Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ___)
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|_| Preliminary proxy statement
|X| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FOCUS Enhancements, Inc.
------------------------
(Name of Registrant as Specified in its Charter)
FOCUS Enhancements, Inc.
------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
|_| $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
|_| $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------
|_| 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:
-----------------------------------------------------
FOCUS ENHANCEMENTS, INC.
142 NORTH ROAD
SUDBURY, MASSACHUSETTS 01776
(508) 371-2000
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------
TO THE STOCKHOLDERS:
An Annual Meeting of Stockholders of FOCUS Enhancements, Inc., a Delaware
corporation, will be held on Friday, July 25, 1997, at 9:00 a.m., at the
Burlington Marriott, Burlington, Massachusetts, for the following purposes:
1. To elect two Class III directors to serve for a three-year term.
2. To approve an amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of the Company's Common Stock
from 20,000,000 to 25,000,000.
3. To consider and act upon a proposal to ratify the selection of the
firm of Wolf & Company, P.C. as independent auditors for the
fiscal year ending December 31, 1997.
4. To transact such other business as may properly come before the
meeting and any adjournments thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on May 30, 1997 are
entitled to notice of and to vote at the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, to assure your representation at the Annual Meeting, you are
urged to mark, sign, date and return the enclosed proxy card as promptly as
possible in the postage-prepaid envelope enclosed for that purpose. Any
stockholder attending the Annual Meeting may vote in person even if he or she
has returned a proxy.
By Order of the Board of Directors,
/s/ THOMAS L. MASSIE
THOMAS L. MASSIE
Chairman of the Board and
Chief Executive Officer
June 20, 1997
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN THE ENCLOSED PROXY CARD AND
RETURN IT PROMPTLY IN THE ENCLOSED STAMPED ENVELOPE BY RETURN MAIL.
FOCUS ENHANCEMENTS, INC.
142 NORTH ROAD
SUDBURY, MASSACHUSETTS 01776
(508) 371-2000
--------------
PROXY STATEMENT
--------------
JUNE 20, 1997
Proxies in the form enclosed with this proxy statement are solicited by the
Board of Directors of FOCUS Enhancements, Inc. (the "Company") for use at the
Annual Meeting of Stockholders (the "Meeting") to be held on Friday, July 25,
1997, at 9:00 a.m., at the Burlington Marriott, Burlington, Massachusetts.
Only stockholders of record as of May 30, 1997 will be entitled to vote at
the Meeting and any adjournments thereof. As of that date, 12,721,633 shares of
Common Stock, $.01 par value, of the Company were issued and outstanding. The
holders of Common Stock are entitled to one vote per share on any proposal
presented at the Meeting. Stockholders may vote in person or by proxy.
Execution of a proxy will not in any way affect a stockholder's right to
attend the Meeting and vote in person. Any stockholder giving a proxy has the
right to revoke it by notice to the Secretary of the Company at any time before
it is exercised.
The persons named as attorneys in the proxies are directors and officers of
the Company. All properly executed proxies returned in time to be counted at the
Meeting will be voted and, with respect to the election of the Board of
Directors, will be voted as stated below under "Election of Directors." Any
stockholder submitting a proxy has the right to withhold authority to vote for
any individual nominee to the Board of Directors by writing that nominee's name
on the space provided on the proxy. In addition to the election of Directors,
the stockholders will consider and vote upon proposals (i) ) to approve the
amendment to the Company's Certificate of Incorporation to increase the number
of authorized shares of the Company's Common Stock from 20,000,000 to 25,000,000
shares; and (ii) to ratify the selection of Wolf & Company, P.C. as auditors, as
further described in this proxy statement. Where a choice has been specified on
the proxy with respect to the foregoing matters, the shares represented by the
proxy will be voted in accordance with the specification and will be voted FOR
if no specification is made.
The representation in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote at the Meeting is necessary
to establish a quorum for the transaction of business. Votes withheld from any
nominee, abstentions and broker non-votes are counted as present or represented
for purposes of determining the presence or absence of a quorum. A "non-vote"
occurs when a broker holding shares for a beneficial owner votes on one
proposal, but does not vote on another proposal because the broker does not have
discretionary voting power and has not received instructions from the beneficial
owner. Directors are elected by a plurality of the votes cast by stockholders
entitled to vote at the Meeting. All other matters being submitted to
stockholders require the affirmative vote of the majority of shares present in
person or represented by proxy at the Meeting. An automated system administered
by the Company's transfer agent tabulates the votes. The vote on each matter
submitted to stockholders is tabulated separately. Abstentions are included in
the number of shares present or represented and voting on each matter.
The Board of Directors knows of no other matter to be presented at the
Meeting. If any other matter should be presented at the meeting upon which a
vote properly may be taken, shares represented by all proxies received by the
Company will be voted with respect thereto in accordance with the judgment of
the persons named as attorneys in the proxies.
The Company's Annual Report on Form 10-KSB, containing financial statements
for the fiscal year ended December 31, 1996, is being mailed contemporaneously
with this proxy statement to all stockholders entitled to vote. This proxy
statement and the form of proxy were first mailed to stockholders on or about
the date above.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock on May 30, 1997 by (i) each
person known to the Company who beneficially owns 5% or more of the 12,721,633
outstanding shares of its Common Stock, (ii) each director of the Company, (iii)
each executive officer identified in the Summary Compensation Tables below, and
(iv) all directors and executive officers of the Company as a group. Unless
otherwise indicated below, to the knowledge of the Company, all persons listed
below have sole voting and investment power with respect to their shares of
Common Stock, except to the extent authority is shared by spouses under
applicable law.
<TABLE>
<CAPTION>
AMOUNT OF BENEFICIAL OWNERSHIP
------------------------------
NAME AND ADDRESS NUMBER
OF BENEFICIAL OWNER OF SHARES PERCENT(1)
------------------- --------- ----------
<S> <C> <C>
Thomas L. Massie(2) ........................................ 686,315 5.29
U. Haskell Crocker II(3) ................................... 184,595 1.44
John C. Cavalier(4) ........................................ 119,204 *
William B. Coldrick(5) ..................................... 326,809 2.51
J. Daniel Shaver(6) ........................................ 50,000 *
Timothy E. Mahoney (7) ..................................... 0 *
Pierre J. Esneau(8) ........................................ 26,667 *
All officers and directors as a group (10 persons)(9) ...... 1,463,232 10.25
</TABLE>
- -----------
* Less than 1% of the outstanding Common Stock.
(1) Unless otherwise indicated, each person possesses sole voting and investment
power with respect to the shares.
(2) Includes 72,821 shares of Common Stock held by Mr. Massie's wife and
children. Also includes 250,000 shares issuable pursuant to stock options
exercisable at May 30, 1997 or within 60 days thereafter but excludes
500,000 shares issuable pursuant to outstanding stock options that are not
currently exercisable.
(3) Includes 58,410 shares of Common Stock held directly by Mr. Crocker. Also
includes 13,419 shares issuable pursuant to immediately exercisable warrants
to purchase Common Stock and 112,766 shares issuable pursuant to stock
options held directly by Mr. Crocker exercisable at May 30, 1997 or within
60 days thereafter, but excludes 125,000 shares of Common Stock issuable
pursuant to outstanding stock options that are not currently exercisable.
(4) Includes 6,438 shares of Common Stock held in trust with Mr. Cavalier's
wife. Also includes 112,766 shares issuable pursuant to stock options
exercisable at May 30, 1997, or within 60 days thereafter. Excludes 125,000
shares issuable pursuant to outstanding stock options that are not currently
exercisable.
(5) Includes 41,450 shares of Common Stock held jointly with Mr. Coldrick's
wife. Also includes 5,000 shares issuable pursuant to immediately
exercisable warrants, and 280,359 shares of Common Stock issuable pursuant
to outstanding stock options exercisable at May 30, 1997, or within 60 days
thereafter. Excludes 100,000 shares of Common Stock issuable pursuant to
outstanding stock options that are not currently exercisable.
(6) Represents 50,000 shares issuable pursuant to stock options currently
exercisable. Does not include 150,000 shares of Common Stock issuable
pursuant to outstanding stock options that are not exercisable at May 30,
1997, or within 60 days thereafter.
2
(7) Does not include 100,000 shares of Common Stock issuable pursuant to
outstanding stock options that are not exercisable at May 30, 1997, or
within 60 days thereafter.
(8) Represents 26,667 shares issuable pursuant to stock options currently
exercisable. Does not include 33,333 shares of Common Stock issuable
pursuant to stock options that are not exercisable at May 30, 1997, or
within 60 days thereafter.
(9) Includes 612,255 shares of Common Stock. Also includes 850,977 shares
issuable pursuant to options and warrants to purchase Common Stock
exercisable at May 30, 1997, or within 60 days thereafter.
ELECTION OF DIRECTORS
In accordance with the Company's Second Restated Certificate of
Incorporation, the Company's Board of Directors is divided into three classes.
Two Class I Directors, Messrs. Massie and Cavalier, were elected at the Annual
Meeting of Stockholders on July 15, 1996 for a term ending on the date of the
Annual Meeting of Stockholders to be held in 1999. One of the Class II
directors, Mr. Coldrick, was elected at the Annual Meeting of Stockholders on
August 18, 1995, and the other Class II director, Mr. Mahoney, was elected by
the Board of Directors at a meeting held on March 19, 1997. Each of Messrs.
Coldrick and Mahoney will serve for a term ending on the date of the Annual
Meeting of Stockholders to be held in 1998. One of the Class III directors, Mr.
Crocker, was elected at the Annual Meeting of Stockholders held on June 24,
1994, and the other Class III director, Mr. Shaver, was elected by the Board of
Directors at a meeting held on March 1, 1996. Each of Messrs. Crocker and Shaver
were elected for a term ending on the date of the Annual Meeting of Stockholders
being held in 1997. Each of Messrs. Crocker and Shaver are seeking re-election
at the Meeting for a term of three years.
The Class III Director nominees, U. Haskell Crocker, II and J. Daniel
Shaver, are currently serving as directors. Shares represented by all proxies
received by the Board of Directors and not so marked to withhold authority to
vote for any individual nominee will be voted (unless one or both nominees are
unable or unwilling to serve) FOR the election of both nominees. The Board of
Directors knows of no reason why any such nominees should be unable or unwilling
to serve, but if such should be the case, proxies may be voted for the election
of some other person or for fixing the number of directors at a lesser number.
The following table sets forth for each nominee to be elected at the Meeting
and for each director whose term of office will extend beyond the Meeting, the
year each such nominee or director was first elected a director, the positions
currently held by each nominee or director with the Company, the year each
nominee's or director's term will expire and the class of director of each
nominee or director.
<TABLE>
<CAPTION>
NOMINEE'S OR DIRECTOR'S NAME
AND YEAR NOMINEE OR YEAR TERM CLASS OF
DIRECTOR FIRST BECAME DIRECTOR POSITION(S) HELD WILL EXPIRE DIRECTOR
------------------------------ ---------------- ----------- --------
<S> <C> <C> <C>
Thomas L. Massie ............... Chairman of the Board, 1999 I
1991 President and Chief
Executive Officer
John C. Cavalier ............... Director 1999 I
1992
William B. Coldrick ............ Director 1998 II
1993
Timothy E. Mahoney ............. Director 1998 II
1997
U. Haskell Crocker II ........... Director 1997 III
1992
J. Daniel Shaver ............... Director 1997 III
1996
</TABLE>
3
OCCUPATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the Class III nominees to be elected at the
Meeting, the current directors who will continue to serve as directors beyond
the Meeting, and the executive officers of the Company, their ages, and the
positions currently held by each such person with the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Thomas L. Massie 35 Chairman of the Board, and Chief Executive Officer
William B. Coldrick(2) 55 Vice Chairman of the Board
Brett A. Moyer 39 President and Chief Operating Officer
Harry G. Mitchell 46 Sr. Vice President, Chief Financial Officer and
Treasurer
Steve R. Morton 49 Vice President of Engineering and Chief
Technical Officer
John C. Cavalier(1) 57 Director
U. Haskell Crocker II(2) 34 Director
Timothy E. Mahoney 41 Director
J. Daniel Shaver(1) 55 Director
</TABLE>
- ----------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
DIRECTORS TO BE ELECTED AT THE MEETING
U. HASKELL CROCKER II has served as a Director of the Company since May
1992. Mr. Crocker is currently a Director of Venture Investment Management
Company LLC ("VIMAC LLC"), a full-service professional investment firm. From
January 1991 through February 1993, Mr. Crocker was an Investment Manager for
Venture Investment Management Company, a predecessor of VIMAC LLC. Prior to
joining Venture Investment Management Company, Mr. Crocker was founder and Chief
Executive Officer of The Aftermarket Inc., a business in the automotive
electronics market. Mr. Crocker attended Northeastern University.
J. DANIEL SHAVER has served as a Director of the Company since March 1996.
Mr. Shaver is currently the Vice President of Indirect Channel Development at
Unisys Corporation where he is responsible for developing channel strategy and
implementation for the Unisys product lines. He was previously President, Chief
Operating Officer and a Director of Minerva Systems, Inc., a privately-held
supplier of digital video processing and encoding systems. From May 1993 to
October 1995, Mr. Shaver was Vice President, Worldwide Sales and Marketing for
Radius, Inc., a publicly-held developer and marketer of graphics products. Prior
thereto, he was Vice President, Worldwide Sales and Marketing for Axel
Workstations, a division of Hyundai America. From 1982 to 1990, Mr. Shaver
served in various positions with Apple Computer, with his last position being
Vice President, Channel Strategy and Reseller Development. Mr. Shaver has also
held positions with IBM Corporation, Sun Microsystems, Inc. and Microage, Inc.
Mr. Shaver received a Bachelor of Science degree in Economics from Dickinson
College.
DIRECTORS WHOSE TERMS EXTEND BEYOND THE MEETING
THOMAS L. MASSIE is Chairman of the Board, Chief Executive Officer, and
until May 1997 was the President of the Company. Mr. Massie is also a co-founder
of the Company. From 1990 to January 1992, Mr. Massie was the Senior Vice
President of Articulate Systems, responsible for worldwide sales, marketing and
operations. Articulate Systems is a developer and manufacturer of voice control
and communications products for the PC marketplace. From
4
February 1986 to 1990, Mr. Massie was the Chairman of the Board, Executive Vice
President and founder of MASS Microsystems. MASS Microsystems is a publicly-held
developer of multimedia hardware products and high-end removal storage
subsystems for the Apple Macintosh marketplace.
JOHN C. CAVALIER has served as a Director of the Company since May 1992. He
has more than 29 years of business management experience. Since November 1996,
Mr. Cavalier has been President, CEO and a Director of MapInfo Corporation, a
software developer. Prior thereto, Mr. Cavalier joined Amdahl Company in early
1993 as Vice President and General Manager of Huron, Amdahl's software business.
In July of 1993, he was also appointed President and CEO of Antares Alliance
Group, a joint venture between Amdahl and EDS. From July 1990 to July 1992, he
was President, Chief Executive Officer and a director of Bimillenium Company, a
software development company. Bimillenium is a developer of scientific software
for the Macintosh and UNIX marketplace. From April 1987 to January 1992, Mr.
Cavalier was a Director of MASS Microsystems. He was President, Chief Executive
Officer and a director of ShareBase Company, a database systems company, from
November 1987 to June 1990. He earned his undergraduate degree from the
University of Notre Dame and an MBA from Michigan State University.
WILLIAM B. COLDRICK has served as a Director of the Company since January
1993, Vice Chairman of the Company since July 1994 and as Executive Vice
President of the Company from July 1994 to May 1995. Mr. Coldrick is currently a
principal of Enterprise Development Partners, a consulting firm serving emerging
growth companies that he founded in April 1997. From July 1996 to April 1997,
Mr. Coldrick was Vice President and General Manager of Worldwide Channel
Operations for the Computer Systems Division of Unisys Corp. In March 1991, Mr.
Coldrick retired as Senior Vice President, U.S. Sales, for Apple Computer, Inc.,
which he joined in 1982. As Senior Vice President, U.S. Sales, for Apple
Computer, Mr. Coldrick was responsible for leading all sales, support, service,
distribution and channel activities for Apple throughout the United States.
Previously at Apple, Mr. Coldrick held the position of Vice President and
General Manager for Western Operations, and was responsible for overseeing
sales, marketing, service and support for Apple's largest business unit in the
field organization. In a prior position as National Sales Director, U.S. Sales,
Mr. Coldrick directed the expansion of the U.S. field sales force. Mr. Coldrick
also held the position of Area Sales Director of the Northeast Area. Before
joining Apple, Mr. Coldrick spent 14 years with Honeywell Information Systems,
where he held a number of positions including Regional Marketing Director. Mr.
Coldrick holds a Bachelor of Science degree in Marketing from Iona College in
New Rochelle, New York.
TIMOTHY E. MAHONEY has served as Director of the Company since March 1997.
He has more than 18 years of experience in the computing industry. Mr. Mahoney
founded Union Atlantic L.C., in 1994, a merchant bank providing professional
management and capital for emerging technology companies. Since 1996, Mr.
Mahoney has served as Chairman of Tallard Technologies BV, a PC products
distributor / value added reseller serving Latin America. From 1991 to 1994 he
was President of SyQuest Technology, SyDos Division, responsible for expanding
distribution channels for SyQuest's hard disk drive products. From 1986 to 1991,
Mr. Mahoney was President of Rodine Systems, Inc., a provider of Macintosh mass
storage peripherals. He earned his BA degree in computer science and business
from West Virginia University and an MBA degree from George Washington
University.
EXECUTIVE OFFICERS
BRETT A. MOYER joined the Company as President and Chief Operating Officer
in May 1997. Mr. Moyer brings over 10 years of global sales, finance and general
management experience from Zenith Electronics Corporation, where he was most
recently the Vice President and General Manager of Zenith's Commerical Products
Division. Mr. Moyer has also served as Vice President of Sales Planning and
Operations at Zenith where he was responsible for forecasting, customer service,
distribution, MIS, and regional credit operations. Mr. Moyer has Bachelor of
Arts in Economics from Beloit College in Wisconsin and a Masters of
International Management with a concentration in finance and accounting from The
American Graduate School of International Management (Thunderbird).
5
HARRY G. MITCHELL joined the Company as Sr. Vice President, Chief Financial
Officer and Treasurer in February 1997. Mr. Mitchell, has over twenty-five years
of experience in senior level management positions for multi-million dollar
public and private companies and, International Public Accounting Firms. Prior
to joining the Company and for the period January 1996 to February 1997, he
served as Chief Operating Officer, Chief Financial Officer and Director of Cape
Cod Cranberry Cookie Company, Inc., a food distribution company. Currently, Mr.
Mitchell is a Director and stockholder of Cape Cod Cranberry Cookie Company,
Inc. From January 1994 to December 1995, Mr. Mitchell provided financial and SEC
consulting services to numerous companies ranging from Fortune 1000 public
companies to emerging technology organizations. From January 1992 to December
1993, he was Chief Financial Officer of AM Technology, Inc., a privately held PC
Board manufacturer. Mr. Mitchell has a BS in Business Administration from
Northeastern University and is a member of the American Institute of Certified
Public Accountants and the Massachusetts Society of Certified Public
Accountants.
STEVE R. MORTON joined the Company as Vice President of Engineering and
Chief Technical Officer in September 1996 as a result of the acquisition of
TView, Inc. Mr. Morton was a co-founder of TView, Inc., where he served as
Executive Vice President. He also is a co-developer of the proprietary video
processing technology used in the Company's PC to TV products acquired by the
Company in connection with the acquistion of TView. Prior to founding TView,
Inc. in 1992, Mr. Morton spent 22 years at Tektronix Inc., where he served as
the general manager of the Digital Signal Processing Group and Engineering
Manager for the Spectrum Analyzer division. Mr. Morton holds a BSEE from Oregon
State University and an MSEE from the University of Portland.
BOARD MEETINGS AND COMMITTEES
The Board of Directors met three times during the fiscal year ended
December 31, 1996. None of the Directors attended fewer than 75% of the meetings
held during the period. The Board of Directors also took action by unanimous
written consent in lieu of a meeting on 13 occasions during 1996. The
Compensation Committee of the Board, of which Mr. Cavalier and Mr. Shaver are
members, sets the compensation of the Chief Executive Officer, reviews and
approves the compensation arrangements for all other officers of the Company and
administers the Company's 1992 Plan. The Compensation Committee met on three
occasions during the fiscal year ended December 31, 1996 and took action by
unanimous written consent in lieu of a meeting on one occasion during this
period. The Audit Committee of the Board, of which Mr. Crocker and Mr. Coldrick
are members, reviews all financial functions of the Company, including matters
relating to the appointment and activities of the Company's auditors. The Audit
Committee met once during the fiscal year ended December 31, 1996. The Board of
Directors does not currently have a standing nominating committee.
6
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
annual and long-term compensation for services in all capacities to the Company
for the fiscal years ended December 31, 1996, 1995, and 1994, of those persons
who were, at December 31, 1996, (i) the Company's Chief Executive Officer and
(ii) other executive officers of the Company receiving total cash and bonus
compensation in excess of $100,000 (the "Named Officers"). The Company did not
grant any restricted stock awards or stock appreciation rights or make any long
term incentive plan payouts to the individuals named in the tables below during
the fiscal year indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
FISCAL SALARY BONUS OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR ($) ($) COMPENSATION($)(2) OPTIONS/SAR(4)
--------------------------- ---- --- --- ------------------ --------------
<S> <C> <C> <C> <C> <C>
Thomas L. Massie ....................... 1996 $150,000 -- -- --
CEO and Chairman of the Board 1995 $129,166 $50,000 $11,538(3) 250,000(5)
1994 $131,243 -- $10,385(3) --
Pierre J. Esneau ....................... 1996 $102,000 -- -- 80,000(6)
Managing Director 1995 -- -- -- --
FOCUS Enhancements b.v. 1994 -- -- -- --
</TABLE>
- -------------
(1) Includes salary and bonus payments earned by the Named Officers in the year
indicated, for services rendered in such year, which were paid in the
following year.
(2) Excludes perquisites and other personal benefits, the aggregate annual
amount of which for each officer was less than the lesser of $50,000 or 10%
of the total salary and bonus reported.
(3) Reflects the payment to Mr. Massie in 1995 and 1994 of compensation for
unused vacation time from 1994 and 1993, respectively.
(4) Long-term compensation table reflects the grant of non-qualified and
incentive stock options granted to the named persons in each of the periods
indicated.
(5) Two-thirds of these options are currently exercisable, with the balance
becoming exercisable on June 30, 1997.
(6) None of these options are currently exercisable.
The following table sets forth information concerning options granted during
the fiscal year ended December 31, 1996 to the executives named in the Summary
Compensation Table above. The Company did not grant any stock appreciation
rights during the fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------
PERCENTAGE OF
SHARES TOTAL OPTIONS
SUBJECT TO GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION
NAME GRANTED FY 1996(1) PRICE DATE
---- ------- ---------- ----- ----
<S> <C> <C> <C> <C>
Thomas L. Massie -0- -- -- --
Pierre J. Esneau 80,000 17.6% $2.06 04/24/06
</TABLE>
(1) Net of cancellations, a total of 455,002 options were granted to employees
in 1996 under the Company's 1992 Stock Option Plan, the purpose of which is
to provide an incentive to employees who are in a position to make
significant contributions to the Company.
7
The following table sets forth information concerning option exercises
during fiscal year 1996 and the value of unexercised options as of December 31,
1996 held by the executives named in the Summary Compensation Table above.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED,
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES DECEMBER 31, 1996 DECEMBER 31, 1996
ACQUIRED ON VALUE (EXERCISABLE/ (EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE) UNEXERCISABLE)(1)
---- ----------- ----------- -------------- -----------------
<S> <C> <C> <C> <C>
Thomas L. Massie 0 0 187,500 (Exercisable) $121,875 (Exercisable)
62,500 (Unexercisable) $ 40,625 (Unexercisable)
Pierre J. Esneau 0 0 0 (Exercisable) 0 (Exercisable)
80,000 (Unexercisable) 0 (Unexercisable)
</TABLE>
- -----------
(1) Value is based on the difference between option exercise price and the
fair-market value at December 31, 1996 ($1.75 per share, the closing price
as quoted on the Nasdaq Small-Cap Market at the close of trading on
December 31, 1996) multiplied by the number of shares underlying the
option.
EMPLOYMENT AGREEMENTS
The Company and Thomas L. Massie are parties to an Employment Contract
effective January 1, 1992, as amended to date, which renews automatically such
that it is always effective for a period of three years, subject to certain
termination provisions. This Employment Contract includes a one-year
non-competition provision following termination of employment. Pursuant to this
Employment Contract, Mr. Massie serves as Chairman of the Board, President and
Chief Executive Officer of the Company at a base salary of $150,000 per year.
This Employment Contract requires a lump-sum severance payment to Mr. Massie of
three times his aggregate compensation or allowances then in effect if Mr.
Massie is terminated without cause during the term of the contract. In addition,
the vesting of all options held by Mr. Massie shall be accelerated so as to be
immediately exercisable. The Employment Contract provides for bonuses as
determined by the Board of Directors and employee benefits, including health and
disability insurance, in accordance with the Company's policies.
COMPENSATION OF DIRECTORS
In 1996, no Director received any cash compensation for his services as a
director.
Directors who are employees of the Company do not receive any cash
compensation for the services as directors. On October 15, 1993, the Board of
Directors of the Company adopted the 1993 Directors Plan, subject to approval by
the Company's stockholders. The 1993 Directors Plan authorized the grant on
October 15, 1993 of a stock option for 25,000 shares of Common Stock to each
member of the Company's Board of Directors who at the time was neither an
employee nor officer of the Company, subject to approval by the Company's
stockholders. An option was granted to each of Messrs. Coldrick, Cavalier and
Crocker, the members of the Board of Directors entitled to participate in the
1993 Directors Plan. These options have an exercise price of $2.625 per share,
the fair-market value on the date of grant.
On July 15, 1996, the Company's stockholders approved the 1995 Directors
Plan. The 1995 Directors Plan authorized the grant on August 18, 1995 of a stock
option for 100,000 shares of Common Stock to each member of the Company's Board
of Directors who is neither an employee
8
nor officer of the Company subject to approval by the Company's stockholders. An
option was granted to each of Messrs., Cavalier and Crocker, the members of the
Board of Directors entitled to participate in the 1995 Directors Plan. Such
options have an exercise price of $3.81, the fair- market value on the date of
grant. Upon joining the Board of Directors, March 1, 1996, Mr. Shaver was
granted a stock option of 100,000 shares of Common Stock at an exercise price of
$4.125, the fair-market value on the date of grant.
On March 19, 1997, the Board of Directors elected to terminate the 1995
Directors Plan and all options granted thereunder. By a unanimous vote of the
Directors, the Board established the 1997 Directors Plan and authorized the
grant of options to purchase up to 1,000,000 shares of Common Stock under the
plan. On March 19, 1997, options to purchase 200,000 shares at an exercise price
of $1.88 per share were granted to each of Messrs. Cavalier, Crocker & Shaver
and options to purchase 100,000 shares at an exercise price of $1.88 per share
were granted to each of Messrs. Coldrick and Mahoney. All of the options are
subject to various vesting provisions.
SECTION 16 REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and officers, and persons who
own more than 10% of a registered class of the Company's equity securities, to
file initial reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission (the "SEC"). Such persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on the Company's review of the copies of such forms received by
it or written representations from certain reporting persons, the Company
believe that during the year ended December 31, 1996, all filing requirements
applicable to its directors, executive officers and greater- than-10% beneficial
owners were met.
PROPOSAL TO INCREASE AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has resolved to recommend to the stockholders that
the Company amend the Company's Certificate of Incorporation to increase the
number of authorized shares of Common Stock from 20,000,000 to 25,000,000
shares. Shares of the Company's Common Stock, including the additional shares
proposed for authorization, do not have preemptive or similar rights.
If this proposal is approved and after giving effect to shares reserved for
issuance under the Company's stock plans, and shares reserved for issuance upon
the exercise of outstanding warrants, options and other commitments, the Board
of Directors will have the authority to issue approximately an additional
2,000,000 (as of May 30, 1997) shares of Common Stock without further
stockholder approval. The Board of Directors of the Company believes that the
increase in the number of authorized shares of Common Stock is in the best
interests of the Company and its stockholders. The Board of Directors believes
that the authorized Common Stock should be increased to provide sufficient
shares for such corporate purposes as may be determined by the Board of
Directors to be necessary or for such corporate purposes as may be determined by
the Board of Directors to be necessary or desirable. These purposes may include
facilitating broader ownership of the Company's Common Stock by effecting a
stock split or issuing a stock dividend, raising capital or acquiring technology
rights through the sale of stock, or attracting or retaining valuable employees
by the issuance of stock options, although the Company at present has no
commitments, agreements or undertakings obligating the Company to issue any such
additional shares. The Board of Directors, however, considers the authorization
of additional shares of Common Stock advisable to ensure prompt availability of
shares for issuance should the occasion arise.
Under the Delaware General Corporation Law, the Board of Directors
generally may issue authorized but unissued shares of Common Stock without
further stockholder approval. The Board of Directors does not currently intend
to seek stockholder approval prior to any future issuance of
9
additional shares of Common Stock, unless stockholder action is required in a
specific case by applicable law, the rules of any exchange or market on which
the Company's securities may then be listed, or the Charter or By-Laws of the
Company then in effect. Frequently, opportunities arise that require prompt
action, and the Company believes that delay necessitated for stockholder
approval of a specific issuance could be to the detriment of the Company and its
stockholders.
The Board of Directors believes that the increase in the number of
authorized shares of undesignated Common Stock is in the best interests of the
Company and its stockholders, since the complexity of modern business financing
requires greater flexibility in the Company's capital structure than now exists.
The additional Common Stock to be authorized would be available for issuance
from time to time for any proper corporate purpose, including public or private
sale for cash as a means of obtaining capital for the use in the Company's
business or for the acquisition by the Company of other businesses or assets.
The Board of Directors believes that having additional shares of Common Stock
will provide the flexibility and facility for finding financing sources quickly
consummating any such transaction. Additionally, from time to time, the Company
is involved in various discussions with other companies relating to the
acquisition of complementary products or services, or other forms of business
combinations involving the Company. However, the Company has no present
commitments or agreements relating to any potential acquisitions or financing.
The Board of Directors, however, consider the authorization of such additional
shares advisable to ensure prompt availability of shares for issuance should the
occasion arise.
The additional shares of Common Stock authorized for issuance pursuant to
this proposal will have the rights and privileges which the presently
outstanding shares of Common Stock possess under the Company's Charter. The
increase in authorized shares would not affect the terms or rights of holders of
existing shares of Common Stock. The rights of the holders of Common Stock,
however, are subordinate to the rights of the holders of the Preferred Stock in
certain instances. All outstanding shares of Common Stock would continue to have
one vote per share on all matters to be voted on by the stockholders, including
the election of directors.
The issuance of any additional shares of Common Stock by the Company may,
depending on the circumstances under which those shares are issued, reduce
stockholders' equity per share and may reduce the percentage ownership of Common
Stock of existing stockholders. The Company expects, however, to receive
consideration for any additional shares of Common Stock issued, thereby reducing
or eliminating the economic effect to each stockholder of such dilution.
The authorized but unissued shares of Common Stock could be used to make
more difficult a change in control of the Company. For example, such shares
could be sold to purchasers who might side with the Board of Directors in
opposing a takeover bid that the Board determines not to be in the best
interests of the Company and its stockholders. Such a sale could have the effect
of discouraging an attempt by another person or entity, through the acquisition
of a substantial number of shares of the Company's Common Stock, to acquire
control of the Company, since the issuance of new shares could be used to dilute
the stock ownership of the acquirer. Neither the Charter nor By-Laws of the
Company now contain any provisions that are generally considered to have an
anti-takeover effect, and the Board of Directors does not now plan to propose
any anti-takeover measures in future proxy solicitations. The Company is not
aware of any pending or threatened efforts to obtain control of the Company, and
the Board of Directors has no current intention to use the additional shares of
Common Stock to impede a takeover attempt.
Approval of the amendment to increase the number of authorized shares of
Common Stock will require the affirmative vote of the holders of a majority of
the outstanding shares of Common Stock of the Company represented in person or
by proxy and entitled to vote at the Meeting. Abstentions will have the same
effect as a vote against the proposal; broker non-votes will have no outcome on
the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE AMENDMENT
TO THE COMPANY'S CHARTER TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK FROM 20,000,000 TO 25,000,000 SHARES.
10
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of Wolf & Company, P.C.,
independent certified public accountants, to serve as auditors for the fiscal
year ending December 31, 1997. Wolf & Company, P.C. has acted as the Company's
independent auditor since June, 1996. It is expected that a member of Wolf &
Company, P.C. will be present at the Annual Meeting of Stockholders with the
opportunity to make a statement if so desired and will be available to respond
to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF ITS SELECTION
OF WOLF & COMPANY, P.C. AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 1997.
TRANSACTION OF OTHER BUSINESS
The Board of Directors of the Company knows of no other matters which may be
brought before the Annual Meeting. If any other matters properly come before the
Annual Meeting, or any adjournment thereof, it is the intention of the persons
named in the accompanying form of Proxy to vote the Proxy on such matters in
accordance with their best judgment.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended for inclusion in the proxy statement to
be mailed to all stockholders entitled to vote at the next annual meeting of
stockholders of the Company must be received at the Company's principal
executive offices not later than December 31, 1997. In order to curtail
controversy as to the date on which a proposal was received by the Company, it
is suggested that proponents submit their proposals by Certified Mail Return
Receipt Requested.
EXPENSES AND SOLICITATION
The cost of solicitation by proxies will be borne by the Company, and in
addition to directly soliciting stockholders by mail, the Company may request
banks and brokers to solicit their customers who have stock of the Company
registered in the name of a nominee and, if so, will reimburse such banks and
brokers for their reasonable out-of-pocket costs. Solicitation by officers and
employees of the Company may be made of some stockholders in person or by mail
or telephone.
11
EXHIBIT A
---------
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF FOCUS ENHANCEMENTS, INC.
FOCUS Enhancements, Inc., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), pursuant to the provisions of
the General Corporation Law of the State of Delaware (the "DGCL"), DOES HEREBY
CERTIFY as follows:
FIRST: The Certificate of Incorporation of the Corporation is hereby amended
by deleting the first paragraph of Section 4 of the Certificate of Incorporation
in its present form and substituting therefor new first and second paragraphs of
Section 4 in the following form:
A. This corporation is authorized to issue two classes of stock, to be
designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares this corporation is authorized to issue is Twenty-Three
Million (28,000,000) shares of capital stock.
B. Of such authorized shares, Twenty Million (25,000,000) shares shall be
designated "Common Stock" and have a par value of $0.01 per share. Three
Million (3,000,000) shares shall be designated "Preferred Stock" and have
a par value of $.01 per share.
SECOND: The amendment to the Certificate of Incorporation of the Corporation
set forth in this Certificate of Amendment has been duly adopted in accordance
with the provisions of Section 242 of the DGCL by (a) the Board of Directors of
the Corporation having duly adopted a resolution setting forth such amendment
and declaring its advisability and submitting it to the stockholders of the
Corporation for their approval, and (b) the stockholders of the Corporation
having duly adopted such amendment by vote of the holders of a majority of the
outstanding stock entitled to vote thereon at a special meeting of stockholders
called and held upon notice in accordance with Section 222 of the DGCL.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
hereunto affixed and this Certificate of Amendment to be signed by Thomas L.
Massie, its Chief Executive Officer, and attested to by John A. Piccione, Esq.,
its Secretary, this day of July, 1997.
FOCUS ENHANCEMENTS, INC.
By:
-----------------------------------
Thomas L. Massie
Chief Executive Officer
ATTEST:
- -----------------------------------------
John A. Piccione
Secretary
SOLICITED BY THE BOARD OF DIRECTORS
FOCUS ENHANCEMENTS, INC.
ANNUAL MEETING OF STOCKHOLDERS
JULY 25, 1997
P The undersigned stockholder of FOCUS Enhancements, Inc. (the "Company")
hereby appoints Thomas L. Massie and John A. Piccione, and each of them
R acting singly, with power of substitution, the attorneys and proxies of the
undersigned and authorizes them to represent and vote on behalf of the
O undersigned, as designated, all of the shares of capital stock of the
Company that the undersigned is entitled to vote at the Annual Meeting of
X Stockholders of the Company to be held on July 25,1997, and at any
adjournment or postponement of such meeting for the purposes identified on
Y the reverse side of this proxy and with discretionary authority as to any
other matters that properly come before the Annual Meeting, in accordance
with and as described in the Notice of Annual Meeting of Stockholders and
Proxy Statement. This proxy when properly executed will be voted in the
manner directed herein by the undersigned stockholder. If this proxy is
returned without direction being given, this proxy will be voted FOR
proposals 1, 2 and 3.
-----------
SEE REVERSE
(IMPORTANT - TO BE SIGNED AND DATED ON REVERSE SIDE) SIDE
-----------
|X| Please mark
votes as in
this example.
FOR WITHHOLD
1. Election of two Class III Directors: |_| |_|
Nominees: U. Haskell Crocker II WITHHOLD FOR NOMINEE BELOW:
J. Daniel Shaver
FOR AGAINST ABSTAIN
2. Approve an amendment to the Company's |_| |_| |_|
Certificate of Incorporation increasing
the authorized shares of Common Stock
|-| |-| |-|
3. Ratify the appointment of Wolf &
Company, P.C. as independent auditors.
MARK HERE FOR MARK
ADDRESS CHANGE |_| HERE FOR |_|
AND NOTE BELOW COMMENTS
Please sign exactly as your name appears on stock certificate. If acting as
attorney, executor, trustee, guardian or in other representative capacity, sign
name and title. 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. If held jointly, both parties must sign
and date.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
Signature:_________________________________ Date:______________________
Signature:_________________________________ Date:______________________
