<PAGE> 1
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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
ARISTO INTERNATIONAL CORPORATION
- - --------------------------------------------------------------------------------
(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):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
ARISTO INTERNATIONAL CORPORATION
152 WEST 57TH STREET, 29TH FLOOR
NEW YORK, NEW YORK 10019
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 29, 1996
NOTICE IS HEREBY GIVEN that the 1996 Annual Meeting of Stockholders (the
"Meeting") of Aristo International Corporation (the "Company") will be held at
the Company's executive offices at 152 West 57th Street, 29th Floor, New York,
New York on Tuesday, October 29, 1996, at 10:00 a.m., New York City time, to
consider and act upon the following matters:
1. The election of three (3) directors of the Company to serve as the
Board of Directors until the next annual meeting of stockholders and until
their successors are duly elected and qualified;
2. A proposal to amend the Company's Certificate of Incorporation (a)
to change its name to "PlayNet Technologies, Inc." and (b) to increase the
number of shares of stock that the Company is authorized to issue to
40,000,000, consisting of 1,000,000 shares of preferred stock and
39,000,000 shares of common stock;
3. A proposal to adopt the Company's 1996 Stock Option Plan (the "1996
Plan"). The 1996 Plan is designed to provide an incentive to key employees,
and to consultants and directors who are not employees, of the Company and
to offer an additional inducement in obtaining the services of such
persons; and
4. The transaction of such other business as may properly come before
the Meeting or any adjournment or postponement thereof.
Information regarding the matters to be acted upon at the Meeting is
contained in the accompanying Proxy Statement.
The close of business on October 1, 1996 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Meeting and any adjournment or postponement thereof. A list of such stockholders
will be open for examination by any stockholder for any purpose germane to the
meeting, during ordinary business hours, for a period of at least 10 days prior
to the Meeting at the offices of the Company, 152 West 57th Street, 29th Floor,
New York, New York.
By Order of the Board of Directors,
Yael Cohen
Secretary
New York, New York
October 8, 1996
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. EACH STOCKHOLDER
IS URGED TO SIGN, DATE AND RETURN THE ENCLOSED FORM OF PROXY WHICH IS BEING
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. AN ENVELOPE ADDRESSED TO THE
COMPANY'S TRANSFER AGENT IS ENCLOSED FOR THAT PURPOSE AND NEEDS NO POSTAGE IF
MAILED IN THE UNITED STATES.
<PAGE> 3
ARISTO INTERNATIONAL CORPORATION
152 WEST 57TH STREET, 29TH FLOOR
NEW YORK, NEW YORK 10019
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 29, 1996
This Proxy Statement is furnished to the holders of Common Stock, par value
$.001 per share ("Common Stock"), of Aristo International Corporation (the
"Company") in connection with the solicitation of proxies by the Board of
Directors of the Company ("Proxy" or "Proxies") for use at the Annual Meeting of
Stockholders (the "Meeting") to be held on Tuesday, October 29, 1996, at 10:00
a.m., New York City time, at the Company's executive offices at 152 West 57th
Street, 29th Floor, New York, New York, and at any adjournment or postponement
thereof, for the purposes set forth in the accompanying Notice of Annual
Meeting. The approximate mailing date of this Proxy Statement is October 8,
1996.
The close of business on October 1, 1996 has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders entitled to notice of, and to vote at, the Meeting and any
adjournment thereof. As of the Record Date, there were 14,542,437 shares of
Common Stock outstanding, which is the only class of voting securities of the
Company issued and outstanding. Each share of Common Stock outstanding on the
Record Date will be entitled to one vote on all matters to come before the
Meeting. A majority of the shares entitled to vote, represented in person or by
proxy, is required to constitute a quorum for the transaction of business.
Proxies submitted which contain abstentions or broker nonvotes will be deemed
present at the Meeting in determining the presence of a quorum.
Directors are elected by a plurality of the votes cast at the Meeting
(Proposal 1). The affirmative vote of a majority of the shares outstanding and
entitled to vote at the Meeting will be required to amend the Company's
Certificate of Incorporation to change its name to "PlayNet Technologies, Inc."
and to increase the number of shares of stock that the Company is authorized to
issue (Proposal 2). The affirmative vote of a majority of the shares present, in
person or by proxy, and entitled to vote at the Meeting will be required to
adopt the Company's 1996 Stock Option Plan, which is designed to provide an
incentive to key employees, and to consultants and directors who are not
employees, of the Company and to offer an additional inducement in obtaining the
services of such persons (Proposal 3). Abstentions are considered as shares
entitled to vote and, therefore, are effectively negative votes for each of
Proposals 2 and 3. Broker nonvotes with respect to any matter are not considered
as shares entitled to vote and, therefore, will have no effect on the outcome of
the vote on Proposals 2 and 3. The Board of Directors has unanimously
recommended a vote in favor of each nominee named in Proposal 1 and in favor of
Proposals 2 and 3.
Unless otherwise specified, all Proxies received will be voted for the
election of all nominees named herein to serve as directors and in favor of
Proposals 2 and 3. A Proxy may be revoked at any time before its exercise by
filing with the Secretary of the Company at the above address an instrument of
revocation or a duly executed proxy bearing a later date, or by attendance at
the Meeting and electing to vote in person. Attendance at the Meeting will not
in and of itself constitute revocation of a Proxy.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the date hereof, certain information
as to the beneficial ownership of the Common Stock by (i) each person known by
the Company to own more than five percent (5%) of the outstanding shares of
Common Stock, (ii) each director of the Company, (iii) each of the executive
officers named in the Summary Compensation Table herein under "Executive
Compensation" and (iv) all directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENTAGE OF OUTSTANDING
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP SHARES OWNED
------------------------------------------- ----------------------- -------------------------
<S> <C> <C>
Shmuel Cohen(1)............................ 2,342,631(2) 15.98%
c/o Aristo International Corporation
152 W. 57th Street
New York, New York 10019
Yael Cohen................................. -0- (3) 0%
5 Cove Lane
Kings Point, NY 11024
Castellon Limited(1)(4).................... 2,271,421(5) 15.57%
Russell Court
St. Stephens Green
Dublin, Ireland
Joseph Ettinger(1)(4)...................... 2,271,421(5) 15.57%
c/o Castellon Limited
Russell Court
St. Stephens Green
Dublin, Ireland
Ron Borta.................................. 1,127,273(6) 7.75%
14 Oak Lane
Sterling, Virginia 20165
N.Y. Holdings, Ltd.(1)..................... 895,336(7) 6.11%
c/o Hertzog, Fox & Neeman
4 Weizman Street
Tel Aviv 64239
Israel
All directors and executive officers as a
group
(3 persons).............................. 4,614,052(2)(8) 31.37%
</TABLE>
- - ---------------
(1) Pursuant to a ten year proxy agreement dated June 30, 1992, Mr. Cohen,
Castellon Limited and N.Y. Holdings, Ltd. have agreed that for so long as
each party is a stockholder of the Company, each party will vote his or
their shares of Common Stock, currently constituting approximately 37.15% of
the outstanding Common Stock, for the election of up to three directors to
be designated by Mr. Cohen, up to two directors to be designated by
Castellon Limited and up to one director to be designated by N.Y. Holdings,
Ltd. Neither Castellon Limited nor N.Y. Holdings, Ltd. have designated
nominees for election as directors at the Meeting. The sole beneficial owner
of Castellon Limited is Mr. Joseph Ettinger.
(2) Includes 120,000 shares issuable upon exercise of currently exercisable
stock options.
(3) Shmuel Cohen and Yael Cohen are husband and wife and each may be deemed to
be the beneficial owner of the shares owned by Mr. Cohen. Mrs. Cohen
disclaims beneficial ownership of such shares.
(4) Mr. Ettinger is the President and sole beneficial owner of Castellon Limited
and may therefore be deemed to be the beneficial owner of all of the shares
of Common Stock owned by Castellon Limited.
(5) Includes 47,273 shares issuable in payment, at the option of the holder, of
a $260,000 convertible note.
(6) Includes 181,818 shares owned by Leslie Davis, Mr. Borta's wife.
(7) Includes 120,000 shares issuable upon exercise of a currently exercisable
stock option.
(8) Includes 167,273 shares issuable upon the exercise of currently exercisable
stock options or in payment of a convertible note held by a corporation
controlled by a director.
2
<PAGE> 5
PROPOSAL 1
ELECTION OF DIRECTORS
At the Meeting, stockholders will elect three (3) directors to serve until
the next annual meeting of stockholders and until their respective successors
are elected and qualified. Unless otherwise directed, the persons named in the
Proxy intend to cast all Proxies received for the election of Shmuel Cohen, Yael
Cohen and Joseph Ettinger (collectively, the "nominees") to serve as directors
upon their nomination at the Meeting. All nominees currently serve on the Board
of Directors and their terms expire at the Meeting.
Each nominee has advised the Company of his or her willingness to serve as
a director and the Company has no reason to expect that any of the nominees will
be unable to stand for election at the date of the Meeting. In case any nominee
should become unavailable for election to the Board of Directors for any reason,
the persons named in the Proxies have discretionary authority to vote the
Proxies for one or more alternative nominees who will be designated by the Board
of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE NOMINEES
LISTED BELOW.
INFORMATION ABOUT NOMINEES
The following table sets forth information regarding the nominees:
<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH THE COMPANY
- - ------------------------------ --- ------------------------------------------------
<S> <C> <C>
Shmuel Cohen.................. 38 President, Chief Executive Officer and Director
Joseph Ettinger............... 57 Director
Yael Cohen.................... 36 Secretary and Director
</TABLE>
All directors hold office until their respective successors are elected, or
until death, resignation or removal. Officers hold office until the meeting of
the Board of Directors following each annual meeting of stockholders and until
their successors have been chosen and qualified.
SHMUEL COHEN founded the Company in May 1990 and has been President, Chief
Executive Officer and a Director of the Company since the Company's inception.
From December 1987 to June 1990, Mr. Cohen served as Chief Executive Officer of
Lamia Enterprises, Ltd., a corporation that developed patented design
application processes. From April 1984 to December 1987, Mr. Cohen served as the
Chief Executive Officer of Arts, Ltd., a company that researched, patented and
produced Soft Art(TM) technology.
JOSEPH ETTINGER joined the Company as a Director in September 1992. From
July 1992 to the present, Mr. Ettinger has been the President and Chief
Executive Officer of Castellon Ltd., a non-U.S. financial services company that
presently owns approximately 15.57% of the Company's Common Stock. From August
1989 to June 1992, Mr. Ettinger was employed by CLAL (Israel) Ltd., a non-U.S.
industrial, multinational conglomerate, in various positions, including Senior
Vice President and General Representative (U.S.).
YAEL COHEN, who is the wife of Shmuel Cohen, has been a Director and
Secretary of the Company since May 1990.
OFFICERS AND KEY EMPLOYEES
PAUL C. MEYER, age 49, joined the Company as Chief Operating Officer in
September 1996. From January 1994 to September 1996, Mr. Meyer served in various
executive positions at Viacom New Media, a publisher and distributor of
multimedia products and a division of Viacom International, Inc., and his last
position was Executive Vice President and General Manager-New York. From October
1991 through October 1994, Mr. Meyer served as President of Paul C. Meyer &
Associates, Inc., a financial consulting firm. Mr. Meyer has also served as a
financial consultant to Automotive Industries, Inc. since September 1989. From
February 1990 to September 1991, Mr. Meyer served as President of Superior Toy &
Manufacturing Company. From December 1974 to August 1988, Mr. Meyer served in
various executive positions with Coleco Industries, Inc., the toy company, his
last position being Chief Financial Officer.
3
<PAGE> 6
GLENN P. SBLENDORIO, age 40, joined the Company in August 1996 as Senior
Vice President and Chief Financial Officer. From July 1993 to August 1996, Mr.
Sblendorio served as Chief Financial Officer of Sony Interactive Entertainment,
Inc., New York, an international, interactive software company. From October
1981 to July 1993, Mr. Sblendorio served in various positions with the
international drug and bio-technology conglomerate, F. Hoffmann La Roche. From
March 1992 to July 1993, Mr. Sblendorio served as Vice President of Finance of
Roche Molecular Systems, Inc., New Jersey, a biotechnology subsidiary. From
January 1990 to March 1992, Mr. Sblendorio served as Controller Europe for F.
Hoffmann La Roche, Basel. From July 1989 to January 1990, Mr. Sblendorio served
as Vice President of Finance and MIS for Medi Physics, Inc., a radio
pharmaceutical imaging product subsidiary of Hoffmann La Roche, Inc.
NOLAN K. BUSHNELL, age 53, joined the Company as Director of Strategic
Planning in June 1996. Mr. Bushnell has served as a consultant to the Company
since July 1995. From March 1991 to June 1996, Mr. Bushnell has been self
employed as a consultant regarding technical advice and venture capital for
Silicon Valley entrepreneurial ventures. From March 1991 to September 1994, Mr.
Bushnell was Chairman of Octus, Inc., a producer of computer software. From July
1977 to January 1983, Mr. Bushnell served as Chief Executive Officer of Chuck E.
Cheese, a restaurant chain featuring electronic entertainment. From November
1972 to February 1979, Mr. Bushnell served as Chief Executive Officer of Atari
Corporation, a manufacturer of video games.
DAVID ALBERT, age 42, joined the Company as Vice President -- Internal Game
Development in August 1996. From January 1993 to August 1996, Mr. Albert served
as Group Director, Creative Support for SEGA of America Inc., a video games
manufacturing corporation. From September 1990 to January 1993, Mr. Albert was
self-employed as a computer consultant. From March 1987 to June 1990, Mr. Albert
served as a Producer for Electronic Arts, a video games development company.
From September 1984 to February 1987, Mr. Albert served as Vice President of
Development and Marketing at Oregon Systems, Inc., a video games manufacturing
corporation.
SCOTT FOLCARELLI, age 31, joined the Company as Vice President -- Hardware
in April 1996. From February 1995 to March 1996, Mr. Folcarelli served as
Director of MIS at Digital Pictures, an interactive, multimedia entertainment
development company. From October 1993 to February 1995, Mr. Folcarelli served
as Publishing Systems Senior Editor of the San Francisco Examiner. From
September 1986 to September 1993, Mr. Folcarelli served as Digital Lab Manager
at The Sacramento Bee.
IZZY SCHILLER, age 44, joined the Company as Chief Information Officer in
June 1996. From April 1983 to the present, Mr. Schiller has served as the
President of ComStar Systems, Inc., a computer systems planning and design
company, and its wholly owned imaging applications subsidiary, Image Star
International, Ltd. From 1994 to the present, Mr. Schiller has also served as
President of Internet Services, Inc., the wholly owned connectivity tools and
programming subsidiary of ComStar Systems, Inc.
RITA ZIMMERER, age 40, joined the Company as Vice President -- Software in
August 1996. From September 1995 to August 1996, Ms. Zimmerer served as Vice
President-Interactive Software at Tiger Electronics, an interactive software
company. From January 1994 to August 1995, Ms. Zimmerer served as Vice President
of Sales, Marketing and Publishing at Terraglyph Interactive Studios, a
developer and publisher of interactive entertainment. From September 1989 to
July 1992, Ms. Zimmerer served as Vice President of Sales and Marketing and from
July 1992 to January 1994, Executive Vice President and General Manager of
Sunsoft USA, a developer and publisher of interactive entertainment. From August
1988 to August 1989, Ms. Zimmerer served as Central Regional Manager of Enesco
Imports, a giftware design company. From July 1985 to August 1988, Ms. Zimmerer
served as North Central Manager of Tonka Toys, Inc., a manufacturer of
childrens' toys.
WILLIAM R. CRAVENS, age 54, joined the Company as Vice President -- Sales
in July 1996. From August 1991 to the present, Mr. Cravens has served as
President of Bulldog Amusements, Inc., a location-based video games distribution
organization. From August 1987 to August 1991, Mr. Cravens served as Vice
President of Sales and Marketing at CapCom USA, a located-based video games
distribution organization. From August 1984 to August 1987, Mr. Cravens served
as Director of Sales for Nintendo of America, a video games manufacturing
corporation.
4
<PAGE> 7
PATRICK O. NUNALLY, age 33, joined the Company as Chief Engineer in April
1996. From January 1995 to April 1996, Mr. Nunally served as Vice President of
Wave Interactive Network, an interactive entertainment technology enterprise.
From January 1994 to December 1994, Mr. Nunally served as a Fellow of VLSI
Technology Inc., a multimedia technology development company. From September
1992 to December 1993, Mr. Nunally served as Chief Executive Officer of
Intellisys Automation, Inc., a manufacturer of media survey devices. From
December 1990 to September 1992, Mr. Nunally served as Chief Executive Officer
of E-Metrics, Inc., a multimedia signals processing systems company. From August
1986 to February 1989, Mr. Nunally served as Director of Technology Application
for General Dynamics Air Defense Systems.
AMY R. GURVEY, age 42, joined the Company as Director of Legal and Business
Affairs in September 1996. From January 1992 to September 1996, Ms. Gurvey
served as Senior Attorney, Law and Business Affairs for Newland Raynor/Cameo
Productions in New York and Los Angeles, a television, motion picture and
interactive software production company. From November 1990 to September 1991,
Ms. Gurvey served as Senior Associate, Intellectual Property, Computer and
Entertainment Law for Weil Gotshal & Manges in New York. Ms. Gurvey is admitted
to practice law in California and New York.
BOARD MEETINGS AND COMMITTEES
The Board of Directors is responsible for the management of the Company.
During the fiscal year ended October 31, 1995, the Board of Directors held 11
meetings. Each incumbent director attended all meetings of the Board.
The Company does not presently have a compensation, audit or nominating
committee or any committees performing similar functions, however, the Company
anticipates creating a compensation committee, which will have power and
authority with respect to all matters pertaining to compensation payable by the
Company and the administration of employee benefits, deferred compensation and
the Company's stock option plans, and an audit committee, which will interact
with the Company's accountants, and review accounting policies of the Company,
in the near future.
COMPENSATION OF DIRECTORS
Directors of the Company do not receive fixed compensation for their
services as directors; however, the Board of Directors may authorize the payment
of a fixed sum to directors for their attendance at regular and special meetings
of the Board as is customary for similar companies. Directors will be reimbursed
for their reasonable out-of-pocket expenses incurred in connection with their
duties to the Company. Other than as described above, there are no family
relationships among any of the directors or executive officers of the Company.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information concerning the annual and long
term compensation paid during the Company's last three fiscal years, ended
October 31, 1995, to Shmuel Cohen, the Company's President and Chief Executive
Officer, for services rendered in all capacities to the Company and its
subsidiaries. No other executive officer of the Company and its subsidiaries
received compensation during the fiscal year ended October 31, 1995 in excess of
$100,000.
<TABLE>
<CAPTION>
LONG TERM AWARDS
ANNUAL COMPENSATION --------------------------
---------------------------------------------- SECURITIES RESTRICTED
NAME AND OTHER ANNUAL UNDERLYING STOCK
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS AWARDS
- - -------------------------- ---- ------- ----- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Shmuel Cohen, 1995 $29,167 -- $456,700(1) 40,000 --
President and Chief 1994 -- -- 626,000(1) -- --
Executive Officer 1993 -- -- 327,000(1) -- --
of the Company
</TABLE>
- - ---------------
(1) Represents amounts paid to Artmedia Ltd., a corporation controlled by Mr.
Cohen, in consideration of Artmedia Ltd. providing the services of Mr. Cohen
as Chief Executive Officer of the Company. Mr. Cohen is currently under
contract solely to the Company.
5
<PAGE> 8
Option Grants in Last Fiscal Year
The following table sets forth the details of options granted to Mr. Cohen.
<TABLE>
<CAPTION>
% OF TOTAL
NUMBER OF OPTIONS GRANTED EXERCISE
OPTIONS TO EMPLOYEES IN PRICE
NAME GRANTED FISCAL YEAR PER SHARE EXPIRATION DATE
- - ------------------------------------ --------- --------------- --------- -----------------
<S> <C> <C> <C> <C>
Shmuel Cohen........................ 200,000(1) 23.9% $2.44 December 9, 2005
</TABLE>
- - ---------------
(1) 120,000 of these options are currently exercisable.
Option Exercises In Last Fiscal Year And Fiscal Year-End Option Values
No options were exercised by Mr. Cohen during the fiscal year ended October
31, 1995. The following table contains information, as of the date hereof,
concerning the number and value of unexercised options held by Mr. Cohen.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS HELD AT
HELD AT FISCAL YEAR-END FISCAL YEAR-END
NAME (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)(1)
- - -------------------------------------------- ----------------------------- ----------------------------
<S> <C> <C>
Shmuel Cohen................................ 120,000/80,000 $ 636,000/$424,000
</TABLE>
- - ---------------
(1) Based on the fair market value of the underlying securities (the closing bid
price of Common Stock on the National Association of Securities Dealers
Automated Quotation System -- SmallCap Market) at fiscal year end (October
31, 1995), minus the exercise price.
EMPLOYMENT AGREEMENTS
Mr. Cohen and the Company have entered into an employment agreement that
provides that Mr. Cohen will serve as Chief Executive Officer and President of
the Company for a term beginning on May 3, 1995, and ending five years
thereafter. Mr. Cohen's compensation under his employment agreement includes a
salary of $350,000 per annum and options to purchase 200,000 shares of Common
Stock. 120,000 of these options have vested on or before May 3, 1996 and are
currently exercisable. The remaining 80,000 options vest on May 3, 1997. The
exercise price of each option is $2.44. The employment agreement includes
non-solicitation, non-compete and confidentiality provisions. Mr. Cohen and the
Company have also entered into a separate agreement that provides contractual
protections against changes in or loss of employment in case of a "change of
control" (as such term is defined in such agreement) of the Company. Such
agreement provides for a lump sum payment equal to 2.99 times Mr. Cohen's "base
amount" (as such term is defined in such agreement) if a change of control
occurs.
STOCK OPTION PLANS
The Company currently maintains two (2) stock option plans aside from the
1996 Plan which is being submitted for approval by the stockholders under this
Proxy Statement. The Company's 1994 Stock Option Plan (the "1994 Stock Option")
provides for the granting of options to key employees (including directors and
officers who are key employees) and to consultants, advisors and directors who
are not employees, of the Company and its present and future subsidiaries, to
purchase up to 500,000 shares of the Company's Common Stock. The Company's 1995
Stock Option Plan (the "1995 Stock Option Plan" and together with the 1994 Stock
Option Plan, the "Stock Option Plans") provides for the granting of options to
key employees (including directors and officers who are key employees) and to
consultants, advisors and directors who are not employees, of the Company and
its present and future subsidiaries, to purchase up to 1,000,000 shares of the
Company's Common Stock. Options granted under the Stock Option Plans may either
be incentive stock options ("ISOs"), within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or non-qualified options
("NQSOs"). ISOs, however, may only be granted to employees of the Company and
its subsidiaries.
6
<PAGE> 9
The Stock Option Plans are administered by the Board of Directors. It is
intended that a committee (the "Committee") of the Board of Directors consisting
of at least two members of the Board (those administering the Stock Option Plans
are the "Administrators") within the requirements of Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act") will
administer the Stock Option Plans in the near future. It is also intended that
the Administrators will be "outside directors" within the meaning of Section
162(m) of the Code.
Within the limits of the Stock Option Plans, the Committee is authorized to
determine, among other things, to whom and the time or times at which options
are to be granted, the type of options to be granted, the number of shares which
will be subject to any option, the term of each option, the exercise price of
each option, the time or times and conditions under which options may be
exercised, and such other terms not inconsistent with the Stock Option Plans as
the Committee may deem appropriate.
The exercise price of each option will be determined by the Committee;
provided, however, that the exercise price of an ISO may not be less than the
fair market value of the Company's Common Stock on the date of grant (110% of
such fair market value if the optionee owns (or is deemed to own) more than 10%
of the voting power of the Company or is an outside director). Options may be
granted for terms determined by the Committee; provided, however, that the term
of an ISO may not exceed 10 years (5 years if the optionee owns (or is deemed to
own) more than 10% of the voting power of the Company) or is an outside
director. The maximum number of shares of the Company's Common Stock for which
options may be granted to an employee in any calendar year is 100,000. Each
option is payable in full upon exercise or, if the applicable contract permits,
in installments. Payment of the exercise price of an option may be made in cash,
or, if the applicable contract permits, in shares of the Company's Common Stock
or any combination thereof.
No option may be granted pursuant to the 1994 Stock Option Plan after
December 9, 2004 and no option may be granted pursuant to the 1995 Stock Option
Plan after July 27, 2000. The Board of Directors may at any time terminate or
amend the Stock Option Plans; provided, however, that, without the approval of
the Company's stockholders, no amendment may be made which would (a) increase
the maximum number of shares available for the grant of options (except as a
result of the anti-dilution adjustments described above), (b) materially
increase the benefits accruing to participants under the Stock Option Plans, or
change the eligibility requirements for individuals who may receive options. No
termination or amendment may adversely affect the rights of an optionee with
respect to an outstanding option without his or her consent.
As of September 12, 1996, options to purchase 428,333 shares of Common
Stock have been granted under the 1994 Stock Option Plan, none of which have
been exercised, and options to purchase 1,000,000 shares of Common Stock have
been granted under the 1995 Stock Option Plan, none of which have been
exercised.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On May 13, 1996, the Company, Ron Borta and Leslie Davis entered into a
binding agreement which provides for, among other things, the resignation of Ron
Borta and Leslie Davis as officers and/or directors of Borta, Inc. In connection
therewith, Mr. Borta and Ms. Davis surrendered all options to purchase Common
Stock previously granted to either of them, and Mr. Borta will surrender 357,143
restricted shares of Common Stock previously granted to him, together with any
other options, incentive payments or rights related thereto. In connection with
their severance, the Company will pay eight months salary, based on their
current rates of pay, over a six month period with the remaining balance payable
on December 31, 1996. In addition, of $425,000 remaining to be paid to Ron Borta
pursuant to his signing bonus with the Company, $5,000 was paid upon the
execution of definitive agreements relating to the resignations, $150,000 was
paid on August 30, 1996, and the balance is payable on December 31, 1996.
On July 1, 1995, the Company entered into a consulting agreement with
Castellon Limited, a stockholder of the Company which presently owns
approximately 15.57% of the Company's Common Stock. Pursuant to this consulting
agreement, Castellon Limited is paid a fee of $10,000 per month for consulting
services rendered to the Company relating to joint ventures, strategic
partnership and investor relations outside the
7
<PAGE> 10
United States. Prior to July 1, 1995, Castellon Limited provided consulting
services to the Company pursuant to other written agreements. During the years
ended October 31, 1995 and 1994 and during the cumulative period from June 4,
1990 (inception) to October 31, 1995, the Company paid to Castellon Limited fees
totaling approximately $70,000, $75,000 and $228,000, respectively, in
consideration of such consulting services. Mr. Joseph Ettinger, a director of
the Company, is the President of Castellon Limited.
On December 29, 1995, the Company issued to Castellon Limited a promissory
note in the principal amount of $260,000 in exchange for, and in full payment of
the principal and accrued interest on, a note originally issued on August 1,
1995. Under the terms of the new note, the principal amount thereof is due on
January 1, 1997, and interest is due and payable in four quarterly installments
of $13,000 beginning on April 1, 1996. The Company has agreed to issue, at the
option of the holder of the note, up to 47,273 shares of Common Stock, in lieu
of cash, in payment of the principal amount of the note (at a price of $5.50 per
share). Castellon Limited has given written notice to the Company that it
intends to receive payment of the entire principal amount of the note in shares
of Common Stock.
In May 1995, the Company sold to Castellon Limited 33,350 shares of
preferred stock, par value $.001 per share ("Preferred Stock"), in consideration
of the payment by Castellon Limited of $100,050 in cash. The terms of this
Preferred Stock provide for cumulative monthly dividends at a rate per annum
equal to 11% of the amount paid by Castellon Limited in consideration of such
Preferred Stock, commencing June 15, 1995. So long as any shares of Preferred
Stock were outstanding, the Company could not declare, pay, or set apart for
payment any dividend or make any other payment on account of any of the shares
of Common Stock, unless and until all accrued and unpaid dividends on the shares
of Preferred Stock had been paid in full. The shares of Preferred Stock were
redeemable at any time at the option of the Company. On May 15, 1996, all of
such outstanding shares of Preferred Stock were converted to 18,191 shares of
Common Stock at a conversion price of $5.50 per share.
On September 30, 1994, the Company issued 159,236 shares of Common Stock to
Castellon Limited as a result of the conversion of a $200,000 promissory note.
In addition, on May 3, 1995, as a result of the merger of Aristo International
Corporation, a New York Corporation, with and into the Company, the Company
issued to Castellon Limited 38,350 shares of Common Stock pursuant to an
anti-dilution provision of this promissory note.
On June 27, 1996, the Company issued to N. Y. Holdings, Ltd. a promissory
note in the principal amount of $330,000 bearing interest at the prime rate, due
on October 31, 1996. In connection therewith, the Company granted an option to
N. Y. Holdings, Ltd. to purchase, at any time before December 31, 1996, 120,000
shares of Common Stock for an aggregate price of $660,000. N. Y. Holdings, Ltd.
has given written notice to the Company that it intends to exercise the option
with respect to 60,000 shares of Common Stock by applying the principal amount
of the note to the purchase price therefor (in lieu of any cash payment thereof
by the Company).
During March 1995, the Company issued 115,050 shares of Common Stock to
Shmuel Cohen in exchange for original graphic images produced by contemporary
artists, with full rights for digital reproduction.
From June 4, 1990 through September 30, 1995, the Company obtained the
services of Shmuel Cohen, its President and Chief Executive Officer, from
another company of which Mr. Cohen is the sole stockholder. Fees paid to this
company for the services of Mr. Cohen during the fiscal years ended October 31,
1995 and 1994 and for the cumulative period from June 4, 1990 (inception) to
October 31, 1995 were approximately $456,700, $626,000 and $2,084,700,
respectively. On February 1, 1995, the Company entered into an employment
agreement with Shmuel Cohen, to be its President and Chief Executive Officer.
Commencing October 1995, the Company began compensating Mr. Cohen as President
and Chief Executive Officer pursuant to this employment agreement, and since
such date has not paid fees to any other person in connection with the services
of Mr. Cohen.
8
<PAGE> 11
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who beneficially own more than 10% of the Company's
Common Stock, to file initial reports of ownership and reports of changes of
ownership with the Securities and Exchange Commission and furnish copies of
those reports to the Company. Based solely on a review of the copies of the
reports furnished to the Company to date, or written representations that no
reports were required, the Company believes that all reports required to be
filed by such persons with respect to the Company's fiscal year ending October
31, 1995 were timely made except that Mr. Cohen, the President, Chief Executive
Officer and a director of the Company, failed to timely file one (1) report with
regard to one (1) transaction, Mr. Ettinger, a director of the Company, and
Castellon Limited, a greater than 10% holder of the Company's Common Stock, each
failed to timely file two (2) reports with regard to two (2) transactions and
Edward Hughes, the Company's former Chief Financial Officer, failed to timely
file one (1) report with regard to one (1) transaction. All of such late reports
have been filed with the Securities and Exchange Commission.
PROPOSAL 2
PROPOSED AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION TO CHANGE
THE NAME OF THE COMPANY AND
TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF STOCK
The Board of Directors of the Company, at a meeting held on September 6,
1996 adopted a resolution approving a proposal to amend, subject to stockholder
approval, the Company's Certificate of Incorporation to change the name of the
Company to "PlayNet Technologies, Inc." The Board of Directors believes that
this change of name is in the best interests of the Company and its stockholders
and offers definitive advantages. The Board of Directors believes that the new
name is more descriptive of its business and that the new name will enhance the
success of marketing in the highly competitive entertainment software industry.
The Board of Directors of the Company, at a meeting held on September 27,
1996, adopted a resolution approving a proposal to amend, subject to stockholder
approval, the Company's Certificate of Incorporation to increase the number of
shares of stock that the Company is authorized to issue 40,000,000, consisting
of 1,000,000 shares of Preferred Stock and 39,000,000 shares of Common Stock.
The proposed amendment would increase the number of shares of Common Stock that
the Company is authorized to issue from 19,000,000 to 39,000,000 and the number
of shares of all classes of stock that the Company is authorized to issue from
20,000,000 to 40,000,000. The Board of Directors believes that the adoption of
the proposed amendment is advantageous to the Company and its stockholders
because it would provide additional authorized shares of Common Stock that could
be used from time to time, without further action or authorization by the
stockholders (except as may be required by law or by any stock exchange on which
the Company's securities may then be listed), for corporate purposes which the
Board of Directors may deem desirable, including, without limitation, stock
splits, dividends or other distributions, public or private financings,
acquisitions, stock grants, stock options and employee benefit plans.
The authority of the Board of Directors to issue Common Stock could also
potentially be used to discourage attempts by others to obtain control of the
Company through merger, tender offer, proxy contest or otherwise by making such
attempts more difficult or costly to achieve.
If the proposed amendment is adopted, there would be 20,588,462 authorized
shares of Common Stock that are not outstanding or reserved for issuance.
Assuming approval of the proposed amendments by the requisite vote of
stockholders at the Meeting, it is expected a Certificate of Amendment to the
Company's Certificate of Incorporation (the "Amendment") will be filed to effect
the name change and increase in the number of authorized shares of stock as
promptly as practicable after the Meeting. However, the Board of Directors may
abandon or delay the amendments at any time before or after the Meeting and
prior to the effective date for the amendments if for any reason the Board
9
<PAGE> 12
of Directors deems it advisable to do so. In addition, the Board of Directors
may make any and all changes to the form of Amendment that it deems necessary in
order to file the Amendment with the Secretary of State of the State of Delaware
and give effect to the proposed name change and increase in the number of
authorized shares of stock. Reference is made to the form of the Amendment set
forth as Exhibit A attached hereto.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock outstanding and entitled to vote at the Meeting will be
required to approve the proposed amendments.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THIS PROPOSAL.
PROPOSAL 3
ADOPTION OF THE COMPANY'S
1996 STOCK OPTION PLAN
On September 6, 1996, the Board of Directors adopted, subject to
stockholder approval at the Meeting, the Company's 1996 Stock Option Plan (the
"1996 Plan"). The 1996 Plan is designed to provide an incentive to key employees
(including directors and officers who are key employees), and to consultants and
directors who are not employees, of the Company, or any of its subsidiaries, and
to offer an additional inducement in obtaining the services of such persons.
The following summary of certain material features of the 1996 Plan does
not purport to be complete and is qualified in its entirety by reference to the
text of the 1996 Plan, a copy of which is set forth as Exhibit B to this Proxy
Statement.
SHARES SUBJECT TO THE OPTION PLAN AND ELIGIBILITY
The 1996 Plan authorizes the issuance of stock awards and the grant of
options to purchase a maximum of 1,500,000 shares of the Company's Common Stock
(subject to adjustment as described below) to key employees (including officers
and directors who are key employees), to consultants and to directors who are
not employees of the Company. Upon expiration, cancellation or termination of
unexercised options, the shares of the Company's Common Stock subject to such
options will again be available for the grant of options under the 1996 Plan. No
options have been granted to date under the 1996 Plan.
TYPE OF OPTIONS
Options granted under the 1996 Plan may either be ISOs or NQSOs, within the
meaning of Section 422 of the Code.
ADMINISTRATION
The 1996 Plan will be administered by the Board of Directors or a committee
of the Board of Directors consisting of at least two members of the Board (those
administering the 1996 Plan will be the "Administrators") within the
requirements of Rule 16b-3 promulgated under the Exchange Act. It is also
intended that each Administrator will be an "outside director" within the
meaning of Section 162(m) of the Code.
Among other things, the Administrators are empowered to determine, within
the express limits contained in the 1996 Plan: the employees, consultants and
non-employee directors to be granted options, whether an option granted to a key
employee is to be an ISO or a NQSO, the number of shares of Common Stock to be
subject to each option, the exercise price of each option, the term of each
option, the date each option shall become exercisable as well as any terms,
conditions or installments relating to the exercisability of each option,
whether to accelerate the date of exercise of any option or installment, the
form of payment of the exercise price, the amount, if any, required to be
withheld with respect to an option, and with the consent of the optionee, to
modify an option. The Administrators are also authorized to prescribe, amend and
rescind rules and regulations relating to the 1996 Plan and to make all other
determinations necessary or advisable for
10
<PAGE> 13
administering the 1996 Plan, and to construe each stock option contract
("Contract") entered into by the Company with an optionee under the 1996 Plan.
TERMS AND CONDITIONS OF OPTIONS
Options granted under the 1996 Plan will be subject to, among other things,
the following terms and conditions:
(a) The exercise price of each option will be determined by the
Administrators; provided, however, that the exercise price of an ISO may
not be less than the fair market value of the Company's Common Stock on the
date of grant (110% of such fair market value if the optionee owns (or is
deemed to own) more than 10% of the voting power of the Company).
(b) Options may be granted for terms determined by the Administrators;
provided, however, that the term of an ISO may not exceed 10 years (5 years
if the optionee owns (or is deemed to own) more than 10% of the voting
power of the Company).
(c) The maximum number of shares of the Company's Common Stock for
which options may be granted to an employee in any calendar year is
250,000. In addition, the aggregate fair market value of shares with
respect to which ISOs may be granted to an employee which are exercisable
for the first time during any calendar year may not exceed $100,000.
(d) The exercise price of each option is payable in full upon exercise
or, if the applicable Contract permits, in installments. Payment of the
exercise price of an option may be made in cash, certified check or, if the
applicable Contract permits, in shares of the Company's Common Stock or any
combination thereof.
(e) Options may not be transferred other than by will or by the laws
of descent and distribution, and may be exercised during the optionee's
lifetime only by him or her (or by his or her legal representative).
(f) Except as may otherwise be provided in the applicable Contract, if
the optionee's relationship with the Company as an employee or consultant
is terminated for any reason (other than the death or disability of the
optionee), the optionee may exercise the options that were granted to him
as an employee or consultant, to the extent exercisable at the time of
termination of such relationship, within three months thereafter, but in no
event after the expiration of the term of the option. However, if the
relationship was terminated either for cause or without the consent of the
Company, the option will terminate immediately. In the case of the death of
an optionee while an employee or consultant (or, generally, within three
months after termination of such relationship, or within one year after
termination of such relationship by reason of disability), except as may
otherwise be provided in the applicable Contract, his or her legal
representative or beneficiary may exercise such options, to the extent
exercisable on the date of death, within one year after such date, but in
no event after the expiration of the term of the option. Except as may
otherwise be provided in the applicable Contract, an optionee whose
relationship with the Company was terminated by reason of his or her
disability may exercise the option, to the extent exercisable at the time
of such termination, within one year thereafter, but not after the
expiration of the term of the option. Options are not affected by a change
in the status of an optionee so long as he continues to be an employee of,
or a consultant to, the Company.
(g) Except as may otherwise be expressly provided in the applicable
Contract, an optionee whose relationship with the Company as a non-employee
director ceases (other than as a result of his death or disability) may
exercise the options granted to him as a non-employee director, to the
extent exercisable on the date of termination, within three months of the
date of such termination but not thereafter and in no event after the date
the option would otherwise have expired; provided, however, that if such
relationship is terminated for cause, the option terminates immediately.
Except as may otherwise be expressly provided in the applicable Contract,
any optionee whose relationship as a non-employee director terminated as a
result of his death or disability may exercise such option, to the extent
exercisable at the date of death or disability, within one year after the
date of such termination but not thereafter and in no event after the date
the option would otherwise have expired.
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<PAGE> 14
(h) The Company may withhold cash and/or shares of the Company's
Common Stock having an aggregate value equal to the amount which the
Company determines is necessary to meet its obligations to withhold any
federal, state and/or local taxes or other amounts incurred by reasons of
the grant or exercise of an option, its disposition or the disposition of
shares acquired upon the exercise of the option. Alternatively, the Company
may require the optionee to pay the Company such amount, in cash, promptly
upon demand.
ADJUSTMENT IN EVENT OF CAPITAL CHANGES
Appropriate adjustments will be made in the number and kind of shares
available under the 1996 Plan, in the number and kind of shares subject to each
outstanding option and the exercise prices of such options, as well as the
limitation on the number of shares that may be granted to any employee in any
calendar year, in the event of any change in the Company's Common Stock by
reason of any stock dividend, spin-off, split-up, combination, reclassification,
recapitalization, merger in which the Company is not the surviving corporation,
exchange of shares or the like. In the event of (a) the liquidation or
dissolution of the Company, or (b) a merger in which the Company is not the
surviving corporation or a consolidation, any outstanding options shall
terminate upon the earliest of any such event, unless other provision is made
therefor in the transaction.
DURATION AND AMENDMENT OF THE 1996 PLAN
No ISO may be granted under the 1996 Plan after September 5, 2006. The
Board of Directors may at any time terminate or amend the 1996 Plan; provided,
however, that, without the approval of the Company's stockholders, no amendment
may be made which would (a) except as a result of the anti-dilution adjustments
described above, increase the maximum number of shares available for the grant
of options or increase the maximum number of options that may be granted to an
employee in any year, (b) change the eligibility requirements for persons who
may receive options, or (c) make any change for which applicable law requires
stockholder approval. No termination or amendment may adversely affect the
rights of an optionee with respect to an outstanding option without the
optionee's consent.
FEDERAL INCOME TAX TREATMENT
The following is a general summary of the federal income tax consequences
under current tax law of NQSOs and ISOs. It does not purport to cover all of the
special rules, including special rules relating to the exercise of an option
with previously-acquired shares, or the state or local income or other tax
consequences inherent in the ownership and exercise of stock options and the
ownership and disposition of the underlying shares.
An optionee will not recognize taxable income for federal income tax
purposes upon the grant of a NQSO or an ISO.
Upon the exercise of a NQSO, the optionee will recognize ordinary income in
an amount equal to the excess, if any, of the fair market value of the shares
acquired on the date of exercise over the exercise price thereof, and the
Company will generally be entitled to a deduction for such amount at that time.
If the optionee later sells shares acquired pursuant to the exercise of a NQSO,
he will recognize long-term or short-term capital gain or loss, depending on the
period for which the shares were held. Long-term capital gain is generally
subject to more favorable tax treatment than ordinary income or short-term
capital gain. Proposed legislation would treat long-term capital gain even more
favorably. There can be no assurance, however, that such proposed legislation
will be enacted.
Upon the exercise of an ISO, the optionee will not recognize taxable
income. If the optionee disposes of the shares acquired pursuant to the exercise
of an ISO more than two years after the date of grant and more than one year
after the transfer of the shares to him, the optionee will recognize long-term
capital gain or loss and the Company will not be entitled to a deduction.
However, if the optionee disposes of such shares within the required holding
period, all or a portion of the gain will be treated as ordinary income and the
Company will generally be entitled to deduct such amount.
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<PAGE> 15
In addition to the federal income tax consequences described above, an
optionee may be subject to the alternative minimum tax, which is payable to the
extent it exceeds the optionee's regular tax. For this purpose, upon the
exercise of an ISO, the excess of the fair market value of the shares over the
exercise price therefor is an adjustment which increases alternative minimum
taxable income. In addition, the optionee's basis in such shares is increased by
such excess for purposes of computing the gain or loss on the disposition of the
shares for alternative minimum tax purposes. If an optionee is required to pay
an alternative minimum tax, the amount of such tax which is attributable to
deferral preferences (including the ISO adjustment) is allowed as a credit
against the optionee's regular tax liability in subsequent years. To the extent
the credit is not used, it is carried forward.
REQUIRED VOTE
Approval of the 1996 Plan requires the affirmative vote of the holders of a
majority of the shares of Common Stock present, in person or by proxy, at the
Meeting and entitled to vote on this proposal. If the 1996 Plan is not approved
by stockholders, the 1996 Plan and any options granted thereunder will not be
effective.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 1996 PLAN.
GRANTS UNDER 1996 PLAN
Subject to stockholder approval of the 1996 Plan, set forth below is the
number of shares of Common Stock underlying options granted under the 1996 Plan:
<TABLE>
<CAPTION>
DOLLAR
NAME AND POSITION VALUE(1) NUMBER OF OPTIONS
----------------------------------------------------- ------------ -----------------
<S> <C> <C>
Shmuel Cohen......................................... 0 0
President and Chief Executive Officer
Executive Officers as a Group........................ $410,000 410,000
Non-Executive Directors as a Group................... 0 0
Non-Executive Officer Employees as a Group........... 1,112,815 976,817
</TABLE>
- - ---------------
(1) Based on the excess, if any, of the fair market value on October 8, 1996 of
the shares of Common Stock subject to the option over the exercise price of
the option.
MISCELLANEOUS
STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented at the 1997 annual
meeting of stockholders must be received by the Company no later than July 1,
1997 for inclusion in the Company's proxy statement and form of proxy for that
meeting.
SOLICITATION OF PROXIES
The cost of preparing, assembling and mailing the Notice of Annual Meeting,
this Proxy Statement and Proxies is to be borne by the Company. The Company will
also reimburse brokers who are holders of record of Common Stock for their
expenses in forwarding Proxies and Proxy soliciting material to the beneficial
owners of such shares. In addition to the use of the mails, Proxies may be
solicited without extra compensation by directors, officers and employees of the
Company by telephone, telecopy or personal interview.
ACCOUNTANTS
Coopers & Lybrand, LLP served as the Company's independent auditors for the
fiscal year ended October 31, 1995, and is acting in that capacity for the
fiscal year ending October 31, 1996. A representative of Coopers & Lybrand, LLP
is expected to be present at the meeting with the opportunity to make a
statement if he/she desires to do so and to be available to respond to questions
from stockholders.
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<PAGE> 16
OTHER MATTERS
Management of the Company does not intend to bring before the Meeting for
action any matters other than those specifically referred to above and is not
aware of any other matters which are proposed to be presented by others. If any
other matters or motions should properly come before the Meeting, the persons
named in the Proxy intend to vote thereon in accordance with their judgment on
such matters or motions, including any matters or motions dealing with the
conduct of the Meeting.
PROXIES
All stockholders are urged to fill in their choices with respect to the
matters to be voted upon, sign and promptly return the enclosed form of Proxy.
By Order of the Board of Directors,
Yael Cohen
Secretary
October 8, 1996
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<PAGE> 17
EXHIBIT A
FORM OF
CERTIFICATE OF AMENDMENT
TO THE
RESTATED AND AMENDED CERTIFICATE OF INCORPORATION
OF ARISTO INTERNATIONAL CORPORATION
UNDER SECTION 242 OF THE GENERAL CORPORATION LAW
It is hereby certified that:
FIRST: The name of the corporation (hereinafter called the "Corporation")
is ARISTO INTERNATIONAL CORPORATION.
SECOND: The Restated and Amended Certificate of Incorporation of the
Corporation was filed with the Secretary of State of the State of Delaware on
the 3rd day of May, 1995.
THIRD: The Amendment to the Restated and Amended Certificate of
Incorporation, as heretofore amended and restated, effected by this Certificate
of Amendment is as follows:
(i) to change the name of the Corporation; and
(ii) to increase the number of shares of stock that the Corporation is
authorized to issue to 40,000,000, consisting of 1,000,000 shares of
preferred stock and 39,000,000 shares of common stock.
FOURTH: To accomplish the change of name of the Corporation, Article FIRST
of the Restated and Amended Certificate of Incorporation, relating to the name
of the Corporation, is hereby amended to read as follows:
"FIRST: The name of the corporation (hereinafter called the
"Corporation") is PlayNet Technolo-
gies, Inc."
FIFTH: To increase the number of shares of stock that the Corporation is
authorized to issue, the first paragraph of Article FOURTH of the Restated and
Amended Certificate of Incorporation of the Corporation is amended to read as
follows:
"FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 40,000,000, of which (i)
1,000,000 shall be Preferred Stock, par value $.001 per share and (ii)
39,000,000 shall be Common Stock, par value $.001 per share."
SIXTH: The foregoing Amendment of the Restated and Amended Certificate of
Incorporation of the Corporation has been duly authorized and adopted in
accordance with the provisions of Section 242 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to the Restated and Amended Certificate of Incorporation to be
executed by Shmuel Cohen, President and Chief Executive Officer, and attested by
its Secretary, this day of , 1996.
--------------------------------------
SHMUEL COHEN
President and Chief Executive Officer
Attest:
- - ---------------------------------------------------------
YAEL COHEN
Secretary
A-1
<PAGE> 18
EXHIBIT B
1996 STOCK OPTION PLAN
OF
ARISTO INTERNATIONAL CORPORATION
1. PURPOSES OF THE PLAN. This stock incentive plan (the "Plan") is
designed to provide an incentive to key employees (including directors and
officers who are key employees) and to consultants and directors who are not
employees of ARISTO INTERNATIONAL CORPORATION, a Delaware corporation (the
"Company"), or any of its Subsidiaries (as defined in Paragraph 19), and to
offer an additional inducement in obtaining the services of such persons. The
Plan provides for the grant of "incentive stock options" ("ISOs") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") and nonqualified stock options which do not qualify as ISOs ("NQSOs").
The Company makes no representation or warranty, express or implied, as to the
qualification of any option as an "incentive stock option" under the Code.
2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Paragraph 12,
the aggregate number of shares of Common Stock, $.001 par value per share, of
the Company ("Common Stock") for which options may be granted under the Plan
shall not exceed 1,500,000. Such shares of Common Stock may, in the discretion
of the Board of Directors of the Company (the "Board of Directors"), consist
either in whole or in part of authorized but unissued shares of Common Stock or
shares of Common Stock held in the treasury of the Company. Subject to the
provisions of Paragraph 13, any shares of Common Stock subject to an option
which for any reason expires, is canceled or is terminated unexercised or which
ceases for any reason to be exercisable, shall again become available for the
granting of options under the Plan. The Company shall at all times during the
term of the Plan reserve and keep available such number of shares of Common
Stock as will be sufficient to satisfy the requirements of the Plan.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Board
of Directors or a committee (the "Committee") of the Board of Directors
consisting of not less than two directors (those administering the Plan are the
"Administrators") within the requirements of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (as the same may be in effect and
interpreted from time to time, "Rule 16b-3"). A majority of the members of the
Committee shall constitute a quorum, and the acts of a majority of the members
present at any meeting at which a quorum is present, and any acts approved in
writing by all of the members of the Committee without a meeting, shall be the
acts of the Committee.
Subject to the express provisions of the Plan, the Administrators shall
have the authority, in their sole discretion, to determine: the key employees,
consultants and Non-Employee Directors who shall be granted options; the type of
option to be granted to a key employee; the times when an option shall be
granted; the number of shares of Common Stock to be subject to each option; the
term of each option; the date each option shall become exercisable; whether an
option shall be exercisable in whole, in part or in installments and, if in
installments, the number of shares of Common Stock to be subject to each
installment, whether the installments shall be cumulative, the date each
installment shall become exercisable and the term of each installment; whether
to accelerate the date of exercise of any option or installment; whether shares
of Common Stock may be issued upon the exercise of an option as partly paid and,
if so, the dates when future installments of the exercise price shall become due
and the amounts of such installments; the exercise price of each option; the
form of payment of the exercise price; whether to restrict the sale or other
disposition of the shares of Common Stock acquired upon the exercise of an
option and, if so, whether and under what conditions to waive any such
restriction; whether and under what conditions to subject all or a portion of
the grant or exercise of an option or the shares acquired pursuant to the
exercise of an option to the fulfillment of certain restrictions or
contingencies as specified in the contract referred to in Paragraph 11 hereof
(the "Contract"), including without limitation, restrictions or contingencies
relating to entering into a covenant not to compete with the Company, any of its
Subsidiaries or a Parent (as defined in Paragraph 19), to financial objectives
for the Company, any of its Subsidiaries or a Parent, a division of any of the
foregoing, a product line or other category, and/or to the period of continued
employment of the optionee with the Company, any of its Subsidiaries or a
Parent, and to determine whether such restrictions or contingencies have been
met;
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<PAGE> 19
whether an optionee is Disabled (as defined in Paragraph 19); the amount, if
any, necessary to satisfy the obligation of the Company, a Subsidiary or Parent
to withhold taxes or other amounts; the fair market value of a share of Common
Stock; to construe the respective Contracts and the Plan; with the consent of
the optionee, to cancel or modify an option, provided, that the modified
provision is permitted to be included in an option granted under the Plan on the
date of the modification, and further, provided, that in the case of a
modification (within the meaning of Section 424(h) of the Code) of an ISO, such
option as modified would be permitted to be granted on the date of such
modification under the terms of the Plan; to prescribe, amend and rescind rules
and regulations relating to the Plan; to approve any provision of the Plan or
any option granted under the Plan, or any amendment to either, which under Rule
16b-3 requires the approval of the Board of Directors, a committee of
non-employee directors or the stockholders to be exempt (unless otherwise
specifically provided herein); and to make all other determinations necessary or
advisable for administering the Plan. Any controversy or claim arising out of or
relating to the Plan, any option granted under the Plan or any Contract shall be
determined unilaterally by the Administrators in their sole discretion. The
determinations of the Administrators on the matters referred to in this
Paragraph 3 shall be conclusive and binding on the parties. No Administrator or
former Administrator shall be liable for any action, failure to act or
determination made in good faith with respect to the Plan or any option
hereunder.
4. ELIGIBILITY. The Administrators may from time to time, in their sole
discretion, consistent with the purposes of the Plan, grant options to (a) key
employees (including officers and directors who are key employees) of the
Company or any of its Subsidiaries, (b) consultants to the Company or any of its
Subsidiaries and (c) Non-Employee Directors. Such options granted shall cover
such number of shares of Common Stock as the Administrators may determine, in
their sole discretion, as set forth in the applicable Contract; provided,
however, that the maximum number of shares subject to options that may be
granted to any employee during any calendar year under the Plan (the "162(m)
Maximum") shall be 250,000 shares; and further, provided, that the aggregate
market value (determined at the time the option is granted in accordance with
Paragraph 5) of the shares of Common Stock for which any eligible employee may
be granted ISOs under the Plan or any other plan of the Company, or of a Parent
or a Subsidiary of the Company, which are exercisable for the first time by such
optionee during any calendar year shall not exceed $100,000. Such ISO limitation
shall be applied by taking ISOs into account in the order in which they were
granted. Any option granted in excess of such ISO limitation amount shall be
treated as a NQSO to the extent of such excess.
5. EXERCISE PRICE. The exercise price of the shares of Common Stock under
each option shall be determined by the Administrators, in their sole discretion,
as set forth in the applicable Contract; provided, however, that the exercise
price of an ISO shall not be less than the fair market value of the Common Stock
subject to such option on the date of grant; and further, provided, that if, at
the time an ISO is granted, the optionee owns (or is deemed to own under Section
424(d) of the Code) stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company, of any of its Subsidiaries or of a
Parent, the exercise price of such ISO shall not be less than 110% of the fair
market value of the Common Stock subject to such ISO on the date of grant.
The fair market value of a share of Common Stock on any day shall be (a) if
the principal market for the Common Stock is a national securities exchange, the
average of the highest and lowest sales prices per share of Common Stock on such
day as reported by such exchange or on a composite tape reflecting transactions
on such exchange, (b) if the principal market for the Common Stock is not a
national securities exchange and the Common Stock is quoted on The Nasdaq Stock
Market ("Nasdaq"), and (i) if actual sales price information is available with
respect to the Common Stock, the average of the highest and lowest sales prices
per share of Common Stock on such day on Nasdaq, or (ii) if such information is
not available, the average of the highest bid and lowest asked prices per share
of Common Stock on such day on Nasdaq, or (c) if the principal market for the
Common Stock is not a national securities exchange and the Common Stock is not
quoted on Nasdaq, the average of the highest bid and lowest asked prices per
share of Common Stock on such day as reported on the OTC Bulletin Board Service
or by National Quotation Bureau, Incorporated or a comparable service; provided,
however, that if clauses (a), (b) and (c) of this Paragraph are all
inapplicable, or if no trades have been made or no quotes are available for such
day, the fair market value of the Common
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<PAGE> 20
Stock shall be determined by the Board of Directors by any method consistent
with applicable regulations adopted by the Treasury Department relating to stock
options.
6. TERM. The term of each option granted pursuant to the Plan shall be
such term as is established by the Administrators, in their sole discretion, as
set forth in the applicable Contract; provided, however, that the term of each
ISO granted pursuant to the Plan shall be for a period not exceeding 10 years
from the date of grant thereof; and further, provided, that if, at the time an
ISO is granted, the optionee owns (or is deemed to own under Section 424(d) of
the Code) stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company, of any of its Subsidiaries or of a Parent,
the term of the ISO shall be for a period not exceeding five years from the date
of grant. Options shall be subject to earlier termination as hereinafter
provided.
7. EXERCISE. An option (or any part or installment thereof), to the extent
then exercisable, shall be exercised by giving written notice to the Company at
its principal office stating which option is being exercised, specifying the
number of shares of Common Stock as to which such option is being exercised and
accompanied by payment in full of the aggregate exercise price therefor (or the
amount due on exercise if the applicable Contract permits installment payments)
(a) in cash or by certified check or (b) if the applicable Contract permits,
with previously acquired shares of Common Stock having an aggregate fair market
value on the date of exercise (determined in accordance with Paragraph 5) equal
to the aggregate exercise price of all options being exercised, or with any
combination of cash, certified check or shares of Common Stock having such
value. The Company shall not be required to issue any shares of Common Stock
pursuant to any such option until all required payments, including any required
withholding, have been made.
The Administrators may, in their sole discretion, permit payment of the
exercise price of an option by delivery by the optionee of a properly executed
notice, together with a copy of his irrevocable instructions to a broker
acceptable to the Administrators to deliver promptly to the Company the amount
of sale or loan proceeds sufficient to pay such exercise price. In connection
therewith, the Company may enter into agreements for coordinated procedures with
one or more brokerage firms.
A person entitled to receive Common Stock upon the exercise of an option
shall not have the rights of a stockholder with respect to such shares of Common
Stock until the date of issuance of a stock certificate for such shares or in
the case of uncertificated shares, an entry is made on the books of the
Company's transfer agent representing such shares; provided, however, that until
such stock certificate is issued or book entry is made, any optionee using
previously acquired shares of Common Stock in payment of an option exercise
price shall continue to have the rights of a stockholder with respect to such
previously acquired shares.
In no case may a fraction of a share of Common Stock be purchased or issued
under the Plan.
8. TERMINATION OF RELATIONSHIP. Except as may otherwise be expressly
provided in the applicable Contract, an optionee whose relationship with the
Company, its Parent and Subsidiaries as an employee or a consultant has
terminated for any reason (other than as a result of the death or Disability of
the optionee) may exercise the options granted to him as an employee or
consultant, to the extent exercisable on the date of such termination, at any
time within three months after the date of termination, but not thereafter and
in no event after the date the option would otherwise have expired; provided,
however, that if such relationship is terminated either (a) for Cause (as
defined in Paragraph 19), or (b) without the consent of the Company, such option
shall terminate immediately. Except as may otherwise be expressly provided in
the applicable Contract, options granted under the Plan to an employee or
consultant shall not be affected by any change in the status of the optionee so
long as the optionee continues to be an employee of, or a consultant to, the
Company, or any of the Subsidiaries or a Parent (regardless of having changed
from one to the other or having been transferred from one corporation to
another).
For the purposes of the Plan, an employment relationship shall be deemed to
exist between an individual and the Company, any of its Subsidiaries or a Parent
if, at the time of the determination, the individual was an employee of such
corporation for purposes of Section 422(a) of the Code. As a result, an
individual on military, sick leave or other bona fide leave of absence shall
continue to be considered an employee for purposes of the Plan during such leave
if the period of the leave does not exceed 90 days, or, if longer, so long
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<PAGE> 21
as the individual's right to reemployment with the Company, any of its
Subsidiaries or a Parent is guaranteed either by statute or by contract. If the
period of leave exceeds 90 days and the individual's right to reemployment is
not guaranteed by statute or by contract, the employment relationship shall be
deemed to have terminated on the 91st day of such leave.
Except as may otherwise be expressly provided in the applicable Contract,
an optionee whose relationship with the Company as a Non-Employee Director
ceases for any reason (other than as a result of his death or Disability) may
exercise the options granted to him as a Non-Employee Director, to the extent
exercisable on the date of such termination, at any time within three months
after the date of termination, but not thereafter and in no event after the date
the option would otherwise have expired; provided, however, that if such
relationship is terminated for Cause, such option shall terminate immediately.
Except as may otherwise be expressly provided in the applicable Contract,
options granted to a Non-Employee Director shall not be affected by the optionee
becoming an employee of the Company, any of its Subsidiaries or a Parent.
Nothing in the Plan or in any option granted under the Plan shall confer on
any optionee any right to continue in the employ of, or as a consultant to, the
Company, any of its Subsidiaries or a Parent, or as a director of the Company,
or interfere in any way with any right of the Company, any of its Subsidiaries
or a Parent to terminate the optionee's relationship at any time for any reason
whatsoever without liability to the Company, any of its Subsidiaries or a
Parent.
9. DEATH OR DISABILITY OF AN OPTIONEE. Except as may otherwise be
expressly provided in the applicable Contract, if an optionee dies (a) while he
is an employee of, or consultant to, the Company, any of its Subsidiaries or a
Parent, (b) within three months after the termination of such relationship
(unless such termination was for Cause or without the consent of the Company) or
(c) within one year following the termination of such relationship by reason of
his Disability, the options that were granted to him as an employee or
consultant may be exercised, to the extent exercisable on the date of his death,
by his Legal Representative (as defined in Paragraph 19) at any time within one
year after death, but not thereafter and in no event after the date the option
would otherwise have expired.
Except as may otherwise be expressly provided in the applicable Contract,
any optionee whose relationship as an employee of, or consultant to, the
Company, its Parent and Subsidiaries has terminated by reason of such optionee's
Disability may exercise the options that were granted to him as an employee or
consultant, to the extent exercisable upon the effective date of such
termination, at any time within one year after such date, but not thereafter and
in no event after the date the option would otherwise have expired.
Except as may otherwise be expressly provided in the applicable Contract,
any optionee whose relationship as a Non-Employee Director ceases as a result of
his death or Disability may exercise the options that were granted to him as a
Non-Employee Director, to the extent exercisable on the date of such
termination, at any time within one year after the date of termination, but not
thereafter and in no event after the date the option would otherwise have
expired. In the case of the death of the Non-Employee Director, the option may
be exercised by his Legal Representative.
10. COMPLIANCE WITH SECURITIES LAWS. It is a condition to the exercise of
any option that either (a) a Registration Statement under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the shares of Common
Stock to be issued upon such exercise shall be effective and current at the time
of exercise, or (b) there is an exemption from registration under the Securities
Act for the issuance of the shares of Common Stock upon such exercise. Nothing
herein shall be construed as requiring the Company to register shares subject to
any option under the Securities Act or to keep any Registration Statement
effective or current.
The Administrators may require, in their sole discretion, as a condition to
the receipt of an option or the exercise of any option that the optionee execute
and deliver to the Company his representations and warranties, in form,
substance and scope satisfactory to the Administrators, which the Administrators
determines are necessary or convenient to facilitate the perfection of an
exemption from the registration requirements of the Securities Act, applicable
state securities laws or other legal requirement, including without limitation
that (a) the shares of Common Stock to be issued upon the exercise of the option
are being
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<PAGE> 22
acquired by the optionee for his own account, for investment only and not with a
view to the resale or distribution thereof, and (b) any subsequent resale or
distribution of shares of Common Stock by such optionee will be made only
pursuant to (i) a Registration Statement under the Securities Act which is
effective and current with respect to the shares of Common Stock being sold, or
(ii) a specific exemption from the registration requirements of the Securities
Act, but in claiming such exemption, the optionee shall prior to any offer of
sale or sale of such shares of Common Stock provide the Company with a favorable
written opinion of counsel satisfactory to the Company, in form, substance and
scope satisfactory to the Company, as to the applicability of such exemption to
the proposed sale or distribution.
In addition, if at any time the Administrators shall determine, in their
sole discretion, that the listing or qualification of the shares of Common Stock
subject to any option on any securities exchange, Nasdaq or under any applicable
law, or the consent or approval of any governmental agency or regulatory body,
is necessary or desirable as a condition to, or in connection with, the granting
of an option or the issuing of shares of Common Stock thereunder, such option
may not be granted and such option may not be exercised in whole or in part
unless such listing, qualification, consent or approval shall have been effected
or obtained free of any conditions not acceptable to the Company.
11. CONTRACTS. Each option shall be evidenced by an appropriate Contract
which shall be duly executed by the Company and the optionee, and shall contain
such terms, provisions and conditions not inconsistent herewith as may be
determined by the Administrators. The terms of each option and Contract need not
be identical.
12. ADJUSTMENTS UPON CHANGES IN COMMON STOCK. Notwithstanding any other
provision of the Plan, in the event of a stock dividend, recapitalization,
merger in which the Company is the surviving corporation, spin-off, split-up,
combination or exchange of shares or the like which results in a change in the
number or kind of shares of Common Stock which is outstanding immediately prior
to such event, the aggregate number and kind of shares subject to the Plan, the
aggregate number and kind of shares subject to each outstanding option and the
exercise price thereof, and the 162(m) Maximum shall be appropriately adjusted
by the Board of Directors, whose determination shall be conclusive and binding
on all parties. Such adjustment may provide for the elimination of fractional
shares which might otherwise be subject to options without payment therefor.
In the event of (a) the liquidation or dissolution of the Company, or (b) a
merger in which the Company is not the surviving corporation or a consolidation,
any outstanding options or unvested stock shall terminate upon the earliest of
any such event, unless other provision is made therefor in the transaction.
13. AMENDMENTS AND TERMINATION OF THE PLAN. The Plan was adopted by the
Board of Directors on September 6, 1996. No ISO may be granted under the Plan
after September 5, 2006. The Board of Directors, without further approval of the
Company's stockholders, may at any time suspend or terminate the Plan, in whole
or in part, or amend it from time to time in such respects as it may deem
advisable, including, without limitation, in order that ISOs granted hereunder
meet the requirements for "incentive stock options" under the Code, to comply
with the provisions of Rule 16b-3, Section 162(m) of the Code, or any change in
applicable law, regulations, rulings or interpretations of administrative
agencies; provided, however, that no amendment shall be effective without the
requisite prior or subsequent stockholder approval which would (a) except as
contemplated in Paragraph 12, increase the maximum number of shares of Common
Stock for which options may be granted under the Plan or the 162(m) Maximum, (b)
change the eligibility requirements to receive options hereunder or (c) make any
change for which applicable law requires stockholder approval. No termination,
suspension or amendment of the Plan shall, without the consent of the optionee,
adversely affect his rights under any option granted under the Plan. The power
of the Administrators to construe and administer any option granted under the
Plan prior to the termination or suspension of the Plan nevertheless shall
continue after such termination or during such suspension.
14. NON-TRANSFERABILITY. No option granted under the Plan shall be
transferable otherwise than by will or the laws of descent and distribution, and
options may be exercised, during the lifetime of the optionee, only by the
optionee or his Legal Representatives. Except to the extent provided above,
options may not be assigned, transferred, pledged, hypothecated or disposed of
in any way (whether by operation of law or
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<PAGE> 23
otherwise) and shall not be subject to execution, attachment or similar process,
and any such attempted assignment, transfer, pledge, hypothecation or
disposition shall be null and void ab initio and of no force or effect.
15. WITHHOLDING TAXES. The Company, a Subsidiary or Parent may withhold
(a) cash or (b) with the consent of the Administrators, shares of Common Stock
to be issued upon exercise of an option having an aggregate fair market value on
the relevant date (determined in accordance with Paragraph 5) or a combination
of cash and shares, in an amount equal to the amount which the Company, a
Subsidiary or Parent determines is necessary to satisfy its obligation to
withhold Federal, state and local income taxes or other amounts incurred by
reason of the grant, vesting, exercise or disposition of an option, or the
disposition of the underlying shares of Common Stock. Alternatively, the
Company, a Subsidiary or Parent may require the holder to pay to it such amount,
in cash, promptly upon demand.
16. LEGENDS; PAYMENT OF EXPENSES. The Company may endorse such legend or
legends upon the certificates for shares of Common Stock issued upon exercise of
an option under the Plan and may issue such "stop transfer" instructions to its
transfer agent in respect of such shares as it determines, in its discretion, to
be necessary or appropriate to (a) prevent a violation of, or to perfect an
exemption from, the registration requirements of the Securities Act and any
applicable state securities laws, (b) implement the provisions of the Plan or
any agreement between the Company and the optionee with respect to such shares
of Common Stock, or (c) permit the Company to determine the occurrence of a
"disqualifying disposition," as described in Section 421(b) of the Code, of the
shares of Common Stock issued or transferred upon the exercise of an ISO granted
under the Plan.
The Company shall pay all issuance taxes with respect to the issuance of
shares of Common Stock upon the exercise of an option granted under the Plan, as
well as all fees and expenses incurred by the Company in connection with such
issuance.
17. USE OF PROCEEDS. The cash proceeds received upon the exercise of an
option under the Plan shall be added to the general funds of the Company and
used for such corporate purposes as the Board of Directors may determine.
18. SUBSTITUTIONS AND ASSUMPTIONS OF OPTIONS OF CERTAIN CONSTITUENT
CORPORATIONS. Anything in this Plan to the contrary notwithstanding, the Board
of Directors may, without further approval by the stockholders, substitute new
options for prior options or restricted stock of a Constituent Corporation (as
defined in Paragraph 19) or assume the prior options or restricted stock of such
Constituent Corporation.
19. DEFINITIONS. For purposes of the Plan, the following terms shall be
defined as set forth below:
(a) "Cause" shall mean (i) in the case of an employee or consultant,
if there is a written employment or consulting agreement between the
optionee and the Company, any of its Subsidiaries or a Parent which defines
termination of such relationship for cause, cause as defined in such
agreement, and (ii) in all other cases, cause as defined by applicable
state law.
(b) "Constituent Corporation" shall mean any corporation which engages
with the Company, any of its Subsidiaries or a Parent in a transaction to
which Section 424(a) of the Code applies (or would apply if the option
assumed or substituted were an ISO), or any Parent or any Subsidiary of
such corporation.
(c) "Disability" shall mean a permanent and total disability within
the meaning of Section 22(e)(3) of the Code.
(d) "Legal Representative" shall mean the executor, administrator or
other person who at the time is entitled by law to exercise the rights of a
deceased or incapacitated optionee with respect to an option granted under
the Plan.
(e) "Non-Employee Director" shall mean a person who is a director of
the Company, but is not an employee of the Company, any of its Subsidiaries
or a Parent.
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<PAGE> 24
(f) "Parent" shall have the same definition as "parent corporation" in
Section 424(e) of the Code.
(g) "Subsidiary" shall have the same definition as "subsidiary
corporation" in Section 424(f) of the Code.
20. GOVERNING LAW; CONSTRUCTION. The Plan, the options and Contracts
hereunder and all related matters shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to conflict
of law provisions.
Neither the Plan nor any Contract shall be construed or interpreted with
any presumption against the Company by reason of the Company causing the Plan or
Contract to be drafted. Whenever from the context it appears appropriate, any
term stated in either the singular or plural shall include the singular and
plural, and any term stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter.
21. PARTIAL INVALIDITY. The invalidity, illegality or unenforceability of
any provision in the Plan, any option or Contract shall not affect the validity,
legality or enforceability of any other provision, all of which shall be valid,
legal and enforceable to the fullest extent permitted by applicable law.
22. STOCKHOLDER APPROVAL. The Plan shall be subject to approval by a
majority of the votes present in person or by proxy and entitled to vote hereon
at the next duly held meeting of the Company's stockholders at which a quorum is
present. No options granted hereunder may be exercised prior to such approval;
provided, however, that the date of grant of any option shall be determined as
if the Plan had not been subject to such approval. Notwithstanding the
foregoing, if the Plan is not approved by a vote of the stockholders of the
Company on or before September 5, 1997, the Plan and any options granted
hereunder shall terminate.
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<PAGE> 25
PROXY
ARISTO INTERNATIONAL CORPORATION
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
The undersigned holder of Common Stock of ARISTO INTERNATIONAL CORPORATION,
revoking all proxies heretofore given, hereby constitutes and appoints Shmuel
Cohen and Joseph Ettinger, and each of them, Proxies, with full power of
substitution, for the undersigned and in the name, place and stead of the
undersigned, to vote all of the undersigned's shares of said stock, according to
the number of votes and with all the powers the undersigned would possess if
personally present, at the Annual Meeting of Stockholders of ARISTO
INTERNATIONAL CORPORATION, to be held at the Company's executive offices at 152
West 57th Street, 29th Floor, New York, New York on Tuesday, October 29, 1996,
at 10:00 a.m. New York City time, and at any adjournments or postponements
thereof.
The undersigned hereby acknowledges receipt of the Notice of Meeting and
Proxy Statement relating to the meeting and hereby revokes any proxy or proxies
heretofore given.
Each properly executed Proxy will be voted in accordance with the
specifications made on this Proxy and in the discretion of the Proxies on any
other matter that may properly come before the meeting. Where no choice is
specified, this Proxy will be voted FOR all listed nominees to serve as
directors and FOR Proposals 2 and 3. Each Proposal has been put forth by the
Company.
PLEASE MARK YOUR CHOICE LIKE THIS IN BLUE OR BLACK INK: X
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL LISTED NOMINEES AND FOR
PROPOSALS 2 AND 3.
(1.) Election of three (3) Directors
/ / FOR all nominees listed (except as marked to the contrary)
/ / WITHHOLD AUTHORITY to vote for all listed nominees below
Nominees: Shmuel Cohen, Joseph Ettinger, Yael Cohen
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, CIRCLE
THAT NOMINEE'S NAME IN THE LIST PROVIDED ABOVE.)
PLEASE MARK, DATE AND SIGN THIS PROXY ON THE REVERSE SIDE
<PAGE> 26
(Continued from other side)
(2.) Proposal to amend the Company's Certificate of Incorporation to change
the name of the Company and to increase the number of authorized shares
of stock
/ / FOR / / AGAINST / / ABSTAIN
(3.) Proposal to adopt the Company's 1996 Stock Option Plan
/ / FOR / / AGAINST / / ABSTAIN
(4.) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting.
WILL ATTEND THE MEETING / /
Dated ____________________________ , 1996
_________________________________________
_________________________________________
Signature(s)
(Signatures should conform to names as
registered. For jointly owned shares,
each owner should sign. When signing as
attorney, executor, administrator,
trustee, guardian or officer of a
corporation, please give full title.)
PLEASE MARK AND SIGN AND RETURN PROMPTLY
