<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For
Use of the Commission Only
(as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ATMEL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
ATMEL CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
ATMEL Logo
ATMEL CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 28, 1999
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of ATMEL
CORPORATION, a California corporation (the "Company"), will be held on
Wednesday, April 28, 1999 at 2:00 p.m., local time, at Atmel Corporation, 2325
Orchard Parkway, San Jose, California 95131, for the following purposes:
1. To elect five (5) directors to serve for the ensuing year and until
their successors are elected.
2. To approve an amendment to the Company's 1991 Employee Stock Purchase
Plan to increase the number of shares reserved for issuance thereunder
by 2,500,000 shares.
3. To approve an amendment to the Company's 1996 Stock Plan to increase the
number of shares reserved for issuance thereunder by 5,000,000 shares.
4. 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.
5. To approve the establishment of a classified Board of Directors of the
Company when the change in its state of incorporation, proposed above,
occurs.
6. To approve an increase in the number of authorized shares of Common
Stock of the Company from two hundred forty million (240,000,000) to
five hundred million (500,000,000) when the change in its state of
incorporation, proposed above, occurs.
7. To ratify the appointment of PricewaterhouseCoopers L.L.P. as
independent accountants of the Company for the year ending December 31,
1999.
8. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on March 5, 1999 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
All shareholders are cordially invited to attend the meeting. However, to
assure your representation at the meeting, you are urged to mark, sign, date and
return the enclosed proxy as promptly as possible in the postage-prepaid
envelope enclosed for that purpose. Any shareholder attending the meeting may
vote in person even if such shareholder has returned a proxy.
FOR THE BOARD OF DIRECTORS
Mark A. Bertelsen
Secretary
San Jose, California
March 23, 1999
<PAGE> 3
ATMEL CORPORATION
------------------------
PROXY STATEMENT
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
ATMEL CORPORATION (the "Company") for use at the Annual Meeting of Shareholders
to be held on Wednesday, April 28, 1999, at 2:00 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
Atmel Corporation, 2325 Orchard Parkway, San Jose, California 95131. When
proxies are properly dated, executed, and returned, and not revoked, the shares
they represent will be voted at the meeting in accordance with the instructions
of the shareholder. If no specific instructions are given, the shares will be
voted as recommended by the Board of Directors. If any other matters are
properly presented for consideration at the meeting or any adjournment or
postponement thereof, the proxy holders will have discretion to vote on those
matters. The Company does not currently anticipate that any other matters will
be raised at the meeting.
These proxy solicitation materials and the Annual Report to Shareholders
for the year ended December 31, 1998, including financial statements, were first
mailed on or about March 26, 1999, to all shareholders entitled to vote at the
meeting.
RECORD DATE AND VOTING SECURITIES
Shareholders of record at the close of business on March 5, 1999, are
entitled to notice of and to vote at the meeting. At the record date,
100,119,747 shares of the Company's Common Stock, no par value, were issued and
outstanding, and no shares of the Company's Preferred Stock, no par value, were
outstanding.
REVOCABILITY OF PROXIES
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:
Investor Relations, 2325 Orchard Parkway, San Jose, California 95131) a written
notice of revocation or a duly executed proxy bearing a later date or by
attending the meeting and voting in person.
VOTING AND SOLICITATION
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 (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 provided that
votes cannot be cast for more than five candidates. However, no shareholder
shall be entitled to cumulate votes for any candidate 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 intention to cumulate the shareholder's votes. 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 entire cost of proxy solicitation, including
preparation, assembly, printing and mailing of this proxy statement, the proxy,
and any additional materials furnished to shareholders. Copies of proxy
solicitation material will be furnished to brokerage houses, fiduciaries, and
custodians holding shares in their names which are beneficially owned by others
to forward to such beneficial owners. In addition, the
<PAGE> 4
Company may reimburse such persons for their cost of forwarding the solicitation
material to such beneficial owners. Solicitation of proxies by mail may be
supplemented by one or more of telephone, telegram, facsimile, or personal
solicitation by directors, officers, or regular employees of the Company, who
will receive no additional compensation for such services. The Company may
engage the services of a professional proxy solicitation firm to aid in the
solicitation of proxies from certain brokers, bank nominees and other
institutional owners. The Company's costs for such services, if retained, will
not be material.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
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
shall constitute a quorum for the transaction of business. The Company intends
to include abstentions and broker non-votes as present or represented for
purposes of establishing a quorum for the transaction of business. The Company
will include abstentions in the calculation of shares entitled to vote with
respect to each proposal, but the Company will not count broker non-votes in the
calculation of shares entitled to vote with respect to each proposal.
SHAREHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Shareholder proposals for inclusion in the Company's proxy statement and
form of proxy relating to the Company's 2000 Annual Meeting must be received by
November 24, 1999. If the Company is not notified of a shareholder proposal by
February 10, 2000, then the proxies held by management of the Company may
provide the discretion to vote against such shareholder proposal, even though
such proposal is not discussed in the Proxy Statement. Shareholder proposals
should be addressed to Mike Ross, Vice President, General Counsel and Assistant
Secretary, Atmel Corporation, 2325 Orchard Parkway, San Jose, California, 95131.
2
<PAGE> 5
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
A board of five (5) directors is to be elected at the meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the five (5) nominees named below, all of whom are presently directors of
the Company. In the event that any such nominee is unable or declines to serve
as a director at the time of the Annual Meeting, the proxies will be voted for
any nominee who shall be designated by the present Board of Directors to fill
the vacancy. 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 assure 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. The
Company is not aware of any nominee who will be unable or will decline to serve
as a director. The term of office for each person elected as a director will
continue until the next Annual Meeting of Shareholders or until his successor
has been elected and qualified.
The names of the nominees and certain information about them are set forth
below:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE(1) PRINCIPAL OCCUPATION SINCE
--------------- ------ -------------------- --------
<S> <C> <C> <C>
George Perlegos... 49 President, Chief Executive Officer and Chairman of 1984
the Board of the Company
Gust Perlegos..... 51 Executive Vice President, General Manager of the 1985
Company
Tsung-Ching Wu.... 48 Executive Vice President, Technology of the Company 1985
Norm Hall......... 45 Managing Partner, Alliant Partners 1992
T. Peter Thomas... 52 General Partner, Institutional Venture Partners 1987
</TABLE>
- ---------------
(1) As of March 5, 1999.
George Perlegos has served as President, Chief Executive Officer and
Chairman of the Board of the Company from its inception in 1984. George Perlegos
holds degrees in electrical engineering from San Jose State University (B.S.)
and Stanford University (M.S.). George Perlegos is a brother of Gust Perlegos.
Gust Perlegos has served as Vice President, General Manager and a director
of the Company since January 1985 and as Executive Vice President since January
1996. Gust Perlegos holds degrees in electrical engineering from San Jose State
University (B.S.), Stanford University (M.S.) and Santa Clara University
(Ph.D.). Gust Perlegos is a brother of George Perlegos.
Tsung-Ching Wu has served as a director of the Company since January 1985,
as Vice President, Technology since January 1986 and as Executive Vice President
since January 1996. Mr. Wu holds degrees in electrical engineering from the
National Taiwan University (B.S.), the State University of New York at Stony
Brook (M.S.) and the University of Pennsylvania (Ph.D.).
Norm Hall has served as a director of the Company since August 1992. He is
currently Managing Partner of Alliant Partners, an investment banking firm,
which position he has held since 1990. From 1988 to 1990, he worked for Berkeley
International Capital Corporation, a venture capital firm. Prior to 1988, Mr.
Hall worked at Intel Corporation. Mr. Hall also serves as a director of White
Electronic Designs, Inc.
T. Peter Thomas has served as a director of the Company since December
1987. Mr. Thomas is a general partner of Institutional Venture Management. Mr.
Thomas has held this position since November 1985. Mr. Thomas also serves as a
director of Telcom Semiconductor, Inc.
3
<PAGE> 6
VOTE REQUIRED AND RECOMMENDATION OF THE BOARD OF DIRECTORS
The five (5) nominees receiving the highest number of affirmative votes of
the shares present or represented and entitled to be voted for them shall be
elected as directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE NOMINEES
SET FORTH HEREIN.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of ten (10) meetings
during 1998. Each director attended an average of 87% of the meetings of the
Board of Directors and meetings of the committees, if any, 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 nor
any committee performing similar functions.
The Compensation Committee currently consists of directors Hall and Thomas,
and met once during 1998. This Committee reviews and approves the Company's
executive compensation policies, including the salaries and target bonuses of
the Company's executive officers, and administers the Company's incentive stock
plans.
The Audit Committee currently consists of directors Hall and Thomas, and
met once during 1998. The Audit Committee recommends engagement of the Company's
independent accountants, and is primarily responsible for approving the services
performed by the Company's independent accountants and for reviewing and
evaluating the Company's accounting principles and its system of internal
accounting controls.
DIRECTOR COMPENSATION
Directors do not receive cash compensation for service on the Board of
Directors or any Committee thereof. Mr. Hall and Mr. Thomas each received an
option to purchase 10,000 shares of the Company's Common Stock on September 4,
1998 and October 9, 1998, respectively.
4
<PAGE> 7
SECURITY OWNERSHIP
The following table sets forth certain information known to the Company
with respect to beneficial ownership of the Company's Common Stock as of
December 31, 1998 by (i) each beneficial owner of more than 5% of the Company's
Common Stock, (ii) the Company's Chief Executive Officer and each of the four
other most highly compensated executive officers (collectively, the "Named
Officers"), (iii) each director and (iv) all directors and executive officers as
a group. The information on beneficial ownership in the table and the footnotes
hereto is based upon the Company's records and the most recent Schedule 13D or
13G filed by each such person or entity and information supplied to the Company
by such person or entity. 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.
<TABLE>
<CAPTION>
APPROXIMATE
COMMON STOCK PERCENT BENEFICIALLY
BENEFICIAL OWNER BENEFICIALLY OWNED OWNED
---------------- ------------------ --------------------
<S> <C> <C>
George Perlegos(1)................................. 8,316,025 8.34%
Gust Perlegos(2)................................... 3,732,650 3.74%
Tsung-Ching Wu(3).................................. 2,326,963 2.33%
B. Jeffrey Katz(4)................................. 329,999 *
Mikes Sisois(5).................................... 385,344 *
Norm Hall(6)....................................... 36,792 *
T. Peter Thomas(7)................................. 261,808 *
All directors and executive officers as a group (8
persons)(8)...................................... 15,422,427 15.47%
</TABLE>
- ---------------
* Less than one percent of the outstanding Common Stock.
(1) The address for George Perlegos is 2325 Orchard Parkway, San Jose,
California 95131.
(2) Includes 102,340 issuable under stock options exercisable within 60 days of
December 31, 1998.
(3) Includes 72,824 issuable under stock options exercisable within 60 days of
December 31, 1998.
(4) Includes 140,000 issuable under stock options exercisable within 60 days of
December 31, 1998.
(5) Includes 28,829 issuable under stock options exercisable within 60 days of
December 31, 1998.
(6) Includes 36,792 issuable under stock options exercisable within 60 days of
December 31, 1998.
(7) Includes 7,708 issuable under stock options exercisable within 60 days of
December 31, 1998.
(8) Includes 421,243 issuable under stock options exercisable within 60 days of
December 31, 1998.
5
<PAGE> 8
EXECUTIVE COMPENSATION
The following table sets forth all compensation received for services
rendered to the Company in all capacities, for the three years ended December
31, 1998, by the Named Officers:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
----------------
ANNUAL COMPENSATION NUMBER OF SHARES
-------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
--------------------------- ---- -------- -------- ----------------
<S> <C> <C> <C> <C>
George Perlegos............................... 1998 $311,905 $ 22,952 --
President and Chief Executive Officer 1997 300,630 130,881 --
1996 276,419 195,900 --
Gust Perlegos................................. 1998 $272,155 $ 20,027 --
Executive Vice President, General 1997 262,330 114,209 40,000
Manager 1996 240,825 172,240 --
Tsung-Ching Wu................................ 1998 $243,800 $ 17,940 --
Executive Vice President, Technology 1997 235,000 102,310 40,000
1996 215,826 155,340 --
B. Jeffrey Katz............................... 1998 $192,920 $ 14,196 --
Vice President of Marketing 1997 185,920 80,938 20,000
1996 171,769 119,920 --
Mikes Sisois.................................. 1998 $192,920 $ 14,196 --
Vice President of Planning and 1997 185,920 80,938 20,000
Information Systems 1996 171,769 119,920 --
</TABLE>
OPTION GRANTS
There were no options granted to any Named Officers during the year ended
December 31, 1998.
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to option exercises
in 1998 by the Named Officers and the value of such officers' unexercised
options at December 31, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES FISCAL YEAR-END FISCAL YEAR-END(2)
ACQUIRED ON VALUE --------------------------- -----------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------ ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
George Perlegos...... -- -- -- -- -- --
Gust Perlegos........ -- -- 97,341 55,836 $ 367,021 --
Tsung-Ching Wu....... 22,352 $217,932 67,826 55,822 40,356 --
B. Jeffrey Katz...... -- -- 136,668 23,332 1,298,660 --
Mikes Sisois......... -- -- 27,162 12,500 14,746 --
</TABLE>
- ---------------
(1) Market value of underlying securities on date of exercise, minus the
exercise price.
(2) Market value of unexercised options is based on the last reported sales
price of the Company's Common Stock on the Nasdaq National Market of
$15.3125 per share on December 31, 1998 (the last trading day for fiscal
1998), minus the exercise price.
6
<PAGE> 9
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors generally reviews and
approves the Company's executive compensation policies, including the base
salary levels and target incentives for executive officers of the Company at the
beginning of each year, and approves the performance objectives of the Company's
officers in their areas of responsibility. The Compensation Committee also
administers the Company's stock plans, including its 1996 Stock Plan and the
1991 Employee Stock Purchase Plan. No member of the Compensation Committee is a
former or current officer or employee of the Company or any of its subsidiaries.
Meetings of the Compensation Committee are also attended by George Perlegos, the
Company's President and Chief Executive Officer, who provides background and
market information and make recommendations to the Compensation Committee on
salary levels, officer performance objectives and corporate financial goals.
However, such individuals are not entitled to vote on any actions taken by the
Compensation Committee.
COMPENSATION POLICIES
The Company's policy is that a substantial portion of each officer's annual
compensation should be based upon the Company's financial performance. The
Compensation Committee establishes the salary of each officer primarily by
considering the salaries of officers in similar positions with ten
comparably-sized companies in the semiconductor industry (the "Benchmark
Group"). Such group is subject to change from year to year based on management's
assessment of comparability. In setting base compensation, the Company strives
to achieve compensation levels for each officer within 25% of the average
salaries paid by the Benchmark Group. The Compensation Committee further adjusts
the salaries of the Company's officers based on the Company's financial
performance during the past year and on each officer's performance against the
objectives related to his area of responsibility, which objectives were
established at the beginning of the prior year. The base salary increases for
the Company's executive officers in 1998 set forth in the Summary Compensation
Table reflect the analysis by management and the Compensation Committee of the
salary levels paid by members of Benchmark Group and the Company's performance
in 1998.
Under the Company's executive bonus plan, executive officers may receive a
substantial percentage of their base salary in bonus payments, based on
quarterly financial performance by the Company compared to pre-tax income
targets established by the Board of Directors at the beginning of the year in
connection with the adoption of the Company's operating plan.
The Compensation Committee considers granting stock options to executive
officers based upon a number of factors, including such officer's
responsibilities and relative position in the Company, any changes in such
officer's responsibility and position, and such officer's equity interest in the
Company in the form of stock and options held by such individual, and the extent
to which existing options remain unvested. All options are granted at the
current market price of the Company's Common Stock on the date of grant and
options generally vest over four years.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Compensation Committee uses the same factors and criteria described
above for compensation decisions regarding the Chief Executive Officer. In
particular, in 1998, Mr. Perlegos' compensation was well below the average
compensation of chief executive officers in the Benchmark Group. Mr. Perlegos'
bonus for 1998 was also determined under the Company's executive bonus plan.
<TABLE>
<S> <C>
T. Peter Thomas, Norm Hall,
Member, Compensation Committee Member, Compensation Committee
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of directors Hall and Thomas. During
1998, the Company paid Alliant Partners approximately $115,347, in consideration
for services rendered in advising the Company regarding financing, mergers and
acquisitions. Mr. Hall, a director of the Company and member of the Compensation
Committee, is Managing Partner of Alliant Partners.
7
<PAGE> 10
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's 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 changes in ownership on Form 4 or 5 with the Securities
Exchange Commission (the "SEC"). Such officers, directors and 10% shareholders
are also required by the Securities and Exchange Commission rules to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on its review of copies of such forms received by it, or
written representations from certain reporting persons that no filings were
required for such persons, the Company believes that, during the year ended
December 31, 1998, all Section 16(a) filing requirements applicable to its
executive officers and directors were complied with.
8
<PAGE> 11
PROPOSAL TWO
AMENDMENT TO 1991 EMPLOYEE STOCK PURCHASE PLAN
The Company's 1991 Employee Stock Purchase Plan (the "Purchase Plan") was
adopted by the Board of Directors and approved by the shareholders in March
1991. Prior to the adoption of the amendment discussed below, a total of
3,000,000 shares of Common Stock had been reserved for the issuance under the
Purchase Plan. In September 1998, the Board of Directors amended the Purchase
Plan to increase the shares reserved for issuance from 3,000,000 shares to
5,500,000 shares. In order for the Purchase Plan to continue to qualify under
Section 423 of the Internal Revenue Code (the "Code") as an "employee stock
purchase plan," and in order for participants under the Purchase Plan to
continue to receive the favorable tax treatment afforded by Section 423 of the
Code, the proposed share increase must be approved by the shareholders.
Accordingly for these purposes, the shareholders are being asked to approve this
share increase at the Annual Meeting. The Board believes that increasing the
number of shares available under the Purchase Plan will enable the Company to
continue its policy of encouraging employee equity participation in the Company
by enabling employees to purchase the Company's Common Stock at a discount from
the market price through voluntary payroll deductions. The Board believes the
continued opportunity for employee equity participation will promote the
attraction, retention and motivation of employees.
PURCHASE PLAN ACTIVITY
To date (without taking into account the proposed amendment to the Purchase
Plan), the Company has issued and sold an aggregate of 2,924,734 shares of
Common Stock pursuant to the Purchase Plan and 75,266 shares of Common Stock
remain available for further issuance under the Purchase Plan. Participation in
the Purchase Plan is voluntary and is dependent on each eligible employee's
election to participate and his or her determination as to the level of payroll
deductions. Accordingly, future purchases under the Purchase Plan are not
determinable. The following table sets forth certain information regarding
shares purchased under the Purchase Plan during the year ended December 31, 1998
by each of the Named Officers, all current executive officers as a group and all
non-executive officer employees as a group:
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL DOLLAR NUMBER OF SHARES
OR IDENTITY OF GROUP VALUE(1) PURCHASED
-------------------- ---------- ----------------
<S> <C> <C>
George Perlegos............................................. -- --
Gust Perlegos............................................... -- --
Tsung-Ching Wu.............................................. $ 11,839 699
B. Jeffrey Katz............................................. 11,849 700
Mikes Sisois................................................ -- --
All executive officers as a group (6 persons)............... 23,688 1,399
All other employees as a group.............................. 7,742,441 621,755
</TABLE>
- ---------------
(1) Represents the market value of the shares on the date of purchase. The
purchase price paid by each participant in the Purchase Plan is 15% below
the market value.
The essential provisions of the Purchase Plan are outlined below.
PURPOSE
The purpose of the Purchase Plan is to provide a convenient and practical
means for employees of the Company and its subsidiaries to purchase the
Company's Common Stock and a method by which the Company may assist and
encourage its employees to become shareholders. The Purchase Plan is intended to
qualify under Sections 421 and 423 of the Code.
ADMINISTRATION
The Purchase Plan is administered by the Board of Directors of the Company
or a committee of members of the Board appointed by the Board. The Purchase Plan
is currently being administered by the Board of
9
<PAGE> 12
Directors. All questions of interpretation or application of the Purchase Plan
are determined by the Board of directors or its appointed committee and its
decisions are final, conclusive and binding upon all participants.
ELIGIBILITY AND PARTICIPATION
Any person who during the applicable offering period is regularly employed
at least 20 hours per week and more than five months per calendar year by the
Company or a subsidiary of the Company designated by the Board who has been so
employed for at least three consecutive months is eligible to participate in the
Purchase Plan. No person who owns or holds options or rights to acquire or as a
result of participation in the Purchase Plan would own or hold options or rights
to acquire 5% or more of the Company's Common Stock may participate in the
Purchase Plan. As of December 31, 1998, approximately 3,000 employees were
eligible to participate in the Purchase Plan; approximately 1,497 employees are
participating in the offering period ending February 4, 1999.
OFFERING DATES
Each successive offering period is six months in length. The current
offering periods under the Purchase Plan commence on the first trading day on or
after February 15 and August 15 of each year.
GRANT AND EXERCISE OF OPTION
At the beginning of each offering period, the Company grants to each
eligible employee an option to purchase Common Stock with payroll deductions
accumulated during such six-month purchase period. No participant may purchase
in any given offering period more than 200% of the number of shares determined
by dividing $12,500 by the fair market value of a share of the Company's Common
Stock at the beginning of the offering period. Participants may not purchase
shares having a fair market value exceeding $25,000 in any calendar year. The
Company may make a pro rata deduction in the number of shares subject to options
if the total number of shares which would otherwise be subject to options
granted at the beginning of an offering period exceeds the number of shares
remaining available for issuance under the Purchase Plan. Unless an employee
withdraws his or her participation in the Purchase Plan by giving written notice
to the Company of this or her election to withdraw all accumulated payroll
deductions prior to the end of an offering period, the employee's option for the
purchase of shares will be exercised automatically at the end of the offering
period and the maximum number of full shares subject to option which are
purchasable with the accumulated payroll deductions in his or her account will
be purchased at the applicable purchase price determined as provided below. Any
payroll deductions accumulated in the employee's account which are insufficient
to purchase a full share shall be retained in such employee's account for the
subsequent offering period. An employee's withdrawal from the Purchase Plan
prior to the end of a given offering period does not affect his or her
eligibility to participate in succeeding offering periods.
PURCHASE PRICE
The purchase price per share at which shares are sold to participating
employees is 85% of the lower of the fair market value per share of the Common
Stock on (i) the first day of the offering period or (ii) the last day of the
offering period. The fair market value of the Common Stock on a given date is
determined by reference to the last reported sales price (or last reported bid
if no sales were reported) on the Nasdaq National Market.
PAYROLL DEDUCTIONS
The aggregate purchase price of the shares acquired is accumulated by
payroll deduction over the six month offering period. The deductions may not
exceed 10% nor be less than 2% of a participant's aggregate compensation (as
such term is defined pursuant to the Purchase Plan). A participant may decrease
(but not increase) the rate of payroll deductions during the offering period. A
participant may discontinued his or her participation in the Purchase Plan at
any time. Upon the withdrawal of a participant from the Purchase Plan, the
Company returns to the participant all funds credited to a participant's payroll
deduction account. An
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employee's participation in the Purchase Plan, including the rate of payroll
deductions, remains in effect for successive offering periods unless the
employee withdraws or amends such participation or such participant's employment
is terminated. Payroll deductions under the Purchase Plan do not accrue
interest, are not segregated and may be used by the Company for any corporate
purpose.
TERMINATION OF EMPLOYMENT
Termination of a participant's employment for any reason, including
retirement or death, or the failure of the participant to remain in the
continuous employ of the Company for at least 20 hours per week during the
applicable offering period, automatically cancels his or her option and his or
her participation in the Purchase Plan. In such event, the payroll deductions
credited to the participant's account will be returned to him or her or, in the
case of death, to the person or persons entitled thereto as provided in the
Purchase Plan.
CAPITAL CHANGES
In the event any change is made in he Company's capitalization during an
offering period, such as a stock split, reverse stock split or stock dividend,
which results in an increase or decrease in the number of share of Common Stock
outstanding without receipt of consideration by he Company, appropriate
adjustment shall be made in the purchase price and in the number of shares
subject to options under the Purchase Plan.
In the event of the liquidation or dissolution of the Company, the offering
period then in progress would terminate automatically unless otherwise provided
by the Board of Directors. In the event of the merger of the Company with
another corporation, the Purchase Plan provides that each outstanding option
shall be assumed or an equivalent option shall be substituted by the successor
corporation, unless the Board determines to shorten the offering period then in
progress in which case outstanding options would be exercised automatically on
the new exercise date established by the Board.
AMENDMENT AND TERMINATION OF THE PLAN
The Board of Directors may amend the Purchase Plan at any time from time to
time or may terminate it without approval of the shareholders. However, no such
action by the Board of Directors may alter or impair any option previously
granted under the Purchase Plan without the consent of the optionee. In any
event, the Option Plan will terminate in 2011.
The Purchase Plan provides that shareholder approval of any amendment to
the Purchase Plan will be required only to the extent necessary to comply with
then current provisions of Rule 16b-3 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") or Section 423 of the Code (or any other
applicable law or regulation).
FEDERAL INCOME TAX INFORMATION
The Purchase Plan, and the right of participants to make purchases
thereunder, is intended to qualify under the provisions of Sections 421 and 423
of the Code. Under these provisions, no income will be taxable to a participant
at the time of grant of the option or purchase of the shares. Upon disposition
of the shares, the participant will generally be subject to tax. If the shares
have been held by the participant for more than two years after the date of
option grant and more than one year after the purchase date of the shares, the
lesser of (a) the excess of the fair market value of the shares at the time of
such disposition over the option price, or (b) 15% of the fair market value of
the shares on the first day of the offering period will be taxable as ordinary
income, and any further gain will be treated as long-term capital gain. If the
shares are disposed of before the expiration of the holding periods described
above, the excess of the fair market value of the shares on the exercise date
over the option price will be treated as ordinary income, and further gain or
loss on such disposition will be capital gain or loss. Different rules may apply
with respect to Purchase Plan participants subject to Section 16(b) of the
Exchange Act. The Company is not entitled to a deduction for amounts taxable to
a participant except to the extent of ordinary income taxable to a participant
under disposition of shares prior to the expiration of the holding periods
described above.
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THE FOREGOING IS ONLY A SUMMARY OF THE FEDERAL INCOME TAX CONSEQUENCES OF
THE PURCHASE PLAN TO PARTICIPANTS AND THE COMPANY AND DOES NOT PURPORT TO BE
COMPLETE. REFERENCE SHOULD BE MADE TO APPLICABLE PROVISION OF THE CODE. IN
ADDITION, THE SUMMARY DOES NOT DISCUSS THE TAX CONSEQUENCES OF A PARTICIPANT'S
DEATH OR THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN
WHICH THE PARTICIPANT MAY RESIDE.
VOTE REQUIRED AND RECOMMENDATION OF THE BOARD OF DIRECTORS
The affirmative vote of a majority of the shares of the Company's Common
Stock present or represented and voting at the Annual Meeting will be required
to approve the amendment to the Purchase Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE AMENDMENT TO
THE 1991 EMPLOYEE STOCK PURCHASE PLAN.
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PROPOSAL THREE
AMENDMENT TO 1996 STOCK PLAN
The Company's 1996 Stock Plan (the "Stock Plan") was adopted by the Board
of Directors and approved by the shareholders in April 1996. Prior to the
adoption of the amendment discussed below, a total of 4,000,000 shares of Common
Stock had been reserved for issuance under the Stock Plan. As of December 31,
1996, there were 2,905,410 options to purchase shares of Common Stock
outstanding under the Stock Plan and 1,068,087 shares of Common Stock remain
available for further issuance thereunder. In March 1999, the Board of Directors
amended the Stock Plan to increase the shares reserved for issuance from
4,000,000 shares to 9,000,000 shares. The Board believes that increasing the
number of shares available under the Stock Plan is in the best interests of the
Company and its shareholders, as the availability of an adequate number of
shares for issuance under the Stock Plan and the ability to grant stock options
is an important factor in attracting, motivating and retaining qualified
personnel essential to the success of the Company.
The essential provisions of the Stock Plan are outlined below.
PURPOSE
The purpose of the Stock Plan is to attract and retain the best available
personnel for positions of substantial responsibility with the Company, to
provide additional incentive to the employees and consultants of the Company and
to promote the success of the Company's business. Options and stock purchase
rights may be granted under the Stock Plan. Options granted under the Stock Plan
may be either "incentive stock options," as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or nonstatutory stock
options.
ADMINISTRATION
The Stock Plan generally may be administered by the Board or the Committee
appointed by the Board. However, with respect to grants of options to employees
who are also officers or directors of the Company ("Insiders"), the Stock Plan
shall be administered by: (i) the Board if the Board may administer the Stock
Plan in a manner complying with Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or any successor rule
thereto ("Rule 16b-3") with respect to a plan under which discretionary grants
and awards of equity securities are to be made to Insiders; or (ii) a committee
designated by the Board to administer the Stock Plan, which committee shall be
constituted to comply with the rules under Rule 16b-3 governing a plan under
which discretionary grants and awards of equity securities are to be made to
Insiders. The administrators of the Stock Plan are referred to herein as the
"Administrator."
PLAN ACTIVITY
The Company cannot now determine the number of options to be received in
the future by the Named Officers, all current executive officers as a group, all
non-employee directors as a group or all employees (including current officers
who are not executive officers) as a group. In 1998, no options were granted to
any Named Officer, options to purchase 20,000 shares of Common Stock were
granted to non-employee directors and options to purchase 1,066,500 shares of
Common Stock were granted to all employees including current officers who are
not Named Officers.
ELIGIBILITY; LIMITATIONS
Nonstatutory stock options and stock purchase rights may be granted under
the Stock Plan to employees and consultants of the Company and any parent or
subsidiary of the Company. Incentive stock options may be granted only to
employees. The Administrator, in its discretion, selects the employees and
consultants to whom options and stock purchase rights may be granted, the time
or times at which such options and stock purchase rights shall be granted, and
the number of shares subject to each such grant.
Section 162(m) of the Code places limits on the deductibility for federal
income tax purposes of compensation paid to certain executive officers of the
Company. In order to preserve the Company's ability to
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deduct the compensation income associated with options and stock purchase rights
granted to such persons, the Stock Plan provides that no employee may be
granted, in any fiscal year of the Company, options and stock purchase rights to
purchase more than 100,000 shares of Common Stock. Notwithstanding this limit,
however, in connection with an employee's initial employment, he or she may be
granted options or stock purchase rights to purchase up to an additional 250,000
shares of Common Stock.
TERMS AND CONDITIONS OF OPTIONS
Each option is evidenced by a stock option agreement between the Company
and the optionee, and is subject to the following additional terms and
conditions:
Exercise Price. The Administrator determines the exercise price of options
at the time the options are granted. The exercise price of an incentive stock
option may not be less than 100% of the fair market value of the Common Stock on
the date such option is granted; provided, however, the exercise price of an
incentive stock option granted to a 10% shareholder may not be less than 110% of
the fair market value of the Common Stock on the date such option is granted.
The fair market value of the Common Stock is generally determined with reference
to the closing sale price for the Common Stock (or the closing bid if no sales
were reported) on the last market trading day prior to the date the option is
granted.
Exercise of Option; Form of Consideration. The Administrator determines
when options become exercisable, and may in its discretion, accelerate the
vesting of any outstanding option. Stock options granted under the Stock Plan
generally vest and become exerciseable over four years. The means of payment for
shares issued upon exercise of an option is specified in each option agreement.
The Stock Plan permits payment to be made by cash, check, promissory note, other
shares of Common Stock of the Company (with some restrictions), cashless
exercises, a reduction in the amount of any Company liability to the optionee,
any other form of consideration permitted by applicable law, or any combination
thereof.
Term of Option. The term of an incentive stock option may be no more than
ten (10) years from the date of grant; provided that in the case of an incentive
stock option granted to a 10% shareholder, the term of the option may be no more
than five (5) years from the date of grant. No option may be exercised after the
expiration of its term.
Termination of Employment. If an optionee's employment or consulting
relationship terminates for any reason (other than death or disability), then
all options held by the optionee under the Stock Plan expire on the earlier of
(i) the date set forth in his or her notice of grant or (ii) the expiration date
of such option. To the extent the option is exercisable at the time of such
termination, the optionee may exercise all or part of his or her option at any
time before such expiration.
Death or Disability. If an optionee's employment or consulting relationship
terminates as a result of death or disability, then all options held by such
optionee under the Stock Plan expire on the earlier of (i) 12 months from the
date of such termination or (ii) the expiration date of such option. The
optionee (or the optionee's estate or the person who acquires the right to
exercise the option by bequest or inheritance), may exercise all or part of the
option at any time before such expiration to the extent that the option was
exercisable at the time of such termination.
Nontransferability of Options. Options granted under the Stock Plan are not
transferable other than by will or the laws of descent and distribution, and may
be exercisable during the optionee's lifetime only by the optionee.
Other Provisions. The stock option agreement may contain other terms,
provisions and conditions not inconsistent with the Stock Plan as may be
determined by the Administrator.
STOCK PURCHASE RIGHTS
A stock purchase right gives the purchaser the right to buy shares of
Common Stock from the Company, provided that the time within which a purchaser
must accept such right may be limited by the Administrator. A stock purchase
right is accepted by the execution of a restricted stock purchase agreement
between the
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Company and the purchaser, accompanied by the payment of the purchase price for
the shares. Unless the Administrator determines otherwise, the restricted stock
purchase agreement shall give the Company a repurchase option exercisable upon
the voluntary or involuntary termination of the purchaser's employment or
consulting relationship with the Company for any reason (including death and
disability). The purchase price for any shares repurchased by the Company shall
be the original price paid by the purchaser. The repurchase option lapses at a
rate determined by the Administrator. A stock purchase right is nontransferable
other than by will or the laws of descent and distribution, and may be
exercisable during the optionee's lifetime only by the optionee.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event that the stock of the Company changes by reason of any stock
split, reverse stock split, stock dividend, combination, reclassification or
other similar change in the capital structure of the Company effected without
the receipt of consideration, appropriate adjustments shall be made in the
number and class of shares of stock subject to the Stock Plan, the number and
class of shares of stock subject to any option or stock purchase right
outstanding under the Stock Plan, and the exercise price of any such outstanding
option or stock purchase right.
In the event of a liquidation or dissolution, any unexercised options or
stock purchase rights will terminate. The Administrator may, in its discretion,
provide that each optionee shall have the right to exercise all of the
optionee's options, including those not otherwise exercisable, until the date
ten (10) days prior to the consummation of the liquidation or dissolution. The
Administrator may, in its discovery, provide that any repurchase option
applicable to any shares purchased upon the exercise of an option or Stock
Purchase rights shall lapse as to all such shares.
In connection with any merger, consolidation, acquisition of assets or like
occurrence involving the Company, each outstanding option or stock purchase
right shall be assumed or an equivalent option or right substituted by the
successor corporation. If the successor corporation refuses to assume the
options and stock purchase rights or to substitute substantially equivalent
options and stock purchase rights, the optionee shall have the right to exercise
the option or stock purchase right as to all the optioned stock, including
shares not otherwise exercisable. In such event, the Administrator shall notify
the optionee that the option or stock purchase right is fully exercisable for
fifteen (15) days from the date of such notice and that the option or stock
purchase right terminates upon expiration of such period.
AMENDMENT AND TERMINATION OF THE STOCK PLAN
The Board may amend, alter, suspend or terminate the Stock Plan, or any
part thereof, at any time and for any reason. However, the Company shall obtain
shareholder approval of any Stock Plan amendment to the extent necessary and
desirable to comply with applicable laws. No such action by the Board or
shareholders may alter or impair any option or stock purchase right previously
granted under the Stock Plan without the written consent of the optionee. Unless
terminated earlier, the Stock Plan shall terminate ten years from the date of
its approval by the shareholders or the Board of the Company, whichever is
earlier.
FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options. An optionee who is granted an incentive stock
option does not recognize taxable income at the time the option is granted or
upon its exercise, although the exercise may subject the optionee to the
alternative minimum tax. Upon a disposition of the shares more than two years
after grant of the option and one year after exercise of the option, any gain or
loss is treated as long-term capital gain or loss. If these holding periods are
not satisfied, the optionee recognizes ordinary income at the time of
disposition equal to the difference between the exercise price and the lower of
(i) the fair market value of the shares at the date of the option exercise or
(ii) the sale price of the shares. Any gain or loss recognized on such a
premature disposition of the shares in excess of the amount treated as ordinary
income is treated as long-term or short-term capital gain or loss, depending on
the holding period. A different rule for measuring ordinary income upon such a
premature disposition may apply if the optionee is also an officer, director, or
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10% shareholder of the Company. The Company is entitled to a deduction in the
same amount as the ordinary income recognized by the optionee.
Nonstatutory Stock Options. An optionee does not recognize any taxable
income at the time he or she is granted a nonstatutory stock option. Upon
exercise, the optionee recognizes taxable income generally measured by the
excess of the then fair market value of the shares over the exercise price. Any
taxable income recognized in connection with an option exercise by an employee
of the Company is subject to tax withholding by the Company. The Company is
entitled to a deduction in the same amount as the ordinary income recognized by
the optionee. Upon a disposition of such shares by the optionee, any difference
between the sale price and the optionee's exercise price, to the extent not
recognized as taxable income as provided above, is treated as long-term or
short-term capital gain or loss, depending on the holding period.
Stock Purchase Rights. Stock purchase rights will generally be taxed in the
same manner as nonstatutory stock options. However, restricted stock is
generally purchased upon the exercise of a stock purchase right. At the time of
purchase, restricted stock is subject to a "substantial risk of forfeiture"
within the meaning of Section 83 of the Code. As a result, the purchaser will
not recognize ordinary income at the time of purchase. Instead, the purchaser
will recognize ordinary income on the dates when a stock ceases to be subject to
a substantial risk of forfeiture. The stock will generally cease to be subject
to a substantial risk of forfeiture when it is no longer subject to the
Company's right to repurchase the stock upon the purchaser's termination of
employment with the Company. At such times, the purchaser will recognize
ordinary income measured as the difference between the purchase price and the
fair market value of the stock on the date the stock is no longer subject to a
substantial risk of forfeiture.
The purchaser may accelerate to the date of purchase his or her recognition
of ordinary income, if any, and the beginning of any capital gain holding period
by timely filing an election pursuant to Section 83(b) of the Code. In such
event, the ordinary income recognized, if any, is measured as the difference
between the purchase price and the fair market value of the stock on the date of
purchase, and the capital gain holding period commences on such date. The
ordinary income recognized by a purchaser who is an employee will be subject to
tax withholding by the Company. Different rules may apply if the purchaser is
also an officer, director, or 10% shareholder of the Company.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION
UPON OPTIONEES, HOLDERS OF STOCK PURCHASE RIGHTS, AND THE COMPANY WITH RESPECT
TO THE GRANT AND EXERCISE OF OPTIONS AND STOCK PURCHASE RIGHTS UNDER THE STOCK
PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS THE TAX
CONSEQUENCES OF THE EMPLOYEE'S OR CONSULTANT'S DEATH OR THE PROVISIONS OF THE
INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE
EMPLOYEE OR CONSULTANT MAY RESIDE.
VOTE REQUIRED AND RECOMMENDATION OF THE BOARD OF DIRECTORS
The affirmative vote of a majority of the shares of the Company's Common
Stock present or represented and voting at the Annual Meeting will be required
to approve the amendment to the Stock Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE AMENDMENT OF
THE 1996 STOCK PLAN.
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PROPOSAL FOUR
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 "Reincorporation
Proposal" or 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 REINCORPORATION
PROPOSAL. Throughout this Proxy Statement, the term "Atmel California" or the
"Company" refers to Atmel Corporation, the existing California corporation, and
the term "Atmel Delaware" refers to the new Delaware corporation, a wholly owned
subsidiary of Atmel California, which is the proposed successor to Atmel
California in the Proposed Reincorporation.
As discussed below, the principal reasons for the Proposed Reincorporation
are 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 Reincorporation Proposal 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.
The Reincorporation Proposal will be effected by merging Atmel California
into Atmel Delaware (the "Merger"). Upon completion of the Merger, Atmel
California as a corporate entity, will cease to exist and Atmel Delaware will
continue to operate the business of the Company under its current name, Atmel
Corporation.
Pursuant to the Agreement and Plan of Merger, in substantially the form
attached hereto as Appendix A (the "Merger Agreement"), each outstanding share
of Atmel California Common Stock, no par value per share, will be automatically
converted into one share of Atmel 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 Atmel California Common Stock will
continue to represent the same number of shares of Common Stock of Atmel
Delaware. IT WILL NOT BE NECESSARY FOR SHAREHOLDERS TO EXCHANGE THEIR EXISTING
STOCK CERTIFICATES FOR STOCK CERTIFICATES OF ATMEL DELAWARE. However,
shareholders may exchange their certificates if they so choose. The Common Stock
of Atmel California is listed for trading on the Nasdaq National Market and,
after the Merger, Atmel Delaware's Common Stock will continue to be traded on
the Nasdaq National Market without interruption, under the same symbol ("ATML")
as the shares of Atmel California Common Stock are currently traded.
Under California law, the affirmative vote of a majority of the outstanding
shares of Common Stock of Atmel California is required for approval of the
Merger Agreement and the other terms of the Proposed Reincorporation. See "Vote
Required for the Reincorporation Proposal." The Proposed Reincorporation has
been unanimously approved by the Company's Board of Directors. If approved by
the shareholders, it is anticipated that the Merger will become effective as
soon as practicable (the "Effective Date") following the Annual Meeting of
Shareholders. However, pursuant to the Merger Agreement, the Merger 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 Atmel California will
have no appraisal rights with respect to the Merger.
The discussion set forth below is qualified in its entirety by reference to
the Merger Agreement, the Certificate of Incorporation of Atmel Delaware and the
Bylaws of Atmel Delaware, copies of which are attached hereto as Appendices A, B
and C, respectively.
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APPROVAL BY SHAREHOLDERS OF THE PROPOSED REINCORPORATION WILL CONSTITUTE
APPROVAL OF THE MERGER AGREEMENT, THE CERTIFICATE OF INCORPORATION, THE BYLAWS,
AND THE RESTATED INDEMNIFICATION AGREEMENTS OF ATMEL DELAWARE AND ALL PROVISIONS
THEREOF EXCEPT WITH RESPECT TO MORE MATTERS SET FORTH IN PROPOSALS FIVE AND SIX
TO BE SEPARATELY VOTED UPON BY THE SHAREHOLDERS.
VOTE REQUIRED AND RECOMMENDATION OF THE BOARD OF DIRECTORS
The Reincorporation Proposal will also constitute approval of (i) the
Merger Agreement, the Certificate of Incorporation and the Bylaws of Atmel
Delaware (except those provisions regarding the adoption of a classified Board
of Directors and the increase in the number of authorized shares which have been
submitted for separate shareholder approval in Proposals Five and Six,
respectively), (ii) the assumption of Atmel California's employee benefit plans
and stock option and employee stock purchase plans by Atmel Delaware and (iii)
restatements of the Company's indemnification agreements with its officers and
directors to afford such persons indemnification by the Company to the full
extent permitted by Delaware law, will require the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock of Atmel
California entitled to vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" 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 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.
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 limits 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 severely limited the
ability of California companies to indemnify their
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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.
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 as to the conduct of the
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.
NO CHANGE IN THE NAME, BOARD MEMBERS, BUSINESS, MANAGEMENT, EMPLOYEE BENEFIT
PLANS OR LOCATION OF PRINCIPAL FACILITIES OF THE COMPANY
The Reincorporation Proposal 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 (5)
directors who will be elected at the Annual Meeting of Shareholders will become
the directors of Atmel Delaware. All employee benefit, stock option and employee
stock purchase plans of Atmel California will be assumed and continued by Atmel
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 Atmel 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 Reincorporation Proposal will also constitute approval of the
assumption of these plans by Atmel Delaware. Other employee benefit arrangements
of Atmel California will also be continued by Atmel Delaware upon the terms and
subject to the conditions currently in effect. As noted above, after the Merger
the shares of Common Stock of Atmel Delaware will continue to be traded, without
interruption, in the same principal market (the Nasdaq Stock Market) and under
the same symbol ("ATML") as the shares of Common Stock of Atmel 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 Atmel
California's rights and obligations under such material contractual arrangements
will continue and be assumed by Atmel Delaware.
ANTITAKEOVER 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 Reincorporation Proposal 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 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 adoption of a shareholder rights plan, the
establishment of a staggered board of directors, and the authorization of
preferred stock, the rights and preferences of which may be determined by the
Board of Directors. Other than the establishment of a staggered board, each of
these measures has been implemented by Atmel California under California law and
will be assumed or a corresponding arrangement has been provided for by Atmel
Delaware under Delaware law. 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 Atmel California and Atmel Delaware" and "Significant
Differences Between the Corporation Laws of California and
Delaware -- Indemnification and Limitation of Liability" below.
Certain effects of the Reincorporation Proposal may be considered to have
antitakeover implications. Section 203 of the Delaware General Corporation Law
restricts certain "business combinations" with
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"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 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; (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; and (iv) certain of the Company's contractual arrangements
provide that they may not be assigned pursuant to a transaction which results in
a "change of control" of the Company without the prior written consent of the
licensor or other contracting party.
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 Reincorporation Proposal, 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 basis in such shares. As a result of such effects of the
Reincorporation Proposal, 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.
THE CHARTERS AND BYLAWS OF ATMEL CALIFORNIA AND ATMEL DELAWARE
The provisions of the Atmel Delaware Certificate of Incorporation and
Bylaws are similar to those of the Atmel California Articles of Incorporation
and Bylaws in many respects. However, the Reincorporation Proposal includes the
implementation of certain provisions in the Atmel Delaware Certificate of
Incorporation and Bylaws which alter the rights of shareholders and the powers
of management. These provisions have antitakeover implications as described in
this Proxy Statement. Approval by shareholders of the Proposed Reincorporation
will constitute an approval of the inclusion in the Atmel Delaware Certificate
of Incorporation and Bylaws of each of the provisions described below. 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 Atmel Delaware is qualified by reference to
Appendices B and C hereto, respectively.
The Articles of Incorporation of Atmel California currently authorize the
Company to issue up to 240,000,000 shares of Common Stock, and 5,000,000 shares
of Preferred Stock. The Certificate of Incorporation of Atmel Delaware provides
that it will have 500,000,000 authorized shares of Common Stock, par value
$0.001 per share, and 5,000,000 shares of Preferred Stock, par value $0.001 per
share. Like Atmel California's Articles of Incorporation, Atmel 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. In
this connection Atmel California has a Shareholder Rights Plan pursuant to which
each share of Common Stock of Atmel California also represents a right to
purchase 1/1000th of a share of Series A Preferred Stock of Atmel California,
240,000 shares of which have been designated and authorized for issuance. Atmel
Delaware will assume the Shareholder Rights Plan and thus will also have 500,000
shares of Series A Preferred Stock authorized for issuance pursuant to the
exercise of such rights. See "Significant Differences Between the Corporation
Laws of California and
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Delaware -- Shareholder Rights Plan" for more information regarding the
Shareholder Rights Plan. Although it has no present intention of doing so, the
Board of Directors, without stockholder approval, could authorize the issuance
of additional Preferred Stock in the future upon terms which could have the
effect of delaying or preventing a change in control of the Company or modifying
the rights of holders of the Company's Common Stock under either California or
Delaware law. The Board of Directors could also utilize such shares for further
financings, possible acquisitions and other uses.
Monetary Liability of Directors. The Articles of Incorporation of Atmel
California and the Certificate of Incorporation of Atmel Delaware both provide
for the elimination of personal monetary liability of directors to the fullest
extent permissible under the law. The provision eliminating monetary liability
of directors set forth in the Atmel Delaware Certificate of Incorporation is
potentially more expansive than the corresponding provision in the Atmel
California Articles of Incorporation, in that the former incorporates future
amendments to Delaware law with respect to the elimination of such liability.
Atmel Delaware proposes to enter into new indemnification agreements with all
directors after the Proposed Reincorporation. 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 Atmel Delaware provide for a
Board of Directors consisting of five (5) members, until changed by a duly
adopted amendment to the Bylaws. The Bylaws of Atmel California provide for a
Board of Directors consisting of not less than four (4) nor more than seven (7)
directors, within which the exact number is set at five (5) members. Under
California law, although changes in the number of directors, in general, must be
approved by a majority of the outstanding shares, the 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 ranges have been approved by the
shareholders. Delaware law permits the 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 Atmel 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 Atmel Delaware could amend the Bylaws to change the size of the
Board of Directors from five directors without further stockholder approval. If
the Reincorporation Proposal is approved, the five directors of Atmel California
who are elected at the Annual Meeting of Shareholders will continue as the five
directors of Atmel Delaware after the Proposed Reincorporation is consummated
and until their successors have been duly elected and qualified.
Cumulative Voting for Directors. Under California law, if any shareholder
has given notice of an intention to cumulate votes for the election of
directors, any other shareholder of the corporation is also 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 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 or those whose stock is held by 800 shareholders of
record and included in the Nasdaq National Market (a "Listed Company") can also
eliminate cumulative voting with shareholder approval. The Company qualifies as
a Listed Company but has not sought shareholder approval to eliminate cumulative
voting. Under Delaware law, cumulative voting in the election of directors is
not mandatory, but is a permitted option. The Atmel Delaware Certificate of
Incorporation does not provide for cumulative voting rights.
Power to Call Special Shareholders' Meetings. Under California law and
Atmel California's Bylaws, a special meeting of shareholders may be called by
the Board of Directors, the Chairman of the Board, the
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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 Atmel 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 such consideration to be appropriate 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 the Board of Directors could amend the Bylaws of
Atmel Delaware without stockholder approval.
Filling Vacancies on the Board of Directors. Under California law, any
vacancy on the Board of Directors other than one created by removal of a
director may be filled by the Board. If the number of directors is less than a
quorum, a vacancy may be filled by the unanimous written consent of the
directors then in office, by the affirmative vote of a majority of the directors
at a meeting held pursuant to notice or waivers of notice or by a sole remaining
director. A vacancy created by removal of a director may be filled by the Board
only if so authorized by a Corporation's Articles of Incorporation or by a Bylaw
approved by the corporation's shareholders. Atmel 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 Atmel Delaware provide, consistent
with the Bylaws of Atmel California, that any vacancy created by the removal of
a director by the stockholders of Atmel Delaware may be filled only by the
stockholders. A vacancy created by any reason other than removal, however, may
be filled by the directors, and the person so elected to fill the vacancy shall
hold office until the next succeeding annual meeting of stockholders at which
the class to which the director belongs is to be elected. Following the Proposed
Reincorporation, the Board of Directors of Atmel Delaware could, although it has
no current intention to do so, amend the Bylaws to provide that directors may
fill any vacancy created by removal of directors by the stockholders.
Nominations of Director Candidates and Introduction of Business at
Shareholder Meetings. The Bylaws of Atmel Delaware establish 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 not fewer than 120 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
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proposed nominee, and 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
each nominee. Under the Business Procedure, notice relating to the conduct of
business at a meeting other than the nomination of directors 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 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 any such proposal,
enabling shareholders to better determine whether they desire to attend the
meeting or grant a proxy to the Board of Directors as to the disposition of such
business. Although the Atmel 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
Atmel Delaware Bylaws may have the effect of precluding a nomination for the
election of directors or of precluding any 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 may reasonably
be expected to benefit the corporation. Pursuant to the Atmel Delaware Bylaws
and in accordance with Delaware law, Atmel 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. Atmel
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 is so
provided in the Certificate of Incorporation. The Bylaws of Atmel Delaware do
not address election by ballot, but the Certificate of Incorporation of Atmel
Delaware, consistent with Atmel California's Bylaws, provides that is a
stockholder specifically demands election of directors by ballot (or if the
Bylaws provide that elections shall be by ballot) then elections shall be held
by ballot. Stockholders of Atmel 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. After the Proposed Reincorporation, the Board of
Directors proposes to establish a classified Board of Directors for Atmel
Delaware. See Proposal Five -- Establishment of a Classified Board of Directors
for a full explanation of the proposed changes.
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Action by Written Consent of the Shareholders. Any action by the
stockholders must be taken at a duly called annual or special meeting, according
to the Bylaws of Atmel Delaware. Thus, although the Bylaws of Atmel California
allow shareholder action by written consent, such action by written consent will
no longer be authorized after the Proposed Reincorporation.
Removal of Directors. The Bylaws of Atmel 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; provided, however, that, so long as
stockholders are entitled to cumulative voting, 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 if then cumulatively
voted at an election of the class of directors of which the director is a part.
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. Under Delaware law, a director of a
corporation with a classified board of directors may be removed only for cause,
unless the Certificate of Incorporation otherwise provides. Thus, because Atmel
Delaware will have a classified board and because its Certificate of
Incorporation does not alter the applicability of Delaware law, stockholders
after the Proposed Reincorporation will no longer be able to remove directors
without cause, although removal will still be subject to approval by more votes
than sufficient to elect a 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, fifteen percent (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 of Section 203 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
eighty-five percent (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 sixty-six and two-thirds percent (66 2/3%) 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.
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 Atmel Delaware in which all stockholders would not be treated equally.
Shareholders should note, however, that the application of Section 203 to Atmel
Delaware will confer upon the Board the power to reject a proposed business
combination in certain circumstances, even though a potential acquiror may be
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offering a substantial premium for Atmel Delaware'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 holders of common stock receive
common stock in a merger of the corporation with the holder of more than fifty
percent (50%) but less than ninety percent (90%) of the target's common stock or
its affiliate unless all of the target company's share holders 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 Section 203 does provide similar protection to shareholders
against coercive two-tiered bids for a corporation in which the stockholders are
not treated equally.
Shareholder Rights Plan
In September 1998, the Board of Directors of Atmel California adopted a
Preferred Shares Rights Agreement (the "Rights Plan"). Pursuant to the Rights
Plan, Atmel California declared a dividend of one Preferred Share Purchase Right
(a "Right") for each outstanding share of Common Stock as of the September 16,
1998 record date and each share of Common Stock issued thereafter. Initially,
each Right entitles holders of Common Stock to purchase from Atmel California
1/1000th share of the Company's Series A Preferred Stock at an exercise price of
$75.00, subject to adjustment. Each 1/1000th share of the Company's Series A
Preferred Stock has economic attributes and voting rights equivalent to those of
one share of the Company's Common Stock. The Rights are not exercisable until
the occurrence of specified events.
The Rights will become exercisable only if a person or group acquires 20%
or more of the Company's Common Stock ("Triggering Event") or announces a tender
offer or exchange offer which would result in its ownership of 20% or more of
the Common Stock. Fifteen days after a Triggering Event, each Right becomes
exercisable at the Right's then current exercise price, for shares of Series A
Preferred Stock of the Company or at the holder's election, shares of Common
Stock of the Company having a value of twice the Right's then current exercise
price (or, in lieu of such shares of Common Stock in certain circumstances and
upon a determination by the Board of Directors, a combination of cash, property,
or securities). Fifteen business days after the announcement of a tender offer
or exchange offer, each Right becomes exerciseable, at the Right's then current
exercise price, for shares of Series A Preferred Stock of the Company.
Alternatively, if the Company is involved in a merger or other business
combination transaction with another person, following a Triggering Event, each
Right becomes exercisable, at the Right's then current exercise price, for
shares of Common Stock of such other person having a value of twice the Right's
exercise price. The Rights are redeemable up to fifteen days following a
Triggering Event, subject to extension by the Board of Directors, at a price of
$.001 per Right. The Rights Plan expires in September 4, 2008 unless the Rights
are earlier redeemed or exchanged by the Company. The Rights Plan is intended to
protect the shareholders in the event of an unsolicited offer to acquire, or the
acquisition of, 20% or more of the Common Stock of Atmel California. The Rights
are not intended to prevent a takeover of the Company and will not interfere
with any tender offer or business combination approved by the Board of
Directors. The Rights encourage persons seeking control of the Company to
initiate such an acquisition or offer to acquire through arm's-length
negotiations with the Board of Directors.
The Rights Plan will be assumed by Atmel Delaware pursuant to the terms of
the Merger Agreement. In the past, Delaware courts have upheld the validity of
plans such as the Rights Plan. To date, the California courts have not
considered the validity of such a plan. Given the lack of legal precedent with
respect to the validity of plans such as the Rights Plan under California law,
there may be more uncertainty as to the Rights Plan's validity under California
law.
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. This method of electing
directors make 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.
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Delaware. 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. After reincorporation in Delaware, the Board of
Directors proposes to establish 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 after the board is fully
implemented. See Proposal Five -- Establishment of a Classified Board of
Directors for a full explanation of the proposed changes.
California. 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 Atmel California qualifies to
adopt a classified board of directors, the Atmel 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.
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.
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.
Atmel California's Articles of Incorporation and Bylaws do not provide for
a classified board of directors but do provide for cumulative voting. The Atmel
Delaware Certificate of Incorporation and Bylaws will provide for a classified
Board but will not 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 Atmel 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: (a) breaches of the director's duty of
loyalty to the corporation or its stockholders; (b) acts or omissions not in
good faith or involving intentional misconduct or knowing violations of law; (c)
the payment of unlawful dividends or unlawful stock repurchases or redemptions;
or (d) 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 Company 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 Atmel California Articles of Incorporation eliminate the
liability of directors to the corporation to the fullest extent permissible
under California law. California law does not permit the elimination of monetary
liability where such liability is based on: (a) intentional misconduct or
knowing and culpable violation of law; (b) acts or omissions that a director
believes to be contrary to the best interests of
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the corporation or its shareholders or that involve the absence of good faith on
the part of the director; (c) receipt of an improper personal benefit; (d) 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; (e) 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; (f) transactions between the
corporation and a director who has a material financial interest in such
transaction; and (g) 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 while Delaware law requires indemnification whether there has been a
successful or unsuccessful defense 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 a
majority vote of a quorum of 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. 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.
Expenses incurred by an officer or director in defending an action may be
paid in advance, under Delaware law and California law, if such 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's purchase of 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
agreements or by-law provisions which make mandatory the permissive
indemnification provided by California law. Atmel California's Articles of
Incorporation permit indemnification beyond that expressly mandated by
California law and limit director monetary liability to the extent permitted by
California law.
Delaware law also permits a Delaware corporation to provide indemnification
in excess of that provided by statute. By contrast to California law, Delaware
law does not require authorizing provisions in the certificate of incorporation
and does not contain express prohibitions on indemnification in certain
circumstances. Limitations on indemnification may be imposed by a court,
however, based on principles of public policy.
Indemnification Agreements. A provision of Delaware law states that
indemnification provided by statute shall 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 Atmel California with its officers and directors may
be assumed by Atmel Delaware upon completion of the Proposed Reincorporation. If
the Proposed Reincorporation is approved, 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, and 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
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<PAGE> 30
absolute right to inspect and copy the corporation's shareholder list by persons
holding an aggregate of five percent (5%) or more of the corporation's voting
shares, or shareholders holding an aggregate of one percent (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
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 1 1/4 times 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 1 1/4 times 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: (a) the merger agreement does not amend the
existing certificate of incorporation; (b) 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; (c) 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 twenty
percent (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,
or both, immediately prior to the reorganization will own immediately after the
reorganization equity securities constituting more than 83.3% (or five-sixths)
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
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<PAGE> 31
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: (a)
with respect to the sale, lease or exchange of all or substantially all of the
assets of a corporation; (b) 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 (c) 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 five
percent (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% (or
five-sixths) of the voting power of the surviving or acquiring corporation or
its parent entity. California law generally affords appraisal rights in sale of
asset reorganizations.
Dissolution
Under California law, shareholders holding fifty percent (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
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. Atmel 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 because of such interest, provided that certain conditions, such as
obtaining the required 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.
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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 or are traded in the Nasdaq National Market and
which have 800 or more shareholders as of the record date of its most recent
annual meeting of shareholders. Following the Proposed Reincorporation, the
Common Stock of Atmel Delaware will continue to be traded on the Nasdaq National
Market and is anticipated to be owned by more than 800 holders and, accordingly,
it is expected that Atmel Delaware will be exempt from Section 2115.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of certain federal income tax considerations
that may be relevant to holders of Atmel California Common Stock who receive
Atmel Delaware Common Stock in exchange for their Atmel 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 Atmel California shareholders, such as dealers in securities, or
those Atmel 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 Atmel 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 "Code"), the following tax consequences generally should result:
(a) No gain or loss should be recognized by holders of Atmel
California Common Stock upon receipt of Atmel Delaware Common Stock
pursuant to the Proposed Reincorporation;
(b) The aggregate tax basis of the Atmel Delaware Common Stock
received by each shareholder in the Proposed Reincorporation should be
equal to the aggregate tax basis of the Atmel California Common Stock
surrendered in exchange therefor; and
(c) The holding period of the Atmel Delaware Common Stock received by
each shareholder of Atmel California should include the period for which
such shareholder held the Atmel California Common Stock surrendered in
exchange therefor, provided that such Atmel 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
(the "IRS") with respect to the federal income tax consequences of the Proposed
Reincorporation under the Code. The Company will, however, receive an opinion
from legal counsel substantially to the effect that the Proposed Reincorporation
will qualify as a reorganization within the meaning of Section 368(a) of the
Code (the "Tax Opinion"). The Tax Opinion will neither bind the IRS nor preclude
it from asserting a contrary position. In addition, the Tax Opinion will be
subject to certain assumptions and qualifications and will be based upon the
truth and accuracy of representations made by Atmel Delaware and Atmel
California. Of particular importance will be assumptions and representations
relating to the requirement (the "continuity of interest" requirement) that the
shareholders of Atmel California retain, through ownership of Atmel Delaware
stock, a significant equity interest in Atmel California's business after the
Proposed Reincorporation.
A successful IRS challenge to the reorganization status of the Proposed
Reincorporation (in consequence of a failure to satisfy the "continuity of
interest" requirement or otherwise) would result in a shareholder recognizing
gain or loss with respect to each share of Atmel California Common Stock
exchanged in the Proposed Reincorporation equal to the difference between the
shareholder's basis in such share and the fair market value, as of the time of
the Proposed Reincorporation, of the Atmel Delaware Common Stock received
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<PAGE> 33
in exchange therefor. In such event, a shareholder's aggregate basis in the
shares of Atmel Delaware Common Stock received in the exchange would equal their
fair market value on such date, and the shareholder's holding period for such
shares would not include the period during which the shareholder held Atmel
California Common Stock. Even if the Proposed Reincorporation qualifies as a
reorganization under the Code, a shareholder would recognize gain to the extent
the shareholder received (actually or constructively) consideration other than
Atmel Delaware Common Stock in exchange for the shareholder's Atmel California
Common Stock.
State, local or foreign income tax consequences to shareholders may vary
from the federal tax consequences described above. Although not free from doubt,
the Company believes that the assumption by Atmel Delaware of the obligations
under the Shareholder Rights Plan should be a tax-free event. There is no
assurance, however, that the IRS or any other taxing authority could not
successfully assert a contrary position. If there was a successful challenge,
the Company believes that the value of the Rights as of the date of the Merger
will be insignificant. Accordingly, the amount of any associated tax liability
should be de minimis.
The Company should not recognize gain or loss for federal income tax
purposes as a result of the Proposed Reincorporation, and Atmel Delaware should
succeed, without adjustment, to the federal income tax attributes of Atmel
California.
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PROPOSAL FIVE
ESTABLISHMENT OF A CLASSIFIED BOARD OF DIRECTORS
GENERAL
The Company currently has a board of directors consisting of five (5)
members elected to one-year terms at each annual meeting of the shareholders. As
part of the Company's Proposed Reincorporation in Delaware (see Proposal
Four -- Reincorporation In Delaware) and the Merger into Atmel Delaware thereby
contemplated, the Company seeks to establish a classified board of directors by
dividing the Board of Directors into three (3) classes with staggered 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 Atmel 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 after the board is fully implemented.
CLASSIFIED BOARD
To implement a classified Board, the Board would be divided in the
following way: two directors will be designated as holding Class I positions;
two directors would be designated as holding Class II positions; and one
director would be designated as holding Class III positions. At the first Annual
Meeting of Stockholders after the Proposed Reincorporation, the directors in
Class I, Class II, and Class III will be elected. The term of office of the
initial Class I directors shall expire at the next succeeding annual meeting of
stockholders, 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 scheduled to be held after the
first Annual Meeting of Stockholders after the Proposed Reincorporation,
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 later 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. Thus, after the
Proposed Reincorporation, stockholders will elect only one-third of the
directors at each Annual Meeting of Stockholders.
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.
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<PAGE> 35
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, particularly a proposal that does not 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 Common Stock, the existence of a classified board
could tend to discourage certain tender offers which 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. Since these provisions will make the
removal of directors more difficult, it will increase the directors' security in
their positions and, since 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
Atmel 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, respectively.
VOTE REQUIRED AND RECOMMENDATION OF THE BOARD OF DIRECTORS
Approval of the adoption of a classified Board of Directors after the
Proposed Reincorporation, which will also constitute approval of the provisions
of the Certificate of Incorporation and the Bylaws of Atmel Delaware
establishing such a classified Board, will require the affirmative vote of the
majority of outstanding shares of Common Stock of Atmel California. As a result,
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
ESTABLISHMENT OF A CLASSIFIED BOARD.
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PROPOSAL SIX
INCREASE IN THE NUMBER OF AUTHORIZED SHARES
The Articles of Incorporation of Atmel California currently authorize the
Company to issue up to 240,000,000 shares of Common Stock and 5,000,000 shares
of Preferred Stock. The Certificate of Incorporation of Atmel Delaware
authorizes Atmel Delaware to issue up to 500,000,000 shares of Common Stock and
5,000,000 shares of Preferred Stock. The Board of Directors has no immediate
plans to issue a significant number of additional shares of Common Stock.
However, the larger number of authorized shares of Common Stock provided for in
the Atmel 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 stock incentive plans, or other
corporate transactions not yet determined.
The Board of Directors of Atmel 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 increased the Company's authorized stock without requiring
shareholder approval. Under Delaware law, however, the Board of Directors cannot
split the Company's stock by means of a 100% stock dividend without shareholder
approval if there are insufficient authorized shares available.
In order for the Board of Directors of Atmel Delaware to respond to growth
of the Company's business which may occur 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
stock dividends. Since there are currently approximately 100,120,000 issued and
outstanding shares of the Company's Common Stock and approximately an additional
8,889,796 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 be barely sufficient to permit the Board of Directors
of Atmel 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 Atmel Delaware, the additional shares of Common
Stock would be available for issuance without 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 Atmel Delaware will
effectively provide the Board with the same flexibility it had to split the
shares of Atmel California.
The Board of Directors also believes that the availability of additional
authorized but unissued shares will provide the Company with the flexibility to
issue Common Stock 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 for
any purpose.
VOTE REQUIRED AND RECOMMENDATION OF THE BOARD OF DIRECTORS
The affirmative vote of the holders of a majority of the outstanding shares
of the Company's Common Stock will be required to approve this proposal. As a
result, abstentions and broker non-votes will have the same effect as a vote
against the proposal.
If this proposal is not approved by the shareholders but the shareholders
approve the Reincorporation Proposal, the Company will reset the authorized
shares of Common Stock of Atmel Delaware to 240,000,000, as currently authorized
for Atmel California, and then complete the Proposed Reincorporation. IF THE
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<PAGE> 37
REINCORPORATION PROPOSAL IS NOT APPROVED, THE COMPANY WILL NOT SEEK SHAREHOLDER
APPROVAL OF THE INCREASE IN ITS AUTHORIZED SHARES AT THIS TIME.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THIS PROPOSAL AND
RECOMMENDS A VOTE "FOR" THE PROPOSAL TO SET THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK OF ATMEL DELAWARE AT 500,000,000 IN CONNECTION WITH THE
REINCORPORATION PROPOSAL.
PROPOSAL SEVEN
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers L.L.P.,
independent accountants, to audit the consolidated financial statements of the
Company for the year ending December 31, 1999. PricewaterhouseCoopers L.L.P. has
audited the Company's financial statements since the year ended 1985.
Representatives of PricewaterhouseCoopers L.L.P. are expected to be present
at the Annual Meeting of Shareholders and will have an opportunity to make a
statement if they so desire. The Representatives are also expected to be
available to respond to appropriate questions from the shareholders.
VOTE REQUIRED AND RECOMMENDATION OF THE BOARD OF DIRECTORS
The affirmative vote of a majority of the shares of the Company's Common
Stock present or represented and voting at the Annual Meeting will be required
to approve this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS L.L.P. AS INDEPENDENT ACCOUNTANTS FOR THE
YEAR ENDING DECEMBER 31, 1999. IN THE EVENT OF A NEGATIVE VOTE ON SUCH
RATIFICATION, THE BOARD OF DIRECTORS WILL RECONSIDER ITS SELECTION.
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.
THE BOARD OF DIRECTORS
Dated: March 23, 1999
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PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total shareholder
return, calculated on a dividend reinvested basis, for Atmel Corporation,
Technology -- 500 and the S&P 500 Index. The graph assumes that $100 was
invested in the Company's Common Stock, Technology -- 500 and the S&P 500 Index
from the date of December 31, 1993 through the 1998 year end. Historic stock
price performance is not necessarily indicative of future stock price
performance.
<TABLE>
<CAPTION>
ATMEL CORPORATION TECHNOLOGY - 500 S&P 500 INDEX
----------------- ---------------- -------------
<S> <C> <C> <C>
12/31/93 100.00 100.00 100.00
12/31/94 194.00 117.00 101.00
12/31/95 258.00 168.00 139.00
12/31/96 383.00 238.00 171.00
12/31/97 229.00 300.00 214.00
12/31/98 177.00 519.00 294.00
</TABLE>
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
OF ATMEL CORPORATION
(A DELAWARE CORPORATION)
AND
ATMEL CORPORATION
(A CALIFORNIA CORPORATION)
THIS AGREEMENT AND PLAN OF MERGER dated as of , 1999 (the
"Agreement") is between Atmel Corporation, a Delaware corporation ("Atmel
Delaware") and Atmel Corporation, a California corporation ("Atmel California").
Atmel Delaware and Atmel California are sometimes referred to herein as the
"Constituent Corporations."
RECITALS
A. Atmel Delaware is a corporation duly organized and existing under the
laws of the State of Delaware and has an authorized capital of 505,000,000
shares, 500,000,000 of which are designated "Common Stock," par value $0.001 per
share, and 5,000,000 of which are designated "Preferred Stock," par value $0.001
per share. Of the authorized shares of Preferred Stock, 500,000 shares are
designated "Series A Preferred Stock" ("Series A Stock"). As of ,
1999, 100 shares of Common Stock were issued and outstanding, all of which were
held by Atmel California, and no shares of Preferred Stock were issued and
outstanding.
B. Atmel California is a corporation duly organized and existing under the
laws of the State of California and has an authorized capital of 245,000,000
shares, 240,000,000 of which are designated "Common Stock," no par value per
share, and 5,000,000 of which are designated "Preferred Stock," no par value per
share. Of the authorized shares of Preferred Stock, 240,000 shares are
designated "Series A Preferred Stock" ("Series A Stock"). As of ,
1999, , shares of Common Stock and no shares of Preferred Stock
were issued and outstanding.
C. The Board of Directors of Atmel California has determined that, for the
purpose of effecting the reincorporation of Atmel California in the State of
Delaware, it is advisable and in the best interests of Atmel California and its
shareholders that Atmel California merge with and into Atmel Delaware upon the
terms and conditions herein provided.
D. The respective Boards of Directors of Atmel Delaware and Atmel
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, Atmel Delaware and Atmel 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,
Atmel California shall be merged with and into Atmel Delaware (the "Merger"),
the separate existence of Atmel California shall cease and Atmel Delaware shall
survive the Merger and shall continue to be governed by the laws of the State of
Delaware, and Atmel Delaware shall be, and is herein sometimes referred to as,
the "Surviving Corporation." The name of the Surviving Corporation shall be
Atmel Corporation.
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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 Atmel California shall cease and Atmel 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
Atmel California's Board of Directors, (iii) shall succeed, without other
transfer, to all of the assets, rights, powers and property of Atmel California
in the 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 Atmel 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 Atmel California
in the same manner as if Atmel 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
Atmel 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 Atmel 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 Directors and Officers. The directors and officers of Atmel 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 Atmel California Common Stock. Upon the Effective Date of the Merger,
each share of Atmel 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.
3.2 Atmel California Options, Stock Purchase Rights and Convertible
Securities.
(a) Upon the Effective Date of the Merger, the Surviving Corporation shall
assume and continue the obligations of Atmel California under the Preferred
Shares Rights Agreement, the stock option plans and all other employee benefit
plans of Atmel California. Each outstanding and unexercised option or other
right to
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purchase or security convertible into Atmel California Common Stock or Atmel
California Preferred Stock shall become an option or right to purchase or a
security convertible into the Surviving Corporation's Common Stock or Preferred
Stock, respectively, on the basis of one share of the Surviving Corporation's
Common Stock for each share of Atmel California Common Stock and one share of
the Surviving Corporation's Preferred Stock for each share of Atmel California's
Preferred Stock, as the case may be, 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
Atmel California option, stock purchase right or convertible security at the
Effective Date of the Merger. This section 3.2(a) shall not apply to outstanding
shares of Atmel California Common Stock. Such Common Stock is subject to Section
3.1 hereof.
(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 Atmel California Common
Stock so reserved immediately prior to the Effective Date of the Merger; and a
number of shares of the Surviving Corporation's Preferred Stock shall be
reserved for issuance upon exercise of options, stock purchase rights and
convertible securities equal to the number of shares of Atmel California
Preferred Stock so reserved immediately prior to the Effective Date of the
Merger.
3.3 Atmel Delaware Common Stock. Upon the Effective Date of the Merger,
each share of Common Stock, par value $0.001 per share, of Atmel Delaware issued
and outstanding immediately prior thereto shall, by virtue of the Merger and
without any action by Atmel 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 Atmel California
Common Stock may, at such stockholder's option, surrender the same for
cancellation to EquiServe L.P., 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 Atmel 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 Atmel California Common
Stock were converted in the Merger.
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 Atmel 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 Atmel 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 Atmel
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 Atmel
Delaware that such tax has been paid or is not payable.
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IV. GENERAL
4.1 Covenants of Atmel Delaware. Atmel 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 Atmel Delaware of all of the franchise tax
liabilities of Atmel 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
(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 Atmel
Delaware or by its successors or assigns, there shall be executed and delivered
on behalf of Atmel California such deeds and other instruments, and there shall
be taken or caused to be taken by Atmel Delaware and Atmel 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 Atmel Delaware the title to
and possession of all the property, interests, assets, rights, privileges,
immunities, powers, franchises and authority of Atmel California and otherwise
to carry out the purposes of this Agreement, and the officers and directors of
Atmel Delaware are fully authorized in the name and on behalf of Atmel
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 Atmel California or of Atmel
Delaware, or of both, notwithstanding the approval of this Agreement by the
shareholders of Atmel California or by the sole stockholder of Atmel 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 1209 Orange Street, Wilmington, Delaware 19801,
County of New Castle 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 2325 Orchard
Parkway, San Jose, California 95131 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.
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IN WITNESS WHEREOF, this Agreement having first been approved by the
resolutions of the Board of Directors of Atmel Corporation, a Delaware
corporation, and Atmel Corporation, a California corporation, is hereby executed
on behalf of each of such two corporations and attested by their respective
officers thereunto duly authorized.
ATMEL CORPORATION
a Delaware corporation
By:
------------------------------------
George Perlegos
President, Chief Executive Officer
and Chairman
By:
------------------------------------
Mike Ross
Assistant Secretary
ATMEL CORPORATION
a California corporation
By:
------------------------------------
George Perlegos
President, Chief Executive Officer
and Chairman
By:
------------------------------------
Mike Ross
Assistant Secretary
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<PAGE> 44
APPENDIX B
CERTIFICATE OF INCORPORATION
OF
ATMEL CORPORATION
ARTICLE I
The name of the corporation is Atmel Corporation (the "Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is 1209 Orange Street, City of Wilmington, County of New Castle, Delaware 19801.
The name of its registered agent at such address is The Corporation Trust
Company.
ARTICLE III
The nature of the business or purposes to be conducted by the Corporation
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
ARTICLE IV
The Corporation is authorized to issue two classes of stock to be
designated, respectively, Common Stock and Preferred Stock. The total number of
shares of all classes of stock which the Corporation has authority to issue is
five hundred five million (505,000,000), consisting of five hundred million
(500,000,000) shares of Common Stock, par value $0.001 per share (the "Common
Stock"), and five million (5,000,000) shares of Preferred Stock, par value
$0.001 per share (the "Preferred Stock").
The Corporation shall from time to time in accordance with the laws of the
State of Delaware increase the authorized amount of its Common Stock if at any
time the number of Common shares remaining unissued and available for issuance
shall not be sufficient to permit conversion of the Preferred Stock.
The Preferred Stock may be issued from time to time in one or more series.
The Board of Directors is hereby authorized subject to limitations prescribed by
law, to fix by resolution or resolutions the designations, powers, preferences
and rights, and the qualifications, limitations or restrictions thereof, of each
such series of Preferred Stock, including without limitation authority to fix by
resolution or resolutions, the dividend rights, dividend rate, conversion
rights, voting rights, rights and terms of redemption (including sinking fund
provisions), redemption price or prices, and liquidation preferences of any
wholly unissued series of Preferred Stock, and the number of shares constituting
any such series and the designation thereof, or any of the foregoing.
The Board of Directors is further authorized to increase (but not above the
total number of authorized shares of the class) or decrease (but not below the
number of shares of any such series then outstanding) the number of shares of
any series, the number of which was fixed by it, subsequent to the issue of
shares of such series then outstanding, subject to the powers, preferences and
rights, and the qualifications, limitations and restrictions thereof 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 which they had prior
to the adoption of the resolution originally fixing the number of shares of such
series.
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ARTICLE V
The name and mailing address of the incorporator are as follows:
S. Dawn Smith
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
ARTICLE VI
The Corporation is to have perpetual existence.
ARTICLE VII
The election of directors need not be by written ballot unless a
stockholder demands election by written ballot at a meeting of stockholders and
before voting begins or unless the Bylaws of the Corporation shall so provide.
ARTICLE VIII
The number of directors which constitute the whole Board of Directors of
the Corporation shall be designated in the Bylaws of the Corporation.
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. Commencing with the first annual meeting of
stockholders held after calendar year 1999 (the "First Annual Meeting"), 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 and elected at the First Annual Meeting.
The term of office of the initial Class I directors shall expire at the next
succeeding annual meeting of stockholders, 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
annual meeting after the First 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.
Vacancies occurring on the Board of Directors may be filled by vote of a
majority of the remaining members of the Board of Directors, although less than
a quorum, at a meeting of the Board of Directors. A person so elected by the
Board of Directors to fill a vacancy shall hold office until the next succeeding
annual meeting of stockholders of the Corporation at which the class to which
the directorship belongs is to be elected and until his or her successor shall
have been duly elected and qualified.
ARTICLE IX
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.
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ARTICLE X
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.
ARTICLE XI
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 adopt,
alter, amend or repeal the Bylaws of the Corporation.
ARTICLE XII
To the fullest extent permitted by the Delaware General Corporation Law as
the same exists or 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.
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, employee or agent of
the Corporation or any predecessor of the Corporation or serves or served at any
other enterprise as a director, officer, employee or agent at the request of the
Corporation or any predecessor to the Corporation.
Neither any amendment nor repeal of this Article, nor the adoption of any
provision of this Certificate of Incorporation inconsistent with this Article,
shall eliminate or reduce the effect of this Article in respect of any matter
occurring, or any cause of action, suit or claim that, but for this Article,
would accrue or arise, prior to such amendment, repeal or adoption of an
inconsistent provision.
ARTICLE XIII
At the election of directors of the Corporation, each holder of stock of
any class or series shall be entitled to one vote for each share held. No
stockholder will be permitted to cumulate votes at any election of directors.
ARTICLE XIV
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.
ARTICLE XV
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.
The undersigned incorporator hereby acknowledges that the foregoing
Certificate of Incorporation is her act and deed and that the facts stated
herein are true.
Dated: , 1999
--------------------------------------
S. Dawn Smith
Incorporator
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CERTIFICATE OF DESIGNATIONS OF RIGHTS, PREFERENCES
AND PRIVILEGES OF
SERIES A PREFERRED STOCK
OF ATMEL CORPORATION
The undersigned, George Perlegos and Mike Ross do hereby certify:
1. That they are the duly elected and acting President and Chief
Executive Officer and Assistant Secretary, respectively, of Atmel
Corporation, a Delaware corporation (the "Corporation").
2. That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation of the said Corporation, the
said Board of Directors on February , 1999 adopted the following
resolution creating a series of 500,000 shares of Preferred Stock
designated as Series A Preferred Stock:
"RESOLVED, that pursuant to the authority vested in the Board of Directors
of the corporation by the Certificate of Incorporation the Board of Directors
does hereby provide for the issue of a series of Preferred Stock of the
Corporation and does hereby fix and herein state and express the designations,
powers, preferences and relative and other special rights and the
qualifications, limitations and restrictions of such series of Preferred Stock
as follows:
SECTION 1. Designation and Amount. The shares of such series shall be
designated as "Series A Preferred Stock." The Series A Preferred Stock shall
have a par value of $0.001 per share, and the number of shares constituting such
series shall be 500,000.
SECTION 2. Proportional Adjustment. In the event the Corporation shall at
any time after the issuance of any share or shares of Series A Preferred Stock
(i) declare any dividend on Common Stock of the Corporation ("Common Stock")
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock
or (iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the Corporation shall simultaneously effect a
proportional adjustment to the number of outstanding shares of Series A
Preferred Stock.
SECTION 3. Dividends and Distributions.
(a) Subject to the prior and superior right of the holders of any shares of
any series of Preferred Stock ranking prior and superior to the shares of Series
A Preferred Stock with respect to dividends, the holders of shares of Series A
Preferred Stock shall be entitled to receive when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the last day of January, April, July and October in
each year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to 1,000 times
the aggregate per share amount of all cash dividends, and 1,000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series A Preferred Stock.
(b) The Corporation shall declare a dividend or distribution on the Series
A Preferred Stock as provided in paragraph (a) above immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock).
(c) Dividends shall begin to accrue on outstanding shares of Series A
Preferred Stock from the Quarterly Dividend Payment Date next preceding the date
of issue of such shares of Series A Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive a quarterly dividend
and
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<PAGE> 48
before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be no more
than 30 days prior to the date fixed for the payment thereof.
SECTION 4. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(a) Each share of Series A Preferred Stock shall entitle the holder
thereof to 1,000 votes on all matters submitted to a vote of the
stockholders of the Corporation.
(b) Except as otherwise provided herein or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common
Stock shall vote together as one class on all matters submitted to a vote
of stockholders of the Corporation.
(c) Except as required by law, holders of Series A Preferred Stock
shall have no special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for taking any corporate action.
SECTION 5. Certain Restrictions.
(a) The Corporation shall not declare any dividend on, make any
distribution on, or redeem or purchase or otherwise acquire for consideration
any shares of Common Stock after the first issuance of a share or fraction of a
share of Series A Preferred Stock unless concurrently therewith it shall declare
a dividend on the Series A Preferred Stock as required by Section 3 hereof.
(b) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 3 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on, make any other distributions on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock;
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity with
the Series A Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors)
to all holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among
the respective series or classes.
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(c) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this Section 5,
purchase or otherwise acquire such shares at such time and in such manner.
SECTION 6. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein and, in the
Certificate of Incorporation, as then amended.
SECTION 7. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share equal
to 1,000 times the aggregate amount to be distributed per share to holders of
shares of Common Stock plus an amount equal to any accrued and unpaid dividends
on such shares of Series A Preferred Stock.
SECTION 8. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share equal to 1,000 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged.
SECTION 9. No Redemption. The shares of Series A Preferred Stock shall not
be redeemable.
SECTION 10. Ranking. The Series A Preferred Stock shall rank junior to all
other series of the Corporation's Preferred Stock as to the payment of dividends
and the distribution of assets, unless the terms of any such series shall
provide otherwise.
SECTION 11. Amendment. The Certificate of Incorporation of the Corporation
shall not be further amended in any manner which would materially alter or
change the powers, preference or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of a
majority of the outstanding shares of Series A Preferred Stock, voting
separately as a class.
SECTION 12. Fractional Shares. Series A Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
RESOLVED FURTHER, that the President or any Vice President and the
Secretary or any Assistant Secretary of this corporation be, and they hereby
are, authorized and directed to prepare and file a Certificate of Designation of
Rights, Preferences and Privileges in accordance with the foregoing resolution
and the provisions of Delaware law and to take such actions as they may deem
necessary or appropriate to carry out the intent of the foregoing resolution."
We further declare under penalty of perjury that the matters set forth in
the foregoing Certificate of Designation are true and correct of our own
knowledge.
Executed at San Jose, California on , 1999.
--------------------------------------
George Perlegos, President
--------------------------------------
Mike Ross, Assistant Secretary
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APPENDIX C
BYLAWS
OF
ATMEL CORPORATION
(A DELAWARE CORPORATION)
ARTICLE I
CORPORATE OFFICES
1.1 Registered Office. The registered office of the corporation shall be
fixed in the certificate of incorporation of the corporation.
1.2 Other Offices. The board of directors may at any time establish branch
or subordinate offices at any place or places where the corporation is qualified
to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 Place Of Meeting. 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.
(a) 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 on the fourth
Tuesday in April in each year at 2:00 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.
(b) At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be properly
brought before an annual meeting, 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 business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the secretary of the corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation not less than one hundred twenty
(120) calendar days in advance of the date specified in the corporation's proxy
statement released to stockholders in connection with the previous year's annual
meeting of stockholders; provided, however, that in the event that no annual
meeting was held in the previous year or the date of the annual meeting has been
changed by more than thirty (30) days from the date contemplated at the time of
the previous year's proxy statement, notice by the stockholder to be timely must
be so received not later than the close of business on the later of one hundred
twenty (120) calendar days in advance of such annual meeting or ten (10)
calendar days following the date on which public announcement of the date of the
meeting is first made. A stockholder's notice to the secretary shall set forth
as to each matter the stockholder proposes to bring before the annual meeting:
(i) a brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (ii)
the name and address, as they appear on the corporation's books, of the
stockholder proposing such business, (iii) the class and number of shares of the
corporation which are beneficially owned by the stockholder, (iv) any material
interest of the stockholder in such business, and (v) any other information that
is required to be provided by the stockholder pursuant to Regulation 14A under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), in his
capacity as a proponent to a stockholder proposal. Notwithstanding the
foregoing, in order to include information with
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respect to a stockholder proposal in the proxy statement and form of proxy for a
stockholder's meeting, stockholders must provide notice as required by the
regulations promulgated under the 1934 Act. Notwithstanding anything in these
Bylaws to the contrary, no business shall be conducted at any annual meeting
except in accordance with the procedures set forth in this paragraph (b). The
chairman of the annual meeting shall, if the facts warrant, determine and
declare at the meeting that business was not properly brought before the meeting
and in accordance with the provisions of this paragraph (b), and, if he should
so determine, he shall so declare at the meeting that any such business not
properly brought before the meeting shall not be transacted.
(c) Only persons who are nominated in accordance with the procedures set
forth in this paragraph (c) shall be eligible for election as directors.
Nominations of persons for election to the board of directors of the corporation
may be made at a meeting of stockholders by or at the direction of the board of
directors or by any stockholder of the corporation entitled to vote in the
election of directors at the meeting who complies with the notice procedures set
forth in this paragraph (c). Such nominations, other than those made by or at
the direction of the board of directors, shall be made pursuant to timely notice
in writing to the secretary of the corporation in accordance with the provisions
of paragraph (b) of this Section 2.2. Such stockholder's notice shall set forth
(i) as to each person, if any, whom the stockholder proposes to nominate for
election or re-election as a director: (A) the name, age, business address and
residence address of such person, (B) the principal occupation or employment of
such person, (C) the class and number of shares of the corporation which are
beneficially owned by such person, (D) 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 nominations are to
be made by the stockholder, and (E) any other information relating to such
person that is required to be disclosed in solicitations of proxies for
elections of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the 1934 Act (including without limitation such person's
written consent to being named in the proxy statement, if any, as a nominee and
to serving as a director if elected); and (ii) as to such stockholder giving
notice, the information required to be provided pursuant to paragraph (b) of
this Section 2.2. At the request of the board of directors, any person nominated
by a stockholder for election as a director shall furnish to the secretary of
the corporation that information required to be set forth in the stockholder's
notice of nomination which pertains to the nominee. No person shall be eligible
for election as a director of the corporation unless nominated in accordance
with the procedures set forth in this paragraph (c). The chairman of the meeting
shall, if the facts warrants, determine and declare at the meeting that a
nomination was not made in accordance with the procedures prescribed by these
Bylaws, and if he should so determine, he shall so declare at the meeting, and
the defective nomination shall be disregarded.
2.3 Special Meeting. A special meeting of the stockholders may be called
at any time by the board of directors, by the chairman of the board, or by the
president, but such special meetings may not be called by any other person or
persons. Only such business shall be considered at a special meeting of
stockholders as shall have been stated in the notice for such meeting.
2.4 Notice Of Stockholders' Meetings. All notices of meetings of
stockholders shall be sent or otherwise given in accordance with Section 2.5 of
these bylaws not less than ten (10) (or, if sent by third-class mail pursuant to
Section 2.5 of these Bylaws, thirty (30)) nor more than sixty (60) days before
the date of the meeting. The notice shall specify the place, date and hour of
the meeting and (i) in the case of a special meeting, the purpose or purposes
for which the meeting is called (no business other than that specified in the
notice may be transacted) or (ii) in the case of the annual meeting, those
matters which the board of directors, at the time of giving the notice, intends
to present for action by the stockholders (but any proper matter may be
presented at the meeting for such action). The notice of any meeting at which
directors are to be elected shall include the name of any nominee or nominees
who, at the time of the notice, the board intends to present for election.
2.5 Manner Of Giving Notice; Affidavit Of Notice. Written notice of any
meeting of stockholders shall be given either (i) personally, (ii) by private
courier, (iii) by first- or third-class United States mail, (iv) by telegraphic
communication, (v) by other written communication or (vi) by other electronic or
wireless means. Notices not personally delivered shall be sent charges prepaid
and shall be addressed to the stockholder at the
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address of that stockholder appearing on the books of the corporation or given
by the stockholder to the corporation for the purpose of notice. Notice shall be
deemed to have been given at the time when delivered personally or by courier or
deposited in the mail or sent by telegram or other means of written
communication or other electronic or wireless means.
An affidavit of the mailing or other means of giving any notice of any
stockholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.
2.6 Quorum. The holders of a majority in voting power 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 either (i) the chairman of
the meeting or (ii) the stockholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the meeting in accordance
with Section 2.7 of these bylaws.
When a quorum is present at any meeting, the vote of the holders of a
majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which, by express provision of the laws of the State of Delaware or
of the certificate of incorporation or these bylaws, a different vote is
required, in which case such express provision shall govern and control the
decision of the question.
If a quorum be initially present, the stockholders may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken is approved by a
majority of the stockholders initially constituting the quorum.
2.7 Adjourned Meeting; Notice. When a meeting is adjourned to another time
and 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, and to voting trusts and other voting agreements).
Except as may be otherwise provided in the certificate of incorporation or
these bylaws, each stockholder shall be entitled to one vote for each share of
capital stock held by such stockholder.
2.9 Validation Of Meetings; Waiver Of Notice; Consent. The transactions of
any meeting of stockholders, either annual or special, however called and
noticed, and wherever held, shall be as valid as though they had been taken at a
meeting duly held after regular call and notice, if a quorum be present either
in person or by proxy, and if, either before or after the meeting, each person
entitled to vote, who was not present in person or by proxy, signs a written
waiver of notice or a consent to the holding of the meeting or an approval of
the minutes thereof. The waiver of notice or consent or approval need not
specify either the business to be transacted or the purpose of any annual or
special meeting of stockholders. All such waivers, consents, and approvals shall
be filed with the corporate records or made a part of the minutes of the
meeting.
Attendance by a person at a meeting shall also constitute a waiver of
notice of and presence at that meeting, except when the person objects at the
beginning of the meeting to the transaction of any business because the meeting
is not lawfully called or convened. Attendance at a meeting is not a waiver of
any right to object to the consideration of matters required by law to be
included in the notice of the meeting but not so included, if that objection is
expressly made at the meeting.
2.10 No Stockholder Action By Written Consent. Subject to the rights of
the holders of the shares of any series of Preferred Stock or any other class of
stock or series thereof having a preference over the Common
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Stock as dividend or upon liquidation, 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. For purposes of
determining the stockholders entitled to notice of any meeting or to vote
thereat, the board of directors may fix, in advance, a record date, which shall
not precede the date upon which the resolution fixing the record date is adopted
by the board of directors and which shall not be more than sixty (60) days nor
less than ten (10) days before the date of any such meeting, and in such event
only stockholders of record on the date so fixed are entitled to notice and to
vote, notwithstanding any transfer of any shares on the books of the corporation
after the record date, except as otherwise provided in the Certificate of
Incorporation, by these Bylaws, by agreement or by applicable law.
If the board of directors does not so fix a record date, 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 business day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the business day next preceding the day on which the
meeting is held.
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
unless the board of directors fixes a new record date for the adjourned meeting,
but the board of directors shall fix a new record date if the meeting is
adjourned for more than thirty (30) days from the date set for the original
meeting.
The record date for any other purpose shall be as provided in Section 8.1
of these bylaws.
2.12 Proxies. Every person entitled to vote for directors, or on any other
matter, shall have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the person 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 transmission, telefacsimile 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(e) of the General Corporation Law of
Delaware (relating to the irrevocability of proxies).
2.13 Organization. The president, or in the absence of the president, the
chairman of the board, shall call the meeting of the stockholders to order, and
shall act as chairman of the meeting. In the absence of the president, the
chairman of the board, and all of the vice presidents, the stockholders shall
appoint a chairman for such meeting. The chairman of any meeting of stockholders
shall determine the order of business and the procedures at the meeting,
including such matters as the regulation of the manner of voting and the conduct
of business. The secretary of the corporation shall act as secretary of all
meetings of the stockholders, but in the absence of the secretary at any meeting
of the stockholders, the chairman of the meeting may appoint any person to act
as secretary of the meeting.
2.14 List Of Stockholders Entitled To Vote. The officer who has charge of
the stock ledger of the 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.
2.15 Inspectors Of Election. Before any meeting of stockholders, the board
of directors may appoint an inspector or inspectors of election to act at the
meeting or its adjournment. If no inspector of election is so appointed, then
the chairman of the meeting may, and on the request of any stockholder or a
stockholder's proxy shall, appoint an inspector or inspectors of election to act
at the meeting. The number of inspectors shall be either one (1) or three (3).
If inspectors are appointed at a meeting pursuant to the request of one (1) or
more stockholders or proxies, then the holders of a majority of the voting power
of shares or their proxies
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present at the meeting shall determine whether one (1) or three (3) inspectors
are to be appointed. If any person appointed as inspector fails to appear or
fails or refuses to act, then the chairman of the meeting may, and upon the
request of any stockholder or a stockholder's proxy shall, appoint a person to
fill that vacancy.
Such inspectors shall:
(a) determine the number of shares outstanding and the voting power of
each, the number of shares represented at the meeting, the existence of a
quorum, and the authenticity, validity, and effect of proxies;
(b) receive votes, ballots or consents;
(c) hear and determine all challenges and questions in any way arising
in connection with the right to vote;
(d) count and tabulate all votes or consents;
(e) determine when the polls shall close;
(f) determine the result; and
(g) do any other acts that may be proper to conduct the election or
vote with fairness to all stockholders.
ARTICLE III
DIRECTORS
3.1 Powers. Subject to the provisions of the General Corporation Law of
Delaware and to 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.
3.2 Number Of Directors. The board of directors shall consist of five (5)
members. The number of directors may be changed by an amendment to this bylaw,
duly adopted by the board of directors or by the stockholders, or by a duly
adopted amendment to the certificate of incorporation.
3.3 Election 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. Commencing with the first
annual meeting of stockholders after calendar year 1999 (the "First Annual
Meeting"), 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 and elected at the First
Annual Meeting. The term of office of the initial Class I directors shall expire
at the next succeeding annual meeting of stockholders, 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 office 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, provided that no decrease in the number of directors constituting
the Board of Directors shall shorten the term of any incumbent director.
3.4 Resignation And Vacancies. Any director may resign effective on giving
written notice to the chairman of the board, the president, the secretary or the
board of directors, unless the notice specifies a later time for that
resignation to become effective. If the resignation of a director is effective
at a future time, the
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board of directors may elect a successor to take office when the resignation
becomes effective. Each director so elected shall hold office until the
expiration of the term of office of the director whom he has replaced and until
a successor has been elected and qualified.
Unless otherwise provided in the Certificate of Incorporation or by these
Bylaws, vacancies in the board of directors may be filled by a majority of the
remaining directors, even if less than a quorum, or by a sole remaining
director; however, a vacancy created by the removal of a director by the vote of
the stockholders or by court order may be filled only by the affirmative vote of
a majority of the voting power of shares represented and voting at a duly held
meeting at which a quorum is present (which shares voting affirmatively also
constitute a majority of the required quorum. Each director so elected shall
hold office until the expiration of the term of office of the director whom he
has replaced and until a successor has been elected and qualified.
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 (relating to meetings
of stockholders).
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 (relating to meetings of stockholders) as far as
applicable.
3.5 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, if and so long as stockholders of the corporation are
entitled to cumulative voting, if less than the entire board is to be removed,
no director may be removed without cause if the votes cast against his removal
would be sufficient to elect him if then cumulatively voted at an election of
the entire board of directors.
3.6 Place Of Meetings; Meetings By Telephone. Regular meetings of the
board of directors may be held at any place within or outside the State of
Delaware that has been designated from time to time by resolution of the board.
In the absence of such a designation, regular meetings shall be held at the
principal executive office of the corporation. Special meetings of the board may
be held at any place within or outside the State of Delaware that has been
designated in the notice of the meeting or, if not stated in the notice or if
there is no notice, at the principal executive office of the corporation.
Any meeting of the board, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in the meeting can hear one another; and all such participating
directors shall be deemed to be present in person at the meeting.
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3.7 First Meetings. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the stockholders at the annual meeting. 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
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
3.8 Regular Meetings. Regular meetings of the board of directors may be
held without notice at such time as shall from time to time be determined by the
board of directors. If any regular meeting day shall fall on a legal holiday,
then the meeting shall be held at the same time and place on the next succeeding
full business day.
3.9 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 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,
telecopy or telegram, or other electronic or wireless means, 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 or by telephone, telecopy or
telegram, it shall be delivered personally or by telephone or to the telegraph
company at least twenty-four (24) hours before the time of the holding of the
meeting. Any oral notice given personally or by telephone may be communicated
either to the director or to a person at the office of the director 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. Moreover, a notice of special meeting need not state the purpose of
such meeting, and, unless indicated in the notice thereof, any and all business
may be transacted at a special meeting.
3.10 Quorum. A majority of the authorized number of directors shall
constitute a quorum for the transaction of business, except to adjourn as
provided in Section 3.12 of these bylaws. Every act or decision done or made by
a majority of the directors present at a duly held meeting at which a quorum is
present shall be regarded as the act of the board of directors, subject to the
provisions of the certificate of incorporation and applicable law.
A meeting at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of directors, if any action taken is
approved by at least a majority of the quorum for that meeting.
3.11 Waiver Of Notice. Notice of a meeting need not be given to any
director (i) who signs a waiver of notice, whether before or after the meeting,
or (ii) who attends the meeting other than for the express purposed of objecting
at the beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened. All such waivers shall be filed with
the corporate records or made part of the minutes of the meeting. A waiver of
notice need not specify the purpose of any regular or special meeting of the
board of directors.
3.12 Adjournment. A majority of the directors present, whether or not
constituting a quorum, may adjourn any meeting of the board to another time and
place.
3.13 Notice Of Adjournment. Notice of the time and place of holding an
adjourned meeting of the board need not be given unless the meeting is adjourned
for more than twenty-four (24) hours. If the meeting is adjourned for more than
twenty-four (24) hours, then notice of the time and place of the adjourned
meeting shall be given before the adjourned meeting takes place, in the manner
specified in Section 3.9 of these bylaws, to the directors who were not present
at the time of the adjournment.
3.14 Board Action By Written Consent Without A Meeting. Any action
required or permitted to be taken by the board of directors may be taken without
a meeting, provided that all members of the board individually or collectively
consent in writing to that action. Such action by written consent shall have the
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same force and effect as a unanimous vote of the board of directors. Such
written consent and any counterparts thereof shall be filed with the minutes of
the proceedings of the board of directors.
3.15 Fees And Compensation Of Directors. Directors and members of
committees may receive such compensation, if any, for their services and such
reimbursement of expenses as may be fixed or determined by resolution of the
board of directors. This Section 3.15 shall not be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee or otherwise and receiving compensation for those services.
3.16 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 any of its subsidiaries, including any officer or employee
who is a director of the corporation or any of its subsidiaries, 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.
3.17 Sole Director Provided By Certificate Of Incorporation. In the event
only one director is required by these bylaws or the certificate of
incorporation, then any reference herein to notices, waivers, consents, meetings
or other actions by a majority or quorum of the directors shall be deemed to
refer to such notice, waiver, etc., by such sole director, who shall have all
the rights and duties and shall be entitled to exercise all of the powers and
shall assume all the responsibilities otherwise herein described as given to the
board of directors.
ARTICLE IV
COMMITTEES
4.1 Committees Of Directors. The board of directors may, by resolution
adopted by a majority of the authorized number of directors, designate one or
more committees, each consisting of one or more directors, to serve at the
pleasure of the board. 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. The appointment of members or alternate
members of a committee requires the vote of a majority of the authorized number
of directors. Any committee, to the extent provided in the resolution of the
board, shall have and may exercise all the powers and authority of the board,
but no such committee shall have the power or authority to (i) approve or adopt
or recommend to the stockholders any action or matter that requires the approval
of the stockholders or (ii) adopt, amend or repeal any Bylaw of the corporation.
4.2 Meetings And Action Of Committees. Meetings and actions of committees
shall be governed by, and held and taken in accordance with, the following
provisions of Article III of these bylaws: Section 3.6 (place of meetings;
meetings by telephone), Section 3.8 (regular meetings), Section 3.9 (special
meetings; notice), Section 3.10 (quorum), Section 3.11 (waiver of notice),
Section 3.12 (adjournment), Section 3.13 (notice of adjournment) and Section
3.14 (board action by written consent without 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 be determined either by resolution of
the board of directors or by resolution of the committee, that special meetings
of committees may also be called by resolution of the board of directors, and
that notice of special meetings of committees 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.
4.3 Committee Minutes. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when required.
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ARTICLE V
OFFICERS
5.1 Officers. The Corporate Officers of the corporation shall be a
president, a secretary and a chief financial officer. The corporation may also
have, at the discretion of the board of directors, a chairman of the board, one
or more vice presidents (however denominated), one or more assistant
secretaries, one or more assistant treasurers, and 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.
In addition to the Corporate Officers of the Company described above, there
may also be such Administrative Officers of the corporation as may be designated
and appointed from time to time by the president of the corporation in
accordance with the provisions of Section 5.12 of these bylaws.
5.2 Election Of Officers. The Corporate Officers of the corporation,
except such officers as may be appointed in accordance with the provisions of
Section 5.3 or Section 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, and shall hold their respective offices for such terms as the board
of directors may from time to time determine.
5.3 Subordinate Officers. The board of directors may appoint, or may
empower the president to appoint, such other Corporate Officers as the business
of the corporation may require, each of whom shall hold office for such period,
have such power and authority, and perform such duties as are provided in these
bylaws or as the board of directors may from time to time determine.
The president may from time to time designate and appoint Administrative
Officers of the corporation in accordance with the provisions of Section 5.12 of
these bylaws.
5.4 Removal And Resignation Of Officers. Subject to the rights, if any, of
a Corporate Officer under any contract of employment, any Corporate Officer may
be removed, either with or without cause, by the board of directors at any
regular or special meeting of the board or, except in case of a Corporate
Officer chosen by the board of directors, by any Corporate Officer upon whom
such power of removal may be conferred by the board of directors.
Any Corporate 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 Corporate
Officer is a party.
Any Administrative Officer designated and appointed by the president may be
removed, either with or without cause, at any time by the president. Any
Administrative Officer may resign at any time by giving written notice to the
president or to the secretary of the corporation.
5.5 Vacancies In Offices. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in these bylaws for regular appointments to that office.
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 such other powers and perform such other 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 or she 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 or she shall have the general powers and duties of
management usually vested in the office of
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president of a corporation, and shall have such other powers and perform such
other duties as may be prescribed by the board of directors or these bylaws.
5.8 Vice Presidents. In the absence or disability of the president, and if
there is no chairman of the board, 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 the
board 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.
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 or she 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 Chief Financial Officer. The chief financial officer 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
for a purpose reasonably related to his position as a director.
The chief financial officer 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 or she 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 or
her transactions as chief financial officer 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, if any, or, if there is
more than one, the assistant secretaries in the order determined by the 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 may from time to time prescribe.
5.12 Administrative Officers. In addition to the Corporate Officers of the
corporation as provided in Section 5.1 of these bylaws and such subordinate
Corporate Officers as may be appointed in accordance with Section 5.3 of these
bylaws, there may also be such Administrative Officers of the corporation as may
be designated and appointed from time to time by the president of the
corporation. Administrative Officers shall perform such duties and have such
powers as from time to time may be determined by the president or the board of
directors in order to assist the Corporate Officers in the furtherance of their
duties. In the performance of such duties and the exercise of such powers,
however, such Administrative Officers shall have limited authority to act on
behalf of the corporation as the board of directors shall establish, including
but not limited to limitations on the dollar amount and on the scope of
agreements or commitments that may be made
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by such Administrative Officers on behalf of the corporation, which limitations
may not be exceeded by such individuals or altered by the president without
further approval by the board of directors.
5.13 Authority And Duties Of Officers. In addition to the foregoing
powers, authority and duties, all officers of the corporation shall respectively
have such authority and powers 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.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND OTHER AGENTS
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 as the same now exists or may hereafter be amended, indemnify any
person against expenses (including attorneys' fees), judgments, fines, and
amounts paid in settlement actually and reasonably incurred in connection with
any threatened, pending or completed action, suit, or proceeding in which such
person was or is a party or is threatened to be made a party by reason of the
fact that such person is or was a director or officer of the corporation. For
purposes of this Section 6.1, a "director" or "officer" of the corporation shall
mean 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.
The corporation shall be required to indemnify a director or officer in
connection with an action, suit, or proceeding (or part thereof) initiated by
such director or officer only if the initiation of such action, suit, or
proceeding (or part thereof) by the director or officer was authorized by the
board of Directors of the corporation.
The corporation shall pay the expenses (including attorney's fees) incurred
by a director or officer of the corporation entitled to indemnification
hereunder in defending any action, suit or proceeding referred to in this
Section 6.1 in advance of its final disposition; provided, however, that payment
of expenses incurred by a director or officer of the corporation in advance of
the final disposition of such action, suit or proceeding shall be made only upon
receipt of an undertaking by the director or officer to repay all amounts
advanced if it should ultimately be determined that the director or officer is
not entitled to be indemnified under this Section 6.1 or otherwise.
The rights conferred on any person by this Article shall not be exclusive
of any other rights which such person may have or hereafter acquire under any
statute, provision of the corporation's Certificate of Incorporation, these
bylaws, agreement, vote of the stockholders or disinterested directors or
otherwise.
Any repeal or modification of the foregoing provisions of this Article
shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification.
6.2 Indemnification Of Others. The corporation shall have the power, to
the maximum extent and in the manner permitted by the General Corporation Law of
Delaware as the same now exists or may hereafter be amended, to indemnify any
person (other than directors and officers) against expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred in connection with any threatened, pending or completed
action, suit, or proceeding, in which such person was or is a party or is
threatened to be made a party by reason of the fact that such person is or was
an employee or agent of the corporation. For purposes of this Section 6.2, an
"employee" or "agent" of the corporation (other than a director or officer)
shall mean 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
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which was a predecessor corporation of the corporation or of another enterprise
at the request of such predecessor corporation.
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 or
her and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the corporation would have the power to
indemnify him or her against such liability under the provisions of the General
Corporation Law of Delaware.
6.4 Expenses. The corporation shall advance to any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or she is or was a director or
officer of the corporation, or 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, prior to the final disposition of the
proceeding, promptly following request therefor, all expenses incurred by any
director or officer in connection with such proceeding, upon receipt of an
undertaking by or on behalf of such person to repay said amounts if it should be
determined ultimately that such person is not entitled to be indemnified under
this Bylaw or otherwise; provided, however, that the corporation shall not be
required to advance expenses to any director or officer in connection with any
proceeding (or part thereof) initiated by such person unless the proceeding was
authorized in advance by the board of directors of the corporation.
Notwithstanding the foregoing, unless otherwise determined pursuant to
Section 6.5, no advance shall be made by the corporation to an officer of the
corporation (except by reason of the fact that such officer is or was a director
of the corporation in which event this paragraph shall not apply) in any action,
suit or proceeding, whether civil, criminal, administrative or investigative, if
a determination is reasonably and promptly made (i) by the board of directors by
a majority vote of a quorum consisting of directors who were not parties to the
proceeding, or (ii) if such quorum is not obtainable, or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, that the facts known to the decision-making party at the time
such determination is made demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in or
not opposed to the best interests of the corporation.
6.5 Non-Exclusivity Of Rights. The rights conferred on any person by this
Bylaw shall not be exclusive of any other right which such person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office. The corporation is specifically
authorized to enter into individual contracts with any or all of its directors,
officers, employees or agents respecting indemnification and advances, to the
fullest extent not prohibited by the General Corporation Law of Delaware.
6.6 Survival Of Rights. The rights conferred on any person by this Bylaw
shall continue as to a person who has ceased to be a director, officer, employee
or other agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
6.7 Amendments. Any repeal or modification of this Bylaw shall only be
prospective and shall not affect the rights under this Bylaw in effect at the
time of the alleged occurrence of any action or omission to act that is the
cause of any proceeding against any agent of the corporation.
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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 of
its business and properties.
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.
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 or her position as a
director.
7.3 Representation Of Shares Of Other Corporations. The chairman of the
board, if any, the president, any vice president, the chief financial officer,
the secretary or any 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 the stock of any other
corporation or corporations standing in the name of this corporation. The
authority herein granted 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.
7.4 Certification And Inspection Of Bylaws. The original or a copy of
these bylaws, as amended or otherwise altered to date, certified by the
secretary, shall be kept at the corporation's principal executive office and
shall be open to inspection by the stockholders of the corporation, at all
reasonable times during office hours.
ARTICLE VIII
GENERAL MATTERS
8.1 Record Date For Purposes Other Than Notice And Voting. For purposes of
determining the stockholders entitled to receive payment of any dividend or
other distribution or allotment of any rights or the stockholders 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 precede the date upon which the
resolution fixing the record date is adopted and which shall not be more than
sixty (60) days before any such action. In that case, only stockholders of
record at the close of business on the date so fixed are entitled to receive the
dividend, distribution or allotment of rights, or to exercise such rights, as
the case may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date so fixed, except as otherwise provided by law.
If the board of directors does not so fix a record date, then the record
date for determining stockholders for any such purpose shall be at the close of
business on the day on which the board of directors adopts the applicable
resolution.
8.2 Checks; Drafts; Evidences Of Indebtedness. 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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8.3 Corporate Contracts And Instruments: How Executed. The board of
directors, except as otherwise provided in these bylaws, may authorize and
empower 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
power and 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.
8.4 Stock Certificates; Transfer; Partly Paid Shares. The shares of the
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 chief
financial officer 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 or she were such
officer, transfer agent or registrar at the date of issue.
Certificates for shares shall be of such form and device as the board of
directors may designate and shall state the name of the record holder of the
shares represented thereby; its number; date of issuance; the number of shares
for which it is issued; a summary statement or reference to the powers,
designations, preferences or other special rights of such stock and the
qualifications, limitations or restrictions of such preferences and/or rights,
if any; a statement or summary of liens, if any; a conspicuous notice of
restrictions upon transfer or registration of transfer, if any; a statement as
to any applicable voting trust agreement; and, if the shares be assessable, or,
if assessments are collectible by personal action, a plain statement of such
facts.
Upon surrender to the secretary or transfer agent of the corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment 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 upon its books.
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, or 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.
8.5 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 (relating to transfers of stock,
stock certificates and uncertificated stock), 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.
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8.6 Lost Certificates. Except as provided in this Section 8.6, no new
certificates for shares shall be issued to replace a previously issued
certificate unless the latter is surrendered to the corporation and canceled at
the same time. The board of directors may, in case any share certificate or
certificate for any other security is lost, stolen or destroyed, authorize the
issuance of replacement certificates on such terms and conditions as the board
may require; the board may require indemnification of the corporation secured by
a bond or other adequate security sufficient to protect the corporation against
any claim that may be made against it, including any expense or liability, on
account of the alleged loss, theft or destruction of the certificate or the
issuance of the replacement certificate.
8.7 Transfer Agents And Registrars. The board of directors may appoint one
or more transfer agents or transfer clerks, and one or more registrars, each of
which shall be an incorporated bank or trust company -- either domestic or
foreign, who shall be appointed at such times and places as the requirements of
the corporation may necessitate and the board of directors may designate.
8.8 Construction; Definitions. Unless the context requires otherwise, the
general provisions, rules of construction and definitions in the General
Corporation Law of Delaware shall govern the construction of these bylaws.
Without limiting the generality of this provision, as used in these bylaws, the
singular number includes the plural, the plural number includes the singular,
and the term "person" includes both an entity and a natural person.
8.9 Provisions Additional to Provisions of Law. All restrictions,
limitations, requirements and other provisions of these Bylaws shall be
construed, insofar as possible, as supplemental and additional to all provisions
of law applicable to the subject matter thereof and shall be fully complied with
in addition to the said provisions of law unless such compliance shall be
illegal.
8.10 Provisions Contrary To Provisions Of Law. Any article, section,
subsection, subdivision, sentence, clause or phrase of these Bylaws which upon
being construed in the manner provided in Section 8.9 hereof, shall be contrary
to or inconsistent with any applicable provisions of law, shall not apply so
long as said provisions of law shall remain in effect, but such result shall not
affect the validity or applicability of any other portions of these Bylaws, it
being hereby declared that these Bylaws would have been adopted and each
article, section, subsection, subdivision, sentence, clause or phrase thereof,
irrespective of the fact that any one or more articles, sections, subsections,
subdivisions, sentences, clauses or phrases is or are illegal.
8.11 Notices. Any reference in these Bylaws to the time a notice is given
or sent means, unless otherwise expressly provided, the time a written notice by
mail is deposited in the United States mails, postage prepaid; or the time any
other written notice is personally delivered to the recipient or is delivered to
a common carrier for transmission, or actually transmitted by the person giving
the notice by electronic means, to the recipient; or the time any oral notice is
communicated, in person or by telephone or wireless means, to the recipient or
to a person at the office of the recipient who the person giving the notice has
reason to believe will promptly communicate it to the recipient.
ARTICLE IX
AMENDMENTS
Subject to Section 6.7 hereof, 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.
Whenever an amendment or new bylaw is adopted, it shall be copied in the
book of bylaws with the original bylaws, in the appropriate place. If any bylaw
is repealed, the fact of repeal with the date of the meeting at which the repeal
was enacted or the filing of the operative written consent(s) shall be stated in
said book.
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#4690-PS-99
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ATMEL CORPORATION
1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 28, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of ATMEL CORPORATION, a California corporation,
hereby acknowledges receipt of the Form 10-K dated March , 1999, and receipt of
the Notice of Annual Meeting of Shareholders and Proxy Statement dated March __,
1999, and hereby appoints George Perlegos and Mike Ross, and each of them,
proxies and attorneys-in-fact, with full power to each of substitution, on
behalf and in the name of the undersigned, to represent the undersigned at the
1999 Annual Meeting of Shareholders of ATMEL CORPORATION to be held on April 28,
1999 at 2:00 p.m., local time, at Atmel Corporation, 2325 Orchard Parkway, San
Jose, California 95131 and at any 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.
THIS PROXY WILL BE VOTED AS DIRECTED OR IF NO CONTRARY DIRECTION IS INDICATED
WILL BE VOTED FOR EACH OF THE PROPOSALS ON THE REVERSE SIDE HEREOF AND FOR SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING AS SAID PROXIES DEEM
ADVISABLE.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
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_______________________________________________________________________________
[ ] ___________________ PLAN TO ATTEND
ACCOUNT NUMBER THE MEETING
[ ]
___________________
COMMON
PLEASE MARK YOUR CHOICE LIKE
THIS [X] IN BLUE OR BLACK INK
Proposal 1 - Election of directors
Nominees: George Perlegos, Gust Perlegos, Tsung-Ching Wu,
Norm Hall and T. Peter Thomas
FOR WITHHELD
[ ] [ ] [ ] ______________________________________
FOR all nominees except as noted above.
Proposal 2 - Proposal to amend the Company's 1991 Employee Stock Purchase Plan
to increase the number of shares reserved for issuance thereunder
by 2,500,000 shares.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Proposal 3 - Proposal to amend the Company's 1996 Stock Plan to increase
the number of shares reserved for issuance thereunder by
5,000,000 shares.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Proposal 4 - Proposal to approve a change in the Company's state of
incorporation from California to Delaware by means of a merger of
the Company into a wholly-owned Delaware subsidiary.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Proposal 5 - Proposal to establish a classified Board of Directors when the
change in its state of incorporation occurs.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Proposal 6 - Proposal to increase the number of authorized shares of Common
Stock of the Company to 500,000,000 when the change in its state of
incorporation occurs.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Proposal 7 - Proposal to ratify the appointment of PricewaterhouseCoopers L.L.P.
as the independent accountants of the Company for 1999.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
IN THEIR DISCRETION UPON SUCH OTHER MATTER OR MATTERS WHICH MAY PROPERLY COME
BEFORE THE MEETING AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
_______________________________________________________________________________
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(This proxy should be marked, dated and signed by the shareholder(s) exactly as
such shareholder's 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:
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Date:
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Signature:
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Date:
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[ ] Mark here for address change and note
at left.
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