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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
PLAYORENA, 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>
PLAYORENA INC.
150 VANDERBILT MOTOR PARKWAY, SUITE 311
HAUPPAUGE, NEW YORK
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 17, 1999
NOTICE IS HEREBY GIVEN, that a Special Meeting of the Shareholders of
Playorena Inc. (the "Company") will be held at 36 West 44th Street, Suite 1201,
New York, New York 10036 on February 17, 1999 at 10:00 a.m. local time, for the
purpose of considering and acting upon the following, all to be effective upon
the consummation of certain transactions described herein:
1. The approval of an amendment to the Company's Certificate of
Incorporation (i) to change the name of the Company to "SK Global
Technologies, Inc."; (ii) to recapitulate the purposes for which the
Company was formed; (iii) to change the location of the office of the
Company; (iv) to change the address to which the Secretary of State
shall mail a copy of any process against the Company served upon him;
(v) to effect a reverse stock split whereby each issued and
outstanding share of Common Stock, $.001 par value per share ("Common
Stock"), will be converted into .0106065 of a share of Common Stock;
(vi) to increase the authorized number of shares of Common Stock from
15,000,000 to 20,000,000; and (vii) to authorize the issuance, in one
or more series, of an aggregate of 5,000,000 shares of Preferred
Stock, $.001 par value per share, each such series having the
designation, relative rights, preferences or limitations, as shall be
determined by the Board of Directors; and
2. The approval of the adoption of the Company's 1998 Stock Option Plan;
and
3. Any and all matters that may properly come before the meeting and any
adjournment thereof.
The Board of Directors has fixed the close of business on January 19,
1999, as the record date for determining the shareholders entitled to vote at
the meeting and any adjournment thereof, and only the holders of Common Stock of
the Company of record at such date will be entitled to notice of and to vote at
the meeting. Such shareholders may vote in person or by proxy.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, WHETHER OR
NOT YOU PLAN TO BE PERSONALLY PRESENT AT THE MEETING, PLEASE MARK, DATE AND SIGN
THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors,
/s/ Lawrence E. Kaplan
Lawrence E. Kaplan
President
Hauppauge, New York
February 5, 1999
<PAGE>
PLAYORENA INC.
150 VANDERBILT MOTOR PARKWAY, SUITE 311
HAUPPAUGE, NEW YORK 11788
PROXY STATEMENT
GENERAL INFORMATION CONCERNING SOLICITATION
This proxy statement is furnished in connection with the solicitation
of proxies by and on behalf of the Board of Directors of Playorena Inc. (the
"Company"), to be held at 36 West 44th Street, Suite 1201, New York, New York
10036 on Wednesday, February 17, 1999 at 10:00 a.m., local time, or any
adjournments thereof. This Proxy Statement and accompanying proxy card are first
being sent to the shareholders of the Company on or about February 5, 1999.
Any proxy delivered in the accompanying form may be revoked by the
person executing the proxy at any time, before the authority thereby granted is
exercised, by written request addressed to the Secretary, Playorena Inc., 150
Vanderbilt Motor Parkway, Suite 311, Hauppauge, New York 11788, or by attending
the meeting and electing to vote in person. Proxies received in such form will
be voted as therein set forth at the meeting or any adjournment thereof, but if
no instructions are given, such shares will be voted for (i) the approval of an
amendment to the Company's Certificate of Incorporation (a) to change the name
of the Company to "SK Global Technologies, Inc.," (b) to recapitulate the
purposes for which the Company was formed, (c) to change the location of the
office of the Company, (d) to change the address to which the Secretary of State
shall mail a copy of any process against the Company served upon him, (e) to
effect a reverse stock split whereby each issued and outstanding share of Common
Stock, $.001 par value per share ("Common Stock"), will be converted into
.0106065 of a share of Common Stock (the "Reverse Stock Split"), (f) to increase
the authorized number of shares of Common Stock from 15,000,000 to 20,000,000,
and (g) to authorize the issuance, in one or more series, of an aggregate of
5,000,000 shares of Preferred Stock, $.001 par value per share, each such series
having the designation, relative rights, preferences and limitations, as shall
be determined by the Board of Directors; (ii) the approval of the adoption of
the Company's 1998 Stock Option Plan ("Plan"); and (iii) the transacting of such
other business as may properly come before the meeting or any adjournment
thereof. The effective date of all such proposals approved of at the meeting
shall be the consummation of a series of related transactions described under
"The Transactions" herein, involving the Company, SmartLink Development Network,
Inc. and King Communications International Limited.
RECORD DATE AND VOTING SECURITIES
The Board of Directors has selected the close of business on January
19, 1999 as the record date for determining the shareholders entitled to notice
of, and to vote at, the meeting or any adjournment thereof. The number of shares
of Common Stock of the Company outstanding on January 19, 1999 ("Record Date")
was 9,198,679. Shareholders present or represented and entitled to vote on any
matter at the meeting or any adjournment thereof will be entitled to one vote on
such matter for each share of the Common Stock of the Company held by them as of
the record date.
2
<PAGE>
THE TRANSACTIONS
THE ACQUISITIONS
The Company intends to acquire in two separate transactions the
businesses of SmartLink Development Network, Inc, a corporation organized under
the laws of Connecticut ("SmartLink"), and King Communications International
Limited, an Australian corporation ("King International"). SmartLink and King
International are providers of wireless voice and data products and systems to
the private two-way land mobile radio industry. The Company will acquire (the
"Acquisition") from King International in exchange for shares of Common Stock of
the Company, all of the outstanding capital stock of King International's two
wholly-owned operating subsidiaries, King Communications Australasia Pty Limited
("King Australasia") and King Communications U.S.A., Inc. ("King USA";
hereinafter, the businesses of King Australasia and King USA shall collectively
be referred to as "King"). Immediately thereafter, a wholly-owned subsidiary of
the Company will merge with and into SmartLink, in exchange for shares of Common
Stock of the Company, with SmartLink as the surviving corporation (the
"Merger"). Following the Acquisition and Merger (collectively, the
"Acquisitions"), each of SmartLink, King Australasia and King USA will be
wholly-owned subsidiaries of the Company.
The Company has entered into two separate agreements with respect to
the acquisition of the business of each of SmartLink and King. The Merger will
be completed pursuant to the Agreement and Plan of Merger, dated as of December
17, 1998 ("SmartLink Merger Agreement"), by and among the Company, SmartLink,
King International, and Todtman, Nachamie, Spizz & Johns, P.C., as escrow agent,
pursuant to which the Company's wholly-owned subsidiary formed for such purposes
will merge into SmartLink in a tax free reorganization within the meaning of
Sections 351 and/or 368 of the Internal Revenue Code of 1986, as amended.
Shareholders of SmartLink will exchange their shares in SmartLink for an
aggregate of 1,363,636 shares of Common Stock of the Company ("SmartLink
Purchase Stock"). Consummation of the transactions contemplated by the SmartLink
Merger Agreement is subject to the approval of holders of a majority of the
outstanding shares of SmartLink.
Pursuant to the Asset Purchase and Sale Agreement ("King Asset Purchase
Agreement"), dated as of December 17, 1998, by and among the Company, SmartLink,
King International, Frank Eccles, Robert Geaghan, and Todtman, Nachamie, Spizz &
Johns, P.C., as escrow agent, the Company will acquire from King all of the
issued share capital of King Australasia and King USA in exchange for 1,517,045
shares of Common Stock of the Company ("King Purchase Stock"). Consummation of
the King Asset Purchase Agreement is contingent upon, among other things,
approval of (i) holders of at least 50% of King International's issued share
capital (which was obtained on December 31, 1998) and (ii) the Vancouver Stock
Exchange, on which King International's securities are traded.
See "Certain Relationships and Related Transactions" below for certain
payments being made to directors and affiliates of the Company in connection
with the Acquisitions.
3
<PAGE>
PROPOSED PRIVATE PLACEMENT
The consummation of the Acquisitions is contingent upon a proposed
private placement of Units by the Company, on a "best efforts" basis, raising at
least $10,000,000 ("Minimum Offering"), up to a maximum $11,500,000 ("Maximum
Offering"), in gross proceeds, giving effect to the conversion of certain debt
("Private Placement"). Each Unit is expected to consist of shares of the
Company's to-be-designated Series A 12% Convertible Preferred Stock, par value
$.001 per share ("Series A Preferred"), and warrants to purchase Common Stock.
CHANGE IN CONTROL OF THE COMPANY
The closing of the Acquisitions is to occur concurrent with the closing
of the Minimum Offering. Giving effect to the Acquisitions, the Private
Placement and Reverse Stock Split, the Company's current shareholders will own,
on a fully diluted basis, 2% of the outstanding voting securities of the
Company. The current shareholders of the Company shall own an aggregate of
113,647 and 119,274 shares of Common Stock, in the case of the Minimum Offering
and Maximum Offering, respectively. The Reverse Stock Split contemplates the
Maximum Offering. Upon the closing of the Minimum Offering, an aggregate of
5,627 shares of Common Stock (the difference between 119,274 and 113,647) will
be placed in escrow, to be released on a proportionate basis upon additional
closings amounting to gross proceeds in excess of the Minimum Offering. In the
event that the Company does not raise in excess of the Minimum Offering, then
the Common Stock held in escrow shall be cancelled.
APPROVAL OF PROPOSALS REQUIRED TO EFFECT THE ACQUISITIONS AND PRIVATE PLACEMENT
The approval of each of the proposals contained herein is a condition
precedent to the consummation of the Acquisitions and the Private Placement.
Assuming approval by shareholders, the proposals contained in this Proxy
Statement shall be effective concurrent with the consummation of the
Acquisitions and Private Placement.
4
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Lawrence Kaplan and Robert Rubin, each a principal shareholder and
director of the Company, and Andrew Kaplan, a principal shareholder of the
Company, as well as another unaffiliated individual, in anticipation of the
consummation of the Acquisitions and Private Placement, have executed and
delivered that certain Assumption and Indemnification Agreement, dated December
17, 1998, pursuant to which each such individual agreed, jointly and severally
for a period of up to three years from the Closing, to indemnify and hold
harmless the Company for all claims and liabilities with respect to (i)
virtually all pre-existing payables and liabilities of the Company prior to the
Closing for the Minimum Offering (which liabilities they will assume), (ii) any
breach of a representation or warranty of the Company (respecting matters no
more than five years old) in any document respecting the Acquisitions and
Private Placement and (ii) any default by the Company with respect to its
obligations pursuant to the Acquisitions and Private Placement prior to the
Closing for the Minimum Offering. In consideration of the foregoing, an amount
in the aggregate of $300,000, less certain expenses of the Transactions, will be
paid at the Closing for the Minimum Offering to such individuals.
On August 1, 1998, after giving effect to a previously approved
one-for-20 reverse stock split which was effective July 24, 1998, Robert Rubin,
Lawrence Kaplan, Alfred Romano (members of the Company's Board of Directors) and
Andrew Kaplan, a principal shareholder of the Company purchased 3,049,944,
2,330,303, 138,113 and 2,335,417, shares of Common Stock of the Company,
respectively, for a purchase price equal to the amounts owed for the
cancellation of all indebtedness (and interest thereon) and for all previous
services rendered.
Effective upon consummation of the Acquisitions and Private Placement,
each of the current directors and officers will resign from their positions, to
be replaced by nominees of SmartLink and King International.
EXECUTIVE COMPENSATION
The summary compensation table is omitted because no compensation for
services in all capacities to the Company was awarded, earned by or paid to the
President of the Company for the fiscal years ended November 30, 1998, 1997 or
1996 and no other executive officer of the Company received salary and bonus in
excess of $100,000 during the fiscal years ended November 30, 1998, 1997 or
1996.
On August 1, 1998, Robert Rubin, Lawrence Kaplan and Alfred Romano, all
current directors of the Company, purchased 3,049,944, 2,330,303 and 138,113
shares of Common Stock of the Company, respectively, for a purchase price equal
to the cancellation of all indebtedness owed to such individuals (and interest
thereon) and for all previous services rendered.
No director of the Company received any remuneration from the Company
as such. Directors do not currently receive fees or other remuneration from the
Company.
5
<PAGE>
PRINCIPAL SHAREHOLDERS AND
HOLDINGS OF MANAGEMENT
The following table sets forth certain information as of January 15,
1999, regarding (i) each person known by the Company to be the beneficial owner
of more than 5% of the outstanding shares of Common Stock, (ii) each director,
nominee and executive officer of the Company and (iii) all officers and
directors as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME & ADDRESS OF BENEFICIAL PERCENTAGE OF
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP CLASS
- ----------------- --------------------- -------------------- -------------
<S> <C> <C> <C>
Common Stock Lawrence Kaplan 2,385,025 25.9%
150 Vanderbilt Motor Parkway
Suite 311
Hauppauge, New York 11788
Common Stock Andrew Kaplan 2,389,583 25.9%
150 Vanderbilt Motor Parkway
Suite 311
Hauppauge, New York 11788
Common Stock Robert Rubin 3,186,110 34.6%
25 Highland Boulevard
Dix Hills, New York 11746
Common Stock Alfred Romano 138,668 1.50%
4 Wagon Wheel Lane
Dix Hills, New York 11746
All Directors and Executive Officers as group (3 persons) 5,709,803 62.07%
</TABLE>
Giving effect to the consummation of the Acquisitions, the Private
Placement and the Reverse Stock Split, the current shareholders of the Company
will collectively own 2% of the outstanding voting securities of the Company, on
a diluted basis. Concurrent with the closing of the Acquisitions and Private
Placement, the incumbent officers and directors of the Company will be replaced
by the officers and directors of King and SmartLink who, on a collective basis,
are expected to beneficially own 52.0% and 49.6% of the voting securities of the
Company, on a diluted basis, giving effect to the Minimum Offering and Maximum
Offering, respectively, with the balance of the outstanding voting securities of
the Company being owned principally by investors in the Private Placement, the
Placement Agent in connection with the Private Placement, and shareholders of
SmartLink.
6
<PAGE>
PROPOSAL 1--AMENDMENT TO THE CERTIFICATE OF INCORPORATION ("AMENDMENT") (A) TO
CHANGE THE NAME OF THE COMPANY TO SK GLOBAL TECHNOLOGIES, INC., (B) TO
RECAPITULATE THE PURPOSES FOR WHICH THE COMPANY WAS FORMED, (C) TO CHANGE THE
LOCATION OF THE OFFICE OF THE COMPANY, (D) TO CHANGE THE ADDRESS TO WHICH THE
SECRETARY OF STATE SHALL MAIL A COPY OF ANY PROCESS AGAINST THE COMPANY SERVED
UPON HIM, (E) TO EFFECT A REVERSE STOCK SPLIT WHEREBY EACH ISSUED AND
OUTSTANDING SHARE OF COMMON STOCK, $.001 PAR VALUE PER SHARE, WILL BE CONVERTED
INTO .0106065 OF A SHARE OF COMMON STOCK, (F) TO INCREASE THE AUTHORIZED NUMBER
OF SHARES OF COMMON STOCK FROM 15,000,000 TO 20,000,000, AND (G) TO AUTHORIZE
THE ISSUANCE, IN ONE OR MORE SERIES, OF AN AGGREGATE OF 5,000,000 SHARES OF
PREFERRED STOCK, $.001 PAR VALUE PER SHARE, EACH SUCH SERIES HAVING THE
DESIGNATION, RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS, AS SHALL BE
DETERMINED BY THE BOARD OF DIRECTORS.
Board Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL. Proxies
solicited by the Board of Directors will be so voted unless shareholders specify
otherwise in their proxy.
DESCRIPTION
A. CHANGE OF NAME
The Transactions are contingent upon the Company's name being changed
to "SK Global Technologies, Inc." SmartLink and King International desire that,
upon the completion of the Acquisitions, the Company's name no longer reflect
its prior business as an operator of children's play centers, and more
accurately reflect the combination of SmartLink and King ("SK"), the worldwide
nature of the business and proposed business and the strong technological
component to its business and proposed business.
B. RECAPITULATION OF PURPOSES OF THE COMPANY
The purposes for which the Company was formed, as set forth in its
Certificate of Incorporation ("Certificate"), shall be recapitulated by stating
that the purpose of the Company shall be to engage in any lawful act or activity
for which a corporation may be organized under the New York Business Corporation
Law, other than any act or activity requiring the consent or approval of any
state official, department, agency, board or other body without such approval or
consent first being obtained. Although the Certificate presently permits the
Company to engage in any lawful act or activity, the Certificate also sets forth
specific purposes such as the operation of gymnasium facilities for recreational
and general health purposes. In anticipation of the completion of the
Transactions, SmartLink and King desire that the Company's Certificate no longer
reflect the prior business of the Company.
7
<PAGE>
C. CHANGE OF LOCATION OF OFFICE
The Certificate provides that the office of the Company is to be
located in the Town of Huntington, County of Suffolk, State of New York. In
anticipation of the completion of the Transactions, SmartLink and King desire
that the Company's office in the State of New York be located in New York
County.
D. CHANGE OF ADDRESS TO WHICH THE SECRETARY OF STATE SHALL MAIL A
COPY OF ANY PROCESS AGAINST THE COMPANY SERVED UPON HIM
The Certificate provides that the address to which the Secretary of
State shall mail a copy of any process against the Company served upon him is:
M. Jack Duksin, Esq., Berlack, Israels & Liberman, 1155 Avenue of the Americas,
New York, New York 10036. In anticipation of the completion of the Transactions,
SmartLink and King desire that the address to which the Secretary of State shall
mail a copy of any process against the Company served upon him be: SK Global
Technologies, Inc., Attention: President, 950 Yale Avenue, Wallingford,
Connecticut, 06492.
E. REVERSE STOCK SPLIT
REASON FOR REVERSE STOCK SPLIT; DILUTION
The consummation of the Acquisitions and Private Placement is
contingent upon each share of Common Stock issued and outstanding, without any
action on the part of any holder thereof, being converted into .0106065 of a
share of Common Stock. Shareholders holding shares of Common Stock in an amount
not divisible by 0.0106065 will receive, in lieu thereof, a payment in an amount
(without interest) equal to such fractional part of a share of the Company, in
U.S. dollars.
The Reverse Stock Split would apply to all shares of the Company's
Common Stock outstanding on the date immediately prior to the closing of the
Minimum Offering, but will not be effective until the consummation of the
Acquisitions and Private Placement. Giving effect to the consummation of the
Acquisitions and Private Placement, the holders of Common Stock will
collectively own 2% of the outstanding voting securities of the Company on a
diluted basis.
The principal purpose of the Reverse Stock Split is to fulfill the
provisions and requirements of the SmartLink Merger Agreement, King Asset
Purchase Agreement and Private Placement. These agreements and the terms of the
Private Placement provide that the Company's currently outstanding Common Stock
on the Record Date be reduced to 113,647 and 119,274 shares of Common Stock in
the case of the Minimum Offering and Maximum Offering, respectively, which is 2%
of the outstanding voting securities of the Company, giving effect to the
Acquisitions and Private Placement, on a fully diluted basis.
The Reverse Stock Split contemplates the Maximum Offering. Upon
the closing of the Minimum Offering, an aggregate of 5,627 shares of Common
Stock (the difference between 119,274 and 113,647) will be placed in escrow, to
be released on a proportionate basis upon additional closings amounting to gross
proceeds in excess of the Minimum Offering. In the event that the Company does
not raise in excess of the Minimum Offering, then the Common Stock held in
escrow shall be cancelled.
8
<PAGE>
EXCHANGE OF STOCK CERTIFICATES
Assuming the Reverse Split is approved by the shareholders,
shareholders will be required to exchange their stock certificates for new
certificates representing the shares of Common Stock giving effect to the
Reverse Stock Split. The new stock certificates will also reflect a prior
one-for-twenty reverse stock split approved by the shareholders at a special
meeting held on February 7, 1997, and effected as of July 31, 1998. Shareholders
will be furnished with the necessary materials and instructions for the
surrender and exchange of stock certificates at the appropriate time by the
Company's transfer agent. Shareholders will not be required to pay a transfer or
other fee in connection with the exchange of certificates. SHAREHOLDERS SHOULD
NOT SUBMIT ANY CERTIFICATES UNTIL REQUESTED TO DO SO.
FEDERAL INCOME TAX CONSEQUENCES OF REVERSE STOCK SPLIT
The following description of Federal income tax consequences is based
upon the Internal Revenue Code of 1986, as amended, the applicable Treasury
Regulations promulgated thereunder, judicial authority and current
administrative rulings and practices as in effect on the date of this Proxy
Statement. This discussion is for general information only and does not discuss
consequences, which may apply to special classes of taxpayers (e.g.,
non-resident aliens, brokers-dealers or insurance companies). Shareholders are
urged to consult their own tax advisors to determine the particular consequences
to them.
The exchange of shares of Common Stock for shares of Common Stock
giving effect to the Reverse Stock Split will not result in recognition of gain
or loss. The holding period of the shares of new Common Stock will include the
shareholder's holding period for the shares of Common Stock exchanged therefor,
provided that the shares of Common Stock were held as a capital asset. The
adjusted basis of the shares of new Common Stock will be the same as the
adjusted basis of the shares of Common Stock exchanged therefor.
F. INCREASE THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK FROM
15,000,000 TO 20,000,000.
The Company's authorized capital stock consists of 15,000,000 shares of
Common Stock, $.001 par value per share. The Private Placement is contingent
upon the amendment of the Company's Certificate of Incorporation to increase the
authorized number of shares of Common Stock from 15,000,000 to 20,000,000.
G. AUTHORIZATION TO ISSUE, IN ONE OR MORE SERIES, AN AGGREGATE OF
5,000,000 SHARES OF PREFERRED STOCK, $.001 PAR VALUE PER
SHARE, EACH SUCH SERIES HAVING THE DESIGNATION, RELATIVE
RIGHTS, PREFERENCES OR LIMITATIONS, AS SHALL BE DETERMINED BY
THE BOARD OF DIRECTORS.
9
<PAGE>
In order to effect the Private Placement, which contemplates the
issuance of shares of Series A 12% Convertible Preferred Stock, the Company's
Certificate of Incorporation must be amended to authorize the issuance of
5,000,000 shares of Preferred Stock. The Board of Directors has adopted and
submitted to shareholders for approval of an amendment to its Certificate to
authorize the issuance of up to 5,000,000 shares of Preferred Stock, $.001 par
value per share.
After the filing of the Amendment, the Board of Directors of the
Company, shall have the authority to specify the designation, relative rights,
preferences and limitations of up to 5,000,000 shares of Preferred Stock. In
connection with the Private Placement, the Board plans to designate 1,500,000
shares of Preferred Stock as Series A 12% Convertible Preferred Stock. It is not
possible to determine the actual effect of the Series A Preferred or any other
to-be designated series of Preferred Stock on the rights of the shareholders of
the Company until the Board of Directors determines the rights of the holders of
such series of the Preferred Stock. However, such effects might include (i)
restrictions on the payment of dividends to the holders of the Common Stock,
(ii) dilution of voting power to the extent that the holders of shares of
Preferred Stock are given voting rights, (iii) dilution of the equity interests
and voting power if the Preferred Stock is convertible into Common Stock, and
(iv) restrictions upon any distribution of assets to the holders of the Common
Stock upon liquidation or dissolution and until the satisfaction of any
liquidation preference granted to the holders of Preferred Stock. Shareholders
will not have preemptive rights to subscribe for shares of Preferred Stock.
The Board of Directors believes that the authorization of the Preferred
Stock is in the best interests of the Company and its shareholders and believes
that it is advisable to authorize such shares and have them available in
connection with possible future transactions, such as financings, strategic
alliances, corporate mergers, acquisitions, possible funding of new product
programs or businesses and other uses not presently determinable and as may be
deemed to be feasible and in the best interests of the Company. In addition, the
Board of Directors believes that it is desirable that the Company have the
flexibility to issue shares of Preferred Stock without further shareholder
action, except as otherwise provided by law.
The proposed Certificate of Amendment to the Company's Certificate of
Incorporation is attached hereto as Exhibit A.
PROPOSAL 2---THE APPROVAL OF THE 1998 STOCK OPTION PLAN
Board Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL. Proxies
solicited by the Board of Directors will be so voted unless shareholders specify
otherwise in their proxy.
DESCRIPTION
In December 1998, the Board of Directors approved the Plan, effective
upon the consummation of the Transactions, in order to provide an incentive to
non-employee directors and to officers and certain other key employees of and
consultants to the Company by making available to them an opportunity to acquire
a proprietary interest or to increase their proprietary interest in the Company.
The Plan provides for the award of options (each, an "Award") representing or
corresponding to up to 750,000 shares of Common Stock. Any Award issued under
the Plan, which is forfeited, expires or terminates prior to vesting or exercise
will be available for Award under the Plan. Capitalized terms not defined herein
shall have the meaning ascribed to them in the Plan.
10
<PAGE>
The following is a summary of the principal features of the Plan. The
summary is qualified in its entirety by reference to the complete text of the
Plan as set forth in Exhibit B to this Proxy Statement. Shareholders are urged
to read the actual text of the Plan set forth in Exhibit B.
PURPOSE OF THE PLAN
The purpose of the Plan is to provide to key employees, officers,
directors, consultants and agents of the Company, or any of its subsidiaries,
added incentive for high levels of performance and unusual efforts to increase
the earnings and long-term growth of the Company. This is accomplished by
providing for the granting of "Incentive Stock Options" and "Nonqualified
Options" to qualified employees. In addition, the Plan also provides for the
granting of "Nonqualified Options" to contract consultants and non-employee
directors of the Company, as consideration for their services.
ADMINISTRATION OF THE PLAN
This Plan shall be administered by the Option Committee, subject to
approval and ratification by the Board of Directors. Any action of the Option
Committee with respect to administration of the Plan shall be taken pursuant to
(i) a majority vote at a meeting of the Option Committee (to be documented by
minutes), or (ii) the unanimous written consent of its members. The Option
Committee may meet in person, by telephone, or by any other means which it
deems to be advisable and convenient. All actions by the Option Committee shall
be submitted to the Board of Directors for ratification and approval.
ELIGIBLE PERSONS
Only officers, key employees and directors who are also employees of the
Company or any subsidiary shall be eligible to receive grants of Incentive Stock
Options. Officers, key employees, contract consultants and all directors of the
Company or any subsidiary shall be eligible to receive grants of Nonqualified
Options. Within the foregoing limits, the Option Committee, from time to time,
shall determine and designate persons to whom options may be granted. All such
designations shall be made in the absolute discretion of the Option Committee
and shall not require the approval of the shareholders, except as expressly set
forth in the Plan. In determining (i) the number of Shares to be covered by each
of the Options granted hereunder (ii) the purchase price for such Shares and the
method of payment of the purchase price (subject to the other sections of the
Plan), (iii) the individuals of the eligible class to whom Options shall be
granted, (iv) the terms and provisions of the respective Option Agreements and
(v) the times at which such Options shall be granted, the Option Committee shall
take into account such factors as it shall deem relevant in connection with
accomplishing the purpose of the Plan as set forth in Section 1 thereof. An
individual who has been granted an Option may be granted additional Options if
the Option Committee shall so determine.
11
<PAGE>
SHARES SUBJECT TO PLAN
Subject to adjustment as provided in the Plan, the total number of
Shares to be subject to Options, granted pursuant to this Plan shall not exceed
Seven Hundred Fifty Thousand (750,000) Shares. Shares subject to the Plan may be
either authorized but unissued Shares or Shares that were once issued and
subsequently reacquired by the Company; the Option Committee shall be empowered
to take any appropriate action required to make Shares available for Options
granted under this Plan. If any Options are surrendered before exercise or lapse
without exercise in full or for any other reason cease to be exercisable, the
Shares reserved therefore shall again be available under the Plan.
INCENTIVE STOCK OPTIONS
Incentive Stock Options granted pursuant to the Plan are intended to be
"incentive stock options" to which Sections 421 and 422 of the Internal Revenue
Code of 1986, as amended ("Code") apply, and the Plan shall be construed and
administered to implement that intent. If all or any part of an Incentive Stock
Option shall not be an "incentive stock option" subject to Sections 421 or 422
of the Code, such Option shall nevertheless be valid and carried into effect.
ADJUSTMENTS IN AWARDS
As used herein, the term "Share Adjustment" means an event pursuant to
which the outstanding Shares of the Company are increased, decreased or changed
into, or exchanged for a different number or kind of securities, without receipt
of consideration by the Company, through reorganization, merger,
recapitalization, reclassification, stock split, reverse stock split, stock
dividend, stock consolidation or otherwise. Upon the occurrence of a Share
Adjustment, (i) appropriate and proportionate adjustments shall be made to the
number and kind of securities and exercise price for the securities subject to
the Options which may thereafter be granted under the Plan, (ii) appropriate and
proportionate adjustments shall be made to the number and kind of and exercise
price for the securities subject to the then outstanding Options, and (iii)
appropriate amendments to the Option Agreements shall be executed by the
Corporation and the Optionees if the Option Committee determines that such
amendments are necessary or desirable to reflect such adjustments. If determined
by the Option Committee to be appropriate, in the event of a Share Adjustment
which involves the substitution of securities of a corporation other than the
Corporation, the Option Committee shall make arrangements for the assumptions by
such other corporation of any Options then or thereafter outstanding under the
Plan. Notwithstanding the foregoing, such adjustment in outstanding Options,
shall be made without change in the total exercise price applicable to the
unexercised portion of the Options but with an appropriate adjustment to the
number of securities, kind of securities and exercise price for each of the
securities subject to the Options. The determination by the Option Committee as
to what adjustments, amendments or arrangements shall be made pursuant to
Section 5.2 of the Plan, and the extent thereof, shall be final and conclusive.
No fractional Shares shall be issued under the Plan on account of any such
adjustment or arrangement.
NONTRANSFERABILITY OF AWARDS
All Options granted under the Plan shall be nontransferable, either
voluntarily or by operation of law, otherwise than by will or the laws of
descent and distribution, and shall be exercisable during the Optionee's
lifetime only by such Optionee.
12
<PAGE>
AMENDMENT AND TERMINATION OF THE PLAN
Unless previously terminated by the Option Committee, the Plan shall
terminate on the tenth anniversary of the date the Plan is approved by the
shareholders. No Options shall be granted under the Plan thereafter.
OTHER BUSINESS
The Board of Directors of the Company knows no other matters to be
presented at the Special Meeting of Shareholders. However, if any other matters
properly come before the meeting, or any adjournment thereof, it is intended
that proxies in the accompanying form will be voted in accordance with the
judgment of the persons named therein.
COST OF SOLICITATION
Solicitation other than by mail may be made personally and by telephone
by regularly employed officers and employees of the Company who will not be
additionally compensated therefor. The Company will request brokers, dealers,
banks or voting trustees, or their nominees, who hold stock in their names for
others or hold stock for others who have the right to give voting instructions,
to forward proxy materials to their principals and request authority for the
execution of the proxy card and will reimburse such institutions for their
reasonable expenses in so doing. The total cost of soliciting proxies will be
borne by the Company.
It is important that your shares be represented at the meeting. If you
are unable to be present in person, you are respectfully requested to sign the
enclosed proxy and return it in the enclosed stamped and addressed envelope as
promptly as possible.
By Order of the Board of Directors
Lawrence E. Kaplan
President
Hauppauge, New York
February 5, 1999
13
<PAGE>
EXHIBIT A
CERTIFICATE OF AMENDMENT TO THE
COMPANY'S CERTIFICATE OF INCORPORATION
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION OF
PLAYORENA INC.
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW
The undersigned President of PLAYORENA INC. ("CORPORATION"), does
hereby certify and say:
1. The name of the corporation is PLAYORENA INC.
2. The Certificate of Incorporation was filed by the Department of
State of the State of New York on December 4, 1981.
3. Article FIRST of the Certificate of Incorporation, which sets forth
the name of the Corporation, is hereby amended to read as follows:
FIRST: The name of the corporation is SK Global
Technologies, Inc.
4. Article SECOND of the Certificate of Incorporation, which sets forth
the purposes for which the Corporation was formed, is hereby amended to read as
follows:
SECOND: The purpose of the corporation is to engage in any
lawful act or activity for which corporations may be organized
under the New York Business Corporation Law, other than any
act or activity requiring the consent or approval of any state
official, department, agency, board or other body without such
approval or consent first being obtained.
5. Article THIRD of the Certificate of Incorporation, which sets forth
the location of the Corporation's office in the State of New York, is hereby
amended to read as follows:
THIRD: The office of the corporation within the State of New
York shall be located in New York County.
1
<PAGE>
6. Article FOURTH of the Certificate of Incorporation, which sets forth
the aggregate number, class, and par value of the shares which the corporation
shall have the authority to issue, is hereby amended to increase the authorized
number of shares of common stock which the corporation shall have the authority
to issue and to authorize the issuance of a new class of preferred stock.
Article FOURTH, as amended hereby, shall read in its entirety as follows:
FOURTH: The aggregate number of shares which the corporation
shall have the authority to issue is Twenty-Five Million
(25,000,000) shares, of which Twenty Million (20,000,000)
shares shall be designated as Common Stock ("Common Stock")
and shall have a par value of $.001 per share, and of which
Five Million (5,000,000) shares shall be designated as
Preferred Stock ("Preferred Stock") and shall have a par value
of $.001 per share.
The Preferred Stock may be issued in one or more
series, from time to time, with each such series to have such
designation, relative rights, preferences or limitations, as
shall be stated and expressed in the resolution or resolutions
providing for the issue of such series adopted by the Board of
Directors of the Corporation, subject to the limitations
prescribed by law and in accordance with the provisions
hereof, the Board of Directors being hereby expressly vested
with authority to adopt any such resolution or resolutions.
The authority of the Board of Directors with respect to each
series of Preferred Stock shall include, but not be limited
to, the determination or fixing of the following:
i) The distinctive designation and number of
shares comprising such series, which number may (except where
otherwise provided by the Board of Directors in creating such
series) be increased or decreased (but not below the number of
shares then outstanding) from time to time by like action of
the Board of Directors;
ii) The dividend rate of such series, the
conditions and time upon which such dividends shall be
payable, the relation which such dividends shall bear to the
dividends payable on any other class or classes of stock or
series thereof, or any other series of the same class, and
whether such dividends shall be cumulative or non-cumulative;
iii) The conditions upon which the shares of such
series shall be subject to redemption by the Corporation and
the times, prices and other terms and provisions upon which
the shares of the series may be redeemed;
iv) Whether or not the shares of the series shall
be subject to the operation of a retirement or sinking fund to
be applied to the purchase or redemption of such shares and,
if such retirement or sinking fund be established, the annual
amount thereof and the terms and provisions relative to the
operation thereof;
2
<PAGE>
v) Whether or not the shares of the series shall
be convertible into or exchangeable for shares of any other
class or classes, with or without par value, or of any other
series of the same class, and, if provision is made for
conversion or exchange, the times, prices, rates, adjustments
and other terms and conditions of such conversion or exchange;
vi) Whether or not the shares of the series shall
have voting rights, in addition to the voting rights provided
by law, and, if so, the terms of such voting rights;
vii) The rights of the shares of the series in the
event of voluntary or involuntary liquidation, dissolution or
upon the distribution of assets of the Corporation;
viii) Any other powers, preferences and relative
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, of the
shares of such series, as the Board of Directors may deem
advisable and as shall not be inconsistent with the provisions
of this Certificate of Incorporation.
The holders of shares of the Preferred Stock of
each series shall be entitled to receive, when and as declared
by the Board of Directors, out of funds legally available for
the payment of dividends, dividends (if any) at the rates
fixed by the Board of Directors for such series before any
cash dividends shall be declared and paid or set apart for
payment, on the Common Stock with respect to the same dividend
period.
The holders of shares of the Preferred Stock of
each series shall be entitled, upon liquidation or dissolution
or upon the distribution of the assets of the Corporation, to
such preferences as provided in the resolution or resolutions
creating such series of Preferred Stock, and no more, before
any distribution of the assets of the Corporation shall be
made to the holders of shares of the Common Stock. Whenever
the holders of shares of the Preferred Stock shall have been
paid the full amounts to which they shall be entitled, the
holders of shares of the Common Stock shall be entitled to
share ratably in all remaining assets of the Corporation.
7. The stated capital of the corporation is reduced from
$______________ to $____________ by changing issued shares with par value into a
lesser number of shares with the same par value.
3
<PAGE>
8. This amendment provides for the following changes of shares:
Issued Shares. The amendment provides for a change in the
previously authorized and issued _____________ shares of
common stock, $.001 par value per share, into ________________
shares of common stock, $.001 par value per share, in the
ratio of .0106065 share for each share of common stock.
Unissued Shares. The amendment provides for a change in the
previously authorized and unissued ______________ shares of
common stock, $.001 par value per share, into ________________
shares of common stock, $.001 par value per share, in the
ratio of ______________ shares of common stock, $.001 par
value per share for each share of common stock.
9. Article FIFTH of the Certificate of Incorporation, which designates
the Secretary of State as agent for service of process and sets forth the
address to which the Secretary of State shall mail a copy of any process against
the corporation served upon him, is hereby amended to read as follows:
FIFTH: The Secretary of State is designated as agent of the
corporation upon whom process against it may be served. The
post office address to which the Secretary of State shall mail
a copy of any process against the corporation served upon him
is:
SK Global Technologies, Inc.
President
950 Yale Avenue
Wallingford, Connecticut 06492
10. The foregoing amendment to the Certificate of Incorporation was
authorized by the Board of Directors followed by approval by the holders of a
majority of all outstanding shares entitled to vote thereon at a meeting of
shareholders.
IN WITNESS WHEREOF, I have subscribed this certificate this ____ day of
January, 1999 and I hereby affirm the statements contained herein as true under
the penalties of perjury.
----------------------------
LAWRENCE KAPLAN, PRESIDENT
4
<PAGE>
EXHIBIT B
1998 STOCK OPTION PLAN
<PAGE>
SK GLOBAL TECHNOLOGIES, INC.
1998 STOCK OPTION PLAN
1. PURPOSE. The purpose of the SK Global Technologies, Inc. 1998
Stock Option Plan (the "Plan") is to provide to key employees,
officers, directors, consultants and agents of SK Global
Technologies, Inc. (the "Corporation"), or any of its
Subsidiaries, added incentive for high levels of performance
and unusual efforts to increase the earnings and long-term
growth of the Corporation. This is accomplished by providing
for the granting of "Incentive Stock Options" and
"Nonqualified Options" to qualified employees. In addition,
the Plan also provides for the granting of "Nonqualified
Options" to contract consultants and non-employee directors of
the Corporation, as consideration for their services.
2. CERTAIN DEFINITIONS. As used in this Plan, the following words
and phrases shall have the respective meanings set forth
below, unless the context clearly indicates a contrary
meaning:
2.1 "Board of Directors" shall mean the Board of
Directors of the Corporation.
2.2 "Cause" For purposes hereof, "cause" shall mean any one or
more of the following:
2.2.1 material breach of any term of employment,
consultation or engagement with the
Corporation or any Subsidiary by the
Optionee,
2.2.2 continuing, repeated willful failure or
refusal by the Optionee to substantially
perform his responsibilities on behalf of
the Corporation or any Subsidiary,
2.2.3 an act or omission of the Optionee that is
materially adverse to the business, goodwill
or reputation of the Corporation or any
Subsidiary,
2.2.4 an act of dishonesty,
2.2.5 commission of a felony or crime involving
moral turpitude,
2.2.6 material breach of fiduciary duty or fraud,
2.2.7 a determination by a physician licensed in
the State of New York that the Optionee is a
chronic alcoholic or a narcotics addict (as
such term is defined under the New York
Mental Hygiene Law, as amended, or
<PAGE>
2.2.8 any "cause" for termination or discharge as
may be otherwise defined in any employment
consultation or engagement agreement between
the Optionee and the Corporation or any
Subsidiary.
The determination of the Option Committee with
respect to whether a termination for Cause has
occurred shall be submitted to the Board of
Directors, whose decision shall be final and
conclusive.
2.3 "Change of Control" shall mean a change in control of
the Corporation, which shall be deemed to have
occurred upon the passage of (i) ten (10) days
following a public announcement that a person or
group of affiliated or associated persons have
acquired, or obtained the right to acquire,
beneficial ownership of fifteen (15%) percent or more
of the outstanding Shares; (ii) ten (10) days
following the commencement of, or announcement of an
intention to make a tender offer or exchange offer,
the consummation of which would result in the
beneficial ownership by a person or group of
affiliated or associated persons of fifteen (15%)
percent or more of such outstanding Shares; or (iii)
ten (10) days after a person or group of affiliated
or associated persons has (A) become the owner of at
least 10% of the Shares or has filed a Schedule 13D
or 13G with the Securities and Exchange Commission
and (B) whose ownership interest is deemed by the
Board of Directors to cause a material adverse impact
on the business or the prospects of the Corporation.
2.4 "Code" shall mean the Internal Revenue Code of 1986,
as amended.
2.5 "Disability" shall mean the inability to engage in
any substantial gainful activity by reason of any
medically determined 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, subject
to such other limitations and conditions imposed by
Code Section 22(e)(3).
2.6 "Effective Date" shall mean the date described in
Section 8.
2.7 "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
2
<PAGE>
2.8 "Fair Market Value Per Share" shall mean the fair
market value per share of the Shares as determined by
the Option Committee in good faith. The Option
Committee is authorized to make its determination as
to the fair market value of the Shares on the
following basis: (i) if the Shares are not traded on
a securities exchange and are not quoted on the
National Association of Securities Dealers, Inc.'s
Automated Quotation System ("NASDAQ"), but are quoted
on the Over The Counter Electronic Bulletin Board
operated by NASDAQ, "Fair Market Value Per Share"
shall be the mean between the average daily bid and
average daily asked prices of the Shares on the
Granting Date of an Option, as published on such
bulletin board; (ii) if the Shares are not traded on
a securities exchange and are quoted on NASDAQ, "Fair
Market Value Per Share" shall be the closing
transaction price of the Shares on the Granting Date
of an Option, as reported on NASDAQ; (iii) if the
Shares are admitted for trading on a securities
exchange, "Fair Market Value Per Share" shall be the
daily closing price of the Shares on the Granting
Date of an Option, on such securities exchange; or
(iv) if the Shares are traded only otherwise than as
described in (i), (ii) or (iii) above, or if the
Shares are not publicly traded, "Fair Market Value
Per Share" shall be the value determined by the
Option Committee in good faith based upon the fair
market value as determined by completely independent
and well qualified experts.
2.9 "Granting Date" shall mean the date on which the
Option is made effective by the Option Committee.
2.10 "Incentive Stock Option" shall mean an Option
intended to qualify for treatment as an incentive
stock option under Code Sections 421 and 422, and
designated as an Incentive Stock Option.
2.11 "Nonqualified Option" shall mean an Option not
qualifying as an Incentive Stock Option.
2.12 "Option" shall mean a stock option granted under the
Plan, which may be either an Incentive Stock Option
or a Nonqualified Option.
2.13 "Option Agreement" shall mean the document setting
forth the terms and conditions of each Option.
2.14 "Option Committee" shall mean the Option Committee
selected and designated by the Board of Directors,
consisting of not less than three (3) members of the
Board of Directors.
2.15 "Optionee" shall mean the holder of an Option.
2.16 "Retirement" shall have the meaning ascribed by the
Option Committee.
2.17 "Securities Act" shall mean the Securities Act of
1933, as amended.
2.18 "Shares" shall mean the shares of common stock, $0.01
par value per share of the Corporation.
2.19 "Subsidiary" shall mean any corporation within the
meaning of Code Section 424(f), or similar successor
section.
3
<PAGE>
2.20 "Ten Percent Shareholder" shall mean an individual
who, at the time an Option is granted, owns stock
possessing more than 10% of the total combined voting
power of all classes of stock of the Corporation, its
parent or its Subsidiaries.
3. ADMINISTRATION OF PLAN.
3.1 In General. This Plan shall be administered by the
Option Committee, subject to approval and
ratification by the Board of Directors. Any action of
the Option Committee with respect to administration
of the Plan shall be taken pursuant to (i) a majority
vote at a meeting of the Option Committee (to be
documented by minutes), or (ii) the unanimous written
consent of its members. The Option Committee may meet
in person, by telephone, or by any other means which
it deems to be advisable and convenient. All actions
taken by the Option Committee shall be submitted to
the Board of Directors for ratification and approval.
3.2 Authority. The Option Committee shall have the
authority, subject to the express provisions of this
Plan and subject always to the approval and
ratification by the Board of Directors, to: (i)
construe and interpret the Plan, decide all questions
and settle all controversies and disputes which may
arise in connection with the Plan and to define the
terms used therein; (ii) prescribe, amend and rescind
rules and regulations relating to administration of
the Plan; (iii) determine the purchase price of the
Shares covered by each Option granted hereunder and
the method of payment of such price, individuals to
whom, and the time or times at which, any Option
granted hereunder shall be granted and exercisable
and the number of Shares covered by each Option
granted hereunder; (iv) determine the terms and
provisions of the respective Option Agreements (which
need not be identical); (v) determine the duration
and purposes of leaves of absence which may be
granted to participants without constituting a
termination of their employment for purposes of the
Plan; and (vi) make all other determinations
necessary or advisable to the administration of the
Plan. Determinations of the Option Committee on
matters referred to in this Section 3.2 shall be
conclusive and binding on all parties howsoever
concerned. With respect to Incentive Stock Options,
the Option Committee shall administer the Plan in
compliance with the provisions of Code Section 422 as
the same may hereafter be amended from time to time.
No member of the Option Committee shall be liable for
any action, omission or determination in connection
with the Plan unless attributable to such member's
willful misconduct.
4
<PAGE>
4. ELIGIBILITY AND PARTICIPATION.
4.1 In General. Only officers, key employees and
directors who are also employees of the Corporation
or any Subsidiary shall be eligible to receive grants
of Incentive Stock Options. Officers, key employees,
contract consultants and all directors of the
Corporation or any Subsidiary shall be eligible to
receive grants of Nonqualified Options. Within the
foregoing limits, the Option Committee, from time to
time, shall determine and designate persons to whom
Options may be granted. All such designations shall
be made in the absolute discretion of the Option
Committee and shall not require the approval of the
stockholders, except as expressly set forth herein.
In determining (i) the number of Shares to be covered
by each of the Options granted hereunder (ii) the
purchase price for such Shares and the method of
payment of the purchase price (subject to the other
sections hereof), (iii) the individuals of the
eligible class to whom Options shall be granted, (iv)
the terms and provisions of the respective Option
Agreements and (v) the times at which such Options
shall be granted, the Option Committee shall take
into account such factors as it shall deem relevant
in connection with accomplishing the purpose of the
Plan as set forth in Section 1. An individual who has
been granted an Option may be granted additional
Options if the Option Committee shall so determine.
4.2 Certain Limitations. The Option Committee may not
grant an Optionee Incentive Stock Options to the
extent that the aggregate fair market value
(determined at the Granting Dates) of the Shares
subject to all Incentive Stock Options granted under
the Plan (or granted under any other incentive stock
option plans of the Corporation and its parent and
Subsidiaries) which are exercisable for the first
time by such Optionee during the same calendar year
exceeds One Hundred Thousand Dollars ($100,000).
5. AVAILABLE SHARES AND ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
5.1 Shares. Subject to adjustment as provided in Section
5.2 below, the total number of Shares to be subject
to Options, granted pursuant to this Plan shall not
exceed Seven Hundred Fifty Thousand (750,000) Shares.
Shares subject to the Plan may be either authorized
but unissued Shares or Shares that were once issued
and subsequently reacquired by the Corporation; the
Option Committee shall be empowered to take any
appropriate action required to make Shares available
for Options granted under this Plan. If any Options
are surrendered before exercise or lapse without
exercise in full or for any other reason cease to be
exercisable, the Shares reserved therefore shall
again be available under the Plan.
5
<PAGE>
5.2 Adjustments. As used herein, the term "Share
Adjustment" means an event pursuant to which the
outstanding Shares of the Corporation are increased,
decreased or changed into, or exchanged for a
different number or kind of securities, without
receipt of consideration by the Corporation, through
reorganization, merger, recapitalization,
reclassification, stock split, reverse stock split,
stock dividend, stock consolidation or otherwise.
Upon the occurrence of a Share Adjustment, (i)
appropriate and proportionate adjustments shall be
made to the number and kind of securities and
exercise price for the securities subject to the
Options which may thereafter be granted under the
Plan, (ii) appropriate and proportionate adjustments
shall be made to the number and kind of and exercise
price for the securities subject to the then
outstanding Options, and (iii) appropriate amendments
to the Option Agreements shall be executed by the
Corporation and the Optionees if the Option Committee
determines that such amendments are necessary or
desirable to reflect such adjustments. If determined
by the Option Committee to be appropriate, in the
event of a Share Adjustment which involves the
substitution of securities of a corporation other
than the Corporation, the Option Committee shall make
arrangements for the assumptions by such other
corporation of any Options then or thereafter
outstanding under the Plan. Notwithstanding the
foregoing, such adjustment in outstanding Options,
shall be made without change in the total exercise
price applicable to the unexercised portion of the
Options but with an appropriate adjustment to the
number of securities, kind of securities and exercise
price for each of the securities subject to the
Options. The determination by the Option Committee as
to what adjustments, amendments or arrangements shall
be made pursuant to this Section 5.2, and the extent
thereof, shall be final and conclusive. No fractional
Shares shall be issued under the Plan on account of
any such adjustment or arrangement.
6. TERMS AND CONDITIONS OF OPTIONS.
6.1 Intended Treatment as Incentive Stock Options.
Incentive Stock Options granted pursuant to this Plan
are intended to be "incentive stock options" to which
Code Sections 421 and 422 apply, and the Plan shall
be construed and administered to implement that
intent. If all or any part of an Incentive Stock
Option shall not be an "incentive stock option"
subject to Sections 421 or 422 of the Code, such
Option shall nevertheless be valid and carried into
effect.
6.2 Amount and Payment of Exercise Price.
6
<PAGE>
6.2.1 Exercise Price. The exercise price per Share
for each Share which the Optionee is
entitled to purchase under a Nonqualified
Option shall be determined by the Option
Committee. The exercise price per Share for
each Share which the Optionee is entitled to
purchase under an Incentive Stock Option
shall be determined by the Option Committee
but shall not be less than one hundred
percent (100%) of the Fair Market Value Per
Share on the Granting Date of the Incentive
Stock Option; except that an Incentive Stock
Option may not be granted to a Ten Percent
Shareholder unless the exercise price is not
less than one hundred ten percent (110%) of
the Fair Market Value Per Share on the
Granting Date of the Incentive Stock Option.
6.2.2 Payment of Exercise Price. The consideration
to be paid for the Shares to be issued upon
exercise of an Option, including the method
of payment, shall be determined by the
Option Committee and may consist of
promissory notes, other Shares or such other
consideration and method of payment for the
Shares as may be permitted under applicable
federal and state laws.
6.3 Exercise of Options.
6.3.1 Period of Exercise. Each Option granted
under the Plan shall be exercisable at such
times and under such conditions as may be
determined by the Option Committee at the
Granting Date and as shall be permissible
under the terms of the Plan; provided,
however, in no event shall an Option be
exercisable after the expiration of ten (10)
years from its Granting Date, and in the
case of a Ten Percent Shareholder, such
Incentive Stock Option shall not be
exercisable later than five (5) years after
its Granting Date.
6.3.2 Minimum Exercise; No Fractional Shares. An
Optionee may purchase less than the total
number of Shares for which the Option is
exercisable, provided that a partial
exercise of an Option may not be for less
than one hundred (100) Shares and shall not
include any fractional shares.
6.3.3 Change of Control. Unless otherwise provided
in any Option Agreement, all Options granted
pursuant to any Option Agreement shall
become exercisable with respect to all
Shares subject thereto, upon a Change of
Control.
6.4 Effect of Termination of Employment or Other
Relationship. The effect of termination of an
Optionee's employment or other relationship with the
Corporation on such Optionee's rights to acquire
Shares shall be as follows:
7
<PAGE>
6.4.1 Termination for Other than Disability,
Cause, Retirement, Death or Without Cause.
If an Optionee ceases to be employed by, or
ceases to have a relationship with, the
Corporation for any reason other than for
Disability, Cause, Retirement, death or
termination without cause, such Optionee's
Options shall expire not later than three
(3) months thereafter. During such three (3)
month period and prior to the expiration of
the Option by its terms, the Optionee may
exercise any Option granted to him or her,
but only to the extent such Options were
exercisable on the date of termination of
his or her employment or relationship and
except as so exercised, such Options shall
expire at the end of such three (3) month
period unless such Options by their terms
expire before such date. The decision as to
whether a termination for a reason other
than Disability, Cause, Retirement or death
has occurred shall be made by the Option
Committee, whose decision shall be final and
conclusive, except that employment shall not
be considered terminated in the case of sick
leave or other bona fide leave of absence
approved by the Corporation.
6.4.2 Termination for Disability or Death. If an
Optionee ceases to be employed by, or ceases
to have a relationship with, the Corporation
by reason of Disability or death, such
Optionee's Options shall become fully vested
and exercisable and shall expire not later
than one (1) year thereafter. During such
one (1) year period and prior to the
expiration of the Option by its terms, the
Optionee, or his or her executor or
administrator or the person or persons to
whom the Option is transferred by will or
the applicable laws of descent and
distribution, may exercise any Option
granted to him or her, and except as so
exercised, such Options shall expire at the
end of such one (1) year period unless such
Options by their terms expire before such
date. The decision as to whether a
termination by reason of Disability has
occurred shall be made by the Option
Committee, whose decision shall be final and
conclusive.
8
<PAGE>
6.4.3 Retirement of an Optionee. If the Optionee
ceases to be employed by, or ceases to have
a relationship with the Corporation by
reason of Retirement, such Optionee's
Options shall become fully vested and
exercisable and shall expire not later than
three (3) months thereafter, in the case of
an Incentive Stock Option and one (1) year
thereafter in the case of a Nonqualified
Option. During such period and prior to the
expiration of the Options by their terms,
such Options may be exercised by the
Optionee, and except as so exercised, such
Options shall expire at the end of such
relevant period unless such Options by their
terms expire before such date. The decision
as to whether a termination by reason of
Retirement has occurred shall be made by the
Option Committee, whose decision shall be
final and conclusive.
6.4.4 Voluntary Termination of Employment or
Termination for Cause. If an Optionee's
employment by, or relationship with, the
Corporation is terminated voluntarily or for
Cause, such Optionee's Options shall expire
immediately; provided, however, the Option
Committee may, in its sole discretion,
within thirty (30) days of such termination,
waive the expiration of any Option by giving
written notice of such waiver to the
Optionee at such Optionee's last known
address. In the event of such waiver, the
Optionee may exercise any such Options only
to such extent, for such time, and upon such
terms and conditions as if such Optionee had
ceased to be employed by, or ceased to have
a relationship with, the Corporation upon
the date of such termination for a reason
other than Disability, Cause, Retirement,
death or termination without cause. The
decision as to whether a termination by
reason of voluntary termination or Cause has
occurred shall be made by the Option
Committee, whose decision shall be final and
conclusive.
6.5 Withholding of Taxes. As a condition to the exercise,
in whole or in part, of any Options, the Option
Committee may in its sole discretion require the
Optionee to pay, in addition to the purchase price of
the Shares covered by the Options an amount equal to
any Federal, state or local taxes that may be
required to be withheld in connection with the
exercise of such Options. Alternatively, the
Corporation may issue or transfer the Shares pursuant
to exercise of the Options net of the number of
Shares sufficient to satisfy the withholding tax
requirements. For withholding tax purposes, the
Shares shall be valued on the date the withholding
obligation is incurred. In the event an Optionee
makes a Code Section 83(b) election in connection
with this Plan, the Optionee shall immediately notify
the Corporation of such election. In the case of an
Incentive Stock Option, an Optionee who disposes of
Shares acquired pursuant to such Incentive Stock
Option either (a) within two (2) years after the
Granting Date of the Incentive Stock Option or (b)
within one (1) year after the issuance of such Shares
to the Optionee, shall notify the Corporation of such
disposition and the amount realized upon such
disposition.
9
<PAGE>
6.6 No Rights to Continued Employment or Relationship.
Nothing contained in the Plan or in any Option
Agreement shall obligate the Corporation to employ or
have another relationship with any Optionee for any
period or interfere in any way with the right of the
Corporation to reduce such Optionee's compensation or
to terminate the employment of or relationship with
any Optionee at any time.
6.7 Time of Granting Options. The Granting Date shall be
the day the Corporation executes the Option
Agreement; provided, however, that if appropriate
resolutions of the Option Committee indicate that an
Option is to be granted as of and on some prior or
future date, the Granting Date shall be such prior or
future date.
6.8 Privileges of Stock Ownership. No Optionee shall be
entitled to the privileges of stock ownership as to
any Shares not actually issued and delivered to such
Optionee. No Shares shall be purchased upon the
exercise of any Option unless and until, in the
opinion of the Corporation's counsel, any then
applicable requirements of any laws or governmental
or regulatory agencies having jurisdiction and of any
exchanges upon which stock of the Corporation may be
listed shall have been fully complied with.
6.9 Securities Laws Compliance. The Corporation will
diligently comply with all applicable securities laws
before any Options are granted under the Plan and
before any Shares are issued pursuant to Options.
Without limiting the generality of the foregoing, the
Corporation may require from the Optionee such
investment representation or such agreement, if any,
as counsel for the Corporation may consider necessary
or advisable in order to comply with the Securities
Act as then in effect, and may require that the
Optionee agree that any sale of the Shares will be
made only in such manner as is permitted by the
Option Committee. The Option Committee in its
discretion may cause the Options and Shares
underlying the Options to be registered under the
Securities Act by the filing of a Form S-8
Registration Statement covering the Options and
Shares underlying such Options. The Optionee shall
take any action reasonably requested by the
Corporation in connection with registration or
qualification of the Shares under Federal and state
securities laws.
6.10 Option Agreement.Each Incentive Stock Option and
Nonqualified Option granted under this Plan shall be
evidenced by the appropriate written Option Agreement
executed by the Corporation and the Optionee
containing each of the provisions and agreements
specifically required to be contained therein
pursuant to this Section 6, and such other terms and
conditions as are deemed desirable by the Option
Committee and are not inconsistent with the purpose
of the Plan as set forth in Section 1.
10
<PAGE>
7. PLAN AMENDMENT AND TERMINATION.
7.1 Authority of Option Committee. The Option Committee
may at any time discontinue granting Options, under
the Plan or otherwise suspend, amend or terminate the
Plan and may, with the consent of an Optionee, make
such modification of the terms and conditions of such
Option as it shall deem advisable. An amendment or
modification made pursuant to the provisions of this
Section shall be deemed adopted as of the date of the
action of the Option Committee effecting such
amendment or modification and shall be effective
immediately, unless otherwise provided therein,
subject to approval thereof (i) within twelve (12)
months before or after the effective date of such
amendment or modification by stockholders of the
Corporation holding not less than a majority vote of
the voting power of the Corporation voting in person
or by proxy at a duly held stockholder's meeting when
required to maintain or satisfy the requirements of
Code Section 422 with respect to Incentive Stock
Options, or Code Section 162(m) with respect to
performance-based compensation, (ii) by any
appropriate governmental agency if required, or (iii)
by a securities exchange or automated quotation
system if required. No Option may be granted during
any suspension or after termination of the Plan.
7.2 Ten (10) Year Maximum Term. Unless previously
terminated by the Option Committee, this Plan shall
terminate on the tenth (10th) anniversary of the
Effective Date. No Options shall be granted under the
Plan thereafter.
7.3 Effect on Outstanding Rights. Amendment, suspension
or termination of the Plan shall not, without the
consent of the Optionee, alter or impair any rights
or obligations under any Option theretofore granted.
8. EFFECTIVE DATE OF PLAN. The Plan shall be effective upon
approval by a majority of the outstanding shares of capital
stock of the Corporation entitled to vote thereon (the
"Effective Date").
9. MISCELLANEOUS PROVISIONS.
9.1 Nontransferability. All Options granted under the
Plan shall be nontransferable, either voluntarily or
by operation of law, otherwise than by will or the
laws of descent and distribution, and shall be
exercisable during the Optionee's lifetime only by
such Optionee.
9.2 Limitation on Benefits. No Option may be exercised,
to the extent such exercise will create an "excess
parachute payment" as defined in Section 28OG of the
Code.
11
<PAGE>
9.3 Exculpation and Indemnification. The Corporation
shall indemnify and hold harmless the Option
Committee from and against any and all liabilities,
costs and expenses incurred by such persons as a
result of any act, or omission to act, in connection
with the performance of such persons' duties,
responsibilities and obligations under the Plan,
other than such liabilities, costs and expenses as
may result from gross negligence, bad faith, willful
conduct and/or criminal acts of such persons.
9.4 Governing Law. The Plan shall be governed and
construed in accordance with the laws of the State of
New York and the Code.
9.5 Compliance with Applicable Laws. The inability of the
Corporation to obtain from any regulatory body having
jurisdiction the authority deemed by the
Corporation's counsel to be necessary to the lawful
issuance and sale of any Shares upon the exercise of
an Option shall relieve the Corporation of any
liability in respect of the non-issuance or sale of
such Shares as to which requisite authority shall not
have been obtained.
9.6 Non-Uniform Determinations. The Option Committee's
determinations under the Plan (including without
limitation determinations of the persons to receive
Options, the form, amount and timing of such Options,
the terms and provisions of such Options and the
Option Agreements evidencing same) need not be
uniform and may be made by it selectively among
persons who receive, or are eligible to receive,
Options under the Plan, whether or not such persons
are similarly situated.
12
<PAGE>
PLAYORENA INC.
PROXY - SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 17, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Lawrence Kaplan and Robert Rubin as
Proxies, each with the power to appoint and substitute, and hereby authorizes
them to represent and to vote, as designated below, all of the shares of Common
Stock, $.001 per value per share, of Playorena Inc. held of record by the
undersigned on January 19, 1999, at the Special Meeting of Shareholders to be
held on February 17, 1999 or any adjournment thereof.
1. Authorization of an amendment to the Company's Certificate of
Incorporation, as described in the accompanying Proxy
Statement.
/ / / / / /
FOR AGAINST ABSTAIN
2. Adoption of the Company's 1998 Stock Option Plan
/ / / / / /
FOR AGAINST ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
This proxy statement is solicited on behalf of the Board of Directors.
This proxy when properly executed will be voted in the manner directed on the
face hereof. If no direction is made, this proxy will be voted (i) FOR the
amendment to the Company's Certificate of Incorporation and (ii) FOR the
adoption of the Company's 1998 Stock Option Plan.
<PAGE>
Please date, sign and return the proxy card promptly in the
accompanying envelope. No postage is required. If you furnish a proxy and
subsequently attend the Special Meeting in person, you may vote in person.
Signature of Shareholder
Signature of Shareholder
Dated: , 1999
NOTE: PLEASE SIGN EXACTLY AS THE NAME APPEARS HEREON. WHEN SHARES ARE HELD BY
JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS AN ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE FURNISH FULL TITLE AS SUCH.
IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY THE PRESIDENT
OR OTHER AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED PERSON.
