03/15/97 3:29 PM
[GRAPHIC OMITTED]
ACTEL CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on May 2, 1997
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Actel
Corporation, a California corporation (the "Company"), will be held on May 2,
1997, at 9:00 a.m., local time, at the executive offices of the Company, located
at 955 East Arques Avenue, Sunnyvale, California 94086, for the following
purposes:
1. To elect directors to serve until the next Annual Meeting of
Shareholders and until their successors are elected.
2. To approve a change in the Company's state of incorporation from
California to Nevada.
3. To approve an amendment to the Company's 1993 Employee Stock
Purchase Plan increasing the number of shares of Common Stock reserved for
issuance under such Plan by 250,000.
4. To approve an amendment to the Company's 1993 Directors' Stock
Option Plan increasing the number of shares of Common Stock reserved for
issuance under such Plan by 90,000.
5. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 28, 1997.
6. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
Only shareholders of record at the close of business on March 12, 1997, are
entitled to notice of and to vote at the Annual Meeting.
All shareholders are cordially invited to attend the Annual Meeting in
person. However, to assure your representation at the Annual Meeting, you are
urged to sign and return the enclosed Proxy as promptly as possible in the
postage-prepaid, self-addressed envelope enclosed for that purpose. Any
shareholder attending the Annual Meeting may vote in person even if such
shareholder has returned a proxy.
BY ORDER OF THE BOARD OF DIRECTORS
David L. Van De Hey
Secretary
Sunnyvale, California
March 27, 1997
ACTEL CORPORATION
--------------------------------------
PROXY STATEMENT FOR
1997 ANNUAL MEETING OF SHAREHOLDERS
The enclosed Proxy is solicited on behalf of the Board of Directors of
Actel Corporation, a California corporation (the "Company"), for use at the
Annual Meeting of Shareholders to be held on Friday, May 2, 1997, at 9:00 a.m.,
local time, and at any adjournments thereof, for the purposes set forth herein
and in the accompanying Notice of Annual Meeting of Shareholders. The Annual
Meeting will be held at the principal executive offices of the Company, which
are located at 955 East Arques Avenue, Sunnyvale, California 94086. The
Company's telephone number at that address is (408) 739-1010.
These proxy solicitation materials were mailed on or about March 31, 1997,
to all shareholders entitled to vote at the Annual Meeting.
INFORMATION CONCERNING SOLICITATION AND VOTING
Record Date
Holders of record of the Company's Common Stock at the close of business on
March 12, 1997 (the "Record Date"), are entitled to notice of and to vote at the
Annual Meeting. At the Record Date, 20,809,568 shares of the Company's Common
Stock were issued and 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 (i) delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date or (ii) attending the Annual Meeting and voting in person.
Voting and Solicitation
Each shareholder voting for the election of directors (Proposal No. 1) may
cumulate the shareholder's votes and (i) give one candidate a number of votes
equal to the number of directors to be elected multiplied by the number of
shares that the shareholder is entitled to vote or (ii) distribute the same
total number of votes among as many candidates as the shareholder chooses,
provided that votes cannot be cast for more than five directors. However, no
shareholder shall be entitled to cumulate votes unless the candidates' names
have been placed in nomination prior to the voting and the shareholder, or any
other shareholder, has given notice at the Annual Meeting to the Inspector of
Elections prior to the voting of the intention to cumulate the shareholder's
votes. In the event that cumulative voting is invoked, the proxy holders intend
to vote all proxies received by them in such a manner as will ensure the
election of as many of the nominees listed below as possible, and in such event
the specific nominees to be voted for will be determined by the proxy holders.
On all other matters, each shareholder is entitled to one vote for each share
held.
This solicitation of proxies is made by the Company, and all related costs
will be borne by the Company. In addition, the Company may reimburse brokerage
firms and other persons representing beneficial owners of shares for their
expenses in forwarding solicitation material to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telefacsimile,
or personal solicitation, without payment of additional compensation, by
directors, officers, or regular employees of the Company.
Required Vote
The quorum required to conduct business at the Annual Meeting or any
adjournments thereof is a majority of the shares of Common Stock issued and
outstanding on the Record Date. If a quorum is present, the five candidates
receiving the highest number of affirmative votes shall be elected directors;
votes against any candidate and votes withheld shall have no legal effect. The
affirmative vote of a majority of the shares "entitled to vote" (whether or not
represented at the Annual Meeting) shall be required to approve Proposal No. 2
(Reincorporation into Nevada). The affirmative vote of a majority of the shares
represented at the Annual Meeting and "entitled to vote" shall be required to
approve Proposals No. 3 (Approval of Amendment to 1993 Employee Stock Purchase
Plan) and No. 4 (Approval of Amendment to 1993 Directors' Stock Option Plan). On
all other proposals set forth herein, the affirmative vote of the majority of
the shares represented at the Annual Meeting and "voting" shall be the act of
the shareholders.
Although there is no definitive statutory or case law in California as
to the proper treatment of abstentions and broker nonvotes, the Company believes
that both abstentions and broker nonvotes should be counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
The Company also believes that neither abstentions nor broker nonvotes should be
counted for purposes of determining the total number of shares represented and
"voting" on each matter submitted to a vote of the shareholders. The Company
further believes that abstentions should be counted, but that broker nonvotes
should not be counted, for purposes of determining the total number of shares
represented and "entitled to vote" on any matter. In the absence of controlling
precedent to the contrary, the Company intends to treat abstentions and broker
nonvotes in the manner described in this paragraph.
Deadline for Receipt of Shareholder Proposals
Proposals of shareholders of the Company that are intended to be presented
by such shareholders at the Company's 1998 Annual Meeting of Shareholders must
be received by the Company no later than December 1, 1997, in order to be
considered for inclusion in the proxy statement and form of proxy relating to
that meeting.
Share Ownership
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock by each person who is known to the
Company to have owned beneficially more than five percent of the outstanding
shares of the Company's Common Stock as of the Record Date:
<TABLE>
<CAPTION>
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership Percent of Class (1)
- - --------------------------------------------------------------- ----------------------- -----------------------
<S> <C> <C>
FMR Corp.................................................... 1,484,400 (2) 7.1%
80 Devonshire Street
Boston, Massachusetts 02109
RCM Capital Management, L.L.C............................... 1,168,300 (3) 5.6%
Four Embarcadero Center, Suite 2900
San Francisco, California 94111
Texas Instruments Incorporated.............................. 2,631,578 (4) 12.6%
13500 North Central Expressway
Dallas, Texas 75243
- - ---------------------------------------
<FN>
(1) Calculated as a percentage of shares of Common Stock outstanding as of
the Record Date.
(2) As reported by the beneficial owner in a Schedule 13G filed with the
Securities and Exchange Commission ("SEC") and dated February 14, 1997,
FMR Corp. had sole voting power with respect to 79,500 of the shares of
Common Stock beneficially owned and sole investment power with respect
to all of the shares of Common Stock beneficially owned. Edward C.
Johnson 3d owned 12.0% and Abigail P. Johnson owned 24.5% of the
aggregate outstanding voting stock of FMR Corp. Through their ownership
of voting common stock and execution of a shareholders' voting
agreement, members of the Johnson family may be deemed, under the
Investment Company Act of 1940, to form a controlling group with
respect to FMR Corp. Fidelity Management & Research Company, a
wholly-owned subsidiary of FMR Corp. and an investment adviser
registered under Section 203 of the Investment Advisers Act of 1940
("Fidelity Management"), was the beneficial owner of 1,404,900 shares
of Common Stock as a result of acting as investment adviser to various
investment companies registered under Section 8 of the Investment
Company Act of 1940 ("Funds"). The ownership of one investment company,
Fidelity Select Electronics Portfolio, amounted to 1,054,500 shares.
Edward C. Johnson 3d, Chairman of FMR Corp., FMR Corp., through its
control of Fidelity Management, and the Funds each had sole power to
dispose of the 1,404,900 shares owned by the Funds. The Boards of
Trustees of the Funds had the sole power to vote or direct the voting
of the 1,404,900 shares owned by the Funds. Fidelity Management Trust
Company, a wholly-owned subsidiary of FMR Corp. and a bank as defined
in Section 3(a)(6) of the Securities Exchange Act of 1934 ("Fidelity
Trust"), was the beneficial owner of 79,500 shares as a result of its
serving as investment manager of the institutional account(s)
("Account(s)"). Edward C. Johnson 3d and FMR Corp., through its control
of Fidelity Trust, each had sole voting and dispositive power over
79,500 shares of Common Stock owned by the Account(s).
(3) As reported by the beneficial owner in a Schedule 13G filed with the
SEC and dated February 3, 1997, the RCM Capital Management, L.L.C.
("RCM Capital") had sole voting power with respect to 1,033,300 of the
shares of Common Stock beneficially owned, sole dispositive power with
respect to 1,133,300 of the shares of Common Stock, and shared
dispositive power with respect to 55,000 of the shares. RCM Limited
L.P. is the Managing Agent of RCM Capital, and RCM General Corporation
is the General Partner of RCM Limited L.P. RCM Capital is an investment
adviser registered under Section 203 of the Investment Advisers Act of
1940. As reported by Dresdner Bank AG ("Dresdner") in a Schedule 13G
filed with the SEC and dated February 7, 1997, RCM Capital a
wholly-owned subsidiary of Dresdner, an international banking
organization headquartered in Frankfurt, Germany.
(4) On March 31, 1995, the Company completed its acquisition of the
antifuse field programmable gate array business of Texas Instruments
Incorporated ("TI"). As part of the consideration for the business
acquired, the Company issued to TI 1,000,000 shares of Series A
Preferred Stock, which was convertible into 2,631,578 shares of Common
Stock. TI converted the Preferred Stock into Common Stock on March 12,
1997.
</FN>
</TABLE>
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
Nominees
A board of five directors is to be elected at the Annual Meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the Company's nominees named below. If any nominee of the Company is unable
or declines to serve as a director at the time of the Annual Meeting, the
proxies will be voted for any nominee who shall be designated by the present
Board of Directors to fill the vacancy. The Company is not aware of any nominee
who will be unable or will decline to serve as a director. The term of office of
each person elected as a director will continue until the next Annual Meeting
and until a successor has been elected.
The Board of Directors recommends that shareholders vote "FOR" the nominees
listed below:
<TABLE>
<CAPTION>
Director
Name of Nominee Age Principal Occupation Since
- - ------------------------------------- ----- ----------------------------------------------------------- ----------
<S> <C> <C>
John C. East....................... 52 President and Chief Executive Officer of the Company 1988
Keith B. Geeslin (1)............... 44 General Partner, Sprout Group 1990
Jos C. Henkens (1)(2).............. 44 General Partner, Advanced Technology Ventures 1988
Frederic N. Schwettmann (2)........ 57 President and Chief Operating Officer, 1990
Read-Rite Corporation
Robert G. Spencer (2).............. 53 Principal, The Spencer Group 1989
- - ---------------------------------------
<FN>
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
</FN>
</TABLE>
Mr. East has served as President, Chief Executive Officer, and a director
of the Company since December 1988. Mr. East also serves, at the Company's
request, as a director of Adaptec, Inc. and a private company.
Mr. Geeslin has been a director of the Company since March 1990. He has
been a general partner of Sprout Group, the venture capital affiliate of
Donaldson, Lufkin & Jenrette Securities Corporation, for the past five years.
Mr. Geeslin also serves as a director of Norand Corporation, SDL Incorporated,
and various private companies.
Mr. Henkens has been a director of the Company since April 1988. He also
served as a director of the Company from October 1985 to July 1986. Mr. Henkens
has been a general partner of Advanced Technology Ventures, a venture capital
firm, for the past ten years. Mr. Henkens also serves as a director of Credence
Systems Corporation, ParcPlace-Digitalk, Inc., and various private companies.
Mr. Schwettmann has been a director of the Company since April 1990. He has
been President, Chief Operating Officer, and a director of Read-Rite
Corporation, the leading independent supplier of thin-film magnetic recording
heads for Winchester disk drives, since May 1993. From June 1990 to May 1993,
Mr. Schwettmann served on the Company's Board of Directors as the representative
of Hewlett-Packard Company, where he was Vice President and General Manager of
the Circuit Technologies Group. Mr. Schwettmann also serves as a director of SDL
Incorporated.
Mr. Spencer has been a director of the Company since February 1989. He has
been the principal of The Spencer Group, a consulting firm, for the past five
years.
There is no family relationship between any director or executive officer
of the Company and any other director or executive officer of the Company.
Board Meetings and Committees
During the Company's 1996 fiscal year, which ended December 29, 1996, the
Board of Directors held five meetings, the Board's Audit Committee held three
meetings, and the Board's Compensation Committee held six meetings. No director
attended fewer than 75% of the aggregate of (i) the number of meetings of
regularly scheduled and special meetings of the Board of Directors and (ii) the
total number of meetings held by all committees of the Board of Directors on
which he served.
The Audit Committee, which currently consists of Messrs. Geeslin and
Henkens, reviews the results and scope of the audit and other services provided
by the Company's independent auditors. The Compensation Committee, which
currently consists of Messrs. Henkens, Schwettmann, and Spencer, approves
salary, benefit, and incentive compensation matters. The Board of Directors does
not have a nominating committee or a committee performing the functions of a
nominating committee.
Director Compensation
Cash Compensation
Since the Company's initial public offering in 1993, directors who are not
employees of the Company receive compensation for their services as directors at
the rate of $1,500 per Board meeting attended and $1,000 per committee meeting
attended. In addition, directors are reimbursed for reasonable out-of-pocket
expenses incurred in the performance of their duties. Beginning in 1996,
nonemployee directors also receive an annual retainer of $12,000.
1993 Directors' Stock Option Plan
The Company's 1993 Directors' Stock Option Plan (the "Director Plan")
provides for the grant of nonstatutory stock options to nonemployee directors of
the Company. Four of the Company's directors (Messrs. Geeslin, Henkens,
Schwettmann, and Spencer) are currently eligible to receive option grants under
the Director Plan. For a summary of the material terms of the Director Plan, as
well as disclosure regarding the approximate dollar value and number of options
to purchase shares that were allocated to directors under the Director Plan in
the last fiscal year, see "PROPOSAL NO. 4 -- APPROVAL OF AMENDMENT TO 1993
DIRECTORS' STOCK OPTION PLAN."
PROPOSAL NO. 2 -- REINCORPORATION INTO NEVADA
Introduction
For the reasons set forth below, the Board of Directors believe that the
best interest of the Company and its shareholders will be served by changing the
state of incorporation of the Company form California to Nevada (the "Proposed
Reincorporation"). Shareholders are urged to read carefully the following
sections of this Proxy Statement, including the exhibit, before voting on the
Proposed Reincorporation. In this discussion of the Proposed Reincorporation,
the term "Actel California" refers to the existing California corporation and
the term "Actel Nevada" refers to the new Nevada corporation that is the
proposed successor to Actel California.
The change in the state of incorporation of the Company from California to
Nevada will be effected by the Agreement and Plan of Merger by and between Actel
California and Actel Nevada, a copy of which is attached hereto as Exhibit A
(the "Merger Agreement"). Pursuant to the Merger Agreement, Actel California
will merge with and into Actel Nevada, and Actel Nevada, under its current
Articles of Incorporation, will continue as the surviving corporation. Each
outstanding share of Actel California Common Stock will automatically be
converted into one share of Actel Nevada Common Stock upon the effective date of
the merger. Shareholders of Actel California will have no dissenters' rights of
appraisal with respect to the Proposed Reincorporation. See "Significant
Differences Between the Corporation Laws of California and Nevada - Appraisal
Rights."
Principal Reasons for the Proposed Reincorporation
Nevada follows a policy of encouraging incorporation in that state and, in
furtherance of that policy, has adopted comprehensive, flexible corporate laws
responsive to the legal and business needs of corporations organized under its
laws. These laws include provisions that, in the judgment of the Company's Board
of Directors, will allow the Company better to protect the interests of its
shareholders in situations involving a potential change in corporate control. In
addition, although many California corporations have in recent years
reincorporated in Delaware, the cost of maintaining a corporation as a Nevada
corporation is significantly less than for a Delaware corporation, and Nevada
law provides much of the same flexibility as Delaware. Other corporations have
also initially chosen Nevada for their state of incorporation or have
subsequently changed their corporate domicile to Nevada in a manner similar to
that proposed by the Company.
Antitakeover Implications
Nevada, like many other states, permits a corporation to adopt a number of
measures through amendment of the corporate charter or bylaws or otherwise, and
provides default legal provisions that apply unless the corporation has
affirmatively chosen to opt out, designed to reduce a corporation's
vulnerability to unsolicited takeover attempts. The Proposed Reincorporation is
not being proposed in order to prevent such a change in control, nor is it in
response to any present attempt known to the Board of Directors to acquire
control of the Company, obtain representation on the Board of Directors, or take
significant action that affects the Company.
In the discharge of its fiduciary obligations to its shareholders, the
Board of Directors has evaluated the Company's vulnerability to potential
unsolicited bidders. In the course of such evaluation, the Board of Directors of
the Company has considered or may consider in the future certain defensive
strategies designed to enhance the Board's ability to negotiate with an
unsolicited bidder. These strategies include, but are not limited to, the
adoption of a shareholder rights plan, severance agreements for its management
and key employees that become effective upon the occurrence of a change in
control of the Company, and the authorization of preferred stock, the rights and
preferences of which are determined by the Board of Directors.
Certain effects of the Proposed Reincorporation may be considered to have
antitakeover implications simply by virtue of the Company being subject to
Nevada law. For example, Sections 78.411 to 78.444 of the Nevada General
Corporation Law, from which Actel Nevada does not intend to opt out, restrict
certain "combinations" with "interested stockholders" for three (3) years
following the date that a person becomes an interested stockholder, unless the
Board of Directors has approved either the business combination or the
transaction by which the interested stockholder became an interested stockholder
prior to the time such person became an interested person. Even after the three
(3) year period, such combinations are restricted unless certain tests are
satisfied. In responding to an unsolicited bidder, the Nevada General
Corporation Law also authorizes directors to consider not only the interests of
stockholders, but also the interests of employees, suppliers, creditors,
customers, the economy of the state and nation, the interests of the community
and society in general, and the long-term as well as short-term interests of the
corporation and its stockholders, including the possibility that these interests
may be best served by the continued independence of the corporation. For a
discussion of these and other differences between the laws of California and
Nevada, see "Significant Differences Between the Corporation Laws of California
and Nevada" below.
The Board of Directors believes that unsolicited takeover attempts may be
unfair or disadvantageous to the Company and its shareholders because:
(a) a nonnegotiated takeover bid may be timed to take advantage of
temporarily depressed stock prices;
(b) a nonnegotiated takeover bid may be designed to foreclose or
minimize the possibility of more favorable competing bids; or
(c) a nonnegotiated takeover bid may involve the acquisition of only a
controlling interest in the Company's stock, without affording all
shareholders the opportunity to receive the same economic benefits.
By contrast, in a transaction in which an acquiror must negotiate with an
independent board of directors, the board can and should take account of the
underlying and long-term values of assets, the possibilities for alternative
transactions on more favorable terms, possible advantages from a tax-free
reorganization, anticipated favorable developments in the corporation's business
not yet reflected in the stock price, and equality of treatment for all
shareholders.
Despite the belief of the Board of Directors as to the benefits to
shareholders of the Proposed Reincorporation, such proposal may be
disadvantageous to the extent that it has the effect of discouraging a future
takeover attempt that 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 Proposed Reincorporation, shareholders who might wish to
participate in a tender offer may not have an opportunity to do so. In addition,
to the extent that such provisions enable the Board of Directors to resist a
takeover or a change in control of the Company, they could make it more
difficult to change the existing Board of Directors and management.
No Change in the Board Members, Business, Management, or Location of Principal
Facilities of the Company; Certain Changes to Name and to Employee Plans
The Proposed Reincorporation will effect a change in the legal domicile of
the Company and other changes of a legal nature, certain of which are described
in this Proxy Statement. The Proposed Reincorporation will not result in any
change in the business, management, fiscal year, assets or liabilities, or
location of the principal facilities of the Company. The five (5) directors who
are currently the directors of Actel California will continue as the directors
of Actel Nevada. All employee benefit and stock option plans of Actel
California, including the 1986 Incentive Stock Option Plan, the 1993 Employee
Stock Purchase Plan, the 1993 Directors' Stock Option Plan, and the 1995
Employee and Consultant Stock Plan, will be continued by Actel Nevada and each
outstanding option to purchase shares of Actel California stock will
automatically be converted into an option to purchase an equivalent number of
shares of Actel Nevada stock on the same terms and subject to the same
conditions. The name of the Company will remain Actel Corporation.
The Charter and Bylaws of Actel California and Actel Nevada
The provisions of the Actel Nevada Articles of Incorporation are similar to
those of the Actel California Articles of Incorporation in most respects. The
material changes that have been made in the Actel Nevada Articles of
Incorporation as compared with the Actel California Articles of Incorporation
are described below in this section or under "Significant Differences Between
the Corporation Laws of California and Nevada."
Authorized Stock
The Articles of Incorporation of Actel California authorize 35,000,000
shares of capital stock, $.01 par value, of which 30,000,000 shares are
designated Common Stock and 5,000,000 shares are designated Preferred Stock. The
Articles of Incorporation of Actel Nevada authorize 60,000,000 shares of capital
stock, $.001 par value, of which 55,000,000 shares are designated Common Stock
and 5,000,000 shares are designated Preferred Stock.
Monetary Liability of Directors
The Articles of Incorporation of Actel California and Actel Nevada both
provide for the elimination or limitation of personal monetary liability of
directors to the fullest extent permissible under the laws of each corporation's
respective state of incorporation. The laws of Nevada and Actel Nevada's
Articles of Incorporation also permit the elimination or limitation of the
liability of officers of the Company. Nevada permits liability to be limited to
a greater extent than does California law. See "Significant Differences Between
the Corporation Laws of California and Nevada" below.
Indemnification
The indemnification provisions of Actel California's Articles of
Incorporation and Bylaws are substantially similar to those of the Articles of
Incorporation and Bylaws of Actel Nevada, though Actel Nevada has placed certain
of these provisions in the Articles of Incorporation rather than in the Bylaws.
These provisions in Actel Nevada's Articles of Incorporation state that the
Company shall indemnify directors and officers in connection with any action,
suit, or proceeding to the fullest extent permitted by law for acts as directors
or officers (of Actel Nevada or of a predecessor to Actel Nevada, or as a
director, officer, employee, or agent of another enterprise at the request of
the Company), and that the Company shall advance the expenses of directors and
officers in advance of the final disposition of any action, suit, or proceeding
upon receipt of an undertaking by the director or officer to repay the amount
advanced if a court ultimately determines that the director or officer is not
entitled to indemnification. Similar provisions also appear in the Bylaws of
both Actel California and Actel Nevada.
While the Bylaws of both Actel California and Actel Nevada permit the
Company to obtain insurance on behalf of directors, officers, employees, and
agents, Actel Nevada's Bylaws also permit the Company to make other financial
arrangements on behalf of any such person for any liabilities or expenses
incurred in such capacity. See "Significant Differences Between the Corporation
Laws of California and Nevada" below.
Significant Differences Between the Corporation Laws of California and Nevada
The General Corporation Laws of California and Nevada differ in many
respects. It is not practical to summarize all differences in this Proxy
Statement, but the principal differences that could materially affect the rights
of shareholders are discussed below.
Size of the Board of Directors
Under California law, changes in the number or of directors or, if set
forth in the articles of incorporation or bylaws, the range in the number of
directors must in general be approved by a majority of the outstanding shares,
but the board of directors may fix the exact number of directors within a stated
range, if authorized. Nevada law permits not only the stockholders but also the
board of directors acting independently of the stockholders to change the
authorized number, or the range, 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 articles of incorporation (in which case a change in the number
of directors may be made only by amendment to the articles of incorporation
following approval of such change by the stockholders). The Articles of
Incorporation of Actel Nevada provide that the number of directors shall be as
specified in the Bylaws. The ability of the Board of Directors, under Nevada
law, to alter the size of the Board without stockholder approval enables the
Company to respond quickly to a potential opportunity to attract the services of
a qualified director or to eliminate a vacancy for which a suitable candidate is
not available. If the Proposed Reincorporation is approved, the five (5)
directors of Actel California will continue as directors of Actel Nevada and the
Bylaws of Actel Nevada will initially provide for a five (5) member Board of
Directors.
Cumulative Voting
California law generally provides that if any shareholder has given notice
of his or her 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.
Under Nevada law, cumulative voting is not mandatory, and cumulative voting
rights must be provided in a corporation's articles of incorporation if
stockholders are to be entitled to cumulative voting rights. The Articles of
Incorporation of Actel Nevada do not provide for cumulative voting.
California law permits a corporation that is listed on a national
securities exchange, or that is listed on the Nasdaq National Market and has at
least 800 stockholders as of the record date for the corporation's most recent
annual meeting of shareholders, to amend its articles or bylaws to eliminate
cumulative voting by approval of the board of directors and of the outstanding
shares voting together as a class. Actel California's current Articles of
Incorporation have eliminated cumulative voting.
Power to Call Special Shareholders' Meetings
Under California law, a special meeting of shareholders may be called by
(a) the board of directors, (b) the chairman of the board, (c) the president,
(d) the holders of shares entitled to cast not less than ten percent (10%) of
the votes at such meeting, or (e) such additional persons as are authorized by
the articles of incorporation or the bylaws. Under Nevada law, a special meeting
of stockholders may be called as set forth in the bylaws. Although permitted to
do so, the Bylaws of Actel Nevada do not eliminate the right of stockholders to
call a special meeting of stockholders; instead, the Bylaws authorize the Board
of Directors, the President, or the holders of at least ten percent (10%) of the
outstanding capital stock to call a special meeting of stockholders. Following
the Proposed Reincorporation, the Board of Directors of Actel Nevada could
(although it has no current intention to do so) amend the Bylaws to limit or
eliminate the right of stockholders to call a special meeting of stockholders.
The right of the stockholders to call a special meeting is not set forth in the
Articles of Incorporation of Actel Nevada, which may be amended only by
stockholder vote or written consent, and therefore such right may be limited or
eliminated by amendment of the Bylaws by the Board of Directors. Any such
limitation could make it more difficult for stockholders to initiate action that
is opposed by the Board of Directors. Such action on the part of stockholders
could include the removal of an incumbent director, the election of a
stockholder nominee as a director, or the implementation of a rule requiring
stockholder ratification of specific defensive strategies that have been adopted
by the Board of Directors with respect to unsolicited takeover bids. The ability
of the Board of Directors under Nevada law to limit or eliminate the right of
stockholders to initiate action at stockholder meetings may make it more
difficult to change the existing Board of Directors and management.
Elimination of Actions by Written Consent of Shareholders
Under California and Nevada law, shareholders may execute an action by
written consent in lieu of a shareholder meeting. While Nevada law permits a
corporation to eliminate such actions by written consent in its articles of
incorporation or bylaws, the Articles and Bylaws of Actel Nevada do not
currently prohibit actions by written consent of the stockholders, although the
Board of Directors could amend the Bylaws in this respect. The ability of the
Board of Directors under Nevada law to limit or eliminate the right of
stockholders to initiate action by written consent may make it more difficult to
change the existing Board of Directors and management.
Business Combinations
In the last several years, a number of states, including Nevada, have
adopted special laws designed to make certain kinds of "unfriendly" corporate
takeovers, or other transactions involving a corporation and one or more of its
significant stockholders, more difficult.
Sections 78.411 to 78.444 of the Nevada General Corporation Law prohibit a
Nevada corporation from engaging in a "combination" with an "interested
stockholder" for three years following the date that such person becomes an
interested stockholder and place certain restrictions on such combinations even
after the expiration of the three-year period. With certain exceptions, an
interested stockholder is a person or group that owns 10% or more of the
corporation's outstanding voting power (including stock with respect to which
the person has voting rights and any rights to acquire stock pursuant to an
option, warrant, agreement, arrangement, or understanding or upon the exercise
of conversion or exchange rights) or is an affiliate or associate of the
corporation and was the owner of 10% or more of such voting stock at any time
within the previous three years.
For purposes of Sections 78.411 to 78.444, the term "combination" is
defined broadly to include mergers of the corporation or its subsidiaries with
the interested stockholder; sales or other dispositions to the interested
stockholder of assets of the corporation or a subsidiary equal to 5% of the
aggregate value of all assets of the corporation, equal to 5% of the value of
all outstanding shares of the corporation, or representing 10% of the
corporation's earning power or net income; the issuance or transfer by the
corporation or a subsidiary of shares equal to 5% of the value of all
outstanding shares of the corporation to the interested stockholder (except
under the exercise of warrants or rights to purchase shares offered or in a pro
rata distribution); the adoption of any plan of liquidation of the corporation
proposed by or under any agreement, arrangement, or understanding with the
interested stockholder; any reclassification, recapitalization, merger of the
corporation with any of its subsidiaries, or other transaction that has the
effect of increasing the proportionate ownership of the interested stockholder;
or receipt by the interested stockholder (except proportionately as a
stockholder), directly or indirectly, of any loans, advances, guarantees,
pledges, or other financial assistance or tax advantages provided by or through
the corporation. These prohibitions also apply to affiliates and associates of
the interested stockholder.
The three-year moratorium imposed on business combinations by Sections
78.411 to 78.444 does not apply if, prior to the date on which such stockholder
becomes an interested stockholder, the board of directors approves either the
business combination or the transaction that resulted in the person becoming an
interested stockholder.
Even after expiration of the three-year period, the moratorium on
combinations continues to apply unless one of the following requirements is met:
(i) prior to the date on which such stockholder becomes an interested
stockholder the board of directors approves either the business combination or
the transaction that resulted in the person becoming an interested stockholder;
(ii) the combination is approved by a majority of the voting power not
beneficially owned by the interested stockholder or its affiliates or associates
at a meeting called for that purpose; or (iii) the combination satisfies certain
provisions concerning fair price.
Sections 78.411 to 78.444 only apply to Nevada corporations that have 200
or more stockholders and, unless the articles of incorporation provide
otherwise, have a class of voting shares registered under Section 12 of the
Securities Exchange Act of 1934 (as the Common Stock of Actel Nevada would be
upon consummation of the Reincorporation). A Nevada corporation may elect not to
be governed by Sections 78.411 to 78.444 by a provision in its original
certificate of incorporation or an amendment thereto, which amendment must be
approved by a majority of the outstanding voting power, although such amendment
is not effective until 18 months after the vote. Actel Nevada has not elected,
and does not intend to elect, not to be governed by these Sections; therefore,
Sections 78.411 to 78.444 will apply to Actel Nevada.
Sections 78.411 to 78.444 should encourage any potential acquiror to
negotiate with the Company's Board of Directors. These Sections also have the
effect of limiting the ability of a potential acquiror to make a two-tiered bid
for the Company in which stockholders would be treated unequally. Shareholders
should note that the application of these Sections to the Company will confer
upon the Board the power to reject a proposed business combination, even though
a potential acquiror may be offering a substantial premium for the Company's
shares over the then-current market price. These Sections should also discourage
certain potential acquirors unwilling to comply with their provisions.
Control Shares
Nevada law further seeks to impede "unfriendly" corporate takeovers by
providing in Sections 78.378 to 78.3793 of the Nevada General Corporation Law
that an "acquiring person" shall only obtain voting rights in the "control
shares" purchased by such person to the extent approved by the other
stockholders at a meeting. With certain exceptions, an acquiring person is one
who acquires or offers to acquire a "controlling interest" in the corporation,
defined as one-fifth or more of the voting power. Control shares include not
only shares acquired or offered to be acquired in connection with the
acquisition of a controlling interest, but also all shares acquired by the
acquiring person within the preceding 90 days. The statute covers not only the
acquiring person but also any persons acting in association with the acquiring
person. California does not have a control shares statute.
Under Sections 78.378 to 78.3793, a Nevada corporation may, if so provided
in the articles of incorporation or bylaws of the corporation in effect on the
tenth day following acquisition of a controlling interest, call for redemption
of not less than all of the control shares at the average price paid for the
control shares if (i) the acquiring person has not delivered an offeror's
statement to the corporation within ten days after acquisition of the control
shares or (ii) the other stockholders do not accord full voting rights to the
control shares.
Unless otherwise provided in the articles of incorporation or bylaws in
effect on the tenth day following acquisition of a controlling interest, if the
control shares are accorded full voting rights and the acquiring person has
acquired a majority of the voting power, then any stockholder of record who did
not vote in favor of authorizing such voting rights is entitled to demand
payment for the fair value of such stockholder's shares.
Sections 78.378 to 78.3793 apply only to Nevada corporations that (i) have
200 or more stockholders, at least 100 of whom are stockholders of record and
are resident in Nevada, and (ii) do business in Nevada directly or through an
affiliated corporation. A corporation may elect to opt out of the provisions of
Sections 78.378 to 78.3793 if, before an acquisition of a controlling interest
is made, the articles of incorporation or bylaws in effect on the tenth day
following the acquisition of a controlling interest by an acquiring person
provide that these Sections do not apply. Although Actel Nevada has not
currently elected to opt out of Sections 78.378 to 78.3793, the Company does not
currently and will not as a result of the Proposed Reincorporation have 100 or
more record stockholders resident in Nevada. If and until that threshold of
Nevada stockholders is reached, Sections 78.378 to 78.3793 would not apply to
the Company.
To the extent such provisions were in the future to apply to the Company,
Sections 78.378 to 78.3793 should, similarly to the business combination
provisions discussed above, encourage any potential acquiror to negotiate with
the Company's Board of Directors. These sections would also have the effect of
limiting the ability of a potential acquiror to make a two-tiered bid for the
Company in which stockholders would be treated unequally. Application of these
Sections to the Company would confer upon the Board the power to reject a
proposed business combination, even though a potential acquiror may be offering
a substantial premium for the Company's shares over the then-current market
price. These Sections would also discourage certain potential acquirors
unwilling to comply with their provisions.
Removal of Directors
Under California law, any director or the entire board of directors may be
removed, with or without cause, by the affirmative vote 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, or not consenting in writing to removal, would be sufficient to
elect the director under cumulative voting. Under Nevada law, any director may
be removed from office by the vote of stockholders representing not less than
two-thirds of the voting power of the class or series of stock of the Company
entitled to elect such director, unless the articles of incorporation provide
for cumulative voting or a larger percentage of voting stock. If a Nevada
corporation's articles of incorporation provide for cumulative voting, a
director may not be removed except upon the vote of stockholders owning
sufficient voting power to have prevented such director's election in the first
instance. The Articles of Incorporation of Actel Nevada do not provide for
cumulative voting, and do not specify any larger percentage for removal;
therefore, two-thirds of the voting power of the class or series of stock
entitled to elect a director may remove such director.
Filling Vacancies on the Board of Directors
Under California law, unless the articles of incorporation or bylaws
provide otherwise, any vacancy on the board of directors not 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. Unless the articles of incorporation or bylaws otherwise
provide, a vacancy created by removal of a director may be filled only by
approval of the shareholders. Actel California's Articles of Incorporation and
Bylaws permit directors to fill vacancies; however, if the vacancy was created
by the removal of a director by the vote or written consent of the shareholders
or by court order, the vacancy may be filled only by the affirmative vote of a
majority of shares represented and voting at a duly held meeting at which a
quorum is present, or by the unanimous written consent of all the shares
entitled to vote thereon. Under Nevada law, unless a corporation's articles of
incorporation provide otherwise, any vacancy on the board of directors,
including one created by removal of a director or an increase in the number of
authorized directors, may be filled by the majority of the remaining directors,
even if such number constitutes less than a quorum. Nevada law would thus enable
the Board of Directors to respond quickly to opportunities to attract the
services of qualified directors; but it would also diminish control of the Board
by the shareholders of the Company between meetings.
Loans to Officers and Employees
Under California law, any loan to or guarantee for the benefit of a
director or officer of a corporation or its parent requires approval of the
shareholders, not counting any shares owned by the relevant director or officer,
unless such loan or guaranty is provided under an employee benefit plan approved
by shareholders owning a majority of the outstanding shares of the corporation.
In addition, under California law shareholders of any corporation with 100 or
more shareholders of record may approve a bylaw authorizing the board of
directors alone, not counting the vote of any interested director, to approve
loans or guarantees 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. The Bylaws of Actel
California authorize such loans or guarantees. These specific provisions of
California law dealing with loans and guarantees would no longer apply after the
Proposed Reincorporation.
Limitation of Liability and Indemnification
California and Nevada have similar laws respecting indemnification by a
corporation of its officers, directors, employees, and other agents. The laws of
both states also permit corporations to adopt a provision in their articles of
incorporation eliminating the liability of a director to the corporation or its
shareholders for monetary damages for breach of the director's fiduciary duty of
care. There are nonetheless certain differences between the laws of the two
states respecting indemnification and limitation of liability.
The Articles of Incorporation of Actel California eliminate the liability
of directors to the fullest extent permissible under California law. California
law permits eliminating or limiting the personal liability of a director for
monetary damages in an action brought by or in the right of the corporation (a
"derivative suit") for breach of a director's duties to the corporation and its
shareholders; provided, however, that the corporation may not eliminate or limit
liability for (i) intentional misconduct or knowing and culpable violation of
law; (ii) acts or omissions that a director believes to be contrary to the best
interests of the corporation or its shareholders, or that involve the absence of
good faith on the part of the director; (iii) receipt of an improper personal
benefit; (iv) acts or omissions that show reckless disregard for the director's
duty to the corporation or its shareholders, where the director in the ordinary
course of performing a director's duties should be aware of a risk of serious
injury to the corporation or its shareholders; (v) acts or omissions that
constitute an unexcused pattern of inattention that amounts to an abdication of
the director's duty to the corporation or its shareholders; (vi) interested
transactions between the corporation and a director in which a director has a
material financial interest; and (vii) liability for improper distributions,
loans, or guarantees.
The Articles of Incorporation of Actel Nevada eliminate the liability of
both directors and officers to the fullest extent permissible under Nevada law,
as such law exists currently or as it may be amended in the future. Under Nevada
law, such provision may not eliminate or limit director or officer monetary
liability for (i) acts or omissions involving intentional misconduct, fraud, or
a knowing violation of law or (ii) the payment of certain prohibited
distributions. Such limitation of liability provision also may not limit a
director's or officer's liability for violation of, or otherwise relieve Actel
Nevada or its directors or officers 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 law permits indemnification of expenses incurred in derivative
or third-party actions, except that, with respect to derivative actions, (a) no
indemnification may be made when a person is adjudged liable to the corporation
in the performance of that person's duty to the corporation and its shareholders
unless a court determines such person is entitled to indemnity for expenses, and
then such indemnification may be made only to the extent that such court shall
determine, and (b) no indemnification may be made in respect of amounts paid in
settling or otherwise disposing of a pending action, or expenses incurred in
defending a pending action that is settled or otherwise disposed of, without
court approval.
Indemnification is permitted by California law only for acts taken in good
faith and believed to be in the best interests of the corporation and its
shareholders, as determined by a majority vote of a disinterested quorum of the
directors, independent legal counsel (if a quorum of independent directors is
not obtainable), a majority vote of a quorum of the shareholders (excluding
shares owned by the indemnified party), or the court handling the action.
California law requires indemnification when the individual has
successfully defended the action on the merits (as opposed to Nevada law, which
requires indemnification relating to a successful defense on the merits or
otherwise).
Nevada law generally permits indemnification of expenses incurred in the
defense or settlement of a derivative or third-party action, provided that,
unless a court orders indemnification or the corporation is bound to advance
expenses as they are incurred, there is a determination by a disinterested
quorum of the directors, by independent legal counsel, or by the stockholders
that the person seeking indemnification acted in good faith and in a manner
reasonably believed to be in or (in contrast to California law) not opposed to
the 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 to the corporation. Nevada law requires
indemnification of expenses when the individual being indemnified has
successfully defended any action, claim, issue, or matter therein, whether on
the merits or otherwise.
Nevada law states that the indemnification provided by statute shall not be
deemed exclusive of any other rights under the articles of incorporation, any
bylaw, agreement, vote of stockholders or disinterested directors, or otherwise.
Each current officer and director of the Company has entered into or will enter
into an indemnification agreement with Actel Nevada that conforms to Nevada law
and includes within its purview future changes in Nevada law that expand the
permissible scope of indemnification of directors and officers of Nevada
corporations.
Nevada law provides that the articles of incorporation or bylaws or an
agreement made by a corporation may provide that the expenses of directors and
officers incurred in defending an action must be paid by the corporation as they
are incurred and in advance of the final disposition of the action upon receipt
of an undertaking by or on behalf of the director or officer to repay the amount
if the court ultimately determines that such person is not entitled to
indemnification. The Articles of Incorporation and the Bylaws of Actel Nevada
provide that the Company shall indemnify directors and officers to the fullest
extent permitted under Nevada law, and that the Company shall pay all expenses
incurred in defending an action in advance. The Bylaws of Actel Nevada also
permit such indemnification of and advancement of expenses to employees and
agents of the Company.
Nevada law further provides that a corporation may purchase and maintain
insurance or make other financial arrangements on behalf of any director,
officer, employee, or agent of the corporation (or person who is serving in such
capacity with another enterprise at the request of the corporation), whether or
not the corporation has the authority to indemnify such person. These other
financial arrangements may include a trust fund, self-insurance, securing the
corporation's obligation by granting a security interest or other lien, or
establishing a letter of credit, guaranty, or surety, although no financial
arrangement may provide protection for intentional misconduct, fraud, or a
knowing violation of law except with respect to the advancement of expenses or
unless ordered by a court. In the absence of fraud, the decision of the board of
directors as to the propriety of any insurance or other financial arrangement is
conclusive, and the insurance or other financial arrangement is not void or
voidable and does not subject any director approving it to personal liability
even if such director is a beneficiary of the insurance or other financial
arrangement. The Bylaws of Actel Nevada permit the Company to purchase and
maintain insurance and make such other financial arrangements.
Inspection of Shareholder List
California law allows any shareholder to inspect the shareholder list, the
accounting books and records, and the minutes of board and shareholder
proceedings for a purpose reasonably related to such person's interest as a
shareholder. California law provides, in addition, for an absolute right to
inspect and copy the corporation's shareholder list by persons who hold an
aggregate of five percent (5%) or more of a corporation's voting shares or who
hold one percent (1%) or more of such shares and have filed a Schedule 14A with
the Securities and Exchange Commission.
Nevada law allows inspection of a stockholder list only upon five (5) days'
notice by either a person who has been a stockholder of record at least six (6)
months or a person holding, or authorized in writing by the holder of, five
percent (5%) of the corporation's outstanding shares. In addition, the
corporation may deny such inspection rights if the stockholder requesting
disclosure refuses to sign an affidavit to the effect that (i) the inspection is
not desired for a purpose that is in the interest of a business or object other
than the business of the corporation and (ii) the stockholder has not at any
time sold or offered for sale any list of stockholders of any corporation or
aided and abetted any other person for such purpose. To inspect the accounting
and financial books and records of a corporation, a stockholder must hold or
have the written authorization of the holders of at least fifteen percent (15%)
of all issued and outstanding shares, and a corporation may demand an affidavit
to the effect that such inspection is not desired for any purpose not related to
such person's interest in the corporation as a stockholder. No right to inspect
the accounting and financial books and records applies to any corporation listed
and traded on a recognized stock exchange or which furnishes detailed annual
financial statements to its stockholders.
Lack of access to stockholder records, even though unrelated to the
stockholder's interests as a stockholder, could result in impairment of the
stockholder's ability to coordinate opposition to management proposals,
including proposals with respect to a change in control of the Company. However,
California law provides that California provisions concerning the inspection of
shareholder lists apply not only to California corporations but also to
corporations organized under the laws of other states that have their principal
executive offices in California or customarily hold meetings of the board in
California, and that the California provisions concerning accounting books and
records and the minutes of board and shareholder proceedings apply to any such
foreign corporation that has its principal executive offices in California. For
so long as the Company continues to have its principal executive offices in
California and to hold board of directors meetings in California, and to the
extent such provisions applicable to foreign corporations are enforceable, the
Company will need to comply with California law concerning shareholder
inspections.
Dividends and Repurchases of Shares
Under California law, a corporation may not make any distribution
(including dividends, whether in cash or other property, and repurchases of its
shares) unless, immediately prior to the proposed distribution, the
corporation's retained earnings equal or exceed the amount of the proposed
distribution or, immediately after giving effect to such distribution, the
corporation's assets (exclusive of goodwill, capitalized research and
development expenses, and deferred charges) would be at least equal to 125% of
its liabilities (not including deferred taxes, deferred income, and other
deferred credits) and the corporation's current assets would be at least equal
to its current liabilities (or 125% of 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). California also
prohibits any distribution if the corporation or subsidiary making the
distribution is or would be likely to be unable to meet its liabilities.
California also prohibits making any distribution to a class or series of shares
junior to another class or series with respect to a liquidation preference
unless after giving effect to the distribution the excess of assets over
liabilities is at least equal to the liquidation preference of all such shares
or, in the case of a dividend preference, retained earnings prior to the
distribution at least equal the proposed distribution plus cumulative dividends
in arrears on all such shares.
Nevada law prohibits a distribution (including dividends, purchases,
redemptions or other acquisition of shares, distributions of indebtedness, or
otherwise) if, after giving effect to the distribution, (i) the corporation
would not be able to pay its debts as they become due in the usual course of
business or (ii) except as provided in the articles of incorporation, the
corporation's total assets would be less than the sum of its total liabilities
plus the amount that would be needed, if the corporation were to be dissolved at
the time of distribution, to satisfy the preferential rights upon dissolution of
stockholders whose preferential rights are superior to those receiving the
distribution.
To date, the Company has not paid cash dividends on its capital stock. In
addition, the Company's bank line of credit prohibits the payment of cash
dividends without the bank's consent. It is the present policy of the Board of
Directors to retain earnings for use in the Company's business, and the Company
does not anticipate paying cash dividends on its capital stock in the
foreseeable future.
Shareholder Voting
Both California and Nevada law generally require that a majority of
shareholders of both the acquiring and target corporations approve statutory
mergers. Nevada law does not require a stockholder vote of the surviving
corporation in a merger (unless the corporation provides otherwise in its
articles of incorporation) if (i) the merger agreement does not amend the
existing articles of incorporation of the surviving corporation, (ii) each
stockholder of the surviving corporation whose shares were outstanding before
the merger will hold the same number of shares with identical designations,
preferences, limitations, and relative rights after the merger, and (iii) the
number of shares outstanding after the merger plus the number of shares issued
as a result of the merger, either by conversion or exercise of securities issued
pursuant to the merger, will not exceed by more than twenty percent (20%) the
number of shares of the surviving corporation outstanding immediately prior to
the merger. 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 five-sixths of the
voting power of the surviving or acquiring corporation or its parent entity.
Both California and Nevada law also require that a sale of all or
substantially all of the assets of a corporation be approved by a majority of
the voting shares of the corporation transferring such assets.
With certain exceptions, California law also requires that mergers,
reorganizations, certain sales of assets, and similar transactions be approved
by a majority vote of each class of shares outstanding. By contrast, Nevada law
generally does not require class voting, except in certain transactions
involving an amendment to the articles of incorporation that differentially
affects a specific class of shares. As a result, stockholder approval of such
transactions may be easier to obtain under Nevada law for companies that have
more than one class of shares outstanding.
California law also requires that, except in a short-form merger or a
merger of a parent corporation into its subsidiary in which it owns at least
ninety percent (90%) of the outstanding shares, if a constituent corporation in
the merger or its parent owns at least fifty percent (50%) of another
constituent corporation in the merger, the nonredeemable common shares of a
constituent corporation may be converted only into nonredeemable common shares
of the surviving corporation or a parent party unless all shareholders of the
class consent. This provision of California law may have the effect of making a
"cash-out" merger by a majority shareholder more difficult to accomplish.
Although Nevada law does not parallel California law in this respect, under some
circumstances Sections 78.411 to 78.444 (business combinations with interested
stockholders) and Sections 78.378 to 78.3793 (voting rights of acquiring
person's control shares) of the Nevada General Corporation Law do provide
similar protection against coercive two-tiered bids for a corporation in which
the stockholders are not treated equally.
California law provides that, except in certain circumstances, when a
tender offer or a proposal for a reorganization or for a sale of assets is made
by an interested party (generally a controlling or managing party of the target
corporation), an affirmative opinion in writing as to the fairness of the
consideration to be paid to the shareholders must be delivered to the
shareholders. This fairness opinion requirement does not apply to a corporation
that does not have shares held of record by at least 100 persons or to a
transaction that has been qualified under California state securities laws.
Furthermore, if a tender of shares or vote is sought pursuant to an interested
party's proposal and a later proposal is made by another party at least ten (10)
days prior to the date of acceptance of the interested party proposal, the
shareholders must be informed of the later offer and be afforded a reasonable
opportunity to withdraw any vote, consent, or proxy or to withdraw any tendered
shares. Nevada law has no comparable provision.
Interested Director Transactions
Under both California and Nevada law, certain contracts or transactions in
which one or more of a corporation's directors have 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 exceptions, the conditions are
similar under California and Nevada law. Under California and Nevada law, either
(i) the shareholders or the board of directors must approve any such contract or
transaction after full disclosure of the material facts and, in the case of
board approval, the contract or transaction must also be "just and reasonable"
(in California) to the corporation or (ii) the contract or transaction must have
been "just and reasonable" (in California) or "fair" (in Nevada) to the
corporation at the time it was approved. In the latter case, California law
explicitly places the burden of proof on the interested director. If board
approval is sought, the contract or transaction must be approved by a majority
vote of a quorum of the directors, without counting the vote of any interested
directors (except that interested directors may be counted for purposes of
establishing a quorum). Under California law, if shareholder approval is sought,
the interested director is not entitled to vote such director's shares at a
shareholder meeting with respect to any action regarding such contract or
transaction, whereas Nevada law requires that such director's votes be counted
for such purpose. Nevada law also provides that the transaction is not void or
voidable if the fact of the common directorship, office, or financial interest
at issue is not disclosed or known to the director at the time the transaction
is brought before the board for action. Nevada law addresses not only interested
directors but also transactions with interested officers.
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 Nevada law,
a stockholder may only bring a derivative action on behalf of the corporation if
the stockholder was a stockholder of the corporation at the time of the
transaction in question or his or her stock thereafter devolved upon him or her
by operation of law. Nevada law also provides that a derivative action may not
be maintained if it appears that the plaintiff does not fairly and adequately
represent the interests of the stockholders similarly situated in enforcing the
right of the corporation.
Appraisal Rights
Under both California and Nevada law, a shareholder of a corporation
participating in certain major corporate transactions may, under varying
circumstances, be entitled to appraisal rights pursuant to which such
shareholder may receive cash in the amount of the fair market value of his or
her shares in lieu of the consideration he or she would otherwise receive in the
transaction.
Under Nevada law, dissenters' (or appraisal) rights are not available in a
merger or share exchange if the shares held by the stockholders prior to the
share exchange or merger were either listed on a national securities exchange or
held by at least 2,000 stockholders of record, unless the articles of
incorporation of the corporation provide for dissenters' rights or the
stockholders are required to accept under the plan of merger or share exchange
anything other than cash, shares of the surviving corporation, shares of a
publicly traded or widely held corporation, or a combination of these.
The limitations on the availability of appraisal rights under California
law are different from those under Nevada law. Shareholders of a California
corporation whose shares are listed on a national securities exchange or on a
list of over-the-counter margin stocks issued by the Board of Governors of the
Federal Reserve System 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 unless 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 five-sixths of the voting power of the surviving or
acquiring corporation or its parent entity (as will be the case under the
Proposed Reincorporation). Appraisal or dissenters' rights are, therefore, not
available to shareholders of Actel California with respect to the Proposed
Reincorporation.
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. Under Nevada law,
a corporation generally may dissolve only upon the passing of a resolution by
the corporation's board of directors and upon approval by the stockholders.
Application of the General Corporation Law of California to Nevada Corporations
Under Section 2115 of the California General Corporation Law, certain
foreign corporations (i.e., corporations not organized under California law) are
placed in a special category if they have characteristics of ownership and
operation indicating that they have certain significant business contacts with
California and more than one half of their voting securities are held of record
by persons having addresses in California. So long as a Nevada or other foreign
corporation is in this special category, and it does not qualify for one of the
statutory exemptions, it is subject to a number of key provisions of the
California General Corporation Law applicable to corporations incorporated in
California. Among the more important provisions are those relating to the
election and removal of directors, cumulative voting, prohibition of classified
boards of directors in privately held corporations, standards of liability and
indemnification of directors, distributions, dividends and repurchases of
shares, shareholder meetings, approval of certain corporate transactions,
dissenters' and appraisal rights, and inspection of corporate records. See
"Significant Differences Between the Corporation Laws of California and Nevada"
above. An exemption from Section 2115 is provided for a corporation whose shares
are listed on a major national securities exchange, or are traded on the Nasdaq
National Market and has 800 or more shareholders as of the record date for its
most recent annual meeting of shareholders. As Actel Nevada will have its shares
listed and publicly traded on the Nasdaq National Market, the Company will
qualify for the exemption from 2115 described above.
Certain Federal Income Tax Consequences
The following is a discussion of certain federal income tax consequences to
holders of Actel California capital stock who receive Actel Nevada capital stock
in exchange for their Actel California capital stock as a result of the Proposed
Reincorporation. No state, local, or foreign tax consequences are addressed
herein.
This discussion does not address all the tax consequences of the Proposed
Reincorporation that may be relevant to particular Actel California
shareholders, including without limitation dealers in securities, holders of
stock options, and those Actel California shareholders who acquired their shares
upon the exercise of stock options. In view of the varying nature of such tax
consequences, shareholders are urged to consult their own tax advisors as to the
specific tax consequences to them of the Proposed Reincorporation, including the
applicability of federal, state, local, or foreign tax laws.
The Company has not requested a ruling from the Internal Revenue Service
(the "IRS") or an opinion of counsel with respect to the federal income tax
consequences of the Proposed Reincorporation under the Internal Revenue Code of
1986, as amended (the "Code"). The Company believes, however, that: (a) the
Proposed Reincorporation will constitute a tax-free reorganization under Section
368(a) of the Code; (b) no gain or loss will be recognized by holders of capital
stock of Actel California upon receipt of capital stock of Actel Nevada pursuant
to the Proposed Reincorporation; (c) the aggregate tax basis of the capital
stock of Actel Nevada received by each shareholder will be the same as the
aggregate tax basis of the capital stock of Actel California held by such
shareholder as a capital asset at the time of the Proposed Reincorporation; and
(d) the holding period of the capital stock of Actel Nevada received by each
shareholder of Actel California will include the period for which such
shareholder held the capital stock of Actel California surrendered in exchange
therefor, provided that such Actel California capital stock was held by such
shareholder as a capital asset at the time of the Proposed Reincorporation.
A successful IRS challenge to the tax-free status of the Proposed
Reincorporation would result in a shareholder recognizing gain or loss with
respect to each share of Actel California capital stock surrendered equal to the
difference between that shareholder's basis in such share and the fair market
value, as of the time of the Proposed Reincorporation, of the Actel Nevada
capital stock received in exchange therefor. In such event, a shareholder's
aggregate basis in the shares of Actel Nevada capital stock received in the
exchange would equal such fair market value, and such shareholder's holding
period for such shares would not include the period during which such
shareholder held Actel California capital stock.
State, local, or foreign income tax consequences to shareholders may vary
from the federal tax consequences described above. Shareholders should consult
their own tax advisors as to the effect of the Proposed Reincorporation under
applicable federal, state, local, or foreign income tax laws.
The Company should not recognize gain or loss for federal income tax
purposes as a result of the Proposed Reincorporation, and Actel Nevada should
succeed without adjustment to the federal income tax attributes of Actel
California.
Vote Required for the Proposed Reincorporation
Approval of the Proposed Reincorporation, which includes approval of the
Merger Agreement, requires the affirmative vote of the holders of a majority of
the outstanding shares of Actel California Common Stock voting together as a
class.
PROPOSAL NO. 3 -- APPROVAL OF AMENDMENT TO
1993 EMPLOYEE STOCK PURCHASE PLAN
General
On January 24, 1997, the Board of Directors amended the Company's 1993
Employee Stock Purchase Plan (the "ESPP") to increase by 250,000 the number of
shares of Common Stock reserved for issuance under the ESPP, bringing the total
number of shares reserved for issuance under the ESPP to 1,150,000. Following
the last purchases from the ESPP on January 31, 1997, 204,556 shares of Common
Stock remained available for issuance under the Plan.
The Board of Directors recommends that shareholders vote "FOR" the
amendment to the ESPP. An abstention will have the same effect as a vote against
approval of the amendment.
Summary of the ESPP
The ESPP and the right of participants to make purchases thereunder are
intended to qualify under the provisions of Section 423 of the Internal Revenue
Code of 1986, as amended (the "Code"). The ESPP is not a qualified deferred
compensation plan under Section 401(a) of the Code and it is not subject to
ERISA. The essential features of the ESPP are summarized below.
Purpose
The purpose of the ESPP is to provide employees of the Company with an
opportunity to purchase Common Stock of the Company through accumulated payroll
deductions.
Administration
The ESPP may be administered by the Board of Directors or a committee
appointed by the Board. All questions of interpretation or application of the
ESPP are determined by the Board or its committee, whose decisions are final and
binding upon all participants. Members of the Board who are eligible employees
are permitted to participate in the ESPP but may not vote on any matter
affecting the administration thereof or the grant of any option pursuant
thereto. No director who is eligible to participate in the ESPP may be a member
of the committee appointed to administer it. No charges for administrative or
other costs may be made against the payroll deductions of a participant in the
ESPP. Members of the Board receive no additional compensation for their services
in connection with the administration of the ESPP.
Eligibility and Participation
Any person who is employed by the Company (or any of its majority-owned
subsidiaries) at least 20 hours per week for at least five months in a calendar
year is eligible to participate in the ESPP, provided that the employee is
employed on the first day of an offering period. Eligible employees become
participants in the ESPP by delivering to the Company a subscription agreement
authorizing payroll deductions prior to the applicable enrollment date. An
employee who becomes eligible to participate in the ESPP after the commencement
of an offering period may not participate in the ESPP until the commencement of
the next offering period.
Offering and Purchase Periods
The ESPP is generally implemented during consecutive and overlapping
24-month offering periods, each of which is divided into four six-month purchase
periods. Generally, offering and purchase periods commence on February 1 and
August 1 of each year. Shares are purchased for participating employees on the
last day of each purchase period, referred to herein as the "Exercise Date." The
Board may alter the duration of the offering periods without shareholder
approval if such change is announced five days prior to the scheduled beginning
of the first offering period to be affected.
Purchase Price
The purchase price per share at which shares will be sold under the ESPP is
the lower of 85% of the fair market value of the Common Stock on the first day
of each offering period or 85% of the fair market value of the Common Stock on
the Exercise Date. The fair market value of a share of Common Stock is the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on the NASDAQ National Market.
The purchase price of the shares is accumulated through payroll deductions
during the offering period. The deductions may not exceed 10% of a participant's
compensation, which is defined in the ESPP to mean all base straight time gross
earnings, including overtime and shift premium, and all incentive compensation,
incentive payments, bonuses, and other compensation. A participant may at any
time discontinue his or her participation in the ESPP or may increase or
decrease the rate of payroll deductions. Payroll deductions commence on the
first payday in the offering period and continue at the same rate in the current
and consecutive offering periods until amended or as provided in the ESPP. All
payroll deductions are credited to the participant's account under the ESPP and
are deposited with the general funds of the Company. All payroll deductions
received or held by the Company may be used by the Company for any corporate
purpose.
Purchase of Stock
At the beginning of each offering period, each participant, by executing a
subscription agreement to participate in the ESPP, is in effect granted an
option to purchase shares of Common Stock on each Exercise Date. The maximum
number of shares placed under option to a participant in a purchase period is
that number determined by dividing the amount of participant's total payroll
deductions to be accumulated during the purchase period by the applicable
purchase price. Unless a participant withdraws from the ESPP, such participant's
option for the purchase of shares will be exercised automatically at the end of
the purchase period for the maximum number of shares at the applicable price.
Notwithstanding the foregoing, no employee will be permitted to subscribe
for shares under the ESPP if, immediately after the grant of the option, the
employee would own 5% or more of the voting power or value of all classes of
stock of the Company or of a parent or of any of its subsidiaries (including
stock that may be purchased under the ESPP or pursuant to any other options),
nor shall any employee be granted an option that would permit the employee to
buy more than $25,000 worth of stock (determined at the fair market value of the
shares at the time the option is granted) pursuant to all Company stock purchase
plans in any calendar year.
Withdrawal
A participant's interest in a given offering may be terminated in whole,
but not in part, by signing and delivering to the Company a notice of withdrawal
from the ESPP. Any withdrawal by the participant of accumulated payroll
deductions for a given offering period automatically terminates the
participant's interest in that offering period. The failure to maintain
continuous status as an employee of the Company for at least 20 hours per week
during an offering period will be deemed to be a withdrawal from that offering
period. The ESPP also provides that participants will be deemed to have
withdrawn from an offering during certain leaves of absence. In addition, if the
fair market value of the Common Stock on any Exercise Date in an offering period
is lower than the fair market value of the Common Stock on the enrollment date
of such offering period, then all participants in such offering period shall be
automatically withdrawn from such offering period immediately after the exercise
of their options on such Exercise Date and automatically re-enrolled in the
immediately following offering period. Generally, a participant's withdrawal
from an offering period does not affect such participant's eligibility to
participate in subsequent offering periods.
Termination of Employment
Termination of a participant's employment for any reason, including
retirement or death, cancels his or her participation in the ESPP immediately.
In such event, the payroll deductions credited to the participant's account will
be returned to such participant or, in the case of death, to the person or
persons entitled thereto as specified by the employee in the subscription
agreement.
Capital Changes
In the event any change is made in the Company's capitalization, such as a
stock split or stock dividend, that results in an increase or decrease in the
number of outstanding shares of Common Stock without receipt of consideration by
the Company, appropriate adjustments will be made in the shares subject to
purchase under the ESPP and in the purchase price per share, subject to any
required action by shareholders of the Company.
Nonassignability
No rights or accumulated payroll deductions of a participant under the ESPP
may be pledged, assigned, or transferred for any reason and any such attempt may
be treated by the Company as an election to withdraw from the ESPP.
Amendment and Termination
The Board may at any time amend or terminate the ESPP, provided that such
termination shall not affect options previously granted, and provided further
that an offering period may be terminated if the Board determines that such
termination is in the best interests of the Company and its shareholders. No
amendment may be made to the ESPP without prior approval of the shareholders of
the Company if such amendment would constitute an amendment for which
shareholder approval is required under the federal securities laws or the Code.
By its terms, the ESPP will terminate in May 2003.
Certain Federal Income Tax Information
The ESPP, 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 until the
sale or other disposition of the shares purchased under the ESPP. Upon such sale
or disposition, the participant will generally be subject to tax in an amount
that depends upon the holding period. If the shares are sold or disposed of more
than two years from the first day of the offering period, the participant will
recognize ordinary income measured as the lesser of (a) the excess of the fair
market value of the shares at the time of such sale or disposition over the
purchase price or (b) an amount equal to 15% of the fair market value of the
shares as of the first day of the offering period. Any additional gain will be
treated as long-term capital gain. If the shares are sold or otherwise disposed
of before the expiration of this holding period, the participant will recognize
ordinary income generally measured as the excess of the fair market value of the
shares on the date the shares are purchased over the purchase price. Any
additional gain or loss on such sale or disposition will be long-term or
short-term capital gain or loss, depending on the holding period. Different
rules may apply with respect to participants subject to Section 16(b) of the
Exchange Act. The Company is not entitled to a deduction for amounts taxed as
ordinary income or capital gain to a participant except to the extent of
ordinary income recognized upon a sale or disposition of shares prior to the
expiration of the holding periods described above.
The foregoing summary of the federal income tax consequences of Purchase
Plan transactions is based upon federal income tax laws in effect on the date of
this Proxy Statement. This summary does not purport to be comprehensive, and
does not describe foreign, state, or local tax consequences.
The following table summarizes the approximate dollar value and number of
shares purchased with contributions made under the ESPP in 1996 by (i) the
executive officers named in the Summary Compensation Table, (ii) all executive
officers as a group, and (iii) all employees who are not executive officers as a
group. Only directors who are also executive officers of the Company are
eligible to purchase shares under the ESPP.
<TABLE>
<CAPTION>
Amended Plan Benefits
1993 Employee Stock Purchase Plan (1)
----------------------------------------------
Number of Shares
Name and Position Dollar Value (2) Purchased (3)
- - -------------------------------------------------------------------- ---------------------- -----------------------
<S> <C> <C>
John C. East..................................................... $ 0 0
President and Chief Executive Officer
Douglas D. Goodyear.............................................. 5,696 588
Vice President of Worldwide Sales
Esmat Z. Hamdy................................................... 53,156 3,224
Senior Vice President of Technology & Operations
Jeffrey M. Schlageter............................................ 54,227 3,289
Senior Vice President of Engineering
David M. Sugishita............................................... 6,248 645
Senior Vice President of Finance & Administration and Chief
Financial Officer
Executive Officer Group (8 Persons).............................. 225,606 14,192
Non-Executive Officer Employee Group............................. 3,232,116 209,341
- - ---------------------------------------
<FN>
(1) Future benefits under the ESPP are not determinable because
participation in the ESPP is voluntary.
(2) Indicates the difference between the price at which shares were
purchased under the ESPP with contributions made in 1996 and $23.50,
the closing price of the Company's Common Stock on December 27, 1996,
the last business day in fiscal 1996.
(3) Indicates the number of shares that were purchased with contributions
made in 1996 under the ESPP. More specifically, the number in the table
indicates shares of Common Stock purchased on January 31, 1996, July
31, 1996, and January 31, 1997, with contributions made under the ESPP
in 1996, and excludes shares purchased on January 31, 1996, with
contributions made under the ESPP in 1995 and shares purchased on
January 31, 1997, with contributions made under the ESPP in January
1997.
</FN>
</TABLE>
PROPOSAL NO. 4 -- APPROVAL OF AMENDMENT TO
1993 DIRECTORS' STOCK OPTION PLAN
General
On January 24, 1997, the Board of Directors amended the Company's 1993
Directors' Stock Option Plan (the "Director Plan") to increase by 90,000 the
number of shares of Common Stock reserved for issuance under the Director Plan,
bringing the total number of shares reserved for issuance under the Director
Plan to 200,000. At December 31, 1996, no shares remained available for future
option grants under the Director Plan.
The Board of Directors recommends that shareholders vote "FOR" the
amendment to the Director Plan. An abstention will have the same effect as a
vote against approval of the amendment.
Summary of the Director Plan
The Director Plan is not a qualified deferred compensation plan under
Section 201(a) of the Code, and it is not subject to ERISA. The essential
features of the Director Plan, as amended, are summarized below.
Purposes
The purposes of the Director Plan are to attract and retain the best
available personnel for service as outside directors of the Company, to provide
additional incentive to such nonemployee directors, and to encourage their
continued service on the Board.
Administration
The Director Plan is designed to operate automatically without requiring
administration. However, to the extent administration is necessary, it is
provided by the Board. The interpretation and construction of any provision of
the Director Plan by the Board shall be final and conclusive. Members of the
Board receive no additional compensation for their services in connection with
the administration of the Director Plan.
Terms of Options
The Director Plan provides for the grant of nonstatutory stock options to
nonemployee directors of the Company. The Director Plan provides that each
eligible director shall be granted an initial option to purchase 20,000 shares
of the Company's Common Stock on the date on which such person first becomes an
eligible director (an "Initial Option"). Thereafter, each eligible director
shall be granted an option to purchase 5,000 additional shares of Common Stock
on August 1 of each year if, on such date, the eligible director shall have
served on the Company's Board of Directors for at least six months (a
"Subsequent Option"). Four of the Company's directors are currently eligible to
receive option grants under the Director Plan. Options granted under the
Director Plan expire 10 years after the date of grant. Each option is evidenced
by a stock option agreement between the Company and the director to whom such
option is granted.
Rule 16b-3
The Director Plan requires that options granted thereunder must comply, to
the extent required, with the applicable provisions of Rule 16b-3 promulgated
under the Exchange Act or any successor thereto and shall contain such
additional conditions or restrictions as may be required thereunder from time to
time to qualify for the maximum exemption from Section 16 of the Exchange Act
with respect to the Director Plan transactions.
Exercise of the Options
The Initial Option becomes exercisable as to 25% of the shares subject to
the Initial Option on the date of the Company's annual shareholder meeting
occurring in each of the first, second, third, and fourth calendar year
following the calendar year in which the Initial Option was granted, subject to
the optionee remaining a director. Each Subsequent Option becomes exercisable in
full on the date of the Company's annual shareholder meeting occurring in the
fourth calendar year following the calendar year in which the Subsequent Option
was granted, subject to optionee remaining a director. An option is exercised by
giving written notice of exercise to the Company, specifying the number of full
shares of Common Stock to be purchased and tendering payment of the purchase
price to the Company. The consideration to be paid for shares issued upon
exercise of options granted under the Directors' Plan, including the method of
payment, shall be determined by the administrators and may consist entirely of
(i) cash, (ii) check, (iii) shares of Common Stock, (iv) the delivery of a
properly executed exercise notice together with such other documentation as the
Board and the broker, if applicable, shall require to effect an exercise of the
option and delivery to the Company of the amount of sale or loan proceeds
required to pay the exercise price, or (v) any combination of the foregoing
methods.
Option Price
The option price under the Director Plan is the fair market value of the
Company's Common Stock on the date of grant. The fair market value of a share of
Common Stock is the closing sales price for such stock (or the closing bid, if
no sales were reported) as quoted on the NASDAQ National Market (or the exchange
with the greatest volume of trading in Common Stock) on the date of grant.
Termination of Status as a Director
The Director Plan provides that, if the optionee ceases to serve as a
director of the Company, the optionee may, but only within 90 days after the
date he or she ceases to be a director, exercise his or her option to the extent
that the optionee was entitled to exercise it at the date of such termination,
provided that the option is exercised no later than its expiration date.
Disability
If an optionee is unable to continue service as a director of the Company
as a result of his or her total and permanent disability, the optionee may, but
only within six months after the date of the optionee's termination, exercise
his or her option to the extent that the optionee was entitled to exercise it at
the date of such termination, provided that the option is exercised no later
than its expiration date.
Death
In the event of the death of an optionee, the option may be exercised at
any time within six months after death, but only to the extent that the option
would have been exercisable had the optionee continued living and remained as a
director for six months after the date of death, provided that the option is
exercised no later than its expiration date.
Nontransferability of Options
An option is nontransferable by the optionee, other than by will or the
laws of descent and distribution, and is exercisable during the optionee's
lifetime only by the optionee.
Adjustments; Dissolution; Mergers and Asset Sales
In the event any change, such as a stock split or dividend, is made in the
Company's capitalization that results in an increase or decrease in the number
of outstanding shares of Common Stock without receipt of consideration by the
Company, an appropriate adjustment shall be made in the number of shares under
the Director Plan and the price per share covered by each outstanding option. In
the event of the proposed dissolution or liquidation of the Company, all
outstanding options will terminate immediately prior to the consummation of such
proposed action. In the event of the merger of the Company with or into another
corporation or a proposed sale of all or substantially all of the assets of the
Company, each outstanding option shall be assumed or substituted by such
successor corporation.
Amendment and Termination
The Board may amend or terminate the Director Plan at any time, but any
such action shall not adversely affect any stock option then outstanding under
the Director Plan without the consent of the holder thereof. To the extent
necessary and desirable to comply with Rule 16b-3 (or any other applicable law
or regulation), the Company shall obtain shareholder approval of any amendment
to the Director Plan in such a manner and to such a degree as required. The
Director Plan will terminate automatically in August 2003. Any options
outstanding under the Director Plan at the time of its termination shall remain
outstanding until they expire by their terms.
Certain Federal Income Tax Information
Options granted under the Director Plan are nonstatutory options. An
optionee will not recognize any taxable income at the time of grant of a
nonstatutory option. However, upon its exercise, the optionee will recognize
ordinary income for tax purposes measured by the excess of the then fair market
value of the shares over the exercise price. Because the optionee is a director
of the Company and therefore subject to Section 16 of the Exchange Act, the date
of taxation (and the date of measurement of taxable ordinary income) may be
deferred unless the optionee files an election under Section 83(b) of the Code.
Upon resale of such shares by the optionee, any difference between the sales
price and the exercise price, to the extent not recognized as ordinary income as
provided above, will be treated as capital gain or loss. The Company will be
entitled to a tax deduction in the amount and at the time that the optionee
recognizes ordinary income with respect to shares acquired upon exercise of an
option.
The foregoing summary of the federal income tax consequences of Director
Plan transactions is based on federal income tax laws in effect on the date of
this Proxy Statement. This summary is not intended to be complete, and does not
describe foreign, state, or local tax consequences.
The following table summarizes the approximate dollar value and number of
option shares granted under the Director Plan in 1996 by (i) each director who
is not an executive officer and (ii) all directors who are not executive
officers as a group. Only directors who are not also executive officers of the
Company are eligible to receive options under the Director Plan.
<TABLE>
<CAPTION>
Amended Plan Benefits
1993 Directors' Stock Option Plan (1)
---------------------------------------------
Number of Option
Name and Position Dollar Value (2) Shares Granted
- - -------------------------------------------------------------------- ---------------------- ----------------------
<S> <C> <C>
Keith B. Geeslin (3)............................................. $ 81,850 12,500
Director
Jos C. Henkens (3)............................................... 81,850 12,500
Director
Frederic N. Schwettmann (3)...................................... 81,850 12,500
Director
Robert G. Spencer (3)............................................ 81,850 12,500
Director
Non-Executive Officer Director Group (4 persons)................. $ 163,750 50,000
- - ---------------------------------------
<FN>
(1) Future benefits under the Director Plan are not determinable because
the value of options depends on the market price of the Company's
Common Stock on the date of grant.
(2) Indicates the difference between the exercise price at which shares
were granted under the Director Plan and $23.50, the closing price of
the Company's Common Stock on December 27, 1996, the last business day
in fiscal 1996. However, none of the options were exercisable in 1996.
(3) Option vests as to 2,500 shares on the date of the Company's annual
shareholder meeting in 1997, 2,500 shares on the date of the Company's
annual shareholder meeting in 1998, and 2,500 shares on the date of the
Company's annual shareholder meeting in 1999. The remaining 5,000
shares vest on the date of the Company's annual shareholder meeting in
2000.
</FN>
</TABLE>
PROPOSAL NO. 5 -- RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP to audit the
financial statements of the Company for the current fiscal year, which ends
December 28, 1997. The Board of Directors recommends that shareholders vote
"FOR" ratification of the selection of Ernst & Young LLP as the Company's
independent auditors. In the event of a negative vote, the Board will reconsider
its selection.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting, will have the opportunity to make a statement if they so desire,
and are expected to be available to respond to appropriate questions.
OTHER INFORMATION
Security Ownership of Management
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of the Record Date by (i) each
director, (ii) each officer named in the Summary Compensation Table, and (iii)
all directors and officers as a group:
<TABLE>
<CAPTION>
Shares Percentage
Beneficially Beneficially
Name Owned (1) Owned (2)
- - ------------------------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
John C. East (3)................................................................... 265,690 1.3%
Keith B. Geeslin (4)............................................................... 13,492 *
Douglas D. Goodyear (5)............................................................ 20,428 *
Esmat Z. Hamdy (6)................................................................. 48,805 *
Jos C. Henkens (4)................................................................. 23,172 *
Jeffrey M. Schlageter (7).......................................................... 112,432 *
Frederic N. Schwettmann (4)........................................................ 9,375 *
Robert G. Spencer (4) ............................................................. 31,041 *
David M. Sugishita (8)............................................................. 40,879 *
All Directors and Executive Officers as a Group (12 persons) (9)................... 658,182 3.1
- - ---------------------------------------
<FN>
* Less than one percent.
(1) Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, the persons and entities named in
the table have sole voting and sole investment power with respect to
all shares of Common Stock beneficially owned.
(2) Calculated as a percentage of shares of Common Stock outstanding as of
the Record Date.
(3) Includes 94,250 shares issuable pursuant to stock options that are
exercisable within 60 days after the Record Date.
(4) Includes 9,375 shares issuable pursuant to stock options that are
exercisable within 60 days after the Record Date.
(5) Includes 18,750 shares issuable pursuant to stock options that are
exercisable within 60 days after the Record Date.
(6) Includes 9,750 shares issuable pursuant to stock options that are
exercisable within 60 days after the Record Date.
(7) Includes 32,249 shares issuable pursuant to stock options that are
exercisable within 60 days after the Record Date.
(8) Includes 28,124 shares issuable pursuant to stock options that are
exercisable within 60 days after the Record Date.
(9) Includes 296,905 shares issuable pursuant to stock options that are
exercisable within 60 days after the Record Date.
</FN>
</TABLE>
Executive Compensation
Summary of Officer Compensation
The following table sets forth information concerning the compensation of
the Company's five mostly highly compensated executive officers for each of the
last three completed fiscal years:
<TABLE>
<CAPTION>
Summary Compensation Table (1)
Long Term
Compensation
Awards
Annual Compensation ------------------
-------------------------------------------------------- Securities
Other Annual Underlying
Name and Principal Position Year Salary Bonus (2) Compensation Options
- - ---------------------------------------- ------- ------------ ------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C>
John C. East........................... 1996 $ 278,609 $ 237,375 $ 0 60,000
President and 1995 253,279 67,412 0 122,000
Chief Executive Officer 1994 236,708 52,173 0 56,000
Douglas D. Goodyear.................... 1996 195,349 176,250 80,972 (3) 95,000
Vice President of
Worldwide Sales
Esmat Z. Hamdy......................... 1996 192,167 129,765 0 49,613 (4)
Senior Vice President of 1995 174,481 32,970 0 42,766
Technology & Operations 1994 138,909 25,758 0 27,250
Jeffrey M. Schlageter.................. 1996 194,167 126,600 0 51,188 (4)
Senior Vice President of 1995 179,300 36,480 0 42,000
Engineering 1994 164,839 27,475 0 24,000
David M. Sugishita..................... 1996 205,833 135,462 0 98,440 (5)
Senior Vice President of 1995 64,359 13,056 0 75,000
Finance & Administration and Chief
Financial Officer
- - ---------------------------------------
<FN>
(1) Except as set forth in this table, there was no reportable compensation
awarded to, earned by, or paid to the named executive officers in 1996.
(2) The Company paid bonuses in the year following that in which the
bonuses were earned.
(3) Other compensation related to expenses incurred in relocating to
California, tax protection on non-deductible relocation expenses, a
hire bonus, and car allowance.
(4) Includes 21,750 options granted in 1995 that were repriced in 1996.
(5) Includes 75,000 options granted in 1995 that were repriced in 1996.
</FN>
</TABLE>
Option Grants
The following table sets forth certain information with respect to stock
options granted during 1996 to each of the executive officers named in the
Summary Compensation Table:
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants (1)
-------------------------------------------------------- Potential Realizable Value at
Number of % of Total Per Assumed Annual Rates of Stock Price
Securities Options Granted Share Appreciation for Option Term (2)
Underlying to Employees in Exercise Expiration -------------------------------------
Name Options (3) Fiscal Year Price Date 0% 5% 10%
- - ------------------------------- ----------- --------------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
John C. East................. 60,000 (4) 2.60% $ 14.875 07/17/06 $ 0 $ 561,288 $ 1,422,415
Douglas D. Goodyear.......... 60,000 (5) 2.60 13.5625 02/02/06 0 511,763 1,270,014
15,000 (6) 0.65 14.875 07/17/06 0 140,322 355,604
20,000 (7) 0.87 13.560 11/01/06 108,800 347,780 714,422
Esmat Z. Hamdy............... 21,750 (8) 0.94 10.625 01/05/06 0 145,334 368,304
27,863 (9) 1.21 14.875 07/17/06 0 260,653 660,546
Jeffrey M. Schlageter........ 21,750 (10) 0.94 10.625 01/05/06 0 145,334 368,304
29,438 (11) 1.27 14.875 07/17/06 0 275,386 697,884
David M. Sugishita........... 75,000 (12) 3.25 10.625 01/05/06 0 501,150 1,270,014
23,440 (13) 1.02 14.875 07/17/06 0 219,277 555,690
- - ------------------------------------------------------
<FN>
(1) The exercise price of these options is equal to the fair market value
of the Company's Common Stock on the date of grant, as determined by
the Company's Board of Directors. The options expire 10 years from the
date of grant, are not transferable by the optionee (other than by will
or the laws of descent and distribution), and are exercisable during
the optionee's lifetime only by the optionee. To the extent exercisable
at the time of termination, options may be exercised within 30 days
following termination of the optionee's employment with the Company,
unless termination is the result of total and permanent disability, in
which case the options may be exercised at any time within six months
following termination, or unless termination is the result of death, in
which case the options may be exercised at any time within 12 months
following death by the optionee's estate or a person who acquired the
right to exercise the option by bequest or inheritance.
(2) The 0%, 5%, and 10% assumed annual rates of appreciation are mandated
by the rules of the SEC and do not represent the Company's estimate or
projection of future Common Stock prices. The "potential realizable
value" at the assumed rates of appreciation were calculated using the
applicable exercise price as the base.
(4) Option vests and is exercisable 100% on August 1, 2000.
(5) Option begins vesting on February 1, 1996 and is exercisable as to 25%
on February 1, 1997 and 6.25% quarterly thereafter.
(6) Option begins vesting as to 3,750 shares on January 1, 1998 and is
exercisable quarterly in 1998, 1999, and 2000. The remaining 11,250
shares vest 100% on August 1, 2000.
(7) Options vest and are fully exercisable upon an involuntary termination
"for cause," or a voluntary termination "for good reason," following a
"change of control" of the Company.
(8) Option begins vesting as to 6,038 shares on January 1, 1996, at the
rate of 678 shares per quarter in 1996 and 1997, and 153.5 shares per
quarter in 1998. The remaining 15,712 shares vest 100% on August 1,
1999. This option was originally granted in 1995 and was repriced in
1996.
(9) Option begins vesting as to 12,363 shares on January 1, 1997, at the
rate of 772 shares per quarter in 1997, 1998, and 1999, and 775 shares
per quarter in 2000. The remaining 15,500 shares vest 100% on August 1,
2000.
(10) Options begin vesting as to 6,562 shares on January 1, 1996, at the
rate of 797 shares per quarter in 1996 and 1997, and 46.5 shares per
quarter in 1998. The remaining 15,188 shares vest 100% on August 1,
1999. These options were originally granted in 1995 and were repriced
in 1996.
(11) Options begin vesting as to 13,938 shares on January 1, 1997, and are
exercisable quarterly as to 3,563 shares in 1997, 1998, and 1999, and
are exercisable quarterly as to 3,250 shares in 2000. The remaining
15,500 shares vest 100% on August 1, 2000.
(12) Option begins vesting on August 28, 1995 and is exercisable as to 25%
on August 28, 1996, and as to 6.25% quarterly thereafter. This option
was originally granted in 1995 and was repriced in 1996.
(13) Option begins vesting as to 7,940 shares on January 1, 1999, at the
rate of 1,172.5 per quarter during 1999 and 812.5 per quarter during
2000. The remaining 15,500 shares vest 100% on August 1, 2000.
</FN>
</TABLE>
Option Values
The following table sets forth certain information concerning the number of
options exercised during 1996 by the executive officers named in the Summary
Compensation Table, as well as the number and aggregate value of shares covered
by both exercisable and unexercisable stock options held by such executive
officers as of December 29, 1996, the end of the fiscal year.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at Fiscal Year-End Fiscal Year-End (1)
Shares Acquired Value --------------------------- ----------------------------
Name on Exercise Realized (2) Exercisable Unexercisable Exercisable Unexercisable
- - --------------------------------------- --------------- ------------- ----------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
John C. East........................ 0 $ 0 84,250 263,750 $ 1,324,805 $ 3,323,415
Douglas D. Goodyear................. 0 0 0 95,000 0 924,425
Esmat Z. Hamdy...................... 24,812 286,314 4,296 98,696 61,718 1,267,520
Jeffrey M. Schlageter............... 4,500 35,213 27,297 97,516 462,770 1,239,717
David M. Sugishita.................. 0 0 23,437 75,003 301,751 866,044
- - --------------------------------------------
<FN>
(1) Calculated on the basis of the difference between the closing market
price as of the fiscal year end ($23.50) and the exercise price.
(2) Calculated on the basis of the difference between the closing market
price as of the exercise date and the exercise price.
</FN>
</TABLE>
Change-in-Control Arrangements
David M. Sugishita joined the Company as Senior Vice President of Finance
and Chief Financial Officer on August 28, 1995. The Company agreed that, upon a
"change of control," it will accelerate the exercisability of Mr. Sugishita's
"new hire" stock option grant. In addition, if a "change of control" were to
occur before August 28, 1997, the Company would make to Mr. Sugishita at the
close of the transaction a lump-sum payment equal to one year's salary.
The Company and its other executive officers have entered into Management
Continuity Agreements, which are designed to ensure continued service in the
event of a "change of control." The Agreements provide for accelerated vesting
of an officer's stock options if following a change of control the officer's
employment is terminated other than for "cause" or the officer voluntarily
terminates his or her employment "for good reason."
In addition, on October 5, 1995, the Board of Director's Compensation
Committee granted to the executive officers other than Mr. Sugishita options
that vest six months after a "change of control." These options were intended to
approximate the benefit that the executive officers would receive if they were
eligible under the Company's Employee Retention Plan. The Employee Retention
Plan provides that all Company employees other than executive officers who hold
unvested stock options under the Option Plan as of the date of any "change of
control" of the Company shall receive, upon remaining in the employ of the
Company for six months following the date of such change of control (or earlier,
if terminated other than for "cause" prior to the end of such six month period),
an amount equal to one-third of the "spread" of their unvested options as of the
date of such change of control. Payment shall be made in common stock of the
acquiror. For this purpose, the "spread" is defined as the difference between
the change-of-control price and the exercise price of each option.
"Change of control" is defined as (i) acquisition by any person of
beneficial ownership of more than 30% of the combined voting power of the
Company's then-outstanding securities; (ii) a change of the majority of the
Board of Directors within a two-year period; (iii) the consummation of a merger
or consolidation of the Company with any other corporation that has been
approved by the shareholders of the Company, other than a merger or
consolidation that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent at least 50% of
the total voting power represented by the voting securities of the Company or
the surviving entity outstanding immediately after such merger or consolidation;
or (iv) approval by the shareholders of the Company of a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
Compensation Committee Report
The following report is provided to shareholders by the members of the
Compensation Committee of the Board of Directors.
Background
Since the Company's incorporation in 1986, the Compensation Committee,
which is a standing committee of the Board of Directors, has been primarily
responsible for establishing and reviewing the Company's management compensation
policies. Since the Company's initial public offering in August 1993, the
Compensation Committee has formally administered the Company's management
compensation policies and plans, including the 1986 Incentive Stock Option Plan
and the 1993 Employee Stock Purchase Plan. The Compensation Committee has the
same authority as the Board to act on all compensation matters, except for
actions requiring shareholder approval or related to the compensation of
directors.
No member of the Compensation Committee is a former or current officer or
employee of the Company. The current members of the Compensation Committee are
Jos C. Henkens, Frederic N. Schwettmann, and Robert G. Spencer. Mr. Henkens has
been a member of the Compensation Committee since 1986, Mr. Schwettmann since
1993, and Mr. Spencer since 1989. Meetings of the Compensation Committee are
attended Michelle A. Begun, the Company's Vice President of Human Resources, who
provides background and market information and makes executive compensation
recommendations but does not vote on any matters before the Compensation
Committee.
Compensation Policy
There are three major elements of the Company's executive compensation
program. The first element is annual cash compensation in the form of base
salary and incentive bonuses. The second element is long-term incentive stock
options, which are designed to align compensation incentives with shareholder
goals. The third element is compensation and employee benefits generally
available to all employees of the Company, such as the 1993 Employee Stock
Purchase Plan, health insurance, and a 401(k) plan.
The Compensation Committee establishes the compensation of each officer
principally by considering the average compensation for officers in similar
positions with 16 companies in the semiconductor industry that have annual
revenues between $50 million and $650 million (the "Reference Group"). The
purpose of monitoring the Reference Group is to provide a stable and continuing
frame of reference for compensation decisions. All of the companies in the
Reference Group have a smaller market capitalization than the companies in the
Standard & Poor's Semiconductor Index (see "Company Stock Performance" below).
The composition of the Reference Group is subject to change from year to year
based on the Committee's assessment of comparability, including the extent to
which the Reference Group reflects changes occurring within the Company and in
the industry as a whole. The Company's policy is to have officer compensation
near the average of the Reference Group.
After analyzing Reference Group base salaries as compared with salaries of
the Company's officers, the Compensation Committee determines an annual salary
increase budget. In August 1996, the Committee approved base salary increases
averaging approximately 9% for the Company's officers. The salary increase
budget is then allocated among officers on the basis of individual performance
(during the preceding 12 months) against objectives related to their respective
areas of responsibility. Performance objectives are proposed by individual
officers, negotiated by the executive staff, and approved by the Compensation
Committee with the advice of the Chief Executive Officer.
Under the Company's Executive Bonus Plan for 1996, incentive cash payments
were based on the achievement by the Company of revenue and profitability
objectives and the performance of the Company relative to its principal
competitors. The target bonus for an officer (other than the Chief Executive
Officer) under the Plan was 40% of his or her base salary. The revenue and
profitability objectives were established at the beginning of the year on a
sliding scale, with 100% allocated to each if the objective were met exactly.
The percentage achievement of the revenue and profitability objectives were
determinable mathematically at the end of the year based on the Company's
revenues and profits. The sum of these two percentages for 1996 was
approximately 210%. This sum was then multiplied by 20% to normalize the
aggregate percentage achievement to the 40% bonus target. The product of these
two percentages, which was approximately 43%, was then multiplied by 150%, since
the Company grew at a rate faster than all of its principal competitors in 1996.
As with the revenue and profitability objectives, this multiple had been
established at the beginning of the year, was determinable objectively at the
end of the year; and could be higher or lower than 100%. For example, the
multiple would have been 50% if the Company had grown at a rate slower than all
of its principal competitors in 1996. The result for 1996 was bonus payments to
officers (other than the Chief Executive Officer) that averaged approximately
63% of base salary. Bonuses were paid under the Executive Bonus Plan in January
of 1997. The Committee believes the bonus amount for 1996 was reasonable not
only because the Company increased net revenues by 37% compared with 1995 and
outgrew its competitors, but also because the Company was also able to improve
its gross margin and operating income as a percentage of net revenues while
achieving that rate of growth.
The Company believes that executive officers should hold substantial,
long-term equity stakes in the Company so that the interests of executive
officers will coincide with the interests of the shareholders. As a result,
stock or stock options constitute a significant portion of the compensation paid
by the Company to its officers. After analyzing the practices of the Reference
Group, the Compensation Committee determines an annual budget for option grants
to the Company's employees and officers. In granting stock options to officers,
the Compensation Committee considers a number of factors, such as the officer's
position, responsibility, and equity interest in the Company, and evaluates the
officer's past performance and future potential to influence the long-term
growth and profitability of the Company. After taking these considerations into
account, the Compensation Committee in 1996 granted options to purchase 60,000,
15,000, 27,863, 29,438, and 23,440 shares of Common Stock to Messrs. East,
Goodyear, Hamdy, Schlageter, and Sugishita, respectively. All of such options
were granted at an exercisable price of $14.875 per share, which was the value
of the Company's Common Stock on the date of grant.
Compensation of Chief Executive Officer
The Compensation Committee generally uses the same factors and criteria
described above in making compensation decisions regarding the Chief Executive
Officer. In 1996, Mr. East's annual base salary was adjusted from $263,330 to
$300,000, an increase of approximately 14%. The Compensation Committee believes
this is an appropriate amount considering Mr. East's exemplary leadership and
resulting influence over the Company's performance. Mr. East's 1996 bonus was
determined under the Company's Executive Bonus Plan in the manner described
above (except that his target bonus is equal to 50% of his base salary) and
resulted in a payment of $237,375, or approximately 79% of his base salary.
Repricing of Options
On January 5, 1996, the Compensation Committee unanimously approved
management's request that the holders of outstanding options to purchase Common
Stock of the Company at exercise prices in excess of $10.625 per share, the
then-current fair market value of the Company's Common Stock, be offered the
opportunity to exchange their higher priced options for new options with an
exercise price of $10.625. At Mr. East's request, his options were not repriced.
The Committee also approved management's recommendation that the exchanged
options generally not be exercisable for six months. The Compensation Committee
concluded that the exchange would greatly assist the Company in retaining
qualified employees in an extraordinarily competitive environment and in
maintaining a highly motivated group of employees, and therefore was in the best
interests of the Company and its shareholders. In deciding to approve
management's repricing recommendations, the Committee was convinced that the
down-turn in the value of the Company's Common Stock had been the result of
general market forces rather than the Company's performance. For example, the
then-current fair market value of the Company's Common Stock was only about 12%
higher than the Company's initial public offering price of $9.50, even though
the Company's quarterly revenues and earnings had doubled.
Options representing the right to purchase a total of 1,093,639 shares of
Common Stock were repriced, of which 235,426 (or approximately 22%) were held by
executive officers. The following table sets forth information concerning the
repricing of options held by any executive officer since the Company has been a
public company.
<TABLE>
<CAPTION>
Option Repricings
Length of
Number of Market Original
Securities Price of Exercise Option Term
Underlying Stock at Price at New Remaining at
Options Time of Time of Exercise Date of
Name Date Repriced Repricing Repricing Price Repricing
- - ------------------------------ ---------- -------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Michelle A. Begun............ 01/05/96 13,250 $10.625 $13.00 $10.625 9.5 Years
Esmat Z. Hamdy............... 01/05/96 21,750 $10.625 $13.00 $10.625 9.5 Years
Arthur S. Mandell............ 01/05/96 17,500 $10.625 $11.00 $10.625 7.8 Years
Arthur S. Mandell............ 01/05/96 21,750 $10.625 $13.00 $10.625 9.5 Years
Dennis F. Nye................ 01/05/96 10,176 $10.625 $11.00 $10.625 7.8 Years
Dennis F. Nye................ 01/05/96 21,750 $10.625 $13.00 $10.625 9.5 Years
Jeffrey M. Schlageter........ 01/05/96 21,750 $10.625 $13.00 $10.625 9.5 Years
David M. Sugishita........... 01/05/96 75,000 $10.625 $16.75 $10.625 9.5 Years
David L. Van De Hey.......... 01/05/96 32,500 $10.625 $13.00 $10.625 9.5 Years
</TABLE>
Deductibility of Executive Compensation
Beginning in 1994, the Code limited the federal income tax deductibility of
compensation paid to the Company's chief executive and to each of the other four
most highly compensated executive officers. For this purpose, compensation can
include, in addition to cash compensation, the difference between the exercise
price of stock options and the value of the underlying stock on the date of
exercise. The Company may deduct compensation with respect to any of these
individuals only to the extent that during any fiscal year such compensation
does not exceed $1 million or meets certain other conditions (such as
shareholder approval). Considering the Company's current compensation plans and
policy, the Company and the Compensation Committee believe that, for the near
future, there is little risk that the Company will lose any significant tax
deduction relating to executive compensation. If the deductibility of executive
compensation becomes a significant issue, the Company's compensation plans and
policy will be modified to maximize deductibility if the Company and the
Compensation Committee determine that such action is in the best interests of
the Company.
Jos C. Henkens
Frederic N. Schwettmann
Robert G. Spencer
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee is an officer or employee of the
Company or any of its subsidiaries, and no officer or employee of the Company or
any of its subsidiaries has served as a member of the Compensation Committee
since the Company's initial public offering.
Company Stock Performance
The following graph shows a comparison of cumulative total return for the
Company's Common Stock, the Standard & Poor's 500 Composite Stock Index, and the
Standard & Poor's Semiconductor Index. In preparing the graph, it was assumed
that (i) $100 was invested on July 31, 1993, in the Company's Common Stock (at
the initial public offering price of $9.50 per share), the S&P Composite Index,
and the S&P Semiconductor Index and (ii) all dividends were reinvested.
Comparison of Cumulative Total Return
[GRAPHIC OMITTED]
The closing price of the Company's Common Stock on December 31, 1996, was
$23.75. The closing price of the Company's Common Stock on March __, 1997, was
$_____.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no additional
reports were required, all directors and officers of the Company filed with the
SEC on a timely basis all reports required by Section 16(a) of the Exchange Act,
during the Company's most recent fiscal year. To the Company's knowledge, there
was no beneficial owner of more than 10% of the Company's Common Stock during
the Company's most recent fiscal year.
OTHER MATTERS
The Company knows of no other matters to be submitted to the Annual
Meeting. If any other matters properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed proxy card to vote the shares
they represent as the Board of Directors may recommend.
BY ORDER OF THE BOARD OF DIRECTORS
David L. Van De Hey
Secretary
Dated: March 27, 1997
THE COMPANY WILL MAIL WITHOUT CHARGE TO ANY SHAREHOLDER UPON WRITTEN REQUEST A
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 29,
1996, INCLUDING THE FINANCIAL STATEMENTS, SCHEDULES AND A LIST OF EXHIBITS.
REQUESTS SHOULD BE SENT TO CLOVER FERNANDES, INVESTOR RELATIONS, ACTEL
CORPORATION, 955 EAST ARQUES AVENUE, SUNNYVALE, CALIFORNIA 94086-4533.
03/16/97 12:39 PM
Exhibit A
AGREEMENT AND PLAN OF MERGER
OF
ACTEL CORPORATION
a Nevada corporation
AND
ACTEL CORPORATION
a California corporation
THIS AGREEMENT AND PLAN OF MERGER dated as of ____________, 1997 (the
"Agreement") is between Actel Corporation, a Nevada corporation having its
principal place of business at 955 E. Arques, Sunnyvale, CA 94086 ("Actel
Nevada"), and Actel Corporation, a California corporation having its principal
place of business at 955 E. Arques, Sunnyvale, CA 94086 ("Actel California").
Actel Nevada and Actel California are sometimes referred to herein as the
"Constituent Corporations."
RECITALS
a. Actel Nevada is a corporation duly organized and existing under the
laws of the State of Nevada and has an authorized capital of 65,000,000 shares,
$0.001 par value, 60,000,000 of which are designated "Common Stock," and
5,000,000 of which are designated "Preferred Stock." As of __________, 1997, 100
shares of Common Stock were issued and outstanding, all of which were held by
Actel California, and no shares of Preferred stock were issued and outstanding.
b. Actel California is a corporation duly organized and existing under
the laws of the State of California and has an authorized capital of 35,000,000
shares, 30,000,000 of which are designated "Common Stock," and 5,000,000 of
which are designated "Preferred Stock." One series of preferred stock of Actel
California has been designated, namely, Series A Preferred Stock (the "Series A
Preferred Stock"), consisting of 1,000,000 shares. As of March 12, 1997,
20,809,568 shares of Common Stock and no shares of Series A Preferred Stock were
issued and outstanding.
c. The Board of Directors of Actel California has determined that, for
the purpose of effecting the reincorporation of Actel California into the State
of Nevada, it is advisable and in the best interests of Actel California and its
shareholders that Actel California merge with and into Actel Nevada upon the
terms and conditions herein provided.
d. The respective Boards of Directors of Actel Nevada and Actel
California have approved this Agreement and have directed that this Agreement be
submitted to a vote of their respective shareholders and executed by the
undersigned officers.
NOW, THEREFORE, in consideration of the mutual agreements and covenants
set forth herein, Actel Nevada and Actel California hereby agree, subject to the
terms and conditions hereinafter set forth, as follows:
I. MERGER
A. Merger. In accordance with the provisions of this Agreement, the
Nevada General Corporation Law and the California General Corporation Law, Actel
California shall be merged with and into Actel Nevada (the "Merger"), the
separate existence of Actel California shall cease and Actel Nevada shall be,
and is herein sometimes referred to as, the "Surviving Corporation," and the
name of the Surviving Corporation shall be Actel Corporation, and the surviving
corporation shall be a Nevada corporation under the Nevada General Corporation
Law.
B. Filing and Effectiveness. The Merger shall become effective when the
following actions shall have been completed:
1. This Agreement and the Merger shall have been adopted and
approved by the shareholders of each Constituent Corporation in accordance
with the requirements of the Nevada General Corporation Law and the
California General Corporation Law;
2. 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;
3. Executed Articles of Merger meeting the requirements of the
Nevada General Corporation Law shall have been filed with the Secretary of
State of the State of Nevada; and
4. An executed Agreement of Merger meeting the requirements of the
California General Corporation Law shall have been filed with the Secretary
of State of the State of California.
The date and time when the Merger shall become effective, as
aforesaid, is herein called the "Effective Date of the Merger."
C. Effect of the Merger. Upon the Effective Date of the Merger, the
separate existence of Actel California shall cease and Actel Nevada, 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
Actel California's Boards of Directors, (iii) shall succeed, without other
transfer, to all of the assets, rights, powers and property of Actel California
in the manner as more fully set forth in Section 92A.250 of the Nevada General
Corporation Law, (iv) shall continue to be subject to all of its debts,
liabilities and obligations 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 Actel California in the same manner as if
Actel Nevada had itself incurred them, all as more fully provided under the
applicable provisions of the Nevada General Corporation Law and the California
General Corporation Law.
II. CHARTER DOCUMENTS; DIRECTORS AND OFFICERS
A. Articles of Incorporation. The Articles of Incorporation of Actel
Nevada 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.
B. Bylaws. The Bylaws of Actel Nevada 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.
C. Directors and Officers. The directors and officers of Actel 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, the
Certificate of Incorporation of the Surviving Corporation or the Bylaws of the
Surviving Corporation.
III. MANNER OF CONVERSION OF STOCK
A. Actel California Common Stock. Upon the Effective Date of the Merger,
each share of Actel 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 fully paid and nonassessable share of
Common Stock, $0.001 par value, of the Surviving Corporation.
B. Actel California Options, Stock Purchase Rights and Convertible
Securities. Upon the Effective Date of the Merger, the Surviving Corporation
shall assume and continue any stock option plans and all other employee benefit
plans of Actel California. As of the date hereof there are options outstanding
under Actel California's stock option plans to purchase a total of _______
shares of Common Stock of Actel California. As of the date hereof, there are no
other options, purchase rights for or securities convertible into either Common
Stock or Preferred Stock of Actel California. Each outstanding and unexercised
option to purchase Actel California Common Stock shall become an option to
purchase the Surviving Corporation's Common Stock on the basis of one share of
the Surviving Corporation's Common Stock for each share of Actel California
Common Stock issuable pursuant to any such option on the same terms and
conditions and at an exercise price per share equal to the exercise price
applicable to any such Actel California option at the Effective Date of the
Merger.
A number of shares of the Surviving Corporation's Common Stock shall
be reserved for issuance upon the exercise of options equal to the number of
shares of Actel California Common Stock so reserved immediately prior to the
Effective Date of the Merger.
D. Actel Nevada Common Stock. Upon the Effective Date of the Merger, each
share of Common Stock, $0.001 par value, of Actel Nevada issued and outstanding
immediately prior thereto shall, by virtue of the Merger and without any action
by Actel Nevada, the holder of such shares or any other person, be canceled and
returned to the status of authorized but unissued shares.
E. Exchange of Certificates. After the Effective Date of the Merger, each
holder of an outstanding certificate representing shares of Actel California
Common Stock may, at such shareholder's option, surrender the same for
cancellation to the transfer agent and registrar for the Common Stock of the
Surviving Corporation, 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 Common Stock of the Surviving
Corporation's into which the surrendered shares were converted as herein
provided. Until so surrendered, each outstanding certificate theretofore
representing shares of Actel California Common Stock shall be deemed for all
purposes to represent the number of shares of Common Stock of the Surviving
Corporation's Common Stock into which such shares of Actel 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 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 capital 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 Actel
California so converted and given in exchange therefor, unless otherwise
determined by the Board of Directors of the Surviving Corporation in compliance
with applicable laws.
If any certificate for shares of Actel Nevada 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 that the person requesting
such transfer pay to the Exchange Agent any transfer or other taxes payable by
reason of the 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 Actel Nevada that such tax has been paid or is not payable.
IV. GENERAL
A. Covenants of Actel Nevada. Actel Nevada covenants and agrees that it
will, on or before the Effective Date of the Merger:
1. Qualify to do business as a foreign corporation in the State of
California and in connection therewith irrevocably consent to service of
process directed to it upon its designated agent as required under the
provisions of Section 2105 of the California General Corporation Law;
2. File any and all documents with the California Franchise Tax
Board necessary for the assumption by Actel Nevada of all of the franchise
tax liabilities of Actel California; and
3. Take such other actions as may be required by the California
General Corporation Law.
B. Further Assurances. From time to time, as and when required by Actel
Nevada or by its successors or assigns, there shall be executed and delivered on
behalf of Actel California such deeds and other instruments, and there shall be
taken or caused to be taken by Actel Nevada and Actel 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 Actel Nevada the title to and
possession of all the property, interests, assets, rights, privileges,
immunities, powers, franchises and authority of Actel California and otherwise
to carry out the purposes of this Agreement, and the officers and directors of
Actel Nevada are fully authorized in the name and on behalf of Actel California
or otherwise to take any and all such action and to execute and deliver any and
all such deeds and other instruments.
C. 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 Actel California or Actel Nevada,
or both, notwithstanding the approval of this Agreement by the shareholders of
Actel California or by the sole stockholder of Actel Nevada, or by both.
The Boards of Directors of the Constituent Corporations may amend this
Agreement at any time prior to the filing of this Agreement (or certificate in
lieu thereof) with the Secretaries of State of the States of California and
Nevada, provided that an amendment made subsequent to the adoption of this
Agreement by the shareholders of either Constituent Corporation shall not: (1)
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, (2) alter
or change any term of the Certificate of Incorporation of the Surviving
Corporation to be effected by the Merger, or (3) 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 of shares or series thereof of such
Constituent Corporation.
D. Registered Office. The registered office of the Surviving Corporation
in the State of Nevada is located at 402 N. Division Street, Carson City, Nevada
89703, and Roy L. Farrow is the registered agent of the Surviving Corporation at
such address.
E. Expenses. Each party to the transactions contemplated by this
Agreement (including, without limitation, Actel California, Actel Nevada and
their respective shareholders) shall pay its own expenses, if any, incurred in
connection with such transactions.
F. Agreement. Executed copies of this Agreement will be on file at the
principal place of business of the Surviving Corporation at 955 E. Arques,
Sunnyvale, CA 94086 and copies thereof will be furnished to any shareholder of
either Constituent Corporation, upon request and without cost.
G. 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 Nevada and, so far as applicable, the merger provisions of the
California General Corporation Law.
H. Counterparts. In order to facilitate the filing and recording of this
Agreement, the same may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, this Agreement, having first been approved by
resolutions of the Boards of Directors of Actel Nevada and Actel California, is
hereby executed on behalf of each of such two corporations and attested by their
respective officers thereunto duly authorized.
ACTEL CORPORATION
a Nevada corporation
By:__________________________________
John C. East
President and Chief Executive Officer
ATTEST:
_____________________________________
David L. Van De Hey
Secretary
ACTEL CORPORATION
a California corporation
By:__________________________________
John C. East
President
ATTEST:
_____________________________________
David L. Van De Hey
Secretary
ACTEL CORPORATION
(California Corporation)
OFFICERS' CERTIFICATE
John C. East and David L. Van De Hey certify that:
1. They are the President and the Secretary, respectively, of Actel
Corporation, a corporation organized under the laws of the State of California.
2. The corporation has authorized two classes of stock, one designated
"Common Stock" and the other designated "Preferred Stock." One series of
Preferred Stock, designated Series A Preferred Stock (the "Series A Preferred
Stock"), has been authorized.
3. There were 20,809,568 shares of Common Stock and no shares of Series A
Preferred outstanding as of the record date for the meeting of shareholders at
which the Agreement and Plan of Merger attached hereto (the "Merger Agreement")
was approved.
4. The principal terms of the Merger Agreement were approved by the Board
of Directors and by the vote of a number of shares of each class and series of
stock that equaled or exceeded the vote required.
5. The vote received was greater than a majority of the outstanding
shares of Common Stock.
6. John C. East and David L. Van De Hey further declare under penalty of
perjury under the laws of the State of California that each has read the
foregoing certificate and knows the contents thereof and that the same is true
of their own knowledge.
Executed in ____________, California on ___________, 1997.
_____________________________________
John C. East
President and Chief Executive Officer
_____________________________________
David L. Van De Hey
Secretary
ACTEL CORPORATION
(Surviving Corporation)
OFFICERS' CERTIFICATE
John C. East and David L. Van De Hey certify that:
1. They are the President and the Secretary, respectively, of Actel
Corporation, a corporation organized under the laws of the State of Nevada.
2. The corporation has authorized two classes of stock, one designated
"Common Stock" and the other designated "Preferred Stock."
3. There were 100 shares of Common Stock outstanding and entitled to vote
on the Agreement and Plan of Merger attached hereto (the "Merger Agreement").
There are no shares of Preferred Stock outstanding.
4. The principal terms of the Merger Agreement were approved by the Board
of Directors and by the vote of a number of shares of each class and series of
stock that equaled or exceeded the vote required.
5. The percentage vote received was greater than a majority of the votes
entitled to be cast by holders of outstanding shares of Common Stock.
6. John C. East and David L. Van De Hey further declare under penalty of
perjury under the laws of the State of Nevada that each has read the foregoing
certificate and knows the contents thereof and that the same is true of their
own knowledge.
Executed in ______________, California on ____________, 1997.
_____________________________________
John C. East
President
_____________________________________
David L. Van De Hey
Secretary
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS OF
ACTEL CORPORATION
To Be Held On May 2, 1997
PROXY SOLICIITED BY THE BOARD OF DIRECTORS
The undersigned holder of Common Stock of Actel Corporation (the
"Company") acknowledges receipt of the Company's "Notice of Annual Meeting of
Shareholders" to be held May 2, 1997, and the accompanying Proxy Statement dated
March 29, 1997 (the "Proxy Statement"), and, revoking any proxy heretofore
given, hereby constitutes and appoints John C. East and Jos C. Henkens, and each
of them individually, with full power of substitution, attorney and proxy to
appear and vote all of the shares of Common Stock of the Company standing in the
name of the undersigned at the 1997 Annual Meeting of Shareholders, and any
adjournment thereof, as follows:
1. To elect the following named persons as directors of the Company: John
C. East, Keith B. Geeslin, Jos C. Henkens, Frederic N. Schwettmann, and
Robert G. Spencer.
FOR ALL NOMINEES (except as AUTHORITY WITHHELD TO VOTE
indicated below FOR ALL NOMINEES
To vote against or to withhold authority to vote for any nominee(s) for
election, write the name(s) of such nominee(s) in the following space:
-----------------------------------------------------------------------
If an "against" vote is cast for any nominee, or if authority is
withheld to vote for any nominee, indicated whether the proxy may vote
for another nominee, in his discretion; or such vote(s) are cast for the
following person(s):
-----------------------------------------------------------------------
2. To approve a change in the FOR AGAINST ABSTAIN
Company's state of incorporation
from California to Nevada.
3. To approve an amendment increasing FOR AGAINST ABSTAIN
the number of shares of Common
Stock reserved for issuance under
the Company's Employee Stock Purchase
Plan by 250,000.
4. To approve an amendment increasing FOR AGAINST ABSTAIN
the number of shares of Common
Stock reserved for issuance under
the Company's 1993 Directors' Stock
Option Plan by 90,000.
5. To ratify the selection of Ernst & FOR AGAINST ABSTAIN
Young LLP as the Company's independent
auditors.
THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY AND MAY REVOKED PRIOR TO ITS EXERCISE. This Proxy will be voted as
directed, but if no direction is indicated, it will be voted for all nominees
for director as set forth in Proposal 1 and for Proposals 2, 3, 4, and 5. If any
other business is presented to the 1997 Annual Meeting of Shareholders, this
Proxy will be voted by those named in this Proxy in their best judgment.
Dated____________________________, 1997
----------------------------------
----------------------------------
Please sign EXACTLY as your
name(s) appear(s) on the address
label used to mail your Proxy
Statement. When shares are held by
joint tenants or as community
property, both should sign. If
signing as attorney, executor,
administrator, trustee, or
guardian, please give full title
as such. If a corporation, please
sign in full corporate name by
president or other authorized
officer. If a partnership, please
sign in partnership name by an
authorized person.
PLEASE SIGN AND DATE YOUR PROXY AND RETURN
IT PROMPTLY IN THE ENCLOSED BUSINESS
REPLY ENVELOPE.
ACTEL CORPORATION
1993 EMPLOYEE STOCK PURCHASE PLAN
Amended and Restated as of January 24, 1997
The following constitute the provisions of the 1993 Employee Stock Purchase
Plan of Actel Corporation.
1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Code. The provisions of the Plan, accordingly, shall be
construed so as to extend and limit participation in a manner consistent with
the requirements of that section of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" shall mean the Common Stock of the Company.
(d) "Company" shall mean Actel Corporation, a California corporation.
(e) "Compensation" shall mean all base straight time gross earnings
including commissions, overtime and shift premiums, and all incentive
compensation, incentive payments, bonuses and other compensation.
(f) "Designated Subsidiaries" shall mean the Subsidiaries which have
been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
(g) "Employee" shall mean any individual who is an employee of the
Company or any Designated Subsidiary for tax purposes whose employment with
the Company or any Designated Subsidiary averages at least twenty (20)
hours per week and more than five (5) months in any calendar year. For
purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90 days
and the individual's right to reemployment is not guaranteed either by
statute or by contract, the employment relationship will be deemed to have
terminated on the 91st day of such leave.
(h) "Enrollment Date" shall mean the first day of each Offering
Period.
(i) "Exercise Date" shall mean the last day of each Purchase Period.
(j) "Fair Market Value" shall mean, as of any date, the value of
Common Stock determined as follows:
(1) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the
National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System, its Fair Market
Value shall be the closing sale price for the Common Stock (or the
mean of the closing bid and asked prices, if no sales were reported),
as quoted on such exchange (or the exchange with the greatest volume
of trading in Common Stock) or system on the date of such
determination, as reported in the Wall Street Journal or such other
source as the Board deems reliable, or;
(2) If the Common Stock is quoted on the NASDAQ system (but not
on the National Market System thereof) or is regularly quoted by a
recognized securities dealer but selling prices are not reported, its
Fair Market Value shall be the mean of the closing bid and asked
prices for the Common Stock on the date of such determination, as
reported in the Wall Street Journal or such other source as the Board
deems reliable, or;
(3) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith
by the Board.
(4) For purposes of the Enrollment Date under the first Offering
Period under the Plan, the Fair Market Value of the Common Stock shall
be the Price to Public as set forth in the final prospectus filed with
the Securities and Exchange Commission pursuant to Rule 424 under the
Securities Act of 1933, as amended.
(k) "Offering Period" shall mean the period of approximately
twenty-four (24) months during which an option granted pursuant to the Plan
may be exercised. The first offering period shall commence with the date on
which the Company's registration statement on Form S-1 (or any successor
form thereof) is declared effective by the Securities and Exchange
Commission. This first offering period shall terminate on the last Trading
Day in the period ending August 1 or February 1 approximately 24 months
later. Subsequent offering periods shall commence on the first Trading Day
on or after August 1 and February 1 of each year and terminate on the last
Trading Day of the periods ending twenty-four months later. The duration
and timing of Offering Periods may be changed pursuant to Section 4 of this
Plan.
(l) "Plan" shall mean this Employee Stock Purchase Plan.
(m) "Purchase Price" shall mean an amount equal to 85% of the Fair
Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.
(n) "Purchase Period" shall mean the approximately six month period
commencing after one Exercise Date and ending with the next Exercise Date,
except that the first Purchase Period of any Offering Period shall commence
on the Enrollment Date and end with the next Exercise Date. However, the
first Purchase Period of the first Offering Period under the Plan may be
more or less than six months in duration.
(o) "Reserves" shall mean the number of shares of Common Stock
covered by each option under the Plan which have not yet been exercised and
the number of shares of Common Stock which have been authorized for
issuance under the Plan but not yet placed under options.
(p) "Subsidiary" shall mean a corporation, domestic or foreign, of
which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
(q) "Trading Day" shall mean a day on which national stock exchanges
and the National Association of Securities Dealers Automated Quotation
(NASDAQ) System are open for trading.
3. Eligibility.
(a) Any Employee (as defined in Section 2(g)), who shall be employed
by the Company on a given Enrollment Date shall be eligible to participate
in the Plan.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) if immediately after
the grant, such Employee (or any other person whose stock would be
attributed to such Employee pursuant to Section 424(d) of the Code) would
own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of the capital stock of the
Company or of any Subsidiary, or (ii) which permits his or her rights to
purchase stock under all employee stock purchase plans of the Company and
its subsidiaries to accrue at a rate which exceeds twenty-five thousand
dollars ($25,000) of Fair Market Value of such stock (determined at the
time such option is granted) for each calendar year in which such option is
outstanding at any time.
4. Offering Periods. The Plan shall be implemented by consecutive,
overlapping Offering Periods with the first Offering Period commencing with the
date on which the Company's registration statement on Form S-1 (or any successor
form thereof) is declared effective by the Securities and Exchange Commission.
The Board shall have the power to change the duration of Offering Periods
(including the commencement dates thereof) with respect to future offerings
without shareholder approval if such change is announced at least five (5) days
prior to the scheduled beginning of the first Offering Period to be affected.
Absent action by the Board, each Offering Period shall be for a period of
approximately twenty-four months (24) and new Offering Periods shall commence on
the first Trading Day of February and August of each year. The first Offering
Period under the Plan may be more or less than twenty-four (24) months in
duration.
5. Participation.
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions (in the
form of Exhibit A to this Plan) and filing it with the Company's payroll
office prior to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on the first
payroll following the Enrollment Date and shall end on the last payroll in
the Offering Period to which such authorization is applicable, unless
sooner terminated by the participant as provided in Section 10 hereof.
6. Payroll Deductions.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each
pay day during the Offering Period in an amount not exceeding ten percent
(10%) of the Compensation which he or she receives on each pay day during
the Offering Period, and the aggregate of such payroll deductions during
the Offering Period shall not exceed ten percent (10%) of the participant's
Compensation during said Offering Period.
(b) All payroll deductions made for a participant shall be credited
to his or her account under the Plan and will be withheld in whole
percentages only. A participant may not make any additional payments into
such account.
(c) A participant may discontinue his or her participation in the
Plan as provided in Section 10 hereof, or may increase or decrease the rate
of his or her payroll deductions during the Offering Period by filing with
the Company a new subscription agreement authorizing a change in payroll
deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period. The change in rate
shall be effective with the first full payroll period following five (5)
business days after the Company's receipt of the new subscription agreement
unless the Company elects to process a given change in participation more
quickly. A participant's subscription agreement shall remain in effect for
successive Offering Periods unless terminated as provided in Section 10
hereof.
(d) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's
payroll deductions may be decreased to 0% if the following should occur:
For the Purchase Periods that end during a single calendar year, the sum of
all payroll deductions that have been used to purchase stock under the Plan
plus all payroll deductions accumulated for the purchase of stock equals
$21,250. Payroll deductions shall recommence at the rate provided in such
participant's subscription agreement at the beginning of the first Purchase
Period which is scheduled to end in the subsequent calendar year, unless
terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part, or at
the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise
upon the exercise of the option or the disposition of the Common Stock. At
any time, the Company may, but will not be obligated to, withhold from the
participant's compensation the amount necessary for the Company to meet
applicable withholding obligations, including any withholding required to
make available to the Company any tax deductions or benefits attributable
to sale or early disposition of Common Stock by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period, each
eligible Employee participating in such Offering Period shall be granted an
option to purchase on the Exercise Date of such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that such purchase
shall be subject to the limitations set forth in Sections 3(b) and 12 hereof.
Exercise of the option shall occur as provided in Section 8 hereof, unless the
participant has withdrawn pursuant to Section 10 hereof, and the option shall
expire on the last day of the Offering Period.
8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in Section 10 hereof, his or her option for the purchase of shares will
be exercised automatically on the Exercise Date, and the maximum number of full
shares subject to the option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares will be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Purchase Period, subject to earlier withdrawal by the participant as provided in
Section 10 hereof. Any other monies left over in a participant's account after
the Exercise Date shall be returned to the participant. During a participant's
lifetime, a participant's option to purchase shares hereunder is exercisable
only by him or her.
9. Delivery. As promptly as practicable after each Exercise Date on which
a purchase of shares occurs, the Company shall arrange the delivery to each
participant, as appropriate, of a certificate representing the shares purchased
upon exercise of his or her option.
10. Withdrawal; Termination of Employment.
(a) A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his
or her option under the Plan at any time by giving written notice to the
Company in the form of Exhibit B to this Plan. All of the participant's
payroll deductions credited to his or her account will be paid to such
participant promptly after receipt of notice of withdrawal and such
participant's option for the Offering Period will be automatically
terminated, and no further payroll deductions for the purchase of shares
will be made during the Offering Period. If a participant withdraws from an
Offering Period, payroll deductions will not resume at the beginning of the
succeeding Offering Period unless the participant delivers to the Company a
new subscription agreement.
(b) Upon a participant's ceasing to be an Employee (as defined in
Section 2(g) hereof), for any reason, including by virtue of him or her
having failed to remain an Employee of the Company for at least twenty (20)
hours per week during a Purchase Period in which the Employee is a
participant, he or she will be deemed to have elected to withdraw from the
Plan and the payroll deductions credited to such participant's account
during the Offering Period but not yet used to exercise the option will be
returned to such participant or, in the case of his or her death, to the
person or persons entitled thereto under Section 14 hereof, and such
participant's option will be automatically terminated.
11. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.
12. Stock.
(a) The maximum number of shares of the Company's Common Stock which
shall be made available for sale under the Plan shall be four hundred
thousand (1,150,000) shares, subject to adjustment upon changes in
capitalization of the Company as provided in Section 18 hereof. If on a
given Exercise Date the number of shares with respect to which options are
to be exercised exceeds the number of shares then available under the Plan,
the Company shall make a pro rata allocation of the shares remaining
available for purchase in as uniform a manner as shall be practicable and
as it shall determine to be equitable.
(b) The participant will have no interest or voting right in shares
covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant
and his or her spouse.
13. Administration.
(a) Administrative Body. The Plan shall be administered by the Board
or a committee of members of the Board appointed by the Board. The Board or
its committee shall have full and exclusive discretionary authority to
construe, interpret and apply the terms of the Plan, to determine
eligibility and to adjudicate all disputed claims filed under the Plan.
Every finding, decision and determination made by the Board or its
committee shall, to the full extent permitted by law, be final and binding
upon all parties. Members of the Board who are eligible Employees are
permitted to participate in the Plan, provided that:
(1) Members of the Board who are eligible to participate in the
Plan may not vote on any matter affecting the administration of the
Plan or the grant of any option pursuant to the Plan.
(2) If a Committee is established to administer the Plan, no
member of the Board who is eligible to participate in the Plan may be
a member of the Committee.
(b) Rule 16b-3 Limitations. Notwithstanding the provisions of
Subsection (a) of this Section 13, in the event that Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or any successor provision ("Rule 16b-3") provides specific requirements
for the administrators of plans of this type, the Plan shall be only
administered by such a body and in such a manner as shall comply with the
applicable requirements of Rule 16b-3. Unless permitted by Rule 16b-3, no
discretion concerning decisions regarding the Plan shall be afforded to any
committee or person that is not "disinterested" as that term is used in
Rule 16b-3.
14. Designation of Beneficiary.
(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account
under the Plan in the event of such participant's death subsequent to an
Exercise Date on which the option is exercised but prior to delivery to
such participant of such shares and cash. In addition, a participant may
file a written designation of a beneficiary who is to receive any cash from
the participant's account under the Plan in the event of such participant's
death prior to exercise of the option. If a participant is married and the
designated beneficiary is not the spouse, spousal consent shall be required
for such designation to be effective.
(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant
and in the absence of a beneficiary validly designated under the Plan who
is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the
estate of the participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its
discretion, may deliver such shares and/or cash to the spouse or to any one
or more dependents or relatives of the participant, or if no spouse,
dependent or relative is known to the Company, then to such other person as
the Company may designate.
15. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
16. Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
17. Reports. Individual accounts will be maintained for each participant
in the Plan. Statements of account will be given to participating Employees at
least annually, which statements will set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.
18. Adjustments Upon Changes in Capitalization.
(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the Reserves as well as the price per share of
Common Stock covered by each option under the Plan which has not yet been
exercised shall be proportionately adjusted for any increase or decrease in
the number of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, or any other increase or decrease in the number of shares of
Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration". Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock subject to
an option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Periods will
terminate immediately prior to the consummation of such proposed action,
unless otherwise provided by the Board.
(c) Merger or Asset Sale. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, each option under the Plan shall
be assumed or an equivalent option shall be substituted by such successor
corporation or a parent or subsidiary of such successor corporation, unless
the Board determines, in the exercise of its sole discretion and in lieu of
such assumption or substitution, to shorten the Offering Periods then in
progress by setting a new Exercise Date (the "New Exercise Date") or to
cancel each outstanding option to purchase and refund all sums collected
from participants during the Offering Period then in progress. If the Board
shortens the Offering Periods then in progress in lieu of assumption or
substitution in the event of a merger or sale of assets, the Board shall
notify each participant in writing, at least ten (10) business days prior
to the New Exercise Date, that the Exercise Date for his option has been
changed to the New Exercise Date and that his option will be exercised
automatically on the New Exercise Date, unless prior to such date he has
withdrawn from the Offering Period as provided in Section 10 hereof. For
purposes of this paragraph, an option granted under the Plan shall be
deemed to be assumed if, following the sale of assets or merger, the option
confers the right to purchase, for each share of stock subject to the
option immediately prior to the sale of assets or merger, the consideration
(whether stock, cash or other securities or property) received in the sale
of assets or merger by holders of Common Stock for each share of Common
Stock held on the effective date of the transaction (and if such holders
were offered a choice of consideration, the type of consideration chosen by
the holders of a majority of the outstanding shares of Common Stock);
provided, however, that if such consideration received in the sale of
assets or merger was not solely common stock of the successor corporation
or its parent (as defined in Section 424(e) of the Code), the Board may,
with the consent of the successor corporation and the participant, provide
for the consideration to be received upon exercise of the option to be
solely common stock of the successor corporation or its parent equal in
fair market value to the per share consideration received by holders of
Common Stock and the sale of assets or merger.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the
price per share of Common Stock covered by each outstanding option, in the
event the Company effects one or more reorganizations, recapitalizations,
rights offerings or other increases or reductions of shares of its
outstanding Common Stock, and in the event of the Company being
consolidated with or merged into any other corporation.
19. Amendment or Termination.
(a) The Board of Directors of the Company may at any time and for any
reason terminate or amend the Plan. Except as provided in Section 18
hereof, no such termination can affect options previously granted, provided
that an Offering Period may be terminated by the Board of Directors on any
Exercise Date if the Board determines that the termination of the Plan is
in the best interests of the Company and its shareholders. Except as
provided in Section 18 hereof, no amendment may make any change in any
option theretofore granted which adversely affects the rights of any
participant. To the extent necessary to comply with Rule 16b-3 or under
Section 423 of the Code (or any successor rule or provision or any other
applicable law or regulation), the Company shall obtain shareholder
approval in such a manner and to such a degree as required.
(b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods,
limit the frequency and/or number of changes in the amount withheld during
an Offering Period, establish the exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars, permit payroll withholding
in excess of the amount designated by a participant in order to adjust for
delays or mistakes in the Company's processing of properly completed
withholding elections, establish reasonable waiting and adjustment periods
and/or accounting and crediting procedures to ensure that amounts applied
toward the purchase of Common Stock for each participant properly
correspond with amounts withheld from the participant's Compensation, and
establish such other limitations or procedures as the Board (or its
committee) determines in its sole discretion advisable which are consistent
with the Plan.
20. Notices. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
21. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
22. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 19 hereof.
23. Additional Restrictions of Rule 16b-3. The terms and conditions of
options granted hereunder to, and the purchase of shares by, persons subject to
Section 16 of the Exchange Act shall comply with the applicable provisions of
Rule 16b-3. This Plan shall be deemed to contain, and such options shall
contain, and the shares issued upon exercise thereof shall be subject to, such
additional conditions and restrictions as may be required by Rule 16b-3 to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
24. Automatic Transfer to Low Price Offering Period. To the extent
permitted by Rule 16b-3 of the Securities Exchange Act of 1934, as amended, if
the Fair Market Value of the Common Stock on any Exercise Date in an Offering
Period is lower than the Fair Market Value of the Common Stock on the Enrollment
Date of such Offering Period, then all participants in such Offering Period
shall be automatically withdrawn from such Offering Period immediately after the
exercise of their options on such Exercise Date and automatically re-enrolled in
the immediately following Offering Period as of the first day thereof.
EXHIBIT A
ACTEL CORPORATION
1993 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
__________ Original Application Enrollment Date: ______________________
__________ Change in Payroll Deduction Rate
__________ Change of Beneficiary(ies)
1. ____________________________________________________ hereby elects to
participate in the Actel Corporation 1993 Employee Stock Purchase Plan (the
"Employee Stock Purchase Plan") and subscribes to purchase shares of the
Company's Common Stock in accordance with this Subscription Agreement and the
Employee Stock Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of _________% of my Compensation on each payday (not to exceed 10%) during the
Offering Period in accordance with the Employee Stock Purchase Plan. (Please
note that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price determined
in accordance with the Employee Stock Purchase Plan. I understand that if I do
not withdraw from an Offering Period, any accumulated payroll deductions will be
used to automatically exercise my option.
4. I have received a copy of the complete "Actel Corporation 1993
Employee Stock Purchase Plan." I understand that my participation in the
Employee Stock Purchase Plan is in all respects subject to the terms of the
Plan. I understand that the grant of the option by the Company under this
Subscription Agreement is subject to obtaining shareholder approval of the
Employee Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should
be issued in the name(s) of (Employee or Employee and Spouse Only):
_______________________________________________________________________________.
6. I understand that if I dispose of any shares received by me pursuant
to the Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares) or one year after the
Exercise Date, I will be treated for federal income tax purposes as having
received ordinary income at the time of such disposition in an amount equal to
the excess of the fair market value of the shares at the time such shares were
purchased over the price which I paid for the shares. I hereby agree to notify
the Company in writing within 30 days after the date of any disposition of my
shares and I will make adequate provision for Federal, state or other tax
withholding obligations, if any, which arise upon the disposition of the Common
Stock. The Company may, but will not be obligated to, withhold from my
compensation the amount necessary to meet any applicable withholding obligation
including any withholding necessary to make available to the Company any tax
deductions or benefits attributable to sale or early disposition of Common Stock
by me. If I dispose of such shares at any time after the expiration of the
2-year and 1-year holding periods, I understand that I will be treated for
federal income tax purposes as having received income only at the time of such
disposition, and that such income will be taxed as ordinary income only to the
extent of an amount equal to the lesser of (1) the excess of the fair market
value of the shares at the time of such disposition over the purchase price
which I paid for the shares, or (2) 15% of the fair market value of the shares
on the first day of the Offering Period. The remainder of the gain, if any,
recognized on such disposition will be taxed as capital gain.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent upon my
eligibility to participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary to receive all payments and shares due me under the Employee Stock
Purchase Plan (if you wish to designate more than one beneficiary, execute and
deliver copies of this page):
PLEASE PRINT!
NAME:___________________________________________________________________________
(First) (Middle) (Last)
_______________________________________
Relationship
________________________________________
________________________________________
________________________________________
(Address)
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT
THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated:_________________________________ ________________________________________
Signature of Employee
________________________________________
Spouse's Signature
(If beneficiary other than spouse)
EXHIBIT B
ACTEL CORPORATION
1993 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Actel Corporation
1993 Employee Stock Purchase Plan which began on __________________________,
19_____ (the "Enrollment Date") hereby notifies the Company that he or she
hereby withdraws from the Offering Period. He or she hereby directs the Company
to pay to the undersigned as promptly as practicable all the payroll deductions
credited to his or her account with respect to such Offering Period. The
undersigned understands and agrees that his or her option for such Offering
Period will be automatically terminated. The undersigned understands further
that no further payroll deductions will be made for the purchase of shares in
the current Offering Period and the undersigned shall be eligible to participate
in succeeding Offering Periods only by delivering to the Company a new
Subscription Agreement.
________________________________________
________________________________________
________________________________________
________________________________________
(Name and Address of Participant)
________________________________________
(Signature)
________________________________________
(Date)
ACTEL CORPORATION
1993 DIRECTORS' STOCK OPTION PLAN
Amended and Restated as of January 24, 1997
1. Purposes of the Plan. The purposes of this Directors' Stock Option
Plan are to attract and retain the best available personnel for service as
Directors of the Company, to provide additional incentive to the Outside
Directors of the Company to serve as Directors, and to encourage their continued
service on the Board.
All options granted hereunder shall be "nonstatutory stock options".
2. Definitions. As used herein, the following definitions shall apply:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" shall mean the Common Stock of the Company.
(d) "Company" shall mean Actel Corporation, a California corporation.
(e) "Continuous Status as a Director" shall mean the absence of any
interruption or termination of service as a Director.
(f) "Director" shall mean a member of the Board.
(g) "Effective Date" shall have the meaning as set forth in Section 6
below.
(h) "Employee" shall mean any person, including officers and
Directors, employed by the Company or any Parent or Subsidiary of the
Company. The payment of a director's fee by the Company shall not be
sufficient in and of itself to constitute "employment" by the Company.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(j) "First Option" shall have the meaning as set forth in Section
4(b)(ii) below.
(k) "Option" shall mean a stock option granted pursuant to the Plan.
(l) "Optioned Stock" shall mean the Common Stock subject to an
Option.
(m) "Optionee" shall mean an Outside Director who receives an Option.
(n) "Outside Director" shall mean a Director who is not an Employee.
(o) "Parent" shall mean a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(p) "Plan" shall mean this 1993 Directors' Stock Option Plan.
(q) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(r) "Subsequent Option" shall have the meaning as set forth in
Section 4(b)(iii) below.
(s) "Subsidiary" shall mean a "subsidiary corporation", whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 200,000 Shares (the "Pool") of Common Stock. The Shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan. If Shares which were acquired upon exercise of an
Option are subsequently repurchased by the Company, such Shares shall not in any
event be returned to the Plan and shall not become available for future grant
under the Plan.
4. Administration of and Grants of Options under the Plan.
(a) Administrator. Except as otherwise required herein, the Plan
shall be administered by the Board.
(b) Procedure for Grants. The Board may grant Options to Outside
Directors hereunder, and on such terms, as are decided in its discretion.
Additionally, Options shall automatically be granted hereunder in
accordance with the following provisions:
(i) After August 1, 1997, each person who first becomes an
Outside Director shall be automatically granted an Option to purchase
20,000 Shares (the "First Option") on the date on which such person
first becomes an Outside Director, whether through election by the
shareholders of the Company or appointment by the Board of Directors
to fill a vacancy.
(ii) Beginning on August 1, 1997, each Outside Director shall be
automatically granted an Option to purchase 5,000 Shares (a
"Subsequent Option") on August 1 of each year if, on such date, he or
she shall have served on the Board for at least six (6) months.
(iii) Notwithstanding the provisions of subsections (i) and (ii)
hereof, in the event that a grant would cause the number of Shares
subject to outstanding Options plus the number of Shares previously
purchased upon exercise of Options to exceed the Pool, then each such
automatic grant shall be for that number of Shares determined by
dividing the total number of Shares remaining available for grant by
the number of Outside Directors on the automatic grant date. Any
further grants shall then be deferred until such time, if any, as
additional Shares become available for grant under the Plan through
action of the shareholders to increase the number of Shares which may
be issued under the Plan or through cancellation or expiration of
Options previously granted hereunder.
(iv) Notwithstanding the provisions of subsections (i) and (ii)
hereof, any grant of an Option made before the Company has obtained
shareholder approval of the Plan in accordance with Section 17 hereof
shall be conditioned upon obtaining such shareholder approval of the
Plan in accordance with Section 17 hereof.
(v) The terms of a First Option granted hereunder shall be as
follows:
(A) the First Option shall be exercisable only while the
Outside Director remains a Director of the Company, except as set
forth in Section 9 hereof.
(B) the exercise price per Share shall be 100% of the fair
market value (as defined in Section 8(b) hereunder) per Share on
the date of grant of the First Option.
(C) the First Option shall vest and become exercisable as
to 25% of the Shares subject to the First Option on the first
anniversary of the date of the Company's annual shareholder
meeting occurring in each of the first, second, third, and fourth
calendar year following the calendar year in which the date of
grant occurred, subject to the provisions set forth in Section 9
below.
(vi) The terms of a Subsequent Option granted hereunder shall be
as follows:
(A) the Subsequent Option shall be exercisable only while
the Outside Director remains a Director of the Company, except as
set forth in Section 9 hereof.
(B) the exercise price per Share shall be 100% of the fair
market value per Share on the date of grant of the Subsequent
Option.
(C) the Subsequent Option shall become exercisable as to
one hundred percent (100%) of the Shares subject to the
Subsequent Option on the date of the Company's annual shareholder
meeting occurring in the fourth calendar year following the
calendar year in which the date of grant occurred, subject to the
provisions set forth in Section 9 below.
(c) Powers of the Board. Subject to the provisions and restrictions
of the Plan, the Board shall have the authority, in its discretion: (i) to
grant discretionary stock options to Outside Directors, upon such terms as
are determined by the Board in its discretion, (ii) to determine, upon
review of relevant information and in accordance with Section 8(b) of the
Plan, the fair market value of the Common Stock; (iii) to determine the
exercise price per share of Options to be granted, which exercise price
shall be determined in accordance with Section 8(a) of the Plan; (iv) to
interpret the Plan and to prescribe, amend and rescind rules and
regulations relating to the Plan; (v) to authorize any person to execute on
behalf of the Company any instrument required to effectuate the grant of an
Option previously granted hereunder; and (vi) to make all other
determinations deemed necessary or advisable for the administration of the
Plan.
(d) Effect of Board's Decision. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees
and any other holders of any Options granted under the Plan.
(e) Suspension or Termination of Option. If the President or his or
her designee reasonably believes that an Optionee has committed an act of
misconduct, the President may suspend the Optionee's right to exercise any
option pending a determination by the Board of Directors (excluding the
Outside Director accused of such misconduct). If the Board of Directors
(excluding the Outside Director accused of such misconduct) determines an
Optionee has committed an act of embezzlement, fraud, dishonesty,
nonpayment of an obligation owed to the Company, breach of fiduciary duty
or deliberate disregard of the Company rules resulting in loss, damage or
injury to the Company, or if an Optionee makes an unauthorized disclosure
of any Company trade secret or confidential information, engages in any
conduct constituting unfair competition, induces any Company customer to
breach a contract with the Company or induces any principal for whom the
Company acts as agent to terminate such agency relationship, neither the
Optionee nor his or her estate shall be entitled to exercise any option
whatsoever. In making such determination, the Board of Directors (excluding
the Outside Director accused of such misconduct) shall act fairly and shall
give the Optionee an opportunity to appear and present evidence on
Optionee's behalf at a hearing before the Board or a committee of the
Board.
5. Eligibility. Options may be granted only to Outside Directors. An
Outside Director who has been granted an Option may, if he or she is otherwise
eligible, be granted an additional Option or Options.
The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate his or her directorship at any time.
6. Term of Plan; Effective Date. The Plan shall become effective on the
date on which the Company's registration statement on Form S-1 (or any successor
form thereof) is declared effective by the Securities and Exchange Commission
(the "Effective Date"). It shall continue in effect for a term of ten (10) years
unless sooner terminated under Section 13 of the Plan, subject to the
limitations set forth in this Plan.
7. Term of Option. The term of each Option shall be ten (10) years from
the date of grant thereof.
8. Exercise Price and Consideration.
(a) Exercise Price. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be 100% of the fair market
value per Share on the date of grant of the Option.
(b) Fair Market Value. The fair market value per Share shall be the
mean of the bid and asked prices of the Common Stock in the
over-the-counter market on the date of grant, as reported in The Wall
Street Journal (or, if not so reported, as otherwise reported by the
National Association of Securities Dealers Automated Quotation ("NASDAQ")
System) or, in the event that the Common Stock is traded on the NASDAQ
National Market System or listed on a stock exchange, the fair market value
per Share shall be the closing price on such system or exchange on the date
of grant of the Option, as reported in The Wall Street Journal, provided,
however, that if such market or exchange is closed on the date of the grant
of the Option then the fair market value per Share shall be based on the
most recent date on which such trading occurred immediately prior to the
date of the grant of the Option; provided, further, that for purposes of
First Options granted on the Effective Date, the fair market value per
share shall be the initial public offering price as set forth in the final
prospectus filed with the Securities and Exchange Commission pursuant to
Rule 424 under the Securities Act of 1933, as amended.
(c) Form of Consideration. The consideration to be paid for the
Shares to be issued upon exercise of an Option shall consist entirely of
cash, check, other Shares having a fair market value on the date of
surrender equal to the aggregate exercise price of the Shares as to which
said Option shall be exercised (which, if acquired from the Company, shall
have been held for at least six months), delivery of a properly executed
exercise notice together with instructions to a broker to deliver promptly
to the Company the amount of sale proceeds required to pay the exercise
price, or any combination of such methods of payment and/or any other
consideration or method of payment as shall be permitted under applicable
corporate law.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times as are set forth in
Section 4(b) hereof or, with respect to a discretionary grant, as decided
by the Board in its discretion; provided, however, that no Options shall be
exercisable until shareholder approval of the Plan in accordance with
Section 17 hereof has been obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and full payment
for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may consist of any consideration and
method of payment allowable under Section 8(c) of the Plan. Until the
issuance (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends
or any other rights as a shareholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. A share
certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment
will be made for a dividend or other right for which the record date is
prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes
of the Plan and for sale under the Option, by the number of Shares as to
which the Option is exercised.
(b) Termination of Status as a Director. If an Outside Director
ceases to serve as a Director, he or she may, but only within three (3)
months (or such other period of time not exceeding six (6) months as is
determined by the Board) after the date he or she ceases to be a Director
of the Company, exercise his or her Option to the extent that he or she was
entitled to exercise it at the date of such termination. Notwithstanding
the foregoing, in no event may the Option be exercised after its term set
forth in Section 7 has expired. To the extent that such Outside Director
was not entitled to exercise an Option at the date of such termination, or
does not exercise such Option (which he or she was entitled to exercise)
within the time specified herein, the Option shall terminate.
(c) Disability of Optionee. Notwithstanding the provisions of Section
9(b) above, in the event a Director is unable to continue his or her
service as a Director with the Company as a result of his or her total and
permanent disability (as defined in Section 22(e)(3) of the Internal
Revenue Code), he or she may, but only within six (6) months (or such other
period of time not exceeding twelve (12) months as is determined by the
Board) from the date of such termination, exercise his or her Option to the
extent he or she was entitled to exercise it at the date of such
termination. Notwithstanding the foregoing, in no event may the Option be
exercised after its term set forth in Section 7 has expired. To the extent
that he or she was not entitled to exercise the Option at the date of
termination, or if he or she does not exercise such Option (which he or she
was entitled to exercise) within the time specified herein, the Option
shall terminate.
(d) Death of Optionee. In the event of the death of an Optionee:
(i) during the term of the Option who is, at the time of his or
her death, a Director of the Company and who shall have been in
Continuous Status as a Director since the date of grant of the Option,
the Option may be exercised, at any time within six (6) months (or
such lesser period of time as is determined by the Board) following
the date of death, by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance,
but only to the extent of the right to exercise that would have
accrued had the Optionee continued living and remained in Continuous
Status as Director for six (6) months (or such lesser period of time
as is determined by the Board) after the date of death.
Notwithstanding the foregoing, in no event may the Option be exercised
after its term set forth in Section 7 has expired.
(ii) within three (3) months (or such lesser period of time as is
determined by the Board) after the termination of Continuous Status as
a Director, the Option may be exercised, at any time within six (6)
months following the date of death, by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the right to exercise that had
accrued at the date of termination. Notwithstanding the foregoing, in
no event may the option be exercised after its term set forth in
Section 7 has expired.
10. Nontransferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution. The designation of a beneficiary
by an Optionee does not constitute a transfer. An Option may be exercised during
the lifetime of an Optionee only by the Optionee or a transferee permitted by
this Section.
11. Adjustments Upon Changes in Capitalization or Merger. Subject to any
required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the
Company, the Option will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. The Board may, in the
exercise of its sole discretion in such instances, declare that any Option shall
terminate as of a date fixed by the Board and give each Optionee the right to
exercise his or her Option as to all or any part of the Optioned Stock,
including Shares as to which the Option would not otherwise be exercisable.
In the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into another
corporation, each outstanding Option shall be assumed or an equivalent option
shall be substituted by the successor corporation or a Parent or Subsidiary of
the successor corporation. In the event that such successor corporation refuses
to assume such Option or to substitute an equivalent option, such Options shall
become fully vested and exercisable as to all of the Optioned Stock, including
the Shares as to which the Options would not otherwise be vested and
exercisable. If Options become fully vested and exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the Board
shall notify the Optionee that the Option shall be fully exercisable for a
period of thirty (30) days from the date of such notice, and the Option will
terminate upon the expiration of such period.
12. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4(b) hereof.
Notice of the determination shall be given to each Outside Director to whom an
Option is so granted within a reasonable time after the date of such grant.
13. Amendment and Termination of the Plan
(a) Amendment and Termination. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable;
provided that, to the extent necessary and desirable to comply with Rule
16b-3 under the Exchange Act (or any other applicable law or regulation),
the Company shall obtain approval of the shareholders of the Company to
Plan amendments to the extent and in the manner required by such law or
regulation.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan that would impair the rights of any Optionee shall
not affect Options already granted to such Optionee and such Options shall
remain in full force and effect as if this Plan had not been amended or
terminated, unless mutually agreed otherwise between the Optionee and the
Board, which agreement must be in writing and signed by the Optionee and
the Company.
14. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares, if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
15. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
16. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
17. Shareholder Approval.
(a) Continuance of the Plan shall be subject to approval by the
shareholders of the Company at or prior to the first annual meeting of
shareholders held subsequent to the granting of an Option hereunder. If
such shareholder approval is obtained at a duly held shareholders' meeting,
it may be obtained by the affirmative vote of the holders of a majority of
the outstanding shares of the Company present or represented and entitled
to vote thereon. If such shareholder approval is obtained by written
consent, it may be obtained by the written consent of the holders of a
majority of the outstanding shares of the Company.
(b) Any required approval of the shareholders of the Company shall be
solicited substantially in accordance with Section 14(a) of the Exchange
Act and the rules and regulations promulgated thereunder.
18. Information to Optionees. The Company shall provide to each Optionee,
during the period for which such Optionee has one or more Options outstanding,
copies of all annual reports to shareholders, proxy statements and other
information provided to all shareholders of the Company.
