<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the
Registrant [_]
Check the appropriate box:
[_]Preliminary Proxy Statement
[_]Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
RF MONOLITHICS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
SAM L. DENSMORE
(NAME OF PERSON(S) FILING PROXY STATEMENT IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box)
[_]$125 per Exchange Act Rules o-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[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 paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
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2. Form, Schedule or Registration Statement No.:
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3. Filing Party:
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4. Date Filed:
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<PAGE>
RF MONOLITHICS, INC.
4347 SIGMA ROAD
DALLAS, TEXAS 75244
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, JANUARY 14, 1998
TO THE STOCKHOLDERS OF RF MONOLITHICS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of RF
MONOLITHICS, INC., a Delaware corporation (the "Company"), will be held on
Wednesday, January 14, 1998 at 9:00 a.m., local time, at The Westin Galleria
Dallas, 13340 Dallas Parkway, Dallas, Texas 75240 for the following purpose:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To approve the Company's amendment and restatement of the Amended and
Restated 1982 Stock Option Plan as the 1997 Equity Incentive Plan and to
increase the aggregate number of shares of Common Stock authorized for
issuance under such plan by 325,000 shares.
3. To approve the Company's 1994 Employee Stock Purchase Plan, as amended,
to increase the aggregate number of shares of Common Stock authorized
for issuance under such plan by 175,000 shares.
4. To ratify the selection of Deloitte & Touche LLP as independent auditors
of the Company for its fiscal year ending August 31, 1998.
5. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on December 4, 1997,
as the record date for the determination of stockholders entitled to notice of
and to vote at this Annual Meeting and at any adjournment or postponement
thereof.
By Order of the Board of Directors
/s/ James P. Farley
James P. Farley
Secretary
Dallas, Texas
December 12, 1997
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE
YOUR REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE
PREPAID IF MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN
IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE
MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A
BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST
OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
RF MONOLITHICS, INC.
4347 SIGMA ROAD
DALLAS, TEXAS 75244
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
JANUARY 14, 1998
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of RF
Monolithics, Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held on Wednesday, January 14, 1998, at
9:00 a.m., local time (the "Annual Meeting"), or at any adjournment or
postponement thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting. The Annual Meeting will be held at The
Westin Galleria Dallas, 13340 Dallas Parkway, Dallas, TX 75240. The Company
intends to mail this proxy statement and accompanying proxy card on or about
Friday, December 12, 1997, to all stockholders entitled to vote at the Annual
Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding in their names shares of Common Stock
beneficially owned by others to forward to such beneficial owners. The Company
may reimburse persons representing beneficial owners of Common Stock for their
costs of forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or
other regular employees for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on December
4, 1997 will be entitled to notice of and to vote at the Annual Meeting. At
the close of business on December 4, 1997 the Company had outstanding and
entitled to vote 5,507,604 shares of Common Stock. Each holder of record of
Common Stock on such date will be entitled to one vote for each share held on
all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter
has been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 4347
Sigma Road, Dallas, Texas 75244, a written notice of revocation or a duly
executed proxy bearing a later date, or it may be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
<PAGE>
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the Company's
1999 Annual Meeting of Stockholders must be received by the Company not later
than September 16, 1998 in order to be included in the proxy statement and
proxy relating to that Annual Meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
There are six nominees for the seven Board positions presently authorized in
the Company's By-laws. Each director to be elected will hold office until the
next annual meeting of stockholders and until his successor is elected and has
qualified, or until such director's earlier death, resignation or removal.
Each nominee listed below is currently a director of the Company, four
directors having been elected by the stockholders, and two directors, Michael
R. Bernique and Matthew J. Desch, having been elected by the Board.
Shares represented by executed proxies will be voted, if authority to do so
is not withheld, for the election of the six nominees named below. In the
event that any nominee should be unavailable for election as a result of an
unexpected occurrence, such shares will be voted for the election of such
substitute nominee as management may propose. Each person nominated for
election has agreed to serve if elected and management has no reason to
believe that any nominee will be unable to serve.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
NOMINEES
The names of the nominees and certain information about them are set forth
below:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION/
NAME AGE POSITION HELD WITH THE COMPANY
- - ---- --- ------------------------------
<S> <C> <C>
Sam L. Densmore............... 56 President and Chief Executive Officer
Michael R. Bernique........... 53 Retired, formerly President of Satellite Data
Networks Group of Next Level Systems, Inc.
Cornelius C. Bond, Jr......... 64 Retired, formerly General Partner, New
Enterprise Associates
Dean C. Campbell.............. 47 Managing General Partner, Campbell Venture
Management
Matthew J. Desch.............. 39 President, Nortel Wireless Networks
Francis J. Hughes, Jr......... 47 General Partner, American Research and
Development
</TABLE>
SAM L. DENSMORE joined the Company as Executive Vice President, Chief
Operating Officer, Chief Financial Officer and Secretary in October 1993. Mr.
Densmore became a director of the Company in June 1994. In July 1996, Mr.
Densmore was elected to the positions of President and Chief Executive
Officer. In 1991, Mr. Densmore founded the IBC Group, a private consulting
company, and served as its President from January 1991 to September 1993. From
1984 to January 1990, Mr. Densmore was employed at Recognition International,
Inc., a document image processing company. During that period, Mr. Densmore
served as Senior Vice President, Treasurer and Chief Financial Officer from
October 1989 to December 1990 and Vice President of Corporate Development from
1984 to 1989. He is also a director of XeTel Corporation, a provider of
advanced design, prototype and manufacturing services in the
telecommunications, networking and computer industries. Mr. Densmore is a
Certified Public Accountant.
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<PAGE>
MICHAEL R. BERNIQUE has served on the Company's Board of Directors since
October 1997. In 1997, Mr. Bernique retired from Next Level Systems, Inc., a
telecommunications company, where he had served as President of Satellite Data
Networks Group since 1996. From 1993 to 1995, Mr. Bernique served as Sr. Vice
President, North American Sales and Service at DSC Communications ("DSC"), a
telecommunications company, and from 1992 to 1993 he served as Vice President
and General Manager, Transmission Products Division of DSC.
CORNELIUS C. BOND, JR. has served on the Company's Board of Directors since
November 1992. From 1982 to 1997, he was a general partner of various New
Enterprise Associates venture capital funds. Mr. Bond is Chairman of the Board
of Metricom, Inc., a digital wireless communications company, and a director
of Spectranetics, Inc., a medical device company.
DEAN C. CAMPBELL has served on the Company's Board of Directors since May
1989. Since 1982, Mr. Campbell has been the Managing General Partner of
Campbell Venture Management, a venture capital fund. Mr. Campbell serves as a
director of Telco Systems, Inc., a manufacturer of telecommunications devices,
and Texas Microsystems, Inc., a manufacturer of computer systems.
MATTHEW J. DESCH has served on the Company's Board of Directors since
October 1997. Since 1996, Mr. Desch has been President of Nortel Wireless
Networks, a global division of Nortel (Northern Telecom), a digital network
solutions company. From 1991 to 1996, Mr. Desch served as Group President and
General Manager at Nortel Wireless Networks.
FRANCIS J. HUGHES, JR. has served on the Company's Board of Directors since
1983. Mr. Hughes joined American Research and Development, a private venture
capital firm, in January 1982, became Chief Operating Officer in November 1990
and President in June 1992. He has been a general partner of three American
Research and Development venture capital funds, as well as a general partner
of Hospitality Technology Funds, L.P. He is also a general partner of Egan-
Managed Capital, a venture capital firm. Mr. Hughes also serves as a director
of Ceramic Process Systems Corporation, a manufacturer of advanced metal-
matrix composites and ceramic components, and as Chairman of the Board of
Texas Microsystems, Inc.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended August 31, 1997 the Board of Directors held
eight meetings. The Board has an Audit Committee and a Compensation Committee.
The Audit Committee meets with the Company's independent auditors at least
annually to review the results of the annual audit and discuss the financial
statements; recommends to the Board the independent auditors to be retained;
and receives and considers the accountants' comments as to controls, adequacy
of staff and management performance and procedures in connection with audit
and financial controls. The Audit Committee is composed of two non-employee
directors: Messrs. Campbell and Hughes. It met once during such fiscal year,
although not as an individual committee, but rather as part of a regular
meeting of the Board of Directors.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation, awards stock options to employees and consultants
under the Company's stock option plans and otherwise determines compensation
levels and performs such other functions regarding compensation as the Board
may delegate. The Compensation Committee is composed of three non-employee
directors: Messrs. Bond, Campbell and Hughes. It met once during such fiscal
year.
During the fiscal year ended August 31, 1997, all Board members attended 75%
or more of the aggregate of the meetings of the Board and of the committees on
which he served, held during the period for which he was a director or
committee member, respectively.
3
<PAGE>
PROPOSAL 2
APPROVAL OF 1997 EQUITY INCENTIVE PLAN
(AMENDMENT AND RESTATEMENT OF THE 1982 STOCK OPTION PLAN)
In 1982, the Board of Directors adopted, and the stockholders subsequently
approved, the Company's Amended and Restated 1982 Stock Option Plan (the "1982
Plan"). As a result of a series of amendments, there are 650,000 shares of the
Company's Common Stock authorized for issuance under the 1982 Plan.
In November 1997, options (net of canceled or expired options) covering an
aggregate of 559,443 shares of the Company's Common Stock had been granted
under the 1982 Plan, and only 90,557 shares (plus any shares that might in the
future be returned to the plans as a result of cancellations or expiration of
options) remained available for future grant under the 1982 Plan.
In October 1997, the Board amended and restated the 1982 Plan as the 1997
Equity Incentive Plan (the "Incentive Plan"), subject to stockholder approval,
to enhance the flexibility of the Board and the Compensation Committee in
granting stock awards to the Company's employees, directors and consultants.
The amendment also increases the number of shares authorized for issuance
under the 1982 Plan from a total of 650,000 shares to 975,000 shares (an
increase of 325,000 shares). The Board adopted this amendment to ensure that
the Company can continue to grant stock options to employees at levels
determined appropriate by the Board and the Compensation Committee.
During the last fiscal year, under the 1982 Plan, the Company granted to all
current executive officers as a group options to purchase 82,500 shares at
exercise prices of $8.125 to $10.50 per share and all employees (excluding
executive officers) as a group options to purchase 133,000 shares at exercise
prices of $8.125 to $22.25 per share.
Stockholders are requested in this Proposal 2 to approve the Incentive Plan.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the meeting will be
required to approve the Incentive Plan. Abstentions will be counted toward the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether this matter
has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
The essential features of the Incentive Plan are outlined below:
GENERAL
The Incentive Plan provides for the grant or issuance of incentive stock
options to employees and nonstatutory stock options, restricted stock purchase
awards, and stock bonuses to consultants, employees and directors. To date
only incentive stock options and nonstatutory stock options have been awarded
under the Incentive Plan. Incentive stock options granted under the Incentive
Plan are intended to qualify as "incentive stock options" within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
Nonstatutory stock options granted under the Incentive Plan are intended not
to qualify as incentive stock options under the Code. See "Federal Income Tax
Information" for a discussion of the tax treatment of the various awards
included in the Incentive Plan.
PURPOSE
The Incentive Plan provides a means by which selected employees and
directors of, and consultants to, the Company, and its affiliates, may be
given an opportunity to purchase Common Stock of the Company. The Company, by
means of the Incentive Plan, seeks to retain the services of persons who are
now employees of or consultants to the Company or its affiliates, to secure
and retain the services of new employees and consultants, and to provide
incentives for such persons to exert maximum efforts for the success of the
Company and its affiliates.
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<PAGE>
FORMS OF BENEFIT
The Incentive Plan provides for incentive stock options, nonstatutory stock
options, restricted stock purchase awards, stock bonuses (collectively "Stock
Awards").
ADMINISTRATION
The Incentive Plan is administered by the Board unless and until the Board
delegates administration to a committee composed of not fewer than two Board
members, all of the members of which committee must be non-employee directors
(unless the Board expressly declares that such requirement shall not apply)
and may also be, in the discretion of the Board, outside directors. If
administration has been delegated to a committee, the committee will have, in
connection with the administration of the Incentive Plan, the powers possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Incentive Plan, as may be adopted from time to time by the
Board. The Board or committee may delegate to a committee of one or more
members of the Board the authority to grant Stock Awards to eligible persons
who are not then subject to Section 16 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and/or who are either (i) not then employees
covered by Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code") and are not expected to be covered by Section 162(m) of the Code
at the time of recognition of income resulting from such Stock Award, or (ii)
not persons with respect to whom the Company wishes to avoid the application
of Section 162(m) of the Code. The Board may abolish such committee at any
time and revest in the Board the administration of the Incentive Plan. The
Board has delegated the administration of the Incentive Plan to the
Compensation Committee.
The Board has the power to determine from time to time which of the persons
eligible under the Incentive Plan shall be granted awards, the type of awards
to be granted, when and how each award shall be granted, to construe and
interpret the Incentive Plan and awards granted under it, and to establish,
amend and revoke rules and regulations for its administration. The Board may
correct any defect in the Incentive Plan or in any award agreement to make the
Incentive Plan fully effective.
SHARES SUBJECT TO THE PLAN
The Common Stock that may be sold pursuant to awards under the Incentive
Plan shall not exceed in the aggregate 975,000 shares of the Company's Common
Stock. If any award expires or terminates, in whole or in part, without having
been exercised in full, the stock not purchased under such award will revert
to and again become available for issuance under the Incentive Plan. The
Common Stock subject to the Incentive Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
ELIGIBILITY
Incentive stock options may be granted only to employees. Nonstatutory stock
options, restricted stock purchase awards, and stock bonuses may be granted
only to employees, directors or consultants.
No person is eligible for the grant of an incentive stock option if, at the
time of grant, such person owns stock possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company
unless the exercise price of such option is at least one hundred ten percent
(110%) of the fair market value of such Common Stock subject to the option at
the date of grant and the option is not exercisable after the expiration of
five (5) years from the date of grant, or in the case of a restricted stock
purchase award, the purchase price is at least one hundred percent (100%) of
the fair market value of Common Stock subject to the award at date of grant.
Once the Company becomes subject to Section 162(m) of the Code (which limits
the Company's deduction for compensation in excess of $1 million per year for
certain executives) following the transition period for newly public
companies, no person shall be eligible to be granted options covering more
than two hundred fifty thousand (250,000) shares of the Company's Common Stock
in any calendar year.
5
<PAGE>
TERM AND TERMINATION
No option is exercisable after the expiration of ten (10) years from the
date it was granted.
In the event an optionee's continuous status as an employee, director or
consultant is terminated, the optionee may exercise his or her option (to the
extent that the optionee was entitled to exercise it at the time of
termination) but generally only within the earlier of (i) the date three (3)
months after the termination of the optionee's continuous status as an
employee, director or consultant, or (ii) the expiration of the term of the
option as set forth in the option agreement.
An optionee's option agreement may also provide that if the exercise of the
option following the termination of the optionee's continuous status as an
employee, director, or consultant would result in liability under Section
16(b) of the Securities Exchange Act of 1934 (the "Exchange Act"), then the
option shall terminate on the earlier of (i) the expiration of the term of the
option set forth in the option agreement, or (ii) the tenth (10th) day after
the last date on which such exercise would result in such liability under
Section 16(b) of the Exchange Act. Finally, an optionee's option agreement may
also provide that if the exercise of the option following the termination of
the optionee's continuous status as an employee, director or consultant would
be prohibited at any time solely because the issuance of shares would violate
the registration requirements under the Securities Act of 1933, then the
option shall terminate on the earlier of (i) the expiration of the term of the
option as set forth in the immediately preceding paragraph, or (ii) the
expiration of a period of three (3) months after the termination of the
optionee's continuous status as an employee, director or consultant during
which the exercise of the option would not be in violation of such
registration requirements.
In the event an optionee's continuous status as an employee, director or
consultant terminates as a result of the optionee's death or disability, the
optionee (or such optionee's estate, heirs or beneficiaries) may exercise his
or her option, but only within the period ending on the earlier of (i) twelve
(12) months following such termination (or such longer or shorter period as
specified in the option agreement) or (ii) the expiration of the term of the
option as set forth in the option agreement.
In the event a stock bonus or restricted stock recipient's continuous status
as an employee, director or consultant terminates, the Company may repurchase
or otherwise reacquire any or all of the shares of stock held by that person
which have not vested as of the date of termination under the terms of the
stock bonus or restricted stock purchase agreement between the Company and
such person.
EXERCISE PRICE
The exercise price of each incentive stock option will not be less than one
hundred percent (100%) of the fair market value of the Company's Common Stock
on the date of grant. The exercise price of each nonstatutory stock option
will not be less than eighty-five percent (85%) of the fair market value on
the date of grant. The purchase price of restricted stock will not be less
than eighty-five percent (85%) of the fair market value of the Company's
Common Stock on the date such award is made. Stock bonuses may be awarded in
consideration for past services actually rendered to the Company or for its
benefit.
CONSIDERATION
The purchase price of stock acquired pursuant to a Stock Award is paid
either in cash at the time of exercise or purchase, or (if determined by the
Board at the time of grant for an option) by deferred payment or other
arrangement or in any other form of legal consideration that may be acceptable
to the Board. Additionally, in the case of an option and in the discretion of
the Board at the time of the grant of an option, by delivery to the Company of
other Common Stock of the Company. In the case of any deferred payment
arrangement, interest will be payable at least annually and will be charged at
the minimum rate of interest necessary to avoid the treatment as interest of
amounts that are not stated to be interest.
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<PAGE>
TRANSFERABILITY
An incentive stock option will not be transferable except by will or by the
laws of descent and distribution, and shall be exercisable during the lifetime
of the person to whom the incentive stock option is granted only by such
person. A nonstatutory stock option, stock bonus, or restricted stock award
generally will be transferable only as provided in the stock award agreement.
An optionee may designate a beneficiary who may exercise his or her option
after death.
VESTING
The total number of shares of stock subject to an option may, but need not,
be allotted in periodic installments. The option agreement may provide that
from time to time during each of such installment periods, the option may
become exercisable ("vest") with respect to some or all of the shares allotted
to that period, and may be exercised with respect to some or all of the shares
allotted to such period and/or any prior period as to which the option became
vested but was not fully exercised. The option agreement may also provide that
an optionee may exercise an option prior to full vesting, provided that the
Company may have a repurchase right with respect to any unvested shares.
Restricted stock purchase awards and stock bonuses granted under the
Incentive Plan may be granted pursuant to a repurchase option in favor of the
Company in accordance with a vesting schedule determined by the Board.
ADJUSTMENTS UPON CHANGES IN STOCK
If any change is made in the Common Stock subject to the Incentive Plan, or
subject to any Stock Award, without receipt of consideration by the Company
(through merger, consolidation, reorganization, recapitalization, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or otherwise), the class(es) and maximum number of shares subject to
the Incentive Plan, the maximum annual award applicable under the Incentive
Plan and the class(es) and number of shares and price per share of stock
subject to outstanding Stock Awards will be appropriately adjusted.
In the event of (a) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act) of 35% or more of either (i) the then outstanding shares of
common stock of the Company, or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of the Board of Directors of the Company, (b) or in connection with
or in anticipation of, any acquisition, merger or reorganization in which
individuals who, as of the date hereof, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a majority of the Board,
or (c) the sale or other disposition of all or substantially all of the assets
of the Company, then any surviving corporation shall assume any Stock Awards
outstanding under the Incentive Plan or shall substitute similar awards for
those outstanding under the Incentive Plan or such Stock Awards shall continue
in full force and effect. In the event a surviving corporation refuses to
assume such Stock Awards or substitute similar awards, then, with respect to
stock awards held by persons then performing services as employees, directors
or consultants, the time during which such Stock Awards may be exercised shall
be accelerated prior to completion of such transaction and such Stock Awards
terminated if not exercised prior to such transaction. If any surviving
corporation assumes Stock Awards outstanding under the Incentive Plan or
substitutes similar stock awards for those outstanding under the Incentive
Plan, then if the holder of a Stock Award (or substitute stock award) is
terminated for any reason other than (i) death, (ii) cause, (iii) disability
which prevents the holder of such award from performing his or her duties for
more than one hundred and eighty (180) days during any twelve (12) month
period, or (iv) voluntary resignation, then the vesting of such award shall be
accelerated in full and, if applicable, such award shall be exercisable in
full for the post-termination exercise period provided in such award's
agreement.
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AMENDMENT OF THE INCENTIVE PLAN
The Board at any time, and from time to time, may amend the Incentive Plan.
However, no amendment shall be effective unless approved by the stockholders
of the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will increase the number of shares reserved for
issuance under the Incentive Plan, modify the requirements as to eligibility
for participation or in any other way if such modification requires
stockholder approval in order for the Incentive Plan to satisfy the
requirements of Section 422 of the Code, Rule 16b-3, or any Nasdaq or
securities exchange requirements. The Board may in its sole discretion submit
any other amendment to the Incentive Plan for stockholder approval.
TERMINATION OR SUSPENSION OF THE INCENTIVE PLAN
The Board may suspend or terminate the Incentive Plan at any time. Unless
sooner terminated, the Incentive Plan shall terminate on October 16, 2007. No
Stock Awards may be granted under the Incentive Plan while the Incentive Plan
is suspended or after it is terminated.
FEDERAL INCOME TAX INFORMATION
INCENTIVE STOCK OPTIONS. Incentive stock options under the Incentive Plan
are intended to be eligible for the favorable federal income tax treatment
accorded "incentive stock options" under the Code.
There generally are no federal income tax consequences to the optionee or
the Company by reason of the grant or exercise of an incentive stock option.
However, the exercise of an incentive stock option may increase the optionee's
alternative minimum tax liability, if any.
If an optionee holds stock acquired through exercise of an incentive stock
option for at least two years from the date on which the option is granted and
at least one year from the date on which the shares are transferred to the
optionee upon exercise of the option, any gain or loss on a disposition of
such stock will be capital gain or loss. Generally, if the optionee disposes
of the stock before the expiration of either of these holding periods (a
"disqualifying disposition"), at the time of disposition, the optionee will
realize taxable ordinary income equal to the lesser of (a) the excess of the
stock's fair market value on the date of exercise over the exercise price, or
(b) the optionee's actual gain, if any, on the purchase and sale. The
optionee's additional gain, or any loss, upon the disqualifying disposition
will be a capital gain or loss, which will be long-term, mid-term, or short-
term depending on how long the optionee holds the stock. Capital gains are
generally subject to lower tax rates than ordinary income. Slightly different
rules may apply to optionees who acquire stock subject to certain repurchase
options.
To the extent the optionee recognizes ordinary income by reason of a
disqualifying disposition, the Company will generally be entitled (subject to
the requirement of reasonableness and the satisfaction of a tax reporting
obligation) to a corresponding business expense deduction in the tax year in
which the disqualifying disposition occurs.
NONSTATUTORY STOCK OPTIONS. Nonstatutory stock options granted under the
Incentive Plan generally have the following federal income tax consequences:
There are no tax consequences to the optionee or the Company by reason of
the grant of a nonstatutory stock option. Upon exercise of a nonstatutory
stock option, the optionee normally will recognize taxable ordinary income
equal to the excess of the stock's fair market value on the date of exercise
over the option exercise price. Generally, with respect to employees, the
Company is required to withhold from regular wages or supplemental wage
payments an amount based on the ordinary income recognized. Subject to the
requirement of reasonableness and the satisfaction of a reporting obligation,
the Company will generally be entitled to a business expense deduction equal
to the taxable ordinary income realized by the optionee. Upon disposition of
the stock, the optionee will recognize a capital gain or loss equal to the
difference between the selling price and the sum of the amount paid for such
stock plus any amount recognized as ordinary income upon exercise of the
option.
8
<PAGE>
Such gain or loss will be long-term, mid-term, or short-term depending on how
long the optionee holds the stock. Slightly different rules may apply to
optionees who acquire stock subject to certain repurchase options or who are
subject to Section 16(b) of the Exchange Act.
POTENTIAL LIMITATION ON COMPANY DEDUCTIONS. In 1993, the U.S. Congress
amended the Code to add Section 162(m) which denies a deduction to any
publicly held corporation for compensation paid to certain employees in a
taxable year to the extent that compensation exceeds $1 million for a covered
employee. It is possible that compensation attributable to awards granted in
the future under the Incentive Plan, when combined with all other types of
compensation received by a covered employee from the Company, may cause this
limitation to be exceeded in any particular year.
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with Treasury regulations issued under Section 162(m), compensation
attributable to stock options will qualify as performance-based compensation,
provided that the option is granted by a compensation committee comprised
solely of "outside directors" and either: (i) the option plan contains a per-
employee limitation on the number of shares for which options may be granted
during a specified period, the per-employee limitation is approved by the
stockholders, and the exercise price of the option is no less than the fair
market value of the stock on the date of grant; or (ii) the option is granted
(or exercisable) only upon the achievement (as certified in writing by the
compensation committee) of an objective performance goal established in
writing by the compensation committee while the outcome is substantially
uncertain, and the option is approved by stockholders.
PROPOSAL 3
APPROVAL OF 1994 EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED
In April 1994, the Board of Directors adopted the 1994 Employee Stock
Purchase Plan (the "Purchase Plan") authorizing the issuance of 175,000 shares
of the Company's Common Stock. The Board of Directors subsequently amended the
Purchase Plan to increase the maximum period during which an offering may be
effective from twelve months to twenty-seven months. The stockholders of the
Company approved the amendment to the Purchase Plan in January 1996. In
October 1997, the Board of Directors of the Company adopted amendments to the
Purchase Plan to increase the number of shares authorized for issuance under
the Purchase Plan to 350,000 shares. This amendment is intended to afford the
Company greater flexibility in providing employees with stock incentives and
ensures that the Company can continue to provide such incentives at levels
determined appropriate by the Board.
Stockholders are requested in this Proposal 3 to approve the Purchase Plan,
as amended. The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and entitled to vote at the meeting
will be required to approve the Purchase Plan, as amended. Abstentions will be
counted toward the tabulation of votes cast on proposals presented to the
stockholders and will have the same effect as negative votes. Broker non-votes
are counted towards a quorum, but are not counted for any purpose in
determining whether this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3.
The essential features of the Purchase Plan, as amended, are outlined below:
PURPOSE
The purpose of the Purchase Plan is to provide a means by which key
employees of the Company (and any parent or subsidiary of the Company
designated by the Board of Directors to participate in the Purchase Plan)
9
<PAGE>
may be given an opportunity to purchase Common Stock of the Company through
payroll deductions, to assist the Company in retaining the services of its
employees, to secure and retain the services of new employees, and to provide
incentives for such persons to exert maximum efforts for the success of the
Company. Approximately 400 of the Company's approximately 450 employees are
eligible to participate in the Purchase Plan.
The rights to purchase Common Stock granted under the Purchase Plan are
intended to qualify as options issued under an "employee stock purchase plan"
as that term is defined in Section 423(b) of the Code.
ADMINISTRATION
The Purchase Plan is administered by the Board of Directors, which has the
final power to construe and interpret the Purchase Plan and the rights granted
under it. The Board has the power, subject to the provisions of the Purchase
Plan, to determine when and how rights to purchase Common Stock of the Company
will be granted, the provisions of each offering of such rights (which need
not be identical), and whether any parent or subsidiary of the Company shall
be eligible to participate in such plan. The Board has the power, which it has
not exercised, to delegate administration of such plan to a committee of not
less than two Board members. The Board may abolish any such committee at any
time and revest in the Board the administration of the Purchase Plan.
OFFERINGS
The Purchase Plan is implemented by offerings of rights to all eligible
employees from time to time by the Board. The initial offering commenced on
November 27, 1995. The initial offering concluded on December 31, 1997, with
purchases occurring on purchase dates of June 30, 1996, December 31, 1996,
June 30, 1997 and December 31, 1997. Thereafter, an offering shall commence
every two years commencing on January 1, 1998, with purchase dates occurring
each June 30 and December 31.
ELIGIBILITY
Any person who is customarily employed at least 20 hours per week and five
months per calendar year by the Company or by any parent or subsidiary of the
Company, and who, on the date an offering commences, has been employed by the
Company or an affiliate for such continuous period of not more than two years
preceding an offering as the Board may require (three months under the current
offering), is eligible to participate in such offering under the Purchase
Plan. The Board also may provide that, if any employee becomes eligible to
participate in the Purchase Plan during the course of an Offering, the
employee may be granted a right under that offering and enroll in the Plan on
specified dates. Such employee's rights shall have the same characteristics as
any rights originally granted under that offering, except that (i) the
specified date on which such rights are granted shall be treated as the date
of the commencement of the offering for purposes of determining the purchase
price (see below) and (ii) the period of the offering for such rights shall
begin on the specified date on which such rights are granted and end
coincident with the end of that offering.
Notwithstanding the foregoing, no employee is eligible for the grant of any
rights under the Purchase Plan if, immediately after such grant, the employee
would own, directly or indirectly, stock possessing 5% or more of the total
combined voting power or value of all classes of stock of the Company or of
any parent or subsidiary of the Company (including any stock which such
employee may purchase under all outstanding rights and options), nor will any
employee be granted rights that would permit him to buy more than $25,000
worth of stock (determined at the fair market value of the shares at the time
such rights are granted) under all employee stock purchase plans of the
Company per calendar year in which the rights were outstanding.
PARTICIPATION IN THE PLAN
Eligible employees become participants in the Purchase Plan by delivering to
the Company as of the date selected by the Board as the offering date for the
offering, an agreement authorizing payroll deductions of up to 15% of such
employees' compensation during the purchase period.
10
<PAGE>
PURCHASE PRICE
The purchase price per share at which shares are sold in an offering under
the Purchase Plan is the lower of (a) 85% of the fair market value of a share
of Common Stock on the date of commencement of the offering, or (b) 85% of the
fair market value of a share of Common Stock on the last day of the purchase
period.
PAYMENT OF PURCHASE PRICE; PAYROLL DEDUCTIONS
The purchase price of the shares is accumulated by payroll deductions over
the offering period. At any time during the purchase period (excluding the
last 10 days), a participant may reduce or terminate his or her payroll
deductions. A participant may increase payroll deductions after the beginning
of any purchase period (excluding the last 10 days). All payroll deductions
made for a participant are credited to his or her account under the Purchase
Plan and deposited with the general funds of the Company. A participant may
not make any additional payments into such account.
PURCHASE OF STOCK
By executing an agreement to participate in the Purchase Plan, the employee
is entitled to purchase shares under such plan. In connection with offerings
made under the Purchase Plan, the Board specifies a maximum number of shares
any employee may be granted the right to purchase and the maximum aggregate
number of shares which may be purchased pursuant to such offering by all
participants. If the aggregate number of shares to be purchased upon exercise
of rights granted in the offering would exceed the maximum aggregate number,
the Board would make a pro rata allocation of shares available in a uniform
and equitable manner. Unless the employee's participation is discontinued, his
right to purchase shares is exercised automatically at the end of the purchase
period at the applicable price. See "Withdrawal" below.
WITHDRAWAL
While each participant in the Purchase Plan is required to sign an agreement
authorizing payroll deductions, the participant may withdraw from a given
offering by terminating his or her payroll deductions and by delivering to the
Company a notice of withdrawal from the Purchase Plan. Such withdrawal may be
elected at any time prior to the end of the applicable offering period
(excluding the last 10 days of any purchase period).
Upon any withdrawal from an offering by the employee, the Company will
distribute to the employee his or her accumulated payroll deductions without
interest, less any accumulated deductions previously applied to the purchase
of stock on the employee's behalf during such offering, and such employee's
interest in the offering will be automatically terminated. The employee is not
entitled to again participate in such offering. An employee's withdrawal from
an offering will not have any effect upon such employee's eligibility to
participate in subsequent offerings under the Purchase Plan.
TERMINATION OF EMPLOYMENT
Rights granted pursuant to any offering under the Purchase Plan terminate
immediately upon cessation of an employee's employment for any reason, and the
Company will distribute to such employee all of his or her accumulated payroll
deductions, without interest.
RESTRICTIONS ON TRANSFER
Rights granted under the Purchase Plan are not transferable and may be
exercised only by the person to whom such rights are granted.
DURATION, AMENDMENT AND TERMINATION
The Board may suspend, terminate or amend the Purchase Plan at any time. Any
amendment of the Purchase Plan must be approved by the stockholders within
twelve months of its adoption by the Board if the amendment
11
<PAGE>
would (a) increase the number of shares of Common Stock reserved for issuance
under the Purchase Plan, (b) modify the requirements relating to eligibility
for participation in the Purchase Plan, or (c) modify any other provision of
the Purchase Plan if such approval is required in order to comply with the
requirements of Rule 16b-3 under the Exchange Act.
Rights granted before amendment or termination of the Purchase Plan will not
be altered or impaired by any amendment or termination of such plan without
consent of the person to whom such rights were granted.
EFFECT OF CERTAIN CORPORATE EVENTS
In the event of a dissolution, liquidation or specified type of merger of
the Company, the surviving corporation may assume the rights under the
Purchase Plan or substitute similar rights, or the exercise date of any
ongoing offering may be accelerated such that the outstanding rights may be
exercised immediately prior to, or concurrent with, any such event, otherwise
such rights will continue in full force and effect.
STOCK SUBJECT TO PURCHASE PLAN
If rights granted under the Purchase Plan expire, lapse or otherwise
terminate without being exercised, the Common Stock not purchased under such
rights again becomes available for issuance under such plan.
FEDERAL INCOME TAX INFORMATION
Rights granted under the Purchase Plan are intended to qualify for favorable
federal income tax treatment associated with rights granted under an employee
stock purchase plan which qualifies under provisions of Section 423 of the
Code.
A participant will be taxed on amounts withheld for the purchase of shares
as if such amounts were actually received. Other than this, no income will be
taxable to a participant until disposition of the shares acquired, and the
method of taxation will depend upon the holding period of the purchase shares.
If the stock is disposed of at least two years after the beginning of the
offering period and at least one year after the stock is transferred to the
participant, then the lesser of (a) the excess of the fair market value of the
stock at the time of such disposition over the exercise price or (b) the
excess of the fair market value of the stock as of the beginning of the
offering period over the exercise price (determined as of the beginning of the
offering period) will be treated as ordinary income. Any further gain or any
loss will be taxed as a long-term or mid-term capital gain or loss. Capital
gains currently are generally subject to lower tax rates than ordinary income.
The maximum capital gains rate for federal income tax purposes is 28% while
the maximum ordinary rate is effectively 39.6% at the present time.
If the stock is sold or disposed of before the expiration of either of the
holding periods described above, then the excess of the fair market value of
the stock on the exercise date over the exercise price will be treated as
ordinary income at the time of such disposition, and the Company may, in the
future, be required to withhold income taxes relating to such ordinary income
from other payments made to the participant. The balance of any gain will be
treated as capital gain. Even if the stock is later disposed of for less than
its fair market value on the exercise date, the same amount of ordinary income
is attributed to the participant, and a capital loss is recognized equal to
the difference between the sales price and the fair market value of the stock
on such exercise date. Any capital gain or loss will be long-term, mid-term or
short-term depending on the length of time the stock has been held.
There are no federal income tax consequences to the Company by reason of the
grant or exercise of rights under the Purchase Plan. The Company is entitled
to a deduction to the extent amounts are taxed as ordinary income to a
participant (subject to the requirement of reasonableness, the provisions of
Section 162(m) of the Code and the satisfaction of a tax reporting
obligation).
12
<PAGE>
PROPOSAL 4
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending August 31, 1998 and has
further directed that management submit the selection of independent auditors
for ratification by the stockholders at the Annual Meeting. Deloitte & Touche
LLP has audited the Company's financial statements since August 1986.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting, will have an opportunity to make a statement if they so desire
and will be available to respond to appropriate questions.
Stockholder ratification of the selection of Deloitte & Touche LLP as the
Company's independent auditors is not required by the Company's By-laws or
otherwise. However, the Board is submitting the selection of Deloitte & Touche
LLP to the stockholders for ratification as a matter of good corporate
practice. If the stockholders fail to ratify the selection, the Audit
Committee and the Board will reconsider whether or not to retain that firm.
Even if the selection is ratified, the Audit Committee and the Board in their
discretion may direct the appointment of different independent auditors at any
time during the year if they determine that such a change would be in the best
interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of Deloitte & Touche LLP.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 4.
13
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of September 30, 1997 by: (i) each nominee
for director; (ii) each of the executive officers named in the Summary
Compensation Table; (iii) all executive officers and directors of the Company
as a group; and (iv) all those known by the Company to be beneficial owners of
more than five percent of its Common Stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
--------------------------
NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES TOTAL(2)
- - ---------------- ------------- ------------
<S> <C> <C>
Kopp Investment Advisors, Inc. (3)................. 1,015,550 18.51%
6600 France Avenue South
Suite 672
Edina, MN 55435
Michael R. Bernique(4)............................. -- --
Cornelius C. Bond, Jr.(5).......................... 46,498 *
Dean C. Campbell(6)................................ 57,943 1.05%
Matthew J. Desch(7)................................ -- --
Francis J. Hughes, Jr.(8).......................... 73,740 1.34%
Sam L. Densmore(9)................................. 177,529 3.14%
Darrell L. Ash(10)................................. 113,978 2.06%
Christopher G. Conlin(11).......................... 70,000 1.26%
James P. Farley(12)................................ 26,910 *
Thomas J. Phillips(13)............................. 12,483 *
All executive officers and directors as a group (10
persons)(14)...................................... 579,081 9.92%
</TABLE>
- - --------
*Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the
Securities and Exchange Commission (the "SEC"). Unless otherwise
indicated in the footnotes to this table and subject to community
property laws where applicable, the Company believes that each of the
stockholders named in this table has sole voting and investment power
with respect to the shares indicated as beneficially owned.
(2) Applicable percentages are based on 5,487,195 shares outstanding on
September 30, 1997, adjusted as required by rules promulgated by the SEC.
(3) Kopp Investment Advisors, Inc. holds voting power with respect to 20,000
shares and shares investment power for 995,550 shares with its clients.
(4) In connection with his election as director by the Board of Directors of
the Company in October 1997, Mr. Bernique received an automatic stock
option grant to purchase 12,500 shares of the Company's Common Stock,
none of which are exercisable within 60 days of September 30, 1997.
(5) Includes 10,113 shares issuable upon exercise of options that are
exercisable within 60 days of September 30, 1997. Also includes 2,684
shares over which Mr. Bond shares voting power.
(6) Represents 4,000 shares held in the Raymond W. Campbell Non-Marital Trust
B. Also includes 20,665 shares issuable upon exercise of options that are
exercisable within 60 days of September 30, 1997.
(7) In connection with his election as director by the Board of Directors of
the Company in October 1997, Mr. Desch received an automatic stock option
grant to purchase 12,500 shares of the Company's Common Stock, none of
which are exercisable within 60 days of September 30, 1997.
(8) Represents 5,000 shares held by American Research and Development. Also
includes 15,666 shares issuable upon exercise of options that are
exercisable within 60 days of September 30, 1997. Mr. Hughes disclaims
beneficial ownership of the shares held by American Research and
Development, except to the extent of his pecuniary interest therein.
(9) Includes 160,000 shares issuable upon exercise of options that are
exercisable within 60 days of September 30, 1997.
14
<PAGE>
(10) Includes 53,332 shares issuable upon exercise of options that are
exercisable within 60 days of September 30, 1997.
(11) Includes 70,000 shares issuable upon exercise of options that are
exercisable within 60 days of September 30, 1997.
(12) Includes 24,166 shares issuable upon exercise of options that are
exercisable within 60 days of September 30, 1997.
(13) Includes 10,291 shares issuable upon exercise of options that are
exercisable within 60 days of September 30, 1997.
(14) Includes an aggregate of 348,567 shares issuable upon exercise of options
held by executive officers and directors that are exercisable within 60
days of September 30, 1997.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended August 31, 1997, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with except that one
report, covering an aggregate of two transactions, was filed late by Mr. Ash,
one report was filed late by Mr. Bond and an initial report of ownership was
filed late by Randall Bell.
15
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Each non-employee director of the Company receives a quarterly retainer of
$3,000 and a per meeting fee of $1,000 per day for each board meeting attended
by a member in person. The members of the Board of Directors are also eligible
for reimbursement for their expenses incurred in connection with attendance at
Board meetings in accordance with Company policy.
Each non-employee director of the Company also receives stock option grants
under the 1994 Non-Employee Directors' Stock Option Plan (the "Directors'
Plan"). Only non-employee directors of the Company or an affiliate of such
directors (as defined in the Code) are eligible to receive options under the
Directors' Plan. Options granted under the Directors' Plan are intended by the
Company not to qualify as incentive stock options under the Code.
Option grants under the Directors' Plan are non-discretionary. Pursuant to
the terms of the Directors' Plan, each person elected for the first time to be
a non-employee director of the Company will automatically be granted an option
to purchase 12,500 shares of Common Stock upon the date of his or her initial
election as a non-employee director by the Board or the Stockholders of the
Company. On January 2nd of each year (or the next business day should such date
be a legal holiday), each member of the Company's Board of Directors who is not
an employee of the Company and has served as a non-employee director for at
least three months or, where specified by the non-employee director, an
affiliate of such director, is automatically granted under the Directors' Plan,
without further action by the Company, the Board of Directors or the
stockholders of the Company, an option to purchase 4,500 shares of Common Stock
of the Company. No other options may be granted at any time under the
Directors' Plan. The exercise price of options granted under the Directors'
Plan is 100% of the fair market value of the Common Stock on the date of the
option grant. Options are subject to vesting over a four-year period commencing
one year after the date of grant, and terminate ten years from the date of
grant unless terminated sooner pursuant to termination of the optionee's status
as a director or otherwise pursuant to the Directors' Plan. In the event of a
merger of the Company with or into another corporation or consolidation,
acquisition of assets or other change-in-control transaction involving the
Company, each option either becomes exercisable in full or is assumed or an
equivalent option is substituted by the successor corporation. Unless
terminated sooner, the Directors' Plan will terminate in 2004. The Directors'
Plan will be administered by the Board of Directors of the Company. The Board
has authority to amend or terminate the Directors' Plan, provided that no such
action may impair the rights of any optionee without the optionee's consent.
During the last fiscal year, each non-employee director of the Company
received an automatic grant of options to purchase 4,500 shares of Common Stock
under the Directors' Plan at a price per share of $9.125, the fair market value
of the Stock as of January 2, 1997, the date of the grant. On October 8, 1997,
the date of their election to the Board, options to purchase 12,500 shares of
Common Stock were granted to each of Messrs. Bernique and Desch at a price per
share of $27.0625, the fair market value of the stock on the date of grant. As
of September 30, 1997, no options had been exercised under the Directors' Plan.
16
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION
The following table shows for the fiscal year ended August 31, 1997,
compensation awarded or paid to, or earned by, the Company's Chief Executive
Officer and its other four most highly compensated executive officers at August
31, 1997 whose total annual salary and bonus exceeded $100,000 during the
fiscal year ended August 31, 1997 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
-------------------------------------- ---------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND COMPENSATION AWARDS OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) ($)(2) (#)(3) ($)(4)
- - ------------------ ---- --------- -------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sam L. Densmore 1997 179,232 126,754 -- -- 30,000 1,215
President and Chief 1996 135,000 39,984 -- 67,500 30,000 342
Executive Officer 1995 131,986 27,763 -- -- -- 160
Darrell L. Ash 1997 115,864 15,000 -- -- -- 369
Senior Vice President, 1996 115,000 16,720 -- 13,500 10,000 342
Technology 1995 112,235 12,750 -- -- -- 148
Christopher G. Conlin 1997 148,979 94,210 -- -- 10,000 204
Vice President, Sales 1996 63,447(5) 55,000 44,991(6) -- 60,000 143
and Marketing
James P. Farley 1997 94,502 21,480 -- -- -- 153
Vice President,
Controller and Secretary
Thomas J. Phillips, Jr. 1997 86,013 24,551 -- -- 5,000 174
Vice President,
Manufacturing
</TABLE>
- - --------
(1) In accordance with Securities and Exchange Commission ("Commission") rules,
Other Annual Compensation in the form of perquisites and other personal
benefits has been omitted where the aggregate amount of such perquisites
and other personal benefits constitute less than the lesser of $50,000 or
10% of the total annual salary and bonus for the Named Executive Officer
for the fiscal year.
(2) Represents Restricted Stock Awards granted in December 1995 to Messrs.
Densmore and Ash for 10,000 and 2,000 shares of Common Stock of the
Company, respectively. As of August 31, 1997, the fair market value of the
Company's Common Stock was $19.875 per share and the value of the
Restricted Stock Awards was $198,750 and $39,750, respectively. The
Restricted Stock Awards vest at a rate of 25% annually, and therefore will
be fully vested in December 1999.
(3) The Company has not granted stock appreciation rights.
(4) Represents premiums paid by the Company on a term life insurance policy.
The Company is not the beneficiary of the policy.
(5) Represents pro-rated salary paid from Mr. Conlin's appointment as Vice
President, Sales and Marketing in March 1996, based on an annual salary of
$145,000.
(6) Represents reimbursements of relocation expenses.
17
<PAGE>
STOCK OPTION GRANTS AND EXERCISES
The Company has two stock option plans for the benefit of officers and other
employees: its Amended and Restated 1982 Stock Option Plan, as previously
described in detail in Proposal 2, and its 1986 Supplemental Stock Option Plan
(the "1986 Plan").
The 1986 Plan was adopted by the Board of Directors in July 1986 and has
been amended seven times, most recently in January 1994. Pursuant to the 1986
Plan, the Company may grant nonstatutory stock options to key employees,
directors of or consultants or advisors to the Company. A total of 712,500
shares of Common Stock have been reserved for issuance under the 1986 Plan.
The 1986 Plan is administered by the Compensation Committee. No vesting is
required under the 1986 Plan, although it may be imposed by the committee. The
maximum term of a stock option under the 1986 Plan is 10 years, but if the
optionee at the time of grant has voting power over more than 10% of the
Company's outstanding capital stock, the maximum term of an incentive stock
option in five years. The exercise price of nonstatutory stock options granted
under the 1986 Plan is determined by the Compensation Committee. Options
granted under the 1986 Plan are generally non-transferable. The exercise price
may be paid in cash or any other form of consideration that may be acceptable
to the Board of Directors.
Options generally terminate three months after termination of the optionee's
employment or relationship as a consultant or director unless such termination
is caused by the permanent disability or death of the optionee. The 1986 Plan
may be amended at any time by Board of Directors, although certain amendments
would require stockholder approval. The 1986 Plan will terminate in November
2002, unless earlier terminated by the Board of Directors.
The following tables show for the fiscal year ended August 31, 1997, certain
information regarding options held at year-end by the Named Executive
Officers. Options to purchase 55,000 shares of the Company's Common Stock were
granted to the Named Executive Officers during the last fiscal year. Options
to purchase 2,500 shares of the Company were exercised by the Named Executive
Officers during the last fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES
NUMBER OF OPTIONS OF STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION FOR
UNDERLYING EMPLOYEES OR BASE OPTION TERM(3)
OPTIONS IN FISCAL PRICE EXPIRATION ---------------------
NAME GRANTED (#) YEAR(1) ($/SH)(2) DATE 5% ($) 10% ($)
- - ---- ----------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sam L. Densmore......... 30,000 13.10 $ 7.875 10/22/06 148,838 375,638
Darrell L. Ash.......... -- -- -- -- -- --
Christopher G. Conlin... 10,000 4.37 $ 7.875 10/22/06 49,613 125,213
James P. Farley......... -- -- -- -- -- --
Thomas J. Phillips...... 5,000 2.18 $10.125 02/25/07 31,893 80,494
</TABLE>
- - --------
(1) Based on aggregate of 229,000 options granted to employees of, consultants
to and directors of the Company during fiscal year ended August 31, 1997,
including the Named Executive Officers.
(2) The exercise price per share of each option is equal to the fair market
value of the Common Stock on the date of grant.
(3) The potential realizable value is calculated based on the term of the
option at its time of grant (ten years). It is calculated by assuming that
the stock price on the date of grant appreciates at the indicated annual
rate compounded annually for the entire term of the option and that the
option is exercised and sold on the last day of its term for the
appreciated stock price. No gain to the optionee is possible unless the
stock price increases over the option term, which will benefit the
stockholder.
18
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
08/31/97 (#) 08/31/97 ($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE(1)
- - ---- --------------- ------------ ------------- ----------------
<S> <C> <C> <C> <C>
Sam L. Densmore......... -- -- 160,000/0 2,598,750/0
Darrell L. Ash.......... 33,333 317,497 53,332/0 906,477/0
Christopher G. Conlin... -- -- 70,000/0 905,000/0
James P. Farley......... 2,500 51,000 34,166/0 596,550/0
Thomas J. Phillips...... -- -- 24,500/0 48,750/0
</TABLE>
- - --------
(1) Based on the fair market value of the Common Stock as of August 31, 1997
of $19.875 per share, minus the exercise price, multiplied by the number
of shares underlying the option.
19
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
GENERAL
Compensation of senior executives of the Company is determined by the
Compensation Committee of the Board of Directors (the "Committee"). The
Committee, comprised entirely of outside directors, meets to fix annual
salaries in advance and bonuses for the current year, to review annual goals
and to reward outstanding annual performance of executive officers and to grant
stock options pursuant to the Incentive Plan (formerly the 1982 Plan prior to
amendment and restatement as described in Proposal 2 herein) and the 1986 Plan.
COMPENSATION PHILOSOPHY
The primary goal of the Company is to align compensation with the Company's
business objectives and performance. The Company's aim is to attract, retain
and reward executive officers and other key employees who contribute to the
long-term success of the Company and to motivate those individuals to enhance
long-term stockholder value. To establish this relationship between executive
compensation and the creation of stockholder value, the Board of Directors has
adopted a total compensation package comprised of base salary, bonus and stock
option awards. Key elements of this compensation package are:
. The Company pays competitively with leading companies with which the
Company competes for talent.
. The Company maintains annual incentive opportunities sufficient to
provide motivation to achieve specific operating goals and to generate
rewards that bring total compensation to competitive levels.
. The Company provides significant equity-based incentives for executives
and other key employees to ensure that individuals are motivated over the
long term to respond to the Company's business challenges and
opportunities as owners and not just as employees.
BASE SALARY
Each executive officer's base salary is reviewed on an annual basis. Among
those factors taken into consideration are (1) individual and corporate
performance, (2) level of responsibility, (3) prior experience, (4) breadth of
knowledge of the industry, and (5) competitive pay practices.
BONUS
The Company believes that executive performance may be maximized via a system
of annual incentive awards. The actual incentive award earned depends on the
extent to which the Company and individual performance objectives are achieved.
Early in the fiscal year, the Compensation Committee will review and approve
the annual performance objectives for the Company and the individual officers.
The Company's objectives consist of operating, strategic and financial goals
that are considered to be critical to the Company's overall goal: building
stockholder value. For the fiscal year ended August 31, 1997, the Board of
Directors determined that the primary goal in building stockholder value would
be the increase in net income via both an expansion of revenues and the control
of costs. During the most recent fiscal year, sales increased by 34% over the
results of the prior fiscal year and net income increased by 102% during the
same period. This represented achievement of the targeted revenue bonus goal
and of the targeted bonus goal for net income. The cash and stock option
bonuses were determined in accordance with those results.
LONG-TERM INCENTIVES
The Company's primary long-term incentive program presently consists of the
Plans and the Purchase Plan. The Plans utilize vesting periods (generally four
years) to encourage key employees to continue in the employ of the Company.
Through option grants and other stock awards, executives receive significant
equity incentives to build long-term stockholder value. The exercise price of
options granted under the Plans generally is 100% of
20
<PAGE>
the fair market value of the underlying stock on the date of grant. Employees
receive value from these grants only if the Company's Common Stock appreciates
in the long term.
The Company established the Purchase Plan both to encourage employees to
continue in the employ of the Company and to motivate employees through
ownership interest in the Company. Under the Purchase Plan, employees,
including officers, may have up to 15% of their earnings withheld for purchases
of Common Stock on certain dates specified by the Board. The price of Common
Stock purchased will be equal to 85% of the lower of the fair market value of
the Common Stock on the purchase date of the commencement date or closing date
of the relevant offering period. In Fiscal 1997, the Committee granted stock
options to purchase 55,000 shares of the Company's Common Stock to the
Company's Named Executive Officers.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Densmore's base salary, bonus and grants of stock options were determined
in accordance with the criteria described in the "Base Salary," "Bonus," and
"Long Term Incentives" sections of this report. Mr. Densmore's Base Salary of
$185,000 and cash bonus of $126,754 reflect the Board and the Committee's
assessment of (1) his very favorable performance, (2) his skills in relation to
other CEO's in the Company's industry, (3) the Board's confidence in Mr.
Densmore's ability to lead the Company's continued development, and (4) his
broad involvement in the operations of the Company. In October 1997, the Board
set Mr. Densmore's base salary for the fiscal year ending August 31, 1998 at
$185,000.
CERTAIN TAX CONSIDERATIONS
Section 162(m) of the Internal Revenue Code (the "Code") limits the Company
to a deduction for federal income tax purposes of not more than $1 million of
compensation paid to certain executive officers in a taxable year. Compensation
above $1 million may be deducted if it is "performance-based compensation"
within the meaning of the Code.
The Board of Directors believes that at the present time it is unlikely that
the compensation paid to any executive officer in a taxable year will exceed $1
million. Therefore, the Board of Directors has not established a policy for
determining which forms of incentive compensation awarded to executive officers
shall be designed to qualify as "performance-based compensation."
From the disinterested members of the Board of Directors and Compensation
Committee:
Cornelius C. Bond, Jr.
Dean C. Campbell
Francis J. Hughes, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Sam L. Densmore, the Company's President and Chief Executive Officer,
participated in the deliberations of the Board of Directors concerning
executive officer compensation, except where the decision directly involved his
compensation package.
21
<PAGE>
PERFORMANCE MEASUREMENT COMPARISON(/1/)
The following graph shows the total stockholder return of an investment of
$100 in cash on August 31, 1997 for (i) the Company's Common Stock, (ii) the
NASDAQ Stock Market (U.S.) and (iii) the NASDAQ Electronic Components Index.
All values assume reinvestment of the full amount of all dividends and are
calculated as of August 31 of each year:
COMPARISON OF 37-MONTH CUMULATIVE TOTAL RETURN*
AMONG RF MONOLITHICS, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ ELECTRONIC COMPONENTS INDEX
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION> RF NASDAQ NASDAQ
Measurement Period MONOLITHICS STOCK ELECTRONIC
(Fiscal Year Covered) INC. MARKET COMPONENTS
- - ------------------- ---------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-07/28/94 $100 $100 $100
FYE 08/94 $113 $108 $114
FYE 08/95 $124 $145 $227
FYE 08/96 $100 $164 $231
FYE 08/97 $294 $229 $469
</TABLE>
* $100 INVESTED ON 7/28/94 IN STOCK OR INDEX -- INCLUDING REINVESTMENT OF
DIVIDENDS, FISCAL YEAR ENDING AUGUST 31.
1 This Section is not "soliciting material," is not deemed "filed" with the SEC
and is not to be incorporated by reference in any filing of the Company under
the 1933 Act or the 1934 Act whether made before or after the date hereof and
irrespective of any general incorporation language in any such filing.
- - --------
22
<PAGE>
CERTAIN TRANSACTIONS
INDEMNIFICATION
The Company has entered into indemnity agreements with certain officers and
directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided
for therein, for expenses, damages, judgments, fines and settlements he may be
required to pay in actions or proceedings which he is or may be made a party
be reason of his position as a director, officer or other agent of the
Company, and otherwise to the full extent permitted under Delaware law and the
Company's By-laws.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
LOGO
/s/ James P. Farley
James P. Farley
Secretary
December 12, 1997
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENDED AUGUST 31, 1997 IS AVAILABLE
WITHOUT CHARGE UPON WRITTEN REQUEST TO: CORPORATE SECRETARY, RF MONOLITHICS,
INC., 4347 SIGMA ROAD, DALLAS, TEXAS 75244.
23
<PAGE>
APPENDIX A
R.F. MONOLITHICS INC.
1997 EQUITY INCENTIVE PLAN
ADOPTED OCTOBER 8, 1997
APPROVED BY STOCKHOLDERS __________________, 1998
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by which selected
Employees and Directors of and Consultants to the Company, and its Affiliates,
may be given an opportunity to benefit from increases in value of the stock of
the Company through the granting of (i) Incentive Stock Options, (ii)
Nonstatutory Stock Options, (iii) stock bonuses, and (iv) rights to purchase
restricted stock, all as defined below.
(b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees or Directors of or Consultants to the Company or
its Affiliates, to secure and retain the services of new Employees, Directors
and Consultants, and to provide incentives for such persons to exert maximum
efforts for the success of the Company and its Affiliates.
(c) The Company intends that the Stock Awards issued under the Plan shall,
in the discretion of the Board or any Committee to which responsibility for
administration of the Plan has been delegated pursuant to subsection 3(c), be
either (i) Options granted pursuant to Section 6 hereof, including Incentive
Stock Options and Nonstatutory Stock Options, or (ii) stock bonuses or rights to
purchase restricted stock granted pursuant to Section 7 hereof. All Options
shall be separately designated Incentive Stock Options or Nonstatutory Stock
Options at the time of grant, and in such form as issued pursuant to Section 6,
and a separate certificate or certificates will be issued for shares purchased
on exercise of each type of Option.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation,
---------
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f) respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
-----
(c) "CAUSE" shall mean (i) the willful breach of habitual neglect of
-----
assigned duties related to the Company, including compliance with Company
policies; (ii) conviction (including any plea of nolo contendere) of Executive
of any felony or crime involving dishonesty; (iii) any act of personal
dishonesty knowingly taken by Executive in connection with his responsibilities
as an employee and intended to result in personal enrichment of Executive or any
other person;
A-1.
<PAGE>
(iv) bad faith conduct that is materially detrimental to the Company; (v)
inability of Executive to perform Employee's duties due to alcohol or illegal
drug use; (vi) the Executive's failure to comply with any legal written
directive of the Board of Directors of the Company; or (vii) any act or omission
of the Executive which is of substantial detriment to the Company because of the
Executive's intentional failure to comply with any statute, rule or regulation,
except any act or omission believed by Executive in good faith to have been in
or not opposed to the best interest of the Company (without intent of Executive
to gain, directly or indirectly, a profit to which Executive was not legally
entitled) and except that Cause shall not mean bad judgment or negligence other
than habitual neglect of duty.
(d) "CHANGE OF CONTROL" shall mean:
-----------------
i. Any acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
under the Exchange Act) of 35% or more of either (A) the then
outstanding shares of common stock of the Company (the "Outstanding
Common Stock") or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of the Board of Directors of the Company
(the "Outstanding Voting Securities"); or
ii. in connection with or in anticipation of, any acquisition,
merger or reorganization in which individuals who, as of the date
hereof, constitute the Board (the "incumbent Board") cease for any
reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A of the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board; or
iii. the sale or other disposition of all or substantially all of
the assets of the Company; but
iv. "Change of Control" shall not mean (i) any acquisition,
merger, or reorganization by the Company in which the beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) of
65% or more of the stockholders of the Company immediately prior to
such acquisition, merger, or reorganization of either (A) the
Outstanding Common Stock or (B) the Outstanding Voting Securities
remains unchanged after such acquisition, merger or reorganization or
(ii) any acquisition, merger, or reorganization by any
A-2.
<PAGE>
employee benefit plan (or related trust) sponsored or maintained by
the Company or any corporation controlled by the Company.
(e) "CODE" means the Internal Revenue Code of 1986, as amended.
----
(f) "COMMITTEE" means a Committee appointed by the Board in accordance with
---------
subsection 3(c) of the Plan.
(g) "COMPANY" means R.F. Monolithics, Inc., a Delaware corporation.
-------
(h) "CONSULTANT" means any person, including an advisor, engaged by the
----------
Company or an Affiliate to render consulting services and who is compensated for
such services, provided that the term "Consultant" shall not include Directors
who are paid only a director's fee by the Company or who are not compensated by
the Company for their services as Directors.
(i) "CONTINUOUS SERVICE AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means that
---------------------------------------------------------
the service of an individual to the Company, whether as an Employee, Director or
Consultant, is not interrupted or terminated. The Board or the chief executive
officer of the Company may determine, in that party's sole discretion, whether
Continuous Service as an Employee, Director or Consultant shall be considered
interrupted in the case of: (i) any leave of absence approved by the Board or
the chief executive officer of the Company, including sick leave, military
leave, or any other personal leave; or (ii) transfers between the Company,
Affiliates or their successors.
(j) "COVERED EMPLOYEE" means the chief executive officer and the four (4)
----------------
other highest compensated officers of the Company for whom total compensation is
required to be reported to stockholders under the Exchange Act, as determined
for purposes of Section 162(m) of the Code.
(k) "DIRECTOR" means a member of the Board.
--------
(l) "EMPLOYEE" means any person, including Officers and Directors, employed
--------
by the Company or any Affiliate of the Company. Neither service as a Director
nor payment of a director's fee by the Company shall be sufficient to constitute
"employment" by the Company.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
------------
(n) "FAIR MARKET VALUE" means, as of any date, the value of the common
-----------------
stock of the Company determined as follows:
(1) If the common stock is listed on any established stock exchange or
traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair
Market Value of a share of common stock shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest volume of
trading in the Company's common stock) on the last market trading day prior
A-3.
<PAGE>
to the day of determination, as reported in The Wall Street Journal or such
other source as the Board deems reliable.
(2) In the absence of such markets for the common stock, the Fair
Market Value shall be determined in good faith by the Board.
(o) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
----------------------
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(p) "LISTING DATE" means the first date upon which any security of the
------------
Company is listed (or approved for listing) upon notice of issuance on any
securities exchange, or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system if
such securities exchange or interdealer quotation system has been certified in
accordance with the provisions of Section 25100(o) of the California Corporate
Securities Law of 1968.
(q) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
---------------------
current Employee or Officer of the Company or its parent or subsidiary, does not
receive compensation (directly or indirectly) from the Company or its parent or
subsidiary for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
("Regulation S-K")), does not possess an interest in any other transaction as to
which disclosure would be required under Item 404(a) of Regulation S-K, and is
not engaged in a business relationship as to which disclosure would be required
under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a "non-
employee director" for purposes of Rule 16b-3.
(r) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as
-------------------------
an Incentive Stock Option.
(s) "OFFICER" means a person who is an officer of the Company within the
-------
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(t) "OPTION" means a stock option granted pursuant to the Plan.
------
(u) "OPTION AGREEMENT" means a written agreement between the Company and an
----------------
Optionee evidencing the terms and conditions of an individual Option grant.
Each Option Agreement shall be subject to the terms and conditions of the Plan.
(v) "OPTIONEE" means a person to whom an Option is granted pursuant to the
--------
Plan or, if applicable, such other person who holds an outstanding Option.
(w) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
----------------
employee of the Company or an "affiliated corporation" (within the meaning of
the Treasury regulations
A-4.
<PAGE>
promulgated under Section 162(m) of the Code), is not a former employee of the
Company or an "affiliated corporation" receiving compensation for prior services
(other than benefits under a tax qualified pension plan), was not an officer of
the Company or an "affiliated corporation" at any time, and is not currently
receiving direct or indirect remuneration from the Company or an "affiliated
corporation" for services in any capacity other than as a Director, or (ii) is
otherwise considered an "outside director" for purposes of Section 162(m) of the
Code.
(x) "PLAN" means this 1997 Long-Term Equity Incentive Plan.
----
(y) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any successor to
----------
Rule 16b-3, as in effect with respect to the Company at the time discretion is
being exercised regarding the Plan.
(z) "SECURITIES ACT" means the Securities Act of 1933, as amended.
--------------
(aa) "STOCK AWARD" means any right granted under the Plan, including any
-----------
Option, any stock bonus, and any right to purchase restricted stock.
(ab) "STOCK AWARD AGREEMENT" means a written agreement between the Company
---------------------
and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to
the terms and conditions of the Plan.
(ac) "VOLUNTARY RESIGNATION" shall mean any termination of Executive's
---------------------
employment with the Company upon such Executive's own initiative, including
Executive's retirement, provided, however, that if such Executive's salary,
title, duties, or benefits are materially reduced subsequent to or in
anticipation of a Change of Control, such resignation by the Executive shall not
be deemed a "Voluntary Resignation."
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the Board
delegates administration to a Committee, as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
(1) To determine from time to time which of the persons eligible under
the Plan shall be granted Stock Awards; when and how each Stock Award shall be
granted; whether a Stock Award will be an Incentive Stock Option, a Nonstatutory
Stock Option, a stock bonus, a right to purchase restricted stock, or a
combination of the foregoing; the provisions of each Stock Award granted (which
need not be identical), including the time or times when a person shall be
permitted to receive stock pursuant to a Stock Award and the number of shares
with respect to which a Stock Award shall be granted to each such person.
A-5.
<PAGE>
(2) To construe and interpret the Plan and Stock Awards granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.
(3) To amend the Plan or a Stock Award as provided in Section 13.
(4) Generally, to exercise such powers and to perform such acts as the
Board deems necessary or expedient to promote the best interests of the Company
which are not in conflict with the provisions of the Plan.
(c) The Board may delegate administration of the Plan to a committee of the
Board composed of not fewer than two (2) members (the "Committee"), all of the
members of which Committee may be, in the discretion of the Board, Non-Employee
Directors and/or Outside Directors. If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board, including the power to
delegate to a subcommittee of two (2) or more Outside Directors any of the
administrative powers the Committee is authorized to exercise (and references in
this Plan to the Board shall thereafter be to the Committee or such a
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan. Notwithstanding anything in this Section 3 to the
contrary, the Board or the Committee may delegate to a committee of one or more
members of the Board the authority to grant Stock Awards to eligible persons who
(1) are not then subject to Section 16 of the Exchange Act and/or (2) are either
(i) not then Covered Employees and are not expected to be Covered Employees at
the time of recognition of income resulting from such Stock Award, or (ii) not
persons with respect to whom the Company wishes to comply with Section 162(m) of
the Code.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 12 relating to adjustments upon
changes in stock, the stock that may be issued pursuant to Stock Awards shall
not exceed in the aggregate nine hundred seventy-five thousand (975,000) shares
of the Company's common stock. If any Stock Award shall for any reason expire
or otherwise terminate, in whole or in part, without having been exercised in
full, the stock not acquired under such Stock Award shall revert to and again
become available for issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
A-6.
<PAGE>
5. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to Employees. Stock Awards
other than Incentive Stock Options may be granted only to Employees, Directors
or Consultants.
(b) No person shall be eligible for the grant of an Incentive Stock Option
if, at the time of grant, such person owns (or is deemed to own pursuant to
Section 424(d) of the Code) stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of any of
its Affiliates unless the exercise price of such Incentive Stock Option is at
least one hundred ten percent (110%) of the Fair Market Value of such stock at
the date of grant and the Incentive Stock Option is not exercisable after the
expiration of five (5) years from the date of grant.
(c) Subject to the provisions of Section 12 relating to adjustments upon
changes in stock, no person shall be eligible to be granted Options covering
more than two hundred fifty thousand (250,000) shares of the Company's common
stock in any calendar year.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted.
(b) PRICE. The exercise price of each Incentive Stock Option shall be not
less than one hundred percent (100%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted; the exercise price of
each Nonstatutory Stock Option shall be determined on the date the Option is
granted. Notwithstanding the foregoing, an Option (whether an Incentive Stock
Option or a Nonstatutory Stock Option) may be granted with an exercise price
lower than that set forth in the preceding sentence if such Option is granted
pursuant to an assumption or substitution for another option in a manner
satisfying the provisions of Section 424(a) of the Code.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii) at
the discretion of the Board or the Committee, at the time of the grant of the
Option, (A) by delivery to the Company of other common stock of the Company, (B)
according to a deferred payment arrangement, except that payment of the common
stock's "par value" (as defined in the Delaware General Corporation Law) shall
not be made by deferred payment, or other arrangement (which may include,
without limiting the generality of the foregoing, the use of other common stock
of the Company) with the person to whom the
A-7.
<PAGE>
Option is granted or to whom the Option is transferred pursuant to subsection
6(d), or (C) in any other form of legal consideration that may be acceptable to
the Board.
In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.
(d) TRANSFERABILITY. An Incentive Stock Option shall not be transferable
except by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of the person to whom the Incentive Stock Option
is granted only by such person. A Nonstatutory Stock Option shall only be
transferable by the Optionee upon such terms and conditions as are set forth in
the Option Agreement for such Nonstatutory Stock Option, as the Board or the
Committee shall determine in its discretion. The person to whom the Option is
granted may, by delivering written notice to the Company, in a form satisfactory
to the Company, designate a third party who, in the event of the death of the
Optionee, shall thereafter be entitled to exercise the Option.
(e) VESTING. The total number of shares of stock subject to an Option may,
but need not, be allotted in periodic installments (which may, but need not, be
equal). The Option Agreement may provide that from time to time during each of
such installment periods, the Option may become exercisable ("vest") with
respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. The Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate. The provisions of this
subsection 6(e) are subject to any Option provisions governing the minimum
number of shares as to which an Option may be exercised.
(f) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR CONSULTANT.
In the event an Optionee's Continuous Service as an Employee, Director or
Consultant terminates (other than upon the Optionee's death or disability), the
Optionee may exercise his or her Option (to the extent that the Optionee was
entitled to exercise it as of the date of termination) but only within such
period of time ending on the earlier of (i) the date three (3) months following
the termination of the Optionee's Continuous Service as an Employee, Director or
Consultant (or such longer or shorter period specified in the Option Agreement),
or (ii) the expiration of the term of the Option as set forth in the Option
Agreement. If, at the date of termination, the Optionee is not entitled to
exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to and again become available for issuance
under the Plan. If, after termination, the Optionee does not exercise his or
her Option within the time specified in the Option Agreement, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.
An Optionee's Option Agreement may also provide that if the exercise of the
Option following the termination of the Optionee's Continuous Status as an
Employee, Director, or
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Consultant (other than upon the Optionee's death or disability) would result in
liability under Section 16(b) of the Exchange Act, then the Option shall
terminate on the earlier of (i) the expiration of the term of the Option set
forth in the Option Agreement, or (ii) the tenth (10th) day after the last date
on which such exercise would result in such liability under Section 16(b) of the
Exchange Act. Finally, an Optionee's Option Agreement may also provide that if
the exercise of the Option following the termination of the Optionee's
Continuous Service as an Employee, Director or Consultant (other than upon the
Optionee's death or disability) would be prohibited at any time solely because
the issuance of shares would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in the first paragraph of this
subsection 6(f), or (ii) the expiration of a period of three (3) months after
the termination of the Optionee's Continuous Service as an Employee, Director or
Consultant during which the exercise of the Option would not be in violation of
such registration requirements.
(g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous Service
as an Employee, Director or Consultant terminates as a result of the Optionee's
disability, the Optionee may exercise his or her Option (to the extent that the
Optionee was entitled to exercise it as of the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement), or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, at the date of termination, the Optionee is
not entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.
(h) DEATH OF OPTIONEE. In the event of the death of an Optionee during,
or within a period specified in the Option Agreement after the termination of,
the Optionee's Continuous Service as an Employee, Director or Consultant, the
Option may be exercised (to the extent the Optionee was entitled to exercise the
Option as of the date of death) by the Optionee's estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the option upon the Optionee's death pursuant to
subsection 6(d), but only within the period ending on the earlier of (i) the
date eighteen (18) months following the date of death (or such longer or shorter
period specified in the Option Agreement), or (ii) the expiration of the term of
such Option as set forth in the Option Agreement. If, at the time of death, the
Optionee was not entitled to exercise his or her entire Option, the shares
covered by the unexercisable portion of the Option shall revert to and again
become available for issuance under the Plan. If, after death, the Option is
not exercised within the time specified herein, the Option shall terminate, and
the shares covered by such Option shall revert to and again become available for
issuance under the Plan.
(i) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director or
Consultant to exercise the Option as to any part or all of the shares subject to
the Option prior to the full vesting of the
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Option. Any unvested shares so purchased may be subject to a repurchase right
in favor of the Company or to any other restriction the Board determines to be
appropriate.
(j) RE-LOAD OPTIONS. Without in any way limiting the authority of the
Board or Committee to make or not to make grants of Options hereunder, the Board
or Committee shall have the authority (but not an obligation) to include as part
of any Option Agreement a provision entitling the Optionee to a further Option
(a "Re-Load Option") in the event the Optionee exercises the Option evidenced by
the Option agreement, in whole or in part, by surrendering other shares of
Common Stock in accordance with this Plan and the terms and conditions of the
Option Agreement. Any such Re-Load Option (i) shall be for a number of shares
equal to the number of shares surrendered as part or all of the exercise price
of such Option; (ii) shall have an expiration date which is the same as the
expiration date of the Option the exercise of which gave rise to such Re-Load
Option; and (iii) shall have an exercise price which is equal to one hundred
percent (100%) of the Fair Market Value of the Common Stock subject to the Re-
Load Option on the date of exercise of the original Option. Notwithstanding the
foregoing, a Re-Load Option which is an Incentive Stock Option and which is
granted to a 10% stockholder (as described in subsection 5(b)), shall have an
exercise price which is equal to one hundred ten percent (110%) of the Fair
Market Value of the stock subject to the Re-Load Option on the date of exercise
of the original Option and shall have a term which is no longer than five (5)
years.
Any such Re-Load Option may be an Incentive Stock Option or a Nonstatutory
Stock Option, as the Board or Committee may designate at the time of the grant
of the original Option; provided, however, that the designation of any Re-Load
-------- -------
Option as an Incentive Stock Option shall be subject to the one hundred thousand
dollar ($100,000) annual limitation on exercisability of Incentive Stock Options
described in subsection 11(e) of the Plan and in Section 422(d) of the Code.
There shall be no Re-Load Options on a Re-Load Option. Any such Re-Load Option
shall be subject to the availability of sufficient shares under subsection 4(a)
and the limits on the grants of Options under subsection 5(c) and shall be
subject to such other terms and conditions as the Board or Committee may
determine which are not inconsistent with the express provisions of the Plan
regarding the terms of Options.
7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement shall be in such
form and shall contain such terms and conditions as the Board or the Committee
shall deem appropriate. The terms and conditions of stock bonus or restricted
stock purchase agreements may change from time to time, and the terms and
conditions of separate agreements need not be identical, but each stock bonus or
restricted stock purchase agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions as appropriate:
(a) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board or Committee shall
determine and designate in such Stock Award Agreement. Notwithstanding the
foregoing, the Board or the Committee may
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determine that eligible participants in the Plan may be awarded stock pursuant
to a stock bonus agreement in consideration for past services actually rendered
to the Company or for its benefit.
(b) TRANSFERABILITY. Rights under a stock bonus or restricted stock
purchase agreement shall be transferable by the grantee only upon such terms and
conditions as are set forth in the applicable Stock Award Agreement, as the
Board or the Committee shall determine in its discretion, so long as stock
awarded under such Stock Award Agreement remains subject to the terms of the
agreement.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to a
stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; (ii) at the discretion of the Board or the Committee, according to a
deferred payment arrangement, except that payment of the common stock's "par
value" (as defined in the Delaware General Corporation Law) shall not be made by
deferred payment, or other arrangement with the person to whom the stock is
sold; or (iii) in any other form of legal consideration that may be acceptable
to the Board or the Committee in its discretion. Notwithstanding the foregoing,
the Board or the Committee to which administration of the Plan has been
delegated may award stock pursuant to a stock bonus agreement in consideration
for past services actually rendered to the Company or for its benefit.
(d) VESTING. Shares of stock sold or awarded under the Plan may, but need
not, be subject to a repurchase option in favor of the Company in accordance
with a vesting schedule to be determined by the Board or the Committee.
(e) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR CONSULTANT.
In the event a Participant's Continuous Service as an Employee, Director or
Consultant terminates, the Company may repurchase or otherwise reacquire any or
all of the shares of stock held by that person which have not vested as of the
date of termination under the terms of the stock bonus or restricted stock
purchase agreement between the Company and such person.
8. CANCELLATION AND RE-GRANT OF OPTIONS.
(a) The Board or the Committee shall have the authority to effect, at any
time and from time to time, (i) the repricing of any outstanding Options under
the Plan and/or (ii) with the consent of the affected holders of Options, the
cancellation of any outstanding Options under the Plan and the grant in
substitution therefor of new Options under the Plan covering the same or
different numbers of shares of stock, but having an exercise price per share not
less than the ratio between the original exercise price and Fair Market Value on
the original date of grant (one hundred percent (100%) of the Fair Market Value
in the case of an Incentive Stock Option) or, in the case of a 10% stockholder
(as described in subsection 5(b)) receiving a new grant of an Incentive Stock
Option, not less than one hundred ten percent (110%) of the Fair Market Value)
per share of stock on the new grant date. Notwithstanding the foregoing, the
Board or the Committee may grant an Option with an exercise price lower than
that set forth above if such Option is granted as part of a transaction to which
section 424(a) of the Code applies.
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(b) Shares subject to an Option canceled under this Section 8 shall
continue to be counted against the maximum award of Options permitted to be
granted pursuant to subsection 5(c) of the Plan. The repricing of an Option
under this Section 8, resulting in a reduction of the exercise price, shall be
deemed to be a cancellation of the original Option and the grant of a substitute
Option; in the event of such repricing, both the original and the substituted
Options shall be counted against the maximum awards of Options permitted to be
granted pursuant to subsection 5(c) of the Plan. The provisions of this
subsection 8(b) shall be applicable only to the extent required by Section
162(m) of the Code.
9. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards, the Company shall keep available
at all times the number of shares of stock required to satisfy such Stock
Awards.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the Stock Award; provided,
however, that this undertaking shall not require the Company to register under
the Securities Act either the Plan, any Stock Award or any stock issued or
issuable pursuant to any such Stock Award. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance
and sale of stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell stock upon exercise of such Stock Awards
unless and until such authority is obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Stock Awards shall constitute
general funds of the Company.
11. MISCELLANEOUS.
The Board shall have the power to accelerate the time at which a Stock
Award may first be exercised or the time during which a Stock Award or any part
thereof will vest pursuant to subsection 6(e), 7(d) or 8(b), notwithstanding the
provisions in the Stock Award stating the time at which it may first be
exercised or the time during which it will vest.
(a) Neither an Employee, Director or Consultant nor any person to whom a
Stock Award is transferred under subsection 6(d), 7(b), or 8(b) shall be deemed
to be the holder of, or to have any of the rights of a holder with respect to,
any shares subject to such Stock Award unless and until such person has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.
(b) Nothing in the Plan or any instrument executed or Stock Award granted
pursuant thereto shall confer upon any Employee, Director, Consultant or other
holder of Stock Awards any right to continue in the employ of the Company or any
Affiliate (or to continue acting as
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a Director or Consultant) or shall affect the right of the Company or any
Affiliate to terminate the employment of any Employee with or without cause the
right of the Company's Board of Directors and/or the Company's stockholders to
remove any Director as provided in the Company's Bylaws and the provisions of
the Delaware General Corporation Law, or the right to terminate the relationship
of any Consultant subject to the terms of such Consultant's agreement with the
Company or Affiliate.
(c) To the extent that the aggregate Fair Market Value (determined at the
time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
all plans of the Company and its Affiliates exceeds one hundred thousand dollars
($100,000), the Options or portions thereof which exceed such limit (according
to the order in which they were granted) shall be treated as Nonstatutory Stock
Options.
(d) The Company may require any person to whom a Stock Award is granted, or
any person to whom a Stock Award is transferred pursuant to subsection 6(d),
7(b) or 8(b), as a condition of exercising or acquiring stock under any Stock
Award, (1) to give written assurances satisfactory to the Company as to such
person's knowledge and experience in financial and business matters and/or to
employ a purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters, and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (2) to
give written assurances satisfactory to the Company stating that such person is
acquiring the stock subject to the Stock Award for such person's own account and
not with any present intention of selling or otherwise distributing the stock.
The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise or acquisition of stock under the Stock Award has been registered under
a then currently effective registration statement under the Securities Act, or
(ii) as to any particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer
of the stock.
(e) To the extent provided by the terms of a Stock Award Agreement, the
person to whom a Stock Award is granted may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of stock
under a Stock Award by any of the following means or by a combination of such
means: (1) tendering a cash payment; (2) authorizing the Company to withhold
shares from the shares of the common stock otherwise issuable to the participant
as a result of the exercise or acquisition of stock under the Stock Award; or
(3) delivering to the Company owned and unencumbered shares of the common stock
of the Company.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
A-13.
<PAGE>
(a) If any change is made in the stock subject to the Plan, or subject to
any Stock Award (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the type(s) and maximum number of securities subject to the Plan
pursuant to subsection 4(a) and the maximum number of securities subject to
award to any person during any calendar year pursuant to subsection 5(c), and
the outstanding Stock Awards will be appropriately adjusted in the type(s) and
number of securities and price per share of stock subject to such outstanding
Stock Awards. Such adjustments shall be made by the Board or the Committee, the
determination of which shall be final, binding and conclusive. (The conversion
of any convertible securities of the Company shall not be treated as a
"transaction not involving the receipt of consideration by the Company".)
(b) In the event of a Change of Control, then: (i) any surviving
corporation or acquiring corporation shall assume any Stock Awards outstanding
under the Plan or shall substitute similar stock awards (including an award to
acquire the same consideration paid to the stockholders in the transaction
described in this subsection 12(b)) for those outstanding under the Plan, or
(ii) in the event any surviving corporation or acquiring corporation refuses to
assume such Stock Awards or to substitute similar stock awards for those
outstanding under the Plan, (A) with respect to Stock Awards held by persons
then performing services as Employees, Directors or Consultants the vesting of
such Stock Awards (and, if applicable, the time during which such Stock Awards
may be exercised) shall be accelerated prior to such event and the Stock Awards
terminated if not exercised (if applicable) after such acceleration and at or
prior to such event, and (B) with respect to any other Stock Awards outstanding
under the Plan, such Stock Awards shall be terminated if not exercised (if
applicable) prior to such event. If any acquiring or surviving corporation
assumes Stock Awards outstanding under the Plan or substitutes similar stock
awards for those outstanding under the Plan, then if the Continuous Service as
an Employee, Director or Consultant of the holder of a Stock Award (or
substitute stock award) is terminated for any reason other than (i) death, (ii)
Cause, (iii) illness, accident, or other physical or mental incapacity which
prevents the holder of such award from performing his or her duties for more
than one hundred and eighty (180) days during any twelve (12) month period, or
(iv) Voluntary Resignation, then the vesting of such award shall be accelerated
in full and, if applicable, such award shall be exercisable in full for the
post-termination exercise period provided in such award's agreement.
13. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(i) Increase the number of shares reserved for Stock Awards under
the Plan;
A-14.
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(ii) Modify the requirements as to eligibility for participation in
the Plan (to the extent such modification requires stockholder approval in order
for the Plan to satisfy the requirements of Section 422 of the Code); or
(iii) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to satisfy the requirements
of Section 422 of the Code or to comply with exchange listing requirements.
(b) The Board may in its sole discretion submit any other amendment to the
Plan for stockholder approval, including, but not limited to, amendments to the
Plan intended to satisfy the requirements of Section 162(m) of the Code and the
regulations promulgated thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid to
certain executive officers.
(c) It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide eligible Employees
with the maximum benefits provided or to be provided under the provisions of the
Code and the regulations promulgated thereunder relating to Incentive Stock
Options and/or to bring the Plan and/or Incentive Stock Options granted under it
into compliance therewith.
(d) Rights and obligations under any Stock Award granted before amendment
of the Plan shall not be impaired by any amendment of the Plan unless (i) the
Company requests the consent of the person to whom the Stock Award was granted
and (ii) such person consents in writing.
(e) The Board at any time, and from time to time, may amend the terms of
any one or more Stock Award; provided, however, that the rights and obligations
under any Stock Award shall not be impaired by any such amendment unless (i) the
Company requests the consent of the person to whom the Stock Award was granted
and (ii) such person consents in writing.
14. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on the day prior to the tenth anniversary
of the earlier of the date the Plan is adopted by the Board or the date the Plan
is approved by the stockholders of the Company. No Stock Awards may be granted
under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any Stock Award granted while the Plan is
in effect shall not be impaired by suspension or termination of the Plan, except
with the written consent of the person to whom the Stock Award was granted.
15. EFFECTIVE DATE OF PLAN.
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The Plan shall become effective as determined by the Board, but no Stock
Awards granted under the Plan shall be exercised unless and until the Plan has
been approved by the stockholders of the Company, which approval shall be within
twelve (12) months before or after the date the Plan is adopted by the Board.
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APPENDIX B
RF MONOLITHICS, INC.
EMPLOYEE STOCK PURCHASE PLAN
AS AMENDED AND RESTATED NOVEMBER 27, 1995
APPROVED BY STOCKHOLDERS JANUARY 31, 1996
AMENDED OCTOBER 8, 1997
APPROVED BY STOCKHOLDERS __________, 1998
1. PURPOSE.
(a) The purpose of the Employee Stock Purchase Plan (the "Plan") is to
provide a means by which employees of RF Monolithics, Inc., a Delaware
corporation (the "Company"), and its Affiliates, as defined in subparagraph
1(b), which are designated as provided in subparagraph 2(b), may be given an
opportunity to purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent corporation
or subsidiary corporation of the Company, as those terms are defined in Sections
424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended
(the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of its
employees, to secure and retain the services of new employees, and to provide
incentives for such persons to exert maximum efforts for the success of the
Company.
(d) The Company intends that the rights to purchase stock of the Company
granted under the Plan be considered options issued under an "employee stock
purchase plan" as that term is defined in Section 423(b) of the Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors (the "Board")
of the Company unless and until the Board delegates administration to a
Committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.
(b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
(i) To determine when and how rights to purchase stock of the Company
shall be granted and the provisions of each offering of such rights (which need
not be identical).
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(ii) To designate from time to time which Affiliates of the Company
shall be eligible to participate in the Plan.
(iii) To construe and interpret the Plan and rights granted under it,
and to establish, amend and revoke rules and regulations for its administration.
The Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan, in a manner and to the extent it shall deem necessary
or expedient to make the Plan fully effective.
(iv) To amend the Plan as provided in paragraph 13.
(v) Generally, to exercise such powers and to perform such acts as the
Board deems necessary or expedient to promote the best interests of the Company.
(c) The Board may delegate administration of the Plan to a Committee
composed of not fewer than two (2) members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 12 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to rights granted under
the Plan shall not exceed in the aggregate three hundred fifty thousand
(350,000) shares of the Company's common stock (the "Common Stock"). If any
right granted under the Plan shall for any reason terminate without having been
exercised, the Common Stock not purchased under such right shall again become
available for the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. GRANT OF RIGHTS; OFFERING.
(a) The Board or the Committee may from time to time grant or provide for
the grant of rights to purchase Common Stock of the Company under the Plan to
eligible employees (an "Offering") on a date or dates (the "Offering Date(s)")
selected by the Board or the Committee. Each Offering shall be in such form and
shall contain such terms and conditions as the Board or the Committee shall deem
appropriate. The provisions of separate Offerings need not be identical, but
each Offering shall include (through incorporation of the provisions of this
Plan by reference in the Offering or otherwise) the period during which the
Offering shall be effective, which period shall not exceed twenty-seven (27)
months beginning with the Offering Date, and the substance of the provisions
contained in paragraphs 5 through 8, inclusive.
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(b) If an employee has more than one right outstanding under the Plan,
unless he or she otherwise indicates in agreements or notices delivered
hereunder: (1) each agreement or notice delivered by that employee will be
deemed to apply to all of his or her rights under the Plan, and (2) a right with
a lower exercise price (or an earlier-granted right, if two rights have
identical exercise prices), will be exercised to the fullest possible extent
before a right with a higher exercise price (or a later-granted right, if two
rights have identical exercise prices) will be exercised.
5. ELIGIBILITY.
(a) Rights may be granted only to employees of the Company or, as the Board
or the Committee may designate as provided in subparagraph 2(b), to employees of
any Affiliate of the Company. Except as provided in subparagraph 5(b), an
employee of the Company or any Affiliate shall not be eligible to be granted
rights under the Plan, unless, on the Offering Date, such employee has been in
the employ of the Company or any Affiliate for such continuous period preceding
such grant as the Board or the Committee may require, but in no event shall the
required period of continuous employment be greater than two (2) years. In
addition, unless otherwise determined by the Board or the Committee and set
forth in the terms of the applicable Offering, no employee of the Company or any
Affiliate shall be eligible to be granted rights under the Plan, unless, on the
Offering Date, such employee's customary employment with the Company or such
Affiliate is at least twenty (20) hours per week and at least five (5) months
per calendar year.
(b) The Board or the Committee may provide that, each person who, during
the course of an Offering, first becomes an eligible employee of the Company or
designated Affiliate will, on a date or dates specified in the Offering which
coincides with the day on which such person becomes an eligible employee or
occurs thereafter, receive a right under that Offering, which right shall
thereafter be deemed to be a part of that Offering. Such right shall have the
same characteristics as any rights originally granted under that Offering, as
described herein, except that:
(i) the date on which such right is granted shall be the "Offering
Date" of such right for all purposes, including determination of the exercise
price of such right;
(ii) the period of the Offering with respect to such right shall begin
on its Offering Date and end coincident with the end of such Offering; and
(iii) the Board or the Committee may provide that if such person first
becomes an eligible employee within a specified period of time before the end of
the Offering, he or she will not receive any right under that Offering.
(c) No employee shall be eligible for the grant of any rights under the
Plan if, immediately after any such rights are granted, such employee owns stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the
B-3.
<PAGE>
Company or of any Affiliate. For purposes of this subparagraph 5(c), the rules
of Section 424(d) of the Code shall apply in determining the stock ownership of
any employee, and stock which such employee may purchase under all outstanding
rights and options shall be treated as stock owned by such employee.
(d) An eligible employee may be granted rights under the Plan only if such
rights, together with any other rights granted under "employee stock purchase
plans" of the Company and any Affiliates, as specified by Section 423(b)(8) of
the Code, do not permit such employee's rights to purchase stock of the Company
or any Affiliate to accrue at a rate which exceeds twenty-five thousand dollars
($25,000) of fair market value of such stock (determined at the time such rights
are granted) for each calendar year in which such rights are outstanding at any
time.
(e) Officers of the Company and any designated Affiliate shall be eligible
to participate in Offerings under the Plan, provided, however, that the Board
may provide in an Offering that certain employees who are highly compensated
employees within the meaning of Section 423(b)(4)(D) of the Code shall not be
eligible to participate.
6. RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, each eligible employee, pursuant to an Offering
made under the Plan, shall be granted the right to purchase up to the number of
shares of Common Stock of the Company purchasable with a percentage designated
by the Board or the Committee not exceeding fifteen (15%) of such employee's
Earnings (as defined in subparagraph 7(a)) during the period which begins on the
Offering Date (or such later date as the Board or the Committee determines for a
particular Offering) and ends on the date stated in the Offering, which date
shall be no later than the end of the Offering. The Board or the Committee
shall establish one or more dates during an Offering (the "Purchase Date(s)") on
which rights granted under the Plan shall be exercised and purchases of Common
Stock effected in accordance with such Offering.
(b) In connection with each Offering made under this Plan, the Board or the
Committee shall specify a maximum number of shares which may be purchased by any
employee as well as a maximum aggregate number of shares which may be purchased
by all eligible employees pursuant to such Offering. In addition, in connection
with each Offering which contains more than one Purchase Date, the Board or the
Committee may specify a maximum aggregate number of shares which may be
purchased by all eligible employees on any given Purchase Date under the
Offering. If the aggregate purchase of shares upon exercise of rights granted
under the Offering would exceed any such maximum aggregate number, the Board or
the Committee shall make a pro rata allocation of the shares available in as
nearly a uniform manner as shall be practicable and as it shall deem to be
equitable.
(c) The purchase price of stock acquired pursuant to rights granted under
the Plan shall be not less than the lesser of:
B-4.
<PAGE>
(i) an amount equal to eighty-five percent (85%) of the fair market
value of the stock on the Offering Date; or
(ii) an amount equal to eighty-five percent (85%) of the fair market
value of the stock on the Purchase Date.
7. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An eligible employee may become a participant in an Offering by
delivering a participation agreement to the Company within the time specified in
the Offering, in such form as the Company provides. Each such agreement shall
authorize payroll deductions of up to the maximum percentage specified by the
Board or the Committee of such employee's Earnings during the Offering.
"Earnings" is defined as the total compensation paid to an employee, including
all salary, wages (including amounts elected to be deferred by the employee,
that would otherwise have been paid, under any cash or deferred arrangement
established by the Company), overtime pay, commissions, bonuses, and other
remuneration paid directly to the employee, but excluding profit sharing, the
cost of employee benefits paid for by the Company, education or tuition
reimbursements, imputed income arising under any Company group insurance or
benefit program, traveling expenses, business and moving expense reimbursements,
income received in connection with stock options, contributions made by the
Company under any employee benefit plan, and similar items of compensation. The
payroll deductions made for each participant shall be credited to an account for
such participant under the Plan and shall be deposited with the general funds of
the Company. A participant may reduce (including to zero), increase or begin
such payroll deductions after the beginning of any Offering only as provided for
in the Offering. A participant may make additional payments into his or her
account only if specifically provided for in the Offering and only if the
participant has not had the maximum amount withheld during the Offering.
(b) At any time during an Offering, a participant may terminate his or her
payroll deductions under the Plan and withdraw from the Offering by delivering
to the Company a notice of withdrawal in such form as the Company provides.
Such withdrawal may be elected at any time prior to the end of the Offering
except as provided by the Board or the Committee in the Offering. Upon such
withdrawal from the Offering by a participant, the Company shall distribute to
such participant all of his or her accumulated payroll deductions (reduced to
the extent, if any, such deductions have been used to acquire stock for the
participant) under the Offering, without interest, and such participant's
interest in that Offering shall be automatically terminated. A participant's
withdrawal from an Offering will have no effect upon such participant's
eligibility to participate in any other Offerings under the Plan but such
participant will be required to deliver a new participation agreement in order
to participate in subsequent Offerings under the Plan.
(c) Rights granted pursuant to any Offering under the Plan shall terminate
immediately upon cessation of any participating employee's employment with the
Company and any designated Affiliate, for any reason, and the Company shall
distribute to such terminated
B-5.
<PAGE>
employee all of his or her accumulated payroll deductions (reduced to the
extent, if any, such deductions have been used to acquire stock for the
terminated employee), under the Offering, without interest.
(d) Rights granted under the Plan shall not be transferable, and, except as
provided in paragraph 14, shall be exercisable only by the person to whom such
rights are granted.
8. EXERCISE.
(a) On each Purchase Date provided in the relevant Offering, each
participant's accumulated payroll deductions and other additional payments
specifically provided for in the Offering (without any increase for interest)
will be applied to the purchase of whole shares of stock of the Company, up to
the maximum number of shares permitted pursuant to the terms of the Plan and the
applicable Offering, at the purchase price specified in the Offering. No
fractional shares shall be issued upon the exercise of rights granted under the
Plan. The amount, if any, of accumulated payroll deductions remaining in each
participant's account after the purchase of shares which is less than the amount
required to purchase one share of stock on the final Purchase Date of an
Offering shall be held in each such participant's account for the purchase of
shares under the next Offering under the Plan, unless such participant withdraws
from such next Offering, as provided in subparagraph 7(b), or is no longer
eligible to be granted rights under the Plan, as provided in paragraph 5, in
which case such amount shall be distributed to the participant after such final
Purchase Date, without interest. The amount, if any, of accumulated payroll
deductions remaining in any participant's account after the purchase of shares
which is equal to the amount required to purchase whole shares of stock on the
final Purchase Date of an Offering shall be distributed in full to the
participant after such Purchase Date, without interest.
(b) No rights granted under the Plan may be exercised to any extent unless
the Plan (including rights granted thereunder) is covered by an effective
registration statement pursuant to the Securities Act of 1933, as amended (the
"Securities Act"). If on a Purchase Date of any Offering hereunder the Plan is
not so registered, no rights granted under the Plan or any Offering shall be
exercised on such Purchase Date and the Purchase Date shall be delayed until the
Plan is subject to such an effective registration statement, except that the
Purchase Date shall not be delayed more than twelve (12) months and the Purchase
Date shall in no event be more than twenty-seven (27) months from the Offering
Date. If on the Purchase Date of any Offering hereunder, as delayed to the
maximum extent permissible, the Plan is not registered, no rights granted under
the Plan or any Offering shall be exercised and all payroll deductions
accumulated during the Offering (reduced to the extent, if any, such deductions
have been used to acquire stock) shall be distributed to the participants,
without interest.
9. COVENANTS OF THE COMPANY.
(a) During the terms of the rights granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such rights.
B-6.
<PAGE>
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the rights granted under the
Plan. If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell stock
upon exercise of such rights unless and until such authority is obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to rights granted under the Plan
shall constitute general funds of the Company.
11. RIGHTS AS A STOCKHOLDER.
A participant shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to rights granted
under the Plan unless and until the participant's shareholdings acquired upon
exercise of rights under the Plan are recorded in the books of the Company.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject to
any rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Plan and outstanding
rights will be appropriately adjusted in the class(es) and maximum number of
shares subject to the Plan and the class(es) and number of shares and price per
share of stock subject to outstanding rights.
(b) In the event of: (1) a dissolution or liquidation of the Company; (2)
a merger or consolidation in which the Company is not the surviving corporation;
(3) a reverse merger in which the Company is the surviving corporation but the
shares of the Company's Common Stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise; or (4) any other capital reorganization
in which more than fifty percent (50%) of the shares of the Company entitled to
vote are exchanged, then, as determined by the Board in its sole discretion (i)
any surviving corporation may assume outstanding rights or substitute similar
rights for those under the Plan, (ii) such rights may continue in full force and
effect, or (iii) participants' accumulated payroll deductions may be used to
purchase Common Stock immediately prior to the transaction described above and
the participants' rights under the ongoing Offering terminated.
B-7.
<PAGE>
13. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(i) Increase the number of shares reserved for rights under the
Plan;
(ii) Modify the provisions as to eligibility for participation in the
Plan (to the extent such modification requires stockholder approval in
order for the Plan to obtain employee stock purchase plan treatment under
Section 423 of the Code or to comply with the requirements of Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended ("Rule
16b-3")); or
(iii) Modify the Plan in any other way if such modification requires
stockholder approval in order for the Plan to obtain employee stock
purchase plan treatment under Section 423 of the Code or to comply with the
requirements of Rule 16b-3.
It is expressly contemplated that the Board may amend the Plan in any respect
the Board deems necessary or advisable to provide eligible employees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to employee stock purchase plans
and/or to bring the Plan and/or rights granted under it into compliance
therewith.
(b) Rights and obligations under any rights granted before amendment of the
Plan shall not be altered or impaired by any amendment of the Plan, except with
the consent of the person to whom such rights were granted or except as
necessary to comply with any laws or governmental regulation.
14. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary who is to
receive any shares and cash, if any, from the participant's account under the
Plan in the event of such participant's death subsequent to the end of an
Offering but prior to delivery to him 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 during an Offering.
(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
B-8.
<PAGE>
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. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. No rights may
be granted under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any rights granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except as expressly provided in the Plan or with the consent of the person
to whom such rights were granted or except as necessary to comply with any laws
or governmental regulation.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no rights
granted under the Plan shall be exercised unless and until the Plan has been
approved by the stockholders of the Company.
B-9.
<PAGE>
RF MONOLITHICS, INC.
Proxy Solicited by the Board of Directors
For the Annual Meeting of Stockholders
To be Held on January 14, 1998
The undersigned hereby appoints SAM L. DENSMORE and JAMES P. FARLEY, and each
of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of RF Monolithics, Inc. which
the undersigned may be entitled to vote at the Annual Meeting of Stockholders of
RF Monolithics, Inc. to be held at The Westin Galleria Dallas, 13340 Dallas
Parkway, Dallas, Texas 75240 on Wednesday, January 14, 1998, at 9:00 a.m., local
time, and at any and all continuations and adjournments thereof, with all powers
that the undersigned would possess if personally present, upon and in respect of
the following matters and in accordance with the following instructions, with
discretionary authority as to any and all other matters that may properly come
before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSALS 2, 3 AND 4 AS MORE SPECIFICALLY
DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS
PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
-----------
SEE REVERSE
SIDE
-----------
Continued and to be Signed on Reverse Side
- - ---------------------------------DETACH HERE------------------------------------
[X] Please mark
votes as in
this example
1. To elect six directors to hold office until the next Annual Meeting of
Stockholders and until their successors are elected.
Nominees: Sam L. Densmore, Michael R. Bernique, Cornelius C. Bond, Jr.,
Dean C. Campbell, Matthew J. Desch and Francis J. Hughes, Jr.
[_] FOR [_] WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[_] MARK HERE [_]
-------------------------------------- FOR ADDRESS
For all nominees except as noted above CHANGE AND
NOTE BELOW
Signature: Date:
----------------------------------------------- ----------------
FOR AGAINST ABSTAIN
2. To approve the amendment and restatement of [_] [_] [_]
the Company's Amended and Restated 1982
Stock Option Plan as the 1997 Equity Incentive
Plan and to increase the aggregate number of
shares of common stock authorized for issuance
under such plan by 325,000 shares.
FOR AGAINST ABSTAIN
3. To approve the Company's 1994 Employee [_] [_] [_]
Stock Purchase Plan, as amended, to increase
the aggregate number of shares of common
stock authorized for issuance under such plan
by 175,000 shares.
FOR AGAINST ABSTAIN
4. To ratify selection of Deloitte & Touche LLP [_] [_] [_]
as independent auditors of the Company for its
fiscal year ending August 31, 1998.
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED ABOVE AND A
VOTE FOR PROPOSALS 2, 3 AND 4.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
Please sign exactly as your name appears hereon. If the stock is registered in
the name of two or more persons, each should sign. Executors, administrators,
trustees, guardians and attorneys-in-fact should add their titles. If signer is
a corporation, please give full corporate name and have a duly authorized
officer sign, stating title. If signer is a partnership, please sign in
partnership name by authorized person.
Signature: Date:
----------------------------------------------- ----------------
