<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] 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
Number Nine Visual Technology Corporation
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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:
________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
________________________________________________________________________
(3) Filing Party:
________________________________________________________________________
(4) Date Filed:
________________________________________________________________________
<PAGE>
NUMBER NINE VISUAL TECHNOLOGY CORPORATION
18 HARTWELL AVENUE
LEXINGTON, MASSACHUSETTS 02173
May 29, 1998
Dear Stockholder:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders
of Number Nine Visual Technology Corporation (the "Company") to be held at
10:00 a.m. on Thursday, June 25, 1998, at The Seaport Hotel, One Seaport Lane,
near the World Trade Center, Boston, Massachusetts (the "Annual Meeting").
At the Annual Meeting, two persons will be elected to the Board of
Directors. In addition, the Company will ask the stockholders to ratify the
selection of Coopers & Lybrand L.L.P. as the Company's independent public
accountants. The Board of Directors recommends the approval of each of these
proposals. Such other business will be transacted as may properly come before
the Annual Meeting.
We hope you will be able to attend the Annual Meeting. Whether you plan to
attend the Annual Meeting or not, it is important that your shares are
represented. Therefore, you are urged promptly to complete, sign, date and
return the enclosed proxy card in accordance with the instructions set forth
on the card. This will ensure your proper representation at the Annual
Meeting.
Sincerely,
ANDREW NAJDA
Chairman of the Board and Chief
Executive Officer
YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY PROMPTLY.
<PAGE>
NUMBER NINE VISUAL TECHNOLOGY CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 25, 1998
To the Stockholders of Number Nine Visual Technology Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Number Nine Visual
Technology Corporation, a Delaware corporation (the "Company"), will be held
on Thursday, June 25, 1998 at The Seaport Hotel, One Seaport Lane, near the
World Trade Center, Boston, Massachusetts at 10:00 a.m. for the following
purposes:
1. To elect two members to the Board of Directors to serve for a term
ending in 2001 and until their successors are duly elected and
qualified.
2. To consider and act upon a proposal to ratify the appointment of Coopers
& Lybrand L.L.P. as the Company's independent public accountants for the
fiscal year ending January 2, 1999.
3. To transact such other business as may be properly brought before the
Annual Meeting and any adjournments thereof.
The Board of Directors has fixed the close of business on April 28, 1998 as
the record date for the determination of Stockholders entitled to notice of
and to vote at the Annual Meeting and at any adjournments thereof.
All Stockholders are cordially invited to attend the Annual Meeting. Whether
you plan to attend the Annual Meeting or not, you are requested to complete,
sign, date and return the enclosed proxy card as soon as possible in
accordance with the instructions on the proxy card. A pre-addressed, postage
prepaid return envelope is enclosed for your convenience.
BY ORDER OF THE BOARD OF DIRECTORS
NEIL ARONSON
Secretary
May 29, 1998
<PAGE>
NUMBER NINE VISUAL TECHNOLOGY CORPORATION
18 HARTWELL AVENUE
LEXINGTON, MASSACHUSETTS 02173
(781) 674-0009
----------------
PROXY STATEMENT
----------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Number Nine Visual Technology Corporation (the
"Company"), a Delaware corporation, of proxies, in the accompanying form, to
be used at the Annual Meeting of Stockholders to be held at The Seaport Hotel,
One Seaport Lane, near the World Trade Center, Boston, Massachusetts on
Thursday, June 25, 1998 at 10:00 a.m., and any adjournments thereof (the
"Meeting").
Where the Stockholder specifies a choice on the proxy as to how his or her
shares are to be voted on a particular matter, the shares will be voted
accordingly. If no choice is specified, the shares will be voted FOR the
election of the two nominees for director named herein, and FOR the
ratification of the appointment of Coopers & Lybrand L.L.P. as the Company's
independent public accountants for the fiscal year ending January 2, 1999. Any
proxy given pursuant to this solicitation may be revoked by the person giving
it at any time before its use by delivering to the Company a written notice of
revocation or a duly executed proxy bearing a later date. Any Stockholder who
has executed a proxy but is present at the Meeting, and who wishes to vote in
person, may do so by revoking his or her proxy as described in the preceding
sentence. Shares represented by valid proxies in the form enclosed, received
in time for use at the Meeting and not revoked at or prior to the Meeting,
will be voted at the Meeting. The presence, in person or by proxy, of the
holders of a majority of the outstanding shares of the Company's common stock,
par value $.01 per share ("Common Stock"), is necessary to constitute a quorum
at the Meeting.
The affirmative vote of a majority of the shares present or represented and
entitled to vote at the Meeting is required to approve each proposal, other
than the election of directors which requires a plurality of the shares voted
affirmatively or negatively at the Meeting. With respect to the tabulation of
votes on any matter, abstentions are treated as votes against a proposal,
while broker non-votes have no effect on the vote.
The close of business on April 28, 1998 has been fixed as the record date
for determining the Stockholders entitled to notice of and to vote at the
Meeting. As of the close of business on April 28, 1998, the Company had
9,300,925 shares of Common Stock outstanding and entitled to vote. Holders of
Common Stock are entitled to one vote per share on all matters to be voted on
by Stockholders.
The cost of soliciting proxies, including expenses in connection with
preparing and mailing this Proxy Statement, will be borne by the Company. In
addition, the Company will reimburse brokerage firms and other persons
representing beneficial owners of Common Stock of the Company for their
expenses in forwarding proxy material to such beneficial owners. Solicitation
of proxies by mail may be supplemented by telephone, telegram, telex and
personal solicitation by the directors, officers or employees of the Company.
No additional compensation will be paid for such solicitation.
This Proxy Statement and the accompanying proxy are being mailed on or about
May 29, 1998 to all Stockholders entitled to notice of and to vote at the
Meeting.
<PAGE>
The Annual Report to Stockholders for the fiscal year ended December 27,
1997 is being mailed to the Stockholders with this Proxy Statement, but does
not constitute a part hereof.
SHARE OWNERSHIP
The following table sets forth certain information as of May 4, 1998
concerning the ownership of Common Stock by each Stockholder known by the
Company to be the beneficial owner of more than 5% of its outstanding shares
of Common Stock, each current member of the Board of Directors, each executive
officer named in the Summary Compensation Table on page 7 hereof, and all
current directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED (1)
-----------------
NAME AND ADDRESS** NUMBER PERCENT
- ------------------ --------- -------
<S> <C> <C>
Andrew Najda (2)............................................. 2,049,424 22.0%
c/o Number Nine Visual Technology Corporation
18 Hartwell Avenue
Lexington, MA 02173
Stanley W. Bialek (3)........................................ 1,020,664 11.0%
c/o Number Nine Visual Technology Corporation
18 Hartwell Avenue
Lexington, MA 02173
John Hancock Mutual Life Insurance Company Affiliated
Entities (4)................................................ 542,736 5.8%
c/o John Hancock Place
Post Office Box 111
Boston, MA 02117
Dr. Fouad H. Nader (5)(6).................................... 201,760 2.2%
William H. Thalheimer (5)(7)................................. 292,088 3.1%
Archie K. Miller (5)......................................... 25,000 *
Michael Romanies (5)......................................... 12,500 *
Daniel W. Muehl.............................................. 0 *
James T. O'Bray.............................................. 0 *
All executive officers and directors as a group (9 persons)
(8)......................................................... 3,240,108 34.2%
</TABLE>
- --------
* Represents beneficial ownership of less than 1% of the Company's
outstanding shares of Common Stock.
** Addresses are given for beneficial owners of more than 5% of the
outstanding Common Stock only.
(1) The number of shares of Common Stock issued and outstanding on May 4,
1998 was 9,306,925. The calculation of percentage ownership for each
listed beneficial owner is based upon the number of shares of Common
Stock issued and outstanding at May 4, 1998, plus shares of Common Stock
subject to options held by such person at May 4, 1998 and exercisable
within 60 days thereafter. The persons and entities named in the table
have sole voting and investment power with respect to all shares shown as
beneficially owned by them, except as noted below.
(2) Also includes 148,000 shares held in the Andrew Najda Irrevocable
Children's Trust, as to which Mr. Najda disclaims beneficial ownership.
(3) Also includes 213,328 shares held in the Stanley W. Bialek Irrevocable
Children's Trust, as to which Mr. Bialek disclaims beneficial ownership.
2
<PAGE>
(4) Includes 542,736 shares held by Hancock Venture Partners, Inc.
("Venture"), which is a managing General Partner of the General Partner
of Hancock Venture Partners IV--Direct Fund L.P. ("Hancock IV") which
holds 508,816 of such shares, and Falcon Ventures II L.P. ("Falcon"),
which holds 33,920 of such shares. Each of such stockholders disclaims
beneficial ownership of all shares held by the other stockholder. Venture
may be deemed to be the beneficial owner of such shares, with sole voting
and investment power as to all such shares. Venture is a wholly-owned
subsidiary of John Hancock Subsidiaries, Inc. ("JHSI"), which is a
wholly-owned subsidiary of John Hancock Mutual Life Insurance Company
("JHMLICO"). Through their parent-subsidiary relationship to Venture,
JHMLICO and JHSI may be deemed to have indirect beneficial ownership of
all such shares deemed beneficially owned by Venture.
(5) Includes the following shares subject to currently exercisable stock
options and stock options exercisable within 60 days of May 4, 1998: Dr.
Nader--53,760; Mr. Thalheimer--78,760; Mr. Romanies--12,500; and Mr.
Miller--25,000.
(6) Includes 148,000 shares held on behalf of the Andrew Najda Irrevocable
Children's Trust, of which Dr. Nader is the sole trustee. Dr. Nader
exercises sole voting and investment power with respect to such shares.
(7) Includes 213,328 shares held on behalf of the Stanley W. Bialek
Irrevocable Children's Trust, of which Mr. Thalheimer is the sole
trustee. Mr. Thalheimer exercises sole voting and investment power with
respect to such shares.
(8) Includes 170,020 shares subject to currently exercisable stock options
and stock options exercisable within 60 days of May 4, 1998.
3
<PAGE>
MANAGEMENT
DIRECTORS
The Company's Restated Certificate of Incorporation and By-Laws provide for
the Company's business to be managed by or under the direction of the Board of
Directors. Under the Company's Restated Certificate of Incorporation and By-
Laws, the number of directors is fixed from time to time by the Board of
Directors. The Board of Directors currently consists of four members,
classified into three classes as follows: Andrew Najda and Stanley W. Bialek
constitute a class with a term which expires at the upcoming Meeting (the
"Class C directors"); and Dr. Fouad H. Nader constitutes a class with a term
ending in 1999 (the "Class A directors"); and William H. Thalheimer
constitutes a class with a term ending in 2000 (the "Class B directors"). At
each annual meeting of Stockholders, directors are elected for a full term of
three years to succeed those directors whose terms are expiring.
Pursuant to a Stockholders Agreement entered into in December 1994, Messrs.
Najda and Bialek have each agreed to vote their shares in favor of the other's
election to the Board of Directors, and not vote their shares in favor of the
election to the Board of Directors of any person to which the other reasonably
objects.
The names of the Company's current directors and certain information about
them are set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ---- --- ----------
<S> <C> <C>
Andrew Najda........................... 43 Chief Executive Officer and Chairman
of the Board of Directors
Stanley W. Bialek...................... 43 Director
Dr. Fouad H. Nader..................... 43 Director
William H. Thalheimer.................. 44 Director
</TABLE>
Andrew Najda, a co-founder of the Company, has been a director of the
Company since its inception in May 1982. During the period through May 1993,
Mr. Najda and Stanley W. Bialek alternated the positions of President and
Chairman of the Board on an annual basis. In May 1993, Mr. Najda reassumed the
position of President, and in December 1994 assumed the new position of Chief
Executive Officer. Mr. Najda also assumed the position of Chairman of the
Board of Directors in April 1995. Mr. Najda relinquished the position of
President in May 1996, but remains the Company's Chief Executive Officer and
Chairman of the Board of Directors. Mr. Najda holds a B.S. in electrical
engineering from the Illinois Institute of Technology.
Stanley W. Bialek, a co-founder of the Company, has been a director of the
Company since its inception in May 1982. During the period through May 1993,
Mr. Bialek and Andrew Najda alternated the positions of President and Chairman
of the Board on an annual basis. In May 1993, Mr. Bialek assumed the positions
of Chairman of the Board, which he held until his resignation in April 1995,
and Chief Operating Officer, which he held until January 1995. Mr. Bialek
studied engineering at the Illinois Institute of Technology.
Dr. Fouad H. Nader has served as a director of the Company since September
1994. Since 1981, Dr. Nader has been a Senior International Management and
Technology Consultant at Arthur D. Little, Inc. Dr. Nader holds a B.S. in
mechanical engineering, an M.S. in engineering management and a professional
engineer's degree in industrial engineering from Northeastern University; a
Ph.D. in operations research from Cornell University, and a Ph.D. in
industrial engineering from the University of California at Berkeley.
William H. Thalheimer has served as a director of the Company since
September 1994, and has served as a financial and business consultant to the
Company since 1992. Mr. Thalheimer also served as the Company's
4
<PAGE>
Acting Chief Operating Officer from April 1996 to June 1996. Since 1979, Mr.
Thalheimer has been a partner of Thalheimer and Lemma, Certified Public
Accountants. Mr. Thalheimer is a member of the American Institute of Certified
Public Accountants and holds a B.S. in accounting from Indiana University.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
Meeting Attendance. During the fiscal year ended December 27, 1997 there
were fifteen meetings of the Board of Directors, and the various committees of
the Board of Directors met a total of eight times. No director attended fewer
than 75% of the total number of meetings of the Board and of committees of the
Board on which he served during fiscal 1997. In addition, from time to time,
the members of the Board of Directors and its committees acted by unanimous
written consent pursuant to Delaware law.
Audit Committee. The Audit Committee, which met five times in fiscal 1997
has two members, Dr. Fouad H. Nader and William H. Thalheimer. The Audit
Committee reviews the engagement of the Company's independent accountants,
reviews annual financial statements, considers matters relating to accounting
policy and internal controls and reviews the scope of annual audits.
Compensation Committee. The Compensation Committee has two members, Dr.
Fouad H. Nader (Chairman) and Stanley W. Bialek. The Compensation Committee
met three times during fiscal 1997. The Compensation Committee reviews,
approves and makes recommendations on the Company's compensation policies,
practices and procedures to ensure that legal and fiduciary responsibilities
of the Board of Directors are carried out and that such policies, practices
and procedures contribute to the success of the Company. The Compensation
Committee also administers the Company's stock and employee benefit plans,
including the Company's 1989 Stock Option Plan (the "1989 Stock Plan"), 1994
Employee, Director and Consultant Stock Option Plan (the "1994 Stock Plan")
and 1996 Employee, Director and Consultant Stock Option Plan (the "1996 Stock
Plan").
Nominating Committee. The Company does not have a standing Nominating
Committee.
Compensation Committee Interlocks and Insider Participation. The
Compensation Committee has two members, Dr. Fouad H. Nader (Chairman) and
Stanley W. Bialek. None of such members is or has been an employee of the
Company. No executive officer of the Company serves as a member of the board
of directors or compensation committee of any entity that has one or more
executive officers serving as a member of the Company's Board of Directors or
Compensation Committee.
COMPENSATION OF DIRECTORS
The Company reimburses ordinary and necessary out-of-pocket expenses
incurred by non-employee directors in connection with their services,
including attendance at meetings of the Board of Directors. In addition,
directors of the Company are eligible to receive non-qualified stock options
under the Company's 1994 Stock Plan and 1996 Stock Plan. During fiscal 1997,
as compensation for serving as the Company's Acting Chief Operating Officer
from April 1996 to June 1996, William H. Thalheimer was granted a fully vested
non-qualified stock option to purchase 25,000 shares of Common Stock under the
1994 Stock Plan. No other options to purchase shares were granted during
fiscal 1997 to any of the Company's directors.
5
<PAGE>
EXECUTIVE OFFICERS
The names of, and certain information regarding, executive officers of the
Company who are not also directors, are set forth below.
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ---- --- -----------
<S> <C> <C>
Archie K. Miller..................... 40 Senior Vice President, Worldwide Sales
Timothy J. Burns..................... 58 Acting Chief Financial Officer
Michael E. Romanies.................. 35 Vice President of Marketing
</TABLE>
Timothy J. Burns has been the Company's Acting Chief Financial Officer since
the Company hired Argus Management as a consultant for financial matters
working with the Company in February 1998. Prior to joining the Company, Mr.
Burns worked at Ibis Technology Corporation from June 1994 to January 1998,
most recently as Chief Financial Officer and Operations Manager. From January
1988 to June 1994, Mr. Burns was employed by Argus Management Corporation as a
Principal focusing on corporate restructurings, turnarounds and financial
management issues. Mr. Burns holds an M.B.A. in finance from the University of
Chicago, a B.S. in Economics from Boston College, and holds a C.P.A from the
State of Massachusetts.
Archie K. Miller has been the Company's Senior Vice President, Worldwide
Sales since joining the Company in December 1996. Prior to joining the
Company, Mr. Miller worked at Merisel Incorporated from September 1994 to
December 1996, most recently as Vice President and General Manager for
Merisel's Open Computer Alliance Distribution. From June 1993 to August 1994,
Mr. Miller was employed by Performance Technology, Inc. as Vice President,
North American Sales. From March 1991 to May 1993, Mr. Miller was employed in
various management positions with Microcom, Inc. Mr. Miller holds a B.A. in
political science from Rutgers University. Mr. Miller resigned from his
position with the Company in May, 1998.
Michael E. Romanies has been the Company's Vice President of Marketing since
joining the Company in October 1996. Prior to joining the Company, Mr.
Romanies was the President of World Color New Media, a division of World Color
Press. From January 1987 to December 1995, Mr. Romanies was employed in
various senior level management positions with REED-Elsevier, plc, most
recently as Vice President and General Manager of REED Technology and
Information Services, Inc. Mr. Romanies holds a B.S. in electrical engineering
and physics from Wilkes University.
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth summary information as
to compensation received for services rendered to the Company in all
capacities during fiscal 1995, 1996 and 1997 by: (i) the Company's Chief
Executive Officer (the "CEO") and (ii) each of the other most highly
compensated persons who were serving as executive officers of the Company
(other than the CEO) as of December 27, 1997 whose salary and bonus earned
during fiscal 1997 exceeded $100,000 (collectively, the "named executive
officers"):
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION(1)
------------------------------------- -------------------------
NAME AND PRINCIPAL FISCAL OTHER ANNUAL SECURITIES UNDERLYING
POSITION YEAR SALARY(2) BONUS COMPENSATION OPTIONS(#)
------------------ ------ --------- ------- ------------ -------------------------
<S> <C> <C> <C> <C> <C>
Andrew Najda............ 1997 $200,000 -- -- --
Chief Executive Officer
and 1996 $200,000 -- $35,561(3) --
Chairman of the Board 1995 $150,495 -- -- --
Daniel W. Muehl(4)...... 1997 $143,750 $47,500 -- 100,000
Chief Operating Officer
and Chief 1996 $134,167 $10,000 -- 40,000
Financial Officer 1995 $ 10,000 -- -- 10,000
James T. O'Bray(4)...... 1997 $132,292 $45,000 -- 20,000
Vice President of Manu-
facturing 1996 $126,823 $16,500 -- --
1995 $ 17,067 -- -- 60,000
Archie K. Miller(5)..... 1997 $150,000 $14,063 -- --
Senior Vice President,
Sales 1996 $ 4,038 -- -- 100,000
Michael Romanies(6)..... 1997 $125,000 $ 9,615 $19,600(7) --
Vice President of
Marketing 1996 $ 33,079 -- -- 50,000
</TABLE>
- --------
(1) The Company did not make any restricted stock awards, grant any stock
appreciation rights or make any long-term incentive plan payments during
its 1995, 1996 or 1997 fiscal years.
(2) Includes amounts deferred during 1995, 1996 and 1997 under the Company's
401(k) plan. The Company does not make any matching contributions under
that plan.
(3) Represents amounts paid to Mr. Najda for reimbursement of certain personal
expenses.
(4) Mr. Muehl and Mr. O'Bray resigned from their respective positions with the
Company in January 1998 and February 1998, respectively. Mr. Muehl and Mr.
O'Bray joined the Company in November 1995.
(5) Mr. Miller joined the Company in December 1996. Mr. Miller resigned from
the Company in May, 1998.
(6) Mr. Romanies joined the Company in October 1996.
(7) Represents amounts paid to Mr. Romanies to cover moving and relocation
expenses in connection with his employment by the Company. See "Certain
Transactions."
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding options granted
during the fiscal year ended December 27, 1997 by the Company to its named
executive officers:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
% OF TOTAL STOCK PRICE APPRECIATION
OPTIONS FOR
GRANTED TO EXERCISE OR OPTION TERM(1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------
NAME GRANTED FISCAL YEAR PER SHARE DATE 5% 10%
---- ------- ------------ ----------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Andrew Najda............ -- -- -- -- -- --
Daniel W. Muehl......... 25,000(2) 1.3% $3.07 11/16/05 $ 36,645 $ 87,770
25,000(2) 1.3% $3.07 9/18/06 $ 42,314 $ 104,222
10,000(2) 0.5% $3.07 3/13/07 $ 19,307 $ 48,928
10,000 0.5% $3.07 8/21/07 $ 19,307 $ 48,928
80,000 4.0% $2.63 12/23/07 $ 132,319 $ 335,323
James T. O'Bray......... 60,000(2) 3.0% $3.07 11/13/05 $ 87,947 $ 210,649
20,000 1.0% $2.63 12/23/07 $ 38,614 $ 97,856
Archie K. Miller........ 100,000(2) 5.0% $3.07 12/23/06 $ 169,258 $ 416,890
Michael P. Romanies..... 50,000(2) 2.5% $3.07 10/22/06 $ 84,629 $ 208,445
</TABLE>
- --------
(1) Represents the hypothetical gains that could be achieved for the options
if exercised at the end of option terms. These gains are based on assumed
rates of stock price appreciation of 5% and 10% compounded annually from
the date the respective options were granted to their expiration dates.
There is no assurance the stock price will appreciate at the rates shown
in this table.
(2) In fiscal 1997, the Company repriced the November 13, 1995, November 16,
1995, September 18, 1996, October 22, 1996, December 23, 1996 and March
13, 1997 non-qualified stock options to purchase shares of Common Stock
granted to Daniel W. Muehl, James T. O'Bray, Archie K. Miller and Michael
Romanies, under the Company's 1994 and 1996 Stock Plans. See "Compensation
Committee Report on Ten Year Option Repricings." Repriced options are
considered grants for the purpose of this table.
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES
None of the named executive officers exercised stock options during the
fiscal year ended December 27, 1997. The following table provides information
regarding the number of shares covered by both exercisable and unexercisable
stock options held by each of the named executive officers as of December 27,
1997 and the values of "in-the-money" options, which values represent the
positive spread between the exercise price of any such option and the fiscal
year-end value of the Company's Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF THE UNEXERCISED
OPTIONS AT FISCAL YEAR- IN-THE-MONEY OPTIONS AT
END FISCAL YEAR-END(1)
------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Andrew Najda................ -- -- -- --
Daniel W. Muehl (2)......... 18,750 131,250 $ 0 $ 0
James T. O'Bray (2)......... 30,000 50,000 $ 0 $ 0
Archie K. Miller............ 25,000 75,000 $ 0 $ 0
Michael Romanies............ 12,500 37,500 $ 0 $ 0
</TABLE>
8
<PAGE>
- --------
(1) The value of unexercised in-the-money options at fiscal year end assumes a
fair market value for the Company's Common Stock of $1.91, the closing
sale price per share of the Company's Common Stock as reported in the
Nasdaq National Market on December 27, 1997. The exercise price of each of
the options held by Mr. Muehl, Mr. O'Bray, Mr. Miller and Mr. Romanies
exceeds $1.91.
(2) Mr. Muehl's and Mr. O'Bray's unvested options terminated at the time of
their resignations in January 1998 and February 1998, respectively. Their
vested options remained effective for a period of 30 days following their
resignations. Only Mr. O'Bray exercised his 30,000 vested options during
the subsequent 30 day period.
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
None of the Company's named executive officers has an employment agreement
with the Company. The named executive officers are parties to confidentiality
agreements with the Company, whereby each is required to disclose to the
Company certain inventions, discoveries and developments, and to assign his
rights therein to the Company.
On December 23, 1996, Archie K. Miller, Senior Vice President, Sales, was
granted a non-qualified stock option to purchase 100,000 shares of the
Company's Common Stock which will vest in four equal annual installments
beginning December 27, 1997, and which are subject to acceleration in the
event of a "change in control" of the Company (as defined in Mr. Miller's
option agreement), provided Mr. Miller is an employee of the Company upon the
occurrence of a "change in control." Each of such options was granted under
the Company's 1996 Stock Plan and are exercisable at a purchase price of $3.07
per share.
In September 1997, upon his promotion to the additional position of Chief
Operating Officer, Daniel W. Muehl was granted a non-qualified stock option to
purchase 80,000 shares of the Company's Common Stock, which will vest in four
equal annual installments beginning December 23, 1997, as well as conversion
of Mr Muehl's previously granted non-qualified stock option to purchase 70,000
shares of the Company's Common Stock, which will vest under annual
installments beginning on the date of the effective grants and which are
subject to acceleration in the event of a "change in control" of the Company
(as defined in Mr. Muehl's option agreement), provided Mr. Muehl is an
employee of the Company upon the occurrence of a "change in control." Each of
such options was granted under the Company's 1994 and 1996 Stock Plans and are
exercisable at a purchase price of $3.07 and $2.63 per share for 70,000 and
80,000 of the shares, respectively. Mr. Muehl resigned from his positions with
the Company in January 1998. All of Mr. Muehl's options either terminated or
expired in accordance with their terms following his resignation.
Under the Company's 1989 Stock Plan, 1994 Stock Plan and 1996 Stock Plan, if
the Company is consolidated with or acquired by another entity, the
Compensation Committee may, among other things, make all options granted
thereunder immediately exercisable just prior to such consolidation or merger
or arrange to have any successor or acquiring entity grant replacement options
to the optionees. In addition, under the 1994 Stock Plan and 1996 Stock Plan,
in the event of a consolidation or acquisition of the Company, the
Compensation Committee may terminate all options in exchange for a cash
payment equal to the difference between the fair market value of the shares
then subject to purchase pursuant to the options and the exercise price for
such shares pursuant to the options.
9
<PAGE>
PERFORMANCE GRAPH
The following graph and table compare the cumulative total stockholder
return on a monthly basis on the Company's Common Stock for the period from
May 25, 1995 (the date of the Company's initial public offering) through
December 27, 1997, against the cumulative total returns on the Nasdaq Stock
Market Index (U.S.) and the Nasdaq Stock Market Index for Computer
Manufacturers' Stocks during the same period. It should be noted that the
Company has not paid any dividends on the Common Stock, and no dividends are
included in the representation of the Company's performance. The stock price
performance on the graph below is not necessarily indicative of future price
performance.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
5/25/95 6/30/95 12/29/95 6/28/96 12/27/96 6/27/97 12/26/97
<S> <C> <C> <C> <C> <C> <C> <C>
COMPANY $100.00 $138.33 $ 58.33 $ 52.50 $ 32.50 $ 31.67 $ 14.17
BROAD INDEX $100.00 $106.51 $120.79 $136.75 $148.75 $165.69 $175.52
SELECT $100.00 $107.62 $132.23 $153.24 $183.01 $191.44 $204.42
</TABLE>
The above graph and table assume $100 invested on May 25, 1995, with all
dividends reinvested, in each of the Company's Common Stock, the Nasdaq Stock
Market Index (U.S.) and the Nasdaq Stock Market Index for Computer
Manufacturers' Stocks.
10
<PAGE>
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee's compensation policy for continuing executive
officers of the Company has been to provide salary based on a combination of
historical levels and market conditions, and to provide both discretionary
bonuses and stock options for executive officers which are intended to provide
incentives. The compensation of executive officers engaged by the Company
during the past year have been determined by a combination of market
conditions and negotiations with these individuals, with the policy of
providing incentives through both bonuses and stock options.
The compensation for Andrew Najda, the Company's Chief Executive Officer, in
fiscal 1997 consisted of a base salary of $200,000. The Chief Executive
Officer's compensation has not been tied to measures of the Company's
performance. Daniel W. Muehl was engaged as the Company's Chief Operating
Officer and Chief Financial Officer in September 1997 and his compensation was
adjusted based upon a combination of market conditions and negotiations
between Mr. Muehl and the Company, including a significant portion of
compensation based upon stock options granted to Mr. Muehl. The Chief
Operating Officer's and Chief Financial Officer's total compensation consisted
of a base salary, a bonus and stock options granted at the promotion of his
responsibilities. Mr. Muehl's base salary, prior to his promotion, started at
$125,000 in part as a result of the significant stock option component to his
compensation. In September 1997, the Compensation Committee approved an
increase in Mr. Muehl's annual base salary to a rate of $200,000 and provided
that Mr. Muehl's bonus for 1997 would be discretionary. This increase in base
salary was based upon a qualitative subjective judgment regarding Mr. Muehl's
overall performance during his tenure at the Company.
Dr. Fouad H. Nader Stanley W. Bialek
COMPENSATION COMMITTEE REPORT ON TEN-YEAR OPTION REPRICINGS
The Company's Stock Plans were established as an employment incentive to
retain persons necessary for the development and financial success of the
Company. As a result of the decrease in the market price of the Company's
Common Stock during the preceding months and recognizing that previously
granted stock options had lost much of their value in motivating employees,
including certain executive officers, to remain with the Company and share in
its overall financial goals, the Compensation Committee voted in August 1997
to reprice the options held by employees and Directors, including the
executive officers named below, granted since December 1994 to an option
exercise price equal to the fair market value on the date of repricing,
subject to a provision that the repriced options would not be exercisable for
at least six months. Options for a total of 1,369,805 shares were repriced. By
repricing these options, the Company intends to provide incentives to and
reward employees, including the executive officers named below, holding such
options for their contributions to the Company.
In particular, in connection with the repricing the Compensation Committee
concluded it was advisable to reprice the options to purchase 325,000, 50,000,
60,000, 60,000, 100,000 and 50,000 shares of Common Stock granted to Mr.
Thompson, Ms. Schultz, Mr. Muehl, Mr. O'Bray, Mr. Miller and Mr. Romanies,
respectively. Accordingly, these options were repriced at the exercise price
of $3.07 per share, the closing price of the Company's Common Stock on the
Nasdaq National Market on August 21, 1997, the date the Compensation Committee
deemed repricing advisable. Existing vesting schedules were unaffected by the
repricing.
11
<PAGE>
The table below sets forth information pertaining to options held by
executive officers of the Company which were repriced during fiscal 1997.
Options are considered to be repriced whenever the Company adjusts or amends
the exercise price of stock options previously granted, whether through
amendment, cancellation or replacement grants, or any other means.
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET PRICE EXERCISE OPTION TERM
UNDERLYING OF STOCK AT PRICE AT NEW REMAINING
DATE OF OPTIONS TIME OF TIME OF EXERCISE AT DATE OF
NAME REPRICING REPRICED REPRICING REPRICING PRICE REPRICING
---- --------- ---------- ------------ --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
John G. Thompson........ 8/21/97 250,000 $3.07 $6.625 $3.07 8.75 years
8/21/97 75,000 $3.07 $6.625 $3.07 8.75 years
Beverly Schultz......... 8/21/97 50,000 $3.07 $9.375 $3.07 8.75 years
Daniel W. Muehl......... 8/21/97 25,000 $3.07 $5.750 $3.07 8.25 years
8/21/97 25,000 $3.07 $5.875 $3.07 9.08 years
8/21/97 10,000 $3.07 $4.250 $3.07 9.58 years
James T. O'Bray......... 8/21/97 60,000 $3.07 $5.750 $3.07 8.25 years
Archie K. Miller........ 8/21/97 100,000 $3.07 $5.375 $3.07 9.33 years
Michael Romanies........ 8/21/97 50,000 $3.07 $7.375 $3.07 9.17 years
</TABLE>
Dr. Fouad H. Nader Stanley W. Bialek
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and officers, and persons who own more than 10% of the Company's
Common Stock, to file with the Securities and Exchange Commission (the "SEC")
initial reports of beneficial ownership and reports of changes in beneficial
ownership of the Common Stock and other equity securities of the Company.
Officers, directors and greater than 10% beneficial owners are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to it and written representations that no other reports were
required during the fiscal year ended December 27, 1997 all Section 16(a)
filing requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with, except that: (i) Daniel W. Muehl, the
former Chief Operating Officer and Chief Financial Officer of the Company
failed to file a Form 5 with respect to the award(s) and repricing of stock
options; (ii) James T. O'Bray, the former Vice President of Manufacturing of
the Company failed to file a Form 5 with respect to the award and repricing of
a stock option; (iii) Archie K. Miller, Senior Vice President, Worldwide Sales
of the Company, failed to file a Form 5 with respect to the repricing of a
stock option; (iv) Michael Romanies, Vice President of Marketing of the
Company, failed to file a Form 5 with respect to the repricing of a stock
option; (v) John G. Thompson, the former President, Chief Operating Officer
and a Director of the Company, failed to file a Form 5 with respect to the
repricing of a stock option; and (vi) Beverly Schultz, the former Vice
President of Engineering of the Company, failed to file a Form 5 with respect
to the repricing of a stock option.
12
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and John G. Thompson, the Company's former President and Chief
Operating Officer, entered into a Separation Agreement as of October 6, 1997
pursuant to which Mr. Thompson resigned his position at the Company. The
Company agreed to pay on behalf of Mr. Thompson a donation of $40,000 to the
Monroe Community College Scholarship Foundation in lieu of an additional three
months of salary. The Company also entered into a Separation Agreement with
Beverly Schultz, the Company's former Vice President of Engineering, on
November 20, 1997 pursuant to which Ms. Schultz confirmed her resignation from
the Company effective October 24, 1997. The Company agreed to pay Ms.
Schultz's salary through December 31, 1997.
The Company accepted the resignation of Daniel W. Muehl, the Company's
former Chief Operating Officer and Chief Financial Officer as of January 19,
1998 pursuant to which Mr. Muehl resigned his position at the Company
effective January 31, 1998. The Company also accepted the resignation of James
T. O'Bray, the Company's former Vice President of Manufacturing as of February
6, 1998 pursuant to which Mr. O'Bray resigned his position at the Company
effective February 20, 1998. The Company did not enter into separation
arrangements with either of Mr. Muehl or Mr. O'Bray.
The Company paid Michael Romanies, Vice President of Marketing of the
Company $19,600, to cover moving and related expenses to the Boston area in
connection with his employment by the Company in October 1996.
In February 1998, the Company entered into an arrangement with Argus
Management Corporation, a financial consulting firm, pursuant to which Timothy
J. Burns has served in the capacity of Acting Chief Financial Officer of the
Company.
ELECTION OF DIRECTORS
(NOTICE ITEM 1)
The Company's Restated Certificate of Incorporation and By-Laws provide for
a classified Board of Directors. The Board of Directors currently consists of
four members, classified into three classes as follows: Andrew Najda and
Stanley W. Bialek constitute a class with a term which expires at the upcoming
Meeting (the "Class C directors"); Dr. Fouad H. Nader constitutes a class with
a term ending in 1999 (the "Class A director") and William H. Thalheimer
constitutes a class with a term ending in 2000 (the "Class B director"). At
each annual meeting of Stockholders, directors are elected for a full term of
three years to succeed those directors whose terms are expiring.
Unless authority to vote for any of the nominees named above is withheld,
the shares represented by the enclosed proxy will be voted FOR the election as
directors of such nominees. In the event that any nominee shall become unable
or unwilling to serve, the shares represented by the enclosed proxy will be
voted for the election of such other person as the Board of Directors may
recommend in his place. The Board has no reason to believe that any nominee
will be unable or unwilling to serve.
A plurality of the shares voted affirmatively or negatively at the Meeting
is required to elect each nominee as a director.
13
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF ANDREW NAJDA AND STANLEY
W. BIALEK AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN
FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
INDEPENDENT PUBLIC ACCOUNTANTS
(NOTICE ITEM 2)
The Board of Directors has appointed Coopers & Lybrand L.L.P., independent
public accountants, to audit the financial statements of the Company for the
fiscal year ending January 2, 1999. The Board proposes that the Stockholders
ratify this appointment. Coopers & Lybrand L.L.P. audited the Company's
financial statements for the fiscal year ended December 27, 1997. The Company
expects that representatives of Coopers & Lybrand L.L.P. will be present at
the Meeting, with the opportunity to make a statement if they so desire, and
will be available to respond to appropriate questions.
In the event that ratification of the appointment of Coopers & Lybrand
L.L.P. as the independent public accountants for the Company is not obtained
at the Meeting, the Board of Directors will reconsider its appointment.
The affirmative vote of a majority of the shares present or represented and
entitled to vote is required to ratify the appointment of the independent
public accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE RATIFICATION OF THE
APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF
UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
OTHER MATTERS
The Board of Directors knows of no other business which will be presented to
the Meeting. If any other business is properly brought before the Meeting, it
is intended that proxies in the enclosed form will be voted in respect thereof
in accordance with the judgment of the persons voting the proxies.
STOCKHOLDER PROPOSALS
To be considered for presentation at the Annual Meeting of Stockholders to
be held in 1999, stockholder proposals must be received, marked for the
attention of: Assistant Treasurer, Number Nine Visual Technology Corporation,
18 Hartwell Avenue, Lexington, Massachusetts 02173, not later than December
18, 1998.
14
<PAGE>
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, YOU ARE URGED TO
FILL OUT, SIGN, DATE AND RETURN THE ENCLOSED PROXY AT YOUR EARLIEST
CONVENIENCE.
BY ORDER OF THE BOARD OF DIRECTORS
NEIL ARONSON
Secretary
May 29, 1998
15
<PAGE>
NUMBER NINE VISUAL TECHNOLOGY CORPORATION
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF
NUMBER NINE VISUAL TECHNOLOGY CORPORATION
The undersigned, revoking any previous proxies relating to these shares, hereby
acknowledges receipt of the Notice and Proxy Statement dated May 19, 1998 in
connection with the Annual Meeting of Stockholders of Number Nine Visual
Technology Corporation to be held at 10:00 a.m. on Thursday, June 25, 1998 at
The Seaport Hotel located near the World Trade Center, Boston, Massachusetts and
hereby appoints Andrew Najda and Timothy J. Burns, and each of them (with full
power to act alone), the attorneys and proxies of the undersigned, with power of
substitution to each, to vote all shares of the Common Stock of Number Nine
Visual Technology Corporation registered in the name provided herein which the
undersigned is entitled to vote at the 1998 Annual Meeting of Stockholders, and
at any adjournments thereof, with all the powers the undersigned would have if
personally present. Without limiting the general authorization hereby given,
said proxies are, and each of them is, instructed to vote or act as follows on
the proposals set forth in said Proxy.
ELECTION OF DIRECTORS (or if any nominee is not available for election, such
substitute as the Board of Directors may designate)
SEE REVERSE SIDE FOR PROPOSALS 1 AND 2. IF YOU WISH TO VOTE IN ACCORDANCE WITH
THE BOARD OF DIRECTORS' RECOMMENDATIONS, JUST SIGN ON THE REVERSE SIDE. YOU
NEED NOT MARK ANY BOXES.
(SEE REVERSE SIDE)
------------------
<PAGE>
This Proxy when executed will be voted in the manner directed herein. If no
direction is made this Proxy will be voted FOR the election of Directors and FOR
Proposal 2.
Please mark
your votes as ---
indicated in X
this example ---
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
NOMINEES: MR. ANDREW NAJDA AND MR. STANLEY BIALEK
1. Election of Directors
FOR all nominees WITHHOLD
listed to the right AUTHORITY
(except as marked to the to vote for all nominees
contrary) listed to the right
--- ---
--- ---
2. Propsal to Ratify the Appointment of Coopers & Lybrand L.L.P. as the
Company's independent public accountants for the fiscal year ending
January 2, 1999.
FOR AGAINST ABSTAIN
--- --- ---
--- --- ---
IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED
TO VOTE UPON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE 1998 ANNUAL MEETING
OR ANY ADJOURNMENT THEREOF.
Please sign exactly as name(s) appears hereon.
Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such.
Dated:--------------------,1998
-------------------------------
Signature
-------------------------------
Signature
