SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT /X/
FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- --------------------------------------------------------------------
Check the appropriate box:
/X/ Preliminary Proxy Statement / / Confidential, For Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
DYNAGEN, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NOT APPLICABLE
(NAME OF PERSON(S) FILING PROXY STATEMENT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ No fee required.
/ / 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:_____
/ / 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.:_____
3) Filing Party:_____
4) Date Filed: _____
- -----------------------------------------------------------------------------
<PAGE>
[LOGO]
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DYNAGEN, INC.
NOTICE OF SPECIAL MEETING OF
STOCKHOLDERS
to be held on February 18, 1998
and
PROXY STATEMENT
================================================================================
IMPORTANT
PLEASE MARK, SIGN AND DATE YOUR PROXY AND PROMPTLY
RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE>
DYNAGEN, INC.
840 MEMORIAL DRIVE
CAMBRIDGE, MA 02139
January 19, 1998
Dear Stockholder:
You are cordially invited to attend the Special Meeting of Stockholders of
DynaGen, Inc. (the "Company"). The meeting will be held at the offices of Foley,
Hoag & Eliot LLP, One Post Office Square, Boston, MA 02109, on February 18,
1998, beginning at 10:00 A.M. EST.
As a stockholder, your vote is important. We encourage you to execute and
return your proxy promptly whether you plan to attend the meeting or not so that
we may have as many shares as possible represented at the meeting. Returning
your completed proxy will not prevent you from voting in person at the meeting
prior to the proxy's exercise if you wish to do so. If you do wish to attend the
meeting in person, we ask that you notify the Company at (617) 491-2527 so that
appropriate arrangements can be made to accommodate all stockholders wishing to
attend.
Thank you for your cooperation, continued support and interest in DynaGen,
Inc.
Sincerely,
Dhananjay G. Wadekar
CHAIRMAN OF THE BOARD OF DIRECTORS
<PAGE>
DYNAGEN, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 18, 1997
Notice is hereby given that a Special Meeting of Stockholders of DynaGen,
Inc. (the "Company") will be held at the offices of Foley, Hoag & Eliot LLP, One
Post Office Square, Boston, MA 02109, on February 18, 1998, beginning at 10:00
A.M. EST, for the following purposes:
1. To consider and act upon a proposed plan of recapitalization that will
result in a one-for-ten reverse split of the Company's Common Stock.
2. To transact such further business as may properly come before the
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on January 9, 1998 as
the record date for the determination of the stockholders of the Company
entitled to notice of, and to vote at, said Meeting and any adjournment thereof.
Only stockholders of record on such date are entitled to notice of, and to vote
at, said Meeting or any adjournment thereof.
By Order of the Board of Directors,
Dhananjay G. Wadekar
CHAIRMAN OF THE BOARD
Boston, Massachusetts
January 19, 1998
YOUR VOTE IS IMPORTANT.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY, WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING.
<PAGE>
DYNAGEN, INC.
840 MEMORIAL DRIVE
CAMBRIDGE, MA 02139
--------------------
PROXY STATEMENT
FOR
SPECIAL MEETING OF STOCKHOLDERS
---------------------
FEBRUARY 18, 1998
Proxies in the form enclosed with this Proxy Statement are solicited by the
Board of Directors of DynaGen, Inc., a Delaware corporation (the "Company"), for
use at the Special Meeting of Stockholders to be held on Wednesday, February 18,
1998, at 10:00 a.m. EST (the "Meeting"), at the offices of Foley, Hoag & Eliot
LLP, One Post Office Square, Boston, MA 02109.
Only stockholders of record as of January 9, 1998 will be entitled to notice
of and to vote at the Meeting and any adjournments thereof. As of that date,
42,501,441 shares of the Company's common stock, $.01 par value per share (the
"Common Stock"), were issued and outstanding. The holders of Common Stock are
entitled to one vote per share on any proposal presented at the Meeting. Also,
the Company had issued and outstanding (i) 37,007 shares of Series A Convertible
Preferred Stock, $0.01 par value (the "Series A Stock"), entitled to an
aggregate of 35,877,661 votes, (ii) 12,515 shares of Series B Convertible
Preferred Stock, $0.01 par value (the "Series B Stock"), entitled to an
aggregate of 4,665,960 votes and (iii) 7,500 shares of Series C Convertible
Preferred Stock, $0.01 par value (the "Series C Stock"), entitled to an
aggregate of 5,100,000 votes (collectively, the Series A Stock, the Series B
Stock and the Series C Stock are referred to as the "Preferred Stock"). The
Company has no other voting securities outstanding. Stockholders may vote in
person or by proxy. Execution of a proxy will not in any way affect a
stockholder's right to attend the Meeting and vote in person. Any stockholder
giving a proxy has the right to revoke it at any time before it is exercised.
Proxies may be revoked by (1) filing with the Secretary of the Company, before
the taking of the vote at the Meeting, a written notice of revocation bearing a
later date than the proxy, (2) duly executing a later-dated proxy relating to
the same shares and delivering it to the Secretary of the Company before the
taking of the vote at the Meeting or (3) attending the Meeting and voting in
person (although attendance at the Meeting will not in and of itself constitute
a revocation of a proxy). Any written notice of revocation or subsequent proxy
should be sent so as to be delivered to DynaGen, Inc., 840 Memorial Drive,
Cambridge, MA 02139, Attention: Secretary, at or before the taking of the vote
at the Meeting.
The representation in person or by proxy of at least a majority of the
outstanding shares entitled to vote at the Meeting is necessary to establish a
quorum for the
<PAGE>
transaction of business. Abstentions and broker non-votes are counted as present
or represented for purposes of determining the presence or absence of a quorum.
An affirmative vote of the majority of shares present in person or represented
by proxy at the Meeting is required to approve the proposed amendment to the
Company's Certificate of Incorporation. An automated system administered by the
Company's transfer agent tabulates the votes. Abstentions are included in the
number of shares present or represented and voting and, therefore, will have the
effect of negative votes. Broker non-votes are not so included, but have the
effect of a vote "against" the proposal to amend the Certificate of
Incorporation.
The shares will be voted FOR the proposal if no specification is made.
The Board of Directors knows of no other matter to be presented at the
Meeting. If any other matter should be presented at the Meeting upon which a
vote properly may be taken, shares represented by all proxies received by the
Company will be voted with respect thereto in accordance with the best judgment
of the persons named as attorneys in the proxies.
THIS PROXY STATEMENT AND THE FORM OF PROXY WERE FIRST MAILED TO STOCKHOLDERS
ON OR ABOUT JANUARY 19, 1998.
2
<PAGE>
PROPOSED AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO EFFECT A ONE-FOR-TEN REVERSE STOCK SPLIT
The Board of Directors has adopted a resolution declaring the advisability
of, and submitting to the stockholders for approval, a proposal to amend the
Company's Certificate of Incorporation (the "Proposed Amendment") to effect a
recapitalization the Company pursuant to which (i) each ten shares of Common
Stock will be automatically converted into one new share of Common Stock and
(ii) the authorized Common Stock will consist of 75,000,000 shares, $0.01 par
value per share (the "Reverse Split"). The text of the Proposed Amendment is set
forth in EXHIBIT A to this Proxy Statement. Shares of the Company's Common Stock
do not have preemptive or similar rights. The Reverse Split will become
effective as of 5:00 p.m. EST on the date that the certificate of amendment to
the Company's Certificate of Incorporation is filed with the Secretary of State
of Delaware (the "Effective Date"). If for any reason the Board of Directors
deems it advisable, the Proposed Amendment may be abandoned at any time before
the Effective Date, whether before or after the Meeting (even if such proposal
has been approved by the stockholders).
In lieu of issuing less than one whole share resulting from the Reverse
Split to holders of a number of shares not divisable by ten, the Company will
determine the fair value of each outstanding share of Common Stock held on the
Effective Date immediately before the Reverse Split takes effect (the
"Fractional Share Purchase Price"). The Company currently anticipates that the
Fractional Share Purchase Price will be based on the average daily closing bid
price per share of the Common Stock as reported by the primary trading market
for the Company's Common Stock for the ten (10) trading days immediately
preceding the Effective Date. In the event the Company determines that unusual
trading activity would cause such amount to be an inappropriate measure of the
fair value of the Common Stock, the Company may base the Fractional Share
Purchase Price on the fair market value of the Common Stock as reasonably
determined in good faith by the Board of Directors of the Company. Stockholders
who hold a number of shares not divisible by ten on the Effective Date
immediately before the Reverse Split takes effect will be entitled to receive,
in lieu of a fractional share, the Fractional Share Purchase Price times the
remainder left after dividing their total number of shares by ten ("Remainder
Shares").
As soon as practicable after the Effective Date, the Company will mail a
letter of transmittal to each holder of record of a stock certificate or
certificates representing Common Stock issued and outstanding on the Effective
Date immediately before the Reverse Split. The letter of transmittal will
contain instructions for the surrender of such certificate or certificates to
the Company's designated exchange agent in exchange for certificates
representing the number of whole shares of Common Stock (plus the Fractional
Share Purchase Price for any Remainder Shares) into which the shares of Common
Stock have been converted as a result of the Reverse Split. No cash payment will
be made or new certificate issued to a stockholder until he has surrendered his
outstanding certificates together with the letter of transmittal to the
Company's exchange agent. See "Exchange of Stock Certificates."
THE BOARD OF DIRECTORS BELIEVES THAT THE ADOPTION OF THE PROPOSED AMENDMENT
IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" THE PROPOSED AMENDMENT.
3
<PAGE>
PURPOSES OF THE REVERSE SPLIT
ELIGIBILITY FOR CONTINUED LISTING ON NASDAQ SMALLCAP MARKET
The Company's Common Stock has been listed on the Nasdaq Stock Market, Inc.
("Nasdaq"), and has traded on the Nasdaq SmallCap Market (the "SmallCap
Market"), since August 21, 1990, when the Company completed its initial public
offering. Effective February 23, 1998, upon the automatic implementation of new
continued listing requirements of Nasdaq, the Company's Common Stock will be
delisted from the SmallCap Market if it does not meet such criteria.
The Company is currently exploring a number of potential transactions
designed to enable the Company to meet these criteria. However, there can be no
assurance that the Company will consummate any such transaction or that the
consummation of any such transaction would result in the Company complying with
the maintenance requirements.
In August 1997, the Securities and Exchange Commission approved a proposal
to revise maintenance criteria for securities traded on the SmallCap Market. The
new listing criteria, which become effective on February 23, 1998, require,
among other things, the minimum bid price of the Company's Common Stock to equal
or exceed $1.00 per share. The closing price of the Company's Common stock on
January 1, 1998 was approximately $0.13 per share. The Company believes that if
the Proposed Amendment is approved by the stockholders at the Meeting, and the
Reverse Split is effected, the Company's shares of Common Stock will have a
minimum bid price in excess of $1.00 per share, and therefore will satisfy one
of the above-mentioned SmallCap Market maintenance criteria. However, the
Company would also need to satisfy other criteria to to maintain its listing,
including maintaining (i) a market capitalization of at least $35,000,000, or
net tangible assets of $2,000,000, or net income of $500,000 in the latest
fiscal year or two of the last three fiscal years, (ii) a public float (i.e.,
shares held other than by officers, directors and beneficial owners of more than
10% of the total shares outstanding) of at least 500,000 shares, (iii) a market
value of the public float of at least $1,000,000, (iv) at least 300 shareholders
(round lot holders), (v) at least two market makers and (vi) compliance with
certain corporate governance requirements. The Company believes that it
satisfies all of these other maintenance criteria except for the market
capitalization criteria. As of January 1, 1998, the Company's market
capitalization was approximately $6,525,000. There can be no assurance that
the Company will be successful in meeting these maintenance criteria or that,
even if these maintenance criteria are met, the Company will be able to continue
to meet the new criteria. If the Reverse Split is not approved by the
stockholders at the Meeting, then it is unlikely that the Company will meet the
new listing maintenance criteria. The delisting of the Company's Common Stock
from the SmallCap Market could adversely affect the liquidity of the Company's
Common Stock and the ability of the Company to raise capital. If the Company's
Common Stock is delisted from the
4
<PAGE>
SmallCap Market, the shares of Common Stock will likely be quoted in the "pink
sheets" maintained by the National Quotation Bureau, Inc. or the OTC Bulletin
Board maintained by Nasdaq. If the Common Stock is listed on the OTC Bulletin
Board or the pink sheets, then the spread between the bid and ask price of the
shares of Common Stock is likely to be greater than at present and stockholders
may experience a greater degree of difficulty in engaging in trades of shares of
Common Stock. The Company's Common Stock is also listed on the Boston Stock
Exchange.
The Board of Directors further believes that low trading prices of the
Company's Common Stock may have an adverse impact upon the efficient operation
of the trading market in the Company's securities. In particular, brokerage
firms often charge a greater percentage commission on low-priced shares than
that which would be charged on a transaction in the same dollar amount of
securities with a higher per share price. Also, the Company believes that some
brokerage firms may be reluctant to recommend purchases of low-priced stock to
their clients or make a market in such shares, which tendencies may adversely
affect the Company. The Reverse Split may lessen these adverse effects if it
results in a higher price per share of the Company's Common Stock. Stockholders
should note that the effect of the Reverse Split upon the market prices for the
Company's Common Stock cannot be accurately predicted. In particular, there is
no assurance that prices for shares of the Common Stock after the Reverse Split
will be ten times the prices for shares of the Common Stock immediately prior
to the Reverse Split. Furthermore, there can be no assurance that the proposed
Reverse Split will achieve the desired results which have been outlined above,
nor can there be any assurance that the Reverse Split will not adversely impact
the market price of the Common Stock or, alternatively, that any increased price
per share of the Common Stock immediately after the proposed Reverse Split will
be sustained for any prolonged period of time. In addition, the Reverse Split
may have the effect of creating odd lots of stock (i.e., lots of fewer than 100
shares) for some stockholders and such odd lots may be more difficult to sell or
have higher brokerage commissions associated with the sale of such odd lots.
GREATER AVAILABILITY OF COMMON STOCK FOR FUTURE ISSUANCES
As of January 9, 1998, there were 42,501,441 shares of Common Stock issued
and outstanding, and outstanding warrants, convertible debt, convertible
preferred stock and options were convertible into approximately 77,020,000
shares of Common Stock. The number of shares of Common Stock which the Company
may be required to issue upon conversion of shares of Preferred Stock fluctuates
based on the trading price of the Common Stock from time to time. If the
Company's Common Stock continues to trade at its present price of approximately
$0.13 per share, then the Company will not have adequate shares of Common Stock
available when necessary for issuance upon conversion of Preferred Stock.
If the Reverse Split is approved, the Board of Directors would have the
authority to issue approximately 63,048,000 additional shares of Common Stock
without further stockholder approval. The Board of Directors believes that the
Reverse Split would provide sufficient shares for issuance upon conversion of
the Preferred Stock, as well as for such corporate purposes as the Board of
Directors may determine to be necessary or desirable. These purposes may
include, without limitation, acquiring other businesses in exchange
5
<PAGE>
for shares of Common Stock, entering into collaborative research arrangements
with other companies, or acquiring complementary technologies, products or
businesses from third parties in exchange for Common Stock. Other corporate
purposes may include issuing shares of Common Stock in connection with research
and development relationships, strategic alliances or other corporate partnering
programs and issuing shares of Common Stock to raise additional working capital
for ongoing operations or planned research projects, and the financing of the
Company's recent acquisition of a generic drug manufacturer. The Company may
also issue additional shares of Common Stock to attract and retain valuable
employees by the issuance of additional stock options, including additional
shares reserved for future option grants under the Company's existing stock
plans. The Company does not have any current commitments or agreements relating
to any acquisitions.
Under the Delaware General Corporation Law, the Board of Directors generally
may issue authorized but unissued shares of Common Stock without further
stockholder approval. The Board of Directors does not currently intend to seek
stockholder approval prior to any future issuance of additional shares of Common
Stock, unless stockholder action is required in a specific case by applicable
law, the rules of any exchange or market on which the Company's securities may
then be listed, or the Certificate of Incorporation or By-Laws of the Company
then in effect.
The issuance of any additional shares of Common Stock by the Company may,
depending on the circumstances under which those shares are issued, reduce
stockholders' equity per share and may reduce the percentage ownership of Common
Stock of existing stockholders. The Company, however, will receive consideration
for any additional shares of Common Stock issued, which could reduce or
eliminate the economic effect to each stockholder of such dilution.
Authorized but unissued shares of Common Stock could be used to make more
difficult a change in control of the Company. For example, such shares could be
sold to purchasers who might side with the Board of Directors in opposing a
takeover bid that the Board determines not to be in the best interests of the
Company and its stockholders. Neither the Certificate of Incorporation nor
By-Laws of the Company now contain any provisions that are generally considered
to have an anti-takeover effect, and the Board of Directors does not now plan to
propose any anti-takeover measures in future proxy solicitations. The Company is
not aware of any pending or threatened efforts to obtain control of the Company,
and the Board of Directors has no current intention to use any issuance of
Common Stock to impede a takeover attempt.
EFFECT OF THE REVERSE SPLIT
As a result of the Reverse Split, the number of whole shares of Common Stock
held by stockholders of record as of the close of business on the Effective Date
will be equal to the number of shares of Common Stock held immediately prior to
the close of business on the Effective Date divided by ten, plus cash in lieu
of any fractional share. The authorized shares of Common Stock will consist of
75,000,000 shares, $0.01 par value per share. The Reverse Split will not affect
a stockholder's percentage ownership interest in the Company or proportional
voting power, except for minor differences resulting from the payment of cash in
lieu of fractional shares. The terms of Common Stock and Preferred Stock, and
the rights and privileges of the holders of such shares, will be unaffected by
the Reverse Split. The number of shares of Common
6
<PAGE>
Stock issued and outstanding will be reduced. Consequently, the aggregate par
value of the issued Common Stock will be lower, and the number of authorized
but unissued shares of Common Stock will be greater, after the Reverse Split.
Future issuances of Common Stock may have the effect of diluting the earnings
per share and book value per share, as well as the stock ownership and voting
rights, of outstanding Common Stock. As the Reverse Split will increase the
number of authorized but unissued shares of Common Stock, it may be construed as
having an anti-takeover effect by permitting the issuance of shares to
purchasers who might oppose a hostile takeover bid or oppose any efforts to
amend or repeal certain provisions of the Company's Certificate of Incorporation
or By-laws.
Dissenting Stockholders will not have appraisal rights under Delaware law or
under the Company's Certificate of Incorporation or By-laws.
The Reverse Split may leave certain stockholders with an odd lot of the
Company's Common Stock (i.e., a number of shares less than 100). These shares
may be more difficult to sell, or require a greater commission to sell, than
shares in multiples of 100.
The Common Stock is currently registered under Section 12(g) of the Exchange
Act and as a result, the Company is subject to the periodic reporting and other
requirements of the Exchange Act. The Reverse Split will not affect the
registration of the Common Stock under the Exchange Act, and the Company has no
current intention of terminating its registration under the Exchange Act.
Upon consummation of the Reverse Split, the total number of shares currently
reserved for outstanding warrants, grants of stock options and all stock options
previously granted would be decreased proportionately. The cash consideration
payable per share upon exercise of the stock warrants and options would be
increased proportionately.
EXCHANGE OF STOCK CERTIFICATES
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE, THE COMPANY INTENDS TO
ENCOURAGE STOCKHOLDERS TO EXCHANGE THEIR STOCK CERTIFICATES ("OLD CERTIFICATES")
FOR NEW CERTIFICATES ("NEW CERTIFICATES") REPRESENTING THE NUMBER OF WHOLE
SHARES OF COMMON STOCK INTO WHICH THEIR SHARES OF COMMON STOCK HAVE BEEN
CONVERTED AS A RESULT OF THE REVERSE SPLIT (AS WELL AS CASH IN LIEU OF
FRACTIONAL SHARES RESULTING FROM THE REVERSE SPLIT). STOCKHOLDERS WILL BE
FURNISHED WITH THE NECESSARY MATERIALS AND INSTRUCTIONS FOR THE SURRENDER AND
EXCHANGE OF STOCK CERTIFICATES AT THE APPROPRIATE TIME BY THE COMPANY'S TRANSFER
AGENT. STOCKHOLDERS WILL NOT BE REQUIRED TO PAY A TRANSFER OR OTHER FEE IN
CONNECTION WITH THE EXCHANGE OF CERTIFICATES.
STOCKHOLDERS SHOULD NOT SUBMIT ANY CERTIFICATES TO THE TRANSFER AGENT UNTIL
REQUESTED TO DO SO.
7
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE SPLIT
The following general description of certain federal income tax
consequences of the Reverse Split is based upon the Internal Revenue Code of
1986, as amended (the "Code"), the applicable Treasury Regulations promulgated
thereunder, judicial authority and current administrative rulings and practices
all as in effect on the date of this Proxy Statement. The Company has not sought
and will not seek an opinion of counsel or a ruling from the Internal Revenue
Service regarding the federal income tax consequences of the Reverse Split. This
discussion is for general information only and does not address aspects of
federal income taxation that may be relevant to special classes of taxpayers,
such as non-resident aliens, broker-dealers, tax-exempt organizations, banks or
insurance companies, and does not discuss the tax consequences under the laws of
any foreign, state or local jurisdiction. Stockholders are urged to consult
their own tax advisors as to the federal, state, local and foreign tax
consequences to them of the Reverse Split.
The Company believes that the Reverse Split will constitute a
reorganization within the meaning of section 368(a)(1)(E) of the Code.
Accordingly, the Reverse Split will have the following federal income tax
consequences:
1. No gain or loss will be recognized by holders of Old Certificates
upon their receipt in exchange therefor in the Reverse Split of New
Certificates.
2. A stockholder who receives cash in the Reverse Split will recognize
gain to the extent that such cash exceeds his adjusted tax basis in the Old
Certificates. Such gain will be capital gain provided the stockholder holds the
Old Certificates as capital assets at the time of the Reverse Split.
3. A stockholder's aggregate tax basis in the New Certificates received
in the Reverse Split will equal his aggregate tax basis in the Old Certificates
surrendered in exchange therefor, reduced by any cash received and increased by
the gain recognized by such stockholder.
4. The holding period of New Certificates received in the Reverse Split
will include the period for which the Old Certificates surrendered in exchange
therefore were held, provided that the Old Certificates are here held as capital
assets at the time of the Reverse Split.
5. The Company will recognize no gain or loss as a result of the
Reverse Split.
VOTE REQUIRED
The Proposed Amendment would effect the Reverse Split. Approval of the
Proposed Amendment would require the affirmative vote of a majority of all of
the issued and outstanding shares of Common Stock and Preferred Stock, voting
together as a class, as well as the affirmative vote of a majority of all of the
issued and outstanding shares of Common Stock, voting as a separate class.
The Board of Directors reserves the right to abandon the Proposed
Amendment without further action by the stockholders at any time before the
filing of the certificate of amendment to the Company's Certificate of
Incorporation effecting the Proposed Amendment with the Delaware Secretary of
State, notwithstanding authorization of the Propoased Amendment by the
stockholders.
The foregoing summary of the Proposed Amendment is qualified in its
entirety by reference to the complete text of the Proposed Amendment, which is
set forth as Exhibit A to this Proxy Statement.
8
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's voting securities as of January 1, 1998, by (i) each
person or entity known to the Company to own beneficially five percent or more
of the Company's Series A Stock, Series B Stock, Series C Stock and Common
Stock, (ii) each of the Company's directors, (iii) the Company's Principal
Executive Officer and each of the other Named Executive Officers, and (iv) all
directors and executive officers of the Company as a group. Except as otherwise
noted, each beneficial owner has sole voting and investment power with respect
to the shares shown.
<TABLE>
<CAPTION>
Shares
Beneficially Owned(1)
---------------------------------------------------------------------------
Series A Series B Series C
Common Stock Stock Stock Stock
--------------------- -------- -------- --------
Name and Number Percent(2) Number Percent Number Percent Number Percent
Address of Class of Class of Class of Class
---- ------ ---------- ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dhananjay G. Wadekar 1,351,250 3.2% - - - - - -
c/o DynaGen, Inc.
840 Memorial Drive
Cambridge, Massachusetts 02139
Dr. Indu A. Muni 1,137,250 2.7% - - - - - -
c/o DynaGen, Inc.
840 Memorial Drive
Cambridge, Massachusetts 02139
Dr. F. Howard Schneider 272,859(3) * - - - - - -
c/o DynaGen, Inc.
840 Memorial Drive
Cambridge, Massachusetts 02139
Steven Georgiev 82,500(4) * - - - - - -
c/o DynaGen, Inc.
840 Memorial Drive
Cambridge, MA 02139
Dr. Michael Sorell 82,500(4) * - - - - - -
115 East 92nd Street
New York, NY 10128
Ardsen Financial S.A. 3,753,399(6) 8.1% 3,580 9.7% - - - -
P.O. Box 9765
123 Birmensdarfer St.
8036 Zurich
Switzerland
Voica Trading S.A. 3,302,572(6) 7.2% 3,150 8.5% - - - -
P.O. Box 9765
123 Birmensdarfer St.
8036 Zurich
Switzerland
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Shares
Beneficially Owned(1)(continued)
---------------------------------------------------------------------------
Series A Series B Series C
Common Stock Stock Stock Stock
--------------------- -------- -------- --------
Name and Number Percent(2) Number Percent Number Percent Number Percent
Address of Class of Class of Class of Class
---- ------ ---------- ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Taib Bank E.C. 2,830,776(6) 6.2% 2,700 7.3% - - - -
Sahl Centre, Diplomatic Area
P.O. Box 20485
Manama, Bahrain
Colbo KFT 2,170,262(6) 4.9% 2,070 5.6% - - - -
Mogurt Raktarhaz Gyari ut
2310 Szigetszentimikios
Hungary
Sovereign Partners L.P. 2,096,871(6) 4.7% 2,000 5.4% - - - -
Executive Pavilion
90 Grove Street
Ridgewood, CT 06878
Legong Investments N.V. 4,822,804(6) 10.2% 4,600 12.4% - - - -
c/o MIT Fund Management LTD
1171 East Putnam Avenue
Riverside, CT 06878
RIC Asset Limited 4,508,273(6) 9.6% 4,300 11.6% - - - -
c/o Rana Investment Co.
P.O. Box 60148
Riyadh 11545
Saudi Arabia
The Endeavor Capital Fund S.A. 10,093,246(7) 19.2% 4,607 12.5% - - 7,500 100%
c/o Endeavor Management
14/14 Divrei Chaim St.
Jerusalem 94479, Isreal
Gross Foundation 2,621,089(6) 5.8% 2,500 6.8% - - - -
1660 49st
Brooklyn, NY 11204
Julius Baer Securities, Inc. 4,906,261(8) 10.4% - - 7,500 59.9% - -
As agent for certain non - U.S. persons
330 Madison Ave.
New York, NY 10017
Coutts & Co. AG 3,236,989(8) 7.1% - - 5,015 40.1% - -
Talstrasse 59
Zurich CH8022
Switzerland
All directors and executive officers 3,037,359(5) 7.1% - - - - - -
as group (6 persons)
</TABLE>
- ----------------------------
*Less than one percent.
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<PAGE>
(1) To the Company's knowledge, the persons named in the table have sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them, subject to community property laws
where applicable and the information contained in the footnotes to this
table.
(2) Percentage ownership is based on 42,501,441 shares of Common Stock
outstanding, plus securities deemed to be outstanding, with respect to
individual stockholders, pursuant to Rule 13d-3(d)(1) under the Exchange
Act.
(3) Includes 202,859 shares issuable to Dr. Schneider pursuant to immediately
exercisable stock options. Does not include 100 shares owned by Dr.
Schneider's wife, of which he disclaims any beneficial interest or
control.
(4) Consists of 82,500 shares issuable persuant to immediately excercisable
stock options.
(5) Includes 457,859 shares issuable pursuant to immediately exercisable stock
options.
(6) Represents shares issuable upon conversion of shares of Series A Stock.
The terms of the Series A Stock prohibit the holder from converting ahres
of Series A Stock if such conversion would result in beneficial ownership
of more than 4.9% of the outstanding Common Stock.
(7) Represents shares issuable upon conversion of Series A and Series C Stock.
The terms of the Series A and Series C Stock prohibit the holder from
converting shares of Series A or Series C Stock if such conversion would
result in beneficial ownership of more than 4.9% of the outstanding
Common Stock.
(8) Represents shares issuable upon an assumed conversion of Series B Stock.
The terms of the Series B Stock prohibit the holder from converting shares
of Series B Stock if such conversion would result in beneficial ownership
of more than 4.9% of the outstanding Common Stock.
11
<PAGE>
OTHER BUSINESS
The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than that stated above. If any other business
should come before the Meeting, votes may be cast pursuant to proxies in respect
to any such business in the best judgment of the person or persons acting under
the proxies.
STOCKHOLDER PROPOSALS
It is contemplated that the 1998 Annual Meeting of Stockholders will be
held on or about June 30, 1998. Proposals of stockholders intended for inclusion
in the proxy statement to be mailed to all stockholders entitled to vote at the
next annual meeting of stockholders of the Company must be received at the
Company's principal executive offices not later than February 1, 1998. In order
to curtail controversy as to the date on which a proposal was received by the
Company, it is suggested that proponents submit their proposals by Certified
Mail, Return Receipt Requested.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Company, and in
addition to soliciting stockholders by mail through its regular employees, the
Company may request banks and brokers to solicit their customers who have stock
of the Company registered in the name of a nominee and, if so, will reimburse
such banks and brokers for their reasonable out-of-pocket costs. Also, the
Company may retain a professional proxy solicitation firm to assist in the proxy
solicitation and, if so, will pay such solicitation firm customary fees plus
expenses. Solicitation by officers and employees of the Company may also be made
of some stockholders in person or by mail, telephone or telegraph, following the
original solicitation.
By Order of the Board of Directors,
DHANANJAY G. WADEKAR
Chairman of the Board
January 19, 1998
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, SIGN, DATE, AND
RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE
WILL GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION IS
APPRECIATED.
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<PAGE>
EXHIBIT A
Text of Proposed Amendment
RESOLVED: That the Certificate of Incorporation of the corporation be
amended by deleting Paragraph 4 thereof and inserting in its place the following
paragraph:
4. The total number of shares of stock which the corporation shall have
authority to issue is 85,000,000 shares, consisting of 75,000,000 shares of
common stock, having a par value of $0.01 per share (the "Common Stock"), and
10,000,000 shares of preferred stock, having a par value of $0.01 per share (the
"Preferred Stock").
At the same time as the filing of this Amendment to the Certificate of
Incorporation of the corporation with the Secretary of the State of Delaware
becomes effective, each ten (10) shares of common stock of the corporation, par
value of $0.01 per share (the "Old Common Stock"), issued and outstanding or
held in the treasury of the Corporation immediately prior to the effectiveness
of such filing, shall be combined, reclassified and changed into one (1) fully
paid and nonassessable share of Common Stock.
Each holder of record of a certificate or certificates for one or more
shares of the Old Common Stock shall be entitled to receive as soon as
practicable, upon surrender of such certificate, a certificate or certificates
representing the largest whole number of shares of Common Stock to which such
holder shall be entitled pursuant to the provisions of the immediately preceding
paragraph. Any certificate for one or more shares of the Old Common Stock not so
surrendered shall be deemed to represent one share of the Common Stock for each
ten (10) shares of the Old Common Stock previously represented by such
certificate.
No fractional shares of Common Stock or scrip representing fractional shares
shall be issued upon such combination and reclassification of the Old Common
Stock into shares of Common Stock. Instead of there being issued any fractional
shares of Common Stock which would otherwise be issuable upon such combination
and reclassification, the corporation shall pay to the holders of the shares of
Old Common Stock which were thus combined and reclassified cash in respect of
such fraction in an amount equal to the same fraction of the market price per
share of the Common Stock (as determined in a manner prescribed by the Board of
Directors) at the close of business on the date such combination and
reclassification becomes effective.
The designations and powers, the rights and preferences and the
qualifications, limitations or restrictions with respect to each class of stock
of the corporation shall be determined by the Board of Directors from time to
time.
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<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
DYNAGEN, INC. A STOCKHOLDER WISHING TO VOTE IN ACCORDANCE WITH
THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS NEED ONLY SIGN
AND DATE THIS PROXY AND RETURN IT IN THE ENCLOSED
ENVELOPE.
DYNAGEN, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 18, 1998
The undersigned stockholder of DynaGen, Inc. (the "Company"), revoking all
prior proxies, hereby appoints Dhananjay G. Wadekar and David A. Broadwin, Esq.,
or any of them acting singly, proxies, with full power of substitution, to vote
all shares of capital stock of the Company which the undersigned is entitled to
vote at the Special Meeting of Stockholders to be held at the offices of Foley,
Hoag & Eliot LLP, One Post Office Square, Boston, MA 02109 on February 18, 1998,
beginning at 10:00 a.m. EST and at any adjournments thereof, upon matters set
forth in the Notice of Special Meeting dated January 19, 1998 and the related
Proxy Statement, copies of which have been received by the undersigned, and in
their discretion upon any business that may properly come before the meeting or
any adjournments thereof. Attendance of the undersigned at the meeting or any
adjourned session thereof will not be deemed to revoke this proxy unless the
undersigned shall affirmatively indicate the intention of the undersigned to
vote the shares represented hereby in person prior to the exercise of this
proxy.
1. To amend the Company's Certificate of Incorporation to effect a one-for-ten
reverse split of the Company's common stock, $0.01 par value per share.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN WITH RESPECT TO THE PROPOSAL SET FORTH ABOVE, WILL BE VOTED
FOR SUCH PROPOSAL.
DATED: , 1998 Signature of Stockholder(s):
Mark here if Stockholder's address has changed: [ ]
New address: ____________________________
____________________________
Please promptly date and sign this proxy and mail it in the enclosed
envelope to assure representation of your shares. No postage need be affixed if
mailed in the United States. PLEASE SIGN EXACTLY AS NAME(S) APPEAR ON STOCK
CERTIFICATE. When shares are held by joint owners, both should sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If stockholder is a corporation, please sign full corporate
name by president or other authorized officer and, if a partnership, please sign
full partnership name by an authorized partner or other person.
Mark here if you plan to attend the meeting: [ ]
14
