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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant []
Check the appropriate box:
[][x] Preliminary Proxy Statement [] Confidential, for Use of the
Commission Only (as permitted by Rule
14a-6(e)(2))
[] Definitive Proxy Statement
[] Definitive Additional Materials
[] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
XYVISION, INC.
_____________________________________________________________________ __
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
_____________________________________________________________________ _____
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[][x] No fee required.
[] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[] Fee paid previously with preliminary materials.
[] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
1
(4) Date Filed:
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Preliminary Copy
XYVISION, INC.
30 NEW CROSSING ROAD
READING, MASSACHUSETTS 01867-3254
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 17, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of
Xyvision, Inc., a Delaware corporation (the "Company"), will be held on
Thursday, September 17, 1998 at 10:00 a.m. at the offices of the Company, 30
New Crossing Road, Reading, Massachusetts (the "Meeting") for the purpose of
considering and voting upon the following matters:
1. To elect two Class III Directors for the ensuing three years;
2. To approve an amendment to the Company's Certificate of Incorporation to
(i) effect a reverse split of the Company's Common Stock, $.03 par value
per share (the "Common Stock"), pursuant to which each five shares of
Common Stock then outstanding will be converted into one share, and (ii)
change the authorized number of shares of Common Stock from 50,000,000 to
25,000,000;
3. To ratify the appointment of Coopers & Lybrand L.L.P. as the Company's
independent public accountants for the current year; and
4. To transact such other business, if any, as may properly come before the
Meeting or any adjournment thereof.
The Board of Directors has no knowledge of any other business to be
transacted at the Meeting.
The Board of Directors has fixed the close of business on Tuesday, July
21, 1998 as the record date for the determination of stockholders entitled to
notice of and to vote at the Meeting and at any adjournments thereof. A list of
the Company's stockholders is open for examination to any stockholder at the
principal executive offices of the Company, 30 New Crossing Road, Reading,
Massachusetts and will be available at the Meeting.
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended March 31, 1998, which contains consolidated financial statements and
other information of interest to stockholders, accompanies this Notice and the
enclosed Proxy Statement.
By Order of the Board of Directors,
Eugene P. Seneta, Secretary
July , 1998
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WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY COMPLETE, SIGN,
DATE AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. NO POSTAGE
NEED BE AFFIXED IF THE PROXY IS MAILED IN THE UNITED STATES.
3
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Preliminary Copy
XYVISION, INC.
30 NEW CROSSING ROAD
READING, MASSACHUSETTS 01867-3254
PROXY STATEMENT
For the Annual Meeting of Stockholders
To Be Held on September 17, 1998
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Xyvision, Inc., a Delaware corporation (the
"Company"), of proxies for use at the Annual Meeting of Stockholders to be held
on Thursday, September 17, 1998 at 10:00 a.m. at the offices of the Company, 30
New Crossing Road, Reading, Massachusetts 01867-3254 and at any adjournments
thereof (the "Meeting").
All proxies will be voted in accordance with the instructions of the
stockholder. If no choice is specified, the proxies will be voted in favor of
the matters set forth in the accompanying Notice of Meeting. Any proxy may be
revoked by a stockholder at any time before its exercise by delivery of a
written revocation or a subsequently dated proxy to the Secretary of the
Company or by voting in person at the Meeting. Attendance at the Meeting will
not itself be deemed to revoke a proxy unless the stockholder gives affirmative
notice at the Meeting that the stockholder intends to revoke the proxy and vote
in person.
THE NOTICE OF MEETING, THIS PROXY STATEMENT, THE ENCLOSED PROXY AND THE
COMPANY'S ANNUAL REPORT TO STOCKHOLDERS FOR THE FISCAL YEAR ENDED MARCH 31,
1998 ARE FIRST BEING SENT OR GIVEN TO STOCKHOLDERS ON OR ABOUT JULY 27, 1998.
THE COMPANY WILL, UPON WRITTEN REQUEST OF ANY STOCKHOLDER, FURNISH WITHOUT
CHARGE A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED MARCH
31, 1998, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WITHOUT
EXHIBITS. PLEASE ADDRESS ALL SUCH REQUESTS TO THE SECRETARY, XYVISION, INC., 30
NEW CROSSING ROAD, READING, MASSACHUSETTS 01867-3254. EXHIBITS WILL BE PROVIDED
UPON WRITTEN REQUEST AND PAYMENT OF AN APPROPRIATE PROCESSING FEE.
VOTING SECURITIES AND VOTES REQUIRED
On July 21, 1998, the record date for determination of stockholders
entitled to vote at the Meeting, there were outstanding and entitled to vote an
aggregate of shares of Common Stock of the Company, $.03 par value per share
(the "Common Stock"), and 235,299 shares of Series B Convertible Preferred
Stock of the Company, $1.00 par value per share (the "Series B Stock"),
constituting all of the voting stock of the Company. Holders of Common Stock
are entitled to one vote per share and holders of Series B Stock are entitled
to the number of votes equal to the number of whole shares of Common Stock into
which the Series B Stock held by such holders are then convertible (two shares
as of July 21, 1998). For the matters to be acted on at the Meeting, holders of
the Common Stock and the Series B Stock (collectively, the "Capital Stock")
shall vote together as a single class.
The holders of a majority of the shares of Capital Stock issued and
outstanding and entitled to vote at the Meeting shall constitute a quorum for
the transaction of business at the Meeting. Shares of Capital Stock present in
person or represented by proxy (including shares which abstain or do not vote
with respect to one or more of the matters presented for stockholder approval)
will be counted for purposes of determining whether a quorum exists at the
Meeting.
The affirmative vote of the holders of a plurality of the votes cast by
the holders of Capital Stock entitled to vote at the Meeting is required for
the election of directors. The affirmative vote of the holders of a majority of
the votes represented by the shares of Capital Stock outstanding on the record
date is required for approval of the amendment to the Company's Certificate of
Incorporation. The affirmative vote of the holders of a majority of the votes
represented by the shares of Capital Stock present or represented by proxy and
voting on the matter is required for the ratification of the selection of
Coopers & Lybrand L.L.P. as the Company's independent public accountants for
the current year.
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Shares which abstain from voting as to a particular matter, and shares
held in "street name" by brokers or nominees who indicate on their proxies that
they do not have discretionary authority to vote such shares as to a particular
matter, will not be counted as votes in favor of such matter, and will also not
be counted as votes cast or shares voting on such matter. Accordingly,
abstentions and "broker non-votes" will have no effect on the voting on a
matter that requires the affirmative vote of a plurality or a certain
percentage of the votes cast or shares voting on a matter. However, because
shares which abstain and shares represented by "broker non-votes" are
nonetheless considered outstanding shares, abstentions and "broker non-votes"
with respect to a matter that requires the affirmative vote of a certain
percentage of the votes represented by the outstanding shares will have the
same effect as a vote against such matter.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of May 31, 1998,
with respect to the beneficial ownership of shares of Common Stock and Series B
Stock by (i) each person known to the Company to beneficially own more than 5%
of the outstanding shares of either class of Capital Stock, (ii) the directors
and nominees for director of the Company, (iii) the persons listed in the
Summary Compensation Table below (the "Named Executive Officers"), and (iv) all
current directors, nominees for director and executive officers of the Company
as a group.
<TABLE>
<S> <C> <C> <C> <C>
AMOUNT AND NATURE AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP OF BENEFICIAL OWNERSHIP
OF COMMON STOCK OF SERIES B STOCK
_____________________________ ____________________________
NAME AND ADDRESS OF NUMBER OF PERCENT OF NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES(1) CLASS(2) SHARES CLASS
___________________________________ _____________ __________ _________ __________
5% Stockholders
Jeffrey L. Neuman 27,305,580(3) 74.5% 58,989 25.1%
Tudor Trust u/t/d August 11, 1986
450 N. Roxbury Avenue
Los Angeles, CA 90210
James S. Saltzman 2,375,491(4) 16.0% 46,686 19.8%
General Partner
c/o Saltzman Partners
621 E. Germantown Pike
Plymouth Valley, PA 19401
JTH Associates 325,706 2.2% 25,758 10.9%
400 Fifth Street South, Suite 305
Naples, FL 33940
Gerlach & Co. 29,236 * 14,618 6.2%
111 Wall Street, 8th Floor
New York, NY 10043
Lancer Enterprises 25,758 * 12,879 5.5%
Largo della Fontanella di
Boighese 19
00186 Rome Italy
5.4%
United Mineworkers of America 62,850 * 12,675
One Financial Center
Boston, MA 02111
OTHER DIRECTORS AND NOMINEES
Kevin J. Duffy 158,000(5) * 0 *
Leland S. Kollmorgen 24,000(6) * 0 *
James L. McKenney 12,000(7) * 0 *
Other Named Executive Officers
</TABLE>
5
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<TABLE>
<S> <C> <C> <C> <C>
AMOUNT AND NATURE
AMOUNT AND NATURE
OF BENEFICIAL OWNERSHIP OF BENEFICIAL OWNERSHIP
OF COMMON STOCK OF SERIES B STOCK
______________________________ ____________________________
NAME AND ADDRESS OF NUMBER OF PERCENT OF NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES(1) CLASS(2) SHARES CLASS
_______________________________________ ______________ __________ _________ __________
Eugene P. Seneta 45,068(8) * 0 *
Michael S. Borin 23,622(9) * 0 *
All current directors, nominees for 29,966,287(10) 80.9% 105,675 44.9%
director and executive officers, as a
group (10 Persons)
---------------------
*Less than 1%
</TABLE>
(1) The number of shares beneficially owned by each director and executive
officer is determined under rules promulgated by the Securities and
Exchange Commission (the "SEC"), and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under such
rules, beneficial ownership includes any shares as to which the individual
has sole or shared voting power or investment power and also any shares
which the individual has the right to acquire currently or within 60 days
after May 31, 1998 through the exercise of any stock option or other
right, including upon the conversion of Series B Stock or the Company's 6%
Convertible Subordinated Debentures due 2002 (the "Debentures"). Any
references in these footnotes to options, warrants or other securities
held by a person or entity refers only to options, warrants or other
securities currently exercisable or exercisable within 60 days after May
31, 1998. The inclusion herein of shares, however, does not constitute an
admission that the named stockholder is a direct or indirect beneficial
owner of such shares. Unless otherwise indicated, each person or entity
named in the table has sole voting power and investment power (or shares
such power with his or her spouse) with respect to all shares of capital
stock listed as beneficially owned by such person or entity.
(2) Number of shares of Common Stock deemed outstanding includes 14,739,857
shares outstanding as of May 31, 1998, plus any shares issuable upon
conversion of Series B Stock or Debentures or subject to options or
warrants held by the person or entity in question.
(3) Based upon information contained on a Schedule 13D/A, dated December 20,
1997, filed with the Securities and Exchange Commission, and otherwise
provided to the Company, by Tudor Trust, includes 21,782,500 shares of
Common Stock issuable upon the exercise of Common Stock Purchase Warrants,
117,978 shares of Common Stock issuable upon conversion of Series B Stock
and 23,000 shares of Common Stock issuable upon conversion of Debentures.
Includes securities held by both Mr. Neuman and by Tudor Trust. Mr. Neuman
is the grantor, sole trustee and sole current beneficiary of Tudor Trust.
See "Certain Transactions."
(4) Includes 93,372 shares of Common Stock issuable upon conversion of Series B
Stock and 20,000 shares of Common Stock subject to outstanding stock
options held by Mr. Saltzman. Includes securities held by both Mr.
Saltzman and Saltzman Partners. Mr. Saltzman is the General Partner of
Saltzman Partners. See "Certain Transactions."
(5) Consists of 158,000 shares of Common Stock subject to outstanding stock
options.
(6) Includes 23,000 shares of Common Stock subject to outstanding stock
options.
(7) Consists of 12,000 shares of Common Stock subject to outstanding stock
options.
(8) Consists of 45,068 shares of Common Stock subject to outstanding stock
options.
(9) Consists of 23,622 shares of Common Stock subject to outstanding stock
options.
(10) Includes an aggregate of 304,216 shares subject to outstanding stock
options, 21,782,500 shares of Common Stock issuable upon the exercise of
Common Stock Purchase Warrants, 211,350 shares of Common Stock issuable
upon conversion of Series B Stock and 23,000 shares of Common Stock
issuable upon conversion of Debentures.
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ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes (designated
Class I directors, Class II directors and Class III directors), with members of
each class serving for staggered three-year terms. There are currently one
Class I director, whose term expires at the 1999 Annual Meeting of
Stockholders, two Class II directors, whose terms expire at the 2000 Annual
Meeting of Stockholders, and two Class III directors, whose terms expire at the
1998 Annual Meeting of Stockholders (in all cases subject to the election and
qualification of their successors and to their earlier death, resignation or
removal).
The persons named in the enclosed proxy will vote to elect, as Class III
directors, Leland S. Kollmorgen and James L. McKenney, the two director
nominees named below, unless the proxy is marked otherwise. Messrs. Kollmorgen
and McKenney are each currently directors of the Company.
Each Class III director will be elected to hold office until the 2001
annual meeting of stockholders (subject to the election and qualification of
his successor and to his earlier death, resignation or removal). Each of the
nominees has indicated his willingness to serve, if elected; however, if any
nominee should be unable to serve, the person acting under the proxy may vote
the proxy for a substitute nominee. The Board of Directors has no reason to
believe that any of the nominees will be unable to serve if elected.
Set forth below are the names and certain information with respect to each
director of the Company, including the nominees for Class III director. There
are no family relationships among any of the directors, nominees for director
and executive officers of the Company.
NOMINEES FOR CLASS III DIRECTOR
LELAND S. KOLLMORGEN, age 71, has been the President of TLK Inc., a
business consulting firm, since 1983 and is a self-employed consultant. Rear
Admiral Kollmorgen (USN, Retired) is a consultant and former Chief of Naval
Research to the United States Navy. He has been a director of the Company since
1988.
JAMES L. MCKENNEY, age 69, has been the John J. McLean Professor of
Business Administration at Harvard University since 1960. Mr. McKenney has been
a director of the Company since November 1994.
CLASS I DIRECTOR
JAMES S. SALTZMAN, age 54, has been the General Partner of Saltzman
Partners, an investment firm, since 1982. Since January 1997, Mr. Saltzman has
served as Chairman of Madison Monroe, Inc., a private company engaged in
investments. He served as Chairman of the Board of Directors of the Company
from February 1994 to February 1995. He has been a director of the Company
since 1992. Mr. Saltzman serves on the Board of Directors of Dynasil
Corporation of America.
CLASS II DIRECTORS
KEVIN J. DUFFY, age 43, has served as President and Chief Operating
Officer of the Company since August 1996 and as a director of the Company since
October 1996. Previously, he served as Senior Vice President and General
Manager, Xyvision Publishing Group from December 1995 to September 1996. From
April 1991 to December 1995 he served as Vice President, North American Sales.
Mr. Duffy joined the Company in June 1983.
JEFFREY L. NEUMAN, age 54, has been Chairman of the Board of Directors of
the Company since October 1996. Mr. Neuman has been a private investor since
1987.
For information relating to shares of Common Stock owned by each of the
directors and nominees for director, see "Security Ownership of Certain
Beneficial Owners and Management."
BOARD AND COMMITTEE MEETINGS
The Board of Directors of the Company met six times (including by
telephone conference) during fiscal 1998. All directors attended at least 75%
of the meetings of the Board of Directors and of the committees on which they
served.
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The Board of Directors has an Audit Committee, which provides the
opportunity for direct contact between the Company's independent public
accountants and the Board. The Audit Committee reviews the effectiveness of the
auditors during the annual audit, discusses the Company's internal accounting
control policies and procedures and considers and recommends the selection of
the Company's independent public accountants. The Audit Committee met twice
during the fiscal 1998. The current Audit Committee members are Messrs.
Kollmorgen, McKenney and Saltzman (Chairman).
The Board of Directors has a Compensation and Stock Option Committee (the
"Compensation Committee"), which provides recommendations to the Board
regarding compensation programs of the Company and administers the Company's
stock option and stock benefit plans. The Compensation Committee met during
fiscal 1998. The current Compensation Committee members are Messrs. Kollmorgen
(Chairman) and Saltzman.
The Board of Directors has a Technology Committee, which provides
recommendations to the Board regarding the Company's technology. The Technology
Committee did not meet during fiscal 1998. The current Technology Committee
members are Messrs. Kollmorgen (Chairman) and McKenney.
The Board of Directors has a Nominating Committee, which provides
recommendations to the Board of Directors regarding nominees for directorships.
The Nominating Committee did not meet during fiscal 1998, as its function for
such period was performed by the full Board of Directors. The Committee will
consider nominees recommended by stockholders. Stockholders who wish to
recommend nominees for director should submit such recommendations to Eugene P.
Seneta, Secretary of the Company, at the principal executive offices of the
Company, who will forward them to the Nominating Committee for consideration.
The current Nominating Committee members are Messrs. Saltzman (Chairman) and
Kollmorgen.
DIRECTOR COMPENSATION
Directors who are not employees of the Company receive directors' fees of
$2,000 per year. Such outside directors also receive fees of $500 for each
Board meeting attended in person and $250 for each telephonic Board meeting in
which the director participates, and directors who are members of Committees of
the Board of Directors receive fees of $250 per Committee meeting attended,
provided such Committee meeting was not held on the same day as a Board
meeting. Directors are also reimbursed for expenses incurred in attending Board
or Committee meetings. Directors who are employees receive no additional
compensation for serving as directors.
Under the Company's 1992 Director Stock Option Plan, each newly elected
outside director is granted, upon his initial election as a director, a
non-qualified option to purchase 20,000 shares of Common Stock at an exercise
price equal to the fair market value of the Common Stock as of the date of
grant. Each option granted under the 1992 Director Stock Option Plan becomes
exercisable on a cumulative basis in five equal annual installments beginning
on the date of grant.
EXECUTIVE COMPENSATION
Summary Compensation
The following table sets forth certain information with respect to
compensation, for the fiscal years indicated, of the Company's Chief Executive
Officer and the Company's two other executive officers who were serving as
executive officers at the end of fiscal 1998.
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SUMMARY COMPENSATION TABLE
<TABLE>
<S> <C> <C> <C> <C> <C>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
_____________________ _______________________________
AWARDS
__________________
Fiscal Securities All Other
Name and Principal Position Year Salary(1) Bonus Underlying Options Compensation(2)
______________________________________ ______ __________ ________ ___________________ ________________
1998 $ 150,000 - - $1,500
Kevin J. Duffy 1997 $ 142,327 - 200,000 $1,573
President and Chief Operating Officer 1996 $ 122,135 $15,000 10,000 $1,221
1998 $ 110,001 - - $1,100
Michael S. Borin 1997 $ 93,558 - 40,000 $936
Vice President, Human Resources 1996 $ 76,423 - 18,130 $764
Eugene P. Seneta
Vice President, Chief Financial 1998 $ 110,001 - -
Officer, 1997 $ 110,011 - 40,000 -
Treasurer and Secretary 1996 $ 97,384 - - - $729
- ---------------------
</TABLE>
(1) In accordance with the rules of the SEC, other compensation in the form of
perquisites and other personal benefits has been omitted because such
perquisites and other personal benefits constituted less than the lesser
of $50,000 or 10% of the total annual salary and bonus for the Named
Executive Officer.
(2) Consists of Company matching contributions to the Company's 401(k) Plan.
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Option/SAR Grants
The Company granted no stock options and no stock appreciation rights to
the Named Executive Officers during fiscal 1998.
Fiscal Year-End Option Value Table
The following table sets forth certain information regarding the number
and value of unexercised stock options held as of March 31, 1998 by each of the
Named Executive Officers. No stock options were exercised during fiscal 1998 by
the Named Executive Officers and no stock appreciation rights were exercised
during fiscal 1998 by the Named Executive Officers or were outstanding at year
end.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<S> <C>
NUMBER OF SECURITIES UNDERLYING UNEXERCISED
OPTIONS AT FISCAL YEAR END(1)
____________________________________________
NAME EXERCISABLE / UNEXERCISABLE
___________________________ ____________________________________________
Kevin J. Duffy 158,000 / 152,000
Michael S. Borin 23,622 / 41,378
Eugene P. Seneta 45,068 / 44,932
---------------------
</TABLE>
(1) As of March 31, 1998, the Named Executive Officers held no unexercised
in-the-money options.
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AGREEMENTS WITH SENIOR EXECUTIVES
The Company has an Employee Severance Benefit Plan in which all full-time
employees (including executive officers) who have been employed by the Company
for at least 90 days participate. Under this Plan, if a "change in control" of
the Company (as defined in the Plan) occurs, and within 12 months thereafter a
participant's employment with the Company is terminated either by the Company
other than for "cause" or "disability" (each as defined in the Plan) or by the
participant for "good reason" (as defined in the Plan), then (i) the
participant is entitled to (a) a cash payment equal to 50% of his annual base
compensation if he has been employed by the Company for less than one year or
100% of his annual base compensation if he has been employed by the Company for
one year or more (subject to reduction in certain events for tax reasons) and
(b) a continuation of certain insurance benefits for a period of one year, and
(ii) all outstanding stock options held by the participant shall immediately
become exercisable in full. Notwithstanding the foregoing, if a particular
change in control of the Company is approved in advance by the Board of
Directors of the Company, participants shall not be entitled to any of the
foregoing benefits. This Plan may be amended or terminated by the Board of
Directors at any time prior to the occurrence of a change in control. Amounts
payable to any employee under the Plan are reduced by amounts payable to such
employee under any other program or agreement under which he will receive
benefits.
CERTAIN TRANSACTIONS
Tudor Trust, of which Jeffrey L. Neuman, Chairman of the Board of
Directors of the Company, is the grantor, sole trustee and sole current
beneficiary, has a fifty percent equity interest in Document Management
Solutions, Inc., a systems integration services company serving the publishing
industry. The Company paid Document Management Solutions, Inc. (DMSI) $260,313
and $57,466 in fiscal 1997 and 1998, respectively, for integration services
provided to the Company. As of March 31, 1998, the Company owed $16,777 of
unpaid invoices to DMSI.
On June 30, 1992, the Company obtained a $2,000,000 line of credit with
Tudor Trust. Jeffrey L. Neuman, Chairman of the Board of Directors of the
Company, is the grantor, sole trustee and sole current beneficiary of Tudor
Trust. The line, which is payable on demand, is secured by substantially all of
the assets of the Company and has been used for working capital and general
business purposes. Interest on the line of credit is payable annually. On
September 28, 1993, the Company and Tudor Trust amended the line of credit,
among other things, to increase the amount available thereunder to $2,500,000,
reduce the annual interest rate from 13% to 10% and extend the term of the line
of credit to June 30, 1995. On December 3, 1993, the Company and Tudor Trust
entered into an additional amendment to the line of credit to increase the
amount available thereunder to $3,000,000. On February 29, 1996, the Company
and Tudor Trust entered into an additional amendment to the line of credit to
increase the amount available thereunder to $4,000,000 and to extend the term
of the line of credit to December 31, 1997.
On May 31, 1996, the Company and Tudor Trust entered into an additional
amendment to the line of credit, among other things, to increase the maximum
loan amount thereunder to $5,000,000 and reduce the interest rate on the line
of credit from 10% to 8% per annum. In consideration therefor, the Company
issued to Tudor Trust warrants for the purchase of an aggregate of 10,000,000
shares of Common Stock of the Company at an exercise price of $.18 per share
(representing the fair market value of the Common Stock of the Company as of
the date of issuance). In connection with this amendment, Tudor Trust exercised
certain outstanding warrants for the purchase of 2,092,500 shares of Common
Stock of the Company for an aggregate purchase price of $200,000.
On November 22, 1996, the Company and Tudor Trust entered into an
additional amendment to the line of credit, among other things, to increase the
maximum loan amount thereunder to $6,000,000.
On November 10, 1997, the Company and Tudor Trust entered into an
additional amendment to the line of credit, among other things, to increase the
maximum loan amount thereunder to $8,300,000, reduce the interest rate on the
line of credit from 8% to 6%, provide for Tudor Trust to cause the issuance of
a letter of credit from a bank in the amount of $444,600 to the Company's new
landlord and extend the term of the line of credit to March 31, 2001. In
consideration for such amendment, the Company issued to Tudor Trust a warrant
for the purchase of 10,000,000 shares of Common Stock of the Company at an
exercise price of $.16 per share (representing the fair market value of the
Common Stock of the Company as of the date of issuance).
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On July 1, 1998, the Company and Tudor Trust amended and restated the
line of credit, among other things, to (i) increase the maximum loan amount
thereunder to $13,500,000, (ii) provide that Tudor Trust shall have the sole
discretion to decide whether or not to make advances of funds thereunder, (iii)
provide that the interest payable thereunder from December 1, 1997 through
January 1, 1999 shall be paid in shares of Common Stock based on the fair
market value of the Common Stock, (iv) provide Tudor Trust with the option of
receiving the interest payable thereunder after January 1, 1999 in cash or in
shares of Common Stock based on the fair market value of the Common Stock, and
(v) increase the interest rate on the line of credit from 6% to 8% per annum.
In consideration for such amendment, the Company issued to Tudor Trust a
warrant for the purchase of 3,000,000 shares of Common Stock of the Company at
an exercise price of $.25 per share.
On September 30, 1996, the Company entered into an exchange agreement with
Tudor Trust, Saltzman Partners, and certain other parties relating to the
Company's 4% Promissory Notes (the "4% Notes") held by such parties. Jeffrey L.
Neuman, the grantor, sole trustee and sole current beneficiary of Tudor Trust,
is the Chairman of the Board of Directors of the Company. James S. Saltzman,
the General Partner of Saltzman Partners, is a director of the Company. Tudor
Trust and Saltzman Partners held 4% Notes in the aggregate principal amounts of
$2,378,500 and $1,087,500, respectively, which they exchanged upon the
following terms. Under the terms of the exchange agreement, the Company issued
to holders of its 4% Notes in exchange for the delivery of its 4% Notes for
cancellation such number of shares of Common Stock of the Company as was equal
to the principal amount of the 4% Notes exchanged divided by $2.00 (any accrued
but unpaid interest was paid in cash at the time of such exchange). Pursuant to
the exchange agreement, Tudor Trust received 1,189,250 shares of Common Stock
and $23,785 in accrued interest, and Saltzman Partners received 543,750 shares
of Common Stock and $10,875 in accrued interest.
On October 7, 1996, the Company entered into an exchange agreement with
Tudor Trust on the same terms as described in the previous paragraph pursuant
to which the Company issued 15,000 shares of Common Stock and paid $22.82 in
accrued interest to Tudor Trust in exchange for the delivery for cancellation
of a 4% Note in the principal amount of $30,000 held by Tudor Trust.
On September 30, 1996, the Company entered into an exchange agreement with
Tudor Trust and certain other parties relating to the Company's 6% Convertible
Subordinated Debentures due 2002 (the "Debentures") held by such parties. Tudor
Trust held Debentures in the aggregate principal amount of $1,970,000, which it
exchanged upon the following terms. Under the terms of the exchange agreement,
the Company issued to holders of its Debentures in exchange for the delivery of
its Debentures for cancellation such number of shares of Common Stock of the
Company as was equal to the sum of the principal amount of the Debentures
exchanged plus the accrued interest thereon, divided by $3.33. Pursuant to the
exchange agreement, Tudor Trust received 783,462 shares of Common Stock.
On May 21, 1997, the Company entered into an exchange agreement with Tudor
Trust on the same terms as described in the previous paragraph pursuant to
which the Company issued 8,223 shares of Common Stock to Tudor Trust in
exchange for the delivery for cancellation of $20,000 aggregate principal
amount of Debentures held by Tudor Trust.
APPROVAL OF AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO EFFECT ONE-FOR-FIVE REVERSE SPLIT AND TO
CHANGE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK
The Board of Directors has adopted a resolution declaring the advisability
of, and submitting to the stockholders for approval, a proposal to amend the
Company's Certificate of Incorporation (the "Proposed Amendment") to (i) effect
a reverse split of the Company's Common Stock, pursuant to which each five
shares of Common Stock will be automatically converted into one share without
any action on the part of the stockholder, with cash being paid in lieu of any
fractional share which might result (the "Reverse Split") and (ii) change the
authorized number of shares of Common Stock from 50,000,000 to 25,000,000
shares. The Reverse Split will become effective as of 5:00 P.M., Boston time
(the "Effective Date"), on the date that the certificate of amendment to the
Company's Certificate of Incorporation giving effect to the Proposed Amendment
is filed with the Secretary of State of the State of Delaware.
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If for any reason the Board of Directors deems it advisable, the Proposed
Amendment may be abandoned at any time before the Effective Date, whether
before or after the Meeting (even if such proposal has been approved by the
stockholders).
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 STOCKHOLDERS VOTE "FOR" THE
PROPOSED AMENDMENT.
Effect of the Reverse Split
As a result of the Reverse Split, the number of whole shares of Common
Stock held by stockholders of record as of the close of business on the
Effective Date will automatically, without any action required by the
stockholders, be equal to the number of shares of Common Stock held immediately
prior to the close of business on the Effective Date divided by five, with cash
being paid in lieu of issuing any fractional share which might result from the
Reverse Split. The Reverse Split will not affect a stockholder's percentage
ownership interest in the Company or proportional voting power, except for
minor differences resulting from the payment of cash in lieu of fractional
shares. The rights and privileges of the holders of shares of Common Stock will
be unaffected by the Reverse Split. The par value of the Common Stock will
remain at $.03 per share following the Effective Date of the Reverse Split, and
the number of shares of Common Stock issued will be reduced. As a consequence,
the aggregate par value of the issued Common Stock will be reduced. In
addition, the number of authorized but unissued shares of Common Stock will be
increased by the Reverse Split, the issuance of which may have the effect of
diluting the earnings per share and book value per share. as well as the stock
ownership and voting rights, of outstanding Common Stock, and may have an
anti-takeover effect.
Stockholders will be entitled to receive, in lieu of any fractional share
arising as a result of the Reverse Split, cash in the amount of the relevant
portion of the fair market value of one share of Common Stock on the Effective
Date, as determined by the Board of Directors of the Company.
Stockholders have no right under Delaware law or under the Company's
Certificate of Incorporation or By-laws to dissent from the Reverse Split.
The Common Stock is currently registered under Section 12(g) of the
Exchange Act and as a result, the Company is subject to the periodic reporting
and other requirements of the Exchange Act. The Reverse Split will not affect
the registration of the Common Stock under the Exchange Act, and the Company
has no current intention of terminating its registration under the Exchange
Act.
Upon consummation of the Reverse Split, the total number of shares
currently reserved for grants of stock options and all stock options previously
granted would be decreased proportionately. The cash consideration payable per
share upon exercise of the stock options would be increased proportionately.
Similarly, the total number of shares issuable upon exercise of warrants
granted by the Company would be decreased proportionately and the cash
consideration payable per share upon exercise of the warrants would increase
proportionately. Finally, the number of shares of Common Stock issuable upon
conversion of the Series B Stock would be decreased proportionately.
Purpose of the Reverse Split
The Board of Directors is submitting the Reverse Split for approval of the
stockholders primarily because it believes the Reverse Split may increase the
trading price of the Common Stock and thereby enhance the likelihood of
generating interest in the Company's Common Stock by more investors and members
of the securities brokerage industry. The Board of Directors also believes the
Reverse Split may enhance the likelihood for success of any acquisition or
financing efforts which might be undertaken by the Company. The Company
believes that brokerage firms and institutional investors might be more willing
to evaluate the Company's securities as a possible investment opportunity for
their clients and to act as a market maker in the Company's securities if the
price range for the Common Stock were higher. The Board of Directors believes
that additional interest by the investment community in the Company's Common
Stock might result in a more liquid trading market for the stock and that
potential acquisition candidates might be more willing to accept shares of
Common Stock if the trading
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prices were in a higher range and the market for the Common Stock was believed
to be less volatile. Although the Board of Directors believes that its ability
to complete acquisitions or conduct financings might be benefited by the
proposed Reverse Split, there can be no assurance that this will occur. At the
current time the Company has no agreements for any acquisitions or financings,
other than as described in this Proxy Statement.
The Board of Directors further believes that low trading prices of the
Company's Common Stock may have an adverse impact upon the efficient operation
of the trading market in the securities. In particular, brokerage firms often
charge a greater percentage commission on low-priced shares than that which
would be charged on a transaction in the same dollar amount of securities with
a higher per share price. A number of brokerage firms will not recommend
purchases of low-priced stock to their clients or make a market in such shares,
which tendencies may adversely affect the Company. Stockholders should note
that the effect of the Reverse Split upon the market prices for the Company's
Common Stock cannot be accurately predicted. In particular, there is no
assurance that prices for shares of the Common Stock after the Reverse Split
will be five times the prices for shares of the Common Stock immediately prior
to the Reverse Split. Furthermore, there can be no assurance that the proposed
Reverse Split will achieve the desired results which have been outlined above,
nor can there be any assurance that the Reverse Split will not adversely impact
the market price of the Common Stock or, alternatively, that any increased
price per share of the Common Stock immediately after the proposed Reverse
Split will be sustained for any prolonged period of time. In addition, the
Reverse Split may have the effect of creating odd lots of stock for some
stockholders and such odd lots may be more difficult to sell or have higher
brokerage commissions associated with the sale of such odd lots.
Exchange of Stock Certificates
As soon as practicable after the Effective Date, the Company intends to
require stockholders to exchange their stock certificates for new certificates
representing the number of whole shares of Common Stock into which their shares
of Common Stock have been converted as a result of the Reverse Split (and cash
in lieu of any fractional share which might result from the Reverse Split).
Stockholders will be furnished with the necessary materials and instructions
for the surrender and exchange of stock certificates at the appropriate time by
the Company's transfer agent. Stockholders will not be required to pay a
transfer or other fee in connection with the exchange of certificates.
STOCKHOLDERS SHOULD NOT SUBMIT ANY CERTIFICATES TO THE TRANSFER AGENT UNTIL
REQUESTED TO DO SO.
Federal Income Tax Consequences of the Reverse Split
The following description of federal income tax consequences of the
Reverse Split is based upon the Internal Revenue Code of 1986, as amended, the
applicable Treasury Regulations promulgated thereunder, judicial authority and
current administrative rulings and practices as in effect on the date of this
Proxy Statement (the "Code"). The Company has not sought and will not seek an
opinion of counsel or a ruling from the Internal Revenue Service regarding the
federal income tax consequences of the Reverse Split. This discussion is for
general information only and does not discuss consequences which may apply to
special classes of taxpayers (e.g., non-resident aliens, broker-dealers or
insurance companies). Stockholders are urged to consult their own tax advisors
to determine the particular consequences to them.
The exchange of five shares of Common Stock for one share of Common Stock
pursuant to the Reverse Split will not result in recognition of gain or loss.
The holding period of the shares of Common Stock acquired in the Reverse Split
will include the stockholder's holding period for the shares of Common Stock
exchanged therefor, provided that the shares of Common Stock were held as a
capital asset. The adjusted basis of the shares of Common Stock acquired in the
Reverse Split will be the same as the adjusted basis of the shares of Common
Stock exchanged therefor. A stockholder who receives cash in lieu of any
fractional share as a result of the Reverse Split will generally be treated as
having received the payment as a distribution in redemption of the fractional
share, as provided by Section 302(a) of the Code. Affected stockholders should
consult their own tax advisors for the tax treatment of such redemption in
light of particular facts and circumstances.
Change in Authorized Common Stock
The Proposed Amendment will change the authorized number of shares of
Common Stock from 50,000,000 to 25,000,000 shares. The Company's 3,000,000
shares of authorized Preferred Stock will not be affected by the
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Proposed Amendment. The Board of Directors believes that the proposed change in
the authorized number of shares of Common Stock will not adversely affect the
Company's ability to continue to honor its outstanding commitments and to
provide shares for issuance in connection with future financings, debt exchange
transactions and other general corporate purposes. Except for the shares of
Common Stock issuable under the Company's stock option and stock benefit plans
or upon the conversion of outstanding warrants and Debentures and shares of
Series B Stock, there is no existing plan, understanding or agreement for the
issuance of any shares of Common Stock, although the Company continues to
negotiate with as many debtholders as possible with respect to potential
exchange transactions that may involve the issuance of Common Stock.
RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
Subject to ratification by stockholders, the Board of Directors has
selected the firm of Coopers & Lybrand L.L.P. to serve as the Company's
independent public accountants for the current fiscal year. Coopers & Lybrand
L.L.P. has served as the Company's independent public accountants since the
Company's inception. Although stockholder approval of the Board of Directors'
selection of Coopers & Lybrand L.L.P. is not required by law, the Board of
Directors believes that it is advisable to give stockholders an opportunity to
ratify this selection. If this proposal is not approved at the Meeting, the
Board of Directors will reconsider its selection of Coopers & Lybrand L.L.P.
Representatives of Coopers & Lybrand L.L.P. are expected to be present at
the Meeting. They will have the opportunity to make a statement if they desire
to do so and will also be available to respond to appropriate questions from
stockholders.
GENERAL
OTHER MATTERS
The Board of Directors knows of no other business which will be presented
for consideration at the Meeting other than that described above. However, if
any other business should come before the Meeting, it is the intention of the
persons named in the enclosed proxy to vote, or otherwise act, in accordance
with their best judgment on such matters.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Any proposal that a stockholder intends to present at the 1999 Annual
Meeting of Stockholders must be submitted to the Secretary of the Company at
its principal executive offices, 30 New Crossing Road, Reading, Massachusetts
01867-3254, no later than March xx, 1999 in order to be considered for
inclusion in the Company's proxy statement and proxy relating to that meeting.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and holders of more than 10% of the
Company's Common Stock ("Reporting Persons") to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Based
solely on its review of copies of reports filed by the Reporting Persons
furnished to the Company, the Company believes that during the last fiscal year
the Reporting Persons complied with all Section 16(a) filing requirements.
COSTS OF SOLICITATION
The Company will bear the costs of soliciting proxies. In addition to
solicitations by mail, the Company's directors, officers and regular employees
may, without additional remuneration, solicit proxies by telephone, facsimile
and personal interviews. The Company will also request brokerage houses,
custodians, nominees and fiduciaries to forward copies of the proxy material to
those persons for whom they hold shares and request
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instructions for voting the proxies. The Company will reimburse such brokerage
houses and other persons for their reasonable expenses in connection with this
distribution.
By Order of the Board of Directors,
Eugene P. Seneta, Secretary
July xx, 1998
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, SIGN, DATE, AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION IS
APPRECIATED.
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Appendix A
XYVISION, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 17, 1998
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY
AND SHOULD BE RETURNED AS SOON AS POSSIBLE
The undersigned, having received notice of the Annual Meeting of
Stockholders and the Board of Directors' proxy statement therefor, and revoking
all prior proxies, hereby appoint(s) Kevin J. Duffy and Patrick J. Rondeau, and
each of them, attorneys or attorney of the undersigned (with full power of
substitution in them and each of them) for and in the name(s) of the
undersigned to attend the Annual Meeting of Stockholders of XYVISION, INC. (the
"Company") to be held on Thursday, September 17, 1998 at 10:00 a.m. at the
offices of the Company, 30 New Crossing Road, Reading, Massachusetts, and any
adjournments thereof, and there to vote and act upon the following matters in
respect of all shares of stock of the Company which the undersigned may be
entitled to vote or act upon, with all the powers the undersigned would possess
if personally present.
In their discretion, the proxy holders are authorized to vote upon such
other matters as may properly come before the meeting or any adjournments
thereof. The shares represented by this proxy will be voted as directed by the
undersigned. IF NO DIRECTION IS GIVEN WITH RESPECT TO ANY ELECTION TO OFFICE OR
PROPOSAL, THIS PROXY WILL BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS.
Attendance of the undersigned at the meeting or at any adjournment thereof will
not be deemed to revoke this proxy unless the undersigned shall revoke this
proxy in writing.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN THIS PROXY IN THE ACCOMPANYING ENVELOPE.
A VOTE "FOR" BOTH DIRECTOR NOMINEES AND A VOTE "FOR" EACH OF PROPOSAL
NUMBERS 2 AND 3 ARE RECOMMENDED BY THE BOARD OF DIRECTORS.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENT
THEREOF.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO OTHER INDICATION IS MADE, THE PROXIES
SHALL VOTE "FOR" BOTH DIRECTOR NOMINEES AND "FOR" EACH OF PROPOSAL NUMBERS 2
AND 3.
1. To elect the following nominees for Class III Director to serve for the
ensuing three years (except as marked below):
Nominees: Leland S. Kollmorgen
James L. McKenney
[] FOR [] WITHHOLD
both nominees (except as marked below)
(Instruction: To withhold a vote for an individual nominee, write the
name of such nominee in the space provided below. Your shares will be
voted for the remaining nominee.)
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2. To approve the amendment to the Company's Certificate of Incorporation to
effect a one-for-five reverse split of the Common Stock and to change the
number of authorized shares of Common Stock from 50,000,000 to 25,000,000.
[] FOR [] AGAINST [] ABSTAIN
3. To ratify the appointment of Coopers & Lybrand L.L.P. as the Company's
independent public accountants for the current year.
[] FOR [] AGAINST [] ABSTAIN
Please mark your votes as indicated in this example [][x]
MARK HERE FOR ADDRESS []
CHANGE AND NOTE AT LEFT
MARK HERE IF YOU PLAN []
TO ATTEND THE MEETING
Dated: ______________________, 1998
___________________________________
Signature
___________________________________
Signature if held jointly
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. 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 A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY AUTHORIZED OFFICER,
GIVING FULL TITLE. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON, GIVING FULL TITLE.
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