<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
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[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
XICOR, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class 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
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previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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<PAGE> 2
XICOR, INC.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 4, 1999
------------------
To the Shareholders of XICOR, INC.:
The Annual Meeting of Shareholders of Xicor, Inc. (the "Company" or
"Xicor"), a California corporation, will be held at 1618 Buckeye Drive,
Milpitas, California, on Friday, June 4, 1999 at 1:00 p.m. local time for the
purpose of considering and acting upon the following proposals:
(1) To elect a Board of five (5) directors;
(2) To approve an amendment to the Company's Bylaws to increase
the authorized number of directors to no less than four (4)
nor more than seven (7) and initially set the number of
directors at five (5).
(3) To approve and ratify amendments to the Company's 1990
Incentive and Non-Incentive Stock Option Plan including an
increase of 250,000 shares of Common Stock issuable
thereunder.
(4) To ratify the designation of PricewaterhouseCoopers LLP as
independent accountants for the period ending December 31,
1999; and
(5) To transact such other business as may properly come before
the Annual Meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on April 9, 1999
as the record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting and at any continuation and adjournment
thereof.
The Company's 1998 Annual Report to Shareholders and the First Quarter
1999 Earnings Release accompany this Notice of Meeting.
By Order of the Board of Directors
Julius Blank, Secretary
Milpitas, California
April 26, 1999
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YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN AND RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED POST-PAID ENVELOPE.
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<PAGE> 3
XICOR, INC.
CORPORATE HEADQUARTERS: PLACE OF MEETING:
1511 Buckeye Drive 1618 Buckeye Drive
Milpitas, CA 95035 Milpitas, CA 95035
Telephone: (408) 432-8888
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PROXY STATEMENT
---------------------
ANNUAL MEETING OF SHAREHOLDERS
JUNE 4, 1999
APPROXIMATE DATE OF MAILING: APRIL 26, 1999
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Xicor, Inc. (the "Company" or "Xicor") of proxies
for use at the Annual Meeting of Shareholders of Xicor (the "Annual Meeting") to
be held on Friday, June 4, 1999 at 1:00 p.m. local time or at any adjournment or
postponement thereof.
VOTING RIGHTS
Shareholders of record of Xicor as of the close of business on April 9,
1999 have the right to receive notice of and to vote at the Annual Meeting. On
April 9, 1999, Xicor had issued and outstanding 20,209,121 shares of Common
Stock, the only class of voting securities outstanding. Each share of Common
Stock is entitled to one vote.
Each shareholder voting at the election of directors may cumulate such
shareholder's votes and give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of votes to which the
shareholder's shares are entitled, or distribute such votes, on the same
principle, among as many candidates as the shareholder thinks fit, provided that
votes cannot be cast for more candidates than the number of directors to be
elected. However, no shareholder will be entitled to cumulate votes unless, in
conformance with the California Corporations Code, a shareholder has given
notice at the Annual Meeting, prior to the voting, of the shareholder's
intention to cumulate such shareholder's votes. If any one shareholder has given
such notice, all shareholders may cumulate their votes for candidates in
nomination.
PROXIES
Properly executed and unrevoked proxies received by Xicor will be voted
at the Annual Meeting in accordance with the instructions thereon. Where no
instructions are specified, the proxies will be voted in favor of all proposals
set forth in the Notice of Meeting.
Any person giving a proxy in the form accompanying this Proxy Statement
has the power to revoke it at any time before its exercise by filing with the
Secretary of Xicor (i) a signed written statement revoking the proxy or (ii) an
executed proxy bearing a date later than that of the proxy being revoked. A
proxy may also be revoked by attendance at the Annual Meeting and election to
vote in person. Attendance at the Annual Meeting will not by itself constitute
the revocation of a proxy.
QUORUM: ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual
Meeting is a majority of the shares of Common Stock issued and outstanding on
the Record Date. Shares that are voted "FOR", "AGAINST" or "WITHHELD FROM" a
matter are treated as being present at the meeting for purposes of establishing
a quorum
<PAGE> 4
and are also treated as shares "represented and voting" at the Annual Meeting
(the "Votes Cast") with respect to such matter.
While there is no definitive statutory or case law authority in
California as to the proper treatment of abstentions, the Company believes that
abstentions should be counted for purposes of determining both (i) the presence
or absence of a quorum for the transaction of business and (ii) the total number
of Votes Cast with respect to a proposal. In the absence of controlling
precedent to the contrary, the Company intends to treat abstentions in this
manner. Accordingly, abstentions will have the same effect as a vote against a
proposal.
Broker non-votes will be counted for purposes of determining the
presence or absence of a quorum for the transaction of business, but will not be
counted for purposes of determining the number of Votes Cast with respect to a
proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 9, 1999 the name, address
and number of shares of each person or entity known to Xicor to own beneficially
more than five percent (5%) of its Common Stock and the number of shares
beneficially owned by each director, by each of the executive officers named in
the Summary Compensation Table and by all executive officers and directors as a
group, together with their respective percentage ownership of outstanding
shares.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
NAME AND ADDRESS OWNED PERCENT
- ---------------- ------------ -------
<S> <C> <C>
Dimensional Fund Advisers, Inc.
1299 Ocean Avenue, 11th Fl
Santa Monica, CA 90401 ........................................ 1,094,850(1) 5.4
Raphael Klein ................................................. 467,500(2)(3) 2.3
Bruce Gray .................................................... 112,200(2) *
Julius Blank .................................................. 84,500(2) *
Andrew W. Elder ............................................... 37,500(2) *
Joseph Drori .................................................. 89,500(2) *
Klaus G. Hendig ............................................... 96,250(2) *
Daniel L. Lewis ............................................... 30,000(2) *
Geoffrey C. Winkler ........................................... 0 *
All Executive Officers and Directors as a Group (14 persons) .. 1,330,750(4) 6.4
</TABLE>
- ------------
* Less than 1%
(1) As of December 31, 1998 as reported on Schedule 13G filed with the
Securities and Exchange Commission.
(2) Includes shares purchasable upon exercise of stock options as of April
9, 1999 or within 60 days thereafter as follows:
<TABLE>
<S> <C>
Raphael Klein ........................... 27,500
Bruce Gray .............................. 55,000
Julius Blank ............................ 22,500
Andrew W. Elder ......................... 22,500
Joseph Drori ............................ 75,000
Klaus G. Hendig ......................... 85,000
Daniel L. Lewis ......................... 30,000
</TABLE>
(3) Includes 440,000 shares held in trust for Mr. Klein's family.
<PAGE> 5
(4) Includes outstanding options to purchase 509,750 shares, which were
exercisable as of April 9, 1999 or within 60 days from such date.
<PAGE> 6
PROPOSAL NO. 1
ELECTION OF DIRECTORS
A Board of five directors will be elected at the Annual Meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
"FOR" the five nominees named below. In the event that any nominee should become
unavailable for any presently unforeseen reason, the proxy holders will vote in
their discretion for a substitute nominee. If additional persons are nominated
for election as director, the proxy holders intend to vote all proxies received
by them in such a manner and in accordance with cumulative voting 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. The term of office of each person elected as a director will continue
until the next Annual Meeting of Shareholders or until his successor has been
elected and qualified.
The names of the nominees, and certain other information, are set forth
below:
<TABLE>
<CAPTION>
AGE (AS OF DIRECTOR
NAME JUNE 4, 1999) OFFICE SINCE
---- ------------- ------ --------
<S> <C> <C> <C>
Raphael Klein 55 Chairman of the Board and
Chief Executive Officer 1978
Bruce Gray 48 President and Chief Operating
Officer 1998
Julius Blank* 74 Director 1978
Andrew W. Elder* 48 Director 1982
Geoffrey C. Winkler* 69 Director 1999
</TABLE>
----------
* Member of Audit Committee
Raphael Klein, Chairman of the Board and Chief Executive Officer. From
August 1987 until January 1998 Mr. Klein was Xicor's President and Chief
Executive Officer. Since January 1998 Mr. Klein has shared the Office of the
President with Mr. Bruce Gray. Mr. Klein is Xicor's Chief Executive Officer with
primary responsibility for finance and administration and shared responsibility
for the direction of the Company. Mr. Klein has been a director of the Company
since founding Xicor in August 1978 and its Chairman of the Board since August
1982. Mr. Klein received the degree of Master of Science in Physics from the
Israeli Institute of Technology ("Technion") and is the inventor or co-inventor
of two patented inventions.
Bruce Gray, President and Chief Operating Officer. Mr. Gray joined
Xicor in September 1996 as Vice President, Wafer Operations and since January
1998 has shared the Office of the President with Mr. Raphael Klein. Mr. Gray is
Xicor's President and Chief Operating Officer with principal profit and loss
responsibility and shared responsibility for the direction of the Company. Mr.
Gray has 27 years of experience in the semiconductor industry in engineering,
manufacturing and management. From September 1994 through September 1996, Mr.
Gray served as the Managing Director of the Advanced Technology Group at
National Semiconductor Corporation. From August 1989 through September 1994, Mr.
Gray was the Director of Santa Clara Operations and Services for National
Semiconductor with operational responsibility for four high-volume wafer
fabrication lines. Mr. Gray was also involved in advanced technology development
and wafer foundry activities. Mr. Gray has a Bachelor of Science Degree in
Metallurgy and Materials Science from the Massachusetts Institute of Technology
(MIT) and is the inventor or co-inventor of three patented inventions.
Julius Blank, Director. Mr. Blank, one of Xicor's founders, holds a
degree in mechanical engineering from CCNY and has been a business consultant to
high technology companies and a private investor for more than five years.
Andrew W. Elder, Director. Mr. Elder is the founder and since March
1992 has been President of Stratis Corporation, a producer of plastic material
handling products. Mr. Elder received a BA from Duke University and an MBA from
the Wharton School at the University of Pennsylvania.
<PAGE> 7
Geoffrey C. Winkler, Director. Mr. Winkler is president of Palomar
Enterprises, a consulting company focused on enhancing organizational
effectiveness and mentoring of executives. Mr. Winkler has been associated with
technology companies throughout his career in the areas of engineering,
marketing, sales and management in the semiconductor, microwave, automotive and
food industries. Mr. Winkler has a B.Sc. degree in mechanical engineering from
Luton University in the United Kingdom and an MBA from Santa Clara University.
There are no family relationships among executive officers or directors
of the Company.
COMMITTEES AND MEETINGS
The total number of regular and special meetings of the Board of
Directors held in the last fiscal year was five. No director failed to attend at
least 75% of the meetings of the Board and the Committees on which such director
serves.
The Audit Committee of the Board presently consists of Julius Blank,
Andrew W. Elder and Geoffrey C. Winkler. This Committee has the responsibility
to review the scope of the annual audit, recommend to the Board of Directors the
appointment of the independent public accountants, meet with the independent
accountants for review and analysis of Xicor's systems, the adequacy of controls
and the sufficiency of financial reporting. This Committee held two meetings
during the 1998 fiscal year.
The Executive Stock Option Committee, which presently consists of
Andrew W. Elder and Geoffrey C. Winkler, met four times in 1998. The Committee
administers stock option grants to Xicor's executive officers.
The Employee Stock Option Committee, which presently consists of
Raphael Klein, Bruce Gray and Julius Blank, met six times during the last fiscal
year. This Committee administers Xicor's stock option plans for all employees
other than executive officers.
The Employee Incentive Cash Bonus Profit Sharing Committee, which
presently consists of Raphael Klein, Julius Blank and Andrew W. Elder, did not
meet in 1998.
The Compensation Committee, which presently consists of Andrew W. Elder
and Geoffrey C. Winkler, met once during 1998. This Committee administers the
compensation for Xicor's executive officers.
There is no nominating committee or any committee performing that
function.
S. Allan Kline was a director during the 1998 fiscal year and served on
the Audit, Executive Stock Option, Employee Stock Option and Compensation
Committees. Mr. Kline retired from Xicor's board in February 1999. Mr. Winkler
was appointed in March 1999 to fill the resulting vacancy on the Board of
Directors and also replaced Mr. Kline on the Audit, Executive Stock Option and
Compensation Committees.
COMPENSATION OF DIRECTORS
All directors, except Raphael Klein and Bruce Gray, received $2,400 per
month plus expenses through October 1998 for serving as directors. Thereafter
non-employee directors received $2,040 per month plus expenses. Julius Blank
received $28,846 of additional compensation for consulting services in 1998.
In 1995, Xicor adopted the 1995 Director Option Plan (the "Director
Plan") that provides for an initial grant of 20,000 options to each of the
Company's directors, including Raphael Klein and Bruce Gray, and automatic
annual grants of 5,000 options thereafter. In 1998, options for 45,000 shares
were granted under the Director Plan. The options are exercisable in 25% annual
increments and expire no later than ten years from date of grant. All
outstanding options were granted at 100% of the fair market value of the stock
at the date of grant.
VOTE REQUIRED
The five nominees receiving the highest number of affirmative votes of
the shares entitled to be voted for them shall be elected as directors. Votes
withheld from any director are counted for purposes of determining the presence
or absence of a quorum, but have no other legal effect under California law.
<PAGE> 8
Unless marked to the contrary, proxies received will be voted "FOR" the
five nominees listed above.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" ALL FIVE NOMINEES LISTED ABOVE.
<PAGE> 9
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO THE BYLAWS
The Company's Bylaws currently provide that the authorized number of
directors shall be no less than three nor more than five. The Board of Directors
believes it is advisable to increase the number of directors in order to give
the Company the flexibility in the future to add directors from outside the
Company with experience relevant to the Company's long-term strategic goals.
Accordingly, the Board of Directors is proposing an amendment to the
Bylaws for approval by shareholders holding a majority of the outstanding shares
of Common Stock of the Company that provides that the Board of Directors will
consist of not less than four nor more than seven directors, with the exact
number to be fixed by approval of the Board of Directors or the shareholders.
The shareholders are asked to approve the amendment and initially set
the number of directors at five. The amendment would replace Article I, Section
2 of the Bylaws in its entirety with the following:
"Section 2. Number and Qualification.
The authorized number of directors of the corporation shall be
no less than four (4) nor more than seven (7), with the exact number of
directors to be fixed within the limits specified by approval of the Board of
Directors or Shareholders.
This number may be changed by amendment to the Articles of
Incorporation or by an amendment to this Section 2, ARTICLE I, of these Bylaws,
adopted by the vote or written assent of the Shareholders entitled to exercise
majority voting power as provided in Sec. 212."
REQUIRED VOTE
The affirmative vote of the holders of a majority of the outstanding
shares is required to approve the amendment and the affirmative vote of a
majority of the shares represented and voting at the meeting is required to
initially set the number of directors at five.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE AMENDMENT OF THE BYLAWS AND TO INITIALLY SET THE NUMBER
OF DIRECTORS AT FIVE
<PAGE> 10
PROPOSAL NO. 3
APPROVAL AND RATIFICATION OF AMENDMENTS TO THE COMPANY'S 1990 INCENTIVE AND
NON-INCENTIVE STOCK OPTION PLAN
The Company's 1990 Incentive and Non-Incentive Stock Option Plan (the
"Plan") was originally adopted by the Board of Directors (the "Board") on
October 21, 1989 and approved by the shareholders on August 9, 1990.
On March 15, 1999, the Board amended the Plan to: (i) increase the
aggregate number of shares of Common Stock authorized for issuance under the
Plan by 250,000 shares (bringing the total number of shares of Common Stock
available at March 15, 1999 for future awards under the Plan to 685,000 shares,
and raising the number of shares reserved for issuance under the Plan since its
inception to 3,450,000); (ii) remove language from the Plan that contemplated
the issuance of Stock Purchase Rights; (iii) allow members of the Board who are
also employees of the Company to receive options under the Plan; and (iv) extend
the expiration date of the Plan to March 15, 2004. The shareholders are being
asked to approve the foregoing amendments to the Plan and the increase in the
number of shares thereunder.
SUMMARY OF THE 1990 INCENTIVE AND NON-INCENTIVE STOCK OPTION PLAN
General. The purpose of the Plan is to attract and retain the best
available personnel for positions of substantial responsibility with the
Company, to provide additional incentive to the employees and consultants of the
Company and to promote the success of the Company's business. The Plan provides
for the grant of "incentive stock options," as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or non-statutory stock
options.
Administration. The Plan may generally be administered by the Board or
Committees appointed by the Board (as applicable, the "Administrator").
Eligibility; Limitations. Non-statutory stock options may be granted
under the Plan to employees and consultants of the Company and any parent or
subsidiary of the Company. Incentive stock options may be granted only to
employees. The Administrator, in its discretion, selects the employees and
consultants to whom options may be granted, the time or times at which such
options shall be granted, and the number of shares subject to each such grant.
Section 162(m) of the Code places limits on the deductibility for
federal income tax purposes of compensation paid to certain executive officers
of the Company. In order to preserve the Company's ability to deduct the
compensation income associated with options granted to such persons, the Plan
provides that no employee or consultant may be granted, in any fiscal year of
the Company, options to purchase more than 200,000 shares of Common Stock.
Terms and Conditions of Options. Each option is evidenced by a stock
option agreement between the Company and the optionee, and is subject to the
following additional terms and conditions:
(a) Exercise Price. The Administrator determines the exercise price of
options at the time the options are granted. The exercise price of an incentive
stock option may not be less than 100% of the fair market value of the Common
Stock on the date such option is granted; provided, however, that the exercise
price of an incentive stock option granted to a 10% stockholder may not be less
than 110% of the fair market value of the Common Stock on the date such option
is granted. The fair market value of the Common Stock is generally determined
with reference to the closing sale price for the Common Stock (or the closing
bid if no sales were reported) on the date the option is granted.
(b) Exercise of Option; Form of Consideration. The Administrator
determines when options become exercisable, and may in its discretion,
accelerate the vesting of any outstanding option. Stock options granted under
the Plan generally vest and become exercisable over four years. The means of
payment for shares issued upon exercise of an option is specified in each option
agreement. The Plan permits payment to be made by cash, check, promissory note,
other shares of Common Stock of the Company (with some restrictions), cashless
<PAGE> 11
exercises, a reduction in the amount of any Company liability to the optionee,
any other form of consideration permitted by applicable law, or any combination
thereof.
(c) Term of Option. The term of an incentive stock option may be no
more than ten (10) years from the date of grant; provided that in the case of an
incentive stock option granted to a 10% stockholder, the term of the option may
be no more than five (5) years from the date of grant. No option may be
exercised after the expiration of its term.
(d) Termination of Employment. If an optionee's employment or
consulting relationship terminates for any reason (other than death, disability
or a reduction in force, as defined in the Plan), then all options held by the
optionee under the Plan expire on the earlier of (i) the date set forth in his
or her notice of grant (normally three months past termination) or (ii) the
expiration date of such option. If, on the date of termination, the optionee is
not vested as to his or her entire option, the shares covered by the unvested
portion of the option shall revert to the Plan. If, after termination, the
optionee does not exercise his or her option within the time specified by the
Administrator, the option shall terminate, and the shares covered by such option
shall revert to the Plan.
(e) Death, Disability or Reduction in Force. If an optionee's
employment or consulting relationship terminates as a result of death,
disability or a reduction in force, then all options held by such optionee under
the Plan expire on the earlier of (i) 12 months from the date of such
termination or (ii) the expiration date of such option. The optionee (or the
optionee's estate or the person who acquires the right to exercise the option by
bequest or inheritance), may exercise all or part of the option at any time
before such expiration to the extent that the option was exercisable at the time
of such termination.
(g) Nontransferability of Options: Options granted under the Plan are
generally not transferable other than by will or the laws of descent and
distribution, and may be exercised during the optionee's lifetime only by the
optionee.
(h) Other Provisions: The stock option agreement may contain other
terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Administrator.
Adjustments Upon Changes in Capitalization. In the event that the stock
of the Company changes by reason of any stock split, reverse stock split, stock
dividend, combination, reclassification or other similar change in the capital
structure of the Company effected without the receipt of consideration,
appropriate adjustments shall be made in the number and class of shares of stock
subject to the Plan, the number and class of shares of stock subject to any
option outstanding under the Plan, and the exercise price of any such
outstanding option.
In the event of a liquidation or dissolution, any unexercised options
will terminate. The Administrator may, in its discretion provide that each
optionee shall have the right to exercise all of the optionee's options,
including those not otherwise exercisable, until the date ten (10) days prior to
the consummation of the liquidation or dissolution.
In connection with any merger, consolidation, acquisition of assets or
like occurrence involving the Company, each outstanding option shall be assumed
or an equivalent option substituted by the successor corporation. If the
successor corporation refuses to assume the options or to substitute
substantially equivalent options, the optionee shall have the right to exercise
the option as to all the optioned stock, including shares not otherwise
exercisable. In such event, the Administrator shall notify the optionee that the
option is fully exercisable for fifteen (15) days from the date of such notice
and that the option terminates upon expiration of such period.
Amendment and Termination of the Plan. The Board may amend, alter,
suspend or terminate the Plan, or any part thereof, at any time and for any
reason. No such action by the Board or shareholders may alter or impair any
option previously granted under the Plan without the written consent of the
optionee. Unless terminated earlier, the Plan shall terminate March 15, 2004.
Outstanding Options. Including the 250,000 share increase approved by
the Board on March 15, 1999, the total number of shares reserved for issuance
since the Plan's inception is 3,450,000. As of April 9, 1999, of this amount
654,550 shares have been issued upon exercise of options, option for 2,095,925
shares have been granted and are outstanding and options for 699,525 shares are
available for grant.
<PAGE> 12
FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options. An optionee who is granted an incentive stock
option does not recognize taxable income at the time the option is granted or
upon its exercise, although the exercise may subject the optionee to alternative
minimum tax. Upon a disposition of the shares more than two years after grant of
the option and one year after exercise of the option, any gain or loss is
treated as long-term capital gain or loss. If these holding periods are not
satisfied, the optionee recognizes ordinary income at the time of disposition
equal to the difference between the exercise price and the lower of (i) the fair
market value of the shares at the date of the option exercise or (ii) the sale
price of the shares. Any gain or loss recognized on such a premature disposition
of the shares in excess of the amount treated as ordinary income is treated as
long-term or short-term capital gain or loss, depending on the holding period. A
different rule for measuring ordinary income upon such a premature disposition
may apply if the optionee is also an officer or 10% shareholder of the Company.
The Company is entitled to a deduction in the same amount as the ordinary income
recognized by the optionee.
Nonstatutory Stock Options. An optionee does not recognize any taxable
income at the time he or she is granted a nonstatutory stock option. Upon
exercise, the optionee recognizes taxable income generally measured by the
excess of the then fair market value of the shares over the exercise price. Any
taxable income recognized in connection with an option exercise by an employee
of the Company is subject to tax withholding by the Company. The Company is
entitled to a deduction in the same amount as the ordinary income recognized by
the optionee. Upon a disposition of such shares by the optionee, any difference
between the sale price and the optionee's exercise price, to the extent not
recognized as taxable income as provided above, is treated as long-term or
short-term capital gain or loss, depending on the holding period.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME
TAXATION UPON OPTIONEES AND THE COMPANY WITH RESPECT TO THE GRANT AND EXERCISE
OF OPTIONS UNDER THE PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT
DISCUSS THE TAX CONSEQUENCES OF THE EMPLOYEE'S OR CONSULTANT'S DEATH OR THE
PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY
IN WHICH THE EMPLOYEE OR CONSULTANT MAY RESIDE.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the shares
represented and voting at the Annual Meeting is required to approve the
Ratification and Amendments to the 1990 Incentive and Non-Incentive Stock Option
Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE APPROVAL OF THE AMENDMENTS TO THE 1990 INCENTIVE AND NON-INCENTIVE
STOCK OPTION PLAN
<PAGE> 13
PROPOSAL NO. 4
DESIGNATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has approved the retention of
PricewaterhouseCoopers LLP as independent accountants for Xicor until revoked by
further action. PricewaterhouseCoopers LLP has been Xicor's independent
accountants since 1979.
The shareholders are asked to ratify the designation of
PricewaterhouseCoopers LLP as independent accountants for Xicor for the fiscal
year ending December 31, 1999. A representative of PricewaterhouseCoopers LLP is
expected to be present at the Annual Meeting to make a statement if he desires
to do so, and such representative is expected to be available to respond to
appropriate questions.
Submission of this proposal to the shareholders is not required by
Xicor's Bylaws or otherwise. The management of Xicor has elected to do so as a
matter of good corporate practice. Should the shareholders fail to ratify the
designation of PricewaterhouseCoopers LLP as independent accountants, retention
of the firm for the fiscal year ending December 31, 1999 will be reconsidered by
the Board of Directors.
Unless marked to the contrary, proxies received will be voted "FOR"
ratification of the designation of PricewaterhouseCoopers LLP as independent
accountants for Xicor's fiscal year ending December 31, 1999.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" SUCH RATIFICATION.
OTHER MATTERS
Management knows of no business that will be presented for
consideration at the Annual Meeting other than as stated in the Notice of
Meeting. If, however, other matters are properly brought before the Annual
Meeting, it is the intention of the persons named in the accompanying form of
proxy to vote the shares represented thereby on such matters in accordance with
their best judgment.
The expense of solicitation of proxies will be borne by Xicor. In
addition to solicitation of proxies by mail, certain officers, directors and
Xicor employees who will receive no additional compensation for their services
may solicit proxies by telephone, facsimile or personal interview. Xicor has
retained the services of Kissel-Blake to aid in the solicitation of proxies from
brokers, bank nominees and other institutional owners, if necessary. Xicor will
pay Kissel-Blake a fee which is not expected to exceed $5,500 for its services
and will reimburse Kissel-Blake for out-of-pocket expenses estimated to be
$8,000. Xicor is required to request brokers and nominees who hold stock in
their name to furnish this proxy material to beneficial owners of the stock and
will reimburse such brokers and nominees for their reasonable out-of-pocket
expenses in so doing.
CERTAIN TRANSACTIONS
Daniel L. Lewis joined Xicor in May 1998 as Vice President, Worldwide
Sales. In connection with his employment, Xicor made a non-interest bearing loan
to him in the amount of $320,000 payable in full on October 22, 1999. The loan
is secured by a third deed of trust on real property.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than 10% of a registered class of the Company's equity securities, to file
reports of ownership and reports of changes in ownership with the Securities and
Exchange Commission (SEC). Such persons are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file.
<PAGE> 14
Based solely on its review of the copies of such forms for 1998, Xicor
believes that all applicable filing requirements have been complied with, except
that a Form 4 involving a stock option exercise for 1,250 shares was filed late
by Mr. Timothy Kanemoto, a Vice President.
REPORT OF THE COMPENSATION COMMITTEE
Xicor applies a consistent philosophy to compensation for all
employees, including senior management, based on the premise that the
achievements of Xicor result from the coordinated efforts of all individuals
working toward common objectives. Xicor strives to achieve those objectives
through teamwork that is focused on meeting the expectations of customers and
shareholders.
COMPENSATION PHILOSOPHY
The goals of the compensation program are to align compensation with
business objectives and performance, and to enable Xicor to attract, retain and
reward executive officers who contribute to the long-term success of Xicor.
Xicor's compensation program for its Chief Executive Officer and other executive
officers is based on the same four principles applicable to compensation
decisions for all Xicor employees:
- Xicor pays competitively.
Xicor is committed to providing a pay program that helps
attract and retain high caliber executives. To ensure that pay
is competitive, Xicor compares its pay practices for its Chief
Executive Officer and other executives with those of other
electronics companies, with particular emphasis on similar
size semiconductor companies, and sets its pay parameters
based on this review.
- Xicor compensates for relative sustained performance.
The Chief Executive Officer and other executive officers are
rewarded based upon corporate performance and individual
performance. Corporate performance is evaluated by reviewing
the extent to which business plan goals are met, including
such factors as operating profit, performance relative to
competitors and timely new product introductions. Individual
performance is evaluated by reviewing progress against set
objectives and business goals.
- Xicor strives for fairness in the administration of
compensation.
Xicor strives to achieve a balance of the compensation paid to
a particular executive and the compensation paid to other
executives both inside Xicor and at comparable companies.
- Xicor believes that executives should understand the
performance evaluation and compensation administration
process.
The process of assessing performance is as follows: At the
beginning of the performance cycle, the evaluating executive
(or in the case of the Chief Executive Officer and of the
President and Chief Operating Officer, the Board of Directors)
sets objectives and key goals. The executive is given ongoing
feedback on performance. At the end of the performance cycle,
the accomplishment of objectives and key goals is evaluated,
the results compared to the results of peers within the
Company and the comparative results are communicated to the
executive. The comparative result affects decisions on salary,
bonuses and stock options.
COMPENSATION VEHICLES
Xicor uses a compensation program that consists of the following cash-
and equity-based vehicles:
<PAGE> 15
CASH-BASED COMPENSATION
Salary and Bonus
Xicor sets base salary and determines bonus amounts for the Chief
Executive Officer and other executives by reviewing corporate and individual
performance and the aggregate of base salary and annual bonus for comparable
positions in the electronics industry, with emphasis on comparable size
semiconductor companies. The base salary of the Chief Executive Officer was not
changed during 1998. The base salary of the President and Chief Operating
Officer was increased upon his promotion to such position in January 1998.
Cash Profit-Sharing
Xicor has an employee incentive cash bonus profit-sharing program (the
"Program"). Under the Program, twice a year (two profit sharing periods) 5% to
15% of Xicor's consolidated operating income, excluding certain non-product
revenues, is distributed to all employees including the Chief Executive Officer
and other executive officers as Xicor believes that all employees share the
responsibility of achieving profits. The exact percentage to be distributed is
determined by a Committee of the Board of Directors; however, in no event may
the distribution result in a net loss after taxes to Xicor for any profit
sharing period. The same profit-sharing percentage applies to each employee,
with the payment determined by applying this percentage to the individuals base
salary. No profit sharing bonuses were paid relating to 1998.
EQUITY-BASED COMPENSATION
Stock Option Program
Stock options are granted to provide additional incentives to key
employees to work to maximize shareholder value. The option program also
utilizes vesting periods to encourage key employees, including executive
officers, to continue in the employ of Xicor. Xicor has a 1990 Incentive and
Non-Incentive Stock Option Plan and a 1998 Non-Statutory Stock Option Plan.
Neither independent Directors nor any executives who are also Board members may
be granted options under the 1990 Incentive and Non-Incentive Stock Option Plan.
Proposal No. 3, if approved, will make executive officers who are also Directors
eligible to receive stock options under this plan. Officers and Directors are
not eligible to receive options under the 1998 Non-Statutory Stock Option Plan.
On February 2, 1998 Xicor repriced all underwater outstanding options under the
1990 Incentive and Non-Incentive Stock Option Plan for its employees and
officers in order to retain such employees and officers, including the newly
appointed President and Chief Operating Officer, due to the highly competitive
employment environment in Silicon Valley. None of the options repriced for
executive officers were exercisable for a six (6) month period from the
repricing date. All options were repriced to $2.75 per share, the fair market
value on the date of repricing. Xicor's Chief Executive Officer, who is also the
Chairman of the Board, and Xicor's President and Chief Operating Officer, who
was elected a Director in 1998, were granted options in 1998 under the 1995
Director Option Plan based on a formula included in the Plan.
COMPENSATION COMMITTEE
Andrew W. Elder
Geoffrey C. Winkler
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee was or is an officer or
employee of Xicor or any of its subsidiaries. No executive officer of Xicor
serves as a member of the board of directors or compensation committee of any
entity which has one or more executive officers serving as a member of Xicor's
Board of Directors or Compensation Committee.
<PAGE> 16
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation earned by
Xicor's Chief Executive Officer and its four other most highly compensated
executive officers during the year ended December 31, 1998 and for the three
years then ended.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION SECURITIES
------------------------------------------ UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS(2) OTHER PAYMENTS(3) OPTIONS COMPENSATION(6)
- --------------------------- ---- --------- -------- ----------------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Raphael Klein 1998 $ 269,092 -- -- 5,000 $ 1,000
Chief Executive Officer and 1997 264,014 $ 2,031 -- 5,000 950
Chairman of the Board 1996 264,014 81,424 -- 5,000 950
Bruce Gray 1998 262,753 -- -- 160,000(4) 1,000
President and Chief Operating 1997 235,019 51,808 -- 80,000 950
Officer 1996 70,506 31,000 -- 60,000 --
Klaus G. Hendig 1998 193,662 -- -- 60,000(5) 1,000
Sr. Vice President, Administration 1997 190,008 1,462 -- 20,000 950
1996 190,008 45,222 $ 29,232 -- 950
Joseph Drori 1998 178,377 -- -- 60,000(5) 1,000
Vice President, Product Definition 1997 175,011 1,346 -- 20,000 950
1996 175,011 40,573 26,925 -- 950
Daniel L. Lewis 1998 125,483(7) 77,000 -- 120,000 --
Vice President, Worldwide Sales
</TABLE>
- ---------------
(1) Fiscal year 1998 consisted of 53 weeks; 1997 and 1996 each consisted of
52 weeks.
(2) Includes bonuses and amounts earned under the Employee Incentive Cash
Bonus Profit Sharing Program.
(3) To reduce vacation carryover hours, in 1996 Xicor paid accrued vacation
to all eligible employees, including executive officers, based on a
fixed formula.
(4) Includes options for 140,000 shares which were granted in prior years
and repriced in 1998.
(5) Represents options granted in prior years and repriced in 1998.
(6) Represents matching contributions under the Company's 401(k) Plan.
(7) Represents salary paid since Mr. Lewis joined the Company on May 11,
1998.
<PAGE> 17
The following table sets forth information concerning stock options granted to
the executive officers named in the Summary Compensation Table during the year
ended December 31, 1998:
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES ANNUAL RATES OF
UNDERLYING % OF TOTAL STOCK PRICE
OPTIONS OPTIONS EXERCISE APPRECIATION FOR
GRANTED(1) GRANTED TO PRICE EXPIRATION OPTION TERM(2)
NAME (#) EMPLOYEES ($/SHARE) DATE 5%($) 10%($)
- ---- -------- ----------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Raphael Klein 5,000 0.2 $ 2.69 05/01/08 $ 8,459 $ 21,436
Bruce Gray 80,000(3) 3.7 2.75 07/29/07 129,463 323,287
60,000(3) 2.8 2.75 09/10/06 86,056 209,606
20,000 0.9 2.19 05/29/08 27,546 69,806
Klaus G. Hendig 40,000(3) 1.8 2.75 07/21/05 48,317 114,030
20,000(3) 0.9 2.75 07/29/07 32,366 80,822
Joseph Drori 40,000(3) 1.8 2.75 07/21/05 48,317 114,030
20,000(3) 0.9 2.75 07/29/07 32,366 80,822
Daniel L. Lewis 120,000 5.5 1.47 07/28/08 110,937 281,136
</TABLE>
- -----------------
(1) Options become exercisable at the rate of 25% of the underlying shares
per year, generally commencing one year from the date of grant.
Repriced options retain the exercise and expiration dates of the
original option except that no options were exercisable for a six (6)
month period from the date of repricing.
(2) The potential realizable value is based on the term of the option (10
years) at the date of grant. It is calculated by assuming that the
stock price on the date of grant (which is equal to the exercise price)
appreciates at the indicated annual rate, compounded annually for the
entire term, and that the option is exercised and sold on the last day
of the option term for the appreciated stock price. These values are
calculated based on requirements promulgated by the Securities and
Exchange Commission and do not reflect the Company's estimate of future
stock price appreciation. Actual gains, if any, are dependent on the
future performance of the Company's Common Stock.
(3) Represents options repriced in 1998.
The following table sets forth certain information concerning stock
option exercises during the year ended December 31, 1998 by the executive
officers named in the Summary Compensation Table and the number and value of
unexercised options held by each named executive officer at December 31, 1998:
<PAGE> 18
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
OPTION VALUES AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED ON VALUE OPTIONS HELD IN-THE-MONEY OPTIONS
EXERCISE REALIZED(1) AT DECEMBER 31, 1998 AT DECEMBER 31, 1998(2)
----------- ----------- ------------------------------ ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Raphael Klein -- -- 18,750 16,250 -- --
Bruce Gray -- -- 50,000 110,000 -- --
Klaus G. Hendig -- -- 82,500 32,500 $360 --
Joseph Drori 5,000 $8,463 75,000 30,000 360 --
Daniel L. Lewis -- -- -- 120,000 -- --
</TABLE>
- --------------
(1) Value represents the difference between the closing price of the Common
Stock on the date of exercise and the exercise price, multiplied by the
number of shares acquired on exercise.
(2) Value of unexercised in-the-money options represents the difference
between the closing price of the Company's Common Stock on the last
trading day of 1998 and the exercise price of the option, multiplied by
the number of shares subject to the option.
<PAGE> 19
The following table sets forth information concerning all repricing of options
held by any executive officer during the last ten completed fiscal years:
<TABLE>
<CAPTION>
TEN-YEAR OPTION REPRICING
Length of
Original
Option Market Price of Exercise New Remaining Option
Repricing Shares Stock at Time of Price at Time Exercise Term at Time of
Name Date Repriced Repricing($) of Repricing($) Price($) Repricing (Years)
- ---- ---- -------- ---------------- --------------- --------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Joseph Drori 2/2/98 40,000 $ 2.75 $ 6.00 $ 2.75 7.46
Vice President, 2/2/98 20,000 2.75 7.25 2.75 9.48
Product Definition
Bruce Gray 2/2/98 80,000 2.75 7.25 2.75 9.48
President and 2/2/98 60,000 2.75 9.00 2.75 8.60
Chief Operating Officer
Geraldine N. Hench 2/2/98 30,000 2.75 6.00 2.75 7.46
Vice President, 2/2/98 20,000 2.75 7.25 2.75 9.48
Finance
Klaus G. Hendig 2/2/98 40,000 2.75 6.00 2.75 7.46
Sr. Vice President, 2/2/98 20,000 2.75 7.25 2.75 9.48
Administration
Timothy D. Kanemoto 2/2/98 40,000 2.75 6.00 2.75 7.46
Vice President, 2/2/98 20,000 2.75 7.25 2.75 9.48
Product Operations
William H. Owen 2/2/98 40,000 2.75 6.00 2.75 7.46
Vice President, 2/2/98 20,000 2.75 7.25 2.75 9.48
Technology
Development
and Intellectual
Properties
</TABLE>
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
Exchange Act that might incorporate future filings, including this Proxy
Statement, in whole or in part, the following report and the Performance Graph
shall not be incorporated by reference into any such filings.
<PAGE> 20
PERFORMANCE GRAPH
Note: The stock price performance shown on the graph below is not
necessarily indicative of future price performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
XICOR, INC., S&P 500 COMPOSITE INDEX
AND S&P TECHNOLOGY 500 INDEX
650 ____________________________________________________________________
600
550
500
450
400
350
300
250
200
150
100
50
0 ____________________________________________________________________
1993 1994 1995 1996 1997 1998
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Xicor, Inc. $100 $158 $488 $683 $200 $ 94
S&P 500 $100 $101 $139 $171 $229 $294
S&P Technology 500 $100 $117 $168 $238 $300 $519
</TABLE>
The chart above shows a five-year comparison of the cumulative total
return on Xicor, Inc. Common Stock, the Standard & Poor's 500 Composite Index,
and the Standard & Poor's Technology 500 Index assuming a $100 investment made
on December 31, 1993.
PROPOSALS INTENDED TO BE PRESENTED AT NEXT ANNUAL MEETING
Proposals of security holders intended to be presented at the next
Annual Meeting of Shareholders of Xicor to be held in May 2000 must be received
by Xicor for inclusion in Xicor's Proxy Statement and form of proxy no later
than January 14, 2000.
By Order of the Board of Directors
Julius Blank,
Secretary
Milpitas, California
April 26, 1999
<PAGE> 21
XICOR, INC.
1990 INCENTIVE
AND NON-INCENTIVE STOCK OPTION PLAN
(AS AMENDED AND RESTATED MARCH 15, 1999)
1. Purposes of the Plan. The purposes of this Stock Plan are:
- to attract and retain the best available personnel for positions
of substantial responsibility,
- to provide additional incentive to Employees and Consultants,
and
- to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as shall be
administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options are, or will be, granted under
the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a committee of Directors appointed by the Board in
accordance with Section 4 of the Plan.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means Xicor, Inc., a California corporation.
(h) "Consultant" means any person, including an advisor, engaged by the
Company or a Parent or Subsidiary to render services to such entity who is not
an Employee or Director.
(i) "Director" means a member of the Board.
<PAGE> 22
(j) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(k) "Employee" means any person, including Officers, employed by the
Company or any Parent or Subsidiary of the Company. A Service Provider shall not
cease to be an Employee in the case of (i) any leave of absence approved by the
Company, (ii) transfers between locations of the Company or between the Company,
its Parent, any Subsidiary, or any successor, or (iii) a Service Provider whose
service with the Company is terminated, but recommences within ninety (90) days
of the date of such termination. For purposes of Incentive Stock Options, no
such leave may exceed ninety days, unless reemployment upon expiration of such
leave is guaranteed by statute or contract. If reemployment upon expiration of a
leave of absence approved by the Company is not so guaranteed, on the 181st day
of such leave any Incentive Stock Option held by the Optionee shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option. Neither service as a Director nor payment of a
director's fee by the Company shall be sufficient to constitute "employment" by
the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "Fair Market Value" means, as of any date, the value of Common Stock
determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(n) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(o) "Nonstatutory Stock Option" means an Option not intended to qualify
as an Incentive Stock Option.
-2-
<PAGE> 23
(p) "Notice of Grant" means a written notice evidencing certain terms
and conditions of an individual Option grant. The Notice of Grant is part of the
Option Agreement.
(q) "Officer" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(r) "Option" means a stock option granted pursuant to the Plan.
(s) "Option Agreement" means a written agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.
(t) "Option Exchange Program" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.
(u) "Optioned Stock" means the Common Stock subject to an Option.
(v) "Optionee" means the holder of an outstanding Option under the Plan.
(w) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(x) "Plan" means this 1990 Incentive and Non-Incentive Stock Option
Plan.
(y) "RIF" means a termination of an Optionee's status as a Service
Provider resulting from a work force reduction or job elimination.
(z) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect when discretion is being exercised with respect to
the Plan.
(aa) "Section 16(b) " means Section 16(b) of the Exchange Act.
(bb) "Service Provider" means an Employee, Director or
Consultant.
(cc) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.
(dd) "Subsidiary" means a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of Shares that may be optioned and sold
under the Plan is 3,450,000 Shares. The Shares may be authorized, but unissued,
or reacquired Common Stock.
-3-
<PAGE> 24
If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares that were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated); provided,
however, that Shares that have actually been issued under the Plan, upon
exercise of an Option, shall not be returned to the Plan and shall not become
available for future distribution under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. The Plan may be administered
by different bodies with respect to different groups of Service Providers.
(ii) Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder
shall be structured to satisfy the requirements for exemption under Rule 16b-3.
(iv) Other Administration. Other than as provided above, the Plan
shall be administered by (A) the Board or (B) Committees, which committees shall
be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the Plan,
and in the case of Committees, subject to the specific duties delegated by the
Board to such Committees, the Administrator shall have the authority, in its
discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options may be
granted hereunder;
(iii) to determine the number of shares of Common Stock to be
covered by each Option granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Option granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options may be exercised (which may be based on performance
-4-
<PAGE> 25
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;
(vi) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;
(vii) to institute an Option Exchange Program;
(viii) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;
(x) to modify or amend each Option (subject to Section 14(c) of
the Plan), including the discretionary authority to extend the post-termination
exercisability period of Options longer than is otherwise provided for in the
Plan;
(xi) to allow Optionees to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon exercise
of an Option that number of Shares having a Fair Market Value equal to the
amount required to be withheld. The Fair Market Value of the Shares to be
withheld shall be determined as of the date that the amount of tax to be
withheld is to be determined. All elections by an Optionee to have Shares
withheld for this purpose shall be made in such form and under such conditions
as the Administrator may deem necessary or advisable;
(xii) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option previously granted by
the Administrator;
(xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's decisions,
determinations and interpretations shall be final and binding on all Optionees
and any other holders of Options.
5. Eligibility. Nonstatutory Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees.
-5-
<PAGE> 26
6. Limitations.
(a) Each Option shall be designated in the Option Agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding
such designation, to the extent that the aggregate Fair Market Value of the
Shares with respect to which Incentive Stock Options are exercisable for the
first time by the Optionee during any calendar year (under all plans of the
Company and any Parent or Subsidiary) exceeds $100,000, such excess Options
shall be treated as Nonstatutory Stock Options. For purposes of this Section
6(a), Incentive Stock Options shall be taken into account in the order in which
they were granted and the Fair Market Value of the Shares shall be determined as
of the time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option shall confer upon an Optionee any
right with respect to continuing the Optionee's relationship as a Service
Provider with the Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate such
relationship at any time, with or without cause.
(c) The following limitations shall apply to grants of Options:
(i) No Service Provider shall be granted, in any fiscal year of
the Company, Options to purchase more than 200,000 Shares.
(ii) The foregoing limitation shall be adjusted proportionately
in connection with any change in the Company's capitalization as described in
Section 12.
(iii) If an Option is canceled in the same fiscal year of the
Company in which it was granted (other than in connection with a transaction
described in Section 12), the canceled Option will be counted against the limit
set forth in subsection (i) above. For this purpose, if the exercise price of an
Option is reduced, the transaction will be treated as a cancellation of the
Option and the grant of a new Option.
7. Term of Plan. Subject to Section 18 of the Plan, the Plan shall continue
in effect for a term of five (5) years from March 15, 1999 unless terminated
earlier under Section 14 of the Plan.
8. Term of Option. The term of each Option shall be stated in the Option
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Incentive
Stock Option shall be five (5) years from the date of grant or such shorter term
as may be provided in the Option Agreement.
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<PAGE> 27
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee described
in paragraph (A) immediately above, the per Share exercise price shall be no
less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(iii) Notwithstanding the foregoing, Options may be granted with
a per Share exercise price of less than 100% of the Fair Market Value per Share
on the date of grant pursuant to a merger or other corporate transaction.
(b) Waiting Period and Exercise Dates. At the time an Option is granted,
the Administrator shall fix the period within which the Option may be exercised
and shall determine any conditions which must be satisfied before the Option may
be exercised.
(c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
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<PAGE> 28
(iv) other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six months
on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;
(v) consideration received by the Company under a cashless
exercise program implemented by the Company in connection with the Plan;
(vi) a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement;
(vii) any combination of the foregoing methods of payment; or
(viii) such other consideration and method of payment for the
issuance of Shares as permitted by Applicable Laws.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option granted
hereunder shall be exercisable according to the terms of the Plan and at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement. An Option may not be exercised for a fraction of a
Share.
An Option shall be deemed exercised when the Company receives:
(i) written notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the Shares
are issued (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. The Company shall
issue (or cause to be issued) such Shares promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the Shares are issued, except as provided
in Section 12 of the Plan.
Exercising an Option in any manner shall decrease the number of
Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.
-8-
<PAGE> 29
(b) Termination of Relationship as a Service Provider. If an Optionee
ceases to be a Service Provider, other than upon the Optionee's death,
Disability or as a result of a RIF, the Optionee may exercise his or her Option
within such period of time as is specified in the Option Agreement to the extent
that the Option is vested on the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Option Agreement).
In the absence of a specified time in the Option Agreement, the Option shall
remain exercisable for three (3) months following the Optionee's termination.
If, on the date of termination, the Optionee is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his or
her Option within the time specified by the Administrator, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service Provider, the
Option may be exercised within such period of time as is specified in the Option
Agreement (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Optionee's estate or by a person
who acquires the right to exercise the Option by bequest or inheritance, but
only to the extent that the Option is vested on the date of death. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's termination. If, at
the time of death, the Optionee is not vested as to his or her entire Option,
the Shares covered by the unvested portion of the Option shall immediately
revert to the Plan. The Option may be exercised by the executor or administrator
of the Optionee's estate or, if none, by the person(s) entitled to exercise the
Option under the Optionee's will or the laws of descent or distribution. If the
Option is not so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(e) Reduction in Force. If the Optionee ceases to be a Service Provider
as a result of a RIF, the Optionee may exercise his or her Option within such
period of time as is specified in the Option Agreement, to the extent the Option
is vested on the date of termination (but in no event later than the expiration
of the term of such Option as set forth in the Option Agreement). In the absence
of a specified time in the Option Agreement, the Option shall remain exercisable
for twelve (12) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the
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<PAGE> 30
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
(f) Buyout Provisions. The Administrator may at any time offer to buy
out for a payment in cash or Shares, an Option previously granted based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.
11. Non-Transferability of Options. Unless determined otherwise by the
Administrator, an Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee. If the Administrator makes an Option
transferable, such Option shall contain such additional terms and conditions as
the Administrator deems appropriate.
12. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset
Sale.
(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation of the Company, the Administrator shall notify each Optionee as
soon as practicable prior to the effective date of such proposed transaction.
The Administrator in its discretion may provide for an Optionee to have the
right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option will terminate immediately prior to the consummation of such proposed
action.
(c) Merger or Asset Sale. In the event of a merger of the Company with
or into another corporation, or the sale of substantially all of the assets of
the Company, each outstanding Option may be assumed or an equivalent option may
be substituted by the successor corporation or a Parent
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<PAGE> 31
or Subsidiary of the successor corporation. The Administrator may, in lieu of
such assumption or substitution, provide for the Optionee to have the right to
exercise the Option as to all or a portion of the Optioned Stock, including
Shares as to which it would not otherwise be exercisable. If the Administrator
makes an Option exercisable in lieu of assumption or substitution in the event
of a merger or sale of assets, the Administrator shall notify the Optionee in
writing that the Option shall be fully exercisable for a period of fifteen (15)
days from the date of such notice, and the Option shall terminate upon the
expiration of such period. For the purposes of this paragraph, the Option shall
be considered assumed if, following the merger or sale of assets, the option
confers the right to purchase or receive, for each Share of Optioned Stock
subject to the Option immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received in
the merger or sale of assets by holders of Common Stock for each Share held on
the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the merger or sale of assets is not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon the
exercise of the Option, for each Share of Optioned Stock subject to the Option,
to be solely common stock of the successor corporation or its Parent equal in
fair market value to the per share consideration received by holders of Common
Stock in the merger or sale of assets.
13. Date of Grant. The date of grant of an Option shall be, for all
purposes, the date on which the Administrator makes the determination granting
such Option, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain shareholder approval
of any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.
15. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with
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<PAGE> 32
Applicable Laws and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of an
Option, the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required.
16. Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
17. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
18. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the manner and to the degree required under Applicable Laws.
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<PAGE> 33
XICOR, INC.
1990 INCENTIVE
AND NON-INCENTIVE STOCK OPTION PLAN
(AS AMENDED AND RESTATED MARCH 15, 1999)
NONSTATUTORY STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Nonstatutory Option Agreement (the "Option
Agreement").
I. NOTICE OF STOCK OPTION GRANT
[Optionee's Name]
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Date of Grant _________________________
Vesting Commencement Date _________________________
Exercise Price per Share $________________________
Total Number of Shares
Underlying Options Granted _________________________
Expiration Date: _________________________
Vesting Schedule:
This Option may be exercised, in whole or in part, in accordance with
the following schedule:
25% of the Shares subject to the Option shall vest twelve months after
the Vesting Commencement Date, and 25% of the Shares subject to the Option shall
vest on each anniversary of the Vesting Commencement Date, subject to Optionee
continuing to be a Service Provider on such dates.
Termination Period:
This Option may be exercised for three (3) months after Optionee ceases
to be a Service Provider; provided, however, that upon the death, disability or
termination as a result of a RIF of the Optionee, this Option may be exercised
for one year after the date of such termination. In no event shall this Option
be exercised later than the Expiration Date as provided above.
<PAGE> 34
II. AGREEMENT
1. Grant of Option. The Plan Administrator of the Company hereby grants
to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee") an option (the "Option") to purchase the number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to
Section 14(c) of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option Agreement,
the terms and conditions of the Plan shall prevail.
2. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its term
in accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of
an exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be completed
by the Optionee and delivered to Corporate Controller of the Company. The
Exercise Notice shall be accompanied by payment of the aggregate Exercise Price
as to all Exercised Shares. This Option shall be deemed to be exercised upon
receipt by the Company of such fully executed Exercise Notice accompanied by
such aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option unless
such issuance and exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered
transferred to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.
3. Method of Payment. Payment of the aggregate Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:
(a) cash; or
(b) check; or
(c) delivery of a properly executed exercise notice together with such
other documentation as the Administrator and the broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price.
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<PAGE> 35
4. Non-Transferability of Option. This Option may not be transferred in any
manner other than by will or by the laws of descent or distribution and may be
exercised during the lifetime of Optionee only by the Optionee. The terms of the
Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
5. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
6. Tax Consequences. Some of the federal tax consequences relating to this
Option, as of the date of this Option, are set forth below. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
(a) Exercising the Option. The Optionee may incur regular federal income
tax liability upon exercise of a Nonstatutory Stock Option (an "NSO"). The
Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess of the Fair Market Value of the
Exercised Shares on the date of exercise over their aggregate Exercise Price. If
the Optionee is an Employee or a former Employee, the Company will be required
to withhold from his or her compensation or collect from Optionee and pay to the
applicable taxing authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may decline to honor the
exercise and decline to deliver Shares if such withholding amounts are not
delivered at the time of exercise.
(b) Disposition of Shares. If the Optionee holds NSO Shares for at least
one year, any gain realized on disposition of the Shares (generally, the
difference between the Fair Market Value of the Shares at exercise and the
selling price) will be treated as long-term capital gain for federal income tax
purposes.
7. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws, but not
the choice of law rules, of California.
8. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES THAT
THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY
CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE
ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER).
OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
-3-
<PAGE> 36
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT
CAUSE.
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
OPTIONEE XICOR, INC.
_____________________________ _____________________________
Signature By
_____________________________ _____________________________
Print Name Title
_____________________________
Residence Address
_____________________________
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<PAGE> 37
EXHIBIT A
XICOR, INC.
1990 INCENTIVE
AND NON-INCENTIVE STOCK OPTION PLAN
EXERCISE NOTICE
Xicor, Inc.
1511 Buckeye Drive
Milpitas, California 95035
Attention: Corporate Controller
1. Exercise of Option. Effective as of today, ________________, the
undersigned ("Purchaser") hereby elects to purchase ______________ shares (the
"Shares") of the Common Stock of Xicor, Inc. (the "Company") under and pursuant
to the 1990 Incentive and Non-Incentive Stock Option Plan (the "Plan") and the
Nonstatutory Stock Option Agreement dated____________ (the "Option Agreement").
The purchase price for the Shares shall be $ , as required by the Option
Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price for the Shares, plus any federal or state taxes required to
be withheld.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 12 of the
Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
<PAGE> 38
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
California.
Submitted by: Accepted by:
PURCHASER XICOR, INC.
_____________________________ _____________________________
Signature By
_____________________________ _____________________________
Print Name Its
Address: Address:
_____________________________ 1511 Buckeye Drive
_____________________________ Milpitas, California 95035
_____________________________
Date Received
-2-
<PAGE> 39
XICOR, INC.
1990 INCENTIVE
AND NON-INCENTIVE STOCK OPTION PLAN
(AS AMENDED AND RESTATED MARCH 15, 1999)
INCENTIVE STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Incentive Option Agreement (the "Option
Agreement").
I. NOTICE OF STOCK OPTION GRANT
[Optionee's Name]
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Date of Grant _________________________
Vesting Commencement Date _________________________
Exercise Price per Share $________________________
Total Number of Shares
Underlying Options Granted _________________________
Expiration Date: _________________________
Vesting Schedule:
This Option may be exercised, in whole or in part, in accordance with
the following schedule:
25% of the Shares subject to the Option shall vest twelve months after
the Vesting Commencement Date, and 25% of the Shares subject to the Option shall
vest on each anniversary of the Vesting Commencement Date, subject to Optionee
continuing to be a Service Provider on such dates.
Termination Period:
This Option may be exercised for three (3) months after Optionee ceases
to be a Service Provider; provided, however, that upon the death, disability or
termination as a result of a RIF of the Optionee, this Option may be exercised
for one year after the date of such termination. In no event shall this Option
be exercised later than the Expiration Date as provided above.
<PAGE> 40
II. AGREEMENT
1. Grant of Option. The Plan Administrator of the Company hereby grants
to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee") an option (the "Option") to purchase the number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to
Section 14(c) of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option Agreement,
the terms and conditions of the Plan shall prevail.
This Option is intended to qualify as an Incentive Stock Option
(an "ISO") under Section 422 of the Code. However, to the extent that it exceeds
the $100,000 rule of Code Section 422(d) it shall be treated as a Nonstatutory
Stock Option ("NSO").
2. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its term
in accordance with the Vesting Schedule set out in the Notice of Grant
and the applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of
an exercise notice, in the form attached as Exhibit A (the "Exercise
Notice"), which shall state the election to exercise the Option, the
number of Shares in respect of which the Option is being exercised (the
"Exercised Shares"), and such other representations and agreements as
may be required by the Company pursuant to the provisions of the Plan.
The Exercise Notice shall be completed by the Optionee and delivered to
Corporate Controller of the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon
receipt by the Company of such fully executed Exercise Notice
accompanied by such aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with Applicable Laws.
Assuming such compliance, for income tax purposes the Exercised Shares
shall be considered transferred to the Optionee on the date the Option
is exercised with respect to such Exercised Shares.
3. Method of Payment. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash; or
(b) check; or
(c) delivery of a properly executed exercise notice together with such
other documentation as the Administrator and the broker, if applicable, shall
require to effect an exercise of
-2-
<PAGE> 41
the Option and delivery to the Company of the sale or loan proceeds required to
pay the exercise price.
4. Non-Transferability of Option. This Option may not be transferred in any
manner other than by will or by the laws of descent or distribution and may be
exercised during the lifetime of Optionee only by the Optionee. The terms of the
Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
5. Term of Option. This Option may be exercised only within the term set out in
the Notice of Grant, and may be exercised during such term only in accordance
with the Plan and the terms of this Option Agreement.
6. Tax Consequences. Some of the federal tax consequences relating to this
Option, as of the date of this Option, are set forth below. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
(a) Exercising the Option. If this Option qualifies as an ISO, the
Optionee will have no regular federal income tax liability upon its exercise,
although the excess, if any, of the Fair Market Value of the Exercised Shares on
the date of exercise over their aggregate Exercise Price will be treated as an
adjustment to alternative minimum taxable income for federal tax purposes and
may subject the Optionee to alternative minimum tax in the year of exercise. In
the event that the Optionee ceases to be an Employee but remains a Service
Provider, any Incentive Stock Option of the Optionee that remains unexercised
shall cease to qualify as an Incentive Stock Option and will be treated for tax
purposes as a Nonstatutory Stock Option on the date three (3) months and one (1)
day following such change of status.
(b) Disposition of Shares. If the Optionee does not dispose of ISO
Shares for at least one year after exercise and two years after the grant date,
any gain realized on disposition of the Shares will be treated as long-term
capital gain for federal income tax purposes. If the Optionee disposes of ISO
Shares within one year after exercise or two years after the grant date, any
gain realized on such disposition will be treated as compensation income
(taxable at ordinary income rates) to the extent of the excess, if any, of the
lesser of (A) the difference between the Fair Market Value of the Shares
acquired on the date of exercise and the aggregate Exercise Price, or (B) the
difference between the sale price of such Shares and the aggregate Exercise
Price. Any additional gain will be taxed as capital gain, short-term or
long-term depending on the period that the ISO Shares were held.
(c) Notice of Disqualifying Disposition. If the Optionee sells or
otherwise disposes of any of the Shares acquired pursuant to an ISO on or before
the later of (i) two years after the grant date, or (ii) one year after the
exercise date, the Optionee shall immediately notify the Company in writing of
such disposition. The Optionee agrees that he or she may be subject to income
tax withholding by the Company on the compensation income recognized from such
early disposition of ISO Shares by payment in cash or out of the current
earnings paid to the Optionee.
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<PAGE> 42
7. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws, but not
the choice of law rules, of California.
8. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY
CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE
ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES HEREUNDER).
OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE
PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT
INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S
RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
OPTIONEE XICOR, INC.
_____________________________ _____________________________
Signature By
_____________________________ _____________________________
Print Name Title
_____________________________
Residence Address
_____________________________
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<PAGE> 43
EXHIBIT A
XICOR, INC.
1990 INCENTIVE
AND NON-INCENTIVE STOCK OPTION PLAN
EXERCISE NOTICE
Xicor, Inc.
1511 Buckeye Drive
Milpitas, California 95035
Attention: Corporate Controller
1. .Exercise of Option. Effective as of today, ________________, the
undersigned ("Purchaser") hereby elects to purchase ______________ shares (the
"Shares") of the Common Stock of Xicor, Inc. (the "Company") under and pursuant
to the 1990 Incentive and Non-Incentive Stock Option Plan (the "Plan") and the
Incentive Stock Option Agreement dated______________ (the "Option Agreement").
The purchase price for the Shares shall be $ , as required by the Option
Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price for the Shares, plus any federal or state taxes required to
be withheld.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 12 of the
Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
<PAGE> 44
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by the internal substantive laws, but not the choice of law rules, of
California.
Submitted by: Accepted by:
PURCHASER XICOR, INC.
_____________________________ _____________________________
Signature By
_____________________________ _____________________________
Print Name Its
Address: Address:
_____________________________ 1511 Buckeye Drive
_____________________________ Milpitas, California 95035
_____________________________
Date Received
-2-
<PAGE> 45
X Please mark your
----- votes as in this
example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING MATTERS TO COME
BEFORE THE MEETING:
<TABLE>
<S> <C>
NOMINEES:
FOR WITHHELD Raphael Klein
1. Election of Bruce Gray
Directors [ ] [ ] Julius Blank
For, except vote withheld from the Andrew W. Elder
following nominee(s): Geoffrey C. Winkler
- ---------------------------
2. To approve an amendment to the FOR AGAINST ABSTAIN
Company's Bylaws to increase the [ ] [ ] [ ]
authorized number of directors to no
less than four (4) nor more than
seven (7) and initially set the number
of directors at five (5).
3. To approve and ratify amendments to the FOR AGAINST ABSTAIN
Company's 1990 Incentive and Non-Incentive [ ] [ ] [ ]
Stock Option Plan including an increase of 250,000
shares of Common Stock issuable thereunder.
4. To ratify the designation of FOR AGAINST ABSTAIN
PricewaterhouseCoopers LLP as independent [ ] [ ] [ ]
accountants for the period ending
December 31, 1999.
</TABLE>
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD USING THE ENCLOSED ENVELOPE.
THIS PROXY, WHICH IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, WILL BE
VOTED FOR THE MATTERS DESCRIBED IN PARAGRAPHS (1), (2), (3) AND (4), UNLESS THE
SHAREHOLDER SPECIFIES OTHERWISE, IN WHICH CASE IT WILL BE VOTED AS SPECIFIED.
SIGNATURE(S)___________________________________________ DATE_________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
<PAGE> 46
XICOR, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints RAPHAEL KLEIN and JULIUS BLANK, or any
of them, proxies, each with the power of substitution, to vote the shares of the
undersigned at the Annual Meeting of Shareholders of XICOR, INC. on June 4,
1999, and at any adjournment thereof, upon all matters as may properly come
before the Meeting. Without otherwise limiting the foregoing general
authorization, the proxies are instructed to vote as indicated herein.
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See
Reverse
(To be Signed on Reverse Side) Side
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