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 Section 240.14a-11(c) or Section 240.14a-12
n-VISION, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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:
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:
<PAGE>
( ) 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>
[n-Vision, Inc. Logo]
7680 Old Springhouse Road
Madison Bldg., First Floor
McLean, Virginia 22102
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 25, 1997
- --------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of
n-Vision, Inc., a Delaware corporation (the "Corporation"), will be held at the
Ritz-Carlton Hotel, 1700 Tysons Boulevard, McLean, Virginia 22102, on April 25,
1997, at 10:00 a.m., Eastern Time, for the following purposes:
1. To elect two (2) directors to serve as second class directors, who shall
serve for a term of two (2) years and until their respective successors
have been elected and qualified.
2. To elect one (1) director to serve as a third class director, who shall
serve for a term of one (1) year and until his or her successor has been
elected and qualified.
3. To ratify the appointment of Grant Thornton LLP as the Corporation's
independent public accountants of the Corporation for the year 1997.
4. To ratify the approval by the Board of Directors of the n-Vision, Inc.
1996 Stock Option Plan.
5. To transact such other business as may be properly brought before the
meeting or any adjournment or adjournments thereof.
Only holders of record of shares of Common Stock, $0.01 par value, of the
Corporation at the close of business on February 28, 1997 will be entitled to
notice of and to vote at the Annual Meeting or any adjournment or adjournments
thereof.
All stockholders of the Corporation are invited to attend the Annual
Meeting. Whether or not you plan to attend the Annual Meeting in person, it is
important that your shares be represented and voted at the meeting. After
reading the enclosed Notice of Annual Meeting of Stockholders and Proxy
Statement, please complete, sign, date, and return the enclosed Proxy Form in
the enclosed envelope, to which no postage need be affixed if mailed in the
United States. If you decide the attend the meeting, you may revoke the proxy at
any time before it is voted.
By Order of the Board of Directors
/s/ Robert B. Hamilton
--------------------------
Robert B. Hamilton, C.P.A.
Secretary
Dated: March 28, 1997
<PAGE>
[n-Vision, Inc. Logo]
7680 Old Springhouse Road
Madison Bldg., First Floor
McLean, Virginia 22102
March 28, 1997
- --------------------------------------------------------------------------------
PROXY STATEMENT
- --------------------------------------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of n-Vision, Inc. (the "Corporation") of proxies to be
used at the Annual Meeting of Stockholders of the Corporation to be held at the
Ritz-Carlton Hotel, 1700 Tysons Boulevard, McLean, Virginia 22102, on April 25,
1997, at 10:00 a.m., Eastern Time, and at any adjournment or adjournments
thereof. Only holders of record of shares of Common Stock, $0.01 par value
("Common Stock"), of the Corporation at the close of business on February 28,
1997 will be entitled to notice of and to vote at the Annual Meeting or any
adjournment or adjournments thereof.
Any stockholder who executes and returns the enclosed Proxy Form may revoke
it at any time before it is voted by giving written notice in writing to the
Secretary of the Corporation or by voting in person at the Annual Meeting.
Unless so revoked, the shares represented by the Proxy Form will be voted in
accordance with the instructions specified therein at the Annual Meeting, if the
Proxy Form is properly executed and is received in time for voting. If no
instructions are specified, the shares represented by the Proxy Form will be
voted FOR all of the matters described herein. All proxies not voted will not be
counted toward establishing a quorum for the transaction of business at the
meeting. Stockholders should note that while votes for ABSTAIN will count toward
establishing a quorum, passage of any proposal considered at the Annual Meeting
will occur only if a sufficient number of votes are cast FOR the proposal.
Accordingly, votes to ABSTAIN and votes AGAINST will have the same effect in
determining whether the proposal is approved. If a broker or other record holder
indicates on a Proxy Form that it does not have authority as to certain shares
to vote on a particular matter, those shares will not be considered as present
and entitled to vote with respect to that matter. Except as otherwise required
by law or by the Corporation's Charter, all matters will be determined by a
majority of the shares represented at the meeting.
The Corporation will bear the entire cost of preparing, assembling, and
mailing the Proxy Statement, the Proxy Form and any additional material
furnished to the stockholders in connection with the Annual Meeting. Further
solicitation of proxies may be made by telephone or in person by officers,
directors and regular employees of the Corporation.
The Corporation's Annual Report for the fiscal year ended December 31,
1996, including financial statements and a description of its operations for
1996, is transmitted herewith. The approximate mailing date of this Proxy
Statement and accompanying Proxy Form is March 28, 1997. A copy of the
Corporation's Annual Report on Form 10-KSB for the fiscal year ended December
31, 1996, as filed with the U.S. Securities and Exchange Commission, is
available from the Corporation without charge to stockholders solicited by means
of this Proxy Statement on request directed to the Secretary of the Corporation
at 7680 Old Springhouse Road, Madison Bldg., First Floor, McLean, Virginia 22102
(Telephone: (703) 506-8808).
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of February 28, 1997, the total number of outstanding shares of Common
Stock entitled to vote at the meeting is 5,312,625. Stockholders are entitled to
one (1) non-cumulative vote for each share of Common Stock. A majority of the
1
<PAGE>
issued and outstanding shares of Common Stock present at the Annual Meeting in
person or by proxy constitutes a quorum for the transaction of business at the
meeting.
The following table sets forth as of February 28, 1997 the number of shares
and percentage of outstanding Common Stock owned by (i) each person known to the
Corporation to be the beneficial owner of more than five percent (5%) of the
Corporation's outstanding Common Stock, (ii) each director and nominee for the
Board of Directors, and (iii) all directors and executive officers of the
Corporation as a group. The address for Thomas T. Prousalis, Esq., is 1919
Pennsylvania Avenue, N.W., Suite 800, Washington, D.C. 20006. The address for
each director and officer listed below is the same as the Corporation's address.
Messrs. Delmar Lewis, Christopher Lewis, Hamilton, Rumsey and Chern each
failed to file on a timely basis a Form 3 (Initial Statement of Beneficial
Ownership of Securities) during the 1996 fiscal year. Each person filed one late
report on Form 3 with respect to one transaction.
<TABLE>
<CAPTION>
COMMON STOCK
---------------------------------
AMOUNT AND
NAME OF BENEFICIAL OWNER NATURE OF BENEFICIAL OWNERSHIP(1)
- ------------------------ ---------------------------------
<S><C>
Delmar J. Lewis
Director and Officer.................................................... 1,471,301(3)
Christopher J. Lewis
Director, Officer and Nominee........................................... 620,063
Robert B. Hamilton, C.P.A.
Director, Officer and Nominee........................................... 51,672
Claude H. Rumsey, Jr.
Director................................................................ 338,216(3)
Mao-Jin Chern, Ph.D.
Director................................................................ -0-
Ronald C. Wilgenbusch
Nominee................................................................. -0-
All directors, nominees and executive officers as a group
(6 persons)............................................................. 2,481,252
Thomas T. Prousalis, Jr., Esq.
Stockholder............................................................. 316,750
<CAPTION>
-------------------
NAME OF BENEFICIAL OWNER PERCENT OF CLASS(2)
- ------------------------ -------------------
<S><C>
Delmar J. Lewis
Director and Officer.................................................... 27.69
Christopher J. Lewis
Director, Officer and Nominee........................................... 11.67
Robert B. Hamilton, C.P.A.
Director, Officer and Nominee........................................... 0.97
Claude H. Rumsey, Jr.
Director................................................................ 6.37
Mao-Jin Chern, Ph.D.
Director................................................................ -0-
Ronald C. Wilgenbusch
Nominee................................................................. -0-
All directors, nominees and executive officers as a group
(6 persons)............................................................. 46.70
Thomas T. Prousalis, Jr., Esq.
Stockholder............................................................. 5.96
</TABLE>
(1) Unless otherwise indicated, each person has sole voting and investment power
with respect to the shares beneficially owned.
(2) Calculated on the basis of 5,312,625 shares of the Corporation's Common
Stock outstanding on February 28, 1997.
(3) Does not include 200,000 shares beneficially owned by Advanced Technology
Systems Inc., which is owned by Messrs. Lewis and Rumsey.
2
<PAGE>
ELECTION OF DIRECTORS
One of the purposes of the Annual Meeting is to elect two (2) second class
directors, who shall hold office for two (2) years until their successors are
elected and qualified, and one (1) third class director, who shall hold office
for one (1) year until the next annual meeting and until his or her successor is
elected and qualified. Should any of the nominees set forth in this Proxy
Statement be unable to serve or refuse to serve as directors (an event that
Management does not anticipate), proxies solicited hereunder will be voted for
substituted nominees. The Corporation's By-Laws authorize not less than one (1)
nor more than nine (9) directors.
The enclosed Proxy Form provides a means for a stockholder to vote for one
or more of the proposed nominees, or to withhold authority to vote for all of
such proposed nominees. Each properly executed Proxy Form received in time for
the Annual Meeting will be voted as specified therein. If a stockholder executes
and returns a Proxy Form but does not specify otherwise, the shares represented
by such stockholder's proxy will be voted FOR each of the proposed nominees
listed therein or, should any one or more of such proposed nominees become
unavailable, for another nominee or other nominees to be selected by the Board
of Directors.
IDENTIFICATION OF NOMINEES
The following table and accompanying narratives set forth certain
information regarding each nominee for the Board of Directors.
<TABLE>
<CAPTION>
POSITION WITH DIRECTOR
NOMINEE AGE THE CORPORATION SINCE
------- --- --------------- --------
<S><C>
Christopher J. Lewis 30 President, Chief Operating Officer, Director and Nominee 1994
Robert B. Hamilton, C.P.A. 57 Executive Vice President, Chief Financial Officer, Secretary, 1995
Director and Nominee
Ronald C. Wilgenbusch 58 Nominee N/A
</TABLE>
NARRATIVE INFORMATION REGARDING NOMINEES
The principal occupation and business experience of each nominee for the
last five (5) years and any directorships with public companies held by each
such person are as follows:
CHRISTOPHER J. LEWIS has been president and chief operating officer of the
Corporation since its incorporation in September 1994. From 1991 to 1994, Mr.
Lewis managed the Corporation while it was a division of Advanced Technology
Systems, Inc.
ROBERT B. HAMILTON, C.P.A. has been executive vice president, chief
financial officer, secretary and a director of the Corporation since March 1995.
Since 1988, Mr. Hamilton, a certified public accountant, has been a director of
finance and administration of Advanced Technology Systems, Inc.
RONALD C. WILGENBUSCH, REAR ADMIRAL, USN (RET.), was designated by the
United States Navy as a Material Professional and a Sub-specialist in Command,
Control, and Communication, Computers and Intelligence (C4I). Admiral
Wilgenbusch has substantial command experience in Communications while serving
as the Commanding Officer of the Naval Communications Master Station,
Mediterranean, responsible for all Naval Communications in the Mediterranean
region. As Program Director for the Information Transfer Systems at the Space
and Naval Warfare Systems Command, he assisted the Director of DARPA (Defense
Advanced Research Project Agency) with the Battle Command Initiative. As a
Principal with Booze Allen & Hamilton Inc., he provided consulting support for
U.S. Navy electronic warfare and the Navy Integrated C4I System. Establishing
his own consulting practice, he contributed to a major "White Paper" and to
master plans, and he currently provides consulting services to major Defense
corporations. Admiral Wilgenbusch has been called to brief Members of Congress
on technical aspects of these projects. He holds a top secret security clearance
with special access, and holds a B.A. degree and an M.S. degree in
Communications Technology Management. Admiral Wilgenbusch has also completed
post-graduate work in senior military institutions.
Messrs. Lewis and Hamilton are nominees for second class directors; Admiral
Wilgenbusch is a nominee for third class director.
THE CORPORATION'S BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR THE NOMINEES IDENTIFIED ABOVE.
3
<PAGE>
IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding each director
and/or executive officer who is not a nominee for the Board of Directors.
<TABLE>
<CAPTION>
POSITION WITH DIRECTOR
NOMINEE AGE THE CORPORATION SINCE
------- --- --------------- --------
<S><C>
Delmar J. Lewis 66 Chairman of the Board and Chief Executive Officer 1995
Claude H. Rumsey, Jr. 53 Director 1994
Mao-Jin Chern, Ph.D. 53 Director 1995
</TABLE>
NARRATIVE INFORMATION REGARDING DIRECTORS AND EXECUTIVE OFFICERS
The principal occupation and business experience of each director and/or
executive officer who is not a nominee for the last five (5) years and
directorships with public companies held by each such person are as follows:
DELMAR J. LEWIS has been chairman of the board and chief executive officer
of the Corporation since January 1995. Mr. Lewis has more than 30 years
experience in executive management and the design, development, testing and
implementation of advanced user data systems and large-scale communication
technology. Since 1978, Mr. Lewis has been a founder, chairman of the board,
president and chief executive officer of Advanced Technology Systems, Inc., a
McLean, Virginia based information technology products and services corporation.
CLAUDE H. RUMSEY, JR. has been a director of the Corporation since its
incorporation in September 1994. Since 1978, Mr. Rumsey has been executive vice
president and a director of Advanced Technology Systems, Inc.
MAO-JIN CHERN, PH.D. has been a director of the Corporation since March
1995. From 1980 to 1993, Dr. Chern held numerous technical and management
positions with Hughes Aircraft Corporation, a Los Angeles, California based
major aerospace corporation, where he was involved in the development of
advanced display systems for aerospace and automotive applications. Since 1993,
Dr. Chern has been the general manager of Vivitek Co., Ltd., a Taiwan based
advanced technology corporation, involved in the design, development and
manufacturing of highly advanced display products based on liquid crystal color
shutter technologies. Dr. Chern, whose term of office as a director of the
Corporation ends on the date of the Annual Meeting, has chosen not to run for
re-election.
FAMILY RELATIONSHIPS
There are no family relationships among any nominees, executive officers or
directors of the Corporation, except between Delmar J. Lewis and Christopher J.
Lewis who are father and son, respectively.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Corporation was established in 1988 as a division of Advanced
Technology Systems, Inc. ("ATS"), a McLean, Virginia based information
technology products and services corporation, which is principally owned and
controlled by Delmar J. Lewis, the chairman of the board and a principal
stockholder of the Corporation. The Corporation was incorporated in Delaware on
September 16, 1994 and acquired all rights, title and interest in the VR
products and systems from ATS for a purchase price of $1,520,590, of which
$500,000 was originally payable in the form of a note payable. The note payable,
however, was forgiven by ATS in October 1995. The balance of $1,020,950 was
payable under a promissory note bearing simple annual interest at a rate of
prime plus 1.375% with semi-annual payments that were to commence in May 1996
and extend through May 2001. In May 1996, however, $1,000,000 of the amount due
under the promissory note was retired in exchange for 200,000 shares of the
Corporation's common stock.
The Corporation had borrowed $1,071,023 against this line as of December
31, 1995 to meet its on-going cash flow requirements. ATS did not demand
repayment of interest and principal due on this loan until January 1, 1997. The
Corporation used net proceeds of its initial public offering in May 1996 to
reduce the outstanding balance of the line of credit by $500,000 and provide the
Corporation with cash reserves to finance its operations for the 12-month period
following the closing of the initial public offering, which occurred on May 28,
1996. The debt owed to ATS was retired and replaced with a promissory note with
a five-year term in the principal amount of $600,000 at an interest rate of 8%
per annum simple interest. The Corporation is required to make two payments per
year equal to $60,000 each, which is applied to the principal amount of the
promissory note.
4
<PAGE>
In 1996, the Corporation had its helmets listed for sale through ATS's
General Services Administration (GSA) schedules. In return for the listing, ATS
receives a 7% sale value commission. The Corporation plans to evaluate this
arrangement with ATS and is considering the establishment of a separate schedule
for implementation in the third or fourth quarter of 1997.
In 1996, Delmar Lewis, the Corporation's Chairman of the Board and Chief
Executive Officer, agreed to waive all compensation owed to him in 1996 (under
the terms of an employment agreement between Mr. Lewis and the Corporation)
except $50,000, which Mr. Lewis received in the form of a bonus. Mr. Lewis
executed an agreement verifying his waiver of compensation and the fair market
value of his services to the Corporation in 1996.
Messrs. Delmar Lewis and Rumsey, directors of the Corporation, are also
officers and stockholders of ATS.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
Since the Corporation's initial public offering in May, 1996, the Board of
Directors held one (1) meeting during the 1996 fiscal year. All continuing
directors were present at the meeting.
By resolutions adopted in February, 1997, the directors created an Audit
Committee and a Compensation Committee. The directors shall determine the
members of each committee in accordance with the Corporation's By-Laws.
EXECUTIVE COMPENSATION
The following information is furnished with respect to the Executive
Officers of the Corporation:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
- ----------------------------------------------------------------------------------- --------------------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
OTHER
ANNUAL RESTRICTED ALL
COMPEN- STOCK LTIP OTHER
SALARY BONUS SATION AWARDS OPTIONS PAYOUTS COMPEN-
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) (#) ($) SATION(1)
- --------------------------- ---- ------ ----- ------- ---------- ------- ------- ---------
<S><C>
1996 -0- 50,000 -0- -0- -0- -0- -0-
Delmar J. Lewis, 1995 -0- -0- -0- -0- -0- -0- -0-
Chairman of the Board, CEO........... 1994 -0- -0- -0- -0- -0- -0- -0-
1996 86,512.74 11,471.94 -0- -0- -0- -0- 156.06
Christopher J. Lewis, 1995 75,000 -0- -0- -0- -0- -0- -0-
President, COO, Director............. 1994 -0- -0- -0- -0- -0- -0- -0-
Robert B. Hamilton, C.P.A. 1996 89,583 14,583 -0- -0- -0- -0- 731.16
Exec. V.P., CFO, Secretary, 1995 -0- -0- -0- -0- -0- -0- -0-
Director............................. 1994 -0- -0- -0- -0- -0- -0- -0-
</TABLE>
(1) Amount represents contributions by the Corporation to life insurance
premiums paid for the listed executive officers, pursuant to the
Corporation's employee fringe benefits program.
STOCK OPTION GRANTS
No stock options were granted to the Corporation's Executive Officers
during the 1996 fiscal year.
STOCK OPTION EXERCISES
None of the Corporation's Executive Officers exercised stock options during
the 1996 fiscal year.
5
<PAGE>
RATIFICATION OF STOCK OPTION PLAN
n-VISION, INC. 1996 STOCK OPTION PLAN
The Board of Directors of the Corporation approved adoption of the
n-Vision, Inc. 1996 Stock Option Plan (the "Plan") on October 25, 1996. Certain
information about the Plan is described below. The description of the Plan is
qualified in its entirety by reference to the full text of the Plan set forth in
Appendix A to this Proxy Statement.
DESCRIPTION OF THE PLAN
OPTION POOL. Under the Plan, 500,000 shares of the Corporation's Common
Stock (the "Option Pool") are reserved for purchase by "Eligible Participants,"
who are defined in the Plan as persons who are, at a particular time, employees,
officers or directors of the Corporation or any of the Corporation's
subsidiaries. There is no limitation on the number of Options that may be
granted to an Eligible Participant under the Plan.
ADMINISTRATION. The Plan is currently administered by the Board of
Directors of the Corporation, who shall continue to administer the Plan unless
the Corporation designates a committee of two (2) or more Non-Employee Directors
to handle administrative duties. In addition to the Board of Directors as a
whole, the Compensation Committee shall maintain oversight of any compensation
under the Plan to directors or executive officers.
STOCK OPTION AGREEMENTS. Options will be deemed granted under the Plan only
upon the execution and delivery of a Stock Option Agreement by the Optionee and
a duly authorized officer of the Corporation. Options will not be deemed granted
under the Plan merely upon the authorization of such grant by the administrators
of the Plan.
CERTAIN TERMS OF STOCK OPTION AGREEMENTS.
(a) COVENANTS OF OPTIONEE. The administrator of the Plan may, at its
discretion, require an Optionee to execute and deliver to the Corporation a
confidential information agreement. Nothing contained in the Plan, any
Stock Option Agreement, or any agreement executed in accordance with the
Plan will confer upon any Optionee any right with respect to the
continuation of his or her status as an employee, officer, or director of
the Corporation or its subsidiaries.
(b) VESTING PERIODS. Unless otherwise provided in an Optionee's Stock
Option Agreement or the Plan, twenty-five percent (25%) of each Option
shall become exercisable on each of the first, second, third and fourth
anniversaries of the grant date set forth in the Optionee's Stock Option
Agreement. No portion of an Option, however, will be exercisable (except as
specifically set forth in the Plan) after the Optionee ceases to be an
Eligible Participant or any other event results in the termination,
expiration or cancellation of the Option.
(c) WITHHOLDING TAXES. As a condition to the issuance of shares of
Common Stock upon the full or partial exercise of an Option, the Optionee
must pay to the Corporation, in cash or such other form as the
administrators of the Plan may determine, the amount of the Corporation's
tax withholding liability required in connection with the exercise.
(d) STOCK APPRECIATION RIGHTS. At the sole discretion of the Plan's
administrator, a Stock Option Agreement may provide the Optionee a right
from time to time to cancel all or any portion of the Option then subject
to exercise, in which event the Corporation's obligation in respect of such
Option may be discharged by (i) payment to the Optionee of an amount in
cash equal to the excess, if any, of the Fair Market Value (as defined in
the Plan) on the date of cancellation of the shares of Common Stock or the
portion thereof so canceled over the aggregate Exercise Price (as defined
in the Plan) for such shares, (ii) the issuance or transfer to the Optionee
of shares of Common Stock with a Fair Market Value on such date equal to
any such excess, or (iii) a combination of cash and Common Stock with a
combined value equal to any such excess.
(e) TERMINATION OF AN OPTION. Except as otherwise provided in the
Plan, each Stock Option Agreement will specify the period of time, to be
fixed by the Plan's administrator, during which the Option granted therein
will be exercisable, not to exceed ten years from the date of grant (the
"Option Period"). To the extent not previously exercised, each Option will
terminate upon the expiration of the Option Period specified in the Stock
Option Agreement, but each Option will terminate, if earlier: (i) on the
date that the Optionee ceases to be an Eligible Participant for any reason
other than by reason of death, Disability, or Retirement, (ii) twenty-four
(24) months after the date that the Optionee ceases to be an Eligible
Participant by reason of such person's death, or (iii) twelve (12) months
after the date that the Optionee ceases to be an Eligible Participant by
reason of such person's Disability or Retirement. If the Corporation sells
all or substantially all of its assets, or participates in a merger,
consolidation or other reorganization in which the Corporation is not
6
<PAGE>
the surviving corporation, or in which the Corporation becomes a Subsidiary
of another corporation (any of the foregoing events, a "Corporate
Transaction"), then notwithstanding anything else set forth in the Plan,
the right to exercise all then outstanding Options will vest immediately
prior to such Corporate Transaction and will terminate immediately after
such Corporate Transaction. If the Corporation's Board of Directors
determines, however, that such immediate vesting is not in the best
interests of the Corporation, then the successor corporation must agree to
assume the outstanding Options or substitute therefor comparable options of
such successor corporation or a parent or Subsidiary of such successor
corporation.
THE CORPORATION'S BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR THE RATIFICATION OF THE N-VISION, INC. 1996 STOCK OPTION PLAN.
INDEPENDENT PUBLIC ACCOUNTANTS
Another purpose of the Annual Meeting is to ratify the selection by the
Board of Directors of independent public accountants. The Board of Directors has
responsibility for selecting the Corporation's independent public accountants
and has engaged the firm of Grant Thornton LLP, Certified Public Accountants,
for fiscal year 1997, subject to ratification by the stockholders. In accordance
with its past practice, the Corporation will take action later in the year as to
the selection of its independent auditors for the current fiscal year. The
Corporation has requested that a representative of Grant Thornton LLP be present
at the Annual Meeting, and the representative is expected to be available to
respond to appropriate questions.
THE CORPORATION'S BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR ITS SELECTION OF GRANT THORNTON LLP AS THE CORPORATION'S INDEPENDENT PUBLIC
ACCOUNTANTS.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Any stockholders wishing to submit a proposal for action at the 1998 Annual
Meeting of Stockholders, pursuant to and in accordance with the requirements of
Securities and Exchange Commission Regulation 240.14a, must present the proposal
in writing to the Corporation no later than February 1, 1998.
OTHER MATTERS
At the date of this Proxy Statement the Corporation does not know of any
business to be presented for consideration at the Annual Meeting other than
stated in the Notice of such meeting. It is intended, however, that the persons
authorized by Management to hold proxies solicited by this Proxy Statement may,
in the absence of instruction to the contrary, vote or act in accordance with
their best judgment with respect to any other proposal presented for action at
such meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Robert B. Hamilton
---------------------------
Robert B. Hamilton, C.P.A.
Secretary
March 28, 1997
7
<PAGE>
APPENDIX A
[n-VISION, INC. LOGO]
1996 STOCK OPTION PLAN
1. PURPOSE, EFFECTIVENESS OF THE PLAN.
(a) The purpose of this Plan is to advance the interests of the Company and
its stockholders by helping the Company obtain and retain the services of
talented employees, officers, and directors, to provide them with further
incentives to advance the interests of the Company, and to align their
interests with those of the stockholders.
(b) This Plan will become effective on the date of its adoption by the
Board, and will remain in effect until terminated by the Board under
section 8 hereof.
2. CERTAIN DEFINITIONS. Unless the context otherwise requires, the following
defined terms (together with other capitalized terms defined elsewhere in this
Plan) will govern the construction of this Plan, and of any Stock Option
Agreements entered into under this Plan:
"1993 Act" means the federal Securities Act of 1993, as amended;
"1934 Act" means the federal Securities Exchange Act of 1934, as amended;
"Board" means the Board of Directors of the Company;
"Code" means the Internal Revenue Code of 1986, as amended;
"Committee" means a committee of two or more Non-Employee Directors,
appointed by the Board, to administer this Plan, but the term "Committee"
will refer to the Board during such times as no such committee is appointed
by the Board;
"Company" means n-Vision, Inc., a Delaware corporation;
"Disability" has the same meaning as the term "permanent and total
disability" in section 22(e)(3) of the Code;
"Eligible Participants" means persons who, at a particular time, are
employees, officers, or directors of the Company or any of its
Subsidiaries;
"Exercise Price" with respect to any particular Option means the price at
which the Optionee may acquire each share of the Option Stock called for
under such Option;
"Fair Market Value" means, with respect to securities as of any date, the
market price of such securities determined by the Committee, as follows:
(i) If the securities were traded on a national securities exchange on
the date in question, then the Fair Market Value will be equal to the
closing price reported by the applicable composite-transactions report
for such date;
(ii) If the securities were traded over-the-counter on the date in
question and last-transaction reporting was available for the
securities, then the Fair Market Value will be equal to the
last-transaction price reported for such date;
(iii) If the securities were traded over-the-counter on the date in
question but last-transaction reporting was not available for the
securities, then the Fair Market Value will be equal to the average of
the last reported representative bid and asked prices quoted for such
date; and
(iv) If none of the foregoing provisions is applicable, then the Fair
Market Value will be determined by the Committee in good faith on such
basis as it deems appropriate.
"Non-Employee Director" has the same meaning as the term "Non-Employee
Director" in Rule 16b-3 under the Exchange Act;
A-1
<PAGE>
"Option" means an option granted under this Plan entitling the option
holder to acquire shares of Stock pursuant to the valid exercise of the
option;
"Option Stock" means Stock issued or issuable by the Company pursuant to
the valid exercise of an Option;
"Optionee" means an Eligible Participant to whom an Option is granted
hereunder, and any transferee thereof pursuant to a Transfer authorized
under this Plan;
"Plan" means this 1996 Stock Option Plan of the Company;
"Qualified Domestic Relations Order" has the same meaning as the term
"qualified domestic relations order" in the Code or Title I of the Employee
Retirement Income Security Act, as amended, or the rules thereunder;
"Retirement" means voluntary termination because of retirement under any
pension or retirement plan of the Company or any of its Subsidiaries, or
with the approval of the Board;
"Stock" means shares of the Company's Common Stock, $0.01 par value;
"Stock Option Agreement" means an agreement between the Company and an
Optionee, in form and substance satisfactory to the Committee in its sole
discretion, consistent with this Plan;
"Subsidiary" has the same meaning as the term "subsidiary corporation" in
section 424(f) of the Code;
"Transfer" means a voluntary or involuntary sale, assignment, transfer,
conveyance, pledge, hypothecation, encumbrance, disposal, loan, gift,
attachment, levy, assignment for the benefit of creditors, transfer by
operation of law (such as a transfer by will or under the laws of descent
and distribution), execution of judgment against, acquisition of record or
beneficial ownership by a lender or creditor, transfer pursuant to a decree
of divorce, dissolution or separate maintenance, a property settlement or a
separation agreement or other agreement with a spouse (except for estate
planning purposes) under which property is transferred or awarded to a
spouse or is required to be sold; or a transfer resulting from the filing
of a petition for relief or of an involuntary petition under the bankruptcy
laws of the United States or of any other jurisdiction.
3. ELIGIBILITY. The Company may grant an Option under this Plan only to a person
who is an Eligible Participant at the time of such grant. Subject to the
provisions of sections 5 and 6 hereof, there is no limitation on the number of
Options that may be granted to an Eligible Participant.
4. ADMINISTRATION.
(a) COMMITTEE. The Committee will administer the Plan.
(b) AUTHORITY AND DISCRETION OF COMMITTEE. The Committee will have full and
final authority in its discretion, at any time and from time to time,
subject only to the express terms, conditions and other provisions of the
Company's charter and by-laws, this Plan, and the specific limitations on
such discretion set forth herein:
(i) to select and approve the persons who will be granted Options under
this Plan from among the Eligible Participants, and to grant to any
person so selected one or more Options to purchase such number of shares
of Option Stock as the Committee may determine;
(ii) to determine the period or periods of time during which Options may
be exercised, the Exercise Price and the duration of such Options, and
other matters to be determined by the Committee in connection with
specific Option grants and Stock Option Agreements as specified under
this Plan;
(iii) to interpret this Plan, to prescribe, amend, and rescind rules and
regulations relating to the Plan, and to make all other determinations
necessary or advisable for the operation and administration of the Plan;
and
(iv) to delegate all or a portion of its authority under subsections (i)
and (ii) of this section 4(b) to one or more directors of the Company
who are executive officers of the Company, but only in connection with
Options granted to Eligible Participants who are not subject to the
reporting and liability provisions of Section 16 of the 1934 Act and the
rules and regulations thereunder, and subject to such restrictions and
limitations (such as the aggregate number of shares of Option Stock
called for by such Options that may be granted) as the Committee may
decide to impose on such delegate directors.
A-2
<PAGE>
(c) LIMITATION ON AUTHORITY. Notwithstanding the foregoing, or any other
provision of this Plan, any committee of Non-Employee Directors
administering this Plan will have no authority to grant Options to any of
its members, whether or not approved by the Board; and no vote of any
member of the Board shall be counted in determining whether that member
shall be granted Options under this Plan.
(d) STOCK OPTION AGREEMENTS. Options will be deemed granted hereunder only
upon the execution and delivery of a Stock Option Agreement by the Optionee
and a duly authorized officer of the Company. Options will not be deemed
granted hereunder merely upon the authorization of such grant by the
Committee.
5. SHARES RESERVED FOR OPTIONS.
(a) OPTION POOL. The aggregate number of shares of Option Stock that may be
issued pursuant to the exercise of Options granted under this Plan may not
exceed 500,000 (the "Option Pool"). Shares of Option Stock that would have
been issuable pursuant to Options, but that are no longer issuable because
all or part of those Options have terminated, expired, or been canceled,
and shares of Option Stock that the Company acquires through repurchase or
otherwise, will be deemed not to have been issued for purposes of computing
the number of shares of Option Stock remaining in the Option Pool and
available for issuance.
(b) ADJUSTMENTS UPON CHANGES IN STOCK. In the event of any change in the
outstanding Stock of the Company as a result of a stock split, reverse
stock split, stock dividend, recapitalization, combination or
reclassification, appropriate proportionate adjustments will be made in:
(i) the aggregate number of shares of Option Stock in the Option Pool
that may be issued pursuant to the exercise of Options granted
hereunder;
(ii) the Option Price and the number of shares of Option Stock called
for in each outstanding Option granted hereunder; and
(iii) other rights and matters determined on a per share basis under
this Plan or any Stock Option Agreement hereunder. Any such adjustments
will be made only by the Board, and when so made will be effective,
conclusive and binding for all purposes with respect to this Plan and
all Options then outstanding. No such adjustments will be required by
reason of a the issuance or sale by the Company for cash or other
consideration of additional shares of its Stock or securities
convertible into or exchangeable for shares of Stock.
6. TERMS OF STOCK OPTION AGREEMENTS. Each Option granted pursuant to this Plan
will be evidenced by a Stock Option Agreement. Without limiting the foregoing,
each Stock Option Agreement (unless otherwise stated therein) will be deemed to
include the following terms and conditions.
(a) COVENANTS OF OPTIONEE. At the discretion of the Committee, the person
to whom an Option is granted hereunder, as a condition to the granting of
the Option, must execute and deliver to the Company a confidential
information agreement approved by the Committee. Nothing contained in this
Plan, in any Stock Option Agreement or in any other agreement executed in
connection with the granting of an Option under this Plan will confer upon
any Optionee any right with respect to the continuation of his or her
status as an employee, officer, or director of the Company or its
Subsidiaries.
(b) VESTING PERIODS. Unless the Stock Option Agreement executed by the
Optionee expressly otherwise provides, and except as set forth herein, 25%
of each Option will become exercisable on each of the first, second, third
and fourth anniversaries of the grant date set forth in the Optionee's
Stock Option Agreement. No portion of an Option, however, will be
exercisable, other than in accordance with subsection 6(e), after the
Optionee ceases to be an Eligible Participant and the occurrence of any
other event (including the passage of time) that would result in the
termination, expiration or cancellation of the Option.
(c) EXERCISE OF THE OPTION.
(i) MECHANICS AND NOTICE. An Option may be exercised to the extent
exercisable (1) by giving written notice of exercise to the Company,
specifying the number of full shares of Option Stock to be purchased and
accompanied by full payment of the Option Price thereof and the amount
of withholding taxes pursuant to subsection 6(c)(ii) below; and (2) by
giving assurances satisfactory to the Company that the shares of Option
Stock to be purchased upon such exercise are being purchased for
investment and not with a view to resale in connection with any
distribution of such shares in violation of the 1933 Act; provided,
however, that in the event the Option Stock called for
A-3
<PAGE>
under the Option is registered under the 1933 Act, or in the event
resale of such Option Stock without such registration would otherwise be
permissible, this second condition will be inoperative if, in the
opinion of counsel for the Company, such condition is not required under
the 1933 Act, or any other applicable law, regulation or rule of any
governmental agency.
(ii) WITHHOLDING TAXES. As a condition to the issuance of the shares of
Option Stock upon full or partial exercise of an Option granted under
this Plan, the Optionee will pay to the Company in cash, or in such
other form as the Committee may determine in its discretion, the amount
of the Company's tax withholding liability required in connection with
such exercise. For purposes of this subsection 6(c)(ii), "tax
withholding liability" will mean all federal and state income taxes,
social security tax, and any other taxes applicable to the compensation
income arising from the transaction required by applicable law to be
withheld by the Company.
(d) PAYMENT OF EXERCISE PRICE. Each Stock Option Agreement will specify the
Exercise Price with respect to the exercise of the Option granted
thereunder, to be fixed by the Committee in its discretion, which may be
equal to or more or less than Fair Market Value. The Exercise Price will be
payable to the Company in United State dollars in cash or by check or in
such other legal consideration as may be approved by the Committee, in its
discretion.
(i) The Committee, in its discretion, may permit a particular Optionee
to pay all or a portion of the Exercise Price, or the tax withholding
liability set forth in subsection 6(c) (ii) above, or both, with respect
to the exercise of an Option either by surrendering securities of the
Company already owned by such Optionee or by withholding shares of
Option Stock, if the Committee determines that the Fair Market Value of
such surrendered securities or withheld Option Stock is equal to the
corresponding portion of such Exercise Price and/or tax withholding
liability, as the case may be, to be paid for therewith.
(ii) If the Committee permits an Optionee to pay any portion of the
Exercise Price or tax withholding liability with shares of Stock with
respect to the exercise of an Option (the "Underlying Option") as
provided in subsection 6(d) (i) above, then the Committee, in its
discretion, may grant to such Optionee (but only if the Optionee remains
an Eligible Participant at that time) additional Options, the number of
shares of Option Stock called for thereunder to be equal to all or a
portion of the Stock so surrendered or withheld (a "Replacement
Option"). Each Replacement Option will be evidenced by a Stock Option
Agreement. Unless otherwise set forth therein, each Replacement Option
will be immediately exercisable upon such grant (without any Vesting
Period) and will be coterminous with the Underlying Option. The
Committee, in its sole discretion, may establish such other terms and
conditions for Replacement Options as it deems appropriate.
(e) STOCK APPRECIATION RIGHTS. A Stock Option Agreement may provide that
the Optionee may, with the consent of the Committee in its sole discretion,
from time to time elect to cancel all or any portion of the Option then
subject to exercise, in which event the Company's obligation in respect of
such Option may be discharged either by (i) payment to the Optionee of an
amount in cash equal to the excess, if any, of the Fair Market Value on the
date of cancellation of the shares of Option Stock or the portion thereof
so canceled over the aggregate Exercise Price for such shares, (ii) the
issuance or transfer to the Optionee of shares of Stock with a Fair Market
Value on such date equal to any such excess, or (iii) a combination of cash
and shares with a combined value equal to any such excess. Unless the Stock
Option Agreement executed by the Optionee expressly otherwise provides, any
such right to elect such cancellation shall be transferable only by will,
by the laws of descent and distribution, or by a Qualified Domestic
Relations Order.
(f) TERMINATION OF AN OPTION. Except as otherwise provided herein, each
Stock Option Agreement will specify the period of time, to be fixed by the
Committee in its discretion, during which the Option granted therein will
be exercisable, not to exceed ten years from the date of grant (the "Option
Period"). To the extent not previously exercised, each Option will
terminate upon the expiration of the Option Period specified in the Option
Agreement, but each Option will terminate, if earlier: (i) on the date that
the Optionee ceases to be an Eligible Participant for any reason other than
by reason of death, Disability, or Retirement; (ii) twenty-four months
after the date that the Optionee ceases to be an Eligible Participant by
reason of such person's death, or (iii) twelve months after the date that
the Optionee ceases to be an Eligible Participant by reason of such
person's Disability or Retirement. In the event of a sale or all or
substantially all of the assets of the Company, or a merger or
consolidation or other reorganization in which the Company is not the
surviving corporation, or in which the Company becomes a Subsidiary of
another corporation (any of the foregoing events, a "Corporate
Transaction"), then notwithstanding anything else herein, the right to
exercise all then outstanding Options will vest immediately prior to such
Corporate Transaction and will terminate immediately after such Corporate
Transaction. If the Board in its sole discretion, however, determines that
such immediate vesting of the right to exercise outstanding Options is not
in the best interests of the Company, then the successor corporation must
agree to assume the
A-4
<PAGE>
outstanding Options or substitute therefor comparable options of such
successor corporation or a parent or Subsidiary of such successor
corporation.
(g) OPTIONS NONTRANSFERABLE. Unless the Stock Option Agreement executed by
the Optionee expressly otherwise provides, the Transfer of an Option is not
permitted otherwise than by will or the laws of descent and distribution,
or pursuant to a Qualified Domestic Relations Order.
(h) QUALIFICATION OF STOCK. The right to exercise an option will be further
subject to the requirement that if at any time the Board determines, in its
discretion, that the listing, registration or qualification of the shares
of Option Stock called for thereunder upon any securities exchange or under
any state or federal law, or the consent or approval of any governmental
regulatory authority, is necessary or desirable as a condition of or in
connection with the granting of such Option or the purchase of shares of
Option Stock thereunder, the Option may not be exercised in whole or in
part, unless and until such listing, registration, qualification, consent
or approval is effected or obtained free of any conditions not acceptable
to the Board, in its discretion.
(i) ADDITIONAL RESTRICTIONS ON TRANSFER. By accepting Options and/or Option
Stock under this Plan, the Optionee will be deemed to represent, warrant
and agree as follows:
(i) The Optionee understands that Transfer of the Option Stock requires
full compliance with the provision of all applicable laws.
(ii) Unless a registration statement is in effect with respect to the
sale of Option Stock obtained through exercise of Options granted
hereunder: (1) Upon exercise of any Option, the Optionee will purchase
the Option Stock for his or her own account and not with a view to
distribution within the meaning of the 1933 Act, other than as may be
effected in compliance with the 1933 Act and the rules and regulations
promulgated thereunder; (2) no one else will have any beneficial
interest in the Option Stock; and (3) the Optionee has no present
intention of disposing of the Option Stock at any particular time.
(j) COMPLIANCE WITH LAW. Notwithstanding any other provision of this Plan,
Options may be granted pursuant to this Plan, and Option Stock may be
issued pursuant to the exercise thereof by an Optionee, only after there
has been compliance with all applicable federal and state securities laws,
and such grants and issuances will be subject to this overriding condition.
The Company will not be required to register or qualify Option Stock with
the Securities and Exchange Commission or any state agency.
(k) STOCK CERTIFICATES. Certificates representing the Option Stock issued
pursuant to the exercise of Options will bear all legends required by law
and necessary to effectuate this Plan's provisions. The Company may place a
"stop transfer" order against shares of Option Stock until all restrictions
and conditions set forth in this Plan and in the legends referred to in
this section 6(k) have been complied with.
(l) OTHER PROVISIONS. The Stock Option Agreement may contain such other
terms and conditions, including special forfeiture conditions, rights of
repurchase, rights of first refusal and other restrictions on Transfer of
Option Stock not inconsistent with this Plan, as may be determined by the
Committee in its sole discretion.
7. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to the terms and
conditions and within the limitations of this Plan, the Committee may modify,
extend or renew outstanding Options granted under this Plan, or accept the
surrender of outstanding Options (to the extent not theretofore exercised) and
authorize the granting of new Options in substitution therefor. Notwithstanding
the foregoing, however, no modification of any Option may alter or impair any
Option previously granted under this Plan without the consent of the holder of
the Option.
8. AMENDMENT AND DISCONTINUANCE. The Board may amend, suspend or discontinue
this Plan at any time or from time to time, but no such action may alter or
impair any Option previously granted under this Plan without the consent of the
holder of the Option.
9. CITATIONS TO STATUTES. References in this Plan to any statutes, regulations,
or portions thereof are intended to refer to the statutes, regulations, or
portions thereof in force at the time of the Plan's adoption by the Board and as
subsequently amended, or to any substantially similar successor statutes,
regulations or portions thereof resulting from recodification, renumbering, or
other enactment or promulgation.
A-5
<PAGE>
10. NOTICES. Any notice to be given to the Company under the terms of this Plan
or under a Stock Option Agreement may be addressed to the Company at its
principal executive office, Attention: Corporate Secretary, or at such other
address as the Company may designate in writing. Any notice to be given to an
Optionee will be addressed to the Optionee at the address set forth in the
applicable Stock Option Agreement or otherwise provided to the Company by the
Optionee. Any such notice will be deemed to have been duly given if and when
enclosed in a properly sealed envelope, addressed as aforesaid, registered and
deposited, postage and registry fee prepaid, in a post office or branch post
office regularly maintained by the United States Government.
11. GOVERNING LAW. This Plan will be governed by, and construed in accordance
with, the laws of the State of Virginia.
12. COPIES OF PLAN. A copy of this Plan will be delivered to each Optionee at or
before the time he or she executes a Stock Option Agreement.
* * * * * *
Date Plan Adopted by Board of Directors: October 25, 1996
A-6
