SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Amendment No. ______________)
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/ / Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
INTEGRATED DEVICE TECHNOLOGY, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) or Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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 transactions applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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INTEGRATED DEVICE TECHNOLOGY, INC.
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 28, 1996
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Notice is hereby given that the 1996 Annual Meeting of the Stockholders of
Integrated Device Technology, Inc., a Delaware corporation (the "Company"), will
be held on Wednesday, August 28, 1996, at 9:30 a.m., local time, at the offices
of the Company located at 2670 Seeley Road, San Jose, California, for the
following purposes:
1. To elect two Class III directors for a term to expire at the 1999 Annual
Meeting of Stockholders;
2. To approve an amendment to the Company's 1994 Stock Option Plan to
increase the number of shares reserved for issuance thereunder from
7,250,000 to 10,750,000;
3. To ratify the appointment of Price Waterhouse LLP as independent auditors
of the Company for fiscal 1997; and
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this notice.
Stockholders of record at the close of business on July 1, 1996 are entitled
to notice of and to vote at the Annual Meeting or any adjournment or
postponement thereof.
The majority of the Company's outstanding shares must be represented at the
Annual Meeting (in person or by proxy) to transact business. To assure a proper
representation at the Annual Meeting, please mark, sign and date the enclosed
proxy and mail it promptly in the enclosed self-addressed envelope. Your proxy
will not be used if you revoke it either before or at the Annual Meeting.
Santa Clara, California
July 17, 1996
By Order of the Board of Directors
/s/ Jack Menache
Jack Menache
Secretary
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE. YOUR VOTE IS IMPORTANT.
<PAGE>
INTEGRATED DEVICE TECHNOLOGY, INC.
2975 STENDER WAY
SANTA CLARA, CALIFORNIA 95054
(408) 727-6116
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1996 ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
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JULY 17, 1996
The accompanying proxy is solicited on behalf of the Board of Directors of
Integrated Device Technology, Inc., a Delaware corporation (the "Company"), for
use at the Annual Meeting of Stockholders (the "Annual Meeting") to be held on
Wednesday, August 28, 1996 at 9:30 a.m., local time, or at any adjournment or
postponement thereof. The Annual Meeting will be held at 2670 Seeley Road, San
Jose, California 95134. Only holders of record of the Company's Common Stock at
the close of business on July 1, 1996 (the "Record Date") are entitled to notice
of, and to vote at, the Annual Meeting. On the Record Date, the Company had
77,946,123 shares of Common Stock outstanding and entitled to vote. A majority
of such shares, present in person or represented by proxy, will constitute a
quorum for the transaction of business. This Proxy Statement and the
accompanying form of proxy were first mailed to stockholders on or about July
17, 1996. An annual report for the fiscal year ended March 31, 1996 is enclosed
with this Proxy Statement.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Holders of the Company's Common Stock are entitled to one vote for each share
held as of the above record date, except that in the election of directors, each
stockholder has cumulative voting rights and is entitled to a number of votes
equal to the number of shares held by such stockholder multiplied by the number
of directors to be elected. The stockholder may cast these votes all for a
single candidate or distribute the votes among any or all of the candidates. No
stockholder will be entitled to cumulate votes for a candidate, however, unless
that candidate's name has been placed in nomination prior to the voting and the
stockholder, or any other stockholder, has given notice at the Annual Meeting,
prior to the voting, of an intention to cumulate votes. In such an event, the
proxy holder may allocate among the Board of Directors' nominees the votes
represented by proxies in the proxy holder's sole discretion.
Directors will be elected by a plurality of the votes of the shares of Common
Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote on the election of directors. Proposal Nos. 2 and 3 each
require for approval the affirmative vote of the majority of shares of Common
Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote on such proposals. All votes will be tabulated by the inspector
of election appointed for the Annual Meeting who will separately tabulate, for
each proposal, affirmative and negative votes, abstentions and broker non-votes.
Abstentions will be counted towards a quorum and the tabulation of votes cast on
proposals presented to the stockholders and will have the same effect as
negative votes. Broker non-votes will be counted towards a quorum but are not
counted for any purpose in determining whether a matter has been approved.
The expenses of soliciting proxies to be voted at the Annual Meeting will be
paid by the Company. Following the original mailing of the proxies and other
soliciting materials, the Company and/or its agents may also solicit proxies by
mail, telephone, telegraph or in person. Following the original mailing of the
proxies and other soliciting materials, the Company will request that brokers,
custodians, nominees and other record holders of the Company's Common Stock
forward copies of the proxy and other soliciting materials to persons for whom
they hold shares of Common Stock and request authority for the exercise of
proxies. In such cases, the Company, upon request of the record holders, will
reimburse such holders for their reasonable expenses.
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REVOCABILITY OF PROXIES
Any person signing a proxy in the form accompanying this Proxy Statement has
the power to revoke it prior to the Annual Meeting or at the Annual Meeting
prior to the vote pursuant to the proxy. A proxy may be revoked by (i) a writing
delivered to the Company stating that the proxy is revoked, (ii) by a subsequent
proxy that is signed by the person who signed the earlier proxy and is presented
at the Annual Meeting or (iii) by attendance at the Annual Meeting and voting in
person. Please note, however, that if a stockholder's shares are held of record
by a broker, bank or other nominee and that stockholder wishes to vote at the
Annual Meeting, the stockholder must bring to the Annual Meeting a letter from
the broker, bank or other nominee confirming that stockholder's beneficial
ownership of the shares.
PROPOSAL NO. 1--ELECTION OF DIRECTORS
The Board of Directors consists of five members, divided into three classes.
Two Class III directors are to be elected at the Annual Meeting to serve a
three-year term expiring at the 1999 Annual Meeting of Stockholders or until a
successor has been elected and qualified. The remaining three directors will
continue to serve for the terms as set forth in the table below.
D. John Carey and Carl E. Berg have been nominated by the Board of Directors
to serve as the Class III directors.
Shares represented by the accompanying proxy will be voted for the election
of the two nominees recommended by the Board of Directors unless the proxy is
marked in such a manner as to withhold authority so to vote. In the event that a
nominee is unable or declines to serve as a director at the time of the Annual
Meeting, the proxies will be voted for any nominee who shall be designated by
the present Board of Directors to fill the vacancy, or the Board of Directors
may reduce the authorized number of directors in accordance with the Company's
Restated Certificate of Incorporation, as amended, and its Bylaws. The Board of
Directors has no reason to believe that the nominees will be unable to serve.
<TABLE>
DIRECTORS/NOMINEES
The names of the nominees and the other directors of the Company, and certain
information about them, as of July 1, 1996 are set forth below:
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- ------------------------------------ ----- ----------------------------------------- --------------
<S> <C> <C> <C>
Class I Directors--Term expiring at
the 1997 Annual Meeting:
Leonard C. Perham ................... 53 Chief Executive Officer and President of 1986
the Company
Class II Directors--Term expiring at
the 1998 Annual Meeting:
Federico Faggin ..................... 54 President and Chief Executive Officer of 1992
Synoptics, Inc.
John C. Bolger(1) ................... 49 Private investor 1993
Class III Directors--Term expiring at
the 1999 Annual Meeting:
D. John Carey ....................... 60 Chairman of the Board of Directors of the 1980
Company
Carl E. Berg(1) ..................... 59 Partner, Berg & Berg Industrial 1982
Developers
<FN>
- ----------
(1) Member of the Audit, Compensation and Stock Option Committees. As of August
28, 1996, Mr. Berg will no longer be a member of the Compensation and Stock
Option Committees. As of such date, Mr. Federico Faggin will become a member
of both such Committees.
</FN>
</TABLE>
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Mr. Perham joined the Company in October 1983 as Vice President and General
Manager, SRAM Division. In October 1986, Mr. Perham was appointed President and
Chief Operating Officer and a director of the Company. In April 1991, Mr. Perham
was elected Chief Executive Officer. Prior to joining the Company, Mr. Perham
held executive positions at Optical Information Systems Incorporated and Zilog
Inc.
Mr. Faggin has been a director of the Company since 1992. Mr. Faggin has been
President, Chief Executive Officer and a director of Synoptics, Inc., a neural
network research and development company, since 1986. He is a director of Aptix,
Inc., Atesla, Inc. and Orbit Semiconductor.
Mr. Bolger has been a director of the Company since January 1993. Mr. Bolger
is a private investor. He was Vice President-Finance and Administration of Cisco
Systems, Inc., an internetworking systems manufacturer, from 1989 to 1992 and
Vice President-Finance and Administration of KLA Instruments, Inc., an optical
inspection equipment manufacturer, from 1988 to 1989. Mr. Bolger is a director
of Integrated Systems, Inc., McAfee Associates Software Company, Sanmina
Corporation and TCSI Corporation.
Mr. Carey was elected to the Board of Directors in 1980 and has been Chairman
of the Board since 1982. He served as Chief Executive Officer of the Company
from 1982 until his resignation in April 1991 and was President of the Company
from 1982 until 1986. Mr. Carey was a founder of Advanced Micro Devices in 1969
and was an executive officer there until 1978.
Mr. Berg has been a director of the Company since 1982. Mr. Berg has been a
partner of Berg & Berg Developers, a real estate development partnership, since
1979. He is a director of Valence Technology and Videonics.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of seven (7) meetings
during the fiscal year ended March 31, 1996. The Board of Directors has Audit
and Compensation Committees, but does not have a Nominating Committee or any
committee performing this function. In addition, the Board has a Stock Option
Committee that administers the 1994 Stock Option Plan.
The Audit Committee, composed of Messrs. Berg and Bolger, recommends
engagement of the Company's independent auditors and is primarily responsible
for approving the services performed by the Company's independent auditors and
for reviewing and evaluating the Company's accounting practices and its systems
of internal accounting controls. Mr. Bolger is the Chair of the Audit Committee.
The Audit Committee held two (2) meetings during fiscal 1996.
The Compensation Committee, composed of Messrs. Berg and Bolger, determines
the salaries and incentive compensation for executive officers, including the
chief executive officer, and key personnel, other than stock options. Mr. Berg
is the Chair of the Compensation Committee. The Compensation Committee held four
(4) meetings during fiscal 1996. As of August 28, 1996, Mr. Federico Faggin will
replace Mr. Berg on such Committee. Mr. Bolger will become the Chairman of such
Committee.
The Stock Option Committee is composed of two directors who have not received
options under the Company's 1985 or 1994 Stock Option Plans in more than one
year, Messrs. Berg and Bolger. Mr. Berg is the Chair of the Stock Option
Committee. The Stock Option Committee administers the Company's stock option
plans, including determining the number of shares underlying options to be
granted to each employee and the terms of such options. The Stock Option
Committee held no meetings during fiscal 1996, but acted by unanimous written
consent thirteen (13) times during fiscal 1996. As of August 28, 1996, Mr.
Federico Faggin will replace Mr. Berg on such Committee. Mr. Bolger will become
the Chairman of such Committee.
Each director attended at least 75% of the aggregate of the total number of
meetings of the Board of Directors and the total number of meetings held by all
committees on which such director served during fiscal 1996.
DIRECTOR COMPENSATION
Members of the Board of Directors who are not also officers or employees of
the Company are paid an annual retainer in the amount of $10,000 per fiscal
year, $2,500 per board meeting attended (except telephone meetings) and $500 per
committee meeting attended if not conducted on the same day as a Board meeting.
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The Company's 1994 Directors Stock Option Plan (the "Directors Plan") was
adopted by the Board of Directors in May 1994 and was approved by the
stockholders in August 1994. All members of the Board of Directors who are not
also employees of the Company or of a parent or subsidiary of the Company
("Nonemployee Directors") are eligible to receive options under the Directors
Plan.
The Directors Plan provides for the mandatory grant of options on an annual
basis to the Company's Nonemployee Directors. The exercise price of options
granted under the Directors Plan may not be less than the fair market value of
the Company's Common Stock at the close of business the day before the grant.
Pursuant to the terms of the Directors Plan, each Nonemployee Director is
granted an option to purchase 16,000 shares of the Company's Common Stock on the
date of such Nonemployee Director's first election or appointment to the Board.
In addition, the Nonemployee Director who chairs the Audit Committee of the
Board of Directors is granted an option to purchase 4,000 shares of the
Company's Common Stock on the date of such Nonemployee Director's first election
or appointment as Chair of the Audit Committee. These options have a term of ten
years and become exercisable in cumulative increments of 25% per year,
commencing on the first anniversary of the date of grant.
Annually thereafter, each Nonemployee Director is granted an option to
purchase 4,000 shares of the Company's Common Stock and an additional 1,000
shares of the Company's Common Stock if the optionee is also Chair of the Audit
Committee. The annual grant is made on the anniversary date of the optionee's
receipt of the initial option granted under the Directors Plan. Such options
become exercisable in full on the fourth anniversary of the date of grant.
In addition, Mr. Faggin was granted a nonstatutory option covering 128,000
shares of Common Stock at an exercise price of $1.8125 per share on July 15,
1992, while he served as a consultant to the Company and before he became a
director. These options become exercisable in cumulative increments of 25% per
year beginning on the first anniversary of the date of grant.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF
EACH OF THE NOMINATED DIRECTORS
PROPOSAL NO. 2--APPROVAL OF AMENDMENT TO THE 1994 STOCK OPTION PLAN
Stockholders are being asked to approve an amendment to the Company's 1994
Stock Option Plan (the "1994 Option Plan") to increase the number of shares of
Common Stock reserved for issuance thereunder from 7,250,000 shares to
10,750,000 shares, an increase of 3,500,000 shares or 4.5% of the shares
outstanding as of the Record Date. The Board of Directors of the Company
approved the proposed amendment described above on April 25, 1996 to be
effective upon stockholder approval.
Below is a summary of the principal provisions of the 1994 Option Plan
assuming approval of the above amendment, which summary is qualified in its
entirety by reference to the full text of the 1994 Option Plan.
1994 OPTION PLAN HISTORY
In May 1994, the Board of Directors of the Company adopted the 1994 Option
Plan and on August 25, 1994 it was approved by the stockholders of the Company.
3,250,000 shares of Common Stock were originally reserved for issuance under the
1994 Option Plan. In May 1995, the Board of Directors approved an amendment to
the 1994 Option Plan to increase the number of shares reserved for issuance
thereunder to 7,250,000, and on August 24, 1995 it was approved by the
stockholders of the Company. In addition, up to 10,000,000 shares of Common
Stock issuable upon exercise of stock options available for future grant or
currently outstanding pursuant to the Company's 1985 Option Plan that expire or
become unexercisable for
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any reason without having been exercised in full are available for issuance
under the 1994 Option Plan. The 1994 Option Plan was intended to replace the
1985 Option Plan, which the Board of Directors terminated upon stockholder
approval of the 1994 Option Plan.
DESCRIPTION OF THE 1994 STOCK OPTION PLAN
Purpose. The purpose of the 1994 Option Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company and its affiliates, by
offering them an opportunity to participate in the Company's future performance
through awards of stock options. The Board of Directors believes that the use of
stock options as a supplement to other forms of compensation paid by the Company
is desirable to secure for the Company and its stockholders the advantages of
stock ownership by participants, upon whose efforts, initiative and judgment the
Company is largely dependent for the successful conduct of its business.
Plan Terms. The 1994 Option Plan provides for the grant of incentive stock
options ("ISOs") and nonstatutory stock options ("NSOs") to employees of the
Company and its affiliates and the grant of NSOs to independent contractors,
consultants and advisors of the Company and its affiliates, including directors
who are also employees or consultants. A maximum of 3,769,433 shares were
available for issuance as of the Record Date pursuant to the 1994 Option Plan
(assuming approval of the proposed amendment). Each optionee will be eligible to
receive options to purchase up to an aggregate maximum of 1,000,000 shares of
Common Stock per fiscal year under the 1994 Option Plan. As of July 1, 1996,
there were approximately 1,900 persons eligible to receive awards of stock
options under the 1994 Option Plan.
The purchase price of the stock covered by all options may not be less than
100% of the fair market value of the Common Stock on the date the option is
granted. The fair market value on the date of grant is defined as the closing
price of the Common Stock as reported by the Nasdaq National Market on the
trading day immediately preceding the date on which the fair market value is
determined. If an employee owns more than 10% of the total combined voting power
of all classes of the Company's stock, the exercise price of an ISO must be at
least 110% of such fair market value. If any option is forfeited or terminates
for any reason before being exercised, then the shares of Common Stock subject
to such option shall again become available for future awards under the 1994
Option Plan.
Plan Administration. The 1994 Option Plan is administered, subject to its
terms, by the Stock Option Committee, whose members are designated by the Board
of Directors. The members of the Stock Option Committee are "disinterested
persons" within the meaning of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and "outside directors"
within the meaning of the Internal Revenue Code of 1986, as amended (the
"Code"). Subject to the terms and conditions of the 1994 Option Plan, the Stock
Option Committee, in its discretion, designates those individuals who are to be
granted options, whether the options will be ISOs or NSOs, the number of shares
for which an option or options will be awarded, the exercise price of the
option, the periods during which the option may be exercised and other terms and
conditions of the option. The interpretation or construction by the Stock Option
Committee of any provision of the 1994 Option Plan or of any option granted
under it is final and binding on all optionees.
Stock Option Agreements. Each option is evidenced by a written stock option
agreement adopted by the Stock Option Committee. Each option agreement states
when and the extent to which options become exercisable, and the agreements need
not be uniform. Options expire not more than ten years after the date of grant
(five years in the case of an ISO granted to a 10% stockholder), or sooner upon
an optionee's termination of employment. With respect to options granted as
ISOs, option agreements contain such other provisions as necessary to comply
with Section 422 of the Code. The exercise price may be paid in cash or check
or, at the discretion of the Stock Option Committee, by delivery of fully paid
shares of Common Stock of the Company that have been owned by the optionee for
more than six months, by waiver of compensation, through a "same day sale,"
through a "margin commitment" or by any combination of the foregoing.
Termination of Employment. Options granted under the 1994 Option Plan
terminate three months after the optionee ceases to be employed by the Company
unless (i) the termination of employment is due to permanent and total
disability, in which case the option may, but need not, provide that it may be
exercised
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at any time within 12 months of termination to the extent the option was
exercisable on the date of termination; (ii) the optionee dies while employed by
the Company or within three months after termination of employment, in which
case the option may, but need not, provide that it may be exercised at any time
within 18 months after death to the extent the option was exercisable on the
date of death; or (iii) the option by its terms specifically provides otherwise.
In no event will an option be exercisable after the expiration date of the
option.
Amendment and Termination. The Board of Directors may at any time terminate
or amend the 1994 Option Plan. Rights and obligations under any award granted
before amendment shall not be materially changed or adversely affected by such
amendment except with the consent of the optionee. Amendments to the 1994 Option
Plan are subject to the approval of the Company's stockholders only to the
extent required by applicable laws, regulations or rules. The 1994 Option Plan
will continue in effect until May 2004, subject to earlier termination by the
Board of Directors.
Accelerated Vesting. In the event of (i) a merger or acquisition in which the
Company is not the surviving entity (except for a transaction to change the
state in which the Company is incorporated), (ii) the sale, transfer or other
disposition of all or substantially all of the assets of the Company or (iii)
any other corporate reorganization or business combination that is not approved
by the Board of Directors and in which the beneficial ownership of 50% or more
of the Company's voting stock is transferred, all options outstanding under the
1994 Option Plan shall become fully exercisable immediately before the effective
date of the transaction. Options will not become fully exercisable, however, if
and to the extent that options are either to be assumed by the successor
corporation or parent thereof or to be replaced with a comparable option to
purchase shares of the capital stock of the successor corporation or parent
thereof. Upon the effective date of such transaction, all options outstanding
will terminate and cease to be exercisable, except to the extent they were
previously exercised or assumed by the successor corporation or its parent. In
the event of (i) a tender or exchange offer that is not recommended by the
Company's Board of Directors for 25% or more of the Company's voting stock by a
person or related group of persons other than the Company or an affiliate of the
Company or (ii) a contested election for the Board of Directors that results in
a change in a majority of the Board within any period of 24 months or less, all
options outstanding under the 1994 Option Plan will become fully exercisable 15
days following the effective date of such event. In such event, all options
outstanding under the 1994 Option Plan will remain exercisable until the
expiration or sooner termination of the option term specified in the option
agreement. Acceleration of the exercisability of options may have the effect of
depressing the market price of the Company's Common Stock and denying
stockholders a control premium that might otherwise be paid for their shares in
such a transaction and may have the effect of discouraging a proposal for
merger, a takeover attempt or other efforts to gain control of the Company.
Adjustments Upon Changes in Capitalization. If the number of shares of Common
Stock outstanding is changed by a stock dividend, stock split, reverse stock
split, recapitalization, subdivision, combination, reclassification or similar
change in the capital structure of the Company without consideration or by
certain types of acquisitions of the Company, the Stock Option Committee will
make appropriate adjustments in the aggregate number of securities subject to
the 1994 Option Plan and the number of securities and the price per share
subject to outstanding options. In the event of the proposed dissolution or
liquidation of the Company, the Board of Directors must notify optionees at
least 15 days before such proposed action. To the extent that options have not
previously been exercised, such options will terminate immediately before
consummation of such proposed action.
Nontransferability. The rights of an optionee under the 1994 Option Plan are
not assignable by such optionee, by operation of law or otherwise, except by
will or the applicable laws of descent and distribution or in the event of an
optionee's divorce or dissolution of marriage. Options granted under the 1994
Option Plan are exercisable during the optionee's lifetime only by the optionee
or the optionee's guardian or legal representative.
FEDERAL INCOME TAX INFORMATION
Incentive Stock Options. An optionee does not recognize income upon the grant
of an ISO and incurs no tax on its exercise (unless the optionee is subject to
the alternative minimum tax described below). If the
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optionee holds the stock acquired upon exercise of an ISO (the "ISO Shares") for
more than one year after the date the option was exercised and for more than two
years after the date the option was granted, the optionee generally will realize
long-term capital gain or loss (rather than ordinary income or loss) upon
disposition of the ISO Shares. This gain or loss will be equal to the difference
between the amount realized upon such disposition and the amount paid for the
ISO Shares. If the optionee disposes of ISO Shares before the expiration of
either required holding period (a "disqualifying disposition"), then gain
realized upon such disqualifying disposition, up to the difference between the
fair market value of the ISO Shares on the date of exercise (or, if less, the
amount realized on a sale of such ISO Shares) and the option exercise price,
will be treated as ordinary income. Any additional gain will be long-term or
short-term capital gain, depending upon the length of time the optionee held the
ISO Shares. The Company will be entitled to a deduction in connection with the
disposition of ISO Shares only to the extent that the optionee recognizes
ordinary income on a disqualifying disposition of the ISO Shares.
Alternative Minimum Tax. The difference between the exercise price and fair
market value of the ISO Shares on the date of exercise of an ISO is an
adjustment to income for purposes of the alternative minimum tax ("AMT"). The
AMT (imposed to the extent it exceeds the taxpayer's regular tax) is 26% of an
individual taxpayer's alternative minimum taxable income (28% in the case of
alternative minimum taxable income in excess of $175,000). Alternative minimum
taxable income is determined by adjusting regular taxable income for certain
items, increasing that income by certain tax preference items and reducing this
amount by the applicable exemption amount ($45,000 in the case of a joint
return, subject to reduction in certain circumstances). If a disqualifying
disposition of the ISO Shares occurs in the same calendar year as exercise of
the ISO, there is no AMT adjustment with respect to those ISO Shares. Also, upon
a sale of ISO Shares that is not a disqualifying disposition, alternative
minimum taxable income is reduced in the year of sale by the excess of the fair
market value of the ISO Shares at exercise over the amount paid for the ISO
Shares.
Nonstatutory Stock Options. An optionee does not recognize any taxable income
at the time an NSO is granted. However, upon exercise of an NSO, the optionee
must include in income as compensation an amount equal to the difference between
the fair market value of the shares on the date of exercise (or, in the case of
exercise for stock subject to a substantial risk of forfeiture, at the time such
forfeiture restriction lapses) and the amount paid for that stock upon exercise
of the NSO. In the case of stock subject to a substantial risk of forfeiture, if
the optionee makes an 83(b) election, the included amount must be based on the
difference between the fair market value on the date of exercise and the option
exercise price. The included amount must be treated as ordinary income by the
optionee and will be subject to income tax withholding by the Company. Upon
resale of the shares by the optionee, any subsequent appreciation or
depreciation in the value of the shares will be treated as capital gain or loss.
The Company will be entitled to a deduction in connection with the exercise of
an NSO by a domestic optionee to the extent that the optionee recognizes
ordinary income and the Company withholds tax.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT
TO THE 1994 STOCK OPTION PLAN
PROPOSAL NO. 3--RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Price Waterhouse LLP as the Company's
independent accountants for the fiscal year ending March 30, 1997, and the
stockholders are being asked to ratify such selection. Price Waterhouse LLP has
been engaged as the Company's independent accountants since 1993.
Representatives of Price Waterhouse LLP are expected to be present at the Annual
Meeting, will be given an opportunity to make a statement if they desire to do
so, and are expected to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF PRICE
WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS
7
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of July 1, 1996, with
respect to the beneficial ownership of the Company's Common Stock by: (a) each
stockholder known by the Company to be the beneficial owner of more than five
percent of the Company's Common Stock; (b) each director and nominee; (c) each
Named Executive Officer (as defined below); and (d) all officers and directors
as a group.
NAME AND ADDRESS SHARES BENEFICALLY PERCENT OF BENEFICIAL
OF BENEFICIAL OWNER OWNED(1)(2) OWNERSHIP
- -------------------------------------- ------------------ ---------------------
Jurika & Voyles Inc.(3) ............... 4,299,700 5.5%
Carl E. Berg(4) ....................... 2,382,708 3.1
D. John Carey(5) ...................... 1,163,500 1.5
Leonard C. Perham(6) .................. 650,759 *
Frederico Faggin(7) ................... 76,000 *
Chuen-Der Lien(8) ..................... 56,058 *
Alan H. Huggins(9) .................... 53,737 *
Daniel L. Lewis(10) ................... 12,266 *
L. Robert Phillips .................... -- *
John C. Bolger(11) .................... 12,000 *
All executive officers and
directors as a group
(14 persons)(12) ..................... 4,607,646 5.8
- ----------
* Less than 1%.
(1) Unless otherwise indicated below, the Company believes that the persons
named in the table have sole voting and sole investment power with respect
to all shares of Common Stock shown in the table to be beneficially owned
by them, subject to community property laws where applicable.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days upon the exercise of options. Each
stockholder's percentage ownership is determined by assuming that options
that are held by such person (but not those held by any other person) and
that are exercisable within 60 days of July 1, 1996, have been exercised.
(3) Based on a Schedule 13G filed by Jurika & Voyles Inc. ("J&V") in February
1996. The address of J&V is 1999 Harrison Street, Suite 700, Oakland,
California 94612.
(4) Represents 1,632,908 shares held of record by Mr. Berg, 589,000 shares held
of record by West Coast Venture Capital, L.P., of which Mr. Berg is a
general partner, 87,800 shares held of record by a trust for Mr. Berg's
child, 25,000 shares held of record by Mr. Berg's spouse and 48,000 shares
subject to options exercisable within 60 days of July 1, 1996. Does not
include approximately 782,445 shares of Common Stock to be issued to Mr.
Berg and his brother pursuant to an acquisition by the Company of Baccarat
Silicon, Inc., of which Mr. Berg and his brother are the only shareholders.
See "Certain Transactions."
(5) Represents 854,198 shares held of record by Mr. Carey, 7,278 shares held of
record by Mr. Carey's 401(k) plan account and 302,024 shares subject to
options exercisable within 60 days of July 1, 1996.
(6) Represents 11,000 shares beneficially owned by Mr. Perham, 8,286 shares
held of record by Mr. Perham's 401(k) plan account and 631,473 shares
subject to options exercisable within 60 days of July 1, 1996.
(7) Represents 76,000 shares subject to options exercisable within 60 days of
July 1, 1996.
(8) Includes 2,140 shares held of record by Mr. Lien's 401(k) plan account and
50,000 shares subject to options exercisable within 60 days of July 1,
1996.
(9) Includes 47,169 shares subject to options exercisable within 60 days of
July 1, 1996. Mr. Huggins resigned from the Company in June 1996.
(10) Represents 600 shares held by Mr. Lewis as custodian for his son and 11,666
shares subject to options exercisable within 60 days of July 1, 1996.
(11) Represents 12,000 shares subject to options exercisable within 60 days of
July 1, 1996.
(12) Includes 1,363,344 shares subject to options exercisable within 60 days of
July 1, 1996.
8
<PAGE>
<TABLE>
EXECUTIVE COMPENSATION
The following table shows certain information concerning the compensation of
each of the Company's Chief Executive Officer and the Company's four most highly
compensated executive officers other than the Chief Executive Officer of the
Company who were serving as executive officers at the end of fiscal 1996 for
services rendered in all capacities to the Company for the fiscal years ended
1996, 1995 and 1994 (together, the "Named Executive Officers"). This information
includes the dollar values of base salaries, bonus awards, the number of stock
options granted and certain other compensation, if any, whether paid or
deferred. The Company does not grant stock appreciation rights and has no long
term compensation benefits other than stock options.
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------------------- -------------
SHARES
NAME AND FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION($)(2) OPTIONS(#) COMPENSATION($)(3)
- ------------------------ -------- ---------- ------------ ------------------ -------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Leonard C. Perham ....... 1996 $341,600 $1,369,003 -- 400,000(4) $1,045
Chief Executive Officer 1995 277,776 947,329 -- 160,000(4) 677
1994 277,776 401,295 -- 280,000 4,162
Alan H. Huggins(5) ...... 1996 193,218 388,764 -- 110,000(4) 1,045
Vice President--Memory 1995 172,788 395,607 -- 44,000 677
Division 1994 160,950 166,549 -- 116,000 2,552
Daniel L. Lewis ......... 1996 157,200 294,664 -- 40,000(4) 1,045
Vice President--Sales 1995 141,102 219,287 -- 20,000 677
and Marketing 1994 129,744 137,641 -- 20,000 2,129
Chuen-Der Lien .......... 1996 180,480 425,125 -- 160,000(4) 1,045
Vice President-- 1995 155,124 378,710 -- 32,000 677
Technology Development 1994 138,250 177,391 -- 44,000 2,231
L. Robert Phillips(6) .. 1996 175,200 257,000 $82,243 190,000(4) 566
Vice President-- 1995 19,542 75,000 -- 160,000 --
Worldwide Manufacturing 1994 -- -- -- -- --
<FN>
- ----------
(1) Amounts listed in this column for 1996, 1995 and 1994 include cash paid
under the Company's Profit Sharing Plan, as follows: Mr. Perham, $52,183,
$30,729 and $14,745; Mr. Huggins, $29,764, $18,957 and $8,669; Mr. Lewis,
$24,077, $15,213 and $6,945; Mr. Lien, $27,625, $17,160 and $7,391; and Mr.
Phillips, $14,314, $0 and $0.
(2) The amount reflected for Mr. Phillips represents a housing relocation
allowance.
(3) Amounts listed in this column for 1994 are the cash value of contributions
for the first half of 1994 made in the Common Stock of the Company to the
Long-Term Incentive Plan ("LTIP") for each of the Named Executive Officers
and the contributions by the Company for the second half of 1994 to the
individual 401(k) accounts of the Named Executive Officers. LTIP
contributions are aggregated and held in trust and paid out to Named
Executive Officers (or any plan participant) only upon retirement,
termination, disability or death. During the last half of 1994, the LTIP
was terminated and the value of participants' share balances were
transferred to individual participant 401(k) accounts. Effective the second
half of 1994, the Company made contributions to individual 401(k) accounts
of 1% of net profit before taxes, allocated equally to all United States
plan participants. For the second half of 1994, that amounted to $234 per
participant and is included in this column for 1994. Amounts listed in this
column for 1995 and 1996 are the Company's contributions to the individual
401(k) accounts of each of the Named Executive Officers for 1995 and 1996,
respectively.
(4) Represents an option for 160,000 shares granted in 1995 and repriced in
1996 and an option for 120,000 shares granted in 1996 and repriced in 1996
for Mr. Perham; an option for 44,000 shares granted in 1995 and repriced in
1996 and an option for 33,000 shares granted in 1996 and repriced in 1996
for Mr. Huggins; an option for 20,000 shares granted in 1996 and repriced
in 1996 for Mr. Lewis; an option for 32,000 shares granted in 1995 and
repriced in 1996 and options for 64,000 shares granted in 1996 and repriced
in 1996 for Mr. Lien; and an option for 160,000 shares granted in 1995 and
repriced in 1996 and an option for 30,000 shares granted in 1996 that was
not repriced for Mr. Phillips. (5) Mr. Huggins resigned from the Company in
June 1996. (6) Mr. Phillips joined the Company in February 1995.
</FN>
</TABLE>
9
<PAGE>
<TABLE>
The following table contains information concerning the grant of stock
options under the Company's 1994 Option Plan to the Named Executive Officers
during fiscal 1996. In addition, there are shown the hypothetical gains or
"option spreads" that would exist for the respective options based on assumed
rates of annual compound stock appreciation of 5% and 10% from the date of grant
over the full option term. Actual gains, if any, on option exercises are
dependent on the future performance of the Company's Common Stock. The
hypothetical gains shown in this table are not intended to forecast possible
future appreciation, if any, of the stock price.
OPTION GRANTS IN FISCAL 1996
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(1)
- ------------------------------------------------------------------------ -------------------------
NUMBER OF % OF TOTAL
SHARES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES PRICE EXPIRATION
NAME GRANTED(2) IN FISCAL 1996 ($/SHARE)(2) DATE(3) 5% 10%
- ------------------- ------------- --------------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Leonard C. Perham . 280,000(4) 3.8% $ 9.875 10/03/02 $1,125,633 $2,623,203
120,000 1.6 19.875 10/15/05 1,499,914 3,801,076
Alan H. Huggins ... 77,000(4) 1.1 9.875 11/07/02 309,549 721,381
33,000 0.5 18.375 11/15/05 381,346 966,406
Daniel L. Lewis ... 20,000(4) 0.3 9.875 07/30/02 80,402 187,372
20,000 0.3 32.0625 08/15/05 403,279 1,021,987
Chuen-Der Lien ..... 96,000(4) 1.3 9.875 08/10/02 385,931 899,384
64,000 0.9 32.0625 08/15/05 1,290,492 3,270,360
L. Robert Phillips 160,000(4) 2.2 9.875 03/06/02 643,219 1,498,973
30,000 0.4 12.625 02/15/03 154,189 359,327
<FN>
- ----------
(1) In accordance with Securities and Exchange Commission (the "SEC") rules,
these columns show gains that might exist for the respective options over
the period of the option terms. This valuation model is hypothetical. If the
stock price does not increase over the exercise price, compensation to the
Named Executive Officer would be zero.
(2) All stock options are granted at the fair market value on the date of grant.
These options generally become fully exercisable as to all shares by the
fourth anniversary of the date of grant. The terms of the 1994 Option Plan
provide that these options may become exercisable in full in the event of a
change in control (as defined in the 1994 Option Plan). The exercise price
and tax withholding obligations related to exercise may be paid by delivery
of shares already owned and tax withholding obligations related to exercise
may be paid by offset of the underlying shares, subject to certain
conditions.
(3) Represents the last expiration date of options. Certain shares pursuant to
such options expire before the dates stated.
(4) These represent options that were repriced on January 15, 1996. These
repriced options become exercisable in 1997 through 2000. Except for an
option for 120,000 shares for Mr. Perham, an option for 33,000 shares for
Mr. Huggins, an option for 20,000 shares for Mr. Lewis and options for
64,000 shares to Mr. Lien, all options represent repricings during 1996 of
options granted prior to 1996.
</FN>
</TABLE>
10
<PAGE>
<TABLE>
The following table shows the number of shares of Common Stock acquired by
each of the Named Executive Officers upon the exercise of stock options during
fiscal 1996, the net value realized upon exercise, the number of shares of
Common Stock represented by outstanding stock options held by each of the Named
Executive Officers as of March 31, 1996 and the value of such options based on
the closing price of the Company's Common Stock at fiscal year-end ($11.375).
AGGREGATED OPTION EXERCISES IN FISCAL 1996 AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR-END(#)(1) AT FISCAL YEAR-END($)(2)
---------------------------- ---------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE(#) REALIZED(1) EXERCISABLE / UNEXERCISABLE EXERCISABLE / UNEXERCISABLE
- --------------------- ------------- ----------- ---------------------------- ---------------------------
<S> <C> <C> <C> <C>
Leonard C. Perham ... -- -- 580,640 / 499,167 $5,019,885 / $1,783,594
Alan H. Huggins ...... 34,000 $623,625 36,169 / 138,834 278,175 / 483,979
Daniel L. Lewis ...... 20,000 562,500 18,333 / 61,667 175,312 / 167,188
Chuen-Der Lien ....... 11,000 193,469 44,666 / 133,334 417,000 / 303,000
Lawrence R. Phillips -- -- -- / 190,000 -- / 240,000
<FN>
- ----------
(1) "Value Realized" represents the fair market value of the shares underlying
the options on the date of exercise less the aggregate exercise price.
(2) These values, unlike the amounts set forth in the column entitled "Value
Realized," have not been, and may never be, realized, and are based on the
positive spread between the respective exercise prices of outstanding
options and the closing price of the Company's Common Stock on March 29,
1996, the last day of trading for fiscal 1996.
</FN>
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
The Company has a Compensation Committee of the Board of Directors, comprised
of Carl E. Berg and John C. Bolger, both of whom are outside directors. The
Stock Option Committee, which makes decisions regarding option grants to
employees including executive officers, consists of Carl E. Berg and John C.
Bolger. Leonard C. Perham, the Chief Executive Officer and a director of the
Company, assigns the "performance units" assigned to executive officers (other
than the Chief Executive Officer) and key employees for purposes of determining
the amount of the annual cash bonus to each. See "Certain Transactions" below.
As of August 28, 1996, Mr. Federico Faggin will replace Mr. Berg on the
Compensation Committee.
11
<PAGE>
REPORT OF COMPENSATION AND STOCK OPTION COMMITTEES
ON EXECUTIVE COMPENSATION
The Report of the Compensation and Stock Option Committees on Executive
Compensation shall not be deemed to be incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of 1934, except
to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
This report is provided by the Compensation and Stock Option Committees of
the Board of Directors of Integrated Device Technology, Inc. to assist
stockholders in understanding the objectives and procedures in establishing the
compensation of the Company's Chief Executive Officer, Leonard C. Perham, and
other executive officers. During the Company's fiscal year ended March 31, 1996,
the Company's compensation program was administered by the Compensation
Committee and the Stock Option Committee of the Board of Directors. The role of
the Compensation Committee was to review and approve salaries, cash bonuses and
other compensation of the executive officers. The role of the Stock Option
Committee was to administer the 1994 Option Plan, including review and approval
of stock option grants to the executive officers. The Compensation Committee and
the Stock Option Committee each consist solely of outside directors, Messrs.
Berg and Bolger.
COMPENSATION PHILOSOPHY
The Compensation Committee believes that the compensation of the Company's
executive officers should be:
o competitive in the market place;
o directly linked to the Company's profitability and to the value of the
Company's Common Stock; and
o sufficient to attract, retain and motivate well-qualified executives who
will contribute to the long- term success of the Company.
The Company's Human Resources Department, working with an independent outside
consulting firm, developed executive compensation data from a nationally
recognized survey for a group of similar size high technology companies and
provided this data to the Compensation Committee and the Stock Option Committee.
The factors used to determine the participants in the survey included annual
revenue, industry, growth rate and geography. The Company's executive level
positions, including the Chief Executive Officer, were matched to comparable
survey positions and competitive market compensation levels to determine base
salary, target incentives and target total cash compensation. Practices of such
companies with respect to stock option grants are also reviewed and compared.
In preparing the performance graph for this Proxy Statement, the Company used
the S&P Electronic (Semi/Components) Index ("S&P Index") as its published line
of business index. The companies in this survey are substantially similar to the
companies contained in the S&P Index. Approximately two thirds of the companies
included in the survey group are included in the S&P Index. The remaining
companies included in the survey group were felt to be relevant by the Company's
independent compensation consultants because they compete for executive talent
with the Company notwithstanding that they are not included in the S&P Index. In
addition, certain companies in the S&P Index were excluded from the survey group
because they were determined not to be competitive with the Company for
executive talent, or because compensation information was not available.
This competitive market data is reviewed with the Chief Executive Officer for
each executive level position and with the Compensation Committee and the Stock
Option Committee as to the Chief Executive Officer. In addition, each executive
officer's performance for the last fiscal year and objectives for the subsequent
year are viewed, together with the executive's responsibility level and the
Company's fiscal performance versus objectives and potential performance targets
for the subsequent year.
KEY ELEMENTS OF EXECUTIVE COMPENSATION
The Company's executive compensation program consists of a cash and an
equity-based component. Base pay and, if warranted, an annual bonus and a
semi-annual award under the Company's Profit Sharing
12
<PAGE>
Plan constitute the cash components. Grants of stock options under the Company's
1994 Option Plan comprise the equity-based component. The Vice President of
Sales is also eligible to receive a commission- based bonus, which is paid
quarterly.
Cash Components. Cash compensation is designed to fluctuate with Company
performance. In years that the Company exhibits superior financial performance,
cash compensation is designed to be above average competitive levels; when
financial performance is below goal, cash compensation is designed generally to
be below average competitive levels. Essentially, this is achieved through the
cash bonus and Profit Sharing Plan awards, which fluctuate generally with
pre-tax profitability.
BASE PAY: Base pay guidelines are established for executive officers after a
review of compensation survey data referred to above. Individual base pay within
the guidelines is based on sustained individual performance toward achieving the
Company's goals and objectives. Executive salaries are reviewed annually.
Executive officer salaries were targeted to the 45th percentile of companies
included in the survey data and increased by approximately 9% over salaries in
fiscal 1995.
BONUS: The Company pays an annual cash bonus to certain executive officers
and other key employees based on the pre-tax earnings of the Company and the
employee's individual performance. Payment of these bonuses is normally made in
the first quarter of each fiscal year for performance during the previous year.
At the beginning of each fiscal year, each eligible employee is assigned a
specific number of "performance units." The number of performance units assigned
to the Chief Executive Officer is determined by the Compensation Committee. The
number of performance units assigned to the other executive officers and key
employees is recommended by the Chief Executive Officer and determined by the
Compensation Committee. The specific number of performance units assigned is
based, in part, on the importance of the individual's job and area of
responsibility relative to the Company's goals. Two-thirds of the cash amount of
the bonus for each eligible employee is based on a value per performance unit
equal to the pre-tax earnings per share of the Company's Common Stock for the
fiscal year. In addition, at the end of the fiscal year, the Compensation
Committee allocates 2% of pre-tax earnings between the Chief Executive Officer
and all eligible employees as a group. The portion not allocated by the
Compensation Committee is allocated by the Chief Executive Officer to eligible
employees on the basis of their respective contributions. The aggregate amount
of all bonuses paid for any single fiscal year may not exceed 6% of pre-tax
profits for the year. The Compensation Committee approves Company performance
objectives to be used for bonus determination and approves the overall structure
and mechanics of the bonus program. For fiscal 1996, bonuses aggregating
$8,361,820 were paid to a total of 394 individuals.
PROFIT SHARING PLAN: The Profit Sharing Plan is available to all employees
who have at least six months of service with the Company. The Board of Directors
determines the amount of annual contributions under the Profit Sharing Plan. In
fiscal 1996, the Board set aside 7.0% of pre-tax earnings to be contributed to
the Profit Sharing Plan. Additionally, 1% of pre-tax profit is contributed
semiannually to each employee's Section 401(k) Plan account. Contributions to
the Profit Sharing Plan and Section 401(k) Plan are made in cash and distributed
to employees semi-annually. The amount of each participating employee's
distribution is that portion of the total funds available for distribution equal
to such employee's base salary divided by the aggregate base salaries of all
participating employees. An aggregate of $290,668 was paid to executive officers
under the Profit Sharing Plan and Section 401(k) Plan for fiscal 1996
performance.
Equity-Based Component. Stock options are an essential element of the
Company's executive compensation package. The Stock Option Committee believes
that equity-based compensation in the form of stock options links the interests
of management and stockholders by focusing employees and management on
increasing stockholder value. The actual value of such equity-based compensation
depends entirely on appreciation of the Company's stock. Approximately 50% of
the Company's employees participate in the Company's 1994 Option Plan.
During fiscal 1996, the Stock Option Committee made stock option grants to
certain executives including the Chief Executive Officer. See "Executive
Compensation--Other Grants in Fiscal 1996." Generally, for executive officers,
the stock option grants were higher than the grants made by the survey
companies. Stock options typically have been granted to executive officers when
the executive first joins the Company, annually thereafter, in connection with
significant changes in responsibilities, and, occasionally, to achieve
13
<PAGE>
equity within a peer group. The number of shares subject to each stock option
granted takes into account or is based on anticipated future contribution and
ability to impact corporate and/or business unit results, past performance or
consistency within the executive's peer group, prior option grants to the
executive officer and the level of vested and unvested options. The purpose of
these options is to provide greater incentives to those officers to continue
their employment with the Company and to strive to increase the value of the
Company's Common Stock. Options have been granted at exercise prices of not less
than fair market value of the Company's Common Stock on the date of grant. These
options generally vest as to 25% of the total shares one year after the date of
grant and then monthly over the next three years. In addition, the Committee has
also granted "fourever" options, which vest monthly over the one year period
following the third anniversary of the date of grant. The "fourever" program is
intended to provide continuing incentive to employees to remain with the
Company.
1996 CEO COMPENSATION
In evaluating the compensation of Mr. Perham, President and Chief Executive
Officer of the Company, for services rendered in fiscal year 1996, the
Compensation Committee examined both quantitative and qualitative factors. In
looking at quantitative factors, the Compensation Committee reviewed the
Company's fiscal 1996 financial results and compared them with the Company's
financial results in fiscal 1995 and with the companies in the S&P Electronics
Index. The Compensation Committee reviewed the Company's net income of
$120,170,000 for fiscal 1996, the Company's increase in earnings per share in
fiscal 1996, the Company's increase in net sales for fiscal 1996, and other
quantitative factors. The Compensation Committee did not apply any specific
quantitative formula which could assign weights to those performance measures or
establish numerical targets for any given factor.
Based on the foregoing, and the factors considered in determining the sizes
of the stock option awards discussed above, the Compensation Committee made the
following determinations with respect to Mr. Perham's compensation for fiscal
1996.
In fiscal 1996, Mr. Perham's base salary was increased to $341,600 (compared
to $277,776 in fiscal 1995).
Mr. Perham received a $1,316,820 bonus in fiscal 1996. The bonus was based in
part on the payout of 90% of 280,000 performance units and the attainment of
$2.00 in pre-tax profit per share in fiscal 1996. The remainder of the bonus was
a discretionary cash award of 0.5% of pre-tax profit. For fiscal 1996, Mr.
Perham also received an aggregate of $53,228 under the Profit Sharing Plan and
the Section 401(k) Plan.
During fiscal 1996, Mr. Perham was granted an option for 120,000 shares. The
Stock Option Committee believes such option is appropriate for Mr. Perham's
level of responsibility and is well within competitive practice, taking into
account prior option grant history, the level of vested versus unvested shares
and the number of shares Mr. Perham already owned. The Stock Option Committee
determined that this new option grant provided the necessary incentive to Mr.
Perham.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as amended ("Section
162(m)"), generally provides that publicly held corporations may not deduct in
any taxable year certain compensation in excess of $1 million paid to the chief
executive officer and the next five most highly compensated executive officers.
The 1994 Option Plan and the 1995 Executive Performance Plan are in compliance
with Section 162(m) and the Company believes that its compensation programs will
generally satisfy the requirements for deductibility of all cash and
stock-related incentive compensation to be paid to the Company's executive
officer under Section 162(m). However, the Compensation Committee considers one
of its primary responsibilities to be providing a compensation program that will
attract, retain and reward executive talent necessary to maximize shareholder
returns. Accordingly, the Compensation Committee believes that the Company's
interests are best served in some circumstances to provide compensation (such as
salary and perquisites) which might be subject to the tax deductibility
limitation of Section 162(m).
1996 OPTION REPRICING PROGRAM
Competition for skilled engineers and other key employees in the
semiconductor industry is intense and the use of significant stock options for
retention and motivation of such personnel is widespread in the high technology
industries. The Stock Option Committee believes that stock options are a
critical component of
14
<PAGE>
the compensation offered by the Company to promote long-term retention of key
employees, motivate high levels of performance and recognize employee
contributions in the success of the Company. The market price of the Company's
common stock decreased substantially from a high of $33.25 in the August 1995 to
a low of $9.2500 in the first quarter of 1996. In light of this substantial
decline in the market price, the Stock Option Committee believed that the large
numbers of outstanding stock options with an exercise price in excess of the
actual market price were no longer an effective tool to encourage employee
retention or to motivate high levels of performance. As a result, the Stock
Option Committee approved on January 15, 1996 an option repricing program.
All executive officers and employees and certain consultants were eligible to
participate. Under the program, the eligible optionees were permitted to
exchange one or more of their existing stock options with an exercise price
above $9.8750 ("Old Options") for new stock options ("Repriced Options")
covering a number of shares equal to the number of unexercised shares covered by
the applicable Old Option. Each exchanged Old Option was cancelled. The exercise
price of the Repriced Options was equal to the closing market price ($9.8750) on
January 14, 1996, the trading date preceding the date on which the Stock Option
Committee approved the repricing plan. The schedules on which Repriced Options
became exercisable were, subject to the exercise black-out period described
below, identical to the applicable exchanged and cancelled Old Options. Exercise
periods for Repriced Options whose original term remaining were more than seven
years were decreased to a maximum of seven years. Notwithstanding the foregoing
and except for the circumstances described below, each Repriced Option was
prohibited from being exercised, in whole or in part (notwithstanding any amount
that may have previously been exercisable) until January 15, 1997, at which time
the same number of shares that would have been exercisable on January 15, 1996
under the Old Option become exercisable under the Repriced Option. As a result
of this restriction, optionees who voluntarily left the Company or who were
involuntarily terminated for cause or performance before January 15, 1997 will
not have an opportunity to exercise all or part of their repriced options.
<TABLE>
Options repriced from April 1, 1986 through March 31, 1996 for each of the
Company's executive officers at the end of fiscal 1996, are listed in the
following table:
<CAPTION>
NUMBER OF LENGTH OF
SECURITIES MARKET PRICE ORIGINAL OPTION
UNDERLYING OF STOCK AT EXERCISE PRICE TERM REMAINING
OPTIONS TIME OF AT TIME OF NEW AT DATE OF
REPRICED OR REPRICING OR REPRICING OR EXERCISE REPRICING OR
NAME DATE AMENDED(1)(2) AMENDMENT AMENDMENT PRICE AMENDMENT
- -------------------- ---------- ------------- -------------- -------------- ---------- ------------------
<S> <C> <C> <C> <C> <C> <C>
D. John Carey ....... 10/28/87 90,000 $2.9600 $ 5.2500 $2.9600 5 years, 0 months
11/29/88 90,000 4.2500 5.6250 4.2500 5 years, 3 months
02/02/90 90,000 2.5625 2.9600 2.5625 2 years, 9 months
02/02/90 90,000 2.5625 4.2500 2.5625 3 years, 10 months
02/02/90 90,000 2.5625 4.6875 2.5625 5 years, 0 months
10/15/90 300,000 1.8125 2.3767 1.8125 6 years, 6 months
10/15/90 270,000 1.8125 2.5625 1.8125 9 years, 4 months
12/17/91 1,924 1.8750 3,5000 1.8750 9 years, 11 months
William B. Cortelyou 10/06/86 3,600 2.2500 3.2500 2.2500 2 years, 7 months
10/06/86 2,325 2.2500 3.8333 2.2500 3 years, 1 month
10/06/86 2,406 2.2500 4.0833 2.2500 4 years, 1 month
10/28/87 18,000 2.9600 5.4167 2.9600 4 years, 5 months
10/28/87 3,958 2.9600 8.0000 2.9600 5 years, 5 months
11/29/88 4,000 4.2500 7.8750 4.2500 4 years, 5 months
02/02/90 5,631 2.5625 2.2500 2.5625 6 years, 8 months
02/02/90 18,000 2.5625 2.9600 2.5625 2 years, 2 months
02/02/90 3,958 2.5625 2.9600 2.5625 3 years, 2 months
02/02/90 4,000 2.5625 4.2500 2.5625 3 years, 3 months
02/02/90 6,000 2.5625 5,5000 2.5625 4 years, 6 months
02/02/90 21,184 2.5625 4.4375 2.5625 5 years, 0 months
10/15/90 2,727 1.8125 2,2500 1.8125 1 year, 0 months
10/15/90 58,773 1.8125 2,5625 1.8125 9 years, 4 months
12/17/91 6,000 1.8750 2,9375 1.8750 9 years, 2 months
01/15/96 20,000 9.8750 32.0625 9.8750 9 years, 7 months
01/15/96 20,000 9.8750 19.8750 9.8750 9 years, 9 months
15
<PAGE>
NUMBER OF LENGTH OF
SECURITIES MARKET PRICE ORIGINAL OPTION
UNDERLYING OF STOCK AT EXERCISE PRICE TERM REMAINING
OPTIONS TIME OF AT TIME OF NEW AT DATE OF
REPRICED OR REPRICING OR REPRICING OR EXERCISE REPRICING OR
NAME DATE AMENDED(1)(2) AMENDMENT AMENDMENT PRICE AMENDMENT
- -------------------- ---------- ------------- -------------- -------------- ---------- ------------------
Robin Hodge ......... 02/02/90 28,000 $2.5625 $ 4.8125 $2.5625 4 years, 2 months
02/02/90 23,000 2.5625 2.8125 2.5625 5 years, 0 months
10/15/90 51,000 1.8125 2.5625 1.8125 9 years, 4 months
12/17/91 812 1.8750 3,7500 1.8750 9 years, 4 months
12/17/91 444 1.8750 2.6250 1.8750 9 years, 7 months
12/17/91 39,000 1,8750 2,1250 1,8750 9 years, 11 months
01/15/96 28,000 9.8750 14.0625 9.8750 8 years, 3 months
01/15/96 28,000 9.8750 18.0313 9.8750 9 years, 4 months
Alan H. Huggins .... 10/06/88 3,900 2.2500 3.8333 2.2500 3 years, 1 month
10/06/86 6,000 2.2500 3.7500 2.2500 3 years, 3 months
10/06/86 7,500 2.2500 4.3767 2.2500 3 years, 4 months
10/06/86 4,500 2.2500 3.6670 2.2500 3 years, 9 months
10/06/86 5,400 2.2500 3.9167 2.2500 4 years, 3 months
10/28/87 48,000 2.9600 5.0000 2.9600 9 years, 5 months
11/29/88 22,000 4.2500 6.2525 4.2500 3 years, 11 months
11/29/88 36,000 4.2500 5.6875 4.2500 4 years, 3 months
11/29/88 18,796 4.2500 5.8125 4.2500 5 years, 7 months
02/02/90 6,000 2.5625 3.0433 2.5625 1 year, 10 months
02/02/90 48,000 2.5625 2.9600 2.5625 7 years, 2 months
02/02/90 36,000 2.5625 4.2500 2.5625 3 years, 1 month
02/02/90 58,000 2.5625 4.2500 2.5625 3 years, 10 months
02/02/90 34,000 2.5625 4.0000 2.5625 5 years, 0 months
10/15/90 52,875 1.8125 2.3767 1.8125 6 years, 0 months
10/15/90 182,000 1.8125 2.5625 1.8125 9 years, 4 months
12/17/91 30,000 1.8750 2.9375 1.8750 9 years, 2 months
12/17/91 1,076 1.8750 3.7500 1.8750 9 years, 4 months
12/17/91 588 1.8750 2.6250 1.8750 9 years, 7 months
01/15/96 44,000 9.8750 14.3125 9.8750 8 years, 10 months
01/15/96 33,000 9.8750 18.3750 9.8750 9 years, 10 months
Daniel L. Lewis .... 10/06/86 18,000 2.2500 3.0000 2.2500 2 years, 10 months
10/06/86 12,000 2.2500 3.0000 2.2500 3 years, 9 months
10/06/86 6,000 2.2500 4.3333 2.2500 3 years, 10 months
10/06/86 6,000 2.2500 4.7500 2.2500 4 years, 10 months
10/28/87 9,000 2.9600 4.5433 2.9600 5 years, 0 months
11/29/88 6,000 4.2500 7.8125 4.2500 5 years, 1 month
02/02/90 9,000 2.5625 2.9600 2.5625 2 years, 8 months
02/02/90 6,000 2.5625 4.2500 2.5625 3 years, 10 months
02/02/90 3,400 2.5625 5.5000 2.5625 4 years, 6 months
10/15/90 12,000 1.8125 2.2500 1.8125 6 years, 0 months
10/15/90 18,000 1.8125 2.3767 1.8125 6 years, 0 months
10/15/90 9,000 1.8125 2.5625 1.8125 2 years, 8 months
10/15/90 6,000 1.8125 2.5625 1.8125 3 years, 10 months
10/15/90 3,400 1.8125 2.5625 1.8125 4 years, 6 months
10/15/90 11,600 1.8125 2.2500 1.8125 9 years, 10 months
12/17/91 192 1.8750 3.7500 1.8750 9 years, 4 months
12/17/91 59,192 1.8750 2.6250 1.8750 9 years, 7 months
01/15/96 20,000 9.8750 32.0625 9.8750 9 years, 7 months
Chuen-Der Lien ...... 10/28/87 12,240 2.9600 6.0000 2.9600 4 years, 9 months
11/29/88 2,190 4.2500 7.1250 4.2500 4 years, 8 months
11/29/88 2,230 4.2500 7.1250 4.2500 4 years, 8 months
02/02/90 12,240 2.5625 2.9600 2.5625 2 years, 6 months
02/02/90 4,420 2.5625 4.2500 2.5625 3 years, 6 months
02/02/90 3,400 2.5625 4.7500 2.5625 4 years, 6 months
10/15/90 12,240 1.8125 2.5625 1.8125 9 years, 10 months
10/15/90 7,820 1.8125 2.5625 1.8125 9 years, 4 months
16
<PAGE>
NUMBER OF LENGTH OF
SECURITIES MARKET PRICE ORIGINAL OPTION
UNDERLYING OF STOCK AT EXERCISE PRICE TERM REMAINING
OPTIONS TIME OF AT TIME OF NEW AT DATE OF
REPRICED OR REPRICING OR REPRICING OR EXERCISE REPRICING OR
NAME DATE AMENDED(1)(2) AMENDMENT AMENDMENT PRICE AMENDMENT
- -------------------- ---------- ------------- -------------- -------------- ---------- ------------------
10/15/90 17,800 $1.8125 $ 2.0625 $1.8125 9 years, 11 months
12/17/91 764 1.8750 3.7500 1.8750 9 years, 11 months
12/17/91 11,490 1.8750 3.1875 1.8750 9 years, 6 months
12/17/91 474 1.8750 2.6250 1.8750 9 years, 7 months
12/17/91 31,000 1.8750 2.1250 1.8750 9 years, 11 months
01/15/96 32,000 9.8750 10.5000 9.8750 8 years, 7 months
01/15/96 64,000 9.8750 32.0625 9.8750 9 years, 7 months
Jack Menache ........ 02/02/90 60,000 2.5625 4.7500 2.5625 4 years, 8 months
10/15/90 60,000 1.8125 2.5625 1.8125 9 years, 4 months
10/15/90 20,000 1.8125 2.5625 1.8125 9 years, 9 months
12/17/91 20,000 1,8750 2,9375 1,8750 9 years, 2 months
12/17/91 236 1,8750 2,6250 1,8750 9 years, 7 months
12/17/91 25,000 1,8750 2,1250 1,8750 9 years, 11 months
01/15/96 21,000 9.8750 19.8750 9.8750 9 years, 9 months
Leonard C. Perham .. 10/06/86 24,999 2.2500 4.0000 2.2500 3 years, 0 months
10/06/86 30,000 2.2500 3.2500 2.2500 4 years, 0 months
10/28/87 90,000 2.9600 5.2500 2.9600 5 years, 0 months
11/29/88 90,000 4.2500 5.6250 4.2500 5 years, 3 months
02/02/90 90,000 2.5625 2.9600 2.5625 2 years, 9 months
02/02/90 90,000 2.5625 4.2500 2.5625 3 years, 10 months
02/02/90 90,000 2.5625 4.6875 2.5625 5 years, 0 months
10/15/90 54,999 1.8125 2.2500 1.8125 6 years, 0 months
10/15/90 300,000 1.8125 2.3767 1.8125 6 years, 0 months
10/15/90 270,000 1.8125 2.5625 1.8125 9 years, 4 months
12/17/91 90,000 1.8750 2.9375 1.8750 9 years, 2 months
12/17/91 292,308 1.8750 3.7500 1.8750 9 years, 4 months
12/17/91 2,500 1.8750 2.6250 1.8750 9 years, 7 months
01/15/96 160,000 9.8750 10.1563 9.8750 8 years, 9 months
01/15/96 120,000 9.8750 19.8750 9.8750 9 years, 9 months
L. Robert Phillips . 01/15/96 160,000 9.8750 18.1563 9.8750 9 years, 1 month
Richard Picard ...... 10/06/86 20,688 2.2500 4.8333 2.2500 3 years, 4 months
10/06/86 5,400 2.2500 6.2500 2.2500 4 years, 6 months
02/02/90 5,000 2.5625 5.3125 2.5625 3 years, 0 months
02/02/90 23,000 2.5625 6.5000 2.5625 3 years, 6 months
02/02/90 14,000 2.5625 4,8750 2.5625 4 years, 1 months
02/02/90 10,000 2.5625 6.1875 2.5625 5 years, 0 months
10/15/90 61,794 1.8125 2.2500 1.8125 6 years, 0 months
10/15/90 64,000 1.8125 2.5625 1.8125 9 years, 4 months
12/17/91 604 1.8750 3,7500 1.8750 9 years, 4 months
12/17/91 18,000 1.8750 3,7500 1.8750 9 years, 5 months
12/17/91 370 1.8750 2.6250 1.8750 9 years, 7 months
01/15/96 30,000 9.8750 11.0625 9.8750 8 years, 1 month
01/15/96 30,000 9.8750 18.9375 9.8750 9 years, 1 month
William D. Snyder .. 10/06/86 15,000 2.2500 3.7500 2.2500 3 years, 6 months
10/06/86 3,000 2.2500 6.6667 2.2500 4 years, 8 months
10/28/87 4,800 2.9600 5.1667 2.9600 4 years, 9 months
10/28/87 6,150 2.9600 7.1667 2.9600 4 years, 6 months
11/29/88 4,800 4.2500 7.5625 4.2500 4 years, 6 months
02/02/90 4,800 2.5625 2.9600 2.5625 2 years, 6 months
02/02/90 6,150 2.5625 2.9600 2.5625 2 years, 3 months
02/02/90 4,800 2.5625 4.2500 2.5625 3 years, 3 months
02/02/90 6,000 2.5625 5.1875 2.5625 4 years, 3 months
17
<PAGE>
NUMBER OF LENGTH OF
SECURITIES MARKET PRICE ORIGINAL OPTION
UNDERLYING OF STOCK AT EXERCISE PRICE TERM REMAINING
OPTIONS TIME OF AT TIME OF NEW AT DATE OF
REPRICED OR REPRICING OR REPRICING OR EXERCISE REPRICING OR
NAME DATE AMENDED(1)(2) AMENDMENT AMENDMENT PRICE AMENDMENT
- -------------------- ---------- ------------- -------------- -------------- ---------- ------------------
02/02/90 10,050 $2.5625 $ 4.3125 $2.5625 4 years, 8 months
10/15/90 30,000 1.8125 2.2500 1.8125 6 years, 0 months
10/15/90 31,800 1.8125 2.5625 1.8125 9 years, 4 months
10/15/90 21,000 1.8125 3,1250 1.8125 9 years, 8 months
10/15/90 16,000 1.8125 2.0625 1.8125 9 years, 11 months
12/17/91 16,682 1.8750 3,7500 1.8750 9 years, 11 months
12/17/91 682 1.8750 2.6250 1.8750 9 years, 7 months
01/15/96 28,000 9.8750 12.6250 9.8750 8 years, 4 months
01/15/96 28,000 9.8750 18.6563 9.8750 9 years, 4 months
<FN>
- ----------
(1) Securities listed in this column include options that may have been
repriced more than once.
(2) Reflects all stock splits of the Company to date.
</FN>
</TABLE>
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
Carl E. Berg Carl E. Berg
John C. Bolger John C. Bolger
18
<PAGE>
PERFORMANCE GRAPH
The Performance Graph shall not be deemed to be incorporated by reference by
any general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
The Securities and Exchange Commission requires that the Company include in
this Proxy Statement a line-graph presentation comparing cumulative, five-year
stockholder returns on an indexed basis with (i) a broad equity market index and
(ii) an industry index or peer group. Set forth below is a line graph comparing
the percentage change in the cumulative total stockholder return on the
Company's Common Stock against the cumulative total return of the Standard &
Poors 500 Index and the Standard & Poors Electronics (Semi/Components) Index for
a period of five fiscal years. The Company's fiscal year ends on a different day
each year because the Company's year ends at midnight on the Sunday nearest to
March 31 of each calendar year. However, for convenience, the amounts shown
below are based on a March 31 fiscal year end. "Total return," for the purpose
of this graph, assumes reinvestment of all dividends.
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
Among Integrated Device Technology, Inc., the S & P 500 Index
and the S & P Electronic (Semi/Components) Index
<CAPTION>
CUMULATIVE TOTAL RETURN
-----------------------------------------------------------------
03/31/91 03/31/92 03/31/93 03/31/94 03/31/95 03/31/96
<S> <C> <C> <C> <C> <C> <C>
Integrated Device Technology, Inc. 100 78 103 338 493 303
S & P 500 Index 100 111 128 130 150 198
S & P Electronics (Semiconductor) Index 100 121 226 303 364 401
<FN>
- ----------
* $100 Invested on 3/31/91 in Stock or Index Including Reinvestment of
Dividends.
Fiscal Year Ending March 31.
</FN>
</TABLE>
19
<PAGE>
CERTAIN TRANSACTIONS
The Company leases its Salinas facility from Baccarat Silicon, Inc.
("Baccarat") a Company wholly-owned by Carl E. Berg, a director of the Company,
and his brother. The Company paid rental expense of $1,058,000 during fiscal
1996, under a lease agreement that expires in June 2005. In March 1996, the
Company entered into an agreement to exchange approximately 782,445 shares of
Common Stock of the Company for all of the outstanding shares of Baccarat.
The Company holds an approximate 37.4% equity interest in Quantum Effect
Design, Inc., ("QED"), a corporation formed in 1991. Mr. Berg, a director of the
Company, holds an approximately 5.6% equity interest in QED. Pursuant to a
development agreement between the Company and QED, QED is developing for the
Company derivative products based on MIPS' 64-bit microprocessor architecture.
During fiscal 1996, the Company paid QED a total of $900,000 for product
development and nonrecurring engineering expenses. During fiscal 1996, the
Company also incurred royalties of $2,029,000 to QED.
As of May 15, 1996, the Company held an approximate 14.3% equity interest in
Monolithic System Technology, Inc. ("MoSys"). Leonard C. Perham and Carl E. Berg
are members of the board of directors of MoSys. West Coast Venture Capital,
L.P., of which Mr. Berg is a general partner, also holds an equity interest of
approximately 18% of MoSys. MoSys is developing certain technology that, if
successfully reduced to practice, could relate to the Company's business. During
1996, the Company incurred $500,000 for prepaid royalties and $125,000 for
product development and non-recurring engineering expenses related to MoSys.
Additionally, during 1996, the Company recorded revenues of $1,594,000
associated with a foundry relationship whereby the Company manufactured DRAM
wafers for MoSys. Major shareholders and Mr. Berg gave an aggregate of 75,000
shares of MoSys common stock to Mr. Perham and persons related to him.
The Company has from time to time retained Phillip Perham, a contractor and
the brother of Leonard C. Perham, as an independent contractor to perform
certain construction services in connection with improvements and repairs to
various Company facilities. The Company paid Phillip Perham an aggregate of
approximately $350,160 for such services in fiscal 1996.
In April 1995, the Company loaned $100,000 to L. Robert Phillips, Vice
President, Manufacturing of the Company, pursuant to a promissory note to secure
a salary advance. The note is due and payable in April 1998 and Mr. Phillips is
obligated to pay interest annually at the rate of 6.69%. In the event that Mr.
Phillips exercises any stock options and sells the underlying shares or receives
a bonus or cash compensation other than salary, then one half of the net
proceeds of such receipts shall be used for repayment of the outstanding
principal. In June 1996, Mr. Phillips repaid $65,000 of the principal balance on
the loan as well as all accrued interest due through June 1, 1996.
COMPLIANCE UNDER SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16 of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and officers, and persons who own more than 10% of the
Company's Common Stock to file initial reports of ownership and reports of
changes in ownership with the SEC and the Nasdaq National Market. Such persons
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms that they file.
Based solely on the Company's review of the copies of such forms furnished to
it and written representations from the executive officers and directors, the
Company believes that all Section 16(a) filing requirements were met.
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Proposals of stockholders that are intended to be presented by such
stockholders at the Company's 1997 Annual Meeting must be received by the
Company no later than March 11, 1997.
20
<PAGE>
OTHER MATTERS
The Company knows of no other matters to be submitted to the Annual Meeting.
However, if any other matters properly come before the Annual Meeting or any
adjournment or postponement thereof, it is the intention of the persons named in
the enclosed form of Proxy to vote the shares they represent as the Board of
Directors may recommend.
By Order of the Board of Directors
/s/ Jack Menache
Jack Menache
Secretary
Dated: July 17, 1996
Santa Clara, California
21
<PAGE>
APPENDIX A
INTEGRATED DEVICE TECHNOLOGY, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
AUGUST 28, 1996
The undersigned hereby appoints Leonard C. Perham and William D. Snyder, or
either of them, each with power of substitution, to represent the undersigned at
the Annual Meeting of Stockholders of Integrated Device Technology, Inc. (the
"Company") to be held at 2670 Seeley Road, San Jose, California 95054 on August
28, 1996, at 9:30 a.m. P.D.T., and any adjournment thereof, and to vote the
number of shares the undersigned would be entitled to vote if personally present
at the meeting on the following matters:
------------------
See Reverse
Side
------------------
<PAGE>
[X] Please mark
your choices
like this
<TABLE>
- ---------------- -------------
ACCOUNT NUMBER COMMON
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
WITHHELD FOR AGAINST ABSTAIN
1. ELECTION FOR FOR ALL 2. AMENDMENT OF 1994 [ ] [ ] [ ]
OF CLASS III [ ] [ ] STOCK OPTION PLAN
DIRECTORS
Nominees: D. John Carey 3. RATIFICATION OF FOR AGAINST ABSTAIN
Carl E. Berg SELECTION OF PRICE [ ] [ ] [ ]
WATERHOUSE LLP AS
THE COMPANY'S
INDEPENDENT AUDITORS
Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name on the space
provided below:
- ---------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR all nominees for election and FOR
Proposals 2 and 3. THIS PROXY WILL BE VOTED AS DIRECTED ABOVE. IN THE ABSENCE OF
DIRECTION, THIS PROXY WILL BE VOTED FOR THE COMPANY'S NOMINEES FOR ELECTION AND
FOR PROPOSALS 2 AND 3. In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the meeting or any
adjournment thereof to the extent authorized by Rule 14a-4(c) promulgated by the
Securities and Exchange Commission.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
Dated: , 1996
-----------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature(s)
Please sign exactly as your name(s) appear(s) on your stock certificate. If
shares are held of record in the names of two or more persons or in the name of
husband and wife, whether as joint tenants or otherwise, both or all of such
persons should sign the proxy. If shares are held of record by a corporation,
the proxy should be executed by the president or vice president and the
secretary or assistant secretary. Executors, administrators, or other
fiduciaries who execute the above proxy for a deceased stockholder should give
their full title. Please date the proxy.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN
AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED, POSTAGE PAID ENVELOPE SO THAT
YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
- --------------------------------------------------------------------------------
<PAGE>
INTEGRATED DEVICE TECHNOLOGY, INC.
1994 STOCK OPTION PLAN
As Adopted May 3, 1994
and as amended through April 25, 1996
1. PURPOSE. The purpose of the Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent,
Subsidiaries and Affiliates, by offering them an opportunity to participate in
the Company's future performance through awards of stock options. Capitalized
terms not defined in the text are defined in Section 19.
2. SHARES SUBJECT TO THE PLAN.
2.1 Number of Shares Available. Subject to Sections 2.2
and 14, the total number of Shares reserved and available for grant and issuance
pursuant to Awards under the Plan shall be Ten Million Seven Hundred Fifty
Thousand (10,750,000) Shares. Shares issuable upon exercise of stock options
granted pursuant to the Company's 1985 Incentive and Nonqualified Stock Option
Plan (the "Prior Plan") that expire or become unexercisable for any reason
without having been exercised in full, shall no longer be available for exercise
under the Prior Plan, but shall be available for distribution under this Plan
(not to exceed Ten Million (10,000,000) Shares). Subject to Sections 2.2 and 14,
Shares shall again be available for grant and issuance in connection with future
Awards under the Plan if such Shares cease to be subject to an Award.
2.2 Adjustment of Shares. In the event that the number
of outstanding Shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration, or
by a Corporate Transaction (as defined in Section 14.1) then, unless such change
results in the termination of all outstanding Awards as a result of the
Corporate Transaction, (a) the number of Shares reserved for issuance under the
Plan and (b) the Exercise Prices of and number of Shares subject to outstanding
Awards shall be proportionately c adjusted, subject to any required action by
the Board or the stockholders of the Company and compliance with applicable
securities laws; provided, however, that fractions of a Share shall not be
issued but shall either be paid in cash at Fair Market Value or shall be rounded
up to the nearest Share, as determined by the Committee; and provided, further,
that the Exercise Price of any Award may not be decreased to below the par value
of the Shares.
<PAGE>
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be
granted only to employees (including officers and directors who are also
employees) of the Company or of a Parent or Subsidiary of the Company. NQSOs (as
defined in Section 5 below) may be granted to employees, officers, directors,
consultants, independent contractors and advisors of the Company or any Parent,
Subsidiary or Affiliate of the Company; provided such consultants, contractors
and advisors render bona fide services not in connection with the offer and sale
of securities in a capital-raising transaction. A person may be granted more
than one Award under the Plan. Each person is eligible to receive up to an
aggregate maximum of One Million (1,000,000) Shares per fiscal year.
4. ADMINISTRATION.
4.1 Committee Authority. The Plan shall be administered
by the Committee. Subject to the general purposes, terms and conditions of the
Plan, the Committee shall have full power to implement and carry out the Plan.
The Committee shall have the authority to:
(a) construe and interpret the Plan, any Stock Option
Agreement and any other agreement or document executed
pursuant to the Plan;
(b) prescribe, amend and rescind rules and regulations
relating to the Plan;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares subject to Awards;
(f) determine whether Awards will be granted in replacement
of, or as alternatives to, other Awards under the Plan
or any other incentive or compensation plan of the
Company or any Parent, Subsidiary or Affiliate of the
Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting and exercisability of Awards;
(i) correct any defect, supply any omission, or reconcile
any inconsistency in the Plan, any Award or any Stock
Option Agreement;
(j) determine the disposition of Awards in the event of a
Participant's divorce or dissolution of marriage; and
(k) make all other determinations necessary or advisable
for the administration of the Plan.
-2-
<PAGE>
4.2 Committee Discretion. Any determination made by the
Committee with respect to any Award shall be made in its sole discretion at the
time of grant of the Award or, unless in contravention of any express term of
the Plan or Award, at any later time, and such determination shall be final and
binding on the Company and all persons having an interest in any Award under the
Plan. The Committee may delegate to one or more officers of the Company the
authority to grant an Award under the Plan to Participants who are not Insiders
of the Company.
4.3 Exchange Act Requirements. If two or more members
of the Board are Outside Directors, the Committee shall be comprised of at least
two members of the Board, all of whom are Outside Directors and Disinterested
Persons. The Company will take appropriate steps to comply with the
disinterested director requirements of Section 16(b) of the Exchange Act,
including but not limited to, the appointment by the Board of a Committee
consisting of not less than two persons (who are members of the Board), each of
whom is a Disinterested Person. It is the intent of the Company that the Plan
and Awards hereunder satisfy and be interpreted in a manner, that, in the case
of Participants who are or may be Insiders, satisfies the applicable
requirements of Rule 16b-3 (or its successor) of the Exchange Act. If any
provision of the Plan or of any Award would otherwise conflict with the intent
expressed in this Section 4.3, that provision to the extent possible shall be
interpreted and deemed amended so as to avoid such conflict.
5. STOCK OPTIONS. The Committee may grant Awards to eligible
persons and shall determine whether such Awards shall be Incentive Stock Options
within the meaning of the Code ("ISOs") or Nonqualified Stock Options ("NQSOs"),
the number of Shares subject to the Award, the Exercise Price of the Award, the
period during which the Award may be exercised, and all other terms and
conditions of the Award, subject to the following:
5.1 Form of Option Grant. Each Award granted under the
Plan shall be evidenced by an Stock Option Agreement which shall expressly
identify the Award as an ISO or NQSO, and be in such form and contain such
provisions (which need not be the same for each Participant) as the Committee
shall from time to time approve, and which shall comply with and be subject to
the terms and conditions of the Plan.
5.2 Date of Grant. The date of grant of an Award shall
be the date on which the Committee makes the determination to grant such Award,
unless otherwise specified by the Committee. The Stock Option Agreement and a
copy of the Plan will be delivered to the Participant within a reasonable time
after the granting of the Award.
5.3 Exercise Period. Awards shall be exercisable within
the times or upon the events determined by the Committee as set forth in the
Stock Option Agreement; provided, however, that no Award shall be exercisable
after the expiration of ten (10) years from the date the Award is granted; and
provided further that no ISO granted to a person who directly or by attribution
owns more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any Parent or Subsidiary of the Company ("Ten
Percent
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Stockholder") shall be exercisable after the expiration of five (5) years from
the date the Award is granted. The Committee also may provide for the exercise
of Awards to become exercisable at one time or from time to time, periodically
or otherwise, in such number or percentage as the Committee determines.
5.4 Exercise Price. The Exercise Price shall be
determined by the Committee when the Award is granted and shall be not less than
100% of the Fair Market Value of the Shares on the date of grant; provided, that
the Exercise Price of any ISO granted to a Ten Percent Stockholder shall not be
less than 110% of the Fair Market Value of the Shares on the date of grant.
Payment for the Shares purchased may be made in accordance with Section 6 of the
Plan.
5.5 Method of Exercise. Awards may be exercised only by
delivery to the Company of a written exercise agreement (the "Exercise
Agreement") in a form approved by the Committee (which need not be the same for
each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares, if any, and such representations and
agreements regarding Participant's investment intent and access to information
and other matters, if any, as may be required or desirable by the Company to
comply with applicable securities laws, together with payment in full of the
Exercise Price for the number of Shares being purchased.
5.6 Termination. Notwithstanding the exercise periods
set forth in the Stock Option Agreement, exercise of an Award shall always be
subject to the following:
(a) If the Participant is Terminated for any reason except
death or Disability, then Participant may exercise such
Participant's Awards only to the extent that such
Awards would have been exercisable upon the Termination
Date no later than three (3) months after the
Termination Date (or such longer time period not
exceeding five years as may be determined by the
Committee), but in any event, no later than the
expiration date of the Awards.
(b) If the Participant is terminated because of death or
Disability (or the Participant dies within three months
of such termination), then Participant's Awards would
have been exercisable by Participant on the Termination
Date and must be exercised by Participant (or
Participant's legal representative or authorized
assignee) no later than (i) twelve (12) months after
the Termination Date in the case of disability or (ii)
eighteen (18) months after the Termination Date in the
case of death (or such longer time period not exceeding
five years as may be determined by the Committee), but
in any event no later than the expiration date of the
Awards.
5.7 Limitations on Exercise. The Committee may specify
a reasonable minimum number of Shares that may be purchased on any exercise of
an Award; provided that
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such minimum number will not prevent Participant from exercising the Award for
the full number of Shares for which it is then exercisable.
5.8 Limitations on ISOs. The aggregate Fair Market
Value (determined as of the date of grant) of Shares with respect to which ISOs
are exercisable for the first time by a Participant during any calendar year
(under the Plan or under any other incentive stock option plan of the Company or
any Affiliate, Parent or Subsidiary of the Company) shall not exceed $100,000.
If the Fair Market Value of Shares on the date of grant with respect to which
ISOs are exercisable for the first time by a Participant during any calendar
year exceeds $100,000, the Awards for the first $100,000 worth of Shares to
become exercisable in such calendar year shall be ISOs and the Awards for the
amount in excess of $100,000 that become exercisable in that calendar year shall
be NQSOs. In the event that the Code or the regulations promulgated thereunder
are amended after the Effective Date of the Plan to provide for a different
limit on the Fair Market Value of Shares permitted to be subject to ISOs, such
different limit shall be automatically incorporated herein and shall apply to
any Awards granted after the effective date of such amendment.
5.9 Modification, Extension or Renewal. The Committee
may modify, extend or renew outstanding Awards and authorize the grant of new
Awards in substitution therefor; provided that any such action may not, without
the written consent of Participant, impair any of Participant's rights under any
Award previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered shall be treated in accordance with Section 424(h)
of the Code. The Committee may reduce the Exercise Price of outstanding Awards
without the consent of Participants affected by a written notice to them;
provided, however, that the Exercise Price may not be reduced below the minimum
Exercise Price that would be permitted under Section 5.4 of the Plan for Awards
granted on the date the action is taken to reduce the Exercise Price; and
provided, further, that the Exercise Price shall not be reduced below the par
value of the Shares, if any.
5.10 No Disqualification. Notwithstanding any other
provision in the Plan, no term of the Plan relating to ISOs shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be exercised, so as to disqualify the Plan under Section 422 of
the Code or, without the consent of the Participant affected, to disqualify any
ISO under Section 422 of the Code.
6. PAYMENT FOR SHARE PURCHASES. Payment for Shares purchased
pursuant to the Plan may be made in cash (by check) or, where expressly approved
for the Participant by the Committee and where permitted by law:
(a) by surrender of Shares that either: (1) have been owned
by Participant for more than six (6) months and have
been paid for within the meaning of SEC Rule 144 (and,
if such shares were purchased from the Company by use
of a promissory note, such note has been fully paid
with respect to such Shares); or (2) were obtained by
Participant in the public market;
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(b) by waiver of compensation due or accrued to Participant
for services rendered;
(c) provided that a public market for the Company's stock
exists:
(1) through a "same day sale" commitment from
Participant and a broker-dealer that is a
member of the National Association of
Securities Dealers (a "NASD Dealer") whereby
the Participant irrevocably elects to exercise
the Award and to sell a portion of the Shares
so purchased in order to pay for the Exercise
Price, and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward
the Exercise Price directly to the Company; or
(2) through a "margin" commitment from Participant
and a NASD Dealer whereby Participant
irrevocably elects to exercise the Award and
to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a
loan from the NASD Dealer in the amount of the
Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such
Shares to forward the exercise price directly
to the Company; or
(d) by any combination of the foregoing.
7. WITHHOLDING TAXES.
7.1 Withholding Generally. Whenever Shares are to be
issued in satisfaction of Awards granted under the Plan, the Company may require
the Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under the Plan, payments
in satisfaction of Awards are to be made in cash, such payment shall be net of
an amount sufficient to satisfy federal, state, and local withholding tax
requirements.
7.2 Stock Withholding. When, under applicable tax laws,
a Participant incurs tax liability in connection with the exercise of any Award
that is subject to tax withholding and the Participant is obligated to pay the
Company the amount required to be withheld, the Committee may allow the
Participant to satisfy the minimum withholding tax obligation by electing to
have the Company withhold from the Shares to be issued that number of Shares
having a Fair Market Value equal to the minimum amount required to be withheld,
determined on the date that the amount of tax to be withheld is to be determined
(the "Tax Date"). All elections by a Participant to have Shares withheld for
this purpose shall be made in writing in a form acceptable to the Committee and
shall be subject to the following restrictions:
(a) the election must be made on or prior to the applicable
Tax Date;
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(b) once made, then except as provided below, the election
shall be irrevocable as to the particular Shares as to
which the election is made;
(c) all elections shall be subject to the consent or
disapproval of the Committee;
(d) if the Participant is an Insider and if the Company is
subject to Section 16(b) of the Exchange Act: (1) the
election may not be made within six (6) months of the
date of grant of the Award, except as otherwise
permitted by SEC Rule 16b-3(e) under the Exchange Act,
and (2) either (A) the election to use stock
withholding must be irrevocably made at least six (6)
months prior to the Tax Date (although such election
may be revoked at any time at least six (6) months
prior to the Tax Date) or (B) the exercise of the Award
or election to use stock withholding must be made in
the ten (10) day period beginning on the third day
following the release of the Company's quarterly or
annual summary statement of sales or earnings; and
(e) in the event that the Tax Date is deferred until six
(6) months after the delivery of Shares under Section
83(b) of the Code, the Participant shall receive the
full number of Shares with respect to which the
exercise occurs, but such Participant shall be
unconditionally obligated to tender back to the Company
the proper number of Shares on the Tax Date.
8. PRIVILEGES OF STOCK OWNERSHIP.
8.1 Voting and Dividends. No Participant shall have any
of the rights of a stockholder with respect to any Shares until the Shares are
issued to the Participant. After Shares are issued to the Participant, the
Participant shall be a stockholder and have all the rights of a stockholder with
respect to such Shares, including the right to vote and receive all dividends or
other distributions made or paid with respect to such Shares.
8.2 Financial Statements. The Company shall provide
financial statements to each Participant prior to such Participant's purchase of
Shares under the Plan, and to each Participant annually during the period such
Participant has Awards outstanding; provided, however, the Company shall not be
required to provide such financial statements to Participants whose services in
connection with the Company assure them access to equivalent information.
9. TRANSFERABILITY. Subject to Section 4.1(j), Awards granted
under the Plan, and any interest therein, shall not: (a) be transferable or
assignable by the Participant, (b) be made subject to execution, attachment or
similar process, otherwise than by will or by the laws of descent and
distribution or as consistent with the specific Plan and Stock Option Agreement
provisions relating thereto or (c) during the lifetime of the Participant, be
exercisable by anyone other than the Participant, and any elections with respect
to an Award, may be made only by the Participant.
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10. CERTIFICATES. All certificates for Shares or other
securities delivered under the Plan shall be subject to such stock transfer
orders, legends and other restrictions as the Committee may deem necessary or
advisable, including restrictions under any applicable federal, state or foreign
securities law, or any rules, regulations and other requirements of the SEC or
any stock exchange or automated quotation system upon which the Shares may be
listed.
11. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award
shall not be effective unless such Award is in compliance with all applicable
federal and state securities laws, rules and regulations of any governmental
body, and the requirements of any stock exchange or automated quotation system
upon which the Shares may then be listed, as they are in effect on the date of
grant of the Award and also on the date of exercise or other issuance.
Notwithstanding any other provision in the Plan, the Company shall have no
obligation to issue or deliver certificates for Shares under the Plan prior to
(a) obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable, and/or (b) completion of any registration
or other qualification of such shares under any state or federal law or ruling
of any governmental body that the Company determines to be necessary or
advisable. The Company shall be under no obligation to register the Shares with
the SEC or to effect compliance with the registration, qualification or listing
requirements of any state securities laws, stock exchange or automated quotation
system, and the Company shall have no liability for any inability or failure to
do so.
12. NO OBLIGATION TO EMPLOY. Nothing in the Plan or any Award
granted under the Plan shall confer or be deemed to confer on any Participant
any right to continue in the employ of, or to continue any other relationship
with, the Company or any Parent, Subsidiary or Affiliate of the Company or limit
in any way the right of the Company or any Parent, Subsidiary or Affiliate of
the Company to terminate Participant's employment or other relationship at any
time, with or without cause.
13. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any
time or from time to time, authorize the Company, with the consent of the
respective Participants, to issue new Awards in exchange for the surrender and
cancellation of any or all outstanding Awards. The Committee may at any time buy
from a Participant an Award previously granted with payment in cash, Shares or
other consideration, based on such terms and conditions as the Committee and the
Participant shall agree.
14. CORPORATE TRANSACTIONS.
14.1 Corporate Transactions. In the event of a
Corporate Transaction (as defined in this Section 14.1), the exercisability of
each Award shall be automatically accelerated so that each Award shall,
immediately before the specified effective date for the Corporate Transaction,
become fully exercisable with respect to the total number of Shares and may be
exercised for all or any portion of such Shares; provided, that an Award shall
not be accelerated if and to the extent that such Award is, in connection with
the Corporate Transaction, either to be assumed by the successor corporation or
parent thereof or to be replaced with a comparable option to purchase shares of
the capital stock of the successor corporation or parent
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thereof. The determination of comparability shall be made by the Committee, and
the Committee's determination shall be final, binding and conclusive. Upon the
consummation of a Corporate Transaction, all outstanding Awards shall, to the
extent not previously exercised or assumed by the successor corporation or its
parent, terminate and cease to be exercisable.
"Corporate Transaction" means (a) a merger or
acquisition in which the Company is not the surviving entity (except for a
transaction the principal purpose of which is to change the State in which the
Company is incorporated), (b) the sale, transfer or other disposition of all or
substantially all of the assets of the Company or (c) any other corporate
reorganization or business combination that is not approved by the Board and in
which the beneficial ownership of 50% or more of the Company's outstanding
voting stock is transferred.
14.2 Change in Control. Notwithstanding any provision
in Section 14.1 to the contrary, in the event of a Change in Control (as defined
in this Section 14.2), each Award shall automatically accelerate effective
fifteen (15) days following the effective date of the Change in Control, so that
each Award shall become fully exercisable with respect to the total number of
Shares and may be exercised for all or any portion of such Shares. Upon a Change
in Control, all outstanding Awards accelerated shall remain fully exercisable
until the expiration or sooner termination of the Award term specified in the
Stock Option Agreement.
A "Change in Control" shall be deemed to
occur: (a) should a person or related group of persons, other than the Company
or a person that directly or indirectly controls, is controlled by or is under
common control with the Company, becomes the beneficial owner (within the
meaning of Rule 13d-3 of the General Rules and Regulations under the Exchange
Act) of 25% or more of the Company's outstanding voting stock pursuant to a
tender or exchange offer that the Board does not recommend and that the
stockholders of the Company accept; or (b) on the first date within any period
of twenty-four (24) consecutive months or less on which there is effected a
change in the composition of the Board by reason of a contested election such
that a majority of the Board members cease to be comprised of individuals who
either (i) have been members of the Board continuously since the beginning of
such period or (ii) have been elected or nominated for election as Board members
during such period by at least a majority of the Board members described in
clause (i) who were still in office at the time such election or nomination was
approved by the Board.
14.3 Dissolution. In the event of the proposed
dissolution or liquidation of the Company, the Board shall notify the
Participant at least fifteen (15) days prior to such proposed action. To the
extent that Awards have not been previously exercised, such Awards will
terminate immediately prior to the consummation of such proposed action.
14.4 Assumption of Awards by the Company. The Company,
from time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other company
or otherwise, by either (a) granting an Award under the Plan in substitution of
such other company's award, or (b) assuming such award as if it had been granted
under the Plan if the terms of such assumed award could be applied to an Award
granted under the Plan. Such substitution or assumption shall be permissible if
the holder
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of the substituted or assumed award would have been eligible to be granted an
Award under the Plan if the other company had applied the rules of the Plan to
such grant. In the event the Company assumes an award granted by another
company, the terms and conditions of such award shall remain unchanged (except
that the exercise price and the number and nature of Shares issuable upon
exercise of any such option will be adjusted appropriately pursuant to Section
424(a) of the Code). In the event the Company elects to grant a new Award rather
than assuming an existing option, such new Award may be granted with a similarly
adjusted Exercise Price.
15. ADOPTION AND STOCKHOLDER APPROVAL. The Plan shall become
effective on the date that it is adopted by the Board (the "Effective Date").
The Plan shall be approved by the stockholders of the Company (excluding Shares
issued pursuant to this Plan), consistent with applicable laws, within twelve
months before or after the Effective Date. Upon the Effective Date, the Board
may grant Awards pursuant to the Plan; provided, however, that: (a) no Award may
be exercised prior to initial stockholder approval of the Plan and (b) no Award
granted pursuant to an increase in the number of Shares approved by the Board
shall be exercised prior to the time such increase has been approved by the
stockholders of the Company. For so long as and whenever the Company is subject
to Section 16(b) of the Exchange Act, the Company will comply with the
requirements of Rule 16b-3 (or its successor), as amended, with respect to
stockholder approval.
16. TERM OF PLAN. The Plan will terminate ten (10) years from
the Effective Date or, if earlier, the date of stockholder approval.
17. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend the Plan in any respect, including without limitation
amendment of any form of Stock Option Agreement or instrument to be executed
pursuant to the Plan; provided, however, that the Board shall not, without the
approval of the stockholders of the Company, amend the Plan in any manner that
requires such stockholder approval pursuant to the Code or the regulations
promulgated thereunder as such provisions apply to ISO plans or pursuant to the
Exchange Act or Rule 16b-3 (or its successor), as amended, thereunder; provided,
further, that no amendment may be made to outstanding Awards without the consent
of the Participant.
18. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan
by the Board, the submission of the Plan to the stockholders of the Company for
approval, nor any provision of the Plan shall be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under the Plan, and such arrangements
may be either generally applicable or applicable only in specific cases.
19. DEFINITIONS. As used in the Plan, the following terms
shall have the following meanings:
"Affiliate" means any corporation that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with the Company where "control" (including the terms
"controlled by" and "under common control with") means
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the possession, direct or indirect, of the power to cause the direction of the
management and policies of the corporation, whether through the ownership of
voting securities, by contract or otherwise. "Award" means an award of an option
to purchase Shares.
"Stock Option Agreement" means, with respect to each
Award, the signed written agreement between the Company and the Participant
setting forth the terms and conditions of the Award.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Committee" means the committee appointed by the Board
to administer the Plan, or if no committee is appointed, the Board.
"Company" means Integrated Device Technology, Inc., a
corporation organized under the laws of the State of Delaware, or any successor
corporation.
"Disability" means a disability, whether temporary or
permanent, partial or total, within the meaning of Section 22(e)(3) of the Code,
as determined by the Committee.
"Disinterested Person" means a director who has not,
during the period that person is a member of the Committee and for one year
prior to service as a member of the Committee, been granted or awarded equity
securities pursuant to the Plan or any other plan of the Company or any Parent,
Subsidiary or Affiliate of the Company, except in accordance with the
requirements set forth in Rules as promulgated by the SEC under Section 16(b) of
the Exchange Act, as such Rules are amended from time to time and as interpreted
by the SEC.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Exercise Price" means the price at which a holder of
an Award may purchase the Shares issuable upon exercise of the Award.
"Fair Market Value" means the value of a share of the
Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq
National Market the closing price on the Nasdaq
National Market System on the trading day immediately
preceeding the date on which Fair Market Value is
determined, or, if no such reported sale takes place on
such date, the closing price on the next preceding
trading date on which a reported sale occurred;
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(b) if such Common Stock is publicly traded and is then
listed on a national securities exchange, the closing
price or, if no reported sale takes place on such date,
the closing price on the next preceding trading day on
which a reported sale occurred;
(c) if such Common Stock is publicly traded but is not
quoted on the Nasdaq National Market nor listed or
admitted to trading on a national securities exchange,
the average of the closing bid and asked prices on such
date, as reported by The Wall Street Journal, for the
over-the-counter market; or
(d) if none of the foregoing is applicable, by the Board in
good faith.
"Insider" means an officer or director of the Company
or any other person whose transactions in the Company's Common Stock are subject
to Section 16 of the Exchange Act.
"Outside Director" means any outside director as
defined in Section 162(m) of the Code and the regulations issued thereunder.
"Parent" means any corporation (other than the Company)
in an unbroken chain of corporations ending with the Company, if at the time of
the granting of an Award under the Plan, each of such corporations other than
the Company owns stock possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
"Participant" means a person who receives an Award
under the Plan.
"Plan" means this Integrated Device Technology, Inc.
1994 Stock Option Plan, as amended from time-to-time.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
"Shares" means shares of the Company's Common Stock
$0.001 par value, reserved for issuance under the Plan, as adjusted pursuant to
Sections 2 and 14, and any successor security.
"Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if, at
the time of granting of the Award, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
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"Termination" or "Terminated" means, for purposes of
the Plan with respect to a Participant, that the Participant has ceased to
provide services as an employee, director, consultant, independent contractor or
adviser, to the Company or a Parent, Subsidiary or Affiliate of the Company,
except in the case of sick leave, military leave, or any other leave of absence
approved by the Committee; provided, that such leave is for a period of not more
than ninety (90) days, or reinstatement upon the expiration of such leave is
guaranteed by contract or statute. The Committee shall have sole discretion to
determine whether a Participant has ceased to provide services and the effective
date on which the Participant ceased to provide services (the "Termination
Date").
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