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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 24, 1999 Commission File No 0-23018
PLANAR SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
OREGON 93-0835396
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
1400 NW Compton Drive
Beaverton, OR 97006
(Address of principle executive offices,
including zip code)
(503) 690-1100
(Registrants telephone number, including area code)
__________________________________________
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the proceeding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO ______
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this form 10-K or any
amendment to this Form 10-K (_)
As of December 17, 1999
Aggregate market value of the voting stock held by
non-affiliates of the Registrant based upon the
closing bid price of such stock: $78,406,000
Number of shares of Common Stock outstanding 10,541,271
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement to be used in connection with the Annual Meeting
of Shareholders to be held on February 3, 2000, are incorporated by reference
into Part III of this report.
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1
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Part I
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Item 1.
BUSINESS
Planar Systems, Inc. (Planar) is a leading provider of high performance
electronic information displays, display sub-systems, and complete display
systems. The Company markets products based on a variety of display technologies
including active matrix liquid crystal displays (AMLCDs), passive matrix liquid
crystal displays (PMLCDs), electroluminescent (EL) flat panel displays, active
matrix electroluminescent (AMEL) and other microdisplays, and specialized
cathode ray tubes (CRTs). These products are currently used in a wide variety of
applications in Planar's core medical, transportation, and industrial markets.
Planar has proprietary technology and manufacturing expertise in its EL, AMEL,
PMLCD, and CRT products. The Company competes on a global basis with
development, manufacturing, and marketing operations in both the United States
and Europe. Major customers include Agilent, Allen-Bradley, Datascope, GE
Marquette Medical Systems, Hewlett-Packard, Honeywell, Mack Trucks, Protocol
Systems, Sun Microsystems, Gilbarco, Siemens, Smiths Industries, and ZOLL
Medical Corporation.
Industry Background
The information display industry is undergoing significant change as
businesses and individuals demand to be connected to the text, graphics, and
video information that is currently available. People also expect that
information to be mobile and accessible wherever they are working.
These trends are converging to drive a growing demand across industries for
color, high-performance, thin, lightweight, power-efficient displays that are
capable of displaying complex information. Although commodity CRTs dominate the
overall information display market, they are large, heavy, fragile, and require
substantial amounts of power to operate.
There are several display technologies currently in development or
commercially available, including various forms of liquid crystal and EL
displays. The principal bases of competition among display suppliers are
commercial availability, long life, price, environmental and optical
performance, size, customer service, design flexibility, power usage, and
ruggedness.
Passive Matrix LCD. PMLCDs modulate light (which is either reflected or
transmitted) by applying a voltage to a liquid crystal material placed between
two glass plates. A range of colors are possible using filter or backlight
techniques.
Active Matrix LCD. AMLCD screens incorporate the PMLCD technology plus add
a transistor at every pixel location. This allows each pixel to be turned on and
off independently which increases the image quality, response time, and side-to-
side viewing angle of the display. Color AMLCDs are produced using various types
of color filters and pixel arrangements.
Electroluminescent. Planar's standard monochrome EL display technology is a
solid state device with a thin film luminescent layer sandwiched between
transparent dielectric (insulator) layers and a matrix of row and column
electrodes deposited on a single glass substrate. A circuit board, with control
and drive components mounted within the same area as the viewing area on the
glass panel, is connected to the back of the glass substrate using various
interconnect technologies. The result is a flat, compact, reliable, and rugged
display device. When AC voltage is applied to a column and a row electrode, the
phosphor thin film between them emits light that passes through the transparent
electrode, through the glass face, and on to the viewer. Increasing the number
of rows and columns, and thus the number of pixels, in a given space increases
the clarity of the display to the viewer.
Other. There is a wide diversity of new technologies constantly under
development with the objective of competing in this market. Some of the more
visible efforts include ferroelectric LCDs, AMLCDs, organic light emitting
diodes (OLEDs), and various forms of miniature displays.
2
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Strategy
The Company's goal is to enhance its position as a leading supplier of
information display systems. The Company has successfully developed a broad
product line of information displays, which has resulted in large market
acceptance. In the last two fiscal years, the Company has shipped over a quarter
million units to customers with a particular emphasis on the medical,
industrial, and transportation markets, including military/avionics.
The Company believes that the trends toward information mobility and
connectivity will drive the development of devices that will require the use of
high performance display systems. The Company is now seeking to meet theses
needs and broaden its market position by adding value to its displays.
Key elements of the Company's strategy to achieve this goal include:
Expand Display Systems Capability. The Company intends to meet its
customer's need for embedded display systems by providing products which
integrate firmware, backlights, display drivers, mechanical enclosures, and
electronic hardware specific to their requirements. The Company will seek to
develop these capabilities in-house or through partnerships.
Expand Market Presence. The Company continues to identify and pursue
growing markets that have a high correlation between the capabilities of the
Company's products and the specific needs of the target market. Within these
markets, the Company focuses on a broad range of customers whose applications
receive high value and benefit from Planar's products. Today, the Company's core
markets are medical, transportation, and industrial. Additionally, Planar is
focusing increased attention on emerging markets for high information content
displays.
Pursue Strategic Relationships. The Company seeks to provide customers with
the best display solution regardless of technology. Display industry customers
are constantly asking for higher product performance at competitive prices. To
meet these customer demands, the Company intends to continue to evaluate and
actively seek to develop or acquire, promising technologies directly or through
strategic relationships.
3
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Markets
The Company is currently serving the following core market segments:
Medical. Displays are used in patient monitors and a range of
administrative, diagnostic, and therapeutic equipment, including health
record terminals, defibrillators, anesthesia systems, ventilators, infusion
pumps, and blood analyzers. These medical applications typically require
certification, a wide viewing angle, and clear, crisp images readable from
across the room in varying light conditions by multiple users at the same
time. The Company believes that its displays and display systems provide
superior display quality and reliability for crucial medical applications.
Industrial. Displays are used in a wide range of production and
control environments, including process controls, industrial computers,
elevator, and crane interfaces, and machine control panels. The
reliability, ruggedness, wide operating temperature range, and low
susceptibility to electromagnetic interference of Planar displays permit
the Company to deliver solutions to a range of problems in these difficult
environments.
The Company's displays are also used in a wide range of test and
measurement products, including digital oscilloscopes, analyzers, and
telecommunications test equipment. The Company's displays can be found in a
range of sales and information terminals such as petroleum dispensers,
kiosks, and data collectors. The Company believes there is an increasing
market demand for the Company's displays in smaller, more portable test
equipment and inventory logistics products.
Transportation. The Company's sales in this market consist of embedded
display systems for commercial vehicles and high performance CRTs and
AMLCDs sold to systems integrators for military cockpits. Additionally, the
Company sells processed EL display glass to military systems suppliers for
integration into various military subsystems used in communications
applications, tactical displays, avionics, and shipboard command and
control equipment.
The Company believes that commercial vehicles will become more automated
and require high performance graphical interfaces to improve driver
productivity, safety, and satisfaction. The Company also believes that
military customers will continue to require increasing display performance,
share development costs, and have significant influence over the
distribution of research and development funding from government sources.
The pervasive use of microprocessors has increased the demand for higher
information content displays for space constrained transportation
applications. The Company has sold displays to customers for use in global
positioning applications, long-haul trucks, off road vehicle instruments,
farm equipment, cockpit displays for trains, warehouse inventory management
displays, forklift applications, and railway car information systems.
In addition to the core markets described above, Planar is serving the following
emerging markets:
Communications. As hardware becomes increasingly portable and the
support systems allow for greater transmission of data, telecommunication
devices require displays with more information capability. The Company has
sold displays to customers for use in field communication systems and
financial trader telephone turrets.
Business/Office Equipment. The Company sells displays for a variety of
applications in the office and retail markets, including high speed
photocopiers, office control panels, point-of-sale devices, custom designed
monitors, and network storage devices. The Company believes that the growth
of e-commerce and Internet-related information systems will lead to greater
demand for embedded display systems utilizing the skills and technologies
used by its other markets.
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Products
The Company offers its customers a variety of displays and display systems
matched to their needs. The Company can supply products in a wide range of
resolutions, formats, viewing areas, and technologies. These can be classified
in four primary categories:
Flat Panel Displays. This category includes monochrome EL and LCD, multi-
color EL and LCD, and full color AMLCD displays. This is principally an OEM
(original equipment manufacturer) component market where the customers purchase
displays to incorporate directly into their products.
Flat Panel Subsystems. This category includes EL, PMLCD, and AMLCD
components which are integrated together with mechanical packages, firmware,
display drives, backlights, touch panels, and electronics to produce embedded
display solutions which meet the needs of key markets and customers.
Value-added Display Solutions. To be able to better satisfy customers'
display needs, the Company incorporates displays into systems that often include
hardware, i.e., keyboards, touch input devices, local computing capability or
special packaging and "software" that enables bus connectivity and graphical
user interfaces (GUI). The Company markets its flat panel monitors and complete
display systems for bedside computing and monitoring applications where
hospitals are increasingly recognizing the productivity gained by such
installations.
Cathode Ray Tubes. The Company offers high performance CRTs based on its
proprietary taut shadow mask technology. These displays are sold primarily to
military systems companies who integrate them into cockpit applications.
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Research, Development and Product Engineering
The Company believes that a significant level of investment in research,
development, and product engineering is required to maintain market leadership.
Total expenses were $23.8, $19.9, and $17.3 million for the fiscal years 1999,
1998, and 1997, respectively, for research, development, and product
engineering. These expenses were partially offset by contract funding from both
government agencies (in the United States and Finland) and private sector
companies of $9.7, $11.2, and $9.6 million in fiscal years 1999, 1998, and 1997,
respectively.
Research and development expenses of the Company are primarily related to the
development of advanced products based on active matrix electroluminescent
(AMEL) and liquid crystal on silicon (LCOS) microdisplay technology, AMLCD and
PMCLD technologies, organic light emitting diodes (OLEDs), new display drive
architectures, and fundamental manufacturing process improvements. Product
engineering expenses are directly related to the design, prototyping, and
release to production of new Company products. Research, development, and
product engineering expenses consist primarily of salaries, project materials,
outside services, allocation of facility expenses, and other costs associated
with the Company's ongoing efforts to develop new products, processes, and
enhancements.
Recent development efforts have been focused on both short-term and long-
term programs designed to enhance the Company's product offerings and
capabilities. These programs include the following:
Microdisplays. This program is focused on the development of high-
resolution image sources for miniature display applications. Current development
efforts with AMEL and LCOS displays are addressing higher resolution, improved
performance, and lower manufacturing costs. Targeted markets for microdisplays
include medical, industrial, military, and transportation.
New Technology Development. As part of the Company's product strategy,
relationships are continuing to be established to explore various display
technologies and their incorporation into the product line. Some of the projects
being pursued include OLEDs, AMLCDs, fast PMLCDs, backlights, and other display
enabling technologies.
6
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Manufacturing
The Company operates EL manufacturing facilities in both the United States
and Finland. These facilities are designed to produce a wide range of display
sizes and types from 1"x 4" to 12"x 14" that can be manufactured with relatively
minor changes to the basic equipment set-up. The Company's LCD facility is also
designed to produce a wide range of display sizes and types. The CRT facility is
designed to produce 5" x 5" and 6" x 6" militarized CRTs.
The Company's manufacturing operations consist of the procurement and
inspection of components, manufacture of the display component, final assembly
of all components and extensive testing of finished products. The Company
currently procures all of its raw materials from outside suppliers. This
includes glass substrates, driver integrated circuits, electronic circuit
assemblies, power supplies and high density interconnects.
Quality and reliability are emphasized in the design and manufacture of the
Company's products. All of the Company's manufacturing facilities have active
operator training/certification programs and regularly use advanced statistical
process control techniques. The Company's products undergo thorough quality
inspection and testing throughout the manufacturing process.
The Company believes that worldwide quality standards are increasing and
that many customers now want manufacturers to have ISO9001 certification. This
certification requires that a company meet a set of criteria, established by an
independent, international quality organization that measures the quality of
systems, procedures and implementation in manufacturing, marketing and
development of products and services. As of September 24, 1999, all of the
operating divisions have received and maintain their ISO9001 certification.
Sales and Marketing
The Company's products are distributed worldwide through a combination of
independent sales representatives, resellers, distributors, and Company-employed
sales personnel. In the United States, Planar has regional sales personnel in
the Boston, Chicago, Milwaukee, Minneapolis, St. Paul, Philadelphia, Portland,
and Tampa metropolitan areas. In addition, there are three sales offices in
Europe: Helsinki, London, and Munich. Each of these locations is staffed by a
regional sales manager who has responsibility for sales in a specific region.
Each region also has a number of independent sales representatives who generally
have exclusive marketing and sales rights in their area and are managed by the
regional sales manager. International sales are conducted through a combination
of direct sales offices (Finland, Germany, and the United Kingdom), independent
sales representatives and distributors.
As of September 24, 1999, the Company's backlog of domestic and
international orders aggregated approximately $40.5 million. The Company
includes in its backlog all accepted contracts or purchase orders that are
scheduled for delivery in the next six months. The Company believes that its
backlog may be of limited utility in predicting future sales, particularly since
its international sales are primarily conducted through distributors, which
typically do not place purchase orders substantially in advance of delivery
dates. Variations in the magnitude and duration of contracts received by the
Company and customer delivery requirements may result in substantial
fluctuations in backlog from period to period.
7
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Competition
The market for information displays and display intensive systems is highly
competitive, and the Company expects this to continue. The Company believes that
over time this competition will have the effect of reducing average selling
prices of flat panel displays. If the Company were unable to increase unit
volumes or increase the performance of its products in order to offset or reduce
any decreases in selling prices, the Company's results of operations would be
adversely impacted. In addition, the Company's ability to maintain gross margins
will depend in part on its ability to reduce cost of sales in an amount
sufficient to compensate for any decreases in selling prices.
The Company competes with other display manufacturers based upon commercial
availability, long life, price, display performance (e.g., brightness, color
capabilities, contrast, and viewing angle), size, customer service, design
flexibility, power usage, durability, and ruggedness. Of particular competitive
interest is the Company's ability to provide custom display systems involving
both hardware and software. The Company believes its total quality program, wide
range of product offerings, flexibility, responsiveness, regional production
sites, technical support, and customer satisfaction programs are important to
the competitive position of the Company.
The principal display competitors against which the Company competes
include Sharp, Toshiba, Optrex, Seiko-Epson and Hitachi for LCDs; Sharp for EL;
Sharp, DTI, Hitachi and NEC for AMLCDs. In addition, a significant number of
Korean companies including Samsung, Hyundai, and Goldstar have also made large
investments in AMLCD technology.
The Company's CRT products dominate the United States market for high
performance full color avionics CRTs and have a significant share of the market
worldwide. Increasingly, the Company is seeing commercial display ruggedizers
attempting to move into the military avionics markets with commercial AMLCD
products for avionics applications.
8
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Intellectual Property
The Company relies on a combination of patents, trade secrets, trademarks,
copyrights and other intellectual property law, nondisclosure agreements and
other measures to protect its proprietary rights. The Company currently owns or
has license rights to over 50 patents and several more pending patent
applications for its technologies. The expiration dates of the Company's
existing patents range from 2000 to 2012. Features for which the Company has and
is seeking patent protection include display glass design, materials,
electronics addressing and control functions and process manufacturing.
Pursuant to the agreements under which the Company receives research and
development funding from government agencies, the funding entities retain
certain rights with respect to technical data developed by the Company pursuant
to funded research. Generally, these rights restrict the government's use of the
specific data to governmental purposes, performed either directly or by third
parties sub-licensed by the government. Rights under the Company's funding
agreements with private sector companies vary significantly, with the Company
and the third party each retaining certain intellectual property rights.
Employees
As of September 24, 1999, the Company had 876 employees worldwide, 636 in
the United States and 240 in Europe. Of these employees, 68 were engaged in
marketing and sales, 97 in research, development and product engineering, 74 in
finance and administration, and 637 in manufacturing and manufacturing support.
The Company's future success will depend in a large part upon its ability
to continue to attract, retain and motivate highly skilled and qualified
manufacturing, technical, marketing, engineering and management personnel. The
Company's U.S. employees are not represented by any collective bargaining units
and the Company has never experienced a work stoppage in the U.S. The Company's
Finnish employees are, for the most part, covered by national union contracts.
These contracts are negotiated annually between the various unions and the
Employer's Union and stipulate benefits, wage rates, wage increases, grievance
and termination procedures and work conditions.
Item 2. Properties
The Company leases three of its primary manufacturing facilities and
various sales offices in the United States and Europe. The EL manufacturing
operation, located in Beaverton, Oregon, leases 79,000 square feet of custom
designed space, including 15,000 square feet of cleanroom. The CRT operation is
located in a large facility in which it leases 29,000 square feet, including
approximately 7,000 square feet of cleanroom. The European facility, located in
Espoo, Finland, is a custom designed facility in which Planar leases 85,000
square feet, including approximately 15,000 square feet of cleanroom.
9
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During 1994, the Company acquired a 21,000 square foot facility with
approximately 6,000 square feet of cleanroom also located in Beaverton, Oregon.
This facility is being used for research and development activities and
production of miniature displays. Additionally, the Company has leased 17,000
square feet of an adjacent building.
As of September 26, 1997, the Company acquired Standish Industries, Inc and
its Lake Mills, Wisconsin LCD manufacturing operation, which includes a 70,000
square foot facility with approximately 7,500 square feet of cleanroom.
The Company has eight field sales offices in key U.S. metropolitan areas
and three sales offices in Europe. The offices are located in the Boston,
Chicago, Milwaukee, Minneapolis, St. Paul, Philadelphia, Portland, Tampa,
Helsinki, London and Munich metropolitan areas. Lease commitments for these
facilities are short term, typically six to twelve months. None of these sales
offices has any significant leasehold improvements nor are any planned.
The Company believes that its facilities are adequate for its immediate and
near term requirements and does not anticipate the need for any significant
additional expansion in the near future.
Item 3. Legal Proceedings
There are no pending material legal proceedings to which the Company is a
party or to which any of its property is subject.
Item 4. Submission of Matter to a Vote of Security Holders
No matters were submitted to stockholders during the fourth quarter of the
fiscal year.
Part II
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Item 5. Market for Registrant's Common Equity and Related Shareholder Matters
Shares of the Company's Common Stock commenced trading in the
over-the-counter market on the Nasdaq National Market System on December 16,
1993, under the symbol PLNR.
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The Company currently intends to retain its earnings to support operations and,
therefore, does not anticipate paying any cash dividends in the foreseeable
future. The following table sets forth for the fiscal periods indicated, the
range of the high and low closing prices for the Company's Common Stock on the
Nasdaq National Market System.
High Low
Fiscal 1998
First Quarter $13.00 $10.13
Second Quarter 13.00 10.13
Third Quarter 13.13 10.88
Fourth Quarter 13.31 9.88
Fiscal 1999
First Quarter 12.50 6.69
Second Quarter 9.81 7.13
Third Quarter 9.00 7.13
Fourth Quarter 7.81 6.13
During the quarter ended September 24, 1999, the Company sold securities
without registration under the Securities Act of 1933, as amended (the
"Securities Act") upon the exercise of certain stock options granted under the
Company's stock option plans. An aggregate of 6,425 shares of Common Stock were
issued at exercises prices ranging from $2.25 to $6.50 These transactions were
effected in reliance upon the exemption from registration under the Securities
Act provided by Rule 701 promulgated by the Securities and Exchange Commission
pursuant to authority granted under Section 3 (b) of the Securities Act.
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
Fiscal year
(in thousands, except per share amounts) 1999 1998 1997 1996 1995
Operations
<S> <C> <C> <C> <C> <C>
Sales $122,914 $129,015 $ 88,850 $80,371 $78,523
Gross profit 33,175 40,252 28,488 27,988 28,388
Income (loss) from operations (3,151) 11,827 (1,395) 9,104 12,102
Net income (loss) $ (5,125) $ 8,951 $ 274 $ 8,672 $10,537
Diluted net income (loss) per share $ (0.48) $ 0.81 $ 0.02 $ 0.77 $ 0.98
Balance Sheet
Working capital $ 54,378 $ 51,520 $ 52,871 $56,924 $59,078
Assets 111,771 118,629 114,196 97,295 88,674
Long-term liabilities 16,622 4,526 8,851 6,015 4,685
Shareholders' equity 72,744 83,378 77,280 79,969 72,356
</TABLE>
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Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
GENERAL
The Company is a worldwide leader in the development, manufacture and marketing
of high performance electronic display products. Planar began shipping products
in 1983 and has experienced revenue growth based upon the expansion of its
product line and market acceptance of its products for a variety of
applications.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage of net
sales of certain items in the Consolidated Financial Statements of the Company.
The table and the discussion below should be read in conjunction with the
Consolidated Financial Statements and Notes thereto.
<TABLE>
<CAPTION>
Fiscal year ended Sept. 24, 1999 Sept. 25, 1998 Sept 26, 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales 100.0% 100.0% 100.0%
Cost of sales 73.0 68.8 67.9
---- ---- ----
Gross profit 27.0 31.2 32.1
Operating expenses:
Research and development, net 11.4 6.7 8.6
Purchased research & development - - 9.3
Sales and marketing 9.2 8.5 9.1
General and administrative 7.7 6.7 7.1
Restructuring charges 1.0 - -
Amortization of goodwill and excess
fair market value of acquired net
assets over purchase price 0.2 0.1 (0.5)
---- ---- ----
Total operating expenses 29.5 22.0 33.6
---- ---- ----
Income (loss) from operations (2.5) 9.2 (1.5)
Non-operating income (expense):
Interest, net (0.2) 0.5 1.5
Foreign exchange, net 1.3 (0.5) 1.7
Other, net (4.4) - (2.3)
---- ---- ----
Net non-operating income (expense) (3.3) - 0.9
---- ---- ----
Income (loss) before income taxes (5.8) 9.2 (0.6)
Provision (benefit) for income taxes (1.6) 2.3 (0.9)
---- ---- ----
Net income (loss) (4.2)% 6.9% 0.3%
==== ==== ====
</TABLE>
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Restructuring Charges
In the fourth quarter of fiscal year 1999, the Company began to implement a
series of actions intended to align operations with current market conditions
and to improve the profitability of its operations. As a result of these
actions, the Company incurred a restructuring charge of $1.5 million. These
actions include a workforce reduction of 18 people and the write-off of prepaid
12
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royalties. In addition, the Company intends to sell Planar Flat Candle, Inc., a
wholly owned subsidiary that manufactures and sells backlights for liquid
crystal displays. Management expects the actions to be completed by the end of
fiscal year 2000 and expects that cash of $243,000 will be used in connection
with severance benefits that have not yet been paid.
The exit of the Flat Candle business resulted in a charge of $1.1 million
which included inventory charges of $237,000 related to the exit of certain
products, $651,000 related to goodwill, $183,000 related to severance and
$66,000 related to other assets and liabilities. The inventory charge of
$237,000 was recorded as cost of sales and the remaining amount of $900,000 was
recorded as restructuring charges in the Consolidated Statement of Operations.
The Company is actively seeking to sell the business and expects this action to
be completed during fiscal year 2000.
The Company also has recorded severance charges of $188,000 related to
headcount reductions. In addition, a charge of $163,000 was recorded related to
prepaid royalties, which were impaired due to lower than expected future sales
associated with certain products covered by the royalty agreement. The fair
value of the prepaid royalty was determined through the calculation of the net
present value of discounted cash flows expected to be provided by the asset.
These amounts were recorded as restructuring charges in the Consolidated
Statement of Operations.
Sales
The Company's sales of $122.9 million in 1999 decreased $6.1 million or 4.7% as
compared to $129.0 million in 1998. The decrease in sales was principally due to
a slowdown across all of the Company's component markets in both Europe and
North America due to customers pushing out shipment dates and reduced sales due
to weak end-product sales. The Company's sales increased by 45.2% to $129.0
million in 1998 from $88.9 million in 1997. The increase in 1998 was primarily
due to the additional sales attributable to the Company's LCD operation, which
was acquired in September 1997. In addition in 1998, sales increases were
realized in the medical, transportation, business/office, and defense markets.
The Company presently expects sales for fiscal year 2000 to be approximately 10%
to 20% greater than the sales in 1999.
International sales, net of intercompany eliminations, decreased by 4.6% to
$25.2 million in 1999 as compared to $26.5 million recorded in 1998, and
increased 12.3% in 1998 from 1997 sales of $23.6 million. The decrease in
international sales was due primarily to decreased sales in existing product
lines in the Company's foreign markets. The increase in international sales in
1998 was primarily attributable to the Company's LCD operation. As a percentage
of total sales, international sales remained constant at 20.5% in both 1999 and
1998 and decreased from 26.6% in 1997. The decline in international sales as a
percentage of total sales in 1998 was mainly attributable to the addition of
sales from the LCD operation, which were primarily domestic sales.
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Gross Profit
The Company's gross margin as a percentage of sales decreased to 27.0% in 1999
from 31.2% in 1998. This decrease was largely attributable to increased
inventory reserves for the end-user products and start-up manufacturing issues
associated with the military avionics AMLCD products. The Company's gross profit
as a percentage of sales decreased to 31.2% in 1998 from 32.1% in 1997. The
decline in gross margin in fiscal 1998 was related mainly to the increase in
sales of LCD products, which historically are at a lower margin. The Company
intends to record charges related to inventory up to $1.7 million in the first
quarter of 2000. Such charges are due to a management decision to discontinue
certain products and record potential reserves for other products. This is in
line with management's efforts to rationalize the product portfolio.
Research and Development
Research and development expenses increased $5.4 million or 61.7% to $14.0
million in 1999 from $8.7 million in 1998. The increase is due primarily to
additional expenses related to the development of new technologies and product
engineering associated with the development of color AMLCD products in both the
commercial and military avionics businesses. In addition, the Company also
received $1.5 million less in contract funding in 1999 as compared to 1998.
Research and development expenses increased 15.4% in 1998 from 1997. This
increase in fiscal 1998 related primarily to LCD development at the Company's
LCD facility. Increases in net expenses in both years related to continued work
on the next generation color products, and technology development on AMLCDs,
FEDs, AMEL miniature displays, and organic light emitting diodes (OLEDs).
Research and development expenses are expected to decrease in fiscal year 2000
due to anticipated reductions in spending. As a result of these reductions and
other cost savings associated with the restructuring charges recorded in 1999,
operating expenses are expected to decline to approximately 24.0% in fiscal 2000
as a percentage of sales as compared to 29.5% in 1999.
Purchased Research and Development Costs
Purchased research and development costs were $8.3 million for fiscal 1997.
These one-time, non-recurring costs represent in-process research and
development costs expensed by the Company in connection with its acquisition of
Standish Industries, Inc.
Sales and Marketing
Sales and marketing expenses increased $453,000 or 4.2% to $11.4 million in 1999
as compared to $10.9 million in 1998. The increase was primarily due to
additional marketing resources associated with the medical and transportation
markets. As a percentage of sales, sales and marketing expenses increased from
8.5% in 1998 to 9.2% in 1999 due to higher expenses and lower sales levels in
1999. Sales and marketing expenses increased by 34.7% to $10.9 million in 1998
from $8.1 million in 1997. The increase in marketing and sales costs in 1998 was
primarily attributable to costs incurred in connection with the LCD operation.
The increases in 1998 and
14
<PAGE>
1997 were also attributable to sales commissions paid on a higher level of sales
and an increased focus on marketing. As a percentage of sales, sales and
marketing expenses decreased to 8.5% in 1998 from 9.1% in 1997. This decrease in
1998 expenses was attributable to the addition of the LCD operation, which had
lower sales and marketing expenses as a percentage of sales.
General and Administrative
General and administrative expenses increased $834,000 or 9.6% to $9.5 million
in 1999 from $8.7 million in 1998. The increase in general and administrative
expenses was primarily due to increased bad debt expense and the search and
transition related to a new President and Chief Executive Officer. As a
percentage of sales, general and administrative expenses increased to 7.7% in
1999 from 6.7% in 1998. This increase is due to higher expenses and lower sales
levels in 1999. General and administrative expenses increased by 37.5% to $8.7
million in 1998 from $6.3 million in 1997. The increase in general and
administrative expenses in 1998 was primarily attributable to costs incurred in
connection with the LCD operation. In addition, the increases in 1998 were
related to the additional administrative costs required to build the
infrastructure to support the growth of the Company, specifically in areas of
management systems and overall management development. As a percentage of sales,
general and administrative expenses decreased to 6.7% in 1998 from 7.1% in 1997.
The decrease in fiscal 1998 expenses as a percentage of sales was attributable
primarily to the addition of the LCD operation, which had lower general and
administrative expenses as a percentage of sales.
Amortization of Goodwill and Excess of Fair Market Value of Acquired Net Assets
over Purchase Price
In connection with the Company's acquisition of Standish Industries, Inc. in
September 1997, the Company recorded goodwill on its balance sheet for the
excess of the purchase price over the fair value of the net assets acquired. The
goodwill is being amortized over a ten-year period, resulting in operating
expenses of $571,000 per year.
In connection with the Company's acquisition of its Finland operation in
January 1991, the Company exchanged Common Stock with a fair market value (based
upon an independent valuation) equivalent to the value of the business acquired.
Due to historical losses of this business and the expectation of future losses,
the value of the Common Stock paid was less than the fair market value of the
net assets acquired. This required the Company to write fixed assets down to
zero and to record negative goodwill on its balance sheet for the remaining
amount of the excess fair market value of the net assets acquired over the
purchase price. Amortization of this negative goodwill has created a positive
offset to operating expenses in the amount of $476,000 per year. Negative
goodwill is being amortized over a ten-year period.
Non-operating Income and Expense
Non-operating income and expense includes interest income on investments,
interest expense and net foreign currency exchange gain or loss. Net interest
income (expense) decreased from net interest income of $736,000 in 1998 to net
interest expense of $233,000 in 1999 due to lower
15
<PAGE>
cash balances earning interest income and higher interest expense due to
increased borrowings. The Company has increased its borrowings to finance
equipment purchases associated with a new production facility. Net interest
income decreased in 1998 from 1997 as a result of lower cash balances in 1998,
due to the cash paid for the acquisition of Standish Industries, Inc. in
September, 1997 and the retirement of its debt in 1998, and cash used for stock
repurchases.
On July 6, 1999, the Company acquired a 20% interest in dpiX Holding Company
LLC. dpiX Holding Company LLC owns 80.1% of dpiX LLC. The Company paid $5.0
million in cash for its interest in dpiX Holding Company LLC. dpiX LLC
manufactures and sells amorphous silicon thin-film transistor arrays for use in
x-ray digital detectors and liquid crystal displays. The investment has been
accounted for under the equity method of accounting. As part of the acquisition
agreement, there is a disproportionate allocation of profit and losses where the
Company recognizes the first $5.0 million of losses incurred. The Company has
written off the entire investment of $5.4 million, which includes transaction
costs of $395,000, in the fourth quarter of fiscal year 1999 based upon the
actual losses incurred since the date of acquisition and the belief that the
investment is other than temporarily impaired.
Foreign currency exchange gains and losses are related to timing differences
in the receipt and payment of funds in various currencies and the conversion of
cash accounts denominated in foreign currencies to the applicable functional
currency. Foreign currency exchange gains and losses amounted to a gain of $1.7
million in 1999, a loss of $659,000 in 1998 and a gain of $1.5 million in 1997.
These amounts are comprised of realized gains and losses on cash transactions
involving various currencies and unrealized gains and losses related to foreign
currency denominated receivables and payables resulting from exchange rate
fluctuations between the various currencies in which the Company conducts
business.
The Company currently realizes about one-fifth of its revenue outside the
United States and expects this to continue in the future. Additionally, the
functional currency of the Company's foreign subsidiary is the Finnish Markka
which must be translated to U.S. Dollars for consolidation. As such, the effects
of future foreign currency fluctuations will impact the Company's business and
operating results.
The other expense recognized for the fiscal year ended September 26, 1997
reflects the write off of an equity investment in Virtual i-O, a privately held
virtual reality headset manufacturing company. The investment was accounted for
under the cost method. In December 1996, as a result of delays in product
developments and supplier issues, Virtual i-O needed additional funding which it
received at a price per share lower than that paid by the Company. Based upon
the lower of cost or market method, the Company's investment was written down
based on the price paid in the last round of independent financing. Virtual i-O
declared bankruptcy during 1997 and the Company's investment was written off.
Provision for Income Taxes
The Company recorded a tax benefit of $2.0 million in 1999, an effective tax
rate of 24.8% for 1998 and a tax benefit of $784,000 for 1997. The change in the
effective tax rate for 1998 was
16
<PAGE>
due to the relative profitability of the Company's Finland subsidiary compared
to the United States entities. For fiscal 1999 and 1997, the change in the
effective tax rates was due to recognition of book losses in the United States
compared to book income for the Company's Finland subsidiary. In 1999, the book
loss in the United States was due primarily to the write-off of the dpiX
investment and the restructuring charges. In 1997, the book loss in the United
States was largely due to the write off of the purchased research and
development associated with the acquisition of Standish Industries, Inc. As a
result of the acquisition of the Company's Finland subsidiary in January 1991,
the Company recognized a change in ownership for tax purposes that resulted in a
limitation on the annual utilization of net operating loss carryforwards for
United States tax purposes. In fiscal 1999, 1998 and 1997, the Company was
subject to the $2.1 million annual limitation.
QUARTERLY RESULTS OF OPERATIONS
The table below presents unaudited consolidated financial results for each
quarter in the two-year period ended September 24, 1999. The Company believes
that all necessary adjustments have been included to present fairly the
quarterly information when read in conjunction with the Consolidated Financial
Statements. The operating results for any quarter are not necessarily indicative
of the results that may be expected for any future period.
<TABLE>
<CAPTION>
Three months ended Sept. 24, June 25, March 26, Dec. 25, Sept. 25, June 26, March 27, Dec. 26,
(in thousands, except per share data) 1999 1999 1999 1998 1998 1998 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $32,773 $30,426 $29,239 $30,476 $33,028 $32,411 $ 32,102 $31,474
Gross profit 7,267 8,190 8,462 9,256 10,327 10,367 10,437 9,121
Income (loss) from operations (4,065) (652) 181 1,385 2,949 3,424 2,997 2,457
Net income (loss) (7,088) 68 955 940 1,633 2,636 2,551 2,131
Net income (loss) per share
(diluted) $ (0.67) $ 0.01 0.09 $ 0.09 $ 0.15 $ 0.24 $ 0.23 $ 0.19
Weighted average number of common
shares outstanding (diluted) 10,527 10,779 10,838 10,975 11,109 11,130 11,098 11,141
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $5.8 million, $4.1 million and
$12.7 million in fiscal years 1999, 1998 and 1997, respectively. The increase in
1999 was primarily due to the loss on the dpiX investment and the restructuring
charges offset by the change in deferred taxes and other balance sheet accounts.
The decrease in 1998 was primarily related to changes in the balance sheet
accounts including inventory, accounts receivable, other current assets and
other current liabilities.
Additions to plant and equipment were $4.8 million, $4.0 million and $2.5
million in 1999, 1998 and 1997, respectively. The significant acquisitions
during 1999 and 1998 were purchases of equipment for the Wisconsin and Finland
manufacturing operations. The principal acquisitions during fiscal 1997 were
related to the acquisition of equipment to be used in connection with the
development of the military flat panel displays and the continued development of
AMEL miniature displays.
17
<PAGE>
The Company invested $9.6 million and $6.3 million in 1998 and 1997,
respectively, associated with the implementation of a new production facility
and equipment, which had not been placed in service at the end of each fiscal
year. As of September 24, 1999, the equipment had not yet been placed in
service. The Company expects to bring its new production facility on line during
the second quarter of fiscal 2000.
At September 24, 1999, the Company had two bank lines of credit agreements
with a total borrowing capacity of $20 million and credit facilities for
financing equipment of $18.0 million. As of September 24, 1999 and September 25,
1998, borrowings outstanding under the credit line were $0 and $10 million,
respectively. Borrowings outstanding under the equipment financing lines were
$17.4 million and $4.0 million as of September 24, 1999 and September 25, 1998,
respectively. The Company was in violation of certain financial covenants under
both lines of credit as of September 24, 1999. The banks have waived the
covenant violations. The Company believes its existing cash and investments
together with cash generated from operations and existing borrowing capabilities
will be sufficient to meet the Company's working capital requirements for the
foreseeable future.
On April 23, 1997, the Company announced its intention to repurchase up to
400,000 shares of the Company's outstanding common stock from time to time over
the following twelve months in open market and negotiated transactions. On May
13, 1998, the Company announced its intention to repurchase up to an additional
$5.0 million of the Company's outstanding common stock from time to time over
the following twelve months in open market and negotiated transactions. During
the twelve months ended September 24, 1999, the Company repurchased
approximately 376,000 shares of its outstanding common stock for $3.4 million.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The Company's exposure to market risk for changes in interest rates relates
primarily to its investment portfolio, and short-term and long-term debt
obligations. The Company mitigates its risk by diversifying its investments
among high credit quality securities in accordance with the Company's investment
policy.
The Company believes that its net income or cash flow exposure relating to
rate changes for short-term and long-term debt obligations is not material. The
Company primarily enters into debt obligations to support capital expenditures
and working capital needs. The Company does not hedge any interest rate
exposures.
Interest expense is affected by the general level of U.S. interest rates
and/or LIBOR. Increases in interest expense resulting from an increase in
interest rates would be offset by a corresponding increase in interest earned on
the Company's investments.
The Finnish Markka is the functional currency of the Company's subsidiary in
Finland. The Company does not currently enter into foreign exchange forward
contracts to hedge certain balance sheet exposures and intercompany balances
against future movements in foreign exchange rates. The Company does maintain
cash balances denominated in currencies other than
18
<PAGE>
the U.S. Dollar. If foreign exchange rates were to weaken against the U.S.
Dollar, the Company believes that the fair value of these foreign currency
amounts would not decline by a material amount.
YEAR 2000 ISSUE
Like most other companies, the Year 2000 computer issue creates risks for the
Company. The Year 2000 issue exists because many computer programs use two digit
rather than four digit date fields to define the applicable year. As a result,
computer equipment and software and devices with embedded technology that are
time-sensitive may recognize a date using "00" as the year 1900 rather than the
year 2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, production delays, a
temporary inability to process transactions, send invoices, or engage in similar
normal business activities. Incomplete or untimely resolution of the Year 2000
issue by the Company or critically important suppliers or customers of the
Company could have a materially adverse effect on the Company's business,
financial condition, or results of operations.
The Company has undertaken various initiatives intended to ensure that its
computer systems, software and other operational equipment will function
properly with respect to dates in the Year 2000 and thereafter. For this
purpose, the term "computer systems and software" includes systems that are
commonly thought of as information technology ("IT") systems, including
enterprise software, operating systems, networking components, application and
data servers, PC hardware, accounting, data processing and other information
systems, as well as systems that are not commonly thought of as IT systems, such
as telephone systems, fax machines, manufacturing equipment and other
miscellaneous systems and equipment. Both IT and non-IT systems may contain
embedded technology, which complicates the Company's Year 2000 assessment,
remediation and testing efforts.
All of the Company's financial and information systems are believed to be Year
2000 compliant. The Company has completed the process of inventorying and
assessing its primary manufacturing and other non-IT systems. To date, no
significant issues have been identified with the Company's manufacturing and
other non-IT systems.
The Company has surveyed its major vendors, suppliers, and customers to assess
the potential impact on its operations of these key third parties. The process
included obtaining information as to their efforts associated with Year 2000
compliance. To date, no significant compliance issues have been identified with
these third parties.
The Company currently estimates that the cost of its Year 2000 assessment,
remediation and testing efforts, as well as current anticipated costs to be
incurred by the Company with respect to Year 2000 issues of third parties, will
not exceed $500,000. The expenditures will be funded from operating cash flows.
This estimate is subject to change as additional information is obtained in
connection with the Company's assessment of the Year 2000 issue. As of September
24, 1999, the Company had incurred costs of approximately $325,000 related to
its Year 2000 assessment, remediation, and testing efforts. In addition, the
Company has incurred $963,000 (which was capitalized and will be amortized over
the expected useful life) associated with the
19
<PAGE>
implementation of the new ERP system in its Finland facility, which was funded
from operating cash flows and existing cash balances.
The Company presently believes that Year 2000 issues will not pose significant
problems for the Company. However, if all Year 2000 issues have not been
properly identified, or assessment, remediation and testing are not effected
timely with respect to Year 2000 problems that are identified, there can be no
assurance that the Year 2000 issue will not have a material adverse impact on
the Company's business, financial condition or results of operations, or
adversely affect the Company's relationships with customers, vendors and others.
Additionally, there can be no assurance that the Year 2000 issues of other
entities, such as one or more of the Company's critical customers or suppliers,
will not have a material adverse impact on the Company's systems or its
business, financial condition or results of operations. Finally, if there are
infrastructure failures, such as disruptions in the supply of power, water,
transportation, communications services, or if major institutions, such as the
government, foreign or domestic banking systems, are unable to continue to
provide their services or support resulting in a disruption in services or
support to the Company, the Company may be unable to operate for the duration of
the disruption.
The foregoing statements as to the Company's expectations regarding the impact
on the Company of the Year 2000 problem are forward-looking statements that are
based upon management's assumptions and expectations regarding future events,
third party remediation plans and certifications, and other factors. There can
be no assurance that these expectations will prove to be accurate and actual
results could differ materially from those currently anticipated. Specific
factors that could cause such material differences include, but are not limited
to, the ability to identify, assess, remediate and test all relevant computer
codes and embedded technology, the reliability of third party assessments and
certifications, and similar uncertainties.
INTRODUCTION OF THE EURO
The Company has established a team to address the issues raised by the
introduction of the Single European Currency (Euro) for initial implementation
as of October 1, 1999 and during the transition period through to January 1,
2002. The Company expects that its internal systems that will be affected by the
initial introduction of the Euro will be Euro capable by January 1, 2000, and
does not expect the costs of system modifications to be material. The Company
does not presently expect that introduction and use of the Euro will result in
any material increase in costs to the Company. While the Company will continue
to evaluate the impact of the Euro introduction over time, based on currently
available information, management does not believe that the introduction of the
Euro currency will have a material adverse impact on the Company's financial
condition or overall trends in results of operation.
FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations and other sections of this Report contain forward-looking statements
within the meaning of the Securities Litigation Reform Act of 1995 that are
based on current expectations, estimates and
20
<PAGE>
projections about the Company's business, management's beliefs and assumptions
made by management. Words such as "expects", "anticipates", "intends", "plans",
"believes", "seeks", "estimates" and variations of such words and similar
expressions are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and involve certain risks,
uncertainties, and assumptions that are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed or forecasted
in such forward-looking statements due to numerous factors, including, but not
limited to those discussed in Management's Discussion and Analysis of Financial
Condition and Results of Operations, as well as those discussed from time to
time in the Company's other Securities and Exchange Commission filings and
reports. In addition, such statements could be affected by general industry and
market conditions and growth rates, and general domestic and international
economic conditions. The forward-looking statements contained in this Report
speak only as of the date on which they are made, and the Company does not
undertake any obligation to update any forward-looking statement to reflect
events or circumstances after the date of this Report. If the Company does
update one or more forward-looking statements, investors and others should not
conclude that the Company will make additional updates with respect thereto or
with respect to other forward-looking statements.
Outlook: Issues and Uncertainties
The following issues and uncertainties, among others, should be considered
in evaluating the Company's future financial performance and prospects for
growth.
Competition
The market for information displays is highly competitive, and the Company
expects this to continue. The Company believes that over time this competition
will have the effect of reducing average selling prices of flat panel displays.
Certain of the Company's competitors have substantially greater name recognition
and financial, technical, marketing and other resources than the Company, and
competitors of the Company have made and continue to make significant
investments in the construction of manufacturing facilities for AMLCDs and other
advanced displays. There can be no assurance that the Company's competitors will
not succeed in developing or marketing products that would render the Company's
products obsolete or noncompetitive. To the extent the Company is unable to
compete effectively against its competitors, whether due to such practices or
otherwise, its financial condition and results of operations would be materially
adversely affected.
Development of New Products and Risks of Technological Change
The Company's future results of operations will depend upon its ability to
improve and market its existing products and to successfully develop,
manufacture and market new products. There can be no assurance that the Company
will be able to continue to improve and market its existing products or develop
and market new products, or that technological developments will not cause the
Company's products or technology to become obsolete or noncompetitive. Even
successful new product introductions typically result in pressure on gross
margins during the
21
<PAGE>
initial phases as costs of manufacturing start-up activities are spread over
lower initial sales volumes. The Company has experienced lower than expected
yields with respect to new products and processes in the past. These low yields
have and will continue to have a negative impact on gross margins. In addition,
customer relationships are negatively impacted due to production problems and
late delivery of shipments.
A portion of the Company's flat panel products rely on EL technology, which
currently constitutes only a small portion of the information display market.
Through the acquisition of Standish Industries, Inc., the Company has
diversified its display products and expanded its addressable market
significantly to include flat panel passive liquid crystal display applications.
The Company's future success will depend in part upon increased market
acceptance of existing EL, passive LCD and active matrix LCD technologies, and
other future technological developments. In that regard, the Company's
competitors are investing substantial resources in the development and
manufacture of displays using a number of alternative technologies. In the event
these efforts result in the development of products that offer significant
advantages over the Company's products, and the Company is unable to improve its
technology or develop or acquire an alternative technology that is more
competitive, the Company's business and results of operations will be adversely
affected.
The Company's military product sales are significantly based on CRT
technology. Military avionics contractors are increasingly focused on
incorporating displays, primarily AMLCDs, into cockpit applications that have
traditionally used CRTs. The Company's ability to transition the military
product line to flat panel displays over the next few years will be important to
the long-term success of Planar's military avionics business.
Level of Advanced Research and Development Funding
The Company's advanced research and development activities have
significantly been funded by outside sources, including agencies of the United
States and Finnish governments and private sector companies. The Company's
recently funded research and development activities have principally focused on
multi-color and full color displays, miniature displays, low power displays,
advanced packaging and other applications. The actual funding that will be
recognized in future periods is subject to wide fluctuation due to a variety of
factors including government appropriation of the necessary funds and the level
of effort spent on contracts by the Company.
Within Congress, there has been significant debate on the level of the
funding to be made available to programs that have historically supported the
Company's research activities. Additionally, government research and
development funding has been gradually shifting to a more commercial approach,
and contractors are increasingly required to share in the development costs.
This trend is likely to continue, which could increase the Company's net
research and development expenses. While the Company has historically not
experienced any loss or decline of external research funding, the loss or
substantial reduction of such funding could adversely affect the Company's
results of operations and its ability to continue research and development
activities at current levels. See Note 1 in the "Notes to Consolidated Financial
Statements".
22
<PAGE>
International Operations and Currency Exchange Rate Fluctuations
Shipments to customers outside of North America accounted for approximately
20.5%, 20.5% and 26.6%, of the Company's sales in fiscal 1999, fiscal 1998 and
fiscal 1997, respectively. The Company anticipates that international shipments
will continue to account for a significant portion of its sales. As a result,
the Company is subject to risks associated with international operations,
including trade restrictions, overlapping or differing tax structures, changes
in tariffs, export license requirements and difficulties in staffing and
managing international operations (including, in Finland, relations with
national labor unions). See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
Declining Military Expenditures
The Company's sales associated with military applications have been
increasing. However, military capital expenditure levels have been declining for
several years and depend largely on factors outside of the Company's control.
Although the Company believes that its dependence on military sales will
decrease as the Company continues to expand its customer base, no assurance can
be given that military sales will continue at current levels. In addition, as a
result of the reduction in military sales, several key suppliers have
threatened to halt production of critical components. Although the Company
believes it has reached agreement with each of its critical vendors, no
assurance can be given that critical material supply will be available when
needed. The Company continues to develop strategic relationships with suppliers.
However, there can be no assurance given that these strategic relationships will
continue in the future and the Company will receive the critical components
required to meet production and shipment schedules.
Effects of Quarterly Fluctuations in Operating Results
Results of operations have fluctuated significantly from quarter to quarter
in the past, and may continue to fluctuate in the future. Various factors,
including timing of new product introductions by the Company or its competitors,
foreign currency exchange rate fluctuations, disruption in the supply of
components for the Company's products, changes in product mix, capacity
utilization, the timing of orders from major customers, production delays or
inefficiencies, inventory obsolescence charges, the timing of expenses and other
factors affect results of operations. Quarterly fluctuations may adversely
affect the market price of the Common Stock.
The Company's backlog at the beginning of each quarter does not normally
include all orders needed to achieve expected sales for the quarter.
Consequently, the Company is dependent upon obtaining orders for shipment in a
particular quarter to achieve its sales objectives for that quarter. The
Company's expense levels are based, in part, on expected future sales. If sales
levels in a particular quarter do not meet expectations, operating results may
be adversely affected.
23
<PAGE>
Item 8. Financial Statements and Supplementary Data
PLANAR SYSTEMS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report.............................................. 25
Consolidated Balance Sheets............................................... 26
Consolidated Statements of Operations..................................... 27
Consolidated Statements of Shareholders' Equity........................... 28
Consolidated Statements of Cash Flows..................................... 29
Notes to Consolidated Financial Statements................................ 30
</TABLE>
24
<PAGE>
Independent Auditors' Report
The Board of Directors
Planar Systems, Inc. and Subsidiaries:
We have audited the accompanying consolidated balance sheets of Planar Systems,
Inc. and subsidiaries as of September 24, 1999 and September 25, 1998, and the
related consolidated statements of operations, shareholders' equity and cash
flows for each of the years in the three-year period ended September 24, 1999.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based upon our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Planar
Systems, Inc. and subsidiaries as of September 24, 1999 and September 25, 1998,
and the results of their operations, and their cash flows for each of the years
in the three-year period ended September 24, 1999 in conformity with generally
accepted accounting principles.
KPMG LLP
Portland, Oregon
November 3, 1999, except as to Note 15, which is as of December 13, 1999
25
<PAGE>
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(In thousands, except share amounts) Sept. 24, 1999 Sept. 25, 1998
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 17,795 $ 23,426
Short-term investments (Note 2) 2,010 -
Accounts receivable, net of allowance for doubtful
accounts of $601 at 1999 and $310 at 1998 (Note 2) 20,982 22,762
Inventories 25,373 25,744
Other current assets (Note 9) 10,623 10,313
-------- --------
Total current assets 76,783 82,245
Property, plant and equipment, net (Note 6) 16,245 16,689
Goodwill (Note 3) 4,000 5,222
Other assets 14,743 14,473
-------- --------
$111,771 $118,629
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Line of credit (Note 7) $ - $ 10,000
Accounts payable 11,513 9,288
Accrued compensation 3,975 4,039
Current portion of long-term debt (Note 7) 1,778 1,505
Deferred revenue 1,301 1,180
Other current liabilities (Note 8) 3,362 4,237
Current portion of excess fair market value of acquired net
assets over purchase price 476 476
-------- --------
Total current liabilities 22,405 30,725
Deferred taxes (Note 9) 353 915
Long-term debt, less current portion (Note 7) 15,599 2,516
Other long-term liabilities 550 499
Long-term portion of excess fair market value of acquired
net assets over purchase price 120 596
-------- --------
Total liabilities 39,027 35,251
SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value. Authorized 10,000,000 shares,
no shares issued at 1999 or 1998
Common stock, no par value. Authorized 30,000,000 shares;
issued 10,490,233 and 10,787,526 shares at 1999 and 1998,
respectively 75,319 74,385
Retained earnings 5,709 14,216
Accumulated other comprehensive loss (Note 14) (8,284) (5,223)
-------- --------
Total shareholders' equity 72,744 83,378
-------- --------
$111,771 $118,629
======== ========
- -------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
26
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Operations Fiscal year ended
(In thousands, except per share amounts) Sept. 24, 1999 Sept. 25, 1998 Sept. 26, 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $122,914 $129,015 $88,850
Cost of sales 89,739 88,763 60,362
-------- -------- -------
Gross profit 33,175 40,252 28,488
-------- -------- -------
OPERATING EXPENSES:
Research and development, net 14,047 8,685 7,638
Purchased research and development (Note 5) - - 8,305
Sales and marketing 11,357 10,904 8,095
General and administrative 9,486 8,652 6,293
Restructuring charges (Note 4) 1,251 - -
Amortization of goodwill and excess fair market
value of acquired net assets over purchase price 185 184 (448)
-------- -------- -------
Total operating expenses 36,326 28,425 29,883
-------- -------- -------
Income (loss) from operations (3,151) 11,827 (1,395)
NON-OPERATING INCOME (EXPENSE):
Interest income 1,341 1,029 1,734
Interest expense (1,574) (293) (381)
Foreign exchange, net 1,658 (659) 1,543
Other, net (Note 3) (5,395) - (2,011)
-------- -------- -------
Net non-operating income (expense) (3,970) 77 885
-------- -------- -------
Income (loss) before income taxes (7,121) 11,904 (510)
Provision (benefit) for income taxes (Note 9) (1,996) 2,953 (784)
-------- -------- -------
Net income (loss) $ (5,125) $ 8,951 $ 274
======== ======== =======
Basic net income (loss) per share $ (0.48) $ 0.83 $ 0.03
Average shares outstanding - basic 10,654 10,837 10,944
Diluted net income (loss) per share $ (0.48) $ 0.81 $ 0.02
Average shares outstanding - diluted 10,654 11,098 11,247
- ----------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
27
<PAGE>
Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
Accumulated
Other Total
Common Stock Retained Comprehensive Shareholders'
(In thousands, except share amounts) Shares Amount Earnings Income (Loss) Equity
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, SEPTEMBER 27, 1996 10,925,218 $71,867 $10,579 $(2,477) $79,969
Components of comprehensive loss:
Net income - - 274 - 274
Currency translation adjustment - - - (3,936) (3,936)
Unrealized gain on investments - - - 17 17
-------
Total comprehensive loss (3,645)
Proceeds from issuance of common stock 97,195 395 - - 395
Issuance of common stock in connection
with acquisition (Note 3) 89,126 891 - - 891
Tax benefit from stock option exercises (Note 9) - 37 - - 37
Stock repurchase (35,809) - (367) - (367)
---------- ------- ------- ------- -------
BALANCE, SEPTEMBER 26, 1997 11,075,730 73,190 10,486 (6,396) 77,280
Components of comprehensive income:
Net income - - 8,951 - 8,951
Currency translation adjustment - - - 1,180 1,180
Unrealized loss on investments - - - (7) (7)
-------
Total comprehensive income 10,124
Proceeds from issuance of common stock 154,946 1,102 - - 1,102
Tax benefit from stock option exercises (Note 9) - 93 - - 93
Stock repurchase (443,150) - (5,221) - (5,221)
---------- ------- ------- ------- -------
BALANCE, SEPTEMBER 25, 1998 10,787,526 74,385 14,216 (5,223) 83,378
Components of comprehensive loss:
Net loss - - (5,125) - (5,125)
Currency translation adjustment - - - (3,061) (3,061)
-------
Total comprehensive loss (8,186)
Proceeds from issuance of common stock 79,166 912 - - 912
Tax benefit from stock option exercises (Note 9) - 22 - - 22
Stock repurchase (376,459) - (3,382) - (3,382)
---------- ------- ------- ------- -------
BALANCE, SEPTEMBER 24, 1999 10,490,233 $75,319 $ 5,709 $(8,284) $72,744
========== ======= ======= ======= =======
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
28
<PAGE>
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Fiscal year ended
(In thousands) Sept. 24, 1999 Sept. 25, 1998 Sept. 26, 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (5,125) $ 8,951 $ 274
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 5,473 4,712 3,260
Amortization of excess market value of acquired net
assets over purchase price (476) (476) (476)
Loss on investment 5,395 - 2,011
Restructuring charges 1,488 - -
Loss (gain) on sale of equipment (8) 35 (3)
Deferred taxes (3,497) 1,614 4
Foreign exchange (gain) loss (1,658) 659 (1,100)
Purchased research and development - - 8,305
Tax benefit of stock options exercised 22 93 37
(Increase) decrease in accounts receivable 1,504 (1,451) (2,879)
Increase in inventories (134) (4,456) (1,444)
(Increase) decrease in other current assets 3,367 (3,416) (3,225)
Increase in accounts payable 2,126 932 4,227
Increase (decrease) in accrued compensation (447) (918) 1,069
Increase (decrease) in deferred revenue 270 (252) 1,389
Increase (decrease) in other current liabilities (2,451) (1,920) 1,207
-------- ------- --------
Net cash provided by operating activities 5,849 4,107 12,656
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of plant and equipment (4,797) (3,996) (2,511)
Investment in a business (5,395) - (13,897)
Equipment and rent deposits (161) (9,601) (6,286)
Increase (decrease) in other long-term liabilities 593 (183) (35)
Net sales (purchases) of short-term investments (2,010) 8,170 (1,059)
Net sales (purchases) of long-term investments (211) 2,245 8,399
-------- ------- --------
Net cash used by investing activities (11,981) (3,365) (15,389)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds (payments) of long-term debt 13,356 (4,555) 895
Net proceeds under long-term accounts receivable 120 1,221 574
Net proceeds from issuance of capital stock 912 1,102 395
Net proceeds (payments) under short-term debt (10,000) 8,870 -
Stock repurchase (3,382) (5,221) (367)
-------- ------- --------
Net cash provided by financing activities 1,006 1,417 1,497
Effect of exchange rate changes (505) (510) (76)
-------- ------- --------
Net increase (decrease) in cash and cash equivalents (5,631) 1,649 (1,312)
Cash and cash equivalents at beginning of period 23,426 21,777 23,089
-------- ------- --------
Cash and cash equivalents at end of period $ 17,795 $23,426 $ 21,777
======== ======= ========
Supplemental cash flow disclosure:
Cash paid for interest $ 1,172 $ 914 $ 381
Cash paid for income taxes $ 1,547 $ 3,419 $ 2,999
- ----------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
29
<PAGE>
Notes to Consolidated Financial Statements
Three Years Ended September 24, 1999
(Dollars in thousands, except per share amounts)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Operations
Planar Systems, Inc. was incorporated on April 27, 1983 and commenced operations
in June 1983. Planar Systems, Inc., and its wholly owned subsidiaries
(collectively, the "Company") are engaged in the developing, manufacturing and
marketing of electronic display products. These display products primarily
include electroluminescent displays (EL), liquid crystal displays (LCDs), active
matrix liquid crystal displays (AMLCDs) and high performance taut shadow mask
cathode ray tubes (CRT) technologies.
Principles of consolidation
The consolidated financial statements include the financial statements of Planar
Systems, Inc. and its wholly-owned subsidiaries, Planar International Ltd.,
Planar America, Inc., Planar Standish, Inc., Planar Flat Candle, Inc. and Planar
Advance, Inc. All significant intercompany accounts and transactions are
eliminated in consolidation.
Fiscal year
The Company's fiscal year ends on the last Friday in September. The last day of
fiscal 1999, 1998 and 1997 was September 24, September 25 and September 26,
respectively. Due to statutory requirements, Planar International's fiscal year-
end is September 30. All references to a year in these notes are to the
Company's fiscal year ended in the period stated which includes the fiscal year
results of Planar International.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions.
These estimates and assumptions affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of sales and
expenses during the reporting period. Actual results may differ from those
estimates.
Foreign currency translation
The local currency is the functional currency of the Company's foreign
subsidiary. Assets and liabilities of the foreign subsidiary are translated into
U.S. Dollars at current exchange rates, and sales and expenses are translated
using average rates. Gains and losses from translation of net
30
<PAGE>
assets are included in accumulated other comprehensive income (loss). Gains and
losses from foreign currency transactions are included as a component of non-
operating income (expense).
Cash and cash equivalents
Cash and cash equivalents include cash deposits in banks and highly liquid
instruments with maturities of three months or less from the time of purchase.
Investments
Debt securities for which the Company does not have the intent or ability to
hold to maturity are classified as available for sale, along with the Company's
investment in equity securities. Securities available for sale are carried at
fair value, with unrealized gains and losses, net of tax, reported in
accumulated other comprehensive loss. At September 24, 1999 and September 25,
1998, the Company had no investments that qualified as trading or held to
maturity.
As of September 24, 1999, the Company's investments in debt and equity
securities were $9,319 of which $2,010 were classified as investments and the
remainder were classified as cash and cash equivalents. As of September 25,
1998, the Company's investments in debt and equity securities were classified as
cash and cash equivalents. The investments are diversified among high credit
quality securities in accordance with the Company's investment policy. As of
September 24, 1999 and September 25, 1998, all debt securities were invested in
either government securities or commercial paper. These securities have been
reported at their fair market value, which equaled their historical cost. The
contractual maturities of the investments as of September 24, 1999 and September
25, 1998 were less than three months.
Inventories
Inventories are stated at the lower of cost (first-in, first-out method) or
market, net of reserves for estimated inventory obsolescence based upon the
Company's best estimate of future product demand. Inventories consist of:
<TABLE>
<CAPTION>
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Raw materials $16,632 $15,892
Work in process 4,058 3,798
Finished goods 4,683 6,054
------- -------
$25,373 $25,744
======= =======
</TABLE>
- --------------------------------------------------------------------------------
Included in cost of sales are $2,909, $1,305 and $644 of charges related to
inventory obsolescence reserves for the years ended September 24, 1999,
September 25, 1998 and September 26, 1997, respectively. The Company has
inventory reserves of $4,283 and $1,717 as of September 24, 1999 and September
25, 1998, respectively.
31
<PAGE>
Property, plant and equipment
Depreciation of equipment is computed on a straight-line basis over the
estimated useful lives of the assets, generally three to seven years. Leasehold
improvements are amortized on a straight-line basis over the lesser of the life
of the leases or the estimated useful lives of the assets. Depreciation of the
building is computed on a straight-line basis over the estimated useful life of
the building, estimated to be 39 years.
Other assets
Included in other assets of $14,743 and $14,473 as of September 24, 1999 and
September 25, 1998, respectively, are assets associated with the implementation
of a new production facility and equipment which had not been placed in service
as of September 24, 1999 and September 25, 1998 in the amounts of $13,982 and
$13,271, respectively. In fiscal years 1999, 1998 and 1997 interest was
capitalized in the amounts of $0, $621 and $61, respectively.
Income taxes
Deferred tax assets and liabilities are established for the temporary
differences between the financial reporting basis and the tax basis of the
Company's assets and liabilities at the enacted tax rates expected to be in
effect when such amounts are realized or settled. Deferred tax assets are
reduced by a valuation allowance when it is more likely than not that some
portion of the deferred tax assets will not be realized.
Revenue recognition
The Company recognizes revenue from product sales generally at the time the
product is shipped. Service revenue is deferred and recognized over the contract
period or as services are rendered.
Research and development costs
Research and development costs are expensed as incurred. The Company
periodically enters into research and development contracts with certain
governmental agencies and private sector companies. These contracts generally
provide for reimbursement of costs. Funding from research and development
contracts is recognized as a reduction in operating expenses during the period
in which the services are performed and related direct expenses are incurred, as
follows:
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Research and
development expense $23,758 $ 19,927 $17,274
Contract funding (9,711) (11,242) (9,636)
------- -------- -------
Research and development, net $14,047 $ 8,685 $ 7,638
======= ======== =======
</TABLE>
- --------------------------------------------------------------------------------
32
<PAGE>
As of September 24, 1999 and September 25, 1998, included in other current
assets is $2,782 and $3,489, respectively, related to these research and
development contracts.
Product warranty
The Company provides a warranty for its products and establishes an allowance at
the time of sale adequate to cover warranty costs during the warranty period.
The warranty period is generally between twelve and fifteen months. This reserve
is included in other current liabilities (Note 8).
Goodwill and excess fair market value of acquired net assets over purchase price
Goodwill and the excess of fair market value of acquired net assets over
purchase price are being amortized over a ten-year period using the straight-
line method. Long-lived assets and intangibles are reviewed for impairment when
events or circumstances indicate costs may not be recoverable. Impairment exists
when the carrying value of the asset is greater than the net undiscounted future
cash flows expected to be provided by the asset. If impairment exists, the
asset's book value will be written down to its fair value. Fair value is
determined through quoted market values or through the calculation of the net
present value of discounted future cash flows expected to be provided by the
asset. Accumulated amortization was $1,143 and $656 as of September 24, 1999 and
September 25, 1998, respectively.
Net income (loss) per share
Basic net income (loss) per share was computed using the weighted average number
of common shares outstanding during each period. Diluted net income (loss) per
share is computed using the weighted average number of common shares plus
dilutive common equivalent shares outstanding during the period. Incremental
shares of 0, 261,000 and 303,000 for the fiscal years ended September 24, 1999,
September 25, 1998 and September 26, 1997, respectively, were used in the
calculations of diluted earnings per share. In years in which a net loss is
incurred, no common stock equivalents are included as they are antidilutive.
Financial instruments
For short-term financial instruments, including cash and cash equivalents,
accounts receivable, short-term debt, accounts payable and accrued compensation,
the carrying amount approximates the fair value because of the immediate short-
term nature of those instruments. The fair value of long-term debt is estimated
based upon quoted market prices for similar instruments or by discounting
expected cash flows at rates currently available to the Company for instruments
with similar risks and maturities. The differences between the fair values and
carrying amounts of the Company's financial instruments at September 24, 1999
and September 25, 1998 were not material.
33
<PAGE>
Stock-based compensation plans
The Company accounts for its stock-based plans under Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees".
Future accounting pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." The new
statement will require recognition of all derivatives as either assets or
liabilities on the balance sheet at fair value. The new statement is effective
for fiscal year 2001, but early adoption is permitted. Management has not yet
completed an evaluation of the effect this standard will have on the Company's
consolidated financial statements.
NOTE 2 CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to concentration of
credit risk consist principally of trade receivables and investments. The risk
in trade accounts receivable is limited due to the credit worthiness of the
companies comprising the Company's customer base and their dispersion across
many different sectors of the electronics industry and geographies. The risk in
investments is limited due to the credit worthiness of investees comprising the
portfolio, the diversity of the portfolio and relative low risk of municipal
securities. At September 24, 1999, the Company does not believe it had any
significant credit risks.
NOTE 3 BUSINESS ACQUISITIONS
On June 4, 1997, the Company acquired Flat Candle Corporation for $1,128 cash.
Flat Candle Corporation's primary business is that of developing, manufacturing
and marketing of backlights. The transaction was accounted for as a purchase.
Intangibles of $803 were recorded, which are being amortized over ten years. The
financial statements include the operating results of Flat Candle Corporation
from the date of acquisition. Pro forma results of operations have not been
presented because the effect of this acquisition is not significant.
On September 26, 1997, the Company acquired all of the outstanding capital
stock of Standish Industries, Inc. for approximately $15 million in cash and
stock. Standish Industries, Inc.'s primary business is that of developing,
manufacturing, and marketing LCD electronic displays. The transaction was
accounted for as a purchase. Intangibles of $5,714 were recorded, after
adjusting for purchased research and development costs (Note 5), which are being
amortized over ten years. The financial statements include the operating results
of Standish Industries, Inc. from the date of acquisition.
On July 6, 1999, the Company acquired a 20% interest in dpiX Holding Company
LLC. dpiX Holding Company LLC owns 80.1% of dpiX LLC. The Company paid $5,000 in
cash for its interest in dpiX Holding Company LLC. dpiX LLC manufactures and
sells amorphous silicon thin-film transistor arrays for use in x-ray digital
detectors and liquid crystal displays. The
34
<PAGE>
investment has been accounted for under the equity method of accounting. As part
of the acquisition agreement, there is a disproportionate allocation of profit
and losses where the Company recognizes the first $5,000 of losses incurred. The
Company has written off the entire investment of $5,395, which includes
transaction costs of $395, in the fourth quarter of fiscal year 1999 based upon
the actual losses incurred since the date of acquisition and the belief that the
investment is other than temporarily impaired. This charge has been recorded in
other non-operating expenses in the Consolidated Statement of Operations. During
the year ended September 24, 1999, the Company purchased $4,462 of materials
from dpiX LLC.
NOTE 4 RESTRUCTURING CHARGES
In the fourth quarter of fiscal year 1999, the Company began to implement a
series of actions intended to align operations with current market conditions
and to improve the profitability of its operations. As a result of these
actions, the Company incurred a restructuring charge of $1,488. These actions
include a workforce reduction of 18 people and the write-off of prepaid
royalties. In addition, the Company intends to sell Planar Flat Candle, Inc., a
wholly owned subsidiary that manufactures and sells backlights for liquid
crystal displays. Management expects the actions to be completed by the end of
fiscal year 2000 and expects that cash of $243 will be used in connection with
severance benefits that have not yet been paid.
The exit of the Flat Candle business resulted in a charge of $1,137 which
included inventory charges of $237 related to the exit of certain products, $651
related to goodwill, $183 related to severance and $66 related to other assets
and liabilities. The inventory charge of $237 was recorded as cost of sales and
the remaining amount of $900 was recorded as restructuring charges in the
Consolidated Statement of Operations. The Company is actively seeking to sell
the business and expects this action to be completed during fiscal year 2000.
The Company also has recorded additional severance charges of $188 related to
headcount reductions. In addition, a charge of $163 was recorded related to
prepaid royalties, which were impaired due to lower than expected future sales.
The fair value of the asset was determined through the calculation of the net
present value of discounted cash flows expected to be provided by the asset.
These amounts were recorded as restructuring charges in the Consolidated
Statement of Operations.
The restructuring charges incurred affected the Company's financial position
as follows:
<TABLE>
<CAPTION>
Accrued
Inventories Other Assets Goodwill Compensation
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Original charge $ 237 $ 229 $ 651 $ 371
Cash paid out - - - (128)
Non-cash write-offs (237) (229) (651) -
----- ----- ----- -----
Ending balance $ - $ - $ - $ 243
===== ===== ===== =====
</TABLE>
35
<PAGE>
NOTE 5 PURCHASED RESEARCH AND DEVELOPMENT EXPENSE
In connection with the acquisition of Standish Industries, Inc. at September 26,
1997, the Company allocated $8,300 of the purchase price to in-process research
and development projects as determined by independent appraisal. Accordingly,
these costs were expensed as of the acquisition date. These allocations
represent the estimated fair value based on risk adjusted cash flows (assuming a
23% discount rate) related to incomplete projects. The development of these
projects had not yet reached technological feasibility, and the technology had
no alternative future use. The technology acquired in these acquisitions
required substantial additional development by the Company. The $8,300 relates
mainly to four significant projects including the Color Enhancements project,
the Low Power project, the Fast Switching project, and the Miniature Display
project.
The Color Enhancement project is targeted at developing a manufacturing
process to add a color mosaic, specifically vertical color strips to LCDs,
resulting in a full color LCD display. At the time of acquisition, the project
was approximately 60% complete. The appropriate materials had been identified,
the process had been run, color filters were created, prototype LCDs were built
out of the color filters, and electronics were attached to the prototype LCDs.
However, none of the prototypes met the design criteria necessary to offer a
color display for sale to a customer. The technological uncertainties involved
the process of applying the topcoat over the color mosaic within required
tolerances and manufacturing consistencies. This technology required the
construction of internal color filters, planarization layers and low temperature
Indium Tin Oxide deposition. Due to the recent substantial decrease in the price
of full color Active Matrix displays, it became apparent that this technology is
uncompetitive and unviable. The Company changed the direction of the development
project toward a new technology, which utilizes external color filters which
significantly reduces the process complexity and cost. Most of the original
development efforts, however, are being utilized in this new technology,
including the fundamental materials being used, the pattern development of the
electrodes, the electronic circuit design and electronic circuit integration,
and the developed knowledge of color imagery and color filters necessary to meet
required performance levels. Remaining efforts include constructing color
filters, constructing holographic elements for light manipulation, integrating
these components into a display, constructing the electrical package, and the
environmental qualification of all components. It is estimated that this project
is approximately 26% complete, and will be completed by December 2000. The
expected costs to complete this project are approximately $185. $3,100 of the
$8,300 in-process research and development related to this Color Enhancement
project. The major assumption underlying the purchase price allocation was that
revenues would reach $25,000 in 2004 based upon an annual increase in revenues
of approximately $4,000 per year.
The Low Power project objective is to define materials and manufacturing
processes to reduce the drive voltage required for graphic displays. Currently
high-level multiplex graphic displays require the use of high voltage drivers,
which have a higher component cost. The combination of the liquid crystal
materials and cell design could result in a display that requires less voltage
and therefore less power and a lower cost to drive the image. At the time of the
acquisition, prototype LCDs, which require lower voltage were undergoing
qualification and image retention testing.
36
<PAGE>
The uniqueness of this project is to find a liquid crystal, which offers both a
wide temperature performance and a low voltage switching characteristic. It was
not known at the acquisition date which fluids, if any, would ultimately meet
the required operating criteria. At the time of acquisition, it was estimated
that the project was approximately 70% complete. Currently, the final liquid
crystal candidate has been pre-released for production, and is waiting for final
release. The project is 91% complete. The estimated cost to complete the project
is approximately $48. Approximately $2,300 of the $8,300 purchase price
allocation relates to the Low Power project. The major assumption associated
with this allocation amount was that related revenues will increase to over
$40,000 by 2005.
The Fast Switching project is targeted at developing fast switching LCD
shutters for "opto-electronics" usage. Standard LCDs typically contain a nematic
liquid crystal, which does not respond to voltage fast enough to be used in fast
switching applications. This project is attempting to decrease the response time
of a nematic LCD below that of the standard LCD that is currently offered for
sale, by modifying the structure of certain liquids. Several different fluids
were being tested at the acquisition date for use in developing various
applications. This project contains several technologies including Fast Twisted
Nematic, Electrically Controlled Birefringence (ECB), and a Field Sequential
Color Active Matrix EL. These technologies have been completed and constructed
in manufacturing and are being sold to customers. Approximately $1,300 of the
$8,300 purchase price allocation related to this Fast Switching project. The
major assumption associated with this allocation amount was that revenues would
increase to $26,000 in 2004. The impact on operations from this project has not
been material to date.
The Miniature Display Project is a co-development activity with an outside
company to create a commercially viable "miniature display" system. The system
will use optics to create a large "virtual" display by projecting the image
generated by a miniature AMLCD into the user's eye. Standish Industries'
contribution was to develop a Liquid Crystal on Silicon (LCOS) display and the
process by which silicon can be fabricated into an LCD. Changing the fabrication
material of an LCD from all glass to both silicon and glass presents particular
challenges in the processing phase. At the time of purchase, prototype LCOS
displays had been produced, however, none of the prototypes met the criteria
necessary to offer the system for sale to a customer. The project was completed
December 31, 1998. Approximately $1,000 of the $8,300 purchase price allocation
related to this project. The major assumption underlying this allocation was
that related revenues would reach $15,000 in 2005, based upon annual revenue
increases of approximately $3,000 per year. On October 5, 1998 the Company
signed a value-added distribution partnership agreement with a third party to
provide full-color, high resolution, and full-motion micro display solutions for
select military, industrial, and commercial markets. The Company will market,
distribute, sell and support the third party's proprietary microdisplay
technology, and may also choose to manufacture the Dynamic Nematic Liquid
Crystal on Silicon (DNLCOS) based products for its customers' critical needs.
The impact of this project on operations has not been material to date.
37
<PAGE>
NOTE 6 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, at cost, consists of:
<TABLE>
<CAPTION>
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Land $ 115 $ 115
Building and improvements 3,731 3,731
Machinery and equipment 34,693 31,164
-------- --------
Total property, plant and equipment 38,539 35,010
Less accumulated depreciation (22,294) (18,321)
-------- --------
Net property, plant and equipment $ 16,245 $ 16,689
======== ========
</TABLE>
- --------------------------------------------------------------------------------
NOTE 7 BORROWINGS
Line of credit
The Company has two bank lines of credit, which allow for total borrowings up to
$20,000. The lines bear interest at the LIBOR rate plus 125 basis points (6.6%
at September 24, 1999) or the prime rate plus 1% (8.3% at September 24, 1999)
and are unsecured with a negative pledge on accounts receivable and inventories.
The agreements will expire in May 2000. There were $0 and $10,000 of borrowings
outstanding on these lines at September 24, 1999 and September 25, 1998,
respectively. The Company was in violation of certain financial covenants under
both lines of credit as of September 24, 1999. The banks have waived these
covenant violations.
Long-term debt
The Company has entered into credit facilities with financial institutions to
finance equipment purchases. These loans are secured by the financed equipment
and bear interest at an average rate of 6.4%. As of September 24, 1999 and
September 25, 1998, the company has $17,377 and $4,021 outstanding under these
loans. Aggregate maturities over the next five years are $1,778 in 2000, $1,893
in 2001, $2,018 in 2002, $2,150 in 2003 and $2,291 in 2002. Covenants under
these agreements are not considered restrictive to normal operations.
38
<PAGE>
NOTE 8 OTHER CURRENT LIABILITIES
Other current liabilities consist of:
<TABLE>
<CAPTION>
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Warranty reserve $1,443 $1,153
Income taxes payable - 1,344
Deferred income taxes 325 433
Other 1,594 1,307
------ ------
Total $3,362 $4,237
====== ======
</TABLE>
- --------------------------------------------------------------------------------
NOTE 9 INCOME TAXES
The components of income (loss) before income taxes consist of the following:
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic $(8,958) $10,235 $(8,803)
Foreign 1,837 1,669 8,293
------- ------- -------
Total $(7,121) $11,904 $ (510)
======= ======= =======
</TABLE>
- --------------------------------------------------------------------------------
The following table summarizes the provision for US federal, state and foreign
taxes on income:
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 176 $ 550 $ 266
State 238 248 242
Foreign 1,087 541 2,425
------- ------ -------
1,501 1,339 2,933
------- ------ -------
Deferred:
Federal (2,951) 1,324 (3,638)
State (350) 150 -
Foreign (196) 140 (79)
------- ------ -------
(3,497) 1,614 (3,717)
------- ------ -------
$(1,996) $2,953 $ (784)
======= ====== =======
</TABLE>
39
<PAGE>
The differences between the U.S. federal statutory tax rate and the Company's
effective rate are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Computed statutory rate (34.0)% 34.0% (34.0)%
State income taxes, net of federal tax benefits 2.7 1.4 (23.7)
Effect of foreign tax rates 0.4 1.7 (97.6)
Permanent differences resulting
from purchase accounting 3.6 (1.0) 24.0
Change in valuation reserve (3.9) (9.2) 37.6
State tax impact for reversal of
intangible basis differences - (2.2) -
Benefit of tax exempt interest earned (0.1) (0.1) (59.6)
Other, net 3.3 0.2 (0.4)
------ ---- -------
Effective tax rate (28.0)% 24.8% (153.7)%
====== ==== =======
</TABLE>
- --------------------------------------------------------------------------------
The tax effects of temporary differences and carryforwards which gave rise to
significant portions of the deferred tax assets and liabilities as of September
24, 1999 and September 25, 1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Inventory valuation reserve $ 1,948 $ 1,705
Loss on investment 2,077 -
Other reserves and liabilities 1,332 1,229
Restructuring charges 490 -
Intangibles 215 75
Capital loss carryforwards 511 578
General business credits 480 480
Net operating loss carryforwards 1,336 1,734
Foreign tax credits 762 287
------- -------
Gross deferred tax assets 9,151 6,088
Valuation allowance (2,327) (2,563)
------- -------
Deferred tax assets 6,824 3,525
Deferred tax liabilities:
Inventory valuation reserve (325) (433)
Accumulated depreciation (680) (682)
Operating reserves (145) (233)
------- -------
Deferred tax liabilities (1,150) (1,348)
------- -------
Net deferred tax asset $ 5,674 $ 2,177
======= =======
</TABLE>
- --------------------------------------------------------------------------------
40
<PAGE>
The deferred tax assets and liabilities are recorded in the following balance
sheet accounts:
1999 1998
- --------------------------------------------------------------------------------
Other current assets $6,352 $3,525
Other current liabilities (325) (433)
Long-term deferred taxes (353) (915)
------ ------
Total $5,674 $2,177
====== ======
- -------------------------------------------------------------------------------
During fiscal years 1999, 1998, and 1997 the Company recognized tax benefits
of $22, $93, and $37, respectively, related to differences between financial and
tax reporting of stock option transactions. This difference was credited to
common stock.
The Company has established a valuation allowance for certain deferred tax
assets, including net operating loss and tax credit carryforwards. SFAS No. 109
requires that such a valuation allowance be recorded when it is more likely than
not that some portion of the deferred tax assets will not be realized. For
fiscal year 1999 and 1998, the valuation reserve decreased by $236 and $1,097,
respectively.
At September 24, 1999, the Company had net operating loss carryforwards of
approximately $3,470 available to reduce future federal taxable income. The
carryforwards expire at various dates through 2004. Utilization of the
carryforwards is subject to certain limitations due to the change in ownership
of the Company, which occurred in conjunction with the acquisition of its
Finland operation. As a result of the acquisition, utilization of available net
operating loss carryforwards is limited to approximately $2,060 per year.
NOTE 10 SHAREHOLDERS' EQUITY
Preferred stock
The Company is authorized to issue up to 10,000,000 shares of preferred stock at
$.01 par value. At September 24, 1999, no shares of preferred stock have been
issued; however, 200,000 shares of Series D Junior Participating Preferred Stock
have been reserved for issuance in connection with the Company's Shareholder
Rights Plan. Additional series of preferred stock may be designated and the
related rights and preferences fixed by action of the Board of Directors.
Stock options
In fiscal 1994, the Company adopted the 1993 Stock Incentive Plan, which
provides for the granting of options to buy shares of Common Stock. These
options are intended to either qualify as "incentive stock options" under the
Internal Revenue Code or "non-qualified stock options" not intended to qualify.
Under the 1993 plan, options generally become exercisable 25% one year after
grant and 6.25% per quarter thereafter, and expire ten years after grant. During
fiscal 1997, the Company adopted the 1996 Stock Incentive Plan with the same
provisions and guidelines as
41
<PAGE>
the aforementioned 1993 plan. The Company reserved 1,200,000 shares of common
stock for issuance under this plan. During fiscal 1999, the Company adopted the
1999 Non Qualified Stock Option Plan with the same provisions and guidelines as
the aforementioned 1993 plan. The Company reserved 100,000 shares of common
stock for issuance under this plan. The option price under all plans is the fair
market value as of the date of the grant. Total shares reserved under these
plans are 2,118,000 shares.
The Company also adopted a 1993 stock option plan for Nonemployee Directors
that provides an automatic annual grant to each outside director of the Company.
Total annual grants under this plan cannot exceed 60,000 shares per year.
Information regarding these option plans is as follows:
Number of Weighted Average
Shares Option Prices
- --------------------------------------------------------------------------------
Options outstanding at
September 27, 1996 1,171,864 $ 9.42
Granted 271,450 13.46
Exercised (71,916) 3.28
Canceled (10,074) 13.44
--------- ------
Options outstanding at
September 26, 1997 1,361,324 10.49
Granted 389,700 11.39
Exercised (114,489) 6.26
Canceled (101,371) 12.11
--------- ------
Options outstanding at
September 25, 1998 1,535,164 10.92
Granted 818,350 6.39
Exercised (38,614) 3.59
Canceled (92,220) 9.67
--------- ------
Options outstanding at
September 24, 1999 2,222,680 $ 9.04
========= ======
Exercisable at September 24, 1999 1,140,524
=========
- --------------------------------------------------------------------------------
Statement of Financial Accounting Standards No. 123
During 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock-Based Compensation" which defines a fair value based
method of accounting for an employee stock option or similar equity instrument.
As is permitted under SFAS No. 123, the Company has elected to continue to
account for its stock-based compensation plans under APB
42
<PAGE>
Opinion No. 25. The Company has computed, for pro forma disclosure purposes, the
value of all options granted during 1999, 1998 and 1997 using the Black-Scholes
option pricing model as prescribed by SFAS No. 123 using the following weighted
average assumptions for grants:
1999 1998 1997
- --------------------------------------------------------------------------------
Risk free interest rate 6.0% 4.5% 6.0%
Expected dividend yield - - -
Expected lives (in years) 4.2 4.2 4.2
Expected volatility 65.0% 54.6% 55.7%
- --------------------------------------------------------------------------------
Using the Black-Scholes methodology, the total value of options granted during
fiscal 1999, 1998 and 1997 was $3,335, $2,579 and $1,363, respectively, which
would be amortized on a pro forma basis over the vesting period of the options.
The weighted average fair value of options granted during fiscal 1999, 1998 and
1997 was $6.39 per share, $11.39 per share and $13.46 per share, respectively.
If the Company accounted for its stock based compensation plans in accordance
with SFAS No 123, the Company's net income and net income per share would
approximate the pro forma disclosures below:
1999 1998 1997
As Pro As Pro As Pro
Reported Forma Reported Forma Reported Forma
- --------------------------------------------------------------------------------
Net income (loss) $(5,125) $(6,896) $8,951 $7,720 $ 274 $ (581)
Net income (loss)
per share (diluted) $ (0.48) $ (0.65) $ 0.81 $ 0.70 $0.02 $(0.05)
- --------------------------------------------------------------------------------
The effects of applying SFAS No. 123 in this pro forma disclosure are not
indicative of future amounts. SFAS No. 123 does not apply to awards prior to
January 1, 1995, and additional awards are anticipated in future years.
43
<PAGE>
The following table summarizes information about stock options and grants
outstanding at September 24, 1999:
Options Outstanding Options Exercisable
- -----------------------------------------------------------------------------
Weighted
Weighted Average of Weighted Number of Weighted
Number Remaining Average Shares Average
Range of Outstanding Contractual Exercise Exercisable Exercise
Exercise Prices at 9/24/99 Life Price at 9/24/99 Price
- -----------------------------------------------------------------------------
$ 0.00 - $ 7.88 826,624 7.89 $ 4.72 239,924 $ 3.73
$ 8.00 - $11.50 797,242 7.89 9.90 426,182 10.05
$12.00 - $23.38 598,814 7.06 13.84 474,418 13.99
- --------------- --------- ---- ------ --------- ------
$ 0.00 - $23.38 2,222,680 7.67 $ 9.04 1,140,524 $10.36
=============== ========= ==== ====== ========= ======
- -----------------------------------------------------------------------------
Performance restricted stock
The 1996 Stock Incentive Plan provides for the issuance of restricted stock to
employees. The shares issued vest over a two to five year period, based on the
attainment of specified performance measures or the passage of time. In the
event the performance measures are not met, any unvested shares would vest at
the end of ten years. Data relative to shares awarded is presented below:
1999 1998 1997
- --------------------------------------------------------------------------------
Number of shares awarded 142,400 80,000 -
Fair value of restricted stock
granted during the year $ 1,061 $ 920 $ -
- --------------------------------------------------------------------------------
Employee Stock Purchase Plan
In fiscal 1995, the Company adopted the 1994 Employee Stock Purchase Plan, which
provides that eligible employees may contribute, through payroll deductions, up
to 10% of their earnings toward the purchase of the Company's Common Stock at 85
percent of the fair market value at specific dates. At September 24, 1999,
117,246 shares remain available for purchase through the plan and there were 790
employees eligible to participate in the plan, of which 161, or 20.4%, were
participants. Employees purchased 67,211 shares, at an average price of $6.02
per share during the year. Total receipts to the Company were $408. Since the
plan is noncompensatory, no charges to operations have been recorded.
Shareholders Rights Plan
In February 1996, the Board of Directors approved a shareholder rights plan and
declared a dividend of one preferred share purchase right for each outstanding
common share. Each right represents the right to purchase one hundredth of a
share of Preferred Stock, at an exercise price
44
<PAGE>
of $60.00, subject to adjustment. The rights are only exercisable ten days after
a person or group acquires, or commences a tender or exchange offer to acquire,
beneficial ownership of 15% or more of the Company's outstanding common stock.
Subject to the terms of the shareholder rights plan and the discretion of the
Board of Directors, each right would entitle the holder to purchase one share of
Common Stock of the Company for each right at one-half of the then-current
price. The rights expire in February 2006, but may be redeemed by action of the
Board of Directors prior to that time at $.01 per right.
NOTE 11 COMMITMENTS
Most of the Company's office and manufacturing facilities are subject to long-
term operating leases. In addition, regional sales offices and automobiles are
subject to leases with terms ranging from one to twelve months.
At September 24, 1999, the minimum annual operating lease payments are:
Fiscal year ending in September:
- --------------------------------------------------------------------------------
2000 $ 1,451
2001 1,414
2002 1,335
2003 1,010
2004 1,020
Thereafter 2,130
----------
$ 8,360
==========
- --------------------------------------------------------------------------------
Total rent expense was $2,268, $2,344 and $1,920 for the years ended September
24, 1999, September 25, 1998 and September 26, 1997, respectively.
NOTE 12 BUSINESS SEGMENTS
The Company has adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information", as of the fiscal year ended September 24,
1999. Information presented for earlier years has been restated for comparative
purposes.
The Company is organized based upon the products and services that it offers.
Under this organizational structure, the Company operates in three main
segments: Components, Federal and Flat Candle. Components derive revenue
primarily through the development and marketing of electroluminescent displays,
liquid crystal displays and color active matrix liquid crystal displays. Federal
derives revenue from the development and marketing of high performance taut
shadow mask cathode ray tubes and color active matrix liquid crystal displays.
Flat Candle derives revenues from the sale of backlights. No single customer
provides 10% or more of the Company's revenues.
45
<PAGE>
The information provided below is obtained from internal information that is
provided to the Company's chief operating decision-maker for the purpose of
corporate management. Research and development expenses for future products are
allocated to the segments based upon a percentage of sales. Depreciation
expense, interest expense, interest income, other non-operating items and income
taxes by segment are not included in the internal information provided to the
chief operating decision-maker and are therefore not presented below. Inter-
segment sales are not material and are included in net sales to external
customers below.
1999 1998 1997
- --------------------------------------------------------------------------------
Net sales to external
customers (by segment):
Components $104,240 $113,890 $76,759
Federal 17,888 13,744 11,925
Flat Candle 786 1,381 166
-------- -------- -------
Total sales $122,914 $129,015 $88,850
======== ======== =======
Net sales to external
customers (by geography):
United States $ 97,665 $102,557 $65,216
Other 25,249 26,458 23,634
-------- -------- -------
Total sales $122,914 $129,015 $88,850
======== ======== =======
Operating income (loss):
Components $ 1,395 $ 11,091 $ 6,032
Federal (2,349) 979 1,136
Flat Candle (709) (243) (258)
Restructuring charges (1,488) - -
Purchased research and development expense - - (8,305)
-------- -------- -------
Total operating income (loss) $ (3,151) $ 11,827 $(1,395)
======== ======== =======
46
<PAGE>
Certain facility, information systems and other expenses are incurred by
Corporate and allocated to the segments based on a percentage of sales. The
assets and related capital expenditures of Flat Candle are not reported
separately and are included within Federal.
<TABLE>
<CAPTION>
1999 1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Segment assets:
Components $ 92,070 $100,807 $ 96,654
Federal 19,701 17,822 17,542
-------- -------- --------
Total assets $111,771 $118,629 $114,196
======== ======== ========
Long-lived assets:
United States $ 90,501 $ 92,659 $ 84,553
Finland 14,918 22,445 24,608
Deferred tax assets 6,352 3,525 5,035
-------- -------- --------
Total assets $111,771 $118,629 $114,196
======== ======== ========
Capital expenditures:
Components $ 2,993 $ 3,500 $ 2,289
Federal 1,804 496 222
-------- -------- --------
Total capital expenditures $ 4,797 $ 3,996 $ 2,511
======== ======== ========
</TABLE>
- --------------------------------------------------------------------------------
NOTE 13 401(K) AND PROFIT SHARING
All employees in North America over 21 years of age who have completed at least
three months of service are eligible to participate in the 401(k) savings and
profit sharing plan. Employees can contribute up to 15% of their gross pay
subject to statutory maximums. The Company matches 55% of the first 10% of each
participating employee's contributions, also subject to statutory maximums.
Employer contributions vest over four years. The 401(k) plan expense amounted to
$873, $666 and $466 for the years ended September 24, 1999, September 25, 1998
and September 26, 1997, respectively.
47
<PAGE>
NOTE 14 COMPREHENSIVE INCOME (LOSS)
The Company adopted SFAS No. 130, "Reporting Comprehensive Income," as of the
first quarter of fiscal year 1999. SFAS No. 130 establishes new rules for the
reporting of comprehensive income (loss) and its components, but has no impact
on the Company's net income (loss) or total shareholders' equity. Comprehensive
income (loss) and its components were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income (loss) (net of tax of $(1,996), $2,953 and
$(784), respectively) $(5,125) $ 8,951 $ 274
Other comprehensive income (loss):
Currency translation adjustment (net of tax
$(1,175), $453 and $(1,511), respectively) (3,061) 1,180 (3,936)
Unrealized gain (loss) on available for sale securities
(net of tax of $0, $(3), and $7, respectively) - (7) 17
------- ------- -------
Total comprehensive
income (loss) $(8,186) $10,124 $(3,645)
======= ======= =======
</TABLE>
NOTE 15 SUBSEQUENT EVENT
The Company intends to record charges related to inventory up to $1,700 in the
first quarter of 2000. Such charges are due to a management decision to
discontinue certain products and record potential reserves for other products.
48
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
Part III
- --------
Item 10. Directors and Executive Officers of Planar Systems, Inc.
The information set forth under the captions "Election of Directors" and
"Management" in the Proxy Statement to be used in connection with the Annual
Meeting of Shareholders on February 3, 2000, is incorporated by reference into
this Report.
Item 11. Executive Compensation
The information set forth under the caption "Executive Compensation" in the
Proxy Statement to be used in connection with the Annual Meeting of Shareholders
on February 3, 2000, is incorporated by reference into this Report.
Item 12: Security Ownership of Certain Beneficial Owners and Management
The information set forth under the caption "Stock Owned by Management and
Principal Shareholders" in the Proxy Statement to be used in connection with the
Annual Meeting of Shareholders on February 3, 2000, is incorporated by reference
into this Report.
Item 13: Certain Relationships and Related Transactions
The Company owns a 20% interest in dpiX Holding Company LLC, which owns an 80.1%
interest of dpiX LLC. The Company paid $5.0 million for its interest in dpiX
Holding Company LLC. During fiscal 1999 the Company purchased $4.5 million of
components from dpiX LLC and dpiX LLC purchased $700,000 of components from the
Company. As of September 24, 1999 the Company had accounts receivable due from
dpiX LLC of $100,000 and accounts payable due to dpiX LLC of $800,000.
Part IV
- -------
Item 14: Exhibits, Financial Statements, Schedules and Reports on 8-K
(a) Financial Statements and Schedules
The financial statements of Planar Systems, Inc. as set forth under Item 8
are filed as part of this report.
Financial statement schedules have been omitted since the information
called for is not present in amounts sufficient to require submission of the
schedules.
49
<PAGE>
The independent auditors' report with respect to the above-listed financial
statements appears on page 25 of this report.
(b) Reports on 8-K
Form 8-K/A filed on September 17, 1999 providing the financial information
required for the dpiX LLC transaction.
(c) Exhibits
Exhibit
Number Title
- --------------------------------------------------------------
3.1 Second Restated Articles of Incorporation of Planar Systems, Inc./(1)/
3.2 Second Restated Bylaws of Planar Systems, Inc., as amended
3.3 Amendment to Second Restated Articles of Incorporation of Planar Systems,
Inc./(2)/
4.1 Specimen stock certificate/(1)/
4.4 Rights Agreement dated as of February 1, 1996 between Planar Systems, Inc.
and First Interstate Bank of Oregon, N.A./(3)/
10.1 Form of Indemnity Agreement between Planar Systems, Inc. and each of its
executive officers and directors/(1)/
10.2 Amended and Restated 1983 Incentive Stock Option Plan/(1)/
10.3 1993 Stock Option Plan for Nonemployee Directors/(1)/
10.4 1993 Incentive Stock Option Plan/(1)/
10.5 1994 Employee Stock Purchase Plan/(4)/
10.6 Lease agreement dated as of September 30, 1993 between Science Park Limited
Partnership I and Planar Systems, Inc./(1)/
10.7 Lease agreement dated as of May 20, 1998 between Metra Corporation and
Planar International, Ltd (English translation)/(8)/
10.8 Lease agreement dated as of August 26, 1994 between Tektronix, Inc. and
Planar Systems, Inc./(5)/
10.9 Asset Purchase Agreement dated August 26, 1994 between Tektronix, Inc. and
Tektronix Federal Systems, Inc. and Planar Systems, Inc and Planar Advance/(5)/
50
<PAGE>
10.10 Stock Purchase Agreement dated August 25, 1997 by and among Planar
Systems, Inc., Standish Industries, Inc., Standish International, Inc., Charles
P. Hoke, Elizabeth A. Hoke and William R. Steinmetz, Trustee of the Steven Hoke
Management Trust, the Catherine Hoke Management Trust, the Lauren Hoke
Management Trust and the Charles D. Hoke Management Trust ('the Agreement")
(certain schedules to the Agreement and its exhibits are omitted)./(6)/
10.11 Amendment to Stock Purchase Agreement dated August 26, 1997/(6)/
10.12 1996 Stock Incentive Plan/(7)/
10.13 Lease agreement dated May 30, 1997 between Pacific Realty Associates,
L.P. and Planar America, Inc./(7)/
10.14 Agreement and Plan of Merger dated as of May 13, 1999 by and among dpiX,
Inc., Xerox Corporation and New dpiX LLC/(9)/
10.15 Credit Agreement between Planar Systems, Inc. and Norwest Bank Wisconsin,
National Association dated July 29, 1999/(10)/
10.16 Employment Agreement between Planar Systems, Inc. and James M. Hurd dated
as of April 30, 1999/(10)/
10.17 Planar Systems, Inc. Nonqualified Stock Option Agreement between Planar
Systems, Inc. and William D. Walker dated as of May 13, 1999/(10)/
10.18 Executive Employment Agreement between Planar Systems, Inc. and
Balakrishnan Krishnamurthy dated as of September 24, 1999
10.19 Restricted Stock Award Agreement between Planar Systems, Inc. and
Balakrishnan Krishnamurthy dated as of September 24, 1999
10.20 Nonqualified Stock Option Agreement between Planar Systems, Inc. and
Balakrishnan Krishnamurthy dated as of September 27, 1999
10.21 Form of Restricted Stock Award Agreement under Planar Systems, Inc. 1996
Stock Incentive Plan dated as of May 24, 1999
10.22 Form of Restricted Stock Award Agreement under Planar Systems, Inc. 1996
Stock Incentive Plan dated as of May 24, 1999
10.23 Planar Systems, Inc. 1999 Nonqualified Stock Option Plan
10.24 Planar Systems, Inc. Deferred Compensation Plan
21 Subsidiaries of Planar Systems, Inc.
23 Consent of KPMG LLP
24 Power of Attorney (included on Signature Page)
27 Financial Data Schedule
/(1)/ Incorporated by reference to the Company's Registration Statement on Form
S-1 (Reg. No. 33-71020), declared effective on December 15, 1993.
/(2)/ Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended September 27, 1996.
/(3)/ Incorporated by reference to the Company's Current Report on Form 8-K
filed on February 21, 1996.
/(4)/ Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended September 30, 1994.
/(5)/ Incorporated by reference to the Company's Current Report on Form 8-K
filed as of September 12, 1994.
/(6)/ Incorporated by reference to the Company's Current Report on Form 8-K
filed on October 10, 1997.
/(7)/ Incorporated by reference to the Company's Annual report on form 10-K for
the year ended September 26, 1997.
/(8)/ Incorporated by reference to the Company's Annual Report on Form 10-K for
the year ended September 25, 1998.
/(9)/ Incorporated by reference to the Company's Current Report on Form 8-K
filed on July 20, 1999.
/(10)/ Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 25, 1999.
51
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
PLANAR SYSTEMS, INC.
December 22, 1999 By: /s/ JACK RAITON
---------------
Jack Raiton
Vice President
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Balaji Krishnamurthy and Jack Raiton, and each of
them singly, as his true and lawful attorneys-in-fact, with full power of
substitution, for him in any and all capacities, to sign any amendments to this
Report on Form 10-K, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dated indicated.
<TABLE>
<S> <C> <C>
/s/ BALAJI KRISHNAMURTHY President, Chief Executive Officer, December 22, 1999
- -----------------------------
Balaji Krishnamurthy Director (Principle Executive Officer)
/s/ JACK RAITON Vice President, Chief Financial Officer, December 22, 1999
- -----------------------------
Jack Raiton (Principle Financial and Accounting Officer)
/s/ WILLIAM D. WALKER Chairman of the Board December 22, 1999
- -----------------------------
William D. Walker
Director December 22, 1999
- -----------------------------
James M. Hurd
/s/ HEINRICH STENGER Director December 22, 1999
- -----------------------------
Heinrich Stenger
/s/ E. KAY STEPP Director December 22, 1999
- -----------------------------
E. Kay Stepp
/s/ J. KENNETH STRINGER III Director December 22, 1999
- -----------------------------
J. Kenneth Stringer III
/s/ GREGORY H. TURNBULL Director December 22, 1999
- -----------------------------
Gregory H. Turnbull
/s/ STEVEN E. WYNNE Director December 22, 1999
- -----------------------------
Steven E. Wynne
</TABLE>
52
<PAGE>
Exhibit 3.2
SECOND RESTATED BYLAWS
OF
PLANAR SYSTEMS, INC.
ARTICLE 1
OFFICES
1.1 Principal Office. The principal office of the corporation shall
----------------
be located at 1400 S.W. Compton Drive, Beaverton, Oregon 97006. The corporation
may have such other offices as the Board of Directors may designate or as the
business of the corporation may from time to time require.
1.2 Registered Office. The registered office of the corporation
-----------------
required by the Oregon Business Corporation Act to be maintained in the State of
Oregon may be, but need not be, identical with the principal office in the State
of Oregon, and the address of the registered office may be changed from time to
time by the Board of Directors.
ARTICLE 2
SHAREHOLDERS
2.1 Annual Meeting. The corporation shall hold its annual meeting of
--------------
shareholders on the first Tuesday in December of each year, beginning at 10:00
a.m., unless a different date and time are fixed by the Board of Directors and
stated in the notice of the meeting. The failure to hold an annual meeting at
the time stated herein shall not affect the validity of any corporate action.
2.2 Special Meetings. Special meetings of the shareholders may be
----------------
called by the President or by the Board of Directors and shall be called by the
President (or in the event of absence, incapacity, or refusal of the President,
by the Secretary or any other officer) at the request of the holders of not less
than one-tenth of all the outstanding shares of the corporation entitled to vote
at the meeting. The requesting shareholders shall sign, date, and deliver to
the Secretary a written demand describing the purpose or purposes for holding
the special meeting.
2.3 Place of Meetings. Meetings of the shareholders shall be held at
-----------------
the principal business office of the corporation or at such other place, within
or without the State of Oregon, as may be determined by the Board of Directors.
2.4 Notice of Meetings. Written notice stating the date, time, and
------------------
place of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called
1 - Second Restated Bylaws
<PAGE>
shall be mailed to each shareholder entitled to vote at the meeting at the
shareholder's address shown in the corporation's current record of shareholders,
with postage thereon prepaid, not less than 10 nor more than 60 days before the
date of the meeting.
2.5 Waiver of Notice. A shareholder may at any time waive any notice
----------------
required by law, the Articles of Incorporation, or these Bylaws. The waiver
must be in writing, be signed by the shareholder entitled to the notice, and be
delivered to the corporation for inclusion in the minutes for filing with the
corporate records. A shareholder's attendance at a meeting waives objection to
lack of notice or defective notice of the meeting, unless the shareholder at the
beginning of the meeting objects to holding the meeting or transacting business
at the meeting. The shareholder's attendance also waives objection to
consideration of a particular matter at the meeting that is not within the
purpose or purposes described in the meeting notice, unless the shareholder
objects to considering the matter when it is presented.
2.6 Record Date
-----------
2.6.1 For the purpose of determining shareholders entitled to
notice of a shareholders' meeting, to demand a special meeting, or to vote or to
take any other action, the Board of Directors of the corporation may fix a
future date as the record date for any such determination of shareholders, such
date in any case to be not more than 70 days before the meeting or action
requiring a determination of shareholders. The record date shall be the same for
all voting groups.
2.6.2 A determination of shareholders entitled to notice of or
to vote at a shareholders' meeting is effective for any adjournment of the
meeting unless the Board of Directors fixes a new record date, which it must do
if the meeting is adjourned to a date more than 120 days after the date fixed
for the original meeting.
2.6.3 If a court orders a meeting adjourned to a date more than
120 days after the date fixed for the original meeting, it may provide that the
original record date continue in effect or it may fix a new record date.
2.7 Shareholders' List for Meeting. After the record date for a
------------------------------
shareholders' meeting is fixed by the Board of Directors, the Secretary of the
corporation shall prepare an alphabetical list of the names of all its
shareholders entitled to notice of the shareholders' meeting. The list must be
arranged by voting group and within each voting group by class or series of
shares and show the address of and number of shares held by each shareholder.
The shareholders' list must be available for inspection by any shareholder,
beginning two business days after notice of the meeting is given for which the
list was prepared and continuing through the meeting, at the corporation's
principal office or at a place identified in the meeting notice in the city
where the meeting will be held. The corporation shall make the shareholders'
list available at the meeting, and any shareholder or the shareholder's agent or
attorney is entitled to inspect the list at any time during the meeting or any
adjournment. Refusal or failure to prepare or make available the shareholders'
list does not affect the validity of action taken at the meeting.
2 - Second Restated Bylaws
<PAGE>
2.8 Quorum; Adjournment. Shares entitled to vote as a separate
-------------------
voting group may take action on a matter at a meeting only if a quorum of those
shares exists with respect to that matter. A majority of the votes entitled to
be cast on the matter by the voting group constitutes a quorum of that voting
group for action in that matter. A majority of shares represented at the
meeting, although less than a quorum, may adjourn the meeting from time to time
to a different time and place without further notice to any shareholder of any
adjournment. At such adjourned meeting at which a quorum is present, any
business may be transacted that might have been transacted at the meeting
originally held. Once a share is represented for any purpose at a meeting, it
shall be deemed present for quorum purposes for the remainder of the meeting and
for any adjournment of that meeting unless a new record date is set for the
adjourned meeting.
2.9 Voting Requirements; Action Without Meeting. Unless otherwise
-------------------------------------------
provided in the Articles of Incorporation, each outstanding share entitled to
vote shall be entitled to one vote upon each matter submitted to a vote at a
meeting of shareholders. If a quorum exists, action on a matter, other than the
election of directors, is approved if the votes cast by the shares entitled to
vote favoring the action exceed the votes cast opposing the action, unless a
greater number of affirmative votes is required by law or the Articles of
Incorporation. If a quorum exists, directors are elected by a plurality of the
votes cast by the shares entitled to vote unless otherwise provided in the
Articles of Incorporation; no cumulative voting for directors shall be permitted
unless the Articles of Incorporation so provide. Action required or permitted
by law to be taken at a shareholders' meeting may be taken without a meeting if
the action is taken by all the shareholders entitled to vote on the action. The
action must be evidenced by one or more written consents describing the action
taken, signed by all the shareholders entitled to vote on the action and
delivered to the corporation for inclusion in the minutes for filing with the
corporate records. Action taken under this section is effective when the last
shareholder signs the consent, unless the consent specifies an earlier or later
effective date. If the law requires that notice of proposed action be given to
nonvoting shareholders and the action is to be taken by unanimous consent of the
voting shareholders, the corporation must give its nonvoting shareholders
written notice of the proposed action at least 10 days before the action is
taken. The notice must contain or be accompanied by the same material that,
under the Oregon Business Corporation Act, would have been required to be sent
to nonvoting shareholders in a notice of meeting at which the proposed action
would have been submitted to the shareholders for action.
2.10 Proxies.
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2.10.1 A shareholder may vote shares in person or by proxy by
signing an appointment, either personally or by the shareholder's attorney-in-
fact. An appointment of a proxy shall be effective when received by the
Secretary or other officer of the corporation authorized to tabulate votes. An
appointment is valid for 11 months unless a longer period is provided in the
appointment form. An appointment is revocable by the shareholder unless the
appointment form conspicuously states that it is irrevocable and the appointment
is coupled with an interest that has not been extinguished.
2.10.2 The death or incapacity of a shareholder appointing a
proxy shall not affect the right of the corporation to accept the proxy's
authority unless notice of the death or
3 - Second Restated Bylaws
<PAGE>
incapacity is received by the Secretary or other officer authorized to tabulate
votes before the proxy exercises the proxy's authority under the appointment.
2.11 Corporation's Acceptance of Votes.
---------------------------------
2.11.1 If the name signed on a vote, consent, waiver, or proxy
appointment corresponds to the name of a shareholder, the corporation, if acting
in good faith, is entitled to accept the vote, consent, waiver, or proxy
appointment and give it effect as the act of the shareholder.
2.11.2 If the name signed on a vote, consent, waiver, or proxy
appointment does not correspond to the name of a shareholder, the corporation,
if acting in good faith, is nevertheless entitled to accept the vote, consent,
waiver, or proxy appointment and give it effect as the act of the shareholder
if:
2.11.2.1 The shareholder is an entity and the name
signed purports to be that of an officer or agent of the entity;
2.11.2.2 The name signed purports to be that of an
administrator, executor, guardian, or conservator representing the shareholder
and, if the corporation requests, evidence of fiduciary status acceptable to the
corporation has been presented with respect to the vote, consent, waiver, or
proxy appointment;
2.11.2.3 The name signed purports to be that of a
receiver or trustee in bankruptcy of the shareholder and, if the corporation
requests, evidence of this status acceptable to the corporation has been
presented with respect to the vote, consent, waiver, or proxy appointment;
2.11.2.4 The name signed purports to be that of a
pledgee, beneficial owner, or attorney-in-fact of the shareholder and, if the
corporation requests, evidence acceptable to the corporation of the signatory's
authority to sign for the shareholder has been presented with respect to the
vote, consent, waiver, or proxy appointment; or
2.11.2.5 Two or more persons are the shareholder as
co-tenants or fiduciaries and the name signed purports to be the name of at
least one of the co-owners and the person signing appears to be acting on behalf
of all co-owners.
2.11.3 The corporation is entitled to reject a vote, consent,
waiver, or proxy appointment if the Secretary or other officer or agent
authorized to tabulate votes, acting in good faith, has reasonable basis for
doubt about the validity of the signature on it or about the signatory's
authority to sign for the shareholder.
2.11.4 The shares of a corporation are not entitled to vote if
they are owned, directly or indirectly, by a second corporation, and the first
corporation owns, directly or indirectly, a majority of the shares entitled to
vote for directors of the second corporation; provided, however, a corporation
may vote any shares, including its own shares, held by it in a fiduciary
capacity.
4 - Second Restated Bylaws
<PAGE>
2.11.5 The corporation and its officer or agent who accepts or
rejects a vote, consent, waiver, or proxy appointment in good faith and in
accordance with the standards of this provision are not liable in damages to the
shareholder for the consequences of the acceptance or rejection. Corporate
action based on the acceptance or rejection of a vote, consent, waiver, or proxy
appointment under this provision is valid unless a court of competent
jurisdiction determines otherwise.
2.12 Notice of Business to be Conducted at Meeting. At an annual meeting
---------------------------------------------
of the shareholders, only such business shall be conducted as shall have been
properly brought before the meeting. To be properly brought before an annual
meeting, business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, (b)
otherwise properly brought before the meeting by or at the direction of the
Board of Directors, or (c) otherwise properly brought before an annual meeting
by a shareholder.
For business to be properly brought before an annual meeting by a
shareholder, the shareholder must have given timely notice thereof in writing to
the Secretary of the corporation. To be timely, a shareholder's notice must be
delivered to or mailed and received at the principal executive offices of the
corporation not less than 60 days nor more than 90 days prior to the meeting;
provided, however, that in the event that less than 60 days' notice or prior
public disclosure of the date of the meeting is given or made to shareholders,
notice by the shareholder to be timely must be so received not later than the
close of business on the 10th day following the day on which such notice of the
date of the annual meeting was mailed or such public disclosure was made.
A shareholder's notice to the Secretary shall set forth as to each matter
the shareholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (b) the name and
address, as they appear on the corporation's books, of the shareholder proposing
such business, (c) the class and number of shares of stock of the corporation
which are beneficially owned by the shareholder, and (d) any material interest
of the shareholder in such business. Notwithstanding anything in the Bylaws to
the contrary, no business shall be conducted at any annual meeting except in
accordance with the procedures set forth in this Section 2.12.
The Chairman of the annual meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before the
meeting and in accordance with the provisions of this Section 2.12 and if the
Chairman should so determine, the Chairman shall so declare to the meeting and
any such business not properly brought before the meeting shall not be
transacted.
ARTICLE 3
BOARD OF DIRECTORS
5 - Second Restated Bylaws
<PAGE>
3.1 Duties. All corporate powers shall be exercised by or under the
------
authority of the Board of Directors and the business and affairs of the
corporation shall be managed by or under the direction of the Board of
Directors.
3.2 Number and Qualification. As set forth in the Second Restated
------------------------
Articles of Incorporation, the number of directors of the corporation shall be
not less than six nor more than twelve, and within such limits, the exact number
shall be fixed and increased or decreased from time to time by resolution of the
Board of Directors. The directors shall be divided into three classes
designated Class I, Class II and Class III, each class to be as nearly equal in
number as possible. At the 1993 annual meeting of shareholders ("First
Meeting"), directors of all three classes shall be elected. The term of office
of Class III directors shall expire at the 1994 annual meeting of shareholders,
that of Class II directors shall expire at the 1995 annual meeting of
shareholders, and that of Class I directors shall expire at the 1996 annual
meeting of shareholders. At each annual meeting of shareholders after the First
Meeting, directors elected to succeed those directors whose terms expire shall
be elected to serve for three-year terms and until their successors are elected
and qualified, so that the term of one class of directors will expire each year.
When the number of directors is changed within the limits provided herein, any
newly created directorships, or any decrease in directorships, shall be so
apportioned among the classes as to make all classes as nearly equal as
possible, provided that no decrease in the number of directors constituting the
Board of Directors shall shorten the term of any incumbent directors.
Directors need not be residents of the State of Oregon or shareholders of the
corporation.
3.3 Chairman of the Board of Directors. The directors may elect a
----------------------------------
director to serve as Chairman of the Board of Directors to preside at all
meetings of the Board of Directors and to fulfill any other responsibilities
delegated by the Board of Directors.
3.4 Regular Meetings. A regular meeting of the Board of Directors
----------------
shall be held without other notice than this Section 3.4 immediately after, and
at the same place as, the annual meeting of shareholders. The Board of
Directors may provide, by resolution, the time and place, either within or
without the State of Oregon, for the holding of additional regular meetings
without other notice than the resolution.
3.5 Special Meetings. Special meetings of the Board of Directors may
----------------
be called by or at the request of the President or any director. The person or
persons authorized to call special meetings of the Board of Directors may fix
any place, either within or without the State of Oregon, as the place for
holding any special meeting of the Board of Directors called by them.
3.6 Notice. Notice of the date, time, and place of any special
------
meeting of the Board of Directors shall be given at least two days prior to the
meeting by any means provided by law. If mailed, notice shall be deemed to be
given one day after being deposited in the United States mail addressed to the
director at the director's business address, with postage thereon prepaid. If
by telegram, notice shall be deemed to be given when the telegram is delivered
to the telegraph company. Notice by all other means shall be deemed to be given
when received by the director or a person at the director's business or
residential address whom the person giving notice reasonably believes will
deliver or report the notice to the director within 24 hours. The attendance of
a director
6 - Second Restated Bylaws
<PAGE>
at a meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
3.7 Waiver of Notice. A director may at any time waive any notice
----------------
required by law, the Articles of Incorporation, or these Bylaws. Unless a
director attends or participates in a meeting, a waiver must be in writing, must
be signed by the director entitled to notice, must specify the meeting for which
notice is waived, and must be filed with the minutes or corporate records.
3.8 Quorum. A majority of the number of directors fixed by Section
------
3.2 shall constitute a quorum for the transaction of business at any meeting of
the Board of Directors.
3.9 Manner of Acting.
----------------
3.9.1 The act of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board of Directors,
unless a different number is provided by law, the Articles of Incorporation, or
these Bylaws.
3.9.2 Members of the Board of Directors may hold a board
meeting by conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other.
Participation in such a meeting shall constitute presence in person at the
meeting.
3.9.3 Any action that is required or permitted to be taken by
the directors at a meeting may be taken without a meeting if a consent in
writing setting forth the action so taken shall be signed by all of the
directors entitled to vote on the matter. The action shall be effective on the
date when the last signature is placed on the consent or at such earlier or
later time as is set forth therein. Such consent, which shall have the same
effect as a unanimous vote of the directors, shall be filed with the minutes of
the corporation.
3.10 Vacancies. Any vacancy, including a vacancy resulting from an
---------
increase in the number of directors, occurring on the Board of Directors may be
filled by the shareholders, the Board of Directors, or the affirmative vote of a
majority of the remaining directors if less than a quorum of the Board of
Directors, or by a sole remaining director. If the vacant office is filled by
the shareholders and was held by a director elected by a voting group of
shareholders, then only the holders of shares of that voting group are entitled
to vote to fill the vacancy. Any directorship not so filled by the directors
shall be filled by election at an annual meeting or at a special meeting of
shareholders called for that purpose. A director elected to fill a vacancy
shall be elected to serve until the next annual meeting of shareholders and
until a successor shall be elected and qualified. A vacancy that will occur at
a specific later date, by reason of a resignation or otherwise, may be filled
before the vacancy occurs, and the new director shall take office when the
vacancy occurs.
7 - Second Restated Bylaws
<PAGE>
3.11 Compensation. By resolution of the Board of Directors, the
------------
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
3.12 Presumption of Assent. A director of the corporation who is
---------------------
present at a meeting of the Board of Directors or a committee of the Board of
Directors shall be presumed to have assented to the action taken (a) unless the
director's dissent to the action is entered in the minutes of the meeting, (b)
unless a written dissent to the action is filed with the person acting as the
secretary of the meeting before the adjournment thereof or forwarded by
certified or registered mail to the Secretary of the corporation immediately
after the adjournment of the meeting or (c) unless the director objects at the
meeting to the holding of the meeting or transacting business at the meeting.
The right to dissent shall not apply to a director who voted in favor of the
action.
3.13 Director Conflict of Interest.
-----------------------------
3.13.1 A transaction in which a director of the corporation has
a direct or indirect interest shall be valid notwithstanding the director's
interest in the transaction if the material facts of the transaction and the
director's interest are disclosed or known to the Board of Directors or a
committee thereof and it authorizes, approves, or ratifies the transaction by a
vote or consent sufficient for the purpose without counting the votes or
consents of directors with a direct or indirect interest in the transaction; or
the material facts of the transaction and the director's interest are disclosed
or known to shareholders entitled to vote and they, voting as a single group,
authorize, approve, or ratify the transaction by a majority vote; or the
transaction is fair to the corporation.
3.13.2 A conflict of interest transaction may be authorized,
approved, or ratified if it receives the affirmative vote of a majority of
directors on the Board of Directors or a committee thereof who have no direct or
indirect interest in the transaction. If a majority of such directors vote to
authorize, approve, or ratify the transaction, a quorum is present for the
purpose of taking action.
3.13.3 A conflict of interest transaction may be authorized,
approved, or ratified by a majority vote of shareholders entitled to vote
thereon. Shares owned by or voted under the control of a director or an entity
controlled by a director who has a direct or indirect interest in the
transaction are entitled to vote with respect to a conflict of interest
transaction. A majority of the shares, whether or not present, that are
entitled to be counted in a vote on the transaction constitutes a quorum for the
purpose of authorizing, approving, or ratifying the transactions.
3.13.4 A director has an indirect interest in a transaction if
(i) another entity in which the director has a material financial interest or in
which the director is a general partner is a party to the transaction or (ii)
another entity of which the director is a director, officer, or trustee is a
party to the transaction and the transaction is or should be considered by the
Board of Directors.
8 - Second Restated Bylaws
<PAGE>
3.14 Removal. All or any number of the directors of the corporation
-------
may be removed only for cause and at a meeting of shareholders called expressly
for that purpose, by the vote of 75 percent of the votes then entitled to be
cast for the election of directors. At any meeting of shareholders at which one
or more directors are removed, a majority of votes then entitled to be cast for
the election of directors may fill any vacancy created by such removal. If any
vacancy created by removal of a director is not filled by the shareholders at
the meeting at which the removal is effected, such vacancy may be filled by a
majority vote of the remaining directors.
3.15 Resignation. Any director may resign by delivering written
-----------
notice to the Board of Directors, its chairperson, or the corporation. Such
resignation shall be effective (a) on receipt, (b) five days after its deposit
in the United States mails, if mailed postpaid and correctly addressed, or (c)
on the date shown on the return receipt, if sent by registered or certified
mail, return receipt requested, and the receipt is signed by addressee, unless
the notice specifies a later effective date. Once delivered, a notice of
resignation is irrevocable unless revocation is permitted by the Board of
Directors.
3.16 Nominations for Election to Board of Directors. Only persons
----------------------------------------------
who are nominated in accordance with the procedures set forth in this Section
3.16 shall be eligible for election as directors. Nominations of persons for
election to the Board of Directors may be made at a meeting of shareholders by
or at the direction of the Board of Directors or by any shareholder of the
corporation entitled to vote for the election of directors at the meeting who
complies with the notice procedures set forth in this Section 3.16.
Such nominations, other than those made by or at the direction of the Board
of Directors shall be made pursuant to timely notice in writing to the Secretary
of the corporation. To be timely, a shareholder's notice shall be delivered to
or mailed and received at the principal executive offices of the corporation not
less than 60 days nor more than 90 days prior to the meeting; provided, however,
that in the event that less than 60 days' notice or prior public disclosure of
the date of the meeting is given or made to shareholders, notice by the
shareholder to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made.
Such shareholder's notice shall set forth (a) as to each person whom the
shareholder proposes to nominate for election or re-election as a director, (i)
the name, age, business address and residence address of such person, (ii) the
principal occupation or employment of such person, (iii) the class and number of
shares of stock of the corporation which are beneficially owned by such person,
and (iv) any other information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (including, without limitation, such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); and (b) as to the shareholder giving the notice, (i) the
name and address, as they appear on the corporation's books, of such
shareholder, and (ii) the class and number of shares of stock of the corporation
which are beneficially owned by such shareholder.
9 - Second Restated Bylaws
<PAGE>
At the request of the Board of Directors, any person nominated by the Board
of Directors for election as a director shall furnish to the Secretary of the
corporation that information required to be set forth in a shareholder's notice
of nomination which pertains to the nominee.
No person shall be eligible for election as a director of the corporation
unless nominated in accordance with the procedures set forth in this Section
3.16. The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
procedures prescribed by these Second Restated Bylaws, and if the Chairman
should so determine, the Chairman shall so declare to the meeting and the
defective nomination shall be disregarded.
ARTICLE 4
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
4.1 Designation of Executive Committee. The Board of Directors may
----------------------------------
designate two or more directors to constitute an executive committee. The
designation of an executive committee, and the delegation of authority to it,
shall not operate to relieve the Board of Directors, or any member thereof, of
any responsibility imposed by law. No member of the executive committee shall
continue to be a member thereof after ceasing to be a director of the
corporation. The Board of Directors shall have the power at any time to
increase or decrease the number of members of the executive committee, to fill
vacancies thereon, to change any member thereof, and to change the functions or
terminate the existence thereof. The creation of the executive committee and
the appointment of members to it shall be approved by a majority of the
directors in office when the action is taken, unless a greater number is
required by the Articles of Incorporation or these Bylaws.
4.2 Powers of Executive Committee. During the interval between
-----------------------------
meetings of the Board of Directors, and subject to such limitations as may be
imposed by resolution of the Board of Directors, the executive committee may
have and may exercise all the authority of the Board of Directors in the
management of the corporation, provided that the committee shall not have the
authority of the Board of Directors with respect to the following matters:
authorizing distributions; approving or proposing to the shareholders actions
that are required to be approved by the shareholders under the Articles of
Incorporation or these Bylaws or by law; filling vacancies on the Board of
Directors or any committee thereof; amending the Articles of Incorporation;
adopting, amending, or repealing bylaws; approving a plan of merger not
requiring shareholder approval; authorizing or approving a reacquisition of
shares, except according to a formula or method prescribed by the Board of
Directors; authorizing or approving the issuance or sale or contract for sale of
shares or determining the designation and relative rights, preferences, and
limitations of a class or series of shares except within limits specifically
prescribed by the Board of Directors.
4.3 Procedures; Meetings; Quorum.
----------------------------
4.3.1 The Board of Directors shall appoint a chairperson from
among the members of the executive committee and shall appoint a secretary who
may, but need not, be a member of the executive committee. The chairperson shall
preside at all meetings of the executive
10 - Second Restated Bylaws
<PAGE>
committee and the secretary of the executive committee shall keep a record of
its acts and proceedings, which shall be filed with the minutes of the
corporation.
4.3.2 Regular meetings of the executive committee, of which no
notice shall be necessary, shall be held on such days and at such places as
shall be fixed by resolution adopted by the executive committee. Special
meetings of the executive committee shall be called at the request of the
President or of any member of the executive committee, and shall be held upon
such notice as is required by these Bylaws for special meetings of the Board of
Directors.
4.3.3 Attendance of any member of the executive committee at a
meeting shall constitute a waiver of notice of the meeting. A majority of the
executive committee, from time to time, shall be necessary to constitute a
quorum for the transaction of any business, and the act of a majority of the
members present at a meeting at which a quorum is present shall be the act of
the executive committee. Members of the executive committee may hold a meeting
of such committee by conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
participation in such meeting shall constitute presence in person at the
meeting.
4.3.4 Any action that is required or permitted to be taken at a
meeting of the executive committee may be taken without a meeting if a consent
in writing setting forth the action so taken shall be signed by all members of
the executive committee entitled to vote on the matter. The action shall be
effective on the date when the last signature is placed on the consent or at
such earlier or later time as is set forth therein. Such consent, which shall
have the same effect as a unanimous vote of the members of the executive
committee, shall be filed with the minutes of the corporation.
4.3.5 The Board of Directors may approve a reasonable fee for
the members of the executive committee as compensation for attendance at
meetings of the executive committee.
4.4 Other Committees. By the approval of a majority of the directors
----------------
when the action is taken (unless a greater number is required by the Articles of
Incorporation), the Board of Directors, by resolution, may create one or more
additional committees, appoint directors to serve on them, and define the duties
of such committee or committees. Each such committee shall have two or more
members, who shall serve at the pleasure of the Board of Directors. Such
additional committee or committees shall not have the powers set forth in
Section 4.2.
ARTICLE 5
OFFICERS
5.1 Number. The officers of the corporation shall be a President and
------
a Secretary. Such other officers and assistant officers as are deemed necessary
or desirable may be appointed from time to time by the Board of Directors, and
shall have such powers and duties prescribed by the Board of Directors or the
officer authorized by the Board of Directors to prescribe the duties of other
officers. A duly appointed officer may appoint one or more officers or
assistant officers if such
11 - Second Restated Bylaws
<PAGE>
appointment is authorized by the Board of Directors. Any two or more offices may
be held by the same person.
5.2 Appointment and Term of Office. The officers of the corporation
------------------------------
shall be appointed annually by the Board of Directors at the first meeting of
the Board of Directors held after the annual meeting of the shareholders. If
the officers shall not be appointed at the meeting, a meeting shall be held as
soon thereafter as is convenient for such appointment of officers. Each officer
shall hold office until a successor shall have been duly appointed and shall
have been qualified or until the officer's death, resignation, or removal.
5.3 Qualification. An officer need not be a director, shareholder,
-------------
or Oregon resident.
5.4 Resignation and Removal. An officer may resign at any time by
-----------------------
delivering notice to the corporation. A resignation is effective on receipt
unless the notice specifies a later effective date. If the corporation accepts
a specified later effective date, the Board of Directors may fill the pending
vacancy before the effective date, but the successor may not take office until
the effective date. Once delivered, a notice of resignation is irrevocable
unless revocation is permitted by the Board of Directors. Any officer appointed
by the Board of Directors may be removed at any time with or without cause.
Appointment of an officer shall not of itself create contract rights. Removal
or resignation of an officer shall not affect the contract rights, if any, of
the corporation or the officer.
5.5 Vacancies. A vacancy in any office because of death,
---------
resignation, removal, disqualification, or otherwise may be filled by the Board
of Directors for the unexpired portion of the term.
5.6 President. The President shall be the chief executive officer of
---------
the corporation and shall be in general charge of its business and affairs,
subject to the control of the Board of Directors. The President shall preside
at all meetings of shareholders and at all meetings of directors. The President
may execute on behalf of the corporation all contracts, agreements, stock
certificates, and other instruments. The President shall from time to time
report to the Board of Directors all matters within the President's knowledge
affecting the corporation that should be brought to the attention of the Board
of Directors. The President shall vote all shares of stock in other
corporations owned by the corporation and is empowered to execute proxies,
waivers of notice, consents, and other instruments in the name of the
corporation with respect to such stock. The President shall perform other
duties assigned by the Board of Directors.
5.7 Vice President. In the absence of the President or in the event
--------------
of the President's death or inability or refusal to act, the Vice President (or,
in the event there be more than one Vice President, the Vice Presidents in the
order designated at the time of their election, or in the absence of any
designation, then in the order of their election) shall perform the duties of
the President and, when so acting, shall have all the powers of and be subject
to all the restrictions upon the President. Any Vice President shall perform
other duties assigned by the President or by the Board of Directors.
12 - Second Restated Bylaws
<PAGE>
5.8 Secretary. The Secretary shall prepare the minutes of all
---------
meetings of the directors and shareholders, shall have custody of the minute
books and other records pertaining to the corporate business, and shall be
responsible for authenticating the records of the corporation. The Secretary
may execute on behalf of the corporation all contracts, agreements, stock
certificates, and other instruments. The Secretary shall also perform other
duties assigned by the President or Board of Directors.
5.9 Treasurer. The Treasurer shall: (a) have charge and custody of
---------
and be responsible for all funds and securities of the corporation; (b) receive
and give receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with the provisions of Article VI of these Bylaws; and (c) in general perform
all of the duties incident to the office of Treasurer and such other duties as
from time to time may be assigned to him or her by the President or by the Board
of Directors. If required by the Board of Directors, the Treasurer shall give a
bond for the faithful discharge of his or her duties in such sum and with such
surety or sureties as the Board of Directors shall determine.
5.10 Assistant Secretaries. The Assistant Secretaries, when
---------------------
authorized by the Board of Directors or the Bylaws, may sign, with the President
or Vice President, certificates for shares of the corporation the issuance of
which shall have been authorized by resolution of the Board of Directors. The
Assistant Secretaries shall, if required by the Board of Directors, give bonds
for the faithful discharge of their duties in such sums and with such sureties
as the Board of Directors shall determine. The Assistant Secretaries shall, in
general, perform such duties as shall be specifically assigned to them in
writing by the President or the Board of Directors.
5.11 Salaries. The salaries of the officers shall be fixed from time
--------
to time by the Board of Directors, and no officer shall be prevented from
receiving such salary because the officer is also a director of the corporation.
ARTICLE 6
ISSUANCE OF SHARES
6.1 Certificates for Shares.
-----------------------
6.1.1 Certificates representing shares of the corporation shall
be in a form determined by the Board of Directors. Such certificates shall be
signed, either manually or in facsimile, by two officers of the corporation, at
least one of whom shall be the President or a Vice President, and may be sealed
with the seal of the corporation or a facsimile thereof. All certificates for
shares shall be consecutively numbered or otherwise identified.
6.1.2 Every certificate for shares of stock that are subject to
any restriction on transfer pursuant to the Articles of Incorporation, the
Bylaws, applicable securities laws, agreements among or between shareholders, or
any agreement to which the corporation is a party shall
13 - Second Restated Bylaws
<PAGE>
have conspicuously noted on the face or back of the certificate either (i) the
full text of the restriction or (ii) a statement of the existence of such
restriction and that the corporation retains a copy of the restriction. Every
certificate issued when the corporation is authorized to issue more than one
class or series of stock shall set forth on its face or back either (i) the full
text of the designations, relative rights, preferences, and limitations of the
shares of each class and series authorized to be issued and the authority of the
Board of Directors to determine variations for future series or (ii) a statement
of the existence of such designations, relative rights, preferences, and
limitations and a statement that the corporation will furnish a copy thereof to
the holder of such certificate upon written request and without charge.
6.1.3 The name and mailing address of the person to whom the
shares represented thereby are issued, with the number of shares and date of
issue, shall be entered on the stock transfer books of the corporation. Each
shareholder shall have the duty to notify the corporation of his or her mailing
address. All certificates surrendered to the corporation for transfer shall be
canceled, and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and canceled, except
that in case of a lost, destroyed, or mutilated certificate a new one may be
issued therefor upon such terms and indemnity to the corporation as the Board of
Directors prescribes.
6.2 Transfer of Shares. A transfer of shares of the corporation
------------------
shall be made only on the stock transfer books of the corporation by the holder
of record thereof or by the holder's legal representative, who shall furnish
proper evidence of authority to transfer, or by the holder's attorney thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the corporation. The person in whose name shares stand on the books of the
corporation shall be deemed by the corporation to be the owner thereof for all
purposes.
6.3 Transfer Agent and Registrar. The Board of Directors may from
----------------------------
time to time appoint one or more transfer agents and one or more registrars for
the shares of the corporation, with such powers and duties as the Board of
Directors determines by resolution. The signatures of officers upon a
certificate may be facsimiles if the certificate is manually signed on behalf of
a transfer agent or by a registrar other than the corporation itself or an
employee of the corporation.
6.4 Officer Ceasing to Act. If the person who signed a share
----------------------
certificate, either manually or in facsimile, no longer holds office when the
certificate is issued, the certificate is nevertheless valid.
ARTICLE 7
CONTRACTS, LOANS, CHECKS, AND OTHER INSTRUMENTS
7.1 Contracts. The Board of Directors may authorize any officer or
---------
officers and agent or agents to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
14 - Second Restated Bylaws
<PAGE>
7.2 Loans. No loans shall be contracted on behalf of the corporation
-----
and no evidence of indebtedness shall be issued in its name unless authorized by
a resolution of the Board of Directors. Such authority may be general or
confined to specific instances.
7.3 Checks; Drafts. All checks, drafts, or other orders for the
--------------
payment of money and notes or other evidences of indebtedness issued in the name
of the corporation shall be signed by such officer or officers and agent or
agents of the corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
7.4 Deposits. All funds of the corporation not otherwise employed
--------
shall be deposited from time to time to the credit of the corporation in such
banks, trust companies, or other depositories as the Board of Directors may
select.
ARTICLE 8
MISCELLANEOUS PROVISIONS
8.1 Seal. The Board of Directors from time to time may provide for a
----
seal of the corporation, which shall be circular in form and shall have
inscribed thereon the name of the corporation and the state of incorporation and
the words "Corporate Seal."
8.2 Severability. Any determination that any provision of these
------------
Bylaws is for any reason inapplicable, invalid, illegal, or otherwise
ineffective shall not affect or invalidate any other provision of these Bylaws.
ARTICLE 9
AMENDMENTS
These Second Restated Bylaws may be altered, amended, or repealed and
new bylaws may be adopted by the Board of Directors at any regular or special
meeting, subject to repeal or change by action of the shareholders of the
corporation.
______________________________________
Curtis M. Stevens, Assistant Secretary
ADOPTED: October 8, 1993.
15 - Second Restated Bylaws
<PAGE>
First Amendment to Second Restated Bylaws - Adopted 4/30/99
RESOLVED, that Article 5 of the Company's Second Restated Bylaws is amended
and restated in its entirety as follows:
ARTICLE 5
OFFICERS
5.1 Number. The officers of the corporation shall be a President and
------
a Secretary, each of whom shall be appointed by the Board of Directors. One or
more Vice Presidents (one or more of whom may be designated an Executive Vice
President or Senior Vice President), a Treasurer and such other officers and
assistant officers, including, but not limited to, a Chairman of the Board of
Directors and/or a Chief Executive Officer, may be appointed by the Board of
Directors; such officers and assistant officers to hold office for such period,
have such authority and perform such duties as are provided in these Bylaws or
as may be provided by resolution of the Board of Directors. Any officer may be
assigned by the Board of Directors any additional title that the Board of
Directors deems appropriate. A duly appointed officer may appoint one or more
officers or assistant officers and prescribe their authority and duties if such
appointment is authorized by the Board of Directors. Any two or more offices
may be held by the same person.
5.2 Appointment and Term of Office. The officers of the corporation
------------------------------
shall be appointed annually by the Board of Directors at the first meeting of
the Board of Directors held after the annual meeting of the shareholders. If
the officers shall not be appointed at the meeting, a meeting shall be held as
soon thereafter as is convenient for such appointment of officers. Each officer
shall hold office until a successor shall have been duly appointed and shall
have been qualified or until the officer's death, resignation, or removal.
5.3 Qualification. An officer need not be a director, shareholder,
-------------
or Oregon resident.
5.4 Resignation and Removal. An officer may resign at any time by
-----------------------
delivering notice to the corporation. A resignation is effective on receipt
unless the notice specifies a later effective date. If the corporation accepts
a specified later effective date, the Board of Directors may fill the pending
vacancy before the effective date, but the successor may not take office until
the effective date. Unless otherwise specified in the notice, the acceptance of
such resignation shall not be necessary to make it effective. Once delivered, a
notice of resignation is irrevocable unless revocation is permitted by the Board
of Directors. Any officer appointed by the Board of Directors may be removed at
any time with or without cause. Appointment of an officer shall not of itself
create contract rights. Removal or resignation of an officer shall not affect
the contract rights, if any, of the corporation or the officer.
5.5 Vacancies. A vacancy in any office because of death,
---------
resignation, removal, disqualification, creation of a new office or any other
cause may be filled by the Board of Directors for the unexpired portion of the
term, or for a new term established by the Board of Directors.
<PAGE>
5.6 Chairman of the Board of Directors. If appointed, the Chairman
----------------------------------
of the Board of Directors shall perform such duties as shall be assigned to him
or her by the Board of Directors from time to time and shall preside over
meetings of the Board of Directors and shareholders unless another officer is
appointed or designated by the Board of Directors as Chairman of such meeting.
5.7 Chief Executive Officer. If appointed, the Chief Executive
-----------------------
Officer shall be the principal executive officer of the corporation unless some
other officer is so designated by the Board of Directors, shall supervise and
control all of the corporation's assets, business and affairs, subject to the
control of the Board of Directors and, in the absence of the Chairman of the
Board, shall preside at all meetings of shareholders and at all meetings of
directors. The Chief Executive Officer shall have authority to execute on
behalf of the corporation all contracts, agreements, stock certificates, and
other instruments. The Chief Executive Officer shall from time to time report
to the Board of Directors all matters within the Chief Executive Officer's
knowledge affecting the corporation that should be brought to the attention of
the Board of Directors. The Chief Executive Officer shall vote all shares of
stock in other corporations owned by the corporation and is empowered to execute
proxies, waivers of notice, consents, and other instruments in the name of the
corporation with respect to such stock. The Chief Executive Officer shall
perform other duties assigned by the Board of Directors.
5.8 President. In the absence of a Chief Executive Officer or in
---------
the event of the death of the Chief Executive Officer or his or her inability or
refusal to act, the President shall perform the duties of the Chief Executive
Officer, except as may be limited by resolution of the Board of Directors, with
all the powers of and subject to all the restrictions upon the Chief Executive
Officer. The President shall have, to the extent authorized by the Chief
Executive Officer or the Board of Directors, the same powers as the Chief
Executive Officer to execute on behalf of the corporation all contracts,
agreements and other instruments. The President shall perform such other duties
as from time to time may be assigned to him or her by the Chief Executive
Officer or the Board of Directors.
5.9 Vice President. In the absence of the President or in the event
--------------
of the President's death or inability or refusal to act, the Vice President (or,
in the event there be more than one Vice President, the Vice President who was
designated by the Board of Directors as the successor to the President, or if no
Vice President is so designated, the Vice Presidents in the order designated at
the time of their election, or in the absence of any designation, then in the
order of their election) shall perform the duties of the President and, when so
acting, shall have all the powers of and be subject to all the restrictions upon
the President. Any Vice President shall perform other duties assigned by the
Chief Executive Officer, the President or by the Board of Directors.
5.10 Secretary. The Secretary shall prepare the minutes of all
---------
meetings of the directors and shareholders, shall have custody of the minute
books and other records pertaining to the corporate business, and shall be
responsible for authenticating the records of the corporation. The Secretary
may execute on behalf of the corporation all contracts, agreements, stock
certificates, and other instruments. The Secretary shall also perform other
duties assigned by the Chief Executive Officer, the President or Board of
Directors.
<PAGE>
5.11 Treasurer. The Treasurer shall: (a) have charge and custody of
---------
and be responsible for all funds and securities of the corporation; (b) receive
and give receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with the provisions of Article VI of these Bylaws; and (c) in general perform
all of the duties incident to the office of Treasurer and such other duties as
from time to time may be assigned to him or her by the Chief Executive Officer,
the President or by the Board of Directors. If required by the Board of
Directors, the Treasurer shall give a bond for the faithful discharge of his or
her duties in such sum and with such surety or sureties as the Board of
Directors shall determine.
5.12 Assistant Secretaries. The Assistant Secretaries, when
---------------------
authorized by the Board of Directors or the Bylaws, may sign, with the Chief
Executive Officer, the President or Vice President, certificates for shares of
the corporation the issuance of which shall have been authorized by resolution
of the Board of Directors. The Assistant Secretaries shall, if required by the
Board of Directors, give bonds for the faithful discharge of their duties in
such sums and with such sureties as the Board of Directors shall determine. The
Assistant Secretaries shall, in general, perform such duties as shall be
specifically assigned to them in writing by the Chief Executive Officer, the
President or the Board of Directors. In the absence of the Secretary, the
Assistant Secretaries may perform the duties of the Secretary.
5.13 Salaries. The salaries of the officers shall be fixed from time
--------
to time by the Board of Directors, and no officer shall be prevented from
receiving such salary because the officer is also a director of the corporation.
<PAGE>
Second Amendment to Second Restated Bylaws - Adopted 9/10/99
RESOLVED, that the Company's Second Restated Bylaws are hereby amended by
adding the following paragraph to Article VIII:
8.3 Stock Option Repricing. In no event shall any stock option
----------------------
already issued and outstanding be repriced to a lower strike price at any time
during the term of such option, without the prior approval of the shareholders
of the corporation by the vote specified in Section 2.9 of these Bylaws. Any
amendment or repeal of this provision requires the approval of the shareholders
of the corporation by the vote specified in Section 2.9 of these Bylaws.
<PAGE>
Third Amendment to Second Restated Bylaws - Adopted 11/5/99
RESOLVED, that pursuant to the authority granted by Article IX of the
Second Restated Bylaws of Planar Systems, Inc., and Section 60.804 of the
Oregon Control Share Act, the Board of Directors hereby amends the Bylaws
by adding the following paragraph to Article VIII:
8.4 Oregon Control Share Act Not Applicable. ORS 60.801 to 60.816 do
---------------------------------------
not apply to acquisitions of voting shares of the corporation.
<PAGE>
Exhibit 10.18
EXECUTIVE EMPLOYMENT AGREEMENT
PLANAR SYSTEMS, INC.
PARTIES: Planar Systems, Inc. ("Company"),
1400 NW Compton Drive
Beaverton, Oregon 97008
Balakrishnan Krishnamurthy ("Executive")
3131 NW 128th Place
Portland, OR 97229
DATE: September 24, 1999
RECITAL:
The Company wishes to obtain the services of the Executive and Executive
wishes to provide his services to the Company upon the terms and conditions set
out in this Agreement.
AGREEMENT:
NOW, THEREFORE, for valuable consideration the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
ARTICLE 1
DEFINITIONS
-----------
1.1 "Base Salary" shall mean regular cash compensation paid on a periodic
-----------
basis exclusive of benefits, bonuses or incentive payments.
1.2 "Board" shall mean the Board of Directors of Company.
-----
1.3 "Disability" shall mean the inability of the Executive to perform the
----------
essential functions of his position under this Agreement, with reasonable
accommodation, because of physical or mental incapacity for a continuous
period of five (5) months, as reasonably determined by the Board after
consultation with a qualified physician selected by the Board.
1.4 "Company" shall mean Planar Systems, Inc. and, any successor in
-------
interest by way of consolidation, operation of law, merger or otherwise.
ARTICLE 2
EMPLOYMENT, DUTIES AND TERM
---------------------------
Exhibit A - List of Business Interests
<PAGE>
2.1 Employment. Upon the terms and conditions set forth in this
----------
Agreement, the Company hereby employs the Executive in the position of
President and Chief Executive Officer, and the Executive accepts such
employment effective as of September 27, 1999.
2.2 Duties. The Executive shall devote his full-time and best efforts to
------
the Company and to fulfilling the duties of his position which shall
include all duties commonly incident to the offices of President and Chief
Executive Officer, including but not limited to, supervision and direction
of Company operations; personnel and financial matters; reports to the
Board concerning all phases of the operation of the Company and maintenance
of all records sufficient to meet the reporting requirements of the
Company, and such other duties as may from time to time be assigned to him
by the Board. The Executive shall comply with the Company's policies and
procedures to the extent they are not inconsistent with this Agreement, in
which case the provisions of this Agreement shall prevail.
2.3 Term. This Agreement shall remain in effect until the earlier of (i)
----
termination pursuant to Article 4 of this Agreement or (ii) the second
Anniversary of the date hereof; provided, however, that commencing on the
second Anniversary of the date hereof and each Anniversary thereafter, the
term of this Agreement shall automatically be extended for one additional
year unless at least 90 days prior to such Anniversary Executive or the
Company shall have given notice to the other that the term of this
Agreement shall not be extended.
2.4 Board Membership. Company shall appoint Executive to the Board to
----------------
serve until the next Board election at which time Company shall use its
best efforts to obtain Executive's re-election to the Board.
ARTICLE 3
COMPENSATION AND EXPENSES
-------------------------
3.1 Base Salary. For all services rendered under this Agreement, the
-----------
Company shall pay Executive a Base Salary at an annual rate of $350,000.
Company shall pay Executive in approximately equal monthly amounts pursuant
to its standard payroll schedule. All amounts paid to Executive under this
Agreement shall be reduced by such amounts as are required to be withheld
by law.
3.2 Bonus. Upon execution of this Agreement, the Company shall pay
-----
Executive a bonus of $75,000, reduced by such amounts as are required to
be withheld by law. In addition, Executive shall be eligible to participate
in the Company's Executive Bonus Program. Such program shall provide an
opportunity for Executive to earn annual bonus compensation in the amount
of 70% ($245,000) of his annual Base Salary if target performance is
achieved; provided, however, that Executive's bonus pursuant to the
Company's Executive Bonus Program for fiscal year 2000 shall not be less
than $140,000.
Page 2 - Executive Employment Agreement
<PAGE>
3.3 Stock Grant. Upon execution of this Agreement or within ten days
-----------
thereafter, Company shall grant Executive 50,000 shares of the Company's no
par value common stock ("Shares"). Except as otherwise stated herein, the
grant of such Shares shall be subject to the terms and conditions of the
Planar Systems, Inc. Restricted Stock Award Agreement in the form attached
hereto as Exhibit A.
3.4 Stock Options. Upon execution of this Agreement or within ten days
-------------
thereafter, Company shall grant Executive options to purchase 250,000
shares of the Company's no par value common stock as follows: (i) options
to purchase up to 50,000 shares shall be incentive stock options with an
exercise price fixed in accordance with the provisions of the Planar
Systems, Inc. 1996 Stock Incentive Plan and the exact number of options
determined based on the application of the statutory $100,000 limitation,
and (ii) the remaining options shall be nonqualified stock options with an
exercise price of $6.5625. Except as otherwise stated herein, such Shares
shall be subject to the terms and conditions of the Planar Systems, Inc.
Nonqualified Stock Option Agreement in the form attached hereto as Exhibit
B and the Planar Systems, Inc. 1996 Stock Incentive Plan and the associated
Planar Systems, Inc. 1996 Stock Incentive Plan Stock Option Agreement,
respectively.
3.5 Benefits. Executive shall be entitled to receive such insurance and
--------
other employment benefits as are available to other executive officers of
Company under the same terms and conditions applicable to such other
executive officers. Such benefits may change from time to time or may be
eliminated by Company.
3.6 Business Expenses. The Company shall, in accordance with, and to the
-----------------
extent of, its policies in effect from time to time, reimburse all ordinary
and necessary business expenses reasonably incurred by the Executive in
performing his duties as an employee of the Company, provided that the
Executive accounts promptly for such expenses to the Company in the manner
prescribed from time to time by the Company.
3.7 Vacation. Executive shall be immediately credited with 200 hours of
--------
Paid Time Off (PTO) which may be used at Executive's discretion at any time
after the date hereof. Except as provided herein, Executive shall be
entitled to vacation and sick leave according to the standard policies and
procedures of Company.
3.8 Reimbursement of Professional Expenses. Company shall reimburse
--------------------------------------
professional fees incurred by Executive to obtain tax and financial
planning advice up to a maximum amount of $10,000 annually.
ARTICLE 4
TERMINATION
-----------
4.1 Termination. This Article 4 governs termination of this Agreement at
-----------
any time during the term of this Agreement.
Page 3 - Executive Employment Agreement
<PAGE>
4.2 Termination for Cause. The Company may terminate this Agreement and
---------------------
Executive's employment immediately for "Cause" as that term is defined
herein, upon written notice to the Executive.
4.2.1 "Cause" means any one of the following: (a) fraud, (b)
misrepresentation by Executive (c) theft or embezzlement of the
Company assets, (d) intentional violations of law involving
moral turpitude, (e) the continued failure by the Executive to
satisfactorily perform his duties as reasonably assigned to the
Executive pursuant to Section 2.2 of this Agreement for a
period of thirty (30) days after a written demand for such
satisfactory performance which specifically and with reasonable
detail identifies the manner in which it is alleged that the
Executive has not satisfactorily performed such duties,
provided, however, that no termination for Cause pursuant to
this subparagraph (e) will be effective until after Executive,
together with Executive's counsel, have had an opportunity to
be heard before the Board, and (f) any material breach of this
Agreement which, if curable, has not been cured within thirty
(30) days after written notice to Executive of such breach.
4.2.2 In the event of termination for Cause pursuant to this Section
4.2, the Executive shall be paid his Base Salary through the
date of termination specified in any notice of termination.
Executive shall not be entitled to any additional compensation
or severance.
4.3 Termination Without Cause. This Section 4.3 shall not be applicable in
-------------------------
the event of a Change of Control Termination (which shall be governed by
Article 6), where Cause for termination is asserted or in the event of
termination due to Executive's death or Disability.
4.3.1 Executive may terminate this Agreement and Executive's
employment at any time by providing at least thirty (30) days'
written notice to Company.
4.3.2 If any of the following events occur without Executive's prior
written consent, Executive may terminate this Agreement and
Executive's employment by providing written notice to the
Company specifically describing the event upon which such
termination is based not later than ninety (90) days after the
occurrence of such event:
4.3.2.1 A reduction in Executive's Base Salary or annual bonus
opportunity under the Company's Executive Bonus
Program below the amounts stated in Sections 3.1 and
3.2, respectively.
Page 4 - Executive Employment Agreement
<PAGE>
4.3.2.2 The removal of Executive from the position as Chief
Executive Officer of the Company or the institution by
the Company of a requirement that Executive regularly
report other than to the Board of Directors.
4.3.2.3 The institution by the Company of a requirement that
Executive be based anywhere other than within 25 miles
of Beaverton, Oregon.
4.3.3 The Company may terminate this Agreement and Executive's
employment at any time without Cause upon giving Executive at
least thirty (30) days' written notice; provided, however, that
the Company shall have the option of making termination of the
Agreement and termination of Executive's employment effective
immediately upon notice, in which case, in addition to the
payments provided for by Section 4.3.4 below, Executive shall
be paid his Base Salary through a notice period of thirty (30)
days.
4.3.4 If the Company gives notice pursuant to Section 2.3 that the
term of this Agreement shall not be extended, or if this
Agreement and Executive's employment are terminated by
Executive pursuant to Section 4.3.2 or by the Company pursuant
to Section 4.3.3, then:
4.3.4.1 for a period of eighteen (18) months following the
effective date of Executive's termination, the Company
shall continue to pay Executive his Base Salary,
payable according to Company's normal payroll
practices; and
4.3.4.2 If Executive elects to continue his group health
benefits under the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA"), the Company
shall pay the premium for Executive's COBRA
continuation coverage for a period of up to eighteen
(18) months; and
4.3.4.3 If life and disability insurance coverage maintained
by Executive through the Company may, under the terms
of the plans, be continued in effect for former
employees, Company shall pay the premiums to continue
such coverage in effect for a period of eighteen (18)
months following the effective date of Executive's
termination; and
4.3.4.4 All outstanding stock options and stock grants held by
Executive at the effective date of Executive's
termination that would, by their terms, vest within
eighteen (18) months of the effective date of
Executive's termination shall become fully vested
effective as of the effective date of Executive's
termination; and
Page 5 - Executive Employment Agreement
<PAGE>
4.3.4.5 As a condition of receiving the compensation and other
benefits pursuant to this Section 4.3.4, Executive
agrees to sign, at the time of termination, the form
of release attached hereto as Exhibit C.
4.4 Termination in the Event of Death or Disability. This Agreement and
-----------------------------------------------
Executive's employment shall terminate immediately in the event of
Executive's death or Disability. Executive shall cooperate with the Board
to provide information and submit to such examinations as the Board may
find necessary to make a determination regarding Executive's Disability.
4.4.1 In the event of the Executive's death, the Company shall pay
Executive's Base Salary owing to Executive as of the date of
termination plus an amount equal to eighteen (18) months of
Base Salary at the rate in effect at the time of Executive's
death. Such amount shall be paid (1) to the beneficiary or
beneficiaries designated in writing to Company by Executive,
(2) in the absence of such designation, to the surviving
spouse, or (3) if there is no surviving spouse, or such
surviving spouse disclaims all or any part, then the full
amount, or such disclaimed portion, shall be paid to the
executor, administrator or other personal representative of
Executive's estate. The amount shall be paid as a lump sum as
soon as practicable following Company's receipt of notice of
Executive's death. No further payments shall be made by Company
to Executive.
4.4.2 In the event of termination due to Executive's Disability,
Executive's Base Salary shall be paid through the date of
termination. In addition, the Company shall pay Executive a
lump sum amount equal to eighteen (18) months Base Salary at
the rate in effect at the time of termination. No further
payments shall be made by Company to Executive.
4.4.3 In the event of termination after the second anniversary of the
date of this Agreement due to Executive's death or Disability,
all outstanding stock options and stock grants held by
Executive at the effective date of Executive's termination that
would, by their terms, vest within eighteen months of the
effective date of Executive's termination shall become fully
vested as of the effective date of Executive's termination.
4.5 Entire Termination Payment. The compensation provided for in this
--------------------------
Article 4 shall constitute Executive's sole remedy for termination of this
Agreement.
4.6 Resignation From The Board. Upon termination of Executive's
--------------------------
employment with Company for any reason, Executive shall offer his
resignation as a member of the Board and as an officer or director of any
subsidiary or affiliate of the Company in which he holds such positions.
Page 6 - Executive Employment Agreement
<PAGE>
ARTICLE 5
CONFIDENTIALITY/NONCOMPETITION/CONFLICT OF INTEREST
---------------------------------------------------
5.1 Proprietary Information. Executive shall keep confidential, except
-----------------------
as the Company may otherwise consent in writing, and not disclose or make
any use of except for the benefit of the Company, at any time either during
or subsequent to his employment by the Company, any Proprietary Information
which he may produce, obtain or otherwise acquire during the course of his
employment. As used herein, "Proprietary Information" shall include any
trade secrets, confidential information, knowledge, data, or other
information of the Company relating to products, processes, know-how,
software designs, formulae, test procedures and results, customer lists,
business plans, marketing plans and strategies, and pricing strategies, or
other subject matter pertaining to any business of the Company for any of
its clients, customers, consultants, licensees of affiliates, which
information is not in the public domain at the time of the alleged breach.
In the event of the termination of the Executive's employment for any
reason whatsoever, Executive shall promptly return all records, materials,
equipment, drawings, software and the like pertaining to any Proprietary
Information.
5.2 Covenant Not to Compete. Executive acknowledges that he will provide
-----------------------
special skills, and acquire special information, regarding the activities
of the Company. Executive agrees, therefore, that he will not, for a
period of eighteen (18) months from and after the date he ceases to be
employed by the Company, join, control or participate in the ownership,
management, operation or control of or be connected with or provide
services in any manner to, any business which is in direct or indirect
competition with the Company or any of the Company's subsidiaries or
affiliates or which is developing products or services which will be in
direct or indirect competition with the Company or any of the Company's
subsidiaries or affiliates. Executive agrees that he shall be deemed to be
"connected with" a business if such a business is carried on by a
partnership in which he is a general or limited partner or employee of a
corporation or association of which he is a shareholder, officer, director,
employee, member, consultant or agent; provided, that nothing herein shall
prohibit the purchase or ownership by him of shares of less than five
percent (5%) in a publicly or privately held corporation. The non-
competition restrictions of this section are effective regardless of the
reason for Executive's termination of employment with the Company.
5.3 Consent to Injunction. Executive agrees that the Company will or
---------------------
would suffer an irreparable injury if Executive were to breach Section 5.1
or 5.2 of this Agreement and that the Company would by reason of such
breach be entitled to injunctive relief in a court of appropriate
jurisdiction and Executive stipulates to the entering of such injunctive
relief.
Page 7 - Executive Employment Agreement
<PAGE>
5.4 Severability. The parties intend that the covenants contained in
------------
Section 5.2 be deemed to be separate covenants as to each county and state,
and that if in any judicial proceeding a court shall refuse to enforce all
of the separate covenants included herein because, taken together, they
cover too extensive a geographic area or because any one includes too large
an area or because they are excessive as to duration, the parties intend
that such covenants shall be reduced in scope to the extent required by law
or, if necessary, eliminated from the provisions hereof, and that all of
the remaining covenants hereof not so affected shall remain fully effective
and enforceable.
5.5 Assignment of Inventions. As used in this Agreement, "inventions"
------------------------
shall include, but not be limited to, ideas, improvements, designs, and
discoveries. Executive hereby assigns and transfers to the Company his
entire right, title and interest in and to all inventions whether or not
conceived by Executive (whether made solely by Executive or jointly with
others) during the period of his employment with the Company which relate
in any manner to the actual or demonstrably anticipated business, work, or
research and development of the Company or its subsidiaries, or result from
or are suggested by any tasks assigned to Executive or any work performed
by Executive for or on behalf of the Company or its subsidiaries.
Executive agrees that all such inventions are the sole property of the
Company. The provisions of this Section 5.5 are subject to and qualified by
Executive's obligation to assign to Tektronix, Inc. any inventions
developed by Executive during the six-month period following Executive's
termination of employment from Tektronix that relate to Tektronix
activities or that result from tasks assigned to Executive by Tektronix.
5.6 Disclosure of Inventions, Patents. Executive agrees that in
---------------------------------
connection with any invention as defined in Section 5.5, above:
5.6.1 Executive will disclose such invention promptly in writing to
the Board regardless of whether he believes the invention is
protected by applicable state law, in order to permit the
Company to claim rights to which it may be entitled under this
Agreement. Such disclosure shall be received in confidence by
the Company;
5.6.2 Executive will, at the Company's request, promptly execute a
written assignment of title to the Company for any invention
required to be assigned by Section 5.5 ("assignable invention")
and Executive shall preserve any such assignable invention as
confidential information of the Company;
5.6.3 Upon request, Executive agrees to assist the Company or its
nominee (at its expense) during and at any time subsequent to
his employment in every reasonable way to obtain for its own
benefit patents and copyrights for such assignable inventions
in any and all countries. Executive agrees to
Page 8 - Executive Employment Agreement
<PAGE>
execute such papers and perform such lawful acts as the Company
deems to be reasonably necessary to allow it to exercise all
right, title, and interest in such patents and copyrights; and
5.6.4 Executive agrees to submit a list of inventions made prior to
his employment by the Company on Exhibit D attached hereto and
incorporated by reference herein.
5.7 Execution of Documentation. In connection with Section 5.5 and
--------------------------
Section 5.6, Executive further agrees to execute, acknowledge and deliver
to the Company or its nominee upon request and at its expense all such
assignments of inventions, patents, and copyrights to be issued therefor,
as the Company may determine necessary or desirable for which to apply.
5.8 Third-Party Obligations. Executive acknowledges that the Company from
-----------------------
time to time may have agreements with other persons or with the U.S.
Government, or agencies thereof, which impose obligations or restrictions
on the Company regarding inventions made during the course of work
thereunder or regarding the confidential nature of such work. Executive
agrees to be bound by all such obligations and restrictions.
5.9 Confidentiality or Non-Competition Obligations Owed to Others.
-------------------------------------------------------------
Executive represents that his employment by the Company does not breach any
agreement to keep in confidence proprietary information, knowledge, or data
acquired by Executive in confidence or in trust prior to his employment
with the Company, nor does it breach any restrictive covenant or
noncompetition agreements. Executive will not disclose to the Company, or
induce the Company to use, any confidential or proprietary information or
material belonging to any previous employer or others. Executive agrees
not to enter into any agreement either written or oral in conflict
herewith.
5.10 Conflict of Interest. During Executive's employment with the
--------------------
Company, Executive will engage in no activity or employment which may
conflict with the interest of the Company without the prior written consent
of the Company and will comply with the Company's policies and guidelines
pertaining to business conduct and ethics.
5.11 Survival of Obligations. The provisions of this Article 5 shall
-----------------------
survive termination of this Agreement.
ARTICLE 6
CHANGE OF CONTROL
-----------------
For purposes of this Article 6, the following definitions shall be applied:
Page 9 - Executive Employment Agreement
<PAGE>
6.1 Definitions.
------------
6.1.1 "Change of Control" shall mean any of the following events:
-----------------
6.1.1.1 the approval by the Company's shareholders of a
merger, reorganization, consolidation or similar
transaction (a "Merger") to which the Company is a
party unless the individuals and entities who were the
beneficial owners (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of the common stock
and other securities of the Company that are entitled
to vote generally in the election of directors
(collectively, "Voting Securities") immediately prior
to the effective date of the Merger would have
beneficial ownership (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934) immediately after
the effective date of the Merger of more than fifty
percent (50%) of the total combined voting power of
the common stock and other securities entitled to vote
generally in the election of directors of the
corporation resulting from the Merger in substantially
the same proportions relative to each other as their
ownership of Voting Securities immediately prior to
the effective date of the Merger;
6.1.1.2 the acquisition (other than directly from the Company)
by any person or entity, or group of associated
persons or entities acting in concert of direct or
indirect beneficial ownership (as defined in Rule 13d-
3 under the Securities Exchange Act of 1934) of
securities of the Company representing twenty-five
percent (25%) or more of the total combined voting
power of the Company's then issued and outstanding
securities;
6.1.1.3 the approval by the Company's shareholders of the sale
of all or substantially all of the assets of the
Company to any person or entity which is not a wholly-
owned subsidiary of the Company; or
6.1.1.4 the approval by the Company's shareholders of any plan
or proposal for the liquidation of the Company.
6.1.2 "Good Reason" shall mean a good faith determination by
-----------
Executive, in Executive's reasonable judgment, that any one or
more of the following events has occurred without Executive's
express written consent, after a Change of Control:
6.1.2.1 A change in Executive's responsibilities, titles or
offices as in effect immediately prior to the Change
of Control, or any removal of Executive from, or any
failure to re-elect Executive to, any of
Page 10 - Executive Employment Agreement
<PAGE>
such positions, which has the effect of materially
diminishing Executive's responsibility or authority;
6.1.2.2 A reduction by Company in Executive's Base Salary as
in effect immediately prior to the Change of Control
or any failure to pay Executive any compensation or
benefits to which he or she is entitled when due;
6.1.2.3 A requirement by Company that Executive be based
anywhere other than within 25 miles of Beaverton,
Oregon;
6.1.2.4 Without replacement by plans, programs or arrangements
which, taken as a whole, provide benefits to Executive
at least reasonably comparable to those discontinued
or adversely affected, (A) the failure by Company to
continue in effect (without reduction in benefit level
and/or reward opportunities), any material
compensation or employee benefit plan, program or
arrangement in which Executive was participating
immediately prior to a Change of Control; or (B) the
taking of any action by Company that would materially
adversely affect Executive's participation or
materially reduce Executive's benefits under any of
such plans, programs or arrangements;
6.1.2.5 The failure by Company to obtain an agreement,
reasonably satisfactory to Executive, from any
successor or assign of the Company to assume and agree
to perform this Agreement; or
6.1.2.6 Any material breach of this Agreement by Company which
breach is not remedied for a period of thirty (30)
days following written notice by Executive to Company,
which notice specifically identifies the nature of the
breach.
6.1.3 "Change of Control Termination" shall mean, with respect to
-----------------------------
Executive, any of the following events occurring within two
years after a Change of Control:
6.1.3.1 Termination of the Executive's employment by the
Company for any reason other than for Cause, as
defined in Section 4.2.1 of this Agreement.
6.1.3.2 Termination of the Executive's employment by the
Executive pursuant to Section 6.2 of this Agreement. A
Change of Control Termination shall not, however,
include termination by death or disability.
Page 11 - Executive Employment Agreement
<PAGE>
6.2 Change of Control Termination Right. For a period of two (2) years
-----------------------------------
following a Change of Control, Executive shall have the right, at any
time and within Executive's sole discretion, to terminate employment
with Company for Good Reason. Such termination shall be accomplished
by, and effective upon, Executive giving written notice to Company of
Executive's decision to terminate.
6.3 Change of Control Termination Payment. In the event of a Change of
-------------------------------------
Control Termination, then, and without further action by the Board,
the Company shall provide the benefits identified in Sections 4.3.4.2,
4.3.4.3 and 4.3.4.4 of this Agreement and, within ten (10) days of
such termination, make a lump sum payment to Executive in an amount
equal to eighteen (18) months Base Salary at the higher of (i) the
rate in effect on the date of the Change of Control, or (ii) the rate
in effect on the date of the Change of Control Termination.
6.4 Interest. In the event the Company does not make timely payment in
--------
full of the Change of Control Termination payment described in Section
6.3, Executive shall be entitled to receive interest on any unpaid
amount at the prime rate of interest (or such comparable index as may
be adopted) established from time to time by the Company's principal
banking institution.
6.5 Attorneys' Fees. In the event Executive incurs any legal expense to
---------------
enforce or defend his or her rights under this Article VI of this
Agreement, or to recover damages for breach thereof, Executive shall
be entitled to recover from Company any expenses for attorneys' fees
and disbursements incurred.
ARTICLE 7
GENERAL PROVISIONS
------------------
7.1 Notices. All notices, requests and demands given to or made pursuant
-------
hereto shall, except as otherwise specified herein, be in writing and shall
be deemed to have been duly given to any party when delivered personally
(by courier service or otherwise), when delivered by facsimile and
confirmed by return facsimile, or three days after being mailed by first-
class mail, postage prepaid and return receipt requested in each case to
the applicable address as set forth at the beginning of this Agreement.
Either party may change its address, by notice to the other party given in
the manner set forth in this Section.
7.2 Caption. The various headings or captions in this Agreement are for
-------
convenience only and shall not affect the meaning or interpretation of this
Agreement.
7.3 Governing Law/Forum. The validity, construction and performance of
-------------------
this Agreement shall be governed by the laws of the State of Oregon. The
exclusive forum for any disputes arising under this Agreement that are not
subject to arbitration shall be the appropriate state or federal court
located in Portland, Oregon.
Page 12 - Executive Employment Agreement
<PAGE>
7.4 Mediation. In case of any dispute arising under this Agreement which
---------
cannot be settled by reasonable discussion, the parties agree that, prior
to commencing any arbitration proceeding as contemplated by Section 7.5
they will first engage the services of a professional mediator agreed upon
by the parties and attempt in good faith to resolve the dispute through
confidential nonbinding mediation. Each party shall bear one-half of the
mediator's fees and expenses and shall pay all of its own attorneys' fees
and expenses related to the mediation.
7.5 Arbitration. Any dispute concerning the interpretation, construction,
-----------
breach or enforcement of this Agreement or arising in any way from
Executive's employment with the Company or termination of employment shall
be submitted to final and binding arbitration. The arbitration is to be
conducted before a single arbitrator in Portland, Oregon. The arbitration
shall be conducted pursuant to the rules of the American Arbitration
Association ("AAA"). Executive and the Company agree that, except for
Company's right to ask a court for injunctive relief pursuant to Section
5.3, the procedures outlined in Section 7.4 and 7.5 are the exclusive
method of dispute resolution.
7.6 Attorney Fees. If any action at law, in equity or by arbitration is
-------------
taken to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled, including fees and expenses on appeal.
7.7 Construction. Wherever possible, each provision of this Agreement
------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective
only to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of this
Agreement.
7.8 Waivers. No failure on the part of either party to exercise, and no
-------
delay in exercising, any right or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right or
remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right or remedy granted hereby or by any related
document or by law.
7.9 Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the Company and its successors and assigns, and
shall be binding upon the Executive, his administrators, executors,
legatees, and heirs. In that this Agreement is a personal services
contract, it shall not be assigned by the Executive.
7.10 Modification. This Agreement may not be and shall not be modified or
------------
amended except by written instrument signed by the parties hereto.
7.11 Entire Agreement. This Agreement constitutes the entire agreement
----------------
and understanding between the parties hereto in reference to all the
matters herein agreed
Page 13 - Executive Employment Agreement
<PAGE>
upon. This Agreement replaces and supersedes all prior agreements or
understandings of the parties hereto with respect to the subject matter
hereof.
7.12 Board Approval. This Agreement shall be subject to approval by the
--------------
Board.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
EXECUTIVE PLANAR SYSTEMS, INC.
/s/ Balakrishnan Krishnamurthy By: /s/ William D. Walker
- ------------------------------ ---------------------------
Balakrishnan Krishnamurthy Title: President and CEO
Page 14 - Executive Employment Agreement
<PAGE>
Exhibit 10.19
PLANAR SYSTEMS, INC.
RESTRICTED STOCK AWARD AGREEMENT
TO: Balakrishnan Krishnamurthy Date of Grant: September 24, 1999
We are pleased to inform you that pursuant to your Employment Agreement
dated as of September 24, 1999 with Planar Systems, Inc. (the "Company") the
Board of Directors (the "Board") of the Company has awarded you 50,000 shares of
the Company's Common Stock (the "Shares"). This award (the "Award") is subject
to the following terms and conditions.
1. VESTING: Except as otherwise provided by the Executive Employment Agreement
between you and the Company dated September 24, 1999, the Shares will vest and
become deliverable to you according to the following schedule:
Date On and After Which Shares Vest Number of Shares Vested
----------------------------------- -----------------------
September 24, 1999 20,000 shares
September 24, 2000 15,000 shares
September 24, 2001 15,000 shares
The Share subject to this Agreement may not be sold, assigned, transferred,
pledged or otherwise encumbered until the Shares are vested and delivered to
you. After the Shares are vested and delivered to you, you shall become the
owner of the Shares free of all restrictions otherwise imposed by this
Agreement.
Notwithstanding any other provision of this Agreement, the Compensation
Committee of the Board of Directors (the "Committee") may at any time, in its
sole discretion, accelerate the date of vesting and delivery of all or a portion
of the Shares subject to this Award.
2. DIVIDENDS AND VOTING RIGHTS. You will be entitled to receive any dividends
paid with respect to the Shares that become payable before the Shares have
vested and been delivered to you; provided, however, that no dividends shall be
payable to you with respect to record dates occurring prior to the Date of
Grant, or with respect to record dates occurring on or after your Date of
Termination (as defined below). You will be entitled to vote the Shares before
the Shares have vested and been delivered to you to the same extent as would
have been applicable to you if you were then vested in the Shares; provided,
however, that you will not be entitled to vote the Shares with respect to record
dates for such voting rights arising prior to the Date of Grant, or with respect
to record dates occurring on or after your Date of Termination (as defined
below).
1 - RESTRICTED STOCK AWARD AGREEMENT
<PAGE>
3. DEPOSIT OF SHARES. Each certificate issued in respect to the Shares granted
under this Agreement shall be registered in your name and shall be held by the
Treasurer of the Company until vested and delivered to you pursuant to the terms
of this Agreement. This Award is conditioned upon your execution of a blank
stock power for the Shares.
4. WITHHOLDING TAXES: As a condition to the delivery of the Shares, you must
make such arrangements as the Company may require for the satisfaction of any
federal, state or local withholding tax obligations that may arise in connection
with the vesting and delivery of the Shares.
5. TERMINATION: If your employment with the Company terminates for any reason,
including death or disability (the "Date of Termination"), then, notwithstanding
the vesting schedule set forth above, this Award shall immediately expire and no
additional Shares shall be vested or delivered to you pursuant to this Award and
you shall forfeit all Shares that are not vested before the Date of Termination.
Your Date of Termination for purposes of this Agreement shall be determined by
the Committee, which determination shall be final.
6. TRANSFERABILITY OF AWARD: This Award and the rights and privileges
conferred hereby may not be sold, transferred, assigned, pledged, encumbered or
hypothecated in any manner (whether by operation of law or otherwise) and any
such attempted action shall be null and void. The terms of this Agreement shall
be binding upon your executors, administrators, heirs, successors and assigns.
Notwithstanding the foregoing, to the extent permitted by applicable law and
regulation, the Company, in its sole discretion, may permit you to transfer this
Award and the rights and privileges conferred hereby.
7. CONTINUATION OF RELATIONSHIP: Nothing in this Award will confer upon you
any right to continue in the employ or other relationship of the Company, or to
interfere in any way with the right of the Company to terminate your employment
or other relationship with the Company at any time.
8. DETERMINATION OF COMMITTEE TO BE FINAL: The administration of this Award
and all determinations referred to herein or otherwise will be made by the
Committee, and such determinations will be final, binding and conclusive.
9. INVESTMENT INTENT: You represent and warrant to the Company that you are
acquiring the Shares for your own account and investment and not with a view to,
or for sale in connection with, any distribution.
10. RESTRICTED SECURITIES; LEGEND: You understand that the Shares have not been
registered under the Securities Act of 1933 in reliance upon an exemption from
registration. Such exemption depends upon, among other things, the bona fide
nature of your investment intent stated in this Agreement. You understand that
the Shares must be held indefinitely, unless the Shares subsequently are
registered under the Securities Act of 1933 or unless an exemption from
registration is otherwise available. You agree that the Shares may not be
offered, sold, transferred, pledged, or otherwise disposed of in the absence of
an effective registration statement under the Securities Act of 1933 and
applicable state securities laws or an opinion of counsel acceptable to the
2 - RESTRICTED STOCK AWARD AGREEMENT
<PAGE>
Company that such registration is not required. The Company agrees to register
under the Securities Act of 1933 the sale of the Shares by you at your request.
You understand that the certificate(s) representing the Shares will be imprinted
with substantially the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR APPLICABLE
STATE SECURITIES LAWS. THE SHARES HAVE BEEN ACQUIRED WITHOUT A VIEW TO
DISTRIBUTION AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SHARES UNDER THE ACT AND UNDER ANY APPLICABLE SECURITIES LAWS, OR
AN OPINION OF COUNSEL FOR THE HOLDER (CONCURRED IN BY LEGAL COUNSEL
FOR THE CORPORATION) THAT SUCH REGISTRATION IS NOT REQUIRED AS TO SUCH
SALE OR OFFER. THE STOCK TRANSFER AGENT HAS BEEN ORDERED TO EFFECTUATE
TRANSFERS OF THIS CERTIFICATE ONLY IN ACCORDANCE WITH THE ABOVE
INSTRUCTION.
Please execute the Agreement in the space below and return it to the
undersigned.
Very truly yours,
PLANAR SYSTEMS, INC.
By: /s/ William D. Walker
--------------------------------
AGREED AND ACCEPTED:
/s/ Balakrishnan Krishnamurthy
- ---------------------------------
Balakrishnan Krishnamurthy
Date: September 24, 1999
3 - RESTRICTED STOCK AWARD AGREEMENT
<PAGE>
Exhibit 10.20
PLANAR SYSTEMS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
To: Balakrishnan Krishnamurthy Date of Grant: September 27, 1999
We are pleased to inform you that pursuant to your Employment Agreement
dated as of September 24, 1999 with Planar Systems, Inc. (the "Company") the
Board of Directors (the "Board") of the Company has awarded you a nonqualified
stock option for the purchase of 200,000 shares of the Company's Common Stock
(the "Shares") at an exercise price of $6.5625 per share.
1. TERM: The term of the option is ten years from date of grant, unless
sooner terminated.
2. VESTING: Except as otherwise provided by the Executive Employment Agreement
between you and the Company dated September 24, 1999, the option will vest and
become exercisable according to the following schedule: the option will vest
with respect to twenty-five percent (25%) of the shares on September 27, 2000
and, thereafter, the option will vest with respect to six and one quarter
percent (6.25%) of the Shares on the last day of each fiscal quarter of the
Company, beginning with the quarter ending December 31, 2000.
3. EXERCISE: During your lifetime only you can exercise the option. The
option may be exercised by the personal representative of your estate, by the
beneficiary you have designated on forms prescribed by and filed with the
Company, or the beneficiary of your estate following your death. You may use the
Notice of Exercise of Nonqualified Stock Option in the form attached to this
Agreement when you exercise the option.
4. PAYMENT FOR SHARES: The option may be exercised by the delivery of:
a. Cash, personal check (unless, at the time of exercise, the Company
determines otherwise), bank certified or cashier's check;
b. Unless Compensation Committee of the Board (the "Committee") in its
sole discretion determines otherwise, shares of the capital stock of the Company
held by you for a period of at least six months having a fair market value at
the time of exercise, as determined in good faith by the Board, equal to the
exercise price;
c. A properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company the amount of sale
or loan proceeds to pay the exercise price; or
1 - NONQUALIFIED STOCK OPTION AGREEMENT
<PAGE>
d. Instructions to the Company to withhold from the Shares that would
otherwise be issued on the exercise that number of Shares having a fair market
value at the time of such exercise equal to the aggregate exercise price of the
options being exercised.
5. WITHHOLDING TAXES: As a condition to the exercise of the option, you must
make such arrangements as the Company may require for the satisfaction of any
federal, state or local withholding tax obligations that may arise in connection
with such exercise.
6. TERMINATION: If your employment with the Company terminates, and unless by
its terms the option sooner terminates or expires, then you may exercise, for a
twelve-month period following the termination of your employment, that portion
of the option which is exercisable at the time of such termination, but the
option will terminate at the end of such period following such termination as to
all shares for which it has not theretofore been exercised.
7. DEATH OF OPTIONEE: If you die while having a relationship with the Company
or within the 12-month period following cessation of such relationship, and
unless by its terms the option sooner terminates or expires, this option may be
exercised within one year after your death by the personal representative of
your estate or by the person or persons to whom your rights under the option
pass (i) by will or by the applicable laws of descent and distribution or (ii)
by a designation or transfer, but the option will terminate at the end of such
period following your death as to all shares for which it has not theretofore
been exercised.
8. TRANSFERABILITY OF OPTION: This option and the rights and privileges
conferred hereby may not be transferred, assigned, pledged or hypothecated in
any manner (whether by operation of law or otherwise) other than by will or by
the applicable laws of descent and distribution and shall not be subject to
execution, attachment or similar process. This option is personal to you and is
exercisable solely by you. Any attempt to transfer, assign, pledge, hypothecate
or otherwise dispose of this option or of any right or privilege conferred
hereby, contrary to the provisions hereof, or the sale or levy or any attachment
or similar process upon the rights and privileges conferred hereby will be null
and void. Notwithstanding the foregoing, to the extent permitted by applicable
law and regulation, the Company, in its sole discretion, may permit you to (i)
during your lifetime, designate a person who may exercise the option after your
death by giving written notice of such designation to the Company (such
designation may be changed from time to time by you by giving written notice to
the Company revoking any earlier designation and making a new designation) or
(ii) transfer the option and the rights and privileges conferred hereby.
9. NO STATUS AS SHAREHOLDER: Neither you nor any party to whom your rights
and privileges under the option pass will be, or have any of the rights or
privileges of, a shareholder of the Company with respect to any of the shares
issuable upon the exercise of this option unless and until this option has been
exercised.
2 - NONQUALIFIED STOCK OPTION AGREEMENT
<PAGE>
10. CONTINUATION OF RELATIONSHIP: Nothing in this option will confer upon you
any right to continue in the employ or other relationship of the Company, or to
interfere in any way with the right of the Company to terminate your employment
or other relationship with the Company at any time.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION: The aggregate number and class
of shares covered by this option and the exercise price per share thereof (but
not the total price), will all be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock of the Company resulting
from a split-up or consolidation of shares or any like capital adjustment, or
the payment of any stock dividend.
12. EFFECT OF LIQUIDATION OR REORGANIZATION
(1) Cash, Stock or Other Property for Stock. Except as provided in
---------------------------------------
subsection (2), upon a merger (other than a merger of the Company in which the
holders of shares of Common Stock immediately prior to the merger have the same
proportionate ownership of shares of Common Stock in the surviving corporation
immediately after the merger), consolidation, acquisition of property or stock,
separation, reorganization (other than a mere reincorporation or the creation of
a holding company) or liquidation of the Company, as a result of which the
shareholders of the Company receive cash, stock or other property in exchange
for or in connection with their shares of Common Stock, this option will
terminate, but you will have the right immediately prior to any such merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation to exercise your option in whole or in part whether or not the
vesting requirements set forth in this agreement have been satisfied.
(2) Conversion of Options on Stock for Stock Exchange. If the shareholders
-------------------------------------------------
of the Company receive capital stock of another corporation ("Exchange Stock")
in exchange for their shares of Common Stock in any transaction involving a
merger (other than a merger of the Company in which the holders of Common Stock
immediately prior to the merger have the same proportionate ownership of Common
Stock in the surviving corporation immediately after the merger), consolidation,
acquisition of property or stock, separation or reorganization (other than a
mere reincorporation or the creation of a holding company), this option will be
converted into an option to purchase shares of Exchange Stock. The amount and
price of converted options will be determined by adjusting the amount and price
of this option in the same proportion as used for determining the number of
shares of Exchange Stock the holders of the shares of Common Stock receive in
such merger, consolidation, acquisition of property or stock, separation or
reorganization. The converted option will be fully vested whether or not the
vesting requirements set forth in this agreement have been satisfied; provided
that such acceleration will not occur if, in the opinion of the Company's
outside accountants, such acceleration would render unavailable "pooling of
interests" accounting treatment for any reorganization, merger or consolidation
of the Company for which pooling of interests accounting treatment is sought by
the Company.
3 - NONQUALIFIED STOCK OPTION AGREEMENT
<PAGE>
13. FRACTIONAL SHARES: In the event of any adjustment in the number of shares
covered by this option, any fractional shares resulting from such adjustment
will be disregarded and the option will cover only the number of full shares
resulting from such adjustment.
14. DETERMINATION OF COMMITTEE TO BE FINAL: The administration of this
Agreement and all determinations and adjustments referred to herein will be made
by the Committee, and its determination as to what adjustments will be made, and
the extent thereof and all other determinations, will be final, binding and
conclusive.
15. SECURITIES REGULATION: Shares will not be issued with respect to this
option unless the exercise of such option and the issuance and delivery of such
shares pursuant thereto complies with all relevant provisions of law, including,
without limitation, any applicable state securities laws, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the shares may
then be listed. The Company agrees to register under the Securities Act of 1933
the sale of the Shares to you upon exercise of the option at your request.
As a condition to the exercise of this option, the Company may require you
to represent and warrant at the time of any such exercise that the shares are
being purchased only for investment and without any present intention to sell or
distribute such shares if, in the opinion of counsel for the Company, such a
representation is required by any relevant provision of the aforementioned laws.
At the option of the Company, a stop-transfer order against any shares of stock
may be placed on the official stock books and records of the Company, and a
legend indicating that the stock may not be pledged, sold or otherwise
transferred, unless an opinion of counsel is provided (concurred in by counsel
for the Company) stating that such transfer is not in violation of any
applicable law or regulation, may be stamped on stock certificates in order to
assure exemption from registration. The Company may also require such other
action or agreement by you as may from time to time be necessary to comply with
the federal and state securities laws.
Please execute the enclosed copy of this Agreement and return it to the
undersigned.
Very truly yours,
PLANAR SYSTEMS, INC.
By: /s/ William D. Walker
-------------------------------
AGREED AND ACCEPTED:
/s/ Balakrishnan Krishnamurthy
- ------------------------------
Balakrishnan Krishnamurthy
Date: September 27, 1999
4 - NONQUALIFIED STOCK OPTION AGREEMENT
<PAGE>
NOTICE OF EXERCISE OF NONQUALIFIED STOCK OPTION
To: Planar Systems, Inc.
I, Balakrishnan Krishnamurthy, a resident of the State of Oregon, hereby
exercise my nonqualified stock option granted by Planar Systems, Inc. (the
"Company") on September 27, 1999 and notify the Company of my desire to purchase
shares of Common Stock of the Company (the "Securities") at the exercise price
of $6.5625 per share which were offered to me pursuant to said option.
I hereby represent and warrant that (1) I have been furnished with all
information which I deem necessary to evaluate the merits and risks of the
purchase of the Securities; (2) I have had the opportunity to ask questions and
receive answers concerning the information received about the Securities and the
Company; and (3) I have been given the opportunity to obtain any additional
information I deem necessary to verify the accuracy of any information obtained
concerning the Securities and the Company.
Dated:________________________ ________________________________
Balakrishnan Krishnamurthy
Taxpayer I.D. Number:_________ ________________________________
________________________________
Address
5 - NONQUALIFIED STOCK OPTION AGREEMENT
<PAGE>
RECEIPT
_____________________ hereby acknowledges receipt from Balakrishnan
Krishnamurthy in payment for ________ shares of Common Stock of Planar Systems,
Inc., an Oregon corporation, of $_________ in the form of
[_] Cash
[_] Check (personal, cashier's or bank certified)
[_] ___________ shares of the Company's Common Stock, fair market value
$_______ per share held by the Optionee for a period of at least six
months
Copy of irrevocable instructions to Broker
Date:___________________
PLANAR SYSTEMS, INC.
By:_______________________
6 - NONQUALIFIED STOCK OPTION AGREEMENT
<PAGE>
Exhibit 10.21
RESTRICTED STOCK AWARD AGREEMENT
UNDER THE
PLANAR SYSTEMS, INC.
1996 STOCK INCENTIVE PLAN
PLANAR SYSTEMS, INC. ("Planar" or the "Company") hereby grants to
____________ ______________ ("Grantee") on May 24, 1999 (the "Award Date"), a
Restricted Stock Award (the "Award") of the right to receive __________ shares
of the Company's no par value common stock ("Shares") pursuant to the Planar
Systems, Inc. 1996 Stock Incentive Plan as amended (the "Plan"). This Award is
subject to the terms of the Plan and the following terms and conditions:
1. No Rights as Shareholder Prior to Issuance and Delivery of Shares.
-----------------------------------------------------------------
Grantee shall not be deemed for any purpose to be a shareholder of the Company
as to any shares subject to this Award until the Shares have vested and been
issued and delivered to Grantee in accordance with the Plan and this Agreement.
2. Issuance and Delivery of Shares.
-------------------------------
a. Vesting Schedule. Except as the Plan or this Agreement may
----------------
otherwise provide, twenty-five percent (25%) of the Shares subject to this Award
shall vest and be issued and delivered at each of May 24, 2000, May 24, 2001,
May 24, 2002 and May 24, 2003 (or, if any such date is not a business day, the
first business day after any such date).
b. Acceleration. Subject to any restrictions specified in the Plan,
------------
notwithstanding any other provision of this Agreement the Compensation Committee
of the Board of Directors of the Company (the "Committee") may at any time, in
its sole discretion, accelerate the date of issuance and delivery of all or a
portion of the Shares subject to this Award.
c. Rights of Grantee with Respect to Shares Delivered. Grantee shall
--------------------------------------------------
enjoy all shareholder rights with respect to Shares that have vested and been
issued and delivered, and such Shares shall no longer be subject to the terms of
the Plan or this Agreement.
3. Termination of Employment. In the event that Grantee's "Continuous
-------------------------
Status as an Employee or Consultant" (as defined in the Plan) terminates for any
reason, including retirement, death or disability (the "Date of Termination"),
this Award shall immediately expire and no additional Shares shall be vested or
issued and delivered to Grantee pursuant to this Award. Grantee's Date of
Termination for purposes of this Agreement shall be determined by the Committee,
which determination shall be final.
-1-
<PAGE>
4. Nontransferability of this Award. This Award may not be sold,
--------------------------------
transferred, assigned, pledged, or encumbered and any such attempted action
shall be void. The terms of this Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Grantee.
5. Withholding Taxes. To the extent that the vesting, issuance and
-----------------
delivery of any Shares pursuant to this Agreement results in income to Grantee
for federal or state income tax purposes, Grantee shall deliver to the Company
at the time of such vesting, issuance and delivery such amount of money or
shares of unrestricted common stock of the Company as the Company may require to
meet its withholding obligation under applicable tax laws or regulations, and,
if Grantee fails to do so, the Company is authorized to withhold from any cash
or other remuneration then or thereafter payable to Grantee any tax required to
be withheld by reason of such resulting compensation income.
6. Tax Consequences. Some of the federal tax consequences relating to
----------------
this Award, as of the date of this Award, are set forth below. Although Oregon
tax consequences for Oregon residents are substantially similar to the federal
tax consequences discussed below, the Company has not reviewed the tax laws of
other states which may apply if the Grantee is not an Oregon resident. THIS
SUMMARY IS NECESSARILY INCOMPLETE, AND STATE AND FEDERAL TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE GRANTEE SHOULD CONSULT A TAX ADVISOR
BEFORE DISPOSING OF THE SHARES.
Grantee will recognize ordinary income for the full amount of the fair
market value of all Shares that are vested, issued and delivered to Grantee
pursuant to this Agreement on the date that such Shares vest. If permitted
under the Company's Executive Deferred Compensation Plan (the "Deferred
Compensation Plan"), Grantee could defer the ordinary income impact by electing
to include the Shares that will vest under this Agreement in the Deferred
Compensation Plan pursuant to the terms and conditions thereof. Grantee would
then have to recognize ordinary income for the market value of the stock as of
the date the shares are removed from the Deferred Compensation Plan. The payout
periods and early withdrawal election periods would be as set forth in the
Deferred Compensation Plan.
Once Grantee has recognized ordinary income on Shares vesting pursuant to
this Agreement, any further appreciation in the value of such Shares would be
taxed in accordance with capital gains regulations.
7. Termination of Agreement. This Agreement shall terminate on the
------------------------
earlier of Grantee's Date of Termination or May 31, 2003.
A copy of the Plan as amended through the date hereof has been delivered to
Grantee, receipt of which Grantee hereby acknowledges, and shall control in the
event of a discrepancy
-2-
<PAGE>
between this Agreement and the Plan. Defined terms used in this Agreement and
not otherwise defined herein shall have the meanings ascribed thereto in the
Plan.
PLANAR SYSTEMS, INC.
By:________________________
Accepted as of May 24, 1999:
GRANTEE
-3-
<PAGE>
Exhibit 10.22
RESTRICTED STOCK AWARD AGREEMENT
UNDER THE
PLANAR SYSTEMS, INC.
1996 STOCK INCENTIVE PLAN
PLANAR SYSTEMS, INC. ("Planar" or the "Company") hereby grants to
____________________ ("Grantee") on May 24, 1999 (the "Award Date"), a
Restricted Stock Award (the "Award") of the right to receive _________ shares of
the Company's no par value common stock ("Shares") pursuant to the Planar
Systems, Inc. 1996 Stock Incentive Plan as amended (the "Plan"). This Award is
subject to the terms of the Plan and the following terms and conditions:
1. No Rights as Shareholder Prior to Issuance and Delivery of Shares.
-----------------------------------------------------------------
Grantee shall not be deemed for any purpose to be a shareholder of the Company
as to any shares subject to this Award until the Shares have vested and been
issued and delivered to Grantee in accordance with the Plan and this Agreement.
2. Issuance and Delivery of Shares.
-------------------------------
a. Vesting Schedule. Except as the Plan or this Agreement may
----------------
otherwise provide, the Shares shall vest and be issued and delivered on May 24,
2001.
b. Acceleration. Subject to any restrictions specified in the Plan,
------------
notwithstanding any other provision of this Agreement the Compensation Committee
of the Board of Directors of the Company (the "Committee") may at any time, in
its sole discretion, accelerate the date of issuance and delivery of all or a
portion of the Shares subject to this Award.
3. Termination of Employment. This Award shall immediately vest and the
-------------------------
Shares shall be immediately issued and delivered to Grantee pursuant to this
Award in the event that Grantee's "Continuous Status as an Employee or
Consultant" (as defined in the Plan) terminates before May 24, 2001 because (i)
the Company terminates Grantee's employment for any reason other than for
"Cause" (as defined below), or (ii) Grantee terminates his or her employment
with the Company for "Good Reason" (as defined below) after a "Change of
Control" (as defined below).
4. Definitions.
-----------
a. "Cause" shall mean any of the following events:
-----
i. Grantee has been convicted of, plead guilty to or plead nolo
contendre to a felony;
ii. Grantee has committed any fraud, theft, embezzlement or
misappropriation in connection with the Company's business; or
-1-
<PAGE>
iii. Grantee has willfully or repeatedly failed to perform his or
her duties or comply with significant Company policies, and such conduct has not
been cured within 30 days after written notice thereof.
b. "Change of Control" shall mean any of the following events:
-----------------
i. the approval by the Company's shareholders of a merger or
consolidation to which the Company is a party if the individuals and entities
who were shareholders of the Company immediately prior to the effective date of
such merger or consolidation would have beneficial ownership (as defined in Rule
13d-3 under the Securities Exchange Act of 1934) of less than fifty percent
(50%) of the total combined voting power for election of directors of the
surviving corporation immediately following the effective date of such merger or
consolidation;
ii. the acquisition (other than directly from the Company) by
any person or entity, or group of associated persons or entities acting in
concert of direct or indirect beneficial ownership (as defined in Rule 13d-3
under the Securities Exchange Act of 1934) of securities of the Company
representing twenty-five percent (25%) or more of the total combined voting
power of the Company's then issued and outstanding securities;
iii. the approval by the Company's shareholders of the sale of
all or substantially all of the assets of the Company to any person or entity
which is not a wholly-owned subsidiary of the Company; or
iv. the approval by the Company's shareholders of any plan or
proposal for the liquidation of the Company.
c. "Good Reason" shall mean a good faith determination by Grantee,
-----------
in Grantee's reasonable judgment, that any one or more of the following events
has occurred without Grantee's express written consent, after a Change of
Control:
i. A change in Grantee's reporting responsibilities, titles or
offices as in effect immediately prior to the Change of Control, or any removal
of Grantee from, or any failure to re-elect Grantee to, any of such positions,
which has the effect of materially diminishing Grantee's responsibility or
authority;
ii. A reduction by Company in Grantee's Base Salary as in effect
immediately prior to the Change of Control or any failure to pay Grantee any
compensation or benefits to which he or she is entitled when due;
iii. A requirement by Company that Grantee be based anywhere
other than within 25 miles of Grantees's job location at the time of the Change
of Control;
iv. Without replacement by plans, programs or arrangements
which, taken as a whole, provide benefits to Grantee at least reasonably
comparable to those discontinued
-2-
<PAGE>
or adversely affected, (A) the failure by Company to continue in effect (without
reduction in benefit level and/or reward opportunities), any material
compensation or employee benefit plan, program or arrangement in which Grantee
was participating immediately prior to a Change of Control; or (B) the taking of
any action by Company that would materially adversely affect Grantee's
participation or materially reduce Grantee's benefits under any of such plans,
programs or arrangements;
v. The failure by Company to obtain an agreement, reasonably
satisfactory to Grantee, from any successor or assign of the Company to assume
and agree to perform this Agreement; or
vi. Any material breach of this Agreement by Company which
breach is not remedied for a period of sixty (60) days following written notice
by Grantee to Company, which notice specifically identifies the nature of the
breach.
5. Nontransferability of this Award. This Award may not be sold,
--------------------------------
transferred, assigned, pledged, or encumbered and any such attempted action
shall be void. The terms of this Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Grantee.
6. Withholding Taxes. To the extent that the vesting, issuance and
-----------------
delivery of any Shares pursuant to this Agreement results in income to Grantee
for federal or state income tax purposes, Grantee shall deliver to the Company
at the time of such vesting, issuance and delivery such amount of money as the
Company may require to meet its withholding obligation under applicable tax laws
or regulations, and, if Grantee fails to do so, the Company is authorized to
withhold from any cash or other remuneration then or thereafter payable to
Grantee any tax required to be withheld by reason of such resulting compensation
income.
7. Tax Consequences. Some of the federal tax consequences relating to
----------------
this Award, as of the date of this Award, are set forth below. Although Oregon
tax consequences for Oregon residents are substantially similar to the federal
tax consequences discussed below, the Company has not reviewed the tax laws of
other states which may apply if the Grantee is not an Oregon resident. THIS
SUMMARY IS NECESSARILY INCOMPLETE, AND STATE AND FEDERAL TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE GRANTEE SHOULD CONSULT A TAX ADVISOR
BEFORE DISPOSING OF THE SHARES.
Grantee will recognize ordinary income for the full amount of the fair
market value of all Shares that are vested, issued and delivered to Grantee
pursuant to this Agreement on the date that such Shares vest. If permitted under
the Company's Executive Deferred Compensation Plan (the "Deferred Compensation
Plan"), Grantee could defer the ordinary income impact by electing to include
the Shares that will vest under this Agreement in the Deferred Compensation Plan
pursuant to the terms and conditions thereof. Grantee would then have to
recognize ordinary income for the market value of the stock as of the date the
shares are removed from the Deferred Compensation Plan. The payout periods and
early withdrawal election periods would be as set forth in the Deferred
Compensation Plan.
-3-
<PAGE>
Once Grantee has recognized ordinary income on Shares vesting pursuant to
this Agreement, any further appreciation in the value of such Shares would be
taxed in accordance with capital gains regulations.
8. Termination of Agreement. This Agreement shall terminate on the
------------------------
earlier of Grantee's Date of Termination or May 25, 2001.
A copy of the Plan as amended through the date hereof has been delivered to
Grantee, receipt of which Grantee hereby acknowledges, and shall control in the
event of a discrepancy between this Agreement and the Plan. Defined terms used
in this Agreement and not otherwise defined herein shall have the meanings
ascribed thereto in the Plan.
PLANAR SYSTEMS, INC.
By:_______________________
Accepted as of May 24, 1999:
GRANTEE
[Name]
-4-
<PAGE>
Exhibit 10.23
PLANAR SYSTEMS, INC.
1999 NONQUALIFIED STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this Nonqualified Stock Option
--------------------
Plan are to attract, retain and reward individuals who can and do contribute to
the Company's success by providing Employees and Consultants an opportunity to
share in the equity of the Company and to more closely align their interests
with the Company and its shareholders.
Options granted hereunder shall be nonqualified stock options, not intended
to qualified as incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended. In addition, shares of the Company's
Common Stock may be Sold hereunder independent of any Option grant.
2. Definitions. As used herein, the following definitions shall apply:
-----------
(a) "Administrator" shall mean the Board or any of its Committees as
-------------
shall be administering the Plan, in accordance with Section 4(a) of the Plan.
(b) "Board" shall mean the Board of Directors of the Company.
-----
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
----
(d) "Committee" shall mean a committee appointed by the Board in
---------
accordance with Section 4(a) of the Plan.
(e) "Common Stock" shall mean the Common Stock of the Company.
------------
(f) "Company" shall mean Planar Systems, Inc., an Oregon corporation.
-------
(g) "Consultant" shall mean any person who is engaged by the Company
----------
or any Parent or Subsidiary to render consulting services and is compensated for
such consulting services, but shall not include any Director of the Company.
(h) "Continuous Status as an Employee or Consultant" shall mean the
----------------------------------------------
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of: (i) any sick leave, military leave, or
any other leave of absence approved by the Company; or (ii) transfers between
locations of the Company or between the Company, its Parent, its Subsidiaries or
its successor.
(i) "Director" shall mean a member of the Board.
--------
(j) "Disability" shall mean total and permanent disability as defined
----------
in Section 22(e)(3) of the Code.
________________________________________________________________________________
1 - 1999 NONQUALIFIED STOCK OPTION PLAN (Planar Systems, Inc.)
<PAGE>
(k) "Employee" shall mean any person, other than Officers and
--------
Directors, employed by the Company or any Parent or Subsidiary.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
(m) "Fair Market Value" shall mean, as of any date, the value of
-----------------
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or the Nasdaq SmallCap Market of the Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for the Common Stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the date of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
on the last market trading day prior to the date of determination, as reported
in The Wall Street Journal or such other source as the Administrator deems
reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(n) "Nonqualified Stock Option" shall mean an Option not intended to
-------------------------
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(o) "Notice of Grant" shall mean a written notice evidencing certain
---------------
terms and conditions of an individual Option grant. The Notice of Grant is part
of the Option Agreement.
(p) "Officer" shall mean a person who is an officer of the Company
-------
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(q) "Option" shall mean a stock option granted pursuant to the Plan.
------
(r) "Option Agreement" shall mean a written agreement between the
----------------
Company and an Optionee evidencing the terms and conditions of an individual
Option grant. The Option Agreement is subject to the terms and conditions of the
Plan.
(s) "Optioned Stock" shall mean the Common Stock subject to an
--------------
Option.
(t) "Optionee" shall mean an Employee or Consultant who holds an
--------
Option.
(u) "Parent" shall mean a "parent corporation," whether now or
------
hereafter existing, as defined in Section 424(e) of the Code.
________________________________________________________________________________
2 - 1999 NONQUALIFIED STOCK OPTION PLAN (Planar Systems, Inc.)
<PAGE>
(v) "Plan" shall mean this 1999 Nonqualified Stock Option Plan.
----
(w) "Sale" or "Sold" shall include, with respect to the sale of
---- ----
Shares under the Plan, the sale of Shares for any form of consideration
specified in Section 8(b), as well as a grant of Shares for consideration in the
form of past or future services.
(x) "Share" shall mean a share of the Common Stock, as adjusted in
-----
accordance with Section 11 of the Plan.
(y) "Subsidiary" shall mean a "subsidiary corporation," whether now
----------
or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan.
-------------------------
(a) Subject to the provisions of paragraph (b) of this Section 3 and
the provisions of Section 11 of the Plan, the maximum aggregate number of Shares
which may be optioned and/or Sold under the Plan is 425,000 shares of Common
Stock. The Shares may be authorized, but unissued, or reacquired Common Stock.
(b) If an Option should expire or become unexercisable for any
reason, or is otherwise terminated or forfeited, without having been exercised
in full, the unpurchased Shares which were subject thereto shall, unless the
Plan shall have been terminated, become available for future Option grants
and/or Sales under the Plan. If any Shares issued pursuant to a Sale shall be
reacquired, canceled or forfeited for any reason, such Shares shall become
available for future Option grants and/or Sales under the Plan, unless the Plan
shall have been terminated. If the exercise price of any Option granted under
the Plan is satisfied by tendering Shares of Common Stock to the Company (by
either actual delivery or by attestation), only the number of shares of Common
Stock issued net of the Shares of Common Stock tendered shall be deemed
delivered for purposes of determining the maximum number of Shares available for
delivery under the Plan.
4. Administration of the Plan.
--------------------------
(a) Procedure. The Plan shall be administered by (A) the Board or (B)
---------
a Committee designated by the Board, which Committee shall be constituted to
satisfy the legal requirements relating to the administration of stock option
plans under applicable corporate and securities laws and the Code. Once
appointed, such Committee shall serve in its designated capacity until otherwise
directed by the Board. The Board may increase the size of the Committee and
appoint additional members, remove members (with or without cause) and
substitute new members, fill vacancies (however caused), and remove all members
of the Committee and thereafter directly administer the Plan, all to the extent
permitted by the legal requirements relating to the administration of stock
option plans under state corporate and securities laws and the Code.
________________________________________________________________________________
3 - 1999 NONQUALIFIED STOCK OPTION PLAN (Planar Systems, Inc.)
<PAGE>
(b) Powers of the Administrator. Subject to the provisions of the
---------------------------
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to grant Nonqualified Stock Options;
(ii) to authorize Sales of Shares of Common Stock hereunder;
(iii) to determine, upon review of relevant information, the
Fair Market Value of the Common Stock;
(iv) to determine the exercise/purchase price per Share of
Options to be granted or Shares to be Sold, which exercise/purchase price shall
be determined in accordance with Section 8(a) of the Plan;
(v) to determine the Employees or Consultants to whom, and the
time or times at which, Options shall be granted and the number of Shares to be
represented by each Option; (vi) to determine the Employees or Consultants to
whom, and the time or times at which, Shares shall be Sold and the number of
Shares to be Sold;
(vii) to interpret the Plan;
(viii) to prescribe, amend and rescind rules and regulations
relating to the Plan;
(ix) to determine the terms and provisions of each Option
granted (which need not be identical) and, with the consent of the holder
thereof, modify or amend each Option;
(x) to determine the terms and provisions of each Sale of
Shares (which need not be identical) and, with the consent of the purchaser
thereof, modify or amend each Sale;
(xi) to accelerate or defer (with the consent of the Optionee)
the exercise date of any Option;
(xii) to accelerate or defer (with the consent of the Optionee
or purchaser of Shares) the vesting restrictions applicable to Shares Sold under
the Plan or pursuant to Options granted under the Plan;
(xiii) to authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an Option or Sale of
Shares previously granted or authorized by the Administrator;
(xiv) to determine the restrictions on transfer, vesting
restrictions, repurchase rights, or other restrictions applicable to Shares
issued under the Plan;
________________________________________________________________________________
4 - 1999 NONQUALIFIED STOCK OPTION PLAN (Planar Systems, Inc.)
<PAGE>
(xv) to effect, at any time and from time to time, with the
consent of the affected Optionees, the cancellation of any or all outstanding
Options under the Plan and to grant in substitution therefor new Options under
the Plan covering the same or different numbers of Shares, but having an Option
price per Share consistent with the provisions of Section 8 of this Plan as of
the date of the new Option grant;
(xvi) to establish, on a case-by-case basis, different terms
and conditions pertaining to exercise or vesting rights upon termination of
employment, whether at the time of an Option grant or Sale of Shares, or
thereafter;
(xvii) to approve forms of agreement for use under the Plan;
(xviii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;
(xix) to determine whether and under what circumstances an
Option may be settled in cash under subsection 9(f) instead of Common Stock; and
(xx) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
(c) Effect of Administrator's Decision. All decisions, determinations
----------------------------------
and interpretations of the Administrator shall be final and binding on all
Optionees and any other holders of any Options granted under the Plan or Shares
Sold under the Plan.
5. Eligibility.
-----------
(a) Persons Eligible. Options may be granted and/or Shares Sold only
----------------
to Employees and Consultants. An Employee or Consultant who has been granted an
Option or Sold Shares may, if he or she is otherwise eligible, be granted an
additional Option or Options or Sold additional Shares.
(b) No Right to Continued Employment. The Plan shall not confer upon
--------------------------------
any Optionee any right with respect to continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with his or her
right or the Company's right to terminate his employment or consulting
relationship at any time, with or without cause.
6. Term of Plan. The Plan shall become effective upon the earlier to
------------
occur of its adoption by the Board or the Administrator. It shall continue in
effect for a term of ten (10) years, unless sooner terminated under Section 13
of the Plan.
7. Term of Option. The term of each Option shall be stated in the Notice
--------------
of Grant.
________________________________________________________________________________
5 - 1999 NONQUALIFIED STOCK OPTION PLAN (Planar Systems, Inc.)
<PAGE>
8. Exercise/Purchase Price and Consideration.
-----------------------------------------
(a) Exercise/Purchase Price.
-----------------------
(i) The per Share exercise/purchase price for the Shares to be
issued pursuant to exercise of an Option or a Sale shall be such price as is
determined by the Administrator.
(ii) Any determination to establish an Option exercise price or
effect a Sale of Common Stock at less than Fair Market Value on the date of the
Option grant or authorization of Sale shall be accompanied by an express finding
by the Administrator specifying that the Option grant or Sale is in the best
interest of the Company, and specifying both the Fair Market Value and the
Option exercise price or Sale price of the Common Stock.
(b) Consideration. The consideration to be paid for the Shares to be
-------------
issued upon exercise of an Option or pursuant to a Sale, including the method of
payment, shall be determined by the Administrator. Such consideration may
consist of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) transfer to the Company of Shares which
(A) in the case of Shares acquired upon exercise of an
Option, have been owned by the Optionee for more than six months on the date of
surrender, and
(B) have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares to be acquired;
(v) if and so long as the Common Stock is registered under
Section 12(b) or 12(g) of the Exchange Act, delivery of a properly executed
exercise notice together with irrevocable instructions to a broker to promptly
deliver to the Company the amount of sale or loan proceeds required to pay the
exercise price;
(vi) such other consideration and method of payment for the
issuance of Shares to the extent permitted by legal requirements relating to the
administration of stock option plans and issuances of capital stock under
applicable corporate and securities laws and the Code; or
(vii) any combination of the foregoing methods of payment.
If the Fair Market Value of the number of whole Shares transferred or the
number of whole Shares surrendered is less than the total exercise price of the
Option, the shortfall must be made up in cash or by check. Notwithstanding the
foregoing provisions of this Section 8(b), the consideration
________________________________________________________________________________
6 - 1999 NONQUALIFIED STOCK OPTION PLAN (Planar Systems, Inc.)
<PAGE>
for Shares to be issued pursuant to a Sale may not include, in whole or in part,
the consideration set forth in subsection (v) above.
9. Exercise of Option.
------------------
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
-----------------------------------------------
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the terms
of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under the Option Agreement and
Section 8(b) of the Plan. Each Optionee who exercises an Option shall, upon
notification of the amount due (if any) and prior to or concurrent with delivery
of the certificate representing the Shares, pay to the Company amounts necessary
to satisfy applicable federal, state and local tax withholding requirements. An
Optionee must also provide a duly executed copy of any stock transfer agreement
then in effect and determined to be applicable by the Administrator. Until the
issuance (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote or receive dividends or any other
rights as a shareholder shall exist with respect to the Optioned Stock
represented by such stock certificate, notwithstanding the exercise of the
Option. No adjustment will be made for a dividend or other right for which the
record date is prior to the date the stock certificate is issued, except as
provided in Section 11 of the Plan.
(b) Termination of Employment or Consulting Relationship. In the
----------------------------------------------------
event that an Optionee's Continuous Status as an Employee or Consultant
terminates (other than upon the Optionee's death or Disability), the Optionee
may exercise his or her Option, but only within such period of time as is
determined by the Administrator, and only to the extent that the Optionee was
entitled to exercise it at the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Notice of Grant).
The Administrator shall determine such period of time (in no event to exceed
three (3) months from the date of termination) when the Option is granted. If,
at the date of termination, the Optionee is not entitled to exercise his or her
entire Option, the Shares covered by the unexercisable portion of the Option
shall revert to the Plan. If, after termination, the Optionee does not exercise
his or her Option within the time specified by the Administrator, the Option
shall terminate, and the Shares covered by such Option shall revert to the Plan.
(c) Disability of Optionee. In the event that an Optionee's
----------------------
Continuous Status as an Employee or Consultant terminates as a result of the
Optionee's Disability, the Optionee may exercise his or her Option at any time
within twelve (12) months from the date of such termination,
________________________________________________________________________________
7 - 1999 NONQUALIFIED STOCK OPTION PLAN (Planar Systems, Inc.)
<PAGE>
but only to the extent that the Optionee was entitled to exercise it at the date
of such termination (but in no event later than the expiration of the term of
such Option as set forth in the Notice of Grant). If, at the date of
termination, the Optionee is not entitled to exercise his or her entire Option,
the Shares covered by the unexercisable portion of the Option shall revert to
the Plan. If, after termination, the Optionee does not exercise his or her
Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
(d) Death of Optionee. In the event of the death of an Optionee, the
-----------------
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent that the Optionee was entitled to exercise the Option at the
date of death. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after death, the Optionee's
estate or a person who acquired the right to exercise the Option by bequest or
inheritance does not exercise the Option within the time specified herein, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.
(e) Buyout Provisions. The Administrator may at any time offer to buy
-----------------
out, in whole or in part, for a payment in cash or Shares, an Option previously
granted, based on such terms and conditions as the Administrator shall establish
and communicate to the Optionee at the time that such offer is made.
10. Nontransferability of Options. Except as otherwise specifically
-----------------------------
provided in the Option Agreement, an Option may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will, or by
the laws of descent and distribution, and may be exercised during the lifetime
of the Optionee only by the Optionee or, if incapacitated, by his or her legal
guardian or legal representative.
11. Adjustments Upon Changes in Capitalization or Merger.
----------------------------------------------------
(a) Changes in Capitalization: Subject to any required action by the
-------------------------
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and the number of shares of Common Stock which have been
authorized for issuance under the Plan but as to which no Options have yet been
granted or Sales made or which have been returned to the Plan upon cancellation
or expiration of an Option, as well as the price per share of Common Stock
covered by each such outstanding Option, shall be proportionately adjusted for
any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no
________________________________________________________________________________
8 - 1999 NONQUALIFIED STOCK OPTION PLAN (Planar Systems, Inc.)
<PAGE>
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, each outstanding Option will
terminate immediately prior to the consummation of such proposed action, unless
otherwise provided by the Administrator. The Administrator may, in the exercise
of its sole discretion in such instances, declare that any Option shall
terminate as of a date fixed by the Board and give each Optionee the right to
exercise Optionee's Option as to all or any part of the Common Stock subject to
the Option, including Shares as to which the Option would not otherwise be
exercisable.
(c) Merger or Asset Sale. Except as otherwise provided in an Option
--------------------
Agreement, in the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into another
corporation, each outstanding Option shall be assumed or an equivalent option
shall be substituted by such successor corporation or a Parent or Subsidiary of
such successor corporation, unless the Administrator determines, in the exercise
of its sole discretion and in lieu of such assumption or substitution, that each
Optionee shall have the right to exercise Optionee's Option as to all or any
part of the Common Stock subject to the Option, including Shares as to which the
Option would not otherwise be exercisable. If the Administrator determines that
an Option shall be exercisable in lieu of assumption or substitution in the
event of a merger or sale of assets, the Administrator shall notify the Optionee
that the Option shall be so exercisable for a period of thirty (30) days from
the date of such notice or such shorter period as the Administrator may specify
in the notice, and the Option will terminate upon the expiration of such period.
For the purposes of this paragraph, the Option shall be considered assumed if,
following the merger or sale of assets, the Option confers the right to
purchase, for each Share of Optioned Stock subject to the Option immediately
prior to the merger or sale of assets, the consideration (whether stock, cash,
or other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets was not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation and the
Optionee, provide for the consideration to be received upon the exercise of the
Option, for each Share of Optioned Stock subject to the Option, to be solely
common stock of the successor corporation or its Parent equal in Fair Market
Value to the per share consideration received by holders of Common Stock in the
merger or sale of assets.
12. Time of Granting Options. The date of grant of an Option shall, for
------------------------
all purposes, be the date on which the Administrator makes the determination
granting such Option. Notice of the determination shall be given to each
Optionee within a reasonable time after the date of such grant.
13. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment and Termination. The Board may amend or terminate the
-------------------------
Plan from time to time in such respects as the Board may deem advisable.
________________________________________________________________________________
9 - 1999 NONQUALIFIED STOCK OPTION PLAN (Planar Systems, Inc.)
<PAGE>
(b) Shareholder Approval. The Company shall obtain shareholder
--------------------
approval of any Plan amendment to the extent necessary and desirable to comply
with applicable law, rule or regulation, including the requirements of any
exchange or quotation system on which the Common Stock is listed or quoted.
Such shareholder approval, if required, shall be obtained in such a manner and
to such a degree as is required by the applicable law, rule or regulation.
(c) Effect of Amendment or Termination. Any such amendment or
----------------------------------
termination of the Plan shall not affect Options already granted, and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Administrator, which agreement must be in writing and signed by the Optionee
and the Company.
14. Conditions Upon Issuance of Shares. Shares shall not be issued
----------------------------------
pursuant to the exercise of an Option or a Sale unless the exercise of such
Option or consummation of the Sale and the issuance and delivery of such Shares
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, applicable state
securities laws, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange (including NASDAQ) upon
which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
15. Reservation of Shares. The Company, during the term of this Plan, will
---------------------
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
16. Liability of Company.
--------------------
(a) Inability to Obtain Authority. Inability of the Company to obtain
-----------------------------
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
As a condition to the exercise of an Option or a Sale, the Company may
require the person exercising such Option or to whom Shares are being Sold to
represent and warrant at the time of any such exercise or Sale that the Shares
are being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required by any of the aforementioned relevant
provisions of law.
(b) Grants Exceeding Allotted Shares. If the Optioned Stock covered
--------------------------------
by an Option exceeds, as of the date of grant, the number of Shares which may be
issued under the Plan without additional shareholder approval, such Option shall
be void with respect to such excess Optioned Stock, unless shareholder approval
of an amendment sufficiently increasing the number of Shares subject to the Plan
is timely obtained in accordance with Section 13 of the Plan.
________________________________________________________________________________
10 - 1999 NONQUALIFIED STOCK OPTION PLAN (Planar Systems, Inc.)
<PAGE>
17. Market Standoff. In connection with any underwritten public offering
---------------
by the Company of its equity securities pursuant to an effective registration
statement filed under the Securities Act, an Optionee or other participant in
the Plan shall not sell, make any short sale of, loan, hypothecate, pledge,
grant any option for the purchase of, or otherwise dispose or transfer for value
or otherwise agree to engage in any of the foregoing transactions with respect
to, any shares issuable or issued under the Plan, whether pursuant to an Option
or a Sale, without the prior written consent of the Company or its underwriters.
Such limitations shall be in effect for such period of time as may be requested
by the Company or such underwriters and agreed to by the Company's officers and
directors with respect to their shares; provided, however, that in no event
shall such period exceed 180 days. The limitations of this paragraph shall in
all events terminate five years after the effective date of the Company's
initial public offering. Participants shall be subject to the market standoff
provisions of this Section 17 only if the officers and directors of the Company
are also subject to similar arrangements.
In the event of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
Company's outstanding Common Stock effected as a class without the Company's
receipt of consideration, then any new, substituted or additional securities
distributed with respect to the purchased shares shall be immediately subject to
the provisions of this Section 18, to the same extent the purchased shares are
at such time covered by such provisions.
In order to enforce the limitations of this Section 17, the Company may
impose stop-transfer instructions with respect to the purchased shares until the
end of the applicable standoff period.
________________________________________________________________________________
11 - 1999 NONQUALIFIED STOCK OPTION PLAN (Planar Systems, Inc.)
<PAGE>
Exhibit 10.24
PLANAR SYSTEMS, INC.
DEFERRED COMPENSATION PLAN
Effective February 1, 1997
As Amended and Restated
Effective April 29, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I--PURPOSE AND EFFECTIVE DATE.................................... 1
ARTICLE II--DEFINITIONS.................................................. 1
2.1 Account........................................................... 1
2.2 Beneficiary....................................................... 1
2.3 Change in Control................................................. 1
2.4 Compensation...................................................... 2
2.5 Compensation Committee............................................ 2
2.6 Deferral Commitment............................................... 2
2.7 Deferral Period................................................... 3
2.8 Determination Date................................................ 3
2.9 Elective Deferred Compensation.................................... 3
2.10 Employer.......................................................... 3
2.11 Financial Hardship................................................ 3
2.12 Investment Index.................................................. 3
2.13 Participant....................................................... 3
2.14 Participation Agreement........................................... 3
2.15 Plan Benefit...................................................... 3
2.16 Plan Year......................................................... 4
2.17 Retirement........................................................ 4
2.18 Stock Gains....................................................... 4
2.19 Subaccount........................................................ 4
ARTICLE III--PARTICIPATION AND DEFERRAL COMMITMENTS...................... 4
3.1 Eligibility and Participation..................................... 4
3.2 Form of Deferral.................................................. 5
3.3 Limitations on Deferral Commitments............................... 5
3.4 Modification of Deferral Commitment............................... 5
ARTICLE IV--DEFERRED COMPENSATION ACCOUNTS............................... 6
4.1 Accounts.......................................................... 6
4.2 Elective Deferred Compensation.................................... 6
4.3 Allocation of Elective Deferred Compensation...................... 7
4.4 Discretionary Contributions....................................... 7
4.5 Determination of Accounts......................................... 7
4.6 Vesting of Accounts............................................... 7
4.7 Statement of Accounts............................................. 8
</TABLE>
(i)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE V--PLAN BENEFITS................................................. 8
5.1 Distributions Prior to Termination of Employment.................. 8
5.2 Distributions Upon Termination of Employment...................... 8
5.3 Form of Benefit Payment........................................... 8
5.4 Form of Benefit Payment for Director Participants................. 9
5.5 Commencement of Benefit Payment................................... 9
5.6 Death Benefit..................................................... 9
5.7 Withholding for Taxes............................................. 10
5.8 Valuation and Settlement.......................................... 10
5.9 Payment to Guardian............................................... 10
ARTICLE VI--BENEFICIARY DESIGNATION...................................... 10
6.1 Beneficiary Designation........................................... 10
ARTICLE VII--ADMINISTRATION.............................................. 11
7.1 Committee; Duties................................................. 11
7.2 Agents............................................................ 11
7.3 Binding Effect of Decisions....................................... 11
7.4 Indemnity of Committee and Administrators......................... 11
ARTICLE VIII--CLAIMS PROCEDURE........................................... 11
8.1 Claim............................................................. 11
8.2 Review of Claim................................................... 11
8.3 Notice of Denial of Claim......................................... 12
8.4 Reconsideration of Denied Claim................................... 12
ARTICLE IX--AMENDMENT AND TERMINATION OF PLAN............................ 12
9.1 Amendment......................................................... 12
9.2 Employer's Right to Terminate..................................... 13
ARTICLE X--MISCELLANEOUS................................................. 13
10.1 Unfunded Plan..................................................... 13
10.2 Unsecured General Creditor........................................ 13
10.3 Trust Fund........................................................ 14
10.4 Nonassignability.................................................. 14
10.5 Not a Contract of Employment...................................... 14
10.6 Governing Law..................................................... 14
10.7 Validity.......................................................... 14
10.8 Notice............................................................ 14
10.9 Successors........................................................ 15
</TABLE>
(ii)
<PAGE>
PLANAR SYSTEMS, INC.
DEFERRED COMPENSATION PLAN
ARTICLE I--PURPOSE AND EFFECTIVE DATE
The purpose of this Deferred Compensation Plan (the "Plan") is to provide
current tax planning opportunities as well as supplemental funds for the
retirement or death of certain employees and outside directors of Planar
Systems, Inc., or any successor to the business thereof, and any affiliated or
subsidiary corporation (the "Company"). The Plan shall be in addition to
existing deferred compensation plans and arrangements maintained by the Company.
It is intended that the Plan will aid in retaining and attracting employees of
exceptional ability by providing them with these benefits. This Plan shall be
effective as of February 1, 1997 (the "Effective Date").
ARTICLE II--DEFINITIONS
For the purposes of this Plan, the following terms shall have the meanings
indicated, unless the context clearly indicates otherwise:
2.1 Account
"Account" means the device used by the Employer to measure and determine
the amounts paid to a Participant under the Plan. Each Account shall consist of
one (1) or more Subaccounts. A Participant's Account shall not constitute or be
treated as a trust fund of any kind.
2.2 Beneficiary
"Beneficiary" means the person, persons or entity entitled under Article VI
to receive any Plan benefits payable after a Participant's death.
2.3 Change in Control
"Change in Control" means at any time after the date of the adoption of
this Plan, the occurrence of any one or more of the following:
(a) With respect to the Company, a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A promulgated under the Securities Exchange Act of 1934, as
amended or any successor thereto; provided that, without limitation, such a
change in control shall be deemed to have occurred if (i) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Act), other than a
trustee or other fiduciary holding securities under an employee benefit
plan of the Company, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Act), directly or indirectly, of Voting Securities of
the Company representing fifty percent (50%) plus one (1) share or more of
the combined voting power of the Company's then outstanding Voting
Securities; (ii) during any period of two (2) consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Company, together with any new directors whose election,
or nomination for election by the shareholders, was approved by a vote of
at least two-thirds (2/3) of the directors then
PAGE 1 - DEFERRED COMPENSATION PLAN
<PAGE>
still in office who were either directors at the beginning of the period or
whose election or nomination for election was previously so approved, cease
for any reason to constitute at least a majority of the Board of Directors
of the Company; or (iii) the stockholders of the Company approve a merger
or consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into Voting
Securities of the surviving entity) at least fifty percent (50%) plus one
(1) share or more of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or the stockholders of the Company
approve a plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company (in one (1) transaction or a series
of transactions) of all or substantially all of the Company's assets to a
person or entity which is not a subsidiary of the Company. As used herein,
"Voting Securities" shall mean any securities which vote generally in the
election of directors.
2.4 Compensation
"Compensation" means the following, which are payable to a Participant
during the Plan Year and considered to be "wages" for purposes of federal income
tax withholding or "net earnings from self-employment" for purposes of federal
self-employment tax, before reduction for amounts deferred this Plan, salary
reduction contributions under IRC Section 401(k), or any other deferral
arrangements:
(a) Salary, including Success Sharing Plan compensation;
(b) Bonus;
(c) Director and committee fees;
(d) Sales commissions.
Compensation does not include expense reimbursements, any form of noncash
compensation or benefits, group life insurance premiums, or any other payments
or benefits other than normal compensation.
2.5 Compensation Committee
"Compensation Committee" means the Compensation Committee of the Board of
Directors or their designee(s).
2.6 Deferral Commitment
"Deferral Commitment" means an election to defer Compensation made by a
Participant pursuant to Article III and for which a separate Participation
Agreement has been submitted by the Participant to the Compensation Committee.
PAGE 2 - DEFERRED COMPENSATION PLAN
<PAGE>
2.7 Deferral Period
"Deferral Period" means the period over which a Participant has elected to
defer a portion of his Compensation. Each Plan Year shall be a separate Deferral
Period, provided that the Deferral Period may be modified pursuant to Section
3.4.
2.8 Determination Date
"Determination Date" means the last business day of each calendar month.
2.9 Elective Deferred Compensation
"Elective Deferred Compensation" means the amount of Compensation that a
Participant elects to defer pursuant to a Deferral Commitment.
2.10 Employer
"Employer" means the Company or any successor to the business thereof, and
any affiliated or subsidiary corporations designated by the Compensation
Committee.
2.11 Financial Hardship
"Financial Hardship" means an immediate and heavy financial need of the
Participant, determined by the Compensation Committee on the basis of
information supplied by the Participant in accordance with the standards set
forth in the applicable treasury regulations promulgated under Section 401(k) of
the Internal Revenue Code, or such other standards as are, from time to time,
established by the Compensation Committee.
2.12 Investment Index
"Investment Index" means each index selected by a Participant to be used as
an earnings index pursuant to Article IV. Each Investment Index shall be a
phantom investment fund which shall be credited with the earnings (whether a
gain or loss) at the same rate as the investment funds as the Compensation
Committee may select from time to time.
2.13 Participant
"Participant" means any individual who is participating or has participated
in this Plan as provided in Article III.
2.14 Participation Agreement
"Participation Agreement" means the agreement submitted by a Participant to
the Compensation Committee prior to the beginning of the Deferral Period, with
respect to a Deferral Commitment made for such Deferral Period.
2.15 Plan Benefit
"Plan Benefit" means the benefit payable to a Participant as calculated in
Article V.
PAGE 3 - DEFERRED COMPENSATION PLAN
<PAGE>
2.16 Plan Year
"Plan Year" means the period beginning January 1 and ending December 31.
2.17 Retirement
"Retirement" means the attainment of age fifty-five (55) and permission
from the Compensation Committee to terminate employment with the Company.
2.18 Stock Gains
"Stock Gains" mean the value accrued upon exercise of an eligible
nonqualified stock option or restricted stock grant. For stock options, this
value will be the excess of the aggregate fair market value at the time of
exercise over the total option purchase price necessary to exercise such option.
For restricted stock grants, this value will be the aggregate fair market value
of the stock at the time of deferral.
2.19 Subaccount
"Subaccount" means the device used by Employer to measure and determine the
amount of deferrals and Discretionary Contributions, if any, allocated to each
Subaccount Index selected by the Participant, and the Earnings allocated
therein.
ARTICLE III--PARTICIPATION AND DEFERRAL COMMITMENTS
3.1 Eligibility and Participation
(a) Eligibility. Eligibility to participate in the Plan is limited to
outside directors of the Board of Directors and those employees who are
designated by the Compensation Committee.
(b) Participation. An eligible employee or director may elect to
participate in the Plan with respect to any Deferral Period by submitting a
Participation Agreement to the Compensation Committee by December 15 of the
Plan Year immediately preceding the Deferral Period.
(c) Part-Year Participation. If an employee or director first becomes
eligible to participate during a Plan Year, a Participation Agreement must
be submitted to the Compensation Committee no later than thirty (30) days
following notification to the employee or director of eligibility to
participate, and such Participation Agreement shall be effective only with
regard to Compensation earned or payable following the submission of the
Participation Agreement to the Compensation Committee.
PAGE 4 - DEFERRED COMPENSATION PLAN
<PAGE>
3.2 Form of Deferral
A Participant may elect Deferral Commitments in the Participation Agreement
as follows:
(a) Salary Deferral Commitment. A salary Deferral Commitment shall be
related to the salary including Success Sharing Plan compensation, payable
to a Participant during the Deferral Period. The amount to be deferred
shall be stated as a percentage or dollar amount.
(b) Bonus Deferral Commitment. A bonus Deferral Commitment shall be
related to the bonus payable to the Participant during the Deferral Period.
The amount to be deferred shall be stated as a percentage or dollar amount.
(c) SALES COMMISSION DEFERRAL COMMITMENT. A Sales Commission Deferral
Commitment shall be related to sales commissions payable to the Participant
during the Deferral Period. The amount to be deferred shall be stated as a
percentage or dollar amount.
(d) DIRECTOR FEES DEFERRAL COMMITMENT. A Director Fees Deferral
Commitment shall be related to Board and committee fees payable to the
Participant during the Deferral Period. The amount to be deferred shall be
stated as a percentage or dollar amount.
(e) Deferral of Stock Gains. Unless specifically authorized by the
Compensation Committee, a Participant shall not be eligible to defer Stock
Gains under the Plan.
3.3 Limitations on Deferral Commitments
The following limitations shall apply to Deferral Commitments:
(a) Minimum. The minimum salary and director and committee fees
deferral amount shall be two thousand dollars ($2,000) per year. There
shall be no minimum deferral amount for bonus or sales commissions.
(b) Maximum. The maximum deferral amount shall be eighty percent
(80%), in whole percentages, of salary, bonus, and sales commissions, and
one hundred percent (100%), in whole percentages, of director and committee
fees.
(c) Changes in Minimum or Maximum. The Compensation Committee may
change the minimum or maximum deferral amounts from time to time by giving
written notice to all Participants. No such change may affect a Deferral
Commitment made prior to the Compensation Committee's action.
(d) Deferral of Stock Gains. In the event that the Compensation
Committee specifically authorizes a Participant to defer Stock Gains under
the Plan, the deferral of such Stock Gain shall be subject to such terms
and conditions as the Compensation Committee may establish.
3.4 Modification of Deferral Commitment
A Deferral Commitment shall be irrevocable except that the Compensation
Committee may permit a Participant to reduce the amount to be deferred, or waive
the remainder of the Deferral Commitment upon a finding that the Participant has
suffered a Financial Hardship.
PAGE 5 - DEFERRED COMPENSATION PLAN
<PAGE>
ARTICLE IV--DEFERRED COMPENSATION ACCOUNTS
4.1 Accounts
For record keeping purposes only, an Account shall be maintained for each
Participant. Separate Subaccounts shall be maintained to the extent necessary to
properly reflect the Participant's election of Investment Indices and total
Account balance.
4.2 Elective Deferred Compensation
A Participant's Elective Deferred Compensation shall be credited to the
Participant's Account as follows:
(a) As soon as practicable following the end of each applicable pay
period, the Committee shall credit the Participant's Subaccounts with an
amount equal to salary deferred by the Participant during each pay period
in accordance with the Participant's election; that is, the portion of the
Participant's deferred salary that the Participant has elected to be deemed
to be invested in a certain type of Investment Index shall be credited to
the Subaccount corresponding to that Investment Index.
(b) As soon as practicable after each bonus or partial bonus,
directors' or committee fee or sales commission would have been paid, the
Committee shall credit the Participant's Subaccounts with an amount equal
to any bonus, partial bonus, directors' or committee fee or sales
commission deferred by the Participant's election; that is, the portion of
the Participant's deferred bonus, partial bonus, directors' or committee
fee or sales commission that the Participant has elected to be deemed to be
invested in a certain type of Investment Index shall be credited to the
Subaccount corresponding to that Investment Index.
(c) As soon as practicable after the last day of the Deferral Period
or such earlier time or times as the Committee may determine, the Committee
shall credit the Participant's Subaccounts with an amount equal to the
portion, if any, of any Discretionary Contributions made to or for the
Participant's benefit in accordance with Section 4.4; that is, the portion
of the Participant's Discretionary Contribution, if any, that the
Participant has elected to be deemed to be invested in a certain type of
Investment Index shall be credited to the Subaccount corresponding to that
Investment Index.
(d) Stock Gains shall not be eligible for deferral under the Plan
without prior specific approval by the Compensation Committee, which may be
granted or withheld in the sole discretion of the Committee. If the
Committee authorizes a Participant to defer Stock Gains under the Plan, and
subject to any terms and conditions imposed on such deferral by the
Committee, as soon as practicable after Stock would have been issued to a
Participant in connection with the exercise of an eligible stock option or
restricted stock grant, the Committee shall credit an equivalent number of
shares of the deferred to the Participant's Company Stock Subaccount.
Unless otherwise authorized by the Compensation Committee, Stock Gains
deferred into the Company Stock Subaccount and the deemed earnings on that
Subaccount shall be distributed to the Participant only in the equivalent
number of shares of Planar Systems, Inc common stock and shall otherwise be
governed by the benefit distribution provisions of Article V herein. Stock
Gain Deferrals credited to the Company Stock subaccount may not be
transferred or reallocated to any other Subaccount or investment index
election. In the event that the Compensation Committee authorizes Stock
Gains to be deferred into Subaccounts represented by other investment index
PAGE 6 - DEFERRED COMPENSATION PLAN
<PAGE>
elections allowed under the Plan, the Committee shall credit the
Participant's Subaccounts, subject to any restrictions imposed by the
Committee, with an amount equal to the Stock Gain deferred by the
Participant in accordance with the Participant's Stock Gain deferral
investment election; that is, the portion of the Participant's deferred
bonus that the Participant has elected to be deemed to be invested in a
certain type of Investment Index shall be credited to the Subaccount
corresponding to that Investment Index. Deferrals credited to an investment
index subaccount may be reallocated or transferred to the Company Stock
Subaccount, subject to any restrictions imposed by the committee.
(e) Any withholding of taxes or other amounts with respect to
deferred Compensation which is required by state, federal or local law
shall be withheld from the Participant's nondeferred Compensation to the
maximum extent possible with any excess being paid by Participant to the
Company in cash.
4.3 Allocation of Elective Deferred Compensation
(a) At the time a Participant completes a Deferral Commitment for a
Deferral Period, the Participant shall also select the Investment Index or
Indexes in which the Participant wishes to have the deferrals deemed
invested. The Participant may select any combination of one (1) to five (5)
of the Investment Indexes as long as at least five percent (5%), in whole
percentages, is credited to each of the Investment Indexes selected.
(b) A Participant may change the amounts allocated to the Investment
Indexes on the first day of each calendar quarter, provided that the
Participant submitted notice of the change at least twenty (20) days before
the first day of the calendar quarter. The change may apply to prospective
deferrals only or may include current account balances.
4.4 Discretionary Contributions
Company may make Discretionary Contributions to the Participant's Account.
Discretionary Contributions shall be credited at such times and in such amounts
as the Compensation Committee in its sole discretion shall determine. At such
time as the Company makes a Discretionary Contribution, the Compensation
Committee may impose a vesting schedule attributable to such Discretionary
Contribution.
4.5 Determination of Accounts
Each Participant's Account as of each Determination Date shall consist of
the balance of the Participant's Account as of the immediately preceding
Determination Date, plus the Participant's Elective Deferred Compensation
credited, any discretionary contributions, and the applicable Earnings, minus
the amount of any distributions made since the immediately preceding
Determination Date.
4.6 Vesting of Accounts
Each Participant shall at all times be one hundred percent (100%) vested in
the amounts credited to such Participant's Account and earnings thereon.
PAGE 7 - DEFERRED COMPENSATION PLAN
<PAGE>
4.7 Statement of Accounts
The Compensation Committee shall give to each Participant a statement
showing the balances in the Participant's Account and Subaccount(s). The
statement will be provided on an annual basis and at such other times as may be
determined by the Compensation Committee.
ARTICLE V--PLAN BENEFITS
5.1 Distributions Prior to Termination of Employment
An Employee Participant's Account may be distributed to the Participant
prior to termination of employment as follows:
(a) Early Withdrawals. A Participant may elect in a Participation
Agreement to withdraw an amount deferred by that Participation Agreement,
as of a date specified in the election. This amount shall be the lesser of
a stated dollar amount or the Account Balance attributable to that deferral
election. Such date shall not be sooner than five (5) years after the date
the Deferral Period commences. Such election shall be made at the time the
Deferral Commitment is made and shall be irrevocable. The distribution
shall be paid in a lump sum on the first business day after the date
designated in the Participation Agreement.
(b) Hardship Withdrawals. Upon a finding that a Participant has
suffered a Financial Hardship, the Compensation Committee may, in its sole
discretion, make distributions from the Participant's Account. The amount
of such a withdrawal shall be limited to the amount reasonably necessary to
meet the Participant's needs resulting from the Financial Hardship. If
payment is made due to Financial Hardship under this Plan, the
Participant's deferrals under this Plan shall cease for a twelve (12)
calendar month period. Any resumption of the Participant's deferrals under
the Plan after such twelve (12) calendar month period shall be made only at
the election of the Participant in accordance with Article III herein. The
distribution shall be paid in a lump sum within thirty (30) days following
the determination of a Financial Hardship.
(c) Accelerated Distribution. Notwithstanding any other provision of
the Plan, at any time a Participant shall be entitled to receive, upon
written request to the Compensation Committee, a lump-sum distribution
equal to ninety percent (90%) of the Account balance as of the
Determination Date immediately preceding the date on which the Compensation
Committee receives the written request. The remaining balance shall be
forfeited by the Participant. The amount payable under this section shall
be paid in a lump sum within thirty (30) days following the receipt of the
notice by the Compensation Committee from the Participant. A Participant
who receives a distribution under this subsection shall be suspended from
participation in the Plan for a period of twenty-four (24) calendar months.
5.2 Distributions Upon Termination of Employment
Upon an Employee Participant's termination of employment with Employer for
any reason, the Employer shall pay the Participant or, in the case of death, the
Participant's Beneficiary, benefits equal to the balance in the Participant's
Account.
5.3 Form of Benefit Payment
PAGE 8 - DEFERRED COMPENSATION PLAN
<PAGE>
(a) If an Employee Participant terminates employment as a result of
the following events, the benefit shall be paid in the form elected by the
Participant prior to the beginning of each Deferral Period:
(i) Retirement.
(ii) Death.
(iii) Disability.
(iv) Termination within twenty-four (24) months following a
Change in Control.
(b) Forms of benefit payment shall be:
(i) A lump sum amount which is equal to the Account balance.
(ii) Equal monthly installments of the Account amortized over
up to one hundred twenty (120) months. Earnings on the unpaid balance
shall continue to be credited to Subaccounts at the appropriate
Investment Index(es) rate.
(c) If a Participant terminates employment for reasons other than
those specified in 5.3(a), the account balance will be paid out in a lump
sum.
(d) Small Account(s). Notwithstanding Section 5.3(a) and (b), unless
installment payments are otherwise authorized by the Compensation
Committee, if a Participant's Account is under one hundred thousand dollars
($100,000) on the Valuation Date (Section 5.8), the benefit shall be paid
in a lump sum.
(e) Change in Form of Payment. Notwithstanding the above, a
Participant may elect to file a change of payment designation which shall
supersede the prior form of payment designation for any one (1) or more
Deferral Periods. If, upon termination of employment for any reason, the
Participant's most recent change of payment designation has not been filed
twenty-four (24) months prior to such termination, then the prior election
shall be used to determine the form of payment.
5.4 Form of Benefit Payment for Director Participants
Upon termination of service for any reason of a Director Participant, the
benefit shall be paid in the form elected by the Participant prior to the
beginning of each deferral period.
5.5 Commencement of Benefit Payment
Benefits shall commence as soon as practical after termination but in no
case more than sixty (60) days after termination.
5.6 Death Benefit
Upon the death of a Participant, the Employer shall pay to the
Participant's Beneficiary an amount equal to the remaining unpaid balance of the
Participant's Account in the manner elected by the Participant.
PAGE 9 - DEFERRED COMPENSATION PLAN
<PAGE>
5.7 Withholding for Taxes
To the extent required by the law in effect at the time payments are made,
the Employer shall withhold from the payments made hereunder any taxes required
to be withheld by the federal or any state or local government, including any
amounts which the Employer determines is reasonably necessary to pay any
generation-skipping transfer tax which is or may become due. A Beneficiary,
however, may elect not to have withholding of federal income tax pursuant to
Section 3405(a)(2) of the Internal Revenue Code, or any successor provision
thereto. A Beneficiary who elects not to have withholding of taxes must submit
documentation to this effect to the Compensation Committee.
5.8 Valuation and Settlement
The amount of a lump-sum payment shall be based on the value of the
Participant's Account on the Determination Date immediately preceding the
payment or commencement of installment payments. The initial amount of
installments shall be based upon that same value, adjusted for any deferrals
related to Compensation payable after the Determination Date. Installment
payments may be reamortized periodically to reflect investment results.
5.9 Payment to Guardian
The Compensation Committee may direct payment to the duly appointed
guardian, conservator, or other similar legal representative of a Participant or
Beneficiary to whom payment is due. In the absence of such a legal
representative, the Compensation Committee may, in its sole and absolute
discretion, make payment to a person having the care and custody of a minor,
incompetent or person incapable of handling the disposition of property upon
proof satisfactory to the Compensation Committee of incompetency, minority, or
incapacity. Such distribution shall completely discharge the Compensation
Committee from all liability with respect to such benefit.
ARTICLE VI--BENEFICIARY DESIGNATION
6.1 Beneficiary Designation
The Beneficiary Designation for benefits under this Plan shall be made by
the Participant on a form provided by or acceptable to the Compensation
Committee. If the Participant fails to make a valid Beneficiary Designation,
then the Beneficiary shall be the same as the Beneficiary Designation most
recently completed by the Participant for other retirement benefits provided by
the Company.
PAGE 10 - DEFERRED COMPENSATION PLAN
<PAGE>
ARTICLE VII--ADMINISTRATION
7.1 Committee; Duties
This Plan shall be administered by the Compensation Committee of the Board
of Directors. The Compensation Committee shall have the authority to make,
amend, interpret and enforce all appropriate rules and regulations for the
administration of the Plan and decide or resolve any and all questions,
including interpretations of the Plan, as may arise in such administration. A
majority vote of the Compensation Committee members shall control any decision.
The Chairman of the Board will vote if the Compensation Committee cannot come to
a majority decision. Members of the Compensation Committee may be Participants
under this Plan.
7.2 Agents
The Compensation Committee may, from time to time, employ agents and
delegate to them such administrative duties as it sees fit, and may from time to
time consult with counsel who may be counsel to the Company.
7.3 Binding Effect of Decisions
The decision or action of the Compensation Committee with respect to any
question arising out of or in connection with the administration, interpretation
and application of the Plan and the rules and regulations promulgated hereunder
shall be final, conclusive and binding upon all persons having any interest in
the Plan.
7.4 Indemnity of Committee and Administrators
The Company shall indemnify and hold harmless the members of the
Compensation Committee and those persons whom the Committee designates to
administer the Plan against any and all claims, loss, damage, expense or
liability arising from any action or failure to act with respect to this Plan on
account of such person's service on the Compensation Committee, except in the
case of gross negligence or willful misconduct.
ARTICLE VIII--CLAIMS PROCEDURE
8.1 Claim
The Compensation Committee shall establish rules and procedures to be
followed by Participants and Beneficiaries in (a) filing claims for benefits,
and (b) for furnishing and verifying proofs necessary to establish the right to
benefits in accordance with the Plan, consistent with the remainder of this
Article. Such rules and procedures shall require that claims and proofs be made
in writing and directed to the Compensation Committee.
8.2 Review of Claim
The Compensation Committee shall review all claims for benefits. Upon
receipt by the Compensation Committee of such a claim, it shall determine all
facts which are necessary to establish the right of the claimant to benefits
under the provisions of the Plan and the amount thereof as herein provided
within thirty (30) days of receipt of such claim. If prior to the expiration of
the initial thirty (30) day pe-
PAGE 11 - DEFERRED COMPENSATION PLAN
<PAGE>
riod, the Compensation Committee determines additional time is needed to come to
a determination on the claim, the Compensation Committee shall provide written
notice to the Participant, Beneficiary or other claimant of the need for the
extension, not to exceed a total of one hundred eighty (180) days from the date
the application was received.
8.3 Notice of Denial of Claim
In the event that any Participant, Beneficiary or other claimant claims to
be entitled to a benefit under the Plan, and the Compensation Committee
determines that such claim should be denied in whole or in part, the
Compensation Committee shall, in writing, notify such claimant that the claim
has been denied, in whole or in part, setting forth the specific reasons for
such denial. Such notification shall be written in a manner reasonably expected
to be understood by such claimant and shall refer to the specific sections of
the Plan relied on, shall describe any additional material or information
necessary for the claimant to perfect the claim and an explanation of why such
material or information is necessary, and where appropriate, shall include an
explanation of how the claimant can obtain reconsideration of such denial.
8.4 Reconsideration of Denied Claim
(a) Within sixty (60) days after receipt of the notice of the denial
of a claim, such claimant or duly authorized representative may request, by
mailing or delivery of such written notice to the Compensation Committee, a
reconsideration by the Compensation Committee of the decision denying the
claim. If the claimant or duly authorized representative fails to request
such a reconsideration within such sixty (60) day period, it shall be
conclusively determined for all purposes of this Plan that the denial of
such claim by the Compensation Committee is correct. If such claimant or
duly authorized representative requests a reconsideration within such sixty
(60) day period, the claimant or duly authorized representative shall have
thirty (30) days after filing a request for reconsideration to submit
additional written material in support of the claim, review pertinent
documents, and submit issues and comments in writing.
(b) After such reconsideration request, the Compensation Committee
shall determine within sixty (60) days of receipt of the claimant's request
for reconsideration whether such denial of the claim was correct and shall
notify such claimant in writing of its determination. The written notice of
decision shall be in writing and shall include specific reasons for the
decision, written in a manner calculated to be understood by the claimant,
as well as specific references to the pertinent Plan provisions on which
the decision is based. In the event of special circumstances determined by
the Compensation Committee, the time for the Compensation Committee to make
a decision may be extended by an additional sixty (60) days upon written
notice to the claimant prior to the commencement of the extension.
ARTICLE IX--AMENDMENT AND TERMINATION OF PLAN
9.1 Amendment
The Compensation Committee may at any time amend the Plan by written
instrument, notice of which is given to all Participants and to any
Beneficiaries to whom a benefit is due, subject to the following:
PAGE 12 - DEFERRED COMPENSATION PLAN
<PAGE>
(a) Preservation of Account Balance. No amendment shall reduce the
amount accrued in any Account to the date such notice of the amendment is
given.
(b) Changes in Investment Indexes. Amendments may change the
Investment Indexes available to Participants for any date subsequent to the
date of amendment.
9.2 Employer's Right to Terminate
The Compensation Committee may at any time partially or completely
terminate the Plan if, in its sole judgment, the tax, accounting or other
effects of the continuance of the Plan, or potential payments thereunder would
not be in the best interests of Employer.
(a) Partial Termination. The Compensation Committee may partially
terminate the Plan by not accepting any additional Deferral Commitments. If
such a partial termination occurs, the Plan shall continue to operate and
be effective with regard to Deferral Commitments entered into prior to the
effective date of such partial termination.
(b) Complete Termination. The Compensation Committee may completely
terminate the Plan by not accepting any additional Deferral Commitments,
and by terminating all ongoing Deferral Commitments. If such a complete
termination occurs, the Plan shall cease to operate and Employer shall pay
out each Account. Payment shall be made in substantially equal annual
installments over the following period, based on the Account balance:
Account Balance Payout Period
----------------------------------------------------------
Less than $100,000 Lump Sum
$100,000 but less than $500,000 3 Years
More than $500,000 5 Years
==========================================================
Payments shall commence within sixty (60) days after the Compensation
Committee terminates the Plan and earnings shall continue to be credited on the
unpaid Account balance.
ARTICLE X--MISCELLANEOUS
10.1 Unfunded Plan
This Plan is an unfunded plan maintained primarily to provide deferred
compensation benefits for a select group of "management or highly-compensated
employees" within the meaning of Sections 201, 301 and 401 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and therefore is
exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA.
10.2 Unsecured General Creditor
Participants and Beneficiaries shall be unsecured general creditors, with
no secured or preferential right to any assets of Employer or any other party
for payment of benefits under this Plan. Any property which may be purchased by
Employer in connection with this Plan shall remain its general, unpledged and
unrestricted assets. Employer's obligation under the Plan shall be an unfunded
and unsecured promise to pay money in the future.
PAGE 13 - DEFERRED COMPENSATION PLAN
<PAGE>
10.3 Trust Fund
At its discretion, the Employer may establish one (1) or more trusts, with
such trustees as the Compensation Committee may approve, for the purpose of
providing for the payment of benefits owed under the Plan. Although such a trust
shall be irrevocable, its assets shall be held for payment of all the Company's
general creditors in the event of insolvency or bankruptcy. To the extent any
benefits provided under the Plan are paid from any such trust, Employer shall
have no further obligation to pay them. If not paid from the trust, such
benefits shall remain the obligation of Employer.
10.4 Nonassignability
Neither a Participant nor any other person shall have any right to commute,
sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber,
transfer, hypothecate or convey in advance of actual receipt the amounts, if
any, payable hereunder, or any part thereof, which are, and all rights to which
are, expressly declared to be unassignable and nontransferable. No part of the
amounts payable shall, prior to actual payment, be subject to seizure or
sequestration for the payment of any debts, judgments, alimony or separate
maintenance owed by a Participant or any other person, nor be transferable by
operation of law in the event of a Participant's or any other person's
bankruptcy or insolvency.
10.5 Not a Contract of Employment
This Plan shall not constitute a contract of employment between Employer
and the Participant. Nothing in this Plan shall give a Participant the right to
be retained in the service of Employer or to interfere with the right of
Employer to discipline or discharge a Participant at any time.
10.6 Governing Law
The provisions of this Plan shall be construed and interpreted according to
the laws of the State of Oregon, except as preempted by federal law.
10.7 Validity
In case any provision of this Plan shall be held illegal or invalid for any
reason, said illegality or invalidity shall not affect the remaining parts
hereof, but this Plan shall be construed and enforced as if such illegal and
invalid provision had never been inserted herein.
10.8 Notice
Any notice required or permitted under the Plan shall be sufficient if in
writing and hand delivered or sent by registered or certified mail. Such notice
shall be deemed as given as of the date of delivery or, if delivery is made by
mail, as of the date shown on the postmark on the receipt for registration or
certification. Mailed notice to the Compensation Committee shall be directed to
the Company's address. Mailed notice to a Participant or Beneficiary shall be
directed to the individual's last known address in Employer's records.
PAGE 14 - DEFERRED COMPENSATION PLAN
<PAGE>
10.9 Successors
The provisions of this Plan shall bind and inure to the benefit of Employer
and its successors and assigns. The term successors as used herein shall include
any corporate or other business entity which shall, whether by merger,
consolidation, purchase or otherwise acquire all or substantially all of the
business and assets of Employer, and successors of any such corporation or other
business entity.
PLANAR SYSTEMS, INC.
By:_____________________________________
Name:___________________________________
(Please Print)
Title:__________________________________
Dated:__________________________________
PAGE 15 - DEFERRED COMPENSATION PLAN
<PAGE>
Exhibit 21
Subsidiaries of Planar Systems, Inc.
Planar America, Inc.
Planar International Oy
Planar Flat Candle
Planar Advance
Planar Standish Inc.
<PAGE>
Exhibit 23
Consent of Independent Auditors
The Board of Directors and Shareholders
Planar Systems, Inc. and Subsidiaries:
We consent to incorporation by reference in the Registration Statements (Nos.
33-82696, 33-82688, 33-90258 and 333-45191) on Form S-8 of Planar Systems, Inc.
and subsidiaries of our report dated November 3, 1999, except as to note 15,
which is as of December 13, 1999, relating to the consolidated balance sheets of
Planar Systems, Inc. and subsidiaries as of September 24, 1999 and September 25,
1998, and the related consolidated statements of operations, shareholders'
equity and cash flows for each of the years in the three-year period ended
September 24, 1999, which report appears in the Annual Report on Form 10-K of
Planar Systems, Inc. and subsidiaries for the year ended September 24, 1999.
/s/ KPMG LLP
- ----------------------
Portland, Oregon
December 21, 1999
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<PAGE>
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<MULTIPLIER> 1,000
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-24-1999
<PERIOD-START> SEP-26-1998
<PERIOD-END> SEP-24-1999
<CASH> 17,795
<SECURITIES> 2,010
<RECEIVABLES> 20,982
<ALLOWANCES> 0
<INVENTORY> 25,373
<CURRENT-ASSETS> 76,783
<PP&E> 38,539
<DEPRECIATION> (22,294)
<TOTAL-ASSETS> 111,771
<CURRENT-LIABILITIES> 22,405
<BONDS> 15,599
0
0
<COMMON> 75,319
<OTHER-SE> (2,575)
<TOTAL-LIABILITY-AND-EQUITY> 111,771
<SALES> 122,914
<TOTAL-REVENUES> 122,914
<CGS> 89,739
<TOTAL-COSTS> 89,739
<OTHER-EXPENSES> 36,326
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<INTEREST-EXPENSE> 1,574
<INCOME-PRETAX> (7,121)
<INCOME-TAX> (1,996)
<INCOME-CONTINUING> (5,125)
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