<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by Registrant: [x]
Filed by a Party other than the Registrant: [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Section 240.14a-11(c) or Section
240.14a-12
DALLAS SEMICONDUCTOR CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
DALLAS SEMICONDUCTOR CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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) of 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 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:(1)
4) Proposed maximum aggregate value of transaction:
(1) Set forth amount on which the filing is calculated and state how it was
determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 23, 1996
To the Stockholders of
Dallas Semiconductor Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of Dallas Semiconductor Corporation, a Delaware corporation (the "Company"),
will be held on Tuesday, April 23, 1996, beginning at 8:30 a.m., Dallas time,
at the offices of the Company, 4401 South Beltwood Parkway, Dallas, Texas, for
the following purposes:
1. To elect seven directors to serve until the next
Annual Meeting of Stockholders or until their
respective successors are elected and qualified;
2. To consider and vote upon a proposal to amend the
Company's 1987 Stock Option Plan;
3. To consider and vote upon a proposal to eliminate the
class of Preferred Stock of the Company;
4. To consider and vote upon a proposal to ratify the
appointment of independent auditors for the Company
for the 1996 fiscal year; and
5. To transact such other business as may properly come
before the meeting or any adjournment thereof.
The Board of Directors of the Company has fixed March 1, 1996, as the
record date for determining the stockholders entitled to notice of, and to vote
at, this meeting or any adjournment thereof. The list of stockholders entitled
to vote will be available for inspection by any stockholder at the offices of
the Company, 4401 South Beltwood Parkway, Dallas, Texas, for ten days prior to
the meeting.
You are cordially invited to attend this meeting in person, if
possible. If you do not expect to be present in person, please sign and date
the enclosed proxy and return it in the enclosed envelope, which requires no
postage if mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
Marla K. McLaughlin, Secretary
Dallas, Texas
March 12, 1996
<PAGE> 3
PRELIMINARY COPY
DALLAS SEMICONDUCTOR CORPORATION
4401 SOUTH BELTWOOD PARKWAY
DALLAS, TEXAS 75244-3292
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 23, 1996
This Proxy Statement is furnished to stockholders of Dallas
Semiconductor Corporation, a Delaware corporation (the "Company"), in
connection with the solicitation by order of the Board of Directors of the
Company of proxies to be voted at the Annual Meeting of Stockholders of the
Company to be held on April 23, 1996, and is being mailed with proxies to such
stockholders on or about March 12, 1996. Proxies in the form enclosed,
properly executed by stockholders and returned to the Company, which are not
revoked, will be voted at the meeting. A proxy may be revoked at any time
before it is voted by written notice thereof to the Secretary of the Company or
by execution of a subsequent proxy.
The Company's Annual Report on Form 10-K and Annual Report to
Stockholders covering the fiscal year ended December 31, 1995 is being mailed
herewith to stockholders.
OUTSTANDING CAPITAL STOCK
The record date for stockholders entitled to notice of and to vote at
the Annual Meeting of Stockholders was the close of business on March 1, 1996.
At the close of business on that date the Company had issued, outstanding and
entitled to vote at the meeting __________ shares of Common Stock, $.02 par
value per share (the "Common Stock").
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a majority of
the outstanding Common Stock is necessary to constitute a quorum at the
meeting. In deciding all questions, a holder of Common Stock shall be entitled
to one vote, in person or by proxy, for each share of Common Stock in the
Stockholder's name on the record date. Stockholders have no cumulative voting
rights.
3
<PAGE> 4
CERTAIN BENEFICIAL OWNERS
As of March 1, 1996, the following persons were known to the Company
to be the beneficial owner of more than 5% of the Common Stock, and, except as
noted, are believed to have sole voting power and sole investment power with
respect to such shares:
<TABLE>
<CAPTION>
SHARES
NAME AND ADDRESS OF BENEFICIALLY PERCENT
BENEFICIAL OWNER (1) OWNED OF CLASS
- -------------------- ----------- --------
<S> <C> <C>
Strong Capital Management, Inc.(2)
100 Heritage Reserve
Menomonee Falls, Wisconsin 53051 1,391,450 5.4%
Wellington Management Company(3)
75 State Street
Boston, Massachusetts 02109 1,567,760 6.1%
</TABLE>
- ---------------
(1) See "Election of Directors" for information regarding beneficial
ownership of stock by C. V. Prothro, whose address is 4401 South
Beltwood Parkway, Dallas, Texas 75244. Excluding options not
exercisable within 60 days, Mr. Prothro may be deemed to be the
beneficial owner of 1,891,934 shares of Common Stock, or 7.0% of the
shares of Common Stock deemed to be outstanding.
(2) Strong Capital Management, Inc. ("Strong") in its capacity as an
investment advisor and Richard S. Strong, as Chairman of the Board and
the principal shareholder of Strong, may be deemed to be the
beneficial owner of 1,391,450 shares of Common Stock, over which
Strong exercises sole dispositive power. Strong exercises sole voting
power over 1,186,300 of such shares.
(3) Wellington Management Company ("Wellington") acting through its
subsidiary Wellington Trust Company, N.A., in its capacity as
investment advisor, may be deemed to be the beneficial owner of
1,567,760 shares of Common Stock. Wellington shares the power to
dispose of all such shares and shares the power to vote 485,960 of
such shares.
2
<PAGE> 5
ACTION TO BE TAKEN AT THE MEETING
The accompanying proxy, unless the stockholder specifies otherwise
therein, will be voted (i) for the election of each of the seven nominees named
herein for the office of director; (ii) for the approval of amendments to the
Company's 1987 Stock Option Plan; (iii) for the elimination of the Company's
class of Preferred Stock; (iv) for the ratification of the appointment of the
independent auditors for the Company for the fiscal year ending December 31,
1996; and (v) in the discretion of the proxy holders on any other matters that
may properly come before the meeting or any adjournment thereof.
In order to be elected a director, a nominee must receive a plurality
of the votes cast at the meeting for the election of directors. Since the
seven nominees receiving the largest number of affirmative votes will be
elected, shares represented by proxies that are marked "withhold authority" or
"abstain" will have no effect on the outcome of the election. Approval of each
of the other matters requires the affirmative vote of at least a majority of
the votes present at the meeting and entitled to vote on such matter. Shares
represented by proxies that are marked "abstain" as to any such matter will be
counted as votes cast, which will have the same effect as a negative vote on
such matter. Under Delaware law, proxies relating to "street name" shares that
are not voted by brokers on one or more, but less than all, matters will be
treated as shares present for purposes of determining the presence of a quorum
but will not be treated as shares entitled to vote as to such matter or matters
not voted upon.
As of the date hereof, the Board of Directors knows of no other
business that will be presented for action by the stockholders at this meeting.
However, if other proper matters are brought before the meeting, a vote may be
cast pursuant to the accompanying proxy in accordance with the judgment of the
proxy holders.
Should any nominee named herein for the office of director become
unwilling or unable to accept nomination or election, the proxy holders will
vote for the election in his place of such other person, if any, as management
may recommend; however, management has no reason to believe that any of the
nominees will be unwilling or unable to serve if elected. Each nominee has
expressed to management his intention, if elected, to serve the entire term for
which his election is sought.
3
<PAGE> 6
ELECTION OF DIRECTORS
Item No. 1 on Proxy
Seven directors are to be elected at the meeting to hold office until
the next Annual Meeting of Stockholders or until their respective successors
are duly elected and qualified. All of the nominees are currently directors of
the Company.
The Board of Directors' nominees for the office of director are as
follows:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING SERVED AS SHARES OF COMMON
LAST FIVE YEARS AND DIRECTOR OF STOCK BENEFICIALLY
DIRECTORSHIPS OF THE OWNED ON MARCH 1, 1996
NAME AGE PUBLIC COMPANIES COMPANY SINCE AND % OF CLASS (1)
---- --- ---------------- ------------- ------------------------
<S> <C> <C> <C> <C>
C.V. Prothro 53 Chairman of the Board, 1984 2,454,434
(E) President Company since 1989; 8.9%
Chairman of the Board of the
Company since 1984; General
Partner of Southwest
Enterprise Associates L.P., a
venture capital fund since
1983; Director of Platinum
Software Corporation.
Chao C. Mai 60 Senior Vice President of the 1985 703,269
Company since January 1993; 2.7%
prior thereto Vice President-
Wafer Fabrication and
Technology Development of the
Company
Michael L. Bolan 49 Vice President-Marketing and 1989 600,100
Product Development of the 2.3%
Company
Richard L. King 57 General Partner of KBA 1984 120,100
(A)(C) Partners L.P., a venture 0.5%
capital fund, since 1987 and
President of King Brothers &
Associates (China) Inc., a
venture capital fund, since
1994; Director of Oak
Technology, Inc.
M.D. Sampels 63 Attorney-at-Law; Shareholder 1985 120,884
(A)(C)(E) in the law firm of Jenkens & 0.5%
Gilchrist, a Professional
Corporation, since April 1995;
prior thereto Partner in the
law firm of Worsham, Forsythe,
Sampels & Wooldrige, L.L.P.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING SERVED AS SHARES OF COMMON
LAST FIVE YEARS AND DIRECTOR OF STOCK BENEFICIALLY
DIRECTORSHIPS OF THE OWNED ON MARCH 1, 1996
NAME AGE PUBLIC COMPANIES COMPANY SINCE AND % OF CLASS (1)
---- --- ---------------- ------------- ------------------------
<S> <C> <C> <C> <C>
Carmelo J. 54 Chairman or President/CEO of 1985 120,167
Santoro Silicon Systems Inc., since 0.5%
(A)(C) 1981, a supplier of custom and
application specific
integrated circuits; Chairman
and CEO of Platinum Software
Corporation; Director of AST
Research, Inc., S3 Inc. and
Platinum Software Corporation
E.R. Zumwalt, Jr. 75 President of Admiral Zumwalt & 1993 100,200
(A)(C) Consultants, Inc., a 0.4%
consulting firm since 1980;
Director of Fleet Aerospace,
Inc., Fleet Aerospace
Corporation, Navistar
International Corporation, NL
Industries, Inc. and Lincoln
Savings Bank
</TABLE>
Beneficial ownership of shares of Common Stock by all other executive officers
of the Company named in "Executive Compensation" herein and by all directors
and executive officers as a group, was as follows:
<TABLE>
<S> <C> <C>
F.A. Scherpenberg 466,183
1.8%
Douglas L. Powell 175,000
0.7%
Total shares beneficially owned 4,858,062
by directors and executive 16.6%
officers as a group (11
persons)
</TABLE>
_______________
(A) Member of the Audit Committee.
(C) Member of the Compensation Committee.
(E) Member of the Executive Committee.
(1) Except as otherwise noted, each person has sole voting and investment
power over the Common Stock shown as beneficially owned, subject to
community property laws where applicable. All outstanding options
held by the following persons are included, regardless of whether such
options are currently exercisable: 1,833,334 shares for Mr. Prothro,
281,169 shares for Dr. Mai, 200,000 shares for Mr. Bolan, 110,000
shares for Mr. King, 120,000 shares for both Mr. Sampels and Mr.
Santoro, 100,000 shares for Adm. Zumwalt, 422,000 shares for Mr.
Scherpenberg,
5
<PAGE> 8
and 3,358,003 shares for all directors and executive officers as a
group. Mr. Prothro disclaims beneficial ownership with respect to an
aggregate of 41,966 shares held for the benefit of his adult children.
Includes 167 shares held in trust for members of Mr. Santoro's family.
The Board of Directors of the Company held eight meetings during 1995.
During such fiscal year, all of the directors attended 75% or more of the
aggregate of the Board of Directors meetings and the meetings of the Committees
on which they serve. The Audit Committee of the Company recommends independent
auditors to the Board and reviews the scope and results of audits conducted and
the Company's internal control procedures. The Audit Committee held three
meetings during 1995. The Company has no Nominating Committee. See "Executive
Compensation - Report of Compensation Committee on Executive Compensation" for
a discussion regarding the membership, scope of authority and report of the
Company's Compensation Committee.
DIRECTOR COMPENSATION
During 1995, each of the nonemployee directors of the Company received
compensation as a director in the amount of $9,750 per quarter, plus $1,500 for
each board meeting attended and $1,000 for each committee meeting attended.
Committee chairmen received $1,500 per committee meeting chaired. The Company
reimburses nonemployee directors for expenses incurred in attending meetings
and provides for air travel and expenses of its nonemployee directors on
Company business. Premiums paid by the Company during 1995 for split-dollar
life insurance policies on Messrs. King, Sampels and Santoro totaled
$269,696. The cash values under such policies accrue for the benefit of the
Company to cover the premium costs, pursuant to a collateral assignment of each
policy to the Company.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee for fiscal year 1995 were
Richard L. King, M. D. Sampels, Carmelo J. Santoro (Chairman) and Admiral E.R.
Zumwalt, Jr.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
is responsible for establishing the level of compensation of the executive
officers of the Company and administers the Company's Executive Bonus Plan,
Profit Sharing Plan and stock option plans.
6
<PAGE> 9
The Company's 1995 performance was reviewed by the Committee for the
purpose of determining salary increases and bonus allocations for officers and
employees. The salary review and evaluation is conducted by comparing the
performance of various indices of the Company with others in its industry, as
well as considering general economic conditions. This evaluation is
subjective. Sales growth, profitability and shareholders' equity are among a
group of indices reviewed. No particular weight is assigned to one index over
another.
During 1995 the Company's officers and those occupying the functional
equivalent received salaries ranging from 6.5% to 23.9% over 1994 levels.
This included an increase in the Chief Executive Officer's base salary of 6.5%.
In comparison to the salary levels of the chief executive officers of companies
within the Standard and Poor's Electronics (Semiconductor) Index, Mr. Prothro
was below average. Likewise the salaries of other executives was lower than
those named in their public documents.
Under the Executive Bonus Plan, payments are determined based on the
achievement of performance targets, as well as subjective assessments, and are
limited in any one case to three times the executive's base compensation. The
plan limits a maximum distribution to all executives under these bonus plans to
6% of profits after tax. The Committee allocated a bonus of $1,000,000 to Mr.
Prothro, and bonuses to the other executive participants ranged from $60,000 to
$325,000. Total bonuses paid to this group were less than 6% of profits after
tax.
Under the Company's Profit Sharing Plan, quarterly bonuses are awarded
to all full-time employees of the Company, including the executive officers.
Under this Plan these profit sharing awards are allocated so that each eligible
employee receives an award equal to a fixed number of hours of his or her base
salary. During 1995, such quarterly profit sharing awards ranged from 15 to 17
hours of base salary for each eligible employee. The profit sharing awards are
included in the Bonus column in the Summary Executive Compensation Table that
follows.
The executive officers are also granted stock options from time to
time under the Company's Stock Option Plans. The timing of such grants and the
size of the overall option pools and their allocations are determined by the
Committee based upon market conditions, as well as corporate and individual
performance. Emphasis is placed on the long-term performance of the Company
and is subjective with no particular emphasis being placed on any one factor.
During 1995, no options were granted to Mr. Prothro or to other members of the
expanded executive group.
Certain executive officers of the Company will be subject to the $1
million limitation on deductibility of compensation under Section 162(m) of the
Internal Revenue Code, beginning in 1994. The Committee anticipates that a
substantial portion of each executive's compensation will be "qualified
performance-based compensation," which is not limited under Section 162(m).
The Committee therefore does not anticipate any executive officer's
compensation to exceed the limitation on deductibility.
COMPENSATION COMMITTEE
Carmelo J. Santoro (Chairman)
M. D. Sampels
Adm. E.R. Zumwalt, Jr.
7
<PAGE> 10
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG THE COMPANY, S&P 500
INDEX & S&P SEMICONDUCTOR INDEX
The following table compares total stockholder returns for the Company
at December 31 of each of the last five years to the Standard & Poor's 500
Stock Index ("S&P 500") and the Standard & Poor's Electronics (Semiconductors)
Index ("S&P Semi Index") assuming a $100 investment made on December 31, 1989
and reinvestment of all dividends. The Company's fiscal year ends on the
Sunday closest to December 31 of each year. This table uses December 31 as the
comparison point for each year. The stockholder return shown on the following
graph is not necessarily indicative of future stock performance.
[GRAPH]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dallas Semiconductor Corp 100 129 218 253 271 341
- -------------------------------------------------------------------------------------------------------
S&P 500 Index 100 130 140 155 157 215
- -------------------------------------------------------------------------------------------------------
S&P Semi Index 100 125 204 315 368 500
- -------------------------------------------------------------------------------------------------------
</TABLE>
The companies included in the S&P Semi Index are: Advanced Micro Devices,
Inc., Applied Materials, Inc. Intel Corporation, LSI Logic Corporation, Micron
Technology, Inc., Motorola, Inc., National Semiconductor Corporation and Texas
Instruments Incorporated.
8
<PAGE> 11
SUMMARY EXECUTIVE COMPENSATION TABLE
The following summary compensation table sets forth the annual
compensation paid or accrued, together with the number of shares covered by
options granted, during each of the Company's 1993, 1994 and 1995 fiscal years
to C. V. Prothro, the Company's Chief Executive Officer, and the Company's
four most highly compensated executive officers other than Mr. Prothro:
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
--------------
Awards
---------------------------------------------
Stock
Underlying All Other
Name and Salary Bonus Options Compensation
Principal Position Year ($)(1) ($)(2) (#)(3) ($)(4)(5)
------------------ ---- ------ --------- -------------- ------------
<S> <C> <C> <C> <C> <C>
C.V. Prothro, Chairman 1995 540,000 1,016,875
of the Board of 1994 490,000 309,307 0 107,110
Directors, President and 1993 375,000 -- 1,000,000 0
Chief Executive Officer
Chao C. Mai, 1995 314,000 334,813 l
Senior Vice President 1994 286,000 180,552 0 65,106
1993 220,000 -- 200,000 0
Michael L. Bolan, 1995 210,000 191,562
Vice President- 1994 195,000 123,104 0 47,652
Marketing and Product 1993 185,000 157,459 100,000 250
Development
F. A. Scherpenberg, 1995 195,000 181,094
Vice President- 1994 180,000 113,634 0 40,096
Computer Products 1993 155,000 132,124 294,000 250
Douglas L. Powell 1995 161,763 180,469
Vice President-Sales 1994 0 0 0 0
and Strategic Marketing 1993 0 0 0 0
</TABLE>
(1) Includes amounts deferred at the executive officer's election pursuant
to the Company's Section 401(k) Plan.
(2) Includes annual bonuses as well as amounts accrued and distributable
under the Company's Profit Sharing Plan in which all full-time employees
of the Company are eligible to participate.
(3) The Company has not granted any SARs.
(4) Excludes premiums paid by the Company for group term life insurance
generally available to all salaried employees of less than $600 for any
executive officer for 1995.
(5) Amounts shown for 1995 represent premiums paid by the Company for
split-dollar life insurance policies on these executive officers. The
cash values under such policies accrue for the benefit of the Company to
cover the premium costs, pursuant to a collateral assignment of each
policy to the Company.
(6) Mr. Powell joined the Company as of January 1, 1995.
9
<PAGE> 12
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES
The following table sets forth, for Mr. Prothro and the other four
most highly compensated executive officers of the Company: (i) the number of
shares of the Company's Common Stock acquired upon exercise of options during
fiscal year 1995; (ii) the net aggregate dollar value realized upon exercise;
(iii) the total number of unexercised options held at the end of fiscal year
1995; and (iv) the aggregate dollar value of in-the-money unexercised options
held at the end of fiscal year 1995. To date, the Company has issued no SARs.
<TABLE>
<CAPTION>
Number of Value of
Shares Underlying Unexercised
Unexercised In-the-Money
Shares Options at 1995 Options at 1995
Acquired on Value Fiscal Year End Fiscal Year End
Name Exercise (#) Realized ($) (#) ($)
------------------- ------------ ------------ ----------------------------- -----------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
C. V. Prothro 3,300 $ 57,750 1,392,534 437,500 $1,975,552 $ 2,625,000
Chao C. Mai 31,169 $ 647,536 162,500 87,500 $1,415,625 $ 525,000
Michael L. Bolan 290,000 $4,637,250 156,250 43,500 $1,890,625 $ 262,500
F. A. Scherpenberg 0 0 290,875 131,125 $2,793,187 $ 803,312
Douglas L. Powell 0 0 0 0 0 0
</TABLE>
10
<PAGE> 13
AMENDMENT OF 1987 STOCK OPTION PLAN
Item No. 2 on Proxy
GENERAL
On January 23, 1996, the Board of Directors approved, subject to
stockholder approval, a proposal to amend the 1987 Stock Option Plan (the
"Plan"). The amendment would provide that the maximum number of shares of
Common Stock available for issuance under the Plan would be increased, on and
as of January 1 of each calendar year from and including January 1, 1996, by a
number of shares equal to one percent (1%) of the number of shares of Common
Stock outstanding on December 31 of the preceding year; subject to adjustment
by the Board of Directors to reflect, as deemed appropriate by the Board of
Directors, any stock dividend, stock split, share combination, recognition,
recapitalization or the like, of or by the Company. The Plan currently
provides that the maximum number of shares of Common Stock available for
issuance under the Plan is 4,860,000.
The proposed amendment will provide the Company with the ability to
continue the purpose of the Plan by providing additional incentives to attract
and retain qualified and competent employees, non-employee directors and
consultants, upon whose judgment the success of the Company is largely
dependent. Approval of the amendment by the stockholders of the Company is
advisable in order for the Plan to continue to comply with Rule 16b-3
promulgated by the Securities and Exchange Commission. Rule 16b-3 provides an
exemption from the operation of the "short-swing profit" recovery provisions of
Section 16(b) of the Exchange Act of 1934, as amended, with respect to the
acquisition of stock options, transactions relating to stock appreciation
rights and the use of already owned shares of Common Stock as payment for the
exercise price of stock options.
The Company has previously registered under the Securities Act of
1933, as amended, 4,860,000 shares currently issuable under the Plan. The
Company intends to register the additional shares of Common Stock issuable
under this amendment, assuming the stockholders approve the proposal to
increase the number of available shares.
PURPOSE
The purpose of the Plan is to advance the interest of the Company by
providing additional incentives to attract and retain qualified and competent
employees, non-employee directors and consultants, upon whose efforts and
judgment the success of the Company is largely dependent, through the
encouragement of stock ownership in the Company by such persons.
ELIGIBILITY
Those persons who are either (i) employees of the Company, (ii) under
written contract to provide consulting services to the Company (a
"Consultant"), or (iii) non-employee directors of the Company are eligible to
participate in the Plan. As of the date hereof, substantially all of the
Company's full-time employees were eligible to receive options under the Plan.
As of March 1, 1996, there were approximately _______ officers, non-employee
directors and employees of the Company.
TYPES OF OPTIONS
The Plan authorizes (i) the granting of incentive stock options
("Incentive Options") to purchase Common Stock to eligible persons, (ii) the
granting of nonqualified stock options ("Nonqualified Options") to purchase
Common Stock to eligible persons and (iii) the use of already owned Common
Stock as full or partial payment for the exercise price of options granted
under the Plan. Unless the context otherwise requires, the term "Option"
includes both Incentive Options and Nonqualified Options.
11
<PAGE> 14
ADMINISTRATION
The Plan is currently administered by the Compensation Committee of
the Board of Directors (the "Plan Administrator"). The Plan Administrator
consists of disinterested persons in accordance with the provisions of Rule
16b-3.
EXERCISE PRICE OF OPTIONS
The Incentive Options may not be granted with an exercise price per
share that is less than the fair market value of the Common Stock at the date
of grant. The Nonqualified Options may be granted with any exercise price
determined by the Plan Administrator.
PAYMENT OF EXERCISE PRICE
The exercise price of an Option may be paid in cash, by certified or
cashier's check, by money order, by personal check or by delivery of already
owned shares of Common Stock having a fair market value equal to the exercise
price, or by delivery of a combination of cash and already owned shares of
Common Stock; provided, however, that if the optionee acquired such stock
directly or indirectly from the Company, he shall have owned such stock to be
surrendered for six months prior to tendering such stock for the exercise of an
Option.
SPECIAL PROVISIONS FOR INCENTIVE STOCK OPTIONS
An eligible employee may receive more than one Incentive Option, but
the maximum aggregate fair market value of the Common Stock (determined when
the Incentive Option is granted) with respect to which Incentive Options are
first exercisable by such employee in any calendar year cannot exceed $100,000.
In addition, no Incentive Option may be granted to an employee owning directly
or indirectly stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company unless the exercise price is set at not
less than 110% of the fair market value of the shares subject to such Incentive
Stock Option on the date of grant and such Incentive Option expires not later
than five (5) years from the date of grant. Awards of Nonqualified Options are
not subject to these special limitations.
NONTRANSFERABILITY OF OPTIONS
No Option granted under the Plan is assignable or transferable,
otherwise than by will or by laws of descent and distribution. During the
lifetime of an optionee, his Option is exercisable only by him.
EXERCISABILITY OF OPTIONS
The Plan Administrator, in its sole discretion, may limit the
optionee's right to exercise all or any portion of an Option until one or more
dates subsequent to the date of grant. The Plan Administrator also has the
right, exercisable in its sole discretion, to accelerate the date on which all
or any portion of an Option may be exercised.
EXPIRATION OF OPTIONS
The expiration date of an Option is determined by the Plan
Administrator at the time of the grant, but in no event may an Option be
exercisable after the expiration of 10 years from the date of grant of the
Option.
If terminated for cause, all rights of an optionee under the Plan
cease and the Options granted to such optionee become null and void for all
purposes. The Plan further provides that in most instances an Option must be
exercised by the optionee within 30 days after the termination of the
consulting contract between such optionee
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and the Company or termination of the optionee's employment with the Company,
as the case may be (for any reason other than termination for cause, mental or
physical disability or death), if and to the extent such Employee Option was
exercisable on the date of such termination.
Generally, if an optionee's employment is terminated due to retirement
or permanent disability, the optionee will have the right to exercise the
Option for the shares that were immediately purchasable at the date of
expiration or three months after the date of such termination, whichever occurs
first. If an optionee dies while actively employed by the Company, the Option
may be exercised (to the extent otherwise exercisable on the date of death)
within one year of the date of the optionee's death by the optionee's legal
representative or legatee.
ADJUSTMENTS
The Plan provides for adjustments to the number of shares under which
Options may be granted, to the number of shares subject to outstanding Options
and to the exercise price of such outstanding Options in the event of a
declaration of a stock dividend or any recapitalization resulting in a stock
split-up, combination or exchange of shares of Common Stock.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Grants of Options
Under current tax laws, the grant of an Option will not be a taxable
event to the recipient optionee and the Company will not be entitled to a
deduction with respect to such grant.
Exercise of Nonqualified Options and Subsequent Sale of Stock
Upon the exercise of a Nonqualified Option, an optionee will recognize
ordinary income at the time of exercise equal to the excess of the then fair
market value of the shares of Common Stock received over the exercise price.
The taxable income recognized upon exercise of a Nonqualified Option will be
treated as compensation income subject to withholding and the Company will be
entitled to deduct as a compensation expense an amount equal to the ordinary
income an optionee recognizes with respect to such exercise. When Common Stock
received upon the exercise of a Nonqualified Option subsequently is sold or
exchanged in a taxable transaction, the holder thereof generally will recognize
capital gain (or loss) equal to the difference between the total amount
realized and the fair market value of the Common Stock on the date of exercise;
the character of such gain or loss as long-term or short-term capital gain or
loss will depend upon the holding period of the shares following exercise.
Exercise of Incentive Options and Subsequent Sale of Stock
The exercise of an Incentive Option will not be taxable to the
optionee, and the Company will not be entitled to any deduction with respect to
such exercise. However, to qualify for this favorable tax treatment of
incentive stock options under the Internal Revenue Code (the "Code"), the
optionee may not dispose of the shares of Common Stock acquired upon the
exercise of an Incentive Option until after the later of two years following
the date of grant or one year following the date of exercise. The surrender of
shares of Common Stock acquired upon the exercise of an Incentive Option in
payment of the exercise price of an Option within the required holding period
for incentive stock options under the Code will be a disqualifying disposition
of the surrendered shares. Upon any subsequent taxable disposition of shares
of Common Stock received upon exercise of a qualifying Incentive Option, the
optionee generally will recognize long-term or short-term capital gain (or
loss) equal to the difference between the total amount realized and the
exercise price of the Option.
If an Option that was intended to be an incentive stock option under
the Code does not qualify for favorable incentive stock option treatment under
the Code due to the failure to satisfy the holding period requirements, the
optionee may recognize ordinary income in the year of the disqualifying
disposition. Provided the amount realized
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in the disqualifying disposition exceeds the exercise price, the ordinary
income an optionee shall recognize in the year of a disqualifying disposition
shall be the lower of (i) the excess of the amount realized over the exercise
price or (ii) excess of the fair market value of the Common Stock at the time
of the exercise over the exercise price. In addition, the optionee shall
recognize capital gain on the disqualifying disposition in the amount, if any,
by which the amount realized in the disqualifying disposition exceeds the fair
market value of the Common Stock at the time of the exercise. Such capital
gain shall be taxable as long-term or short-term capital gain, depending on the
optionee's holding period for such shares.
Notwithstanding the favorable tax treatment of Incentive Options for
regular tax purposes, as described above, for alternative minimum tax purposes,
an Incentive Option is generally treated in the same manner as a Nonqualified
Option. Accordingly, an optionee must generally include in alternative minimum
taxable income for the year in which an Incentive Option is exercised the
excess of the fair market value on the date of exercise of the shares of Common
Stock received over the exercise price. If, however, an optionee disposes of
shares of Common Stock acquired upon the exercise of an Incentive Option in the
same calendar year as the exercise, only an amount equal to the optionee's
ordinary income for regular tax purposes with respect to such disqualifying
disposition will be recognized for the optionee's calculation of alternative
minimum taxable income in such calendar year.
ELIMINATION OF THE CLASS OF
PREFERRED STOCK OF THE COMPANY
Item No. 3 on Proxy
The Board of Directors has approved, and recommends that the Company's
stockholders approve, an amendment to the Company's certificate of
incorporation that would eliminate the Company's class of preferred stock, par
value $.10 per share. As of the date of this proxy statement, no shares of
Preferred Stock were outstanding.
The elimination of the Company's Preferred Stock by the proposed
amendment would result in a reduction in the amount of franchise tax payable by
the Company to the State of Delaware of approximately $10,000-13,000 annually.
However, the proposed amendment could limit the Company's future flexibility
with respect to the issuance of preferred stock generally. Once the Preferred
Stock is eliminated, the Company would not be authorized to issue any shares of
preferred stock unless the stockholders of the Company approve a subsequent
amendment to the Company's certificate of incorporation authorizing the
issuance of preferred stock. While the Preferred Stock was not intended as an
anti- takeover provision, the elimination of the Preferred Stock could make a
takeover attempt by another person more difficult for the Company to prevent.
APPOINTMENT OF INDEPENDENT AUDITORS
Item No. 4 on Proxy
It is proposed that the appointment by the Board of Directors of the
firm of Ernst & Young LLP as the independent auditors of the Company for the
fiscal year ending December 31, 1996 be ratified. Ernst & Young has served as
the Company's independent auditors since 1984. A representative of such firm
is expected to be present at the meeting and will be available to answer
questions and will be afforded an opportunity to make a statement if desired.
The appointment of independent auditors does not require ratification by
stockholders and ratification of this appointment will not limit the Board of
Director's ability to discharge its independent auditors and engage another
firm to act in such capacity.
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STOCKHOLDER PROPOSALS
Any proposals from stockholders to be presented for consideration for
inclusion in the proxy material in connection with the next annual meeting of
stockholders of the Company scheduled to be held in April 1997 must be
submitted in accordance with the rules of the Securities and Exchange
Commission and received by the Secretary of the Company at the mailing address
set forth on the first page of this statement no later than the close of
business on November 12, 1996. The Company's By-laws also require that the
Company be given notice of all proposals and nominees to be presented by
stockholders at an annual meeting at least ninety (90) days in advance of the
meeting.
COMPLIANCE WITH SECTION 16(A)
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors, officers and persons who own more than 10% of
a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Directors, officers and greater than 10% beneficial owners are required by
applicable regulations to furnish the Company with copies of all forms they
file with the Securities and Exchange Commission pursuant to Section 16(a).
Based solely upon a review of the copies of the forms furnished to the
Company, the Company believes that during fiscal 1995 all filing requirements
applicable to its directors, executive officers and greater than 10 percent
beneficial owners were satisfied.
OTHER MATTERS
The accompanying proxy is being solicited on behalf of the Board of
Directors of the Company. The expense of preparing, printing and mailing the
form of proxy and the material used in the solicitation thereof will be borne
by the Company. In addition to the use of the mails, proxies may be solicited
by personal interview, telephone and telegram by directors, officers and
employees of the Company. The Company has engaged Chemical Bank to assist in
the solicitation of proxies at a cost of $6,000 plus certain expenses.
Arrangements have also been made with brokerage houses, banks and other
custodians, nominees and fiduciaries for the forwarding of soliciting materials
to the beneficial owners of Common Stock held of record by such persons, and
the Company will reimburse them for reasonable out-of-pocket expenses incurred
by them in connection therewith.
All information contained in this Proxy Statement relating to the
occupations, affiliations and securities holdings of directors and officers of
the Company and their relationship and transactions with the Company is based
upon information received from the individual directors and officers. All
information relating to any beneficial owner of more than 5% of the Company's
Common Stock is based upon information contained in reports filed by such owner
with the Securities and Exchange Commission.
The information contained in Items 7 and 8 of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995 is hereby
incorporated by reference. The Company will furnish without charge a copy of
its Annual Report on Form 10-K, including the financial statements and
schedules thereto, for the fiscal year ended December 31, 1996 filed with the
Securities and Exchange Commission pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 to any stockholder (including any beneficial
owner) upon written request to Alan P. Hale, Vice President- Finance, 4401
South Beltwood Parkway, Dallas, Texas 75244-3292. A copy of the exhibits to
such report will be furnished to any stockholder upon written request therefor
and payment of a nominal fee.
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APPENDIX A
DALLAS SEMICONDUCTOR CORPORATION
1987
STOCK OPTION PLAN
1. Purpose. The Dallas Semiconductor Corporation 1987 Stock
Option Plan (the "Plan") is intended to advance the interests of Dallas
Semiconductor Corporation. a Delaware corporation (the "Company"), and its
stockholders, by encouraging and enabling selected officers, directors,
consultants, agents and employees, upon whose judgment, initiative and effort
the Company is largely dependent for the successful conduct of its business, to
acquire and retain a proprietary interest in the Company by ownership of its
stock. It is intended that options which may qualify for treatment as
"incentive stock options" under Section 422A of the Internal Revenue Code of
1986, as amended, and applicable regulations and rulings promulgated thereunder
(collectively the "Code"), as well as options which may not so qualify, may be
granted under the Plan.
2. Definitions.
(a) "Annual Grant Date" means with respect to the year 1990, March
2 and with respect to the year 1991 and thereafter, October 4.
(b) "Board" means the Board of Directors of the Company or a
Committee of,.the Board to whom its authority has been delegated.
(c) "Common Stock" means the Company's Common Stock, $.02 par
value per share.
(d) "Date of Grant" means the date on which an Option is granted
under the Plan, which will be the date the Board authorizes the Option unless
the Board specifies a later date.
(e) "Date of Exercise" means the date on which an Option is
validly exercised pursuant to the Plan.
(f) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(g) "Fair Market Value" of the Company's Common Stock means, as
long as the Company's Common Stock is traded on the New York Stock Exchange,
the closing price of such stock on the New York Stock Exchange on such date (or
if such date is not a trading day, on the last trading day immediately
preceding such date) or, if not so traded, on the NASDAQ National Market System
or another national exchange upon which the Company's Common Stock is traded or
as otherwise determined by the Board, based on any reasonable valuation method.
(h) "Option" means an option granted under the Plan.
(i) "Optionee" means a person to whom an Option, which has not
expired, has been granted under the Plan.
(j) "Subsidiary" or "Subsidiaries" means a subsidiary corporation
or corporations of the Company as defined in Section 425(f) of the Code.
(k) "Successor" means the legal representative of the estate of a
deceased optionee or the person or persons who acquire the right to exercise an
Option by bequest or inheritance or by reason of the death of an Optionee.
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<PAGE> 19
(l) "Incentive Stock Option" means an option that qualifies as an
incentive stock option under all of the requirements of the Code.
(m) "Incentive Stock Option Agreement" means the agreement between
the Company and the Optionee, in such form as may from time to time be adopted
by the Board, under which the Optionee may purchase Common Stock pursuant to
the terms of an Incentive Stock Option granted under the Plan.
(n) "Non-Qualified Stock Option" means an option to purchase
Common Stock granted pursuant to the provisions of the Plan that does not
qualify as an Incentive Stock Option.
(o) "Non-Qualified Stock Option Agreement" means the agreement
between the Company and the Optionee, in such form as may from time to time be
adopted by the Board, under which the Optionee may purchase Common Stock
pursuant to the terms of a Non-Qualified Stock Option granted under the Plan.
(p) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange
Act, as (and to the extent) such rule, or any successor thereto, may from time
to time be in effect and including all interpretations thereunder.
3. Administration and Interpretation of Plan. The Plan shall be
administered by the Board. The Board shall have full and final authority in
its discretion, subject to the provisions of the Plan: (i) to determine the
individuals to whom, and the time or times at which, Options shall be granted
and the number of shares of Common Stock covered by each Option; (ii) to
construe and interpret the Plan; and (iii) to make all other determinations and
take all other actions deemed necessary or advisable for the proper
administration of the Plan. All such actions and determinations by the Board
shall be final and conclusively binding for all purposes and upon all persons.
Any Committee authorized to administer the Plan shall consist entirely of
disinterested persons in accordance with the provisions of Rule 16b-3.
4. Common Stock Subject to Options. The aggregate number of
shares of the Company's Common Stock which may be issued upon the exercise of
Options granted under the Plan shall not exceed 4,860,000 subject to adjustment
by the Board to reflect, as deemed appropriate by the Board, any stock
dividend, stock split, reverse stock split, share combination, reorganization,
recapitalization or the like, of or by the Company. The shares of Common Stock
to be issued upon the exercise of Options may be authorized but unissued
shares, shares issued and reacquired by the Company or shares bought on the
open market for the purposes of the Plan. In the event any Option shall, for
any reason, terminate or expire or be canceled or surrendered without having
been exercised in full, the shares subject to such Option, but not purchased
thereunder, shall again be available for Options to be granted under the Plan-
5. Participants. Options may be granted under the Plan to any
person who is an officer or other key employee (including officers and
employees who are also directors) or a consultant of the Company or any of its
Subsidiaries provided however, that no member of any Committee administering
this Plan shall be eligible to be granted an option hereunder except (i)
pursuant to the provisions of Section 7 hereof or (ii) under any other
circumstances that may be permitted under Rule 16b-3 without adversely
affecting any requirement of such rule that this Plan be administered by
disinterested persons.
6.1. Terms and Conditions of Options. Any Option granted under the
Plan shall be evidenced by either an Incentive Stock Option Agreement or a
Non-Qualified Stock Option Agreement executed by the Company and the Optionee.
Such agreement shall be subject to the following limitations and conditions:
(a) Option Price. The option price per share with respect to each
Option shall be determined by the Board but in no instance shall the option
price for an Option which is intended to qualify as an Incentive Stock Option
be less than 100% of the Fair Market Value of a share of the Common Stock on
the Date of Grant.
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(b) Payment of Option Price. Full payment for shares purchased
upon exercising an Option shall be made in cash or by check, or by delivery of
previously owned shares of Common Stock, or partly in cash or by check and
partly in such stock. The value of shares of Common Stock delivered in
connection with the payment of the option price shall be the Fair Market Value
of such shares on the Date of Exercise of the Option.
(c) Term of Option. The expiration date of each Incentive Stock
Option shall not be more than ten (10) years from the Date of Grant. The
expiration date of each Non-Qualified Stock Option shall not be more than
eleven (11) years from the Date of Grant.
(d) Vesting of Stockholder Rights. Neither an Optionee nor his
Successor shall have any of the rights of a stockholder of the Company until
the certificate or certificates evidencing the shares purchased pursuant to the
exercise of an Option are properly delivered to such Optionee or his Successor.
(e) Exercise of an Option. Each Option shall be exercisable at
any time, and from time to time, and in no particular order if the Optionee
holds more than one Option, throughout a period commencing on or after the Date
of Grant, as specified by the Board, and ending upon the earliest of the
expiration, cancellation, surrender or termination of the Option; provided
however, that no Option shall be exercisable in whole or in part prior to the
date of stockholder approval of the Plan. Furthermore, the exercise of each
Option shall be subject to the condition that if at any time the Company shall
determine in its discretion that the satisfaction of withholding tax or other
withholding liabilities, or that the listing, registration, or qualification of
any share otherwise deliverable upon such exercise upon any securities exchange
or under any state or federal law, or that the report to, or consent or
approval of, any regulatory body, is necessary or desirable as a condition of,
or in connection with, such exercise or the delivery or purchase of shares
pursuant thereto, then in any such event, such exercise shall not be effective
unless such withholding, listing, registration, qualification, report, consent
or approval shall have been effected or obtained free of any conditions not
acceptable to the Company.
(f) Stock Appreciation Rights. Any Option may include a Stock
Appreciation Right, either at the Date of Grant or later by amendment approved
by the Board, and provision therefor shall be included in the stock option
agreement at such time consistent with the terms hereof. Such Stock
Appreciation Right shall be subject to such terms and conditions not
inconsistent with the Plan as the Board shall impose, including the following:
(i) It shall be exercisable only when and to the extent
the Option is exercisable and only at such time as the value of the
Company's Common Stock is equal to or greater than the option price
specified in such Option.
(ii) It shall entitle the Optionee to surrender
unexercised the Option in which the Stock Appreciation Right is
included (or any portion of such Option) to the Company and to receive
from the Company in exchange therefor that number of shares of Common
Stock having an aggregate value equal to the excess of the Fair Market
Value of one share, on the day immediately preceding the date on which
the Stock Appreciation Right is exercised, over the purchase price per
share specified in such option, times the number of shares called for
by the Option, or portion thereof, which is so surrendered. The
Company, in its discretion, shall be entitled to elect to settle its
obligation arising out of the exercise of a Stock Appreciation Right
by the payment of cash equal to the aggregate value of the shares it
would otherwise be obligated to deliver. The Company may also elect
to settle such obligation partly in cash and partly in Common Stock.
In lieu thereof, the Company shall have the right, in its discretion,
to the extent it shall deem advisable to consent to or disapprove the
election of the Optionee to receive cash in full or partial settlement
of a Stock Appreciation Right.
(iii) No fractional shares shall be delivered pursuant to
exercise of a Stock Appreciation Right but in lieu thereof a cash
adjustment shall be made.
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(iv) Notwithstanding the other provisions hereof, to the
extent that a Stock Appreciation Right included in an Option is
exercised, such Option shall be deemed to have been exercised to the
extent of the number of shares of Common Stock called for by the
Option or portion thereof which is surrendered on exercise of the
Stock Appreciation Right, so that such shares shall no longer be
reserved for issuance upon the exercise of Options to be granted under
the Plan.
(v) The Board shall have the right, without the consent
or approval of the Optionee, at any time after the grant of a Stock
Appreciation Right to limit the time within or extent to which such
Stock Appreciation Right may be exercisable, to limit the maximum
amount of appreciation that may be recognized in connection with the
exercise thereof or to in any other manner it, in its discretion,
shall deem advisable amend or terminate such Stock Appreciation Right.
(vi) A Stock Appreciation Right granted pursuant to the
Plan shall not be exercisable unless and until the Optionee shall have
completed one (1) continuous year of full time employment with the
Company subsequent to the time of grant of such Stock Appreciation
Right. For the purposes hereof, full time employment shall be such as
may be established by the Board.
(vii) The Company shall have the right at any time to amend
this provision of the Plan dealing with Stock Appreciation Rights, and
the provisions of any stock option agreement pursuant to the Plan
dealing with a Stock Appreciation Right, to the extent that it, in its
discretion, shall deem to be necessary in order to comply with the
provisions of Rule 16b-3.
(g) Non-ISO Tax Offset Bonus. The Board may grant a Tax Offset
Bonus to such Optionees and on such bases as the Board shall determine,
including, but not limited to, a Tax Offset Bonus which becomes exercisable
only upon an Optionee's being subject to the restrictions of Section 16 of the
Exchange Act, and a provision relating thereto shall be included in the stock
option agreement at the time the right is granted. A Tax Offset Bonus may be
granted only with respect to a Non-Qualified Stock Option under the Plan, and
may be granted concurrently with or after the grant of the Non-Qualified Stock
Option. A Tax Offset Bonus shall entitle an Optionee to receive from the
Company or a Subsidiary an amount in cash no greater than the then existing
maximum statutory Federal income tax rate (including any surtax or similar
charge or assessment) for individuals multiplied by the amount of ordinary
income, if any, realized by the Optionee for Federal income tax purposes as a
result of the exercise of the Non-Qualified Stock Option. The Board may cancel
or place a limit on the term of, or the amount payable for, any Tax Offset
Bonus at any time. The Board shall determine all other terms and provisions of
any Tax Offset Bonus grant. The Company shall not be required to fund such Tax
Offset Bonus prior to the due date for such taxes, and the proceeds of such Tax
Offset Bonus shall be advanced to the Optionee in the form of a check payable
to the Internal Revenue Service for the account of the Optionee or such other
method as the Board may determine. The Board shall have the right to require
an Optionee to present reasonable proof of the amount of such taxes as a
condition precedent to the making of such payment. The Company shall be under
no obligation of any nature to grant any Tax Offset Bonus to any Optionee at
any time.
(h) Company Loans. The Company may make stock purchase loans in
connection with Option exercises upon the following terms and conditions:
(i) Upon the exercise by an Optionee of his Option, or
any part thereof, and the Optionee's request for a loan pursuant
hereto, the Company, upon approval by the Board, may loan said
Optionee, for the sole purpose of purchasing Common Stock from the
Company pursuant to the exercise of such Option, an amount equal to
the excess of the exercise price of the Option over the aggregate par
value of the Common Stock which the Optionee has elected to purchase
pursuant to such exercise; provided, however, that the Optionee shall
execute concurrently a promissory note in form satisfactory to the
Board for such amount payable to the order of the Company;
(ii) The Company shall have no obligation to make any loan
to any Optionee at any time;
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(iii) The promissory note referenced hereinbefore shall
provide for interest to be payable upon the outstanding principal
balance thereof at such rate and times as the Board may determine.
Such note shall also provide that the Board may require the Optionee
to secure the payment thereof at any time with collateral deemed
adequate by the Board in its sole discretion. Such note shall mature,
and all outstanding principal and interest shall become immediately
due and payable in installments or in lump sum at such time or times
as the Board shall provide. The note will provide for prepayment of
principal and accrued interest in whole or in part from time to time
without premium or penalty and may be extended or modified, from time
to time, at the Board's discretion. The note shall provide for
acceleration of maturity by the Company upon the happening of any
events determined appropriate by the Board, including without
limitation, any of the following events:
(1) failure of the Optionee to pay or perform any
term or provision thereof; or
(2) termination of the Optionee's employment with
the Company or a Subsidiary for any reason, except retirement,
disability or death; or
(3) if the Optionee shall execute an assignment
for the benefit of creditors, or admit in writing his ability
to pay his debts generally as they become due, or voluntarily
seek the benefit of, or have a petition filed against him
seeking the benefit of, a judgment, order or decree filed
against him pursuant to any bankruptcy, insolvency,
reorganization, or similar debtor relief law affecting the
rights of creditors generally; or
(4) failure of the Optionee to have discharged
within a period of thirty (30) days after the commencement
thereof any attachment, sequestration, or similar proceeding
against any of the assets of the Optionee; or
(5) failure of the Optionee to pay any money
judgment against him at least thirty (30) days prior to the
date on which any of his assets may be lawfully sold to
satisfy such judgment; or
(6) failure or refusal of the Optionee to comply
with any of the terms and conditions of his stock option
agreement or any other oral or written agreement with the
Company; or
(7) failure or refusal of the Optionee to provide
adequate security for payment of the promissory note
immediately upon request for collateral by the Board; or
(8) the divorce of the Optionee, unless
arrangements satisfactory to the Board are agreed to prior to
the entry of the divorce decree.
(i) Nontransferability of Option. No Option shall be transferable
or assignable by an Optionee, voluntarily, or by operation of law, other than
by will or the laws of descent and distribution. Each Option shall be
exercisable, during the Optionee's lifetime, only by him. No Option or the
shares covered thereby shall be pledged or hypothecated in any way and no
Option or the shares covered thereby shall be subject to execution, attachment,
or similar process except with the prior express written consent of the Board.
(j) Termination of Employment. Upon termination of an Optionee's
employment with the Company or with any of its Subsidiaries for any reason
other than retirement, permanent disability or death, any and all outstanding
Option(s) of such Optionee shall immediately thereupon be null and void. Upon
termination of an Optionee's employment with the Company or with any of its
Subsidiaries by reason of his retirement, or permanent disability, but
excluding his death, his option privileges shall be limited to the shares which
were immediately purchasable by him at the date of its expiration or three (3)
months after the date of such termination, whichever
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occurs first. Neither the adoption of this Plan nor the grant of an Option to
an eligible person shall alter in any way the Company's or the relevant
Subsidiary's rights to terminate such person's employment or directorship at
any time with or without cause nor does it confer upon such person any rights
or privileges to continued employment. or any other rights and privileges,
except as specifically provided in the Plan.
(k) Death of Optionee. If an Optionee dies while in the employ of
the Company or any Subsidiary, his option privileges shall be limited to the
shares which were immediately purchasable by him at the date of death and such
option privileges shall expire unless exercised by his Successor prior to the
date of its expiration or one (1) year from the date of the Optionee's death,
whichever occurs first.
(l) Ten Percent Stockholders. Notwithstanding anything herein to
the contrary, an Option which is intended to qualify as an Incentive Stock
Option shall be granted hereunder to any Optionee who, immediately before such
Option is granted, beneficially owns, directly or indirectly, more than 10% of
the total voting power of all classes of stock of the Company only if both of
the following conditions are met:
(i) The option price per share shall be no less than 110%
of the Fair Market Value of a share of Common Stock on the Date of
Grant; and
(ii) The expiration date of the Option shall be not more
than five (5) years from the Date of Grant.
(m) Other Terms. Each Incentive Stock Option Agreement or
Non-Qualified Stock Option Agreement, as the case may be, may contain such
other provisions (not inconsistent herewith) as the Board in its discretion may
determine, including, without limitation:
(i) in the event that an Option shall be immediately
exercisable, any provision which shall provide that the shares
acquired pursuant thereto shall not be deemed to have been issued
pursuant to a fully vested stock option and thereby subject to
repurchase rights (if any) contained in the shareholder's agreement
with the Optionee, entered into pursuant to Paragraph 10 hereof;
(ii) any provision which shall condition the exercise of
all or part of an Option upon such matters as the Board may deem
appropriate (if any) such as the passage of time, or the attainment of
certain performance goals, appropriate to reflect the contribution of
the Optionee to the performance of the Company;
(iii) any provision which would give the Board the
discretionary authority to accelerate the exercisability of an Option
in spite of any provision contained in an Option pursuant to clause
(ii) above, under such circumstances as the Board may deem
appropriate; and
(iv) the manner in which an Option is to be exercised.
7. Allotment of Shares. The grant of an Option shall not be
deemed either to entitle the Optionee to, or disqualify the Optionee from,
participation in any other grant of options under this Plan or any other stock
option plan of the Company. The number of shares allotted to each Optionee
shall be determined as follows:
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(a) Optionees Other than Non-Employee Directors. The Board shall,
in its discretion, determine the number of shares of Common Stock to be offered
from time to time by grant of Options to officers, key employees and
consultants of the Company or its Subsidiaries; provided that the aggregate
Fair Market Value (determined as of the time the option is granted) of the
Common Stock with respect to which Options which are intended to qualify as
Incentive Stock Options are exercisable for the first time by such Optionee
during any calendar year (under all such plans of the Optionee's employer
corporation and its parent and subsidiary corporations) shall not exceed
$100,000.
(b) Non-Employee Directors. Subject to the limitations imposed
pursuant to Section 4 of this Plan as to the aggregate number of shares that
may be issued hereunder, each non-employee director of the Company except C.
Richard Kramlich and any other non-employee director elected after March 2,
1990 who is required to remit his remuneration as a director of the Company
(including stock options) to a venture capital fund or other similar entity
with which he is affiliated, effective as of the Annual Grant Date of each
year, commencing with March 2, 1990, be granted an Option to purchase 10,000
shares of Common Stock subject to adjustment by the Board to reflect, as deemed
appropriate by the Board, any stock dividend, stock split, reverse stock split,
share combination, reorganization or the like, of or by the Company at a price
equal to 100% of the Fair Market Value of the Common Stock on the date of
grant, for a term of ten (10) years. The eligibility of each non-employee
director to receive a grant under this provision shall be determined as of each
Annual Grant Date.
8. Adjustments. The number of shares of Common Stock covered by
each outstanding Option granted under the Plan and the option price shall be
adjusted to reflect, as deemed appropriate by the Board in its discretion, any
stock dividend, stock split, reverse stock split, share combination, exchange
of shares, recapitalization, merger, consolidation, separation, reorganization,
liquidation or the like of or by the Company. Decisions by the Board as to
what adjustments shall be made, and the extent thereof, shall be final, binding
and conclusive on all Optionees.
9. Designation of Incentive Stock Options. The Board shall cause
each Option granted hereunder to be clearly designated in the agreement
evidencing such Option, at the time of grant, as to whether or not it is
intended to qualify as an Incentive Stock Option.
10. Execution of Shareholder's Agreement. Options may only be
exercised hereunder by employees who have executed a Shareholder's Agreement in
such form as the Board may adopt from time to time.
11. Notices. Whenever any notice is required or permitted
hereunder, such notice must be in writing and personally delivered or sent by
mail. Any notice required or permitted to be delivered hereunder shall be
deemed to be delivered on the date which it is personally delivered, or,
whether actually received or not, on the third business day after it is
deposited in the United States mail, certified or registered, postage prepaid,
addressed to the person who is to receive it at the address which such person
has theretofore specified by written notice delivered in accordance herewith.
The Company or an Optionee may change, at any time and from time to time, by
written notice to the other, the address which it or he had theretofore
specified for receiving notices. Until changed in accordance herewith, the
Company and each Optionee shall specify as its and his address for receiving
notices the address set forth in the option agreement pertaining to the shares
to which such notice relates.
12. Amendment or Discontinuance. The Plan and any Option
outstanding hereunder may be amended or discontinued by the Board without the
approval of the stockholders of the Company, except that the Board may not,
except as expressly provided in the Plan, increase the aggregate number of
shares which may be issued under Options granted pursuant to the Plan,
materially amend the eligibility requirements of the Plan or materially
increase the benefits which may accrue to participants under the Plan, without
such approval (if any) as may be required pursuant to the provisions of Rule
16b-3, or applicable law or the requirements of any national stock exchange
upon which the Company's Common Stock is traded.
22
<PAGE> 25
13. Effect of the Plan. Neither the adoption of this Plan nor any
action of the Board shall be deemed to give any officer or employee any right
to be granted an option to purchase Common Stock of the Company or any of its
Subsidiaries, or any other rights except as may be evidenced by a stock option
agreement, or any amendment thereto, duly authorized by the Board and executed
on behalf of the Company and then only to the extent and on the terms and
conditions expressly set forth therein.
14. Grant of Incentive Stock Options. No Incentive Stock Options
shall be granted pursuant to this Plan after the expiration of ten years from
the date of the earlier of: (i) the date the Plan is adopted, or (ii) the date
the Plan is approved by the stockholders of the Company.
23
<PAGE> 26
PRELIMINARY COPY PROXY
DALLAS SEMICONDUCTOR CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints C.V. Prothro and Chao C. Mai, and each
of them severally, as their proxies with full power of substitution and
resubstitution for and in the name, place and stead of the undersigned to vote
upon and act with respect to all of the shares of Common Stock of the Company
standing in the name of the undersigned, or with respect to which the
undersigned is entitled to vote and act, at the meeting to be held on April 23,
1996 or any adjournment(s) thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE,
THIS PROXY WILL BE VOTED FOR EACH OF THE LISTED NOMINEES FOR DIRECTOR AND FOR
PROPOSALS 2, 3 AND 4. If more than one of the proxies named shall be present in
person or by substitution at the meeting or at any adjournment thereof, the
majority of the proxies so present and voting, either in person or by
substitute, shall exercise all of the powers hereby given.
<PAGE> 27
<TABLE>
<S> <C>
1.ELECTION OF DIRECTORS: C.V. Prothro, Chao C. Mai, Michael L. Bolan, Richard L. King, M.D. Sampels,
WITHHOLD Carmelo J. Santoro, E.R. Zumwalt, Jr.
FOR all nominees AUTHORITY
listed to the right to vote for all (INSTRUCTION: To withhold authority to vote for any individual nominee, write that
(except as marked nominees nominee's name on the line below.)
to the contrary) listed at right
[ ] [ ]
---------------------------------------------------------------------------------
2.PROPOSAL TO APPROVE THE AMENDMENT TO THE
COMPANY'S 1987 STOCK OPTION PLAN: 5. THE DISCRETION OF THE PROXIES ON ANY OTHER MATTER
THAT MAY PROPERLY COME BEFORE THE MEETING.
For Against Abstain
[ ] [ ] [ ] For Against Abstain
[ ] [ ] [ ]
3.PROPOSAL TO APPROVE THE ELIMINATION OF THE The undersigned acknowledges receipt of the Notice of the Annual
COMPANY'S CLASS OF PREFERRED STOCK: Meeting and Proxy statement dated March 4, 1996.
For Against Abstain Please date this proxy and sign your name exactly as it appears
[ ] [ ] [ ] hereon. When there is more than one owner, each should sign.
When signing as an attorney, administrator, executor, guardian or
trustee, please add your title as such. If executed by the
corporation, the proxy should be signed by a duly authorized
officer.
4.PROPOSAL TO RATIFY THE APPOINTMENT OF PLEASE DATE, SIGN AND MAIL THIS PROXY CARD IN THE ENCLOSED
INDEPENDENT AUDITORS FOR THE 1995 FISCAL ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
YEAR:
Dated: , 1996
---------------------------------------------------
For Against Abstain
[ ] [ ] [ ]
----------------------------------------------------------------
Signature of Stockholder
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Signature of Stockholder
</TABLE>
