<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
TRIKON TECHNOLOGIES INC.
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(Name of Registrant as Specified In Its Charter)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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TRIKON TECHNOLOGIES, INC.
Ringland Way,
Newport, South Wales NP6 2TA
United Kingdom
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Notice of Annual Meeting of Shareholders
To Be Held on June 14, 1999
----------------
NOTICE IS HEREBY GIVEN that an Annual Meeting of Shareholders (the "Annual
Meeting") of Trikon Technologies, Inc. (the "Company") will be held at the
Michelangelo Hotel located at 152 West 51st Street, New York, New York 10019,
on Monday, June 14, 1999, at 9:00 a.m., for the following purposes:
1. For the holders of Common Stock to elect four directors of the Board
of Directors to serve until the next annual meeting of shareholders and
until their successors have been elected and qualified. The nominees for
election by holders of Common Stock are Christopher D. Dobson, Nigel
Wheeler, Richard M. Conn and Lawrence D. Lenihan, Jr.
2. For the holders of Series H Preferred Stock to elect one director of
the Board of Directors to serve until the next annual meeting of
shareholders and until his successor has been elected and qualified. The
nominee for election by the holders of Series H Preferred Stock is Stephen
N. Wertheimer.
3. To approve an amendment to the Company's Seventh Restated Articles of
Incorporation to effectuate a one-for-ten reverse stock split of all
outstanding shares of Common Stock.
4. To approve an amendment to the Company's 1991 Stock Option Plan to (i)
increase the number of shares of Common Stock that may be issued under such
Plan from 8,870,000 to 10,500,000 shares (without giving effect to the
proposed reverse stock split in Proposal 3) and (ii) increase the limit on
the maximum number of shares for which any one participant may be granted
stock options per calendar year to 2,100,000 shares of Common Stock
(without giving effect to the proposed reverse stock split in Proposal 3).
5. To ratify the selection of Ernst & Young as the Company's independent
public accountants for the fiscal year ending December 31, 1999.
6. To act upon such other matters as may properly come before the Annual
Meeting or any adjournments or postponements thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. The record date for determining those
shareholders who will be entitled to notice of, and to vote at, the Annual
Meeting and at any adjournment thereof is May 11, 1999. The stock transfer
books will not be closed between the record date and the date of the meeting.
A list of shareholders entitled to vote at the Annual Meeting will be
available for inspection at the offices of the Company.
Whether or not you plan to attend the Annual Meeting in person, please
complete, date, sign, and return the enclosed proxy promptly in the
accompanying reply envelope. Your proxy may be revoked at any time prior to
the Annual Meeting. If you decide to attend the Annual Meeting and wish to
change your proxy vote, you may do so automatically by voting in person at the
Annual Meeting.
By Order of the Board of Directors
Jeremy Linnert
Secretary
Newport, South Wales, United Kingdom
May , 1999
YOUR VOTE IS IMPORTANT.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN, AND DATE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE AND
RETURN IT IN THE ENCLOSED REPLY ENVELOPE (TO WHICH NO POSTAGE NEED BE
AFFIXED IF MAILED IN THE UNITED STATES).
<PAGE>
TRIKON TECHNOLOGIES, INC.
Ringland Way,
Newport, South Wales NP6 2TA
United Kingdom
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PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
To Be Held on June 14, 1999
--------------
These proxy materials are furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board of Directors") of Trikon
Technologies, Inc., a California corporation (the "Company"), for use at the
Annual Meeting of Shareholders (the "Annual Meeting") to be held at 9:00 a.m.
on Monday, June 14, 1999, at the Michelangelo Hotel located at 152 West 51st
Street, New York, New York 10019 and at any adjournment or postponement of the
Annual Meeting. These proxy materials were first mailed on or about May ,
1999, to all shareholders entitled to vote at the Annual Meeting.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the Annual Meeting
are summarized in the accompanying Notice of Annual Meeting of Shareholders.
Each proposal is described in more detail in this Proxy Statement.
VOTING RIGHTS AND SOLICITATION
Voting
The Company's common stock, no par value per share (the "Common Stock"), and
series H preferred stock, no par value per share (the "Series H Preferred
Stock"), are the only classes of securities entitled to vote at the Annual
Meeting. The Company's Series H Preferred Stock is only entitled to vote on
Proposal 2. The Company's Common Stock is not entitled to vote on Proposal 2.
On May 11, 1999, the record date for determination of shareholders entitled to
vote at the Annual Meeting, there were shares of Common Stock and
shares of Series H Preferred Stock outstanding. Each shareholder of
record on May 11, 1999, is entitled to one vote for each share of Common Stock
and one vote for each share of Series H Preferred Stock held on such date.
A majority of the shares of Common Stock, represented in person or by proxy,
shall constitute a quorum for the transaction of business other than for
Proposal 2. A majority of the shares of Series H Preferred Stock, represented
in person or by proxy, shall constitute a quorum for the election of the
director to be elected by the holders of Series H Preferred Stock as set forth
in Proposal 2. Abstentions and broker non-votes are counted as present for the
purpose of determining the presence of a quorum for the transaction of
business. With respect to the election of directors by holders of Common
Stock, the four nominees receiving the greatest number of affirmative votes
will be elected. With respect to the election of a director by holders of
Series H Preferred Stock, the nominee receiving the greatest number of
affirmative votes will be elected. With respect to the approval of the
amendment of the Company's Seventh Restated Articles of Incorporation (the
"Restated Articles") to effectuate the one-for-ten reverse stock split (the
"Reverse Split"), the affirmative vote of a majority of the Company's
outstanding shares of Common Stock will constitute approval of such proposal.
With respect to the ratification of the selection of Ernst & Young as the
Company's independent public accountants for the fiscal year ended December
31, 1999 and the amendment to the Company's 1991 Stock Option Plan, amended
and restated as of January 26, 1999 (the "Option Plan"), the affirmative vote
of a majority of the shares of Common
<PAGE>
Stock present or represented and voting at the Annual Meeting will constitute
ratification of such proposals, provided that the shares voting affirmatively
also constitute at least a majority of the required quorum. Accordingly,
abstentions and broker non-votes can have the effect of preventing approval of
the ratification of the selection of Ernst & Young as the Company's
independent public accountants and the amendment to the Option Plan, if the
number of affirmative votes, though a majority of the votes cast, does not
constitute a majority of the required quorum.
In the election of directors by holders of Common Stock, a shareholder may
cumulate his votes for one or more nominees, but only if the names of nominees
were placed in nomination prior to the voting and any shareholder has given
notice at the meeting prior to the voting of his intention to so cumulate his
votes. If any one shareholder has given such notice, all shareholders may
cumulate their votes in such election of directors. If the voting for
directors is conducted by cumulative voting, each share will be entitled to a
number of votes equal to the number of directors to be elected, which votes
may be cast for a single nominee or distributed among two or more nominees in
such proportions as the shareholder or proxy deems fit.
Proxies
Whether or not you are able to attend the Annual Meeting, you are urged to
complete and return the appropriate enclosed proxy, which is solicited by the
Board of Directors and which will be voted as you direct on your proxy when
properly completed. In the event no directions are specified, such proxies
will be voted FOR the approval of Proposals 1, 2, 3, 4 and 5 described in the
accompanying Notice and Proxy Statement and in the discretion of the proxy
holders as to other matters that may properly come before the Annual Meeting.
You may revoke or change your proxy at any time before the Annual Meeting. To
do this, send a written notice of revocation or another signed proxy with a
later date to the Secretary of the Company at the Company's principal
executive offices before the beginning of the Annual Meeting. You may also
revoke your proxy by attending the Annual Meeting and voting in person.
The Common Stock proxy is only to be used to vote shares of Common Stock.
The Series H Preferred Stock proxy is only to be used to vote shares of Series
H Preferred Stock. Holders of both Common Stock and Preferred Stock should
complete both the Common Stock proxy, to vote their shares of Common Stock,
and the Series H Preferred Stock proxy, to vote their shares of Series H
Preferred Stock.
Solicitation of Proxies
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing, and mailing of this Proxy Statement, the
proxies, and any additional solicitation material furnished to shareholders.
Copies of solicitation material will be furnished to brokerage houses,
fiduciaries, and custodians holding shares in their names that are
beneficially owned by others so that they may forward this solicitation
material to such beneficial owners. In addition, the Company may reimburse
such persons for their costs of forwarding the solicitation material to such
beneficial owners. The original solicitation of proxies by mail may be
supplemented by solicitation by telephone, telegram, or other means by
directors, officers, employees, or agents of the Company. No additional
compensation will be paid to these individuals for any such services. Except
as described above, the Company does not intend to solicit proxies other than
by mail.
2
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MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
PROPOSAL NO. 1:
ELECTION OF DIRECTORS BY HOLDERS OF COMMON STOCK
General
The Certificate of Determination that establishes the rights, preferences
and privileges of the Series H Preferred Stock provides that the holders of
Series H Preferred Stock are entitled to elect one director if the Board of
Directors is constituted of five or fewer members and two directors if the
Board of Directors is constituted of more than five members. Under the Bylaws
of the Company, the number of directors constituting the entire Board of
Directors may be increased or decreased within the range of not less than five
and not more than nine directors by majority action of the Board of Directors.
The currently authorized number of directors is five. As a result, four
directors will be elected at this meeting by holders of Common Stock and one
director will be elected by the holders of Series H Preferred Stock.
At the Annual Meeting, the Company is nominating four candidates for
election to the Board of Directors by holders of Common Stock. Unless
otherwise instructed, the proxy holders will vote the proxies received from
holders of Common Stock by them for the four nominees listed herein. In the
event that any nominee of the Company is unable or declines to accept
nomination for election, the proxies will be voted for any nominee who shall
be recommended by the present Board of Directors. Management has no present
knowledge that any of the persons named will be unavailable or unwilling to
serve. The terms of office for each person elected as a director will continue
until the next annual meeting of shareholders and until such director's
successor has been elected and qualified.
The four nominees who receive the greatest number of affirmative votes of
shares of Common Stock shall become directors. Upon the request of any person
entitled to vote for directors to be elected by the holders of Common Stock
prior to the voting, each holder of Common Stock voting in the election of
directors may cumulate such holder's votes and give one candidate a number of
votes equal to the number of directors to be elected multiplied by the number
of shares of Common Stock held by such holder, or distribute his votes on the
same principle among as many candidates as he may select. However, no
shareholder shall be entitled to cumulate votes for any candidate unless,
pursuant to the Bylaws of the Company, the candidate's name has been placed in
nomination prior to the voting.
To the knowledge of the Company, no arrangement or understanding exists
between any of such four nominees and any other person or persons pursuant to
which any nominee was or is to be selected as a director or nominee. None of
the nominees has any family relationship to any other nominee or to any
executive officer of the Company.
Recommendation of The Board of Directors
The Board of Directors recommends a vote FOR the nominees listed below for
election by the holders of Common Stock.
Christopher D. Dobson joined the Company's Board of Directors as Chairman in
November 1996 upon the Company's acquisition of Electrotech Limited and
Electrotech Equipments Limited (together, "Electrotech"). From December 1997
to June 1998, Mr. Dobson was Chief Executive Officer of the Company. Mr.
Dobson was appointed Chief Scientific Officer in May 1998. Mr. Dobson was a
co-founder of Electrotech and was the Chairman of Electrotech's board of
directors from 1971 to November 1996.
Nigel Wheeler joined the Company as a director and the President and Chief
Operating Officer in November 1996 upon the Company's acquisition of
Electrotech. In October 1998, Mr. Wheeler was appointed Chief Executive
Officer. From July 1993 to November 1996, Mr. Wheeler served as Electrotech's
Chief Executive Officer. From July 1986 to July 1993, Mr. Wheeler was the
General Operations Director of Electrotech and had served in other capacities
with Electrotech since 1980.
3
<PAGE>
Richard M. Conn was first elected as a director of the Company in January
1998. Mr. Conn formed Business Development Consulting in early 1997 and serves
as a consultant in the semiconductor equipment industry. Prior to forming
Business Development Consulting, Mr. Conn was a Vice President of Sales at KLA
Instruments Corp. from 1984 until 1996. During his tenure at KLA Instruments
Corp., Mr. Conn was a member of the boards of directors of KLA Instruments
Corp.'s subsidiaries in the United Kingdom, France and Germany. Mr. Conn has
held several other positions in the semiconductor industry at companies that
include Eaton Semiconductor Equipment, Applied Materials UK and ITT
Semiconductors.
Lawrence D. Lenihan, Jr. was appointed to the Board of Directors in June
1998. Mr. Lenihan has been a Fund Manager for Pequot Capital Management, Inc.
since January 1999, and has been a managing member of the general partner of
Pequot Private Equity Fund, L.P. since February 1997. He is also a principal
at Dawson-Samberg Capital Management, Inc. From August 1993 to October 1996,
Mr. Lenihan was a principal at Broadview Associates, LLC. He currently serves
as a Director of Direc-To-Phone, Digital Generation Systems, Inc., STM
Wireless and Memotec Communications, Inc.
PROPOSAL NO. 2:
ELECTION OF A DIRECTOR BY HOLDERS OF SERIES H PREFERRED STOCK
General
The Certificate of Determination that establishes the rights, preferences
and privileges of the Series H Preferred Stock provides that the holders of
Series H Preferred Stock are entitled to elect one director if the Board of
Directors is constituted of five or fewer members and two directors if the
Board of Directors is constituted of more than five members. Under the Bylaws
of the Company, the number of directors constituting the entire Board of
Directors may be increased or decreased within the range of not less than five
and not more than nine directors by majority action of the Board of Directors.
The currently authorized number of directors is five. As a result, four
directors will be elected at this meeting by holders of Common Stock and one
director will be elected by holders of Series H Preferred Stock.
At the Annual Meeting, the Company is nominating one candidate for election
to the Board of Directors by holders of Series H Preferred Stock. Unless
otherwise instructed, the proxy holders will vote the proxies received from
holders of Series H Preferred Stock by them for the nominee listed herein. In
the event that any nominee of the Company is unable or declines to accept
nomination for election, the proxies will be voted for any nominee who shall
be recommended by the present Board of Directors. Management has no present
knowledge that the person named will be unavailable or unwilling to serve. The
terms of office for each person elected as a director will continue until the
next annual meeting of shareholders and until such director's successor has
been elected and qualified. The nominee who receives the greatest number of
affirmative votes of shares of Series H Preferred Stock shall become a
director.
Pursuant to a management agreement (the "Management Agreement") between the
Company and B III Capital Partners, L.P. ("B III"), entered into on April 24,
1998, the Company granted B III, among other rights, the right to nominate one
member of the Board of Directors of the Company. Stephen N. Wertheimer has
been nominated for election as a director by B III pursuant to the Management
Agreement. To the knowledge of the Company, no arrangement or understanding
exists between any nominee for the director to be elected by the holders of
Series H Preferred Stock and any other person or persons pursuant to which the
nominee was or is to be selected as a director or nominee. The nominee does
not have any family relationship to any other nominee or to any executive
officer of the Company.
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR the nominee listed below for
election by the holders of Series H Preferred Stock.
4
<PAGE>
Stephen N. Wertheimer was appointed to the Board of Directors in June 1998.
He has been a Managing Director of Credit Research and Trading LLC since 1996.
He was the President and founder of Water Capital Corp. from 1991 to 1996.
From 1988 to 1991, he was a Managing Director for PaineWebber Incorporated.
Mr. Wertheimer is also Chairman of Advanced Mining Systems, Inc. and currently
serves as a director of El Paso Electric Company and Greenwich Fine Arts, Inc.
Information Concerning Nominees and Incumbent Directors
<TABLE>
<CAPTION>
Positions and Offices Held with the
Nominees Age Company
-------- --- -----------------------------------
<C> <C> <S>
Richard M. Conn(1)(2)....... 54 Director
Director, Chairman of the Board and Chief
Christopher D. Dobson....... 62 Scientific Officer
Director, President and Chief Executive
Nigel Wheeler............... 49 Officer
Lawrence D. Lenihan,
Jr.(1)(2).................. 34 Director
Stephen N.
Wertheimer(1)(2)........... 48 Director
</TABLE>
- --------
(1)Member of Audit Committee
(2)Member of Compensation Committee
Board Committees and Meetings
During the fiscal year ended December 31, 1998, the Board of Directors held
thirteen (13) meetings. During this period, each of the incumbent directors
attended or participated in more than 75% of the aggregate of (i) the total
number of meetings of the Board of Directors and (ii) the total number of
meetings held by all Committees of the Board on which each such director
served.
Committees of the Board of Directors
The Board of Directors has an Audit Committee and a Compensation Committee.
The Audit Committee reviews the results and scope of the audit and other
services provided by the Company's independent auditors, reviews and evaluates
the Company's internal control functions, and monitors transactions between
the Company and its employees, officers and directors. The Audit Committee
held no meetings during the year ended December 31, 1998. The Compensation
Committee administers the Company's stock option plan and designates
compensation levels for officers and directors of the Company. The
Compensation Committee held one (1) meeting during the year ended December 31,
1998.
PROPOSAL NO. 3:
APPROVAL OF AMENDMENT TO SEVENTH RESTATED ARTICLES OF INCORPORATION
TO EFFECT A ONE-FOR-TEN REVERSE STOCK SPLIT
General
The Board of Directors of the Company has unanimously approved (subject to
shareholder approval), and is hereby soliciting shareholder approval of, an
amendment to the Company's Restated Articles, substantially in the form of
Exhibit A attached to this Proxy Statement (the "Reverse Split Articles
Amendment"), and incorporated herein by reference, effecting the Reverse Split
with respect to all issued and outstanding shares of Common Stock; however,
such text is subject to change as may be required by the Secretary of State of
the State of California (the "California Secretary of State"). If the Reverse
Split Articles Amendment is approved by the Company's shareholders, as a
result of the Reverse Split, every ten shares of existing Common Stock
outstanding ("Old Common Stock") as of the time of filing of the Reverse Split
Articles Amendment with the California Secretary of State (the "Effective
Date") will automatically convert into one new share of Common Stock ("New
Common Stock").
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In order to effect the Reverse Split, the shareholders are being asked to
approve the Reverse Split Articles Amendment. The Board of Directors approved
the Reverse Split at the meeting of the Board of Directors on April 26, 1999,
subject to shareholder approval. The Board of Directors believes that the
Reverse Split is in the best interests of both the Company and the
shareholders. If the Reverse Split is approved by the shareholders, the Board
of Directors shall determine, in its sole discretion, when to file the Reverse
Split Articles Amendment, if at all. The Board of Directors reserves the
right, notwithstanding shareholder approval and without further action by the
shareholders, to decide not to proceed with the Reverse Split if at any time
prior to its effectiveness it determines, in its sole discretion, that the
Reverse Split is no longer in the best interests of the Company and its
shareholders.
The approval of the Reverse Split Articles Amendment requires the
affirmative vote of a majority of the Company's outstanding shares of Common
Stock. The failure of the shareholders to approve the Reverse Split Articles
Amendment will not affect any other proposals of this Proxy Statement.
Purposes and Reasons for the Reverse Split
The Board of Directors believes that the Reverse Split is desirable to the
Company and its shareholders. The principal reasons for the Reverse Split are
to have a positive effect on the price and marketability of existing shares
and to attempt to enhance investor interest in the Common Stock.
The Board of Directors also believes that the current low per share price of
the Common Stock as reported on the OTC Bulleting Board has had a negative
effect on the price and marketability of existing shares, the amount and
percentage (relative to share price) of transaction costs paid by individual
shareholders and the potential ability of the Company to raise capital by
issuing additional shares or to undertake merger or acquisition transactions.
Reasons for these effects include internal policies and practices of certain
institutional investors which prevent or tend to discourage the purchase of
low-priced stocks, the fact that many brokerage houses do not permit low-
priced stocks to be used as collateral for margin accounts or to be purchased
on margin and a variety of brokerage house policies and practices which tend
to discourage individual brokers within those firms from dealing in low-priced
stocks.
In addition, since brokers' commissions on low-priced stocks generally
represent a higher percentage of the stock price than commissions on higher
priced stocks, the current share price of the Common Stock can result in
individual shareholders paying transaction costs which are a higher percentage
of the share price than would be the case if the share price were
substantially higher. The Board of Directors believes that the Reverse Split,
and the expected increase in price levels as a result, may enhance investor
interest in the Common Stock. There is, however, no assurance that any of the
foregoing effects will occur.
WHILE THE BOARD OF DIRECTORS BELIEVES THAT THE SHARES OF COMMON STOCK WILL
TRADE AT HIGHER PRICES THAN THOSE WHICH HAVE PREVAILED IN RECENT MONTHS, THERE
IS NO ASSURANCE THAT SUCH INCREASE IN THE TRADING PRICE WILL OCCUR OR, IF IT
DOES OCCUR, THAT IT WILL EQUAL OR EXCEED THE DIRECT ARITHMETICAL RESULT OF THE
REVERSE SPLIT SINCE THERE ARE NUMEROUS FACTORS AND CONTINGENCIES WHICH COULD
AFFECT SUCH PRICE.
Effects of the Reverse Split
If effected, the Reverse Split would reduce the number of outstanding shares
of Old Common Stock from as of May 11, 1999 to approximately
shares of New Common Stock as of the Effective Date. (The foregoing
assumes no issuances of Common Stock between May , 1999 and the Effective
Date.) The Reverse Split itself would have no effect on the number of
authorized shares of Common Stock or the par value of the Common Stock.
The Reverse Split will effect a reduction in the number of shares of Common
Stock available under the Option Plan in proportion to the exchange ratio of
the Reverse Split. The number of shares of Common Stock
6
<PAGE>
currently authorized under the Option Plan and the 1998 Directors Stock Option
Plan (the "Directors Plan") is 10,500,000 (subject to shareholder approval of
Proposal No. 4) and 500,000, respectively (each without giving effect to the
proposed Reverse Split). If the shareholders approve the Reverse Split, the
amendments to the Option Plan and the Directors Plan, the Reverse Split would
effect a reduction in the numbers of shares of Common Stock available under
the Option Plan and the Directors Plan from 10,500,000 to approximately
1,050,000 and from 500,000 to 50,000, respectively. The Company also had
outstanding certain stock options and warrants to purchase shares of the
Company's Common Stock. Under the terms of the outstanding options and
warrants, the Reverse Split will effect a reduction in the number of shares of
Common Stock issuable upon exercise of such stock options and warrants in
proportion to the exchange ratio of the Reverse Split and will effect a
proportionate increase in the exercise price of such outstanding stock options
and warrants. In connection with the Reverse Split, the number of shares of
Common Stock issuable upon exercise of outstanding stock options and warrants
will be rounded to the nearest whole share and no cash payment will be made in
respect of such rounding. The Reverse Split would not affect any shareholder's
proportionate equity interest in the Company except for those shareholders who
would receive an additional share of Common Stock in lieu of fractional
shares. None of the rights currently accruing to holders of the Company's
Common Stock, or options or warrants to purchase Common Stock, will be
affected by the Reverse Split.
The Reverse Split will result in some shareholders holding odd lots of the
Company's Common Stock (blocks of less than 100 shares). Because brokers
typically charge a higher commission to complete trades in odd lots of
securities, the transaction costs may increase for those shareholders who will
hold odd lots after the Reverse Split.
Although the Board of Directors believes as of the date of this Proxy
Statement that the Reverse Split is advisable, the Reverse Split may be
abandoned by the Board of Directors at any time before, during or after the
Annual Meeting and prior to the Effective Date. In addition, the Board of
Directors may make any and all changes to the Reverse Split Articles Amendment
that it deems necessary in order to file the Reverse Split Articles Amendment
with the California Secretary of State and give effect to the Reverse Split.
Mechanics of Reverse Split
If the Reverse Split is approved by the requisite vote of the Company's
shareholders, the Company will file the Reverse Split Articles Amendment as
soon as practicable thereafter, and the Reverse Split will be effective on the
date of such filing, unless abandoned by the Board of Directors as described
above. Upon filing of the Reverse Split Articles Amendment, every ten issued
and outstanding shares of Old Common Stock will, effective upon such filing,
be automatically and without any action on the part of the shareholders
converted into and reconstituted as one share of New Common Stock.
As soon as practical after the Effective Date, the Company will forward, or
cause to be forwarded, a letter of transmittal to each holder of record of
shares of Old Common Stock outstanding as of the Effective Date. The letter of
transmittal will set forth instructions for the surrender of certificates
representing shares of Old Common Stock to the Company's transfer agent in
exchange for certificates representing the number of whole shares of New
Common Stock into which the shares of Old Common Stock have been converted as
a result of the Reverse Split. CERTIFICATES SHOULD NOT BE SENT TO THE COMPANY
OR THE TRANSFER AGENT PRIOR TO RECEIPT OF SUCH LETTER OF TRANSMITTAL FROM THE
COMPANY.
Until a shareholder forwards a completed letter of transmittal together with
certificates representing his, her or its shares of Old Common Stock to the
transfer agent and receives a certificate representing shares of New Common
Stock, such shareholder's Old Common Stock shall be deemed equal to the number
of whole shares of New Common Stock to which each shareholder is entitled as a
result of the Reverse Split.
No scrip or fractional certificates will be issued in the Reverse Split.
Instead, the Company will issue one additional share of New Common Stock to
each affected shareholder at no cost to the shareholder. The ownership of a
fractional interest will not give the holder thereof any voting, dividend or
other rights except the right to
7
<PAGE>
receive an additional share therefor as described herein. The number of shares
of New Common Stock to be issued in connection with settling such fractional
interests is not expected to be material.
Federal Income Tax Consequences of the Reverse Split
The following is a summary of the material anticipated federal income tax
consequences of the Reverse Split to shareholders of the Company. This summary
is based on the provisions of the Internal Revenue Code of 1986, as amended
(the "Code"), the Treasury Department Regulations (the "Regulations") issued
pursuant thereto, and published rulings and court decisions in effect as of
the date hereof, all of which are subject to change. This summary does not
take into account possible changes in such laws or interpretations, including
amendments to the Code, applicable statutes, Regulations and proposed
Regulations or changes in judicial or administrative rulings; some of which
may have retroactive effect. No assurance can be given that any such changes
will not adversely affect the discussion of this summary.
This summary is provided for general information only and does not purport
to address all aspects of the possible federal income tax consequences of the
Reverse Split and IS NOT INTENDED AS TAX ADVICE TO ANY PERSON OR ENTITY. In
particular, and without limiting the foregoing, this summary does not consider
the federal income tax consequences to shareholders of the Company in light of
their individual investment circumstances or to holders subject to special
treatment under the federal income tax laws (for example, tax exempt entities,
life insurance companies, regulated investment companies and foreign
taxpayers). In addition, this summary does not address any consequences of the
Reverse Split under any state, local or foreign tax laws.
No ruling from the Internal Revenue Service ("Service") or opinion of
counsel will be obtained regarding the federal income tax consequences to the
shareholders of the Company as a result of the Reverse Split. ACCORDINGLY,
EACH SHAREHOLDER IS ENCOURAGED TO CONSULT HIS, HER OR ITS TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES OF THE PROPOSED TRANSACTION TO SUCH
SHAREHOLDER, INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL AND
FOREIGN INCOME AND OTHER TAX LAWS.
The Company believes that the Reverse Split will qualify as a
"recapitalization" under Section 368(a)(1)(E) of the Code. As a result, no
gain or loss will be recognized by the Company or its shareholders in
connection with the Reverse Split. A shareholder of the Company who exchanges
his, her or its Old Common Stock solely for New Common Stock will recognize no
gain or loss for federal income tax purposes. A shareholder's aggregate tax
basis in his, her or its shares of New Common Stock received from the Company
will be the same as his, her or its aggregate tax basis in the Old Common
Stock exchanged therefor. The holding period of the New Common Stock received
by such shareholder will include the period during which the Old Common Stock
surrendered in exchange therefor was held, provided all such Common Stock was
held as a capital asset on the date of the exchange.
Recommendation of Board of Directors
The Board of Directors recommends a vote FOR the above proposal.
8
<PAGE>
PROPOSAL NO. 4:
APPROVAL OF AMENDMENTS TO THE 1991 STOCK OPTION PLAN
The Company's shareholders are being asked to approve an amendment to the
Company's Option Plan that will (i) increase the number of shares of Common
Stock reserved for issuance under the Option Plan by 1,630,000 shares, from
8,870,000 shares to 10,500,000 shares (without giving effect to the Reverse
Stock Split) and (ii) increase the limit on the maximum number of shares for
which any one participant may be granted stock options under the Plan to
2,100,000 shares (without giving effect to the reverse stock split) per
calendar year. Prior to such amendment, the limit was set at 500,000 shares
per calendar year, except that such limit was increased to 2,000,000 shares
for the calendar year in which the participant first commenced employment or
service with the Company.
The amendments to the Option Plan that are the subject of this Proposal were
approved by the Board of Directors at a meeting on April 26, 1999 and are
subject to shareholder approval at the Annual Meeting. The purpose of the
amendments are to provide the Company with greater flexibility in structuring
equity incentive awards for senior management while continuing to assure that
any compensation deemed paid to the Company's executive officers in connection
with their stock options under the Option Plan or their disposition of the
purchased shares will qualify as tax-deductible performance-based compensation
under the federal tax laws. Such performance-based compensation will not be
subject to the $1 million limitation per covered individual on the tax
deductibility of compensation paid to certain executive officers of the
Company.
The Option Plan became effective upon adoption by the Board of Directors on
December 11, 1990, and was originally entitled the Nonqualified Stock Option
Plan. The Option Plan was amended and restated by the Board of Directors in
1995, and was subsequently approved by the shareholders during the same year.
In October 1996, in connection with the acquisition of Electrotech Limited, a
United Kingdom Company, the Board of Directors adopted the Share Option Scheme
(the "U.K. Plan") as a separate subplan within the Option Plan to be used for
option grants to employees resident in the United Kingdom. The Option Plan was
amended and restated by the Board of Directors on July 19, 1998, and
subsequently approved by the shareholders on July 28, 1998. The Board of
Directors further amended and restated the Option Plan on January 26, 1999.
The share reserve under the Option Plan is available for issuance pursuant to
options granted under either the Option Plan or the U.K. Plan incorporated
therein. Options granted under the U.K. Plan have terms similar to the option
grants made under the Option Plan, except for certain differences required to
satisfy the applicable tax and corporate law requirements in effect in the
United Kingdom.
The following is a summary of the principal features of the Option Plan as
most recently amended, and the primary differences between the U.K. Plan and
the Option Plan. The summary, however, does not purport to be a complete
description of all the provisions of either plan. Any shareholder of the
Company who wishes to obtain a copy of the actual plan documents may do so
upon written request to the Corporate Secretary at the Company's principal
executive offices in South Wales, United Kingdom.
None of the share numbers or other information in this Proposal reflect the
Reverse Split proposed in Proposal 3.
Administration
The Option Plan may be administered by Board of Directors or a committee of
the Board of Directors. Currently, the Option Plan is administered by the
Compensation Committee of the Board of Directors. The entity responsible for
administering the Plan will be referred in this Proposal as the Plan
Administrator.
Eligibility
Employees, non-employee Board members, and independent consultants and
advisers in the service of the Company or its subsidiaries are eligible to
receive options to purchase shares of Common Stock under the Option Plan.
9
<PAGE>
As of May 3, 1999, a total of approximately four (4) executive officers, 245
other employees, and three (3) non-employee Board members were eligible to
participate in the Option Plan.
Share Reserve
A total of 10,500,000 shares of Common Stock has been reserved for issuance
in the aggregate under the Option Plan and the U.K. Plan provided the
shareholders approve the 1,630,000 share increase that forms part of this
Proposal.
In no event may any one participant in the Option Plan be granted stock
options for more than 2,100,000 shares per calendar year, effective with the
1999 calendar year. Shareholder approval of this Proposal will accordingly
constitute approval of such share limitation for purposes of Internal Revenue
Code Section 162(m).
To the extent an outstanding option under the Option Plan expires or
terminates for any reason prior to exercise in full, the shares subject to the
portion of the option not so exercised will be available for subsequent option
grants under the Option Plan.
Should any change be made to the Common Stock issuable under the Option
Plan, whether by reorganization, merger, consolidation, recapitalization,
reclassification, stock split, stock dividend or similar capital adjustment,
appropriate adjustments will be made to (i) the maximum number of shares of
Common Stock issuable under the Option Plan, (ii) the maximum number of shares
for which any one person may be granted stock options under the Option Plan
per calendar year, and (iii) the number, price and kind of securities subject
to any outstanding options under the Option Plan.
Valuation
The fair market value per share of Common Stock on any relevant date under
the Option Plan will be the closing selling price per share on the date
immediately prior to the date in question on the OTC Bulletin Board. On May 3,
1999, the closing selling price per share was $0.1719.
Option Grants
Options must be granted with an exercise price per share not less than the
fair market value per share of Common Stock on the grant date. No granted
option may have a term in excess of ten years. Options granted under the Plan
will generally become exercisable in four (4) successive equal annual
installments upon the optionee's completion of each year of service over the
four (4)-year period measured from the grant date. The Board of Directors may
not impose a vesting schedule upon granted options which is more restrictive
than twenty percent (20%) per year vesting, with the initial vesting to occur
not later than one (1) year after the date of grant of the option. However,
such limitation shall not be applicable to any option granted to individuals
who are officers of the Company, directors or independent consultants.
Upon termination of employment, the optionee will have a limited period of
time in which to exercise his or her outstanding options to the extent those
options are exercisable for one or more option shares at the time of such
termination of employment. The Plan Administrator will have discretion to
extend the period following the optionee's cessation of service during which
his or her outstanding options may be exercised and/or accelerate the
exercisability of those options in whole or in part.
The Plan Administrator will have the authority to effect the cancellation of
outstanding options under the Option Plan that have exercise prices in excess
of the then current market price of Common Stock and to issue replacement
options with an exercise price based on the market price of Common Stock at
the time of the new grant.
10
<PAGE>
On February 6, 1998, the Plan Administrator implemented an option
cancellation/regrant program for all employees of the Company, including the
executive officers. Pursuant to the program, each such employee was given the
opportunity to surrender the outstanding options granted to him or her under
the Option Plan with an exercise price in excess of $1.4375 per share in
return for a new option grant for the same number of shares but with an
exercise price of $1.4375 per share, the fair market value per share of Common
Stock on the February 6, 1998 grant date of the new option. Options for a
total of 855,973 shares with a weighted average exercise price of $11.05 per
share were surrendered for cancellation, and new options for the same number
of shares were granted with the $1.4375 per share exercise price. Each new
option vests in a series of four (4) successive equal annual installments,
each with a vesting date six (6) months later than the corresponding vesting
date under the cancelled option.
Shareholder Rights and Option Assignability
An optionee will not have any shareholder rights pursuant to an outstanding
option until a stock certificate is issued representing the shares purchased
upon the exercise of such option.
Options are generally not assignable or transferable other than by will or
the laws of inheritance and, during the optionee's lifetime, the option may be
exercised only by the optionee. However, the Plan Administrator may allow non-
statutory options to be transferred or assigned during the optionee's lifetime
to one or more members of the optionee's immediate family or to a trust
established exclusively for more or more such family members.
Acceleration
In the event of a dissolution, liquidation, reorganization, merger or
consolidation of the Company "Corporate Transaction"), any options outstanding
at such time will automatically accelerate immediately prior to the effective
date of such transaction, so that each such option will become fully
exercisable for all the shares at the time subject to that option and may be
exercised for any or all of those shares as fully vested shares. However,
outstanding options will not vest on such an accelerated basis to the extent
those options are assumed by the surviving corporation in the transaction.
Immediately following the effective date of the Corporate Transaction, all
outstanding options will terminate unless assumed.
The accelerated vesting of options in the event of a change in ownership or
control of the Company may be seen as an anti-takeover provision and may have
the effect of discouraging a merger proposal, a takeover attempt or other
efforts to gain control of the Company.
Financial Reports
Under the terms of the Option Plan, the Company shall deliver a balance
sheet and an income statement at least annually to each individual holding an
outstanding option, unless such individual is a key employee whose duties in
connection with the Company assure such individual access to equivalent
information.
Amendment and Termination
The Board of Directors may amend or modify the Option Plan in any or all
respects whatsoever, subject to any shareholder approval under applicable law
or regulation. The Board of Directors may terminate the Option Plan at any
time, and the Option Plan will in all events terminate on December 31, 2003.
Stock Awards
The table below shows, as to each of the Company's executive officers named
in the Summary Compensation Table and the various indicated individuals and
groups, the number of shares of Common Stock subject to options granted under
the Option Plan, the Directors Plan and the U.K. Plan between January 1, 1998,
and May 3, 1999, together with the weighted average exercise price payable per
share. The number of shares
11
<PAGE>
and weighted average exercise price calculations include all options granted
or regranted during the indicated period at a lower exercise price per share
pursuant to the February 6, 1998 cancellation/regrant program described above.
OPTION TRANSACTIONS
<TABLE>
<CAPTION>
Options Granted Weighted Average
Name and Title (Number of Shares) Exercise Price
-------------- ------------------ ----------------
<S> <C> <C>
Christopher D. Dobson..................... -- --
Thomas C. McKee........................... 1,874,477 $0.6250
Nigel Wheeler............................. 1,000,000 0.4656
Nicolas Carrington........................ 306,300 0.3025
Jeremy Linnert............................ 223,000 0.1903
Bernard Culverhouse....................... 221,000 0.1790
All executive officers as a group (6
persons)................................. 3,624,777 0.4998
Brian D. Jacobs, Director................. 10,833 1.4375
Richard M. Conn, Director................. 90,000 0.4957
Lawrence D. Lenihan, Jr., Director........ 90,000 0.625
Stephen Wertheimer, Director.............. 90,000 0.6092
All non-employee directors as a group (4
persons)................................. 280,833 0.7959
All employees, including current officers
who are not executive officers, as a
group (224 persons)...................... 1,682,920 0.6294
</TABLE>
The number of shares for which options were granted on February 6, 1998 in
cancellation of higher-priced options for the same number of shares originally
granted during the period from January 1, 1998 to May 3, 1999 were as follows
for each of the indicated individuals and groups: Mr. Dobson, no options were
repriced; for Mr. McKee, no options were repriced; for Mr. Wheeler, options
for 200,000 shares; for Mr. Carrington, options for 36,300 shares; for Mr.
Linnert, options for 15,000 shares; for Mr. Culverhouse, options for 14,000
shares; for all executive officers as a group, options for 265,300 shares; for
Mr. Jacobs, options for 10,833 shares; for Mr. Conn, no options were repriced;
for Mr. Lenihan, no options were repriced; for Mr. Wertheimer, no options were
repriced; for all non-employee directors as a group, options for 10,833
shares; and for all employees (other than executive officers) as a group,
options for 383,654 shares. Mr. McKee resigned from the Company effective
September 7, 1998. Mr. McKee did not exercise any of the above-mentioned
options and all such options expired effective September 25, 1998.
As of May 3, 1999, options for 3,523,200 shares were outstanding, 260,071
shares had been issued under the Option Plan, and 5,086,709 shares remained
available for future option grant.
New Plan Benefits
If the shareholders approve this Proposal, the Company will grant Nigel
Wheeler a stock option to purchase 2,076,876 shares of Common Stock with an
exercise price per share equal to the fair market value per share of Common
Stock on the grant date. The option will have a maximum term of ten (10) years
measured from such grant date subject to earlier termination upon his
cessation of service and will become exercisable in four successive annual
installments upon his completion of each year of service over the four-year
period measured from his appointment as Chief Executive Officer on October 27,
1998.
Federal Income Tax Consequences
Options granted under the Option Plan may be either incentive stock options
which satisfy the requirements of Section 422 of the Internal Revenue Code or
non-statutory options which are not intended to satisfy such requirements. The
Federal income tax treatment for the two types of options differs as follows:
12
<PAGE>
Incentive Stock Options. No taxable income is recognized by the optionee at
the time of the option grant, and no taxable income is generally recognized at
the time the option is exercised. The optionee will, however, recognize
taxable income in the year in which the purchased shares are sold or otherwise
made the subject of disposition.
For Federal income tax purposes, dispositions are divided into two
categories: (i) qualifying and (ii) disqualifying. The optionee will make a
qualifying disposition of the purchased shares if the sale or disposition is
made more than two (2) years after the grant date of the option and more than
one (1) year after the exercise date. If the optionee fails to satisfy either
of these two holding periods prior to the sale or disposition, then a
disqualifying disposition of the purchased shares will result.
If the optionee makes a disqualifying disposition of the purchased shares,
then the Company will be entitled to an income tax deduction, for the taxable
year in which such disposition occurs, equal to the excess of (i) the fair
market value of such shares on the date the option was exercised over (ii) the
exercise price paid for such shares. In no other instance will the Company be
allowed a deduction with respect to the optionee's disposition of the
purchased shares. The Company anticipates that any compensation deemed paid by
the Company upon one or more disqualifying dispositions of incentive stock
option shares will not have to be taken into account for purposes of the $1
million limitation per covered individual on the deductibility of the
compensation paid to certain executive officers of the Company.
Non-statutory Options. No taxable income is recognized by an optionee upon
the grant of a non-statutory option. The optionee will in general recognize
ordinary income in the year in which the option is exercised equal to the
excess of the fair market value of the purchased shares on the exercise date
over the exercise price, and the optionee will be required to satisfy the tax
withholding requirements applicable to such income.
The Company will be entitled to an income tax deduction equal to the amount
of ordinary income recognized by the optionee in connection with the exercise
of the non-statutory option. The deduction will in general be allowed for the
taxable year of the Company in which such ordinary income is recognized by the
optionee. The Company anticipates that the compensation deemed paid by the
Company upon the exercise of non-statutory options will not have to be taken
into account for purposes of the $1 million limitation per covered individual
on the deductibility of the compensation paid to certain executive officers of
the Company.
Accounting Treatment
Option grants to employees and members of the Board with an exercise price
equal to the fair market value of the shares on the grant date will not result
in any charge to the Company's earnings, but the Company must disclose, in
pro-forma statements to the Company's financial statements, the impact the
option grants would have upon the Company's reported earnings were the fair
value of those options at the time of grant treated as compensation expense.
In addition, the number of outstanding options may be a factor in determining
the Company's earnings per share on a fully-diluted basis.
The Financial Accounting Standards Board recently issued an exposure draft
of a proposed interpretation of APB Opinion 25, "Accounting for Stock Issued
to Employees." Under the proposed interpretation, option grants made to non-
employee Board members or independent consultants after December 15, 1998 will
result in a direct charge to the Company's reported earnings based upon the
fair value of the option measured initially as of the grant date and then
subsequently on the vesting date of each installment of the option shares.
Accordingly, such charge will include the appreciation in the value of the
option shares over the period between the grant date of the option (or, if
later, the effective date of the final interpretation) and the vesting date of
each installment of the option shares. In addition, if the proposed
interpretation is adopted, any options which are repriced after December 15,
1998 will also trigger a direct charge to Company's reported earnings measured
by the appreciation in the value of the underlying shares over the period
between the grant date of the option (or, if later, the effective date of the
final interpretation) and the date the option is exercised for those shares.
13
<PAGE>
U.K. Plan
The following is a summary of the major differences between the provisions
of the U.K. Plan and those of the Option Plan:
. Consultants and directors who are not required to devote more than 25
hours per week to the Company or its subsidiaries are not eligible to
receive option grants under the U.K. Plan.
. The aggregate market value of the shares of Common Stock purchasable
under all outstanding options granted under the U.K. Plan and any other
option plan of the Company to any one individual may not exceed 30,000
British pounds, with such value to be determined for each option at the
time of the grant.
. Options must be granted at an exercise price not less than the par value
per share.
. Options granted under the U.K. Plan are not transferable during the
optionee's lifetime.
. In the event of (i) certain changes in control of the Company resulting
from a tender offer for the total outstanding securities of the Company
or for all the shares of Common Stock, (ii) any court-ordered
reorganization of the Company or (iii) a voluntary winding up of the
Company, each outstanding option granted under the U.K. Plan will become
immediately exercisable for all the shares subject to that option and
may be exercised for any or all of those shares for a period of up to
six months following the date on which the successor entity obtains
control of the Company or the date the court orders such reorganization
or the date of the resolution for such winding up of the Company.
However, no acceleration of an outstanding option will occur in
connection with a change in control of the Company if the successor
entity assumes that option or replaces it with an option of equivalent
value.
Shareholder Approval Required
The affirmative vote of a majority of the shares present or represented and
voting at the Annual Meeting, together with the affirmative vote of the
required quorum, is required for approval of the amendment to the Option Plan.
If shareholder approval of the amendment to the Option Plan is not obtained,
any options granted on the basis of the 1,630,000-share increase will
terminate without becoming exercisable for any of the shares of Common Stock
subject to those options, and no further options will be granted on the basis
of such share increase. The limitation on the maximum number of shares for
which any one participant may be granted stock options per calendar will not
be increased. However, the Option Plan will continue to remain in effect, and
option grants may continue to be made pursuant to the provisions of the Option
Plan in effect prior to the amendment summarized in this Proposal.
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR the above proposal.
14
<PAGE>
PROPOSAL NO. 5:
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young served as the Company's independent public accountants for
fiscal year ended December 31, 1998. At the Annual Meeting, the shareholders
are being asked to ratify the selection of Ernst & Young as the Company's
independent public accountants for the fiscal year ending December 31, 1999.
The affirmative vote of the majority of shares of Common Stock present or
represented and voting at the Annual Meeting, together with the affirmative
vote of at least a majority of the required quorum, is required for approval
of the ratification of Ernst & Young as the Company's independent public
accountants.
In the event the shareholders fail to ratify the appointment, the Board of
Directors will reconsider its selection. Even if the selection is ratified,
the Board of Directors, in its discretion, may direct the appointment of a
different independent accounting firm for such fiscal year if the Board of
Directors feels that such a change would be in the Company's and its
shareholders' best interests.
Representatives of Ernst & Young will be present at the Annual Meeting to
respond to appropriate questions and to make such statements as they desire.
Recommendation of the Board of Directors
The Board of Directors recommends that the shareholders vote FOR the
ratification of the selection of Ernst & Young to serve as the Company's
independent public accountants for the fiscal year ending December 31, 1999.
OTHER MATTERS WHICH MAY COME BEFORE THE MEETING
The Board of Directors has no knowledge of any other matters which may come
before the Annual Meeting and does not intend to present any other matters.
However, if any other matters shall properly come before the meeting or any
adjournments thereof, the persons named as proxies will have discretionary
authority to vote the shares of Common Stock and Series H Preferred Stock
represented by the accompanying proxies in accordance with their best
judgment.
15
<PAGE>
OWNERSHIP OF SECURITIES
To the extent known by the Company, the following table sets forth certain
information regarding beneficial ownership of Common Stock and Preferred Stock
as of March 1, 1999 by (i) each person (or group or affiliated persons) who is
known by the Company to own beneficially more than 5% of the Company's
outstanding Common Stock or Series H Preferred Stock, (ii) each of the
Company's directors and nominees for director, (iii) each person who served as
Chief Executive Officer of the Company during the year ended December 31, 1998
and each of the other Named Executive Officers and (iv) the Company's
directors and executive officers as a group. Except as indicated in the
footnotes to this table, the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock and Preferred
Stock shown as beneficially owned by them, subject to community property laws,
where applicable.
<TABLE>
<CAPTION>
Shares of
Shares of Series H Percent of
Common Stock Percent of Preferred Stock Series H
Name and Address Beneficially Common Beneficially Preferred
of Beneficial Owner Owned Stock(1) Owned Stock(2)
- ------------------- ------------ ---------- --------------- ----------
<S> <C> <C> <C> <C>
Christopher D. Dobson.... 16,346,140 17.4% -- --
Ringland Way, Newport
South Wales, NP6 2TA
U.K.
Pequot Capital
Management, Inc.(3)..... 10,122,509 10.8 143,871 4.9%
500 Nyala Farm Road
Westport, CT 06880
The DDJ Entities(4)...... 11,090,192 11.8 630,698 21.4
141 Linden Street, Suite
4
Wellesley, MA 02181
Citigroup Inc.(5)........ 6,651,730 7.1 383,059 13.0
838 Greenwich Street
New York, NY 10013
Mackay-Shields Financial
Corporation(6).......... 5,284,717 5.6 301,590 10.2
9 West 57th Street, 37th
Floor
New York, NY 10019
Putnam Investments....... 2,596,000 2.8 255,537 8.6
One Post Office Square
Boston, MA 02109
Larry Lenihan(3)......... 10,122,509 10.8 143,871 4.9
Stephen Wertheimer....... -- -- -- --
Nigel Wheeler(7)......... 75,000 * -- --
Thomas McKee(8).......... -- * -- --
Nicolas Carrington(9).... 14,075 * -- --
Jeremy Linnert(10)....... 5,750 * -- --
Richard M. Conn(11)...... 3,125 * -- --
Bernard Culverhouse(12).. 5,250 * -- --
All current directors and
executive officers
as a group (8 persons).. 26,571,849(13) 28.2 -- --
</TABLE>
- --------
* Less than 1%
(1) Beneficial ownership is determined in accordance with Rule 13d-3 under
the Exchange Act. Percent ownership is based on the number of shares of
Common Stock outstanding as of March 1, 1999, which number was 94,015,616
shares, plus any shares issuable pursuant to options and warrants held by
the person in question which may be exercised or converted within 60 days
after March 1, 1999.
(2) Percent ownership is based on the number of shares of Series H Preferred
Stock outstanding as of March 1, 1999, which number was 2,953,074.
16
<PAGE>
(3) The number of shares beneficially owned by Pequot Capital Management,
Inc. is based on information contained in a Schedule 13D filed on January
8, 1999 and certain information provided by Pequot Capital Management,
Inc. to the Company. Pequot Capital Management, Inc., an investment
adviser registered under the Investment Advisers Act of 1940, acts as an
investment adviser to certain investment funds and managed accounts,
which hold shares of Common Stock and Series H Preferred Stock. Mr.
Lenihan is a fund manager at Pequot Capital Management, Inc. Mr. Lenihan
disclaims beneficial ownership of the shares for which Pequot Capital
Management, Inc. has beneficial ownership.
(4) The number of shares beneficially owned by the DDJ Entities is based on
the information contained in Amendment No. 3 to Schedule 13D filed by DDJ
Capital Management, LLC ("DDJ") on behalf of DDJ Capital III, LLC ("DDJ
III"), B III Capital Partners, L.P. (the "DDJ Fund") and itself on
October 30, 1998 and certain information provided by DDJ to the Company.
DDJ III is the general partner of, and DDJ is the investment manager for,
the DDJ Fund. All shares of Common Stock reported as beneficially owned
by DDJ Entities were directly beneficially owned by the DDJ Fund.
(5) The number of shares beneficially owned by Citigroup Inc. ("Citigroup")
is based on information in a Schedule 13G filed by Citigroup on February
16, 1999 and certain information provided by Citigroup to the Company.
All shares of the Common Stock reported as beneficially owned by
Citigroup were directly beneficially owned by subsidiaries of Citigroup.
(6) The number of shares beneficially owned by Mackay-Shields Financial
Corporation ("Mackay-Shields") is based on information contained in a
Schedule 13G filed by Mackay-Shields on February 8, 1999 and certain
information provided by Mackay-Shields to the Company.
(7) Includes 75,000 shares of Common Stock issuable under stock options
exercisable within 60 days of March 1, 1999.
(8) Mr. McKee resigned from the Company effective September 7, 1998.
(9) Includes 14,075 shares of Common Stock issuable under stock options
exercisable within 60 days of March 1, 1999.
(10) Includes 5,750 shares of Common Stock issuable under stock options
exercisable within 60 days of March 1, 1999.
(11) Includes 3,125 shares of Common Stock issuable under stock options
exercisable within 60 days of March 1, 1999.
(12) Includes 5,250 shares of Common Stock issuable under stock options
exercisable within 60 days of March 1, 1999.
(13) Includes 103,200 shares of Common Stock issuable under stock options
exercisable within 60 days of March 1, 1999.
Compliance with SEC Reporting Requirements
Section 16(a) of the Exchange Act ("Section 16(a)"), requires Trikon's
directors and certain of its officers, and persons who own more than 10% of
Trikon's Common Stock (collectively, "Insiders"), to file reports of ownership
and changes in ownership with the Securities and Exchange Commission (the
"Commission"). Insiders are required by Commission regulations to furnish
Trikon with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Form 5s were
required for those persons, Trikon believes that its Insiders complied with
all applicable Section 16 filing requirements for 1998, on a timely basis,
with the exception of the following late filings by (i) Richard M. Conn, a
director of the Company, who filed a Form 3 in February 1998 to report his
beneficial ownership after being appointed as Director in January 1998, and
filed a Form 5 in February 1999 to report the grant of stock options to
purchase 12,500 shares of Common Stock in February 1998 and the grant of stock
options to purchase 77,500 shares of Common Stock in August 1998, (ii) Carl
Brancher, the Vice President of Corporate Development of the Company, who
filed a Form 3 in June 1998 on becoming an Insider in June 1998 and filed a
Form 5 in February 1999 to report the grant of stock options to purchase
21,300 shares of Common Stock on February 1998 and the grant of stock options
to purchase 100,000 shares of Common Stock in December 1998, (iii) Thomas C.
McKee, the former Chief Executive Officer of the Company, who filed a
17
<PAGE>
Form 3 in June 1998 after being appointed as a Director and the Chief
Executive Officer in June 1998, and (iv) Bernard Culverhouse, the Vice
President, Marketing of the Company, who filed a Form 3 in March 1999 to
report his beneficial ownership of stock options to purchase 221,000 shares of
Common Stock after being appointed Vice President, Marketing in December 1998.
18
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table sets forth all compensation received for services
rendered to Trikon in all capacities for the years ended December 31, 1998,
1997 and 1996, by (i) each person who served as Chief Executive Officer of
Trikon during the year ended December 31, 1998 and (ii) each of the other four
most highly compensated executive officers of Trikon who were serving as
executive officers at December 31, 1998 and whose total compensation exceeded
$100,000 (collectively, the "Named Executive Officers"). Perquisites amounting
in aggregate to the lesser of $50,000 or 10% of the total annual salary and
bonus reported for the named executive officer are not disclosed. For the
purpose of calculating salaries and other compensation paid in British pounds
to Nigel Wheeler, Christopher D. Dobson, Jeremy Linnert, Nicolas Carrington
and Bernard Culverhouse the conversion rate of 1.6638 is used, which is the
average rate of exchange for the year ended December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation Compensation Awards
---------------------------------------- --------------------------
Securities
Restricted Underlying
Fiscal Other Annual Stock Stock All Other
Year Salary ($) Bonus ($) Compensation Awards ($) Options (#) Compensation ($)
------ ---------- --------- ------------ ---------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Christopher D. Dobson
(1).................... 1998 $235,727 $ -- $ -- $7,183,004 (2) -- --
Chairman of the Board
and 1997 315,917 -- -- -- -- --
Chief Scientific
Officer 1996 52,653 -- -- -- --
Thomas C McKee (3)...... 1998 90,258 -- -- -- -- 17,786 (4)
Former director and
Chief
Executive Officer
Nigel Wheeler (5)....... 1998 266,111 -- -- -- 500,000 50,306 (6)
Director, President and
Chief 1997 268,200 268,200 -- -- 200,000 50,388 (7)
Executive Officer 1996 44,699 -- -- -- -- 5,485 (8)
Nicolas Carrington (9).. 1998 118,842 -- -- -- 306,300 16,463 (10)
Senior Vice President,
Sales 1997 115,589 -- 1,509 -- 36,300 72,994 (11)
and Field Operations 1996 13,711 -- -- -- -- 1,924 (12)
Jeremy Linnert (13)..... 1998 106,196 -- -- -- 223,000 48,501 (14)
Acting Chief Financial 1997 82,270 -- -- -- 15,000 55,830 (15)
Officer and Secretary 1996 9,832 -- -- -- -- 2,450 (16)
Bernard Culverhouse
(17)................... 1998 126,360 -- -- -- 221,000 25,005 (18)
Vice President,
Marketing 1997 104,443 -- -- -- 14,000 22,010 (19)
1996 10,687 -- -- -- -- 2,283 (20)
</TABLE>
- --------
(1) Mr. Dobson joined Trikon in November 1996 upon the Company's Acquisition
of Trikon Limited. Mr. Dobson served as Chief Executive Officer from
December 1997 to May 1998.
(2) On May 15, 1998, the Company issued to Mr. Dobson 5,015,811 shares of
restricted Common Stock and 6,476.995 shares of restricted Series I
Preferred Stock. Each share of restricted Series I Preferred Stock
automatically converted into 1,000 shares of restricted Common Stock on
July 28, 1998. The restricted shares of Common Stock and Series I
Preferred Stock were valued at $7,183,004 based upon the $ per share
closing price of the equivalent unrestricted Common Stock on the date of
issuance. The restricted shares of Common Stock issued to Mr. Dobson vest
100% on the earlier of (i) May 14, 2003, or (ii) the sale of all or
substantially all of the assets of the Company. The number and value of
Mr. Dobson's aggregate restricted stock holdings at December 31, 1998
were 11,492,806 shares valued at $358,575.
(3) Mr. McKee served as Chief Executive Officer from June 1998 to September
1998.
(4) Of this amount, $12,500 represents a relocation allowance and $4,499
represents a car allowance.
19
<PAGE>
(5) Mr. Wheeler joined Trikon in November 1996 as President and Chief
Operating Officer upon the Acquisition of Trikon Limited. He was
appointed Chief Executive Officer in October 1998.
(6) Of this amount, $11,997 represents a car allowance and $36,438 represents
pension contributions by Trikon on behalf of the officer.
(7) Of this amount, $15,651 represents a car allowance and $32,182 represents
pension contributions by Trikon on behalf of the officer.
(8) Of this amount, $1,922 represents a car allowance and $2,949 represents
pension contributions by Trikon on behalf of the officer.
(9) Mr. Carrington joined Trikon in November 1996 as Senior Vice President,
General Manager of Deposition Division. He was appointed Senior Vice
President Sales and Field Operations in December 1997.
(10) Of this amount, $10,916 represents a car allowance and $4,659 represents
pension contributions by Trikon on behalf of the officer.
(11) Of this amount, $57,795 represents consideration for Mr. Carrington's
agreement to remain with Trikon until March 31, 1998, $3,647 represents
contributions by the Company pursuant to a defined contribution agreement
on behalf of Mr. Carrington and $10,461 represents a car allowance
(12) Of this amount $1,283 represents a car allowance.
(13) Mr. Linnert joined Trikon in November 1996 upon the acquisition of
Electrotech. He was appointed Acting Chief Financial Officer and
Secretary in December 1998.
(14) Of this amount, $33,276 represents consideration for Mr. Linnert's
agreement to stand for election as a director for the period from January
to June 1998, $9,955 represents a car allowance and $3,938 represents
pension contributions paid by Trikon on behalf of the officer.
(15) Of this amount, $41,341 represents consideration for Mr. Linnert's
agreement to remain with Trikon until March 31, 1998 and $9,462
represents a car allowance.
(16) Of this amount, $1,210 represents a car allowance.
(17) Mr. Culverhouse joined Trikon in November 1996 upon the acquisition of
Electrotech. He was appointed Vice President of Marketing on December 14,
1998.
(18) Of this amount, $7,242 represents a car allowance and $17,264 represents
pension contributions paid by Trikon on behalf of the officer.
(19) Of this amount, $6,698 represents a car allowance and $14,204 represents
pension contributions paid by Trikon on behalf of the officer.
(20) Of this amount, $830 represents a car allowance and $1,453 represents
pension contributions paid by Trikon on behalf of the officer
20
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth each grant of stock options made during the
year ended December 31, 1998 to each of the Named Executive Officers. No stock
appreciation rights ("SARs") have ever been granted by Trikon.
<TABLE>
<CAPTION>
Potential
Realizable
Value at
Assumed Annual
Rates of Stock
Price
Number of Appreciation
Securities Percent of Total for Option
Underlying Options Granted Exercise Term(2)
Options to Employees in Price Expiration ---------------
Granted (#) Fiscal Year (%) ($/sh)(1) Date 5% ($) 10% ($)
----------- ---------------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Christopher D. Dobson... -- -- -- -- -- --
Thomas C. McKee(3)...... 1,874,477 34.3185 0.6250 5-31-2005 -- --
Nigel Wheeler........... 200,000(4) 3.6617 1.4375 2-6-2008 180,807 458,201
100,000(5) 1.8308 1.4375 2-6-2008 90,404 229,101
200,000(6) 3.6617 0.0938 10-27-2008 11,792 29,883
Nicolas Carrington...... 36,300(4) 0.6646 1.4375 2-6-2008 32,816 83,163
20,000(5) 0.3662 1.4375 2-6-2008 18,081 45,820
250,000(7) 4.5771 0.0469 12-8-2008 7,370 18,677
Jeremy Linnert.......... 15,000(4) 0.2746 1.4375 2-6-2008 13,561 34,365
8,000(5) 0.1465 1.4375 2-6-2008 7,232 18,328
200,000(7) 3.6617 0.0469 12-8-2008 5,896 14,942
Bernard Culverhouse..... 14,000(4) 0.2563 1.4375 2-6-2008 12,656 32,074
7,000(5) 0.1281 1.4375 2-6-2008 6,328 16,037
200,000(7) 3.6617 0.0469 12-8-2008 4,717 11,953
</TABLE>
- --------
(1) Represents the fair market value of the underlying shares of Common Stock
at the time of grant.
(2) Represents the value of the shares of Common Stock issuable upon the
exercise of the option, assuming the stated rates of price appreciation
for ten years, compounded annually, with the aggregate exercise price
deducted from the final appreciated value. Such annual rates of
appreciation are for illustrative purposes only, are based on requirements
of the Commission and do not reflect Trikon's estimate of future stock
appreciation. No assurance can be given that such rates of appreciation,
or any appreciation, will be achieved.
(3) Mr. McKee resigned from the Company effective September 7, 1998. All of
Mr. McKee's stock options expired effective September 25, 1998.
(4) On February 6, 1998, the Company cancelled stock options for the same
number of shares previously granted to Messrs. Wheeler, Carrington,
Linnert and Culverhouse in 1997 and issued these new stock options with an
exercise price of $1.4375 per share. The new stock options vest in equal
annual increments of 25% over a four-year period of service measured from
September 18, 1997.
(5) Represents stock options that vest in equal, annual increments of 25% over
the four-year period of service measured from their date of grant,
February 6, 1998.
(6) Represents stock options that vest in equal, annual increments of 25% over
the four-year period of service measured from their date of grant, October
27, 1998.
(7) Represents stock options that vest in equal, annual increments of 25% over
the four-year period of service measured from their date of grant,
December 8, 1998.
21
<PAGE>
Aggregated Stock Option Exercises in Last Fiscal Year and Fiscal Year-end
Option Values
The following table sets forth the number of exercisable and unexercisable
options held by each of the Named Executive Officers at December 31, 1998. No
shares of common stock were acquired upon exercise of stock options by the
Named Executive Officers during the fiscal year 1998. No exercisable or
unexercisable options were "In-The-Money" at December 31, 1998. No stock
appreciation rights were exercised by the Named Executive Officers during
fiscal year 1998, and no stock appreciation rights were outstanding at the end
of such year.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised
Options at Fiscal Year-End (#)
Name Exercisable/Unexercisable
- ---- ------------------------------
<S> <C>
Christopher D. Dobson............................ --
Thomas C. McKee(1)............................... --
Nigel Wheeler.................................... 50,000/450,000
Nicolas Carrington............................... 9,075/297,225
Jeremy Linnert................................... 3,750/219,250
Bernard Culverhouse.............................. 3,500/217,500
</TABLE>
- --------
(1) Mr. McKee resigned from the Company effective September 7, 1998. All stock
options granted to Mr. McKee lapsed prior to exercise.
Pension Plans
The following table shows the estimated annual pension benefits payable to a
covered participant at normal retirement age, which is age 65, under the
Company's defined benefit pension plan, the Electrotech Retirement Benefits
Scheme. (For female members, pension earned prior to 6th April 1996 may be
taken unreduced from age 60.) The Electrotech Retirement Benefits Scheme was
originally initiated by Electrotech. As a result, only former Electrotech
employees are covered participants. Plan members are required to contribute at
the rate of 5% of taxable remuneration, the balance of the cost being met by
the Company. Benefits are provided on retirement, death and withdrawal, with
vesting after two years of service in the plan. Pensions increase in payment
at the rate of 5% per annum. Benefits are calculated with reference to taxable
remuneration and years of service in the plan and are not subject to offsets
for social security retirement benefits:
Pension Plan Table
<TABLE>
<CAPTION>
Years of Service
------------------------------------------------------------------------------------------------------
Remuneration 5 10 15 20 25 30 35
- ------------ ------------- ------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
(Pounds)
50,000......... (Pounds)4,167 (Pounds)8,333 (Pounds)12,500 (Pounds)16,667 (Pounds)20,833 (Pounds)25,000 (Pounds)29,167
100,000......... 8,333 16,667 25,000 33,333 41,667 50,000 58,333
150,000......... 12,500 25,000 37,500 50,000 62,500 75,000 87,500
200,000......... 16,667 33,333 50,000 66,667 83,333 100,000 116,667
250,000......... 20,833 41,667 62,500 83,333 104,167 125,000 145,833
300,000......... 25,000 50,000 75,000 100,000 125,000 150,000 175,000
<CAPTION>
Remuneration 40 or more
- ------------ --------------
<S> <C>
(Pounds)
50,000......... (Pounds)33,333
100,000......... 66,667
150,000......... 100,000
200,000......... 133,333
250,000......... 166,667
300,000......... 200,000
</TABLE>
A participant's remuneration covered by the Company's pension plan is his or
her highest taxable salary (the "Highest Taxable Salary") in the last five
plan years of the participant's career or, in the case of a controlling
director with a 20% stock holding, the average such salary over his or her
last three plan years. A participant earns one-sixtieth ( 1/60) of his Highest
Taxable Salary for each year of service to a maximum of forty-sixtieths (
40/60). Taxable remuneration for the Named Executive Officers in the plan as
at the end of the last calendar year was (Pounds)163,000 (approximately
$268,200) for Mr. Wheeler and (Pounds)75,947 (approximately $126,360) for Mr.
Culverhouse. The projected number of years of service for Mr. Wheeler and Mr.
Culverhouse at their normal retirement age are 33 years and 10 months and 40
years, respectively. Pension contributions on behalf of
22
<PAGE>
Mr. Wheeler and Mr. Culverhouse for fiscal years 1996, 1997, and 1998,
respectively, are as included in the All Other Compensation column of the
Summary Compensation Table.
Compensation Committee Report on 1998 Cancellation and Regrant of Options
This report is made by Richard M. Conn, Lawrence D. Lenihan and Stephen N.
Wertheimer, the current members of the Compensation Committee. On February 6,
1998, the Compensation Committee, consisting of Richard M. Conn and Brian D.
Jacobs, approved the cancellation and regrant of all outstanding options with
an exercise price above $1.4375, the then fair market value per share of the
Company's Common Stock. Each optionee had the opportunity to elect to retain
his or her higher-priced options with their existing vesting schedule or
accept a new option with an exercise price of $1.4375. Each new option has a
term of ten years and becomes exercisable for the option shares in a series of
four (4) successive equal annual installments over the optionee's period of
continued service with the Company. Each such installment will become
exercisable on a date six (6) months later than the date that installment
would otherwise become exercisable under the higher-priced options. Out of the
340 optionees holding such higher-priced options, 335 optionees agreed to the
cancellation of those options in exchange for the new options. As a result,
options for 1,278,056 shares with a weighted average exercise price of $10.859
per share were cancelled, and new options for the same number of shares were
issued with an exercise price of $1.4375 per share.
The Compensation Committee approved the cancellation-regrant program because
it believes that equity incentives are a significant factor in the Company's
ability to attract and retain key employees and consultants critical to the
Company's long-term financial success. During the last fiscal year, the market
value of the Common Stock had fallen as a result of market factors that
affected the stock prices of a number of companies in the industry in which
the Company is engaged and other factors that were unique to the Company. As a
result of such decrease in the fair market value of the Common Stock, the
Committee believed that the Company's ability to retain existing employees and
to attract talented individuals in the future would be impaired.
However, in order for the regranted options to serve their primary purpose
of assuring the continued service of each optionee, a new vesting schedule was
imposed with respect to the option shares so that each installment of those
shares would vest six months later than that installment would have otherwise
vested under the cancelled option. Accordingly, each optionee will only have
the opportunity to acquire the option shares at the lower exercise price if he
or she remains in the Company's employ.
As a result of the new vesting schedules imposed on the regranted options,
the Compensation Committee believes that the program strikes an appropriate
balance between the interests of the option holders and those of the
stockholders. The lower exercise prices in effect under the regranted options
make those options valuable once again to the executive officers and key
employees critical to the Company's financial performance. However, those
individuals will enjoy the benefits of the regranted options only if they in
fact remain in the Company's employ and contribute to the Company's financial
success.
23
<PAGE>
The following sets forth certain information concerning the repricing,
replacement or cancellation and regrant of options which has occurred over the
last ten fiscal years with respect to options held by executive officers of
the Company:
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
Length of
Number of Market Price Original
Securities of Stock at Option Term
Underlying Time of Exercise Price Remaining at
Options/SARs Repricing or at Time of Date of
Repriced or Amendment Repricing or New Exercise Repricing or
Name Date Amended (#) ($) Amendment ($) Price ($) Amendment
---- ------- ------------ ------------ -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Nigel Wheeler........... 2/06/98 200,000 $1.4375 11.6250 $1.4375 9.01
Nicolas Carrington...... 2/06/98 36,300 $1.4375 11.6250 $1.4375 9.01
Jeremy Linnert.......... 2/06/98 15,000 $1.4375 11.6250 $1.4375 9.01
Bernard Culverhouse..... 2/06/98 14,000 $1.4375 11.6250 $1.4375 9.01
</TABLE>
Employment Agreements
On October 2, 1997, the Company entered into retention agreements with
Nicolas Carrington and Jeremy Linnert pursuant to which they agreed to remain
with the Company in their respective capacities of Senior Vice President,
General Manager and Financial Controller of the Deposition Division until
March 31, 1998 in exchange for payments of approximately $57,795 and $41,341,
respectively, or six months salary. The Company also entered into an
employment agreement with Nigel Wheeler, dated November 15, 1996, pursuant to
which Mr. Wheeler is to be nominated as a director and to act as the President
and Chief Operating Officer for the three-year term of the agreement. The
agreement with Mr. Wheeler renews annually unless terminated by either party.
Under the agreement, Mr. Wheeler is paid a base salary of $268,200 per year,
net of any U.S. taxes or other assessments so long as he is not a U.S.
citizen. The base salary is subject to certain annual, upward adjustments by
the Company. In addition, Mr. Wheeler is eligible to receive an annual
performance bonus for each year of service. Mr. Wheeler was also granted, in
connection with entering into such agreement, options to acquire 200,000
shares of Common Stock at an exercise price of $11.625 per share, the fair
market value of a share of Common Stock on the date of grant. The employment
agreement further provides certain customary insurance, vacation benefits and
termination provisions.
On September 11, 1998, the Company announced that Mr. Wheeler would waive a
substantial portion of his salary until the Company returns to profitability.
On October 27, 1998, the Board of Directors appointed Mr. Wheeler as Chief
Executive Officer. In connection with his appointment as Chief Executive
Officer, the Board of Directors reinstated Mr. Wheeler's previous salary and
agreed to (i) immediately grant options to purchase 200,000 shares of Common
Stock, (ii) on or about January 1, 1999, grant him additional options to
purchase 500,000 shares of Common Stock, and (iii) subject to shareholder
approval at the Company's next annual meeting, grant additional options to
purchase shares of Common Stock equal to 2% of the Company's then outstanding
Common Stock on a fully diluted basis. Approval of Proposal No. 4 would allow
this third grant to Mr. Wheeler to be made. Mr. Wheeler is authorized to
direct the Company to allocate all or a portion of such options to other
members of management.
In connection with the exchange offer consummated on May 14, 1998 (the
"Exchange Offer"), the Board of Directors entered into certain agreements with
Christopher D. Dobson, Chairman of the Board and then Chief Executive Officer
of the Company. The Company and Mr. Dobson agreed that upon the consummation
of the Exchange Offer, 5,015,811 shares of restricted Common Stock and
6,476.995 shares of restricted Series I Preferred Stock (collectively, the
"Restricted Stock") would be granted to Mr. Dobson. The Restricted Stock shall
vest one hundred percent (100%) upon the earlier of (i) the date five years
after the closing of the Exchange Offer, or (ii) the sale of all or
substantially all of the assets of the Company, the direct sale by the
Company's stockholders possessing more than 50% of the total combined voting
power of the Company's outstanding
24
<PAGE>
securities to persons different than those holding such securities immediately
prior to such sale or the merger or consolidation in which securities
possessing more than 50% of the total combined voting power of the Company's
outstanding securities are transferred to persons different than those holding
such securities immediately prior to the merger or consolidation. The
Restricted Stock shall automatically be acquired by the Company in return for
a payment of $0.001 per share of Common Stock and $1.00 per share of Series I
Preferred Stock upon Mr. Dobson's termination for cause, voluntary cessation
of providing services to the Company or if, during the first two years
following the Exchange Offer, Mr. Dobson devotes fewer than 750 hours per
annum to Trikon related matters. For purposes of the Restricted Stock, the
meaning of "for cause" is limited to willful misconduct that materially
injures the pecuniary interests of the Company and any material breach of the
noncompetition obligations under these agreements. Mr. Dobson is permitted, at
his discretion, to reallocate up to twenty percent (20%) of the Restricted
Stock to other members of senior management of the Company. Each share of
restricted Series I Preferred Stock automatically converted into 1,000 shares
of restricted Common Stock on July 28, 1998.
The Board of Directors and Mr. Dobson further agreed that after the
consummation of the Exchange Offer, Mr. Dobson shall receive a contingent
variable interest up to 3% of the net proceeds (gross proceeds less reasonable
and customary expenses) received upon the sale of the Company as follows:
<TABLE>
<CAPTION>
Cumulative
Percentage
Sales Price ($) (%)
--------------- ----------
<S> <C>
At least $250 million.......................................... 0.5%
At least $260 million.......................................... 1.0
At least $270 million.......................................... 2.0
At least $280 million.......................................... 2.5
$300 million or more........................................... 3.0
</TABLE>
In addition, the Board of Directors and Mr. Dobson agreed upon certain terms
of his employment following the consummation of the Exchange Offer. Among
other things, Mr. Dobson shall continue in his position as Chairman and Chief
Executive Officer of the Company, devote substantially his full business time
to his duties (which shall include research and development work performed on
Trikon projects and products, wherever located) and a base salary, of 196,000
British pounds. Upon successful recruitment of a chief executive officer
candidate, Mr. Dobson shall step down as Chief Executive Officer of the
Company and continue to receive compensation at his current rate of
compensation, unless in connection therewith he determines to devote
substantially less than 75% of his full business time to the Company in which
case his base salary shall be reduced by 50%. In the event that Mr. Dobson is
terminated for any reason other than cause prior to May 2001, he shall be paid
an amount equal to his base salary (as of the date of termination) for the
period from the date of termination until May 2001. During his employment, Mr.
Dobson has agreed not to directly or indirectly be involved with any
enterprise engaged in the semiconductor equipment manufacturing industry,
subject to a de minimis investment exception. In addition, he also agreed not
to solicit any employees of the Company to leave the Company nor any business
of any customers, licensors or licensees of the Company during his employment
and for two (2) additional years thereafter. All intellectual property and
know-how developed by Mr. Dobson while employed by the Company will
automatically be assigned to the Company without royalties or other payment.
On September 11, 1998, the Company announced that Mr. Dobson would waive his
salary until the Company returns to profitability.
In connection with the negotiation of the Applied Materials and Lam Research
licenses, restructuring the Company and future licensing efforts, the Board of
Directors authorized a $1,500,000 bonus payable to Mr. Dobson, subject to
consummation of the Exchange Offer. Payment of such bonus by the Company is
subject to (i) payment of all accrued and unpaid dividends on the Series H
Preferred Stock and redemption for cash of all outstanding shares of Series H
Preferred Stock issued as payment of dividends on outstanding Series H
Preferred Stock, (ii) such payment not being made prior to June 30, 1999 and
(iii) at the time of payment Trikon shall have had at least $8,000,000 of
EBITDA during and for its two most recently completed fiscal quarters
25
<PAGE>
(taken as one period). For purposes of calculating EBITDA, upfront license
fees (excluding the Applied Material and Lam Research licenses) shall be
equally amortized over the twelve-month period following receipt (including
the month of receipt, and, incremental license fees associated with the
MORI(TM) source technology.
At the end of May 1998, the Company also entered into an employment
agreement with Thomas C. McKee pursuant to which Mr. McKee was nominated as a
director and to act as the Chief Executive Officer for the period commencing
June 1, 1998 and continuing through December 31, 1999. Thereafter, the
agreement with Mr. McKee was to renew annually unless terminated by either
party upon thirty (30) days prior written notice. Under the agreement, Mr.
McKee was paid a base salary of $340,000 per year. The base salary was subject
to annual review by the Company and could be increased at the Board of
Director's discretion. In addition, Mr. McKee was eligible to receive an
annual performance bonus for each year of service in an amount not to exceed
fifty percent (50%) of his base salary which was to become payable upon the
achievement of certain financial objectives and performance milestones for
each year. Mr. McKee was also granted, in connection with entering into such
agreement, options to acquire 1,874,477 shares of Common Stock (representing
two percent (2%) of the Company's outstanding equity securities on a fully
diluted basis) at an exercise price of $0.625 per share, the closing selling
price per share of Common Stock as reported on the Nasdaq National Market on
June 1, 1998. The employment agreement further provided for certain customary
insurance, vacation benefits and termination provisions as well as certain
housing cost reimbursements. Mr. McKee resigned as Chief Executive Officer and
director for personal reasons on September 7, 1998.
Other than as set forth above, Trikon currently has no employment contracts
with any of the Named Executive Officers.
Director Compensation
The Company's outside directors earn an annual retainer of $15,000 and
receive $1,000 for attending a meeting of the Board of Directors in person,
$750 for attending a meeting of the Board of Directors by telephone and $750
for attending a committee meeting in person or by telephone. Payment of the
annual retainer has been deferred until the Board of Directors determines that
sufficient cash flow is achieved. Outside directors may also be reimbursed for
certain expenses in connection with attendance at Board of Directors and
committee meetings. In addition, under the Company's 1998 Director Stock
Option Plan, each individual who is first elected or appointed to the Board as
a non-employee Board member after June 10, 1999 will automatically receive, at
the time of such initial election or appointment, a stock option to purchase
90,000 shares of Common Stock, and at each annual stockholders meeting,
beginning with the 1999 Annual Stockholders Meeting, each individual who is
re-elected as a non-employee Board member will automatically receive a stock
option to purchase 18,000 shares of Common Stock. The shares subject to each
90,000-share option grant vest in a series of four (4) successive equal annual
installments upon the director's completion of each year of service on the
Board of Directors over the four (4) year period measured from the date of
grant, and the shares subject to each 18,000-share option grant vest upon
completion of one year of service measured from the date of grant. In June
1998, each of Lawrence D. Lenihan and Stephen N. Wertheimer received an option
to purchase 90,000 shares of Common Stock at an exercise price of $0.625
pursuant to the Company's 1998 Director Stock Option Plan.
In December 1997, the Company agreed to pay Jeremy Linnert (Pounds)20,000
(approximately $33,000), subject to his serving as a director until June 30,
1998, in consideration for his agreement to stand for election as director.
In February 1998, the Board of Directors, in connection with his election to
the Board of Directors, approved the grant to Richard M. Conn of an option to
purchase 12,500 shares of Common Stock at an exercise price of $1.4375, which
price represented the fair market value of a share of Common Stock on the date
of grant, which option vests in equal, annual investments of 25% over the
four-year period following the date of grant, subject to his continued service
as a director of the Company. In August 1998, the Board of Directors, as an
incentive for his continued service on the Board of Directors, approved the
grant to Richard M. Conn of an option to purchase 77,500 shares of Common
Stock at an exercise price of $0.3438 which price represented the fair market
value of a share of Common Stock on the date of grant, which option vests in a
series of four (4)
26
<PAGE>
successive equal annual installments following the date of grant, subject to
his continued service as a director of the Company. In February 1998, the
Board of Directors cancelled certain stock options granted to Brian D. Jacobs
and issued new stock options with an exercise price per share of $1.4375 for
the same number of shares as the canceled stock options. The new stock options
vest in installments six months later than each installment was due to vest
pursuant to the cancelled stock options.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors of the Company (the
"Compensation Committee") currently consists of Richard M. Conn who was
appointed on January 23, 1998, and Lawrence D. Lenihan Jr. and Stephen N.
Wertheimer who were appointed on June 10, 1998. Brian D. Jacobs also served on
the Compensation Committee from January 23, 1998 until his term of office
expired on July 28, 1998.
None of these individuals was at any time during the fiscal year ended
December 31, 1998 or at any other time an officer or employee of the Company.
No executive officer of the Company serves as a member of the Board or the
Compensation Committee of any other entity which has one or more executive
officers serving as a member of the Company's Board of Directors or
Compensation Committee.
Report of the Board of Directors on Executive Compensation
The Compensation Committee recommends to the Board of Directors general
compensation policies for the Company, oversees the Company's compensation
plans and specific compensation levels for executive officers, including
bonuses, and administers the Option Plan. The following is the report approved
by the Compensation Committee addressing the compensation of the Company's
executive officers for 1998.
Compensation Policy. The Company's executive compensation policy is designed
to establish an appropriate relationship between executive pay and the
Company's annual performance, long-term growth objectives and ability to
attract and retain qualified executive officers. The Compensation Committee
addresses this objective by integrating competitive annual base salaries with
(a) bonuses based on annual corporate performance and the achievement of
individual performance objectives and (b) stock option grants under the Option
Plan. The Compensation Committee believes that cash compensation in the form
of salary and bonus provides Company executives with appropriate immediate
rewards for success in current operations, while stock option grants promote
management stock ownership and thereby expand management's stake in the long-
term performance and success of the Company.
For 1998, the Compensation Committee approved the base salaries of each of
the Company's executive officers. In determining such base salaries, the
Company examined salaries paid to executive officers of semiconductor
equipment companies and other high technology companies with sales comparable
to those of the Company. For 1998, the Compensation Committee set the base
salaries of the Company's executive officers generally at the median level of
the salaries paid to executives in comparable positions at semiconductor
equipment companies and other high technology companies of similar size as the
Company.
In 1998, the executive officers of the Company, including the then Chief
Executive Officer, were each granted options under the Option Plan. The number
of options that each executive officer or employee was granted was based
primarily on the executive's or employee's ability to influence the Company's
long-term growth and profitability. The vesting provisions of the options
granted under the Option Plan are designed to encourage longevity of
employment with the Company.
Compensation of Chief Executive Officer. The Compensation Committee believed
that Nigel Wheeler, the Company's Chief Executive Officer from October 27,
1998 through December 31, 1998, provided valuable services to the Company, and
that his compensation should therefore be competitive with that paid to
executives at comparable semiconductor equipment companies. In addition, the
Compensation Committee believed that the compensation of the Chief Executive
Officer should be heavily influenced by the Company's performance.
27
<PAGE>
Therefore, although there has necessarily been some subjectivity in setting
Mr. Wheeler's salary, major elements of his compensation package are directly
tied to the Company's performance. For 1998, Mr. Wheeler's salary was reset at
approximately $268,200 per annum, an amount the Compensation Committee deemed
at the time appropriate in light of the Company's stage of growth and salaries
paid to chief executive officers of other growth technology companies. In
addition, he received (i) a grant of options to purchase 200,000 shares of
Common Stock upon his appointment and (ii) a grant of additional options to
purchase 500,000 shares of Common Stock on January 1, 1999. The Company has
also agreed, subject to shareholder approval, to grant additional options to
purchase shares of Common Stock equal to 2% of the Company's then outstanding
Common Stock on a fully-diluted basis. The Compensation Committee believes the
options are appropriate to align Mr. Wheeler's interests with those of the
Company's shareholders.
The Compensation Committee believed that Thomas C. McKee, the Company's
Chief Executive Officer from June 1, 1998 through September 7, 1998, would
provide valuable services to the Company, and that his compensation should
therefore be competitive with that paid to executives at comparable
semiconductor equipment companies. In addition, the Compensation Committee
believed that the compensation of the Chief Executive Officer should be
heavily influenced by the Company's performance. Therefore, although there has
necessarily been some subjectivity in setting Mr. McKee's salary, major
elements of his compensation package are directly tied to the Company's
performance. For 1998, Mr. McKee's salary was set at approximately $340,000
per annum, an amount the Compensation Committee deemed at the time appropriate
in light of the Company's stage of growth and salaries paid to chief executive
officers of other growth technology companies. In addition, Mr. McKee was
eligible to receive an annual performance bonus for each year of service in an
amount not to exceed fifty percent (50%) of his base salary which was to
become payable upon the achievement of certain financial objectives and
performance milestones for each year. Mr. McKee also received a grant of
options to purchase options to acquire 1,874,477 shares of Common Stock
(representing two percent (2%) of the Company's outstanding equity securities
on a fully diluted basis) at an exercise price of $.625 per share, the closing
selling price per share of Common Stock as reported on the Nasdaq National
Market on June 1, 1998. Mr. McKee did not exercise any of the above-mentioned
options and all such options expired effective September 25, 1998. The
Compensation Committee believed the bonus and options were appropriate to
align Mr. McKee's interests with those of the Company's shareholders.
Internal Revenue Code Section 162(M). Under Section 162 of the Internal
Revenue Code, the amount of compensation paid to certain executives that is
deductible with respect to the Company's corporate taxes is limited to
$1,000,000 annually. It is the current policy of the Compensation Committee to
maximize, to the extent reasonably possible, the Company's ability to obtain a
corporate tax deduction for compensation paid to executive officers of the
Company to the extent consistent with the best interests of the Company and
its shareholders.
The members of the Compensation Committee for the 1998 fiscal year included
Richard M. Conn, Lawrence D. Lenihan, Jr., Stephen N. Wertheimer and Brian D.
Jacobs at different intervals. Mr. Jacobs served on the Compensation Committee
from January 23, 1998 until his term of office expired on July 28, 1998.
Accordingly, this report has been prepared by the current members of the
Compensation Committee: Messrs. Conn, Lenihan and Wertheimer.
28
<PAGE>
Stock Performance Graph
The following graph shows a comparison of total shareholder returns for the
Company, the Nasdaq Composite Index, the Hambrecht & Quist Semiconductor Index
and the Philadelphia Semiconductor Index for the period during which the
Company's Common Stock has been registered under Section 12 of the Securities
Exchange Act of 1934.
[CHART]
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Trikon Hambrecht & Quist NASDAQ
Covered) Technologies, Inc. Semi-Conductor Stock Market
------------------ ------------------ ----------------- ------------
<S> <C> <C> <C>
Measurement Pt 08/25/95...... 100.00 100.00 100.00
FYE 12/31/95................. 50.00 72.00 104.00
FYE 12/31/96................. 52.00 93.00 128.00
FYE 12/31/97................. 5.00 98.00 157.00
FYE 12/31/98................. 0.14 138.00 220.00
</TABLE>
- --------
* Total return assumes reinvestment of dividends.
The chart above assumes $100.00 was invested on August 25, 1995 in the
Company's Common Stock the Nasdaq Composite Index and the Hambrecht & Quist
Semiconductor Index. Total returns for the Nasdaq Composite Index and the
Hambrecht & Quist Semiconductor Index are weighted based on market
capitalization.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act or the Exchange Act that might
incorporate future filings made by the Company under those statutes, the
preceding Report of the Compensation Committee of the Board of Directors on
Executive Compensation and the Company stock performance graph will not be
incorporated by reference into any of those prior filings, nor will such
report or graph be incorporated by reference into any future filings made by
the Company under those statutes.
29
<PAGE>
SHAREHOLDER PROPOSALS FOR PROXY STATEMENT FOR
THE ANNUAL MEETING FOR THE YEAR ENDING DECEMBER 31, 1999
Proposals of shareholders of the Company that are intended to be presented
by such shareholders at the Company's 2000 Annual Meeting must be received no
later than [120 days prior to mailing] 2000, in order that they may be
included in the proxy statement and form of proxy relating to that meeting. In
addition, the proxies solicited by the Board of Directors for the Company's
2000 Annual Meeting will confer discretionary authority to vote on any
shareholder proposal presented at that meeting, unless the Company receives
notice of such proposal not later than [45 days prior to mailing].
ANNUAL REPORTS
A copy of the Company's annual report on Form 10-K is being mailed to each
shareholder of record along with this Proxy Statement. Such report is not part
of the Company's soliciting material.
OTHER MATTERS
The Board of Directors knows of no other matters to be presented for
shareholder action at the Annual Meeting. However, if other matters do
properly come before the Annual Meeting or any adjournments or postponements
thereof, the Board of Directors intends that the persons named in the proxies
will vote upon such matters in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
Jeremy Linnert
Secretary
30
<PAGE>
EXHIBIT A
PROPOSED REVERSE SPLIT ARTICLES AMENDMENT
Article III of the Seventh Restated Articles of Incorporation is amended to
read in its entirety substantially as follows:
"Upon the amendment of this Article III pursuant to the filing of this
Certificate of Amendment with the California Secretary of State, each ten (10)
issued and outstanding shares of the Company's common stock (the "Old Common
Stock") shall be automatically and without any action on the part of the
holder thereof, reclassified and converted into one (1) share of common stock
(the "New Common Stock"), subject to the treatment of fractional interests as
described below. Each holder of a certificate or certificates which
immediately prior to the amendment to the Seventh Restated Articles of
Incorporation becoming effective pursuant to the California General
Corporation Law (the "Effective Date"), represented outstanding shares of the
Old Common Stock shall be entitled to receive a certificate for the number of
shares of New Common Stock they own by presenting their old certificate(s) to
the Company's transfer agent for cancellation and exchange.
No scrip of fractional certificates will be issued. In lieu of fractional
shares, the Company will issue one additional share of New Common Stock. The
ownership of a fractional interest will not give the holder thereof any
voting, dividend or other rights except the right to receive an additional
share therefor as described herein."
31
<PAGE>
ANNEX A
TRIKON TECHNOLOGIES, INC.
1991 STOCK OPTION PLAN
(Amended and Restated as of April 26, 1999)
SECTION 1. Description of Plan. This is the 1991 Stock Option Plan
(the "Plan") of Trikon Technologies, Inc., a California corporation (the
"Company"). Under the Plan, employees, directors, consultants and advisors of
the Company or any of its Subsidiaries, to be selected as set forth below, may
be granted options ("Options") to purchase shares of the Common Stock of the
Company ("Common Stock"). For purposes of the Plan, the term "Subsidiary" means
any corporation 50% or more of the voting stock of which is owned by the Company
or by a Subsidiary of the Company. It is intended that the Options under the
Plan will either qualify for treatment as incentive stock options under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code") and be
designated Incentive Stock Options, or not qualify for such treatment and be
designated Non-Statutory Stock Options.
SECTION 2. Purpose of this Plan. The purpose of the Plan and of
granting options to employees, directors, consultants and advisors is to further
the growth, development and financial success of the Company and its
subsidiaries by providing additional incentives to such persons by assisting
them in acquiring shares of Common Stock and to benefit directly from the
Company's growth, development and financial success.
SECTION 3. Eligibility. The persons who shall be eligible to receive
grants of Options under the Plan shall be the employees, directors, consultants
and advisors of the Company or any of its Subsidiaries. A person who holds an
Option is herein referred to as a "Participant." More than one Option may be
granted to any one Participant. Notwithstanding the foregoing, no Option may be
granted to any person who then owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of a Subsidiary
unless the Option Price (as hereinafter defined) is at least 110% of the fair
market value of the Common Stock on the date of grant. In addition, any
Incentive Stock Option granted to any person who then owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or of a Subsidiary shall have a termination date not later than five
years after the date such Option is granted. For this purpose, a person's stock
ownership is determined using the constructive ownership rules contained in Code
Section 424(d).
Only employees of the Company or a Subsidiary may be granted Incentive
Stock Options under the Plan. The exercise of an Incentive Stock Option will
not qualify for favorable income tax treatment unless the Participant remains an
employee of the Company or a Subsidiary at all times during the period beginning
on the date of the grant of the Incentive Stock Option and ending on the date
three months before the date of the exercise of the Incentive Stock Option. For
this purpose, a Participant who is on a leave of absence that exceeds ninety
days
<PAGE>
will be considered to have terminated his employment on the ninety-first day of
the leave of absence, unless the Participant's rights to reemployment are
guaranteed by statute or contract. However, a Participant will not be
considered to have incurred a termination of employment because of a transfer of
employment between the Company and a Subsidiary (or vice versa).
The aggregate fair market value (determined as of the time an Option
is granted) of the Common Stock for which any Participant may be granted
Incentive Stock Options first exercisable in any calendar year under the Plan
and any other incentive stock option plans (which qualify under Section 422 of
the Code) of the Company or any Subsidiary shall not exceed $100,000.
SECTION 4. Administration. This Plan shall be administered by the
Board of Directors of the Company or a committee thereof (in either case, the
"Board"). Should the Board delegate its authority to administer the Plan to a
committee of the Board, then such committee shall be comprised of individuals
who satisfy the requirements under Rule 16b-3 of the Securities Exchange Act of
1934, as amended (the "1934 Act") and under Code Section 162(m) for purposes of
Option grants made to officers and directors of the Company who are subject to
the short-swing liability provisions of Section 16 of the 1934 Act, as amended.
The Board is authorized and empowered to administer the Plan and,
subject to the Plan, (a) to select the Participants, to specify the number of
shares of Common Stock with respect to which Options are granted to each such
Participant, to specify the Option Price (as hereinafter defined) and the terms
of Options, and in general to grant Options; (b) to determine, subject to the
limits of Section 3 hereof, whether Options will be Incentive Stock Options or
Non-Statutory Stock Options; (c) to determine the dates upon which Options shall
be granted and to provide for the terms and conditions of the Options in a
manner consistent with this Plan, which terms and conditions need not be
identical as to the various Options granted; (d) to interpret the Plan; (e) to
prescribe, amend and rescind rules relating to the Plan; and (f) to determine
the rights and obligations of Participants under the Plan. The interpretation
and construction by the Board of any provision of the Plan or of any Option
granted thereunder shall be final. No member of the Board shall be liable for
any action or determination made in good faith with respect to the Plan or any
Option granted under it.
SECTION 5. Shares Subject to the Plan. The number of shares of Common
Stock which may be purchased pursuant to the exercise of Options granted under
both the Plan and the Company's Share Option Scheme shall be 10,500,000 shares.
Such share reserve includes (i) 1,300,000 shares reserved for issuance prior to
the acquisition of Electrotech Limited and Electrotech Equipment Limited
(collectively "Electrotech"), (ii) an additional 1,100,000 shares approved by
the Board and shareholders in connection with the acquisition of Electrotech,
(iii) an additional increase of 6,470,000 shares approved by the Board as of
June 19, 1998, and approved by the shareholders at the 1998 Annual Meeting held
on July 28, 1998 and (iv) an additional increase of 1,630,000 shares approved by
the Board as of April 26, 1999, subject to shareholder approval at the 1999
Annual Meeting. Such number shall in any event be adjusted to reflect all
stock splits, stock dividends or similar capital changes. Upon the expiration
or termination for any reason of an outstanding Option which shall not have
2.
<PAGE>
been exercised in full, any shares of Common Stock then remaining unissued which
shall have been reserved for issuance upon such exercise shall again become
available for the granting of additional Options under the Plan.
The maximum number of shares for which options may be granted to any
Participant shall be limited to 2,100,000 shares per calendar year. For this
purpose, an Option granted to a Participant shall be continued to be outstanding
despite its cancellation, and the repricing of an Option shall be treated as the
grant of a new option.
SECTION 6. Option Price. The purchase price per share (the "Option
Price") of the shares of Common Stock underlying each Option shall be determined
in each case by the Board with respect to each specific Option but shall not be
less than the Fair Market Value (as defined below) of such shares on the date of
grant. In the event that the Company acquires another entity, the Board may
authorize the issuance of Options ("Substitute Options") to the individuals
performing services for the acquired entity in substitution of stock options
previously granted to those individuals in connection with their performance of
services for such entity upon such terms and conditions as the Board shall
determine, taking into account the conditions of Code Section 424(a) in the case
of a Substitute Option that is intended to be an Incentive Stock Option.
Fair Market Value per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:
(a) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date immediately prior to the date
in question, as such price is reported by the National Association of
Securities Dealers on the Nasdaq National Market. If there is no closing
selling price for the Common Stock on the date immediately prior to the
date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
(b) If the Common Stock is at the time listed on either the
American Stock Exchange or the New York Stock Exchange, then the Fair
Market Value shall be the closing selling price per share of Common Stock
on the date immediately prior to the date in question on the stock exchange
determined by the Board to be the primary market for the Common Stock, as
such price is officially quoted in the composite tape of transactions on
such exchange. If there is no closing selling price for the Common Stock
on the date immediately prior to the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for
which such quotation exists.
3.
<PAGE>
(c) In the event the Common Stock is not traded on the Nasdaq
National Market or listed on the American Stock Exchange or the New York
Stock Exchange, the Fair Market Value shall be determined by the Board,
after taking into account such factors as it deems appropriate.
SECTION 7. Exercise of Options. Subject to all other provisions of
the Plan, each Option shall be exercisable for the full number of shares of
Common Stock subject thereto, or any part thereof, in five equal cumulative
annual installments commencing one year after the date of grant (provided the
Participant is employed by the Company at the time of vesting), or in such other
installments and at such other intervals as the Board may in any specific case
or cases otherwise specifically determine in granting such Option. The Board
may not impose a vesting schedule upon the Option or shares of Common Stock
subject to such Option which is more restrictive than twenty percent (20%) per
year vesting, with the initial vesting to occur not later than one (1) year
after the date of grant of the Option. However, such limitation shall not be
applicable to any Option granted to individuals who are officers of the Company,
directors or independent consultants. Each Option shall terminate and expire,
and shall no longer be subject to exercise, ten years after the date of grant
thereof, or at such earlier date as the Board may otherwise specifically
determine in granting such Option. The Option shall be exercised by the
Participant by giving written notice to the Company specifying the number of
full shares to be purchased and accompanied by payment of the full purchase
price therefor in cash, by check or in such other form of lawful consideration
(including promissory notes or shares of Common Stock then held by the
Participant) as the Board may approve from time to time.
SECTION 8. Option. Each Option granted under the Plan shall be
evidenced by a written stock option executed by the Company and delivered to the
Participant, which shall be substantially in the form attached as Exhibit A
hereto, or shall be in such other form as specified by the Board. Such stock
option shall indicate whether such Option is to be an Incentive Stock Option or
a Non-Statutory Stock Option and, if an Incentive Stock Option, shall contain
terms and conditions permitting such Option to qualify for treatment as an
incentive stock option under Section 422 of the Code.
SECTION 9. Issuance of Common Stock. The Company's obligation to
issue shares of Common Stock upon the exercise of an Option is expressly
conditioned upon the making of such investment representations and related
undertakings by the Participant (or his legal representative, heir or legatee,
as the case may be) in order to comply with the requirements of any exemption
from any securities law registration or other qualification of such shares which
the Company in its sole discretion shall deem necessary or advisable. Such
required representations and undertakings may include representations and
agreements that such Participant (or his legal representative, heir or legatee):
(a) is purchasing such shares for investment and not with any present intention
of selling or otherwise disposing thereof, and (b) agrees to have placed upon
the face and reverse of any certificates evidencing such shares a legend setting
forth (i) any representations and undertakings which such Participant has given
to the Company or a reference
4.
<PAGE>
thereto, and (ii) that, prior to effecting any sale or other disposition of any
such shares, the Participant must furnish to the Company an opinion of counsel,
satisfactory to the Company and its counsel, to the effect that such sale or
disposition will not violate the applicable requirements of state and federal
laws and regulatory agencies.
SECTION 10. Limited Transferability of Options. During the lifetime
of a Participant, Options shall be exercisable only by the Participant and shall
not be assignable or transferable other than by will or by the laws of descent
and distribution following the Participant's death in accordance with Section
13(b) hereof.
SECTION 11. Recapitalization, Reorganization, Merger or
Consolidation. If the outstanding shares of Common Stock of the Company are
increased, decreased or exchanged for different securities through
reorganization, merger, consolidation, recapitalization, reclassification, stock
split, stock dividend or like capital adjustment, a proportionate adjustment
shall be made (a) in the aggregate number of shares of Common Stock which may be
issued pursuant to the exercise of Options under the Plan and the maximum number
of shares for which options may be granted per Participant, as provided in
Section 5, and (b) in the number, price and kind of shares subject to any
outstanding Option granted under the Plan.
Upon the dissolution or liquidation of the Company or upon any
reorganization, merger or consolidation in which the Company does not survive,
the Plan and each outstanding Option shall terminate; provided that in such
event: (a) each Participant to whom no Option has been tendered by the
surviving corporation in accordance with all of the terms of clause (b)
immediately below shall have the right until five days before the effective date
of such dissolution or liquidation, or such merger or consolidation in which the
Company is not the surviving corporation, to exercise in whole or in part any
unexpired Option or Options issued to him, without regard to the installment
provisions of Section 7 of the Plan or any option agreement; or (b) in its sole
and absolute discretion, the surviving corporation may, but shall not be so
obligated, tender to any Participant holding an Option, an option or options to
purchase shares of the surviving corporation, and such new option or options
shall contain such terms and provisions as shall be required to preserve
substantially all of the rights and benefits of any Option then outstanding
under the Plan. Each Participant shall be given written notice by the Company
of any such proposed or contemplated dissolution, liquidation, reorganization,
merger or consolidation at least thirty-five (35) days prior to the effective
date thereof, which notice shall advise such Participant of the proposed
dissolution, liquidation, reorganization, merger or consolidation and the rights
of the Participant pursuant to this paragraph.
To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except as
hereinbefore expressly provided in this Section 11, the Participant shall have
no rights by reason of any subdivision or consolidation of shares of stock of
any class or the payment of any stock dividend or any other increase or decrease
in the number of shares of stock of any class, and the number or price of shares
of Common Stock
5.
<PAGE>
subject to any Option shall not be affected by, and no adjustment shall be made
by reason of, any dissolution, liquidation, reorganization, merger or
consolidation, or any issue by the Company of shares of stock of any class, or
rights to purchase or subscribe for stock of any class, or securities
convertible into shares of stock of any class.
The grant of an Option pursuant to the Plan shall not affect in any
way the right or power of the Company to make adjustments, reclassifications or
changes in its capital or business structures or to merge, consolidate, dissolve
or liquidate or to sell or transfer all or any part of its business or assets.
SECTION 12. Rights as a Shareholder. A Participant holding an
Option, or a transferee of an Option, shall have no rights as a shareholder with
respect to any shares covered by his Option until the date of the issuance of a
stock certificate to him for such shares, and no adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the date such stock certificate is issued, except as expressly provided in
Section 11.
SECTION 13. Termination of Options. Each Option granted under the
Plan shall set forth a termination date thereof, which date shall be not later
than ten years from the date such Option is granted. Except as otherwise
determined by the Board and set forth in the documents evidencing an Option, all
Options shall terminate and expire upon the first to occur of the following
events:
(a) the expiration of 30 days from the date of such Participant's
termination of employment (other than by reason of death), except that
if the Participant is disabled (within the meaning of Section 22(e)(3)
of the Internal Revenue Code) at the time of his termination of
employment, the expiration of one year from the date of the
Participant's termination of employment;
(b) the expiration of 180 days from the date of the death of such
Participant if his death occurs while he is employed by the Company or
any of its subsidiaries; or
(c) the termination of the Option pursuant to Section 11 of the
Plan.
The termination of employment of a Participant by death or otherwise
shall not accelerate or otherwise affect the number of shares with respect to
which an Option may be exercised, and the Option may only be exercised with
respect to that number of shares which could have been purchased under the
Option had the Option been exercised by the Participant on the date of such
termination.
6.
<PAGE>
For purposes of the above, in the case of Options granted to
Participants who are directors of the Company or consultants or advisors to the
Company, "employment" shall mean service as such director, consultant or advisor
to the Company.
SECTION 14. Withholding of Taxes. The Company shall deduct and
withhold from the wages, salary, bonus and other income paid by the Company to
the Participant the requisite tax upon the amount of taxable income, if any,
recognized by the Participant in connection with the exercise in whole or in
part of any Option or the sale of Common Stock issued to the Participant upon
exercise of the Option, all as may be required from time to time under any
federal or state tax laws and regulations. This withholding of tax shall be
made from the Company's concurrent or next payment of wages, salary, bonus or
other income to the Participant or by payment to the Company by the Participant
of the required withholding tax, as the Board may determine.
SECTION 15. Termination of Plan. The Plan shall terminate upon the
earliest to occur of (i) December 31, 2003, (ii) the date on which all shares
- --------
available for issuance under the Plan shall have been issued or (iii) the
termination of all outstanding options in accordance with Section 11. However,
the Board may in its absolute discretion terminate the Plan at any time. Should
the Plan terminate on December 31, 2003, or by the Board in its absolute
discretion, then all Option grants outstanding at that time shall continue to
have force and effect in accordance with the provisions of the documents
evidencing such grants.
SECTION 16. Amendment of Plan. The Board shall have complete and
exclusive power and authority to amend or modify the Plan in any or all
respects. However, no such amendment or modification shall adversely affect the
rights and obligations with respect to Options at the time outstanding under the
Plan unless the Participant consents to such amendment or modification. In
addition, certain amendments may require shareholder approval pursuant to
applicable laws or regulations.
As of April 26, 1999, the Plan was amended to effect the following
changes (the "1999 Restatement") (i) increase the number of shares of Common
Stock authorized for issuance over the term of the Plan by an additional
1,630,000 shares and (ii) increase the maximum number of shares any participant
may receive under the Plan from 2,000,000 shares in the calender year in which a
participant first commences service with the Company and 500,000 shares per any
other calender year, to 2,100,000 shares per calendar year. The 1999 Restatement
became effective immediately upon adoption by the Board.
The 1999 Restatement is subject to shareholder approval at the 1999
Annual Meeting, and no option grants made on the basis of the 1,630,000-share
increase shall become exercisable in whole or in part unless and until the 1999
Restatement is approved by the shareholders. Should such shareholder approval
not be obtained at the 1999 Annual Meeting, then each option grant made pursuant
to such 1,630,000-share increase shall terminate and cease to remain
outstanding, and no further option grants shall be made on the basis of that
share increase. However, the provisions of the Plan as in effect immediately
prior to the 1999 Restatement shall automatically be reinstated, and option
grants may thereafter continue to be made pursuant to the reinstated provisions
of the Plan. All option grants made prior to the 1999 Restatement shall remain
outstanding in accordance with the terms and conditions of the respective
instruments evidencing those options, and nothing in the 1999 Restatement shall
be deemed to modify or in any way affect those outstanding options. Subject to
the foregoing limitations, the Plan Administrator may make option grants under
the Plan at any time before the date fixed herein for the termination of the
Plan.
7.
<PAGE>
SECTION 17. Amendment of Options. The Board may modify an existing
Option, including the right to (a) change the exercise price, (b) accelerate the
right to exercise it, (c) extend or renew it, or (d) cancel it and issue a new
Option. However, no modification may be made to an Option that would impair the
rights of the Participant holding the Option without his consent. Whether a
modification of an existing Incentive Stock Option will be treated as the
issuance of a new Incentive Stock Option will be determined in accordance with
the rules of Code Section 424(h). Whether a modification of an existing Option
granted to an Insider will be treated as a new grant for purposes of Section 16
of the Securities Exchange Act of 1934 will be determined in accordance with
Rule 16b-3.
SECTION 18. Financial Reports. The Company shall deliver a balance
sheet and an income statement at least annually to each individual holding an
outstanding Option, unless such individual is a key Employee whose duties in
connection with the Company or Subsidiary assure such individual access to
equivalent information.
8.
<PAGE>
RULES OF THE
TRIKON TECHNOLOGIES, INC.
(UNITED KINGDOM COMPANIES)
SHARE OPTION SCHEME
-------------------
1. DEFINITIONS
-----------
1.1 In these Rules the following words and expressions shall
have the following meanings:
"Announcement Date" the date on which the annual or half-yearly
results of the Company are announced.
"Appropriate Period" the meaning given in Paragraph 15(2) of
Schedule 9.
"Approval Date" the date on which the Scheme is approved by the
Board of Inland Revenue under Schedule 9.
"Associated Company" has the same meaning in Section 416 of ICTA
1988.
"Auditors" the auditors for the time being of the Company (acting
as experts and not as arbitrators).
"Board" the Board of Directors of the Company or, except in Rule
10.4, a duly constituted committee thereof.
"Company" Trikon Technologies, Inc.
"Control" has the same meaning as in Section 840 of ICTA 1988.
"Dealing Day" a day on which the stock exchange is open for the
transaction of business.
"Date of Grant" the date on which an Option is, was, or is to be
granted under the Scheme.
"Eligible Employee" any director of any Participating Company
who is required to devote to his duties not less than 25 hours per week
(excluding meal breaks) or any employee (other than one who is a director) of
any Participating Company, provided that the director or employee is not
precluded by paragraph 8 of Schedule 9 from participating in the Scheme.
9.
<PAGE>
"ICTA 1988" The Income and Corporation Taxes Act 1988.
"Market Value" on any date the closing selling price of a Share
on the Dealing Day immediately prior to the date in question, as such price is
reported by the National Association of Securities Dealers on the Nasdaq
National Market, or if not then traded on the Nasdaq National Market, as such
price is reported by the stock exchange on which the Shares are listed. If
there is no closing selling price immediately prior to the date in question,
then Market Value shall be the closing selling price on the last preceding
date for which such quotation exists. (Provided that if the Dealing Day does
not fall within the period specified in Rule 2, on any date the market value
of a Share determined in accordance with the provisions of Part VIII of the
Taxation of Chargeable Gains Act 1992 and agreed for the purposes of the
Scheme with the Inland Revenue Shares Valuation Division on or before that
day.)
"Option" a right to acquire Shares granted (or to be granted) in
accordance with the Rules of this Scheme.
"Option Holder" an individual to whom an Option has been granted
or his personal representatives.
"Participating Company" the Company and any other company of
which the Company has Control and which is for the time being nominated by the
Board to be a Participating Company.
"Schedule 9" Schedule 9 ICTA 1988.
"Scheme" the employee share option scheme constituted and
governed by these rules as from time to time amended.
"Share" a share of Common Stock of the Company which satisfies
the conditions specified in paragraphs 10-14 inclusive of Schedule 9.
"Subscription Price" the price at which each Share subject to
an Option may be acquired on the exercise of that Option determined in
accordance with Rule 2.
"Subsisting Option" an option which has neither lapsed nor been
exercised.
1.2 Where the context so admits the singular shall include the
plural and vice versa and the masculine shall include the feminine.
1.3 Any reference in the Scheme to any enactment includes a
reference to that enactment as from time to time modified, extended or re-
enacted.
10.
<PAGE>
2. INVITATION TO APPLY FOR OPTIONS
2.1 At any time or times within a period of four weeks after an
Announcement Date or the Approval Date, and in any case not earlier than the
Approval Date nor later than the tenth anniversary thereof, the Board may in its
absolute discretion select any number of individuals who may at the intended
Date of Grant be Eligible Employees and invite them to apply for the grant of
Options to acquire Shares in the Company.
2.2 Each invitation shall specify:
i) the date (being neither earlier than 7 nor later than
14 days after the issue of the invitation) by which an
application must be made,
ii) the maximum number of Shares over which that individual
may on that occasion apply for an Option, being
determined at the absolute discretion of the Board
save that it shall not be so large that the grant of
the Option over that number of Shares would cause the
limit specified in Rule 5.1 to be exceeded, and
iii) the Subscription Price at which Shares may be acquired
on the exercise of any Option granted in response to
the application.
2.3 Each invitation shall be accompanied by an application in
such form, not inconsistent with these Rules, as the Board may determine.
2.4 i) The Subscription Price shall not be less than the
nominal value of a Share, and
ii) Subject to Rule 8, the Subscription Price shall not be
less than the Market Value of a Share on the day the
invitation to apply for an Option was issued pursuant
to Rule 2.1.
3. APPLICATIONS FOR OPTIONS
3.1 Not later than the date specified in the invitation each
Eligible Employee to whom an invitation has been issued in accordance with Rule
2 above may apply to the Board, using the application form supplied, for an
Option over a number of Shares not exceeding the number specified in the
invitation.
11.
<PAGE>
3.2 Each application shall be accompanied by a payment of
(Pounds)1 in consideration for the Option to be granted.
4. GRANT OF OPTIONS
4.1 Not later than the twenty-first day following the issue of
invitations the Board may grant to each applicant who is still an Eligible
Employee an Option over the number of Shares specified in his application.
4.2 As soon as possible after Options have been granted the
Board shall issue an option certificate in respect of each Option in such form,
not inconsistent with these Rules, as the Board may determine.
4.3 No Option may be transferred, assigned or charged and any
purported transfer, assignment or charge shall cause the Option to lapse
forthwith. Each option certificate shall carry a statement to this effect.
5. LIMITATIONS ON GRANTS
5.1 Any option granted to an Eligible Employee shall be limited
to take effect so that the aggregate Market Value of Shares subject to that
Option, when aggregated with the Market Value of shares subject to Subsisting
Options, shall not exceed (Pounds) 30,000.
5.2 For the purposes of Rule 5.1:
i) Options shall include all Options granted under this
Scheme and all options granted under any other scheme,
not being a savings-related share option scheme,
approved under Schedule 9 and established by the
Company or any Associated Company thereof.
ii) The Market Value of shares shall be calculated as at
the time the Options in relation to those shares were
granted or such earlier time as may have been agreed
in writing with the Board of Inland Revenue.
6. EXERCISE OF OPTIONS
6.1 Subject to Rule 9 below and provided always that at all
times the Option has not lapsed it may be exercised in whole or in part in five
(5) equal cumulative annual installments commencing one year after the Date of
Grant or in such other installments and/or at such other intervals as may be
specified in the invitation to apply for the grant of the Option.
12.
<PAGE>
6.2 An Option shall lapse on the latest of the following events:
i) the Option Holder ceasing to be employed by a
Participating Company; and, the earliest of:
ii) the tenth anniversary of the Date of Grant, or such
shorter period as may be specified in the invitation
to apply for the grant of the Option,
iii) the expiration of 180 days from the Option Holder's
death if his death occurs while he is employed by any
Participating Company,
iv) the expiration of 30 days following the Option Holder
ceasing to be a director or employee of any
Participating Company, other than by reason of his
death, except that if Option Holder is disabled at the
time he ceases to be a director or employee, the
expiration of one year from the date of termination,
v) unless a release has been effected under Rule 7.4, six
months after the Option has become exercisable in
accordance with Rule 7, and
vi) the Option Holder being adjudicated bankrupt.
6.3 The termination of Employment of an Option Holder by death
or otherwise shall not accelerate or otherwise affect the number of Shares with
respect to which an Option may be exercised, and the Option may only be
exercised with respect to that number of Shares which could have been purchased
under the Option had the Option been exercised by the Option Holder on the date
of such termination.
7. TAKEOVERS AND LIQUIDATIONS
7.1 If any person obtains Control of the Company as a result of
making:
i) a general offer to acquire the whole of the issued
share capital of the Company which is made on a condition such that if it is
satisfied the person making the offer will have Control of the Company, or
ii) a general offer to acquire all the shares in the
Company which are of the same class as the Shares,
13.
<PAGE>
then any Subsisting Option may subject to Rule 7.4 below be exercised within six
months of the time when the person making the offer has obtained Control of the
Company and any condition subject to which the offer is made has been satisfied.
7.2 If under Section 425 of the Companies Act 1985 or any
provisions of United States law having similar effect the Court sanctions a
compromise or arrangement proposed for the purposes of or in connection with a
scheme for the reconstruction of the Company or its amalgamation with any other
company or companies, any Subsisting Option may subject to Rule 7.4 below be
exercised within six months of the Court sanctioning the compromise or
arrangement.
7.3 If any person becomes bound or entitled to acquire shares
in the Company under Section 428 to 430 of the said Act of 1985 or Articles 421
to 423 of the said Order of 1986 or any provisions of United States law having
similar effect any Subsisting Option may subject to Rule 7.4 below be exercised
at any time when that person remains so bound or entitled.
7.4 If as a result of the events specified in Rules 7.1 or 7.2
a company has obtained Control of the Company, or if a company has become bound
or entitled as mentioned in Rule 7.3, the Option Holder may, by agreement with
that other company (the "Acquiring Company"), within the Appropriate Period,
release each Subsisting Option (the "Old Option") for an option (the "New
Option") which satisfies the conditions that it:
i) is over shares in the Acquiring Company or some other
company falling within paragraph (b) or paragraph (c)
of Paragraph 10, Schedule 9 which satisfy the
conditions specified in Paragraphs 10 to 14 inclusive
of Schedule 9.
ii) is a right to acquire such number of such shares as has
on acquisition of the New Option an aggregate Market
Value equal to the aggregate Market Value of the shares
subject to the Old Option on its release,
iii) has a subscription price per share such that the
aggregate price payable on the complete exercise equals
the aggregate price which would have been payable on
complete exercise of the Old Option, and
iv) is otherwise identical in terms to the Old Option.
The New Option shall, for all other purposes of this scheme, be
treated as having been acquired at the same time as the Old Option.
14.
<PAGE>
Where any New Options are granted pursuant to this clause 7.4, Rules
4.3, 6, 7, 8, 9, 10.1 and 10.3 to 10.6 shall, in relation the New Options, be
construed as if references to the Company and to the Shares were references to
the Acquiring Company or, as the case may be, to the other company to whose
shares the New Options relate, and to the shares in that other company, but
reference to Participating Company shall continue to be construed as if
references to the Company were references to Trikon Technologies, Inc.
7.5 If the Company passes a resolution for voluntary winding
up, any Subsisting Option may be exercised within six months of the passing of
the resolution.
7.6 For the purposes of this Rule 7, other than Rule 7.4, a
person shall be deemed to have obtained Control of a Company if he and others
acting in concert with him have together obtained Control of it.
7.7 The exercise of an Option pursuant to the preceding
provisions of this Rule 7 shall be subject to the provisions of the Rule 9
below.
7.8 Where in accordance with Rule 7.4 Subsisting Options are
released and New Options granted the New Options shall not be exercisable in
accordance with Rule 7.1, 7.2 and 7.3 above by virtue of the event by reason of
which the New Options were granted.
8. VARIATION OF SHARE CAPITAL
In the event of any variation of the share capital of the
Company by way of capitalization or rights issue, consolidation, subdivision
or reduction of capital or otherwise, the number of Shares subject to any
Option and the Subscription Price for each of those Shares shall be adjusted
in such manner as the Auditors confirm in writing to be fair and reasonable
provided that:
i) the aggregate amount payable on the exercise of an Option
in full is not increased,
ii) the Subscription Price for a Share is not reduced below its
nominal value,
iii) no adjustment shall be made without the prior approval of
the Board of Inland Revenue, and
iv) following the adjustment the Shares continue to satisfy the
conditions specified in paragraphs 10 to 14 inclusive of
Schedule 9.
15.
<PAGE>
9. MANNER OF EXERCISE OF OPTIONS
9.1 No Option may be exercised by an individual at any time
when he is precluded by paragraph 8 of Schedule 9 from participating in the
Scheme.
9.2 No Option may be exercised at any time when the shares
which may be thereby acquired do not satisfy the conditions specified in
paragraphs 10-14 of Schedule 9.
9.3 An Option shall be exercised by the Option Holder giving
notice to the Company in writing of the number of Shares in respect of which he
wishes to exercise the Option accompanied by the appropriate payment and the
relevant option certificate and shall be effective on the date of its receipt by
the Company.
9.4 Shares shall be allotted and issued or transferred pursuant
to a notice of exercise within 30 days of the date of exercise and a definitive
share certificate issued to the Option Holder in respect thereof. Save for any
rights determined by reference to a date preceding the date of allotment or
transfer, such Shares shall rank pari passu with the other shares of the same
class in issue at the date of allotment.
9.5 When an Option is exercised only in part, the balance shall
remain exercisable on the same terms as originally applied to the whole Option
and a new option certificate shall be issued accordingly by the Company as soon
as possible after the partial exercise.
10. ADMINISTRATION AND AMENDMENT
10.1 The Scheme shall be administered by the Board whose
decision on all disputes shall be final.
10.2 The Board may from time to time amend these Rules provided
that:
i) no amendment may materially affect an Option Holder as
regards an Option granted prior to the amendment being
made,
ii) no amendment may be made which would make the terms on
which Options may be granted materially more generous
without the prior approval of the Company in general
meeting, and
16.
<PAGE>
iii) no amendment shall have effect until approved by the
Board of Inland Revenue.
10.3 The cost of establishing and operating the Scheme shall be
home by the Participating Companies in such proportions as the Board shall
determine.
10.4 The Board may establish a committee consisting of not less
than three Board members to whom any or all of its powers in relation to the
Scheme may be delegated. The Board may at any time dissolve the Committee,
alter its constitution or direct the manner in which it shall act.
10.5 Any notice or other communication under or in connection
with the Scheme may be given by the Company either personally or by post and to
the Company either personally or by post to the secretary; items sent by post
shall be prepaid and shall be deemed to have been received 72 hours after
posting.
10.6 The Company shall at all times keep available sufficient
authorized and unissued Shares or shall otherwise procure that sufficient issued
Shares are available for transfer to satisfy the exercise to the full extent
still possible of all Options which have neither lapsed nor been fully
exercised, taking account of any other obligations of the Company to issue
unissued Shares.
17.
<PAGE>
LOGO
COMMON STOCK PROXY
TRIKON TECHNOLOGIES, INC.
ANNUAL MEETING OF SHAREHOLDERS, JUNE 14, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TRIKON TECHNOLOGIES, INC.
THIS PROXY IS ONLY TO BE USED TO VOTE SHARES OF COMMON STOCK, NO PAR VALUE PER
SHARE ("COMMON STOCK"), OF TRIKON TECHNOLOGIES, INC. IT IS NOT TO BE USED TO
VOTE SHARES OF SERIES H PREFERRED STOCK, NO PAR VALUE PER SHARE ("SERIES H
PREFERRED STOCK"), OF TRIKON TECHNOLOGIES, INC. HOLDERS OF SERIES H PREFERRED
STOCK SHOULD COMPLETE THE SERIES H PREFERRED STOCK PROXY INCLUDED IN THESE
MATERIALS. HOLDERS OF COMMON STOCK AND PREFERRED STOCK SHOULD COMPLETE THIS
PROXY TO VOTE THEIR SHARES OF COMMON STOCK AND THE SERIES H PREFERRED STOCK
PROXY INCLUDED IN THESE MATERIALS TO VOTE THEIR SHARES OF PREFERRED STOCK.
The undersigned revokes all previous proxies, acknowledges receipt of the
notice of Annual Meeting of Shareholders to be held on June 14, 1999 and the
proxy statement, and appoints Christopher D. Dobson and Nigel Wheeler or either
of them the proxy of the undersigned, with full power of substitution, to vote
all shares of Common Stock of Trikon Technologies, Inc. that the undersigned is
entitled to vote, either on his or her own behalf or on behalf of an entity or
entities, at the 1999 Annual Meeting of Shareholders of the Company to be held
at the Michelangelo Hotel located at 152 West 51st Street, New York, New York
10019, on June 14, 1999 at 9:00 a.m., and at any adjournment or postponement
thereof, with the same force and effect as the undersigned might or could do if
personally present thereat. The shares represented by this proxy shall be voted
in the manner set forth below.
1. TO ELECT FOUR DIRECTORS TO SERVE UNTIL THE NEXT ANNUAL MEETING OF
SHAREHOLDERS AND UNTIL THEIR SUCCESSORS HAVE BEEN ELECTED AND QUALIFIED, TO BE
ELECTED BY THE HOLDERS OF COMMON STOCK.
_____ FOR all nominees listed below (except as marked to the contrary below).
Nominees: Christopher D. Dobson
Nigel Wheeler
Richard M. Conn
Lawrence D. Lenihan, Jr.
_____ WITHHELD AUTHORITY to vote for all nominees listed below.
TO WITHHOLD AUTHORITY TO VOTE for any nominee or nominees, write the name of
such nominee or nominees below:
___________________________________
___________________________________
<PAGE>
3. TO APPROVE AN AMENDMENT TO THE COMPANY'S SEVENTH RESTATED ARTICLES OF
INCORPORATION TO EFFECTUATE A ONE-FOR-TEN REVERSE STOCK SPLIT OF ALL OUTSTANDING
SHARES OF COMMON STOCK OF THE COMPANY.
____ FOR ____ AGAINST ____ABSTAIN
4. TO APPROVE AN AMENDMENT TO THE COMPANY'S 1991 STOCK OPTION PLAN TO (i)
INCREASE THE NUMBER OF SHARES OF COMMON STOCK THAT MAY BE ISSUED UNDER SUCH PLAN
FROM 8,870,000 TO 10,500,000 SHARES AND (ii) INCREASE THE LIMIT ON THE MAXIMUM
NUMBER OF SHARES FOR WHICH ANY ONE INDIVIDUAL MAY BE GRANTED STOCK OPTIONS PER
CALENDER YEAR TO 2,100,000 SHARES OF COMMON STOCK.
____ FOR ____ AGAINST ____ABSTAIN
5. TO RATIFY THE SELECTION OF ERNST & YOUNG AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999.
____ FOR ____ AGAINST ____ABSTAIN
6. IN ACCORDANCE WITH THE DISCRETION OF THE PROXY HOLDERS, TO ACT UPON ALL
MATTERS INCIDENT TO THE CONDUCT OF THE MEETING AND UPON OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
The Board of Directors recommends a vote FOR the directors listed above in
Proposal 1 and a vote FOR all other proposals. This Proxy, when properly
executed, will be voted as specified above. If no specification is made, this
Proxy will be voted FOR the election of the directors listed above in Proposal 1
and FOR all other proposals.
MARK HERE FOR ADDRESS
CHANGE AND NOTE BELOW
Please sign your name exactly as it appears hereon. If acting as an
attorney, executor, trustee, or in other representative capacity, sign name and
title.
Signature:_________________________
Date:______________________________
Signature:_________________________
Date:______________________________
<PAGE>
LOGO
SERIES H PREFERRED STOCK PROXY
TRIKON TECHNOLOGIES, INC.
ANNUAL MEETING OF SHAREHOLDERS, JUNE 14, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TRIKON TECHNOLOGIES, INC.
THIS PROXY IS ONLY TO BE USED TO VOTE SHARES OF SERIES H PREFERRED STOCK, NO PAR
VALUE PER SHARE ("SERIES H PREFERRED STOCK"), OF TRIKON TECHNOLOGIES, INC. IT IS
NOT TO BE USED TO VOTE SHARES OF COMMON STOCK, NO PAR VALUE PER SHARE ("COMMON
STOCK"), OF TRIKON TECHNOLOGIES, INC. HOLDERS OF COMMON STOCK SHOULD COMPLETE
THE COMMON STOCK PROXY INCLUDED IN THESE MATERIALS. HOLDERS OF COMMON STOCK AND
PREFERRED STOCK SHOULD COMPLETE THIS PROXY TO VOTE THEIR SHARES OF SERIES H
PREFERRED STOCK AND THE COMMON STOCK PROXY INCLUDED IN THESE MATERIALS TO VOTE
THEIR SHARES OF COMMON STOCK.
The undersigned revokes all previous proxies, acknowledges receipt of the notice
of Annual Meeting of Shareholders to be held on June 14, 1999 and the proxy
statement, and appoints Christopher D. Dobson and Nigel Wheeler or either of
them the proxy of the undersigned, with full power of substitution, to vote all
shares of Series H Preferred Stock of Trikon Technologies, Inc. that the
undersigned is entitled to vote, either on his or her own behalf or on behalf of
an entity or entities, at the 1998 Annual Meeting of Shareholders of the Company
to be held at the Michelangelo Hotel located at 152 West 51st Street, New York,
New York 10019, on June 14, 1999 at 9:00 a.m., and at any adjournment or
postponement thereof, with the same force and effect as the undersigned might or
could do if personally present thereat. The shares represented by this proxy
shall be voted in the manner set forth below.
2. TO ELECT A DIRECTOR TO SERVE UNTIL THE NEXT ANNUAL MEETING OF SHAREHOLDERS
AND UNTIL HIS SUCCESSOR HAS BEEN ELECTED AND QUALIFIED, TO BE ELECTED BY THE
HOLDERS OF THE SERIES H PREFERRED STOCK:
________ FOR the nominee listed below.
Nominee: Stephen N. Wertheimer
________ WITHHELD AUTHORITY to vote for the nominee listed above.
6. IN ACCORDANCE WITH THE DISCRETION OF THE PROXY HOLDERS, TO ACT UPON ALL
MATTERS INCIDENT TO THE CONDUCT OF THE MEETING AND UPON OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS OF POSTPONEMENTS THEREOF.
<PAGE>
The Board of Directors recommends a vote FOR the directors listed above in
Proposal 2 and a vote FOR all other proposals. This Proxy, when properly
executed, will be voted as specified above. If no specification is made, this
Proxy will be voted FOR the election of the directors listed above in Proposal 2
and FOR all other proposals.
MARK HERE FOR ADDRESS
CHANGE AND NOTE BELOW
Please sign your name exactly as it appears hereon. If acting as an
attorney, executor, trustee, or in other representative capacity, sign name and
title.
Signature:______________________
Date:___________________________
Signature:______________________
Date:___________________________
