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
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Trikon Technologies, Inc.
(Name of Registrant as Specified in Its Charter)
None
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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2) Aggregate number of securities to which transaction applies:
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pursuant to exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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TRIKON TECHNOLOGIES, INC.
RINGLAND WAY
NEWPORT, SOUTH WALES NP18 2TA
UNITED KINGDOM
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
TO BE HELD MAY 15, 2001
----------------
The annual meeting of stockholders of Trikon Technologies, Inc. ("Trikon" or
the "Company") will be held at the offices of McDermott, Will & Emery, 50
Rockefeller Plaza, 11th Floor, New York, New York 10020, on Tuesday, May 15,
2001, at 9:00 a.m., for the following purposes:
1. For the holders of Common Stock to elect four directors of the board
of directors to serve until the next annual meeting of stockholders
and until their successors have been elected and qualified. The
nominees for election by holders of Common Stock are Christopher D.
Dobson, Nigel Wheeler, Richard M. Conn and Robert R. Anderson.
2. For the holders of Series H Preferred Stock to elect one director of
the board of directors to serve until the next annual meeting of
stockholders and until his successor has been elected and qualified.
The nominee for election by the holders of Series H Preferred Stock
is Stephen N. Wertheimer.
3. To approve an amendment to Trikon's 1991 Stock Option Plan, amended
and restated as of March 7, 2001, to increase the number of shares
of Common Stock that may be issued under such plan from 1,500,000 to
2,250,000
4. To ratify the selection of Ernst & Young as Trikon's independent
public accountants for the fiscal year ending December 31, 2001.
5. To act upon such other matters as may properly come before the
annual meeting or any adjournments or postponements thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this notice. Except with respect to proposal 2, each
share of Trikon's Common Stock is entitled to one vote on all matters
presented at the annual meeting. With respect to proposal 2, each share of
Trikon's Series H Preferred Stock is entitled to one vote. The record date for
determining those stockholders who will be entitled to notice of, and to vote
at, the annual meeting and at any adjournment thereof is April 11, 2001. A
list of stockholders entitled to vote at the annual meeting will be available
for inspection at the offices of Trikon.
Whether or not you plan to attend the annual meeting in person, please
complete, date, sign, and return the enclosed proxy promptly in the
accompanying reply envelope. Your proxy may be revoked at any time prior to
the annual meeting. If you decide to attend the annual meeting and wish to
change your proxy vote, you may do so automatically by voting in person at the
annual meeting.
By Order of the Board of Directors
William J. Chappell
Secretary
Newport, South Wales, United Kingdom
April 13, 2001
YOUR VOTE IS IMPORTANT.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN, AND DATE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE AND RETURN
IT IN THE ENCLOSED REPLY ENVELOPE (TO WHICH NO POSTAGE NEED BE AFFIXED IF
MAILED IN THE UNITED STATES).
TRIKON TECHNOLOGIES, INC.
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 15, 2001
----------------
INTRODUCTION
These proxy materials are furnished in connection with the solicitation of
proxies by the board of directors of Trikon Technologies, Inc., a California
corporation, for use at its annual meeting of stockholders to be held on
Tuesday, May 15, 2001, at 9:00 a.m., at the offices of McDermott, Will &
Emery, 50 Rockefeller Plaza, 11th Floor, New York, New York 10020, and at any
adjournment or postponement of the annual meeting. These proxy materials were
first mailed on or about April 16, 2001, to all stockholders entitled to vote
at the annual meeting.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the annual meeting
are summarized in the accompanying Notice of Annual Meeting of Stockholders.
Each proposal is described in more detail in this Proxy Statement.
VOTING RIGHTS AND SOLICITATION
Voting
Trikon's common stock, no par value (the "Common Stock"), and Series H
Preferred Stock, no par value (the "Series H Preferred Stock"), are the only
classes of securities entitled to vote at the annual meeting. Holders of
Trikon's Common Stock are entitled to vote on all proposals, other than
proposal 2. Holders of Trikon's Series H Preferred Stock are only entitled to
vote on proposal 2. On April 11, 2001, the record date for determination of
stockholders entitled to vote at the annual meeting, there were 11,844,109
shares of Common Stock and 273,421 shares of Series H Preferred Stock
outstanding. Each stockholder of record on April 11, 2001 is entitled to one
vote for each share of Common Stock and one vote for each share of Series H
Preferred Stock held on such date.
A majority of the shares of Common Stock, represented in person or by proxy,
shall constitute a quorum for the transaction of business other than for
proposal 2. A majority of the shares of Series H Preferred Stock, represented
in person or by proxy, shall constitute a quorum for the election of the
director to be elected by the holders of Series H Preferred Stock as set forth
in proposal 2. Abstentions and broker non-votes are counted as present for the
purpose of determining the presence of a quorum for the transaction of
business. With respect to the election of directors by holders of Common
Stock, the four nominees receiving the greatest number of affirmative votes
will be elected. With respect to the election of a director by holders of
Series H Preferred stock, the nominee receiving the greatest number of
affirmative votes will be elected.
With respect to the ratification of the selection of Ernst & Young as
Trikon's independent public accountants for the fiscal year ending December
31, 2001, and the amendment to Trikon's 1991 Stock Option Plan, amended and
restated as of March 7, 2001 (the "Stock Option Plan"), the affirmative vote
of a majority of the shares of Common Stock present or represented and voting
at the annual meeting will constitute ratification of such proposals, provided
that the shares voting affirmatively also constitute at least a majority of
the required quorum. Accordingly, abstentions and broker non-votes can have
the effect of preventing approval of the ratification of the selection of
Ernst & Young as Trikon's independent public accountants and the amendment of
the Stock Option Plan, if the number of affirmative votes, though a majority
of the votes cast, does not constitute a majority of the required quorum.
In the election of directors by holders of Common Stock, a stockholder may
cumulate his votes. If the voting for directors is conducted by cumulative
voting, each share will be entitled to a number of votes equal
1
to the number of directors to be elected, which votes may be cast for a single
nominee or distributed among two or more nominees in such proportions as the
stockholder or proxy deems fit. No shareholder shall be entitled to cumulate
his votes, unless the candidate's or candidates' names for which he desires to
cumulate his votes have been placed in nomination prior to the voting, and the
shareholder has given notice of his intention to cumulate his votes at the
meeting prior to the voting. If any one stockholder has given such notice, all
stockholders may cumulate their votes in such election of directors.
Proxies
Whether or not you are able to attend the annual meeting, you are urged to
complete and return the appropriate enclosed proxy card, which is solicited by
the board of directors and which will be voted as you direct on your proxy
card when properly completed. In the event no directions are specified, such
proxies will be voted FOR the approval of proposals 1, 2, 3 and 4 described in
the accompanying Notice and Proxy Statement and in the discretion of the proxy
holders as to other matters that may properly come before the annual meeting.
You may revoke or change your proxy at any time before the annual meeting. To
do this, send a written notice of revocation or another signed proxy card with
a later date to the Secretary of Trikon at Trikon's principal executive
offices before the beginning of the annual meeting. You may also revoke your
proxy by attending the annual meeting and voting in person.
The Common Stock proxy is only to be used to vote shares of Common Stock.
The Series H Preferred Stock proxy is only to be used to vote shares of Series
H Preferred Stock. Holders of both Common Stock and series H Preferred Stock
should complete both the Common Stock proxy, to vote their shares of Common
Stock, and the Series H Preferred Stock proxy, to vote their shares of Series
H Preferred Stock.
Solicitation of Proxies
Trikon will bear the entire cost of solicitation, including the preparation,
assembly, printing, and mailing of this Proxy Statement, the proxies, and any
additional solicitation material furnished to stockholders.
Copies of solicitation material will be furnished to brokerage houses,
fiduciaries, and custodians holding shares in their names that are
beneficially owned by others so that they may forward this solicitation
material to such beneficial owners. In addition, Trikon may reimburse such
persons for their costs of forwarding the solicitation material to such
beneficial owners. The original solicitation of proxies by mail may be
supplemented by solicitation by telephone, telegram, or other means by
directors, officers, employees, or agents of Trikon. No additional
compensation will be paid to these individuals for any such services. Except
as described above, Trikon does not intend to solicit proxies other than by
mail.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
PROPOSAL NO. 1:
ELECTION OF DIRECTORS BY HOLDERS OF COMMON STOCK
General
The Certificate of Determination that establishes the rights, preferences
and privileges of the Series H Preferred Stock provides that the holders of
Series H Preferred Stock are entitled to elect one director if the board of
directors of Trikon is constituted of five or fewer members and two directors
if the board of directors is constituted of more than five members. Under the
By-laws of Trikon, the number of directors constituting the entire board of
directors may be increased or decreased, within the range of not less than
five and not more than nine directors, by majority action of the board of
directors. The currently authorized number of directors is five. As a result,
four directors will be elected at this meeting by holders of Common Stock and
one director will be elected by the holders of Series H Preferred Stock.
At the annual meeting, Trikon is nominating four candidates for election to
the board of directors by holders of Common Stock. Unless otherwise
instructed, the proxy holders will vote the proxies received from holders of
Common Stock by them for the four nominees listed herein. In the event that
any nominee of Trikon is unable or declines to accept nomination for election,
the proxies will be voted for any nominee who shall be recommended by the
present board of directors. Management has no knowledge that any of the
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persons named will be unavailable or unwilling to serve. The terms of office
for each person elected as a director will continue until the next annual
meeting of stockholders and until such director's successor has been elected
and qualified.
The four nominees who receive the greatest number of affirmative votes of
shares of Common Stock shall become directors. Upon the request of any person
entitled to vote for directors to be elected by the holders of Common Stock
prior to the voting, each holder of Common Stock voting in the election of
directors may cumulate such holder's votes and give one candidate a number of
votes equal to the number of directors to be elected multiplied by the number
of shares of Common Stock held by such holder, or distribute his votes on the
same principle among as many candidates as he may select. However, no
stockholder shall be entitled to cumulate votes for any candidate unless,
pursuant to the By-laws of Trikon, the candidate's name has been placed in
nomination prior to the voting.
To the knowledge of Trikon, no arrangement or understanding exists between
any of such four nominees and any other person or persons pursuant to whom any
nominee was or is to be selected as a director or nominee. None of the
nominees has any family relationship to any other nominee or to any executive
officer of Trikon.
Recommendation of The Board of Directors
The board of directors recommends a vote FOR the nominees listed below for
election by the holders of Common Stock.
Christopher D. Dobson. Mr. Dobson joined Trikon's board of directors as
Chairman in November 1996 upon the acquisition of Trikon Limited. From
December of 1997 to June 1998, Mr. Dobson was Chief Executive Officer of the
Company. Mr. Dobson was appointed Chief Technical Officer in May 1998. Mr.
Dobson was a co-founder of Trikon Limited and was the Chairman of Trikon
Limited's board of directors from 1971 to November 1996.
Nigel Wheeler. Mr. Wheeler joined Trikon as a director and the President
and Chief Operating Officer in November 1996 upon the acquisition of Trikon
Limited. In October 1998, Mr. Wheeler was appointed Chief Executive Officer.
From July 1993 to November 1996, Mr. Wheeler served as Trikon Limited's Chief
Executive Officer.
Richard M. Conn. Mr. Conn was elected to the board of directors of Trikon
in January 1998. Mr. Conn formed Business Development Consulting in early 1997
and serves as a consultant in the semiconductor equipment industry. Prior to
forming Business Development Consulting, Mr. Conn was a Vice President of
Sales at KLA Instruments Corporation, the predecessor to KLA-Tencor ("KLA")
from 1984 until 1996. During his tenure at KLA, Mr. Conn was a member of the
boards of directors of KLA's subsidiaries in the United Kingdom, France and
Germany. Mr. Conn has held several other positions in the semiconductor
industry at companies that include Eaton Semiconductor Equipment, Applied
Materials UK and ITT Semiconductors.
Robert R. Anderson. Mr. Anderson was elected to the board of directors of
Trikon in April 2000. Mr. Anderson is a private investor. From January 1994 to
January 31, 2001, he was Chairman of Silicon Valley Research, Inc., a
semiconductor design automation software company, and its Chief Executive
Officer from December 1996 to August 1998, and from April 1994 to July 1995.
He also served as Chairman and Chief Executive Officer of Yield Dynamics,
Inc., a private semiconductor process control software company, from October
1998 to October 2000, and presently serves as a director. In 1975, Mr.
Anderson co-founded KLA, a supplier of semiconductor process control systems,
from which he retired in 1994. He served as Vice-Chairman of KLA from November
1991 to March 1994, and as Chairman of KLA from May 1985 to November 1991.
Prior to that, Mr. Anderson served as Chief Operating Officer and Chief
Financial Officer of KLA. In addition to serving as a director of Trikon, Mr.
Anderson currently serves as a director of MKS Instruments, Inc., Metron
Technology N.V., and Aehr Test Systems, Inc. Furthermore, he serves as a
director for three other private development stage companies, and as a trustee
of Bentley College.
3
PROPOSAL NO. 2:
ELECTION OF A DIRECTOR BY HOLDERS OF SERIES H PREFERRED STOCK
General
At the annual meeting, Trikon is nominating one candidate for election to
the board of directors by holders of Series H Preferred Stock. Unless
otherwise instructed, the proxy holders will vote the proxies received from
holders of Series H Preferred Stock by them for the nominee listed herein. In
the event that the nominee of Trikon listed below is unable or declines to
accept nomination for election, the proxies will be voted for any nominee who
shall be recommended by the present board of directors. Management has no
present knowledge that the person named will be unavailable or unwilling to
serve. The terms of office for the person elected as a director will continue
until the next annual meeting of stockholders and until such director's
successor has been elected and qualified. The nominee who receives the
greatest number of affirmative votes of shares of Series H Preferred Stock
shall become a director.
To the knowledge of Trikon, no arrangement or understanding exists between
the nominee for the director to be elected by the holders of Series H
Preferred Stock and any other person or persons pursuant to which the nominee
was or is to be selected as a director or nominee. The nominee does not have
any family relationship to any other nominee or to any executive officer of
Trikon.
Recommendation of the Board of Directors
The board of directors recommends a vote FOR the nominee listed below for
election by the holders of Series H Preferred Stock.
Stephen N. Wertheimer. Mr. Wertheimer was appointed to the board of
directors in June 1998. He has been a Managing Director of Credit Research and
Trading LLC since 1996. He was the President and founder of Water Capital
Corp. from 1991 to 1996. From 1988 to 1991, he was a Managing Director for
Paine Webber Incorporated. Mr. Wertheimer also currently serves as a director
of El Paso Electric Company, Greenwich Fine Arts, Inc., and SpectruMedix
Corporation. Mr. Wertheimer also serves as a member of the compensation
committee of SpectruMedix Corporation.
Information Concerning Nominees and Incumbent Directors
Nominees Age Positions and Offices Held with Trikon
- -------- --- --------------------------------------
Richard M. Conn(1)(2) .......................... 57 Director
Christopher D. Dobson .......................... 65 Director, Chairman of the Board and Chief Technical Officer
Nigel Wheeler .................................. 51 Director, President, Chief Operating Officer, and Chief Executive
Officer
Stephen N. Wertheimer (1)(2) ................... 50 Director
Robert R. Anderson(1)(2) ....................... 63 Director
- ---------------
(1) Member of audit committee
(2) Member of compensation committee
Board Committees and Meetings
During the fiscal year ended December 31, 2000, the board of directors held
six meetings. During this period, each of the incumbent directors attended or
participated in each meeting of the board of directors and each meeting held
by all committees of the board on which each such director served.
Committees of the Board of Directors
The board of directors has two committees: the Audit Committee and the
Compensation Committee.
4
The Audit Committee, which is currently composed of Messrs. Anderson, Conn,
and Wertheimer, each of whom is independent within the meaning of the rules of
the NASD, met four times during 2000. The Audit Committee operates under a
written charter adopted by the Board. Its functions and qualifications for
membership are set forth in its charter, a copy of which is attached as
Exhibit A to this Proxy Statement.
The Compensation Committee, which is currently composed of Messrs. Anderson,
Conn, and Wertheimer, met twice during 2000. The Compensation Committee
administers Trikon's Stock Option Plan and designates compensation levels for
officers and directors of Trikon.
PROPOSAL NO. 3:
APPROVAL OF AMENDMENTS TO THE 1991 STOCK OPTION PLAN
Trikon's stockholders are being asked to approve an amendment to Trikon's
Stock Option Plan that will increase the number of shares of Common Stock
reserved for issuance under the Stock Option Plan by 750,000 shares, from
1,500,000 to 2,250,000.
The amendment to the Stock Option Plan that is the subject of this proposal
was approved by the board of directors at a meeting on March 7, 2001 and is
subject to stockholder approval at the annual meeting. The purpose of the
amendment is to increase the number of shares reserved for issuance under the
Stock Option Plan, thereby affording the Company greater ability to offer
incentive based compensation. A copy of the Amended and Restated Stock Option
Plan, as proposed to be adopted, is attached hereto as Exhibit B.
The Stock Option Plan became effective upon adoption by the board of
directors on December 11, 1990, and was originally entitled the Nonqualified
Stock Option Plan. The Stock Option Plan was last amended and restated by the
board of directors on March 21, 2000, and was subsequently approved by the
stockholders during the same year. In October 1996, in connection with the
acquisition of Electrotech Limited, a United Kingdom Company, the board of
directors adopted the Share Option Scheme (the "U.K. Plan") as a separate
subplan within the Stock Option Plan to be used for option grants to employees
resident in the United Kingdom.
The Stock Option Plan was previously amended and restated by the board of
directors on July 19, 1998, and subsequently approved by the stockholders on
July 28, 1998. The board of directors further amended and restated the Stock
Option Plan on April 26, 1999, and such amendment was approved by the
stockholders on June 14, 1999. The share reserve under the Stock Option Plan
is available for issuance pursuant to options granted under either the Stock
Option Plan or the U.K. Plan incorporated therein. Options granted under the
U.K. Plan have terms similar to the option grants made under the Stock Option
Plan, except for certain differences required to satisfy the applicable tax
and corporate law requirements in effect in the United Kingdom.
The following is a summary of the principal features of the Stock Option
Plan as most recently amended, and the primary differences between the U.K.
Plan and the Stock Option Plan. The summary, however, does not purport to be a
complete description of all the provisions of either plan. Any stockholder of
Trikon who wishes to obtain a copy of the actual plan documents may do so upon
written request to the Corporate Secretary at Trikon's principal executive
offices in South Wales, United Kingdom.
Administration
The Stock Option Plan may be administered by the board of directors or a
committee of the board of directors. Currently, the Stock Option Plan is
administered by the compensation committee of the board of directors. The
entity responsible for administering the Stock Option Plan will be referred to
in this proposal as the Plan Administrator.
Eligibility
Employees, non-employee board members, and independent consultants and
advisors in the service of Trikon or its subsidiaries are eligible to receive
options to purchase shares of Common Stock under the Stock Option Plan.
5
As of March 16, 2001, a total of approximately 3 executive officers, 449
other employees, and 3 non-employee Board members were eligible to participate
in the Stock Option Plan.
Share Reserve
A total of 2,250,000 shares of Common Stock has been reserved for issuance
in the aggregate under the Stock Option Plan and the U.K. Plan, provided the
stockholders approve the 750,000 share increase that forms part of this
proposal.
In no event may any one participant in the Stock Option Plan be granted
stock options for more than 210,000 shares per calendar year, effective with
the 1999 calendar year. Stockholder approval of this proposal will accordingly
constitute approval of such share limitation for purposes of Internal Revenue
Code Section 162(m).
To the extent an outstanding option under the Stock Option Plan expires or
terminates for any reason prior to exercise in full, the shares subject to the
portion of the option not so exercised will be available for subsequent option
grants under the Stock Option Plan.
Should any change be made to the Common Stock issuable under the Stock
Option Plan, whether by reorganization, merger, consolidation,
recapitalization, reclassification, stock split, stock dividend or similar
capital adjustment, appropriate adjustments will be made to (i) the maximum
number of shares of Common Stock issuable under the Stock Option Plan, (ii)
the maximum number of shares for which any one person may be granted stock
options under the Stock Option Plan per calendar year, and (iii) the number,
price and kind of securities subject to any outstanding options under the
Stock Option Plan.
Valuation
The fair market value per share of Common Stock on any relevant date under
the Option Plan will be the closing selling price per share on the date
immediately prior to the date in question on the NASDAQ National Market. On
April 11, 2001, the closing selling price per share was $9.10.
Option Grants
Options must be granted with an exercise price per share not less than the
fair market value per share of Common Stock on the grant date. No granted
option may have a term in excess of ten (10) years. Options granted under the
Stock Option Plan will generally become exercisable in four (4) successive
equal annual installments upon the optionee's completion of each year of
service over the four (4)-year period measured from the grant date. The board
of directors may not impose a vesting schedule upon granted options which is
more restrictive than twenty percent (20%) per year vesting, with the initial
vesting to occur not later than one (1) year after the date of grant of the
option. However, such limitation shall not be applicable to any option granted
to individuals who are officers, directors or independent consultants of
Trikon.
Upon termination of employment for reasons other than death, the optionee
will have thirty (30) days in which to exercise his or her outstanding options
to the extent those options are exercisable for one or more option shares at
the time of such termination of employment. Upon termination of employment due
to death or disability, the optionee will have either 180 days or one year,
respectively, from the date of termination in which to exercise such options.
Stockholder Rights and Option Assignability
An optionee will not have any stockholder rights pursuant to an outstanding
option until a stock certificate is issued representing the shares purchased
upon the exercise of such option.
Options are generally not assignable or transferable other than by will or
the laws of inheritance and, during the optionee's lifetime, the option may be
exercised only by the optionee. However, the Plan Administrator may allow non-
statutory options to be transferred or assigned during the optionee's lifetime
to one or more members of the optionee's immediate family or to a trust
established exclusively for more or more such family members.
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Acceleration
In March 2000, the board of directors amended the Stock Option Plan to
provide that in the event of a dissolution or liquidation of the Company, or
any reorganization, merger or consolidation in which the Company does not
survive (each, a "Corporate Transaction"), each optionee shall have the right
until five (5) days before the effective date of the Corporate Transaction to
exercise in whole or in part any unexpired options issued to such optionee,
whether or not such options are vested and whether or not the surviving
corporation, if any, grants the optionee an option to purchase shares in the
surviving corporation.
The accelerated vesting of options in the event of a change in ownership or
control of Trikon may be seen as an anti-takeover provision and may have the
effect of discouraging a merger proposal, a takeover attempt or other efforts
to gain control of Trikon.
Financial Reports
Under the terms of the Stock Option Plan, Trikon shall deliver a balance
sheet and an income statement at least annually to each individual holding an
outstanding option, unless such individual is a key employee whose duties in
connection with Trikon assure such individual access to equivalent
information.
Amendment and Termination
The board of directors may amend or modify the Stock Option Plan in any or
all respects whatsoever, subject to any stockholder approval under applicable
law or regulation. The board of directors may terminate the Stock Option Plan
at any time, and the Stock Option Plan will, in all events, terminate on
December 31, 2003.
New Plan Benefits
As of the date hereof, the Company has not determined the timing or amount
of any future grants of additional options or other benefits under the Stock
Option Plan.
Federal Income Tax Consequences
Options granted under the Stock Option Plan may be either incentive stock
options, which satisfy the requirements of Section 422 of the Internal Revenue
Code, or non-statutory options which are not intended to satisfy such
requirements. The Federal income tax treatment for the two types of options
differs as follows:
Incentive Stock Options. No taxable income is recognized by the optionee at
the time of the option grant, and no taxable income is generally recognized at
the time the option is exercised. The optionee will, however, recognize
taxable income in the year in which the purchased shares are sold or otherwise
made the subject of disposition.
For Federal income tax purposes, dispositions are divided into two
categories: (i) qualifying and (ii) disqualifying. The optionee will make a
qualifying disposition of the purchased shares if the sale or disposition is
made more than two (2) years after the grant date of the option and more than
one (1) year after the exercise date. If the optionee fails to satisfy either
of these two holding periods prior to the sale or disposition, then a
disqualifying disposition of the purchased shares will result.
If the optionee makes a disqualifying disposition of the purchased shares,
then Trikon will be entitled to an income tax deduction, for the taxable year
in which such disposition occurs, equal to the excess of (i) the fair market
value of such shares on the date the option was exercised over (ii) the
exercise price paid for such shares. In no other instance will Trikon be
allowed a deduction with respect to the optionee's disposition of the
purchased shares. Trikon anticipates that any compensation deemed paid by
Trikon upon one or more disqualifying dispositions of incentive stock option
shares will not have to be taken into account for purposes of the $1 million
limitation per covered individual on the deductibility of the compensation
paid to certain executive officers of Trikon.
Non-statutory Options. No taxable income is recognized by an optionee upon
the grant of a non-statutory option. The optionee will in general recognize
ordinary income in the year in which the option is
7
exercised equal to the excess of the fair market value of the purchased shares
on the exercise date over the exercise price, and the optionee will be
required to satisfy the tax withholding requirements applicable to such
income.
Trikon will be entitled to an income tax deduction equal to the amount of
ordinary income recognized by the optionee in connection with the exercise of
the non-statutory option. The deduction will in general be allowed for the
taxable year of Trikon in which such ordinary income is recognized by the
optionee- Trikon anticipates that the compensation deemed paid by Trikon upon
the exercise of non-statutory options will not have to be taken into account
for purposes of the $1 million limitation per covered individual on the
deductibility of the compensation paid to certain executive officers of
Trikon.
Accounting Treatment
Option grants to employees and members of the board of directors with an
exercise price equal to the fair market value of the shares on the grant date
will not result under current generally accepted accounting principles in any
charge to Trikon's earnings, but Trikon must disclose, in pro-forma statements
to Trikon's financial statements, the impact the option grants would have upon
Trikon's reported earnings were the fair value of those options at the time of
grant treated as compensation expense. In addition, the number of outstanding
options may be a factor in determining Trikon's earnings per share on a fully-
diluted basis.
U.K. Plan
The following is a summary of the major differences between the provisions
of the U.K. Plan and those of the Stock Option Plan:
o Consultants and directors who are not required to devote more than
25 hours per week to Trikon or its subsidiaries are not eligible to
receive option grants under the U.K. Plan.
o The aggregate market value of the shares of Common Stock purchasable
under all outstanding options granted under the U.K. Plan and any
other option plan of Trikon to any one individual may not exceed
30,000 British pounds, with such value to be determined for each
option at the time of the grant.
o Options must be granted at an exercise price not less than the par
value per share.
o Options granted under the U.K. Plan are not transferable during the
optionee's lifetime.
o In the event of (i) certain changes in control of Trikon resulting
from a tender offer for the total outstanding securities of Trikon
or for all the shares of Common Stock, (ii) any court-ordered
reorganization of Trikon or (iii) a voluntary winding up of Trikon,
each outstanding option granted under the U.K. Plan will become
immediately exercisable for all the shares subject to that option
and may be exercised for any or all of those shares for a period of
up to six (6) months following the date on which the successor
entity obtains control of Trikon or the date the court orders such
reorganization or the date of the resolution for such winding up of
Trikon. However, no acceleration of an outstanding option will occur
in connection with a change in control of Trikon if the successor
entity assumes that option or replaces it with an option of
equivalent value.
Stockholder Approval Required
The affirmative vote of a majority of the shares present or represented and
voting at the annual meeting, together with the affirmative vote of the
required quorum, is required for approval of the amendment to the Stock Option
Plan.
Recommendation of the Board of Directors
The board of directors recommends a vote FOR the above proposal.
8
PROPOSAL NO. 4:
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee recommends, and the Board of Director selects,
independent public accountants for Trikon. The Audit Committee has recommended
that Ernst & Young, who served during the 2000 fiscal year, be selected as
Trikon's independent public accountants for 2001, and the Board has approved
the selection. Unless a stockholder directs otherwise, proxies will be voted
for the approval of the selection of Ernst & Young as independent public
accountants for 2001. If the stockholders do not approve the appointment of
Ernst & Young, the Board will consider the selection of other independent
public accountants for 2001.
At the annual meeting, the stockholders are being asked to ratify the
selection of Ernst & Young as Trikon's independent public accountants for the
fiscal year ending December 31, 2001. The affirmative vote of the majority of
shares of Common Stock present or represented and voting at the annual
meeting, together with the affirmative vote of at least a majority of the
required quorum, is required for approval of the ratification of Ernst & Young
as Trikon's independent public accountants.
In the event the stockholders fail to ratify the appointment, the board of
directors will reconsider its selection. Even if the selection is ratified,
the board of directors, in its discretion, may direct the appointment of a
different independent accounting firm for such fiscal year if the board of
directors feels that such a change would be in Trikon's and its stockholders,
best interests.
Audit Fees
The aggregate fees billed by Ernst & Young for professional services
rendered for (i) the audit of Trikon's annual financial statements set forth
in Trikon's Annual Report on Form 10-K for the fiscal year ended December 31,
2000, and (ii) the reviews of the financial statements included in Trikon's
Quarterly Reports on Form 10-Q for that fiscal year were $141,700.
Financial Information Systems Design and Implementation Fees
Trikon has not retained Ernst & Young to perform services in connection with
(i) operating or supervising the operation of Trikon's financial information
system or managing Trikon's local area network, or (ii) designing or
implementing a hardware or software system that aggregates source data
underlying the financial statements or generates information that is
significant to Trikon's financial statements taken as whole.
All Other Fees
The aggregate fees billed by Ernst & Young for all other professional
services rendered during the fiscal year ended December 31, 2000, other than
as stated above under the caption Audit Fees, were $119,737. These fees
include work performed by Ernst & Young with respect to tax compliance and
consulting.
The Audit Committee has advised Trikon that it has determined that the non-
audit services rendered by Ernst & Young during Trikon's most recent fiscal
year are compatible with maintaining the independence of such auditors.
Recommendation of the Board of Directors
The board of directors recommends that the stockholders vote FOR the
ratification of the selection of Ernst & Young to serve as Trikon's
independent public accountants for the fiscal year ending December 31, 2001.
PROPOSAL NO. 5:
OTHER MATTERS WHICH MAY COME BEFORE THE MEETING
The board of directors has no knowledge of any other matters that may come
before the annual meeting and does not intend to present any other matters.
However, if any other matters shall properly come before the meeting or any
adjournments thereof, the persons named as proxies will have discretionary
authority to vote the shares of Common Stock and Series H Preferred Stock
represented by the accompanying proxies in accordance with their best
judgment.
9
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
To the extent known by Trikon, the following table sets forth certain
information regarding beneficial ownership of Common Stock and Series H
Preferred Stock: (i) each person (or group or affiliated persons) who is known
by Trikon to own beneficially more than 5% of Trikon's outstanding Common
Stock or Series H Preferred Stock, (ii) each of Trikon's directors and
nominees for director, (iii) each of the executive officers named in the
"SUMMARY COMPENSATION TABLE" and (iv) Trikon's directors and executive
officers as a group. For purposes of calculating the percentage beneficially
owned, (i) the number of shares of Common Stock includes (x) 11,822,336 shares
of Common Stock outstanding as of February 21, 2001 and (y) the shares of
Common Stock subject to options and warrants held by the person or group that
are currently exercisable or exercisable within 60 days from February 21, 2001
and (ii) the number of shares of Series H Preferred Stock outstanding as of
February 21, 2001 was 273,453. Except as indicated in the footnotes to this
table, the persons named in the table have sole voting and investment power
with respect to all shares of Common Stock and Series H Preferred Stock shown
as beneficially owned by them, subject to community property laws, where
applicable. None of the directors, nominees for director or executive officers
of Trikon own any shares of the Series H Preferred Stock and Trikon is not
aware of any person who owns beneficially more than 5% of the outstanding
shares of Series H Preferred Stock.
Shares of
Name and Address of Common Stock Percent of
Beneficial Owner Beneficially Owned Common Stock
------------------ ------------------ ------------
William D. Witter, Inc.(1) ................ 952,350 8.1%
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Kern Capital Management, LLC(2) ........... 632,900 5.4%
114 West 47th Street
Suite 1926
New York, New York 10036
Christopher D. Dobson ..................... 1,634,614(3) 13.8%
Robert Anderson ........................... 22,250(4) *
Nicolas Carrington ........................ 17,973(5) *
Richard M. Conn ........................... 6,614(6) *
Jeremy Linnert ............................ 12,725(7) *
Stephen Wertheimer ........................ 6,300(8) *
Nigel Wheeler ............................. 138,845(9) 1.2%
All directors and executive officers as a
group (7 persons) ....................... 1,839,321(10) 15.3%
- ---------------
* Less than 1.0%
(1) The number of shares of common stock beneficially owned by William D.
Witter, Inc. ("Witter") is based on information in a Schedule 13G filed
by Witter on March 14, 2001.
(2) The number of shares of common stock beneficially owned by Kern Capital
Management, L.L.C. ("Kern") is based on information in a Schedule 13G
filed by Kern on February 12, 2001.
(3) Includes 1,149,281 restricted shares of Common Stock that vest 100% on
the earlier of (i) May 14, 2003, or (ii) the sale of all or
substantially all of the assets of Trikon.
(4) Includes 2,250 shares of Common Stock issuable under stock options
exercisable within 60 days of February 21, 2001.
(5) Includes 17,973 shares of Common Stock issuable under stock options
currently exercisable or exercisable within 60 days of February 21,
2001.
(6) Includes 6,614 shares of Common Stock issuable under stock options
currently exercisable or exercisable within 60 days of February 21,
2001.
10
(7) Includes 12,725 shares of Common Stock issuable under stock options
currently exercisable or exercisable within 60 days of February 21,
2001.
(8) Includes 6,300 shares of Common Stock issuable under stock options
currently exercisable or exercisable within 60 days of February 21,
2001.
(9) Includes 138,845 shares of Common Stock issuable under stock options
exercisable within 60 days of February 21, 2001.
(10) Includes 184,707 shares of Common Stock issuable under stock options
currently exercisable or exercisable within 60 days of February 21,
2001.
Compliance with SEC Reporting Requirements
Section 16(a) of the Exchange Act ("Section 16(a)"), requires Trikon's
directors and certain of its officers, and persons who own more than 10% of
Trikon's Common Stock (collectively, "Insiders"), to file reports of ownership
and changes in ownership with the Securities and Exchange Commission (the
"Commission"). Insiders are required by Commission regulations to furnish
Trikon with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Form 5s were
required for those persons, Trikon believes that its Insiders complied with
all applicable Section 16 filing requirements for 2000, on a timely basis.
11
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table sets forth all compensation received for services
rendered to Trikon in all capacities for the years ended December 31, 2000,
1999 and 1998, by (i) each person who served as Chief Executive Officer of
Trikon during the year ended December 31, 2000 and (ii) each of the other
executive officers of Trikon who were serving as executive officers at
December 31, 2000 and whose total compensation exceeded $100,000
(collectively, the "Named Executive Officers"). Perquisites amounting in
aggregate to the lesser of $50,000 or 10% of the total annual salary and bonus
reported for the named executive officer are not disclosed. For the purpose of
calculating salaries and other compensation paid in British pounds to Nigel
Wheeler, Christopher Dobson, Nicolas Carrington and Jeremy Linnert, the
conversion rate of 1.52 is used, which is the average rate of exchange for the
year ended December 31, 2000.
SUMMARY COMPENSATION TABLE
Securities
Compensation Restricted Stock Underlying All Other
Fiscal Year Salary-($) Bonus-($) Awards ($) Options/SAR(1) Compensation ($)
----------- ---------- --------- ---------------- -------------- ----------------
Nigel Wheeler(2) .................. 2000 248,005 124,000 50,000 78,811(3)
Director, President, Chief
Operating Officer, and Chief 1999 263,408 131,704 - 257,688 76,964(4)
Executive Officer 1998 266,111 - - 50,000 50,306(5)
Christopher D. Dobson(6) .......... 2000 292,128 298,214 - - 18,416(7)
Chairman of the Board and 1999 - - - - 17,237(8)
Chief Technical Officer 1998 235,727 - 7,183,004(9) - 22,640(10)
Nicolas Carrington(11) ............ 2000 122,735 360,490 - 5,000 16,633(12)
Senior Vice President, Sales 1999 117,564 79,962 - - 18,871(13)
and Field Operations 1998 118,842 - - 30,630 16,463(14)
Jeremy Linnert(15) ................ 2000 121,720 60,860 - 4,000 18,557(16)
Former Chief Financial Officer 1999 105,040 25,856 - - 17,340(17)
and Secretary 1998 106,196 - - 22,300 48,501(18)
- ---------------
(1) The number of shares of Common Stock underlying stock options granted in
each year has been adjusted for the effect of the one for ten reverse
stock split on December 17, 1999.
(2) Mr. Wheeler was appointed Chief Executive Officer in October 1998.
(3) Of this amount, $19,430 represents a car allowance and $55,801 represents
pension contributions by Trikon on behalf of this officer.
(4) Of this amount, $13,883 represents a car allowance and $59,266 represents
pension contributions by Trikon on behalf of the officer.
(5) Of this amount, $12,865 represents a car allowance and $36,438 represents
a pension contributions by Trikon on behalf of the officer.
(6) Mr. Dobson served as Chief Executive Officer from December 1991 to May
1998.
(7) Of this amount, $15,086 represents a car allowance.
(8) Of this amount, $13,303 represents a car allowance.
(9) In connection with the consummation of the exchange offer commenced on
April 14, 1998 (the "Exchange Offer"), the Company issued to Mr. Dobson
5,015,811 shares of restricted Common Stock and 6,476.995 shares of
restricted Series I Preferred Stock. Each share of restricted Series I
Preferred Stock automatically converted into 1,000 shares of restricted
Common Stock on July 28, 1998. The aggregate restricted stock was subject
to the one for ten reverse stock split carried out on December 17, 1999.
The restricted shares of Common Stock and Series I Preferred Stock were
valued at $7,183,004 based upon the closing price of the equivalent
unrestricted Common Stock on the date of grant. The restricted shares of
Common Stock issued to Mr. Dobson vest 100% on the earlier of (i) May 14,
2003, or (ii) the sale of all or substantially all of the assets of
Trikon. The number and value of Mr. Dobson's aggregate restricted stock
holdings at December 31, 2000 were 1,149,281 shares valued at
$10,217,108.
(10) Of this amount, $18,195 represents a car allowance.
12
(11) Mr. Carrington was appointed Senior Vice President Sales and Field
operations in December 1997.
(12) Of this amount, $10,518 represents a car allowance and $5,433 represents
pension contributions by Trikon on behalf of this officer.
(13) Of this amount, $11,748 represents a car allowance and $5,738 represents
pension contributions by Trikon on behalf of the officer.
(14) Of this amount, $10,916 represents a car allowance and $4,659 represents
pension contributions by Trikon on behalf of the officer.
(15) Mr. Linnert joined Trikon in November 1996 upon the acquisition of
Electrotech. He served as Acting Chief Financial Officer and Secretary
from December 1998 through January 2001.
(16) Of this amount, $11,247 represents a car allowance and $5,616 represents
a pension contribution by Trikon on behalf of the officer.
(17) Of this amount $10,748 represents a car allowance and $5,260 represents
pension contributions paid by Trikon on behalf of the officer.
(18) Of this amount, $33,276 represents consideration for Mr. Linnert's
agreement to stand for election as a director for the period from January
to June 1998, $9,955 represents a car allowance and $3,938 represents
pension contributions paid by Trikon on behalf of the officer.
Option Grants in Last Fiscal Year
The following table sets forth each grant of stock options made during the
year ended December 31, 2000 to each of the Named Executive Officers. No stock
appreciation rights ("SARs") have ever been granted by Trikon.
Potential
Realizable Value
at Assumed
Annual Rates of
Number of Stock Price
Securities Percent of Total Appreciation for
Underlying Options Granted Exercise Option Term(2)
Options to Employees in Price Expiration ---------------
Granted (#) Fiscal Year (%) ($/sh)(1) Date 5%($) 10%($)
----------- ---------------- --------- ---------- ------- -------
Nigel Wheeler....................... 50,000(3) 20.9% 10.6875 01/04/10 336,066 851,656
Christopher D. Dobson............... - - - - - -
Nicolas Carrington.................. 5,000(4) 2.1% 14.3750 03/07/10 45,202 114,550
Jeremy Linnert...................... 4,000(5) 1.7% 14.3750 03/03/10 36,161 91,640
- ---------------
(1) Represents the fair market value of the underlying shares of Common
Stock at the time of grant.
(2) Represents the value of the shares of Common Stock issuable upon the
exercise of the option, assuming the stated rates of price appreciation
for ten years, compounded annually, with the aggregate exercise price
deducted from the final appreciated value. Such annual rates of
appreciation are for illustrative purposes only, are based on
requirements of the commission and do not reflect Trikon's estimate of
future stock appreciation. No assurance can be given that such rates of
appreciation, or any appreciation, will be achieved.
(3) Represents stock options that vest in equal, annual increments of 25%
over the four-year period of service measured from their date of grant,
January 4, 2000.
(4) Represents stock options that vest in equal, annual increments of 25%
over the four-year period of service measured from their date of grant,
March 7, 2000.
(5) Represents stock options that vest in equal, annual increments of 25%
over the four-year period of service measured from their date of grant,
March 3, 2000.
13
Aggregated Stock Option Exercises in Last Fiscal Year and Fiscal Year-end
Option Values
The following table sets forth the number of exercisable and unexercisable
options held by each of the Named Executive Officers at December 31, 2000. No
shares of Common Stock were acquired upon the exercise of stock options by the
Named Executive Officers during the fiscal year 2000.
Number of Securities Underlying Value of Unexercised In-the-Money
Unexercised Options at Fiscal Year-End Options at Fiscal Year End
Name Exercisable/Unexercisable (#) Exercisable/Unexercisable ($)
- ---- -------------------------------------- ---------------------------------
Nigel Wheeler.......................... 89,442 / 318,266 575,329 / 1,566,948
Christopher D. Dobson.................. - -
Nicolas Carrington..................... 15,315 / 20,315 107,284 / 107,284
Jeremy Linnert......................... 11,150 / 14,575 84,210 / 84,210
Pension Plans
The following table shows the estimated annual pension benefits payable to a
covered participant at normal retirement age, which is age 65, under Trikon's
defined benefit pension plan, the Electrotech Retirement Benefits Scheme. (For
female members, pension earned prior to 6th April 1996 may be taken unreduced
from age 60.) The Electrotech Retirement Benefits Scheme was originally
initiated by Electrotech. As a result, only former Electrotech employees are
covered participants. Plan members are required to contribute at the rate of
5% of taxable remuneration, the balance of the cost being met by Trikon.
Benefits are provided on retirement, death and withdrawal, with vesting after
two years of service in the plan. Pensions increase in payment at the rate of
5% per annum. Benefits are calculated with reference to taxable remuneration
and years of service in the plan and are not subject to offsets for social
security retirement benefits:
Pension Plan Table
Years of Service
-----------------------------------------------------------------------------------------------------
Remuneration 5 10 15 20 25 30 35 40 or more
- ------------ --------- --------- --------- ---------- ---------- ---------- ---------- ----------
(pound) (pound) (pound) (pound) (pound) (pound) (pound) (pound) (pound)
50,000 ............... 4,167 8,333 12,500 16,667 20,833 25,000 29,167 33,333
100,000 ............... 8,333 16,667 25,000 33,333 41,667 50,000 58,333 66,667
150,000 ............... 12,500 25,000 37,500 50,000 62,500 75,000 87,500 100,000
200,000 ............... 16,667 33,333 50,000 66,667 83,333 100,000 116,667 133,333
250,000 ............... 20,833 41,667 62,500 83,333 104,167 125,000 145,833 166,667
300,000 ............... 25,000 50,000 75,000 100,000 125,000 150,000 175,000 200,000
A participant's remuneration covered by Trikon's pension plan is his or her
highest taxable salary (the "Highest Taxable Salary") in the last five plan
years of the participant's career or, in the case of a controlling director
with a 20% stock holding, the average such salary over his or her last three
plan years. A participant earns one-sixtieth (1/60) of his Highest Taxable
Salary for each year of service to a maximum of forty-sixtieths (40/60).
Taxable remuneration for the Named Executive officers in the plan as at the
end of the last calendar year was 163,000 British pounds (approximately
$248,005) for Mr. Wheeler. The projected number of years of service for Mr.
Wheeler at his normal retirement age is 33 years and 10 months. Pension
contributions on behalf of Mr. Wheeler for fiscal years 1998, 1999 and 2000,
respectively, are as included in the All Other Compensation column of the
Summary Compensation Table.
14
TEN-YEAR OPTION/SAR REPRICINGS
Number of
Securities Market Price
Underlying of Stock at Exercise Price
Options/SARs Time of at Time of
Repriced or Repricing or Repricing or New Exercise
Name Date Amended (#) Amendment ($) Amendment ($) Price ($)
- ---- ------- ------------ ------------- -------------- ------------
Nigel Wheeler.......................................... 2/06/98 200,000 $1.4375 11.6250 $1.4375
Nicolas Carrington..................................... 2/06/98 36,300 $1.4375 11.6250 $1.4375
Jeremy Linnert......................................... 2/06/98 15,000 $1.4375 11.6250 $1.4375
Employment Agreements
Nigel Wheeler. The Company has entered into an employment agreement with
Nigel Wheeler, dated November 15, 1996, pursuant to which Mr. Wheeler was
nominated as a director and as the President and Chief Operating Officer for
the three-year term of the agreement. The agreement with Mr. Wheeler renews
annually unless terminated by either party. Under the agreement, Mr. Wheeler
is paid a base salary of $248,005 per year, net of any U.S. taxes or other
assessments so long as he is not a U.S. citizen. The base salary is subject to
certain annual, upward adjustments by the Company. In addition, Mr. Wheeler is
eligible to receive an annual performance bonus for each year of service. The
employment agreement further provides certain customary insurance, vacation
benefits and termination provisions.
On October 27, 1998, the Board of Directors appointed Mr. Wheeler as Chief
Executive Officer. In connection with his appointment as Chief Executive
Officer, the Board of Directors agreed to (i) immediately grant him options to
purchase 20,000 shares of Common Stock, (ii) on or about January 1, 1999,
grant him additional options to purchase 50,000 shares of Common Stock, and
(iii) subject to stockholder approval, grant additional options to purchase
shares of Common Stock equal to 2% of the Company's then outstanding Common
Stock on a fully diluted basis. Mr. Wheeler is authorized to direct the
Company to allocate all or a portion of such options to other members of
management. Stockholder approval was granted at the Annual Meeting of
Stockholders on June 14, 1999.
Christopher D. Dobson. In connection with the Exchange Offer, the Board of
Directors entered into certain agreements with Christopher D. Dobson, Chairman
of the Board and then Chief Executive Officer of the Company. The Company and
Mr. Dobson agreed that upon the consummation of the Exchange Offer, 1,149,281
shares of restricted Common Stock would be granted to Mr. Dobson. The
Restricted Stock shall vest one hundred percent (100%) upon the earlier of (i)
the date five years after the closing of the Exchange Offer, or (ii) the sale
of all or substantially all of the assets of the Company, the direct sale by
the Company's stockholders possessing more than 50% of the total combined
voting power of the Company's outstanding securities to persons different than
those holding such securities immediately prior to such sale or the merger or
consolidation in which securities possessing more than 50% of the total
combined voting power of the Company's outstanding securities are transferred
to persons different than those holding such securities immediately prior to
the merger or consolidation. The restricted stock shall automatically be
acquired by the Company in return for a payment of $0.01 per share of Common
Stock upon Mr. Dobson's termination for cause, voluntary cessation of
providing services to the Company or if, during the first two (2) years
following the Exchange Offer, Mr. Dobson devotes fewer than 750 hours per
annum to Trikon related matters. For purposes of the restricted stock, the
meaning of "for cause" is limited to willful misconduct that materially
injures the pecuniary interests of the Company and any material breach of the
noncompetition obligations under these agreements. Mr. Dobson is permitted, at
his discretion, to reallocate up to 20% of the restricted stock to other
members of senior management of the Company.
15
The Board of Directors and Mr. Dobson further agreed that after the
consummation of the Exchange Offer, Mr. Dobson shall receive a contingent
variable interest up to 3% of the net proceeds (gross proceeds less reasonable
and customary expenses) received upon the sale of the Company as follows:
Cumulative
Sales Price ($) Percentage (%)
--------------- --------------
At least $250 million......................................... 0.5%
At least $260 million......................................... 1.0
At least $270 million......................................... 2.0
At least $280 million......................................... 2.5
$300 million or more.......................................... 3.0
In addition, the Board of Directors and Mr. Dobson agreed upon certain terms
of his employment following the consummation of the Exchange Offer. Among
other things, Mr. Dobson shall continue in his position as Chairman and Chief
Executive Officer of the Company, devote substantially his full business time
to his duties (which shall include research and development work performed on
Trikon projects and products, wherever located) and a base salary of 196,000
British pounds. Upon successful recruitment of a chief executive officer
candidate, Mr. Dobson shall step down as Chief Executive Officer of the
Company and continue to receive compensation at his current rate of
compensation, unless in connection therewith he determines to devote
substantially less than 75% of his full business time to the Company in which
case his base salary shall be reduced by 50%. In the event that Mr. Dobson is
terminated for any reason other than cause prior to May 2001, he shall be paid
an amount equal to his base salary (as of the date of termination) for the
period from the date of termination until May 2001. During his employment, Mr.
Dobson has agreed not to directly or indirectly be involved with any
enterprise engaged in the semiconductor equipment manufacturing industry,
subject to a de minimis investment exception. In addition, he also agreed not
to solicit any employees of the Company to leave the Company nor any business
of any customers, licensors or licensees of the Company during his employment
and for two (2) additional years thereafter. All intellectual property and
know-how developed by Mr. Dobson while employed by the Company will
automatically be assigned to the Company without royalties or other payment.
Mr. Dobson waived his salary for the whole of 1999.
In connection with the negotiation of the Applied Materials and Lam Research
licenses, restructuring the Company, and future licensing efforts, the Board
of Directors authorized a $1,500,000 bonus payable to Mr. Dobson, subject to
consummation of the Exchange Offer. Payment of such bonus by the Company is
subject to (i) payment of all accrued and unpaid dividends on the Series H
Preferred Stock and redemption for cash of all outstanding shares of Series H
Preferred Stock issued as payment of dividends on outstanding Series H
Preferred Stock, (ii) such payment not being made prior to June 30, 2000 and
(iii) at the time of payment Trikon shall have had at least $8,000,000 of
EBITDA during and for its two most recently completed fiscal quarters (taken
as one period). For purposes of calculating EBITDA, upfront license fees
(excluding the Applied Material and Lam Research licenses) shall be equally
amortized over the twelve-month period following receipt (including the month
of receipt, and, incremental license fees associated with the MORITM source
technology.
Other than as set forth above, Trikon currently has no employment contracts
with any of the Named Executive Officers.
Director Compensation
Trikon's outside directors earn an annual retainer of $15,000 and receive
$1,000 for attending a meeting of the board of directors in person, $750 for
attending a meeting of the board of directors by telephone and $750 for
attending a committee meeting in person or by telephone. Outside directors may
also be reimbursed for certain expenses in connection with attendance at board
of directors and committee meetings. In addition, under Trikon's 1998 Director
Stock Option Plan, each individual who is first elected or appointed to the
Board as a non-employee Board member after June 10, 1999 will automatically
receive, at the time of such initial election or appointment, a stock option
to purchase 9,000 shares of Common Stock, and at each annual
16
stockholders meeting, beginning with the 2000 Annual Stockholders Meeting,
each individual who is re-elected as a non-employee Board member will
automatically receive a stock option to purchase 4,000 shares of Common Stock.
In March 2000, the board of directors increased the number of shares of Common
Stock underlying the annual stock option grant from 1,800 to 4,000. The shares
subject to each 9,000-share option grant vest in a series of four (4)
successive equal annual installments upon the director's completion of each
year of service on the board of directors over the four (4) year period
measured from the date of grant, and the shares subject to each 4,000-share
option grant vest upon completion of one year of service, or the next annual
meeting of shareholders, whichever is earlier. In May 2000, each of Richard M.
Conn and Stephen N. Wertheimer received an option to purchase 4,000 shares of
Common Stock at an exercise price of $13.3125 following their reelection as
non-employee Board members. The number and exercise price of the shares is
stated after giving effect to the reverse stock split effective December 17,
1999.
Compensation Committee Interlocks and Insider Participation
The compensation committee of the board of directors of Trikon throughout
the fiscal year 2000 consisted of Richard M. Conn, Robert R. Anderson and
Stephen N. Wertheimer.
None of these individuals was at any time during the fiscal year ended
December 31, 2000 or at any other time an officer or employee of Trikon. No
executive officer of Trikon serves as a member of the board of directors or
the compensation committee of any other entity, which has one or more
executive officers serving as a member of Trikon's board of directors or
compensation committee.
Report of the Compensation Committee of the Board of Directors
The compensation committee recommends to the board of directors general
compensation policies for Trikon, oversees Trikon's compensation plans and
specific compensation levels for executive officers, including bonuses, and
administers the Stock Option Plan. The following is the report approved by the
compensation committee addressing the compensation of Trikon's executive
officers for 2000.
Compensation Policy. Trikon's executive compensation policy is designed to
establish an appropriate relationship between executive pay and Trikon's
annual performance, long-term growth objectives and ability to attract and
retain qualified executive officers. The compensation committee addresses this
objective by integrating competitive annual base salaries with (a) bonuses
based on annual corporate performance and the achievement of individual
performance objectives and (b) stock option grants under the Stock Option
Plan. The compensation committee believes that cash compensation in the form
of salary and bonus provides Company executives with appropriate immediate
rewards for success in current operations, while stock option grants promote
management stock ownership and thereby expand management's stake in the long-
term performance and success of Trikon.
For 2000, the compensation committee approved the base salaries of each of
Trikon's executive officers. In determining such base salaries, Trikon
examined salaries paid to executive officers of semiconductor equipment
companies and other high technology companies with sales comparable to those
of Trikon. For 2000, the compensation committee set the base salaries of
Trikon's executive officers generally at the median level of the salaries paid
to executives in comparable positions at semiconductor equipment companies and
other high technology companies of similar size as Trikon.
During 2000, the compensation committee reviewed the number of stock options
granted to each of Trikon's employees, including the executive officers and
the Chief Executive Officer. Following the review, all eligible employees were
granted options under the Stock Option Plan either in 2000 or in the first
quarter of 2001. The number of options that each executive officer or employee
was granted was based primarily on the executive's or employee's ability to
influence Trikon's long-term growth and profitability. The vesting provisions
of the options granted under the Stock Option Plan are designed to encourage
longevity of employment with Trikon.
Compensation of Chief Executive Officer. The compensation committee
believed that Nigel Wheeler, Trikon's Chief Executive Officer during 2000,
provided valuable services to Trikon, and that his compensation should
therefore be competitive with that paid to executives at comparable
semiconductor
17
equipment companies. In addition, the compensation committee believed that the
compensation of the Chief Executive Officer should be heavily influenced by
Trikon's performance.
Therefore, although there has necessarily been some subjectivity in setting
Mr. Wheeler's salary, major elements of his compensation package are directly
tied to Trikon's performance. For 2000, Mr. Wheeler's salary was reset at
163,000 British pounds (approximately $248,005) per annum, an amount the
compensation committee deemed at the time appropriate in light of Trikon's
stage of growth and salaries paid to chief executive officers of other growth
technology companies. In addition, he earned a bonus of 81,500 British pounds
(approximately $124,000) on Trikon's achieving certain revenue and net income
targets for the fiscal year. In January 2000, the compensation committee
approved the grant to Mr. Wheeler of options to acquire 50,000 shares of
Common Stock of the Company. The compensation committee believes the options
are appropriate to align Mr. Wheeler's interests with those of Trikon's
stockholders.
Internal Revenue Code Section 162(M). Under Section 162 of the Internal
Revenue Code, the amount of compensation paid to certain executives that is
deductible with respect to Trikon's corporate taxes is limited to $1,000,000
annually. It is the current policy of the compensation committee to maximize,
to the extent reasonably possible, Trikon's ability to obtain a corporate tax
deduction for compensation paid to executive officers of Trikon to the extent
consistent with the best interests of Trikon and its stockholders.
Robert R. Anderson
Richard M. Conn
Stephen N. Wertheimer
Stock Performance Graph
The following graph shows a comparison of total stockholder returns* for
Trikon, the JP Morgan Hambrecht & Quist Semiconductor Index, and the Nasdaq
Composite Index for the period during which Trikon's Common Stock has been
registered under Section 12 of the Securities Exchange Act of 1934.
JP Morgan
Trikon Hambrecht & Quist NASDAQ
Measurement Period (Fiscal Year Covered) Technologies, Inc. Semi-Conductor Stock Market
- ---------------------------------------- ------------------ ----------------- ------------
Measurement Pt 12/31/95.................................................. 100.00 100.00 100.00
FYE 12/31/96............................................................. 104.44 129.51 123.04
FYE 12/31/97............................................................. 9.17 136.59 150.69
FYE 12/31/98............................................................. 0.36 191.72 212.51
FYE 12/31/99............................................................. 9.44 478.47 394.94
FYE 12/31/00............................................................. 8.89 399.14 237.68
- ---------------
* Total return assumes reinvestment of dividends.
18
The chart below assumes $100.00 was invested on December 31, 1995 in
Trikon's Common Stock, the JP Morgan Hambrecht & Quist Semiconductor Index,
and the Nasdaq Composite Index. Total returns for the JP Morgan Hambrecht &
Quist Semiconductor Index and the Nasdaq Composite Index are weighted based on
market capitalization.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURNS*
AMONG TRIKON TECHNOLOGIES, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE JP MORGAN H & Q SEMICONDUCTORS INDEX
[line graph]
Notwithstanding anything to the contrary set forth in any of Trikon's
previous filings under the Securities Act or the Exchange Act that might
incorporate future filings made by Trikon under those statutes, the preceding
Report of the compensation committee of the board of directors on Executive
Compensation and the Trikon stock performance graph will not be incorporated
by reference into any of those prior filings, nor will such report or graph be
incorporated by reference into any future filings made by Trikon under those
statutes.
19
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee has reviewed and discussed Trikon's audited financial
statements included in the 2000 Annual Report to Stockholders. Management has
confirmed to us that such financial statements (i) have been prepared with
integrity and objectivity and are the responsibility of management and, (ii)
have been prepared in conformity with generally accepted accounting
principles.
We have discussed with Ernst & Young, our independent auditors, the matters
required to be discussed by SAS 61 (Communications with Audit Committee). SAS
61 requires our independent auditors to provide us with additional information
regarding the scope and results of their audit of Trikon's financial
statements, including with respect to (i) their responsibility under generally
accepted auditing standards, (ii) significant accounting policies, (iii)
management judgments and estimates, (iv) any significant audit adjustments,
(v) any disagreements with management, and (vi) any difficulties encountered
in performing the audit.
We have received from Ernst & Young a letter providing the disclosures
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) with respect to any relationships between
Ernst & Young and the Company that in their professional judgment may
reasonably be thought to bear on independence. Ernst & Young has discussed its
independence with us, and has confirmed in such letter that, in its
professional judgment, it is independent of Trikon within the meaning of the
federal securities laws.
Based on the review and discussions described above with respect to Trikon's
audited financial statements included in the 2000 Annual Report to
Stockholders, we have recommended to the Board of Directors that such
financial statements be included in Trikon's Annual Report on Form 10-K.
As specified in the Audit Committee Charter, it is not the duty of the Audit
Committee to plan or conduct audits or to determine that Trikon's financial
statements are complete and accurate and in accordance with generally accepted
accounting principles. That is the responsibility of management and Trikon's
independent auditors. In giving our recommendation to the Board of Directors,
we have relied on (i) management's representation that such financial
statements have been prepared with integrity and objectivity and in conformity
with generally accepted accounting principals, and (ii) the report of Trikon's
independent auditors with respect to such financial statements.
Robert R. Anderson
Richard M. Conn
Stephen N. Wertheimer
20
STOCKHOLDER PROPOSALS
Stockholders are entitled to submit proposals on matters appropriate for
stockholder action consistent with regulations of the Securities and Exchange
Commission and with the Company's By-laws. Any such proposal for the 2002
annual meeting of stockholders must comply with applicable regulations and be
received by the Secretary, Trikon Technologies, Inc., Ringland Way, Newport,
South Wales, NP6 2TA, United Kingdom, as follows:
(i) to be eligible for inclusion in the Company's proxy statement and form
of proxy, it must be received no later than December 14, 2001; or
(ii) to be eligible to be presented from the floor for vote at the meeting
(but not intended for inclusion in the Company's proxy materials), it must be
received by January 31, 2002.
ANNUAL REPORTS
A copy of Trikon's annual report on Form 10-K is being mailed to each
stockholder of record along with this Proxy Statement. Such report is not part
of Trikon's soliciting material.
OTHER MATTERS
The board of directors knows of no other matters to be presented for
stockholder action at the annual meeting. However, if other matters do
properly come before the annual meeting or any adjournments or postponements
thereof, the board of directors intends that the persons named in the proxies
will vote upon such matters in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
William J. Chappell
Secretary
21
LOGO
COMMON STOCK PROXY
TRIKON TECHNOLOGIES, INC.
ANNUAL MEETING OF STOCKHOLDERS, MAY 15, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TRIKON TECHNOLOGIES, INC.
THIS PROXY IS ONLY TO BE USED TO VOTE SHARES OF COMMON STOCK, NO PAR VALUE PER
SHARE ("COMMON STOCK"), OF TRIKON TECHNOLOGIES, INC. IT IS NOT TO BE USED TO
VOTE SHARES OF SERIES H PREFERRED STOCK, NO PAR VALUE PER SHARE ("SERIES H
PREFERRED STOCK"), OF TRIKON TECHNOLOGIES, INC. HOLDERS OF SERIES H PREFERRED
STOCK SHOULD COMPLETE THE SERIES H PREFERRED STOCK PROXY INCLUDED IN THESE
MATERIALS. HOLDERS OF COMMON STOCK AND SERIES H PREFERRED STOCK SHOULD COMPLETE
THIS PROXY TO VOTE THEIR SHARES OF COMMON STOCK AND THE SERIES H PREFERRED STOCK
PROXY INCLUDED IN THESE MATERIALS TO VOTE THEIR SHARES OF SERIES H PREFERRED
STOCK.
The undersigned revokes all previous proxies, acknowledges receipt of
the notice of annual meeting of stockholders to be held on May 15, 2001 and the
proxy statement, and appoints Christopher D. Dobson and Nigel Wheeler or either
of them the proxy of the undersigned, with full power of substitution, to vote
all shares of Common Stock of Trikon Technologies, Inc. that the undersigned is
entitled to vote, either on his or her own behalf or on behalf of an entity or
entities, at the 2001 annual meeting of stockholders of the Company to be held
at the offices of McDermott, Will & Emery, 50 Rockefeller Plaza, 11th Floor, New
York, New York 10020, on May 15, 2001 at 9:00 a.m., and at any adjournment or
postponement thereof, with the same force and effect as the undersigned might or
could do if personally present thereat. The shares represented by this proxy
shall be voted in the manner set forth below.
1. TO ELECT FOUR DIRECTORS TO SERVE UNTIL THE NEXT ANNUAL MEETING OF
STOCKHOLDERS AND UNTIL THEIR SUCCESSORS HAVE BEEN ELECTED AND QUALIFIED, TO
BE ELECTED BY THE HOLDERS OF COMMON STOCK.
_____ FOR all nominees listed below (except as marked to the contrary
below).
Nominees: Christopher D. Dobson
Nigel Wheeler
Richard M. Conn
Robert R. Anderson
_____ WITHHOLD AUTHORITY to vote for all nominees listed above.
TO WITHHOLD AUTHORITY TO VOTE for any nominee or nominees, write the name
of such nominee or nominees below:
_____________________________
_____________________________
3. TO APPROVE AN AMENDMENT TO THE COMPANY'S 1991 STOCK OPTION PLAN TO INCREASE
THE NUMBER OF SHARES OF COMMON STOCK THAT MAY BE ISSUED UNDER SUCH PLAN
FROM 1,500,000 TO 2,250,000.
_____ FOR _____ AGAINST _____ ABSTAIN
4. TO RATIFY THE SELECTION OF ERNST & YOUNG AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2001.
_____ FOR _____ AGAINST _____ ABSTAIN
5. IN ACCORDANCE WITH THE DISCRETION OF THE PROXY HOLDERS, TO ACT UPON ALL
MATTERS INCIDENT TO THE CONDUCT OF THE MEETING AND UPON OTHER MATTERS AS
MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS
THEREOF.
The board of directors recommends a vote FOR the directors listed above
in proposal 1 and a vote FOR all other proposals. This Proxy, when properly
executed, will be voted as specified above. If no specification is made, this
Proxy will be voted FOR the election of the directors listed above in proposal 1
and FOR all other proposals.
MARK HERE FOR ADDRESS
CHANGE AND NOTE BELOW
Please sign your name exactly as it appears hereon. If acting as an
attorney, executor, trustee, or in other representative capacity, sign name and
title.
Signature:
------------------------------------
Date:
-----------------------------------------
Signature:
------------------------------------
Date:
------------------------------------
SERIES H PREFERRED STOCK PROXY
TRIKON TECHNOLOGIES, INC.
ANNUAL MEETING OF STOCKHOLDERS, MAY 15, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TRIKON TECHNOLOGIES, INC.
THIS PROXY IS ONLY TO BE USED TO VOTE SHARES OF SERIES H PREFERRED STOCK, NO PAR
VALUE PER SHARE ("SERIES H PREFERRED STOCK"), OF TRIKON TECHNOLOGIES, INC. IT IS
NOT TO BE USED TO VOTE SHARES OF COMMON STOCK, NO PAR VALUE PER SHARE ("COMMON
STOCK"), OF TRIKON TECHNOLOGIES, INC. HOLDERS OF COMMON STOCK SHOULD COMPLETE
THE COMMON STOCK PROXY INCLUDED IN THESE MATERIALS. HOLDERS OF COMMON STOCK AND
SERIES H PREFERRED STOCK SHOULD COMPLETE THIS PROXY TO VOTE THEIR SHARES OF
SERIES H PREFERRED STOCK AND THE COMMON STOCK PROXY INCLUDED IN THESE MATERIALS
TO VOTE THEIR SHARES OF COMMON STOCK.
The undersigned revokes all previous proxies, acknowledges receipt of the notice
of annual meeting of Stockholders to be held on May 15, 2001 and the proxy
statement, and appoints Christopher D. Dobson and Nigel Wheeler or either of
them the proxy of the undersigned, with full power of substitution, to vote all
shares of Series H Preferred Stock of Trikon Technologies, Inc. that the
undersigned is entitled to vote, either on his or her own behalf or on behalf of
an entity or entities, at the 2001 annual meeting of stockholders of Trikon to
be held at the offices of McDermott, Will & Emery, 50 Rockefeller Plaza, 11th
Floor, New York, New York 10020, on May 31, 2000 at 9:00 a.m., and at any
adjournment or postponement thereof, with the same force and effect as the
undersigned might or could do if personally present thereat. The shares
represented by this proxy shall be voted in the manner set forth below.
2. TO ELECT A DIRECTOR TO SERVE UNTIL THE NEXT ANNUAL MEETING OF STOCKHOLDERS
AND UNTIL HIS SUCCESSOR HAS BEEN ELECTED AND QUALIFIED, TO BE ELECTED BY
THE HOLDERS OF THE SERIES H PREFERRED STOCK:
______ FOR Stephen N. Wertheimer
______ WITHHOLD AUTHORITY to vote for the nominee listed above.
5. IN ACCORDANCE WITH THE DISCRETION OF THE PROXY HOLDERS, TO ACT UPON ALL
MATTERS INCIDENT TO THE CONDUCT OF THE MEETING AND UPON OTHER MATTERS AS
MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS OF POSTPONEMENTS
THEREOF.
The board of directors recommends a vote FOR the directors listed above
in proposal 2 and a vote FOR all other proposals. This Proxy, when properly
executed, will be voted as specified above. If no specification is made, this
Proxy will be voted FOR the election of the directors listed above in proposal 2
and FOR all other proposals.
MARK HERE FOR ADDRESS
CHANGE AND NOTE BELOW
Please sign your name exactly as it appears hereon. If acting as an
attorney, executor, trustee, or in other representative capacity, sign name and
title.
Signature:
------------------------------------
Date:
-----------------------------------------
Signature:
------------------------------------
Date:
------------------------------------
EXHIBIT A
TRIKON TECHNOLOGIES, INC
Audit Committee Charter - Adopted February 2, 2000
1. Organisation
The audit committee of the board of directors shall be comprised of at
least three directors who are independent of management and the Company.
Members of the audit committee shall be considered independent if they
have no relationship to the Company that my interfere with the exercise
of their independence from management and the Company. All audit
committee members will be financially literate, and at least one member
will have accounting or related financial management expertise.
2. Statement of Policy
The audit committee shall provide assistance to the directors in
fulfilling their responsibility to the shareholders, potential
shareholders, and investment community relating to corporate accounting,
reporting practices of the company, and the quality and integrity of
financial reports of the company. In so doing, it is the responsibility
of the audit committee to maintain free and open communication between
the directors, the independent auditors, and the financial management of
the company.
3. Responsibilities
In carrying out its responsibilities, the audit committee believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure to the directors and shareholders that
the corporate accounting and reporting practices of the company are in
accordance with all requirements and are of the highest quality.
4. In carrying out these responsibilities, the audit committee will:
o Obtain the full board of directors' approval of this Charter and
review and reassess this Charter as conditions dictate (at least
annually).
o Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the company and its
divisions and subsidiaries.
o Have a clear understanding with the independent auditors that they
are ultimately accountable to the board of directors and the audit
committee, as the shareholders' representatives, who have the
ultimate authority in deciding to engage, evaluate, and if
appropriate, terminate their services.
o Review and concur with management's appointment, termination, or
replacement of any director of internal audit.
o Meet with the independent auditors and financial management of the
Company to review the scope of the proposed audit and timely
quarterly reviews for the current year and the procedures to be
utilised, the adequacy of the independent auditor's compensation,
and at the conclusion thereof review such audit or review, including
any comments or recommendations of the independent auditors.
o Review with the independent auditors, and financial and accounting
personnel, the adequacy and effectiveness of the accounting and
financial controls of the company, and elicit any recommendations
for the improvement of such internal controls or particular areas
where new or more detailed controls or procedures are desirable.
Particular emphasis should be given to the adequacy of internal
controls to expose any payments, transactions, or procedures that
might be deemed illegal or otherwise improper. Further, the
committee periodically should review company policy statements to
determine their adherence to the code of conduct.
o Review reports received from regulators and other legal and
regulatory matters that may have a material effect on the financial
statements or related company compliance policies.
A-1
o Inquire of management, and the independent auditors about
significant risks or exposures and assess the steps management has
taken to minimize such risks to the Company.
o Review the quarterly financial statements with financial management
and the independent auditors prior to the filing of the Form 10-Q
(or prior to the press release of results, if possible) to determine
that the independent auditors do not take exception to the
disclosure and content of the financial statements, and discuss any
other matters required to be communicated to the committee by the
auditors. The chair of the committee may represent the entire
committee for purposes of this review.
o Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to
determine that the independent auditors are satisfied with the
disclosure and content of the financial statements to be presented
to the shareholders. Review with financial management and the
independent auditors the results of their timely analysis of
significant financial reporting issues and practices, including
changes in, or adoptions of, accounting principles and disclosure
practices, and discuss any other matters required to be communicated
to the committee by the auditors. Also review with financial
management and the independent auditors their judgements about the
quality, not just acceptability, of accounting principles and the
clarity of the financial disclosure practices used or proposed to be
used, and particularly, the degree of aggressiveness or conservatism
of the organization's accounting principles and underlying
estimates, and other significant decisions made in preparing the
financial statements.
o Provide sufficient opportunity for the independent auditors to meet
with members of the audit committee without members of management
present. Among the items to be discussed in these meetings are the
independent auditors' evaluation of the company's financial, and
accounting personnel, and the co-operation that the independent
auditors received during the course of audit.
o Review accounting and financial human resources and succession
planning within the Company.
o Report the results of the annual audit to the board of directors. If
requested by the board, invite the independent auditors to attend
the full board of directors meeting to assist in reporting the
results of the annual audit or to answer other directors' questions
(alternatively, the other directors, particularly the other
independent directors, may be invited to attend the audit committee
meeting during which the results of the annual audit are reviewed).
o Review the nature and scope of other professional services provided
to the company by the independent auditors and consider the
relationship to the auditors' independence.
o On an annual basis, obtain from the independent auditors a written
communication delineating all their relationships and professional
services as required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees. In addition, review
with the independent auditors the nature and scope of any disclosed
relationships or professional services and take, or recommend that
the board of directors take, appropriate action to ensure the
continuing independence of the auditors.
o Review the report of the audit committee in the annual report to
shareholders and the Annual Report on Form 10-K disclosing whether
or not the committee had reviewed and discussed with management and
the independent auditors, as well as discussed within the committee
(without management or the independent auditors present), the
financial statements and the quality of accounting principles and
significant judgements affecting the financial statements. in
addition, disclose the committee's conclusion on the fairness of
presentation of the financial statements in conformity with GAAP
based on those discussions.
o Submit the minutes of all meetings of the audit committee to, or
discuss the matters discussed at each committee meeting with, the
board of directors.
o Investigate any matter brought to its attention with the scope of
its duties, with the power to retain outside counsel for this
purpose if, in its judgement, that is appropriate.
o Review the Company's disclosure in the proxy statement for its
annual meeting of shareholders that describes that the Committee has
satisfied its responsibilities under this Charter for the prior
year. In addition, include a copy of this Charter in the annual
report to shareholders or the proxy statement at least triennially
or the year after any significant amendment to the Charter.
A-2
EXHIBIT B
TRIKON TECHNOLOGIES, INC.
1991 STOCK OPTION PLAN
(As Amended on March 7, 2001)
SECTION 1. Description of Plan. This is the 1991 Stock Option Plan (the
"Plan") of Trikon Technologies, Inc., a California corporation (the
"Company"). Under the Plan, employees, directors, consultants and advisors of
the Company or any of its Subsidiaries, to be selected as set forth below, may
be granted options ("Options") to purchase shares of the Common Stock of the
Company ("Common Stock"). For purposes of the Plan, the term "Subsidiary"
means any corporation 50% or more of the voting stock of which is owned by the
Company or by a Subsidiary of the Company. It is intended that the Options
under the Plan will either qualify for treatment as incentive stock options
under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") and be designated Incentive Stock Options, or not qualify for such
treatment and be designated Non-Statutory Stock Options.
SECTION 2. Purpose of this Plan. The purpose of the Plan and of granting
options to employees, directors, consultants and advisors is to further the
growth, development and financial success of the Company and its subsidiaries
by providing additional incentives to such persons by assisting them in
acquiring shares of Common Stock and to benefit directly from the Company's
growth, development and financial success.
SECTION 3. Eligibility. The persons who shall be eligible to receive grants
of Options under the Plan shall be the employees, directors, consultants and
advisors of the Company or any of its Subsidiaries. A person who holds an
option is herein referred to as a "Participant." More than one Option may be
granted to any one Participant. Notwithstanding the foregoing, no Option may
be granted to any person who then owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or of a
Subsidiary unless the Option Price (as hereinafter defined) is at least 110%
of the fair market value of the Common Stock on the date of grant. In
addition, any Incentive Stock Option granted to any person who then owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or of a Subsidiary shall have a termination date not
later than five years after the date such Option is granted. For this purpose,
a person's stock ownership is determined using the constructive ownership
rules contained in Code Section 424(d).
Only employees of the Company or a Subsidiary may be granted Incentive Stock
Options under the Plan. The exercise of an Incentive Stock Option will not
qualify for favorable income tax treatment unless the Participant remains an
employee of the Company or a Subsidiary at all times during the period
beginning on the date of the grant of the Incentive Stock Option and ending on
the date three months before the date of the exercise of the Incentive Stock
Option. For this purpose, a Participant who is on a leave of absence that
exceeds ninety days will be considered to have terminated his employment on
the ninety-first day of the leave of absence, unless the Participant's rights
to reemployment are guaranteed by statute or contract. However, a Participant
will not be considered to have incurred a termination of employment because of
a transfer of employment between the Company and a Subsidiary (or vice versa).
The aggregate fair market value (determined as of the time an Option is
granted) of the Common Stock for which any Participant may be granted
Incentive Stock Options first exercisable in any calendar year under the Plan
and any other incentive stock option plans (which qualify under Section 422 of
the Code) of the Company or any Subsidiary shall not exceed $100,000.
SECTION 4. Administration. This Plan shall be administered by the Board of
Directors of the Company or a committee thereof (in either case, the "Board").
Should the Board delegate its authority to administer the Plan to a committee
of the Board, then such committee shall be comprised of individuals who
satisfy the requirements under Rule 16b-3 of the Securities Exchange Act of
1934, as amended (the "1934 Act") and under Code Section 162(m) for purposes
of Option grants made to officers and directors of the Company who are subject
to the short-swing liability provisions of Section 16 of the 1934 Act, as
amended.
B-1
The Board is authorized and empowered to administer the Plan and, subject to
the Plan, (a) to select the Participants, to specify the number of shares of
Common Stock with respect to which Options are granted to each such
Participant, to specify the Option Price (as hereinafter defined) and the
terms of options, and in general to grant Options; (b) to determine, subject
to the limits of Section 3 hereof, whether Options will be Incentive Stock
Options or Non-Statutory Stock options; (c) to determine the dates upon which
options shall be granted and to provide for the terms and conditions of the
options in a manner consistent with this Plan, which terms and conditions need
not be identical as to the various options granted; (d) to interpret the Plan;
(e) to prescribe, amend and rescind rules relating to the Plan; and (f) to
determine the rights and obligations of Participants under the Plan. The
interpretation and construction by the Board of any provision of the Plan or
of any option granted thereunder shall be final. No member of the Board shall
be liable for any action or determination made in good faith with respect to
the Plan or any option granted under it.
SECTION 5. Shares Subject to the Plan. The number of shares of Common Stock
which may be purchased under both the Plan and the Company's Share Option
Scheme shall be 2,500,000 shares. Such number shall in any event be adjusted
to reflect all stock splits, stock dividends or similar capital changes. Upon
the expiration or termination for any reason of an outstanding Option which
shall not have been exercised in full, any shares of Common Stock then
remaining unissued which shall have been reserved for issuance upon such
exercise shall again become available for the granting of additional Options
under the Plan.
The maximum number of shares for which Options may be granted to any
Participant shall be limited to 210,000 shares per calendar year. For this
purpose, an Option granted to a Participant shall be continued to be
outstanding despite its cancellation.
SECTION 6. Option Price. The purchase price per share (the "Option Price")
of the shares of Common Stock underlying each Option shall be determined in
each case by the Board with respect to each specific Option but shall not be
less than the Fair Market Value (as defined below) of such shares on the date
of grant. In the event that the Company acquires another entity, the Board may
authorize the issuance of options ("Substitute Options") to the individuals
performing services for the acquired entity in substitution of stock options
previously granted to those individuals in connection with their performance
of services for such entity upon such terms and conditions as the Board shall
determine, taking into account the conditions of Code Section 424(a) in the
case of a Substitute Option that is intended to be an Incentive Stock Option.
Fair Market Value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:
(a) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date immediately prior to the date in
question, as such price is reported by the National Association of
Securities Dealers on the Nasdaq National Market. If there is no closing
selling price for the Common Stock on the date immediately prior to the
date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
(b) If the Common Stock is at the time listed on either the American
Stock Exchange or the New York Stock Exchange, then the Fair Market Value
shall be the closing selling price per share of Common Stock on the date
immediately prior to the date in question on the stock exchange
determined by the Board to be the primary market for the Common Stock, as
such price is officially quoted in the composite tape of transactions on
such exchange. If there is no closing selling price for the Common Stock
on the date immediately prior to the date in question, then the Fair
Market Value shall be the closing selling price on the last preceding
date for which such quotation exists.
(c) In the event the Common Stock is not traded on the Nasdaq National
Market or listed on the American Stock Exchange or the New York Stock
Exchange, the Fair market value shall be determined by the Board, after
taking into account such factors as it deems appropriate.
SECTION 7. Exercise of Options. Subject to all other provisions of the
Plan, each Option shall be exercisable for the full number of shares of Common
Stock subject thereto, or any part thereof, in five equal cumulative annual
installments commencing one year after the date of grant (provided the
Participant is
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employed by the Company at the time of vesting), or in such other installments
and at such other intervals as the Board may in any specific case or cases
otherwise specifically determine in granting such Option. The Board may not
impose a vesting schedule upon the option or shares of Common Stock subject to
such option which is more restrictive than twenty percent (20%) per year
vesting, with the initial vesting to occur not later than one (1) year after
the date of grant of the Option. However, such limitation shall not be
applicable to any Option granted to individuals who are officers of the
Company, directors or independent consultants. Each Option shall terminate and
expire, and shall no longer be subject to exercise, ten (10) years after the
date of grant thereof, or at such earlier date as the Board may otherwise
specifically determine in granting such Option. The Option shall be exercised
by the Participant by giving written notice to the Company specifying the
number of full shares to be purchased and accompanied by payment of the full
purchase price therefor in cash, by check or in such other form of lawful
consideration (including promissory notes or shares of Common Stock then held
by the Participant) as the Board may approve from time to time.
SECTION 8. Option. Each Option granted under the Plan shall be evidenced by
a written stock option executed by the Company and delivered to the
Participant, which shall be substantially in the form attached as Exhibit A
hereto, or shall be in such other form as specified by the Board. Such stock
option shall indicate whether such Option is to be an Incentive Stock Option
or a Non-Statutory Stock Option and, if an Incentive Stock Option, shall
contain terms and conditions permitting such Option to qualify for treatment
as an incentive stock option under Section 422 of the Code.
SECTION 9. Issuance of Common Stock. The Company's obligation to issue
shares of Common Stock upon the exercise of an Option is expressly conditioned
upon the making of such investment representations and related undertakings by
the Participant (or his legal representative, heir or legatee, as the case may
be) in order to comply with the requirements of any exemption from any
securities law registration or other qualification of such shares which the
Company in its sole discretion shall deem necessary or advisable. Such
required representations and undertakings may include representations and
agreements that such Participant (or his legal representative, heir or
legatee): (a) is purchasing such shares for investment and not with any
present intention of selling or otherwise disposing thereof, and (b) agrees to
have placed upon the face and reverse of any certificates evidencing such
shares a legend setting forth (i) any representations and undertakings which
such Participant has given to the Company or a reference thereto, and (ii)
that, prior to effecting any sale or other disposition of any such shares, the
Participant must furnish to the Company an opinion of counsel, satisfactory to
the Company and its counsel, to the effect that such sale or disposition will
not violate the applicable requirements of state and federal laws and
regulatory agencies.
SECTION 10. Limited Transferability of Options. During the lifetime of a
Participant, options shall be exercisable only by the Participant and shall
not be assignable or transferable other than by will or by the laws of descent
and distribution following the Participant's death in accordance with Section
13(b) hereof.
SECTION 11. Recapitalization, Reorganization, Merger or Consolidation. If
the outstanding shares of Common Stock of the Company are increased, decreased
or exchanged for different securities through reorganization, merger,
consolidation, recapitalization, reclassification, stock split, stock dividend
or like capital adjustment, a proportionate adjustment shall be made (a) in
the aggregate number of shares of Common Stock which may be issued pursuant to
the exercise of options under the Plan and the maximum number of shares for
which options may be granted per Participant, as provided in Section 5, and
(b) in the number, price and kind of shares subject to any outstanding option
granted under the Plan.
Upon the dissolution or liquidation of the Company or upon any
reorganization, merger or consolidation in which the Company does not survive,
the Plan and each outstanding Option shall terminate; provided that in such
event: (a) each Participant to whom no option has been tendered by the
surviving corporation in accordance with all of the terms of clause (b)
immediately below shall have the right until five days before the effective
date of such dissolution or liquidation, or such merger or consolidation in
which the Company is not the surviving corporation, to exercise in whole or in
part any unexpired Option or Options issued to him, without regard to the
installment provisions of Section 7 of the Plan or any option agreement; or
(b) in its sole and absolute discretion, the surviving corporation may, but
shall not be so obligated, tender to any Participant holding an Option, an
option or options to purchase shares of the surviving corporation, and such
new option or options shall contain such terms and provisions as shall be
required to preserve substantially all
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of the rights and benefits of any option then outstanding under the Plan. Each
Participant shall be given written notice by the Company of any such proposed
or contemplated dissolution, liquidation, reorganization, merger or
consolidation at least thirty-five (35) days prior to the effective date
thereof, which notice shall advise such Participant of the proposed
dissolution, liquidation, reorganization, merger or consolidation and the
rights of the Participant pursuant to this paragraph.
To the extent that the foregoing adjustments relate to stock or securities
of the Company, such adjustments shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except
as hereinbefore expressly provided in this Section 11, the Participant shall
have no rights by reason of any subdivision or consolidation of shares of
stock of any class or the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class, and the number or
price of shares of Common Stock subject to any option shall not be affected
by, and no adjustment shall be made by reason of, any dissolution,
liquidation, reorganization, merger or consolidation, or any issue by the
Company of shares of stock of any class, or rights to purchase or subscribe
for stock of any class, or securities convertible into shares of stock of any
class.
The grant of an Option pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustments, reclassifications or
changes in its capital or business structures or to merge, consolidate,
dissolve or liquidate or to sell or transfer all or any part of its business
or assets.
SECTION 12. Rights as a Shareholder. A Participant holding an Option, or a
transferee of an Option, shall have no rights as a shareholder with respect to
any shares covered by his Option until the date of the issuance of a stock
certificate to him for such shares, and no adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior
to the date such stock certificate is issued, except as expressly provided in
Section 11.
SECTION 13. Termination of Options. Each Option granted under the Plan
shall set forth a termination date thereof, which date shall be not later than
ten years from the date such option is granted. Except as otherwise determined
by the Board and set forth in the documents evidencing an Option, all options
shall terminate and expire upon the first to occur of the following events:
(a) the expiration of 30 days from the date of such Participant's
termination of employment (other than by reason of death), except that if
the Participant is disabled (within the meaning of section 22(e)(3) of
the Internal Revenue Code) at the time of his termination of employment,
the expiration of one year from the date of the Participant's termination
of employment;
(b) the expiration of 180 days from the date of the death of such
Participant if his death occurs while he is employed by the Company or
any of its subsidiaries; or
(c) the termination of the option pursuant to Section 11 of the Plan.
The termination of employment of a Participant by death or otherwise shall
not accelerate or otherwise affect the number of shares with respect to which
an Option may be exercised, and the option may only be exercised with respect
to that number of shares which could have been purchased under the option had
the option been exercised by the Participant on the date of such termination.
For purposes of the above, in the case of Options granted to Participants
who are directors of the Company or consultants or advisors to the Company,
"employment" shall mean service as such director, consultant or advisor to the
Company.
SECTION 14. Withholding of Taxes. The Company shall deduct and withhold
from the wages, salary, bonus and other income paid by the Company to the
Participant the requisite tax upon the amount of taxable income, if any,
recognized by the Participant in connection with the exercise in whole or in
part of any Option or the sale of Common Stock issued to the Participant upon
exercise of the option, all as may be required from time to time under any
federal or state tax laws and regulations. This withholding of tax shall be
made from the Company's concurrent or next payment of wages, salary, bonus or
other income to the Participant or by payment to the Company by the
Participant of the required withholding tax, as the Board may determine.
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SECTION 15. Termination of Plan. The Plan shall terminate upon the earliest
to occur of (i) December 31, 2003, (ii) the date on which all shares available
for issuance under the Plan shall have been issued or (iii) the termination of
all outstanding options in accordance with Section 11. However, the Board may
in its absolute discretion terminate the Plan at any time. Should the Plan
terminate on December 31, 2003, or by the Board in its absolute discretion,
then all option grants outstanding at that time shall continue to have force
and effect in accordance with the provisions of the documents evidencing such
grants.
SECTION 16. Amendment of Plan. The Board shall have complete and exclusive
power and authority to amend or modify the Plan in any or all respects.
However, no such amendment or modification shall adversely affect the rights
and obligations with respect to options at the time outstanding under the Plan
unless the Participant consents to such amendment or modification. In
addition, certain amendments may require shareholder approval pursuant to
applicable laws or regulations.
On March 7, 2001, the Plan was amended to increase the number of shares of
Common Stock authorized for issuance over the term of the Plan by an
additional 750,000 shares (the "2001 Amendment"). The 2001 Amendment became
effective immediately upon adoption by the Board.
The 2001 Amendment is subject to shareholder approval at the 2001 Annual
Meeting, and no option grants made on the basis of the 750,000-share increase
shall become exercisable in whole or in part unless and until the 2001
Amendment is approved by the shareholders. Should such shareholder approval
not be obtained at the 2001 Annual Meeting, then each option grant made
pursuant to such 750,000-share increase shall terminate and cease to remain
outstanding, and no further option grants shall be made on the basis of that
share increase. However, the provisions of the Plan as in effect immediately
prior to the 2001 Amendment shall automatically be reinstated, and option
grants may thereafter continue to be made pursuant to the reinstated
provisions of the Plan. All option grants made prior to the 2001 Amendment
shall remain outstanding in accordance with the terms and conditions of the
respective instruments evidencing those options, and nothing in the 2001
Amendment shall be deemed to modify or in any way affect those outstanding
options. Subject to the foregoing limitations, the Plan Administrator may make
option grants under the Plan at any time before the date fixed herein for the
termination of the Plan.
SECTION 17. Amendment of Options. The Board may modify an existing option,
including the right to (a) change the exercise price, (b) accelerate the right
to exercise it, (c) extend or renew it, or (d) cancel it and issue a new
Option. However, no modification may be made to an option that would impair
the rights of the Participant holding the option without his consent. Whether
a modification of an existing Incentive Stock Option will be treated as the
issuance of a new Incentive Stock Option will be determined in accordance with
the rules of Code Section 424(h). Whether a modification of an existing option
granted to an Insider will be treated as a new grant for purposes of Section
16 of the Securities Exchange Act of 1934 will be determined in accordance
with Rule 16b-3.
SECTION 18. Financial Reports. The Company shall deliver a balance sheet
and an income statement at least annually to each individual holding an
outstanding option, unless such individual is a key Employee whose duties in
connection with the Company or Subsidiary assure such individual access to
equivalent information.
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