<PAGE> 1
As filed with the Securities and Exchange Commission on May 21, 1999
Registration No. 333-______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------------
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
-------------------------------
SI DIAMOND TECHNOLOGY, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
TEXAS 76-0273345
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
</TABLE>
3006 LONGHORN BOULEVARD
SUITE 107
AUSTIN, TEXAS 78758
(Address of Principal Executive Offices)
(Zip Code)
AMENDED AND RESTATED 1992 OUTSIDE DIRECTORS' STOCK OPTION PLAN
AMENDED AND RESTATED 1992 EMPLOYEE STOCK OPTION PLAN
AMENDED AND RESTATED 1998 DIRECTORS AND OFFICERS STOCK OPTION PLAN
(Full Title of the Plans)
<TABLE>
<S> <C>
Copies to:
DOUGLAS P. BAKER DONALD T. LOCKE, ESQ.
VICE PRESIDENT AND MATTHEW T. FRANKLIN, ESQ.
CHIEF FINANCIAL OFFICER HASKELL SLAUGHTER & YOUNG, L.L.C.
3006 LONGHORN BOULEVARD 1200 AMSOUTH/HARBERT PLAZA
AUSTIN, TEXAS 78758 1901 SIXTH AVENUE NORTH
(Name and Address of Agent for Service) BIRMINGHAM, ALABAMA 35203
(512) 339-5020 TEL: (205) 251-1000
(Telephone Number, including Area Code, of Agent for Service) FAX: (205) 324-1133
</TABLE>
-------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
Proposed Maximum Proposed Maximum
Title of Securities Amount to be Offering Price Aggregate Offering Amount of
to be Registered Registered Per Share (1) Price (1) Registration Fee (1)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.001 6,500,000 shares (2) $0.80 $5,200,000 $548.22 (2)
per share
=========================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee, as
determined in accordance with Rules 457(c) and 457(h), using the average
of the high and low sales prices per share of SI Diamond's common stock as
reported on the OTC Bulletin Board for May 17, 1999.
(2) Amount represents the total number of shares of common stock issuable
pursuant to the above referenced plans, as amended, of which 4,035,000
shares were previously registered on Registration Statement Nos. 33-82666
and 333-56457, for which registration fees have previously been paid.
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The document(s) containing the information specified in Part I of Form
S-8 will be sent or given to specified directors, officers and employees
pursuant to Rule 428(b)(1) of the Securities Act of 1933 (the "Securities Act").
The documents and the documents incorporated by reference in this Registration
Statement pursuant to Item 3 of Part II below, taken together, constitute a
prospectus that meets the requirements of Section 10(a) of the Securities Act.
Under cover of this Form S-8 is a reoffer prospectus prepared in
accordance with Part I of Form S-3 under the Securities Act. The reoffer
prospectus may be utilized for reoffering and resales of up to 4,420,903 shares
of common stock acquired by selling shareholders through participation in SI
Diamond's Amended and Restated 1992 Outside Directors' Stock Option Plan, its
Amended and Restated 1992 Employee Stock Option Plan and its Amended and
Restated 1998 Directors and Officers Stock Option Plan.
<PAGE> 3
REOFFER PROSPECTUS
SI DIAMOND TECHNOLOGY, INC.
4,420,903 SHARES OF COMMON STOCK
(PAR VALUE $.001 PER SHARE)
This Reoffer Prospectus relates to the offer and sale of shares of
common stock, par value $.001 per share, of SI Diamond Technology, Inc., which
may be offered from time to time by any or all of the selling shareholders named
in this Reoffer Prospectus for their own benefit. The shareholders acquired
these shares of common stock through the exercise of options granted to them in
connection with the (1) Amended and Restated 1992 Outside Directors' Stock
Option Plan, (2) Amended and Restated 1992 Employee Stock Option Plan or (3)
Amended and Restated 1998 Directors and Officers Stock Option Plan. The
shareholders who sell shares of common stock covered by this Reoffer Prospectus
will receive all proceeds from those sales. SI Diamond will receive no part of
the proceeds from the sale of the shares which may be offered by the selling
shareholders, but may receive funds upon the exercise of the options pursuant to
which the selling shareholders will acquire the shares covered by this Reoffer
Prospectus. Any funds received by SI Diamond will be used for working capital.
SI Diamond will bear all the expenses of this Registration Statement, and the
selling shareholders will bear all selling and other expenses involved in their
sales.
The common stock of SI Diamond is listed and traded on the OTC Bulletin
Board under the symbol "SIDT." On May 17, 1999, the last reported sale price of
SI Diamond common stock on the OTC Bulletin Board was $0.82. The address and
phone number of SI Diamond's principal executive offices are:
3006 Longhorn Boulevard, Suite 107
Austin, Texas 78758
(512) 339-5020
THESE SECURITIES ARE SUBJECT TO A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" ON PAGE 1 OF THIS REOFFER PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS REOFFER PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY SI
DIAMOND OR THE SELLING SHAREHOLDERS. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF
SI DIAMOND SINCE THE DATE HEREOF. THIS REOFFER PROSPECTUS IS NOT AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SHARES
OFFERED HEREBY IN ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATION
WOULD BE UNLAWFUL.
------------------------------
The date of this Prospectus is May 21, 1999.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
RISK FACTORS......................................................................................................1
WHERE YOU CAN FIND MORE INFORMATION..............................................................................11
DOCUMENTS INCORPORATED BY REFERENCE..............................................................................11
USE OF PROCEEDS..................................................................................................12
SELLING SHAREHOLDERS.............................................................................................12
PLAN OF DISTRIBUTION.............................................................................................13
DESCRIPTION OF SECURITIES TO BE REGISTERED.......................................................................14
LEGAL MATTERS....................................................................................................15
EXPERTS..........................................................................................................16
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES...................................................................16
</TABLE>
<PAGE> 5
RISK FACTORS
The common stock being offered hereby involves a high degree of risk.
You should carefully consider the following risk factors in addition to other
information contained in this prospectus in deciding whether to invest in our
shares of common stock.
DFE PRODUCT DEVELOPMENT IS IN ITS EARLY STAGES AND THE OUTCOME IS UNCERTAIN
Our Diamond Field Emission ("DFE") technology, and any products that
use this technology, will require significant additional development,
engineering, testing and investment prior to commercialization. Our leading
potential DFE product is a cathode, or light source, intended for use in a
display. If the cathode is successful, a display using this cathode is also a
possibility. The cathode or display may not be successfully developed. If either
of these products is developed, it may not be possible to produce these products
in significant quantities at a price that is competitive with other similar
products.
THERE ARE NO CURRENT DFE PRODUCT REVENUES
We currently receive no revenue from any products related to our DFE
technology. The only revenues that we have received related to our DFE
technology are revenues for continued research on the technology, and license
payments for use of our patents. We may never receive product revenues from the
DFE technology.
OUR SUCCESS IS DEPENDENT ON OUR PRINCIPAL PRODUCTS
Our DFE technology is an emerging technology. Our financial condition
and prospects are dependent upon market acceptance and sales of our DFE products
and our electronic billboard and related electronic display products. Additional
research and development needs to be conducted on the DFE products before
marketing and sales efforts can be commenced. Market acceptance of our products
will be dependent upon the perception within the electronics and instrumentation
industries of the quality, reliability, performance, efficiency, breadth of
application and cost effectiveness of the products. There can be no assurance
that we will be able to gain commercial market acceptance for our products or
develop other products for commercial use.
WE HAVE A HISTORY OF OPERATING LOSSES
We have a history of operating losses and have never had a profitable
year. The first quarter of 1999 was our first profitable quarter. We have
incurred operating losses as shown below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 NET LOSS
---------------------- --------
<S> <C>
1992 $ (1,630,978)
1993 $ (7,527,677)
1994 $ (7,255,420)
1995 $(14,389,856)
1996 $(13,709,006)
1997 $ (6,320,901)
1998 $ (3,557,548)
1999 (through March 31) $ 3,445,984
</TABLE>
1
<PAGE> 6
We may continue to incur additional operating losses for an extended
period of time as we continue to develop products. We do, however, expect to be
profitable in 1999. We may not be profitable beyond 1999. Wallace Sanders &
Company, Independent Auditors of the Company, have expressed substantial doubt
as to our ability to continue as a going concern based on these accumulated
losses from operations. See "Independent Auditors' Report." We have funded our
operations to date primarily through the proceeds from the sale of our debt and
equity securities. In order to continue our transition from a contract research
and development organization to an organization with ongoing operations, we
anticipate that substantial product development expenditures will continue to be
incurred.
WE HAVE FUTURE CAPITAL NEEDS AND THE SOURCE OF THAT FUNDING IS UNCERTAIN
We expect to continue to incur substantial expenses for research and
development, product testing, production, manufacturing, product marketing, and
administrative overhead. The majority of research and development expenditures
are for the development of our DFE technology and our electronic billboard
product. Some of our proposed products may not be available for commercial sale
or routine use for a period of one to two years. Commercialization of our
existing and proposed products will require additional capital in excess of our
current sources of funding. A shortage of capital may prevent us from achieving
profitability for an extended period of time. Because the timing and receipt of
revenues from the sale of products will be tied to the achievement of certain
product development, testing, manufacturing and marketing objectives, which
cannot be predicted with certainty, there may be substantial fluctuations in our
results of operations. If revenues do not increase as rapidly as anticipated, or
if product development and testing and marketing require more funding than
anticipated, we may be required to curtail our expansion and/or seek additional
financing from other sources. We may seek additional financing through the offer
of debt or equity or any combination of the two at any time.
We have developed a plan to allow us to maintain operations until we
are able to sustain ourselves on our own revenue. At the present time, we have
existing resources to sustain ourselves for a period of approximately 12 months
from the date of this Prospectus at current spending levels. We believe that we
have the ability to continue to raise short term funding, if necessary, to
enable us to continue operations until our plan can be completed. Our plan is
primarily dependent on raising funds through the licensing of our technology and
through strategic partner and debt offerings. We are also concentrating on
raising revenue by seeking customers for our electronic billboard product, which
is currently under development.
Our plan is based on current development plans, current operating
plans, the current regulatory environment, historical experience in the
development of electronic products and general economic conditions. Changes
could occur which would cause certain assumptions on which this plan is based to
be no longer valid. Our plan is primarily dependent on increasing revenues and
raising additional funds through strategic partners and additional debt
offerings. If adequate funds are not available from operations or additional
sources of financing, we may have to eliminate, or reduce substantially,
expenditures for research and development, testing and production of our
products. We may have to obtain funds through arrangements with other entities
that may require us to relinquish rights to certain of our technologies or
products. These actions could materially and adversely affect the Company.
2
<PAGE> 7
RAPID TECHNOLOGICAL CHANGE COULD RENDER OUR PRODUCTS OBSOLETE AND WE MAY NOT
REMAIN COMPETITIVE
The display industry is highly competitive and is characterized by
rapid technological change. Our existing and proposed products will compete with
other existing products and may compete against other developing technologies.
Development by others of new or improved products, processes or technologies may
reduce the size of potential markets for our products. There is no assurance
that other products, processes or technologies will not render our proposed
products obsolete or less competitive. Most of our competitors have greater
financial, managerial, distribution, and technical resources than us. We will be
required to devote substantial financial resources and effort to further
research and development. There can be no assurance that we will successfully
differentiate our products from our competitors' products, or that we will adapt
to evolving markets and technologies, develop new products, or achieve and
maintain technological advantages.
WE HAVE TECHNOLOGIES SUBJECT TO LICENSES
As a licensee of certain research technologies through various license
and assignment agreements with Microelectronics and Computer Technology
Corporation and DiaGasCrown, Inc., we have acquired rights to develop and
commercialize certain research technologies. In certain cases, agreements
require us to pay royalties on the sale of products developed from the licensed
technologies and fees on revenues from sublicensees. We also have to pay for the
costs of filing and prosecuting patent applications. Each agreement is subject
to termination by either party, upon notice, in the event of certain defaults by
the other party. The payment of such royalties may adversely affect the future
profitability of the Company.
OUR PRODUCTS MAY NOT BE ACCEPTED BY THE MARKET
Since our inception, we have focused our product development and
research and development efforts on technologies that we believe will be a
significant advance over currently available technologies. With any new
technology, there is a risk that the market may not appreciate the benefits or
recognize the potential applications of the technology. Market acceptance of our
products will depend, in part, on our ability to convince potential customers of
the advantages of such products as compared to competitive products. It will
also depend upon our ability to train manufacturers and others to use our
products. We currently have a limited marketing organization and there is no
assurance that we will be able to successfully market our proposed products even
if such products perform as anticipated.
WE HAVE LIMITED MANUFACTURING CAPACITY AND EXPERIENCE
We have no established commercial manufacturing facilities in the areas
in which we are conducting our principal research. The management team has
commercial manufacturing and marketing experience in other industries and with
other products in the display industry; however, we have no experience in
manufacturing our proposed products. At the present time, we have no intention
of establishing a manufacturing facility. We are focusing our efforts on
licensing our technology to others for use in their manufacturing processes. We
intend to contract with a qualified manufacturer for assembly services related
to our electronic billboard product, which is currently under development. To
the extent that any of our other products require manufacturing facilities, we
intend to contract with a strategic partner or other qualified manufacturer.
3
<PAGE> 8
WE MAY NOT BE ABLE TO MARKET AND SELL OUR PRODUCTS
We intend to establish and develop a sales organization to promote,
market, and sell our products. This may require significant additional
expenditures, management resources, and training time. There can be no assurance
that we will be able to establish a successful sales organization.
WE ARE DEPENDENT ON THE AVAILABILITY OF MATERIALS AND SUPPLIERS
We anticipate that the materials to be used in producing our future
products will be purchased from outside vendors. In certain circumstances, we
may be required to bear the risk of material price fluctuations. We anticipate
that the majority of raw materials used in products to be manufactured by the
Company or its strategic partners will be readily available. However, there is
no assurance that these materials will be available in the future, or if
available, will be procurable at prices favorable to the Company or its
strategic partners.
LOSS OF KEY PERSONNEL COULD ADVERSELY AFFECT OUR BUSINESS
Our future success will depend on our ability to attract and retain
highly qualified scientific, technical and managerial personnel. Competition for
such personnel is intense. We may not be able to attract and retain all
personnel necessary for the development of our business. In addition, much of
the know-how and processes developed by the Company reside in our key scientific
and technical personnel. This know-how and these processes are not readily
transferable to other scientific and technical personnel. The loss of the
services of key scientific, technical and managerial personnel could have a
material adverse effect on us.
WE MAY NOT BE ABLE TO PROVIDE SYSTEM INTEGRATION
In order to prove that our technologies work and will produce a
complete product, we must ordinarily integrate a number of highly technical and
complicated subsystems into a fully-integrated prototype. There is no assurance
that we will be able to successfully complete the development work on any of our
proposed products or ultimately develop any marketable products.
WE MAY BE UNABLE TO ENFORCE OR DEFEND OUR OWNERSHIP AND USE OF PROPRIETARY
TECHNOLOGY
Our ability to compete effectively with other companies will depend on
our ability to maintain the proprietary nature of our technology. Although we
have been awarded, have filed applications for, or have been licensed technology
under numerous patents, the degree of protection offered by these patents or the
likelihood that pending patents will be issued is uncertain. Competitors in both
the United States and foreign countries, many of which have substantially
greater resources and have made substantial investment in competing
technologies, may already have, or may apply for and obtain patents that will
prevent, limit or interfere with our ability to make and sell our products.
Competitors may also intentionally infringe on our patents. The defense and
prosecution of patent suits is both costly and time-consuming, even if the
outcome is favorable to the Company. In foreign countries, the expenses
associated with such proceedings can be prohibitive. In addition, there is an
inherent unpredictability in obtaining and enforcing patents in foreign
countries. An adverse outcome in the defense of a patent suit could subject us
to significant liabilities to third parties, require disputed rights to be
licensed from third parties or require us to cease selling our products.
Although third parties have not asserted infringement claims against us, there
is no assurance that third parties will not assert such claims in the future.
Claims that our products infringe on the proprietary rights of others are more
likely to be asserted after commencement of commercial sales incorporating our
technology.
4
<PAGE> 9
We also rely on unpatented proprietary technology, and there is no
assurance that others will not independently develop the same or similar
technology, or otherwise obtain access to our proprietary technology. To protect
our rights in these areas, we require all employees and most consultants,
advisors and collaborators to enter into confidentiality agreements. These
agreements may not provide meaningful protection for the our trade secrets,
know-how, or other proprietary information in the event of any unauthorized use,
misappropriation or disclosure of such trade secrets, know-how, or other
proprietary information. While we have attempted to protect proprietary
technology that we develop or acquire and will continue to attempt to protect
future proprietary technology through patents, copyrights and trade secrets, we
believe that our success will depend upon further innovation and technological
expertise.
OUR REVENUES HAVE BEEN DEPENDENT ON GOVERNMENT CONTRACTS IN THE PAST
In previous years, a significant part of our revenues were derived from
contracts with agencies of the United States government. Following is a summary
of those revenues in recent years:
<TABLE>
<CAPTION>
REVENUES FROM PERCENTAGE OF
YEAR ENDED DECEMBER 31 GOVERNMENT CONTRACTS TOTAL REVENUE
---------------------- -------------------- -------------
<S> <C> <C>
1992 $ 930,000 99%
1993 $1,147,000 89%
1994 $ 820,000 41%
1995 $1,009,000 33%
1996 $2,869,000 50%
1997 $ 854,000 24%
1998 $ 0 0%
</TABLE>
We currently have no significant commitment for any future government
funding and do not intend to seek any government funding unless it directly
relates to achievement of our strategic objectives. To the extent that we are
unable to obtain funding from alternate sources, this could adversely affect our
ability to continue to perform research and development on our proposed
products.
Contracts involving the United States government are, or may be,
subject to various risks including, but not limited to, the following:
- Unilateral termination for the convenience of the government
- Reduction or modification in the event of changes in the
government's requirements or budgetary constraints
- Increased or unexpected costs causing losses or reduced
profits under fixed-price contracts or unallowable costs under
cost reimbursement contracts
- Potential disclosure of our confidential information to third
parties
- The failure or inability of the prime contractor to perform
its prime contract in circumstances where we are a
subcontractor
- The failure of the government to exercise options provided for
in the contracts
5
<PAGE> 10
- The right of the government to obtain a non-exclusive, royalty
free, irrevocable world-wide license to technology developed
under contracts funded by the government if we fail to
continue to develop the technology
YEAR 2000 ISSUES MAY EXPOSE US TO LIABILITY
Some computers, software and other equipment include programming code
in which calendar year data is abbreviated to only two digits. As a result of
this design decision, some of the systems could fail to operate or fail to
produce correct results if "00" is interpreted to mean 1900 rather than 2000.
These problems are widely expected to increase in frequency and severity as the
year 2000 approaches and are commonly referred to as the "Year 2000 Problem."
The Year 2000 Problem presents us potential risks including, but not
limited to, the following:
- Products sold to customers - We have had very limited product
sales to customers and believe that all products sold to
customers are Year 2000 complaint. We believe our risk in this
area is extremely limited.
- Internal Infrastructure - We have completed an internal
evaluation and have determined that all of our internal
systems will be Year 2000 compliant well prior to the end of
1999. We believe our risk in this area is extremely limited.
- Suppliers/third party relationships - There is no assurance
that our suppliers or other third parties that we rely on will
resolve any or all Year 2000 problems with their systems on a
timely basis. Since we have no significant suppliers of
product, we believe our risk is limited in this area.
- External Infrastructure - We are dependent on other entities
such as governmental units, utilities, banks, etc., that
maintain an external infrastructure necessary for us to
operate. Although we expect that such entities are addressing
and solving their Year 2000 problems, there no assurance that
these problems will be addressed and solved on a timely basis.
WE ARE EXPOSED TO MATERIAL LITIGATION
We have been sued by a former customer of Plasmatron, one of our
subsidiaries, for damages that the former customer claims that it incurred as a
result of the alleged failure of the machine provided by Plasmatron to perform
as intended. Various trade creditors have also filed suit to collect unpaid
trade amounts due. We expect these items to be resolved with no material impact
on our financial statements. If we were to become subject to a judgment that
exceeds our ability to pay, that judgment could have a material impact on our
financial condition and could affect our ability to continue in existence.
OFFICERS, DIRECTORS AND PRINCIPAL SHAREHOLDERS OWN OR CONTROL A LARGE NUMBER OF
SHARES
Officers, directors and principal shareholders of SI Diamond own, or
have the power to vote, in the aggregate, approximately 10.2% of the voting
stock of SI Diamond on an "as converted" basis. Due to the relatively large
number of shares owned by these shareholders and certain provisions of SI
Diamond's Amended and Restated Articles of Incorporation (the "Restated
Articles") and Bylaws, it may be difficult for
6
<PAGE> 11
other shareholders to cause a change in control of SI Diamond or effect other
fundamental corporate transactions if officers, directors and principal
shareholders were to act as a group.
THE MARKET FOR SHARES OF SI DIAMOND COMMON STOCK IS VOLATILE
The market price of the shares of SI Diamond common stock, like that of
the common stock of many emerging technology companies, has fluctuated
significantly in recent years and will likely continue to fluctuate in the
future. The prices of such securities currently rise and are expected to
continue to rise rapidly in response to certain events, such as announcements
concerning product developments, licenses and patents, although the outcome of
such events may not be fully determined. Similarly, prices of such securities
may fall rapidly if unfavorable results are encountered in product development
or market acceptance. In the event that SI Diamond achieves earnings from the
sale of products, securities analysts may begin predicting quarterly earnings.
The failure of our earnings to meet analysts' expectations could result in a
significant rapid decline in the market price of our common stock. In addition,
the stock market has experienced and continues to experience extreme price and
volume fluctuations which have affected the market price of the equity
securities of many technology companies and which have often been unrelated to
the operating performance of those companies. Such broad market fluctuations, as
well as general economic and political conditions, may adversely affect the
market price of the common stock.
SHARES OF OUR SERIES G PREFERRED STOCK MAY BE CONVERTED AT A DISCOUNT INTO
SHARES OF SI DIAMOND COMMON STOCK
Shares of the Company's Series G preferred stock may be convertible
into SI Diamond common stock at prices which are at a discount to prevailing
market prices at the time of conversion into SI Diamond's common stock. The
Series G preferred stock is convertible into that number of shares of the
Company's common stock determined by dividing the original issue price of the
Series G preferred stock, plus an amount equal to ten percent (10%) of the issue
price per annum, by $1.00. As of the date of this Prospectus, the price of the
Company's common stock was below $1.00. Sales or offers to sell shares of common
stock converted from this series of the Company's preferred stock could
adversely affect the price of and market for SI Diamond's common stock.
SHARES OF OUR COMMON STOCK ARE ELIGIBLE FOR FUTURE SALE
As of May 17, 1999, there were 50,865,739 shares of SI Diamond common
stock outstanding, of which 43,604,154 shares of such common stock were freely
tradeable without restriction or further registration under the Securities Act
by persons other than "affiliates" of SI Diamond. As of that date, the remaining
shares of SI Diamond common stock were deemed "restricted securities," as
defined in Rule 144 under the Securities Act, and may not be resold in the
absence of registration under the Securities Act or pursuant to an exemption
from such registration, including exemptions provided by Rule 144 under the
Securities Act. Under Rule 144, persons who have held securities for a period of
at least one year may sell a limited amount of such securities without
registration under the Securities Act. Rule 144 also permits, under certain
circumstances, persons who are not affiliates of SI Diamond, to sell their
restricted securities without quantity limitations once they have completed a
two-year holding period.
In addition to the shares of common stock which are outstanding as of
May 17, 1999, 5,873,988 shares of common stock have been reserved for issuance
pursuant to our stock option plans. Approximately 11,404,792 shares of common
stock have also been reserved for issuance upon the exercise of warrants that
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<PAGE> 12
have been issued by SI Diamond and 1,829,909 shares of common stock have been
reserved for issuance upon conversion of the Company's Series G preferred stock.
No prediction can be made as to the effect, if any, that future sales,
or the availability of shares of SI Diamond common stock for future sales, will
have on the market price prevailing from time to time. Sales of substantial
amounts of SI Diamond common stock by SI Diamond or by shareholders who hold
"restricted securities," or the perception that such sales may occur, could
adversely affect prevailing market prices for the common stock.
PRIOR AND SUPERIOR RIGHTS OF OTHER CLASSES OF CAPITAL STOCK
The rights of holders of the common stock to receive dividends or other
payments with respect thereto are subject to any prior and superior rights of
holders of SI Diamond's preferred stock. As of May 17, 1999, SI Diamond had
issued and outstanding 1,550 shares of its Series G preferred stock. No current
series of SI Diamond's preferred stock has rights that are prior and superior to
the common stock with respect to dividends. Additionally, the holders of the
Series G preferred stock are entitled to a liquidation preference over the
holders of the common stock. The Board of Directors, however, has the authority
to provide for the issuance of additional shares of preferred stock in one or
more additional series and such shares may, in the Board's discretion, have
prior and superior rights to receive dividends or other payments with respect
thereto. In light of its future capital requirements, SI Diamond could issue
shares of preferred stock at any time having such prior and superior rights. See
"Description of Securities to be Registered".
A POSSIBLE ADVERSE EFFECT ON THE PRICE OF OUR COMMON STOCK COULD RESULT FROM
SALES BY SELLING SHAREHOLDERS IN THE MARKET
Sales of or offers to sell substantial blocks of common stock currently
held by certain shareholders, or the perception by investors, investment
professionals or securities analysts of the possibility that such sales may
occur could adversely affect the price of and market for the common stock.
OTHER CLASSES OF CAPITAL STOCK HAVE PRIOR AND SUPERIOR RIGHTS
The rights of holders of the common stock to receive dividends or other
payments with respect thereto are subject to any prior and superior rights of
holders of SI Diamond's preferred stock. As of May 17, 1999, SI Diamond had
issued and outstanding 1,550 shares of its Series G preferred stock.
Additionally, the holders of the Series G preferred stock are entitled to a
liquidation preference over the holders of the common stock. The Board of
Directors, however, has the authority to provide for the issuance of additional
shares of preferred stock in one or more additional series and such shares may,
in the Board's discretion, have prior and superior rights to receive dividends
or other payments with respect thereto. In light of its future capital
requirements, SI Diamond could issue shares of preferred stock at any time
having such prior and superior rights. See "Description of Securities to be
Registered".
WE HAVE NEVER PAID DIVIDENDS
SI Diamond has never paid cash dividends on its equity securities and
does not intend to pay cash dividends in the foreseeable future. To the extent
SI Diamond has earnings in the future, it intends to reinvest such earnings in
its business operations.
8
<PAGE> 13
OUR RESTATED ARTICLES OF INCORPORATION AND BYLAWS MAY INHIBIT A TAKEOVER
SI Diamond's Restated Articles and Bylaws contain a number of
provisions which could make its acquisition, by means of an unsolicited tender
offer, a proxy contest or otherwise, more difficult, including the following:
- the Board is authorized to issue series of preferred stock
that could, depending on the terms of such series, impede the
completion of a merger, tender offer or other takeover
attempt;
- the Board of Directors is divided into three classes of
directors, with the result that approximately one-third of the
Board of Directors are elected each year;
- except in limited circumstances, no shares of SI Diamond's
preferred stock may be issued or sold to any officer or
director of SI Diamond or any shareholder owning more than
five percent (5%) of SI Diamond's common stock without the
affirmative vote of a majority of the disinterested
shareholders of SI Diamond; and
OUR RESTATED ARTICLES AND BYLAWS LIMIT OUR DIRECTORS' LIABILITY AND PROVIDE FOR
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Restated Articles provide that a director of the Company
will only be liable to the Company for the following:
- breaches of his duty of loyalty to the Company and its
shareholders,
- acts or omissions not in good faith or which constitute a
breach of duty of a director of the Company or involve
intentional misconduct or a knowing violation of law,
- transactions from which a director receives an improper
benefit, whether or not the benefit resulted from an action
taken within the scope of the director's office,
- acts or omissions for which liability is specifically provided
by statute, and
- acts relating to unlawful stock purchases or payments of
dividends.
Thus, the Company may be prevented from recovering damages for certain alleged
errors or omissions by its directors.
The Bylaws also provide that, under certain circumstances, the Company
will indemnify its officers and directors for liabilities incurred in connection
with their good faith acts for the Company. Such an indemnification payment
might deplete the Company's assets. While Texas law permits a shareholder to
bring a derivative action on behalf of a corporation, the law relating to the
remedies available to corporate shareholders is constantly changing.
Shareholders who have questions concerning the fiduciary obligations of the
officers and directors of the Company should consult with independent legal
counsel. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
9
<PAGE> 14
THERE ARE RISKS ASSOCIATED WITH FORWARD LOOKING STATEMENTS
This prospectus contains some forward-looking statements.
Forward-looking statements give our current expectations or forecasts of future
events. You can identify these statements by the fact that they do not relate
strictly to historical or current facts. They use words such as "anticipate",
"believe", "expect", "estimate", "project", "intend", "plan", and other words
and terms of similar meaning in connection with any discussion of future
operating or financial performance. In particular, these include statements
relating to future actions, prospective products or product approvals, future
performance or results of current and anticipated products, sales efforts,
expenses, the outcome of contingencies such as legal proceedings, and financial
results. From time to time, we also may provide oral or written forward-looking
statements in other materials we release to the public.
Any or all of our forward-looking statements in this report and in any
other public statements we make may turn out to be wrong. They can be affected
by inaccurate assumptions we might make or by known or unknown risks or
uncertainties. Many factors mentioned in the following discussion - for example,
product development, competition, and the availability of funding - will be
important in determining future results. Consequently, no forward-looking
statement can be guaranteed. Actual future results may vary materially.
We undertake no obligation to publicly update any forward-looking
statements, whether as the result of new information, future events, or
otherwise. You are advised, however, to consult any further disclosures we make
on related subjects in our 10-QSB, 8-K, and 10-KSB reports to the SEC. Also note
that we provide the following cautionary discussion of risks, uncertainties, and
possibly inaccurate assumptions relevant to our business. These are factors that
we think could cause our actual results to differ materially from expected and
historical results. Other factors besides those listed here could also adversely
affect the Company. This discussion is provided as permitted by the Private
Securities Litigation Reform Act of 1995.
10
<PAGE> 15
WHERE YOU CAN FIND MORE INFORMATION
SI Diamond has filed with the Securities and Exchange Commission a
Registration Statement on Form S-8 under the Securities Act with respect to the
securities offered. This Prospectus does not contain all the information set
forth in the Registration Statement and the exhibits and schedules thereto, to
which reference is made. Statements made in this Prospectus as to the contents
of any contract, agreement or other document referred to are not necessarily
complete; with respect to each such contract, agreement or other document filed
as an exhibit to the Registration Statement, reference is made to the exhibit
for a more complete description of the matter involved, and each such statement
shall be deemed qualified in its entirety by such reference.
SI Diamond is subject to the informational requirements of the
Securities Exchange Act of 1934, and in accordance with the Exchange Act files
reports, proxy statements and other information with the SEC. Materials filed
with the SEC by SI Diamond can be inspected and copied at the public reference
facilities maintained by the SEC at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20459; and at the Regional Offices of the SEC at the
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60606-2511; and Seven World Trade Center, New York, new York 10048. You
may obtain information on the operation of the public reference facilities by
calling the SEC at 1-800-SEC-0330. Copies of such material can also be obtained
at the prescribed rates from the Public Reference Section of the SEC at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. The SEC also
maintains a Web site that contains reports, proxy statements, and other
information regarding registrants that file electronically with the SEC. The
address of such site is http://www.sec.gov.
SI Diamond's common stock is included in the OTC Bulletin Board under
the symbol "SIDT."
DOCUMENTS INCORPORATED BY REFERENCE
The Commission allows us to "incorporate" into this Prospectus
information we file with the Commission in other documents. This means we can
disclose important information to you by referring to other documents which we
have filed and contain that information. The following documents, which have
been filed by the Company with the Commission pursuant to the Exchange Act (File
No. 1-11602), are incorporated by reference in this prospectus and shall be
deemed to be a part hereof:
(1) The Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1998.
(2) The Company's Quarterly Report on Form 10-QSB for the
quarterly period ended March 31, 1999.
(3) The Company's Current Report on Form 8-K dated as of
February 4, 1999.
(4) The Company's Current Report on Form 8-K dated as of
April 16, 1999.
(5) The description of the Company's common stock which
is contained in the Company's Registration Statement
on Form 8-A filed on November 19, 1992, pursuant to
Section 12 of the Securities Exchange Act of 1934,
including any amendment or report filed for the
purpose of updating such description.
11
<PAGE> 16
We incorporate by reference all future documents we may file with the
Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 until we terminate the offering of these shares. The information
that we incorporate by reference may include documents filed after the date of
this Prospectus which update and supersede the information you read in this
Prospectus.
You may request a copy of the documents incorporated by reference at no
cost. Requests for copies should be directed in writing or by telephone to:
SI Diamond Technology, Inc.
3006 Longhorn Boulevard, Suite 107
Austin, Texas 78758
Attention: Corporate Secretary
(Telephone: (512) 339-5020)
USE OF PROCEEDS
All of the shares of common stock are being offered in this Prospectus
by the selling shareholders. SI Diamond will not receive any proceeds from sales
of common stock by the selling shareholders. Any funds received by SI Diamond
will be used for working capital.
SELLING SHAREHOLDERS
The shares of common stock offered in this Prospectus are being
registered for re-offers and re-sales by selling shareholders of SI Diamond who
may acquire such shares pursuant to the exercise of options granted or to be
granted under the Amended and Restated Outside Directors' Stock Option Plan, the
Amended and Restated 1992 Employee Stock Option Plan and the Amended and
Restated 1998 Directors and Officers Stock Option Plan (collectively, the
"Plans"). The selling shareholders named below may resell all, a portion, or
none of the shares that they acquire or may acquire pursuant to the exercise of
options under the Plans or other Option.
Key employees deemed to be "affiliates" of SI Diamond who acquired
registered common stock under the Plans may be added to the selling shareholders
listed below from time to time, either by means of a post-effective amendment
hereto or by use of a prospectus supplement filed pursuant to Rule 424(b) under
the Securities Act. An "affiliate" is defined in Rule 405 under the Securities
Act as a "person who directly, or indirectly, through one or more
intermediaries, controls or is controlled by, or is under common control with,"
SI Diamond.
The following table sets forth the name of each selling shareholder,
the nature of his position, office, or other material relationship with SI
Diamond within the past three years, the number of shares of common stock known
by SI Diamond to be beneficially owned by each selling shareholder as of May 17,
1999, the number of shares covered by this Prospectus and the number of shares
and (if one percent or more) the percentage of the class to be owned by each
selling shareholder if such selling shareholder were to sell all of the shares
of common stock covered by this Prospectus:
12
<PAGE> 17
<TABLE>
<CAPTION>
Number of Shares Number of Shares Number of Shares
Selling Shareholder Beneficially Owned Covered by this to be Owned After Percentage
Prior to Offering (1) Prospectus Offering (2)
<S> <C> <C> <C> <C>
Zvi Yaniv 1,331,000 1,320,000 11,000 *
Director, President and
Chief Operating Officer
Marc Eller 1,343,796 1,030,000 313,796 *
Chairman and Chief
Executive Officer
Doug Baker 692,000 670,000 22,000 *
Chief Financial Officer and
Vice President
Ron Berman 1,155,222 344,383 810,839 1.58%
Director
Igor Leontiev 556,520 306,520 250,000 *
Director
Phil Shaffer 542,702 430,000 112,702 *
Director
Dave Sincox 441,213 320,000 121,213 *
Director
TOTALS 6,062,453 4,420,903 1,641,550 2.97%
</TABLE>
- --------------------
*Amount Represents Less Than 1%
(1) Includes shares of SI Diamond common stock underlying options granted
to selling shareholders under the Plans whether or not exercisable as
of, or within 60 days of, May 17, 1999.
(2) Assuming all shares that may be offered hereby are sold and based on
50,865,739 shares outstanding at May 17, 1999.
PLAN OF DISTRIBUTION
Any shares of common stock sold pursuant to this Prospectus will be
sold by the selling shareholders or their allowed transferees pursuant to the
rules of the Securities and Exchange Commission for their own account and they
will receive all proceeds from any such sales. SI Diamond will not receive any
of the proceeds from the sale of shares which may be offered pursuant to this
Prospectus. However, SI Diamond may receive funds upon the exercise of the
options pursuant to which the selling shareholders will acquire the shares
covered by this Prospectus, which funds, if any, will be used for working
capital. The selling shareholders may sell shares of common stock in any of the
following ways: (1) through dealers; (2) through agents; or (3) directly to one
or more purchasers. The distribution of the shares of common stock may be
effected from time to time in one or more transactions (which may include block
transactions) on the OTC Bulletin Board (whether pursuant to Rule 144 under the
Securities Act or otherwise). Any such transaction may be effected at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, at negotiated prices or at fixed prices. If shares of common
stock are sold through brokers, the selling shareholders may pay customary
brokerage commission and charges. The selling shareholders may effect such
13
<PAGE> 18
transactions by selling shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the selling shareholders and/or the purchasers of shares for
whom such broker-dealers may act as agent or to whom they may sell as principal,
or both (which compensation as to a particular broker-dealer might be in excess
of customary commissions). The selling shareholders and any broker-dealers or
agents that act in connection with the sale of the shares pursuant to this
Prospectus might be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act, and any discounts, commissions or concessions
received by any such broker-dealer or agent and any profit on the resale of
shares as principals might be deemed to be underwriting discounts and
commissions, under the Securities Act.
DESCRIPTION OF SECURITIES TO BE REGISTERED
The authorized capital stock of SI Diamond consists of 120,000,000
shares of common stock, par value $.001 per share, and 2,000,000 shares of
preferred stock, par value $1 per share. The preferred stock may be issued in
series and currently consists of the Series G preferred stock, of which 1,550
shares are issued and outstanding.
The holders of common stock are entitled to one vote per share, voting
with the holders of any other class of stock entitled to vote, without regard to
class, on all matters to be voted on by the shareholders, including the election
of directors. All issued and outstanding shares of common stock are fully paid
and nonassessable. The common stock is currently listed and traded on the OTC
Bulletin Board.
Subject to any prior and superior rights of the preferred stock, the
holders of common stock are entitled to receive dividends when, and if, declared
by the Board of Directors from funds legally available. Currently, no series of
preferred stock has rights that are prior and superior to the common stock with
respect to dividends.
In the event of any liquidation, dissolution or winding up of the
affairs of SI Diamond, the holders of the common stock are entitled to receive,
pro rata, any assets of SI Diamond remaining after payment has been made in full
to the holders of any series of preferred stock with a liquidation preference.
Currently, only the holders of Series G preferred stock are entitled to a
liquidation preference.
The preferred stock may be issued from time to time in one or more
series as may be established and designated by the Board of Directors by
resolution. The voting powers, preferences and relative, participating, optional
and other special rights and the qualifications, limitations or restrictions of
any series of preferred stock shall be as is stated in the resolution or
resolutions of the Board of Directors that provides for the designation of the
series. With the exception of shares issued pursuant to any duly adopted stock
option plan of SI Diamond, no shares of the preferred stock may be issued to any
officer or director of SI Diamond or any shareholder who directly or indirectly
owns greater than five percent (5%)of the issued and outstanding voting stock of
SI Diamond or any affiliate of such persons, without the affirmative vote of a
majority in interest of the disinterested shareholders of SI Diamond. Under the
Texas Business Corporation Act, each series of preferred stock is entitled to
vote as a class with respect to a proposed amendment to SI Diamond's Amended and
Restated Articles of Incorporation in certain circumstances.
14
<PAGE> 19
There are 3,000 shares of Series G preferred stock currently authorized
for issuance, of which 1,550 shares are issued and outstanding. Subject to
adjustment in certain circumstances, each share of Series G preferred stock is
convertible into that number of shares of common stock determined by dividing
the original issue price of the Series G preferred stock plus, an amount equal
to ten percent (10%) of the issue price per annum, by $1.00.
Except as provided by law, the holders of Series G preferred stock
shall be entitled to a number of votes equal to the number of shares of common
stock into which their respective shares of Series G preferred stock are then
convertible using the record date for the taking of such vote of shareholders as
the date as of which the conversion price is calculated. Holders of Series G
preferred stock shall be entitled to notice of all shareholders meetings or
written consents with respect to which they would be entitled to vote.
In the event of any liquidation, dissolution or winding-up of the
Company, either voluntary or involuntary, the holders of shares of the Series G
preferred stock then issued and outstanding shall be entitled to be paid out of
the assets of the Company available for distribution to its shareholders,
whether from capital, surplus or earnings, before any payment shall be made to
the holders of shares of the common stock, an amount per share equal to the sum
of (i) the stated value and (ii) an amount equal to ten percent (10%) of the
stated value multiplied by the fraction N/365, where N equals the number of days
elapsed since the issue date of the Series G preferred stock. If, upon any
liquidation of the Company, the assets of the Company available for distribution
to its shareholders shall be insufficient to pay the holders of shares of the
Series G preferred stock and the holders of any other series of preferred stock
with a liquidation preference equal to the liquidation preference of the Series
G preferred stock the full amounts to which they shall respectively be entitled,
the holders of shares of the Series G preferred stock and the holders of any
other series of preferred stock with liquidation preference equal to the
liquidation preference of the Series G preferred stock shall receive all of the
assets of the Company available for distribution and each such holder of shares
of the Series G preferred stock and the holders of any other series of preferred
stock with a liquidation preference equal to the liquidation preference of the
Series G preferred stock shall share ratably in any distribution in accordance
with the amounts due such shareholders. After payment shall have been made to
the holders of shares of the Series G preferred stock of the full amount to
which they shall be entitled, as aforesaid, the holders of shares of the Series
G preferred stock shall be entitled to no further distributions thereon and the
holders of shares of the common stock and of shares of any other series of stock
of the Company shall be entitled to share, according to their respective rights
and preferences, in all remaining assets of the Company available for
distribution to its shareholders.
As of May 17, 1999, there were 50,865,739 shares of SI Diamond common
stock outstanding. In addition, 5,873,988 shares of common stock have been
reserved for issuance pursuant to SI Diamond's stock option plans; 11,404,792
shares of common stock have also been reserved for issuance upon the exercise of
warrants that have been issued by SI Diamond; and 1,829,909 shares of common
stock have been reserved for issuance upon conversion of the Series G preferred
stock.
LEGAL MATTERS
The validity of the common stock offered pursuant to this Prospectus
will be passed upon for SI Diamond by Haskell Slaughter & Young, L.L.C., 1200
AmSouth/Harbert Plaza, 1901 Sixth Avenue North, Birmingham, Alabama 35203.
15
<PAGE> 20
EXPERTS
The Consolidated Balance Sheets as of December 31, 1998 and 1997 and
the Consolidated Statements of Operations, Shareholders' Equity <Deficit> and
cash flows for the years then ended, incorporated by reference in this
prospectus, have been incorporated herein in reliance on the report, which
includes an explanatory paragraph regarding SI Diamond's ability to continue as
a going concern, of Wallace Sanders & Company, independent auditors, given on
the authority of that firm as experts in accounting and auditing.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Article 2.02A(16) and Article 2.01-1 of the Texas Business Corporation
Act and Article VIII of SI Diamond's Bylaws provide SI Diamond with broad powers
and authority to indemnify its directors and officers and to purchase and
maintain insurance for such purposes. Pursuant to such statutory and Bylaw
provisions, SI Diamond has purchased insurance against certain costs of
indemnification that may be incurred by it and its officers and directors.
Additionally, Article Seven(C) of SI Diamond's Amended and Restated
Articles, provides that a director of SI Diamond is not liable to SI Diamond or
its shareholders for monetary damages for any act or omission in the director's
capacity as director, except that Article Seven(C) does not eliminate or limit
the liability of a director for:
- breaches of his duty of loyalty to SI Diamond and its
shareholders
- acts or omissions not in good faith or which constitute a
breach of duty of a director of SI Diamond or involve
intentional misconduct or a knowing violation of law
- transactions from which a director receives an improper
benefit, whether or not the benefit resulted from an action
taken within the scope of the director's office
- acts or omissions for which liability is specifically provided
by statute
- acts relating to unlawful stock purchases or payments of
dividends.
Article Seven(C) also provides that any subsequent amendments to Texas
statutes that further limit the liability of directors will inure to the benefit
of the directors, without any further action by shareholders. Any repeal or
modification of Article Seven(C) shall not adversely affect any right of
protection of a director of SI Diamond existing at the time of the repeal or
modification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers or persons
controlling SI Diamond pursuant to the foregoing provisions and agreements, SI
Diamond has been informed that, in the opinion of the SEC, such indemnification
is against public policy as expressed in the Securities Act and is therefore
unenforceable.
The foregoing discussion is not intended to be exhaustive and is
qualified in its entirety by each of such documents and such statutes.
16
<PAGE> 21
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
SI Diamond Technology, Inc., a Texas corporation, incorporates by
reference into this Registration Statement on Form S-8, the following documents
which have previously been filed by SI Diamond with the Securities and Exchange
Commission:
(a) SI Diamond's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1998.
(b) SI Diamond's Quarterly Report on Form 10-QSB for the
quarterly period ended March 31, 1999.
(c) SI Diamond's Current Report on Form 8-K dated February 4,
1999.
(d) SI Diamond's Current Report on Form 8-K dated April 16,
1999.
(e) The description of SI Diamond's common stock which is
contained in SI Diamond's Registration Statement on Form 8-A filed on
November 19, 1992, pursuant to Section 12 of the Securities Exchange
Act of 1934, including any amendment or report filed for the purpose of
updating such description.
All documents subsequently filed by SI Diamond pursuant to Section
13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining sold, shall be deemed to
be incorporated by reference into and to be a part of this Registration
Statement from the date of filing of such documents.
Any statements contained in a document incorporated by reference in
this Registration Statement shall be deemed to be modified or superseded for
purposes of this Registration Statement to the extent that a statement contained
in this Registration Statement (or in any other subsequently filed document
which is also incorporated by reference in this Registration Statement) modifies
or supersedes such statement. Any statement so modified or superseded shall not
be deemed to constitute a part of this registration statement except as so
modified or superseded.
SI Diamond undertakes to provide without charge to each person to whom
a copy of this Prospectus has been delivered, upon written or oral request of
any such person, a copy of any or all of the documents referred to above that
have been incorporated by reference in this Prospectus (not including exhibits
to the documents that are incorporated by reference unless such exhibits are
specifically incorporated by reference into such documents). Requests for such
copies should be directed in writing or by telephone to SI Diamond Technology,
Inc., 3006 Longhorn Boulevard, Suite 107, Austin, Texas 78758, Attention:
Corporate Secretary (Telephone: (512) 339-5020).
II-1
<PAGE> 22
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 2.02A(16) and Article 2.02-1 of the Texas Business Corporation
Act and Article VIII of SI Diamond's Bylaws provide SI Diamond with broad powers
and authority to indemnify its directors and officers and to purchase and
maintain insurance for such purposes. Pursuant to such statutory and Bylaw
provisions, SI Diamond has purchased insurance against certain costs of
indemnification that may be incurred by it and its officers and directors. See
"Item 9. Undertakings" for a description of the Securities and Exchange
Commission's position regarding such indemnification provisions.
Additionally, Article Seven(C) of SI Diamond's Amended and Restated
Articles, provides that a director of SI Diamond is not liable to SI Diamond or
its shareholders for monetary damages for any act or omission in the director's
capacity as director, except that Article Seven(C) does not eliminate or limit
the liability of a director for
- breaches of his duty of loyalty to SI Diamond and its
shareholders
- acts or omissions not in good faith or which constitute a
breach of duty of a director of SI Diamond or involve
intentional misconduct or a knowing violation of law
- transactions from which a director receives an improper
benefit, whether or not the benefit resulted from an action
taken within the scope of the director's office
- acts or omissions for which liability is specifically provided
by statute
- acts relating to unlawful stock purchases or payments or
dividends
Article Seven(C) also provides that any subsequent amendments to Texas
statutes that further limit the liability of directors will inure to the benefit
of the directors, without any further action by shareholders. Any repeal or
modification of Article Seven(C) shall not adversely affect any right of
protection of a director of SI Diamond existing at the time of the repeal or
modification.
The foregoing discussion is not intended to be exhaustive and is
qualified in its entirety by each of such documents and such statutes.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
II-2
<PAGE> 23
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
-------------- ----------------------
<S> <C>
4.1 Amended and Restated 1992 Outside Directors' Stock Option Plan.
4.2 Amended and Restated 1992 Employee Stock Option Plan.
4.3 Amended and Restated 1998 Directors and Officers Stock Option Plan.
5.1 Opinion of Haskell Slaughter & Young, L.L.C. as to the legality of
the shares of SI Diamond Technology, Inc., being registered.
23.1 Consent of Wallace Sanders & Company
23.2 Consent of Haskell Slaughter & Young L.L.C. (contained in the
opinion of counsel filed as Exhibit 5.1 to this Registration
Statement).
24 Power of Attorney (see Signature Page)
</TABLE>
ITEM 9. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To file a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions or, otherwise, the Registrant has
II-3
<PAGE> 24
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-4
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Birmingham, State of Alabama, on May 21, 1999.
SI DIAMOND TECHNOLOGY, INC.
By /s/ Marc W. Eller
---------------------------------------
Marc W. Eller
Chairman of the Board and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Marc W. Eller and Douglas P. Baker, and
each or either of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement and any subsequent
registration statements relating to the offering to which this Registration
Statement relates, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully and to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or either of them, or their or his
substitutes or substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Marc W. Eller Chairman of the Board
- -------------------------- and Chief Executive Officer
Marc W. Eller (Principal Executive Officer) May 20, 1999
/s/ Dr. Zvi Yaniv
- -------------------------- President, Chief Operating
Dr. Zvi Yaniv Officer and Director May 20, 1999
/s/ Douglas P. Baker Vice President and Chief Financial Officer
- -------------------------- (Principal Financial Officer
Douglas P. Baker and Principal Accounting Officer) May 20, 1999
/s/ Ronald J. Berman
- -------------------------- Director May 20, 1999
Ronald J. Berman
</TABLE>
<PAGE> 26
<TABLE>
<S> <C> <C>
Philip C. Shaffer
- -------------------------- Director May 20, 1999
Philip C. Shaffer
David R. Sincox
- -------------------------- Director May 20, 1999
David R. Sincox
- -------------------------- Director May __, 1999
Dr. Igor Leontiev
</TABLE>
<PAGE> 27
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description of Exhibit Page Number
------ ---------------------- -----------
<S> <C> <C>
4.1 Amended and Restated 1992 Outside Directors' Stock Option Plan
4.2 Amended and Restated 1992 Employee Stock Option Plan
4.3 Amended and Restated 1998 Directors and Officers Stock Option Plan
5.1 Opinion of Haskell Slaughter & Young, L.L.C. as to the legality of the shares of
SI Diamond Technology, Inc. being registered
23.1 Consent of Wallace Sanders & Company
23.2 Consent of Haskell Slaughter & Young, L.L.C. (contained in the opinion of
counsel filed on Exhibit 5.1 to this Registration Statement)
24 Power of Attorney (see Signature Page)
</TABLE>
<PAGE> 1
EXHIBIT 4.1
SI DIAMOND TECHNOLOGY, INC.
AMENDED AND RESTATED
1992 OUTSIDE DIRECTORS' STOCK OPTION PLAN
1. DEFINITIONS. As used herein, the following terms have the
meanings hereinafter set forth unless the context clearly indicates to the
contrary:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Company" shall mean SI Diamond Technology, Inc.
(c) "Common Stock" shall mean the common stock, par value $.001
per share, of the Company or, in the event that the outstanding shares of
Common Stock are hereafter changed into or exchanged for different stock or
securities of the Company or some other corporation, such other stock or
securities.
(d) "Date of Grant" shall mean the last Monday of each July.
(e) "Fair Market Value" of a share of Common Stock on a
particular date shall be deemed to mean:
(i) if the shares of Common Stock are listed on a
national securities exchange, the average of the highest and lowest
sales price per share of the Common Stock on the principal such
national securities exchange on that date, or if there shall have been
no such sale so reported on that date, on the last preceding date on
which such a sale was so reported;
(ii) if the shares of Common Stock are not so listed
but are quoted on the NASDAQ National Market System, the average of
the highest and lowest sales price per share of Common Stock on the
NASDAQ National Market System on that date, or, if there shall have
been no such sale so reported on that date, on the last preceding date
on which such a sale was so reported;
(iii) if the Common Stock is not so listed or quoted,
the average of the closing bid and asked price on that date, or, if
there are no quotations available for such date, on the last preceding
date on which such quotations shall be available, as reported by
NASDAQ, or
(iv) in all other events, "Fair Market Value" shall be
determined by the Board in good faith.
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<PAGE> 2
(f) "Effective Date of the Plan" shall mean March 16, 1992.
(g) "Eligible Director" shall mean any Director of the Company
who is not a salaried employee of or exclusive, full-time consultant to the
Company or its subsidiaries.
(h) "Option" shall mean an Eligible Director's stock option to
purchase stock granted pursuant to the provisions of Article 5 hereof.
(i) "Optionee" shall mean an Eligible Director to whom an
Option has been granted hereunder.
(j) "Option Price" shall mean the price at which an Optionee
may purchase a share of Common Stock under a Stock Option Agreement.
(k) "Plan" shall mean the SI Diamond Technology, Inc. Amended
and Restated 1992 Outside Directors' Stock Option Plan, as hereby amended, the
terms of which are set forth herein.
(l) "Stock Option Agreement" shall mean an agreement between
the Company and the Optionee under which the Optionee may purchase Common Stock
in accordance with the Plan.
(m) "Subsidiary" of the Company shall mean any corporation of
which the Company directly or indirectly owns shares representing more than 50%
of the voting power of all classes or series of capital stock of such
corporation which have the right to vote generally on matters submitted to a
vote of the stockholders of such corporation.
2. THE PLAN.
(a) Name. This Plan shall be known as the "SI Diamond
Technology, Inc. Amended and Restated 1992 Outside Directors' Stock Option
Plan."
(b) Purpose. This Plan is intended as an incentive to retain
and attract Eligible Directors of training, experience and ability to serve as
independent directors of the Board and to afford Eligible Directors of the
Company an opportunity to acquire or increase their proprietary interests in
the Company, and thereby to encourage their continued service as Directors and
to provide them additional incentives to achieve the growth objectives of the
Company.
(c) Termination Date. The Plan shall terminate and no further
Options shall be granted hereunder upon the tenth anniversary of the Effective
Date of the Plan.
3. ADMINISTRATION. The Plan shall be administered by the
Compensation Committee of the Board or by any other Committee appointed by the
Board (the "Committee"), which Committee shall consist solely of two or more
Non-Employee Directors ("Non-Employee Directors") as such are defined in Rule
16b-3, promulgated pursuant to the Securities Exchange
2
<PAGE> 3
Act of 1934 (the "Exchange Act"), or any successor provision. The Committee
shall, subject to the provisions of the Plan, have the power to construe the
Plan, to determine all questions thereunder, and to adopt and amend such rules
and regulations for the administration of the Plan as it may deem desirable.
4. DESIGNATION OF PARTICIPANTS; AUTOMATIC GRANT OF OPTIONS. On
the last Monday of each July, each Eligible Director shall receive Options to
purchase 20,000 shares of the Company's Common Stock pursuant to the provisions
of the Plan. If an Eligible Director has not served a full year as a Director of
the Company since the last Monday of July of the previous year, then that
Eligible Director shall receive that number of Options equivalent to the product
of (a) 20,000, multiplied by (b) a fraction (i) the numerator of which is the
number of days which have elapsed between the commencement of such Eligible
Director's service and the last Monday of July relating to any current grant of
Options, and (ii) the denominator of which is 365.
5. STOCK OPTION AGREEMENT, OPTION GRANT AND NUMBER OF SHARES.
Each Option granted hereunder shall be embodied in a Stock Option Agreement,
which shall be subject to the terms and conditions set forth herein and shall
be signed by the Optionee and by the Chief Executive Officer, the Chief
Operating Officer, or any Vice President of the Company for and on behalf of
the Company. Each Option Agreement shall state the Options' number, duration,
time of exercise, vesting schedule and exercise price. The terms and conditions
of the Option shall be consistent with the Plan. All options issued under this
Plan shall be non-qualified stock options.
6. COMMON STOCK RESERVED FOR THE PLAN. Subject to adjustment
as provided in Section 11 hereof, a total of 500,000 Shares of Common Stock
shall be reserved for issuance upon the exercise of Options granted pursuant to
this Plan. The shares subject to the Plan shall consist of unissued shares or
previously issued shares reacquired and held by the Company, or any parent or
Subsidiary of the Company, in its treasury. The Committee and the appropriate
officers of the Company shall from time to time take whatever actions are
necessary to execute, acknowledge, file and deliver any documents required to
be filed with or delivered to any governmental authority or any stock exchange
or transaction reporting system on which shares of Common Stock are listed or
quoted in order to make shares of Common Stock available for issuance to an
Optionee; provided, however, that shares of Common Stock with respect to which
an Option has been exercised shall not again be available for any grant of
options hereunder, pursuant to this Plan. Common Stock subject to Options that
are forfeited or terminated or expire unexercised in such a manner that all or
some of the shares subject thereto are not issued to an Optionee shall
immediately become available for the granting of Options.
7. OPTION PRICE. The purchase price of each share of Common
Stock that is subject to an Option granted pursuant to this Plan shall be 100%
of the Fair Market Value of such share of Common Stock on the Date of Grant.
8. OPTION PERIOD. Each Option granted pursuant to this Plan
shall terminate and be of no force and effect with respect to any shares of
Common Stock not purchased by the Optionee upon the expiration of the tenth
anniversary of the Date of Grant.
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<PAGE> 4
9. EXERCISE OF OPTIONS.
(a) Unless otherwise determined by the Committee, Options
granted pursuant to this Plan shall be exercisable in full upon the Date of
Grant.
(b) In the event an Optionee ceases to serve as an Eligible
Director for any reason other than death, Disability, Retirement or a Change in
Control, an Option held by the participant shall expire on the earlier of (i)
the last day of the term of the Option and (ii) the date which is one month
after the date of such termination. Upon the Optionee ceasing to serve as an
Eligible Director by reason of death, Disability or Retirement, the Option held
by such participant shall expire on the earlier of (i) the last day of the term
of the Option and (ii) the date which is one year after the date of termination
of such employment. Upon the Optionee ceasing to serve as an Eligible Director
by reason of a Change in Control, the Option held by such participant shall
expire on its original expiration date. The term "Disability" with respect to a
Participant means physical or mental inability to perform the normal duties of
his employment or engagement as determined by a physician, selected by the
Committee, after examination of the Participant; provided, however, that if
such Participant fails or refuses to cooperate in such examination, the
determination of his Disability shall be made by the Committee in its sole
discretion. The term "Retirement" with respect to a Participant means the
Participants' termination in a manner which qualifies the Grantee to receive
immediately payable retirement benefits under any retirement plan adopted or
hereafter adopted by the Company, or which in the absence of any such
retirement plan is determined by the Committee to constitute retirement.
(c) An Option granted under the Plan shall be accelerated and
become fully exercisable upon a Change in Control (as hereinafter defined) of
the Company. For purposes of this Plan, a "Change of Control" shall be
conclusively deemed to have occurred if (and only if) any of the following
events shall have occurred: (a) there shall have occurred an event required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) promulgated under
the Securities Exchange Act of 1934 (the "Exchange Act"), whether or not the
Company is then subject to such reporting requirement; (b) any "person" (as such
term is used in Section 13(d) and 14(d) of the Exchange Act) shall have become
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 20% or more of
the combined voting power of the Company's then outstanding voting securities
without prior approval of at least two-thirds of the members of the Board in
office immediately prior to such person's attaining such percentage interest;
(c) the Company is a party to a merger, consolidation, sale of assets or other
reorganization, or a proxy contest as a consequence of which members of the
Board in office immediately prior to such transaction or event constitute less
than a majority of the Board thereafter or (d) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board (including for this purpose any new Director whose election or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds of the Directors then still in office who were Directors at
the beginning of such period) cease for any reason to constitute at least a
majority of the Board.
4
<PAGE> 5
(d) An installment of a participant's Option shall not become
exercisable on the otherwise applicable vesting date of such Award if the
participant's date of termination occurs on or before such vesting date.
Notwithstanding the foregoing sentence, an Option shall become fully and
immediately exercisable upon (1) the death or Disability of the Participant or
(2) or the occurrence of a Change of Control.
(e) An Option shall be exercised by written notice of exercise
of the Option, with respect to a specified number of shares of Stock, delivered
to the Corporate Secretary or other corporate officer of the Company at its
principal offices.
(f) The purchase price of the shares as to which an Option is
exercised shall be paid in full at the time of the exercise before any shares
of Common Stock are issued. Such purchase price shall be payable in cash, which
may be paid by check or other instrument acceptable to the Company. The Board
may also provide for procedures to permit the exercise of Options by the use of
the proceeds to be received from the sale of Common Stock issuable pursuant to
an Option, or by means of tendering theretofore owned Common Stock, valued at
Fair Market Value on the date of exercise. No holder of an Option shall be, or
have any of the rights or privileges of, a shareholder of the Company in
respect of any shares to any Option unless and until certificates evidencing
such shares shall have been issued by the Company to such holder.
10. TRANSFERABILITY OF OPTIONS. The Committee may, in its
discretion, authorize all or a portion of non-qualified stock options to be on
terms which permit transfer by such Eligible Director to (i) immediate family
members, (ii) a trust or trusts for the exclusive benefit of such immediate
family members, or (iii) a partnership in which such immediate family members
are the only partners, provided that (A) there may be no consideration for any
such transfer, (B) the Stock Option Agreement pursuant to which such Options
are granted must be approved by the Committee, and must expressly provide for
transferability in a manner consistent with this Section 10, and (C) subsequent
transfers of transferred Options shall be prohibited except those by will or
the laws of descent and distribution. Following transfer, any such Options
shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer. Notwithstanding the foregoing, should
the Committee provide that Options granted be transferable, the Company by such
action incurs no obligation to notify or otherwise provide notice to a
transferee of early termination of the Option. In the event of a transfer, as
set forth above, the original Eligible Director is and will remain subject to
and responsible for any applicable withholding taxes upon the exercise of such
Options.
11. ADJUSTMENTS.
(a) The existence of outstanding Options shall not affect in
any manner the right or power of the Company or its shareholders to make or
authorize any or all adjustments, recapitalization, reorganizations or other
changes in the capital stock of the Company or its business or any merger or
consolidation of the Company, or any issue of bonds, debentures,
5
<PAGE> 6
preferred or prior preference stock (whether or not such issue is prior to, on
a parity with or junior to the Common Stock) or the dissolution or liquidation
of the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding of any kind, whether or not
of a character similar to that of the acts or proceedings enumerated above.
(b) In the event of any subdivision or consolidation of
outstanding shares of Common Stock or declaration of a dividend payable in
shares of Common Stock or capital reorganization or reclassification or other
transaction involving an increase or reduction in the number of outstanding
shares of Common Stock, the Board may adjust proportionally (i) the number of
shares of Common Stock reserved under these Options; and (ii) the exercise
price of such Options. In the event of any consolidation or merger of the
Company with another corporation or entity or the adoption by the Company of a
plan of exchange affecting the Common Stock or any distribution to holders of
Common Stock of securities or property (other than normal cash dividends or
dividends payable in Common Stock), the Board shall make such adjustments or
other provisions as it may deem equitable, including adjustments to avoid
fractional shares, to give proper effect to such event. In the event of a
corporate merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation, the Board shall be authorized to issue or assume
stock options by means of substitution of new options for previously issued
options or an assumption of previously issued options, or to make provision for
the acceleration of the exercisability of, or lapse of restrictions with
respect to, the termination of unexercised options in connection with such
transaction.
The foregoing adjustments and the manner of applications thereof shall
be determined solely by the Board. The adjustments required under this Article
shall apply to any successor or successors of the Company and shall be made
regardless of the number or type of successive events requiring adjustments
hereunder.
12. PURCHASE FOR INVESTMENT. Unless the Options and shares of
Common Stock covered by this Plan have been registered under the Securities Act
of 1933, each person exercising an Option under this Plan may be required by the
Company to give a representation in writing in form and substance satisfactory
to the Company to the effect that he or she is acquiring such shares for his or
her own account for investment and not with a view to, or for sale in connection
with, the distribution of such shares or any part thereof.
13. WITHHOLDING AND EMPLOYMENT TAXES. At the time of exercise
of an Option, the Optionee shall remit to the Company in cash all applicable
federal and state withholding and employment taxes. If and to the extent
authorized and approved by the Committee in its sole discretion, an optionee
may elect, by means of a form of election to be prescribed by the Committee, to
have shares which are acquired upon exercise of an option withheld by the
Company or tender other shares of Common Stock or other securities of the
Company owned by the Optionee to the Company at the time the amount of such
taxes is determined in order to pay the amount of such tax obligations, subject
to the following limitations:
6
<PAGE> 7
(1) such election shall be irrevocable; and
(2) such election shall be subject to the disapproval of the
Committee at any time.
Any Common Stock or other securities so withheld or tendered will be valued by
the Company as of the date they are withheld or tendered. Unless the Committee
otherwise determines, the Optionee shall pay to the Company in cash, promptly
when the amount of such obligations become determinable, all applicable federal
and state withholding taxes resulting from the lapse of restrictions imposed on
exercise of an option, from a transfer or other disposition of shares acquired
upon exercise of an option or otherwise related to the Option or the shares
acquired upon exercise of the option.
14. TERMINATION, AMENDMENT AND MODIFICATION OF PLAN. The
Committee may at any time terminate the Plan, and may at any time and from time
to time, and in any respect, amend or modify the Plan, except that (a) no
amendment or alteration that would impair the rights of any Optionee under any
Option that he has been granted shall be made without his consent or (b) no
amendment or alteration shall be effective prior to approval by the Company's
shareholders to the extent such approval is otherwise required by applicable
legal requirements.
15. STOCK CERTIFICATES. The Company shall not be required to
issue or deliver any certificate for shares of Common Stock purchased upon the
exercise of any Option granted hereunder or any portion thereof unless, in the
opinion of counsel to the Company, there has been compliance with all applicable
legal requirements. An Option granted under the Plan may provide that the
Company's obligation to deliver shares of Common Stock upon the exercise thereof
may be conditioned upon the receipt by the Company of a representation as to the
investment intention of the holder thereof in such form as the Company shall
determine to be necessary or advisable solely to comply with the provisions of
the Securities Act of 1933 or any other federal, state or local securities laws.
16. GOVERNMENT REGULATIONS. This Plan, and the granting and
exercise of Options hereunder, and the obligation of the Company to sell and
deliver shares of Common Stock under such Options, shall be subject to all
applicable laws, rules and regulations, and to such approvals on the part of
any governmental agencies or national securities exchanges or transaction
reporting, systems as may be required.
17. GOVERNING LAW. This Plan and all determinations made and
actions taken pursuant hereto, to the extent not otherwise governed by
mandatory provisions of the Code or the securities laws of the United States,
shall be governed by and construed in accordance with the laws of the State of
Texas.
18. EFFECTIVE DATE OF PLAN. This Plan, as hereby amended, shall
be effective as of March 16, 1992.
7
<PAGE> 8
19. MISCELLANEOUS. The granting of any Option shall not impose
upon the Company or Board any obligation to nominate any Optionee for election
as a director, and the right of the shareholders of the Company to remove any
person as a director of the Company shall not be diminished or affected by
reason of the fact that an Option has been granted to such person.
20. RELATIONSHIP TO OTHER COMPENSATION PLANS. The adoption of
the Plan shall neither affect any other stock option, incentive or other
compensation plans in effect for the Company or any of its Subsidiaries, nor
shall the adoption of the Plan preclude the Company from establishing any other
forms of incentive or other compensation plan for directors of the Company.
21. MISCELLANEOUS.
(a) Plan Binding on Successors. The Plan shall be binding upon
the successors and assigns of the Company.
(b) Singular, Plural; Gender. Whenever used herein, nouns in
the singular shall include the plural, and the masculine pronoun shall include
the feminine gender.
(c) Headings, etc., No Part of Plan. Headings of articles and
paragraphs hereof are inserted for convenience and reference, and do not
constitute a part of the Plan.
8
<PAGE> 1
EXHIBIT 4.2
AMENDED AND RESTATED
1992 EMPLOYEE STOCK OPTION PLAN OF
SI DIAMOND TECHNOLOGY, INC.
1. Purpose
SI Diamond Technology, Inc. (the "Corporation") desires to attract and
retain the best available talent and encourage the highest level of performance
in order to continue to serve the best interests of the Corporation and its
shareholders. By affording key personnel the opportunity to acquire proprietary
interests in the Corporation and by providing them incentive to put forth
maximum efforts for the success of the business, the Amended and Restated 1992
Employee Stock Option Plan of SI Diamond Technology, Inc. (the "1992 Plan") is
expected to contribute to the attainment of those objectives.
2. Scope and Duration
Options under the 1992 Plan may be granted in the form of Awards
("Awards") of incentive stock options ("Incentive Options") as provided in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
in the form of nonqualified stock options ("Nonqualified Options"). Unless
otherwise indicated, references in the 1992 Plan to "options" include Incentive
Options and Nonqualified Options. The maximum aggregate number of shares as to
which options may be granted from time to time under the 1992 Plan is 3,500,000
shares of the Common Stock of the Corporation ("Common Stock"), which shares
may be, in whole or in part, authorized but unissued shares or shares
reacquired by the Corporation. If an option shall expire, terminate or be
surrendered for cancellation for any reason without having been exercised in
full, the shares represented by the option or portion thereof not so exercised
shall (unless the 1992 Plan shall have been terminated) become available for
subsequent option grant under the 1992 Plan. The 1992 Plan became effective on
March 16, 1992, and unless terminated sooner pursuant to paragraph 13, the 1992
Plan shall terminate on March 15, 2002, and no option shall be granted
hereunder after that date.
3. Administration
The 1992 Plan shall be administered by the Compensation Committee of the
Board of Directors or by any other committee appointed by the Board of
Directors (the "Committee"), which Committee shall consist solely of two or
more Non-Employee Directors ("Non-Employee Directors") as such are defined in
Rule 16b-3, promulgated pursuant to the Securities Exchange Act of 1934 (the
"Exchange Act") or any successor provision.
The Committee shall have plenary authority in its discretion, subject to
and not inconsistent with the express provisions of the 1992 Plan, to grant
options, to determine the purchase price of the Common Stock covered by each
option, the term of each option, the persons to whom, and the time or times at
which, options shall be granted and the number of shares to be covered by each
option;
1
<PAGE> 2
to designate options as Incentive Options or Nonqualified Options; to interpret
the 1992 Plan; to prescribe, amend, and rescind regulations relating to the
1992 Plan; to determine the terms and provisions of the option agreements
(which need not be identical) entered into in connection with options under the
1992 Plan; and to make all other determinations deemed necessary or advisable
for the administration of the 1992 Plan. The Committee may also, in its
discretion, provide for the extension of the exercisability of an Award,
accelerate the vesting or exercisability of an Award, eliminate or make less
restrictive any restrictions contained in an Award, waive any restriction or
other provision of this 1992 Plan or an Award or otherwise amend and modify an
Award in any manner that is either (i) not adverse to the participant holding
such Award or (ii) consented to by such participant. The Committee may correct
any defect or supply any omission or reconcile any inconsistency in this Plan
or in any Award in the manner and to the extent the Committee deems necessary
or desirable to carry it into effect. The Committee may delegate to one or more
of its members, or to one or more agents, such administrative duties as it may
deem advisable, and the Committee, or any person to whom it has delegated
duties as aforesaid, may employ one or more persons to render advice with
respect to any responsibility the Committee, or such person, may have under the
1992 Plan.
4. Eligibility; Factors to be Considered in Granting Options
Incentive Options shall be limited to persons who are regular full-time
employees of the Corporation at the date of grant of any options. In
determining the employees to whom Incentive Options shall be granted and the
number of shares to be covered by each Incentive Option, the Committee shall
take into account the nature of the employee's duties, their present and
potential contributions to the success of the Corporation, and such other
factors as it shall deem relevant in connection with accomplishing the purposes
of the 1992 Plan. An employee who had been granted an option or options under
the 1992 Plan may be granted an additional option or options, subject, in the
case of Incentive Options, to such limitations as may be imposed by the Code on
such options. Except as provided below, a Nonqualified Option may be granted to
any person, including, but not limited to, employees, independent agents,
directors, consultants and attorneys, who the Committee believes has
contributed, or will contribute, to the success of the Corporation.
5. Option Price
The purchase price of the Common Stock covered by each option shall be
determined by the Committee and, in the case of Incentive Options, shall not be
less than 100% of the Fair Market Value (as defined in paragraph 14 below) of a
share of the Common Stock on the date on which the option is granted. In the
case of Nonqualified Options, the purchase price of an option shall generally
be Fair Market Value, although the Committee may grant options with option
prices of less than Fair Market Value. Such price shall be subject to
adjustment as provided in paragraph 11 below. The Committee shall determine the
date on which an option is granted; in the absence of such a determination, the
date on which the Committee adopts a resolution granting an option shall be
considered the date on which such option is granted.
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<PAGE> 3
6. Term of Option
The term of each option shall be not more than ten (10) years from the
date of grant, as the Committee shall determine, subject to earlier termination
as provided in paragraph 10 below.
7. Exercise of Options
In its discretion, the Committee may, in any case, prescribe vesting
requirements or provide that an option may be exercisable in full immediately
upon the date of its grant.
Upon the exercise of an option or Award that requires payment by a
participant to the Corporation, the amount due to the Corporation shall be paid
in cash or by check payable to the order of the Corporation for the full
purchase price of the shares of Common Stock for which such election is made.
Except as otherwise provided by the Committee before the Option is exercised
(i) all or a part of the exercise price may be paid by the grantee by delivery
of shares of the Corporations Common Stock owned by the grantee and acceptable
to the Committee having an aggregate Fair Market Value (valued at the date of
exercise) that is equal to the amount of cash that would otherwise be required;
and (ii) the Grantee may pay the exercise price by authorizing a third party to
sell shares of Corporation Common Stock (or a sufficient portion thereof)
acquired upon the exercise of the Option and remit to the Corporation a
sufficient portion of the sales proceeds to pay the entire exercise price and
any tax withholding from such exercise.
The Corporation shall have the right to deduct from all Awards paid any
federal, state, local or employment taxes which the Corporation deems are
required by law to be held with respect to such payments. Whenever shares of
Common Stock are to be issued in satisfaction of the exercise of an award, the
Corporation shall have the right to require the participant (or legal
representative, as applicable) to remit to the Corporation an amount sufficient
to satisfy federal, state and local withholding tax requirements or make other
arrangements therefor prior to the delivery of any certificate or certificates
for such shares. At the election of the participant, and subject to such rules
and limitations as may be established by the Committee from time to time, such
withholding obligations may be satisfied through the surrender of shares of the
Corporation's Common Stock which the participant already owns, or to which the
participant is otherwise entitled under the Plan.
8. Incentive Options
(a) With respect to Incentive Options granted, the aggregate Fair Market
Value (determined in accordance with the provisions of paragraph 14 at the time
the Incentive Option is granted) of the Common Stock or any other stock of the
Corporation, its parent or subsidiary corporations with respect to which
incentive stock options, as defined in Section 422 of the Code, are exercisable
for
3
<PAGE> 4
the first time by any employee during the calendar year (under all incentive
stock option plans of the Corporation and its parent and subsidiary
corporations, as those terms are defined in Section 425 of the Code) shall not
exceed $100,000.
(b) No Incentive Option may be awarded to any employee who immediately
prior to the date of the granting of such Incentive Option owns more than 10%
of the combined voting power of all classes of stock of the Corporation or any
of its subsidiaries unless the exercise price under the Incentive Option is at
least 110% of the Fair Market Value and the option expires within five (5)
years from the date of the grant.
(c) In the event of amendments to the Code or applicable regulations
relating to the Incentive Options subsequent to the date hereof, the
Corporation may amend the provisions of the 1992 Plan, and the Corporation and
the employees holding options may agree to amend outstanding option agreements,
to conform to such amendments.
9. Transferability of Options
Incentive Options granted under the 1992 Plan shall not be
transferable otherwise than by will or the laws of descent and distribution,
and Incentive Options may be exercised during the lifetime of the employee only
by the employee.
The Committee may, in its discretion, authorize all or a portion of
Nonqualified Options granted to an optionee to be on terms which permit
transfer by such optionee to (i) the spouse, children or grandchildren of the
optionee ("Immediate Family Members"), (ii) a trust or trusts for the exclusive
benefit of such Immediate Family Members, or (iii) a partnership in which such
Immediate Family Members are the only partners, provided that (x) there may be
no consideration for any such transfer, (y) the option agreement pursuant to
which such Nonqualified Options are granted must be approved by the Committee,
and must expressly provide for transferability in a manner consistent with this
Section, and (z) subsequent transfers of transferred Nonqualified Options shall
be prohibited except those by will or the laws of descent and distribution.
Following transfer, any such Nonqualified Options shall continue to be subject
to the same terms and conditions as were applicable immediately prior to
transfer, provided that for purposes of this Plan, the term "optionee" shall be
deemed to refer to the transferee. The events of termination of employment
shall continue to be applied with respect to the original optionee, following
which the Nonqualified Options shall be exercisable by the transferee only to
the extent, and for the periods specified in paragraph 10 below.
Notwithstanding the foregoing, should the Committee provide that Nonqualified
Options granted be transferable, the Company by such action incurs no
obligation to notify or otherwise provide notice to a transferee of early
termination of the Nonqualified Options. In the event of a transfer, as set
forth above, the original optionee is and will remain subject to and
responsible for any applicable withholding taxes upon the exercise of such
Nonqualified Options.
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10. Termination of Employment; Acceleration of Vesting
Upon termination of employment for any reason other than death,
Disability (as defined below), Retirement or a Change in Control, any Incentive
or Nonqualified Option held by the Participant shall expire on the earlier of
(i) the last day of the term of the Option and (ii) the date which is one month
after the date of termination of such employment. Upon termination of
employment by reason of death, Disability or Retirement, the Option held by
such Participant shall expire on the earlier of (i) the last day of the term of
the Option and (ii) the date which is one year after the date of termination of
such employment. Upon termination of employment by reason of a Change in
Control, the Option held by such Participant shall expire on its original
expiration date. The term "Disability" with respect to a Participant means
physical or mental inability to perform the normal duties of his employment or
engagement as determined by a physician, selected by the Compensation
Committee, after examination of the Participant; provided, however, that if
such Participant fails or refuses to cooperate in such examination, the
determination of his Disability shall be made by the Compensation Committee in
its sole discretion. The term "Retirement" with respect to a Participant means
the Participants' termination of employment in a manner which qualifies the
Grantee to receive his immediately payable retirement benefits under any
retirement plan adopted or hereafter adopted by the Company, or which in the
absence of any such retirement plan is determined by the Committee to
constitute retirement.
For purposes of this Plan, a "Change of Control" shall be conclusively
deemed to have occurred if (and only if) any of the following events shall have
occurred: (a) there shall have occurred an event required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any
similar item on any similar schedule or form) promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the
Corporation is then subject to such reporting requirement; (b) any "person" (as
such term is used in Section 13(d) and 14(d) of the Exchange Act) shall have
become the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Corporation representing 20%
or more of the combined voting power of the Corporation's then outstanding
voting securities without prior approval of at least two-thirds of the members
of the Board of Directors in office immediately prior to such person's
attaining such percentage interest; (c) the Corporation is a party to a merger,
consolidation, sale of assets or other reorganization, or a proxy contest, as a
consequence of which members of the Board of Directors in office immediately
prior to such transaction or event constitute less than a majority of the Board
of Directors thereafter or (d) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors (including for this purpose any new Director whose election or
nomination for election by the Corporation's shareholders was approved by a
vote of at least two-thirds of the Directors then still in office who were
Directors at the beginning of such period) cease for any reason to constitute
at least a majority of the Board of Directors.
An installment of a Participant's Option shall not become exercisable on the
otherwise applicable
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vesting date of such Award if the Participant's date of termination occurs on
or before such vesting date. Notwithstanding the foregoing sentence, an Option
shall become fully and immediately exercisable upon (1) the death or Disability
of the Participant or (2) or the occurrence of a Change of Control.
11. Adjustment Upon Changes in Capitalization, etc.
Notwithstanding any of the provisions of the 1992 Plan, the Committee may,
at any time, make or provide for such adjustments to the 1992 Plan, to the
number and class of shares issuable thereunder or to any outstanding options as
it shall deem appropriate to prevent dilution or enlargement of rights,
including adjustments in the event of changes in the outstanding Common Stock
by reason of stock dividends, split-ups, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, separations,
reorganizations, liquidations and the like. In the event of any offer to
holders of Common Stock generally relating to the acquisition of their shares,
the Committee may make such adjustment as it deems equitable in respect to
outstanding options and rights, including, in its discretion, revision of
outstanding options and rights so that they may be exercisable for the
consideration payable in the acquisition transaction. Any such determination by
the Committee shall be conclusive. Any fractional shares resulting from such
adjustments shall be eliminated.
12. Withholding and Employment Taxes
At the time of exercise of an option, the optionee shall remit to the
Corporation in cash all applicable federal and state withholding and employment
taxes. If and to the extent authorized and approved by the Committee in its
sole discretion, an optionee may elect, by means of a form of election to be
prescribed by the Committee, to have shares which are acquired upon exercise of
an option withheld by the Company or tender other shares of Common Stock or
other securities of the Company owned by the optionee to the Company at the
time the amount of such taxes is determined in order to pay the amount of such
tax obligations, subject to the following limitations:
(1) such election shall be irrevocable; and
(2) such election shall be subject to the disapproval of the
Committee at any time.
Any Common Stock or other securities so withheld or tendered will be valued by
the Corporation as of the date they are withheld or tendered. Unless the
Committee otherwise determines, the optionee shall pay to the Corporation in
cash, promptly when the amount of such obligations become determinable, all
applicable federal and state withholding taxes resulting from the lapse of
restrictions imposed on exercise of an option, from a transfer or other
disposition of shares acquired upon exercise of an option or otherwise related
to the option or the shares acquired upon exercise of the option.
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13. Termination and Amendment
The Committee may at any time terminate the Plan, and may at any time and
from time to time, and in any respect, amend or modify the Plan, except that
(a) no amendment or alteration that would impair the rights of any optionee
under any Option that he has been granted shall be made without his consent or
(b) no amendment or alteration shall be effective prior to approval by the
Company's shareholders to the extent such approval is otherwise required by
applicable legal requirements.
14. Miscellaneous
As said term is used in the 1992 Plan, the "Fair Market Value" of a share
of Common Stock on any day shall be deemed to mean:
(a) if the shares of Common Stock are listed on a national securities
exchange, the average of the highest and lowest sales price per share of the
Common Stock on the principal such national securities exchange on that date,
or if there shall have been no such sale so reported on that date, on the last
preceding date on which such a sale was so reported;
(b) if the shares of Common Stock are not so listed but are quoted on the
NASDAQ National Market System, the average of the highest and lowest sales
price per share of Common Stock on the NASDAQ National Market System on that
date, or, if there shall have been no such sale so reported on that date, on
the last preceding date on which such a sale was so reported;
(c) if the Common Stock is not so listed or quoted, the average of the
closing bid and asked price on that date, or, if there are no quotations
available for such date, on the last preceding date on which such quotations
shall be available, as reported by NASDAQ; or
(d) in all other events, "Fair Market Value" shall be determined by the
Board of Directors in good faith.
The Committee may require, as a condition to the exercise of any options
granted under the 1992 Plan, that to the extent required at the time of
exercise, (i) the shares of Common Stock reserved for purposes of the 1992 Plan
shall be duly listed, upon official notice of issuance, upon the stock
exchange(s) on which the Common Stock is listed, (ii) a Registration Statement
under the Securities Act of 1933 with respect to such shares shall be effective,
and/or (iii) the person exercising such option deliver to the Corporation such
documents, agreements and investment and other representations as the Committee
shall determine to be in the best interests of the Corporation.
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EXHIBIT 4.3
SI DIAMOND TECHNOLOGY, INC.
AMENDED AND RESTATED
1998 DIRECTORS AND OFFICERS STOCK OPTION PLAN
1. DEFINITIONS. As used herein, the following terms have the
meanings hereinafter set forth unless the context clearly indicates to the
contrary:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Company" shall mean SI Diamond Technology, Inc.
(c) "Common Stock" shall mean the common stock, par value $.001
per share, of the Company or, in the event that the outstanding shares of Common
Stock are hereafter changed into or exchanged for different stock or securities
of the Company or some other corporation, such other stock or securities.
(d) "Date of Grant" shall mean the date Options are granted to
Officers or Directors pursuant to this Plan.
(e) "Director" shall mean any Director of the Company.
(f) "Effective Date of the Plan" shall mean May 11, 1998
(g) "Fair Market Value" of a share of Common Stock on a particular
date shall be deemed to mean:
(i) if the shares of Common Stock are listed on a
national securities exchange, the average of the highest and lowest
sales price per share of the Common Stock on the principal such
national securities exchange on that date, or if there shall have been
no such sale so reported on that date, on the last preceding date on
which such a sale was so reported;
(ii) if the shares of Common Stock are not so listed but
are quoted on the NASDAQ National Market System, the average of the
highest and lowest sales price per share of Common Stock on the NASDAQ
National Market System on that date, or, if there shall have been no
such sale so reported on that date, on the last preceding date on which
such a sale was so reported;
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(iii) if the Common Stock is not so listed or quoted, the
average of the closing bid and asked price on that date, or, if there
are no quotations available for such date, on the last preceding date
on which such quotations shall be available, as reported by NASDAQ, or
(iv) in all other events, "Fair Market Value" shall be
determined by the Board in good faith.
(h) "Officer" shall mean any Officer of the Company.
(i) "Option" shall mean a non-qualified stock option to purchase
Common Stock granted pursuant to the provisions of Article 5 hereof.
(j) "Optionee" shall mean a Director or Officer to whom an Option
has been granted hereunder.
(k) "Option Price" shall mean the price at which an Optionee may
purchase a share of Common Stock under a Stock Option Agreement.
(l) "Plan" shall mean the SI Diamond Technology, Inc. Amended and
Restated 1998 Directors and Officers Stock Option Plan, the terms of which are
set forth herein.
(m) "Stock Option Agreement" shall mean an agreement between the
Company and the Optionee under which the Optionee may purchase Common Stock in
accordance with the Plan.
(n) "Subsidiary" of the Company shall mean any corporation of
which the Company directly or indirectly owns shares representing more than 50%
of the voting power of all classes or series of capital stock of such
corporation which have the right to vote generally on matters submitted to a
vote of the stockholders of such corporation.
2. THE PLAN.
(a) Name. This Plan shall be known as the "SI Diamond Technology,
Inc. Amended and Restated 1998 Directors and Officers Stock Option Plan."
(b) Purpose. This Plan is intended as an incentive to retain and
attract Directors and Officers of training, experience and ability to serve the
Company and to afford such Directors and Officers of the Company an opportunity
to acquire or increase their proprietary interests in the Company, and thereby
to encourage their continued service and to provide them additional incentives
to achieve the growth objectives of the Company.
(c) Termination Date. The Plan shall terminate and no further
Options shall be granted hereunder upon the tenth anniversary, of the Effective
Date of the Plan.
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<PAGE> 3
3. ADMINISTRATION. The Plan shall be administered by the
Compensation Committee of the Board or by any other Committee appointed by the
Board (the "Committee"), which Committee shall consist solely of two or more
Non-Employee Directors ("Non-Employee Directors") as such are defined in Rule
16b-3, promulgated pursuant to the Securities Exchange Act of 1934 (the
"Exchange Act"), or any successor provision. The Committee shall, subject to the
provisions of the Plan, have the power to construe the Plan, to determine all
questions thereunder, and to adopt and amend such rules and regulations for the
administration of the Plan as it may deem desirable.
4. DESIGNATION OF PARTICIPANTS; AUTOMATIC GRANT OF OPTIONS. Each
eligible Director and Officer of the Company shall receive options to purchase
shares of the Company's Common Stock pursuant to the provisions of the Plan.
5. STOCK OPTION AGREEMENT, OPTION GRANT AND NUMBER OF SHARES.
Each Option granted hereunder shall be embodied in a Stock Option Agreement,
which shall be subject to the terms and conditions set forth herein and shall be
signed by the Optionee and by the Chief Executive Officer, the Chief Operating
Officer, or any Vice President of the Company for and on behalf of the Company.
Each Option Agreement shall state the Options' number, duration, time of
exercise, vesting schedule and exercise price. The terms and conditions of the
Option shall be consistent with the Plan.
6. COMMON STOCK RESERVED FOR THE PLAN. Subject to adjustment as
provided in Section 11 hereof, a total of 2,500,000 Shares of Common Stock
shall be reserved for issuance upon the exercise of Options granted pursuant to
this Plan. The shares subject to the Plan shall consist of unissued shares or
previously issued shares reacquired and held by the Company, or any parent or
Subsidiary of the Company, in its treasury. The Committee and the appropriate
officers of the Company shall from time to time take whatever actions are
necessary to execute, acknowledge, file and deliver any documents required to be
filed with or delivered to any governmental authority or any stock exchange or
transaction reporting system on which shares of Common Stock are listed or
quoted in order to make shares of Common Stock available for issuance to an
Optionee; provided, however, that shares of Common Stock with respect to which
an Option has been exercised shall not again be available for any grant of
options hereunder, pursuant to this Plan. Common Stock subject to Options that
are forfeited or terminated or expire unexercised in such a manner that all or
some of the shares subject thereto are not issued to an Optionee shall
immediately become available for the granting of Options.
7. OPTION PRICE. The purchase price of each share of Common Stock
that is subject to an Option granted pursuant to this Plan shall be at least
100% of the Fair Market Value of such share of Common Stock on the Date of
Grant.
8. OPTION PERIOD. Each Option granted pursuant to this Plan shall
terminate and be of no force and effect with respect to any shares of Common
Stock not purchased by the Optionee upon the expiration of the tenth anniversary
of the Date of Grant.
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<PAGE> 4
9. EXERCISE OF OPTIONS.
(a) Unless otherwise determined by the Committee, Options granted
pursuant to this Plan shall be exercisable, in full, upon the Date of Grant.
(b) In the event an Optionee ceases to serve as a Director or
Officer for any reason other than death, Disability, Retirement or a Change in
Control, an Option held by the participant shall expire on the earlier of (i)
the last day of the term of the Option and (ii) the date which is one month
after the date of such termination. Upon the Optionee ceasing to serve as a
Director or Officer by reason of death, Disability or Retirement, the Option
held by such participant shall expire on the earlier of (i) the last day of the
term of the Option and (ii) the date which is one year after the date of such
termination. Upon the Optionee ceasing to serve as a Director or Officer by
reason of a Change in Control, the Option held by such participant shall expire
on its original expiration date. The term "Disability" with respect to a
participant means physical or mental inability to perform the normal duties of
his employment or engagement as determined by a physician, selected by the
Committee, after examination of the participant; provided, however, that if such
participant fails or refuses to cooperate in such examination, the determination
of his Disability shall be made by the Committee in its sole discretion. The
term "Retirement" with respect to a participant means the participant's
termination in a manner which qualifies him or her to receive immediately
payable retirement benefits under any retirement plan adopted or hereafter
adopted by the Company, or which in the absence of any such retirement plan is
determined by the Committee to constitute retirement.
(c) An Option granted under the Plan shall be accelerated and
become fully exercisable upon a Change in Control (as hereinafter defined) of
the Company. For purposes of this Plan, a "Change of Control" shall be
conclusively deemed to have occurred if (and only if) any of the following
events shall have occurred: (a) there shall have occurred an event required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or
not the Company is then subject to such reporting requirement; (b) any "person"
(as such term is used in Section 13(d) and 14(d) of the Exchange Act) shall have
become the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 20% or more of
the combined voting power of the Company's then outstanding voting securities
without prior approval of at least two-thirds of the members of the Board in
office immediately prior to such person's attaining such percentage interest;
(c) the Company is a party to a merger, consolidation, sale of assets or other
reorganization, or a proxy contest as a consequence of which members of the
Board in office immediately prior to such transaction or event constitute less
than a majority of the Board thereafter or (d) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board (including for this purpose any new Director whose election or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds of the Directors then still in office who were Directors at
the beginning of such period) cease for any reason to constitute at least a
majority of the Board.
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(d) An installment of an Optionee's Option shall not become
exercisable on the otherwise applicable vesting date of such Award if the
Optionee's date of termination occurs on or before such vesting date.
Notwithstanding the foregoing sentence, an Option shall become fully and
immediately exercisable upon (1) the death or Disability of the Optionee or (2)
or the occurrence of a Change of Control.
(e) An Option shall be exercised by written notice of exercise of
the Option, with respect to a specified number of shares of Stock, delivered to
the Corporate Secretary or other corporate officer of the Company at its
principal offices.
(f) The purchase price of the shares as to which an Option is
exercised shall be paid in full at the time of the exercise before any shares of
Common Stock are issued. Such purchase price shall be payable in cash, which may
be paid by check or other instrument acceptable to the Company. The Board may
also provide for procedures to permit the exercise of Options by the use of the
proceeds to be received from the sale of Common Stock issuable pursuant to an
Option, or by means of tendering theretofore owned Common Stock, valued at Fair
Market Value on the date of exercise. No holder of an Option shall be, or have
any of the rights or privileges of, a shareholder of the Company in respect of
any shares to any Option unless and until certificates evidencing such shares
shall have been issued by the Company to such holder.
10. TRANSFERABILITY OF OPTIONS. The Committee may, in its
discretion, authorize all or a portion of non-qualified stock options to be on
terms which permit transfer by such Director or Officer to (i) immediate family
members, (ii) a trust or trusts for the exclusive benefit of such immediate
family members, or (iii) a partnership in which such immediate family members
are the only partners, provided that (A) there may be no consideration for any
such transfer, (B) the Stock Option Agreement pursuant to which such Options are
granted must be approved by the Committee, and must expressly provide for
transferability in a manner consistent with this Section, and (C) subsequent
transfers of transferred Options shall be prohibited except those by will or the
laws of descent and distribution. Following transfer, any such Options shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer. Notwithstanding the foregoing, should the
Committee provide that Options granted be transferable, the Company by such
action incurs no obligation to notify or otherwise provide notice to a
transferee of early termination of the Option. In the event of a transfer, as
set forth above, the original Director or Officer is and will remain subject to
and response for any applicable withholding taxes upon the exercise of such
Options.
11. ADJUSTMENTS.
(a) The existence of outstanding Options shall not affect in any
manner the right or power of the Company or its shareholders to make or
authorize any or all adjustments, recapitalization, reorganizations or other
changes in the capital stock of the Company or its business or any merger or
consolidation of the Company, or any issue of bonds, debentures,
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<PAGE> 6
preferred or prior preference stock (whether or not such issue is prior to, on a
parity with or junior to the Common Stock) or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding of any kind, whether or not
of a character similar to that of the acts or proceedings enumerated above.
(b) In the event of any subdivision or consolidation of
outstanding shares of Common Stock or declaration of a dividend payable in
shares of Common Stock or capital reorganization or reclassification or other
transaction involving an increase or reduction in the number of outstanding
shares of Common Stock, the Board may adjust proportionally (i) the number of
shares of Common Stock reserved under these Options; and (ii) the exercise price
of such Options. In the event of any consolidation or merger of the Company with
another corporation or entity or the adoption by the Company of a plan of
exchange affecting the Common Stock or any distribution to holders of Common
Stock of securities or property (other than normal cash dividends or dividends
payable in Common Stock), the Board shall make such adjustments or other
provisions as it may deem equitable, including adjustments to avoid fractional
shares, to give proper effect to such event. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Board shall be authorized to issue or assume stock options by
means of substitution of new options for previously issued options or an
assumption of previously issued options, or to make provision for the
acceleration of the exercisability of, or lapse of restrictions with respect to,
the termination of unexercised options in connection with such transaction.
The foregoing adjustments and the manner of applications thereof shall
be determined solely by the Board. The adjustments required under this Article
shall apply to any successor or successors of the Company and shall be made
regardless of the number or type of successive events requiring adjustments
hereunder.
12. PURCHASE FOR INVESTMENT. Unless the Options and shares of
Common Stock cov ered by this Plan have been registered under the Securities Act
of 1933, each person exercising an Option under this Plan may be required by the
Company to give a representation in writing in form and substance satisfactory
to the Company to the effect that he is acquiring such shares for his own
account for investment and not with a view to, or for sale in connection with,
the distribution of such shares or any part thereof.
13. WITHHOLDING AND EMPLOYMENT TAXES. At the time of exercise of
an Option, the optionee shall remit to the Company in cash all applicable
federal and state withholding and employment taxes. If and to the extent
authorized and approved by the Committee in its sole discretion, an optionee may
elect, by means of a form of election to be prescribed by the Committee, to have
shares which are acquired upon exercise of an option withheld by the Company or
tender other shares of Common Stock or other securities of the Company owned by
the optionee to the Company at the time the amount of such taxes is determined
in order to pay the amount of such tax obligations, subject to the following
limitations:
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(1) such election shall be irrevocable; and
(2) such election shall be subject to the disapproval of the
Committee at any time.
Any Common Stock or other securities so withheld or tendered will be valued by
the Company as of the date they are withheld or tendered. Unless the Committee
otherwise determines, the optionee shall pay to the Company in cash, promptly
when the amount of such obligations become determinable, all applicable federal
and state withholding taxes resulting from the lapse of restrictions imposed on
exercise of an option, from a transfer or other disposition of shares acquired
upon exercise of an option or otherwise related to the Option or the shares
acquired upon exercise of the option.
14. TERMINATION, AMENDMENT AND MODIFICATION OF PLAN. The Committee
may at any time terminate the Plan, and may at any time and from time to time,
and in any respect, amend or modify the Plan, except that (a) no amendment or
alteration that would impair the rights of any Optionee under any Option that he
has been granted shall be made without his consent or (b) no amendment or
alteration shall be effective prior to approval by the Company's shareholders to
the extent such approval is otherwise required by applicable legal requirements.
15. STOCK CERTIFICATES. The Company shall not be required to issue
or deliver any certificate for shares of Common Stock purchased upon the
exercise of any Option granted hereunder or any portion thereof unless, in the
opinion of counsel to the Company, there has been compliance with all applicable
legal requirements. An Option granted under the Plan may provide that the
Company's obligation to deliver shares of Stock upon the exercise thereof may be
conditioned upon the receipt by the Company of a representation as to the
investment intention of the holder thereof in such form as the Company shall
determine to be necessary or advisable solely to comply with the provisions of
the Securities Act of 1933 or any other federal, state or local securities laws.
16. GOVERNMENT REGULATIONS. This Plan, and the granting and
exercise of Options hereunder, and the obligation of the Company to sell and
deliver shares of Common Stock under such Options, shall be subject to all
applicable laws, rules and regulations, and to such approvals on the part of any
governmental agencies or national securities exchanges or transaction reporting,
systems as may be required.
17. GOVERNING LAW. This Plan and all determinations made and
actions taken pursuant hereto, to the extent not otherwise governed by mandatory
provisions of the Code or the securities laws of the United States, shall be
governed by and construed in accordance with the laws of the State of Texas.
18. EFFECTIVE DATE OF PLAN. This Plan, as hereby amended, shall be
effective as of May 11, 1998.
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19. MISCELLANEOUS. The granting of any Option shall not impose
upon the Company or Board any obligation to nominate any Optionee for election
as a director, and the right of the stockholders of the Company to remove any
person as a director of the Company shall not be diminished or affected by
reason of the fact that an Option has been granted to such person.
20. RELATIONSHIP TO OTHER COMPENSATION PLANS. The adoption of the
Plan shall neither affect any other stock option, incentive or other
compensation plans in effect for the Company or any of its Subsidiaries, nor
shall the adoption of the Plan preclude the Company from establishing any other
forms of incentive or other compensation plan for directors of the Company.
21. MISCELLANEOUS.
(a) Plan Binding on Successors. The Plan shall be binding upon the
successors and assigns of the Company.
(b) Singular, Plural; Gender. Whenever used herein, nouns in the
singular shall include the plural, and the masculine pronoun shall include the
feminine gender.
(c) Headings, etc., No Part of Plan. Headings of articles and
paragraphs hereof are inserted for convenience and reference, and do not
constitute a part of the Plan.
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EXHIBIT 5.1
[Letterhead of Haskell Slaughter & Young, L.L.C.]
May 21, 1999
SI Diamond Technology, Inc.
3006 Longhorn Boulevard, Suite 107
Austin, Texas 78758
Re: REGISTRATION STATEMENT ON FORM S-8--
AMENDED AND RESTATED 1992 OUTSIDE DIRECTORS' STOCK OPTION
PLAN OF SI DIAMOND TECHNOLOGY, INC. ("SI DIAMOND"); AMENDED
AND RESTATED 1992 EMPLOYEE STOCK OPTION PLAN OF SI DIAMOND;
AMENDED AND RESTATED 1998 DIRECTORS AND OFFICERS STOCK OPTION
PLAN OF SI DIAMOND
Gentlemen:
We have served as counsel for SI Diamond Technology, Inc., a Texas
corporation (the "Company"), in connection with the registration under the
Securities Act of 1993, as amended, of an aggregate of 6,500,000 shares (the
"Shares") of the Company's authorized Common Stock, par value $.001 per share,
to be issued to participants of the above-referenced plans (the "Plans"),
pursuant to the Company's Registration Statement on Form S-8 relating thereto
(the "Registration Statement"). This opinion is furnished to you pursuant to the
requirements of Form S-8.
In connection with this opinion, we have examined and are familiar with
originals or copies (certified or otherwise identified to our satisfaction) of
such documents, corporate records and other instruments relating to the
incorporation of the Company and to the authorization and issuance of the Shares
as we have deemed necessary and appropriate.
Based upon the foregoing, and having regard for such legal
considerations we have deemed relevant, it is our opinion that:
1. The Shares have been duly authorized.
2. Upon issuance, sale and delivery of the Shares as
contemplated in the Registration Statement and the Plans, the Shares will be
legally issued, fully paid and nonassessable.
<PAGE> 2
SI Diamond Technology, Inc.
May 21, 1999
Page 2
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement.
Very truly yours,
HASKELL SLAUGHTER & YOUNG, L.L.C.
By: /s/ Donald T. Locke
-----------------------------------------
Donald T. Locke
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated February 15, 1999 (except as to Note
15, which is as of March 15, 1999), which appears on page 18 of the annual
report on Form 10-KSB of SI Diamond Technology, Inc. and subsidiaries for the
year ended December 31, 1998, and to the reference to our Firm under the caption
"Experts" in the Prospectus.
WALLACE SANDERS & COMPANY
Dallas, Texas
May 20, 1999
