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 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
<TABLE>
<CAPTION>
<S> <C>
[_] Preliminary Proxy Statement [_] Confidential, For Use of the Commission Only
(As Permitted by Rule 14a-6(e)(2))
</TABLE>
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
V3 SEMICONDUCTOR INC.
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(Name of Registrant as Specified In Its Charter)
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(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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<PAGE>
[_] Fee paid previously with preliminary materials.
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[_] 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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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
V3 SEMICONDUCTOR INC.
250 Consumers Road, Suite 901
North York, Ontario, Canada M2J 4V6
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 29, 1999
North York, Ontario
Canada
March 1, 1999
The Annual Meeting of Stockholders (the "Annual Meeting") of V3
Semiconductor Inc., a Nevada corporation (the "Company"), will be held in the
Van Gogh 1 room at Bellagio, 3600 Las Vegas Blvd. South, Las Vegas, Nevada 89109
on March 29, 1999 at 1:00 p.m. (local time) for the following purposes:
1. To elect five directors to the Corporation's Board of Directors, each
to hold office until his successor is elected and qualified or until
his earlier resignation or removal;
2. To approve the Company's 1999 Employee Stock Option Plan and to reserve
up to 700,000 shares of Common Stock for issuance thereunder (Proposal
No. 2);
3. To consider and act upon a proposal to ratify the Board of Directors'
selection of KPMG Peat Marwick as the Corporation's independent
auditors for the fiscal year ending September 30, 1999 (Proposal No.
3); and
4. To transact such other business as may properly come before the Annual
Meeting and any adjournment or postponement thereof.
The foregoing items of business, including the nominees for directors,
are more fully described in the Proxy Statement which is attached and made a
part of this Notice.
The Board of Directors has fixed the close of business on February 16,
1999 as the record date for determining the stockholders entitled to notice of
and to vote at the Annual Meeting and any adjournment or postponement thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, whether or not you expect to attend the Annual Meeting in
person, you are urged to mark, date, sign and return the enclosed proxy card as
promptly as possible in the postage-prepaid envelope provided to ensure your
representation and the presence of a quorum at the Annual Meeting. If you send
in your proxy card and then decide to attend the Annual Meeting to vote your
shares in person, you may still do so. Your proxy is revocable in accordance
with the procedures set forth in the Proxy Statement.
By Order of the Board of Directors,
/s/ CARL MITCHELL
Carl Mitchell
Secretary
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IMPORTANT
---------
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE. IF A QUORUM IS NOT REACHED, THE COMPANY WILL HAVE THE ADDED EXPENSE OF
RE-ISSUING THESE PROXY MATERIALS. IF YOU ATTEND THE MEETING AND SO DESIRE, YOU
MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
THANK YOU FOR ACTING PROMPTLY
<PAGE>
V3 SEMICONDUCTOR INC.
250 Consumers Road, Suite 901
North York, Ontario, Canada M2J 4V6
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors (the "Board") of V3 Semiconductor Inc., a Nevada
corporation (the "Company"), of proxies in the enclosed form for use in voting
at the Annual Meeting of Stockholders (the "Annual Meeting") to be held at Van
Gogh 1 room at Bellagio, 3600 Las Vegas Blvd. South, Las Vegas, Nevada 89109 on
March 29, 1999 at 1:00 p.m. (local time), and any adjournment or postponement
thereof. Only holders of record of the Company's common stock, $.001 par value
per share (the "Common Stock"), and the Company's special voting shares (the
"Special Voting Shares"), on February 16, 1999 (the "Record Date") will be
entitled to vote at the Meeting. At the close of business on the Record Date,
the Company had outstanding 5,471,628 shares of Common Stock and 46,368 Special
Voting Shares.
Any person giving a proxy in the form accompanying this Proxy Statement
has the power to revoke it prior to its exercise. Any proxy given is revocable
prior to the Meeting by an instrument revoking it or by a duly executed proxy
bearing a later date delivered to the Secretary of the Company. Such proxy is
also revoked if the stockholder is present at the Meeting and elects to vote in
person.
The Company will bear the entire cost of preparing, assembling,
printing and mailing the proxy materials furnished by the Board of Directors to
stockholders. Copies of the proxy materials will be furnished to brokerage
houses, fiduciaries and custodians to be forwarded to the beneficial owners of
the Common Stock. In addition to the solicitation of proxies by use of the mail,
some of the officers, directors and regular employees of the Company may
(without additional compensation) solicit proxies by telephone or personal
interview, the costs of which the Company will bear.
This Proxy Statement and the accompanying form of proxy is being sent
or given to stockholders on or about February 26, 1999.
Stockholders of the Company's Common Stock and Special Voting Stock are
entitled to one vote for each share held. Such shares may not be voted
cumulatively.
Each validly returned proxy (including proxies for which no specific
instruction is given) which is not revoked will be voted "FOR" each of the
proposals as described in this Proxy Statement and, at the proxy holders'
discretion, on such other matters, if any, which may come before the Meeting
(including any proposal to adjourn the Meeting).
Determination of whether a matter specified in the Notice of Annual
Meeting of Stockholders has been approved will be determined as follows. Those
persons will be elected directors who receive a plurality of the votes cast at
the Meeting in person or by proxy and entitled to vote on the election.
Accordingly, abstentions or directions to withhold authority will have no effect
on the outcome of the vote. For each other matter specified in the Notice of
Annual Meeting of Stockholders, the affirmative vote of a majority of the shares
of Common Stock present at the Meeting in person or by proxy and entitled to
vote on such matter is required for approval. Abstentions will be considered
shares present in person or by proxy and entitled to vote and, therefore, will
have the effect of a vote against the matter. Broker non-votes will be
considered shares not present for this purpose and will have no effect on the
outcome of the vote. Directions to withhold authority to vote for directors,
abstentions and broker non-votes will be counted for purposes of determining
whether a quorum is present for the Meeting.
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominees
At the Annual Meeting, the stockholders will elect five (5) directors
to serve until the next Annual Meeting of Stockholders or until their respective
successors are elected and qualified. In the event any nominee is unable or
unwilling to serve as a director at the time of the Annual Meeting, the proxies
may be voted for the balance of those nominees named and for any substitute
nominee designated by the present Board or the proxy holders to fill such
vacancy, or for the balance of the nominees named without nomination of a
substitute, or the size of the Board may be reduced in accordance with the
Bylaws of the Company. The Board has no reason to believe that any of the
persons named below will be unable or unwilling to serve as a nominee or as a
director if elected.
Assuming a quorum is present, the five nominees receiving the highest
number of affirmative votes of shares entitled to be voted for them will be
elected as directors of the Company for the ensuing year. Unless marked
otherwise, proxies received will be voted "FOR" the election of each of the five
nominees named below. In the event that additional persons are nominated for
election as directors, the proxy holders intend to vote all proxies received by
them in such a manner as will ensure the election of as many of the nominees
listed below as possible, and, in such event, the specific nominees to be voted
for will be determined by the proxy holders.
<TABLE>
<CAPTION>
<S> <C> <C>
Name Age Position
John Zambakkides 48 President, CEO and Director
Bernard N. Slade 75 Director
Jim Wilkinson 51 Director
John A. Fazackerley 63 Director
Robert Skinner 48 Director
</TABLE>
The following information with respect to the principal occupation or
employment of each nominee for director, the principal business of the
corporation or other organization in which such occupation or employment is
carried on, and such nominee's business experience during the past five years,
has been furnished to the Company by the respective director nominees:
John Zambakkides. Mr. Zambakkides joined the Board of Directors of the
Company in May, 1995 and on April 13, 1996, he was appointed as President and
Chief Executive Officer of the Company. Mr. Zambakkides has an Electronics
Diploma from Niagara College and an Electronics Bachelor of Engineering from
Ryerson Polytechnical Institute. From 1992 to 1996, Mr. Zambakkides worked with
InTELaTECH Inc. From 1972 to 1992, Mr. Zambakkides served as Regional Manager
for Fairchild Semiconductor during which time he helped to establish Fairchild
in the Canadian market. After National Semiconductor Corp. ("NSC") acquired
Fairchild, Mr. Zambakkides was made General Manager for NSC. Mr. Zambakkides
served on the Board of Directors of the Canadian subsidiaries of both Fairchild
and NSC for a total of 13 years where he contributed his expertise in the areas
of sales, engineering and corporate development. In addition, his expertise was
supplemented by numerous courses in management, finance as well as Total Quality
Management ("TQM"), whereby he was also an accredited instructor for the
Canadian organization.
Bernard N. Slade. Mr. Slade was elected to the Company's board of directors
in April, 1996. Mr. Slade has a B.S. in Electrical Engineering from the
University of Wisconsin and a M.S. in Electrical Engineering from Stevens
Institute of Technology. Mr. Slade has also served on the board of directors of
Anon Incorporated Inc. since 1998. In 1998, Mr. Slade founded YieldUp
International. From 1993 to 1984, Mr. Slade acted as a consultant for Arthur D.
Little, Inc. and Gemini Consulting. Prior to becoming a consultant, Mr. Slade
spent 28 years working for IBM, from 1956 to 1984, where he held a number of
senior positions including management of product development and manufacturing
for the components division and Corporate Director of Manufacturing Technology.
From 1948 to 1956 Mr. Slade worked in research and development for RCA. Mr.
Slade is the author of "Compressing Product Development Cycle" and "Winning the
Productivity Race."
<PAGE>
James Wilkinson. Mr. Wilkinson was elected to the Company's board of
directors in April, 1996 and is also currently working as a consultant in the
industry. From 1994 to 1997, Mr. Wilkinson served as the Vice-President, Chief
Operating Officer and Secretary to Tee-Comm Electronics, Inc. and has 30 years
of experience in corporate finance. From 1987 to 1994, Mr. Wilkinson served as
Vice President and Treasurer of Northern Telecom Ltd., and from 1984 to 1987 Mr.
Wilkinson was the Assistant Treasurer of Corporate Finance for Northern Telecom
Ltd. Prior thereto, he held senior financial positions with Shell Canada Ltd.
and Canadian National Railway Co.
John A. Fazackerley. Mr. Fazackerley was elected to the board of directors
in September, 1997. Mr. John Fazackerley, founded Digital Processing Systems in
1987 and is currently serving as its Chairman of the Board. From 1975 to 1987,
Mr. Fazackerley was employed by Scientific Atlanta. When he joined Scientific
Atlanta, he served as head of Broadband sales for their newly established
Canadian facility. In 1977 he was promoted to General Manager and in 1987 he
purchased Scientific Atlanta's studio (equipment) products, under its Digital
Video Systems division, and formed Digital Processing Systems. Mr. Fazackerley
has served as a director on the Board of the Canadian Cable Television
Association for seven years and he presently serves as an international
representative on the Management Committee of the International Broadcasting
Convention in London, England. He was born in Cheshire, England were he received
his Radio and Television Engineering diploma from Sanford University.
Robert Skinner. Mr. Skinner was elected to the board of directors in March
1998. From 1992 to 1998 Mr. Skinner has managed his own investments,
specializing in emerging companies in the technology market. From 1980 to 1992,
Mr. Skinner was an Executive Director of Bain Capital Markets Ltd., Bain
Securities Ltd., and Bain and Co. Ltd., the group holding company. He first
joined Bain and Co. Ltd. in 1980 working in its Fixed Income Division, and soon
thereafter became a partner in the firm in December 1981. During his career with
Bain and Co. Ltd. he was also involved in risk management, mortgage
securitization and commodities markets with emphasis on both coal and industrial
metals. Mr. Skinner's experience in the securities industry commenced in 1977,
when he joined Capel Court Corporation Ltd., a merchant bank, where he engaged
in securities trading and structuring transactions.
No director or executive officer of the Company has any family relationship
with any other director or executive officer of the Company.
Directors serve until the next annual meeting of stockholders or until
their successors are elected and qualified. Officers serve at the discretion of
the Board of Directors.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended September 30, 1998, the Board of Directors of
the Corporation held eight (8) meetings and acted by unanimous written consent
on one (1) occasion. No director attended fewer than 75% of the total number of
meetings of the Board of Directors during the last fiscal year.
The Board of Directors has an Audit Committee and a Compensation Committee.
The Audit Committee is composed of two directors, Jim Wilkinson and John
Fazackerley. The Audit Committee is responsible for (a) recommending the
engagement and termination of the independent public accountants to audit the
financial statements of the Company, (b) overseeing the scope of the external
audit services, (c) reviewing adjustments recommended by the independent public
accountant and address disagreements between the independent public accountants
and management, (d) reviewing the adequacy of internal controls and management's
handling of identified material inadequacies and reportable conditions in the
internal controls over financial reporting and compliance with laws and
regulations, and (e) supervises the internal audit function, which may include
approving the selection, compensation and termination of internal auditors. The
Audit Committee met two (2) times during the last fiscal year.
<PAGE>
The Compensation Committee consists of three directors, Jim Wilkinson,
Bernard Slade and Robert Skinner. The Committee is responsible for overseeing
the compensation of the executive officers and directors, including annual
executive salaries, bonuses and cash incentives and long-term equity incentives,
to ensure that such officers and directors receive adequate and fair
compensation. The Compensation Committee also administers the Company's stock
option plans. The Compensation Committe met twice during the last fiscal year.
The Board does not have a nominating committee or a committee performing
the functions of a nominating committee. Although there are no formal procedures
for stockholders to nominate persons to serve as directors, the Board will
consider nominations from stockholders, which should be addressed to Carl
Mitchell at the Company's address set forth above.
COMPENSATION OF DIRECTORS
Directors currently receive no cash fees for services provided in that
capacity, but are reimbursed for reasonable out-of-pocket expenses incurred in
connection with attendance at meetings of the Board or any committee thereof
they attend. During the 1998 fiscal year, Mssrs. Slade, Wilkinson, Fazackerley
and Skinner were each granted 10,000 options to purchase Common Stock as
compensation for their services as directors of the Company.
The proxy holders intend to vote the shares represented by proxies for
all of the board's nominees, except to the extent authority to vote for the
nominees is withheld.
RECOMMENDATION OF THE BOARD:
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF ALL NOMINEES NAMED ABOVE.
<PAGE>
PROPOSAL NO. 2
APPROVAL OF THE 1999 EMPLOYEE STOCK OPTION PLAN
At the Annual Meeting, the Company's stockholders are being asked to
approve the 1999 Employee Stock Option Plan (the "1999 Option Plan") and to
authorize 700,000 shares of Common Stock for issuance thereunder. The following
is a summary of principal features of the 1999 Option Plan. The summary,
however, does not purport to be a complete description of all the provisions of
the 1999 Option Plan. Any stockholder of the Company who wishes to obtain a copy
of the actual plan document may do so upon written request to the Company's
Secretary, Carl Mitchell, at the Company's principal offices at 250 Consumers
Road, Suite 901, North York, Ontario, Canada.
GENERAL
The 1999 Option Plan was adopted by the Board of Directors in February
1999. The Board of Directors has initially reserved 700,000 shares of Common
Stock for issuance under the 1999 Option Plan. Under the Plan, options may be
granted which are intended to qualify as Incentive Stock Options ("ISOs") under
Section 422 of the Internal Revenue Code of 1986 (the "Code") or which are not
("Non-ISOs") intended to qualify as Incentive Stock Options thereunder.
The 1999 Option Plan and the right of participants to make purchases
thereunder are intended to qualify as an "employee stock purchase plan" under
Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"). The
1999 Option Plan is not a qualified deferred compensation plan under Section
401(a) of the Internal Revenue Code and is not subject to the provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA").
PURPOSE
The primary purpose of the 1999 Option Plan is to attract and retain
the best available personnel for the Company in order to promote the success of
the Company's business and to facilitate the ownership of the Company's stock by
employees. In the event that the 1999 Option Plan is not adopted the Company may
have considerable difficulty in attracting and retaining qualified personnel,
officers, directors and consultants.
ADMINISTRATION
The 1999 Option Plan, when approved, will be administered by the
Company's Board of Directors, as the Board of Directors may be composed from
time to time. All questions of interpretation of the 1999 Option Plan are
determined by the Board, and its decisions are final and binding upon all
participants. Any determination by a majority of the members of the Board of
Directors at any meeting, or by written consent in lieu of a meeting, shall be
deemed to have been made by the whole Board of Directors.
Notwithstanding the foregoing, the Board of Directors may at any time,
or from time to time, appoint a committee (the "Committee") of at least two
members of the Board of Directors, and delegate to the Committee the authority
of the Board of Directors to administer the Plan. Upon such appointment and
delegation, the Committee shall have all the powers, privileges and duties of
the Board of Directors, and shall be substituted for the Board of Directors, in
the administration of the Plan, subject to certain limitations.
Members of the Board of Directors who are eligible employees are
permitted to participate in the 1999 Option Plan, provided that any such
eligible member may not vote on any matter affecting the administration of the
1999 Option Plan or the grant of any option pursuant to it, or serve on a
committee appointed to administer the 1999 Option Plan. In the event that any
member of the Board of Directors is at any time not a "disinterested person", as
defined in Rule 16b-3(c)(3)(i) promulgated pursuant to the Securities Exchange
Act of 1934, the Plan shall not be administered by the Board of Directors, and
may only by administered by a Committee, all the members of which are
disinterested persons, as so defined.
ELIGIBILITY
Under the 1999 Option Plan, options may be granted to key employees,
officers, directors or consultants of the Company, as provided in the 1999
Option Plan.
<PAGE>
TERMS OF OPTIONS
The term of each Option granted under the Plan shall be contained in a
stock option agreement between the Optionee and the Company and such terms shall
be determined by the Board of Directors consistent with the provisions of the
Plan, including the following:
(a) Purchase Price. The purchase price of the Common Shares subject to each
ISO shall not be less than the fair market value (as set forth in the
1999 Option Plan), or in the case of the grant of an ISO to a Principal
Stockholder, not less that 110% of fair market value of such Common
Shares at the time such Option is granted. The purchase price of the
Common Shares subject to each Non-ISO shall be determined at the time
such Option is granted, but in no case less than 85% of the fair market
value of such Common Shares at the time such Option is granted. The
purchase price of the Common Shares subject to each Non-ISO.
(b) Vesting. The dates on which each Option (or portion thereof) shall be
exercisable and the conditions precedent to such exercise, if any,
shall be fixed by the Board of Directors, in its discretion, at the
time such Option is granted.
(c) Expiration. The expiration of each Option shall be fixed by the Board
of Directors, in its discretion, at the time such Option is granted;
however, unless otherwise determined by the Board of Directors at the
time such Option is granted, an Option shall be exercisable for ten
(10) years after the date on which it was granted (the "Grant Date").
Each Option shall be subject to earlier termination as expressly
provided in the 1999 Option Plan or as determined by the Board of
Directors, in its discretion, at the time such Option is granted.
(d) Transferability. No Option shall be transferable, except by will or the
laws of descent and distribution, and any Option may be exercised
during the lifetime of the Optionee only by him. No Option granted
under the Plan shall be subject to execution, attachment or other
process.
(e) Option Adjustments. The aggregate number and class of shares as to
which Options may be granted under the Plan, the number and class
shares covered by each outstanding Option and the exercise price per
share thereof (but not the total price), and all such Options, shall
each be proportionately adjusted for any increase decrease in the
number of issued Common Shares resulting from split-up spin-off or
consolidation of shares or any like Capital adjustment or the payment
of any stock dividend.
Except as otherwise provided in the 1999 Option Plan, any Option
granted hereunder shall terminate in the event of a merger,
consolidation, acquisition of property or stock, separation,
reorganization or liquidation of the Company. However, the Optionee
shall have the right immediately prior to any such transaction to
exercise his Option in whole or in part notwithstanding any otherwise
applicable vesting requirements.
(f) Termination, Modification and Amendment. The 1999 Option Plan (but not
Options previously granted under the Plan) shall terminate ten (10)
years from the earlier of the date of its adoption by the Board of
Directors or the date on which the Plan is approved by the affirmative
vote of the holders of a majority of the outstanding shares of capital
stock of the Company entitled to vote thereon, and no Option shall be
granted after termination of the Plan. Subject to certain restrictions,
the Plan may at any time be terminated and from time to time be
modified or amended by the affirmative vote of the holders of a
majority of the outstanding shares of the capital stock of the Company
present, or represented, and entitled to vote at a meeting duly held in
accordance with the applicable laws of the State of Nevada.
FEDERAL INCOME TAX ASPECTS OF THE 1999 OPTION PLAN
THE FOLLOWING IS A BRIEF SUMMARY OF THE EFFECT OF FEDERAL INCOME
TAXATION UPON THE PARTICIPANTS AND THE COMPANY WITH RESPECT TO THE PURCHASE OF
SHARES UNDER THE 1999 OPTION PLAN. THIS SUMMARY DOES NOT PURPORT TO BE COMPLETE
AND DOES NOT ADDRESS THE FEDERAL INCOME TAX CONSEQUENCES TO TAXPAYERS WITH
SPECIAL TAX STATUS. IN ADDITION, THIS SUMMARY DOES NOT DISCUSS THE PROVISIONS OF
THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE
PARTICIPANT MAY RESIDE, AND DOES NOT DISCUSS ESTATE, GIFT OR OTHER TAX
CONSEQUENCES OTHER THAN INCOME TAX CONSEQUENCES. THE COMPANY ADVISES EACH
PARTICIPANT TO CONSULT HIS OR HER OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES
OF PARTICIPATION IN THE 1999 OPTION PLAN AND FOR REFERENCE TO APPLICABLE
PROVISIONS OF THE CODE.
<PAGE>
The 1999 Option Plan and the right of participants to make purchases
thereunder are intended to qualify under the provisions of Sections 421, 422 and
423 of the Code. Under these provisions, no income will be recognized by a
participant prior to disposition of shares acquired under the 1999 Option Plan.
If the shares are sold or otherwise disposed of (including by way of
gift) more than two years after the first day of the offering period during
which shares were purchased (the "Offering Date"), a participant will recognize
as ordinary income at the time of such disposition the lesser of (a) the excess
of the fair market value of the shares at the time of such disposition over the
purchase price of the shares or (b) 15% of the fair market value of the shares
on the first day of the offering period. Any further gain or loss upon such
disposition will be treated as long-term capital gain or loss. If the shares are
sold for a sale price less than the purchase price, there is no ordinary income
and the participant has a capital loss for the difference.
If the shares are sold or otherwise disposed of (including by way of
gift) before the expiration of the two-year holding period described above, the
excess of the fair market value of the shares on the purchase date over the
purchase price will be treated as ordinary income to the participant. This
excess will constitute ordinary income in the year of sale or other disposition
even if no gain is realized on the sale or a gift of the shares is made. The
balance of any gain or loss will be treated as capital gain or loss and will be
treated as long-term capital gain or loss if the shares have been held more than
one year.
In the case of a participant who is subject to Section 16(b) of the
Exchange Act, the purchase date for purposes of calculating such participant's
compensation income and beginning of the capital gain holding period may be
deferred for up to six months under certain circumstances. Such individuals
should consult with their personal tax advisors prior to buying or selling
shares under the 1999 Option Plan.
The ordinary income reported under the rules described above, added to
the actual purchase price of the shares, determines the tax basis of the shares
for the purpose of determining capital gain or loss on a sale or exchange of the
shares.
The Company is entitled to a deduction for amounts taxed as ordinary
income to a participant only to the extent that ordinary income must be reported
upon disposition of shares by the participant before the expiration of the
two-year holding period described above.
RESTRICTIONS ON RESALE
Certain officers and directors of the Company may be deemed to be
"affiliates" of the Company as that term is defined under the Securities Act.
The Common Stock acquired under the 1999 Option Plan by an affiliate may be
reoffered or resold only pursuant to an effective registration statement or
pursuant to Rule 144 under the Securities Act or another exemption from the
registration requirements of the Securities Act.
REQUIRED VOTE
The approval of the 1999 Option Plan and the reservation of 700,000
shares for issuance requires the affirmative vote of the holders of a majority
of the shares of the Company's Common Stock present at the Annual Meeting in
person or by proxy and entitled to vote and constituting at least a majority of
the required quorum.
The proxy holders intend to vote the shares represented by proxies to
approve, the 1999 Employee Stock Option Plan, except to the extent authority to
vote for the nominees is withheld.
RECOMMENDATION OF THE BOARD:
THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE 1999 EMPLOYEE STOCK OPTION PLAN.
<PAGE>
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
KPMG Peat Marwick has served as the Company's independent auditors
since 1994 and has been appointed by the Board to continue as the Company's
independent auditors for the fiscal year ending September 30, 1999. In the event
that ratification of this selection of auditors is not approved by a majority of
the shares of Common Stock voting at the Annual Meeting in person or by proxy,
the Board will reconsider its selection of auditors. KPMG Peat Marwick has no
interest, financial or otherwise, in the Company.
A representative of KPMG Peat Marwick is not expected to be present at
the Annual Meeting.
The proxy holders intend to vote the shares represented by proxies to
approve, the 1999 Employee Stock Option Plan, except to the extent authority to
vote for the nominees is withheld.
RECOMMENDATION OF THE BOARD:
THE BOARD RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF KPMG
PEAT MARWICK AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING
SEPTEMBER 30, 1999.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding ownership
of the Company's Common Stock as of September 30, 1998, by all persons known by
the Company to be beneficial owners of five percent (5%) or more of the
outstanding shares of Common Stock.
<TABLE>
<CAPTION>
Number of Shares Approximate
Beneficially Percentage of
Name* Owned Common Stock**
<S> <C> <C>
Carl Mitchell(1) 712,336 13%
Michael Alford(2) 483,248 9%
Alan Simmons(3) 531,784 10%
Patrick Prentiss 543,654 10%
Bellingham Industries Inc. 599,999 11%
- -------------------
</TABLE>
* Except as noted above, the address for the above identified officers and
directors of the Company is c/o V3 Semiconductor, Inc., 250 Consumers Road,
Suite 901, North York, Ontario, Canada M2J 4V6.
** Percentages are based upon the assumption that the shareholder has exercised
all of the currently exercisable options he or she owns which are currently
exercisable or exercisable within 60 days and that no other shareholder has
exercised any options he or she owns.
(1) Includes 50,000 shares of Common Stock owned by Mr. Mitchell's wife and
40,000 shares of Common Stock issuable upon exercise of stock options granted
under the Company's Employee Stock Option Plan ("ESOP"). Of such options, 35,000
are immediately exercisable.
(2) Includes 140,000 shares of Common Stock owned by Mr. Alford's wife and
40,000 shares of Common Stock issuable upon exercise of stock options granted
under the Company's ESOP. Of such options, 35,000 are immediately exercisable.
(3) Includes 159,101 shares of Common Stock owned by Mr. Simmons' wife.
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding ownership
of the Company's Common Stock as of September 30, 1998, by (i) each director of
the Company, (ii) each of the executive officers named in the Summary
Compensation Table of this proxy statement (the "Named Executive Officers"), and
(iii) all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Number of Shares Approximate
Beneficially Percentage of
Name* Owned Common Stock**
<S> <C> <C>
John Zambakkides(1) 160,000 3%
Gregg Smith(2) 30,000 0.6%
Bernard N. Slade(3) 85,000 2%
Jim Wilkinson(4) 25,000 0.5%
John A. Fazackerley(5) 15,833 0.3%
Robert Skinner(6) 210,002 4%
All Officers and Directors
as a Group (8 persons) 1,721,419 31%
</TABLE>
* Except as noted above, the address for the above identified officers and
directors of the Company is c/o V3 Semiconductor, Inc., 250 Consumers Road,
Suite 901, North York, Ontario, Canada M2J 4V6.
** Percentages are based upon the assumption that the shareholder has exercised
all of the options he or she owns and that no other shareholder has exercised
any options he or she owns.
(1) Includes 160,000 shares of Common Stock issuable upon exercise of the stock
options granted John Zambakkides as part of a special grant, 140,000 of which
are immediately exercisable.
(2) Includes 30,000 shares of Common Stock issuable upon exercise of stock
options granted under the Company's ESOP plan, of which 10,000 are immediately
exercisable.
(3) Includes 25,000 shares of Common Stock issuable upon exercise of stock
options granted under the Company's ESOP plan, all of which are immediately
exercisable. Includes 20,000 shares owned by Mr. Slade's wife and 6,000 shares
owned by Mr. Slade's son.
(4) Includes 25,000 shares of Common Stock issuable upon exercise of stock
options granted under the Company's ESOP plan, all of which are immediately
exercisable.
(5) Includes 15,833 shares of Common Stock issuable upon exercise of stock
options granted under the Company's ESOP plan, all of which are immediately
exercisable.
(6) Includes 200,002 shares of Common Stock owned by Cedar Capital Limited.
Robert Skinner is the sole shareholder of Cedar Capital Limited. Includes 10,000
shares of Common Stock issuable upon exercise of stock options granted under the
Company's ESOP plan, all of which are immediately exercisable.
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain summary information with respect
to the compensation paid to the Company's Chief Executive Officer, and the
Company's Vice-President of Sales and Marketing, for services rendered in all
capacities to the Company for the fiscal period ended September 30, 1998. Other
than as listed below, the Company had no executive officers whose total annual
salary and bonus exceeded $100,000 for that fiscal year:
<TABLE>
<CAPTION>
Long-Term Compensation
Other
Compen-
Name Position Year Salary sation Bonus
Awards Payouts
Restricted Securities LTIP All
Stock Underlying Payouts Other
Award(s) Options/ ($) Compen-
($) SARs sation
(#) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
John President 1998 $97,743 $13,117(1) $55,200 ---- ---- ---- ----
Zambakkides and Chief 1997 $72,560 $5,966 ---- ---- ---- ---- ----
(1) Executive 1996 $52,766 ---- ---- ---- ---- ---- ----
Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Gregg Smith Vice 1998 $67,384 $78,215(2) ---- ---- ---- ---- ----
President 1996 ---- ---- ---- ---- ---- ---- ----
Sales and 1995 ---- ---- ---- ---- ---- ---- ----
Marketing
- ------------------------------------------------------------------------------------------------------------------------------------
- ----------------
</TABLE>
1. Represents car allowance paid to Mr. Zambakkides pursuant to his
employment agreement with the Company.
2. Represents $23,265 in commissions paid to Mr. Smith, $48,950 in
consulting fees and $6,000 in car allowance paid to Mr. Smith.
<PAGE>
STOCK OPTIONS GRANTS AND EXERCISES
No stock options were granted to the named executive officers during the
last completed fiscal year.
The following table shows the value at September 30, 1998 of unexercised
options held by the named executive officers:
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-end Option Values
Number of securities Value of unexercised in-the-
underlying unexercised money optionsat fiscal year-
options at fiscal year-end end
(#) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Name Shares acquired on Value Realized
exercise (#) ($) Exercisable/unexercisable Exercisable/unexercisable*
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John Zambakkides, 0 0 120,000/40,000 $37,500/$12,500
President and Chief
Executive Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Gregg Smith, Vice 0 0 10,000/20,000 $9,525/$19,050
President Sales and
Marketing
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------------------
* The options held by Mr. Zambakkides are exercisable at $3.75 per share of
Common Stock and the options held by Mr. Smith are exercisable at $3.11 per
share. Assumes a fair market value of $4.0625 per share.
EMPLOYMENT CONTRACTS
On January 1, 1998, Mr. Zambakkides entered into an agreement with the
Company whereby Mr. Zambakkides will be employed as the Company's President and
Chief Executive Officer for a term of five years and, thereafter, the agreement
shall be renewable annually. Under the terms of the agreement, Mr. Zambakkides
received a base salary of Cdn. $200,000 for the period from January 1, 1998 to
December 31, 1998. In addition, the employment agreement provides for a car
allowance of Cdn. $1,000 per month. Mr. Zambakkides is also entitled to receive
a bonus and options based upon achieving certain goals and objectives as
determined by the Board of Directors.
<PAGE>
TRANSACTIONS WITH MANAGEMENT
A shareholder, Alan Simmons, provided consulting and management
services to the Company for fees in the amount of $67,757 for fiscal year ended
September 30, 1997 and $28,246 in fiscal year ended September 30, 1998. These
amounts are included in the Company's Research and Development expense. From
October 27, 1997 to May 1, 1997, prior to joining the Company as Vice President
of Sales and Marketing, Gregg Smith provided consulting and management services
to the Company for fees in the amount of $48,950 for fiscal year ended September
30, 1998. The consulting and management services provided by Mssrs. Simmons and
Smith were on terms no less favorable than those that could have been obtained
from an unaffiliated party.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Proposals of stockholders intended to be presented at next year's
Annual Meeting of Stockholders must be received by Carl Mitchell, V3
Semiconductor Inc., 250 Consumers Road, Suite 901, North York, Ontario, Canada
M2J 4V6, no later than November 1, 1999.
OTHER PROPOSED ACTION
The Board of Directors is not aware of any other business which will
come before the Meeting, but if any such matters are properly presented, the
proxies solicited hereby will be voted in accordance with the best judgment of
the persons holding the proxies. All shares represented by duly executed proxies
will be voted at the Meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own more than 10% of the Company's Common
Stock (collectively, "Reporting Persons") to file with the Securities and
Exchange Commission ("SEC") initial reports of ownership and changes in
ownership of the Company's Common Stock. Reporting Persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) reports they
file. To the Company's knowledge, based solely on its review of the copies of
such reports received or written representations from certain Reporting Persons
that no other reports were required, the Company believes that during its fiscal
year ended September 30, 1998, all Reporting Persons complied with all
applicable filing requirements.
AVAILABILITY OF CERTAIN DOCUMENTS REFERRED TO HEREIN
THIS PROXY STATEMENT REFERS TO CERTAIN DOCUMENTS OF THE COMPANY THAT
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS ARE AVAILABLE TO
ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT IS
DELIVERED, UPON ORAL OR WRITTEN REQUEST, WITHOUT CHARGE, DIRECTED TO CARL
MITCHELL, V3 SEMICONDUCTOR INC., 250 CONSUMERS ROAD, NORTH YORK, ONTARIO, CANADA
M2J 4V6, TELEPHONE NUMBER (416) 497-8884. IN ORDER TO ENSURE TIMELY DELIVERY OF
THE DOCUMENTS, SUCH REQUESTS SHOULD BE MADE BY MARCH 1, 1999.
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other business that will be
presented to the Annual Meeting. If any other business is properly brought
before the Annual Meeting, proxies in the enclosed form will be voted in respect
thereof as the proxy holders deem advisable.
It is important that the proxies be returned promptly and that your
shares be represented. Stockholders are urged to mark, date, execute and
promptly return the accompanying proxy card in the enclosed envelope.
By Order of the Board of Directors,
/s/ CARL MITCHELL
Carl Mitchell
Secretary
North York, Ontario
Canada
March 1, 1999
<PAGE>
PROXY PROXY
V3 SEMICONDUCTOR INC.
PROXY FOR ANNUAL MEETING TO BE HELD ON AUGUST 4, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John Zambakkides and Carl Mitchell, or
either of them, as proxies, each with the power to appoint his substitute, to
represent and to vote all the shares of common stock of V3 Semiconductor Inc.
(the "Company"), which the undersigned would be entitled to vote, at the
Company's Annual Meeting of Stockholders to be held on March 29, 1999 and at any
adjournments thereof, subject to the directions indicated on the reverse side
hereof.
In their discretion, the Proxies are authorized to vote upon any other
matter that may properly come before the meeting or any adjournments thereof.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE,
BUT IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
ALL NOMINEES AND FOR THE PROPOSALS LISTED ON THE REVERSE SIDE.
IMPORTANT--This Proxy must be signed and dated on the reverse side.
<PAGE>
THIS IS YOUR PROXY
YOUR VOTE IS IMPORTANT!
Dear Stockholder:
We cordially invite you to attend the Annual Meeting of Stockholders of
V3 Semiconductor Inc. to be held in Van Gogh 1 room at Bellagio, 3600 Las Vegas
Blvd. South, Las Vegas, Nevada 89109 on March 29, 1999 at 1:00 p.m. (local
time).
Please read the proxy statement which describes the proposals and
presents other important information, and complete, sign and return your proxy
promptly in the enclosed envelope.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1-3
1. ELECTION OF DIRECTORS -- For Withhold
Nominees:
John Zambakkides [_] [_]
Bernard N. Slade [_] [_]
Jim Wilkinson [_] [_]
John Fazackerley [_] [_]
Robert Skinner [_] [_]
(Except nominee(s) written above)
For Against Abstain
2. Proposal to approve the Company's 1999 [_] [_] [_]
Employee Stock Option Plan.
3. Proposal to ratify KPMG Peat Marwick as independent auditors.
For Against Abstain
[_] [_] [_]
If you plan to attend the Annual Meeting please mark this box [_]
Dated:________________, 1999
Signature ______________________________________________________________________
Name (printed) _________________________________________________________________
Title __________________________________________________________________________
Important: Please sign exactly as name appears on this proxy. When signing
as attorney, executor, trustee, guardian, corporate officer, etc., please
indicate full title.
FOLD AND DETACH HERE
<PAGE>
V3 SEMICONDUCTOR INC.
1999 EMPLOYEE STOCK OPTION PLAN
1. Purposes
This 1998 Stock Option Plan (the "Plan") is intended to attract and retain the
best available personnel for positions with V3 Semiconductor Inc. or any of its
subsidiary corporations (collectively, the "Company"), and to provide additional
incentive to such employees and others to exert their maximum efforts toward the
success of the Company. The above aims will be effectuated through the granting
of certain stock options. Under the Plan, options may be granted which are
intended to qualify as Incentive Stock Options ("ISOs") under Section 422 of the
Internal Revenue Code of 1986 (the "Code") or which are not ("Non-ISOs")
intended to qualify as Incentive Stock Options thereunder. The term "subsidiary
corporation" shall, for the purposes of the Plan, be defined in the same manner
as such term is defined in Section 424(f) of the Code and shall include a
subsidiary of any subsidiary.
2. Administration of the Plan
(a) The Plan shall be administered by the Board of Directors of the Company (the
"Board of Directors"), as the Board of Directors may be composed from time to
time, except as provided in subparagraph (b) of this Paragraph 2. The
determinations of the Board of Directors under the Plan, including without
limitation as to the matters referred to in this Paragraph 2, shall be
conclusive. Any determination by a majority of the members of the Board of
Directors at any meeting, or by written consent in lieu of a meeting, shall be
deemed to have been made by the whole Board of Directors. Within the limits of
the express provisions of the Plan, the Board of Directors shall have the
authority, in its discretion, to take the following actions under the Plan:
(i) to determine the individuals to whom, and the time or times at
which, ISOs to purchase the Company's shares of Common Stock, par value $.001
per share ("Common Shares"), shall be granted, and the number of Common Shares
to be subject to each ISO,
(ii) to determine the individuals to whom, and the time or times at
which, Non-ISOs to purchase the Common Shares, shall be granted, and the number
of Common Shares to be subject to each Non-ISO,
(iii) to determine the terms and provisions of the respective stock
option agreements granting ISOs and Non-ISOs (which need not be identical),
(iv) to interpret the Plan,
(v) to prescribe, amend and rescind rules and regulations relating
to the Plan, and
(vi) to make all other determinations and take all other actions
necessary or advisable for the administration of the Plan. In making such
determinations, the Board of Directors may take into account the nature of the
services rendered by such individuals, their present and potential contributions
to the Company's success and such other factors as the Board of Directors, in
its discretion, shall deem relevant. An individual to whom an option has bee
granted under the Plan is referred to herein as an "Optionee."
(b) Notwithstanding anything to the contrary contained herein, the Board of
Directors may at any time, or from time to time, appoint a committee (the
"Committee") of at least two members of the Board of Directors, and delegate to
the Committee the authority of the Board of Directors to administer the Plan.
Upon such appointment and delegation, the Committee shall have all the powers,
privileges and duties of the Board of Directors, and shall be substituted for
the Board of Directors, in the administration of the Plan, except that the power
to appoint members of the Committee and to terminate, modify or amend the Plan
shall be retained by
<PAGE>
the Board of Directors. In the event that any member of the Board of Directors
is at any time not a "disinterested person," as defined in Rule 16b-3(c)(3)(i)
promulgated pursuant to the Securities Exchange Act of 1934, the Plan shall not
be administered by the Board of Directors, and may only by administered by a
Committee, all the members of which are disinterested persons, as so defined.
The Board of Directors may from time to time appoint members of the Committee in
substitution for or in addition to members previously appointed, may fill
vacancies in the Committee and may discharge the Committee. A majority of the
Committee shall constitute a quorum and all determinations shall be made by a
majority of its members. Any determination reduced to writing and signed by a
majority of the members shall be fully as effective as if it had been made by a
majority vote at a meeting duly called and held. Members of the Committee shall
not be eligible to participate in this Plan.
3. Shares Subject to the Plan
The total number of Common Shares which shall be subject to ISOs and Non-ISOs
granted under the Plan (collectively, "Options") shall be 700,000 in the
aggregate, subject to adjustment as provided in Paragraph 8. The Company shall
at all times while the Plan is in force reserve such number of Common Shares as
will be sufficient to satisfy the requirements of outstanding Options. The
Common Shares to be issued upon exercise of Options shall in whole or in part be
authorized and unissued or reacquired Common Shares. The unexercised portion of
any expired, terminated or canceled Option shall again be available for the
grant of Options under the Plan.
4. Eligibility
(a) Subject to subparagraphs (b) and (c) of this Paragraph 4, Options may be
granted to key employees, officers, directors or consultants of the Company, as
determined by the Board of Directors.
(b) An ISO may be granted, consistent with the other terms of the Plan, to an
individual who owns (within the meaning of Sections 422(b)(6) and 424(d) of the
Code), more that ten (10%) percent of the total combined voting power or value
of all classes of stock of the Company or a subsidiary corporation (any such
person, a "Principal Stockholder") only if, at the time such ISO is granted, the
purchase price of the Common Shares subject to the ISO is an amount which equals
or exceeds one hundred ten percent (110%) of the fair market value of such
Common Shares, and such ISO by its terms is not exercisable more than five (5)
years after it is granted.
(c) A director or an officer of the Company who is not also an employee of the
Company and consultants to the Company shall be eligible to receive Non-ISOs but
shall not be eligible to receive ISOs.
(d) Nothing contained in the Plan shall be construed to limit the right to the
Board of Directors to grant an ISO and Non-ISO concurrently under a single stock
option agreement so long as each Option is clearly identified as to its status.
Furthermore, if an Option has been granted under the Plan, additional Options
may be granted from time to time to the Optionee holding such Options, and
Options may be granted from time to time to one or more employees, officers or
directors who have not previously been granted Options.
(e) To the extent that the grant of an Option results in the aggregate fair
market value (determined at the time of grant) of the Common Shares (or other
capital stock of the Company or any subsidiary) with respect to which Incentive
Stock Options are exercisable for the first time by an Optionee during any
calendar year (under all plans of the Company and subsidiary corporation) to
exceed $100,000, such Options shall be treated as a Non-ISO. The provisions of
this subparagraph (e) of Paragraph 4 shall be construed and applied in
accordance with Section 422(d) of the Code and the regulations, if any,
promulgated thereunder.
5. Terms of Options
The term of each Option granted under the Plan shall be contained in a stock
option agreement between the
<PAGE>
Optionee and the Company and such terms shall be determined by the Board of
Directors consistent with the provisions of the Plan, including the following:
(a) The purchase price of the Common Shares subject to each ISO shall not be
less than the fair market value (or in the case of the grant of an ISO to a
Principal Stockholder, not less that 110% of fair market value) of such Common
Shares at the time such Option is granted. Such fair market value shall be
determined by the Board of Directors and, if the Common Shares are listed on a
national securities exchange or traded on the over-the-counter market, the fair
market value shall be the mean of the highest and lowest trading prices or of
the high bid and low asked prices of the Common Shares on such exchange, or on
the over-the-counter market as reported by the NASDAQ system or the National
Quotation Bureau, Inc., as the case may be, on the day on which the ISO is
granted or, if there is no trading or bid or asked price on that day, the mean
of the highest and lowest trading or high bid and low asked prices on the most
recent day preceding the day on which the ISO is granted for which such prices
are available.
(b) The purchase price of the Common Shares subject to each Non-ISO shall not be
less than 85% of the fair market value of such Common Shares at the time such
Option is granted. Such fair market value shall be determined by the Board of
Directors in accordance with subparagraph (a) of this Paragraph 5. The purchase
price of the Common Shares subject to each Non-ISO shall be determined at the
time such Option is granted.
(c) The dates on which each Option (or portion thereof) shall be exercisable and
the conditions precedent to such exercise, if any, shall be fixed by the Board
of Directors, in its discretion, at the time such Option is granted.
(d) The expiration of each Option shall be fixed by the Board of Directors, in
its discretion, at the time such Option is granted; however, unless otherwise
determined by the Board of Directors at the time such Option is granted, an
Option shall be exercisable for ten (10) years after the date on which it was
granted (the "Grant Date"). Each Option shall be subject to earlier termination
as expressly provided in Paragraph 6 hereof or as determined by the Board of
Directors, in its discretion, at the time such Option is granted.
(e) Options shall be exercised by the delivery by the Optionee thereof to the
Company at its principal office, or at such other address as may be established
by the Board of Directors, of written notice of the number of Common Shares with
respect to which the Option is being exercised accompanied by payment in full of
the purchase price of such Common Shares. Payment for such Common Shares may be
made (as determined by the Board of Directors) (i) in cash, (ii) by certified
check or bank cashier's check payable to the order of the Company in the amount
of such purchase price, (iii) by a promissory note issued by the Optionee in
favor of the Company in the amount equal to such purchase price and payable on
terms prescribed by the Board of Directors, which provides for the payment of
interest at a fair market rate, as determined by the Board of Directors, (iv) by
delivery of capital stock to the Company having a fair market value (determined
on the date of exercise in accordance with the provisions of subparagraph (a) of
this Paragraph 5) equal to said purchase price, or (v) by any combination of the
methods of payment described in clauses (i) through (iv) above.
(f) An Optionee shall not have any of the rights of a stockholder with respect
to the Common Shares subject to his Option until such shares are issued to him
upon the exercise of his Option as provided herein.
(g) No Option shall be transferable, except by will or the laws of descent and
distribution, and any Option may be exercised during the lifetime of the
Optionee only by him. No Option granted under the Plan shall be subject to
execution, attachment or other process.
6. Death or Termination of Employment
(a) If employment or other relationship of an Optionee with the Company shall be
terminated voluntarily by the Optionee and without the consent of the Company or
for "Cause" (as hereinafter defined), and immediately after such termination
such Optionee shall not then be employed by the Company, any Options
<PAGE>
granted to such Optionee to the extent not theretofore exercised shall expire
forthwith. For purposes of the Plan, "Cause" shall mean "Cause" as defined in
any employment agreement ("Employment Agreement") between Optionee and the
Company, and, in the absence of an Employment Agreement or in the absence of a
definition of "Cause" in such Employment Agreement, "Cause" shall mean (i) any
continued failure by the Optionee to obey the reasonable instructions of the
President or any member of the Board of Directors, (ii) continued neglect by the
Optionee of his duties and obligations as an employee of the Company, or a
failure to perform such duties and obligations to the reasonable satisfaction of
the President or the Board of Directors, (iii) willful misconduct of the
Optionee or other actions in bad faith by the Optionee which are to the
detriment of the Company, including without limitation commission of a felony,
embezzlement or misappropriation of funds or commission of any act of fraud or
(iv) a breach of any material provision of any Employment Agreement not cured
within 10 days after written notice thereof.
(b) If such employment or other relationship shall terminate other than (i) by
reason of death, (ii) voluntarily by the optionee and without the consent of the
Company, or (iii) for Cause, and immediately after such termination such
Optionee shall not them be employed by the Company, any Options granted to such
Optionee may be exercised at any time within three months after such
termination, subject to the provisions of subparagraph (d) of this Paragraph 6.
After such three-month period, the unexercised Options shall expire. For the
purposes of the Plan, the retirement of an Optionee either pursuant to a pension
or retirement plan adopted by the Company or on the normal retirement date
prescribed from time to time by the Company, and the termination of employment
as a result of a disability (as defined in Section 22(e) (3) of the Code) shall
be deemed to be a termination of such Optionee's employment or other
relationship other than voluntarily by the Optionee or for Cause.
(c) If an Optionee dies (i) while employed by, or engaged in such other
relationship with, the Company or (ii) within three months after the termination
of his employment or other relationship other than voluntarily by the Optionee
and without the consent of the Company or for Cause, any options granted to such
Optionee may be exercised at any time within twelve months after such Optionee's
death, subject to the provisions of subparagraph (d) of this Paragraph 6. After
the three month period, the unexercised Options shall expire.
(d) An Option may not be exercised pursuant to this paragraph 6 except to the
extent that the Optionee was entitled to exercise the Option at the time of
termination of employment or Such other relationship, or death, and in any event
may not be exercised after the expiration of the earlier of (i) the term of the
option or (ii) ten (10) years from the date the Option was granted, or five (5)
years from the date an ISO was granted if the optionee was a Principal
Stockholder at that date.
7. Leave of Absence
For purposes of the Plan, an individual who is on military or sick leave or
other bona fide leave of absence (such temporary employment by the United States
or any state government) shall be considered as remaining in the employ of the
Company for 90 days or such longer period as shall be determined by the Board of
Directors.
8. Option Adjustments
(a) The aggregate number and class of shares as to which Options may be granted
under the Plan, the number and class shares covered by each outstanding Option
and the exercise price per share thereof (but not the total price), and all such
Options, shall each be proportionately adjusted for any increase decrease in the
number of issued Common Shares resulting from split-up spin-off or consolidation
of shares or any like Capital adjustment or the payment of any stock dividend.
(b) Except as provided in subparagraph (c) of this Paragraph 8, upon a merger,
consolidation, acquisition of property or stock, separation, reorganization
(other than a merger or reorganization of the Company in which the holders of
Common Shares immediately prior to the merger or reorganization have the same
<PAGE>
proportionate ownership of Common Shares in the surviving corporation
immediately after the merger or reorganization) or liquidation of the Company,
as a result of which the stockholders of the Company receive cash, stock or
other property in exchange for their Common Shares, any Option granted hereunder
shall terminate, but, provided that the Optionee shall have the right
immediately prior to any such merger, consolidation, acquisition of property or
stock, separation, reorganization or liquidation to exercise his Option in whole
or in part whether or not the vesting requirements set forth in the stock option
agreement have been satisfied.
(c) If the stockholders of the Company receive capital stock of another
corporation ("Exchange Stock") in exchange for their Common Shares in any
transaction involving a merger, consolidation, acquisition of property or stock,
separation or reorganization (other than a merger or reorganization of the
Company in which the holders of Common Shares immediately prior to the merger or
reorganization have the same proportionate ownership of Common Shares in the
surviving corporation immediately after the merger or reorganization), all
options granted hereunder shall terminate in accordance with the provision of
subparagraph (b) of this Paragraph 8 unless the of Directors and the corporation
issuing the Exchange Stock in their sole and arbitrary discretion and subject to
any required action by the stockholders of the Company and such corporation,
agree that all such Options granted hereunder are converted into options to
purchase shares of Exchange Stock. The amount and price of such options shall be
determined by adjusting the amount and price of the Options granted hereunder in
the same proportion as used for determining the number of shares of Exchange
Stock the holders of the Common Shares receive in such merger, consolidation,
acquisition of property or stock, separation or reorganization. The vesting
schedule set forth in the stock option agreement shall continue to apply to the
options granted for the Exchange Stock.
(d) All adjustments pursuant to this Paragraph 8 shall be made by the Board of
Directors and its determination as to what adjustments shall be made, and the
extent thereof, shall be final, binding and conclusive.
9. Further Conditions of Exercise
(a) Unless prior to the exercise of an Option the Common Shares issuable upon
such exercise are the subject of a registration statement filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), and there is then in effect a prospectus filed
as part of such registration statement meeting the Requirements of Section
10(a)(3) of the Securities Act, the notice of exercise with respect to such
Option shall be accompanied by a representation or agreement of the individual
exercising the Option to the Company to the effect that such shares are being
acquired for investment only and not with a view to the resale or distribution
thereof, or such other, documentation as may be required by the Company, unless,
in the opinion of counsel to the Company, such representation, agreement or
documentation is not necessary to comply with the Securities Act.
(b) Anything in the Plan to the contrary notwithstanding, the Company shall not
be obligated to issue or sell any Common Shares until they have been listed on
each securities exchange on which the Common Shares may then be listed and until
and unless, in the opinion of counsel to the Company, the Company may issue such
shares pursuant to a qualification or an effective registration statement, or an
exemption from registration, under such state and federal laws, rules or
regulations as such counsel may deem applicable. The Company shall use
reasonable efforts to effect such listing, qualification and registration, as
the case may be.
10. Termination, Modification and Amendment
(a) The Plan (but not Options previously granted under the Plan) shall terminate
ten (10) years from the earlier of the date of its adoption by the Board of
Directors or the date on which the Plan is approved by the affirmative vote of
the holders of a majority of the outstanding shares of capital stock of the
Company entitled to vote thereon, and no Option shall be granted after
termination of the Plan.
<PAGE>
(b) The Plan may at any time be terminated and from time to time be modified or
amended by the affirmative vote of the holders of a majority of the outstanding
shares of the capital stock of the Company present, or represented, and entitled
to vote at a meeting duly held in accordance with the applicable laws of the
State of Nevada.
(c) The Board of Directors of the Company may at any time terminate the Plan or
from time to time make such modifications or amendments of the Plan as it may
deem advisable; provided, however, that the Board of Directors shall not (i)
modify or amend the Plan in any way that would disqualify any ISO issued
pursuant to the Plan as an Incentive Stock Option or (ii) without approval by
the affirmative vote of the holders of a majority of the outstanding shares of
the capital stock of the Company present, or represented, and entitled to vote
at a meeting duly held in accordance with the applicable laws of the State of
Nevada, increase (except as provided by Paragraph 8) the maximum number of
Common Shares as to which Options may be granted under the Plan or change the
class of persons eligible to Options under the Plan.
(d) No termination, modification or amendment of the Plan may adversely affect
the rights conferred by any Options the consent of the Optionee thereof.
11. Effectiveness of the Plan
The Plan shall become effective upon adoption by the Board of Directors. The
Plan shall be subject to approval by the affirmative vote of the holders of a
majority of the outstanding shares of the capital stock of the Company entitled
to vote thereon within one year following adoption of the Plan by the Board of
Directors, and all Options granted prior to such approval shall be subject
thereto. In the event such approval is withheld, the Plan and all Options which
may have been granted thereunder shall become null and void.
12. Not a Contract of Employment
Nothing contained in the Plan or in any stock option agreement executed pursuant
hereto shall be deemed to confer upon any individual to whom an Option is or may
be granted hereunder any right to remain in the employ of, or in another
relationship with, the relationship with, the Company.
13. Miscellaneous
(a) Nothing contained in the Plan or in any stock option agreement executed
pursuant hereto shall be deemed to confer upon any individual to whom an Option
is or may be granted hereunder any right to remain in the employ of, or other
relationship with, the Company.
(b) If an Option has been granted under the Plan, additional Options may be
granted from time to time to the Optionee, and Options may be granted from time
to time to one or more individuals who have not previously been granted options.
(c) Nothing contained in the Plan shall be construed to limit the right of the
Company to grant options otherwise than under the Plan in connection with the
acquisition of the business and assets of any corporation, firm, person or
association, including options granted to employees thereof who become employees
of the Company, nor shall the provisions of the Plan be to limit the right of
the Company to grant options Otherwise than under the Plan for other proper
corporate purposes.
(d) The Company shall have the right to require the Optionee to pay the Company
the cash amount of any taxes the Company is required to withhold in connection
with the exercise of an Option.
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(e) No award under this Plan shall be taken into account in determining an
Optionee's compensation for purposes of an employee benefit plan of the Company.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in its behalf by one of its officers and sealed by its corporate seal,
as of the date set forth below, and the Employee has hereunto set his hand on or
as of said date, which date is the date such option rights were approved for
grant, with Employee by his aid execution hereof hereby representing that the
residence indicated below his (or her) name is his (or her) bona fide residence
and domicile.
V3 SEMICONDUCTORS, INC.
___________________________
By: John Zambakkides, President
___________________________
