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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
IN FOCUS SYSTEMS, INC.
(Exact Name of Registrant as Specified In Its Charter)
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(1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
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(1) Amount Previously Paid:
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IN FOCUS SYSTEMS, INC.
27700B S.W. PARKWAY AVENUE
WILSONVILLE, OREGON 97070
May 1, 2000
Dear Shareholders:
Our board of directors has unanimously approved a proposal to combine our
operations with those of Proxima ASA, a developer, manufacturer and marketer of
multimedia projection products. We have agreed with Proxima to effect the
combination through a public tender offer to Proxima's shareholders.
Specifically, we are offering to exchange 0.3615 shares of In Focus common stock
for each outstanding Proxima ordinary share and to assume all outstanding
Proxima stock options. Upon completion of the share exchange, our shareholders
will own approximately 62% of our shares, after giving effect to the potential
exercise of all assumed Proxima stock options and all outstanding In Focus stock
options.
We are holding a special meeting of In Focus shareholders to consider the
four proposals described in the enclosed notice of meeting, proxy statement, and
proxy card. The first of these proposals would authorize the issuance of up to
15,825,000 shares of In Focus common stock to complete the share exchange as
described in the proxy statement and the Business Combination Agreement attached
as Annex A. The other three proposals relate to amendments to our Restated
Articles of Incorporation and our 1998 Stock Incentive Plan. The special meeting
of In Focus shareholders will be held on May 31, 2000, beginning at 3:00 p.m.,
Pacific Daylight Time, at the following location:
Embassy Suites-Washington Square
9000 Washington Square Road
Tigard, OR 97223
Whether or not you plan to attend the meeting, please sign and return the
enclosed proxy card promptly. A prepaid return envelope is provided for this
purpose. Your shares will be voted at the meeting in accordance with your proxy.
If you have shares in more than one name, or if your stock is registered in
more than one way, you may receive multiple copies of the proxy materials. If
so, please sign and return each proxy card you receive so that all of your
shares may be voted.
Very truly yours,
IN FOCUS SYSTEMS, INC.
JOHN V. HARKER
Chairman of the Board, President and
Chief Executive Officer
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IN FOCUS SYSTEMS, INC.
27700B S.W. PARKWAY AVENUE
WILSONVILLE, OREGON 97070
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 31, 2000
To the Shareholders of In Focus Systems, Inc.:
NOTICE IS HEREBY GIVEN that a special meeting of the shareholders of In
Focus Systems, Inc. will be held on May 31, 2000, at 3:00 p.m., Pacific Daylight
Time, at the Embassy Suites-Washington Square, 9000 Washington Square Road,
Tigard, OR 97223. The purposes of the special meeting are to:
1. Consider and vote upon a proposal to authorize the issuance of up to
15,825,000 shares of In Focus Systems, Inc. common stock to complete the
share exchange and the transactions contemplated thereby, as described
in the proxy statement and the Business Combination Agreement, dated as
of March 5, 2000, by and among In Focus and Proxima ASA, a copy of which
is attached as Annex A to the proxy statement;
2. Consider and vote upon a proposal to amend the In Focus Systems, Inc.
Restated Articles of Incorporation to increase the number of shares of
common stock authorized for issuance from 50,000,000 to 150,000,000;
3. Consider and vote upon a proposal to amend the In Focus Systems, Inc.
Restated Articles of Incorporation to change our name to "InFocus
Corporation";
4. Consider and vote upon a proposal to amend the In Focus Systems, Inc.
1998 Stock Incentive Plan to increase the number of shares of common
stock available for issuance from 1,500,000 to 4,500,000; and
5. Consider and act upon any other matter which may properly come before
the meeting or any adjournment thereof.
Our board of directors has fixed the close of business on April 21, 2000,
as the record date for determining shareholders entitled to notice of and to
vote at the special meeting or any adjournment thereof. Only holders of record
of our common stock at the close of business on the record date will be entitled
to notice of and to vote at the special meeting and any adjournment thereof. The
accompanying proxy statement presents further information regarding voting
rights and the matters to be voted upon at the special meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND PROMPTLY
RETURN THE ENCLOSED PROXY CARD, WHICH YOU MAY REVOKE AT ANY TIME PRIOR TO ITS
USE. A prepaid, self-addressed envelope is enclosed for your convenience. Your
shares will be voted at the meeting in accordance with your proxy. If you attend
the meeting, you may revoke your proxy and vote in person.
By Order of the Board of Directors,
JOHN V. HARKER
Chairman of the Board, President and
Chief Executive Officer
Wilsonville, Oregon
May 1, 2000
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IN FOCUS SYSTEMS, INC.
27700B S.W. PARKWAY AVENUE
WILSONVILLE, OREGON 97070
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PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 31, 2000
SOLICITATION AND REVOCATION OF PROXIES
We are furnishing this proxy statement, the accompanying notice of special
meeting and proxy card to our shareholders in connection with the solicitation
of proxies by our board of directors for use at a special meeting of
shareholders. The special meeting will be held on May 31, 2000, beginning at
3:00 p.m., Pacific Daylight Time, and any adjournment thereof at the following
location:
Embassy Suites-Washington Square
9000 Washington Square Road
Tigard, OR 97223
The solicitation of proxies by mail may be followed by personal
solicitation of shareholders by our officers or regular employees, and we have
engaged Morrow & Co. to provide additional assistance in soliciting proxies. We
will bear all expenses associated with this solicitation, including
approximately $10,000 relating to our engagement of Morrow & Co.
The two persons named as proxies on the enclosed proxy card, John V. Harker
and E. Scott Hildebrandt, were designated by the board of directors. Except to
the extent that authority to vote has been withheld, all properly executed
proxies will be voted, and where a choice has been specified as provided in the
proxy card, it will be voted in accordance with such specification. Proxies
submitted without specification will be voted:
- FOR proposal 1, to authorize the issuance of up to 15,825,000 shares of
In Focus common stock to complete the share exchange and the transactions
contemplated thereby, as described in this proxy statement and the
Business Combination Agreement, dated as of March 5, 2000, by and among
In Focus and Proxima ASA, attached as Annex A;
- FOR proposal 2, to amend the In Focus Systems, Inc. Restated Articles of
Incorporation to increase the number of shares of common stock authorized
for issuance from 50,000,000 shares to 150,000,000 shares;
- FOR proposal 3, to amend the In Focus Systems, Inc. Restated Articles of
Incorporation to change our name to "InFocus Corporation"; and
- FOR proposal 4, to amend the In Focus Systems, Inc. 1998 Stock Incentive
Plan to increase the number of shares authorized for issuance from
1,500,000 shares to 4,500,000 shares.
You may revoke your proxy prior to its exercise by providing written notice
to our Secretary received prior to the special meeting, by submitting another
proxy bearing a later date, or by voting in person at the special meeting. The
notice or later proxy will not affect a vote on any matter taken prior to our
receipt of the notice or proxy.
These proxy materials are being mailed on or about May 3, 2000 to
shareholders of record on April 21, 2000. Our principal executive office and
mailing address is 27700B S.W. Parkway Avenue, Wilsonville, Oregon 97070.
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TABLE OF CONTENTS
IN FOCUS PROXY STATEMENT
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CHAPTER ONE: SUMMARY........................................ 1
The Special Meeting....................................... 1
Proposal 1: The Share Exchange............................ 2
Proposal 2: Amend our Restated Articles of Incorporation
to Increase the Number of Authorized Shares of Common
Stock.................................................. 6
Proposal 3: Amend our Restated Articles of Incorporation
to Change Our Name to "InFocus Corporation"............ 7
Proposal 4: Amend our Stock Incentive Plan to Increase the
Number of Shares Authorized for Issuance............... 7
CHAPTER TWO: RISK FACTORS................................... 8
CHAPTER THREE: FINANCIAL INFORMATION........................ 12
Nature of Proxima's Trading Market........................ 12
Comparative Per Share Data................................ 13
In Focus Selected Financial Data.......................... 14
Proxima Selected Financial Data........................... 15
Exchange Rates............................................ 16
Proxima Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 17
Selected Unaudited Pro Forma Financial Information........ 23
CHAPTER FOUR: THE SPECIAL MEETING AND SHARE OWNERSHIP....... 24
Information About the Meeting and Voting.................. 24
Security Ownership of Certain Beneficial Owners and
Management............................................. 27
CHAPTER FIVE: BUSINESS OF PROXIMA........................... 28
CHAPTER SIX: PROPOSAL ONE................................... 32
The Share Exchange........................................ 32
The Business Combination Agreement........................ 44
CHAPTER SEVEN: OTHER PROPOSALS.............................. 53
Proposal 2: Amend Our Restated Articles of Incorporation
to Increase the Number of Authorized Shares of Common
Stock.................................................. 53
Proposal 3: Amend Our Restated Articles of Incorporation
to Change Our Name to "InFocus Corporation"............ 57
Proposal 4: Amend Our Stock Incentive Plan to Increase the
Number of Shares Authorized for Issuance............... 58
CHAPTER EIGHT: EXECUTIVE COMPENSATION....................... 62
CHAPTER NINE: ADDITIONAL INFORMATION FOR SHAREHOLDERS....... 67
CHAPTER TEN: FINANCIAL STATEMENTS........................... F-1
Index to Financial Statements............................. F-1
ANNEXES..................................................... A-1
Annex A: Business Combination Agreement................... A-1
Annex B: Form of Affiliate Agreement...................... B-1
Annex C: Fairness Opinion of Salomon Smith Barney Inc..... C-1
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CHAPTER ONE
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROXY STATEMENT AND
MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. BEFORE YOU
DECIDE HOW TO VOTE, WE URGE YOU TO READ THIS ENTIRE DOCUMENT, INCLUDING THE
BUSINESS COMBINATION AGREEMENT ATTACHED AS ANNEX A, THE OTHER ANNEXES AND THE
DOCUMENTS WE HAVE INCORPORATED BY REFERENCE FROM OUR SEC FILINGS.
THE SPECIAL MEETING
WHEN AND WHERE THE SPECIAL MEETING WILL BE HELD (SEE PAGE 24)
The special meeting will be held on May 31, 2000, beginning at 3:00 p.m.,
Pacific Daylight Time, at the following location:
Embassy Suites-Washington Square
9000 Washington Square Road
Tigard, OR 97223
RECORD DATE FOR VOTING (SEE PAGE 25)
You are entitled to vote at the special meeting if you held shares of In
Focus common stock on April 21, 2000, the record date.
VOTING; QUORUM (SEE PAGE 24)
You are entitled to one vote at the special meeting for each share of In
Focus common stock you held as of the record date. The presence, in person or by
properly executed proxy, of the holders of at least a majority of the
outstanding shares of In Focus common stock entitled to vote at the special
meeting will constitute a quorum for the transaction of business. If a quorum is
not present, our board of directors will likely adjourn or postpone the meeting
to solicit additional proxies.
VOTES REQUIRED TO APPROVE THE PROPOSALS (SEE PAGE 25)
Assuming a quorum is present at the special meeting, the following votes
are required to approve the proposals:
- proposal 1 requires the affirmative vote of a majority of the votes cast
on the proposal in person or by proxy at the special meeting;
- proposal 2 requires the number of votes cast for the proposal to exceed
the number of votes cast against it;
- proposal 3 requires the number of votes cast for the proposal to exceed
the number of votes cast against it; and
- proposal 4 requires the affirmative vote of the holders of a majority of
the shares present in person or represented by proxy at the special
meeting and entitled to vote.
EVEN IF OUR SHAREHOLDERS APPROVE PROPOSAL 1, WE CANNOT AND WILL HAVE NO
OBLIGATION TO COMPLETE THE SHARE EXCHANGE UNLESS OUR SHAREHOLDERS ALSO APPROVE
PROPOSAL 2. IF PROPOSAL 4 IS APPROVED, THE AMENDMENT TO OUR STOCK INCENTIVE PLAN
WILL TAKE EFFECT ONLY IF WE COMPLETE THE SHARE EXCHANGE.
EFFECT OF ABSTENTIONS (SEE PAGE 24)
If you abstain from voting, your shares of common stock will be deemed
present at the special meeting for purposes of determining whether a quorum is
present. Abstentions are not counted as votes "for" or "against" a proposal and
are not counted in determining the number of votes cast on a proposal.
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Therefore, abstentions will have the same effect as a vote against proposal 4,
but will not affect proposals 1, 2 and 3.
EFFECT OF BROKER NON-VOTES (SEE PAGE 24)
If your broker holds your shares in street name, your broker will not have
discretionary voting authority with respect to proposals 1 and 4. Therefore, you
should instruct your broker how to vote. Broker non-votes will be deemed present
at the special meeting for purposes of determining whether a quorum is present.
However, broker non-votes are not counted as votes "for" or "against" proposals
1, 2, 3 and 4 and are not counted in determining the number of votes cast on
these proposals. In addition, broker non-votes are not entitled to vote on
proposal 4. Accordingly, broker non-votes will have no effect on proposals 1, 2,
3 and 4.
PROPOSAL 1
THE PROPOSED SHARE EXCHANGE (SEE PAGE 32)
We have agreed with Proxima to make a public tender offer to all Proxima
shareholders, offering to exchange shares of In Focus common stock for Proxima
ordinary shares. As permitted by the Business Combination Agreement, we may make
the exchange offer and complete the share exchange through a subsidiary
corporation. If we complete the share exchange, Proxima will become a direct or
indirect wholly owned subsidiary of In Focus. We urge you to read the Business
Combination Agreement attached as Annex A to this proxy statement carefully and
in its entirety. It is an important legal document relating to the exchange
offer and the share exchange.
We are seeking shareholder approval for the issuance of up to 15,825,000
shares of In Focus common stock to complete the share exchange and the
transactions contemplated thereby, as described in the Business Combination
Agreement and this proxy statement. However, even if our shareholders approve
the issuance, we cannot and will have no obligation to complete the share
exchange unless our shareholders also approve proposal 2 to increase the number
of shares of common stock we are authorized to issue.
OUR REASONS FOR THE SHARE EXCHANGE (SEE PAGE 32)
We believe the share exchange will enhance our position as the market
leader in the data/video projection industry and strengthen our ability to
compete against larger market participants. The share exchange should also:
- build upon the companies' complementary sales and distribution
infrastructure and enhance our visibility in key markets such as Latin
America, Asia and Europe;
- expand and focus our research and development resources and expertise,
thereby shortening the time to develop new products and allowing us to
pursue a broader range of opportunities;
- strengthen our negotiating position with suppliers, which should result
in lower component costs and other cost savings; and
- help to satisfy each company's immediate personnel needs that are
important to support our growth objectives.
PROXIMA'S REASONS FOR THE SHARE EXCHANGE (SEE PAGE 33)
Proxima's board of directors has advised us that they perceive similar
benefits. They also believe that the share exchange should:
- enhance shareholder value and liquidity and expand analyst coverage;
- build upon the companies' complementary sales, marketing and distribution
infrastructure, and expand Proxima's manufacturing, research and
development resources and expertise;
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- improve long-term cost efficiency and competitive position; and
- enable Proxima to strengthen its ultraportable product offerings.
RECOMMENDATION OF OUR BOARD OF DIRECTORS (SEE PAGE 35)
Our board of directors believes the share exchange is fair to In Focus and
in the best interests of both In Focus and its shareholders. Therefore, our
board of directors unanimously recommends that you vote FOR the proposal to
approve the issuance of up to 15,825,000 shares of In Focus common stock to
complete the share exchange and the transactions contemplated thereby.
THE COMPANIES
In Focus Systems, Inc.
27700B SW Parkway Avenue
Wilsonville, Oregon 97070
(503) 685-8888
In Focus is the worldwide leader in manufacturing and developing data/video
projection products and services that make it easy to project the power of
multimedia in business and sales presentations, software demos, education and
training, and interactive workgroup meetings. Our products, which include
personal projectors, conference room projectors and fixed/auditorium projectors,
are based on liquid crystal display and Digital Light Processing(TM)
technologies and are compatible with all major personal computers and most video
sources used in business and educational settings. We market our products
domestically through a variety of dealers, direct resellers and wholesale
distributors, and also directly to major organizations with significant
presentation technology needs. Internationally, we market our products through a
variety of distributors in more than 87 countries. We also maintain private
label original equipment manufacturing, or OEM, arrangements with IBM, Kodak,
Toshiba, Boxlight Corporation and PictureTel, which resell our projectors under
their own labels.
For further information about In Focus, see "Where You Can Find More
Information" on page 67 of this proxy statement.
Proxima ASA
K.G. Medahlsvei 9
Postboks 1403
N-1602 Fredrikstad, Norway
(011) 47-69-34-01-55
Proxima is a leading developer, manufacturer and marketer of multimedia
projection products that present video, audio, graphics and data from personal
computers, workstations, VCRs and DVD players. Proxima's products are used by
businesses, educational institutions and government agencies for training
sessions, meetings, sales presentations, technical seminars, group collaboration
and other applications that involve sharing computer-generated and/or video
information with an audience. They are based on liquid crystal display and
Digital Light Processing(TM) technologies and are compatible with all major
personal computers and most video sources used in business and educational
settings. Proxima markets its products worldwide. In the Americas, Proxima
relies on a trained reseller network and wholesale distributors. In Europe and
Asia, Proxima sells its products through numerous distributors under the brand
names ASK and PROXIMA.
For further information about Proxima's business, see page 28 of this proxy
statement.
WHAT WE WILL PAY IN THE SHARE EXCHANGE (SEE PAGE 45)
We are offering to exchange 0.3615 shares of In Focus common stock for each
outstanding Proxima ordinary share. Fractional shares will be rounded up to the
nearest whole number. Our exchange offer is conditioned upon, among other
things, the tender of more than 90% of Proxima's 42,021,181 issued and
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outstanding ordinary shares. Therefore, we expect to issue a minimum of
approximately 13,675,000 shares, and a maximum of approximately 15,200,000
shares of common stock in the share exchange. We also anticipate issuing a
maximum of approximately 545,000 additional shares of common stock upon the
exercise of Proxima stock options we assume as part of the share exchange.
The actual number of shares we issue in the share exchange will vary,
depending on the number of Proxima shares tendered and the effect of rounding
fractional shares. However, we are not obligated to issue more than 15,825,000
shares in the share exchange. On April 28, 2000, the most recent practicable
date prior to the filing of this proxy statement, the closing price of Proxima
ordinary shares on the Oslo Stock Exchange was NOK 90.00 per share. The exchange
rate for Norwegian kroner to U.S. dollars on that date was 8.9590.
MANDATORY OFFER (SEE PAGE 45)
We may obtain the tender of more than 90% of all outstanding Proxima shares
and complete the share exchange, but acquire less than all outstanding Proxima
ordinary shares. In this case, Norwegian law would require us to commence a
"mandatory offer" to purchase, for cash, all Proxima ordinary shares that were
not tendered in response to the exchange offer. The price per share in any
mandatory offer we undertake will be the higher of the market price of Proxima
shares at the time we become obligated to commence a mandatory offer and the
cash value of the exchange offer.
COMPULSORY ACQUISITION (SEE PAGE 46)
If, after the exchange offer and mandatory offer, we do not own all of
Proxima's outstanding ordinary shares, we intend to initiate a "compulsory
acquisition" under Norwegian law for the remaining ordinary shares. The purpose
and effect of a compulsory acquisition is to force the remaining Proxima
shareholders to sell their Proxima ordinary shares to us at fair market value,
which may be determined by a Norwegian court.
OPINION OF OUR FINANCIAL ADVISOR (SEE PAGE 36)
To assist with its evaluation of the share exchange, our board of directors
requested and received an opinion of Salomon Smith Barney Inc. regarding the
fairness, from a financial point of view, of the exchange ratio. Salomon Smith
Barney rendered an opinion to our board of directors that, based upon and
subject to the considerations and limitations set forth in the opinion, in
Salomon Smith Barney's opinion, as of March 4, 2000, the exchange ratio was
fair, from a financial point of view, to us. This opinion, which is attached as
Annex C to this proxy statement, sets forth the assumptions made, general
procedures followed, matters considered and limitations upon the review
undertaken in connection with the opinion. We urge you to read Salomon Smith
Barney's opinion carefully and in its entirety.
OWNERSHIP OF IN FOCUS FOLLOWING THE SHARE EXCHANGE (SEE PAGE 8)
Assuming Proxima's shareholders tender all of their shares, and after
giving effect to the rounding of fractional shares and the potential exercise of
all Proxima stock options we are offering to assume, we anticipate issuing a
maximum of approximately 15,745,000 shares of common stock in the share
exchange. These shares would represent approximately 38% of the outstanding In
Focus common stock following completion of the share exchange, after giving
effect to the potential exercise of all outstanding In Focus stock options.
BOARD OF DIRECTORS AND MANAGEMENT OF IN FOCUS FOLLOWING THE SHARE EXCHANGE (SEE
PAGE 46)
After the share exchange, our board of directors will include three
additional directors: Messrs. Ole J. Fredriksen, Svein S. Jacobsen, and Einar J.
Greve. Messrs. Jacobsen and Greve are currently members of the Proxima board of
directors, and Mr. Fredriksen is currently Proxima's President and Chief
Executive Officer. Mr. Fredriksen and John V. Harker, our President, Chief
Executive Officer and Chairman of the Board, will serve as Co-Chairs of the
Board.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE SHARE EXCHANGE (SEE PAGE 42)
None of our current shareholders should recognize gain or loss under U.S.
federal income tax laws solely as a result of the share exchange. In addition,
neither we nor Proxima should recognize gain or loss under U.S. federal income
tax laws solely as a result of the share exchange.
ACCOUNTING TREATMENT OF THE SHARE EXCHANGE (SEE PAGE 43)
We intend for the share exchange to, and believe it will, qualify as a
pooling of interests for accounting purposes. One of the conditions to our
obligation to complete the share exchange is that, prior to closing, we must
receive a letter from Arthur Andersen, LLP, our independent public accountants,
stating that it is appropriate for the share exchange to be accounted for as a
pooling of interests.
NO APPRAISAL RIGHTS (SEE PAGE 43)
You are not entitled to appraisal rights in connection with the share
exchange. Proxima shareholders have the rights described on page 46, relating to
compulsory acquisition procedures under Norwegian law.
REGULATORY APPROVALS (SEE PAGE 43)
Pursuant to the Hart-Scott-Rodino Antitrust Improvements Act, the share
exchange may not be completed until after we submit information and materials to
the Federal Trade Commission and U.S. Department of Justice and the required
waiting period has expired or been terminated. We submitted the required
notification and report forms on March 15, 2000. The waiting period expired at
midnight on April 14, 2000. The waiting period for Proxima's submission expired
on the same date. The waiting period for the submission on behalf of a Proxima
shareholder relative to his acquisition of In Focus common stock in the share
exchange expired at midnight on April 27, 2000.
The share exchange is also subject to approval by the Norwegian Ministry of
Industry and Trade under the Norwegian Acquisition of Business Undertakings Act.
Approval may be denied if the share exchange is deemed contrary to the public
interest. To date the Ministry has never taken that kind of action, although
they have imposed conditions on transactions. If the Ministry does not take
action or request further information within 30 days after filing, approval will
be deemed granted. In accordance with Norwegian law, the earliest date we may
file the required report with the Ministry is when Proxima's shareholders have
tendered the minimum number of shares in response to the exchange offer.
Proxima has, on behalf of its Norwegian shareholders, applied to the
Norwegian Ministry of Finance for a tax exemption with respect to gains realized
upon the exchange of Proxima ordinary shares for In Focus common stock. Under
the Business Combination Agreement, unless Proxima consents, we may not commence
the exchange offer unless and until the tax exemption is granted.
CONDITIONS TO THE SHARE EXCHANGE (SEE PAGE 49)
We are not required to complete the share exchange unless a number of
conditions are satisfied or we waive them. These conditions include the
following, in addition to standard conditions:
- holders of more than 90% of Proxima's issued and outstanding ordinary
shares must tender their shares in response to the exchange offer;
- holders of a sufficient number of outstanding Proxima stock options, as
necessary for the share exchange to be accounted for as a pooling of
interests, must agree to permit us to assume their stock options;
- our shareholders must approve the issuance of up to 15,825,000 shares of
In Focus common stock to complete the share exchange and the transactions
contemplated thereby, as described in this proxy statement and the
Business Combination Agreement;
- our shareholders must approve the increase in the number of shares of
common stock we are authorized to issue;
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- any applicable waiting period under the Hart-Scott-Rodino Act, and under
any applicable competition laws of any non-U.S. jurisdiction, must have
expired or been terminated; and
- prior to closing, we must receive a letter from Arthur Andersen LLP, our
independent public accountants, stating that it is appropriate to account
for the share exchange as a pooling of interests.
TERMINATION OF THE BUSINESS COMBINATION AGREEMENT (SEE PAGE 51)
Both parties may terminate the Business Combination Agreement and abandon
the share exchange by mutual written consent. In addition, either party may
unilaterally take such action under specified circumstances, including if:
- the share exchange is not completed by September 30, 2000, but this right
is not available to a party that has breached its obligations under the
Business Combination Agreement and thereby prevented completion of the
share exchange;
- our shareholders do not approve the issuance of up to 15,825,000 shares
of common stock to complete the share exchange and the transactions
contemplated thereby, as described in this proxy statement and the
Business Combination Agreement;
- our shareholders do not approve the increase in the number of shares of
common stock that we are authorized to issue; or
- the other party takes certain action with respect to a prohibited
acquisition proposal or modifies or withdraws its approval of the
Business Combination Agreement or the share exchange.
NO NEGOTIATIONS REGARDING ALTERNATIVE BUSINESS COMBINATIONS (SEE PAGE 49)
Both parties have agreed, subject to limited exceptions, not to initiate or
engage in discussions with another party about a business combination while the
share exchange is pending.
TERMINATION FEE (SEE PAGE 52)
We would be entitled to a $3,500,000 termination fee from Proxima if we
terminate the Business Combination Agreement, and Proxima would be entitled to
the same termination fee from us if it terminates the Business Combination
Agreement, for any of the following reasons:
- the other party enters into, or publicly announces its intention to enter
into, an agreement or agreement in principle with respect to a prohibited
acquisition proposal;
- the other party's board of directors withdraws its approval or
recommendation of the exchange offer or the Business Combination
Agreement, or modifies its approval or recommendation in a manner adverse
to the terminating party; or
- the other party's board of directors makes any recommendation with
respect to a prohibited acquisition proposal other than a recommendation
rejecting or against the acquisition proposal.
PROPOSAL 2
THE PROPOSED AMENDMENT (SEE PAGE 53)
We are seeking shareholder approval of an amendment to the In Focus
Systems, Inc. Restated Articles of Incorporation. The amendment would increase
the number of shares of common stock that we authorized to issue from 50,000,000
to 150,000,000.
REASONS FOR THE AMENDMENT (SEE PAGE 53)
We are presently authorized to issue up to 50,000,000 shares of common
stock. Following completion of the share exchange and assuming shareholder
approval of proposal 4, up to 65,417,923 shares of our common stock would be
either issued and outstanding or reserved for issuance under our stock incentive
plans and shareholder rights plan. CONSEQUENTLY, OUR SHAREHOLDERS MUST APPROVE
AN INCREASE IN OUR
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AUTHORIZED SHARES IN ORDER FOR US TO COMPLETE THE SHARE EXCHANGE. Even if we do
not complete the share exchange, our board of directors believes the increase is
appropriate to provide sufficient flexibility in furtherance of general
corporate purposes.
RECOMMENDATION OF OUR BOARD OF DIRECTORS (SEE PAGE 53)
Our board of directors unanimously recommends that you vote FOR the
proposal to amend our Restated Articles of Incorporation to increase the number
of shares of In Focus common stock authorized for issuance from 50,000,000 to
150,000,000.
PROPOSAL 3
THE PROPOSED AMENDMENT (SEE PAGE 57)
We are seeking shareholder approval of an amendment to the In Focus
Systems, Inc. Restated Articles of Incorporation. The amendment would change our
name to "InFocus Corporation."
REASONS FOR THE AMENDMENT (SEE PAGE 57)
Our board of directors believes it is important to change our corporate
name to better reflect our product trademark "InFocus."
RECOMMENDATION OF OUR BOARD OF DIRECTORS (SEE PAGE 57)
Our board of directors unanimously recommends that you vote FOR the
proposal to amend our Restated Articles of Incorporation to change our name to
"InFocus Corporation."
PROPOSAL 4
THE PROPOSED AMENDMENT (SEE PAGE 58)
We are seeking shareholder approval of an amendment to the In Focus
Systems, Inc. 1998 Stock Incentive Plan. The amendment would increase the number
of shares of In Focus common stock authorized for issuance under the stock
incentive plan from 1,500,000 to 4,500,000. However, even if our shareholders
approve the amendment, it will not take effect unless we complete the share
exchange.
On April 10, 2000, our board of directors approved an amendment to our
stock incentive plan to prohibit any repricing or cancellation and reissuance of
stock options granted under the plan. This amendment will become effective only
if our shareholders approve the proposal to increase the number of shares
authorized for issuance under our stock incentive plan.
REASONS FOR THE AMENDMENT (SEE PAGE 58)
Our stock incentive plan is, and will continue to be, an important tool in
attracting and retaining key personnel. Our board of directors approved the
amendment primarily to ensure sufficient flexibility in retaining and attracting
key personnel following the share exchange. To ensure that the proposed
3,000,000 share increase is competitive with the stock programs of other,
similarly sized high technology companies, we engaged an independent consultant
to evaluate our proposal. Highlights of that study are included in this proxy
statement.
RECOMMENDATION OF OUR BOARD OF DIRECTORS (SEE PAGE 59)
Our board of directors unanimously recommends that you vote FOR the
proposal to amend our stock incentive plan to increase the number of shares of
In Focus common stock authorized for issuance from 1,500,000 to 4,500,000.
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CHAPTER TWO
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE INFORMATION BELOW AS WELL AS ALL OTHER
INFORMATION PROVIDED TO YOU IN THIS DOCUMENT IN DECIDING WHETHER TO APPROVE THE
ISSUANCE OF THE COMPANY'S SHARES NECESSARY TO COMPLETE THE SHARE EXCHANGE,
INCLUDING INFORMATION IN THE SECTION OF THIS DOCUMENT ENTITLED "FORWARD-LOOKING
STATEMENTS MAY PROVE INACCURATE."
IF WE ARE UNABLE TO EFFECTIVELY INTEGRATE PROXIMA INTO OUR OPERATIONS, WE MAY
NOT ACHIEVE THE REVENUE, EARNINGS AND BUSINESS SYNERGIES WE ANTICIPATE FROM THE
BUSINESS COMBINATION.
We will face challenges integrating In Focus and Proxima, any of which
could adversely affect the revenue, earnings and business synergies we
anticipate from the business combination. The distance between our respective
facilities amplifies these challenges. If we are unable to effectively integrate
our technology, operations and personnel in a timely and efficient manner, we
may not realize the anticipated benefits of the business combination, and, as a
result, our financial performance may be adversely affected. We note, in
particular, the following concerns:
- the integration process may unduly distract our management and other key
personnel from their regular responsibilities;
- our business and management culture may be incompatible with Proxima's;
- we may experience unanticipated costs and delays in implementing common
systems and procedures; and
- we may be unable to maintain the companies' existing relationships with
their respective customers, suppliers and business partners.
IF WE ARE UNABLE TO RETAIN KEY IN FOCUS AND PROXIMA PERSONNEL, OUR EFFORTS TO
INTEGRATE IN FOCUS AND PROXIMA MAY BE ADVERSELY AFFECTED.
Our success in integrating the two companies depends in part on the
continued service of key In Focus and Proxima personnel, including various
officers and sales and distribution employees. Despite our retention efforts,
one or more of these officers or employees may refuse to work for us following
the share exchange. If we cannot timely recruit adequate replacements for these
individuals, our integration efforts and, ultimately, our financial performance
may be adversely affected.
THE COMBINATION IS SUBJECT TO THE RECEIPT OF CONSENTS AND APPROVALS FROM VARIOUS
GOVERNMENT ENTITIES, WHICH MAY JEOPARDIZE OR DELAY COMPLETION OF THE COMBINATION
OR ADVERSELY AFFECT THE ANTICIPATED BENEFITS OF THE TRANSACTION.
We cannot complete the share exchange without making certain filings with
antitrust and other regulatory authorities in the U.S., including the filing of
certain information and materials with the Federal Trade Commission and the
Department of Justice. In addition, consents and approvals are required from
regulatory authorities in various other jurisdictions, including Norwegian
authorities that can review the transaction after Proxima's shareholders have
tendered their shares. Any of these jurisdictions and authorities may impose
conditions that delay the share exchange or adversely affect the anticipated
benefits of the transaction. See "The Share Exchange -- Regulatory Filings and
Approvals Required to Complete the Share Exchange."
THE SHARE EXCHANGE WILL DECREASE THE VOTING CONTROL OF OUR SHAREHOLDERS.
The share exchange will dilute the ownership interest of our current
shareholders by as much as 38%, assuming all Proxima ordinary shares are
tendered in response to the exchange offer and after giving effect to the
potential exercise of all assumed Proxima stock options and all of our
outstanding stock options. Accordingly, our current shareholders will have
reduced voting power in the combined company.
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WE MAY BE REQUIRED TO PAY A SUBSTANTIAL, AND UNCERTAIN, AMOUNT OF CASH IN THE
SHARE EXCHANGE.
The exchange offer is conditioned upon, among other things, the tender of
more than 90% of Proxima's outstanding ordinary shares in response to the
exchange offer. We intend to acquire any untendered shares for cash through
various legal procedures under Norwegian law, which would require us to use a
portion of our liquid assets. The amount of cash required to complete the
purchase of untendered shares is uncertain because, under Norwegian law, the
eventual cash price is likely to be substantially based on the trading price of
our common stock and Proxima ordinary shares immediately prior to completion of
the share exchange. If Proxima's shareholders tender only the minimum required
percentage of shares, the cash required to complete the purchase of untendered
shares, based on the trading price of In Focus and Proxima shares on April 21,
2000, would be approximately $43,500,000. If the trading price of our common
stock or Proxima ordinary shares is materially higher immediately prior to
completion of the share exchange, the effect on our cash position would be more
significant.
In addition, the negotiation and implementation of the share exchange and
business combination will result in costs and expenses that we cannot yet
calculate, but which we estimate will exceed $10,000,000. Such costs and
expenses have or will be diverted from other, possibly more productive uses.
THE BUSINESS COMBINATION WILL EXPAND OUR INTERNATIONAL SALES AND OPERATIONS AND
INCREASE OUR EXPOSURE TO THE INHERENT RISKS OF CONDUCTING BUSINESS
INTERNATIONALLY.
International sales represented approximately 36.6% of our revenue during
1999 and, on a pro forma basis, would have represented 38.5% of our revenue
during 1999 if the share exchange had been completed as of January 1, 1999. The
business combination will increase our exposure to a variety of risks associated
with conducting business internationally, any of which could adversely affect
our financial performance. These risks include:
- difficulties in staffing and managing international operations;
- longer payment cycles and other problems collecting accounts receivable;
- seasonal reductions in business activity during the summer months in
Europe and certain other parts of the world;
- recessionary environments in foreign economies;
- uncertainties relative to regional, political and economic circumstances;
and
- increases in tariffs, duties, price controls or other restrictions on
foreign currencies or trade barriers imposed by foreign countries.
FLUCTUATIONS IN THE VALUE OF FOREIGN CURRENCIES COULD RESULT IN CURRENCY
TRANSACTION LOSSES.
Following the share exchange, we will conduct a larger portion of our
business in foreign currencies. Despite efforts to manage foreign exchange risk,
our hedging activities may not adequately protect us against the risks
associated with foreign currency fluctuations. As a consequence, we may incur
losses in connection with fluctuations in foreign currency exchange rates.
THE BUSINESS COMBINATION COULD HARM OUR RELATIONSHIPS WITH EXISTING CUSTOMERS,
SUPPLIERS AND OTHER THIRD-PARTIES.
Our existing customers and suppliers, as well as other third-parties with
whom we have business relationships, may react unfavorably to the business
combination or have significant concerns regarding the consequent uncertainties
of the business combination. As a result, these parties may delay purchasing
decisions or modify pricing or payment terms, as the case may be, or take other
action that adversely affects our business.
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IF WE ARE UNABLE TO ACCOUNT FOR THE SHARE EXCHANGE AS A POOLING OF INTERESTS,
OUR FINANCIAL PERFORMANCE WOULD BE SIGNIFICANTLY HARMED.
The combination is intended to be treated for accounting purposes as a
pooling of interests. If, however, this expected accounting treatment does not
occur and we nevertheless consummated the share exchange, we will be required to
account for the share exchange as a purchase of Proxima's assets, including
goodwill and other intangible assets. Purchase accounting would negatively
affect our earnings, as goodwill and other intangible assets would be amortized
over a period of years and reduce earnings for each quarter during those years.
Although we expect to receive a letter from our independent public accountants
concurring with our management that the share exchange will qualify for pooling
of interests accounting treatment, the opinion would not be binding on the SEC
and would not take into account transactions that may occur subsequent to the
share exchange that would disallow pooling of interests accounting.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE.
This proxy statement and the documents we have incorporated by reference
include various statements about us, Proxima, the share exchange and the
combined company after the share exchange that are forward-looking and do not
address historical facts. These statements constitute "forward-looking
statements" within the meaning of the safe harbor set forth in Section 21E of
the Securities Exchange Act of 1934, as amended, and Section 27A of the
Securities Act of 1933, as amended. We believe such statements are covered by
the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include and address such matters as:
- financial projections and estimates;
- plans, objectives and expectations with respect to future operations,
products and services;
- synergies resulting from the share exchange;
- future economic performance;
- assumptions underlying projections, estimates and performance; and
- the estimated size and growth of relevant markets.
Forward-looking statements often include such words as "anticipates,"
"believes," "expects," "intends," "estimates," "plans," and similar expressions.
However, we do not intend the absence of such words in a particular statement to
suggest that the statement is not forward-looking.
When we make forward-looking statements, we do so on the basis of what we
believe are reasonable assumptions. However, numerous risks, uncertainties and
other important factors, most of which are difficult to predict and generally
are beyond our control, may cause actual results to differ materially from those
suggested in forward-looking statements. These include:
- matters discussed or identified from time to time in our public filings
with the Securities and Exchange Commission;
- specific risks or uncertainties associated with our expectations
regarding our business, Proxima's business or the share exchange, such
as:
- the timing, completion or tax status of the share exchange;
- the accounting treatment of the share exchange;
- the fairness of the exchange ratio;
- growth prospects;
- distribution channels;
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- the impact of technological change;
- risks associated with international operations, including foreign
exchange rate fluctuations;
- earnings per share;
- anticipated cost savings;
- anticipated revenue enhancements;
- demand for our combined product offerings;
- competition; and
- pricing.
- general economic conditions such as:
- changes in interest rates and market fluctuations;
- changes in domestic and foreign laws, regulations and taxes;
- changes in competition and pricing environments;
- regional or general changes in asset valuations;
- the occurrence of significant natural disasters; and
- general market conditions.
Our actual results following the share exchange could differ materially
from those expressed in, or implied by, these forward-looking statements.
Accordingly, we cannot assure that any of the events anticipated by the
forward-looking statements will occur, or if they do, what impact they will have
on our results of operations and financial condition.
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CHAPTER THREE
FINANCIAL INFORMATION
NATURE OF PROXIMA'S TRADING MARKET
Proxima ordinary shares are traded on the Oslo Stock Exchange under the
symbol "PRX." There is no established trading market for Proxima ordinary shares
in the U.S. As of April 21, 2000, approximately 886,993 Proxima ordinary shares
were held of record by approximately 26 U.S. shareholders.
The following table summarizes the high and low quarterly sales prices for
Proxima ordinary shares, as reported on the Oslo Stock Exchange, during the
current year and the preceding two years. The per share price of Proxima
ordinary shares has been converted into U.S. dollars based on the currency
exchange rate in effect on the date of each high and low quarterly price.
PROXIMA PROXIMA
(NOK) (USD)
-------------- -------------
HIGH LOW HIGH LOW
----- ----- ----- ----
1998
1st Quarter............................................... 96.00 58.00 12.69 7.71
2nd Quarter............................................... 92.00 48.50 11.94 6.39
3rd Quarter............................................... 62.00 30.00 8.03 3.77
4th Quarter............................................... 53.00 30.50 7.02 4.07
1999
1st Quarter............................................... 59.00 44.50 7.90 5.70
2nd Quarter............................................... 54.00 40.70 6.92 5.21
3rd Quarter............................................... 55.50 42.90 7.10 5.44
4th Quarter............................................... 62.00 47.00 7.83 6.06
2000
1st Quarter............................................... 94.50 48.50 11.20 6.05
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COMPARATIVE PER SHARE DATA
The following table sets forth selected historical per share data of In
Focus and Proxima and combined per share data on an unaudited pro forma basis,
after giving effect to the share exchange on a pooling of interests accounting
basis. The pro forma equivalent data for Proxima are based on historical amounts
per share multiplied by the exchange ratio of 0.3615. This data is derived from
and should be read in conjunction with the In Focus Selected Financial Data, the
Proxima Selected Financial Data and the separate historical combined financial
statements of In Focus and Proxima contained elsewhere in this proxy statement
or incorporated herein by reference. The unaudited pro forma combined financial
data are not necessarily indicative of the operating results that would have
been achieved had the transaction been in effect as of the beginning of the
years presented and should not be construed as representative of future
operations. During the periods presented, In Focus did not declare any cash
dividends with respect to its common stock and Proxima did not declare any cash
dividends with respect to its ordinary shares.
DECEMBER 31,
------------------------
1999 1998 1997
----- ------ -----
(AMOUNTS IN USD)
In Focus Common Stock
Net income (loss) per share:
Historical:
Basic................................................ $1.20 $(0.03) $0.93
Diluted.............................................. 1.13 (0.03) 0.90
Pro forma combined
Basic................................................ 1.16 0.18 0.88
Diluted.............................................. 1.12 0.18 0.87
Book value per share at year-end:(1)
Historical............................................. 7.41
Pro forma combined..................................... 7.29
Proxima Ordinary Shares
Net income per share:
Historical (U.S. GAAP):
Basic................................................ 0.40 0.18 0.29
Diluted.............................................. 0.40 0.18 0.29
Historical (Norwegian GAAP):
Basic................................................ 0.42 0.33 0.38
Diluted (Fully)(2)................................... 0.41 0.32 0.38
Diluted (Treasury Stock Method)(3)................... 0.42 0.33 0.38
Pro forma equivalent
Basic................................................ 0.42 0.07 0.32
Diluted.............................................. 0.40 0.07 0.31
Book value per share at year-end:(1)
Historical (U.S. GAAP)................................. 7.10
Pro forma equivalent................................... 2.64
- ---------------
(1) Included for specified year only, in accordance with SEC rules.
(2) Includes dilutive effect using all shares subject to outstanding options (on
a weighted average basis) for the period.
(3) Includes dilutive effect using the treasury stock method as prescribed by
SFAS 128.
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IN FOCUS SELECTED FINANCIAL DATA
The table below sets forth selected historical financial information
regarding In Focus for, and as of the end of, each of the five years ended
December 31, 1999, all of which was derived from our audited financial
statements. This information is only a summary, and you should read it in
conjunction with our historical financial statements and related notes and
Management's Discussion and Analysis of Financial Condition and Results of
Operations, which we incorporate by reference into this proxy statement.
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA
Revenue................................... $390,691 $306,663 $315,761 $258,475 $202,821
Cost of product sales..................... 275,368 242,123 230,503 185,313 126,148
-------- -------- -------- -------- --------
Gross profit........................... 115,323 64,540 85,258 73,162 76,673
Operating expenses:
Marketing and sales.................... 48,213 40,561 32,726 30,152 25,265
Engineering............................ 21,013 20,153 18,222 18,545 11,882
General and administrative............. 10,299 7,226 7,852 7,535 6,585
-------- -------- -------- -------- --------
Income (loss) from operations........ 35,798 (3,400) 26,458 16,930 32,941
Other income.............................. 2,339 952 1,817 1,824 1,593
-------- -------- -------- -------- --------
Income (loss) before income taxes......... 38,137 (2,448) 28,275 18,754 34,534
Provision for (benefit from) income
taxes.................................. 11,250 (1,777) 8,225 5,622 11,842
-------- -------- -------- -------- --------
Net income (loss)......................... $ 26,887 $ (671) $ 20,050 $ 13,132 $ 22,692
======== ======== ======== ======== ========
Basic net income (loss) per share......... $ 1.20 $ (0.03) $ 0.93 $ 0.60 $ 1.04
======== ======== ======== ======== ========
Diluted net income (loss) per share....... $ 1.13 $ (0.03) $ 0.90 $ 0.58 $ 0.99
======== ======== ======== ======== ========
BALANCE SHEET DATA
Working capital........................... $148,218 $119,487 $112,402 $ 93,109 $ 81,414
Total assets.............................. 234,595 171,931 189,908 138,250 127,303
Long-term debt, less current portion...... -- -- -- 738 --
Shareholders' equity...................... 169,763 135,601 133,029 107,960 97,527
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PROXIMA SELECTED FINANCIAL DATA
The table below sets forth selected historical financial information
regarding Proxima for, and as of the end of, each of the five years ended
December 31, 1999, all of which was derived from Proxima's audited financial
statements. This information is only a summary, and you should read it in
conjunction with Proxima's historical financial statements and related notes and
Management's Discussion and Analysis of Financial Condition and Results of
Operations, contained elsewhere in this proxy statement.
Proxima's audited financial statements were prepared in accordance with
Norwegian GAAP, which differ in certain respects from U.S. GAAP. A summary of
the principal differences between Norwegian and U.S. GAAP and a reconciliation
to U.S. GAAP are set forth in the notes to Proxima's audited financial
statements.
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- ------- ------- -------
(IN NOK THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA(1)
Sales revenue............................... 2,323,335 1,575,582 604,321 324,616 219,169
Cost of goods sold.......................... 1,613,547 1,077,890 348,357 162,870 128,558
Salaries.................................... 192,005 143,091 63,650 37,516 29,936
Other operating expenses, including
amortization of goodwill and ordinary
depreciation............................. 323,962 202,262 65,305 50,311 28,685
--------- --------- ------- ------- -------
Operating profit............................ 193,821 152,339 127,009 73,919 31,990
Net financial items......................... 18,667 2,820 8,452 1,341 (1,285)
--------- --------- ------- ------- -------
Income before income taxes.................. 212,488 155,159 135,461 75,260 30,705
Provision for income taxes.................. 77,250 54,522 37,418 25,229 9,183
--------- --------- ------- ------- -------
Net income.................................. 135,238 100,637 98,043 50,031 21,522
========= ========= ======= ======= =======
Basic net income per share.................. 3.27 2.48 2.69 1.40 0.65
========= ========= ======= ======= =======
Diluted net income per share................ 3.16 2.43 2.67 1.40 0.65
========= ========= ======= ======= =======
Diluted net income per share, using Treasury
Stock Method............................. 3.25 2.48 2.67 1.40 0.65
========= ========= ======= ======= =======
U.S. GAAP net income(2)..................... 129,631 55,024 75,721 41,266 23,083
U.S. GAAP basic earnings per share.......... 3.13 1.36 2.08 1.16 0.70
U.S. GAAP diluted earnings per share........ 3.12 1.36 2.08 1.16 0.70
BALANCE SHEET DATA(3)
Working capital............................. 584,333 402,905 277,842 101,535 49,471
Total assets................................ 1,389,731 1,307,413 410,052 167,057 92,565
Long-term debt, less current portion........ 251 5,558 103 -- 147
Shareholders' equity........................ 901,931 729,962 290,151 113,190 55,184
U.S. GAAP total assets(3)................... 1,339,274 1,254,377 413,631 170,209 94,126
U.S. GAAP shareholders' equity(3)........... 852,199 685,077 302,242 140,287 56,745
- ---------------
(1) Statement of operations data for 1995 and 1996 have not been restated in
accordance with the Norwegian Accounting Act of 1998.
(2) U.S. GAAP amounts have been restated to be on a consistent basis for all
years.
(3) Balance sheet data for 1995, 1996 and 1997 have not been restated in
accordance with the Norwegian Accounting Act of 1998.
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EXCHANGE RATES
The following table sets forth, for the periods and dates indicated, the
average, high, low and end of period exchange rates for Norwegian kroner into
U.S. dollars. In accordance with SEC regulations, the exchange rates used are
the noon buying rates in New York City for cable transfers payable in Norwegian
kroner as announced for customs purposes by the Federal Reserve Bank of New
York.
FISCAL YEAR ENDED DECEMBER 31, AVERAGE(A) HIGH LOW END OF PERIOD
------------------------------ ---------- ------ ------ -------------
1995................................................... 6.3355 6.8110 6.1265 6.3210
1996................................................... 6.4594 6.6160 6.3100 6.3750
1997................................................... 7.0857 7.7564 6.3420 7.3740
1998................................................... 7.5521 8.3200 7.3130 7.5800
1999................................................... 7.8071 8.0970 7.3970 8.0100
2000 (through March 31, 2000).......................... 8.3723 8.4660 7.9340 8.4350
- ---------------
(A) The average of the exchange rates on the last trading day of each calendar
month during the period.
On April 28, the most recent practicable date prior to the filing of this
proxy statement, the exchange rate for Norwegian kroner into U.S. dollars was
8.9590. Fluctuations in the exchange rate between the U.S. dollar and the
Norwegian kroner will not affect the exchange ratio in the share exchange.
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PROXIMA MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Proxima prepared the following discussion and analysis of its financial
condition and results of operations for inclusion in this proxy statement. The
historical financial information is drawn from Proxima's audited financial
statements, which were prepared in accordance with Norwegian GAAP. A summary of
the differences between U.S. GAAP and Norwegian GAAP and a reconciliation to
U.S. GAAP are set forth in the notes to Proxima's audited financial statements,
beginning on page F-17 of this proxy statement. The explanatory and
forward-looking statements herein reflect Proxima's analysis of its financial
performance and known trends and uncertainties. We believe, but cannot provide
any assurance, that such statements are accurate in all material respects.
1999 COMPARED TO 1998
Total revenue increased approximately NOK 747.7 million, or 48%, to NOK
2,323.3 million in 1999, compared to NOK 1,575.6 million in 1998. The increase
in total revenue is primarily attributable to Proxima's acquisition of its U.S.
subsidiary, Proxima Corporation, and the increased level of unit sales. Even
though there was a limited supply of sourced products, reduced availability of
components, and quality issues with certain purchased components towards the end
of 1999, the revenue reported is the highest in Proxima's history.
The geographical split of the revenue was 63% from the Americas, 28% from
Europe, and 9% from Asia in 1999, compared to 55% from the Americas, 38% from
Europe, and 7% from Asia in 1998. Revenue in the Americas increased NOK 604.4
million, or 70%, to NOK 1,466.2 million in 1999 compared to NOK 861.8 million in
1998. The shift toward a larger American share was primarily due to, and a
significant factor in Proxima's American revenue growth was, the inclusion of
Proxima's U.S. subsidiary in its operations throughout 1999, compared to 1998
when the U.S. subsidiary's operations were included for less than three
quarters. Revenue in Europe increased NOK 57.5 million, or 10%, to NOK 658.2
million in 1999 compared to NOK 600.7 million in 1998. Revenue in Asia increased
NOK 85.8 million, or 76%, to NOK 198.9 million in 1999 compared to NOK 113.1
million in 1998.
During 1999 Proxima introduced the PROXIMA UltraLight SV1/ASK C1 and
PROXIMA Ultralight LX1/ASK C5. These projectors have won several awards and
helped drive demand for Proxima's products. As average unit prices have
gradually declined, demand has increased. The largest revenue increase comes
from the ultra portable product segment which made up 41% of total sales in the
fourth quarter of 1999. Additionally, Proxima introduced ePresenter.com as the
first "one stop shopping" Internet store in the market for sales of projectors
and other presentation products via the Internet. The revenue generated by
ePresenter.com is not yet significant to Proxima. However, Proxima expects it to
become an important sales channel in the future.
Gross margin increased approximately NOK 212.1 million, or 43%, to NOK
686.6 million in 1999, compared to NOK 497.7 million in 1998. The increase is
primarily due to the increased revenue. Gross margin as a percentage of sales
decreased slightly to 30.6% in 1999 from 31.6% in 1998. Gross margin is defined
for Norwegian GAAP purposes using cost of goods sold that includes only material
costs and not direct labor.
Other operating costs, including salaries and other personnel costs,
increased approximately NOK 162.4 million, or 55%, to NOK 481.5 million in 1999,
compared to NOK 319.1 million in 1998. The increase was primarily a result of
higher sales and marketing expenditures from increased sales activity and higher
volumes. Additionally, Proxima's U.S. subsidiary was included for a full year in
1999, but for less than three quarters in 1998. Proxima reports its expenses in
its income statement based on the type of cost, rather than the function.
Amortization of goodwill increased approximately NOK 7.1 million or 49% to
NOK 21.5 million in 1999 from NOK 14.4 in 1998. The increase is due to the
inclusion of a full year of goodwill amortization in 1999 relating to Proxima's
U.S. subsidiary, compared to less than three quarters in 1998. The goodwill
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relates to Proxima's acquisition of its U.S. subsidiary, effective April 14,
1998. Goodwill was reduced to NOK 194.6 million as of December 31, 1999 compared
to NOK 290.0 million as of December 31, 1998. In addition to amortization and
effects of currency fluctuation, Proxima reclassified NOK 85.9 million of
goodwill as deferred tax assets. The reclassification relates to the revaluation
of the tax position of Proxima's U.S. subsidiary at the end of 1999 and its
ability to take advantage of loss carryforwards. The reclassification was made
effective December 31, 1999 and does not have any effect on Proxima's 1999
income statement. Beginning in 2000 the reclassification will reduce
amortization of goodwill by approximately NOK 6.5 million annually.
Depreciation increased approximately NOK 1.0 million, or 8%, to NOK 12.9
million in 1999, compared to NOK 11.9 million in 1998. This increase is
primarily due to further investments in fixed assets, particularly related to
new production equipment in Fredrikstad and information technology investments.
Financial income increased approximately NOK 21.0 million, or 78%, to NOK
48.1 million in 1999, compared to NOK 27.1 million in 1998. Financial income in
1999 was comprised of interest income of NOK 11.7 million, a currency gain of
NOK 24.3 million, and a gain of approximately NOK 12.1 million from the sale of
shares, compared to interest income of NOK 6.2 million, a currency gain of NOK
20.9 million, and no gain from the sale of shares in 1998. Interest income
increased primarily due to higher average cash holdings. The gain from the sale
of shares in 1999 represents the profit Proxima realized when it sold all of its
shares in Laser Power Corporation.
Financial expenses increased by approximately NOK 5.2 million, or 21%, to
NOK 29.5 million in 1999, compared to NOK 24.3 million in 1998. Financial
expenses in 1999 included a currency loss of NOK 21.8 million and other
financial expenses of approximately NOK 7.7 million, compared to a currency loss
of NOK 16.5 million and other financial expenses of NOK 7.8 million in 1998. The
net effect of Proxima's currency transactions was a gain of NOK 2.5 million.
Profit before taxes increased to NOK 212.5 million (9.1% of revenue) in
1999 from NOK 155.2 million (9.9% of revenue) in 1998. The increase was
primarily the result of increased sales.
Income tax expense was approximately NOK 77.3 million in 1999, compared to
approximately NOK 54.5 million in 1998. Proxima's effective tax rate was
approximately 36.4% in 1999, compared to approximately 35.1% in 1998.
Net income increased approximately NOK 34.6 million or 34% to NOK 135.2
million in 1999, compared to NOK 100.6 million in 1998.
EFFECT OF U.S. GAAP
Proxima's financial statements are presented according to Norwegian GAAP.
Had the financials been prepared according to U.S. GAAP, Proxima's net income
would have been approximately NOK 129.6 million, which is approximately NOK 5.6
million less than Proxima's reported net income according to Norwegian GAAP.
Cost of goods sold is higher under U.S. GAAP because direct labor, logistics and
procurement, warranty costs and outbound freight are elements of cost of goods
sold under U.S. GAAP, but are included in salaries and other operating expenses
in Proxima's Norwegian GAAP financial statements. Additional compensation costs
would be recorded under U.S. GAAP as a result of electing to apply APB 25 to the
stock options issued. Proxima has expensed certain investments that would have
been capitalized and depreciated according to U.S. GAAP. Amortization of
goodwill would have been lower under U.S. GAAP because the recorded goodwill
would have been lower due to differences in accounting for business
combinations. Proxima's gain on the sale of shares would have been smaller under
U.S. GAAP because the securities would have been recorded as a marketable
security available for sale, and not written down as part of the purchase
accounting of Proxima's U.S. subsidiary. For more information about the
reconciliation from Norwegian GAAP to U.S. GAAP, see note 17 to Proxima's
financial statements.
Inflation has not had a significant effect on Proxima's operating results
in 1999 or 1998.
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1998 COMPARED TO 1997
Total revenue increased approximately NOK 971.3 million or 161% to NOK
1,575.6 million in 1998, compared to NOK 604.3 million in 1997. The increase in
total revenue is primarily attributable to Proxima's acquisition of its U.S.
subsidiary, Proxima Corporation, as well as a large increase in unit sales. The
acquisition of Proxima Corporation was effective April 14, 1998 and Proxima
Corporation is included in the Proxima Group's results from the effective date.
The inclusion of Proxima Corporation in Proxima's financial statements
contributed NOK 892.4 million of revenue in 1998. The growth in the number of
units sold is stronger than the growth measured in value due to lower average
sales prices.
The geographical split of the revenue was 55% from the Americas, 38% from
Europe, and 7% from Asia in 1998, compared to 16% from the Americas, 69% from
Europe, and 15% from Asia in 1997. Revenue in the Americas increased NOK 765.1
million or 791% to NOK 861.8 million in 1998 compared to NOK 96.7 million in
1997. The increased share of and revenue generated by Proxima's American
operations was primarily due to the inclusion of the Proxima's U.S. subsidiary
in its financial statements from April 14, 1998. Revenue in Europe increased NOK
183.7 million or 44% to NOK 600.7 million in 1998 compared to NOK 417.0 million
in 1997. Revenue in Asia increased NOK 22.5 million or 24.8% to NOK 113.1
million in 1998 compared to NOK 90.6 million in 1997.
During 1998 Proxima introduced the ASK A4 Compact and the PROXIMA PRO AV
9310. Both products received a favorable market response. The ASK A4 Compact
product marked a breakthrough in ultraportable projectors with its small
dimensions and low weight. The PROXIMA PRO AV 9310 marked a new achievement for
polysilicon technology and has an output of over 2,000 lumens. A total of 13 new
or improved projectors were introduced in 1998.
Gross margin increased NOK 241.7 million, or 94%, to NOK 497.7 million in
1998, compared to NOK 256.0 million in 1997. Gross margin as a percentage of
sales revenue decreased from 42.4% in 1997 to 31.6% in 1998. The decrease in the
gross margin percentage was primarily a result of the inclusion in the financial
statements of Proxima's U.S. subsidiary beginning April 14, 1998. The structure
of Proxima's U.S. subsidiary is slightly different than Proxima's structure, as
the U.S. subsidiary primarily sells products manufactured by strategic partners.
Therefore, instead of incurring engineering and development expenses, such costs
typically are passed-on by the manufacturers as part of the sales price. This
business model typically results in a lower gross margin than a business model
that focuses on selling self-manufactured products. Gross margin is defined for
Norwegian GAAP purposes using cost of goods sold that includes only material
costs and not direct labor.
Other operating costs, including salaries and other personnel costs,
increased approximately NOK 194.4 million, or 189%, to NOK 319.1 million in
1998, compared to NOK 124.7 million in 1997. The increase was primarily a result
of additional expenses from Proxima's U.S. subsidiary and expenses due to higher
sales and increased activity in marketing, sales, engineering and development.
Amortization of goodwill increased to NOK 14.4 million in 1998. Proxima did
not record any goodwill in 1997. All of Proxima's goodwill amortization in 1998
resulted from Proxima's April 14, 1998 acquisition of Proxima Corporation, a
distribution company with the bulk of its operations in the U.S. Proxima
consummated the acquisition through a public cash tender offer made through its
wholly-owned subsidiary, BD Acquisition Corp. BD Acquisition Corp. and Proxima
Corporation merged immediately after the acquisition, with the surviving company
retaining the name Proxima Corporation and continuing as a wholly-owned
subsidiary of Proxima. Proxima accounted for the acquisition using purchase
accounting.
Depreciation increased approximately NOK 7.6 million, or 177%, to NOK 11.9
million in 1998, compared to NOK 4.3 million in 1997. This increase is primarily
due to additional fixed assets obtained through the acquisition of Proxima's
U.S. subsidiary and Proxima's additional investments in fixed assets. The
warehouse operations in Fredrikstad moved into a new 2,500 square meter site
early in the year requiring additional investments.
Financial income increased approximately NOK 8.8 million, or 48%, to NOK
27.1 million in 1998, compared to NOK 18.3 million in 1997. Financial income was
comprised of interest income of NOK
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6.2 million and a currency gain of approximately NOK 20.9 million in 1998,
compared to interest income of NOK 2.9 million and a currency gain of NOK 15.4
million in 1997. Interest income increased primarily due to higher average cash
holdings.
Financial expenses increased approximately NOK 14.4 million, or 146%, to
NOK 24.3 million in 1998, compared to NOK 9.9 million in 1997. Financial
expenses in 1998 were comprised of a currency loss of NOK 16.5 million and other
financial expenses of approximately NOK 7.8 million, compared to a currency loss
of NOK 9.4 million and other financial expenses of NOK 0.5 million in 1997.
Financial expenses increased in 1998 primarily as a result of borrowing costs
related to Proxima's acquisition of its U.S. subsidiary. The net effect of
Proxima's currency transactions in 1998 was a gain of NOK 4.4 million.
Profit before taxes increased to NOK 155.1 million (9.8% of revenue) in
1998 from NOK 135.5 million (22.4% of revenue) in 1997. The increase was
primarily the result of increased sales. The lower profit as a percentage of
revenue is primarily due to lower margins for Proxima's U.S. subsidiary, which
it acquired in April 1998.
Income tax expense was approximately NOK 54.5 million in 1998, compared to
approximately NOK 37.4 million in 1997. Proxima's effective tax rate was
approximately 35.1% in 1998, compared to approximately 27.6% in 1997. Proxima's
U.S. subsidiary made a profit for the year after the acquisition on April 14,
1998, which has resulted in a higher tax rate for the group. The higher tax is
also due to tax conditions linked to deferred tax benefits, goodwill from the
acquisition, and a higher combined state and federal tax rate in California, the
location of Proxima's U.S. subsidiary.
Net income increased approximately NOK 2.6 million or 3% to NOK 100.6
million in 1998, compared to NOK 98.0 million in 1997.
EFFECT OF U.S. GAAP
Proxima's financial statements are presented according to Norwegian GAAP.
Had the financials been prepared according to U.S. GAAP, Proxima's net income
would have been approximately NOK 55.0 million, which is approximately NOK 45.6
million less than Proxima's reported net income according to Norwegian GAAP. A
major part of this lower net income under U.S. GAAP is due to restructuring
costs and differences in fair value allocation in relation to Proxima's
acquisition of its U.S. subsidiary in April 1998. A portion of these costs would
qualify to be capitalized as part of the purchase according to Norwegian GAAP,
but would be treated as period cost according to U.S. GAAP. Cost of goods sold
is higher under U.S. GAAP because direct labor, logistics and procurement,
warranty costs and outbound freight are elements of cost of goods sold under
U.S. GAAP, but are included in salaries and other operating expenses in
Proxima's Norwegian GAAP financial statements. Additional compensation costs
would be recorded under U.S. GAAP as a result of electing to apply APB 25 to the
stock options issued. Proxima would have recorded a loss on investment under
U.S. GAAP because the investment in shares of Laser Power Corporation would have
been recorded as a marketable security available for sale, and not written down
as part of the purchase accounting of Proxima's U.S. subsidiary. This security
had a decline in value which was defined as other than temporary. For more
information about the reconciliation from Norwegian GAAP to U.S. GAAP, see note
17 to Proxima's consolidated financial statements.
Inflation did not have a significant effect on Proxima's operating results
in 1998 or 1997.
LIQUIDITY AND CAPITAL RESOURCES
Working capital was approximately NOK 584.3 million at December 31, 1999
compared to NOK 402.9 million at December 31, 1998. Working capital included
cash of NOK 330.1 million and NOK 321.6 million in 1999 and 1998, respectively.
The increase in working capital of approximately NOK 181.5 million is primarily
attributable to a decrease in the short term portion of interest bearing debt of
NOK 165.6 million or 97% to 5.6 million at December 31, 1999, compared to NOK
171.2 million at December 31, 1998. Proxima generated NOK 172.9 million in cash
from operations in 1999. The cash flow from operations enabled Proxima to pay
down on its interest bearing debt. The interest bearing debt
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relates to Proxima's acquisition of its U.S. subsidiary. The remaining interest
bearing debt will be redeemed during the first six months of 2000.
Inventories increased approximately NOK 6.7 million to NOK 211.6 million at
December 31, 1999 compared to NOK 204.9 million at December 31, 1998. The
increase in inventories is due to higher volumes, offset by large demand and
limited availability of components at the end of the year.
Accounts receivable increased approximately NOK 123.2 million to NOK 505.5
million at December 31, 1999 compared to NOK 382.3 million at December 31, 1998.
The increase in accounts receivable is primarily attributable to increase in
sales levels. Collection efforts have increased. Days sales outstanding has
decreased to 78 days at December 31, 1999 compared to 87 days at December 31,
1998. At December 31, 1999, 60% of Proxima's accounts receivable were current,
13% were 30 days or less past due and 27% were beyond 30 days past due. At
December 31, 1998, 62% of Proxima's accounts receivable were current, 15% were
30 days or less past due and 23% were beyond 30 days past due.
Goodwill fell to NOK 194.6 million as of December 31, 1999, compared to NOK
290.0 million as of December 31, 1998. In addition to amortization and the
effects of currency fluctuation, Proxima reclassified NOK 89.5 million of
goodwill as deferred tax assets in 1999. The reclassification relates to the
revaluation of the tax position of Proxima's U.S. subsidiary at the end of 1999
and its ability to take advantage of net operating loss carryforwards. The
reclassification, which was effective December 31, 1999, was made in accordance
with Norwegian GAAP and does not have any effect on Proxima's 1999 income
statement. Beginning in 2000 the reclassification will reduce amortization of
goodwill by approximately NOK 6.5 million annually. Deferred tax assets
increased to NOK 88.7 million as of December 31, 1999 from NOK 15.2 million as
of December 31, 1998, primarily due to the reclassification. Proxima's goodwill
relating to the acquisition of its U.S. subsidiary is recorded in U.S. dollars
because the subsidiary officially merged with a wholly-owned U.S. subsidiary of
Proxima. The currency fluctuation on goodwill is material due to an increase in
the exchange rate between U.S. dollars and Norwegian Kroner from 7.61 at
December 31, 1998 to 8.05 at December 31, 1999.
Fixed assets increased approximately NOK 16.5 million to NOK 34.0 million
as of December 31, 1999 compared to NOK 17.5 million as of December 31, 1998.
Approximately NOK 25.5 million in cash was invested in fixed assets in 1999. The
capital expenditures for fixed assets primarily relates to purchase of
production equipment and investment in infrastructure. The new production plant
in Fredrikstad became operational during 1999. Proxima is leasing all its
buildings and therefore has no capital tied up in real estate.
Shareholders equity increased approximately NOK 171.9 million or 24% to NOK
901.9 million as of December 31, 1999 compared to NOK 730.0 million as of
December 31, 1998. The increase is a result of net income for the year of NOK
135.2 million, currency effects of NOK 26.1 million and capital increase of NOK
10.6 million due to exercise of stock options.
Proxima's working capital requirements over the next year are expected to
be met from existing cash and cash flow from operations.
EFFECT OF U.S. GAAP
Proxima's financial statements are presented according to Norwegian GAAP.
Had the financials been prepared according to U.S. GAAP there would have been
material differences in goodwill, property and equipment, investment in shares,
inventory, accrued expenses, deferred tax assets and shareholders equity. The
significant variance relates to Proxima's acquisition of its U.S. subsidiary.
Refer to the discussion of results of operations for U.S. GAAP differences.
Under U.S. GAAP, total assets would have been approximately NOK 1,339.0 million
in 1999 and NOK 1,254.0 million in 1998 which is approximately NOK 51.0 million
and NOK 53 million less than what was reported under Norwegian GAAP for 1999 and
1998, respectively. Under U.S. GAAP shareholders' equity would have been
approximately NOK 852.0 million in 1999 and NOK 685.0 million in 1998, which is
approximately NOK 50.0 million and NOK 45.0 million less than what was reported
under Norwegian GAAP for 1999 and 1998, respectively.
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For more information about the reconciliation from Norwegian GAAP to U.S. GAAP,
see note 17 to Proxima's consolidated financial statements.
YEAR 2000
Proxima has not experienced any significant year 2000 problems with its
products, information systems, suppliers or resellers. Proxima does not expect
to incur any material additional cost related to year 2000 issues.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1999, the FASB issued Statement of Financial Accounting Standards
No. 137, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
137"). SFAS 133 is an amendment to Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS
133 establishes accounting and reporting standards for all derivative
instruments. SFAS 133 is effective for fiscal years beginning after June 15,
2000. Proxima does not currently have any material derivative instruments and,
accordingly, does not expect the adoption of SFAS 133 to have an impact on its
financial position or results of operations.
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SELECTED UNAUDITED
PRO FORMA COMBINED FINANCIAL INFORMATION
The following table sets forth selected unaudited pro forma combined
statement of operations data for each of the years in the three year period
ended December 31, 1999, and unaudited pro forma combined balance sheet data as
of December 31, 1999, giving pro forma effect to the proposed combination of In
Focus Systems, Inc. and Proxima ASA on a pooling-of-interests accounting basis.
The pro forma financial data should be read in conjunction with the accompanying
financial information with respect to Proxima ASA and our financial information
incorporated by reference in this proxy statement. See "Additional Information
for Shareholders -- Where You Can Find More Information."
YEAR ENDED DECEMBER 31,
---------------------------------------
1999 1998 1997
----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA
Revenue................................................... $688,519 $515,412 $401,333
Cost of sales............................................. 500,669 401,090 286,500
-------- -------- --------
Gross profit........................................... 187,850 114,322 114,833
Operating expenses:
Marketing and sales.................................... 76,643 62,309 38,238
Research and development............................... 28,317 25,852 21,295
General and administrative............................. 22,414 11,954 13,995
-------- -------- --------
Income from operations............................... 60,476 14,207 41,305
Other income (expense).................................... 4,173 (2,112) 3,014
-------- -------- --------
Income before income taxes................................ 64,649 12,095 44,319
Provision for income taxes................................ 21,145 5,476 13,547
-------- -------- --------
Net income................................................ $ 43,504 $ 6,619 $ 30,772
======== ======== ========
Basic net income per share................................ $ 1.16 $ 0.18 $ 0.88
======== ======== ========
Diluted net income per share.............................. $ 1.12 $ 0.18 $ 0.87
======== ======== ========
BALANCE SHEET DATA
Working capital........................................... $231,514
Total assets.............................................. 401,189
Long-term debt, less current portion...................... --
Shareholders' equity...................................... 276,492
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CHAPTER FOUR
THE SPECIAL MEETING AND SHARE OWNERSHIP
INFORMATION ABOUT THE MEETING AND VOTING
WHEN AND WHERE THE SPECIAL MEETING WILL BE HELD
Our board of directors is furnishing this proxy statement in connection its
solicitation of proxies from In Focus shareholders for use at the special
meeting. The special meeting will be held on May 31, 2000, beginning at 3:00
p.m., Pacific Daylight Time, at the following location:
Embassy Suites-Washington Square
9000 Washington Square Road
Tigard, OR 97223
PURPOSE OF THE SPECIAL MEETING
The purpose of the special meeting is to consider and vote upon the
following matters:
1. Consider and vote upon a proposal to authorize the issuance of up to
15,825,000 shares of In Focus common stock to complete the share
exchange and the transactions contemplated thereby, as described in this
proxy statement and the Business Combination Agreement;
2. Consider and vote upon a proposal to amend the In Focus Systems, Inc.
Restated Articles of Incorporation to increase the number of shares of
common stock authorized for issuance thereunder from 50,000,000 to
150,000,000;
3. Consider and vote upon a proposal to amend the In Focus Systems, Inc.
Restated Articles of Incorporation to change our name to "InFocus
Corporation";
4. Consider and vote upon a proposal to amend the In Focus Systems, Inc.
1998 Stock Incentive Plan to increase the number of shares of common
stock available for issuance from 1,500,000 to 4,500,000; and
5. Consider and act upon any other matter which may properly come before
the meeting or any adjournment thereof.
EVEN IF OUR SHAREHOLDERS APPROVE PROPOSAL 1, WE CANNOT, AND WILL HAVE NO
OBLIGATION TO, COMPLETE THE SHARE EXCHANGE UNLESS OUR SHAREHOLDERS ALSO APPROVE
PROPOSAL 2. IF OUR SHAREHOLDERS APPROVE PROPOSAL 4, THE AMENDMENT TO OUR STOCK
INCENTIVE PLAN WILL TAKE EFFECT ONLY IF WE COMPLETE THE SHARE EXCHANGE.
RECOMMENDATION OF OUR BOARD OF DIRECTORS
Our board of directors unanimously approved the Business Combination
Agreement and share exchange, and unanimously recommends that you vote FOR each
of the proposals described in this proxy statement.
RECORD DATE AND OUTSTANDING SHARES
You are entitled to vote at the special meeting if you owned shares of our
common stock as of the close of business on April 21, 2000, the record date. At
the close of business on the record date, 23,070,603 shares of our common stock
were outstanding and entitled to vote at the special meeting. You are entitled
to one vote at the special meeting for each share of our common stock that you
owned as of the record date.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The presence, in person or by properly executed proxy, of the holders of at
least a majority of the outstanding shares of common stock entitled to vote at
the special meeting will constitute a quorum for
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the transaction of business. Broker non-votes and shares held by persons
abstaining from voting will be counted for purposes of determining whether a
quorum is present at the special meeting. If a quorum is not present at the
special meeting, our board of directors will likely adjourn or postpone the
meeting to solicit additional proxies.
Abstentions are not counted as votes cast "for" or "against" a proposal and
are not counted in determining the number of votes cast on a proposal.
Therefore, abstentions will have the same effect as a vote against proposal 4,
but will not affect proposals 1, 2 and 3.
A broker non-vote occurs when a nominee holding stock for a beneficial
owner does not vote on a particular matter because the nominee does not have
discretionary voting power with respect to the matter and has not received
voting instructions from the beneficial owner. At the special meeting, absent
instructions from the beneficial owners, brokers who hold shares of In Focus
common stock as nominees will not have discretionary authority to vote such
shares on proposals 1 and 4. Broker non-votes are not counted as votes "for" or
"against" proposals 1, 2, 3 and 4 and are not counted in determining the number
of votes cast on these proposals. In addition, broker non-votes are not entitled
to vote on proposal 4. Accordingly, broker non-votes will have no effect on
proposals 1, 2, 3 and 4.
VOTES REQUIRED TO APPROVE THE PROPOSALS
Assuming a quorum is present at the special meeting, the following votes
are required to approve the proposals:
- proposal 1, to authorize the issuance of up to 15,825,000 shares of In
Focus common stock, as described in this proxy statement and the Business
Combination Agreement, will be approved if it receives the affirmative
vote of a majority of the votes cast on the proposal in person or by
proxy at the special meeting;
- proposal 2, to amend our Restated Articles of Incorporation by increasing
the number of authorized shares of In Focus common stock from 50,000,000
to 150,000,000, will be approved if the number of votes cast for the
proposal exceed the number of shares cast against it;
- proposal 3, to amend our Restated Articles of Incorporation by changing
our name to "InFocus Corporation," will be approved if the number of
votes cast for the proposal exceed the number of shares cast against it;
and
- proposal 4, to amend our stock incentive plan by increasing the number of
shares of In Focus common stock authorized for issuance under the plan
from 1,500,000 to 4,500,000, will be approved if it receives the
affirmative vote of the holders of a majority of the shares present in
person or represented by proxy at the special meeting and entitled to
vote.
PROXIES; PROXY VOTING
Our board of directors is soliciting proxies for the special meeting to
enable you to vote upon the proposals described above, whether or not you attend
the special meeting in person. Accordingly, we request you to complete, sign and
date the accompanying proxy and promptly return it in the accompanying envelope
or otherwise mail it to our principal executive office. All proxies that are
properly executed and returned, and not subsequently revoked, will be voted at
the special meeting in accordance with the instructions on the proxy. Executed
but unmarked proxies will be voted in favor of each of the proposals listed
above.
Our board of directors is not aware of, and does not presently intend to
bring, any business before the special meeting other than the specific proposals
described in this proxy statement. If any other matters are properly brought
before the meeting, our board of directors intends that all proxies, in the form
enclosed, will be voted in accordance with the judgment of the person voting
such proxies. Those other matters could include consideration of any motion for
adjournment of the special meeting for purposes of soliciting additional votes
in favor of the proposals.
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If the special meeting is postponed or adjourned for any reason, the proxy
holders will vote proxies in the same manner at any subsequent reconvening of
the special meeting as they would have voted at the initial meeting. However,
the proxy holders will not vote any proxies that have been revoked or withdrawn
before the reconvened meeting.
REVOCATION OF PROXIES
If you submit a proxy in response to this solicitation, you may revoke the
proxy at any time before the proxy is exercised by:
- filing a revoking instrument with our Secretary; or
- executing another proxy bearing a later date.
You may also suspend the powers of the proxy holders with respect to your
shares by attending the special meeting in person and voting or requesting the
suspension. If you execute two or more proxies with respect to the same shares,
the proxy bearing the most recent date will be honored if otherwise valid. Your
attendance at the special meeting will not, in itself, revoke your proxy.
SOLICITATION OF PROXIES
We will bear all costs of proxy solicitation for the special meeting,
including the reasonable expenses of brokers, fiduciaries and other nominees in
forwarding solicitation material to beneficial owners. In addition to
solicitation by mail, our directors, officers and employees may solicit proxies
personally or by telephone, facsimile transmission or otherwise. We will not pay
additional compensation to these directors, officers and employees for their
solicitation, but may reimburse them for out-of-pocket expenses. We expect to
incur nominal expenses, if any, to engage in such solicitation.
We have retained Morrow & Co. to assist in solicitation of proxies for a
fee we do not expect to exceed $10,000. We will make arrangements with brokerage
houses and other custodians, nominees, fiduciaries and shareholders of record to
forward proxy solicitation materials to the beneficial owners of the stock held
of record by such persons. We may reimburse these solicitors for reasonable
out-of-pocket expenses.
INDEPENDENT AUDITORS
Representatives of Arthur Andersen LLP, our independent public accountants,
are expected to attend the special meeting and be available to respond to
appropriate questions. They will also have an opportunity to make a statement if
they desire to do so.
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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 21, 2000, certain information
furnished to us with respect to ownership of our common stock by (i) each
director, (ii) the "named executive officers" (as defined under "Executive
Compensation"), (iii) all persons we know are beneficial owners of more than 5%
of our common stock, and (iv) all current executive officers and directors as a
group.
COMMON STOCK
-----------------------------
NUMBER OF PERCENT OF SHARES
SHAREHOLDER SHARES OUTSTANDING (1)
----------- --------- -----------------
Lord, Abbett & Co.(2)....................................... 1,711,725 7.4%
90 Hudson Street
Jersey City, NJ 07302
John V. Harker(3)........................................... 495,323 2.1%
Michael R. Hallman(4)....................................... 139,793 *
Susan L. Thompson(5)........................................ 131,380 *
Peter D. Behrendt(6)........................................ 107,638 *
Gary R. Pehrson(7).......................................... 92,680 *
William D. Yavorsky(8)...................................... 77,166 *
Nobuo Mii(9)................................................ 57,492 *
Mark A. Pruitt(10).......................................... 23,384 *
All executive officers and directors as a group (9
persons)(11).............................................. 1,126,356 4.7%
- ---------------
* Less than one percent
(1) Applicable percentage of ownership is based on 23,070,603 shares of common
stock outstanding as of April,21, 2000 together with applicable options for
such shareholders. Beneficial ownership is determined in accordance with
the rules of the Securities and Exchange Commission, and includes voting
and investment power with respect to shares. Shares of common stock subject
to options or warrants currently exercisable or exercisable within 60 days
after April 21, 2000 are deemed outstanding for computing the percentage
ownership of the person holding such options or warrants, but are not
deemed outstanding for computing the percentage of any other person.
(2) The following information is obtained solely from a Schedule 13G filing
prepared by Lord, Abbett & Co. Lord Abbett & Co. is an Investment Advisor
registered under Section 203 of the Investment Advisers Act of 1940. Lord
Abbett & Co. has sole voting and dispositive power with respect to all
1,711,725 shares.
(3) Includes 378,844 shares subject to options granted pursuant to our stock
incentive plans, and exercisable within 60 days after the date of this
table.
(4) Includes 79,793 shares subject to options granted pursuant to our stock
incentive plans, and exercisable within 60 days after the date of this
table.
(5) Includes 115,630 shares subject to options granted pursuant to our stock
incentive plans, and exercisable within 60 days after the date of this
table.
(6) Includes 61,881 shares subject to options granted pursuant to our stock
incentive plans, and exercisable within 60 days after the date of this
table.
(7) Includes 78,010 shares subject to options granted pursuant to our stock
incentive plans, and exercisable within 60 days after the date of this
table.
(8) Includes 52,116 shares subject to options granted pursuant to our stock
incentive plans, and exercisable within 60 days after the date of this
table and 700 shares held by Mr. Yavorsky's wife in her 401(k) plan.
(9) Includes 35,822 shares subject to options granted pursuant to our stock
incentive plans, and exercisable within 60 days after the date of this
table.
(10) Includes 5,384 shares subject to options granted pursuant to our stock
incentive plans, and exercisable within 60 days after the date of this
table.
(11) Includes 807,480 shares subject to options granted pursuant to our stock
incentive plans and exercisable within 60 days after the date of this table
and 700 shares held by Mr. Yavorsky's wife in her 401(k) plan.
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CHAPTER FIVE
BUSINESS OF PROXIMA
Proxima prepared the following description of its business for inclusion in
this proxy statement. The explanatory and forward-looking statements herein
reflect Proxima's assessment of its business. We believe, but cannot provide any
assurance, that such statements are accurate in all material respects.
INTRODUCTION
Proxima ASA, a company organized under the laws of the Kingdom of Norway,
was founded in 1984. Proxima's ordinary shares began trading on the Oslo Stock
Exchange in 1996 under its then corporate name, ASK ASA. ASK acquired all of the
outstanding common stock of Proxima Corporation, a Delaware corporation, through
a cash tender offer that closed on April 14, 1998. ASK changed its name to
Proxima ASA on December 23, 1999.
Proxima develops, manufactures and markets innovative multimedia projection
products worldwide. Proxima's products utilize liquid crystal display ("LCD")
and Digital Light Processing(TM) ("DLP") technologies to present output from
personal computers and other electronic devices. References to "Proxima" in this
document include Proxima ASA and its consolidated subsidiaries Proxima
Corporation, Mediavision Prasentationsysteme AG, ASK AS and Proxima Norge AS.
Proxima's primary offices are located in Fredrikstad, Norway and San Diego,
California.
PRODUCTS
Proxima develops, manufactures and markets multimedia projection products
that present video, audio, graphics and data from personal computers,
workstations, VCRs and DVD players. Proxima's products are used by businesses,
educational institutions and government agencies for training sessions,
meetings, sales presentations, technical seminars, group collaborations and
other applications that involve the sharing of computer-generated and/or video
information with an audience. Proxima's products are compatible with all major
personal computers and most video sources used in business and education.
Important characteristics of Proxima's products include brightness, weight and
resolution. Resolution is defined by using standard industry terms SVGA, XGA and
SXGA, which define the number of pixels in a display.
Proxima offers two major product segments designed to meet the diverse
projection requirements of particular audiences: Mobile Projectors and System
Projectors. Mobile Projectors are intended for the mobile presenter who places a
premium on reduced size and weight in a presentation solution. System Projectors
are intended for conference room and auditorium environments that require a
superior image and brightness, and may require a fixed presentation solution and
sophisticated connectivity alternatives.
Mobile Projectors
Proxima recently announced the industry's first complete family of
DLP-based products designed to offer excellent performance while minimizing size
and weight. This product family includes the following:
- Proxima DX3/ASK M5, XGA, 1100 Lumens, 5 lbs.;
- Proxima DX2, XGA, 700 Lumens, 5 lbs.; and
- Proxima DS2, SVGA, 700 Lumens, 5 lbs.
Proxima expects to begin shipping these projectors in May 2000.
Proxima also offers a broad range of projectors that offer significant
versatility to end-users. These projectors combine features, such as image
quality, durability and affordability, to deliver a projector well-
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suited for both the mobile professional or for use in small conference rooms.
This product family includes the following:
- UltraLight LX2, XGA, 1200 Lumens, 8.6 lbs.;
- UltraLight LX1/ASK C6, XGA, 900 Lumens, 8.1 lbs.;
- Ultralight LX, XGA, 800 Lumens, 8.4 lbs.;
- UltraLight LS2, SVGA, 1200 Lumens, 8.6 lbs.;
- UltraLight SV1+/ASK C2, SVGA, 800 Lumens, 8.1 lbs.
- UltraLight LS1, SVGA, 700 Lumens, 8.4 lbs.; and
- ASK C1, SVGA, 700 Lumens, 8.1 lbs.
System Projectors
Proxima offers the following full featured, high-brightness projectors
designed for every-day conference room use:
- ASK Impression A10+, XGA, 1800 Lumens, 10.8 lbs.;
- ASK Impression A9+, XGA, 1300 Lumens, 10.8 lbs.;
- ASK Impression A8+, SVGA, 1500 Lumens, 10.8 lbs.;
- DP9250+, XGA, 1900 Lumens, 14.3 lbs.;
- DP6850, XGA, 1500 Lumens, 13.2 lbs.;
- DP6810, XGA, 900 Lumens, 17.0 lbs.; and
- DP5950, SVGA, 1250 Lumens, 14.3 lbs.
Proxima's Pro AV family, which offers extensive features, maximum
brightness and connectivity options, is designed for large room and auditorium
installations. This product line includes the following:
- Pro AV 9400+, SXGA, 3300 Lumens, 39.2 lbs.;
- Pro AV 9400, SXGA, 2300 Lumens, 39.2 lbs.;
- Pro AV 9320, XGA, 3000 Lumens, 39.2 lbs.; and
- Pro AV 9310, XGA, 2100 Lumens, 38.1 lbs.
PRODUCT SOURCING AND TECHNOLOGY DEVELOPMENT
Proxima has adopted a flexible product development and product sourcing
model, allowing it to access a broad range of products. Proxima develops, or
jointly develops with third parties, certain of its own products. These products
may then be manufactured in-house or through contract manufacturers. In
addition, Proxima sources completed products from certain major Japanese and
Taiwanese corporations under strategic original equipment manufacturer
relationships. Proxima believes that this model allows it to access the broadest
range of products in the industry on a timely basis, while significantly
mitigating the inherent risks and costs of internal product development.
Proxima expended approximately NOK 63 million, NOK 46 million and NOK 25
million on research and development activities for the years ended December 31,
1999, 1998 and 1997, respectively.
MARKETING AND DISTRIBUTION
Proxima sells its products to a large number of customers worldwide under
two primary brand names: ASK and PROXIMA.
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In its Americas business unit, Proxima has devoted significant resources to
develop and support a well-trained reseller network with the ability to
demonstrate and sell Proxima's products. Proxima offers its products to
approximately 115 authorized professional audiovisual dealers and direct
resellers. In addition, Proxima sells its products through wholesale
distributors including Ingram Micro, Tech Data, Merisel, Pinacor, International
Computer Graphics and D&H, which in turn sell to approximately 2,000 PC
resellers, online providers, catalogs and government resellers. For the year
ended December 31, 1999, the Americas Business Unit generated 63% of Proxima's
total revenue.
In its Europe business unit and Asia business unit, Proxima sells its
products to approximately 170 international business partners. These
distributors sell Proxima's products to audiovisual dealers and distributors, PC
resellers and, in some cases, directly to end-users. For the year ended December
31, 1999, the Europe and Asia Business Units generated 28% and 9%, respectively,
of Proxima's total revenue.
Additionally, Proxima sells certain of its products and services directly
to end users over the Internet in the United States. Proxima launched
www.ePresenter.com during the fourth quarter of 1999. ePresenter represents the
industry's first one-stop-shopping Internet store offering a broad array of
projectors, accessories and presentation products.
SERVICE
Proxima services its products at facilities located in Fredrikstad, Norway;
San Diego, California; and Maastricht, The Netherlands. Additionally, products
are also serviced worldwide through a network of independent authorized service
centers. Customers have toll-free telephone access to technical specialists who
respond to applications and hardware questions. Most of Proxima's current
products are covered by a two-year warranty for parts and labor from the date of
sale, and extended service agreements are available for purchase.
MANUFACTURING AND SUPPLY
The principal components of Proxima's projection products include various
types of LCDs and digital micromirror devices ("DMDs"), integrated circuits,
light sources, optics, plastic housing parts and electronic sub-assemblies. For
Proxima manufactured products, Proxima manufactures it own printed circuit
boards and electronics. Proxima procures and tests parts manufactured to its
specifications and also designs and delivers certain electronic components to
local sub-contractors for sub-assembly. Proxima then assembles and tests the
final product.
For products sourced from third parties under original equipment
manufacturer relationships or products manufactured through contract
manufacturers, Proxima works directly with the manufacturer of the product from
development through manufacturing to ensure the product fully complies with its
specifications. Each product is thoroughly qualified and tested before first
shipments are made to customers. After qualification, quality is continuously
monitored on each production lot received.
Proxima offers products utilizing several types of display devices and
generally attempts to procure components from multiple sources. Certain
components, however, including certain LCDs, DMDs and plastic housing parts for
the projection panels, are purchased from single or limited sources. Further,
each sourced product is purchased from a single supplier, and each sourced
product supplier also competes with Proxima. On manufactured products, Proxima
relies on two sources for LCD panels, and both of these LCD suppliers also
compete with Proxima. Proxima does not have an alternate source for the DMDs in
its DMD-based products, which Proxima expects to generate a material portion of
its revenues in 2000.
COMPETITION
Proxima believes its ability to compete in the projection display market
depends on its continued implementation of strong sales and marketing programs
and on certain key product characteristics including: resolution, brightness,
price, image quality, ease-of-use and portability. Proxima faces competition
primarily from 30 to 40 manufacturers, many of which are large conglomerates
many times
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larger than Proxima. Proxima expects continued competition as new technologies,
applications and products are introduced. Principal current competitors include
Epson, In Focus, NEC, Sharp and Sony.
EMPLOYEES
As of December 31, 1999, Proxima had 446 employees. Proxima believes its
employee relations are good.
PROPERTIES
Proxima leases its primary facilities in Fredrikstad, Norway and San Diego,
California under non-cancelable operating leases. Proxima leases 50,000 square
feet in Fredrikstad, and these leases expire June 2002 and April 2009. Proxima
leases 71,000 square feet in San Diego, and this lease expires April 1, 2004.
Additionally, Proxima leases 15,000 square feet in San Diego on a month-to-month
basis.
LEGAL PROCEEDINGS
As of the date of this proxy statement, there were no material, pending
legal proceedings to which Proxima or its subsidiaries are a party. From time to
time, Proxima becomes involved in ordinary, routine or regulatory legal
proceedings incidental to the business of Proxima.
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CHAPTER SIX
PROPOSAL ONE
THE SHARE EXCHANGE
THE PROPOSAL
We have agreed with Proxima to make a public tender offer to all Proxima
shareholders, offering to exchange shares of In Focus common stock for Proxima
ordinary shares. As permitted by the Business Combination Agreement, we may make
the exchange offer and complete the share exchange through a subsidiary
corporation. If we complete the share exchange, Proxima will become a direct or
indirect wholly owned subsidiary of In Focus.
We are seeking shareholder approval for the issuance of up to 15,825,000
shares of In Focus common stock to complete the share exchange and the
transactions contemplated thereby, as described in the Business Combination
Agreement and this proxy statement. HOWEVER, EVEN IF OUR SHAREHOLDERS APPROVE
THE ISSUANCE, WE CANNOT, AND WILL HAVE NO OBLIGATION TO, COMPLETE THE SHARE
EXCHANGE UNLESS OUR SHAREHOLDERS ALSO APPROVE PROPOSAL 2 TO INCREASE THE NUMBER
OF SHARES OF COMMON STOCK WE ARE AUTHORIZED TO ISSUE.
OUR REASONS FOR THE SHARE EXCHANGE
This section contains numerous forward-looking statements that involve
risks and uncertainties. See "Risk Factors -- Forward-Looking Statements May
Prove Inaccurate" for more information about forward-looking statements.
Our board of directors carefully evaluated the merits and risks of the
share exchange over a period of several months. During such time, they consulted
with our management team and professional advisers, reviewed Proxima's business
operations and considered the combination of the two companies. Based on this
evaluation, our board of directors concluded that the share exchange is in the
best interests of both In Focus and its shareholders, principally because the
share exchange should:
- fortify our position as the market leader in the data/video projection
industry;
- strengthen our ability to compete against larger market participants,
such as Epson, NEC, Sharp and Sony;
- build upon the companies' complementary sales and distribution
infrastructure and enhance our visibility in key markets such as Asia,
Latin America and Europe;
- expand and focus our research and development resources and expertise,
thereby shortening the time to develop new products and allowing us to
pursue a broader range of opportunities;
- improve our negotiating position with suppliers, which we believe will
result in lower component costs and other cost savings;
- add a highly trained employee base critical to meet our growth
objectives;
- increase our earnings per share and cash flow;
- add depth to our manufacturing capabilities, particularly in Europe;
- improve long-term competitive flexibility;
- enhance shareholder liquidity and expand analyst coverage; and
- reduce our combined requirements for personnel growth.
Our board of directors instructed senior management to conduct a detailed
due diligence review of Proxima, its business operations, strategies and goals,
and its prospects for future performance. In addition, our board of directors
sought the advice and analysis of independent financial, legal and accounting
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advisers regarding due diligence and the structure and fairness, from a
financial point of view, of the share exchange. Our board of directors
considered, among other things:
- the extent to which the share exchange would further our long term
strategies and goals;
- strategic and financial alternatives to the share exchange;
- detailed reports presented by management and advisers regarding Proxima's
business operations, financial condition, culture, long-term strategic
goals, prospects, and our integration plans and strategies;
- current financial market conditions and historical market prices,
volatility and trading information with respect to the capital stock of
each company;
- the terms and conditions of the Business Combination Agreement;
- the expectation that the share exchange will be accounted for as a
pooling of interests;
- the opinion of our financial advisor, Salomon Smith Barney Inc., that, as
of March 4, 2000, the exchange ratio was fair from a financial point of
view to In Focus (see " -- Opinion of Our Financial Advisor");
- the likely impact of the share exchange on each company's employees and
customers;
- the compatibility of In Focus's and Proxima's corporate cultures;
- the necessity of obtaining shareholder approval to complete the share
exchange;
- the potential dilutive effect of the issuance of In Focus common stock in
the share exchange;
- the substantial costs expected to be incurred in connection with the
share exchange, including the transaction expenses arising from the share
exchange, cash required to purchase untendered Proxima shares and costs
associated with combining the operations of the two companies; and
- the risks identified above under "Risk Factors," beginning on page 8.
The foregoing discussion of the information and factors our board of
directors considered is not intended to be exhaustive. In view of the variety of
factors considered in connection with its evaluation of the share exchange, our
board of directors did not find it practicable to, and did not, quantify or
otherwise assign relative weights to the specific factors considered in reaching
its determination.
In addition, our board of directors did not make any specific determination
as to whether any particular factor, or any aspect of any particular factor, was
favorable or unfavorable to their ultimate determination. In the course of its
deliberations, our board of directors did not establish a range of value for
Proxima. However, based on the factors outlined above, our board of directors
determined that the terms of the Business Combination Agreement are fair, from a
financial point of view, to In Focus, and that the share exchange is in the best
interests of In Focus and its shareholders.
Notwithstanding the foregoing, we cannot provide any assurance that any of
the potential savings, synergies, or opportunities considered by our board of
directors will be achieved following completion of the share exchange. See "Risk
Factors," beginning on page 8 of this proxy statement, for a discussion of some
of the risks relating to the share exchange and the business combination.
PROXIMA'S REASONS FOR THE SHARE EXCHANGE
Proxima advised us that its board of directors and senior management
thoroughly evaluated the merits and risks of the share exchange over a period of
several months. During this time, Proxima's board of directors consulted with
its management team and professional advisers, reviewed In Focus's business
operations and considered the combination of the two companies. Based on this
evaluation, Proxima's
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board of directors unanimously concluded that the share exchange is fair to
Proxima and in the best interests of both Proxima and its shareholders,
principally because the share exchange should:
- enhance shareholder value and liquidity and expand analyst coverage;
- strengthen Proxima's ability to compete against larger market
participants, such as Epson, NEC, Sharp and Sony;
- improve Proxima's negotiating position with suppliers potentially
resulting in lower component costs and other cost savings;
- build upon the companies' complementary sales, marketing and distribution
infrastructure;
- expand Proxima's manufacturing and research and development resources and
expertise;
- improve Proxima's long-term cost efficiency and competitive position;
- enable Proxima to strengthen its ultraportable product offerings; and
- result in additional resources becoming available to potentially pursue
new and complementary markets for projection technology.
Proxima's board of directors instructed senior management to conduct a
detailed due diligence review of In Focus, its business operations, strategies
and goals, and its prospects for future performance. In addition, Proxima's
board of directors sought the advice and analysis of independent financial,
legal and accounting advisers regarding due diligence and the structure and
fairness of the share exchange. Proxima's board of directors considered, among
other things:
- the extent to which the exchange offer would improve shareholder value
and liquidity;
- the extent to which the share exchange would further Proxima's long term
strategies and goals;
- strategic and financial alternatives to the share exchange;
- detailed reports presented by management and advisers regarding In
Focus's business operations, financial condition, culture, long-term
strategic goals and prospects;
- current financial market conditions and historical market prices,
volatility and trading information with respect to the capital stock of
each company;
- the terms and conditions of the Business Combination Agreement;
- the likely impact of the share exchange on each company's employees and
customers;
- the compatibility of In Focus's and Proxima's corporate cultures;
- the requirement that more than 90% of Proxima's shareholders accept the
exchange offer;
- the substantial costs expected to be incurred in connection with the
share exchange, including the transaction expenses arising from the share
exchange and costs associated with combining the operations of the two
companies; and
- various market and business risks which may impede the effectiveness of
the combined companies.
Proxima advised us that the foregoing discussion of factors considered by
Proxima's board of directors is not intended to be exhaustive. In addition,
Proxima's board of directors did not find it practicable to, and did not,
quantify or otherwise assign relative weights to the specific factors considered
in reaching its determination.
VOTE REQUIRED
Assuming a quorum is present at the special meeting, proposal 1 will be
approved if it receives the affirmative vote of a majority of the votes cast on
the proposal in person or by proxy at the special meeting. In the absence of
contrary specifications, shares represented by proxies will be voted FOR
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approval of the issuance of up to 15,825,000 shares of In Focus common stock to
complete the share exchange and the transactions contemplated thereby.
RECOMMENDATION OF OUR BOARD OF DIRECTORS
Our board of directors has unanimously approved the Business Combination
Agreement and the share exchange and believes that the terms of the Business
Combination Agreement are fair to, and that the share exchange is in the best
interests of, In Focus and its shareholders. Therefore, our board of directors
unanimously recommends that you vote FOR approval of the issuance of up to
15,825,000 shares of In Focus common stock to complete the share exchange and
the transactions contemplated thereby, as described in this proxy statement and
the Business Combination Agreement.
BACKGROUND OF THE SHARE EXCHANGE
John Harker, our Chairman, and Ole Fredriksen, Proxima's Chairman, met in
San Diego on November 9, 1999 following an industry conference. They discussed
the possibility of a combination of the two companies and some of the benefits
that could result from such a transaction. Mr. Harker agreed to evaluate whether
such a combination would be appropriate and beneficial for their respective
companies.
Following the meeting, Mr. Harker, together with certain of our other
executive officers, reviewed Proxima's publicly available information and
analyzed the potential synergies and other benefits of a possible business
combination. In addition, they considered the operational and management issues
that could be involved with combining the two companies. They also discussed
accounting issues concerning such a combination with representatives of Arthur
Andersen LLP and reviewed certain legal issues with our outside counsel.
Mr. Harker informed our board of directors of his discussions with Mr.
Fredriksen at a regularly scheduled meeting on December 15, 1999 and presented
the board with general information about Proxima. Our board of directors
authorized Mr. Harker to engage in further discussions with Proxima concerning a
possible transaction and to retain a financial advisor to assist in this
analysis. From that point on, Mr. Harker was in regular contact with all board
members, apprising them of the status of discussions with Proxima.
On December 30, 1999, we engaged Salomon Smith Barney as our financial
advisor in connection with evaluating a prospective business combination with
Proxima. After this date, our management regularly consulted with Salomon Smith
Barney regarding the proposed transaction.
We signed a limited confidentiality agreement with Proxima on January 5,
2000. This agreement did not provide for the exchange of confidential
information but was executed for the purpose of conducting further preliminary
discussions.
Representatives of senior management of each of In Focus and Proxima met on
January 14 and 15, 2000 in New York City to discuss their respective businesses,
operations, strategies and corporate cultures. This meeting included discussions
of the business synergies that could be realized through a combination.
Our board of directors conducted a regularly scheduled meeting on January
20, 2000. At this meeting our management reported to the board regarding the
results of its discussions with Proxima. Our management also provided the board
with more detailed information about Proxima, including Proxima's business,
operations and preliminary pro forma financial information. The board authorized
our management to proceed with a full due diligence review and continue its
evaluation of a combination with Proxima.
Proxima engaged Deutsche Bank-Alex Brown as its financial advisor on
January 27, 2000.
Beginning in late January 2000, senior management of In Focus and Proxima
communicated regularly to exchange information and conduct due diligence. In
Focus and Proxima executed a nondisclosure and confidentiality agreement which
permitted the exchange of certain nonpublic, confidential information on
February 12, 2000. Representatives of the two companies met in Norway on
February 12, 13 and 14, 2000
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and in San Diego on February 28, 2000. Representatives of Proxima visited our
Portland facilities on February 18, 19 and 20, 2000. This due diligence process
included the senior staffs of each company, as well as their respective
independent financial, accounting, tax and legal advisors.
Following these meetings, senior management of In Focus and Proxima,
including their respective financial advisors, met on February 23 and 24 in New
York City to review the results of their evaluations and discuss the financial
terms of a possible combination.
Our board of directors held a regularly scheduled meeting on February 28,
2000. Management updated the board on the due diligence review and the status of
negotiations with Proxima. Mr. Harker advised the board of the general terms and
exchange ratio under discussion with Proxima. The board authorized management to
continue negotiating the exchange ratio and other material terms of the proposed
transaction and to proceed with the negotiation of a definitive agreement.
During the due diligence process, our legal counsel prepared a draft
Business Combination Agreement and discussed the material terms of the agreement
with our executive officers. Following the February 28, 2000 meeting of our
board of directors, a draft of the Business Combination Agreement was
distributed to members of the working group for both In Focus and Proxima.
During the next four days, the legal and financial advisors of both companies
engaged in intensive negotiations regarding the terms of the Business
Combination Agreement. In addition, senior executives of both companies met in
New York City to discuss certain integration, organization and communication
issues related to the proposed business combination.
On March 4, 2000, after being advised that Proxima's board of directors had
approved the Business Combination Agreement, our board of directors held a
special meeting to discuss the Business Combination Agreement and financial
terms of the proposed transaction with Proxima. In advance of the meeting, each
director received a package of information concerning the proposed share
exchange, including a draft of the Business Combination Agreement as well a
draft fairness opinion presentation from Salomon Smith Barney. At this meeting,
the board reviewed in detail the principal terms of the draft Business
Combination Agreement. Our senior management, independent auditors and outside
legal counsel reported to the board on the results of their due diligence
review. In addition, Salomon Smith Barney discussed with the board its financial
analysis of the exchange ratio provided for in the draft Business Combination
Agreement and delivered its oral opinion, subsequently confirmed in writing, to
the effect that, as of the date of the opinion and based upon and subject to the
considerations and limitations set forth in the opinion, the exchange ratio was
fair, from a financial point of view, to In Focus. After discussion, the board
unanimously determined that the Business Combination Agreement and the issuance
of shares of In Focus common stock pursuant to the Business Combination
Agreement were advisable and in the best interest of our shareholders.
In Focus and Proxima entered into the Business Combination Agreement on
March 5, 2000 and subsequently issued a joint press release announcing the
transaction.
OPINION OF OUR FINANCIAL ADVISOR
We retained Salomon Smith Barney as our financial advisor in connection
with the exchange offer. As part of its engagement with us, Salomon Smith Barney
rendered an opinion to our board of directors on March 4, 2000 to the effect
that, based upon and subject to the considerations and limitations set forth in
the opinion, Salomon Smith Barney's experience as investment bankers, its work
described below and other factors it deemed relevant, as of that date, the
exchange ratio was fair, from a financial point of view, to In Focus.
The full text of Salomon Smith Barney's opinion, which sets forth the
assumptions made, general procedures followed, matters considered and limits on
the review undertaken, is included as Annex C to this proxy statement. The
summary of Salomon Smith Barney's opinion set forth below is qualified in its
entirety by reference to the full text of the opinion. SHAREHOLDERS ARE URGED TO
READ SALOMON SMITH BARNEY'S OPINION CAREFULLY AND IN ITS ENTIRETY.
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In arriving at its opinion, Salomon Smith Barney reviewed a draft of the
Business Combination Agreement, dated March 1, 2000, and held discussions with
senior officers, directors and other representatives and advisors of each of In
Focus and Proxima concerning the businesses, operations and prospects of In
Focus and Proxima. Salomon Smith Barney examined publicly available business and
financial information relating to In Focus and Proxima as well as financial
forecasts and other information and data for In Focus and Proxima which were
provided to or otherwise discussed with Salomon Smith Barney by the managements
of In Focus and Proxima, including certain strategic implications and
operational benefits anticipated to result from the share exchange. Salomon
Smith Barney reviewed the financial terms of the share exchange as set forth in
the Business Combination Agreement in relation to, among other things:
- current and historical market prices and trading statistics of In Focus
common stock and Proxima ordinary shares;
- the historical and projected earnings and other operating data of In
Focus and Proxima; and
- the historical and projected capitalization and financial condition of In
Focus and Proxima.
Salomon Smith Barney considered, to the extent publicly available, the
financial terms of other similar transactions recently effected that Salomon
Smith Barney considered relevant in evaluating the exchange ratio and analyzed
financial, stock market and other publicly available information relating to the
businesses of other companies whose operations Salomon Smith Barney considered
relevant in evaluating those of In Focus and Proxima. Salomon Smith Barney also
evaluated the pro forma financial impact of the share exchange on In Focus. In
addition, Salomon Smith Barney conducted such other analyses and examinations
and considered such other information and financial, economic and market
criteria as it deemed appropriate in arriving at its opinion.
In rendering its opinion, Salomon Smith Barney assumed and relied, without
independent verification, upon the accuracy and completeness of all financial
and other information and data publicly available or furnished to or otherwise
reviewed by or discussed with Salomon Smith Barney and further relied on the
assurances of managements of In Focus and Proxima that they were not aware of
any facts that would make any of such information inaccurate or misleading. With
respect to financial forecasts and other information and data provided to or
otherwise reviewed by or discussed with it, Salomon Smith Barney was advised by
the managements of In Focus and Proxima that such forecasts and other
information and data had been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the managements of In Focus and
Proxima as to the future financial performance of In Focus and Proxima and the
strategic implications and operational benefits anticipated to result from the
share exchange. Salomon Smith Barney expressed no view with respect to such
forecasts and other information and data or the assumptions on which they were
based. Salomon Smith Barney assumed, with the consent of In Focus's board of
directors, that the share exchange will be treated as a tax free reorganization
for U.S. federal income tax purposes and that it will qualify and will be
accounted for as a pooling of interests for accounting and financial reporting
purposes. Salomon Smith Barney has not made or been provided with an independent
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of In Focus or Proxima nor did Salomon Smith Barney make any physical inspection
of the properties or assets of In Focus or Proxima. Salomon Smith Barney assumed
that the final terms of the Business Combination Agreement would not vary
materially from those set forth in the draft reviewed by Salomon Smith Barney.
Salomon Smith Barney further assumed that the business combination will be
consummated in accordance with the terms of the Business Combination Agreement,
without waiver of any of the conditions to the share exchange contained in the
Business Combination Agreement.
Salomon Smith Barney was not asked to consider, and its opinion does not
address, the relative merits of the share exchange as compared to any
alternative business strategies that might exist for In Focus. Salomon Smith
Barney's opinion was limited to the fairness, from a financial point of view, to
In Focus of the exchange ratio in the share exchange and did not address In
Focus's decision to effect the share exchange. Salomon Smith Barney did not
express any opinion as to what the likely trading range of In Focus's common
stock would be subsequent to the share exchange. Salomon Smith Barney's opinion
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necessarily was based on information available to it and financial, stock market
and other conditions and circumstances existing and disclosed to Salomon Smith
Barney as of the date of the opinion.
SALOMON SMITH BARNEY'S ADVISORY SERVICES AND OPINION WERE PROVIDED FOR THE
INFORMATION OF IN FOCUS'S BOARD OF DIRECTORS IN ITS EVALUATION OF THE PROPOSED
SHARE EXCHANGE AND DID NOT CONSTITUTE A RECOMMENDATION OF THE SHARE EXCHANGE TO
IN FOCUS OR A RECOMMENDATION TO ANY STOCKHOLDER AS TO HOW THAT STOCKHOLDER
SHOULD VOTE ON ANY MATTERS RELATING TO THE PROPOSED SHARE EXCHANGE.
In connection with rendering its opinion, Salomon Smith Barney made a
presentation to the In Focus board of directors on March 4, 2000, with respect
to the material analyses performed by Salomon Smith Barney in evaluating the
fairness, from a financial point of view, of the exchange ratio. The following
is a summary of this presentation. The summary includes information presented in
tabular format. IN ORDER TO UNDERSTAND FULLY THE FINANCIAL ANALYSES USED BY
SALOMON SMITH BARNEY, THESE TABLES MUST BE READ TOGETHER WITH THE TEXT OF EACH
SUMMARY. THE TABLES ALONE DO NOT CONSTITUTE A COMPLETE DESCRIPTION OF THE
FINANCIAL ANALYSES. The following quantitative information, to the extent it is
based on market data, is, except as otherwise indicated, based on market data as
it existed at or prior to February 29, 2000 and is not necessarily indicative of
current or future market conditions.
Implied Historical Exchange Ratio. Salomon Smith Barney derived implied
historical exchange ratios by dividing the closing price per ordinary share of
Proxima by the closing price per share of common stock of In Focus for each
trading day in the twenty-four month period from February 29, 1998, through
February 29, 2000 and the twelve-month period from January 1, 1999, through
February 29, 2000. Salomon Smith Barney calculated that the implied exchange
ratio as of February 29, 2000 was 0.241, the highest implied exchange ratios
during the twenty-four month period and the twelve-month period were 1.466 and
0.967, respectively and the lowest implied exchange ratio during the twenty-four
months period was 0.219. Salomon Smith Barney also calculated the average
implied exchange ratios for each of the following calendar periods ending
February 29, 2000:
Last 24 months.............................................. 0.692
Last 12 months.............................................. 0.487
Last 90 days................................................ 0.295
Last 60 days................................................ 0.285
Last 30 days................................................ 0.263
Comparable Company Trading Multiples. Salomon Smith Barney compared certain
financial, operating and stock market information and forecasted financial
information, for each of In Focus and Proxima, with the same publicly available
information for selected publicly traded companies that operate in the computer
peripherals and networking and communication devices industries.
The forecasted financial information used by Salomon Smith Barney for the
selected comparable companies in the course of these analyses was based on
information published by certain investment banking firms as well as information
published by Industrial Brokers Estimate System (I/B/E/S) and First Call
Corporation as of February 29, 2000. I/B/E/S is a data service that monitors and
publishes compilations of earning estimates by selected research analysts
regarding companies of interest to institutional investors. First Call
Corporation compiles summaries of financial forecasts published by various
investment banking firms. With respect to In Focus and Proxima, the forecasted
financial information used by Salomon Smith Barney was based on information
provided by management. Calculations were made based on the closing price per
common share of each company on February 29, 2000, which was $33.50 for In Focus
and US$8.10 for Proxima.
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The selected comparable companies considered by Salomon Smith Barney were:
Cybex Computer Products; Troy Group, Inc.; Media 100, Inc.; Hauppauge Digital
Inc.; and MicroTouch Systems, Inc. For In Focus, Proxima and each of the
selected comparable companies considered in the analysis, Salomon Smith Barney
derived and compared, among other things:
- the ratio of the closing price per common share of each company on
February 29, 2000 to (a) its actual earnings per share (EPS) for 1999,
(b) its estimated EPS for 2000 and (c) its estimated EPS for 2001;
- the ratio of each company's firm value as of February 29, 2000 to (a) its
revenue for the last twelve-month period for which financial results were
available, (b) its earnings before taking into account interest expense,
taxes, depreciation and amortization (EBITDA) for the last twelve-month
period for which results are available and (c) its earnings before taking
into account interest expense and taxes (EBIT) for the last twelve-month
period for which results were available; and
- the estimated price earnings ratio for 2000 over earnings growth.
Firm value was calculated as the sum of the value of:
- all common shares (at the closing price on February 29, 2000) assuming
the exercise of all in-the-money options, warrants and convertible
securities, less the proceeds from such exercise; plus
- non-convertible indebtedness; plus
- minority interests; plus
- non-convertible preferred stock; plus
- out-of-the-money convertible securities; minus
- investments in unconsolidated affiliates and cash.
The following table sets forth the results of these analyses.
COMPARABLE COMPANIES AT IN FOCUS AT PROXIMA
FEBRUARY 29, 2000 FEBRUARY 29, AT FEBRUARY 29,
CLOSING PRICE 2000 2000
------------------------------- CLOSING CLOSING
RANGE MEAN MEDIAN PRICE PRICE
-------------- ----- ------ ------------ ---------------
RATIO OF CLOSING COMMON OR ORDINARY SHARE
PRICE TO:
(a) Actual EPS for 1999................ 11.6x - 71.4x 43.9x 46.4x 29.6x 20.9x
(a) Estimated EPS for 2000............. 14.9x - 103.4x 49.9x 46.0x 20.3x 14.3x
(c) Estimated EPS for 2001............. 10.8x - 69.0x 37.5x 32.9x 15.5x 10.9x
RATIO OF FIRM VALUE TO:
(a) Revenues for the last twelve-month
period.............................. 0.5x - 8.0x 5.4x 7.0x 2.0x 1.1x
(b) EBITDA for the last twelve-month
period.............................. 4.4x - 113.4x 47.8x 36.7x 17.1x 11.0x
(c) EBIT for the last twelve month
period.............................. 6.3x - 48.6x 29.0x 32.0x 21.7x 12.9x
ESTIMATED PRICE EARNINGS RATIO FOR 2000
OVER EARNINGS GROWTH................... 1.0x - 1.5x 1.3x 1.3x 1.0x Not Available
Salomon Smith Barney noted that for each ratio derived, the result for In
Focus and Proxima were below the mean and the median for the selected comparable
companies.
Precedent Merger and Acquisition Transaction Analysis. Salomon Smith Barney
reviewed publicly available information for thirteen merger or acquisition
transactions in the computer peripherals industry announced since May 20, 1996
in which two publicly traded companies were involved. The precedent transactions
considered by Salomon Smith Barney were the following (in each case, the
acquiror's name is listed first and the acquired company's name is listed
second): (i) IBM Corp./Sequent Computer Sys. Inc.; (ii) S3 Inc./Diamond
Multimedia Sys. Inc.; (iii) 3Dfx Interactive Inc./STB Systems Inc.;
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(iv) HBO & Co./Eltron International Inc.; (v) Parametric Technology
Corp./Computer Vision Corp.; (vi) Comverse Technology Inc./Boston Technology
Inc.; (vii) Axiohm SA/DH Technology Inc.; (viii) CDSI Holding Corp./Control Data
Systems Inc.; (ix) Intel Corp./Chips and Technologies Inc.; (x) Raab Karcher AG
(Veba AG)/Wyle Electronics; (xi) GTE Corp./BBN Corp.; (xii) Compaq Computer
Corp./Microcom Inc. and (xiii) General Electric Capital/AmeriData Technologies
Inc.
For each precedent transaction, Salomon Smith Barney derived the following:
- the ratio of the firm value of the acquired company based on the
consideration paid in the transaction to (a) the sales of the acquired
company for the last twelve-month period prior to the announcement of the
transaction for which financial results were available, (b) EBIT of the
acquired company for the last twelve-month period prior to the
announcement of the transaction for which financial results were
available and (c) EBITDA of the acquired company for the last
twelve-month period prior to the announcement of the transaction for
which financial results were available; and
- the premium paid in the transaction to the firm value of the acquired
company one week prior to the announcement of the transaction.
With respect to certain financial information for the companies involved in
the precedent transactions, Salomon Smith Barney relied on information available
in public documents and the Securities Data Company database.
The following table sets forth the results of these analyses:
COMPARABLE COMPANIES PROXIMA AT IMPLIED
--------------------------------- BUSINESS
RANGE MEAN MEDIAN COMBINATION PRICE
-------------- ----- ------ ------------------
RATIO OF FIRM VALUE TO:
(a) Acquired company's sales for the last
twelve-month period prior to
announcement........................... 0.3x - 3.6x 1.5x 1.0x 1.7x
(b) Acquired company's EBIT for the last
twelve-month period prior to
announcement........................... 7.6x - 45.8x 24.5x 22.3x 20.4x
(c) Acquired company's EBITDA for the last
twelve-month period prior to
announcement........................... 5.6x - 23.8x 15.1x 15.5x 17.3x
PREMIUM OF TRANSACTION PRICE TO ACQUIRED
COMPANY'S FIRM VALUE 1WEEK PRIOR TO
ANNOUNCEMENT:............................. 16.2% - 91.2% 43.2% 32.6% 49.6%
Salomon Smith Barney noted that in each case shown above, the ratio derived
for Proxima based on the implied price per share to be paid in the share
exchange was lower than the upper limit of the range derived for the precedent
transactions and was lower than the mean and median ratios of firm value to
acquired company's EBIT for the last twelve-month period prior to announcement
of the transaction, derived for the precedent transactions.
Accretion/Dilution Analysis. Salomon Smith Barney performed an analysis of
the impact of the business combination on the future EPS of In Focus. Salomon
Smith Barney made pro forma adjustments to estimated combined operating earnings
of the merged entity assuming that the share exchange would be considered a
pooling of interests for financial reporting purposes and using share prices as
of February 29, 2000. Future EPS for In Focus and Proxima were based on
management projections. In performing this analysis, Salomon Smith Barney
assumed a forward NOK/USD exchange rate of 7.95, an exchange ratio of 0.3615 and
synergies in 2000 and 2001 as a result of the share exchange.
Based upon the foregoing analysis, the share exchange would be accretive to
In Focus's estimated EPS in 2000 and 2001.
Contribution Analysis. Salomon Smith Barney analyzed the relative
contribution of each of In Focus and Proxima to the pro forma merged entity with
respect to certain market and financial data. Data for 1999 was derived from In
Focus's and Proxima's financial statements. Firm value was calculated as the
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sum of the value of all shares of common stock (or all ordinary shares),
assuming the exercise of all in-the-money options, warrants and convertible
securities, less the proceeds from such exercise; plus non-convertible
indebtedness. In performing this analysis, Salomon Smith Barney did not assume
any anticipated cost savings, revenue enhancements or other potential effects of
the business combination. In performing this analysis, Salomon Smith Barney
assumed a forward exchange rate of 7.95 NOK to the USD in 2000 and 2001. Based
on each company's relative contribution in each category, Salomon Smith Barney
also derived an approximate implied exchange ratio for that category based on
all fully diluted common stock or ordinary shares outstanding. Salomon Smith
Barney compared each derived percentage contribution to the estimated pro forma
62% ownership stake holders of In Focus common stock would have in the combined
entity based on the exchange ratio and share prices as of February 29, 2000.
Salomon Smith Barney also compared each implied exchange ratio to the exchange
ratio of 0.3615. The following table sets forth the results of Salomon Smith
Barney's contribution analysis.
APPROXIMATE IMPLIED
IN FOCUS PROXIMA EXCHANGE RATIO
-------- ------- -------------------
MARKET CAPITALIZATION.................................. 69.5% 30.5% 0.263x
FIRM VALUE............................................. 72.1% 27.9% 0.236x
REVENUES
(a) actual for 1999.................................... 56.7% 43.3% 0.441x
(b) estimated for 2000................................. 57.8% 42.2% 0.424x
(c) estimated for 2001................................. 57.7% 42.3% 0.426x
EBITDA
(a) actual for 1999.................................... 60.8% 39.2% 0.377x
(b) estimated for 2000................................. 63.2% 36.8% 0.343x
(c) estimated for 2001................................. 63.5% 36.5% 0.338x
NET INCOME
(a) actual for 1999.................................... 60.8% 39.2% 0.387x
(b) estimated for 2000................................. 62.1% 37.9% 0.367x
(c) estimated for 2001................................. 62.6% 37.4% 0.359x
Discounted Cash Flow Valuation. Using a discounted cash flow (DCF)
methodology, Salomon Smith Barney valued In Focus and Proxima by estimating the
present value of future free cash flows available to debt and equity holders if
each of In Focus and Proxima were to perform on a standalone basis in accordance
with management forecasts and estimates through 2005. Free cash flow represents
the amount of cash generated and available for principal, interest and dividend
payments after providing for ongoing business operations. Salomon Smith Barney
estimated a weighted average cost of capital (WACC) of 12.6% and aggregated the
present value utilizing WACC ranging from 10.0% to 14.0% of the free cash flow
with the present value of the range of terminal values described below without
assuming any synergies. The range of terminal values was calculated by applying
multiples ranging from 10.0x to 14.0x to each of In Focus and Proxima's EBITDA.
The DCF analysis resulted in a range of standalone equity values of $44.83 to
$71.63 per In Focus share of common stock and NOK141.90 to NOK223.77 per
ordinary share of Proxima, respectively (assuming a forward NOK/USD exchange
rate of 7.95).
The preceding discussion is a summary of the material financial analyses
furnished by Salomon Smith Barney to the In Focus board of directors but it does
not purport to be a complete description of the analyses performed by Salomon
Smith Barney or of its presentations to the In Focus board of directors. The
preparation of financial analyses and fairness opinions is a complex process
involving subjective judgments and is not necessarily susceptible to partial
analysis or summary description. Salomon Smith Barney made no attempt to assign
specific weights to particular analyses or factors considered, but rather made
qualitative judgments as to the significance and relevance of all the analyses
and factors considered and determined to give its fairness opinion as described
above. Accordingly, Salomon Smith Barney believes that its analyses, and the
summary set forth above, must be considered as a whole and that selecting
portions of the analyses and of the factors considered by Salomon Smith Barney,
without considering all of the analyses and factors, could create a misleading
or incomplete view of the processes underlying the analyses conducted by Salomon
Smith Barney and its opinion. With regard to the
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comparable companies analyses summarized above, Salomon Smith Barney selected
comparable public companies on the basis of various factors, including the size
and similarity of the line of business; however, no company utilized as a
comparison in these analyses, and no transaction utilized as a comparison in the
comparable transaction analyses summarized above, is identical to In Focus or
Proxima or the share exchange. As a result, these analyses are not purely
mathematical, but also take into account differences in financial and operating
characteristics of the subject companies and other factors that could affect the
transaction or public trading value of the subject companies and transactions to
which In Focus and Proxima and the share exchange are being compared. In its
analyses, Salomon Smith Barney made numerous assumptions with respect to In
Focus, Proxima, industry performance, general business, economic, market and
financial conditions and other matters, many of which are beyond the control of
In Focus and Proxima. Any estimates contained in Salomon Smith Barney's analyses
are not necessarily indicative of actual values or predictive of future results
or values, which may be significantly more or less favorable than those
suggested by these analyses. Estimates of values of companies do not purport to
be appraisals or necessarily to reflect the prices at which companies may
actually be sold. Because these estimates are inherently subject to uncertainty,
none of In Focus, Proxima, the In Focus board of directors, Salomon Smith Barney
or any other person assumes responsibility if future results or actual values
differ materially from the estimates. Salomon Smith Barney's analyses were
prepared solely as part of Salomon Smith Barney's analysis of the fairness of
the exchange ratio in the share exchange and were provided to the In Focus board
of directors in that connection. The opinion of Salomon Smith Barney was only
one of the factors taken into consideration by the In Focus board of directors
in making its determination to approve the Business Combination Agreement and
the share exchange. See "-- Our Reasons for the Share Exchange" for a more
detailed discussion of the reasons our board of directors approved the share
exchange.
Salomon Smith Barney is an internationally recognized investment banking
firm engaged, among other things, in the valuation of businesses and their
securities in connection with mergers and acquisitions, restructurings,
leveraged buyouts, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. In Focus selected Salomon
Smith Barney to act as its financial advisor on the basis of Salomon Smith
Barney's international reputation and Salomon Smith Barney's familiarity with In
Focus. In the ordinary course of its business, Salomon Smith Barney and its
affiliates may actively trade or hold the securities of both In Focus and
Proxima for its own account and for the account of customers and, accordingly,
may at any time hold a long or short position in these securities. Salomon Smith
Barney and its affiliates, including Citigroup Inc. and its affiliates, may
maintain relationships with In Focus and Proxima and their respective
affiliates.
Pursuant to Salomon Smith Barney's engagement letter, In Focus agreed to
pay Salomon Smith Barney the following fees for its services rendered in
connection with the share exchange: (i) $100,000, that became payable upon
execution of the engagement letter, (ii) $750,000, that became payable upon
delivery of Salomon Smith Barney's fairness opinion, plus (iii) an additional
fee equal to $3,000,000 (less any amounts described in clauses (i) and (ii)
above), that will become payable upon completion of the share exchange. In Focus
has also agreed to reimburse Salomon Smith Barney for its reasonable travel and
other out-of-pocket expenses incurred in connection with its engagement,
including the reasonable fees and disbursements of its counsel, and to indemnify
Salomon Smith Barney against specific liabilities and expenses relating to or
arising out of its engagement, including liabilities under the federal
securities laws.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE SHARE EXCHANGE
None of our shareholders should recognize gain or loss under U.S. federal
income tax laws solely as a result of the share exchange. In addition, neither
we nor Proxima should recognize gain or loss under U.S. federal income tax laws
solely as a result of the share exchange. HOWEVER, TAX MATTERS ARE VERY
COMPLICATED. WE URGE YOU TO CONSULT YOUR OWN TAX ADVISOR TO DETERMINE WHETHER
THE SHARE EXCHANGE, UNDER YOUR SPECIFIC CIRCUMSTANCES, MAY HAVE TAX CONSEQUENCES
UNDER APPLICABLE FEDERAL, STATE, LOCAL OR FOREIGN TAX LAWS.
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APPRAISAL RIGHTS
Our shareholders are not entitled to appraisal rights in connection with
the share exchange. Proxima shareholders have the rights described below under
"The Business Combination Agreement -- Compulsory Acquisition."
ACCOUNTING TREATMENT OF THE SHARE EXCHANGE
We intend for the share exchange to qualify as a pooling of interests for
accounting and financial reporting purposes. This method of accounting permits
us to restate our financial and accounting information to include Proxima's
financial information as if the companies had been combined since inception. The
recorded assets and liabilities of In Focus and Proxima will be carried forward
to the combined company at their recorded amounts, income of the combined
company will include income of In Focus and Proxima for the entire fiscal year
in which the share exchange occurs, and the reported income or loss of In Focus
and Proxima for prior periods will be combined and restated as income of the
combined company. Neither company will record goodwill in the business
combination.
Our obligation to complete the share exchange is conditioned, in part, on
our receipt of a letter from Arthur Andersen LLP, our independent public
accountants, stating that it is appropriate to account for the share exchange as
a pooling of interests under generally accepted accounting principles and
applicable SEC rules and regulations.
REGULATORY FILINGS AND APPROVALS REQUIRED TO COMPLETE THE SHARE EXCHANGE
Antitrust Review. We believe the proposed share exchange promotes
competition and is in the public interest in part because the combined company
will be able to compete more effectively with the larger companies in our
markets. However, we cannot provide any assurances that the antitrust review
process will move rapidly or that a challenge to the share exchange on antitrust
grounds will not be made.
U.S. Antitrust Review. Under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 and the rules promulgated thereunder, the share exchange may not be
consummated until notifications have been given and certain information and
materials have been furnished to and reviewed by the Department of Justice and
the Federal Trade Commission. In addition, the specified waiting period
requirements must have been satisfied. On March 15, 2000, In Focus and Proxima
filed the pre-merger notification forms required by the Hart-Scott-Rodino Act
with the Department of Justice and the Federal Trade Commission, and the
applicable waiting period under the Hart-Scott-Rodino Act expired at midnight on
April 14, 2000. The waiting period for the submission on behalf of a Proxima
shareholder relative to his acquisition of In Focus common stock in the share
exchange expired at midnight on April 27, 2000. At any time prior to or after
the consummation of the share exchange, the Department of Justice or the Federal
Trade Commission could take action under the federal antitrust laws, including
an action to enjoin the share exchange or place conditions thereon. State
antitrust authorities and private parties in certain circumstances may bring
legal action under the antitrust laws seeking to enjoin the share exchange or
impose conditions.
Approval Under the Norwegian Acquisition of Business Undertakings Act. The
Norwegian Acquisition of Business Undertakings Act of 23 December 1994, No. 79,
provides for a general authorization procedure upon the acquisition of more than
one-third of the shares in a Norwegian company. Until the Norwegian Ministry of
Trade and Industry approves the acquisition, usually by inaction within 30 days
from notification, the acquirer can exercise only limited ownership rights in
the target company. However, the Ministry may subject the transaction to closer
examination and condition or withhold its approval as it deems appropriate in
furtherance of the public interest. In accordance with Norwegian law, the
earliest date we may file the required report is when Proxima's shareholders
have tendered more than 90% of Proxima's outstanding ordinary shares in response
to the exchange offer.
Norwegian Antitrust Law. No filings are necessary under the Norwegian
Competition Act. However, Norwegian Competition authorities may decide to review
the transaction, in which case they could impose certain conditions.
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Norwegian Tax Exemption. Without Proxima's consent, we may not commence the
exchange offer until Proxima secures an unconditional commitment from the
Norwegian Ministry of Finance to the effect that:
- the holders of Proxima ordinary shares who are Norwegian residents will
not be subject to tax in Norway as a result of the share exchange; and
- the holders of outstanding Norwegian stock options granted by Proxima
will not be subject to tax as a result of our assumption of such options.
Other Approvals. In Focus and Proxima each conduct business outside of the
U.S. and Norway. The share exchange may require the review and approval of
regulatory bodies in certain of these countries.
LISTING OF IN FOCUS COMMON STOCK ON THE NASDAQ NATIONAL MARKET
Our common stock is currently listed for trading on the Nasdaq National
Market System. We have agreed to use commercially reasonable efforts to cause
all shares of In Focus common stock issued in the share exchange, and all shares
issuable upon the exercise of assumed Proxima stock options, to be authorized
for listing on the Nasdaq National Market System.
LISTING OF IN FOCUS COMMON STOCK ON THE OSLO STOCK EXCHANGE
Proxima ordinary shares are currently listed for trading on the Oslo Stock
Exchange, but will be delisted upon completion of the share exchange. We have
agreed to prepare and file all documents necessary for In Focus common stock
issued in the share exchange to be approved for secondary listing on the Oslo
Stock Exchange, subject to official notice of issuance, and have agreed to
exercise reasonable best efforts to cause such approval to be granted.
THE BUSINESS COMBINATION AGREEMENT
STRUCTURE OF THE EXCHANGE OFFER
As permitted by the Business Combination Agreement, we may conduct the
exchange offer and complete the share exchange through a subsidiary corporation.
We would, in such case, assign to the subsidiary all of our rights, interests
and obligations under the Business Combination Agreement, including the right to
consummate the share exchange and purchase all or any portion of the Proxima
ordinary shares tendered in response to the exchange offer. However, such
assignment would not relieve us of any liability under the Business Combination
Agreement.
THE EXCHANGE OFFER
We will make the exchange offer pursuant to a prospectus/offer document
prepared and submitted to Proxima's shareholders in accordance with Norwegian
law. We anticipate mailing the prospectus/offer document to Proxima's
shareholders on or about May 5, 2000, shortly after the date on which we expect
the Oslo Stock Exchange to approve the document. The initial exchange offer
expiration date will be approximately fourteen calendar days thereafter.
However, without Proxima's consent, we may not commence the exchange offer until
we obtain an unconditional commitment from Norwegian tax authorities to the
effect that:
- the holders of Proxima ordinary shares who are Norwegian residents will
not be subject to tax in Norway as a result of the share exchange; and
- the holders of outstanding Norwegian stock options granted by Proxima
will not be subject to tax as a result of our assumption of such options.
We have appointed Den norske Bank ASA, Verdipapirservice to act as exchange
agent for the exchange offer. Proxima shareholders desiring to accept the
exchange offer must tender a form of
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acceptance to the exchange agent on or before the exchange offer expiration
date. Such acceptance, once submitted, is irrevocable.
COMPLETION OF THE SHARE EXCHANGE
We must close the share exchange at the earliest practicable time after the
exchange offer expiration date, provided we are legally able to do so and all
conditions precedent have been fully satisfied or waived. Based on the
anticipated initial exchange offer expiration date, we expect to complete the
share exchange on or before June 30, 2000. However, we have the right to extend
the exchange offer expiration date, in our sole discretion and without Proxima's
consent, at any time and from time to time up to September 30, 2000. In
addition, if any of the conditions precedent to our obligation have not been
satisfied or waived, we must, upon Proxima's written request submitted not later
than the exchange offer expiration date, extend the deadline until a date not
later than September 30, 2000.
CONSIDERATION
Exchange Offer. We are offering to exchange 0.3615 shares of In Focus
common stock for each Proxima ordinary share. Our offer is conditioned upon,
among other things, the tender of more than 90% of the issued and outstanding
Proxima ordinary shares in response to the exchange offer. As of the date of
this proxy statement, 42,021,181 Proxima ordinary shares are issued and
outstanding. Therefore, after accounting for the effects of rounding fractional
shares, we expect to issue a minimum of approximately 13,675,000 shares, and a
maximum of approximately 15,200,000 shares, of In Focus common stock in the
share exchange, excluding shares issuable upon the exercise of Proxima stock
options that we assume.
Treatment of Proxima Stock Options. Proxima maintains a stock option plan
under U.S. law for employees of its U.S. subsidiary and has entered into
individual stock option agreements with other employees in accordance with
general authorizations obtained at shareholder meetings. Upon completion of the
share exchange, we will assume all outstanding options granted under Proxima's
U.S. stock option plan, the terms of which permit such assumption without the
consent of any option holder. Proxima's other option agreements do not contain a
similar assumption provision. Therefore, we are offering to assume each
individual stock option agreement granted outside of Proxima's U.S. stock option
plan.
The terms of all assumed Proxima stock options will be the same as
originally granted, except that the options will be exercisable for In Focus
common stock and the number of shares and exercise price per share will be
adjusted to reflect the exchange ratio. As of the date of this proxy statement,
options to purchase an aggregate of 1,504,179 Proxima ordinary shares were
issued and outstanding. If we assume all such options, we would be obligated to
issue approximately 545,000 shares of In Focus common stock upon the exercise
thereof.
No Fractional Shares. We will not issue any fractional shares to Proxima
stockholders in the exchange offer. Instead, fractional shares will be rounded
up to the nearest whole number. For example, if a Proxima shareholder owns 1,000
ordinary shares, such shareholder would receive 362 shares of In Focus common
stock in the share exchange (1,000 ordinary shares multiplied by 0.3615, the
product of which is rounded up to the nearest whole number).
MANDATORY OFFER
We may obtain the tender of more than 90% of all outstanding Proxima shares
and complete the share exchange, but acquire less than all outstanding Proxima
ordinary shares. In this case, Norwegian law would require us to commence a
"mandatory offer" to purchase all remaining Proxima ordinary shares. We must
commence the mandatory offer without undue delay, and in no event later than
four weeks after completing the share exchange.
The mandatory offer must be in cash and at a price per share equal to the
higher of the market price for Proxima ordinary shares at the time we become
obligated to commence the mandatory offer and the cash value of the exchange
offer. The procedure and filing requirements for a mandatory offer are much
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the same as for the exchange offer. Specifically, we must prepare a
prospectus/offering document, submit the document for approval by the Oslo Stock
Exchange, and mail the document to Proxima's remaining shareholders, all in
accordance with applicable Norwegian law. The mandatory offer must be open for
at least four weeks, but no more than six weeks, after we mail the
prospectus/offer document to Proxima's shareholders. Settlement must take place
as soon as possible, and in no event later than fourteen days, after expiration
of the offer period.
COMPULSORY ACQUISITION
If any Proxima shareholders fail to tender their shares in response to the
exchange offer or the mandatory offer, we intend to initiate a "compulsory
acquisition" under Section 4-25 of the Norwegian Public Limited Companies Act.
The purpose and effect of a compulsory acquisition is to force the remaining
Proxima shareholders to sell their Proxima ordinary shares to us at a fair cash
price, which may be determined by a Norwegian court.
To commence a compulsory acquisition, our board of directors must first
formally decide to take such action and establish a price per share. In most
instances the price per share will be the same price offered in the mandatory
offer. We would then submit the offer in writing to all Proxima shareholders and
publish the offer in the Norwegian Legal Gazette, in each case stating the
deadline for submitting objections to the offer. The deadline cannot be earlier
than two months after publication of the compulsory acquisition offer in the
Norwegian Legal Gazette. To avoid a protracted process, Norwegian law permits us
to include a compulsory acquisition offer in the same materials we prepare for
the mandatory offer. Thus, we effectively commence the compulsory acquisition
process by publishing the required notice immediately upon expiration of the
mandatory offer. At the same time, we would also deposit the aggregate offering
price with a financial institution authorized to do business in Norway,
whereupon we would be deemed the holder of all outstanding Proxima ordinary
shares and the remaining Proxima shareholders would lose their status as such
and have only a claim for compensation against us.
A Proxima shareholder who does not raise objections before the specified
deadline is deemed to have accepted the compulsory acquisition offer. We will
attempt to reach an agreement with any Proxima shareholders who submit timely
objections. However, to the extent we are unable to reach such an agreement, a
Norwegian court will determine what constitutes fair compensation.
COMPOSITION OF OUR BOARD OF DIRECTORS; CO-CHAIRS OF IN FOCUS
Effective upon completion of the share exchange, our board of directors
will increase its size from four to seven members and appoint the following
persons to fill the three new vacancies: Ole J. Fredriksen, Svein S. Jacobsen
and Einar J. Greve. Mr. Fredriksen currently serves as Proxima's President and
Chief Executive Officer and Messrs. Jacobsen and Greve currently serve on
Proxima's board of directors. Pursuant to Oregon law and our bylaws, these new
directors will serve until the next meeting of In Focus shareholders at which
directors are elected.
Also effective upon completion of the share exchange, our board of
directors will create two new officer positions, each with the title "Co-Chair."
Mr. Fredriksen will be appointed to fill one of the new positions and Mr. John
V. Harker, our President, CEO and Chairman of the board of directors, will be
appointed to fill the other new position.
REPRESENTATIONS AND WARRANTIES
In Focus and Proxima have each made a number of representations and
warranties in the Business Combination Agreement, none of which will survive the
completion of the share exchange. These representations and warranties relate
to:
- corporate existence, qualification to conduct business, corporate
standing and power and similar matters regarding the parties'
subsidiaries;
- capital structure;
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- authorization, execution, delivery, performance and enforceability of the
Business Combination Agreement and other matters;
- the absence of conflicts under certificates of incorporation, bylaws or
other organic documents, required consents or approvals and violations of
any instruments or law as a result of the share exchange;
- documents filed with the SEC or the OSE and the accuracy of information
contained therein;
- the absence of certain specified material adverse changes, material
litigation and material undisclosed liabilities;
- tax, labor and employee benefit matters;
- the accuracy of information supplied to the other party for inclusion or
incorporation by reference in the Norwegian prospectus/offer document,
this proxy statement, and any other any other filings with the SEC or the
OSE;
- direct or indirect ownership, by the representing party or its
affiliates, of capital stock in the other party and related matters;
- environmental matters;
- title to properties and certain intellectual property matters;
- the absence of any circumstances that would preclude the share exchange
from being accounted for as a pooling of interests;
- compliance with all applicable laws and governmental orders;
- In Focus's receipt of a fairness opinion from Salomon Smith Barney Inc.;
- the absence of any financial advisors, brokers, agents or finders other
than Salomon Smith Barney Inc., in the case of In Focus, and Deutsche
Bank-Alex Brown, in the case of Proxima; and
- the due authorization and issuance of In Focus common stock in the share
exchange.
CONDUCT PENDING COMPLETION OF THE SHARE EXCHANGE
Conduct by Proxima. At all times after signing the Business Combination
Agreement until completion of the share exchange, Proxima has agreed, as to
itself and its subsidiaries, to conduct their business in the ordinary course in
substantial compliance with applicable law, and to use reasonable efforts to:
- preserve intact their present business organizations and reputation;
- keep available the services of their present officers and employees;
- maintain the assets and properties in good working order and condition,
ordinary wear and tear excepted;
- maintain insurance on their tangible assets and businesses in such
amounts and against such risks as are currently in effect;
- preserve their relationships with customers, suppliers, licensors,
licensees, distributors and others having business relationships with
them; and
- comply in all material respects with all applicable laws.
In addition, Proxima specifically agreed that neither it nor any of its
subsidiaries would, without our prior written consent:
- adopt or amend in any material respect any benefit or compensation plan,
agreement or arrangement relating to its directors, officers or
employees;
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- incur debt outside the ordinary course of business;
- make capital expenditures or expend funds for research and development
outside the ordinary course of business;
- sell, lease or otherwise encumber or dispose of any of its material
assets outside the ordinary course of business;
- declare or pay dividends or modify its capital structure;
- issue, deliver, pledge, dispose of or otherwise encumber its securities,
other than issuance upon the exercise of Proxima stock options
outstanding on the date of the Business Combination Agreement;
- amend its organizational documents or alter through merger, liquidation,
reorganization or in any other fashion the corporate structure or
ownership of any of its subsidiaries;
- acquire or agree to acquire in any manner any business entity or division
thereof;
- settle or agree to settle any material claim or litigation, whether
relating to the share exchange or otherwise;
- make or rescind any material tax election or settle any material tax
liability;
- materially modify, amend or terminate any material contract or waive,
release or assign any material rights or claims, except in the ordinary
course of business;
- fail to pay trade accounts payable in the ordinary course of business,
other than amounts being disputed in good faith, or alter the terms or
scheduled payment dated of any trade accounts payable; or
- take or agree to take any action that would make any of its
representations and warranties inaccurate at, or as of any time prior to,
the completion of the share exchange, or omit or agree to omit to take
any action necessary to prevent any such representation and warranty from
being inaccurate at any such time.
Proxima has also agreed to confer with us on a regular and frequent basis
regarding its business and operations and other matters relevant to the exchange
offer. They must also advise us promptly, both orally and in writing, of any
change or event that may reasonably be expected to have a material adverse
effect on Proxima and its subsidiaries as a whole or on Proxima's ability to
complete the transactions contemplated by the Business Combination Agreement.
Conduct by In Focus. We agreed that, at all times after execution of the
Business Combination Agreement through completion of the share exchange, we and
our subsidiaries would use reasonable efforts to:
- preserve intact our present business organizations and reputation;
- keep available the services of our present officers and employees;
- maintain our assets and properties in good working order and condition,
ordinary wear and tear excepted;
- maintain insurance on our tangible assets and businesses in such amounts
and against such risks and losses as are currently in effect;
- preserve our relationships with customers, suppliers, licensors,
licensees, distributors and others with whom we have business
relationships; and
- comply in all material respects with all applicable laws.
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NO SOLICITATIONS
Each party has agreed that, prior to completion of the share exchange,
neither it nor any of its subsidiaries will, nor shall it or any of its
subsidiaries authorize or permit any officer, director, employee or agent to:
- take any action to knowingly solicit, initiate, continue, facilitate or
encourage any acquisition proposal other than the transactions
contemplated by the Business Combination Agreement; or
- engage in negotiations, discussions or communications regarding or
disclose any information relating to the parties or any of their
subsidiaries, or afford access to the properties, books and records of
the parties or any of their subsidiaries, to any person, group or entity
that has made or is considering making an acquisition proposal.
An acquisition proposal includes any offer or proposal for a merger,
consolidation or other business combination involving In Focus, Proxima or any
of their subsidiaries, any proposal to acquire shares of any class of securities
of In Focus, Proxima or any of their subsidiaries, and any proposal to acquire a
substantial portion of the assets of In Focus, Proxima, or any of their
subsidiaries. However, we are not prohibited from initiating, negotiating, and
consummating a transaction in which we issue shares constituting less than 20%
of our outstanding common stock. In addition:
- Proxima may participate in negotiations and discussions and furnish
information regarding an acquisition proposal, and may modify or withdraw
its approval of the exchange offer, provided such proposal is superior to
the exchange offer and Proxima's board of directors determines, and is
advised by its outside legal counsel that, failure to take such action
would reasonably be expected to constitute a breach of its fiduciary
duties; and
- We may participate in negotiations and discussions and furnish
information regarding an acquisition proposal, and our board of directors
may modify or withdraw its approval of the exchange offer, if our board
of directors determines that the failure to take such action would
reasonably be expected to constitute a breach of its fiduciary duties.
CONDITIONS TO THE SHARE EXCHANGE
Our obligation to complete the share exchange is subject to a number of
conditions, any one or more of which we may waive in our sole discretion. These
conditions include:
- holders of more than 90% of Proxima's issued and outstanding ordinary
shares must tender their shares in response to the exchange offer;
- holders of a sufficient number of Proxima's outstanding Norwegian stock
options, as necessary for the share exchange to be accounted for as a
pooling of interests, shall have agreed to permit us to assume their
stock options;
- our shareholders must have approved the issuance of In Focus common stock
in the share exchange;
- our shareholders must have approved the increase in the number of shares
of common stock that we are authorized to issue;
- any applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and under any applicable
competition laws of any non-U.S. jurisdiction, shall have expired or been
terminated;
- no change shall have occurred, and no condition, event or development
involving a prospective change shall have occurred that would have a
material adverse effect on Proxima;
- Proxima's representations and warranties must be true and correct at and
as of the completion of the share exchange, except where the failure to
be true and correct would not have a material adverse effect on Proxima;
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- Proxima shall have performed and complied, in all material respects, with
all of its obligations, covenants and agreements under the Business
Combination Agreement;
- we must have received a letter from Arthur Andersen LLP stating that
accounting for the share exchange as a pooling of interests is
appropriate under generally accepted accounting principles and SEC rules
and regulations;
- all governmental consents, approvals, actions, filings and notices
necessary for the completion of the share exchange shall have been
obtained or made, in form and substance satisfactory to us; and
- no governmental entity shall have entered, enacted, promulgated, enforced
or issued any judgment, order, decree, statute, law ordinance, rule or
regulation that would prevent completion of the share exchange or that
would reasonably be likely to have a material adverse effect on us or
Proxima.
ADDITIONAL AGREEMENTS
Access to Information; Confidentiality. Each party has agreed to afford the
other party and the other party's officers, employees and agents reasonable
access during normal business hours to its properties, books and records. Each
party must also furnish to the other party:
- a copy of each document it files pursuant to the requirements of U.S.
federal or state securities laws or Norwegian securities laws; and
- all other information concerning its business, properties and personnel
as the other party may reasonably request.
Each party has also agreed to hold, and to cause its officers, directors,
employees and agents to hold, in strict confidence all non-public information
disclosed by or otherwise obtained from the other party.
In Focus Shareholders' Meeting; Preparation of Proxy Statement. We agreed
to call and hold a special meeting of our shareholders as soon as reasonably
practicable after the public announcement of the Business Combination Agreement,
for the purpose of obtaining such approvals as are necessary to complete the
share exchange. We also agreed to prepare and file, in consultation with
Proxima, this proxy statement soliciting proxies for use at the special meeting.
We were obligated to use commercially reasonable efforts to respond to and have
cleared any SEC comments regarding the proxy statement. Proxima was obligated to
provide such information regarding its shareholders, business, financial
statements and affairs as was reasonably required or appropriate for inclusion
in this proxy statement.
Regulatory and Other Approvals. Before we can complete the share exchange,
we must satisfy all regulatory requirements and obtain the approval of all
regulatory agencies having jurisdiction over the share exchange. To facilitate
the regulatory review and approval process, each party has agreed to make all
necessary filings promptly and use commercially reasonable efforts to take all
actions necessary to complete the share exchange. Without limiting this general
obligation, each party specifically agreed to:
- take promptly all actions necessary to make all required filings under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and under
comparable merger notification or competition laws of non-U.S.
jurisdictions;
- comply at the earliest practicable date with any request for additional
information from the Federal Trade Commission, the Antitrust Division of
the Department of Justice or the authorities of such other jurisdictions;
- cooperate with the other party in connection with such party's filings
and any investigation or other inquiry concerning the exchange offer or
the other matters contemplated by the Business Combination Agreement;
- use all reasonable efforts to resolve such objections, if any, as may be
asserted with respect to any of the transactions contemplated by the
Business Combination Agreement by the Federal Trade
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Commission, the Department of Justice, state attorneys general or the
regulatory authorities of any non-U.S. jurisdiction; and
- cooperate to contest and resist the institution of any administrative,
judicial or legislative action or proceeding that challenges any of the
transactions contemplated by the Business Combination Agreement.
Expenses. Except for the termination fee described below, pending
completion of the share exchange each party is solely responsible for its own
costs and expenses incurred in connection with the Business Combination
Agreement and the transactions contemplated thereby. However, the parties will
share all expenses incurred in connection with the filing, printing and mailing
of the Norwegian prospectus/offer documents and related materials.
Nasdaq and Oslo Stock Exchange Listings. We have agreed to use commercially
reasonable efforts to cause all In Focus common stock issued in the share
exchange and upon the exercise of all assumed Proxima stock options to be
authorized for listing on the Nasdaq National Market System. We have also agreed
to file an application for a secondary listing of In Focus common stock issued
in the share exchange on the Oslo Stock Exchange and to use reasonable best
efforts to cause such application to be approved.
Form S-8. We have agreed to file a Registration Statement on Form S-8
covering shares of In Focus common stock issuable upon the exercise of the stock
options we assume under Proxima's U.S. stock option plan, to the extent that the
shares are eligible for registration on Form S-8. We must make the filing no
later than ten days after completion of the share exchange. We are not required
to file a Form S-8 with respect to Proxima's Norwegian stock options that we
assume.
Proxima Affiliate Agreements. Proxima has agreed to use reasonable best
efforts to cause all shareholders who might be considered affiliates of Proxima
under applicable securities laws to execute and deliver to us certain agreements
not less than 30 days prior to completion of the share exchange. The purpose of
these agreements is to comply with the requirements of certain federal
securities laws and pooling of interests accounting with respect to such
stockholders' ability to dispose of In Focus common stock received in the share
exchange. A form of these affiliate agreements is attached as Annex B to this
proxy statement.
TERMINATION OF THE BUSINESS COMBINATION AGREEMENT
Termination by Either Party. Either party may terminate the Business
Combination Agreement and abandon the share exchange at any time prior to
completion of the share exchange:
- by mutual written consent of both In Focus and Proxima;
- if the share exchange is not completed by September 30, 2000, provided
the terminating party has not breached its obligations under the Business
Combination Agreement and thereby prevented completion on or before such
date;
- if our shareholders do not approve the issuance of up to 15,825,000
shares of In Focus common stock to complete the share exchange and the
transactions contemplated thereby, as described in this proxy statement
and the Business Combination Agreement;
- if our shareholders do not approve the increase in the number of shares
of common stock that we are authorized to issue;
- if a court order or other governmental ruling permanently prohibiting
completion of the share exchange becomes final and nonappealable,
provided the terminating party has used reasonable best efforts to avoid
or remove such prohibition;
- if the other party enters into, or publicly announces its intention to
enter into, an agreement or agreement in principal with respect to any
business combination or similar transaction other than the share
exchange;
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- if the other party's board of directors or any committee thereof
withdraws its approval or recommendation of the exchange offer or the
Business Combination Agreement, or modifies its approval or
recommendation in a manner adverse to the terminating party; or
- if the other party's board of directors or any committee thereof makes
any recommendation with respect to a business combination or similar
transaction by any person, other than In Focus, other than a
recommendation rejecting or against such transaction.
Termination by In Focus. We may terminate the Business Combination
Agreement and abandon the share exchange at any time prior to completion of the
share exchange:
- if any representation or warranty Proxima makes is not true and correct
in all material respects, provided the failure to be true and correct has
a material adverse effect on Proxima and, if the defect can be cured
within 30 days following notice to Proxima, it is not cured within such
30-day period;
- if Proxima commits a material breach of any covenant or agreement in the
Business Combination Agreement, provided the breach is incapable of cure
or is not cured within 30 days following notice to Proxima of such
breach; or
- the exchange offer expires or terminates without our purchasing any
Proxima ordinary shares due to the failure of any condition precedent to
our obligation to complete the share exchange.
Termination by Proxima. Proxima may terminate the Business Combination
Agreement and abandon the share exchange at any time prior to completion of the
share exchange:
- if any representation or warranty we make is not true and correct in all
material respects, provided the failure to be true and correct has a
material adverse effect on us and, if the defect can be cured within 30
days following notice to us, it is not cured within such 30-day period;
or
- if we commit a material breach of any covenant or agreement in the
Business Combination Agreement, provided the breach is incapable of cure
or is not cured within 30 days following notice to us of such breach.
FEES PAYABLE UPON TERMINATION OF THE BUSINESS COMBINATION AGREEMENT
If either party terminates the Business Combination Agreement for the
reasons specified below, the non-terminating must pay to the other party a
termination fee of $3,500,000 immediately upon notice of such termination. The
fee is triggered by termination for any of the following reasons:
- the non-terminating party enters into, or publicly announces its
intention to enter into, an agreement or agreement in principal with
respect to any business combination or similar transaction other than the
share exchange;
- the non-terminating party's board of directors or any committee thereof
withdraws its approval or recommendation of the exchange offer or the
Business Combination Agreement, or modifies its approval or
recommendation in a manner adverse to the terminating party; or
- the non-terminating party's board of directors or any committee thereof
makes any recommendation with respect to a business combination or
similar transaction by any person, other than In Focus, other than a
recommendation rejecting or against such transaction.
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CHAPTER SEVEN
OTHER PROPOSALS
PROPOSAL 2
THE PROPOSAL
Our board of directors has unanimously approved an amendment to Article III
of our Restated Articles of Incorporation to increase the number of authorized
shares of In Focus common stock from 50,000,000 shares to 150,000,000 shares. As
amended, Article III would read as follows:
ARTICLE III. The aggregate number of shares which the Corporation shall
have authority to issue is 150,000,000 shares of Common Stock.
REASONS FOR THE AMENDMENT
As of April 21, 2000, 23,070,603 shares of our common stock are issued and
outstanding, and an additional 15,729,820 shares have been reserved for future
issuance under our stock incentive plans and shareholder rights plan. We
anticipate issuing a maximum of approximately 15,745,000 shares of In Focus
common stock in the share exchange and related transactions, which would also
require the reservation of up to an additional 7,872,500 shares of common stock
under our shareholder rights plan. Thus, following completion of the share
exchange and assuming shareholder approval of proposal 4, up to approximately
65,417,923 shares of our common stock would either be issued and outstanding or
reserved for issuance. This number exceeds the number of shares we are presently
authorized to issue. CONSEQUENTLY, OUR SHAREHOLDERS MUST APPROVE AN INCREASE IN
OUR AUTHORIZED SHARES IN ORDER FOR US TO COMPLETE THE SHARE EXCHANGE. Even if we
do not complete the share exchange, our board of directors believes the increase
is appropriate to provide sufficient flexibility in furtherance of general
corporate purposes.
VOTE REQUIRED
Assuming a quorum is present at the special meeting, proposal 2 will be
approved if the number of votes cast for the proposal exceed the number of votes
cast against it. In the absence of contrary specifications, shares represented
by proxies will be voted FOR approval of the amendment to our Restated Articles
of Incorporation.
BOARD RECOMMENDATION
Our board of directors unanimously recommends that you vote FOR approval of
the proposal to amend our Restated Articles of Incorporation to increase the
number of authorized shares of In Focus common stock from 50,000,000 to
150,000,000.
DESCRIPTION OF IN FOCUS CAPITAL STOCK
Our authorized capital stock consists of 50,000,000 of common stock, no par
value. If the share exchange is completed and proposal two is approved, this
number will increase to 150,000,000. As of April 21, 2000, 23,070,603 shares of
In Focus common stock were issued and outstanding. Following the share exchange,
we estimate that between 36,745,603 and 38,270,603 shares of In Focus common
stock will be outstanding, depending upon the number of Proxima shareholders who
accept the exchange offer.
Common Stock. The holders of our common stock are entitled to:
- one vote per share at all shareholder meetings;
- receive dividends ratably, if, as and when declared by our board of
directors; and
- participate ratably in any distribution of property or assets upon any
liquidation, winding up, or dissolution of In Focus.
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None of our common stock has cumulative voting rights, preemptive rights or
conversion rights, and there are no redemption or sinking fund provisions
applicable to our common stock. All outstanding shares of common stock are fully
paid and nonassessable.
Shareholder Rights Plan.
Our board of directors implemented a shareholder rights plan on July 16,
1997 to assure that all of our shareholders receive fair and equal treatment in
the event of a proposed takeover of In Focus and to guard against partial tender
offers, open market accumulations and other abusive tactics designed to gain
control of In Focus without paying a control premium. For the reasons described
below, the rights will cause substantial dilution to a person or group that
acquires 20% or more of our stock on terms not approved by our board of
directors. The rights should not interfere with any merger or other business
combination, such as the share exchange, approved by our board of directors in
advance.
Under the plan, we declared a dividend of one common share purchase right
for each outstanding share of our common stock at the close of business on July
31, 1997. We issued, and will continue to issue, an additional right with each
share of common stock issued subsequent to such date, including all shares
issued in the share exchange. Each two rights entitles the registered holder
thereof to purchase from us one share of common stock at a price of $65.00 per
share, which price is subject to certain anti-dilution adjustments. Until the
earlier to occur of:
- ten days following a public announcement that a person or group of
affiliated or associated persons has acquired, or obtained the right to
acquire, beneficial ownership of 20% or more of our common stock (an
"Acquiring Person"), or
- ten business days (or such later date as may be determined by action of
our board of directors prior to such time as any person or group of
affiliated persons becomes an Acquiring Person) following the
commencement or announcement of an intention to make a tender offer or
exchange offer, the consummation of which would result in the beneficial
ownership by a person or group of 20% or more of our common stock,
(the earlier of the two events being called the "Distribution Date"), the rights
will be evidenced by our common stock certificates. The rights may be
transferred with and only with shares of our common stock until the Distribution
Date or earlier redemption, termination or expiration of the rights. As soon as
practicable following the Distribution Date, separate certificates evidencing
the rights will be mailed to record holders of our common stock as of the close
of business on the Distribution Date and such separate certificates alone will
evidence the rights.
If a person becomes an Acquiring Person, or if we were the surviving
corporation in a merger with an Acquiring Person or any affiliate or associate
of an Acquiring Person and our common stock was not changed or exchanged, each
holder of a right, other than rights that are or were acquired or beneficially
owned by the Acquiring Person (which rights will thereafter be void), will
thereafter have the right to receive upon exercise that number of shares of our
common stock having a market value of two times the then current purchase price
of the right. If, after a person has become an Acquiring Person, we were
acquired in a merger or other business combination transaction or more than 50%
of our assets or earning power were sold, proper provision shall be made so that
each holder of a right shall thereafter have the right to receive, upon the
exercise thereof at the then current purchase price of the right, that number of
shares of common stock of the acquiring company which at the time of such
transaction would have a market value of two times the then current purchase
price of one right.
At any time after a Person becomes an Acquiring Person and prior to the
earlier of one of the events described in the last sentence in the previous
paragraph or the acquisition by such Acquiring Person of 50% or more of our then
outstanding common stock, our board of directors may cause us to exchange the
rights (other than rights owned by an Acquiring Person which have become void),
in whole or in part, for our common stock at an exchange rate of one share of
common stock per right (subject to adjustment).
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Our board of directors may redeem the rights in whole, but not in part, at
a price of $.01 per right at any time prior to the time a person has become an
Acquiring Person. The redemption of the rights may be made effective at such
time, on such basis and with such conditions as our board of directors in its
sole discretion may establish. Immediately upon any redemption of the rights,
the right to exercise the rights will terminate and the only right of the
holders of rights will receive the redemption price.
The rights will expire on July 16, 2007 (unless earlier redeemed, exchanged
or terminated). ChaseMellon Shareholders Services, L.L.C. is the rights agent.
The purchase price payable, and the number of shares of common stock or
other securities or property issuable, upon exercise of the rights are subject
to adjustment from time to time to prevent dilution (a) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, our common
stock, (b) upon the grant to holders of our common stock of certain rights or
warrants to subscribe for or purchase common stock or convertible securities at
less than the current market price of our common stock or (c) upon the
distribution to holders of our common stock of evidences of indebtedness, cash,
securities or assets (excluding regular periodic cash dividends at a rate not in
excess of 125% of the rate of the last regular periodic cash dividend
theretofore paid or, in case regular periodic cash dividends have not
theretofore been paid, at a rate not in excess of 50% of the average net income
per share for the four quarters ended immediately prior to the payment of such
dividend, or dividends payable in common stock (which dividends will be subject
to the adjustment described in clause (a) above)) or of subscription rights or
warrants (other than those referred to above).
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of In Focus beyond those as an existing stockholder,
including, without limitation, the right to vote or to receive dividends.
Our board of directors may amend any of the provisions of the rights plan
for so long as the rights are then redeemable, and after the rights are no
longer redeemable, we may amend or supplement the rights plan in any manner that
does not adversely affect the interests of rights holders.
Oregon Control Share and Business Combination Statutes. Oregon law may
restrict the ability of significant shareholders of In Focus to exercise voting
rights. The law generally applies to a person who acquires voting stock of an
Oregon corporation in a transaction that results in that person holding more
than 20%, 33 1/3% or 50% of the total voting power of the corporation. If such a
transaction occurs, the person cannot vote the shares unless voting rights are
restored to those shares by:
- a majority of the outstanding voting shares, including the acquired
shares; and
- the holders of a majority of the outstanding voting shares, excluding the
acquired shares and shares held by the corporation's officers and inside
directors.
This law is construed broadly and may apply to persons acting as a group.
The restricted shareholder may, but is not required to, submit to the
corporation a statement setting forth information about itself and its plans
with respect to the corporation. The statement may request that the corporation
call a special meeting of shareholders to determine whether voting rights will
be granted to the shares acquired. If a special meeting of shareholders is not
requested, the issue of voting rights of the acquired shares will be considered
at the next annual or special meeting of shareholders. If the acquired shares
are granted voting rights and they represent a majority of all voting power,
shareholders who do not vote in favor of granting voting rights will have the
right to receive the appraised fair value of their shares. The appraised fair
value will, at a minimum, be equal to the highest price paid per share by the
person for the shares acquired in the transaction subject to this law.
We are also subject to provisions of Oregon law that govern business
combinations between corporations and interested shareholders. These provisions
generally prohibit a corporation from entering
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into a business combination transaction with a person, or affiliate of that
person, for a period of three years from the date the person acquires 15% or
more of the voting stock of the corporation. For the purpose of this law, the
prohibition generally applies to the following:
- a merger or plan of share exchange;
- any sale, lease, mortgage, or other disposition of 10% or more of the
assets of the corporation; and
- transactions that result in the issuance of capital stock of the
corporation to the 15% shareholder.
The general prohibition does not apply, however, if:
- the 15% shareholder, as a result of the transaction in which the person
acquired 15% of the shares, owns at least 85% of the outstanding voting
stock of the corporation;
- the board of directors approves the share acquisition or business
combination before the shareholder acquired 15% or more of the
corporation's outstanding voting stock; or
- the board of directors and the holders of at least two-thirds of the
outstanding voting stock of the corporation, excluding shares owned by
the 15% shareholder, approve the transaction after the shareholder
acquires 15% or more of the corporation's voting stock.
Oregon Constituency Provision. Oregon law provides that our board of
directors may consider the following factors in determining whether a proposed
acquisition is in the best interests of In Focus:
- the social, legal and economic effects of the proposed transaction on our
employees, customers and suppliers and on the communities and
geographical areas in which we operate;
- the economy of the state of the nation;
- the long-term as well as short-term interests of In Focus and its
shareholders, including the possibility that these interests may be best
served by the continued independence of In Focus; and
- other relevant factors.
This provision allows our board of directors to consider other interests
other than those of the majority of independent shareholders in determining
whether an acquisition is in our best interests.
Transfer Agent and Registrar. The transfer agent and registrar for our
common stock is ChaseMellon Shareholders Services, L.L.C.
Listing. Our common stock is listed for trading on the Nasdaq National
Market System under the symbol "INFS." We have agreed with Proxima to use
commercially reasonable efforts to cause all shares of In Focus common stock we
issue in the share exchange to be authorized for listing on the Nasdaq National
Market System. We also agreed to use reasonable best efforts to cause all shares
of In Focus common stock we issue in the share exchange to be approved for
secondary listing on the Oslo Stock Exchange.
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PROPOSAL 3
THE PROPOSAL
Our board of directors has unanimously approved an amendment to Article I
of our Restated Articles of Incorporation to change our name to "InFocus
Corporation." As amended, Article I would read as follows:
ARTICLE I. The name of the Corporation shall be INFOCUS CORPORATION and its
duration shall be perpetual.
The proposed amendment would not affect shareholders' rights, would not
necessitate any exchange of outstanding stock certificates, and would not affect
our Nasdaq National Market System ticker symbol.
REASONS FOR THE AMENDMENT
The purpose of the name change is to cause our corporate name to better
reflect our product trademark, "InFocus."
VOTE REQUIRED
Assuming a quorum is present at the special meeting, proposal 3 will be
approved if the number of votes cast for the proposal exceed the number of votes
cast against it. In the absence of contrary specifications, shares represented
by proxies will be voted FOR approval of the amendment to our Restated Articles
of Incorporation.
BOARD RECOMMENDATION
Our board of directors unanimously recommends that you vote FOR approval of
the proposal to amend our Restated Articles of Incorporation to change our name
to "InFocus Corporation."
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PROPOSAL 4
THE PROPOSAL
Our board of directors has approved an amendment to the In Focus Systems,
Inc. 1998 Stock Incentive Plan to increase the number of shares of In Focus
common stock available for issuance from 1,500,000 to 4,500,000. However,
notwithstanding shareholder approval of this amendment, it will not be effective
unless we complete the share exchange. For information regarding the material
features of our stock incentive plan, see "Summary Description of Our Stock
Incentive Plan" below.
REASONS FOR THE AMENDMENT
Our stock incentive plan is, and will continue to be, an important tool in
attracting and retaining key personnel. As of April 21, 2000, we had issued
options to purchase an aggregate of 890,801 of the 1,500,000 shares authorized
and reserved for issuance under the stock incentive plan, leaving 609,199 shares
available for future option grants or restricted stock awards. Our board of
directors desires to increase the number of shares authorized for issuance under
the stock incentive plan, principally to ensure sufficient flexibility in
retaining and attracting key personnel following the share exchange.
The high technology industry is highly competitive for executive,
management, and technical talent. The competition is especially extreme in the
area of stock options or grants. It is unlikely that we will be able to attract
or retain the necessary human resources to grow and enhance shareholder value
without the availability of significant stock-based incentives.
Our board of directors sought the assistance of a recognized, independent
research firm to consider this need. It retained the services of Strategic
Compensation Research Associates ("SCRA") to evaluate our stock incentive plan
and the available shares compared to an objectively determined comparable group
of companies. SCRA has been widely identified in corporate governance and
business media for its analysis of shareholder reactions to stock incentive
plans across a broad cross section of the market.
SCRA based its analysis on the fact that In Focus is included in two
relevant indices, the Russell 2000 Index (and the Russell 2000 Tech Index) and
the Bloomberg Oregon Index. From those indices, as well as other relevant peer
companies, SCRA selected a group of 24 companies to compare the availability of
stock compensation for competitive compensation.
According to SCRA's independent report to the board, In Focus would be at a
severe recruiting disadvantage following the share exchange without the benefit
of the additional shares. Specifically, while the Russell 2000 computer
peripheral companies and the high tech Oregon companies have average dilution
from stock compensation plans of 18.7% of shares outstanding, In Focus would be
trying to compete with only 11.2% of shares outstanding.
Our board of directors and management believe the proposed amendment is
necessary, and conservative. With the additional authority of 3,000,000 shares,
the level of stock compensation availability would rise to 17.0%.
Our stock incentive program is, and will continue to be, an important tool
in attracting and retaining key personnel and in providing the motivation of a
common interest with the shareholders. It is also important in protecting our
assets since the plan provides that options may be immediately terminated for
unauthorized disclosure of confidential information or other violation of other
written agreements regarding ownership of inventions.
PROHIBITION ON RE-PRICING AND CANCELING AND RE-ISSUING STOCK OPTIONS
On April 10, 2000, our board of directors approved an amendment to our
stock incentive plan prohibiting any re-pricing or cancellation and re-issuance
of stock options granted under the plan. The amendment prohibiting re-pricing or
cancellation and re-issuance will become effective only if our shareholders
approve the proposal to increase the number of shares authorized for issuance
under our stock incentive plan.
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VOTE REQUIRED
The affirmative vote of the holders of at least a majority of the shares of
In Focus common stock present in person or represented by proxy at the special
meeting and entitled to vote is required to approve the amendment. In the
absence of contrary specifications, shares represented by proxies will be voted
FOR approval of the amendment to the stock incentive plan.
BOARD RECOMMENDATION
Our board of directors unanimously recommends that you vote FOR approval of
the amendment to the stock incentive plan.
SUMMARY DESCRIPTION OF OUR STOCK INCENTIVE PLAN
Background. Our board of directors adopted the stock incentive plan in
December 1997, and our shareholders approved the stock incentive plan on April
22, 1998. The stock incentive plan provides for the grant of incentive stock
options ("ISOs"), non qualified stock options ("NQSOs") and restricted stock
awards covering an aggregate of up to 1,500,000 shares of In Focus common stock.
The proposed amendment would increase this number to 4,500,000 shares.
Eligibility. We may grant ISOs to our officers and employees and NQSOs and
restricted stock awards to our employees, officers, directors and consultants.
As of April 21, 2000, the persons eligible to participate in our stock incentive
plan included six officers, three non-employee directors and approximately 570
employees.
Administration. The stock incentive plan provides for administration by our
board of directors or a committee appointed by, and consisting of two or more
members of, our board of directors. The plan administrator has full authority to
administer the stock incentive plan in accordance with its terms and to
determine all questions arising in connection with the interpretation and
application of the stock incentive plan. In selecting the plan administrator,
our board of directors must consider, with respect to any persons subject to
Section 16 of the Exchange Act, the provisions regarding "outside directors" as
contemplated by Section 162(m) of the Internal Revenue Code of 1986, as amended,
and "nonemployee directors" as contemplated by Rule 16b-3 under the Exchange
Act.
Shares Subject to the Plan. The stock incentive plan presently covers a
total of 1,500,000 shares of In Focus common stock. The proposed amendment would
increase this number to 4,500,000 shares. Not more than 400,000 shares of common
stock may be made subject to awards under the stock incentive plan to any one
individual in the aggregate in one fiscal year, except we may make additional
one-time grants of up to 1,000,000 shares to a newly hired individual. This
limitation must be applied in a manner consistent with the requirements of, and
only to the extent required for compliance with, the exclusion from the
limitation on deductibility of compensation under Section 162(m) of the Internal
Revenue Code.
Minimum Option Price. The exercise prices of ISOs and NQSOs granted under
the stock incentive plan must equal or exceed the fair market value of In Focus
common stock on the date of grant, or 110% of the fair market value in the case
of employees who hold 10% or more of the voting power of our common stock. As
defined in the stock incentive plan, "fair market value" means the last reported
sales price of In Focus common stock on the Nasdaq National Market System on the
date of grant.
Duration of Options. Subject to earlier termination as a result of
termination of employment, death or disability, each option granted under the
stock incentive plan shall expire on the date specified by the plan
administrator. However, in no event will an option terminate more than:
- ten years from the date of grant in the case of ISOs generally; or
- five years from the date of grant in the case of ISOs granted to an
employee who holds 10% or more of the voting power of our common stock.
Means of Exercising Options. An option holder exercises his or her option
by delivering written notice to us, which notice must be accompanied by full
payment of the purchase price therefor. The
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purchase price must be submitted in cash or by certified check, or at the
discretion of the plan administrator:
- through delivery of shares of In Focus common stock, either actual or by
attestation, having a fair market value equal to the cash exercise price
of the option
- by delivery of instructions to a broker for a cashless exercise whereby
shares acquired upon exercise are sold to pay the option exercise price;
- by delivery of the optionee's personal recourse promissory note in the
amount of the cash exercise price of the option;
- by delivering such other consideration as the plan administrator may
permit; or
- by any combination of the above as permitted by the plan administrator.
Grant of Stock Awards. The plan administrator is authorized to make awards
of common stock on such terms and conditions and subject to such restrictions,
if any (which may be based on continuous service with the company or the
achievement of performance goals related to operating profit as a percentage of
revenues, revenue and profit growth, profit-related return ratios, such as
return on equity, or cash flow, where such goals may be stated in absolute terms
or relative to comparison companies), as the plan administrator shall determine,
in its sole discretion, which terms, conditions and restrictions shall be set
forth in the instrument evidencing the award ("Stock Award"). The terms,
conditions and restrictions that the plan administrator shall have the power to
determine shall include, without limitation, the manner in which shares subject
to Stock Awards are held during the periods they are subject to restrictions and
the circumstances under which forfeiture or restricted stock shall occur by
reason of termination of the holder's services.
Term and Amendment of the Plan. The stock incentive plan has no fixed
expiration date, but ISOs may not be granted after December 17, 2007. The board
of directors may terminate or amend the stock incentive plan at any time,
provided, however, to the extent required for compliance with Section 422 of the
Code or any applicable law or regulation, the following actions will not become
effective without approval of the shareholders obtained within 12 months before
or after the Board adopts a resolution authorizing such action:
- increasing the total number of shares that may be issued under the stock
incentive plan (except by adjustment under the Plan);
- modifying the class of persons eligible to receive grants; or
- modifying terms that otherwise require shareholder approval under any
applicable law or regulation.
Transferability. Except as indicated in the following, no option shall be
transferable or exercisable by any person other than the optionee to whom such
option was originally granted. Any option exercisable at the time of the
optionee's death may be exercised to the extent of the number of shares
purchasable at the date of death, by any person to whom such rights have passed
under applicable laws of descent and distribution at any time, or from time to
time, within one year after the date of death, but in no event later than the
remaining term of the option. The plan administrator may, in its discretion,
authorize all or a portion of the NQSOs granted to an optionee to be on terms
that permit transfer by such optionee to (i) the spouse, children or
grandchildren of the optionee ("Immediate Family Members"), (ii) a trust or
trusts for the exclusive benefit of such Immediate Family Members, or (iii) a
partnership in which such Immediate Family Members are the only partners,
provided that (a) there may be no consideration for any such transfer, (b) the
stock option agreement pursuant to which such options are granted must be
approved by the plan administrator and must expressly provide for
transferability and (c) subsequent transfers of transferred options are
prohibited.
Federal Tax Effects of ISOs. We intend for ISOs granted under the stock
incentive plan to qualify as ISOs under Section 422 of the Code. An optionee
acquiring stock pursuant to an ISO receives favorable tax treatment in that the
optionee does not recognize any taxable income at the time of the grant of the
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ISO or upon exercise. The tax treatment of the disposition of ISO stock depends
upon whether the stock is disposed of within the holding period, which is the
later of two years from the date the ISO is granted or one year from the date
the ISO is exercised. If the optionee disposes of ISO stock after completion of
the holding period, the optionee will recognize as capital gains income the
difference between the amount received in such disposition and the basis in the
ISO stock, i.e. the option's exercise price. If the optionee disposes of ISO
stock before the holding period expires, it is considered a disqualifying
disposition and the optionee must recognize the gain on the disposition as
ordinary income in the year of the disqualifying disposition. Generally, the
gain is equal to the difference between the option's exercise price and the
stock's fair market value at the time the related stock is sold. While the
exercise of an ISO does not result in taxable income, there are implications
with regard to the alternative minimum tax ("AMT"). When calculating income for
AMT purposes, the favorable tax treatment granted ISOs is disregarded and the
difference between the option exercise price and the fair market value of the
related common stock on the date of exercise (the "bargain purchase element")
will be considered as part of AMT income. Just as the optionee does not
recognize any taxable income on the grant or exercise of an ISO, the Company is
not entitled to a deduction on the grant or exercise of an ISO. Upon a
disqualifying disposition of ISO stock, the Company may deduct from taxable
income in the year of the disqualifying disposition an amount generally equal to
the amount that the optionee recognizes as ordinary income due to the
disqualifying disposition.
Federal Tax Effects of NQSOs. If an option does not meet the statutory
requirements of Section 422 of the Code and therefore does not qualify as an
ISO, the difference, if any, between the option's exercise price and the fair
market value of the stock on the date the option is exercised is considered
compensation and is taxable as ordinary income to the optionee in the year the
option is exercised, and is deductible by the Company for federal income tax
purposes in such year.
The foregoing summary of federal income tax consequences of stock options
does not purport to be complete, nor does it discuss the provisions of the
income tax laws of any state or foreign country in which the optionee resides.
Director and Executive Stock Ownership Guidelines. In January 1998, our
board of directors approved ownership objectives for our executive officers and
outside directors. One of the purposes of the stock incentive plan is to provide
a means for our executive officers and outside directors to achieve the
following objectives:
POSITION OWNERSHIP GUIDELINE DATE TO BE ACCOMPLISHED
- ----------------------- -------------------------------------- ----------------------------
Chief Executive Officer 5 times annual salary in stock value 1/1/01 or 5 years from hire
date, whichever is later
Senior Vice President 3 times annual salary in stock value 1/1/01 or 5 years from hire
date, whichever is later
Vice President 2 times annual salary in stock value 1/1/01 or 5 years from hire
date, whichever is later
Outside Directors 4 times annual retainer in stock value 1/1/03 or 5 years from
appointment date, whichever
is later
Participation in the Stock Incentive Plan. All option grants to executive
officers under the stock incentive plan are subject to the discretion of the
plan administrator. As of the date of this proxy statement, the plan
administrator has not made any determination with respect to future option
grants or restricted stock awards. Therefore, except for automatic option grants
to certain non-employee directors, future awards are not determinable.
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CHAPTER EIGHT
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation awarded to, earned by or paid to the Company's Chief Executive
Officer and each of the four other most highly compensated executive officers of
the Company determined as of the end of the last fiscal year (herein referred to
as the "named executive officers") for the fiscal years ended December 31, 1999,
1998 and 1997.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ----------------------------
---------------------------------- RESTRICTED
OTHER ANNUAL SECURITIES SECURITIES ALL OTHER
SALARY BONUS COMPENSATION STOCK UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(A) ($)(A) ($)(B) AWARDS ($)(D) OPTIONS (#) ($)(C)
--------------------------- ---- ------- --------- ------------ -------------- ----------- ------------
John V. Harker................. 1999 418,470 1,064,058 -- 97,815 -- 9,954
Chairman of the Board, 1998 381,933 7,625 1,050 144,706 237,690 4,574
President and Chief 1997 345,971 230,888 1,450 -- -- 3,978
Executive Officer
Gary R. Pehrson(E)............. 1999 251,077 205,069 425 71,971 -- 11,496
Senior Vice President, 1998 242,308 206,324 119,519 7,141 100,000 1,156
Worldwide Operations and
Customer Support 1997 21,231 -- -- -- 200,000 --
William D. Yavorsky............ 1999 209,231 188,729 -- 102,815 -- 2,167
Vice President, 1998 197,692 5,795 -- 24,820 82,560 446
Worldwide Sales 1997 145,757 48,585 -- -- -- 461
Susan L. Thompson.............. 1999 209,231 150,808 -- 41,126 80,000 4,024
Vice President, 1998 197,692 5,795 -- 27,930 49,720 349
Corporate Resources 1997 155,962 53,789 -- -- -- 165
Mark A. Pruitt(F).............. 1999 209,231 146,513 -- 102,815 -- 5,327
Vice President, 1998 99,231 101,777 64,351 4,563 130,000 1,033
Research and Development 1997 -- -- -- -- -- --
- ---------------
(A) Amounts shown include cash compensation earned in each respective year.
Unless otherwise indicated, amounts under the Bonus column include an annual
bonus in 1999 and 1997 and 401(k) matching payments and quarterly profit
sharing in all years.
(B) Unless otherwise indicated, Other Annual Compensation represents the cost of
income tax advice provided by a third party.
(C) Unless otherwise indicated, amounts included in this column represent life
insurance premiums paid by the Company for the benefit of the named
executive.
(D) Restricted stock held by each of the named executive officers and the value
thereof, calculated by multiplying the number of shares by the closing price
of In Focus common stock on December 31, 1999, $23.19, is as follows:
NAME SHARES HELD VALUE
---- ----------- --------
John V. Harker............................. 23,493 $544,802
Gary R. Pehrson............................ 4,890 113,399
William D. Yavorsky........................ 8,350 193,637
Susan L. Thompson.......................... 5,250 121,748
Mark A. Pruitt............................. 6,000 139,140
(E) The 1998 Bonus amount for Mr. Pehrson includes a $200,075 signing bonus and
Other Annual Compensation in 1998 is related to relocation assistance. All
Other Compensation in 1999 includes
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$9,954 of imputed interest on an interest free note payable by Mr. Pehrson
to In Focus related to his relocation.
(F) 1998 Salary for Mr. Pruitt includes salary earned from the time he joined us
in July 1998. The 1998 Bonus amount includes a $100,000 signing bonus and
Other Annual Compensation is related to relocation assistance.
STOCK OPTIONS
The following table contains information concerning the grant of stock
options under our stock incentive plan to the named executive officers in 1999.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS (A) POTENTIAL
------------------------------------------------------ REALIZABLE VALUE
NUMBER AT ASSUMED ANNUAL
OF % OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM (B)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ---------------------
NAME GRANTED FISCAL YEAR PRICE ($/SH.) DATE 5% ($) 10% ($)
---- ---------- ------------ ------------- ---------- -------- ----------
John V. Harker................ -- -- -- -- -- --
Gary R. Pehrson............... -- -- -- -- -- --
William D. Yavorsky........... -- -- -- -- -- --
Susan L. Thompson............. 80,000 15.5% $18.44 09/09/09 $927,645 $2,350,834
Mark A. Pruitt................ -- -- -- -- -- --
- ---------------
(A) Options granted in 1999 vest as to 25% of the options granted on each of the
first through fourth anniversaries of the grant date, with full vesting
occurring on the fourth anniversary date. Under the terms of the plan, the
Administrative Committee of the board of directors retains discretion,
subject to plan limits, to modify the terms of outstanding options.
(B) These calculations are based on certain assumed annual rates of appreciation
as required by rules adopted by the Securities and Exchange Commission
requiring additional disclosure regarding executive compensation. Under
these rules, an assumption is made that the shares underlying the stock
options shown in this table could appreciate at rates of 5% and 10% per
annum on a compounded basis over the ten-year term of the stock options.
Actual gains, if any, on stock option exercises are dependent on the future
performance of our common stock and overall stock market conditions. There
can be no assurance that amounts reflected in this table will be achieved.
(C) Options held by all executive officers become immediately exercisable,
without regard to any contingent vesting provision to which such option may
otherwise be subject, upon the occurrence of a change-in-control.
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OPTION EXERCISES AND HOLDINGS
The following table provides information concerning the exercise of options
during 1999 and unexercised options held as of the end of the fiscal year, with
respect to the named executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
NUMBER OF
SECURITIES UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
SHARES ACQUIRED VALUE AT FY-END (#) AT FY-END ($) (B)
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) (A) UNEXERCISABLE UNEXERCISABLE
---- --------------- -------- --------------------- ----------------------
John V. Harker................ 15,000 $126,067 337,338 /205,352 $3,747,830 /$2,462,247
Gary R. Pehrson............... 46,990 501,358 78,010 /175,000 633,783 /2,227,925
William D. Yavorsky........... 50,936 602,041 38,976 /89,686 466,481 /1,129,398
Susan L. Thompson............. 19,000 274,778 110,275 /127,715 1,330,654 /1,073,960
Mark A. Pruitt................ 27,116 394,905 5,384 /97,500 89,848 /1,676,288
- ---------------
(A) Market value of the underlying securities at exercise date, minus exercise
price of the options.
(B) Market value of the underlying securities at December 31, 1999, $23.19 per
share, minus exercise price of the unexercised options.
LONG-TERM INCENTIVE PLAN AWARDS
The following table provides information concerning the grant of restricted
stock pursuant to our stock incentive plan during 1999 with respect to the named
executive officers. We use restricted stock grants as a vehicle to aid officers
and directors in achieving certain ownership guidelines.
NUMBER OF PERIOD UNTIL
NAME SHARES (#) (A) MATURATION (B)
---- -------------- --------------
John V. Harker.......................................... 5,000 3 years
Gary R. Pehrson......................................... 3,500 3 years
William D. Yavorsky..................................... 5,000 3 years
Susan L. Thompson....................................... 2,000 3 years
Mark A. Pruitt.......................................... 5,000 3 years
- ---------------
(A) Shares were issued based on a ratio of one share for every two shares
purchased during 1999 up to a maximum of 5,000 shares per person for
qualifying purchases made during any one calendar year.
(B) Each share of restricted stock vests at the end of a three-year period of
continuous service as an elected or appointed officer or director, beginning
with the date of the qualifying purchase. However, if the shares held or
purchased that resulted in the restricted shares being issued are sold prior
to the end of the three-year vesting period, a proportionate number of
restricted shares as the shares sold will vest at the end of a nine-year
period of continuous service as an elected or appointed officer or director.
Any unvested restricted stock will become fully vested immediately prior to
a consummation of a reorganization resulting in a change-in-control.
DIRECTOR COMPENSATION
During 1999, our non-employee directors received an $18,000 annual retainer
and $2,500 for each board meeting attended. The non-employee directors were also
reimbursed for their expenses in attending meetings of our board of directors.
In addition, the Directors' Plan, as amended, provides that each "Eligible
Director" shall be granted an option to purchase 20,000 shares of our common
stock upon becoming an Eligible Director and, so long as he or she remains an
Eligible Director, he or she will be granted an option to purchase 10,000 shares
of our common stock on each date that he or she is re-elected
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to the board of directors at our annual shareholders' meeting. Eligible
Directors also received restricted stock grants based on a ratio of one share
for every two shares of our common stock purchased during 1999. We pay no
additional remuneration to employees who serve as directors.
The following table summarizes option grants and restricted stock awards
during 1999 for our Eligible Directors:
# OF RESTRICTED VALUE OF RESTRICTED
# OF SHARES COVERED PRICE OF OPTIONS SHARES SHARES GRANTED
NAME BY OPTIONS GRANTED GRANTED (A)
---- ------------------- ---------------- --------------- -------------------
Peter Behrendt..................... 10,000 $9.97 -(B) $ --
Michael Hallman.................... 10,000 9.97 5,000 49,375
Nobuo Mii.......................... 10,000 9.97 5,000 72,500
- ---------------
(A) Calculated based on the number of shares issued multiplied by the closing
value of our common stock on the day of issue.
(B) Mr. Behrendt made a qualifying purchase in December 1999. The associated
grant of 5,000 restricted shares was made in January 2000.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
We have two severance pay plans that provide for severance benefits to
employees of In Focus and its subsidiaries. Persons employed by Proxima as of
the date we complete the share exchange will be eligible to participate in these
plans.
One of the severance plans, the Executive Severance Pay Plan, provides for
the payment of severance benefits to persons currently serving as executives of
In Focus. Under the Executive Plan, covered executives are entitled to receive
severance benefits in the event we terminate their employment without cause. In
addition, a covered executive is entitled to severance benefits in the event the
executive terminates his/her employment for "good reason." In general, an
executive has "good reason" to terminate employment if, within 18 months after a
"change of control," one of the following occurs: substantial alteration of the
executive's duties or responsibilities; material reduction of the executive's
pay or benefits; relocation of the executive's place of employment by more than
35 miles; or failure to pay the executive's compensation within 10 days of the
date it is due.
For executives holding Vice President or Senior Vice President titles, the
amount of severance pay payable under the Executive Plan is 12 months of salary
continuation. For executives holding Chief Executive Officer and/or President
titles, the period of salary continuation is 24 months. In addition to salary
continuation, the executives receive a lump sum payment covering the cost of
continuing the executive's health insurance during the period of salary
continuation, as well as outplacement services for the salary continuation
period. The amount of severance pay is subject to reduction in the event any
portion of the payment would be subject to the excise tax imposed under the
so-called "Golden Parachute" provisions of the Internal Revenue Code.
In order to receive severance benefits, covered executives must sign a
release of any claims against us. In addition, severance payments may be
immediately terminated in the event the executive discloses any of our
confidential information or violates the noncompetition provisions included in
the Executive Plan.
Certain Proxima executives have agreements with Proxima providing for
severance benefits. In order to be eligible for benefits under the Executive
Plan, a Proxima executive must make an election within 90 days after completion
of the share exchange of their initial eligibility under the plan to cancel any
existing agreement. The Executive Plan in no way alters the terms and conditions
of the Proxima executives' stock options that we assume.
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As an incentive to continue their employment with In Focus after completion
of the share exchange, eligible executives of In Focus will be provided
Retention Benefits arrangements effective upon completion of the share exchange.
Eligible executives who remain employed with In Focus for a minimum of 6 months
after completion of the share exchange will receive severance payments if,
within 18 months after completion of the share exchange, they resign with "good
reason." "Good reason" is defined as the substantial alteration of the
executive's duties or responsibilities; material reduction of the executive's
pay or benefits; relocation of the executive's place of employment of more than
35 miles; or failure to pay the executive's compensation within 10 days of the
date it is due.
For executives holding Vice President or Senior Vice President titles, the
amount of severance pay payable under the Retention Benefits arrangement is 12
months of salary continuation. For executives holding Chief Executive Officer
and/or President titles, the period of salary continuation is 24 months. In
addition to salary continuation, executives receive a lump sum payment covering
the cost of continuing the executive's health insurance during the period of
salary continuation, as well as outplacement services for the salary
continuation period. The amount of severance pay is subject to reduction in the
event any portion of the payment would be subject to the excise tax imposed
under the so-called "Golden Parachute" provisions of the Internal Revenue Code.
In order to receive Retention Benefits, covered executives must sign a
release of any claims against us. In addition, payments may be immediately
terminated in the event the executive discloses any of our confidential
information or violates certain noncompetition provisions.
In April 1997, our board of directors approved amendments to the stock
option agreements of all of our executive officers to provide that all options
held by such persons shall become immediately exercisable, without regard to any
contingent vesting provision to which such option may otherwise be subject, in
the event of the occurrence of a change-in-control. In addition, any unvested
restricted stock will become fully vested immediately prior to a consummation of
a reorganization resulting in a change-in-control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The compensation committee of our board of directors was comprised of
Messrs. Behrendt (Committee Chair), Hallman and Mii during 1999. All members of
the compensation committee are non-employee, outside directors. Although Mr.
Harker, our chief executive officer, served on our board of directors in 1999
and participated in compensation discussions, he did not participate in any
deliberations or decisions regarding his own compensation.
66
72
CHAPTER NINE
ADDITIONAL INFORMATION FOR SHAREHOLDERS
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers, and persons who own more than 10% of out outstanding
shares of common stock, to file with the SEC initial reports of beneficial
ownership and reports of changes in beneficial ownership of shares of In Focus
common stock and our other equity securities. To our knowledge, based solely on
review of the copies of such reports furnished to us or otherwise in our files
and on written representations from our directors, executive officers and 10%
shareholders that no other reports were required, during the fiscal year ended
December 31, 1999, our officers, directors and 10% shareholders complied with
all applicable Section 16(a) filing requirements.
SHAREHOLDER PROPOSALS
We must receive any shareholder proposals intended to be presented at our
2001 annual meeting of shareholders at our principal executive office no later
than November 17, 2000, in order to be included in our 2000 Proxy Statement. Our
Amended and Restated Bylaws require shareholders to deliver proposals they
intend to present at our 2001 annual meeting to our principal executive office
no later than sixty calendar days and no earlier than ninety calendar days prior
to the first anniversary of our 2000 Annual Meeting.
TRANSACTION OF OTHER BUSINESS
As of the date of this proxy statement, our board of directors is not aware
of any other matters that may come before the special meeting. The persons named
in the enclosed proxy intend to vote the proxy in accordance with their best
judgment if any other matters do properly come before the meeting. Please return
your proxy as soon as possible. Unless a quorum consisting of a majority of the
outstanding shares entitled to vote is represented at the meeting, no business
can be transacted. Therefore, please be sure to date and sign your proxy exactly
as your name appears on your stock certificate and return it in the enclosed
postage prepaid return envelope. Please act promptly to insure that you will be
represented at this important meeting.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may inspect and
copy these materials at the public reference facilities maintained by the SEC
at:
Judiciary Plaza Citicorp Center Seven World Trade Center
Room 1024 500 West Madison Street 13th Floor
450 Fifth Street, N.W. Suite 1400 New York, New York 10048
Washington, D.C. 20549 Chicago, Illinois 60661
You may also obtain copies of such material from the SEC at prescribed
rates by writing to the Public Reference Section of the SEC, 450 Fifth Street,
N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more
information on the operation of the public reference rooms. You can also find
our SEC filings at the SEC's website at www.sec.gov.
Reports, proxy statements and other information concerning In Focus may
also be inspected at: The National Association Securities Dealers, 1735 K
Street, N.W. Washington, D.C. 20006.
The SEC's rules and regulations allow us to "incorporate by reference" the
information contained in documents that they filed with the SEC, which means
that we can disclose important information to you by referring you to those
documents. The information incorporated by reference is considered to be part of
this proxy statement. Information in this proxy statement supersedes information
incorporated by reference
67
73
that we have filed with the SEC prior to the date of this proxy statement, while
information that we file later with the SEC will automatically update and, in
some cases, supersede the information in this proxy statement.
All documents we file pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 after the date of this proxy statement and
before the date of the special meeting are incorporated by reference into and
deemed to be a part of this proxy statement from the date those documents are
filed.
The following documents, which we filed with the SEC, are incorporated by
reference into this proxy statement:
- Annual Report on Form 10-K for the fiscal year ended December 31, 1999;
- Quarterly Report on Form 10-Q for the quarter ended March 31, 2000; and
- Current Report on Form 8-K, filed March 7, 2000
You may request a copy of these filings, at no cost to you, by writing or
telephoning us at:
In Focus Systems, Inc.
27700B S.W. Parkway Avenue
Wilsonville, Oregon 97070
1-800-999-9206
We will provide delivery by first class mail or another equally prompt
method. If you wish to receive copies of any of our documents listed above, you
should make your request no later than five days before the special meeting, or
May 26, 2000, to ensure delivery prior to your special meeting.
You should rely only on the information contained in this proxy statement
or that we have referred you to. We have not authorized anyone to provide you
with information that is different. We provided all information concerning us,
and Proxima provided all information concerning Proxima, contained in this proxy
statement.
Our website is located at http:\\www.infocus.com. Information contained on
our web site does not constitute, and shall not be deemed to constitute, part of
this proxy statement.
68
74
CHAPTER TEN
FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
PAGE
----
PROXIMA ASA
Report of Independent Accountants......................... F-2
Balance Sheets as of December 31, 1998 and 1999........... F-3
Statements of Income for each of the three years ended
December 31, 1999...................................... F-5
Statements of Cash Flows for each of the three years ended
December 31, 1999...................................... F-6
Notes to Financial Statements............................. F-7
IN FOCUS SYSTEMS, INC. PRO FORMA COMBINED FINANCIAL
STATEMENTS (UNAUDITED)
Balance Sheet as of December 31, 1999..................... F-22
Statements of Operations for the year ended December 31,
1999................................................... F-23
Statements of Operations for the year ended December 31,
1998................................................... F-24
Statements of Operations for the year ended December 31,
1997................................................... F-25
Notes to Unaudited Pro Forma Combined Financial
Statements............................................. F-26
F-1
75
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Shareholders of Proxima ASA
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income and cash flows present fairly, in all
material respects, the financial position of Proxima ASA and its subsidiaries at
December 31, 1999 and 1998, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1999 in
conformity with generally accepted accounting principles in Norway. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards ("GAAS") in Norway, which are
substantially the same as GAAS in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
Generally accepted accounting principles vary in certain significant
respects from generally accepted accounting principles in the United States.
Application of generally accepted accounting principles in the United States
would have affected net income for each of the three years in the period ended
December 31, 1999 and shareholders' equity as at December 31, 1999 and 1998 to
the extent summarized in Note 17 to the consolidated financial statements
PRICEWATERHOUSECOOPERS DA
Oslo, Norway
February 15, 2000, except for Note 17
and Note 18, which is as of April 5, 2000
F-2
76
PROXIMA GROUP
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
FIGURES IN NOK 1,000 NOTE 1999 1998*
-------------------- ---- --------- ---------
ASSETS
Fixed Assets:
Intangible assets
Deferred tax assets.................................... 6 88,733 15,189
Goodwill............................................... 7 194,617 290,002
--------- ---------
Total intangible assets........................... 283,350 305,191
--------- ---------
Tangible fixed assets:
Property and equipment................................. 8 34,006 17,484
--------- ---------
Total tangible fixed assets....................... 34,006 17,484
--------- ---------
Long-term financial assets:
Long-term receivables.................................. 493 222
Investment in shares................................... 9,718
--------- ---------
Total long-term financial assets.................. 493 9,940
--------- ---------
Total Fixed Assets.............................. 317,849 332,615
--------- ---------
Current Assets:
Inventory................................................. 9 211,590 204,845
--------- ---------
Receivables
Trade accounts receivable.............................. 505,537 382,294
Other receivables...................................... 24,665 66,021
--------- ---------
Total receivables................................. 530,202 448,315
--------- ---------
Cash and cash equivalents................................. 10 330,090 321,638
--------- ---------
Total Current Assets.............................. 1,071,882 974,798
--------- ---------
Total Assets...................................... 1,389,731 1,307,413
========= =========
- ---------------
* The financial statements have been restated in accordance with the new
Accounting Act of 1998.
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
77
PROXIMA GROUP
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
FIGURES IN NOK 1,000 NOTE 1999 1998*
-------------------- ---- --------- ---------
EQUITY AND LIABILITIES
Shareholders' Equity:
Paid-in capital
Share capital............................................. 83,122 82,654
Additional paid-in capital............................. 35,064
--------- ---------
Total paid-in capital............................. 118,186 82,654
--------- ---------
Retained earnings:
Other equity.............................................. 783,745 647,308
--------- ---------
Total retained earnings................................ 783,745 647,308
--------- ---------
Total Equity...................................... 11 901,931 729,962
--------- ---------
Liabilities:
Provision for commitments
Pension liabilities....................................... 13 251 231
--------- ---------
Total provision for commitments................... 251 231
--------- ---------
Other long-term liabilities:
Debts to financial institutions........................ 5,327
--------- ---------
Total other long-term liabilities................. 0 5,327
--------- ---------
Short-term liabilities:
Debts to financial institutions........................ 5,635 171,225
Accounts payable....................................... 310,174 263,846
Taxes payable.......................................... 6 46,149 40,143
Employee taxes and social security costs............... 20,219 9,384
Other short-term liabilities........................... 105,372 87,295
--------- ---------
Total short-term liabilities...................... 487,549 571,893
--------- ---------
Total Liabilities................................. 487,800 577,451
--------- ---------
Total Equity and Liabilities...................... 1,389,731 1,307,413
========= =========
- ---------------
* The financial statements have been restated in accordance with the new
Accounting Act of 1998.
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
78
PROXIMA GROUP
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31
FIGURES IN NOK 1,000 NOTE 1999 1998* 1997*
-------------------- ---- --------- --------- -------
Sales revenue............................................. 4 2,323,335 1,575,582 604,321
Cost of goods sold........................................ 1,613,547 1,077,890 348,357
Salaries.................................................. 5 192,005 143,091 63,650
Amortization of goodwill.................................. 7 21,523 14,350 0
Depreciation.............................................. 8 12,918 11,935 4,251
Other operating expense................................... 16 289,521 175,977 61,054
--------- --------- -------
Operating profit.......................................... 193,821 152,339 127,009
--------- --------- -------
Financial income.......................................... 3 48,128 27,074 18,340
Financial expenses........................................ 3 29,461 24,254 9,888
--------- --------- -------
Income before income taxes................................ 212,488 155,159 135,461
--------- --------- -------
Taxes..................................................... 6 77,250 54,522 37,418
--------- --------- -------
Net income for the year................................... 135,238 100,637 98,043
--------- --------- -------
Basic EPS (NOK)........................................... 3.27 2.48 2.69
Diluted EPS (NOK)......................................... 3.16 2.43 2.67
- ---------------
* The financial statements have been restated in accordance with Norway's new
Accounting Act of 1998.
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
79
PROXIMA GROUP
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31
FIGURES IN NOK 1,000 1999 1998 1997
-------------------- -------- -------- -------
Cash flows from operating activities:
Net income before taxes.................................. 212,488 155,159 135,461
Tax paid in the period................................... -58,680 -42,423 -25,119
Loss/profit on sale of fixed assets...................... -12,273
Depreciation and amortization............................ 34,441 26,285 4,251
Write-down of fixed assets............................... 1,294 0
Change in inventory...................................... 1,210 9,327 -31,552
Change in accounts receivable............................ -107,785 54,000 -98,789
Change in accounts payable............................... 35,600 -16,378 38,943
Change in other assets and liabilities................... 67,836 -15,367 -4,360
Changes in pension liabilities........................... 20 128 405
-------- -------- -------
Net cash provided by operating activities............. 172,857 172,025 19,240
-------- -------- -------
Cash flows from investing activities:
Proceeds from sale of fixed assets....................... 315
Payments for purchase of property and equipment.......... -25,519 -19,001 -5,298
Payments/proceeds on loan................................ -271 -180 126
Proceeds from sale of shares............................. 22,329
Purchase of shares in subsidiary......................... -489,831
-------- -------- -------
Net cash used in investing activities................. -3,146 -509,012 -5,172
-------- -------- -------
Cash flows from financing activities:
Proceeds from share issuances............................ 10,668 325,217 83,822
Payments received on long term liabilities............... 5,327
Repayment of short term liabilities...................... -181,125
Payments received on short-term liabilities.............. 170,986
-------- -------- -------
Net cash provided by (used in) financing activities... -170,457 501,530 83,822
-------- -------- -------
Net change in cash for the year............................ -746 164,543 97,890
-------- -------- -------
Cash and cash equivalents at the beginning of the period... 321,638 157,095 59,205
Effect of foreign exchange on cash and cash equivalents.... 9,198
-------- -------- -------
Cash and cash equivalents at the end of the period......... 330,090 321,638 157,095
-------- -------- -------
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
80
PROXIMA GROUP
NOTES TO FINANCIAL STATEMENTS
THREE YEARS ENDED DECEMBER 31, 1999
NOTE 1 -- ACCOUNTING PRINCIPLES AND THE EFFECT OF CHANGES MADE TO THE ACCOUNTING
PRINCIPLES
The annual accounts have been drawn up in accordance with the Accounting
Act of 1998 and have been prepared according to Norwegian accounting standards.
Several accounting principles have been changed in accordance with the
Accounting Act. These changes are described below.
BASIS OF CONSOLIDATION
The group accounts cover the parent company Proxima ASA and all companies
in which it controls more than 50% of the voting rights, whether directly or
indirectly. The group accounts show the overall financial performance and
overall financial position when the parent company and the subsidiaries are
presented as a financial entity. Therefore, shares in subsidiaries, internal
claims and debts as well as intercompany transactions have been eliminated when
preparing the group accounts. Unrealized gains in inventory that are derived
from internal deliveries are eliminated in the group's inventory. The foreign
subsidiary's balance sheet is translated at the exchange rates on the balance
sheet date. The income statement has been translated at average rates for the
year. All translation differences are included directly in equity.
As of December 31, 1999, the group comprised the following companies:
Proxima ASA................................................. Parent company
Proxima Corporation, USA.................................... 100%
ASK AS, Norway.............................................. 100%
In April 1998, Proxima ASA set up a subsidiary in the USA under the name BD
Acquisition Corporation. The company purchased all the shares in Proxima
Corporation, a distribution company with the bulk of its operations in the U.S.
These companies merged immediately after the acquisition. The merged company
acquired the name Proxima Corporation. The accounts for 1998 contain income and
costs in Proxima Corporation from April 14, 1998. With effect from January 21,
1999, ASK LCD Inc., the wholly-owned subsidiary, was merged with Proxima
Corporation.
The accounts have been prepared using the purchase method for the acquired
subsidiary. In conjunction with the acquisition, a detailed assessment of actual
value of various asset and debt items was carried out. As a result of a planned
coordination of the operations of Proxima Corporation and Proxima ASA, a
provision for planned restructuring costs was also made. The cost price for
shares that could not be allocated to specific asset or debt items has been
classified as goodwill in the consolidated balance sheet. The goodwill amount is
amortized on a straight-line basis over 15 years. Amortization over more than
five years is justified by the fact that the company is a distribution company
with a strong brand name.
In connection with the finalization of the purchase price allocation,
certain reclassifications to the balance sheet were recorded as of December 31,
1999.
There is no activity in the Norwegian subsidiary ASK AS.
CLASSIFICATION
Assets determined for permanent use and receivables that fall due later
than one year after the financial year-end are classified as fixed assets. All
other assets are classified as current assets. The same basis for classification
has been used for liabilities.
F-7
81
PROXIMA GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
THREE YEARS ENDED DECEMBER 31, 1999
VALUATION PRINCIPLES
Use of Estimates
Preparation of the consolidated accounts in accordance with generally
accepted accounting principles requires that the board and management of the
company make estimates and establish conditions which have an influence on the
value of assets and liabilities in the balance sheet and reported income and
costs for the financial year. The final values realized may deviate from these
estimates.
Recognition of Revenue
All sales are taken to income on the delivery date. Sales are gross sales
less commissions, discounts and any other price reductions.
Accounts Receivable
Trade accounts receivable and other receivables are entered in the balance
sheet at face value less a provision to cover bad debts. A provision for bad
debts is made on the basis of an individual assessment of each claim.
Transactions and Reserves in Foreign Currencies
Income statement items are entered in the individual accounts at the
exchange rate on the transaction date. Current assets, accounts receivable and
accounts payable in foreign currencies are translated at the exchange rates on
the balance sheet date. Realized/unrealized currency gain and
realized/unrealized currency loss are classified as financial items in the
income statement.
Inventory
Inventory is valued at the lower of cost and net realizable value on a
first-in/first-out basis. For raw materials and work in progress net realizable
value is calculated as the realizable value of finished goods less remaining
manufacturing costs and sales costs. The cost price of manufactured goods
comprises direct materials, direct wages and allocated indirect manufacturing
costs.
Research and Development Costs
Research and development costs are expensed as incurred.
Property and Equipment
Tangible fixed assets are reported at historical cost less accumulated
depreciation. Depreciation is charged on a straight-line basis over the
estimated life of each asset. When fixed assets are sold or disposed of,
gains/losses are included as operating income/cost.
Pension Costs
The parent company provides its employees with a collective (secured)
pension plan, which gives fixed future pension benefits based on the number of
years of service and the expected salary upon retirement. The parent company
also provides an unsecured pension plan for some of its employees. These pension
commitments are paid using the company's own funds and the liabilities are
subject to provisions. For secured pensions, overall liabilities are valued
against overall pension funds in the pension plan. When valuing pension funds
and pension commitments, the estimated value at year-end is used. In the balance
sheet, secured and unsecured pension liabilities are shown combined under
long-term liabilities. Pension
F-8
82
PROXIMA GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
THREE YEARS ENDED DECEMBER 31, 1999
costs are recorded in the accounts in accordance with the accounting standards
governing pension costs. The main principle is that the pension liabilities are
charged against income when they occur, i.e. as they are earned through
employment. When calculating them, a straight-line earning profile is used, and
the expected final salary is used as the earnings basis. Net pension costs are
recorded in the income statement under "Salaries". Employers' contributions are
accrued for unsecured pensions. For secured pensions, employers' contributions
are charged against income based on pension premiums paid.
Proxima Corporation provides a contributory pension plan. The premium for
this is charged against income on an ongoing basis.
Stock-Based Compensation
The group records its stock-based compensation plans in the accounts
according to guidelines published by the Oslo Stock Exchange. Accompanying notes
provide pro forma information of the effects these plans would have on net
income and profit per share if they were recorded at actual value.
Earnings per Share
Earnings per share are calculated on the basis of the time-weighted average
of the number of outstanding shares in the company in the period. Diluted
earnings per share are based on the time-weighted average of the number of
outstanding shares in the company taking into consideration the diluting effect
of potential shares in the company.
The following table shows the basis for calculations of earnings per share
and diluted earnings per share:
FIGURES IN NOK 1,000 1999 1998 1997
-------------------- ---------- ---------- ----------
Net income for the year................................ 135,238 100,637 98,043
Average number of shares in the company................ 41,341,551 40,637,481 36,471,620
Average number of potential diluting shares:
Stock options.......................................... 1,424,407 801,834 307,490
Average number of shares in the company taking into
consideration the diluting effect of potential shares
in the company....................................... 42,765,958 41,439,315 36,779,110
Taxes
Taxes are expensed as incurred, i.e. the tax cost is linked to the income
before taxes for accounting purposes. In principle, the tax cost consists of
payable taxes and changes in deferred tax assets and liabilities. Deferred tax
assets in the balance sheet are calculated on the basis of net temporary
differences between accounting and tax values. In conjunction with the
acquisition of Proxima Corporation, this company had substantial net
tax-reducing temporary differences and losses to carry forward. The possible
deferred tax assets linked to these temporary differences are included in
goodwill in the acquisition balance sheet. The tax assets utilized in 1999 were
reclassified from goodwill to deferred tax assets in the balance sheet.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash, cash equivalents and investments
which fall due within three months of the time of making the investments.
F-9
83
PROXIMA GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
THREE YEARS ENDED DECEMBER 31, 1999
Warranty Expenses
Estimated future warranty obligations related to the group's products are
provided by charges to operations in the period in which the related revenue is
recognized.
AMENDMENTS TO ACCOUNTING PRINCIPLES
Proxima ASA introduced new accounting principles in accordance with the
Accounting Act of 1998 to take effect on December 31, 1996.
Deferred Tax Assets
In accordance with previous acts, it was not permitted to enter net
deferred tax assets in the balance sheet.
Long-Term Items in Foreign Currencies
In accordance with previous acts, long-term items in foreign currencies
were entered at the lowest/highest value's principle, as the case might be, for
assets and liabilities. According to the new Accounting Act, all items in
foreign currencies are entered at the exchange rate on the balance sheet date.
The amendments to the accounting principles were included in shareholders'
equity in the accounts as of December 31, 1996. We refer to note 11 where the
effect of shareholders' equity is given in detail.
CORRESPONDING FIGURES
The corresponding figures in the balance sheet and the income statement are
restated according to principles in the new Accounting act.
NOTE 2 -- FINANCIAL MARKET RISK
Financial instruments which are subject to credit and currency risk consist
mainly of cash and cash equivalents and accounts receivable. Cash and cash
equivalents are principally administered by two financial institutions. The main
part of accounts receivable are not collateralized, but some are collateralized
by use of Letter of Credit. The group assesses the creditworthiness of its
customers on an ongoing basis and makes an accrual for possible bad debts. As at
December 31,1999 and 1998, no customers accounted for more than 10% of total
accounts receivable.
The group is exposed to changes in exchange rates through large quantities
of the materials used in production being bought from abroad, principally Asia.
Similarly, a large percentage of the company's sales income is received in
foreign currencies. Exposure to changes in foreign currency is to some extent
covered by hedging with forward contracts. As at December 31, 1999, two
transactions were in effect, totaling USD 4 million at an exchange rate of NOK
7.97, both falling due Q 1 2000. Unrealized profit/loss on forward contracts in
foreign currencies were valued on the basis of the market exchange rate at the
end of the year. The group has a foreign currency loan in USD which is being
paid off on an ongoing basis via income in the same currency.
F-10
84
PROXIMA GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
THREE YEARS ENDED DECEMBER 31, 1999
NOTE 3 -- SINGLE TRANSACTIONS AND MERGED ITEMS
In 1999, the group sold its shares in Laser Power Corporation. The sale
made a gain of NOK 12.0 million which is recorded as income under financial
income.
FIGURES IN NOK 1,000 1999 1998 1997
-------------------- ------ ------ ------
Financial Income
Interest income.......................................... 11,748 6,156 2,881
Currency gain............................................ 24,331 20,918 15,459
Gain from sales of shares................................ 12,049 -- --
------ ------ ------
Total financial income................................... 48,128 27,074 18,340
------ ------ ------
Financial Expenses
Currency loss............................................ 21,813 16,500 9,413
Other financial expenses................................. 7,648 7,754 475
------ ------ ------
Total financial expenses................................. 29,461 24,254 9,888
------ ------ ------
NOTE 4 -- SALES REVENUE
Based on guidelines issued by Norsk Regnskapsstiftelse (the Norwegian
Institute of Accounting), the group has defined its activities as falling within
one segment. Sales are geographically distributed as follows:
SALES GEOGRAPHICALLY DISTRIBUTED 1999 1998 1997
-------------------------------- ---- ---- ----
America..................................................... 63% 55% 16%
Europe...................................................... 28% 38% 69%
Asia........................................................ 9% 7% 15%
--- --- ---
Total....................................................... 100% 100% 100%
--- --- ---
No single customer accounted for more than 10% of turnover in the financial
years ending in 1999, 1998 and 1997.
NOTE 5 -- SALARIES
FIGURES IN NOK 1,000 1999 1998 1997
-------------------- ------- ------- ------
Salaries............................................... 165,532 128,995 56,330
Social security costs.................................. 20,025 10,248 4,973
Pension costs.......................................... 4,650 2,280 1,232
Other benefits......................................... 1,798 1,568 1,115
------- ------- ------
Total.................................................. 192,005 143,091 63,650
------- ------- ------
Average number of employees............................ 405 321 161
Auditing fees for 1999 charged against income amounted to NOK 1,145,400.
Additional fees for other services totaled NOK 923,650.
NOTE 6 -- TAXES
Taxes for the group are distributed as follows:
FIGURES IN NOK 1,000 1999 1998 1997
-------------------- ------ ------ ------
Norway................................................... 36,837 39,550 37,418
Other countries.......................................... 40,413 14,972 --
------ ------ ------
Total.................................................... 77,250 54,522 37,418
------ ------ ------
F-11
85
PROXIMA GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
THREE YEARS ENDED DECEMBER 31, 1999
The difference between the nominal tax rate in Norway
and the group's effective tax rate is as follows:
Income before taxes....................................... 212,488 155,159 135,461
Nominal tax rate in Norway (28%).......................... 59,497 43,445 37,929
Permanent differences..................................... 806 265 74
Higher tax rates abroad................................... 10,921 5,186 --
Tax effect of non-deductible goodwill amortization........ 6,026 4,879 --
Other..................................................... -- 747 -585
------- ------- -------
Effective taxes........................................... 77,250 54,522 37,418
------- ------- -------
Specification of Basis for Deferred Tax Assets:
Net Timing Differences
Fixed assets.............................................. 2,494 9,835 -745
Current assets............................................ 198,181 195,444 32,048
Liabilities............................................... 13,061 10,232 8,846
Tax losses to be carried forward.......................... 65,076 83,800 --
------- ------- -------
TOTAL..................................................... 278,812 299,311 40,149
------- ------- -------
Deferred tax assets....................................... 101,553 111,887 11,242
Non-recognized deferred tax assets........................ -12,820 -96,698 --
------- ------- -------
DEFERRED TAX ASSETS RECORDED IN THE BALANCE SHEET......... 88,733 15,189 11,242
------- ------- -------
Deferred tax assets are recorded in the balance sheet to the extent it is
probable such assets are realizable in the future.
In 1998 and 1997 respectively, NOK 11.5 million and NOK 2.6 million in tax
assets were linked to tax-deductible share issue expenses included in
shareholders' equity in Proxima ASA.
NOTE 7 -- INTANGIBLE ASSETS (GOODWILL)
FIGURES IN NOK 1,000 1999
-------------------- -------
Acquisition cost as of 01.01.99............................. 304,453
Acquisitions for the year................................... 0
Reclassification............................................ -89,468
Currency translation difference............................. 17,603
-------
Acquisition cost as of 12.31.99............................. 232,588
-------
Amortization as of 12.31.99 incl. currency translation
difference................................................ 37,971
-------
Value recorded in the balance sheet as of 12.31.99.......... 194,617
-------
Amortization for the year................................... 21,523
-------
Goodwill
Goodwill has increased following the acquisition of Proxima Corporation.
The goodwill amount is amortized on a straight-line basis over the estimated
life of 15 years. Goodwill resulting from the acquisition contains possible tax
assets for tax-reducing temporary differences in conjunction with the
acquisition. In 1999, NOK 89.5 million was reclassified from goodwill to
deferred tax assets.
F-12
86
PROXIMA GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
THREE YEARS ENDED DECEMBER 31, 1999
Product Research and Development
During the fiscal year, the group completed the following research and
development projects:
- The COMPACT series projectors, consisting of C1, C2, C5 and C6.
- The IMPRESSION series projectors were upgraded through launching A8+, A9+
and A10+.
- The ASK M5 projector.
A total of NOK 62.8 million in research and development costs were expensed
in 1999.
NOTE 8 -- PROPERTY AND EQUIPMENT
FIGURES IN NOK 1,000
--------------------
Acquisition costs as of 01.01.99............................
129,880
Acquisitions for the year...................................
25,519
Sales for the year..........................................
-53,889
Currency translation difference.............................
6,420
Value recorded in the balance sheet as of 12.31.99..........
107,930
-------------
Accumulated depreciation as of 12.31.99 incl. currency
translation difference....................................
73,924
-------------
Value recorded in the balance sheet as of 12.31.99..........
34,006
-------------
Depreciation for the year...................................
12,918
-------------
Economic lifetime
Depreciation plan.........................................
3-5 years
Straight line
Operating lease expense amounted to 5,942 in 1999 and 3,384 in 1998.
NOTE 9 -- INVENTORY
FIGURES IN NOK 1,000 1999 1998
-------------------- ------- -------
Raw materials............................................... 88,267 46,464
Work in progress............................................ 12,724 8,001
Finished goods.............................................. 110,599 150,380
------- -------
Total inventory............................................. 211,590 204,845
------- -------
NOTE 10 -- CASH EQUIVALENTS, ETC.
FIGURES IN NOK 1,000 1999 1998
-------------------- ----- -----
Restricted bank deposits.................................... 3,658 3,493
----- -----
F-13
87
PROXIMA GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
THREE YEARS ENDED DECEMBER 31, 1999
NOTE 11 -- SHAREHOLDERS' EQUITY
TOTAL
ADDITIONAL SHAREHOLDERS'
FIGURES IN NOK 1,000 SHARE CAPITAL PAID-IN CAPITAL OTHER EQUITY EQUITY
-------------------- ------------- --------------- ------------ --------------
Shareholders' equity 12.31.96................. 11,925 41,163 60,102 113,190
Effect of new Accounting Act:
Recording of deferred tax assets in the
balance sheet............................ -- -- 4,349 4,349
Introduction of current market value for
long-term receivables.................... -- -- 180 180
------ ------ ------- -------
Revised shareholders' equity 12.31.96......... 11,925 41,163 64,631 117,719
------ ------ ------- -------
Shareholders' equity 12.31.97................. 75,254 8,470 217,657 301,381
------ ------ ------- -------
Change in shareholders' equity for the year
Issue of shares............................. 7,400 24,662 304,638 336,700
Share issue expenses, net after taxes....... -- -8,268 -- -8,268
Income for the year......................... -- -- 100,637 100,637
Currency translation differences............ -- -- -488 -488
------ ------ ------- -------
Shareholders' equity 12.31.98................. 82,654 24,864 622,444 729,962
------ ------ ------- -------
Change in shareholders' equity for the year
Issue of shares............................. 468 10,200 -- 10,668
Income for the year......................... -- -- 135,238 135,238
Currency translation differences............ -- -- 26,063 26,063
------ ------ ------- -------
Shareholders' equity 12.31.99................. 83,122 35,064 783,745 901,931
------ ------ ------- -------
NOTE 12 -- STOCK OPTION PLAN
The board has been granted authorization by a resolution of the general
meeting to expand the share capital (with no pre-emption rights for
shareholders) to employees, board members and advisors in the group via a stock
option plan of in all 2,450,000 shares. 1,950,000 options apply for the period
until ordinary general meeting in 2001 and 500,000 until November 2001.
At present, the group has three stock option plans:
- A two-year program in Proxima ASA where, as of December 31, 1999, a total
of 575,000 stock options were distributed after adjustments for
cancellations. 50% could be exercised after January 1, 1999 and the
remaining 50% after January 1, 2000. The stock options will expire on
March 10, 2000. As of December 31, 1999, 192,500 stock options had been
exercised.
- A three-year program in Proxima ASA where, as of December 31, 1999, a
total of 486,000 stock options were distributed after adjustments for
cancellations. The options vest 1/3 per year and can be exercised for the
first time 12 months after the allotment. Options not exercised can be
accumulated until the end of the option plan period. As of December 31,
1999 40,000 options were exercised.
- A five-year program for Proxima Corporation. Adjusted for cancellations
763,134 stock options were originally issued in 1998 and, as of December
31, 1999, 855,585 stock options had been issued adjusted for
cancellations. The options vest 1/3 per year over the first three years
and can be exercised for the first time 12 months after the allotment.
Options not exercised can be accumulated until the end of the option plan
period. As of December 31, 1999, approximately 2,000 options had been
exercised.
F-14
88
PROXIMA GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
THREE YEARS ENDED DECEMBER 31, 1999
The subscription price is the original market rate at the time of issue
with an additional 1% increase per month (the addition does not apply to
employees of Proxima Corporation). In November 1998, previously issued stock
options were repriced. The original subscription price was NOK 41.67 per share
for 700,000 shares and NOK 50.00 per share for 1,250,000 shares before the
repricing at NOK 40.00 per share with an additional 1% increase per month which
took place in November 1998 (the addition does not apply to employees of Proxima
Corporation). The repricing was regarded as a one-time event and was undertaken
because of the general fall in the stock market. As the repricing was in
accordance with the current stock market price on that day, the repricing did
not result in an expense for the company that had to be recorded in the
accounts.
The following table summarizes the stock option activity of the
aforementioned plans:
1999 1998 1997
------------------------- ------------------------- -------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
FIGURES IN NOK 1,000, EXCEPT NUMBER OF PRICE NUMBER OF PRICE NUMBER OF PRICE
PER SHARE DATA STOCK OPTIONS (NOK/SH.) STOCK OPTIONS (NOK/SH.) STOCK OPTIONS (NOK/SH.)
- ---------------------------- ------------- --------- ------------- --------- ------------- ---------
Number of shares as of
01.01.................... 1,638,550 40.41 630,000 44.17 0 --
Issued..................... 318,451 51.63 1,063,550 40.00 630,000 41.67
Exercised.................. 234,149 45.56 0 -- 0 --
Cancelled.................. 40,416 40.00 55,000 46.67 0 --
Number of shares as of
12.31.................... 1,682,436 44.44 1,638,550 40.41 630,000 44.17
Vested at the end of the
year..................... 416,896 42.47 0 -- 0 --
Weighted average remaining life of stock options in the company on December
31, 1999 is 2.48 years.
The group has calculated pro forma information for income for the year as
if the group had entered the stock-based compensation plans in the accounts at
their actual value. In the following pro forma statement, the actual value of
the stock options has been calculated and charged over the period until the
stock options can be exercised.
FIGURES IN NOK 1,000, EXCEPT PER SHARE DATA 1999 1998 1997
------------------------------------------- --------- --------- ---------
Reported income for the year.............................. 135,238 100,637 98,043
Earnings per share (NOK).................................. 3.27 2.48 2.69
Pro forma income for the year............................. 128,894 68,331 92,125
Pro forma earnings per share (NOK)........................ 3.12 1.68 2.53
Weighted average actual value per stock option issued for
the year (NOK).......................................... 19.92 19.72 9.39
Actual value of the stock options are calculated by use of
the Black-Scholes model with the following assumptions:
Estimated yearly volatility as an average, when issued.... 45% 80% 42%
Risk-free interest when issued............................ 4.7 - 5.8% 5.5 - 5.6% 3.3%
Estimated lifetime in years, provided further approval
from the board.......................................... 2.9 - 5.0 1.3 - 5.0 2.7 years
years years
Estimated dividend........................................ 0% 0% 0%
NOTE 13 -- PENSION PLAN
Proxima ASA has a collective pension plan with an insurance company for its
employees (secured scheme). The scheme is a defined benefit plan, i.e. the
company bears the financial responsibility for ensuring that its employees
receive the agreed benefits. The liability covers 135 employees, compared with
68 employees in 1998. The company also provides an unsecured pension plan for
some of its employees.
F-15
89
PROXIMA GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
THREE YEARS ENDED DECEMBER 31, 1999
Proxima Corporation also provides a pension plan for its employees. This plan is
a defined contribution plan. When the company has provided the contribution to
the pension plan, it has no other obligations. The annual cost is thus equal to
the contribution, and no entry is made in the balance sheet. Actuarial
calculations for Proxima ASA are made each year on the basis of information from
the company.
The following conditions form the basis of calculations:
1999 1998 1997
---- ---- ----
Discount rate............................................... 6.0% 6.0% 5.0%
Estimated return pension funds.............................. 7.0% 7.0% 8.0%
Estimated salary increase................................... 3.5% 3.5% 3.5%
Estimated increase of base amount........................... 3.5% 3.5% 3.5%
Pension adjustments......................................... 3.0% 3.0% 3.0%
Average estimated voluntary retirement...................... 2.5% 2.5% 2.5%
Based upon these assumptions the pension liabilities, pension funds and
pension costs are calculated as follows:
FIGURES IN NOK 1,000 1999 1998
-------------------- ------ ------
Calculated pension liabilities.............................. -7,990 -5,281
The market value of the pension funds....................... 5,705 3,853
------ ------
= Estimated Net pension liabilities......................... -2,285 -1,428
Non-realized changes of estimates........................... 2,034 1,197
------ ------
Net pension liabilities..................................... -251 -231
Specification of pension costs:
FIGURES IN NOK 1,000 1999 1998 1997
-------------------- ----- ----- -----
Pensions earned during the year............................. 1,932 932 1,085
Interest cost from pension liabilities...................... 338 243 178
Expected return on pension funds............................ -310 -216 -163
Realized deviations and changes of estimates................ 82 46 132
----- ----- -----
Pension cost................................................ 2,042 1,005 1,232
Contribution to pension plan in Proxima Corporation......... 2,608 1,275 0
----- ----- -----
Total pension costs in the group............................ 4,650 2,280 1,232
----- ----- -----
Estimate changes and deviations are amortized over the estimated remaining
service period provided they exceed 10% of the largest of the pension
liabilities and pension funds (corridor).
NOTE 14 -- LEASING COMMITMENTS
The group is responsible for leasing buildings under leasing agreements
that will expire on June 30, 2002, March 31, 2004 and April 30, 2009,
respectively.
As of December 31, 1999, future-leasing liabilities in accordance with
agreements entered into will be as follows:
2000...................................................... NOK 10.9 million
2001...................................................... NOK 11.1 million
2002...................................................... NOK 10.9 million
2003...................................................... NOK 10.5 million
2004...................................................... NOK 5.4 million
Following years, total.................................... NOK 16.0 million
-----------------
Total lease commitments................................... NOK 64.8 million
-----------------
F-16
90
PROXIMA GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
THREE YEARS ENDED DECEMBER 31, 1999
NOTE 15 -- LEGAL CLAIMS AND OTHER CONTINGENCIES
From time to time Proxima becomes involved in ordinary, routine or
regulatory legal proceedings incidental to the business. The management's
judgment is that these contingent liabilities do not have significant influence
on the group's financial position, results or cash flow.
NOTE 16 -- OTHER OPERATING EXPENSES
FIGURES IN NOK 1,000 1999 1998 1997
-------------------- ------- ------- ------
Marketing expenses........................................ 79,767 56,793 15,230
Rental.................................................... 12,440 8,036 3,126
Loss on debtors........................................... 7,911 -4,370 3,332
Other operating expenses.................................. 189,403 115,518 39,366
------- ------- ------
Total other operating expenses............................ 289,521 175,977 61,054
------- ------- ------
NOTE 17 -- UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The consolidated financial statements have been prepared under Norwegian
generally accepted accounting (N GAAP), which differs in certain respects from
United States generally accepted accounting principles (U.S. GAAP). The
principal differences between the Group's accounting principles under N GAAP and
U.S. GAAP are set out below:
RECONCILIATION OF NET INCOME FROM N GAAP TO U.S. GAAP
YEAR END DECEMBER 31,
------------------------------------
AMOUNTS IN NOK 1000 REF. 1999 1998 1997
------------------- ---- ---------- ---------- ----------
Net income in accordance with N GAAP........ 135,238 100,637 98,043
Adjustments for U.S. GAAP:
Marketable securities....................... (a) -4,327 -25,949
Stock Compensation.......................... (b) -6,815 314 -22,749
Business Combinations....................... (c) 3,171 -20,544
Property and equipment...................... (d) 2,307 786 593
Tax effect of U.S. GAAP adjustments......... (e) 57 -220 -166
---------- ---------- ----------
Net income in accordance with U.S. GAAP..... 129,631 55,024 75,721
---------- ---------- ----------
Approximate earnings (basic and dilutive)
per share in accordance with U.S. GAAP
Basic..................................... 3.13 1.36 2.08
Dilutive (treasury stock method).......... 3.12 1.36 2.08
Shares used for Basic EPS................... 41,341,551 40,637,481 36,471,620
Shares used for Diluted EPS................. 41,611,110 40,701,911 36,482,661
F-17
91
PROXIMA GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
THREE YEARS ENDED DECEMBER 31, 1999
RECONCILIATION OF SHAREHOLDERS EQUITY FROM N GAAP TO U.S. GAAP
YEAR END DECEMBER 31
--------------------
AMOUNTS IN NOK 1000 REF. 1999 1998
------------------- ---- -------- --------
Shareholders equity in accordance with N GAAP.......... 901,931 729,962
Adjustments for U.S. GAAP:
Marketable Securities.................................. (a) 4,254
Stock Compensation..................................... (b) -5,852 -2,404
Business Combinations.................................. (c) -49,686 -50,880
Property and Equipment................................. (d) 8,064 5,757
Tax effects of U.S. GAAP adjustments................... (e) -2,258 -1,612
-------- --------
Shareholders' equity in accordance with U.S. GAAP...... 852,199 685,077
-------- --------
THE FOLLOWING TABLE REFLECTS THE COMPONENTS OF COMPREHENSIVE INCOME UNDER U.S.
GAAP
AMOUNTS IN NOK 1000 1999 1998
------------------- ------- ------
Net income.................................................. 129,631 55,024
Translation adjustments..................................... 17,849 -621
------- ------
Comprehensive income........................................ 147,480 54,403
------- ------
(A) MARKETABLE SECURITIES
Under Norwegian GAAP, the Company's long-term investments in marketable
securities are recorded at cost. The cost basis of the individual security shall
be written down to fair value as a new cost basis and the amount of the
writedown shall be included in earnings only if the decline in fair value of
these securities is judged to be permanent
Under U.S. GAAP, such securities that are available for sale are carried at
fair value with unrealized gains or losses, net of tax, recorded as a separate
component of shareholders' equity. If the decline in fair value of these
securities is judged to be other than temporary, the cost basis of the
individual security shall be written down to fair value as a new cost basis and
the amount of the writedown shall be included in earnings.
(B) STOCK COMPENSATION
In accordance with Norwegian GAAP, the Company did not recognize
compensation expense for stock options granted to employees with no intrinsic
value. On the grant date, it was agreed that the exercise price of the options
would equal the quoted market price of the Company's stock and would increase by
1% per month until the date such options are exercised.
In accordance with U.S. GAAP, the measurement date for determining
compensation cost for stock options is the first date at which both the number
of shares the employee is entitled to receive and the exercise price of the
options are known. When the Company granted stock options, the number of shares
was known at the grant date, however, the exercise price to be paid was not
because it was not known when the employee would exercise the options.
Accordingly, variable grant accounting would apply under U.S. GAAP and the
intrinsic value of the options at the end of each reporting period, based on a
presumed exercise price and the quoted market price of the Company's stock,
would be calculated and recorded as compensation expense over the vesting
period.
F-18
92
PROXIMA GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
THREE YEARS ENDED DECEMBER 31, 1999
In accordance with Norwegian GAAP, the Company did not recognize
compensation expense for shares issued to employees at a price below the quoted
market price of the Company's stock.
In accordance with U.S. GAAP, the intrinsic value of such shares would be
calculated and recorded as compensation expense over the vesting period.
(C) BUSINESS COMBINATIONS
In accordance with Norwegian GAAP, purchase price adjustments, which are
broadly defined, and the related allocation to the fair value of the net assets
acquired are recorded in connection with purchase business combinations.
In accordance with U.S. GAAP, certain purchase price adjustments, such as
provisions for restructuring, are narrowly defined and are not recorded unless
specific criteria are met. The basis for goodwill and related amortization would
be adjusted accordingly under U.S. GAAP.
The following illustrates the net effect of the business combination
differences on the financial statement line items:
DECEMBER 31,
------------------
1999 1998
SHAREHOLDERS EQUITY ------- -------
Deferred tax asset..................................... -7078
Goodwill............................................... -60,311 -69,209
Inventories............................................ 11,125 7,777
Accrued expenses....................................... 6,578 10,552
------- -------
Effect on shareholders equity.......................... -49,686 -50,880
------- -------
YEAR ENDED DECEMBER 31,
------------------------
1999 1998
---------- ----------
Cost of goods sold..................................... 2,929 -13,454
Personnel expenses..................................... -929 -5,285
Goodwill amortization.................................. 4,967 3,405
Other operating expenses............................... -3,796 -5,210
------- -------
Effect on net income................................... 3,171 -20,544
------- -------
(D) PROPERTY AND EQUIPMENT
In accordance with Norwegian GAAP, the Company records certain tangible
fixed assets at historical cost less accumulated depreciation. Such assets have
estimated useful lives between 3 and 5 years. Similar costs with estimated
useful lives less than 3 years do not qualify as tangible fixed assets and are
expensed as incurred.
In accordance with U.S. GAAP, all tangible fixed assets are recorded at
historical cost less accumulated depreciation.
(E) TAX EFFECTS OF U.S. GAAP ADJUSTMENTS
The tax adjustment includes the income tax effects of U.S. GAAP
adjustments, where appropriate.
F-19
93
PROXIMA GROUP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
THREE YEARS ENDED DECEMBER 31, 1999
NOTE 18 -- SUBSEQUENT EVENTS
Proxima ASA and In Focus Systems Inc. (In Focus) announced March 6, 2000
that they had entered into a definitive agreement to merge the activity of the
two entities. Technically, In Focus will make a public exchange offer to all
shareholders of Proxima. The combined company will be called "InFocus
Corporation" and will continue to market multimedia solutions under all three of
its popular brand names: In Focus, PROXIMA and ASK. The proposed transaction
calls for Proxima shareholders to exchange each of their shares for 0.3615
shares of In Focus. Following the business combination, Proxima shareholders
will comprise approximately 38% of the new company and In Focus shareholders
approximately 62%.
In Focus will apply for a secondary listing on the Oslo Stock Exchange. The
Board of Directors of both In Focus and Proxima has unanimously approved the
business combination. The transaction is expected to be consummated in the
second quarter of 2000, subject to the holders of more than 90% of Proxima's
outstanding shares accepting the offer; approval of In Focus shareholders; a
number of regulatory approvals and other customary closing conditions.
F-20
94
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined statements of operations data
for each of the years in the three year period ended December 31, 1999, and the
unaudited pro forma combined balance sheet data as of December 31, 1999, give
the pro forma effect of the proposed combination of In Focus Systems, Inc. and
Proxima ASA on a pooling-of-interests accounting basis. The pro forma financial
data should be read in conjunction with the accompanying financial information
with respect to Proxima ASA and the financial information incorporated by
reference in this proxy statement with respect to In Focus Systems, Inc. See
"Additional Information for Shareholders--Where You Can Find More Information"
on page 67. The following anticipated events have not been included in the
Unaudited Pro Forma Combined Financial Statements: (1) share exchange-related
expenses which will be recorded after consummation of the share exchange, which
is expected to occur during the second quarter of fiscal 2000; and (2) the
positive effect of potential cost savings which may be achieved subsequent to
the share exchange.
F-21
95
IN FOCUS SYSTEMS, INC.
UNAUDITED PROFORMA COMBINED BALANCE SHEET
DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
IN
FOCUS PROXIMA ADJUSTMENTS PRO FORMA
-------- -------- ----------- ---------
ASSETS
Current Assets:
Cash and cash equivalents....................... $ 50,764 $ 41,063 $-- $ 91,827
Marketable securities -- held to maturity....... 21,746 -- -- 21,746
Accounts receivable............................. 86,400 62,889 -- 149,289
Inventories, net................................ 38,990 27,706 -- 66,696
Income taxes receivable......................... 2,394 -- -- 2,394
Deferred income taxes........................... 7,222 8,404 -- 15,626
Other current assets............................ 4,281 3,068 -- 7,349
-------- -------- --- --------
Total Current Assets....................... 211,797 143,130 -- 354,927
Marketable securities -- held to maturity............ 6,790 -- -- 6,790
Property and equipment............................... 10,254 5,234 -- 15,488
Deferred income taxes................................ 2,562 1,473 -- 4,035
Goodwill............................................. -- 16,696 -- 16,696
Other assets, net.................................... 3,192 61 -- 3,253
-------- -------- --- --------
Total Assets............................... $234,595 $166,594 $-- $401,189
======== ======== === ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable................................ $ 45,536 $ 38,483 $-- $ 84,019
Payroll and related benefits payable............ 6,168 2,515 -- 8,683
Income taxes payable............................ -- 5,741 -- 5,741
Marketing incentives payable.................... 7,441 4,426 -- 11,867
Accrued warranty................................ 3,758 4,981 -- 8,739
Short term bank debt............................... -- 701 -- 701
Other current liabilities....................... 676 2,987 -- 3,663
-------- -------- --- --------
Total Current Liabilities.................. 63,579 59,834 -- 123,413
Other Long-Term Liabilities.......................... 1,253 31 -- 1,284
Shareholders' Equity:
Common stock.................................... 58,618 12,749 -- 71,367
Additional paid-in capital...................... 14,911 58,401 -- 73,312
Other comprehensive income (loss)............... -- (5,410) -- (5,410)
Retained earnings............................... 96,234 40,989 -- 137,223
-------- -------- --- --------
Total Shareholders' Equity................. 169,763 106,729 -- 276,492
-------- -------- --- --------
Total Liabilities and Shareholders'
Equity................................... $234,595 $166,594 $-- $401,189
======== ======== === ========
The accompanying notes are an integral part of these combined statements.
F-22
96
IN FOCUS SYSTEMS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
IN
FOCUS PROXIMA ADJUSTMENTS PRO FORMA
-------- -------- ----------- ---------
Revenue.............................................. $390,691 $297,828 $-- $688,519
Cost of sales........................................ 275,368 225,301 -- 500,669
-------- -------- --- --------
Gross profit......................................... 115,323 72,527 -- 187,850
Operating expenses:
Marketing and sales................................ 48,213 28,430 -- 76,643
Research and development........................... 21,013 7,304 -- 28,317
General and administrative......................... 10,299 12,115 -- 22,414
-------- -------- --- --------
79,525 47,849 -- 127,374
-------- -------- --- --------
Income from operations............................... 35,798 24,678 -- 60,476
Other income (expense):
Interest expense................................... -- (980) -- (980)
Interest income.................................... 2,733 1,506 -- 4,239
Other, net......................................... (394) 1,308 -- 914
-------- -------- --- --------
2,339 1,834 -- 4,173
-------- -------- --- --------
Income before income taxes........................... 38,137 26,512 -- 64,649
Provision for income taxes........................... 11,250 9,895 -- 21,145
-------- -------- --- --------
Net income........................................... $ 26,887 $ 16,617 $-- $ 43,504
======== ======== === ========
Basic net income per share........................... $ 1.20 $ 1.11 $-- $ 1.16
======== ======== === ========
Diluted net income per share......................... $ 1.13 $ 1.11 $-- $ 1.12
======== ======== === ========
Shares used for basic EPS............................ 22,445 14,945 -- 37,390
Shares used for diluted EPS.......................... 23,899 14,945 -- 38,844
The accompanying notes are an integral part of these combined statements.
F-23
97
IN FOCUS SYSTEMS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
IN
FOCUS PROXIMA ADJUSTMENTS PRO FORMA
-------- -------- ----------- ---------
Revenue.............................................. $306,663 $208,749 $-- $515,412
Cost of sales........................................ 242,123 158,967 -- 401,090
-------- -------- --- --------
Gross profit......................................... 64,540 49,782 -- 114,322
Operating expenses:
Marketing and sales................................ 40,561 21,748 -- 62,309
Research and development........................... 20,153 5,699 -- 25,852
General and administrative......................... 7,226 4,728 -- 11,954
-------- -------- --- --------
67,940 32,175 -- 100,115
-------- -------- --- --------
Income (loss) from operations........................ (3,400) 17,607 -- 14,207
Other income (expense):
Interest expense................................... (82) (1,027) -- (1,109)
Interest income.................................... 1,280 816 -- 2,096
Other, net......................................... (246) (2,853) -- (3,099)
-------- -------- --- --------
952 (3,064) -- (2,112)
-------- -------- --- --------
Income (loss) before income taxes.................... (2,448) 14,543 -- 12,095
Provision for (benefit from) income taxes............ (1,777) 7,253 -- 5,476
-------- -------- --- --------
Net income (loss).................................... $ (671) $ 7,290 $-- $ 6,619
======== ======== === ========
Basic net income (loss) per share.................... $ (0.03) $ 0.50 $-- $ 0.18
======== ======== === ========
Diluted net income (loss) per share.................. $ (0.03) $ 0.50 $-- $ 0.18
======== ======== === ========
Shares used for basic EPS............................ 22,170 14,690 -- 36,860
Shares used for diluted EPS.......................... 22,170 14,690 367 37,227
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IN FOCUS SYSTEMS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
IN
FOCUS PROXIMA ADJUSTMENTS PRO FORMA
-------- ------- ----------- ---------
Revenue............................................. $315,761 $85,572 $-- $401,333
Cost of sales....................................... 230,503 55,997 -- 286,500
-------- ------- --- --------
Gross profit........................................ 85,258 29,575 -- 114,833
Operating expenses:
Marketing and sales............................... 32,726 5,512 -- 38,238
Research and development.......................... 18,222 3,073 -- 21,295
General and administrative........................ 7,852 6,143 -- 13,995
-------- ------- --- --------
58,800 14,728 -- 73,528
-------- ------- --- --------
Income from operations.............................. 26,458 14,847 -- 41,305
Other income (expense):
Interest expense.................................. (79) (67) -- (146)
Interest income................................... 2,025 408 -- 2,433
Other, net........................................ (129) 856 -- 727
-------- ------- --- --------
1,817 1,197 -- 3,014
-------- ------- --- --------
Income before income taxes.......................... 28,275 16,044 -- 44,319
Provision for income taxes.......................... 8,225 5,322 -- 13,547
-------- ------- --- --------
Net income.......................................... $ 20,050 $10,722 $-- $ 30,772
======== ======= === ========
Basic net income per share.......................... $ 0.93 $ 0.81 $-- $ 0.88
======== ======= === ========
Diluted net income per share........................ $ 0.90 $ 0.81 $-- $ 0.87
======== ======= === ========
Shares used for basic EPS........................... 21,653 13,184 -- 34,837
Shares used for diluted EPS......................... 22,349 13,184 -- 35,533
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NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
NOTE A:
The historical statements of income for Proxima reflect the following
reclassifications and adjustments to conform to U.S. GAAP:
- Operating expenses and cost of sales have been reclassified from a
Norwegian statutory presentation to a functional expense classification
format that is consistent with In Focus's historical presentation.
- All Norwegian GAAP to U.S. GAAP reconciliation differences, as set forth
in the Notes to Proxima's historical audited financials statements, have
been fully reflected in the Proxima historical column in order to present
such amounts in accordance with U.S. GAAP.
All asset and liability amounts have been translated into U.S. dollars at
the exchange rates on the balance sheet date. Shareholders' equity amounts,
excluding other comprehensive loss, have been translated at historical exchange
rates. Other comprehensive loss represents cumulative foreign currency
translation adjustments. The income statement has been translated into U.S.
dollars using the average exchange rates for the year.
NOTE B:
The pro forma combined basic and diluted net income per share is based on
the combined weighted average number of common and common equivalent shares of
In Focus common stock and Proxima common stock for each period based on the
conversion ratio of .3615 shares of In Focus common stock for each share of
Proxima common stock. All common stock options are included in diluted net
income per share using the treasury stock method. The pro forma adjustment for
shares used in the diluted EPS calculation in 1998 reflect the dilutive effect
of In Focus common stock options which were considered antidilutive in In
Focus's historical statement of income due to losses.
NOTE C:
No significant adjustments are anticipated to conform the accounting
policies of the combined company, other than as already described in Note A.
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ANNEX A
BUSINESS COMBINATION AGREEMENT
BY AND AMONG
IN FOCUS SYSTEMS, INC.
AND
PROXIMA ASA
DATED AS OF MARCH 5, 2000
101
BUSINESS COMBINATION AGREEMENT
BUSINESS COMBINATION AGREEMENT, dated as of March 5, 2000 (the
"Agreement"), by and between IN FOCUS SYSTEMS, INC., an Oregon corporation ("In
Focus"), and PROXIMA ASA, a corporation organized under the laws of the country
of Norway ("Proxima").
RECITALS
A. The Board of Directors of In Focus and the Board of Directors of Proxima
have each determined that it is advisable, and in the best interest of their
respective stockholders, to combine their respective businesses under the
ownership of one company;
B. The Board of Directors of In Focus and the Board of Directors of Proxima
have, in accordance with the laws of their respective jurisdictions of
organization, approved the business combination transaction contemplated by this
Agreement, whereby In Focus will make a public tender offer to acquire all of
the outstanding ordinary shares of Proxima in exchange for shares of common
stock of In Focus;
C. Concurrently with the execution and delivery of this Agreement and as a
condition to In Focus's willingness to enter into this Agreement, certain
shareholders of Proxima are entering into Irrevocable Commitments to Sell
Shares, substantially in the form attached hereto as Exhibit A, pursuant to
which each such shareholder has agreed to tender all ordinary shares of Proxima
beneficially owned by such shareholder to In Focus pursuant to the Exchange
Offer referred to herein;
D. The Board of Directors of Proxima has resolved and agreed to recommend
that holders of all of the issued and outstanding ordinary shares of Proxima
tender their shares to In Focus pursuant to the Exchange Offer referred to
herein;
E. In Focus and Proxima desire to make certain representations, warranties
and agreements in connection with the transactions contemplated by this
Agreement, and to prescribe various conditions to the consummation of such
transactions;
F. For financial reporting purposes the parties intend that the
transactions contemplated by this Agreement will be accounted for as a
"pooling-of-interests" transaction under United States generally accepted
accounting principles ("US GAAP"); and
G. All capitalized terms used in this Agreement and not elsewhere defined
shall have the respective meanings ascribed to them in Annex A hereto;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
THE EXCHANGE OFFER
1.1 THE EXCHANGE OFFER.
(a) As soon as reasonably practicable after the public announcement of the
execution of this Agreement, In Focus shall commence, in compliance with
Norwegian law, a public tender offer (the "Exchange Offer") to the holders of
ordinary shares, par value NOK 2 per share, of Proxima (the "Proxima Ordinary
Shares"), to exchange, subject to the Exchange Offer Conditions, .3615 share of
common stock, no par value, of In Focus (the "In Focus Common Stock"), for each
Proxima Ordinary Share held by such holder (such .3615-for-one exchange to be
offered pursuant to this Section 1.1(a), with such adjustments as may be
required pursuant to Section 1.6, being referred to herein as the "Exchange
Offer Ratio"). The maximum number of shares of In Focus Common Stock to be
issued in exchange for the acquisition by In Focus of all Proxima Ordinary
Shares outstanding on a Fully Diluted Basis shall be 15,825,000, with such
adjustments as may be required pursuant to Section 1.6.
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(b) The obligation of In Focus to consummate the Exchange Offer and issue
In Focus Common Stock in exchange for the Proxima Ordinary Shares tendered
pursuant to the Exchange Offer, shall be subject only to satisfaction or waiver
of (i) the condition that there shall have been validly tendered and available
for purchase, in accordance with the terms of the Exchange Offer, prior to the
Exchange Offer Expiration Date, a number of Proxima Ordinary Shares that
represents more than 90% of the outstanding Proxima Ordinary Shares (the
"Minimum Condition"), and (ii) the other conditions set forth in Article VII
(together with the Minimum Condition, the "Exchange Offer Conditions").
(c) The expiration date of the Exchange Offer shall initially be the date
which is 30 calendar days after commencement of the Exchange Offer or such other
date mutually agreeable to In Focus and Proxima (such date, as it may be
extended as provided herein, the "Exchange Offer Expiration Date"). In Focus
shall have the right, in its sole discretion and without Proxima's consent, to
extend the expiration date of the Exchange Offer, at any time and from time to
time, but in no event shall the Exchange Offer Expiration Date be later than the
Outside Termination Date. If at any scheduled Exchange Offer Expiration Date any
of the Exchange Offer Conditions have not been satisfied or waived by In Focus,
at Proxima's written request delivered to In Focus no later than such Exchange
Offer Expiration Date, In Focus shall extend the Exchange Offer until a date not
later than the Outside Termination Date.
(d) Subject to the satisfaction or waiver of the Exchange Offer Conditions,
In Focus shall, at the earliest practicable time following the Exchange Offer
Expiration Date and after it is permitted to do so under applicable law, accept
for exchange, by written notice to the Exchange Agent, and shall exchange, all
Proxima Ordinary Shares validly tendered (the "Share Exchange") and shall effect
the Share Exchange in accordance with applicable law (the date In Focus gives
such written notice to the Exchange Agent being referred to herein as the
"Effective Time").
(e) No holder of Proxima Ordinary Shares will be entitled to receive
fractional shares of In Focus Common Stock pursuant to the Exchange Offer. In
lieu thereof, In Focus shall round to the next highest whole number the number
of shares issuable to such holders otherwise entitled to a fractional share.
1.2 NORWEGIAN EXCHANGE OFFER DOCUMENTS. As soon as reasonably practicable
after the public announcement of this Agreement, In Focus shall prepare and file
with the Oslo Stock Exchange ("OSE") a preliminary prospectus/offer document
(together with all amendments and supplements thereto, the "Norwegian
Prospectus/Offer Document") with respect to the Exchange Offer, and shall use
its reasonable best efforts to have the Norwegian Prospectus/Offer Document
cleared by the OSE as promptly as practicable after the filing. The Norwegian
Prospectus/Offer Document shall contain an offer to exchange, listing
particulars, a form of acceptance, and any other documents required to be filed
pursuant to the Norwegian Securities Trading Act of 1997 (the "Securities
Trading Act") and the Norwegian Stock Exchange Regulations No. 30 of January 17,
1994 (the Norwegian Prospectus/Offer Document and such other documents, together
with all amendments and supplements thereto, are sometimes collectively referred
to in this Agreement as the "Exchange Offer Documents"). The Norwegian
Prospectus/Offer Document shall also contain the recommendation of the Board of
Directors of Proxima that the holders of the Proxima Ordinary Shares accept the
Exchange Offer and tender their Proxima Ordinary Shares to In Focus thereunder.
Proxima agrees to provide to In Focus, as promptly as practicable, such
information concerning its stockholders, business, financial statements and
affairs as may be reasonably required or appropriate for inclusion in the
Exchange Offer Documents and to cause its counsel and auditors to cooperate with
In Focus's counsel and auditors in the preparation of the Exchange Offer
Documents. In Focus shall use commercially reasonable efforts to cause the
Exchange Offer Documents to be disseminated to the holders of Proxima Ordinary
Shares, as and to the extent required by applicable Norwegian law, as promptly
as practicable after (i) the Norwegian Prospectus/Offer Document has been
cleared by the OSE, and (ii) the Norwegian Tax Approval has been obtained and is
in full force and effect, provided Proxima may waive this condition or require
the offer to proceed subject to this condition. Proxima and its counsel shall be
given an opportunity to review and comment on the Exchange Offer Documents prior
to their being filed with the OSE, and Proxima shall be promptly advised of and
consulted with respect to any comments that In Focus receives from the OSE or
its staff with respect to the Exchange Offer Documents promptly after receipt of
any such comments.
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1.3 MANDATORY OFFER; COMPULSORY ACQUISITION. If In Focus acquires or
holds, as a result of the Exchange Offer or otherwise, a number of Proxima
Ordinary Shares representing more than 40% of the voting rights in Proxima, then
In Focus will commence a mandatory offer (the "Mandatory Offer") pursuant to the
Securities Trading Act. If In Focus acquires or holds more than 90% of the total
issued shares and voting rights in Proxima then outstanding, after having made
the Mandatory Offer, In Focus will, pursuant to Section 4-25 of the Norwegian
Public Limited Companies Act (the "Companies Act"), commence a process leading
to a compulsory acquisition for cash of all Proxima Ordinary Shares not
theretofore acquired by In Focus at a price to be determined in accordance with
the Companies Act.
1.4 PROXIMA ACTION.
(a) Proxima hereby approves and consents to the Exchange Offer and
represents that the Board of Directors of Proxima, at a meeting duly called and
held at which a quorum was present throughout, has unanimously (i) determined
that this Agreement and the transactions contemplated hereby, including the
Exchange Offer, are fair to and in the best interest of the holders of the
Proxima Ordinary Shares, (ii) approved and adopted this Agreement and the
transactions contemplated hereby, and (iii) recommended that the holders of the
Proxima Ordinary Shares accept the Exchange Offer, and tender their Proxima
Ordinary Shares thereunder to In Focus.
(b) Proxima shall promptly, at In Focus's request, cause its transfer agent
to furnish In Focus with mailing labels containing the names and addresses of
all record holders of Proxima Ordinary Shares and with security position
listings of the Proxima Ordinary Shares held in stock depositories, each as of a
recent date, together with all other available listings and computer files
containing names, addresses, and security position listings of record holders
and beneficial holders of the Proxima Ordinary Shares. Proxima shall furnish In
Focus with such additional information, including, without limitation, updated
listings and files of stockholders, mailing labels and security position
listings and such other assistance as In Focus or its agents may reasonably
request in communicating the Exchange Offer to record and beneficial holders of
the Proxima Ordinary Shares.
1.5 EXCHANGE AGENT. In Focus shall appoint a bank or trust company or
other independent financial institution to act as exchange agent for the
Exchange Offer (the "Exchange Agent").
1.6 ANTI-DILUTION PROTECTION FOR EXCHANGE OFFER RATIO. If, between the
date of this Agreement and the Effective Time, the outstanding shares of In
Focus Common Stock shall have been changed into a different number of shares or
a different class by reason of any reclassification, recapitalization, stock
split, combination or exchange of shares, or a stock dividend or dividend
payable in any other securities shall be declared with a record date within such
period, or any similar event shall have occurred, the Exchange Offer Ratio shall
be appropriately adjusted to provide to the holders of the Proxima Ordinary
Shares the same economic effect as contemplated by this Agreement prior to such
event.
ARTICLE II
COMPOSITION OF IN FOCUS BOARD AFTER EFFECTIVE TIME
2.1 COMPOSITION OF BOARD OF DIRECTORS OF IN FOCUS.
(a) Without the intention to interfere with the rights and powers of the In
Focus shareholders, In Focus and Proxima agree that after the Effective Time and
until the first annual meeting of the In Focus shareholders following the
Effective Time, the Board of Directors of In Focus shall be comprised of the
following individuals:
EXISTING DIRECTORS NEW DIRECTORS
John V. Harker Ole J. Fredriksen
Peter D. Behrendt Svein A. Jacobsen
Michael R. Hallman Einar J. Greve
Nobuo Mii
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(b) The current Board of Directors of In Focus shall, at or prior to the
Effective Time, take all action necessary to increase the size of the Board of
Directors from four members to seven members, and shall take all such other
action as necessary to cause Ole Fredriksen, Svein Jacobsen and Einar Greve to
be appointed, as of the Effective Time, to fill the three new seats on the Board
of Directors.
2.2 CO-CHAIRMEN OF IN FOCUS. In Focus and Proxima agree that after the
Effective Time and until the first annual meeting of the Board of Directors of
In Focus following the Effective Time, John V. Harker shall serve as
Co-Chairman, President and CEO of In Focus, and Ole Fredriksen shall serve as
Co-Chairman of In Focus. The current Board of Directors of In Focus shall, at or
prior to the Effective Time, take all necessary action to create Co-Chairmen
positions, and shall take all such other action as necessary to cause John V.
Harker and Ole Fredriksen to be appointed, effective upon consummation of the
Share Exchange, to fill such Co-Chairmen positions.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Except as set forth in the In Focus Disclosure Schedule or as otherwise
contemplated by this Agreement, In Focus hereby represents and warrants to
Proxima, and except as set forth in the Proxima Disclosure Schedule or as
otherwise contemplated by this Agreement, Proxima hereby represents and warrants
to In Focus, in each case as set forth in this Article III and as of the date of
this Agreement, with the party making such representations and warranties being
referred to as the "Representing Party." Notwithstanding the foregoing, any
representation or warranty which expressly refers to In Focus or Proxima is
being made solely by In Focus or Proxima, as the case may be.
3.1 CORPORATE ORGANIZATION. The Representing Party is a corporation duly
incorporated, validly existing and in good standing (to the extent the concept
of "good standing" exists) under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to own, operate and
lease all of its properties and assets and to carry on its business as it is now
being conducted, except where the failure to be in good standing would not
reasonably be expected to have a Material Adverse Effect. The Representing Party
is duly qualified to do business and is in good standing (to the extent the
concepts of "qualification to do business" and "good standing" exist) in all
jurisdictions where it is required to be so qualified, except in such
jurisdictions, if any, where the failure to be so qualified or in good standing
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The Representing Party, its Subsidiaries and, to their
knowledge, their respective employees hold all permits, licenses, variances,
exemptions, orders, registrations and approvals of all Government Entities which
are required for the operation of the businesses of the Representing Party and
its Subsidiaries as currently conducted (the "Company Permits"), except where
the failure to have any such Company Permits individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect. In Focus has
made available to Proxima true and complete copies of its Articles of
Incorporation and Bylaws and Proxima has made available to In Focus a true and
complete copy of its Articles of Association and an English translation thereof.
3.2 SUBSIDIARIES.
(a) Each Subsidiary of the Representing Party is a corporation duly
organized, validly existing and in good standing (to the extent the concept of
"good standing" exists) under the laws of its jurisdiction of incorporation, has
the corporate power and authority to own, operate or lease all of its properties
and assets and to carry on its business as it is now being conducted and is duly
qualified to do business and is in good standing (to the extent the concepts of
"qualification to do business" and "good standing" exist) in each jurisdiction
where it is required to be so qualified, except in such jurisdictions, if any,
where the failure to be so organized, existing, in good standing or qualified
would not reasonably be expected to have a Material Adverse Effect. Each
Representing Party has made available to the other Representing Party a true and
complete copy of the certificate of incorporation, bylaws, articles of
association or other similar governing documents for each of its Subsidiaries.
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(b) Each Representing Party is, directly or indirectly, the record and
beneficial owner of that percentage of the outstanding shares of capital stock
of each of its Subsidiaries which is set forth opposite the name of each such
Subsidiary in Section 3.2(b) of the Representing Party's Disclosure Schedule.
There are no outstanding (i) securities of the Representing Party or any of its
Subsidiaries convertible into or exchangeable or exercisable for shares of
capital stock or other voting securities or ownership interests in any of the
Representing Party's Subsidiaries, (ii) warrants, calls, options or other rights
to acquire from the Representing Party or any of its Subsidiaries, or any
obligations of the Representing Party or any of its Subsidiaries to issue, any
capital stock, voting securities or other ownership interests in, or any
securities convertible into or exchangeable or exercisable for, any capital
stock, voting securities or ownership interests in any of the Representing
Party's Subsidiaries, or (iii) obligations of the Representing Party or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any outstanding
securities of the Representing Party's Subsidiaries or to issue, deliver or
sell, or cause to be issued, delivered or sold, any such securities. All of the
outstanding shares of capital stock of each of the Representing Party's
Subsidiaries have been validly issued and are fully paid, non-assessable and
free of preemptive rights, and the shares owned, directly or indirectly, by such
Representing Party are owned free and clear of all Encumbrances, other than
restrictions on transfer arising under applicable securities laws.
3.3 CAPITAL STOCK.
(a) Section 3.3(a) of the Representing Party's Disclosure Schedule sets
forth as of the date of this Agreement:
(i) the number of authorized shares of each class or series of capital
stock of the Representing Party;
(ii) the number of shares of each class or series of capital stock of
the Representing Party which are issued and outstanding;
(iii) the number of shares of each class or series of capital stock
which are held in the treasury of such Representing Party;
(iv) the number of shares of each class or series of capital stock of
the Representing Party which are reserved for issuance, indicating each
particular reservation;
(v) the number of shares of each class or series of capital stock of
such Representing Party which are subject to stock options or other rights
to purchase or receive capital stock granted under such Representing
Party's stock option or other stock based employee benefit plans,
indicating the name of the plan, identifying the option or right holder by
name, such person's jurisdiction of residence, the date of grant and the
exercise price thereof; and
(vi) on Proxima's Disclosure Schedule, the identity of, and number of
Proxima Ordinary Shares held by, each U.S. holder (as such term is defined
in Rule 800(h) of the Securities Act) as registered in the Norwegian
register of Proxima Ordinary Shares.
(b) Except as disclosed in Section 3.3(a) of each Representing Party's
Disclosure Schedule, there are no authorized, issued, reserved for issuance or
outstanding (i) shares of capital stock or voting securities of the Representing
Party, (ii) securities of the Representing Party convertible into or
exchangeable for shares of capital stock or voting securities of the
Representing Party, (iii) warrants, calls, options or other rights to acquire
from the Representing Party or any of its Subsidiaries, or any obligation of the
Representing Party or any of its Subsidiaries to issue, any shares of capital
stock or voting securities or securities convertible into or exchangeable or
exercisable for capital stock or voting securities of the Representing Party,
and there are no outstanding obligations of the Representing Party to
repurchase, redeem or otherwise acquire any such securities or to issue, deliver
or sell, or cause to be issued, delivered or sold, any such securities.
3.4 AUTHORITY. The Representing Party has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution, delivery and performance of this Agreement by In Focus
and the consummation by In Focus of the transactions contemplated hereby have
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been duly authorized by the Board of Directors of In Focus, and, except for the
In Focus Stockholders' Approval, no other corporate action on the part of In
Focus is necessary to authorize this Agreement or the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by Proxima and
the consummation by Proxima of the transactions contemplated hereby have been
duly authorized by the Board of Directors of Proxima, and no other corporate
action on the part of Proxima is necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Representing Party and (assuming this Agreement
constitutes a valid and binding obligation of the other Representing Party) is a
valid and binding agreement of the Representing Party, enforceable against such
Representing Party in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar Laws relating to the enforcement of
creditors' rights generally and by general principles of equity.
3.5 CONSENTS AND APPROVALS; NO VIOLATION.
(a) Except as disclosed in Section 3.5 of each Representing Party's
Disclosure Schedule, no filing with, and no permit, authorization, consent or
approval of, any Governmental Entity or other public or private third party is
necessary or required under the terms, conditions or provisions of any Law or
Order of any Governmental Entity or any Contract to which the Representing Party
or any of its Subsidiaries is a party or by which the Representing Party or any
of its Subsidiaries or any of their respective assets or properties is bound for
the execution, delivery and performance of this Agreement by the Representing
Party and the consummation by such Representing Party of the transactions
contemplated hereby, other than such consents, approvals, actions, filings and
notices which the failure to make or obtain, as the case may be, individually or
in the aggregate, could not be reasonably expected to have a Material Adverse
Effect on the ability of the Representing Party to consummate the transactions
contemplated by this Agreement.
(b) Neither the execution, delivery or performance of this Agreement by the
Representing Party nor the consummation by such Representing Party of the
transactions contemplated hereby, will (i) violate any provision of the Articles
or Certificate of Incorporation, Bylaws, Articles of Association, or other
similar governing documents of the Representing Party or any of its
Subsidiaries, (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation, vesting, payment, exercise, acceleration,
suspension or revocation) under any of the provisions of any note, bond,
mortgage, deed of trust, security interest, indenture, license, sublicense,
contract, agreement, plan or other instrument or obligation of any kind
(collectively, "Contracts") to which the Representing Party or any of its
Subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound, (iii) violate any statute, law, rule,
regulation or ordinance (collectively, "Laws"), or any judgment, decree, order,
writ, injunction, permit or license (collectively, "Orders") of any Governmental
Entity applicable to the Representing Party or its Subsidiaries or any of their
respective properties or assets, (iv) result in the creation or imposition of
any Encumbrance on any asset of the Representing Party or any of its
Subsidiaries, or (v) cause the suspension or revocation of any permit, license,
governmental authorization, consent or approval necessary for the Representing
Party or any of its Subsidiaries to conduct its business as currently conducted,
except in the case of clauses (ii), (iii), (iv) and (v) for violations,
breaches, defaults, terminations, cancellations, accelerations, creations,
impositions, suspensions or revocations which would not be reasonably expected
to have, individually or in the aggregate, a Material Adverse Effect or prevent
the consummation of the transactions contemplated hereby.
3.6 SEC FILINGS; OSE FILINGS; FINANCIAL STATEMENTS.
(a) Proxima has received prior to the execution of this Agreement a true
and complete copy of each form, report, schedule, registration statement,
definitive proxy statement and other document (together with all amendments
thereof and supplements thereto) filed by In Focus or any of its Subsidiaries
with the U.S. Securities and Exchange Commission ("SEC") since January 1, 1997,
which are all the documents (other than preliminary material) that In Focus and
its Subsidiaries were required to file with the SEC
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since such date, and In Focus will promptly deliver to Proxima a true and
complete copy of all additional filings made by In Focus with the SEC between
the date hereof and the Effective Time, specifically including, without
limitation, In Focus's annual report on Form 10-K for the fiscal year ended
December 31, 1999 (collectively, as such documents have since the time of their
filing been amended or supplemented, the "In Focus SEC Filings"). As of their
respective dates, the In Focus SEC Filings (i) complied as to form in all
material respects with the requirements of the Securities Act of 1933, as
amended, and the rules and regulations thereunder (the "Securities Act"), or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the case
may be, and (ii) did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and
unaudited interim consolidated financial statements (including, in each case,
the notes, if any, thereto) included in the In Focus SEC Filings (the "In Focus
Financial Statements") complied as to form in all material respects with the
published rules and regulations of the SEC as of the date thereof with respect
thereto, were prepared in accordance with US GAAP applied on a consistent basis
during the periods involved (except as may be indicated therein or in the notes
thereto and except with respect to unaudited statements as permitted by Form
10-Q of the SEC) and fairly present (subject, in the case of the unaudited
interim financial statements, to normal, recurring year-end audit adjustments
which would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect) the consolidated financial position of In
Focus and its consolidated subsidiaries as at the respective dates thereof and
the consolidated results of their operations and cash flows for the respective
periods then ended. Each Subsidiary of In Focus is treated as a consolidated
subsidiary of In Focus in the In Focus Financial Statements for all periods
covered thereby.
(b) In Focus has received prior to the execution of this Agreement a true
and complete copy of each form, report, schedule, registration statement,
definitive proxy statement and other document (together with all amendments
thereof and supplements thereto) filed by Proxima or any of its Subsidiaries
with the OSE since January 1, 1997, which are all the documents (other than
preliminary material) that Proxima and its Subsidiaries were required to file
with the OSE since such date, and Proxima will promptly deliver to In Focus a
true and complete copy of all additional filings made by Proxima with the OSE
between the date hereof and the Effective Time, specifically including, without
limitation, Proxima's annual report, including audited financial statements, for
the fiscal year ended December 31, 1999 (collectively, as such documents have
since the time of their filing been amended or supplemented, the "Proxima OSE
Filings"). As of their respective dates, the Proxima OSE Filings (i) complied as
to form in all material respects with the requirements of the OSE and the
Securities Trading Act, and the rules and regulations thereunder, and (ii) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and unaudited interim
consolidated financial statements (including, in each case, the notes, if any,
thereto) included in the Proxima OSE Filings (the "Proxima Financial
Statements") complied as to form in all material respects with the published
rules and regulations of the OSE as of the date thereof with respect thereto,
were prepared in accordance with Norwegian generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be indicated therein or in the notes thereto) and fairly present (subject,
in the case of the unaudited interim financial statements, to normal, recurring
year-end audit adjustments which would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect) the consolidated
financial position of Proxima and its consolidated subsidiaries as at the
respective dates thereof and the consolidated results of their operations as at
the respective dates thereof and the consolidated results of their operations
and cash flows for the respective periods then ended. Each Subsidiary of Proxima
is treated as a consolidated subsidiary of Proxima in the Proxima Financial
Statements for all periods covered thereby.
3.7 ABSENCE OF CHANGES. The In Focus SEC Filings and the Proxima OSE
Filings are referred to, as applicable, as the "Representing Party's Filings,"
and the In Focus Financial Statements and the Proxima Financial Statements are
referred to, as applicable, as the "Representing Party's Financial Statements."
Except as disclosed in the Representing Party's Filings and except as
contemplated by this
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Agreement, since the date of the Representing Party's latest financial
statements included in such Representing Party's Filings, the Representing Party
and its Subsidiaries have conducted their respective businesses in the ordinary
course consistent with past practice and there has not been:
(a) any Material Adverse Effect;
(b) any material change in the method of accounting or accounting practice
of the Representing Party and its Subsidiaries, other than changes required by
applicable generally accepted accounting principles;
(c) any direct or indirect redemption, purchase or other acquisition by the
Representing Party or its Subsidiaries of any shares of capital stock of the
Representing Party or any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock or property) in respect of such
capital stock;
(d) (i) any increase in the compensation payable or to become payable by
the Representing Party or any of its Subsidiaries to any of their respective
officers or employees, other than increases in the ordinary course of business
and substantially consistent with past practice, increases required by union
contracts and increases specifically approved in writing by the other
Representing Party, or (ii) any increase or modification in any bonus, pension,
insurance or other employee benefit, plan, payment or arrangement made to, for
or with respect to employees not in the ordinary course of business and
consistent with past practice, other than changes required by applicable law, or
(iii) entry into or amendment of any employment agreement or other employment
arrangement with any employee of the Representing Party or any of its
Subsidiaries which employment agreement or amendment provides compensation and
benefits in excess of $150,000 to any individual in any 12-month period; or
(e) any issuance of shares of capital stock other than pursuant to stock
options or other similar stock based employee benefit awards outstanding as of
the date of the most recent Representing Party's Filing.
3.8 ABSENCE OF UNDISCLOSED LIABILITIES. There are no liabilities of the
Representing Party or any of its Subsidiaries of any kind whatsoever, whether or
not accrued and whether or not contingent or absolute, determined or
determinable, that are material to such Representing Party and its Subsidiaries
taken as a whole, other than (a) liabilities disclosed or provided for in such
Representing Party's Financial Statements, (b) liabilities disclosed in the
Representing Party's Filings or disclosed as liabilities on the Representing
Party's Disclosure Schedule, (c) liabilities incurred on behalf of the
Representing Party in connection with this Agreement and the transactions
contemplated hereby, (d) liabilities not required to be disclosed on the face of
such party's balance sheet under applicable generally accepted accounting
principles, and (e) liabilities incurred in the ordinary course of business
consistent with past practice since the date of the Representing Party's latest
financial statements included in such Representing Party's Filings, none of
which, either individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect.
3.9 LITIGATION. Except as set forth in Section 3.9 of each Representing
Party's Disclosure Schedule, there are no claims, actions, suits, proceedings or
investigations pending or, to the knowledge of the Representing Party,
threatened against such Representing Party or any of its Subsidiaries or any of
their respective assets before any Governmental Entity. The claims, actions,
suits, proceedings or investigations disclosed in the Representing Party's
Disclosure Schedule, if adversely determined, would not reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect.
Neither the Representing Party nor any of its Subsidiaries is subject to any
outstanding order, writ, injunction or decree which could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.
3.10 TAXES. The Representing Party and each of its Subsidiaries have
timely filed or caused to be filed (or there has been timely filed on their
behalf) all income Tax Returns and all other material Tax Returns required by
applicable law to be filed on or prior to the date hereof, or requests for
extensions to file such Tax Returns have been filed, granted and have not
expired, except to the extent that such failures to file or to have extensions
granted that remain in effect, individually or in the aggregate, would not
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reasonably be expected to have a Material Adverse Effect. All such Tax Returns
are complete and accurate in all material respects. The Representing Party and
each of its Subsidiaries have paid (or there has been paid on their behalf) all
Taxes shown as due on such Tax Returns, and the most recent Representing Party's
Financial Statements contained in the Representing Party's Filings reflect an
adequate liability in accordance with applicable generally accepted accounting
principles consistently applied for all Taxes payable by the Representing Party
and its Subsidiaries for all taxable periods and portions thereof accrued
through the date of such financial statements. No deficiencies for any Tax have
been proposed or asserted in writing or assessed, in each case by any taxing
authority, against the Representing Party or any of its Subsidiaries for which
there are not adequate liabilities accrued on the latest balance sheet included
in the Representing Party's Financial Statements. The Representing Party nor any
of its Subsidiaries are a party to any agreement, contract or arrangement that
would result, separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Code Section 280G. The Representing
Party and all of its Subsidiaries have complied in all material respects with
all transfer pricing Laws of the United States and all other jurisdictions in
which the Representing Party or its Subsidiaries has conducted, or is presently
conducting, business.
3.11 EMPLOYEE BENEFIT PLANS.
(a) Section 3.11 of each Representing Party's Disclosure Schedule sets
forth a true and complete list of each material deferred compensation, incentive
compensation, stock purchase, stock option and other equity compensation plan,
program, agreement or arrangement; each material severance or termination pay,
medical, surgical, hospitalization, life insurance and other "welfare" plan,
fund or program (within the meaning of Section 3(1) of ERISA); each material
profit-sharing, stock bonus or other "pension" plan, fund or program (within the
meaning of Section 3(2) of ERISA); each material employment, termination or
severance agreement; and each other material employee benefit plan, fund,
program, agreement or arrangement, in each case that is sponsored, maintained or
contributed to or required to be contributed to by the Representing Party or by
any trade or business, whether or not incorporated (an "ERISA Affiliate"), that
together with the Representing Party would be deemed a "single employer" within
the meaning of Section 4001(b) of ERISA, or to which the Representing Party or
an ERISA Affiliate is a party, whether written or oral, for the benefit of any
employee or former employee of the Representing Party or any of the Representing
Party's Subsidiaries and whether or not subject to ERISA (with respect to a
Representing Party, the "Plans").
(b) Except as would not reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect, each Plan has been administered
and operated in compliance with its terms and applicable law in all respects,
including, without limitation, in accordance with the Internal Revenue Code of
1986, as amended (the "Code"), and ERISA and the comparable provisions of any
foreign law.
(c) There are no liabilities of the Representing Party or any ERISA
Affiliate with respect to any Plan, other than (i) liabilities disclosed or
provided for in such Representing Party's Financial Statements, (ii) liabilities
incurred in the ordinary course of business since the date of the Representing
Party's Financial Statements, which do not have, individually or in the
aggregate, a Material Adverse Effect, and (iii) liabilities which, either
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
3.12 LABOR AND EMPLOYMENT MATTERS.
(a) Section 3.12 of each Representing Party's Disclosure Schedule sets
forth a true and complete list of each employment agreement or any other
arrangement or understanding (other than applicable law) with any employee that
provides for the payment of any consideration (including severance pay) by such
Representing Party or any of its Subsidiaries to such person as a result of the
consummation of any of the transactions contemplated by this Agreement, either
alone or in conjunction with the termination of such person's employment.
(b) (i) neither the Representing Party nor any of its Subsidiaries is a
party to, or bound by, any material collective bargaining agreement or other
material contract, agreement, arrangement or
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understanding with a labor union or labor organization; (ii) except as would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect or as set forth in the Representing Party's Disclosure Schedule,
there is no (1) unfair labor practice, labor dispute (other than routine
individual grievances) or labor arbitration proceeding pending or, to the
knowledge of the Representing Party, threatened against the Representing Party
or its Subsidiaries; (2) activity or proceeding by a labor union or
representative thereof to organize any employees of the Representing Party or
any of its Subsidiaries; or (3) lockout, strike, slowdown, work stoppage or, to
the knowledge of the Representing Party, threat thereof by or with respect to
such employees; and (iii) there has not been any adoption or amendment in any
material respect by the Representing Party or any of its Subsidiaries of any
material collective bargaining agreement or other contract, agreement,
arrangement or understanding with a labor union or labor organization. Each of
the Representing Party and its Subsidiaries is in compliance with all laws
regarding employment, employment practices, terms and conditions of employment
and wages, except for such noncompliance that individually or in the aggregate
would not reasonably be expected to have a Material Adverse Effect.
3.13 INFORMATION SUPPLIED. None of the information provided or to be
provided by the Representing Party specifically for inclusion or incorporation
by reference in (a) the Proxy Statement will, at the date the Proxy Statement is
first mailed to the In Focus's stockholders, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading, (b) the Exchange Offer Documents
will, at the time the Exchange Offer commences or at the Exchange Offer
Expiration Date, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading, or (c) any other filings submitted to the SEC or the OSE
in connection with the transactions contemplated by this Agreement will, at the
time such filing is made, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. Notwithstanding the foregoing, no representation
or warranty is made by a Representing Party with respect to any statements made
in the documents specified in items (a) through (c) above based on information
provided by or on behalf of the other Representing Party for inclusion or
incorporation by reference in such documents or with respect to information
incorporated by reference in such documents from any of the other Representing
Party's Filings.
3.14 OWNERSHIP OF CAPITAL STOCK. To the knowledge of the Representing
Party, neither the Representing Party nor any of its affiliates beneficially
owns, directly or indirectly, any capital stock of the other Representing Party
or is a party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any capital stock of the other
Representing Party.
3.15 ENVIRONMENTAL MATTERS. Except as would not reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect, the
Representing Party and its Subsidiaries are in compliance with all applicable
Environmental Laws. Except as would not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect, the Representing
Party and its Subsidiaries have obtained all permits, licenses and other
authorizations from all Governmental Entities required under applicable
Environmental Laws, and are in compliance with the terms and conditions thereof.
Neither the Representing Party nor any of its Subsidiaries has received written
notice of, or is the subject of, any action, cause of action, claim,
investigation, demand or notice by any person or entity alleging liability under
or noncompliance with any Environmental Law. Except as would not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect, there is no environmental condition which would constitute a violation
of applicable Environmental Law and was caused by the Representing Party or its
Subsidiaries on any of the properties currently or formerly owned or leased by
the Representing Party or any of its Subsidiaries.
3.16 INTELLECTUAL PROPERTY RIGHTS. Except as set forth in Section 3.16 of
each Representing Party's Disclosure Schedule, (i) the Representing Party or its
Subsidiaries own the entire right, title and interest
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in and to, or is licensed or otherwise has the right to use, all Intellectual
Property, including the right to sue and recover for damages and the other
remedies with respect to any past infringement or other violations of the
Intellectual Property, used in or necessary for the conduct of the business as
currently conducted by the Representing Party and its Subsidiaries taken as a
whole; (ii) there is no suit, claim, action, investigation or proceeding pending
or, to the knowledge of the Representing Party, threatened that the Representing
Party or any of its Subsidiaries is infringing, misappropriating or otherwise
violating the rights of any person or entity with regard to any Intellectual
Property owned by, licensed to and/or otherwise used by the Representing Party
or any of its Subsidiaries; (iii) to the knowledge of the Representing Party no
person is infringing on or otherwise violating any right of the Representing
Party or any of its Subsidiaries with respect to any Intellectual Property owned
by, licensed to and/or otherwise used by the Representing Party or any of its
Subsidiaries; (iv) the Representing Party or its Subsidiaries will continue to
own, be licensed or have rights to use the Intellectual Property owned, licensed
or used as of the date of this Agreement after the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby; (v)
the Representing Party and each of its Subsidiaries has taken reasonable steps
to protect its Intellectual Property and its rights thereunder, and to the
knowledge of the Representing Party, no such rights to Intellectual Property
have been lost or are in jeopardy of being lost through failure to act by the
Representing Party or any of its Subsidiaries; (vi) there are no restrictions on
the direct or indirect transfer of any interest in the Intellectual Property,
including any license agreement, held by the Representing Party or any of its
Subsidiaries in respect of the Intellectual Property; and (vii) neither the
Representing Party nor any of its Subsidiaries is, or has received notice that
it is, in default (or with the giving of notice or lapse of time or both, would
be in default) under any agreement to use the Intellectual Property.
3.17 ACCOUNTING MATTERS. To its knowledge neither the Representing Party
nor any of its affiliates (as such term is used in Section 6.11) has taken or
agreed to take any action that would prevent the transactions contemplated by
this Agreement from being accounted for as a "pooling-of-interests" under
Opinion No. 16 "Business Combinations" of the Accounting Principles Board of the
American Institute of Certified Public Accountants ("APB No. 16") and the
Representing Party has no reason to believe that such transactions will not
qualify for "pooling-of-interests" accounting treatment under APB No. 16.
3.18 COMPLIANCE WITH LAWS AND ORDERS. Except as disclosed in the
Representing Party's Filings, the Representing Party and its Subsidiaries are
not in violation of or default under any Law or Order of any Governmental
Entity, except for violations which, individually or in the aggregate, would not
be reasonably expected to have a Material Adverse Effect.
3.19 TITLE TO PROPERTIES. The Representing Party and its Subsidiaries have
good and marketable title to, or have valid leasehold interests in or valid
rights under contract to use, all real and tangible personal properties used in
and, individually or in the aggregate, material to the conduct of the businesses
of the Representing Party and its Subsidiaries taken as a whole (including all
real and tangible personal properties reflected on the latest balance sheet
included in the Representing Party's SEC Filings or OSE Filings, as applicable,
or acquired since such date, other than properties or assets disposed of since
such date or held subject to a lease or other contract permitted to expire in
accordance with its terms since such date, in either case in the ordinary course
of business), free and clear of all Encumbrances other than (i) any lien for
taxes, assessments or other governmental charges not yet due and payable or the
validity of which are being contested in good faith by appropriate proceedings;
(ii) any statutory liens arising in the ordinary course of business by operation
of Law with respect to a liability that is not yet due or delinquent, and (iii)
any minor imperfection of title or similar Encumbrance which individually or in
the aggregate with other such Encumbrances does not materially impair the value
of the property or asset subject to such Encumbrance or the use of such property
or asset in the conduct of the business of the Representing Party or any such
Subsidiary.
3.20 OPINION OF FINANCIAL ADVISORS. In Focus represents and warrants to
Proxima that In Focus has received the opinion of Salomon Smith Barney, Inc.
("SSB"), to the effect that, as of the date of this Agreement, the Exchange
Offer Ratio is fair from a financial point of view to the holders of shares of
In Focus Common Stock. Proxima represents and warrants to In Focus that Proxima
has received the opinion
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of Duetche Banc Alex, Brown ("DBAB"), to the effect that, as of the date of this
Agreement, the Exchange Offer Ratio is fair from a financial point of view to
the holders of Proxima Ordinary Shares.
3.21 FINDERS AND ADVISORS. Except for SSB, whose fees shall be the sole
responsibility of In Focus, and DBAB, whose fees shall be the sole
responsibility of Proxima, no financial advisor, broker, agent or finder has
been retained by either Representing Party in connection with this Agreement or
any transaction contemplated hereby, and no such financial advisor, broker,
agent or finder is entitled to any fee or other compensation on account of this
Agreement or any transaction contemplated hereby.
3.22 DULY AUTHORIZED SHARES. In Focus represents and warrants that all
shares of In Focus Common Stock to be issued in exchange for Proxima Ordinary
Shares pursuant to the terms of this Agreement have been duly authorized and
when issued pursuant to the terms of the Exchange Offer will be validly issued,
fully paid and nonassessable. The shares of In Focus Common Stock issuable upon
exercise of the assumed Proxima U.S. Options and issuable upon the exercise of
the assumed Proxima Norwegian Options have been duly authorized and will be,
prior to the Effective Time, reserved for issuance, and upon issuance pursuant
to the terms of such options, such shares shall be validly issued, fully paid
and nonassessable.
ARTICLE IV
COVENANTS OF PROXIMA AND IN FOCUS
4.1 CONDUCT OF PROXIMA'S BUSINESS. At all times from and after the date
hereof until the Effective Time, Proxima covenants and agrees as to itself and
its Subsidiaries that (except as expressly contemplated or permitted by this
Agreement, or to the extent that In Focus shall otherwise consent in writing):
(a) ORDINARY COURSE. Proxima and its Subsidiaries shall conduct their
respective businesses only in, and Proxima and such Subsidiaries shall not take
any action except in, the ordinary course in substantially the same manner as
previously conducted and in substantial compliance with all applicable Laws.
Without limiting the generality of the foregoing, (i) Proxima and its
Subsidiaries shall use reasonable efforts to preserve intact their present
business organizations and reputation, to keep available the services of their
present officers and employees, to maintain their assets and properties in good
working order and condition, ordinary wear and tear excepted, to maintain
insurance on their tangible assets and businesses in such amounts and against
such risks and losses as are currently in effect, to preserve their
relationships with customers, suppliers, licensors, licensees, distributors and
others having business relationships with them and to comply in all material
respects with all Laws and Orders of all Governmental Entities applicable to
them, and (ii) neither Proxima nor any of its Subsidiaries shall, except as
expressly contemplated by this Agreement:
(1) Adopt or amend in any material respect any bonus, profit sharing,
compensation, severance, termination, stock option, stock appreciation
right, pension, retirement, employment or other employee benefit agreement,
trust plan or other arrangement for the benefit or welfare of any director,
officer or employee of Proxima or any of its Subsidiaries or increase in
any manner the compensation or fringe benefits of any director, officer or
employee of Proxima or any of its Subsidiaries or pay any benefit not
required by any existing agreement or place any assets in any trust for the
benefit of any director, officer or employee of Proxima or any of its
Subsidiaries;
(2) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person (other than in the ordinary course of
business consistent with past practice) or issue or sell any debt
securities or warrants or other rights to acquire any debt securities of
Proxima or any of its Subsidiaries, guarantee any debt securities of
another person, enter into any "keep well" or other agreement to maintain
any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing, or make any
loans, advances or capital contributions to, or investments in, any other
person;
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(3) Expend funds for capital expenditures or research and development,
other than in the ordinary course of business consistent with past
practices;
(4) Sell, lease, license, mortgage or otherwise encumber or subject to
any Encumbrance or otherwise dispose of any of its properties or assets
except for disposition of inventory or immaterial assets or the imposition
of purchase money security interests on inventory or equipment, in either
case, in the ordinary course of business consistent with past practice;
(5) (x) Declare, set aside or pay any dividends on, or declare or make
any other distribution in respect of, any of its capital stock (except for
dividends paid by Subsidiaries to Proxima with respect to capital stock),
(y) split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock or (z) purchase, redeem or
otherwise acquire any shares of capital stock of Proxima or any of its
Subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(6) Authorize for issuance, issue, deliver, sell or agree to commit to
issue, sell or deliver (whether through the issuance or granting of options
or otherwise), pledge or otherwise encumber any shares of its capital stock
or the capital stock of any of its Subsidiaries, any other voting
securities or any securities convertible into, or any options to acquire,
any such shares, voting securities or convertible securities or any other
securities or equity equivalents (including without limitation stock
appreciation rights) (other than issuances upon exercise of Proxima U.S.
Options and Proxima Norwegian Options outstanding on the date hereof);
(7) Amend its certificate of incorporation, bylaws, articles of
association or equivalent organizational documents or alter through merger,
liquidation, reorganization, restructuring or in any other fashion the
corporate structure or ownership of any Subsidiary of Proxima;
(8) Acquire or agree to acquire, including, without limitation, by
merging or consolidating with, or by purchasing a substantial equity
interest in or substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof;
(9) Settle or compromise any stockholder derivative or other suits
arising out of the transactions contemplated by this Agreement or any other
litigation (whether or not commenced prior to the date of this Agreement)
or settle, pay or compromise any claims not required to be paid, other than
in consultation and cooperation with In Focus, and, with respect to any
such settlement, without the prior written consent of In Focus, which
consent shall not be unreasonably withheld or delayed;
(10) Make any material Tax election or settle or compromise any
material Tax liability (whether with respect to amount or timing);
(11) Except in the ordinary course of business, materially modify,
amend or terminate any material Contract or waive or release or assign any
material rights or claims;
(12) (i) Fail to pay in the ordinary course of business consistent
with past practice any amount ("Payable") due, owing or payable to any
trade creditor or supplier (other than amounts being disputed in good
faith) or (ii) other than in the ordinary course of business consistent
with past practice, alter the terms or scheduled payment dates of any
Payable; or
(13) Take or agree to take any action that would make any
representation and warranty of Proxima contained in this Agreement
inaccurate at, or as of any time prior to the Effective Date, or omit or
agree to omit to take any action necessary and prudent to prevent any such
representation or warranty from being inaccurate at any such time.
(b) ADVICE OF CHANGES. Proxima shall confer on a regular and frequent basis
with In Focus with respect to its business and operations and other matters
relevant to the Exchange Offer, and shall promptly advise In Focus, orally and
in writing, of any change or event, including, without limitation, any
complaint,
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investigation or hearing by any Governmental Entity (or communication indicating
the same may be contemplated) or the institution or threat of litigation,
having, or which, insofar as can be reasonably foreseen, would reasonably be
expected to have, a Material Adverse Effect on Proxima and its Subsidiaries
taken as a whole or on the ability of Proxima to consummate the transactions
contemplated hereby.
4.2 CONDUCT OF IN FOCUS'S BUSINESS. At all times from and after the date
hereof until the Effective Time, In Focus and its Subsidiaries shall use
reasonable efforts to preserve intact their present business organizations and
reputation, to keep available the services of their present officers and
employees, to maintain their assets and properties in good working order and
condition, ordinary wear and tear excepted, to maintain insurance on their
tangible assets and businesses in such amounts and against such risks and losses
as are currently in effect, to preserve their relationships with customers,
suppliers, licensors, licensees, distributors and others having business
relationships with them and to comply in all material respects with all Laws and
Orders of all Governmental Entities applicable to them.
4.3 NO SOLICITATIONS.
(a) From the date of this Agreement until the earlier of the termination of
this Agreement or the Effective Time, neither In Focus, Proxima nor any of their
Subsidiaries shall, nor shall they authorize or permit any officer, director,
employee, investment banker, financial advisor, attorney, accountant or other
advisor or representative retained by or acting for or on behalf of In Focus,
Proxima or any of their Subsidiaries to, directly or indirectly, (i) take any
action to knowingly solicit, initiate, continue, facilitate or encourage
(including by way of furnishing or disclosing non-public information) any offer
or proposal for a merger, consolidation or other business combination involving
In Focus, Proxima or any of their Subsidiaries or any proposal or offer to
acquire in any manner, directly or indirectly, shares of any class of voting
securities of In Focus, Proxima or any of their Subsidiaries (excluding, in the
case of In Focus, proposals for the acquisition of shares constituting less than
20% of In Focus's outstanding voting securities) or a substantial portion of the
assets of In Focus, Proxima or any of their Subsidiaries, other than the
transactions contemplated by this Agreement (any of the foregoing being referred
to as an "Acquisition Proposal"), or (ii) engage in negotiations, discussions or
communications regarding or disclose any information relating to In Focus,
Proxima or any of their Subsidiaries or afford access to the properties, books
or records of In Focus, Proxima or any of their Subsidiaries to any person,
corporation, partnership or other entity or group (a "Potential Acquiror") that
may be considering making, or has made, an Acquisition Proposal. The board of
directors of Proxima (including any committee thereof) shall not withdraw or
modify in a manner adverse to In Focus the approval and recommendation of the
Exchange Offer or this Agreement. Neither the board of directors of In Focus or
Proxima shall approve or recommend any Acquisition Proposal.
(b) Notwithstanding the foregoing provisions of Section 4.2(a):
(i) Proxima may participate in discussions or negotiations with or
furnish information to any third party which makes a written Acquisition
Proposal which either (x) is not subject to a financing contingency and
involves the purchase for cash of 100% of the Proxima Ordinary Shares at a
price per share, which Proxima's board of directors determines, based on
the advice of its financial advisor, is financially superior to the
Exchange Offer or (y) provides for the acquisition of 100% of the Proxima
Ordinary Shares, for consideration, not consisting entirely of cash, which
Proxima's board of directors determines, based on the advice of its
financial advisor, is financially superior to the Exchange Offer (in the
case of either (x) or (y), a "Superior Proposal"), and Proxima's board of
directors, or any committee thereof may withdraw or modify in a manner
adverse to In Focus, the approval or recommendation of the Exchange Offer,
and may approve or recommend any such Superior Proposal, if, in the case of
either (x) or (y), Proxima's board of directors determines (and is advised
by its outside legal counsel) that the failure to take such action would
reasonably be expected to constitute a breach of its fiduciary duties.
Proxima shall (i) notify In Focus promptly (and in any event within one
business day) after receipt of any Acquisition Proposal or any request for
non-public information relating to Proxima or any of its Subsidiaries or
for access to the properties, books or records of Proxima or any of its
Subsidiaries by any person that is considering making, or has made,
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an Acquisition Proposal, (ii) notify Proxima promptly of any material
change to any such Acquisition Proposal or request and (iii) upon
reasonable request by In Focus, provide In Focus all material information
about any such Acquisition Proposal, indication or request. Proxima will
not, and will cause its affiliates not to, enter into an agreement with
respect to a Superior Proposal unless In Focus has been advised in writing
of the identity of the parties making the Superior Proposal and the
material terms thereof at least two business days prior to the entering
into of such agreement.
(ii) In Focus may participate in discussions or negotiations with or
furnish information to any third party which makes a written Acquisition
Proposal, and In Focus's board of directors, or any committee thereof may
withdraw or modify in a manner adverse to Proxima, the approval or
recommendation of the Exchange Offer, and may approve or recommend any such
Acquisition Proposal, if In Focus's board of directors determines (and is
advised by its outside legal counsel) that the failure to take such action
would reasonably be expected to constitute a breach of its fiduciary
duties. In Focus shall (i) notify Proxima promptly (and in any event within
one business day) after receipt of any Acquisition Proposal or any request
for non-public information relating to In Focus or any of its Subsidiaries
or for access to the properties, books or records of In Focus or any of its
Subsidiaries by any person that is considering making, or has made, an
Acquisition Proposal, and (ii) notify In Focus promptly of any material
change to any such Acquisition Proposal or request.
ARTICLE V
TREATMENT OF PROXIMA STOCK OPTION PLANS
5.1 U.S. STOCK OPTION PLAN. Upon consummation of the Share Exchange, each
outstanding and unexercised option to purchase shares of Proxima Ordinary Shares
(the "Proxima U.S. Options") under the Proxima Amended 1998 Stock Option Plan
(the "Proxima U.S. Option Plan"), whether vested or unvested, shall be, in
connection with the Share Exchange, assumed by In Focus. Each Proxima U.S.
Option so assumed by In Focus under this Agreement shall continue to have, and
be subject to, the same terms and conditions set forth in the Proxima U.S.
Option Plan, and/or as provided in the respective option agreements governing
such Proxima U.S. Option immediately prior to consummation of the Share
Exchange, except that (A) such Proxima U.S. Option shall be exercisable for the
number of whole shares of In Focus Common Stock equal to the product of the
number of shares of Proxima Ordinary Shares that were issuable upon exercise of
such Proxima U.S. Option immediately prior to consummation of the Share
Exchange, multiplied by the Exchange Offer Ratio rounded up to the nearest whole
number of shares of In Focus Common Stock, and (B) the per share exercise price
for the In Focus Common Stock issuable upon exercise of such assumed Proxima
U.S. Option shall be equal to the quotient determined by dividing the exercise
price per share at which such Proxima U.S. Option was exercisable immediately
prior to the consummation of the Share Exchange by the Exchange Offer Ratio,
rounded up to the nearest whole cent. Promptly following the consummation of the
Share Exchange, In Focus will issue to each holder of an outstanding Proxima
U.S. Option a document evidencing the foregoing assumption of such Proxima U.S.
Option by In Focus. To the extent that such Proxima U.S. Option was qualified
under Section 422 of the Code, In Focus shall use commercially reasonable
efforts to cause such option to continue to be so qualified.
5.2 NORWEGIAN STOCK OPTION PLANS.
(a) Proxima shall use commercially reasonable efforts to cause each holder
of an outstanding and unexercised option to purchase Proxima Ordinary Shares
(individually, a "Proxima Norwegian Option" and collectively, the "Proxima
Norwegian Options") under the stock option plans maintained by Proxima in Norway
(collectively, the "Proxima Norwegian Option Plans") to agree in writing, prior
to the Effective Time, to allow In Focus to assume his or her Proxima Norwegian
Option, as of the Effective Time, pursuant to an Option Assumption Agreement on
terms and conditions reasonably acceptable to In Focus (individually, an "Option
Assumption Agreement" and collectively, the "Option Assumption Agreements").
Each Proxima Norwegian Option so assumed by In Focus under an Option Assumption
Agreement shall continue to have, and be subject to, the same terms and
conditions set forth in the
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Norwegian Option Plans, as applicable, and as provided in the respective
individual option agreement governing such Proxima Norwegian Option immediately
prior to the consummation of the Share Exchange, except that (i) such Proxima
Norwegian Option shall be exercisable for the number of whole shares of In Focus
Common Stock equal to the product of the number of shares of Proxima Ordinary
Shares that were issuable upon exercise of such Proxima Norwegian Option
immediately prior to consummation of the Share Exchange, multiplied by the
Exchange Offer Ratio rounded up to the nearest whole number of shares of In
Focus Common Stock, and (ii) the per share exercise price for the In Focus
Common Stock issuable upon exercise of such assumed Proxima Norwegian Option
shall be equal to the quotient determined by dividing the exercise price per
share at which such Proxima Norwegian Option was exercisable immediately prior
to the consummation of the Share Exchange by the Exchange Offer Ratio, rounded
up to the nearest whole cent.
(b) If an insufficient number of holders of Proxima Norwegian Options enter
into Option Assumption Agreements, such that the transactions contemplated by
this Agreement would not, in the opinion of In Focus's independent accountants,
qualify for accounting as a "pooling of interests" under APB No. 16 and
applicable SEC rules and regulations, Proxima shall use commercially reasonable
efforts to cause such option holders to take such other actions and enter into
such other agreements as In Focus may reasonably request to cause the
transactions contemplated by this Agreement to so qualify.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Each of In Focus and Proxima shall, and shall cause each of their
respective Subsidiaries to, afford to the other party and to the officers,
employees, accountants, counsel, financial advisors and other representatives of
such other party, reasonable access during normal business hours during the
period prior to the Effective Time to all their respective properties, books,
contracts, commitments, personnel and records and, during such period, each of
In Focus and Proxima shall, and shall cause each of its respective Subsidiaries
to, furnish promptly to the other party (i) a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of U.S. federal or state securities laws or
Norwegian securities laws and (ii) all other information concerning its
business, properties and personnel as such other party may reasonably request.
No review pursuant to this Section 6.1 shall affect any representation or
warranty given by the other party hereto.
(b) Each of In Focus and Proxima will hold and will cause each of their
respective officers, directors, employees, accountants, attorneys, investment
bankers and other advisors ("Representatives") to hold in strict confidence
(unless compelled to disclose by judicial or administrative process with respect
to which the other party shall be given a reasonable opportunity to oppose) all
non-public information obtained, whether prior to or after the date of this
Agreement, from or provided on behalf of the other party, except to the extent
that such information can be shown to have been (i) previously known or
independently developed by the party receiving such information, (ii) in the
public domain through no fault of the receiving party, or (iii) later lawfully
acquired by the receiving party from other sources not known by the receiving
party to be bound by confidentiality obligations (the "Confidential
Information"). Each of In Focus and Proxima will, and will cause each of their
respective Representatives to, use the Confidential Information received by it
solely in connection with its evaluation of the transactions contemplated by
this Agreement and in furtherance of the consummation of such transactions in
accordance with the terms of this Agreement. In the event of the termination of
this Agreement, each of In Focus and Proxima will, and will cause each of their
respective Representatives to, (x) maintain the confidentiality of the
Confidential Information, and (y) return all copies of written Confidential
Information promptly upon the written request of the other party.
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6.2 APPROVAL OF IN FOCUS STOCKHOLDERS; PREPARATION OF PROXY STATEMENT.
(a) APPROVAL OF IN FOCUS STOCKHOLDERS. As soon as reasonably practicable
after the public announcement of this Agreement, In Focus shall, through its
Board of Directors, duly call, give notice of, convene and hold a meeting of its
stockholders (the "In Focus Stockholders Meeting") for the purpose of obtaining
such approvals as are required by the applicable rules and regulations of the
NASDAQ National Market System and, if applicable, Oregon law, to consummate the
transactions contemplated by this Agreement (the "In Focus Stockholders'
Approval"). Subject to its rights to terminate this Agreement pursuant to
Section 8.1, In Focus shall, through its Board of Directors, include in the
Proxy Statement the recommendation of the Board of Directors that the In Focus
stockholders grant such approval, and shall use its reasonable best efforts to
obtain such approval.
(b) PREPARATION OF PROXY STATEMENT. As soon as reasonably practicable after
the public announcement of this Agreement, In Focus shall in consultation with
Proxima prepare and file with the SEC a preliminary proxy statement (the "Proxy
Statement"), and all other required materials, to be used in connection with the
solicitation of proxies by In Focus for the In Focus Stockholders Meeting. In
Focus shall use commercially reasonable efforts to respond to any SEC comments
regarding its Proxy Statement and to have such comments cleared as promptly as
practicable, and shall promptly mail the Proxy Statement in its definitive form
to its shareholders after the Norwegian Prospectus/Offer Document has been
mailed to the holders of the Proxima Ordinary Shares. Proxima agrees to provide
as promptly as practicable to In Focus such information concerning its
stockholders and its business and financial statements and affairs as may
reasonably be required or appropriate for inclusion in the Proxy Statement or in
any amendments or supplements thereto, and to cause its counsel and auditors to
cooperate with In Focus's counsel and auditors in the preparation of the Proxy
Statement.
6.3 REGULATORY AND OTHER APPROVALS.
(a) Subject to the terms and conditions of this Agreement and without
limiting the provisions of Section 6.2, each of Proxima and In Focus will use
commercially reasonable efforts to do, or cause to be done, all things
necessary, proper or advisable to, as promptly as practicable, obtain all
consents, approvals or actions of, make all filings with and give all notices to
Governmental Entities or any other public or private third parties required of
Proxima, In Focus or any of their Subsidiaries to consummate the Exchange Offer
and provide such other information and communications to such Governmental
Entities or other public or private third parties as the other party hereto or
such Governmental Entities or other public or private third parties may
reasonably request. In addition to and not in limitation of the foregoing, each
of the parties will (x) take promptly all actions necessary to make the filings
required of In Focus and Proxima or their affiliates under the HSR Act and under
comparable merger notification or competition laws of non-U.S. jurisdictions,
(y) comply at the earliest practicable date with any request for additional
information received by such party or its affiliates from the Federal Trade
Commission (the "FTC") or the Antitrust Division of the Department of Justice
(the "Antitrust Division") pursuant to the HSR Act or the authorities of such
other jurisdictions, and (z) cooperate with the other party in connection with
such party's filings under the HSR Act and in connection with resolving any
investigation or other inquiry concerning the Exchange Offer or the other
matters contemplated by this Agreement commenced by the FTC, the Antitrust
Division, state attorneys general or any other Governmental Entity.
(b) In furtherance and not in limitation of the covenants in Section
6.3(a), In Focus and Proxima shall each use all reasonable efforts to resolve
such objections, if any, as may be asserted with respect to any transactions
contemplated by this Agreement by any of the authorities identified in Section
6.3(a). If any administrative, judicial or legislative action or proceeding is
threatened to be instituted by any such authority challenging any of the
transactions contemplated by this Agreement, In Focus and Proxima will each
cooperate to contest and resist the institution of any such action or
proceeding.
6.4 EXPENSES. Except as set forth in Section 8.2(b), whether or not the
Exchange Offer is consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such cost or expense, except that expenses
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incurred in connection with printing and mailing the Norwegian Exchange Offer
Documents, as well as any filing fees relating thereto, shall be shared equally
by In Focus and Proxima.
6.5 OSE LISTING. As soon as practicable following the date of this
Agreement and in any event prior to the Effective Time, In Focus shall prepare
and file all documents with OSE and use its reasonable best efforts to cause the
shares of In Focus Common Stock to be issued by In Focus in connection with the
transactions contemplated by this Agreement to be approved for secondary listing
on OSE, subject to official notice of issuance.
6.6 FORM S-8. In Focus shall file a registration statement on Form S-8 for
the shares of In Focus Common Stock issuable with respect to the assumed Proxima
U.S. Options no later than ten (10) days after the Effective Time, to the extent
the shares of In Focus Common Stock issuable upon exercise of such options
qualify for registration on Form S-8.
6.7 NNM LISTING OF ADDITIONAL SHARES APPLICATION. In Focus shall use
commercially reasonable efforts to cause to be authorized for listing on the
Nasdaq National Market (i) the shares of In Focus Common Stock to be issued in
exchange for Proxima Ordinary Shares pursuant to the Exchange Offer and (ii) the
shares of In Focus Common Stock required to be reserved for issuance in
connection with assumption of the Proxima U.S. Options and the Proxima Norwegian
Options.
6.8 FULFILLMENT OF CONDITIONS. Subject to the terms and conditions of this
Agreement, each of In Focus and Proxima will take or cause to be taken all steps
reasonably necessary or desirable to satisfy each condition to the other's
obligations contained in this Agreement and to consummate and make effective the
transactions contemplated by this Agreement, and neither In Focus nor Proxima
will, nor will it permit any of its Subsidiaries to, take or fail to take any
action that could be reasonably expected to result in the nonfulfillment of any
such condition.
6.9 TAX TREATMENT. Proxima shall use its reasonable best efforts to secure
an unconditional commitment from Norwegian tax authorities that the holders of
Proxima Ordinary Shares, who are residents of Norway, will not be subject to tax
in Norway (i) upon consummation of the Share Exchange and the exchange of their
Proxima Ordinary Shares for In Focus Common Stock, or (ii) if In Focus assumes
the Proxima Norwegian Options as contemplated by Section 5.2 (the "Norwegian Tax
Approval").
6.10 CONVEYANCE TAXES. In Focus and Proxima shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications,
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes which become payable in
connection with the transactions contemplated hereunder that are required or
permitted to be filed on or before the Effective Time.
6.11 AFFILIATES. As soon as practicable after the date hereof, Proxima
shall deliver to In Focus a letter identifying all persons who are, at the time
the Exchange Offer is submitted to the stockholders of Proxima, "affiliates" of
Proxima for purposes of Rule 145 under the Securities Act or for purposes of
qualifying the Share Exchange for "pooling-of-interests" accounting treatment
under APB No. 16 and applicable SEC rules and regulations, and such list shall
be updated as necessary to reflect changes from the date hereof. Proxima shall
use reasonable best efforts to cause all persons who are "affiliates" of Proxima
for purposes of qualifying the Share Exchange for "pooling-of-interests"
accounting treatment under APB No. 16 and applicable SEC rules and regulations
to deliver to In Focus not less than thirty (30) days prior to the Effective
Time, a written agreement substantially in the form of Exhibit B.
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ARTICLE VII
CONDITIONS TO EXCHANGE OFFER
7.1 CONDITIONS TO EXCHANGE OFFER AND IN FOCUS'S
OBLIGATIONS. Notwithstanding any other provisions of this Agreement or the
Exchange Offer, In Focus shall not be required to accept for exchange, and may
delay acceptance of, any tendered Proxima Ordinary Shares, and may terminate the
Exchange Offer, if each of the following conditions are not fully satisfied or
waived by In Focus on or prior to the Effective Time:
(a) The Minimum Condition, as defined in Section 1.1(b), shall have been
satisfied;
(b) Holders of a sufficient number of the Proxima Norwegian Options, as
necessary for the transactions contemplated by this Agreement to be accounted
for as a "pooling of interests" under APB No. 16 and applicable SEC rules and
regulations, shall have entered into Option Assumption Agreements;
(c) The In Focus Shareholders' Approval shall have been obtained;
(d) Any applicable waiting periods under the HSR Act, or under any
applicable competition laws of any non-U.S. jurisdiction, relating to the
transactions contemplated by this Agreement shall have expired or been
terminated;
(e) No change shall have occurred since the date of this Agreement (and no
condition, event or development shall have occurred, involving a prospective
change) that would have a Material Adverse Effect on Proxima;
(f) The representations and warranties of Proxima set forth in this
Agreement shall be true and correct both when made and at and as of the
Effective Time, as if made at and as of such time, except where the failure of
such representations and warranties to be true and correct would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on Proxima, and In Focus shall have received a Certificate of the Chief
Executive Officer of Proxima as to the satisfaction of this condition;
(g) Proxima shall, in all material respects, have performed and complied
with all obligations, covenants and agreements required to be performed or
complied with by it under this Agreement at or prior to the Effective Time, and
In Focus shall have received a Certificate of the Chief Executive Officer of
Proxima as to the satisfaction of this condition;
(h) In Focus shall have received a letter from its independent accountants,
dated as of the Effective Time, stating that accounting for the Share Exchange
as a "pooling-of-interests" under APB No. 16 and applicable SEC rules and
regulations is appropriate if the Share Exchange is consummated as contemplated
by this Agreement;
(i) All consents, approvals and actions of, filings with and notices to any
Governmental Entity required of In Focus, Proxima, or any of their respective
Subsidiaries to consummate the Share Exchange, shall have been obtained or made,
all in form and substance reasonably satisfactory to In Focus, including without
limitation approval by the Norwegian Ministry of Industry and Trade pursuant to
the Norwegian Business Acquisition Act of 1994 No. 79 and any other approvals
required under any other applicable competition laws of any non-U.S.
jurisdiction; and
(j) No judgment, order, decree, statute, law, ordinance, rule or
regulation, entered, enacted, promulgated, enforced or issued by any
Governmental Entity of competent jurisdiction or other legal restraint or
prohibition (collectively, "Restraints") shall be in effect (i) preventing the
consummation of the Exchange Offer, or (ii) which otherwise is reasonably likely
to have a Material Adverse Effect on In Focus or Proxima.
The foregoing conditions are for the sole benefit of In Focus and may be
waived by In Focus in whole or in part at any time and from time to time in the
sole discretion of In Focus. The failure by In Focus at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right; the
waiver
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of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time. Any determination by In Focus concerning the events
described above will be final and binding on all parties.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION. This Agreement may be terminated, and the transactions
contemplated hereby may be abandoned, at any time prior to the Effective Time,
whether prior to or after In Focus Stockholders' Approval:
(a) By mutual written consent of Proxima and In Focus;
(b) By either Proxima or In Focus:
(i) If the Share Exchange shall not have been consummated by September
30, 2000 (the "Outside Termination Date"), provided that the right to
terminate this Agreement pursuant to this Section 8.1(b)(i) shall not be
available to any party whose failure to perform any of its obligations
under this Agreement results in the failure of the Share Exchange to be
consummated on or prior to such date;
(ii) If the In Focus Stockholders' Approval shall not have been
obtained at the In Focus Stockholders Meeting or at any adjournment or
postponement thereof; or
(iii) If any Restraint having either of the effects set forth in
Section 7.1(j) shall be in effect and shall have become final and
nonappealable, provided, that the party seeking to terminate this Agreement
pursuant to this Section 8.1(b)(iii) shall have used reasonable best
efforts to prevent the entry of and to remove such Restraint.
(c) By In Focus, (i) if any representation or warranty of Proxima contained
in this Agreement shall not be true and correct in all material respects and the
failure of such representation or warranty to be true and correct (1) has a
Material Adverse Effect on Proxima, and (2) if capable of being made true and
correct within 30 days following receipt by Proxima of notice of such
representation or warranty not being true and correct is not in fact made true
and correct within such 30-day period, or (ii) if there has been a material
breach of any covenant or agreement on the part of Proxima set forth in this
Agreement, which breach is incapable of being cured by Proxima or is not cured
within 30 days following receipt by Proxima of notice of such breach;
(d) By Proxima, (i) if any representation or warranty of In Focus contained
in this Agreement shall not be true and correct in all material respects and the
failure of such representation or warranty to be true and correct (1) has a
Material Adverse Effect on In Focus, and (2) if capable of being made true and
correct within 30 days following receipt by In Focus of notice of such
representation or warranty not being true and correct is not in fact made true
and correct within such 30-day period, or (ii) if there has been a material
breach of any covenant or agreement on the part of In Focus set forth in this
Agreement, which breach is incapable of being cured by In Focus or is not cured
within 30 days following receipt by In Focus of notice of such breach;
(e) By In Focus or Proxima, upon the occurrence of a Trigger Event with
respect to the other party; and
(f) By In Focus, if the Exchange Offer shall have expired or been
terminated without any Proxima Ordinary Shares being purchased hereunder by In
Focus as a result of the failure of any of the conditions set forth in Article
VII hereof.
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8.2 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either Proxima or In
Focus as provided in Section 8.1, written notice thereof shall be given as
promptly as possible to the other party hereto, and this Agreement shall
forthwith become null and void and there shall be no liability or obligation on
the part of either Proxima or In Focus (or any of their respective
Representatives or affiliates), except (i) that the provisions of Sections
6.1(b) and 6.4, this Section 8.2 and Article IX will continue to apply following
any such termination, (ii) that nothing contained herein shall relieve any party
hereto from liability for breach of its representations, warranties, covenants
or agreements contained in this Agreement, and (iii) as provided in Section
8.2(b) below.
(b) If either party terminates this Agreement pursuant to Section 8.1(e),
the non-terminating party shall pay to the terminating party by wire transfer in
immediately available funds to an account specified in writing by the
terminating party immediately upon notice of such termination, a termination fee
of Three Million Five Hundred Thousand and No/100 US Dollars (US$3,500,000.00)
(c) The parties acknowledge that the agreements in Section 8.2(b) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, they each would not enter into this Agreement;
accordingly, if either party fails to pay in a timely manner the amounts due
pursuant to Section 8.2(b) and, in order to obtain such payment, the terminating
party makes a claim that results in a judgment against the other party for the
amounts set forth in Section 8.2(b), the non-terminating party shall pay to the
terminating party its reasonable costs and expenses (including reasonable
attorneys' fees and expenses) in connection with such suit, together with
interest on the amounts set forth in Section 8.2(b) from the date of demand to
the date of payment at the prime rate of The Chase Manhattan Bank in effect on
the date such payment was required to be made.
(d) If any provision of this Section 8.2 shall be void under applicable
law, or if the performance by any party of its obligations hereunder is
prohibited by applicable law, but such provision or action would be permissible
if some part or all of Section 8.2 were deleted, then such modification as may
be necessary to make such provision or action permissible shall be deemed to
have taken place.
8.3 AMENDMENT. This Agreement may be amended, supplemented or modified by
action taken by or on behalf of the respective Boards of Directors of the
parties hereto at any time prior to the Effective Time, whether prior to or
after In Focus's Stockholders' Approval but after such approval only to the
extent permitted by applicable law. No such amendment, supplement or
modification shall be effective unless set forth in a written instrument duly
executed by or on behalf of each party hereto.
8.4 WAIVER. At any time prior to the Effective Time, any party hereto, by
action taken by or on behalf of its Board of Directors, may to the extent
permitted by applicable law (i) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties of the other parties hereto
contained herein or in any document delivered pursuant hereto or (iii) waive
compliance with any of the covenants, agreements or conditions of the other
parties hereto contained herein. No such extension or waiver shall be effective
unless set forth in a written instrument duly executed by or on behalf of the
party extending the time of performance or waiving any such inaccuracy or
non-compliance. No waiver by any party of any term or condition of this
Agreement, in any one or more instances, shall be deemed to be or construed as a
waiver of the same or any other term or condition of this Agreement on any
future occasion.
ARTICLE IX
GENERAL PROVISIONS
9.1 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument or
document delivered pursuant to this Agreement shall survive the Effective Time.
This Section 9.1 shall not limit any covenant or agreement of the parties which
by its terms contemplates performance after the Effective Time.
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9.2 NOTICES. All notices, requests and other communications hereunder must
be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission, or by an internationally recognized
courier service such as Federal Express, to the parties at the following
addresses or facsimile numbers:
If to In Focus, to:
In Focus Systems, Inc.
27700B SW Parkway Avenue
Wilsonville, Oregon 97070
Facsimile No.: (503) 685-8838
Attn: Chief Executive Officer
with copies (which shall not constitute notice) to:
Garvey, Schubert & Barer and Thommessen Krefting Greve Lund
121 S.W. Morrison, 11th Floor Haakon VII's gate 10
Portland, Oregon 97204 Postboks 1484 Vika
Facsimile No.: (503) 226-0259 N-0116 Oslo, Norway
Attn: Bruce A. Robertson and Facsimile No.: 011-47 23-11-10-10
Stephen J. Connolly Attn: Olav Vikoren
If to Proxima, to:
Proxima ASA and Proxima Corporation
K.G. Medahlsvei 9 Postboks 1403 9440 Carroll Park Drive
N-1602 Fredrikstad, Norway San Diego, California 92121-2298
Facsimile No.: 011-47-69-34-06-32 Facsimile No.: (858) 638-2951
Attn: Chief Executive Officer Attn: Thomas D. Kampfer
with copies (which shall not constitute notice) to:
Brobeck, Phleger & Harrison LLP and Wikborg, Rein & Co.
38 Technology Drive P. O. Box 1153 Vika
Irvine, California 92618-5312 01170 Oslo, Norway
Facsimile No.: (949) 790-6301 Facsimile No.: 011-47-22-82-75-01
Attn: Patrick Arrington Attn: Einar Greve
All such notices, requests and other communications will (i) if delivered
personally or by an internationally recognized courier service to the address as
provided in this Section, be deemed given upon delivery, (ii) if delivered by
facsimile transmission to the facsimile number as provided in this Section, be
deemed given upon receipt, and (iii) if delivered by mail in the manner
described above to the address as provided in this Section, be deemed given upon
receipt (in each case regardless of whether such notice, request or other
communication is received by any other person to whom a copy of such notice is
to be delivered pursuant to this Section). Any party from time to time may
change its address, facsimile number or other information for the purpose of
notices to that party by giving notice in writing specifying such change to the
other parties hereto.
9.3 ENTIRE AGREEMENT. This Agreement, including all Exhibits and Schedules
referred to herein or delivered pursuant hereto, and the Nondisclosure Agreement
between In Focus and Proxima, dated January 24, 2000, supersede all prior
discussions and agreements among the parties hereto with respect to the subject
matter hereof and thereof, and contain the sole and entire agreement among the
parties hereto with respect to the subject matter hereof and thereof. No prior
draft of this Agreement may be used in the construction or interpretation
hereof.
9.4 PUBLIC ANNOUNCEMENTS. Except as otherwise required by law or the rules
of any applicable securities exchange or national market system, so long as this
Agreement is in effect, In Focus and Proxima will not, and will not permit any
of their respective Representatives to, issue or cause the publication of any
press release or make any other public announcement with respect to the
transactions contemplated by this Agreement without the consent of the other
party, which consent shall not be unreasonably withheld or delayed. In Focus and
Proxima will cooperate with each other in the
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development and distribution of all press releases and other public
announcements with respect to this Agreement and the transactions contemplated
hereby, and will furnish the other with drafts of any such releases and
announcements as far in advance as practicable. The parties agree that the
initial press release to be issued with respect to the transactions contemplated
by this Agreement shall be in the form heretofore agreed to by the parties and
signed on their behalf for identification.
9.5 NO THIRD PARTY BENEFICIARY. The terms and provisions of this Agreement
are intended solely for the benefit of each party hereto and their respective
successors or permitted assigns, and it is not the intention of the parties to
confer third-party beneficiary rights upon any other person.
9.6 NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any party hereto without the
prior written consent of the other parties hereto and any attempt to do so will
be void, except that In Focus may assign any or all of its rights, interests and
obligations hereunder, including the right to consummate the Share Exchange and
purchase all or any portion of Proxima Ordinary Shares tendered pursuant to the
Exchange Offer, to a direct or indirect wholly owned Subsidiary of In Focus,
provided that any such assignment will not relieve In Focus of any liability
hereunder and any such Subsidiary must agree in writing to be bound by all of
the terms, conditions and provisions contained herein. Subject to the preceding
sentence, this Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors and assigns.
9.7 HEADINGS. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
9.8 INVALID PROVISIONS. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the legal, invalid or unenforceable provision
or by its severance herefrom and (iv) in lieu of such illegal, invalid or
unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
9.9 GOVERNING LAW. The Exchange Offer and Share Exchange (to the extent
they are conducted in Norway) shall be governed by and effected in accordance
with Norwegian law. In all other respects, this Agreement shall be governed by
and construed in accordance with the laws of the State of New York, including
Sections 5-1401 to 5-1402 of the New York General Obligation Law and Section
327(b) of the New York Civil Practice Law and Rules.
9.10 CONSENT TO JURISDICTION. Each of the parties hereto (a) consents to
submit itself to the personal jurisdiction of any federal court located in the
Borough of Manhattan, The City of New York, State of New York or any New York
state court sitting in the Borough of Manhattan, The City of New York in the
event any dispute arises out of or relates to this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it will not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court, including, without limitation, a motion to dismiss on
the grounds of forum non conveniens, (c) agrees that it will not bring any
action arising out of or relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal court sitting
in the Borough of Manhattan, The City of New York, State of New York or a New
York state court sitting in the Borough of Manhattan, The City of New York, and
(d) waives any right to a trial by jury with respect to any claim, counterclaim
or action arising out of or in connection with this Agreement or the
transactions contemplated hereby.
9.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
signed by its officer thereunto duly authorized as of the date first above
written.
IN FOCUS SYSTEMS, INC.
By: /s/ JOHN V. HARKER
--------------------------------------
Name: John V. Harker
Title: Chairman, President and CEO
PROXIMA ASA
By: /s/ SVEIN S. JACOBSEN
--------------------------------------
Name: Svein S. Jacobsen
Title: Styreformann
By: /s/ OLE J. FREDRIKSEN
--------------------------------------
Name: Ole J. Fredriksen
Title: Administrative Director
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ANNEX OF DEFINED TERMS
1.1 "Acquisition Proposal" shall have the meaning set forth in Section 4.3(a).
1.2 "affiliate" of any person shall mean, as to any person, any other person
which, directly or indirectly, controls, is controlled by, or is under
common control with, such person, where "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of
the management or policies of a person, whether through the ownership of
securities or partnership or other ownership interests, by contract or
otherwise.
1.3 "Agreement" shall have the meaning set forth in the preamble.
1.4 "Antitrust Division" shall have the meaning set forth in Section 6.3(a).
1.5 "APB No. 16" shall have the meaning set forth in Section 3.17.
1.6 "Code" shall have the meaning set forth in Section 3.11(b).
1.7 "Companies Act" shall have the meaning set forth in Section 1.3.
1.8 "Company Permits" shall have the meaning set forth in Section 3.1.
1.9 "Confidential Information" shall have the meaning set forth in Section
6.1(b).
1.10 "Contracts" shall have the meaning set forth in Section 3.5(b).
1.11 "DBAB" shall have the meaning set forth in Section 3.20.
1.12 "Disclosure Schedule" shall mean the disclosure schedule delivered by each
Representing Party to the other setting forth (organized by the number and
letter of the corresponding section and paragraph in the Business
Combination Agreement, provided, that matters disclosed in any section of
the Disclosure Schedule shall be deemed to be disclosed for all purposes of
such disclosure schedule) the Representing Party's exceptions to the
representations and warranties of such Representing party contained in
Article III, and provided further that inclusion of an item in a disclosure
schedule shall not be construed to mean that the item is required to be
disclosed or is material.
1.13 "Effective Time" shall have the meaning set forth in Section 1.1(d).
1.14 "Encumbrance" shall mean any mortgage, pledge, lien, charge, encumbrance,
security interest, claim or option.
1.15 "Environmental Law" means any Law of any Governmental Entity relating to
human health, safety or protection of the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants or
Hazardous Materials in the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface
strata), or otherwise relating to the treatment, storage, disposal,
transport or handling of any Hazardous Material. "Hazardous Material" means
(A) petroleum or petroleum products, radioactive materials, asbestos in any
form that is or could become friable, urea formaldehyde foam insulation and
transformers or other equipment that contain dielectric fluid containing
levels of polychlorinated biphenyls (PCBs); (B) any chemicals, materials,
substances or wastes which are now or hereafter become defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants" or words of similar import,
under any Environmental Law; and (C) any other chemical, material,
substance or waste, exposure to which is now prohibited, limited or
regulated by any Governmental Entity.
1.16 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
1.17 "ERISA Affiliate" shall have the meaning set forth in Section 3.11(a).
1.18 "Exchange Act" shall have the meaning set forth in Section 3.6(a).
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1.19 "Exchange Agent" shall have the meaning set forth in Section 1.5.
1.20 "Exchange Offer" shall have the meaning set forth in Section 1.1(a).
1.21 "Exchange Offer Conditions" shall have the meaning set forth in Section
1.1(b).
1.22 "Exchange Offer Documents" shall have the meaning set forth in Section 1.2.
1.23 "Exchange Offer Expiration Date" shall have the meaning set forth in
Section 1.1(c).
1.24 "Exchange Offer Ratio" shall have the meaning set forth in Section 1.1(a).
1.25 "FTC" shall have the meaning set forth in Section 6.3(a).
1.26 "Fully Diluted Basis" shall mean a basis that takes into account all
outstanding Proxima Ordinary Shares and the maximum aggregate number of
Proxima Ordinary Shares that may be issued in respect of any warrants,
options, convertible instruments or other rights pursuant to which the
holder thereof may acquire Proxima Ordinary Shares, regardless of whether
currently exercisable or convertible.
1.27 "Governmental Entity" shall mean any court, tribunal or administrative,
governmental or regulatory body, agency, commission, division, department,
public body or other authority, whether federal, state, local or foreign.
1.28 "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
1.29 "In Focus" shall mean the corporate party to the Agreement identified in
the first paragraph.
1.30 "In Focus Common Stock" shall have the meaning set forth in Section 1.1(a).
1.31 "In Focus Financial Statements" shall have the meaning set forth in Section
3.6(a).
1.32 "In Focus SEC Filings" shall have the meaning set forth in Section 3.6(a).
1.33 "In Focus Stockholders' Approval" shall have the meaning set forth in
Section 6.2(a).
1.34 "In Focus Stockholders Meeting" shall have the meaning set forth in Section
6.2(a).
1.35 "Intellectual Property" shall mean (i) any and all trademarks and trademark
rights, trade names and trade name rights, service marks and service mark
rights, trade dress, copyrights and copyright rights, patents and patent
rights, mask works, trade secrets, know-how, proprietary information,
processes, formulae, computer programs (including source code, object code
and data), industrial models, designs, methodologies, business names,
product names, brand names, logos and slogans; (ii) any and all pending
applications for trademarks, service marks, copyrights, patents and mask
works and any and all other kinds of intellectual property; and (iii) all
documentation related to such intellectual property, including, without
limitation, technical specifications, manufacturing, engineering and
technical drawings, and comprising physical documents and/or electronic
files.
1.36 "Laws" shall have the meaning set forth in Section 3.5(b).
1.37 "Mandatory Offer" shall have the meaning set forth in Section 1.3.
1.38 "Material Adverse Effect" with respect to In Focus or Proxima shall mean
any event or state of facts that is or would reasonably be expected to be
materially adverse to the business, assets, results of operations or
financial condition of such Party and its Subsidiaries, taken as a whole.
1.39 "Minimum Condition" shall have the meaning set forth in Section 1.1(b).
1.40 "Norwegian Prospectus/Offer Document" shall have the meaning set forth in
Section 1.2.
1.41 "Norwegian Tax Approval" shall have the meaning set forth in Section 6.9.
1.42 "Option Assumption Agreements" shall have the meaning set forth in Section
5.2(a).
1.43 "OSE" shall have the meaning set forth in Section 1.2.
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1.44 "Orders" shall have the meaning set forth in Section 3.5(b).
1.45 "Outside Termination Date" shall have the meaning set forth in Section
8.1(b)(i).
1.46 "Payable" shall have the meaning set forth in Section 4.1(a)(12).
1.47 "person" shall mean an individual, corporation, partnership, association,
trust, or any other entity or organization, including, without limitation,
a Governmental Entity.
1.48 "Plans" shall have the meaning set forth in Section 3.11(a).
1.49 "Potential Acquiror" shall have the meaning set forth in Section 4.3(a).
1.50 "Proxima" shall mean the corporate party to the Agreement identified in the
first paragraph.
1.51 "Proxima Financial Statements" shall have the meaning set forth in Section
3.6(b).
1.52 "Proxima Norwegian Option Plans" shall have the meaning set forth in
Section 5.2(a).
1.53 "Proxima Norwegian Options" shall have the meaning set forth in Section
5.2(a).
1.54 "Proxima Ordinary Shares" shall have the meaning set forth in Section
1.1(a).
1.55 "Proxima OSE Filings" shall have the meaning set forth in Section 3.6(b).
1.56 "Proxima U.S. Options" shall have the meaning set forth in Section 5.1.
1.57 "Proxima U.S. Option Plan" shall have the meaning set forth in Section 5.1.
1.58 "Proxy Statement" shall have the meaning set forth in Section 6.2(b).
1.59 "Representatives" shall have the meaning set forth in Section 6.1(b).
1.60 "Representing Party" shall have the meaning set forth in Article III.
1.61 "Representing Party's Filings" shall have the meaning set forth in Section
3.7.
1.62 "Representing Party's Financial Statements" shall have the meaning set
forth in Section 3.7.
1.63 "Restraints" shall have the meaning set forth in Section 7.1(j).
1.64 "SEC" shall have the meaning set forth in Section 3.6(a).
1.65 "Securities Act" shall have the meaning set forth in Section 3.6(a).
1.66 "Securities Trading Act" shall have the meaning set forth in Section 1.2.
1.67 "Share Exchange" shall have the meaning set forth in Section 1.1(d).
1.68 "SSB" shall have the meaning set forth in Section 3.20.
1.69 "Subsidiary" shall mean with respect to In Focus or Proxima, as the case
may be, any person (i) of which fifty percent or more of either the equity
interests in, or the voting control of, such person is directly or
indirectly beneficially owned by In Focus or Proxima, or (ii) In Focus or
Proxima has the ability to elect fifty percent or more of the directors or
members of the governing board of such person, and in either such case,
such person is a consolidated entity in the consolidated financial
statements of In Focus or Proxima, as the case may be.
1.70 "Superior Proposal" shall have the meaning set forth in Section 4.3(b)(i).
1.71 "Taxes" shall mean any and all taxes, duties, levies, imposts or other
governmental charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect
thereto) imposed by any taxing authority, including without limitation,
taxes or other charges on or with respect to income, net assets,
franchises, windfall or other profits, gross receipts, property, sales,
use, capital stock, payroll, employment, social security, workers'
compensation,
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unemployment compensation, or net worth, and taxes or other charges in the
nature of excise, withholding, ad valorem or value added.
1.72 "Tax Returns" shall mean any return, report or similar statement required
to be filed with respect to any Taxes, including, without limitation, any
information return, claim for refund, amended return or declaration of
estimated Taxes.
1.73 "Trigger Event" shall mean any of the following events:
(a) A party enters into, or publicly announces its intention to enter
into, an agreement or agreement in principle with respect to any
Acquisition Proposal or similar business combination or transaction other
than the transactions contemplated by this Agreement;
(b) A party's Board of Directors or any committee thereof shall have
withdrawn its approval or recommendation of the Exchange Offer, or this
Agreement, or modified its approval or recommendation in a manner adverse
to the other party; or
(c) A party's Board of Directors or any committee thereof shall have
made any recommendation with respect to an Acquisition Proposal by any
person (other than In Focus) other than a recommendation rejecting or
against such Acquisition Proposal.
1.74 "US GAAP" shall have the meaning set forth in Recital F.
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ANNEX B
FORM OF AFFILIATE LETTER
In Focus Systems, Inc.
27700B SW Parkway Avenue
Wilsonville, Oregon 97070
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed to
be an "affiliate" of Proxima ASA, a corporation organized and existing under the
laws of the Kingdom of Norway ("Proxima"), as the term "affiliate" is (i)
defined for purposes of paragraphs (c) and (d) of Rule 145 of the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Act"), and/or (ii) used in and for purposes of Accounting Series Releases No.
130 and No. 135, as amended, of the Commission. Capitalized terms used in this
letter without definition shall have the meanings assigned to them in the
Business Combination Agreement, dated as of March 5, 2000 (the "Business
Combination Agreement"), by and among Proxima and In Focus Systems, Inc. ("In
Focus").
Pursuant to the terms and conditions of the Business Combination Agreement,
In Focus will make a public tender offer (the "Exchange Offer") to the holders
of ordinary shares, par value NOK 2 per share, of Proxima (the "Proxima Ordinary
Shares"), to exchange share of In Focus common stock, no par
value per share (the "In Focus Common Stock"), for each Proxima Ordinary Share.
In Focus will also assume the Proxima US Options (the "Assumed US Options") and
offer to assume Proxima Norwegian Options (the "Assumed Norwegian Options").
Accordingly, as a result of the Exchange Offer, I may receive In Focus Common
Stock and In Focus may assume any Proxima US Options and/or Proxima Norwegian
Options I hold.
1. I hereby represent, warrant and covenant to In Focus that if I receive
any In Focus Common Stock pursuant to the Exchange Offer or upon the exercise of
Assumed Norwegian Options or Assumed US Options:
A. I shall not make any offer, sale, pledge, transfer or other
disposition of In Focus Common Stock in violation of the Act or the Rules
and Regulations.
B. I have carefully read this letter and the Business Combination
Agreement and discussed the requirements of such documents and other
applicable limitations upon my ability to sell, transfer or otherwise
dispose of In Focus Common Stock, to the extent I felt necessary, with my
counsel or counsel for Proxima.
C. I have been advised that the issuance of any In Focus Common Stock
to me is being made pursuant to the exemption set forth in Rule 802
promulgated under the Act, and is being registered with the Oslo Stock
Exchange. However, I have also been advised that, because at the time the
Exchange Offer is submitted to Proxima's shareholders, (a) I may be deemed
to be an affiliate of Proxima and (b) the distribution by me of the In
Focus Common Stock has not been registered under the Act, I may not sell,
transfer or otherwise dispose of the In Focus Common Stock issued to me in
the Exchange Offer or the Proxima Merger unless (i) such sale, transfer or
other disposition is made in conformity with the volume and other
limitations of Rule 145 promulgated by the Commission under the Act, (ii)
such sale, transfer or other disposition has been registered under the Act,
or (iii) in the opinion of counsel reasonably acceptable to In Focus, or a
"no action" letter obtained by the undersigned from the staff of the
Commission such sale, transfer or other disposition is otherwise exempt
from registration under the Act.
D. I understand that except as provided for in the Business
Combination Agreement, In Focus is under no obligation to register the
sale, transfer or other disposition of the In Focus Common Stock
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by me or on my behalf under the Act or, except as provided in paragraph 2
below, to take any other action necessary in order to make compliance with
an exemption from such registration available.
E. I further represent to, and covenant with, In Focus that I will
not, during the 30 days prior to the Effective Time, sell, transfer or
otherwise dispose of or reduce my risk (as contemplated by the SEC
Accounting Series Release No. 135) with respect to Proxima Ordinary Shares
that I may hold and, furthermore, that I will not sell, transfer or
otherwise dispose of or reduce my risk (as contemplated by SEC Accounting
Series Release No. 135) with respect to the In Focus Common Stock received
by me in the Exchange Offer or any other shares of capital stock of In
Focus until after such time as results covering at least 30 days of In
Focus's operations have been published by In Focus, in the form of a
quarterly earnings report, an effective registration statement filed with
the Commission, a report to the Commission on Form 10-K, or any other
public filing or announcement which includes the combined results of
operations of In Focus and Proxima (the period commencing 30 days prior to
the Effective Time and ending on the date of the publication of the
post-Effective Time financial results is referred to herein as the "Pooling
Period"). In Focus shall notify the "affiliates" of the publication of such
results.
F. Notwithstanding paragraph E, I understand that during the Pooling
Period, subject to providing written notice to In Focus, I will not be
prohibited from selling up to 10% of the In Focus Common Stock (the "10%
Shares") I receive or the Proxima Ordinary Shares I own or making
charitable contributions or bona fide gifts of the In Focus Common Stock I
receive or the Proxima Ordinary Shares I own, subject to the same
restrictions and provided any such sale, contribution, gift or other
disposition would not cause the aggregate volume of such transactions by
all "affiliates" to exceed 1%. The 10% and 1% calculations shall be made in
accordance with SEC Accounting Series Release No. 135 as amended by Staff
Accounting Bulletin No. 76. I covenant with In Focus that I will not sell,
transfer or otherwise dispose of any 10% Shares during the period
commencing on the Effective Time and ending on the last day of the Pooling
Period except in compliance with Rule 145(d)(i) under the Act or pursuant
to charitable contributions or bona fide gifts.
G. Execution of this letter should not be considered an admission on
my part that I am an "affiliate" of Proxima as described in the first
paragraph of this letter, or as a waiver of any rights I may have to object
to any claim that I am such an affiliate on or after the date of this
letter.
2. By In Focus's acceptance of this letter, In Focus hereby agrees with me
that for so long as and to the extent necessary to permit me to sell the In
Focus Common Stock pursuant to Rule 145 and, to the extent applicable, Rule 144
under the Act, In Focus shall (a) use its reasonable best efforts (i) to file,
on a timely basis, all reports and data required to be filed with the Commission
by it pursuant to Section 13 of the Securities Exchange Act of 1934, as amended,
and (ii) to furnish me upon request a written statement as to whether In Focus
has complied with such reporting requirements during the 12 months preceding any
proposed sale of the In Focus Common Stock by me under Rule 145, and (b)
otherwise use its reasonable efforts to permit such sales pursuant to Rule 145
and Rule 144.
Very truly yours,
--------------------------------------
Name:
----------------------------------
Agreed and accepted this day of March, 2000, by
In Focus Systems, Inc.
By:
-----------------------------------------------------
Name:
----------------------------------------------------
Title:
----------------------------------------------------
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ANNEX C
March 4, 2000
Board of Directors
In Focus Systems, Inc.
27700B SW Parkway Avenue
Willsonville, OR 97070
Ladies and Gentlemen:
You have requested our opinion as to the fairness, from a financial point
of view, to In Focus Systems, Inc. (the "Company") of the Exchange Ratio (as
defined below) contemplated by the Business Combination Agreement (the
"Agreement") to be entered into between the Company and Proxima ASA, a company
organized under the laws of the Kingdom of Norway ("Proxima").
As more specifically set forth in the Agreement, and subject to the terms
and conditions thereof, the Company and Proxima propose to enter into a business
combination (the "Business Combination") by means of having the Company make a
public offer (the "Exchange Offer") to the holders of the outstanding ordinary
shares of Proxima (the "Proxima Ordinary Shares") to exchange 0.3615 of a share
of the common stock, no par value, of the Company (the "Company Common Stock")
for each Proxima Ordinary Share held by such holder (the "Exchange Ratio").
In arriving at our opinion, we reviewed a draft of the Agreement, dated
March 1, 2000, and held discussions with certain senior officers, directors and
other representatives and advisors of each of the Company and Proxima concerning
the businesses, operations and prospects of the Company and Proxima. We examined
certain publicly available business and financial information relating to the
Company and Proxima as well as certain financial forecasts and other information
and data for the Company and Proxima which were provided to or otherwise
discussed with us by the managements of the Company and Proxima, including
certain strategic implications and operational benefits anticipated to result
from the Business Combination. We reviewed the financial terms of the Business
Combination as set forth in the Agreement in relation to, among other things:
current and historical market prices and trading volumes of Company Common Stock
and Proxima Ordinary Shares; the historical and projected earnings and other
operating data of the Company and Proxima; and the historical and projected
capitalization and financial condition of the Company and Proxima. We
considered, to the extent publicly available, the financial terms of certain
other similar transactions recently effected that we considered relevant in
evaluating the Exchange Ratio and analyzed certain financial, stock market and
other publicly available information relating to the businesses of other
companies whose operations we considered relevant in evaluating those of the
Company and Proxima. We also evaluated the pro forma financial impact of the
Business Combination on the Company. In addition to the foregoing, we conducted
such other analyses and examinations and considered such other information and
financial, economic and market criteria as we deemed appropriate in arriving at
our opinion.
In rendering our opinion, we have assumed and relied, without independent
verification, upon the accuracy and completeness of all financial and other
information and data publicly available or furnished to or otherwise reviewed by
or discussed with us and have further relied upon the assurances of the
managements of the Company and Proxima that they are not aware of any facts that
would make any of such information inaccurate or misleading. With respect to
financial forecasts and other information and data provided to or otherwise
reviewed by or discussed with us, we have been advised by the managements of the
Company and Proxima that such forecasts and other information and data were
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the managements of the Company and Proxima as to the future
financial performance of the Company and Proxima and the strategic implications
and operational benefits anticipated to result from the Business Combination. We
express no view with respect to such forecasts and other information and data or
the assumptions on which they were based. We have assumed, with your consent,
that the Business Combination will be treated as a
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tax-free reorganization for U.S. federal income tax purposes and that it
qualifies, and will be accounted for, as a "pooling of interests" in accordance
with generally accepted accounting principles. We have not made or been provided
with an independent evaluation or appraisal of the assets or liabilities
(contingent or otherwise) of the Company or Proxima nor have we made any
physical inspection of the properties or assets of the Company or Proxima. You
have advised us, and we have assumed, that the final terms of the Agreement will
not vary materially from those set forth in the draft reviewed by us. We have
further assumed that the Business Combination will be consummated in a timely
fashion in accordance with the terms of the Agreement without waiver of any of
the conditions precedent to the Business Combination contained in the Agreement.
We were not requested to consider, and our opinion does not address, the
relative merits of the Business Combination as compared to any alternative
business strategies that might exist for the Company. Our opinion is, in any
event, limited to the fairness, from a financial point of view, of the Exchange
Ratio in the Business Combination and does not address the Company's underlying
business decision to effect the Business Combination. We are not expressing any
opinion as to the likely trading range of the Company's Common Stock subsequent
to the Business Combination. Our opinion necessarily is based upon information
available to us and financial, stock market and other conditions and
circumstances existing and disclosed to us as of the date hereof and we assume
no responsibility to update or revise our opinion based upon circumstances or
events occurring after the date hereof.
Salomon Smith Barney Inc. is acting as financial advisor to the Company in
connection with the Business Combination and will receive a fee for our
services, a portion of which is payable only upon the consummation of the
Business Combination. In the ordinary course of our business, we and our
affiliates may actively trade or hold the securities of the Company and Proxima
for our own account or for the account of our customers and, accordingly, may at
any time hold a long or short position in such securities. Salomon Smith Barney
Inc. and its affiliates (including Citigroup Inc. and its affiliates) may
maintain relationships with the Company and Proxima and their respective
affiliates.
Our advisory services and the opinion expressed herein are provided for the
information of the Board of Directors of the Company in its evaluation of the
Business Combination and our opinion is not intended to be and does not
constitute a recommendation of the Business Combination to the Company or a
recommendation to any stockholder as to how such stockholder should vote on any
matters relating to the Business Combination.
Based upon and subject to the foregoing, we are of the opinion that, as of
the date hereof, the Exchange Ratio is fair, from a financial point of view, to
the Company.
Very truly yours,
SALOMON SMITH BARNEY INC.
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