GENERAL
The Board of Directors of the Company approved, Subject to
the shareholder approval solicited hereby, a single proposal
("Reverse Stock Split Proposal") to amend the Company's Amended and
Restated Articles of Incorporation to effect a one-for-three
reverse Common Stock split ("Reverse Stock Split"). A reverse
stock split is effected under Virginia law by amending the Articles
of Incorporation, which requires the approval of the Company's
shareholders. If the amendment of the Company's Articles of
Incorporation (the "Amendment") is approved by the requisite vote
of the Company's shareholders, the Reverse Stock Split will be
effective upon filing of the Amendment with the Virginia State
Corporation Commission (the "Effective Time" and the date of the
Effective Time, the "Effective Date"). Each stock certificate
representing a number of shares of Common Stock outstanding
immediately prior to the Effective Time will be deemed
automatically, without any action on the part of the shareholders,
to represent one-third that number of shares after the Effective
Time. A form of the amended text to the Articles of Incorporation
is attached hereto as Appendix A.
Although the Company's Board of Directors believes as of
the date of this Proxy Statement that a one-for-three Reverse
Stock Split is advisable, the Reverse Stock Split Proposal may be
abandoned by the Board of Directors at any time before, during
or after the Annual Meeting and prior to filing the amendment to
the Articles of Incorporation with the State Corporation
Commission of the Commonwealth of Virginia.
PURPOSES OF REVERSE STOCK SPLIT
In light of the relatively low price per share at which
the Common Stock has traded in the recent past, the American Stock
Exchange has recommended that a combination or reverse split of the
shares of Common Stock be submitted to the Company's
shareholders. The Board of Directors also believes, among other
things, that the per share price of the Common Stock has
affected the marketability of the existing shares, the amount and
percentage of transaction costs paid by individual shareholders
and the potential ability of the Company to raise capital by
issuing additional shares. The Board of Directors further Believes
that the decrease in the number of shares of Common Stock
outstanding as a consequence of the proposed Reverse Stock Split
may result in an increase in the quoted market price of the Common
Stock to a level which the Board believes is a more readily
accepted trading price in the capital markets. There can be no
assurance, however, that any such increase would be in
proportion to the one-for-three reverse stock split ratio, or that
the per share price level of the Common Stock immediately after
the proposed Reverse Stock Split will be maintained for any period
of time.
In particular, the Board of Directors of the Company
believes that a relatively low per share market price for stock may
impair the interest in that stock on the part of certain members of
the investing public. Certain investors may view low-priced
stock as less attractive or, as a matter of policy, may not extend
margin credit on stock trading at low prices, although certain
other investors may be attracted to low-priced stock because of the
greater trading volatility sometimes associated with such
securities. Some brokerage houses may be less inclined to
recommend lower-priced stock to their clients or to hold it in
their own portfolios. Further, a variety of brokerage house
policies and practices may discourage individual brokers within
those firms from dealing in low-priced stock because of the
time-consuming procedures that make the handling of low-priced
stock less attractive to brokerage houses from an economic
standpoint.
In addition, since the broker's commissions on low-priced
stock generally represent a higher percentage of the stock price
than commissions on higher priced stock, a lower share price can
result in individual shareholders paying transaction costs
(commissions, markups or markdowns) which are a higher percentage
of their total share value than would be the case if the
share price were substantially higher. However, if approved, the
Reverse Stock Split may result in some shareholders owning
'odd-lots' of less than 100 shares of Common Stock. Brokerage
commissions and other costs of transactions in odd-lots may
be higher, particularly on a per-share basis, than the cost of
transactions in even multiples of 100 shares.
EFFECTS OF REVERSE STOCK SPLIT
The Reverse Stock Split alone will not affect any
shareholder's proportionate equity interest in the Company, except
for minor differences resulting from the rounding of fractional
shares, nor will it affect the rights, preferences, privileges or
priorities of the Common Stock. In addition, the Reverse Stock
Split will not affect the shareholders' equity of the Company as
reflected in the financial statements of the Company except to
change the number of the issued and outstanding shares of Common
Stock. After giving effect to the Reverse Stock Split, each
shareholder will own one share of new Common Stock for each three
shares of Common Stock held at the time of the Reverse Stock Split,
and one additional share in lieu of the issuance of fractional
shares of new Common Stock. In connection with the Reverse Stock
Split, appropriate adjustments will be made in the exercise or
conversion price of, and number of shares issuable under, the
Company's outstanding stock options and outstanding warrants to
purchase Common Stock and convertible debentures.
If the Amendment is approved by the shareholders, the
Company intends to file the Certificate of Amendment shortly after
the date of the Meeting. If for any reason the Board of Directors
deems it advisable to do so, the Reverse Stock Split Proposal
may be abandoned by the Board of Directors at any time before,
during or after the annual shareholders meeting and prior to filing
and effectiveness of the amendment to the Articles of
Incorporation, without further action by the shareholders of the
Company. The Reverse Stock Split will become effective on the
Effective Time.
EXCHANGE OF STOCK CERTIFICATES
As soon as practicable after the Effective Date, the
Company will send a letter of transmittal to each shareholder of
record on the Effective Date for use in transmitting certificates
representing shares of Common Stock ("old certificates") to the
Company's transfer agent, Chemical Bank, 450 West 33rd Street, 15th
Floor, New York, New York 10001 (the "Exchange Agent"). The letter
of transmittal will contain instructions for the surrender of old
certificates to the Exchange Agent in exchange for certificates
representing the number of whole shares of new Common Stock. No
new certificates will be issued to a shareholder until such
shareholder has surrendered all old certificates together with a
properly completed and executed letter of transmittal to the
Exchange Agent. Upon proper completion and execution of the letter
of transmittal and return thereof to the Exchange Agent, together
with all old certificates, shareholders will receive a new
certificate or certificates representing the number of whole shares
of new Common Stock into which their shares of Common Stock
represented by the old certificates have been converted as a result
of the Reverse Stock Split. Until surrendered, outstanding old
certificates held by shareholders will be deemed for all purposes
to represent the number of whole shares of Common Stock to which
such shareholders are entitled as a result of the Reverse Stock
Split. Shareholders should not send their old certificates to the
Exchange Agent until they have received the letter of transmittal.
Old certificates not presented for surrender as soon as is
practicable after the letter of transmittal is sent shall be
exchanged for new certificates at the first time they are otherwise
presented for transfer. No service charges will be payable by
shareholders in connection with the exchange of certificates, all
expenses of which will be borne by the Company.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material anticipated
Federal income tax consequences of the Reverse Stock Split to
shareholders of the Company. This summary is based on the Federal
income tax laws now in effect and as currently interpreted;
it does not take into account possible changes in such laws or
interpretations, including amendments to applicable statutes,
regulations and proposed regulations or changes in judicial or
administrative rulings, some of which may have retroactive effect.
This summary is provided for general information only and does not
purport to address all aspects of the possible Federal income
tax consequences of the Reverse Stock Split and IS NOT INTENDED AS
TAX ADVICE TO ANY PERSON. In particular, and without limiting the
foregoing, this summary does not consider the Federal income tax
consequences to shareholders of the Company in light of their
individual investment circumstances or to holders subject to
special treatment under the Federal income tax laws (for example,
life insurance companies, regulated investment companies and
foreign taxpayers). The summary does not address any consequence
of the Reverse Stock Split under any state, local or foreign tax
laws. No ruling from the Internal Revenue Service ("Service") or
opinion of counsel will be obtained regarding the Federal income
tax consequences to the shareholders of the Company as a result of
the Reverse Stock Split. ACCORDINGLY, EACH SHAREHOLDER IS
ENCOURAGED TO CONSULT HIS OR HER TAX ADVISOR REGARDING THE SPECIFIC
TAX CONSEQUENCES OF THE PROPOSED TRANSACTION TO SUCH SHAREHOLDER,
INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN
INCOME AND OTHER TAX LAWS.
The Company believes that the Reverse Stock Split would be
a tax-free recapitalization to the Company and its shareholders.
If the Reverse Stock Split qualifies as a recapitalization under
Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as
amended, a stockholder of the Company who exchanges his or her
Common Stock solely for new Common Stock should recognize no gain
or loss for Federal income tax purposes. A stockholder's aggregate
tax basis in his or her shares of new Common Stock received from
the Company should be the same as his or her aggregate tax basis in
the Common Stock exchanged therefor. The holding period of the new
Common Stock received by such stockholder should include the period
during which the Common Stock surrendered in exchange therefor was
held, provided all such Common Stock was held as a capital asset on
the date of the exchange.
VOTE REQUIRED
The affirmative vote of two-thirds of the Common Stock
outstanding and entitled to vote shall be required to approve the
proposed amendment to the Articles of Incorporation. The votes
represented by the Proxies received will be voted FOR approval
of the adoption of the proposed amendment to the Articles of
Incorporation, unless a vote against such approval or to abstain
from voting is specifically indicated on the Proxy.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR APPROVAL OF THE PROPOSED AMENDMENT TO THE
RESTATED ARTICLES OF INCORPORATION
<PAGE>
PROPOSAL NO. 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected BDO Seidman,
independent certified public accountants, as independent auditors
for the Company for fiscal year 1996. A resolution will be
submitted to shareholders at the meeting for ratification of such
selection. Although ratification by shareholders is not a
prerequisite to the ability of the Board of Directors to select BDO
Seidman as the Company's independent auditors, the Company believes
such ratification to be desirable. If the shareholders do not
ratify the selection of BDO Seidman, the selection of independent
auditors will be reconsidered by the Board of Directors; however,
the Board of Directors may select BDO Seidman notwithstanding the
absence of shareholder ratification of its selection.
The Board of Directors recommends a vote FOR this
resolution to approve BDO Seidman as the independent auditors for
the Company for fiscal year 1996. Proxies solicited by the Board
of Directors will be so voted unless shareholders specify a
contrary vote. The resolution may be adopted by a majority of the
votes cast with respect thereto.
It is expected that a representative of BDO Seidman will
be present at the meeting, will have an opportunity to make a
statement if he or she desires to do so, and will be available to
respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR THE RATIFICATION OF BDO SEIDMAN AS THE INDEPENDENT
AUDITORS.
SHAREHOLDERS' PROPOSAL
Proposals of shareholders which are intended to be
presented at the 1996 Annual Meeting must be received by the
Company at its principal executive offices no later than June 14,
1996 for inclusion in the Company's proxy materials for that
meeting.
OTHER MATTERS
The Proxy and Proxy Statement have been approved by the
Board of Directors and sent to shareholders by its authority.
The matters referred to in the Notice of Meeting and in the Proxy
Statement are, to management's knowledge, the only matters
which will be presented for consideration at the Meeting. If any
other matters properly come before the Meeting, the persons
named in the enclosed Proxy intend to vote said Proxy on any such
matters in accordance with their best judgment.
This Proxy Statement incorporates certain Financial
Statements and other information from the Company's Annual Report
delivered herewith which contains the text of the Company's Annual
Report on Form 10-K for the fiscal year ending May 31,
1995.
A copy of the Company's Annual Report on Form 10-K for the
fiscal year ending May 31, 1995, as filed with the Securities
and Exchange Commission, will be furnished without charge upon the
written request to the Company's Secretary at the address
shown on the first page.
SANDY B. SEWITCH
Secretary
<PAGE>
<PAGE>
APPENDIX A
PROPOSED AMENDMENT TO ARTICLE THIRD OF
THE COMPANY'S RESTATED ARTICLES OF INCORPORATION
THIRD: The maximum number of shares that the corporation
has the authority to issue is fifty million (50,000,000) shares
of common stock with a par value of twenty-five cents ($.25) each.
Said shares may be issued from time to time for such
consideration as may be fixed from time to time by the Board of
Directors and as permitted by law. All issued shares of common
stock, including shares held in the treasury of the corporation,
shall be designated "Common Stock". Holders of the Common
Stock shall not be entitled to any preemptive rights to acquire
unissued shares of the corporation at such time as such shares
may be issued. Each three (3) shares of authorized Common Stock
issued and outstanding or standing in the name of the
Corporation at the close of business on the date of filing and
recording (the "Effective Time") of this Certificate of Amendment
("Amendment") in the Office of the State Corporation Commission of
the Commonwealth of Virginia, shall, upon the filing and
recording of this Amendment in the Office of the State Corporation
Commission of the Commonwealth of Virginia, thereupon
automatically be reclassified and changed into one (1) validly
issued, fully paid and nonassessable share of Common Stock. Each
holder of record of shares of Common Stock to be so reclassified
and changed shall at the Effective Time become the record
owner of the number of shares of Common Stock as shall result from
such reclassification and change. Each such record holder
shall be entitled to receive, upon the surrender of the certificate
or certificates representing the shares of Common Stock to be
so reclassified and changed at the office of the transfer agent of
the Corporation in such form and accompanied by such
documents, if any, as may be prescribed by the transfer agent of
the Corporation, a new certificate or certificates representing
the number of shares of Common Stock of which he or she is the
record owner after giving effect to the provisions of this Article
Third. The Corporation shall not issue fractional shares with
respect to the reclassification and change, and instead shall, in
lieu of any fractional share of Common Stock which would otherwise
result, issue to the holder entitled thereto one (1) whole share
of Common Stock, which share shall be validly issued, fully paid
and nonassessable. <PAGE>
<PAGE>
PRELIMINARY PROXY FORM (FRONT)
COMMON STOCK PROXY
GENERAL KINETICS INCORPORATED
14130-C Sullyfield Circle - Chantilly, VA 22021
REVOCABLE PROXY FOR ANNUAL MEETING ON NOVEMBER 14, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Larry Heimendinger and
Sandy Sewitch, and each of them jointly and severally, attorneys
and proxies of the undersigned, with full power of substitution,
and hereby authorizes them to represent and to vote, as
designated below, all the shares of common stock of General
Kinetics Incorporated which the undersigned may be entitled to
vote at the Annual Meeting of Shareholders to be held at the
Marriott Suites Washington Dulles, 13101 Worldgate Drive,
Herndon, Va. 22070, on November 14, 1995, and at all adjournments
thereof with all powers the undersigned would possess
if personally present and voting thereat.
The Board of Directors recommends a vote FOR:
1. The election of Larry Heimendinger as a Class I director
/ / FOR the above named / / WITHHOLD AUTHORITY to vote for
nominee the above named nominee
2. The proposal to approve the amendment to the Company's
Restated Articles of Incorporation to effect a one-for-three
reverse common stock split.
/ / FOR / / AGAINST / / ABSTAIN
3. The proposal to ratify the appointment of BDO Seidman
/ / FOR / / AGAINST / / ABSTAIN
4. In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before the meeting.
Stockholders planning to attend the Annual Meeting are requested to
indicate the number of persons attending in the block. / /
Stockholders may attend the meeting whether or not the block is
filled in.
IMPORTANT -- THIS PROXY MUST BE SIGNED AND DATED ON THE
REVERSE SIDE.
<PAGE>
<PAGE>
PRELIMINARY PROXY FORM (BACK)
THE SHARES REPRESENTED HEREBY WILL BE VOTED IN ACCORDANCE WITH
THE INSTRUCTIONS IN THIS PROXY. IF INSTRUCTIONS ARE NOT INCLUDED
HEREIN, THIS PROXY WILL BE VOTED FOR ITEMS 1, 2, 3, and 4.
---
Date , 1995
--------------------
Number of Shares
---------------------------------------
(Signature)
---------------------------------------
(Signature if held jointly)
(Please sign as name(s) appear(s) on this
proxy card. If joint account, each joint
owner should sign. When signing as attorney,
executor, administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full corporation
name by President or other authorized officer.
If a partnership, please sign in partnership
name by authorized person.)
PLEASE MARK, DATE, SIGN AND MAIL THIS PROXY CARD PROMPTLY IN THE
ENVELOPE ENCLOSED - NO POSTAGE IS REQUIRED
