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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 240.14a-11(c) or 240.14a-12
GASONICS INTERNATIONAL CORPORATION
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(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:
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(4) Date Filed:
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[LOGO]
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MARCH 3, 1997
------------------------
TO THE STOCKHOLDERS OF GASONICS INTERNATIONAL CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of GaSonics International Corporation, a Delaware corporation (the
"Company"), will be held on Monday, March 3, 1997, at 9:00 a.m. local time, at
the Techmart, 5201 Great America Parkway, Santa Clara, California 95054, for the
following purposes, as more fully described in the Proxy Statement accompanying
this Notice:
1. To elect directors to serve until the next Annual Meeting, or until
their successors are elected and qualified;
2. To approve a series of amendments to the Company's 1994 Stock
Option/Stock Issuance Plan (the "Option Plan");
3. To approve an amendment to the Company's Employee Stock Purchase Plan
(the "Purchase Plan") which will increase the number of shares of Common
Stock authorized for issuance over the term of the Purchase Plan by an
additional 400,000 shares;
4. To ratify the appointment of Arthur Andersen LLP as independent auditors
of the Company for the fiscal year ending September 30, 1997; and
5. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on January 15, 1997 are
entitled to notice of and to vote at the Annual Meeting. The stock transfer
books will not be closed between the record date and the date of the meeting. A
list of stockholders entitled to vote at the Annual Meeting will be available
for inspection at the executive offices of the Company.
All stockholders are cordially invited to attend the meeting in person.
Whether or not you plan to attend, please sign and return the enclosed Proxy as
promptly as possible in the envelope enclosed for your convenience. Should you
receive more than one proxy because your shares are registered in different
names and addresses, each proxy should be signed and returned to assure that all
your shares will be voted. You may revoke your proxy at any time prior to the
Annual Meeting. If you attend the Annual Meeting and vote by ballot, your proxy
will be revoked automatically and only your vote at the Annual Meeting will be
counted.
Sincerely,
Monte M. Toole
CHAIRMAN OF THE BOARD OF DIRECTORS
San Jose, California
January 20, 1997
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YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE
READ THE ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED
ENVELOPE.
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<PAGE>
GASONICS INTERNATIONAL CORPORATION
2540 JUNCTION AVENUE
SAN JOSE, CALIFORNIA 95134-1909
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PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 3, 1997
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GENERAL
The enclosed proxy ("Proxy") is solicited on behalf of the Board of
Directors of GaSonics International Corporation, a Delaware corporation (the
"Company"), for use at the Annual Meeting of Stockholders to be held on Monday,
March 3, 1997 (the "Annual Meeting"). The Annual Meeting will be held at 9:00
a.m. local time at the Techmart, 5201 Great America Parkway, Santa Clara,
California 95054. These proxy solicitation materials were mailed on or about
January 20, 1997 to all stockholders entitled to vote at the Annual Meeting.
VOTING
The specific proposals to be considered and acted upon at the Annual Meeting
are summarized in the accompanying Notice and are described in more detail in
this Proxy Statement. On January 15, 1997, the record date for determination of
stockholders entitled to notice of and to vote at the Annual Meeting, 13,560,375
shares of the Company's common stock, $.001 par value ("Common Stock"), were
issued and outstanding. No shares of the Company's preferred stock were
outstanding. Each stockholder is entitled to one vote for each share of Common
Stock held by such stockholder on January 15, 1997. Stockholders may not
cumulate votes in the election of directors.
All votes will be tabulated by the inspector of elections appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions and broker non-votes are counted
as present for purposes of determining the presence or absence of a quorum for
the transaction of business. Abstentions will be counted towards the tabulations
of votes cast on proposals presented to the stockholders and will have the same
effect as negative votes, whereas broker non-votes will not be counted for
purposes of determining whether a proposal has been approved or not.
REVOCABILITY OF PROXIES
You may revoke or change your Proxy at any time before the Annual Meeting by
filing with Mr. Terry R. Gibson, the Secretary of the Company, at the Company's
principal executive offices, GaSonics International Corporation, 2540 Junction
Avenue, San Jose, California 95134-1909, a notice of revocation or another
signed Proxy with a later date. You may also revoke your Proxy by attending the
Annual Meeting and voting in person.
SOLICITATION
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the Proxy
and any additional soliciting materials furnished to stockholders. Copies of
solicitation materials will be furnished to brokerage houses, fiduciaries and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, the Company may reimburse such persons for their costs in
forwarding the solicitation materials to such beneficial owners. The original
solicitation of proxies by mail may be supplemented by a solicitation by
telephone, telegram or other means by directors,
<PAGE>
officers or employees. No additional compensation will be paid to these
individuals for any such services. Except as described above, the Company does
not presently intend to solicit proxies other than by mail.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company that are intended to be presented
by such stockholders at the Company's 1998 Annual Meeting must be received no
later than September 20, 1997, in order that they may be included in the proxy
statement and form of proxy relating to that meeting.
MATTERS TO BE CONSIDERED AT ANNUAL MEETING
PROPOSAL ONE--ELECTION OF DIRECTORS
The persons named below are nominees for director to serve until the next
annual meeting of stockholders or until their successors have been elected and
qualified. The Certificate of Incorporation and Bylaws of the Company provide
that the authorized number of directors shall be determined by resolution of the
Board of Directors. The authorized number of directors is currently four. The
Board of Directors has selected four nominees, all of whom are currently
directors of the Company. Proxies cannot be voted for a greater number of
directors than four. Each person nominated for election has agreed to serve if
elected and management has no reason to believe that any nominee will be
unavailable to serve. Unless otherwise instructed, the proxy holders will vote
the Proxies received by them FOR the nominees named below. The four candidates
receiving the highest number of affirmative votes of the shares entitled to vote
at the Annual Meeting will be elected Directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF THE FOLLOWING NOMINEES TO SERVE AS DIRECTORS OF THE COMPANY UNTIL
THE NEXT ANNUAL MEETING FOLLOWING THE ANNUAL MEETING OR UNTIL THEIR RESPECTIVE
SUCCESSORS HAVE BEEN ELECTED AND QUALIFIED.
INFORMATION WITH RESPECT TO NOMINEES
Set forth below is information regarding the nominees, including information
furnished by them as to principal occupations, certain other directorships held
by them, any arrangements pursuant to which they are selected as directors or
nominees and their ages as of November 15, 1996:
<TABLE>
<CAPTION>
NOMINEES AGE POSITION(S) WITH THE COMPANY
- --------------------------- --- -----------------------------------------------------
<S> <C> <C>
Monte M. Toole 65 Chairman of the Board
Dave Toole 41 Chief Executive Officer, President and Director
Kenneth L. Schroeder 50 Director
F. Joseph Van Poppelen 69 Director
</TABLE>
BUSINESS EXPERIENCE OF BOARD NOMINEES
MONTE M. TOOLE founded the Company in March 1971 and has served as Chairman
of the Board since the Company's inception and as Chief Executive Officer from
inception to December 31, 1994. Between March 1971 and May 1993, Mr. Toole also
served as President of the Company. Prior to founding the Company, Mr. Toole was
a representative of semiconductor equipment manufacturers at Monte Toole and
Associates, Inc., a manager at Fairchild Semiconductor and a systems analyst at
IBM. From October 1991 to June 1993, Mr. Toole served on the Board of Directors
of Integrated Process Equipment Corporation, a semiconductor equipment company.
DAVE TOOLE became the Company's President and Chief Operating Officer in May
1993, and became the Company's Chief Executive Officer on December 31, 1994.
Prior to that time, Mr. Toole served as the Company's Vice President, Sales and
Marketing from October 1986 to April 1989 and has served as a Director since
April 1979. Mr. Toole also served as the Company's Vice President and General
Manager
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from April 1989 to May 1991 and as Vice President, Commercial Operations from
May 1991 to May 1993. Mr. Toole has held various other positions in purchasing,
manufacturing, marketing and sales since joining the Company in 1979.
Previously, Mr. Toole was employed by Advanced Micro Devices, a semiconductor
manufacturer.
KENNETH L. SCHROEDER became a Director of the Company in July 1995. Mr.
Schroeder has been the President and Chief Operating Officer, and a Director of
KLA Instruments Corporation, a semiconductor equipment manufacturer, since
November 1991. Mr. Schroeder served as the President and Chief Operating Officer
of Genus, Inc., a semiconductor equipment manufacturer, from May 1990 to October
1991. Prior to that Mr. Schroeder held a variety of management positions while
working for KLA Instruments.
F. JOSEPH VAN POPPELEN became a Director of the Company in July 1995. Mr.
Van Poppelen has been the President of The Van Poppelen Company, a consulting
firm focused on marketing and business strategies for high technology companies,
since 1989. From 1975 to 1989, Mr. Van Poppelen was employed by National
Semiconductor Corporation, a semiconductor manufacturer, where he last served as
Senior Vice President, Worldwide Marketing and Sales. Mr. Van Poppelen currently
serves on the Board of Directors of Novellus Systems, Inc., a semiconductor
capital equipment manufacturer.
There are no family relationships among the members of the Board of
Directors or the officers, other than Monte M. Toole and Dave Toole who are
father and son.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended September 30, 1996, the Board of Directors held
five (5) meetings and acted by unanimous written consent on one (1) occasion.
The Board of Directors has an Audit Committee and a Compensation Committee. Each
of the directors attended or participated in 75% or more of the aggregate of (i)
the total meetings of the Board of Directors and (ii) the total number of
meetings held by all committees on which he served during the past fiscal year.
The Audit Committee currently consists of two (2) directors, Messrs.
Schroeder and Van Poppelen. The Audit Committee reviews internal auditing
procedures, the adequacy of internal controls and the results and scope of the
audit and other services provided by the Company's independent auditors. The
Audit Committee meets periodically with management and the independent auditors.
The Audit Committee held three (3) meetings during the last fiscal year.
The Compensation Committee currently consists of two (2) directors, Messrs.
Schroeder and Van Poppelen. The Compensation Committee establishes salaries,
incentives and other forms of compensation for officers and other employees of
the Company and administers the incentive compensation and benefit plans of the
Company, including the Purchase Plan. The Compensation Committee also has
exclusive authority to administer the Company's 1994 Stock Option/Stock Issuance
Plan (the "Option Plan") and to make option grants and direct stock issuances
under such Plan. Pursuant to the provisions of the Option Plan, the Compensation
Committee has appointed a Secondary Committee of the Compensation Committee,
consisting of Mr. Dave Toole (the "Secondary Committee"), to make option grants
and direct stock issuances to eligible persons other than officers and directors
subject to the short-swing profit restrictions of the federal securities laws.
The Compensation Committee held two (2) meetings and acted by unanimous written
consent on nine (9) occasions, and the Secondary Committee acted by unanimous
written consent on four (4) occasions during the last fiscal year.
DIRECTOR COMPENSATION
Board members who are employees of the Company do not receive cash
compensation for their service on the Board. However, the Company has entered
into compensation arrangements with two of the existing non-employee Board
members, Messrs. Schroeder and Van Poppelen, which provide that at the
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end of each quarter during the fiscal year, commencing with the fiscal quarter
ended September 30, 1995, each receives a cash fee of $5,000 for service on the
Board during that fiscal quarter. In addition, Mr. Van Poppelen received $19,312
for certain consulting services provided during fiscal 1996.
The Company also paid Mr. Monte M. Toole $113,636.60 during fiscal year 1996
in consideration for his services as Chairman of the Board. In addition, during
the same period, the Company paid (i) the premiums of $242, $130 and $153 for
excess coverage provided to Mr. M. Toole under the Company's major medical
insurance program, accidental death and dismemberment, and disability policies,
respectively, and (ii) the premium of $84,440 for a special life insurance
policy maintained on the life of Mr. M. Toole. The policy was cancelled in March
1996, and the Company was paid the cash surrender value of that policy in the
amount of $44,394. The Company also paid the following automobile-related
expenses on behalf of Mr. M. Toole during fiscal year 1996: (i) $1,296 and
$6,791 for automobile lease payments on a previously owned car and a new car,
respectively, and (ii) $3,250 for automobile insurance.
Each non-employee Board member will also receive, over his period of Board
service, a series of option grants under the Automatic Option Grant Program in
effect under the Option Plan. On July 19, 1995, Messrs. Schroeder and Van
Poppelen each received, in connection with their appointment to the Board as
non-employee directors, an automatic option grant for 30,000 shares of Common
Stock with an exercise price of $19.34 per share, the fair market value per
share of Common Stock on the grant date. Each of these options becomes
exercisable in a series of four successive equal annual installments upon the
optionee's completion of each year of Board service over the four (4)-year
period measured from the grant date. Should either individual cease Board
service prior to completion of such four (4)-year period, then he will have a
twelve (12)-month period in which to exercise the option for any or all of the
shares for which the option is exercisable at the time of his cessation of Board
service plus an additional twenty-five percent (25%) of the option shares on the
next anniversary of the grant date following the optionee's cessation of Board
service.
In addition, each non-employee Board member will receive an annual option
grant for 7,500 shares on each successive anniversary of the grant date of his
initial 30,000-share option, beginning with the fourth anniversary of such grant
date, provided he continues to serve on the Board. For a non-employee Board
member who was previously employed by the Company, the initial annual option
grant will be made at the first Annual Stockholders Meeting at which that
individual is first elected as a non-employee Board member. Each such annual
option grant will have an exercise price per share equal to the fair market
value of the Common Stock on the grant date and will become exercisable for all
of the option shares one year after the grant date, whether or not the optionee
in fact continues in Board service after the grant date.
Each automatic option grant will accelerate and become immediately
exercisable for all of the option shares upon (i) the optionee's death or
permanent disability while a Board member, (ii) an acquisition of the Company by
merger or asset sale or (iii) the successful completion of a hostile tender
offer for more than fifty percent (50%) of the Company's outstanding voting
stock or a change in the majority of the Board effected through one or more
proxy contests for Board membership. In addition, upon the successful completion
of a hostile tender offer for more than fifty percent (50%) of the Company's
outstanding voting stock, each automatic option grant which has been outstanding
for at least six months may be surrendered to the Company for a cash
distribution per surrendered option share in an amount equal to the excess of
(a) the highest price per share of Common Stock paid in connection with such
tender offer over (b) the exercise price payable for such share.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF EACH OF THE ABOVE NOMINEES.
4
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PROPOSAL TWO--APPROVAL OF AMENDMENTS
TO THE 1994 STOCK OPTION/STOCK ISSUANCE PLAN
The Company's stockholders are being asked to approve a series of amendments
to the Company's 1994 Stock Option/Stock Issuance Plan (the "Option Plan") which
will effect the following changes: (i) increase the maximum number of shares of
Common Stock authorized for issuance over the term of the Option Plan from
2,200,000 to 2,700,000 shares, (ii) render the non-employee Board members
eligible to receive option grants and direct stock issuances under the
Discretionary Option Grant and Stock Issuance Programs in effect under the
Option Plan, (iii) allow unvested shares issued under the Option Plan and
subsequently repurchased by the Company at the option exercise price or issue
price paid per share to be reissued under the Option Plan and (iv) remove
certain restrictions on the eligibility of non-employee Board members to serve
as Plan Administrator and effect a series of additional changes to the
provisions of the Option Plan (including stockholder approval requirements) in
order to take advantage of the recent amendments to Rule 16b-3 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") which exempts certain
officer and director transactions under the Option Plan from the short-swing
liability provisions of the federal securities laws.
The amendments are designed to assure that a sufficient reserve of Common
Stock is available under the Option Plan to attract and retain the services of
key individuals essential to the Company's long-term growth and success. The
amendments will also enhance the Company's opportunity to provide equity
incentives to the non-employee Board members and facilitate plan administration.
The following is a summary of the principal features of the Option Plan, as
most recently amended. However, the summary does not purport to be a complete
description of all the provisions of the Option Plan. Any stockholder of the
Company who wishes to obtain a copy of the actual plan document may do so upon
written request to the Corporate Secretary at the Company's principal executive
offices in San Jose, California.
The Option Plan became effective on January 27, 1994 upon adoption by the
Board of Directors and was approved by the stockholders in March 1994. The
Option Plan was amended by the Board on September 21, 1994 to increase the share
reserve by an additional 750,000 shares of Common Stock, and this share increase
was approved by the stockholders at the 1995 Annual Meeting. The Option Plan was
again amended by the Board on November 6, 1995 to increase the share reserve by
an additional 750,000 shares of Common Stock, and this share increase was
approved by the stockholders at the 1996 Annual Meeting. The changes to the
Option Plan effected by the amendments which are the subject of this Proposal
Two were adopted by the Board on December 20, 1996.
EQUITY INCENTIVE PROGRAMS
The Option Plan contains three separate equity incentive programs: (i) a
Discretionary Option Grant Program, (ii) an Automatic Option Grant Program and
(iii) a Stock Issuance Program. The principal features of these programs are
described below. The Option Plan (other than the Automatic Option Grant Program)
is administered by the Compensation Committee of the Board. The Compensation
Committee acting in such administrative capacity (the "Plan Administrator") has
complete discretion (subject to the provisions of the Option Plan) to authorize
option grants and direct stock issuances under the Option Plan. However,
pursuant to authority granted in the Option Plan, the Compensation Committee has
also appointed a Secondary Committee to authorize option grants and direct stock
issuances to eligible persons other than executive officers and Board members
subject to the short-swing liability provisions of the federal securities laws.
All grants under the Automatic Option Grant Program are to be made in strict
compliance with the provisions of that program, and no administrative discretion
will be exercised by the Plan Administrator with respect to the grants made
under such program.
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SHARE RESERVE
A total of 2,700,000 shares of Common Stock has been reserved for issuance
over the ten-year term of the Option Plan, assuming stockholder approval of the
500,000 share increase which forms part of this Proposal. In no event may any
one participant in the Option Plan be granted stock options and direct stock
issuances for more than 825,000 shares in the aggregate under the Option Plan.
In the event any change is made to the outstanding shares of Common Stock by
reason of any recapitalization, stock dividend, stock split, combination of
shares, exchange of shares or other change in corporate structure effected
without the Company's receipt of consideration, appropriate adjustments will be
made to (i) the maximum number and class of securities issuable under the Option
Plan, (ii) the maximum number and class of securities for which any one
participant may be granted stock options and direct stock issuances under the
Option Plan, (iii) the number and class of securities for which option grants
will subsequently be made under the Automatic Option Grant Program to each
newly-elected or continuing non-employee Board member and (iv) the number and
class of securities and the exercise price per share in effect under each
outstanding option.
Should an option expire or terminate for any reason prior to exercise in
full, the shares subject to the portion of the option not so exercised will be
available for subsequent issuance under the Option Plan. Unvested shares issued
under the Option Plan and subsequently repurchased by the Company at the
original option or issue price paid per share will be added back to the share
reserve and will accordingly be available for subsequent issuance under the
Option Plan. Shares subject to any option surrendered in accordance with the
stock appreciation right provisions of the Option Plan will not be available for
subsequent issuance.
ELIGIBILITY
Officers and other employees of the Company and its subsidiaries (whether
now existing or subsequently established), non-employee members of the Board or
the board of directors of any parent or subsidiary corporation and independent
consultants and advisors in the service of the Company or its subsidiaries will
be eligible to participate in the Discretionary Option Grant and Stock Issuance
Programs. Non-employee members of the Board will also be eligible to participate
in the Automatic Option Grant Program.
As of November 15, 1996, six (6) executive officers, two (2) non-employee
Board members and approximately 456 other employees were eligible to participate
in the Discretionary Option Grant and Stock Issuance Programs, and the two (2)
non-employee Board members were also eligible to participate in the Automatic
Option Grant Program.
VALUATION
The fair market value per share of Common Stock on any relevant date under
the Option Plan will be the closing selling price per share on that date on The
Nasdaq National Market. On November 15, 1996, the closing selling price per
share was $8.25.
DISCRETIONARY OPTION GRANT PROGRAM
Options may be granted under the Discretionary Option Grant Program at an
exercise price per share not less than eighty-five percent (85%) of the fair
market value per share of Common Stock on the option grant date. No granted
option will have a term in excess of ten years. The options will generally
become exercisable in a series of installments over the optionee's period of
service with the Company.
Upon cessation of service, the optionee will have a limited period of time
in which to exercise his or her outstanding options for any shares in which the
optionee is vested at that time. The Plan Administrator will have complete
discretion to extend the period following the optionee's cessation of service
during
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which his or her outstanding options may be exercised and/or to accelerate the
exercisability or vesting of such options in whole or in part. Such discretion
may be exercised at any time while the options remain outstanding, whether
before or after the optionee's actual cessation of service.
The Plan Administrator is authorized to issue two types of stock
appreciation rights in connection with option grants made under the
Discretionary Option Grant Program:
TANDEM STOCK APPRECIATION RIGHTS provide the holders with the right
to surrender their options for an appreciation distribution from the
Company equal in amount to the excess of (a) the fair market value of
the vested shares of Common Stock subject to the surrendered option over
(b) the aggregate exercise price payable for such shares. Such
appreciation distribution may, at the discretion of the Plan
Administrator, be made in cash or in shares of Common Stock.
LIMITED STOCK APPRECIATION RIGHTS may be provided to one or more
officers of the Company as part of their option grants. Any option with
such a limited stock appreciation right may be surrendered to the
Company upon the successful completion of a hostile tender offer for
more than fifty percent (50%) of the Company's outstanding voting stock.
In return for the surrendered option, the officer will be entitled to a
cash distribution from the Company in an amount per surrendered option
share equal to the excess of (a) the highest price paid per share of
Common Stock paid in connection with the tender offer over (b) the
exercise price payable for such share.
The shares of Common Stock acquired upon the exercise of one or more options
may be unvested and subject to repurchase by the Company, at the original
exercise price paid per share, if the optionee ceases service with the Company
prior to vesting in those shares. The Plan Administrator will have complete
discretion to establish the vesting schedule to be in effect for any such
unvested shares and may at any time cancel the Company's outstanding repurchase
rights with respect to those shares and thereby accelerate the vesting of those
shares.
The Plan Administrator will also have the authority to effect the
cancellation of outstanding options under the Discretionary Option Grant Program
which have exercise prices in excess of the then current market price of the
Common Stock and to issue replacement options with an exercise price based on
the lower market price of Common Stock at the time of the new grant.
AUTOMATIC OPTION GRANT PROGRAM
Under the Automatic Option Grant Program, each individual who first becomes
a non-employee Board member on or after July 19, 1995, whether through election
by the stockholders or appointment by the Board, will automatically be granted,
at the time of such initial election or appointment (the "Initial Grant Date"),
a non-statutory option to purchase 30,000 shares of Common Stock, provided such
individual has not previously been in the Company's employ. Each non-employee
Board member who receives such an initial 30,000-share option grant will
automatically be granted, on each successive anniversary of the Initial Grant
Date on which he or she continues to serve as a Board member, beginning with the
fourth anniversary of such Initial Grant Date, a non-statutory option to
purchase an additional 7,500 shares of Common Stock. An individual who becomes a
non-employee Board member after previously serving in the Company's employ will
receive his or her initial 7,500-share annual grant at the first Annual
Stockholders Meeting at which such individual is elected as a non-employee Board
member and will receive an additional 7,500-share automatic option grant at each
subsequent Annual Stockholders Meeting at which he or she is re-elected to the
Board as a non-employee director. There will be no limit on the number of such
7,500-share option grants which any one non-employee Board member may receive
over his or her period of Board service.
Each 30,000-share or 7,500-share option granted under the Automatic Option
Grant Program will have an exercise price per share equal to one hundred percent
(100%) of the fair market value per share of Common Stock on the option grant
date and a maximum term of ten (10) years measured from the grant
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date, subject to earlier termination at the end of the twelve (12)-month period
measured from the date of the optionee's cessation of Board service. Each
initial 30,000-share automatic option grant will become exercisable for the
option shares in four (4) successive equal annual installments upon the
optionee's completion of each year of Board service over the four (4)-year
period measured from the Initial Grant Date. Should the optionee cease Board
service prior to the fourth anniversary of the Initial Grant Date, then the
optionee may, at any time during the next twelve (12) months, exercise the
option for any or all of the option shares for which the option is exercisable
at the time of such cessation of Board service. In addition, the option may be
exercised for another twenty-five percent (25%) of the option shares on the next
anniversary of the Initial Grant Date immediately following the optionee's
cessation of Board service. Each annual 7,500-share automatic option grant will
become exercisable for all of the option shares one (1) year following the grant
date, whether or not the optionee continues in Board service.
Each automatic option grant will accelerate and become immediately
exercisable for all of the option shares upon (i) the optionee's death or
permanent disability while a Board member, (ii) an acquisition of the Company by
merger or asset sale or (iii) the successful completion of a hostile tender
offer for more than fifty percent (50%) of the Company's outstanding voting
stock or a change in the majority of the Board effected through one or more
proxy contests for Board membership. In addition, upon the successful completion
of a hostile tender offer for more than fifty percent (50%) of the Company's
outstanding voting stock, each automatic option grant may be surrendered to the
Company for a cash distribution per surrendered option share in an amount equal
to the excess of (a) the highest price per share of Common Stock paid in
connection with such tender offer over (b) the exercise price payable for such
share. The exercise of such surrender right will be pre-approved by the Board at
the time the automatic option grant is made.
STOCK ISSUANCE PROGRAM
Shares may be sold under the Stock Issuance Program at a price per share not
less than eighty-five percent (85%) of fair market value, payable in cash or
through a promissory note payable to the Company. Shares may also be issued
solely as a bonus for past services.
The issued shares may either be immediately vested upon issuance or subject
to a vesting schedule tied to the performance of service or the attainment of
performance goals. The Plan Administrator will, however, have the discretionary
authority at any time to accelerate the vesting of any and all unvested shares
outstanding under the Option Plan.
GENERAL PROVISIONS
ACCELERATION
In the event that the Company is acquired by merger or asset sale, each
outstanding option under the Discretionary Option Grant Program which is not to
be assumed by the successor corporation will automatically accelerate in full,
and all unvested shares under the Discretionary Option Grant and Stock Issuance
Programs will immediately vest, except to the extent the Company's repurchase
rights with respect to those shares are to be assigned to the successor
corporation. Any options assumed in connection with such acquisition may, in the
Plan Administrator's discretion, be subject to immediate acceleration, and any
unvested shares which do not vest at the time of such acquisition may be subject
to full and immediate vesting, in the event the individual's service with the
successor entity is subsequently terminated within a specified period following
the acquisition. In connection with a hostile change in control of the Company
(whether by successful tender offer for more than fifty percent (50%) of the
outstanding voting stock or by proxy contest for the election of Board members),
the Plan Administrator will have the discretionary authority to provide for
automatic acceleration of outstanding options under the Discretionary Option
Grant Program and the automatic vesting of all unvested shares outstanding under
the Discretionary Option Grant and Stock Issuance Programs, with such
acceleration or vesting to occur either at the time of such change in control or
upon the subsequent termination of the individual's service.
8
<PAGE>
The acceleration of vesting upon a change in the ownership or control of the
Company may be seen as an anti-takeover provision and may have the effect of
discouraging a merger proposal, a takeover attempt or other efforts to gain
control of the Company.
FINANCIAL ASSISTANCE
The Plan Administrator may institute a loan program to assist one or more
participants in financing the exercise of outstanding options or the purchase of
shares under the Discretionary Option Grant and Stock Issuance Programs. The
Plan Administrator will have complete discretion to determine the terms of any
such financial assistance. However, the maximum amount of financing provided any
individual may not exceed the cash consideration payable for the issued shares
plus all applicable taxes. Any such financing may be subject to forgiveness in
whole or in part, at the discretion of the Plan Administrator, over the
participant's period of service.
SPECIAL TAX ELECTION
The Plan Administrator may provide one or more holders of options or
unvested shares with the right to have the Company withhold a portion of the
shares otherwise issuable to such individuals in satisfaction of the tax
liability incurred by such individuals in connection with the exercise of those
options or the vesting of those shares. Alternatively, the Plan Administrator
may allow such individuals to deliver previously acquired shares of Common Stock
in payment of such tax liability.
STOCK AWARDS
The table below shows, as to each of the Company's executive officers named
in the Summary Compensation Table and the various indicated individuals and
groups, the number of shares of Common Stock subject to options granted under
the Option Plan between the January 27, 1994 effective date and November 15,
1996, together with the weighted average exercise price payable per share. The
table does not include option grants that were originally granted at a higher
exercise price and were cancelled on August 5, 1996 in exchange for a new option
for the same number of shares with an exercise price of $7.25. For further
information concerning these options, see the discussion of Option Repricing
under the Executive Compensation and Related Information section of this Proxy.
9
<PAGE>
OPTION TRANSACTIONS
<TABLE>
<CAPTION>
OPTIONS GRANTED WEIGHTED AVERAGE
NAME (NUMBER OF SHARES) EXERCISE PRICE
- -------------------------------------------------------------------- ------------------ -----------------
<S> <C> <C>
Dave Toole ......................................................... 125,000 $ 7.25
Chief Executive Officer, President and Director
Avner Shelem ....................................................... 95,000 $ 7.83
Vice President, General Manager, Engineering and Operations
Pascal Didier ...................................................... 52,500 $ 7.25
Vice President, Worldwide Sales and Customer Support
Gregory S. Fischer ................................................. 78,750 $ 7.76
Vice President, Operations
John Bulman ........................................................ 37,500 $ 12.83
Former Vice President, Worldwide Sales
Jerald P. Shaevitz ................................................. 82,500 $ 8.15
Vice President, Treasurer
All executive officers as a group .................................. 640,125 $ 8.00
Kenneth L. Schroeder ............................................... 30,000 $ 19.33
Director
F. Joseph Van Poppelen ............................................. 30,000 $ 19.33
Director
All non-employee directors as a group .............................. 60,000 $ 19.33
All employees, including current officers who are not
executive officers, as a group .................................... 1,132,667 $ 8.91
</TABLE>
In addition to the option transactions described above, the Company issued
fully vested options to purchase 25,000 shares of Common Stock to Jeannine
Sargent, Vice President, Marketing and Customer Technology, pursuant to the
Option Plan. The Company did not issue any fully vested options to purchase
shares of Common Stock to any other employee of the Company during fiscal year
1996.
As of November 15, 1996, options covering 1,557,270 shares of Common Stock
were outstanding under the Option Plan, 1,046,738 shares remained available for
future option grant assuming stockholder approval of the 500,000 share increase
which forms part of this Proposal, and 95,992 shares have been issued under the
Option Plan.
AMENDMENT AND TERMINATION
The Board may amend or modify the Option Plan in any or all respects
whatsoever, subject to any stockholder approval required under applicable law or
regulation. The Board may terminate the Option Plan at any time, and the Option
Plan will in all events terminate on December 31, 2003.
10
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
OPTION GRANTS
Options granted under the Option Plan may be either incentive stock options
which satisfy the requirements of Section 422 of the Internal Revenue Code or
non-statutory options which are not intended to meet such requirements. The
Federal income tax treatment for the two types of options differs as follows:
INCENTIVE OPTIONS. No taxable income is recognized by the optionee at the
time of the option grant, and no taxable income is generally recognized at the
time the option is exercised. The optionee will, however, recognize taxable
income in the year in which the purchased shares are sold or otherwise made the
subject of a taxable disposition. For Federal tax purposes, dispositions are
divided into two categories: (i) qualifying and (ii) disqualifying. A qualifying
disposition occurs if the sale or other disposition is made after the optionee
has held the shares for more than two (2) years after the option grant date and
more than one (1) year after the exercise date. If either of these two (2)
holding periods is not satisfied, then a disqualifying disposition will result.
If the optionee makes a disqualifying disposition of the purchased shares,
then the Company will be entitled to an income tax deduction, for the taxable
year in which such disposition occurs, equal to the excess of (i) the fair
market value of such shares on the option exercise date over (ii) the exercise
price paid for the shares. In no other instance will the Company be allowed a
deduction with respect to the optionee's disposition of the purchased shares.
NON-STATUTORY OPTIONS. No taxable income is recognized by an optionee upon
the grant of a non-statutory option. The optionee will in general recognize
ordinary income, in the year in which the option is exercised, equal to the
excess of the fair market value of the purchased shares on the exercise date
over the exercise price paid for the shares, and the optionee will be required
to satisfy the tax withholding requirements applicable to such income.
If the shares acquired upon exercise of the non-statutory option are
unvested and subject to repurchase by the Company in the event of the optionee's
termination of service prior to vesting in those shares, then the optionee will
not recognize any taxable income at the time of exercise but will have to report
as ordinary income, as and when the Company's repurchase right lapses, an amount
equal to the excess of (i) the fair market value of the shares on the date the
repurchase right lapses over (ii) the exercise price paid for the shares. The
optionee may, however, elect under Section 83(b) of the Internal Revenue Code to
include as ordinary income in the year of exercise of the option an amount equal
to the excess of (i) the fair market value of the purchased shares on the
exercise date over (ii) the exercise price paid for such shares. If the Section
83(b) election is made, the optionee will not recognize any additional income as
and when the repurchase right lapses.
The Company will be entitled to an income tax deduction equal to the amount
of ordinary income recognized by the optionee with respect to the exercised
non-statutory option. The deduction will in general be allowed for the taxable
year of the Company in which such ordinary income is recognized by the optionee.
STOCK APPRECIATION RIGHTS
An optionee who is granted a stock appreciation right will recognize
ordinary income in the year of exercise equal to the amount of the appreciation
distribution. The Company will be entitled to an income tax deduction equal to
such distribution for the taxable year in which the ordinary income is
recognized by the optionee.
11
<PAGE>
DIRECT STOCK ISSUANCE
The tax principles applicable to direct stock issuances under the Option
Plan will be substantially the same as those summarized above for the exercise
of non-statutory option grants.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Company anticipates that any compensation deemed paid by it in
connection with disqualifying dispositions of incentive stock option shares or
exercises of non-statutory options granted with exercise prices equal to the
fair market value of the option shares on the grant date will qualify as
performance-based compensation for purposes of Internal Revenue Code Section
162(m) and will not have to be taken into account for purposes of the $1 million
limitation per covered individual on the deductibility of the compensation paid
to certain executive officers of the Company. Accordingly, all compensation
deemed paid with respect to those options will remain deductible by the Company
without limitation under Internal Revenue Code Section 162(m).
ACCOUNTING TREATMENT
Option grants or stock issuances with exercise or issue prices less than the
fair market value of the shares on the grant or issue date will result in a
compensation expense to the Company's earnings equal to the difference between
the exercise or issue price and the fair market value of the shares on the grant
or issue date. Such expense will be accruable by the Company over the period
that the option shares or issued shares are to vest. Option grants or stock
issuances with exercise or issue prices equal to the fair market value of the
shares at the time of issuance or grant will not result in any charge to the
Company's earnings, but the Company must disclose, in pro-forma statements to
the Company's financial statements, the impact those option grants would have
upon the Company's reported earnings were the value of those options treated as
compensation expense. Whether or not granted at a discount, the number of
outstanding options may be a factor in determining the Company's earnings per
share on a fully-diluted basis.
Should one or more optionees be granted stock appreciation rights which have
no conditions upon exercisability other than a service or employment
requirement, then such rights will result in a compensation expense to the
Company's earnings.
NEW PLAN BENEFITS
As of November 15, 1996, no options have been granted to date on the basis
of the 500,000-share increase to the Option Plan which forms part of this
Proposal.
STOCKHOLDER APPROVAL
The affirmative vote of a majority of the outstanding voting shares of the
Company present or represented and entitled to vote at the Annual Meeting is
required for approval of the amendments to the Option Plan. Should such
stockholder approval not be obtained, then any options granted on the basis of
the 500,000 share increase which forms part of this Proposal will terminate
without becoming exercisable for any of the shares of Common Stock subject to
those options, and no further options will be granted on the basis of such share
increase. The Option Plan will, however, continue to remain in effect, and
option grants and stock issuances may continue to be made pursuant to the
provisions of the Option Plan prior to the amendments until the available
reserve of Common Stock under the Option Plan as last approved by the
stockholders is issued. In addition, the non-employee Board members will not
become eligible to participate in the Discretionary Option Grant and Stock
Issuance Programs of the Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
AMENDMENTS TO THE OPTION PLAN.
12
<PAGE>
PROPOSAL THREE--APPROVAL OF AMENDMENT TO THE
EMPLOYEE STOCK PURCHASE PLAN
The Company's stockholders are being asked to approve an amendment to the
Company's Employee Stock Purchase Plan (the "Purchase Plan") which will increase
the maximum number of shares of Common Stock authorized for issuance over the
term of the Purchase Plan from 700,000 to 1,100,000 shares.
The amendment is designed to assure that a sufficient reserve of Common
Stock is available under the Purchase Plan to provide eligible employees of the
Company and its participating affiliates with the opportunity to acquire a
proprietary interest in the Company through participation in a payroll-deduction
based employee stock purchase plan under Section 423 of the Internal Revenue
Code. Participating affiliates may include any parent or subsidiary corporations
of the Company, whether now existing or hereafter established, which elect to
extend the benefits of the Purchase Plan to their eligible employees.
The terms and provisions of the Purchase Plan are summarized below. However,
the summary does not purport to be a complete description of the Purchase Plan.
Copies of the actual plan document may be obtained by any stockholder upon
written request to the Corporate Secretary at the Company's principal offices in
San Jose, California.
The Purchase Plan was adopted by the Board of Directors on January 27, 1994
and was approved by the stockholders in March 1994. The Purchase Plan was
amended by the Board on November 6, 1995 to increase the share reserve by an
additional 400,000 shares of Common Stock and to allow eligible employees to
join the Purchase Plan on any semi-annual entry date within an offering period,
and this amendment was approved by the stockholders at the 1996 Annual Meeting.
The share increase to the Purchase Plan which is the subject of this Proposal
Three was adopted by the Board on December 20, 1996, subject to the approval of
the stockholders at the 1997 Annual Meeting.
ADMINISTRATION
The Purchase Plan is administered by the Compensation Committee of the
Board. Such committee, as Plan Administrator, has full authority to adopt
administrative rules and procedures and to interpret the provisions of the
Purchase Plan. All costs and expenses incurred in plan administration are paid
by the Company without charge to participants.
SECURITIES SUBJECT TO THE PURCHASE PLAN
The shares of Common Stock issuable under the Purchase Plan may be either
shares newly issued by the Company or shares reacquired by the Company,
including shares purchased on the open market. The maximum number of shares of
Common Stock which may be sold to participants over the term of the Purchase
Plan may not exceed 1,100,000 shares. However, not more than 773,695 shares may
be issued under the Purchase Plan after November 15, 1996.
In the event that any change is made to the Company's outstanding Common
Stock (whether by reason of recapitalization, stock dividend, stock split,
exchange or combination of shares or other change in corporate structure
effected without the Company's receipt of consideration), appropriate
adjustments will be made to (i) the class and maximum number of securities
issuable over the term of the Purchase Plan, (ii) the class and maximum number
of securities purchasable per participant on any one semi-annual purchase date
and (iii) the class and number of securities and the price per share in effect
under each outstanding purchase right.
PURCHASE PERIODS AND PURCHASE RIGHTS
Shares of Common Stock are offered under the Purchase Plan through a series
of successive offering periods, each with a maximum duration of twenty-four (24)
months. The initial offering period began on
13
<PAGE>
March 21, 1994 and ended on December 31, 1995. A new twenty-four (24)-month
period began on January 2, 1996 and will continue through December 31, 1997.
ELIGIBILITY AND PARTICIPATION
Any individual who is employed on a basis under which he or she is expected
to work more than twenty (20) hours per week for more than five (5) months per
calendar year in the employ of the Company or any participating parent or
subsidiary corporation (including any corporation which subsequently becomes
such at any time during the term of the Purchase Plan) is eligible to
participate in the Purchase Plan. As of November 15, 1996, the Company estimated
that approximately 456 employees, including six (6) executive officers, were
eligible to participate in the Purchase Plan.
An individual who is an eligible employee at the start of any offering
period may join that offering period at that time or on any subsequent
semi-annual entry date (the first business day in January and July each year)
within that offering period. An individual who first becomes an eligible
employee after such start date may join the offering period on any semi-annual
entry date within that offering period on which he or she is an eligible
employee.
At the time the participant joins the offering period, he or she will be
granted a purchase right to acquire shares of Common Stock at semi-annual
intervals over the remainder of that offering period. The purchase dates will
occur on the last business day in June and December of each year, and all
payroll deductions collected from the participant for the period ending with
each such semi-annual purchase date will automatically be applied to the
purchase of Common Stock. Payroll deductions may not exceed fifteen percent
(15%) of base salary for each semi-annual period of participation, and no
participant may purchase more than 1,800 shares per semi-annual purchase date.
PURCHASE PRICE
The purchase price of the Common Stock acquired on each semi-annual purchase
date will be equal to eighty-five percent (85%) of the lower of (i) the fair
market value per share of Common Stock on the participant's entry date into the
offering period or (ii) the fair market value on the semi-annual purchase date.
However, the clause (i) amount for any participant whose entry date is other
than the start date of the offering period will not be less than the fair market
value per share of Common Stock on that start date.
The fair market value of the Common Stock on any relevant date under the
Purchase Plan will be the closing selling price per share on such date on The
Nasdaq National Market. On November 15, 1996, the fair market value per share of
Common Stock was $8.25 per share.
PAYROLL DEDUCTIONS AND STOCK PURCHASES
Each participant may authorize periodic payroll deductions in any multiple
of one percent (1%) (up to a maximum of fifteen percent (15%)) of his or her
base salary each offering period to be applied to the acquisition of Common
Stock on the semi-annual purchase dates. On each semi-annual purchase date (the
last business day in June and December each year), the payroll deductions of
each participant will automatically be applied to the purchase of whole shares
of Common Stock at the purchase price in effect for the participant for that
purchase date.
14
<PAGE>
SPECIAL LIMITATIONS
The Purchase Plan imposes certain limitations upon a participant's rights to
acquire Common Stock, including the following limitations:
- Purchase rights may not be granted to any individual who owns stock
(including stock purchasable under any outstanding purchase rights)
possessing five percent (5%) or more of the total combined voting power or
value of all classes of stock of the Company or any of its affiliates.
- Purchase rights granted to a participant may not permit such individual to
purchase more than $25,000 of Common Stock (valued at the time each
purchase right is granted) during any one calendar year.
- No participant may purchase more than 1,800 shares of Common Stock on any
semi-annual purchase date.
TERMINATION OF PURCHASE RIGHTS
The participant may withdraw from the Purchase Plan at any time and elect to
have his or her accumulated payroll deductions either refunded immediately or
applied to the purchase of Common Stock on the next semi-annual purchase date.
The participant's purchase right will immediately terminate upon his or her
cessation of employment or loss of eligible employee status. Any payroll
deductions which the participant may have made for the semi-annual period in
which his or her employment terminates will be refunded and will not be applied
to the purchase of Common Stock.
STOCKHOLDER RIGHTS
No participant will have any stockholder rights with respect to the shares
covered by his or her purchase rights until the shares are actually purchased on
the participant's behalf. No adjustment will be made for dividends,
distributions or other rights for which the record date is prior to the date of
such purchase.
ASSIGNABILITY
No purchase rights will be assignable or transferable by the participant,
and the purchase rights will be exercisable only by the participant.
CHANGE IN CONTROL
In the event the Company is acquired by merger or asset sale, all
outstanding purchase rights will automatically be exercised immediately prior to
the effective date of such acquisition. The purchase price will be the lesser of
(i) eighty-five percent (85%) of the fair market value per share of Common Stock
on the participant's entry date into the offering period in which such
acquisition occurs or (ii) eighty-five percent (85%) of the fair market value
per share of Common Stock immediately prior to such acquisition, but in no event
will the clause (i) fair market value be less than the fair market value per
share of Common Stock on the start date of the offering period in which such
acquisition occurs.
AMENDMENT AND TERMINATION
The Purchase Plan will terminate upon the earlier of (i) December 31, 2003
or (ii) the date on which all shares available for issuance thereunder are sold
pursuant to exercised purchase rights.
The Board may at any time alter, suspend or discontinue the Purchase Plan.
However, the Board may not, without stockholder approval, (i) increase the
number of shares issuable under the Purchase Plan or
15
<PAGE>
the maximum number of shares purchasable per participant on any one semi-annual
purchase date, except in connection with certain changes in the Company's
capital structure, (ii) alter the purchase price formula so as to reduce the
purchase price, (iii) materially increase the benefits accruing to participants
or (iv) materially modify the requirements for eligibility to participate in the
Purchase Plan.
FEDERAL TAX CONSEQUENCES
The Purchase Plan is intended to be an "employee stock purchase plan" within
the meaning of Section 423 of the Internal Revenue Code. Under a plan which so
qualifies, no taxable income will be recognized by a participant, and no
deductions will be allowable to the Company, upon either the grant or the
exercise of the purchase rights. Taxable income will not be recognized until
there is a sale or other disposition of the shares acquired under the Purchase
Plan or in the event the participant should die while still owning the purchase
shares.
If the participant sells or otherwise disposes of the purchased shares
within two (2) years after his or her entry date into the offering period in
which such shares were acquired or within one (1) year after the semi-annual
purchase date on which those shares were actually acquired, then the participant
will recognize ordinary income in the year of sale or disposition equal to the
amount by which the fair market value of the shares on the purchase date
exceeded the purchase price paid for those shares, and the Company will be
entitled to an income tax deduction, for the taxable year in which such
disposition occurs, equal in amount to such excess.
If the participant sells or disposes of the purchased shares more than two
(2) years after his or her entry date into the offering period in which the
shares were acquired and more than one year after the semi-annual purchase date
of those shares, then the participant will recognize ordinary income in the year
of sale or disposition equal to the lesser of (i) the amount by which the fair
market value of the shares on the sale or disposition date exceeded the purchase
price paid for those shares or (ii) fifteen percent (15%) of the fair market
value of the shares on the participant's entry date into that offering period;
and any additional gain upon the disposition will be taxed as a long-term
capital gain. The Company will not be entitled to an income tax deduction with
respect to such disposition.
If the participant still owns the purchased shares at the time of death, the
lesser of (i) the amount by which the fair market value of the shares on the
date of death exceeds the purchase price or (ii) fifteen percent (15%) of the
fair market value of the shares on his or her entry date into the offering
period in which those shares were acquired will constitute ordinary income in
the year of death.
ACCOUNTING TREATMENT
Under current accounting rules, the issuance of Common Stock under the
Purchase Plan will not result in a compensation expense chargeable against the
Company's reported earnings. However, the Company must disclose, in pro-forma
statements to the Company's financial statements, the impact the purchase rights
granted under the Purchase Plan would have upon the Company's reported earnings
were the value of those purchase rights treated as compensation expense.
STOCK ISSUANCES
The table below shows, as to each of the Company's executive officers named
in the Summary Compensation Table and the various indicated groups, the number
of shares of Common Stock purchased under the Purchase Plan between the March
21, 1994 effective date of the Purchase Plan and November 15, 1996, together
with the weighted average purchase price paid per share.
16
<PAGE>
PURCHASE PLAN TRANSACTIONS
<TABLE>
<CAPTION>
NUMBER OF WEIGHTED AVERAGE
NAME PURCHASED SHARES PURCHASE PRICE
- ---------------------------------------------------------------------- ---------------- -----------------
<S> <C> <C>
Dave Toole ........................................................... -- --
Chief Executive Officer, President and Director
Avner Shelem ......................................................... 6,021 $ 7.67
Vice President, General Manager, Engineering and Operations
Pascal Didier ........................................................ 1,361 $ 10.06
Vice President, Worldwide Sales and Customer Support
Gregory S. Fischer ................................................... 5,565 $ 7.64
Vice President, Operations
John Bulman .......................................................... 348 $ 11.48
Former Vice President, Worldwide Sales
Jerald P. Shaevitz ................................................... 5,656 $ 7.64
Vice President, Treasurer
All executive officers as a group..................................... 22,927 $ 7.68
All employees, including current officers who are not executive
officers, as a group................................................. 303,378 $ 7.58
</TABLE>
NEW PLAN BENEFITS
As of November 15, 1996, no purchase rights had been granted under the
Purchase Plan on the basis of the 400,000-share increase which is the subject of
this Proposal Three.
STOCKHOLDER APPROVAL
The affirmative vote of a majority of the outstanding voting shares of the
Company present or represented and entitled to vote at the Annual Meeting is
required for approval of the amendment to increase the share reserve under the
Purchase Plan by an additional 400,000 shares. Should such stockholder approval
not be obtained, then no purchase rights will be granted under the Purchase Plan
on the basis of the 400,000 share increase, and the Purchase Plan will continue
in effect until the available reserve of Common Stock under the Purchase Plan as
last approved by the stockholders is issued.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
AMENDMENT TO THE PURCHASE PLAN.
17
<PAGE>
PROPOSAL FOUR--RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of Arthur Andersen LLP,
independent public auditors for the Company during fiscal year 1996, to serve in
the same capacity for the year ending September 30, 1997, and is asking the
stockholders to ratify this appointment. The affirmative vote of a majority of
the shares represented and voting at the Annual Meeting is required to ratify
the selection of Arthur Andersen LLP.
In the event the stockholders fail to ratify the appointment, the Board of
Directors will reconsider its selection. Even if the selection is ratified, the
Board of Directors in its discretion may direct the appointment of a different
independent auditing firm at any time during the year if the Board of Directors
believes that such a change would be in the best interests of the Company and
its stockholders.
A representative of Arthur Andersen LLP is expected to be present at the
Annual Meeting, will have the opportunity to make a statement if he or she
desires to do so, and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE SELECTION OF ARTHUR ANDERSEN LLP TO SERVE AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 1997.
OTHER MATTERS
The Company knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters properly come before
the Annual Meeting, it is the intention of the persons named in the enclosed
form of Proxy to vote the shares they represent as the Board of Directors may
recommend. Discretionary authority with respect to such other matters is granted
by the execution of the enclosed Proxy.
18
<PAGE>
OWNERSHIP OF SECURITIES
The following table sets forth certain information known to the Company with
respect to the beneficial ownership of the Company's Common Stock as of November
15, 1996 by (i) all persons who are beneficial owners of five percent (5%) or
more of the Company's Common Stock, (ii) each director and nominee, (iii) the
executive officers named in the Summary Compensation Table below, and (iv) all
current directors and executive officers as a group. Unless otherwise indicated,
each of the stockholders has sole voting and investment power with respect to
the shares beneficially owned, subject to community property laws, where
applicable.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENTAGE OF SHARES
NAME OF BENEFICIAL OWNER OWNED BENEFICIALLY OWNED (1)
- ----------------------------------------------------------- ----------- -----------------------
<S> <C> <C>
Monte M. Toole (2)(3)...................................... 2,519,728 18.7%
Dave Toole (3)(4).......................................... 1,093,098 8.1%
Jerald P. Shaevitz (5)..................................... 50,984 *
Gregory S. Fischer (6)..................................... 49,837 *
Avner Shelem (7)........................................... 35,831 *
Pascal Didier.............................................. 1,361 *
John Bulman................................................ 348 *
F. Joseph Van Poppelen (8)................................. 17,500 *
Kenneth L. Schroeder (8)................................... 7,500 *
All directors and executive officers as a group (12
persons) (9).............................................. 3,811,828 27.9%
</TABLE>
- ------------------------
* Less than one percent of the outstanding Common Stock.
(1) Percentage of ownership is based on 13,479,745 shares of Common Stock
outstanding on November 15, 1996.
(2) Includes 1,312,999 shares of Common Stock held by the Monte M. Toole Family
Limited Partnership, of which Monte M. Toole is the sole General Partner.
(3) The principal business address of the stockholder is GaSonics International
Corporation, 2540 Junction Avenue, San Jose, California 95134.
(4) Includes 234,999 shares of Common Stock held by the David Toole Family
Limited Partnership, of which Dave Toole and his wife, Diane Toole, are the
sole General Partners, and 809,702 shares of Common Stock held by the David
Toole and Diane L. Toole Family Trust, of which Dave and Diane Toole are the
sole Trustees. Excludes 89,998 shares of Common Stock held by the trustee of
the David Toole and Diane L. Toole Children's Trust for the benefit of Mr.
and Mrs. Toole's two minor children. Mr. D. Toole disclaims beneficial
ownership of such 89,998 shares. Also excludes 32,462 shares held by the
David and Diane L. Toole Charitable Remainder Unitrust. Mr. Toole disclaims
beneficial ownership of such 32,462 shares. Also excludes 1,500 shares held
by the David and Diane L. Toole Charitable Foundation. Mr. D. Toole
disclaims beneficial ownership of such 1,500 shares.
(5) Includes 45,328 shares underlying stock options which are currently
exercisable or which will become exercisable within 60 days after November
15, 1996.
(6) Includes 40,500 shares underlying stock options which are currently
exercisable or which will become exercisable within 60 days after November
15, 1996.
(7) Includes 34,500 shares underlying stock options which are currently
exercisable or which will become exercisable within 60 days after November
15, 1996.
(8) Includes 7,500 shares underlying stock options which are currently
exercisable or which will become exercisable within 60 days after November
15, 1996.
(9) Includes 165,447 shares underlying stock options held by 10 officers and 2
directors which are currently exercisable or which will become exercisable
within 60 days after November 15, 1996.
19
<PAGE>
EXECUTIVE COMPENSATION AND RELATED INFORMATION
The following table provides certain information summarizing the
compensation earned by the Company's Chief Executive Officer and each of the
Company's other four most highly compensated executive officers whose
compensation was in excess of $100,000 for the 1996 fiscal year, for services
rendered in all capacities to the Company and its subsidiaries for each of the
last three fiscal years. The table also includes one (1) former executive
officer who left the Company's employ during the 1996 fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION NUMBER OF
------------------------------------------ SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION OPTION(#) COMPENSATION($)(2)
- ----------------------------------- --------- ------------- ------------ ------------- ------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Dave Toole 1996 258,922 179,850(3) -- 125,000(6) 30,175
Chief Executive Officer and 1995 202,634 419,857(4) -- 15,000(7) 30,970
President 1994 140,005 246,325(5) -- 60,000(7) 45,365
Avner Shelem (8) 1996 154,621 32,000 -- 20,000 4,038
Vice President, General Manager, 1995 134,335 145,552 -- -- 6,649
Engineering and Operations 1994 61,925 20,000 -- 75,000 --
Gregory S. Fischer 1996 135,700 8,268 -- -- 3,577
Vice President, Operations 1995 124,641 127,552 -- 52,500 6,649
1994 108,147 53,000 -- -- 9,624
Pascal Didier (9) 1996 171,173(10) 134,441 164,705(11) 52,500(6) 694
Vice President, Worldwide Sales 1995 -- -- -- 22,500(7) --
and Customer Support 1994 -- -- -- -- --
John Bulman (12) 1996 117,526 47,539 -- -- 2,609
Former Vice President, Worldwide 1995 83,073 89,316(13) -- -- 7,470
Sales 1994 -- -- -- -- --
Jerald P. Shaevitz (14) 1996 130,694 -- -- -- 3,415
Vice President, Treasurer 1995 127,312 105,552 -- 3,750 6,649
1994 121,216 30,000 -- 52,500 9,424
</TABLE>
- ------------------------
(1) For the 1996 fiscal year, Bonus includes the following bonus amounts
deferred by certain of the Company's executive officers: Messrs. Toole
($78,400), Fischer ($8,268) and Shelem ($16,000).
(2) For the 1996 fiscal year, All Other Compensation includes: (i) the
contributions allocated under the Company's profit sharing plan on behalf of
Messrs. Toole, Shelem, Fischer, Didier, Bulman and Shaevitz in the amount of
$694 for each such individual, (ii) the contributions provided by the
Company under its 401(k) plan on behalf of Messrs. Toole ($4,165), Shelem
($3,344), Fischer ($2,883), Bulman ($1,915) and Shaevitz ($2,721) and (iii)
the premium of $25,316 paid by the Company on the split dollar life
insurance policies maintained for Mr. Toole pursuant to which the Company
will, upon Mr. Toole's death or liquidation of the policy, be entitled to
the refund of all premium payments made on that policy, and the balance of
the policy proceeds will be paid to Mr. Toole or his designated
beneficiaries.
20
<PAGE>
(3) Includes (i) $100,000 of loan forgiveness accrued over the 1996 fiscal year
pursuant to a special bonus program established for Mr. Toole in January
1994 plus (ii) $1,450 of tax gross up to reimburse Mr. Toole for the
medicare tax incurred in connection with such loan forgiveness. Under that
program, $300,000 of principal due under the note which Mr. Toole delivered
to the Company on November 11, 1993 in payment of the option exercise price
for 566,665 shares of Common Stock is subject to forgiveness over his
continued period of service with the Company. Accordingly, $100,000 of
principal is forgiven on the first day of each calendar year, beginning
January 1, 1995, provided Mr. Toole continues in service with the Company.
(4) Includes (i) $100,000 of loan forgiveness accrued over the 1995 fiscal year
plus (ii) $1,450 of tax gross up to reimburse Mr. D. Toole for the medicare
tax incurred in connection with such loan forgiveness.
(5) Includes $75,000 of loan forgiveness accrued over the 1994 fiscal year.
(6) Includes the following options regranted on August 5, 1996 in exchange for
the cancellation of preexisting options with a higher exercise price per
share: Dave Toole (75,000 option shares) and Pascal Didier (37,500 option
shares).
(7) The option was originally granted at a higher exercise price and was
cancelled on August 5, 1996 in exchange for a new option for the same number
of shares with an exercise price of $7.25 per share. See footnote 6 above.
(8) Avner Shelem, the current Vice President, General Manager, Engineering and
Operations, joined the Company in March 1994.
(9) Pascal Didier, the current Vice President, Worldwide Sales and Customer
Support, joined the Company in May 1995.
(10) Includes a foreign differentiation of $18,204 which represents a premium
paid in conjunction with living and working in Singapore.
(11) Includes: (i) $147,205 for living expenses related to overseas assignment
and (ii) $17,500 for Singapore taxes paid by the Company for the period
from October 1, 1995 to December 31, 1995. The taxes for the period from
January 1, 1996 to September 30, 1996 are not determinable at this time.
(12) John Bulman was Vice President, Worldwide Sales, from March 20, 1995 to May
31, 1996. Mr. Bulman left the Company on May 31, 1996.
(13) Includes a one-time $25,000 sign-on bonus.
(14) Jerald P. Shaevitz was Vice President, Finance, from July 6, 1993 to May
20, 1996 and Vice President, Treasurer from May 21, 1996 to September 30,
1996. For the 1997 fiscal year, Mr. Shaevitz will provide consulting
services to the Company and will be paid consulting fees of $5,000 per
month for such services.
21
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the stock option grants
made to each of the executive officers named in the Summary Compensation Table
for the fiscal year ended September 30, 1996. No stock appreciation rights
("SARs") were granted to these individuals during such fiscal year.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
INDIVIDUAL GRANT VALUE AT ASSUMED
------------------------- ANNUAL RATES OF
NUMBER OF STOCK PRICE
SECURITIES % OF TOTAL APPRECIATION
UNDERLYING OPTIONS FOR OPTION TERM
OPTIONS GRANTED TO EXERCISE OR -------------------
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION 5% 10%
NAME (#)(1) FISCAL YEAR ($/SH) DATE ($)(2) ($)(2)
- -------------------------------------------------- ---------- ------------ ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Dave Toole........................................ 50,000 8.5% $7.25 08/04/06 $277,974 $ 577,732
75,000(1) 18.0% $7.25 08/04/06 $328,283 $ 831,934
Avner Shelem...................................... 20,000 3.4% $7.25 08/04/06 $ 91,190 $ 231,093
Pascal Didier..................................... 15,000 2.6% $7.25 08/04/06 $ 68,392 $ 173,319
37,500(1) 9.0% $7.25 08/04/06 $170,981 $ 433,299
Gregory S. Fischer................................ -- -- -- -- -- --
John Bulman....................................... -- -- -- -- -- --
Jerald P. Shaevitz................................ -- -- -- -- -- --
</TABLE>
- ------------------------
(1) The option grant indicated as (1) for each individual was originally granted
at a higher exercise price and was cancelled on August 5, 1996 in exchange
for a new option for the same number of shares with an exercise price of
$7.25 per share. (See Option Repricing information below.) The repriced
option grant will become exercisable as follows: 25% of the total grant will
be exercisable upon the optionee's completion of one year of service
measured from the August 5, 1996 grant date; and the remaining 75% will
become exercisable in a series of 36 successive monthly installments upon
completion of each calendar month of service measured from August 5, 1997.
Each of the other option grants made to the named executive officers during
the 1996 fiscal year will also become exercisable in accordance with the
same vesting schedule applicable to the repriced options. For further
information concerning the terms of these option grants, see the discussion
of the Discretionary Option Grant Program in Proposal Two.
(2) There can be no assurance provided to any executive officer or any other
holder of the Company's securities that the actual stock price appreciation
over the ten-year option term will be at the assumed 5% and 10% levels or at
any other defined level. Unless the market price of the Common Stock
appreciates over the option term, no value will be realized from the option
grants made to the executive officers.
22
<PAGE>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END VALUES
The table below sets forth certain information with respect to the Company's
Chief Executive Officer and the other executive officers named in the Summary
Compensation Table concerning their exercise of options during the 1996 fiscal
year and the unexercised options they held as of the end of such fiscal year. No
SARs were exercised by such individuals during the 1996 fiscal year, nor did
they hold any outstanding SARs at the end of such fiscal year.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FY-END(#) FY-END($)(1)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE(#) REALIZED($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------- ------------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dave Toole......................... -- -- -- 125,000 -- $ 93,750
Avner Shelem....................... 3,000 $ 9,150 34,500 57,500 $ 15,825 $ 33,000
Gregory S. Fischer................. -- -- 40,500 38,250 $ 23,737 $ 21,600
Pascal Didier...................... -- -- -- 52,500 -- $ 39,375
John Bulman........................ -- -- -- -- -- --
Jerald P. Shaevitz................. -- -- 41,438 41,062 $ 23,737 $ 21,600
</TABLE>
- ------------------------
(1) Based on the fair market value of the option shares at fiscal year-end
($8.00 per share on the basis of the closing selling price on The Nasdaq
National Market at fiscal year-end) less the exercise price.
(2) Based on the fair market value of the shares on the exercise date less the
exercise price paid for those shares.
OPTION REPRICING
As discussed in the Compensation Committee Report on Executive Compensation
below, the Company implemented an option cancellation/regrant program for
executive officers and other employees holding stock options with an exercise
price per share in excess of the market price of the Company's Common Stock at
the time the cancellation/regrant occurred. The cancellation/regrant was
effected on August 5, 1996, and a number of outstanding options with an exercise
price in excess of $7.25 per share were canceled and new options for the same
aggregate number of shares were granted with an exercise price of $7.25 per
share.
The following table sets forth information with respect to each of the
Company's executive officers concerning his or her participation in the option
cancellation/regrant program effected on August 5, 1996.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES MARKET PRICE
UNDERLYING OF STOCK AT EXERCISE LENGTH OF OPTION
OPTIONS TIME OF PRICE AT TIME NEW TERM REMAINING AT
REPRICING REPRICED OR REPRICING OR OF REPRICING EXERCISE DATE OF REPRICING
NAME DATE AMENDED AMENDMENT OR AMENDMENT PRICE OR AMENDMENT
- --------------------------------- --------- ----------- ------------- ------------- ----------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Dave Toole....................... 08/05/96 16,368 $ 7.25 $ 9.17 $ 7.25 8 years, 46 days
08/05/96 43,632 $ 7.25 $ 9.17 $ 7.25 8 years, 46 days
08/05/96 15,000 $ 7.25 $ 16.33 $ 7.25 8 years, 298 days
Pascal Didier.................... 08/05/96 22,500 $ 7.25 $ 16.33 $ 7.25 8 years, 298 days
08/05/96 1,620 $ 7.25 $ 20.00 $ 7.25 9 years, 66 days
08/05/96 13,380 $ 7.25 $ 20.00 $ 7.25 9 years, 66 days
Jeannine P. Sargent.............. 08/05/96 39,024 $ 7.25 $ 10.25 $ 7.25 9 years, 185 days
08/05/96 10,976 $ 7.25 $ 10.25 $ 7.25 9 years, 185 days
</TABLE>
23
<PAGE>
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT ARRANGEMENTS AND CHANGE OF
CONTROL AGREEMENTS
The Company does not have any existing employment agreements with the Chief
Executive Officer or any other executive officer named in the Summary
Compensation Table, except that Jerald P. Shaevitz, who resigned from his
position as Vice President, Treasurer as of September 30, 1996, has entered into
an agreement with the Company pursuant to which he will provide consulting
services for the 1997 fiscal year to the Company in exchange for consulting fees
of $5,000 per month and continued vesting of certain of his stock options, which
will vest on a monthly basis during the 1997 fiscal year, up to a maximum of
15,562 shares.
The Compensation Committee of the Board has the discretionary authority as
Plan Administrator of the Option Plan to provide for the accelerated vesting of
the shares of Common Stock subject to the outstanding options or direct stock
issuances under the Option Plan which are held by the Chief Executive Officer
and the Company's other executive officers, in the event their employment were
to be terminated (whether involuntarily or through a forced resignation)
following (i) an acquisition of the Company by merger or asset sale or (ii) a
hostile take-over of the Company effected through a successful tender offer for
more than 50% of the Company's outstanding Common Stock or through a change in
the majority of the Board as a result of one or more contested elections for
Board membership. All outstanding options granted to date to the Company's
executive officers contain such an acceleration provision.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board is currently comprised of Messrs.
Schroeder and Van Poppelen. None of the present or former members of the
Compensation Committee were at any time during the fiscal year ended September
30, 1996 or at any other time an officer or employee of the Company.
No executive officer of the Company serves as a member of the board of
directors or compensation committee of any entity which has one or more
executive officers serving as a member of the Company's Board of Directors or
Compensation Committee.
COMPENSATION COMMITTEE REPORT
OVERVIEW AND PHILOSOPHY
The Compensation Committee (the "Committee") of the Company's Board of
Directors is responsible for establishing the compensation payable to the
Company's executive officers, including the officers named in the Summary
Compensation Table. Such compensation is primarily comprised of the following
elements: base salary, annual performance incentives, stock options and
executive benefits.
It is the Committee's objective that executive compensation be directly
influenced by the Company's business results. Accordingly, the Company's
executive compensation program is structured to stimulate and reward exceptional
performance that results in enhanced corporate and stockholder values. The
Committee retains independent compensation consultants to provide objective and
expert advice in the review of executive compensation plans. Technology industry
compensation surveys are also reviewed and relied upon in the Committee's
assessment of appropriate compensation levels.
The Committee recognizes that the highly-specialized industry sector in
which the Company operates is extremely competitive world-wide, with the result
that there is substantial demand for high-caliber, seasoned executives. It is
crucial that the Company be assured of retaining and rewarding its executive
personnel essential in contributing to the attainment of the Company's
performance goals. For these reasons, the Committee believes the Company's
executive compensation arrangements must remain competitive with those offered
by other companies of similar magnitude, complexity and performance records (the
"peer group").
24
<PAGE>
CASH COMPENSATION
A key objective of the Company's executive compensation program is to
position its key executives to earn annual cash compensation (base salary plus
bonus) equaling or exceeding that which the executive would earn at other peer
group companies. The Committee ensures, however, that the higher level of
compensation is paid only when profitable growth rates significantly exceed peer
group averages.
Base salaries for the named executive officers are established considering a
number of factors, including the Company's sustained growth and increased profit
margins, the executive's performance and contribution to overall Company
performance, and the salary levels of comparable positions at the peer group
companies. The Committee adheres to a compensation philosophy of moderate levels
of fixed compensation such as base salary. Base salary decisions are made as
part of a formal review process. Generally, base salaries for the 1996 fiscal
year were set close to the 50th percentile (median) of the salaries surveyed for
the peer group companies.
Under the Executive Incentive Plan ("EIP"), an executive's annual incentive
award depends on improved profit results and the executive's specific
contribution. The performance goals for the Company and for each business unit
or function are derived from the Company's business plans that include critical
performance targets relating to strategic product positioning, revenue growth
and profits for the fiscal year. The EIP provides no payment until a threshold
profit level is attained. The threshold is established each year at a level
significantly in excess of the prior year's results. Individual executive
incentive targets as a percentage of base salary are established based upon
industry averages reported in external surveys. This target percentage ranges
from 45% - 60% of an executive's base salary. The incentive target is set at a
higher percentage for more senior officers, with the result that the more senior
executive officers have a higher percentage of their potential cash compensation
at risk. If business plans are exceeded by 20% - 30%, executives can earn up to
a maximum of 90% - 120% of their base salaries. The Committee annually reviews
and approves specific bonus targets, maximums and performance criteria for each
executive. At its discretion, the Committee can also reduce total or individual
bonus awards derived by the performance results formulae.
For purposes of the stock price performance graph which appears later in
this Proxy Statement, the Company has selected the Hambrecht & Quist
Semiconductor Sector Index as the industry index. Several of the companies
included in that index were also among the companies which the Committee
surveyed as part of the peer group for comparative compensation purposes.
However, in selecting companies to survey for such compensation purposes, the
Committee focused primarily on whether those companies were actually competitive
with the Company in seeking executive talent and whether those companies had a
management style and corporate culture similar to the Company's. For this
reason, the number of companies surveyed for compensation data was substantially
less than the number of companies included in the Hambrecht & Quist
Semiconductor Sector Index.
STOCK OPTIONS
The Committee grants stock options under the Option Plan to foster executive
ownership and to provide direct linkage with stockholder interests. The
Committee considers the executive's current level of equity holdings in the
Company, the stock options previously granted to that individual, industry
practices, the executive's accountability level, and assumed, potential stock
value when determining stock option grants. The Committee relies upon
competitive guideline ranges of retention-effective, target gain objectives to
be derived from option gains based upon relatively aggressive assumptions
relating to planned growth and earnings. In this manner, the potential executive
gains parallel those of other stockholders over the long-term. Therefore, the
stock option program serves as the Company's only long-term incentive and
retention tool for executives and other key employees. The exercise prices of
stock options granted to the named executive officers are equal to the market
value of the stock on the date of grant. Therefore, stock
25
<PAGE>
options provide an incentive to executives to maximize the Company's profitable
growth which ordinarily, over time, should be reflected in the price of the
Company's stock.
BENEFITS
The Company provides benefits to the named executive officers that are
generally available to other executives in the peer group companies. The amount
of such executive-level benefits and perquisites, as determined in accordance
with the rules of the Securities and Exchange Commission relating to executive
compensation, did not, for any executive officer, exceed 10% of his or her total
salary and bonus for fiscal 1996. The Committee believes, based upon the review
of industry practices and published benefits surveys, that the Company's
officers receive approximately average benefit levels when compared to the peer
group companies.
CHIEF EXECUTIVE OFFICER PERFORMANCE AND COMPENSATION
In setting Mr. Dave Toole's base salary of $258,922 and in determining his
performance bonus for fiscal 1996, the Committee took note of the Company's
growth and profits in recent years and continued to structure his compensation
package so that more of his total compensation would be tied to the Company's
attainment of specific revenue and profit objectives.
The Committee also awarded him a bonus of $78,400 for the 1996 fiscal year.
The Committee has estimated that the resulting total cash compensation paid to
Mr. Toole places him in approximately the second quartile of the compensation
paid to other chief executive officers at companies of similar size and
complexity in the industry. Stock options for an additional 50,000 shares of
Common Stock were granted to Mr. Toole.
SPECIAL OPTION REGRANT PROGRAM
During the 1996 fiscal year, the Compensation Committee felt that
circumstances had made it necessary for the Company to implement an option
cancellation/regrant program pursuant to which a number of outstanding options
held by the Company's executive officers and other employees under the Option
Plan were canceled, and new options for the same number of shares were granted
with a lower exercise price per share equal to the market price of the Company's
Common Stock on the regrant date.
The Compensation Committee determined that this program was necessary
because equity incentives are a significant component of the total compensation
package of the Company's employees and play a substantial role in the Company's
ability to retain the services of individuals essential to the Company's
long-term financial success. Prior to the implementation of the program, the
market price of the Company's Common Stock had fallen as a result of market
factors which affected stock prices throughout the semiconductor and
semiconductor capital equipment industries and which did not necessarily reflect
the market's particular assessment of the Company's progress. The Compensation
Committee felt that the Company's ability to retain key employees would be
significantly impaired, unless value were restored to their options in the form
of regranted options at the current market price of the Company's Common Stock.
However, in order for the regranted options to serve their primary purpose of
assuring the continued service of each optionee, a new four-year vesting
schedule was imposed with respect to all regranted option shares so that the
optionee would only have the opportunity to acquire the option shares at the
lower exercise price if he or she remained in the Company's employ.
Accordingly, on August 5, 1996, a number of outstanding options held by the
Company's executive officers and other employees with an exercise price in
excess of $7.25 per share were cancelled, and new options for the same number of
shares were granted with an exercise price of $7.25 per share, the market price
of the Common Stock on that date. Each new option includes a new four-year
vesting schedule measured from the grant date.
26
<PAGE>
As a result of the new vesting schedules imposed on the regranted options,
the Compensation Committee believes that the program strikes an appropriate
balance between the interests of the option holders and those of the
stockholders. The lower exercise prices in effect under the regranted options
make those options valuable once again to the executive officers and key
employees critical to the Company's financial performance. However, those
individuals will enjoy the benefits of the regranted options only if they in
fact remain in the Company's employ and contribute to the Company's financial
success.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to publicly held companies for compensation exceeding
$1 million paid to certain of the corporation's executive officers. The
compensation to be paid to the Company's executive officers for the 1996 fiscal
year did not exceed the $1 million limit per officer, nor is it expected that
the compensation to be paid to the Company's executive officers for fiscal 1997
will exceed that limit. The Company's 1994 Stock Option/ Stock Issuance Plan is
structured so that any compensation deemed paid to an executive officer when he
exercises an outstanding option under that Plan with an exercise price equal to
the fair market value of the option shares on the grant date will qualify as
performance-based compensation which will not be subject to the $1 million
limitation. Because it is very unlikely that the cash compensation payable to
any of the Company's executive officers in the foreseeable future will approach
the $1 million limit, the Compensation Committee has decided at this time not to
take any other action to limit or restructure the elements of cash compensation
payable to the Company's executive officers. The Compensation Committee will
reconsider this decision should the individual compensation of any executive
officer ever approach the $1 million level.
It is the opinion of the Committee that the adopted executive compensation
policies and plans provide the necessary total remuneration program to properly
align the Company's performance and the interests of the Company's stockholders
with competitive and equitable executive compensation in a balanced and
reasonable manner, for both the short- and long-term.
The Compensation Committee of the
Board
Kenneth L. Schroeder
F. Joseph Van Poppelen
27
<PAGE>
STOCK PERFORMANCE GRAPH
The graph depicted below shows a comparison of cumulative total stockholder
returns for the Company, The Nasdaq Stock Market Index and the Hambrecht & Quist
Semiconductor Sector Index.
COMPARISON OF CUMULATIVE TOTAL RETURN (1)(2)(3)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GASONICS INTERNATIONAL
CORPORATION THE NASDAQ STOCK MARKET (US) H&Q SEMICONDUCTOR SECTOR INDEX
<S> <C> <C> <C>
3/21/1994 100.000 100.000 100.000
Jun-94 94.230 86.500 93.410
Sep-94 133.650 93.660 102.090
Dec-94 125.000 92.590 107.780
Mar-95 155.770 100.860 130.160
Jun-95 219.230 115.300 182.870
Sep-95 286.540 128.940 206.450
Dec-95 13.500 345.724 489.620
Mar-96 9.250 361.870 462.410
Jun-96 10.500 391.376 443.180
Sep-96 8.000 405.304 503.100
</TABLE>
- ------------------------
(1) The graph covers the period from March 21, 1994, the date the Company's
initial public offering commenced, through the fiscal year ended September
30, 1996.
(2) The graph assumes that $100 was invested on March 21, 1994 in the Company's
Common Stock and in each index, and that all dividends were reinvested. No
cash dividends have been declared on the Company's Common Stock.
(3) Stockholder returns over the indicated period should not be considered
indicative of future stockholder returns.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings made under the Securities Act of 1933, as amended, or the
Exchange Act that might incorporate future filings made by the Company under
those statutes, neither the preceding Stock Performance Graph nor the
Compensation Committee Report, except for the section of the Compensation
Committee Report entitled "Special Option Regrant Program," is to be
incorporated by reference into any such prior filings, nor shall such graph or
report be incorporated by reference into any future filings made by the Company
under those statutes.
28
<PAGE>
CERTAIN TRANSACTIONS
In March 1996, in connection with commencement of employment, the Company
loaned Ms. Jeannine Sargent, Vice President of Marketing and Customer
Technology, $60,000, bearing interest at the rate of 5.65% annually. Upon
completion of one year of service, such note will be forgiven. As of November
15, 1996, the highest amount outstanding on the note was $62,401.25.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
The members of the Board of Directors, the executive officers of the Company
and persons who hold more than 10% of the Company's outstanding Common Stock are
subject to the reporting requirements of Section 16(a) of the Exchange Act which
require them to file reports with respect to their ownership of the Common Stock
and their transactions in such Common Stock. Based upon (i) the copies of
Section 16(a) reports which the Company received from such persons for their
1996 fiscal year transactions in the Common Stock and their Common Stock
holdings, and (ii) the written representations received from one or more of such
persons that no annual Form 5 reports were required to be filed by them for the
1996 fiscal year, the Company believes that both the executive officers and the
Board members complied with all their reporting requirements under Section 16(a)
for such fiscal year.
ANNUAL REPORT
A copy of the Annual Report of the Company for the fiscal year ended
September 30, 1996 has been mailed concurrently with this Proxy Statement to all
stockholders entitled to notice of and to vote at the Annual Meeting. Except for
"Executive Officers of the Registrant" from Part I of the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1996, the Annual
Report is not incorporated into this Proxy Statement and is not considered proxy
solicitation material.
FORM 10-K
The Company filed an Annual Report on Form 10-K for the fiscal year ended
September 30, 1996 with the Securities and Exchange Commission. Stockholders may
obtain a copy of this report, without charge, by writing to Mr. Terry R. Gibson,
the Secretary of the Company, at the Company's principal offices located at 2540
Junction Avenue, San Jose, California 95134-1909.
Dated: January 20, 1997
THE BOARD OF DIRECTORS OF GASONICS
INTERNATIONAL CORPORATION
29
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GASONICS INTERNATIONAL CORPORATION
1994 STOCK OPTION/STOCK ISSUANCE PLAN
(AS AMENDED AND RESTATED EFFECTIVE DECEMBER 17, 1996)
ARTICLE ONE
GENERAL
I. PURPOSE OF THE PLAN
A. This 1994 Stock Option/Stock Issuance Plan (the "Plan") is
intended to promote the interests of GaSonics International Corporation, a
Delaware corporation or any successor corporation (the "Corporation") adopting
the Plan, by providing (i) key employees (including officers) of the Corporation
(or its parent or subsidiary corporations) who are responsible for the
management, growth and financial success of the Corporation (or its parent or
subsidiary corporations), (ii) the non-employee members of the Board and (iii)
consultants and other independent contractors who provide valuable services to
the Corporation (or its parent or subsidiary corporations) with the opportunity
to acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Corporation as an incentive for them to remain in the Service
of the Corporation (or its parent or subsidiary corporations).
B. The Plan became effective upon adoption by the Board of Directors
of Gasonics International Corporation, a California corporation ("Gasonics
California") on January 27, 1994, and such date shall accordingly constitute the
Effective Date of the Plan. The Plan was subsequently assumed by the
Corporation in connection with the merger (the "Merger") of Gasonics California
into the Corporation in February, 1994.
II. DEFINITIONS
A. For purposes of the Plan, the following definitions shall be in
effect:
BOARD: the Corporation's Board of Directors.
CHANGE IN CONTROL: a change in ownership or control of the
Corporation effected through either of the following transactions:
a. the direct or indirect acquisition by any person or related
group of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of
the 1934 Act) of securities possessing more than fifty percent (50%) of the
<PAGE>
total combined voting power of the Corporation's outstanding securities
pursuant to a tender or exchange offer made directly to the Corporation's
stockholders which the Board does not recommend such stockholders to
accept; or
b. a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the
Board members (rounded up to the next whole number) ceases, by reason of
one or more contested elections for Board membership, to be comprised of
individuals who either (i) have been Board members continuously since the
beginning of such period or (ii) have been elected or nominated for
election as Board members during such period by at least a majority of the
Board members described in clause (i) who were still in office at the time
such election or nomination was approved by the Board.
CODE: the Internal Revenue Code of 1986, as amended.
COMMON STOCK: shares of the Corporation's common stock, par value
$0.001 per share.
CORPORATE TRANSACTION: any of the following stockholder-approved
transactions to which the Corporation is a party:
a. a merger or consolidation in which the Corporation is
not the surviving entity, except for a transaction the principal
purpose of which is to change the state in which the Corporation is
incorporated,
b. the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in complete
liquidation or dissolution of the Corporation, or
c. any reverse merger in which the Corporation is the
surviving entity but in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior
to such merger.
EMPLOYEE: an individual who performs services while in the employ of
the Corporation or one or more parent or subsidiary corporations, subject to the
control and direction of the employer entity not only as to the work to be
performed but also as to the manner and method of performance.
EXERCISE DATE: the date on which the Corporation shall have received
written notice of the option exercise.
2.
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FAIR MARKET VALUE: the Fair Market Value per share of Common Stock
determined in accordance with the following provisions:
a. If the Common Stock is not at the time listed or
admitted to trading on any national securities exchange but is traded
on the Nasdaq National Market, the Fair Market Value shall be the
closing selling price per share on the date in question, as such price
is reported by the National Association of Securities Dealers on the
Nasdaq National Market or any successor system. If there is no
reported closing selling price for the Common Stock on the date in
question, then the closing selling price on the last preceding date
for which such quotation exists shall be determinative of Fair Market
Value.
b. If the Common Stock is at the time listed or admitted
to trading on any national securities exchange, then the Fair Market
Value shall be the closing selling price per share on the date in
question on the securities exchange determined by the Plan
Administrator to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of transactions on
such exchange. If there is no reported sale of Common Stock on such
exchange on the date in question, then the Fair Market Value shall be
the closing selling price on the exchange on the last preceding date
for which such quotation exists.
c. If the Common Stock is on the date in question neither
listed nor admitted to trading on any national securities exchange nor
traded on the Nasdaq National Market, then the Fair Market Value of
the Common Stock on such date shall be determined by the Plan
Administrator after taking into account such factors as the Plan
Administrator shall deem appropriate.
HOSTILE TAKE-OVER: the direct or indirect acquisition by any person
or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common control
with, the Corporation) of beneficial ownership (within the meaning of Rule 13d-3
of the 1934 Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities pursuant
to a tender or exchange offer made directly to the Corporation's stockholders
which the Board does not recommend such stockholders to accept.
INCENTIVE OPTION: a stock option which satisfies the requirements of
Code Section 422.
1934 ACT: the Securities and Exchange Act of 1934, as amended from
time to time.
3.
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NON-STATUTORY OPTION: a stock option not intended to meet the
requirements of Code Section 422.
OPTIONEE: any person to whom an option is granted under the
Discretionary Option Grant or Automatic Option Grant Program in effect under the
Plan.
PARTICIPANT: any person who receives a direct issuance of Common
Stock under the Stock Issuance Program in effect under the Plan.
PERMANENT DISABILITY OR PERMANENTLY DISABLED: the inability of the
Optionee or the Participant to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment expected to
result in death or to be of continuous duration of twelve (12) months or more.
PLAN ADMINISTRATOR: the particular entity, whether the Primary
Committee, the Board or the Secondary Committee, which is authorized to
administer the Discretionary Option Grant and Stock Issuance Programs with
respect to one or more classes of eligible persons, to the extent such entity is
carrying out its administrative functions under those programs with respect to
the persons under its jurisdiction.
PRIMARY COMMITTEE: the committee of two (2) or more non-employee
Board members appointed by the Board to administer the Discretionary Option
Grant and Stock Issuance Programs with respect to Section 16 Insiders.
SERVICE: the performance of services on a periodic basis to the
Corporation (or any parent or subsidiary corporation) in the capacity of an
Employee, a non-employee member of the board of directors or an independent
consultant or advisor, except to the extent otherwise specifically provided in
the applicable stock option or stock issuance agreement.
SECONDARY COMMITTEE: a committee of one (1) or more Board members
appointed by the Board to administer the Discretionary Option Grant and Stock
Issuance Programs with respect to eligible persons other than Section 16
Insiders.
SECTION 12(G) REGISTRATION DATE: the date on which the initial
registration of the Common Stock under Section 12(g) of the 1934 Act becomes
effective.
SECTION 16 INSIDER: an executive officer of the Company or a member
of the Board subject to the short-swing liability provisions of Section 16(b) of
the 1934 Act.
TAKE-OVER PRICE: the GREATER of (a) the Fair Market Value per share
of Common Stock on the date the particular option to purchase such stock is
surrendered to the Corporation in connection with a Hostile Take-Over or (b) the
highest reported price
4.
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per share of Common Stock paid by the tender offeror in effecting such Hostile
Take-Over. However, if the surrendered option is an Incentive Option, the
Take-Over Price shall not exceed the clause (a) price per share.
B. The following provisions shall be applicable in determining the
parent and subsidiary corporations of the Corporation:
Any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation shall be considered
to be a PARENT of the Corporation, provided each such corporation in
the unbroken chain (other than the Corporation) owns, at the time of
the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the
other corporations in such chain.
Each corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation shall be
considered to be a SUBSIDIARY of the Corporation, provided each such
corporation in the unbroken chain (other than the last corporation)
owns, at the time of the determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
III. STRUCTURE OF THE PLAN
A. STOCK PROGRAMS. The Plan shall be divided into three (3)
separate components: the Discretionary Option Grant Program specified in
Article Two, the Automatic Option Grant Program specified in Article Three and
the Stock Issuance Program specified in Article Four. Under the Discretionary
Option Grant Program, eligible individuals may, at the discretion of the Plan
Administrator, be granted options to purchase shares of Common Stock in
accordance with the provisions of Article Two. Under the Automatic Option Grant
Program, non-employee members of the Board will receive special option grants at
periodic intervals to purchase shares of Common Stock in accordance with the
provisions of Article Three. Under the Stock Issuance Program, eligible
individuals may be issued shares of Common Stock directly, either through the
immediate purchase of such shares at a price not less than eighty-five percent
(85%) of the Fair Market Value of the shares at the time of issuance or as a
bonus tied to the performance of services or the Corporation's attainment of
financial objectives.
B. GENERAL PROVISIONS. Unless the context clearly indicates
otherwise, the provisions of Articles One and Five shall apply to the
Discretionary Option Grant Program, the Automatic Option Grant Program and the
Stock Issuance Program and shall accordingly govern the interests of all
individuals under the Plan.
5.
<PAGE>
IV. ADMINISTRATION OF THE PLAN
A. The persons eligible to participate in the Discretionary Option
Grant and Stock Issuance Programs shall be limited to the following:
(i) Employees of the Corporation or any parent or
subsidiary, whether now existing or subsequently established,
(ii) non-employee members of the Board or the board of
directors of any parent or subsidiary corporation, and
(iii) consultants and other independent advisors who
provide services to the Corporation (or any parent or subsidiary
corporation).
B. The Primary Committee shall have sole and exclusive authority to
administer the Discretionary Option Grant and Stock Issuance Programs with
respect to Section 16 Insiders.
C. Administration of the Discretionary Option Grant and Stock
Issuance Programs with respect to all other persons eligible to participate in
those programs may, at the Board's discretion, be vested in the Primary
Committee or a Secondary Committee, or the Board may retain the power to
administer those programs with respect to all such persons. The member or
members of the Secondary Committee may be comprised of one or more Board members
who are Employees eligible to receive discretionary option grants or direct
stock issuances under the Plan or any other stock option, stock appreciation,
stock bonus or other stock plan of the Corporation (or any Parent or
Subsidiary).
D. Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions
of any Secondary Committee and reassume all powers and authority previously
delegated to such committee.
E. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority to
establish such rules and regulations as it may deem appropriate for proper
administration of the Discretionary Option Grant and Stock Issuance Programs and
to make such determinations under, and issue such interpretations of, the
provisions of such programs and any outstanding options or stock issuances
thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator within the scope of its administrative functions under the Plan
shall be final and binding on all parties who have an interest in the
Discretionary Option Grant or Stock Issuance Program under its jurisdiction or
any stock option or stock issuance thereunder.
6.
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F. Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants or stock issuances under the
Plan.
G. Administration of the Automatic Option Grant Program shall be
self-executing in accordance with the terms of that program, and no Plan
Administrator shall exercise any discretionary functions with respect to option
grants made thereunder.
V. STOCK SUBJECT TO THE PLAN
A. Shares of Common Stock shall be available for issuance under
the Plan and shall be drawn from either the Corporation's authorized but
unissued shares of Common Stock or from reacquired shares of Common Stock,
including shares repurchased by the Corporation on the open market. The
maximum number of shares of Common Stock which may be issued over the term of
the Plan shall not exceed 2,700,000 shares,(1) subject to adjustment from time
to time in accordance with the provisions of this Section VI. Such share
reserve includes the 500,000-share increase authorized by the Board on
December 17, 1996, subject to stockholder approval at the 1997 Annual
Stockholders Meeting.
B. In no event shall the aggregate number of shares of Common Stock
for which any one individual participating in the Plan may be granted stock
options and direct stock issuances exceed 825,000 shares(1) over the term
of the Plan.
C. Should one or more outstanding options under this Plan expire or
terminate for any reason prior to exercise in full (including any option
cancelled in accordance with the cancellation-regrant provisions of Section IV
of Article Two of the Plan), then the shares subject to the portion of each
option not so exercised shall be available for subsequent issuance under the
Plan. Unvested shares issued under the Plan and subsequently repurchased by the
Corporation at the original option or issue price paid per share will be added
back to the share reserve and will accordingly be made available for subsequent
issuance under the Plan. Shares subject to any option or portion thereof
surrendered in accordance with Section V of Article Two or Section III of
Article Three shall not be available for subsequent issuance under the Plan. In
addition, should the exercise price of an outstanding option under the Plan be
paid with shares of Common Stock or should shares of Common Stock otherwise
issuable under the Plan be withheld by
____________________
(1) Each number reflects the 3-for-2 split of the Common Stock effected by
the Corporation on November 20, 1995. In no event, however, may more than
2,604,008 shares of Common Stock to be issued under the Plan after November
15, 1996, including the shares subject to options outstanding under the Plan
on that date.
7.
<PAGE>
the Corporation in satisfaction of the withholding taxes incurred in connection
with the exercise of an outstanding option under the Plan or the vesting of a
direct share issuance made under the Plan, then the number of shares of Common
Stock available for issuance under the Plan shall be reduced by the gross number
of shares for which the option is exercised or which vest under the share
issuance, and not by the net number of shares of Common Stock actually issued to
the holder of such option or share issuance.
Should any change be made to the Common Stock issuable under the
Plan by reason of any stock split, stock dividend, recapitalization, combination
of shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration, then
appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the maximum number and/or class of
securities for which any one individual participating in the Plan may be granted
stock options and direct stock issuances in the aggregate over the term of the
Plan, (iii) the number and/or class of securities for which automatic option
grants are to be subsequently made per newly-elected or continuing non-employee
Board member under the Automatic Option Grant Program and (iv) the number and/or
class of securities and price per share in effect under each option outstanding
under the Discretionary Option Grant or Automatic Option Grant Program. Such
adjustments to the outstanding options are to be effected in a manner which
shall preclude the enlargement or dilution of rights and benefits under such
options. The adjustments determined by the Plan Administrator shall be final,
binding and conclusive.
8.
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ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF OPTIONS
Options granted under the Discretionary Option Grant Program shall be
authorized by action of the Plan Administrator and may, at the Plan
Administrator's discretion, be either Incentive Options or Non-Statutory
Options. Each granted option shall be evidenced by one or more instruments in
the form approved by the Plan Administrator; PROVIDED, however, that each such
instrument shall comply with the terms and conditions specified below. Each
instrument evidencing an Incentive Option shall, in addition, be subject to the
applicable provisions of Section II of this Article Two.
A. EXERCISE PRICE.
1. The exercise price per share shall be fixed by the Plan
Administrator in accordance with the following provisions:
a. The exercise price per share of the Common Stock
subject to an Incentive Option shall in no event be less than one
hundred percent (100%) of the Fair Market Value of such Common Stock
on the grant date.
b. The exercise price per share of the Common Stock
subject to a Non-Statutory Option shall in no event be less than
eighty-five percent (85%) of the Fair Market Value of such Common
Stock on the grant date.
2. The exercise price shall become immediately due upon
exercise of the option and, subject to the provisions of Section I of
Article Five and the instrument evidencing the grant, shall be payable in one of
the alternative forms specified below:
a. full payment in cash or check made payable to the
Corporation's order;
b. full payment in shares of Common Stock held for
the requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at Fair Market
Value on the Exercise Date;
9.
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c. full payment in a combination of shares of Common
Stock held for the requisite period necessary to avoid a charge to the
Corporation's earnings for financial reporting purposes and valued at
Fair Market Value on the Exercise Date and cash or check made payable
to the Corporation's order; or
d. to the extent the option is exercised for vested
shares, full payment through a broker-dealer sale and remittance
procedure pursuant to which the Optionee shall provide concurrent
irrevocable written instructions (i) to a Corporation-designated
brokerage firm to effect the immediate sale of the purchased shares
and remit to the Corporation, out of the sale proceeds available on
the settlement date, sufficient funds to cover the aggregate exercise
price payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be withheld by
the Corporation in connection with such purchase and (ii) to the
Corporation to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the sale
transaction.
Except to the extent the sale and remittance procedure is utilized in
connection with the exercise of the option, payment of the exercise price for
the purchased shares must accompany such notice.
B. TERM AND EXERCISE OF OPTIONS. Each option granted under this
Discretionary Option Grant Program shall be exercisable at such time or times
and during such period as is determined by the Plan Administrator and set forth
in the instrument evidencing the grant. No such option, however, shall have a
maximum term in excess of ten (10) years measured from the grant date.
C. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or by the laws of descent
and distribution following the Optionee's death. However, a Non-Statutory
Option may, in connection with the Optionee's estate plan, be assigned in whole
or in part during the Optionee's lifetime to one or more members of the
Optionee's immediate family or to a trust established exclusively for one or
more such family members. The assigned portion may only be exercised by the
person or persons who acquire a proprietary interest in the option pursuant to
the assignment. The terms applicable to the assigned portion shall be the same
as those in effect for the option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Plan Administrator
may deem appropriate.
10.
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D. TERMINATION OF SERVICE.
1. The following provisions shall govern the exercise period
applicable to any outstanding options held by the Optionee at the time of
cessation of Service or death.
a. Should an Optionee cease Service for any reason
(including death or Permanent Disability) while holding one or more
outstanding options under this Article Two, then none of those options
shall (except to the extent otherwise provided pursuant to
subparagraph 3 below) remain exercisable for more than a thirty-six
(36)-month period (or such shorter period determined by the Plan
Administrator and set forth in the instrument evidencing the grant)
measured from the date of such cessation of Service.
b. Any option held by the Optionee under this Article
Two and exercisable in whole or in part on the date of his or her
death may be subsequently exercised by the personal representative of
the Optionee's estate or by the person or persons to whom the option
is transferred pursuant to the Optionee's will or in accordance with
the laws of descent and distribution. However, the right to exercise
such option shall lapse upon the EARLIER of (i) the third anniversary
of the date of the Optionee's death (or such shorter period determined
by the Plan Administrator and set forth in the instrument evidencing
the grant) or (ii) the specified expiration date of the option term.
Accordingly, upon the occurrence of the earlier event, the option
shall terminate and cease to remain outstanding.
c. Under no circumstances shall any such option be
exercisable after the specified expiration date of the option term.
d. During the applicable post-Service exercise
period, the option may not be exercised in the aggregate for more than
the number of shares (if any) in which the Optionee is vested at the
time of his or her cessation of Service. Upon the expiration of the
limited post-Service exercise period or (if earlier) upon the
specified expiration date of the option term, each such option shall
terminate and cease to remain outstanding with respect to any vested
shares for which the option has not otherwise been exercised.
However, each outstanding option shall immediately terminate and cease
to remain outstanding, at the time of the Optionee's cessation of
Service, with respect to any shares for which the option is not
otherwise at that time exercisable or in which the Optionee is not
otherwise vested.
11.
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e. Should (i) the Optionee's Service be terminated
for misconduct (including, but not limited to, any act of dishonesty,
willful misconduct, fraud or embezzlement) or (ii) the Optionee make
any unauthorized use or disclosure of confidential information or
trade secrets of the Corporation or its parent or subsidiary
corporations, then in any such event all outstanding options held by
the Optionee under this Article Two shall terminate immediately and
cease to remain outstanding.
2. The Plan Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to permit one or more options held by the Optionee
under this Article Two to be exercised, during the limited post-Service exercise
period applicable under this paragraph C., not only with respect to the number
of vested shares of Common Stock for which each such option is exercisable at
the time of the Optionee's cessation of Service but also with respect to one or
more subsequent installments of vested shares for which the option would
otherwise have become exercisable had such cessation of Service not occurred.
3. The Plan Administrator shall also have full power and
authority, exercisable either at the time the option is granted or at any time
while the option remains outstanding, to extend the period of time for which the
option is to remain exercisable following the Optionee's cessation of Service or
death from the limited period in effect under subparagraph 1. above to such
greater period of time as the Plan Administrator shall deem appropriate. In no
event, however, shall such option be exercisable after the specified expiration
date of the option term.
E. STOCKHOLDER RIGHTS. An Optionee shall have no stockholder rights
with respect to any shares covered by the option until such individual shall
have exercised the option and paid the exercise price for the purchased shares.
F. REPURCHASE RIGHTS. The shares of Common Stock acquired upon the
exercise of any Article Two option grant may be subject to repurchase by the
Corporation in accordance with the following provisions:
1. The Plan Administrator shall have the discretion to
authorize the issuance of unvested shares of Common Stock under this Article
Two. Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase any or all of those unvested
shares at the exercise price paid per share. The terms and conditions upon
which such repurchase right shall be exercisable (including the period and
procedure for exercise and the appropriate vesting schedule for the purchased
shares) shall be established by the Plan Administrator and set forth in the
instrument evidencing such repurchase right.
12.
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2. All of the Corporation's outstanding repurchase rights under
this Article Two shall automatically terminate, and all shares subject to such
terminated rights shall immediately vest in full, upon the occurrence of a
Corporate Transaction, except to the extent: (i) any such repurchase right is
expressly assigned to the successor corporation (or parent thereof) in
connection with the Corporate Transaction or (ii) such termination is precluded
by other limitations imposed by the Plan Administrator at the time the
repurchase right is issued.
3. The Plan Administrator shall have the discretionary
authority, exercisable either before or after the Optionee's cessation of
Service, to cancel the Corporation's outstanding repurchase rights with respect
to one or more shares purchased or purchasable by the Optionee under this
Discretionary Option Grant Program and thereby accelerate the vesting of such
shares in whole or in part at any time.
II. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under this Article Two. Incentive Options may only be
granted to individuals who are Employees. Options which are specifically
designated as Non-Statutory Options when issued under the Plan shall NOT be
subject to such terms and conditions.
A. DOLLAR LIMITATION. The aggregate Fair Market Value (determined
as of the respective date or dates of grant) of the Common Stock for which one
or more options granted to any Employee under this Plan (or any other option
plan of the Corporation or its parent or subsidiary corporations) may for the
first time become exercisable as incentive stock options under the Federal tax
laws during any one calendar year shall not exceed the sum of One Hundred
Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more
such options which become exercisable for the first time in the same calendar
year, the foregoing limitation on the exercisability of such options as
incentive stock options under the Federal tax laws shall be applied on the basis
of the order in which such options are granted. Should the number of shares of
Common Stock for which any Incentive Option first becomes exercisable in any
calendar year exceed the applicable One Hundred Thousand Dollar ($100,000)
limitation, then that option may nevertheless be exercised in such calendar year
for the excess number of shares as a non-statutory option under the Federal tax
laws.
B. 10% STOCKHOLDER. If any individual to whom an Incentive Option
is granted is the owner of stock (as determined under Section 424(d) of the
Code) possessing ten percent (10%) or more of the total combined voting power of
all classes of stock of the Corporation or any one of its parent or subsidiary
corporations, then the exercise price per share shall not be less than one
hundred ten percent (110%) of the Fair Market Value per share of Common Stock on
the grant date, and the option term shall not exceed five (5) years, measured
from the grant date.
13.
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Except as modified by the preceding provisions of this Section II, the
provisions of Articles One, Two and Five of the Plan shall apply to all
Incentive Options granted hereunder.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction, each option which is
at the time outstanding under this Article Two shall automatically accelerate so
that each such option shall, immediately prior to the specified effective date
for the Corporate Transaction, become fully exercisable with respect to the
total number of shares of Common Stock at the time subject to such option and
may be exercised for all or any portion of such shares. However, an outstanding
option under this Article Two shall NOT so accelerate if and to the extent: (i)
such option is, in connection with the Corporate Transaction, either to be
assumed by the successor corporation or parent thereof or to be replaced with a
comparable option to purchase shares of the capital stock of the successor
corporation or parent thereof, (ii) such option is to be replaced with a cash
incentive program of the successor corporation which preserves the option spread
existing at the time of the Corporate Transaction and provides for subsequent
payout in accordance with the same vesting schedule applicable to such option or
(iii) the acceleration of such option is subject to other limitations imposed by
the Plan Administrator at the time of the option grant. The determination of
option comparability under clause (i) above shall be made by the Plan
Administrator, and its determination shall be final, binding and conclusive.
B. Immediately following the consummation of the Corporate
Transaction, all outstanding options under this Article Two shall terminate and
cease to remain outstanding, except to the extent assumed by the successor
corporation or parent company.
C. Each outstanding option under this Article Two which is assumed
in connection with the Corporate Transaction or is otherwise to continue in
effect shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply and pertain to the number and class of securities which
would have been issued to the option holder, in consummation of such Corporate
Transaction, had such person exercised the option immediately prior to such
Corporate Transaction. Appropriate adjustments shall also be made to the
exercise price payable per share, PROVIDED the aggregate exercise price payable
for such securities shall remain the same. In addition, the class and number of
securities available for issuance under the Plan following the consummation of
the Corporate Transaction shall be appropriately adjusted.
D. The Plan Administrator shall have the discretion, exercisable
either at the time the option is granted or at any time while the option remains
outstanding, to provide (upon such terms as it may deem appropriate) for (i) the
automatic acceleration of one or more outstanding options granted under the Plan
which are assumed or replaced in the Corporate Transaction and do not otherwise
accelerate at that time and/or (ii) the subsequent termination of one or more of
the Corporation's outstanding repurchase rights
14.
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which are assigned in connection with the Corporate Transaction and do not
otherwise terminate at that time, in the event Optionee's Service should
subsequently terminate within a designated period following such Corporate
Transaction.
E. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to provide for the automatic acceleration of one or
more outstanding options under this Article Two (and the immediate termination
of one or more of the Corporation's outstanding repurchase rights under this
Article Two) upon the occurrence of a Change in Control. The Plan Administrator
shall also have full power and authority to condition any such option
acceleration (and the termination of any outstanding repurchase rights) upon the
subsequent termination of the Optionee's Service within a specified period
following the Change in Control.
F. Any options accelerated in connection with the Change in Control
shall remain fully exercisable until the expiration or sooner termination of the
option term.
G. The grant of options under this Article Two shall in no way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
H. The portion of any Incentive Option accelerated under this
Section III in connection with a Corporate Transaction or Change in Control
shall remain exercisable as an incentive stock option under the Federal tax laws
only to the extent the dollar limitation of Section II of this Article Two is
not exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a non-statutory option under the
Federal tax laws.
IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected Optionees, the
cancellation of any or all outstanding options under this Article Two and to
grant in substitution new options under the Plan covering the same or different
numbers of shares of Common Stock but with an exercise price per share not less
than (i) eighty-five percent (85%) of the Fair Market Value per share of Common
Stock on the new grant date or (ii) one hundred percent (100%) of such Fair
Market Value in the case of an Incentive Option.
V. STOCK APPRECIATION RIGHTS
A. Provided and only if the Plan Administrator determines in its
discretion to implement the stock appreciation right provisions of this Section
V, one or more Optionees may be granted the right, exercisable upon such terms
and conditions as the Plan
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Administrator may establish, to surrender all or part of an unexercised option
under this Article Two in exchange for a distribution from the Corporation in an
amount equal to the excess of (i) the Fair Market Value (on the option surrender
date) of the number of shares in which the Optionee is at the time vested under
the surrendered option (or surrendered portion thereof) over (ii) the aggregate
exercise price payable for such vested shares.
B. No surrender of an option shall be effective hereunder unless it
is approved by the Plan Administrator, either at the time of the option
surrender or at any earlier time. If the surrender is so approved, then the
distribution to which the Optionee shall accordingly become entitled under this
Section V may be made in shares of Common Stock valued at Fair Market Value on
the option surrender date, in cash, or partly in shares and partly in cash, as
the Plan Administrator shall in its sole discretion deem appropriate.
C. One or more officers of the Corporation subject to the
short-swing profit restrictions of the Federal securities laws may, in the Plan
Administrator's sole discretion, be granted limited stock appreciation rights in
tandem with their outstanding options under this Article Two. Upon the
occurrence of a Hostile Take-Over, the officer shall have a thirty (30)-day
period in which he or she may surrender any outstanding options with such a
limited stock appreciation right to the Corporation, to the extent such option
is at the time exercisable for fully vested shares of Common Stock. The officer
shall in return be entitled to a cash distribution from the Corporation in an
amount equal to the excess of (i) the Take-Over Price of the vested shares of
Common Stock at the time subject to each surrendered option (or surrendered
portion of such option) over (ii) the aggregate exercise price payable for such
shares. The cash distribution shall be made within five (5) days following the
date the option is surrendered to the Corporation. The Plan Administrator shall
pre-approve, at the time the limited right is granted, the subsequent exercise
of that right in accordance with the terms of the grant and the provisions of
this Section V. No additional approval of the Plan Administrator or the Board
shall be required at the time of the actual option surrender and cash
distribution. Any unsurrendered portion of the option shall continue to remain
outstanding and become exercisable in accordance with the terms of the
instrument evidencing such grant.
D. The shares of Common Stock subject to any option surrendered for
an appreciation distribution pursuant to this Section V shall NOT be available
for subsequent issuance under the Plan.
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ARTICLE THREE
AUTOMATIC OPTION GRANT PROGRAM
I. ELIGIBILITY
ELIGIBLE DIRECTORS. The individuals eligible to receive automatic
option grants pursuant to the July 19, 1995 restated provisions of this Article
Three program shall be limited to (i) those individuals who are continuing to
serve as non-employee Board members on July 19, 1995 and (ii) those individuals
who are first elected or appointed as non-employee Board members on or after
July 19, 1995. A non-employee Board member who has previously been in the
employ of the Corporation (or any parent or subsidiary) shall not be eligible to
receive an option grant under the Automatic Option Grant Program at the time he
or she first becomes a non-employee Board member, but such individual shall be
eligible to receive periodic option grants under the Automatic Option Grant
Program upon his or her continued service as a non-employee Board member. Any
non-employee Board member eligible to participate in the Automatic Option Grant
Program pursuant to the foregoing criteria shall be designated an Eligible
Director for purposes of this Article Three.
II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. GRANT DATES. Option grants shall be made pursuant to the July
19, 1995 restated provisions of this Article Three on the dates specified below:
INITIAL GRANT. Each individual who first becomes an Eligible
Director on or after July 19, 1995, whether through election by the
stockholders or appointment by the Board, shall automatically be granted,
at the time of such initial election or appointment (the "Initial Grant
Date"), a Non-Statutory Option to purchase 30,000 shares(2) of Common Stock
upon the terms and conditions of this Article Three.
ANNUAL GRANT. Each Eligible Director who receives an initial
30,000-share option grant shall automatically be granted, on each
successive anniversary of the Initial Grant Date on which he or she
continues to serve as an Eligible Director, beginning with the fourth
anniversary of such Initial Grant Date, a Non-Statutory
(2) This number reflects the 3-for-2 split of the Common Stock effected by the
Corporation on November 20, 1995.
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Option to purchase an additional 7,500 shares(3) of Common Stock upon the
terms and conditions of this Article Three. In addition, each individual
who is an Eligible Director on July 19, 1995 but who is not otherwise to
receive an initial 30,000-share grant on such date shall automatically be
granted, on July 19, 1995 and each subsequent anniversary of that grant
date on which he or she continues to serve as an Eligible Director, a
Non-Statutory Option to purchase an additional 7,500 shares of Common Stock
upon the terms and conditions of this Article Three. Any Eligible Director
previously in the Corporation's employ shall receive his or her initial
7,500-share option grant under this Article Three at the first Annual
Stockholders Meeting at which he is she is elected as a non-employee Board
member and shall automatically be granted, on the date of each succeeding
Annual Stockholders Meeting at which he or she is re-elected as a
non-employee Board member, a Non-Statutory Option to purchase an additional
7,500 shares of Common Stock upon the terms and conditions of this Article
Three.
There shall be no limit on the number of such 7,500-share option
grants any one Eligible Director may receive over his or her period of Board
service. The number of shares for which the automatic option grants are to be
made to each newly-elected or continuing Eligible Director shall be subject to
periodic adjustment pursuant to the applicable provisions of Section VI.C. of
Article One.
B. EXERCISE PRICE. The exercise price per share of Common Stock
subject to each automatic option grant made under this Article Three shall be
equal to one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the automatic grant date.
C. PAYMENT. The exercise price shall be payable in one of the
alternative forms specified below:
1. full payment in cash or check made payable to the
Corporation's order;
2. full payment in shares of Common Stock held for the
requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at Fair Market
Value on the Exercise Date;
3. full payment in a combination of shares of Common Stock
held for the requisite period necessary to avoid a charge to the
Corporation's earnings for financial reporting purposes and valued at
Fair
____________________
(3) This number reflects the 3-for-2 split of the Common Stock effected by the
Corporation on November 20, 1995.
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Market Value on the Exercise Date and cash or check made payable to the
Corporation's order; or
4. full payment through a sale and remittance procedure
pursuant to which the non-employee Board member shall provide
concurrent irrevocable written instructions (i) to a
Corporation-designated brokerage firm to effect the immediate sale of
the purchased shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover
the aggregate exercise price payable for the purchased shares and (ii)
to the Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the sale
transaction.
D. OPTION TERM. Each automatic grant under this Article Three shall
have a maximum term of ten (10) years measured from the automatic grant date.
E. EXERCISABILITY. Option grants made under this Article Three
shall become exercisable as specified below:
INITIAL GRANT. Each initial 30,000-share automatic grant shall
become exercisable in four (4) successive equal annual installments upon
the Optionee's completion of each year of Board service over the four
(4)-year period measured from the Initial Grant Date.
ANNUAL GRANT. Each annual 7,500-share automatic grant shall
become exercisable upon the Optionee's completion of one (1) year of Board
service measured from the grant date.
Each option granted under this Article Three shall automatically
accelerate and become fully exercisable for all of the shares of Common Stock at
the time subject to the option:
- should the Optionee cease to serve as a Board member by
reason of death or Permanent Disability, or
- should there occur an acceleration event specified in
Section III of this Article Three.
F. LIMITED TRANSFERABILITY. During the lifetime of the Optionee,
each automatic option grant, together with the limited stock appreciation right
pertaining to such option, shall be exercisable only by the Optionee and shall
not be assignable or transferable by the Optionee other than a transfer of the
option to one or more immediate family members or a trust established
exclusively for one or more such family members. The assigned portion of may
only be exercised by the person or persons who acquire a
19.
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proprietary interest in the option pursuant to the assignment. The terms
applicable to the assigned portion shall be the same as those in effect for the
option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Plan Administrator may deem fit.
G. TERMINATION OF BOARD SERVICE.
1. Should the Optionee cease to serve as a Board member for any
reason other than death or Permanent Disability while holding one or more
automatic option grants under this Article Three, then each of those options
may, during the twelve (12)-month period measured from the date of such
cessation of Board service (the "Post-Service Exercise Period"), be exercised in
accordance with the following parameters:
INITIAL 30,000-SHARE GRANT
a. Should the Optionee cease Board service prior to the
fourth anniversary of the Initial Grant Date, then the Optionee may,
at any time during the Post-Service Exercise Period, exercise the
option for any or all of the option shares for which the option is
exercisable at the time of such cessation of Board service. In
addition, the option shall become exercisable for an additional
twenty-five percent (25%) of the option shares on the next anniversary
of the Initial Grant Date following the Optionee's cessation of Board
service and shall remain so exercisable until the expiration date of
the Post-Service Exercise Period.
b. If the Optionee ceases Board service on or after the
fourth anniversary of the Initial Grant Date, then the Optionee may,
at any time during the Post-Service Exercise Period, exercise the
option for any or all of the option shares for which the option is
exercisable at the time of such cessation of Board service.
c. However, the option shall, immediately upon the
Optionee's cessation of Board service, terminate and cease to be
outstanding with respect to any and all option shares for which the
option is not otherwise at that time exercisable or for which it is
not otherwise to become exercisable in accordance with clause a.
above.
ANNUAL 7,500-SHARE GRANT
a. The option shall become exercisable for all of the
option shares on the first anniversary of the grant date, whether or
not the Optionee continues in Board service, and shall remain so
exercisable for any or all of those shares until the expiration date
of the Post-Service Exercise Period.
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b. Should the Optionee die after his or her cessation of
Board service but while holding one or more automatic option grants
under this Article Three, then the personal representative of the
Optionee's estate or the person or persons to whom the option is
transferred pursuant to the Optionee's will or in accordance with the
laws of descent and distribution shall have the remainder of the
applicable Post-Service Exercise Period in which to exercise each such
option in accordance with the parameters established for the Optionee
in Paragraph 1.
c. Should the Optionee cease to serve as a Board member by
reason of death or Permanent Disability while holding one or more
automatic option grants under this Article Three, then such individual
(or the personal representative of the Optionee's estate or by the
person or persons to whom the option is transferred pursuant to the
Optionee's will or in accordance with the laws of descent and
distribution) shall have a twelve (12)-month period following the date
of such cessation of Board service in which to exercise each such
option for any or all of the option shares at the time subject to the
option, whether or not the option would otherwise at that time be
exercisable for those shares.
2. In no event shall any automatic grant under this Article
Three remain exercisable after the expiration date of the ten (10)-year option
term.
H. STOCKHOLDER RIGHTS. The holder of an automatic option grant
under this Article Three shall have none of the rights of a stockholder with
respect to any shares subject to such option until such individual shall have
exercised the option and paid the exercise price for the purchased shares.
I. REMAINING TERMS. The remaining terms and conditions of each
automatic option grant shall be as set forth in the form Automatic Stock Option
Agreement attached as Exhibit A.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction, each Article Three
option, to the extent outstanding at the time but not otherwise fully
exercisable, shall automatically accelerate so that each such option shall,
immediately prior to the specified effective date for the Corporate Transaction,
become exercisable for all of the shares of Common Stock at the time subject to
such option and may be exercised for all or any portion of such shares as
fully-vested shares. Immediately following the consummation of the Corporate
Transaction, all automatic option grants under this Article Three shall
terminate and cease to be outstanding, except to the extent assumed by the
acquiring company (or parent thereof).
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<PAGE>
B. In connection with any Change in Control of the Corporation, each
Article Three option, to the extent outstanding at the time but not otherwise
fully exercisable, shall automatically accelerate so that each such option
shall, immediately prior to the specified effective date for the Change in
Control, become exercisable for all of the shares of Common Stock at the time
subject to such option and may be exercised for all or any portion of such
shares as fully-vested shares. Each such option shall remain so exercisable for
all the option shares following the Change in Control, until the expiration or
sooner termination of the option term.
C. Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each
Article Three option held by him or her. The Optionee shall in return be
entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the shares of Common Stock at the time
subject to the surrendered option (whether or not the option is otherwise at the
time exercisable for those shares) over (ii) the aggregate exercise price
payable for such shares. Such cash distribution shall be paid within five (5)
days following the surrender of the option to the Corporation. At the time of
each Article Three option grant, the Board shall concurrently pre-approve any
subsequent surrender of that option in accordance with the provisions of this
Section III.C, and no additional approval of the Board or any Plan Administrator
shall accordingly be required at the time of the actual option surrender and
cash distribution. The shares of Common Stock subject to each option
surrendered in connection with the Hostile Take-Over shall NOT be available for
subsequent issuance under the Plan.
D. The automatic option grants outstanding under this Article Three
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
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ARTICLE FOUR
STOCK ISSUANCE PROGRAM
IV. TERMS AND CONDITIONS OF STOCK ISSUANCES
Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate purchases without any intervening stock option
grants. The issued shares shall be evidenced by a Stock Issuance Agreement
("Issuance Agreement") that complies with the terms and conditions of this
Article Four.
A. CONSIDERATION.
1. Shares of Common Stock drawn from the Corporation's
authorized but unissued shares of Common Stock ("Newly Issued Shares") shall be
issued under the Stock Issuance Program for one or more of the following items
of consideration which the Plan Administrator may deem appropriate in each
individual instance:
a. full payment in cash or check made payable to the
Corporation's order;
b. a promissory note payable to the Corporation's
order in one or more installments, which may be subject to
cancellation in whole or in part upon terms and conditions established
by the Plan Administrator; or
c. past services rendered to the Corporation or any
parent or subsidiary corporation.
2. Newly Issued Shares may, in the absolute discretion of the
Plan Administrator, be issued for consideration with a value less than one
hundred percent (100%) of the Fair Market Value of such shares at the time of
issuance, but in no event less than eighty-five percent (85%) of such Fair
Market Value.
3. Shares of Common Stock reacquired by the Corporation and
held as treasury shares ("Treasury Shares") may be issued under the Stock
Issuance Program for such consideration (including one or more of the items of
consideration specified in subparagraph 1 above) as the Plan Administrator may
deem appropriate, whether such consideration is in an amount less than, equal to
or greater than the Fair Market Value of the Treasury Shares at the time of
issuance. Treasury Shares may, in lieu of any cash consideration, be issued
subject to such vesting requirements tied to the Participant's period
23.
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of future Service or the Corporation's attainment of specified performance
objectives as the Plan Administrator may establish at the time of issuance.
B. VESTING PROVISIONS.
1. Shares of Common Stock issued under the Stock Issuance
Program may, in the absolute discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or more installments over
the Participant's period of Service. The elements of the vesting schedule
applicable to any unvested shares of Common Stock issued under the Stock
Issuance Program, namely:
a. the Service period to be completed by the
Participant or the performance objectives to be achieved by the
Corporation,
b. the number of installments in which the shares are
to vest,
c. the interval or intervals (if any) which are to
lapse between installments, and
d. the effect which death, Permanent Disability or
other event designated by the Plan Administrator is to have upon the
vesting schedule,
shall be determined by the Plan Administrator and incorporated into the Issuance
Agreement executed by the Corporation and the Participant at the time such
unvested shares are issued.
2. The Participant shall have full stockholder rights with
respect to any shares of Common Stock issued to him or her under the Plan,
whether or not his or her interest in those shares is vested. Accordingly, the
Participant shall have the right to vote such shares and to receive any regular
cash dividends paid on such shares. Any new, additional or different shares of
stock or other property (including money paid other than as a regular cash
dividend) which the Participant may have the right to receive with respect to
his or her unvested shares by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration or by reason of any Corporate Transaction shall be
issued, subject to (i) the same vesting requirements applicable to his or her
unvested shares and (ii) such escrow arrangements as the Plan Administrator
shall deem appropriate.
3. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock under the Stock Issuance
Program, then those shares shall be immediately surrendered to the Corporation
and made available for
24.
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subsequent issuance. The Participant shall have no further stockholder rights
with respect to those shares. To the extent the surrendered shares were
previously issued to the Participant for consideration paid in cash or cash
equivalent (including the Participant's purchase-money promissory note), the
Corporation shall repay to the Participant the cash consideration paid for the
surrendered shares and shall cancel the unpaid principal balance of any
outstanding purchase-money note of the Participant attributable to such
surrendered shares. The surrendered shares may, at the Plan Administrator's
discretion, be retained by the Corporation as Treasury Shares or may be retired
to authorized but unissued share status.
4. The Plan Administrator may in its discretion elect to waive
the surrender and cancellation of one or more unvested shares of Common Stock
(or other assets attributable thereto) which would otherwise occur upon the
non-completion of the vesting schedule applicable to such shares. Such waiver
shall result in the immediate vesting of the Participant's interest in the
shares of Common Stock as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the Participant's cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.
V. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. Upon the occurrence of any Corporate Transaction, all unvested
shares of Common Stock at the time outstanding under this Stock Issuance Program
shall immediately vest in full and the Corporation's repurchase rights shall
terminate, except to the extent: (i) any such repurchase right is expressly
assigned to the successor corporation (or parent thereof) in connection with the
Corporate Transaction or (ii) such termination is precluded by other limitations
imposed in the Issuance Agreement.
B. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the stock issuance is made or at any time while
that issuance remains outstanding, to provide for the automatic vesting of one
or more unvested shares outstanding under the Stock Issuance Program (and the
immediate termination of the Corporation's repurchase rights with respect to
those shares) at the time of a Change in Control. The Plan Administrator shall
also have full power and authority to condition any such accelerated vesting
upon the subsequent termination of the Participant's Service within a specified
period following the Change in Control.
VI. TRANSFER RESTRICTIONS/SHARE ESCROW
A. Unvested shares may, in the Plan Administrator's discretion, be
held in escrow by the Corporation until the Participant's interest in such
shares vests or may be issued directly to the Participant with restrictive
legends on the certificates evidencing such unvested shares. To the extent an
escrow arrangement is utilized, the unvested shares and any securities or other
assets distributed with respect to such shares (other than regular cash
dividends) shall be delivered in escrow to the Corporation to be held until the
Participant's
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interest in such shares (or the distributed securities or assets) vests. If the
unvested shares are issued directly to the Participant, the restrictive legend
on the certificates for such shares shall read substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE UNVESTED AND ARE
ACCORDINGLY SUBJECT TO (I) CERTAIN TRANSFER RESTRICTIONS AND (II)
CANCELLATION OR REPURCHASE IN THE EVENT THE REGISTERED HOLDER (OR
HIS/HER PREDECESSOR IN INTEREST) CEASES TO REMAIN IN THE
CORPORATION'S SERVICE. SUCH TRANSFER RESTRICTIONS AND THE TERMS
AND CONDITIONS OF SUCH CANCELLATION OR REPURCHASE ARE SET FORTH
IN A STOCK ISSUANCE AGREEMENT BETWEEN THE CORPORATION AND THE
REGISTERED HOLDER (OR HIS/HER PREDECESSOR IN INTEREST) DATED
, 199 , A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF THE CORPORATION."
B. The Participant shall have no right to transfer any unvested
shares of Common Stock issued to him or her under the Stock Issuance Program.
For purposes of this restriction, the term "transfer" shall include (without
limitation) any sale, pledge, assignment, encumbrance, gift or other disposition
of such shares, whether voluntary or involuntary. Upon any such attempted
transfer, the unvested shares shall immediately be cancelled in accordance with
substantially the same procedure in effect under Section I.B.3 of this Article
Four, and neither the Participant nor the proposed transferee shall have any
rights with respect to such cancelled shares. However, the Participant shall
have the right to make a gift of unvested shares acquired under the Stock
Issuance Program to his or her spouse or issue, including adopted children, or
to a trust established for such spouse or issue, provided the donee of such
shares delivers to the Corporation a written agreement to be bound by all the
provisions of the Stock Issuance Program and the Issuance Agreement applicable
to the gifted shares.
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ARTICLE FIVE
MISCELLANEOUS
I. LOANS OR INSTALLMENT PAYMENTS
A. The Plan Administrator may, in its discretion, assist any
Optionee or Participant, to the extent such Optionee or Participant is an
Employee (including an Optionee or Participant who is an officer of the
Corporation), in the exercise of one or more options granted to such Optionee
under the Discretionary Option Grant Program or the purchase of one or more
shares issued to such Participant under the Stock Issuance Program, including
the satisfaction of any Federal, state and local income and employment tax
obligations arising therefrom, by (i) authorizing the extension of a loan from
the Corporation to such Optionee or Participant or (ii) permitting the Optionee
or Participant to pay the exercise price or purchase price for the purchased
shares in installments over a period of years. The terms of any loan or
installment method of payment (including the interest rate and terms of
repayment) shall be upon such terms as the Plan Administrator specifies in the
applicable option or issuance agreement or otherwise deems appropriate under the
circumstances. Loans or installment payments may be authorized with or without
security or collateral. However, the maximum credit available to the Optionee
or Participant may not exceed the exercise or purchase price of the acquired
shares (less the par value of such shares) plus any Federal, state and local
income and employment tax liability incurred by the Optionee or Participant in
connection with the acquisition of such shares.
B. The Plan Administrator may, in its absolute discretion, determine
that one or more loans extended under this financial assistance program shall be
subject to forgiveness by the Corporation in whole or in part upon such terms
and conditions as the Plan Administrator may deem appropriate.
II. AMENDMENT OF THE PLAN AND AWARDS
A. The Board has complete and exclusive power and authority to amend
or modify the Plan (or any component thereof) in any or all respects whatsoever.
However, no such amendment or modification shall adversely affect rights and
obligations with respect to options at the time outstanding under the Plan, nor
adversely affect the rights of any Participant with respect to Common Stock
issued under the Stock Issuance Program prior to such action, unless the
Optionee or Participant consents to such amendment. In addition, certain
amendments may require stockholder approval in accordance with applicable laws
and regulations.
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B. (i) Options to purchase shares of Common Stock may be granted
under the Discretionary Option Grant Program and (ii) shares of Common Stock may
be issued under the Stock Issuance Program, which are in both instances in
excess of the number of shares then available for issuance under the Plan,
provided any excess shares actually issued under the Discretionary Option Grant
Program or the Stock Issuance Program are held in escrow until stockholder
approval is obtained for a sufficient increase in the number of shares available
for issuance under the Plan. If such stockholder approval is not obtained
within twelve (12) months after the date the first such excess option grants or
excess share issuances are made, then (i) any unexercised excess options shall
terminate and cease to be exercisable and (ii) the Corporation shall promptly
refund the purchase price paid for any excess shares actually issued under the
Plan and held in escrow, together with interest (at the applicable Short Term
Federal Rate) for the period the shares were held in escrow.
III. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common Stock
upon the exercise of stock options for such shares or the vesting of such shares
under the Plan shall be subject to the satisfaction of all applicable Federal,
state and local income and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion and in accordance
with the provisions of this Section III and such supplemental rules as the Plan
Administrator may from time to time adopt (including the applicable safe-harbor
provisions of Securities and Exchange Commission Rule 16b-3), provide any or all
holders of Non-Statutory Options (other than the automatic option grants made
pursuant to Article Three of the Plan) or unvested shares under the Plan with
the right to use shares of the Corporation's Common Stock in satisfaction of all
or part of the Federal, state and local income and employment tax liabilities
incurred by such holders in connection with the exercise of their options or the
vesting of their shares (the "Taxes"). Such right may be provided to any such
holder in either or both of the following formats:
STOCK WITHHOLDING: The holder of the Non-Statutory Option or
unvested shares may be provided with the election to have the Corporation
withhold, from the shares of Common Stock otherwise issuable upon the
exercise of such Non-Statutory Option or the vesting of such shares, a
portion of those shares with an aggregate Fair Market Value to exceed one
hundred percent (100%) of the applicable Taxes.
STOCK DELIVERY: The Plan Administrator may, in its discretion,
provide the holder of the Non-Statutory Option or the unvested shares with
the election to deliver to the Corporation, at the time the Non-Statutory
Option is exercised or the shares vest, one or more shares of Common Stock
previously acquired by such individual (other than in connection with the
option exercise or share vesting
28.
<PAGE>
triggering the Taxes) with an aggregate Fair Market Value not to exceed one
hundred percent (100%) of the Taxes incurred in connection with such option
exercise or share vesting.
IV. EFFECTIVE DATE AND TERM OF PLAN
A. This Plan became effective immediately upon adoption by the Board
of Directors of Gasonics California. This Plan was subsequently assumed by the
Corporation in connection with the Merger. Stock options and share issuances
may be made under Articles Two and Four of the Plan from and after the Effective
Date.
B. The Plan was amended by the Board on September 21, 1994 to (i)
increase the number of shares of Common Stock issuable under the Plan by an
additional 500,000 shares(4) and (ii) increase the maximum number of shares of
Common Stock for which any one individual may be granted stock options and
direct stock issuances under the Plan by an additional 250,000 shares(4) (the
"1994 Amendment"). The stockholders approved the 1994 Amendment at the 1995
Annual Meeting which was held on February 14, 1995. The Plan was subsequently
restated by the Board on July 19, 1995 to revise the provisions of the Automatic
Option Grant Program in effect under Article III (the "June 1995 Restatement")
and was amended in November 1995 to increase the number of shares available for
issuance under the Plan by an additional 750,000 shares (the "November 1995
Increase"). Both the June 1995 and the November 1995 Share Increase were
approved by the stockholders at the 1996 Annual Meeting. The Plan was
subsequently amended on December 17, 1996 (the "December 1996 Amendment") to
effect the following changes: (i) increase the number of shares of Common Stock
authorized for issuance over the term of the Plan by an additional 500,000
shares, (ii) render the non-employee Board members eligible to receive option
grants and direct stock issuances under the Discretionary Option Grant and Stock
Issuance Programs, (iii) allow unvested shares issued under the Plan and
subsequently repurchased by the Corporation at the option exercise price or
issue price paid per share to be reissued under the Plan and (iv) effect a
series of technical changes to the provisions of the Plan in order to take
advantage of the recent amendments to Rule 16b-3 of the Securities Exchange Act
of 1934 which exempts certain officer and director transactions under the Plan
from the short-swing liability provisions of the federal securities laws. The
December 1996 Amendment is subject to stockholder approval at the 1997 Annual
Meeting, and no option grants made on the basis of the December 1996 share
increase shall become exercisable in whole or in part unless and until the
December 1996 Amendment is approved by the stockholders. Should such
stockholder approval not be obtained at the 1997 Annual Meeting, then each
option grant made pursuant to the
____________________
(4) The numbers do not reflect the 3-for-2 split of the Common Stock effected
by the Corporation on November 20, 1995.
29.
<PAGE>
December 1996 share increase shall terminate and cease to remain outstanding,
and no further option grants shall be made on the basis of that share increase.
However, the provisions of the Plan as in effect immediately prior to the
December 1996 Amendment shall automatically be reinstated, and option grants and
direct stock issuances may thereafter continue to be made pursuant to the
reinstated provisions of the Plan. All option grants and direct stock issuances
made prior to the December 1996 Amendment shall remain outstanding in accordance
with the terms and conditions of the respective instruments evidencing those
options or issuances, and nothing in the December 1996 Amendment shall be deemed
to modify or in any way affect those outstanding options or issuances. Subject
to the foregoing limitations, the Plan Administrator may make option grants and
direct stock issuances under the Plan at any time before the date fixed herein
for the termination of the Plan.
C. The Plan was amended on February 1, 1996 to authorize the
appointment of the Secondary Committee for purposes of administering the
Discretionary Option Grant and Stock Issuance Programs with respect to
individuals who are non Section 16 Insiders. The Primary Committee shall also
retain separate but concurrent authority to administer the Discretionary Option
Grant and Stock Issuance Programs with respect to such individuals.
D. The Plan shall terminate upon the EARLIER of (i) December 31,
2003 or (ii) the date on which all shares available for issuance under the Plan
shall have been issued or cancelled pursuant to the exercise, surrender or
cash-out of the options granted under the Plan or the issuance of shares
(whether vested or unvested) under the Stock Issuance Program. If the date of
termination is determined under clause (i) above, then all option grants and
unvested share issuances outstanding on such date shall thereafter continue to
have force and effect in accordance with the provisions of the instruments
evidencing such grants or issuances.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
pursuant to option grants or share issuances under the Plan shall be used for
general corporate purposes.
VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any stock option
or stock appreciation right under the Plan, the issuance of any shares under the
Stock Issuance Program and the issuance of Common Stock upon the exercise of the
stock options or stock appreciation rights granted hereunder shall be subject to
the Corporation's procurement of all approvals and permits required by
regulatory authorities having jurisdiction over the Plan, the stock options and
stock appreciation rights granted under it and the Common Stock issued pursuant
to it.
30.
<PAGE>
B. No shares of Common Stock or other assets shall be issued or
delivered under this Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any securities exchange on which the Common Stock is then listed for trading.
VII. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing the Plan, nor
any action taken by the Plan Administrator hereunder, nor any provision of the
Plan shall be construed so as to grant any individual the right to remain in the
Service of the Corporation (or any parent or subsidiary corporation) for any
period of specific duration, and the Corporation (or any parent or subsidiary
corporation retaining the services of such individual) may terminate such
individual's Service at any time and for any reason, with or without cause.
VIII. MISCELLANEOUS PROVISIONS
A. Except to the extent otherwise expressly provided in the Plan,
the right to acquire Common Stock or other assets under the Plan may not be
assigned, encumbered or otherwise transferred by any Optionee or Participant.
B. The provisions of the Plan relating to the exercise of options
and the vesting of shares shall be governed by the laws of the State of
California without resort to that State's conflict-of-laws rules, as such laws
are applied to contracts entered into and performed in such State.
C. The provisions of the Plan shall inure to the benefit of, and be
binding upon, the Corporation and its successors or assigns, whether by
Corporate Transaction or otherwise, and the Participants and Optionees, the
legal representatives of their respective estates, their respective heirs or
legatees and their permitted assignees.
31.
<PAGE>
GASONICS INTERNATIONAL CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED AND RESTATED EFFECTIVE DECEMBER 17, 1996)
I. PURPOSE
A. The GaSonics International Corporation Employee Stock Purchase
Plan (the "Plan") is intended to provide eligible employees of the Corporation
and one or more of its Corporate Affiliates with the opportunity to acquire a
proprietary interest in the Corporation through participation in a
payroll-deduction based employee stock purchase plan designed to qualify under
Section 423 of the Code.
B. The Plan was adopted on January 27, 1994 by the Board of
Directors of Gasonics International Corporation, a California corporation
("Gasonics California"). The Plan was subsequently assumed by the Corporation
in connection with the merger of Gasonics California with and into the
Corporation in February 1994.
II. DEFINITIONS
For purposes of administration of the Plan, the following terms shall
have the meanings indicated:
BASE SALARY means the regular base salary paid to a Participant by one
or more Participating Companies during such individual's period of participation
in the Plan, plus any pre-tax contributions made by the Participant to any Code
Section 401(k) salary deferral plan or any Code Section 125 cafeteria benefit
program now or hereafter established by the Corporation or any Corporate
Affiliate. The following items of compensation shall NOT be included in Base
Salary: (i) all overtime payments, bonuses, commissions (other than those
functioning as base salary equivalents), profit-sharing distributions and other
incentive-type payments and (ii) any and all contributions (other than Code
Section 401(k) or Code Section 125 contributions) made on the Participant's
behalf by the Corporation or one or more Corporate Affiliates under any employee
benefit or welfare plan now or hereafter established.
BOARD means the Board of Directors of the Corporation.
CODE means the Internal Revenue Code of 1986, as periodically amended.
COMMON STOCK means shares of the Corporation's common stock, par value
$0.001 per share.
<PAGE>
CORPORATE AFFILIATE means any parent or subsidiary corporation of the
Corporation (as determined in accordance with Code Section 424), including any
parent or subsidiary corporation which becomes such after the Effective Time.
CORPORATION means GaSonics International Corporation, a Delaware
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of GaSonics International Corporation which shall by
appropriate action adopt the Plan.
EFFECTIVE TIME means the time at which the Underwriting Agreement for
the initial public offering of the Common Stock is executed and finally priced.
The initial offering period under the Plan shall start at the time of such
execution and pricing of the Underwriting Agreement. Any Corporate Affiliate
which becomes a Participating Corporation in the Plan after such Effective Time
shall designate a subsequent Effective Time with respect to its
employee-Participants.
ELIGIBLE EMPLOYEE means any person who is engaged, on a
regularly-scheduled basis of more than twenty (20) hours per week for more than
five (5) months per calendar year, in the rendition of personal services to the
Corporation or any other Participating Corporation as an employee for earnings
considered wages under Section 3401(a) of the Code.
ENTRY DATE means the Semi-Annual Entry Date on which an Eligible
Employee first joins the offering period in effect under the Plan. However, the
first Entry Date for the initial offering period under the Plan shall be the
Effective Time.
FAIR MARKET VALUE means, for the Effective Time at which the initial
offering period under the Plan begins, the price per share at which the Common
Stock is to be sold in the initial public offering of the Common Stock pursuant
to the Underwriting Agreement. For any subsequent date under the Plan on which
the Common Stock is registered under Section 12(g) of the 1934 Act and traded on
the open market, Fair Market Value means the closing selling price per share of
the Common Stock on such date, as officially quoted on the principal securities
exchange on which the Common Stock is at the time traded or, if not traded on
any securities exchange, the closing selling price per share of the Common Stock
on such date, as reported on the Nasdaq National Market System. If there are no
sales of the Common Stock on such day, then the closing selling price per share
on the next preceding day for which such closing selling price is quoted shall
be determinative of Fair Market Value.
1933 ACT means the Securities Act of 1933, as amended.
1934 ACT means the Securities Exchange Act of 1934, as amended.
2.
<PAGE>
PARTICIPANT means any Eligible Employee of a Participating Corporation
who is actively participating in the Plan.
PARTICIPATING CORPORATION means the Corporation and such Corporate
Affiliate or Affiliates as may be authorized from time to time by the Board to
extend the benefits of the Plan to their Eligible Employees. The Participating
Corporations in the Plan, as of the Effective Time, are listed in attached
Schedule A.
PLAN ADMINISTRATOR shall have the meaning given such term in Article
III.
SEMI-ANNUAL ENTRY DATE means the first business day of January and
July each calendar year within an offering period in effect under the Plan.
However, the first Semi-Annual Entry Date for the initial offering period under
the Plan shall be deemed to be the Effective Time.
SEMI-ANNUAL PERIOD OF PARTICIPATION means each semi-annual period for
which the Participant actually participates in an offering period in effect
under the Plan. There shall be a maximum of four (4) semi-annual periods of
participation within each offering period. The first such semi-annual period
(which may actually be less than six (6) months for the initial offering period)
shall extend from the Effective Time through the last business day in June 1994.
Subsequent semi-annual periods shall be measured from the first business day of
July to the last business day of December each calendar year and from the first
business day of January in the succeeding calendar year to the last business day
of June in that calendar year.
SEMI-ANNUAL PURCHASE DATE means the last business day of June and
December each calendar year on which shares of Common Stock are automatically
purchased for Participants under the Plan. The initial Semi-Annual Purchase
Date shall be June 30, 1994.
III. ADMINISTRATION
The Plan Administrator shall have sole and exclusive authority to
administer the Plan and shall consist of a committee (the "Plan Administrator")
of two (2) or more non-employee Board members appointed by the Board. The Plan
Administrator shall have full authority to interpret and construe any provision
of the Plan and to adopt such rules and regulations for administering the Plan
as it may deem necessary in order to comply with the requirements of Code
Section 423. Decisions of the Plan Administrator shall be final and binding on
all parties who have an interest in the Plan.
3.
<PAGE>
IV. OFFERING PERIODS
A. Shares of Common Stock shall be offered for purchase under the
Plan through a series of successive offering periods until such time as (i) the
maximum number of shares of Common Stock available for issuance under the Plan
shall have been purchased or (ii) the Plan shall have been sooner terminated in
accordance with Subsection I of Article VII, Subsection A of Article IX or
Subsection B of Article X.
B. Each offering period shall have a maximum duration of twenty-four
(24) months. The duration of each offering period shall be designated by the
Plan Administrator prior to the start date. However, the initial offering
period shall run from the Effective Time to the last business day in December
1995. The next offering period shall commence on the first business day in
January 1996 and end on the last business day in December 1997. Subsequent
offering periods shall commence as designated by the Plan Administrator.
C. The Participant shall be granted a separate purchase right for
each offering period in which he or she participates. The purchase right shall
be granted on the Entry Date on which such individual first joins the offering
period in effect under the Plan and shall be automatically exercised in
successive semi-annual installments on the last business day of June and
December of each year. Accordingly, each purchase right may be exercised up to
two (2) times each calendar year it remains outstanding.
D. No purchase rights granted under the Plan shall be exercised, and
no shares of Common Stock shall be issued hereunder, until such time as (i) the
Plan shall have been approved by the stockholders of Gasonics California and
(ii) the Corporation shall have complied with all applicable requirements of the
1933 Act (including the registration of the shares of Common Stock issuable
under the Plan on a Form S-8 registration statement filed with the Securities
and Exchange Commission), all applicable listing requirements of any securities
exchange on which the Common Stock is listed for trading and all other
applicable requirements established by law or regulation.
E. The Participant's acquisition of Common Stock under the Plan on
any Semi-Annual Purchase Date shall neither limit nor require the Participant's
acquisition of Common Stock on any subsequent Semi-Annual Purchase Date, whether
within the same or a different offering period.
V. ELIGIBILITY AND PARTICIPATION
A. Each Eligible Employee of a Participating Corporation shall be
eligible to participate in the Plan in accordance with the following provisions:
- An individual who is an Eligible Employee on the start date of
any offering period under the Plan shall be eligible to commence
participation in that
4.
<PAGE>
offering period on such start date or on any subsequent Semi-Annual Entry
Date within that offering period. The date on which the Eligible Employee
commences participation in the offering period shall constitute his/her
Entry Date for that offering period, and on that date such individual shall
be granted his/her purchase right for the offering period.
- An individual who first becomes an Eligible Employee after the
start date of any offering period under the Plan may enter that offering
period on the first Semi-Annual Entry Date on which he/she is an Eligible
Employee or on any subsequent Semi-Annual Entry Date within that offering
period, provided he/she remains an Eligible Employee. The Semi-Annual
Entry Date on which such Eligible Employee enters the offering period shall
constitute his/her Entry Date for that offering period, and on that date
such individual shall be granted his/her purchase right for the offering
period.
B. To participate in the Plan for a particular offering period, the
Eligible Employee must complete the enrollment forms prescribed by the Plan
Administrator (including a purchase agreement and a payroll deduction
authorization) and file such forms with the Plan Administrator (or its
designate) on or before his/her scheduled Entry Date.
C. The payroll deduction authorized by the Participant for purposes
of acquiring shares of Common Stock under the Plan may be any multiple of one
percent (1%) of the Base Salary paid to the Participant during each Semi-Annual
Period of Participation within the offering period, up to a maximum of fifteen
percent (15%). The deduction rate so authorized shall continue in effect for
the remainder of the offering period, except to the extent such rate is changed
in accordance with the following guidelines:
- The Participant may, at any time during a Semi-Annual Period
of Participation, reduce his/her rate of payroll deduction to become
effective as soon as possible after filing of the requisite reduction
form with the Plan Administrator. The Participant may not, however,
effect more than one such reduction per Semi-Annual Period of
Participation.
- The Participant may, prior to the commencement of any new
Semi-Annual Period of Participation within the offering period, increase the
rate of his/her payroll deduction by filing the appropriate form with the
Plan Administrator. The new rate (which may not exceed the fifteen percent
(15%) maximum) shall become effective as of the first day of the first
Semi-Annual Period of Participation following the filing of such form.
D. Payroll deductions will automatically cease upon the termination
of the Participant's purchase right in accordance with the applicable provisions
of Section VII below.
5.
<PAGE>
VI. STOCK SUBJECT TO PLAN
A. The Common Stock purchasable under the Plan shall, solely in the
discretion of the Plan Administrator, be made available from either authorized
but unissued shares of Common Stock or from shares of Common Stock reacquired by
the Corporation, including shares of Common Stock purchased on the open market.
The total number of shares of Common Stock which may be issued under the Plan
shall not exceed 1,100,000 shares(1)(subject to adjustment under Section VI.B
below). Such share reserve includes (i) the 400,000 share-increase(1)
authorized by the Board on November 6, 1995 and approved by the stockholders
at the 1996 Annual Stockholders Meeting plus (ii) an additional 400,000 share
increase authorized by the Board on December 17, 1996, subject to stockholder
approval at the 1997 Annual Stockholders Meeting. No shares of Common Stock
shall be issued under the Plan on the basis of the December 1996 share
increase unless that increase is approved by the stockholders at the 1997
Annual Meeting, and in no event shall more than 773,695 shares of Common
Stock be issued after November 15, 1996, assuming stockholder approval of the
December 1996 share increase.
B. In the event any change is made to the Corporation's outstanding
Common Stock by reason of any stock dividend, stock split, exchange or
combination of shares, recapitalization or any other change affecting the Common
Stock as a class without the Corporation's receipt of consideration, appropriate
adjustments shall be made by the Plan Administrator to (i) the class and maximum
number of securities issuable over the term of the Plan, (ii) the class and
maximum number of securities purchasable per Participant on any one Semi-Annual
Purchase Date and (iii) the class and number of securities and the price per
share in effect under each purchase right at the time outstanding under the
Plan. Such adjustments shall be designed to preclude the dilution or
enlargement of rights and benefits under the Plan.
VII. PURCHASE RIGHTS
An Eligible Employee who participates in the Plan for a particular
offering period shall have the right to purchase shares of Common Stock, in a
series of successive semi-annual installments during such offering period, upon
the terms and conditions set forth below and shall execute a purchase agreement
embodying such terms and conditions and such other provisions (not inconsistent
with the Plan) as the Plan Administrator may deem advisable.
A. PURCHASE PRICE. Common Stock shall be purchasable on each
Semi-Annual Purchase Period within the offering period at a purchase price equal
to eighty-five percent (85%) of the LOWER of (i) the Fair Market Value per share
of Common Stock on the
_____________________
(1) Each number reflects the 3-for-2-split of the Common Stock effected by the
Corporation on November 20, 1995
6.
<PAGE>
Participant's Entry Date into that offering period or (ii) the Fair Market Value
per share on that Semi-Annual Purchase Date. However, for each Participant
whose Entry Date is other than the start date of the offering period, the clause
(i) amount shall in no event be less than the Fair Market Value of the Common
Stock on the start date of that offering period.
B. NUMBER OF PURCHASABLE SHARES. The number of shares purchasable
per Participant on each Semi-Annual Purchase Date during the offering period
shall be the number of whole shares obtained by dividing the amount collected
from the Participant through payroll deductions during the Semi-Annual Period of
Participation ending with that Semi-Annual Purchase Date (together with any
carryover deductions from the preceding Semi-Annual Period of Participation) by
the purchase price in effect for the Participant for such Semi-Annual Purchase
Date. However, the maximum number of shares of Common Stock purchasable per
Participant on any Semi-Annual Purchase Date shall not exceed One Thousand Eight
Hundred (1,800) shares(2), subject to periodic adjustment under Section VI.B.
Under no circumstances shall purchase rights be granted under the Plan
to any Eligible Employee if such individual would, immediately after the grant,
own (within the meaning of Code Section 424(d)) or hold outstanding options or
other rights to purchase, stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the Corporation
or any of its Corporate Affiliates.
C. PAYMENT. Payment for the Common Stock purchased under the Plan
shall be effected by means of the Participant's authorized payroll deductions.
Such deductions shall begin on the first pay day following the Participant's
Entry Date into the offering period and shall (unless sooner terminated by the
Participant) continue through the pay day ending with or immediately prior to
the last day of the offering period. The amounts so collected shall be credited
to the Participant's book account under the Plan, but no interest shall be paid
on the balance from time to time outstanding in such account. The amounts
collected from the Participant shall not be held in any segregated account or
trust fund and may be commingled with the general assets of the Corporation and
used for general corporate purposes.
D. TERMINATION OF PURCHASE RIGHT. The following provisions shall
govern the termination of outstanding purchase rights:
- A Participant may, at any time prior to the next Semi-Annual
Purchase Date, terminate his/her outstanding purchase right under the Plan
by filing the prescribed notification form with the Plan Administrator (or
its designate), and no
___________________________
(2) Such number reflects the 3-for-2 split of the Common Stock effected by the
Corporation on November 20, 1995.
7.
<PAGE>
further payroll deductions shall be collected from the Participant with
respect to the terminated purchase right. Any payroll deductions collected
for the Semi-Annual Period of Participation in which such termination
occurs shall, at the Participant's election, be immediately refunded or
held for the purchase of shares on the Semi-Annual Purchase Date
immediately following such termination. If no such election is made at the
time such purchase right is terminated, then the payroll deductions
collected with respect to the terminated right shall be refunded as soon as
possible.
- The termination of such purchase right shall be irrevocable, and
the Participant may not subsequently rejoin the offering period for which
the terminated purchase right was granted. In order to resume
participation in any subsequent offering period, such individual must
re-enroll in the Plan (by making a timely filing of a new stock purchase
agreement and enrollment form) on or before his/her scheduled Entry Date
into that offering period.
- Should the Participant cease to remain an Eligible Employee for
any reason (including death, disability or change in status) while his/her
purchase right remains outstanding, then that purchase right shall
immediately terminate and all of the Participant's payroll deductions for
the Semi-Annual Period of Participation in which such cessation of Eligible
Employee status occurs shall be immediately refunded.
E. STOCK PURCHASE. Shares of Common Stock shall automatically be
purchased on behalf of each Participant (other than Participants whose payroll
deductions have previously been refunded in accordance with the Termination of
Purchase Right provisions above) on each Semi-Annual Purchase Date. The
purchase shall be effected by applying each Participant's payroll deductions for
the Semi-Annual Period of Participation ending on such Semi-Annual Purchase Date
(together with any carryover deductions from the preceding Semi-Annual Period of
Participation) to the purchase of whole shares of Common Stock (subject to the
limitation on the maximum number of purchasable shares imposed under subsection
B. of this Article VII) at the purchase price in effect for the Participant for
that Semi-Annual Purchase Date. Any payroll deductions not applied to such
purchase because they are not sufficient to purchase a whole share shall be held
for the purchase of Common Stock on the next Semi-Annual Purchase Date.
However, any payroll deductions not applied to the purchase of Common Stock by
reason of the limitation on the maximum number of shares purchasable by the
Participant on the Semi-Annual Purchase Date shall be promptly refunded to the
Participant.
F. PRORATION OF PURCHASE RIGHTS. Should the total number of shares
of Common Stock which are to be purchased pursuant to outstanding purchase
rights on any particular date exceed the number of shares then available for
issuance under the Plan, the Plan Administrator shall make a pro-rata allocation
of the available shares on a uniform and nondiscriminatory basis, and the
payroll deductions of each Participant, to the extent in
8.
<PAGE>
excess of the aggregate purchase price payable for the Common Stock pro-rated to
such individual, shall be refunded to such Participant.
G. RIGHTS AS STOCKHOLDER. A Participant shall have no stockholder
rights with respect to the shares subject to his/her outstanding purchase right
until the shares are actually purchased on the Participant's behalf in
accordance with the applicable provisions of the Plan. No adjustments shall be
made for dividends, distributions or other rights for which the record date is
prior to the date of such purchase.
A Participant shall be entitled to receive, as soon as practicable
after each Semi-Annual Purchase Date, a stock certificate for the number of
shares purchased on the Participant's behalf. Such certificate may, upon the
Participant's request, be issued in the names of the Participant and his/her
spouse as community property or as joint tenants with right of survivorship.
Alternatively, the Participant may request the issuance of such certificate in
"street name" for immediate deposit in a Corporation-designated brokerage
account.
H. ASSIGNABILITY. No purchase right granted under the Plan shall be
assignable or transferable by the Participant other than by will or by the laws
of descent and distribution following the Participant's death, and during the
Participant's lifetime the purchase right shall be exercisable only by the
Participant.
I. CHANGE IN OWNERSHIP. Should any of the following transactions (a
"Change in Ownership") occur during the offering period:
- a merger or consolidation in which the Corporation is not the
surviving entity, except for a transaction the principal purpose of which
is to change the state in which the Corporation is incorporated,
- the sale, transfer or other disposition of all or substantially
all of the assets of the Corporation in complete liquidation or dissolution
of the Corporation, or
- any reverse merger in which the Corporation is the surviving
entity but in which securities possessing more than fifty percent (50%) of
the total combined voting power of the Corporation's outstanding securities
are transferred to a person or persons different from the persons holding
those securities immediately prior to such merger,
then all outstanding purchase rights under the Plan shall
automatically be exercised immediately prior to the effective date of such
Change in Ownership by applying the payroll deductions of each Participant for
the Semi-Annual Period of Participation in which such Change in Ownership occurs
to the purchase of whole shares of Common Stock at eighty-five percent (85%) of
the LOWER of (i) the Fair Market Value of
9.
<PAGE>
the Common Stock on the Participant's Entry Date into the offering period in
which such Change in Ownership occurs or (ii) the Fair Market Value of the
Common Stock immediately prior to the effective date of such Change in
Ownership. However, the applicable share limitations of Articles VII and VIII
shall continue to apply to any such purchase, and the clause (i) amount above
shall not, for any Participant whose Entry Date for the offering period is other
than the start date of that offering period, be less than the Fair Market Value
of the Common Stock on such start date.
The Corporation shall use its best efforts to provide at least ten
(10)-days prior written notice of the occurrence of any Change in Ownership, and
Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights in accordance with the applicable
provisions of this Article VII.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to acquire
Common Stock pursuant to any purchase right outstanding under this Plan if and
to the extent such accrual, when aggregated with (i) rights to purchase Common
Stock accrued under any other purchase right outstanding under this Plan and
(ii) similar rights accrued under other employee stock purchase plans (within
the meaning of Code Section 423) of the Corporation or its Corporate Affiliates,
would otherwise permit such Participant to purchase more than $25,000 worth of
stock of the Corporation or any Corporate Affiliate (determined on the basis of
the fair market value of such stock on the date or dates such rights are
granted) for each calendar year such rights are at any time outstanding.
B. For purposes of applying such accrual limitations, the right to
acquire Common Stock pursuant to each purchase right outstanding under the Plan
shall accrue as follows:
- The right to acquire Common Stock under each such purchase right
shall accrue in a series of successive semi-annual installments as and when
the purchase right first becomes exercisable for each such installment on
the last business day of each Semi-Annual Period of Participation for which
the right remains outstanding.
- No right to acquire Common Stock under any outstanding purchase
right shall accrue to the extent the Participant has already accrued in the
same calendar year the right to acquire Common Stock under one or more
other purchase rights at a rate equal to $25,000 worth of Common Stock
(determined on the basis of the Fair Market Value on the date or dates of
grant) for each calendar year during which one or more of those purchase
rights were at any time outstanding.
- If by reason of such accrual limitations, any purchase right of a
Participant does not accrue for a particular Semi-Annual Period of
Participation,
10.
<PAGE>
then the payroll deductions which the Participant made during that
Semi-Annual Period of Participation with respect to such purchase right
shall be promptly refunded.
C. In the event there is any conflict between the provisions of this
Article VIII and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article VIII shall be controlling.
IX. AMENDMENT AND TERMINATION
A. The Board may alter, amend, suspend or discontinue the Plan
following the close of any Semi-Annual Period of Participation. However, the
Board may not, without the approval of the Corporation's stockholders:
- materially increase the number of shares issuable under the Plan
or the maximum number of shares purchasable per Participant on any one
Semi-Annual Purchase Date, except that the Plan Administrator shall have
the authority, exercisable without such stockholder approval, to effect
adjustments to the extent necessary to reflect changes in the Corporation's
capital structure pursuant to Subsection B of Article VI; or
- alter the purchase price formula so as to reduce the purchase
price payable for the shares purchasable under the Plan; or
- materially increase the benefits accruing to Participants under
the Plan or materially modify the requirements for eligibility to
participate in the Plan.
B. The Corporation shall have the right, exercisable in the sole
discretion of the Plan Administrator, to terminate all outstanding purchase
rights under the Plan immediately following the close of any Semi-Annual Period
of Participation. Should the Corporation elect to exercise such right, then the
Plan shall terminate in its entirety. No further purchase rights shall
thereafter be granted or exercised, and no further payroll deductions shall
thereafter be collected, under the Plan.
X. GENERAL PROVISIONS
A. The Plan was initially adopted by the Board on January 27, 1994
and approved by the stockholders in March 1994. On November 6, 1995, the Board
authorized a 400,000 share increase(3) to the number of shares of Common Stock
available for issuance under the Plan, and stockholders approved that share
increase at the 1996 Annual Stockholders Meeting. On December 17, 1996, the
Board amended the Plan to increase the
___________________________
(3) As adjusted for the 3-for-2 split of the Common Stock effected on November
20, 1995.
11.
<PAGE>
number of shares of Common Stock reserved for issuance under the Plan by an
additional 400,000 shares. However, no purchase rights shall be granted under
the Plan on the basis of such share increase, and no shares of Common Stock
shall accordingly be issued on the basis of that increase, unless and until the
increase shall have been approved by the Corporation's stockholders at the 1997
Annual Stockholders Meeting. Should such stockholder approval not be obtained,
then the 400,000-share increase authorized by the Board on December 17, 1996
shall not be implemented. However, all outstanding purchase rights under the
Plan which have NOT been granted on the basis of that 400,000-share increase
shall remain outstanding in accordance with the terms and provisions of the
agreements evidencing those grants, whether or not stockholder approval of such
share increase is obtained.
B. On November 6, 1995, the Board also amended the Plan to allow
Eligible Employees to enter an offering period under the Plan on any Semi-Annual
Entry Date within that offering period on which they remain in Eligible Employee
status. Prior to such amendment, Eligible Employees were only allowed to enter
the offering period on the first Semi-Annual Entry Date on which they satisfied
such Eligible Employee requirement. The amendment is subject to stockholder
approval at the 1996 Annual Stockholders Meeting and shall not become effective
unless such stockholder approval is obtained.
C. The Plan shall terminate upon the EARLIER of (i) the last
business day in December 2003 or (ii) the date on which all shares available for
issuance under the Plan shall have been sold pursuant to purchase rights
exercised under the Plan.
D. All costs and expenses incurred in the administration of the Plan
shall be paid by the Corporation.
E. Neither the action of the Corporation in establishing the Plan,
nor any action taken under the Plan by the Board or the Plan Administrator, nor
any provision of the Plan itself shall be construed so as to grant any person
the right to remain in the employ of the Corporation or any of its Corporate
Affiliates for any period of specific duration, and such person's employment may
be terminated at any time, with or without cause.
F. The provisions of the Plan shall be governed by the laws of the
State of California without resort to that State's conflict-of-laws rules.
12.
<PAGE>
SCHEDULE A
CORPORATIONS PARTICIPATING IN
EMPLOYEE STOCK PURCHASE PLAN
AS OF THE EFFECTIVE TIME
GaSonics International Corporation
GaSonics International Europe Limited
GaSonics International Japan, Kabushiki Kaisha
GaSonics International Korea Corporation
Tekisco, Inc.
<PAGE>
PROXY GASONICS INTERNATIONAL CORPORATION PROXY
ANNUAL MEETING OF STOCKHOLDERS, MARCH 3, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
GASONICS INTERNATIONAL CORPORATION
The undersigned revokes all previous proxies, acknowledges receipt of the
Notice of the Annual Meeting of Stockholders to be held on March 3, 1997 and the
Proxy Statement and appoints Monte M. Toole and Dave Toole, and each of them, as
the Proxy of the undersigned, with full power of substitution, to vote all
shares of Common Stock of GaSonics International Corporation (the "Company")
which the undersigned is entitled to vote, either on his or her own behalf or on
behalf of any entity or entities, at the Annual Meeting of Stockholders of the
Company to be held at Techmart, 5201 Great America Parkway, Santa Clara,
California 95054, on Monday, March 3, 1997 at 9:00 a.m. local time (the "Annual
Meeting"), and at any adjournment or postponement thereof, with the same force
and effect as the undersigned might or could do if personally present thereat.
The shares represented by this Proxy shall be voted in the following manner:
1. To elect the following directors to serve until the next annual meeting of
stockholders or until their successors are elected and qualified:
<TABLE>
<S> <C> <C> <C>
Monte M. Toole FOR [ ] WITHHOLD AUTHORITY TO VOTE [ ] Dave Toole FOR [ ] WITHHOLD AUTHORITY TO VOTE [ ]
F. Joseph Van Poppelen FOR [ ] WITHHOLD AUTHORITY TO VOTE [ ] Kenneth L. Schroeder FOR [ ] WITHHOLD AUTHORITY TO VOTE [ ]
</TABLE>
2. To approve a series of amendments to the Company's 1994 Stock Option/Stock
Issuance Plan (the "Option Plan") which will (i) increase the maximum number
of shares of Common Stock authorized for issuance over the term of the
Option Plan, (ii) render the non-employee Board members eligible to receive
option grants and direct stock issuances under the Discretionary Option
Grant and Stock Issuance Programs in effect under the Option Plan, (iii)
allow unvested shares issued under the Option Plan and subsequently
repurchased by the Company at the option exercise price or issue price paid
per share to be reissued under the Option Plan, and (iv) remove certain
restrictions on the eligibility of non-employee Board members to serve as
Plan Administrator and effect a series of additional changes to the
provisions of the Option Plan in order to take advantage of recent
amendments to Rule 16b-3 of the Securities Exchange Act of 1934, as amended,
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve an amendment to the Company's Employee Stock Purchase Plan (the
"Purchase Plan") which will increase the number of shares of Common Stock
authorized for issuance over the term of the Purchase Plan,
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To ratify the appointment of Arthur Andersen LLP to serve as the Company's
independent auditors for the fiscal year ending September 30, 1997; and
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
The Board of Directors recommends a vote FOR each of the directors listed
above and a vote FOR the other proposals. This Proxy, when properly executed,
will be voted as specified above. THIS PROXY WILL BE VOTED FOR THE ELECTION OF
THE DIRECTORS LISTED ABOVE AND FOR THE OTHER PROPOSALS IF NO SPECIFICATION IS
MADE.
Please print the name(s)
appearing on each share
certificate(s) over which you
have voting authority:
______________________________
(Print name(s) on certificate)
______________________________
Please sign your name
______________________________
(Authorized Signature(s))
Date: ________________________
