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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for the Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
TRUEVISION, INC.
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(Name of Registrant as Specified In Its Charter)
R. JOHN CURSON
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box)
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4. Proposed maximum aggregate value of transaction:
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5. Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
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2. Form, Schedule or Registration Statement No.:
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3. Filing Party:
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4. Date Filed:
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[TRUEVISION LOGO OR NAME]
2500 WALSH AVENUE
SANTA CLARA, CALIFORNIA 95051
Please note that due to technical difficulties in transmitting the
Definitive 14A EDGAR submission, Truevision, Inc.'s 1997 Proxy (the "Proxy")
filed with the U.S. Securities and Exchange Commission on September 24, 1997,
as submitted, omitted pages 9-22 of the Proxy. This EDGAR submission contains
the complete version of the Definitive 14A Proxy.
R. JOHN CURSON
Secretary
Santa Clara, California
September 30, 1997
<PAGE>
[TRUEVISION LOGO OR NAME]
2500 WALSH AVENUE
SANTA CLARA, CALIFORNIA 95051
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 28, 1997
TO THE STOCKHOLDERS OF TRUEVISION, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
TRUEVISION, INC., a Delaware corporation (the "Company"), will be held on
Tuesday, October 28, 1997 at 10:00 a.m. local time at the Company's offices
at 2500 Walsh Avenue, Santa Clara, California 95051, for the following
purposes:
1. To elect directors to serve for the ensuing year and until their
successors have been duly elected and qualified.
2. To approve the Company's Amended 1988 Incentive Stock Plan, as
amended, to increase the aggregate number of shares of Common Stock
authorized for issuance under such plan by 600,000 shares and to
permit participation by non-employee directors under such plan.
3. To ratify the selection of Price Waterhouse LLP as independent
auditors of the Company for its fiscal year ending June 27, 1998.
4. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on September 5,
1997, as the record date for the determination of stockholders entitled to
notice of and to vote at this Annual Meeting and at any adjournment or
postponement thereof.
By Order of the Board of Directors
R. JOHN CURSON
Secretary
Santa Clara, California
September 24, 1997
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID
IF MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU
HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE
MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A
BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST
OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
TRUEVISION, INC.
2500 WALSH AVENUE
SANTA CLARA, CALIFORNIA 95051
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 28, 1997
----------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Truevision, Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held on October 28, 1997, at 10:00 a.m.
local time (the "Annual Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at the Company's offices,
2500 Walsh Avenue, Santa Clara, California 95051. The Company intends to
mail this proxy statement and accompanying proxy card on or about September
24, 1997 to all stockholders entitled to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies,
including preparation, assembly, printing and mailing of this proxy
statement, the proxy and any additional information furnished to
stockholders. Copies of solicitation materials will be furnished to banks,
brokerage houses, fiduciaries and custodians holding in their names shares of
Common Stock beneficially owned by others to forward to such beneficial
owners. The Company may reimburse persons representing beneficial owners of
Common Stock for their costs of forwarding solicitation materials to such
beneficial owners. Original solicitation of proxies by mail may be
supplemented by telephone, telegram or personal solicitation by directors,
officers or other regular employees of the Company, or at the Company's
request, by Skinner & Co., Inc. No additional compensation will be paid to
directors, officers or other regular employees for such services, but Skinner
& Co., Inc. will be paid its customary fee, estimated to be about $2,500, if
it renders solicitation services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on
September 5, 1997 will be entitled to notice of and to vote at the Annual
Meeting. At the close of business on September 5, 1997 the Company had
outstanding and entitled to vote 12,773,315 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to
one vote for each share held on all matters to be voted upon at the Annual
Meeting. With respect to the election of directors, stockholders may exercise
cumulative voting rights. Under cumulative voting, each holder of Common
Stock will be entitled to five votes for each share held. Each stockholder
may give one candidate, who has been nominated prior to voting, all the votes
such stockholder is entitled to cast or may distribute such votes among as
many such candidates as such stockholder chooses. Unless the proxyholders
are otherwise instructed, stockholders, by means of the accompanying proxy,
will grant the proxyholders discretionary authority to cumulate votes.
All votes will be tabulated by the inspector of election appointed for
the meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards
a quorum, but are not counted for any purpose in determining whether a matter
has been approved.
1.
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REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with
the Secretary of the Company at the Company's principal executive office,
2500 Walsh Avenue, Santa Clara, California 95051, a written notice of
revocation or a duly executed proxy bearing a later date, or it may be
revoked by attending the meeting and voting in person. Attendance at the
meeting will not, by itself, revoke a proxy.
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the
Company's 1998 Annual Meeting of Stockholders must be received by the Company
not later than May 27, 1998 in order to be included in the proxy statement
relating to that Annual Meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
The Bylaws of the Company presently provide that the authorized number of
directors shall not be less than five nor more than nine, with the current
number of authorized directors set at five. At the Annual Meeting, five
directors will be elected to serve until the next Annual Meeting and until
their successors are elected and qualified. The Company intends to nominate
for election as directors the five persons named below, all of whom are
incumbent directors. All of these nominees have indicated that they are able
and willing to serve as directors. In the event that any nominee of the
Company is unable or declines to serve as a director at the time of the
Annual Meeting, the proxies will be voted for any nominee who shall be
designated by the present Board of Directors to fill the vacancy. In the
event that additional persons are nominated for election as directors, the
proxyholders intend to vote all proxies received by them in such a manner in
accordance with cumulative voting as will assure the election of as many of
the nominees listed below as possible, and, in such event, the specific
nominees to be voted for will be determined by the proxyholders.
The five nominees for director receiving the highest number of
affirmative votes will be elected directors of the Company. A stockholder
may, prior to the vote being taken, indicate his or her intention to cumulate
votes. In such a case, each stockholder would be entitled to that number of
votes as equals the number of shares of Common Stock held by such stockholder
multiplied by five and would be entitled to allocate those votes to any one
or more nominees for director in the stockholder's discretion. Abstentions
and broker non-votes are not considered in elections for director.
Unless otherwise instructed, the proxyholders intend to vote the shares
of Common Stock represented by the proxies in favor of the election of these
nominees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH NOMINEE.
2.
<PAGE>
INFORMATION CONCERNING NOMINEES
The Company's nominees are listed below together with their ages and
positions with the Company:
NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------
Walter W. Bregman(1)(2) 63 Chairman of the Board of Directors
Louis J. Doctor 39 President, Chief Executive Officer and
Director
William H. McAleer(2) 46 Director
Kieth E. Sorenson 49 Director
Conrad J. Wredberg(1) 56 Director
- -----------
(1) Audit Committee Member
(2) Compensation Committee Member
All directors are elected at the Annual Meeting of Stockholders to serve
until the following Annual Meeting and until their successors are duly
elected and have been qualified. There are no family relationships among any
officers or directors of the Company.
Mr. Bregman has been a director of the Company since July 1991 and
Chairman of the Board of Directors since December 1994. He has been Chairman
and Co-Chief Executive Officer of S&B Enterprises, a consulting firm, since
March 1988, and since December 1992 has been President and Chief Executive
Officer of Golf Scientific, Inc., a company that produces and sells golf
instructional equipment. From July 1985 until June 1987, he was President
and owner of the Cormorant Beach Club. Prior to July 1985, he served as
President of International Playtex Inc. He is also a director of Symantec,
Inc. and Quakka, Inc.
Mr. Doctor has been President, Chief Executive Officer and a director
since he joined the Company in October 1994. Prior to joining the Company,
he was President of The Arbor Group since May 1994, a company that offers
corporate clients strategic services in the technology arena. From June 1991
to April 1994, he held positions of Executive Vice President and Vice
President of Business Development at SuperMac Technology, Inc. In March
1981, Mr. Doctor co-founded Raster Technologies, a manufacturer of high-end
graphics and imaging systems, and served as its President until January 1989.
Mr. Doctor was an independent consultant from January 1989 to 1991. He is
also a director of Plaid Bros. Software, Inc.
Mr. McAleer has been a director of the Company since February 1995 and is
currently Managing Director of Voyager Capital, which provides venture
financing and advisory services to technology companies. From 1988 to 1994,
he was Vice President of Finance, Chief Financial Officer and Secretary of
Aldus Corporation, a publicly-held software company. At Aldus Corporation,
Mr. McAleer was responsible for finance, legal and business development
activities, including that company's merger with Adobe Systems Incorporated
in 1994. Prior to joining Aldus Corporation, he was Vice President, Finance
and Administration with Ecova Corporation from 1987 to 1988 and also served
as Vice President with Westin Hotels and Resorts from 1984 through 1987. He
is also a director of Apex PC Solutions, Four Gen Software and Primus
Communications.
Mr. Sorenson, a founder of the Company, has served as a director since
June 1987. He also served as Chairman of the Board of Directors from June
1987 until December 1994, as Chief Executive Officer from June 1987 until
September 1993 and as President from June 1987 until May 1993. Mr. Sorenson
has been President of Autronix, Inc. since January 1996. He has also been a
partner with Sorenson, Thomas & Co., an investment management firm, since
January 1995. From September 1979 to June 1987, Mr. Sorenson was employed by
Ramtek Corporation, a manufacturer of computer graphic systems, where he most
recently held the position of Vice President of Engineering and Product
Development.
Mr. Wredberg has been a director of the Company since October 1992. He
has been President of the Transmission Systems Business Division of the Broad
Band Communications Group of Scientific Atlanta, Inc., a telecommunications
services and products company, since April 1995. Previously, he had been
President and
3.
<PAGE>
General Manager of American Microsystems, Inc. ("AMI"), a manufacturer of
integrated circuits, for eight years. He joined AMI in 1985 as Vice
President of Manufacturing and became Senior Vice President of Operations in
1986. Prior to his joining AMI, Mr. Wredberg worked at Mostek Corporation, a
subsidiary of United Technologies Corporation, where he most recently held
the position of Vice President of Quality Assurance.
BOARD OF DIRECTORS COMMITTEES AND MEETINGS
During the fiscal year ended June 28, 1997 the Board of Directors held
eight meetings. The Board of Directors has an Audit Committee and a
Compensation Committee. During fiscal 1997, all incumbent directors attended
at least 75% of the aggregate of the meetings of the Board of Directors and
of the committees on which they served, held during the period for which they
were a director or committee member, respectively.
The Audit Committee currently consists of Messrs. Bregman and Wredberg.
The Audit Committee met two times during fiscal 1997. The Audit Committee
approves the engagement of and services to be performed by the Company's
independent auditors and reviews the Company's accounting principles and its
system of internal accounting controls.
The Compensation Committee currently consists of Messrs. Bregman and
McAleer. The Compensation Committee met nine times during fiscal 1997. The
Compensation Committee reviews and approves the Company's executive
compensation policy, makes recommendations concerning the Company's employee
benefit policies and approves salaries of and bonuses and option grants to
employees, including officers and eligible directors.
The Board has no Nominating Committee or a committee performing similar
functions.
4.
<PAGE>
PROPOSAL 2
APPROVAL OF THE AMENDED 1988 INCENTIVE STOCK PLAN
In February 1988, the Board of directors adopted, and the stockholders
subsequently approved, the Company's 1988 Incentive Stock Plan (the "Option
Plan"). As a result of a series of amendments, prior to August 1997 there
were 3,641,300 shares of the Company's Common Stock reserved for issuance
under the Option Plan.
As of August 1, 1997, options (net of canceled or expired options)
covering an aggregate of 2,997,157 shares of the Company's Common Stock had
been granted under the Option Plan, and 644,143 shares (plus any shares that
might in the future be returned to the plan as a result of cancellations or
expiration of options) remained available for future grant. During fiscal
1997, the Company granted to all executive officers as a group, options to
purchase 980,200 shares (including options repriced in May 1997 to purchase
794,200 shares) at exercise prices ranging from $2.15625 to $4.875 per share
and to all employees (excluding executive officers) as a group options to
purchase 1,888,005 shares (including options repriced in May 1997 to purchase
1,265,260 shares) at exercise prices ranging from $1.937 to $6.75 per share.
In August 1997, the Board of Directors approved an amendment increasing
the number of shares reserved for issuance under the Option Plan by an
additional 600,000 shares, for an aggregate of 4,241,300 shares reserved for
issuance under the Option Plan. The Board of Directors adopted this
amendment to ensure that the Company can continue to grant stock options to
employees at levels determined appropriate by the Board of Directors and the
Compensation Committee. In addition, in connection with the amendment to Rule
16b-3 promulgated under the Securities and Exchange Act of 1934, the Board of
Directors also amended the Option Plan to permit participation by
non-employee directors.
The affirmative vote of the holders of a majority of the shares
represented, in person or by proxy, and entitled to vote at the Annual
Meeting will be required to approve the amendments to the Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2.
The essential features of the Option Plan are outlined below:
GENERAL
The Option Plan gives the Board of Directors, or a committee which the
Board of Directors appoints, authority to grant options to purchase Common
Stock and stock purchase rights. Options granted under the Option Plan may
be either "incentive stock options" as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or nonstatutory stock options,
at the discretion of the Board of Directors or its committee.
PURPOSES
The purposes of the Option Plan are to attract and retain the best
available personnel for the Company, to provide additional incentive to the
service providers of the Company and to promote the success of the Company's
business.
ADMINISTRATION
The Board of Directors is authorized to administer the Option Plan or
delegate administration to a committee of the Board of Directors. The Board
of Directors has delegated administration of the Option Plan to the
Compensation Committee. As used herein with respect to the Option Plan, the
"Board of Directors" refers to the Compensation Committee as well as to the
Board of Directors.
5.
<PAGE>
ELIGIBILITY
The Option Plan provides that stock options and stock purchase rights may
be granted to employees (including officers and directors who are also
employees), non-employee directors and consultants of the Company and its
parent or subsidiaries. However, incentive stock options may be granted only
to employees. The Board of Directors selects the participants and determines
the number of shares to be subject to each stock option or stock purchase
right.
EXERCISE PRICE
The per share exercise price for shares issued pursuant to options or
stock purchase rights granted under the Option Plan is determined by the
Board of Directors and must not be less than 100% of the fair market value of
the Common Stock on the date of grant in the case of incentive stock options,
and 85% of the fair market value of the Common Stock on the date of grant in
the case of nonstatutory stock options or stock purchase rights. Fair market
value per share is the closing price as reported on the Nasdaq National
Market on the date of grant. Incentive and nonstatutory stock options
granted to stockholders owning more than 10% of the Company's outstanding
stock are subject to the additional restriction that the exercise price must
be at least 110% of the fair market value on the date of grant. In the event
of a decline in the value of the Company's Common Stock, the Board of
Directors has the authority to replace outstanding higher priced options,
whether incentive or nonstatutory, with new lower priced options.
OPTIONS
Each option is evidenced by a written agreement between the Company and
the person to whom such option is granted. The Board of Directors determines
the terms of the options granted under the Option Plan. Each option shall be
designated either an incentive stock option or a nonstatutory stock option
except that, to the extent that the aggregate fair market value of the shares
with respect to which options designated as incentive stock options are
exercisable for the first time by an optionee during any calendar year (under
the Option Plan and all other plans of the Company) exceeds $100,000, such
excess options shall be treated as nonstatutory stock options. Options
typically vest with respect to 25% of the option shares after one year and
ratably each month over the following three years with respect to the
remaining 75% of the shares. Pursuant to the Option Plan, options may be
subject to the following additional terms and conditions.
TERM OF OPTIONS. The term of each option granted under the Option Plan
is ten years from the date of grant in the case of incentive stock options
and ten years and one day in the case of nonstatutory stock options, unless a
shorter period is provided for in the stock option agreement. However,
options granted to an optionee who, at the time of the grant, owns stock
representing more than ten percent (10%) of the Company's outstanding stock,
expire five years from the date of grant in the case of incentive stock
options and five years and one day from the date of grant in the case of
nonstatutory stock options.
EXERCISE OF OPTION. An option is exercised by giving written notice of
exercise to the Company specifying the number of full shares of Common Stock
to be purchased and tendering payment of the purchase price to the Company.
The method of payment of the exercise price of the shares purchased upon
exercise of an option is determined by the Board of Directors, and may
include cash, check, use of a promissory note, surrender of shares of Company
Common Stock held for at least six months, or any combination of the
foregoing.
TERMINATION OF SERVICE. If an optionee's service relationship with the
Company is terminated for any reason other than death or permanent
disability, options outstanding under the Option Plan may be exercised within
30 days (or such other period of time as determined by the Board of
Directors, not to exceed certain limits) after the date of such termination
to the extent the options were exercisable on the date of termination.
DISABILITY. If an optionee's service by the Company terminates because
of total and permanent disability, options outstanding under the Option Plan
may be exercised within six months (or such other period of time as
6.
<PAGE>
determined by the Board of Directors not to exceed certain limits, but in no
event later than the date of expiration of the term of such option) after
termination to the extent such options were exercisable at the date of
termination.
DEATH OF OPTIONEE. If an optionee should die while providing services to
the Company, options may be exercised at any time within six months (or such
other period of time as determined by the Board of Directors not to exceed
certain limits, but in no event later than the date of expiration of the term
of such option) after death to the extent the options were exercisable at the
date of death.
STOCK PURCHASE RIGHTS
Each stock purchase right is evidenced by a written agreement between the
Company and the person to whom such right is granted. The Board of Directors
determines the terms relating to the right, including the time within which
such person must accept the offer to purchase, which shall in no event exceed
six months from the date of grant. Unless the Board of Directors determines
otherwise, the Company will have a right to repurchase shares in the event of
termination of the purchaser's service with the Company. Such repurchase
right will lapse at a rate determined by the Board of Directors.
OTHER PROVISIONS
Options or stock purchase rights granted under the Option Plan may
contain other terms, provisions and conditions not inconsistent with the
Option Plan as may be determined by the Board of Directors.
NONTRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS
Options and stock purchase rights granted under the Option Plan may not
be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may
be exercised, during the lifetime of the optionee or purchaser, only by such
optionee or purchaser.
ADJUSTMENT UPON CHANGES IN CAPITALIZATION OR MERGER
In the event any change is made in the Company's capitalization, such as
a stock split or reverse stock split, appropriate adjustment shall be made to
the purchase price and to the number of shares subject to the stock option or
stock purchase right. In the event of the proposed dissolution or
liquidation of the Company, all options will terminate immediately prior to
the consummation of such action, unless otherwise provided by the Board of
Directors. The Board of Directors may, in its sole discretion, accelerate
the time which options may be exercised prior to such dissolution or
liquidation. 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, the successor corporation shall assume all outstanding options
or substitute new options therefor. If the successor corporation refuses to
assume or substitute for outstanding options, the Board of Directors shall
provide for the exercisability of such options to accelerate in full prior to
such event, and the termination, to the extent such options are not
exercised, upon completion of such event.
AMENDMENT AND TERMINATION OF THE OPTION PLAN
The Board of Directors may amend or terminate the Option Plan from time
to time in such respects as the Board of Directors may deem advisable without
approval of the stockholders; provided, however, that stockholder approval of
amendments to the Option Plan shall only be required to the extent necessary
to comply with Rule 16b-3 or Section 422 of the Code (or any other applicable
law or regulation).
In any event, the Option Plan shall terminate in February 1998. Any
options or stock purchase rights outstanding under the Option Plan at the
time of its termination shall remain outstanding until they expire by their
terms.
7.
<PAGE>
FEDERAL INCOME TAX INFORMATION
Options granted under the Option Plan may be either "incentive stock
options," as defined in Section 422 of the Code, or nonstatutory stock
options.
An optionee who is granted an incentive stock option will not recognize
taxable income either at the time the option is granted or upon its exercise,
although the exercise may subject the optionee to the alternative minimum
tax. Upon the sale or exchange of the shares more than two years after grant
of the option and one year after exercising the option, any gain or loss will
be treated as long-term capital gain or loss. If both of these holding
periods are not satisfied, the optionee will recognize ordinary income at the
time of sale or exchange equal to the difference between the exercise price
and the lower of (i) the fair market value of the shares at the date of the
option exercise or (ii) the sale price of the shares. A different rule for
measuring ordinary income upon such a premature disposition may apply if the
optionee is also an officer, director, or 10% stockholder of the Company.
Any gain or loss recognized on such a premature disposition of the shares in
excess of the amount treated as ordinary income will be characterized as
long-term or short-term capital gain or loss, depending on the holding
period. The Company will be entitled to a tax deduction in the same amount
as the ordinary income recognized by the optionee.
All other options which do not qualify as incentive stock options are
referred to as nonstatutory stock options. An optionee will not recognize
any taxable income at the time he or she is granted a nonstatutory stock
option. However, upon its exercise, the optionee will recognize taxable
income generally measured as the excess of the then fair market value of the
shares purchased over the purchase price. Any taxable income recognized in
connection with an option exercise by an optionee who is also an employee of
the Company will be subject to tax withholding by the Company. Upon resale
of such shares by the optionee, any difference between the sales price and
the optionee's purchase price, to the extent not recognized as taxable income
as described above, will be treated as long-term or short-term capital gain
or loss, depending on the holding period. The Company will be entitled to a
tax deduction in the same amount as the ordinary income recognized by the
optionee with respect to shares acquired upon exercise of a nonstatutory
stock option.
The foregoing summary of the effects of federal income taxation upon the
participant and the Company with respect to the purchase of shares under the
Option Plan does not purport to be complete, and reference should be made to
the applicable provisions of the Code. In addition, this summary does not
discuss the tax implications of an optionee's death or the provisions of the
income tax laws of any municipality, state or foreign country in which the
participant may reside.
PROPOSAL 3
RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE LLP
AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING JUNE 27, 1998
Price Waterhouse LLP have been the independent auditors for the Company
since 1988 and, upon recommendation of the Audit Committee, their appointment
as independent auditors for the 1998 fiscal year has been approved by the
Board of Directors, subject to ratification by the stockholders.
Representatives of Price Waterhouse LLP are expected to be present at the
Annual Meeting, will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
Stockholder ratification of the selection of Price Waterhouse LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board of Directors is submitting the selection of
Price Waterhouse LLP to the stockholders for ratification as a matter of good
corporate practice. If the stockholders fail to ratify the selection, the
Audit Committee and the Board of Directors will reconsider whether or not to
retain that firm. Even if the selection is ratified, the Audit Committee and
the Board of Directors in their discretion may direct the appointment of
different independent auditors at any time during the year if they determine
that such a change would be in the best interests of the Company and its
stockholders.
The affirmative vote of the holders of a majority of the shares
represented, in person or by proxy, and entitled to vote at the Annual
Meeting will be required to ratify the appointment of Price Waterhouse LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 3.
8.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of August 1, 1997 by
(i) all those known by the Company to be the beneficial owner of more than 5%
of the Company's Common Stock, (ii) each director and nominee for director,
(iii) each of the executive officers named in the Summary Compensation Table
and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP (1)
--------------------------
NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES TOTAL
- ---------------- --------- ----------
<S> <C> <C>
Scitex Corporation Ltd. 1,820,000 14.3%
P.O. Box 330
46103 Herzlia B, Israel
Entities affiliated with 21st Century 1,315,000 10.1%
Communications Partners, L.P.(2)
767 Fifth Avenue
45th Floor
New York, New York 10153
Louis J. Doctor (3) 411,284 3.1%
Carl C. Calabria (4) 241,517 1.9%
R. John Curson (5) 105,947 *
William M. Carter (6) 88,380 *
Harvey A. Chesler (7) 32,292 *
Robert J. O'Brien (8) 104,317 *
Walter W. Bregman (9) 44,725 *
William H. McAleer (10) 8,025 *
Kieth E. Sorenson (11) 7,075 *
Conrad J. Wredberg (12) 16,250 *
All executive officers and directors as a
group (10 persons)(13) 1,059,812 7.8%
</TABLE>
- --------------------------
* Less than one percent (1%).
(1) This table is based upon information supplied by officers, directors
and principal stockholders and Schedules 13D and 13G filed with the
Securities and Exchange Commission (the "SEC"). Unless otherwise
indicated in the footnotes to this table and subject to community
property laws where applicable, the Company believes that each of the
stockholders named in this table has sole voting and investment power
with respect to the shares indicated as beneficially owned. Applicable
percentages are based on 12,742,257 shares of Common Stock outstanding
on August 1, 1997, adjusted as required by rules promulgated by the SEC.
(2) According to the Schedule 13D/A, filed jointly by 21st Century
Communications Partners, L.P. ("21st Century"), 21st Century
Communications T-E Partners, L.P. ("21st Century T-E"), 21st Century
Communications Foreign Partners, L.P. ("21st Century Foreign"), Andrew
Sandler, Barry Fingerhut, Barry Lewis, Barry Rubenstein, Harvey
Sandler, Irwin Lieber, John Kornreich and Michael J. Marocco
(collectively, the "21st Century Group"), the 21st Century Group
beneficially owned 1,315,000 shares of Common Stock. This includes
shares held by 21st Century (631,175 shares, including a warrant to
purchase 126,235 shares), 21st Century T-E (214,750 shares, including a
warrant to purchase 42,950 shares), 21st Century Foreign (84,975
shares, including a warrant to purchase 16,995 shares) and Applewood
Associates, L.P. ("Applewood") (384,100 shares, including a warrant to
purchase 66,820 shares). Messrs. Fingerhut, Rubenstein and Lieber are
shareholders, officers and directors of the general
9.
<PAGE>
partner of 21st Century, 21st Century T-E and 21st Century Foreign and
are also general partners of Applewood. Messrs. Sandler, Lewis,
Sandler, Kornreich and Marocco are general partners of entities that
are general partners of 21st Century, 21st Century T-E and 21st Century
Foreign. 21st Century disclaims beneficial ownership of shares of
Common Stock held by 21st Century T-E, 21st Century Foreign and
Applewood. 21st Century T-E disclaims beneficial ownership of shares
of Common Stock held by 21st Century, 21st Century Foreign and
Applewood. 21st Century Foreign disclaims beneficial ownership of
shares of Common Stock held by 21st Century, 21st Century T-E and
Applewood. Messrs. Sandler, Fingerhut, Lewis, Rubenstein, Sandler,
Lieber, Kornreich and Marocco disclaim beneficial ownership of shares
of Common Stock held by 21st Century Group, except as to the extent of
their pecuniary interest therein and Messrs. Fingerhut, Rubenstein and
Lieber disclaim beneficial ownership of shares of Common Stock held by
Applewood, except as to the extent of their pecuniary interest therein.
(3) Includes 313,333 shares of Common Stock issuable pursuant to a warrant
exercisable within 60 days of August 1, 1997 and 9,900 shares of Common
Stock issuable pursuant to options exercisable within 60 days of August
1, 1997.
(4) Includes 141,517 shares of Common Stock issuable pursuant to options
exercisable within 60 days of August 1, 1997.
(5) Includes 105,947 shares of Common Stock issuable pursuant to options
exercisable within 60 days of August 1, 1997.
(6) Includes 88,380 shares of Common Stock issuable pursuant to options
exercisable within 60 days of August 1, 1997.
(7) Includes 31,292 shares of Common Stock issuable pursuant to options
exercisable within 60 days of August 1, 1997.
(8) Includes 79,166 shares of Common Stock issuable pursuant to options
exercisable within 60 days of August 1, 1997.
(9) Includes 28,750 shares of Common Stock issuable pursuant to options
exercisable within 60 days of August 1, 1997.
(10) Includes 5,625 shares of Common Stock issuable pursuant to options
exercisable within 60 days of August 1, 1997.
(11) Includes 6,875 shares of Common Stock issuable pursuant to options
exercisable within 60 days of August 1, 1997.
(12) Includes 13,750 shares of Common Stock issuable pursuant to options
exercisable within 60 days of August 1, 1997.
(13) Includes an aggregate of 824,535 shares of Common Stock issuable
pursuant to options and warrants exercisable within 60 days of August
1, 1997. See Notes (3) through (12) above.
10.
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Prior to April 8, 1997, each non-employee director of the Company
received a per meeting fee of $1,500. As of April 8, 1997, the Chairman of
the Board receives $2,000 per meeting of the Board of Directors, $1,000 per
each committee meeting if held on the same date as a Board of Directors
meeting and $2,000 per each committee meeting if held on a different date
than a Board of Directors meeting. All other non-employee directors of the
Company receive $1,500 per meeting of the Board of Directors, $750 per each
committee meeting if held on the same date as a Board of Directors meeting
and $1,500 per each committee meeting if held on a different date than a
Board of Directors meeting. These fees are not paid for telephonic meetings
of (i) the Board of Directors or (ii) any committees. In the fiscal year
ended June 28, 1997, the total compensation paid to non-employee directors
was $51,000. The members of the Board of Directors are also eligible for
reimbursement of their expenses incurred in connection with their services as
directors.
Each non-employee director of the Company also receives stock option
grants under the Amended and Restated 1991 Director Option Plan (the
"Director Plan"). Only non-employee directors of the Company or an
"affiliate" of the Company (as defined in the Code) are eligible to receive
options under the Director Plan. Options granted under the Director Plan are
not intended to qualify as incentive stock options under the Code.
The Director Plan provides for the grant of nonstatutory stock options to
non-employee directors of the Company. Under the terms of the Director Plan
as amended, (i) each person who becomes a non-employee director shall
receive, on the date such person joins the Board, an option to purchase
10,000 shares which shall become exercisable at the rate of 25% per year for
four years following the date of grant, (ii) each non-employee director who
is a member of the Board of Directors immediately before the Company's Annual
Meeting of Stockholders (the "Annual Meeting Date") and remains a member of
the Board of Directors immediately after such Annual Meeting Date, shall
receive on the first Annual Meeting Date thereafter, for so long as such
non-employee director remains a member of the Board of Directors, an
additional option to purchase 2,500 shares of Common Stock subject to
four-year vesting from the date of grant similar to the vesting provisions
set forth above, and (iii) each non-employee director who becomes Chairman of
the Board on or after December 16, 1994 shall receive an option to purchase
25,000 shares of Common Stock, which shall become exercisable at the rate of
25% per year for four years. The term of options granted under the Director
Plan is ten years and the per share exercise price for shares issued pursuant
to options granted under the Director Plan is 100% of the fair market value
of the Common Stock on the date of grant. In the event of a merger of the
Company with or into another corporation or a consolidation, acquisition of
assets or other change-in-control transaction involving the Company, (i) if
the Company is the surviving entity, each option will continue in effect or
will be assumed or (ii) if the Company is not the surviving entity, an
equivalent option will be substituted by the successor corporation. If the
successor corporation does not assume or substitute an equivalent option, the
vesting of each option will accelerate and the option will terminate if not
exercised prior to the consummation of the transaction.
During fiscal 1997, the Company granted options covering 2,500 shares to each
non-employee director of the Company, at an exercise price per share of
$3.125, the fair market value (based on the closing sales price reported in
the Nasdaq National Market on the date of grant). As of August 1, 1997, no
options had been exercised under the Director Plan.
11.
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table shows, for the fiscal years ended July 1, 1995, June
29, 1996 and June 28, 1997, compensation awarded or paid to, or earned by the
Company's Chief Executive Officer and its other four most highly compensated
executive officers and one former executive officer who departed from the
Company during fiscal year 1997 (the "Named Executive Officers"):
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------- ------------
OTHER ALL
NAME AND PRINCIPAL ANNUAL OTHER
POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION($)
- ---------------------- ---- --------- -------- ---------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Louis J. Doctor(1) 1997 186,667 -- 2,000(2) 112,000(3) 1,907(4)
President & CEO 1996 170,000 -- 2,000(2) 40,000 --
1995 124,052 -- 1,000(2) 400,000(5) --
Carl C. Calabria 1997 155,000 -- 2,000(2) 234,200(3) --
Sr. V.P. Engineering 1996 150,000 -- 2,000(2) 30,000 --
1995 157,250 -- 1,000(2) 150,000 39,369(6)
R. John Curson 1997 136,667 10,000 -- 225,900(3) --
Sr. V.P., CFO 1996 130,000 -- 2,255(2) 30,000 --
& Secretary 1995 140,000 -- -- 140,000(7) 4,000(8)
William M. Carter(9) 1997 138,333 -- 2,000(2) 216,200(3) --
V.P. Operations 1996 128,973 -- 2,472(2) 30,000 --
1995 24,918 -- -- 130,000 --
Harvey A. Chesler(10) 1997 102,667 7,693 2,000(2) 77,900(3) 337(4)
V.P & Corporate 1996 95,137 -- 2,000(2) 10,000 --
Controller 1995 92,420 -- 1,000(2) 42,000 2,000(8)
Robert J. O'Brien(11) 1997 77,000 -- 2,000(2) -- 94,125(12)
Former Sr. V.P. 1996 160,765 -- 2,000(2) 70,000 --
Worldwide Sales 1995 91,167 20,000(13) 1,000(2) 100,000 --
</TABLE>
- ----------------------------
(1) Mr. Doctor commenced employment with the Company in October 1994.
(2) Represents matching contributions for Messrs. Doctor, Calabria, Curson,
Carter, Chesler and O'Brien under the Company's 401(K) plan.
(3) In May 1997, the Compensation Committee of the Board of Directors approved
an option repricing program. Employees could elect to replace outstanding
options (the "Old Options") with new options (the "Repriced Options") that
are exercisable for the number of shares equal to 90% of the number of
shares underlying the Old Options. Repriced Options are treated as new
option grants. This figure includes grants issued in fiscal 1997 that have
been subsequently cancelled upon issuance of Repriced Options as follows:
Mr. Doctor, 40,000 shares; Mr. Calabria, 23,000 shares; Mr. Curson, 41,000
shares; Mr. Carter, 38,000 shares; and Mr. Chesler, 19,000 shares. Also
included in this figure are Repriced Options that have replaced options
granted in prior fiscal years as follows: Mr. Doctor, 36,000 shares; Mr.
Calabria, 190,500
12.
<PAGE>
shares; Mr. Curson, 148,000 shares; Mr. Carter, 144,000 shares; and Mr.
Chesler, 41,800 shares. See "Option Repricing Information" below.
(4) Represents spousal travel allowance payments to Messrs. Doctor and
Chesler of $268 and $337, respectively, and a payment to Mr. Doctor of
$1,639 for use of his accumulated airline mileage for company
business.
(5) Mr. Doctor was issued a warrant to purchase 400,000 shares of Common
Stock in connection with his acceptance of employment with the
Company.
(6) Represents payment of a relocation allowance.
(7) Stock options to purchase 80,000 shares were surrendered in November
1994 and a new option was issued for the purchase of 140,000 shares in
November 1994. See "Option Repricing Information" below.
(8) Represents automobile allowances for Messrs. Curson and Chesler.
(9) Mr. Carter commenced employment with the Company in April 1995.
Effective July 1997, Mr. Carter resigned his position of V.P.
Operations at the Company.
(10) Mr. Chesler commenced employment with the Company in July 1994.
(11) Mr. O'Brien commenced employment with the Company in December 1994.
(12) Mr. O'Brien resigned as Sr. V.P. Worldwide Sales in December 1996. As
part of a separation agreement entered into with the Company, Mr.
O'Brien received payments of $16,125 in lieu of accrued and unused
paid time off and $78,000 in severance payments.
(13) Represents payment of a bonus for accepting employment.
13.
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
All stock options granted to the Named Executive Officers in fiscal 1997
are disclosed in the following table. This table discloses, for each named
executive, the gain or "spread" that would be realized if the options were
exercised on the expiration date, assuming that the Company's stock had
appreciated at the level indicated, compounded annually over the life of the
options.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------ ANNUAL RATES OF STOCK
NUMBER OF % OF TOTAL PRICE APPRECIATION FOR
SECURITIES OPTIONS GRANTED EXERCISE OPTION TERMS (3)
UNDERLYING TO EMPLOYEES IN PRICE EXPIRATION -------------------------
NAME OPTIONS(#)(1) FISCAL YEAR(2) ($/SH) DATE 5%($) 10%($)
- ------------------ ------------- --------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Louis J. Doctor 40,000 1.4 4.87500 08/20/06 --(4) --(4)
36,000 1.3 2.15625 08/20/06 42,797 105,411
36,000 1.3 2.15625 10/03/05 37,062 88,771
Carl C. Calabria 23,000 0.8 4.87500 08/20/06 --(4) --(4)
20,700 0.7 2.15625 08/20/06 24,608 60,611
45,000 1.6 2.15625 08/28/02 26,808 59,239
13,500 0.5 2.15625 05/11/04 11,850 27,617
105,000 3.7 2.15625 11/10/04 108,099 258,916
27,000 0.9 2.15625 10/03/05 27,797 66,578
R. John Curson 41,000 1.4 4.87500 08/20/06 --(4) --(4)
36,900 1.3 2.15625 08/20/06 43,867 108,046
121,000 4.2 2.15625 11/10/04 124,571 298,369
27,000 0.9 2.15625 10/03/05 27,797 66,578
William M. Carter 38,000 1.3 4.87500 08/20/06 --(4) --(4)
34,200 1.2 2.15625 08/20/06 40,657 100,140
117,000 4.1 2.15625 04/04/05 120,453 288,506
27,000 0.9 2.15625 10/03/05 27,797 66,578
Harvey A. Chesler 19,000 0.7 4.87500 08/20/06 --(4) --(4)
17,100 0.6 2.15625 08/20/06 20,329 50,070
13,000 0.5 2.15625 08/02/04 11,412 26,594
10,800 0.4 2.15625 11/10/04 11,119 26,631
9,000 0.3 2.15625 01/26/05 9,266 22,193
9,000 0.3 2.15625 10/03/05 9,266 22,193
Robert J. O'Brien 0 (5) 0.0 -- -- -- --
</TABLE>
- ------------------------------
(1) Stock options are granted with an exercise price equal to the fair market
value of the Company's Common Stock on the date of grant. Options under
the Option Plan generally become exercisable 25% one year after issuance
and 1/48th each month thereafter for thirty-six months. Amounts include
Repriced Options that have a vesting start date identical to the Old Option
but generally vest over a forty-two month period instead of the forty-eight
month vesting schedule of the Old Options. See "Option Repricing
Information" below. The term of each option granted is generally the
earlier of (i) ten years or (ii) 30 days after termination of the holder.
The options will fully vest upon a change of control, as defined in the
Option Plan, unless the acquiring Company assumes or substitutes similar
options. The Board of Directors may reprice the options under the terms of
the Option Plan.
14.
<PAGE>
(2) Based on options granted in fiscal 1997 to purchase 2,868,205 shares.
(3) The potential realizable value is calculated based on the term of the
option at its time of grant. It is calculated by assuming that the stock
price on the date of grant appreciates at the indicated annual rate,
compounded annually for the entire term of the option and that the option
is exercised and sold on the last day of its term for the appreciated stock
price. All calculations are based on rounding the number of years
remaining on the term of the option to the nearest whole number. No gain
to the optionee is possible unless the stock price increases over the
option term. The 5% and 10% assumed rates of appreciation are derived from
the rules of the Securities and Exchange Commission and do not represent
the Company's estimate or projection of the future Common Stock price.
(4) Grant canceled upon issuance of Repriced Option. See "Option Repricing
Information" below.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
This table discloses the aggregate dollar value realized upon exercise of
stock options in the last fiscal year by the Named Executive Officers. For each
Named Executive Officer, the table also includes the total number of unexercised
options and the aggregate dollar value of in-the-money unexercised options held
at the end of the last completed fiscal year, separately identifying the
exercisable and unexercisable options.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS VALUE OF IN-THE-MONEY
SHARES AS OF JUNE 28, 1997 OPTIONS AS OF JUNE 28, 1997(1)
ACQUIRED ON VALUE -------------------------------- --------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) UNEXERCISABLE($)
- ---------------------- ----------- ----------- -------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Louis J. Doctor(2) 0 0 293,333 178,667 0 33,750
Carl C. Calabria 0 0 124,687 86,513 58,447 40,553
R. John Curson 0 0 86,350 98,550 40,477 46,195
William M. Carter 0 0 70,200 108,000 32,906 50,625
Harvey A. Chesler 0 0 23,755 35,145 11,135 16,474
Robert J. O'Brien 0 0 78,333 91,667 36,719 42,969
</TABLE>
(1) Valuations above for unexercised in-the-money options are based on the
difference between the option price and fair market value at June 28, 1997
($2.625 per share). Accordingly, an option is reported as having zero
value if the exercise price of the option equaled or exceeded the fair
market value of the Company's Common Stock at June 28, 1997.
(2) Included in Mr. Doctor's option amounts is a warrant granted to Mr. Doctor
to purchase 400,000 shares of the Company's Common Stock. One hundred
thousand of such shares became exercisable on January 1, 1995. The
remaining shares are exercisable at a rate of 6,666.67 per month, such that
the warrant will be fully exercisable on October 1, 1998.
15.
<PAGE>
OPTION REPRICING INFORMATION
In April 1997, the Company offered employees the opportunity to participate
in an option repricing program. Under the program, each employee could elect on
or before April 30, 1997 that his or her Old Option issued under the Company's
Option Plan be converted into a Repriced Option, subject to final approval by
the Compensation Committee of the Company's Board of Directors. The per share
exercise price of each Repriced Option would be equal to the fair market value
of the Company's Common Stock on the conversion date. In return for the lower
exercise price, Old Options were replaced with Repriced Options that are
exercisable for the number of shares equal to 90% of the number of shares
underlying the Old Options. All Repriced Options have a vesting start date
identical to that of the Old Option, but the vesting schedule of the Repriced
Options is generally forty-two months instead of the forty-eight month vesting
schedule of the Old Options. On May 2, 1997, the option repricing program and
the options elected for conversion under the program were approved by the
Compensation Committee. The fair market value of the Company's Common Stock on
May 2, 1997 was $2.15625. The Repriced Options are treated as new option
grants.
The following table shows certain information concerning the repricing of
options received by executive officers during the last ten years.
TEN YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF MARKET ORIGINAL
SECURITIES PRICE OF EXERCISE OPTION
UNDERLYING STOCK AT PRICE AT NEW TERM
OPTIONS TIME OF TIME OF EXERCISE REMAINING
REPRICED REPRICING REPRICING PRICE AT DATE OF
NAME DATE (#) ($) ($) ($) REPRICING
- ---- -------- ---------- --------- --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Louis J. Doctor 05/02/97 36,000 2.15625 7.250 2.15625 8.43 years
President & CEO 05/02/97 36,000 2.15625 4.875 2.15625 9.31 years
Carl C. Calabria 05/02/97 45,000 2.15625 10.000 2.15625 5.33 years
Sr. V.P. Engineering 05/02/97 13,500 2.15625 5.125 2.15625 7.03 years
05/02/97 105,000 2.15625 3.000 2.15625 7.53 years
05/02/97 27,000 2.15625 7.250 2.15625 8.43 years
05/02/97 20,700 2.15625 4.875 2.15625 9.31 years
R. John Curson 05/02/97 121,000 2.15625 2.750 2.15625 7.53 years
Sr. V.P., CFO 05/02/97 27,000 2.15625 7.250 2.15625 8.43 years
& Secretary 05/02/97 36,900 2.15625 4.875 2.15625 9.31 years
11/10/94 60,000 2.75000 7.625 2.75000 9.08 years
11/10/94 20,000 2.75000 5.125 2.75000 9.50 years
William M. Carter 05/02/97 117,000 2.15625 4.125 2.15625 7.53 years
V.P. Operations 05/02/97 27,000 2.15625 7.250 2.15625 8.43 years
05/02/97 34,200 2.15625 4.875 2.15625 9.31 years
Harvey A. Chesler 05/02/97 13,000 2.15625 3.750 2.15625 7.26 years
V.P. & Corporate 05/02/97 10,800 2.15625 2.750 2.15625 7.53 years
Controller 05/02/97 9,000 2.15625 3.875 2.15625 7.74 years
05/02/97 9,000 2.15625 7.250 2.15625 8.43 years
05/02/97 17,100 2.15625 4.875 2.15625 9.31 years
</TABLE>
16.
<PAGE>
EMPLOYMENT AGREEMENTS
In connection with the Company's employment of Mr. Doctor, the Company has
agreed to pay Mr. Doctor $170,000 per year and has granted Mr. Doctor a warrant
to purchase 400,000 shares of the Company's Common Stock (the "Warrant"). One
hundred thousand shares underlying the Warrant became exercisable on January 1,
1995 and the remaining shares are exercisable at a rate of 6,666.67 shares per
month thereafter such that the Warrant will be fully exercisable on October 1,
1998. Upon a change of control of the Company, the vesting period will
accelerate and the warrant will thereupon become fully exercisable. In
addition, the Company has agreed that upon the occurrence of such event, if Mr.
Doctor becomes subject to the "golden parachute" provisions of the Code by
virtue of such change in control, the Company will reimburse Mr. Doctor for any
additional taxes owed upon the exercise of the Warrant.
In connection with the Company's merger with RasterOps Corporation in 1992,
the Company and Mr. Calabria entered into an agreement that will pay Mr.
Calabria an amount equal to six-months' base compensation if the Company
terminates Mr. Calabria for any reason other than cause. If Mr. Calabria's
employment with the Company is terminated because of a disability, he will be
entitled to an amount equal to one year's base compensation. The terms of
agreement continue until six months after the date of termination of Mr.
Calabria's employment.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No current member of the Compensation Committee is an officer or employee
of the Company.
17.
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS INTRODUCTION (1)
INTRODUCTION
Prior to January 1997, the Compensation Committee of the Board of
Directors consisted of Messrs. Bregman, McAleer and Eubanks. Since January
1, 1997, due to Mr. Eubanks' resignation from the Board of Directors, the
Compensation Committee of the Board of Directors consisted of Messrs. Bregman
and McAleer. None of the members of the Compensation Committee were officers
or employees of the Company during fiscal 1997. The Compensation Committee
establishes the general compensation policies for the Company's executive
officers.
PHILOSOPHY
The Compensation Committee believes that the Company must provide the
executive officers of the Company with compensation competitive with peer
companies in order to attract and retain experienced employees critical to
the success of the Company in meeting its performance and strategic
objectives and to maximize stockholder value. The Compensation Committee
believes that the compensation of the executive officers, including the Chief
Executive Officer, should be related to the Company's long-term performance.
Accordingly, the Compensation Committee attempts to place greater emphasis on
equity-based incentive compensation over base compensation. With respect to
Section 162(m) of the Code (which limits deductibility of executive
compensation exceeding $1 million per individual per year unless certain
conditions are met), the Company's compensation plans currently do not
qualify for an exemption from Section 162(m); however, the Compensation
Committee continues to evaluate such plans in light of Section 162(m). The
Company has entered into an agreement with its Chief Executive Officer to
compensate him in the event he is adversely affected by Section 162(m). See
"Compensation of Chief Executive Officer" below.
COMPENSATION PLANS
For executive officers, compensation is comprised of three elements: Base
Compensation, Short-Term Incentive Compensation and Long-Term Incentive
Compensation.
BASE COMPENSATION. Base compensation is established by reviewing the
salaries of executive officers of comparably-sized peer companies, the
Company's financial performance during the past year and individual
performance of the executives during the past year. Consistent with its
philosophy, the Company generally attempts to set the base compensation
levels of its executive officers somewhat below the amounts paid to employees
with similar levels of responsibility at comparably-sized peer companies.
Factors relating to the Company's financial performance that may be relevant
to increasing or decreasing base salary include revenues and earnings.
Factors relating to individual performance that are assessed in setting base
compensation vary based on particular duties and areas of responsibility of
the individual officer. The establishment of base compensation involves a
subjective assessment and weighing of the foregoing criteria and is not based
on any specific formula. Based on the above considerations, the base salaries
of the executive officers were increased between 4.0% and 11.8% during fiscal
1997.
SHORT-TERM INCENTIVE COMPENSATION. Short-term incentive compensation is
directly related to the Company's achievement of revenue and earnings goals.
Early in each fiscal year, the Compensation Committee establishes specified
targets, generally with respect to revenues and earnings and in certain cases
with respect to the items based on a particular executive officer's duties
and areas of responsibility, and provides for the granting of stock options
subject to accelerated vesting based on the Company's performance against
such targets. During fiscal
- ----------------------
(1) This section is not "soliciting material," is not deemed "filed" with
the SEC, and is not to be incorporated by reference in any filing of the
Company under the Securities Act of 1933, as amended, or the Exchange Act,
whether made before or after the date hereof and irrespective of any general
incorporation language in any such filing.
18.
<PAGE>
1997, because the Company did not meet a minimum established earnings level,
there was no acceleration of the vesting of such options.
LONG-TERM INCENTIVE COMPENSATION. Long-term incentive compensation is
comprised of stock options which are the Company's only long-term compensation
element. This program is intended to provide additional incentives to the
executive officers to maximize stockholder value. All options are granted at
the current market price and utilize vesting periods which encourage executive
officers to remain with the Company. Equity compensation is granted based on
the Compensation Committee's judgment in each case based on the individual
circumstances of each executive officer.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Doctor's compensation was established consistent with the philosophy
described above. Mr. Doctor's base salary ($190,000 per year, effective
September 1996) was set somewhat below the level consistent with other Chief
Executive Officers at comparably-sized, peer companies. Mr. Doctor's base
salary for fiscal 1997 increased by 11.8% from his base salary for fiscal 1996.
During fiscal 1995, as part of Mr. Doctor's employment pay package, Mr. Doctor
was granted a warrant to purchase 400,000 shares of the Company's Common Stock,
100,000 shares of which became exercisable on January 1, 1995 and the remaining
shares are exercisable at a rate of 6,666.67 shares per month thereafter. Upon
a change of control of the Company, the vesting period will accelerate and the
warrant will thereupon become fully exercisable. In addition, in fiscal 1996
and fiscal 1997, Mr. Doctor was granted in each year an option to purchase
40,000 shares of Common Stock pursuant to the short-term incentive compensation
plan described above. On May 2, 1997, as part of the Company's option repricing
program, Mr. Doctor's Old Options were replaced with Repriced Options that are
exercisable for the number of shares equal to 90% of the number of shares
underlying the Old Options, or 72,000 shares. No shares of these options vested
during fiscal 1997 because the Company did not meet a minimum established
earnings level.
THE MEMBERS OF THE COMPENSATION COMMITTEE FOR FISCAL YEAR 1997
Walter W. Bregman
William H. McAleer
19.
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PERFORMANCE MEASUREMENT COMPARISON(1)
The Securities and Exchange requires a comparison on an indexed basis of
cumulative total stockholder return for the Company, a relevant broad equity
market index and a published industry line-of-business index. The following
graph shows a five-year comparison of cumulative stockholder return of an
investment of $100 in cash on June 30, 1992 in (i) the CRSP Total Return Index
for the Nasdaq Stock Market (U.S. Companies) (the "Nasdaq Composite Index"),
(ii) the Hambrecht & Quist ("H&Q") Technology Index, and (iii) the Company's
Common Stock. The H&Q Technology Index is composed of approximately 200
technology companies in the semiconductor, electronics, medical, and related
technology industries. Historic stock price performance is not necessarily
indicative of future stock price performance. All values assume reinvestment of
full amount of all dividends and are calculated as of June 30th of each year.
Comparison of Five-Year Cumulative Total Return on Investment(2)
[TRUV PLOTPOINTS]
Cumulative Total Return
----------------------------------
6/92 6/93 6/94 6/95 6/96 6/97
TRUEVISION, INC. TRUV 100 76 36 48 63 21
NASDAQ STOCK MARKET (U.S.) INAS 100 126 127 169 218 265
HAMBRECHT & QUIST TECHNOLOGY IHQT 100 136 139 245 287 374
_____ / / Truevision, Inc. _____ / / H&Q Technology _____ / / Nasdaq
- ------------------
(1) This section is not "soliciting material," is not deemed "filed" with the
SEC, and is not to be incorporated by reference in any filing of the
Company under the Securities Act of 1933, as amended, or the Exchange Act,
whether made before or after the date hereof and irrespective of any
general incorporation language in any such filing.
(2) The total return on investment (change in stock price plus reinvested
dividends) for the Company, the Nasdaq Composite Index and the H&Q
Technology Index, based on June 30, 1992 = 100.
20.
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Scitex Corporation Ltd. ("Scitex"), a principal stockholder of the Company,
was also a purchaser of certain products manufactured by the Company during
fiscal 1997. The Company has also agreed to negotiate in good faith toward a
program of strategic cooperation with Scitex. Aggregate sales to Scitex by the
Company during the fiscal year ended June 28, 1997 were approximately $589,000.
The Company has entered into indemnity agreements with certain officers and
directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided for
therein, for expenses, damages, judgments, fines and settlements he may be
required to pay in actions or proceedings which he is or may be made a party by
reason of his position as a director, officer or other agent of the Company, and
otherwise to the full extent permitted under Delaware law and the Company's
Bylaws.
COMPLIANCE WITH THE REPORTING REQUIREMENTS OF SECTION 16(A)
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and greater
than ten percent stockholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended June 28, 1997, all Section
16(a) filing requirements applicable to its officers, directors and greater than
ten percent beneficial owners were complied with; except one report of one
transaction was filed late by Messrs. Doctor, Calabria, Carter, Curson, O'Brien,
Chesler, Bregman, McAleer, Sorenson, Wredberg and Eubanks.
21.
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OTHER MATTERS
OTHER BUSINESS
The Board of Directors is not aware of any other business to be presented
at the Annual Meeting. If any other matters should properly come before the
meeting, it is intended that the persons named in the accompanying form of Proxy
will vote such proxy in accordance with their best judgment on such matters.
1997 ANNUAL REPORT TO STOCKHOLDERS AND 1997 ANNUAL REPORT ON FORM 10-K
A copy of the 1997 Annual Report to stockholders accompanies this Proxy
Statement. Truevision's Annual Report on Form 10-K for the year ended June 28,
1997, as filed with the Securities and Exchange Commission, containing full
audited financial statements and financial statement schedule also accompanies
this Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS.
Santa Clara, California
September 24, 1997
22.
<PAGE>
TRUEVISION, INC.
AMENDED 1988 INCENTIVE STOCK PLAN
(As of September 1997)
1. PURPOSES OF THE PLAN. The purposes of this Incentive Stock Plan are
to attract and retain the best available personnel, to provide additional
incentive to the Employees of Truevision, Inc. (the "Company") and to promote
the success of the Company's business.
Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Board and as reflected
in the terms of the written option agreement. The Board also has the
discretion to grant Stock Purchase Rights.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "BOARD" shall mean the Committee, if one has been appointed, or
the Board of Directors of the Company, if no Committee is appointed.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMITTEE" shall mean the Committee appointed by the Board of
Directors in accordance with Section 4(a) of the Plan, if one is appointed.
(d) "COMMON STOCK" shall mean the Common Stock of the Company.
(e) "COMPANY" shall mean Truevision, Inc., a Delaware corporation.
(f) "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, and any Director of the Company
whether compensated for such services or not; provided that the term
Consultant shall not include Directors who are not compensated for their
services or are paid only a Director's fee by the Company.
(g) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT"
shall mean the absence of any interruption or termination of service as an
Employee, Director or Consultant, as applicable. Continuous Status as an
Employee, Director or Consultant shall not be considered interrupted in the
case of sick leave, military leave, or any other leave of absence approved by
the Board; provided that such leave is for a period of not more than 90 days
or reemployment upon the expiration of such leave is guaranteed by contract
or statute.
(h) "DIRECTOR" shall mean a member of the Board.
(i) "EMPLOYEE" shall mean any person, including officers and
Directors, employed by the Company or any Parent or Subsidiary of the
Company. The payment of a Director's fee by the Company shall not be
sufficient to constitute "employment" by the Company.
1.
<PAGE>
(j) "INCENTIVE STOCK OPTION" shall mean an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(k) "NONSTATUTORY STOCK OPTION" shall mean an Option not intended
to qualify as an Incentive Stock Option.
(l) "OPTION" shall mean a stock option granted pursuant to the Plan.
(m) "OPTIONED STOCK" shall mean the Common Stock subject to an
Option.
(n) "OPTIONEE" shall mean a person who receives an Option.
(o) "PARENT" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(p) "PLAN" shall mean this Amended 1988 Incentive Stock Plan.
(q) "PURCHASER" shall mean a person who exercises a Stock Purchase
Right.
(r) "SHARE" shall mean a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(s) "STOCK PURCHASE RIGHT" shall mean a right to purchase Common
Stock pursuant to the Plan or the right to receive a bonus of Common Stock
for past services.
(t) "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. Subject to the provisions of Section 11
of the Plan, the maximum aggregate number of shares under the Plan is
4,241,300 shares of Common Stock. The Shares may be authorized, but
unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right should expire or become
unexercisable for any reason without having been exercised in full, then the
unpurchased Shares which were subject thereto shall, unless the Plan shall
have been terminated, become available for future grant or sale under the
Plan. Notwithstanding any other provision of the Plan, shares issued under
the Plan and later repurchased by the Company shall not become available for
future grant or sale under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE. The Plan shall be administered by the Board of
Directors of the Company.
(i) The Board of Directors may appoint a Committee
consisting of one or more members of the Board of Directors to administer the
Plan on behalf of the Board of Directors, subject to such terms and
conditions as the Board of Directors may prescribe. In
2.
<PAGE>
the discretion of the Board of Directors, a Committee may consist solely of
two or more Outside Directors (as such term is defined below), or solely of
two or more Non-Employee Directors (as such term is defined below). Once
appointed, the Committee shall continue to serve until otherwise directed by
the Board of Directors.
(ii) Subject to the foregoing, from time to time the Board
of Directors may increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause) and appoint new
members in substitution therefor, fill vacancies however caused, or remove
all members of the Committee and thereafter directly administer the Plan.
(iii) The term "Outside Director," as used in this Plan,
shall mean a Director who either (i) is not a current employee of the Company
or an "affiliated corporation" (within the meaning of Treasury regulations
promulgated under Section 162(m) of the Code), is not a former employee of
the Company or an "affiliated corporation" receiving compensation for prior
services (other than benefits under a tax qualified pension plan), was not an
officer of the Company or an "affiliated corporation" at any time, and is not
currently receiving direct or indirect remuneration from the Company or an
"affiliated corporation" for services in any capacity other than as a
Director, or (ii) is otherwise considered an "outside director" for purposes
of Section 162(m) of the Code. The term "Non-Employee Director," as used in
this Plan, shall mean a Director who either (i) is not a current employee or
officer of the Company or its parent or subsidiary, does not receive
compensation (directly or indirectly) from the Company or its parent or
subsidiary for services rendered as a consultant or in any capacity other
than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K ("Regulation S-K") promulgated
pursuant to the Securities Act of 1933 (the "Securities Act"), does not
possess an interest in any other transaction as to which disclosure would be
required under Item 404(a) of Regulation S-K, and is not engaged in a
business relationship as to which disclosure would be required under Item
404(b) of Regulation S-K; or (ii) is otherwise considered a "non-employee
director" for purposes of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(b) POWERS OF THE BOARD. Subject to the provisions of the Plan,
the Board shall have the authority, in its discretion: (i) to grant
Incentive Stock Options, Nonstatutory Stock Options or Stock Purchase Rights;
(ii) to determine, upon review of relevant information and in accordance with
Section 7 of the Plan, the fair market value of the Common Stock; (iii) to
determine the exercise price per share of options or Stock Purchase Rights,
to be granted, which exercise price shall be determined in accordance with
Section 7 of the Plan; (iv) to determine the persons to whom, and the time or
times at which, Options or Stock Purchase Rights shall be granted and the
number of shares to be represented by each Option or Stock Purchase Right;
(v) to interpret the Plan; (vi) to prescribe, amend and rescind rules and
regulations relating to the Plan; (vii) to determine the terms and provisions
of each option and Stock Purchase Right granted (which need not be identical)
and, with the consent of the holder thereof, modify or amend any provisions
(including provisions relating to exercise price) of any Option or Stock
Purchase Right; (viii) to accelerate or defer (with the consent of the
Optionee) the exercise date of any Option, consistent with the provisions of
Section 5 of the Plan; (ix) to authorize any person to execute on behalf of
the Company any instrument required to effectuate
3.
<PAGE>
the grant of an Option or Stock Purchase Right previously granted by the
Board; and (x) to make all other determinations deemed necessary or advisable
for the administration of the Plan.
(c) EFFECT OF BOARD'S DECISION. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees,
Purchasers and any other holders of any Options or Stock Purchase Rights
granted under the Plan.
5. ELIGIBILITY.
(a) Options and Stock Purchase Rights may be granted to Employees,
Directors or Consultants, provided that Incentive Stock Options may only be
granted to Employees. A person who has been granted an Option or Stock
Purchase Right may, if such person is otherwise eligible, be granted
additional Option(s) or Stock Purchase Right(s).
(b) Each Option shall be designated in the written option agreement
as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate fair
market value of the Shares with respect to which Options designated as
Incentive Stock Options are exercisable for the first time by any Optionee
during any calendar year (under all plans of the Company) exceeds $100,000,
such Options shall be treated as Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Options shall be taken into
account in the order in which they were granted, and the fair market value of
the Shares shall be determined as of the time the Option with respect to such
Shares is granted.
(d) The Plan shall not confer upon any Optionee or holder of a Stock
Purchase Right any right with respect to continuation of employment by or the
rendition of consulting services to the Company, nor shall it interfere in
any way with his or her right or the Company's right to terminate his or her
employment or services 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 of Directors or its approval by vote of
the holders of a majority of the outstanding shares of the Company entitled
to vote on the adoption of the Plan. It shall continue in effect for a term
of ten (10) years unless sooner terminated under Section 14 of the Plan.
7. EXERCISE PRICE AND CONSIDERATION.
(a) The per Share exercise price for the Shares to be issued
pursuant to exercise of an Option or Stock Purchase Right shall be such price
as is determined by the Board, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the
grant of such Incentive Stock Option, owns stock representing more than ten
percent (10%) of the
4.
<PAGE>
voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the
fair market value per Share on the date of grant.
(B) granted to any Employee, the per Share exercise
price shall be no less than 100% of the fair market value per Share on the
date of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a person who, at the time of the
grant of such Option, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the
fair market value per Share on the date of the grant.
(B) granted to any person, the per Share exercise
price shall be no less than 85% of the fair market value per Share on the
date of grant.
(iii) In the case of a Stock Purchase Right granted to any
person, the per Share exercise price shall be no less than 85% of the fair
market value per Share on the date of grant.
For purposes of this Section 7(a), in the event that an Option or
Stock Purchase Right is amended to reduce the exercise price, the date of
grant of such Option or Stock Purchase Right shall thereafter be considered
to be the date of such amendment.
(b) The fair market value shall be determined by the Board in its
discretion; provided, however, that where there is a public market for the
Common Stock, the fair market value per Share shall be the mean of the bid
and asked prices (or the closing price per share if the Common Stock is
listed on the Nasdaq National Market of the Common Stock for the date of
grant, as reported in the Wall Street Journal (or, if not so reported, as
otherwise reported by Nasdaq) or, in the event the Common Stock is listed on
a stock exchange, the fair market value per Share shall be the closing price
on such exchange on the date of grant of the Option or Stock Purchase Right,
as reported in the Wall Street Journal.
(c) The consideration to be paid for the Shares to be issued upon
exercise of an Option or Stock Purchase Right, including the method of
payment, shall be determined by the Board and may consist entirely of cash,
check, promissory note, other Shares of Common Stock which (i) either have
been owned by the Optionee for more than six (6) months on the date of
surrender or were not acquired directly or indirectly, from the Company, and
(ii) have a fair market value on the date of surrender equal to the aggregate
exercise price of the Shares as to which said Option shall be exercised, or
any combination of such methods of payment, or such other consideration and
method of payment for the issuance of Shares to the extent permitted under
Sections 408 and 409 of the California General Corporation Law. In making
its determination as to the type of consideration to accept, the Board shall
consider if acceptance of such consideration may be reasonably expected to
benefit the Company (Section 315(b) of the California General Corporation
Law).
8. OPTIONS.
5.
<PAGE>
(a) TERM OF OPTION. The term of each Incentive Stock Option shall
be ten (10) years from the date of grant thereof or such shorter term as may
be provided in the Incentive Stock Option Agreement. The term of each Option
that is not an Incentive Stock Option shall be ten (10) years and one (1) day
from the date of grant thereof or such shorter term as may be provided in the
Stock Option Agreement. However, in the case of an Option granted to an
Optionee who, at the time the Option is granted, owns stock representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, (i) if the Option is an Incentive Stock
Option, the term of the Option shall be five (5) years from the date of grant
thereof or such shorter time as may be provided in the Stock Option
Agreement, or (ii) if the Option is a Nonstatutory Stock Option, the term of
the Option shall be five (5) years and one (1) day from the date of grant
thereof or such other term as may be provided in the Stock Option Agreement.
(b) EXERCISE OF OPTION.
(i) 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 Board, 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 Board, consist of any
consideration and method of payment allowable under Section 7 of the Plan.
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, notwithstanding the exercise of the Option. The Company shall issue
(or cause to be issued) such stock certificate promptly upon exercise of the
Option. In the event that the exercise of an Option is treated in part as
the exercise of an Incentive Stock Option and in part as the exercise of a
Nonstatutory Stock Option pursuant to Section 5(b), the Company shall issue a
separate stock certificate evidencing the Shares treated as acquired upon
exercise of an Incentive Stock Option and a separate stock certificate
evidencing the Shares treated as acquired upon exercise of a Nonstatutory
Stock Option and shall identify each such certificate accordingly in its
stock transfer records. 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.
Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which
the Option is exercised.
(ii) TERMINATION OF CONTINUOUS STATUS AS AN EMPLOYEE,
DIRECTOR OR CONSULTANT. In the event of termination of an Optionee's
Continuous Status as an
6.
<PAGE>
Employee, Director or Consultant, such Optionee may, but only within thirty
(30) days (or such other period of time not exceeding three (3) months in the
case of an Incentive Stock Option or six (6) months in the case of a
Nonstatutory Stock Option, as is determined by the Board, with such
determination in the case of an Incentive Stock Option being made at the time
of grant of the option) after the date of such termination (but in no event
later than the date of expiration of the term of such Option as set forth in
the Option Agreement), exercise the Option to the extent that such Optionee
was entitled to exercise it at the date of such termination. To the extent
that such Optionee was not entitled to exercise the Option at the date of
such termination, or if such Optionee does not exercise such Option (which
such Optionee was entitled to exercise) within the time specified herein, the
Option shall terminate.
(iii) DISABILITY OF OPTIONEE. Notwithstanding the provisions
of Section 8(b)(ii) above, in the event of termination of an Optionee's
Continuous Status as an Employee, Director or Consultant as a result of such
Optionee's total and permanent disability (as defined in Section 22(e)(3) of
the Code), such Optionee may, but only within six (6) months (or such other
period of time not exceeding twelve (12) months as is determined by the
Board, with such determination in the case of an Incentive Stock Option being
made at the time of grant of the Option) from the date of such termination
(but in no event later than the date of expiration of the term of such Option
as set forth in the Option Agreement), exercise the Option to the extent such
Optionee was entitled to exercise it at the date of such termination. To the
extent that such Optionee was not entitled to exercise the Option at the date
of termination, or if such Optionee does not exercise such Option (which such
Optionee was entitled to exercise) within the time specified herein, the
Option shall terminate.
(iv) DEATH OF OPTIONEE. In the event of the death of an
Optionee:
(A) during the term of the Option who is at the time
of his or her death an Employee, Director or Consultant of the Company and
who shall have been in Continuous Status as an Employee, Director or
Consultant since the date of grant of the Option, the Option may be
exercised, at any time within six (6) months (or such other period of time as
is determined by the Board at the time of grant of the Option) following the
date of death (but in no event later than the date of expiration of the term
of such Option as set forth in the Option Agreement), 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 of the right to exercise that
would have accrued had the Optionee continued living and remained in
Continuous Status as an Employee, Director or Consultant six (6) months (or
such other period of time as is determined by the Board at the time of grant
of the Option) after the date of death; or
(B) within thirty (30) days (or such other period of
time not exceeding three (3) months as is determined by the Board, with such
determination in the case of an Incentive Stock Option being made at the time
of grant of the Option) after the termination of Continuous Status as an
Employee, Director or Consultant, the Option may be exercised, at any time
within six (6) months (or such other period of time as is determined by the
Board at the time of grant of the Option) following the date of death (but in
no event later than the date of expiration of the term of such Option as set
forth in the Option Agreement), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest
7.
<PAGE>
or inheritance, but only to the extent of the right to exercise that had
accrued at the date of termination.
9. STOCK PURCHASE RIGHTS.
(a) RIGHTS TO PURCHASE. After the Board of Directors determines
that it will offer an Employee, Director or Consultant a Stock Purchase
Right, it shall deliver to the offeree a stock purchase agreement or stock
bonus agreement, as the case may be, setting forth the terms, conditions and
restrictions relating to the offer, including the number of Shares which such
person shall be entitled to purchase, and the time within which such person
must accept such offer, which shall in no event exceed six (6) months from
the date upon which the Board of Directors or its Committee made the
determination to grant the Stock Purchase Right. The offer shall be accepted
by execution of a stock purchase agreement or stock bonus agreement in the
form determined by the Board of Directors.
(b) ISSUANCE OF SHARES. Forthwith after payment therefor, the
Shares purchased shall be duly issued; provided, however, that the Board may
require that the Purchaser make adequate provision for any Federal and State
withholding obligations of the Company as a condition to the Purchaser
purchasing such Shares.
(c) REPURCHASE OPTION. Unless the Board determines otherwise, the
stock purchase agreement or stock bonus agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination
of the Purchaser's service with the Company for any reason (including death
or disability). If the Board so determines, the purchase price for shares
repurchased may be paid by cancellation of any indebtedness of the Purchaser
to the Company. The repurchase option shall lapse at such rate as the Board
may determine.
(d) OTHER PROVISIONS. The stock purchase agreement or stock bonus
agreement shall contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Board of Directors.
10. NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS. The
Options and Stock Purchase Rights may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or
by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee or Purchaser, only by the Optionee or Purchaser.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject to
any required action by the shareholders of the Company, the number of shares
of Common Stock covered by each outstanding Option and Stock Purchase Right,
and the number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Options or Stock Purchase Rights
have yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Option or Stock Purchase Right, or
repurchase of Shares from a Purchaser upon termination of services, as well
as the price per share of Common Stock covered by each such outstanding
Option or Stock Purchase Right, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
8.
<PAGE>
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock of the Company or the payment of a stock
dividend with respect to 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 Board, 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 adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock
subject to an Option or Stock Purchase Right.
In the event of the proposed dissolution or liquidation of the
Company, the Option will terminate immediately prior to the consummation of
such proposed action, unless otherwise provided by the Board. The Board 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 his or her Option as to all or any part of the Optioned
Stock, including Shares as to which the Option would not otherwise be
exercisable. 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, the Option shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation. In the event that such successor corporation refuses
to assume the Option or to substitute an equivalent option, the Board shall,
in lieu of such assumption or substitution, provide for the Optionee to have
the right to exercise the Option as to all of the Optioned Stock, including
Shares as to which the Option would not otherwise be exercisable. If the
Board makes an Option fully exercisable in lieu of assumption or substitution
in the event of a merger or sale of assets, the Board shall notify the
Optionee that the Option shall be fully exercisable for a period of fifteen
(15) days from the date of such notice, and the Option will terminate upon
the expiration of such period.
12. TIME OF GRANTING OPTIONS. The date of grant of an Option or Stock
Purchase Right shall, for all purposes, be the date on which the Board makes
the determination granting such Option or Stock Purchase Right. Notice of
the determination shall be given to each Employee, Director or Consultant to
whom an Option or Stock Purchase Right is so granted 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;
provided that, the following revisions or amendments shall require approval
of the shareholders of the Company in the manner described in Section 17 of
the Plan:
(i) any increase in the number of Shares subject to the
Plan, other than in connection with an adjustment under Section 11 of
the Plan;
9.
<PAGE>
(ii) any change in the designation of the class of persons
eligible to be granted Options and Stock Purchase Rights; or
(iii) any material increase in the benefits accruing to
participants under the Plan.
(b) SHAREHOLDER APPROVAL. If any amendment under Section 13(a) of
the Plan requires shareholder approval, the Company shall obtain such
shareholder approval as described in Section 17 of the Plan.
(c) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options or Stock Purchase Rights
already granted and such Options or Stock Purchase Rights shall remain in
full force and effect as if this Plan had not been amended or terminated,
unless mutually agreed otherwise between the Optionee or Purchaser (as the
case may be) and the Board, which agreement must be in writing and signed by
the Optionee or Purchaser (as the case may be) and the Company.
14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option or Stock Purchase Rights unless the
exercise of such Option or Stock Purchase Rights and the issuance and
delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed,
and shall be further subject to he approval of counsel for the Company with
respect to such compliance.
As a condition to the exercise of an Option or Stock Purchase Rights, the
Company may require the person exercising such Option or Stock Purchase
Rights 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 of the aforementioned
relevant provisions of law.
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.
The 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.
16. OPTION, STOCK PURCHASE AND STOCK BONUS AGREEMENTS. Options shall be
evidenced by written option agreements in such form as the Board shall
approve. Upon the exercise of Stock Purchase Rights, the Purchaser shall sign
a stock purchase agreement or stock bonus agreement in such form as the Board
shall approve.
10.
<PAGE>
17. SHAREHOLDER APPROVAL.
(a) Continuance of the Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months before or after the
date the Plan is adopted.
(b) Any required approval of the shareholders of the Company shall
be solicited substantially in accordance with Section 14(a) of the Exchange
Act and the rules and regulations promulgated thereunder.
18. INFORMATION TO OPTIONEES AND PURCHASER. The Company shall provide
to each Optionee and Purchaser, during the period for which such Optionee or
Purchaser has one or more Options or Stock Purchase Rights outstanding,
copies of all annual reports and other information which are provided to all
shareholders of the Company. The Company shall not be required to provide
such information if the issuance of Options or Stock Purchase Rights under
the Plan is limited to key employees whose duties in connection with the
Company assure their access to equivalent information.
11.
<PAGE>
TRUEVISION, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON OCTOBER 28, 1997
The undersigned hereby appoints LOUIS J. DOCTOR and R. JOHN CURSON and each
of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of Truevision, Inc. (the
"Company") which the undersigned may be entitled to vote at the Annual Meeting
of Stockholders of the Company to be held at the Company's offices at 2500 Walsh
Avenue, Santa Clara, California on Tuesday, October 28, 1997, at 10:00 a.m., and
at any and all continuations and adjournments thereof, with all powers that the
undersigned would possess if personally present, upon and in respect of the
following matters and in accordance with the following instructions, with
discretionary authority as to any and all other matters that may properly come
before the meeting.
FOLD AND DETACH HERE
<PAGE>
Please mark your votes
as indicated in this example
X
Unless a contrary direction is indicated, this Proxy will be voted for all
nominees listed in Proposal 1 and for Proposals 2 and 3 as more specifically
described in the proxy statement. If specific instructions are indicated, this
Proxy will be voted in accordance therewith.
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED BELOW.
PROPOSAL 1: To elect five directors to hold office until the 1998 Annual Meeting
of Stockholders.
<TABLE>
<S> <C>
FOR all nominees listed below WITHHOLD AUTHORITY to vote for
(except as marked to the contrary below). all nominees listed below.
NOMINEES
Walter W. Bregman; Louis J. Doctor; William H. McAleer; TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S)
Kieth E. Sorenson; and Conrad J. Wredberg WRITE SUCH NOMINEE(S)' NAME(S) BELOW:
-------------------------------------------------------
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MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 2.
FOR AGAINST ABSTAIN
PROPOSAL 2: To approve the Company's Amended 1988 / / / / / /
Incentive Stock Plan, as amended, to increase the
aggregate number of shares of Common Stock
authorized for issuance under such plan by 600,000
shares and to permit participation by non-employee
directors under such plan.
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 3.
FOR AGAINST ABSTAIN
PROPOSAL 3: To ratify selection of Price Waterhouse / / / / / /
LLP as independent auditors of the Company for its
fiscal year ending June 27, 1998.
</TABLE>
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. IF THE STOCK IS REGISTERED IN
THE NAMES OF TWO OR MORE PERSONS, EACH SHOULD SIGN. EXECUTORS, ADMINISTRATORS,
TRUSTEES, GUARDIANS AND ATTORNEYS-IN-FACT SHOULD ADD THEIR TITLES. IF SIGNER IS
A CORPORATION, PLEASE GIVE FULL CORPORATE NAME AND HAVE A DULY AUTHORIZED
OFFICER SIGN, STATING TITLE. IF SIGNER IS A PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED PERSON.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
Signature(s) Dated: 1997
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FOLD AND DETACH HERE
