UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant | |
Check the appropriate box:
|X| Preliminary Proxy Statement | | Confidential, For Use of the
| | Definitive Proxy Statement Commission Only (as permitted by
| | Definitive Additional Materials Rule 14a-6(e)(2))
| | Soliciting Material Under ss.240.14a-12
EMERGING VISION, INC.
----------------------------------------------------------
(Name of Registrant as Specified in its Charter)
----------------------------------------------------------
(Names of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
| | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:____________________
(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 its
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:_________________________
EMERGING VISION, INC.
100 Quentin Roosevelt Boulevard
Garden City, New York 11530
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on May __, 2005
To the Shareholders of Emerging Vision, Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the "Special
Meeting") of Emerging Vision, Inc. ("EVI" or the "Company") will be held at the
offices of Certilman Balin Adler & Hyman, LLP, 90 Merrick Avenue, East Meadow,
NY 11554, on _________, the __ day of May 2005, at 10:00 a.m. (local time), for
the following purposes:
(1) To consider and act upon a proposal to amend EVI's 1995 Stock Incentive
Plan, as amended (the "Plan"), to increase the number of shares of Common Stock
issuable thereunder to twenty-five million (25,000,000) shares.
A Proxy Statement explaining the matters to be acted upon at the Special
Meeting is enclosed. Please read it carefully.
The Board of Directors has fixed the close of business on April 1, 2005 as
the record date for the determination of the shareholders of the Company
entitled to notice of, and to vote at, the Special Meeting or any adjournment
thereof. We encourage you, nevertheless, to vote by proxy. You may attend the
meeting and change your vote at that time if you wish to do so.
If you have any questions about the procedures for admission to the Special
Meeting, please contact the Company's counsel, Adam M. Stahl, of Stahl Law
Associates, LLP, at (516) 465-6952 or via e-mail at adstahl@stahllaw.net.
By Order of the Board of Directors
By: /s/ Christopher G. Payan
-------------------------------
Christopher G. Payan
Chief Executive Officer
April 25, 2005
ALL HOLDERS OF THE COMPANY'S COMMON STOCK AND SENIOR CONVERTIBLE PREFERRED
STOCK (WHETHER THEY INTEND TO ATTEND THE SPECIAL MEETING OR NOT) ARE STRONGLY
ENCOURAGED TO COMPLETE, SIGN, DATE AND RETURN PROMPTLY THE PROXY CARD ENCLOSED.
EMERGING VISION, INC.
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
To be held on May __, 2005
This Proxy Statement is being furnished to shareholders of Emerging Vision,
Inc. ("EVI" or the "Company"), of record as of April 1, 2005, in connection with
the solicitation of proxies by the Board of Directors of EVI for the Special
Meeting of Shareholders to be held at the offices of Certilman Balin Adler &
Hyman, LLP, 90 Merrick Avenue, East Meadow, NY 11554, on __________, May __,
2005, at 10:00 a.m. (local time), and at any adjournments, postponements,
continuations or reschedulings of the meeting, for the purposes stated in the
Notice of Special Meeting of Shareholders.
The approximate date of mailing to shareholders of the Notice of Special
Meeting, this Proxy Statement and the enclosed proxy card, is April 29, 2005.
Who is Entitled to Vote at the Special Meeting
The Board has fixed the close of business on April 1, 2005 as the record
date for the determination of shareholders entitled to notice of the Special
Meeting, and only holders of record of the Company's common stock (the "Common
Stock") and senior convertible preferred stock (which with the Common Stock
shall collectively be referred to in this Proxy Statement as the "voting
shares") on that date will be entitled to such notice and to vote at the Special
Meeting. As of the record date, we had a total of 70,422,217 voting shares
entitled to vote at the Special Meeting, including:
o 70,323,698 shares of Common Stock, each entitled to one vote on all
matters presented at the Special Meeting, and
o 0.74 shares of senior convertible preferred stock, which are entitled to
vote on an as-converted basis, together with the common stock as a single class,
98,519 shares of Common Stock.
How You Can Vote
You can vote by completing and returning the enclosed proxy card by mail.
To vote your proxy by mail, mark your selections on the enclosed proxy card,
date and sign your name exactly as it appears on your proxy card, and return
your proxy card.
Vote Required
The presence, in person or by proxy, of the holders of voting shares that
represent a majority of the voting shares entitled to be cast at the Special
Meeting is necessary to constitute a quorum at the Special Meeting. Abstentions
and broker non-votes will be counted to determine whether a quorum is present.
A majority of the votes cast at the Special Meeting is required for the
increase in the number of shares of Common Stock issuable under the Plan (as
hereinafter defined). Accordingly, abstentions, broker non-votes and shares not
voted will not be counted in the total vote.
Revocation of Proxies
If the enclosed proxy card is signed and returned, it may, nevertheless, be
revoked at any time prior to the voting thereof at the discretion of the
shareholder signing it, by:
o delivering, via certified mail - return receipt requested, written notice
of revocation to the Secretary of the Company, which notice must be received by
5:00 p.m. (local time) on ________, May __, 2005, at the Company's executive
offices at 100 Quentin Roosevelt Blvd., Suite 508, Garden City, New York 11530,
o by voting the shares covered by that proxy in person at the Special
Meeting, or
1
o by submitting a duly executed proxy bearing a later date.
Voting
Voting shares represented by a duly executed proxy will be voted in
accordance with the voting instructions indicated by the shareholder on the
proxy, and if no such instructions are indicated, will be voted in favor of the
amendment to increase the number of shares of Common Stock issuable under the
Plan.
If you sign your proxy card but do not make any selections, you give
authority to Christopher G. Payan, our Chief Executive Officer, and Adam M.
Stahl of Stahl Law Associates, LLP, our counsel, to vote upon the matter
incident to the conduct of the Special Meeting. Mr. Payan and Mr. Stahl intend
to use such authority to vote FOR the amendment to increase the number of shares
of Common Stock issuable under the Plan.
The Proxy is being solicited by the Company's Board of Directors. A list of
shareholders entitled to vote at the Special Meeting will be available for
examination by any shareholder at the Special Meeting.
PROPOSAL NO. 1:
APPROVAL OF INCREASE IN SHARES OF COMMON STOCK AVAILABLE FOR ISSUANCE
UNDER THE COMPANY'S 1995 STOCK INCENTIVE PLAN
On December 30, 2004, the Board of Directors authorized, subject to
shareholder approval, Amendment No. 5 to the Company's 1995 Stock Incentive
Plan, as amended (the "Plan"), increasing the number of shares of Common Stock
authorized for issuance thereunder from 7,000,000 to 25,000,000. As of April 18,
2005, there were 5,326,210 shares of Common Stock issuable (pursuant to the
exercise of outstanding options granted under the Plan) under the Plan.
The Board of Directors believes that it is in the best interests of the
Company and its shareholders to approve Amendment No. 5, which will allow the
Company to increase the number of shares of Common Stock authorized for issuance
under the Plan, in order to enable the Company to secure and retain the services
of current and future key officers, directors, employees and consultants.
DESCRIPTION OF THE 1995 STOCK INCENTIVE PLAN
The Company adopted the Plan in order to motivate qualified employees of,
and certain consultants to, the Company and its affiliates, as well as to assist
the Company and its affiliates in attracting talented officers, directors and
employees, and to align the interests of such persons with those of the
shareholders of the Company. As of April 18, 2005, 40 individuals and/or
entities held options under the Plan, and four of such individuals were granted
options under the Plan, subject to the approval of this Proposal No. 1.
Certain features of the Plan are summarized below. However, such summary is
qualified in its entirety by reference to the full text of the Plan, which is
available at the offices of the Company.
The Plan provides for the grant of "incentive stock options" ("Incentive
Stock Options") within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), and nonqualified stock options ("Nonqualified
Options") to key employees of, and key individuals (including consultants) to,
the Company and its affiliates (provided that Incentive Stock Options may only
be granted to employees). Except as described below, the Plan is administered by
the Company's Compensation Committee.
The Plan currently authorizes the issuance of options to purchase a maximum
of 7,000,000 shares of Common Stock. The Plan contains provisions with respect
to adjustments for stock splits and similar transactions. If any stock option
granted under the Plan terminates, expires unexercised, or is cancelled, the
shares of Common Stock that would otherwise have been issuable pursuant thereto
will be available for issuance pursuant to the grant of new stock options.
All officers, directors and key employees of, and consultants and
independent contractors to, the Company and its affiliates are eligible to
participate in the Plan. As of April 18, 2005, approximately fifteen (15) key
employees and six (6) key individuals were eligible to receive options under the
Plan. The Compensation Committee has exclusive discretion (except as may be
designated or permitted in the Plan or by the Amended and Restated By-Laws of
the Company, and except for stock options granted to Drs. Robert, Alan, and
2
Edward Cohen and certain members of their respective immediate families, which
are within the exclusive discretion of the Audit Committee of the Board of
Directors) to select to whom stock options will be granted, to determine the
type, size, terms and conditions under which each stock option may be
exercisable, and the expiration date of each option. The Compensation Committee
also has exclusive discretion to make all other determinations that its members
deem necessary or desirable in the interpretation and/or administration of the
Plan.
Stock options granted under the Plan generally expire not later than ten
years after the date on which they are granted. The Plan provides that, with
respect to Incentive Stock Options, in no event may such options be exercised,
to any extent, by any person after (i) the expiration of three (3) months from
the date of the optionee's termination of employment if for any reason other
than such optionee's death, disability or retirement, or (ii) the expiration of
one (1) year from the date of the optionee's termination of employment by reason
of the optionee's death or disability. The exercise price of options granted
under the Plan may not be less than the par value of the underlying Common
Stock, except that, in the case of an Incentive Stock Option, the exercise price
may not be less than 100% of the fair market value of the Common Stock on the
date any such stock option is granted (110% in the case of any optionee who, at
the time of grant, owns, directly or by attribution, more than 10% of the
combined voting power of all classes of capital stock of the Company (a "ten
percent owner optionee")). In addition, the term of an Incentive Stock Option
for a ten percent owner optionee cannot exceed five years from the date of
grant.
The aggregate fair market value (determined at the time the option is
granted) of the Common Stock underlying the Incentive Stock Options granted to
an optionee that may become exercisable for the first time during any calendar
year, cannot exceed $100,000 (or such other limit as may be imposed by the
Code). Payment of the full amount of the exercise price must be made at the time
of exercise either in cash, by tendering to the Company shares of Common Stock
previously acquired by the optionee having a fair market value equal to the
aggregate exercise price, by a combination thereof, or, in certain instances, by
a loan from the Company to the optionee.
The Plan provides that the Compensation Committee, in its sole discretion,
may provide, by the express terms of any stock option agreement, that such
option cannot be exercised after the merger or consolidation of the Company with
or into another corporation, the acquisition by another corporation or person of
all or substantially all of the Company's assets, or 80% or more of the
Company's then outstanding voting stock, or the liquidation or dissolution of
the Company; and the Compensation Committee may also provide, either by the
terms of any such option or by resolution adopted prior to the occurrence of
such merger, consolidation, acquisition, liquidation or dissolution, that, for
some period of time prior to any such event, such option shall be exercisable as
to all shares covered thereby.
Options granted under the Plan are not transferable otherwise than by will
or the laws of descent and distribution and such options are exercisable, during
a holder's lifetime, only by the optionee.
The Board of Directors or the Compensation Committee may amend the Plan at
any time and from time to time, but any such amendment is subject to shareholder
approval where the absence of such shareholder approval would adversely affect
the compliance of the Plan with Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended, or other applicable laws or regulations.
Accordingly, no action of the Board or the Compensation Committee may, without
shareholder approval, (i) increase the maximum number of shares of Common Stock
which may be issued upon exercise of an option, (ii) modify the eligibility
requirements of the Plan, (iii) reduce the minimum option exercise price
requirements, or (iv) extend the limits imposed on the period during which
options may be granted or issued.
The Plan (but not options previously granted thereunder) shall terminate on
April 5, 2005, ten years from the date that it was adopted by the Board.
Federal Income Tax Consequences
A. Incentive Stock Options. The following general rules are applicable,
under existing law, to holders of Incentive Stock Options and to the Company for
Federal income tax purposes:
1. Generally, no taxable income results to the optionee upon the grant of
an Incentive Stock Option or upon the issuance of shares to him, her or it upon
exercise of an Incentive Stock Option;
2. No tax deduction is allowed to the Company upon either the grant or
exercise of an Incentive Stock Option under the Plan;
3. If shares acquired upon the exercise of an Incentive Stock Option are
not disposed of prior to the later of: (i) two years following the date the
Incentive Stock Option was granted; or (ii) one year following the date the
shares are transferred to the optionee pursuant to the exercise of such
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Incentive Stock Option, the difference between the amount realized on any
subsequent disposition of the shares and the exercise price will generally be
treated as long-term capital gain or loss to the optionee;
4. If shares acquired upon the exercise of an Incentive Stock Option are
disposed of before the expiration of one or both of the requisite holding
periods (a "disqualifying disposition"), then, in most cases, the lesser of: (i)
any excess of the fair market value of the shares at the time of exercise of the
Incentive Stock Option over the exercise price; or (ii) the actual gain on
disposition, will be treated as compensation to the optionee and will be taxed
as ordinary income in the year of such disposition;
5. Any excess of the amount realized by the optionee as the result of a
disqualifying disposition over the sum of: (i) the exercise price; and (ii) the
amount of ordinary income recognized under the above rules, will be treated as
either a long-term or short-term capital gain, depending upon the time elapsed
between receipt and disposition of the shares disposed of;
6. In any year that an optionee recognizes compensation income on a
disqualifying disposition of shares acquired by exercising an Incentive Stock
Option, the Company will generally be entitled to a corresponding deduction for
income tax purposes; and
7. The bargain element at the time of exercise of an Incentive Stock Option
(i.e., the amount by which the fair market value of the Common Stock acquired
upon exercise of the Incentive Stock Option exceeds the exercise price) may be
taxable to the optionee under the "alternative minimum tax" provisions of the
Code.
B. Nonqualified Stock Options. The following general rules are applicable,
under existing law, to holders of Nonqualified Stock Options and to the Company
for Federal income tax purposes:
1. The optionee will not realize any taxable income upon the grant of a
Nonqualified Stock Option, and the Company is not allowed a business expense
deduction by reason of any such grant;
2. The optionee will recognize ordinary compensation income at the time of
the exercise of a Nonqualified Stock Option in an amount equal to the excess, if
any, of the fair market value of the shares on the date of exercise over the
exercise price. Gain or loss upon a subsequent disposition of the shares
underlying a Nonqualified Stock Option will be either long-term or short-term
capital gain or loss, depending on the time elapsed between receipt and
disposition of such shares disposed of; and
3. In general, the Company will be entitled to a tax deduction upon the
exercise of a Nonqualified Stock Option.
Plan Benefits
The following table sets forth certain information regarding options
granted under the Plan to (i) each person listed in the Summary Compensation
Table under "Executive Compensation," in this Proxy Statement (ii) all current
executive officers as a group, (iii) all current directors who are not executive
officers as a group, and (iv) all employees, including current officers who are
not executive officers, as a group:
--------------------------------------------- ---------------------------------------- ----------------------------------------
Average Weighted Exercise Price Per
Name And Position Common Stock Underlying Options Granted Share
--------------------------------------------- ---------------------------------------- ----------------------------------------
Christopher G. Payan
Chief Executive Officer and Director 7,508,220 (1) $0.14
--------------------------------------------- ---------------------------------------- ----------------------------------------
Myles S. Lewis
Co-Chief Operating Officer and Senior
Vice President-Business Development 3,464,124 (2) $0.14
--------------------------------------------- ---------------------------------------- ----------------------------------------
Samuel Z. Herzkowitz
Co-Chief Operating Officer and Chief
Marketing Officer 2,008,680 (2) $0.22
--------------------------------------------- ---------------------------------------- ----------------------------------------
Brian P. Alessi
Chief Financial Officer and Treasurer 920,590 $0.14
--------------------------------------------- ---------------------------------------- ----------------------------------------
Dr. Nicholas Shashati
President - VisionCare of California 140,000 $1.91
--------------------------------------------- ---------------------------------------- ----------------------------------------
4
--------------------------------------------- ---------------------------------------- ----------------------------------------
All current executive officers, as a group
(5 persons) 14,041,614 (3) $0.17
--------------------------------------------- ---------------------------------------- ----------------------------------------
All current directors who are not executive
officers, as a group (5 persons) 2,020,000 (4) $4.69
--------------------------------------------- ---------------------------------------- ----------------------------------------
All employees, other than executive
officers, as a group 5,169,542 (5) $4.83
--------------------------------------------- ---------------------------------------- ----------------------------------------
(1) Includes 150,000 stock options that were exercised in February 2003,
and 100,000 stock options that were exercised in May 2004.
(2) Includes 100,000 stock options that were exercised in November 2003.
(3) Includes 150,000 stock options that were exercised in February 2003,
200,000 stock options that were exercised in November 2003, and 100,000 stock
options that were exercised in May 2004.
(4) Includes 300,000 stock options that expired in April 2002 and 1,100,000
stock options that were surrendered and forfeited in December 2004.
(5) Includes 5,132,042 stock options that either expired or that were
canceled upon termination of employment at various dates since Plan inception in
April 1995.
Other Information
The number of shares which may be subject to options to be granted under
the Plan in the future is, subject to the terms of the Plan, within the
discretion of the Compensation Committee and is, therefore, not determinable at
this time.
The closing bid price of the Company's Common Stock on April 18, 2005, as
reported by the OTC Bulletin Board, was $0.15 per share.
Approval by the holders of a majority of the votes cast at the Special
Meeting by the holders of the voting shares will be required for approval of
Amendment No. 5 to the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO. 1
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Common Stock
The following table sets forth information, as of April 18, 2005, regarding
the beneficial ownership of our Common Stock by: (i) each shareholder known by
us to be the beneficial owner of more than five percent of the outstanding
shares of our Common Stock; (ii) each of our directors; (iii) each of our Named
Executive Officers (as said term is defined under the caption "Executive
Compensation" below); and (iv) all directors and executive officers of the
Company as a group, in each case, based on an aggregate amount of 70,323,698
shares of Common Stock outstanding as of that date.
The percentages in the "Percent of Class" column are calculated in
accordance with the rules of the SEC, under which a person may be deemed to be
the beneficial owner of shares if that person has or shares the power to vote or
dispose of those shares or has the right to acquire beneficial ownership of
those shares within 60 days (for example, through the exercise of an option or
warrant). Accordingly, the shares shown in the table as beneficially owned by
certain individuals may include shares owned by certain members of their
respective families. Because of these rules, more than one person may be deemed
to be the beneficial owner of the same shares. The inclusion of the shares shown
in the table is not necessarily an admission of beneficial ownership of those
shares by the person indicated. The address of Horizons Investors Corp. is 2830
Pitkin Avenue, Brooklyn, New York 11208. The address of Joel L. Gold is c/o
Andrew Garrett, Inc., 425 Park Avenue, 22nd Floor, New York, New York 10022. The
address of Nicholas Shashati is c/o Sterling VisionCare, 9663 Tierra Grande
Street, San Diego, California 92126. The address of Lou Weisbach is c/o
Teamscape, LLC, 3100 Dundee Road, Suite 704, Northbrook, IL 60062. The address
of all other persons listed below is 100 Quentin Roosevelt Boulevard, Suite 508,
Garden City, New York 11530.
------------------------------------------------------------ ---------------------------------- --------------------------------
Name Beneficial Ownership Percent of Class
------------------------------------------------------------ ---------------------------------- --------------------------------
Christopher G. Payan (a) (b) 2,567,500 (1) 3.6%
------------------------------------------------------------ ---------------------------------- --------------------------------
Myles S. Lewis (b) 750,000 (2) 1.1%
------------------------------------------------------------ ---------------------------------- --------------------------------
------------------------------------------------------------ ---------------------------------- --------------------------------
Samuel Z. Herskowitz (b) 500,834 (3) *
------------------------------------------------------------ ---------------------------------- --------------------------------
Brian P. Alessi (b) 166,666 (4) *
------------------------------------------------------------ ---------------------------------- --------------------------------
Dr. Nicholas Shashati (b) 140,000 (5) *
------------------------------------------------------------ ---------------------------------- --------------------------------
Dr. Alan Cohen (a) 2,850,469 (6) 4.0%
------------------------------------------------------------ ---------------------------------- --------------------------------
Dr. Robert Cohen (a) 2,473,859 (7) 3.5%
------------------------------------------------------------ ---------------------------------- --------------------------------
Joel L. Gold (a) 221,500 (8) *
------------------------------------------------------------ ---------------------------------- --------------------------------
Harvey Ross (a) 997,011 1.4%
------------------------------------------------------------ ---------------------------------- --------------------------------
Horizons Investors Corp. 23,926,531 (9) 34.0%
------------------------------------------------------------ ---------------------------------- --------------------------------
Lou Weisbach 4,085,000 5.8%
------------------------------------------------------------ ---------------------------------- --------------------------------
All current directors and executive officers as a group 10,647,839 (10) 14.6%
------------------------------------------------------------ ---------------------------------- --------------------------------
----------------------
* less than 1%
(a) Director
(b) Executive officer
(1) Includes the right to acquire 1,355,000 shares of Common Stock upon the
exercise of presently exercisable, outstanding options, but excludes the right
to acquire 1,305,000, 3,293,220 and 1,305,000 shares of Common Stock upon the
exercise of outstanding options that are not exercisable until December 30,
2005, April 16, 2006 and December 30, 2006, respectively.
(2) Includes the right to acquire 650,000 shares of Common Stock upon the
exercise of presently exercisable, outstanding options, but excludes the right
to acquire 600,000, 1,514,124 and 600,000 shares of Common Stock upon the
exercise of outstanding options that are not exercisable until December 30,
2005, April 16, 2006 and December 30, 2006, respectively.
(3) Includes the right to acquire 400,834 shares of Common Stock upon the
exercise of presently exercisable, outstanding options, but excludes the right
to acquire 333,333, 841,180 and 333,333 shares of Common Stock upon the exercise
of outstanding options that are not exercisable until December 30, 2005, April
16, 2006 and December 30, 2006, respectively.
(4) Includes the right to acquire 166,666 shares of Common Stock upon the
exercise of presently exercisable, outstanding options, but excludes the right
to acquire 166,667, 420,950 and 166,667 shares of Common Stock upon the exercise
of outstanding options that are not exercisable until December 30, 2005, April
16, 2006 and December 30, 2006, respectively.
(5) Represents the right to acquire 140,000 shares of Common Stock upon the
exercise of presently exercisable, outstanding options.
(6) Includes (i) the right to acquire 200,000 shares of Common Stock upon
the exercise of presently exercisable, outstanding options, and (ii) 26,700
shares owned by Dr. Cohen, as custodian for each of Erica and Nicole Cohen (Dr.
Cohen's children, as to which Dr. Cohen disclaims beneficial ownership), but
excludes (i) 8,973,800 shares, in the aggregate, held in trust for Dr. Cohen's
minor children, Erica, Nicole, Jaclyn and Gabrielle, as beneficiaries, in
respect of which Dr. Cohen is not a trustee and has no dispositive or investment
authority, and as to which he disclaims beneficial ownership and (ii) the right
to acquire 5,562,753 (and, in the case of Dr. Cohen's children trusts,
9,200,864) shares of Common Stock upon the exercise of outstanding warrants that
are not exercisable until April 15, 2006.
(7) Includes the right to acquire 200,000 shares of Common Stock upon the
exercise of presently exercisable, outstanding options, but excludes (i)
8,766,566 shares, in the aggregate, owned by Dr. Cohen's adult children,
Allyson, Jeffrey and Stefanie, as to which Dr. Cohen has no dispositive or
investment authority and disclaims beneficial ownership and (ii) the right to
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acquire 4,293,729 (and, in the case of Dr. Cohen's children, 9,084,906) shares
of Common Stock upon the exercise of outstanding warrants that are not
exercisable until April 15, 2006.
(8) Includes 1,500 shares of Common Stock owned by Mr. Gold's children and
the right to acquire 220,000 shares of Common Stock upon the exercise of
presently exercisable, outstanding options, but excludes an additional 5,000
shares of Common Stock owned by Mr. Gold's wife, as to which Mr. Gold disclaims
beneficial ownership.
(9) Represents shares of Common Stock owned by Horizons Investors Corp., or
Horizons, a New York corporation principally owned by Benito R. Fernandez, a
former director of the Company, and includes the right to acquire 100,000 shares
of Common Stock upon the exercise of presently exercisable, outstanding options,
but excludes the right to acquire 31,067,776 shares of Common Stock upon the
exercise of outstanding warrants that are not exercisable until April 15, 2006.
(10) Includes (i) the right to acquire 3,332,500 shares of Common Stock
upon the exercise of presently exercisable, outstanding options, and (ii) 26,700
shares owned by Dr. Cohen, as custodian for each of Erica and Nicole Cohen (as
to which Dr. Cohen disclaims beneficial ownership), but excludes the right to
acquire 2,405,000, 15,925,596, and 2,405,000 shares of Common Stock upon the
exercise of options and/or warrants that are not exercisable until December 30,
2005, April 15, 2006, and December 30, 2006, respectively. In accordance with
Rule 13d-3(d)(1) under the Securities Exchange Act of 1934, as amended, the
3,332,500 shares of Common Stock for which the Company's directors and executive
officers, as a group, hold currently exercisable options and warrants, have been
added to the total number of issued and outstanding shares of Common Stock
solely for the purpose of calculating the percentage of such total number of
issued and outstanding shares of Common Stock beneficially owned by such
directors and executive officers as a group.
Senior Convertible Preferred Stock
In April 1998, we issued a series of our preferred stock, par value $0.01
per share, designated as senior convertible preferred stock, together with
warrants (all of which expired in February 2001) to acquire shares of our Common
Stock. Each share of senior convertible preferred stock had a liquidation
preference of $100,000, and was originally convertible into Common Stock at a
price of $5.00 per share. In December 1999, the conversion price was reduced to
$0.75 per share for all of the remaining holders of senior convertible preferred
stock.
Set forth below is the name, address, beneficial ownership, and voting
power of the sole remaining owner of shares of senior convertible preferred
stock:
Name Beneficial Ownership Percent of Class
---------------------- -------------------- ----------------
Rita Folger 0.74(1) 100%
1257 East 24th Street
Brooklyn, NY 11210
---------------------
(1) These shares are convertible into an aggregate of 98,519 shares of our
Common Stock; and the holder thereof is entitled to cast, on an as-converted
basis, an equivalent number of votes, at any meeting of shareholders, voting
together with the holders of the Common Stock.
EXECUTIVE COMPENSATION
The following sets forth the compensation, for the three years ended
December 31, 2004, of the Company's Chief Executive Officer and of each of the
Company's four most highly compensated executive officers (other than the Chief
Executive Officer) that were serving as executive officers of the Company and/or
VisionCare of California as of December 31, 2004 (collectively, the "Named
Executive Officers"):
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Summary Compensation Table
=================================== ========= ================================ =================== ======================
Long-Term
Compensation
Securities
Fiscal Annual Compensation Underlying Stock All Other
Name and Principal Position Year Salary Bonus Options Compensation
----------------------------------- --------- -------------------------------- ------------------- ----------------------
Christopher G. Payan, 2004 $275,000 (2) $ -- 7,208,220 (4) $ 7,200 (7)
Chief Executive Officer and 2003 $175,000 (2) $ 26,000 (3) 100,000 (5) $ 32,200 (8)
Director (1) 2002 $169,000 (2) $ -- 100,000 (6) $ 6,000 (7)
----------------------------------- --------- -------------------------------- ------------------- ----------------------
Myles S. Lewis, 2004 $190,000 (9) $ -- 3,314,124 (10) $ 6,000 (12)
Co-Chief Operating Officer and 2003 $156,000 (9) $ 26,000 (3) 100,000 (11) $ 6,000 (12)
Senior Vice President - Business 2002 $156,000 (9) $ -- -- $ 3,000 (12)
Development
----------------------------------- --------- -------------------------------- ------------------- ----------------------
Samuel Z. Herskowitz, 2004 $190,000 (13) $ -- 1,841,180 (14) $ 10,000 (15)
Co-Chief Operating Officer and 2003 $125,000 (13) $ 26,000 (3) 100,000 (11) $ 10,000 (15)
Chief Marketing Officer 2002 $125,000 (13) $ -- -- $ 11,000 (15)
----------------------------------- --------- -------------------------------- ------------------- ----------------------
Brian P. Alessi, 2004 $121,000 (17) $ -- 920,950 (18) $ --
Chief Financial Officer and 2003 $ 94,000 (17) $ -- -- $ --
Treasurer (16) 2002 $ 77,000 (17) $ -- -- $ --
----------------------------------- --------- -------------------------------- ------------------- ----------------------
Dr. Nicholas Shashati, 2004 $137,000 (19) $ -- -- $ --
President - VisionCare of 2003 $125,000 (19) $ -- -- $ --
California 2002 $125,000 (19) $ -- -- $ --
=================================== ========= ================================ =================== ======================
(1) Mr. Payan became Vice President of Finance on July 16, 2001, Senior
Vice President, Chief Financial Officer, Treasurer and Secretary in October
2001, and Co-Chief Operating Officer on April 29, 2002. On March 24, 2004, Mr.
Payan resigned as Treasurer and was appointed a director of the Company. On June
7, 2004, Mr. Payan was appointed Chief Executive Officer and resigned all of his
other offices.
(2) Represents salary paid to Mr. Payan.
(3) Represents bonus paid related to the year ended December 31, 2003.
(4) Represents 1,305,000 options that are fully vested and exercisable, and
5,903,220 options (the underlying shares of which are subject to shareholder
approval) that will vest at various dates through December 31, 2006.
(5) All of these options were exercised on May 20, 2004.
(6) All of these options were exercised in February 2003.
(7) Represents car allowance payments made to Mr. Payan.
(8) Represents car allowance payments made to Mr. Payan, along with the
payment for certain additional services provided in connection with the
Company's evaluation of an offer, during 2003, by certain of its directors and
principal shareholders, and some of their immediate family members, to acquire
all of the outstanding capital stock of the Company.
(9) Represents salary paid to Mr. Lewis.
(10) Represents 600,000 options that are fully vested and exercisable, and
2,714,124 options (the underlying shares of which are subject to shareholder
approval) that will vest at various dates through December 31, 2006.
(11) All of these options were exercised in November 2003.
(12) Represents car allowance payments made to Mr. Lewis.
8
(13) Represents salary paid to Mr. Herskowitz.
(14) Represents 333,334 options that are fully vested and exercisable, and
1,507,846 options (the underlying shares of which are subject to shareholder
approval) that will vest at various dates through December 31, 2006.
(15) Represents car allowance payments made to Mr. Herskowitz.
(16) Mr. Alessi served as Controller of the Company until June 7, 2004,
when he became Chief Financial Officer. Mr. Alessi became Treasurer on March 24,
2004.
(17) Represents salary paid to Mr. Alessi.
(18) Represents 166,666 options that are fully vested and exercisable, and
754,284 options (the underlying shares of which are subject to shareholder
approval) that will vest at various dates through December 31, 2006.
(19) Represents salary paid to Dr. Shashati.
Option Grants in Last Fiscal Year
On December 30, 2004, the Compensation Committee of the Board granted an
aggregate of 13,284,114 stock options to the Named Executive Officers of the
Company. The options have an exercise price of $0.14, a term of 10 years, and
vest at various dates through December 30, 2006.
The following table sets forth information concerning the options granted,
during fiscal 2004, to the Named Executive Officers of the Company:
--------------------------------- --------------- -------------- -------------- -------------- -----------------------------------
% of Total Potential Realizable Value of Assumed
Number of Options Annual Rates of Stock Price
Shares Granted to Appreciation
Underlying Employees in Exercise for Option Term
Options Fiscal Year Price Expiration
Name Granted Per Share Date 5% 10%
--------------------------------- --------------- -------------- -------------- --------------- ------------------- ----------------
Christopher G. Payan 7,208,220 54.3% $0.14 12/30/14 $649,000 $1,586,000
--------------------------------- --------------- -------------- -------------- --------------- ------------------- ----------------
Myles S. Lewis 3,314,124 24.9% $0.14 12/30/14 $298,000 $ 729,000
--------------------------------- --------------- -------------- -------------- --------------- ------------------- ----------------
Samuel Z. Herskowitz 1,841,180 13.9% $0.14 12/30/14 $166,000 $ 405,000
--------------------------------- --------------- -------------- -------------- --------------- ------------------- ----------------
Brian P. Alessi 920,590 6.9% $0.14 12/30/14 $ 83,000 $ 203,000
--------------------------------- --------------- -------------- -------------- --------------- ------------------- ----------------
Equity Compensation Plan Information
The following table contains information as of April 18, 2005 concerning
(1) the number of shares of Common Stock to be issued upon the exercise of
outstanding options, warrants and rights issued under our existing equity
compensation plans, (2) the weighted average exercise price of those options,
warrants and rights, and (3) the number of securities remaining available for
future issuance under those plans:
--------------------------------- ------------------------------ ------------------------------ -------------------------------
(A) (B) (C)
--------------------------------- ------------------------------ ------------------------------ -------------------------------
Number of securities
Number of securities to be available for future issuance
issued upon exercise of Weighted-average exercise under equity compensation
outstanding options and price of outstanding options plan (excludes securities
Plan Category warrants and warrants reflected in column (A)
--------------------------------- ------------------------------ ------------------------------ -------------------------------
Authorized by shareholders 5,326,210 $1.44 368,133
--------------------------------- ------------------------------ ------------------------------ -------------------------------
Not authorized by shareholders 72,652,027 $0.64 -
--------------------------------- ------------------------------ ------------------------------ -------------------------------
9
Aggregate Options Exercised in Last Fiscal Year and Fiscal Year-End Option
Values
---------------------------------- ------------- ------------ -------------------------------- -------------------------------------
Shares
Acquired Number of Securities
on Exercise Value Underlying Unexercised Options Value of Unexercised In-the-Money
Name (#) Realized at FY-End (#) Options at FY-End ($)*
($) Exercisable/Unexercisable Exercisable/Unexercisable
---------------------------------- ------------- ------------ -------------------------------- -------------------------------------
Christopher G. Payan 100,000 $ 9,000 1,355,000/5,903,220 $13,050/$59,032
---------------------------------- ------------- ------------ -------------------------------- -------------------------------------
Myles S. Lewis - $ - 650,000/2,714,124 $6,000/$27,141
---------------------------------- ------------- ------------ -------------------------------- -------------------------------------
Samuel Z. Herskowitz - $ - 400,834/1,507,846 $3,333/$15,078
---------------------------------- ------------- ------------ -------------------------------- -------------------------------------
Brian P. Alessi - $ - 166,666/753,924 $1,666/$7,539
---------------------------------- ------------- ------------ -------------------------------- -------------------------------------
Dr. Nicholas Shashati - $ - 140,000/-0- $0/$0
---------------------------------- ------------- ------------ -------------------------------- -------------------------------------
* Based on the OTC Bulletin Board closing price for the last business day
of the fiscal year ($0.15).
The stock options granted to the Named Executive Officers have exercise
prices as follows: Christopher G. Payan: 7,208,220 options at $0.14 and 50,000
options at $0.26; Myles S. Lewis: 3,314,124 options at $0.14; Samuel Z.
Herskowitz: 1,841,180 options at $0.14, 20,000 options at $6.31, and 10,000
options at $3.25; Dr. Nicholas Shashati: 100,000 options at $0.33, 20,000
options at $6.31, 10,000 options at $3.25, and 10,000 options at $7.50; and
Brian P. Alessi: 920,590 options at $0.14.
Director Compensation
Directors who are not employees or executive officers of the Company
receive $20,000 per annum, payable in equal, quarterly installments of $5,000,
$1,500 for each in person meeting, and no additional compensation for telephonic
meetings or actions taken by written consent in lieu of a meeting. In the event
that multiple meetings are held on the same day, directors will receive
compensation for one meeting. Further, all directors are reimbursed for certain
expenses in connection with their attendance at board and committee meetings.
Other than with respect to the reimbursement of expenses, directors who are
employees or executive officers of the Company will not receive additional
compensation for serving as a director.
OTHER MATTERS
Except as discussed in this Proxy Statement, the Board does not know of any
matters that are to be presented at the Special Meeting other than those stated
in the Notice of Special Meeting and referred to in this Proxy Statement. The
Board reserves the right to adjourn, postpone, continue or reschedule the
Special Meeting, depending on the circumstances and the Board's belief that such
adjournments, postponements, continuations or reschedulings would be in the best
interests of all EVI shareholders.
METHOD AND COST OF SOLICITATION OF PROXIES
The cost of solicitation of proxies in the accompanying form will be borne
by the Company, including expenses in connection with preparing and mailing this
Proxy Statement. In addition to solicitation of proxies by mail, directors,
officers and employees of the Company (who will receive no additional
compensation therefor) may solicit the return of proxies by telephone, telegram
or personal contact. Arrangements have also been made with brokerage houses and
other custodians, nominees and fiduciaries for the forwarding of solicitation
material to the beneficial owners of shares of capital stock of the Company held
of record by such persons, and the Company will reimburse those firms for the
reasonable out-of-pocket expenses incurred by them in connection therewith in
accordance with the rules of the SEC.
10
SHAREHOLDER PROPOSALS
If any shareholder of the Company intends to present a proposal for
consideration at the 2005 annual shareholder meeting and desires to have such
proposal included in the 2005 proxy statement and proxy card distributed by the
Board with respect to such meeting, such proposal must have been received at the
Company's principal executive offices, 100 Quentin Roosevelt Boulevard, Suite
508, Garden City, New York 11530, Attention: Secretary, by not later than
February 23, 2005. Upon receipt of a proposal, the Company will determine
whether or not to include the proposal in its 2005 proxy statement in accordance
with applicable law.
Shareholder proposals submitted after February 23, 2005 will not be
included in the Company's 2005 proxy statement but may be raised at the 2005
Annual Meeting. However, if any shareholder wishes to present a proposal for the
2005 Annual Meeting that is not included in the Company's proxy statement for
that meeting and fails to submit that proposal on or before February 23, 2005,
as required under our bylaws, then the persons named as proxies in the Company's
proxy card accompanying its 2005 proxy statement will be allowed to use their
discretionary voting authority when the proposal is raised at the 2005 Annual
Meeting, without any discussion of the matter in the Company's 2005 proxy
statement.
By Order of the Board of Directors
By: /s/ Christopher G. Payan
--------------------------------
Christopher G. Payan
Chief Executive Officer
April 25, 2005
11
PRELIMINARY PROXY MATERIAL, DATED April 25, 2005
SUBJECT TO COMPLETION
PROXY
This Proxy Is Solicited On Behalf Of The Board Of Directors Of
EMERGING VISION, INC.
Special Meeting Of Shareholders: _____, May __, 2005
The undersigned shareholder of Emerging Vision, Inc., a New York
corporation (the "Company"), hereby appoints Mr. Christopher G. Payan and Mr.
Adam M. Stahl, or either of them, voting singly in the absence of the others, as
his/her/its attorney(s) and proxy(ies), with full power of substitution and
revocation, to vote, as designated on the reverse side, all of the shares of the
Capital Stock of Emerging Vision, Inc. that the undersigned is entitled to vote
at the Annual Meeting of Shareholders of the Company to be held at the offices
of Certilman Balin Adler & Hyman, LLP, 90 Merrick Avenue, East Meadow, New York
11554, at 10:00 a.m. (local time), on _______, May __, 2005, or any adjournment,
adjournments, postponements or continuations thereof, in accordance with the
instructions on the reverse side hereof.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy will
be voted "FOR" Proposal No. 1 and in favor of any proposal to adjourn the
meeting in order to allow the Company additional time to obtain sufficient
Proxies with regard thereto.
FOLD AND DETACH HERE
The Board of Directors recommends a vote "FOR" Proposal No. 1.
PROPOSAL NO. 1 - To approve of an amendment to the Company's 1995
Stock Incentive Plan, as amended, to increase the number of
shares of Common Stock issuable thereunder to twenty-five
million (25,000,000) shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Signature: Signature: Date:
------------------- ---------------------- ---------
Note: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full corporate name by
an authorized officer. If a partnership, please sign in partnership name by an
authorized person.
FOLD AND DETACH HERE