<PAGE>
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Productivity Technologies Corp.
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
Productivity Technologies Corp.
206 South Main Street, 2nd Floor
Ann Arbor, Michigan 48104
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on March 29, 2000
As a stockholder of Productivity Technologies Corp. (the "Company"), you
are invited to be present, or represented by proxy, at the Company's annual
meeting of stockholders, to be held at 600 Third Avenue, 32nd floor, New York
City on March 29, 2000 at 2:00 p.m., local time, and any adjournments thereof,
for the following purposes:
1. To elect Samuel N. Seidman and Alan H. Foster to the Board of
Directors of the Company for a term of three years. See "Election of
Directors" in the Proxy Statement.
2. To amend the Company's 1996 Performance Equity Plan to increase the
maximum number of shares which may be issued under such Plan from
330,000 to 530,000 shares. See "Amendment to 1996 Performance Equity
Plan" in the Proxy Statement.
3. To transact such other business as may properly be brought before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on February 18, 2000 are
entitled to vote at the annual meeting of stockholders and all adjournments
thereof. Since a majority of the outstanding shares of the Company's common
stock must be represented at the meeting in order to constitute a quorum, all
stockholders are urged either to attend the meeting or to be represented by
proxy.
If you do not expect to attend the meeting in person, please sign, date and
return the accompanying proxy in the enclosed reply envelope. Your vote is
important regardless of the number of shares you own. If you later find that
you can be present and you desire to vote in person or, for any other reason,
desire to revoke your proxy, you may do so at any time before the voting.
If you plan to vote at the meeting in person and your shares are held in
the name of your broker, bank or other nominee, please request from such broker,
bank or other nominee a letter to present to the judge of the election
evidencing your ownership of the shares and your authority to vote the shares at
the meeting.
By Order of the Board of Directors,
Jesse A. Levine
Secretary
Ann Arbor, Michigan
February 18, 2000
<PAGE>
Productivity Technologies Corp.
206 South Main Street, 2nd Floor
Ann Arbor, Michigan 48104
ANNUAL MEETING OF STOCKHOLDERS
March 29, 2000
PROXY STATEMENT
This Proxy Statement and the Notice of Annual Meeting and Form of Proxy
accompanying this Proxy Statement, which will be mailed on or about February
24, 2000, are furnished in connection with the solicitation by the Board of
Directors of Productivity Technologies Corp., a Delaware corporation (including
its subsidiaries, the "Company"), of proxies to be voted at the annual meeting
of stockholders to be held at 600 Third Avenue, 32nd floor, New York City on
March 29, 2000 at 2:00 p.m., local time, and any adjournments thereof.
Holders of record of the Company's Common Stock at the close of business on
February 18, 2000 (the "record date") will be entitled to one vote at the
meeting or by proxy for each share then held. On the record date, there were
2,475,000 shares of Common Stock of the Company outstanding. All shares
represented by proxy will be voted in accordance with the instructions, if any,
given in such proxy. A stockholder may withhold authority to vote for the
nominees by marking the appropriate box on the accompanying proxy card, or may
withhold authority to vote for an individual nominee by drawing a line through
such nominee's name in the appropriate place on the accompanying proxy card.
Unless instructions to the contrary are given, each properly executed proxy will
be voted, except as specified below, to (1) elect Samuel N. Seidman and Alan H.
Foster to the Board of Directors of the Company, (2) amend the Company's 1996
Performance Equity Plan to increase the maximum number of shares which may be
issued under such Plan by 200,000 shares and (3) transact such other business as
may properly be brought before the meeting or any adjournment thereof.
All proxies may be revoked and execution of the accompanying proxy will not
affect a stockholder's right to revoke it by giving written notice of revocation
to the Secretary at any time before the proxy is voted or by the mailing of a
later-dated proxy. Any stockholder attending the meeting in person may vote his
or her shares even though he or she has executed and mailed a proxy. A majority
of all of the issued and outstanding shares of the Company's Common Stock is
required to be present in person or by proxy to constitute a quorum. Directors
are elected by a plurality.
This Proxy Statement is being solicited by the Board of Directors of the
Company. The expense of making this solicitation is being paid by the Company
and consists of the preparing, assembling and mailing of the Notice of Meeting,
Proxy Statement and Proxy, tabulating returns of proxies, and charges and
expenses of brokerage houses and other custodians, nominees or fiduciaries for
forwarding documents to stockholders. In addition to solicitation by mail,
officers and regular employees of the Company may solicit proxies by telephone,
facsimile or in person without additional compensation therefor.
ELECTION OF DIRECTORS
Election of Directors
Effective January 1, 2000, the Board reduced its size from eight members to
five members. The Board is divided into three classes. The members of each
class serve for a term of three years, with only one class of directors being
elected in each year. Class III directors are being elected at this annual
meeting to serve for a term which will expire upon the election of directors at
the annual meeting to be held in the fiscal year ending June 30, 2003. The
Board has nominated Samuel N. Seidman and Alan H. Foster, each of whom is an
incumbent Class III Director, as candidates for election.
Unless you indicate to the contrary, the persons named in the accompanying
proxy will vote it for the election of the nominees named above. If, for any
reason, a nominee should be unable to serve as a director at the time of the
2
<PAGE>
meeting, which is not expected to occur, the persons designated herein as
proxies may not vote for the election of any other person not named herein as a
nominee for election to the Board of Directors. See "Information Concerning
Directors and Nominees."
Recommendation
The Board of Directors recommends a vote "FOR" the election of each of the
nominees. Proxies solicited by the Board of Directors will be voted in favor of
this proposal unless a contrary vote or authority withheld is specified.
INFORMATION CONCERNING DIRECTORS AND NOMINEES
Directors and Nominees
The term of the Class I directors, Alan I. Goldman and Jesse A. Levine,
will expire upon the election of directors at the annual meeting to be held in
the fiscal year ending June 30, 2001. The term of the Class II director,
Michael D. Austin, will expire upon the election of director at the annual
meeting to be held in the fiscal year ending June 30, 2002. The term of the
Class III directors, Samuel N. Seidman and Alan H. Foster, will expire upon the
election of directors at this annual meeting. Mr. Seidman and Mr. Foster have
been nominated by the Board to serve for an additional term continuing until the
annual meeting to be held in the fiscal year ending June 30, 2003. See
"Election of Directors." In the case of each class of directors, the persons
elected will hold office until the next annual meeting of stockholders at which
his class of directors is to be elected.
Set forth below is information concerning each director and nominee for
director of the Company, including his business experience during at least the
past five years, his positions with the Company, and certain directorships held
by him. Each nominee is currently a director of the Company. Except as
hereinafter described, there are no family relationships among any of the
directors or nominees or any arrangements or understandings between any director
and another person pursuant to which he was selected as a director or nominee.
<TABLE>
<CAPTION>
Director
Nominee/Director Age Since Current Position
- ---------------- --- -------- --------------------------------------
<S> <C> <C> <C>
Class III Nominees
Samuel N. Seidman 65 1993 Director, Chairman of the Board,
President and Chief Executive Officer
Alan H. Foster 74 1993 Director
Class I Directors
Alan I. Goldman 62 1993 Director
Jesse A. Levine 32 1993 Director, Chief Financial Officer,
Vice President, Secretary and
Treasurer
Class II Director
Michael D. Austin 48 1999 Director, and President and Chief
Executive Officer of the Company's
Atlas Technologies, Inc. subsidiary
</TABLE>
3
<PAGE>
Class III Nominees
Samuel N. Seidman has been President and a Director of the Company since
its inception. In 1970, Mr. Seidman founded Seidman & Co., Inc., an investment
banking firm, and serves as its President. In this capacity, he has provided a
broad range of investment banking services, including financial analysis and
valuations, private financings, and corporate recapitalizations and debt
restructurings. Mr. Seidman also serves as a director of AMREP Corporation, a
real estate development corporation listed on the New York Stock Exchange. He
has acted as financial advisor to manufacturers of various kinds of production
systems and components for a number of industries, including ASM International,
N.V., a multi-national producer of automated equipment and systems for the
production of semiconductor traded on the Nasdaq National Market. Mr. Seidman
advised in the sale of ASM Fico Tooling, Inc., a European-based multi-national
manufacturer of specialized tooling for the semiconductor industry. Mr. Seidman
was Co-Chairman of the Creditors' Committee in the Chapter 11 reorganization of
Sharon Steel Corp., an integrated manufacturer of finished steel products, and
served as financial advisor in Chapter 11 to Chyron Corp., a specialized
producer of television character generation equipment for video productions
listed on the New York Stock Exchange, and Mr. Gasket Co., a manufacturer of
automobile aftermarket products. Prior to founding Seidman & Co., Mr. Seidman
worked in corporate finance at Lehman Brothers. Mr. Seidman earned a B.A.
degree from Brooklyn College and a Ph.D. in economics from New York University.
He was a Fulbright Scholar and a member of the graduate faculty of the City
University of New York. Mr. Seidman's nephew, Jesse A. Levine, is Vice
President, Chief Financial Officer, Secretary, Treasurer and a Director of the
Company.
Alan H. Foster has been a Director of the Company since its inception.
Since 1986, he has been an Adjunct Professor of Finance and Corporate Strategy
at the University of Michigan. Since 1978, Mr. Foster has been the principal of
A.H. Foster & Company, a consulting firm which serves as a consultant in
corporate finance to foreign governments and domestic and international clients.
Currently, Mr. Foster is a director of Code-Alarm, Inc., a manufacturer of
automobile security systems. For the last 12 years, Mr. Foster has served
numerous times as a court-appointed trustee in bankruptcy for both Chapter 7 and
Chapter 11 cases. He was employed by the American Motors Corporation from 1963
to 1978, where he first served as Director, Financial Planning and Analysis and
then as Vice President and Treasurer for the last ten of those years. From 1953
to 1963, Mr. Foster worked at Sylvania Electric Products in various capacities,
including Manager, Corporate Planning and Control. Mr. Foster is the author of
Practical Business Management, published in 1962. Mr. Foster earned a B.S.B.A.
degree from Boston College and an M.B.A. degree from Harvard Business School.
Class I Directors
Alan I. Goldman has been a Director of the Company since its inception.
Since 1985, Mr. Goldman has been self-employed as an investment banker and
management consultant, specializing in mergers and acquisitions, private
placements and business and organization consulting. Since 1999, Mr. Goldman
has also served as Chairman of the Board, Chief Financial Officer and Treasurer
of SGA Interactive, Inc., a privately held Internet training and communications
company. From 1975 to 1985, Mr. Goldman was Senior Vice President, Finance and
Chief Financial Officer of Management Assistance, Inc., a multi-national
computer manufacturing, marketing and maintenance company and a purchaser and
user of productions systems and components. From 1970 to 1974, Mr. Goldman was
Vice President, Finance, Treasurer and Chief Financial Officer of Interway
Corporation, an international company engaged in trailer and container leasing
and fleet management. Mr. Goldman was also a director of Substance Abuse
Technology, Inc., at the time it filed a Chapter 11 bankruptcy petition in 1997.
Mr. Goldman earned a B.A. degree from Cornell University and an M.B.A. degree
from New York University.
Jesse A. Levine has been Secretary, Treasurer and a Director of the Company
since its inception, Chief Financial Officer since June 1995 and a Vice
President since May 1996. Since January 1992, Mr. Levine has been Vice
President and then Senior Vice President of Seidman & Co., Inc., specializing in
financial and business analysis, corporate finance, private placement financing,
merger and acquisition, and corporate advisory services. Previously, Mr. Levine
served as a commercial credit analyst for Society Bank, Michigan. Mr. Levine
earned a B.A. degree, with highest honors distinction, in economics from the
University of Michigan and has been elected a chartered financial analyst.
Samuel N. Seidman, the President, Chief Executive Officer, and Chairman of the
Company, is Mr. Levine's uncle.
4
<PAGE>
Class II Director
Michael D. Austin is currently the President and Chief Executive Officer of
Atlas Technologies, Inc., a PTC operated subsidiary. From 1996 to 1998, Mr.
Austin held the position of President of Atlas Technologies, Inc., and was
primarily responsible for directing the marketing and sales activities of the
company for determining the overall product directions, managing product
research and development, and managing the application engineering department.
From 1977 to 1996, Mr. Austin held various other management positions at Atlas
Technologies, Inc., including Vice President of Operations, Vice President of
Sales and Marketing, Sales Manager, and Controls Manager. From 1973 to 1977,
Mr. Austin held various controls engineering and management positions at Fluid &
Electric Control Co., including Chief Engineer. Mr. Austin serves on the board
of directors or board of advisors of the Society of Manufacturing Engineers, the
Flint-Genesee Economic Growth Alliance, the Genesee Area Focus Council, the
Manufacturer's Innovation Council, Kettering University, Baker College and Mott
Community College. Mr. Austin holds a U.S. and foreign patents for certain
apparatus and methods for forming workpieces.
Meetings of the Board of Directors
The Board met four times during the fiscal year ended June 30, 1999 and
took various actions throughout the year through the execution of unanimous
written consents. Each person who served as a director of the Company during
fiscal 1999 attended at least 75% of the meetings held during fiscal 1999.
Audit Committee
The Board currently maintains a single standing committee, the Audit
Committee, which currently is composed of Messrs. Goldman and Foster. The
responsibilities of the Audit Committee include, in addition to such other
duties as the Board may specify, (1) recommending to the Board the appointment
of independent accountants, (2) reviewing the timing, scope and results of the
independent accountants' audit examination and related fees, (3) reviewing
periodic comments and recommendations by the Company's independent accountants
and the Company's response thereto, (4) reviewing the scope and adequacy of
internal accounting controls and internal auditing activities and (5) making
recommendations to the Board with respect to significant changes in accounting
policies and procedures. The Audit Committee met two times during the fiscal
year ended June 30, 1999. Both members of the Committee attended these
meetings.
INFORMATION REGARDING EXECUTIVE OFFICERS
The following table sets forth certain information concerning each
individual who currently serves as an executive officer or key employee of the
Company. See "Information Concerning Directors and Nominees" for a description
of each executive officer's business experience during at least the past five
years and positions held with the Company. Executive officers are appointed by
the Board of Directors and serve at the discretion of the Board. Except as
specifically described, there are no family relationships among any of the
executive officers or any arrangements or understandings between any executive
officer and another person pursuant to which he was selected as an executive
officer.
Set forth below is a table naming the executive officers of the Company and
stating the positions held by them. Additional information concerning these
individuals, each of whom is a director of the Company, is set forth under
"Information Concerning Directors and Nominees."
<TABLE>
<CAPTION>
Executive Officer Current Position
- ----------------- -----------------------------------------------------------------
<S> <C>
Samuel N. Seidman Chairman of the Board, President and Chief Executive
Officer
Jesse A. Levine Chief Financial Officer, Vice President, Secretary and Treasurer
Michael D. Austin President and Chief Executive Officer of Atlas Technologies, Inc.
</TABLE>
5
<PAGE>
EXECUTIVE COMPENSATION
Director Compensation and Arrangements
During fiscal 1999, the Company's two non-employee directors, Alan I.
Goldman and Alan H. Foster, received $12,000 per annum, payable quarterly. The
members of the Audit Committee, Messrs. Goldman and Foster, also received $1,000
for attending the two Audit Committee meetings held in fiscal 1999 ($500 per
meeting). All directors other than the Chairman are entitled to receive payment
of $1,000 per day, as determined by the Chairman, for actual days spent by them
providing consulting services to the Company or performing other special
services for the benefit of the Company.
Executive Officer Compensation
The following table shows all compensation paid by the Company for the
fiscal years ended June 30, 1997, 1998 and 1999 to (1) the person who has served
as the chief executive officer of the Company at all times since the beginning
of fiscal 1999 (Samuel N. Seidman), and (2) the only executive officer of the
Company, other than the chief executive officer, who served as an executive
officer at any time during fiscal 1999 and whose income exceeded $100,000
(Michael D. Austin) (collectively, the "Named Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
---------------------- ---------------------------------------
Name and Fiscal Year Restricted Securities
Principal Position ended June 30, Salary ($) Bonus ($) Stock Awards (#) Underlying Options (#)
- -------------------- ------------- ---------- ----------- ---------------- ----------------------
<S> <C> <C> <C> <C> <C>
Samuel N. Seidman 1999 65,000 --- --- ---
1998 75,000 --- --- ---
1997 6,250 --- --- ---
Michael D. Austin 1999 201,179 --- --- ---
1998 196,888 718,192 (1) 150,000 ---
1997 190,743 355,473 --- ---
</TABLE>
_______________
(1) Represents amounts to which Mr. Austin was entitled under a deferred
compensation plan.
Option Awards and Values. No options or stock appreciation rights were
awarded to any of the Named Executive Officers in fiscal 1999. The following
table sets forth information concerning the aggregate number and values of
options held by the Named Executive Officers as of June 30, 1999. None of the
Named Executive Officers holds stock appreciation rights and none of such
persons exercised any options in fiscal 1999.
Aggregate Year-End Option Values
<TABLE>
<CAPTION>
Number of unexercised options at fiscal Value of unexercised in the money
year end (#) options at fiscal year end ($)
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Samuel N. Seidman 70,833 --- --- ---
Michael D. Austin --- --- --- ---
</TABLE>
6
<PAGE>
Employment Agreements
In May 1996, Mr. Michael D. Austin entered into an employment agreement
with Atlas Technologies, Inc. (subsequently amended in June 1998) under which he
currently serves as the President and Chief Executive Officer of Atlas
Technologies, Inc. Mr. Austin's agreement terminates on December 31, 2001. The
agreement requires Mr. Austin to devote substantially all of his business time
and attention to the affairs of Atlas Technologies, Inc. The agreement provides
for a base salary of $198,588 per year, subject to cost-of-living increases
after December 31, 1998, for six weeks vacation per year, reimbursement of
business expenses, use of an automobile and mobile telephone, medical and life
insurance benefits and other benefits generally made available to other
employees. The employment agreement also contains provisions restricting the
disclosure of confidential information and non-competition covenants. As part of
the fiscal 1998 bonus restructuring agreement, Atlas Technologies, Inc. also is
scheduled to pay to Mr. Austin deferred compensation of $718,192 payable in
annual installments with 6.1% interest with final payment due July 2002.
The Company has no other employment agreements with its executive officers.
Compensation Committee Interlocks and Insider Participation
The full Board of Directors of the Company serves as the Company's
Compensation Committee. There have not been since the beginning of fiscal 1999
any interlocking relationships, as defined in the regulations of the Securities
and Exchange Commission, involving any person who has served on the Company's
Board of Directors since that time. See "Executive Compensation---Employment
Agreements" and "Certain Relationships and Related Transactions" for a
description of certain transactions entered into by certain directors with the
Company since the beginning of fiscal 1999.
Report of the Compensation Committee
Overview and Philosophy
The Company's executive compensation policy is to provide compensation to
employees at such levels as will enable the Company to attract and retain
employees of the highest caliber, to compensate employees in a manner best
calculated to recognize individual, group and Company performances and to seek
to align the interests of the employees with the interests of the Company's
stockholders. The Board of Directors has responsibility for reviewing and
approving executive and employee salaries, bonuses, non-cash incentive
compensation and benefits, including stock options.
Compensation of Executive Officers
Except for Michael D. Austin, salary determinations for executive officers
were most recently made by the Board in October 1999, based upon various
subjective factors such as the executive's responsibilities, position,
qualifications, individual performance and experience. The Board Company did
not utilize quantitative measures of Company or individual performance for
purposes of fixing the salaries or bonuses of its executives. The compensation
of Mr. Austin, the President and Chief Executive Officer of Atlas Technologies,
Inc., was fixed pursuant to the terms of an employment agreement he entered into
with the Company at the time PTC purchased Atlas Technologies, Inc., as amended
by a bonus restructuring agreement entered into in fiscal 1998. This employment
agreement was negotiated on an arms-length basis by Mr. Austin with the Board.
See "Executive Compensation --Employment Agreements."
Compensation of Chief Executive Officer
The compensation of Samuel N. Seidman, currently the Chairman, President
and Chief Executive Officer of the Company, was fixed by the Board in October
1999. The decisions of the Board regarding his compensation were based upon
various subjective factors such as his responsibilities, qualifications and
years of experience. In no such case did the Compensation Committee undertake a
formal survey or analysis of compensation paid by other companies.
7
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Submission of Report
This report on Executive Compensation is submitted by Samuel N. Seidman,
Michael D. Austin, Jesse A. Levine, Alan H. Foster and Alan I. Goldman, the
current members of the Board of Directors.
Performance Information
The following chart compares cumulative total return of the Company's
Common Stock (symbol PRAC) with the cumulative total return of (1) the Standard
& Poor's Midcap 400 index, a broad equity market index ("S&P Index"), and (2) an
industry peer group index ("Peer Index") consisting of six other publicly held
production tooling manufacturers. The table assumes $100 was invested on July
6, 1994 (the date the Common Stock began trading on the OTC Bulletin Board) in
shares of Common Stock, stocks comprising the S&P Index and stocks comprising
the Peer Index and that dividends are reinvested when received. The Peer Index
includes Bethlehem Corp., DeVlieg Bullard, Inc., Farrell Corp., Hurco Companies,
Inc., Monarch Machine Tool Co. and Thermwood Corp., equally weighted.
<TABLE>
<CAPTION>
Cumulative Total Return
6/94 6/95 6/96 6/97 6/98 6/99
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PRODUCTIVITY TECHNOLOGIES CORP. 100.00 89.80 151.02 73.47 120.41 163.27
- ---------------------------------------------------------------------------------
PEER GROUP 100.00 114.60 149.63 159.99 171.74 141.39
- ---------------------------------------------------------------------------------
S & P MIDCAP 400 100.00 122.34 148.75 183.45 233.26 262.58
</TABLE>
No dividends were paid on the Company's Common Stock during the period
shown. The return shown is based on the percentage change from June 30, 1994
through June 30, 1999.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, certain of its officers and persons who own more than 10% of the
Company's Common Stock to file reports of ownership and changes in ownership
with 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 its
review of the copies of such forms furnished to it, and written representations
that no other reports were required, the Company believes that during the fiscal
year ended June 30, 1999, each of its officers, directors and 10% stockholders
complied with the Section 16(a) reporting requirements, except that Michael D.
Austin, the President and Chief Executive Officer of Atlas Technologies, Inc.,
did not timely file a Form 4 to report his open market purchases of shares of
the Company's common stock in November and December 1998 and October 1999. His
failure to timely file was inadvertent, he did not sell any shares within six
months before such purchases or at any time following such purchases, and he has
since made appropriate filings with the SEC to report such purchases.
8
<PAGE>
SECURITIES OWNERSHIP
The following table and accompanying footnote sets forth certain
information as of February 18, 2000 with respect to the stock ownership of (1)
each stockholder known by the Company to be a beneficial owner of more than 5%
of the Company's Common Stock, (2) each director and nominee of the Company, (3)
the Company's Chief Executive Officer, and (4) all directors and executive
officers of the Company as a group (based upon information furnished by such
persons). Shares of Common Stock issuable upon exercise of options which are
currently exercisable or exercisable within 60 days of the date of the Proxy
Statement have been included in the following table. See "Executive
Compensation" for additional information regarding the stock options granted to
the indicated persons. The business address of the persons listed below is
Productivity Technologies Corp., 206 South Main Street, 2nd Floor, Ann Arbor,
Michigan 48104, except for Mr. Friant, whose address is 30 Boxwood Drive,
Morristown, New Jersey 07961.
<TABLE>
<CAPTION>
Name of Beneficial Number of Shares Percentage of Shares
Owner Beneficially Owned Beneficially Owned
<S> <C> <C>
Michael D. Austin 285,000 11.5
Samuel N. Seidman 285,083 (1) 10.8 (3)
Ray J. Friant, Jr. 218,083 (1) 8.5
Ronald Prime 150,000 6.1
Jesse A. Levine 149,583 (1)(2) 5.8
Alan I. Goldman 48,250 1.9
Alan H. Foster 43,250 1.7
All directors and
executive officers as a
group (5 persons) (4) 811,166 (4) 29.1
</TABLE>
______________________
(1) Includes shares of Common Stock issuable upon immediately exercisable
warrants and options as follows: Mr. Friant - 91,833 shares; Mr. Seidman -
158,833 shares; Mr. Levine - 106,333; Mr. Foster - 22, 000 shares; Mr.
Goldman - 22,000 shares. Options issued in February 2000 to Messrs.
Seidman and Levine to purchase 68,000 shares and 58,000 shares,
respectively, are conditioned upon the expiration of options held by Mr.
Friant, which is expected to occur in March 2000.
(2) Includes 4,000 shares gifted by Mr. Levine to a related minor.
(3) The percentage in this column is calculated by dividing the number of
shares beneficially held by the individual or group shown on each line by
the sum of (i) the number of outstanding shares of Common Stock and (ii)
any shares of Common Stock issuable upon the exercise of options held by
such individual or group members, but for no other person. Consequently,
although Mr. Seidman beneficially owns more shares than Mr. Austin, the
shares included in the denominator to calculate his percentage includes the
shares issuable to him upon the exercise of his options and, therefore, his
deemed ownership percentage in that of the Company is less than that of Mr.
Austin.
(4) Includes shares of Common Stock issuable upon immediately exercisable
warrants and options to Mr. Seidman, Mr. Levine, Mr. Foster and Mr.
Goldman, as disclosed in note 1.
AMENDMENT TO 1996 PERFORMANCE EQUITY PLAN
Background Information
On February 8, 1996, the Board of Directors of the Company approved the
1996 Performance Equity Plan (the "Plan"), subject to approval of the Company's
stockholders. On May 21, 1996, the stockholders of the Company approved the
Plan. The Plan authorizes the grant of awards in the forms of options to
purchase Common Stock, stock appreciation rights, and restricted stock to
officers, key employees of the Company and its affiliates and other key
individuals (including non-employees).
9
<PAGE>
Proposed Amendment
In February 2000, the Board approved an amendment to the Plan, subject to
stockholder approval, to increase the maximum number of shares which may be
issued under such Plan from 330,000 shares to 530,000 shares. The Board
believes that the additional shares are needed to attract and retain talented
management personnel.
New Plan Benefits
The Company has made no determination to issue options under the Plan to
any persons by reason of the adoption of the proposed amendment increasing the
number of authorized shares under the Plan. However, the Board has discretion
under the Plan to issue such number of options to such of the officers, key
employees, agents or consultants of the Company who occupy responsible
managerial or professional positions or who have the capability of making
substantial contributions to the success of the Company as it determines.
Summary of Material Terms of the Plan
Administration
The Plan provides that it will be administered by the Board of Directors or
by a committee ("Committee") appointed by the Board. If appointed, the Committee
must have two or more members, each of whom is a "disinterested person." The
Plan is currently administered by the Board. The Board or, if appointed,
Committee, has full authority, subject to the provisions of the Plan, to award
stock options, stock appreciation rights, restricted stock, deferred stock,
stock reload options and/or other stock-based awards (collectively, "Awards").
Subject to the provisions of the Plan, the Board or the Committee also has
authority to determine, among other things, the persons to whom Awards will be
granted, the type of Awards to be granted, the number of shares subject to each
Award, share or exercise prices, any restrictions or limitations on such Awards
and any vesting, exchange, deferral, surrender, cancellation, acceleration,
termination, exercise or forfeiture provisions related to the Awards. The Board
or Committee is also empowered to interpret and settle disputes under the Plan.
Shares Subject to the Plan, General Terms
As proposed to be amended, the Plan authorizes the granting of Awards the
exercise of which would allow up to an aggregate of 530,000 shares of common
stock to be acquired by the holders of Awards. In order to prevent the dilution
or enlargement of the rights of holders under the Plan, the number of shares
authorized to be issued under the Plan is subject to adjustment by the Board in
the event of any increase or decrease in the number of shares of outstanding
Common Shares resulting from a stock dividend, stock split, reverse stock split,
merger, reorganization, consolidation, recapitalization or other change in
corporate structure. If any Awards granted under the Plan are expire or are
terminated, the shares that were available pursuant to such Award will again be
available for distribution under the Plan.
Eligibility
Awards may be granted to key employees, officers, directors, consultants
and other persons who are deemed to have rendered or to be able to render
significant services to the Company or its subsidiaries and are deemed to have
contributed or to have the potential to contribute to the success of the
Company. Incentive stock options may be awarded only to persons who, at the
time of such awards, are employees of the Company or its subsidiaries.
Term and Termination of the Plan
The Plan became effective as of February 9, 1996. Unless terminated by the
Board, the Plan will continue to remain effective until such time as no further
Awards may be granted and all Awards granted under the Plan are no longer
outstanding. Grants of incentive stock options may only be made during the ten-
year period following the effective date of the Plan. The amendment, if
approved by the shareholders, will become effective on the date approved.
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Amendments to the Plan
The Board may at any time amend, alter, suspend or discontinue any of the
provisions of the Plan, but no amendment, alteration, suspension or
discontinuance is permitted that would impair the rights of a holder of any
Awards previously granted, without the consent of the employee.
Federal Income Tax Consequences
The following discussion of the federal income tax consequences of
participation in the Plan is only a summary of the general rules applicable to
the grant and exercise of stock options and does not purport to give specific
details on every variable and does not cover, among other things, state, local
and foreign tax treatment of participation in the Plan. The information is based
on present law and regulations, which are subject to being changed prospectively
or retroactively.
Incentive Options. A Plan participant will recognize no taxable income and
the Company will not qualify for any deduction upon the grant or exercise of an
incentive stock option. Upon a disposition of the shares underlying the option
after the later of two years from the date of grant or one year after the
exercise of the option, the participant will recognize the difference, if any,
between the amount realized and the exercise price as long-term capital gain or
long-term capital loss (as the case may be) if the shares are capital assets.
The excess, if any, of the fair market value of the shares on the date of
exercise of an incentive stock option over the exercise price will be treated as
an item of adjustment in computing the alternative minimum tax for a
participant's taxable year in which the exercise occurs and may result in an
alternative minimum tax liability for the participant.
If common shares acquired upon the exercise of an incentive stock option
are disposed of before expiration of the necessary holding period of two years
from the date of the grant of the option and one year after the exercise of the
option, (i) the participant will recognize ordinary compensation income in the
taxable year of disposition in an amount equal to the excess, if any, of the
lesser of the fair market value of the shares on the date of exercise or the
amount realized on the disposition of the shares, over the exercise price paid
for such shares; (ii) the participant will recognize gain or loss equal to the
difference between the amount realized and the sum of the exercise price and the
ordinary compensation income recognized; and (iii) the Company will qualify for
a deduction equal to any such amount recognized, subject to the limitation that
the compensation be reasonable.
Nonqualified Options. With respect to nonqualified stock options (i) upon
grant of the option, the participant will recognize no income; (ii) upon
exercise of the option, generally, the participant will recognize ordinary
compensation income in an amount equal to the excess, if any, of the fair market
value of the shares on the date of exercise over the exercise price, and the
Company will qualify for a deduction in the same amount, subject to the
requirement that the compensation be reasonable; and (iii) the Company will be
required to comply with applicable federal income tax withholding requirements
with respect to the amount of ordinary compensation income recognized by the
participant. On a disposition of the shares, the participant will recognize
gain or loss equal to the difference between the amount realized and the sum of
the exercise price and the ordinary compensation income recognized. If the
shares acquired upon exercise of a nonqualified stock option are subject to a
substantial risk of forfeiture, the participant will recognize income at the
time when the substantial risk of forfeiture is removed and the Company will
qualify for a corresponding deduction at such time.
Stock Appreciation Rights. A participant who receives stock appreciation
rights will recognize no income on the grant of such rights, but he or she will
recognize ordinary compensation income equal to the cash received, and the
Company will qualify for a deduction of equal amount subject to the
reasonableness of compensation limitation.
Recommendation
The Board of Directors recommends that the stockholders vote "FOR" the
proposal to amend the Plan. Proxies solicited by the Board of Directors will be
voted in favor of this proposal unless a contrary vote or abstention is
specified.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Seidman & Co., Inc., an affiliate of the Company, makes available to the
Company office space, as well as certain office, administrative and secretarial
services as may be required by the Company. The Company paid Seidman & Co.,
Inc. approximately $40,000 in the fiscal year ended June 30, 1999 for such
services. In January 2000, the Company moved its headquarters to Seidman & Co.,
Inc.'s offices in Ann Arbor, Michigan, and the amount of this payment was
reduced. Samuel N. Seidman, a director and the Chairman, President and Chief
Executive Officer of the Company, is President of Seidman & Co., Inc., and Jesse
A. Levine, a director, Chief Financial Officer, Vice President, Secretary and
Treasurer of the Company, is Senior Vice President of Seidman & Co., Inc. See
"Executive Compensation--Employment Agreements" for a description of the
employment agreements entered into between the Company and Michael D. Austin,
the President and Chief Executive Officer of Atlas Technologies, Inc.
INDEPENDENT AUDITORS
BDO Seidman, LLP served as the Company's independent certified public
accountants for the year ended June 30, 1999. The Board has selected BDO
Seidman, LLP as the Company's independent certified public accountants for the
fiscal year ending June 30, 2000. A representative of BDO Seidman, LLP will
have the opportunity to address the stockholders if such representative so
desires and is expected to be present at the annual meeting. The representative
will be available to answer appropriate questions from stockholders.
STOCKHOLDERS' PROPOSALS
To be considered for inclusion in the Company's Proxy Statement for the
next annual meeting of stockholders, stockholder proposals must be sent to the
Company (directed to the attention of Jesse A. Levine, Secretary, Productivity
Technologies Corp., 206 South Main Street, Ann Arbor, Michigan 48104) for
receipt not later than October 25, 2000.
GENERAL AND OTHER MATTERS
Management knows of no matters, other than those referred to in this Proxy
Statement, which will be presented to the meeting. However, if any other
matters properly come before the meeting or any adjournment, the persons named
in the accompanying proxy will vote it in accordance with their best judgment on
such matters.
The Company will bear the expense of preparing, printing and mailing this
Proxy Statement, as well as the cost of any required solicitation. In addition
to the solicitation of proxies by use of the mails, the Company may use regular
employees, without additional compensation, to request, by telephone or
otherwise, attendance or proxies previously solicited.
By Order of the Board of Directors,
Jesse A. Levine
Secretary
Ann Arbor, Michigan
February 18, 2000
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PROXY
PRODUCTIVITY TECHNOLOGIES CORP.
Solicited by the Board of Directors for the Annual Meeting of Stockholders
Productivity Technologies Corp.
206 South Main Street, 2nd Floor
Ann Arbor, Michigan 48104
The undersigned hereby appoints Samuel N. Seidman and Jesse A. Levine as
Proxies, each with the power to appoint his substitute, to vote all of the
shares of Common Stock of Productivity Technologies Corp. (the "Company"), held
of record by the undersigned on the record date, February 18, 2000, at the
Annual Meeting of Stockholders to be held on March 29, 2000, or any adjournment
thereof, as directed and, in their discretion, on all other matters which may
properly come before the meeting. The undersigned directs said proxies to vote
as specified upon the items shown on the reverse side, which are referred to in
the Notice of Annual Meeting and set forth in the Proxy Statement.
Holders of record of the Company's Common Stock at the close of business on
the record date will be entitled to vote at the Annual Meeting. Holders of
Common Stock will be entitled to one vote for each share then held. Each
stockholder may vote in person or by proxy. All shares represented by proxy
will be voted in accordance with the instructions, if any, given in such proxy.
A stockholder may withhold authority to vote for any nominee(s) or abstain from
voting on the proposal under consideration by so indicating on the reverse
side.
The votes represented by this proxy will be voted as marked by you. However,
if you properly execute and return the proxy unmarked, such votes will be voted
FOR all of the proposals. Any proxy which is not properly executed shall be
ineffective. Please mark each box with an "x".
(Continued, and to be marked, dated and signed, on the other side)
<PAGE>
The votes represented by this proxy will be voted as marked by you. However, if
you execute and return the proxy unmarked, such votes will be voted FOR all of
the proposals. Please mark each box with an "x".
The Board of Directors Recommends a Vote "For" all proposals.
1. Election of Directors: Samuel N. Seidman and Alan H. Foster have been
nominated.
FOR [_] Withheld for all [_]
Withheld for the following (write the nominee's name
in the space below).
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2. Approve amendment to 1996 Performance Equity Plan to increase the maximum
number of shares which may be issued under such Plan from 330,000 to
530,000 shares.
FOR [_] Against [_] Abstain [_] When shares are held as joint
tenants, both should sign.
When signing as attorney,
executor, administrator,
trustee or guardian, please
give full title as such. If a
corporation, please sign in
full corporate name by
President or other authorized
officer. If a partnership,
please sign in the partnership
name by authorized person.
Dated:
---------------------------
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Signature
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Signature if held jointly
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
