<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
TelCom Semiconductor, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
______________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
______________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
______________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
______________________________________________________________________
(5) Total fee paid:
______________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
______________________________________________________________________
(2) Form, Schedule or Registration Statement no.: _______________
(3) Filing Party:
______________________________________________________________________
(4) Date Filed:
______________________________________________________________________
<PAGE>
[TELCOM LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of TelCom
Semiconductor, Inc., a Delaware corporation (the "Company"), will be held on
Thursday, May 1, 1997, at 10:00 a.m., local time, at the Company's offices
located at 1300 Terra Bella Avenue, Mountain View, California, for the following
purposes:
1. To elect four directors to serve for the ensuing year and until their
successors are duly elected and qualified.
2. To amend the Company's 1994 Stock Option Plan to increase the number of
shares available for issuance thereunder by 500,000 shares to an aggregate
of 3,300,000 shares.
3. To ratify the appointment of Price Waterhouse LLP as independent
accountants for the Company for the 1997 fiscal year.
4. To transact such other business as may properly come before the meeting or
any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on March 14, 1997 are
entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign and return the enclosed proxy as promptly as possible in the postage-
prepaid envelope enclosed for that purpose. Any stockholder attending the
meeting may vote in person even if he or she has returned a proxy.
FOR THE BOARD OF DIRECTORS
R. Michael O'Malley
Secretary
Mountain View, California
April 3, 1997
IMPORTANT: Whether or not you plan to attend the meeting, you are requested to
complete and promptly return the enclosed proxy in the envelope provided.
<PAGE>
TELCOM SEMICONDUCTOR, INC.
1300 TERRA BELLA AVENUE
MOUNTAIN VIEW, CALIFORNIA
PROXY STATEMENT FOR 1997
ANNUAL MEETING OF STOCKHOLDERS
The enclosed Proxy is solicited on behalf of the Board of Directors of
TelCom Semiconductor, Inc. (the "Company") for use at the Annual Meeting of
Stockholders to be held on Thursday, May 1, 1997, at 10:00 a.m., local time, or
at any adjournment thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting will
be held at the Company's offices located at 1300 Terra Bella Avenue, Mountain
View, California.
The proxy solicitation materials were mailed on or about April 3, 1997 to
all stockholders of record on March 14, 1997.
INFORMATION CONCERNING SOLICITATION AND VOTING
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it any time before its use by delivering to the Secretary of the Company
at the above address of the Company, written notice of revocation or a duly
executed proxy bearing a later date, or by attending the meeting and voting in
person.
RECORD DATE AND VOTING SECURITIES
Stockholders of record at the close of business on March 14, 1997 are
entitled to notice of the meeting and to vote at the meeting. At the record
date, 15,823,101 shares of the Company's Common Stock, $0.001 par value per
share, were issued and outstanding.
VOTING AND SOLICITATION
Proxies properly executed, duly returned to the Company and not revoked,
will be voted in accordance with the specifications made. Where no
specifications are given, such proxies will be voted as the management of the
Company may propose. If any matter not described in this Proxy Statement is
properly presented for action at the meeting, the persons named in the enclosed
form of proxy will have discretionary authority to vote according to their best
judgment.
Each stockholder is entitled to one vote for each share of Common Stock on
all matters presented at the meeting. The required quorum for the transaction
of business at the Annual Meeting is a majority of the votes eligible to be cast
by holders of shares of Common Stock issued and outstanding on the Record Date.
Shares that are voted "FOR," "AGAINST," "WITHHELD" or "ABSTAIN" are treated as
being present at the meeting for purposes of establishing a quorum and are also
treated as shares entitled to vote at the Annual Meeting (the "Votes Cast") with
respect to such matter. Abstentions will have the same effect as a vote against
a proposal. Broker non-votes will be counted for purposes of determining the
presence or absence of a quorum for the transaction of business, but such non-
votes will not be counted for purposes of determining the number of Votes Cast
with respect to the particular proposal on which a broker has expressly not
voted. Thus, a broker non-vote will not effect the outcome of the voting on a
proposal.
<PAGE>
The cost of soliciting proxies will be borne by the Company. The Company
may also reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation materials to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers, and employees, without additional compensation, personally
or by telephone or telegram.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals by stockholders of the Company which such stockholders intend to
present at the Company's 1998 Annual Meeting of Stockholders must be received by
the Company no later than December 4, 1997 so that they may be considered for
inclusion in the proxy statement and form of proxy relating to that meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
A board of four (4) directors is to be elected at the Annual Meeting of
Stockholders. Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the Company's four (4) nominees named below, all of
whom are presently directors of the Company. 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 the nominee designated by the present Board of
Directors to fill the vacancy. It is not expected that any nominee 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 or
until a successor has been elected and qualified.
VOTE REQUIRED; RECOMMENDATION OF BOARD OF DIRECTORS
The four (4) candidates receiving the highest number of "FOR" votes shall
be elected to the Company's Board of Directors. An abstention will have the
same effect as a vote withheld for the election of directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE NOMINEES
LISTED BELOW:
NAME AGE PRINCIPAL OCCUPATION
- -------------------- --- ---------------------------------------------------
Phillip M. Drayer... 51 Chief Executive Officer, President and Director
of the Company
Irwin Federman...... 61 General Partner, U.S. Venture Partners
Robert J. Loarie.... 54 General Partner, Morgan Stanley Venture Partners
T. Peter Thomas..... 50 General Partner, Institutional Venture Partners
-2-
<PAGE>
Except as set forth below, each nominee has been engaged in his principal
occupation described above during the past five (5) years. There is no family
relationship among any directors or executive officers of the Company.
Phillip M. Drayer has been Chief Executive Officer, President and a
-----------------
director of the Company since the Company commenced operations in December 1993.
From 1990 through 1993, Mr. Drayer was President and Chief Executive Officer of
the Teledyne Components division of Teledyne, Inc. From 1980 to 1990, he was
President and Chief Executive Officer of EPI Technologies, a semiconductor
testing company, and from 1976 and 1979, he was Manufacturing Manager at Mostek,
a semiconductor manufacturer. Mr. Drayer earned his B.S.E.E. degree from Lamar
University and his J.D. degree from South Texas College of Law. Mr. Drayer is a
member of the Texas bar.
Irwin Federman has served as a director of the Company since December 1993.
--------------
Since April 1990, Mr. Federman has been a general partner in U.S. Venture
Partners, a venture capital firm. From 1988 to 1990, he was a Managing Director
of Dillon Read & Co., an investment banking firm, and a general partner in its
venture capital affiliate, Concord Partners. From August 1987 to December 1987,
Mr. Federman was Vice Chairman of Advanced Micro Devices, a company which
acquired Monolithic Memories, a corporation engaged in the production of
integrated circuits, with which he was affiliated for 16 years. From 1979 to
1987, Mr. Federman was President of Monolithic Memories. Mr. Federman served as
Chairman of the Semiconductor Industry Association from 1986 to 1988. He earned
his B.S. degree from Brooklyn College. He is also a director of Checkpoint
Software Technologies, Ltd., Komag, Incorporated, NeoMagic, Inc., SanDisk,
Incorporated, Western Digital Corporation and various private corporations.
Robert J. Loarie has served as a director of the Company since December
----------------
1993. Since August 1992, Mr. Loarie has been a principal of Morgan Stanley &
Co. Incorporated, a diversified financial services firm, and a general partner
of several venture capital management partnerships affiliated with Morgan
Stanley Venture Capital II, Inc. Prior to that time, Mr. Loarie had been a
general partner of various venture capital management partnerships affiliated
with Weiss, Peck & Greer since 1981. From 1979 to 1981, he served as Vice
President, Finance for Siliconix Incorporated, a manufacturer of analog
semiconductor components. He earned his B.S.E.E. degree from the Illinois
Institute of Technology and his M.B.A. degree from Harvard University. Mr.
Loarie is also a director of Adaptec, Inc., Aurum Software, Inc. and several
private corporations.
T. Peter Thomas has served as a director of the Company since June 1994.
---------------
Mr. Thomas is a general partner of Institutional Venture Management III, IV, V,
VI and VII, the General Partners of Institutional Venture Partners III, IV, V,
VI and VII, respectively, all of which are venture capital funds. Mr. Thomas
has been a general partner with Institutional Venture Partners since 1985. He
received his B.S.E.E. degree from Utah State University and his M.S. in Computer
Science from the University of Santa Clara. Mr. Thomas is also a director of
Atmel and Adaptive Solutions.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held four (4) meetings during fiscal
1996.
The Audit Committee, consisting of Messrs. Federman, Loarie and Thomas,
held two (2) meetings during fiscal 1996. The Audit Committee reviews the
financial statements and the internal financial reporting system and controls of
the Company with the Company's management and independent accountants,
recommends resolutions for any dispute between the Company's management and its
auditors, and reviews other matters relating to the relationship of the Company
with its independent accountants.
-3-
<PAGE>
The Compensation Committee, consisting of Messrs. Federman, Loarie and
Thomas, held one (1) meeting during fiscal 1996. The Compensation Committee
makes recommendations to the Board of Directors regarding the Company's
executive compensation policies and administers the Company's stock option plan
and employee stock purchase plan.
The Board of Directors currently has no nominating committee or committee
performing a similar function.
Each director attended all of (i) the meetings of the Board of Directors
held during fiscal 1996 and (ii) the meetings held by all committees of the
Board of Directors during fiscal 1996 on which such director served.
COMPENSATION OF DIRECTORS
Directors receive no cash remuneration for serving on the Board of
Directors. Non-employee directors participate in the Company's 1996 Director
Stock Option Plan (the "Director Plan"). Under the Director Plan, each non-
employee director who joins the Board will automatically be granted a non-
statutory option to purchase 12,000 shares of Common Stock on the date upon
which such person first becomes a director. In addition, each non-employee
director will automatically receive a non-statutory option to purchase 3,000
shares of Common Stock upon such director's annual re-election to the Board,
provided the director has been a member of the Board for at least six (6) months
upon the date of re-election. The exercise price of each option granted under
the Director Plan must be equal to the fair market value of the Common Stock on
the date of grant. The 12,000 share grant vests at the rate of twenty five
percent (25%) of the option shares upon the first anniversary of the date of
grant and as to twenty-five percent (25%) of the shares each year thereafter and
the 3,000 share grant vests monthly over a twelve (12) month period. Options
granted under the Director Plan have a term of ten (10) years unless terminated
sooner, whether upon termination of the optionee's status as a director or
otherwise pursuant to the Director Plan. In fiscal 1996, Messrs. Federman,
Loarie and Thomas were each granted an option to purchase 3,000 shares of Common
Stock under the Director Plan at an exercise price of $6.375 per share.
-4-
<PAGE>
PROPOSAL TWO
APPROVAL OF AMENDMENT TO 1994 STOCK OPTION PLAN
The Company's Board of Directors and stockholders have previously adopted
and approved the Company's 1994 Stock Option Plan (the "Option Plan"). A total
of 2,800,000 shares of Common Stock are presently reserved for issuance under
the Option Plan. In January 1997, the Board of Directors approved an amendment
to the Option Plan, subject to stockholder approval, to increase the shares
reserved for issuance thereunder by 500,000 shares, bringing the total number of
shares issuable under the Option Plan to 3,300,000.
As of March 31, 1997, 329,183 shares were available for future issuance
under the Option Plan.
At the Annual Meeting, the stockholders are being requested to consider and
approve the proposed amendment to the Option Plan to increase the number of
shares of Common Stock reserved for issuance thereunder by 500,000 shares,
bringing the total number of shares issuable under the Option Plan to 3,300,000.
The Board believes that the amendment will enable the Company to continue its
policy of widespread employee stock ownership as a means to motivate high levels
of performance and to recognize key employee accomplishments.
Options granted under the Option Plan are intended to meet the requirements
of being performance-based within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"). The Option Plan provides that no
employee shall be granted, in any fiscal year of the Company, options to
purchase more than 250,000 shares of Common Stock.
For a description of the principal features of the Option Plan, see
"Appendix A--Description of 1994 Stock Option Plan."
VOTE REQUIRED; RECOMMENDATION OF BOARD OF DIRECTORS
The approval of the amendment to the Option Plan requires the affirmative
vote of a majority of the Votes Cast on the proposal at the Annual Meeting.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
AMENDMENT OF THE OPTION PLAN TO INCREASE THE NUMBER OF SHARES RESERVED FOR
ISSUANCE THEREUNDER.
-5-
<PAGE>
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Price Waterhouse LLP, independent
accountants, to audit the financial statements of the Company for the 1997
fiscal year. This nomination is being presented to the stockholders for
ratification at the meeting. Price Waterhouse LLP has audited the Company's
financial statements since the Company's inception. A representative of Price
Waterhouse LLP is expected to be present at the meeting, will have the
opportunity to make a statement, and is expected to be available to respond to
appropriate questions.
VOTE REQUIRED; RECOMMENDATION OF BOARD OF DIRECTORS
The affirmative vote of a majority of the Votes Cast on the proposal at the
Annual Meeting is required to ratify the Board's selection. If the stockholders
reject the nomination, the Board will reconsider its selection.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS FOR THE 1997 FISCAL YEAR.
-6-
<PAGE>
ADDITIONAL INFORMATION
PRINCIPAL SHARE OWNERSHIP
As of March 14, 1997, the following persons were known by the Company to be
the beneficial owners of more than 5% of the Company's Common Stock:
NAME NUMBER PERCENT
---- ------- -------
Morgan Stanley Venture Partners
Robert J. Loarie
3000 Sand Hill Road
Building 4, Suite 250
Menlo Park, CA 94025(l)........ 3,403,000 21.5%
Institutional Venture Partners
T. Peter Thomas
3000 Sand Hill Road
Building 2, Suite 290
Menlo Park, CA 94025(2)........ 2,336,334 14.8
U.S. Venture Partners
Irwin Federman
2180 Sand Hill Road, Suite 300
Menlo Park, CA 94035(3)........ 1,902,847 12.0
Phillip M. Drayer
TelCom Semiconductor, Inc.
1300 Terra Bella Avenue
Mountain View, CA 94035........ 1,285,500 8.1
- ------------
(1) Includes 2,224,647 shares held by Morgan Stanley Venture Capital Fund II,
L.P. ("MSVC II LP"), 740,706 shares held by Morgan Stanley Venture
Investors, L.P. ("MSVI") and 434,647 shares held by Morgan Stanley
Venture Capital Fund II, C.V. ("MSVC II CV"). Morgan Stanley Venture
Capital II, Inc. ("MSVC II") is the managing general partner of Morgan
Stanley Venture Partners II, L.P. ("MSVP II"). MSVP II is the general
partner of MSVC II LP and MSVI. MSVP II is the investment general partner
of MSVC II CV. Mr. Loarie is a director of the Company, a principal of
Morgan Stanley & Co. Incorporated, a general partner of MSVP II and a vice
president of MSVC II and disclaims beneficial ownership of all such
shares. Also includes 3,000 shares issuable upon the exercise of options
to purchase Common Stock which are exercisable within 60 days of March 14,
1997 held by Mr. Loarie.
(2) Includes 2,286,667 shares held by Institutional Venture Partners VI ("IVP")
and 46,667 shares held by Institutional Venture Management VI ("IVM"). IVM
is the general partner of IVP. Mr. Thomas is a general partner of IVM. Mr.
Thomas disclaims beneficial ownership of all such shares, except as to the
pecuniary interest therein arising from his interest in such funds. Also
includes 3,000 shares issuable upon the exercise of options to purchase
Common Stock which are exercisable within 60 days of March 14, 1997 held by
Mr. Thomas.
(3) Includes 1,823,854 shares held by U.S. Venture Partners III ("USVP III"),
56,995 shares held by Second Ventures Limited Partnership ("SVLP") and
18,998 shares held by U.S.V. Entrepreneur Partners ("USV"). Mr. Federman
is a general partner of BHMS Partners III, A California Limited Partnership
("BHMS"). BHMS is the general partner of USVP III, SVLP and USV. Mr.
Federman disclaims beneficial ownership of
-7-
<PAGE>
the shares which are held by USVP III, SVLP, and USV, except as to the
pecuniary interest therein arising from his interest in BHMS. Also
includes 3,000 shares issuable upon the exercise of options to purchase
Common Stock which are exercisable within 60 days of March 14, 1997 held by
Mr. Federman.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
Common Stock as of March 14, 1997 (i) by each director of the Company, (ii) by
the Company's Chief Executive Officer and the four other most highly compensated
executive officers of the Company for fiscal year 1996 (such officers are
collectively referred to as the "Named Executive Officers"), and (iii) by all
current directors and executive officers as a group:
NUMBER
OF PERCENT
NAME SHARES OF TOTAL
----------------------------------------------- --------- --------
Phillip M. Drayer.............................. 1,285,500 8.1%
R. Michael O'Malley(l)......................... 233,302 1.5
Gary P. Pinelli................................ 582,850 3.7
Edward D. Mitchell(2).......................... 62,492 *
Kenneth J. Rose(3)............................. 35,984 *
Robert J. Loarie(4)............................ 3,403,000 21.5
T. Peter Thomas(5)............................. 2,336,334 14.8
Irwin Federman(6).............................. 1,902,847 12.0
All executive officers and directors as a group
(8 persons) (7)............................... 9,842,309 61.7
- --------------
* Less than 1%
(1) Includes 86,450 shares issuable upon the exercise of options to purchase
Common Stock which are exercisable within 60 days of March 14, 1997.
(2) Includes 22,492 shares issuable upon the exercise of options to purchase
Common Stock which are exercisable within 60 days of March 14, 1997.
(3) Includes 22,915 shares issuable upon the exercise of options to purchase
Common Stock which are exercisable within 60 days of March 14, 1997.
(4) Includes 3,000 shares issuable upon the exercise of options to purchase
Common Stock which are exercisable within 60 days of March 14, 1997. Also
includes 3,400,000 shares held by funds affiliated with Morgan Stanley
Venture Partners. Mr. Loarie disclaims beneficial ownership of all shares
held by such funds. See "Principal Share Ownership."
(5) Includes 3,000 shares issuable upon the exercise of options to purchase
Common Stock which are exercisable within 60 days of March 14, 1997. Also
includes 2,333,334 shares held by funds affiliated with Institutional
Venture Partners. Mr. Thomas disclaims beneficial ownership of all shares
held by such funds, except as to the pecuniary interest therein arising
from his interest in such funds. See "Principal Share Ownership."
(6) Includes 3,000 shares issuable upon the exercise of options to purchase
Common Stock which are exercisable within 60 days of March 14, 1997. Also
includes 1,899,847 shares beneficially owned by funds affiliated with U.S.
Venture Partners. Mr. Federman disclaims beneficial ownership of the
shares which are held by USVP III, SVLP, and USV, except as to the
pecuniary interest therein arising from his interest in BHMS. See
"Principal Share Ownership."
(7) Includes 140,857 shares issuable upon exercise of options to purchase
Common Stock which are exercisable within 60 days of March 14, 1997. Also
includes 3,400,000 shares held by funds affiliated with Morgan Stanley
Venture Capital, 2,333,334 shares held by funds affiliated with
Institutional Venture Partners and 1,899,847 shares beneficially owned by
funds affiliated with U.S. Venture Partners. See notes (4), (5) and (6)
above.
-8-
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning compensation paid to
the Named Executive Officers during the Company's 1994, 1995 and 1996 fiscal
years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION(1) SECURITIES
FISCAL ----------------------- UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
- -------------------------------------------------------- ---- -------- -------- ------------
<S> <C> <C> <C> <C>
Phillip M. Drayer....................................... 1996 $185,799 -- --
Chief Executive Officer and President 1995 175,854 -- --
1994 166,992 $12,923 --
Gary P. Pinelli......................................... 1996 138,566 -- --
Vice President, Sales and Tactical Marketing 1995 129,050 -- --
1994 125,008 9,616 25,000
R. Michael O'Malley..................................... 1996 123,261 -- 100,000
Vice President, Chief Operating Officer and Chief 1995 114,917 -- 75,000
Financial Officer 1994 108,742 8,462 25,000
Edward D. Mitchell...................................... 1996 111,259 -- 40,000
Vice President, Engineering and Chief Technical 1995 105,267 -- 25,000
Officer 1994 94,994 7,770 25,000
Kenneth J. Rose......................................... 1996 102,911 -- 20,000
Chief Accounting Officer and Corporate Controller 1995 97,402 -- 15,000
1994 95,099 3,629 35,000
</TABLE>
- --------------
(1) Excludes perquisites and other personal benefits which for each Named
Executive Officer did not exceed the lesser of $50,000 or 10% of the total
annual salary and bonus for such officer during any fiscal year.
-9-
<PAGE>
OPTION INFORMATION
The following tables set forth information regarding stock options granted
to the Named Executive Officers during fiscal 1996, as well as options held by
such officers as of December 31, 1996, the last day of the Company's 1996 fiscal
year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUES AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION (THROUGH
INDIVIDUAL GRANTS(1) EXPIRATION DATE)(2)
------------------------------------------------ ------------------------------
% OF
TOTAL
OPTIONS OPTION EXERCISE EXPIRATION
NAME GRANTED GRANTS PRICE ($/SH) DATE 5% PER YEAR 10% PER YEAR
- ---------------------- ------- -------- ------------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Phillip M. Drayer..... -- -- -- -- -- --
Gary P. Pinelli....... -- -- -- -- -- --
R. Michael O'Malley... 25,000 2.4% $4.875 01/29/06 $ 76,647 $194,237
25,000 2.4 4.375 07/17/06 68,785 174,316
50,000 4.8 3.500 11/08/06 110,057 278,904
Edward D. Mitchell.... 25,000 2.4 4.875 01/29/06 76,647 194,237
15,000 1.4 4.375 07/17/06 41,271 104,589
Kenneth J. Rose....... 7,000 0.7 4.875 01/29/06 21,461 54,386
13,000 1.2 3.875 10/16/06 31,681 80,285
</TABLE>
- -------------
(1) Each of these options was granted pursuant to the Option Plan and is
subject to the terms of such plan. These options were granted at an
exercise price equal to the fair market value of the Company's Common Stock
as determined by the Board of Directors of the Company on the date of grant
and, as long as the optionee maintains continuous employment with the
Company, vest over a four year period at a rate of one-fourth of the shares
on the first anniversary of the date of grant and 1/36th of the remaining
shares per month thereafter.
(2) Potential gains are net of the exercise price but before taxes associated
with the exercise. Amounts represent hypothetical gains that could be
achieved for the respective options if they were exercised at the end of
the option term. The assumed 5% and 10% rates of stock appreciation are
based on appreciation from the exercise price per share. These rates are
provided in accordance with the rules of the Securities and Exchange
Commission and do not represent the Company's estimate or projection of the
future Common Stock price. Actual gains, if any, on stock option exercises
are dependent on the future financial performance of the Company, overall
stock market conditions and the option holders' continued employment
through the vesting period. This table does not take into account any
appreciation in the price of the Common Stock from the date of grant to the
date of this Proxy Statement, other than the columns reflecting assumed
rates of appreciation of 5% and 10%.
-10-
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER VALUE OF
OF UNEXERCISED UNEXERCISED OPTIONS
SHARES AT FISCAL YEAR END AT FISCAL YEAR END(1)
ACQUIRED ON VALUE -------------------- ---------------------
NAME EXERCISE REALIZED VESTED UNVESTED VESTED UNVESTED
- --------------------- ---------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Phillip M. Drayer..... -- -- -- -- -- --
Gary P. Pinelli....... -- -- -- -- -- --
R. Michael O'Malley... -- -- 56,249 143,751 $232,027 $592,973
Edward D. Mitchell.... 15,000 $103,125 10,000 80,000 41,250 330,000
Kenneth J. Rose....... 5,000 23,125 16,563 37,500 68,322 154,688
</TABLE>
- ---------------
(1) Represents the difference between the exercise price of the options and the
closing price of the Company's Common Stock on December 27, 1996 of $4.125
per share.
TEN YEAR OPTION REPRICINGS
In January 1996, the Company's Board of Directors approved an option exchange
program whereby all employees that held options with exercise prices in excess
of $4.875 per share were offered the opportunity to exchange such options for
new options at $4.875 per share, which was the fair market value of the Common
Stock on the date of the exchange program. The following table sets forth
certain information with respect to participation by the Company's Named
Executive Officers in such option exchange program. For further information
with respect to such program, see "Report of the Compensation Committee of the
Board of Directors."
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET PRICE EXERCISE OPTION TERM
UNDERLYING OF STOCK AT PRICE AT NEW REMAINING
OPTIONS TIME OF TIME OF EXERCISE AT DATE OF
NAME AND POSITION DATE REPRICED REPRICING REPRICING PRICE REPRICING
- ----------------------------- ---------------- ---------- ------------ --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Kenneth J. Rose.............. January 29, 1996 7,000 $4.875 $8.750 $4.875 45 months(1)
Chief Accounting Officer
and Corporate Controller
</TABLE>
- -------------
(1) In order to participate in the option exchange program, employees were
required to restart the vesting period for their options such that the
vesting commencement date would be January 29, 1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Messrs.
Federman, Loarie and Thomas, none of whom is an officer or employee of the
Company. No member of the Compensation Committee or executive officer of the
Company has a relationship that would constitute an interlocking relationship
with executive officers or directors of another entity. In November 1995, the
Company entered into certain agreements with IC WORKS, Inc., a privately-held
company located in San Jose, California. Pursuant to such agreements, the
Company purchased $3.0 million of preferred stock of IC WORKS and provided $10.0
million in capital equipment. In return for this investment, TelCom received a
guarantee of submicron wafer capacity for a period of five years, projected to
start in late 1997. Irwin Federman and Peter Thomas are directors of the
Company and of IC WORKS. In addition, venture capital funds affiliated with
Messrs. Federman and Thomas are principal shareholders of IC WORKS. See
"Certain Transactions."
-11-
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee (the "Committee") is comprised of Irwin
Federman, Robert Loarie and Peter Thomas, all of whom are non-employee
directors. The Committee sets, reviews and administers the Company's executive
compensation program. The role of the Committee is to establish and recommend
salaries and other compensation paid to executive officers of the Company and to
administer the Company's stock option plan and employee stock purchase plan.
The Company's Board of Directors reviews and approves all stock option grants to
employees and all executive officer base salaries and any cash bonus payments to
the executive officers.
The Company's executive pay programs are designed to attract and retain
executives who will contribute to the Company's long-term success, to mesh
executive and stockholder interests through stock option based plans and to
provide a compensation package that recognizes individual contributions and
Company performance.
At this time in the Company's growth, the Committee has determined that the
most effective means of compensation are base salaries and long-term incentives
through the Company's stock option program.
Base Salary. The base salaries of executive officers are initially
-----------
determined by evaluating the responsibilities of the position held and the
experience and performance of the individual, with reference to the competitive
marketplace for executive talent, including a comparison to base salaries for
comparable positions in high growth, technology-based companies of reasonably
similar size. The Committee reviews executive salaries annually and adjusts
them as appropriate to reflect changes in the market conditions and individual
performance and responsibility. During fiscal 1996, salaries for executive
officers were increased by 0% to 13%. The Chief Executive Officer's salary was
not increased from fiscal 1995 to 1996.
Stock Options. Under the Company's Option Plan, stock options may be
-------------
granted to executive officers and other employees of the Company. Upon joining
the Company, an individual's initial option grant is based on the individual's
responsibilities and position. The size of any annual stock option awards is
based primarily on an individual's performance and responsibilities. Because of
the start-up nature of the Company's operations over the past two years, the
Committee believes stock option grants are an effective method of ensuring that
the executive is taking a longer term view of the Company's performance and that
the executive's and the stockholder's interests are in alignment.
In January 1996, the Company's Board of Directors approved an option
exchange program whereby all employees that held options with exercise prices in
excess of $4.875 per share were offered the opportunity to exchange such options
for new options at $4.875 per share, which was the fair market value of the
Common Stock on the date of the exchange program. In order to participate in
the option exchange program, employees were required to restart the vesting
period for their options such that the vesting commencement date would be
January 29, 1996. The Board undertook this action in light of the then recent
reduction in the trading price of the Company's Common Stock and in
consideration of the importance to the Company of retaining its employees by
offering them appropriate equity incentives. The Board also considered the
highly competitive environment for obtaining and retaining qualified employees
and the overall benefit to the Company's stockholders from a highly motivated
group of employees.
Other. The Company did not pay bonuses to any employees in 1996. Going
-----
forward, the Committee will review the use of bonuses as a third component of
executive compensation.
Other elements of executive compensation include Company-wide medical and
life insurance benefits and the ability to defer compensation pursuant to a
401(k) plan. The Company matches annual contributions under the 401(k) plan up
to a maximum of $1,500.
-12-
<PAGE>
The Company's Chief Executive Officer does not receive any other special or
additional compensation other than as described above.
The Committee has considered the potential impact of Section 162(m) of the
Code, and the regulations thereunder (the "Section"). The Section disallows a
tax deduction for any publicly-held corporation for individual compensation
exceeding $1 million in any taxable year for any of the Named Executive
Officers, unless such compensation is performance-based. Since the cash
compensation of each of the Named Executive Officers is below the $1 million
threshold and the Committee believes that any options granted under the Option
Plan will meet the requirements of being performance-based, the Committee
believes that the Section will not reduce the tax deduction available to the
Company. The Company's policy is to qualify, to the extent reasonable, its
executive officers' compensation for deductibility under applicable tax laws.
However, the Committee believes that its primary responsibility is to provide a
compensation program that will attract, retain and reward the executive talent
necessary to the Company's success. Consequently, the Committee recognizes that
the loss of a tax deduction could be necessary in some circumstances.
Compensation Committee of the Board of Directors
Irwin Federman
Robert J. Loarie
T. Peter Thomas
-13-
<PAGE>
COMPARISON OF TOTAL CUMULATIVE STOCKHOLDER RETURN
The following graph sets forth the Company's total cumulative stockholder
return as compared to the Standard & Poor's 500 Index and the Standard & Poor's
Semiconductor Index for the period July 28, 1995 (the date of the Company's
initial public offering) through March 7, 1997. Total stockholder return
assumes $100 invested at the beginning of the period in the Common Stock of the
Company, the stocks represented in the Standard & Poor's 500 Index and the
stocks represented in the Standard & Poor's Semiconductor Index, respectively.
Total return also assumes reinvestment of dividends; the Company has paid no
dividends on its Common Stock.
Historical stock price performance should not be relied upon as indicative
of future stock price performance.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
TelCom S&P S&P
Semiconductor 500 INDEX Semiconductor Index
------------- --------- -------------------
<S> <C> <C> <C>
07/28/95 $100 $100 $100
09/31/95 $ 82 $104 $ 97
12/31/96 $ 52 $110 $ 75
03/31/96 $ 37 $117 $ 71
06/30/96 $ 37 $121 $ 82
09/30/96 $ 34 $125 $103
12/31/96 $ 29 $138 $136
03/07/97 $ 38 $146 $155
</TABLE>
-14-
<PAGE>
CERTAIN TRANSACTIONS
In November 1995, the Company entered into certain agreements with IC
WORKS, Inc., a privately-held company located in San Jose, California. Pursuant
to such agreements, the Company purchased $3.0 million of preferred stock of IC
WORKS and provided $10.0 million in capital equipment. In return for this
investment, TelCom received a guarantee of submicron wafer capacity for a period
of five years. Irwin Federman and Peter Thomas are directors of the Company and
of IC WORKS. In addition, venture capital funds affiliated with Messrs.
Federman and Thomas are principal shareholders of IC WORKS.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of copies of filings under Section 16(a) of the
Securities Exchange Act of 1934, as amended, received by it, or written
representations from certain reporting persons, the Company believes that during
fiscal 1996 all Section 16 filing requirements were met, except that Gary
Pinelli and Michael O'Malley each filed one late Form 4.
OTHER MATTERS
The Company knows of no other matters to be submitted at the Annual
Meeting. If any other matters properly come before the meeting, it is the
intention of the persons named in the enclosed proxy to vote the shares they
represent as the Board of Directors of the Company may recommend.
THE BOARD OF DIRECTORS
Mountain View, California
April 3, 1997
-15-
<PAGE>
APPENDIX A
DESCRIPTION OF THE 1994 STOCK OPTION PLAN
General. The Company's 1994 Stock Option Plan (the "Option Plan") was
-------
adopted by the Board of Directors and approved by the stockholders in February
1994. The Option Plan authorizes the Board, or one or more committees which the
Board may appoint from among its members (the "Committee"), to grant stock
options. Prior to the proposed amendment to the Option Plan to be voted on at
the Annual Meeting, a total of 2,800,000 shares of Common Stock has been
reserved for issuance under the Option Plan. Options granted under the Option
Plan may be either "incentive stock options" as defined in Section 422 of the
Code, or nonstatutory stock options, as determined by the Board or the
Committee.
Purpose. The general purpose of the Option Plan is to attract and retain
-------
the best available personnel for positions of substantial responsibility, to
provide additional incentive to employees and consultants and to promote the
success of the Company's business.
Administration. The Option Plan may be administered by the Board or the
--------------
Committee. Subject to the other provisions of the Option Plan, the Board has
the authority to: (i) determine the fair market value of the stock; (ii) approve
forms of agreement for use under the Option Plan; (iii) select the persons to
whom options are to be granted; (iv) determine the number of shares to be made
subject to each option; (v) determine whether and to what extent options are to
be granted; (vi) prescribe the terms and conditions of each option (including
the exercise price, whether an option will be classified as an incentive stock
option or a nonstatutory option and the provisions of the stock option to be
entered into between the Company and the grantee); and (vii) reduce the exercise
price of an option to the then current fair market value. All decisions,
interpretations and other actions of the Committee shall be final and binding on
all holders of options and on all persons deriving their rights therefrom.
Eligibility. The Option Plan provides that options may be granted to the
-----------
Company's Employees and Consultants (as such terms are defined in the Option
Plan). Incentive stock options may be granted only to Employees. Any optionee
who owns more than 10% of the combined voting power of all classes of
outstanding stock of the Company (a "10% Stockholder") is not eligible for the
grant of an option unless the exercise price of the option is at least 110% of
the fair market value of the Common Stock on the date of grant.
Terms and Conditions of Options. Each option granted under the Option Plan
-------------------------------
is evidenced by a written stock option agreement between the optionee and the
Company and is subject to the following terms and conditions:
(a) Exercise Price. The Board or Committee determines the exercise price
--------------
of options to purchase shares of Common Stock at the time the options are
granted. However, excluding options issued to 10% Stockholders, the exercise
price under an incentive stock option must not be less than 100% of the fair
market value of the Common Stock on the date the option is granted and the
exercise price of a nonstatutory stock option must not be less than 85% of the
fair market value of the Common Stock on the date the option is granted.
Generally, the fair market value shall be the closing sales price for such stock
(or the closing bid, if no sales were reported) as quoted on the Nasdaq National
Market on the last market trading day prior to the date of determination.
(b) Form of Consideration. The means of payment for shares issued upon
---------------------
exercise of an option is specified in each option agreement and generally may be
made by cash, check, promissory note, other shares of Common Stock of the
Company owned by the optionee, delivery of an exercise notice together with
irrevocable instructions to a broker to deliver the exercise price to the
Company from the sale or loan proceeds, reduction in the
A-1
<PAGE>
amount of any Company liability to the optionee, authorization for the Company
to retain the number of shares having a fair market value on the date of
exercise equal to the exercise price, or by a combination thereof
(c) Exercise of the Option. Each stock option agreement will specify the
----------------------
term of the option and the date when the option is to become exercisable.
However, in no event shall an option granted under the Option Plan be exercised
more than ten (10) years after the date of grant. Moreover, in the case of an
incentive stock option granted to a 10% Stockholder, the term of the option
shall be for no more than five (5) years from the date of grant.
(d) Termination of Employment. If an optionee's employment terminates for
-------------------------
any reason (other than death or permanent disability), the optionee may exercise
his or her option, but only within such period of time as is determined by the
Board or Committee at the time of grant (such period not to exceed ninety (90)
days in the case of an Incentive Stock Option) from the date of such
termination, and only to the extent that the optionee was entitled to exercise
it at the date of such termination (but in no event later than the expiration of
the term of such option as set forth in the option agreement). To the extent
that the optionee was not entitled to exercise an option at the date of such
termination, and to the extent that the optionee does not exercise such option
(to the extent otherwise so entitled) within the time permitted, the option
shall terminate.
(e) Permanent Disability. If an employee is unable to continue employment
--------------------
with the Company as a result of disability, then all options held by such
optionee under the Option Plan shall expire upon the earlier of (i) six (6)
months after the date of termination of the optionee's employment or (ii) the
expiration date of the option. However, if such disability is not a disability
as defined in Section 22(e)(3) of the Code, then any incentive stock options
shall convert into nonstatutory stock options after three (3) months. The
optionee may exercise all or part of his or her option at any time before such
expiration to the extent that such option was exercisable at the time of
termination of employment.
(f) Death. If an optionee dies while employed by the Company, his or her
-----
option shall expire upon the earlier of (i) twelve (12) months after the
optionee's death or (ii) the expiration date of the option. The executor or
other legal representative of the optionee may exercise all or part of the
optionee's option at any time before such expiration to the extent that such
option was exercisable at the time of death.
(g) Termination of Options. Each stock option agreement will specify the
----------------------
term of the option and the date when all or any installment of the option is to
become exercisable. Notwithstanding the foregoing, however, the term of any
incentive stock option shall not exceed ten (10) years from the date of grant.
No options may be exercised by any person after the expiration of its term.
(h) Nontransferability of Options. During an optionee's lifetime, his or
-----------------------------
her option(s) shall be exercisable only by the optionee and shall not be
transferable other than by will or laws of descent and distribution.
(i) Value Limitation. If the aggregate fair market value of all shares of
----------------
Common Stock subject to an optionee's incentive stock option which are
exercisable for the first time during any calendar year exceeds $100,000, the
excess options shall be treated as nonstatutory options.
(j) Rule 162(m) Limitation. The Option Plan provides that no employee
----------------------
shall be granted, in any fiscal year of the Company, options to purchase more
than 250,000 shares of Common Stock.
Stock Withholding. The administrator may allow optionees to satisfy their
-----------------
withholding obligations by electing to have a certain number of shares of stock
withheld by the Company which would otherwise be received pursuant to the
exercise of the option.
A-2
<PAGE>
Adjustment Upon Change in Capitalization, Change in Control. In the event
-----------------------------------------------------------
that the stock of the Company is changed by reason of any stock split, reverse
stock split, stock dividend, recapitalization or other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by the Company, appropriate proportional adjustments shall be made
in the number and class of shares of stock subject to the Option Plan, the
number of shares of stock subject to any option outstanding under the Option
Plan, and the exercise price of any such outstanding option. Any such
adjustment will be made by the Board, whose determination shall be conclusive.
In connection with any merger, consolidation, acquisition of assets or like
event involving the Company, each outstanding option may be assumed or an
equivalent option substituted by a successor corporation. If the successor
corporation does not assume the options or substitute substantially equivalent
options, the option will terminate.
Amendments, Suspensions and Termination of the Option Plan. The Board may
----------------------------------------------------------
amend, suspend or terminate the Option Plan at any time; provided, however, that
stockholder approval is required for any amendment to the extent necessary to
comply with Rule 16b-3 promulgated under the Exchange Act or Section 422 of the
Code, or any similar rule or statute. In any event, the Option Plan will
terminate automatically in 2004.
Federal Tax Information for Option Plan. Options granted under the Option
---------------------------------------
Plan may be either "incentive stock options," as defined in Section 422 of the
Code, or nonstatutory options.
An optionee who is granted an incentive stock option will not recognize
taxable income either at the time the option is granted or upon its exercise,
although the exercise may subject the optionee to the alternative minimum tax.
Upon the sale or exchange of the shares more than two (2) years after grant of
the option and one (1) year after exercising the option, any gain or loss will
be treated as long term capital gain or loss. If these holding periods are not
satisfied, the optionee will recognize ordinary income at the time of sale or
exchange equal to the difference between the exercise price and the lower of (i)
the fair market value of the shares at the date of the option exercise or (ii)
the sale price of the shares. A different rule for measuring ordinary income
upon such a premature disposition may apply if the optionee is also an officer,
director, or 10% Stockholder of the Company. The Company will be entitled to a
deduction in the same amount as the ordinary income recognized by the optionee.
Any gain or loss recognized on such a premature disposition of the shares in
excess of the amount treated as ordinary income will be characterized as long-
term or short-term capital gain or loss, depending on the holding period.
All options which do not qualify as incentive stock options are referred to
as nonstatutory options. An optionee will not recognize any taxable income at
the time he or she is granted a nonstatutory option. However, upon its
exercise, the optionee will recognize taxable income generally measured as the
excess of the then fair market value of the shares purchased over the purchase
price. Any taxable income recognized in connection with an option exercise by
an optionee who is also an employee of the Company will be subject to tax
withholding by the Company. Upon resale of such shares by the optionee, any
difference between the sales price and the optionee's purchase price, to the
extent not recognized as taxable income as described above, will be treated as
long-term or short-term capital gain or loss, depending on the holding period.
The Company will be entitled to a tax deduction in the same amount as the
ordinary income recognized by the optionee with respect to shares acquired upon
exercise of a nonstatutory option.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION
UPON THE OPTIONEE AND THE COMPANY WITH RESPECT TO THE GRANT AND EXERCISE OF
OPTIONS UNDER THE OPTION PLAN, DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT
DISCUSS THE TAX CONSEQUENCES OF THE OPTIONEE'S DEATH OR THE INCOME TAX LAWS OF
ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH AN OPTIONEE MAY RESIDE.
A-3
<PAGE>
Option Plan Benefits. The Company is unable to predict the amount of
--------------------
benefits that will be received by or allocated to any particular participant
under the Option Plan. The following table sets forth the dollar amount and the
number of shares granted under the Option Plan during the last fiscal year to
(i) each of the Company's Named Executive Officers, (ii) all executive officers
as a group, (iii) all non-employee directors as a group and (iv) all employees
other than executive officers as a group:
OPTION PLAN BENEFITS TABLE
<TABLE>
<CAPTION>
DOLLAR VALUE NUMBER OF
NAME AND POSITION OF GRANTS(1) SHARES GRANTED
- ---------------------------------------------------------- --------------- --------------
<S> <C> <C>
Phillip M. Drayer......................................... -- --
Chief Executive Officer and President
Gary P. Pinelli........................................... -- --
Vice President, Sales and Tactical Marketing
R. Michael O'Malley....................................... $406,250 100,000
Vice President, Chief Operating Officer and Chief
Financial Officer
Edward D. Mitchell........................................ 187,500 40,000
Vice President, Engineering and Chief Technical Officer
Kenneth J. Rose........................................... 84,500 20,000
Chief Accounting Officer and Corporate Controller
All Executive Officers as a Group (5 persons)............. 678,250 160,000
All Non-employee Directors as a Group (3 persons)......... -- --
All Employees other than Executive Officers as a Group.... 888,500 4,010,844
</TABLE>
- --------------
(1) The dollar value of option grants under the Option Plan was computed by
multiplying the number of shares subject to the option times the exercise
price of the option. All options granted under the Option Plan were
granted at an exercise price equal to the fair market value of the Common
Stock on the date of grant.
A-4
<PAGE>
TELCOM SEMICONDUCTOR, INC.
1994 STOCK OPTION PLAN
(as amended on January 28, 1997)
1. Purposes of the Plan. The purposes of this Stock Option Plan are to
--------------------
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under this Plan may be incentive stock options (as
defined under Section 422 of the Code) or nonstatutory stock options, as
determined by the Administrator at the time of grant of an option and subject to
the applicable provisions of Section 422 of the Code, as amended, and the
regulations promulgated thereunder.
2. Definitions. As used herein, the following definitions shall apply:
-----------
(a) "Administrator" means the Board or any of its Committees appointed
-------------
pursuant to Section 4 of the Plan.
(b) "Board" means the Board of Directors of the Company.
-----
(c) "Code" means the Internal Revenue Code of 1986, as amended.
----
(d) "Committee" means the Committee appointed by the Board of
---------
Directors in accordance with paragraph (a) of Section 4 of the Plan.
(e) "Company" means TelCom Semiconductor, Inc., a Delaware
-------
corporation (formerly named TelCom Universal, Inc.).
(f) "Consultant" means any person who is engaged by the Company or
----------
any Parent or Subsidiary to render consulting or advisory services and is
compensated for such services, and any director of the Company whether
compensated for such services or not. If and in the event the Company registers
any class of any equity security pursuant to the Exchange Act, the term
Consultant shall thereafter not include directors who are not compensated for
their services or are paid only a director's fee by the Company.
(g) "Continuous Status as an Employee" means the absence of any
--------------------------------
interruption or termination of the employment relationship by the Company or any
Subsidiary. Continuous Status as an Employee shall not be considered
interrupted in the case of: (i) any leave of absence approved by the Board,
including sick leave, military leave, or any other personal leave; provided,
however, that for purposes of Incentive Stock Options, such leave is for a
period of not more than ninety (90) days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to Company policy adopted from time to time; or (ii)
in the case of transfers between locations of the Company or between the
Company, its Subsidiaries or its successor.
<PAGE>
(h) "Employee" means 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 to constitute
"employment" by the Company.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
(j) "Fair Market Value" means, as of any date, the value of the
-----------------
Stock determined as follows:
(i) If the Stock is listed on any established stock exchange
or a national market system including, without limitation, the National Market
of the National Association of Securities Dealers, Inc. Automated Quotation
("NASDAQ") System, its Fair Market Value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported, as quoted on such
system or exchange or the exchange with the greatest volume of trading in Stock
for the last market trading day prior to the time of determination) as reported
in the Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Stock is quoted on the NASDAQ System (but not on
the National Market thereof) or regularly quoted by a recognized securities
dealer but selling prices are not reported, its Fair Market Value shall be the
mean between the high and low asked prices for the Stock or;
(iii) In the absence of an established market for the Stock,
the Fair Market Value thereof shall be determined in good faith by the
Administrator.
(k) "Incentive Stock Option" means an Option intended to qualify as
----------------------
an incentive stock option within the meaning of Section 422 of the Code.
(l) "Nonstatutory Stock Option" means an Option not intended to
-------------------------
qualify as an Incentive Stock Option.
(m) "Option" means a stock option granted pursuant to the Plan.
------
(n) "Optioned Stock" means the Stock subject to an Option.
--------------
(o) "Optionee" means an Employee or Consultant who receives an
--------
Option.
(p) "Parent" means a "parent corporation," whether now or hereafter
------
existing, as defined in Section 424(e) of the Code.
(q) "Plan" means this 1994 Stock Option Plan.
----
(r) "Share" means a share of the Stock, as adjusted in accordance
-----
with Section 12 of the Plan.
-2-
<PAGE>
(s) "Stock" means the Common Stock of the Company;
-----
(t) "Subsidiary" means 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 12 of
-------------------------
the Plan, the maximum number of shares of Stock which may be optioned and sold
under the Plan is 3,300,000 shares. The shares may be authorized, but unissued,
or reacquired 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.
4. Administration of the Plan.
--------------------------
(a) Procedure.
---------
(i) Administration With Respect to Directors and Officers.
-----------------------------------------------------
With respect to grants of Options to Employees who are also officers or
directors of the Company, the Plan shall be administered by (A) the Board if the
Board may administer the Plan in compliance with Rule 16b-3 promulgated under
the Exchange Act or any successor thereto ("Rule 16b-3") with respect to a plan
intended to qualify thereunder as a discretionary plan, or (B) a Committee
designated by the Board to administer the Plan, which Committee shall be
constituted in such a manner as to permit the Plan to comply with Rule 16b-3
with respect to a plan intended to qualify thereunder as a discretionary plan.
Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies, however caused, and remove all members of the
Committee and thereafter directly administer the Plan, all to the extent
permitted by Rule 16b-3 with respect to a plan intended to qualify thereunder as
a discretionary plan.
(ii) Multiple Administrative Bodies. If permitted by Rule
------------------------------
16b-3, the Plan may be administered by different bodies with respect to
directors, nondirector officers and Employees who are neither directors nor
officers.
(iii) Administration With Respect to Consultants and Other
----------------------------------------------------
Employees. With respect to grants of Options to Employees or Consultants who
- ---------
are neither directors nor officers of the Company, the Plan shall be
administered by (A) the Board or (B) a Committee designated by the Board, which
Committee shall be constituted in such a manner as to satisfy the legal
requirements relating to the administration of incentive stock option plans, if
any, of the corporate and securities laws of California and of the Code (the
"Applicable Laws"). Once appointed, such Committee shall continue to serve in
its designated capacity until otherwise directed by the Board. From time to time
the Board may increase the size of the Committee and appoint additional members
thereof, remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies,
-3-
<PAGE>
however caused, and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by the Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
---------------------------
Plan and in the case of a Committee, the specific duties delegated by the Board
to such Committee, the Administrator shall have the authority, in its
discretion:
(i) to determine the Fair Market Value of the Stock, in
accordance with Section 2(j) of the Plan;
(ii) to select the officers, Consultants and Employees to whom
Options may from time to time be granted hereunder;
(iii) to determine whether and to what extent Options are
granted hereunder;
(iv) to determine the number of shares of Stock to be covered
by each such award granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder (including, but not
limited to, the share price and any restriction or limitation, or waiver of
forfeiture restrictions regarding any Option or other award and/or the shares of
Stock relating thereto, based in each case on such factors as the Administrator
shall determine, in its sole discretion);
(vii) to determine whether and under what circumstances an
Option may be bought-out for cash under subsection 9(f);
(viii) to determine whether, to what extent and under what
circumstances Stock and other amounts payable with respect to an award under
this Plan shall be deferred either automatically or at the election of the
participant (including providing for and determining the amount, if any, of any
deemed earnings on any deferred amount during any deferral period); and
(ix) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Stock covered by such
Option shall have declined since the date the Option was granted.
(c) Effect of Committee's Decision. All decisions, determinations
------------------------------
and interpretations of the Administrator shall be final and binding on all
Optionees and any other holders of any Options.
-4-
<PAGE>
5. Eligibility.
-----------
(a) Nonstatutory Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if he is otherwise
eligible, be granted an additional Option or Options.
(b) Each Option shall be designated in the written option agreement
as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designa tions, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Options designated as Incentive Stock
Options are exercisable for the first time by any Optionee during any calendar
year (under all plans of the Company or any Parent or Subsidiary) exceeds
$100,000, such excess Options shall be treated as Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time the Option with respect
to such Shares is granted.
(d) The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with his right or the Company's right
to terminate his employment or consulting relationship at any time, with or
without cause.
(e) The following limitations shall apply to grants of Options to
Employees:
(i) No Employee shall be granted, in any fiscal year of the
Company, Options to purchase more than 250,000 Shares.
(ii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 12 hereof.
(iii) If an Option is canceled in the same fiscal year of the
Company in which it was granted (other than in connection with a transaction
described in Section 12 hereof, the canceled Option will be counted against the
limit set forth in Section 5(e) hereof. For this purpose, if the exercise price
of an Option is reduced, the transaction will be treated as a cancellation of
the Option and the grant of a new Option.
6. 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
stockholders of the Company as described in Section 18 of the Plan. It shall
continue in effect until February 9, 2004, unless sooner terminated under
Section 14 of the Plan.
7. Term of Option. The term of each Option shall be the term stated in
--------------
the Option Agreement; provided, however, that such term shall be no more than
ten (10) years from the date of grant thereof or such shorter term as may be
provided in the Option Agreement. However, in the
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<PAGE>
case of an Option granted to an Optionee who, at the time the Option is granted,
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Option shall be five (5) years from the date of grant thereof or such shorter
term as may be provided in the Option Agreement.
8. Option Exercise Price and Consideration.
---------------------------------------
(a) The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Board, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the
grant of such Incentive Stock Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant.
(B) granted to any Employee, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a person who, at the time of the grant
of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the per Share exercise price shall be no less than 110% of the Fair Market Value
per Share on the date of the grant.
(B) granted to any person, the per Share exercise price
shall be no less than 85% of the Fair Market Value per Share on the date of
grant.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note, (4) other shares of the Company's capital stock
which (x) in the case of shares of the Company's capital stock acquired upon
exercise of an Option either have been owned by the Optionee for more than six
months on the date of surrender or were not acquired, directly or indirectly,
from the Company, and (y) have 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, (5) authorization from the Company to retain from the total
number of Shares as to which the Option is exercised that number of Shares
having a Fair Market Value on the date of exercise equal to the exercise price
for the total number of Shares as to which the Option is exercised, (6) delivery
of a properly executed exercise notice together with irrevocable instructions to
a broker to promptly deliver to the Company the amount of sale or loan proceeds
required to pay the exercise price, (7) by delivering an irrevocable
subscription agreement for the Shares which irrevocably obligates the option
-6-
<PAGE>
holder to take and pay for the Shares not more than twelve months after the date
of delivery of the subscription agreement, (8) any combination of the foregoing
methods of payment, (9) or such other consideration and method of payment for
the issuance of Shares to the extent permitted under Applicable Laws.
9. Exercise of Option.
------------------
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
-----------------------------------------------
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Board, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan. An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised, and the Optionee deemed to
be a shareholder of the shares being purchased upon exercise, 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, as authorized by the Board, consist
of any consideration and method of payment allowable under Section 8(b) 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 Employment. In the event of termination of an
-------------------------
Optionee's consulting relationship or Continuous Status as an Employee with the
Company (as the case may be), such Optionee may, within thirty (30) days (or
such longer period of time as is determined by the Board, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option and not exceeding ninety (90) days) after the date of such
termination (but in no event later than the expiration date of the term of such
Option as set forth in the Option Agreement), exercise his Option to the extent
that Optionee was entitled to exercise it at the date of such termination. To
the extent that Optionee was not entitled to exercise the Option at the date of
such termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.
(c) Disability of Optionee. Notwithstanding the provisions of
----------------------
Section 9(b) above, in the event of termination of an Optionee's Consulting
relationship or Continuous Status as an Employee as a result of his disability,
Optionee may, but only within six (6) months from the date of such termination
(and in no event later than the expiration date of the term of such Option as
set forth in the Option Agreement), exercise the Option to the extent otherwise
entitled to exercise it at the date of such termination; provided, however, that
if such disability is not a "disability" as such term is defined in Section
22(e)(3) of the Code, in the case of an Incentive Stock Option such Incentive
Stock Option shall automatically convert to a Nonstatutory Stock Option on the
day three months and one day following such termination. To the extent that
Optionee is not entitled to exercise the Option at the date of termination, or
if Optionee does not exercise such Option to the extent so
-7-
<PAGE>
entitled within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
(d) Death of Optionee. In the event of the death of an Optionee, the
-----------------
Option may be exercised, at any time within twelve (12) months following the
date of death (but in no event later than the expiration date of the term of
such Option as set forth in the Option Agreement), by the Optionee's estate or
by a person who acquired the right to exercise the Option by bequest or inheri
tance, but only to the extent the Optionee was entitled to exercise the Option
at the date of death. To the extent that Optionee was not entitled to exercise
the Option at the date of termination, or if Optionee does not exercise such
Option to the extent so entitled within the time specified herein, the Option
shall terminate.
(e) Rule 16b-3. Options granted to persons subject to Section
----------
16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
(f) Buyout Provisions. The Administrator may at any time offer to
-----------------
buy out for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
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 and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
11. Stock Withholding to Satisfy Withholding Tax Obligations. At the
--------------------------------------------------------
discretion of the Administrator, Optionees may satisfy withholding obligations
as provided in this paragraph. When an Optionee incurs tax liability in
connection with an Option, which tax liability is subject to tax withholding
under applicable tax laws, and the Optionee is obligated to pay the Company an
amount required to be withheld under applicable tax laws, the Optionee may
satisfy the withholding tax obligation by electing to have the Company withhold
from the Shares to be issued upon exercise of the Option, that number of Shares
having a Fair Market Value equal to the amount required to be withheld. The
Fair Market Value of the Shares to be withheld shall be determined on the date
that the amount of tax to be withheld is to be determined (the "Tax Date").
All elections by an Optionee to have Shares withheld for this purpose
shall be made in writing in a form acceptable to the Administrator and shall be
subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax Date;
(b) once made, the election shall be irrevocable as to the particular
Shares of the Option as to which the election is made;
(c) all elections shall be subject to the consent or disapproval of
the Administrator;
-8-
<PAGE>
(d) if the Optionee is subject to Rule 16b-3, the election must
comply with the applicable provisions of Rule 16b-3 and shall be subject to such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
In the event the election to have Shares withheld is made by an
Optionee and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Optionee shall receive
the full number of Shares with respect to which the Option is exercised but such
Optionee shall be unconditionally obligated to tender back to the Company the
proper number of Shares on the Tax Date.
12. Adjustments Upon Changes in Capitalization or Merger. Subject to any
----------------------------------------------------
required action by the shareholders of the Company, the number of Shares covered
by each outstanding Option, and the number of Shares 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 Stock covered by each such outstanding
Option, shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclas sification of the Stock, or any
other increase or decrease in the number of issued shares of 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 Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the
Company, the Board shall notify the Optionee at least fifteen (15) days prior to
such proposed action. To the extent it has not been previously exercised, the
Option will terminate immediately prior to the consummation of such proposed
action.
In the event of a merger of the Company with or into another
corporation, the Option shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation. In the event that such successor corporation does not
agree to assume the Option or to substitute an equivalent option, the Option
shall terminate.
13. Time of Granting Options. The date of grant of an Option shall, for
------------------------
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Board. Notice
of the determination shall be given to each Employee or Consultant to whom an
Option is so granted within a reasonable time after the date of such grant.
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<PAGE>
14. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment and Termination. The Board may at any time amend,
-------------------------
alter, suspend or discontinue the Plan, but no amendment, alteration, suspension
or discontinuation shall be made which would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Rule 16b-3 under the Exchange
Act or with Section 422 of the Code (or any other applicable law or regulation,
including the requirements of the NASD or an established stock exchange), the
Company shall obtain shareholder approval of any Plan amendment in such a manner
and to such a degree as required.
(b) Effect of Amendment or Termination. Any such amendment or
----------------------------------
termination of the Plan shall not affect Options already granted 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.
15. 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, 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.
16. 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.
The 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.
17. Agreements. Options shall be evidenced by written agreements in such
form as the Board shall approve from time to time.
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<PAGE>
18. Shareholder Approval. Continuance of the Plan shall be subject to
--------------------
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under applicable state and federal law.
19. Information to Optionees. The Company shall provide to each
------------------------
Optionee, not less frequently than annually, copies of annual financial
statements. The Company shall also provide such statements to each individual
who acquires Shares pursuant to the Plan while such individual owns such Shares.
The Company shall not be required to provide such statements to key employees
whose duties in connection with the Company assure their access to equivalent
information.
-11-
<PAGE>
TELCOM SEMICONDUCTOR, INC.
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Phillip M. Drayer and R. Michael
O'Malley, jointly and severally, proxies with full power of substitution, to
vote all shares of Common Stock of TelCom Semiconductor, Inc., a Delaware
corporation, which the undersigned is entitled to vote at the Annual Meeting
of Stockholders to be held at the Company's offices located at 1300 Terra
Bella Avenue, Mountain View, California, on May 1, 1997 at 10:00 am, local
time, or any adjournment thereof. The proxies are being directed to vote as
specified on the reverse side hereof or, if no specification is made, FOR the
election of directors, FOR the proposal to amend the Company's 1994 Stock
Option Plan, FOR the appointment of Price Waterhouse LLP as independent
accountants and in accordance with their discretion on such other matters that
may properly come before the meeting.
THE DIRECTORS RECOMMEND A FOR VOTE ON EACH ITEM.
(Continued and to be signed on reverse side)
<PAGE>
Please mark
your votes [X]
as indicated
1. ELECTION OF DIRECTORS
FOR all nominees listed WITHHOLD AUTHORITY
(except as withheld) to vote for nominee listed
[_] [_]
(Instructions: To withhold authority to vote for any individual nominee,
strike that nominee's name below.)
Nominees: Phillip M. Drayer Robert J. Loarie
Irwin Federman T. Peter Thomas
2. Proposal to amend the Company's 1994 Stock Option Plan FOR AGAINST ABSTAIN
to increase the number of shares reserved for issuance [_] [_] [_]
thereunder by 500,000 shares.
3. Proposal to ratify the appointment of Price Waterhouse
LLP as independent accountants for the 1997 fiscal
year. [_] [_] [_]
I plan to attend the Meeting [_]
Signature(s)__________________________________________ Dated____________, 1997
(Signature(s) must be exactly as name(s) appear on this proxy.) (If signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such, and, if signing for a corporation, please give your title. When
shares are in the name or more than one person, each should sign the Proxy.)
