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:
/ / 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 toss.240.14a-11(c) orss.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: _____
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[LOGO]
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DYNAGEN, INC.
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
to be held on May 31, 2000
and
PROXY STATEMENT
================================================================================
IMPORTANT
PLEASE MARK, SIGN AND DATE YOUR PROXY
AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE>
DYNAGEN, INC.
1000 WINTER STREET, SUITE 2700
WALTHAM, MA 02451
May 1, 2000
Dear Stockholder:
You are cordially invited to attend the 2000 annual meeting of
stockholders of DynaGen, Inc. The meeting will be held at the offices of Foley,
Hoag & Eliot LLP, One Post Office Square, 16th Floor, Boston, MA 02109, on
Wednesday, May 31, 2000, beginning at 10:00 A.M. local time.
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 DynaGen at (781) 890-0021
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,
C. Robert Cusick
PRESIDENT
<PAGE>
DYNAGEN, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 31, 2000
DynaGen hereby gives notice that it will hold its annual meeting of
stockholders at the offices of Foley, Hoag & Eliot LLP, One Post Office Square,
16th Floor, Boston, MA 02109, on Wednesday, May 31, 2000, beginning at 10:00
A.M. local time, for the following purposes:
1. To elect a board of directors for the ensuing year. The nominees
the board proposes to present for election are: C. Robert Cusick,
James Klint, F. Howard Schneider, Harry Silverman and
Dhananjay G. Wadekar.
2. To consider and act upon a proposal to approve an amendment to
DynaGen's certificate of incorporation to increase the number of
authorized shares of common stock from 75,000,000 to 125,000,000
shares.
3. To consider and act upon a proposal to approve an amendment to
DynaGen's certificate of incorporation to change the company's
name to Able Laboratories, Inc.
4. To transact such further business as may properly come before the
annual meeting or any adjournment thereof.
The board of directors has fixed the close of business on April 13,
2000 as the record date for the stockholders entitled to notice of, and to vote
at, the annual meeting and any adjournment thereof. Only stockholders of record
on such date are entitled to notice of, and to vote at, the annual meeting or
any adjournment thereof.
By Order of the Board of Directors,
Dhananjay G. Wadekar
SECRETARY
Boston, Massachusetts
May 1, 2000
YOUR VOTE IS IMPORTANT
PLEASE SIGN AND RETURN THE ENCLOSED PROXY, WHETHER OR
NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
<PAGE>
DYNAGEN, INC.
1000 WINTER STREET, SUITE 2700
WALTHAM, MA 02451
--------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
--------------------
MAY 31, 2000
This proxy statement and the enclosed form of proxy relates to the
annual meeting of stockholders of DynaGen, Inc. The annual meeting will take
place as follows:
DATE: Wednesday, May 31, 2000
TIME: 10 a.m.
PLACE Foley, Hoag & Eliot LLP
One Post Office Square, 16th Floor
Boston, Massachusetts 02109
We are soliciting proxies for the annual meeting and adjournments of
the annual meeting. When proxies are returned properly executed, the person
named in the proxies will vote the shares represented in accordance with the
stockholders' directions. We encourage stockholders to vote on each matter to be
considered. However, if a stockholder does not specify a vote on any proposal,
the shares covered by his or her proxy will be voted on that proposal as
management recommends.
We are mailing our Annual Report, containing financial statements and
management's discussion and analysis of financial condition and results of
operations for the fiscal year ended December 31, 1999, together with this Proxy
Statement to all stockholders entitled to vote. We are mailing this proxy
statement and the enclosed form of proxy to stockholders on or about May 1,
2000.
PURPOSE OF THE ANNUAL MEETING
At the annual meeting, we will submit three proposals to the
stockholders:
PROPOSAL ONE: To elect five directors;
PROPOSAL TWO: To approve an amendment to the certificate of incorporation to
increase the authorized number of shares of common stock; and
PROPOSAL THREE: To approve an amendment to the certificate of incorporation to
change the company's name to Able Laboratories, Inc.
The shares will be voted FOR the three proposals if no specification is
made.
<PAGE>
RECORD DATE
We have set April 13, 2000 as the record date for the annual meeting.
Only stockholders of record as of April 13, 2000 will be entitled to notice of
and to vote at the annual meeting and any adjournments thereof. As of that date,
68,526,895 shares of common stock were issued and outstanding and entitled to
one vote. Also, as of that date we had issued and outstanding: (i) 1,500 shares
of Series B Convertible Preferred Stock, entitled to an aggregate of 223,214
votes, (ii) 10,500 shares of Series E Convertible Preferred Stock, entitled to
an aggregate of 1,250,000 votes, (iii) 1,500 shares of Series F Convertible
Preferred Stock, entitled to an aggregate of 178,571 votes, (iv) 650 shares of
Series H Convertible Preferred Stock, not entitled to vote, (v) 401 shares of
Series I Convertible Preferred Stock, entitled to an aggregate of 597,327 votes,
(vi) 5,133 shares of Series J Convertible Preferred Stock, entitled to an
aggregate of 488,870 votes, (vii) 20,000 shares of Series K Convertible
Preferred Stock, entitled to an aggregate of 1,761,905 votes, and (viii) 10,000
shares of Series L Convertible Preferred Stock, entitled to an aggregate of
1,190,476 votes. The holders of common stock are entitled to one vote per share
on any proposal presented at the meeting. The holders of preferred stock with
voting rights are entitled to vote together with the holders of common stock and
are entitled to the number of votes equal to the number of shares of common
stock into which the shares of preferred stock could be converted. Together the
shares of common stock and preferred stock, entitled to vote, shall be
considered voting capital stock. We have no other voting securities. A total of
74,217,258 votes are eligible to be cast at the meeting.
QUORUM
Our by-laws provide that a quorum at the annual meeting will be at
least a majority of the outstanding shares entitled to vote at the meeting. We
will treat shares of voting capital stock represented by a properly signed and
returned proxy as present at the meeting for purposes of determining the
existence of a quorum at the meeting. We will count abstentions and broker
non-votes as present or represented for purposes of determining the existence of
a quorum. A broker non-vote occurs when a broker or nominee holding shares for a
beneficial owner does not vote on a proposal because the broker or nominee does
not have discretionary voting power and has not received instructions from the
beneficial owner with respect to that proposal.
TABULATION OF VOTES
A plurality of the votes properly cast at the annual meeting will elect
each director. Abstentions and votes withheld for any nominee, including broker
non-votes, will not be included in calculating the number of votes cast and
accordingly will not affect the outcome of the vote.
The amendments to the certificate of incorporation will require the
affirmative vote of a majority of the issued and outstanding shares of voting
capital stock. Abstentions and broker non-votes will count as votes cast against
each proposal.
Our transfer agent will tabulate the votes through an automated system.
We do not intend to submit any other proposals to the stockholders at
the annual meeting. The board of directors was not aware, a reasonable time
before mailing this proxy statement to stockholders, of any other business that
may properly be presented for action at the annual meeting. If any other
business should properly come before the annual meeting, shares represented by
all proxies received by us will be voted with respect thereto in accordance with
the best judgment of the persons named as attorneys in the proxies.
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REVOCATION OF PROXY
Stockholders may vote in person or by proxy. A stockholder's execution
of a proxy will not in any way affect his 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. A stockholder may revoke a proxy by (1) filing with
DynaGen's Secretary, 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 DynaGen's
Secretary 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., 1000
Winter Street, Suite 2700, Waltham, MA 02451, Attention: Secretary, at or before
the taking of the vote at the meeting.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
PROPOSAL ONE: ELECTION OF DIRECTORS
Our board of directors currently consists of five directors. The board of
directors has nominated the following five individuals to serve as directors for
the upcoming year.
NAME AGE POSITION WITH DYNAGEN
C. Robert Cusick 53 Chairman of the Board of Directors,
President and Chief Executive Officer
Dhananjay G. Wadekar 46 Director, Executive Vice President,
Treasurer and Secretary
James B. Klint 57 Director
F. Howard Schneider 61 Director
Harry Silverman 41 Director
C. ROBERT CUSICK. Mr. Cusick has served as the chairman of the Board of
Directors, President and Chief Executive Officer since May 1998. Mr. Cusick was
the Chief Executive Officer, President and Director of International Murex
Technologies Corporation from December 1, 1996 until April 1998, when
International Murex was acquired by Abbott Laboratories. Mr. Cusick is a
certified public accountant and has served in various executive positions in
manufacturing, banking and real estate.
DHANANJAY G. WADEKAR. Mr. Wadekar has served as a director since
inception, as Executive Vice President since November 1991 and as Treasurer
since 1999. Mr. Wadekar earned an M.S. degree from the Massachusetts Institute
of Technology and an MBA from Colorado State University.
JAMES B. KLINT, M.D. Dr. Klint joined DynaGen as a director in April
2000. Dr. Klint is a clinical professor of Medicine (Hematology) at the Stanford
University School of Medicine, and has been the team physician for the San
Francisco Forty Niners for the past twenty years. In addition, Dr. Klint has
served as the
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team physician for Stanford University and as a medical consultant for the San
Jose Sharks, a professional hockey team. Dr. Klint has also held positions at
the Palo Alto Medical Foundation's Department of Sports Medicine and Internal
Medicine.
F. HOWARD SCHNEIDER. Dr. Schneider has served as a director since
September 1989. He was also Senior Vice President of Technology from June 1991
until November 1997. Dr. Schneider was previously a partner and Senior Vice
President of Bogart Delafield Ferrier. Dr. Schneider participated in the
management buyout of Bogart Delafield Ferrier from its parent corporation,
McCann Healthcare Group, a subsidiary of Inter Public Group.
HARRY SILVERMAN. Mr. Silverman joined DynaGen as a director in April
2000. Mr. Silverman is the Executive Vice President, Chief Financial Officer and
Treasurer of Domino's Pizza. Mr. Silverman joined Domino's Pizza in 1985 as a
regional Controller. In 1988 he was named National Operations Controller, and in
1990 he was named Chief Financial Officer and Vice President of Finance.
If the stockholders elect these individuals as directors, each of them
will hold office until the next annual meeting of stockholders, and until his
successor is elected and qualified. Each of the nominees has agreed to serve, if
elected, and we have no reason to believe that any nominee will be unable to
serve. In the event that one or more nominees is unable or declines to serve as
a director at the time of the annual meeting, then proxies will be voted for
such other nominee as may be designated by the board of directors.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 1999, the board of directors
met four times and acted by unanimous written consent 19 times. Each incumbent
director who served during the fiscal year ended December 31, 1999 attended at
least 75% of the meetings of the board held during the period in which he
served.
The board of directors currently has two standing committees. The board
of directors has an audit committee responsible for overseeing all of DynaGen's
financial functions, including matters relating to the appointment and
activities of our auditors, audit plans and procedures, various accounting and
financial reporting issues and changes in accounting policies. The audit
committee did not meet formally during the fiscal year ended December 31, 1999.
We intend to resume regular meetings of the audit committee during fiscal 2000.
We have appointed Mr. Silverman as a member of the audit committee to serve with
Dr. Schneider.
The board of directors has an executive compensation committee
responsible for reviewing and setting the cash and non-cash compensation for
Messrs. Cusick and Wadekar and providing guidance to the board of directors on
the cash and non-cash compensation payable to DynaGen's other officers and
employees. The executive compensation committee did not meet formally during the
fiscal year ended December 31, 1999, but its members acted together with the
other directors to review and act upon compensation matters. We intend to resume
regular meetings of the executive compensation committee during fiscal 2000. We
have appointed Mr. Klint as a member of the executive compensation committee to
serve with Dr. Schneider.
DIRECTOR COMPENSATION
Directors are not compensated for attending meetings of the board of
directors. All directors are reimbursed for out-of-pocket expenses incurred in
connection with attendance at meetings and other services as directors.
Directors are entitled to receive, and receive from time to time, stock options,
under our option plans or otherwise.
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On February 4, 1999 the board of directors granted Mr. Cusick two
non-qualified stock options. The first option was to purchase up to 300,000
shares of common stock, in place of the consulting fees accrued by Mr. Cusick in
1998 under his consulting agreement, and the second option was to purchase up to
600,000 shares of common stock, in place of the consulting fees accruing under
the agreement in 1999.
Also on February 4, 1999, the board granted Mr. Wadekar a stock option to
purchase up to 400,000 shares of common stock. We also granted Steven Georgiev,
a former director, an option to purchase 200,000 shares to vest in equal
installments during 1999, to cover consulting fees to accrue during 1999 under a
consulting agreement between DynaGen and Mr. Georgiev. The option grants of
February 4, 1999 were ratified by unanimous written consent of the entire board
of directors.
In February 1999, the board also granted a non-qualified stock option to
purchase 4,100,000 shares to Mr. Cusick, a non-qualified stock option to
purchase 4,600,000 shares to Mr. Wadekar and a non-qualified stock option to
purchase 450,000 shares to Mr. Schneider. All options were granted at a purchase
price of $.25 per share. The options vested in three equal installments in
September 1999, January 2000 and April 2000. We also granted Mr. Georgiev an
option to purchase 450,000 shares at an exercise price of $.25, which vested on
the same terms as the options granted to the other directors.
Our by-laws provide for the annual election of the board of directors.
All directors are elected to hold office until the next annual meeting, and
until their successors have been duly elected and qualified.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF
MESSRS. CUSICK, KLINT, SCHNEIDER, SILVERMAN AND WADEKAR.
PROPOSAL TWO: AMENDMENT TO DYNAGEN'S
CERTIFICATE OF INCORPORATION TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The board of directors has voted to recommend to the stockholders that we
amend our certificate of incorporation to increase the number of authorized
shares of common stock from 75,000,000 to 125,000,000 shares. Shares of common
stock, including the additional shares proposed for authorization, do not have
preemptive or similar rights.
As of April 13, 2000, there were 68,526,895 shares of common stock issued
and outstanding, 49,684 shares of preferred stock issued and outstanding. Also,
we were obligated to issue 34,693,990 additional shares of common stock pursuant
to outstanding warrants, convertible securities, convertible debt and options.
Therefore, we currently do not have a sufficient number of shares of common
stock to satisfy all of our obligations. If the stockholders approve the
additional shares of common stock, we will have the authority to issue
21,779,115 additional shares of common stock without further stockholder
approval.
Because several of our convertible securities have exercise or conversion
prices that rise and fall depending on the trading price of our common stock,
the number of shares that we are obligated to issue varies from time to time and
can fluctuate widely. Even if the stockholders approve the proposed increase, a
significant decrease in the price of our common stock could leave us with an
insufficient number of authorized shares of common stock to fulfill all of our
obligations.
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The board of directors also believes that the authorized number of shares
of common stock should be increased to provide sufficient shares for such
corporate purposes as the board of directors may determine to be necessary or
desirable. These purposes may include, without limitation, issuing shares of
common stock in connection with research and development relationships and
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. In addition, we intend to issue additional shares of
common stock to attract and retain valuable employees by the issuance of stock
options, including additional shares reserved for future option grants under our
existing stock plans.
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 our securities may
then be listed, or our charter or by-laws then in effect. Frequently,
opportunities arise that require prompt action, and we believe that the delay
necessitated for stockholder approval of a specific issuance could be to the
detriment of DynaGen and our stockholders.
The additional shares of common stock authorized for issuance pursuant to
this proposal will have all of the rights and privileges which the presently
outstanding shares of common stock possess under our certificate of
incorporation. The increase in authorized shares would not affect the terms or
rights of holders of existing shares of common stock. All outstanding shares of
common stock would continue to have one vote per share on all matters to be
voted on by the stockholders, including the election of directors.
If we issue additional shares of common stock, then, depending on the
circumstances under which those shares are issued, the action may reduce
stockholder's equity per share and may reduce the percentage ownership of common
stock of existing stockholders. We, however, will receive consideration for any
additional shares of common stock issued (except for shares issued in conversion
of convertible securities), thereby reducing or eliminating the economic effect
to each stockholder of such dilution.
The proposal to amend the certificate of incorporation requires the
affirmative vote of a majority of the issued and outstanding shares of common
stock and preferred stock, voting together, entitled to vote at the annual
meeting.
THE BOARD OF DIRECTORS BELIEVES THE ADOPTION OF THE PROPOSED AMENDMENT IS
IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS THAT
YOU VOTE "FOR" THE PROPOSED AMENDMENT.
PROPOSAL THREE: AMENDMENT TO DYNAGEN'S CERTIFICATE OF INCORPORATION TO
CHANGE DYNAGEN'S NAME TO ABLE LABORATORIES, INC.
The board of directors has voted to recommend to the stockholders that we
amend our certificate of incorporation to change the company's name to Able
Laboratories, Inc., at such time as the board of directors may elect to do so.
Over time our core business has evolved from a biotechnology to a
pharmaceuticals focus. We do not have any current biotechnology operations, and
all of the products that we make are sold under the Able
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Laboratories label. We believe that the Able Laboratories label is better known
and that changing our company name to Able Laboratories, Inc. would help our
business.
The proposal to amend the certificate of incorporation requires the
affirmative vote of a majority of the issued and outstanding shares of common
stock and preferred stock, voting together, entitled to vote at the annual
meeting.
THE BOARD OF DIRECTORS BELIEVES THE ADOPTION OF THE PROPOSED AMENDMENT IS
ADVISABLE AND RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSED AMENDMENT.
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EXECUTIVE OFFICERS
Our executive officers and their ages and positions, are as follows:
Name Age Position
---- --- --------
C. Robert Cusick 53 Chairman of the Board, President and Chief
Executive Officer
Dhananjay G. Wadekar 46 Director, Executive Vice President,
Treasurer and Secretary
Executive officers are elected by the board of directors and serve at the
discretion of the board or until their respective successors have been duly
elected and qualified. There are no family relationships among our executive
officers and directors.
EXECUTIVE OFFICER COMPENSATION
The following table sets forth certain information concerning the
compensation for services rendered in all capacities to DynaGen for the fiscal
years ended December 31, 1999, 1998 and 1997 of our Chief Executive Officer and
the other officers whose salary and bonus for 1999 exceeded $100,000 (the "named
executive officers").
SUMMARY COMPENSATION TABLE
<TABLE><CAPTION>
ANNUAL LONG-TERM COMPENSATION AWARDS
COMPENSATION (1)
NAME AND PRINCIPAL POSITION FISCAL SALARY SECURITIES ALL OTHER
YEAR UNDERLYING COMPENSATION (3)
OPTIONS
<S> <C> <C> <C> <C>
C. Robert Cusick........................ 1999 (4) 5,000,000 __
President, Chief Executive Officer, 1998 (4) 2,000,000(2)
and Chairman of the Board 1997 --- ---
Dhananjay G. Wadekar.................... 1999 $ 145,000 5,000,000 $ 210
Director, Executive Vice 1998 $ 145,000 700,000(2)(5) $ 304
President and Treasurer 1997 $ 124,300 --- $ 304
</TABLE>
(1) Other than as described in this table or the footnotes to this table, we
did not pay any executive officer any compensation, including incidental
personal benefits, in excess of 10% of such executive officer's salary.
(2) Excludes options granted in fiscal 1998 that were later canceled in
connection with the November 1998 option repricing.
(3) Amount represents dollar value of group-term life insurance premiums we
paid for the benefit of the executive officer.
(4) Mr. Cusick joined us in 1998 and serves as our President and Chief
Executive Officer without receiving a cash salary. We entered into a
consulting agreement with Mr. Cusick on May 8, 1998, pursuant to which we
agreed to pay him $75,000 per year in consulting fees. In February 1999,
the board of directors increased the annual consulting fee under the
agreement to $148,000 payable solely in options to purchase common stock.
We did not pay any cash compensation to Mr. Cusick under the consulting
agreement in 1998 or 1999. In February 1999, the board of directors voted
to grant Mr. Cusick two non-qualified stock options. The first option was
to purchase up to 300,000 shares of common stock, in place of the
consulting fees accrued by Mr. Cusick in 1998, and the second option was
to purchase up to 600,000 shares of common stock, in place of the
consulting fees accrued by Mr. Cusick in 1999.
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(5) Does not include an option which the board of directors granted in April
1998 to Mr. Wadekar to purchase up to 1,300,000 shares of common stock
subject to stockholder approval. The option was not submitted to the
stockholders for approval.
OPTION GRANTS IN FISCAL 1999
The following table sets forth each grant of stock options made during
the year ended December 31, 1999 to each of the named executive officers. No
stock appreciation rights were granted during fiscal 1999.
<TABLE><CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS EXERCISE PRICE MARKET PRICE
UNDERLYING GRANTED TO PER ON DATE OF
OPTIONS EMPLOYEES IN SHARE GRANT ($/SHARE) EXPIRATION
NAME GRANTED (#) FISCAL YEAR DATE
<S> <C> <C> <C> <C> <C>
C. Robert Cusick.......... 900,000(1) 6.0% $0.01 0.24 2/04
4,100,000(2) 27.0% $0.25 0.24 2/04
Dhananjay G. Wadekar...... 400,000(3) 3.0% $0.01 0.24 2/04
4,600,000(2) 30.0% $0.25 0.24 2/04
</TABLE>
(1) Immediately exercisable for 300,000 options and vesting as to the
remaining 600,000 shares in equal monthly installments through December
1999.
(2) Vested in three equal installments on September 1, 1999, January 1, 2000
and April 1, 2000.
(3) Immediately exercisable for 100,000 options and vesting as to the
remaining 300,000 shares in equal monthly installments through December
1999.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth certain information regarding
exercisable and unexercisable stock options held as of December 31, 1999 by each
of the named executive officers. The value of unexercised in-the-money options
has been calculated by determining the difference between the exercise price per
share payable upon exercise of such options and the last sale price of the
common stock on December 31, 1999, as reported on the OTC Bulletin Board ($0.34
per share). No stock options were exercised by named executive officers during
1999.
<TABLE><CAPTION>
FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
C. Robert Cusick.......... 4,266,667 2,733,334 $ 680,710 $ 246,000
Dhananjay G. Wadekar (1).. 2,633,334 3,066,668 $ 341,300 $ 276,000
</TABLE>
(1) Does not include an option which the board of directors granted in April
1998 to Mr. Wadekar to purchase up to 1,300,000 shares of common stock
subject to stockholder approval. The option was not submitted to the
stockholders for approval.
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STOCK OPTION PLANS
During 1999, we maintained three employee stock plans: the 1998 Stock
Option Plan, the 1991 Stock Plan and the 1989 Stock Option Plan. During 1999,
each plan was administered by the executive compensation committee along with
the board of directors.
The 1998 Stock Option Plan provides for the issuance of options to
employees, officers, directors and consultants, and reserves up to 2,500,000
shares of common stock for issuance under the plan. As of December 31, 1999,
options to purchase a total of 1,370,000 shares of common stock were outstanding
under the 1998 Stock Option Plan, all of which were then exercisable, and
1,105,000 shares of common stock were reserved for future grant.
The 1991 Stock Plan provides for the issuance of options, stock awards
and purchase rights to employees, officers, directors and consultants, and
reserves up to 260,000 shares of common stock for issuance under the plan. As of
December 31, 1999, options to purchase a total of 21,300 shares of common stock
were outstanding under the 1991 Stock Plan, all of which were then exercisable,
and 168,530 shares of common stock were reserved for future option grants.
The 1989 Stock Option Plan provides for the grant of incentive stock
options, non-qualified options, awards and authorizations to purchase up to
60,000 shares of common stock. As of December 31, 1999, options to purchase a
total of 6,200 shares of common stock were outstanding under the 1989 plan, all
of which were currently exercisable. As of December 31, 1999, 14,600 shares were
reserved for future option grants.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The board of directors and executive compensation committee were
responsible for determining the compensation of executive officers of DynaGen
during 1999. None of the officers or directors was present during discussion of,
and abstained from voting with respect to, his own compensation as an executive
officer of DynaGen.
REPORT OF THE AUDIT COMMITTEE
The audit committee, consisting of Dr. Schneider and Steven Georgiev,
reviewed and discussed the audited financial statements for the year ended
December 31, 1999 with management. The audit committee has not discussed with
our independent auditors any matters required to be discussed by SAS 61 as
currently in effect, and has not received the written disclosures and the letter
from our independent accountants as required by Independence Board Standard No.
1 or discussed with the independent accountants their independence. The audit
committee did not formally recommend to the board of directors that the audited
financial statements be included in DynaGen's 1999 annual report. The audit
committee does not have a written charter.
Our audit committee did not meet during fiscal 1999, but intends to
resume regular meetings in 2000. We believe the addition of Mr. Silverman and
Mr. Klint to the board of directors as outside directors, and the addition of
Mr. Silverman on the audit committee will increase the regularity of the
meetings of the audit committee.
Harry Silverman
Dr. F. Howard Schneider
10
<PAGE>
EMPLOYMENT AND CONSULTING AGREEMENTS
We have entered into an employment agreement with Mr. Wadekar, our
Executive Vice President. For 1999, the board of directors set Mr. Wadekar's
annual base salary at $145,000.
Mr. Wadekar's employment agreement provides that (i) during his period of
employment with DynaGen and for a period of one year thereafter, he will not
engage in any business activity engaged in or under development by DynaGen and
(ii) for a period of three years following his respective period of employment,
he will not engage in any activities for any direct competitor similar or
related to those activities engaged in during the preceding two years of
employment with DynaGen. In the event we terminate Mr. Wadekar's employment
without cause, we will be obligated to pay to him an amount equal to three
months' base salary. In February 1999, the board of directors voted to increase
Mr. Wadekar's salary in the form of stock options. The board of directors voted
to grant Mr. Wadekar a five-year option to purchase up to 400,000 shares of
common stock at an exercise price of $0.01 per share. This option was granted in
March 1999. One-quarter of the shares were immediately exercisable and the
remaining shares vested in equal monthly installments on the last day of each
month during calendar year 1999. In February 1999, the board of directors
granted Mr. Wadekar a non-qualified stock option to purchase up to 4,600,000
shares of common stock at an exercise price of $.25 per share. This option
vested in three equal installments on each of September 1999, January 2000 and
April 2000.
We entered into a consulting agreement with Mr. Cusick in 1998, in
connection with his joining DynaGen as Chairman of the Board. In November 1998,
Mr. Cusick became President and Chief Executive Officer of DynaGen. The
consulting agreement provides that DynaGen will pay Mr. Cusick $75,000 per year
in consulting fees. In February 1999, the board of directors increased the
annual consulting fee under the agreement to $148,000 payable solely in options
to purchase common stock. We did not pay any cash compensation to Mr. Cusick
under the consulting agreement in 1998 or 1999. In February 1999, the board of
directors voted to grant Mr. Cusick two non-qualified stock options. The first
option was to purchase up to 300,000 shares of common stock, in place of the
consulting fees accrued by Mr. Cusick in 1998. This option was immediately
exercisable. The second option was to purchase up to 600,000 shares of common
stock, in place of the consulting fees accrued by Mr. Cusick in 1999. This
option vested in equal monthly installments during calendar year 1999. In
February 1999, the board of directors granted Mr. Cusick a non-qualified stock
option to purchase up to 4,100,000 shares of common stock at an exercise price
of $.25 per share. This option vested in three equal installments on each of
September 1999, January 2000 and April 2000.
11
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the DynaGen's voting securities as of April 5, 2000, by
(i) each person or entity known to us to own beneficially five percent or more
of any series of preferred stock and common stock, (ii) each of our directors,
(iii) each of our named executive officers, and (iv) all of our directors and
executive officers as a group. Except as otherwise noted, each beneficial owner
has sole voting and investment power with respect to the shares shown.
COMMON STOCK:
- ------------
<TABLE><CAPTION>
NUMBER OF SHARES PERCENT
BENEFICIALLY OF COMMON STOCK
NAME AND ADDRESS OF BENEFICIAL OWNER (1) OWNED (2) OUTSTANDING
---------------------------------------- --------- -----------
<S> <C> <C>
C. Robert Cusick ........................................ 7,520,000 (3) 9.9%
Dhananjay G. Wadekar .................................... 5,700,000 (4) 7.7%
F. Howard Schneider ..................................... 708,000 (5) 1%
Harry Silverman ......................................... 807,092 (6) 1.2%
James Klint ............................................. 153,061 (7) *
All directors and executive officers as a group
(5 persons)........................................... 14,888,153 (8) 19.3%
</TABLE>
- ----------------------
* Represents beneficial ownership of less than 1.0%.
(1) Each stockholder's address is c/o DynaGen, Inc., 1000 Winter Street,
Suite 2700, Waltham, MA 02451.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Except as indicated, each
person possesses sole voting and investment power with respect to all of
the shares of common stock owned by such person, subject to community
property laws where applicable. In computing the number of shares
beneficially owned by a person and the percentage ownership of that
person, shares of common stock subject to options held by that person
that are currently exercisable, or become exercisable by June 4, 2000 (60
days after April 5, 2000), are deemed outstanding. Such shares, however,
are not deemed outstanding for the purpose of computing the percentage
ownership of any other person. Percentage ownership is based on
68,526,895 shares of common stock outstanding on April 5, 2000, plus
securities deemed to be outstanding with respect to individual
stockholders pursuant to Rule 13d-3(d)(1) under the Exchange Act. The
information as to each person has been furnished by such person.
(3) Includes 7,000,000 shares of common stock subject to options exercisable
by June 4, 2000.
(4) Includes 5,700,000 shares of common stock subject to options exercisable
by June 4, 2000.
(5) Includes 700,000 shares of common stock subject to options exercisable by
June 4, 2000.
(6) Includes 25,000 shares of common stock subject to a warrant exercisable
by June 4, 2000 and 229,592 shares of common stock issuable at DynaGen's
election under a 9% convertible note.
(7) Includes 153,061 shares of common stock issuable at DynaGen's election
under a 9% convertible note.
(8) Includes 13,805,153 shares of common stock subject to options, warrants,
or convertible notes exercisable by June 4, 2000.
12
<PAGE>
PREFERRED STOCK:
- ----------------
<TABLE><CAPTION>
NUMBER OF SHARES PERCENT
BENEFICIALLY OF PREFERRED STOCK
NAME OF BENEFICIAL OWNER OWNED (1) OUTSTANDING (2)
------------------------ --------- ---------------
<S> <C> <C>
Generic Distributors Limited Partnership
1611 Olive Street 12,000 (3) 24.5%
Monroe, LA 71201
The Endeavor Capital Fund S.A.
c/o Endeavor Management 8,901 (4) 18.2%
14/14 Divrei Chaim Street
Jerusalem, 94479 Israel
Kenilworth LLC
c/o Thomason Kernaghan 15,133 (5) 30.9%
365 Bay Street, 10th Floor
Toronto, Ont. M5H 2V2
Finova Mezzanine Capital, Inc.
500 Church Street, Suite 200 6,667 (6) 13.6%
Nashville, TN 37216
Argosy Investment
950 West Valley Road 3,333 (7) 6.8%
Wayne, PA 19087
</TABLE>
- ---------------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Except as indicated, each
person possesses sole voting and investment power with respect to all of
the shares of common stock owned by such person, subject to community
property laws where applicable.
(2) Based on 49,034 shares of voting preferred stock outstanding as of April
4, 2000, including Series B Preferred Stock, Series E Preferred Stock,
Series F Preferred Stock, Series I Preferred Stock, Series J Preferred
Stock, Series K Preferred Stock and Series L Preferred Stock.
(3) Consists of 10,500 shares of Series E Preferred Stock and 1,500 shares of
Series F Preferred Stock.
(4) Consists of 401 shares of Series I Preferred Stock and 8,500 shares of
Series K Preferred Stock.
(5) Consists of 5,133 shares of Series J Preferred Stock and 10,000 shares of
Series K Preferred Stock.
(6) Consists of 6,667 shares of Series L Preferred Stock.
(7) Consists of 3,333 shares of Series L Preferred Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In fiscal 1998, certain officers and their family members, including
Dhananjay G. Wadekar, our Executive Vice President, loaned DynaGen the aggregate
sum of $295,000. In fiscal 1998, DynaGen issued 1,893,333 shares of common stock
to the individuals in consideration for the cancellation of this debt.
In fiscal 1998, Carolyn Cusick, the spouse of C. Robert Cusick, our
President and Chief Executive Officer, loaned us $150,000 at 15% interest. In
connection with this transaction, we issued Ms. Cusick a warrant to purchase up
to 37,500 shares of common stock at an exercise price of $.40 per share.
13
<PAGE>
We entered into a consulting agreement for corporate development and
financial planning with Steven Georgiev, a former director. We accrued $90,000
towards these consulting fees during fiscal 1998, but did not pay Mr. Georgiev
any of this accrued amount. In February 1999, the board of directors voted to
issue shares of common stock to Mr. Georgiev having an aggregate market value
equal to the amounts accrued to date pursuant to his consulting agreement. In
addition, to cover fees under the consulting agreement accruing in 1999, the
board granted Mr. Georgiev a five-year option to purchase up to 200,000 shares
of common stock at a purchase price of $0.01 per share. This option was
exercisable for one-sixth the number of shares as of the date of grant and
vested in equal monthly installments through calendar year 1999 with respect to
the remaining shares, provided that Mr. Georgiev continued to serve as a
director and to perform services under the consulting agreement. The agreement
was terminated in connection with Mr. Georgiev's retirement in April 2000.
In February 1999, we granted to each of our directors five-year options
to purchase an aggregate of 1,035,000 shares of the BioTrack common stock owned
by us, in consideration of cash advances, deferment of expense reimbursement,
and the extraordinary management and consulting services that the board was
called upon to perform on behalf of DynaGen. The options were exercisable at a
purchase price per share of $.50. The options were later cancelled without being
exercised.
In May 1998, we entered into a consulting agreement with C. Robert
Cusick, the Chairman of the Board and our Chief Executive Officer, pursuant to
which we agreed to pay him $75,000 a year in consulting fees. In February 1999,
the board of directors increased the annual consulting fees under the agreement
to $148,000, payable solely in options to purchase common stock. In February
1999, the board of directors voted to grant Mr. Cusick two non-qualified stock
options. The first option was to purchase up to 300,000 shares of common stock,
in place of the consulting fees accrued by Mr. Cusick in 1998, and the second
option was to purchase up to 600,000 shares of common stock, in place of the
consulting fees accrued by Mr. Cusick in 1999. Both options are exercisable at a
purchase price per share of $.01 and expire in February 2004.
In November 1998, the board of directors discussed and approved raising
Mr. Wadekar's salary by $72,000. In February 1999, the board of directors agreed
that instead of raising Mr. Wadekar's salary in cash, the company would grant
him an option to purchase 400,000 shares of common stock at a purchase price of
$.01 per share. The option vests monthly over fiscal 1999 and expires in
February 2004.
In February 1999, the board granted a non-qualified stock option to
purchase 4,100,000 shares to Mr. Cusick, a non-qualified stock option to
purchase 4,600,000 shares to Mr. Wadekar and a non-qualified stock option to
purchase 450,000 shares to Mr. Schneider. All options were granted at a purchase
price of $.25 per share and vested in three equal installments in September
1999, January 2000 and April 2000.
In May 1999, before they agreed to join the board of directors, each of
Messrs. Silverman and Klint purchased 9% subordinated Convertible Debentures
each having a principal amount of $25,000 and $50,000 respectively. The
debentures are convertible into a number of shares of common stock equal to a
certain percentage of our issued and outstanding common stock on the date of
conversion. The debentures are due and payable on May 8, 2000.
INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
No person who has been a director or executive officer since January 1,
1999, has any interest in the adoption of any of the proposals submitted to the
stockholders except for Proposal No. 1 relating to the election of directors and
except that the additional shares of common stock proposed to be authorized by
Proposal No. 2 might be necessary to satisfy our obligations under certain stock
options granted to the directors and executive officers.
14
<PAGE>
STOCKHOLDER PROPOSALS
It is contemplated that the next annual meeting of stockholders will be
held on or about May 10, 2001. 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 must be received at our principal executive
offices not later than December 30, 2000. In addition, Section 3 of our by-laws
requires that a stockholder who wishes to propose an item of business for
consideration at the annual meeting must give us written notice of such item of
business not less than 60 days nor more than 90 days before the date for such
meeting describing any proposal to be brought before such meeting. The
procedural requirements are fully set forth in Section 3 of our bylaws. In order
to avoid controversy as to the date on which we received a proposal, we suggest
that stockholders desiring to submit proposals do so by Certified Mail, Return
Receipt Requested.
INDEPENDENT AUDITORS
The board of directors has selected the firm of Wolf & Company, P.C.,
independent certified public accountants, to serve as independent auditors for
the fiscal year ending December 31, 2000. Wolf & Company, P.C. has acted as our
auditors commencing with the period ending June 30, 1989. We expect that a
member of Wolf & Company, P.C. will be present at the meeting with the
opportunity to make a statement if so desired and will be available to respond
to appropriate questions.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires our officers and directors, and persons who own more than ten percent
of a registered class of equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and The Nasdaq
Stock Market. Officers, directors and greater-than-ten percent stockholders are
required by Securities and Exchange Commission regulations to furnish us with
all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, we
believe that during fiscal 1999 all of its officers, directors and
greater-than-ten percent stockholders complied with all Section 16(a) filing
requirements except that each of Messrs. Wadekar and Cusick reported the sale of
stock, which they had pledged to secure the obligations of DynaGen, by the
pledgee on Form 5 instead of timely on Form 4.
EXPENSES AND SOLICITATION
We will bear the cost of solicitation of proxies, and in addition to
soliciting stockholders by mail through its regular employees, we may request
banks and brokers to solicit their customers who have stock of DynaGen
registered in the name of a nominee and, if so, will reimburse such banks and
brokers for their reasonable out-of-pocket costs. Also, we 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 our officers and employees may also be made of some stockholders in person or
by mail, telephone or telegraph, following the original solicitation.
MISCELLANEOUS
The board of directors does not intend to present to the annual meeting
any business other than the proposals listed herein, and the board was not
aware, a reasonable time before mailing this proxy statement to the
stockholders, of any other business which may be properly presented for action
at the annual meeting.
15
<PAGE>
If any other business should come before the annual meeting, the persons present
will have discretionary authority to vote the shares they own or represent by
proxy in accordance with their judgement.
AVAILABLE INFORMATION
Stockholders of record on April 13, 2000 will receive a proxy statement
and our annual report to stockholders, which contains detailed financial
information about us. The annual report to stockholders is not incorporated
herein and is not deemed a part of this proxy statement. We will mail, without
charge, a copy of our Annual Report on Form 10-KSB (excluding exhibits) to any
stockholder solicited hereby who requests it in writing. Please submit any such
written request to: Shareholder Relations, DynaGen, Inc., 1000 Winter Street,
Suite 2700, Waltham, Massachusetts 02451.
16
<PAGE>
EXHIBIT A
TEXT OF PROPOSED AMENDMENT - INCREASE IN AUTHORIZED CAPITAL
RESOLVED: That the certificate of incorporation of the Company be amended by
deleting the first paragraph of Paragraph 4 thereunder 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 135,000,000 shares, consisting of 125,000,000 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").
<PAGE>
EXHIBIT B
TEXT OF PROPOSED AMENDMENT - CHANGE OF CORPORATE NAME
RESOLVED: That the certificate of incorporation of the Company be amended by
deleting Paragraph 1 thereunder and inserting in its place the
following paragraph:
1. The name of the corporation is Able Laboratories, Inc.
<PAGE>
DYNAGEN, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 31, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF DYNAGEN, INC.
The undersigned stockholder of DynaGen, Inc., revoking all prior proxies,
hereby appoints Dhananjay G. Wadekar and C. Robert Cusick, or each of them
acting singly, proxies, with full power of substitution, to vote all shares of
capital stock of DynaGen which the undersigned is entitled to vote at the 2000
annual meeting of stockholders to be held at the offices of Foley, Hoag & Eliot
LLP, One Post Office Square, Boston, MA 02109 on May 31, 2000, beginning at
10:00 a.m. local time and at any adjournments thereof, upon matters set forth in
the notice of annual meeting dated April 29, 2000 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.
The undersigned hereby acknowledges receipt of a copy of the accompanying
notice of annual meeting of stockholders and of the proxy statement relating
thereto, and hereby revokes any proxy or proxies heretofore given. This proxy
may be revoked at any time before it is exercised.
When properly executed, this proxy will be voted in the manner directed
herein by the undersigned. If no direction is given, this proxy will be voted
for proposals 1 through 3, and in the discretion of the persons named as proxies
as to such other matters as may properly come before the meeting.
<PAGE>
1. To elect a board of directors.
FOR all nominees listed below: WITHHOLD AUTHORITY to
(except as marked to vote for all nominees:
the contrary below)
NOMINEES:
C. Robert Cusick
James Klint
F. Howard Schneider
Harry Silverman
Dhananjay G. Wadekar
INSTRUCTIONS:
To withhold authority to vote for any individual nominee, mark the "For
all" box and strike a line through the nominee's name. Your shares will
be voted for the remaining nominee(s).
2. To approve an amendment to DynaGen's certificate of incorporation to
increase the number of authorized shares of Common Stock, $.01 par value
per share, from 75,000,000 to 125,000,000 shares.
FOR AGAINST ABSTAIN
3. To approve an amendment to DynaGen's certificate of incorporation to
change the name of the company to Able Laboratories, Inc.
FOR AGAINST ABSTAIN
4. To transact such other business as may properly come before the meeting.
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: __________, 2000 Signature of Stockholder(s):
----------------
Print Name:
---------------------------------
Mark here if you plan to attend the meeting:
Mark here if your 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.
