<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Intevac, Inc.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
LOGO
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders (the
"Annual Meeting") of Intevac, Inc. (the "Company") which will be held on May 15,
1997, at 9:00 a.m., at the Company's headquarters, 3550 Bassett Street, Santa
Clara, California 95054.
At the Annual Meeting, you will be asked to consider and vote upon the
following proposals: (i) to elect five (5) directors of the Company; (ii) to
approve an amendment to the Employee Stock Purchase Plan; and (iii) to ratify
the appointment of Ernst & Young LLP as independent auditors of the Company for
the fiscal year ending December 31, 1997.
The enclosed Proxy Statement more fully describes the details of the
business to be conducted at the Annual Meeting. After careful consideration, the
Company's Board of Directors has unanimously approved the proposals and
recommends that you vote FOR each such proposal.
After reading the Proxy Statement, please mark, date, sign and return the
enclosed proxy card in the accompanying reply envelope by no later than May 14,
1997. If you decide to attend the Annual Meeting and would prefer to vote in
person, please notify the Secretary of the Company that you wish to vote in
person and your proxy will not be voted. YOUR SHARES CANNOT BE VOTED UNLESS YOU
SIGN, DATE AND RETURN THE ENCLOSED PROXY OR ATTEND THE ANNUAL MEETING IN PERSON.
A copy of the Company's 1996 Annual Report has been mailed concurrently
herewith to all shareholders entitled to notice of and to vote at the Annual
Meeting.
We look forward to seeing you at the Annual Meeting. Please notify Brenda
Boschetto at (408) 496-2877 if you plan to attend.
Sincerely yours,
/s/ NORMAN H. POND
Norman H. Pond
President and Chief Executive Officer
Santa Clara, California
April 1, 1997
IMPORTANT
PLEASE MARK, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT AT YOUR
EARLIEST CONVENIENCE IN THE ENCLOSED POSTAGE-PREPAID RETURN ENVELOPE SO THAT IF
YOU ARE UNABLE TO ATTEND THE ANNUAL MEETING, YOUR SHARES MAY BE VOTED.
<PAGE> 3
INTEVAC, INC.
3550 BASSETT STREET
SANTA CLARA, CALIFORNIA 95054
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 15, 1997
------------------------
TO OUR SHAREHOLDERS:
You are cordially invited to attend the Annual Meeting of Shareholders (the
"Annual Meeting"') of
Intevac, Inc., a California corporation (the "Company"'), to be held on May 15,
1997 at 9:00 a.m., local time, at the Company's headquarters, 3550 Bassett
Street, Santa Clara, California 95054, for the following purposes:
1. To elect directors to serve for the ensuing year or until their
respective successors are duly elected and qualified. The nominees are
Norman H. Pond, Edward Durbin, Robert D. Hempstead, David N. Lambeth and H.
Joseph Smead.
2. To approve an amendment to the Employee Stock Purchase Plan
3. To ratify the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending December 31, 1997.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement that accompanies this Notice.
Only shareholders of record at the close of business on March 18, 1997 are
entitled to notice of and to vote at the Annual Meeting and at any continuation
or adjournment thereof.
All shareholders are cordially invited and encouraged to attend the Annual
Meeting. In any event, to assure your representation at the meeting, please
carefully read the accompanying Proxy Statement which describes the matters to
be voted on at the Annual Meeting and sign, date and return the enclosed proxy
card in the reply envelope provided. Should you receive more than one proxy
because your shares are registered in different names and addresses, each proxy
should be returned to assure that all your shares will be voted. If you attend
the Annual Meeting and vote by ballot, your proxy will be revoked automatically
and only your vote at the Annual Meeting will be counted. The prompt return of
your proxy card will assist us in preparing for the Annual Meeting.
We look forward to seeing you at the Annual Meeting. Please notify Brenda
Boschetto at (408) 496-2877 if you plan to attend.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ CHARLES B. EDDY III
CHARLES B. EDDY III
Vice President, Finance and
Administration,
Chief Financial Officer, Treasurer and
Secretary
Santa Clara, California
April 1, 1997
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. IN ANY EVENT, TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU
ARE URGED TO VOTE, SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN
THE POSTAGE-PREPAID ENVELOPE ENCLOSED FOR THAT PURPOSE.
<PAGE> 4
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
INTEVAC, INC.
TO BE HELD MAY 15, 1997
GENERAL
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Intevac, Inc., a California corporation (the "Company"
or "Intevac"), of proxies to be voted at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held on May 15, 1997, or at any adjournment or
postponement thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders. Shareholders of record on March 18, 1997 will be
entitled to vote at the Annual Meeting. The Annual Meeting will be held at 9:00
a.m. at the Company's headquarters, 3550 Bassett Street, Santa Clara, California
95054.
It is anticipated that this Proxy Statement and the enclosed proxy card
will be first mailed to shareholders on or about April 1, 1997.
VOTING RIGHTS
The close of business on March 18, 1997 was the record date for
shareholders entitled to notice of and to vote at the Annual Meeting and any
adjournments thereof. At the record date, the Company had approximately
12,532,584 shares of its Common Stock outstanding and entitled to vote at the
Annual Meeting, held by approximately 1,300 shareholders. Holders of Common
Stock are entitled to one vote for each share of Common Stock so held. A
majority of the shares of Common Stock entitled to vote will constitute a quorum
for the transaction of business at the Annual Meeting.
If any shareholder is unable to attend the Annual Meeting, such shareholder
may vote by proxy. The enclosed proxy is solicited by the Company's Board of
Directors, (the "Board of Directors" or the "Board") and, when the proxy card is
returned properly completed, it will be voted as directed by the shareholder on
the proxy card. Shareholders are urged to specify their choices on the enclosed
proxy card. If a proxy card is signed and returned without choices specified, in
the absence of contrary instructions, the shares of Common Stock represented by
such proxy will be voted FOR Proposals 1, 2 and 3 and will be voted in the proxy
holders' discretion as to other matters that may properly come before the Annual
Meeting.
The five director nominees receiving the highest number of affirmative
votes will be elected. Votes against a nominee, abstentions and brokers
non-votes will have no effect. Approval of Proposals 2 and 3 require (i) the
affirmative vote of a majority of those shares present and voting, and (ii) the
affirmative vote of the majority of the required quorum. Thus, abstentions and
broker non-votes can have the effect of preventing approval of a proposal where
the number of affirmative votes, though a majority of the votes cast, does not
constitute a majority of the required quorum. All votes will be tabulated by the
inspector of election appointed for the meeting, who will separately tabulate
affirmative and negative votes, abstentions and broker non-votes.
REVOCABILITY OF PROXIES
Any person giving a proxy has the power to revoke it at any time before its
exercise. A proxy may be revoked by filing with the Secretary of the Company an
instrument of revocation or a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person.
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SOLICITATION OF PROXIES
The Company will bear the cost of soliciting proxies. Copies of
solicitation material will be furnished to brokerage houses, fiduciaries, and
custodians holding shares in their names that are beneficially owned by others
to forward to such beneficial owners. The Company 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 the Company. No additional compensation will be paid to these
individuals for any such services. Except as described above, the Company does
not intend to solicit proxies other than by mail.
THE ANNUAL REPORT OF THE COMPANY FOR THE FISCAL YEAR ENDED DECEMBER 31,
1996, HAS BEEN MAILED CONCURRENTLY WITH THE MAILING OF THE NOTICE OF ANNUAL
MEETING AND PROXY STATEMENT TO ALL SHAREHOLDERS ENTITLED TO NOTICE OF AND TO
VOTE AT THE ANNUAL MEETING. THE ANNUAL REPORT IS NOT INCORPORATED INTO THIS
PROXY STATEMENT AND IS NOT CONSIDERED PROXY SOLICITING MATERIAL.
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
At the Annual Meeting, five directors (constituting the entire board) are
to be elected to serve until the next Annual Meeting of Shareholders and until a
successor for such director is elected and qualified, or until the death,
resignation, or removal of such director. It is intended that the proxies will
be voted for the five nominees named below for election to the Company's Board
of Directors unless authority to vote for any such nominee is withheld. There
are five nominees, all of whom are currently directors of the Company. All of
the current directors other than Dr. Hempstead were elected to the Board by the
shareholders at the last annual meeting. Dr. Hempstead was appointed to the
Board on March 24, 1997 to fill the vacancy created by the resignation of John
R. Dougery. Each person nominated for election has agreed to serve if elected,
and the Board of Directors has no reason to believe that any nominee will be
unavailable or will decline to serve. In the event, however, that any nominee is
unable or declines to serve as a director at the time of the Annual Meeting, the
proxies will be voted for any nominee who is designated by the current Board of
Directors to fill the vacancy. Unless otherwise instructed, the proxyholders
will vote the proxies received by them for the nominees named below. The five
candidates receiving the highest number of the affirmative votes of the shares
entitled to vote at the Annual Meeting will be elected directors of the Company.
The proxies solicited by this Proxy Statement may not be voted for more than
five nominees.
NOMINEES
Set forth below is information regarding the nominees to the Board of
Directors.
<TABLE>
<CAPTION>
NAME POSITION(S) WITH THE COMPANY AGE
---------------------------- ---------------------------------------- ---
<S> <C> <C>
Norman H. Pond.............. Chairman of the Board, President and 58
Chief Executive Officer
Edward Durbin(1)............ Director 69
Robert D. Hempstead......... Chief Operating Officer and General 53
Manager of the Vacuum Systems Division
David N. Lambeth(1)......... Director 50
H. Joseph Smead(2).......... Director 71
</TABLE>
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(1) Member of the Audit Committee
(2) Member of the Compensation Committee
BUSINESS EXPERIENCE OF NOMINEES FOR ELECTION AS DIRECTORS
Mr. Pond is a founder of the Company and has served as Chairman of the
Board, President and Chief Executive Officer since February 1991. Before joining
the Company, from 1988 to 1990, Mr. Pond served as
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President and Chief Operating Officer of Varian Associates, Inc. ("Varian"), a
publicly held manufacturer of semiconductor, communication, defense and medical
products, where he was responsible for overall management of Varian's
operations. From 1984 to 1988, Mr. Pond was President of Varian's Electron
Device and Systems Group and became a Director of Varian in 1986. Prior to
joining Varian, Mr. Pond was employed by Teledyne, a diversified electronics
company, from 1963 to 1984 where he served in various positions, including Group
Executive.
Mr. Durbin has served as a Director of the Company since February 1991. Mr.
Durbin has been a Senior Vice President of Kaiser Aerospace & Electronics
Corporation ("Kaiser"), responsible for marketing and business development since
joining Kaiser in 1975. Mr. Durbin currently serves as a director for all of
Kaiser's subsidiaries.
Dr. Hempstead has served as Chief Operating Officer and General Manager of
the Vacuum Systems Division of the Company since April 1996. Before joining the
Company, Dr. Hempstead served from November 1994 to February 1996 as Executive
Vice President of Censtor Corp., a manufacturer of computer disk drive heads and
disks. Dr. Hempstead was a self-employed consultant from 1989 to November 1994.
Dr. Lambeth has served as a Director of the Company since May 1996. Dr.
Lambeth has been Professor of electrical and computer engineering and Associate
Director of the Data Storage Systems Center at Carnegie Mellon University since
1989. Since 1988 Dr. Lambeth has been the owner of Lambeth Systems, an
engineering consulting firm. From 1973 to 1988 Dr. Lambeth worked at Eastman
Kodak Company's Research Laboratories, most recently as the head of the Magnetic
Materials Laboratory.
Dr. Smead has served as a Director of the Company since February 1991. Dr.
Smead has been President of Kaiser since joining Kaiser in 1974. Since 1977, Dr.
Smead has been President and Chairman of the Board of Directors of K Systems,
Inc. ("KSI"), Kaiser's parent company. Dr. Smead currently serves as Chairman of
the Board of Directors of Kaiser and as a director for all of Kaiser's
subsidiaries.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held seven (7) meetings during fiscal 1996. All
members of the Board of Directors during fiscal 1996 attended more than
seventy-five percent (75%) of the aggregate of the total number of meetings of
the Board of Directors held during the fiscal year and the total number of
meetings held by all committees of the Board on which such director served.
There are no family relationships among executive officers or directors of the
Company. The Board of Directors has an Audit Committee and a Compensation
Committee.
The Audit Committee of the Board of Directors held four (4) meeting during
fiscal 1996. The Audit Committee, which during 1996 was comprised of Messrs.
Dougery and Durbin and Dr. Lambeth, recommends engagement of the Company's
independent auditors, approves services performed by such auditors and reviews
and evaluates the Company's accounting system and its system of internal
controls.
The Compensation Committee of the Board of Directors held one (1) meeting
during fiscal 1996. The Compensation Committee, which during 1996 was comprised
of Mr. Dougery and Dr. Smead, has overall responsibility for the Company's
compensation policies and determines the compensation payable to the Company's
executive officers, including their participation in certain of the Company's
employee benefit and stock option plans.
DIRECTOR COMPENSATION
Directors of the Company do not receive compensation for services provided
as a director. The Company also does not pay compensation for committee
participation or special assignments of the Board of Directors. However, the
directors are eligible to receive periodic option grants under the Discretionary
Option Grant and Automatic Option Grant Programs in effect under the Company's
1995 Stock Option/Stock Issuance Plan (the "1995 Plan").
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Under the Automatic Option Grant Program, each individual who was serving
as a non-employee Board member on the November 20, 1995 effective date of the
1995 Plan received an option grant for 10,000 shares of Common Stock with an
exercise price of $6.00 per share, the price per share at which the Common Stock
was sold in the initial public offering on that date. Each individual who first
becomes a non-employee Board member at any time after November 20, 1995 will
receive a similar 10,000-share option grant on the date such individual joins
the Board, provided such individual has not been in the prior employ of the
Company. In addition, on the date of each Annual Shareholders Meeting, each
individual who is to continue to serve as a non-employee Board member, whether
or not that individual has been in the prior employ of the Company, will receive
an option grant to purchase 2,500 shares of Common Stock, provided such
individual has served as a non-employee Board member for at least six months. No
non-employee Board members received any option grants under the Discretionary
Option Grant Program during the 1996 fiscal year.
Each automatic grant will have an exercise price per share equal to the
fair market value per share of Common Stock on the grant date and will have a
maximum term of 10 years, subject to earlier termination following the
optionee's cessation of Board service. Each automatic option will be immediately
exercisable for any or all of the option shares; however, any shares purchased
under the option will be subject to repurchase by the Company, at the option
exercise price paid per share, should the optionee cease service as a Board
member prior to vesting in those shares. The shares subject to each initial
10,000-share grant will vest in four successive equal annual installments over
the optionee's period of Board service, with the first installment to vest upon
the Board member's completion of one year of Board service measured from the
grant date. The shares subject to each 2,500-share grant will vest upon the
optionee's completion of one year of Board service measured from the grant date.
However, the shares subject to each outstanding option will immediately vest
upon (i) certain changes in the ownership or control of the Company or (ii) the
death or disability of the optionee while serving as a Board member.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR ELECTION OF
ALL OF THE ABOVE NOMINEES FOR ELECTION AS DIRECTORS.
PROPOSAL NO. 2:
APPROVAL OF AMENDMENT TO THE EMPLOYEE STOCK PURCHASE PLAN
The Company's shareholders are being asked to approve an amendment to the
Company's Employee Stock Purchase Plan (the "Purchase Plan") which will increase
the maximum number of shares of Common Stock authorized for issuance over the
term of the Purchase Plan from 250,000 to 500,000 shares.
The amendment is designed to assure that a sufficient reserve of Common
Stock is available under the Purchase Plan to provide eligible employees of the
Company and its participating affiliates with the opportunity to acquire a
proprietary interest in the Company through participation in a payroll-deduction
based employee stock purchase plan under Section 423 of the Internal Revenue
Code. Participating affiliates may include any parent or subsidiary corporations
of the Company, whether now existing or hereafter established, which elect to
extend the benefits of the Purchase Plan to their eligible employees.
The Purchase Plan was adopted by the Board of Directors (the "Board") on
September 14, 1995 and approved by the shareholders in October 1995. The
Purchase Plan became effective on November 20, 1995 at the time of the initial
public offering of the Company's Common Stock. The share increase to the
Purchase Plan which is the subject of this Proposal No. 2 was adopted by the
Board on March 18, 1997, subject to the approval of the shareholders at the 1997
Annual Meeting.
The terms and provisions of the Purchase Plan, as most recently amended,
are summarized below. However, the summary does not purport to be a complete
description of the Purchase Plan. Copies of the actual plan document may be
obtained by any stockholder upon written request to the Corporate Secretary at
the Company's executive offices in Santa Clara, California.
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ADMINISTRATION
The Purchase Plan is administered by the Compensation Committee of the
Board. Such committee, as Plan Administrator, has full authority to adopt
administrative rules and procedures and to interpret the provisions of the
Purchase Plan. All costs and expenses incurred in plan administration are paid
by the Company without charge to participants.
SECURITIES SUBJECT TO THE PURCHASE PLAN
The shares of Common Stock issuable under the Purchase Plan may be either
shares newly issued by the Company or shares reacquired by the Company,
including shares purchased on the open market. The maximum number of shares of
Common Stock which may be sold to participants over the term of the Purchase
Plan may not exceed 500,000 shares, assuming the shareholders approve the share
increase which forms part of this proposal. However, not more than 370,887
shares may be issued under the Purchase Plan after January 31, 1997.
In the event that any change is made to the Company's outstanding Common
Stock (whether by reason of any recapitalization, stock dividend, stock split,
exchange or combination of shares or other change in corporate structure
effected without the Company's receipt of consideration), appropriate
adjustments will be made to (i) the class and maximum number of securities
issuable over the term of the Purchase Plan, (ii) the class and maximum number
of securities purchasable per participant on any one semi-annual purchase date
and (iii) the class and number of securities and the price per share in effect
under each outstanding purchase right.
PURCHASE PERIODS AND PURCHASE RIGHTS
Shares of Common Stock will be offered under the Purchase Plan through a
series of successive offering periods, each with a maximum duration of
twenty-four (24) months, with the exception of the initial offering period. The
initial offering period began on November 20, 1995 and will end on the last
business day in January, 1998. The next offering period will start on the first
business day in February, 1998, and any subsequent offering periods will begin
as designated by the Plan Administrator.
ELIGIBILITY AND PARTICIPATION
Any individual who is employed on a basis under which he or she is expected
to work for more than twenty (20) hours per week for more than five (5) months
per calendar year in the employ of the Company or any participating parent or
subsidiary corporation (including any corporation which subsequently becomes
such at any time during the term of the Purchase Plan) is eligible to
participate in the Purchase Plan. As of January 31, 1997, the Company estimated
that approximately 215 employees, including two (2) executive officers, were
eligible to participate in the Purchase Plan.
An individual who is an eligible employee at the start of any offering
period may join that offering period at that time or on any subsequent
semi-annual entry date (the first business day in February or August each year)
within that offering period. An individual who first becomes an eligible
employee after such start date may join the offering period on any semi-annual
entry date within that offering period on which he or she is an eligible
employee.
At the time the participant joins the offering period, he or she will be
granted a purchase right to acquire shares of Common Stock at semi-annual
intervals over the remainder of that offering period. The purchase dates will
occur on the last business day in January and July each year, and all payroll
deductions collected from the participant for the period ending with each such
semi-annual purchase date will automatically be applied to the purchase of
Common Stock. Payroll deductions may not exceed ten percent (10%) of base salary
for each semi-annual period of participation, and no participant may purchase
more than 750 shares per semi-annual purchase date.
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PURCHASE PRICE
The purchase price of the Common Stock acquired on each semi-annual
purchase date will be equal to eighty-five (85%) of the lower of (i) the fair
market value per share of Common Stock on the participant's entry date into the
offering period or (ii) the fair market value on the semi-annual purchase date.
However, the clause (i) amount for any participant whose entry date is other
than the start date of the offering period will not be less than the fair market
value per share of Common Stock on that start date.
The fair market value per share of Common Stock on the November 20, 1995
effective date of the Purchase Plan was deemed to be equal to the $6.00 per
share price at which the Common Stock was sold in the initial public offering on
that date. The fair market value of the Common Stock on any other relevant date
under the Purchase Plan will be deemed to be equal to the closing selling price
per share on such date on the Nasdaq National Market. On January 31, 1997, the
fair market value per share of Common Stock was $18.50 per share.
PAYROLL DEDUCTIONS AND STOCK PURCHASES
Each participant may authorize periodic payroll deductions in any multiple
of 1% (up to a maximum of 10%) of his or her base salary each offering period to
be applied to the acquisition of Common Stock on the semi-annual purchase dates.
On each semi-annual purchase date (the last business day in January and July
each year), the payroll deductions of each participant will automatically be
applied to the purchase of whole shares of Common Stock at the purchase price in
effect for the participant for that purchase date.
AUTOMATIC RESET
Should the fair market value per share of Common Stock on any semi-annual
purchase date within an offering period be less than the fair market value per
share of Common Stock on the start date of that offering period, then the
offering period will automatically terminate immediately after the purchase of
shares of Common Stock on that semi-annual purchase date, and a new offering
period will begin on the next business day following such purchase date. The
duration of that new offering period will be established by the Plan
Administrator within five (5) business days following such start date.
SPECIAL LIMITATIONS
The Purchase Plan imposes certain limitations upon a participant's rights
to acquire Common Stock, including the following:
- Purchase rights may not be granted to any individual who owns stock
(including stock purchasable under any outstanding purchase rights)
possessing five percent (5%) or more of the total combined voting power
or value of all classes of stock of the Company or any of its affiliates.
- Purchase rights granted to a participant may not permit such individual
to purchase more than $25,000 of Common Stock (valued at the time each
purchase right is granted) during any one calendar year.
- No participant may purchase more than 750 shares of Common Stock on any
semi-annual purchase date.
TERMINATION OF PURCHASE RIGHTS
The participant may withdraw from the Purchase Plan at any time and his or
her accumulated payroll deductions will be refunded immediately.
The participant's purchase right will immediately terminate upon his or her
cessation of employment or loss of eligible employee status. Any payroll
deductions which the participant may have made for the semi-annual period in
which such cessation of employment or loss of eligibility occurs will be
refunded and will not be applied to the purchase of Common Stock.
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SHAREHOLDER RIGHTS
No participant will have any shareholder rights with respect to the shares
covered by his or her purchase rights until the shares are actually purchased on
the participant's behalf. No adjustment will be made for dividends,
distributions or other rights for which the record date is prior to the date of
such purchase.
ASSIGNABILITY
No purchase rights will be assignable or transferable by the participant,
and the purchase rights will be exercisable only by the participant.
CHANGE IN CONTROL
In the event the Company is acquired by merger or asset sale, all
outstanding purchase rights will automatically be exercised immediately prior to
the effective date of such acquisition. The purchase price will be the lesser of
(i) eighty-five percent (85%) of the fair market value per share of Common Stock
on the participant's entry date into the offering period in which such
acquisition occurs or (ii) eighty-five percent (85%) of the fair market value
per share of Common Stock immediately prior to such acquisition, but in no event
will the clause (i) fair market value for any participant whose entry date is
other than the start date of the offering period be less than the fair market
value per share of Common Stock on the start date of the offering period in
which such acquisition occurs.
SHARE PRO-RATION
Should the total number of shares of Common Stock to be purchased pursuant
to outstanding purchase rights on any particular date exceed the number of
shares then available for issuance under the Purchase Plan, then the Plan
Administrator will make a pro-rata allocation of the available shares on a
uniform and nondiscriminatory basis, and the payroll deductions of each
participant, to the extent in excess of the aggregate purchase price payable for
the Common Stock pro-rated to such individual, will be refunded.
AMENDMENT AND TERMINATION
The Purchase Plan will terminate upon the earliest of (i) the last business
day in January, 2005, (ii) the date on which all shares available for issuance
thereunder are sold pursuant to exercised purchase rights or (iii) the date on
which all purchase rights are exercised in connection with an acquisition of the
Company.
The Board may at any time alter, suspend or discontinue the Purchase Plan.
However, the Board may not, without shareholder approval, (i) increase the
number of shares issuable under the Purchase Plan or the maximum number of
shares purchasable per participant on any one semi-annual purchase date, except
in connection with certain changes in the Company's capital structure, (ii)
alter the purchase price formula so as to reduce the purchase price, (iii)
materially increase the benefits accruing to participants or (iv) materially
modify the requirements for eligibility to participate in the Purchase Plan.
FEDERAL TAX CONSEQUENCES
The Purchase Plan is intended to be an "employee stock purchase plan"
within the meaning of Section 423 of the Internal Revenue Code. Under a plan
which so qualifies, no taxable income will be recognized by a participant, and
no deductions will be allowable to the Company, upon either the grant or the
exercise of the purchase rights. Taxable income will not be recognized until
there is a sale or other disposition of the shares acquired under the Purchase
Plan or in the event the participant should die while still owning the purchased
shares.
If the participant sells or otherwise disposes of the purchased shares
within two (2) years after his or her entry date into the offering period in
which such shares were acquired or within one (1) year after the semi-annual
purchase date on which those shares were actually acquired, then the participant
will recognize ordinary income in the year of sale or disposition equal to the
amount by which the fair market value of the shares on the purchase date
exceeded the purchase price paid for those shares, and the Company will be
7
<PAGE> 11
entitled to an income tax deduction, for the taxable year in which such
disposition occurs, equal in amount to such excess.
If the participant sells or disposes of the purchased shares more than two
(2) years after his or her entry date into the offering period in which the
shares were acquired and more than one (1) year after the semi-annual purchase
date of those shares, then the participant will recognize ordinary income in the
year of sale or disposition equal to the lesser of (i) the amount by which the
fair market value of the shares on the sale or disposition date exceeded the
purchase price paid for those shares or (ii) 15% of the fair market value of the
shares on the participant's entry date into that offering period; and any
additional gain upon the disposition will be taxed as a long-term capital gain.
The Company will not be entitled to an income tax deduction with respect to such
disposition.
If the participant still owns the purchased shares at the time of death,
the lesser of (i) the amount by which the fair market value of the shares on the
date of death exceeds the purchase price or (ii) 15% of the fair market value of
the shares on his or her entry date into the offering period in which those
shares were acquired will constitute ordinary income in the year of death.
ACCOUNTING TREATMENT
Under current accounting rules, the issuance of Common Stock under the
Purchase Plan will not result in a compensation expense chargeable against the
Company's reported earnings. However, the Company must disclose, in footnotes to
the Company's financial statements, the impact the purchase rights granted under
the Purchase Plan would have upon the Company's reported earnings were the value
of those purchase rights treated as compensation expense.
STOCK ISSUANCES
The table below shows, as to each of the Company's executive officers named
in the Summary Compensation Table and the various indicated groups, the number
of shares of Common Stock purchased under the Purchase Plan between the November
20, 1995 effective date of the Purchase Plan and January 31, 1997, together with
the weighted average purchase price paid per share.
PURCHASE PLAN TRANSACTIONS
<TABLE>
<CAPTION>
NUMBER OF WEIGHTED AVERAGE
NAME PURCHASED SHARES PURCHASE PRICE
--------------------------------------------- ---------------- ----------------
<S> <C> <C>
Norman H. Pond, Chairman of the Board,
President and Chief Executive Officer...... -- --
Charles B. Eddy III, Vice President, Finance
and Administration, Chief Financial
Officer, Treasurer and Secretary........... 1,500 $ 5.100
Robert D. Hempstead, Chief Operating Officer
and General Manager of the Vacuum Systems
Division................................... 750 $ 10.625
William C. Johnson, Vice President and
General Manager of the Vacuum System
Division(1)................................ 750 $ 5.100
All executive officers as a group............ 3,000 $ 6.481
All employees, including current officers who
are not executive officers, as a group..... 126,113 $ 5.441
</TABLE>
- ---------------
(1) Mr. Johnson stepped down as Vice President and General Manager of the Vacuum
Systems Division on April 26, 1996. He continued to be employed by the
Company until August 23, 1996.
8
<PAGE> 12
NEW PLAN BENEFITS
As of January 31, 1997, no purchase rights had been granted under the
Purchase Plan on the basis of the 250,000 share increase which is the subject of
this Proposal No. 2.
SHAREHOLDER APPROVAL
The affirmative vote of the holders of a majority of the shares represented
and voting at the Annual Meeting will be required for approval of the amendment
to increase the share reserve under the Purchase Plan by an additional 250,000
shares. Should such shareholder approval not be obtained, then no purchase
rights will be granted under the Purchase Plan on the basis of the 250,000 share
increase, and the Purchase Plan will continue in effect until the available
reserve of Common Stock under the Purchase Plan as last approved by the
shareholders is issued.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE AMENDMENT
TO THE PURCHASE PLAN.
PROPOSAL NO. 3:
RATIFICATION OF INDEPENDENT PUBLIC AUDITORS
The Company is asking the shareholders to ratify the selection of Ernst &
Young LLP as the Company's independent public auditors for the fiscal year
ending December 31, 1997. The affirmative vote of the holders of a majority of
the shares represented and voting at the Annual Meeting will be required to
ratify the selection of Ernst & Young LLP.
In the event the shareholders fail to ratify the appointment, the Audit
Committee of the Board of Directors will consider it as a direction to select
other auditors for the subsequent year. Even if the selection is ratified, the
Board in its discretion may direct the appointment of a different independent
accounting firm at any time during the year if the Board determines that such a
change would be in the best interest of the Company and its shareholders.
Ernst & Young LLP has audited the Company's financial statements annually
since 1991. Its representatives are expected to be present at the Annual
Meeting, will have the opportunity to make a statement if they desire to do so,
and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL
TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT PUBLIC
AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997.
9
<PAGE> 13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of January 31, 1997 by (i) all persons known by
the Company to be beneficial owners of five percent (5%) or more of its
outstanding Common Stock, (ii) each director of the Company and each nominee for
director, (iii) the Chief Executive Officer and each of the three most highly
compensated executive officers of the Company serving as such as of the end of
the last fiscal year whose compensation for such year was in excess of $100,000,
and (iv) all executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP(1)
-------------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT OWNED(2)
-------------------------------------------- ---------------- ----------------
<S> <C> <C>
Kaiser Aerospace and Electronics............ 5,600,000 44.7%
950 Tower Lane, Suite 800
Foster City, CA 94404
Entities affiliated with Dougery & Wilder
Funds(3).................................. 2,800,000 22.3%
155 Bovet Road, Suite 350
San Mateo, CA 94402
Norman H. Pond(4)........................... 1,113,433 8.8%
3550 Basset Street
Santa Clara, CA 95054
Charles B. Eddy(5).......................... 144,832 1.1%
Robert D. Hempstead......................... 750 *
Ed Durbin(6)................................ 5,612,500 44.7%
David N. Lambeth(7)......................... 10,000 *
H. Joseph Smead(6).......................... 5,612,500 44.7%
All directors and executive officers as a
group
(6 persons)(8)............................ 9,694,015 75.8%
</TABLE>
- ---------------
* Less than 1%
(1) Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, the persons named in the table have sole
voting and investment power with respect to all shares of Common Stock. The
number of shares beneficially owned includes Common Stock of which such
individual has the right to acquire beneficial ownership either currently or
within 60 days after January 31, 1997, including, but not limited to, upon
the exercise of an option.
(2) Percentage of beneficial ownership is based upon 12,530,084 shares of Common
Stock, all of which were outstanding on January 31, 1997. For each
individual, this percentage includes Common Stock of which such individual
has the right to acquire beneficial ownership either currently or within 60
days of January 31, 1997, including, but not limited to, upon the exercise
of an option; however, such Common Stock shall not be deemed outstanding for
the purpose of computing the percentage owned by any other individual. Such
calculation is required by General Rule 13d-3(d)(1)(i) under the Securities
Exchange Act of 1934. Based upon a review of 13G filings made with the
Securities and Exchange Commission during 1996, the table above includes all
greater than 5% shareholders.
(3) Includes 2,672,320 shares held by Dougery & Wilder III, a California Limited
Partnership ("D&W III"), and 127,680 shares held by DW III International
Investors Partnership, a California Limited Partnership ("DW III
International").
(4) Includes 860,100 shares held by the Norman Hugh Pond and Natalie Pond Trust
DTD 12/23/80 and 90,000 shares held by the Pond 1996 Charitable Remainder
Unitrust, both of which Norman Hugh Pond and Natalie Pond are Trustees, and
options exercisable into 163,333 shares of Common Stock
10
<PAGE> 14
outstanding under the Company's 1995 Plan. Excludes 216,663 shares
transferred by Mr. Pond to Mr. Pond's relatives or their respective trusts,
as Mr. Pond has no voting or dispositive power over such shares.
(5) Includes options exercisable into 66,666 shares of Common Stock under the
1995 Plan.
(6) Includes options exercisable into 12,500 shares of Common Stock under the
1995 Plan and 5,600,000 shares held by Kaiser. Messrs. Durbin and Smead are
directors of the Company and are officers and shareholders of KSI, which
owns all the outstanding stock of Kaiser, and share voting and investment
powers over the shares of the Company held by Kaiser. Both individuals
disclaim beneficial ownership of the shares of the Company held by Kaiser
except as to their pecuniary interests as shareholders of KSI.
(7) Includes options exercisable into 10,000 shares of Common Stock under the
1995 Plan.
(8) Includes options exercisable into 277,499 shares of Common Stock under the
1995 Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's directors and executive officers and persons who own more than ten
percent (10%) of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission (the "SEC") initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Officers, directors and greater than ten percent
(10%) shareholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely upon review of the copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that during the fiscal year ended December 31, 1996, its
officers, directors and holders of more than 10% of the Company's common stock
complied with all Section 16(a) filing requirements, with the following
exceptions. Former director John R. Dougery inadvertently failed to file one
report of a change in beneficial ownership on a timely basis for two
transactions. Two trusts established for the benefit of members of Mr. Dougery's
family inadvertently failed to file an initial statement of beneficial ownership
of securities on a timely basis. Lewis T. Lipton, a Company Vice-President and
General Manager of the Lotus Technology Division inadvertently failed to file an
initial statement of beneficial ownership of securities on a timely basis. Henry
L.B. Wilder, a beneficial holder of more than 10% of the Company's common stock
inadvertently failed to file a statement of change in beneficial ownership on a
timely basis for one transaction.
11
<PAGE> 15
EXECUTIVE COMPENSATION AND RELATED INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning the
compensation earned, by (i) the Company's Chief Executive Officer and (ii) each
of the three other most highly compensated executive officers of the Company
whose salary and bonus was in excess of $100,000 for the 1996 fiscal year, for
services rendered in all capacities to the Company and its subsidiaries for each
of the last three fiscal years. Such individuals will be hereafter referred to
as the Named Executive Officers. No other executive officer who would have
otherwise been includible in such table on the basis of salary and bonus earned
for the 1996 fiscal year has resigned or terminated employment during that
fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
------------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEARS SALARY($)(1) BONUS OPTIONS# COMPENSATION(2)
- ------------------------------------ ---- ------------ ------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Norman H. Pond...................... 1996.. $287,903 -- -- $ 2,574
President and Chief 1995 279,990 -- 193,333 2,741
Executive Officer 1994 240,000 -- -- 2,460
Charles B. Eddy III................. 1996 137,696 -- -- 1,056
Vice President, Finance and 1995 127,691 $25,000 83,332 1,011
Administration, Chief Financial 1994 115,774 15,000 10,000 886
Officer Treasurer and Secretary
Robert D. Hempstead(3).............. 1996 142,798 50,000 250,000 1,413
Chief Operating Officer and 1995 -- -- -- --
General Manager of the 1994 -- -- -- --
Vacuum Systems Division
William C. Johnson(4)............... 1996 121,589 -- -- 1,007
Vice President and 1995 150,000 20,000 66,666 1,102
General Manager of the 1994 57,552 20,000 50,000 135
the Vacuum Systems Division
</TABLE>
- ---------------
(1) Includes salary deferral contributions to the Company's 401(k) Plan.
(2) The indicated amount for each Named Executive Officer is comprised of the
contributions made by the Company on behalf of such individual to the
Company's 401(k) Plan which match part of such officer's salary deferral
contributions to that plan, plus the cost of any life insurance in excess of
$50,000 paid by the Company.
(3) Dr. Hempstead joined the Company on April 29, 1996 as Chief Operating
Officer and General Manager of the Vacuum Systems Division. He was paid a
bonus upon beginning employment with the Company.
(4) Mr. Johnson stepped down as Vice President and General Manager of the Vacuum
Systems Division on April 26, 1996. He continued to be employed by the
Company until August 23, 1996.
12
<PAGE> 16
STOCK OPTIONS
The following table contains information concerning the stock option grants
made to each of the Named Executive Officers for fiscal 1996. Except for the
limited stock appreciation rights described in footnote (2) below, no stock
appreciation rights were granted to those individuals during such year.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------- VALUE AT ASSUMED ANNUAL
NUMBER OF PERCENT OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS EXERCISE APPRECIATION FOR OPTION
UNDERLYING GRANTED TO OR TERM(1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED(2) 1996 ($/SHARE)(3) DATE 5%($) 10%($)
- -------------------------- ---------- -------------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Norman H. Pond............ -- -- -- -- --
Charles B. Eddy III....... -- -- -- -- --
Robert D. Hempstead....... 250,000 44.1% $7.625 04/09/96 $1,198,415 $3,036,781
William C. Johnson........ -- -- -- -- --
</TABLE>
- ---------------
(1) There can be no assurance provided to any executive officer or any other
holder of the Company's securities that the actual stock price appreciation
over the 10-year option term will be at the 5% and 10% assumed annual rates
of compounded stock price appreciation or at any other defined level. Unless
the market price of the Common Stock appreciates over the option term, no
value will be realized from the option grant made to the Named Executive
Officer.
(2) The option shares will generally vest in a series of five (5) successive
equal annual installments upon the optionee's completion of each year of
service over the five (5) year period measured from the grant date. In
addition, the option shares will vest in full upon an acquisition of the
Company by merger or asset sale, unless the Company's repurchase right with
respect to those shares is transferred to the acquiring entity. Each option
has a maximum term of 10 years measured from the option grant date, subject
to earlier termination following the optionee's cessation of service with
the Company. Each option also includes a limited stock appreciation right
which provides the optionee with a right, exercisable upon the successful
completion of a hostile tender offer for fifty percent (50%) or more of the
Company's outstanding voting securities, to surrender the option to the
Company, to the extent the option is at that time exercisable for vested
shares, in return for a cash distribution per surrendered option share equal
to the excess of (i) the highest price per share of Common Stock paid in the
hostile tender offer over (ii) the option exercise price payable per share.
(3) The exercise price may be paid in cash, in shares of the Company's Common
Stock valued at fair market value on the exercise date or through a cashless
exercise procedure involving a same-day sale of the purchased shares. The
Company may also finance the option exercise by loaning the optionee
sufficient funds to pay the exercise price for the purchased shares, plus
any Federal and state income tax liability incurred by the optionee in
connection with such exercise.
13
<PAGE> 17
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information concerning option exercises and
option holdings for the 1996 fiscal year by each of the Named Executive
Officers. Except for the limited stock appreciation rights described in footnote
(2) to the Stock Options table above, no stock appreciation rights were
exercised during such year or were outstanding at the end of that year.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL YEAR-END(#) FISCAL YEAR-END(#)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) VALUE REALIZED(1) UNEXERCISABLE(2) UNEXERCISABLE(3)
- ----------------------------- --------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Norman H. Pond............... 30,000 $ 328,750 104,669/58,664 $1,151,359/645,304
Charles B. Eddy III.......... 16,666 $ 170,244 25,166/41,500 $ 327,825/456,500
Robert D. Hempstead.......... -- -- 0/250,000 $ 0/2,343,750
William C. Johnson........... 27,082 $ 395,866 -- --
</TABLE>
- ---------------
(1) Equal to the fair market value of the purchased shares on the option
exercise date less the exercise price paid for those shares.
(2) For options that are immediately exercisable for all the option shares, any
shares purchased under those options will be subject to repurchase by the
Company, at the original exercise price paid per share, upon the optionee's
cessation of service with the Company prior to vesting in such shares. As of
December 31, 1996, the repurchase right had lapsed as to 8,666 of Mr. Pond's
option shares and 0 of Mr. Eddy's option shares.
(3) Based on the market price of $17.00 per share, which was the closing selling
price per share of the Company's Common Stock on the Nasdaq National Market
on the last day of the 1996 fiscal year, less the exercise price payable for
such shares.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
administers the Company's compensation policies and programs and has primary
responsibility for executive compensation matters, including the establishment
of the base salaries of the Company's executive officers, the approval of
individual bonuses and bonus programs for executive officers and the
administration of certain employee benefit programs. In addition, the Committee
has exclusive responsibility for administering the Company's 1995 Stock
Option/Stock Issuance Plan, under which stock option grants and direct stock
issuances may be made to executive officers and other employees. The Committee
during 1996 was comprised of two non-employee directors. The following is a
summary of policies which the Committee applies in setting the compensation
levels for the Company's executive officers.
GENERAL COMPENSATION POLICY. The overall policy of the Committee is to
offer the Company's executive officers competitive compensation opportunities
based upon their personal performance, the financial performance of the Company
and their contribution to that performance. Each executive officer's
compensation package will generally be comprised of base salary, which will be
determined on the basis of the individual's position and responsibilities with
the Company, the level of his or her performance, and the financial performance
of the Company and incentive performance awards payable in cash and stock
options.
FACTORS. The primary factors which the Committee considered in establishing
the components of each executive officer's compensation package for the 1996
fiscal year are summarized below. However, the Committee may, in its discretion,
apply entirely different factors, such as different measures of financial
performance, for future fiscal years.
BASE SALARY. In setting the base salary for each executive officer, the
Committee took into account comparative compensation data for a select group of
companies. Companies are included within the survey
14
<PAGE> 18
group on the basis of a number of factors, such as their size and organizational
structure, the nature of their businesses, the geographic regions in which they
operate, the composition of their compensation programs (including the extent to
which they rely on other contingent forms of compensation), the extent to which
they compete with the Company for executive talent and the availability of
information concerning their compensation practices. On the basis of the
compiled data, the Committee fixed the base salary of each executive officer at
a level which is competitive with the salaries of individuals in similar
positions at the surveyed companies. The Committee also took into account, in
determining such base salary levels, the performance of each executive officer
in comparison to the performance of the Company's other executive officers.
INCENTIVE COMPENSATION. At the end of each fiscal year the Compensation
Committee evaluates each executive officer's base salary, the level of his
performance, and the performance of the Company and determines for each
individual executive officer the amount of any cash incentive bonus to be paid
to such executive officer. For fiscal year 1996, no year-end cash incentive
bonuses were paid, although Dr. Hempstead was paid a $50,000 bonus upon joining
the Company in April 1996, as indicated in the Summary Compensation Table.
LONG-TERM STOCK-BASED INCENTIVE COMPENSATION. Long-term incentives are
provided through stock option grants. The grants are designed to align the
interests of each executive officer with those of the shareholders and provide
each individual with a significant incentive to manage the Company from the
perspective of an owner with an equity stake in the business. Each grant allows
the officer to acquire shares of the Company's Common Stock at a fixed price per
share (the market price on the grant date) over a specified period of time (up
to ten (10) years). Each option generally becomes exercisable in installments
over a five year period, contingent on the officer's continued employment with
the Company. Accordingly, the option will provide a return to the executive
officer only if the market price of the shares appreciates over the option term
and the officer continues in the Company's employ.
The size of the option grant to each executive officer is designed to
create a meaningful opportunity for stock ownership and is based upon the
executive officer's current position with the Company, internal comparability
with option grants made to other Company executives, the executive officer's
current level of performance and the executive officer's potential for future
responsibility and promotion over the option term. The Committee also takes into
account the number of vested and unvested options held by the executive officer
in order to maintain an appropriate level of equity incentive for that
individual. However, the Committee does not adhere to any specific guidelines as
to the relative option holdings of the Company's executive officers. During
1996, a stock option grant was made to Dr. Hempstead under the 1995 Plan.
CEO COMPENSATION. The compensation payable to Mr. Pond, the Company's Chief
Executive Officer during fiscal year 1996, was determined by the Committee. His
base salary was set at a level which the Committee felt would be competitive
with the base salary levels in effect for chief executive officers at
similarly-sized companies within the industry. For the 1997 fiscal year, Mr.
Pond's compensation package was set by the Committee on the basis of the
compensation policy summarized in this report.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). Section 162(m) of the
Internal Revenue Code, enacted in 1993, generally disallows a tax deduction to
publicly-held companies for compensation paid to certain executive officers, to
the extent that compensation exceeds $1 million per officer in any year. The
compensation paid to the Company's executive officers for the 1996 fiscal year
did not exceed the $1 million limit per officer, and it is not expected the
compensation to be to the Company's executive officers for the 1997 fiscal year
will exceed that limit. In addition, the Company's 1995 Stock Option/Stock
Issuance Plan is structured so that any compensation deemed paid to an executive
officer in connection with the exercise of his or her outstanding options under
the 1995 Plan will qualify as performance-based compensation which will not be
subject to the $1 million limitation.
Submitted by the Compensation Committee of the Company's Board of
Directors:
H. Joseph Smead, Compensation Committee Member
15
<PAGE> 19
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board of Directors was formed
on September 14, 1995 and during 1996 was comprised of John R. Dougery and H.
Joseph Smead. Neither of these individuals was at any time during fiscal 1996,
or at any other time, an officer or employee of the Company. No executive
officer of the Company serves as a member of the board of directors or
compensation committee of any other entity that has one or more executive
officers serving as a member of the Company's Board of Directors or Compensation
Committee.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL AGREEMENTS
None of the Company's executive officers have employment agreements with
the Company, and their employment may be terminated at any time at the
discretion of the Board of Directors. Pursuant to the express provisions of the
1995 Stock Option/Stock Incentive Plan, the outstanding options under the 1995
Plan held by the Chief Executive Officer and the Company's other executive
officers will immediately accelerate in full, and all unvested shares of Common
Stock at the time held by such individuals under the 1995 Plan will immediately
vest, in the event their employment were to be terminated (whether involuntarily
or through a forced resignation) within twelve (12) months after any acquisition
of the Company by merger or asset sale in which those options and shares did not
otherwise vest. In addition, the Compensation Committee of the Board of
Directors has the authority as Plan Administrator of the 1995 Stock Option/Stock
Incentive Plan to provide for the accelerated vesting of the outstanding options
under the 1995 Plan held by the Chief Executive Officer and the Company's other
executive officers and the immediate vesting of all unvested shares of Common
Stock at the time held by such individuals under the 1995 Plan, in the event
their employment were to be terminated (whether involuntarily or through a
forced resignation) following a hostile take-over of the Company effected
through a successful tender offer for more than fifty percent (50%) of the
Company's outstanding Common Stock or through a change in the majority of the
Board as a result of one or more contested elections for Board membership.
16
<PAGE> 20
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the
Common Stock of the Company with that of the NASDAQ Stock Market Total Return
Index, a broad market index published by the Center for Research in Security
Prices ("CRSP"), and the NASDAQ Computer Manufacturers Stock Total Return Index
compiled by CRSP. The comparison for each of the periods assumes that $100 was
invested on November 21, 1995 (the date of the Company's initial public
offering) in the Company's Common Stock, the stocks included in the NASDAQ Stock
Market Total Return Index and the stocks included in the NASDAQ Computer
Manufacturers Stock Total Return Index. These indices, which reflect formulas
for dividend reinvestment and weighing of individual stocks, do not necessarily
reflect returns that could be achieved by individual investors.
COMPARISON OF CUMULATIVE TOTAL RETURN SINCE NOVEMBER 21, 1995
AMONG INTEVAC, NASDAQ STOCK MARKET TOTAL RETURN INDEX AND
NASDAQ COMPUTER MANUFACTURERS TOTAL RETURN INDEX
<TABLE>
<CAPTION>
NASDAQ COMPUTER
NASDAQ STOCK MANUFACTURER'S
MEASUREMENT PERIOD MARKET US TOTAL TOTAL RETURN
(FISCAL YEAR COVERED) INTEVAC, INC. RETURN INDEX INDEX
<S> <C> <C> <C>
21-NOV-95 1.000 1.000 1.000
30-NOV-95 1.100 1.035 1.054
29-DEC-95 1.060 1.029 0.993
31-JAN-96 1.180 1.035 0.997
29-FEB-96 1.200 1.074 1.097
29-MAR-96 1.160 1.078 1.023
30-APR-96 2.500 1.167 1.173
31-MAY-96 3.440 1.220 1.253
28-JUN-96 2.360 1.165 1.151
31-JUL-96 2.000 1.062 1.034
30-AUG-96 1.860 1.121 1.106
30-SEP-96 2.720 1.207 1.271
31-OCT-96 2.320 1.194 1.276
29-NOV-96 2.560 1.268 1.389
31-DEC-96 2.720 1.266 1.333
</TABLE>
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Exchange Act that might
incorporate future filings, including this Proxy Statement, in whole or in part,
the preceding Compensation Committee Report on Executive Compensation and the
preceding Performance Graph shall not be incorporated by reference into any such
filings; nor shall such Report or graph be incorporated by reference into any
future filings.
17
<PAGE> 21
OTHER BUSINESS
The Board of Directors knows of no other business that will be presented
for consideration at the Annual Meeting. If other matters are properly brought
before the Annual Meeting, however, it is the intention of the persons named in
the accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
SHAREHOLDER PROPOSALS
Proposals of shareholders that are intended to be presented at the
Company's annual meeting of shareholders to be held in 1998 must be received by
December 1, 1997 in order to be included in the proxy statement and proxy
relating to that meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ CHARLES B. EDDY III
CHARLES B. EDDY III
Vice President, Finance and
Administration,
Chief Financial Officer, Treasurer and
Secretary
Santa Clara, California
April 1, 1997
18
<PAGE> 22
INTEVAC, INC.
EMPLOYEE STOCK PURCHASE PLAN
I. PURPOSE OF THE PLAN
This Employee Stock Purchase Plan is intended to promote the
interests of Intevac, Inc. by providing eligible employees with the opportunity
to acquire a proprietary interest in the Corporation through participation in a
payroll-deduction based employee stock purchase plan designed to qualify under
Section 423 of the Code.
Capitalized terms herein shall have the meanings assigned to
such terms in the attached Appendix.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret
and construe any provision of the Plan and to adopt such rules and regulations
for administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares
of authorized but unissued or reacquired Common Stock, including shares of
Common Stock purchased on the open market. The maximum number of shares of
Common Stock which may be issued over the term of the Plan shall not exceed
five hundred thousand (500,000) shares.
B. Should any change be made to the Common Stock by
reason of any stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration,
appropriate adjustments shall be made to (i) the maximum number and class of
securities issuable under the Plan, (ii) the maximum number and class of
securities purchasable per Participant on any one Purchase Date and (iii) the
number and class of securities and the price per share in effect under each
outstanding purchase right in order to prevent the dilution or enlargement of
benefits thereunder.
IV. OFFERING PERIODS
A. Shares of Common Stock shall be offered for purchase
under the Plan through a series of successive offering periods until such time
as (i) the maximum number of shares of Common Stock available for issuance
under the Plan shall have been purchased or (ii) the Plan shall have been
sooner terminated.
<PAGE> 23
B. Each offering period shall be of such duration (not
to exceed twenty-four (24) months) as determined by the Plan Administrator
prior to the start date. However, the initial offering period shall commence
at the Effective Time and terminate on the last business day in January 1998.
The next offering period shall commence on the first business day in February
1998, and subsequent offering periods shall commence as designated by the Plan
Administrator.
C. Each offering period shall be comprised of a series
of one or more successive Purchase Intervals. Purchase Intervals shall run
from the first business day in February to the last business day in July each
year and from the first business day in August each year to the last business
day in January of the following year. However, the first Purchase Interval in
effect under the initial offering period shall commence at the Effective Time
and terminate on the last business day in July 1996.
D. Should the Fair Market Value per share of Common
Stock on any Purchase Date within an offering period be less than the Fair
Market Value per share of Common Stock on the start date of that offering
period, then that offering period shall automatically terminate immediately
after the purchase of shares of Common Stock on such Purchase Date, and a new
offering period shall commence on the next business day following such Purchase
Date. The duration of that new offering period shall be established by the
Plan Administrator within five (5) business days following such start date.
V. ELIGIBILITY
A. Each individual who is an Eligible Employee on the
start date of any offering period under the Plan may enter that offering period
on such start date or on any subsequent Semi-Annual Entry Date within that
offering period, provided he or she remains an Eligible Employee.
B. Each individual who first becomes an Eligible
Employee after the start date of an offering period may enter that offering
period on any subsequent Semi-Annual Date within that offering period on which
he or she is an Eligible Employee.
C. The date an individual enters an offering period
shall be designated his or her Entry Date for purposes of that offering period.
D. To participate in the Plan for a particular offering
period, the Eligible Employee must complete the enrollment forms prescribed by
the Plan Administrator (including a stock purchase agreement and a payroll
deduction authorization) and file such forms with the Plan Administrator (or
its designate) on or before his or her scheduled Entry Date.
2.
<PAGE> 24
VI. PAYROLL DEDUCTIONS
A. The payroll deduction authorized by the Participant
for purposes of acquiring shares of Common Stock during an offering period may
be any multiple of one percent (1%) of the Base Salary paid to the Participant
during each Purchase Interval within that offering period, up to a maximum of
ten percent (10%). The deduction rate so authorized shall continue in effect
throughout the offering period, except to the extent such rate is changed in
accordance with the following guidelines:
(i) The Participant may, at any time
during the offering period, reduce his or her rate of payroll
deduction to become effective as soon as possible after filing the
appropriate form with the Plan Administrator. The Participant may
not, however, effect more than one (1) such reduction per Purchase
Interval.
(ii) The Participant may, prior to the
commencement of any new Purchase Interval within the offering period,
increase the rate of his or her payroll deduction by filing the
appropriate form with the Plan Administrator. The new rate (which may
not exceed the ten percent (10%) maximum) shall become effective as of
the start date of the first Purchase Interval following the filing of
such form.
B. Payroll deductions shall begin on the first pay day
following the Participant's Entry Date into the offering period and shall
(unless sooner terminated by the Participant) continue through the pay day
ending with or immediately prior to the last day of that offering period. The
amounts so collected shall be credited to the Participant's book account under
the Plan, but no interest shall be paid on the balance from time to time
outstanding in such account. The amounts collected from the Participant shall
not be held in any segregated account or trust fund and may be commingled with
the general assets of the Corporation and used for general corporate purposes.
C. Payroll deductions shall automatically cease upon the
termination of the Participant's purchase right in accordance with the
provisions of the Plan.
D. The Participant's acquisition of Common Stock under
the Plan on any Purchase Date shall neither limit nor require the Participant's
acquisition of Common Stock on any subsequent Purchase Date, whether within the
same or a different offering period.
VII. PURCHASE RIGHTS
A. GRANT OF PURCHASE RIGHT. A Participant shall be
granted a separate purchase right for each offering period in which he or she
participates. The purchase right shall be granted on the Participant's Entry
Date into the offering period and shall provide the Participant with the right
to purchase shares of Common Stock, in a series of successive
3.
<PAGE> 25
installments over the remainder of such offering period, upon the terms set
forth below. The Participant shall execute a stock purchase agreement
embodying such terms and such other provisions (not inconsistent with the Plan)
as the Plan Administrator may deem advisable.
Under no circumstances shall purchase rights be granted under
the Plan to any Eligible Employee if such individual would, immediately after
the grant, own (within the meaning of Code Section 424(d)) or hold outstanding
options or other rights to purchase, stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Corporation or any Corporate Affiliate.
B. EXERCISE OF THE PURCHASE RIGHT. Each purchase right
shall be automatically exercised in installments on each successive Purchase
Date within the offering period, and shares of Common Stock shall accordingly
be purchased on behalf of each Participant (other than any Participant whose
payroll deductions have previously been refunded in accordance with the
Termination of Purchase Right provisions below) on each such Purchase Date.
The purchase shall be effected by applying the Participant's payroll deductions
for the Purchase Interval ending on such Purchase Date to the purchase of whole
shares of Common Stock at the purchase price in effect for the Participant for
that Purchase Date.
C. PURCHASE PRICE. The purchase price per share at
which Common Stock will be purchased on the Participant's behalf on each
Purchase Date within the offering period shall not be less than eighty-five
percent (85%) of the lower of (i) the Fair Market Value per share of Common
Stock on the Participant's Entry Date into that offering period or (ii) the
Fair Market Value per share of Common Stock on that Purchase Date. However,
for each Participant whose Entry Date is other than the start date of the
offering period, the clause (i) amount shall in no event be less than the Fair
Market Value per share of Common Stock on the start date of that offering
period. The Plan Administrator shall establish the exact percentage for each
offering period prior to the start date of that period.
D. NUMBER OF PURCHASABLE SHARES. The number of shares
of Common Stock purchasable by a Participant on each Purchase Date during the
offering period shall be the number of whole shares obtained by dividing the
amount collected from the Participant through payroll deductions during the
Purchase Interval ending with that Purchase Date by the purchase price in
effect for the Participant for that Purchase Date. However, the maximum number
of shares of Common Stock purchasable per Participant on any one Purchase Date
shall not exceed seven hundred fifty (750) shares, subject to periodic
adjustments in the event of certain changes in the Corporation's
capitalization.
4.
<PAGE> 26
E. EXCESS PAYROLL DEDUCTIONS. Any payroll deductions
not applied to the purchase of shares of Common Stock on any Purchase Date
because they are not sufficient to purchase a whole share of Common Stock shall
be held for the purchase of Common Stock on the next Purchase Date. However,
any payroll deductions not applied to the purchase of Common Stock by reason of
the limitation on the maximum number of shares purchasable by the Participant
on the Purchase Date shall be promptly refunded.
F. TERMINATION OF PURCHASE RIGHT. The following
provisions shall govern the termination of outstanding purchase rights:
(i) A Participant may, at any time prior
to the next scheduled Purchase Date in the offering period, terminate
his or her outstanding purchase right by filing the appropriate form
with the Plan Administrator (or its designate), and no further payroll
deductions shall be collected from the Participant with respect to the
terminated purchase right. Any payroll deductions collected during
the Purchase Interval in which such termination occurs shall be
refunded as soon as possible.
(ii) The termination of such purchase
right shall be irrevocable, and the Participant may not subsequently
rejoin the offering period for which the terminated purchase right was
granted. In order to resume participation in any subsequent offering
period, such individual must re-enroll in the Plan (by making a timely
filing of the prescribed enrollment forms) on or
before his or her scheduled Entry Date into that offering period.
(iii) Should the Participant cease to
remain an Eligible Employee for any reason (including death,
disability or change in status) while his or her purchase right
remains outstanding, then that purchase right shall immediately
terminate, and all of the Participant's payroll deductions for the
Purchase Interval in which the purchase right so terminates shall be
immediately refunded. However, should the Participant cease to remain
in active service by reason of an approved unpaid leave of absence,
then the Participant shall have the right, exercisable up until the
last business day of the Purchase Interval in which such leave
commences, to (a) withdraw all the payroll deductions collected to
date on his or her behalf for that Purchase Interval or (b) have such
funds held for the purchase of shares on his or her behalf on the next
scheduled Purchase Date. In no event, however, shall any further
payroll deductions be collected on the Participant's behalf during
such leave. Upon the Participant's return to active service, his or
her payroll deductions under the Plan shall automatically resume at
the rate in effect at the time the leave began.
5.
<PAGE> 27
G. CORPORATE TRANSACTION. Each outstanding purchase
right shall automatically be exercised, immediately prior to the effective date
of any Corporate Transaction, by applying the payroll deductions of each
Participant for the Purchase Interval in which such Corporate Transaction
occurs to the purchase of whole shares of Common Stock at a purchase price per
share equal to eighty-five percent (85%) (or such greater percentage as the
Plan Administrator may have established for the offering period in which the
Corporate Transaction occurs) of the lower of (i) the Fair Market Value per
share of Common Stock on the Participant's Entry Date into the offering period
in which such Corporate Transaction occurs or (ii) the Fair Market Value per
share of Common Stock immediately prior to the effective date of such Corporate
Transaction. However, the applicable limitation on the number of shares of
Common Stock purchasable per Participant shall continue to apply to any such
purchase, and the clause (i) amount above shall not, for any Participant whose
Entry Date for the offering period is other than the start date of that
offering period, be less than the Fair Market Value per share of Common Stock
on that start date.
The Corporation shall use its best efforts to provide at least
ten (10)-days prior written notice of the occurrence of any Corporate
Transaction, and Participants shall, following the receipt of such notice, have
the right to terminate their outstanding purchase rights prior to the effective
date of the Corporate Transaction.
H. PRORATION OF PURCHASE RIGHTS. Should the total
number of shares of Common Stock to be purchased pursuant to outstanding
purchase rights on any particular date exceed the number of shares then
available for issuance under the Plan, the Plan Administrator shall make a
pro-rata allocation of the available shares on a uniform and nondiscriminatory
basis, and the payroll deductions of each Participant, to the extent in excess
of the aggregate purchase price payable for the Common Stock pro-rated to such
individual, shall be refunded.
I. ASSIGNABILITY. The purchase right shall be
exercisable only by the Participant and shall not be assignable or transferable
by the Participant.
J. STOCKHOLDER RIGHTS. A Participant shall have no
stockholder rights with respect to the shares subject to his or her outstanding
purchase right until the shares are purchased on the Participant's behalf in
accordance with the provisions of the Plan and the Participant has become a
holder of record of the purchased shares.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to
acquire Common Stock pursuant to any purchase right outstanding under this Plan
if and to the extent such accrual, when aggregated with (i) rights to purchase
Common Stock accrued under any other purchase right granted under this Plan and
(ii) similar rights accrued under other employee stock purchase plans (within
the meaning of Code Section 423) of the Corporation or any
6.
<PAGE> 28
Corporate Affiliate, would otherwise permit such Participant to purchase more
than Twenty-Five Thousand Dollars ($25,000) worth of stock of the Corporation
or any Corporate Affiliate (determined on the basis of the Fair Market Value
per share on the date or dates such rights are granted) for each calendar year
such rights are at any time outstanding.
B. For purposes of applying such accrual limitations to
the purchase rights granted under the Plan, the following provisions shall be
in effect:
(i) The right to acquire Common Stock
under each outstanding purchase right shall accrue in a series of
installments on each successive Purchase Date during the offering
period on which such right remains outstanding.
(ii) No right to acquire Common Stock
under any outstanding purchase right shall accrue to the extent the
Participant has already accrued in the same calendar year the right to
acquire Common Stock under one (1) or more other purchase rights at a
rate equal to Twenty-Five Thousand Dollars ($25,000) worth of Common
Stock (determined on the basis of the Fair Market Value per share on
the date or dates of grant) for each calendar year such rights were at
any time outstanding.
C. If by reason of such accrual limitations, any
purchase right of a Participant does not accrue for a particular Purchase
Interval, then the payroll deductions which the Participant made during that
Purchase Interval with respect to such purchase right shall be promptly
refunded.
D. In the event there is any conflict between the
provisions of this Article and one or more provisions of the Plan or any
instrument issued thereunder, the provisions of this Article shall be
controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on September 14,
1995 and subsequently approved by the stockholders in October 1995. The Plan
became effective at the Effective Time.
B. On March 18, 1997, the Board of Directors authorized
an increase in the number of shares of Common Stock reserved for issuance under
the Plan from two hundred fifty thousand (250,000) to five hundred thousand
(500,000) shares, subject to stockholder approval at the 1997 Annual Meeting.
No purchase rights shall be granted under the Plan in reliance on such two
hundred fifty thousand (250,000)-share increase, and no shares of Common Stock
shall be issued on the basis of such increase, unless and until such increase
has been approved by the Corporation's stockholders at the 1997 Annual Meeting.
7.
<PAGE> 29
C. Unless sooner terminated by the Board, the Plan shall
terminate upon the earliest of (i) the last business day in January 2005, (ii)
the date on which all shares available for issuance under the Plan shall have
been sold pursuant to purchase rights exercised under the Plan or (iii) the
date on which all purchase rights are exercised in connection with a Corporate
Transaction. No further purchase rights shall be granted or exercised, and no
further payroll deductions shall be collected, under the Plan following such
termination.
X. AMENDMENT OF THE PLAN
The Board may alter, amend, suspend or discontinue the Plan at
any time to become effective immediately following the close of any Purchase
Interval. However, the Board may not, without the approval of the Corporation's
stockholders, (i) materially increase the number of shares of Common Stock
issuable under the Plan or the maximum number of shares purchasable per
Participant on any one Purchase Date, except for permissible adjustments in the
event of certain changes in the Corporation's capitalization, (ii) alter the
purchase price formula so as to reduce the purchase price payable for the
shares of Common Stock purchasable under the Plan, or (iii) materially increase
the benefits accruing to Participants under the Plan or materially modify the
requirements for eligibility to participate in the Plan.
XI. GENERAL PROVISIONS
A. All costs and expenses incurred in the administration
of the Plan shall be paid by the Corporation.
B. Nothing in the Plan shall confer upon the Participant
any right to continue in the employ of the Corporation or any Corporate
Affiliate for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Corporation (or any Corporate Affiliate
employing such person) or of the Participant, which rights are hereby expressly
reserved by each, to terminate such person's employment at any time for any
reason, with or without cause.
C. The provisions of the Plan shall be governed by the
laws of the State of California without resort to that State's conflict-of-laws
rules.
8.
<PAGE> 30
SCHEDULE A
CORPORATIONS PARTICIPATING IN
EMPLOYEE STOCK PURCHASE PLAN
AS OF THE EFFECTIVE TIME
Intevac, Inc.
<PAGE> 31
APPENDIX
The following definitions shall be in effect under the Plan:
A. BASE SALARY shall mean the regular base salary paid
to a Participant by one or more Participating Companies during such
individual's period of participation in one or more offering periods under the
Plan, plus any pre-tax contributions made by the Participant to any Code
Section 401(k) salary deferral plan or any Code Section 125 cafeteria benefit
program now or hereafter established by the Corporation or any Corporate
Affiliate. The following items of compensation shall NOT be included in Base
Salary: (i) all overtime payments, bonuses, commissions (other than those
functioning as base salary equivalents), profit-sharing distributions and other
incentive-type payments and (ii) any and all contributions (other than Code
Section 401(k) or Code Section 125 contributions) made on the Participant's
behalf by the Corporation or any Corporate Affiliate under any employee benefit
or welfare plan now or hereafter established.
B. BOARD shall mean the Corporation's Board of
Directors.
C. CODE shall mean the Internal Revenue Code of 1986, as
amended.
D. COMMON STOCK shall mean the Corporation's common
stock.
E. CORPORATE AFFILIATE shall mean any parent or
subsidiary corporation of the Corporation (as determined in accordance with
Code Section 424), whether now existing or subsequently established.
F. CORPORATE TRANSACTION shall mean either of the
following stockholder-approved transactions to which the Corporation is a
party:
(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities are transferred to a
person or persons different from the persons holding those securities
immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of
all or substantially all of the assets of the Corporation in
complete liquidation or dissolution of the Corporation.
G. CORPORATION shall mean Intevac, Inc., a California
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of Intevac, Inc. which shall by appropriate action adopt
the Plan.
A-1.
<PAGE> 32
H. EFFECTIVE TIME shall mean November 21, 1995, the time
at which the Underwriting Agreement was executed and finally priced. Any
Corporate Affiliate which becomes a Participating Corporation after such
Effective Time shall designate a subsequent Effective Time with respect to its
employee-Participants.
I. ELIGIBLE EMPLOYEE shall mean any person who is
employed by a Participating Company on a basis under which he or she is
regularly expected to render more than twenty (20) hours of service per week
for more than five (5) months per calendar year for earnings considered wages
under Code Section 3401(a).
J. ENTRY DATE shall mean the date an Eligible Employee
first commences participation in the offering period in effect under the Plan.
The earliest Entry Date under the Plan shall be the Effective Time.
K. FAIR MARKET VALUE per share of Common Stock on any
relevant date shall be determined in accordance with the following provisions:
(i) 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 in
question, as such price is reported by the National Association of
Securities Dealers on the Nasdaq National Market or any successor
system. If there is no closing selling price for the Common Stock on
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.
(ii) If the Common Stock is at the time listed on
any Stock Exchange, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question on the
Stock Exchange determined by the Plan Administrator 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 in question,
then the Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.
(iii) For purposes of the initial offering period
which begins at the Effective Time, the Fair Market Value shall be
deemed to be equal to the price per share at which the Common Stock is
sold in the initial public offering pursuant to the Underwriting
Agreement.
L. 1933 ACT shall mean the Securities Act of 1933, as
amended.
A-2.
<PAGE> 33
M. PARTICIPANT shall mean any Eligible Employee of a
Participating Corporation who is actively participating in the Plan.
N. PARTICIPATING CORPORATION shall mean the Corporation
and such Corporate Affiliate or Affiliates as may be authorized from time to
time by the Board to extend the benefits of the Plan to their Eligible
Employees. The Participating Corporations in the Plan as of the Effective Time
are listed in attached Schedule A.
O. PLAN shall mean the Corporation's Employee Stock
Purchase Plan, as set forth in this document.
P. PLAN ADMINISTRATOR shall mean the committee of two
(2) or more Board members appointed by the Board to administer the Plan.
Q. PURCHASE DATE shall mean the last business day of
each Purchase Interval. The initial Purchase Date shall be July 31, 1996.
R. PURCHASE INTERVAL shall mean each successive six
(6)-month period within the offering period at the end of which there shall be
purchased shares of Common Stock on behalf of each Participant.
S. SEMI-ANNUAL ENTRY DATE shall mean the first business
day in February and August each year.
T. STOCK EXCHANGE shall mean either the American Stock
Exchange or the New York Stock Exchange.
U. UNDERWRITING AGREEMENT shall mean the agreement
between the Corporation and the underwriter or underwriters managing the
initial public offering of the Common Stock.
A-3.
<PAGE> 34
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
INTEVAC, INC.
Norman H. Pond and Charles B. Eddy III or either of them, are hereby
appointed as the lawful agents and proxies of the undersigned (with all powers
the undersigned would possess if personally present, including full power of
substitution) to represent and to vote all shares of capital stock of Intevac,
Inc. (the "Company") which the undersigned is entitled to vote at the Company's
Annual Meeting of Shareholders of May 15, 1997, and at any adjournments or
postponements thereof as follows on the reverse side.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE> 35
The Board of Directors recommends a vote FOR each of the proposals below. This
Proxy will be voted as directed or, if no direction is indicated, will be voted
FOR each of the proposals below and, at the discretion of the persons named as
proxies, upon such other matters as may properly come before the meeting. This
proxy may be revoked at any time before it is voted.
1. The election of all nominees listed below for the Board of Directors, as
described in the Proxy Statement:
Nominees: Norman H. Pond, Edward Durbin, Robert D. Hempstead, David N.
Lambeth and H. Joseph Smead
FOR [] WITHHELD []
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
such name or names in the space provided below.)
2. Proposal to approve an amendment to the Company's Employee Stock Purchase
Plan:
FOR [] AGAINST [] ABSTAIN []
3. Proposal to ratify the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending December 31, 1997:
FOR [] AGAINST [] ABSTAIN []
4. Transaction of any other business which may properly come before the
meeting and any adjournment or postponement thereof.
DATE:_________________, 1997
____________________________
(Signature)
____________________________
(Signature if held jointly)
(Please sign exactly as shown on your stock certificate and on the envelope in
which this proxy was mailed. When signing as a partner, corporate officer,
attorney, executor, administrator, trustee, guardian or in any other
representative capacity, give full title as such and sign your own name as
well. If stock is held jointly, each joint owner should sign.)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY,
USING THE ENCLOSED ENVELOPE.
