SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
Compositech Ltd.
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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.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
________________________________________________________________________________
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (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:
[_] 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:
2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
(SC14A-07/98)
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[LOGO]
Compositech Ltd.
120 Ricefield Lane
Hauppauge, NY 11788
516-436-5200
March 1, 1999
Dear Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders of
Compositech Ltd. to be held at 10:00 a.m. on Friday, March 26, 1999 at the
Company's offices located at 120 Ricefield Lane, Hauppauge, New York.
The following pages contain the Notice of the Special Meeting and Proxy
Statement which includes the approval of an amendment to the Company's Amended
and Restated Certificate of Incorporation to increase the number of authorized
shares of Common Stock of the Company from 25,000,000 shares to 50,000,000
shares.
The Company's Board of Directors believes that increasing the number of
authorized shares of Common Stock is in the best interest of the Company and its
stockholders because it would permit the Company to issue additional shares of
Common Stock, for example, in connection with potential financings, corporate
mergers, establishment of strategic relationships with corporate partners or
employee benefit plans, as more fully discussed in the Proxy Statement.
The Company's Board of Directors believes that a vote to approve the
amendment is in the best interests of the Company and its stockholders and
unanimously recommends a vote FOR the approval. Please review the accompanying
material carefully and return the enclosed proxy card promptly.
You are cordially invited to attend the meeting. Whether or not you plan to
attend, please complete, sign, date and return the enclosed proxy card without
delay.
Sincerely,
/s/ Christopher F. Johnson
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President and Chief Executive Officer
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[LOGO]
Compositech Ltd.
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 26, 1999 AT 10:00 a.m.
To the Stockholders of Compositech Ltd.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of
Compositech Ltd. will be held at the Company's offices located at 120 Ricefield
Lane, Hauppauge, New York on Friday, March 26, 1999 at 10:00 a.m., for the
following purposes:
1. To approve amendment to the Company's Amended and Restated Certificate
of Incorporation to increase the number of authorized shares of Common
Stock of the Company from 25,000,000 shares, $0.01 par value, to
50,000,000 shares, $0.01 par value;
2. To transact such other business as may properly be presented at the
meeting and at any adjournments or postponements thereof.
Only holders of record of Compositech's Common Stock and Series A
Convertible Preferred Stock at the close of business on February 12, 1999 are
entitled to notice of, and to vote at, the meeting and any adjournments or
postponements thereof.
By Order of the Board of Directors,
/s/ Fred E. Klimpl
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Secretary
Hauppauge, New York
March 1, 1999
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WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE SIGN THE
ACCOMPANYING PROXY CARD AND RETURN IT AS SOON AS POSSIBLE IN THE ACCOMPANYING
POSTPAID ENVELOPE. YOUR DOING SO MAY SAVE COMPOSITECH THE EXPENSE OF A SECOND
MAILING.
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Compositech Ltd.
PROXY STATEMENT
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The accompanying proxy is solicited on behalf of the Board of Directors
(the "Board") of Compositech Ltd. ("Compositech" or the "Company"), a Delaware
corporation, for use at Compositech's Special Meeting of Stockholders (the
"Special Meeting") to be held at 10:00 a.m. on Friday, March 26, 1999 at
Compositech's offices located at 120 Ricefield Lane, Hauppauge, New York, 11788;
telephone number (516) 436-5200, and any adjournment or adjournments thereof.
Only holders of record of Compositech's Common Stock and Series A
Convertible Preferred Stock ("Series A Stock") as of the close of business on
February 12, 1999 are entitled to notice of, and to vote at, the Special Meeting
and any adjournments or postponements thereof. At the close of business on that
date, Compositech had outstanding 14,769,532 shares of its Common Stock, par
value $0.01 per share and 520,995 shares of Series A Stock, par value $3.00 per
share. Holders of Common Stock are entitled to one vote for each share of Common
Stock held. Holders of Series A Stock are entitled to one vote for each two
shares of Series A Stock held.
Any holder of Common Stock or Series A Stock giving a proxy in the form
accompanying this Proxy Statement has the power to revoke the proxy prior to its
use. A proxy can be revoked (i) by an instrument of revocation delivered prior
to the Special Meeting to the Secretary of Compositech, (ii) by a duly executed
proxy bearing a later date or time than the date or time of the proxy being
revoked, or (iii) at the Special Meeting if the stockholder is present and
elects to vote in person. Mere attendance at the Special Meeting will not serve
to revoke a proxy.
The approval of this proposal to amend the Company's Amended and Restated
Certificate of Incorporation to increase the number of authorized shares of
Common Stock requires the affirmative vote of the holders, as of the record
date, of a majority of the voting power of the Common Stock and Series A Stock.
Abstentions and broker non-votes will not be deemed affirmative, and will have
the same effect as a negative vote on the proposal. Such votes, however, will be
counted in determining whether a quorum is present.
This Proxy Statement and the accompanying proxy card are being mailed to
Compositech stockholders on or about March 1, 1999. Directors, officers and
other employees of Compositech may solicit proxies by personal interview,
telephone or facsimile, without special compensation. Any costs of such
solicitation will be borne by Compositech.
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COMPOSITECH LTD.
APPROVAL OF AMENDMENT TO
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
The Company's Amended and Restated Certificate of Incorporation (the
"Certificate"), as currently in effect, provides that authorized capital stock
shall consist of 25,000,000 shares of Common Stock, $0.01 par value (the "Common
Stock"), 714,161 shares of Series A Convertible Preferred Stock, par value $3.00
per share and 4,000,000 shares of Preferred Stock, $0.01 par value (the
"Preferred Stock"). On January 22, 1999, the Company's Board of Directors
approved an amendment to the Certificate (the "Amendment") to increase the
number of shares of Common Stock authorized for issuance under the Certificate
by 25,000,000 to a total of 50,000,000 shares. As more fully described below,
the proposed Amendment is intended to provide the Company flexibility to meet
future needs for unreserved Common Stock. The affirmative vote of holders of a
majority of the voting power of the Common Stock and Series A Stock outstanding
is required to approve the Amendment. The Board of Directors recommends that
stockholders vote FOR approval of the Amendment. The reasons for and the
possible effects of the amendment to the Certificate and certain information
regarding the Certificate are set forth below.
Reasons for Amendment
The Company's number of authorized shares of Common Stock has remained at
25,000,000 since the last increase in the authorized number of shares which was
approved by the stockholders and effected in 1996.
As of February 12, 1999, 14,769,532 shares of Common Stock, par value $0.01
per share, were issued and outstanding and 9,997,084 were reserved for
conversions of preferred stock and issuances for stock options, stock awards,
warrants and stock purchase and stock exchange agreements, leaving only 233,384
shares of Common Stock available for future issuance. The number of shares
remaining available is not considered adequate for the Company's future
requirements.
The Company requires additional funding to cover current operations until
revenues from operations are sufficient for that purpose. The Company is
currently negotiating financing through the sale of Common Stock or convertible
securities which would require Common Stock to be reserved for conversion of the
securities. Additional funding may be raised through sources including equity
funding which would require the issuance of Common Stock. The Company is also
pursuing discussions with potential industry partners to accelerate the
commercialization of the Company's products worldwide which also may require the
issuance of Common Stock. There can be no assurances that the Company will be
able to consummate such financings or ventures with industry partners.
Except as stated above, the Company has no firm plans to use the additional
authorized shares of Common Stock. However, the Company's Board of Directors
believes that it is prudent to increase the number of authorized shares of
Common Stock to the proposed level in order to provide a reserve of shares
available for issuances in connection with possible future actions. In
particular, the Company's Board of Directors believes that the current number of
authorized shares needs to be increased to provide the flexibility to effect
other possible actions such as financing, corporate mergers, establishing
strategic relationships with corporate partners, employee benefit plans and for
other general corporate purposes. Currently there are no plans, agreements or
arrangements in place requiring the utilization of these additional shares for
such purposes. Having such additional authorized Common Stock available for
issuance in the future would allow the Board of Directors to issue shares of
Common Stock without the delay and expense associated with seeking stockholder
approval of an increase in the authorization. Elimination of such delays and
expense occasioned by
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the necessity of obtaining stockholder approval will better enable the Company,
among other things, to engage in financing transactions and acquisitions as well
as to take advantage of changing market and financial conditions on a more
competitive basis as determined by the Board of Directors.
The additional Common Stock to be authorized by adoption of the Amendment
would have rights identical to the currently outstanding Common Stock of the
Company. Adoption of the proposed Amendment and issuance of the Common Stock
would not affect the rights of the holders of currently outstanding Common Stock
of the Company. If the Amendment is adopted, it will become effective upon
filing of the Amendment with the Secretary of the State of Delaware. Further
stockholder approval may be required if it is proposed that any such shares are
to be added to the number of shares reserved for issuance under the Company's
option plans, in compliance with applicable rules and laws.
Possible Effects of the Amendment
If the proposed Amendment is approved, the Board of Directors may cause the
issuance of additional shares of Common Stock without further vote of
stockholders of the Company, except as provided under the Delaware corporate law
or under the rules of NASDAQ or any national securities exchange on which shares
of Common Stock of the Company are then listed. Current holders of Common Stock
have no preemptive or like rights, which means that current stockholders do not
have a prior right to purchase any new issue of capital stock of the Company in
order to maintain their proportionate ownership thereof. The effects of the
issuance of additional shares of Common Stock may also include dilution of the
voting power of currently outstanding shares and reduction of the portion of
dividends and of liquidation proceeds payable to the holders of currently
outstanding Common Stock.
In addition, the Board of Directors could use authorized but unissued
shares to create impediments to a takeover or a transfer of control of the
Company. Accordingly, the increase in the number of authorized shares of Common
Stock may deter a future takeover attempt which holders of Common Stock may deem
to be in their best interest or in which holders of Common stock may be offered
a premium for their shares over the market price.
The Board of Directors is not currently aware of any attempt to take over
or acquire the Company. While it may be deemed to have potential anti-takeover
effects, the proposed Amendment to increase the authorized Common Stock is not
prompted by any specific effort or takeover threat currently perceived by
management. Moreover, management does not currently intend to propose additional
anti-takeover measures in the foreseeable future.
THE BOARD BELIEVES THAT A VOTE TO APPROVE THE AMENDMENT TO THE AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION IS IN THE BEST INTERESTS OF THE COMPANY
AND UNANIMOUSLY RECOMMENDS A VOTE FOR SUCH PROPOSAL.
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SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's voting capital stock as of February 12, 1999, by (i)
each director of the Company, (ii) each person known to the Company to be the
beneficial owner of more than 5% of the Common Stock of the Company, and (iii)
all executive officers and directors as a group. Except as otherwise indicated,
the address of each person is care of Compositech Ltd., 120 Ricefield Lane,
Hauppauge, New York 11788.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name and Address Beneficial Ownership (1) Class (1)
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<S> <C> <C>
Jonas Medney (2) 1,277,993 8.5%
Fred E. Klimpl (3) 666,240 4.4%
Willard T. Jackson (4) 572,003 3.7%
Samuel S. Gross (5) 247,750 1.6%
Robert W. Middleton (6) 20,935 *
Heinz-Gerd Reinkemeyer (7) 12,203 *
James W. Taylor (8) 11,203 *
Christopher F. Johnson (9) 5,000 *
Pierre Laflamme (10) 2,537 *
All executive officers and directors as
a group (9 persons) (11) 2,815,864 17.9%
Dr. Cheng-Ming Lee (12) 1,464,744 9.4%
Trautman Kramer & Company ("TK") (13) 1,129,047 7.1%
HT Troplast AG ("HT") (14) 828,834 5.5%
</TABLE>
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* Indicates less than 1%
(1) The number of shares shown includes outstanding shares owned by the person
indicated as of February 12, 1999 and shares underlying options owned by
such person on February 12, 1999 that were exercisable within 60 days of
such date. Except as otherwise noted, each beneficial owner identified in
this table has sole investment power with respect to the shares shown in
the table to be owned by the person or entity.
(2) Includes warrants to purchase 31,800 shares of Common Stock and options to
purchase 42,050 shares of Common Stock under the Company's stock option
plans. Includes Series A Stock convertible into 4,166 shares of Common
Stock held by Mr. Medney's wife, as to all of which shares Mr. Medney
disclaims beneficial ownership.
(3) Includes warrants to purchase 29,750 shares of Common Stock and options to
purchase 36,500 shares of Common Stock under the Company's stock option
plans.
(4) Includes Series A Stock convertible into 37,500 shares of Common Stock,
warrants to purchase 277,800 shares of Common Stock, stock awards of 870
shares and options to purchase 20,833 shares of Common Stock under the
Company's stock option plans. Includes securities held as nominee and
trustee of Trust created for the benefit of Willard T. Jackson and members
of his family.
(5) Includes warrants to purchase 6,000 shares of Common Stock and options to
purchase 239,250 shares of Common Stock under the Company's stock option
plan
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(6) Robert W. Middleton is the designee of TK on the Board of Directors. He has
disclaimed beneficial ownership of all securities owned by employees or
principals of TK. Includes warrants to purchase 16,732 shares of Common
Stock, stock awards of 870 shares and options to purchase 3,333 shares of
Common Stock under the Company's stock option plans.
(7) Heinz-Gerd Reinkemeyer is the designee of HT on the Board of Directors. He
has disclaimed beneficial ownership of all shares held by HT. Includes
stock awards of 870 shares and options to purchase 8,333 shares of Common
Stock under the Company's stock option plans.
(8) Includes stock awards of 870 shares and options to purchase 8,333 shares of
Common Stock under the Company's stock option plans.
(9) Includes 5,000 shares of Common Stock held directly by Mr. Johnson.
(10) Pierre Laflamme is the designee of each of Industries Devma, Inc., Societe
Innovatech du Grand Montreal, Fonds Regional de Solidarite Ile de Montreal
and Fonds de Solidarite des Travailleurs du Quebec on the Board of
Directors. He has disclaimed ownership of all securities held by each
entity. Includes stock awards of 870 shares and options to purchase 1,667
shares of Common Stock under the Company's stock option plans.
(11) Consists of all the shares of Series A Stock and Common Stock (or shares of
Common Stock underlying options and warrants) held by Messrs. Medney,
Klimpl, Jackson, Gross, Middleton, Reinkemeyer, Taylor, Johnson and
Laflamme as described in notes (2)-(10) above.
(12) Includes 587,372 shares held by Composite Technologies Inc.; Composite
Technologies, Inc.'s purchase right to acquire an additional 587,372 shares
at $1.7025 per share; 235,000 shares of Common Stock and 35,000 warrants to
purchase the Company's Common Stock held by WIN WIN Venture Capital
Corporation and 20,000 shares of the Company's Common Stock held by Dr. Lee
and his son; over all of which Dr. Lee may be deemed to have voting or
dispositive power.
(13) Includes 91,672 shares of Common Stock, as of the close of business on
February 12, 1999, held in the trading account of TK, a market maker of the
Company's Common Stock. This total may fluctuate on a daily basis depending
on trading activity. Includes 125,000 shares of Common Stock owned by TK.
Includes 912,375 shares issuable as follows: (i) 76,993 shares underlying
Common Stock Purchase Warrants exercisable at $3.96 per share issued as
partial compensation for the Company's private placement which had a final
closing on February 15, 1996; (ii) 182,140 shares underlying Common Stock
Purchase Warrants exercisable at $6.00 per share issued as partial
compensation for the Company's private placement of its 5% Convertible
Debentures which had its final closing on August 26, 1997, (iii) 75,000
shares underlying Common Stock Purchase Warrants exercisable at $2.6125
issued as compensation for the Company's final conversion of its 5%
Convertible Debentures which occurred on April 23, 1998; (iv) 210,000
shares underlying 105,000 of the Company's Unit Purchase Options entitling
the holder to purchase units at $7.50 per unit, each unit consisting of one
share of Common Stock and a Common Stock Purchase Warrant to purchase one
share of Common Stock at $7.8125 per share and (v) 368,242 shares
underlying Common Stock Purchase Warrants exercisable at prices ranging
from $1.125 to $2.50 issued as partial compensation for the Company's
private placement which had its most recent closing on February 12, 1999.
(14) The address for HT is Kaiserstrasse, 53840 Troisdorf, Federal Republic of
Germany. Includes warrants to purchase 30,000 shares of Common Stock.
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OTHER MATTERS
Proposals of stockholders of the Company for inclusion in the 1999 Annual
Meeting proxy statement were to be received by the Company no later than January
15, 1999. No such proposals were received by the Company. All other stockholder
proposals to be presented at the 1999 Annual Meeting must be submitted in
writing to the Secretary of the Company at the Company's principal offices no
later than the close of business on March 31, 1999.
The Board knows of no other matters that will be presented at the Special
Meeting. If, however, any other matter is properly presented at the Special
Meeting, the proxy solicited hereby will be voted in accordance with the
judgment of the proxyholders.
By Order of the Board of Directors,
/s/ Fred E. Klimpl
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Secretary
Hauppauge, New York
March 1, 1999
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COMPOSITECH LTD.
Proxy
Special Meeting, March 26, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Samuel S. Gross and Christopher F. Johnson
as Proxies, each with full power to appoint his substitute, and hereby
authorizes them to appear and vote as designated below, all shares of Common
Stock and Series A Convertible Preferred Stock of Compositech Ltd. held on
record by the undersigned on February 12, 1999, at the Special Meeting of
Stockholders to be held on March 26, 1999, and any adjournments thereof.
The undersigned hereby directs this Proxy to be voted:
1. Proposal to approve an amendment to the Company's Amended and Restated
Certificate of Incorporation to increase the number of authorized shares of
Common Stock of the Company from 25,000,000, $0.01 par value, to 50,000,000
shares, $0.01 par value.
[_] FOR [_] AGAINST [_] ABSTAIN
2. In their discretion, the named Proxies may vote on such other business as
may properly come before the Special Meeting, or any adjournments or
postponements thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL 1.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN ACCORDANCE
WITH THE STOCKHOLDER'S SPECIFICATIONS ABOVE. THE PROXY CONFERS DISCRETIONARY
AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE
MAILING OF THE NOTICE OF THE SPECIAL MEETING OF STOCKHOLDERS TO THE UNDERSIGNED.
Date:___________________________________
________________________________________
Signature of Stockholder
________________________________________
Signature if held jointly
NOTE: Please mark, date, sign and return
this Proxy promptly using the enclosed
envelope. When shares are held by joint
tenants, both should sign. If signing as
attorney, executor, administrator,
trustee or guardian, please give full
title. If a corporation or partnership,
please sign in corporate or partnership
name by an authorized person.
