<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as Permitted
by Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 14a-11(c) or Section 14a-12
ATG INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[ATG LOGO]
June 18, 1999
Dear Shareholder:
Enclosed are the proxy materials for the 1999 Annual Meeting of
Shareholders, our first as a public company. I hope you will be able to join
us on July 15, 1999, and take the opportunity to meet members of the dedicated
team who have contributed to the success of the Company.
In the meantime, I urge you to carefully review all of the proposals in the
proxy statement and I solicit your support of the Board's recommendation on
these proposals.
Sincerely,
Doreen M. Chiu
Chairman, President and Chief
Executive Officer
<PAGE>
ATG INC.
47375 Fremont Boulevard
Fremont, California 94538
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 15, 1999
To the Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of ATG Inc.
(the "Company") will be held at The Westin Santa Clara, 5101 Great America
Parkway, Santa Clara, California on Thursday, July 15, 1999 at 10:00 a.m.
Pacific Daylight Time, for the following purposes:
1. To elect seven directors of the Company to serve until the next Annual
Meeting of Shareholders and until their respective successors are duly
elected and qualify.
2. To approve an amendment to increase by 500,000 the number of shares
available for option grants under the Company's 1998 Stock Ownership
Incentive Plan (the "Incentive Plan").
3. To consider and act upon such other business as may properly come
before the meeting or any adjournment(s) thereof.
Shareholders of record as of the close of business on May 17, 1999 are
entitled to receive notice of and to vote at the meeting or any adjournment(s)
thereof.
By Order of the Board of Directors
Frank Y. Chiu
Secretary
Fremont, California
June 18, 1999
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING OF
SHAREHOLDERS, PLEASE FILL IN, DATE AND SIGN THE ENCLOSED PROXY AND RETURN
IT PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
ATG INC.
47375 Fremont Boulevard
Fremont, CA 94538
----------------
PROXY STATEMENT
----------------
INFORMATION CONCERNING SOLICITATION AND VOTING
General Information
This Proxy Statement is solicited by and on behalf of the Board of Directors
of ATG Inc., a California corporation (the "Company"), for use at the Annual
Meeting of Shareholders (the "Annual Meeting") to be held at The Westin Santa
Clara, 5101 Great America Parkway, Santa Clara, California on Thursday, July
15, 1999 at 10:00 a.m. Pacific Daylight Time, and at any adjournment(s)
thereof. The approximate date on which this Proxy Statement and the
accompanying Proxy was first given or sent to security holders was June 18,
1999.
Each Proxy executed and returned by a shareholder may be revoked at any time
thereafter, by written notice to that effect to the Company, attention of the
Secretary, prior to the Annual Meeting, or in person to the Chairman of, or
the Inspectors of Election at, the Annual Meeting, or by the execution and
return of a later-dated Proxy, except as to any matter voted upon prior to
such revocation.
The Proxies in the accompanying form will be voted in accordance with the
specifications made thereon and where no specifications are given, such
Proxies will be voted FOR all proposals herein. In the discretion of the proxy
holders, the Proxies will also be voted FOR or AGAINST such other matters as
may properly come before the Annual Meeting. The management of the Company is
not aware that any other matters are to be presented for action at the Annual
Meeting.
The solicitation of proxies generally will be by mail and by directors,
officers, and regular employees of the Company without additional
compensation. In some instances, solicitation may be made by telephone or
other means. All costs incurred in connection with the solicitation of proxies
will be borne by the Company. Arrangements may be made with brokers and other
custodians, nominees and fiduciaries to send proxies and proxy material to
their principals, and the Company may reimburse them for reasonable out-of-
pocket and clerical expenses in forwarding such material.
Record Date And Voting Rights
Only shareholders of record at the close of business on May 17, 1999 will be
entitled to notice of and to vote at the Annual Meeting or any and all
adjournments thereof. Each share of the Company's Common Stock, no par value
per share (the "Common Stock"), outstanding on that date is entitled to one
vote on each of the matters to be presented at the Annual Meeting. As of April
28, 1999, there were 14,047,221 shares of Common Stock outstanding. The
holders of a majority of the outstanding shares of Common Stock, present in
person or by proxy and entitled to vote, will constitute a quorum at the
Annual Meeting. Abstentions and broker non-votes will be counted for purposes
of determining the presence or absence of a quorum. "Broker non-votes" are
shares held by brokers or nominees which are present in person or represented
by proxy, but which are not voted on a particular matter because instructions
have not been received from the beneficial owner. Abstentions are counted in
tabulations of the votes cast on proposals presented to the shareholders,
whereas broker non-votes are not counted for purpose of determining whether a
proposal has been approved.
Notwithstanding the foregoing description of voting rights, shareholders may
exercise cumulative voting rights with respect to the election of directors.
Cumulative voting allows a shareholder to cast a number of votes equal to the
number of directors to be elected (seven) multiplied by the number of votes
held in his or her name
1
<PAGE>
on the record date. This total number of votes may be cast for one nominee or
may be distributed among as many candidates as the shareholder desires.
Pursuant to California law, no shareholder can cumulate votes unless, prior to
the voting at the Annual Meeting, a shareholder has given notice of the
shareholder's intention to cumulate the shareholder's votes at the Annual
Meeting and the nominee for which the shareholder intends to cumulate votes
has properly been nominated. If any shareholder has given such notice, all
shareholders may cumulate their votes for candidates in nomination. The Board
of Directors does not, at this time, intend to give such notice or to cumulate
the votes it may hold pursuant to the Proxies solicited herein unless the
required notice by a shareholder is given, in which event votes represented by
Proxies delivered pursuant to this Proxy Statement may be cumulated in the
discretion of the proxy holders, in accordance with the recommendation of the
Board of Directors. Therefore, discretionary authority to cumulate votes in
such event is solicited in this Proxy Statement.
Shareholder Information
A copy of the Company's 1998 Annual Report to shareholders, including
financial statements and schedules, is enclosed with these proxy solicitation
materials. In compliance with Rule 14a-3 promulgated under the Securities
Exchange Act of 1934, the Company hereby undertakes to provide, without charge
to each person solicited upon written request, a copy of the Company's 1998
Annual Report on Form 10-K, including the financial statements and financial
schedules thereto. Requests for such copies should be directed to ATG Inc.,
47375 Fremont Boulevard, Fremont, California 94538, Attention: Investor
Relations.
PROPOSAL NO. 1--ELECTION OF DIRECTORS
Seven directors will be elected at the Annual Meeting to hold office until
the next Annual Meeting of Shareholders and until their respective successors
are duly elected and qualify. It is intended that the Proxies will be voted
for the following nominees, but the holders of the Proxies reserve discretion
to cast votes for individuals other than the nominees for director named below
in the event of the unavailability of any such nominee. The Company has no
reason to believe that any of the nominees will become unavailable for
election. Set forth below are the names of the nominees, age, position with
the Company, the year in which first elected a director of the Company,
principal occupation and certain other information concerning each of the
nominees.
Doreen M. Chiu, 45, has served as President, Chief Executive Officer and
Chairman of the Board since joining the Company in 1984. Prior to joining the
Company, Ms. Chiu owned her own certified public accounting firm. Ms. Chiu is
a California CPA and holds a Bachelor of Arts degree in Business
Administration from the University of Wisconsin. Ms. Chiu is the wife of Frank
Chiu.
Frank Y. Chiu, 45, joined the Company in 1980 as Financial Controller,
became Vice-President and a director of the Company in 1984, and became
Executive Vice-President in 1992. Mr. Chiu holds a Bachelor of Arts degree in
Business Administration and a Master's degree in Business Administration from
the University of Wisconsin. Mr. Chiu is the husband of Doreen Chiu.
William M. Hewitt, 52, joined the Company in April 1997 as President--Waste
Management Services. He became a director in May 1998. Mr. Hewitt has over 26
years of domestic and international professional management experience,
primarily in the waste minimization and environmental fields. From 1994 until
joining the Company, Mr. Hewitt was the President of Hewitt Management
Services, Inc., a consulting firm providing strategic planning and other
business advice in the areas of pollution prevention, waste minimization and
strategic environmental management. During this period, Mr. Hewitt also served
as a Group President of Philip Environmental Services Companies, in which
capacity he designed and implemented the strategic, organizational and
marketing approach for integrating that group of companies. From 1990 to 1994,
he held a number of positions with companies in the WMX Technologies
Affiliates group, including Vice-President, Strategic Planning, of Rust
International, Inc. from 1993 to 1994, and President of Rust Federal
Environmental Services (formerly CWM FES) from 1991 to 1993. Mr. Hewitt holds
a Bachelor of Science degree in Chemical
2
<PAGE>
Engineering from the University of Rhode Island and a Master of Science degree
in Mechanical/Nuclear Engineering from Catholic University of America.
Steven J. Guerrettaz, 53, has served as Chief Financial Officer since
joining the Company in December 1997 and as a director since May 1998. From
May 1994 until joining the Company, Mr. Guerrettaz was the Vice President--
Finance of Thermatrix Inc., a publicly traded supplier of flameless thermal
oxidation equipment for the thermal treatment of volatile organic compounds
and hazardous air pollutants. From 1988 to 1994, Mr. Guerrettaz was the Vice
President Regional Controller for Chemical Waste Management, Inc. Mr.
Guerrettaz is a former audit partner of Arthur Andersen LLP. He is a
California CPA and holds a Bachelor of Science degree in accounting from San
Jose State University.
Andrew C. Kadak, 52, has been a director of the Company since May 1998. Mr.
Kadak has over 30 years of experience in the nuclear power industry. Since
1997 he has been President of Kadak Associates, Incorporated, a firm providing
consulting services to the nuclear power industry. From 1989 to 1997, Mr.
Kadak served as President and Chief Executive Officer of Yankee Atomic
Electric Company ("Yankee"), a company which operates nuclear power plants in
the Northeastern United States. Mr. Kadak serves on the Board of Directors of
the American Nuclear Society, a nuclear industry trade group, and is currently
a visiting Senior Lecturer in the Nuclear Engineering Department of the
Massachusetts Institute of Technology ("MIT"). He holds a Bachelor of Science
degree in Mechanical Engineering from Union College, a Master's degree in
Business Administration from Northeastern University and a Master of Science
degree and a Ph.D. in Nuclear Engineering from MIT.
Earl E. Gjelde, 54, has been a director of the Company since May 1998. Since
1993 Mr. Gjelde has been Managing Director of Summit Energy Group, Ltd., an
energy development company. From 1991 to 1993, he served as Vice President of
Waste Management Inc. and from 1989 to 1993, he served as Vice President of
Chemical Waste Management, Inc. From 1982 to 1989, he served in a number of
senior federal government positions, including Under Secretary of the U.S.
Department of the Interior ("Interior") from 1987 to 1989, and as Chief
Operating Officer of Interior from 1985 to 1989. Mr. Gjelde is currently a
member of the boards of directors of two publicly held companies: DIDAX, Inc.
a company in the Internet field, and Electrosource, Inc., a technology company
specializing in metals and bi-metals extrusion and battery development and
manufacturing. He holds a Bachelor of Science degree in Engineering from
Oregon State University.
George Doubleday II, 59, was appointed as a director of the Company in April
1999 and is being nominated for election for the first time. Mr. Doubleday has
been a private investor and advisor to companies for 18 years, principally
through his investment company, Nathan M. Malle Associates. Since 1983 he has
also been Chairman of the InnerAsia Group, a family of companies with
interests in international tourism, trade, and manufacturing. From 1965 to
1981, he served with Pan American World Airways as Staff Vice President
Operations Control and Regional Managing Director Southeast Asia. From 1961 to
1965, he served as a fighter pilot with the U.S. Marine Corps. He holds a
Bachelor of Science degree in Industrial Administration from Yale University.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" ALL OF THE NOMINEES LISTED ABOVE
3
<PAGE>
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors conducted seven (7) meetings during fiscal year 1998.
All of the persons who are currently Directors of the Company, except one,
attended at least seventy-five percent (75%) of the aggregate of: (i) the
total number of meetings of the board of directors, and (ii) the total number
of meetings held by the committee on which they served during fiscal year
1998. Doreen M. Chiu attended 71% of the meetings and was absent from the
others due to travel in Asia on Company business. The Board of Directors has
two committees, the Audit Committee and the Compensation Committee.
Compensation of Directors
Each non-employee director receives a cash fee of $2,000 per Board meeting
attended (but not including conference calls) and an additional $2,000 per
Board Committee meeting attended, if such committee meeting is held on a day
different from that of a Board meeting. Each non-employee Board member, upon
appointment to the Board and pursuant to the Company's 1998 Non-Employee
Directors' Stock Option Plan (the "Directors' Plan") received an automatic
option grant to purchase 20,000 shares of Common Stock at an option exercise
price equal to 100% of the market price of the Common Stock on the date of
grant ($8.50 per share, in the case of Messrs. Gjelde and Kadak and $6.875 per
share in the case of Mr Doubleday). Each option has a maximum term of ten (10)
years and became immediately exercisable as to 5,000 of the option shares upon
the date of grant. The balance of the option shares vest at 5,000 shares each
on the succeeding three anniversaries of the grant date.
Audit Committee
The Audit Committee of the Board is composed of Messrs. Gjelde, Doubleday
and Kadak and is chaired by Mr. Gjelde. The Audit Committee was formed in May
1998 and met once in fiscal year 1998. The functions performed by the Audit
Committee include making recommendations to the Board of Directors regarding
the selection of independent accountants to serve the Company for the ensuing
year and reviewing with the independent accountants and management the general
scope and results of the company's annual audit, the fees charged by the
independent accountants and other matters relating to internal control
systems. In addition, the Audit Committee is responsible for reviewing and
monitoring the performance of non-audit services by the Company's auditors and
for recommending the engagement or discharge of the Company's independent
accountants.
Compensation Committee
The Compensation Committee of the Board is composed of Messrs. Kadak,
Doubleday and Gjelde, and is chaired by Mr. Kadak. All members of this
Committee are non-employee directors. The responsibilities of the Compensation
Committee include establishing the compensation of the Chief Executive
Officer, reviewing and approving executive compensation policies and
practices, reviewing salaries and bonuses for certain executive officers of
the Company and administering the Company's stock option plans. The
Compensation Committee met two (2) times during fiscal year 1998.
4
<PAGE>
PROPOSAL NO. 2--AMEND THE 1998 STOCK OWNERSHIP
INCENTIVE PLAN TO PROVIDE FOR AN INCREASE IN THE
NUMBER OF SHARES AVAILABLE FOR OPTION GRANTS
General
The Incentive Plan was adopted in February 1998. It authorizes the award of
stock options, shares of restricted stock and performance units to employees
of the Company. A total of 500,000 shares of Common Stock were reserved for
issuance, with no more than 250,000 shares allowed to be issued in the form of
shares of restricted stock. The Incentive Plan is intended to advance the
interests of the Company by encouraging the Company's employees who contribute
to the Company's long-term success and development to acquire and retain an
ownership interest in the Company.
The Incentive Plan is administered by the Board. All employees (318 at April
28, 1999) are eligible to receive option grants. The Board selects employees
to receive awards under the Incentive Plan and determines the terms,
conditions and limitations applicable to each award. Each award is evidenced
by a grant letter from the Board to the recipient setting forth the terms and
conditions of the award. The Incentive Plan will terminate at the discretion
of the Board; provided, however, that in no event will the term of the
Incentive Plan extend beyond the tenth anniversary of its adoption by the
Board.
Stock options granted pursuant to the Incentive Plan may either be incentive
stock options ("ISOs") intended to qualify under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or stock options not intended
to so qualify. Each stock option awarded under the Incentive Plan must have an
exercise price equal to at least 100% of the fair market value of the Common
Stock on the date of grant ($7.50 at April 28, 1999), and ISOs granted to any
employee possessing more than 10% of the combined voting power of all classes
of stock of the Company must have an exercise price equal to at least 110% of
such fair market value. Optionees may exercise options under the Incentive
Plan by paying cash, by tendering shares of Common Stock, by using a cashless
exercise procedure provided for in the Incentive Plan, or by a combination
thereof, as permitted by the Board. Options typically vest in equal
installments over a three year period and, upon a change of control of the
Company (as defined in the Incentive Plan), any outstanding options become
fully vested and immediately exercisable. No options granted under the
Incentive Plan may be exercised after the expiration of ten years from the
date it was granted.
There generally are no federal income tax consequences to the Participant or
the Company by reason of the grant or exercise of an ISO. If the Participant
holds Shares of Common Stock acquired through exercise of an ISO for at least
two (2) years from the date on which the Option is granted and at least one
(1) year from the date on which the Shares are transferred to the Participant
upon exercise of the Option, any gain or loss on a disposition of such Shares
will be long-term capital gain or loss. Generally, if the Participant disposes
of the Shares before the expiration of either of these holding periods (a
"disqualifying disposition"), at the time of disposition, the Participant will
realize taxable ordinary income equal to the lesser of (a) the excess of the
Shares' fair market value on the date of exercise over the exercise price of
the Option, or (b) the Participant's actual gain, if any, on the purchase and
sale. The Participant's additional gain, or any loss, upon the disqualifying
disposition will be a capital gain or loss, which will be long-term, mid-term,
or short-term depending on how long the Participant holds the stock. Capital
gains are generally subject to lower tax rates than ordinary income.
To the extent the Participant recognizes taxable ordinary income by reason
of a disqualifying disposition, the Company will generally be entitled
(subject to the requirement of reasonableness and the satisfaction of a tax
reporting obligation) to a corresponding business expense deduction in the tax
year in which the disqualifying disposition occurs.
Any non-qualified stock options ("NQSOs") granted under the Plan are not
intended to be "incentive stock options" under the Code. At the time of grant
of an NQSO, no income will be recognized by the Participant, and the Company
will not be entitled to a deduction. Upon the exercise of an NQSO, the
Participant will
5
<PAGE>
recognize taxable ordinary income and the Company will be entitled to a
corresponding business deduction in an amount by which the then fair market
value of the Shares issued to such Participant exceeds the exercise price
(provided certain tax withholding requirements are met). Upon any subsequent
disposition of such Shares, the Participant will recognize capital gain or
loss in an amount equal to the difference between the proceeds received upon
such disposition and the fair market value of such Shares at the time of
exercise. Such capital gain or loss will be long-term, mid-term, or short-term
depending on how long the Participant holds the Shares.
Reasons for the Proposed Amendment
The Company's Board of Directors believes that stock options are an
important way to attract, retain and reward the employees who will contribute
to the long-term success of the Company. In 1998, options to purchase 391,000
shares of Common Stock were granted as Incentive Stock Options to a total of
66 employees (options to purchase 190,000 shares were granted to executive
officers). As of April 28, 1999 there are only 109,000 shares available for
future grants under the Incentive Plan.
The Company has been growing rapidly and will need to continue to attract
and retain key management and operating personnel in the future. The Board of
Directors is recommending that the Incentive Plan be amended to provide for a
total of one million shares of Common Stock to be available for option grants
thereunder, an increase of 500,000 shares over the 500,000 shares initially
available for option grants under the Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" APPROVAL OF THE AMENDMENT TO INCREASE THE NUMBER OF
SHARES UNDER THE 1998 STOCK OWNERSHIP INCENTIVE PLAN
6
<PAGE>
CERTAIN TRANSACTIONS
The following is a summary of certain transactions to which the Company was
or is a party and in which certain executive officers, directors or
shareholders of the Company had or have a direct or indirect material
interest.
From 1992 to 1997, Doreen M. Chiu, the Company's Chairman of the Board and
Chief Executive Officer, extended a series of loans to the Company, each of
which was repayable in full upon demand (collectively, the "Loan"). The Loan,
which was unsecured, bore interest at an annual rate of 10%, payable
concurrently with principal. The outstanding principal balance of the Loan,
including accrued interest, at December 31, 1997 was $1,280,180. This Loan was
repaid in full in 1998.
Doreen M. Chiu and Frank Y. Chiu, the Executive Vice-President and a
director of the Company, have each guaranteed the obligations of the Company
under (i) a Promissory Note in the principal amount of $3,000,500 held by
Safeco Credit Company, Inc.; (ii) a Term Loan Agreement in the principal
amount of $400,000 held by Sanwa Bank California; (iii) an Equipment Lease
between the Company and Great Western Leasing that provides for an aggregate
rental amount of $215,673; (iv) an Equipment Lease between the Company and The
CIT Group/Equipment Financing, Inc. that provides for an aggregate rental
amount of $174,640; and (v) a Commercial Lease Agreement between the Company
and California Thrift and Loan with an aggregate rental amount of $125,767.
In connection with the issuance of certain bonds, undertakings and other
instruments of guarantee in favor of the Company, Doreen M. Chiu and Frank Y.
Chiu have each executed (i) a blanket Indemnity Agreement in favor of ACSTAR
Insurance Company ("ACSTAR"), indemnifying ACSTAR against any losses that
ACSTAR may incur in connection with the issuance of any such bonds,
undertakings or other instruments of guarantee, and (ii) a blanket Continuing
Agreement of Indemnity-Contractor's Form for the benefit of Reliance Insurance
Company, United Pacific Insurance, Reliance National Indemnity Company and
Reliance Surety Company, indemnifying such entities against any losses that
such entities may incur in connection with the issuance of any such bonds,
undertakings or other instruments of guarantee. As of December, 31, 1998, the
potential aggregate liability of Mr. and Mrs. Chiu under the blanket
indemnities was approximately $5.4 million.
In 1998, the Company entered into a contract to provide certain engineering,
remediation and construction services to Mission Ranch Center, a California
limited partnership ("Mission Ranch"). Doreen M. Chiu and Frank Y. Chiu are
the sole general partners of and own a 50% partnership interest in Mission
Ranch. The Company reported revenues of $785,000 and costs of $432,000 related
to services provided under this contract in 1998. The total project contract
value is approximately $3.0 million and is expected to be completed in fiscal
1999.
7
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of the Common Stock
of the Company as of April 28, 1999, by each person known by the Company to
own beneficially more than five percent of the Company's outstanding Common
Stock, by each director, by each executive officer named in the Summary
Compensation Table below and by all current directors and executive officers
as a group. All shares are subject to the named person's sole voting and
investment power, except where otherwise indicated. The address of each
beneficial owner identified in care of the Company, 47375 Fremont Boulevard,
Fremont, California 94538.
<TABLE>
<CAPTION>
Percent of
Number of Shares
Name Shares(1) Outstanding
---- --------- -----------
<S> <C> <C>
Doreen M. Chiu(2).................................... 2,605,926 18.6%
George Doubleday, II(3).............................. 497,243 3.5%
Eric C. Su(4)........................................ 110,000 *
William M. Hewitt(5)................................. 53,333 *
Steven J. Guerrettaz(6).............................. 40,000 *
Earl E. Gjelde(7).................................... 10,000 *
Andrew C. Kadak(7)................................... 10,000 *
All directors and executive officers as a group (9
persons)(8)......................................... 3,401,102 24.2%
</TABLE>
- --------
* The number of shares owned is less than 1%
(1) Beneficial ownership includes shares of Common Stock subject to options
held by the named person that are currently exercisable or will become
exercisable within 60 days.
(2) Includes all shares beneficially owned by Frank Y. Chiu as community
property.
(3) Includes options to purchase 5,000 shares of Common Stock
(4) Includes options to purchase 40,000 shares of Common Stock.
(5) Represents options to purchase 53,333 shares of Common Stock
(6) Represents options to purchase 40,000 shares of Common Stock
(7) Represents options to purchase 10,000 shares of Common Stock
(8) Includes 198,333 shares of Common Stock that may be issued upon the
exercise of options outstanding and beneficially owned by the directors
and executive officers as a group.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent
(10%) of the Company's Common Stock, to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission
and the National Association of Securities Dealers. Officers, directors and
greater than ten percent (10%) beneficial owners are required by the
Securities and Exchange Commission regulations to furnish the Company with
copies of all Section 16(a) forms they file. Specific due dates for these
reports have been established and the Company is required to disclose in this
Proxy Statement any late filings during the most recent fiscal year. To the
Company's knowledge, based solely on its review of the copies of such reports
required to be furnished to the Company during the most recent fiscal year,
all of these reports were timely filed with the Securities and Exchange
Commission and the National Association of Securities Dealers, except that
reports to reflect the grant of options to Ms. Chiu and Messrs. Chiu, Hewitt,
Guerrettaz and Su were inadvertently filed late, with one such report filed
late in the case of each such person.
8
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received by the Company's Chief
Executive Officer and the four (4) remaining most highly paid executive
officers who received total compensation in excess of $100,000 for the
previous years ended December 31, 1998, 1997 and 1996.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
------------
Annual Compensation
(3) Securities
-------------------- Underlying
Name and Principal Position Year Salary Bonus Options
--------------------------- ---- -------- ------ ------------
<S> <C> <C> <C> <C>
Doreen M. Chiu........................... 1998 $156,000 * 50,000
Chief Executive Officer 1997 150,000 * 150,000
1996 150,000 * *
Frank Y. Chiu............................ 1998 130,000 * 50,000
Executive Vice President 1997 120,000 * 159,900
1996 120,000 * *
William M. Hewitt........................ 1998 157,038 * 40,000
President--Waste Management Services(1) 1997 103,269 * 70,000
1996 * * *
Steven J. Guerrettaz..................... 1998 150,000 * 10,000
Chief Financial Officer(2) 1997 1,731 * 60,000
1996 * * *
Eric C. Su............................... 1998 112,086 * 40,000
Vice President--Marketing & Planning 1997 94,386 25,000 20,000
1996 76,000 24,736 *
</TABLE>
- --------
* None
(1) Joined the Company in April 1997.
(2) Joined the Company in December 1997.
(3) Each of the named executive officers received perquisites and other
personal benefits, the aggregate amount of which did not exceed the lesser
of $50,000 or 10% of the annual base salary reported.
9
<PAGE>
Stock Option Grants and Exercises
The following table shows, as to the individuals named in the Summary
Compensation Table above, information concerning stock options granted during
the fiscal year ended December 31, 1998.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------
Potential
RealizableValue
at Assumed Annual
Rates of Stock
Price
Number of % of Total Appreciation for
Securities Options Option Term
Underlying Granted to ($)(1)
Options Employees Exercise Price Expiration -----------------
Name Granted (#) in Fiscal Year Per Share ($) Date (2) 5% 10%
---- ---------- -------------- -------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Doreen M. Chiu.......... 50,000 10.4% $5.50 10/09/08 $397,946 $663,279
Frank Y. Chiu........... 50,000 10.4% 5.50 10/09/08 397,946 663,279
William M. Hewitt....... 40,000 8.3% 5.00 10/09/08 285,779 478,748
Steven J. Guerrettaz.... 10,000 2.1% 5.00 10/09/98 71,445 119,687
Eric C. Su.............. 40,000 8.3% 5.00 10/09/08 285,779 478,748
</TABLE>
- --------
(1) Potential realizable value is based on the assumption that the Common
Stock appreciates at the annual rate shown (compounded annually) from the
date of grant until the expiration of the ten-year option term. These
numbers are calculated based on the requirements promulgated by the
Securities and Exchange Commission and do not reflect the Company's
estimate of future stock price growth.
(2) Options may terminate before their expiration date if the optionee's
status as an employee is terminated.
The following table shows, as to the individuals named in the Summary
Compensation Table above, information concerning stock options exercised
during the fiscal year ended December 31, 1998 and the value of unexercised
options at such date.
Aggregated Option Exercises in Last Fiscal Year
And Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-
Options at the-Money Options at
December 31, 1998 (#) December 31, 1998 ($)(1)
---------------------- ------------------------
Shares Acquired Value Exercisable/ Exercisable/
On Exercise (#) Realized ($) Unexercisable Unexercisable
--------------- ------------ ---------------------- ------------------------
<S> <C> <C> <C> <C>
Doreen M. Chiu.......... -- -- 21,000/179,000 $43,875/1,006,125
Frank Y. Chiu........... -- -- 34,000/241,900 138,450/ 454,813
William M. Hewitt....... -- -- 36,666/ 73,334 87,082/ 174,168
Steven J. Guerrettaz.... -- -- 30,000/ 40,000 71,250/ 95,000
Eric C. Su.............. -- -- 100,000/ 50,000 720,300/ 158,750
</TABLE>
- --------
(1) Based on the fair market value of the Common Stock at December 31, 1998 of
$7.375 per share, less the exercise price paid for such shares.
Employment Agreements
None of the individuals named in the Summary Compensation Table above is a
party to an employment agreement with the Company.
10
<PAGE>
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
report and the Performance Graph on page 13 shall not be incorporated by
reference into any such filings.
Compensation Philosophy
The Compensation Committee of the Board of Directors of the Company (the
"Committee") consists of the three (3) independent directors who are neither
employees nor officers of the Company. The Committee reviews the Company's
executive compensation program and policies, determines the compensation of
the Company's Chief Executive Officer ("CEO"), and reviews and approves the
CEO's recommendations for the compensation of the other senior executive
officers of the Company.
The Committee's philosophy regarding compensation of the Company's senior
management is to link rewards to financial and operational performance, to
encourage creation of shareholder value and to achieve the Company's strategic
goals and objectives. Through its executive compensation policies, the
Committee seeks to attract, retain and motivate highly qualified executives
who will contribute to the Company's success. Thus, the Committee believes the
Company's compensation arrangements must remain competitive with those offered
by other companies of similar size and scope of operations. To achieve these
goals, the executive compensation program consists of three primary components
which, taken together, constitute a flexible and balanced method of
establishing total compensation for senior management. These components are:
(i) base salary which reflects individual performance and contribution to the
Company; (ii) discretionary annual bonus awards payable in cash and tied to
the Company's achievement of financial targets; and (iii) long-term stock
based incentive awards designed to strengthen the mutuality of interests
between the Company's executive officers and its shareholders. Beginning in
1998, option grants to executive officers are made under the Company's 1998
Stock Ownership Incentive Plan by the Committee.
Cash Based Compensation
Salary. Consistent with the Company's philosophy, the Committee's approach
to base compensation is to offer competitive salaries in comparison with
market practices. Salary decisions are based on an annual review with the CEO,
considering the decision-making responsibilities of each position and the
experience, work performance, and team-building skills of position incumbents,
subject to existing employment agreements, if any. The cash salary of each of
the Company's executive officers is determined by the individual's performance
and past and potential contributions to the Company, as well as the overall
financial performance and resources of the Company.
Bonuses. The Committee has in the past and may in the future authorize the
payment of discretionary bonus compensation based upon an assessment of an
individual's exceptional contributions to the Company. Bonuses are based upon
the overall achievement in increasing the Company's revenue and its level of
profitability. In 1998, the Committee did not authorize any bonus to be paid
to any executive officer.
As a general matter, the Committee endorses the philosophy that executive
compensation should reflect company performance. The Company, to date, has not
yet adopted any compensation plans which are tied directly to Company
performance by formula.
Equity Based Compensation
The executive officers have, from time to time, received grants of options
to acquire Common Stock. The purpose of the option grants is to provide such
individuals with additional incentives to maximize shareholder value. The
Committee also utilizes vesting periods to encourage key employees to continue
in the employ of the
11
<PAGE>
Company. The size of the option grant to each executive officer is set at a
level which is intended to create a meaningful opportunity for stock ownership
based on the individual's current position with the Company and may also be
based in part upon Company performance factors such as earnings per share and
revenue growth. However, the extent to which these latter factors are taken
into consideration will vary from individual to individual at the Committee's
sole discretion.
Chief Executive Officer Compensation
The process of determining the compensation for the CEO and the factors
taken into consideration in such determination are generally the same as the
process and factors used in determining the compensation of all of the
executive officers of the Company. The Committee considers both the Company's
overall performance and the CEO's individual performance. Bonuses for the CEO
are based upon the overall achievements in increasing the Company's revenue
and its level of profitability. In 1998, the Company did not pay the CEO a
bonus. Ms. Chiu's salary was determined based on analysis of salaries paid by
peer companies and on Ms. Chiu's knowledge, experience and individual
performance.
The foregoing report has been furnished by the Compensation Committee of the
Board of Directors of the Company.
Andrew C. Kadak, Chairman
Earl E. Gjelde
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The following persons served on the Compensation Committee of the Company's
Board of Directors during fiscal year 1998: Andrew C. Kadak and Earl E.
Gjelde. Neither of these persons is a current or former officer or employee of
the Company. There are no "interlocks, " as defined by the Securities and
Exchange Commission, with respect to any member of the Compensation Committee.
12
<PAGE>
PERFORMANCE GRAPH
The following graph demonstrates a comparison of cumulative total
shareholder returns, calculated on a dividend reinvestment basis and based
upon an initial investment of $100 in the Company's Common Stock as compared
with the Russell 2000 Index and the Nasdaq Stock Marker (U.S.) Index. No
dividends have been declared or paid on the Company's Common Stock during such
period. The stock price performance shown on the graph below is not
necessarily indicative of future price performance. The Common Stock began
trading on the Nasdaq National Market on May 7, 1998. The graph reflects the
Company's stock price performance from the initial public offering through the
end of fiscal 1998.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Cumulative Total Return
-------------------------------------------------
5/7/98 5/98 6/98 7/98 8/98 9/98 10/98 11/98 12/98
------ ---- ---- ---- ---- ---- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ATG INC...................... 100 102 90 88 75 71 87 75 87
RUSSELL 2000................. 100 97 98 90 72 78 81 85 91
NASDAQ STOCK MARKET (U.S.)... 100 96 103 102 82 93 97 107 121
</TABLE>
13
<PAGE>
INDEPENDENT ACCOUNTANTS
The Company's financial statements for the fiscal year ended December 31,
1998, have been audited by the independent accounting firm of
PricewaterhouseCoopers LLP. A representative of PricewaterhouseCoopers LLP
will be present at the Annual Meeting and will have the opportunity to make a
statement if he desires and will be available to respond to appropriate
questions.
SHAREHOLDER PROPOSALS
Shareholder proposals for presentation at the year 2000 Annual Meeting of
Shareholders and to be considered for inclusion in next year's proxy statement
must be received at the Company's principal executive offices on or before
January 1, 2000.
OTHER MATTERS
The Company is not aware of any matters that may come before the Annual
Meeting other than those referred to in the Notice of Annual Meeting of
Shareholders. If any other matters shall properly come before the meeting, the
persons named in the accompanying proxy form intend to vote thereon in
accordance with their best judgment.
ALL SHAREHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS,
Frank Y. Chiu
Secretary
June 18, 1999
Fremont, California
14
<PAGE>
ANNEX A
ATG INC.
1998 STOCK OWNERSHIP INCENTIVE PLAN
ARTICLE 1. PURPOSE
The purpose of this 1998 Stock Ownership Incentive Plan ("Plan") is to
advance the interests of ATG Inc., a California corporation ("Company"), and its
subsidiaries by encouraging employees who will largely be responsible for the
long-term success and development of the Company to acquire and retain an
ownership interest in the Company. The Plan is also intended to provide
flexibility to the Company in attracting and retaining such employees and
stimulating their efforts on behalf of the Company.
ARTICLE 2. DEFINITIONS AND CONSTRUCTION
2.1 Definitions. As used in the Plan, terms defined parenthetically
immediately after their use or otherwise herein shall have the respective
meanings provided by such definitions, and the terms set forth below shall have
the following meanings (in either case, such terms shall apply equally to both
the singular and plural forms of the terms defined):
2.1.1 "Award" shall mean, individually or collectively, a
grant under the Plan of Options, Restricted Stock or Performance Units.
2.1.2 "Board" shall mean the Board of Directors of the
Company.
2.1.3 "Cause" shall mean, unless otherwise defined in an
agreement evidencing an Award, a felony conviction of a Participant or the
failure of a Participant to contest prosecution for a felony, or a
Participant's willful misconduct or dishonesty, or the Participant's gross
insubordination or willful neglect of duty, any of which is determined by the
Board to be directly and materially harmful to the business or reputation of
the Company or its Subsidiaries.
2.1.4 A "Change in Control" shall mean any of the following
events:
(a) An acquisition (other than directly from the
Company) of any voting securities of the Company ("Voting Securities") by any
Person immediately after which such Person has Beneficial Ownership (within
the meaning of
-1-
<PAGE>
Rule 13d-3 promulgated under the Exchange Act) of 30% or more of the combined
voting power of the Company's then outstanding Voting Securities; provided,
however, that in determining whether a Change in Control has occurred, Voting
Securities which are acquired in a Non-Control Acquisition (as hereinafter
defined) shall not constitute an acquisition which would cause a Change in
Control. A Non-Control Acquisition shall mean acquisition by (i) the Company
or any Subsidiary, (ii) an employee benefit plan (or a trust forming a part
thereof) maintained by the Company or any Subsidiary or (iii) any Person in
connection with a Non-Control Transaction (as hereinafter defined).
(b) The individuals who, as of the Effective Date
(as hereinafter defined), are members of tho Board ("Incumbent Board") cease
for any reason to constitute at least a majority of the Board; provided,
however, that if the election, or nomination for election by the Company's
shareholders, of any new director was approved by a vote of at least a
majority of the Incumbent Board, such new director shall, for purposes of the
Plan, be considered as a member of the Incumbent Board; provided, further,
however, that no individual shall be considered a member of the Incumbent
Board if such individual initially assumed office as a result of either an
actual or threatened election contest (as described in Rule 14a-11 promulgated
under the Exchange Act) or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board ("Proxy Contest")
including by reason of any agreement intended to avoid or settle any such
election contest or Proxy Contest; or
(c) Approval by shareholders of the Company of:
(i) A merger, consolidation or reorganization
involving the Company, unless such is a Non-Control Transaction. For purposes of
the Plan, the term "Non-Control Transaction" shall mean a merger, consolidation
or reorganization of the Company in which:
(A) the shareholders of the Company
immediately before such merger, consolidation or reorganization, own, directly
or indirectly immediately following such merger, consolidation or
reorganization, at least a majority of the combined voting power of the
outstanding voting securities of the corporation resulting from such merger,
consolidation or reorganization ("Surviving Corporation") in substantially the
same respective proportions as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization;
-2-
<PAGE>
(B) the individuals who were members of
the Board immediately prior to the execution of the agreement providing for
such merger, consolidation or reorganization constitute at least a majority of
the members of the board of directors of the Surviving Corporation; and
(C) no Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan (or a trust forming a
part thereof) maintained by the Company, the Surviving Corporation or any
Subsidiary of the Company, or any Person who, immediately prior to such
merger, consolidation or reorganization had Beneficial Ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
the then outstanding Voting Securities) has Beneficial Ownership of 20% or
more of the combined voting power of the Surviving Corporation's then
outstanding voting securities;
(ii) A complete liquidation or dissolution of
the Company; or
(iii) An agreement for the sale or other
disposition of all or substantially all of the assets of the Company to any
Person (other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person ("Subject Person") acquired Beneficial Ownership of
more than the permitted amount of the outstanding Voting Securities as a result
of the acquisition of Voting Securities by the Company which, by reducing the
number of Voting Securities outstanding, increases the proportional number of
shares Beneficially Owned by the Subject Person; provided, however, that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after such
share acquisition by the Company the Subject Person becomes the Beneficial Owner
of any additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall be deemed to occur.
2.1.5 "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any successor thereto.
2.1.6 "Disability" shall mean the total disability as
determined by the Board in accordance with standards and procedures similar to
those under the Company's long-term disability plan, or, if none, a physical or
mental infirmity which the Board determines impairs the Participant's ability to
perform substantially his or her duties for the Company and its Subsidiaries
for a period of 180 consecutive days.
-3-
<PAGE>
2.1.7 "Employee" shall mean an individual who is a full-time
or part-time employee of the Company or a Subsidiary of the Company.
2.1.8 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
2.1.9 "Fair Market Value" of the Shares shall mean, as of any
applicable date, the closing sale price of the Shares on the NASDAQ National
Market or any national or regional stock exchange on which the Shares are
traded, or if no such reported sale of the Shares shall have occurred on such
date, on the next preceding date on which there was such a reported sale. If
there shall be any material alteration in the present system of reporting sale
prices of the Shares, or if the Shares are not included in the NASDAQ National
Market or listed on a national or regional stock exchange, the Fair Market Value
of the Shares as of a particular date shall be determined by such method as
shall be determined by the Board.
2.1.10 "ISOs" shall have the meaning given such term in
Section 6.1.
2.1.11 "NQSOs" shall have the meaning given such term in
Section 6.1.
2.1.12 "Option" shall mean an option to purchase Shares
granted pursuant to Article 6.
2.1.13 "Option Agreement" shall mean an agreement evidencing
the grant of an Option as described in Section 6.2.
2.1.14 "Option Exercise Price" shall mean the purchase price
per Share subject to an Option, which shall not be less than the Fair Market
Value of the Share on the date of grant (110% of Fair Market Value in the case
of an ISO granted to a Ten Percent Shareholder).
2.1.15 "Participant" shall mean any Employee selected by the
Board to receive an Award under the Plan.
2.1.16 "Performance Goals" shall have the meaning given such
term in Section 8.4.
2.1.17 "Performance Period" shall have the meaning given such
term in Section 8.3.
-4-
<PAGE>
2.1.18 "Performance Unit" shall mean the right to receive a
payment from the Company upon the achievement of specified Performance Goals as
set forth in a Performance Unit Agreement.
2.1.19 "Performance Unit Agreement" shall mean an agreement
evidencing a Performance Unit grant, as described in Section 8.2.
2.1.20 "Person" shall have the meaning ascribed to such term
in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d).
2.1.21 "Plan" shall mean this ATG Inc. 1998 Stock Ownership
Incentive Plan, as the same may be amended from time to time.
2.1.22 "Restriction Period" shall mean the period determined
by the Board during which transfer of Shares is limited in some way or Shares
are otherwise restricted or subject to forfeiture as provided in Article 7.
2.1.23 "Restricted Stock" shall mean Shares granted pursuant
to Article 7 as to which the restrictions have not expired.
2.1.24 "Restricted Stock Agreement" shall mean an agreement
evidencing a Restricted Stock grant, as described in Section 7.2.
2.1.25 "Retirement" shall mean retirement by a Participant in
accordance with the terms of the Company's retirement or pension plans or
policies.
2.1.26 "Shares" shall mean the shares of the Company's common
stock, no par value per share.
2.1.27 "Subsidiary" shall mean, with respect to any company,
any corporation or other Person of which a majority of its voting power, equity
securities, or equity interest is owned directly or indirectly by such company.
2.1.28 "Taxable Event" shall mean any event upon which the
Company has a withholding obligation and which involves the issuance of Shares
to a Participant.
2.1.29 "Ten Percent Shareholder" shall mean an Employee who,
at the time an ISO is granted, owns (within the meaning of section 422(b)(6) of
the Code) stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company.
-5-
<PAGE>
2.2 Gender and Number. Except where otherwise indicated by the context,
reference to the masculine gender shall include the feminine gender, the plural
shall include the singular and the singular shall include the plural.
2.3 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
ARTICLE 3. ADMINISTRATION
3.1 The Board. The Plan shall be administered by the Board. The Board
in administering the Plan shall meet at such times and places as it determines
and may meet through telephone conference call.
3.2 Authority of the Board. Subject to the provisions of the Plan, the
Board shall have full authority to:
3.2.1 select Participants to whom Awards are granted;
3.2.2 determine the size, types and frequency of Awards
granted under the Plan;
3.2.3 determine the terms and condition of Awards, including
any restrictions on or conditions to the Award, which need not be identical;
3.2.4 cancel or modify, with the consent of the Participant,
outstanding Awards and to grant new Awards in substitution therefor;
3.2.5 accelerate the exercisability of any Award, for any
reason;
3.2.6 construe and interpret the Plan and any agreement or
instrument entered into under the Plan;
3.2.7 establish, amend and rescind rules and regulations for
the Plan's administration; and
3.2.8 amend the terms and conditions of any outstanding Award
to the extent such terms and conditions are within the discretion of the Board
as provided in the Plan.
-6-
<PAGE>
The Board shall make all determinations which may be necessary or advisable for
the administration of the Plan. To the extent permitted by law and Rule 16b-3
promulgated under the Exchange Act, the Board may delegate its authority
hereunder.
3.2.9 Decisions Binding. All determinations and decisions made
by the Board pursuant to the provisions of the Plan, and all related orders or
resolutions of the Board, shall be final, conclusive and binding for all
purposes upon all persons, including the Company, its shareholders, Employees,
Participants and their estates and beneficiaries.
3.3 Section 16 Compliance; Bifurcation of Plan. It is the intention of
the Company that the Plan and the administration of the Plan comply in all
respects with Section 16(b) of the Exchange Act and the rules and regulations
promulgated thereunder, if such rules and regulations are applicable to the
Company. If any Plan provision, or any aspect of the administration of the Plan,
is found not to be in compliance with Section 16(b) of the Exchange Act, the
provision or administration shall be deemed null and void, and in all events the
Plan shall be construed in favor of its meeting the requirements of Rule 16b-3
promulgated under the Exchange Act. Notwithstanding anything in the Plan to the
contrary, the Board, in its discretion, may bifurcate the Plan so as to
restrict, limit or condition the use of any provision of the Plan to
Participants who are subject to Section 16 of the Exchange Act without so
restricting, limiting or conditioning the Plan with respect to other
Participants. Directors and officers who fall within the definition of "officer"
under Rule 16a-1(f) promulgated under the Exchange Act shall deliver to the
Corporate Secretary of the Company an executed notice of his/her intention to
sell Shares acquired directly or indirectly hereunder. Such notice, in which
there shall be specified the number of Shares which are to be sold and the date
such Shares were acquired, shall be provided at least one full business day in
advance of the proposed date of sale.
ARTICLE 4. SHARES AVAILABLE UNDER THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in Section 4.3,
the maximum number of Shares reserved for issuance under this Plan shall be Five
Hundred Thousand (500,000). Any Shares issued under the Plan may consist, in
whole or in part, of authorized and unissued Shares or treasury Shares. If and
to the extent an Award shall expire or terminate for any reason without having
been exercised in full (including a cancellation and re-grant of an Option), or
shall be forfeited, without, in either case, the Participant having realized
any of the economic benefits of a shareholder (such as the receipt of
dividends or other distributions paid on Shares of Restricted Stock), the
Shares (including Restricted Stock) associated with such Awards shall again
become available for Award under the Plan.
-7-
<PAGE>
4.2 Shares of Restricted Stock Available Under the Plan. Subject to
adjustment as provided in Section 4.3, the number of Shares which may be the
subject of Awards granted in the form of Restricted Stock is limited to a
maximum of Two Hundred Fifty Thousand (250,000) Shares.
4.3 Adjustments in Authorized Shares and Outstanding Awards. In the
event of a merger, reorganization, consolidation, recapitalization,
reclassification, split-up, spin-off, stock dividend, stock split, reverse stock
split, cash dividend, property dividend, share repurchase, share combination,
share exchange, or other fundamental change in the corporate structure of the
Company affecting the Shares, the Board may substitute or adjust the total
number and class of Shares or other stock or securities which may be issued
under the Plan, and the number, class and/or price of Shares subject to
outstanding Awards, as it determines to be appropriate and equitable to prevent
dilution or enlargement of the rights of Participants and to preserve, without
increasing, the value of any outstanding Awards; and further provided, that the
number of Shares subject to any Award shall always be a whole number. In the
case of ISOs, such adjustments shall be made in such a manner so as not to
constitute a "modification" within the meaning of section 424(h)(3) of the Code
and only to the extent otherwise permitted by sections 422 and 424 of the Code.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
All Employees of the Company and its Subsidiaries are eligible to
receive Awards under the Plan. In selecting Employees to receive Awards under
the Plan, as well as in determining the number of Shares subject to, and the
other terms and conditions applicable to, each Award, the Board shall take into
consideration such factors as it deems relevant in promoting the purposes of the
Plan, including the duties of the Employees, their present and potential
contribution to the success of the Company and their anticipated number of years
of active service remaining with the Company or a Subsidiary.
ARTICLE 6. STOCK OPTIONS
6.1 Grant of Options. Subject to the terms and provisions of the Plan,
the Board may grant Options to Participants at any time and from time to time,
in the form of options which are intended to qualify as incentive stock options
within the meaning of section 422 of the Code ("ISOs"), Options which are not
intended to so qualify ("NQSOs"), or a combination thereof.
6.2 Option Agreement. Each Option shall be evidenced by an Option
Agreement that shall specify the Option Exercise Price, the duration of the
Option, the
-8-
<PAGE>
number of Shares to which the Option relates and such other provisions as the
Board may determine which are required by the Plan. The Option Agreement shall
also specify whether the Option is intended to be an ISO or a NQSO and shall
include such provisions applicable to the particular type of Option granted.
6.3 Duration of Options. Each Option shall expire at such time as is
determined by the Board at the time of grant ("Expiration Date"); provided,
however, that no Option shall be exercised later than the tenth anniversary of
its grant (fifth anniversary, in the case of an ISO granted to a Ten Percent
Shareholder).
6.4 Exercise of Options. Options shall be exercisable at such times and
be subject to such restrictions and conditions as the Board shall approve at the
time of grant, which need not be the same for each grant or for each
Participant. Options shall be exercised by delivery to the Company of a written
notice of exercise, setting forth the number of Shares with respect to which the
Option is to be exercised and accompanied by full payment of the Option Exercise
Price and all applicable withholding taxes.
6.5 Payment of Option Exercise Price. The Option Exercise Price for
Shares as to which an Option is exercised shall be paid to the Company in full
at the time of exercise either (a) in cash in the form of currency or other cash
equivalent acceptable to the Company, (b) by rendering Shares having a Fair
Market Value at the time of exercise equal to the Option Exercise Price, (c) any
other reasonable consideration that the Board may deem appropriate or (d) by a
combination of the forms of consideration described in (a), (b) and (c) of this
Section 6.5. The Board may permit the cashless exercise of Options, subject to
applicable securities law restrictions and the requirements of Regulation T
promulgated by the Federal Reserve Board, or by any other means which the Board
determines to be consistent with the Plan's purpose and applicable law; except
that in the case of any Participant subject to Section 16(b) of the Exchange Act
such cashless exercise of his or her Option may not occur within six months of
the date of grant of such Option, to the extent such exercise during such
six-month period would not be exempted from Section 16(b) of the Exchange Act by
virtue of Rule 16b-3 promulgated thereunder.
6.6 Vesting Upon Change in Control. Upon a Change in Control, any then
outstanding Options held by Participants shall become fully vested and
immediately exercisable.
6.7 Termination of Employment. If the employment of a Participant is
terminated for Cause, all then outstanding Options of such Participant, whether
or not exercisable, shall terminate immediately. If the employment of a
Participant is terminated for any reason other than for Cause, death, Disability
or Retirement, to the
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extent then outstanding Options of such Participant are exercisable, such
Options may be exercised by such Participant or such Participant's personal
representative at any time prior to the Expiration Date of the Options or
within 60 days after the date of such termination of employment, whichever is
earlier. In the event of the Retirement of a Participant, to the extent then
outstanding Options of such Participant are exercisable, such Options may be
exercised by the Participant (a) in the case of NQSOs, within two years after
the date of Retirement and (b) in the case of ISOs, within 90 days after
Retirement; provided, however, that no such Options may be exercised on a date
subsequent to their Expiration Date. In the event of the death or Disability
of a Participant while employed by the Company or a Subsidiary, all then
outstanding Options of such Participant shall become fully vested and
immediately exercisable, and may be exercised at any time (x) in the case of
NQSOs, within two years after the date of death or determination of Disability
and (y) in the case of ISOs, within one year after the date of death or
determination of Disability; provided, however that no such Options may be
exercised on a date subsequent to their Expiration Date. In the event of the
death of a Participant, the Option may be exercised by the person or persons
to whom rights pass by will or by the laws of descent and distribution, or if
appropriate, the legal representative of the deceased Participant's estate. In
the event of the Disability of a Participant, the Option may be exercised by
the Participant, or if such Participant is incapable of exercising the Option,
by such Participant's legal representative.
ARTICLE 7. RESTRICTED STOCK
7.1 Grant of Restricted Stock. Subject to the terms and provisions of
the Plan, the Board may grant shares of Restricted Stock to Participants at any
time and from time to time and upon such terms and conditions as it may
determine. The purchase price per share, if any, of Restricted Stock granted
shall be determined by the Board, but shall not be less than the par value per
Share.
7.2 Restricted Stock Agreement. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Agreement which shall specify the Restriction
Period, the number of shares of Restricted Stock granted and such other
provisions as the Board may determine and which are required by the Plan.
7.3 Non-Transferability of Restricted Stock. Except as provided in
this Article 7, shares of Restricted Stock may not be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated until the end of the
applicable Restriction Period as specified in the Restricted Stock Agreement,
or upon earlier satisfaction of any other conditions determined at the time of
grant specified in the Restricted Stock Agreement.
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7.4 Other Restrictions. The Committee may impose such other
restrictions on any shares of Restricted Stock as it may deem advisable,
including, without limitation, restrictions based upon the achievement of
Performance Goals, years of service and/or restrictions under applicable Federal
or state securities laws. The Committee may provide that any share of Restricted
Stock shall be held (together with a stock power executed in blank by the
Participant) in custody by the Company until any or all restrictions thereon
shall have lapsed.
7.5 Forfeiture. The Committee shall determine and set forth in a
Participant's Restricted Stock Agreement such events upon which a Participant's
shares of Restricted Stock shall be forfeitable, which may include, without
limitation, the termination of a Participant's employment during the Restriction
Period or the nonachievement of Performance Goals. Any such forfeited shares of
Restricted Stock shall be immediately returned to the Company by the
Participant, and the Participant shall only receive the amount, if any, paid by
the Participant for such Restricted Stock.
7.6 Certificate Legend. In addition to any legends placed on
certificates pursuant to Section 7.4, each certificate representing shares of
Restricted Stock shall bear the following legend:
"The sale or other transfer of the shares represented by this
Certificate, whether voluntary, involuntary or by operation of
law, is subject to certain restrictions on transfer as set
forth in the ATG Inc. 1998 Stock Ownership Incentive Plan, and
in the related Restricted Stock Agreement. A copy of the Plan
and such Restricted Stock Agreement may be obtained from the
Secretary of ATG Inc."
7.7 Lapse of Restrictions Generally. Except as otherwise provided in
this Article 7, shares of Restricted Stock shall become freely transferable by
the Participant and no longer subject to forfeiture after the last day of the
Restriction Period, provided however, that if the restriction relates to the
achievement of a Performance Goal, the Restriction Period shall not end until
the Board has certified in writing that the Performance Goal has been meet. Once
the shares of Restricted Stock are released from their restrictions, the
Participant shall be entitled to have the legend required by Section 7.6 removed
from the Participant's share certificate, which certificate shall thereafter
represent freely transferable and nonforfeitable Shares free from any and all
restrictions under the Plan.
7.8 Lapse of Restrictions Upon Change in Control. Upon a Change in
Control, any restrictions and other Plan conditions pertaining to then
outstanding shares of Restricted Stock held by Participants, including, but not
limited to, vesting
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requirements, shall lapse and such Shares shall thereafter be immediately
transferable and nonforfeitable.
7.9 Voting Rights: Dividends and Other Distributions. During the
Restriction Period, Participants holding shares of Restricted Stock may exercise
full voting rights, and shall, unless the Board exercises its discretion as
provided in Section 7.10, be entitled to receive all dividends and other
distributions paid with respect to such Restricted Stock. If any dividends or
distributions are paid in Shares, the Shares shall be subject to the same
restrictions as the shares of Restricted Stock with respect to which they were
paid.
7.10 Treatment of Dividends. At the time shares of Restricted Stock are
granted to a Participant, the Board may, in its discretion, determine that the
payment of dividends, or a specified portion thereof, declared or paid on such
shares shall be deferred until the lapse of the restrictions applicable to such
shares, in which event such deferred dividends shall be held by the Company for
the account of the Participant. In the event of such deferral, there may be
credited at the end of each year (or portion thereof) interest on the amount of
the account during the year at a rate per annum as the Board, in its discretion,
may determine. Deferred dividends, together with interest accrued thereon, if
any, shall be (a) paid to the Participant upon the lapse of restrictions on the
shares of Restricted Stock as to which the dividends related or (ii) forfeited
to the Company upon the forfeiture of such shares by the Participant.
7.11 Termination of Employment. If the employment of a Participant is
terminated for any reason other than death or Disability prior to the expiration
of the Restriction Period applicable to any shares of Restricted Stock then held
by the Participant, such shares shall thereupon be forfeited immediately by the
Participant and returned to the Company, and the Participant shall only receive
the amount, if any, paid by the Participant for such Restricted Stock. If the
employment of a Participant is terminated as a result of death or Disability
prior to the expiration of the Restriction Period applicable to any shares of
Restricted Stock then held by the Participant, any restrictions and other
conditions pertaining to such shares then held by the Participant, including,
but not limited to, vesting requirements, shall immediately lapse and such
Shares shall thereafter be immediately transferable and nonforfeitable.
Notwithstanding anything in the Plan to the contrary, except in the case of
Restricted Stock for which a Performance Goal must be achieved, the Board may
determine, in its sole discretion, in the case of any termination of a
Participant's employment other than for Cause, that the restrictions on some or
all of the shares of Restricted Stock awarded to a Participant shall
immediately lapse and such Shares shall thereafter be immediately transferable
and nonforfeitable.
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ARTICLE 8. PERFORMANCE UNITS
8.1 Grant of Performance Units. The Board may, from time to time and
upon such terms and conditions as it may determine, grant Performance Units
which will become payable to a Participant upon certification in writing by the
Board that the Performance Goals related thereto have been achieved.
8.2 Performance Unit Agreement. Each Performance Unit grant shall be
evidenced by a Performance Unit Agreement that shall specify the Performance
Goals, the Performance Period and the number of Performance Units to which it
pertains.
8.3 Performance Period. The period of performance ("Performance
Period") with respect to each Performance Unit shall be such period of time,
which shall not be less than one year, nor more than five years, as determined
by the Board, for the measurement of the extent to which Performance Goals are
attained.
8.4 Performance Goals. The goals ("Performance Goals") that are to be
achieved with respect to each Performance Unit, or Restricted Stock subject to a
requirement that Performance Goals be achieved, shall be those objectives
established by the Board as it deems appropriate, and which may be expressed in
terms of, by way of illustration and not limitation, (a) earnings per Share, (b)
Share price, (c) pre-tax profit, (d) net earnings, (e) return on equity or
assets, (f) revenues or (g) any combination of the foregoing Performance Goals,
in respect of the performance of the Company and its Subsidiaries (which may be
on a consolidated basis), a Subsidiary, a division or other operating unit of
the Company. Performance goals may be absolute or relative and may be expressed
in terms of a progression within a specified range. The Performance Goals with
respect to a Performance Period shall be established by the Board in order to
comply with Rule 16b-3 under the Exchange Act and section 162(m) of the Code, as
applicable.
8.5 Termination of Employment. If the employment of a Participant shall
terminate prior to the expiration of the Performance Period for any reason other
than for death, Disability or Retirement, the Performance Units then held by the
Participant shall immediately terminate. In the case of termination of
employment by reason of death, Disability or Retirement of a Participant prior
to the expiration of the Performance Period, any then outstanding Performance
Units of such Participant shall be payable in an amount equal to the maximum
amount payable under the Performance Unit multiplied by a percentage equal to
the percentage that would have been earned under the terms of the Performance
Unit Agreement assuming that the rate at which the Performance Goals have been
achieved as of the date of such termination of employment would have continued
until the end of the Performance Period; provided,
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however, that if no maximum amount payable is specified in the Performance
Unit Agreement, the amount payable shall be such amount as the Board shall
determine is reasonable.
8.6 Payment Upon Change in Control. Upon a Change in Control, any then
outstanding Performance Units shall become fully vested and immediately payable
in an amount which is equal to the greater of (a) the maximum amount payable
under the Performance Unit multiplied by a percentage equal to the percentage
that would have been earned under the terms of the Performance Unit Agreement
assuming that the rate at which the Performance Goals have been achieved as of
the date of such Change in Control would have continued until the end of the
Performance Period or (b) the maximum amount payable under the Performance Unit
multiplied by the percentage of the Performance Period completed by the
Participant at the time of the Change in Control; provided, however, that if no
maximum amount payable is specified in the Performance Unit Agreement, the
amount payable shall be such amount as the Board shall determine is reasonable.
8.7 Time and Manner of Payment of Performance Units. Subject to such
terms and conditions as the Board may impose, and unless otherwise provided in
the Performance Unit Agreement, Performance Units shall be payable within 90
days following the end of the Performance Period during which the Participant
attained at least the minimum acceptable level of achievement under the
Performance Goals, or 90 days following a Change in Control, as applicable. The
Board, in its discretion, may determine at the time of payment required in
connection with a Performance Unit whether such payment shall be made (a) solely
in cash, (b) solely in Shares (valued at the Fair Market Value of the Shares on
the date of payment) or (c) a combination of cash and Shares; provided, however,
that if a Performance Unit becomes payable upon a Change in Control, the
Performance Unit shall be paid solely in cash.
8.8 Designation of Beneficiary. Each Participant may, from time to
time, name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom the right to receive payments under a Performance Unit is
to be paid in case of the Participant's death before receiving any or all such
payments. Each such designation shall revoke all prior designations by the
Participant, shall be in a form prescribed by the Company and shall be effective
only when filed by the Participant in writing with the Board or its designee
during the Participant's lifetime. In the absence of any such designation,
benefits remaining unpaid at the Participant's death shall be paid to the
Participant's estate.
ARTICLE 9. AMENDMENT, MODIFICATION AND TERMINATION
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9.1 Termination Date. The Plan shall terminate on the earliest to occur
of (a) the tenth anniversary of the adoption of the Plan by the Board, (b) the
date when all Shares available under the Plan shall have been acquired pursuant
to the exercise of Awards and the payment of all benefits in connection with
Performance Unit Award has been made or (c) such other date as the Board may
determine in accordance with Section 9.2.
9.2 Amendment, Modification and Termination. The Board may, at any
time, amend, modify or terminate the Plan. Without the approval of the
shareholders of the Company (as may be required by section 162(m) of the Code,
Section 16 of the Exchange Act and the rules promulgated thereunder, any
national securities exchange or national market system on which the Shares are
then listed, included or reported or a regulatory body having jurisdiction with
respect hereto), however, no such amendment, modification or termination may:
9.2.1 materially increase the benefits accruing to
Participants under the Plan;
9.2.2 increase the total amount of Shares which may be issued
under the Plan, except as provided in Section 4.3;
9.2.3 materially modify the class of Employees eligible to
participate in the Plan;
9.2.4 extend the term of the Plan; or
9.2.5 otherwise modify or add a material term of the Plan (as
determined under section 162(m) of the Code and Proposed Treasury Regulation
section 1.162-27).
9.3 Awards Previously Granted. No amendment, modification or
termination of the Plan shall in any manner adversely affect any outstanding
Award without the written consent of the Participant holding such Award.
ARTICLE 10. NON -TRANSFERABILITY
A Participant's rights under the Plan may not be assigned, pledged or
otherwise transferred other than by will or the laws of descent and
distribution, except that upon a Participant's death, the Participant's rights
to payment pursuant to a Performance Unit may be transferred to a beneficiary
designated in accordance with the provisions of Section 8.8; provided,
however, that in the case of NQSOs, the Participant may, subject
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to any restriction under Section 16(b) of the Exchange Act, if applicable,
transfer the Options to the Participant's spouse, lineal descendants, trusts
for their benefit or a charitable remainder trust of which the Participant or
such family members referred to above are a beneficiary or beneficiaries.
ARTICLE 11. NO GRANTING OF EMPLOYMENT RIGHTS
Neither the Plan, nor any action taken under the Plan, shall be
construed as giving any Employee the right to become a Participant, nor shall an
Award under the Plan be construed as giving a Participant any right with respect
to continuance of employment by the Company or any of its Subsidiaries. The
Company expressly reserves the right to terminate, whether by dismissal,
discharge or otherwise, a Participant's employment at any time, with or without
Cause, except as may otherwise be provided by any written agreement between the
Company and the Participant.
ARTICLE 12. WITHHOLDING
12.1 Tax Withholding. A Participant shall remit to the Company an
amount sufficient to satisfy Federal, state and local taxes (including the
Participant's FICA and Medicare obligation) required by law to be then withheld
by the Company with respect to any grant, exercise or payment made under or as a
result of the Plan.
12.2 Share Withholding. If the Company has a withholding obligation
upon the issuance of Shares under the Plan, a Participant may, subject to the
discretion of the Board, elect to satisfy the withholding requirement, in whole
or in part, by having the Company withhold Shares having a Fair Market Value on
the date the withholding tax is to be determined equal to the amount required to
be withheld under applicable law.
ARTICLE 13. INDEMNIFICATION
Except in relation to matters as to which the Board member was grossly
negligent or engaged in willful misconduct, no member of the Board shall be
personally liable for any action, determination or interpretation taken or made
with respect to the Plan, and all members of the Board shall, to the extent
permitted by law, be fully indemnified and protected by the Company with respect
to any such action, determination or interpretation.
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ARTICLE 14. SUCCESSORS
All obligations of the Company with respect to Awards granted under the
Plan shall be binding on any successor to the Company, whether the existence of
such successor is a result of a direct or indirect purchase, merger,
consolidation or otherwise, of all or substantially all of the business and/or
assets of the Company.
ARTICLE 15. GOVERNING LAW
To the extent not preempted by Federal law, the Plan and all agreements
under the Plan, shall be governed by, and construed in accordance with, the laws
of the State of California without regard to its conflict of laws principles.
ARTICLE 16. APPROVAL OF SHAREHOLDERS
This Plan is effective as of the date of adoption by the Board (the
"Effective Date") but is subject to the approval of the holders of a majority of
the outstanding shares of the voting stock of the Company, which approval must
occur no later than one year after the date of the adoption of this Plan by the
Board. Any amendments to the Plan requiring shareholder approval must be
approved by the affirmative vote of the holders of a majority of the outstanding
shares of the voting stock of the Company.
Date Plan Adopted by Board of Directors: February __, 1998
Date Plan Approved by Shareholders: _____________________
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ATG INC.
47375 Fremont Boulevard
Fremont, California 94538
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Doreen M. Chiu and Frank Y. Chiu, and each of
them, with full power of substitution, as proxies to vote on behalf of the
undersigned all shares which the undersigned may be entitled to vote at the
Annual Meeting of Shareholders of ATG Inc., to be held at The Westin Santa
Clara, 5101 Great America Parkway, Santa Clara, California on Thursday, July
15, 1999 at 10:00 am Pacific Daylight Time , and at any adjournments thereof.
The undersigned hereby acknowledges receipt of a copy of the Company's 1998
Annual Report and Notice of Annual Meeting and Proxy Statement relating to such
Annual Meeting.
The shares represented by this proxy will be voted in accordance with the
specifications made herein. If no instructions to the contrary are indicated on
the reverse side hereof, this proxy when properly executed will be voted FOR
all nominees in proposal 1 and FOR proposal 2. The proxies are authorized to
vote in their discretion with respect to other matters which may come before
the meeting.
[X] PLEASE MARK YOUR VOTE AS IN THIS EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN PROPOSAL 1 AND
"FOR" PROPOSAL 2.
1. ELECTION OF DIRECTORS
Nominees: Doreen M. Chiu, Frank Y. Chiu, William M. Hewitt, Steven J.
Guerrettaz, Andrew C. Kadak, Earl E. Gjelde, George Doubleday
[_] FOR ALL [_] WITHHOLD ALL [_] FOR ALL EXCEPT:
(Continued and to be signed on reverse side)
2. Amend the 1998 Stock Ownership Incentive Plan to increase the number of
shares available for option grants
[_] FOR [_] AGAINST [_] ABSTAIN
3. Upon any other matters as may properly come before the meeting or any
adjournment thereof
-------------------------------
Signature(s)
-------------------------------
Date
NOTE: Please mark, date and
sign exactly as name appears
on your share certificate and
return in the enclosed
envelope. If the stock is
issued in the name of two or
more persons, each of them
should sign the proxy. If the
proxy is executed by a
corporation, it should be
signed in the corporation's
name by a duly authorized
officer.
