<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.__)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PIXTECH, INC.
- --------------------------------------------------------------------------------
(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] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
PIXTECH, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 2000 Annual Meeting of Stockholders of PixTech, Inc. will be held at the New
York Marriott East Side, 525 Lexington Avenue, New York, NY 10017 at 4:00 p.m.
on Tuesday, April 18, 2000 for the following purposes:
1. To elect one director to hold office for a term of three years and until
his successor is elected and qualified.
2. To amend the Company's 1993 Stock Option Plan to increase the number of
shares available under such Plan from 5,156,372 shares to 11,156,372
shares.
3. To transact such other business as may be in furtherance of or incidental
to the foregoing or as may otherwise properly come before the meeting.
Only stockholders of record at the close of business on February 28, 2000 will
be entitled to vote at the meeting or any adjournment thereof. A list of such
stockholders will be open for examination by any stockholder for any purpose
germane to the meeting for ten days before the meeting during ordinary business
hours at the offices of Palmer & Dodge LLP, One Beacon Street, Boston,
Massachusetts 02108.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. THEREFORE,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE YOUR PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. IF YOU ATTEND THE MEETING AND WISH TO VOTE IN PERSON, YOUR PROXY
WILL NOT BE USED.
By order of the Board of Directors,
MICHAEL LYTTON, Secretary
Dated: March 28, 2000
<PAGE>
PIXTECH, INC.
Avenue Olivier Perroy, Zone Industrielle de Rousset
13790 Rousset France
Telephone 011 33 442 29 1000
Proxy Statement
The enclosed proxy is solicited on behalf of the Board of Directors of PixTech,
Inc. (the "Company") for use at the 2000 Annual Meeting of Stockholders to be
held on Tuesday, April 18, 2000, at 4:00 p.m. at the New York Marriott East
Side, 525 Lexington Avenue, New York, NY 10017, and at any adjournments thereof.
The approximate date on which this proxy statement and accompanying proxy are
first being sent or given to security holders is March 28, 2000.
The principal business expected to be transacted at the meeting, as more fully
described below, will be the election of one director and an increase in the
number of shares available under the Company's 1993 Stock Option Plan.
The authority granted by an executed proxy may be revoked at any time before its
exercise by filing with the Secretary of the Company a written revocation or a
duly executed proxy bearing a later date or by voting in person at the meeting.
Shares represented by valid proxies will be voted in accordance with the
specifications in the proxies. If no specifications are made, the proxies will
be voted to elect the director nominated by the Board of Directors and to
approve the other proposals listed in the notice on the cover page of this proxy
statement.
The Company will bear the cost of the solicitation of proxies, including the
charges and expenses of brokerage firms and others for forwarding solicitation
material to beneficial owners of stock. In addition to the use of mails,
proxies may be solicited by officers and employees of the Company in person or
by telephone.
VOTING SECURITIES AND VOTES REQUIRED
Only stockholders of record at the close of business on February 28, 2000 will
be entitled to vote at the meeting. On that date, the Company had outstanding
41,323,543 shares of common stock, $0.01 par value (the "Common Stock"), each of
which is entitled to one vote. In addition, the Company had outstanding 230,694
shares of Series E Preferred Stock, $0.01 par value (the "Series E Stock"), each
of which is entitled to the number of votes equal to the number of whole shares
of Common Stock which the shares of Series E Stock are convertible into as of
the record date. As of February 28, 2000, the record date for the 2000 Annual
Meeting, each share of Series E Stock would have been convertible into 15.25
shares of Common Stock. A majority in interest of the outstanding Common Stock
and shares convertible into Common Stock entitled to vote, represented at the
meeting in person or by proxy, constitutes a quorum for the transaction of
business. A plurality of the votes cast is required to elect the nominee for
director. Broker non-votes are counted for the purpose of determining the
presence or absence of a quorum for the transaction of business, but will not be
counted in determining the shares entitled to vote on a particular matter nor
treated as votes cast. A "broker non-vote" occurs when a registered broker
holding a customer's shares in the name of the broker has not received voting
instructions on the matter from the customer, is barred by applicable rules from
exercising discretionary voting authority in the matter, and so indicates on the
proxy. The amendment to the Company's 1993 Stock Option Plan requires approval
from a majority of the Common Stock and shares convertible into Common Stock
present or represented and entitled to vote. In voting on amending the 1993
Stock Option Plan, abstentions will be counted as present and entitled to vote;
accordingly, they will have the effect of votes against approval of such
amendment. Abstentions will not be treated as votes cast in the election of
directors.
1
<PAGE>
ELECTION OF DIRECTORS
The number of directors is fixed at five for the coming year and is divided into
three classes with the members of each class holding office for a three year
term. At the meeting, one director will be elected to hold office for three
years and until his successor is elected and qualified. John A. Hawkins, who
was elected a Director in 1994 and re-elected in 1997, has been nominated for
re-election by the Board of Directors. Unless a properly signed and returned
proxy withholds authority to vote for the nominee or is a broker non-vote, the
shares represented by such proxy will be voted for the election of the Board's
nominee as director. If the nominee is unable to serve, which is not expected,
the shares represented by a properly signed and returned proxy will be voted for
such other candidate as may be nominated by the Board of Directors.
The following table contains certain information about the nominee for director
and each other person whose term of office as a director will continue after the
meeting.
<TABLE>
<CAPTION>
Present
Director Term
Name and Age Business Experience and Other Directorships Since Expires
- ------------ ------------------------------------------- ----- -------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Jean-Luc Grand-Clement Jean-Luc Grand-Clement, a co-founder of the Company, has served as 1992 2001
Age: 60 Chairman of the Board of Directors since the Company's inception in
1992. Mr. Grand-Clement served as President and Chief Executive
Officer from the Company's inception through March 1998 and January
1999, respectively and remains an employee of the Company. Prior to
founding the Company, Mr. Grand-Clement co-founded European Silicon
Structures ("ES2"), a European applications specific integrated circuit
supplier for cell based and full custom CMOS products, and served as
Chief Executive Officer and then as Chairman of the Board of Directors
of ES2 from its founding in 1985 until 1991. From 1967 to 1978 and
from 1982 to 1985, Mr. Grand-Clement held various positions with
Motorola, Inc., most recently as Vice-President and Assistant General
Manager of the Motorola European Semiconductor Group from 1983 to 1985.
From 1978 to 1982, Mr. Grand-Clement was the Managing Director of
Eurotechnique, a MOS semiconductor design and fabrication joint venture
between National Semiconductor and Saint-Gobain. Mr. Grand-Clement
graduated from Ecole Nationale Superieure des Telecommunications in
Paris.
- ------------------------------------------------------------------------------------------------------------------------------------
Dieter Mezger Dieter Mezger joined PixTech in March 1998 as President and took on the 1999 2002
Age: 56 additional role of Chief Executive Officer in January 1999. Mr. Mezger
has been a director of the Company since March 1999. Between 1996 and
1998, Mr. Mezger worked as a marketing consultant in California.
Between 1990 and 1996, Mr. Mezger was President of Compass Design
Automation, a wholly-owned subsidiary of VLSI Technology, Inc., which
develops and markets computer assisted design software tools for
integrated circuit designs. From 1984 to 1990, Mr. Mezger established
VLSI's European presence in Munich, building the European marketing and
sales organizations, design centers, R&D operations, as well as its
finance and human resources departments. Mr. Mezger simultaneously
built VLSI's wireless and GSM businesses. Prior to joining VLSI, Mr.
Mezger's career included fifteen years with Texas Instruments, where he
rose to the position of Manager, Sales and Marketing, Europe. He holds
a BS in engineering from the University of Stuttgart.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Present
Director Term
Name and Age Business Experience and Other Directorships Since Expires
- ------------ ------------------------------------------- ----- -------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
John A. Hawkins (1) John A. Hawkins has been a director of the Company since 1994. Since 1994 2000
Age: 39 August 1995, Mr. Hawkins has been a managing partner of Generation
Capital Partners, L.P., a private equity firm. From 1992 until August,
1995, Mr. Hawkins was a general partner of various funds affiliated
with Burr, Egan, Deleage & Co. He is currently a limited partner of
various funds associated with Burr, Egan, Deleage & Co. He was an
associate at Burr, Egan, Deleage & Co. from 1987 to 1992, prior to
which he was an associate with Alex. Brown & Sons Incorporated. Mr.
Hawkins is a director of P-Com, Inc., a telecommunications company, and
HotJobs.com, Ltd., an internet recruiter. Mr. Hawkins holds degrees
from Harvard College and Harvard Business School.
- ------------------------------------------------------------------------------------------------------------------------------------
Ronald J. Ritchie Mr. Ritchie was elected to the Board of Directors effective October 27, 1999 2002
Age: 58 1999. Until its recent acquisition, Mr. Ritchie was Chairman of the
Board of VXI electronics, Inc., a private power conversion company
based in Oregon. From 1996 to 1998, Mr. Ritchie was President and Chief
Executive Officer of Akashic Memories Corporation, a private
manufacturer of thin film, hard disk media used in disk drives. From
1994 to 1996, Mr. Ritchie was a consultant for start-up or high-tech
companies. Prior to that, Mr. Ritchie held various senior executive
positions with various multinational firms, including Texas
Instruments, from 1965 to 1992, where he begun his career and rose to
the position of Vice President, Worldwide Marketing. Mr. Ritchie holds
degrees from the Southern Methodist University and Stanford University.
Mr. Ritchie serves as a director of SBE, Inc., a company that provides
communications connectivity and application solutions for servers and
other communications systems.
- ------------------------------------------------------------------------------------------------------------------------------------
Andre Borrel Mr. Borrel was elected to the Board of Directors effective February 2, 2000 2001
Age: 63 2000. Mr. Borrel is a 33-year veteran of the semiconductor industry.
He retired in 1994 from Motorola as Senior Vice President and General
Manager of the Communications, Power and Signal Technology Group, a
$1.5 billion operation with 13,000 employees. Prior to that, Mr.
Borrel held a number of management positions with Motorola, including
Vice President of International Operations of Motorola Semiconductor
Sector from 1986 to 1990. Mr. Borrel currently serves on the boards of
directors of Mitel (a Canadian telecom/semiconductor company),
Chartered Semiconductor Manufacturing (in Singapore) and MiCS
(Michrochemical Systems, a chemical sensor company in Switzerland).
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Nominee for re-election as director.
Committees of the Board
The Audit Committee, which during 1999 consisted of William C. Schmidt and Mr.
Hawkins, is responsible for providing the Board of Directors with an independent
review of the financial health of the Company and its financial controls and
reporting. Its primary functions are to recommend independent auditors to the
Board of Directors, review the results of the annual audit and the auditors'
reports, and ensure the adequacy of the Company's financial controls and
procedures. The Audit Committee met four times in 1999. The Audit Committee
currently consists of Mr. Ritchie and Mr. Borrel.
3
<PAGE>
The Compensation Committee, whose members in 1999 were Messrs. Schmidt and
Hawkins, acts for the Board of Directors with respect to the Company's
compensation practices and their implementation. It sets and implements the
compensation of the Company's officers and administers the Amended and Restated
1993 Stock Option Plan and the 1995 Employee Stock Purchase Plan. The
Compensation Committee held 2 meetings in 1999. The Compensation Committee
currently consists of Messrs. Hawkins and Ritchie. The entire Board of
Directors functions as a nominating committee, considering nominations submitted
by the Chairman of the Board. The Board of Directors held ten meetings during
1999, and each director attended at least 75% of all meetings of the Board and
of all committees of the Board on which he served.
Director Compensation
Director Fees
--------------
Non-employee directors are reimbursed for expenses incurred in attending
meetings, and they also receive $1,500 for each meeting of the Board of
Directors that they attend, plus an additional $4,000 if they attend at least
four meetings in a year. Such payments may not exceed a total of $10,000 in any
one year. Mr. Mezger and Mr. Grand-Clement will be the only directors who are
employees of the Company, and they will not receive additional compensation for
their service as directors.
1995 Director Stock Option Plan
--------------------------------
The 1995 Director Stock Option Plan (the "Director Plan") provides that each
director who is not an employee of the Company and who is elected or re-elected
into office following the Annual Meeting of Stockholders receives an automatic
grant of options to purchase 6,000 shares of Common Stock. The options become
exercisable in increments of 2,000 shares as follows: 2,000 shares on the grant
date, and an additional 2,000 shares at each of the following two Annual
Meetings of Stockholders so long as the director remains in office. The
options expire ten years from the grant date. The exercise price of each
option is the fair market value of the Common Stock on the day immediately
preceding the grant date. In 1999, Ronald J. Ritchie received a grant under
the Director Plan of an option to purchase 6,000 shares of Common Stock.
The Director Plan authorizes the grant of stock options to purchase up to a
maximum of 50,000 shares (subject to adjustment in the event of a stock split
or other recapitalization) of Common Stock. Mr. Hawkins, Mr. Ritchie and Mr.
Borrel are currently eligible to participate under the Director Plan. As of
December 31, 1999, options to purchase 22,000 shares of Common Stock of the
Company were outstanding pursuant to the Director Plan.
Options granted under the Director Plan are not intended to qualify as
incentive stock options under the Internal Revenue Code. The exercise of an
option under the Director Plan results in ordinary income to the director and a
corresponding deduction for the Company, in each case equal to the difference
between the option price and the fair market value of the shares on the date of
exercise.
4
<PAGE>
Summary Compensation Table (1)
The following table provides summary information on the cash compensation and
certain other compensation paid, awarded, or accrued by the Company and its
subsidiaries to or for the Chief Executive Officer of PixTech and each of its
other four most highly compensated executive officers for 1999.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation (1) Awards
------------------------------------------------- ------------------
Securities
Underlying
Name and Principal Position Year Salary($) Other ($) Options(#)
- --------------------------- ---- --------- --------- ----------
<S> <C> <C> <C> <C>
Dieter Mezger (2) 1999 180,000 -- 300,000
President and Chief Executive Officer 1998 156,000 -- 300,000
1997 10,500 -- --
James Cathey (3) 1999 84,541 165,333 (4) --
Vice President, Sales
Francis G. Courreges (5) 1999 188,047 -- --
Executive Vice President, 1998 149,201 -- --
Chief Technology Officer 1997 150,850 -- 77,000
Michel Garcia (6) 1999 91,891 44,714 (7) --
Vice President, 1998 101,728 53,808 (7) --
Industrial Partners 1997 102,852 -- 56,000
Jean-Luc Grand-Clement 1999 133,329 -- --
Former President, Former Chief Executive Officer, 1998 192,246 -- --
current Chairman of the Board 1997 193,708 165,000
</TABLE>
(1) Some dollar amounts shown for Messrs. Courreges, Garcia and Grand-Clement
reflect the conversion of Euros to U.S. dollars at an average conversion rate
for Euros to U.S. dollars of 0.8893 for 1997, 0.8992 in 1998 and 0.9954 in 1999.
(2) Dieter Mezger joined PixTech in March 1998 and was elected President and
Chief Executive Officer as of March 1998 and January 1999, respectively. Prior
to that, Mr. Mezger was a consultant to PixTech from November 1997 to March
1998, an activity for which he received $10,500 in 1997 and $21,000 in 1998.
(3) Mr. Cathey joined PixTech in May 1999.
(4) Bonus in connection with the acquisition of Micron Technology, Inc.'s Field
Emission Display Division in 1999.
(5) Francis Courreges's employment with PixTech terminated in January 2000.
(6) Michel Garcia is an employee of PixTech S.A., a wholly owned subsidiary of
PixTech.
(7) In 1999, consisted of $36,500 in daily expenses, $6,500 in rent, and $1,714
in automobile expenses. In 1998, consisted of $29,450 in daily expenses,
$22,120 in rent and automobile payments of $2,238.
5
<PAGE>
Stock Option Grants in Last Fiscal Year
The following table provides information on stock options granted during 1999 to
the executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
Potential Realized Value at Assumed
Annual Rates of Stock Price
Number of % of Total Appreciation for Option Term
Securities Options ----------------------------
Underlying Granted to Exercise ($) (1)
Options Employees Price -------
Name Granted (#) in 1999 ($/ share) Expiration Date 5% 10%
---- ---------- --------- ---------- --------------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Dieter Mezger 300,000 (2) 13.85 1.948 7/16/09 367,526 931,383
Francis Courreges 120,000 (3) 5.54 1.948 7/16/09 147,010 372,553
Michel Garcia 100,000 (3) 4.61 1.948 7/16/09 122,509 310,461
Jean-Luc Grand-Clement 100,000 (3) 4.61 1.948 7/16/09 122,509 310,461
</TABLE>
(1) The dollar amounts under these columns are the result of calculations at
the 5% and 10% appreciation rates set by the Securities and Exchange Commission
of a value for the common stock equal to the market price of the common stock on
the date of grant of the option. These amounts are not intended to forecast
possible future appreciation, if any, in the price of the common stock.
(2) The option became exercisable as to 150,000 shares covered by such option on
July 16, 1999; as to 150,000 shares (the "Milestone Shares"), upon the
occurrence of the closing of an equity financing of $10 million or more. The
Milestone Shares became exercisable in October, 1999.
(3) These options vest in four equal installments on July 16, 2000, July 16,
2001, July 16, 2002 and July 16, 2003.
Aggregated Option Exercises in Last Fiscal Year and Year-End Stock Option Values
The following table sets forth certain information concerning the unexercised
stock options as of December 31, 1999 held by the executive officers named in
the Summary Compensation Table.
<TABLE>
<CAPTION>
Shares Number of Securities Value of Unexercised In-The-
Acquired Name Value Underlying Unexercised Money Options
Name on Exercise Realized ($) Options at 12/31/99 (#) at 12/31/99 ($) (1)
---- ----------- ----------- ----------------------- -------------------
(#)
---
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dieter Mezger - - 525,000 75,000 90,600 0
Francis Courreges 133,334 158,173 25,000 172,000 0 36,240
Michel Garcia - - 127,355 139,750 202,883 30,200
James Cathey - - 38,500 115,500 8,624 25,872
Jean-Luc Grand-Clement - - 593,961 217,500 943,112 30,200
</TABLE>
(1) Based on the difference between the respective option exercise price and the
closing market price of the Common Stock on December 31, 1999, which was $2.25.
Executive Employment Agreements
Each of Messrs. Grand-Clement, Courreges, Garcia and Louart have entered into
employment agreements with the Company in substantially the same form as most of
the Company's other employees. The material terms of the employment agreements
provide for employment by each individual for an indefinite period. Pursuant to
the employment agreements, each individual agrees to non-competition and non-
solicitation provisions which
6
<PAGE>
survive for a one-year period following termination of employment. The
employment agreements also contain obligations of each employee concerning
confidentiality and assignment of inventions and intellectual property to the
Company. Messrs. Mezger and Cathey have entered into employment agreements
providing for employment for an indefinite period, non-competition and non-
solicitation for one year following termination, and confidentiality provisions.
Compensation Committee Report on Executive Compensation
This Compensation Committee Report describes the compensation policies
applicable to executive officers of the Company.
Overall Policy. The Company's executive compensation program is designed to be
closely linked to corporate performance and returns to stockholders. To this
end, the Company has developed an overall compensation strategy and specific
compensation plan that tie a portion of executive compensation to the Company's
success in meeting specified performance goals. In addition, through the use of
stock options, the Company ensures that a part of the executives' compensation
is closely tied to appreciation in the Company's stock price. The overall
objectives of this strategy are to attract and retain the best possible
executive talent, to motivate these executives to achieve the goals inherent in
the Company's business strategy, to link executive and stockholder interests
through equity based plans and, finally, to provide a compensation package that
recognizes individual contributions as well as overall business results.
The Compensation Committee determines the compensation of the seven most highly
compensated corporate executives, including the executive officers named in the
Summary Compensation Table. The Compensation Committee takes into account the
views of the Company's Chief Executive Officer in reviewing the individual
performance of these executives (other than the Chief Executive Officer), a
responsibility assumed by Mr. Mezger when he was elected Chief Executive Officer
in January 1999.
The key elements of the Company's executive compensation consist of base salary,
annual bonus and stock options. The Compensation Committee's policies with
respect to each of these elements, including the bases for the compensation
awarded to Mr. Mezger, are discussed below. In addition, while the elements of
compensation described below are considered separately, the Compensation
Committee takes into account the full compensation package afforded by the
Company to the individual, including insurance and other employee benefits, as
well as the programs described below.
Base Salaries. Base salaries for new executive officers are initially determined
by evaluating the responsibilities of the position held and the experience of
the individual. In making determinations regarding base salaries, the
Compensation Committee considers generally available information regarding
salaries prevailing in the industry, but does not utilize any particular indices
or peer groups.
Annual salary adjustments are determined by evaluating the financial performance
of the Company and of each executive officer, and also take into account new
responsibilities. The Compensation Committee, where appropriate, also considers
non-financial performance measures. These non-financial performance measures may
include such factors as efficiency gains, quality improvements and improvements
in relations with customers, suppliers and employees. No particular weight is
given to any of these financial or non- financial factors.
The determination of Mr. Mezger's base salary for 1999 was based on the overall
successful development of the Company and in particular on his ability to
achieve the transition from a research and development company to
7
<PAGE>
a manufacturing company. Mr. Mezger was granted a base salary of $180,000 in
1999, an increase of 15% over his $156,000 base salary for 1998. No bonus was
awarded to Mr. Mezger in 1999.
Annual Bonus. The Company's executive officers are eligible for an annual cash
bonus, based primarily on achievement of the Company's overall performance. For
the year ended December 31, 1999, no annual bonuses were awarded to executive
officers of the Company. Mr. Cathey was awarded a bonus of $165,333 in 1999 in
connection with the Company's acquisition of Micron Technology, Inc.'s Field
Emission Display Division.
Stock Options. Stock options are granted to the Company's executive officers
under the Company's Amended and Restated 1993 Stock Option Plan. Stock options
are designed to align the interests of executives with those of the
stockholders. Stock options are granted with an exercise price equal to the
fair market value of the Common Stock on the date of grant and vest over various
periods of time, normally four years. Stock option grants are designed to
encourage the creation of stockholder value over the long term since the full
benefit of the compensation package cannot be realized unless stock price
appreciation is achieved, and, once achieved, is maintained and improved upon.
In determining the amount of such grants, the Compensation Committee evaluates
the job level of the executive, responsibilities to be assumed in the upcoming
year, and responsibilities in prior years, and also takes in account the size of
the officer's awards in the past. Based on these factors and on the level of
his existing stock ownership in 1999, 300,000 Stock Options were granted to Mr.
Mezger in 1999.
Policy on Deductibility of Compensation. The Internal Revenue Service has
adopted a provision limiting the income tax deduction of public companies for
certain compensation paid in a year to any executive officer named in the proxy
statement compensation tables in excess of one million dollars. No such officer
of the Company received applicable compensation at that level in 1999. At such
time as it becomes likely that the applicable compensation for a covered
executive will exceed the deductibility limit, the Compensation Committee will
consider the adoption of a policy in this regard.
Conclusion. Through the programs described above, a very significant portion of
the Company's executive compensation is linked directly to individual and
corporate performance and stock appreciation. In 1999, as in previous years, a
substantial portion of the Company's targeted executive compensation consists of
performance-based variable elements. The Compensation Committee intends to
continue the policy of linking executives compensation to Company performance
and returns to stockholders, recognizing that the ups and downs of the business
cycle from time to time may result in an imbalance for a particular period.
By the Compensation Committee,
John A. Hawkins
Ronald J. Ritchie
8
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph shows the cumulative total stockholder return on the
Company's Common Stock over the period beginning December 29, 1995, and ending
December 31, 1999, as compared with that of the Nasdaq Market Index and an
Industry Index, based on an initial investment of $100 in each. Total
stockholder return is measured by dividing share price change plus dividends, if
any, for each period by the share price at the beginning of the respective
period, and assumes reinvestment of dividends. The Electronic Components, N.E.C.
Index consists of 190 publicly traded electronic components companies reporting
under the same Standard Industrial Classification Code (SIC 3670-3679) as the
Company.
[THE TABLE BELOW WAS ALSO REPRESENTED IN THE PRINTED MATERIAL BY A LINE GRAPH]
<TABLE>
<S> <C> <C> <C> <C> <C>
12/29/95 12/31/96 12/31/97 12/31/98 12/31/99
--------- --------- --------- --------- ---------
PixTech, Inc. $ 100.00 $ 39.74 $ 23.72 $ 24.67 $ 23.08
Electronics Components, NEC Index $ 100.00 $ 172.88 $ 181.24 $ 280.23 $ 549.25
Nasdaq Market Index $ 100.00 $ 123.00 $ 150.93 $ 212.52 $ 386.11
</TABLE>
9
<PAGE>
PROPOSAL TO AMEND THE AMENDED AND RESTATED 1993 STOCK OPTION PLAN
Amended and Restated 1993 Stock Option Plan
General
The Company's Amended and Restated 1993 Stock Option Plan (the "Option Plan")
was readopted by the Board of Directors on May 9, 1995 and by the stockholders
on May 19, 1995. The purpose of the Option Plan is to attract and retain key
employees and consultants of the Company and its affiliates. The Option Plan
provides for the grant of incentive and nonstatutory stock options (the
"Options") to employees and consultants of the Company and its affiliates
("Eligible Persons").
Currently, Options may be granted under the Option Plan for up to a total of
5,156,372 shares of Common Stock (subject to adjustment for stock splits and
similar capital changes) to employees of the Company and, in the case of
nonstatutory Options, to consultants (other than French consultants, pursuant to
French tax law) of the Company or any Affiliate (as defined in the Option Plan)
capable of contributing to the Company's performance.
As of March 1, 1999, approximately 175 employees were eligible to participate in
the Option Plan and Options to purchase an aggregate of 6,686,781 shares of
Common Stock had been granted. Of these, Options to purchase 1,565,803 shares
had been canceled, 440,915 had been exercised and Options to purchase 3,430,063
shares remained outstanding, leaving 35,394 shares available for new Options
under the Option Plan.
Administration and Eligibility
Awards are made by the Compensation Committee which has been designated by the
Board of Directors to administer the Option Plan. The Compensation Committee
may delegate to one or more officers the power to make awards under the Option
Plan to persons other than officers of the Company who are subject to the
reporting requirements of Section 16 of the Securities Exchange Act of 1934 (the
"Exchange Act").
Options under the Option Plan are granted at the discretion of the Compensation
Committee which determines the recipients and establishes the terms and
conditions of each award, including the exercise price, the form of payment of
the exercise price, the number of shares subject to Options and the time at
which such Options become exercisable. However, the exercise price of any
incentive stock option granted under the Option Plan may not be less than the
fair market value of the Common Stock on the date of grant.
Proposed Amendment to the Option Plan
The Board of Directors has voted, subject to the approval of the stockholders,
to increase the aggregate number of shares of Common Stock that may be subject
to grants under the Option Plan by 6,000,000, from 5,156,372 to 11,156,372,
subject to adjustment for stock splits, stock dividends and certain transactions
affecting the Company's capital stock. The Company believes that this increase
is necessary and appropriate because, as of December 31, 1999, the exercise
prices of most of the Options outstanding and exercisable under the Option Plan
were above the Company's stock price, thus limiting the ability of the Option
Plan to retain qualified employees. The Company's policy is to grant new stock
options to its employees in order to attract and retain key employees. The
Company will be unable to continue to follow this policy if there is an
insufficient number of shares available under the Option Plan.
10
<PAGE>
United States Federal Income Tax Consequences Relating to Stock Options
The following is a description of the tax consequences relating to stock options
under United States tax law. Individuals subject to taxation in any other
country should consult their own tax advisors regarding the tax consequences
relating to the exercise of stock options and the sale of shares acquired upon
the exercise of such options.
Incentive Stock Options. An optionee does not realize taxable income upon the
grant or exercise of an incentive stock option ("ISO") under the Option Plan.
If no disposition of shares issued to an optionee pursuant to the exercise of an
ISO is made by the optionee within two years from the date of grant or within
one year from the date of exercise, then (a) upon sale of such shares, any
amount realized in excess of the option price (the amount paid for the shares)
is taxed to the optionee as long-term capital gain and any loss sustained will
be a long-term capital loss and (b) no deduction is allowed to the Company for
Federal income tax purposes. The exercise of ISOs gives rise to an adjustment in
computing alternative minimum taxable income that may result in alternative
minimum tax liability for the optionee.
If shares of Common Stock acquired upon the exercise of an ISO are disposed of
prior to the expiration of the two-year or one-year holding periods described
above (a "disqualifying disposition") then (a) the optionee realizes ordinary
income in the year of disposition in an amount equal to the excess (if any) of
the fair market value of the shares at exercise (or, if less, the amount
realized on a sale of such shares) over the option price thereof and (b) the
Company is entitled to deduct such amount. Any further gain realized is taxed
as a short-term or long-term capital gain and does not result in any deduction
to the Company. A disqualifying disposition in the year of exercise will
generally avoid the alternative minimum tax consequences of the exercise of an
ISO.
Nonstatutory Stock Options. No income is realized by the optionee at the time a
nonstatutory option is granted. Upon exercise, (a) ordinary income is realized
by the optionee in an amount equal to the difference between the option price
and the fair market value of the shares on the date of exercise and (b) the
Company receives a tax deduction for the same amount. Upon disposition of the
shares, appreciation or depreciation after the date of exercise is treated as a
short-term or long-term capital gain or loss and will not result in any
deduction by the Company.
Votes Required
The affirmative vote of the holders of a majority in interest of the Common
Stock present or represented at the meeting and entitled to vote is required to
approve the proposed amendment to the Option Plan. Broker non-votes will not be
counted as present or represented for this purpose. Abstentions will be counted
as present and entitled to vote and, accordingly, will have the effect of a
negative vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL.
==========================================================
11
<PAGE>
Compensation Committee Interlocks And Insider Participation
During the fiscal year ended December 31, 1999, the compensation committee
consisted of Messrs. Schmidt and Hawkins. None of the members of the
compensation committee has been an officer or employee of PixTech.
Mr. Jean-Pierre Noblanc, who was a member of the Company's Board of Directors
and its Audit Committee until March 1999, is an officer of CEA Industrie, S.A.,
which is controlled by the Commissariat a l'Energie Atomique ("CEA"), the French
atomic agency. In September 1992, the Company licensed its fundamental
technology from the Laboratoire d'Electronique, de Technologie et
d'Instrumentation ("LETI"), a research laboratory of the CEA, pursuant to an
exclusive, worldwide, royalty-bearing license agreement with CEA (the "LETI
License Agreement"), which has a term of twenty years. The LETI License
Agreement was amended in July 1993, March 1994 and October 1997. Beginning in
1996, the Company became obligated under the LETI License Agreement to make
royalty payments to the LETI based on the sales of products incorporating
licensed technology. In addition to such royalty payments, the Company must pass
through to CEA a percentage of any lump sum sublicense fees earned after 1993
and royalties on sales of licensed products by the Company's sublicenses.
Pursuant to an amendment to the LETI License Agreement signed in 1997 (the "1997
CEA Amendment"), the royalty rates and minimum payments from the Company to CEA
were increased for a period of three years. An amount of $364,000 was accrued
in 1999 in that respect.
The Company also entered into a research and development agreement with CEA
("the "LETI Research Agreement") in 1992, under which the Company funds research
at the LETI. Pursuant to the LETI Research Agreement, the Company expensed
$644,000, $637,000 and $848,000 in 1996, 1997 and 1998, respectively. In 1999,
the Company recorded $1,043,000 as expenses pursuant to the LETI Research
Agreement.
12
<PAGE>
SHARE OWNERSHIP
The following tables set forth certain information regarding the ownership of
the Company's Common Stock and Series E Preferred Stock as of February 28, 2000
by (i) persons known by the Company to be beneficial owners of more than 5% of
its Common Stock and Series E Preferred Stock, (ii) the executive officers of
the Company, (iii) the directors of the Company, and (iv) all current executive
officers and directors of the Company as a group:
Common Stock
<TABLE>
<CAPTION>
Shares of Common Stock
Beneficially Owned (1)
------------------------------------------------
Beneficial Owner Shares Percent of
Class
- ------------------------------------ --------------------- ---------------------
<S> <C> <C> <C>
United Microelectronics Corporation 13,538,257 (2) 32.8%
2F, NO. 76 SEC 2, Tunhwa S. RD.,
Taipei, Taiwan, R.O.C.
Unipac Optoelectronics Corporation 12,427,146 (3) 30.1%
No 5 Hsin Road VI
Science Based Industrial Park
Hsin Chu City Taiwan R.O.C.
Micron Technology, Inc. 7,443,562 (4) 17.9%
8000 South Federal Way
Boise, Idaho 83716-9632
Jean-Luc Grand-Clement 734,389 (5) 1.8%
Dieter Mezger 562,500 (6) 1.3%
Michel Garcia 137,616 (7) *
John A. Hawkins 16,000 (8) *
James Cathey 43,500 (9) *
Ronald J. Ritchie 2,000 (10) *
Andre Borrel 2,000 (11) *
All directors and executive officers 1,557,005 (12) 3.6%
as a group (10 persons)
</TABLE>
* Less than one percent.
(1) Except as otherwise indicated in these footnotes, the persons and entities
named in the table have sole voting and investment power with respect to
all shares beneficially owned by them. Share ownership information
includes shares of Common Stock issuable pursuant to outstanding options
which may be exercised within 60 days after February 28, 2000.
(2) Includes the 12,427,146 shares held by Unipac. UMC is the owner of 40.7%
of the outstanding shares of Unipac and three members of the UMC board of
directors serve as members of the Unipac board of directors.
(3) Consists of 12,427,146 shares of Common Stock issued to Unipac in a private
placement closed on October 15, 1999.
13
<PAGE>
(4) Consists of 7,133,562 shares of Common Stock and a warrant to purchase
310,000 shares of Common Stock exercisable until May 19, 2001. The Common
Stock and the warrant were issued to Micron Technology, Inc. in a private
placement May 19, 1999 in consideration for substantially all of the assets
of Micron's Field Emission Display Division and $4.4 million in cash.
(5) Includes 53,605 shares held by Mr. Grand-Clement's wife and 609,678 shares
of Common Stock subject to options exercisable as of February 28, 2000 or
within 60 days thereafter, of which 6,967 shares are subject to options
held by Mr. Grand-Clement's wife.
(6) Consists of 525,000 shares of Common Stock subject to options exercisable
as of February 28, 2000 or within 60 days thereafter.
(7) Includes 129,855 shares of Common Stock subject to options exercisable as
of February 28, 2000 or within 60 days thereafter.
(8) Includes 6,000 shares of Common Stock subject to an option exercisable as
of February 28, 2000 or within 60 days thereafter.
(9) Consists of 38,500 shares of Common Stock subject to an option exercisable
as of February 28, 2000 or within 60 days thereafter.
(10) Consists of 2,000 shares of Common Stock subject to an option exercisable
as of February 28, 2000 or within 60 days thereafter.
(11) Consists of 2,000 shares of Common Stock subject to an option exercisable
as of February 28, 2000 or within 60 days thereafter.
(12) Includes 1,456,533 shares of Common Stock subject to options exercisable as
of February 28, 2000 or within 60 days thereafter.
Series E Preferred Stock
<TABLE>
<CAPTION>
Shares of Series E Preferred Stock
Beneficially Owned
------------------------------------------------
Beneficial Owner Shares Percent of
Class
- ---------------------------------------------------------------- ----------------------- ----------------
<S> <C> <C> <C>
The Kaufmann Fund, Inc. 199,722 (1) 86.6%
140 East 45th Street
43rd floor
New York, NY 10017
Citadel Investment Group, L.L.C. 18,766 (2) 6.3%
225 West Washington Street
Chicago, Illinois 60606
</TABLE>
(1) As of February 28, 2000, these shares of Series E Preferred Stock would
have been convertible into 3,046,474 shares of Common Stock. In addition,
the Kaufmann Fund, Inc. holds 1,683,216 shares of Common Stock of the
Company. As of February 28, 2000, the Kaufmann Fund, Inc. holds 4,729,690
shares of Common Stock on a as-converted basis.
(2) As of February 28, 2000, these shares of Series E Preferred Stock would
have been convertible into 286,248 shares of Common Stock. In addition,
Citadel Investment Group, L.L.C. holds 146,295 shares of Common Stock of
the Company (Information as of February 11, 2000). As of February 28,
2000, Citadel Investment Group, L.L.C. holds 432,543 shares of Common Stock
on a as-converted basis.
14
<PAGE>
SECURITIES EXCHANGE ACT REPORTING
The Company's executive officers and directors are required under Section 16(a)
of the Exchange Act to file reports of ownership of Company securities and
changes in ownership with the Securities and Exchange Commission. Copies of
those reports must also be furnished to the Company.
Based solely on a review of the copies of reports furnished to the Company and
written representations that no other reports were required, the Company
believes that during 1999 the executive officers and directors of the Company
complied with all applicable Section 16(a) filing requirements.
INFORMATION CONCERNING AUDITORS
The firm of Ernst & Young, independent accountants, has audited the Company's
accounts since the inception of the Company and will do so for 2000.
Representatives of Ernst & Young have been invited to attend the Annual Meeting.
STOCKHOLDER PROPOSALS
The Company's Bylaws require a stockholder who wishes to bring business before
or propose director nominations at an annual meeting to give written notice to
the Secretary of the Company not less than 45 days nor more than 60 days before
the meeting, unless less than 60 days' notice or public disclosure of the
meeting is given, in which case the stockholder's notice must be received within
15 days after such notice or disclosure is given. The notice must contain
specified information about the proposed business or nominee and the stockholder
making the proposal or nomination. If any stockholder intends to present a
proposal at the 2001 Annual Meeting of stockholders and desires that it be
considered for inclusion in the Company's proxy statement and form of proxy, it
must be received by the Company at Avenue Olivier Perroy, Zone Industrielle de
Rousset, 13790 Rousset, France; Attention: Marie Boem, Interim Chief Financial
Officer, no later than December 29, 2000.
OTHER MATTERS
The Board of Directors does not know of any business to come before the meeting
other than the matters described in the notice. If other business is properly
presented for consideration at the meeting, the enclosed proxy authorizes the
persons named therein to vote the shares in their discretion.
IN ADDITION TO THE COMPANY'S ANNUAL REPORT, WHICH HAS BEEN MAILED TO
STOCKHOLDERS, ANY HOLDER OR BENEFICIAL OWNER OF THE COMPANY'S COMMON STOCK MAY
OBTAIN A COPY OF THE COMPANY'S FORM 10-K FOR THE FISCAL YEAR ENDING DECEMBER 31,
1999, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. WRITTEN REQUESTS FOR
COPIES OF THE COMPANY'S FORM 10-K SHOULD BE ADDRESSED TO MARIE BOEM, INTERIM
CHIEF FINANCIAL OFFICER, AVENUE OLIVIER PERROY, ZONE INDUSTRIELLE DE ROUSSET,
13790 ROUSSET, FRANCE.
15
<PAGE>
APPENDIX A
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PIXTECH, INC.
PROXY FOR THE ANNUAL METING OF STOCKHOLDERS APRIL 18, 2000
The undersigned stockholder of PixTech, Inc. (the "Company") hereby appoints
Jean-Luc Grand-Clement, Dieter Mezger, Marie Boem, Michael Lytton, and Marc A.
Rubenstein, and each of them acting singly, the attorneys and proxies of the
undersigned, with full power of substitution, to vote on behalf of the
undersigned all the shares of capital stock of the company entitled to vote at
the Annual Meeting of Stockholders of the Company to be held on April 18, 2000,
and at any adjournment thereof, hereby revoking any proxy heretofore given with
respect to such shares.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
Back of Card:
A [X] Please mark your
votes as in this
example.
1. Election of Director
FOR WITHHELD
[ ] [ ] Nominee: John A. Hawkins
2. Proposal put forth by the Board of Directors of the Company to amend the
Company's Amended and Restated 1993 Stock Option Plan to increase the number of
shares of Common Stock available under such Plan from 5,156,372 shares to
11,156,372 shares.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholders. If no specification is made, this proxy will be
voted for proposals 1 and 2. In their discretion, the proxies are also
authorized to vote upon such matters as may properly come before the meeting.
Signature____________________________ Date________________
Signature____________________________ Date________________
(IF HELD JOINTLY)
Note: Please sign exactly as name appears on stock certificate. When shares
are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by President or other
authorized officer. If a partner, please sign in partnership name by authorized
person.
<PAGE>
APPENDIX B
PixTech, Inc.
Amended and Restated 1993 Stock Option Plan
As adopted by the Board of Directors on May 9, 1995,
approved by the Stockholders on May 19, 1995.
As amended by the Board of Directors on February , 1997,
approved by the Stockholders on March 24, 1997.
As amended by the Board of Directors on February 3, 1999,
approved by the Stockholders on April 27, 1999.
As amended by the Board of Directors February 2, 2000,
approved by the Stockholders on April 18, 2000
This 1993 Stock Option Plan (the "Plan") is intended to encourage ownership of
Common Stock, $.01 par value (the "Stock") of Pixtech, Inc. (the "Company") by
its officers, employees and consultants so as to provide additional incentives
to promote the success of the Company through the grant of Incentive Stock
Options and Nonstatutory Stock Options (as such terms are defined in Section
3(a) below (collectively, "Options").
1. Administration of the Plan.
--------------------------
The administration of the Plan shall be under the general supervision of any
committee of the Board appointed by the Board to administer the Plan, the
members of which are `Non-Employee Directors' within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended, or any successor
provision (the "Rule") to the extent necessary to comply with the Rule (the
"Compensation Committee"). Within the limits of the Plan, the Compensation
Committee shall determine the individuals to whom, and the times at which,
Options shall be granted, the type of Option to be granted, the duration of each
Option, the price and method of payment for each Option, and the time or times
within which (during its term) all or portions of each Option may be exercised.
The Compensation Committee may establish such rules as it deems necessary for
the proper administration of the Plan, make such determinations and
interpretations with respect to the Plan and Options granted under it as may be
necessary or desirable and include such further provisions or conditions in
Options granted under the Plan as it deems advisable. To the extent permitted
by law, the Compensation Committee may delegate its authority under the Plan to
a sub-committee of the Compensation Committee.
2. Shares Subject to the Plan.
--------------------------
(a) Number and Type of Shares. The aggregate number of shares of Stock of
-------------------------
the Company which may be optioned under the Plan is 11,156,372 shares. In the
event that the Compensation Committee in its discretion determines that any
stock dividend, split-up, combination or reclassification of shares,
recapitalization or other similar capital change affects the Stock such that
adjustment is required in order to preserve the benefits or potential benefits
of the Plan or any Option granted under the Plan, the maximum aggregate number
and kind of shares or securities of the Company as to which Options may be
granted under the Plan and as to which Options then outstanding shall be
exercisable, and the option price of such Options, shall be appropriately
adjusted by the Compensation Committee (whose determination shall be conclusive)
so that the proportionate number of shares or other securities as to which
Options may be granted and the proportionate interest of holders of outstanding
Options shall be maintained as before the occurrence of such event.
1
<PAGE>
(b) Effect of Certain Transactions. In the event of a consolidation or
------------------------------
merger of the Company with another corporation, or the sale or exchange of all
or substantially all of the assets of the Company, or a reorganization or
liquidation of the Company, each holder of an outstanding Option shall be
entitled to receive upon exercise and payment in accordance with the terms of
the Option the same shares, securities or property as he would have been
entitled to receive upon the occurrence of such event if he had been,
immediately prior to such event, the holder of the number of shares of Stock
purchasable under his Option; provided, however, that in lieu of the foregoing
the Board of Directors of the Company (the "Board") may upon written notice to
each holder of an outstanding Option provide that such Option shall terminate on
a date not less than 20 days after the date of such notice unless theretofore
exercised. In connection with such notice, the Board may in its discretion
accelerate or waive any deferred exercise period.
(c) Restoration of Shares. If any Option expires or is terminated
---------------------
unexercised or is forfeited for any reason or settled in a manner that results
in fewer shares outstanding than were initially awarded, including without
limitation the surrender of shares in payment of the Option exercise price or
any tax obligation thereon, the shares subject to such Option or so surrendered,
as the case may be, to the extent of such expiration, termination, forfeiture or
decrease, shall again be available for granting Options under the Plan, subject,
however, in the case of Incentive Stock Options, to any requirements under the
Code (as defined below).
(d) Reservation of Shares. The Company shall at all times while the Plan
---------------------
is in force reserve such number of shares of Stock as will be sufficient to
satisfy the requirements of the Plan. Shares issued under the Plan may consist
in whole or in part of authorized but unissued shares or treasury shares.
3. Grant of Options; Eligible Persons
----------------------------------
(a) Types of Options. Options shall be granted under the Plan either as
----------------
incentive stock options ("Incentive Stock Options"), as defined in Section 422
of the Internal Revenue Code of l986, as amended (the "Code") or as Options
which do not meet the requirements of Section 422 ("Nonstatutory Stock
Options"). Options may be granted from time to time by the Compensation
Committee, within the limits set forth in Sections l and 2 of the Plan, to all
employees of the Company or of any parent corporation or subsidiary corporation
of the Company (as defined in Sections 424(e) and (f), respectively, of the
Code), and, with regard to Nonstatutory Stock Options, to all employees and
consultants of the Company or of any such parent corporation or subsidiary
corporation.
(b) Date of Grant. The date of grant for each Option shall be the date on
-------------
which it is approved by the Compensation Committee, or such later date as the
Compensation Committee may specify. No Options shall be granted hereunder after
ten years from the date on which the Plan was approved by the Board.
(c) Automatic Awards. The Compensation Committee may provide for the
----------------
automatic award of an Option upon the delivery of shares to the Company in
payment of an Option for up to the number of shares so delivered.
4. Form of Options.
---------------
Options granted hereunder shall be evidenced by a writing delivered to the
optionee specifying the terms and conditions thereof and containing such other
terms and conditions not inconsistent with the provisions of the Plan as the
Compensation Committee considers necessary or advisable to achieve the purposes
of the Plan or comply with applicable tax and regulatory laws and accounting
principles. The form of such Options may vary among optionees.
2
<PAGE>
5. Option Price.
------------
In the case of Incentive Stock Options, the price at which shares may from
time to time be optioned shall be determined by the Compensation Committee,
provided that such price shall not be less than the fair market value of the
Stock on the date of granting as determined in good faith by the Compensation
Committee; and provided further that no Incentive Stock Option shall be granted
to any individual who is ineligible to be granted an Incentive Stock Option
because his ownership of stock of the Company or its parent or subsidiary
corporations exceeds the limitations set forth in Section 422(b)(6) of the Code
unless such option price is at least ll0% of the fair market value of the Stock
on the date of grant.
In the case of Nonstatutory Stock Options, the price at which shares may from
time to time be optioned shall be determined by the Compensation Committee.
The Compensation Committee may in its discretion permit the option price to be
paid in whole or in part by a note or in installments or with shares of Stock of
the Company or such other lawful consideration as the Compensation Committee may
determine.
6. Term of Option and Dates of Exercise.
------------------------------------
(a) Exercisability. The Compensation Committee shall determine the term
--------------
of all Options, the time or times that Options are exercisable and whether they
are exercisable in installments; provided, however, that the term of each non-
statutory stock option granted under the Plan shall not exceed a period of
eleven years from the date of its grant and the term of each Incentive Stock
Option granted under the Plan shall not exceed a period of ten years from the
date of its grant, provided that no Incentive Stock Option shall be granted to
any individual who is ineligible to be granted such Option because his ownership
of stock of the Company or its parent or subsidiary corporations exceeds the
limitations set forth in Section 422(b)(6) of the Code unless the term of his
Incentive Stock Option does not exceed a period of five years from the date of
its grant. In the absence of such determination, the Option shall be exercisable
at any time or from time to time, in whole or in part, during a period of ten
years from the date of its grant or, in the case of an Incentive Stock Option,
the maximum term of such Option.
(b) Effect of Disability, Death or Termination of Employment. The
--------------------------------------------------------
Compensation Committee shall determine the effect on an Option of the
disability, death, retirement or other termination of employment of an optionee
and the extent to which, and during the period which, the optionee's estate,
legal representative, guardian, or beneficiary on death may exercise rights
thereunder. Any beneficiary on death shall be designated by the optionee, in
the manner determined by the Compensation Committee, to exercise rights of the
optionee in the case of the optionee's death.
(c) Other Conditions. The Compensation Committee may impose such
----------------
conditions with respect to the exercise of Options, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable.
(d) Withholding. The optionee shall pay to the Company, or make provision
-----------
satisfactory to the Compensation Committee for payment of, any taxes required by
law to be withheld in respect of any Options under the Plan no later than the
date of the event creating the tax liability. In the Compensation Committee's
discretion, such tax obligations may be paid in whole or in part in shares of
Stock, including shares retained from the exercise of the Option creating the
tax obligation, valued at the fair market value of the Stock on the date of
delivery to the Company as determined in good faith by the Compensation
Committee. The Company and any parent corporation or subsidiary corporation of
the Company (as defined in Sections 424(e) and (f),
3
<PAGE>
respectively, of the Code) may, to the extent permitted by law, deduct any such
tax obligations from any payment of any kind otherwise due to the optionee.
(e) Amendment of Options. The Compensation Committee may amend, modify or
--------------------
terminate any outstanding Option, including substituting therefor another Option
of the same or different type, changing the date of exercise or realization and
converting an Incentive Stock Option to a Nonstatutory Stock Option, provided
that the optionee's consent to such action shall be required unless the
Compensation Committee determines that the action, taking into account any
related action, would not materially and adversely affect the optionee.
7. Limitations on Transferability.
------------------------------
Options granted under the Plan shall not be transferable by the recipient
otherwise than by will or the laws of descent and distribution, and are
exercisable, during such person's lifetime, only by such person or by such
person's guaradian or legal representative; provided that the Compensation
Committee may in its discretion waive such restrictions in any particular case.
8. No Right to Employment.
----------------------
No persons shall have any claim or right to be granted an Option, and the
grant of an Option shall not be construed as giving an optionee the right to
continued employment. The Company expressly reserves the right at any time to
dismiss an optionee free from any liability or claim under the Plan, except as
specifically provided in the applicable Option.
9. No Rights as a Shareholder.
--------------------------
Subject to the provisions of the applicable Option, no optionee or any person
claiming through an optionee shall have any rights as a shareholder with respect
to any shares of Stock to be distributed under the Plan until he or she becomes
the holder thereof.
10. Amendment or Termination.
------------------------
The Board may amend or terminate the Plan at any time, provided that no
amendment shall be made without stockholder approval if such approval is
necessary to comply with any applicable tax or regulatory requirement.
11. Stockholder Approval.
--------------------
The Plan is subject to approval by the stockholders of the Company by the
affirmative vote of the holders of a majority of the shares of capital stock of
the Company entitled to vote thereon and present or represented at a meeting
duly held in accordance with the laws of the State of Delaware, or by any other
action that would be given the same effect under the laws of such jurisdiction,
which action in either case shall be taken within twelve (12) months from the
date the Plan was adopted by the Board. In the event such approval is not
obtained, all Options granted under the Plan shall be void and without effect.
12. Governing Law.
-------------
The provisions of the Plan shall be governed by and interpreted in accordance
with the laws of Delaware.
4
