<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment No. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for 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:
<PAGE>
[TRUEVISION LOGO OR NAME]
2500 WALSH AVENUE
SANTA CLARA, CALIFORNIA 95051
NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 10, 1998
TO THE STOCKHOLDERS OF TRUEVISION, INC.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of
TRUEVISION, INC., a Delaware corporation (the "Company"), will be held on
Friday, April 10, 1998 at 10:00 a.m. local time at the Company's offices at
2500 Walsh Avenue, Santa Clara, California 95051, for the following purpose:
1. To approve the Company's 1997 Equity Incentive Plan.
The foregoing item of business is more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on February 18,
1998, as the record date for the determination of stockholders entitled to
notice of and to vote at this Special Meeting and at any adjournment or
postponement thereof.
By Order of the Board of Directors
R. JOHN CURSON
Secretary
Santa Clara, California
March 4, 1998
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 A SPECIAL MEETING OF STOCKHOLDERS
APRIL 10, 1998
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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 a
Special Meeting of Stockholders to be held on April 10, 1998, at 10:00 a.m.
local time (the "Special Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Special Meeting. The Special 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 March 4,
1998 to all stockholders entitled to vote at the Special 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 $1,500, if
it renders solicitation services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on
February 18, 1998 will be entitled to notice of and to vote at the Special
Meeting. At the close of business on February 18, 1998 the Company had
outstanding and entitled to vote 12,971,992 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 Special
Meeting.
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 the proposal 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.
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.
<PAGE>
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
APPROVAL OF 1997 EQUITY INCENTIVE 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 December 1997 there
were 4,241,300 shares of the Company's Common Stock reserved for issuance
under the Option Plan. The Option Plan expired on February 4, 1998 and no
further options may be granted under the Option Plan. In December 1997, in
anticipation of the expiration of the Option Plan, the Board of Directors
adopted the Company's 1997 Equity Incentive Plan (the "Incentive Plan"), and
reserved 600,000 shares for issuance under the Incentive Plan. Future option
grants to employees, directors and consultants may only be made under the
Incentive Plan. Outstanding options and grants previously made under the
Option Plan will continue to be governed by their existing terms, which
contain substantially the same terms and conditions as those described below
for the Incentive Plan. The Board of Directors adopted the Incentive Plan to
ensure that the Company can continue to grant stock options, restricted stock
purchase awards and stock bonuses to employees, directors and consultants at
levels determined appropriate by the Board of Directors and the Compensation
Committee.
As of December 31, 1997, options (net of canceled or expired options)
covering an aggregate of 3,363,421 shares of the Company's Common Stock had
been granted under the Option Plan, and no shares remained available for
future grant under the Option Plan. As of December 31, 1997, no options,
restricted stock purchase awards or stock bonuses had been granted under the
Incentive Plan, and 600,000 shares remained available for future grant under
the Incentive Plan. 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. All of these options were granted under the
now expired Option Plan.
Stockholders are requested in this Proposal to approve the Incentive
Plan and to reserve for issuance 600,000 shares of Common Stock under the
Incentive Plan. At the last Annual Meeting of Stockholders held on October
28, 1997, the stockholders approved an increase to the number of shares
reserved for issuance under the Option Plan by 600,000 shares. However, all
such shares available for issuance under the Option Plan became unavailable
for grant when the Option Plan expired in February 1998. As a result, in
order for the Company to have the ability to grant options, restricted stock
purchase awards and stock bonuses to employees, directors and consultants,
the stockholders must approve the adoption of the Incentive Plan and
re-approve the reservation of the 600,000 shares of Common Stock thereunder.
If the stockholders fail to approve this Proposal, the Incentive Plan will
terminate and any outstanding options, restricted stock purchase awards and
stock bonuses granted under the Incentive Plan will terminate and become null
and void. In addition, if the stockholders fail to approve the Incentive
Plan and the Incentive Plan terminates, the Company will not have a plan
under which it may grant options, restricted stock purchase awards and stock
bonuses to employees, directors and consultants in the future. The
affirmative vote of the holders of a majority of the shares present in person
or represented by proxy and entitled to vote at the meeting will be required
to approve the Incentive Plan. Abstentions will be counted toward 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 this
matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 1
2.
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The essential features of the Incentive Plan are outlined below:
GENERAL
The Incentive Plan provides for the grant or issuance of incentive stock
options, nonstatutory stock options, restricted stock purchase awards and
stock bonuses to employees, directors and consultants (collectively, "Stock
Awards"). Incentive stock options granted under the Incentive Plan are
intended to qualify as "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
Nonstatutory stock options granted under the Incentive Plan are intended not
to qualify as incentive stock options under the Code. See "Federal Income
Tax Information" for a discussion of the tax treatment of the various Stock
Awards included in the Incentive Plan.
PURPOSE
The Incentive Plan provides a means by which selected employees,
directors and consultants to the Company, and its affiliates, may be given an
opportunity to purchase Common Stock of the Company. The Company, by means
of the Incentive Plan, seeks to retain the services of persons who are now
employees, directors or consultants to the Company or its affiliates, to
secure and retain the services of new employees, directors and consultants,
and to provide incentives for such persons to exert maximum efforts for the
success of the Company and its affiliates.
FORMS OF BENEFIT
The Incentive Plan provides for incentive stock options, nonstatutory
stock options, restricted stock purchase awards and stock bonuses.
ADMINISTRATION
The Incentive Plan is administered by the Board unless the Board
delegates administration to a committee composed of two (2) or more Board
members, all of the members of which may be non-employee directors (as
defined in Rule 16b-3 promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) and may also be, in the discretion of the
Board, outside directors (as defined in Section 162(m) of the Code). If
administration is delegated to a committee, such committee will have, in
connection with the administration of the Incentive Plan, the powers
possessed by the Board, subject, however, to such resolutions, not
inconsistent with the provisions of the Incentive Plan, as may be adopted
from time to time by the Board. The Board or the committee may delegate to a
subcommittee of one or more members of the Board the authority to grant Stock
Awards to eligible persons who are not then subject to Section 16 of the
Exchange Act and/or who are either (i) not then employees covered by Section
162(m) of the Code and are not expected to be covered by Section 162(m) of
the Code at the time of recognition of income resulting from such Stock
Award, or (ii) not persons with respect to whom the Company wishes to avoid
the application of Section 162(m) of the Code. The Board may abolish a
committee or subcommittee at any time and revest in the Board the
administration of the Incentive Plan. The Board has delegated the
administration of the Incentive Plan to the Compensation Committee.
The Board has the power to determine from time to time which of the
persons eligible under the Incentive Plan shall be granted Stock Awards, the
type of Stock Awards to be granted, when and how each Stock Award shall be
granted, to construe and interpret the Incentive Plan and Stock Awards
granted under it, and to establish, amend and revoke rules and regulations
for its administration. The Board may correct any defect in the Incentive
Plan or in any Stock Award agreement to make the Incentive Plan fully
effective.
SHARES SUBJECT TO THE INCENTIVE PLAN
The Common Stock that may be sold pursuant to Stock Awards under the
Incentive Plan shall not exceed in the aggregate 600,000 shares of the
Company's Common Stock. If any Stock Award expires or terminates, in whole
or in part, without having been exercised in full, the Common Stock not
purchased under such Stock Award will revert to and again become available
for issuance under the Incentive Plan. However, any currently outstanding
Stock Awards granted under the now expired Option Plan which expire without
being exercised in full will NOT revert to and become available for issuance
under the Incentive Plan. The Common Stock subject to the Incentive Plan may
be unissued shares or reacquired shares, bought on the market or otherwise.
3.
<PAGE>
ELIGIBILITY
Incentive stock options may be granted only to employees. Nonstatutory
stock options, restricted stock purchase awards and stock bonuses may be
granted only to employees, directors or consultants.
No person is eligible for the grant of an incentive stock option if, at
the time of grant, such person owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the
Company unless the exercise price of such option is at least one hundred ten
percent (110%) of the fair market value of Common Stock subject to the option
at the date of grant and the option is not exercisable after the expiration
of five (5) years from the date of grant, or in the case of a restricted
stock purchase award, the purchase price is at least one hundred percent
(100%) of the fair market value of Common Stock subject to the restricted
stock purchase award at date of grant. No person shall be eligible to be
granted Stock Awards covering more than three hundred thousand (300,000)
shares of the Company's Common Stock in any calendar year.
TERM AND TERMINATION
The following is a description of the permissible terms of options under
the Incentive Plan. Individual option grants may be more restrictive.
No option is exercisable after the expiration of ten (10) years from the
date it was granted.
In the event an optionee's continuous status as an employee, director or
consultant is terminated, for any reason other than death or disability, the
optionee may exercise his or her option (to the extent that the optionee was
entitled to exercise it at the time of termination) but only within the
earlier of (i) the date thirty (30) days after the termination of the
optionee's continuous status as an employee, director or consultant, or (ii)
the expiration of the term of the option as set forth in the option agreement.
In the event an optionee's continuous status as an employee, director or
consultant terminates as a result of the optionee's death or disability, the
optionee (or such optionee's estate, heirs or beneficiaries) may exercise his
or her option, but only within the period ending on the earlier of (i) six
(6) months following such termination (or such longer or shorter period as
specified in the option agreement) or (ii) the expiration of the term of the
option as set forth in the option agreement.
An optionee's option agreement may also provide that if the exercise of
the option following the termination of the optionee's continuous status as
an employee, director, or consultant would result in liability under Section
16(b) of the Exchange Act, then the option shall terminate on the earlier of
(i) the expiration of the term of the option set forth in the option
agreement, or (ii) the tenth (10th) day after the last date on which such
exercise would result in such liability under Section 16(b) of the Exchange
Act. Finally, an optionee's option agreement may also provide that if the
exercise of the option following the termination of the optionee's continuous
status as an employee, director or consultant would be prohibited at any time
solely because the issuance of shares would violate the registration
requirements under the Securities Act of 1933, as amended, then the option
shall terminate on the earlier of (i) the expiration of the term of the
option as set forth in the immediately preceding paragraph, or (ii) the
expiration of a period of thirty (30) days after the termination of the
optionee's continuous status as an employee, director or consultant during
which the exercise of the option would not be in violation of such
registration requirements.
In the event a stock bonus or restricted stock recipient's continuous
status as an employee, director or consultant terminates, the Company may
repurchase or otherwise reacquire any or all of the shares of Common Stock
held by that person which have not vested as of the date of termination under
the terms of the stock bonus or restricted stock purchase agreement between
the Company and such person.
EXERCISE/PURCHASE PRICE
The exercise price of each incentive stock option will not be less than
one hundred percent (100%) of the fair market value of the Company's Common
Stock on the date of grant, and in some cases may be higher (see
"Eligibility"). The exercise price of each nonstatutory stock option will
not be less than eighty-five percent (85%) of the fair market value of the
Company's Common Stock on the date of grant. The purchase price of
restricted stock will not be less than eighty-five percent (85%) of the fair
market value of the Company's
4.
<PAGE>
Common Stock on the date such Stock Award is made. Stock bonuses may be
awarded in consideration for past services actually rendered to the Company
or for its benefit.
CONSIDERATION
The purchase price of Common Stock acquired pursuant to a Stock Award is
paid either in cash at the time of exercise or purchase, or (if determined by
the Board at the time of grant for an option) by deferred payment or in any
other form of legal consideration that may be acceptable to the Board.
Additionally, in the case of an option, and in the discretion of the Board at
the time of the grant, by delivery to the Company of other Common Stock of
the Company. In the case of any deferred payment arrangement, interest will
be payable at least annually and will be charged at the minimum rate of
interest necessary to avoid the imputation of interest.
TRANSFERABILITY
An incentive stock option shall not be transferable except by will or by
the laws of descent and distribution, and shall be exercisable during the
lifetime of the person to whom the incentive stock option is granted only by
such person. A nonstatutory stock option shall be transferable only to the
extent specifically provided for in the option agreement evidencing the
nonstatutory stock option, provided that if the nonstatutory stock option
agreement does not provide for transferability, then the option is not
transferable except by will or by the laws of descent and distribution or
pursuant to a domestic relations order. A stock bonus or restricted stock
purchase award shall not be transferable except by will or by the laws of
descent and distribution or pursuant to a domestic relations order. A Stock
Award holder may designate a beneficiary who may exercise his or her Stock
Award after death.
VESTING
The total number of shares of Common Stock subject to an option may, but
need not, be allotted in periodic installments. The option agreement may
provide that from time to time during each of such installment periods, the
option may become exercisable ("vest") with respect to some or all of the
shares allotted to that period, and may be exercised with respect to some or
all of the shares allotted to such period and/or any prior period as to which
the option became vested but was not fully exercised. The option agreement
may also provide that an optionee may exercise an option prior to full
vesting, provided that the Company may have a repurchase right with respect
to any unvested shares.
Restricted stock purchase awards and stock bonuses granted under the
Incentive Plan may be granted pursuant to a repurchase option in favor of the
Company in accordance with a vesting schedule determined by the Board.
ADJUSTMENTS UPON CHANGES IN COMMON STOCK
If any change is made in the Common Stock subject to the Incentive Plan,
or subject to any Stock Award, without receipt of consideration by the
Company (through merger, consolidation, reorganization, recapitalization,
stock dividend, dividend in property other than cash, stock split,
liquidating dividend, combination of shares, exchange of shares, change in
corporate structure or otherwise), the class(es) and maximum number of shares
subject to the Incentive Plan, the maximum annual Stock Award applicable
under the Incentive Plan and the class(es) and number of shares and price per
share of Common Stock subject to outstanding Stock Awards will be
appropriately adjusted.
In the event of a merger, consolidation, liquidation, dissolution or the
sale of substantially all of the Company's assets or a reverse merger in
which the Company is the surviving corporation but the shares of the
Company's Common Stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise, any surviving corporation shall assume any
Stock Awards outstanding under the Incentive Plan or shall substitute similar
awards for those outstanding under the Incentive Plan. In the event a
surviving corporation refuses to assume such Stock Awards or substitute
similar awards, then, with respect to Stock Awards held by persons then
performing services as employees, directors or consultants, the time during
which such Stock Awards may be exercised shall be accelerated prior to
completion of such transaction and such Stock Awards terminated if not
exercised prior to such transaction.
5.
<PAGE>
AMENDMENT OF THE INCENTIVE PLAN
The Board at any time, and from time to time, may amend the Incentive
Plan. However, no amendment shall be effective unless approved by the
stockholders of the Company within twelve (12) months before or after the
adoption of the amendment, where such amendment requires stockholder approval
in order for the Incentive Plan to satisfy the requirements of Section 422 of
the Code, Rule 16b-3 of the Exchange Act or any Nasdaq or securities exchange
listing requirement. The Board may in its sole discretion submit any other
amendment to the Incentive Plan for stockholder approval.
TERMINATION OR SUSPENSION OF THE INCENTIVE PLAN
The Board may suspend or terminate the Incentive Plan at any time.
Unless sooner terminated, the Incentive Plan shall terminate on December 15,
2007. No Stock Awards may be granted under the Incentive Plan while the
Incentive Plan is suspended or after it is terminated.
FEDERAL INCOME TAX INFORMATION
INCENTIVE STOCK OPTIONS. Incentive stock options under the Incentive
Plan are intended to be eligible for the favorable federal income tax
treatment accorded "incentive stock options" under the Code.
There generally are no federal income tax consequences to the optionee
or the Company by reason of the grant or exercise of an incentive stock
option. However, the exercise of an incentive stock option may increase the
optionee's alternative minimum tax liability, if any.
If an optionee holds Common Stock acquired through exercise of an
incentive stock option for at least two (2) years from the date on which the
option is granted and at least one (1) year from the date on which the shares
are transferred to the optionee upon exercise of the option, any gain or loss
on a disposition of such Common Stock will be capital gain or loss.
Generally, if the optionee disposes of the Common Stock before the expiration
of either of these holding periods (a "disqualifying disposition"), at the
time of disposition, the optionee will realize taxable ordinary income equal
to the lesser of (a) the excess of the Common Stock's fair market value on
the date of exercise over the exercise price, or (b) the optionee's actual
gain, if any, on the purchase and sale. The optionee's additional gain, or
any loss, upon the disqualifying disposition will be a capital gain or loss,
which will be long-term, mid-term or short-term depending on how long the
Common Stock was held. Capital gains currently are generally subject to lower
tax rates than ordinary income. Slightly different rules may apply to
optionees who acquire Common Stock subject to certain repurchase options or
who are subject to Section 16(b) of the Exchange Act.
To the extent the optionee recognizes ordinary income by reason of a
disqualifying disposition, the Company will generally be entitled (subject to
the requirement of reasonableness, the provisions of Section 162(m) of the
Code and the satisfaction of a tax reporting obligation) to a corresponding
business expense deduction in the tax year in which the disqualifying
disposition occurs.
NONSTATUTORY STOCK OPTIONS. Nonstatutory stock options granted under
the Incentive Plan generally have the following federal income tax
consequences:
There are no tax consequences to the optionee or the Company by reason
of the grant of a nonstatutory stock option. Upon exercise of a nonstatutory
stock option, the optionee normally will recognize taxable ordinary income
equal to the excess of the Common Stock's fair market value on the date of
exercise over the option exercise price. With respect to employees, the
Company is generally required to withhold from regular wages or supplemental
wage payments an amount based on the ordinary income recognized. Generally,
the Company will be entitled (subject to the requirement of reasonableness,
the provisions of Section 162(m) of the Code and the satisfaction of a tax
reporting obligation) to a business expense deduction equal to the taxable
ordinary income realized by the optionee. Upon disposition of the Common
Stock, the optionee will recognize a capital gain or loss equal to the
difference between the selling price and the sum of the amount paid for such
Common Stock plus any amount recognized as ordinary income upon exercise of
the option. Such gain or loss will be long-term, mid-term or short-term
depending on how long the Common Stock was held. Slightly different rules may
apply to optionees who acquire Common Stock subject to certain repurchase
options or who are subject to Section 16(b) of the Exchange Act.
6.
<PAGE>
RESTRICTED STOCK PURCHASE AWARDS AND STOCK BONUSES. Restricted stock
purchase awards and stock bonuses granted under the Incentive Plan generally
have the following federal income tax consequences:
Upon acquisition of the Common Stock, the recipient normally will
recognize taxable ordinary income equal to the excess of the Common Stock's
fair market value over the purchase price, if any. However, to the extent
the Common Stock is subject to certain types of vesting restrictions, the
taxable event will be delayed until the vesting restrictions lapse unless the
recipient elects to be taxed on receipt of the Common Stock. With respect to
employees, the Company is generally required to withhold from regular wages
or supplemental wage payments an amount based on the ordinary income
recognized. Generally, the Company will be entitled (subject to the
requirement of reasonableness, the provisions of Section 162(m) of the Code
and the satisfaction of a tax reporting obligation) to a business expense
deduction equal to the taxable ordinary income realized by the optionee.
Upon disposition of the Common Stock, the optionee will recognize a capital
gain or loss equal to the difference between the selling price and the sum of
the amount paid for such Common Stock plus any amount recognized as ordinary
income upon acquisition (or vesting) of the Common Stock. Such gain or loss
will be long-term, mid-term or short-term depending on how long the Common
Stock was held. Slightly different rules may apply to optionees who acquire
Common Stock subject to certain repurchase options or who are subject to
Section 16(b) of the Exchange Act.
POTENTIAL LIMITATION ON COMPANY DEDUCTIONS. Section 162(m) of the Code
denies a deduction to any publicly held corporation for compensation paid to
certain employees in a taxable year to the extent that compensation exceeds
$1 million for a covered employee. It is possible that compensation
attributable to Stock Awards granted in the future under the Incentive Plan,
when combined with all other types of compensation received by a covered
employee from the Company, may cause this limitation to be exceeded in any
particular year.
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with Treasury regulations issued under Section 162(m) of the Code,
compensation attributable to stock options will qualify as performance-based
compensation, provided that: (i) the stock award plan contains a per-employee
limitation on the number of shares for which stock options and stock
appreciation rights may be granted during a specified period; (ii) the
per-employee limitation is approved by the stockholders; (iii) the award is
granted by a compensation committee comprised solely of "outside directors";
and (iv) the exercise price of the award is no less than the fair market
value of the stock on the date of grant. Compensation attributable to
restricted stock will qualify as performance-based compensation, provided
that: (i) the award is granted by a compensation committee comprised solely
of "outside directors"; and (ii) the purchase price of the award is no less
than the fair market value of the stock on the date of grant. Stock bonuses
qualify as performance-based compensation under the Treasury regulations only
if: (i) the award is granted by a compensation committee comprised solely of
"outside directors"; (ii) the award is granted (or exercisable) only upon the
achievement of an objective performance goal established in writing by the
compensation committee while the outcome is substantially uncertain; (iii)
the compensation committee certifies in writing prior to the granting (or
exercisability) of the awards that the performance goal has been satisfied;
and (iv) prior to the granting (or exercisability) of the award, stockholders
have approved the material terms of the award (including the class of
employees eligible for such award, the business criteria on which the
performance goal is based, and the maximum amount (or formula used to
calculate the amount) payable upon attainment of the performance goal.
NEW PLAN BENEFITS
As of February 17, 1998, the Company had granted to non-executive
employees as a group, options covering an aggregate of 12,900 shares of the
Company's Common Stock at an exercise price of $2.125 per share, for a total
value equal to approximately $27,413 under the Incentive Plan, subject to the
approval of the Company's stockholders.
7.
<PAGE>
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 December 31, 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 14.2%
P.O. Box 330
46103 Herzlia B, Israel
Entities affiliated with 21st Century
Communications Partners, L.P.(2) ................. 1,315,000 10.0%
767 Fifth Avenue
45th Floor
New York, New York 10153
Louis J. Doctor (3) ................................ 455,784 3.4%
Carl C. Calabria (4) ............................... 261,655 2.0%
R. John Curson (5) ................................. 126,310 1.0%
William M. Carter (6) .............................. 88,380 *
Harvey A. Chesler (7) .............................. 38,705 *
Robert J. O'Brien .................................. 25,151 *
Walter W. Bregman (8) .............................. 53,475 *
Conrad J. Wredberg (9) ............................. 18,750 *
William H. McAleer (10) ............................ 11,775 *
Keith E. Sorenson (11) ............................. 11,450 *
All executive officers and directors as a
group (10 persons)(12) ............................ 1,091,435 8.0%
</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 12,854,883 shares of Common Stock outstanding
on December 31, 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 partner of 21st Century, 21st
Century T-E and 21st Century Foreign and are also general partners of
8.
<PAGE>
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 353,333 shares of Common Stock issuable pursuant to a warrant
exercisable within 60 days of December 31, 1997 and 14,400 shares of
Common Stock issuable pursuant to options exercisable within 60 days of
December 31, 1997.
(4) Includes 161,655 shares of Common Stock issuable pursuant to options
exercisable within 60 days of December 31, 1997.
(5) Includes 126,310 shares of Common Stock issuable pursuant to options
exercisable within 60 days of December 31, 1997.
(6) Includes 88,380 shares of Common Stock issuable pursuant to options
exercisable within 60 days of December 31, 1997.
(7) Includes 37,705 shares of Common Stock issuable pursuant to options
exercisable within 60 days of December 31, 1997.
(8) Includes 37,500 shares of Common Stock issuable pursuant to options
exercisable within 60 days of December 31, 1997.
(9) Includes 16,250 shares of Common Stock issuable pursuant to options
exercisable within 60 days of December 31, 1997.
(10) Includes 9,375 shares of Common Stock issuable pursuant to options
exercisable within 60 days of December 31, 1997.
(11) Includes 11,250 shares of Common Stock issuable pursuant to options
exercisable within 60 days of December 31, 1997.
(12) Includes an aggregate of 856,158 shares of Common Stock issuable
pursuant to options and warrants exercisable within 60 days of December
31, 1997. See Notes (3) through (11) above.
9.
<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 attended,
$1,000 per committee meeting if held on the same date as a Board of Directors
meeting and $2,000 per committee meeting attended 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 attended, $750
per committee meeting attended if held on the same date as a Board of
Directors meeting and $1,500 per committee meeting attended if held on a
different date than a Board of Directors meeting. Each non-employee director
of the Company receives half of the current fee paid for attendance at a
Board of Directors meeting or committee meeting if the non-employee director
participates telephonically. 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
$3.125, the fair market value on the date of grant (based on the closing
sales price reported on the Nasdaq National Market).
10.
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table shows, for the fiscal years ended July 1, 1995, June
29, 1996 and June 28, 1997, compensation awarded or paid to, or earned by the
Company's Chief Executive Officer and its other four most highly compensated
executive officers and one former executive officer who departed from the
Company during fiscal year 1997 (the "Named Executive Officers"):
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- ------------
OTHER ALL
NAME AND PRINCIPAL ANNUAL OTHER
POSITION YEAR SALARY($) 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 shares; Mr.
Curson, 148,000 shares; Mr. Carter, 144,000 shares; and Mr. Chesler,
41,800 shares. See "Option Repricing Information" below.
11.
<PAGE>
(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 $78,000 in severance payments.
(13) Represents payment of a bonus for accepting employment.
12.
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
All stock options granted to the Named Executive Officers in fiscal 1997
are disclosed in the following table. This table discloses, for each Named
Executive Officer, the gain or "spread" that would be realized if the options
were exercised on the expiration date, assuming that the Company's stock had
appreciated at the level indicated, compounded annually over the life of the
options.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------------------------- VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
NUMBER OF OPTIONS PRICE APPRECIATION FOR
SECURITIES GRANTED TO EXERCISE OPTION TERMS (3)
UNDERLYING EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME OPTIONS (#)(1) FISCAL YEAR (2) ($/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 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. Prior
13.
<PAGE>
to its expiration on February 4, 1998, the Board of Directors could
reprice the options under the terms of the Option Plan.
(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 SEC 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
SHARES OPTIONS VALUE OF IN-THE-MONEY
ACQUIRED AS OF JUNE 28, 1997 OPTIONS AS OF JUNE 28, 1997(1)
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.
14.
<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 $2.15625. The Repriced Options are treated as new option grants.
The following table shows certain information concerning the repricing
of options received by executive officers during the last ten years.
TEN YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION> Length of
Number of Market Original
Securities Price of Option
Underlying Stock at Exercise Price New Term
Options Time of at Time of Exercise Remaining
Repriced Repricing Repricing Price at Date of
Name Date (#) ($) ($) ($) 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>
15.
<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 at a price
of $2.75 per share (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.
BY ORDER OF THE BOARD OF DIRECTORS.
Santa Clara, California
March 4, 1998
16.
<PAGE>
APPENDIX A
TRUEVISION, INC.
1997 EQUITY INCENTIVE PLAN
ADOPTED BY THE BOARD OF DIRECTORS ON DECEMBER 16, 1997
APPROVED BY STOCKHOLDERS ON __________, 1998
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by which selected
Employees and Directors of and Consultants to the Company and its Affiliates
may be given an opportunity to benefit from increases in value of the common
stock of the Company ("Common Stock") through the granting of (i) Incentive
Stock Options, (ii) Nonstatutory Stock Options, (iii) stock bonuses and (iv)
rights to purchase restricted stock, all as defined below.
(b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees, Directors or Consultants, to secure and retain
the services of new Employees, Directors and Consultants, and to provide
incentives for such persons to exert maximum efforts for the success of the
Company and its Affiliates.
(c) The Company intends that the Stock Awards issued under the Plan
shall, in the discretion of the Board or any Committee to which
responsibility for administration of the Plan has been delegated pursuant to
subsection 3(c), be either (i) Options granted pursuant to Section 6 hereof,
including Incentive Stock Options and Nonstatutory Stock Options, or (ii)
stock bonuses or rights to purchase restricted stock granted pursuant to
Section 7 hereof. All Options shall be separately designated Incentive Stock
Options or Nonstatutory Stock Options at the time of grant, and a separate
certificate or certificates will be issued for shares purchased on exercise
of each type of Option.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections
424(e) and (f) respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a Committee appointed by the Board in accordance
with subsection 3(c) of the Plan.
(e) "COMPANY" means TrueVision, Inc., a Delaware corporation.
(f) "CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is compensated
for such services, provided that the term "Consultant" shall not include
Directors who are paid only a director's fee by the Company or who are not
compensated by the Company for their services as Directors.
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(g) "CONTINUOUS SERVICE" means the employment or relationship as a
Director or Consultant is not interrupted or terminated. The Board, in its
sole discretion, may determine whether Continuous Service shall be considered
interrupted in the case of: (i) any leave of absence approved by the Board,
including sick leave, military leave, or any other personal leave; or (ii)
transfers between locations of the Company or between the Company, Affiliates
or their successors.
(h) "DIRECTOR" means a member of the Board.
(i) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as
a Director nor payment of a director's fee by the Company shall be sufficient
to constitute "employment" by the Company.
(j) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(k) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock of the Company determined as follows:
(1) If the Common Stock is listed on any established stock
exchange, or traded on the Nasdaq National Market or The Nasdaq SmallCap
Market, the Fair Market Value of a share of Common Stock shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or market (or the exchange or market with the
greatest volume of trading in Common Stock) on the date of grant of the Stock
Award, as reported in the Wall Street Journal or such other source as the
Board deems reliable;
(2) In the absence of such markets for the Common Stock, the
Fair Market Value shall be determined in good faith by the Board.
(l) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(m) "NON-EMPLOYEE DIRECTOR" means 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 promulgated pursuant to
the Securities Act of 1933 ("Regulation S-K"), 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.
(n) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.
(o) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(p) "OPTION" means a stock option granted pursuant to the Plan.
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(q) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of
the Plan.
(r) "OPTIONEE" means a person to whom an Option is granted pursuant to
the Plan.
(s) "OUTSIDE DIRECTOR" means 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.
(t) "PLAN" means this 1997 Equity Incentive Plan.
(u) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect when discretion is being exercised with respect
to the Plan.
(v) "STOCK AWARD" means any right granted under the Plan, including any
Option, any stock bonus, and any right to purchase restricted stock.
(w) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of
an individual Stock Award grant. Each Stock Award Agreement shall be subject
to the terms and conditions of the Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a Committee, as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons
eligible under the Plan shall be granted Stock Awards; when and how each
Stock Award shall be granted; whether a Stock Award will be an Incentive
Stock Option, a Nonstatutory Stock Option, a stock bonus, a right to purchase
restricted stock, or a combination of the foregoing; the provisions of each
Stock Award granted (which need not be identical), including the time or
times when a person shall be permitted to receive stock pursuant to a Stock
Award; and the number of shares with respect to which a Stock Award shall be
granted to each such person.
(2) To construe and interpret the Plan and Stock Awards
granted under it, and to establish, amend and revoke rules and regulations
for its administration. The Board, in the exercise of this power, may
correct any defect, omission or inconsistency in the Plan or in any Stock
Award Agreement, in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.
(3) To amend the Plan or a Stock Award as provided in Section
12.
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(4) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests
of the Company which are not in conflict with the provisions of the Plan.
(c) The Board may delegate administration of the Plan to a committee or
committees ("Committee") of one (1) or more members of the Board. In the
discretion of the Board, a Committee may consist solely of two (2) or more
Outside Directors, in accordance with Code Section 162(m), or solely of two
(2) or more Non-Employee Directors, in accordance with Rule 16b-3. If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee any
of the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter be to the Committee or
such a subcommittee), subject, however, to such resolutions, not inconsistent
with the provisions of the Plan, as may be adopted from time to time by the
Board. The Board may abolish the Committee at any time and revest in the
Board the administration of the Plan.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 11 relating to adjustments upon
changes in stock, the stock that may be issued pursuant to Stock Awards shall
not exceed in the aggregate six hundred thousand (600,000) shares of Common
Stock. If any Stock Award granted pursuant to the Plan shall for any reason
expire or otherwise terminate, in whole or in part, without having been
exercised in full (or vested in the case of restricted stock awards), the
stock not acquired under such Stock Award shall revert to and again become
available for issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to Employees. Stock
Awards other than Incentive Stock Options may be granted only to Employees,
Directors or Consultants.
(b) No person shall be eligible for the grant of an Incentive Stock
Option if, at the time of grant, such person owns (or is deemed to own
pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of
the Company or of any of its Affiliates unless the exercise price of such
Option is at least one hundred ten percent (110%) of the Fair Market Value of
such stock at the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant.
(c) Subject to the provisions of Section 11 relating to adjustments upon
changes in stock, no person shall be eligible to be granted Stock Awards
covering more than three hundred thousand (300,000) shares of Common Stock in
any calendar year.
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6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise)
the substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.
(b) PRICE. The exercise price of each Incentive Stock Option shall be
not less than one hundred percent (100%) of the Fair Market Value of the
stock subject to the Option on the date the Option is granted, and the
exercise price of each Nonstatutory Stock Option shall be not less than
eighty-five percent (85%) of the Fair Market Value of the stock subject to
the Option on the date the Option is granted. Notwithstanding the foregoing,
an Option may be granted with an exercise price lower than that set forth in
the preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of
Section 424(a) of the Code.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii)
at the discretion of the Board or Committee, at the time of the grant of the
Option, (A) by delivery to the Company of other Common Stock of the Company
(provided that such shares have been held for the requisite period to avoid a
charge to the Company's earnings), (B) according to a deferred payment or
other arrangement (which may include, without limiting the generality of the
foregoing, the use of other Common Stock of the Company) with the person to
whom the Option is granted or to whom the Option is transferred pursuant to
subsection 6(d), or (C) in any other form of legal consideration that may be
acceptable to the Board. In the case of any deferred payment arrangement,
interest shall be payable at least annually and shall be charged at the
minimum rate of interest necessary to avoid the treatment as interest, under
any applicable provisions of the Code, of any amounts other than amounts
stated to be interest under the deferred payment arrangement.
(d) TRANSFERABILITY. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Incentive
Stock Option is granted only by such person. A Nonstatutory Stock Option may
be transferred to the extent provided in the Option Agreement; provided that
if the Option Agreement does not expressly permit the transfer of a
Nonstatutory Stock Option, the Nonstatutory Stock Option shall not be
transferable except by will, by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Option is
granted only by such person or any transferee pursuant to a domestic
relations order. Notwithstanding the foregoing, the person to whom the
Option is granted may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionee, shall thereafter be entitled to exercise the Option.
(e) VESTING. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time
during each of such installment periods, the Option may become exercisable
("vest") with respect to some or all of the shares allotted to that
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period, and may be exercised with respect to some or all of the shares
allotted to such period and/or any prior period as to which the Option became
vested but was not fully exercised. The Option may be subject to such other
terms and conditions on the time or times when it may be exercised (which may
be based on performance or other criteria) as the Board may deem appropriate.
The provisions of this subsection 6(e) are subject to any Option provisions
governing the minimum number of shares as to which an Option may be exercised.
(f) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionee's
Continuous Service terminates (other than upon the Optionee's death or
disability), the Optionee may exercise his or her Option within such period
of time designated by the Board, which shall in no event be later than the
expiration of the term of the Option as set forth in the Option Agreement
(the "Post-Termination Exercise Period") and only to the extent that the
Optionee was entitled to exercise the Option on the date Optionee's
Continuous Service terminates. In the case of an Incentive Stock Option, the
Board shall determine the Post-Termination Exercise Period at the time the
Option is granted, and the term of such Post-Termination Exercise Period
shall in no event exceed thirty (30) days from the date of termination, and
may, in the event Optionee's Continuous Service terminates for cause,
terminate of the date of such Optionee's termination. In addition, the Board
may at any time, with the consent of the Optionee, extend the
Post-Termination Exercise Period and provide for continued vesting; provided,
however, that any extension of such period by the Board in excess of three
(3) months from the date of termination shall cause an Incentive Stock Option
so extended to become a Nonstatutory Stock Option, effective as of the date
of Board action. If, at the date of termination, the Optionee is not
entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to the Plan. If, after
termination, the Optionee does not exercise his or her Option within the time
specified in the Option Agreement or as otherwise determined above, the
Option shall terminate, and the shares covered by such Option shall revert to
the Plan. Notwithstanding the foregoing, the Board shall have the power to
permit an Option to continue to vest during the Post-Termination Exercise
Period.
An Optionee's Option Agreement may also provide that if the exercise of
the Option following the termination of the Optionee's Continuous Service
(other than upon the Optionee's death or disability) would result in
liability under Section 16(b) of the Exchange Act, then the Option shall
terminate on the earlier of (i) the expiration of the term of the Option set
forth in the Option Agreement, or (ii) the tenth (10th) day after the last
date on which such exercise would result in such liability under Section
16(b) of the Exchange Act. Finally, an Optionee's Option Agreement may also
provide that if the exercise of the Option following the termination of the
Optionee's Continuous Service (other than upon the Optionee's death or
disability) would be prohibited at any time solely because the issuance of
shares would violate the registration requirements under the Securities Act,
then the Option shall terminate on the earlier of (i) the expiration of the
term of the Option set forth in the first paragraph of this subsection 6(f),
or (ii) the expiration of a period of thirty (30) days after the termination
of the Optionee's Continuous Service during which the exercise of the Option
would not be in violation of such registration requirements.
(g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous
Service terminates as a result of the Optionee's disability, the Optionee may
exercise his or her Option (to the extent that the Optionee was entitled to
exercise it at the date of termination), but only within such period of time
ending on the earlier of (i) the date six (6) months following such
termination (or such longer or shorter period specified in the Option
Agreement), or (ii) the
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expiration of the term of the Option as set forth in the Option Agreement.
If, at the date of termination, the Optionee is not entitled to exercise his
or her entire Option, the shares covered by the unexercisable portion of the
Option shall revert to and again become available for issuance under the
Plan. If, after termination, the Optionee does not exercise his or her Option
within the time specified herein, the Option shall terminate, and the shares
covered by such Option shall revert to and again become available for
issuance under the Plan.
(h) DEATH OF OPTIONEE. In the event of the death of an Optionee during,
or within a thirty (30)-day period (or such other period of time not
exceeding three (3) months as determined by the Board) after the termination
of, the Optionee's Continuous Service, the Option may be exercised to the
extent vested by the Optionee's estate, by a person who acquired the right to
exercise the Option by bequest or inheritance or by a person designated to
exercise the option upon the Optionee's death pursuant to subsection 6(d),
but only within the period ending on the earlier of (i) the date six (6)
months following the date of death (or such longer or shorter period
specified in the Option Agreement), or (ii) the expiration of the term of
such Option as set forth in the Option Agreement. If, at the time of death,
the Optionee was not entitled to exercise his or her entire Option, the
shares covered by the unexercisable portion of the Option shall revert to and
again become available for issuance under the Plan. If, after death, the
Option is not exercised within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.
(i) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director or
Consultant to exercise the Option as to any part or all of the shares subject
to the Option prior to the full vesting of the Option. Any unvested shares
so purchased may be subject to a repurchase right in favor of the Company or
to any other restriction the Board determines to be appropriate.
7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement shall be in such
form and shall contain such terms and conditions as the Board or Committee
shall deem appropriate. The terms and conditions of stock bonus or
restricted stock purchase agreements may change from time to time, and the
terms and conditions of separate agreements need not be identical, but each
stock bonus or restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions as appropriate:
(a) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board or Committee shall
determine and designate in such agreement but in no event shall the purchase
price be less than eighty-five percent (85%) of the stock's Fair Market Value
on the date such award is made. Notwithstanding the foregoing, the Board or
Committee may determine that eligible participants in the Plan may be awarded
stock pursuant to a stock bonus agreement in consideration for past services
actually rendered to the Company for its benefit.
(b) TRANSFERABILITY. No rights under a stock bonus or restricted stock
purchase agreement shall be transferable except by will or the laws of
descent and distribution or, if the agreement so provides, pursuant to a
domestic relations order satisfying the requirements of Rule
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16b-3, so long as stock awarded under such agreement remains subject to the
terms of the agreement.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to a
stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; (ii) at the discretion of the Board or Committee, according to a
deferred payment or other arrangement with the person to whom the stock is
sold; or (iii) in any other form of legal consideration that may be
acceptable to the Board or Committee in its discretion. Notwithstanding the
foregoing, the Board or Committee to which administration of the Plan has
been delegated may award stock pursuant to a stock bonus agreement in
consideration for past services actually rendered to the Company or for its
benefit.
(d) VESTING. Shares of stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or Committee.
(e) TERMINATION OF CONTINUOUS SERVICE. In the event a Participant's
Continuous Service terminates, the Company may repurchase or otherwise
reacquire any or all of the shares of stock held by that person which have
not vested as of the date of termination under the terms of the stock bonus
or restricted stock purchase agreement between the Company and such person.
8. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of stock required to satisfy such
Stock Awards.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares under Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities
Act of 1933, as amended (the "Securities Act") either the Plan, any Stock
Award or any stock issued or issuable pursuant to any such Stock Award. If,
after reasonable efforts, the Company is unable to obtain from any such
regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell
stock upon exercise of such Stock Awards unless and until such authority is
obtained.
9. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.
10. MISCELLANEOUS.
(a) The Board shall have the power to accelerate the time at which a
Stock Award may first be exercised or the time during which a Stock Award or
any part thereof will vest, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which
it will vest.
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(b) Neither an Employee, Director nor a Consultant nor any person to
whom a Stock Award is transferred in accordance with the Plan shall be deemed
to be the holder of, or to have any of the rights of a holder with respect
to, any shares subject to such Stock Award unless and until such person has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.
(c) Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any Employee, Consultant or other
holder of Stock Awards any right to continue in the employ of the Company or
any Affiliate, or to continue serving as a Consultant and Director, or shall
affect the right of the Company or any Affiliate to terminate the employment
of any Employee with or without notice and with or without cause, or the
right to terminate the relationship of any Consultant pursuant to the terms
of such Consultant's agreement with the Company or Affiliate or service as a
Director pursuant to the Company's By-Laws.
(d) To the extent that the aggregate Fair Market Value (determined at
the time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
all plans of the Company and its Affiliates exceeds one hundred thousand
dollars ($100,000), the Options or portions thereof which exceed such limit
(according to the order in which they were granted) shall be treated as
Nonstatutory Stock Options.
(e) The Company may require any person to whom a Stock Award is granted,
or any person to whom a Stock Award is transferred in accordance with the
Plan, as a condition of exercising or acquiring stock under any Stock Award,
(1) to give written assurances satisfactory to the Company as to such
person's knowledge and experience in financial and business matters and/or to
employ a purchaser representative reasonably satisfactory to the Company who
is knowledgeable and experienced in financial and business matters, and that
he or she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (2)
to give written assurances satisfactory to the Company stating that such
person is acquiring the stock subject to the Stock Award for such person's
own account and not with any present intention of selling or otherwise
distributing the stock. The foregoing requirements, and any assurances given
pursuant to such requirements, shall be inoperative if (i) the issuance of
the shares upon the exercise or acquisition of stock under the Stock Award
has been registered under a then currently effective registration statement
under the Securities Act, or (ii) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need
not be met in the circumstances under the then applicable securities laws.
The Company may, upon advice of counsel to the Company, place legends on
stock certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including,
but not limited to, legends restricting the transfer of the stock.
(f) To the extent provided by the terms of a Stock Award Agreement, the
person to whom a Stock Award is granted may satisfy any federal, state or
local tax withholding obligation relating to the exercise or acquisition of
stock under a Stock Award by any of the following means or by a combination
of such means: (1) tendering a cash payment; (2) authorizing the Company to
withhold shares from the shares of the Common Stock otherwise issuable to the
participant as a result of the exercise or acquisition of stock under the
Stock Award; or (3)
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delivering to the Company owned and unencumbered shares of the Common Stock
of the Company.
11. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any Stock Award, without the receipt of consideration by the Company
(through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares,
change in corporate structure or other transaction not involving the receipt
of consideration by the Company), the Plan will be appropriately adjusted in
the class(es) and maximum number of shares subject to the Plan and the
maximum number of shares subject to award to any person during any calendar
year, and the outstanding Stock Awards will be appropriately adjusted in the
class(es) and number of shares and price per share of stock subject to such
outstanding Stock Awards. Such adjustments shall be made by the Board or
Committee, the determination of which shall be final, binding and conclusive.
(The conversion of any convertible securities of the Company shall not be
treated as a "transaction not involving the receipt of consideration by the
Company.")
(b) In the event of a Change in Control, (i) any surviving or acquiring
corporation shall assume Stock Awards outstanding under the Plan or shall
substitute similar Stock Awards for those outstanding under the Plan, or (ii)
in the event any surviving or acquiring corporation refuses to assume such
Stock Awards or to substitute similar Stock Awards for those outstanding
under the Plan, (A) with respect to Stock Awards held by persons then
performing services as Employees, Directors or Consultants, the vesting of
such Stock Awards and the time during which such Stock Awards may be
exercised shall be accelerated prior to such event and the Stock Awards
terminated if not exercised after such acceleration and at or prior to such
event, and (B) with respect to any other Stock Awards outstanding under the
Plan, such Stock Awards shall be terminated if not exercised prior to such
event.
For purposes of this Plan, "Change in Control" means: (1) a
dissolution, liquidation, or sale of all or substantially all of the assets
of the Company; (2) a merger or consolidation in which the Company is not the
surviving corporation; (3) a reverse merger in which the Company is the
surviving corporation but the shares of the Company's common shares
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise; or (4) the acquisition by any person, entity or group within the
meaning of Section 13(d) or 14(d) of the Exchange Act, or any comparable
successor provisions (excluding any employee benefit plan, or related trust,
sponsored or maintained by the Company or any Affiliate of the Company) of
the beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act, or comparable successor rule) of securities of the Company
representing at least fifty percent (50%) of the combined voting power
entitled to vote in the election of directors.
12. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 11 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder
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approval is necessary for the Plan to satisfy the requirements of Section 422
of the Code, Rule 16b-3 or any Nasdaq or securities exchange listing
requirements.
(b) The Board may in its sole discretion submit any other amendment to
the Plan for stockholder approval, including, but not limited to, amendments
to the Plan intended to satisfy the requirements of Section 162(m) of the
Code and the regulations thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.
(c) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide eligible
Employees, Directors or Consultants with the maximum benefits provided or to
be provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan
and/or Incentive Stock Options granted under it into compliance therewith.
(d) Rights and obligations under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan
unless (i) the Company requests the consent of the person to whom the Stock
Award was granted and (ii) such person consents in writing.
(e) The Board at any time, and from time to time, may amend the terms of
any one or more Stock Award; provided, however, that the rights and
obligations under any Stock Award shall not be impaired by any such amendment
unless (i) the Company requests the consent of the person to whom the Stock
Award was granted and (ii) such person consents in writing.
13. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on December 15, 2007. No Stock
Awards may be granted under the Plan while the Plan is suspended or after it
is terminated.
(b) Rights and obligations under any Stock Award granted while the Plan
is in effect shall not be impaired by suspension or termination of the Plan,
except with the consent of the person to whom the Stock Award was granted.
14. EFFECTIVE DATE OF PLAN.
The Plan shall become effective upon adoption by the Board, but no Stock
Awards granted under the Plan shall be exercised unless and until the Plan
has been approved by the stockholders of the Company, which approval shall be
within twelve (12) months before or after the date the Plan is adopted by the
Board.
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TRUEVISION, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR A
SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 10, 1998
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 Special
Meeting of Stockholders of the Company to be held at the Company's offices at
2500 Walsh Avenue, Santa Clara, California on Friday, April 10, 1998, 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.
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Please mark your votes
as indicated in this example
/X/
Unless a contrary direction is indicated, this Proxy will be voted for
Proposal 1 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 PROPOSAL 1.
FOR AGAINST ABSTAIN
PROPOSAL 1: To approve the Company's 1997 / / / / / /
Equity Incentive Plan.
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: ______________,1998
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