<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CELERITEK, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
CELERITEK, INC.
3236 SCOTT BOULEVARD
SANTA CLARA, CALIFORNIA 95054
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 30, 1998
------------------------
The Annual Meeting of Shareholders of Celeritek, Inc., a California
corporation (the "Company"), will be held on Thursday, July 30, 1998 at 9:00
a.m. at the offices of the Company located at 3236 Scott Boulevard, Santa Clara,
California 95054.
At the meeting, shareholders will consider and vote upon the following
proposals:
1. To elect a Board of Directors of the Company;
2. To approve an amendment to the Company's Employee Qualified Stock
Purchase Plan to increase the number of shares of Common Stock reserved for
issuance thereunder from 250,000 to 500,000;
3. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending March 31, 1999; and
4. To transact such other business as may properly come before the
meeting or any and all postponements or adjournments thereof.
The Board of Directors has fixed the close of business on June 11, 1998 as
the record date for the determination of shareholders entitled to notice of and
to vote at the meeting. Accordingly, only shareholders of record at the close of
business on that day will be entitled to vote at the meeting, notwithstanding
any transfer of shares on the books of the Company after that date.
A Proxy Statement which contains information with respect to the matters to
be voted upon at the meeting and a Proxy card and return envelope are furnished
herewith. Management urges each shareholder to carefully read the Proxy
Statement. If you cannot be present personally at the meeting, you are requested
to complete and sign the Proxy card and return it promptly in the envelope
enclosed for that purpose.
BY ORDER OF THE BOARD OF DIRECTORS
Margaret E. Smith, Assistant Secretary
Santa Clara, California
Dated: June 25, 1998
IT IS DESIRABLE THAT AS MANY OF THE SHAREHOLDERS AS POSSIBLE BE REPRESENTED
AT THE MEETING IN PERSON OR BY PROXY. YOU ARE CORDIALLY INVITED TO ATTEND IN
PERSON. IF YOU ARE UNABLE TO BE PRESENT AT THE MEETING, OR ARE NOT SURE WHETHER
YOU WILL BE, YOU ARE REQUESTED TO SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY SO
THAT YOUR SHARES WILL BE REPRESENTED. SIGNING A PROXY AT THIS TIME WILL NOT
AFFECT YOUR RIGHT TO VOTE IN PERSON SHOULD YOU LATER DECIDE TO ATTEND THE
MEETING.
<PAGE> 3
CELERITEK, INC.
3236 SCOTT BOULEVARD
SANTA CLARA, CALIFORNIA 95054
------------------------
PROXY STATEMENT
------------------------
GENERAL
DATE, TIME AND PLACE
This Proxy Statement is furnished to the shareholders of Celeritek, Inc., a
California corporation (the "Company"), in connection with the solicitation of
Proxies by the Board of Directors of the Company for use at the Annual Meeting
of Shareholders to be held at 9:00 a.m. on Thursday, July 30, 1998, and any and
all postponements or adjournments thereof. It is anticipated that this Proxy
Statement and the enclosed Proxy card will be sent to such shareholders on or
about June 25, 1998.
PURPOSES OF THE ANNUAL MEETING
The purposes of the Annual Meeting are to (1) elect a Board of Directors of
the Company, (2) approve an amendment to the Employee Qualified Stock Purchase
Plan to increase the number of shares of Common Stock reserved for issuance
thereunder by 250,000 shares, (3) ratify the appointment of Ernst & Young LLP as
the Company's independent auditors for the fiscal year ending March 31, 1999 and
(4) transact such other business as may properly come before the meeting or any
and all postponements or adjournments thereof.
PROXY/VOTING INSTRUCTION CARDS AND REVOCABILITY OF PROXIES
When the Proxy in the enclosed form is returned, properly executed, the
shares represented thereby will be voted at the meeting in accordance with the
instructions given by the shareholder. If no instructions are given, the
returned Proxy will be voted in favor of the election of the nominees named
herein as directors and in favor of each of the other proposals. Any
shareholder, including a shareholder personally attending the meeting, may
revoke his or her Proxy at any time prior to its use by filing with the
Secretary of the Company, at the corporate offices at 3236 Scott Boulevard,
Santa Clara, California 95054, a written notice of revocation or a duly executed
Proxy bearing a later date or by voting in person at the Annual Meeting.
RECORD DATE AND SHARE OWNERSHIP
Shareholders of record at the close of business on June 11, 1998 (the
"Record Date") are entitled to notice of and to vote at the meeting. At the
Record Date, 7,205,342 shares of the Company's Common Stock were issued and
outstanding. For information regarding security ownership by management and by
5% shareholders, see "Other Information -- Share Ownership by Principal
Shareholders and Management."
VOTING AND SOLICITATION; QUORUM
Each share has one vote. The required quorum for the transaction of
business at the Annual Meeting is a majority of the shares of Common Stock
issued and outstanding on the Record Date. Shares that are voted "FOR",
"AGAINST" or "WITHHELD FROM" a matter are treated as being present at the
meeting for the purposes of establishing a quorum and are also treated as shares
"represented and voting" at the Annual Meeting (the "Votes Cast") with respect
to such matter.
The Company believes that abstentions should be counted for the purpose of
determining the presence or absence of a quorum for the transaction of business,
but should not be counted as Votes Cast with respect to a proposal as to which
the shareholder has expressly abstained from voting.
Broker non-votes will be counted for the purpose of determining the
presence or absence of a quorum for the transaction of business, but will not be
counted for the purpose of determining the number of Votes Cast
<PAGE> 4
with respect to the proposal on which the broker has expressly not voted. Thus,
abstentions and broker non-votes will not affect the outcome of the voting on a
proposal that requires a majority of the Votes Cast.
The cost of this solicitation will be borne by the Company. In addition,
the Company may reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
material to such beneficial owners. Proxies may also be solicited by certain of
the Company's directors, officers and regular employees, without additional
compensation, personally or by telephone, telegram or facsimile.
SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Any proposal to be presented at the Company's 1999 Annual Meeting of
Shareholders must be received at the Company's principal office no later than
February 25, 1999 in order to be considered for inclusion in the Company proxy
materials for such meeting. Any such proposals must be submitted in writing and
addressed to the attention of the Company's Corporate Secretary at 3236 Scott
Boulevard, Santa Clara, California 95054.
PROPOSAL NO. ONE
ELECTION OF DIRECTORS
NOMINEES
The Bylaws of the Company provide for a Board of six directors. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for management's six nominees named below, all of whom are presently directors
of the Company. In the event that any nominee of the Company is unable or
declines to serve as a director at the time of the Annual Meeting, the proxies
will be voted for any nominee who shall be designated by the present Board of
Directors to fill the vacancy. It is not expected that any nominee will be
unable or will decline to serve as a director. The term of office of each person
elected as a director will continue until the next Annual Meeting of
Shareholders or until his successor has been elected and qualified.
The names of the nominees, and certain information about them, are set
forth below.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE(1) SINCE PRINCIPAL OCCUPATION OR EMPLOYMENT
---- ------ -------- ----------------------------------
<S> <C> <C> <C>
Tamer Husseini................ 55 1984 Chairman of the Board, President and Chief
Executive Officer of the Company
Thomas W. Hubbs............... 53 1998 Senior Vice President and Chief Financial
Officer of Walker Interactive Systems, Inc.
Robert C. Mullaley(2)......... 71 1984 Private investor and consultant
William D. Rasdal(3).......... 64 1984 Director of SymmetriCom, Inc.
Charles P. Waite(3)........... 68 1984 General Partner of Greylock Ventures
Limited Partnership
William H. Younger, Jr.(2).... 48 1984 General Partner of Sutter Hill Ventures
</TABLE>
- ---------------
(1) As of the Record Date
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
Mr. Husseini, a founder of the Company, has served as its Chairman of the
Board, President and Chief Executive Officer since the Company's organization in
1984. Prior to founding the Company, Mr. Husseini was employed by Granger
Associates, Inc. ("Granger"), a telecommunications company, as Vice President
from 1982 until 1984. Before joining Granger, Mr. Husseini was employed by
Avantek, Inc. ("Avantek"), a manufacturer of integrated circuits and components
for wireless communications applications and now a subsidiary of
Hewlett-Packard, from 1972 until 1982, most recently as General Manager of the
Microwave Transistor Division.
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<PAGE> 5
Mr. Hubbs was appointed to Celeritek's Board of Directors in June 1998.
Since April 1998, Mr. Hubbs has served as Senior Vice President and Chief
Financial Officer of Walker Interactive Systems, Inc., a developer of financial
applications software products. From December 1995 to April 1998, Mr. Hubbs
served as Senior Vice President and Chief Financial Officer of interWAVE
Communications International, Ltd., a developer of distributed systems
architecture for wireless communications. From 1987 to 1995, Mr. Hubbs served as
Vice President of VeriFone, Inc. Mr. Hubbs has 30 years of financial and
operational management experience in leading technology companies.
Mr. Mullaley has served on Celeritek's Board of Directors since the
Company's organization in 1984. Since 1982, Mr. Mullaley has worked as a
consultant and private investor. From 1976 until 1982, Mr. Mullaley served as
Vice President and General Manager of Avantek's Telecommunications Division.
Prior to his service with Avantek, Mr. Mullaley spent 24 years with Collins
Radio Company (later acquired by Rockwell International Corporation) where he
held various management positions including Vice President of Operations, Vice
President and Chief Financial Officer and Senior Vice President and Group
Executive.
Mr. Rasdal has served on Celeritek's Board of Directors since the Company's
organization in 1984. Until June 1998, Mr. Rasdal served as Chairman of the
Board and Chief Executive Officer of SymmetriCom, Inc., a position he held since
1989, and continues to serve on Symmetricom's Board of Directors. Mr. Rasdal
joined SymmetriCom in 1985 as President and Chief Executive Officer. Prior to
his employment with SymmetriCom, Mr. Rasdal was employed by Granger as President
and Chief Operating Officer. Prior to his employment with Granger, Mr. Rasdal
served as Vice President and General Manager of Avantek's Microwave Integrated
Circuit and Semiconductor Operations. Mr. Rasdal also serves on the Board of
Directors of Advanced Fibre Communications, Inc.
Mr. Waite has served on Celeritek's Board of Directors since the Company's
organization 1984. He is a General Partner of Greylock Ventures Limited
Partnership, a venture capital firm he co-founded in 1965. Mr. Waite also serves
on the Board of Directors of Teltone Corporation.
Mr. Younger has served on Celeritek's Board of Directors since the
Company's organization in 1984. He is currently a General Partner of Sutter Hill
Ventures, a California Limited Partnership and a venture capital firm, where he
has been employed since 1981. Mr. Younger also serves on the Board of Directors
of Information Advantage, Inc. and Oacis HealthCare Holdings Corp.
VOTE REQUIRED; RECOMMENDATION OF BOARD OF DIRECTORS
The six nominees receiving the highest number of affirmative votes of the
shares entitled to be voted for them shall be elected as directors. Votes
withheld from any director are counted for purposes of determining the presence
or absence of a quorum, but have no other legal effect under California law. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH NAMED NOMINEE.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors has an Audit Committee and a Compensation Committee.
There is no Nominating Committee or a committee performing the functions of a
nominating committee. The Audit Committee monitors the performance of the
independent auditors, recommends their engagement or dismissal to the Board of
Directors and monitors the Company's internal financial and accounting
organization and financial reporting. The Compensation Committee recommends
executive compensation arrangements for action by the Board as a whole. During
the fiscal year ended March 31, 1998 (the "1998 Fiscal Year"), the Audit
Committee held one meeting and the Compensation Committee held one meeting.
During the 1998 Fiscal Year, there were seven meetings of the Board of
Directors. Each person who was a director during the 1998 Fiscal Year attended
at least 75% of the aggregate of (i) the total number of meetings of the Board
of Directors and (ii) the total number of meetings of committees of the Board of
Directors on which such person served during the 1998 Fiscal Year.
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<PAGE> 6
DIRECTOR COMPENSATION
During the 1998 Fiscal Year, non-employee directors of the Company were
paid $1,500 for each Board meeting attended. During the fiscal year ending March
31, 1999, non-employee directors will be paid $2,500 for each Board meeting
attended. The Company also reimburses its directors for certain expenses
incurred by them in their capacity as directors or in connection with attendance
at Board meetings. In addition, each non-employee director of the Company is
eligible to participate in the Company's Outside Directors' Stock Option Plan
(the "Plan"). Under the terms of the Plan, each non-employee director
automatically receives a nonstatutory option to purchase 6,000 shares of the
Company's Common Stock, (the "First Option Grant") on the later of the
consummation of the Company's initial public offering or the date on which the
optionee first becomes a director of the Company. The vesting of the First
Option Grant is based on continued service as a director at the rate of 25% of
the shares issuable upon exercise of such option per year over a four-year
period. Beginning four years after the First Option Grant for each non-employee
director, and each year thereafter, such non-employee director shall
automatically be granted an option to purchase 1,500 additional shares of Common
Stock based on continued service as a director, all of which option shares vest
one year after the date of grant.
PROPOSAL NO. TWO
APPROVAL OF 250,000 SHARE INCREASE TO
EMPLOYEE QUALIFIED STOCK PURCHASE PLAN
GENERAL
In October 1995 and November 1995, the Company's Board of Directors and
shareholders, respectively, adopted and approved the Employee Qualified Stock
Purchase Plan (the "Purchase Plan"). The Purchase Plan originally provided for
the issuance of 250,000 shares of Common Stock of the Company. For a detailed
description of the Purchase Plan, see "Summary of the Purchase Plan."
PROPOSAL
In June 1998, the Board of Directors approved an amendment to the Purchase
Plan to increase the number of shares reserved for issuance thereunder by
250,000 shares (the "Increase"), for a total number of shares authorized for
issuance under the Purchase Plan of 500,000 shares. The Increase is necessary in
order to provide employees with an opportunity to purchase Common Stock of the
Company through payroll deductions. The Company also believes that the right of
participants to make purchases under the Purchase Plan is critical to its
success in attracting and retaining experienced and qualified employees. At the
Annual Meeting, the shareholders are being requested to approve the Increase.
VOTE REQUIRED; RECOMMENDATION OF BOARD OF DIRECTORS
The affirmative vote of a majority of the Votes Cast will be required to
approve the Increase. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THIS PROPOSAL.
SUMMARY OF THE PURCHASE PLAN
Purpose of the Purchase Plan
The purpose of the Purchase Plan is to provide employees of the Company
with an opportunity to purchase Common Stock of the Company through accumulated
payroll deductions.
Administration
The Purchase Plan shall be administered by the Board of Directors or a
committee appointed by the Board. All questions of interpretation or application
of the Purchase Plan are determined by the Board of Directors or its committee,
whose decisions are final and binding upon all participants. No charges for
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<PAGE> 7
administrative or other costs may be made against the payroll deductions of a
participant in the Purchase Plan. Members of the Board of Directors receive no
additional compensation for their services in connection with the administration
of the Purchase Plan.
Eligibility and Participation in the Purchase Plan
Any person who is employed by the Company for at least ninety (90) days
before an enrollment date, for at least twenty (20) hours per week and more than
five (5) months in a calendar year is eligible to participate in the Purchase
Plan, provided that the employee is employed on the first day of an offering
period. Eligible employees become participants in the Purchase Plan by
delivering to the Company a subscription agreement authorizing payroll
deductions prior to the applicable enrollment date. An employee who becomes
eligible to participate in the Purchase Plan after the commencement of an
offering period may not participate in the plan until the commencement of the
next offering period.
Offering Dates
The Purchase Plan is generally implemented during overlapping offering
periods beginning every six (6) months during the term of the Purchase Plan,
commencing February 1st and August 1st of each year and ending on the last
market trading day twenty-four (24) months later. The Board of Directors may
alter the duration of the offering periods without shareholder approval if such
change is announced three (3) days prior to the scheduled beginning of the first
offering period to be affected.
Purchase Price
The purchase price per share at which shares are sold under the Purchase
Plan is the lower of 85% of the fair market value of the Common Stock on the
first day of each offering period or 85% of the fair market value of the Common
Stock on the last day of each six month purchase period during the offering
period (the "Exercise Date"). For as long as the Company's Common Stock is
traded on the Nasdaq National Market, the fair market value of the Common Stock
on a given date shall be the closing sale price of the Common Stock on the
applicable date.
Payment of Purchase Price; Payroll Deductions
The purchase price of the shares is accumulated by payroll deductions
during the offering period. The deductions may not exceed 10% of a participant's
eligible compensation, which is defined in the Purchase Plan to include all base
straight time gross earnings, bonuses and sales commissions, exclusive of
payments for overtime, shift premium and other compensation. A participant may
discontinue his or her participation in the Purchase Plan or may increase or
decrease the rate of payroll deductions at any time during the offering period;
however, the Board may, in its discretion, limit the number of such increases or
decreases in an offering period. Payroll deductions shall commence on the first
payday following the enrollment date, and shall continue at the same rate until
the end of the offering period and for consecutive offering periods unless
sooner terminated as provided in the Purchase Plan.
All payroll deductions are credited to the participant's account under the
Purchase Plan and are deposited with the general funds of the Company. All
payroll deductions received or held by the Company may be used by the Company
for any corporate purpose.
Purchase of Stock; Exercise of Option
By executing a subscription agreement to participate in the Purchase Plan,
each employee is in effect granted an option to purchase shares of Common Stock
on each Exercise Date during the offering period. The maximum number of shares
placed under option to a participant in an offering period is that number
determined by dividing the amount of participant's total payroll deductions
accumulated prior to such Exercise Date (not to exceed an amount equal to 10% of
the participant's eligible compensation which he or she receives on each pay day
during the offering period) by the applicable purchase price, and subject to the
further limitation that the maximum number of shares an employee may purchase
during each purchase
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<PAGE> 8
period shall be determined by dividing $12,500 by the fair market value of a
share of Common Stock on the first day of the offering period. Unless a
participant withdraws from the Purchase Plan, such participant's option for the
purchase of shares will be exercised automatically on the Exercise Date for the
maximum number of shares at the applicable price.
Notwithstanding the foregoing, no employee will be permitted to subscribe
for shares under the Purchase Plan if, immediately after the grant of the
option, the employee would own stock possessing 5% or more of the total combined
voting power or value of all classes of stock of the Company or of a parent or
of any of its subsidiaries (including stock which may be purchased under the
Purchase Plan), nor shall any employee be granted an option which would permit
the employee to buy pursuant to the Purchase Plan more than $21,250 worth of
stock in any calendar year.
Withdrawal
A participant may withdraw all, but not less than all, the payroll
deductions credited to his or her account at any time by signing and delivering
to the Company a notice of withdrawal from the Purchase Plan. Any such
withdrawal by the participant of payroll deductions credited to his or her
account for a given offering period automatically terminates the participant's
interest in that offering period. If a participant withdraws from an offering
period payroll deductions will not resume at the beginning of the succeeding
offering period unless the participant delivers to the Company a new
subscription agreement.
Termination of Employee
Termination of a participant's employment for any reason, including
retirement or death, cancels his or her participation in the Purchase Plan
immediately. In such event, the payroll deductions credited to the participant's
account will be returned to such participant or, in the case of death, to the
person or persons entitled thereto as specified by the employee in the
subscription agreement.
Capital Changes
In the event any change is made in the Company's capitalization, such as a
stock split or stock dividend, which results in an increase or decrease in the
number of outstanding shares of Common Stock without receipt of consideration by
the Company, appropriate adjustments will be made by the Board of Directors in
the shares subject to purchase under the Purchase Plan and in the purchase price
per share, subject to any required action by shareholders of the Company.
Nonassignability
No rights or accumulated payroll deductions of a participant under the
Purchase Plan may be pledged, assigned or transferred (other than by will or the
laws of descent and distribution) and any such attempt may be treated by the
Company as an election to withdraw from the Purchase Plan.
Amendment and Termination of the Plan
The Board of Directors may at any time amend or terminate the Purchase
Plan, except that such termination shall not affect options previously granted
nor may any amendment make any change in an option granted prior thereto which
adversely affects the rights of any participant. No amendment may be made to the
Purchase Plan without prior approval of the shareholders of the Company if such
amendment would constitute an amendment for which shareholder approval is
required under the federal securities laws or the Internal Revenue Code of 1986,
as amended (the "Code"). In any event, the Purchase Plan will terminate on
October 30, 2005.
6
<PAGE> 9
PURCHASES UNDER THE PURCHASE PLAN
As of the Record Date, a total of 91,815 shares of Common Stock have been
issued pursuant to the Purchase Plan, and 408,185 shares remained available for
issuance (giving effect to the Increase being presented to the shareholders
pursuant to this Proposal No. Two for approval at the Annual Meeting).
TAX INFORMATION
The Purchase Plan and the right of participants to make purchases
thereunder is intended to qualify under the provisions of Sections 421 and 423
of the Code. Under these provisions, no income will be taxable to a participant
at the time of grant of the option or purchase of shares. A participant may
become liable for tax upon disposition of the shares acquired, as summarized
below.
I. If the shares are sold or disposed of (including by way of gift) at
least two years after the first day of the offering period during which shares
were purchased and more than one year after the date on which shares were
transferred to the employee (i.e., the Exercise Date). In this event, the lesser
of (a) the excess of the fair market value of the shares at the time of such
disposition over the purchase price of the shares subject to the option (herein
referred to as the "Option Price") or (b) 15% of the fair market value of the
shares on the first day of the offering period, will be treated as ordinary
income to the participant. Any further gain upon such disposition will be
treated as long-term capital gain.
II. If the shares are sold or disposed of (including by way of gift or by
exchange in connection with the exercise of an incentive stock option) before
the expiration of the holding periods described above. In this event, the excess
of the fair market value of the shares on the Exercise Date over the Option
Price will be treated as ordinary income to the participant. Any additional gain
or loss will be treated as a long-term or short-term capital gain or loss,
depending on the holding period.
The Company is entitled to a deduction only for amounts taxed as ordinary
income to a participant upon disposition of shares by the participant before the
expiration of the holding periods described above.
The foregoing summary of the effect of federal income taxation upon the
participant and the Company with respect to the shares purchased under the
Purchase Plan does not purport to be complete. Reference should be made to the
applicable provisions of the Code. In addition, the summary does not discuss the
provisions of the income tax laws of any municipality, state or foreign country
in which the participant may reside. It is advisable that an optionee consult
his own tax advisor concerning application of these tax laws.
PROPOSAL NO. THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS OF THE COMPANY
Ernst & Young LLP, Certified Public Accountants, have been the independent
auditors for the Company since 1993 and, upon recommendation of the Audit
Committee, their reappointment as independent auditors for the fiscal year
ending March 31, 1999 has been approved by the Board of Directors, subject to
ratification by the shareholders.
The Company has been advised by Ernst & Young LLP that neither it nor any
of its members has had any relationship with the Company or any of its
affiliates during the past three years other than as independent auditors. The
Company has been advised that a representative of Ernst & Young LLP will be
present at the Annual Meeting, will be available to respond to appropriate
questions, and will be given an opportunity to make a statement if he or she so
desires.
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<PAGE> 10
VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS
Although not required to be submitted for shareholder approval, the Board
of Directors has conditioned its appointment of its independent auditors upon
receiving the affirmative vote of a majority of the shares represented, in
person or by proxy, and voting at the Annual Meeting. In the event the
shareholders do not approve the selection of Ernst & Young LLP, the appointment
of independent auditors will be reconsidered by the Board of Directors. THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
OTHER INFORMATION
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors and persons who
own more than ten percent (10%) of a registered class of the Company's equity
securities, to file certain reports regarding ownership of, and transactions in,
the Company's securities with the Securities and Exchange Commission (the
"SEC"). Such officers, directors and ten percent (10%) shareholders are also
required by SEC rules to furnish the Company with copies of all Section 16(a)
forms that they file.
Based solely on its review of such forms furnished to the Company and
written representations from certain reporting persons, the Company believes
that all filing requirements applicable to the Company's executive officers,
directors and more than ten percent (10%) shareholders were complied with during
and subsequent to the 1998 Fiscal Year, except that the Form 5 required to be
filed by William Younger for a transaction occurring in February 1998 was filed
late.
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<PAGE> 11
SHARE OWNERSHIP BY PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock of
the Company as of May 31, 1998, by (i) all persons known to the Company to be
the beneficial owners of more than 5% of the Company's Common Stock, (ii) the
Company's Chief Executive Officer, (iii) the four most highly compensated
executive officers other than the Chief Executive Officer, (iv) each director
and (v) all directors and executive officers as a group. A total of 7,181,342
shares of the Company's Common Stock was outstanding as of May 31, 1998.
<TABLE>
<CAPTION>
SHARES APPROXIMATE
BENEFICIALLY PERCENT
NAME AND ADDRESS OWNED OWNED
---------------- ------------ -----------
<S> <C> <C>
Kopp Investment Advisors, Inc.(1)........................... 867,625 12.1%
6600 France Avenue South
Suite 672
Edina, Minnesota 55435
State of Wisconsin Investment Board(2)...................... 743,300 10.4%
121 East Wilson Street
P.O. Box 7842
Madison, Wisconsin 53707
Wellington Management Company, LLP(3)....................... 594,000 8.3%
75 State Street
Boston, MA 02109
Technology Value Fund(4).................................... 524,200 7.3%
312 Walnut Street
Cincinnati, OH 45202
Tamer Husseini(5)........................................... 204,387 2.9%
Robert D. Jones(5,6)........................................ 137,914 1.9%
Gary J. Policky(5,7)........................................ 106,910 1.5%
Robert C. Mullaley(5,8)..................................... 84,646 1.2%
Margaret E. Smith(5)........................................ 64,949 *
William H. Younger(5,9)..................................... 64,928 *
Richard G. Finney(5)........................................ 64,167 *
Charles P. Waite(5)......................................... 43,273 *
William D. Rasdal(5,10)..................................... 42,572 *
Thomas W. Hubbs............................................. 0 --
All directors and executive officers as a group (12
persons)(5)............................................... 906,031 12.6%
</TABLE>
- ---------------
* Less than one percent (1%).
(1) Based on information set forth in Schedule 13G as filed with the SEC by
Kopp Investment Advisors, Inc. on February 9, 1998.
(2) Based on information set forth in Schedule 13G as filed with the SEC by
State of Wisconsin Investment Board on May 5, 1998.
(3) Based on information set forth in Schedule 13G as filed with the SEC by
Wellington Management Company, LLP on February 9, 1998.
(4) Based on information provided by Technology Value Fund.
(5) Includes 40,000, 13,333, 14,333, 3,000, 53,041, 3,000, 14,167, 3,000, 3,000
and 202,599 shares which Messrs. Husseini, Jones, Policky (along with his
spouse), Mullaley, Ms. Smith, Messrs. Younger, Finney, Waite, Rasdal and
all present directors and executive officers as a group, respectively, have
the right to acquire within 60 days of May 31, 1998 upon the exercise of
stock options.
(6) Includes 124,581 shares held by The Jones Living Trust as to which Mr.
Jones shares voting and dispositive power.
9
<PAGE> 12
(7) Includes 878 shares held by Mr. Policky's spouse and 1,000 shares which Mr.
Policky's spouse has the right to acquire within 60 days of May 31, 1998
upon the exercise of a stock option.
(8) Includes 81,646 shares held by The Mullaley Family Trust as to which Mr.
Mullaley shares voting and dispositive power.
(9) Includes 28,032 shares held by The Younger Living Trust as to which Mr.
Younger shares voting and dispositive power. Also includes 1,500 shares
held by a retirement plan for the benefit of Mr. Younger. Also includes
32,024 shares owned by Sutter Hill Ventures ("Sutter Hill"), of which Mr.
Younger is a general partner of a partnership that is the general partner
of Sutter Hill. Mr. Younger holds voting and investment power with respect
to the shares owned by Sutter Hill.
(10) Includes 39,572 shares held by The Rasdal Family Trust as to which Mr.
Rasdal shares voting and dispositive power.
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation earned in the last three fiscal
years by (i) the Company's Chief Executive Officer and (ii) the four most highly
compensated executive officers other than the Chief Executive Officer who were
serving as executive officers at the end of the 1998 Fiscal Year (together, the
"Named Officers").
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
-------------------- SECURITIES ALL OTHER
SALARY BONUS UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTIONS(#) ($)(1)
--------------------------- ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Tamer Husseini....................... 1998 249,225 97,000 -- 9,966
Chairman of the Board, 1997 244,575 38,200 -- 6,092
President and Chief Executive
Officer 1996 211,106 113,700 30,000 1,881
Robert D. Jones...................... 1998 159,609 58,179 -- 6,961
Senior Vice President, 1997 149,412 53,288 -- 6,703
Marketing and Sales 1996 134,716 70,685 10,000 5,499
Richard G. Finney.................... 1998 170,775 38,000 -- 5,827
Vice President, 1997 149,528 34,305 -- 2,181
Subsystem Division 1996 137,457 25,000 10,000 1,522
Gary J. Policky...................... 1998 169,613 30,000 -- 10,400
Vice President, Engineering 1997 159,532 15,000 -- 4,631
and Chief Technical Officer 1996 147,666 12,000 10,000 1,777
Margaret E. Smith.................... 1998 161,828 35,000 -- 4,472
Vice President, Finance and 1997 149,451 20,000 -- 5,214
Chief Financial Officer 1996 134,568 25,000 20,000 622
</TABLE>
- ---------------
(1) Represents premiums paid on term life insurance, supplemental accidental,
death and dismemberment insurance and medical reimbursement insurance.
OPTION GRANTS IN LAST FISCAL YEAR
There were no options granted to the Named Officers during the 1998 Fiscal
Year.
10
<PAGE> 13
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table provides information with respect to option exercises
in the 1998 Fiscal Year by the Named Officers and the value of such officers'
unexercised options at the close of business on March 27, 1998 (the last market
trading day prior to the end of the 1998 Fiscal Year).
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR IN-THE-MONEY OPTIONS AT
SHARES VALUE END(#) FISCAL YEAR END($)(2)
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Tamer Husseini............. 0 -- 37,500 15,000 204,375 18,750
Robert D. Jones............ 0 -- 12,500 5,000 68,125 6,250
Richard G. Finney.......... 0 -- 12,709 6,875 69,849 21,718
Gary J. Policky............ 0 -- 12,500 5,000 68,125 6,250
Margaret E. Smith.......... 3,000 22,500 49,500 15,000 338,375 53,750
</TABLE>
- ---------------
(1) Market value of underlying securities based on the closing price of the
Company's Common Stock on the date of exercise, minus the exercise price.
(2) Market value of underlying securities based on the closing price of $11.25
of the Company's Common Stock on March 27, 1998 minus the exercise price.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee, consisting of directors Charles P.
Waite and William D. Rasdal, reviews and approves compensation and benefits for
the Company's executive officers, and grants options to executive officers under
the 1994 Stock Option Plan (the "1994 Plan"). No interlocking relationship
exists between the Company's Board of Directors or the compensation committee of
any other company, nor has any such interlocking relationship existed in the
past.
CERTAIN TRANSACTIONS
During the three years preceding the Record Date, the Company granted
Incentive Stock Options in the following amounts exercisable at the following
per share prices to the Named Officers pursuant to the 1994 Plan: Mr. Husseini,
30,000 shares in March 1996 at $10.00 per share; Mr. Jones, 10,000 shares in
March 1996 at $10.00 per share; Mr. Finney, 10,000 shares in March 1996 at
$10.00 per share; Mr. Policky, 10,000 shares in March 1996 at $10.00 per share;
and Ms. Smith, 20,000 shares in March 1996 at $10.00 per share. All such options
have ten-year terms and vest over a four-year period.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended (the "Securities
Act"), or the Exchange Act that might incorporate future filings, including this
Proxy Statement, in whole or in part, the following report and the Performance
Graph on page 13 shall not be deemed to be "soliciting material" or to be
"filed" with the Securities and Exchange Commission, nor shall such information
be incorporated by reference into any further filing under the Securities Act or
the Exchange Act, except to the extent that the Company specifically
incorporates it by reference into any such filing.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the "Committee")
determines the compensation of the Company's Chief Executive Officer and its
other executive officers. The Committee is composed entirely of outside
directors. In addition to determining the salary and bonus compensation for all
of the Company's executive officers, the Committee determines the nature and
timing of awards and grants under the Company's Stock Option Plans.
11
<PAGE> 14
The goals of the compensation program are to align compensation with the
Company's performance and objectives and to attract, retain and reward executive
officers whose contributions are critical to the long-term success of the
Company.
The primary components of the Company's compensation package are salary,
bonuses and stock options.
Salary
The level of base salary for executive officers is set based upon their
scope of responsibility, level of experience and individual performance. The
salary range for each position is reviewed against the Radford Survey (a third
party compensation survey) data for high-tech companies with similar sales
volumes located on the West Coast. Additionally, the Committee takes into
account general business and economic conditions. The Company sets its salary to
be competitive with the marketplace. None of the factors considered is assigned
a specific weight.
Bonuses
The Company's executive bonus plan provides the opportunity for annual cash
bonuses based on accomplishment of specific individual performance objectives
and Company profit objectives. These objectives are set at the beginning of the
fiscal year based on the Company's long-term and short-term objectives, and
performance against these objectives is assessed at the end of the year.
Stock options
The Committee believes that the granting of stock options is an important
method of rewarding and motivating management by aligning management's interests
with the Company's shareholders. The Committee also recognizes that a stock
incentive program is a necessary element in a competitive compensation package.
The program utilizes a vesting schedule to encourage key employees of the
Company to continue in the employ of the Company and encourages employees to
maintain a long-term prospective. In determining the size of stock option
grants, the Committee focuses primarily on the Company's performance and the
perceived role of such executive in accomplishing these objectives as well as
the satisfaction of individual performance objectives. The Committee also
considers the number of outstanding unvested options which the officer holds and
the size of previous option awards to that officer. The Committee does not
assign specific weights to these items.
Compensation of the Chief Executive Officer
Mr. Tamer Husseini has been President, Chief Executive Officer and Chairman
of the Board since the founding of the Company in 1984. The Committee used the
same compensation policy described above for all executive officers to determine
Mr. Husseini's 1998 Fiscal Year compensation. In setting both the cash-based and
the equity-based elements of Mr. Husseini's compensation, the Committee
considered competitive forces, the Company's performance and Mr. Husseini's
leadership in achieving the Company's long-term strategic goals. During the 1998
Fiscal Year, Mr. Husseini received a salary of $249,225 and a bonus of $97,000.
During the 1998 Fiscal Year, Mr. Husseini was not granted any stock
options. Given the Company's financial performance in the 1998 Fiscal Year and
its successful implementation of its growth strategies, the Committee believes
Mr. Husseini's 1998 Fiscal Year compensation fairly and sufficiently rewards him
for this performance and will serve to retain him as a key employee on whom the
Company is dependent for its continued success.
Compensation Committee
William D. Rasdal
Charles P. Waite
12
<PAGE> 15
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total shareholders' return on the
Company's Common Stock with the total return on the S & P 500 Index and the S &
P High Technology -- Composite Index over the same period for the months of
December 1995 through March 1998 (assuming the investment of $100 in the
Company's Common Stock, the S & P 500 Index and the S & P High
Technology -- Composite Index, and reinvestment of all dividends). The Company's
Common Stock began trading on the Nasdaq Stock Market on December 20, 1995.
PERFORMANCE GRAPH
CELERITEK, INC.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
CELERITEK, INC., S & P 500 INDEX AND
S & P HIGH TECHNOLOGY -- COMPOSITE INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD HIGH TECH
(FISCAL YEAR COVERED) CELERITEK INC COMPOSITE S&P 500 INDEX
<S> <C> <C> <C>
DEC-95 100 100 100
MAR-96 98.23 105.66 105.37
JUN-96 103.53 114.57 110.1
SEP-96 115.29 125.46 113.5
DEC-96 100 141.87 122.96
MAR-97 103.53 142.83 128.83
JUN-97 117.65 174.17 148.3
SEP-97 167.06 203.74 159.41
DEC-97 131.76 178.89 163.98
MAR-98 106.47 215.87 186.86
</TABLE>
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If
any other matters properly come before the 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.
THE BOARD OF DIRECTORS
Dated: June 25, 1998
13
<PAGE> 16
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
CELERITEK, INC.
1998 ANNUAL MEETING OF SHAREHOLDERS
The undersigned shareholder of Celeritek, Inc., a California
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated June 25, 1998, and hereby appoints
Tamer Husseini and Margaret E. Smith, and each of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 1998 Annual Meeting
of Shareholders of Celeritek, Inc. to be held on July 30, 1998 at 9:00 a.m., at
the offices of the Company, at 3236 Scott Boulevard, Santa Clara, California
95054 and at any adjournments thereof, and to vote all shares of Common Stock
which the undersigned would be entitled to vote if then and there personally
present, on the matters set forth below:
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED,
WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS NAMED HEREIN, "FOR" EACH PROPOSAL
LISTED, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME
BEFORE THE MEETING. EITHER OF SUCH ATTORNEYS OR SUBSTITUTES SHALL HAVE AND MAY
EXERCISE ALL OF THE POWERS OF SAID ATTORNEYS-IN-FACT HEREUNDER.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE> 17
1. ELECTION OF DIRECTORS:
NOMINEES: Tamer Husseini, Thomas W. Hubbs, Robert C. Mullaley, William
D. Rasdal, Charles P. Waite, William H. Younger, Jr.
___ FOR all nominees
___ WITHHELD from all nominees
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE(S), WRITE THE NAME OF THE NOMINEE(S) NAME ON THE LINE ABOVE.
2. Proposal to approve an amendment to the Company's Employee Qualified
Stock Purchase Plan to increase the number of shares of Common Stock
reserved for issuance thereunder from 250,000 to 500,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to ratify the appointment of Ernst & Young LLP as the
independent auditors of the Company for the fiscal year ending March
31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
and upon such other matter or matters which may properly come before
the meeting and any adjournment(s) thereof.
(This Proxy should be dated, signed by the
shareholder(s) exactly as his or her name
appears hereon, and returned promptly in the
enclosed envelope. Persons signing in a
fiduciary capacity should so indicate. If
shares are held by joint tenants or as
community property, both should sign.)
Signature:_____________ Date:________ Signature: _______________ Date:______
<PAGE> 18
CELERITEK, INC.
EMPLOYEE QUALIFIED STOCK PURCHASE PLAN
(AS AMENDED THROUGH JUNE 1998)
The following constitute the provisions of the Employee Qualified Stock
Purchase Plan of Celeritek, Inc.
1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" shall mean the Common Stock of the Company.
(d) "Company" shall mean Celeritek, Inc. and any Designated
Subsidiary of the Company.
(e) "Compensation" shall mean all base straight time gross
earnings, bonuses and sales commissions, but exclusive of payments for overtime,
shift premium, and other compensation.
(f) "Designated Subsidiaries" shall mean the Subsidiaries which
have been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
(g) "Employee" shall mean any individual who is an Employee of
the Company for tax purposes for at least ninety (90) days before an Enrollment
Date and whose customary employment with the Company is at least twenty (20)
hours per week and more than five (5) months in any calendar year. For purposes
of the Plan, the employment relationship shall be treated as continuing intact
while the individual is on sick leave or other leave of absence approved by the
Company. Where the period of leave exceeds 90 days and the individual's right to
reemployment is not guaranteed either by statute or by contract, the employment
relationship shall be deemed to have terminated on the 91st day of such leave.
(h) "Enrollment Date" shall mean the first day of each Offering
Period.
<PAGE> 19
(i) "Exercise Date" shall mean the last day of each Purchase
Period.
(j) "Fair Market Value" shall mean, as of any date, the value of
Common Stock determined as follows:
(1) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the mean
of the closing bid and asked prices, if no sales were reported) as quoted on
such exchange (or the exchange with the greatest volume of trading in Common
Stock) or system on the date of determination (or, in the event such date is not
a trading day, the trading day immediately prior to the date of determination),
as reported in The Wall Street Journal or such other source as the Board deems
reliable, or;
(2) If the Common Stock is regularly quoted on the Nasdaq
system (but not the Nasdaq National Market) or by a recognized securities dealer
but selling prices are not reported, its Fair Market Value shall be the mean of
the closing bid and asked prices for the Common Stock on the date of such
determination (or, in the event such date is not a trading day, the trading day
immediately prior to the date of determination), as reported in The Wall Street
Journal or such other source as the Board deems reliable, or;
(3) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board.
(k) "Offering Periods" shall mean the periods of approximately
twenty-four (24) months during which an option granted pursuant to the Plan may
be exercised, commencing on the first Trading Day on or after February 1 and
August 1 of each year and terminating on the last Trading Day in the periods
ending twenty-four months later. The duration and timing of Offering Periods may
be changed pursuant to Section 4 of this Plan.
(l) "Plan" shall mean this Employee Qualified Stock Purchase
Plan.
(m) "Purchase Price" shall mean an amount equal to 85% of the
Fair Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.
(n) "Purchase Period" shall mean the approximately six month
period commencing after one Exercise Date and ending with the next Exercise
Date, except that the first Purchase Period of any Offering Period shall
commence on the Enrollment Date and end with the next Exercise Date.
(o) "Reserves" shall mean the number of shares of Common Stock
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
-2-
<PAGE> 20
(p) "Subsidiary" shall mean a corporation, domestic or foreign,
of which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.
(q) "Trading Day" shall mean a day on which national stock
exchanges and the Nasdaq System are open for trading.
3. Eligibility.
(a) Any Employee (as defined in Section 2(g)), who shall be
employed by the Company on a given Enrollment Date shall be eligible to
participate in the Plan.
(b) Any provisions of the Plan to the contrary notwithstanding,
no Employee shall be granted an option under the Plan (i) to the extent that,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Subsidiary, or (ii) to the extent that his or her rights to purchase stock
under all employee stock purchase plans (not including incentive stock option
plans) of the Company and its subsidiaries accrues at a rate which exceeds
Twenty-Five Thousand Dollars ($25,000) worth of stock (determined at the fair
market value of the shares at the time such option is granted) for each calendar
year in which such option is outstanding at any time.
4. Offering Periods. The Plan shall be implemented by consecutive,
overlapping Offering Periods with a new Offering Period commencing on the first
Trading Day on or after February 1 and August 1 each year, or on such other date
as the Board shall determine, and continuing thereafter until terminated in
accordance with Section 19 hereof. The Board shall have the power to change the
duration of Offering Periods (including the commencement and/or termination
dates thereof) with respect to future offerings without shareholder approval if
such change is announced at least three (3) days prior to the scheduled
beginning of the first Offering Period to be affected thereafter.
5. Participation.
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
of Exhibit A to this Plan and filing it with the Company's payroll office prior
to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on the
first payroll following the Enrollment Date and shall end on the last payroll in
the Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
-3-
<PAGE> 21
6. Payroll Deductions.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding ten percent (10%) of the
Compensation which he or she receives on each pay day during the Offering
Period.
(b) All payroll deductions made for a participant shall be
credited to his or her account under the Plan and shall be withheld in whole
percentages only. A participant may not make any additional payments into such
account.
(c) A participant may discontinue his or her participation in the
Plan as provided in Section 10 hereof, or may increase or decrease the rate of
his or her payroll deductions during the Offering Period by completing or filing
with the Company a new subscription agreement authorizing a change in payroll
deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period. The change in rate shall
be effective with the first full payroll period following five (5) business days
after the Company's receipt of the new subscription agreement unless the Company
elects to process a given change in participation more quickly. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a
participant's payroll deductions may be decreased to zero percent (0%) at such
time during any Purchase Period which is scheduled to end during the current
calendar year (the "Current Purchase Period") that the aggregate of all payroll
deductions which were previously used to purchase stock under the Plan in a
prior Purchase Period which ended during that calendar year plus all payroll
deductions accumulated with respect to the Current Purchase Period equal
$21,250. Payroll deductions shall recommence at the rate provided in such
participant's subscription agreement at the beginning of the first Purchase
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part, or
at the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but shall not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee.
-4-
<PAGE> 22
7. Grant of Option. On the Enrollment Date of each Offering Period, each
eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Purchase Period more than a
number of shares determined by dividing $12,500 by the Fair Market Value of a
share of the Company's Common Stock on the Enrollment Date, and provided further
that such purchase shall be subject to the limitations set forth in Sections
3(b) and 12 hereof. Exercise of the option shall occur as provided in Section 8
hereof, unless the participant has withdrawn pursuant to Section 10 hereof. The
option shall expire on the last day of the Offering Period.
8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in Section 10 hereof, his or her option for the purchase of shares
shall be exercised automatically on the Exercise Date, and the maximum number of
full shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Purchase Period or Offering Period, subject to earlier with drawal by the
participant as provided in Section 10 hereof. Any other monies left over in a
participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to purchase
shares hereunder is exercisable only by him or her.
9. Delivery. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, the shares purchased upon exercise of his or
her option.
10. Withdrawal; Termination of Employment.
(a) A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet used to exercise
his or her option under the Plan at any time by giving written notice to the
Company in the form of Exhibit B to this Plan. All of the participant's payroll
deductions credited to his or her account shall be paid to such participant
promptly after receipt of notice of withdrawal and such participant's option for
the Offering Period shall be automatically terminated, and no further payroll
deductions for the purchase of shares shall be made for such Offering Period. If
a participant withdraws from an Offering Period, payroll deductions shall not
resume at the beginning of the succeeding Offering Period unless the participant
delivers to the Company a new subscription agreement.
(b) Upon a participant's ceasing to be an Employee (as defined in
Section 2(g) hereof), for any reason, he or she shall be deemed to have elected
to withdraw from the Plan and the
-5-
<PAGE> 23
payroll deductions credited to such participant's account during the Offering
Period but not yet used to exercise the option shall be returned to such
participant or, in the case of his or her death, to the person or persons
entitled thereto under Section 14 hereof, and such participant's option shall be
automatically terminated. The preceding sentence notwithstanding, a participant
who receives payment in lieu of notice of termination of employment shall be
treated as continuing to be an Employee for the participant's customary number
of hours per week of employment during the period in which the participant is
subject to such payment in lieu of notice.
(c) A participant's withdrawal from an Offering Period shall not
have any effect upon his or her eligibility to participate in any similar plan
which may hereafter be adopted by the Company or in succeeding Offering Periods
which commence after the termination of the Offering Period from which the
participant withdraws.
11. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.
12. Stock.
(a) The maximum number of shares of the Company's Common Stock
which shall be made available for sale under the Plan shall be 500,000 shares,
subject to adjustment upon changes in capitalization of the Company as provided
in Section 18 hereof. If, on a given Exercise Date, the number of shares with
respect to which options are to be exercised exceeds the number of shares then
available under the Plan, the Company shall make a pro rata allocation of the
shares remaining available for purchase in as uniform a manner as shall be
practicable and as it shall deter mine to be equitable.
(b) The participant shall have no interest or voting right in
shares covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan shall
be registered in the name of the participant or in the name of the participant
and his or her spouse.
13. Administration.
(a) Administrative Body. The Plan shall be administered by the
Board or a committee of members of the Board appointed by the Board. The Board
or its committee shall have full and exclusive discretionary authority to
construe, interpret and apply the terms of the Plan, to determine eligibility
and to adjudicate all disputed claims filed under the Plan. Every finding,
decision and determination made by the Board or its committee shall, to the full
extent permitted by law, be final and binding upon all parties.
(b) Rule 16b-3 Limitations. Notwithstanding the provisions of
Subsection (a) of this Section 13, in the event that Rule 16b-3 promulgated
under the Securities Exchange Act of 1934,
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<PAGE> 24
as amended (the "Exchange Act"), or any successor provision ("Rule 16b-3")
provides specific requirements for the administrators of plans of this type, the
Plan shall be administered only by such a body and in such a manner as shall
comply with the applicable requirements of Rule 16b-3. Unless permitted by Rule
16b-3, no discretion concerning decisions regarding the Plan shall be afforded
to any committee or person that is not "disinterested" as that term is used in
Rule 16b-3.
14. Designation of Beneficiary.
(a) A participant may file a written designation of a beneficiary
who is to receive any shares and cash, if any, from the participant's account
under the Plan in the event of such partici pant's death subsequent to an
Exercise Date on which the option is exercised but prior to delivery to such
participant of such shares and cash. In addition, a participant may file a
written designation of a beneficiary who is to receive any cash from the
participant's account under the Plan in the event of such participant's death
prior to exercise of the option. If a participant is married and the designated
beneficiary is not the spouse, spousal consent shall be required for such
designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.
15. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
16. Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
17. Reports. Individual accounts shall be maintained for each
participant in the Plan. Statements of account shall be given to participating
Employees at least annually, which statements shall set forth the amounts of
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
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<PAGE> 25
18. Adjustments Upon Changes in Capitalization, Dissolution,
Liquidation, Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the Reserves, as well as the price per share
and the number of shares of Common Stock covered by each option under the Plan
which has not yet been exercised, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of shares of Common Stock effected without receipt of consideration by
the Company; provided, however, that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration". Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Periods shall terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board.
(c) Merger or Asset Sale. In the event of a proposed sale of all
or substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each option under the Plan shall be assumed or
an equivalent option shall be substituted by such successor corporation or a
parent or subsidiary of such successor corporation, unless the Board determines,
in the exercise of its sole discretion and in lieu of such assumption or
substitution, to shorten the Offering Period then in progress by setting a new
Exercise Date (the "New Exercise Date") or to cancel each outstanding right to
purchase and refund all sums collected from participants during the Offering
Period then in progress. If the Board shortens the Offering Period then in
progress in lieu of assumption or substitution in the event of a merger or sale
of assets, the Board shall notify each participant in writing, at least five (5)
business days prior to the New Exercise Date, that the Exercise Date for his
option has been changed to the New Exercise Date and that his option will be
exercised automatically on the New Exercise Date, unless prior to such date he
has withdrawn from the Offering Period as provided in Section 10 hereof.
19. Amendment or Termination.
(a) The Board of Directors of the Company may at any time and for
any reason terminate or amend the Plan. Except as provided in Section 18 hereof,
no such termination can affect options previously granted, provided that an
Offering Period may be terminated by the Board of Directors on any Exercise Date
if the Board determines that the termination of the Plan is in the best
interests of the Company and its shareholders. Except as provided in Section 18
hereof, no amendment may make any change in any option theretofore granted which
adversely affects the
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<PAGE> 26
rights of any participant. To the extent necessary to comply with Rule 16b-3 or
under Section 423 of the Code (or any successor rule or provision or any other
applicable law or regulation), the Company shall obtain shareholder approval for
an amendment in such a manner and to such a degree as required.
(b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.
20. Notices. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
21. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may
require the person exercising such option to represent and warrant at the time
of any such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
22. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 19 hereof.
23. Automatic Transfer to Low Price Offering Period. To the extent
permitted by Rule 16b-3 of the Exchange Act, if the Fair Market Value of the
Common Stock on any Exercise Date in an Offering Period is lower than the Fair
Market Value of the Common Stock on the
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<PAGE> 27
Enrollment Date of such Offering Period, then all participants in such Offering
Period shall be automatically withdrawn from such Offering Period immediately
after the exercise of their option on such Exercise Date and automatically
re-enrolled in the immediately following Offering Period as of the first day
thereof.
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<PAGE> 28
EXHIBIT A
CELERITEK, INC.
EMPLOYEE QUALIFIED STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date: ___________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. _________________________________hereby elects to participate in the
Celeritek, Inc. Employee Qualified Stock Purchase Plan (the "Employee
Qualified Stock Purchase Plan") and sub scribes to purchase shares of
the Company's Common Stock in accordance with this Sub scription
Agreement and the Employee Qualified Stock Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of ____% of my Compensation on each payday (from 1 to 10%) during the
Offering Period in accordance with the Employee Qualified Stock Purchase
Plan. (Please note that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Qualified Stock Purchase
Plan. I understand that if I do not withdraw from an Offering Period,
any accumulated payroll deductions will be used to automatically
exercise my option.
4. I have received a copy of the complete Employee Qualified Stock Purchase
Plan. I under stand that my participation in the Employee Qualified
Stock Purchase Plan is in all respects subject to the terms of the Plan.
I understand that my ability to exercise the option under this
Subscription Agreement is subject to shareholder approval of the
Employee Qualified Stock Purchase Plan.
5. Shares purchased for me under the Employee Qualified Stock Purchase Plan
should be issued in the name(s) of (Employee or Employee and Spouse
only): __________________________________________________________.
6. I understand that if I dispose of any shares received by me pursuant to
the Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares) or one year after
the Exercise Date, I will be treated for federal income tax purposes as
having received ordinary income at the time of such disposition in an
amount equal to the excess of the fair market value of the shares at the
time such shares were purchased by me
<PAGE> 29
over the price which I paid for the shares. I hereby agree to notify the
Company in writing within 30 days after the date of any disposition of
my shares and I will make adequate provision for Federal, state or other
tax withholding obligations, if any, which arise upon the disposition of
the Common Stock. The Company may, but will not be obligated to,
withhold from my compensation the amount necessary to meet any
applicable withholding obligation including any withholding necessary to
make available to the Company any tax deductions or benefits
attributable to sale or early disposition of Common Stock by me. If I
dispose of such shares at any time after the expiration of the 2-year
and 1-year holding periods, I understand that I will be treated for
federal income tax purposes as having received income only at the time
of such disposition, and that such income will be taxed as ordinary
income only to the extent of an amount equal to the lesser of (1) the
excess of the fair market value of the shares at the time of such
disposition over the purchase price which I paid for the shares, or (2)
15% of the fair market value of the shares on the first day of the
Offering Period. The remainder of the gain, if any, recognized on such
disposition will be taxed as capital gain.
7. I hereby agree to be bound by the terms of the Employee Qualified Stock
Purchase Plan. The effectiveness of this Subscription Agreement is
dependent upon my eligibility to participate in the Employee Qualified
Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Qualified Stock Purchase Plan:
NAME: (Please print)
----------------------------------------------------------
(First) (Middle) (Last)
- ------------------------------- --------------------------------------------
Relationship
--------------------------------------------
(Address)
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<PAGE> 30
Employee's Social
Security Number: ____________________________________
Employee's Address: ____________________________________
____________________________________
____________________________________
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated:_________________________ ____________________________________________
Signature of Employee
____________________________________________
Spouse's Signature (If beneficiary other
than spouse)
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<PAGE> 31
EXHIBIT B
CELERITEK, INC.
EMPLOYEE QUALIFIED STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Celeritek,
Inc. Employee Qualified Stock Purchase Plan which began on ____________, 19____
(the "Enrollment Date") hereby notifies the Company that he or she hereby
withdraws from the Offering Period. He or she hereby directs the Company to pay
to the undersigned as promptly as practicable all the payroll deductions
credited to his or her account with respect to such Offering Period. The
undersigned understands and agrees that his or her option for such Offering
Period will be automatically terminated. The undersigned under stands further
that no further payroll deductions will be made for the purchase of shares in
the current Offering Period and the undersigned shall be eligible to participate
in succeeding Offering Periods only by delivering to the Company a new
Subscription Agreement.
Name and Address of Participant:
--------------------------------
--------------------------------
--------------------------------
Signature:
--------------------------------
Date:
--------------------------
