<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as
[ ] Definitive Additional Materials permitted by Rule 14a-
[ ] Soliciting Material Pursuant to 6(e)(2))
Rule 14a-11(c) or Rule 14a-12
PROJECTAVISION, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
--------------------------------------------------
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
Projectavision, Inc.
One Evertrust Plaza - 11th Floor
Jersey City, New Jersey 07302
Dear Stockholders:
After many months of hard work, we have closed the transaction that
combines Projectavision and Vidikron into a single new global entity that, with
stockholder approval, will be known as Vidikron Technology Group, Inc.
From the beginning of our efforts to acquire Vidikron, we were
determined to expand the Company beyond a single product offering. We did not
want the Company to be too dependent on a single product and technology over
which we did not have full control.
We worked diligently with the Vidikron team and certain of our current
major investors to structure a transaction that we believe will help secure the
future of our Company and position it to grow profitably. The key ingredients of
the transaction involved Vidikron taking stock and cash along with certain major
investors converting their initial investment along with their new investment
into fixed price securities to insure a stable, fixed capital structure.
This has been a long and challenging journey for all of us. The
complexities of launching a new product, difficult in the best of times, were
compounded by unexpected delays over which the Company had little control. Now
with the Vidikron transaction completed we believe we are at the beginning of a
very promising new chapter in the Company's history.
The transaction was completed effective December 7, 1998 and now I, on
behalf of the Company's executive management and Board of Directors, ask you to
support your new Company and it management by voting yes to the various
resolutions contained in the enclosed proxy statement at the annual stockholders
meeting on February 19, 1999.
As set forth on page 10 of the enclosed proxy statement, your
failure to approve Proposal No. 2 could result in the investors foreclosing on
the assets that the Company has acquired. Your support is therefore critical to
the Company implementing its plan.
Thank you for your support and all the best for 1999.
Martin J. Holleran
President and Chief Executive Officer
<PAGE>
PROJECTAVISION, INC.
ONE EVERTRUST PLAZA, 11TH FLOOR
JERSEY CITY, NEW JERSEY 07302
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
FEBRUARY 19, 1999
TO THE STOCKHOLDERS:
Notice is hereby given that the annual meeting of stockholders (the
"Annual Meeting") of Projectavision, Inc. (the "Company") has been called for
8:30 A.M. Eastern Standard Time and will be on February 19, 1999, at The Club
Hotel & Suites by Doubletree, 455 Washington Boulevard, Jersey City, New Jersey,
07310, for the following purposes:
1. To elect, Jules Zimmerman, Mr. Flavio Peralda and Mr. Emillio Baj
Macario to the Board of Directors, each for a three (3) year term, and until
each of their respective successors shall have been elected and qualified;
2. To obtain stockholder approval for the issuance of an aggregate of
6,500 shares of a new series of a convertible preferred security (the "Series I
Preferred Stock"), having a liquidation preference of $1,000 per share, to be
issued in connection with the financing and acquisition by the Company in
December, 1998 of substantially all of the video assets of Vidikron Industries
S.p.A. (the "Vidikron Acquisition").
3. To obtain stockholder approval to (A) amend the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock by 450,000,000 shares, such that the aggregate number of authorized
shares of Common Stock would increase from 50,000,000 shares to 500,000,000
shares; and in connection therewith, (B) grant the Company's Board of Directors
the authority to effect a one-time reverse stock split of the Company's issued
and outstanding common stock of up to 40-to-1 in order to increase the price of
the Company's common stock so as to assure compliance with the $1.00 minimum bid
price requirement of the Nasdaq Stock Market so that the Company's Common Stock
can continue to be traded on the Nasdaq Stock Market (the proposed increase in
authorized capital and proposed simultaneous reverse stock split of up to
40-to-1 is sometimes hereinafter collectively referred to as the "Proposed
Recapitalization" of the Company);
4. To obtain stockholder approval to amend the Company's Certificate of
Incorporation to change the name of the Company from "Projectavision, Inc." to
"Vidikron Technologies Group, Inc."
5. To approve the adoption of the Company's 1999 Incentive Stock Option
Plan;
6. To ratify the appointment by the Board of Directors of Deloitte &
Touche, LLP to serve as the Company's independent certified public accountants
for 1998 and for the current calendar year; and
7. To consider and transact such other business as may properly come
before the Annual Meeting or any adjournments thereof.
<PAGE>
The Board of Directors has fixed the close of business on Company
January 21, 1999 as the record date for the determination of the stockholders
entitled to notice of, and to vote at, the Annual Meeting or any adjournments
thereof. The list of stockholders entitled to vote at the Annual Meeting will be
available for the examination of any stockholder at the Company's offices at One
Evertrust Plaza Jersey City, New Jersey commencing February 19, 1998.
By Order of the Board of Directors
/s/ Martin Holleran
-------------------------------------
Martin Holleran, President and Chief
Executive Officer
Dated January 25, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE FILL IN, SIGN,
AND DATE THE PROXY SUBMITTED HEREWITH AND RETURN IT IN THE ENCLOSED STAMPED
ENVELOPE. THE GIVING OF SUCH PROXY WILL NOT AFFECT YOUR RIGHT TO REVOKE SUCH
PROXY IN PERSON SHOULD YOU LATER DECIDE TO ATTEND THE MEETING. THE ENCLOSED
PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS.
<PAGE>
PROJECTAVISION, INC.
PROXY STATEMENT
GENERAL
This proxy statement is furnished by the Board of Directors of
Projectavision, Inc., a Delaware corporation (the "Company"), with offices
located at One Evertrust Plaza, 11th floor, Jersey City, NJ 07302 in connection
with the solicitation of proxies to be used at the annual meeting of
stockholders of the Company to be held on February 19, 1999, and at any
adjournments thereof (the "Annual Meeting"). This proxy statement will be mailed
to stockholders beginning approximately January 26, 1999. If a proxy in the
accompanying form is properly executed and returned, the shares represented
thereby will be voted as instructed on the proxy. Any proxy may be revoked by a
stockholder prior to its exercise upon written notice to the President of the
Company, or by a stockholder voting in person at the Annual Meeting.
All properly executed proxies received prior to the Annual Meeting will
be voted at the Annual Meeting in accordance with the instructions marked
thereon or otherwise as provided therein. Unless instructions to the contrary
are indicated, proxies forwarded to those stockholders who hold their voting
securities in "street name" will be voted FOR the election of Messrs. Zimmerman,
Peralda and Baj Macario to the Board of Directors for a three (3) year term, FOR
the ratification of the selection by the Board of Directors of Deloitte &
Touche, LLP as the independent certified public accountants of the Company for
the current calendar year, FOR the amendment of the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock by
450,000,000 such that the aggregate number of authorized shares of Common Stock
would increase from 50,000,000 shares to 500,000,000 shares, FOR the
authorization to the Company's Board of Directors to effect a one-time reverse
stock split of up to 40-to-1 in order for the Company to maintain its Nasdaq
listing for its Common Stock, and FOR the ratification of the appointment by the
Board of Directors of Deloitte & Touche, LLP to serve as the Company's
independent certified public accountants for 1998 and the current calender year.
A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, and Quarterly Report on Form 10-Q for the periods ended March
31, 1998, June 30, 1998, and September 30, 1998 accompanies this proxy
statement.
An "abstention" on any proposal will be counted as present for purposes of
determining whether a quorum of shares is present at the Annual Meeting with
respect to the proposal on which the abstention is noted. Abstentions will be
counted as a vote "against" such proposal, except in the case of the election
of directors or ratification of the appointment of accountants where an
abstention will not be counted as a vote and will not affect the outcome of the
vote on such proposals. Under the Rules of the New York Stock Exchange, which
apply in part to the Annual Meeting, proposals 1, 3(A), 3(B), 4 and 6 are
considered "discretionary" proposals, which means that brokers who hold Company
shares in "street name" for customers are authorized to vote on such proposals
on behalf of their customers unless expressly advised to the contrary. However,
each other proposal is considered a "non-discretionary" proposal, which means
that such brokers are not authorized to vote on such proposals without specific
voting instructions as to such proposal. Therefore, "broker non-votes" on such
non-discretionary proposals will not be counted as present for purposes of
determining whether a quorum of shares is present at the Annual Meeting.
The Board of Directors does not know of any matter to be proposed for
action at the meeting other than those described in this proxy statement. If
other matters properly come before the meeting, the persons named in the
accompanying proxy will act in accordance with their best judgment.
The cost of preparing, assembling and mailing this notice of meeting,
proxy statement, the enclosed annual and quarterly reports, letter from the
President, and proxy will be borne by the Company. In addition to the
solicitation of the proxies by a proxy solicitor retained by the Company by use
of the mails, some of the officers and regular employees of the Company,
without extra remuneration, may solicit proxies personally or by telephone,
telegraph, or cable. The Company may also request brokerage houses, nominees,
custodians and fiduciaries to forward soliciting material to the beneficial
owners of stock held of record. The Company will reimburse such persons for
their expenses in forwarding soliciting material.
1
<PAGE>
VOTING SECURITIES AND
PRINCIPAL HOLDERS THEREOF
The Board of Directors has fixed the close of business on January
21, 1999 as the record date (the "Record Date") for the determination of
stockholders entitled to notice of, and to vote at, the Annual Meeting. Only
stockholders of the Company's common stock, par value $.001 per share (the
"Common Stock") on the Record Date will be able to vote at the Annual Meeting,
and each holder of record will be entitled to one vote for each share of Common
Stock held.
As of the Record Date, there were 47,131,606 shares of the Common Stock
issued and outstanding, all of which are entitled to one (1) vote per share at
the Annual Meeting. Holders of the Common Stock are entitled to vote on all
matters. Unless otherwise indicated herein, a majority of the votes represented
by shares present or represented by proxy at the Annual Meeting is required for
approval of each matter which will be submitted to stockholders.
Management of the Company knows of no business other than that
specified in Items 1-6 of the Notice of Annual Meeting which will be presented
for consideration at the Annual Meeting. If any other matter is properly
presented, it is the intention of the persons named in the enclosed proxy to
vote in accordance with their best judgment.
The following table sets forth certain information, as of January
21, 1999, known to the Company regarding beneficial ownership of the
Company's Common Stock, which is the only class of the Company's voting
securities, by: (i) any holder of more than five (5%) percent of the outstanding
shares of the Common Stock; (ii) the Company's directors and director nominees;
and (iii) the directors and officers of the Company as a group:
Shares of Percentage of
Common Total
Stock Common
Name Owned(1)(2) Stock(3)
---- ---------- -------------
Martin D. Fife (4) 150,000 .3%
405 Lexington Avenue
New York, NY 10174
Marvin Maslow (5) 1,391,280 2.8%
Projectavision, Inc.
Two Penn Plaza
Suite 640
New York, NY 10121
Jules Zimmerman (6) 120,000 .2%
20 West 64th Street
New York, NY 10023
Martin Holleran 100,000(7) .2%(7)
Projectavision, Inc.
Two Penn Plaza
Suite 640
New York, NY 10121
Sherman Langer (8) 152,000 .3%
Projectavision, Inc.
Two Penn Plaza
Suite 640
New York, NY 10121
Flavio Peralda 4,160,350(9) 8.5%(9)
Vidikron Industries S.p.A.
Via Dei Guasti, 29
20020 Misinto (Milano)
C.so Venezia, 16-20121
Milano, Italy
2
<PAGE>
Shares of Percentage of
Common Total
Stock Common
Name Owned(1)(2) Stock(3)
---- ---------- -------------
Emillo Baj Macario 4,160,350(9) 8.5%(9)
Vidikron Industries S.p.A.
Via Dei Guasti, 29
20020 Misinto (Milano)
C.so Venezia, 16-20121
Milano, Italy
All Directors, Director Nominees
and Officers as a Group
(consisting of
7 persons) (3) (4) (5) (6)
(7)(8)(9) 6,073,630 12.4%
------------- --------
(1) Except as otherwise indicated, all shares of Common Stock are
beneficially owned, and sole investment and voting power is held, by
the persons named. The share information with respect to the number of
shares and corresponding percentage ownership interest, unless
expressly stated herein to the contrary, does not give effect to the
Proposed Recapitalization.
(2) Gives effect to the reverse stock split of one-for- 11.3467611 shares
of Common Stock in February, 1990, two-for-three shares of Common Stock
in July, 1990, and two-for-the proposed reverse stock split for which
stockholder approval is being sought in accordance with Proposal 3(B)
of this Proxy Statement.
(3) In accordance with Rule 13d-3(d) of the Securities Act of 1933, as
amended, includes in addition to 47,131,606 shares of Common
Stock outstanding, all of the shares of Common Stock issuable upon the
issuance of options held by officers and directors within sixty (60)
days.
(4) Includes 150,000 non-qualified options granted to and beneficially
owned by Mr. Fife to acquire 150,000 shares of Common Stock.
(5) Includes 1,375,000 shares of Common Stock subject to 1,375,000
non-qualified stock options.
(6) Includes 120,000 non-qualified options granted to and beneficially
owned by Mr. Zimmerman to acquire 120,000 shares of the Company's
Common Stock.
(7) In December, 1998, in connection with the Vidikron Acquisition, Mr.
Holleran, in exchange for his currently existing 1,250,000
non-qualified stock options which were returned to the Company for
cancellation, was granted such number of non-qualified stock options
that are equal to seven percent (7%) of the Company after giving effect
to the Proposed Recapitalization. The exercise price of these newly
granted options is $.06 per share, which is the average price at which
the investors who are to acquire the proposed Series I Preferred Stock
that is subject to stockholder approval invested in the Company in
connection with the Vidikron Acquisition. These newly issued options
vest as follows: one-third immediately, one-third on the one (1) year
anniversary of the Vidikron Acquisition and one-third on the two (2)
year anniversary of the Vidikron Acquisition.
(8) Includes 152,000 non-qualified options granted to an beneficially owned
by Mr. Langer to acquire 152,000 shares of Common Stock.
(9) These shares were issued to Grangeover Limited as partial consideration
for the transfer to the Company of certain trademarks and attendant
intellectual property rights in connection with the Vidikron
Acquisition. Messrs. Peralda and Baj Macario, the principals of
Vidikron Industries, S.p.A., are also the principals of Grangeover
Limited, and are director nominees. In addition, the Company will issue
to Grangeover, subject to obtaining the requisite stockholder approval,
additional shares of Series I Preferred Stock such that, when
aggregated with the 4,160,350 shares of Common Stock already issued to
Grangeover, Grangeover will beneficially own securities of the Company
equal to and/or convertible into an aggregate of 4.4% of the issued and
outstanding shares of Common Stock after giving effect to the Proposed
Recapitalization.
3
<PAGE>
PROPOSAL NO. 1:
General
The Board of Directors consisted of eight (8) persons in each of the
fiscal years ended 1996 and 1997. In July 1998, Dr. Craig Fields resigned from
the Company's Board of Directors for personal reasons. In October 1998, Arthur
Lipper III resigned from the Company's Board of Directors for personal reasons.
In November 1998, Mr. Richard Hickok resigned from the Company's Board of
Directors for personal reasons. In connection with the Company effecting the
acquisition of substantially all of the assets of Vidikron Industries, S.p.A.
("Vidikron"), the Company agreed to expand its Board to no more than eleven (11)
individuals. The new individuals who the Company has agreed to nominate for
election to the Company's Board of Directors are Mr. Flavio Peralda and Mr.
Emillio Baj Macario, the principals of Vidikron. In addition, each of Sovereign
Partners, L.P. and Dominion Capital Fund, Ltd., on one hand, and The Zanett
Securities Corporation on the other hand, obtained the right, in connection with
providing or facilitating financing for the Vidikron Acquisition, to appoint up
to two (2) members to the Company's Board of Directors. Sovereign Partners, L.P.
and Dominion Capital Fund Ltd. provided $1,275,000 and $1,375,000 of financing,
respectively, to the Company in connection with the Vidikron Acquisition. Prior
to providing such financing, each of Sovereign Partners, L.P. and Dominion
Capital Fund, had provided $2,550,000 in financing to the Company. In connection
with the Vidikron Acquisition, The Zanett Securities Corporation facilitated the
financing of an aggregate of $2,350,000: $1,204,000 from Goldman Sachs
Performance Partners, L.P.; $946,000 from Goldman Sachs Performance Partners,
(Offshore) L.P. and $100,000 from Zanett Lombardier, Ltd., an entity which had
previously invested $2,850,000 in the Company. Each of The Zanett Securities
Corporation, Sovereign Partners, L.P. and Dominion Capital Fund, Ltd. has
advised the Company that they do not presently intend to nominate any
individuals to the Company's Board of Directors until subsequent to the
Company's Annual Meeting.
The Company has a classified Board of Directors which is divided into
three classes, which means that the Company's Directors are elected for
three-year terms or until their successors are elected and qualify with a
plurality of votes cast in favor of their election.
Each of Mr Jules Zimmerman, Mr. Flavio Peralda, and Mr. Emillo Baj
Macario is being nominated for a three (3) year term.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION AS
DIRECTORS OF THE NOMINEES NAMED HEREIN. Unless otherwise directed by the
stockholder giving the proxy, the proxies forwarded to those stockholders who
hold their voting securities in "street name" will be voted "FOR" the election
of the nominees named above as directors. If any of the nominees should
subsequently become unavailable for election, the persons voting the
accompanying proxy may in their discretion vote for a substitute.
Board of Directors
The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company. Although in
their capacity as Board members, they are not involved in day-to-day operating
details, members of the Board are kept informed of the Company's business by
various reports and documents sent to them as well as by operating and financial
reports made at Board meetings. The Board also held three (3) regular and three
(3) special meetings in 1998. All of the current members of the Board attended
at least seventy-five (75%) percent of the Board meetings in 1998.
4
<PAGE>
The directors and executive officers of the Company are listed below,
followed by a brief description of their business experience during the past
five years.
<TABLE>
<CAPTION>
Term
Name Age Position Expires
- ---- --- -------- --------
<S> <C> <C> <C>
Marvin Maslow 61 Chairman of the Board 1999
of Directors
Martin Holleran 56 President, Chief Executive
Officer and Director 2000
Martin D. Fife 71 Director 2000
Jules Zimmerman (2) 63 Chief Financial Officer, 1998
Secretary and Director
Sherman Langer 51 Director 1999
Flavio Peralda 49 Director nominee 2000
Emillio Baj Macario 53 Director nominee 2000
</TABLE>
Marvin Maslow, a co-founder of the Company, has served as Chairman of
the Board of Directors of the Company since its inception. Mr. Maslow also
served as the Company's Chief Executive Officer from inception through September
30, 1996, when he voluntarily resigned as Chief Executive Officer of the
Company, endorsing the appointment by the Board of Mr. Martin Holleran as Chief
Executive Officer of the Company. Mr. Maslow also served as an officer and a
director of DKY, Inc. ("DKY"), the Company's predecessor in interest from
October 1988 until June 12, 1990, when DKY was merged into the Company. Mr.
Maslow also served as Chief Financial Officer of the Company from its inception
until the consummation of its initial public offering in August, 1990. Prior to
founding the Company, Mr. Maslow was a principal in a private investment
company, with responsibility for investing capital in privately held, emerging
growth companies.
Martin J. Holleran, has served as President of the Company since
November, 1993. On September 30, 1996, Mr. Holleran became Chief Executive
Officer of the Company, at which time, he retained the title of President but
resigned as the Chief Operating Officer of the Company, a position which he had
also held since November, 1993. Prior to 1993, Mr. Holleran served as President
and Chief Executive Officer of Thomson Consumer Electronics Marketing and Sales
Company ("Thomson") from 1988 to 1992. At Thomson, Mr. Holleran had overall
responsibility for the marketing, sales and distribution of the RCA and GE
brands of consumer electronic products sold in North and South America. From
1992 until 1993, Mr. Holleran was President and Chief Operating Officer of
Emerson Radio.
Jules Zimmerman has served as a Director since January 1993, as
Secretary of the Company since February 1994 and as the Chief Financial Officer
of the Company since 1990. From October 1989 to December 31, 1996, Mr. Zimmerman
served as President and Chief Executive Officer of Hickok Associates, a company
that provided financial consulting services. Mr. Zimmerman was employed by Avon
Products Inc. for 12 years and served as Avon's Senior Vice President and Chief
Financial Officer from 1984 to 1988. From 1992 through 1995, Mr. Zimmerman was a
member of the Board of Directors of Winners All International, as well as its
predecessor-in-interest, National Child Care Company. He is a Director of GP
Financial and was the President of the New York Chapter of the National
Association of Corporate Directors from September 1990 through December 1992.
Sherman Langer has been the Company's Senior Vice President of
Marketing and Sales since October 1994 and has served as a Director since
February, 1996. Mr. Langer was a consultant to the Company from February 1994
until October 1994. From June 1988 through January 1994, Mr. Langer was the
General Manager of the Consumer LCD Products Division of the Sharp Electronics
Corporation.
Flavio Peralda was appointed to the Company's Board of Directors in
December, 1998 in connection with the Vidikron Acquisition. Prior thereto, Mr.
Peralda was the founder, and for the last twenty (20) years, the chief executive
officer and majority stockholder of Vidikron Industries, S.p.A.
Emillio Baj Macario was appointed to the Company's Board of Directors
in December, 1998 in connection with the Vidikron Acquisition. For the last
ten (10) years, Mr. Baj Macario was an executive and principal of Vidikron
Industries, S.p.A.
5
<PAGE>
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of
its Common Stock, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the "Commission") and the National
Association of Securities Dealers, Inc. Officers, directors and greater than ten
percent stockholders are required by the Commission to furnish the Company with
copies of all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no reports on
Form 5 were required for those persons, the Company believes that during 1998
all filing requirements applicable to its officers, directors and greater than
ten percent stockholders were complied with.
Executive Compensation
The following table sets forth the cash compensation paid by the Company to
executive officers of the Company for the year ended December 31, 1998 whose
total annual salary and bonus exceeded $100,000:
SUMMARY COMPENSATION TABLE
--------------------------
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------------------------------
Annual Compensation Awards Payouts
-------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Other Re- All
Annual stricted other
Compen- Stock LTIP Compen-
Name and sation Awards Options/ Payouts sation
Principal Position Year Salary($) Bonus($) $ $ SARs(#) $ $
- ------------------ ---- --------- -------- ------- ------- ------- ------- -------
Marvin Maslow, 1998 $150,000 $ -0- $ -0- $ -0- -0- $ -0- $ -0-(1)
Chief Executive 1997 $150,000 $ -0- $ -0- $ -0- -0- $ -0- $ -0-
Officer, Chairman 1996 $150,000 $ -0- $ -0- $ -0- 1,000,000(1) $ -0- $100,000
of the Board of
Directors
Martin Holleran, 1998 $220,000 $ -0-(2)
President, Chief 1997 $220,000 $ -0- $ -0- $ -0- -0- $ -0- $ -0-
Operating Officer 1996 $180,000 $ -0- $ -0- $ -0- 1,000,000 $ -0- $100,000
and Director
Sherman Langer
Senior Vice 1998 $165,000 $ -0- $ -0- $ -0- -0- $ -0- $ -0-
President of 1997 $165,000 $ -0- $ -0- $ -0- -0- $ -0- $ -0-
Marketing and 1996 $130,000 $30,000 $ -0- $ -0- 100,000 $ -0- $ -0-
Sales and
Director
</TABLE>
(1) Mr. Maslow also receives a non-accountable expense allowance of $2,000 per
month plus a car allowance with respect to the use of an Acura.
(2) In December, 1998, in connection with the Vidikron Acquisition, Mr.
Holleran, in exchange for his currently existing 1,250,000 non-qualified
stock options which were returned to the Company for cancellation, and was
granted such number of non-qualified stock options that are equal to seven
percent (7%) of the Company after giving effect to the Proposed
Recapitalization. The exercise price of these newly granted options is $.06
per share, which is the average price at which the investors who are to
acquire the proposed Series I Preferred Stock that is subject to
stockholder approval invested in the Company in connection with the
Vidikron Acquisition. These newly issued options vest as follows: one-third
immediately, one-third on the one (1) year anniversary of the Vidikron
Acquisition and one-third on the two (2) year anniversary of the Vidikron
Acquisition.
6
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Value of Unexercised
Number of Unexercised In-the-Money
Options/SARs at Options/SARs at
Fiscal Year End (#) Fiscal Year End ($)
Name and Shares Acquired Value Realized Exercisable/ Exercisable/
Principal Position on Exercise (#) ($) Unexercisable Unexercisable
- --------------------------- --------------- -------------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
Marvin Maslow, -0- N/A 1,375,000 Exercisable 0/0
Chief Executive
Officer, President of
the Board of
Directors
Martin Holleran, -0- N/A (1) 0/0
President and Chief
Operating Officer
Martin Fife, -0- N/A 15,000 Exercisable 0/0
Vice Chairman of the
Board of Directors
Jules Zimmerman, -0- N/A 120,000 Exercisable 0/0
Chief Financial
Officer and Director
Sherman Langer, -0- N/A 152,000 Exercisable 0/0
Senior Vice President
of Marketing Sales
and Director
</TABLE>
(1) In December, 1998, in connection with the Vidikron Acquisition, Mr.
Holleran, in exchange for his currently existing 1,250,000 non-qualified
stock options which were returned to the Company for cancellation, was
granted such number of non-qualified stock options that are equal to seven
percent (7%) of the Company after giving effect to the Proposed
Recapitalization. The exercise price of these newly granted options is $.06
per share, which is the average price at which the investors who are to
acquire the proposed Series I Preferred Stock that is subject to
stockholder approval invested in the Company in connection with the
Vidikron Acquisition. These newly issued options would vest as follows:
one-third immediately, one-third on the one (1) year anniversary of the
Vidikron Acquisition and one-third on the two (2) year anniversary of the
Vidikron Acquisition.
Comparison of Five-Year Cumulative Total Returns
Performance Report for
Projectavision, Inc.
Prepared by the Center for Research in Security Prices
Produced on 01/20/1999 including data to 12/31/1998
Company Index: CUSIP Ticker Class Sic Exchange
----- ------ ----- --- --------
74339110 PJTV 3660 NASDAQ
Fiscal Year-end is 12/31/1998
Market Index: Nasdaq Stock Market (US Companies)
Peer Index: NASDAQ Stocks (SIC 3660-3669 US Companies)
Communications Equipment
<PAGE>
Date Company Index Market Index Peer Index
---- ------------- ------------ ----------
12/31/1993 100.000 100.000 100.000
01/31/1994 80.682 103.035 100.788
02/28/1994 62.500 102.073 98.085
03/31/1994 61.364 95.797 91.886
04/29/1994 61.364 94.553 95.175
05/31/1994 45.455 94.785 85.228
06/30/1994 55.682 91.318 79.834
07/29/1994 47.727 93.193 84.114
08/31/1994 50.000 99.135 93.740
09/30/1994 46.591 98.881 93.278
10/31/1994 52.273 100.824 105.370
11/30/1994 45.455 97.479 104.840
12/30/1994 39.205 97.752 113.428
01/31/1995 31.818 98.310 109.964
02/28/1995 29.545 103.509 118.085
03/31/1995 30.682 106.578 123.902
04/28/1995 23.295 109.936 131.144
05/31/1995 21.591 112.772 132.886
06/30/1995 28.409 121.911 157.365
07/31/1995 27.273 130.873 175.814
08/31/1995 30.114 133.526 177.400
09/29/1995 42.614 136.596 187.897
10/31/1995 51.136 135.807 173.262
11/30/1995 34.091 138.996 186.370
12/29/1995 43.182 138.256 175.935
01/31/1996 40.909 138.936 171.886
02/29/1996 43.182 144.224 183.654
03/29/1996 36.932 144.699 181.159
04/30/1996 20.455 156.700 215.722
05/31/1996 26.136 163.896 243.372
06/28/1996 32.955 156.508 234.122
07/31/1996 26.705 142.551 188.855
08/30/1996 35.227 150.538 202.873
09/30/1996 36.364 162.052 213.700
10/31/1996 34.091 160.261 201.541
11/29/1996 30.682 170.168 208.784
12/31/1996 23.295 170.015 195.178
01/31/1997 27.557 182.098 207.294
02/28/1997 25.000 172.026 181.620
03/31/1997 23.864 160.793 164.429
04/30/1997 18.182 165.820 157.669
05/30/1997 17.330 184.612 197.998
06/30/1997 17.898 190.266 203.922
07/31/1997 13.352 210.349 224.948
08/29/1997 17.330 210.028 227.641
09/30/1997 17.614 222.440 233.837
10/31/1997 14.773 210.924 221.992
11/28/1997 13.636 211.979 219.291
12/31/1997 8.807 208.580 208.891
01/30/1998 10.369 215.158 195.824
02/27/1998 6.818 235.360 206.210
03/31/1998 10.227 244.052 215.153
04/30/1998 6.818 248.196 227.371
8
<PAGE>
Date Company Index Market Index Peer Index
---- ------------- ------------ ----------
05/29/1998 4.545 234.573 212.244
06/30/1998 2.273 251.119 225.908
07/31/1998 3.409 248.467 221.908
08/31/1998 1.136 199.752 142.298
09/30/1998 0.852 227.341 139.211
10/30/1998 0.852 236.632 158.622
11/30/1998 0.852 259.943 171.915
12/31/1998 0.568 293.209 186.983
The index level for all series was set to 100.0 on 12/31/1993
Board Classification and Committees and Advisory Board
The Company adopted a classified Board of Directors in February, 1990. The
Board of Directors presently consists of eight members divided into three
classes. Having a classified Board of Directors may be viewed as inhibiting a
change in control of the Company and having possible anti-takeover effects.
Officers of the Company serve at the discretion of the Board of Directors.
The Company has an Audit Committee, a Compensation Committee and an
Executive Committee. The Audit Committee reviews the engagement of the
independent accountants, reviews and approves the scope of the annual audit
undertaken by the independent accountants and reviews the independence of the
accounting firm. The Audit Committee also reviews the audit and non-audit fees
of the independent accountants and the adequacy of the Company's internal
control procedures. The Audit Committee is presently comprised of Jules
Zimmerman and Martin D. Fife. Mr. Richard Hickok also served on the Audit
Committee in 1998 until he resigned from the Board for personal reasons. The
Audit Committee held one (1) meeting during 1998. The Compensation Committee
reviews compensation issues relating to executive management and makes
recommendations with respect thereto to the Board of Directors. The Compensation
Committee is presently comprised of Jules Zimmerman and Martin Fife. Mr. Hickok
and Mr. Fields also served on the Compensation Committee in 1998 until each of
them resigned from the Board for personal reasons. The Compensation Committee
held two (2) meetings in 1997.
In 1998, except for Mr. Arthur Lipper, and Dr. Craig Fields each of whom
resigned from the Board in October and July of 1998, respectively, for personal
reasons, each member of the Board of Directors who was not an officer or
employee of the Company received $8,000 per year, plus $1,000 for each Board of
Directors or committee meetings attended for serving as Director. The Company
reimburses its Directors for out-of-pocket expenses incurred in connection with
meetings of the Board of Directors or committee meetings attended. Further, in
1998, Arthur Lipper III, a former director who resigned from the Board in
October 1998, received (or his affiliated entities received) an aggregate of
$24,000 from the Company and Dr. Craig Fields, a former director who
resigned from the Board in July 1998, received an aggregate of $12,000 from
the Company in 1998. Both Arthur Lipper (and his affiliated entities) and Dr.
Fields received these sums for various consulting services provided to the
Company, which services were in addition to Mr. Lipper's and Dr. Field's duties
as an outside Director. There are no family relationships among any Directors or
officers.
Executive Employment Agreements
The Company entered into an employment agreement in July 1990 with Marvin
Maslow to serve as Chief Executive Officer of the Company. Mr. Maslow's
employment agreement, which was to initially expire in July, 1995, was
automatically extended in January 1995 by its terms for an additional 30 months.
That employment agreement was terminated and replaced with a new executive
employment agreement effective March 1, 1997. The term of Mr. Maslow's new
employment agreement is six (6) years with a two-year extension, and it contains
certain change in control provisions. Mr. Maslow is currently paid $150,000 per
year under his employment agreement, and in addition, receives a non-accountable
expense allowance of $2,000 per month and a car allowance for an Acura.
The Company entered into a three (3) year employment agreement with Mr.
Martin Holleran in November 1993 to serve as the Company's President and Chief
Operating Officer. Upon the expiration of this agreement (which was orally
extended by the parties subsequent to its term), the Company entered into a new
executive employment agreement with Mr. Holleran effective March 1, 1997. The
term of Mr. Holleran's new executive employment agreement is six (6) years with
a two-year extension, and it contains certain change in control provisions. Mr.
Holleran is currently paid $220,000 per year under his employment agreement.
Effective January 1, 1997, the Company entered into an executive employment
agreement with Mr. Sherman Langer. The term of Mr. Langer's employment agreement
is three (3) years and provides for a salary of $165,000 per year and also
contains certain change in control provisions.
Each of Messrs. Maslow, Holleran and Langer have agreed not to compete with
the Company during the term of his respective employment agreement or for a
period of two years after the termination thereof. All of the executive
employment agreements contain termination for cause provisions.
Since 1996, Mr. Zimmerman has provided his services to the Company as Chief
Financial Officer on an hourly basis.
9
<PAGE>
PROPOSAL NO. 2:
AUTHORIZATION TO APPROVE THE
ISSUANCE OF 6,500 SHARES OF SERIES I PREFERRED STOCK
On December 8, 1998 the Company effected the closing of the Vidikron
Acquisition in which the Company acquired a high-end, world-renowned, video
concern that has a successful track record of sales and profitability.
Specifically, Vidikron has been in business for eighteen (18) years and enjoys
revenues of approximately $20,000,000 per annum and is profitable. Moreover,
the reputation of Vidikron throughout the industry is that of the highest
caliber, and the Company believes that with its own marketing expertise and
access to capital markets, the Company will be able to effectively and
profitably expand its business and operations.
In order to finance the Vidikron Acquisition, the Company raised
$5,500,000 in additional capital from or through the efforts of investors who
had previously invested in or provided financing to the Company. Specifically,
Sovereign Partners LP which had previously invested $2,550,000 in the Company
invested additional $1,375,000 in the Company. Dominion Capital Fund Limited,
which had previously invested $2,550,000 in the Company, invested an additional
$1,375,000 in the Company. Willora Company which had previously invested
$1,600,000 in the Company invested an additional $250,000 in the Company. Mr.
Zubair Kazi, an individual who had previously invested $2,000,000 in the
Company invested an additional $250,000 in the Company. The Zanett Securities
Corporation facilitated the investment of an aggregate of $2,250,000:
$1,204,000 by Goldman Sachs Performance Partners L.P.; $946,000 by Goldman
Sachs Performance Partners (Offshore) L.P.; and $100,000 from Zanett Lombardier
Ltd. which had previously invested $2,850,000 in the Company. In addition, each
of Sovereign Partners LP, Dominion Capital Fund Limited, the Willora Company
(and its affiliate), Mr. Kazi and Zanett Lombardier, Ltd. agreed, subject to
obtaining stockholder approval, to have their various securities (collectively,
the "Prior Convertible Securities") redeemed by the Company in exchange for
Series I Preferred Stock. The Prior Convertible Securities were convertible
into shares of the Company's common stock at varying "floating" discounts to
the Company's market price at the time of conversion. The Series I Preferred
Stock is convertible into shares of the Company's Common Stock at the fixed
price of $.09 per share.
In exchange for the aggregate investment of $5,500,000, the new investors
received secured promissory notes (the "Notes"), which, if not converted into
Series I Preferred Stock of the Company on or before April 6, 1999, holders
representing 75% of the principal amount of the Notes (i.e., $4,125,000), may
declare all of the Notes to be in default, in which event the noteholders would
have the right to foreclose on all of the assets of Vidikron acquired by the
Company in the Vidikron Acquisition. In the event that the stockholders approve
the Proposed Racapitalization and the issuance of the Series I Preferred Stock,
the conversion of the Notes into Series I Convertible Preferred Stock, and the
redemption of the Prior Convertible Securities in exchange for shares of Series
I Preferred Stock, will result in the issuance of Series I Convertible
Preferred Stock that will be, in the aggregate, convertible into shares of the
Company representing, on a fully diluted basis, approximately 82% of the issued
and outstanding voting securities of the Company. Specifically, assuming the
conversion of the Notes and redemption of the Prior Convertible Securities, and
the issuance of additional securities to each of the following entities and
individuals for various financial services rendered in connection with the
Vidikron Acquisition, each of the following entities and individuals will own
such number of Series I Convertible Preferred Stock that will represent, on a
fully diluted basis, the following percentage ownership interest in the Company:
Sovereign Partners LP -- approximately 17.96%; Dominion Capital Fund Limited --
approximately 17.96%; Zanett Lombardier Ltd., -- approximately 14.3%; Mr. Zubair
Kazi -- approximately 11.4%; Goldman Sachs Performance Partners, L.P. --
approximately 5.9%; Goldman Sachs Performance Partners (Offshore) L.P. --
approximately 4.6%; and the Willora Company -- approximately 9.6%. Accordingly,
current stockholders of the Company would experience substantial dilution in
their ownership interest in the Company. Not withstanding the foregoing, the
Series I Preferred Stock contains a provision, however, that in no event is any
holder of the Series I Preferred Stock entitled to convert the Series I
Preferred Stock such that it would result in the beneficial ownership by a
holder of more than 4.99% of the Company's issued and outstanding shares of
Common Stock.
In addition, in connection with the Vidikron Acquisition, $1,000,000 of
the purchase price is to be in the form of securities of the Company.
Accordingly, the Company has heretofore issued to Grangeover 4,160,350 shares
of Common Stock in connection with the Vidikron Acquisition, and subject to
obtaining the requisite
10
<PAGE>
stockholder approval, the Company has agreed to issue to Grangeover Limited,
the entity from which the Company acquired certain trademarks and intellectual
property rights with respect to the Vidikron name, an additional number of
shares of Series I Preferred Stock which, when aggregated with the 4,160,350
shares of Common Stock previously issued to Grangeover, would represent
approximately 4.4% of the Company on a fully diluted basis.
The rules of The Nasdaq SmallCap Market (the market on which the Company's
securities are traded) require the Company to obtain the approval of its
stockholders in the event that the Company issues shares of Common Stock (or a
security convertible into shares of Common Stock) which may result in the
holders thereof acquiring 20% or more of the issued and outstanding shares of
Common Stock at a price per share which is less than the greater of the per
share book value or the per share market value of the Common Stock. The
issuance of, in the aggregate, Series I Preferred Stock will result in the
holders thereof acquiring a security convertible into 20% or more of the issued
and outstanding shares of Common Stock at a price of $.09 per share of Common
Stock which is less than the greater of the per share book value or per share
market value of the Common Stock.
Accordingly, a majority of the votes represented by shares present or
represented by proxy at the Annual Meeting is necessary to issue the Series I
Preferred Stock in exchange for the Notes and the redemption of the Prior
Convertible Securities.
The terms and conditions of the Series I Convertible Preferred Stock are
set forth in Annex I attached hereto.
The Board of Directors recommends a vote FOR the approval of the issuance of
the Series I Preferred Stock.
11
<PAGE>
PROPOSAL NO. 3(A):
AMENDMENT OF CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK
The Company is presently authorized to issue 50,000,000 shares of Common
Stock. As of the Record Date, of the 50,000,000 shares authorized, 47,131,606
shares were issued and outstanding, and 1,817,000 shares were reserved for
issuance under the Company's benefit plans and for certain convertible
securities. The Company's Common Stock has no preemptive or other subscription
rights, and there are no conversion rights or redemption or sinking fund
provisions with respect to such shares. An affirmative vote of at least a
majority of the outstanding shares of Common Stock is necessary for approval.
The Board of Directors of the Company at a meeting held on December 31,
1998 adopted resolutions to amend, subject to stockholder approval, ARTICLE
FOURTH of the Company's Certificate of Incorporation to authorize an additional
450,000,000 shares of Common Stock. Other than increasing the aggregate number
of authorized shares of Common Stock from 50,000,000 shares to 500,000,000
shares, this amendment in no way changes the Company's Certificate of
Incorporation.
Other than the shares reserved for issuances in connection with the
Company's benefit plans, for issuance to the Company's investment banking firm
for fees due in connection with effecting the Vidikron Acquisition, for
certain convertible securities as discussed above, and shares reserved for
conversion of the Series I Preferred Stock in the event that the issuance of
the Series I Preferred Stock is approved in accordance with Proposal No.2
above, the Company has no specific plans, arrangements, or understandings for
the issuance of the additional shares of Common Stock. The additional
authorized shares would be available for raising additional capital, employee
benefit plans, acquisitions, stock splits and other purposes, at the discretion
of the Board of Directors of the Company without, in most cases, the delays and
expenses attendant to obtaining further stockholder approval, thus enabling the
Company to provide needed flexibility for future financial and capital
requirements so that proper advantage could be taken of propitious market
conditions. While any additional issuances of the Company's securities (except
in the event of a stock split) would dilute the ownership of existing security
holders, the Board believes that potential dilution is outweighed by the
flexibility and access to capital afforded by the additional authorized
capital.
The Board of Directors recommends a vote FOR the approval of the amendment
to the Certificate of Incorporation to increase the number of authorized shares
of Common Stock. Unless otherwise directed by the stockholder giving the proxy,
proxies forwarded to those stockholders who hold their voting securities in
"street name" will be voted "FOR" the amendment to the Company's Certificate of
Incorporation increasing the number of authorized shares of Common Stock.
12
<PAGE>
PROPOSAL NO. 3(B)
AUTHORIZATION TO AMEND THE CERTIFICATE OF INCORPORATION,
IN THE DISCRETION OF THE BOARD OF DIRECTORS, TO ENABLE THE BOARD
OF DIRECTORS TO EFFECT, AT THEIR DISCRETION, A ONE TIME
REVERSE SPLIT OF UP TO ONE-FOR-FORTY OF THE
OUTSTANDING SHARES OF THE COMPANY'S COMMON STOCK
Under the rules of The Nasdaq Stock Market, in order for the Company to
qualify the Common Stock for continued quotation on The Nasdaq SmallCap Market
(the market on which the Common Stock is presently traded), the Company, among
other things, must have a minimum bid price of $1.00 per share of Common Stock.
As of the Record Date, the bid price of the Common Stock was $.09 per share.
On May 27th, the Company was notified in writing by The Nasdaq Stock Market that
it had failed to meet the minimum bid price requirement and unless it was in
compliance (i.e., its Common Stock traded over $1.00 per share) or requested a
hearing on or before August 25th, that its securities would be de-listed from
The Nasdaq SmallCap Market. In August the Company requested a hearing, which
took place before a Nasdaq listing qualifications panel on October 16, 1998.
Following the October 16, 1998 hearing the Company was granted a temporary
exception from the minimum bid price requirement until December 22, 1998, which
exception was subsequently extended by The Nasdaq Stock Market to February 22,
1999.
The Board of Directors has determined that it may be advisable to amend the
Company's Certificate of Incorporation to (i) effect a one time reverse stock
split of the Company's Common Stock of up to one-for-forty and the payment of
cash in lieu of fractional shares otherwise issuable.
Subject to stockholder approval of the proposed Amendment, the Board of
Directors will, if and when it deems it in the best interests of the Company,
authorize the filing of the Amendment with the Secretary of State of the State
of Delaware. Such an Amendment to the Company's Certificate of Incorporation
would result, in conjunction with the approval sought in Proposal 3(A) above,
and assuming that the Board of Directors effected the maximum reverse split
authorized by the Company's stockholders in one post-split share of Common Stock
being issued in exchange for every 40 shares of Common Stock issued and
outstanding on the effective date of the reverse split. If the Amendment is
authorized by the stockholders and the Board of Directors determines to proceed
with the reverse split, the Board will use its discretion to determine when to
file the Amendment and the precise reverse stock split ratio.
The Board of Directors reserves the right in its sole discretion to proceed
with or to abandon the proposed Amendment and reverse split without further
action by the stockholders at any time.
Although the Company's board of directors believes that the reverse split
of the Common Stock will allow the Company to qualify the Common Stock for
continued quotation on The Nasdaq SmallCap Market, there can be no assurance
that the reverse split will ensure that the Common Stock remains listed on The
Nasdaq SmallCap Market.
In the event that the Company does not effect a reverse split of the Common
Stock and the minimum bid price does not equal or exceed $1.00 per share, the
Common Stock would be delisted from The Nasdaq SmallCap Market, and trading of
the Common Stock would be conducted in the over-the-counter market in what are
commonly referred to as the "pink sheets" or the NASD Bulletin Board. As a
result, an investor may find it more difficult to dispose of, or to obtain
accurate quotations of the price of, the Common Stock.
In addition, if the Common stock is not quoted on The Nasdaq SmallCap
Market, or if the Company does not meet the other exceptions to the penny stock
regulations discussed in the next paragraph, trading in the Common Stock would
be covered by Rule 15g-9 promulgated under the Securities Exchange Act of 1934,
as amended, for non-Nasdaq and non-national securities exchange listed
securities. Under such rule, broker/dealers who recommend such securities to
persons other than established customers and accredited investors must make a
special written suitability determination for the purchaser and receive the
purchaser's written agreement to a transaction prior to sale. Securities also
are exempt from this rule if the market price is at least $5.00 per share.
If the Common Stock becomes subject to the regulations applicable to penny
stocks, the market liquidity for the Common Stock could be adversely affected.
In such event, the regulations on penny stocks could limit the ability of
broker/dealers to sell the Common Stock and thus the ability of purchasers of
the Common Stock
13
<PAGE>
to sell their securities in the secondary market. The Securities and Exchange
Commission has adopted regulations which define a "penny stock" to be any equity
security that has a market price (as defined) less than $5.00 per share, subject
to certain exceptions. For any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the transaction, of a
disclosure schedule prepared by the Securities and Exchange Commission relating
to the penny stock market. The broker-dealer also must disclose the commissions
payable to both the broker-dealer and the registered representative, current
quotations for the securities and, if the broker-dealer is the sole marketmaker,
the broker-dealer must disclose this fact and the broker-dealer's presumed
control of the market. Finally, monthly statements must be sent disclosing
recent price information for the penny stock held in the account and information
on the limited market in the penny stock. Transactions in a Nasdaq-listed
security would be exempt from all but the sole marketmaker provision for (i)
issuers who have $2,000,000 in tangible assets ($5,000,000 if the issuer has not
been in continuous operation for three years or average annual return of at
least $6,000,000 if the issuer has been in continuous operation for less than
three years), (ii) transactions in which the customer is an institutional
accredited investor and (iii) transactions that are not recommended by the
broker-dealer. In addition, transactions in a Nasdaq security directly with a
Nasdaq marketmaker for such securities would be subject only to the sole
marketmaker disclosure and the disclosure with respect to commissions to be paid
to the broker-dealer and the registered representative.
Based upon the 47,131,606 shares of Common Stock outstanding as of January
21, 1999, and giving effect to, and assuming stockholder approval of, Proposals
2, 3(A) and 3(B) and the Proposed Recapitalization, and assuming the issuance of
all of the shares of Common Stock issuable on a fully diluted basis including
the conversion of all Series I Preferred Stock and the exercise of all warrants
and options, and assuming the maximum reverse split that the Board is seeking
authorization to effect, a one for forty reverse split would would result in
approximately 11,500,000 post-split shares of Common Stock outstanding, subject
to adjustment as a result of the elimination of fractional shares. Similarly,
the aggregate number of shares of Common Stock reserved for issuance upon
exercise of warrants and options would decrease, and the exercise price of these
options and accruals would increase, proportionally.
In such instance, each outstanding share of common stock would be reduced
by 1/40 and each outstanding option or warrant will automatically become an
option or warrant, as the case may be, to purchase one-fortieth (1/40) of the
number of shares subject to the option or warrant immediately prior to the
reverse split at an exercise price which will be appropriately adjusted to
reflect the reverse split, subject to adjustment as a result of the elimination
of fractional shares. In addition, the shares available for issuance under the
Company's current Incentive Stock Option Plan and Non-Qualified Stock Option
Plan (not the Plan for which stockholder approved is being sought pursuant to
Proposal 5 below )will be reduced by approximately one-fortieth (1/40) to
reflect the reverse split, subject to adjustments required to eliminate
fractional shares, and the other relevant terms and provisions of the Company's
stock option plans will be appropriately adjusted to reflect the reverse split.
The reverse split will not affect the aggregate par value of the
outstanding shares of Common Stock but the par value of each authorized and
unissued, and each outstanding share of common stock, will be $.01 par value
per share. The reverse split will not affect the number or par value of the
authorized Preferred Shares, which will remain at 2,000,000 Preferred Shares,
$.001 par value per share. If approved, the reverse split would decrease the
number of shares outstanding and reserved for issuance pursuant to the exercise
of options and warrants and will result in an increase in the number of shares
available for issuance. Subject to the provisions for the elimination of
fractional shares, consummation of the reverse split will not result in a
change in the relative equity interest in the Company or the voting power or
other rights, preferences or privileges of the holders of Common Stock.
The Company has been advised that: (i) the proposed stock split will not be
a taxable transaction to the Company; (ii) the Company's stockholders who do not
receive any cash will not recognize any gain or loss as a result of the reverse
stock split; (iii) the aggregate tax basis of the Common Stock received by the
stockholders pursuant to the reverse stock split will equal the aggregate tax
basis of the stockholders' Common Stock prior to the reverse stock split; and
(iv) the holding period of the Common Stock received by the Company's
stockholders will include the holding period of the stockholders' Common Stock
before the reverse stock split, provided the Common Stock was a capital asset in
the hands of such stockholder. This discussion should not be considered as tax
or investment advice, and the tax consequences of the reverse split may not be
the same for all stockholders. Stockholders should consult their own tax
advisors to ascertain their individual federal, state, local and foreign tax
consequences.
14
<PAGE>
The reverse stock split would decrease the number of shares of Common Stock
outstanding and presumably increase the per share market price for the
post-split shares. The decrease in the number of shares of Common Stock
outstanding resulting from the reverse split and the anticipated corresponding
increased price per share may stimulate interest in the Company's Common Stock,
promote greater liquidity for the Company's stockholders and result in a price
level for the post-split Common Stock that will help it to maintain its Nasdaq
SmallCap Market listing. However, there is no assurance that the reverse split
will achieve these results. In addition, it is possible that the liquidity of
the post-split shares of Common Stock may be adversely affected by the reduced
number of shares outstanding if the proposed maximum reverse stock split is
effected. In addition, the reverse split might leave some stockholders with one
or more "odd-lots" of the Company's Common Stock (stock in amounts of less than
100 shares). These shares may be more difficult to sell, or require a greater
commission per share to sell, than shares in even multiples of 100.
If the reverse split becomes effective, the additional shares of post-split
Common Stock available for issuance by the Board of Directors of the Company may
be used for raising additional capital, stock options, acquisitions, stock
splits, stock dividends or other corporate purposes. There are no arrangements,
understandings or plans for the issuance of any such additional shares, other
than shares reserved for issuance upon the exercise of stock options and
warrants outstanding or authorized for issuance under existing plans.
If the proposed Amendment becomes effective, assuming the maximum reverse
split that the Board is seeking authorization to effect, each every forty (40)
pre-split shares of Common Stock will automatically be combined and changed into
one (1) post-split share of Common Stock and each certificate representing
pre-split shares of Common Stock will represent for all purposes one-tenth of
that number of post-split shares of Common Stock. Stockholders will then be
requested to exchange their certificates representing Common Stock held prior to
the reverse split for new certificates representing Common Stock issued as a
result of the reverse split. Stockholders will be furnished the necessary
materials and instructions to effect such exchange. Stockholders should not
submit any certificates until requested to do so.
No scrip or fractional post-split Common Stock will be issued to any
stockholder in connection with the reverse split. Accordingly, all stockholders
of record who would otherwise be entitled to receive fractional post-split
Common Stock, will, upon surrender of their certificates representing pre-split
Common Stock, receive at the option of the Company, either (i) a cash payment
in lieu thereof equal to the fair value of such fractional share, or (ii) the
fractional share, no matter how small, will be rounded up to a whole share. The
fair value of the Common Stock will be based on the closing price of the Common
Stock on The Nasdaq SmallCap Market on the effective date, or, if there are no
reported sales on such date, the average of the last reported high bid and low
asked prices on such day shall be used.
The Company's Annual Report on Form 10-KSB for the year ended December 31,
1997 includes the Company's audited financial statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
which are incorporated by reference in this Proxy Statement. A copy of the
Annual Report on Form 10-KSB accompanies this Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF GRANTING THE
BOARD OF DIRECTORS THE AUTHORITY TO EFFECT A ONE-TIME REVERSE STOCK SPLIT OF UP
TO ONE FOR FORTY OF THE COMPANY'S COMMON STOCK. Unless otherwise directed by
the stockholder giving the proxy the proxies forwarded to those stockholders
who hold their voting securities in "street name" will be voted "FOR" the
granting to the Board of Directors of the authority to effect a one-time
reverse split of up to one-for-forty of the Company's Common Stock.
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PROPOSAL NO. 4:
In connection with effecting the Vidikron Acquisition, the Company
acquired trademark and other similar intellectual property rights with respect
to Vidikron. The Company believes that Vidikron's name and reputation in the
high-end audio-video technology field is well known and well regarded.
Moreover, the Company believes that the future direction, growth and reputation
of the Company will come from both the assets it acquired in the Vidikron
Acquisition and the Company's own proprietary products and technologies.
Accordingly, the Company believes that it is in the best interests of the
Company's stockholders to amend the Company's Articles of Incorporation to
change the name of the Company from Projectavision, Inc. to Vidikron
Technologies Group, Inc. so as to more appropriately reflect the future
direction of the Company.
Approval of this Amendment to the Company's Certificate of Incorporation
requires the affirmative vote of the holders of the majority of the outstanding
shares of the Company's Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT
TO THE COMPANY'S CERTIFICATE OF INCORPORATION CHANGING THE NAME OF THE COMPANY
FROM PROJECTAVISION, INC. TO VIDIKRON TECHNOLOGIES GROUP, INC. Unless otherwise
directed by the stockholder giving the giving, the proxies forwarded to those
stockholders who hold their voting securities in "street name" will be voted
"FOR" the approval of the amendment to the Company's Certificate of
Incorporation to change the name of the Company from Projectavision, Inc. to
Vidikron Technologies Group, Inc.
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PROPOSAL NO. 5
APPROVAL OF THE COMPANY'S
1999 INCENTIVE STOCK OPTION PLAN
TO REPLACE THE COMPANY'S
1990 STOCK OPTION AND ALLOCATION PLAN
At the Annual Meeting a vote will be taken on a proposal to approve the
adoption of the Company's 1999 Incentive Stock Option Plan (the "1999 Option
Plan") inasmuch as the Company's currently existing 1990 Incentive Stock Option
and Allocation Plan (the "1990 Option Plan") will, by its terms in accordance
with applicable Federal Income Tax provisions, expire in February 2000.
The purpose of the 1999 Option Plan, like the 1990 Plan, is to encourage
and enable employees and consultants of the Company and its subsidiaries to
acquire a proprietary interest in the Company through the ownership of the
Company's Common Stock. The Option Plan is designed to provide employees and
consultants with a more direct stake in the Company's future welfare and an
incentive to remain with the Company. It is also expected that the Option Plan
will encourage qualified persons to seek employment with the Company.
The 1999 Option Plan will be, in most material respects, substantially
similar if not identical to the 1990 Option Plan. Like the 1990 Option Plan, the
1990 Option Plan will provide for grants of "Incentive Stock Options," meeting
the requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code") and "Non-qualified Stock Options."
The 1999 Option Plan will be administered by the Compensation Committee of
the Board of Directors (the "Committee") which is comprised of not less than two
disinterested directors within the meaning of Rule 16b-3 of the Exchange Act.
The Option Plan permits the Committee to determine which employees or
consultants or other eligible personnel shall receive options and the times when
options are to be granted. The Committee also determines the purchase price of
Common Stock covered by each option, the term of each option, the number of
shares of Common Stock to be covered by each option and any performance
objectives or vesting standards applicable to each option. The Committee also
designates whether the options shall be Incentive Stock Options or Non-qualified
Stock Options. The Plan would have a term of ten (10) years and expire in
February 2009.
The purchase price per share under each Incentive Stock Option or
Non-qualified Stock Option is the "Market Price" (i.e., the average of the high
and low reported consolidated trading sales price for such day) of the Common
Stock on the date the option is granted, except that the exercise price for an
Incentive Stock Option granted to a 10% stockholder may not be less than 100% of
the Market Price of the Common Stock on the date of the grant. The aggregate
Market Price of the Common Stock exercisable under Incentive Stock Options held
by any optionee during any calendar year may not exceed $100,000. Incentive
Stock Options granted to employees under the Option Plan have a maximum term of
ten years. Incentive Stock Options granted to 10% stockholders have a maximum
term of five years. Options are not transferable except by will or pursuant to
the applicable laws of descent and distribution. Notwithstanding the general
restriction on transferability, in the sole discretion of the Committee,
Non-qualified Stock Options may be made transferable subject to the requirements
of Rule 16b-3.
In the event that an employee is terminated for any reason other than
death, Disability, Retirement or Cause (as such terms are defined in the Option
Plan), to the extent that the employee had the right to exercise an option, such
option will be exercisable until the earlier of the expiration date of the
option, or within 30 days of the date of such termination. Options held on the
date of Disability or Retirement, whether or not exercisable on such date, are
exercisable within one year of the date of Disability or Retirement. Options
held by an employee at the date of death, whether or not exercisable on the date
of death, are exercisable by the beneficiary of the employee within one year
from the date of death. The Committee may, in its sole discretion, cause any
option to be forfeited upon an employee's termination for Cause (as defined in
the Option Plan). In the event of a Change of Control (as such term is defined
in the Plan) of the Company, all outstanding options will vest and appropriate
provisions shall be made for the protection of options by substitution on an
equitable basis of appropriate stock of the Company or appropriate stock of the
merged, consolidated or otherwise reorganized corporation, as the case may be.
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The Board is permitted to suspend, terminate, modify or amend the Option
Plan, provided that any amendment that would (i) materially increase the
aggregate number of shares, (ii) materially increase benefits accruing to
employees, or (iii) materially modify the eligibility requirements for
participation shall be subject to stockholder approval, provided, however, that
stockholder approval is not required for adjustments to the Option Plan or to
the number of shares available thereunder which are deemed appropriate by the
Committee to prevent dilution or expansion of rights.
The Company's 1999 Option Plan would have available options exercisable for
shares of Common Stock of the Company in an amount equal to twenty percent (20%)
of the Company's issued and outstanding shares after giving effect to the
Proposed Recapitalization.
Federal Income Tax Consequences
For federal income tax purposes, an optionee is not subject to tax upon the
grant of an option. If the option is a Nonqualified Stock Option, the optionee
will generally recognize ordinary income at the time of exercise of the option
in an amount equal to the difference between the fair market value of the shares
received and the exercise price. Such optionee's basis in any shares acquired
upon such exercise will equal their fair market value on the exercise date. A
subsequent sale of shares will result in a capital gain or loss equal to the
difference between the amount realized and such basis. In the event that the
option is an Incentive Stock Option, the optionee will generally not recognize
income until the sale of shares. In the event the shares are held for the
requisite holding periods, all gain on the sale will be treated as long-term
capital gain. in the event that the holding periods are not satisfied (a
"disqualifying disposition"), then the portion of the gain equal to the
difference between the market value of the shares at the time of exercise and
the exercise price will generally be treated as ordinary income.
Reference is made to Annex B to this Proxy Statement, which is incorporated
by reference herein, and sets forth the full text of the 1999 Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE COMPANY'S
1999 INCENTIVE STOCK OPTION PLAN AMENDMENT TO THE INCREASE IN THE NUMBER OF
SHARES AVAILABLE UNDER THE OPTION PLAN.
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PROPOSAL NO. 6:
RATIFICATION OF SELECTION
OF DELOITTE & TOUCHE, LLP
AS INDEPENDENT AUDITORS
The Board of Directors has selected the firm of Deloitte & Touche, LLP to
serve as independent certified public accountants and to audit the accounts for
the Company for 1998. The firm of Deloitte & Touche, LLP has previously audited
the Company's financial statements. The Company is advised that neither that
firm nor any of its partners has any material direct or indirect relationship
with the Company. The Board of Directors considers Deloitte & Touche, LLP to be
well qualified for the function of serving as the Company's auditors. The
Delaware Business Corporation Law does not require the approval of the selection
of auditors by the Company's stockholders, but in view of the importance of the
financial statement to stockholders, the Board of Directors deems it desirable
that they pass upon its selection of auditors. In the event the stockholders
disapprove of the selection, the Board of Directors will consider the selection
of other auditors. The Board of Directors recommends that you vote in favor of
the above proposal in view of the familiarity of Deloitte & Touche LLP with the
Company's financial and other affairs due to its previous service as auditors
for the Company.
A representative of Deloitte & Touche, LLP is expected to be present at the
Annual Meeting with the opportunity to make a statement if he desires to do so,
and is expected to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
SELECTION OF DELOITTE & TOUCHE, LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
Unless otherwise directed by the stockholder giving the proxy, proxies forwarded
to those stockholders who hold their voting securities in "street name" will be
voted "FOR" the ratification of the selection by the Board of Directors of
Deloitte & Touche LLP as the Company's independent certified public auditors for
1998 and the current calendar year.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1999 annual
meeting must be received in writing, by the President of the Company at its
offices by June 1, 1999, in order to be considered for inclusion in the
Company's proxy statement relating to its next annual meeting of stockholders.
By Order of the Board of Directors
/s/ Martin Holleran
----------------------------------------
Martin Holleran, Chief Executive Officer
and President
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ANNEX I
Section 1. Designation. Six Thousand Five Hundred (6,500) shares of
Preferred Stock are hereby designated as Series I Convertible Preferred Stock
(the "Preferred Stock"). The rights, preferences, privileges and qualifications,
limitations and restrictions of the Preferred Stock are set forth in Sections 2
through 7 below. The rights, preferences, privileges and qualifications,
limitations and restrictions of the remaining shares of Preferred Stock shall be
determined by the board of Directors, from time to time after the date of the
adoption of this Resolution, pursuant to the provisions of Article Fourth of the
Certificate of Incorporation.
Section 2. Dividends. The holders of the Preferred Stock are entitled to
receive if, when and as declared by the Board of Directors out of funds legally
available therefor, cumulative dividends, payable in cash or common stock of the
Corporation, par value $.0001 per share (the "Common Stock") at the
Corporation's election, at the rate of 9% per annum of the Liquidation Value of
the Preferred Stock until the "Maturity Date" (as defined below); provided,
however, that in the event that the Corporation elects to pay the dividend in
shares of Common Stock, the dividend rate shall be 13.5% per annum of the
Liquidation Value of the Preferred Stock. The dividend is payable annually
within ten(10) business days after each December 31st of each year, commencing
December 31, 1999 (each, a "Dividend Payment Date"); provided that the first
dividend payable on December 31, 1999 shall also include dividends from December
7, 1998 through December 31, 1998, and; provided further, that dividends accrued
as of the date of the giving of a "Conversion Notice" (as that term is defined
in Section 3(d) below) shall be paid as of the date of such Conversion Notice
with respect to those shares of Preferred Stock being converted pursuant to such
Conversion Notice. Dividends shall be paid only with respect to shares of
Preferred Stock actually issued and outstanding on a Dividend Payment Date and
to the holders of record as of the Dividend Payment Date. Dividends shall accrue
from the first day of the annual period in which such dividend may be payable,
except with respect to the first annual dividend which shall accrue from
December 7, 1998. In the event that the Corporation elects to pay dividends in
Common Stock (on an Dividend Payment Date or in connection with the conversion
of Preferred Stock into the Common Stock), each holder of Preferred Stock shall
receive shares of Common Stock equal to the number of days that have elapsed
since the immediately preceding Dividend Payment Date (or December 7, 1998 in
the case of the First Dividend Payment Date / 365 multiplied by the quotient of
(i) the product of 13.5% multiplied by the Liquidation Value of the Preferred
Stock outstanding on the applicable Dividend Payment Date divided by (ii) the
average of the closing bid quotation of the Common Stock as reported on the
over-the-counter market, or the closing sale price if quoted on The Nasdaq
SmallCap Market or listed on a national exchange, for the five (5) trading days
immediately prior to the Dividend Payment Date (the "Stock Dividend Price").
Section 3. Conversion. Subject to the provisions of this Section 3 below,
the holders of the Preferred Stock shall have right to convert each of its
shares of Preferred Stock (the "Conversion Rights") into a number of fully paid
and nonassessable shares of Common Stock determined in accordance with the
following formula:
Liquidation Preference + Accrued Dividends
Conversion Price
(h) Right to Convert and Sell. The Preferred Stock, and accrued but unpaid
dividends as of the date of any conversion, shall not be convertible at any time
until after the 120th day after the Company effects the acquisition of
substantially all of the assets of Vidikron Industries, S.p.A. (the "Vidikron
Acquisition"). Thereafter, 12.5% of the Preferred Stock may be converted and the
shares of Common Stock, issuable thereon may be sold during each thirty (30)
calendar day period thereafter (and which right of conversion shall be
cumulative with respect to successive thirty (30) day periods); provided,
however, that in the event that the registration statement covering all of the
shares of Common Stock has not been declared effective by the Securities and
Exchange Commission by the 120th day after the Vidikron Acquisition, the holders
Conversion Rights with respect to the Preferred Stock under this Section 3(a)
shall be adjusted such that the Preferred Stock can thereafter be converted and
the shares of Common Stock issuable thereon may be sold in "equal percentages"
during the "remaining time period." As used herein, the term "equal percentages"
shall be the percentage resulting from the fraction in which the numerator is
100 and the denominator of which is the number of 30 day periods (or portions
thereof) that comprise the remaining time period. As used herein, the term
"remaining time period" shall be the date commencing the effective date of the
registration statement and concluding the one (1) year anniversary of the
closing of the Vidikron Acquisition..
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In the event that the registration statement required by this Section 3(a)
above is not declared effective by the Commission within 120 days after the date
the Company effects the acquisition of substantially all of the shares of
Vidikron Industries, S.p.A. (the "Vidikron Acquisition"):(i) Holder shall be
entitled to receive additional shares of Preferred Stock in an amount equal to
one (1%) percent of the aggregate liquidation preference of the Holder's
Preferred Stock which will be added to the Preferred Stock acquired by purchase
or redemption provided that the Registrable Securities are registered by the
150th day after the closing of the Vidikron Acquisition (or a pro rated portion
thereof if registered prior to said 150th day); (ii) Holder shall be entitled to
receive additional shares of Preferred Stock in an amount equal to two (2%) of
the aggregate liquidation preference of the Holder's Preferred Stock which will
be added to the Preferred Stock acquired by purchase or redemption or pursuant
to clause (b)(i) preceding (provided that the Registrable Securities are
registered on or after the 151st day after the closing of the Vidikron
Acquisition up through the 180th day (or a pro rated portion thereof if
registered prior to said 180th day) and;(iii) Holder shall be entitled to
receive additional shares of Preferred Stock in an amount equal to three (3%)
percent of the aggregate liquidation preference of the Holder's Preferred Stock
which will be added to the Preferred Stock acquired by purchase or redemption or
pursuant to clause (b)(i), b(ii) or b(iii) hereof for each 30 day period
subsequent to the 180th day (or a pro rated portion thereof) after the closing
of the Vidikron Acquisition that the Registrable Securities are not registered.
Furthermore, notwithstanding any other provisions of this Section 3(a), in
the event that for any 5 consecutive trading days, the price of the Common Stock
closes in excess of 200.0% (the "Threshold Price") of the "Conversion Price" (as
that term is defined in Section 3(c) below) there will be no restriction upon
the conversion of the Preferred Stock or the resale of shares of Common Stock
issuable thereon for so long as the price of the Common Stock remains above
125.0% of the Conversion Price(the "Minimum Unrestricted Resale Price"). In the
event that, thereafter, the share price of the Common Stock closes below the
Minimum Unrestricted Resale Price, the conversion and resale provisions set
forth in the first paragraph of this Section 3(a) shall automatically once again
go into effect. Thereafter, a new consecutive 5 day trading period above the
Minimum Unrestricted Resale Price will be required to lift such restrictions on
conversion or resale.
Notwithstanding the foregoing, in no event shall a holder of Preferred
Stock be entitled to receive shares of Common Stock upon a conversion to the
extent that the sum of (x) the number of shares of Common Stock beneficially
owned by the holder and its affiliates (exclusive of shares issuable upon
conversion of the unconverted portion of the shares of Preferred Stock or the
unexercised or unconverted portion of any other securities of the Corporation
subject to a limitation on conversion or exercise analogous to the limitations
contained herein) and (y) the number of shares of Common Stock issuable upon the
conversion of the Preferred Stock with respect to which the determination of
this subparagraph is being made, would result in beneficial ownership by the
holder and its affiliates of more than 4.99% of the outstanding shares of Common
Stock. For purposes of this subparagraph, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and Regulation 13 D-G thereunder, except as otherwise provided
in clause (x) above. The restriction contained in this Paragraph shall not be
altered, amended, deleted or changed in any manner whatsoever unless the holders
of a majority of the outstanding shares of Common Stock and each holder of
outstanding shares of Preferred Stock shall approve such alteration, amendment,
deletion or change.
(i) Automatic Conversion. All unconverted shares of Preferred Stock on the
four (4) year anniversary date of the date of the closing of the Vidikron
Acquisition the "Maturity Date", along with all accrued and unpaid dividends,
shall automatically be converted into shares of Common Stock at the Conversion
Price.
(j) Conversion Price. As used herein, the term Conversion Price shall be
$.09, subject to adjustment as hereinbelow set forth.
(k) Mechanics of Conversion. Failure to Convert Any holder of Preferred
Stock who wishes to exercise its Conversion Rights pursuant to paragraph (a) of
this Section 3, must surrender the certificate therefor at the principal
executive office of the Corporation, and give written notice, which may be via
facsimile transmission, to the Corporation at its principal executive office
that it elects to convert the same (the "Conversion Notice"). No Conversion
Notice with respect to any shares of Preferred Stock can be given prior to the
time such shares of Preferred Stock are eligible for conversion in accordance
with the provisions of Section 3(a) above. Any such premature Conversion Notice
shall automatically be null and void. The Corporation shall, within three (3)
business day after receipt of an appropriate and timely Conversion Notice (the
"Conversion Deadline"), issue to such holder of Preferred Stock a certificate
for the number of shares of Common Stock
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to which the holder shall be entitled (which may include shares with respect to
accrued but unpaid dividends as of the date of the Conversion Notice if so
specified in the Conversion Notice). Such conversion shall be deemed to have
been made only after both the certificate for the shares of Preferred Stock to
be converted have been surrendered and the Conversion Notice is received by the
Corporation (the "Conversion Documents"), and the person entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder of such shares of Common Stock at and after such
time. In the event that the Conversion Notice is sent via facsimile
transmission, the Corporation shall be deemed to have received such Conversion
Notice on the first business day on which such facsimile Conversion Notice is
actually received, provided that the necessary certificates are actually
received by the Corporation within three (3) business days thereafter.
In the event that the Corporation fails to deliver to holder any of the
shares of Common Stock entitled to be delivered pursuant to a conversion of
Preferred Stock on or prior to the Conversion Deadline, then in such event, in
addition to the Corporation's obligation to deliver said shares of Common Stock,
the Corporation shall also be obligated to pay to holder, for every ten (10)
business day period after the Conversion Deadline that it fails to deliver the
shares of Common Stock underlying the Preferred Stock requested to be converted
(the "Unconverted Preferred Stock"), as liquidated damages, an amount equal to
one percent (1%) of the outstanding face amount of the Unconverted Preferred
Stock payable in cash or shares of Common Stock at the option of the holder.
Such deliveries of additional shares pursuant to this subparagraph shall be made
every seven (7) business days until the Corporation is in compliance with all
lawful conversions hereunder.
(l) Adjustments to Conversion Price for Stock Dividends and for
Combinations or Subdivisions of Common Stock. If the Corporation at any time or
from time to time while shares of Preferred Stock are issued and outstanding
shall declare or pay any dividend on the Common Stock payable in Common Stock,
or shall effect a subdivision of the outstanding shares of Common Stock into a
greater number of shares of Common Stock (by stock split, reclassification or
otherwise than by payment of a dividend in Common Stock or in any right to
acquire Common Stock), or if the outstanding shares of Common Stock shall be
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares of Common Stock, then the Conversion Price in effect immediately
before such event shall, concurrently with the effectiveness of such event, be
proportionately decreased or increased, as appropriate. If the Corporation shall
declare or pay any dividend on the Common Stock payable in any right to acquire
Common Stock for no consideration, then the Corporation shall be deemed to have
made a dividend payable in Common Stock in an amount of shares equal to the
maximum number of shares issuable upon exercise of such rights to acquire Common
Stock.
(m) Adjustments for Reclassification and Reorganization. If the Common
Stock issuable upon conversion of the Preferred Stock shall be changed into the
same or a different number of shares of any other class or classes of stock,
whether by capital reorganization, reclassification or otherwise (other than a
subdivision or combination of shares provided for in paragraph (e) of this
Section 3), the Conversion Price then in effect shall, concurrently with the
effectiveness of such reorganization or reclassification, be proportionately
adjusted so that the Preferred Stock shall be convertible into, in lieu of the
number of shares of Common Stock which the holders would otherwise have been
entitled to receive, a number of shares of such other class or classes of stock
equivalent to the number of shares of Common Stock that would have been subject
to receipt by the holders upon conversion of the Preferred Stock immediately
before that change.
(n) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issuance or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all of the provisions of
this Section 3 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Preferred Stock against impairment. The provisions of this paragraph (g) may be
waived by the affirmative vote of the holders of at least a majority of the then
outstanding shares of Preferred Stock voting together as a single class and
taken in advance of any action that would conflict with this paragraph (g).
(o) Notice of Adjustments. Upon the occurrence of each adjustment or
readjustment of any Conversion Price pursuant to this Section 3, the Corporation
at its expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to each holder of
Preferred Stock a notice
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setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based.
(p) Notices of Record Date. If the Corporation shall propose at any time:
(i) to declare any dividend or distribution upon its Common Stock, whether in
cash, property, stock or other securities, other than a regular cash dividend
out of earnings or earned surplus or a dividend as to which adjustment of the
Conversion Price will be made under paragraph (f) of this Section 3; (ii) to
offer for subscription pro rata to the holders of any class or series of its
stock any additional shares of stock of any class or series or other rights;
(iii) to effect any reclassification or recapitalization of its Common Stock
outstanding involving a change in the Common Stock other than one as to which
adjustments of the Conversion Price will be made under paragraph (e) of this
Section 3; or (iv) to merge or consolidate with or into any other corporation,
or sell all or substantially all of its assets, or to liquidate, dissolve or
wind up; then, in connection with such event, the Corporation shall send to the
holders of the Preferred Stock;
(1) at least ten (10) days' prior written notice of the Date on which a
record shall be taken for such dividend, distribution or subscription
rights (and specifying the Date on which the holders of Common Stock shall
be entitled thereto) or for determining rights; to vote, if any, in respect
of the matters referred to in clauses (iii) and (iv) above; and
(2) in the case of the matters referred to in clauses (iii) and (iv)
above, at least ten (10) days' prior written notice of the Date when the
same shall take place (and specifying the Date on which the holders of
Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon the occurrence of such
event).
(q) Issue Taxes. The Corporation shall pay any and all issue and other
taxes that may be payable in respect of any issue or delivery of shares of
Common Stock on conversion of Preferred Stock pursuant hereto; provided,
however, that the Corporation shall not be obligated to pay any transfer taxes
resulting from any transfer requested by any holder in connection with any such
conversion.
(r) Reservation of Stock Issuable Upon Conversion. The Corporation shall at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock, solely for the purpose of effecting the conversion of the
shares of the Preferred Stock, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Preferred Stock, the
Corporation will take such corporate action as may be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purpose, including, without limitation, engaging in best
efforts to obtain the requisite stockholder approval of any necessary amendment
to its Certificate of Incorporation. Upon the filing of this Certificate of
Designation the Holder of the Preferred Stock acknowledges that the Company does
not have sufficient authorized shares of Common Stock and shall seek the
requisite stockholder approval of the necessary amendment to the Certificate of
Incorporation.
(s) Fractional Shares. No fractional share shall be issued upon the
conversion of any share or shares of Preferred Stock. All shares of Common Stock
(including fractions thereof) issuable upon conversion of more than one share of
Preferred Stock by a holder thereof shall be aggregated for purposes of
determining whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the conversion would
result in the issuance of a fractional share of Common Stock, such fractional
share shall be rounded up to the nearest whole share.
(t) Notices. Except as otherwise specified herein to the contrary, all
notices, requests, demands and other communications required or desired to be
given hereunder shall only be effective if given in writing by hand, by
certified or registered mail, return receipt requested, postage prepaid, or by
U.S. express mail service, or by private overnight mail service (e.g. Federal
Express), or by facsimile transmission. Any such notice shall be deemed to have
been given (a) on the business day actually received if given by hand or
facsimile transmission, (b) on the business day immediately subsequent to
mailing, if sent by U.S. express mail service or private overnight mail service,
or (c) three (3) business days following the mailing thereof, if
mailed by certified or registered mail,
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postage prepaid, return receipt requested, and all such notices shall be sent to
the following addresses (or to such other address or addresses as aparty may
have advised the other in the manner provided herein):
If to the Company:
Martin J. Holleran
President and Chief Executive Officer
One Evertrust Plaza
11th Floor
Jersey City, New Jersey 07302
with copies simultaneously by like means to:
Clifford A. Brandeis, Esq.
Zukerman Gore & Brandeis, LLP
900 Third Avenue
New York, NY 10022
If to the Subscriber, to the address of Subscriber as set forth in the
Subscription Agreement.
(n) Business Day. As used herein, the term "business day" shall mean any
day other than a Saturday, Sunday or a day when the federal and state banks
located in the State of New York are required or permitted to close.
Section 4. Voting Rights. The holders of the Preferred Stock shall have no
voting rights whatsoever, except as otherwise provided by the Delaware General
Corporation Law (the "Delaware Law"), and as expressly set forth in this Section
4 and in Section 7(b) below. To the extent that under Delaware Law the vote of
the holders of the Preferred Stock, voting separately as a class or series as
applicable, is required to authorize a given action of the Corporation, the
affirmative vote or consent of the holders of at least a majority of the shares
of the Preferred Stock represented at a duly held meeting at which a quorum is
present or by written consent of a majority of the shares of Preferred Stock
(except as otherwise may be required under Delaware Law) shall constitute the
approval of such action by the class. To the extent that under Delaware Law the
holders of the Preferred Stock are entitled to vote on a matter with holders of
Common Stock, voting together as one class, each share of Preferred Stock shall
be entitled to a number of votes equal to the number of shares of Common Stock
into which it is then convertible using the record date for the taking of such
vote of stockholders as the date as of which the Conversion Price is calculated
and conversion is effected. Holders of the Preferred Stock shall be entitled to
notice of (and copies of proxy materials and other information sent to
shareholders) all shareholder meetings or written consents with respect to which
they would be entitled to vote, which notice would be provided pursuant to the
Corporation's by-laws and applicable statutes.
Section 5. Liquidation Preference. The holders of shares of Preferred Stock
will be entitled to receive, in the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, out of or to
the extent of the net assets of the Corporation legally available for such
distribution, before any distributions are made with respect to any Common Stock
or any stock ranking junior to the Preferred Stock, and parri passu with the
Company's Series I Convertible Preferred Stock, $1000.00 per share, plus any
declared but unpaid dividends (the "Liquidation Preference"). After payment of
the full amount of the Liquidation Preference, the holders of shares of
Preferred Stock will not be entitled to any further participation in any
distribution of assets by the Corporation.
Section 6. Restrictions and Limitations.
(a) Shares of Preferred Stock acquired by the Corporation by reason of
purchase, conversion, redemption or otherwise shall be retired and shall
become authorized but unissued shares of Preferred Stock, which may be
reissued as part of a new series of Preferred Stock hereafter created under
Article Fourth of the Certificate of Incorporation.
(b) So long as shares of Preferred Stock remain outstanding, the
Corporation shall not, without the affirmative vote of the holders of at
least a majority of the then outstanding shares of Preferred Stock voting
together as a separate class, amend the terms of this Resolution. The
holders of the outstanding shares
A-5
<PAGE>
of the Preferred Stock shall be entitled to vote as a separate class upon a
proposed amendment of the Certificate of Incorporation if the amendment would
alter or change the powers, preferences or special rights of the shares of
Preferred Stock so as to affect them adversely.
A-6
<PAGE>
ANNEX B
PROJECTAVISION, INC.
1999 STOCK OPTION PLAN
1. PURPOSES. The purposes of this Stock Option Plan (the "Plan") are to
attract and retain the best qualified personnel for positions of substantial
responsibility, to provide additional incentive to the Employees of the Company
or its Subsidiaries, if any (as such terms are defined in Section 2 below), as
well as other individuals who perform services for the company or its
Subsidiaries, and to promote the success of the company's business.
Options granted hereunder may be either "incentive stock options," as
defined in Section 422 of the Internal Revenue Code of 1986, as amended, or
"non-qualified stock options," at the discretion of the Board and as reflected
in the terms of the written instrument evidencing an option.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "Board" shall mean the Committee, if one has been appointed, or
the Board of Directors of the Company, if no committee is appointed.
(b) "Common Stock" shall mean the common stock of the Company, par
value $.01 per share.
(c) "Company" shall mean Projectavision, Inc.
(d) "Committee" shall mean the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan, if one
is appointed.
(e) "Continuous Status as an Employee" shall mean the absence of any
interruption or termination of service as an Employee. Continuous Status as
an Employee shall not be considered interrupted in the case of sick leave
or any other leave of absence approved by the Board.
(f) "Employee" shall mean any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the
Company. The payment of a director's fee by the Company shall not be
sufficient to constitute "employment" by the Company.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(h) "Incentive Stock Option" shall mean a stock option intended to
qualify as an incentive stock option within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended.
(i) "Non-Qualified Stock Option" shall mean a stock option not
intended to qualify as an Incentive Stock Option.
(j) "Option" shall mean a stock option granted pursuant to the Plan.
(k) "Optioned Stock" shall mean the Common Stock subject to an
Option.
(1) "Optionee" shall mean an Employee or other person who receives
an Option.
(m) "Parent" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Internal Revenue
Code of 1986, as amended.
(n) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(o) "SEC" shall mean the Securities and Exchange Commission.
(p) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(q) "Subsidiary" shall mean a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Internal Revenue
Code of 1986, as amended.
B-1
<PAGE>
3. STOCK
Subject to the provisions of Section 11 of the Plan, the maximum aggregate
number of shares which may be optioned and sold under the Plan is up to twenty
percent (20%) of the Company's authorized shares of Common Stock.
If an option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
shall, unless the Plan shall have been terminated, become available for further
grant under the Plan.
4. ADMINISTRATION
(a) Procedure. The Company's Board of Directors may appoint a Committee to
administer the Plan. The Committee shall consist of not less than two members of
the Board of Directors who shall administer the Plan on behalf of the Board of
Directors, subject to such terms and conditions as the Board of Directors may
prescribe. Once appointed, the Committee shall continue to serve until otherwise
directed by the Board of Directors. From time to time the Board of Directors may
increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause), and appoint new members in substitution
therefor, fill vacancies however caused, or remove all members of the Committee
and thereafter directly administer the Plan.
If a majority of the Board of Directors is eligible to be granted Options
or has been eligible at any time within the preceding year, a Committee must be
appointed to administer the Plan. The Committee must consist of not less than
two members of the Board of Directors, all of whom are "disinterested persons"
as defined in Rule 16b-3 of the General Rules and Regulations promulgated under
the Exchange Act.
(b) Powers of the Board. Subject to the provisions of the Plan, the Board
shall have the authority, in its discretion: (i) to grant Incentive Stock
Options, in accordance with Section 422 of the Internal Revenue Code of 1986, as
amended, or to grant Non-Qualified Stock Options; (ii) to determine, upon review
of relevant information and in accordance with Section 8(b) of the Plan, the
fair market value of the Common Stock; (iii) to determine the exercise price per
share of Options to be granted, which exercise price shall be determined in
accordance with Section 8(a) of the Plan; (iv) to determine the persons to whom,
and the time or times at which, Options shall be granted and the number of
shares to be represented by each Option; (v) to interpret the Plan; (vi) to
prescribe, amend and rescind rules and regulations relating to the Plan; (vii)
to determine the terms and provisions of each Option granted (which need not be
identical) and, with the consent of the holder thereof, accelerate, modify or
amend each option; (viii) to accelerate or defer (with the consent of the
Optionee) the exercise date of any option; (ix) to authorize any person to
execute on behalf of the Company any instrument required to effectuate the grant
of an Option previously granted by the Board; and (x) to make all other
determinations deemed necessary or advisable for the administration of the Plan.
(c) Effect of the Board's Decision. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.
5. ELIGIBILITY. Incentive Stock Options may be granted only to Employees.
Non-Qualified Stock Options may be granted to employees as well as directors
(subject to the limitations set forth in Section 4), independent contractors and
agents, as determined by the Board. Any person who has been granted an Option
may, if he is otherwise eligible, be granted an additional Option or Options.
No Incentive Stock Option may be granted to an Employee if, as a result of
such grant, the aggregate fair market value (determined at the time each Option
was granted) of the Shares with respect to which such Incentive Stock Options
are exercisable for the first time by such Employee during any calendar year
(under all such plans of the Company and any Parent and Subsidiary) shall exceed
One Hundred Thousand Dollars ($100,000).
The Plan shall not confer upon any Optionee any right with respect to
continuation of employment by the Company, nor shall it interfere in any way
with his right or the Company's right to terminate his employment at any time.
6. TERM OF PLAN. The Plan shall become effective upon the earlier to occur
of (i) its adoption by the Board of Directors, or (ii) its approval by vote of
the holders of a majority of the outstanding shares of the Company entitled to
vote on the adoption of the Plan. The Plan shall continue in effect until
February _, 2009, unless sooner terminated under Section 13 of the Plan.
B-2
<PAGE>
7. TERM OF OPTION. The term of each Option shall be ten (10) years from the
date of grant thereof or such shorter term as may be provided in the instrument
evidencing the option. However, in the case of an Incentive Stock Option granted
to an Employee who, immediately before the Incentive Stock Option is granted,
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant thereof or
such shorter time as may be provided in the instrument evidencing the option.
8. EXERCISE PRICE AND CONSIDERATION.
(a) The per Share exercise price for the Shares to be issued pursuant to
the exercise of an Option shall be such price as is determined by the Board, but
shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, immediately before the grant
of such Incentive Stock Option, owns stock representing
more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no
less than 110% of the fair market value per Share on the
date of grant; or, as the case may be,
(B) granted to an Employee not subject to the provisions of
Section 8(a)(i)(A), the per Share exercise price shall be
no less than one hundred percent (100%) of the fair
market value per Share on the date of grant.
(ii) In the case of a Non-Qualified Stock Option, the per Share
exercise price shall be no less than one hundred percent
(100%) of the fair market value per Share on the date of
grant.
(b) The fair market value shall be determined by the Board in its
discretion; provided, however, that where there is a public market for the
Common Stock, the fair market value per Share shall be the mean of the bid and
asked prices or, if applicable, the closing price of the Common Stock on the
date of grant, as reported by the National Association of Securities Dealers
Automated Quotation (NASDAQ) System or, in the event the Common Stock is listed
on a stock exchange, the fair market value per Share shall be the closing price
on such exchange on the date of grant of the Option, as reported in the Wall
Street Journal.
(c) The consideration to be paid for the Shares to be issued upon exercise
of an Option or in payment of any withholding taxes thereon, including the
method of payment, shall be determined by the Board or the Committee and may
consist entirely of (i) cash, check or promissory note; (ii) by cancellation of
such number of the shares of Common Stock otherwise issuable upon exercise of
the Option such that the aggregate current fair market value of such specified
number of shares of Common Stock on the date of exercise over the portion of the
Option exercise price attributable to such shares shall equal the Option
exercise price attributable to the shares of Common Stock to be issued on such
exercise; (iii) other Shares of Common Stock owned by the Employee that have a
fair market value on the date of surrender equal to the aggregate exercise price
of the Shares as to which said Option shall be exercised; (iv) an assignment by
the Employee of the net proceeds to be received from a registered broker upon
the sale of the Shares or the proceeds of a loan from such broker in such
amount; or (v) any combination of such methods of payment, or such other
consideration and method of payment for the issuance of Shares as may be
determined by the Board or the Committee to the extent permitted under Delaware
Law and meeting the rules and regulations of the SEC applicable to plans meeting
the requirements of Section 16(b)(3) of the Exchange Act.
9. EXERCISE OF OPTION.
(a) Procedure for Exercise; Rights as a Stockholder. Any Option granted
hereunder shall be exercisable at such times and subject to such conditions as
may be determined by the Board, including performance criteria with respect to
the Company and/or the Optionees, and as shall be permissible under the terms of
the Plan.
An Option nay not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
instrument evidencing the Option by the person entitled to exercise the option
and full payment for the Shares with respect to which the Option is exercised
has been received by the Company. Full payment may, as authorized by the Board,
consist of any consideration and method of
B-3
<PAGE>
payment allowable under Section 8(c) of the Plan; it being understood that the
Company shall take such action as maybe be reasonably required to permit use of
an approved payment method. Until the issuance, which in no event will be
delayed more than thirty (30) days from the date of the exercise of the Option
(as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for the purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Status as an Employee. If any Employee ceases to serve
as an Employee, he may, but only within thirty (30) days (or such other period
of time not exceeding three (3) months as is determined by the Board) after the
date he ceases to be an Employee of the Company, exercise his Option to the
extent that he was entitled to exercise it as of the date of such termination.
To the extent that he was not entitled to exercise the Option at the date of
such termination, or if he does not exercise such Option (which he was entitled
to exercise) within the time specified herein, the Option shall terminate.
(c) Notwithstanding the provisions of Section 9(b) above, in the event an
Employee is unable to continue his employment with the Company as a result of
his total and permanent disability, he may, but only within three (3) months (or
such other period of time not exceeding twelve (12) months as in determined by
the Board) from the date of disability, exercise his Option to the extent he was
entitled to exercise it at the date of such disability. To the extent that he
was not entitled to exercise the Option at the date of disability, or if he does
not exercise such Option (which he was entitled to exercise) within the time
specified herein, the Option shall terminate. For purposes of Section 9, an
Employee is permanently and totally disabled if he is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than twelve (12)
months.
(d) Death of Optionee. In the event of the death of an Optionee:
(i) during the term of the Option who is at the time of his
death an Employee of the Company and who shall have been in
Continuous Status as an Employee since the date of grant of
the Option, the Option may be exercised, at any time within
twelve (12) months following the date of death, by the
Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to
the extent of the right to exercise that would have accrued
had the Optionee continued living one (1) month after the
date of death; or
(ii) within thirty (30) days (or such other period of time not
exceeding three (3) months as is determined by the Board)
after the termination of Continuous Status as an Employee,
the Option may be exercised, at any time within three (3)
months following the date of death, by the Optionee's
estate or by a person who acquired the right to exercise
the Option by bequest or inheritance, but only to the
extent of the right to exercise that had accrued at the
date of termination.
10. NON-TRANSFERABILITY OF OPTIONS. Unless otherwise permitted by the Board
or the Committee, subject to applicable laws and regulations, the Option may not
be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution or in
connection with estate planning purposes as may be permitted from time to time
by the Committee, and may be exercised, during the lifetime of the Optionee,
only by the Optionee.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject to any
required action by the stockholders of the Company, the number of shares which
have been authorized for issuance under the Plan but as to which no Options have
yet been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion
B-4
<PAGE>
of any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made by
the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the Company, or
in the event of a proposed sale of all or substantially all of the assets of the
Company, or the merger of the company with or into another corporation, the
Board of Directors of the Company shall, as to outstanding Options, either (i)
make appropriate provision for the protection of any such outstanding Options by
the substitution on an equitable basis of appropriate stock of the Company or of
the merged, consolidated or otherwise reorganized corporation which will be
issuable in respect to one share of Common Stock of the Company; provided, only
that the excess of the aggregate fair market value of the shares subject to the
Options immediately after such substitution over the purchase price thereof is
not more than the excess of the aggregate fair market value of the shares
subject to such Options immediately before such substitution over the purchase
price thereof, or (ii) upon written notice to an Optionee, provide that all
unexercised Options must be exercised within a specified number of days of such
notice or they will be terminated. In any such case, the Board of Directors may,
in its discretion, advance the lapse of any waiting or installment periods and
exercise dates.
12. TIME FOR GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date on which the Board makes the determination granting
such Option. Notice of the determination shall be given to each person to whom
an Option is so granted within a reasonable time after the date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
(a) The Board may amend or terminate the Plan from time to time in
such respect as the Board may does advisable; provided, however, that the
following revisions or amendments shall require approval of the holders of a
majority of the outstanding shares of the Company entitled to vote:
(i) any increase in the number of Shares subject to the Plan,
other than in connection with an adjustment under
Section 11 of the Plan;
(ii) any change in the designation of the class of persons
eligible to be granted options; or
(iii) any material increase in the benefits accruing to
participants under the Plan.
(b) Stockholder Approval. If any amendment requiring stockholder approval
under Section 13(a) of the Plan is made, such stockholder approval shall be
solicited as described in Section 17(a) of the Plan.
(c) Effect of Amendment or Termination. Any such amendment or termination
of the Plan shall not affect Options already granted and such Options shall
remain in full force and effect as if this Plan had not been amended or
terminated, unless mutually agreed otherwise between the Optionee and the Board,
which agreement must be in writing and signed by the Optionee and the Company.
14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued pursuant
to the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the Shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by, or appropriate
under, any of the aforementioned relevant provisions of law.
B-5
<PAGE>
15. RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares As to which such requisite authority shall not have been obtained.
16. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
17. STOCKHOLDER APPROVAL. Continuation of the Plan shall be subject to
approval by the stockholders of the Company within twelve (12) months before or
after the date the Plan is adopted. If such stockholder approval is obtained at
a duly held stockholders' meeting, it may be obtained by the affirmative vote of
the holders of a majority of the outstanding shares of the Company present or
represented and entitled to vote thereon. The approval of such stockholders of
the Company shall be (1) solicited substantially in accordance with Section
14(a) of the Exchange Act and the rules and regulations promulgated thereunder,
or (2) solicited after the Company has furnished in writing to the holders
entitled to vote substantially the same information concerning the Plan as that
which would be required by the rules and regulations in effect under Section
14(a) of the Exchange Act at the time such information is furnished.
18. OTHER PROVISIONS. The Stock Option Agreement authorized under the Plan
shall contain such other provisions, including, without limitation, restrictions
upon the exercise of the Option, as the Board of Directors of the Company shall
deem advisable. Any Incentive Stock Option Agreement shall contain such
limitations and restrictions upon the exercise of the Incentive Stock Option as
shall be necessary in order that such option will be an Incentive Stock Option
as defined in Section 422 of the Internal Revenue Code of 1986, an amended.
19. INDEMNIFICATION OF BOARD. In addition to such other rights of
indemnification as they may have as directors or as members of the Board, the
members of the Board shall be indemnified by the Company against the reasonable
expenses, including attorneys' fees actually and necessarily incurred in
connection with the defense of any action suit or proceeding, or in connection
with any appeal therein, to which they or any of them may be a party by reason
of any action taken or failure to act under or in connection with the Plan or
any Option granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by then in satisfaction of a judgment
in any such action, suit or proceeding that such Board member is liable for
negligence or misconduct in the performance of his duties, provided that within
60 days after institution of any such action, suit or proceeding a Board member
shall, in writing, offer the Company the opportunity, at its own expense, to
handle and defend the same.
20. OTHER COMPENSATION PLANS. The adoption of the Plan shall not affect
any other stock option or incentive or other compensation plans in effect for
the Company or any Subsidiary, nor shall the Plan preclude the Company from
establishing any other forms of incentive or other compensation for employees
and directors of the Company or any Subsidiary.
21. SINGULAR, PLURAL; GENDER. Whenever used herein, nouns in the singular
shall include the plural, and the masculine pronoun shall include the feminine
gender.
22. HEADINGS, ETC., NO PART OF PLAN. Headings of Articles and Sections
hereof are inserted for convenience and reference; they constitute no part of
the Plan.
B-6
<PAGE>
PROJECTAVISION, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Martin J. Holleran and Stuart Barlow as
proxies (the "Proxies"), each with power of substitution and resubstitution, to
vote all shares of Common Stock, $.001 par value per share, of Projectavision,
Inc. (the "Company") held of record by the undersigned on January 21, 1999 at
the Annual Meeting of Stockholders to be held at the Club Hotel & Suites by
Doubletree, 455 Washington Boulevard, Jersey City, NJ 07310 on Friday, February
19, 1999 at 8:30 a.m. Eastern Standard Time, or at any adjournments thereof, as
directed below, and in their discretion on all other matters coming before the
meeting or any adjournments thereof.
Please mark boxes [ ] in blue or black ink.
Proposal 1. Election of three (3) Directors: Jules Zimmerman, Flavio Peralda
and Emilio Baj Macario each for a 3 year term.
(Mark only ONE of the two boxes relative to this Proposal).
[ ] VOTE FOR all nominees named above except those who may be named on this
line:
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(or)
[ ] VOTE WITHHELD as to all nominees named above
Proposal 2. Proposal to obtain stockholder approval for the issuance of an
aggregate of 6,500 shares of a new series of a convertible preferred
security, having a liquidation preference of $1,000 per share, to be
issued in connection with the Company's recent acquisition of
substantially all of video assets of Vidikron International, S.p.A.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 3. (A) Proposal to obtain stockholder approval to amend the Company's
Certificate of Incorporation to increase the number of
authorized shares of common stock by 450,000,000, such that the
aggregate number of authorized shares of common stock would
increase from 50,000,000 shares to 500,000,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
(B) Proposal to obtain stockholder approval to grant the Company's
Board of Directors the authority to effect a one-time reverse
stock split of up to 40-to-1 in order for the Company to
maintain the continued listing of its Common Stock on The Nasdaq
Stock Market.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 4. Proposal to obtain stockholder approval to amend the Company's
Certificate of Incorporation to change the name of the Company from
"Projectavision, Inc." to "Vidikron Technologies Group, Inc."
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 5. Proposal to obtain stockholder approval to adopt the Company's 1999
Incentive Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 6. Proposal to obtain stockholder approval to ratify the appointment by
the Board of Directors of Deloitte & Touche, LLP to serve as the
Company's independent certified public accountants for 1998 and the
current calendar year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
When properly executed, this Proxy will be voted as directed. If no
direction is made, this proxy will be voted "FOR" Proposals 1, three and 6.
Please mark, date, sign and return this Proxy promptly in the enclosed
envelope.
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney or executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated: , 1999
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X
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Signature
X
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Print Name(s)
X
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Signature, if held jointly
