<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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
[X] Definitive Proxy Statement by Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
DSP TECHNOLOGY, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $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:*
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
*Set forth the amount on which the filing fee 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:_____________________________________________________________
Notes:
<PAGE>
[DSP LOGO]
48500 KATO ROAD
FREMONT, CALIFORNIA 94538-7338
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 24, 1996
Dear Shareholder:
You are invited to attend the Annual Meeting of the Shareholders of DSP
Technology Inc. (the "Company"), which will be held on June 24, 1996, at 10:00
a.m. at the Company's offices located at 795 Highland Drive, Ann Arbor, Michigan
48108, for the following purposes:
1. To elect a Board of Directors to serve for the ensuing year;
2. To consider and vote upon a proposal to increase the aggregate maximum
number of shares of the Company's Common Stock issuable under its 1991
Stock Option Plan by 100,000 shares from 818,327 shares to 918,327
shares;
3. To ratify the appointment of the accounting firm of Grant Thornton as
the independent accountants of the Company for the fiscal year ending
January 31, 1997; and
4. To transact any other business that may properly come before the
meeting or any adjournments thereof.
Shareholders of record at the close of business on May 17, 1996 are
entitled to notice of, and to vote at, this meeting and any adjournments
thereof.
By Order of the Board of Directors,
/s/ Jose M. Millares, Jr.
JOSE M. MILLARES, JR.
Secretary
Fremont, California
May 28, 1996
- --------------------------------------------------------------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY AND MAIL IT PROMPTLY IN THE RETURN ENVELOPE TO ASSURE THAT
YOUR SHARES ARE REPRESENTED AT THE MEETING. IF YOU LATER DESIRE TO REVOKE YOUR
PROXY, YOU MAY DO SO AT ANY TIME BEFORE IT IS EXERCISED.
- --------------------------------------------------------------------------------
<PAGE>
DSP TECHNOLOGY INC.
48500 KATO ROAD
FREMONT, CALIFORNIA 94538-7338
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
The accompanying proxy is solicited by the Board of Directors of DSP
Technology Inc., a California corporation (the "Company"), for use at the Annual
Meeting of Shareholders to be held on June 24, 1996, or any adjournment thereof,
for the purposes set forth in the accompanying Notice of Annual Meeting. The
date of this Proxy Statement is May 28, 1996, the approximate date on which this
Proxy Statement and the accompanying form of proxy were first sent or given to
shareholders.
GENERAL INFORMATION
ANNUAL REPORT. An annual report for the fiscal year ended January 31, 1996
is enclosed with this Proxy Statement.
VOTING SECURITIES. Only shareholders of record as of the close of business
on May 17, 1996, will be entitled to vote at the meeting and any adjournment
thereof. As of that date, there were 2,159,963 shares of Common Stock of the
Company issued and outstanding. Shareholders may vote in person or by proxy.
Each holder of shares of Common Stock is entitled to one (1) vote for each share
of stock held on the proposals presented in this Proxy Statement. The Company's
Bylaws provide that a majority of all of the shares of the stock entitled to
vote, whether present in person or represented by proxy, shall constitute a
quorum for the transaction of business at the meeting. Shareholders have
cumulative voting rights in the election of directors. Under the cumulative
voting method, a shareholder may multiply the number of shares owned by the
number of directors to be elected and cast this total number of votes for any
one candidate or distribute the total number of votes in any proportion among as
many candidates as the shareholder desires. A shareholder may not cumulate his
or her votes for a candidate unless such candidate's name has been placed in
nomination prior to the voting and unless a shareholder has given notice at the
meeting, prior to the voting, of his or her intention to cumulate his or her
votes. If any shareholder gives such notice, all shareholders may then cumulate
their votes. Management is hereby soliciting discretionary authority to cumulate
votes represented by proxies if cumulative voting is invoked.
SOLICITATION OF PROXIES. The cost of soliciting proxies will be borne by
the Company. The Company has retained MacKenzie Partners, Inc. to assist in
solicitation of proxies for a fee not to exceed $4,000, plus customary out-of-
pocket expenses. In addition, the Company will solicit shareholders by mail
through its regular employees, and will request banks and brokers, and other
custodians, nominees and fiduciaries, to solicit their customers who have stock
of the Company registered in the names of such persons and will reimburse them
for their reasonable, out-of-pocket costs. The Company may use the services of
its officers, directors, and others to solicit proxies, personally or by
telephone, without additional compensation.
VOTING OF PROXIES. All valid proxies received prior to the meeting will be
voted. All shares represented by a proxy will be voted, and where a shareholder
specifies by means of the proxy a choice with respect to any matter to be acted
upon, the shares will be voted in accordance with the specification so made. If
no choice is indicated on the proxy, the shares will be voted in favor of the
proposal. A shareholder giving a proxy has the power to revoke his or her proxy,
at any time prior to the time it is voted, by delivery to the Secretary of the
Company of a written instrument revoking the proxy or a duly executed proxy with
a later date, or by attending the meeting and voting in person.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The following
table sets forth certain information as of April 30, 1996, with respect to the
beneficial ownership of the Company's Common Stock by (i) all persons known by
the Company to be the beneficial owners of more than 5% of
1
<PAGE>
the outstanding Common Stock of the Company, (ii) each director and director-
nominee of the Company, (iii) the Chief Executive Officer and the four other
executive officers of the Company as of January 31, 1996 whose salary and bonus
for the year ended January 31, 1996 exceeded $100,000, and (iv) all executive
officers and directors of the Company as a group.
<TABLE>
<CAPTION>
SHARES OWNED (1)
---------------------
NAME AND ADDRESS OF NUMBER OF PERCENTAGE
BENEFICIAL OWNERS SHARES OF CLASS
--------------------- --------- ----------
<S> <C> <C>
FMR Corp. (2)................................................ 200,800 9.3%
82 Devonshire Street
Boston, MA 02109
Howard O. Painter, Jr. (3)................................... 69,000 3.2%
F. Gil Troutman, Jr. (4)..................................... 105,000 4.8%
J. Scott Kamsler (5)......................................... 51,200 2.4%
Michael Ford (6)............................................. 14,000 *
Alan S. Broad (7)............................................ 86,202 3.9%
Jose M. Millares, Jr. (8).................................... 39,666 1.8%
Executive officers and directors as a group (6 persons) (9).. 365,068 15.9%
</TABLE>
____________________
* Less than 1%
(1) Except as indicated in the footnotes to this table, the persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock shown as beneficially owned by them, subject to community
property laws, where applicable.
(2) According to a Schedule 13G/A filed with the Securities and Exchange
Commission February 13, 1996, all of the shares are beneficially owned by
FMR Corp. through its wholly-owned subsidiary, Fidelity Management &
Research Company ("Fidelity"), which is deemed to beneficially own such
shares as a result of acting as an investment advisor to various investment
companies registered under Section 8 of the Investment Company Act of 1940
(the "Funds"). The ownership of one investment company, Fidelity Low-Priced
Stock Fund, amounts to 131,800 shares of the Company's Common Stock. Edward
C. Johnson 3d, FMR Corp., through its control of Fidelity, and the Funds
each has the sole power to dispose of the 200,800 shares owned by the
Funds. Neither FMR Corp. nor Edward C. Johnson 3d has the sole power to
vote or direct the voting of the shares owned directly by the Funds, which
power resides with the Funds' Board of Trustees. Fidelity carries out the
voting of the shares under written guidelines established by the Funds'
Board of Trustees. Members of the Mr. Edward C. Johnson 3d family, through
their ownership of voting common stock of FMR Corp. and their execution of
a shareholder's voting agreement, may be deemed, under the Investment
Company Act of 1940, to form a controlling group with respect to FMR Corp.,
and may therefore be deemed to beneficially own the shares of the Company's
stock beneficially owned by FMR Corp.
(3) Includes 14,000 shares subject to stock options exercisable within 60 days
of April 30, 1996.
(4) Includes 45,000 shares subject to stock options exercisable within 60 days
of April 30, 1996.
2
<PAGE>
(5) Includes 14,000 shares subject to stock options exercisable within 60 days
of April 30, 1996.
(6) Includes 14,000 shares subject to stock options exercisable within 60 days
of April 30, 1996.
(7) Includes 24,166 shares subject to stock options exercisable within 60 days
of April 30, 1996.
(8) Includes 24,166 shares subject to stock options exercisable within 60 days
of April 30, 1996.
(9) Includes 135,332 shares subject to stock options exercisable within 60 days
of April 30, 1996.
ELECTION OF DIRECTORS
The Company's directors are elected annually to serve until the next annual
meeting of shareholders and thereafter until their successors are elected and
are qualified. The Bylaws of the Company authorize a flexible number of
directors ranging from three to five, currently fixed at four.
Unless otherwise directed by shareholders, the proxyholders will vote all
shares represented by proxies held by them for the election of the following
nominees, all of whom are now members of and constitute the Company's Board of
Directors. The Company is advised that all of the nominees have indicated their
availability and willingness to serve if elected. In the event that any nominee
becomes unavailable or unable to serve as a director of the Company prior to the
voting, the proxyholders will refrain from voting for the unavailable nominee
and will vote for a substitute nominee in the exercise of their best judgment.
If a quorum is present and voting, the four nominees for director receiving the
highest number of votes will be elected directors.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION WITH THE COMPANY SINCE
- ---- --- ------------------------- --------
<S> <C> <C> <C>
Howard O. Painter, Jr. 60 Chairman of the Board 1987
F. Gil Troutman, Jr. 52 Director, Chief Executive Officer 1988
and President
J. Scott Kamsler 47 Director 1988
Michael A. Ford 57 Director and Product Line Manager 1988
</TABLE>
Howard O. Painter, Jr. has served as Chairman of the Board since March
1988, and as a Director since June 1987. He also served as the Company's Chief
Executive Officer from March 1988 until October 1989 and as President from March
1988 until July 1988. Since 1985, Mr. Painter has been an independent business
development and marketing consultant. From April 1992 to January 1994, he also
served as the President of Adtron Instruments, a manufacturer of electronic
instruments. From 1980 to 1985, he held the position of Vice President and
General Manager of the Service Products Division of GenRad, Inc., a test
equipment manufacturer. Prior to this, he held various other management
positions with GenRad, Inc. since 1971.
F. Gil Troutman, Jr. has served as Chief Executive Officer since October
1989 and as a Director and President since July 1988. From 1985 until July 1988,
Mr. Troutman held the position of Product Line Manager of the Test Systems and
Instruments Group of GenRad, Inc. Prior to this, he held various other
management positions with GenRad, Inc. since 1967, including the position of
National Sales Manager of all GenRad products from 1982 to 1985.
3
<PAGE>
J. Scott Kamsler is a founder of the Company and has served as a Director
since November 1988. He served as the Company's Vice President of Finance, Chief
Financial Officer and Secretary from April 1984 until September 1989. From
January 1984 until September 1989, he was also the Vice President, Finance and
Chief Financial Officer of Solitec, Inc. Since October 1989 Mr. Kamsler has also
served as Vice President, Finance and Chief Financial Officer of Symmetricom,
Inc., formerly Silicon General Inc.
Michael A. Ford has served as a Director of the Company since October 1988
and has served as Product Line Manager for the Company's SigLab Group on a part-
time, interim basis since July 1994. In addition, Mr. Ford has been an
independent management and marketing consultant since March 1994. Mr. Ford
served as President of On-Line Environment Corporation, a company providing
environmental monitoring equipment and services to large computer installations
from October 1989 to March 1994. Prior to this, Mr. Ford was the President of
Western Management Partners, a business development and marketing consulting
company from 1986 to 1989.
BOARD MEETINGS. During the fiscal year ended January 31, 1996, the Board
held five (5) meetings. No director serving on the Board in fiscal 1996 attended
fewer than 75% of such meetings of the Board and the Committees on which he
serves.
COMMITTEES OF THE BOARD. The Company does not have a standing Nominating
Committee, but does have an Audit Committee and a Compensation Committee.
The Audit Committee's function is to review with the Company's independent
accountants and management the annual financial statements and independent
accountants' opinion, review the scope and results of the examination of the
Company's financial statements by the independent accountants, approve all
professional services and related fees performed by the independent accountants,
recommend the retention of the independent accountants to the Board, subject to
ratification by the shareholders, and periodically review the Company's
accounting policies and internal accounting and financial controls. The members
of the Audit Committee are J. Scott Kamsler, Michael A. Ford and Howard O.
Painter, Jr. During the fiscal year ended January 31, 1996, the Audit Committee
held one (1) meeting.
The Compensation Committee's function is to review and approve salary and
bonus levels and stock option grants. The members of the Compensation Committee
during fiscal 1996 were Michael A. Ford and J. Scott Kamsler. During the fiscal
year ended January 31, 1996, the Compensation Committee held five (5) meetings.
EXECUTIVE OFFICERS OF THE COMPANY WHO DO NOT SERVE AS DIRECTORS. The following
table sets forth information as to each executive officer of the Company as of
April 30, 1996:
<TABLE>
<CAPTION>
NAME AGE OFFICE
<S> <C> <C>
Alan S. Broad 49 Senior Vice President
Jose M. Millares, Jr. 43 Vice President, Finance, Chief
Financial Officer and Secretary
</TABLE>
All officers are elected by the Board of Directors. Elected officers hold
office until the first meeting of the Board of Directors following the Annual
Meeting of Shareholders and thereafter until a successor is chosen and
qualified. There are no family relationships among the officers and/or
directors.
Alan S. Broad has served as Senior Vice President since March 1986 and as
Vice President of Engineering since April 1985. In 1981, Dr. Broad co-founded
Transiac and served as Director and Vice President until it was acquired by the
Company in 1985.
Jose M. Millares has served as Vice President, Finance, Chief Financial
Officer and Secretary since October 1989, and as Controller since September
1984. From 1980 to 1984, he served as Corporate
4
<PAGE>
Controller for Transend Corporation, a data communications software/hardware
company. Mr. Millares is a Certified Public Accountant in California.
EXECUTIVE COMPENSATION AND OTHER MATTERS
COMPENSATION OF EXECUTIVE OFFICERS.
The following table sets forth information concerning the compensation of
the Chief Executive Officer of the Company and the two other executive officers
of the Company as of January 31, 1996 whose total salary and bonus for the
fiscal year ended January 31, 1996 exceeded $100,000, for services in all
capacities to the Company, during the fiscal years ended January 31, 1996, 1995
and 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
---------------------- --------------
Awards
------
Securities
Underlying
Name and Principal Position Year Salary Bonus Options
------------------------------- ------ ---------- --------- --------------
<S> <C> <C> <C> <C>
F. Gil Troutman, Jr. 1996 $160,638 $40,000 0
Director, Chief Executive 1995 $151,081 $50,000 0
Officer and President 1994 $143,354 -- 15,000
Alan S. Broad 1996 $124,227 $22,350 0
Senior Vice President 1995 $116,231 $27,000 0
1994 $111,197 -- 10,000
Jose M. Millares, Jr. 1996 $106,470 $19,150 0
Chief Financial Officer, 1995 $ 97,243 $22,300 0
Secretary and Vice President, 1994 $ 91,376 -- 10,000
Finance
</TABLE>
STOCK OPTIONS GRANTED IN FISCAL 1996
There were no grants of options to purchase the Company's Stock to the
persons named in the Summary Compensation table during the fiscal year ended
January 31, 1996.
5
<PAGE>
OPTION EXERCISES AND FISCAL 1996 YEAR-END VALUES
The following table provides the specified information concerning
unexercised options held as of January 31, 1996, by the persons named in the
Summary Compensation Table.
FISCAL YEAR-END OPTION VALUES (1)
<TABLE>
<CAPTION>
Number of Securities Value in Dollars of Unexercised In-
Underlying Unexercised the-Money Options at
Options at 1/31/96 1/31/96
---------------------- -------------------------------
Name Exercisable(2) Unexercisable(3) Exercisable(4) Unexercisable(3)
---------------------- ------------------ -------------------- ------------------ --------------------
<S> <C> <C> <C> <C>
F. Gil Troutman, Jr. 45,000 5,000 $286,875.00 $31,875.00
Alan S. Broad 24,166 3,334 $154,058.25 $21,254.25
Jose M. Millares, Jr. 24,166 3,334 $154,058.25 $21,254.25
</TABLE>
____________________
(1) There were no exercises of options to purchase the Company's Common Stock
by the persons named in the Summary Compensation Table in the fiscal year
ended January 31, 1996.
(2) Options granted in fiscal 1996 under the 1991 Plan generally vest in equal
annual amounts over a three-year period; provided, however, that no option
may be exercised in whole or in part until six months after the date of
grant.
(3) Represents shares which are not yet vested.
(4) Based on the closing price of $6.375, as reported on the Nasdaq National
Market, on January 31, 1996, less the exercise price.
COMPENSATION OF DIRECTORS
The Company pays a monthly fee of $2,725 to its Chairman of the Board and
$1,500 to the other non-employee directors. The Company also reimburses these
directors for expenses incurred in attending each Board and committee meeting.
The Company's 1991 Outside Directors Stock Option Plan (the "Directors Plan")
provides for the initial automatic grant of an option to purchase 6,000 shares
of the Company's Common Stock to directors of the Company who are not employees
of the Company or any parent or subsidiary corporation (an "Outside Director")
upon initial appointment or election to the Board of Directors, and subsequent
grants to each Outside Director of an option to purchase 3,000 shares of Common
Stock on each anniversary of the date of his or her initial grant. A total of
75,000 shares of the authorized but unissued Common Stock of the Company are
reserved for issuance under the Directors Plan. Messrs. Painter and Kamsler were
each granted options to purchase 3,000 shares of Common Stock under the
Directors Plan during the fiscal year ended January 31, 1996, while Mr. Ford was
granted options to purchase 3,000 shares of Common Stock under a separate alone
agreement during the fiscal year ended January 31, 1996 after becoming an
employee of the Company.
In March, 1993, the Company entered into a consulting agreement with
Michael A. Ford, an outside director, whereby the Company paid a fee of $2,000
per month for marketing research services. This agreement was terminated by the
Company in July 1994. Since July 1, 1994, Mr. Ford has served as Product Line
Manager on a part-time, interim basis for the Company's SigLab Group at a $6,000
monthly salary.
6
<PAGE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company's 1991 Stock Option Plan provides that in the event of a
"Transfer of Control" of the Company, the acquiring corporation will either
assume the Company's rights under outstanding options or issue substitute
options for the acquiring corporation's stock for such outstanding options. In
the event that the acquiring corporation elects not to assume or substitute for
outstanding options in connection with certain merger transactions, the Board of
Directors will provide that such outstanding options become immediately
exercisable and vested with respect to the full number of shares subject to such
options as of a date prior to the transfer of control. Options which are neither
assumed or substituted for by the acquiring corporation nor exercised as of the
consummation of the transfer of control will terminate.
PROPOSAL TO AMEND THE 1991 STOCK OPTION PLAN
The DSP Technology Inc. 1991 Stock Option Plan (the "Option Plan") was
adopted by the Board of Directors on April 23, 1991, and adopted by the
Company's shareholders at the 1991 Annual Meeting of Shareholders held on June
19, 1991. Currently, a maximum of 818,327 shares of Common Stock may be issued
under the Option Plan. This number consists of 103,894 shares of Common Stock
previously reserved for issuance under the Company's 1985 Incentive Stock Option
Plan and 1985 Nonstatutory Stock Option Plan (the "1985 Plans") which the Board
of Directors transferred to the Option Plan upon its adoption, 174,433 shares of
Common Stock which at the time of the adoption of the Option Plan were subject
to options previously granted under the 1985 Plans (the "1985 Plan Options"),
and an additional 540,000 shares of Common Stock reserved for issuance under the
Option Plan. However, the maximum number of shares that may be issued under the
Option Plan will be reduced by the number of shares subject to any 1985 Plan
Options that are exercised or remain outstanding. As of April 30, 1996, the
maximum number of shares issuable under the Option Plan is reduced by 174,433,
which is the sum of the 36,500 shares remaining subject to outstanding 1985 Plan
Options and 137,933 shares previously issued upon the exercise of 1985 Plan
Options.
Options to purchase 165,175 shares of the Company's Common Stock were
granted under the Option Plan during the fiscal year ended January 31, 1996 at
exercise prices ranging from $5.063 to $7.75. No option grants were made to the
Company's executive officers during the fiscal year ended January 31, 1996.
Option grants under the Option Plan are made at the discretion of the
Compensation Committee or the Board of Directors. Accordingly, future grants
under the Option Plan are not yet determinable. As of April 30, 1996, a total of
403,520 shares had been issued under the Option Plan or were subject to options
outstanding under the Option Plan, leaving 136,480 shares of Common Stock
available for future option grants under the Option Plan. Due to the limited
number of shares remaining, on February 22, 1996, the Board of Directors amended
the Option Plan, subject to shareholder approval, to increase the aggregate
maximum number of shares of the Company's Common Stock issuable under the Option
Plan by 100,000 shares from 818,327 shares to 918,327 shares. No options have
been granted under the Option Plan following the amendment except for options
for a total of 24,000 shares granted to employees who are not executive
officers.
The Board of Directors now seeks shareholder approval of the amendment to
the Option Plan authorizing the additional 100,000 shares for future stock
option awards. The Board of Directors believes that approval of the amendment to
the Option Plan to make available an adequate number of shares for the future
grant of stock options is in the best interests of the Company and its
shareholders because stock options serve to align the long-term interests of the
optionees and the shareholders and are an important factor in attracting,
motivating and retaining qualified personnel essential to the success of the
Company.
7
<PAGE>
SUMMARY OF THE PROVISIONS OF THE OPTION PLAN AS AMENDED
The following summary of the Option Plan as amended is qualified in its
entirety by the specific language of the Option Plan, a copy of which is
available to any shareholder upon request.
GENERAL. The Option Plan provides for the grant of incentive stock options
within the meaning of section 422(b) of the Internal Revenue Code of 1986, as
amended (the "Code"), and nonstatutory stock options. Currently, a maximum of
818,327 of the Company's Common Stock may be issued upon the exercise of options
under the Option Plan. The Board has amended the Option Plan, subject to
shareholder approval, to increase by 100,000 to 918,327 the aggregate maximum
number of shares that may be issued thereunder. As described above, this number
is reduced by the number of shares subject to any 1985 Plan Options that are
exercised or remain outstanding. In the event of any stock dividend, stock
split, reverse stock split, recapitalization, reclassification or
reorganization, the Board may approve an appropriate and proportionate
adjustment in the number and kind of shares subject to the Option Plan and to
outstanding options and to the exercise price of outstanding options. To the
extent any outstanding option under the Option Plan expires or terminates prior
to exercise in full or if shares issued upon the exercise of an option are
repurchased by the Company, the shares for which the option has not been
exercised or the repurchased shares are returned to the Option Plan and become
available for future grant.
ADMINISTRATION. The Option Plan is administered by the Board or a duly
appointed committee of the Board (together, the "Administrator"). Subject to the
provisions of the Option Plan, the Administrator determines the persons to whom
options are to be granted, the number of shares to be covered by each option,
whether an option is to be an incentive stock option or a nonstatutory stock
option, the terms of vesting and exercisability of each option, the type of
consideration to be paid to the Company upon exercise of an option, the duration
of each option, and all other terms and conditions of the options. The
Administrator will interpret the Option Plan, and all determinations of the
Administrator will be final and binding on all optionees.
ELIGIBILITY. All employees (including officers and directors who are also
employees) of the Company, any parent or subsidiary corporations of the Company,
or any other corporation within a controlled group of corporations within the
meaning of section 1563 of the Code which includes the Company may be granted
one or more options under the Option Plan. As of April 30, 1996, approximately
118 employees, including 3 executive officers, were eligible to participate in
the Option Plan.
TERMS AND CONDITIONS OF OPTIONS. Each option is evidenced by a written
agreement between the Company and the optionee specifying the number of shares
subject to the option and the other terms and conditions of the option,
consistent with the requirements of the Option Plan. The exercise price per
share of an option must equal at least the fair market value of a share of the
Company's Common Stock on the date of grant. However, the exercise price per
share of any option granted to a person who at the time of grant owns stock
possessing more than 10% of the total combined voting power or value of all
classes of stock of the Company or any parent or subsidiary corporation of the
Company must be at least 110% of the fair market value of a share of the
Company's Common Stock on the date of grant, and the term of any such option
cannot exceed five years. On April 30, 1996, the closing sale price of the
Company's Common Stock, as reported by the Nasdaq National Market, was $5.75 per
share.
Generally, options may be exercised by payment of the exercise price in
cash or in cash equivalent, or, if permitted by the Administrator, by tender of
shares of Common Stock owned by the optionee having a fair market value not less
than the option exercise price or by the assignment of the proceeds of a sale of
some or all of the shares of Common Stock being acquired upon the exercise of
the option.
8
<PAGE>
Options become exercisable and vested at such times as specified by the
Administrator, provided that no option may be exercised in whole or in part
until six months after the date of grant. Generally, options become exercisable
in installments, subject to the optionee's continued employment. However, the
Administrator may accelerate the time at which an option or an installment
thereof may be exercised. The maximum term of options is ten years. Options are
nontransferable by the optionee other than by will or by the laws of descent and
distribution, and are exercisable during the optionee's lifetime only by the
optionee.
Under the Option Plan, if an optionee's employment is terminated for any
reason except death or disability, the optionee may generally exercise his or
her option (to the extent unexercised and exercisable on the date of
termination) within 90 days after the date of termination, but in any event not
later than the expiration of the option term; provided, however, that, at the
election of the Administrator, such 90-day period may be extended by up to one
year in the case of a nonstatutory stock option, but in no event later than the
expiration of the option term. If an optionee's employment terminates due to
death or disability, the optionee (or his or her legal representative) may
exercise the option (to the extent unexercised and exercisable on the date of
termination) within one year after the date of the optionee's death or the date
the optionee ceases to be an employee due to disability, as the case may be, but
in any event not later than the expiration of the option term.
TRANSFER OF CONTROL. A "Transfer of Control" will be deemed to occur upon
any of the following events in which the shareholders of the Company do not
retain, directly or indirectly, at least a majority of the beneficial interest
in the voting stock of the Company: (i) the direct or indirect sale or exchange
by the shareholders of the Company of all or substantially all of the stock of
the Company, or (ii) a merger in which the Company is the surviving corporation.
A Transfer of Control will also occur in the event of (i) a merger in which the
Company is not the surviving corporation, other than such transaction the
principal purpose of which is to change the state of the Company's
incorporation, (ii) the sale, exchange or transfer (other than to a subsidiary
of the Company) of all or substantially all of the assets of the Company, or
(iii) a liquidation or dissolution of the Company. If a Transfer of Control
occurs, the surviving, continuing, successor, or purchasing corporation or
parent corporation thereof, as the case may be (the "Acquiring Corporation"),
may either assume outstanding options or substitute options for the Acquiring
Corporation's stock for the outstanding options. However, if the Acquiring
Corporation does not assume or substitute for outstanding options in connection
with a merger of the Company constituting a Transfer of Control, the
Administrator must provide that any unexercisable and/or unvested portion of the
outstanding options will be immediately exercisable and vested as of a date at
least 30 days prior to the Transfer of Control. Any options which are neither
assumed or substituted for by the Acquiring Corporation nor exercised as of the
date of the Transfer of Control will terminate effective as of such date.
TERMINATION OR AMENDMENT. Unless sooner terminated, no options may be
granted under the Option Plan after April 22, 2001. The Administrator may
terminate or amend the Option Plan at any time, but, without shareholder
approval, the Administrator may not amend the Option Plan to increase the
aggregate maximum number of shares of Common Stock which may be issued
thereunder or change the class of persons eligible to receive options. No
termination or amendment of the Option Plan may adversely affect an outstanding
option without the consent of the optionee, unless the amendment is necessary to
comply with any applicable law or regulation.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES OF THE OPTION PLAN
The following summary is intended only as a general guide as to the United
States federal income tax consequences under current law with respect to
participation in the Option Plan and does not attempt to describe all possible
federal or other tax consequences of such participation or tax consequences
based on particular circumstances.
9
<PAGE>
INCENTIVE STOCK OPTIONS. An optionee recognizes no taxable income for
regular income tax purposes as the result of the grant or exercise of an
incentive stock option qualifying under section 422. Optionees who do not
dispose of their shares for two years following the date the option was granted
nor within one year following the exercise of the option will normally recognize
a long-term capital gain or loss equal to the difference, if any, between the
sale price and the purchase price of the shares. If an optionee satisfies such
holding periods upon a sale of the shares, the Company will not be entitled to
any deduction for federal income tax purposes. If an optionee disposes of shares
within two years after the date of grant or within one year from the date of
exercise (a "disqualifying disposition"), the difference between the fair market
value of the shares on the determination date (see discussion under
"Nonstatutory Stock Options" below) and the option exercise price (not to exceed
the gain realized on the sale if the disposition is a transaction with respect
to which a loss, if sustained, would be recognized) will be taxed as ordinary
income at the time of disposition. Any gain in excess of that amount will be a
capital gain. If a loss is recognized, there will be no ordinary income, and
such loss will be a capital loss. A capital gain or loss will be long-term if
the optionee's holding period is more than 12 months. Any ordinary income
recognized by the optionee upon the disqualifying disposition of the shares
generally should be deductible by the Company for federal income tax purposes,
except to the extent such deduction is limited by applicable provisions of the
Code or the regulations thereunder.
The difference between the option exercise price and the fair market value
of the shares on the determination date of an incentive stock option (see
discussion under "Nonstatutory Stock Options" below) is an adjustment in
computing the optionee's alternative minimum taxable income and may be subject
to an alternative minimum tax which is paid if such tax exceeds the regular tax
for the year. Special rules may apply with respect to certain subsequent sales
of the shares in a disqualifying disposition, certain basis adjustments for
purposes of computing the alternative minimum taxable income on a subsequent
sale of the shares and certain tax credits which may arise with respect to
optionees subject to the alternative minimum tax.
NONSTATUTORY STOCK OPTIONS. Options not designated or qualifying as
incentive stock options will be nonstatutory stock options. Nonstatutory stock
options have no special tax status. An optionee generally recognizes no taxable
income as the result of the grant of such an option. Upon exercise of a
nonstatutory stock option, the optionee normally recognizes ordinary income in
the amount of the difference between the option exercise price and the fair
market value of the shares on the determination date (as defined below) and such
ordinary income generally is subject to withholding of income and employment
taxes. The "determination date" is the date on which the option is exercised
unless the shares are subject to a substantial risk of forfeiture and are not
transferable, in which case the determination date is the earlier of (i) the
date on which the shares are transferable or (ii) the date on which the shares
are not subject to a substantial risk of forfeiture. If the determination date
is after the exercise date, the optionee may elect, pursuant to Section 83(b) of
the Code, to have the exercise date be the determination date by filing an
election with the Internal Revenue Service not later than 30 days after the date
the option is exercised. Upon the sale of stock acquired by the exercise of a
nonstatutory stock option, any gain or loss, based on the difference between the
sale price and the fair market value on the date of recognition of income, will
be taxed as capital gain or loss. A capital gain or loss will be long-term if
the optionee's holding period is more than 12 months. No tax deduction is
available to the Company with respect to the grant of a nonstatutory option or
the sale of the stock acquired pursuant to such grant. The Company generally
should be entitled to a deduction equal to the amount of ordinary income
recognized by the optionee as a result of the exercise of a nonstatutory option,
except to the extent such deduction is limited by applicable provisions of the
Code or the regulations thereunder.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of a majority of the votes present and entitled to
vote at the Annual Meeting of Shareholders, at which a quorum representing a
majority of all outstanding shares of
10
<PAGE>
Common Stock of the Company is present and voting, either in person or by proxy,
is required for approval of this proposal. Broker non-votes will have no effect
on the outcome of this vote.
The Board of Directors believes that the proposed amendment to increase the
share reserve of the 1991 Stock Option Plan is in the best interests of the
shareholders and the Company for the reasons stated above. THEREFORE, THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THIS PROPOSAL TO
INCREASE THE AGGREGATE MAXIMUM NUMBER OF SHARES ISSUABLE UNDER THE DSP
TECHNOLOGY INC. 1991 STOCK OPTION PLAN BY 100,000 SHARES.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has selected Grant Thornton as
independent accountants to audit the financial statements of the Company for the
fiscal year ending January 31, 1997. Grant Thornton has acted in such capacity
since its appointment during the fiscal year ended January 31, 1993. A
representative of Grant Thornton is expected to be present at the Annual Meeting
with the opportunity to make a statement if the representative desires to do so,
and is expected to be available to respond to appropriate questions.
The affirmative vote of a majority of the votes present and entitled to
vote at the Annual Meeting of Shareholders, at which a quorum representing a
majority of all outstanding shares of Common Stock of the Company is present and
voting, either in person or by proxy, is required for approval of this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPOINTMENT OF
GRANT THORNTON AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR
ENDING JANUARY 31, 1997.
SHAREHOLDER PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL MEETING
Proposals of shareholders intended to be presented at the next Annual
Meeting of the Shareholders of the Company must be received at the Company's
principal office not later than January 29, 1997, and satisfy the conditions
established by the Securities and Exchange Commission for shareholder proposals
to be included in the Company's proxy statement for that meeting.
11
<PAGE>
TRANSACTION OF OTHER BUSINESS
At the date of this Proxy Statement, the only business which the Board of
Directors intends to present or knows that others will present at the meeting is
as set forth above. If any other matter or matters are properly brought before
the meeting, or any adjournment thereof, it is the intention of the persons
named in the accompanying form of proxy to vote the proxy on such matters in
accordance with their best judgment.
By Order of the Board of Directors
/s/ Jose M. Millares, Jr.
JOSE M. MILLARES, JR.
Secretary
May 28, 1996
12
<PAGE>
DSP TECHNOLOGY INC.
48500 KATO ROAD, FREMONT, CALIFORNIA 94538
THIS PROXY IS SOLICITED ON BEHALF OF
PROXY THE BOARD OF DIRECTORS
The undersigned hereby appoints F. Gil Troutman, Jr. and Jose M. Millares,
Jr. (the "Proxies"), and each of them, each with the power to appoint his
substitute, and hereby authorizes each of them to represent and vote as
designated below, all the shares of Common Stock of DSP Technology Inc. (the
"Company") held of record by the undersigned on May 17, 1996, at the Annual
Meeting of Shareholders to be held on June 24, 1996 or any adjournment thereof.
1. ELECTION OF DIRECTORS
[_] FOR all nominees listed below [_] WITHHOLD AUTHORITY to vote for
(except as marked to the contrary all nominees listed below
below)
(INSTRUCTION: To withhold authority to vote for any individual nominee, draw a
line through the nominee's name below.)
Howard O. Painter, Jr. F. Gil Troutman, Jr. J. Scott Kamsler Michael A. Ford
2. To increase the aggregate maximum number of shares of the Company's Common
Stock issuable under its 1991 Stock Option Plan by 100,000 shares from
818,327 shares to 918,327 shares.
[_] FOR [_] AGAINST [_] ABSTAIN
3. To ratify the appointment of Grant Thornton as the independent accountants
of the Company for the fiscal year ending January 31, 1997.
[_] FOR [_] AGAINST [_] ABSTAIN
4. In their discretion, the Proxies are each authorized to vote upon such other
business as may properly come before the meeting.
- --------------------------------------------------------------------------------
This Proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, the Proxy will
be voted FOR Proposals 1, 2 and 3.
Please sign exactly as your name appears
on your share certificates. When shares
are held by joint tenants, both should
sign. When signing as an attorney, as
executor, administrator, trustee or
guardian, please give your full title. If
a corporation, please sign in full
corporate name, by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
Dated: ___________________________ , 1996
_________________________________________
Signature
_________________________________________
Signature, if held jointly
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO DATE,
SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED TO ASSURE
THAT YOUR SHARES ARE REPRESENTED AT THE MEETING. IF YOU ATTEND THE MEETING, YOU
MAY VOTE IN PERSON IF YOU WISH TO DO SO EVEN THOUGH YOU HAVE SENT IN YOUR PROXY.
