<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
/X/ Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to
sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
PROXIMA CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
PROXIMA CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AUGUST 14, 1996
To The Stockholders:
NOTICE IS HEREBY GIVEN that the 1996 Annual Meeting of Stockholders of
Proxima Corporation, a Delaware corporation (the "Company"), will be held on
August 14, 1996, at 5:00 p.m. at the offices of the Company, 9440 Carroll Park
Drive, San Diego, California 92121, for the following purposes:
1. To elect directors to serve for the following year and until their
successors are duly elected;
2. To approve the 1996 Stock Plan and reserve shares for issuance
thereunder;
3. To ratify the appointment of Deloitte & Touche LLP as independent
accountants of the Company for the fiscal year ending March 30, 1997; and
4. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Stockholders of record at the close of business on June 21, 1996, are
entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to ensure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed Proxy as soon as possible in the envelope
enclosed for that purpose. Any stockholder attending the meeting may vote in
person even if he or she previously returned a Proxy.
By Order of the Board of Directors
/s/ DENNIS A WHITTLER
----------------------------------
DENNIS A. WHITTLER
Secretary
San Diego, California
July 12, 1996
<PAGE> 3
PROXIMA CORPORATION
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
AUGUST 14, 1996
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of Proxima Corporation (the
"Company") for the Annual Meeting of Stockholders to be held on August 14, 1996,
at 5:00 p.m. at the offices of the Company, 9440 Carroll Park Drive, San Diego,
California 92121, or any adjournment or adjournments thereof, for the purposes
set forth herein and in the accompanying Notice of Annual Meeting.
These proxy solicitation materials were mailed on or about July 12, 1996,
to all stockholders entitled to vote at the meeting.
RECORD DATE; OUTSTANDING SHARES
Only stockholders of record at the close of business on June 21, 1996, are
entitled to receive notice of and to vote at the meeting. The outstanding voting
securities of the Company as of such date consisted of 6,943,240 shares of
Common Stock. For information regarding holders of more than 5% of the
outstanding Common Stock, see "Election of Directors -- Securities Ownership."
REVOCABILITY OF PROXIES
The enclosed Proxy is revocable at any time before its use by delivering to
the Company a written notice of revocation or a duly executed proxy bearing a
later date. If a person who has executed and returned a proxy is present at the
meeting and wishes to vote in person, he or she may elect to do so and thereby
suspend the power of the proxy holders to vote his or her proxy.
VOTING AND SOLICITATION
Every stockholder of record on the Record Date is entitled, for each share
held, to one vote on each proposal or item that comes before the meeting. In the
election of directors, each stockholder will be entitled to vote for seven
nominees, and the seven nominees with the greatest number of votes will be
elected.
The cost of this solicitation will be borne by the Company. The Company may
reimburse expenses incurred by brokerage firms and other persons representing
beneficial owners of shares in forwarding solicitation material to beneficial
owners. Proxies may be solicited by certain of the Company's directors, officers
and regular employees, without additional compensation, personally, by telephone
or by telegram.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting
is a majority of the shares of Common Stock issued and outstanding on the Record
Date. Shares that are voted "FOR," AGAINST" or "WITHHELD FROM" a matter are
treated as being present at the meeting for purposes of establishing a quorum
and are also treated as shares "represented and voting" at the Annual Meeting
(the "Votes Cast") with respect to such matter.
<PAGE> 4
While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions, the Company believes that abstentions
should be counted for purposes of determining both (i) the presence or absence
of the quorum for the transaction of business and (ii) the total number of Votes
Cast with respect to a proposal. In the absence of controlling precedent to the
contrary, the Company intends to treat abstentions in this manner. Accordingly,
abstentions will have the same effect as a vote against a proposal.
Broker non-votes will be counted for purposes of determining the presence
or absence of a quorum for the transaction of business, but will not be counted
for purposes of determining the number of Votes Cast with respect to a proposal.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company which are intended to be presented
by such stockholders at the Company's next Annual Meeting must be received by
the Company no later than March 14, 1997, in order that they may be included in
the proxy statement and form of proxy relating to that meeting.
ELECTION OF DIRECTORS
A Board of seven directors is to be elected at the meeting. Unless
otherwise instructed, the proxy holders will vote all of the proxies received by
them for the Company's nominees named below. In the event that additional
persons are nominated for election as directors, the proxy holders intend to
vote all proxies received by them in such a manner as will ensure the election
of as many of the nominees listed below as possible, and, in such event, the
specific nominees to be voted for will be determined by the proxy holders. In
the event that any of the nominees shall become unavailable, the proxy holders
will vote in their discretion for a substitute nominee. It is not expected that
any nominee will be unavailable. The term of office of each person elected as a
director will continue until the next Annual Meeting of Stockholders or until
his successor has been elected and qualified.
VOTE REQUIRED
The seven nominees receiving the highest number of affirmative votes of the
shares entitled to be voted shall be elected to the Board of Directors. Votes
withheld from any director are counted for purposes of determining the presence
or absence of a quorum, but have no other legal effect under Delaware law.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the Company's nominees named below, all of whom are
presently directors of the Company. If any nominee of the Company is unable or
declines to serve as a director at the time of the meeting, the proxies will be
voted for any nominee who is designated by the present Board of Directors to
fill the vacancy. It is not expected that any nominee will be unable or will
decline to serve as a director.
2
<PAGE> 5
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE NOMINEES
LISTED.
The names and certain information about the nominees for directors are set
forth below:
<TABLE>
<CAPTION>
POSITION/PRINCIPAL
NAME OF NOMINEE AGE OCCUPATION DIRECTOR SINCE
- - ----------------------- ---- ---------------------------- --------------
<S> <C> <C> <C>
Patrick Arrington 53 Partner, Rutan and Tucker 1994
Richard E. Belluzzo 42 Executive Vice President, 1995
Computer Organization,
Hewlett-Packard Company
Robert W. Johnson 46 Private Venture Capital 1985
Investor
Jeffrey M. Nash 48 President, TransTech 1993
Information Management
Systems, Inc.
Kenneth E. Olson 59 Chairman of the Board 1984
John E. Rehfeld 56 President and Chief 1996
Executive Officer
John M. Seiber 61 Senior Vice President of 1988
PaineWebber, Inc.
</TABLE>
Except as set forth below, each of the nominees has been engaged in the
principal occupation described above during the past five years. There is no
family relationship between any director or executive officer of the Company.
Mr. Arrington is the partner in charge of the corporate practice at the law
firm of Rutan & Tucker. He joined the firm in July 1983. Mr. Arrington is a
director of SysteMed, Inc.
Mr. Belluzzo is the Executive Vice President, Computer Organization at
Hewlett-Packard Company. Mr. Belluzzo has held various positions at
Hewlett-Packard during the last twenty years.
Mr. Johnson has been a private venture capital investor since July 1988.
Mr. Johnson is a director of STAC Electronics, Inc.
Mr. Nash is the President of TransTech Information Management Systems,
Inc., a software development company. From June 1994 to July 1995, Mr. Nash was
President of Digital Perceptions, Inc., a software development company. From
1989 to June 1994, he served as President of VISqUS Corporation, a computer disk
drive/magnetic recording technology development company which he co-founded in
1989 and which is a subsidiary of Conner Peripherals, a disk drive company. Mr.
Nash is a director of Remec, Inc.
Mr. Olson has served as Chairman of the Board since 1984. From July 1989
through January 1996, he was the Chief Executive Officer of Proxima Corporation
and was also President of the Company from April 1995 through January 1996. Mr.
Olson is a director of Lidak Pharmaceuticals.
Mr. Rehfeld is currently the President and Chief Executive Officer of the
Company. From 1993 to February 1996, he was President and Chief Executive
Officer of Etak, Inc., a leading developer of digital maps, mapping software
tools and vehicle navigation systems. From 1989 to 1993, he was President of
Seiko Instruments USA. Mr. Rehfeld is a director of Wonderware Corporation.
Mr. Seiber is a Senior Vice President of PaineWebber, Inc., an investment
company. He has served in a variety of positions with PaineWebber, Inc. since
1962.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of June 21, 1996, certain information
with respect to the beneficial ownership of the Company's Common Stock by (i)
each person known by the Company to own beneficially more than five percent of
the outstanding shares of Common Stock, (ii) each current director of the
Company, (iii) each of the officers named in the table under "Executive
Compensation -- Summary Compensation Table" and (iv) all directors and executive
officers as a group. Except as otherwise noted
3
<PAGE> 6
below, the Company knows of no agreements among its stockholders which relate to
voting or investment power of its shares of Common Stock.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED
----------------------
DIRECTORS, EXECUTIVE OFFICERS AND PERCENTAGE
FIVE PERCENT STOCKHOLDERS NUMBER OWNERSHIP
-------------------------------------------------------- ------- ----------
<S> <C> <C>
Patrick Arrington(1).................................... 7,989 *
Richard E. Belluzzo(2).................................. 3,710 *
Robert W. Johnson(3).................................... 19,148 *
Jeffrey M. Nash(4)...................................... 10,033 *
Kenneth E. Olson(5)..................................... 328,665 4.7
John E. Rehfeld(6)...................................... 1,000 *
John M. Seiber(7)....................................... 13,994 *
Arthur P. Minich(8)..................................... 25,943 *
Michael S. Tamkin(9).................................... 11,182 *
Donald S. Houston(10)................................... 13,809 *
Dennis A. Whittler(11).................................. 59,194 *
All directors and executive officers as a group
(16 persons)(12)...................................... 546,828 7.9
</TABLE>
- - ---------------
* Less than one percent
(1) Includes 7,989 shares subject to outstanding options that are exercisable
within 60 days of June 21, 1996.
(2) Includes 3,710 shares subject to outstanding options that are exercisable
within 60 days of June 21, 1996.
(3) Includes 9,888 shares subject to outstanding options that are exercisable
within 60 days of June 21, 1996.
(4) Includes 10,033 shares subject to outstanding options that are exercisable
within 60 days of June 21, 1996.
(5) Includes 183,019 shares subject to outstanding options that are exercisable
within 60 days of June 21, 1996.
(6) Includes 1,000 shares held by his spouse, Gunvor Rehfeld, as to which
shares Mr. Rehfeld disclaims beneficial ownership.
(7) Includes 9,888 shares subject to outstanding options that are exercisable
within 60 days of June 21, 1996, and 1,000 shares held by his spouse,
Patricia Seiber, as to which shares Mr. Seiber disclaims beneficial
ownership.
(8) Includes 25,943 shares subject to outstanding options that are exercisable
within 60 days of June 21, 1996.
(9) Includes 11,182 shares subject to outstanding options that are exercisable
within 60 days of June 21, 1996.
(10) Includes 10,400 shares subject to outstanding options that are exercisable
within 60 days of June 21, 1996.
(11) Includes 35,257 shares subject to outstanding options that are exercisable
within 60 days of June 21, 1996.
(12) Includes 329,813 shares subject to outstanding options that are exercisable
within 60 days of June 21, 1996.
4
<PAGE> 7
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of eight meetings during
the fiscal year ended March 31, 1996.
The Audit Committee, currently consisting of director Seiber, met once
during the last fiscal year. This Committee recommends engagement of the
Company's independent public accountants and is primarily responsible for
approving the services performed by such accountants and for reviewing and
evaluating the Company's accounting principles and its system of internal
accounting controls.
The Compensation Committee, currently consisting of directors Johnson and
Nash, met once during the last fiscal year. This Committee establishes the
salary and incentive compensation of the executive officers of the Company and
administers the Company's employee benefit plans.
The Finance Committee, currently consisting of directors Seiber, Nash and
Olson, held one meeting during the last fiscal year. The Finance Committee
reviews matters concerning financing strategies and strategic alliances.
The Nominating Committee, currently consisting of directors Nash, Arrington
and Olson, did not meet during the last fiscal year. The Nominating Committee
reviews candidates and makes recommendations for nominees to serve on the Board
of Directors. The Committee will consider recommendations by stockholders for
vacancies on the Board. Suggestions may be submitted to the Secretary of the
Company.
During the fiscal year ended March 31, 1996, all directors attended at
least 75% of the meetings of the Board of Directors and meetings of Committees
on which such director served.
BOARD COMPENSATION
Non-employee directors are compensated at the rate of $1,000 per meeting of
the Board of Directors and $500 per meeting of a committee that is held on a day
when a meeting of the entire Board is not held. Non-employee directors also
receive a $1,000 quarterly retainer.
REPORT OF THE COMPENSATION COMMITTEE
The following is the Report of the Compensation Committee of the Company,
describing the compensation policies and rationale applicable to the Company's
officers with respect to the compensation paid to the officers for the year
ended March 31, 1996.
TO THE BOARD OF DIRECTORS:
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for reviewing and evaluating the compensation of the Company's
officers. The duties of the Compensation Committee include reviewing and making
recommendations regarding salaries, bonuses and equity-based compensation to the
Board. All recommendations by the Committee submitted to the Board are reviewed
and approved by the non-employee directors. The Committee is composed of Messrs.
Robert Johnson and Jeffrey Nash, both independent, outside directors of the
Company.
- Base Salaries
The Committee establishes the base salaries of the officers by
considering the salaries of officers in similar positions at comparably
sized companies in the electronics industry using survey information
published by the American Electronics Association. The Committee benchmarks
salaries to the 50th percentile of the survey range and also considers the
Company's performance over the past year in such areas as revenues,
profitability and progress toward long-term goals. The base salaries are
reviewed and adjusted annually.
5
<PAGE> 8
- Annual Bonuses
The Committee establishes target bonus levels which vary between 20%
and 50% of base salary for officers. The Committee also predetermines a
minimum performance level below which no bonus is earned and the
performance goal at which the full target bonus is earned. Additional bonus
amounts are earned for achievement of results above the targets. The target
bonus is prorated for achievement of results between the minimum level and
the performance goal. For fiscal 1996, annual bonuses were based upon
earnings goals and also upon revenue goals for certain officers who are
primarily involved with selling.
- Equity-Based Compensation
The Committee views stock options as an important part of the
Company's long-term performance-based compensation plan. The Committee
bases grants of stock options to the officers upon its estimation of each
executive's potential contribution to the long-term growth and
profitability of the Company. The program is intended to provide additional
incentives to the officers to maximize stockholder value. An extensive
review of industry practices was conducted at the end of fiscal 1994 which
served as the basis for equity-based compensation in fiscal 1996. All
options are granted at the fair market value of the Company's Common Stock
at the date of grant. The stock options vest over time to encourage key
employees to remain with the Company.
- Chief Executive Officer Compensation
The compensation of the Company's Chief Executive Officer was based
upon the same criteria described above. Specifically, the Committee
considered (i) salaries of chief executive officers for comparably sized
companies in the electronics industry, (ii) the profitability goals of the
Company and the performance of similar companies, and (iii) the Company's
performance for fiscal year 1996.
COMPENSATION COMMITTEE:
Robert Johnson, Chairman
Jeffrey Nash, Committee Member
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee was or is an officer or employee of
the Company or any of its subsidiaries.
6
<PAGE> 9
PERFORMANCE GRAPH
The following is a graph comparing the cumulative total return to
stockholders of the Company's Common Stock to two indices: (i) the Nasdaq Stock
Market (U.S. Companies) Index and (ii) the Nasdaq Computer Manufacturers Stock
Index. The information contained in the Performance Graph shall not be deemed to
be "soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act or the Exchange Act, except to the extent
that the Company specifically incorporates it by reference into such filing.
COMPARISON OF 38-MONTH CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
MEASUREMENT PERIOD NASDAQ STOCK NASDAQ
(FISCAL YEAR COVERED) PROXIMA CORP MRKT - US COMPUTER MFR
<S> <C> <C> <C>
FEB-93 100 100 100
MAR-93 94 98 90
MAR-94 70 106 87
MAR-95 199 118 104
MAR-96 147 161 161
</TABLE>
<TABLE>
<CAPTION>
2/93 3/93 3/94 3/95 3/96
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Proxima Corporation $100 $ 94 $ 70 $199 $147
Nasdaq Stock Market-U.S. Companies 100 98 106 118 161
Nasdaq Computer Manufacturers 100 90 87 104 161
</TABLE>
The Performance Graph shows the cumulative total return on investment
assuming an investment of $100 on February 4, 1993, in the Company, the Nasdaq
Stock Market (U.S. Companies) Index and the Nasdaq Computer Manufacturers Stock
Index. The return on investment includes the reinvestment of dividends, although
dividends have never been paid on Company stock.
7
<PAGE> 10
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the
compensation paid by the Company for the year ended March 31, 1996, to the Chief
Executive Officer and each of the other four most highly compensated executive
officers of the Company. Also included is an officer who would have been
included in the table but for the fact that he was no longer an executive
officer of the Company at the end of the fiscal year.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
--------------------- UNDERLYING
FISCAL SALARY BONUS OPTION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($) AWARDS (#) COMPENSATION(1)
- - --------------------------------- ------ -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
John E. Rehfeld.................. 1996(2) $ 55,386 $ 25,000 200,000 $ 3,068
President and CEO 1995 -- -- -- --
1994 -- -- -- --
Kenneth E. Olson................. 1996 221,538 -- -- 17,278
Chairman (also President 1995 220,000 220,000 37,000 13,865
and CEO to 2/96) 1994 220,000 19,997 -- --
Arthur P. Minich................. 1996 171,104 -- -- 5,399
Chief Technical Officer; Vice 1995 160,000 111,685 20,000 5,482
President R&D 1994 140,001 7,658 30,000 852
Michael S. Tamkin................ 1996 155,000 -- -- 5,833
Vice President Manufacturing 1995(2) 136,635 68,345 30,000 52,617
1994 -- -- -- --
Donald S. Houston................ 1996 140,000 -- 10,000 3,733
Vice President Sales 1995(2) 16,154 -- 30,000 --
1994 -- -- -- --
Dennis A. Whittler............... 1996 149,000 -- -- 5,041
Vice President Finance; 1995 129,000 81,041 10,000 4,962
CFO and Secretary 1994 117,000 5,701 15,000 4,604
</TABLE>
- - ---------------
(1) Includes life insurance premiums paid by the Company, matching contributions
made by the Company under its 401(k) Plan, and car allowances.
(2) Employed for only a portion of the fiscal year.
8
<PAGE> 11
Option Grants in Last Fiscal Year. The following table sets forth each
grant of stock options made during the fiscal year ended March 31, 1996, to each
of the executive officers named in the Summary Compensation Table:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
------------------------------------------------------------- REALIZABLE VALUE AT
% OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM(1)
OPTIONS EMPLOYEES EXERCISE OR EXPIRATION -------------------------
NAME GRANTED(#) IN FISCAL YEAR BASE PRICE DATE 5% 10%
- - ------------------- ---------- --------------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
John E. Rehfeld..... 200,000 38.7 $ 20.75 1/7/03 $1,689,467 $3,937,176
Kenneth E. Olson.... -- -- -- -- -- --
Arthur P. Minich.... -- -- -- -- -- --
Michael S. Tamkin... -- -- -- -- -- --
Donald S. Houston... 10,000 1.9 19.75 8/17/02 80,402 225,859
Dennis A. Whittler.. -- -- -- -- -- --
</TABLE>
- - ---------------
(1) Potential realizable value is based on an assumption that the stock price
appreciates at the annual rate shown (compounded annually) from the date of
grant until the end of the seven year option term. These numbers are
calculated based on the requirements promulgated by the Securities and
Exchange Commission and do not reflect the Company's estimate of future
stock price growth.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End
Values. The following table sets forth, for each of the executive officers
named in the Summary Compensation Table above, each exercise of stock options
during the fiscal year ended March 31, 1996, and the year-end value of
unexercised options:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
SHARES UNDERLYING UNEXERCISED MONEY OPTIONS AT YEAR END:
ACQUIRED ON VALUE OPTIONS AT YEAR-END: ----------------------------
NAME EXERCISE(#) REALIZED(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(2)
- - --------------------- ----------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
John E. Rehfeld...... -- -- 0 200,000 0 0
Kenneth E. Olson..... 79,999 $ 1,109,985 171,841 55,157 $ 2,148,388 $375,998
Arthur P. Minich..... 50,000 535,237 16,217 58,783 124,990 440,297
Michael S. Tamkin.... 9,000 86,625 7,290 33,710 25,073 177,052
Donald S. Houston.... -- -- 6,049 33,951 0 0
Dennis A. Whittler... 23,333 323,745 31,496 23,503 337,324 147,587
</TABLE>
- - ---------------
(1) Market value of underlying securities minus exercise price at time of
exercise.
(2) Market value of underlying securities at year-end minus the exercise price.
EMPLOYMENT CONTRACTS
On December 22, 1995, John E. Rehfeld accepted employment as the Company's
President, Chief Executive Officer and a Director. The employment offer letter
setting forth the terms of his at-will employment provides for (a) an annual
base salary set until April 1997 at $300,000, (b) eligibility for an annual
bonus initially targeted, but not capped, at 50% of base salary, (c) an
employment bonus of $100,000, payable in equal quarterly installments, (d) an
option under the Company's incentive stock option plan to purchase 200,000
shares of Company Common Stock (with partial accelerated vesting if the Company
is acquired), (e) participation in the Company's 401(k) plan, with the Company
matching 60% of the first 8% of salary deferrals made by Mr. Rehfeld, (f)
reimbursement of cellular telephone expenses and an $800 monthly car allowance,
(g) $125,000 in net relocation expenses and up to $10,000 to cover certain
temporary living expenses, (h) payment of up to 2% of the purchase price of a
new home, and (i) certain other standard employee benefits.
On March 19, 1996, the Company entered into an Agreement Regarding Change
of Status ("Olson Agreement") with Kenneth E. Olson, formerly Chairman of the
Board, President and Chief Executive Officer
9
<PAGE> 12
of the Company. The Olson Agreement provides that Mr. Olson will serve as a
part-time Company employee at a monthly salary of $10,000 until the earlier of
August 5, 1996, or such time as Mr. Olson becomes an employee or consultant of
another company.
The Olson Agreement also provides that Mr. Olson will continue to serve as
Chairman of the Board until the earlier of February 5, 1997, or such time as the
Board elects another Chairman or Mr. Olson resigns as Chairman or as a Director.
The Board anticipates that Mr. Olson will be appointed Vice Chairman of the
Board for up to one year thereafter, but the Board is free to elect a new
Chairman or Vice Chairman at any time. Mr. Olson will serve on the Board until
either the stockholders remove or fail to re-elect him or he resigns from the
Board. The Company is not required to nominate him to a Board seat.
While he remains an employee, Mr. Olson may continue to participate in all
benefits to which he was entitled as of the date of the Olson Agreement, and his
previously granted options will continue to vest. On termination, he will be
granted an option to purchase 2,500 shares of Company Common Stock under the
employee option plan then in effect, which options will vest as if automatically
granted to a continuing director. Thereafter, he will be granted options as a
continuing outside director. If, on termination, he is not employed by another
company, the Board may, under certain circumstances, pay him $60,000.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Company's Bylaws provide that the Company is required to indemnify its
officers and directors to the fullest extent permitted by Delaware law,
including those circumstances in which indemnification would otherwise be
discretionary, and that the Company is required to advance expenses to its
officers and directors as incurred. Further, the Company has entered into
indemnification agreements with its officers and directors. The Company believes
that its charter and bylaw provisions and indemnification agreements are
necessary to attract and retain qualified persons as directors and officers.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act") requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership on Form 3 and changes in ownership on
Form 4 or Form 5 with the Securities and Exchange Commission (the "SEC"). Such
officers, directors and ten percent stockholders are also required by SEC rules
to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, the
Company believes that, during the fiscal year ended March 31, 1996, all Section
16(a) filing requirements applicable to its officers, directors and ten percent
stockholders were complied with except with regard to Donald S. Houston, Vice
President, Sales, who filed a late Form 4.
APPROVAL OF ADOPTION OF THE 1996 STOCK PLAN
BACKGROUND
The Amended and Restated 1986 Stock Option Plan (the "1986 Plan") expired
in February 1996. The Board of Directors adopted the 1996 Stock Plan (the "Plan"
or the 1996 Plan") in June 1996. The stockholders are being requested to
consider and approve the adoption of the Plan and the reservation of 500,000
shares of Common Stock, par value $.001, for issuance thereunder, as well as up
to an additional 500,000 shares that were authorized for issuance under the
expired 1986 Plan, so that they may be returned to the 1996 Plan in the event
options relating to such shares are not exercised prior to the expiration of
such options.
As of March 31, 1996, approximately 1,224,994 shares were subject to
outstanding options under the 1986 Plan at prices ranging from $.19 to $36.88
per share. The closing price of a share of Proxima Corporation Common Stock on
June 21, 1996, was $12.625.
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VOTE REQUIRED
The affirmative vote of a majority of the shares of the Votes Cast will be
required to approve the Plan and reserve shares thereunder. Votes that are cast
against the proposal are counted for the purposes of determining the total
number of Voting Shares with respect to this proposal. THE BOARD OF DIRECTORS
RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ADOPTION OF THE STOCK PLAN.
SUMMARY OF THE 1996 STOCK PLAN
General. The Board of Directors adopted the 1996 Stock Plan in June 1996.
The Board of Directors reserved 500,000 shares of Common Stock for issuance
under the Plan, together with 500,000 additional shares of Common Stock for
issuance to the extent that outstanding options previously granted under the
1986 Stock Option Plan expire unexercised. The Plan provides for the
discretionary grant of options and stock purchase rights ("Rights") to employees
and directors of and consultants to the Company. Options granted under the Plan
may be either "incentive stock options," as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or nonstatutory stock
options.
Purpose. The purpose of the 1996 Plan is to attract and retain the best
available personnel for positions of substantial responsibility with the
Company, to provide additional incentive to the employees, directors and
consultants of the Company and to promote the success of the Company's business.
Administration. The 1996 Plan may generally be administered by the Board
or a Committee appointed by the Board. However, with respect to grants of
options and Rights to employees who are also officers or directors of the
Company ("Insiders"), the 1996 Plan shall be administered by: (i) the Board if
the Board may administer the 1996 Plan in a manner complying with Rule 16b-3
promulgated under the Exchange Act or any successor rule thereto ("Rule 16b-3")
with respect to a Plan under which discretionary grants and awards of equity
securities are to be made to Insiders; or (ii) a committee designated by the
Board to administer the 1996 Plan, which committee shall be constituted to
comply with the rules under Rule 16b-3 governing a Plan under which
discretionary grants and awards of equity securities are to be made to Insiders.
The administrators of the 1996 Plan are referred to herein as the
"Administrator."
Eligibility; Limitations. Nonstatutory stock options and Rights may be
granted under the 1996 Plan to employees, directors and consultants of the
Company and any parent or subsidiary of the Company. Incentive stock options may
be granted only to employees. The Administrator, in its discretion, selects the
employees, directors and consultants to whom options and Rights may be granted,
the time or times at which such awards may be exercised, and the number of
shares subject to each such award. To the extent that the aggregate fair market
value of shares with respect to which Incentive Stock Options are exercisable
for the first time by an optionee in a calendar year under all Company plans
exceeds $100,000, such options shall be treated as nonstatutory options.
Section 162(m) of the Code limits the deductibility of compensation paid to
certain executive officers of the Company. To maximize the Company's deduction
attributable to options granted to such persons, the 1996 Plan provides that no
employee may be granted, in any fiscal year of the Company, options or Rights to
purchase more than 200,000 shares of Common Stock, except that in connection
with an employee's initial employment, he or she may be granted options or
Rights to purchase up to an additional 400,000 shares of Common Stock.
Terms and Conditions of Options. Each option is evidenced by a stock
option agreement between the Company and the optionee, and is subject to the
following additional terms and conditions:
(a) Exercise Price. The Administrator determines the exercise price
of options at the time the options are granted and may also reduce the
exercise price of any option or Right if the fair market value of the
Common Stock covered should decline after the initial grant. The
Administrator may also institute an option exchange program, whereby
outstanding options are exchanged for options with a lower exercise price.
The exercise price of an incentive stock option may not be less than 100%
of the fair market value of the Common Stock on the date such option is
granted; provided, however, that the exercise price of an incentive stock
option granted to a more than 10% stockholder may not be less than
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<PAGE> 14
110% of the fair market value of the Common Stock on the date such option
is granted. The fair market value of the Common Stock is generally
determined with reference to the closing sale price for the Common Stock on
the last market trading day before the date the option is granted.
(b) Exercise of Option; Form of Consideration. The Administrator
determines when options become exercisable and may, in its discretion,
accelerate the vesting of any outstanding option or extend the
post-termination exercise period for options beyond what the Plan otherwise
provides. Stock options granted under the 1996 Plan generally vest and
become exercisable over sixty (60) months. The means of payment for shares
issued upon exercise of an option is specified in each option agreement.
The 1996 Plan permits payment to be made by cash, check, promissory note,
other shares of Common Stock (with some restrictions), cashless exercise, a
reduction in the amount of any Company liability to the optionee, any other
form of consideration permitted by applicable law, or any combination
thereof.
(c) Term of Option. The term of an incentive stock option may be no
more than ten (10) years from the date of grant. An Incentive Stock Option
granted to a more than 10% stockholder may have a term of no more than five
(5) years from the date of grant. No option may be exercised after the
expiration of its term.
(d) Termination of Employment. If an optionee's employment
relationship, directorship or consulting relationship terminates for any
reason other than death or disability, the optionee may exercise any Plan
options that have vested by the termination date within such time as is set
forth in the Notice of Grant or, if no time is so specified, for three
months following the termination. For Incentive Stock Options, the exercise
period may not exceed three months from the termination date. An optionee's
change in status between consultant, employee and director shall not be
considered termination, but an Incentive Stock Option shall be treated for
tax purposes as a nonstatutory stock option three months and one day after
an optionee stops being an employee.
(e) Death or Disability. If an optionee's employment relationship,
directorship or consulting relationship terminates as a result of death or
disability, then all options held by such optionee under the 1996 Plan
expire on the earlier of (i) 12 months from the date of such termination or
(ii) the expiration date of such option in the Notice of Grant. The
optionee (or the optionee's estate or the person who acquires the right to
exercise the option by bequest or inheritance) may exercise all or part of
the option at any time before such expiration to the extent that the option
was exercisable at the time of such termination.
(f) Nontransferability of Options: Options granted under the 1996
Plan are not transferable other than by will or the laws of descent and
distribution, and may be exercised during the optionee's lifetime only by
the optionee.
(g) The Administrator may offer to buy an optionee's option for cash
or shares on terms determined by the Administrator.
(h) Other Provisions: The stock option agreement may contain such
other terms, provisions and conditions not inconsistent with the 1996 Plan
as the Administrator may determine.
Stock Purchase Rights. A stock purchase right gives the purchaser a period
of no longer than six (6) months from the date of grant to purchase Common
Stock. A stock purchase right is accepted by the execution of a restricted stock
purchase agreement between the Company and the purchaser, accompanied by the
payment of the purchase price for the shares. Unless the Administrator
determines otherwise, the restricted stock purchase agreement shall give the
Company a repurchase option exercisable upon the voluntary or involuntary
termination of the purchaser's employment relationship, directorship or
consulting relationship with the Company for any reason (including death and
disability). The purchase price for any shares repurchased by the Company shall
be the original price paid by the purchaser. The repurchase option lapses at a
rate determined by the Administrator. A stock purchase right is nontransferable
other than by will or the laws of descent and distribution, and may be exercised
during the Right holder's lifetime only by the Right holder.
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<PAGE> 15
Adjustments Upon Changes in Capitalization. If the stock of the Company
changes by reason of any stock split, reverse stock split, stock dividend,
combination, reclassification or other increase or decrease in the number of
issued shares of Common Stock effected without the receipt of consideration,
appropriate adjustments shall be made in the number of shares of stock subject
to the 1996 Plan, the number of unissued or returned Plan shares and shares
subject to any option or Right outstanding under the 1996 Plan, and the exercise
price of any such outstanding award.
In the event of a liquidation or dissolution, any unexercised options or
Rights will terminate. The Administrator may, in its discretion, provide that
each optionee shall have the right to exercise all of the optionee's options,
including those not otherwise exercisable, and may provide that any Company
repurchase right lapses if the proposed liquidation or dissolution takes place
as contemplated.
In connection with any merger or sale of substantially all the assets of
the Company, each outstanding option or Right shall be assumed or an equivalent
option or right shall be substituted by the successor corporation. If the
successor corporation refuses to assume the options and Rights or to substitute
substantially equivalent awards, the optionee or Right holder shall be entitled
to exercise the option or Right in full, including as to shares not otherwise
exercisable. In such event, the Administrator shall notify the optionee or Right
holder that the option or Right is fully exercisable for fifteen (15) days from
the date of such notice and that the option or Right terminates upon expiration
of such period.
Amendment and Termination of the 1996 Plan. The Board may amend, alter,
suspend or terminate the 1996 Plan at any time. However, the Company shall
obtain stockholder approval for any amendment to the 1996 Plan to the extent
necessary or desirable to comply with Rule 16b-3 or Section 422 of the Code, or
any successor rule or statute or other applicable law, including requirements of
an exchange or quotation system. No such action by the Board or stockholders may
alter or impair any option or Right previously granted under the 1996 Plan
without the written consent of the optionee or Right holder. Unless terminated
earlier, the 1996 Plan shall terminate ten years from the date of its approval.
FEDERAL INCOME TAX CONSEQUENCES FOR THE 1996 PLAN
Incentive Stock Options. An optionee who is granted an Incentive Stock
Option does not recognize taxable income at the time the option is granted or
upon its exercise, although the exercise may subject the optionee to the
alternative minimum tax. Upon a disposition of the shares more than two years
after grant of the option and one year after exercise of the option, any gain or
loss is treated as long-term capital gain or loss. If these holding periods are
not satisfied, the optionee recognizes ordinary income at the time of
disposition equal to the lesser of (A) the difference between the fair market
value of the shares at the date of the option exercise and the aggregate
exercise price, and (B) the difference between the sale price of the shares and
the aggregate exercise price. A different rule for measuring ordinary income
upon such a premature disposition may apply if the optionee is also an officer,
director, or a more than 10% stockholder of the Company. The Company is entitled
to a deduction in the same amount as the ordinary income recognized by the
optionee.
Nonstatutory Stock Options. An optionee does not recognize any taxable
income at the time of a grant of a nonstatutory stock option. Upon exercise, the
optionee recognizes taxable income generally measured by the excess of the then
fair market value of the shares over the aggregate exercise price. Any taxable
income recognized in connection with an option exercise by an employee or former
employee of the Company is subject to tax withholding by the Company. The
Company is entitled to a deduction in the same amount as the ordinary income
recognized by the optionee.
Stock Purchase Rights. Stock purchase rights will generally be taxed in
the same manner as nonstatutory stock options. However, restricted stock is
generally purchased upon the exercise of a stock purchase right. At the time of
purchase, restricted stock is subject to a "substantial risk of forfeiture"
within the meaning of Section 83 of the Code. As a result, the purchaser will
not recognize ordinary income at the time of purchase. Instead, the purchaser
will recognize ordinary income on the dates when a stock ceases to be subject to
a substantial risk of forfeiture. The stock will generally cease to be subject
to a substantial risk of forfeiture when it is no longer subject to the
Company's right to repurchase the stock upon the purchaser's termination of the
employment relationship, directorship or consulting relationship with the
Company. At
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<PAGE> 16
such times, the purchaser will recognize ordinary income measured as the
difference between the purchase price and the fair market value of the stock on
the date the stock is no longer subject to a substantial risk of forfeiture.
The purchaser may accelerate to the date of purchase the recognition of
ordinary income, if any, and the beginning of any capital gain holding period by
timely filing an election pursuant to Section 83(b) of the Code. In such event,
the ordinary income recognized, if any, is measured as the difference between
the purchase price and the fair market value of the stock on the date of
purchase, and the capital gain holding period commences on such date. The
ordinary income recognized by a purchaser who is an employee or former employee
will be subject to tax withholding by the Company. Different rules may apply if
the purchaser is also an officer, director, or a more than 10% stockholder of
the Company.
The foregoing is only a summary of the effect of federal income taxation
upon optionees, holders of stock purchase rights, and the Company with respect
to the grant and exercise of options and stock purchase rights under the 1996
Plan. It does not purport to be complete and does not discuss the tax
consequences of an employee's, director's or consultant's death or the
provisions of the income tax laws of any municipality, state or foreign country
in which the employee, director or consultant may reside.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Deloitte & Touche LLP, independent
accountants, to audit the books, records and accounts of the Company for the
fiscal year ending March 30, 1997. Deloitte & Touche has audited the Company's
financial statements since fiscal 1983.
The affirmative vote of the holders of a majority of the Company's Common
Stock represented and voting at the meeting will be required to approve and
ratify the Board's selection of Deloitte & Touche. The Board of Directors
recommends voting "FOR" approval and ratification of such selection. In the
event of a negative vote on such ratification, the Board of Directors will
reconsider its selection.
A representative of Deloitte & Touche is expected to be available at the
Annual Meeting to make a statement if such representative desires to do so and
to respond to appropriate questions.
OTHER MATTERS
Management does not intend to bring before the meeting any matters other
than those set forth herein, and has no present knowledge that any other matters
will or may be brought before the meeting by others. However, if any other
matters properly come before the meeting, it is the intention of the persons
named in the enclosed form of Proxy to vote the Proxies in accordance with their
judgment.
The Company has borne the cost of preparing, assembling and mailing this
proxy solicitation material.
By Order of the Board of Directors
/s/ Dennis A. Whittler
----------------------------------
Dennis A. Whittler
Secretary
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PROXIMA CORPORATION
1996 STOCK PLAN
1. Purposes of the Plan. The purposes of this Stock Plan are:
- to attract and retain the best available personnel for
positions of substantial responsibility,
- to provide additional incentive to Employees, Directors and
Consultants, and
- to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the legal requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code and the applicable laws of any
foreign country or jurisdiction where Options or Stock Purchase Rights are, or
will be, granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a Committee appointed by the Board in
accordance with Section 4 of the Plan.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means Proxima Corporation, a Delaware corporation.
(h) "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services and who is compensated
for such services.
(i) "Continuous Status as an Employee, Director or Consultant" means
that (i) the employment relationship with, (ii) the relationship as a Director
of or (iii) the consulting relationship with the Company, any Parent, or
Subsidiary, is not interrupted or terminated. Continuous Status as
<PAGE> 18
an Employee, Director or Consultant shall not be considered interrupted in the
case of (i) any leave of absence approved by the Company or (ii) transfers
between locations of the Company or between the Company, its Parent, any
Subsidiary, or any successor. A leave of absence approved by the Company shall
include sick leave, military leave, or any other personal leave approved by an
authorized representative of the Company. For purposes of Incentive Stock
Options, no such leave may exceed ninety days, unless reemployment upon
expiration of such leave is guaranteed by statute or contract. If reemployment
upon expiration of a leave of absence approved by the Company is not so
guaranteed, on the 181st day of such leave any Incentive Stock Option held by
the Optionee shall cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Nonstatutory Stock Option.
(j) "Director" means a member of the Board.
(k) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(l) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(n) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
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(o) "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(p) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(q) "Notice of Grant" means a written notice evidencing certain
terms and conditions of an individual Option or Stock Purchase Right grant. The
Notice of Grant is part of the Option Agreement.
(r) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "Option" means a stock option granted pursuant to the Plan.
(t) "Option Agreement" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.
(u) "Option Exchange Program" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.
(v) "Optioned Stock" means the Common Stock subject to an Option or
Stock Purchase Right.
(w) "Optionee" means an Employee, Director or Consultant who holds
an outstanding Option or Stock Purchase Right.
(x) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(y) "Plan" means this 1996 Stock Plan.
(z) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under Section 11 below.
(aa) "Restricted Stock Purchase Agreement" means a written agreement
between the Company and the Optionee evidencing the terms and restrictions
applying to stock purchased under a Stock Purchase Right. The Restricted Stock
Purchase Agreement is subject to the terms and conditions of the Plan and the
Notice of Grant.
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(bb) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(cc) "Section 16(b)" means Section 16(b) of the Securities Exchange
Act of 1934, as amended.
(dd) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
(ee) "Stock Purchase Right" means the right to purchase Common Stock
pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(ff) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 13
of the Plan, the maximum aggregate number of Shares that may be optioned and
sold under the Plan is 500,000 Shares, plus any Shares returned to the Plan as a
result of termination of options under the 1986 Stock Option Plan, which amount
shall not exceed 500,000 Shares. The Shares may be authorized, but unissued, or
reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, the unpurchased Shares that were subject thereto
shall become available for future grant or sale under the Plan (unless the Plan
has terminated); provided, however, that Shares that have actually been issued
under the Plan, whether upon exercise of an Option or a Right, shall not be
returned to the Plan and shall not become available for future distribution
under the Plan, except that if Shares of Restricted Stock are repurchased by the
Company at their original purchase price, and the original purchaser of such
Shares did not receive any benefits of ownership of such Shares, such Shares
shall become available for future grant under the Plan. For purposes of the
preceding sentence, voting rights shall not be considered a benefit of Share
ownership.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. If permitted by Rule 16b-3,
the Plan may be administered by different bodies with respect to Directors,
Officers who are not Directors, and Employees who are neither Directors nor
Officers.
(ii) Administration With Respect to Directors and Officers
Subject to Section 16(b). With respect to Option or Stock Purchase Right grants
made to Employees who are also Officers or Directors subject to Section 16(b) of
the Exchange Act, the Plan shall be administered by
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<PAGE> 21
(A) the Board, if the Board may administer the Plan in a manner complying with
the rules under Rule 16b-3 relating to the disinterested administration of
employee benefit plans under which Section 16(b) exempt discretionary grants and
awards of equity securities are to be made, or (B) a committee designated by the
Board to administer the Plan, which committee shall be constituted to comply
with the rules under Rule 16b-3 relating to the disinterested administration of
employee benefit plans under which Section 16(b) exempt discretionary grants and
awards of equity securities are to be made. Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of the Committee and
appoint additional members, remove members (with or without cause) and
substitute new members, fill vacancies (however caused), and remove all members
of the Committee and thereafter directly administer the Plan, all to the extent
permitted by the rules under Rule 16b-3 relating to the disinterested
administration of employee benefit plans under which Section 16(b) exempt
discretionary grants and awards of equity securities are to be made.
(iii) Administration With Respect to Other Persons. With respect
to Option or Stock Purchase Right grants made to Employees or Consultants who
are neither Directors nor Officers of the Company, the Plan shall be
administered by (A) the Board or (B) a committee designated by the Board, which
committee shall be constituted to satisfy Applicable Laws. Once appointed, such
Committee shall serve in its designated capacity until otherwise directed by the
Board. The Board may increase the size of the Committee and appoint additional
members, remove members (with or without cause) and substitute new members, fill
vacancies (however caused), and remove all members of the Committee and
thereafter directly administer the Plan, all to the extent permitted by
Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the Plan,
and in the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, the Administrator shall have the authority, in its
discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(n) of the Plan;
(ii) to select the Employees, Directors and Consultants to whom
Options and Stock Purchase Rights may be granted hereunder;
(iii) to determine whether and to what extent Options and Stock
Purchase Rights, or any combination thereof, are granted hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each Option and Stock Purchase Right granted hereunder;
(v) to approve forms of agreement for use under the Plan;
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<PAGE> 22
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options or Stock Purchase Rights may be exercised (which may be based
on performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Option or Stock
Purchase Right or the shares of Common Stock relating thereto, based in each
case on such factors as the Administrator, in its sole discretion, shall
determine;
(vii) to reduce the exercise price of any Option or Stock
Purchase Right to the then current Fair Market Value if the Fair Market Value of
the Common Stock covered by such Option or Stock Purchase Right shall have
declined since the date the Option or Stock Purchase Right was granted;
(viii) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;
(x) to modify or amend each Option or Stock Purchase Right
(subject to Section 15(c) of the Plan), including the discretionary authority to
extend the post-termination exercisability period of Options longer than is
otherwise provided for in the Plan;
(xi) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option or Stock Purchase Right
previously granted by the Administrator;
(xii) to institute an Option Exchange Program;
(xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Purchase Rights.
5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights
may be granted to Employees, Directors and Consultants. Incentive Stock Options
may be granted only to Employees. If otherwise eligible, an Employee, Director
or Consultant who has been granted an Option or Stock Purchase Right may be
granted additional Options or Stock Purchase Rights.
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<PAGE> 23
6. Limitations.
(a) Each Option shall be designated in the written option agreement
as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair
Market Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon an Optionee any right with respect to continuing the Optionee's
employment or consulting relationship with the Company, nor shall they
interfere in any way with the Optionee's right or the Company's right to
terminate such employment or consulting relationship at any time, with or
without cause.
(c) The following limitations shall apply to grants of Options and
Stock Purchase Rights to Employees:
(i) No Employee shall be granted, in any fiscal year of the
Company, Options and Stock Purchase Rights to purchase more than 200,000 Shares.
(ii) In connection with his or her initial employment, an
Employee may be granted Options and Stock Purchase Rights to purchase up to an
additional 400,000 Shares, which shall not count against the limit set forth in
subsection (i) above.
(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 13.
(iv) If an Option or Stock Purchase Right is cancelled in the
same fiscal year of the Company in which it was granted (other than in
connection with a transaction described in Section 13), the cancelled Option or
Stock Purchase Right will be counted against the limits set forth in subsections
(i) and (ii) above. For this purpose, if the exercise price of an Option or
Stock Purchase Right is reduced, the transaction will be treated as a
cancellation of the Option or Stock Purchase Right and the grant of a new Option
or Stock Purchase Right.
7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall
become effective upon the earlier to occur of its adoption by the Board or its
approval by the stockholders of the Company as described in Section 19 of the
Plan. It shall continue in effect for a term of ten (10) years unless terminated
earlier under Section 15 of the Plan.
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<PAGE> 24
8. Term of Option. The term of each Option shall be stated in the
Notice of Grant; provided, however, that in the case of an Incentive Stock
Option, the term shall be ten (10) years from the date of grant or such shorter
term as may be provided in the Notice of Grant. Moreover, in the case of an
Incentive Stock Option granted to an Optionee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Incentive Stock Option shall be five (5) years from
the date of grant or such shorter term as may be provided in the Notice of
Grant.
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the Shares
to be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the
Incentive Stock Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee
described in paragraph (A) immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per
Share exercise price shall be determined by the Administrator.
(b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions that must be satisfied before the
Option may be exercised. In so doing, the Administrator may specify that an
Option may not be exercised until the completion of a service period.
(c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
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<PAGE> 25
(iv) other Shares (A) that have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised, and (B) in the case of Shares acquired
upon exercise of an option, that have been owned by the Optionee for more than
six months on the date of surrender.
(v) delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option, a sale of all or
a portion of the Shares acquired pursuant thereto and delivery to the Company of
the sale or loan proceeds required to pay the exercise price;
(vi) a reduction in the amount of any Company liability
to the Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement;
(vii) any combination of the foregoing methods of
payment; or
(viii) other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as may be determined by the Administrator
and set forth in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company
receives: (i) written notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the stock certificate evidencing such Shares is issued (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly after the Option is exercised. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 13 of the Plan.
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<PAGE> 26
Exercising an Option in any manner shall decrease the number of
Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.
(b) Termination of Employment Relationship, Directorship or Consulting
Relationship. Upon termination of an Optionee's Continuous Status as an
Employee, Director or Consultant, other than upon the Optionee's death or
Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Notice of Grant to the extent that he or she is
entitled to exercise it on the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Notice of Grant).
In the absence of a specified time in the Notice of Grant, the Option shall
remain exercisable for three (3) months following the Optionee's termination. In
the case of an Incentive Stock Option, such period of time for exercise shall
not exceed three (3) months from the date of termination. If, on the date of
termination, the Optionee is not entitled to exercise his or her entire Option,
the Shares covered by the unexercisable portion of the Option shall revert to
the Plan. If, after termination, the Optionee does not exercise his or her
Option within the time specified by the Administrator, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
Notwithstanding the above, in the event of changes in an Optionee's
status between Employee, Director or Consultant, the Optionee's Continuous
Status as an Employee, Director or Consultant shall not automatically terminate
solely as a result of such changes in status. In such event, an Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option
three months and one day following the date Optionee's status as an employee
terminated.
(c) Disability of Optionee. Upon termination of an Optionee's
Continuous Status as an Employee, Director or Consultant as a result of the
Optionee's Disability, the Optionee may exercise his or her Option at any time
within twelve (12) months from the date of termination, but only to the extent
that the Optionee is entitled to exercise it on the date of termination (and in
no event later than the expiration of the term of the Option as set forth in the
Notice of Grant). If, on the date of termination, the Optionee is not entitled
to exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.
(d) Death of Optionee. Upon the death of an Optionee, the Option may be
exercised at any time within twelve (12) months following the date of death (but
in no event later than the expiration of the term of such Option as set forth in
the Notice of Grant), by the Optionee's estate or by a person who acquires the
right to exercise the Option by bequest or inheritance, but only to the extent
that the Optionee would have been entitled to exercise the Option on the date of
death. If, at the time of death, the Optionee is not entitled to exercise his or
her entire Option, the Shares covered by the unexercisable portion of the Option
shall immediately revert to the Plan. If the Optionee's estate or the person who
acquires the right to exercise the Option by bequest or inheritance does not
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<PAGE> 27
exercise the Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
(f) Rule 16b-3. Options granted to individuals subject to Section
16 of the Exchange Act ("Insiders") must comply with the applicable provisions
of Rule 16b-3 and shall contain such additional conditions or restrictions as
may be required thereunder to qualify for the maximum exemption from Section 16
of the Exchange Act with respect to Plan transactions.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing, by means of a Notice of Grant, of the terms,
conditions and restrictions related to the offer, including the number of Shares
that the offeree shall be entitled to purchase, the price to be paid, and the
time within which the offeree must accept such offer, which shall in no event
exceed six (6) months from the date upon which the Administrator made the
determination to grant the Stock Purchase Right. The offer shall be accepted by
execution of a Restricted Stock Purchase Agreement in the form determined by the
Administrator.
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment relationship, directorship or consulting relationship
with the Company for any reason (including death or Disability). The purchase
price for Shares repurchased pursuant to the Restricted Stock Purchase Agreement
shall be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The repurchase
option shall lapse at a rate determined by the Administrator.
(c) Rule 16b-3. Stock Purchase Rights granted to Insiders, and
Shares purchased by Insiders in connection with Stock Purchase Rights, shall be
subject to any restrictions applicable thereto in compliance with Rule 16b-3. An
Insider may only purchase Shares pursuant to the grant of a Stock Purchase
Right, and may only sell Shares purchased pursuant to the grant of a Stock
Purchase Right, during such time or times as are permitted by Rule 16b-3.
(d) Other Provisions. The Restricted Stock Purchase Agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock Purchase Agreements need not be the
same with respect to each purchaser.
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<PAGE> 28
(e) Rights as a Stockholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 13
of the Plan.
12. Non-Transferability of Options and Stock Purchase Rights. An Option
or Stock Purchase Right may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
13. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action by
the stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, and the number of shares of
Common Stock that have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or that have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse
as to all such Shares, provided the proposed dissolution or liquidation takes
place at the time and in the manner contemplated. To the extent it has not been
previously exercised, an Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.
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<PAGE> 29
(c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option and Stock Purchase Right shall be
assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the event
that the successor corporation refuses to assume or substitute for the Option or
Stock Purchase Right, the Optionee shall have the right to exercise the Option
or Stock Purchase Right as to all of the Optioned Stock, including Shares as to
which it would not otherwise be exercisable. If an Option or Stock Purchase
Right is exercisable in lieu of assumption or substitution in the event of a
merger or sale of assets, the Administrator shall notify the Optionee that the
Option or Stock Purchase Right shall be fully exercisable for a period of
fifteen (15) days from the date of such notice, and the Option or Stock Purchase
Right shall terminate upon the expiration of such period. For the purposes of
this paragraph, the Option or Stock Purchase Right shall be considered assumed
if, following the merger or sale of assets, the option or right confers the
right to purchase or receive, for each Share of Optioned Stock subject to the
Option or Stock Purchase Right immediately prior to the merger or sale of
assets, the consideration (whether stock, cash, or other securities or property)
received in the merger or sale of assets by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the merger or sale of assets was not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option or Stock Purchase Right, for each Share
of Optioned Stock subject to the Option or Stock Purchase Right, to be solely
common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
merger or sale of assets.
14. Date of Grant. The date of grant of an Option or Stock Purchase
Right shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.
15. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) Stockholder Approval. The Company shall obtain stockholder
approval of any Plan amendment to the extent necessary or desirable to comply
with Rule 16b-3 or with Section 422 of the Code (or any successor rule or
statute or other applicable law, rule or regulation, including the requirements
of any exchange or quotation system on which the Common Stock is listed or
quoted). Such stockholder approval, if required, shall be obtained in such a
manner and to such a degree as is required by the applicable law, rule or
regulation.
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<PAGE> 30
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
16. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the exercise of such Option
or Stock Purchase Right and the issuance and delivery of such Shares shall
comply with all relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, Applicable Laws, and the requirements of any stock
exchange or quotation system upon which the Shares may then be listed or quoted,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
(b) Investment Representations. As a condition to the exercise of
an Option or Stock Purchase Right, the Company may require the person exercising
such Option or Stock Purchase Right to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required.
17. Liability of Company.
(a) Inability to Obtain Authority. The inability of the Company
to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
(b) Grants Exceeding Allotted Shares. If the Optioned Stock
covered by an Option or Stock Purchase Right exceeds, as of the date of grant,
the number of Shares that may be issued under the Plan without additional
stockholder approval, such Option or Stock Purchase Right shall be void with
respect to such excess Optioned Stock, unless stockholder approval of an
amendment sufficiently increasing the number of Shares subject to the Plan is
timely obtained in accordance with Section 15(b) of the Plan.
18. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
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<PAGE> 31
19. Stockholder Approval. Continuance of the Plan shall be subject to
approval by the stockholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such stockholder approval shall be obtained
in the manner and to the degree required under Applicable Laws and the rules of
any stock exchange or quotation system upon which the Common Stock is listed.
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<PAGE> 32
1996 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
[Optionee's Name and Address]
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Grant Number _________________________
Date of Grant _________________________
Vesting Commencement Date _________________________
Exercise Price per Share $________________________
Total Number of Shares Granted _________________________
Total Exercise Price $_________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: _________________________
Vesting Schedule:
This Option may be exercised, in whole or in part, in accordance with
the following schedule:
20% of the Shares subject to the Option shall vest twelve months after
the Vesting Commencement Date. Beginning with the thirteenth month and ending
with the sixtieth month after the Vesting Commencement Date, 1/60 of the Shares
subject to the Option shall vest in each such month.
<PAGE> 33
Termination Period:
This Option may be exercised for 90 days after termination of the
Optionee's employment or consulting relationship with the Company. Upon the
death or Disability of the Optionee, this Option may be exercised for such
longer period as is provided in the Plan. In the event of changes in the
Optionee's status between Employee, Director or Consultant, this Option
Agreement shall remain in effect. In no event shall this Option be exercised
later than the Term/Expiration Date as provided above.
II. AGREEMENT
1. Grant of Option. The Plan Administrator of the Company hereby grants
to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee") an option (the "Option") to purchase the number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to
Section 15(c) of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option Agreement,
the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").
2. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its term
in accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement. In the event of
Optionee's death, Disability or other termination of Optionee's employment or
consulting relationship, the exercisability of the Option is governed by the
applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of
an exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The Exercise Notice shall be accompanied by payment of
the aggregate Exercise Price as to all Exercised Shares. This Option shall be
deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price.
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<PAGE> 34
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise comply with all relevant provisions of law and
the requirements of any stock exchange or quotation service upon which the
Shares are then listed. Assuming such compliance, for income tax purposes the
Exercised Shares shall be considered transferred to the Optionee on the date the
Option is exercised with respect to such Exercised Shares.
3. Method of Payment. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash; or
(b) check; or
(c) delivery of a properly executed exercise notice together with
such other documentation as the Administrator and the broker, if applicable,
shall require to effect an exercise of the Option, a sale of all or a portion of
the Shares acquired pursuant thereto and delivery to the Company of the sale or
loan proceeds required to pay the exercise price; or
(d) surrender of other Shares (i) that have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares, AND (ii) in the case of Shares acquired upon exercise of an option, that
have been owned by the Optionee for more than six (6) months on the date of
surrender.
4. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
5. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
6. Tax Consequences. Some of the federal and state tax consequences
relating to this Option, as of the date of this Option, are set forth below.
THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING
THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercising the Option.
(i) Nonstatutory Stock Option. The Optionee may incur
regular federal income tax and state income tax liability upon exercise of a
NSO. The Optionee will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if any, of
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<PAGE> 35
the Fair Market Value of the Exercised Shares on the date of exercise over their
aggregate Exercise Price. If the Optionee is an Employee or a former Employee,
the Company will be required to withhold from his or her compensation or collect
from Optionee and pay to the applicable taxing authorities an amount in cash
equal to a percentage of this compensation income at the time of exercise, and
may refuse to honor the exercise and refuse to deliver Shares if such
withholding amounts are not delivered at the time of exercise.
(ii) Incentive Stock Option. If this Option qualifies as
an ISO, the Optionee will have no regular federal income tax or state income tax
liability upon its exercise, although the excess, if any, of the Fair Market
Value of the Exercised Shares on the date of exercise over their aggregate
Exercise Price will be treated as an adjustment to alternative minimum taxable
income for federal tax purposes and may subject the Optionee to alternative
minimum tax in the year of exercise. In the event that the Optionee undergoes a
change of status from Employee to Director or Consultant, any Incentive Stock
Option of the Optionee that remains unexercised shall cease to qualify as an
Incentive Stock Option and will be treated for tax purposes as a Nonstatutory
Stock Option on the ninety-first (91st) day following such change of status.
(b) Disposition of Shares.
(i) NSO. If the Optionee holds NSO Shares for at least
one year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at least
one year after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the lesser of (A) the difference between the Fair Market
Value of the Shares acquired on the date of exercise and the aggregate Exercise
Price, or (B) the difference between the sale price of such Shares and the
aggregate Exercise Price.
(c) Notice of Disqualifying Disposition of ISO Shares. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the Company
in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.
7. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely
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<PAGE> 36
to the Optionee's interest except by means of a writing signed by the Company
and Optionee. This agreement is governed by California law except for that body
of law pertaining to conflict of laws.
8. NO GUARANTEE OF EMPLOYMENT. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY
CONTINUING SERVICE AS AN EMPLOYEE, DIRECTOR OR CONSULTANT AT THE WILL OF THE
COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR
PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS
AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET
FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS AN EMPLOYEE, DIRECTOR OR CONSULTANT FOR THE VESTING PERIOD, FOR
ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE
COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT RELATIONSHIP, DIRECTORSHIP OR
CONSULTING RELATIONSHIP AT ANY TIME, WITH OR WITHOUT CAUSE.
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
OPTIONEE: PROXIMA CORPORATION
__________________________________ By:________________________________
Signature
__________________________________ ________________________________
Print Name Print Name
__________________________________ Title:______________________________
Residence Address
__________________________________
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<PAGE> 37
CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves the
terms and conditions of the Plan and this Option Agreement. In consideration of
the Company's granting his or her spouse the right to purchase Shares as set
forth in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.
__________________________________
Spouse of Optionee
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<PAGE> 38
EXHIBIT A
1996 STOCK PLAN
EXERCISE NOTICE
PROXIMA CORPORATION
9440 Carroll Park Drive
San Diego, CA 92121
Attention: Corporate Secretary
1. Exercise of Option. Effective as of today, ________________, 199__,
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Proxima Corporation (the "Company") under
and pursuant to the 1996 Stock Plan (the "Plan") and the Stock Option Agreement
dated , 19___ (the "Option Agreement"). The purchase price for the Shares shall
be $ , as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. Rights as Stockholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment will
be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 13 of the
Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing
<PAGE> 39
signed by the Company and Purchaser. This agreement is
governed by California law except for that body of law pertaining to conflict of
laws.
Submitted by: Accepted by:
PURCHASER: PROXIMA CORPORATION
__________________________________ By: _________________________________
Signature
__________________________________ _____________________________________
Print Name Print Name
Its:_________________________________
Address: Address:
___________________________ 9440 Carroll Park Drive
___________________________ San Diego, CA 92121
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<PAGE> 40
1996 STOCK PLAN
NOTICE OF GRANT OF STOCK PURCHASE RIGHT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Notice of Grant.
[Grantee's Name and Address]
You have been granted the right to purchase Common Stock of the Company,
subject to the Company's Repurchase Option and your ongoing Continuous Status as
an Employee, Director or Consultant (as described in the Plan and the attached
Restricted Stock Purchase Agreement), as follows:
Grant Number _________________________
Date of Grant _________________________
Price Per Share $________________________
Total Number of Shares Subject _________________________
to This Stock Purchase Right
Expiration Date: _________________________
YOU MUST EXERCISE THIS STOCK PURCHASE RIGHT BEFORE THE EXPIRATION DATE
OR IT WILL TERMINATE AND YOU WILL HAVE NO FURTHER RIGHT TO PURCHASE THE SHARES.
By your signature and the signature of the Company's representative below, you
and the Company agree that this Stock Purchase Right is granted under and
governed by the terms and conditions of the 1996 Stock Plan and the Restricted
Stock Purchase Agreement, attached hereto as Exhibit A-1, both of which are made
a part of this document. You further agree to execute the attached Restricted
Stock Purchase Agreement as a condition to purchasing any shares under this
Stock Purchase Right.
GRANTEE: PROXIMA CORPORATION
___________________________ By: ___________________________
Signature
___________________________ _______________________________
Print Name Print Name
Its:___________________________
<PAGE> 41
EXHIBIT A-1
1996 STOCK PLAN
RESTRICTED STOCK PURCHASE AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Restricted Stock Purchase Agreement.
WHEREAS the Purchaser named in the Notice of Grant, (the "Purchaser") is
an Employee, Director or Consultant of the Company, and the Purchaser's
continued participation is considered by the Company to be important for the
Company's continued growth; and
WHEREAS in order to give the Purchaser an opportunity to acquire an
equity interest in the Company as an incentive for the Purchaser to participate
in the affairs of the Company, the Administrator has granted to the Purchaser a
Stock Purchase Right subject to the terms and conditions of the Plan and the
Notice of Grant, which are incorporated herein by reference, and pursuant to
this Restricted Stock Purchase Agreement (the "Agreement");
NOW THEREFORE, the parties agree as follows:
1. Sale of Stock. The Company hereby agrees to sell to the Purchaser and
the Purchaser hereby agrees to purchase shares of the Company's Common Stock
(the "Shares"), at the per Share purchase price and as otherwise described in
the Notice of Grant.
2. Payment of Purchase Price. The purchase price for the Shares may be
paid by delivery to the Company at the time of execution of this Agreement of
cash, a check, or some combination thereof.
3. Repurchase Option.
(a) In the event the Purchaser's Continuous Status as an
Employee, Director or Consultant terminates for any or no reason (including
death or disability) before all of the Shares are released from the Company's
Repurchase Option (see Section 4), the Company shall, upon the date of such
termination (as reasonably fixed and determined by the Company) have an
irrevocable, exclusive option (the "Repurchase Option"), for a period of sixty
(60) days from such date, to repurchase at the original purchase price per share
(the "Repurchase Price") up to that number of shares that constitute the
Unreleased Shares (as defined in Section 4). The Repurchase Option shall be
exercised by the Company by delivering written notice to the Purchaser or the
Purchaser's executor (with a copy to the Escrow Holder) AND, at the Company's
option, (i) by delivering to the Purchaser or the Purchaser's executor cash or a
check in the amount of the aggregate Repurchase Price, or (ii) by cancelling an
amount of the Purchaser's indebtedness to the Company equal to the aggregate
Repurchase Price, or (iii) by a combination of (i) and (ii) so that the combined
payment and cancellation of indebtedness equals the aggregate Repurchase Price.
Upon delivery of such notice and the payment of the aggregate Repurchase Price,
the Company shall become the legal and beneficial owner of the Shares
<PAGE> 42
being repurchased and all rights and interests therein or relating thereto, and
the Company shall have the right to retain and transfer to its own name the
number of Shares being repurchased by the Company.
(b) Whenever the Company shall have the right to repurchase
Shares hereunder, the Company may designate and assign one or more employees,
officers, directors or stockholders of the Company or other persons or
organizations to exercise all or a part of the Company's purchase rights under
this Agreement and purchase all or a part of such Shares. If the Fair Market
Value of the Shares to be repurchased on the date of such designation or
assignment (the "Repurchase FMV") exceeds the aggregate Repurchase Price of such
Shares, then each such designee or assignee shall pay the Company cash equal to
the difference between the Repurchase FMV and the aggregate Repurchase Price of
such Shares.
4. Release of Shares From Repurchase Option.
(a) Twenty percent (20%) of the Shares shall be released from the
Company's Repurchase Option one year after the Date of Grant and 1/60 of the
shares shall be released at the end of each month thereafter, provided that the
Purchaser's Continuous Status as an Employee, Director or Consultant has not
terminated prior to the date of any such release.
(b) Any of the Shares that have not yet been released from the
Repurchase Option are referred to herein as "Unreleased Shares."
(c) The Shares that have been released from the Repurchase Option
shall be delivered to the Purchaser at the Purchaser's request (see Section 6).
5. Restriction on Transfer. Except for the escrow described in Section 6
or the transfer of the Shares to the Company or its assignees contemplated by
this Agreement, none of the Shares or any beneficial interest therein shall be
transferred, encumbered or otherwise disposed of in any way until such Shares
are released from the Company's Repurchase Option in accordance with the
provisions of this Agreement, other than by will or the laws of descent and
distribution.
6. Escrow of Shares.
(a) To ensure the availability for delivery of the Purchaser's
Unreleased Shares upon repurchase by the Company pursuant to the Repurchase
Option, the Purchaser shall, upon execution of this Agreement, deliver and
deposit with an escrow holder designated by the Company (the "Escrow Holder")
the share certificates representing the Unreleased Shares, together with the
stock assignment duly endorsed in blank, attached hereto as Exhibit A-2. The
Unreleased Shares and stock assignment shall be held by the Escrow Holder,
pursuant to the Joint Escrow Instructions of the Company and Purchaser attached
hereto as Exhibit A-3, until such time as the Company's Repurchase Option
expires. As a further condition to the Company's obligations under this
Agreement, the
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<PAGE> 43
Company may require the spouse of Purchaser, if any, to execute and deliver to
the Company the Consent of Spouse attached hereto as Exhibit A-4.
(b) The Escrow Holder shall not be liable for any act it may do
or omit to do with respect to holding the Unreleased Shares in escrow while
acting in good faith and in the exercise of its judgment.
(c) If the Company or any assignee exercises the Repurchase
Option hereunder, the Escrow Holder, upon receipt of written notice of such
exercise from the proposed transferee, shall take all steps necessary to
accomplish such transfer.
(d) When the Repurchase Option has been exercised or expires
unexercised or a portion of the Shares has been released from the Repurchase
Option, upon request the Escrow Holder shall promptly cause a new certificate to
be issued for the released Shares and shall deliver the certificate to the
Company or the Purchaser, as the case may be.
(e) Subject to the terms hereof, the Purchaser shall have all the
rights of a stockholder with respect to the Shares while they are held in
escrow, including without limitation, the right to vote the Shares and to
receive any cash dividends declared thereon. If, from time to time during the
term of the Repurchase Option, there is (i) any stock dividend, stock split or
other change in the Shares, or (ii) any merger or sale of all or substantially
all of the assets or other acquisition of the Company, any and all new,
substituted or additional securities to which the Purchaser is entitled by
reason of the Purchaser's ownership of the Shares shall be immediately subject
to this escrow, deposited with the Escrow Holder and included thereafter as
"Shares" for purposes of this Agreement and the Repurchase Option.
7. Legends. The share certificate evidencing the Shares issued hereunder
shall be endorsed with the following legend (in addition to any legend required
under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN AGREEMENT
BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY.
8. Adjustment for Stock Split. All references to the number of Shares
and the purchase price of the Shares in this Agreement shall be appropriately
adjusted to reflect any stock split, stock dividend or other change in the
Shares that may be made by the Company after the date of this Agreement.
9. Tax Consequences. The Purchaser has reviewed with the Purchaser's own
tax advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement. The Purchaser is
relying solely on such advisors and not on any statements or representations of
the Company or any of its agents. The Purchaser understands that the
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<PAGE> 44
Purchaser (and not the Company) shall be responsible for the Purchaser's own tax
liability that may arise as a result of the transactions contemplated by this
Agreement. The Purchaser understands that Section 83 of the Internal Revenue
Code of 1986, as amended (the "Code"), taxes as ordinary income the difference
between the purchase price for the Shares and the Fair Market Value of the
Shares as of the date any restrictions on the Shares lapse. In this context,
"restriction" includes the right of the Company to buy back the Shares pursuant
to the Repurchase Option. The Purchaser understands that the Purchaser may elect
to be taxed at the time the Shares are purchased rather than when and as the
Repurchase Option expires by filing an election under Section 83(b) of the Code
with the IRS within 30 days from the date of purchase. The form for making this
election is attached as Exhibit A-5 hereto.
THE PURCHASER ACKNOWLEDGES THAT IT IS THE PURCHASER'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION
83(b), EVEN IF THE PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE
THIS FILING ON THE PURCHASER'S BEHALF.
10. General Provisions.
(a) This Agreement shall be governed by the laws of the State of
California, except for that body of law pertaining to conflict of law. This
Agreement, subject to the terms and conditions of the Plan and the Notice of
Grant, represents the entire agreement between the parties with respect to the
purchase of the Shares by the Purchaser. Subject to Section 15(c) of the Plan,
in the event of a conflict between the terms and conditions of the Plan and the
terms and conditions of this Agreement, the terms and conditions of the Plan
shall prevail. Unless otherwise defined herein, the terms defined in the Plan
shall have the same defined meanings in this Agreement.
(b) Any notice, demand or request required or permitted to be
given by either the Company or the Purchaser pursuant to the terms of this
Agreement shall be in writing and shall be deemed given when delivered
personally or deposited in the U.S. mail, First Class with postage prepaid, and
addressed to the parties at the addresses of the parties set forth at the end of
this Agreement or such other address as a party may request by notifying the
other in writing.
Any notice to the Escrow Holder shall be sent to the Company's
address with a copy to the other party hereto.
(c) The rights of the Company under this Agreement shall be
transferable to any one or more persons or entities, and all covenants and
agreements hereunder shall inure to the benefit of, and be enforceable by the
Company's successors and assigns. The rights and obligations of the Purchaser
under this Agreement may only be assigned with the prior written consent of the
Company.
(d) Either party's failure to enforce any provision of this
Agreement shall not in any way be construed as a waiver of any such provision,
nor prevent that party from thereafter enforcing
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<PAGE> 45
any other provision of this Agreement. The rights granted both parties hereunder
are cumulative and shall not constitute a waiver of either party's right to
assert any other legal remedy available to it.
(e) The Purchaser agrees upon request to execute any further
documents or instruments necessary or desirable to carry out the purposes or
intent of this Agreement.
(f) PURCHASER ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES
PURSUANT TO SECTION 4 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN
EMPLOYEE, DIRECTOR OR CONSULTANT AT THE WILL OF THE COMPANY (AND NOT THROUGH THE
ACT OF BEING HIRED OR PURCHASING SHARES HEREUNDER). PURCHASER FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS
OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE, DIRECTOR OR
CONSULTANT FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT
INTERFERE WITH PURCHASER'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE PURCHASER'S
EMPLOYMENT RELATIONSHIP, DIRECTORSHIP OR CONSULTING RELATIONSHIP AT ANY TIME,
WITH OR WITHOUT CAUSE.
By Purchaser's signature below, Purchaser represents that he or she is
familiar with the terms and provisions of the Plan, and hereby accepts this
Agreement subject to all of the terms and provisions thereof. Purchaser has
reviewed the Plan and this Agreement in their entirety, has had an opportunity
to obtain the advice of counsel prior to executing this Agreement and fully
understands all provisions of this Agreement. Purchaser agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Agreement.
Purchaser further agrees to notify the Company upon any change in the residence
indicated in the Notice of Grant.
DATED: _____________________
PURCHASER: PROXIMA CORPORATION
______________________________ By:____________________________
Signature
______________________________ _______________________________
Print Name Print Name
Title:__________________________
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<PAGE> 46
EXHIBIT A-2
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I, __________________________, hereby sell, assign
and transfer unto ___________________________________________ (__________)
shares of the Common Stock of Proxima Corporation standing in my name of the
books of said corporation represented by Certificate No. _____ herewith and do
hereby irrevocably constitute and appoint ________________________________ to
transfer the said stock on the books of the within named corporation with full
power of substitution in the premises.
This Stock Assignment may be used only in accordance with the Restricted
Stock Purchase Agreement (the "Agreement") between________________________ and
the undersigned dated ______________, 19__.
Dated: _______________, 19
Signature:______________________________
INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise the
Repurchase Option, as set forth in the Agreement, without requiring additional
signatures on the part of the Purchaser.
<PAGE> 47
EXHIBIT A-3
JOINT ESCROW INSTRUCTIONS
_____________, 19___
Corporate Secretary
Proxima Corporation
9440 Carroll Park Drive
San Diego, CA 92121
Dear ______________:
As Escrow Agent for both Proxima Corporation, a Delaware corporation
(the "Company"), and the undersigned purchaser of stock of the Company (the
"Purchaser"), you are hereby authorized and directed to hold the documents
delivered to you pursuant to the terms of that certain Restricted Stock Purchase
Agreement ("Agreement") between the Company and the undersigned, in accordance
with the following instructions:
1. In the event the Company and/or any assignee of the Company (referred
to collectively as the "Company") exercises the Company's Repurchase Option set
forth in the Agreement, the Company shall give to Purchaser and you a written
notice specifying the number of shares of stock to be purchased, the purchase
price, and the time for a closing hereunder at the principal office of the
Company. Purchaser and the Company hereby irrevocably authorize and direct you
to close the transaction contemplated by such notice in accordance with the
terms of said notice.
2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company or its
assignee, against the simultaneous delivery to you of the purchase price for the
number of shares of stock being purchased pursuant to the exercise of the
Company's Repurchase Option.
3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with any applicable state blue sky
authority of any required applications for consent to, or notice of transfer of,
the securities. Subject to the provisions of this paragraph 3, Purchaser shall
exercise all rights and privileges of a stockholder of the Company while the
stock is held by you.
<PAGE> 48
4. Upon written request of the Purchaser, but no more than once per
calendar year, unless the Company's Repurchase Option has been exercised, you
shall deliver to Purchaser a certificate or certificates representing so many
shares of stock as are not then subject to the Company's Repurchase Option.
Within 90 days after cessation of Purchaser's continuous employment by or
services to the Company, or any parent or subsidiary of the Company, you shall
deliver to Purchaser a certificate or certificates representing the aggregate
number of shares held or issued pursuant to the Agreement and not purchased by
the Company or its assignees pursuant to exercise of the Company's Repurchase
Option.
5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of the same to Purchaser and shall be discharged of all
further obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith,
and any act done or omitted by you pursuant to the advice of your own attorneys
shall be conclusive evidence of such good faith.
8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law, and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree, you shall not
be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the outlawing of any rights under the
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. You shall be entitled to employ such legal counsel and other experts
as you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.
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<PAGE> 49
12. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be an officer or agent of the Company or if you shall resign
by written notice to each party. In the event of any such termination, the
Company shall appoint a successor Escrow Agent.
13. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said securities
until such disputes shall have been settled either by mutual written agreement
of the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, or any appeal has been finally resolved, but you shall be under
no duty whatsoever to institute or defend any such proceedings.
15. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses or at such other addresses as a party may designate by ten
days' advance written notice to each of the other parties hereto.
COMPANY: PROXIMA CORPORATION
PURCHASER: ___________________
___________________
___________________
ESCROW AGENT: Corporate Secretary
Proxima Corporation
9440 Carroll Park Drive
San Diego, CA 92121
16. By signing these Joint Escrow Instructions, you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not become
a party to the Agreement.
17. This instrument shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and permitted assigns.
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<PAGE> 50
18. These Joint Escrow Instructions shall be governed by, and construed
and enforced in accordance with, the laws of the State of California, except for
that body of law pertaining to conflict of laws.
Very truly yours,
PROXIMA CORPORATION
By: _____________________________________
Print Name: _______________________________
Title: ____________________________________
PURCHASER:
___________________________________________
(Signature)
___________________________________________
(Print Name)
ESCROW AGENT:
_____________________________
Corporate Secretary
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<PAGE> 51
EXHIBIT A-4
CONSENT OF SPOUSE
I, ____________________, spouse of ___________________, have read and
approve the foregoing Restricted Stock Purchase Agreement (the "Agreement"). In
consideration of the Company's grant to my spouse of the right to purchase
shares of Proxima Corporation, as set forth in the Agreement, I hereby appoint
my spouse as my attorney-in-fact in respect to the exercise of any rights under
the Agreement and agree to be bound by the provisions of the Agreement insofar
as I may have any rights in said Agreement or any shares issued pursuant thereto
under the community property laws or similar laws relating to marital property
in effect in the state of our residence as of the date of the signing of the
foregoing Agreement.
Dated: _______________, 19___
___________________________________
Signature of Spouse
<PAGE> 52
EXHIBIT A-5
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, to include in taxpayer's gross income
for the current taxable year the amount of any compensation taxable to taxpayer
in connection with his or her receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of
the undersigned are as follows:
NAME: TAXPAYER: SPOUSE:
ADDRESS:
IDENTIFICATION NO.: TAXPAYER: SPOUSE:
TAXABLE YEAR:
2. The property with respect to which the election is made is described as
follows: shares (the "Shares") of the Common Stock of Proxima
Corporation (the "Company").
3. The date on which the property was transferred is: ____________, 19__.
4. The property is subject to the following restrictions:
The Shares may be repurchased by the Company, or its assignee, upon
certain events. This right lapses with regard to a portion of the Shares
based on the continued performance of services by the taxpayer over
time.
5. The fair market value at the time of transfer, determined without regard
to any restriction other than a restriction that by its terms will never
lapse, of such property is:
$_______________.
6. The amount (if any) paid for such property is:
$_______________.
The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.
The undersigned understands that the foregoing election may not be revoked
except with the consent of the Commissioner.
Dated: ___________________, 19____ ___________________________________________
Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated: ___________________, 19____ ___________________________________________
Spouse of Taxpayer
<PAGE> 53
PROXY
PROXIMA CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
1996 ANNUAL MEETING OF STOCKHOLDERS--AUGUST 14, 1996
The undersigned stockholder(s) of Proxima Corporation, a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement and hereby appoints John E. Rehfeld and
Kenneth E. Olson and each of them, Proxies and Attorneys-in-Fact, with full
power to each of substitution, on behalf and in the name of the undersigned, to
represent the undersigned at the Annual Meeting of Stockholders of Proxima
Corporation to be held August 14, 1996 at 5:00 p.m., local time, at the offices
of the corporation, 9440 Carroll Park Drive, San Diego, California 92121 and
any adjournments thereof, and to vote all shares of Common Stock which the
undersigned is entitled to vote on the matters set forth below:
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE REVERSE SIDE)
- - --------------------------------------------------------------------------------
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<PAGE> 54
Please mark
your votes as /X/
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3
1. Election of Directors WITHHOLD
To withhold authority to vote for any individual FOR FOR ALL
nominee, strike through the nominee's name below. / / / /
Nominees: Patrick Arrington
Richard E. Belluzzo
Robert W. Johnson
Jeffrey M. Nash
Kenneth E. Olson
John E. Rehfeld
John M. Seiber
2. Approve the 1996 Stock Plan and reserve shares FOR AGAINST ABSTAIN
for issuance thereunder / / / / / /
3. Ratify the appointment of Deloitte & Touche LLP FOR AGAINST ABSTAIN
as independent accountants for the ensuing year / / / / / /
THIS BALLOT WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR ALL PROPOSALS ABOVE AND AS THE PROXIES DEEM
ADVISABLE ON ANY OTHER MATTERS AS MAY COME BEFORE THE MEETING.
Signature(s) __________________________________________________ Date: __________
This proxy should be signed by the Stockholder(s) exactly as his or her name
appears hereon. If signing as attorney, executor, administrator, trustee or
guardian, please give full title.
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