<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Mark One)
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the fiscal year ended June 30, 2000
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from _______ to _______.
Commission File Number 000-23415
Princeton Video Image, Inc.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<CAPTION>
New Jersey 22-3062052
---------- ----------
<S> <C>
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
</TABLE>
15 Princess Road, Lawrenceville, New Jersey 08648
---------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
609-912-9400
(Registrant's Telephone Number, Including Area Code)
----------------------------------------------------
Securities registered pursuant to Section 12(b) of
the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
--------------------------
Title of Each Class
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
State the aggregate market value of the voting and non-voting common
equity held by non-affiliates of the registrant computed by reference to the
price at which the common equity was sold, or the average bid and asked prices
of such common equity, as of a specified date within the past 60
<PAGE> 2
days: $49,049,437, based upon the last sales price on September 15, 2000.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: 10,061,423 shares of
Common Stock, no par value per share, were outstanding on September 15, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
There are no documents incorporated by reference in this Form.
<PAGE> 3
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, COMPLIANCE WITH SECTION 16(A) OF THE
EXCHANGE ACT.
INFORMATION REGARDING DIRECTORS
The current Board of Directors is comprised of the following persons:
<TABLE>
<CAPTION>
NAME PAGE
---- ----
<S> <C>
Brown F Williams 59
Dennis P. Wilkinson 52
Donald P. Garber 43
Lawrence Lucchino 55
Jerome J. Pomerance 59
Enrique F. Senior 57
Eduardo Sitt 69
John B. Torkelsen 55
</TABLE>
The principal occupations and business experience, for at least the
past five years, of each director are as follows:
Brown F Williams is a co-founder of the Company and its Chairman of the
Board. Prior to his election as Chairman of the Board in January 1997, Mr.
Williams served the Company as its President and Chief Executive Officer, and he
has been a director of the Company since its organization in July 1990. Mr.
Williams also served as the Treasurer of the Company prior to Mr. Lawrence L.
Epstein's election to such office in February 1998. Mr. Williams is a senior
executive with more than 25 years experience in the development of high
technology products, primarily during his 20 years with RCA Laboratories, Inc.
Until 1987, Mr. Williams was Vice President of David Sarnoff Research Center,
Inc. with responsibility for both hardware and software contract research
business. Between 1987 and 1991, Mr. Williams was active in a number of start-up
companies, either as a consultant on behalf of the funding groups or as an
executive employee on behalf of the managements of such companies. Mr. Williams
has had significant experience in product development, product introduction and
licensing in Europe and Japan, as well as in the United States.
Dennis P. Wilkinson joined the Company in November 1998 as President
and Chief Executive Officer. Mr. Wilkinson was elected to the Board of Directors
of the Company in December 1998. Prior to joining the Company, Mr. Wilkinson
served as Senior Vice President of Marketing and Programming at Primestar, Inc.,
then the second largest Direct Broadcasting Satellite provider in the United
States from May 1995 through September 1998. Before joining Primestar, he was
Senior Vice President of Consumer Marketing at Time Warner Entertainment/Home
Box Office from 1992 to 1995.
Donald P. Garber has been a director of the Company since December
1999. Mr. Garber has been Commissioner, President and Chief Executive Officer of
Major League Soccer since August 1999. Prior to such appointment, Mr. Garber
served in various positions with the National Football League over the past
fifteen years. Most recently he served as Senior Vice President of NFL
International, the NFL's international division, where he was responsible for
managing the NFL Europe league, from October 1996 to July 1999. Prior to working
with NFL International, Mr. Garber was Vice President of Business Development
and Special Events for NFL Properties from 1990 to 1996.
Lawrence Lucchino has been a director of the Company since October
1994. Mr. Lucchino enjoys
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a wide variety of connections with the professional sports industry. In addition
to his prior service as a member of the Board of Directors of the Washington
Redskins, Mr. Lucchino served as President of the Baltimore Orioles from May
1988 until October 1993. He has been a member of the MLB Operations Committee
and currently serves on the Commissioner's Blue Ribbon Task Force on Baseball
Economics. Mr. Lucchino has served as President and Chief Executive Officer of
the San Diego Padres since December 1994, and has been a partner in the
Washington, DC law firm of Williams & Connolly since 1978.
Jerome J. Pomerance was elected to the Board of Directors of the
Company in 1992. He has served as the President of J.J. Pomerance & Co., Inc., a
firm providing strategic international business advice for product development
and applications, since November 1991. Prior to his founding of that firm, Mr.
Pomerance was Chief Operating Officer and Vice-Chairman of Kroll Associates,
Inc., a leading corporate investigation, due diligence and crisis management
firm. Before joining Kroll in 1983, he was Treasurer, and later President and
Chief Executive Officer, of a group of privately held international ophthalmic
companies and a director of the Optical Manufacturers Association over a period
of 20 years.
Enrique F. Senior has been a director of the Company since October
1994. He is a Managing Director and Executive Vice President of Allen & Company
Incorporated since 1973. Mr. Senior is a director of Dick Clark Productions,
Inc., Pics Retail Networks, Inc. and Telemundo Group, Inc. He is or has recently
served as financial advisor to several corporations including The Coca-Cola
Company, General Electric, CapCities/ABC, Columbia Pictures, QVC Networks and
others.
Eduardo Sitt has been a director of the Company since October 1993.
From 1964 until 1993, he was the principal shareholder and Chief Executive
Officer of Hilaturas de Michoacon, S.A., a Mexican textile manufacturer. Mr.
Sitt is a shareholder and, during the past five years, has served as a director
of Grupo Financiero BBV-Probursa, a publicly held financial corporation and
parent company of Mexico's fifth largest bank (Banco Bilbao Vizcaya, S.A.), a
full service stock brokerage house (Casa de Bolsa BBV-Probursa) and several
other financial firms. Mr. Sitt is the President and principal shareholder of,
and the individual designated to serve on the Board of Directors of the Company
by, Presencia en Medios, S.A. de C.V. ("Presencia"), a principal shareholder of
the Company, and is the Presidente del Consejo of Publicidad Virtual, S.A. de
C.V., an entity that was originally formed as a joint venture by the Company and
Presencia. He also serves as a director of Albatros Textil, a textile
manufacturer.
John B. Torkelsen has been a director of the Company since 1995. Since
April 1999, Mr. Torkelsen has served as President of Princeton Technology
Management, LLC, a venture capital management company and President of Equity
Valuation Advisors, Inc., an affiliated financial consulting company. He also
serves as President of Equity Valuation Advisors, Inc.'s affiliate, PVR
Securities, Inc., which was formed in 1987. Mr. Torkelsen is the Manager of the
General Partner (Acorn Technology Partners, LLC) of Acorn Technology Fund, L.P.,
a venture capital fund specializing in early stage, high technology investing.
He founded Princeton Venture Research, Inc., an investment, banking, consulting
and venture capital firm and served as its President from 1984 to 1999.
2
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INFORMATION REGARDING OFFICERS
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS PAGE CAPACITIES IN WHICH SERVED IN CURRENT POSITIONS SINCE
------------------ --- -------------------------- --------------------------
<S> <C> <C> <C>
Brown F Williams 59 Chairman of the Board 1997
Dennis P. Wilkinson (1) 52 President, Chief Executive Officer and 1998
Director
Samuel A. McCleery (3) 49 Vice President of Business Development 1999(VP),
and Assistant Secretary 1991 (Asst.Secretary)
Lawrence L. Epstein (2) 46 Vice President, Finance, Chief Financial 1998
Officer and Treasurer
Paul Slagle (4) 49 Vice President of Sales and Marketing 1999
Gene Dwyer (5) 53 Vice President and Chief Technology Officer 2000
Howard J. Kennedy (6) 51 Vice President of Convergence 2000
</TABLE>
1) Dennis P. Wilkinson was elected President and Chief Executive
Officer in November 1998 and was elected to the Board of Directors of the
Company in December 1998.
2) Lawrence L. Epstein has been the Company's Vice President, Finance,
Chief Financial Officer and Treasurer since February 1998. Prior to joining the
Company, Mr. Epstein was Chief Financial Officer and Vice President of Finance
and Administration for Primestar Partners, L.P., then the nation's second
largest Direct Broadcast Satellite provider, where he was responsible for
overall financial management as well as strategic and long-range planning. Prior
to joining Primestar in March 1993, Mr. Epstein held several senior financial
positions with a number of CBS, Inc. units, including the CBS Television
Network, CBS News and CBS owned-and-operated stations from 1979 to 1993.
3) Sam McCleery was named Vice President of Business Development
(formerly VP of Sales and Marketing) in October 1999. At the same
time, Paul Slagle was named Vice President of Sales and Marketing. Mr. McCleery
has been the Company's Assistant Secretary since 1991. From November 1991
through September 1999, Mr. McCleery was the Company's Vice President of Sales
and Marketing. Prior to November 1991, Mr. McCleery was President of his own
sports marketing and events company with clients that included the Reagan
Foundation. From 1981 to 1989, Mr. McCleery served as the director of sports
marketing for Prince Manufacturing, the world's largest marketer of tennis
racquets. Prior to 1981, Mr. McCleery was a Director of New Business for Le Coq
Sportif, a division of Adidas (France).
4) Paul Slagle has been the Company's Vice President of Sales and
Marketing since October 1999. Prior to October 1999, Mr. Slagle served as Vice
President of Integrated Sales & Marketing for ESPN from July 1994 to October
1999. From August 1991 through June 1994, Mr. Slagle was Director of National
Television for Wieden & Kennedy. Prior to 1991, Mr. Slagle has also served as
Vice President of Special Events for Streff-Buchanan Communications.
5) Gene Dwyer has been the Company's Vice President and Chief
Technology Officer since January 2000. From November 1997 through December 1999,
Mr. Dwyer was the Company's Director of Research, responsible for the algorithm
architecture of the L-VIS(TM) System. Prior to joining the Company, Mr. Dwyer
was the co-owner of Silhoutte Technology from 1986, which provided image
processing and enhancement software for the U.S. Department of Defense.
3
<PAGE> 6
6) Howard J. Kennedy has been the Company's Vice President of
Convergence since January 2000. From March 1995 through December 1999, Mr.
Kennedy was the Company's Director-Principal Scientist, responsible for the
technical development, evaluation and direction of new software and Internet
products. Prior to joining the Company, Mr. Kennedy worked at Intel Corporation
from October 1988 where he was Architect and Principal Engineer in the
Multimedia Systems Technology Group.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and
Exchange Commission ("SEC") and NASDAQ. Officers, directors and greater than ten
percent stockholders are required by SEC regulation to furnish the Company with
copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received and written representations from certain reporting persons that they
were not required to file Form 5 for specified fiscal years, the Company
believes that all its officers, directors, and greater than ten percent
beneficial owners complied with all filing requirements applicable to them with
respect to transactions during the fiscal year ended June 30, 2000, except that
Mr. Williams inadvertently failed to timely file a report relating to three
gift transactions which were later reported on a Form 4.
ITEM 11. EXECUTIVE COMPENSATION.
EXECUTIVE OFFICERS' COMPENSATION
The following table sets forth certain information concerning the
annual and long-term compensation for the fiscal years ended June 30, 2000,
1999, and 1998 of the Company's chief executive officer and certain other highly
compensated executive officers of the Company who were serving as executive
officers at June 30, 2000 (collectively, the "Named Officers").
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION STOCK
NAME AND PRINCIPAL OPTION AWARDS ALL OTHER
POSITION ANNUAL COMPENSATION (NUMBER OF SHARES) COMPENSATION
------------------- ---------------------------- ------------------ ------------
YEAR SALARY BONUS
---- ------ -----
<S> <C> <C> <C> <C> <C>
Brown F Williams 2000 $250,000 --- 120,000 ---
Chairman of the Board 1999 229,167 $25,000 --- ---
1998 225,000 --- 20,000 $261,250(1)
Dennis P. Wilkinson 2000 $290,737 $12,500 120,000 ---
President and Chief Executive 1999 161,474 25,000 400,000 ---
Officer 1998 --- --- --- ---
Lawrence L. Epstein 2000 $154,167 --- 10,000 ---
Vice President, Finance and 1999 150,000 --- --- ---
Chief Financial Officer 1998 31,346 --- 100,000 ---
Samuel A. McCleery 2000 $154,167 15,000 --- ---
Vice President of Business 1999 150,000 --- --- ---
Development 1998 150,000 --- 20,000 $99,000(1)
Paul Slagle 2000 $123,958 $35,000 65,000 ---
Vice President of Sales and 1999 --- --- --- ---
Marketing 1998 --- --- --- ---
</TABLE>
(1) Reflects a compensation charge recorded by the Company in connection
with the exercise of warrants in July 1997.
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The following table sets forth certain information concerning grants of
stock options during the fiscal year ended June 30, 2000 to the Named Officers.
OPTION GRANTS IN LAST FISCAL YEAR
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<CAPTION>
Percentage of
Total Options
Number of Securities Granted to Exercise of
Underlying Options Employees in Base Price per Grant Date
Name Granted Fiscal 1999 Share Expiration Date Present Value*
---- ------- ----------- ----- --------------- --------------
<S> <C> <C> <C> <C> <C>
Brown F Williams 100,000 10.60% $5.94 04/05/2010 $480,124
20,000 2.12% 4.69 09/30/2009 75,818
Dennis P. Wilkinson 100,000 10.60% $5.94 04/05/2010 $480,124
20,000 2.12% 4.69 09/30/2009 75,818
Samuel A. McCleery 0 -- -- -- --
Lawrence L. Epstein 10,000 1.06% $8.00 12/31/2009 $64,663
Paul Slagle 65,000 6.89% $4.69 09/30/2009 $246,407
</TABLE>
* The calculation of the grant date valuation is based on the
Black-Scholes method.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table sets forth certain information with respect to the
exercise of options to purchase Common Stock during the fiscal year ended June
30, 2000 by the Named Officers and unexercised options to purchase Common Stock
held by the Named Officers at June 30, 2000.
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of
Shares Unexercised Options Unexercised In-the-Money
Acquired Value Held at June 30,2000 Options Held at June 30, 2000(1)
On Realized ------------------------------ --------------------------------
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ --- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Brown F Williams - - 187,500 102,500 $ 18,550 $ 2,650
Dennis P. Wilkinson - - 223,056 296,944 144,162 115,038
Lawrence L. Epstein - - 79,444 30,556 - -
Samuel A. McCleery - - 70,000 - 65,000 -
Paul Slagle - - 16,250 48,750 17,225 51,675
</TABLE>
(1) Based on the closing price on the Nasdaq National Market on June 30,
2000: $5.75.
DIRECTORS' COMPENSATION
Directors do not receive cash compensation for services on the Board of
Directors or any committee thereof. The Company has granted, subject to certain
conditions (including, without limitation, conditions relating to vesting), to
Mr. Pomerance, options to purchase 60,000 shares of common stock, to each of
Messrs. Lucchino, Senior, Sitt and Torkelsen, options to purchase 50,000 shares
of common stock, to Mr. Williams, options to purchase 40,000 shares of common
stock, to Mr. Wilkinson, options to purchase 20,000 shares of common stock, and
to Mr. Garber, options to purchase 10,000 shares of
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common stock, for their participation on the Board of Directors. Such options
were originally issued at exercise prices ranging from $4.688 to $17.50 per
share and certain options were repriced in May 1998 to an exercise price of
$8.00 per share of common stock. All directors are reimbursed for expenses
incurred in connection with attendance at Board of Directors and committee
meetings.
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
In January 1997, the Company and Mr. Williams entered into an
employment agreement that provides for automatic annual renewal and permits the
Company to terminate the agreement upon 90 days' prior notice; provided,
however, that Mr. Williams' term of employment will be automatically extended
for a period of three years following a change in control of the Company.
Pursuant to such agreement, Mr. Williams' base salary will be $225,000 per year,
subject to increases at the discretion of the Board of Directors. Mr. Williams
is eligible for an annual bonus based on performance measures determined by the
Compensation Committee. In accord with the provisions of the agreement, in April
1999 the Board of Directors approved an increase in Mr. Williams base salary to
$250,000, effective May 1, 1999, and awarded Mr. Williams a bonus of $25,000. In
the event Mr. Williams' employment is terminated by the Company without cause or
in the event Mr. Williams terminates his employment due to a detrimental change
in the nature or scope of his employment or duties, he is entitled to receive
his then current salary for a period equal to the greater of two years or the
remainder of his current term of employment.
In November 1998, the Company and Mr. Wilkinson entered into a
three-year employment agreement that provides for automatic renewal for three
year periods and permits the Company to terminate the agreement upon 90 days'
prior notice. Pursuant to the employment agreement, Mr. Wilkinson's base salary
is $275,000 per year, subject to an increase of $25,000 per year at the
discretion of the Board of Directors. In addition, Mr. Wilkinson is eligible to
receive a bonus of $25,000 at the end of each year based on performance measures
determined by the Board of Directors. In accord with the provisions of the
agreement, in December 1999 the Board of Directors approved an increase in Mr.
Wilkinson's base salary to $300,000, effective November 1, 1999, and awarded Mr.
Wilkinson a bonus of $12,500. In the event Mr. Wilkinson's employment is
terminated by the Company without cause, the agreement provides for a
continuation of his then current salary for the balance of the then current
term, but in no case less than twelve months.
In March 1997, the Company and Mr. McCleery entered into an employment
agreement that provides for automatic annual renewal and permits the Company to
terminate the agreement upon 90 days' prior notice; provided, however, that Mr.
McCleery's term of employment will be automatically extended for a period of
three years following a change in control of the Company. Pursuant to such
agreement, Mr. McCleery's base salary will be $150,000 per year, subject to
increases at the discretion of the Board of Directors. Mr. McCleery is eligible
for an annual bonus based on performance measures determined by the Compensation
Committee of the Board of Directors. In accord with the provisions of the
agreement, the Board of Directors approved an increase in Mr. McCleery's base
salary to $160,000, effective January 1, 2000. In the event Mr. McCleery's
employment is terminated by the Company without cause or in the event Mr.
McCleery terminates his employment due to a detrimental change in the nature or
scope of his employment or duties, he is entitled to receive his then current
salary for a period equal to the greater of two years or the remainder of his
current term of employment.
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In February 1998, the Company and Mr. Epstein entered into an
employment agreement that provides for automatic annual renewal and permits the
Company to terminate the agreement upon 90 days' prior notice. Pursuant to the
employment agreement, Mr. Epstein's base salary will be $150,000 per year,
subject to increases at the discretion of the Board of Directors. Mr. Epstein is
eligible for an annual bonus based on performance measures determined by the
Compensation Committee of the Board of Directors. In accord with the provisions
of the agreement, the Board of Directors approved an increase in Mr. Epstein's
base salary to $160,000, effective January 1, 2000. In the event Mr. Epstein's
employment is terminated by the Company without cause, he is entitled to receive
his then current salary for a period of six months. In the event Mr. Epstein
terminates his employment due to a detrimental change in the nature or scope of
his employment or duties, he is entitled to receive his then current salary for
a period equal to the greater of six months or the remainder of his current term
of employment.
In October 1999, the Company and Mr. Slagle entered into an employment
agreement that provides for automatic annual renewal and permits the Company to
terminate the agreement upon 90 days' prior notice. Pursuant to the employment
agreement, Mr. Slagle's base salary will be $175,000 per year, subject to
increase at the discretion of the Board of Directors. Mr. Slagle received a
signing bonus in the amount of $70,000 which was paid in two installments:
$35,000 thirty days after his date of hire and $35,000 in October 2000, the
first anniversary of his date of hire. In addition, Mr. Slagle was eligible for
and received a bonus of $75,000 in October 2000, upon the satisfactory
completion of his first year of employment. Pursuant to the agreement, Mr.
Slagle received an option to purchase 65,000 shares of Common Stock. In the
event Mr. Slagle's employment is terminated by the Company without cause, he is
entitled to receive his then current salary for a period of three months. In the
event Mr. Slagle terminates his employment due to a detrimental change in the
nature of scope of his employment or duties, he is entitled to receive his then
current salary for a period of three months.
In addition to provisions in the above-described employment agreements
requiring each individual to maintain the confidentiality of the Company's
information and assign inventions to the Company, such executive officers have
agreed that during the terms of their employment agreements and for two years
thereafter, they will not compete with the Company by engaging in any capacity
in any business which is competitive with the business of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The persons who served as members of the Compensation Committee of the
Board of Directors during the fiscal year ended June 30, 2000 were Enrique F.
Senior, John B. Torkelsen, Donald P. Garber (Mr. Garber served from December 7,
1999 to June 30, 2000) and Lawrence Lucchino ( Mr. Lucchino served from July 1,
1999 to December 6, 1999). None of the members of the Compensation Committee
were an officer, former officer or employee of the Company.
401(k) Plan
In 1998, the Company adopted a tax-qualified employee savings and
retirement plan (the "401(k) Plan") covering the Company's employees. Pursuant
to the 401(k) Plan, employees may elect to reduce their current compensation by
up to the statutorily prescribed annual limit ($10,500 in 2000) and have the
amount of such reduction contributed to the 401(k) Plan. The Board of Directors
approved an amendment to the Plan pursuant to which it will match fifty percent
(50%) of employees' contributions with a contribution of phantom Common Stock
having an initial fair market value equivalent to the employee contribution, up
to five percent (5%) of the participant's contribution, effective July 1, 1999.
Contributions by both the Company and employees to the Plan and income earned on
such contributions are not taxable to employees until withdrawn from the 401(k)
Plan. The Trustees under the 401(k) Plan, at the direction of each participant,
invest the assets of the 401(k) Plan in any of nine investment options.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
There were, as of September 15, 2000, 387 holders of record of the
Company's Common Stock. The following table sets forth certain information
regarding the beneficial ownership of the Company's Common Stock as of September
15, 2000, except as otherwise set forth below, (i) by each person who is known
to the Company to own beneficially more than 5% of the Common Stock, and (ii) by
each current director and Named Officer, and by all current directors and
officers as a group.
<TABLE>
<CAPTION>
COMMON STOCK BENEFICIALLY
OWNED (1)
NAME OF BENEFICIAL OWNER NUMBER PERCENT
------------------------ ------ -------
<S> <C> <C>
Enrique F. Senior (2)....................................................... 1,335,972 12.0%
c/o Allen & Company Incorporated
711 Fifth Avenue
New York, NY 10020
Allen & Company Incorporated (3)............................................ 1,285,972 11.6%
Allen Holding Inc.
Herbert A. Allen
711 Fifth Avenue
New York, NY 10020
Eduardo Sitt (4)............................................................ 672,340 6.6%
c/o Presencia en Medios, S.A. de C.V.
Paseo de las Palmas
No. 735, desp 206
11000 Mexico, DF
Kern Capital Management, LLC (5)..................................... 656,100 6.5%
Robert E. Kern, Jr.
David G. Kern
114 West 47th Street
New York, NY 10036
Presencia en Medios, S.A. de C.V. (6)....................................... 622,340 6.2%
Paseo de las Palmas
No. 735, desp 206
11000 Mexico, DF
Brown F Williams (7)........................................................ 576,908 5.6%
c/o Princeton Video Image, Inc.
15 Princess Road
Lawrenceville, NJ 08648
Lawrence L. Epstein (8)..................................................... 94,444 *
c/o Princeton Video Image, Inc.
15 Princess Road
Lawrenceville, NJ 08648
</TABLE>
<PAGE> 12
<TABLE>
<CAPTION>
COMMON STOCK BENEFICIALLY
OWNED (1)
NAME OF BENEFICIAL OWNER NUMBER PERCENT
------------------------ ------ -------
<S> <C> <C>
Lawrence Lucchino (9)....................
San Diego Padres
8880 Rio San Diego Drive 127,500 1.3%
Suite 400
San Diego, CA 92108
Samuel A. McCleery (10) ................. 195,200 1.9%
c/o Princeton Video Image, Inc.
15 Princess Road
Lawrenceville, NJ 08648
Jerome J. Pomerance (11) ................ 209,842 2.1%
c/o J.J. Pomerance & Co.
730 Third Avenue
Suite 4602
New York, NY 10017
John B. Torkelsen (12) .................. 151,785 1.5%
c/o Acorn Technology Fund, L.P.
5 Vaughn Drive
Princeton, NJ 08540
Dennis P. Wilkinson (13) ................ 253,334 2.5%
c/o Princeton Video Image, Inc.
15 Princess Road
Lawrenceville, NJ 08648
Donald P. Garber (14) ................... 10,000 *
c/o Major League Soccer
110 East 42nd Street
10th Floor
New York, NY 10017
Paul William Slagle (15) ................ 23,472 *
c/o Princeton Video Image, Inc.
15 Princess Road
Lawrenceville, NJ 08648
All directors and executive officers as a
group (13 persons) (16) ................. 3,777,824 30.7%
</TABLE>
* Less than one percent
(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. Shares of Common Stock
subject to stock options and warrants currently exercisable or
exercisable within 60 days are deemed outstanding for computing the
percentage ownership of the person holding such options and the
percentage ownership of any group of which the holder is a member, but
are not deemed outstanding for computing the percentage ownership of
any other person. Except as indicated by footnote, and subject to
community property laws where applicable, 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.
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Applicable percentage of ownership is based on 10,061,423 shares of
Common Stock outstanding as of September 15, 2000. Outstanding shares
of Series A and Series B Preferred Stock are not reflected above
because such Preferred Stock has no voting rights and is not
convertible.
(2) Includes 227,746 shares of Common Stock and 478,226 shares of Common
Stock underlying warrants owned of record by Allen & Company
Incorporated ("Allen"), of which Mr. Senior is a Managing Director and
Executive Vice President. Also includes 380,000 and 200,000 shares of
Common Stock underlying the Representatives' Warrants received by
Allen as partial consideration for services rendered on behalf of the
Company with respect to the Company's initial public offering and as a
placement agent in connection with the Company's private placement of
Common Stock on October 20, 1999, respectively. See "Certain
Transactions." See Note 3 immediately below. By virtue of his
positions with Allen, Mr. Senior may, under certain circumstances
derive economic benefit from such securities. Includes 50,000 shares
of Common Stock underlying options that were exercisable within 60
days of September 15, 2000. Does not include shares of Common Stock
held by Allen in its capacity as a market maker or shares of Common
Stock held directly by certain officers, directors or employees of
Allen.
(3) Includes 227,746 shares of Common Stock and 478,226 shares of Common
Stock underlying warrants owned of record by Allen. Also includes
380,000 shares of Common Stock underlying the Representatives'
Warrants received by Allen as partial consideration for services
rendered on behalf of the Company with respect to the Company's
initial public offering and an additional 200,000 shares of Common
Stock underlying a warrant received by Allen with respect to its
services as a placement agent in connection with the Company's private
placement of Common Stock on October 20, 1999. See "Certain
Transactions." Does not include shares of Common Stock underlying
options owned by Enrique F. Senior, a Managing Director and Executive
Vice President of Allen and a director of the Company. Does not
include shares of Common Stock held by Allen in its capacity as a
market maker or shares of Common Stock held directly by certain
officers, directors or employees of Allen. See Note 2 immediately
above. In addition to Allen, Allen Holding Inc., the holder of all of
the outstanding stock of Allen, and Herbert A. Allen, the controlling
stockholder of Allen Holding Inc., may, consistent with applicable
rules, be deemed the beneficial owner of the securities held by Allen.
(4) Includes 587,408 shares of Common Stock and 34,932 shares of Common
Stock underlying warrants owned by Presencia, of which Mr. Sitt is
President and a principal shareholder. See Note 6 immediately below.
Includes 50,000 shares of Common Stock underlying options that were
exercisable within 60 days of September 15, 2000.
(5) Includes 656,100 shares of Common Stock held by Kern Capital
Management, LLC ("KCM"). Robert E. Kern, Jr. and David Kern are
controlling members of KCM and may be deemed the beneficial owner of
the securities owned by KCM. Robert E. Kern, Jr., David Kern and KCM
excessively deny beneficial ownership of the securities held by KCM.
(6) Includes 587,408 shares of Common Stock and 34,932 shares of Common
Stock underlying warrants. Does not include shares of Common Stock
underlying options owned by Eduardo Sitt, the President and a
principal shareholder of Presencia and a director of the Company. See
Note 4 immediately above.
(7) Includes 12,401 shares of Common Stock owned by the Estate of Sandra
Williams, as custodian for Bronwyn Williams, Mr. and Mrs. Williams'
minor daughter, and 53,266 shares owned by the Estate of Sandra
Williams, Mr. Williams' wife. Also includes 321,241 shares of Common
Stock and 190,000 shares of Common Stock underlying options that were
exercisable within 60 days of September 15, 2000. Does not include
5,000 and 2,200 shares of Common Stock owned by Mr. Williams' brother
and a trust of which Mr. Williams' mother is a beneficiary,
respectively. Mr.
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<PAGE> 14
Williams disclaims beneficial ownership of the shares of Common Stock
that are owned by the Estate of Sandra Williams, individually and as
custodian for Bronwyn Williams.
(8) Includes 94,444 shares of Common Stock underlying options granted to
Mr. Epstein that were exercisable within 60 days of September 15,
2000.
(9) Includes 80,000 shares of Common Stock underlying options owned by LL
Sports Inc. that were exercisable within 60 days of September 15,
2000. Mr. Lucchino controls LL Sports Inc. Also includes 47,500 shares
of Common Stock underlying options that were exercisable within 60
days of September 15, 2000.
(10) Includes 78,000 shares of Common Stock, 47,200 shares of Common Stock
underlying warrants and 70,000 shares of Common Stock underlying
options granted to Mr. McCleery that were exercisable within 60 days
of September 15, 2000.
(11) Includes 20,000 shares of Common Stock owned by J.J. Pomerance & Co.,
Inc. of which Mr. Pomerance is the President. Also includes 129,842
shares of Common Stock and 60,000 shares of Common Stock underlying
options that were exercisable within 60 days of September 15, 2000.
(12) Includes 7,321 shares of Common Stock owned by Pamela R. Torkelsen,
Mr. Torkelsen's wife. Also includes 6,914 shares of Common Stock and
and 48,200 shares of Common Stock underlying warrants owned by
Princeton Valuation Consultants L.L.C. a company of which Mr.
Torkelsen is the sole shareholder. Also includes 39,350 shares of
Common Stock owned by Acorn Technology Fund, L.P., a limited
partnership of which Acorn Technology Partners, L.L.C. is the general
partner. Mr. Torkelsen is the Manager of Acorn Technology Partners.
Includes 50,000 shares of Common Stock underlying options that were
exercisable within 60 days of September 15, 2000. Mr. Torkelsen
disclaims beneficial ownership of the shares of Common Stock that are
owned by Mrs. Torkelsen.
(13) Includes 253,334 shares of Common Stock underlying options granted to
Mr. Wilkinson that were exercisable within 60 days of September 15,
2000.
(14) Includes 10,000 shares of Common Stock underlying options granted to
Mr. Garber that were exercisable within 60 days of September 15, 2000.
(15) Includes 23,472 shares of Common Stock underlying options granted to
Mr. Slagle that were exercisable within 60 days of September 15, 2000.
(16) Includes 1,188,558 shares of Common Stock underlying warrants.
Includes 1,067,077 shares of Common Stock underlying options that were
exercisable within 60 days of September 15, 2000.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Consulting and Other Agreements
John B. Torkelsen, a director of the Company, is the Manager and a
member of Acorn Technology Partners, L.L.C., the general partner of Acorn
Technology Fund, L.P., which purchased 1.5 units in the Company's October 1997
bridge financing (the "October 1997 Bridge Financing"). Each unit consisted of
one promissory note in the principal amount of $100,000 and bearing interest at
a rate of 10%, and warrants (the "Bridge Warrants") to purchase 10,000 shares of
Common Stock at an exercise price of $0.01 per share. The purchase price of each
unit was $100,000. Following the Company's initial
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<PAGE> 15
public offering of Common Stock, the Company paid the principal and all accrued
interest on all of the notes issued in the October 1997 Bridge Financing. In
January 1998, Acorn Technology Fund L.P. exercised their Bridge Warrants to
purchase 15,000 shares of Common Stock and has subsequently sold 8,500 of such
shares. See "Security Ownership of Certain Beneficial Owners and Management."
Enrique F. Senior, a director of the Company, is a Managing Director
and Executive Vice President of Allen & Company Incorporated ("Allen"), which is
a principal shareholder of the Company, has furnished general financial advisory
services to the Company from time to time, and has acted as a representative of
the several underwriters in the Company's initial public offering. Except as
described herein, no fees have been paid to Allen or to Mr. Senior in connection
with such services and there are no arrangements providing for the payment of
fees for such services. Pursuant to a placement agent agreement, Allen was paid
a fee of $247,000 plus expenses, and received warrants to purchase 28,226 shares
of Common Stock at an exercise price of $19.25 per share, for raising funds for
the Company in a financing that closed in February 1996. In May 1998 the
exercise price of such warrants was reduced to $8.00 per share. Allen, as a
representative of the several underwriters, received underwriting discounts and
commissions in the aggregate amount of $1,306,666.67, as well as warrants
initially exercisable for 380,000 shares of Common Stock at an exercise price of
$8.40 per share, for services rendered on behalf of the Company relating to its
initial public offering of Common Stock in December 1997. See "Security
Ownership of Certain Beneficial Owners and Management." Allen may serve as a
market maker for the Common Stock.
On October 20, 1999 the Company issued 1,592,727 shares of Common Stock
to investors at $5.50 per share in connection with a private placement. Allen
acted as the placement agent for the private placement and received a commission
of $438,000 and a warrant to purchase 200,000 shares of Common Stock at an
exercise price of $6.60 at any time on or before October 21, 2006. See
"Registration Rights" below. On June 14, 2000, Allen and the Company entered
into an agreement, which expires on December 14, 2000, pursuant to which Allen
will act as the Company's exclusive financial advisor in connection with certain
transactions. No such transactions have been consummated and no amounts ahave
been paid to Allen pursuant to the agreement to date.
In 1993, the Company entered into a 50/50 joint venture with Presencia
en Medios, S.A. de C.V. ("Presencia"), a principal shareholder of the Company,
pursuant to which the parties formed Publicidad Virtual, S.A. de C.V., a Mexican
limited liability company ("Publicidad"), which was granted an exclusive,
royalty-free license to use, market and sub-license the Company's L-VIS System
throughout Mexico, Central and South America and the Spanish-speaking markets in
the Caribbean basin. Presencia was granted warrants to purchase 24,000 shares of
Common Stock at an exercise price of $15.00 per share in March 1996, in
consideration of Presencia's expenses incurred by Presencia in connection with
Publicidad. In May 1998 the exercise price of such warrants was reduced to $8.00
per share. Such warrants expire in March 2001. As of January 1, 1999, the
Company entered into an Amendment Agreement with Publicidad which amended the
terms of the license. Pursuant to the amended license, Publicidad will pay to
the Company a royalty on annual net revenues as follows: (i) a 17% royalty on
net revenues of up to $3,000,000, (ii) a 25% royalty on incremental annual net
revenues exceeding $3,000,000 and up to $6,000,000, and (iii) a 20% royalty on
incremental annual net revenues exceeding $6,000,000. The Company also entered
into a Stock Purchase Agreement, dated as of January 1, 1999, with Presencia and
Eduardo Sitt, the President and a principal shareholder of Presencia, and a
director of the Company. In accord with the terms and conditions of such Stock
Purchase Agreement, the Company sold its interest in Publicidad to Presencia and
Mr. Sitt for an aggregate purchase price of $121,000.
Presencia purchased three units in the October 1997 Bridge Financing.
Following the closing of the October 1997 Bridge Financing, an investor assigned
an additional 100,000 Bridge Warrants to Presencia. In January 1998, Presencia
purchased 130,000 shares of the Common Stock of the Company upon the exercise of
Bridge Warrants. Mr. Eduardo Sitt is the President and a principal shareholder
of Presencia. See "Election of Directors" and "Security Ownership of Certain
Beneficial Owners and Management."
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<PAGE> 16
Indebtedness of Management
Brown F Williams, Chairman of the Board of the Company, exercised a
warrant to purchase 190,000 shares of Common Stock in July 1997 in exchange for
his non-recourse promissory note in the principal amount of $475,000, the
aggregate purchase price of the shares of common stock underlying such warrants.
Such note bears an annual interest rate of 8.5% and has a term of five years.
However, the note will become payable in full when all of the shares issued upon
the exercise of such warrants become freely transferable under applicable
securities laws. Mr. Williams' obligations under the note are secured by a
pledge of such shares, and Mr. Williams is required to assign to the Company any
cash or marketable securities received with respect to such shares. In
connection with the exercise of the warrant in exchange for a non-recourse note,
the Company recorded a compensation charge of $261,250 in the first quarter of
Fiscal 1998. As of June 30, 2000 and September 16, 2000, principal and interest
in the amount $592,807 and $602,983, respectively, remained outstanding.
Samuel A. McCleery, Vice President, Business Development of the
Company, exercised a warrant to purchase 72,000 shares of Common Stock in July
1997 in exchange for his non-recourse promissory note in the principal amount of
$180,000, the aggregate purchase price of the shares of common stock underlying
such warrants. The terms of such note, and of the pledge of such shares that
secures Mr. McCleery's obligations under the note, are identical to those of Mr.
Williams' note and pledge. In connection with the exercise of the warrant in
exchange for a non-recourse note, the Company recorded a compensation charge of
$99,000 in the first quarter of Fiscal 1998. As of June 30, 2000 and September
16, 2000, principal and interest in the amount $224,642 and $228,499,
respectively, remained outstanding.
The total number of shares issued to Brown F Williams and Samuel A.
McCleery in exchange for notes payable to the Company which were outstanding as
of June 30, 2000 is 262,000 shares of Common Stock (or 2.7% of the outstanding
shares of Common Stock). Specifically, Mr. Williams received 190,000 shares of
Common Stock in exchange for a note in the amount of $475,000 and Mr. McCleery
received 72,000 Shares of Common Stock in exchange for a note in the amount of
$180,000.
In December 1997, Messrs. Williams and McCleery signed non-recourse
promissory notes (the "Tax Notes") in the amounts of $122,920 and $46,580,
respectively, as consideration for money received for the express purpose of
paying the tax liabilities incurred by each of them in connection with the
exercise of their warrants. The obligations under the Tax Notes are secured by
pledge agreements pursuant to which each of Messrs. Williams and McCleery
pledged their shares of Common Stock. Each of the Tax Notes bears an annual
interest rate of 8.5%. Each of the Tax Notes becomes due and payable upon the
earlier of (i) the first anniversary of the date on which all of such officer's
pledged shares become freely transferable, and (ii) the date on which such
officer sells, assigns or otherwise disposes of, for consideration, any interest
in any share of capital stock of the Company. As of June 30, 2000 and September
16, 2000, principal and interest in the amount $149,284 and $151,917,
respectively, remained outstanding under Mr. William's Tax Notes. As of June 30,
2000 and September 16, 2000, principal and interest in the amount $56,570 and
$57,568, respectively, remained outstanding under Mr. McCleery's Tax Notes.
Registration Rights
The Company has granted registration rights with respect to 400,000
shares of Common Stock issuable upon the exercise of the warrants granted to the
representatives of the several underwriters of the Company's initial public
offering of Common Stock in December 1997, including 380,000 shares of Common
Stock underlying a warrant granted to Allen. Subject to certain conditions and
limitations, the registration rights granted to such holders give them the right
to require the Company to register all or any portion of the Common Stock
issuable upon the exercise of such warrants, that are not transferable in a
three-month period pursuant to Rule 144 in connection with any registration by
the Company of its
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<PAGE> 17
securities on certain registration statements under the Securities Act. These
shares were registered at the time of the Company's initial public offering. The
Company has also granted registration rights with respect to the 200,000 shares
of Common Stock issuable upon the exercise of the warrant granted to Allen in
connection with the Company's private placement of Common Stock on October 20,
1999. Subject to certain conditions and limitations, these registration rights
give Allen the one-time right, commencing October 20, 2000, to require the
Company to register not less than 50% of such shares held by Allen at such time.
The registration rights also require the Company to register such shares at
Allen's request, in the event the company intends to file a registration
statement for its own account or on behalf of selling shareholders. All of the
registration rights described herein are subject to certain notice requirements,
timing restrictions and volume limitations which may be imposed by the
underwriters of an offering. The Company is required to bear the expenses of all
such registrations, except for the underwriting discounts and commissions
relating to the sale of the shares of Common Stock held by such investors.
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<PAGE> 18
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amendment to be signed
on its behalf by the undersigned, thereunto duly authorized.
PRINCETON VIDEO IMAGE, INC.
By: /s/ Brown F Williams
---------------------
Brown F Williams
Chairman of the Board
Date: October 26, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934,
this amendment has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ Brown F Williams Chairman of the Board October 26, 2000
----------------------- (principal executive officer)
Brown F Williams
/s/ Dennis P. Wilkinson President, Chief Executive Officer October 25, 2000
----------------------- and Director
Dennis P. Wilkinson
/s/ Lawrence L. Epstein Chief Financial Officer and Treasurer October 25, 2000
----------------------- (principal financial officer)
Lawrence L. Epstein
/s/ John B. Torkelsen Director October 27, 2000
-----------------------
John B. Torkelsen
/s/ Lawrence Lucchino Director October 26, 2000
-----------------------
Lawrence Lucchino
/s/ Jerome J. Pomerance Director October 26, 2000
-----------------------
Jerome J. Pomerance
/s/ Enrique B. Senior Director October 26, 2000
-----------------------
Enrique B. Senior
/s/ Eduardo Sitt Director October 25, 2000
-----------------------
Eduardo Sitt
/s/ Donald P. Garber Director October 25, 2000
-----------------------
Donald P. Garber
</TABLE>
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