<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
IN FOCUS SYSTEMS, INC.
(Exact Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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<PAGE>
IN FOCUS SYSTEMS, INC.
27700B S.W. PARKWAY AVENUE
WILSONVILLE, OREGON 97070
March 9, 1998
Dear Shareholders:
Our Annual Meeting of Shareholders will be held on Wednesday, April 22, 1998,
at 1:00 p.m., Pacific Daylight Savings Time, at the Oregon Museum of Science
and Industry, 1945 S.E. Water Avenue, Portland, Oregon 97214. You are
invited to attend this meeting to give us an opportunity to meet you
personally, to allow us to introduce to you the key management of your
Company and its directors, and to answer any questions you may have.
The formal Notice of Meeting, the Proxy Statement, the proxy card and a copy
of the Annual Report to Shareholders describing the Company's operations for
the year ended December 31, 1997 are enclosed.
I hope that you will be able to attend the meeting in person. Whether or not
you plan to attend the meeting, please sign and return the enclosed proxy
card promptly. A prepaid return envelope is provided for this purpose. Your
shares will be voted at the meeting in accordance with your proxy.
If you have shares in more than one name, or if your stock is registered in
more than one way, you may receive multiple copies of the proxy materials.
If so, please sign and return each proxy card you receive so that all of your
shares may be voted. I look forward to meeting you at the Annual Meeting.
Very truly yours,
IN FOCUS SYSTEMS, INC.
JOHN V. HARKER
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
<PAGE>
IN FOCUS SYSTEMS, INC.
27700B S.W. PARKWAY AVENUE
WILSONVILLE, OREGON 97070
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 22, 1998
To the Shareholders of In Focus Systems, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of IN FOCUS
SYSTEMS, INC. (the Company), an Oregon corporation, will be held at the Oregon
Museum of Science and Industry, 1945 S.E. Water Avenue, Portland, Oregon 97214,
on Wednesday, April 22, 1998, at 1:00 p.m., Pacific Daylight Savings Time. The
purposes of the Annual Meeting will be:
1. To elect the Board of Directors to serve until the next
Annual Meeting of Shareholders (Proposal No. 1);
2. To ratify the appointment of Arthur Andersen LLP as the Company's
independent accountants for the year ending December 31,
1998 (Proposal No. 2);
3. To approve the In Focus Systems, Inc. 1998 Stock Incentive Plan
(Proposal No. 3);
4. To approve an amendment to Article III of the Company's 1990
Restated Articles of Incorporation to increase the number of
authorized shares of Common Stock from 30 million to 50
million shares (Proposal No. 4); and
5. To consider and act upon any other matter which may properly come
before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on February 27, 1998,
as the record date for determining shareholders entitled to notice of and to
vote at the meeting or any adjournment thereof. Only holders of record of
Common Stock of the Company at the close of business on the record date will
be entitled to notice of and to vote at the meeting and any adjournment
thereof. Further information regarding voting rights and the matters to be
voted upon is presented in the accompanying proxy statement.
All shareholders are cordially invited to attend the Annual Meeting. A
review of the Company's operations for the year ended December 31, 1997 will
be presented. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND
PROMPTLY RETURN THE ENCLOSED PROXY CARD, WHICH YOU MAY REVOKE AT ANY TIME
PRIOR TO ITS USE. A prepaid, self-addressed envelope is enclosed for your
convenience. Your shares will be voted at the meeting in accordance with
your proxy. If you attend the meeting, you may revoke your proxy and vote in
person.
By Order of the Board of Directors,
MICHAEL D. YONKER
VICE PRESIDENT, INFORMATION SERVICES,
CHIEF FINANCIAL OFFICER AND SECRETARY
Wilsonville, Oregon
March 9, 1998
<PAGE>
IN FOCUS SYSTEMS, INC.
27700B S.W. PARKWAY AVENUE
WILSONVILLE, OREGON 97070
_______________________
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 22, 1998
______________________
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement and the accompanying Annual Report to Shareholders, the
Notice of Annual Meeting and the proxy card are being furnished to the
shareholders of In Focus Systems, Inc., an Oregon corporation (the "Company"),
in connection with the solicitation of proxies by the Company's Board of
Directors for use at the Company's 1998 Annual Meeting of Shareholders (the
"Annual Meeting") to be held at the Oregon Museum of Science and Industry, 1945
S.E. Water Avenue, Portland, Oregon 97214, on Wednesday, April 22, 1998, at 1:00
p.m. Pacific Daylight Savings Time and any adjournment thereof. The
solicitation of proxies by mail may be followed by personal solicitation of
certain shareholders, by officers or regular employees of the Company. All
expenses of the Company associated with this solicitation will be borne by the
Company.
The two persons named as proxies on the enclosed proxy card, John V. Harker
and Michael D. Yonker, were designated by the Board of Directors. All
properly executed proxies will be voted (except to the extent that authority
to vote has been withheld) and where a choice has been specified by the
shareholder as provided in the proxy card, it will be voted in accordance
with the specification so made. Proxies submitted without specification will
be voted FOR Proposal No. 1 to elect the nominees for directors proposed by
the Board of Directors, FOR Proposal No. 2 to ratify the appointment of
Arthur Andersen LLP as independent accountants for the Company, FOR Proposal
No. 3 to approve the In Focus Systems, Inc. 1998 Stock Incentive Plan and FOR
Proposal No. 4 to approve an amendment to the Company's 1990 Restated
Articles of Incorporation to increase the number of authorized shares of
Common Stock from 30 million to 50 million shares.
A proxy may be revoked by a shareholder prior to its exercise by written
notice to the Secretary of the Company, by submission of another proxy
bearing a later date or by voting in person at the Annual Meeting. Such
notice or later proxy will not affect a vote on any matter taken prior to the
receipt thereof by the Company.
These proxy materials and the Company's 1997 Annual Report to Shareholders
are being mailed on or about March 9, 1998 to shareholders of record on
February 27, 1998 of the Company's Common Stock. The principal executive
office and mailing address of the Company is 27700B S.W. Parkway Avenue,
Wilsonville, Oregon 97070.
1
<PAGE>
VOTING AT THE MEETING
The shares of Common Stock constitute the only class of securities entitled to
notice of and to vote at the meeting. In accordance with the Company's Bylaws,
the stock transfer records were compiled on February 27, 1998, the record date
set by the Board of Directors, for determining the shareholders entitled to
notice of, and to vote at, this meeting and any adjournment thereof. On that
date, there were 22,078,571 shares of Common Stock outstanding and entitled to
vote and the closing price of the Company's Common Stock as reported by the
Nasdaq National Market System was $19.97.
Each share of Common Stock outstanding on the record date is entitled to one
vote per share at the Annual Meeting. If a quorum is present at the Annual
Meeting: (i) the four nominees for election as directors who receive the
greatest number of votes cast for the election of directors by the shares of
Common Stock present in person or represented by proxy at the meeting and
entitled to vote shall be elected directors, (ii) Proposal No. 2 to ratify
the appointment of Arthur Andersen LLP as independent accountants for the
Company will be approved if the number of votes cast in favor of the proposal
exceeds the number of votes cast against it, (iii) Proposal No. 3 to approve
the In Focus Systems, Inc. 1998 Stock Incentive Plan will be approved if it
receives the affirmative vote of the holders of at least a majority of the
shares of Common Stock present in person or represented by proxy at the
Annual Meeting and (iv) Proposal No. 4 to approve an amendment to Article III
of the Company's 1990 Restated Articles of Incorporation to increase the
number of authorized shares of Common Stock from 30 million to 50 million
shares will be approved if the number of votes cast in favor of the proposal
exceeds the number of votes cast against it.
With respect to the election of directors, directors are elected by a
plurality of the votes cast and only votes cast in favor of a nominee will
have an effect on the outcome. Therefore, abstention from voting or
nonvoting by brokers will have no effect thereon. With respect to voting on
Proposal No. 2, abstention from voting or nonvoting by brokers will have no
effect thereon. With respect to voting on Proposal No. 3, abstention from
voting will have the same effect as voting against the proposal and nonvoting
by brokers will have no effect thereon. With respect to Proposal No. 4,
abstention from voting or nonvoting by brokers will have no effect thereon
2
<PAGE>
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
In accordance with the Company's Bylaws, the Board of Directors shall consist
of no less than three and no more than seven directors, the specific number
to be determined by resolution adopted by the Board of Directors. By
resolution adopted on February 13, 1998, the Board of Directors set the
number of Directors at four, and four Directors are to be elected at the 1998
Annual Meeting of Shareholders.
NOMINEES FOR DIRECTOR
The names and certain information concerning the persons to be nominated by the
Board of Directors at the Annual Meeting are set forth below. THE BOARD OF
DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES NAMED BELOW. Shares represented by proxies will be voted for the
election to the Board of Directors of the persons named below unless authority
to vote for a particular director or directors has been withheld in the proxy.
All nominees have consented to serve as directors for the ensuing year. The
Board of Directors has no reason to believe that any of the nominees will be
unable to serve as a director. In the event of the death or unavailability of
any nominee or nominees, the proxy holders will have discretionary authority
under the proxy to vote for a suitable substitute nominee as the Board of
Directors may recommend. Proxies may not be voted for more than four (4)
nominees. The Board of Directors has nominated the persons named in the
following table to be elected as directors:
<TABLE>
<CAPTION>
NAME AGE HAS BEEN A DIRECTOR SINCE
- ---- --- -------------------------
<S> <C> <C>
Peter D. Behrendt 59 1995
Michael R. Hallman 52 1992
John V. Harker 63 1992
Nobuo Mii 66 1997
</TABLE>
Peter D. Behrendt is a director of the Company. He is the former Chairman
and Chief Executive Officer of Exabyte Corp., a publicly traded company that
is the world's largest independent manufacturer focused exclusively on tape
storage products, tape libraries and recording media. Prior to working at
Exabyte Corp., Mr. Behrendt spent 26 years in numerous executive positions at
International Business Machines, Inc. ("IBM"), including worldwide
responsibility for business and product planning for IBM's tape and disk
drives and general management of IBM's worldwide electronic typewriter
business. Mr. Behrendt is on the Board of Directors of Western Digital Corp.
and Exabyte Corp.
3
<PAGE>
Michael R. Hallman is a director of the Company and is currently serving as
President of The Hallman Group, a management consulting company focusing on
marketing, sales, business development and strategic planning for the
information systems industry. Mr. Hallman served as President and Chief
Operating Officer of Microsoft Corporation from February 1990 until March
1992. From 1987 to 1990, he was Vice President of the Boeing Company and
President of Boeing Computer Services. From 1967 to 1987, Mr. Hallman worked
for IBM in various sales and marketing executive positions, with his final
position being Vice President of Field Operations, responsible for one-half
of IBM's domestic sales revenue. Mr. Hallman holds a B.B.A. and a M.B.A.
from the University of Michigan. Mr. Hallman is a member of the Board of
Directors of Keytronics, Inc., Intuit, Inc., Timeline, Inc. and Network
Appliance, Inc.
John V. Harker is a director of the Company, and has served as President and
Chief Executive Officer of the Company since April 1992. Mr. Harker was
elected as Chairman of the Board in October 1994. Mr. Harker served as
Executive Vice President of Genicom Corporation, a manufacturer of printers,
from 1984 to January 1992, and as a member of the Board of Directors of
Genicom Corporation, from 1986 to January 1992. Mr. Harker served as Senior
Vice President of Marketing and Corporate Development of Data Products, Inc.
from 1982 to 1984, as Vice President and partner of Booz, Allen & Hamilton,
Inc. from 1979 to 1982, and in various managerial and executive positions at
IBM Corporation from 1963 to 1979. He holds a B.S. degree in Marketing from
the University of Colorado.
Nobuo Mii is a director of the Company. Mr. Mii has been the Chairman and
CEO of SegaSoft, Inc. since December 1995. Mr. Mii is also a partner at
ACCEL Partners, a venture capital firm specializing in technology
investments. Mr. Mii also spent 26 years at IBM, with his final position
being Corporate Vice President, General Manager of the Power Personal Systems
Division. Mr. Mii holds a B.S. degree in Communication Engineering from
Kyushu University in Fukuoka, Japan.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held six regular meetings and took action pursuant to one
unanimous written consent during the year ended December 31, 1997. No director
attended fewer than 75 percent of the meetings of the Board of Directors and
committees thereof, if any, during the period that he was a member of the Board
of Directors during 1997.
Until April 1997, the Audit Committee was composed of Mr. Hallman and Mr.
Behrendt, outside directors who are not, and have not been at any time in the
past, officers of the Company. In April 1997, Mr. Harker was added to the
Audit Committee. The Audit Committee reviews, with the Company's independent
public accountants and representatives of management, the scope and results
of audits, the appropriateness of accounting principles used in financial
reporting, and the adequacy of financial and operating controls. The Audit
Committee held two meetings in1997.
The Compensation Committee and the Administrative Committee of the 1988
Combination Stock Option Plan were composed of Messrs. Hallman, Behrendt and
Kuehler during 1997. The Compensation Committee approves all of the policies
under which compensation is paid or awarded to the Company's executive
officers. The Compensation Committee is
4
<PAGE>
responsible for establishing compensation of executive officers who also
serve on the Board of Directors. The entire Board of Directors is
responsible for reviewing and providing feedback on non-director executive
officer compensation with goals and dollar amounts established by the Chief
Executive Officer in accordance with policies approved by the Board. During
1997, the Administrative Committee of the 1988 Combination Stock Option Plan
was responsible for approving option grants under such plan. The Compensation
Committee held two regular meetings during 1997. The Administrative
Committee of the 1988 Combination Stock Option Plan held four regular
meetings during the year ended December 31, 1997.
The Board of Directors does not have a Nominating Committee.
5
<PAGE>
SELECTION OF INDEPENDENT ACCOUNTANTS
(Proposal No. 2)
The Board of Directors has appointed Arthur Andersen LLP, independent
accountants, as auditors of the Company for the year ending December 31,
1998, subject to ratification by the shareholders. In the absence of
contrary specifications, the shares represented by the proxies will be voted
FOR the appointment of Arthur Andersen LLP as the Company's independent
accountants for the year ending December 31, 1998.
A representative of Arthur Andersen LLP is expected to be present at the
Annual Meeting. The representative will be given the opportunity to make a
statement on behalf of his firm if such representative so desires, and will
be available to respond to appropriate shareholder questions. Arthur
Andersen LLP was the Company's independent accountant for the year ended
December 31, 1997.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF
THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT
ACCOUNTANTS OF THE COMPANY FOR THE YEAR ENDING
DECEMBER 31, 1998.
6
<PAGE>
APPROVAL OF THE IN FOCUS SYSTEMS, INC. 1998 STOCK INCENTIVE PLAN
(PROPOSAL NO. 3)
In order for the Company to continue to attract and retain key personnel, the
Board of Directors has approved the In Focus Systems, Inc. 1998 Stock
Incentive Plan (the "Plan") and the reservation of 1,500,000 shares for
issuance thereunder. The Plan allows for the granting of incentive stock
options, non-qualified stock options and restricted stock. The Plan is the
successor to the Company's 1988 Combination Stock Option Plan, which expires
on December 21, 1998. For a description of the Plan see "1998 Stock
Incentive Plan Summary" on page 16. In the absence of contrary
specifications, the shares represented by proxies will be voted FOR the
approval of the In Focus Systems, Inc. 1998 Stock Incentive Plan.
The affirmative vote of the holders of at least a majority of the shares of
Common Stock present in person or represented by proxy at the Annual Meeting
is required to approve the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE APPROVAL OF THE PLAN.
7
<PAGE>
APPROVAL OF AN AMENDMENT TO THE COMPANY'S 1990 RESTATED ARTICLES OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES
(PROPOSAL NO. 4)
The Company's Board of Directors has unanimously approved a resolution to
increase the number of authorized shares of the Company's Common Stock from
30 million to 50 million shares as indicated in the following amendment to
Article III of the Company's 1990 Restated Articles of Incorporation:
ARTICLE III
The aggregate number of shares which the Corporation shall have authority to
issue is 50,000,000 shares of Common Stock.
The Company currently has 30 million shares of Common Stock authorized, of
which, at February 27, 1998, 22,078,571 shares were outstanding and 5,246,668
shares were reserved for issuance under the Company's stock option plans
(assuming approval of Proposal No. 3 above). Assuming issuance of all shares
reserved under the Company's stock incentive plans, the Company would have
27,325,239 shares of Common Stock outstanding and 2,674,761 shares of
authorized but unissued shares of Common Stock available for future issuance.
Accordingly, the Board of Directors has proposed to increase the Company's
authorized shares of its Common Stock to 50 million shares.
The terms of the additional shares of Common Stock will be identical to the
terms of the shares of Common Stock currently authorized and outstanding, and
approval of the proposed amendment will not affect the terms or the rights of
the holders of currently authorized and outstanding shares of Common Stock.
Holders of the Company's Common Stock do not have preemptive rights to
subscribe for or purchase any additional shares of Common Stock issued.
The purpose of the increase in the number of authorized shares of Common
Stock is to have additional shares available for issuance for such corporate
purposes as the Board of Directors may determine in its discretion,
including, without limitation, future acquisitions, investment opportunities,
future financings and other corporate purposes. Except for the shares
reserved under the Company's stock incentive plans and shareholder rights
plan, the Company has no agreements or understandings regarding the issuance
of additional stock.
If adopted by the shareholders, this proposed amendment to the Company's
Articles will become effective upon the filing of the amendment with the
Oregon Secretary of State. Such filing is expected to occur shortly after
this annual meeting, upon adoption of the proposal by the shareholders.
8
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 27, 1998, certain information
furnished to the Company with respect to ownership of the Company's Common
Stock of (i) each Director, (ii) the Chief Executive Officer, (iii) the
"named executive officers" (as defined under "Executive Compensation") other
than the Chief Executive Officer, (iv) all persons known by the Company to be
beneficial owners of more than 5 percent of its Common Stock, and (v) all
executive officers and Directors as a group.
<TABLE>
<CAPTION>
COMMON STOCK (A)
---------------------------------
NUMBER OF PERCENT OF SHARES
SHAREHOLDER SHARES OUTSTANDING
- -------------------------------------- --------- -----------------
<S> <C> <C>
J. & W. Seligman & Co. Incorporated (M) 2,212,100 10.0%
100 Park Avenue
New York, New York 10017
John V. Harker (B) (C) 265,008 1.2%
Michael D. Yonker (B) (D) 139,110 *
David L. Stallard (B) (E) 100,000 *
Susan L. Thompson (B) (F) 89,926 *
Michael R. Hallman (B) (G) 69,204 *
Stuart F. Cohen (B) (H) 50,160 *
Jack D. Kuehler (B) (I) 44,764 *
Peter D. Behrendt (B) (J) 40,764 *
Nobuo Mii (B) (K) 21,866 *
All executive officers and
directors as a group (10 persons) (L) 739,530 3.3%
</TABLE>
- -------------
*Less than one percent
9
<PAGE>
(A) Applicable percentage of ownership is based on 22,078,571 shares of Common
Stock outstanding as of February 27, 1998 together with applicable
options for such shareholders. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission,
and includes voting and investment power with respect to shares.
Shares of Common Stock subject to options or warrants currently
exercisable or exercisable within 60 days after February 27, 1998 are
deemed outstanding for computing the percentage ownership of the
person holding such options or warrants, but are not deemed
outstanding for computing the percentage of any other person.
(B) The address for such person is 27700B SW Parkway Avenue, Wilsonville,
Oregon 97070.
(C) Includes 188,022 shares subject to options granted pursuant to the
Company's 1988 Combination Stock Option Plan, as amended, and
exercisable as of April 28, 1998.
(D) Includes 127,510 shares subject to options granted pursuant to the
Company's 1988 Combination Stock Option Plan, as amended, and
exercisable as of April 28, 1998.
(E) Includes 99,400 shares subject to options granted pursuant to the Company's
1988 Combination Stock Option Plan, as amended, and exercisable as of
April 28, 1998.
(F) Includes 84,926 shares subject to options granted pursuant to the Company's
1988 Combination Stock Option Plan, as amended, and exercisable as of
April 28, 1998.
(G) Includes 65,204 shares subject to options granted pursuant to the Company's
Directors' Stock Option Plan, as amended, and exercisable as of April
28, 1998.
(H) Includes 50,160 shares subject to options granted pursuant to the Company's
1988 Combination Stock Option Plan, as amended, and exercisable as of
April 28, 1998.
(I) Includes 40,764 shares subject to options granted pursuant to the Company's
Directors' Stock Option Plan, as amended, and exercisable as of April
28, 1998.
(J) Includes 40,764 shares subject to options granted pursuant to the Company's
Directors' Stock Option Plan, as amended, and exercisable as of April
28, 1998.
(K) Includes 21,866 shares subject to options granted pursuant to the Company's
Directors' Stock Option Plan, as amended, and exercisable as of April
28, 1998.
(L) Includes 632,964 shares subject to options granted pursuant to the
Company's 1988 Combination Stock Option Plan, as amended, and the
Company's Directors' Stock Option Plan, as amended and exercisable as
of April 1, 1997.
(M) The Company has been advised in Schedule 13g filings and otherwise as
follows: these securities are deemed to be beneficially owned by J. &
W. Seligman & Co. Incorporated ("JWS") as a result of its capacity as
investment adviser. JWS has shared voting and dispositive power with
regard to all such shares. JWS is an Investment Adviser registered
under Section 203 of the Investment Advisers Act of 1940. One client
of JWS, Seligman Communications and Information Fund, Inc., an
investment company registered under the Investment Company Act,
beneficially own greater than five percent of the class of securities
referred to herein. William C. Morris, as the owner of a majority of
the outstanding voting securities of JWS, may be deemed to
beneficially own the shares which are beneficially owned by JWS.
10
<PAGE>
EXECUTIVE OFFICERS
The following table identifies the current executive officers of the Company,
the positions they hold and the year in which they began serving in their
respective capacities. Officers of the Company are elected by the Board of
Directors at the Annual Meeting to hold office until their successors are
elected and qualified.
<TABLE>
<CAPTION>
POSITION HELD
NAME AGE CURRENT POSITION(s) WITH COMPANY SINCE
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
John V. Harker 63 Chairman of the Board, President 1994
and Chief Executive Officer
Stuart F. Cohen 38 Vice President, Worldwide Marketing 1997
Gary R. Pehrson 52 Senior Vice President, Operations 1998
Susan L. Thompson 40 Vice President, Human Resources 1994
William D. Yavorsky 41 Vice President, Worldwide Sales 1997
Michael D. Yonker 40 Vice President, Information 1996
Services, Chief Financial Officer,
Treasurer and Secretary
</TABLE>
For information on the business background of Mr. Harker see "Nominees For
Director" above.
Stuart F. Cohen joined the Company in April 1997 as Vice President, Worldwide
Marketing. Prior to joining the Company, Mr. Cohen held various positions at
IBM from 1981 through April 1996, with his final position being Director,
Worldwide Marketing. Mr. Cohen holds a B.S. degree in Business
Administration, with a major in Quantitative Business Analysis from Arizona
State University.
Gary R. Pehrson joined the Company in January 1998 as Senior Vice President,
Operations. From 1995 until joining the Company, Mr. Pehrson was Executive
Vice President and General Manager for Teletronics Pacing Systems, a medical
device manufacturer with annual sales over $300 million at the time. In 1997
Teletronics Pacing Systems was sold to St. Jude Medical and the name of the
corporation was changed to Pacesetter, Inc. - A St. Jude Company. From 1990
to 1995, Mr. Pehrson was Senior Vice President at Verbatim Tape Corporation,
a $500 million company at the time. Mr. Pehrson holds a B.S. degree in
Business Administration with an emphasis in Marketing from the University of
Nebraska, Lincoln.
11
<PAGE>
Susan L. Thompson joined the Company in May 1990 as Manager, Human Resources
and in January 1994, was promoted to Vice President, Human Resources. From
May 1989 to May 1990, Ms. Thompson was a training consultant with Richard
Chang Associates, a large human resources consulting firm. From October 1987
to May 1989 Ms. Thompson held senior management positions in human resources
at Emerald Systems, a computer peripherals manufacturer with annual revenues
at the time of approximately $50 million. Prior to this time, she held
various positions within human resources at Archive Corporation and Fluor
Engineers and Constructors. Ms. Thompson studied human resource management
at the University of California at Irvine.
William D. Yavorsky was promoted to Vice President, Worldwide Sales in April
1997. Mr. Yavorsky joined the Company in August 1993 as Manager, Strategic
Relationships. In January 1995, Mr. Yavorsky was promoted to Director,
Strategic Relationships, International Sales and in July 1996 he was promoted
to Director, Worldwide Sales. In October 1996, Mr. Yavorsky was promoted to
Vice President, Sales. From February 1992 until joining the Company, Mr.
Yavorsky was a Channel Sales Manager for Tektronix Corporation. Mr. Yavorsky
holds a B.S. degree in Business Administration from Bowling Green State
University.
Michael D. Yonker, C.P.A., joined the Company in July 1993 as Vice President,
Information Services, Chief Financial Officer, Treasurer and Assistant
Secretary. During 1996, Mr. Yonker was named Secretary of the Company.
Prior to joining the Company, Mr. Yonker was the Partner in Charge of
Northwest Manufacturing Industry at Arthur Andersen LLP specializing in
process improvement, total quality and performance measurement systems for
the manufacturing industry. Mr. Yonker was the audit partner for the Company
in 1992 and was with Arthur Andersen from February 1980 until July 1993. He
graduated from Linfield College in 1980 with a B.S. degree in Accounting and
Finance.
12
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation awarded to, earned by or paid to the Company's Chief Executive
Officer and each of the four other most highly compensated executive officers
of the Company determined as of the end of the last fiscal year and any
ex-officers for whom disclosure would have been provided except for the fact
that the individual was not serving as an executive officer at the end of the
fiscal year (hereafter referred to as the "named executive officers") for the
fiscal years ended December 31, 1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
Annual Compensation -------------
------------------------------------------------------ Securities All Other
Name and Principal Other Annual Underlying Compensation
Position Year Salary($)(A) Bonus($)(A) Compensation($)(B) Options (#) ($)(C)
- --------------------------- ----- ------------- ------------ --------------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
John V. Harker 1997 345,971 230,888 1,450 -- 3,978
Chairman of the Board, 1996 307,493 12,964 625 200,000 1,047
President and Chief 1995 298,750 154,384 1,440 70,000 5,325
Executive Officer
Stuart F. Cohen (D) 1997 130,078 172,717 146,262 200,640 344
Vice President, 1996 -- -- -- -- --
Worldwide Marketing 1995 -- -- -- -- --
Michael D. Yonker 1997 188,165 63,548 250 -- 440
Vice President, Infor- 1996 169,255 8,735 250 54,200 209
mation Services, 1995 158,635 53,317 1,160 17,000 526
Chief Financial Officer,
Treasurer and Secretary
David L. Stallard (E) 1997 187,551 59,344 250 -- 1,983
Former Vice President, 1996 180,077 9,098 -- 40,000 1,419
Engineering 1995 68,308 18,779 -- 150,000 741
Susan L. Thompson 1997 155,962 53,789 -- -- 165
Vice President, 1996 121,154 7,262 300 50,200 145
Human Resources 1995 108,850 37,485 1,260 31,200 322
</TABLE>
(A) Amounts shown include cash compensation earned in each respective year.
Unless otherwise indicated, amounts under the Bonus column include an
annual bonus in 1995 and 1997 and 401(k) matching payments and quarterly
profit sharing in all years. See "Annual Bonus Awards for 1997" below.
(B) Unless otherwise indicated, Other Annual Compensation includes the cost
of income tax advice provided by a third party.
(C) Unless otherwise indicated, amounts included in this column represent
life insurance premiums paid by the Company for the benefit of the named
executive.
(D) Salary for Mr. Cohen includes amounts earned from the time Mr. Cohen
joined the Company in April 1997. The Bonus amount for Mr. Cohen
includes a $130,189 signing bonus and Other Annual Compensation includes
$146,262 for relocation assistance.
(E) 1995 Salary includes amounts paid to Mr. Stallard from the date he
joined the Company in August 1995 through the fiscal year ended December
31, 1995. As of January 1998, Mr. Stallard is no longer an executive
officer of the Company.
13
<PAGE>
STOCK OPTIONS
The following table contains information concerning the grant of stock
options under the Company's 1988 Combination Stock Option Plan, as amended
(the "Plan") to the named executive officers in 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential
Realizable Value
At Assumed Annual
Rates of Stock Price
Appreciation for
Individual Grants (A) Option Term (B)
- --------------------------------------------------------------------------------------------- -------------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted Fiscal Year Price ($/Sh.) Date 5% ($) 10% ($)
- --------------------------------------------------------------------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C>
John V. Harker -- -- -- -- -- --
Stuart F. Cohen (C) 200,640 1.66 9.47 04/16/07 1,194,938 3,028,208
Michael D. Yonker -- -- -- -- -- --
David L. Stallard -- -- -- -- -- --
Susan L. Thompson -- -- -- -- -- --
</TABLE>
(A) Options granted in 1997 vest as to 25 percent of the options granted on
each of the first through fourth anniversaries of the grant date, with
full vesting occurring on the fourth anniversary date. Under the terms
of the Plan, the Administrative Committee of the Board of Directors
retains discretion, subject to plan limits, to modify the terms of
outstanding options.
(B) These calculations are based on certain assumed annual rates of
appreciation as required by rules adopted by the Securities and Exchange
Commission requiring additional disclosure regarding executive
compensation. Under these rules, an assumption is made that the shares
underlying the stock options shown in this table could appreciate at
rates of 5% and 10% per annum on a compounded basis over the ten-year
term of the stock options. Actual gains, if any, on stock option
exercises are dependent on the future performance of the Company's
Common Stock and overall stock market conditions. There can be no
assurance that amounts reflected in this table will be achieved.
(C) Options held by all executive officers of the Company shall become
immediately exercisable, without regard to any contingent vesting
provision to which such option may otherwise be subject, in the event of
the occurrence of a Change of Control.
14
<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table provides information concerning the exercise of options
during 1997 and unexercised options held as of the end of the fiscal year,
with respect to the named executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities
Underlying
Unexercised Value of Unexercised
Shares Options In-The-Money Options
Acquired Value At FY-End (#) At FY-End ($)(B)
On Exercise Realized Exercisable/ Exercisable/
Name (#) ($)(A) Unexercisable Unexercisable
- ----------------------- -------------- ---------- -------------------- -------------------------
<S> <C> <C> <C> <C>
John V. Harker -- -- 256,018 / 146,956 1,456,037 / 580,231
Stuart F. Cohen -- -- -- / 200,640 -- / 1,147,661
Michael D. Yonker 4,000 39,500 149,812 / 44,788 1,136,438 / 224,163
David L. Stallard 10,600 94,150 86,900 / 92,500 125,136 / 298,200
Susan L. Thompson 32,000 223,530 79,166 / 48,394 396,574 / 235,474
</TABLE>
(A) Market value of the underlying securities at exercise date, minus
exercise price of the options.
(B) Market value of the underlying securities at December 31, 1997, $15.1875
per share, minus exercise price of the unexercised options.
DIRECTOR COMPENSATION
During 1997, non-employee directors of the Company received quarterly stock
option grants as well as an annual grant pursuant to the In Focus Systems,
Inc. Directors' Stock Option Plan (the "Directors' Plan"). The non-employee
directors were also reimbursed for their expenses in attending meetings of
the Company's Board of Directors. The Directors' Plan, as amended, provides
that each "Eligible Director" shall be granted an option to purchase 20,000
shares of the Company's Common Stock upon becoming an Eligible Director. The
Directors' Plan further provides that each Eligible Director shall, so long
as he or she remains an Eligible Director, be granted an option to purchase
10,000 shares of the Company's Common Stock on each anniversary of becoming
an Eligible Director. The quarterly grants under the Directors' Plan are
based on a formula defined in the Plan. Messrs. Behrendt and Kuehler each
received options covering a total of 18,086 shares of the Company's Common
Stock during 1997, Mr. Hallman received options covering 17,494 shares of the
Company's Common Stock during 1997 and Mr. Mii received options covering
24,354 shares of the Company's Common Stock during 1997. The options granted
were at exercise prices between $7.33 per share and $15.69 per share. The
Company pays no additional remuneration to employees of the Company who serve
as directors.
15
<PAGE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE IN CONTROL ARRANGEMENTS
In connection with Mr. Harker's employment in April 1992 as President and
Chief Executive Officer, the Company entered into an agreement with Mr.
Harker, which provided for certain relocation benefits. In addition, in the
event the Company terminates Mr. Harker's employment other than "for cause",
as defined in the agreement, Mr. Harker will be entitled to receive salary
and insurance benefits for an additional twelve-month period. Additionally,
as specified in the agreement, in the event the Company is acquired, Mr.
Harker's unvested options will become fully vested.
In April 1997, the Board of Directors approved amendments to the stock option
agreements of all executive officers of the Company to provide that all
options held by executive officers of the Company shall become immediately
exercisable, without regard to any contingent vesting provision to which such
option may otherwise be subject, in the event of the occurrence of a Change
of Control.
IN FOCUS SYSTEMS, INC. 1998 STOCK INCENTIVE PLAN SUMMARY
BACKGROUND
In December 1997, the Company's Board of Directors adopted the In Focus
Systems, Inc. 1998 Stock Incentive Plan (the "1998 Plan"), which provides for
the grant of incentive stock options ("ISOs") to officers and other employees
of the Company and non qualified stock options ("NQSOs") and restricted stock
awards to employees, officers, directors and consultants of the Company
covering up to 1,500,000 shares of the Company's Common Stock. The 1998 Plan
is the successor to the Company's 1988 Combination Stock Option Plan (the
"1988 Plan") which terminates on December 21, 1998.
ELIGIBILITY
As of January 31, 1998 the persons eligible to participate in the 1998 Plan
included six officers, four non-employee directors and approximately 520
employees of the Company. Under the 1988 Plan, options to purchase 1,212,330
shares of Common Stock were granted at an average exercise price of $12.21
per share during the year ended December 31, 1997. As a result of employee
terminations, options to purchase 550,140 shares of the Company's Common
Stock were canceled during 1997 at an average price of $9.97. As of December
31, 1997, options to purchase 3,139,100 shares of Common Stock were
outstanding at an average exercise price of $10.51 per share, 5,350,956
shares of Common Stock had been issued upon exercise of options, and 489,944
shares of Common Stock were available for future grants under the 1988 Plan.
As of the date of this Proxy Statement, there has been no activity under the
1998 Plan.
ADMINISTRATION
The 1998 Plan shall be administered by the Board of Directors of the Company
(the "Board") or a committee appointed by, and consisting of two or more
members of, the Board, hereinafter referred to as the Plan Administrator.
The Plan Administrator has full authority to administer the 1998 Plan in
accordance with its terms and to determine all questions arising in
connection with the interpretation and application of the 1998 Plan. In
16
<PAGE>
selecting the Plan Administrator, the Board shall consider, with respect to
any persons subject to Section 16 of the Exchange Act, the provisions
regarding "outside directors" as contemplated by Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code") and "nonemployee
directors" as contemplated by Rule 16b-3 under the Exchange Act.
SHARES SUBJECT TO THE PLAN
The 1998 Plan covers a total of 1,500,000 shares of the Company's Common
Stock. Not more than 400,000 shares of Common Stock may be made subject to
awards under the Plan to any one individual in the aggregate in one fiscal
year of the Company, except the Company may make additional one-time grants
of up to 1,000,000 shares to a newly hired individual, such limitation to be
applied in a manner consistent with the requirements of, and only to the
extent required for compliance with, the exclusion from the limitation on
deductibility of compensation under Section 162(m) of the Code.
MINIMUM OPTION PRICE
The exercise prices of ISOs and NQSOs under the 1998 Plan must equal or
exceed the fair market value of the Common Stock on the date of grant (110%
of the fair market value in the case of employees who hold 10% or more of the
voting power of the Common Stock). As defined in the 1998 Plan, "fair market
value" shall mean the last reported sales price of the Common Stock on the
Nasdaq National Market System on the date of grant.
DURATION OF OPTIONS
Subject to earlier termination as a result of termination of employment,
death or disability, each option granted under the 1998 Plan shall expire on
the date specified by the Plan Administrator, but in no event more than (i)
ten years from the date of grant in the case of ISOs generally, and (ii) five
years from the date of grant in the case of ISOs granted to an employee who
holds 10% or more of the voting power of all Common Stock.
MEANS OF EXERCISING OPTIONS
An option is exercised by giving written notice to the Company, which notice
must be accompanied by full payment of the purchase price therefor, either in
cash or by certified check, or at the discretion of the Plan Administrator,
through delivery of shares of Common Stock (either actual or by attestation)
having a fair market value equal to the cash exercise price of the option, by
delivery of instructions to a broker for a "cashless exercise" whereby shares
acquired upon exercise are sold to pay the option exercise price, by delivery
of the optionee's personal recourse promissory note in the amount of the cash
exercise price of the option, such other consideration that the Plan
Administrator may permit, or by any combination of the above as permitted by
the Plan Administrator.
GRANT OF STOCK AWARDS
The Plan Administrator is authorized to make awards of Common Stock on such
terms and conditions and subject to such restrictions, if any (which may be
based on continuous service with the company or the achievement of
performance goals related to operating profit as a percentage of revenues,
revenue and profit growth, profit-related return ratios, such as return on
equity, or cash flow, where such goals may be stated in absolute terms or
relative to comparison companies), as the Plan Administrator shall determine,
in its sole discretion, which terms, conditions and restrictions shall be set
forth in the instrument
17
<PAGE>
evidencing the award ("Stock Award"). The terms, conditions and restrictions
that the Plan Administrator shall have the power to determine shall include,
without limitation, the manner in which shares subject to Stock Awards are
held during the periods they are subject to restrictions and the
circumstances under which forfeiture or restricted stock shall occur by
reason of termination of the holder's services.
TERM AND AMENDMENT OF THE PLAN
The 1998 Plan has no fixed expiration date, but ISOs may not be granted after
December 17, 2007. The Board of Directors may terminate or amend the 1998
Plan at any time, provided, however, to the extent required for compliance
with Section 422 of the Code or any applicable law or regulation, the
following actions will not become effective without approval of the
shareholders obtained within 12 months before or after the Board adopts a
resolution authorizing such action:
(a) increasing the total number of shares that may be issued under
the 1998 Plan (except by adjustment under the Plan);
(b) modifying the class of persons eligible to receive grants; or
(c) modifying terms that otherwise require shareholder approval under
any applicable law or regulation.
TRANSFERABILITY
Except as indicated in the following, no option shall be transferable or
exercisable by any person other than the optionee to whom such option was
originally granted. Any option exercisable at the time of the optionee's
death may be exercised to the extent of the number of shares purchasable at
the date of death, by any person to whom such rights have passed under
applicable laws of descent and distribution at any time, or from time to
time, within one year after the date of death, but in no event later than the
remaining term of the option. The Plan Administrator may, in its discretion,
authorize all or a portion of the NQSOs granted to an optionee to be on terms
that permit transfer by such optionee to (i) the spouse, children or
grandchildren of the optionee ("Immediate Family Members"), (ii) a trust or
trusts for the exclusive benefit of such Immediate Family Members, or (iii) a
partnership in which such Immediate Family Members are the only partners,
provided that (a) there may be no consideration for any such transfer, (b)
the stock option agreement pursuant to which such options are granted must be
approved by the Plan Administrator and must expressly provide for
transferability and (c) subsequent transfers of transferred options are
prohibited.
FEDERAL TAX EFFECTS OF ISOS
The Company intends that ISOs granted under the 1998 Plan will qualify as
ISOs under Section 422 of the Code. An optionee acquiring stock pursuant to
an ISO receives favorable tax treatment in that the optionee does not
recognize any taxable income at the time of the grant of the ISO or upon
exercise. The tax treatment of the disposition of ISO stock depends upon
whether the stock is disposed of within the holding period, which is the
later of two years from the date the ISO is granted or one year from the date
the ISO is exercised. If the optionee disposes of ISO stock after completion
of the holding period, the optionee will recognize as capital gains income
the difference between the amount received in such disposition and the basis
in the ISO stock, i.e. the option's exercise price. If the optionee disposes
of ISO stock before the holding period expires, it is considered a
18
<PAGE>
disqualifying disposition and the optionee must recognize the gain on the
disposition as ordinary income in the year of the disqualifying disposition.
Generally, the gain is equal to the difference between the option's exercise
price and the stock's fair market value at the time the related stock is
sold. While the exercise of an ISO does not result in taxable income, there
are implications with regard to the alternative minimum tax ("AMT"). When
calculating income for AMT purposes, the favorable tax treatment granted ISOs
is disregarded and the difference between the option exercise price and the
fair market value of the related common stock on the date of exercise (the
"bargain purchase element") will be considered as part of AMT income. Just
as the optionee does not recognize any taxable income on the grant or
exercise of an ISO, the Company is not entitled to a deduction on the grant
or exercise of an ISO. Upon a disqualifying disposition of ISO stock, the
Company may deduct from taxable income in the year of the disqualifying
disposition an amount generally equal to the amount that the optionee
recognizes as ordinary income due to the disqualifying disposition. In
general capital gains will be taxed at a rate of 28 percent, but if the
shares are held for at least 18 months, the rate of taxation is 20 percent.
FEDERAL TAX EFFECTS OF NQSOS
If an option does not meet the statutory requirements of Section 422 of the
Code and therefore does not qualify as an ISO, the difference, if any,
between the option's exercise price and the fair market value of the stock on
the date the option is exercised is considered compensation and is taxable as
ordinary income to the optionee in the year the option is exercised, and is
deductible by the Company for federal income tax purposes in such year.
The foregoing summary of federal income tax consequences of stock options
does not purport to be complete, nor does it discuss the provisions of the
income tax laws of any state or foreign country in which the optionee resides.
DIRECTOR AND EXECUTIVE STOCK OWNERSHIP GUIDELINES
In January 1998, the Board of Directors approved ownership objectives for the
Company's executive officers and Outside Directors. One of the purposes of
the 1998 Plan is to provide a means for the executive officers and Outside
Directors of the Company to achieve the following objectives:
<TABLE>
<CAPTION>
Position Ownership Guideline Date to be Accomplished By
- ------------------------- ------------------------ --------------------------------
<S> <C> <C>
Chief Executive Officer 5 times annual salary 1/1/01 or 5 years from hire
in stock value date, whichever is later
Senior Vice President 3 times annual salary 1/1/01 or 5 years from hire
in stock value date, whichever is later
Vice President 2 times annual salary 1/1/01 or 5 years from hire
in stock value date, whichever is later
Outside Directors 4 times annual 1/1/03 or 5 years from
retainer in stock value appointment date, whichever
is later
</TABLE>
19
<PAGE>
The Board has under consideration specific proposals with regard to the
granting of restricted stock to executive officers and Outside Directors, and
expects to approve such proposals during 1998.
NEW PLAN BENEFITS
1998 STOCK INCENTIVE PLAN
There have been no options granted under the 1998 Plan. However, the
following options have been granted under the Company's existing 1988 Plan
and Director's Plan from January 1, 1998 through February 27, 1998:
<TABLE>
<CAPTION>
Name and Position Dollar Value ($) Number of Units (A)
----------------- ---------------- -------------------
<S> <C> <C>
John V. Harker, Chairman of the Board,
President and Chief Executive Officer -- 157,690
Stuart Cohen, Vice President, Worldwide Sales -- 19,720
Michael D. Yonker, Vice President,
Information Services
Chief Financial Officer, Treasurer and -- 59,140
Assistant Secretary
David L. Stallard, Former Vice President, -- --
Engineering
Susan L. Thompson, Vice President, Human -- 19,720
Resources
Peter D. Behrendt, Director -- --
Michael R. Hallman, Director -- --
Jack D. Kuehler, Director -- 10,000
Nobuo Mii, Director -- --
All Current Executive Officers as a Group (6 -- 308,830
people)
All Non-Executive Officer Directors
as a Group (4 people) -- 10,000
All Non-Executive Officer Employees as a -- 228,040
Group (520 people)
</TABLE>
(A) Options to purchase shares of the Company's Common Stock, totaling
546,870 shares, have been granted to the Named Executive Officers and
described groups through February 27, 1998. Such options were granted
at an exercise price per share that is equal to the fair market value of
the Company's Common Stock on the date of grant. The average per share
exercise price of all option grants included in the above table is
$15.70. Except for Mr. Kuehler's options, which fully vest six months
from the date of grant, the options shall become exercisable over a
four-year period and expire ten years from the date of grant. Option
grants under the 1988 Combination Stock Option Plan and the 1998 Stock
Incentive Plan are discretionary and therefore grants for the remainder
of 1998 or thereafter cannot be determined. The fair market value of
the Company's Common Stock, as reported by the Nasdaq National Market
System, on February 27, 1998 was $19.97.
20
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997, the Compensation Committee was composed of Messrs. Hallman,
Behrendt and Kuehler, all outside directors who are not, and have not been at
any time in the past, officers of the Company. Although Mr. Harker, Chairman
of the Board, President and Chief Executive Officer, served on the Company's
Board of Directors in 1997 and participated in compensation discussions, he
did not participate in any deliberations or decisions regarding his own
compensation.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors was composed of Messrs.
Hallman, Behrendt and Kuehler during 1997. All members of the Compensation
Committee are non-employee, outside directors. The Compensation Committee is
responsible for establishing compensation of officers who also serve on the
Board of Directors. The entire Board is responsible for reviewing and
providing feedback on non-director executive officer compensation with goals
and dollar amounts established by the Chief Executive Officer in accordance
with policies approved by the Board.
Awards to executive officers under the Company's 1988 Combination Stock
Option Plan, as amended, are made solely by the Administrative Committee,
which is composed of the same non-employee, outside Directors as the
Compensation Committee.
COMPENSATION PHILOSOPHY AND POLICIES
The Company's philosophy is to structure executive officer compensation so
that it will attract, motivate and retain senior management by providing an
opportunity for competitive compensation based on performance. Executive
officer compensation includes competitive base salaries, annual bonus plans
based on Company financial and personal performance goals, and long-term
stock-based incentive opportunities in the form of options exercisable to
purchase the Company's Common Stock. It is also the policy of both the
Compensation Committee and the Administrative Committee that, to the extent
possible, compensation will be structured so that it meets the
"performance-based" criteria as defined by Section 162(m) of the Internal
Revenue Code of 1986, as amended and therefore is not subject to federal
income tax deduction limitations. Both the Compensation Committee and the
Administrative Committee have the right to waive pre-established performance
criteria in granting awards.
BASE SALARIES
In setting base salaries that are competitive with other high technology
companies, the Company participates in executive salary surveys including
those conducted by Radford Associates, the American Electronics Association
(AEA) and the Western Management Group (WMG). When selecting comparables,
the Company attempts to select companies that are similar in many respects,
including industry, annual revenue and profitability. Executives' salaries
paid in 1997 were targeted within the 50th to 75th percentile compared to the
range of salaries paid by companies in the salary surveys mentioned above.
Many of the companies included in the above mentioned surveys are also
included in the indices used in the Performance Graph.
21
<PAGE>
ANNUAL BONUS AWARDS FOR 1997
The 1997 Officer Bonus Plan (the "Plan") provided for annual bonuses in two
components. First, the Plan provided for the payment of quarterly profit
sharing bonuses equal to a percentage of each officer's quarterly salary.
This percentage was determined by dividing the quarterly non-officer profit
sharing bonus pool (2 percent of pre-tax income) paid quarterly to
non-officer employees by total non-officer compensation for the quarter.
These percentages were approximately 3.50%, 3.78%, 2.81% and 4.63% based on
the first, second, third and fourth quarter of 1997 results, respectively.
The fourth quarter profit sharing was paid in the first quarter of 1998.
Second, the Plan provided for the payment of executive officer bonuses (other
than the Chief Executive Officer) based 75 percent on the Company meeting its
1997 profit before income tax objectives and 25 percent on meeting individual
goals and objectives which are both quantitative and qualitative in nature,
including such factors as market development, product introduction and
resource management. The targeted bonus was 30 percent of annual salary and
would be achieved by an officer receiving 100 percent ratings on both the
Company and individual goals. The maximum bonus component for Company profit
before income tax performance is 200 percent and for individual performance
is 130 percent. The Company goals must be met at the 50 percent level or
greater and the individual goals must be met at the 75 percent level or
greater for an officer to receive a bonus. Bonuses paid for 1997 to the
named executive officers (other than the Chief Executive Officer) ranged from
24.8 percent to 27.1 percent of total salary based on Company performance
being met at the 77 percent level and the individual goals being met between
the 90 percent and the 130 percent levels.
STOCK OPTION AWARDS FOR 1997
The Company's 1988 Combination Stock Option Plan, as amended, provides for
the issuance of incentive and non-qualified stock options to officers and
employees of the Company to purchase shares of the Company's Common Stock at
an exercise price equal to the fair market value on the date of grant. See
"Option Grants in Last Fiscal Year" table for a summary of options granted to
the named executive officers during 1997.
22
<PAGE>
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Harker's 1997 base salary of $350,000 was determined in the same manner
as the other executives as described in "Base Salaries" above. The profit
sharing component of Mr. Harker's annual bonus was determined in the same
manner as discussed above under "Annual Bonus Awards for 1997" and totaled
$15,588. The second component of Mr. Harker's bonus was based on the Company
meeting its profit before income tax objectives. Mr. Harker's targeted bonus
under this component of the annual bonus plan was 60 percent of his 1997
annual salary, based on the Company meeting its profit before income tax
objectives at the 100 percent level. The maximum bonus component for Company
profit before income tax performance is 200 percent with a 75 percent minimum
level for Mr. Harker to receive a bonus under this component of the bonus
plan. Mr. Harker's bonus totaled $161,700, or 46.2 percent of his 1997
annual salary, based on the Company meeting 77 percent of its profit before
income tax objective. The Compensation Committee also approved an additional
bonus for 1997 performance of $50,000 for Mr. Harker. The Compensation
Committee's objective in setting Mr. Harker's 1997 compensation was to be
competitive with other companies in the Company's industry and to allow for
potential compensation based on long-term performance criteria as defined in
"Annual Bonus Awards for 1997" and "Stock Option Awards for 1997" above.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS:
Peter D. Behrendt
Michael R. Hallman
Jack D. Kuehler
23
<PAGE>
STOCK PERFORMANCE GRAPH
The SEC requires that registrants include in their proxy statement a
line-graph presentation comparing cumulative five-year shareholder returns on
an indexed basis, assuming a $100 initial investment and reinvestment of
dividends, of (a) the registrant, (b) a broad-based equity market index and
(c) an industry-specific index. The broad-based market index used is the
Nasdaq Stock Market Total Return Index - U.S. and the industry-specific index
used is the Computer Hardware Sector Sub-Index of the Hambrecht & Quist
Technology Index.
<TABLE>
<CAPTION>
BASE INDEXED RETURNS
PERIOD YEAR ENDING
COMPANY/INDEX 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- ------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
In Focus Systems, Inc. 100.00 122.45 212.75 294.90 176.53 247.96
Nasdaq U.S. Index 100.00 114.80 112.21 158.70 195.19 239.53
Computer Sector Sub-Index of
the Hambrecht & Quist
Technology Index 100.00 104.84 130.23 187.47 248.54 338.35
</TABLE>
24
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Act requires the Company's directors and executive
officers and persons who own more than ten percent of the outstanding shares
of the Company's Common Stock ("ten percent shareholders"), to file with the
SEC initial reports of beneficial ownership and reports of changes in
beneficial ownership of shares of Common Stock and other equity securities of
the Company. To the Company's knowledge, based solely on review of the copies
of such reports furnished to the Company or otherwise in its files and on
written representations from its directors, executive officers and ten
percent shareholders that no other reports were required, during the fiscal
year ended December 31, 1997, the Company's officers, directors and ten
percent shareholders complied with all applicable Section 16(a) filing
requirements.
SHAREHOLDER PROPOSALS
Proposals by shareholders intended to be presented at the Company's 1999
Annual Meeting must be received by the Company at its principal executive
office no later than November 9, 1998 in order to be included in the
Company's 1999 Proxy Statement and proxy card.
TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors is not aware
of any other matters that may come before this meeting. It is the intention
of the persons named in the enclosed proxy to vote the proxy in accordance
with their best judgment if any other matters do properly come before the
meeting.
Please return your proxy as soon as possible. Unless a quorum consisting of
a majority of the outstanding shares entitled to vote is represented at the
meeting, no business can be transacted. Therefore, please be sure to date
and sign your proxy exactly as your name appears on your stock certificate
and return it in the enclosed postage prepaid return envelope. Please act
promptly to insure that you will be represented at this important meeting.
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, ON THE WRITTEN REQUEST OF ANY
BENEFICIAL OWNER OF SHARES OF THE COMPANY'S COMMON STOCK ENTITLED TO VOTE AT
THE ANNUAL MEETING OF SHAREHOLDERS, A COPY OF THE COMPANY'S ANNUAL REPORT ON
FORM 10-K AS FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION FOR THE
COMPANY'S FISCAL YEAR ENDED DECEMBER 31, 1997. WRITTEN REQUESTS SHOULD BE
MAILED TO THE SECRETARY, IN FOCUS SYSTEMS, INC., 27700B SW PARKWAY AVENUE,
WILSONVILLE, OREGON 97070.
By Order of the Board of Directors:
MICHAEL D. YONKER
VICE PRESIDENT, INFORMATION SERVICES,
CHIEF FINANCIAL OFFICER AND SECRETARY
Dated: March 9, 1998
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APPENDIX A
IN FOCUS SYSTEMS, INC.
1998 STOCK INCENTIVE PLAN
1. STATEMENT OF PURPOSE.
The principal purposes of this Stock Incentive Plan ("Plan") are to
secure to In Focus Systems, Inc. (the "Company") the advantages of the
incentive inherent in stock ownership on the part of employees, officers,
directors, and consultants responsible for the continued success of the
Company and to create in such individuals a proprietary interest in, and a
greater concern for, the welfare of the Company through the grant of options
to acquire shares of the common stock of the Company ("Common Stock") and
through the award of restricted Common Stock. Such grants or awards of
options and of stock pursuant to this Plan shall be referred to as "Awards."
Each incentive stock option ("ISO") granted hereunder is intended to
constitute an "incentive stock option," as such term is defined in Section
422 of the Internal Revenue Code of 1986, as the same may be amended from
time to time (the "Code"), and this Plan and each such ISO is intended to
comply with all of the requirements of said Section 422 and of all other
provisions of the Code applicable to incentive stock options and to plans
issuing the same. Each nonstatutory stock option ("Non-ISO") granted
hereunder is intended to constitute a nonstatutory stock option that does not
comply with the requirements of Section 422 of the Code. ISO's and Non-ISO's
shall sometimes hereinafter be referred to collectively as "Options". This
Plan is expected to benefit shareholders by enabling the Company to attract
and retain personnel of the highest caliber by offering to them an
opportunity to share in any increase in the value of the Common Stock to
which such personnel have contributed.
2. ADMINISTRATION.
2.1 The Plan shall be administered by the Board of Directors of
the Company ("Board") or a committee or committees (which term includes
subcommittees) appointed by, and consisting of two or more members of, the
Board (hereinafter, "Plan Administrator"). If and so long as the Common
Stock is registered under Section 12(b) or 12(g) of the Securities Exchange
Act of 1934, as amended ("Exchange Act"), the Board shall consider in
selecting the Plan Administrator and the membership of any committee acting
as Plan Administrator of the Plan with respect to any persons subject or
likely to become subject to Section 16 under the Exchange Act the provisions
regarding (a) "outside directors," as contemplated by Section 162(m) of the
Code, and (b) "nonemployee directors," as contemplated by Rule 16b-3 under
the Exchange Act. The Board may delegate the responsibility for
administering the Plan with respect to designated classes of eligible persons
to different committees, subject to such limitations as the Board deems
appropriate. Committee members shall serve for such term as the Board may
determine, subject to removal by the Board at any time.
2.2 Except for the terms and conditions explicitly set forth in
the Plan, the Plan Administrator shall have exclusive authority, in its
discretion, to determine all matters relating to awards under the Plan,
including the selection of individuals to be granted Awards, the type of
Awards, the number of shares of Common Stock subject to an Award, all terms,
conditions, restrictions and limitations, if any, of an Award, and the terms
of any instrument that evidences the Award. The Plan Administrator shall
also have exclusive authority to interpret the
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Plan and may from time to time adopt, and change, rules and regulations of
general application for the Plan's administration. The Plan Administrator's
interpretation of the Plan and its rules and regulations, and all actions
taken and determinations made by the Plan Administrator pursuant to the Plan,
shall be conclusive and binding on all parties involved or affected. The Plan
Administrator may delegate administrative duties to such of the Company's
officers as it so determines.
3. ELIGIBILITY.
3.1 ISO's may be granted to any employee of the Company or of an
Affiliate of the Company, as defined in Section 3.2 below. Non-ISO's may be
granted to any employee, officer or director (whether or not also an
employee), or consultant of the Company or of an Affiliate of the Company.
Each employee, officer, director, or consultant selected by the Plan
Administrator to receive an Option shall sometimes hereinafter be referred to
as an "Optionee".
3.2 As used in this Plan, an "Affiliate" of a corporation shall
refer to a "parent corporation" of such corporation as described in Section
424(e) of the Code or a "subsidiary corporation" of such corporation as
described in Section 424(f) of the Code.
3.3 An Optionee who is not an employee of the Company or of an
Affiliate of the Company shall not be eligible to receive an ISO hereunder
and no ISO's shall be granted to any such non-employee Optionee.
3.4 No Option shall be granted hereunder to any Optionee unless
the Plan Administrator shall have determined, based on the advice of counsel,
that the grant of such option (and the exercise thereof by the Optionee) will
not violate the securities law of the state where the Optionee resides.
4. SHARES SUBJECT TO THE PLAN.
4.1 Subject to adjustment from time to time as provided in Section
10, a maximum of seven hundred fifty thousand (750,000) shares of Common
Stock shall be available for issuance under the Plan; in addition, if
subsequent to the 1998 Annual Meeting of the Company's shareholders the
Company repurchases any shares of Common Stock (whether on the open market,
pursuant to option exercises or otherwise), then additional shares of Common
Stock may be issued pursuant to the Plan, provided that the number of such
additional shares shall not exceed the lesser of (i) the number of shares so
repurchased, or (ii) seven hundred fifty thousand (750,000) shares. Shares
issued under the Plan shall be drawn from authorized and unissued shares.
4.2 Upon exercise of an Option, the number of shares of Common
Stock thereafter available hereunder and under the Option shall decrease by
the number of shares of Common Stock as to which such Option was exercised;
provided that if such shares are pledged to secure a promissory note given in
payment of the Option Price for such shares and, as a result of a default on
such note, the pledged shares are returned to the Company, then such shares
shall again be available for the purposes of this Plan.
4.3 Any shares of Common Stock made subject to an Award granted
hereunder that cease to be subject to the Award (other than by reason of
exercise or payment of
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the Award to the extent it is exercised for or settled in shares) shall again
be available for issuance in connection with future Awards under this Plan.
4.4 The Company shall at all times during the term of this Plan
reserve and keep available such number of shares as shall be sufficient to
satisfy the requirements of the Plan.
4.5 Subject to any adjustment as provided in Section 10, if and so
long as the Common Stock is registered under Section 12 of the Exchange Act,
not more than two hundred thousand (200,000) shares of Common Stock may be
made subject to Awards under the Plan to any one individual in the aggregate
in any one fiscal year of the Company, except the Company may make additional
one-time grants of up to five hundred thousand (500,000) shares to a newly
hired individual, such limitation to be applied in a manner consistent with
the requirements of, and only to the extent required for compliance with, the
exclusion from the limitation on deductibility of compensation under Section
162(m) of the Code.
5. OPTION TERMS.
5.1 The Plan Administrator shall specify the following terms to be
contained in each Option granted to an Optionee hereunder, which Option shall
be executed by the Company and such Optionee:
5.1.1 Whether such Option is an ISO or a Non-ISO;
5.1.2 The number of shares of Common Stock subject to
purchase pursuant to such Option;
5.1.3 The date on which the grant of such Option shall be
effective (the "Date of Grant");
5.1.4 The period of time during which such Option shall be
exercisable, which shall in no event be more than ten (10) years following
its Date of Grant for ISO's; provided, however, that if an ISO is granted to
an Optionee who on the Date of Grant owns, either directly or indirectly
within the meaning of Section 424(d) of the Code, more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company or
an Affiliate of the Company, the period of time during which such Option
shall be exercisable shall in no event be more than five (5) years following
its Date of Grant;
5.1.5 The price at which such Option shall be exercisable
by the Optionee (the "Option Price"); provided, however, that the Option
Price for all Options shall be not less than the fair market value, as
defined in Section 5.2 below, on the Date of Grant of the shares of Common
Stock subject thereto; and provided further that, if such Option is granted
to an Optionee who on the Date of Grant owns, either directly or indirectly
within the meaning of Section 424(d) of the Code, more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company or
an Affiliate of the Company, then the Option Price specified in such Option
shall be at least one hundred ten percent (110%) of the fair market value, on
the Date of Grant, of the Common Stock subject thereto;
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5.1.6 Any vesting schedule upon which the exercise of an
Option is contingent; provided that the Plan Administrator shall have
complete discretion with respect to the terms of any vesting schedule upon
which the exercise of an Option is contingent, including, without limitation,
discretion (a) to allow full and immediate vesting upon grant of such Option,
(b) to permit partial vesting in stated percentage amounts based on the
length of the holding period of such Option, or (c) to permit full vesting
after a stated holding period has passed; and
5.1.7 Such other terms and conditions as the Plan
Administrator deems advisable and as are consistent with the purpose of this
Plan.
5.2 Fair market value shall be determined as follows:
5.2.1 If the Company's Common Stock is publicly traded at
the time an Option is granted hereunder, fair market value shall be
determined as of the date of grant and shall mean:
(a) The average (on that date) of the high and low prices of
the Common Stock on the principal national securities exchange on
which the Common Stock is traded, if the Common Stock is then
traded on a national securities exchange; or
(b) The last reported sale price (on that date) of the Common
Stock on the NASDAQ National Market System, if the Common Stock is
not then traded on a national securities exchange; or
(c) The closing bid price (or average of bid prices) last
quoted on such date by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on
the NASDAQ National Market System.
5.2.2 If the Common Stock is not publicly traded at the
time an Option is granted hereunder, fair market value shall be deemed to be
the fair value of the Common Stock as determined by the Plan Administrator
after taking into consideration all factors that it deems appropriate,
including, without limitation, recent sale and offer prices of the Common
Stock in private transactions negotiated at arm's length.
5.3 No Option shall be granted hereunder during the suspension of
this Plan or after the termination of this Plan pursuant to Section 12.2.
Except as expressly provided herein, nothing contained in this Plan shall
require that the terms and conditions of Options granted hereunder be uniform.
5.4 Notwithstanding anything in the Plan to the contrary, the Plan
Administrator may grant Options under the Plan in substitution for options
issued under other plans, or assume under the Plan awards issued under other
plans, if the other plans are or were plans of other acquired entities
("Acquired Entities") (or the parent of the Acquired Entity) and the new
Option is substituted, or the old option is assumed, by reason of a merger,
consolidation, acquisition of property or of stock, reorganization or
liquidation (the "Acquisition Transaction"). In the event that a written
agreement pursuant to which the Acquisition Transaction is completed is
approved by the Board and said agreement sets forth the terms and conditions
of the substitution for or assumption of outstanding awards of the Acquired
Entity, said terms and
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conditions shall be deemed to be the action of the Plan Administrator without
any further action by the Plan Administrator, and the persons holding such
Options shall be deemed to be Optionees.
6. LIMITATION ON GRANTS OF ISO'S.
In the event that the aggregate fair market value of Common Stock and other
stock with respect to which ISO's granted to an Optionee hereunder or
incentive stock options granted to such Optionee under any other plan of the
Company or any of its Affiliates are exercisable for the first time during
any calendar year, exceeds the maximum permitted under Section 422(d) of the
Code, then to the extent of such excess, such ISO's shall be treated as
Non-ISO's.
7. EXERCISE OF OPTION.
7.1 Subject to any limitations or conditions imposed upon an
Option pursuant to Section 5 above, an Optionee may exercise an Option or any
part thereof (unless partial exercise is specifically prohibited by the terms
of the Option), by giving written notice thereof to the Company at its
principal place of business accompanied by payment as described in Section
7.2.
7.2 The exercise price for shares purchased under an Option shall
be paid in full to the Company by delivery of consideration equal to the
Option Price for the whole number of shares as to which it is exercised.
Such consideration must be paid in cash or by check, or, in the Plan
Administrator's discretion, a combination of cash and/or check and/or one or
both of the following alternative forms: (a) tendering (either actually or,
if and so long as the Common Stock is registered under Section 12(b) or 12(g)
of the Exchange Act, by attestation) Common Stock already owned by the
Optionee for at least six (6) months (or any shorter period necessary to
avoid a charge to the Company's earnings for financial reporting purposes)
having a fair market value on the day prior to the exercise date equal to the
aggregate Option Price or (b) if and so long as the Common Stock is
registered under Section 12(b) or 12(g) of the Exchange Act, delivery of a
properly executed exercise notice, together with irrevocable instructions, to
(i) a brokerage firm, that may from time to time be designated by the Company
in its discretion, to deliver to the Company the aggregate amount of sale or
loan proceeds to pay the Option Price and any withholding tax obligations
that may arise in connection with the exercise and (ii) the Company, to
deliver the certificates for such purchased shares directly to such brokerage
firm, all in accordance with the regulations of the Federal Reserve Board.
In addition, the exercise price for shares purchased under an Option may be
paid, either singly or in combination with one or more of the alternative
forms of payment authorized by this Section 7.2, by (y) a promissory note; or
(z) such other consideration as the Plan Administrator may permit. Any
promissory note delivered in connection with exercise of an Option shall bear
interest at a rate specified by the Plan Administrator but in no case less
than the rate required to avoid imputation of interest (taking into account
any exceptions) for federal income tax purposes.
7.3 As soon as practicable after exercise of an option in
accordance with Sections 7.1 and 7.2 above, the Company shall issue a stock
certificate evidencing the Common Stock with respect to which the Option has
been exercised. Until the issuance (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the
Company) of such stock certificate, no right to vote or receive dividends or
any other rights as a
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shareholder shall exist with respect to such Common Stock, notwithstanding
the exercise of the Option. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 10 below.
7.4 The amount to be paid by the Optionee upon exercise shall be
the full Option Price together with the amount of any taxes required to be
withheld with respect to the grant or exercise of the Option. Subject to the
Plan and to applicable law, the Plan Administrator, in its sole discretion,
may permit such withholding obligations to be paid, in whole or in part, by
electing to have the Company withhold shares of Common Stock or by
transferring shares of Common Stock to the Company, in such amounts as are
equivalent to the fair market value of the withholding obligation.
8. TRANSFERABILITY AND POST-TERMINATION EXERCISES.
8.1 Except as provided otherwise in this Section 8, no Option
shall be transferable or exercisable by any person other than the Optionee to
whom such Option was originally granted.
8.2 The Plan Administrator shall establish and set forth in each
instrument that evidences an Option whether the Option will continue to be
exercisable and the terms and conditions of such exercise, if the Optionee
ceases to be employed by or provide services to the Company or its
Affiliates, which may be waived or modified by the Plan Administrator. If
not so established and subject to Section 8.3, the Option will be exercisable
in accordance with the following terms, which may be waived or modified by
the Plan Administrator:
8.2.1 In case of termination of Optionee's employment or
services other than by reason of death, the Option shall be exercisable, to
the extent of the number of shares purchasable at the date of termination,
only within three months after the date the Optionee ceases to be an employee
or consultant of the Company or Affiliate, but no later than the remaining
term of the Option.
8.2.2 Any Option exercisable at the time of the Optionee's
death may be exercised to the extent of the number of shares purchasable at
the date of death, by the personal representative of the Optionee's estate or
the person(s) to whom the Optionee's rights under the Option have passed by
will or applicable laws of descent and distribution at any time or from time
to time within one year after the date of death, but in no event later than
the remaining term of the Option.
8.2.3 Any portion of an Option not exercisable on the date
of termination of the Optionee's employment or services shall terminate on
such date, unless the Plan Administrator determines otherwise.
8.2.4 Subject to Section 8.3, the effect of a
Company-approved leave of absence on terms and conditions of an Option shall
be determined by the Plan Administrator in its sole discretion. A transfer
of services or employment between or among the Company and subsidiaries shall
not be considered a termination of employment or services.
8.2.5 To the extent exercisable, a Non-ISO may be exercised
during the Optionee's lifetime by the Optionee's guardian or legal
representative.
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8.3 To the extent required by Section 422 of the Code, ISO's shall
be subject to the following additional terms and conditions: To qualify for
ISO tax treatment, an Option designated as an ISO must be exercised within
three months after termination of employment for reasons other than death,
except that in the case of termination of employment due to total disability,
such Option must be exercised within one year after such termination.
Employment shall not be deemed to continue beyond the first 90 days of a
leave of absence unless the Optionee's reemployment rights are guaranteed by
statute or contract. For purposes of this Section 8.3, "total disability"
shall have the meaning given to such term in the Company's long-term
disability plan, as such plan is in effect on the date of determination.
8.4 In the event that a qualified domestic relations order, as
defined by Section 414(p) of the Code or Title I of the Employee Retirement
Income Security Act or the rules thereunder, mandates the transfer of any
Option that could have been exercised immediately prior to the issuance of
such order, such Option shall pass to the person or persons entitled thereto
pursuant to the order and shall be exercisable by such person or persons in
accordance with the terms thereof.
8.5 The Plan Administrator may, in its discretion, authorize all
or a portion of the Non-ISO's granted to an Optionee to be on terms which
permit transfer by such Optionee to (i) the spouse, children or grandchildren
of the Optionee ("Immediate Family Members"), (ii) a trust or trusts for the
exclusive benefit of such Immediate Family Members, or (iii) a partnership in
which such Immediate Family Members are the only partners, provided that (x)
there may be no consideration for any such transfer, (y) the stock option
agreement pursuant to which such Options are granted must be approved by the
Plan Administrator and must expressly provide for transferability in a manner
consistent with this Section, and (z) subsequent transfers of transferred
Options are prohibited except those in accordance with Section 8 of the Plan.
The Plan Administrator may, in its discretion, in permitting transferability,
impose additional conditions in the Option Agreement consistent with this
section, including without limitation imposition of a post-exercise holding
period on transferees. Following transfer, any such Options shall continue to
be subject to the same terms and conditions as were applicable immediately
prior to transfer; provided, the events of termination of employment of
Sections 8 and 9 hereof shall continue to be applied with respect to the
original Optionee, following which the Options shall be exercisable by the
transferee only to the extent and for the periods specified. The Company
disclaims any obligation to provide notice to a transferee of early
termination of the Option due to termination of employment or otherwise.
Notwithstanding a transfer pursuant to the foregoing, the original Optionee
will remain subject to applicable withholding taxes upon exercise. No
transfer will be effective until written notice of transfer is delivered to
the Company. The Company reserves the right to approve transfers hereunder.
8.6 In order to obtain certain tax benefits afforded to ISO's
under Section 422 of the Code, the Optionee must hold the shares issued upon
exercise of an ISO for two years after the grant date of the ISO and one year
from the date of exercise. An Optionee may be subject to the alternative
minimum tax at the time of exercise of an ISO. The Plan Administrator may
require an Optionee to give the Company prompt notice of any disposition of
shares acquired by the exercise of an ISO prior to expiration of such holding
periods.
9. TERMINATION OF OPTIONS.
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To the extent not earlier exercised, an Option shall terminate at the
earliest of the following dates:
9.1 The termination date specified for such Option in the
respective Option Agreement;
9.2 As specified in Section 8 above:
9.3 The date of any sale, transfer, or hypothecation, or any
attempted sale, transfer or hypothecation, of such Option in violation of
Section 8 above;
9.4 The date specified in Section 10.2 below for such termination
in the event of a Terminating Event; or
9.5 At the discretion of the Plan Administrator, immediately upon
determination by the Plan Administrator that the Optionee has (i) made
unauthorized disclosure of confidential information relating to the Company,
(ii) failed to assign to the Company any invention which the Optionee is
obligated to assign to the Company pursuant to written agreement or
otherwise, or (iii) breached the terms of any written agreement in effect
between the Company and the Optionee relating to confidentiality,
nondisclosure or ownership of inventions.
10. ADJUSTMENTS.
10.1 In the event of a material alteration in the capital
structure of the Company on account of a recapitalization, stock split,
reverse stock split, stock dividend, or otherwise, then the Plan
Administrator shall make such adjustments to this Plan and to the Awards then
outstanding and thereafter granted hereunder as the Plan Administrator
determines to be appropriate and equitable under the circumstances, so that
the proportionate interest of each holder shall, to the extent practicable,
be maintained as before the occurrence of such event. Such adjustments may
include, without limitation (a) a change in the number or kind of shares of
stock of the Company covered by such Awards, and (b) a change in the Option
Price payable per share; provided, however, that the aggregate Option Price
applicable to the unexercised portion of existing Options shall not be
altered, it being intended that any adjustments made with respect to such
Options shall apply only to the price per share and the number of shares
subject thereto. For purposes of this Section 10.1, neither (i) the issuance
of additional shares of stock of the Company in exchange for adequate
consideration (including services), nor (ii) the conversion of outstanding
preferred shares of the Company into Common Stock shall be deemed material
alterations of the capital structure of the Company. In the event the Plan
Administrator shall determine that the nature of a material alteration in the
capital structure of the Company is such that it is not practical or feasible
to make appropriate adjustments to this Plan or to the Awards granted
hereunder, such event shall be deemed a Terminating Event as defined in
Section 10.2 below.
10.2 All Options granted hereunder shall terminate upon the
occurrence of any of the following events ("Terminating Events"): (a) the
dissolution or liquidation of the Company; or (b) a material change in the
capital structure of the Company that is subject to this Section 10.2 by
virtue of the last sentence of Section 10.1 above.
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10.3 All Options granted hereunder shall become immediately
exercisable, without regard to any contingent vesting provision to which such
Options may have otherwise been subject, in the event of a reorganization (as
defined in Section 10.4), which results in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity) less than a majority of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such reorganization.
10.4 In the event of a reorganization as defined in this Section
10.4 in which the Company is not the surviving or acquiring company, or in
which the Company is or becomes a wholly-owned subsidiary of another company
after the effective date of the reorganization, then the plan or agreement
respecting the reorganization shall include appropriate terms providing for
the assumption of each Option granted hereunder, or the substitution of an
option therefor, such that no "modification" of any such Option occurs under
Section 424 of the Code. For purposes of Section 10.3 and this Section 10.4,
reorganization shall mean any statutory merger, statutory consolidation, sale
of all or substantially all of the assets of the Company, or sale, pursuant
to an agreement with the Company, of securities of the Company pursuant to
which the Company is or becomes a wholly-owned subsidiary of another
corporation after the effective date of the reorganization.
10.5 The Plan Administrator shall have the right to accelerate the
date of exercise of any installment of any option; provided, however, that,
without the consent of the Optionee with respect to any Option, the Plan
Administrator shall not accelerate the date of any installment of any Option
granted to an employee as an ISO (and not previously converted into a Non-ISO
pursuant to Section 13 below) if such acceleration would violate the annual
vesting limitation contained in Section 422(d) of the Code, as described in
Section 6 above.
10.6 Adjustments and determinations under this Section 10 shall be
made by the Plan Administrator (upon the advice of counsel), whose decisions
as to what adjustments or determination shall be made, and the extent
thereof, shall be final, binding, and conclusive.
11. STOCK AWARDS.
11.1 GRANT OF STOCK AWARDS. The Plan Administrator is authorized
to make awards of Common Stock on such terms and conditions and subject to
such restrictions, if any (which may be based on continuous service with the
Company or the achievement of performance goals related to operating profit
as a percentage of revenues, revenue and profit growth, profit-related return
ratios, such as return on equity, or cash flow, where such goals may be
stated in absolute terms or relative to comparison companies), as the Plan
Administrator shall determine, in its sole discretion, which terms,
conditions and restrictions shall be set forth in the instrument evidencing
the award ("Stock Award"). The terms, conditions and restrictions that the
Plan Administrator shall have the power to determine shall include, without
limitation, the manner in which shares subject to Stock Awards are held
during the periods they are subject to restrictions and the circumstances
under which forfeiture of restricted stock shall occur by reason of
termination of the holder's services.
11.2 ISSUANCE OF SHARES. Upon the satisfaction of any terms,
conditions and restrictions prescribed in respect to a Stock Award, or upon
the holder's release from any terms,
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conditions and restrictions of a Stock Award, as determined by the Plan
Administrator, the Company shall deliver, as soon as practicable, to the
holder or, in the case of the holder's death, to the personal representative
of the holder's estate or as the appropriate court directs, a stock
certificate for the appropriate number of shares of Common Stock.
11.3 WAIVER OF RESTRICTIONS. Notwithstanding any other provisions
of the Plan, the Plan Administrator may, in its sole discretion, waive the
forfeiture period and any other terms, conditions or restrictions on any
restricted stock under such circumstances and subject to such terms and
conditions as the Plan Administrator shall deem appropriate.
11.4 PAYMENT. Stock Awards under the Plan may be settled through
cash payments, delivery of Common Stock or granting of awards or combinations
thereof as the Plan Administrator shall determine. Any award settlement,
including payment deferrals, may be subject to such conditions, restrictions
and contingencies as the Plan Administrator shall determine. The Plan
Administrator may permit or require deferral of any award payment, subject to
rules and procedures as it may establish, which may include provisions for
payment or crediting of interest, or dividend equivalents.
12. TERMINATION AND AMENDMENT OF PLAN.
12.1 The Plan may be amended only by the Board as it shall deem
advisable; however, to the extent required for compliance with Section 422 of
the Code or any applicable law or regulation, shareholder approval will be
required for any amendment that will (a) increase the total number of shares
as to which Awards may be granted under the Plan, (b) modify the class of
persons eligible to receive Awards, or (c) otherwise require shareholder
approval under any applicable law or regulation.
12.2 The Company's shareholders or the Board may suspend or
terminate the Plan at any time. The Plan will have no fixed expiration date;
provided, however, that no ISO may be granted more than ten (10) years after
the earlier of the Plan's adoption by the Board and approval by the
shareholders.
12.3 The amendment or termination of the Plan shall not, without
the consent of the Optionee under the Plan, impair or diminish any rights or
obligations under any Option theretofore granted under the Plan. Any change
or adjustment to an outstanding ISO shall not, without the consent of the
holder, be made in a manner so as to constitute a "modification" that would
cause such ISO to fail to continue to qualify as an incentive stock option.
13. CONVERSION OF ISO'S INTO NON-ISO'S.
At the written request of any ISO Optionee, the Plan Administrator may in its
discretion take such actions as may be necessary to convert such Optionee's
ISO's (or any installments or portions of installments thereof) that have not
been exercised on the date of conversion into Non-ISO's at any time prior to
the expiration of such ISO's, regardless of whether the Optionee is an
employee of the Company or of an Affiliate of the Company at the time of such
conversion. Such actions may include, but shall not be limited to, extending
the exercise period or reducing the exercise price of the appropriate
installments of such ISO's. At the time of such conversion, the Plan
Administrator, with the consent of the Optionee, may impose such conditions
on the
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exercise of the resulting Non-ISO's as the Plan Administrator in its
discretion may determine, provided that such conditions shall not be
inconsistent with this Plan. Nothing in this Plan shall be deemed to give
any Optionee the right to have such Optionee's ISO's converted into
Non-ISO's, and no such conversion shall occur until and unless the Plan
Administrator takes appropriate action. The Plan Administrator, with the
consent of the Optionee, may also terminate any portion of any ISO that has
not been exercised at the time of such conversion.
14. CONDITIONS UPON ISSUANCE OF SHARES.
14.1 Shares shall not be issued pursuant to the exercise of any
Award unless the exercise of such Award and the issuance and delivery of such
shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended
("Securities Act"), the Exchange Act, any applicable state securities law,
the rules and regulations promulgated thereunder, and the requirements of any
stock exchange upon which the shares may then be listed or otherwise traded,
and such compliance has been confirmed by counsel for the Company. The
Company shall be under no obligation to any participants to register for
offering or resale or to qualify for an exemption under the Securities Act,
or to register or qualify under state securities laws, any shares of
Company's stock issued under the Plan or to continue in effect any
registrations or qualifications if made. The Company may issue certificates
for shares with such legends and subject to such restrictions on transfer as
counsel for the Company deems necessary or desirable for compliance with
federal and state securities laws.
14.2 As a condition to the exercise of any Option, the Company may
require the participant exercising such Option to represent and warrant at
the time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such
shares if, in the opinion of counsel for the Company, such representations
and warranties are required by any relevant provision of law.
14.3 The Company's inability to obtain authority from any
regulatory body having jurisdiction, which authority the Company's counsel
has determined to be necessary to the lawful issuance and sale of any shares
hereunder, shall relieve the Company of any liability with respect to the
failure to issue or sell such shares.
15. USE OF PROCEEDS.
Proceeds from the sale of Common Stock pursuant to the exercise of Options
granted hereunder shall constitute general funds of the Company and shall be
used for general corporate purposes.
16. NOTICES.
All notices, requests, demands and other communications required or permitted
to be given under this Plan and the Awards granted hereunder shall be in
writing and shall be either served personally on the party to whom notice is
to be given (in which case notice shall be deemed to have been duly given on
the date of such service), or mailed to the party to whom notice is to be
given, by first class mail, registered or certified, return receipt
requested, postage prepaid, and addressed to the party at his or its most
recent known address, in which case such notice shall be
11
<PAGE>
deemed to have been duly given on the third (3rd) postal delivery day
following the date of such mailing.
17. MISCELLANEOUS PROVISIONS.
17.1 Optionees shall be under no obligation to exercise Options
granted hereunder.
17.2 Nothing contained in this Plan shall obligate the Company to
retain an Optionee or holder of a Stock Award as an employee, officer,
director, or consultant for any period, nor shall this Plan interfere in any
way with the right of the Company to reduce such person's compensation.
17.3 The provisions of this Plan and each Award hereunder shall be
binding upon such holder, the Qualified Successor or Guardian, and the heirs,
successors, and assigns.
17.4 This Plan is intended to constitute an "unfunded" plan and
nothing herein shall require the Company to segregate any monies or other
property or shares of Common Stock or create any trusts or deposits, and no
Optionee or holder shall have rights greater than a general unsecured
creditor of the Company.
17.5 It is the Company's intention that, if and so long as any of
the Company's equity securities are registered pursuant to Section 12(b) or
12(g) of the Exchange Act, the Plan shall comply in all respects with Rule
16b-3 under the Exchange Act and, if any Plan provision is later found not to
be in compliance with such Rule 16b-3, the provision shall be deemed null and
void, and in all events the Plan shall be construed in favor of its meeting
the requirements of Rule 16b-3. Notwithstanding anything in the Plan to the
contrary, the Board, in its sole discretion, may bifurcate the Plan so as to
restrict, limit or condition the use of any provision of the Plan to
Optionees who are officers or directors subject to Section 16 of the Exchange
Act without so restricting, limiting or conditioning the Plan with respect to
other Optionees. Additionally, in interpreting and applying the provisions
of the Plan, any Option granted as an ISO pursuant to the Plan shall, to be
extent permitted by law, be construed as an "incentive stock option" within
the meaning of Section 422 of the Code.
17.6 Where the context so requires, references herein to the
singular shall include the plural, and vice versa, and references to a
particular gender shall include either or both genders.
17.7 This Plan and any agreements hereunder shall be administered,
interpreted and enforced under the internal laws of the State of Oregon
without regard to conflicts of laws thereof.
18. EFFECTIVE DATE OF PLAN AND AMENDMENTS.
This Plan was initially adopted by the Board of Directors on __________, 1997
and approved by the shareholders on _______________.
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IN FOCUS SYSTEMS, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 22, 1998
The undersigned hereby names, constitutes and appoints John V. Harker and
Michael D. Yonker, or either of them acting in absence of the other, with
full power of substitution, my true and lawful attorneys and Proxies for me
and in my place and stead to attend the Annual Meeting of the Shareholders of
In Focus Systems, Inc. (the "Company") to be held at 1:00 p.m. on Wednesday,
April 22, 1998, and at any adjournment thereof, and to vote all the shares of
Common Stock held of record in the name of the undersigned on February 27,
1998, with all the powers that the undersigned would possess if he were
personally present.
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FOLD AND DETACH HERE
<PAGE>
<TABLE>
<S><C>
Please mark
your votes as
indicated in /X/
this example
FOR all WITHHOLD THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
nominees AUTHORITY to vote for FOR THE APPROVAL OF PROPOSALS 2, 3 AND 4.
listed below all nominees listed below FOR AGAINST ABSTAIN
PROPOSAL 1 - Election of Directors / / / / PROPOSAL 2 - To ratify the
appointment of Arthur Andersen / / / / / /
To withhold authority to vote for any individual nominee, strike a line LLP as the Company's independent
through the nominee's name in the list below: accountants for the year ending
December 31, 1998.
PETER D. BEHRENDT MICHAEL R. HALLMAN JOHN V. HARKER NOBUO MII
PROPOSAL 3 - To approve the / / / / / /
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF In Focus Systems, Inc. 1998
THE NOMINEES NAMED ABOVE. Stock Incentive Plan.
PROPOSAL 4 - To approve an / / / / / /
amendment to Article III of
the In Focus Systems, Inc.
1990 Restated Articles of
Incorporation to increase the
number of authorized shares
of Common Stock from 30 million
to 50 million shares.
5. Upon such other matters as may properly come
before, or incident to the conduct of the Annual
Meeting, the Proxy holders shall vote in such
manner as they determine to be in the best
interests of the Company. Management is not
presently aware of any such matters to be
presented for action at the meeting.
I do I do not
plan to attend the meeting / / / /
(Please check)
Signature(s)______________________________________
Dated_______________________________________, 1998
NOTE: Please sign as name appears hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian,
please give full title as such.
The shareholder signed above reserves the right to revoke this Proxy at any time prior to its exercise by written notice
delivered to the Company's Secretary at the Company's corporate offices at 27700B S.W. Parkway Avenue, Wilsonville, Oregon 97070,
prior to the Annual Meeting. The power of the Proxy holders shall also be suspended if the shareholder signed above appears at
the Annual Meeting and elects in writing to vote in person.
THIS PROXY IS SOLICITED BY THE MANAGEMENT OF THE COMPANY. IF NO SPECIFIC DIRECTION IS GIVEN AS TO ANY OF THE ABOVE ITEMS, THIS
PROXY WILL BE VOTED FOR EACH OF THE NOMINEES NAMED IN PROPOSAL 1 AND FOR PROPOSALS 2, 3 and 4.
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</TABLE>
