SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. __)
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
[ ] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
LINEAR TECHNOLOGY CORPORATION
----------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
----------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transactions applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
<PAGE>
LINEAR TECHNOLOGY CORPORATION
Notice of Annual Meeting of Shareholders
To Be Held on November 8, 2000
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Linear
Technology Corporation, a California corporation (the "Company"), will be held
on November 8, 2000 at 3:00 p.m., local time, at the Company's principal
executive offices, located at 720 Sycamore Drive, Milpitas, California 95035,
for the following purposes:
1. To elect five (5) directors to serve until the next Annual Meeting of
Shareholders and until their successors are elected.
2. To ratify the appointment of Ernst & Young LLP as independent auditors
of the Company for the fiscal year ending July 1, 2001.
3. To approve a change in the Company's state of incorporation from
California to Delaware by means of a merger of the Company with and into
a wholly-owned Delaware subsidiary of the Company.
4. To approve the establishment of a classified Board of Directors of the
Company when the change in state of incorporation, proposed above,
occurs.
5. To approve an increase in the number of authorized shares of Common
Stock of the Company from 480,000,000 to 2,000,000,000 and an increase
in the number of authorized, but undesignated, shares of Preferred Stock
of the Company from 2,000,000 to 5,000,000, when the change in state of
incorporation, proposed above, occurs.
6. To make certain amendments to the 1996 Senior Executive Bonus Plan.
7. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record of the Company's Common Stock at the close of
business on September 13, 2000, the record date, are entitled to notice of and
to vote at the Annual Meeting and any adjournment thereof.
<PAGE>
All shareholders are cordially invited to attend the Annual Meeting in
person. However, to ensure your representation at the meeting, you are urged to
mark, sign, date and return the enclosed proxy card as promptly as possible in
the postage-prepaid envelope enclosed for that purpose. Any shareholder
attending the Annual Meeting may vote in person even if such shareholder has
returned a proxy.
FOR THE BOARD OF DIRECTORS
Arthur F. Schneiderman
Secretary
Milpitas, California
September 30, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND RETURN
THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE.
<PAGE>
LINEAR TECHNOLOGY CORPORATION
PROXY STATEMENT
FOR
2000 ANNUAL MEETING OF SHAREHOLDERS
INFORMATION CONCERNING SOLICITATION
AND VOTING
General
The enclosed Proxy is solicited on behalf of the Board of Directors of
Linear Technology Corporation, a California corporation (the "Company"), for use
at the Annual Meeting of Shareholders to be held November 8, 2000, at 3:00 p.m.,
local time, or at any adjournment thereof, for the purposes set forth herein and
in the accompanying Notice of Annual Meeting of Shareholders. The Annual Meeting
will be held at the Company's principal executive offices, located at 720
Sycamore Drive, Milpitas, California 95035. The telephone number at that
location is (408) 432-1900.
These proxy solicitation materials and the Company's Annual Report to
Shareholders for the year ended July 2, 2000, including financial statements,
were mailed on or about September 30, 2000 to all shareholders entitled to vote
at the Annual Meeting.
Proxies; Revocability of Proxies
All shares entitled to vote and represented by properly executed proxies
received prior to the Annual Meeting, and not revoked, will be voted at the
Annual Meeting in accordance with the instructions indicated on those proxies.
If no instructions are indicated on a properly executed proxy, the shares
represented by that proxy will be voted as recommended by the Board of
Directors. If any other matters are properly presented for consideration at the
Annual Meeting, the persons named in the enclosed proxy and acting thereunder
will have discretion to vote on those matters in accordance with their best
judgment. The Company does not currently anticipate that any other matters will
be raised at the Annual Meeting.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company (Attention:
Paul Coghlan, Vice President of Finance and Chief Financial Officer) a written
notice of revocation or a duly executed proxy bearing a later date or by
attending the Annual Meeting and voting in person.
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<PAGE>
Voting Rights and Solicitation of Proxies
On all matters other than the election of directors, each share has one
vote. Each shareholder voting for the election of directors may cumulate such
shareholder's votes and give one candidate a number of votes equal to the number
of directors to be elected (which number is currently set at five) multiplied by
the number of shares held by such shareholder, or may distribute such
shareholder's votes on the same principle among as many candidates as the
shareholder may select. However, no shareholder will be entitled to cumulate
votes unless the candidate's name has been placed in nomination prior to the
voting, and the shareholder, or any other shareholder, has given notice at the
meeting prior to the voting of the shareholder's intention to cumulate votes. If
any shareholder gives such notice, all shareholders may cumulate their votes for
the candidates in nomination. In the event that cumulative voting is invoked,
the proxy holders will have the discretionary authority to vote all proxies
received by them in such a manner as to ensure the election of as many of the
Board of Directors' nominees as possible. See "Proposal One--Election of
Directors."
The Company will bear the cost of soliciting proxies. In addition, the
Company may reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation material to such
beneficial owners. Solicitation of proxies by mail may be supplemented by one or
more of telephone, telegram, facsimile, e-mail or personal solicitation by
directors, officers or regular employees of the Company. No additional
compensation will be paid to such persons for such services.
Quorum; Abstentions; Broker Non-Votes
Under California law, all proposals submitted at the Annual Meeting require
for their approval both the affirmative vote of a majority of the shares
"represented and voting" at the Annual Meeting and the affirmative vote of a
majority of the quorum required for the transaction of business. A quorum is
established by the presence at the Annual Meeting, either in person or by proxy,
of the holders of a majority of the outstanding shares of Common Stock "entitled
to vote" at the Annual Meeting, including those shares as to which no votes are
cast at the Annual Meeting. Accordingly, abstentions and broker non-votes will
be counted as "entitled to vote" and thus represented for purposes of
establishing a quorum, but will not be counted for purposes of determining the
number of shares which are "represented and voting" with respect to a given
proposal.
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<PAGE>
Deadline for Receipt of Shareholder Proposals; Discretionary Authority to Vote
on Shareholder Proposals
Proposals of shareholders of the Company which are intended to be presented
by such shareholders at the Company's 2001 Annual Meeting must be received by
the Company no later than June 2, 2001 in order that they may be included in the
proxy statement and form of proxy relating to that meeting.
The Company may use its discretionary voting authority on all shareholder
proposals not received by the Company on or prior to August 16, 2001.
Record Date and Voting Securities
Shareholders of record at the close of business on September 13, 2000 (the
"Record Date") are entitled to notice of and to vote at the meeting. As of the
Record Date,------- shares of the Company's Common Stock, no par value, were
issued and outstanding. No shares of the Company's Preferred Stock are
outstanding. Based on the last reported sale on the Nasdaq National Market on
September , 2000, the market value of one share of the Company's Common Stock
was $-------. For information regarding security ownership by management and by
the beneficial owners of more than five percent of the Company's Common Stock,
see "Beneficial Security Ownership of Directors, Officers and Certain Other
Beneficial Owners."
PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
The Company's Bylaws currently provide for a board of five directors.
Unless otherwise instructed, the proxy holders will vote the proxies received by
them for the Company's five nominees named below, all of whom are currently
directors of the Company. In the event that any nominee of the Company is unable
or declines to serve as a director at the time of the Annual Meeting, the
proxies will be voted for any substitute nominee who is designated by the
current Board of Directors to fill the vacancy. It is not expected that any
nominee listed below will be unable or will decline to serve as a director. In
the event that additional persons are nominated for election as directors, the
proxy holders intend to vote all proxies received by them in such a manner in
accordance with cumulative voting as will ensure the election of as many of the
nominees listed below as possible, and, in such event, the specific nominees to
be voted for will be determined by the proxy holders. In any event, the proxy
holders cannot vote for more than five persons. The term
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<PAGE>
of office of each person elected as a director will continue until the next
Annual Meeting of Shareholders or until his successor has been elected and
qualified; provided, however, that as part of the Reincorporation it is proposed
that the Board of Directors be divided into three classes, with each class
serving staggered three year terms. See "Proposal Four--Establishment of a
Classified Board of Directors."
<TABLE>
The names of the nominees, and certain information about them, are set
forth below.
<CAPTION>
Director
Name Of Nominee Age(1) Principal Occupation Since
--------------- ------ -------------------- -----
<S> <C> <C> <C>
Robert H. Swanson, Jr. ......... 62 Chairman and Chief Executive Officer 1981
of the Company
David S. Lee ................... 63 Chairman, Cortelco Systems Holding 1988
Corp.
Leo T. McCarthy ................ 70 President, The Daniel Group
Richard M. Moley ............... 61 Former President and Chief Executive 1994
Officer, StrataCom, Inc.
Thomas S. Volpe ................ 49 Chairman, Prudential Volpe Technology 1984
Group
<FN>
-------------
(1) As of September 13, 2000
</FN>
</TABLE>
There are no family relationships among the Company's directors and
executive officers.
Mr. Swanson, a founder of the Company, has served as Chairman and Chief
Executive Officer since April 1999. From the Company's incorporation in
September 1981 until April 1999, Mr. Swanson served as President and Chief
Executive Officer. Mr. Swanson has also served as a director of the Company
since its incorporation. From August 1968 to July 1981, he was employed in
various positions at National Semiconductor Corporation, a manufacturer of
integrated circuits, including Vice President and General Manager of the Linear
Integrated Circuit Operation and Managing Director in Europe.
Mr. Lee is Chairman of the Boards of Cortelco Systems Inc., Cortelco
Kellogg, Open Data Systems and Telmax Communications, and a Regent of the
University of California. Mr. Lee co-founded Qume Corporation in 1973 and
served as Executive Vice-President of Qume until it was acquired by ITT
Corporation in 1978. After the acquisition, Mr. Lee held the positions of
Executive Vice President of ITT Qume until 1981, and President of ITT Qume
through 1983. From 1983 to 1985, he served as Vice President of ITT and as
Group Executive and Chairman of its Business Information Systems Group. In
1985, he became President and Chairman of Data Technology
4
<PAGE>
Corp. ("DTC"), and in 1988 DTC acquired and merged with Qume. Currently, Mr.
Lee is a member of the Board of Directors of ACT Manufacturing Inc., Centigram
Communications Corporation, and Daily Wellness Co. Mr. Lee also serves as a
board member of Directors of the California Chamber of Commerce, as
Commissioner of California Post Secondary Education Commission and as President
of Asian Cultural Teachings. Mr. Lee served as an adviser to Presidents George
Bush and Bill Clinton on the Advisory Committee on Trade Policy and Negotiation
(Office of the U.S. Trade Representative/Executive Office of the President) and
to Governor Pete Wilson on the California Economic Development Corporation
(CalEDC) and the Council on California Competitiveness. Mr. Lee founded and
served as Chairman of the Chinese Institute of Engineers, the Asian American
Manufacturers' Association and the Monte Jade Science and Technology
Association.
Mr. McCarthy has served since January 1995 as President of The Daniel
Group, a partnership engaged in international trade in Asia and other investment
opportunities. Mr. McCarthy retired from elective office in 1994 after twelve
years as Lieutenant Governor of the State of California. His primary
responsibility as Lieutenant Governor was to help businesses start and grow
through his role as chair of the California Commission for Economic Development.
One major area of focus for Mr. McCarthy was and remains international trade and
investment, particularly involving Pacific Rim markets. Mr. McCarthy serves as a
director of Parnassus Investments and Forward Funds.
Mr. Moley served as Chairman, President and Chief Executive Officer of
StrataCom, Inc., a network systems company, from June 1986 until its
acquisition by Cisco Systems, Inc., a provider of computer internetworking
solutions, in July 1996. Mr. Moley served as Senior Vice President of Cisco
until August 1997, when he became a consultant and private investor. Mr. Moley
served in various executive positions at ROLM Corporation, a telecommunications
company, from 1973 to 1986, most recently as a Group Vice President. Prior to
joining ROLM, he held management positions in software development and
marketing at Hewlett-Packard Company. Mr. Moley serves as a director of CIDCO
Incorporated, Netro and Echelon Corporation.
Mr. Volpe has served as Chairman of Prudential Volpe Technology Group
since December 1999. Mr. Volpe served as Chief Executive Officer of Volpe Brown
Whelan & Company, LLC (formerly Volpe, Welty & Company), a private investment
banking and risk capital firm, from its founding in April 1986 until its
acquisition by Prudential Securities in December 1999. Until
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<PAGE>
April 1986, he was President and Chief Executive Officer of Hambrecht & Quist
Incorporated, an investment banking firm with which he had been affiliated since
1981.
Vote Required and Recommendation of Board of Directors
The five nominees receiving the highest number of affirmative votes of the
shares entitled to be voted shall be elected as directors. Votes withheld will
be counted for purposes of determining the presence or absence of a quorum for
the transaction of business at the meeting, but will not be counted as votes
cast in the election of directors.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
NOMINEES SET FORTH HEREIN.
6
<PAGE>
BENEFICIAL SECURITY
OWNERSHIP OF DIRECTORS, EXECUTIVE
OFFICERS AND CERTAIN OTHER
BENEFICIAL OWNERS
Security Ownership
The following table sets forth certain information known to the Company
regarding the beneficial ownership of the Company's Common Stock as of the
Record Date, by (a) each beneficial owner of more than 5% of the Company's
Common Stock, (b) the Company's Chief Executive Officer and the Company's four
other most highly compensated executive officers during fiscal 2000
(collectively, the "Named Executive Officers"), (c) each director of the Company
and (d) all directors and executive officers of the Company as a group. Except
as otherwise indicated, each person has sole voting and investment power with
respect to all shares shown as beneficially owned, subject to community property
laws where applicable.
Shares Percentage
Beneficially Beneficially
Beneficial Owner Owned Owned
---------------- ------------ ------------
Janus Capital Corporation (1) ................. 38,691,510
100 Fillmore Street
Denver, CO 80206-4923 .....................
Putnam Investments, Inc. (2) .................. 33,178,698
One Post Office Square ....................
Boston, MA 02109 ..........................
FMR Corp. (3) ................................. 32,431,844
82 Devonshire Street ......................
Boston, MA 02109 ..........................
Robert H. Swanson, Jr. (4) .................... 737,800
Robert C. Dobkin (5) .......................... 1,580,432
Clive B. Davies (6) ........................... 1,075,256
Paul Coghlan (7) .............................. 483,448
Hans J. Zapf (8) .............................. 304,000
Thomas S. Volpe (9) ........................... 208,000
David S. Lee (10) ............................. 76,000
Leo T. McCarthy (11) .......................... 204,400
Richard M. Moley (12) ......................... 96,000
All directors and executive officers as a group
(13 persons) (13) ........................... 5,258,536
7
<PAGE>
--
* Less than one percent of the outstanding Common Stock.
(1) As reported by Janus Capital Corporation ("Janus Capital") as of February
14, 2000. Includes 15,225,430 shares beneficially owned by Janus Fund.
Janus Capital and Janus Fund have shared voting power and shared
dispositive power with respect to the shares beneficially owned by Janus
Capital and Janus Fund.
(2) As reported by Putnam Investments, Inc. as of March 7, 2000. Consists of
15,044,412 shares held by Putnam Investment Management, Inc. ("PIM") and
1,545,337 shares held by The Putnam Advisory Company, Inc. ("PAC"), each
a registered investment advisor under the Investment Advisers Act of
1940. PIM and PAC are deemed to be beneficial owners of the shares held
by their respective investment advisory clients. Putnam Investments, Inc.
("PI"), a wholly owned subsidiary of Marsh & McLennan Companies, Inc.
("MMC"), is the sole owner of PIM and PAC. PI and MMC disclaim the power
to vote or dispose of, or to direct the voting or disposition of, any of
the securities owned by PIM and PAC.
(3) As reported by Fidelity Management & Research Company ("FMRC") as of
February 14, 2000. Includes 14,959,880 shares beneficially owned by FMRC,
1,162,542 shares beneficially owned by Fidelity Management Trust Company,
and 23,200 shares beneficially owned by Fidelity International Limited.
FMR Corp. has sole voting power with respect to 15,720,172 shares and has
sole dispositive power with respect to the 16,215,922 shares.
(4) Includes 284,800 shares issued in the name of Robert H. Swanson, Jr. and
Sheila L. Swanson, Trustees of the Robert H. Swanson, Jr. and Sheila L.
Swanson Trust U/T/A dated May 27, 1976. Also includes 453,000 shares
issuable pursuant to options exercisable within 60 days of September 13,
2000.
(5) Includes 708,432 shares issued in the name of Robert C. Dobkin and
Kathleen C. Dobkin, Trustees of the Dobkin Family Trust U/D/T 9/16/91.
Also includes 872,000 shares issuable pursuant to options exercisable
within 60 days of September 13, 2000.
(6) Includes 636,256 shares issued in the name of Clive B. Davies and Carol
B. Davies, Trustees of the Davies Living Trust 9/9/94. Also includes
439,000 shares issuable pursuant to options exercisable within 60 days of
September 13, 2000.
(7) Includes 410,000 shares issuable pursuant to options exercisable within
60 days of September 13, 2000.
8
<PAGE>
(8) Includes 249,000 shares issuable pursuant to options exercisable within
60 days of September 13, 2000.
(9) Consists of 208,000 shares issuable pursuant to options exercisable
within 60 days of September 13, 2000.
(10) Consists of 76,000 shares issuable pursuant to options exercisable within
60 days of September 13, 2000.
(11) Includes 18,000 shares issued in the name of Leo and Jacqueline McCarthy
LLC. Also includes 186,400 shares issuable pursuant to options exercisable
within 60 days of September 13, 2000.
(12) Consists of 96,000 shares issuable pursuant to options exercisable within
60 days of September 13, 2000.
(13) Includes 3,482,600 shares issuable pursuant to options exercisable within
60 days of September 13, 2000.
Board Meetings And Committees
The Board of Directors of the Company held a total of four meetings during
the fiscal year ended July 2, 2000. No director attended fewer than 75% of the
meetings of the Board of Directors and the Board committees upon which such
director served. The Board of Directors has an Audit Committee and a
Compensation Committee. The Board of Directors has no nominating committee or
any committee performing similar functions.
The Audit Committee of the Board of Directors currently consists of
directors Lee, McCarthy, Moley and Volpe, and held a total of four meetings
during the last fiscal year. The Audit Committee recommends engagement of the
Company's independent auditors, and is primarily responsible for approving the
services performed by the Company's independent auditors and for reviewing and
evaluating the Company's accounting principles and its system of internal
accounting controls.
The Compensation Committee of the Board of Directors currently consists of
directors Lee, McCarthy, Moley and Volpe, and held a total of four meetings
during the last fiscal year. The Committee reviews and approves the Company's
executive compensation policy, including the salaries and target bonuses of the
Company's executive officers, and administers the Company's employee stock
plans.
Director Compensation
The Company currently pays each non-employee director an annual retainer of
$20,000 and a fee of $1,500 for each meeting of the Board of Directors attended.
Directors are generally eligible to receive options under the
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<PAGE>
Company's stock option plans. For the fiscal year ended July 2, 2000, Messrs.
Lee, Moley and Volpe each received an option to purchase 32,000 shares.
Compensation Committee Interlocks and Insider Participation
The Company's Compensation Committee currently consists of directors Lee,
McCarthy, Moley and Volpe. No executive officer of the Company served on the
compensation committee of another entity or on any other committee of the board
of directors of another entity performing similar functions during the last
fiscal year.
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
reports of ownership on Form 3 and of changes in ownership on Forms 4 or 5 with
the Securities and Exchange Commission and the National Association of
Securities Dealers, Inc. Executive officers, directors and ten percent
shareholders are also required by Commission rules to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely upon its review of copies of such forms and amendments, if
any, received by the Company, or written representations from certain reporting
persons that no Forms 5 were required for such persons, the Company believes
that it has complied with all Section 16(a) filing requirements applicable to
its executive officers and directors during the fiscal year ended July 2, 2000.
10
<PAGE>
EXECUTIVE OFFICER COMPENSATION
<TABLE>
The following table sets forth all compensation received for services
rendered to the Company in all capacities, for the last three fiscal years ended
July 2, 2000, by the Named Executive Officers:
Summary Compensation Table
<CAPTION>
Long Term
Compensation
--------------
Annual Compensation Shares
Name and Principal ------------------- Underlying All Other
Position Year Salary Bonus(1) Options(2) Compensation(3)
-------- ---- ------ -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Robert H. Swanson, Jr. ................ 2000 $ 274,273 $ 2,263,455 -- $ 31,980
Chairman and Chief .................. 1999 283,488 1,340,347 200,000 33,064
Executive Officer ................... 1998 268,258 1,273,804 500,000 23,790
Clive B. Davies ....................... 2000 $ 272,696 $ 1,795,484 -- $ 23,156
President ........................... 1999 253,615 1,064,105 130,000 22,576
1998 241,662 979,622 260,000 22,620
Robert C. Dobkin ...................... 2000 $ 261,639 $ 1,140,285 -- $ 22,397
Vice President, Engineering ......... 1999 249,677 853,018 90,000 22,250
And Chief Technical Officer ......... 1998 237,717 908,210 380,000 22,172
Paul Coghlan .......................... 2000 $ 255,152 $ 1,452,206 -- $ 21,693
Vice President, Finance and ......... 1999 244,677 881,256 70,000 21,440
Chief Financial Officer ............. 1998 232,833 861,497 180,000 21,820
Hans J. Zapf .......................... 2000 $ 245,992(4) $ 663,058 -- $ 21,135
Vice President ...................... 1999 231,157(4) 431,455 50,000 22,250
International Sales ................. 1998 218,827(4) 486,689 160,000 22,258
<FN>
(1) Includes cash profit sharing and cash bonuses earned for the fiscal year,
whether accrued or paid.
(2) All stock numbers reflect two-for-one splits of the Company's Common Stock
in February 1999 and March 2000.
(3) Includes insurance premiums paid by the Company under its life insurance
program. Also includes 401(k) profit sharing distributions earned during the
fiscal year.
(4) Includes sales commissions earned by Mr. Zapf for the fiscal year.
</FN>
</TABLE>
11
<PAGE>
Option Grants in Last Fiscal Year
No stock options were granted to any of the Named Executive Officers during
the fiscal year ended July 2, 2000.
Option Exercises And Holdings
The following table provides information with respect to option exercises
in fiscal 2000 by the Named Executive Officers and the value of such officers'
unexercised options at June 30, 2000.
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<PAGE>
<TABLE>
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
<CAPTION>
Value of Unexercised
Number of Shares Underlying In-the-Money Options at
Unexercised Options at Fiscal Fiscal
Shares Year-end (1) Year-end(3)
Acquired On Value ----------------------------- ------------------------
Name Exercise(1) Realized(2) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert H. Swanson, Jr. .......... 340,000 $12,567,253 333,000 700,000 $16,995,738 $34,875,602
Clive B. Davies ................. 490,000 20,332,813 440,000 380,000 24,197,306 18,602,362
Robert C. Dobkin ................ 120,000 5,071,875 770,000 480,000 43,423,804 24,592,110
Paul Coghlan .................... 400,000 17,133,253 372,000 248,000 20,878,433 12,359,367
Hans J. Zapf .................... 230,000 10,421,562 220,000 220,000 12,051,309 11,175,243
<FN>
-------------
(1) All stock numbers reflect the two-for-one split of the Company's Common
Stock in March 2000.
(2) Market value of underlying securities on the exercise date, minus the
exercise price.
(3) Value is based on the last reported sale price of the Common Stock on the
Nasdaq National Market of $63.9375 per share on June 30, 2000 (the last
trading day for fiscal 2000), minus the exercise price.
</FN>
</TABLE>
13
<PAGE>
PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total
shareholder return, calculated on a dividend reinvested basis, for Linear
Technology Corporation, the Nasdaq National Market and the Semiconductor
Subgroup of the S&P Electronics Index (the "Semiconductor Index"). The graph
assumes that $100 was invested in the Company's Common Stock, in the Nasdaq
National Market and in the Semiconductor Index on the last trading day of the
Company's 1995 fiscal year. Note that historic stock price performance is not
necessarily indicative of future stock price performance.
[GRAPHIC OMITTED]
Plot points to come
14
<PAGE>
COMPENSATION COMMITTEE REPORT
Introduction
The Compensation Committee of the Board of Directors is composed only of
non-employee directors. It is responsible for reviewing and recommending for
approval by the Board of Directors the Company's compensation practices,
executive salary levels and variable compensation programs, both cash-based and
equity-based. The Committee generally determines base salary levels for
executive officers of the Company at or about the start of each fiscal year and
determines actual bonuses at the end of each six-month fiscal period based upon
Company and individual performance.
Compensation Philosophy
The Committee has adopted an executive pay-for-performance philosophy
covering all executive officers, including the Chief Executive Officer. This
philosophy emphasizes variable compensation in order to align executive
compensation with the Company's business objectives and performance and to
attract, retain and reward executives who contribute both to the short-term and
long-term success of the Company. Pay is sufficiently variable that
above-average performance results in above-average total compensation, and
below-average performance for the Company or the individual results in
below-average total compensation. The focus is on corporate performance and
individual contributions toward that performance.
Compensation Program
The Company has a comprehensive compensation program which consists of cash
compensation, both fixed and variable, and equity-based compensation. The
program has four principal components, which are intended to attract, retain,
motivate and reward executives who are expected to manage both the short-term
and long-term success of the Company. These components are:
Cash-Based Compensation
Base Salary--Base salary is predicated on industry and peer group
comparisons and on performance judgments as to the past and expected future
contribution of the individual executive officer. In general, salary increases
are made based on median increases in salaries for similar executives of
similar-size companies in the high technology industry.
Profit Sharing--Profit sharing payments are distributed semi-annually to
all employees, including executives, from a profit sharing pool. The amount of
the pool is largely determined by the magnitude of sales and operating income
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for the six-month period. This pool is distributed to all eligible employees
based on the ratio of their individual salary to total salaries for all
employees. A portion of this profit sharing is paid directly into a 401(k)
retirement plan for all employees.
Bonuses--The Company has a discretionary key employee incentive pool
pursuant to which executive officers and a limited number of key employees may
receive semi-annual cash bonuses. Targets for sales growth and operating income
as a percentage of sales influence the size of the pool. Individual payments are
made based on the Company's achievement of these targets and upon the
individual's personal and departmental performance.
In 1996, the Company adopted the 1996 Senior Executive Bonus Plan to
facilitate, under Section 162(m) of the Internal Revenue Code, the federal
income tax deductibility of compensation paid to the Company's most highly
compensated executive officers. In fiscal 2000, the participants were Messrs.
Swanson, Davies, Dobkin, Coghlan and Zapf. In fiscal 2001, the plan will include
the Chief Executive Officer and each of the Company's four other most highly
compensated executive officers. In July 2000, the Board of Directors approved an
amendment to the plan to increase the maximum amount payable to any individual
in any one year under the plan from $3 million to $5 million. See "Proposal
Six--Amendment of the 1996 Senior Executive Bonus Plan."
Equity-Based Compensation
Stock Options--Stock options are granted periodically to provide additional
incentive to executives and other key employees to work to maximize long-term
total return to shareholders. The options vest over a five-year period to
encourage option holders to continue in the employ of the Company. Over 35% of
worldwide employees have received stock options. In granting options, the
Compensation Committee takes into account the number of shares and outstanding
options already held by the individual.
Chief Executive Officer Compensation
The Committee uses the same factors and criteria described above for
compensation decisions regarding the Chief Executive Officer.
Compensation Limitations for Tax Purposes
The Committee has considered the potential impact of Section 162(m) of the
Internal Revenue Code adopted under the federal Revenue Reconciliation Act of
1993. Section 162(m) generally disallows a tax deduction for any publicly-held
corporation for individual compensation exceeding $1 million in
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any taxable year for any of the Named Executive Officers, unless compensation is
performance-based. The Company's policy is to qualify, to the extent reasonable,
its executive officers' compensation for deductibility under applicable tax
laws. In 1996, the Company implemented the 1996 Senior Executive Bonus Plan in
order to qualify certain bonus payments to the Named Executive Officers as
performance-based compensation under Section 162(m). The Committee believes that
the implementation of the 1996 Senior Executive Bonus Plan enables the Company
to compensate its executive officers in accordance with its pay-for-performance
philosophy while maximizing the deductibility of such compensation. However, the
Committee recognizes that the loss of a tax deduction may be necessary in some
circumstances.
Summary
The Committee believes that a fair and motivating compensation program has
played a critical role in the success of the Company. The Committee reviews this
program on an ongoing basis to evaluate its continued effectiveness.
Respectfully submitted by:
The Compensation Committee
David S. Lee
Leo T. McCarthy
Richard M. Moley
Thomas S. Volpe
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PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP, independent
auditors, to audit the financial statements of the Company for the year ending
July 1, 2001, and recommends that the shareholders vote for ratification of such
appointment. In the event of a negative vote on such ratification, the Board of
Directors will reconsider its selection. Ernst & Young LLP has audited the
Company's financial statements since the fiscal year ended June 30, 1982.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting, will have the opportunity to make a statement and are expected to be
available to respond to appropriate questions from shareholders.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING JULY 1, 2001.
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PROPOSAL THREE
REINCORPORATION IN DELAWARE
Introduction
For the reasons set forth below, the Board of Directors believes that it is
in the best interests of the Company and its shareholders to change the state of
incorporation of the Company from California to Delaware (the "Proposed
Reincorporation"). Shareholders are urged to read carefully this section of the
Proxy Statement, including the related exhibits referenced below and attached
hereto, before voting on the Proposed Reincorporation. Throughout this Proxy
Statement, the term "Linear California" or the "Company" refers to Linear
Technology Corporation, the existing California corporation, and the term
"Linear Delaware" refers to the new Delaware corporation, a wholly owned
subsidiary of Linear California, which is the proposed successor to Linear
California in the Proposed Reincorporation.
As discussed below, the principal reason for the Proposed Reincorporation
is the potential advantages of the greater flexibility of Delaware corporate law
and the substantial body of case law interpreting that law. The Company believes
that its shareholders will benefit from the well established principles of
corporate governance that Delaware law affords. The proposed Delaware
Certificate of Incorporation and Bylaws are substantially similar to those
currently in effect for Linear California, with certain exceptions, including
that: (i) the rights of shareholders to call special meetings and to act by
written consent will be eliminated, (ii) the Board of Directors will be divided
into three classes with staggered terms of office (if "Proposal
Four--Establishment of a Classified Board of Directors" is approved), (iii)
cumulative voting will be eliminated, (iv) shareholder nominations for directors
and proposals for business to be presented at shareholder meetings must meet
certain advance notice requirements, and (v) the authorized number of shares of
Common Stock will be increased from 480,000,000 to 2,000,000,000 and the
authorized number of shares of undesignated Preferred Stock will be increased
from 2,000,000 to 5,000,000 (if "Proposal Five--Increase in the Number of
Authorized Shares" is approved). The Proposed Reincorporation is not being
proposed in order to prevent an unsolicited takeover attempt, and the Board of
Directors is not aware of any present attempt by any person to acquire control
of the Company, obtain representation on the Board of Directors or take any
action that would materially affect the governance of the Company.
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The Proposed Reincorporation will be effected by merging Linear California
into Linear Delaware. Upon completion of the merger, Linear California, as a
corporate entity, will cease to exist and Linear Delaware will continue to
operate the business of the Company under its current name, Linear Technology
Corporation.
Pursuant to an Agreement and Plan of Merger, in substantially the form
attached hereto as Appendix A (the "Merger Agreement"), each outstanding share
of Linear California Common Stock, no par value, will be automatically converted
into one share of Linear Delaware Common Stock, par value $0.001 per share, upon
the effective date of the merger. Each stock certificate representing issued and
outstanding shares of Linear California Common Stock will continue to represent
the same number of shares of Common Stock of Linear Delaware. IT WILL NOT BE
NECESSARY FOR SHAREHOLDERS TO EXCHANGE THEIR EXISTING STOCK CERTIFICATES FOR
STOCK CERTIFICATES OF LINEAR DELAWARE. However, shareholders may exchange their
certificates if they so choose. The Common Stock of Linear California is listed
for trading on The Nasdaq Stock Market's National Market and, after the
Reincorporation, Linear Delaware's Common Stock will continue to be traded on
The Nasdaq Stock Market's National Market without interruption, under the same
symbol ("LLTC") as the shares of Linear California Common Stock are currently
traded.
Under California law, the affirmative vote of a majority of the outstanding
shares of Common Stock of Linear California is required for approval of the
Merger Agreement and the other terms of the Proposed Reincorporation. See "Vote
Required for the Proposed Reincorporation." The Proposed Reincorporation has
been unanimously approved by the Company's Board of Directors. If approved by
the shareholders, it is anticipated that the Reincorporation will become
effective as soon as practicable (the "Effective Date") following the Annual
Meeting of Shareholders. However, pursuant to the Merger Agreement, the Proposed
Reincorporation may be abandoned or the Merger Agreement may be amended by the
Board of Directors (except that the principal terms may not be amended without
shareholder approval) either before or after shareholder approval has been
obtained and prior to the Effective Date if, in the opinion of the Board of
Directors of the Company, circumstances arise which make it inadvisable to
proceed under the original terms of the Merger Agreement. Shareholders of Linear
California will have no appraisal rights with respect to the Proposed
Reincorporation.
The discussion set forth below is qualified in its entirety by reference to
the Merger Agreement, the Certificate of Incorporation of Linear Delaware and
the Bylaws of Linear Delaware, copies of which are attached as Appendices A, B
and C.
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APPROVAL BY SHAREHOLDERS OF THE PROPOSED REINCORPORATION WILL CONSTITUTE
APPROVAL OF THE MERGER AGREEMENT, THE CERTIFICATE OF INCORPORATION AND THE
BYLAWS OF LINEAR DELAWARE AND ALL PROVISIONS THEREOF EXCEPT WITH RESPECT TO
THOSE MATTERS SET FORTH IN PROPOSALS FOUR AND FIVE TO BE SEPARATELY VOTED UPON
BY THE SHAREHOLDERS.
Vote Required for the Proposed Reincorporation
Approval of the Proposed Reincorporation, which will also constitute
approval of (i) the Merger Agreement, the Certificate of Incorporation and the
Bylaws of Linear Delaware (except those provisions regarding the adoption of a
classified Board of Directors and the increase in the number of authorized
shares, which are being submitted for separate shareholder approval in Proposals
Four and Five, (ii) the assumption of Linear California's employee benefit plans
and stock option and employee stock purchase plans by Linear Delaware, and (iii)
the restatement of the Company's indemnification agreements with each of its
officers and directors to afford such persons indemnification by the Company to
the fullest extent permitted by Delaware law, will require the affirmative vote
of the holders of a majority of the outstanding shares of Common Stock of Linear
California entitled to vote. Abstentions and broker non-votes will have the same
effect as a vote against the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSED
REINCORPORATION. The effect of an abstention or a broker non-vote is the same as
that of a vote against the Proposed Reincorporation.
Principal Reasons for the Proposed Reincorporation
As the Company plans for the future, the Board of Directors and management
believe that it is essential to be able to draw upon well established principles
of corporate governance in making legal and business decisions. The prominence
and predictability of Delaware corporate law provide a reliable foundation on
which the Company's governance decisions can be based, and the Company believes
that shareholders will benefit from the responsiveness of Delaware corporate law
to their needs and to those of the corporation they own.
Prominence, Predictability, and Flexibility of Delaware Law. For many years
Delaware has followed a policy of encouraging incorporation in that state and,
in furtherance of that policy, has been a leader in adopting, construing and
implementing comprehensive, flexible corporate laws responsive
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to the legal and business needs of corporations organized under its laws. Many
corporations have chosen Delaware initially as a state of incorporation or have
subsequently changed corporate domicile to Delaware in a manner similar to that
proposed by the Company. Because of Delaware's prominence as the state of
incorporation for many major corporations, both the legislature and courts in
Delaware have demonstrated an ability and a willingness to act quickly and
effectively to meet changing business needs. The Delaware courts have developed
considerable expertise in dealing with corporate issues, and a substantial body
of case law has developed construing Delaware law and establishing public
policies with respect to corporate legal affairs.
Well Established Principles of Corporate Governance. There is substantial
judicial precedent in the Delaware courts as to the legal principles applicable
to measures that may be taken by a corporation and to the conduct of a
corporation's board of directors, such as under the business judgment rule and
other standards. The Company believes that its shareholders will benefit from
the well established principles of corporate governance that Delaware law
affords.
Increased Ability to Attract and Retain Qualified Directors. Both
California and Delaware law permit a corporation to include a provision in its
certificate of incorporation which reduces or eliminates the monetary liability
of directors for breaches of fiduciary duty in certain circumstances. The
increasing frequency of claims and litigation directed against directors and
officers has greatly expanded the risks facing directors and officers of
corporations in exercising their respective duties. The amount of time and money
required to respond to such claims and to defend such litigation can be
substantial. It is the Company's desire to reduce these risks to its directors
and officers and to limit situations in which monetary damages can be recovered
against directors so that the Company may continue to attract and retain
qualified directors who otherwise might be unwilling to serve because of the
risks involved. The Company believes that, in general, Delaware law provides
greater protection to directors than California law and that Delaware case law
regarding a corporation's ability to limit director liability is more developed
and provides more guidance than California law.
California Proposition 211. In November 1996, Proposition 211 was rejected
by the California electorate. Proposition 211 would have limited the ability of
California companies to indemnify their directors and officers. While
Proposition 211 was defeated, similar initiatives or legislation containing
similar provisions may be proposed in California in the future. As a result, the
Company believes that the more favorable corporate environment afforded by
Delaware will enable it to compete more effectively with other public companies
in attracting new directors.
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No Change in the Name, Board Members, Business, Management, Employee Benefit
Plans or Location of Principal Facilities of the Company
The Proposed Reincorporation will effect only a change in the legal
domicile of the Company and certain other changes of a legal nature which are
described in this Proxy Statement. The Proposed Reincorporation will NOT result
in any change in the name, business management, fiscal year, assets or
liabilities or location of the principal facilities of the Company. The five
directors who will be elected at the Annual Meeting of Shareholders will become
the directors of Linear Delaware. All employee benefits, stock options and
employee stock purchase plans of Linear California will be assumed and continued
by Linear Delaware, and each option or right issued pursuant to such plans will
automatically be converted into an option or right to purchase the same number
of shares of Linear Delaware Common Stock at the same price per share, upon the
same terms and subject to the same conditions. Shareholders should note that
approval of the Proposed Reincorporation will also constitute approval of the
assumption of these plans by Linear Delaware. Other employee benefit
arrangements of Linear California will also be continued by Linear Delaware upon
the terms and subject to the conditions currently in effect. As noted above,
after the merger the shares of Common Stock of Linear Delaware will continue to
be traded without interruption, on the same exchange (The Nasdaq Stock Market's
National Market) and under the same symbol ("LLTC") as the shares of Common
Stock of Linear California are currently traded. The Company believes that the
Proposed Reincorporation will not affect any of its material contracts with any
third parties and that Linear California's rights and obligations under such
material contractual arrangements will continue and be assumed by Linear
Delaware.
Anti-takeover Implications
Delaware, like many other states, permits a corporation to adopt a number
of measures designed to reduce a corporation's vulnerability to unsolicited
takeover attempts through amendment of the corporate charter or bylaws or
otherwise. The Proposed Reincorporation is NOT being proposed in order to
prevent such a change in control, and the Board of Directors is not aware of any
present attempt to acquire control of the Company or to obtain representation on
the Board of Directors.
In the discharge of its fiduciary obligations to its shareholders, the
Board of Directors has evaluated the Company's vulnerability to potential
unsolicited bidders. In the course of such evaluation, the Board of Directors of
the Company has considered or may consider in the future certain defensive
strategies designed to enhance the Board's ability to negotiate with an
unsolicited bidder. These strategies include, but are not limited to, the
establishment of a classified board of directors, the elimination of the right
to remove
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a director other than for cause, the elimination of stockholder action by
written consent, the authorization of additional common stock, the elimination
of cumulative voting, and the authorization of preferred stock, the rights and
preferences of which may be determined by the Board of Directors. Other than the
authorization of preferred stock (which will continue in Linear Delaware
following the Reincorporation), none of these measures has been previously
adopted by Linear California. It should also be noted that the establishment of
a classified board of directors and the elimination of cumulative voting also
can be undertaken under California law in certain circumstances. For a detailed
discussion of all of the changes which will be implemented as part of the
Proposed Reincorporation, see "The Charters and Bylaws of Linear California and
Linear Delaware" and "Significant Differences Between the Corporation Laws of
California and Delaware" below.
The Board of Directors believes that unsolicited takeover attempts may be
unfair or disadvantageous to the Company and its shareholders because, among
other reasons: (i) a non-negotiated takeover bid may be timed to take advantage
of temporarily depressed stock prices; (ii) a non-negotiated takeover bid may be
designed to foreclose or minimize the possibility of more favorable competing
bids or alternative transactions; and (iii) a non-negotiated takeover bid may
involve the acquisition of only a controlling interest in the corporation's
stock, without affording all shareholders the opportunity to receive the same
economic benefits.
By contrast, in a transaction in which a potential acquiror must negotiate
with an independent board of directors, the board can and should take account of
the underlying and long-term values of the Company's business, technology and
other assets, the possibilities for alternative transactions on more favorable
terms, possible advantages from a tax-free reorganization, anticipated favorable
developments in the Company's business not yet reflected in the stock price, and
equality of treatment of all shareholders.
Despite the belief of the Board of Directors as to the benefits to
shareholders of the Proposed Reincorporation, it may be disadvantageous to the
extent that it has the effect of discouraging a future takeover attempt which is
not approved by the Board of Directors, but which a majority of the shareholders
may deem to be in their best interests or in which shareholders may receive a
substantial premium for their shares over the then current market value or over
their cost bases in such shares. As a result, shareholders who might wish to
participate in an unsolicited tender offer may not have an opportunity to do so.
In addition, to the extent that provisions of Delaware law enable the Board of
Directors to resist a takeover or a change in control of the Company, such
provisions could make it more difficult to change the existing Board of
Directors and management.
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Certain effects of the Proposed Reincorporation may be considered to have
anti-takeover implications. Section 203 of the Delaware General Corporation Law,
from which Linear Delaware does not intend to opt out, restricts certain
"business combinations" with "interested stockholders" for three years following
the date that a person becomes an interested stockholder, unless the Board of
Directors approves the business combination. See "Significant Differences
Between the Corporation Laws of California and Delaware-Stockholder Approval of
Certain Business Combinations."
The Charters and Bylaws of Linear California and Linear Delaware
The provisions of the Linear Delaware Certificate of Incorporation and
Bylaws are similar to those of the Linear California Articles of Incorporation
and Bylaws in many respects. However, material differences include the
establishment of a classified board of directors, the elimination of the right
to remove a director other than for cause, the exclusion of stockholder action
by written consent, the authorization of additional common stock and the
elimination of cumulative voting. In addition, while the Company has no present
intention to do so, Linear Delaware could in the future implement certain other
changes by amendment of its Certificate of Incorporation or Bylaws. For a
discussion of such changes, see "Significant Differences Between the Corporation
Laws of California and Delaware." This discussion of the Certificate of
Incorporation and Bylaws of Linear Delaware is qualified by reference to
Appendices B and C hereto.
Number of Authorized Shares. The Articles of Incorporation of Linear
California currently authorize the Company to issue up to 480,000,000 shares of
Common Stock, no par value, and 2,000,000 shares of Preferred Stock, no par
value. The Certificate of Incorporation of Linear Delaware provides that it will
have 2,000,000,000 authorized shares of Common Stock, par value $0.001 per
share, and 5,000,000 authorized shares of Preferred Stock, par value $0.001 per
share. Like Linear California's Articles of Incorporation, Linear Delaware's
Certificate of Incorporation provides that the Board of Directors is entitled to
determine the powers, preferences and rights, and the qualifications,
limitations or restrictions, of the authorized and unissued Preferred Stock.
Monetary Liability of Directors. The Articles of Incorporation of Linear
California and the Certificate of Incorporation of Linear Delaware both provide
for the elimination of personal monetary liability of directors to the fullest
extent permissible under the laws of the respective states. The provision
eliminating monetary liability of directors set forth in the Linear Delaware
Certificate of Incorporation is potentially more expansive than the
corresponding provision in the Linear California Articles of Incorporation, in
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that the former incorporates future amendments to Delaware law with respect to
the elimination of such liability. For a more detailed explanation of the
foregoing, see "Significant Differences Between the Corporation Laws of
California and Delaware-Indemnification and Limitation of Liability."
Size of Board of Directors. The Bylaws of Linear Delaware provide for a
Board of Directors consisting of five members, until changed by a duly adopted
amendment to the Bylaws. The Bylaws of Linear California provide for a Board of
Directors consisting of not less than four nor more than seven directors, within
which the exact number is set at five members. Under California law, although
changes in the number of directors, in general, must be approved by a majority
of the outstanding shares, a board of directors may fix the exact number of
directors within a stated range set forth in the articles of incorporation or
bylaws, if the stated range has been approved by the shareholders. Delaware law
permits a board of directors, acting alone, to change the authorized number of
directors by amendment to the bylaws, unless the directors are not authorized to
amend the bylaws or the number of directors is fixed in the certificate of
incorporation (in which case a change in the number of directors may be made
only by amendment to the certificate of incorporation following approval of such
change by stockholders). The Linear Delaware Certificate of Incorporation
provides that the number of directors will be as specified in the Bylaws and
authorizes the Board of Directors to adopt, alter, amend or repeal the Bylaws.
Following the Proposed Reincorporation, the Board of Directors of Linear
Delaware could amend the Bylaws to change the size of the Board of Directors
from five directors without further stockholder approval. If the Proposed
Reincorporation is approved, the five directors of Linear California who are
elected at the Annual Meeting of Shareholders will continue as the five
directors of Linear Delaware after the Proposed Reincorporation is consummated
and until their successors have been duly elected and qualified.
Cumulative Voting for Directors. The Linear Delaware Certificate of
Incorporation does not provides for cumulative voting rights. Under Delaware
law, cumulative voting in the election of directors is not mandatory but is a
permitted option. Under California law and the Company's Bylaws, if any
shareholder has given notice of an intention to cumulate votes for the election
of directors, such shareholder and any other shareholder of the Company would be
entitled to cumulate his or her votes at such election. Cumulative voting
provides that each share of stock normally having one vote is entitled to a
number of votes equal to the number of directors to be elected. A shareholder
may then cast all such votes for a single candidate or may allocate them among
as many candidates as the shareholder may choose. In the absence of cumulative
voting, the holders of the majority of the shares present
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or represented at a meeting in which directors are to be elected would have the
power to elect all the directors to be elected at such meeting, and no person
could be elected without the support of holders of the majority of shares
present or represented at such meeting. Elimination of cumulative voting could
make it more difficult for a minority shareholder adverse to a majority of the
shareholders to obtain representation on the Company's Board of Directors.
California corporations whose stock is listed on a national stock exchange can
also eliminate cumulative voting with shareholder approval, although the Company
to date has not done so.
Power to Call Special Shareholders' Meetings. Under California law and
Linear California's Bylaws, a special meeting of shareholders may be called by
the Board of Directors, the Chairman of the Board, the President, the holders of
shares entitled to cast not less than 10% of the votes at such meeting and such
additional persons as are authorized by the articles of incorporation or the
bylaws. Under Delaware law, a special meeting of stockholders may be called by
the board of directors or any other person authorized to do so in the
certificate of incorporation or the bylaws. The Bylaws of Linear Delaware
authorize the Board of Directors, the Chairman of the Board or the President to
call a special meeting of stockholders. Therefore, holders of 10% or more of the
voting shares of the Company will no longer be able to call a special meeting of
stockholders. The Company believes this change is warranted as a prudent
corporate governance measure to prevent an inappropriately small number of
stockholders from prematurely forcing stockholder consideration of a proposal
over the opposition of the Board of Directors by calling a special stockholders'
meeting before (i) the time that the Board believes to be appropriate for
considering such a proposal or (ii) the next annual meeting (provided that the
holders meet the notice requirements for consideration of a proposal). Such
special meetings would involve substantial expense and diversion of board and
management time, which the Company believes to be inappropriate for an
enterprise the size of the Company. Aside from the foregoing, no other change is
contemplated in the procedures to call a special stockholders' meeting, although
in the future the Board of Directors could amend the Bylaws of Linear Delaware
without stockholder approval.
Filling Vacancies on the Board of Directors. Under California law, any
vacancy on a board of directors other than one created by removal of a director
may be filled by the board. If the number of directors then in office is less
than a quorum, a vacancy may be filled by (i) the unanimous written consent of
the directors then in office, (ii) the affirmative vote of a majority of the
directors then in office at a meeting held pursuant to notice or waivers of
notice or (iii) a sole remaining director. A vacancy created by removal of a
director may be filled by the board only if so authorized by the corporation's
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articles of incorporation or by a bylaw approved by the corporation's
shareholders. Linear California's Articles of Incorporation and Bylaws do not
permit directors to fill vacancies created by removal of a director. Under
Delaware law, vacancies and newly created directorships may be filled by a
majority of the directors then in office (even though less than a quorum) or by
a sole remaining director, unless otherwise provided in the certificate of
incorporation or bylaws (or unless the certificate of incorporation directs that
a particular class of stock is to elect such director(s), in which case a
majority of the directors elected by such class, or a sole remaining director so
elected, shall fill such vacancy or newly created directorship). The Bylaws of
Linear Delaware provide that any vacancy created by the removal of a director by
the stockholders of Linear Delaware may be filled by the vote of a majority of
the remaining directors.
Nominations of Director Candidates and Introduction of Business at
Shareholder Meetings. The Bylaws of Linear Delaware include an advance notice
procedure with regard to the nomination, other than by or at the direction of
the Board or Directors, of candidates for election as directors (the "Nomination
Procedure") and with regard to certain matters to be brought before an annual
meeting or special meeting of shareholders (the "Business Procedure").
The Nomination Procedure provides that only persons nominated by or at the
direction of the Board of Directors or by a shareholder who has given timely
written notice to the Secretary of the Company prior to the meeting will be
eligible for election as directors. The Business Procedure provides that at an
annual or special meeting, and subject to any other applicable requirements,
only such business may be conducted as has been brought before the meeting by or
at the direction of the Board of Directors or by a shareholder who has given
timely written notice to the Secretary of the Company of such shareholder's
intention to bring such business before the meeting. In all cases, to be timely,
notice must be received by the Company at least 90 days prior to the meeting.
Under the Nomination Procedure, a shareholder's notice to the Company must
contain certain information about the nominee, including name, address, the
consent to be nominated and such other information as would be required to be
included in a proxy statement soliciting proxies for the election of the
proposed nominee, as well as certain information about the shareholder proposing
to nominate that person, including name, address, a representation that the
shareholder is a holder of record of stock entitled to vote at the meeting and a
description of all arrangements or understandings between the shareholder and
the nominee. Under the Business Procedure, notice relating to the conduct of
business at a meeting other than the nomination of directors
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must contain certain information about the business and about the shareholder
who proposes to bring the business before the meeting. If the chairman or other
officer presiding at the meeting determines that a person was not nominated in
accordance with the Nomination Procedure, such person will not be eligible for
election as a director, or if he or she determines that other business was not
properly brought before such meeting in accordance with the Business Procedure,
such business will not be conducted at such meeting. Nothing in the Nomination
Procedure or the Business Procedure will preclude discussion by any shareholder
of any nomination or business proposal properly made or brought before an annual
or special meeting in accordance with the above-described procedures.
By requiring advance notice of nominations by shareholders, the Nomination
Procedure affords the Board of Directors an opportunity to consider the
qualifications of the proposed nominees and, to the extent deemed necessary or
desirable by the Board, to inform the shareholders about such qualifications. By
requiring advance notice of proposed business, the Business Procedure provides
the Board with an opportunity to inform shareholders of any business proposed to
be conducted at a meeting and the Board's position on such proposal, enabling
shareholders to decide better whether to attend the meeting or grant a proxy to
the Board of Directors as to the disposition of such business. Although the
Linear Delaware Bylaws do not give the Board any power to approve or disapprove
shareholder nominations for the election of directors or any other business
desired by shareholders to be conducted at a meeting, the Linear Delaware Bylaws
may have the effect of precluding a nomination for the election of directors or
of precluding other business at a particular meeting if the proper procedures
are not followed. In addition, the procedures may discourage or deter a third
party from conducting a solicitation of proxies to elect its own slate of
directors or otherwise attempting to obtain control of the Company, even if the
conduct of such business or such attempt might be deemed to be beneficial to the
Company and its shareholders.
Loans to Officers and Employees. Under California law, any loan or guaranty
to or for the benefit of a director or officer of the corporation or its parent
requires approval of the shareholders unless such loan or guaranty is provided
under a plan approved by shareholders owning a majority of the outstanding
shares of the corporation. However, under California law, shareholders of any
corporation with 100 or more shareholders of record, such as the Company, may
approve a bylaw authorizing the board of directors alone to approve loans or
guaranties to or on behalf of officers (whether or not such officers are
directors) if the board determines that any such loan or guaranty
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may reasonably be expected to benefit the corporation. Pursuant to the Linear
Delaware Bylaws and in accordance with Delaware law, Linear Delaware may make
loans to, guarantee the obligations of or otherwise assist its officers or other
employees and those of its subsidiaries (including directors who are also
officers or employees) when such action, in the judgment of the directors, may
reasonably be expected to benefit the corporation.
Voting by Ballot. California law provides that the election of directors
may proceed in the manner described in a corporation's bylaws. Linear
California's Bylaws provide that the election of directors at a shareholders'
meeting may be by voice vote or ballot, unless prior to such vote a shareholder
demands a vote by ballot, in which case such vote must be by ballot. Under
Delaware law, the right to vote by written ballot may be restricted if so
provided in the certificate of incorporation. The Bylaws and Certificate of
Incorporation of Linear Delaware do not restrict the right to vote by written
ballot. Stockholders of Linear Delaware may therefore continue to demand
election by ballot, unless and until the Certificate of Incorporation is
amended, which amendment would require a majority stockholder vote. It may be
more difficult for a stockholder to contest the outcome of a vote that has not
been conducted by written ballot.
Classified Board. As part of the Proposed Reincorporation, it is proposed
that the Company's Board of Directors be divided into three classes, each with
staggered three-year terms of office. See "Proposal Four-- Establishment of a
Classified Board of Directors" for a more complete explanation of the proposed
changes.
Action by Written Consent of the Shareholders. The Articles of
Incorporation and Bylaws of Linear California permit shareholders to take action
by written consent in lieu of a vote at an annual or special meeting of
shareholders. The Certificate of Incorporation and Bylaws of Linear Delaware
provide that actions by stockholders may be taken only at a duly called annual
or special meeting. Thus, stockholder action by written consent will no longer
be permitted after the Proposed Reincorporation.
Removal of Directors. The Bylaws of Linear Delaware permit a director to be
removed solely for cause by a majority of the outstanding shares then entitled
to vote in an election of directors. California law permits the removal of
directors, with or without cause, by a majority of the outstanding shares then
entitled to vote; provided, however, that no individual director may be removed
(unless the entire board is removed) if the number of votes cast against such
removal would be sufficient to elect the director under cumulative voting. In
addition, under Delaware law, a director of a corporation with a classified
board of directors may be removed only for cause, unless the
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certificate of incorporation otherwise provides. Thus, because Linear Delaware
will have a classified board and cumulative voting will have been eliminated,
stockholders after the Proposed Reincorporation will no longer be able to remove
directors without cause, and removal of individual directors will no longer
require approval by more votes than would be sufficient to prevent election of
one director under cumulative voting.
Significant Differences Between the Corporation Laws of California and Delaware
The following provides a summary of the major substantive differences
between the Corporation Laws of California and Delaware. It is not an exhaustive
description of all differences between the two states' laws.
Stockholder Approval of Certain Business Combinations
Delaware. Under Section 203 of the Delaware General Corporation Law, a
Delaware corporation is prohibited from engaging in a "business combination"
with an "interested stockholder" for three years following the date that such
person or entity becomes an interested stockholder. With certain exceptions, an
interested stockholder is a person or entity who or which owns, individually or
with or through certain other persons or entities, 15% or more of the
corporation's outstanding voting stock (including any rights to acquire stock
pursuant to an option, warrant, agreement, arrangement or understanding, or upon
the exercise of conversion or exchange rights, and stock with respect to which
the person has voting rights only). The three-year moratorium imposed by Section
203 on business combinations does not apply if (i) prior to the date on which
such stockholder becomes an interested stockholder the board of directors of the
subject corporation approves either the business combination or the transaction
that resulted in the person or entity becoming an interested stockholder; (ii)
upon consummation of the transaction that made him or her an interested
stockholder, the interested stockholder owns at least 85% of the corporation's
voting stock outstanding at the time the transaction commenced (excluding from
the 85% calculation shares owned by directors who are also officers of the
subject corporation and shares held by employee stock plans that do not give
employee participants the right to decide confidentially whether to accept a
tender or exchange offer); or (iii) on or after the date such person or entity
becomes an interested stockholder, the Board approves the business combination
and it is also approved at a stockholder meeting by 66 2|M/3% of the outstanding
voting stock not owned by the interested stockholder. Although a Delaware
corporation to which Section 203 applies may elect not to be governed by Section
203, the Board of Directors of the Company intends that the Company be governed
by Section 203. The Company believes that most Delaware corporations have
availed themselves of this statute and have not opted out of Section 203.
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The Company believes that Section 203 will encourage any potential acquiror
to negotiate with the Company's Board of Directors. Section 203 also might have
the effect of limiting the ability of a potential acquiror to make a two-tiered
bid for Linear Delaware in which all stockholders would not be treated equally.
Shareholders should note, however, that the application of Section 203 to Linear
Delaware will confer upon the Board the power to reject a proposed business
combination in certain circumstances, even though a potential acquiror may be
offering a substantial premium for the Company's shares over the then-current
market price. Section 203 would also discourage certain potential acquirors
unwilling to comply with its provisions.
California. California law requires that, in a merger of the corporation
with the holder of more than 50% but less than 90% of the target common stock or
its affiliate, the holders of common stock receive common stock in the surviving
entity unless all of the target company's shareholders consent to the
transaction. This provision of California law may have the effect of making a
"cash-out" merger by a majority shareholder more difficult to accomplish.
Although Delaware law does not parallel California law in this respect, under
some circumstances Delaware Section 203 does provide protection to shareholders
against coercive two-tiered bids for a corporation in which the stockholders are
not treated equally.
Classified Board of Directors
A classified board is one on which a certain number, but not all, of the
directors are elected on a rotating basis each year.
Delaware. Delaware law permits a corporation to establish a classified
board of directors, pursuant to which the directors can be divided into as many
as three classes with staggered three-year terms of office, with only one class
of directors standing for election each year. The Linear Delaware Certificate of
Incorporation and Bylaws provide for a classified board. See "Proposal
Four--Establishment of a Classified Board of Directors."
California. Under California law, certain publicly traded companies may
adopt a classified board of directors by adopting amendments to its charter or
bylaws, which amendments must be approved by the shareholders. The Linear
California Articles of Incorporation and Bylaws do not currently provide for a
classified board.
Removal of Directors
Delaware. Under Delaware law, any director or the entire board of directors
of a corporation that does not have a classified board of directors or
cumulative voting may be removed with or without cause with the approval of a
majority of the outstanding shares entitled to vote at an election of directors.
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In the case of a Delaware corporation having cumulative voting, if less than the
entire board is to be removed, a director may not be removed without cause if
the number of shares voted against such removal would be sufficient to elect the
director under cumulative voting. In addition, in the case of a Delaware
corporation having a classified board, a director may be removed by the
stockholders only for cause. The Linear Delaware Certificate of Incorporation
and Bylaws do not provide for cumulative voting, but do provide for a classified
board.
California. Under California law, any director or the entire board of
directors may be removed with or without cause, with the approval of a majority
of the outstanding shares entitled to vote; however, no individual director may
be removed (unless the entire board is removed) if the number of votes cast
against such removal would be sufficient to elect the director under cumulative
voting. Linear California's Articles of Incorporation provide for cumulative
voting.
Indemnification and Limitation of Liability
California and Delaware have similar laws respecting indemnification by a
corporation of its officers, directors, employees and other agents. The laws of
both states also permit, with certain exceptions, a corporation to adopt charter
provisions eliminating the liability of a director to the corporation or its
shareholders for monetary damages for breach of the director's fiduciary duty.
There are nonetheless certain differences between the laws of the two states
respecting indemnification and limitation of liability which are summarized
below.
Delaware. The Linear Delaware Certificate of Incorporation would eliminate
the liability of directors to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director to the fullest extent
permissible under Delaware law, as such law exists currently and as it may be
amended in the future. Under Delaware law, such provision may not eliminate or
limit director monetary liability for: (i) breaches of the director's duty of
loyalty to the corporation or its stockholders; (ii) acts or omissions not in
good faith or involving intentional misconduct or knowing violations of law;
(iii) the payment of unlawful dividends or unlawful stock repurchases or
redemptions; or (iv) transactions in which the director received an improper
personal benefit. Such limitation of liability provisions also may not limit a
director's liability for violation of, or otherwise relieve the corporation or
its directors from the necessity of complying with, federal or state securities
laws or affect the availability of nonmonetary remedies such as injunctive
relief or rescission.
California. The Linear California Articles of Incorporation eliminate the
liability of directors to the Company to the fullest extent permissible
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under California law. California law does not permit the elimination of monetary
liability where such liability is based on: (i) intentional misconduct or
knowing and culpable violation of law; (ii) acts or omissions that a director
believes to be contrary to the best interests of the corporation or its
shareholders or that involve the absence of good faith on the part of the
director, (iii) receipt of an improper personal benefit; (iv) acts or omissions
that show reckless disregard for the director's duty to the corporation or its
shareholders, where the director in the ordinary course of performing a
director's duties should be aware of a risk of serious injury to the corporation
or its shareholders, (v) acts or omissions that constitute an unexcused pattern
of inattention that amounts to an abdication of the director's duty to the
corporation and its shareholders; (vi) transactions between the corporation and
a director who has a material financial interest in such transaction; and (vii)
liability for improper distributions, loans or guarantees.
Indemnification Compared and Contrasted. California law requires
indemnification when the individual has defended successfully the action on the
merits. Delaware law requires indemnification of expenses when the individual
being indemnified has successfully defended any action, claim, issue or matter
therein, on the merits or otherwise. Delaware law generally permits
indemnification of expenses, including attorneys' fees, actually and reasonably
incurred in the defense or settlement of a derivative or third-party action,
provided there is a determination by a majority vote of a disinterested quorum
of the directors, by independent legal counsel or by the stockholders that the
person seeking indemnification acted in good faith and in a manner reasonably
believed to be in best interests of the corporation. Without court approval,
however, no indemnification may be made in respect of any derivative action in
which such person is adjudged liable for negligence or misconduct in the
performance of his or her duty to the corporation. Expenses incurred by an
officer or director in defending an action may be paid in advance under Delaware
law or California law, if the director or officer undertakes to repay such
amounts if it is ultimately determined that he or she is not entitled to
indemnification. In addition, the laws of both states authorize a corporation to
purchase indemnity insurance for the benefit of its officers, directors,
employees and agents whether or not the corporation would have the power to
indemnify against the liability covered by the policy.
California law permits a California corporation to provide rights to
indemnification beyond those provided therein to the extent such additional
indemnification is authorized in the corporation's articles of incorporation.
Thus, if so authorized, rights to indemnification may be provided pursuant to
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agreements or bylaw provisions which make mandatory the permissive
indemnification provided by California law. Linear California's Articles of
Incorporation authorize indemnification beyond that expressly mandated by
California law.
Delaware law also permits a Delaware corporation to provide indemnification
in excess of that provided by statute. Delaware law does not require authorizing
provisions in the certificate of incorporation.
Indemnification Agreements. A provision of Delaware law states that
indemnification provided by statute will not be deemed exclusive of any other
right under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise. Under Delaware law, therefore, the indemnification
agreement entered into by Linear California with its officers and directors may
be assumed by Linear Delaware as part of the Proposed Reincorporation. If the
Proposed Reincorporation is consummated, the indemnification agreements will be
amended to the extent necessary to conform the agreements to Delaware law and to
provide for indemnification of officers and directors and advancement of
expenses to the maximum extent permitted by Delaware law. A vote in favor of the
Proposed Reincorporation is also approval of such amendments to the
indemnification agreements. Among other things, the indemnification agreements
will be amended to include within their purview future changes in Delaware law
that expand the permissible scope of indemnification of directors and officers
of Delaware corporations.
Inspection of Shareholder List
Both California and Delaware law allow any shareholder to inspect the
shareholder list for a purpose reasonably related to such person's interest as a
shareholder. California law provides, in addition, for an absolute right to
inspect and copy the corporation's shareholder list by persons holding an
aggregate of 5% or more of the corporation's voting shares, or shareholders
holding an aggregate of 1% or more of such shares who have contested the
election of directors. Delaware law also provides for inspection rights as to a
list of stockholders entitled to vote at a meeting within a ten day period
preceding a stockholders' meeting for any purpose germane to the meeting.
However, Delaware law contains no provisions comparable to the absolute right of
inspection provided by California law to certain shareholders.
Dividends and Repurchases of Shares
California law dispenses with the concepts of par value of shares as well
as statutory definitions of capital, surplus and the like. The concepts of par
value, capital and surplus exist under Delaware law.
Delaware. Delaware law permits a corporation to declare and pay dividends
out of surplus or, if there is no surplus, out of net profits for the fiscal
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year in which the dividend is declared and/or for the preceding fiscal year as
long as the amount of capital of the corporation following the declaration and
payment of the dividend is not less than the aggregate amount of the capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets. In addition, Delaware law, generally
provides that a corporation may redeem or repurchase its shares only if the
capital of the corporation is not impaired and such redemption or repurchase
would not impair the capital of the corporation.
California. Under California law, a corporation may not make any
distribution to its shareholders unless either: (i) the corporation's retained
earnings immediately prior to the proposed distribution equal or exceed the
amount of the proposed distribution, or (ii) immediately after giving effect to
such distribution, the corporation's assets (exclusive of goodwill, capitalized
research and development expenses and deferred charges) would be at least equal
to 125% its liabilities (not including deferred taxes, deferred income and other
deferred credits), and the corporation's current assets would be at least equal
to its current liabilities (or 125% its current liabilities if the average
pre-tax and pre-interest expense earnings for the preceding two fiscal years
were less than the average interest expense for such years). Such tests are
applied to California corporations on a consolidated basis.
Shareholder Voting
Both California and Delaware law generally require that a majority of the
shareholders of both acquiring and target corporations approve statutory
mergers.
Delaware. Delaware law does not require a stockholder vote of the surviving
corporation in a merger (unless the corporation provides otherwise in its
certificate of incorporation) if (i) the merger agreement does not amend the
existing certificate of incorporation; (ii) each share of stock of the surviving
corporation outstanding immediately before the effective date of the merger is
an identical outstanding share after the merger; and (iii) either no shares of
common stock of the surviving corporation and no shares, securities or
obligations convertible into such stock are to be issued or delivered under the
plan of merger, or the authorized unissued shares or shares of common stock of
the surviving corporation to be issued or delivered under the plan of merger
plus those initially issuable upon conversion of any other shares, securities or
obligations to be issued or delivered under such plan do not exceed 20% of the
shares of common stock of such constituent corporation outstanding immediately
prior to the effective date of the merger.
California. California law contains a similar exception to its voting
requirements for reorganizations where shareholders or the corporation itself,
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or both, immediately prior to the reorganization will own immediately after the
reorganization equity securities constituting more than 83.3% of the voting
power of the surviving or acquiring corporation or its parent entity.
Appraisal Rights
Under both California and Delaware law, a shareholder of a corporation
participating in certain major corporate transactions may, under varying
circumstances, be entitled to appraisal rights, pursuant to which such
shareholder may receive cash in the amount of the fair market value of his or
her shares in lieu of the consideration he or she would otherwise receive in the
transaction.
Delaware. Under Delaware law, such fair market value is determined
exclusive of any element of value arising from the accomplishment or expectation
of the merger or consolidation, and such appraisal rights are not available: (i)
with respect to the sale, lease or exchange of all or substantially all of the
assets of a corporation; (ii) with respect to a merger or consolidation by a
corporation the shares of which are either listed on a national securities
exchange or are held of record by more than 2,000 holders if such stockholders
receive only shares of the surviving corporation or shares of any other
corporation that are either listed on a national securities exchange or held of
record by more than 2,000 holders, plus cash in lieu of fractional shares of
such corporations; or (iii) to stockholders of a corporation surviving a merger
if no vote of the stockholders of the surviving corporation is required to
approve the merger under Delaware law.
California. The limitations on the availability of appraisal rights under
California law are different from those under Delaware law. Shareholders of a
California corporation whose shares are listed on a national securities exchange
generally do not have such appraisal rights unless the holders of at least 5% of
the class of outstanding shares claim the right or the corporation or any law
restricts the transfer of such shares. Appraisal rights are also unavailable if
the shareholders of a corporation or the corporation itself, or both,
immediately prior to the reorganization will own immediately after the
reorganization equity securities constituting more than 83.3% of the voting
power of the surviving or acquiring corporation or its parent entity. California
law generally affords appraisal rights in sale of assets reorganizations.
Dissolution
Under California law, shareholders holding 50% or more of the total voting
power may authorize a corporation's dissolution, with or without the approval of
the corporation's board of directors and, this right may not be modified by the
articles of incorporation. Under Delaware law, unless the
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board of directors approves the proposal to dissolve, the dissolution must be
unanimously approved by all the stockholders entitled to vote thereon. Only if
the dissolution is initially approved by the board of directors may the
dissolution be approved by a simple majority of the outstanding shares of the
corporation's stock entitled to vote. In the event of such a board-initiated
dissolution, Delaware law allows a Delaware corporation to include in its
certificate of incorporation a supermajority (greater than a simple majority)
voting requirement in connection with dissolutions. Linear Delaware's
Certificate of Incorporation contains no such supermajority voting requirement.
Interested Director Transactions
Under both California and Delaware law, certain contracts or transactions
in which one or more of a corporation's directors has an interest are not void
or voidable simply because of such interest, provided that certain conditions,
such as obtaining required disinterested approval and fulfilling the
requirements of good faith and full disclosure, are met. With certain minor
exceptions, the conditions are similar under California and Delaware law.
Shareholder Derivative Suits
California law provides that a shareholder bringing a derivative action on
behalf of a corporation need not have been a shareholder at the time of the
transaction in question, provided that certain tests are met. Under Delaware
law, a stockholder may bring a derivative action on behalf of the corporation
only if the stockholder was a stockholder of the corporation at the time of the
transaction in question or if his or her stock thereafter devolved upon him or
her by operation of law. California law also provides that the corporation or
the defendant in a derivative suit may make a motion to the court for an order
requiring the plaintiff shareholder to furnish a security bond. Delaware does
not have a similar bonding requirement.
Application of the General Corporation Law of California to Delaware
Corporations
Under Section 2115 of the California General Corporation Law, certain
foreign corporations (i.e., corporations not organized under California law)
which have significant contacts with California are subject to a number of key
provisions of the California General Corporation Law. However, an exemption from
Section 2115 is provided for corporations whose shares are listed on a major
national securities exchange, such as the The Nasdaq Stock Market's National
Market. Following the Proposed Reincorporation, the Common Stock of Linear
Delaware will continue to be traded on the The Nasdaq Stock Market's National
Market, and, accordingly, it is expected that Linear Delaware will be exempt
from Section 2115.
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Certain Federal Income Tax Consequences
The following is a discussion of certain federal income tax considerations
that may be relevant to holders of Linear California Common Stock who receive
Linear Delaware Common Stock in exchange for their Linear California Common
Stock as a result of the Proposed Reincorporation. The discussion does not
address all of the tax consequences of the Proposed Reincorporation that may be
relevant to particular Linear California shareholders, such as dealers in
securities, or those Linear California shareholders who acquired their shares
upon the exercise of stock options, nor does it address the tax consequences to
holders of options or warrants to acquire Linear California Common Stock.
Furthermore, no foreign, state, or local tax considerations are addressed
herein. IN VIEW OF THE VARYING NATURE OF SUCH TAX CONSEQUENCES, EACH SHAREHOLDER
IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE SPECIFIC TAX
CONSEQUENCES OF THE PROPOSED REINCORPORATION, INCLUDING THE APPLICABILITY OF
FEDERAL, STATE, LOCAL OR FOREIGN TAX LAWS.
Subject to the limitations, qualifications and exceptions described herein,
and assuming the Proposed Reincorporation qualifies as a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended,
the following tax consequences generally should result:
(a) No gain or loss should be recognized by holders of Linear
California Common Stock upon receipt of Linear Delaware
Common Stock pursuant to the Proposed Reincorporation;
(b) The aggregate tax basis of the Linear Delaware Common Stock
received by each shareholder in the Proposed Reincorporation
should be equal to the aggregate tax basis of the Linear
California Common Stock surrendered in exchange therefor;
and
(c) The holding period of the Linear Delaware Common Stock
received by each shareholder of Linear California should
include the period for which such shareholder held the
Linear California Common Stock surrendered in exchange
therefor, provided that such Linear California Common Stock
was held by the shareholder as a capital asset at the time
of the Proposed Reincorporation.
The Company has not requested a ruling from the Internal Revenue Service,
nor an opinion from its outside legal counsel, with respect to the federal
income tax consequences of the Proposed Reincorporation under the Code. In any
case, such an opinion would neither bind the IRS nor preclude it from asserting
a contrary position.
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State, local or foreign income tax consequences to shareholders may vary
from the federal tax consequences described above.
The Company should not recognize gain or loss for federal income tax
purposes as a result of the Proposed Reincorporation, and Linear Delaware should
succeed, without adjustment, to the federal income tax attributes of Linear
California.
PROPOSAL FOUR
ESTABLISHMENT OF A CLASSIFIED BOARD OF DIRECTORS
General
The Company currently has a board of directors consisting of five members
elected to one-year terms at each annual meeting of the shareholders. As part of
the Proposed Reincorporation in Delaware (see "Proposal Three-- Reincorporation
in Delaware") and the merger into Linear Delaware thereby contemplated, the
Company seeks to establish a classified board of directors by dividing the Board
of Directors into three classes, each with staggered three-year terms.
A classified board is one in which a certain number, but not all, of the
directors are elected on a rotating basis each year. This method of electing
directors makes changes in the composition of the board of directors more
difficult, and thus a potential change in control of a corporation a lengthier
and more difficult process. Under California law, a company whose shares are
listed on a national exchange may also provide for a classified board of
directors by adopting amendments to its articles of incorporation or bylaws,
which amendments must be approved by the shareholders. Although Linear
California qualifies to adopt a classified board of directors, its Board of
Directors has not previously done so. Delaware law permits, but does not
require, a classified board of directors, pursuant to which the directors can be
divided into as many as three classes with staggered terms of office, with only
one class of directors standing for election each year. Assuming shareholder
approval of the Proposed Reincorporation in Delaware, the Board of Directors
recommends the adoption of a classified board, dividing the directors into three
equal classes. The directors of each class will serve three-year terms, and the
term of one class will expire each year.
Classified Board
To implement a classified Board, the Board would be divided in the
following way: two directors, Messrs. McCarthy and Moley, will be designated
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as holding Class I positions; two directors, Messrs. Volpe and Lee, will be
designated as holding Class II positions; and one director, Mr. Swanson, will be
designated as holding a Class III position. The term of office of the initial
Class I directors will expire at the next annual meeting of stockholders, the
term of office of the initial Class II directors will expire at the next
succeeding annual meeting of stockholders, and the term of office of the initial
Class III director will expire at the second succeeding annual meeting of
stockholders. At each annual meeting scheduled to be held after the Proposed
Reincorporation, directors to replace those of the class whose terms expire at
such annual meeting will be elected to hold office until the third succeeding
annual meeting and until their respective successors will have been duly elected
and qualified. Thus, after the Proposed Reincorporation, stockholders will elect
only one-third of the directors at each Annual Meeting of Stockholders. If the
number of directors is later changed, any newly created directorships or any
decrease in the number of directorships shall be so apportioned among the
classes as to make all classes as nearly equal in number as is practicable.
The Board of Directors believes that dividing the directors into three
classes is advantageous to the Company and its stockholders because, by
providing that directors will serve three-year terms rather than one-year terms,
the likelihood of continuity and stability in the policies formulated by the
Board will be enhanced.
The Board of Directors also believes that a classified board would, if
adopted, effectively reduce the possibility that a third party could effect a
sudden or surprise change in control of the Company's Board of Directors. A
classified board would serve to ensure that the Board and management, if
confronted by a surprise proposal from a third party who has acquired a block of
the Company's Common Stock, will have sufficient time to review the proposal and
appropriate alternatives to the proposal and to attempt to negotiate a better
transaction, if possible, for the stockholders.
The Board of Directors of the Company believes that if a potential acquiror
were to purchase a significant or controlling interest in the Company, such
potential acquiror's ability to remove the Company's directors and obtain
control of the Board and thereby remove the Company's management would severely
curtail the Company's ability to negotiate effectively with such potential
acquiror. The threat of obtaining control of the Board would deprive the Board
of the time and information necessary to evaluate the proposal, to study
alternative proposals and to help ensure that the best price is obtained in any
transaction involving the Company which may ultimately be undertaken. A
classified board is designed to reduce the vulnerability of the Company to an
unsolicited takeover proposal, including a proposal that does not
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contemplate the acquisition of all of the Company's outstanding shares or an
unsolicited proposal for the restructuring or sale of all or part of the
Company.
Since the creation of a classified board will increase the amount of time
required for a takeover bidder to obtain control of the Company without the
cooperation of the Board, even if the takeover bidder were to acquire a majority
of the Company's outstanding stock, the existence of a classified board could
tend to discourage certain tender offers that stockholders might feel would be
in their best interests. Because tender offers for control usually involve a
purchase price higher than the current market price, the creation of a
classified board could also discourage open market purchases by a potential
takeover bidder. Such tender offers or open market purchases could increase the
market price of the Company's stock, enabling stockholders to sell their shares
at a price higher than that which otherwise would prevail. In addition, the
creation of a classified board could make the Company's Common Stock less
attractive to persons who invest in securities in anticipation of an increase in
price if a takeover attempt develops. Moreover, since these provisions will make
the removal of directors more difficult, they will increase the directors'
security in their positions and, given that the Board has the power to retain
and discharge management, could perpetuate incumbent management.
The foregoing discussion of the Certificate of Incorporation and Bylaws of
Linear Delaware is qualified in its entirety by reference to the relevant
sections of such Certificate and Bylaws attached to this Proxy Statement as
Appendices B and C.
Required Vote
Approval of the adoption of a classified board of directors as part of the
Proposed Reincorporation, which will also constitute approval of the provisions
of the Certificate of Incorporation and the Bylaws of Linear Delaware
establishing such a classified board, will require the affirmative vote of the
majority of outstanding shares of Common Stock of Linear California entitled to
vote.
If this proposal is not approved by the shareholders but the shareholders
approve the Proposed Reincorporation, the Company will revise the Certificate of
Incorporation and Bylaws of Linear Delaware to eliminate the classified board
provisions, and then complete the Proposed Reincorporation. If the Proposed
Reincorporation is not approved, the Company will not seek shareholder approval
for establishment of a classified board at this time.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
ESTABLISHMENT OF A CLASSIFIED BOARD. The effect of an abstention on broker
now-vote is the same as that of a vote against the proposal.
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PROPOSAL FIVE
INCREASE IN THE NUMBER OF AUTHORIZED SHARES
The Articles of Incorporation of Linear California currently authorize the
Company to issue up to 480,000,000 shares of Common Stock and 2,000,000 shares
of Preferred Stock. The Certificate of Incorporation of Linear Delaware
authorizes Linear Delaware to issue up to 2,000,000,000 shares of Common Stock
and 5,000,000 shares of undesignated Preferred Stock. The Board of Directors has
no immediate plans to issue a significant number of additional shares of Common
Stock or Preferred Stock. However, the larger number of authorized shares
provided for in the Linear Delaware Certificate of Incorporation will provide
the Company the certainty and flexibility to undertake various types of
transactions, including stock splits (in the form of stock dividends),
financings, increases in the shares reserved for issuance pursuant to employee
stock and option incentive plans, or other corporate transactions not yet
determined.
The Board of Directors of Linear California believes it is in the Company's
best interest to increase the number of shares of Common Stock that it is
authorized to issue in order to give the Company additional flexibility to
maintain a reasonable stock price with future stock splits and stock dividends
without having to wait for shareholder approval. In particular, under California
law, the board of directors' approval of a stock split automatically and
proportionately increases a corporation's authorized stock without requiring
shareholder approval. Under Delaware law, however, the board of directors cannot
split the corporation's stock by means of a stock dividend without shareholder
approval if there are insufficient authorized shares available.
Both in February 1999 and in March 2000, the Board of Directors approved
2-for-1 splits of the Company's Common Stock. In order for the Board of
Directors of Linear Delaware to respond to growth of the Company's business in
the future with the same flexibility the Company has had as a California
corporation, the Company must have a sufficient number of authorized shares to
cover appropriate levels of future stock dividends. Since there are currently
approximately --------- issued and outstanding shares of the Company's Common
Stock and approximately an additional --------- reserved for future issuance
under the Company's stock incentive plans and employee stock purchase plans, the
number of shares of Common Stock currently authorized would not be sufficient to
permit the Board of Directors of Linear Delaware to approve a 2-for-1 stock
split in the form of a 100% stock dividend without first obtaining stockholder
approval. Under the proposed Certificate of Incorporation of Linear Delaware,
the additional shares of Common Stock would be available for issuance without
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further stockholder action, unless shareholder action is otherwise required by
Delaware law or the rules of any stock exchange or automated quotation system on
which the Common Stock may then be listed or quoted. Although the Company is not
currently contemplating any additional stock split or stock dividend, and there
can be no assurance that any additional stock split or stock dividend will
happen at any particular time in the future or at all, the additional authorized
shares in Linear Delaware will effectively provide the Board with flexibility to
split the Company's shares.
The Board of Directors also believes that the availability of additional
authorized but unissued shares of Common Stock and Preferred Stock will provide
the Company with the flexibility to issue shares for other proper corporate
purposes which may be identified in the future, such as to raise equity capital,
to make acquisitions through the use of stock, to establish strategic
relationships with other companies, and to adopt additional employee benefit
plans or reserve additional shares for issuance under such plans. The Board of
Directors has no immediate plans, understandings, agreements or commitments to
issue additional Common Stock or Preferred Stock for any purpose.
Required Vote
Approval of an increase in the number of authorized shares as part of the
Proposed Reincorporation, which will also constitute approval of the provisions
of the Certificate of Incorporation establishing such an increase, will require
the affirmative vote of a majority of outstanding shares of Common Stock of
Linear California entitled to vote.
If this proposal is not approved by the shareholders but the shareholders
approve the Proposed Reincorporation, the Company will revise the Certificate of
Incorporation of Linear Delaware to set the number of authorized shares of
Common Stock of Linear Delaware to 480,000,000 and the number of authorized
shares of Preferred Stock to 2,000,000, as currently authorized for Linear
California, and then complete the Proposed Reincorporation. If the Proposed
Reincorporation is not approved, the Company will not seek shareholder approval
of the increase in the number of authorized shares at this time.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE PROPOSAL TO SET THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK AT
2,000,000,000 AND THE NUMBER OF AUTHORIZED SHARES OF PREFERRED STOCK AT
5,000,000 IN CONNECTION WITH THE PROPOSED REINCORPORATION. The effect of an
abstention or broker non-vote is the same as a vote against the proposal.
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PROPOSAL SIX
AMENDMENT OF THE 1996 SENIOR EXECUTIVE BONUS PLAN
The 1996 Senior Executive Bonus Plan provides the Company's senior key
executives with the opportunity to earn incentive awards based on the
achievement of goals relating to the performance of the Company. The Board of
Directors has approved the amendment of the 1996 Senior Executive Bonus Plan.
Background and Reasons for Adoption
The Company has a general performance-based bonus plan similar to the 1996
Senior Executive Bonus Plan, pursuant to which the Company rewards management
for achieving certain performance objectives. However, under Section 162(m) of
the Internal Revenue Code, the federal income tax deductibility of compensation
paid to the Company's Chief Executive Officer and to each of its four other most
highly compensated executive officers may be limited to the extent that such
compensation exceeds $1 million in any one year. Under Section 162(m), the
Company may deduct compensation in excess of that amount if it qualifies as
"performance-based compensation", as defined in Section 162(m).
In July 1996, the Company adopted the 1996 Senior Executive Bonus Plan to
qualify payments thereunder as "performance-based compensation", so that the
Company could continue to receive a federal income tax deduction for the payment
of incentive bonuses to its most highly compensated executive officers. As
originally adopted, no actual award under the plan may exceed $3 million for any
fiscal year for any individual. The Company now proposes to amend the Plan to
increase this maximum award to $5 million to take into consideration
significantly improved Company financial performance since the plan was
originally adopted in 1996. In all other respects, the 1996 Senior Executive
Bonus Plan will remain unchanged. The Company will also continue to operate its
general bonus plan for the compensation of senior executives and other key
employees for whom Section 162(m) is not applicable.
Vote Required
The affirmative vote of a majority of the votes cast will be required to
approve the amendment of the 1996 Senior Executive Bonus Plan, provided such
affirmative vote also constitutes a majority of the quorum.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE AMENDMENT OF THE
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1996 SENIOR EXECUTIVE BONUS PLAN. The effect of an abstention or broker
non-vote is the same as a vote against the proposal.
Description of the 1996 Senior Executive Bonus Plan
The following paragraphs provide a summary of the principal features of the
1996 Senior Executive Bonus Plan and its operation, as amended. The discussion
set forth below is qualified in its entirety by reference to the copy of the
1996 Senior Executive Bonus Plan as Appendix D.
Purpose of the Plan
The 1996 Senior Executive Bonus Plan is intended to increase shareholder
value and the success of the Company by aligning senior executive compensation
with the Company's business objectives and performance.
Administration of the Plan
The 1996 Senior Executive Bonus Plan is administered by the Compensation
Committee of the Board of Directors in accordance with (i) the express
provisions of the plan and (ii) the requirements of Section 162(m).
Eligibility to Receive Awards
Participation in the 1996 Senior Executive Bonus Plan is determined
annually in the discretion of the Company's Compensation Committee. In selecting
participants for the plan, the Committee will choose officers of the Company who
are likely to have a significant impact on Company performance and be highly
compensated. For fiscal 2001, the participants in the plan are Messrs. Swanson,
Davies, Dobkin, Coghlan and Zapf. Participation in future years will be in the
discretion of the Committee, but it currently is expected that two to five
officers will participate each year.
Target Awards and Performance Goals
For each fiscal year, the Committee will establish: (i) a target award for
each participant, (ii) the performance goals which must be achieved in order for
the participant to be paid the target award, and (iii) a formula for increasing
or decreasing a participant's actual award depending upon how actual performance
compares to the pre-established performance goals. The performance measures
which the Committee may use are: annual revenue, and operating income expressed
as a percent of sales.
For fiscal 2001, the Committee has established for the five plan
participants a combined performance goal with respect to: operating profit
return on sales (i.e. fiscal 2001 operating profit as a percentage of revenue),
and revenue
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growth from fiscal 2000 to fiscal 2001. The Committee has also established a
formula, with such measurements as variables, which will determine actual
awards.
Determination of Actual Awards
After the end of each fiscal year, the Committee must certify in writing
the extent to which the performance goals applicable to each participant were
achieved or exceeded. The actual award (if any) for each participant will be
determined by applying the formula to the level of actual performance which has
been certified by the Committee. However, the Committee retains discretion to
eliminate or reduce the actual award payable to any participant below that which
otherwise would be payable under the applicable formula. Also, no participant's
actual award under the 1996 Senior Executive Bonus Plan may exceed $5 million
for any fiscal year.
The 1996 Senior Executive Bonus Plan contains a continuous employment
requirement. If a participant's employment with the Company terminates prior the
end of a fiscal year, he or she generally will not be entitled to the payment of
an award for the fiscal year. However, if the participant's termination is due
to retirement, disability or death, the Committee will proportionately reduce
(or eliminate) his or her actual award based on the date of termination and such
other considerations as the Committee deems appropriate.
Awards under the 1996 Senior Executive Bonus Plan generally will be payable
in cash after the end of the fiscal year during which the award was earned.
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OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting or any adjournment or
postponement thereof, it is the intention of the persons named in the enclosed
form of Proxy to vote the shares they represent as the Board of Directors may
recommend.
BY ORDER OF THE BOARD
OF DIRECTORS
Dated: September , 2000
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Appendix A -- Agreement and Plan of Merger
Appendix B -- Certificate of Incorporation of Linear Delaware
Appendix C -- Bylaws of Linear Delaware
Appendix D -- 1996 Senior Executive Bonus Plan, as amended
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
OF LINEAR TECHNOLOGY CORPORATION
(a Delaware corporation)
AND
LINEAR TECHNOLOGY CORPORATION
(a California corporation)
THIS AGREEMENT AND PLAN OF MERGER dated as of ----------- , 2000 (the
"Agreement") is between Linear Technology Corporation, a Delaware corporation
("Linear Delaware"), and Linear Technology Corporation, a California corporation
("Linear California"). Linear Delaware and Linear California are sometimes
referred to herein as the "Constituent Corporations."
RECITALS
A. Linear Delaware is a corporation duly organized and existing under the
laws of the State of Delaware and has an authorized capital of -----------
shares, ----------- of which are designated "Common Stock," par value $0.001 per
share, and of which are designated "Preferred Stock," par value $0.001 per
share. The Preferred Stock of Linear Delaware is undesignated as to series,
rights, preferences, privileges or restrictions. As of September 30, 2000,
------------ shares of Common Stock were issued and outstanding, all of which
were held by Linear California, and no shares of Preferred Stock were issued and
outstanding.
B. Linear California is a corporation duly organized and existing under the
laws of the State of California and has an authorized capital of 482,000,000
shares, 480,000,000 of which are designated "Common Stock," no par value, and
2,000,000 of which are designated "Preferred Stock," no par value. The Preferred
Stock of Linear California is undesignated as to series, rights, preferences,
privileges or restrictions. As of September 30, 2000,
shares of Common Stock and no shares of Preferred Stock were issued
and outstanding.
C. The Board of Directors of Linear California has determined that, for the
purpose of effecting the reincorporation of Linear California in the State of
Delaware, it is advisable and in the best interests of Linear California and its
shareholders that Linear California merge with and into Linear Delaware upon the
terms and conditions herein provided.
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D. The respective Boards of Directors of Linear Delaware and Linear
California have approved this Agreement and have directed that this Agreement be
submitted to a vote of their respective sole stockholder and shareholders and
executed by the undersigned officers.
NOW, THEREFORE, in consideration of the mutual agreements and covenants set
forth herein, Linear Delaware and Linear California hereby agree, subject to the
terms and conditions hereinafter set forth, as follows:
I. MERGER
1.1 Merger. In accordance with the provisions of this Agreement, the
Delaware General Corporation Law and the California General Corporation Law,
Linear California shall be merged with and into Linear Delaware (the "Merger"),
the separate existence of Linear California shall cease and Linear Delaware
shall survive the Merger and shall continue to be governed by the laws of the
State of Delaware, and Linear Delaware shall be, and is herein sometimes
referred to as, the "Surviving Corporation." The name of the Surviving
Corporation shall be "Linear Technology Corporation."
1.2 Filing and Effectiveness. The Merger shall become effective when the
following actions shall have been completed:
(a) This Agreement and Merger shall have been adopted and
approved by the stockholders of each Constituent Corporation
in accordance with the requirements of the Delaware General
Corporation Law and the California Corporations Code;
(b) All of the conditions precedent to the consummation of the
Merger specified in this Agreement shall have been satisfied
or duly waived by the party entitled to satisfaction
thereof; and
(c) An executed counterpart of this Agreement meeting the
requirements of the Delaware General Corporation Law shall
have been filed with the Secretary of State of the State of
Delaware.
The date and time when the Merger shall become effective, as aforesaid, is
herein called the "Effective Date of the Merger."
1.3 Effect of the Merger. Upon the Effective Date of the Merger, the
separate existence of Linear California shall cease, and Linear Delaware, as the
Surviving Corporation, (i) shall continue to possess all of its assets, rights,
powers and property as constituted immediately prior to the Effective Date of
the Merger, (ii) shall be subject to all actions previously taken by its and
Linear California's Board of Directors, (iii) shall succeed, without other
transfer, to all of the assets, rights, powers and property of Linear California
in the
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manner more fully set forth in Section 259 of the Delaware General Corporation
Law, (iv) shall continue to be subject to all of the debts, liabilities and
obligations of Linear Delaware as constituted immediately prior to the Effective
Date of the Merger, and (v) shall succeed, without other transfer, to all of the
debts, liabilities and obligations of Linear California in the same manner as if
Linear Delaware had itself incurred them, all as more fully provided under the
applicable provisions of the Delaware General Corporation Law and the California
General Corporation Law.
II. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1 Certificate of Incorporation. The Certificate of Incorporation of
Linear Delaware as in effect immediately prior to the Effective Date of the
Merger shall continue in full force and effect as the Certificate of
Incorporation of the Surviving Corporation until duly amended in accordance with
the provisions thereof and applicable law.
2.2 Bylaws. The Bylaws of Linear Delaware as in effect immediately prior to
the Effective Date of the Merger shall continue in full force and effect as the
Bylaws of the Surviving Corporation until duly amended in accordance with the
provisions thereof and applicable law.
2.3 irectors and Officers. The directors and officers of Linear California
immediately prior to the Effective Date of the Merger shall be the directors and
officers of the Surviving Corporation until their successors shall have been
duly elected and qualified or until as otherwise provided by law, or the
Certificate of Incorporation of the Surviving Corporation or the Bylaws of the
Surviving Corporation.
III. MANNER OF CONVERSION OF STOCK
3.1 Linear California Common Stock. Upon the Effective Date of the Merger,
each share of Linear California Common Stock issued and outstanding immediately
prior thereto shall, by virtue of the Merger and without any action by the
Constituent Corporations, the holder of such shares or any other person, be
converted into and exchanged for one (1) fully paid and nonassessable share of
Common Stock, par value $0.001 per share, of the Surviving Corporation.
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3.2 Linear California Options, Stock Purchase Rights and Convertible
Securities.
(a) Upon the Effective Date of the Merger, the Surviving
Corporation shall assume and continue the stock option
plans and all other employee benefit plans of Linear
California. Each outstanding and unexercised option or
other right to purchase or security convertible into Linear
California Common Stock shall become an option or right to
purchase or a security convertible into the Surviving
Corporation's Common Stock on the basis of one share of the
Surviving Corporation's Common Stock for each share of
Linear California Common Stock issuable pursuant to any
such option, stock purchase right or convertible security,
on the same terms and conditions and at an exercise price
per share equal to the exercise price applicable to any
such Linear California option, stock purchase right or
convertible security at the Effective Date of the Merger.
There are no options, purchase rights for or securities
convertible into Preferred Stock of Linear California.
(b) A number of shares of the Surviving Corporation's Common
Stock shall be reserved for issuance upon the exercise of
options, stock purchase rights and convertible securities
equal to the number of shares of Linear California Common
Stock so reserved immediately prior to the Effective Date of
the Merger.
3.3 Linear Delaware Common Stock. Upon the Effective Date of the Merger,
each share of Common Stock, par value $0.001 per share, of Linear Delaware
issued and outstanding immediately prior thereto shall, by virtue of the Merger
and without any action by Linear Delaware, the holder of such shares or any
other person, be canceled and returned to the status of authorized but unissued
shares.
3.4 Exchange of Certificates. After the Effective Date of the Merger, each
holder of an outstanding certificate representing shares of Linear California
Common Stock may, at such stockholder's option, but need not, surrender the same
for cancellation to the transfer agent for the Linear California Common Stock,
as exchange agent (the "Exchange Agent"), and each such holder shall be entitled
to receive in exchange therefor a certificate or certificates representing the
number of shares of the Surviving Corporation's Common Stock into which the
surrendered shares were converted as herein provided. Unless and until so
surrendered, each outstanding certificate theretofore representing shares of
Linear California Common Stock shall be deemed for all purposes to represent the
number of shares of the Surviving Corporation's Common Stock into which such
shares of Linear California Common Stock were converted in the Merger.
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<PAGE>
The registered owner on the books and records of the Surviving Corporation
or the Exchange Agent of any shares of stock represented by such outstanding
certificate shall, until such certificate shall have been surrendered for
transfer or conversion or otherwise accounted for to the Surviving Corporation
or the Exchange Agent, have and be entitled to exercise any voting and other
rights with respect to and to receive dividends and other distributions upon the
shares of Common Stock of the Surviving Corporation represented by such
outstanding certificate as provided above.
Each certificate representing Common Stock of the Surviving Corporation so
issued in the Merger shall bear the same legends, if any, with respect to the
restrictions on transferability as the certificates of Linear California so
converted and given in exchange therefore, unless otherwise determined by the
Board of Directors of the Surviving Corporation in compliance with applicable
laws, or other such additional legends as agreed upon by the holder and the
Surviving Corporation.
If any certificate for shares of Linear Delaware stock is to be issued in a
name other than that in which the certificate surrendered in exchange therefor
is registered, it shall be a condition of issuance thereof that the certificate
so surrendered shall be properly endorsed and otherwise in proper form for
transfer, that such transfer otherwise be proper and comply with applicable
securities laws and that the person requesting such transfer pay to Linear
Delaware or the Exchange Agent any transfer or other taxes payable by reason of
issuance of such new certificate in a name other than that of the registered
holder of the certificate surrendered or establish to the satisfaction of Linear
Delaware that such tax has been paid or is not payable.
IV. GENERAL
4.1 Covenants of Linear Delaware. Linear Delaware covenants and agrees
that it will, on or before the Effective Date of the Merger:
(a) qualify to do business as a foreign corporation in the State
of California and in connection therewith appoint an agent
for service of process as required under the provisions of
Section 2105 of the California General Corporation Law;
(b) file any and all documents with the California Franchise Tax
Board necessary for the assumption by Linear Delaware of all
of the franchise tax liabilities of Linear California;
(c) file an executed counterpart of this Agreement meeting the
requirements of the California General Corporation Law with
the Secretary of State of the State of California; and
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(d) take such other actions as may be required by the California
General Corporation Law.
4.2 Further Assurances. From time to time, as and when required by Linear
Delaware or by its successors or assigns, there shall be executed and delivered
on behalf of Linear California such deeds and other instruments, and there shall
be taken or caused to be taken by Linear Delaware and Linear California such
further and other actions as shall be appropriate or necessary in order to vest
or perfect in or conform of record or otherwise by Linear Delaware the title to
and possession of all the property, interests, assets, rights, privileges,
immunities, powers, franchises and authority of Linear California and otherwise
to carry out the purposes of this Agreement, and the officers and directors of
Linear Delaware are fully authorized in the name and on behalf of Linear
California or otherwise to take any and all such action and to execute and
deliver any and all such deeds and other instruments.
4.3 Abandonment. At any time before the Effective Date of the Merger, this
Agreement may be terminated and the Merger may be abandoned for any reason
whatsoever by the Board of Directors of either Linear California or of Linear
Delaware, or of both, notwithstanding the approval of this Agreement by the
shareholders of Linear California or by the sole stockholder of Linear Delaware,
or by both.
4.4 Amendment. The Boards of Directors of the Constituent Corporations may
amend this Agreement at any time prior to the filing of this Agreement with the
Secretaries of State of the States of Delaware and California, provided that an
amendment made subsequent to the adoption of this Agreement by the stockholders
of either Constituent Corporation shall not, unless approved by the stockholders
as required by law: (a) alter or change the amount or kind of shares,
securities, cash, property and/or rights to be received in exchange for or on
conversion of all or any of the shares of any class or series thereof of such
Constituent Corporation; (b) alter or change any term of the Certificate of
Incorporation of the Surviving Corporation to be effected by the Merger; or (c)
alter or change any of the terms and conditions of this Agreement if such
alteration or change would adversely affect the holders of any class or series
of capital stock of any Constituent Corporation.
4.5 Registered Office. The registered office of the Surviving Corporation
in the State of Delaware is Street, , Delaware ,
County of and The Corporation Trust Company is the registered agent of
the Surviving Corporation at such address.
4.6 Agreement. Executed copies of this Agreement will be on file at the
principal place of business of the Surviving Corporation at 1630 McCarthy
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Boulevard, Milpitas, California 95035 and copies thereof will be furnished to
any stockholder of either Constituent Corporation, upon request and without
cost.
4.7 Governing Law. This Agreement shall in all respects be construed,
interpreted and enforced in accordance with and governed by the laws of the
State of Delaware and, so far as applicable, the merger provisions of the
California General Corporation Law.
4.8 Counterparts. In order to facilitate the filing and recording of this
Agreement, the same may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, this Agreement having first been approved by the
resolutions of the Board of Directors of Linear Technology Corporation, a
Delaware corporation, and Linear Technology Corporation, a California
corporation, is hereby executed on behalf of each of such two corporations and
attested by their respective officers thereunto duly authorized.
LINEAR TECHNOLOGY CORPORATION
a Delaware corporation
--------------------------------------
Robert H. Swanson, Jr.
Chief Executive Officer
--------------------------------------
Arthur F. Schneiderman
Secretary
LINEAR TECHNOLOGY CORPORATION
a California corporation
--------------------------------------
Robert H. Swanson, Jr.
Chief Executive Officer
--------------------------------------
Arthur F. Schneiderman
Secretary
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<PAGE>
LINEAR TECHNOLOGY CORPORATION
(a California corporation)
OFFICERS' CERTIFICATE
Robert H. Swanson, Jr. and Arthur F. Schneiderman certify that:
1. They are the Chief Executive Officer and the Secretary, respectively, of
Linear Technology Corporation, a corporation organized under the laws of the
State of California.
2. The corporation has authorized two classes of stock, designated "Common
Stock" and "Preferred Stock," respectively. There are authorized 480,000,000
shares of Common Stock and 2,000,000 shares of Preferred Stock. The Preferred
Stock is undesignated as to series, rights, preferences or restrictions.
3. There were --------- shares of Common Stock and no shares of Preferred
Stock outstanding as of the record date (the "Record Date") and entitled to vote
at the shareholders' meeting at which the Agreement and Plan of Merger (the
"Merger Agreement") attached hereto was approved.
4. The principal terms of the Merger Agreement were approved by the Board
of Directors and by the vote of a number of shares of each class of stock which
equaled or exceeded the vote required.
5. The percentage vote required was more than 50% of the votes entitled to
be cast by holders of Common Stock outstanding as of the Record Date, voting as
a single class.
6. Robert H. Swanson, Jr. and Arthur F. Schneiderman further declare under
penalty of perjury under the laws of the State of California that they have
read the foregoing certificate and know the contents thereof and that the same
is true of their own knowledge.
Executed in Milpitas, California on , 2000.
-----------------------------------
Robert H. Swanson, Jr.
Chief Executive Officer
-----------------------------------
Arthur F. Schneiderman
Secretary
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<PAGE>
LINEAR TECHNOLOGY CORPORATION
(a Delaware corporation)
OFFICERS' CERTIFICATE
Robert H. Swanson, Jr. and Arthur F. Schneiderman certify that:
1. They are the Chief Executive Officer and the Secretary, respectively, of
Linear Technology Corporation, a corporation organized under the laws of the
State of Delaware.
2. The corporation has authorized two classes of stock, designated "Common
Stock" and "Preferred Stock," respectively. There are authorized
shares of Common Stock and 2,000,000 shares of Preferred Stock. The
Preferred Stock is undesignated as to series, rights, preferences or
restrictions.
3. There are 1000 shares of Common Stock outstanding and entitled to vote
on the Agreement and Plan of Merger (the "Merger Agreement") attached hereto.
There are no shares of Preferred Stock outstanding.
4. The principal terms of the Merger Agreement were approved by the Board
of Directors and by the vote of 100% of the shares outstanding and entitled to
vote on the Merger Agreement.
5. The percentage vote required was more than 50% of the votes entitled to
be cast by holders of outstanding shares of Common Stock.
6. Robert H. Swanson, Jr. and Arthur F. Schneiderman further declare under
penalty of perjury under the laws of the State of Delaware that they have read
the foregoing certificate and know the contents thereof and that the same is
true of their own knowledge.
Executed in Milpitas, California on , 2000.
-----------------------------------
Robert H. Swanson, Jr.
Chief Executive Officer
-----------------------------------
Arthur F. Schneiderman
Secretary
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<PAGE>
APPENDIX B
CERTIFICATE OF INCORPORATION
OF
LINEAR TECHNOLOGY CORPORATION
ARTICLE I
The name of this corporation is Linear Technology Corporation (the
"Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is ---------. The name of its registered agent at such address is
ARTICLE III
The nature of the business or purposes to be conducted or promoted by the
Corporation is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
ARTICLE IV
The Corporation is authorized to issue two classes of stock to be
designated, respectively, Preferred Stock, par value $0.001 per share
("Preferred"), and Common Stock, par value $0.001 per share ("Common"). The
total number of shares of Common that the Corporation shall have authority to
issue is 2,000,000,000. The total number of shares of Preferred that the
Corporation shall have authority to issue is 5,000,000. The Preferred Stock may
be issued from time to time in one or more series.
The shares of Preferred Stock authorized by this Certificate of
Incorporation may be issued from time to time in one or more series. For any
wholly unissued series of Preferred Stock, the Board of Directors is hereby
authorized to fix and alter the dividend rights, dividend rates, conversion
rights, voting rights, rights and terms of redemption (including sinking fund
provisions), redemption prices, liquidation preferences, the number of shares
constituting any such series and the designation thereof, or any of them.
For any series of Preferred Stock having issued and outstanding shares, the
Board of Directors is hereby authorized to increase or decrease the number of
shares of such series when the number of shares of such series was
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originally fixed by the Board of Directors, but such increase or decrease shall
be subject to the limitations and restrictions stated in the resolution of the
Board of Directors originally fixing the number of shares of such series.
If the number of shares of any series is so decreased, then the shares
constituting such decrease shall resume the status that they had prior to the
adoption of the resolution originally fixing the number of shares of such
series.
ARTICLE V
The Corporation is to have perpetual existence.
ARTICLE VI
For the management of the business and for the conduct of the affairs of
the Corporation, and in further definition, limitation and regulation of the
powers of the Corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
A. The management of the business and the conduct of the affairs of the
Corporation shall be vested in its Board of Directors. The number of
directors shall be fixed and may be changed from time to time by an
amendment to the Bylaws duly adopted by the stockholders or by the Board of
Directors.
B. In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware, the Board of Directors is expressly
authorized to make, alter, amend, or repeal the Bylaws of the Corporation.
C. The directors of the Corporation need not be elected by written
ballot unless the Bylaws of the Corporation so provide.
D. Advance notice of stockholder nomination for the election of
directors and of any other business to be brought by stockholders before any
meeting of the stockholders of the Corporation shall be given in the manner
provided in the Bylaws of the Corporation.
E. No action shall be taken by the stockholders of the Corporation
except at an annual or special meeting of the stockholders called in
accordance with the Bylaws, and no action shall be taken by the stockholders
by written consent.
ARTICLE VII
The directors of the Corporation shall be divided into three classes as
nearly equal in size as is practicable, hereby designated Class I, Class II and
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Class III. For the purposes hereof, the initial Class I, Class II and Class III
directors shall be those directors so designated by the incorporator of the
Corporation. The term of office of the initial Class I directors shall expire at
the next succeeding annual meeting of stockholders held after calendar 2000, the
term of office of the initial Class II directors shall expire at the second
succeeding annual meeting of stockholders and the term of office of the initial
Class III directors shall expire at the third succeeding annual meeting of the
stockholders. At each such annual meeting, directors to replace those of a class
whose terms expire at such annual meeting shall be elected to hold office until
the third succeeding annual meeting and until their respective successors shall
have been duly elected and qualified. If the number of directors is hereafter
changed, any newly created directorships or decrease in directorships shall be
so apportioned among the classes as to make all classes as nearly equal in
number as is practicable.
ARTICLE VIII
The name and mailing address of the incorporator are as follows:
Herbert P. Fockler
Wilson Sonsini Goodrich and Rosati
650 Page Mill Road
Palo Alto, CA 94304
ARTICLE IX
The Corporation reserves the right to amend, alter, change, or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by the laws of the State of Delaware, and all rights
conferred herein are granted subject to this reservation.
ARTICLE X
A. To the fullest extent permitted by the Delaware General Corporation Law
as the same exists or as may hereafter be amended, no director of the
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director.
B. The Corporation may indemnify to the fullest extent permitted by law any
person made or threatened to be made a party to an action or proceeding, whether
criminal, civil, administrative or investigative, by reason of the fact that he,
his testator or intestate is or was a director, officer or employee of the
Corporation or any predecessor of the Corporation or serves or served at any
other enterprise as a director, officer or employee at the request of the
Corporation or any predecessor to the Corporation.
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C. Neither any amendment nor repeal of this Article X, nor the adoption of
any provision of the Corporation=s Certificate of Incorporation inconsistent
with this Article X, shall eliminate or reduce the effect of this Article X,
with respect of any matter occurring, or any action or proceeding accruing or
arising or that, but for this Article X, would accrue or arise, prior to such
amendment, repeal, or adoption of an inconsistent provision.
ARTICLE XI
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the laws of the State of Delaware)
outside of the State of Delaware at such place or places as may be designated
from time to time by the Board of Directors or in the Bylaws of the Corporation.
IN WITNESS WHEREOF, the undersigned incorporator hereby acknowledges that
the foregoing Certificate of Incorporation is her act and deed and that the
facts stated herein are true.
--------------------------------------
Herbert P. Fockler
Incorporator
Dated: , 2000
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APPENDIX C
BYLAWS
OF
LINEAR TECHNOLOGY CORPORATION
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the corporation shall be. The name of the
registered agent of the corporation at such location is ------- .
1.2 OTHER OFFICES
The board of directors may at any time establish other offices at any place
or places where the corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place, within or outside the
State of Delaware, designated by the board of directors. In the absence of any
such designation, stockholders' meetings shall be held at the principal
executive office of the corporation.
2.2 ANNUAL MEETING
The annual meeting of stockholders shall be held each year on a date and at
a time designated by the board of directors. In the absence of such designation,
the annual meeting of stockholders shall be held the first Wednesday of November
in each year at 3:00 P.M. However, if such day falls on a legal holiday, then
the meeting shall be held at the same time and place on the next succeeding full
business day. At the meeting, directors shall be elected and any other proper
business may be transacted.
2.3 SPECIAL MEETING
A special meeting of the stockholders may be called at any time by the
board of directors, or by the chairman of the board, or by the president.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings with stockholders shall be in writing and shall be
sent or otherwise given in accordance with Section 2.5 of these bylaws not less
than ten (10) nor more than sixty (60) days before the date of the meeting
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to each stockholder entitled to vote at such meeting. The notice shall specify
the place, date, and hour of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called.
To be properly brought before an annual meeting or special meeting,
nominations for the election of director or other business must be (a) specified
in the notice of meeting (or any supplement thereto) given by or at the
direction of the board of directors, (b) otherwise properly brought before the
meeting by or at the direction of the board of directors, or (c) otherwise
properly brought before the meeting by a stockholder. For such nominations or
other business to be considered properly brought before the meeting by a
stockholder such stockholder must have given timely notice and in proper form of
his intent to bring such business before such meeting. To be timely, such
stockholder's notice must be delivered to or mailed and received by the
secretary of the corporation not less than ninety (90) days prior to the
meeting; provided, however, that in the event that less than one-hundred (100)
days notice or prior public disclosure of the date of the meeting is given or
made to stockholders, notice by the stockholder to be timely must be so received
not later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made. To be in proper form, a stockholder's notice to the secretary shall set
forth:
(i) the name and address of the stockholder who intends to make
the nominations or propose the business and, as the case
may be, the name and address of the person or persons to be
nominated or the nature of the business to be proposed;
(ii) a representation that the stockholder is a holder of record
of stock of the corporation entitled to vote at such meeting
and, if applicable, intends to appear in person or by proxy
at the meeting to nominate the person or persons specified
in the notice or introduce the business specified in the
notice;
(iii) if applicable, a description of all arrangements or
understandings between the stockholder and each nominee and
any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be
made by the stockholder;
(iv) such other information regarding each nominee or each matter
of business to be proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant
to the proxy rules of the Securities and Exchange Commission
had the nominee been nominated, or intended to be nominated,
or the matter been proposed, or intended to be proposed by
the board of directors; and
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(v) if applicable, the consent of each nominee to serve as
director of the corporation if so elected.
The chairman of the meeting may refuse to acknowledge the nomination of any
person or the proposal of any business not made in compliance with the foregoing
procedure.
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. An
affidavit of the secretary or an assistant secretary or of the transfer agent of
the corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
2.6 QUORUM
The holders of a majority of the stock issued and outstanding and entitled
to vote thereat, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders for the transaction of business
except as otherwise provided by statute or by the certificate of incorporation.
If, however, such quorum is not present or represented at any meeting of the
stockholders, then the stockholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum is
present or represented. At such adjourned meeting at which a quorum is present
or represented, any business may be transacted that might have been transacted
at the meeting as originally noticed.
2.7 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time or place, unless these bylaws
otherwise require, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business that
might have been transacted at the original meeting. If the adjournment is for
more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
2.8 VOTING
The stockholders entitled to vote at any meeting of stockholders shall be
determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to the provisions of Sections 217 and 218 of the General Corporation Law
of Delaware (relating to voting rights of fiduciaries, pledgors and joint owners
of stock and to voting trusts and other voting agreements).
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Except as may be otherwise provided in the certificate of incorporation,
each stockholder shall be entitled to one vote for each share of capital stock
held by such stockholder.
2.9 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the General
Corporation Law of Delaware or of the certificate of incorporation or these
bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice unless so
required by the certificate of incorporation or these bylaws.
2.10 NO STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
The stockholders of the corporation may not take action by written consent
without a meeting but must take any such actions at a duly called annual or
special meeting.
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS
In order that the corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix, in advance, a record date, which shall
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action.
If the board of directors does not so fix a record date:
(i) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be
at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on
which the meeting is held.
(ii) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on
which the board of directors adopts the resolution relating
thereto.
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A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
2.12 PROXIES
Each stockholder entitled to vote at a meeting of stockholders may
authorize another person or persons to act for him by a written proxy, signed by
the stockholder and filed with the secretary of the corporation, but no such
proxy shall be voted or acted upon after three (3) years from its date, unless
the proxy provides for a longer period. A proxy shall be deemed signed if the
stockholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic or facsimile transmission or otherwise) by the
stockholder or the stockholder's attorney-in-fact. The revocability of a proxy
that states on its face that it is irrevocable shall be governed by the
provisions of Section 212(c) of the General Corporation Law of Delaware.
2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the General Corporation Law of Delaware and
any limitations in the certificate of incorporation or these bylaws relating to
action required to be approved by the stockholders or by the outstanding shares,
the business and affairs of the corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the board of directors.
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3.2 NUMBER OF DIRECTORS
The number of directors shall be five (5), until changed by a bylaw
amending this Section 3.2, duly adopted by the board of directors or by the
stockholders. No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these bylaws, at each annual meeting
of stockholders, directors of the corporation shall be elected to hold office
until the expiration of the term for which they are elected, and until their
successors have been duly elected and qualified; except that if any such
election shall not be so held, such election shall take place at a stockholders'
meeting called and held in accordance with the Delaware General Corporation Law.
The term of office of a director shall begin immediately after election. The
directors of the corporation shall be divided into three classes as nearly equal
in size as is practicable, hereby designated Class I, Class II and Class III.
For the purposes hereof, the initial Class I, Class II and Class III directors
shall be those directors so designated by the incorporator of the corporation.
The term of office of the initial Class I directors shall expire at the next
succeeding annual meeting of stockholders after calendar 2000, the term of
office of the initial Class II directors shall expire at the second succeeding
annual meeting of stockholders and the term of office of the initial Class III
directors shall expire at the third succeeding annual meeting of stockholders.
At each annual meeting after the annual meeting of stockholders scheduled to be
held thereafter, directors to replace those of a class whose terms expire at
such annual meeting shall be elected to hold office until the third succeeding
annual meeting and until their respective successors shall have been duly
elected and qualified. If the number of directors is hereafter changed, any
newly created directorships or decrease in directorships shall be so apportioned
among the classes as to make all classes as nearly equal in number as is
practicable.
Directors need not be stockholders unless so required by the certificate of
incorporation or these bylaws, wherein other qualifications for directors may be
prescribed. Election of directors need not be by written ballot unless a
stockholder demands election by written ballot at the meeting and before voting
begins.
3.4 RESIGNATION AND VACANCIES
Any director may resign at any time upon written notice to the
corporation. When one or more directors so resigns and the resignation is
effective
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at a future date, a majority of the directors then in office, including those
who have so resigned, shall have power to fill such vacancy or vacancies, the
vote thereon to take effect when such resignation or resignations shall become
effective, and each director so chosen shall hold office as provided in this
section in the filling of other vacancies.
Unless otherwise provided in the certificate of incorporation or these
bylaws:
(i) Vacancies and newly created directorships resulting from
any increase in the authorized number of directors elected
by all of the stockholders having the right to vote as a
single class may be filled by a majority of the directors
then in office, although less than a quorum, or by a sole
remaining director.
(ii) Whenever the holders of any class or classes of stock or
series thereof are entitled to elect one or more directors
by the provisions of the certificate of incorporation,
vacancies and newly created directorships of such class or
classes or series may be filled by a majority of the
directors elected by such class or classes or series
thereof then in office, or by a sole remaining director so
elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created directorship,
the directors then in office constitute less than a majority of the whole board
(as constituted immediately prior to any such increase), then the Court of
Chancery may, upon application of any stockholder or stockholders holding at
least ten (10) percent of the total number of the shares at the time outstanding
having the right to vote for such directors, summarily order an election to be
held to fill any such vacancies or newly created directorships, or to replace
the directors chosen by the directors then in office as aforesaid, which
election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
The board of directors of the corporation may hold meetings, both regular
and special, either within or outside the State of Delaware.
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Unless otherwise restricted by the certificate of incorporation or these
bylaws, members of the board of directors, or any committee designated by the
board of directors, may participate in a meeting of the board of directors, or
any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
3.6 FIRST MEETINGS
The first meeting of each newly elected board of directors shall be held at
such time and place, if any, as may be fixed by the vote of the stockholders at
the annual meeting, and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided a
quorum shall be present. In the event of the failure of the stockholders to fix
the time or place of such first meeting of the newly elected board of directors,
or in the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for meetings of the board of
directors, or as shall be specified in a written waiver signed by all of the
directors.
3.7 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice at
such time and at such place as shall from time to time be determined by the
board.
3.8 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes may
be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two (2) directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. If the notice is mailed, it
shall be deposited in the United States mail at least four (4) days before the
time of the holding of the meeting. If the notice is delivered personally, by
facsimile transmission or by telephone or by telegram, it shall be delivered
personally, by facsimile transmission or by telephone or to the telegraph
company at least forty-eight (48) hours before the time of the holding of the
meeting. Any oral notice given personally, by facsimile transmission or by
telephone may be communicated either to the director or to a person at the
office of the director
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who the person giving the notice has reason to believe will promptly communicate
it to the director. The notice need not specify the purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of the
corporation.
3.9 QUORUM
At all meetings of the board of directors, a majority of the authorized
number of directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the certificate of incorp-
oration. If a quorum is not present at any meeting of the board of directors,
then the directors present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum is
present.
3.10 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the General
Corporation Law of Delaware or of the certificate of incorporation or these
bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the directors, or members of a committee of directors, need be specified in
any written waiver of notice unless so required by the certificate of
incorporation or these bylaws.
3.11 ADJOURNED MEETING; NOTICE
If a quorum is not present at any meeting of the board of directors, then
the directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present.
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise restricted by the certificate of incorporation or these
bylaws, any action required or permitted to be taken at any meeting of the board
of directors, or of any committee thereof, may be taken without a meeting if all
members of the board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the board or committee.
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3.13 FEES AND COMPENSATION OF DIRECTORS
Unless otherwise restricted by the certificate of incorporation or these
bylaws, the board of directors shall have the authority to fix the compensation
of directors.
3.14 APPROVAL OF LOANS TO OFFICERS
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or of its
subsidiary, including any officer or employee who is a director of the
corporation or its subsidiary, whenever, in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing contained in this section shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
3.15 REMOVAL OF DIRECTORS
Unless otherwise restricted by statute, by the certificate of incorporation
or by these bylaws, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors; provided, however that so long as
the board of directors of the corporation is divided into classes, no director
may be removed without cause.
No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of such director's term of office.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution passed by a majority of the whole
board, designate one or more committees, with each committee to consist of one
or more of the directors of the corporation. The board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously
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appoint another member of the board of directors to act at the meeting in the
place of any such absent or disqualified member. Any such committee, to the
extent provided in the resolution of the board of directors or in the bylaws of
the corporation, shall have and may exercise all the powers and authority of the
board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers that may require it; but no such committee shall have the power or
authority to (i) amend the certificate of incorporation (except that a committee
may, to the extent authorized in the resolution or resolutions providing for the
issuance of shares of stock adopted by the board of directors as provided in
Section 151(a) of the General Corporation Law of Delaware, fix any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
corporation), (ii) adopt an agreement of merger or consolidation under Sections
251 or 252 of the General Corporation Law of Delaware, (iii) recommend to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, (iv) recommend to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or (v) amend
the bylaws of the corporation; and, unless the board resolution establishing the
committee, the bylaws or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend, to
authorize the issuance of stock, or to adopt a certificate of ownership and
merger pursuant to Section 253 of the General Corporation Law of Delaware.
4.2 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report the
same to the board of directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and taken
in accordance with, the provisions of Article III of these bylaws, Section 3.5
(place of meetings and meetings by telephone), Section 3.7 (regular meetings),
Section 3.8 (special meetings and notice), Section 3.9 (quorum), Section 3.10
(waiver of notice), Section 3.11 (adjournment and notice of adjournment), and
Section 3.12 (action without a meeting), with such changes in the context of
those bylaws as are necessary to substitute the committee and its members for
the board of directors and its members; provided, however, that the time of
regular meetings of committees may also be called by resolution of the board of
directors and that notice of special meetings of committees
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shall also be given to all alternate members, who shall have the right to attend
all meetings of the committee. The board of directors may adopt rules for the
government of any committee not inconsistent with the provisions of these
bylaws.
ARTICLE V
OFFICERS
5.1 OFFICERS
The officers of the corporation shall be a president, one or more vice
presidents, a secretary, and a treasurer. The corporation may also have, at the
discretion of the board of directors, a chairman of the board, one or more
assistant vice presidents, assistant secretaries, assistant treasurers, and any
such other officers as may be appointed in accordance with the provisions of
Section 5.3 of these bylaws. Any number of offices may be held by the same
person.
5.2 ELECTION OF OFFICERS
The officers of the corporation, except such officers as may be appointed
in accordance with the provisions of Sections 5.3 or 5.5 of these bylaws, shall
be chosen by the board of directors, subject to the rights, if any, of an
officer under any contract of employment.
5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or empower the president to appoint,
such other officers and agents as the business of the corporation may require,
each of whom shall hold office for such period, have such authority, and perform
such duties as are provided in these bylaws or as the board of directors may
from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the board of directors at any regular or
special meeting of the board or, except in the case of an officer chosen by the
board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
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5.5 VACANCIES IN OFFICES
Any vacancy occurring in any office of the corporation shall be filled by
the board of directors.
5.6 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these bylaws. If there is no
president, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.7 of these bylaws.
5.7 PRESIDENT
Subject to such supervisory powers, if any, as may be given by the board of
directors to the chairman of the board, if there be such an officer, the
president shall be the chief executive officer of the corporation and shall,
subject to the control of the board of directors, have general supervision,
direction, and control of the business and the officers of the corporation. He
shall preside at all meetings of the stockholders and, in the absence or
nonexistence of a chairman of the board, at all meetings of the board of
directors. He shall have the general powers and duties of management usually
vested in the office of president of a corporation and shall have such other
powers and duties as may be prescribed by the board of directors or these
bylaws.
5.8 VICE PRESIDENT
In the absence or disability of the president, the vice presidents, if any,
in order of their rank as fixed by the board of directors or, if not ranked, a
vice president designated by the board of directors, shall perform all the
duties of the president and when so acting shall have all the powers of, and be
subject to all the restrictions upon, the president. The vice presidents shall
have such other powers and perform such other duties as from time to time may be
prescribed for them respectively by the board of directors, these bylaws, the
president or the chairman of the board.
5.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal executive
office of the corporation or such other place as the board of directors may
direct, a book of minutes of all meetings and actions of directors, committees
of directors, and stockholders. The minutes shall show the time and place of
each meeting, whether regular or special (and, if special, how authorized and
the notice given), the names of those present at directors' meetings or
committee meetings, the number of shares present or represented at stockholders'
meetings, and the proceedings thereof.
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The secretary shall keep, or cause to be kept, at the principal executive
office of the corporation or at the office of the corporation's transfer agent
or registrar, as determined by resolution of the board of directors, a share
register, or a duplicate share register, showing the names of all stockholders
and their addresses, the number and classes of shares held by each, the number
and date of certificates evidencing such shares, and the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings of
the stockholders and of the board of directors required to be given by law or by
these bylaws. He shall keep the seal of the corporation, if one be adopted, in
safe custody and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or by these bylaws.
5.10 TREASURER
The treasurer shall keep and maintain, or cause to be kept and maintained,
adequate and correct books and records of accounts of the properties and
business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, retained earnings,
and shares. The books of account shall at all reasonable times be open to
inspection by any director.
The treasurer shall deposit all money and other valuables in the name and
to the credit of the corporation with such depositaries as may be designated by
the board of directors. He shall disburse the funds of the corporation as may be
ordered by the board of directors, shall render to the president and directors,
whenever they request it, an account of all of his transactions as treasurer and
of the financial condition of the corporation, and shall have such other powers
and perform such other duties as may be prescribed by the board of directors or
these bylaws.
5.11 ASSISTANT SECRETARY
The assistant secretary, or, if there is more than one, the assistant
secretaries in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as the board of
directors or the stockholders may from time to time prescribe.
5.12 ASSISTANT TREASURER
The assistant treasurer, or, if there is more than one, the assistant
treasurers, in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election),
shall, in
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the absence of the treasurer or in the event of his or her inability or refusal
to act, perform the duties and exercise the powers of the treasurer and shall
perform such other duties and have such other powers as the board of directors
or the stockholders may from time to time prescribe.
5.13 AUTHORITY AND DUTIES OF OFFICERS
In addition to the foregoing authority and duties, all officers of the
corporation shall respectively have such authority and perform such duties in
the management of the business of the corporation as may be designated from time
to time by the board of directors or the stockholders.
ARTICLE VI
INDEMNITY
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the maximum extent and in the manner permitted by
the General Corporation Law of Delaware, indemnify each of its directors and
officers against expenses (including attorneys' fees), judgments, fines,
settlements, and other amounts actually and reasonably incurred in connection
with any proceeding, arising by reason of the fact that such person is or was an
agent of the corporation. For purposes of this Section 6.1, a "director" or
"officer" of the corporation includes any person (i) who is or was a director or
officer of the corporation, (ii) who is or was serving at the request of the
corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, or (iii) who was a director or officer of a
corporation which was a predecessor corporation of the corporation or of another
enterprise at the request of such predecessor corporation.
6.2 INDEMNIFICATION OF OTHERS
The corporation shall have the power, to the extent and in the manner
permitted by the General Corporation Law of Delaware, to indemnify each of its
employees and agents (other than directors and officers) against expenses
(including attorneys' fees), judgments, fines, settlements, and other amounts
actually and reasonably incurred in connection with any proceeding, arising by
reason of the fact that such person is or was an agent of the corporation. For
purposes of this Section 6.2, an "employee" or "agent" of the corporation (other
than a director or officer) includes any person (i) who is or was an employee or
agent of the corporation, (ii) who is or was serving at the request of the
corporation as an employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, or (iii) who was an employee or agent of a
corporation which was a predecessor corporation of the corporation or of another
enterprise at the request of such predecessor corporation.
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6.3 INSURANCE
The corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of the General Corporation Law of Delaware.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive office or at such
place or places as designated by the board of directors, keep a record of its
stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent, shall,
upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not
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so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his position as a director. The Court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a director
is entitled to the inspection sought. The Court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.
7.3 ANNUAL STATEMENT TO STOCKHOLDERS
The board of directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the corporation.
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, the president, any vice president, the
treasurer, the secretary or assistant secretary of this corporation, or any
other person authorized by the board of directors or the president or a vice
president, is authorized to vote, represent, and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority granted
herein may be exercised either by such person directly or by any other person
authorized to do so by proxy or power of attorney duly executed by such person
having the authority.
ARTICLE VIII
GENERAL MATTERS
8.1 CHECKS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
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8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
The board of directors, except as otherwise provided in these bylaws, may
authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES
The shares of a corporation shall be represented by certificates, provided
that the board of directors of the corporation may provide by resolution or
resolutions that some or all of any or all classes or series of its stock shall
be uncertificated shares. Any such resolution shall not apply to shares
represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the board of
directors, every holder of stock represented by certificates and upon request
every holder of uncertificated shares shall be entitled to have a certificate
signed by, or in the name of the corporation by the chairman or vice-chairman of
the board of directors, or the president or vice-president, and by the treasurer
or an assistant treasurer, or the secretary or an assistant secretary of such
corporation representing the number of shares registered in certificate form.
Any or all of the signatures on the certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate has ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer, transfer agent or
registrar at the date of issue.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
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8.4 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock or
more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
8.5 LOST CERTIFICATES
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and cancelled at the same time. The corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate or uncertificated shares.
8.6 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a corporation and a natural
person.
8.7 DIVIDENDS
The directors of the corporation, subject to any restrictions contained in
the certificate of incorporation, may declare and pay dividends upon the shares
of its capital stock pursuant to the General Corporation Law of Delaware.
Dividends may be paid in cash, in property, or in shares of the corporation's
capital stock.
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The directors of the corporation may set apart out of any of the funds of
the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not be
limited to equalizing dividends, repairing or maintaining any property of the
corporation, and meeting contingencies.
8.8 FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
board of directors and may be changed by the board of directors.
8.9 SEAL
This corporation may have a corporate seal, which may be adopted or altered
at the pleasure of the board of directors, and may use the same by causing it or
a facsimile thereof, to be impressed or affixed or in any other manner
reproduced.
8.10 TRANSFER OF STOCK
Upon surrender to the corporation or the transfer agent of the corporation
of a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignation or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate, and record the transaction in its books.
8.11 STOCK TRANSFER AGREEMENTS
The corporation shall have power to enter into and perform any agreement
with any number of stockholders of any one or more classes of stock of the
corporation to restrict the transfer of shares of stock of the corporation of
any one or more classes owned by such stockholders in any manner not prohibited
by the General Corporation Law of Delaware.
8.12 REGISTERED STOCKHOLDERS
The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
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ARTICLE IX
AMENDMENTS
The original or other bylaws of the corporation may be adopted, amended or
repealed by the stockholders entitled to vote; provided, however, that the
corporation may, in its certificate of incorporation, confer the power to adopt,
amend or repeal bylaws upon the directors. The fact that such power has been so
conferred upon the directors shall not divest the stockholders of the power, nor
limit their power to adopt, amend or repeal bylaws.
ARTICLE X
DISSOLUTION
If it should be deemed advisable in the judgment of the board of directors
of the corporation that the corporation should be dissolved, the board, after
the adoption of a resolution to that effect by a majority of the whole board at
any meeting called for that purpose, shall cause notice to be mailed to each
stockholder entitled to vote thereon of the adoption of the resolution and of a
meeting of stockholders to take action upon the resolution.
At the meeting a vote shall be taken for and against the proposed
dissolution. If a majority of the outstanding stock of the corporation entitled
to vote thereon votes for the proposed dissolution, then a certificate stating
that the dissolution has been authorized in accordance with the provisions of
Section 275 of the General Corporation Law of Delaware and setting forth the
names and residences of the directors and officers shall be executed,
acknowledged, and filed and shall become effective in accordance with Section
103 of the General Corporation Law of Delaware. Upon such certificate's becoming
effective in accordance with Section 103 of the General Corporation Law of
Delaware, the corporation shall be dissolved.
Whenever all the stockholders entitled to vote on a dissolution consent in
writing, either in person or by duly authorized attorney, to a dissolution, no
meeting of directors or stockholders shall be necessary. The consent shall be
filed and shall become effective in accordance with Section 103 of the General
Corporation Law of Delaware. Upon such consent's becoming effective in
accordance with Section 103 of the General Corporation Law of Delaware, the
corporation shall be dissolved. If the consent is signed by an attorney, then
the original power of attorney or a photocopy thereof shall be attached to and
filed with the consent. The consent filed with the Secretary of State shall have
attached to it the affidavit of the secretary or some other officer of the
corporation stating that the consent has been signed by or on behalf of all the
stockholders entitled to vote on a dissolution; in addition, there shall be
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attached to the consent a certification by the secretary or some other officer
of the corporation setting forth the names and residences of the directors and
officers of the corporation.
ARTICLE XI
CUSTODIAN
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES
The Court of Chancery, upon application of any stockholder, may appoint one
or more persons to be custodians and, if the corporation is insolvent, to be
receivers, of and for the corporation when:
(i) at any meeting held for the election of directors the
stockholders are so divided that they have failed to elect
successors to directors whose terms have expired or would
have expired upon qualification of their successors; or
(ii) the business of the corporation is suffering or is
threatened with irreparable injury because the directors are
so divided respecting the management of the affairs of the
corporation that the required vote for action by the board
of directors cannot be obtained and the stockholders are
unable to terminate this division; or
(iii) the corporation has abandoned its business and has failed
within a reasonable time to take steps to dissolve,
liquidate or distribute its assets.
11.2 DUTIES OF CUSTODIAN
The custodian shall have all the powers and title of a receiver appointed
under Section 291 of the General Corporation Law of Delaware, but the authority
of the custodian shall be to continue the business of the corporation and not to
liquidate its affairs and distribute its assets, except when the Court of
Chancery otherwise orders and except in cases arising under Sections 226(a)(3)
or 352(a)(2) of the General Corporation Law of Delaware.
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CERTIFICATE OF ADOPTION OF BYLAWS
OF
LINEAR TECHNOLOGY CORPORATION
Adoption by Incorporator
The undersigned person appointed in the Certificate of Incorporation to act
as the Incorporator of Linear Technology Corporation hereby adopts the foregoing
bylaws, comprising twenty-one pages, as the bylaws of the corporation.
Executed this ______ day of ______, 2000.
--------------------------------------
Herbert P. Fockler, Incorporator
Certificate by Secretary of Adoption by Incorporator
The undersigned hereby certifies that he is the duly elected, qualified,
and acting Secretary of Linear Technology Corporation and that the foregoing
bylaws, comprising twenty-one (21) pages, were adopted as the Bylaws of the
corporation on the day of --- , 2000, by the person appointed in the
Certificate of Incorporation to act as the Incorporator of the corporation.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and affixed
the corporate seal this day of --- , 2000.
--------------------------------------
Arthur F. Schneiderman, Secretary
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APPENDIX D
1996 SENIOR EXECUTIVE BONUS PLAN
AS AMENDED JULY __, 2000
The Compensation Committee (the "Committee") of the Board of Directors has
approved the Amendment of the 1996 Senior Executive Bonus Plan (the "Plan").
Adoption of the Plan is subject to the approval of a majority of the shares of
the Company's Common Stock which are present in person or by proxy and entitled
to vote at the Annual Meeting. The Plan provides the Company's senior key
executives with the opportunity to earn incentive awards based on the
achievement of goals relating to the performance of the Company.
Background and Reasons for Adoption
The Company has a performance-based bonus plan similar to the Plan,
pursuant to which the Company rewards management for achieving certain
performance objectives. However, under section 162(m) of the Internal Revenue
Code, the federal income tax deductibility of compensation paid to the Company's
Chief Executive Officer and to each of its four other most highly compensated
executive officers may be limited to the extent that such compensation exceeds
$1 million in any one year. Under section 162(m), the Company may deduct
compensation in excess of that amount if it qualifies as "performance-based
compensation," as defined in section 162(m). The Plan is designed to qualify
payments thereunder as performance-based compensation, so that the Company may
continue to receive a federal income tax deduction for the payment of incentive
bonuses to its executives. The Company will continue to operate its current
bonus plan, as well, for the compensation of senior executives and other key
employees for whom section 162(m) is not an issue.
Description of the Plan
The following paragraphs provide a summary of the principal features of the
Plan and its operation.
Purpose of the Plan
The Plan is intended to increase stockholder value and the success of the
Company by aligning senior executive compensation with the Company's business
objectives and performance.
Administration of the Plan
The Plan will be administered by the Committee in accordance with (1) the
express provisions of the Plan and (2) the requirements of section 162(m).
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Eligibility to Receive Awards
Participation in the Plan is determined annually in the discretion of the
Committee. In selecting participants for the Plan, the Committee will choose
officers of the Company who are likely to have a significant impact on Company
performance and be highly compensated. For fiscal 2000, the participants in the
Plan were Messrs. Swanson, Davies, Dobkin, Coghlan and Maier. In fiscal 2001,
the Plan will include the Chief Executive Officer and each of the Company's four
other most highly compensated executive officers.
Target Awards and Performance Goals
For each fiscal year, the Committee will establish: (1) a target award for
each participant, (2) the performance goals which must be achieved in order for
the participant to be paid the target award, and (3) a formula for increasing or
decreasing a participant's actual award depending upon how actual performance
compares to the pre-established performance goals.
Each participant's target award will be expressed as a percentage of his or
her base salary. Base salary under the Plan means the lesser of: (1) 125% of the
participant's annual salary rate on the first day of the fiscal year, or (2) the
participant's annual salary rate on the last day of the fiscal year.
There are several performance measures which the Committee may use in
setting the performance goals for any fiscal year. Specifically, the performance
goals applicable to any participant will provide for a targeted level of
achievement using one or more of the following measures: (1) annual revenue, and
(2) operating income expressed as a percent of sales.
For fiscal 2000, the Committee has established for the Plan participants a
combined performance goal with respect to: (1) operating profit return on sales
(i.e. fiscal 2000 operating profit as a percentage of revenue), and (2) revenue
growth from fiscal 2000 to fiscal 2001. The Committee has also established a
formula, with such measurements as variables, which will determine actual
awards.
Determination of Actual Awards
After the end of each fiscal year, the Committee must certify in writing
the extent to which the performance goals applicable to each participant were
achieved or exceeded. The actual award (if any) for each participant will be
determined by applying the formula to the level of actual performance which has
been certified by the Committee. However, the Committee retains discretion to
eliminate or reduce the actual award payable to any participant below that which
otherwise would be payable under the applicable formula. Also, no participant's
actual award under the Plan may exceed $5 million for any fiscal year.
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The Plan contains a continuous employment requirement. If a participant
terminates employment with the Company prior the end of a fiscal year, he or she
generally will not be entitled to the payment of an award for the fiscal year.
However, if the participant's termination is due to retirement, disability or
death, the Committee will proportionately reduce (or eliminate) his or her
actual award based on the date of termination and such other considerations as
the Committee deems appropriate.
Awards under the Plan generally will be payable in cash after the end of
the fiscal year during which the award was earned.
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EDGAR APPENDIX E
----------------
PROXY
LINEAR TECHNOLOGY CORPORATION
2000 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Linear Technology Corporation, a California
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated September __, 2000 and hereby
appoints Robert H. Swanson, Jr. and Paul Coghlan, or either of them, as
attorneys-in-fact, each with full power, on behalf and in the name of the
undersigned, to represent the undersigned at the 2000 Annual Meeting of
Shareholders of Linear Technology Corporation to be held on November 8, 2000, at
3:00 p.m. local time, at the Company's principal executive offices, located at
720 Sycamore Drive, Milpitas, California 95035, and at any postponement or
adjournment thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth on the reverse side, and, in their discretion, upon such
other matter or matters which may properly come before the meeting and any
adjournment thereof.
This proxy will be voted as directed or, if no contrary direction is indicated,
will be voted FOR the election of the specified nominees as directors, FOR
Proposals 2, 3, 4, 5 and 6, and as said proxies deem advisable on such other
matters as may properly come before the meeting.
<TABLE>
<CAPTION>
<S> <C> <C>
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SEE REVERSE SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE SIDE
------------------------- ----------------------
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THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF THE SPECIFIED NOMINEES AS DIRECTORS, FOR
PROPOSALS 2, 3, 4, 5 AND 6, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THIS MEETING.
FOR WITHHELD
ALL FROM ALL
1. To elect five (5) directors to serve until the next Annual Meeting of [ ] [ ]
Shareholders and until their successors are elected.
Nominees: Robert H. Swanson, Jr.; David S. Lee; Leo T. McCarthy; Richard
M. Moley; Thomas S. Volpe
[ ] For all nominees exactly except as noted -------------------------------
FOR AGAINST ABSTAIN
2. To ratify the appointment of Ernst & Young LLP as independent auditors [ ] [ ] [ ]
of the Company for the fiscal year ending July 1, 2001.
FOR AGAINST ABSTAIN
3. To approve a change in the Company's state of incorporation from [ ] [ ] [ ]
California to Delaware by means of a merger of the Company with and into a
wholly-owned Delaware subsidiary of the Company.
FOR AGAINST ABSTAIN
4. To approve the establishment of a classified Board of Directors of the [ ] [ ] [ ]
Company when the change in state of incorporation, proposed above, occurs.
FOR AGAINST ABSTAIN
5. To approve an increase in the number of authorized shares of Common [ ] [ ] [ ]
Stock of the Company from 480,000,000 to 2,000,000,000 and an increase in
the number of authorized, but undesignated, shares of Preferred Stock of
the Company from 2,000,000 to 5,000,000 when the change in state of
incorporation, proposed above, occurs.
FOR AGAINST ABSTAIN
6. To make certain amendments to the 1996 Senior Executive Bonus Plan. [ ] [ ] [ ]
In their discretion, upon such other matter or matters which may properly come
before the meeting and any postponement or adjournment thereof.
This proxy should be marked, dated, signed by the shareholder(s) exactly as his
or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.
Signature: Date: Signature: Date:
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