<PAGE>
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:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
AMATI COMMUNICATIONS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
AMATI COMMUNICATIONS CORPORATION
2043 SAMARITAN DRIVE
SAN JOSE, CALIFORNIA 95124
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 20, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Amati
Communications Corporation, a Delaware corporation (the "Company"), will be held
at the principal executive offices of the Company, located at 2043 Samaritan
Drive, San Jose, California at 2:00 p.m., local time, on December 20, 1996, for
the following purposes:
1. To elect a Board of Directors to serve for the ensuing year.
2. To adopt the Company's 1996 Stock Option Plan.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on October 25, 1996,
are entitled to notice of and to vote at the meeting and any adjournment
thereof.
You are cordially invited to attend the meeting in person. Whether or not
you plan to attend the meeting, please sign and return the enclosed proxy as
promptly as possible in the enclosed postpaid envelope.
By Order of the Board of Directors
Teresita O. Medel, SECRETARY
November 18, 1996
<PAGE>
PROXY STATEMENT OF
AMATI COMMUNICATIONS CORPORATION
2043 SAMARITAN DRIVE
SAN JOSE, CALIFORNIA 95124
SOLICITATION AND REVOCABILITY OF PROXY; VOTING SECURITIES
This Proxy Statement is furnished in connection with the solicitation by
Amati Communications Corporation, a Delaware Corporation (the "Company"), of
proxies to be used at the Annual Meeting of Stockholders of the Company to be
held on December 20, 1996 at 2:00 p.m. local time and at any adjournment thereof
(the "Annual Meeting"). The Annual Meeting will be held at the principal
executive offices of the Company, located at 2043 Samaritan Drive, San Jose,
California. Each stockholder of record on October 25, 1996, or his proxy, will
be entitled to one vote for each share of the Company's $0.20 par value common
stock ("Common Stock") held of record. On October 25, 1996, 17,718,034 shares of
Common Stock were issued and outstanding. Broker non-votes and shares held by
persons abstaining will be counted in determining whether a quorum is present.
In the election of directors, a stockholder may cumulate his votes and give one
nominee a number of votes equal to the number of directors to be elected,
multiplied by the number of votes to which his shares are entitled, or may
distribute his votes on the same principle among as many nominees as he chooses.
Unless the proxy holders are otherwise instructed, stockholders, by means of the
accompanying proxy, are granting the proxy holders discretionary authority to
cumulate votes. Voting on all other matters to be submitted at this meeting is
non-cumulative and must be approved by the vote of the holders of a majority of
the shares represented in person or by proxy and entitled to vote at the Annual
Meeting. In determining whether such proposals have been approved, abstentions
are counted as votes against a proposal and broker non-votes are not counted as
votes for or against a proposal.
Any person giving a proxy in the form accompanying this Proxy Statement has
the power to revoke it at any time prior to its exercise. A proxy may be revoked
by filing with the Secretary of the Company a request to revoke such proxy or a
duly executed proxy bearing a later date. It may also be revoked by attendance
at the meeting and the election to vote in person. Attendance at the meeting
will not, by itself, revoke a proxy. All shares represented by the proxy will be
voted and, when a stockholder specifies by means of the proxy a choice with
respect to any matter to be acted upon, the shares will be voted in accordance
with the specifications so made.
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the proxy
and any additional material that may be furnished to stockholders. The Company
will upon request, reimburse the reasonable charges and expenses of brokerage
houses or other nominees, fiduciaries or custodians for forwarding proxy
materials to, and obtaining authority to execute proxies from, beneficial owners
for whose account they hold shares of Common Stock. Additionally, the services
of Shareholder Communications Corporation have been obtained for a fee of $6,000
to be paid by the Company to facilitate the delivery of solicitation material to
banks and brokerage houses and the receipt of proxies from beneficial owners of
Common Stock held in the names of such banks and brokerage houses. Proxies may
be solicited by directors, officers or regular employees of the Company, and by
employees of Shareholder Communications Corporation, in person or by telephone
or telegraph. The approximate date this Proxy Statement and accompanying proxy
will first be sent to stockholders of the Company is November 18, 1996.
The Company knows of no business that will be presented for consideration at
the Annual Meeting other than that stated in the Notice of Meeting. However, if
any other business shall properly come before the meeting, votes may be cast
pursuant to the proxies solicited hereby in respect of such other business in
accordance with the best judgment of the person or persons acting under such
proxies.
1
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Each director to be elected will hold office until the next annual meeting
of stockholders and until his successor is elected and has qualified. The Board
of Directors (sometimes hereinafter referred to as the "Board") has selected the
five nominees listed below, and included in this Proxy Statement brief
statements for each nominee setting forth such nominee's age, principal
occupation, all positions and offices held with the Company, the length of time
served as a director of the Company and a brief account of each nominee's
business experience during the past five years. Persons named in the
accompanying form of proxy will vote the shares represented thereby for the
following nominees, but may cumulate the votes for less than all nominees, as
permitted by the laws of the State of Delaware, unless otherwise instructed. If
any such nominee shall decline or be unable to act as a director (although the
Company knows of no reason to anticipate that this will occur), the proxies may
be voted for substitute nominees to be designated by the Board of Directors.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND DIRECTOR
NAME AGE OFFICES WITH THE COMPANY SINCE
- ------------------------------------ --- ----------------------------------------------------------- -----------
<S> <C> <C> <C>
Dr. James Gibbons................... 65 Chairman of the Board of the Company 1995
Donald L. Lucas..................... 66 Venture Capitalist and Director of the Company 1968
James Steenbergen................... 49 President, Chief Executive Officer, Chief Financial Officer 1995
and Director of the Company
Dr. John Cioffi..................... 39 Chief Technical Officer and Director of the Company 1995
Aamer Latif......................... 38 Director of the Company 1993
</TABLE>
Dr. James Gibbons has served as the Chairman of the Board of Directors of
Old Amati since 1992 and as Chairman of the Company since December 4, 1995. Dr.
Gibbons is a Professor of Electrical Engineering and served as the Dean of the
School of Engineering at Stanford University from 1984 to 1996. Dr. Gibbons
currently serves on the Board of Directors of Lockheed Martin Corporation,
Raychem Corporation, Centigram Communications Corporation, El Paso Natural Gas
Company and Cisco Systems, Inc.
Mr. Donald L. Lucas, a venture capitalist, has been a Director of the
Company since 1968. He is also a director of Cadence Design Systems, Inc.,
Oracle Corporation, Macromedia, Inc., Racotek, Inc., Transcend Services, Inc.
and Tricord Systems, Inc.
Mr. James Steenbergen, President, Chief Executive Officer and Chief
Financial Officer of the Company, was elected to the Company's Board in
December, 1995. Mr. Steenbergen has been Chief Executive Officer and President
for several high-technology companies involved in the manufacture and
development of systems for the telecommunications industry. These companies
include Optilink Corporation, SRX and Granger Associates.
Dr. John Cioffi, Chief Technical Officer of the Company, was elected to the
Company's Board in December, 1995. He is founder of Old Amati and has served as
its Vice President of Engineering, Chief Technical Officer and Director since
1991. Dr. Cioffi has also been a Professor of Electrical Engineering at Stanford
University since 1986. Dr. Cioffi sits on the technical boards of C-Cube
Microsystems, Inc., and has served on the technical staffs of Bell Laboratories
Inc. and IBM's Almaden Research Laboratories.
Mr. Aamer Latif was elected President, Chief Executive Officer, Chief
Financial Officer and Director of the Company in May 1993; he was elected
Chairman in July 1995 and served in this capacity until December 1995. Prior to
1993, Mr. Latif served in various positions in Engineering with the Company
since 1980. He resigned as an officer of the Company in December, 1995.
2
<PAGE>
BOARD MEETINGS AND COMMITTEES
During the fiscal year ended July 27, 1996, the Company's Board of Directors
held five meetings. All directors were present at all meetings.
The Board of Directors has an Audit Committee, the current members of which
are Donald L. Lucas and Aamer Latif. During fiscal 1996, the Audit Committee
held one meeting, at which all members were present. The principal functions of
the Audit Committee are to meet with the Company's management and independent
auditors to review financial controls and practices, and make recommendations to
the Board with respect to the engagement of the independent auditors.
The Board of Directors has a Compensation Committee which oversees and
approves officers' compensation and administers the Company's Stock Option
Plans. The current members are Donald L. Lucas and Aamer Latif. During fiscal
1996, the Compensation Committee held five meetings, at which all members were
present.
The Board does not have a standing nominating committee.
3
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS, OFFICERS AND
PRINCIPAL STOCKHOLDERS
The following table sets forth the number of shares of the Company's Common
Stock beneficially owned as of September 27, 1996, by (i) each stockholder known
to the Company to be a beneficial owner of more than 5% of the Company's Common
Stock, (ii) each director, and (iii) each executive officer named in the Summary
Compensation Table below, and (iv) all executive officers and directors as a
group. Except as otherwise indicated, each of the listed persons or entities has
sole voting and investment power with respect to the shares listed as
beneficially owned by them, subject to community property laws, where
applicable.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME OWNERSHIP(1) OF CLASS
- ------------------------------------------------------------ ------------------ -------------
<S> <C> <C>
Dr. John Cioffi............................................. 1,170,408(2) 6.2
Dr. James Gibbons........................................... 312,885(3) 1.7
Donald L. Lucas............................................. 52,216(4) *
Aamer Latif................................................. 75,000(5) *
James Steenbergen........................................... 112,500(6) *
Benjamin Berry.............................................. 44,000(7) *
David Bivolcic.............................................. 6,250(8) *
Ronald Carlini.............................................. 18,250(9) *
James Hood.................................................. 30,000(10) *
All directors and executive officers, as a group
(12 persons).............................................. 1,863,826(11) 9.5
</TABLE>
- ------------------------
* Less than 1%.
(1) Based upon information supplied or confirmed by officers, directors and the
principal stockholders. The percentage of class assumes the exercise of all
options and warrants held by the named individual that are exercisable on
September 27, 1996, or within sixty days thereafter, but not the exercise of
any other options or warrants that are outstanding.
(2) Includes 221,380 shares that are deemed beneficially owned by Dr. Cioffi by
virtue of options held by him that are exercisable within 60 days of
September 27, 1996. Dr. Cioffi also holds options to purchase up to
1,188,015 shares that will vest over the next three years.
(3) Includes 93,258 shares that are deemed beneficially owned by Dr. Gibbons by
virtue of options held by him that are exercisable within 60 days of
September 27, 1996.
(4) Includes 27,500 shares that are deemed beneficially owned by Mr. Lucas by
virtue of options held by him that are exercisable within 60 days of
September 27, 1996. Also includes 23,716 shares that are held in a living
trust for Mr. Lucas and his wife. As trustee of the joint trusts, Mr. Lucas
holds voting and investment power with respect to such shares.
(5) Includes 75,000 shares that are deemed beneficially owned by Mr. Latif by
virtue of options held by him that are exercisable within 60 days of
September 27, 1996.
(6) Includes 112,500 shares that are deemed beneficially owned by Mr.
Steenbergen by virtue of options held by him that are exercisable within 60
days of September 27, 1996.
(7) Includes 44,000 shares that are deemed beneficially owned by Mr. Berry by
virtue of options held by him that are exercisable within 60 days of
September 27, 1996.
4
<PAGE>
(8) Includes 6,250 shares that are deemed beneficially owned by Mr. Bivolcic by
virtue of options held by him that are exercisable within 60 days of
September 27, 1996.
(9) Includes 16,250 shares that are deemed beneficially owned by Mr. Carlini by
virtue of options held by him that are exercisable within 60 days of
September 27, 1996.
(10) Includes 30,000 shares that are deemed beneficially owned by Mr. Hood by
virtue of options held by him that are exercisable within 60 days of
September 27, 1996.
(11) In addition to the items discussed in footnotes (2) through (10) above,
this amount includes 39,567 shares that are deemed beneficially owned by
executive officers not individually listed on the table by virtue of options
that are exercisable by such officers within 60 days of September 27, 1996.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten percent stockholders are required by
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received by the
Company during fiscal year 1996 and written representations from certain
reporting persons, the Company believes that all Section 16(a) filing
requirements applicable to all officers, directors, and greater than ten percent
beneficial owners were complied with during fiscal year 1996.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table shows certain information concerning compensation paid
during the fiscal years ended July 30, 1994, July 29, 1995 and July 27, 1996 to
the Chief Executive Officer, Former Chief Executive Officer and the four other
most highly compensated Executive Officers of the Company whose salary and bonus
exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
--------------------------------- UNDERLYING
BONUS OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) EARNED ($) (#) COMPENSATION ($)
- ---------------------------------------- ----- ---------- ------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
James Steenbergen....................... 1996 124,994 75,000 500,000 4,125(1)
President, CEO, CFO
Aamer Latif............................. 1996 80,420 115,582(2)
Former CEO 1995 163,750 114,000 198(3)
1994 150,000 75,000 198(3)
Benjamin Berry.......................... 1996 87,577 34,000 200,000 4,000(1)
Vice President of Marketing
David J. Bivolcic....................... 1996 142,638 50,000 165,000 198(3)
Senior Vice President 1995 132,000 57,000 198(3)
1994 120,000 50,000 198(3)
Ronald Carlini.......................... 1996 110,000 50,000 170,000 1,350(3)
Vice President of 1995 100,000 15,000 40,000 1,350(3)
Corporate Development
James Hood ............................. 1996 88,428 30,000 200,000 --
Vice President of Engineering
</TABLE>
- ------------------------
(1) Car allowances for Messrs. Steenbergen and Berry.
(2) Includes $115,384 paid to Mr. Latif as part of his severance agreement with
the Company and $198 paid by the Company for premiums on a group life
insurance policy for Mr. Latif.
(3) Payments made by the Company for premiums on group life insurance policies
for Messrs. Latif, Bivolcic and Carlini.
6
<PAGE>
The following table sets forth certain information with respect to the
options granted during the fiscal year ended July 27, 1996 to the Executive
Officers named in the Summary Compensation Table.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES PERCENT OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OF OPTION TERM(1)
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ----------------------------------- ----------- ----------------- ----------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
James Steenbergen.................. 500,000(2) 9.5 4.25 11-27-2005 1,338,750 3,378,750
Aamer Latif........................ 0 -- N/A N/A 0 0
Benjamin Berry..................... 200,000(2) 3.8 6.88 12-04-2005 866,880 2,187,840
David J. Bivolcic.................. 25,000(2) * 6.88 12-04-2005 108,360 273,480
140,000(3) 3.1 10.75 7-26-2006 948,150 2,392,950
Ronald Carlini..................... 25,000(2) * 6.88 12-04-2005 108,360 273,480
145,000(3) 3.2 10.75 7-26-2006 982,013 2,478,413
James Hood......................... 200,000(2) 3.8 8.13 01-02-2006 1,024,380 2,585,340
</TABLE>
- ------------------------
* Less than 1%
(1) Potential realizable value is based on certain assumed rates of appreciation
over the term of the option. The amounts are calculated based on rules of
the Securities and Exchange Commission, and do not represent the Company's
estimate or projection of future stock price growth.
(2) Exercisable with respect to 25% of shares granted six months from the date
of grant and with respect to 25% of shares granted each year thereafter. All
options are granted at the fair market value of the Company's Common Stock
on the date of grant.
(3) Exercisable with respect to 25% of shares granted twelve months from the
date of grant and with respect to 25% of shares granted each year
thereafter. All options are granted at the fair market value of the
Company's Common Stock on the date of grant.
7
<PAGE>
The following table sets forth certain information regarding options
exercised during the last fiscal year and held at the end of such year by the
Executive Officers named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
FISCAL YEAR 1996
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
VALUE AT FY-END (#) AT FY-END ($)
SHARES ACQUIRED REALIZED EXERCISABLE/ EXERCISABLE/
ON EXERCISE (#) ($)(1) UNEXERCISABLE UNEXERCISABLE(2)
--------------- -------------- ----------------- ----------------------
<S> <C> <C> <C> <C>
James Steenbergen.................... 12,500 $ 341,562 112,500/375,000 $731,250/$1,437,500
Aamer Latif.......................... 215,500 $ 1,005,064 75,000/0 $468,770/$0
Benjamin Berry....................... 6,000 $ 136,470 44,000/150,000 $170,280/$580,500
David J. Bivolcic.................... 100,500 $ 472,927 6,250/28,750 $24,188/$168,763
Ronald Carlini....................... 10,000 $ 31,023 16,250/38,750 $119,788/$263,763
James Hood........................... 20,000 $ 211,338 30,000/150,000 $78,600/$393,000
</TABLE>
- ------------------------
(1) Value realized is the aggregate market value of the underlying securities at
exercise date less the aggregate exercise price.
(2) Aggregate market value of underlying securities at fiscal year-end less the
aggregate exercise price of "in the money" options. On July 27, 1996, the
closing price for the Company's common stock as reported on the Nasdaq
National Market System was $10.75.
COMPENSATION OF DIRECTORS
Each director who was not also an officer or employee of the Company
received a fee of $2,000 per quarter in fiscal 1996. In addition, each such
director received a fee of $2,000 for each Board meeting attended and $2,000 for
each Audit Committee meeting attended during fiscal 1996. Board resolutions
adopted April 26, 1996, discontinued the payment of quarterly and attendance
fees to directors. The Company has a policy of reimbursing directors for
reasonable travel and related expenses incurred in attending Board and Committee
meetings. Donald L. Lucas, a director of the Company, did not receive any of the
aforementioned payments; however, Mr. Lucas earned $21,600 in consulting fees
for services rendered to the Company in fiscal 1996.
Directors who are not employees of the Company or any affiliate of the
Company are eligible to participate in the Company's 1990 Non-Employee
Directors' Stock Option Plan. Pursuant to such plan, (i) each individual elected
to the Company's Board as a non-employee Director for the first time was granted
an option to purchase up to 25,000 shares of the Company's Common Stock at an
exercise price equal to the fair market value of such stock on the date of
grant; and (ii) each non-employee Director then in office (other than
individuals receiving first-time grants as described in (i) above) received an
option to purchase up to 10,000 shares of the Company's Common Stock on
September 1, 1995, at an exercise price of $4.63 per share. Beginning with the
grants made to each continuing non-employee Director in office on September 1,
1996, each continuing non-employee Director shall receive an option to purchase
up to 20,000 shares of the Company's Common Stock at an exercise price equal to
the fair market value of the Company's Common Stock on such grant date. Grants
are automatically made annually under this plan. In lieu of participating in the
1990 Non-Employee Directors' Stock Option Plan on an annual basis, Dr. James
Gibbons received a one-time grant of an option to purchase up to 25,000 shares
of the Company's
8
<PAGE>
Common Stock under this plan and an additional option to purchase up to 125,000
shares pursuant to the 1990 Supplemental Stock Option Plan, both at an exercise
price equal to the fair market value of the Company's Common Stock on the date
of grant of such options.
BOARD COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
establishing compensation policies applicable to the Company's executive
officers and, pursuant to such policies, determining the compensation payable to
the Company's Chief Executive Officer and, taking into account recommendations
of the Chief Executive Officer, all other executive officers. The following
report relates to compensation payable to the Company's executive officers for
the year-ended July 27, 1996.
COMPONENTS OF COMPENSATION
There are three components to the compensation payable to the Company's
executive officers: (1) base salary; (2) annual incentive compensation in the
form of cash bonuses; and (3) equity-based incentive compensation in the form of
stock options.
COMPENSATION POLICIES
The compensation policies of the Compensation Committee are (i) to establish
base salaries which are competitive with those payable by regional
high-technology companies with which the Company competes in the recruitment of
senior management and which fall within the top one-half of salaries payable by
such regional high-technology companies; (ii) to tie cash bonuses to achievement
of pre-established company goals; and (iii) to use stock options to promote
equity ownership in the Company at percentage levels appropriate to executive
positions within the Company.
COMPENSATION PAYABLE TO EXECUTIVE OFFICERS
BASE SALARIES. Base salaries for executive officers are reviewed and
adjusted annually based on information regarding competitive salaries, including
salary survey data provided by third parties regarding regional high-technology
companies and information prepared by management regarding salaries payable by
the Company's competitors. The average increase in base salaries for all
executive officers corresponds to the average percentage increase in salaries
payable to all employees. Individual increases are established by the
Compensation Committee, taking into account recommendations of the Chief
Executive Officers concerning the overall effectiveness of each executive.
CASH BONUSES. Cash bonuses are determined under the Company's senior
executive incentive program, adopted by the Compensation Committee, which
annually establishes Company goals, and the percentage of target bonus for each
executive officer (a percentage of base salary). If all applicable goals are
achieved, the bonus is paid in full to each executive. No bonus is payable
unless a minimum threshold of the Company's goals are achieved, and larger
bonuses, up to a maximum, are payable in the event the goals are exceeded.
STOCK OPTIONS. Stock options are granted by the Compensation Committee to
provide equity-based, long term incentive compensation to the Company's
executive officers. The Compensation Committee establishes the maximum amount of
options which may be granted to all employees each year. Individual grants to
executive officers are then made by the Compensation Committee, taking into
account recommendations of the Chief Executive Officer, to reflect the
executive's overall effectiveness, as well as the equity ownership goal for each
executive. The Compensation Committee believes that encouraging equity ownership
through stock options will enhance management incentives to improve shareholder
value. In addition, the grant of stock options which vest over time also
encourages executives to remain with the Company and to focus on longer-term
results.
9
<PAGE>
CHIEF EXECUTIVE OFFICER COMPENSATION
Compensation payable to the Company's Chief Executive Officer consists of
the same three components described above, and is determined by the Compensation
Committee following the same policies utilized for all executives. Base salary
is reviewed and adjusted annually, utilizing regional salary survey data
provided by outside sources and comparable company information generated by
management, based on the Compensation Committee's evaluation of the Chief
Executive Officer's overall effectiveness. The Chief Executive Officer is
entitled to a bonus under the senior executive incentive program, although his
target bonus represents a greater percentage of base salary than for other
executive officers. The Chief Executive Officer's bonus is primarily tied to the
achievement of Company goals established for the entire year. Consequently, the
Chief Executive Officer's total compensation is more dependent on the Company's
performance than is compensation for other executive officers of the Company. In
addition, the Chief Executive Officer is granted stock options based on the
Compensation Committee's evaluation of the Chief Executive Officer's overall
effectiveness.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
DONALD L. LUCAS
AAMER LATIF
PERFORMANCE GRAPH
The following line graph illustrates a five-year comparison of the
cumulative total stockholder return on the Company's Common Stock against the
cumulative total return of the S&P 500 Index and the Hambrecht & Quist
Technology Index, assuming $100 invested in the Common Stock and the two indexes
on July 27, 1991.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AMATI COMMUNICATIONS HAMBRECHT & QUIST
CORPORATION S & P 500 TECHNOLOGY
<S> <C> <C> <C>
7/91 100 100 100
7/92 460 113 113
7/93 190 123 125
7/94 160 129 139
7/95 440 163 243
7/96 1800 190 240
</TABLE>
10
<PAGE>
PROPOSAL 2
APPROVAL OF THE 1996 STOCK OPTION PLAN
BACKGROUND
The Company's Board of Directors adopted the 1996 Stock Option Plan covering
1,000,000 shares of Common Stock (the "Plan") on July 12, 1996. The Plan
provides for the granting of stock options to employees, officers, directors and
consultants of the Company. Approximately 78 employees, 10 officers, 3 directors
and no consultants would be eligible to participate in the Plan as of October
30, 1996. At the Annual Meeting, the stockholders of the Company will consider
and vote upon the approval of the Plan. The purpose of this proposal is to
obtain stockholder approval of the Plan.
APPROVAL OF THE PLAN
The Plan is intended to strengthen the Company by providing added incentive
to employees, officers, directors and consultants of the Company for high levels
of performance and for unusual efforts to increase the earnings of the Company
through the opportunity for stock ownership. The Plan authorizes the granting of
both options which are incentive stock options, within the meaning of the
Internal Revenue Code ("ISOs"), and nonstatutory options to which Section 421 of
the Code does not apply ("NSOs", and together with ISOs, "Options"). As of July
27, 1996, the Company had Options outstanding to purchase 652,500 shares under
the Plan and an aggregate of 5,033,549 Options to purchase Shares under all
stock option plans of the Company.
The Board of Directors believes that it would be in the best interests of
the Company to approve the Plan. To permit the grant of ISOs under the Plan,
stockholder approval of the Plan is required within 12 months of the Board's
action on July 12, 1996.
DESCRIPTION OF THE PLAN
The following is a general summary of the principal provisions of the Plan.
Any stockholder who desires to review the actual text of the Plan may obtain
copies by writing the Company's Secretary.
The Plan provides for the granting to employees (including employees who are
officers or directors) of ISOs and for the granting of NSOs to employees,
nonemployee directors, and consultants of the Company. The Plan is administered
by the Board of Directors of the Company (the "Administrator") or by a committee
designated thereby, which determines the terms of options granted under the
Plan, including the exercise price, the number of shares subject to the Option
and the schedule pursuant to which such shares shall become exercisable. The
exercise price of each ISO and NSO granted under the Plan must be at least equal
to 100% and 85%, respectively, of the fair market value of the underlying shares
on the date of grant, and the maximum term of each ISO is 10 years. With respect
to any participant who owns stock possessing more than 10% of the voting rights
of the Company's outstanding capital stock, the exercise price of any Option
must be at least 110% of the fair market value of the Common Stock on the date
of grant and the term of any ISO may be no longer than five years. Under the
terms of the Plan, no employee may receive ISOs which first become exercisable
in any calendar year to purchase Common Stock with an aggregate fair market
value in excess of $100,000 at the time of grant. Options may be exercised for
three months after the recipient of an Option ("Optionee") leaves the Company
and, if the Optionee's employment is terminated by reason of death or
disability, for twelve months after the death, or eighteen months after the
permanent and total disability of, the Optionee, but in either case not beyond
the original term of the Option. Unless otherwise specifically determined by the
Administrator, Options are not transferable or assignable except by the laws of
descent and distribution, and each Option is exercisable, during the lifetime of
the Optionee, only by the Optionee.
At the time an Option is exercised, in whole or in part, or at such other
time as the amount of such obligations becomes determinable, the Optionee is
required to make adequate provision for federal and
11
<PAGE>
state withholding and employment tax obligations of the Company, if any,
resulting from the exercise. The exercise price of Options may be paid in cash
or, in accordance with the provisions of the Plan, by delivery of a full
recourse promissory note or shares of Common Stock. In the event of a merger of
the Company with or into another corporation or a sale of substantially all of
the Company's assets, outstanding Options shall be assumed by the surviving
entity or equivalent options shall be substituted therefor. If the successor
does not agree to assume or substitute for such outstanding options, Options
will expire upon such event.
The Plan expires on July 12, 2006, unless terminated earlier by the Board of
Directors. The Board may at any time terminate or amend the Plan, provided that
stockholder approval shall be required if (a) such approval is required to
preserve incentive stock option treatment for federal income tax purposes, or
(b) the Board otherwise determines that stockholder approval is advisable. In
any case, no amendment may adversely affect any then outstanding Option or
unexercised portion thereof without the Optionee's consent unless such amendment
is required to enable the option to qualify as an ISO.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal Federal income tax
consequences of transactions under the Plan based on current Federal income tax
laws. The summary is not intended to constitute tax advice and, among other
things, does not address possible state, local or foreign tax consequences.
Nonstatutory Options -- In general, no income would be realized by an Optionee
upon grant of an NSO. Upon exercise of an NSO, the Optionee would recognize
ordinary compensation income in an amount equal to the excess, if any, of the
fair market value of the underlying stock over the exercise price (the "Spread")
at the time of exercise. The Spread would be deductible by the Company for
Federal income tax purposes (i) provided that applicable Federal income tax
withholding requirements are satisfied and (ii) subject to the possible
limitations on deductibility under Section 162(m) of the Code of compensation
paid to the executives designated in that section. Upon a sale of the shares
received by the Optionee upon exercise of the NSO, any gain or loss is generally
long-term or short-term capital gain or loss, depending on the holding period.
The required holding period for long-term capital gain is presently more than
one year. The Optionee's holding period for shares acquired pursuant to the
exercise of an NSO would begin on the date of exercise of such option. The
excess of the net long-term capital gain over net short-term capital loss is
taxable at a maximum stated tax rate of 28%.
Incentive Stock Options -- ISO holders generally incur no Federal income tax
liability at the time of grant or upon exercise of such options. However, the
Spread will be included in the Optionee's "alternative minimum taxable income",
which may give rise to "alternative minimum tax" liability at the time of
exercise. If the Optionee does not dispose of the shares before two years from
the date of grant and one year from the date of exercise, the difference between
the exercise price and the amount realized upon disposition of the shares would
constitute long-term capital gain or loss, as the case may be. Assuming both
holding periods are satisfied, no deduction would be allowable to the Company
for Federal income tax purposes in connection with the exercise of ISOs. If the
shares are disposed of before both of these holding periods have expired, the
Optionee will have taxable ordinary income and/or capital gain (or loss) in the
year of sale determined as if the ISO had been an NSO, except that the amount of
ordinary income will not exceed the actual gain on the sale, and the Company
will be entitled to a corresponding deduction.
12
<PAGE>
The following table shows the number of shares of Common Stock issuable upon
exercise of options granted to the named individuals or groups under the Plan
during the fiscal year ended July 27, 1996. The exercise price of all options
granted pursuant to the Plan has been the fair market value of the Common Stock
underlying such options on the date each such option was granted.
NEW PLAN BENEFITS
1996 STOCK OPTION PLAN
<TABLE>
<CAPTION>
NUMBER
NAME AND POSITION OF OPTIONS
- --------------------------------------------------------------------------------- ----------
<S> <C>
James Steenbergen ...............................................................
President, CEO, CFO 0
Aamer Latif .....................................................................
Director, Former CEO 0
Benjamin Berry ..................................................................
Vice President of Marketing 0
David J. Bivolcic ...............................................................
Senior Vice President 140,000
Ronald Carlini ..................................................................
Vice President of Corporate Development 145,000
James Hood ......................................................................
Vice President of Engineering 0
Executive Group.................................................................. 545,000
Non-Executive Director Group..................................................... 0
Non-Executive Officer Employee Group............................................. 107,500
</TABLE>
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE APPROVAL
OF THE 1996 STOCK OPTION PLAN.
13
<PAGE>
STOCKHOLDER PROPOSALS
Stockholders of the Company may submit proposals for inclusion in the proxy
material. These proposals must meet the stockholder eligibility and other
requirements of the Securities and Exchange Commission. In order to be included
in the Company's 1997 proxy material, a stockholder's proposal must be received
no later than July 2, 1997, at the Company's Corporate Headquarters, 2043
Samaritan Drive, San Jose, California 95124, Attention: Secretary.
AUDITORS
Arthur Andersen LLP served as the Company's independent public accountants
for the fiscal year ended July 27, 1996, and have been selected by the Company's
Board of Directors as the independent public accountants for the fiscal year
ending July 26, 1997.
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting. Such representatives will have the opportunity to make a
statement at the meeting if they desire to do so and will be available to
respond to appropriate questions.
OTHER MATTERS
The Company knows of no other matters that will be brought before the Annual
Meeting. However, if any such matters are properly brought before the meeting,
the persons named in the enclosed form of proxy will vote in accordance with
their best judgment.
Whether or not you plan to attend the meeting, please date, sign and return
the enclosed proxy at your earliest convenience in the enclosed postpaid
envelope.
By Order of the Board of Directors
Teresita O. Medel, SECRETARY
November 18, 1996
14
<PAGE>
1996 STOCK OPTION PLAN
OF
AMATI COMMUNICATIONS CORPORATION
1. PURPOSES OF THE PLAN. The purposes of the 1996 Stock Option Plan (the
"Plan") of Amati Communications Corporation, a Delaware corporation (the
"Company"), are to:
(a) Encourage selected employees, directors and consultants to improve
operations and increase profits of the Company;
(b) Encourage selected employees, directors and consultants to accept or
continue employment or association with the Company or its Affiliates; and
(c) Increase the interest of selected employees, directors and
consultants in the Company's welfare through participation in the growth in
value of the common stock of the Company (the "Common Stock").
Options granted under this Plan ("Options") may be "incentive stock options"
("ISOs") intended to satisfy the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or "nonqualified options"
("NQOs").
2. ELIGIBLE PERSONS. Every person who at the date of grant of an Option is
a full-time employee of the Company or of any Affiliate (as defined below) of
the Company is eligible to receive NQOs or ISOs under this Plan. Every person
who at the date of grant is a consultant to, or non-employee director of, the
Company or any Affiliate (as defined below) of the Company is eligible to
receive NQOs under this Plan. The term "Affiliate" as used in the Plan means a
parent or subsidiary corporation as defined in the applicable provisions
(currently Sections 424(e) and (f), respectively) of the Code. The term
"employee" includes an officer or director who is an employee, of the Company.
The term "consultant" includes persons employed by, or otherwise affiliated
with, a consultant.
3. STOCK SUBJECT TO THIS PLAN. Subject to the provisions of Section 6.1.1
of the Plan, the total number of shares of stock which may be issued under
options granted pursuant to this Plan shall not exceed 1,000,000 shares of
Common Stock. The shares covered by the portion of any grant under the Plan
which expires unexercised shall become available again for grants under the
Plan.
4. ADMINISTRATION.
4.1 GENERAL. This Plan shall be administered by the Board of Directors
of the Company (the "Board") or, either in its entirety or as permitted
pursuant to Section 4.2 hereof, by a committee to which administration of
the Plan, or of part of the Plan, is delegated (in either case, the
"Administrator").
4.2 COMMITTEE OF THE BOARD. Subject to the discretion of the Board,
this Plan may be administered by a committee (the "Committee") of at least
two Board members each of whom are a "Non-Employee Director" as defined
under Rule 16b-3 promulgated by the Securities and Exchange Commission
("Rule 16b-3") under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any successor rule thereto.
4.3 AUTHORITY OF ADMINISTRATOR. Subject to the other provisions of
this Plan, the Administrator shall have the authority, in its discretion:
(i) to grant Options; (ii) to determine the fair market value of the Common
Stock subject to Options; (iii) to determine the exercise price of Options
granted; (iv) to determine the persons to whom, and the time or times at
which, Options shall be granted, and the number of shares subject to each
Option; (v) to interpret this Plan; (vi) to prescribe, amend, and rescind
rules and regulations relating to this Plan; (vii) to determine the terms
and provisions of each Option granted (which need not be identical),
including but not limited to, the time or times at which Options shall be
exercisable; (viii) with the consent of the optionee, to modify or amend any
Option; (ix) to authorize any person to execute on behalf of the Company any
instrument evidencing the grant of an Option; and (x) to make all other
determinations deemed necessary or advisable for the
<PAGE>
administration of this Plan. The Administrator may delegate nondiscretionary
administrative duties to such employees of the Company as it deems proper.
4.4 INTERPRETATION BY ADMINISTRATOR. All questions of interpretation,
implementation, and application of this Plan shall be determined by the
Administrator. Such determinations shall be final and binding on all
persons.
4.5 RULE 16B-3. With respect to persons subject to Section 16 of the
Exchange Act, if any, transactions under this Plan are intended to comply
with the applicable conditions of Rule 16b-3, or any successor rule thereto.
To the extent any provision of this Plan or action by the Administrator
fails to so comply, it shall be deemed modified to the extent necessary to
comply with Rule 16b-3, to the extent permitted by law and deemed advisable
by the Administrator. Notwithstanding the above, it shall be the
responsibility of such persons, not of the Company or the Administrator, to
comply with the requirements of Section 16 of the Exchange Act, and neither
the Company nor the Administrator shall be liable if this Plan or any
transaction under this Plan fails to comply with the applicable conditions
of Rule 16b-3 or any successor rule thereto, or if any such person incurs
any liability under Section 16 of the Exchange Act.
5. GRANTING OF OPTIONS; OPTION AGREEMENT. No Options shall be granted
under this Plan after ten years from the date of adoption of this Plan by the
Board. Each Option shall be evidenced by a written stock option agreement, in
form satisfactory to the Company, executed by the Company and the person to whom
such Option is granted; PROVIDED, HOWEVER, that the failure by the Company, the
optionee, or both to execute such an agreement shall not invalidate the granting
of an Option, although the exercise of each option shall be subject to Section
6.1.3. The stock option agreement shall specify whether each Option it evidences
is a NQO or an ISO. Subject to Section 6.3.3 with respect to ISOs, the
Administrator may approve the grant of Options under this Plan to persons who
are expected to become employees, directors or consultants of the Company, but
are not employees, directors or consultants at the date of approval.
6. TERMS AND CONDITIONS OF OPTIONS. Each Option granted under this Plan
shall be subject to the terms and conditions set forth in Section 6.1. NQOs
shall be also subject to the terms and conditions set forth in Section 6.2, but
not those set forth in Section 6.3. ISOs shall also be subject to the terms and
conditions set forth in Section 6.3, but not those set forth in Section 6.2.
6.1 TERMS AND CONDITIONS TO WHICH ALL OPTIONS ARE SUBJECT. All Options
granted under this Plan shall be subject to the following terms and
conditions:
6.1.1 CHANGES IN CAPITAL STRUCTURE. Subject to Section 6.1.2, if
the stock of the Company is changed by reason of a stock split, reverse
stock split, stock dividend, or recapitalization, combination or
reclassification, appropriate adjustments shall be made by the Board in
(a) the number and class of shares of stock subject to this Plan and each
Option outstanding under this Plan, and (b) the exercise price of each
outstanding Option; PROVIDED, HOWEVER, that the Company shall not be
required to issue fractional shares as a result of any such adjustments.
Each such adjustment shall be subject to approval by the Board in its
sole discretion.
6.1.2 CORPORATE TRANSACTIONS. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify
each optionee at least 30 days prior to such proposed action. To the
extent not previously exercised, all Options will terminate immediately
prior to the consummation of such proposed action. In the event of a
merger or consolidation of the Company with or into another corporation
or entity in which the Company does not survive, or in the event of a
sale of all or substantially all of the assets of the Company in which
the stockholders of the Company receive securities of the acquiring
entity or an affiliate thereof, all Options shall be assumed or
equivalent options shall be substituted by the successor corporation (or
other entity) or a parent or subsidiary of such successor corporation (or
other entity). If such
2
<PAGE>
successor does not agree to assume the Options or to substitute
equivalent options therefor, unless the Administrator shall determine
otherwise, the Options will expire upon such event.
6.1.3 TIME OF OPTION EXERCISE. Subject to Section 5 and Section
6.3.4, Options granted under this Plan shall be exercisable in accordance
with a schedule related to the date of the grant of the Option, the date
of first employment, or such other date as may be set by the
Administrator (in any case, the "Vesting Base Date") and specified in the
written stock option agreement relating to such Option; PROVIDED,
HOWEVER, that unless otherwise specifically determined by the
Administrator, the right to exercise an Option shall vest at the rate of
25% per year over four years from the date the option was granted. In any
case, no Option shall be exercisable until a written stock option
agreement in form satisfactory to the Company is executed by the Company
and the optionee.
6.1.4 OPTION GRANT DATE. Except in the case of advance approvals
described in Section 5, the date of grant of an Option under this Plan
shall be the date as of which the Administrator approves the grant.
6.1.5 NONASSIGNABILITY OF OPTION RIGHTS. Unless otherwise
specifically determined by the Administrator, no Option granted under
this Plan shall be assignable or otherwise transferable by the optionee
except by will or by the laws of descent and distribution, and during the
life of the optionee, an Option shall be exercisable only by the
optionee.
6.1.6 PAYMENT. Except as provided below, payment in full, in cash,
shall be made for all stock purchased at the time written notice of
exercise of an Option is given to the Company, and proceeds of any
payment shall constitute general funds of the Company. At the time an
Option is granted or exercised, the Administrator, in the exercise of its
absolute discretion after considering any tax or accounting consequences,
may authorize any one or more of the following additional methods of
payment:
(a) Acceptance of the optionee's promissory note for all or part
of the Option price, payable on such terms and bearing such interest
rate as determined by the Administrator (but in no event less than
the minimum interest rate specified under the Code at which no
additional interest would be imputed), which promissory note may be
either secured or unsecured in such manner as the Administrator shall
approve (including, without limitation, by a security interest in the
shares of the Company); and
(b) Delivery by the optionee of Common Stock already owned by the
optionee (or having Common Stock which is acquired on exercise of the
Option withheld by the Company) for all or part of the Option price,
provided the value (determined as set forth in Section 6.1.11) of
such Common Stock is equal on the date of exercise to the Option
price, or such portion thereof as the optionee is authorized to pay
by delivery of such stock; PROVIDED, HOWEVER, that if an optionee has
exercised any portion of any Option granted by the Company by
delivery or withholding of Common Stock, the optionee may not, within
six months following such exercise, exercise any Option granted under
this Plan by delivery or withholding of Common Stock without the
consent of the Administrator.
6.1.7 TERMINATION OF EMPLOYMENT. If for any reason other than death
or disability, an optionee ceases to be employed by or to serve as a
consultant to the Company or any of its Affiliates (such event being
called a "Termination"), Options held at the date of Termination (to the
extent then exercisable) may be exercised in whole or in part at any time
within three months of the date of such Termination, or such other period
of not less than thirty days after the date of such Termination as is
specified in the Option Agreement (but in no event after the Expiration
Date); PROVIDED, that if such exercise of the Option would result in
liability for the optionee under Section 16(b) of the Exchange Act, then
such three-month period automatically shall be extended
3
<PAGE>
until the tenth day following the last date upon which optionee has any
liability under Section 16(b) (but in no event after the Expiration
Date). If an optionee dies or becomes disabled (within the meaning of
Section 22(c)(3) of the Code) while employed by or serving as a
consultant to the Company or an Affiliate or within the period that the
Option remains exercisable after Termination, Options then held (to the
extent then exercisable) may be exercised, in whole or in part, by the
optionee, by the optionee's personal representative or by the person to
whom the Option is transferred by devise or the laws of descent and
distribution, for such period of up to twelve months after the death, or
eighteen months after the permanent and total disability, of the
optionee, as is specified in the Option Agreement (but in no event after
the Expiration Date). For purposes of this Section 6.1.7, "employment"
includes service as a director or as a consultant. For purposes of this
Section 6.1.7, an optionee's employment shall not be deemed to terminate
by reason of sick leave, military leave or other leave of absence
approved by the Administrator, if the period of any such leave does not
exceed 90 days or, if longer, if the optionee's right to reemployment by
the Company or any Affiliate is guaranteed either contractually or by
statute.
6.1.8 REPURCHASE OF STOCK. At the option of the Administrator, the
stock to be delivered pursuant to the exercise of any Option granted to
an employee, director or consultant under this Plan may be subject to a
right of repurchase in favor of the Company with respect to any employee,
or director or consultant whose employment, or director or consulting
relationship with the Company is terminated. Such right of repurchase
shall be at the Option exercise price and, unless otherwise determined by
the Administrator, (i) shall lapse at the rate of 25% per year over four
years from the date the Option is granted (without regard to the date it
becomes exercisable), and must be exercised for cash or cancellation of
purchase money indebtedness within 90 days of such termination.
Determination of the number of shares subject to any such right of
repurchase shall be made as of the date the employee's employment by,
director's director relationship with, or consultant's consulting
relationship with, the Company terminates, not as of the date that any
Option granted to such employee, director or consultant is thereafter
exercised.
6.1.9 WITHHOLDING AND EMPLOYMENT TAXES. At the time of exercise of
an Option or at such other time as the amount of such obligations becomes
determinable (the "Tax Date"), the optionee shall remit to the Company in
cash all applicable federal and state withholding and employment taxes.
If authorized by the Administrator in its sole discretion after
considering any tax or accounting consequences, an optionee may elect to
(a) deliver a promissory note on such terms as the Administrator deems
appropriate, (b) tender to the Company previously owned shares of Common
Stock or other securities of the Company, or (c) have shares of Common
Stock which are acquired upon exercise of the Option withheld by the
Company to pay some or all of the amount of tax that is required by law
to be withheld by the Company as a result of the exercise of such Option.
Limitations on the foregoing may be imposed by the Administrator, in
its sole discretion, if the Administrator determines that such
limitations are required in order that the transaction shall be exempt
from Section 16(b) of the Exchange Act pursuant to Rule 16b-3, or any
successor rule thereto. Any securities tendered or withheld in accordance
with this Section 6.1.9 shall be valued by the Company as of the Tax
Date.
6.1.10 OTHER PROVISIONS. Each Option granted under this Plan may
contain such other terms, provisions, and conditions not inconsistent
with this Plan as may be determined by the Administrator, and each ISO
granted under this Plan shall include such provisions and conditions as
are necessary to qualify the Option as an "incentive stock option" within
the meaning of Section 422 of the Code.
4
<PAGE>
6.1.11 DETERMINATION OF VALUE. For purposes of the Plan, the value
of Common Stock or other securities of the Company shall be determined as
follows:
(a) If the stock of the Company is listed on any established
stock exchange or a national market system, including without
limitation the National Market System of the National Association of
Securities Dealers, Inc. Automated Quotation System, 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 system or exchange
(or the largest such exchange) for the date the value is to be
determined (or if there are no sales for such date, then for the last
preceding business day on which there were sales), as reported in the
WALL STREET JOURNAL or similar publication.
(b) If the stock of the Company is regularly quoted by a
recognized securities dealer but selling prices are not reported, its
fair market value shall be the mean between the high bid and low
asked prices for the stock on the date the value is to be determined
(or if there are no quoted prices for the date of grant, then for the
last preceding business day on which there were quoted prices).
(c) In the absence of an established market for the stock, the
fair market value thereof shall be determined in good faith by the
Administrator, with reference to the Company's net worth, prospective
earning power, dividend-paying capacity, and other relevant factors,
including the goodwill of the Company, the economic outlook in the
Company's industry, the Company's position in the industry and its
management, and the values of stock of other corporations in the same
or a similar line of business.
6.1.12 OPTION TERM. No ISO shall be exercisable more than ten years
after the date of grant, or such lesser period of time as is set forth in
the stock option agreement (the end of the maximum exercise period stated
in the stock option agreement is referred to in this Plan as the
"Expiration Date").
6.1.13 EXERCISE PRICE. The exercise price of any Option granted to
any person who owns, directly or by attribution under the Code currently
Section 424(d), stock possessing more than ten percent of the total
combined voting power of all classes of stock of the Company or of any
Affiliate (a "Ten Percent Stockholder") shall in no event be less than
110% of the fair market value (determined in accordance with Section
6.1.11) of the stock covered by the Option at the time the Option is
granted.
6.2 TERMS AND CONDITIONS TO WHICH ONLY NQOS ARE SUBJECT. Except as set
forth in Section 6.1.13, the exercise price of a NQO shall be not less than
85% of the fair market value (determined in accordance with Section 6.1.11)
of the stock subject to the Option on the date of grant.
6.3 TERMS AND CONDITIONS TO WHICH ONLY ISOS ARE SUBJECT. Options
granted under this Plan which are designated as ISOs shall be subject to the
following terms and conditions:
6.3.1 EXERCISE PRICE. Except as set forth in Section 6.1.13, the
exercise price of an ISO shall be determined in accordance with the
applicable provisions of the Code and shall in no event be less than the
fair market value (determined in accordance with Section 6.1.11) of the
stock covered by the Option at the time the Option is granted.
6.3.2 DISQUALIFYING DISPOSITIONS. If stock acquired by exercise of
an ISO granted pursuant to this Plan is disposed of in a "disqualifying
disposition" within the meaning of Section 422 of the Code, the holder of
the stock immediately before the disposition shall promptly notify the
Company in writing of the date and terms of the disposition and shall
provide such other information regarding the Option as the Company may
reasonably require.
5
<PAGE>
6.3.3 GRANT DATE. If an ISO is granted in anticipation of
employment as provided in Section 5, the Option shall be deemed granted,
without further approval, on the date the grantee assumes the employment
relationship forming the basis for such grant, and, in addition,
satisfies all requirements of this Plan for Options granted on that date.
6.3.4 VESTING. Notwithstanding any other provision of this Plan,
ISOs granted under all incentive stock option plans of the Company and
its subsidiaries may not "vest" for more than $100,000 in fair market
value of stock (measured on the grant dates(s)) in any calendar year. For
purposes of the preceding sentence, an option "vests" when it first
becomes exercisable. If, by their terms, such ISOs taken together would
vest to a greater extent in a calendar year, and unless otherwise
provided by the Administrator, ISOs with lower exercise prices shall vest
before ISOs with higher exercise prices, regardless of the grant date.
6.3.5 TERM. Notwithstanding Section 6.1.12, no ISO granted to any
Ten Percent Stockholder shall be exercisable more than five years after
the date of grant.
7. MANNER OF EXERCISE. An optionee wishing to exercise an Option shall
give written notice to the Company at its principal executive office, to the
attention of the officer of the Company designated by the Administrator,
accompanied by payment of the exercise price as provided in Section 6.1.6. The
date the Company receives written notice of an exercise hereunder accompanied by
payment of the exercise price will be considered as the date such Option was
exercised. Promptly after receipt of written notice of exercise of an Option,
the Company shall, without stock issue or transfer taxes to the optionee or
other person entitled to exercise the Option, deliver to the optionee or such
other person a certificate or certificates for the requisite number of shares of
stock. An optionee or permitted transferee of an optionee shall not have any
privileges as a stockholder with respect to any shares of stock covered by the
Option until the date of issuance (as evidenced by the appropriate entry on the
books of the Company or a duly authorized transfer agent) of such shares.
8. EMPLOYMENT OR CONSULTING RELATIONSHIP. Nothing in this Plan or any
Option granted thereunder shall interfere with or limit in any way the right of
the Company or of any of its Affiliates to terminate any optionee's employment
or consulting at any time, nor confer upon any optionee any right to continue in
the employ of, or consult with, the Company or any of its Affiliates.
9. FINANCIAL INFORMATION. The Company shall provide to each optionee
during the period such optionee holds an outstanding Option, and to each holder
of Common Stock acquired upon exercise of Options granted under the Plan for so
long as such person is a holder of such Common Stock, annual financial
statements of the Company as prepared either by the Company or independent
certified public accountants of the Company. Such financial statements shall
include, at a minimum, a balance sheet and an income statement, and shall be
delivered as soon as practicable following the end of the Company's fiscal year.
10. CONDITIONS UPON ISSUANCE OF SHARES. Shares of Common Stock 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 pursuant thereto shall
comply with all relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended (the "Securities Act").
11. NONEXCLUSIVITY OF THE PLAN. The adoption of the Plan shall not be
construed as creating any limitations on the power of the Company to adopt such
other incentive arrangements as it may deem desirable, including, without
limitation, the granting of stock options other than under the Plan.
12. MARKET STANDOFF. Each Optionee, if so requested by the Company or any
representative of the underwriters in connection with any registration of the
offering of any securities of the Company under the Securities Act shall not
sell or otherwise transfer any shares of Common Stock acquired upon exercise of
Options during such period following the effective date of a registration
statement of the Company filed under the Securities Act as is agreed upon
between the Company and such representative(s); PROVIDED,
6
<PAGE>
HOWEVER, that such restriction shall apply only to the first two registration
statements of the Company to become effective under the Securities Act which
includes securities to be sold on behalf of the Company to the public in an
underwritten public offering under the Securities Act. The Company may impose
stop-transfer instructions with respect to securities subject to the foregoing
restriction until the end of such period.
13. AMENDMENTS TO PLAN. The Board may at any time amend, alter, suspend or
discontinue this Plan. Without the consent of an optionee, no amendment,
alteration, suspension or discontinuance may adversely affect outstanding
Options except to conform this Plan and ISOs granted under this Plan to the
requirements of federal or other tax laws relating to incentive stock options.
No amendment, alteration, suspension or discontinuance shall require stockholder
approval unless (a) stockholder approval is required to preserve incentive stock
option treatment for federal income tax purposes, or (b) the Board otherwise
concludes that stockholder approval is advisable.
14. EFFECTIVE DATE OF PLAN. This Plan shall become effective upon adoption
by the Board; PROVIDED, HOWEVER, that no ISO shall be exercisable unless and
until written consent of the stockholders of the Company, or approval of
stockholders of the Company voting at a validly called stockholders' meeting, is
obtained within 12 months after adoption by the Board. If such stockholder
approval is not obtained within such time, ISOs granted hereunder shall
terminate and be of no force and effect from and after expiration of such
12-month period although any NQO granted shall remain in full force and effect.
The Plan shall terminate ten years after adoption by the Board unless terminated
earlier by the Board.
Plan adopted by the Board of Directors on July 12, 1996.
Plan approved by Stockholders on , 1996.
7
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
AMATI COMMUNICATIONS CORPORATION
PROXY
FOR THE ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 20, 1996
The undersigned hereby appoints JAMES STEENBERGEN and TERRY MEDEL, and each
of them, with full power of substitution, as proxies of the undersigned to
represent and vote all shares of the stock of Amati Communications
Corporation (the "Company") which the undersigned is entitled to vote at
the Annual Meeting of Stockholders of the Company to be held at Amati
Communications Corporation, 2043 Samaritan Drive, San Jose, California, on
December 20, 1996, at 2:00 p.m., local time, and at any continuation or
adjournment thereof, with all powers which the undersigned would possess if
personally present, upon such business as may properly come before the
meeting, including the following items:
- ------------------------------------------------
COMMENTS/ADDRESS CHANGE:
PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued and to be
signed on other side)
- FOLD AND DETACH HERE -
<PAGE>
1. To elect directors whether by cumulative voting or otherwise
to hold office until the 1997 Annual Meeting of Stockholders.
FOR AGAINST ABSTAIN
/ / / / / /
2. To adopt the 1996 Stock Option Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. To vote at their discretion on such other matters as may come
before the meeting or any adjournment thereof.
FOR AGAINST ABSTAIN
/ / / / / /
------------------
I plan to attend
the meeting.
/ /
------------------
This proxy when executed will be voted in the manner herein by the
undersigned.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH PROPOSAL AND
SHARES WILL BE SO VOTED UNLESS OTHERWISE INDICATED.
The majority of said proxies who shall be present and shall act at
the meeting (or if only one shall be present and act, then that one)
shall have and exercise all of the power of the said proxies
hereunder.
The undersigned hereby acknowledges receipt of (a) Notice of the
Annual Meeting of Stockholders of the Company to be held on December
20, 1996 and (b) the accompanying Prospectus/Proxy Statement.
Please sign below exactly as your name appears to the left. When
shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give
title as such. If a corporation, please sign in full corporate name
by authorized officer. If a partnership, please sign in partnership
name By authorized person.
Date _______________________________________________________________
____________________________________________________________________
Signature(s)
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
- FOLD AND DETACH HERE -
