<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
<TABLE>
<S> <C>
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 Section240.14a-11(c) or
Section240.14a-12
</TABLE>
GATEFIELD CORPORATION
-------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(6) Amount Previously Paid:
----------------------------------------------------------
(7) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(8) Filing Party:
----------------------------------------------------------
(9) Date Filed:
----------------------------------------------------------
</TABLE>
<PAGE>
[LOGO]
47436 Fremont Blvd., Fremont, California 94538-6503
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, MAY 31, 2000
TO THE STOCKHOLDERS OF GATEFIELD CORPORATION:
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the "Annual
Meeting") of GateField Corporation, a Delaware corporation (the "Company"), will
be held on Wednesday, May 31, 2000 at 1:00 p.m. local time at the Company's
principal executive office located at 47436 Fremont Boulevard, Fremont,
California 94538-6503 for the following purposes:
1. To elect one (1) Class III director to hold office until the 2003 Annual
Meeting of Stockholders or until his successor is duly elected and qualified
pursuant to the classified board provisions of the Company's Restated
Certificate of Incorporation. In addition, in accordance with Section 2115
of the California General Corporation Law the Company is permitting the
stockholders of the Company (the "Stockholders") to vote to elect all three
current directors to serve until the next annual meeting or until their
respective successors are elected and qualified. Accordingly, there will be
two separate votes regarding the election of directors.
2. To ratify the appointment by the Board of Directors of Deloitte & Touche LLP
as independent auditors of the Company for the fiscal year ending
December 31, 2000; and
3. 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.
The Board of Directors has fixed the close of business on April 3, 2000 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting and at any adjournment or postponement thereof.
By Order of the Board of Directors
/s/ LYNNE M. BENNETT
Lynne M. Bennett
SECRETARY
Fremont, California
April 14, 2000
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
GATEFIELD CORPORATION
47436 Fremont Boulevard
Fremont, CA 94538-6503
PROXY STATEMENT
FOR 2000 ANNUAL MEETING OF STOCKHOLDERS
MAY 31, 2000
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of GateField Corporation, a
Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders to be held on Wednesday, May 31, 2000 at 1:00 p.m. local time, or
at any adjournment or postponement thereof (the "Annual Meeting"), for the
purposes set forth herein and in the accompanying Notice of Annual Meeting. The
Annual Meeting will be held at the Company's principal executive office located
at 47436 Fremont Boulevard, Fremont, California 94538-6503. The Company intends
to mail this proxy statement and accompanying proxy card on or about April 14,
2000 to all stockholders entitled to vote at the Annual Meeting.
All information contained in this Proxy Statement reflects a 10-for-1 stock
split of the common stock effected on June 30, 1999.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office,
47436 Fremont Boulevard, Fremont, California 94538-6503, a written notice of
revocation or a duly executed proxy bearing a later date, or it may be revoked
by attending the meeting and voting in person. Attendance at the meeting will
not, by itself, revoke a proxy.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the
accompanying proxy card and any additional information furnished to
Stockholders. Copies of solicitation materials will be furnished to banks,
brokerage houses, fiduciaries and custodians holding in their names shares of
Common Stock beneficially owned by others to forward to such beneficial owners.
The Company may reimburse persons representing beneficial owners of Common Stock
for their costs of forwarding solicitation materials to such beneficial owners.
Original solicitation of proxies by mail may be supplemented by telephone,
telegram or personal solicitation by directors, officers or other regular
employees of the Company or, at the Company's request, Beacon Hill
Partners, Inc. No additional compensation will be paid to directors, officers or
other regular employees for such services, but Beacon Hill Partners, Inc. would
be paid reasonable out-of-pocket expenses, if it renders solicitation services.
RECORD DATE AND VOTING RIGHTS
Only stockholders of record at the close of business on April 3, 2000 (the
"Record Date") will be entitled to notice of and to vote at the Annual Meeting.
As of the close of business on the Record Date, the Company had outstanding and
entitled to vote (i) 4,662,464 shares of Common Stock, (ii) 18,003 shares of
Series B Preferred Stock (the "Series B Stock") (convertible into 8,249 shares
of Common Stock), (iii) 300,000 shares of Series C Preferred Stock (the
"Series C Stock") (convertible into 200,000 shares of Common Stock)
(collectively, the "Preferred Stock"), and (iv) 420,000 shares of Series C-1
Preferred Stock (the "Series C-1 Stock") (convertible into 1,230,769 shares of
Common Stock) (collectively, the "Preferred Stock").
<PAGE>
Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon. Each holder of record
of Preferred Stock on such date will be entitled to the number of votes equal to
the number of whole shares of Common Stock into which the shares of Preferred
Stock held by such holder are then convertible. However, as discussed below, in
connection with the election of directors of the Company pursuant to
Proposal 1, Stockholders will be permitted to exercise cumulative voting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions and broker non-votes are each
included in the determination of the number of shares present and voting, and
each is tabulated separately. However, broker non-votes are not counted for
purposes of determining the number of votes cast with respect to a particular
proposal. In determining whether a proposal has been approved, abstentions are
counted as votes against the proposal and broker non-votes are not counted as
votes for or against the proposal.
STOCKHOLDER PROPOSALS
The deadline for submitting a Stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2001 Annual
Meeting of Stockholders pursuant to Rule 14a-8, of the Securities and Exchange
Commission is December 28, 2000. The attached proxy card grants the proxy
holders discretionary authority to vote on any matter raised at the meeting. If
a stockholder intends to submit a proposal at the next annual meeting of
stockholders, which is not eligible for inclusion in the proxy statement
relating to that meeting, the stockholder must give notice to the Company in
accordance with the requirements set forth in the Securities Exchange Act of
1934, as amended, no later than March 17, 2001. If a stockholder does not comply
with the foregoing notice provision, the proxy holders will be allowed to use
their discretionary voting authority when and if the proposal is raised at the
next annual meeting of the stockholders.
2
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The number of Directors on the Board is fixed at three (3). With respect to
the election of directors, the Board has divided the nominees into two slates,
one for election in accordance with the Delaware General Corporation Law
("Delaware Law") and the Company's Certificate of Incorporation and the other
for election in accordance with the California Corporation Code ("California
Law"). All holders of record of Common Stock and Preferred Stock at the close of
business on April 3, 2000 will be entitled to vote on each slate. Each holder of
Preferred Stock will be entitled to vote on an as-if-converted basis as
described above.
In connection with the vote on the first slate (the "First Slate"), each
holder of record of Common Stock and Preferred Stock on April 3, 2000 will be
entitled to vote for one director whose term of office expires in 2000 (the
"Class III Nominee") to hold office until the 2003 annual meeting of
Stockholders. Further, in connection with the First Slate, each holder of Common
Stock and Preferred Stock will be entitled to one vote for each share of Common
Stock held and each whole share of Common Stock issuable upon conversion of each
share of Preferred Stock held.
In connection with the vote on the second slate (the "Second Slate"),
Stockholders will be voting to elect all three current directors to hold office
until the next annual meeting of Stockholders. Further in connection with the
Second Slate, cumulative voting may be used for the election of each director
under California Corporation Code. Under cumulative voting, each stockholder may
cast for a single candidate, or distribute among the candidates as such
stockholder chooses, a number of votes equal to the number of candidates (three
(3) at this meeting) multiplied by the number of shares held by such
stockholder. Cumulative voting will apply only to those candidates whose names
have been placed in nomination prior to voting. No stockholder shall be entitled
to cumulate votes unless the shareholder has given notice at the meeting, prior
to the voting, of the stockholder's intention to cumulate the stockholder's
votes. If any one stockholder gives such notice, all stockholders may cumulate
their votes for candidates in nomination, except to the extent that a
stockholder withholds votes from the nominees, the proxy holders named in the
accompanying form of proxy, in their sole discretion, will vote such proxy for,
and, if necessary, exercise cumulative voting rights to secure, the election of
the nominees listed below, under slate two, as directors of the Company.
The slates are as follows:
<TABLE>
<CAPTION>
NOMINEE FOR A THREE-YEAR TERM NOMINEES FOR A ONE-YEAR TERM
EXPIRING AT THE 2003 ANNUAL MEETING EXPIRING AT THE 2001 ANNUAL MEETING
- ------------------------------------- -------------------------------------
<S> <C>
Horst G. Sandfort Jonathan S. Huberman
Horst G. Sandfort
Timothy Saxe
</TABLE>
Should the elections yield different results, the Company plans to seek
guidance from a court of law regarding which states law the Company must apply
in its corporate governance matters. To the extent both the First Slate and
Second Slate are elected, the Company's Board of Directors shall consist of
those members set forth in the Second Slate.
Set forth below is biographical information for all the nominees for
director of the Company.
INFORMATION CONCERNING THE NOMINEES
HORST G. SANDFORT
HORST G. SANDFORT, age 57, has been a director of the Company since
September 1995. Mr. Sandfort has served as President and Chief Executive Officer
of Intellon Corporation, a developer of powerline communications integrated
circuits, since June 1997. From September 1995 to June 1997, he was
3
<PAGE>
the President of the GateField division of the Company. From 1991 to September
1995, he was the Executive Vice President for Geographic Markets at LSI Logic
Corporation, a developer of application specific integrated circuits and
application specific standard products, where he was responsible for sales,
marketing and engineering in Asia, Canada, Europe and the United States.
Mr. Sandfort is a member of the Company's Audit, Compensation and Nominating
Committees.
TIMOTHY SAXE
TIMOTHY SAXE, age 44, has been a director of the Company since February 8,
1999. He has been President and Chief Operating Officer of the Company since
July 23, 1998 and Chief Executive Officer of the Company since February 8, 1999.
From 1993 to 1997, Dr. Saxe was Vice President of Engineering of the GateField
division of the Company.
JONATHAN S. HUBERMAN
JONATHAN S. HUBERMAN, age 34, has been a director of the Company since
January 1, 2000 replacing Michael J. Kucha after his resignation on
December 31, 1999. Previously, he was a director of the Company from
December 15, 1997 until March 9, 1999. He has been with Idanta Partners Ltd.,
since 1995, and is a General Partner of Idanta. Mr. Huberman was a Management
Consultant with the Boston Consulting Group, a management consulting company,
from 1992 to 1995. Previously, he was a Marketing Manager at Cray
Research, Inc. Mr. Huberman is currently a member of the Board of Directors of
Iomega Corporation, Urbanite Network, Boxer Cross Corporation, Torrex
Corporation, and Viagate Technologies. Mr. Huberman is a member of the Company's
Audit, Compensation and Nominating Committees.
FIRST SLATE: ELECTION OF DIRECTORS PURSUANT TO DELAWARE LAW
AND COMPANY'S CHARTER DOCUMENTS
The Company's Certificate and By-laws provide that the Board shall be
divided into three classes, each class consisting, as nearly as possible, of
one-third of the total number of directors, with each class having a three-year
term. Vacancies on the Board may be filled only by persons elected by a majority
of the remaining directors. A director elected by the Board to fill a vacancy
(including a vacancy created by an increase in the size of the Board) shall
serve for the remainder of the full term of the class of directors in which the
vacancy occurred and until such director's successor is elected and qualified.
Effective December 31, 1999, Mr. Michael J. Kucha submitted his resignation
as a director of the Company. As a result, under the Company's Certificate (and
without giving effect to Section 2115 of the California Corporations Code) the
Board of Directors is presently composed of three members, one of whom is a
Class I director (with a term expiring at the 2001 annual meeting), one of whom
is a Class II director (with a term expiring at the 2002 Annual Meeting) and one
of whom is a Class III director (with a term expiring at the 2000 annual
meeting). Following the resignation of Mr. Kucha, Mr. Jonathan S. Huberman, who
was previously a board member, was elected to the Board to hold office until the
next election of the Class II director expiring at the 2002 annual meeting of
Stockholders and until his successor is elected and has qualified, or until such
director's earlier death, resignation or removal.
Shares represented by executed proxies will be voted, if authority to do so
is not withheld, for the election of the Class III Nominee. In the event that
the nominee should be unavailable for election as a result of an unexpected
occurrence, such shares will be voted for the election of such substitute
nominee as management may propose. The person nominated for election has agreed
to serve if elected, and management has no reason to believe that such nominee
will be unable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE CLASS III NOMINEE
4
<PAGE>
SECOND SLATE: ELECTION OF DIRECTORS PURSUANT TO CALIFORNIA LAW
Under Section 2115 of the California Law ("Section 2115"), certain
corporations not organized under California law which have significant contacts
with California and which are not otherwise exempt from Section 2115 are subject
to a number of key provisions of the California Law. Because the Company had
significant contacts with California during the period specified in
Section 2115, the Company believes that it is currently subject to
Section 2115. Accordingly, the Company is complying with certain provisions of
the California Law, including Section 301, regarding the election of directors.
Section 301 does not permit the Company to have a classified Board. In
connection with the "Second Slate" each Stockholder will be voting to elect all
three current directors to hold office until the next annual meeting of
Stockholders. Each director to be elected will hold office until the next annual
meeting of Stockholders and until his successor is elected and has qualified, or
until such director's earlier death, resignation or removal. Each nominee is
currently a director of the Company, two directors having been elected by the
Stockholders, and one director, Jonathan S. Huberman, having been elected by the
Board.
Under Section 2115, Stockholders are permitted to exercise cumulative voting
rights. Each Stockholder may give one candidate, who has been nominated prior to
voting, all the votes such Stockholder is entitled to cast or may distribute
such votes among as many such candidates as such Stockholder chooses. (However,
no Stockholder will be entitled to cumulate votes unless the candidate's name
has been placed in nomination prior to the voting in accordance with applicable
law and the Company's Bylaws and Certificate and at least one Stockholder has
given notice at the meeting, prior to the voting, of his or her intention to
cumulate votes). Unless the proxyholders are otherwise instructed, Stockholders,
by means of the accompanying proxy, will grant the proxyholders discretionary
authority to cumulate votes.
Shares represented by executed proxies will be voted, if authority to do so
is not withheld, for the election of the three nominees enumerated above. In the
event that any nominee should be unavailable for election as a result of an
unexpected occurrence, such shares will be voted for the election of such
substitute nominee as management may propose. Each person nominated for election
has agreed to serve if elected and management has no reason to believe that any
nominee will be unable to serve.
Pursuant to the Second Slate, the three candidates receiving the highest
number of affirmative votes cast at the meeting will be elected directors of the
Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN
FAVOR OF EACH NOMINEE NAMED ABOVE
5
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
Directors and Executive Officers of the Company:
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Timothy Saxe........................ 44 Chief Executive Officer, President and Director
James B. Boyd....................... 47 Chief Financial Officer
Jonathan S. Huberman(1) (2)......... 34 Director
Horst G. Sandfort(1) (2)............ 57 Director
</TABLE>
- ------------------------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
TIMOTHY SAXE
TIMOTHY SAXE, age 44, has been a director of the Company since February 8,
1999. He has been President and Chief Operating Officer of the Company since
July 23, 1998 and Chief Executive Officer of the Company since February 8, 1999.
From 1993 to 1997, Dr. Saxe was Vice President of Engineering of the GateField
division of the Company.
JAMES B. BOYD
JAMES B. BOYD, age 47, has served as Chief Accounting Officer and Controller
of the Company since April 1998. Mr. Boyd was promoted to Chief Financial
Officer by the board of directors on March 17, 2000. From February 1998 to April
1998, he was a consultant with various companies for Re:Sources, an accounting
agency. Prior to that time, he was Chief Financial Officer of AirMedia, Inc. a
software developer and manufacturer of wireless mobile products. From March 1996
to August 1997, he was Controller of Netopia Communications, Inc., a
manufacturer of network communications equipment. From December 1992 to March
1996, he was an independent consultant working for several technology companies.
JONATHAN S. HUBERMAN
JONATHAN S. HUBERMAN, age 34, has been a director of the Company since
January 1, 2000 replacing Michael J. Kucha after his resignation of
December 31, 1999. Previously, he was a director of the Company from
December 15, 1997 until March 9, 1999. He has been with Idanta Partners Ltd.,
since 1995, and is a General Partner of Idanta. Mr. Huberman was a Management
Consultant with the Boston Consulting Group, a management consulting company,
from 1992 to 1995. Previously, he was a Marketing Manager at Cray Research, Inc.
Mr. Huberman is currently a member of the Board of Directors of Iomega
Corporation, Urbanite Network, Boxer Cross Corporation, Torrex Corporation, and
Viagate Technologies. Mr. Huberman is a member of the Company's Audit,
Compensation and Nominating Committees.
HORST G. SANDFORT
HORST G. SANDFORT, age 57, has been a director of the Company since
September 1995. Mr. Sandfort has served as President and Chief Executive Officer
of Intellon Corporation, a developer of powerline communications integrated
circuits, since June 1997. From September 1995 to June 1997, he was the
President of the GateField division of the Company. From 1991 to September 1995,
he was the Executive Vice President for Geographic Markets at LSI Logic
Corporation, a developer of application
6
<PAGE>
specific integrated circuits and application specific standard products, where
he was responsible for sales, marketing and engineering in Asia, Canada, Europe
and the United States. Mr. Sandfort is a member of the Company's Audit,
Compensation and Nominating Committees.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended December 31, 1999 the Board of Directors held
seven meetings. The Board has an Audit Committee, a Compensation Committee and a
Nominating Committee.
The Audit Committee meets with the Company's independent auditors at least
annually to review the results of the annual audit and discuss the financial
statements; recommends to the Board the independent auditors to be retained; and
receives and considers the accountants' comments as to controls, adequacy of
staff and management performance and procedures in connection with audit and
financial controls. Currently, the Audit Committee is composed of two
non-employee directors: Messrs. Sandfort and Huberman. It met three times during
such fiscal year. Mr. Michael J. Kucha was a member of the Audit Committee prior
to his resignation, effective December 31, 1999.
The Compensation Committee administers the Company's stock plans and
approves salaries, stock options and other compensation arrangements for
executive officers of the Company. The Compensation Committee is composed of two
non-employee directors: Messrs. Sandfort and Huberman. It met one time during
such fiscal year. Mr. Michael J. Kucha was a member of the Audit Committee prior
to his resignation, effective December 31, 1999.
The Nominating Committee interviews, evaluates, nominates and recommends
individuals for membership on the Company's Board of Directors and committees
thereof and nominates specific individuals to be elected as officers of the
Company by the Board of Directors. No procedure has been established for the
consideration of nominees recommended by stockholders. The Nominating Committee
is composed of two non-employee directors: Messrs. Sandfort and Huberman. It met
one time during such fiscal year. Mr. Michael J. Kucha was a member of the Audit
Committee prior to his resignation, effective December 31, 1999.
During the fiscal year ended December 31, 1999, each Board member attended
75% or more of the aggregate of the meetings of the Board and of the committees
on which he served, held during the period for which he was a director or
committee member, respectively.
DIRECTOR COMPENSATION
Each non-employee director of the Company receives a quarterly retainer of
$2,500 and a per meeting fee of $1,000 for each Board and committee meeting
attended. The members of the Board of Directors are also eligible for
reimbursement for their expenses incurred in connection with attendance at Board
meetings in accordance with Company policy. In the fiscal year ended
December 31, 1999, the total compensation paid to non-employee directors was
$50,691.
Each non-employee director of the Company also receives stock option grants
under the 1995 Stock Option Directors' Plan for Non-Employee Directors (the
"Directors' Plan"). Only non-employee directors of the Company or an affiliate
of such directors (as defined in the Code) are eligible to receive options under
the Directors' Plan. Options granted under the Directors' Plan are intended by
the Company not to qualify as incentive stock options under the Code.
Option grants under the Directors' Plan are non-discretionary. Under the
Director's Plan, each non-employee director elected to the Board of Directors is
automatically granted, upon his or her initial election as a director, and
without further action by the Company, the Board or the stockholders of the
Company, an option to purchase 1,500 shares of Common Stock (an "Initial
Grant"). Each non-employee director is also granted an option to purchase 750
shares of Common Stock on the date of each Annual
7
<PAGE>
Meeting of Stockholders (an "Annual Grant"). In no event shall any non-employee
director receive an option to purchase in the aggregate more than 10,000 shares
pursuant to the Directors' Plan.
On May 13, 1998, the date of the 1997 Annual Meeting of Stockholders,
Messrs. Sandfort, Dunn and Huberman were each granted an option to purchase 750
shares of Common Stock at an exercise price of $15.00 per share, the fair market
value of the Common Stock on such date. On July 23, 1998, the date of his
appointment as a director by the Board, Mr. Kucha was granted an option to
purchase 1,500 shares of Common Stock at an exercise price of $8.30 per share,
the fair market value of the Common Stock on such date. On June 7, 1999, the
date of the 1998 Annual Meeting of Shareholders, Messrs. Sandfort and Kucha were
each granted an option to purchase 750 shares of common stock at an exercise
price of $8.10 per share, the fair market value of the Common Stock on such
date. All options granted under the Director's Plan have or will have an
exercise price equal to the fair market value of the Common Stock on the date of
grant and expire ten years from the date of grant (subject to earlier
termination in the event the optionee ceases to serve as a director of the
Company). Under the Directors' Plan, options from an Initial Grant vest in full
two years after the date of grant. Options from an Annual Grant vest one year
after the date of grant. The total number of shares of Common Stock that may be
issued under the Director's Plan is 20,000 shares. As of April 3, 2000, 2,250
shares had been granted under the Directors' Plan. As of April 3, 2000, no
options had been exercised under the Directors' Plan.
RELATIONSHIPS AMONG DIRECTORS OR EXECUTIVE OFFICERS
There are no family relationships among any of the Directors or Executive
Officers of the Company.
8
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company with
respect to beneficial ownership of the Company's Common Stock as of April 3,
2000 by: (i) each director and nominee for director; (ii) certain executive
officers named in the Summary Compensation Table; (iii) all executive officers
and directors of the Company as a group; and (iv) all those known by the Company
to be beneficial owners of more than five percent of its Common Stock and each
series of Preferred Stock. Except as indicated in the footnotes to this table
and subject to applicable community property laws, the persons named in the
table, based on the information provided by such persons, have sole voting and
investment power with respect to all shares of stock beneficially owned by them.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP (1)
--------------------------
PERCENTAGE OF
TOTAL
NUMBER OF OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES COMMON STOCK
- ------------------------------------------------------------ ---------- -------------
<S> <C> <C>
Idanta Partners Ltd. (2)
4660 La Jolla Drive, Suite 850, San Diego, CA 92122......... 406,752 8.7%
Infineon (3)
Hofmannstr. 51, 81359 Munich, Germany....................... 402,375 8.6%
Actel Corporation (4)
955 East Argues Avenue, Sunnyvale, CA 94086................. 1,621,298 34.8%
Mitsui (5)
1500 East Higgins Road, Unit B, Elk Grove Village, IL
60067..................................................... 307,696 6.61%
Timothy Saxe (6)............................................ 96,693 2.07%
Horst G. Sandfort (7)....................................... 2,250 *
Jonathan S. Huberman (8) ................................... 406,752 8.7%
Peter G. Feist (9).......................................... 54,935 1.83%
James R. Fiebiger (10)...................................... 70,788 1.5%
James B. Boyd (11).......................................... 30,650 *
All directors and executive officers as a group (6 persons)
(12)...................................................... 662,068 2.5%
</TABLE>
- ------------------------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal owning greater than five percent, as set forth in filings required
by the Securities and Exchange Commission (the "SEC or as otherwise
provided. Percentages are based on 4,662,464 shares of Common Stock
outstanding on April 3, 2000, adjusted as required by rules promulgated by
the SEC. The address of each officer and director identified in this table
is that of GateField's executive offices, 47436 Fremont Blvd., Fremont,
CA 94538.
(2) The address of Idanta Partners Ltd. ("Idanta") is 4660 La Jolla Village
Drive, Suite 850, San Diego, CA 92122. Includes 6,471 shares of Common Stock
issuable upon the conversion of 14,122 shares of Series B Preferred Stock.
Idanta holds 78.6% of the outstanding Series B Preferred Stock. Also
includes 40,818 shares of common stock purchased on a pro-rata basis on
September 30, 1999.
(3) The address of Infineon, formally known as Siemens Aktiengesellschaft
("Infineon") is Hofmannstr. 51, 81359 Munich, Germany. Consists of
(i) 352,375 shares of Common Stock which Infineon has the right to acquire
within 60 days of the date of this table upon the exercise of
9
<PAGE>
outstanding warrants, and (ii) 50,000 shares of Common Stock which Infineon
has the right to acquire within 60 days of the date of this table pursuant
to the Infineon License Agreement.
(4) The address of Actel Corporation ("Actel") is 955 East Argues Avenue,
Sunnyvale, California 94086. Consists of 200,000 shares of Common Stock
issuable upon conversion of 300,000 shares of Series C Preferred Stock and
1,230,769 shares of common stock issuable upon conversion of 420,000 shares
of Series C-1 convertible preferred stock. Actel holds 100% of the
outstanding Series C and C-1 Preferred Stock. Also includes 112,129 shares
of common stock purchased on a pro-rata basis on September 30, 1999.
(5) The address of Mitsui Create USA, Inc ("MCU") and MHT America Holdings, Inc.
("MHT") is 1500 East Higgins Road, Unit B, Elk Grove Village,
Illinois 60067. Consists of 153,848 shares of common stock each.
(6) Includes 35,620 shares, which Mr. Saxe has the right to acquire within 60
days after the date of this table upon the exercise of outstanding stock
options.
(7) Consists of shares, which Mr. Sandfort has the right to acquire within 60
days after the date of this table upon the exercise of outstanding stock
options.
(8) Includes 6,471 shares of Common Stock issuable upon the conversion of 14,122
shares of Series B Preferred Stock and 400,281 shares of Common Stock
beneficially owned by Idanta Partners Ltd., with respect to which
Mr. Huberman is a general partner. Mr. Huberman shares voting and investment
power with respect to such shares. Mr. Huberman disclaims beneficial
ownership of all of the foregoing shares.
(9) Includes 21,876 shares, which Mr. Feist has the right to acquire within 60
days after the date of this table upon the exercise of outstanding stock
options.
(10) Includes 11,163 shares purchased in 1999, 5,000 warrants that were
exercised by Mr. Fiebiger on April 19, 1999, 1,722 shares purchased in 1998,
40,000 shares which Mr. Fiebiger has the right to acquire within 60 days
after the date of this table upon the exercise of outstanding stock options.
Mr. Fiebiger resigned as Director and Chief Executive Officer of the Company
on February 8, 1999.
(11) Includes 1,567 shares purchased in 2000, 921 shares purchased in 1999, 662
shares purchased in 1998 and 3,624 shares which Mr. Boyd has the right to
acquire within 60 days after the date of this table upon the exercise of
outstanding stock options.
(12) Includes shares described in the notes above, as applicable.
10
<PAGE>
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending December 31, 2000 and has
further directed that management submit the selection of independent auditors
for ratification by the stockholders at the Annual Meeting. Deloitte & Touche
LLP has audited the Company's financial statements since its inception in 1992.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting, will have an opportunity to make a statement if they so desire
and will be available to respond to appropriate questions.
REQUIRED VOTE
Stockholder ratification of the selection of Deloitte & Touche LLP as the
Company's independent auditors is not required by the Company's By-laws or
otherwise. However, the Board is submitting the selection of Deloitte & Touche
to the stockholders for ratification as a matter of good corporate practice. If
the stockholders fail to ratify the selection, the Audit Committee and the Board
will reconsider whether or not to retain that firm. Even if the selection is
ratified, the Audit Committee and the Board in their discretion may direct the
appointment of different independent auditors at any time during the year if
they determine that such a change would be in the best interests of the Company
and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of Deloitte & Touche LLP. Abstentions will
be counted toward the tabulation of votes cast on proposals presented to the
stockholders and will have the same effect as negative votes. Broker non-votes
are counted towards a quorum, but are not counted for any purpose in determining
whether this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
11
<PAGE>
EXECUTIVE OFFICER COMPENSATION
SUMMARY OF COMPENSATION
The following table shows for the fiscal years ended 1997, 1998 and 1999
compensation awarded or paid to, or earned by, the Company's Chief Executive
Officer and each of the two other most highly compensated executive officers
whose salary plus bonus exceeded $100,000 (the "Named Executive Officers") at
December 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1) LONG-TERM COMPENSATION(2)
--------------------------------------------------- ----------------------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION OPTIONS/ COMPENSATION
POSITION YEAR ($) ($) ($) SARS(#) ($)
- --------------------------- -------- -------- -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Dr. James R. Fiebiger...... 1999 $142,506 -- $30,104(4) -- $ 8,106(5)
Chief Executive 1998 $180,000 $94,000(6) $56,120(7) -- $10,500(8)
Officer(3) 1997 $ 98,890(9) $94,000(10) $32,251(11) 900,000(12) $ 4,945(13)
Dr. Timothy Saxe........... 1999 $180,010 -- -- 40,000(14) $10,500(15)
President and 1998 $175,003 $ 750 -- 326,181 $10,250(16)
Chief Executive Officer 1997 $150,015 $ 1,500 -- 265,750(17) $ 9,000(18)
Peter G. Feist............. 1999 $166,000 -- -- 20,000(20) $ 9,800(21)
Senior Vice President, 1998 $167,303 $16,247(22) -- 184,375 $ 7,360(23)
Marketing(19) 1997 $140,010 $30,247(24) $43,044(25) 190,000(26) $ 8,501(27)
James B. Boyd.............. 1999 $131,262 -- -- 27,500(29) $ 6,563(30)
Chief Financial Officer(28)
</TABLE>
- ------------------------
(1) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of prerequisites and other personal benefits
has been omitted because such prerequisites and other personal benefits
constituted less than the lesser of $50,000 or 10% of the total of annual
salary and bonus for the executive officer for the fiscal year.
(2) The Company did not make any restricted stock awards, grant any stock
appreciation rights or make any long-term incentive plan payouts during
1997, 1998 or 1999.
(3) Dr. Fiebiger resigned as Chief Executive Officer on February 8, 1999. On
that date the Board approved Dr. Timothy Saxe to serve as Chief Executive
Officer. Dr. Fiebiger continues to serve as Vice Chairman and Managing
Director of Technology and Licensing.
(4) Represents $14,130 in cost of living adjustments for California housing and
$15,974 in tax gross up reimbursement payments for 1999.
(5) Represents the value of the Company's contribution during 1999 to a
cafeteria benefit plan and $1,500 contributed by the Company to a 401(k)
plan for the Named Executive Officer.
(6) The bonus of $94,000 was earned in fiscal 1997 and paid in fiscal 1998.
Dr. Fiebiger did not receive a bonus in fiscal 1998.
(7) Represents $22,588 in cost of living adjustments for California housing and
$33,532 in tax gross up reimbursement payments for 1998.
(8) Represents the value of the Company's contribution during 1998 to a
cafeteria benefit plan and $1,500 contributed by the Company to a 401(k)
plan for the Named Executive Officer.
(9) Represents compensation since June 1997, the date Dr. Fiebiger became an
employee of the Company.
(10) The bonus of $94,000 was earned in fiscal 1997 and paid in fiscal 1998.
12
<PAGE>
(11) Represents $10,424 in cost of living adjustments for California housing,
$14,077 in tax gross up reimbursement payments for 1997, and $7,750 in
consulting fees from January 1997 through June 1997 paid while a director of
the Company.
(12) Includes options to purchase an aggregate of 300,000 shares granted on
July 28, 1997 replacing an option to purchase 300,000 shares granted on
June 12, 1997. Options to purchase 300,000 shares were cancelled in
connection with the repricing in fiscal 1997.
(13) Represents the value of the Company's contribution during 1997 to a
cafeteria benefit plan for the Named Executive.
(14) Represents options granted on August 31, 1999.
(15) Represents the value of the Company's contribution during 1999 to a
cafeteria benefit plan and $1,500 contributed by the Company to a 401(k)
plan for the Named Executive Officer.
(16) Represents the value of the Company's contribution during 1998 to a
cafeteria benefit plan and $1,500 contributed by the Company to a 401(k)
plan for the Named Executive Officer.
(17) Includes options to purchase an aggregate of 129,400 shares granted on
July 28, 1997 replacing options to purchase an aggregate of 50,000 shares
granted on August 16, 1993, an option to purchase 14,400 shares granted on
October 29, 1996, an option to purchase 40,000 shares granted on
October 29, 1996 and an option to purchase 25,000 shares granted on June 5,
1997. Options to purchase 129,400 shares were cancelled in connection with
the repricing in fiscal 1997.
(18) Represents the value of the Company's contribution during 1997 to a
cafeteria benefit plan and $1,500 contributed by the Company to a 401(k)
plan for the Named Executive Officer.
(19) Mr. Feist resigned as an executive officer of the Company, but remains as
an employee as of the date of the filing of the Company's 1999 Annual Report
on Form 10-K.
(20) Represents options granted on August 31, 1999.
(21) Represents the value of the Company's contribution during 1999 to a
cafeteria benefit plan and $1,500 contributed by the Company to a 401(k)
plan for the Named Executive Officer.
(22) The bonus of $16,247 was earned in fiscal 1997 and was paid in fiscal 1998.
(23) Represents the value of the Company's contribution during 1998 to a
cafeteria benefit plan and $1,500 contributed by the Company to a 401(k)
plan for the Named Executive Officer.
(24) Includes bonus of $16,247, which was earned in fiscal 1997 and paid in
fiscal 1998.
(25) Represents $43,044 in cost of living adjustments for California housing for
1997 for the Named Executive Officer.
(26) Includes options to purchase an aggregate of 85,000 shares granted on
July 28, 1997 replacing options to purchase an aggregate of 60,000 shares
granted on October 2, 1996 and an option to purchase 25,000 shares granted
on June 5, 1997. Options to purchase 85,000 shares were cancelled in
connection with the repricing in fiscal 1997.
(27) Represents the value of the Company's contribution during 1997 to a
cafeteria benefit plan and $1,500 contributed by the Company to a 401(k)
plan for the Named Executive Officer.
(28) Mr. Boyd was hired in May 1998. Mr. Boyd was promoted to Chief Financial
Officer by the board of directors on March 17, 2000.
(29) Includes 7,500 options granted in 1998 before he was an executive officer.
(30) Represents the value of the Company's contribution during 1999 to a
cafeteria benefit plan.
13
<PAGE>
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers under its 1993 Stock
Option Plan (the "1993 Plan"), its 1996 Stock Option Plan (the "1996 Plan"), and
its 1999 Stock Option Plan (the "1999 Plan"), collectively ("the Plans"). As of
April 3, 2000, options to purchase 464,175 shares were outstanding under the
Plans and options to purchase 199,273 shares remained available for grant.
The following tables show for the fiscal year ended December 31, 1999
certain information regarding options granted to, exercised by, and held at year
end by, the Named Executive Officers. In accordance with the rules of the
Securities and Exchange Commission, also shown below is the potential realizable
value over the term of the option (the period from the grant date to the
expiration date) based on assumed rates of stock appreciation of 5% and 10%,
compounded annually. These amounts are based on certain assumed rates of
appreciation and do not represent the Company's estimate of future stock price.
Actual gains, if any, on stock option exercises will be dependent on the future
performance of the Common Stock.
OPTION/SAR GRANTS IN FISCAL 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS/ ANNUAL RATES OF STOCK
SECURITIES SARS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(2)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED (#)(1) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- --------------------------- -------------- ------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Dr. Fiebiger............... -- -- -- -- -- --
Dr. Saxe................... 40,000 23.6% $6.44 08/31/09 $419,600 $668,000
Mr. Feist.................. 20,000 11.8% $6.44 08/31/09 $209,800 $334,000
Mr. Boyd................... 20,000 11.8% $6.44 08/31/09 $209,800 $334,000
</TABLE>
(1) Options are non-qualified stock options. Options vest 25% on the first
anniversary of the date of grant and thereafter at 1/48th per month. All
options expire ten years from the date of grant. All options are subject to
accelerated vesting upon the achievement of certain management business
objectives. The options generally terminate three months following
termination of the executive officer's employment with the Company or the
expiration date, whichever occurs earlier. The exercise price of each is
equal to the fair market value per share of the Common Stock on the date of
grant. The Board of Directors may reprice options under the terms of the
Company's option plans. In the event of a "change in control," 50% of any
unvested portion of the option shall immediately vest upon the closing of
such change in control transaction. The remaining 50% of any unvested
portion of the Option shall vest per its original schedule but in no event
shall such vesting period be longer than two years from the closing date of
the change in control. If an employee is terminated for any reason other
than for cause, within six months of a change in control event, then such
option shall vest in its entirety upon such termination.
(2) The potential realizable value is based on the term of the option at its
time of grant (10 years). It is calculated by assuming that the stock price
on the date of grant appreciates at the indicated annual rate, compounded
annually for the entire term of the option, and that the option is exercised
and sold on the last day of its term for the appreciated stock price. These
amounts represent certain assumed rates of appreciation only, in accordance
with the rules of the SEC, and do not reflect the Company's estimate or
projection of future stock price performance. Actual gains, if any, are
dependent on the actual future performance of the Company's Common Stock and
no gain to the optionee is possible unless the stock price increases over
the option term, which will benefit all stockholders.
14
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR, AND FY-END OPTION/SAR
VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FY-END (#) FY-END ($) (1)
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ---------------------------------- --------------- ------------ --------------- -------------------
<S> <C> <C> <C> <C>
Dr. Fiebiger...................... -- -- 40,000/0 $(32,800)/$0
Dr. Saxe.......................... -- -- 32,230/64,463 $(26,429)/$(52,860)
Mr. Fiest......................... -- -- 21,108/33,827 $(17,309)/$(27,747)
Mr. Boyd.......................... -- -- 7,500/20,000 $ (6,150)/$(16,400)
</TABLE>
- ------------------------
(1) Based on a value of $3.88 per share, the fair market value of the Common
Stock on December 31, 1999, less the option exercise price.
15
<PAGE>
EMPLOYMENT AGREEMENTS
The Company has entered into an Employment, Confidential Information and
Invention Assignment Agreement, with each of Messrs. Fiebiger, Feist, Saxe and
Boyd. These agreements provide that each such Named Executive shall be an
at-will employee of the Company, and his employment may be terminated by the
Company at any time. The agreements contain a covenant by each of such
executives not to compete with the business of the Company during the term of
such executive's employment with the Company, and also contain customary
confidentiality and invention assignment provisions.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION(1)
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS,
INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT AND
THE PERFORMANCE MEASUREMENT COMPARISON GRAPH WHICH FOLLOWS SHALL NOT BE DEEMED
TO BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors (the "Committee"), which is
currently comprised of Messrs. Sandfort and Huberman, two of the Company's
non-employee directors. The Committee is responsible for determining the
salaries of, establishing bonus programs for, and granting stock options to, the
Company's executive officers, including the Chief Executive Officer (the "CEO").
In making decisions regarding executive compensation, other than for the CEO,
the Committee receives and considers input from the CEO. The CEO is not present
during the discussion of his compensation. In administering the executive
compensation program, including the salary to be paid to the CEO, the Committee
considers several elements designed to attract and retain key personnel, reward
outstanding performance, link executive pay to long-term Company performance and
to align executive interests with stockholder interests. These elements consist
of a base salary, annual bonuses, and long-term incentive stock awards.
BASE SALARY
The base salaries of the Company's executive officers are determined by the
Committee and, for executive officers other than the CEO, are based upon
recommendations from the CEO. In establishing base salaries for executive
officers, including the CEO, the Committee considers numerous factors such as:
salaries paid to executive officers in comparable positions at similar
companies, the executive's responsibilities, prior experience and breadth of
knowledge, the executive's importance to the Company, the executive's
performance in the prior year, historical salary levels of the executive and
relative salary levels within the Company. Increases in base salary are
generally based upon the Committee's subjective review of enhanced individual
performance and/or increases in an executive's responsibilities.
ANNUAL BONUS
The Committee believes that it is important to tie a significant portion of
the compensation of executive officers to the attainment of corporate success,
thus aligning the objectives and rewards of Company executives with those of the
stockholders of the Company. The Committee awards executive bonuses based upon a
review of the bonuses given by comparable companies, and, for executive officers
other than the CEO, based upon recommendations from the CEO. Individual bonuses
are paid as a
- ------------------------
(1) The material in this report is not "soliciting material," is not deemed
"filed" with the SEC, and is not to be incorporated by reference into any
filing of the Company under the 1933 Act or 1934 Act, whether made before or
after the date hereof and irrespective of any general incorporation language
contained in such filing.
16
<PAGE>
percentage of salary and are based upon the Company meeting certain financial
goals, in addition to the attainment of individual achievement goals. The
Company's financial goals are established by the Board of Directors in the form
of gross revenue and net income benchmarks. If the specified gross revenue and
net income benchmarks are achieved the Committee has discretion to distribute
bonuses to the Company's executives based upon their individual contributions to
the achievement of the Company's financial benchmarks. Individual achievement
goals are established for each executive, other than the CEO, by the CEO. An
executive's performance in meeting his or her specified individual achievement
goals, coupled with attainment of the Company's gross revenue and net income
goals, determines the total bonus for each executive in any given year.
LONG TERM INCENTIVE STOCK AWARDS
The Company's Plans authorize the Committee to grant incentive or
non-qualified stock options to employees of the Company. The Committee
determines the prices and terms at which such options are granted. The Committee
uses stock options as a significant element of the compensation package of
executive officers, because it believes options provide an incentive to
executives to maximize stockholder value and because they compensate executives
only to the extent that the Company's stockholders receive a return on their
investment. Options vest 25% on the first anniversary of the date of grant and
thereafter at 2.08% per month. Moreover, options are subject to accelerated
vesting upon achievement of certain management business objectives and terminate
three months after the termination of the executive's employment with the
Company. Accordingly, such stock options serve as a means of retaining
executives. In determining the total number of shares of Common Stock to be
covered by option grants to executive officers in a given year, the Committee
takes into account the number of outstanding shares of Common Stock, the number
of shares reserved for issuance under the Company's Plans, recommendations of
management concerning option grants to employees below executive level, and the
Company's projected hiring needs for the coming year. In making individual stock
option grants to executives, the Committee considers the same factors considered
in the determination of base salary levels, as well as the stock and option
holdings of each executive and the remaining vesting schedule of such
executive's options.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Committee uses the same procedures described above for the other
executive officers in setting the annual salary, bonus and stock option awards
for the CEO. In determining where the CEO's total compensation is set in light
of the considerations described above, the Committee subjectively evaluates such
factors as the CEO's performance and the achievement of the Company's financial
benchmarks. In determining the CEO's salary the Committee considers the salaries
paid to CEO's of similar companies. For fiscal 1999 the base salary of the CEO
was set at $180,000. In setting this amount, the Committee took into account
Dr. Saxe's experience and his value to the Company. In awarding stock options to
the CEO, the Committee considers, in addition to the factors enumerated above,
the CEO's stock and option holdings and the number of options still subject to
vesting. The CEO's annual bonus is dependent upon the criteria enumerated above
for other executive officers. The CEO did not earn a bonus in fiscal 1999
because the Company's financial performance did not meet expectations.
Dr. Fiebiger was CEO until March 9, 1999, earning $34,000, a pro-rata portion of
the annual base salary.
Section 162(m) of the Internal Revenue Code (the "Code") limits the Company
to a deduction for federal income tax purposes of no more than $1 million of
compensation paid to certain Named Executive Officers in a taxable year.
Compensation above $1 million may be deducted if it is "performance-based
compensation" within the meaning of the Code. The statute containing this law
and the applicable proposed Treasury regulations offer a number of transitional
exceptions to this deduction limit for pre-existing compensation plans,
arrangements and binding contracts. As a result, the Compensation Committee
believes that at the present time it is quite unlikely that the compensation
paid to any Named Executive Officer in a taxable year, which is subject to the
deduction limit will exceed $1 million. Therefore, the
17
<PAGE>
Compensation Committee has not yet established a policy for determining which
forms of incentive compensation awarded to its Named Executive Officers shall be
designed to qualify as "performance-based compensation." The Compensation
Committee intends to continue to evaluate the effects of the statute and any
final Treasury regulations.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Horst G. Sandfort
Jonathan S. Huberman
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to Mr. Michael J. Kucha's resignation from the Board, effective
December 31, 1999, the Company's compensation committee consisted of Michael J.
Kucha and Horst G. Sandfort, two of the Company's then, non-employee directors.
Prior to Mr. Jonathan S. Huberman's resignation from the Board, effective
March 9, 1999, the Company's compensation committee consisted of Jonathan S.
Huberman and Horst G. Sandfort, two of the Company's then, non-employee
directors. From September 1995 to June 1997, Mr. Sandfort was an employee and an
executive officer of the Company, serving as President of the Company's
GateField division. Mr. Huberman is a general partner of Idanta Partners, Ltd.
("Idanta"), a principal stockholder of the Company. Mr. Huberman was elected to
the Company's Board of Directors in 1997 in accordance with the terms of a Stock
Purchase Agreement (the "Idanta Agreement"), dated November 10, 1997, among the
Company, Idanta, the Dunn Family Trust and the Perscilla Family Trust (the
"Idanta Entities"). Pursuant to the Idanta Agreement, the Company agreed to
cause Messrs. Jonathan Huberman and David Dunn to be nominated for election to
the Board at the Company's 1997 Annual Meeting and for re-election to the
Company's Board on each proxy statement filed for each subsequent meeting of
stockholders as their respective terms expire, until the earlier of (i) the date
the Company first reports Annual Net Income (as defined in the Idanta Agreement)
of at least $15 million and (ii) the date that the Idanta Entities own less than
one half of the total number of shares of Preferred Stock and Common Stock
purchased pursuant to the Idanta Agreement. Messrs. Huberman and Dunn resigned
from the Board, effective March 9, 1999. Mr. Kucha resigned from the Board,
effective December 31, 1999. Currently, the Compensation Committee consists of
Horst G. Sandfort and Jonathan S. Huberman.
On October 19, 1998, the Company was notified by the Idanta Entities of
their request that the Company redeem, in cash, an aggregate of 981,997 shares
of the Company's Series B Preferred Stock (the "Shares") at a redemption price
of equal to $4.5825 per share plus accrued dividends thereon. The Idanta
Entities became entitled, pursuant to the Idanta Agreement, to request
redemption of their shares upon the delisting of the Company's Common Stock from
the Nasdaq SmallCap Market. On December 16, 1998, the Company redeemed the
Shares for an aggregate price of $4,648,000. Eighteen Thousand and Three
(18,003) shares of Series B Preferred Stock remain outstanding.
No executive officer of the Company serves as a member of the Board of
Directors or compensation committee of any entity, which has one or more
executive officers serving as a member of the Company's Board of Directors or
Compensation Committee.
18
<PAGE>
PERFORMANCE MEASUREMENT COMPARISON(2)
The following graph shows the total stockholder return of an investment of
$100 in cash on December 31, 1994 for (i) the Company's Common Stock, (ii) the
Chase Hambrecht and Quist Technology Index (the "H&Q") and (iii) the Nasdaq
Composite Index (the "NASDAQ"). All values assume reinvestment of the full
amount of all dividends and are calculated as of December 31 of each year:
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CHASE HAMBRECHT
<S> <C> <C> <C>
Nasdaq Composite and Quist
GateField Corporation Index Technology Index
12/31/94 $100.00 $100.00 $100.00
12/31/95 $600.00 $141.33 $149.52
12/31/96 $125.02 $173.89 $185.84
12/31/97 $100.00 $213.07 $217.87
12/31/98 $52.36 $300.25 $338.89
12/31/99 $281.82 $542.43 $756.85
</TABLE>
<TABLE>
<CAPTION>
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
GateField Corporation................. $100.00 $600.00 $125.02 $100.00 $ 52.36 $281.82
Nasdaq Composite Index................ $100.00 $141.33 $173.89 $213.07 $300.25 $542.43
Chase Hambrecht and Quist Technology
Index............................... $100.00 $149.52 $185.84 $217.87 $338.89 $756.85
</TABLE>
- ------------------------
(2) This Section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any filing of the Company
under the 1933 Act or the 1934 Act whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.
19
<PAGE>
CERTAIN TRANSACTIONS
On September 30, 1999 the Company entered into a series of related Common
Stock Purchase Agreements (collectively, the "Agreement") with Mitsui Create
USA, Inc. and MHT American Holdings Inc., each purchasing 153,848 shares of the
Company's Common Stock at a price of $6.499922. The Series B Holders, Idanta
Partners, Ltd., and the Dunn Family Trust as well as the Series C Holders, Actel
Corporation, had the option to participate in the Company's Common Stock on a
pro-rata basis. Idanta purchased 40,818 shares; the Dunn Family Trust purchased
10,407 shares; and Actel Corporation purchased 112,129 shares of the Company's
Common Stock.
On May 25, 1999, the Company entered into an agreement with Actel
Corporation ("Actel"), the Series C-1 Preferred Stock ("Series C-1") whereby the
Company promises to pay to Actel, or registered assigns, the principal sum of
Eight Million Dollars ($8,000,000), together with interest (computed on the
basis of a 360-day year) from the date hereof on the unpaid balance of such
principal amount from time to time outstanding at the rate of 5.22% per annum.
Interest shall accrue from the date of issuance of the Note and shall be due and
payable quarterly from the date of issuance of the Note. All principal and any
unpaid interest shall be due and payable on May 25, 2004, or, if earlier,
thirty (30) days following a Change in Ownership of the Company. Payment of this
Note is secured by a security interest in certain property of the Company
pursuant to a security agreement of even date herewith between the Company and
Actel (the "Security Agreement"). The Series C-1 Preferred Stock shall be
convertible, at the option of the holder, into 29.304029 shares of Common Stock.
The "Conversion Price" shall mean $19.047619 per share of Conversion Securities.
The holder of this Note has the right, at its option, at any time and from time
to time to convert all or a portion of the outstanding principal amount of this
Note and unpaid interest thereon (the amount to be converted, the "Conversion
Amount") into fully-paid and non-assessable shares of Conversion Securities. In
the event of default, the entire unpaid principal of this Note and all unpaid
interest then accrued on this Note shall become and be immediately due and
payable upon written demand of the holder of this Note. This Note may not be
prepaid in whole or in part, without the prior written consent of the holder of
this Note.
The Company has entered into indemnity agreements with directors and certain
executive officers which provide, among other things, that the Company will
indemnify such officer or director, under the circumstances and to the extent
provided for therein, for expenses, damages, judgments, fines, witness fees and
settlements such officer or director may be required to pay in actions or
proceedings which he is or may be made a party by reason of his position as a
director, officer or other agent of the Company, and otherwise to the full
extent permitted under Delaware law and the Company's By-laws.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten percent Stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1999, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with; except that one
report on Form 3, covering an aggregate of 1 transaction, was filed late by
Mr. Huberman.
20
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
Proxy to vote on such matters in accordance with their best judgment.
It is important that your shares be represented at the meeting, regardless
of the number of shares which you hold. You are, therefore, urged to execute and
return, at your earliest convenience, the accompanying proxy in the envelope
which has been enclosed.
<TABLE>
<S> <C> <C>
By Order of the Board of Directors
By: /s/ LYNNE M. BENNETT
Lynne M. Bennett
SECRETARY
</TABLE>
April 14, 2000
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 IS AVAILABLE
WITHOUT CHARGE UPON WRITTEN REQUEST TO: CORPORATE SECRETARY, GATEFIELD
CORPORATION, 47436 FREMONT BOULEVARD, FREMONT, CALIFORNIA 94538-6503.
21
<PAGE>
GATEFIELD CORPORATION
47436 FREMONT BOULEVARD
FREMONT, CALIFORNIA 94538-6503
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
MAY 31, 2000
The undersigned stockholder of Gatefield Corporation, a Delaware
Corporation (the "Company") acknowledges receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement, each dated April 14, 2000, and
hereby appoints Lynne M. Bennett and Timothy Saxe and each of them, as the
proxies and attorneys-in-fact, with full power to each of substitution on
behalf and in the name of the undersigned, to vote all shares of the capital
stock the Company, and otherwise represent all of the shares registered in
the name of the undersigned at the 2000 Annual Meeting of Stockholders of the
Company to be held at the offices of the Company, on Wednesday, May 31, 2000
at 1:00 p.m. (local time), and at any and all postponements, continuations or
adjournments thereof, with the same force and effect as the undersigned might
or could do if personally present thereat, as set forth below and in their
discretion upon any other business that may properly come before the meeting.
Attendance of those signing on the reverse side at the Annual
Meeting or at any adjourned session thereof will not be deemed to revoke this
proxy unless those signing on the reverse side shall affirmatively indicate
thereat the intention of those signing on the reverse side to vote said
shares in person. If those signing on the reverse side hold(s) any of the
shares of capital stock of the Company in a fiduciary, custodial or joint
capacity or capacities, this proxy is signed by those signing on the reverse
side in every such capacity as well as individually.
IN THEIR DISCRETION, THE NAMED PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING, OR ANY
ADJOURNMENT THEREOF.
PROPOSAL 1: To elect one Class III director of the Company pursuant to
Delaware law and the classified Board provisions of the
Company's Restated Certificate of Incorporation to serve until
the 2003 Annual Meeting of Stockholders and until his successor
is elected; and to elect three directors of the Company pursuant
to California Law, whether by cumulative voting or otherwise, to
serve until the next Annual Meeting of Stockholders and until
their successors are elected.
<TABLE>
<CAPTION>
SLATE 1 SLATE 2
NOMINEE FOR A THREE-YEAR NOMINEES FOR A ONE-YEAR
TERM EXPIRING AT THE 2003 TERM EXPIRING AT THE
ANNUAL MEETING 2001 ANNUAL MEETING
------------------------- -----------------------
<S> <C>
Horst G. Sandfort Jonathan S. Huberman
Horst G. Sandfort
Timothy Saxe
</TABLE>
/ / WITH AUTHORITY to vote for the SLATE 1 nominee
/ / WITHHOLD AUTHORITY as to the SLATE 1 nominee
/ / WITH AUTHORITY to vote for the SLATE 2 nominees listed above
(except as marked below)
/ / WITHHOLD AUTHORITY as to the following SLATE 2 nominees:
1
<PAGE>
To withhold authority to vote for any Slate 2 Nominee(s) write such
nominee(s) name(s) below:
---------------------------------------------------------------------
PROPOSAL 2: To ratify the appointment of Deloitte & Touche LLP as
independent auditors for the Company for the fiscal year
ending December 31, 2000 (check one box).
/ / For / / Against / / Abstain
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH SPECIFICATIONS
MADE HEREIN. IF NO SPECIFICATION IS MADE AS TO ANY INDIVIDUAL ITEM HEREIN, IT
IS INTENDED THAT SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THE NAMED NOMINEES AND FOR THE OTHER PROPOSALS SPECIFIED HEREIN.
Both of said attorneys and proxies or their substitutes as shall be
present and act at the meeting, or if only one be present and act then that
one, shall have and may exercise all of the powers of both of said attorneys
and proxies hereunder.
The undersigned hereby acknowledges receipt of (a) the Notice of
Annual Meeting of Stockholders to be held on May 31, 2000 and (b) the
accompanying Proxy Statement.
2
<PAGE>
WITNESS the signature of the undersigned this __________ day of
__________, 2000.
--------------------------------------------
--------------------------------------------
SIGNATURE(S)
Please sign this proxy exactly as your name
appears hereon: joint owners should each
sign personally. Trustees and other
fiduciaries should indicate the capacity in
which they sign. If a corporation or
partnership, this signature should be that
of an authorized officer who should state
his or her title.
Please vote, date and promptly return this
proxy in the enclosed return envelope which
is postage prepaid if mailed in the United
States.
3
