SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, For Use Of The Commission Only (As Permitted By
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant To Rule 14a-11(c) or Rule 14a-12
SPECTRIAN CORPORATION
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(Name of Registrant as specified in its Charter)
SPECTRIAN CORPORATION
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A
/ / $500 per party to the controversy pursuant to Exchange Act Rule
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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(2) Aggregate number of securities to which transaction applies:
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calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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/ / 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
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SPECTRIAN CORPORATION
350 West Java Drive Sunnyvale, CA 94089
May 15, 1996
Dear Spectrian Shareholder:
Enclosed are the proxy materials for Spectrian's 1996 Annual
Shareholders' Meeting.
In this year's proxy statement, Spectrian has proposed amendments to
both the 1994 Employee Stock Purchase Plan and the 1992 Stock Plan to increase
the number of shares of Common Stock reserved for issuance thereunder. Combined,
these amendments amount to an increase of 650,000 in the shares received, which
represents approximately 8% of the total shares outstanding.
Spectrian is committed to attracting, retaining and motivating the best
available personnel. In order to do so, linking key employee compensation to
corporate performance is critical as we believe this increases employee
motivation to improve stockholder value. To that end, we have recently hired
Garrett A. Garrettson as our new President and CEO and Stephen B. Greenspan as
our Executive Vice President, Operations, who were granted stock options by our
Board totaling approximately 4% of the shares outstanding. The balance of the
additional shares (4%) would be for planned new hires and additional options for
existing personnel.
In order to promote the success of the Company's business, we are
asking that our shareholders vote in favor of Proposals Two and Three in the
proxy statement. We do not expect that the request for options will approach
this level in future years.
Thank you for your continued support and interest in Spectrian, and
please return your proxy as soon as possible.
Sincerely,
/s/ Edward A. Supplee, Jr.
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Edward A. Supplee, Jr.
Executive Vice President, Finance & Administration
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SPECTRIAN CORPORATION
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 14, 1996
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of SPECTRIAN
CORPORATION, a California corporation (the "Company"), will be held on Friday,
June 14, 1996 at 8:00 a.m. local time, at 160 Gibralter Court, Sunnyvale,
California 94089 for the following purposes:
1. To elect six directors to serve until the next Annual Meeting of
Shareholders or until their successors are elected.
2. To approve an amendment to the 1994 Employee Stock Purchase Plan to
increase the number of shares of Common Stock reserved for issuance thereunder
by 25,000 shares.
3. To approve an amendment to the 1992 Stock Plan to increase the number of
shares of Common Stock reserved for issuance thereunder by 625,000 shares.
4. To ratify the appointment of KPMG Peat Marwick LLP as independent
auditors of the Company for the fiscal year ending March 31, 1997.
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Only shareholders of record at the close of
business on April 19, 1996 are entitled to notice of and to vote at the meeting.
All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed Proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any shareholder attending
the meeting may vote in person even if he or she has returned a Proxy.
Sincerely,
Edward A. Supplee, Jr.
Secretary
Sunnyvale, California
May 17, 1996
YOUR VOTE IS IMPORTANT.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE AND RETURN
IT IN THE ENCLOSED ENVELOPE.
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SPECTRIAN CORPORATION
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PROXY STATEMENT FOR 1996
ANNUAL MEETING OF SHAREHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
SPECTRIAN CORPORATION, a California corporation (the "Company"), for use at the
Annual Meeting of Shareholders to be held Friday, June 14, 1996 at 8:00 a.m.
local time, or at any adjournment thereof, for the purposes set forth herein and
in the accompanying Notice of Annual Meeting of Shareholders. The Annual Meeting
will be held at 160 Gibralter Court, Sunnyvale, California 94089. The Company's
principal executive offices are located at 350 West Java Drive, Sunnyvale,
California 94089 and its telephone number at that location is (408) 745-5400.
These proxy solicitation materials and the Annual Report to Shareholders for
the year ended March 31, 1996, including financial statements, were first mailed
on or about May 17, 1996 to all shareholders entitled to vote at the meeting.
RECORD DATE AND PRINCIPAL SHARE OWNERSHIP
Shareholders of record at the close of business on April 19, 1996 are
entitled to notice of and to vote at the meeting. The Company has one series of
Common Shares outstanding, designated Common Stock, no par value. At the record
date, 8,019,067 shares of the Company's Common Stock were issued and outstanding
and held of record by 373 shareholders. No shares of the Company's Preferred
Stock were outstanding.
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The following table sets forth certain information regarding the beneficial
ownership of Common Stock of the Company as of April 19, 1996 as to (i) each
person who is known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) each director, (iii) each of the
executive officers named in the Summary Compensation Table below and (iv) all
directors and executive officers as a group.
Common
Stock Approximate
Five Percent Shareholders, Beneficially Percentage
Directors and Certain Executive Officers Owned Owned(1)
---------------------------------------- ------------ ------------
LGT Asset Management, Inc. ............................ 1,155,500 14.4%
50 California Street
27th Floor
San Francisco, CA 94111-4624
Kopp Investment Advisors, Inc. ........................ 1,089,950 13.6%
6600 France Avenue South
Suite 672
Edina, MN 55433
Denver Investment Advisors LLC ........................ 981,600 12.2%
1225 17th Street, 26th Floor
Denver, CO 80217
C. Woodrow Rea, Jr.(2) ................................ 104,878 1.3%
James A. Cole ......................................... 3,534 *
Eric A. Young(3) ...................................... 3,387 *
David S. Wisherd(4) ................................... 13,698 *
William P. Clark(5) ................................... 28,183 *
Martin Cooper(6) ...................................... 10,000 *
Edward A. Supplee, Jr.(7) ............................. 71,225 *
Gary R. Gianatasio(8) ................................. 1,095 *
Robert Wilson ......................................... -- --
All Directors and executive officers as a group (9
persons)(9) ......................................... 236,000 2.9%
- - ----------
* Less than 1%
(1) Applicable percentage ownership is based on 8,019,067 shares of Common Stock
outstanding as of April 19, 1996 together with applicable options for such
shareholder. Beneficial ownership is determined in accordance with the rules
of the Securities and Exchange Commission, and includes voting and
investment power with respect to shares. Shares of Common Stock subject to
options currently exercisable or exercisable within 60 days after April 19,
1996 are deemed outstanding for computing the percentage ownership of the
person holding such options, but are not deemed outstanding for computing
the percentage of any other person.
(2) Includes 11,546 shares issuable pursuant to options exercisable within 60
days of April 19, 1996. Mr. Rea resigned as President, Chief Executive
Officer and director of the Company in April 1996.
(3) Represents 3,387 shares owned by Canaan Capital Limited Partnership, over
which Mr. Young may be deemed to share voting and investment power.
(4) Includes 13,648 shares issuable pursuant to options exercisable within 60
days of April 19, 1996.
(5) Includes 281 shares issuable pursuant to options exercisable within 60 days
of April 19, 1996.
(6) Includes 10,000 shares issuable pursuant to options exercisable within 60
days of April 19, 1996.
(7) Includes 20,815 shares issuable pursuant to options exercisable within 60
days of April 19, 1996.
(8) Includes 1,095 shares issuable pursuant to options exercisable within 60
days of April 19, 1996.
(9) Includes 60,772 shares issuable pursuant to options exercisable within 60
days of April 19, 1996.
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REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date or by attending the meeting and voting in person.
VOTING AND SOLICITATION
Each shareholder is entitled to one vote for each share held. Every
shareholder voting for the election of directors (Proposal One) may cumulate
such shareholder's votes and give one candidate a number of votes equal to the
number of directors to be elected multiplied by the number of shares that such
shareholder is entitled to vote, or distribute such shareholder's votes on the
same principle among as many candidates as the shareholder may select, provided
that votes cannot be cast for more than six candidates. However, no shareholder
shall be entitled to cumulate votes unless the candidate's name has been placed
in nomination prior to the voting and the shareholder, or any other shareholder,
has given notice at the meeting, prior to the voting, of the intention to
cumulate the shareholder's votes. On all other matters, each share of Common
Stock has one vote. A quorum comprising the holders of the majority of the
outstanding shares of Common Stock on the record date must be present or
represented for the transaction of business at the Annual Meeting. Abstentions
and broker non-votes will be counted in establishing the quorum.
This solicitation of proxies is made by the Company, and all related costs
will be borne by the Company. In addition, the Company may reimburse brokerage
firms and other persons representing beneficial owners of shares for their
expenses in forwarding solicitation material to such beneficial owners. Proxies
may also be solicited by certain of the Company's directors, officers and
regular employees, without additional compensation, personally or by telephone
or telegram.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company that are intended to be presented by
such shareholders at the Company's 1997 Annual Meeting of Shareholders must be
received by the Company no later than January 17, 1997 in order that they may be
considered for inclusion in the proxy statement and form of proxy relating to
that meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
A board of six directors is to be elected at the Annual Meeting of
Shareholders. Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the Company's six nominees named below, all of whom
are presently directors of the Company. In the event that any nominee of the
Company is unable or declines to serve as a director at the time of the Annual
Meeting of Shareholders, the proxies will be voted for any nominee who shall be
designated by the present Board of Directors to fill the vacancy. The Company is
not aware of any nominee who will be unable or will decline to serve as a
director. In the event that additional persons are nominated for election as
directors, the proxy holders intend to vote all proxies received by them in such
a manner (in accordance with cumulative voting) as will assure the election of
as many of the nominees listed below as possible, and, in such event, the
specific nominees to be voted for will be determined by the proxy holders. The
term of office for each person elected as a director will continue until the
next Annual Meeting of Shareholders or until a successor has been elected and
qualified.
VOTE REQUIRED
If a quorum is present and voting, the six nominees receiving the highest
number of votes will be elected to the Board of Directors. Abstentions and
"broker non-votes" are not counted in the election of directors.
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NOMINEES
The names of the nominees and certain information about them are set forth
below:
Director
Name of Nominee Age Position with the Company Since
- - --------------------- --- ---------------------------------- ---------
Garrett A. Garrettson 52 President, Chief Executive Officer 1996
and Director
David S. Wisherd .... 49 Executive Vice President, 1984
Chief Technical Officer and
Chairman of the Board of Directors
James A. Cole(1) .... 53 Director 1985
Martin Cooper(2) .... 67 Director 1994
Robert C. Wilson(2)... 76 Director 1995
Eric A. Young(1) .... 40 Director 1991
- - ----------
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
There is no family relationship between any director or executive officer of
the Company.
Garrett A. Garrettson joined the Company in April 1996 as President, Chief
Executive Officer and director. Between March 1993 and March 1996 he was
President and Chief Executive Officer of Censtor Corporation, which designed and
sold technology related to magnetic recording heads for the disk drive industry.
From November 1986 to March 1993, he served as a Vice President of the Imprimis
Technology Incorporated ("Imprimis"), a wholly owned subsidiary of Control Data
Corporation, and subsequently with Seagate Technology when they acquired
Imprimis in 1989. Prior to 1986, Mr. Garrettson held a variety of positions with
Hewlett Packard Company and served in the U.S. Navy. Mr. Garrettson also serves
as a director of Censtor Corporation and Benton Oil and Gas Company. He received
his B.S. and M.S. in Engineering, Physics and a Ph.D. in Mechanical Engineering
from Stanford University.
David S. Wisherd, a founder of the Company, has been a director, Executive
Vice President and Chief Technical Officer since April 1984. He was elected
Chairman of the Board in January 1995. From 1978 until 1983, he served as Vice
President of Engineering of Communications Transistor Corporation, a
manufacturer of RF power transistors and a subsidiary of Varian Associates. From
1975 until 1978, he served as Vice President of Operations of Communications
Power Incorporated, a manufacturer of wireless communications equipment. Prior
to such time, Mr. Wisherd held engineering positions with King Radio and
Motorola, Inc. ("Motorola"). Mr. Wisherd received a B.S. in Electrical
Engineering from the University of Missouri at Rolla.
James A. Cole has been a director of the Company since June 1985. He has been
a General Partner of Spectra Enterprise Associates, a venture capital firm, and
a partner with NEA, a venture capital firm, since 1986. Prior to 1986, Mr. Cole
spent twenty years in various microwave integrated circuit companies, including
Amplica Inc. ("Amplica"), where he was a co-founder and served as Chief
Operating Officer. Amplica became a public company in 1981 and was acquired by
Comsat Corporation in 1982. He presently serves on the Board of Directors of
Vitesse Semiconductor Corp., a semiconductor manufacturer, and Gigatronics Inc.,
a microwave instrument supplier ("Gigatronics").
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Martin Cooper has been a director of the Company since January 1994. Mr.
Cooper has served as Chairman and Chief Executive of Array Comm, Incorporated,
an array antenna technology company, since April 1992 and as Chairman of Dyna,
Incorporated, a consulting company, since 1986. From 1985 to December 1992, he
served as President of Cellular Pay Phone Incorporated, a cellular pay telephone
company. From 1982 to 1986, he was a co-founder, Chairman and Chief Executive
Officer of Cellular Business Systems, Inc., a management information company.
From 1954 to 1983, Mr. Cooper served in a variety of positions including
Corporate Vice President, Division Manager and Corporate Director of Research
and Development of Motorola. He is a Fellow of the IEEE and of the Radio Club of
America and a recipient of the IEEE Centennial medal. He serves on the Advisory
Board of the International National Electronics Consortium and serves on its
Board of Directors. He received a B.S. and an M.S. in Electrical Engineering
from the Illinois Institute of Technology.
Robert C. Wilson has served as a director of the Company since October 1995.
Mr. Wilson has been Chairman of Wilson & Chambers, a venture capital and
consulting firm, since December 1992. Mr. Wilson served as President, Chief
Executive Officer and Chairman of the Board at Memorex Corporation from 1974
until 1980. From 1971 to 1974, Mr. Wilson served as President and Chief
Executive Officer of Collins Radio Company, a communications company. From 1969
to 1971, Mr. Wilson was employed by Rockwell International, a diversified
manufacturing company, first as President of Commercial Products and later as
Executive Vice President. He is currently a director of Andros Incorporated,
Carco Electronics, Gigatronics, Storage Technology Corporation and SyQuest
Technology, Inc. Mr. Wilson has previously served as a director of Chrysler
Corporation, GAF Corporation, Rockwell International and Western Digital
Corporation. Mr. Wilson received a B.S. from the University of California at
Berkeley.
Eric A. Young has been a director of the Company since January 1991. He was a
co-founder of Canaan Partners, a venture capital investment firm, and has served
as a General Partner since its inception in 1987. Prior to such time, Mr. Young
held various management positions with GE Venture Capital, a venture capital
investment firm and a subsidiary of General Electric Co. He presently serves on
the Board of Directors of UNIQUEST, Inc., an applications software company. He
received a B.S. in Mechanical Engineering at Cornell University and received an
M.M. in Finance from Northwestern University.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of seven meetings during
fiscal 1996. No director attended fewer than 75% of the meetings of the Board of
Directors and committees thereof, if any, upon which such director served. The
Board of Directors has an Audit Committee and a Compensation Committee. The
Board of Directors has no nominating committee or any committee performing such
functions.
The Audit Committee, which consisted of Mr. Cooper during fiscal 1996, is
responsible for overseeing actions taken by the Company's independent auditors
and reviews the Company's internal financial controls. The Audit Committee met
one time during fiscal 1996.
The Compensation Committee, which consisted of Messrs. Cole and Young during
fiscal 1996, met once during fiscal 1996. The duties of the Compensation
Committee include determining salaries, incentives and other forms of
compensation for directors, officers and other employees of the Company and
administering various incentive compensation and benefit plans.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Cole and Young. Mr. Rea, who
was President and Chief Executive Officer of the Company, participated in all
discussions and decisions regarding salaries and incentive compensation for all
employees and consultants to the Company, except that Mr. Rea was excluded from
discussions regarding his own salary and incentive compensation.
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PROPOSAL TWO
AMENDMENT OF 1994 EMPLOYEE STOCK PURCHASE PLAN
At the Annual Meeting, the shareholders are being asked to approve an
amendment of the Company's 1994 Employee Stock Purchase Plan (the "Purchase
Plan") to increase the number of shares reserved for issuance thereunder by
25,000 shares. The adoption of the Purchase Plan was approved by the Board of
Directors in May 1994 and by the shareholders in June 1994. In June 1994 the
shareholders approved an amendment to the Purchase Plan to allow executive
officers of the Company to increase the rate of their payroll deductions at the
beginning of any purchase period thereunder. A total of 250,000 shares of Common
Stock have been reserved for issuance under the Purchase Plan. As of April 19,
1996, a total of 131,416 shares had been issued to employees at an average
purchase price of $10.82 per share pursuant to three offerings under the
Purchase Plan and 118,584 shares remain available for future issuance.
The fair market value of the Common Stock of the Company on the first day of
the most recent offering period was $22.75 per share. See "Purchase Price."
VOTE REQUIRED
The affirmative vote of a majority of the Votes Cast will be required by law
to approve the amendment to the Purchase Plan. For this purpose, the "Votes
Cast" are defined to be the shares of the Company's Common Stock represented and
"voting" at the Annual Meeting. In addition, the affirmative votes must
constitute at least a majority of the required quorum, which quorum is a
majority of the shares outstanding at the record date. Votes that are cast
against the proposal will be counted for purposes of determining both (i) the
presence or absence of a quorum and (ii) the total number of Votes Cast with
respect to the proposal. Abstentions will be counted for purposes of determining
both (i) the presence or absence of a quorum for the transaction of business and
(ii) the total number of Votes Cast with respect to the proposal. Accordingly,
abstentions will have the same effect as a vote against the proposal. Broker
non-votes will be counted for purposes of determining the presence or absence of
a quorum for the transaction of business, but will not be counted for purposes
of determining the number of Votes Cast with respect to this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE AMENDMENT TO
THE PURCHASE PLAN.
The essential terms of the Purchase Plan, as amended, are summarized as
follows:
PURPOSE
The purposes of the Purchase Plan is to provide employees of the Company and
of any subsidiary which is designated by the Board of Directors to participate
in the Purchase Plan with an opportunity to purchase Common Stock of the Company
through accumulated payroll deductions. The Purchase Plan is intended to qualify
under Section 423 of the Internal Revenue Code of 1986, as amended (the "Code").
ADMINISTRATION
The Purchase Plan provides for administration by the Board of Directors of
the Company or a committee appointed by the Board. All questions of
interpretation or application of the Purchase Plan are determined by the Board
of Directors or its appointed committee, and its decisions are final and binding
upon all participants. No charge for administrative or other costs may be made
against the payroll deductions of a participant in the Purchase Plan. Members of
the Board receive no additional compensation for their services in connection
with the administration of the Purchase Plan.
OFFERING PERIODS
The Purchase Plan has offering periods of approximately twenty-four months,
each divided into four six-month purchase periods. The offering periods commence
on or after December 31 and June 30 of each year. The Board of Directors has the
power to alter the duration of the offering periods without shareholder
approval.
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ELIGIBILITY
Any person who (i) is a regular employee scheduled to work at least twenty
hours per week and at least five months per year and (ii) was employed by the
Company on the lst day of April or the lst day of October immediately preceding
the enrollment date (or by any subsidiary designated from time to time by the
Board of Directors) is eligible to participate in the Purchase Plan. Eligible
employees become participants in the Purchase Plan by delivering to the
Company's payroll office a subscription agreement authorizing payroll
deductions. An employee who becomes eligible to participate in the Purchase Plan
after the commencement of an offering may not participate in the Purchase Plan
until the commencement of the next offering period.
PURCHASE PRICE
The price at which shares are sold to participating employees is eighty-five
percent (85%) of the lower of the fair market value per share of the Common
Stock on (i) the first day of the offering period or (ii) the last day of the
purchase period. The fair market value of the Common Stock on a given date is
determined by reference to the closing sales price on the Nasdaq National
Market. The closing sale price per share of the Company's Common Stock on the
Nasdaq National Market on April 19, 1996 was $20.50.
PAYMENT OF PURCHASE PRICE; PAYROLL DEDUCTIONS
The purchase price of the shares is accumulated by payroll deductions over
the offering period. The deductions may not exceed 15% of a participant's
compensation. A participant may discontinue his or her participation in the
Purchase Plan and may decrease the rate of payroll deductions at any time during
the offering period. A participant may increase the rate of payroll deductions
at the beginning of each purchase period. Payroll deductions shall commence on
the first payday following the offering date and shall continue at the same rate
until the end of the offering period unless sooner terminated as provided in the
Purchase Plan.
PURCHASE OF STOCK; EXERCISE OF OPTION
By executing a subscription agreement to participate in the Purchase Plan,
the employee is entitled to have shares placed under option to him or her. The
maximum number of shares placed under option to a participant in an offering is
that number arrived at by dividing the amount of his or her compensation which
he or she has elected to have withheld for the purchase period by the lower of
(i) 85% of the fair market value of a share of Common Stock at the beginning of
the offering period, or (ii) 85% of the fair market value of a share of Common
Stock on the last day of the purchase period as long as the total number of
shares issued to a participant for any purchase period does not exceed a number
determined by dividing $12,500 by the market value of a share of Common Stock at
the beginning of the offering period. Unless the employee's participation is
discontinued, the option for the purchase of shares will be exercised
automatically at the end of the purchase period at the applicable price.
Notwithstanding the forgoing, no employee shall be permitted to subscribe for
shares under the Purchase Plan (a) if, immediately after the grant of the
option, the employee would own, and/or hold outstanding options to purchase, 5%
or more of the voting stock or value of all classes of stock of the Company or
(b) which permits his or her rights to purchase stock under all employees stock
purchase plans of the Company and its subsidiaries to accrue at a rate which
exceeds twenty-five thousand dollars ($25,000) worth of stock (determined at the
fair market value of the shares at the time such option is granted) for each
calendar year in which such option is outstanding at any time. Furthermore, if
the number of shares which would otherwise be placed under option at the
beginning of an offering period exceeds the number of shares then available
under the Purchase Plan, a pro rata allocation of the shares remaining shall be
made in as equitable a manner as is practicable.
WITHDRAWAL
While each participant in the Purchase Plan is required to sign a
subscription agreement authorizing payroll deductions, the participant's
interest in a given offering may be terminated in whole, but not in part, by
signing and delivering to the Company a notice of withdrawal from the Purchase
Plan. Such
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withdrawal may be elected at any time prior to the end of the applicable
offering period. Any withdrawal by the employee during a given offering
automatically terminates the employee's interest in that offering.
TERMINATION OF EMPLOYMENT
Termination of a participant's employment for any reason, including
retirement or death, cancels his or her participation in the Purchase Plan
immediately. In such event, the payroll deductions credited to the participant's
account will be returned without interest to such participant, or, in the case
of death, to the person or persons entitled thereto as specified by the employee
in the subscription agreement.
CAPITAL CHANGES
In the event of any changes in the capitalization of the Company, such as
stock splits or stock dividends, resulting in an increase or decrease in the
number of shares of Common Stock, effected without receipt of consideration by
the Company, appropriate adjustments will be made by the Company in the shares
subject to purchase and in the purchase price per share.
NONASSIGNABILITY
No rights or accumulated payroll deductions of an employee under the Purchase
Plan may be pledged, assigned, or transferred for any reason and any such
attempt may be treated by the Company as an election to withdraw from the
Purchase Plan.
AMENDMENT AND TERMINATION OF THE PURCHASE PLAN
The Board of Directors may at any time amend or terminate the Purchase Plan,
except that such termination shall not affect options previously granted nor may
any amendment make any changes in an option granted prior thereto which
adversely affects the rights of any participant. No amendment may be made to the
Purchase Plan without prior approval of the shareholders of the Company if such
amendment would increase the number of shares reserved under the Purchase Plan,
materially modify the eligibility requirements, or materially increase the
benefits which may accrue to participants under the Purchase Plan.
CERTAIN UNITED STATES FEDERAL INCOME TAX INFORMATION
The Purchase Plan, and the right of participants to make purchases
thereunder, is intended to qualify under the provisions of Section 423 of the
Code. Under these provisions, no income will be taxable to a participant until
the shares purchased under the Purchase Plan are sold or otherwise disposed of.
Upon sale or other disposition of the shares, the participant will generally be
subject to tax and the amount of the tax will depend upon the holding period. If
the shares are sold or otherwise disposed of more than two years from the first
day of the offering period and more than one year from the date of the shares
are purchased, the participant will recognize ordinary income measured as the
lesser of (a) the excess of the fair market value of the shares at the time of
such sale or disposition over the purchase price, or (b) an amount equal to 15%
of the fair market value of the shares as of the first day of the offering
period. Any additional gain will be treated as long-term capital gain. If the
shares are sold or otherwise disposed of before the expiration of these holding
periods, the participant will recognize ordinary income generally measured as
the excess of the fair market value of the shares on the date the shares are
purchased over the purchase price. Any additional gain or loss of such sale or
disposition will be long-term or short-term capital gain or loss, depending on
the holding period. Generally, the Company is entitled to a deduction for
ordinary income recognized by participants upon a sale or disposition of shares
prior to the expiration of the holding period(s) described above.
The foregoing is only a summary of the effect of federal income taxation upon
the participant and the Company with respect to the shares purchased under the
Purchase Plan. Reference should be made to the applicable provisions of the
Code. In additional, the summary does not discuss the tax consequences of a
participant's death or the income tax laws of any state or foreign country in
which the participant may reside.
8
<PAGE>
PARTICIPATION IN THE PURCHASE PLAN
Participation in the Purchase Plan is voluntary and is dependent on each
eligible employee's election to participate and his or her determination as to
the level of payroll deductions. Accordingly, future purchases under the
Purchase Plan are not determinable. Non-employee directors are not eligible to
participate in the Purchase Plan.
<TABLE>
The following table sets forth certain information regarding shares purchased
during the fiscal year ended March 31, 1996 by each of the executive officers
named in the Summary Compensation Table below who participated in the Purchase
Plan, all current executive officers as a group, and all other employees who
participated in the Purchase Plan as a group:
<CAPTION>
Number of
Shares Dollar
Name of Individual or Identity of Group and Position Purchased(#) Valued($)(1)
- - ---------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
C. Woodrow Rea, Jr., President, Chief Executive Officer and
Director(2) .......................................................... 1,611 $ 31,433
David S. Wisherd, Executive Vice President, Chief Technical Officer
and Chairman of the Board of Directors ............................... -- --
Edward A. Supplee, Jr., Executive Vice President, Finance and
Administration, Chief Financial Officer and Secretary ................ 2,000 40,750
Gary R. Gianatasio, Senior Vice President, Sales and Marketing ....... 1,926 39,890
William P. Clark, President of AMT .................................... 1,554 30,420
All Current Executive Officers as a group (6 Persons) ................. 7,091 142,493
Non-Executive Officer Directors as a group ............................ * *
All Other Employees as a group ........................................ 89,856 1,709,632
<FN>
- - ----------
* Not eligible to participate in the Purchase Plan.
(1) Market value of shares on date of purchase minus the purchase price under
the Purchase Plan.
(2) Mr. Rea resigned as President, Chief Executive Officer and director of the
Company in April 1996.
</FN>
</TABLE>
PROPOSAL THREE
AMENDMENT OF 1992 STOCK PLAN
At the Annual Meeting, the shareholders are being asked to approve an
amendment of the Company's 1992 Stock Plan (the "Plan") to increase the number
of shares of Common Stock reserved for issuance thereunder by 625,000 shares.
The adoption of the Plan was approved by the Board of Directors in July 1992 and
subsequently by the shareholders. In June 1995 the shareholders approved an
amendment to the Plan to increase the number of shares of Common Stock reserved
for issuance thereunder by 200,000 shares and to make certain changes to the
Plan in order that it comply with the performance- based criteria of Section
162(m) of the Code. As of April 19, 1996, options to purchase an aggregate of
1,284,512 shares of the Company's Common Stock were outstanding, with a weighted
average exercise price of $17.92 per share, and 423,825 shares (including the
625,000 shares subject to shareholder approval at this Annual Meeting) were
available for future grant. In addition, 1,242,548 shares have been purchased
pursuant to exercise of stock options under the Plan.
The Plan authorizes the Board of Directors to grant stock options to eligible
employees and consultants of the Company. The Plan is structured to allow the
Board of Directors broad discretion in creating equity incentives in order to
assist the Company in attracting, retaining and motivating the best available
personnel for the successful conduct of the Company's business. The Company has
had a long standing practice of linking key employee compensation to corporate
performance because it believes that this increases employee motivation to
improve shareholder value. The Company has, therefore, consistently included
equity incentives as a significant component of compensation for a broad range
of the Company's employees. This practice has enabled the Company to attract and
retain the talent that it continues to require.
The Board of Directors believes that the remaining shares available for grant
under the Plan are insufficient to accomplish the purposes of the Plan described
above. In April 1996, the Company hired two
9
<PAGE>
key executive officers -- a new President and Chief Executive Officer and a new
Executive Vice President, Operations. In order to attract these two executives
and provide them the opportunity to purchase an equity interest in the Company,
thereby creating a direct link between their compensation and long-term
increases in shareholder value, the Company granted these new executives options
to purchase an aggregate of 330,000 shares. Because these grants exceeded the
shares available for grant under the Plan, these option grants are subject to
the shareholders' approval of the increase to the Plan at this Annual Meeting.
In addition, the Company currently intends to hire certain additional senior
management employees during fiscal 1997 and will be required to offer equity
incentives to attract and motivate these individuals. Finally, in order to
retain the services of valuable employees as the Company matures and its
employee base grows larger, it will be necessary to grant additional options to
current employees as older options become fully vested.
FOR THESE REASONS, THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE FOR APPROVAL OF THE AMENDMENT TO THE PLAN.
VOTE REQUIRED
The affirmative vote of a majority of the Votes Cast will be required to
approve the amendment to the Plan. In addition, the affirmative votes must
constitute at least a majority of the required quorum, which quorum is a
majority of the shares outstanding at the Record Date. Votes that are cast
against the proposal will be counted for purposes of determining both (i) the
presence or absence of a quorum and (ii) the total number of Votes Cast with
respect to the proposal. Abstentions will be counted for purposes of determining
both (i) the presence or absence of a quorum for the transaction of business and
(ii) the total number of Votes Cast with respect to the proposal. Accordingly,
abstentions will have the same effect as a vote against the proposal. Broker
non-votes will be counted for purposes of determining the presence or absence of
a quorum for the transaction of business, but will not be counted for purposes
of determining the number of Votes Cast with respect to this proposal.
The essential terms of the Plan are summarized as follows:
PURPOSE
The purposes of the Plan are to attract, retain and motivate the best
available personnel for positions of substantial responsibility, to provide
additional incentive to employees and consultants of the Company and to promote
the success of the Company's business.
ADMINISTRATION
The Plan provides for administration by the Board of Directors of the Company
or by a Committee of the Board. The Plan is currently being administered by the
Compensation Committee of the Board of Directors, except that grants to
executive officers are approved by the entire Board of Directors. The Board or
the committee appointed to administer the Plan are referred to in this
description as the "Administrator." The Administrator determines the terms of
options granted, including the exercise price, number of shares subject to the
option and the exercisability thereof. All questions of interpretation are
determined by the Administrator and its decisions are final and binding upon all
participants. Members of the Board receive no additional compensation for their
services in connection with the administration of the Plan.
ELIGIBILITY
The Plan provides that either incentive or nonstatutory stock options may be
granted to employees (including officers and employee directors) of the Company
or any of its designated subsidiaries. In addition, the Plan provides that
nonstatutory stock options may be granted to consultants of the Company or any
of its designated subsidiaries. The Administrator's elects the optionees and
determines the number of shares to be subject to each option. In making such
determination, there are taken into account the duties and responsibilities of
the optionee, the value of the optionee's services, the optionee's present and
potential contribution to the success of the Company and other relevant factors.
The Plan provides a limit of $100,000 on the aggregate fair market value of
shares subject to all incentive options which are exercisable for the first time
in any one calendar year.
10
<PAGE>
TERMS OF OPTIONS
Each option is evidenced by a stock option agreement between the Company and
the optionee to whom such option is granted and is subject to the following
additional terms and conditions:
(1) EXERCISE OF THE OPTION: The Administrator determines when options
granted under the Plan may be exercised. An option is exercised by giving
written notice of exercise to the Company, specifying the number of shares
of Common Stock to be purchased and tendering payment to the Company of the
purchase price. Payment for shares issued upon exercise of an option may
consist of cash, check, promissory note, delivery of already-owned shares
of the Company's Common Stock subject to certain conditions, pursuant to a
cashless exercise procedure under which the optionee provides irrevocable
instructions to a brokerage firm to sell the purchased shares and to remit
to the Company, out of the sale proceeds, an amount equal to the exercise
price plus all applicable withholding taxes or such other consideration as
determined by the Administrator and as permitted by the California
Corporations Code.
Options may be exercised at any time on or following the date the
options are first exercisable. An Option may not be exercised for a
fraction of a share.
(2) OPTION PRICE: The option price of all incentive stock options and
nonstatutory stock options under the Plan is determined by the
Administrator, but in no event shall it be less than the fair market value
of the Common Stock on the date the option is granted. For purposes of the
Plan, fair market value is defined as the closing price per share of the
Common Stock on the date of grant as reported on the Nasdaq National
Market. In the case of an option granted to an optionee who at the time of
grant owns stock representing more than 10% of the voting power of all
classes of stock of the Company, the option price must be not less than
110% of the fair market value on the date of grant.
(3) TERMINATION OF EMPLOYMENT: The Plan provides that if the
optionee's employment by the Company is terminated for any reason, other
than death or disability, options may be exercised within 30 days (or such
other period of time not exceeding three months (or such other period of
time, not exceeding three months in the case of Incentive Stock Options as
is determined by the Administrator)) after such termination and may be
exercised only to the extent the options were exercisable on the date of
termination.
(4) DEATH: If an optionee should die while an employee or a consultant
of the Company (or during such period of time not exceeding three months,
as determined by the Administrator) following termination of the optionee's
employment or consultancy, options may be exercised at any time within six
months after the date of death but only to the extent that the options were
exercisable on the date of death or termination of employment and in no
event later than the expiration of the term of such option as set forth in
the Notice of Grant.
(5) DISABILITY: If an optionee's employment is terminated due to a
disability, options may be exercised at any time within twelve months from
the date of such termination, but only to the extent that the options were
exercisable on the date of termination of employment and in no event later
than the expiration of the term of such option as set forth in the Notice
of Grant.
(6) TERMINATION OF OPTIONS: Options granted under the Plan expire ten
years from the date of grant. However, incentive stock options granted to
an optionee who, immediately before the grant of such option, owned more
than 10% of the total combined voting power of all classes of stock of the
Company or a parent or subsidiary corporation, may not have a term of more
than five years. No option may be exercised by any person after such
expiration.
(7) NONTRANSFERABILITY OF OPTIONS: An option is nontransferable by the
optionee, other than by will or the laws of descent and distribution, and
is exercisable only by the optionee during his or her lifetime or, in the
event of death, by a person who acquires the right to exercise the option
by bequest or inheritance or by reason of the death of the optionee.
ADJUSTMENT UPON CHANGES IN CAPITALIZATION
In the event any change, such as a stock split or dividend, is made in the
Company's capitalization which results in an increase or decrease in the number
of outstanding shares of Common Stock without
11
<PAGE>
receipt of consideration by the Company, an appropriate adjustment shall be made
in the option price and in the number of shares subject to each option. In the
event of the proposed dissolution or liquidation of the Company, all outstanding
options automatically terminate. In the event of a merger of the Company with or
into another corporation or sale of substantially all of the assets of the
Company, all outstanding options shall be assumed or an equivalent option
substituted by the successor corporation. The Administrator may in its
discretion make provision for accelerating the exercisability of shares subject
to options under the Plan in such event.
AMENDMENT AND TERMINATION
The Board of Directors may amend the Plan at any time or from time to time or
may terminate it without approval of the shareholders, provided, however, that
shareholder approval is required for any amendment which increases the number of
shares which may be issued under the Plan, materially changes the standards of
eligibility or materially increases the benefits which may accrue to
participants under the Plan. However, no action by the Board of Directors or
shareholders may alter or impair any option previously granted under the Plan
without the consent of the optionee. In any event, the Plan will terminate in
July 2002.
TAX INFORMATION
Options granted under the Plan may be either "incentive stock options," as
defined in Section 422 of the Code, or nonstatutory options.
An optionee who is granted an incentive stock option will not recognize
taxable income either at the time the option is granted or upon its exercise,
although the exercise may subject the optionee to the alternative minimum tax.
Upon the sale or exchange of the shares more than two years after grant of the
option and one year after exercising the option, any gain or loss will be
treated as long-term capital gain or loss. If these holding periods are not
satisfied, the optionee will recognize ordinary income at the time of sale or
exchange equal to the difference between the exercise price and the lower of (i)
the fair market value of the shares at the date of the option exercise or (ii)
the sale price of the shares. A different rule for measuring ordinary income
upon such a premature disposition may apply if the optionee is also an officer,
director, or 10% shareholder of the Company. Generally, the Company will be
entitled to a deduction in the same amount as the ordinary income recognized by
the optionee. Any gain or loss recognized on such a premature disposition of the
shares in excess of the amount treated as ordinary income will be characterized
as long-term or short-term capital gain or loss, depending on the holding
period.
All other options which do not qualify as incentive stock options are
referred to as nonstatutory options. An optionee will not recognize any taxable
income at the time he or she is granted a nonstatutory option. However, upon its
exercise, the optionee will recognize ordinary income generally measured as the
excess of the then fair market value of the shares purchased over the purchase
price. Any taxable income recognized in connection with an option exercise by an
optionee who is also an employee of the Company will be subject to tax
withholding by the Company. Upon resale of such shares by the optionee, any
difference between the sales price and the optionee's purchase price, to the
extent not recognized as taxable income as described above, will be treated as
long-term or short-term capital gain or loss, depending on the holding period.
Generally, the Company will be entitled to a tax deduction in the same amount
as the ordinary income recognized by the optionee with respect to shares
acquired upon exercise of a nonstatutory option.
The foregoing is only a summary of the effect of federal income taxation upon
the optionee and the Company with respect to the grant and exercise of options
under the Plan, does not purport to be complete, and does not discuss the tax
consequences of the optionee's death or the income tax laws of any municipality,
state or foreign country in which an optionee may reside.
PARTICIPATION IN THE PLAN
The grant of options under the Plan to executive officers, including the
officers named in the Summary Compensation Table below, is subject to the
discretion of the Administrator. As of the date of
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<PAGE>
this proxy statement, there has been no determination by the Administrator with
respect to future awards under the Plan. Accordingly, future awards are not
determinable. There were no options granted to the named executive officers
during fiscal 1996. Information regarding options granted to non-employee
Directors during fiscal 1996 is set forth under the heading "Executive
Compensation and Other Matters--Compensation of Directors." During fiscal 1996,
all current executive officers as a group and all non-executive officer
employees as a group received options to purchase 0 shares and 429,743 shares,
respectively, pursuant to the Plan.
PROPOSAL FOUR
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP, independent
auditors, to audit the consolidated financial statements of the Company for the
fiscal year ending March 31, 1997, and recommends that shareholders vote for
ratification of such appointment. Although action by shareholders is not
required by law, the Board of Directors has determined that it is desirable to
request approval of this selection by the shareholders. Notwithstanding the
selection, the Board of Directors, in its discretion, may direct the appointment
of new independent auditors at any time during the year, if the Board of
Directors feels that such a change would be in the best interest of the Company
and its shareholders. In the event of a negative vote on ratification, the Board
of Directors will reconsider its selection.
KPMG Peat Marwick LLP has audited the Company's financial statements annually
since 1993. Representatives of KPMG Peat Marwick LLP are expected to be present
at the meeting with the opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate questions.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS.
13
<PAGE>
EXECUTIVE COMPENSATION AND OTHER MATTERS
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth certain information
regarding the compensation of the Chief Executive Officer of the Company and the
other most highly compensated executive officers of the Company for services
rendered in all capacities to the Company for the fiscal year.
Long-term
Compensation
------------
Awards
-----------
Annual Number of
Compensation(1) Securities
Fiscal ------------------ Underlying
Name and Principal Position Year Salary Bonus(2) Options
- - ------------------------------------------ ----- --------- -------- ----------
C. Woodrow Rea, Jr. .......................1996 $209,422 $ -- --
President, Chief Executive Officer and 1995 225,367 111,937 --
Director(3) 1994 203,513 100,000 75,000
David S. Wisherd ..........................1996 167,404 8,809 --
Executive Vice President, Chief 1995 132,029 64,813 55,000
Technical Officer and Director 1994 110,702 46,975 7,500
Edward A. Supplee, Jr. ....................1996 138,950 18,388 --
Executive Vice President, Finance and 1995 118,428 55,406 5,000
Administration, Chief Financial Officer 1994 110,706 45,400 15,663
and Secretary
Gary R. Gianatasio ........................1996 107,407 13,095 --
Senior Vice President, Sales 1995 96,820 53,775 --
and Marketing 1994 91,230 48,550 15,000
William P. Clark ..........................1996 97,698 60,000 --
President, AMT 1995 101,546 14,963 --
1994 96,013 40,125 1,500
- - ----------
(1) Other than salary and bonus described herein, the Company did not pay the
persons named in the Summary Compensation Table any compensation, including
incidental personal benefits, in excess of 10% of such executive officer's
salary.
(2) Represents bonuses relating to performance of services for the Company in
fiscal 1996, some of which was paid for in fiscal 1997.
(3) Mr. Rea resigned as President, Chief Executive Officer and director of
the Company in April 1996.
14
<PAGE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
There were no stock options granted to the executive officers named in the
Summary Compensation Table above during the fiscal year ended March 31, 1996.
The following table sets forth certain information regarding the exercise of
stock options during fiscal 1996 and the value of options held as of March 31,
1996 by the persons named in the Summary Compensation Table at March 31, 1996.
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options at In-the-money Options at
Acquired March 31, 1996(#) March 31, 1996($)(2)
On Value ----------------------------- -----------------------------
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
- - ---------------------- ---------- ----------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
C. Woodrow Rea, Jr.(3) 262,454 8,365,926 10,157 1,389 $222,712 $ 30,211
David S. Wisherd ...... 141,300 3,921,020 13,127 30,573 $ 29,872 $ 137,333
Edward A. Supplee .... 13,259 471,611 16,673 10,127 $360,478 204,321
Gary R. Gianatasio ... 35,208 1,210,550 365 4,427 $ 7,954 $ 96,397
William P. Clark ...... 36,854 1,111,404 157 489 $ 3,434 $ 10,661
<FN>
- - ----------
(1) Market value of the Company's Common Stock at the exercise date minus the
exercise price.
(2) Market value of the Company's Common Stock at fiscal year-end minus
the exercise price.
(3) Mr. Rea resigned as President, Chief Executive Officer and director of the
Company in April 1996.
</FN>
</TABLE>
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company has entered into employment agreements with C. Woodrow Rea, Jr.
and David S. Wisherd (the "Employees"). Pursuant to employment agreements dated
January 6, 1992, Mr. Rea was paid a weekly base salary of $3,846.15 in 1992, and
Mr. Wisherd was paid a weekly base salary of $2,692.31 in 1992. The foregoing
base salaries were modified by the Board of Directors, as they may be from time
to time, and are as shown in the Summary Compensation Table above. The Employees
are eligible to participate in the Company's employee benefit plans and
executive compensation programs.
Pursuant to the employment agreements, the Company granted Mr. Rea an option
to purchase 287,500 shares of the Company's Common Stock and granted Mr. Wisherd
an option to purchase 80,000 shares of the Company's Common Stock, each option
at a price per share of $1.00 equal to the fair market value of the Company's
Common Stock on the date of grant as determined by the Board of Directors.
Subsequently, all options were re-priced to be $.20 per share at the time the
Company's 1992 Stock Plan was adopted. Such options have a term of ten years and
vest starting one year after the date of grant, with 25% of the shares covered,
thereby becoming exercisable at that time and with an additional 1/48th of the
option shares becoming exercisable each month thereafter.
Upon the termination of an Employee's employment with the Company for any
reason whatsoever, including a Constructive Termination (defined below), and
other than a voluntary termination or termination for Cause (defined below) or
disability or death, an Employee is entitled to a severance payment at the then
applicable base salary rate, and payment of COBRA benefits for six months. In
addition, an Employee will have three months from the date of such termination
of employment described above, or if terminated due to a disability or death, in
which to exercise his stock options. The vesting of such options will be
adjusted such that an Employee's options are vested in the amount the option
shares would have been vested had an Employee's employment continued to the end
of the severance period. Upon the termination of an Employee's employment with
the Company due to a disability, the Employee is entitled to a severance payment
equal to the amount by which such Employee's then applicable base salary rate
exceeds all disability payments under the Company's insurance plans and any
state or federal disability plans. Such severance payment shall be made for six
months. An Employee shall not be entitled to severance payments if his
employment is voluntarily terminated or terminated for Cause or by death.
Constructive Termination means a material reduction in salary or benefits not
agreed to by the Employee, or a material change in the Employee's
responsibilities, or a requirement to relocate more than 25 miles. Termination
for "Cause" means termination of employment as a result of (i) an act or acts of
dishonesty undertaken by the Employee and intended to result in substantial gain
or personal enrichment at the
15
<PAGE>
expense of the Company, (ii) willful, deliberate and persistent failure by the
Employee to perform his duties, or (iii) an Employee's conviction of a felony.
Mr. Rea resigned as President, Chief Executive Officer and director of the
Company in April 1996.
In April 1996 the Company appointed Garrett A. Garrettson as the Company's
President, Chief Executive Officer and director of the Company. Mr. Garrettson
entered into an employment agreement with the Company pursuant to which he is to
receive an annual base salary of $275,000 and a signing bonus of $25,000. The
agreement provides for variable compensation in the target amount of $100,000
per year starting in fiscal year 1997. The Company also granted Mr. Garrettson
an option to purchase 250,000 shares of Common Stock. These shares are subject
to vesting over four years and are priced at the fair market value of the
Company's Common Stock at the time of grant. The agreement also provides that in
the event that Mr. Garrettson's employment is terminated by the Company, for any
reason other than misconduct, the Company will continue Mr. Garrettson's base
salary for nine months.
In April 1996, in connection with his acceptance of employment with the
Company, Stephen B. Greenspan, Executive Vice President of Operations, entered
into an employment agreement with the Company pursuant to which he is to receive
an annual base salary of $175,000. The agreement provides for variable
compensation in the target amount of $100,000 per year starting in fiscal year
1997. The Company also granted Mr. Greenspan an option to purchase 80,000 shares
of Common Stock. These shares are subject to vesting over four years and are
priced at the fair market value of the Common Stock at the time of grant. The
agreement also provides that in the event that Mr. Greenspan's employment is
terminated by the Company, for any reason other than misconduct, the Company
will continue Mr. Greenspan's base salary for six months.
COMPENSATION OF DIRECTORS
Non-employee directors currently receive an annual retainer of $3,000, a fee
of $2,000 for attendance at each general Board of Directors meeting, and $1,000
for attendance at each committee meeting for services provided in that capacity
and are reimbursed for out-of-pocket expenses incurred in connection with
attendance at meetings of the Board of Directors and committees of the Board.
The Company's 1994 Director Option Plan provides that options may be granted to
non-employee directors of the Company who do not represent shareholders holding
more than 1% of the Company's outstanding Common Stock pursuant to an automatic
nondiscretionary grant mechanism. Each Outside Director shall be automatically
granted an Option to purchase 5,000 shares (the "First Option") on the date on
which such person first becomes an Outside Director. After the First Option has
been granted to an Outside Director, such Outside Director shall thereafter be
automatically granted an Option to purchase 1,250 shares at the next meeting of
the Board of Directors following the Annual Meeting of Shareholders in each
year, if, on such date, he shall have served on the Board for at least (6)
months. The "First Option" granted shall be exercisable only while the Outside
Director remains a Director with the Company, and vests in installments
cumulatively as to 25% of the Shares subject to the Option on each anniversary
of its date of grant. Subsequent option grants shall be exercisable only while
the Outside Director remains a Director of the Company, and vest as to 8.34% of
the Shares subject to the Option on each monthly anniversary of its date of
grant.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
During the fiscal year ended March 31, 1996 the Company's executive
compensation program was approved by the Board of Directors as a whole rather
than the Compensation Committee of the Board of Directors. The following is the
report of the Board of Directors with respect to the compensation paid to the
Company's executive officers during fiscal 1996. Actual compensation earned
during the fiscal year by the Named Executive Officers is shown in the Summary
Compensation Table above.
Compensation Philosophy
The Company's philosophy in setting its compensation policies for executive
officers is to maximize shareholder value over time. The primary goal of the
Company's executive compensation program is therefore to closely align the
interests of the executive officers with those of the Company's shareholders.
16
<PAGE>
To achieve this goal the Company attempts to (i) offer compensation
opportunities that attract and retain executives whose abilities are critical to
the long-term success of the Company, motivate individuals to perform at their
highest level and reward outstanding achievement, (ii) maintain a significant
portion of the executive's total compensation at risk, tied to achievement of
financial, organizational and management performance goals, and (iii) encourage
executives to manage from the perspective of owners with an equity stake in the
Company.
The compensation program for the Company's executive officers consists of the
following components:
o Base Salary
o Quarterly and Annual Cash Incentives
o Long-Term Stock Option Incentives
Base Salary
The Board of Directors reviewed and approved fiscal 1996 base salaries for
the Chief Executive Officer and other executive officers at the beginning of the
fiscal year. Base salaries were established by the Board based upon competitive
compensation data, an executive's job responsibilities, level of experience,
individual performance and contribution to the business. In addition, the level
of base salary of Mr. Rea, the Chief Executive Officer, and Mr. Wisherd were
governed by employment agreements entered into with such executives in
connection with their original employment with the Company, and such respective
base salaries have been subsequently modified. The terms of these employment
agreements are described in the section entitled, "Employment Contracts and
Change-In-Control Arrangements." Executive officer salaries have been targeted
at or above the average rates paid by competitors to enable the Company to
attract, motivate, reward and retain highly skilled executives. In order to
evaluate the Company's competitive posture in the industry, the Board reviewed
and analyzed the compensation packages, including base salary levels, offered by
other high technology companies. The competitive information was obtained from
surveys prepared by national consulting companies or industry associations
(e.g., Radford Associates, Coopers & Lybrand and the American Electronics
Association). The surveys include, but are not limited to, data from all
industries represented in the Standard & Poor's Communication Equipment
Manufacturer Index, the "line of business index" used in the stock performance
graph set forth below. See "Performance Graph." In making base salary decisions,
the Board exercised its discretion and judgment based upon these factors. No
specific formula was applied to determine the weight of each factor.
Quarterly and Annual Cash Incentives
Quarterly and annual incentive bonuses for executive officers are intended to
reflect the Board's belief that a significant portion of the compensation of
each executive officer should be contingent upon the performance of the Company,
as well as the individual contribution of each executive officer. To carry out
this philosophy, the Company has implemented a Variable Compensation Bonus Plan,
which compensates officers in the form of quarterly and annual cash bonuses. At
the beginning of fiscal 1996, the Board of Directors established target bonuses
for each executive officer as a percentage of the officer's base salary. The
target level of bonuses which the executive officers were eligible to receive
varied from 25% to 73% of base salary. The Variable Compensation Bonus Plan is
intended to motivate and reward executive officers by directly linking the
amount of any cash bonus to specific Company-based performance targets and
specific individual-based performance targets. The executive officers, including
Mr. Rea, must successfully achieve these performance targets which are submitted
by management to the Board for its evaluation and approval at the beginning of
each fiscal quarter. The Company-based performance goals are tied to different
indicators of Company performance, such as achievement of specific levels of
orders, sales and pre-tax profits. These Company-based performance goals, vary
from quarter to quarter, are somewhat subjective in nature and are competitively
sensitive to the Company's business and operations. The individual's performance
goals are tied to different indicators of the individual executive officer's
performance, such as having received an order from a specific customer,
17
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achieved an R&D project milestone, or achieved a desired on-time customer
delivery. The Board evaluates the completion of the Company and individual goals
and approves a performance rating relative to the goals so completed. This
scoring is subjective and is influenced by the Board's perception of the
importance of the various corporate and individual goals. At the end of the
fiscal year, when determining the bonus payment for the fourth fiscal quarter,
the Board considers the overall performance of the Company and each individual
during the entire fiscal year, including the fourth quarter. Actual bonuses
earned during fiscal 1996 ranged from 0 to 61% of the executive officers' base
salary.
Long-Term Stock Option Incentives
The Board provides the Company's executive officers with long-term incentive
compensation through grants of stock options under the Company's 1992 Stock
Plan. The Board believes that stock options provide the Company's executive
officers with the opportunity to purchase and maintain an equity interest in the
Company and to share in the appreciation of the value of the Company's Common
Stock. The Board believes that stock options directly motivate an executive to
maximize long-term shareholder value. The options also utilize vesting periods
that encourage key executives to continue in the employ of the Company. All
options granted to executive officers to date have been granted at the fair
market value of the Company's Common Stock on the date of grant. The Board
considers the grant of each option subjectively, considering factors such as the
individual performance of the executive officer and the anticipated contribution
of the executive officer to the attainment of the Company's long-term strategic
performance goals. Long-term incentives granted in prior years are also taken
into consideration. Mr. Rea did not receive any option grants during fiscal
1996, as the Board believed that the options already held by Mr. Rea were
sufficient to motivate him to maximize the long-term shareholder value.
SECTION 162(M)
The Board has considered the potential future effects of Section 162(m) of the
Internal Revenue Code on the compensation paid to the Company's executive
officers. Section 162(m) disallows a tax deduction for any publicly-held
corporation for individual compensation exceeding $1.0 million in any taxable
year for any of the executive officers named in the proxy statement, unless
compensation is performance-based. The Company has adopted a policy that, where
reasonably practicable, the Company will seek to qualify the variable
compensation paid to its executive officers for an exemption from the
deductibility limitations of Section 162(m).
Respectfully submitted by:
Garrett A. Garrettson Martin Cooper
David S. Wisherd Robert C. Wilson
James A. Cole Eric A. Young
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PERFORMANCE GRAPH
Set forth below is a line graph comparing the annual percentage change in the
cumulative return to the shareholders of the Company's Common Stock with the
cumulative return of the Standard & Poor's 500 Index and of the Standard &
Poor's Communication Equipment Manufacturer Index for the period commencing
August 3, 1994 (the date of the Company's initial public offering) and ending on
March 31, 1996. Returns for the indices are weighted based on market
capitalization at the beginning of each fiscal year.
(The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T)
S&P
Communication
Spectrian Equipment S&P
Corporation Manufacturer 500
----------- -------------- ----
August 1994 ...................... 100 100 100
March 1995 ....................... 236 142 111
March 1996 ....................... 175 205 147
(1) The graph assumes that $100 was invested on August 3, 1994 in the Company's
Common Stock and in the Standard & Poor's 500 Index and in the Standard &
Poor's Communication Equipment Manufacturer Index and that all dividends
were reinvested. No dividends have been declared or paid on the Company's
Common Stock. Shareholder returns over the indicated period should not be
considered indicative of future shareholder returns.
The information contained above under the captions "Report of the Board of
Directors on Executive Compensation" and "Performance Graph" shall not be deemed
to be "soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act or Exchange Act, except to the extent
that the Company specifically incorporates it by reference into such filing.
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COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's executive officers and directors, and persons who own
more than ten percent of a registered class of the Company's equity securities
to file reports of ownership and changes in ownership with the Securities and
Exchange Commission ("SEC") and the National Association of Securities Dealers,
Inc. Executive 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. Based solely in its review of the copies of such forms
received by it, or written representations from certain reporting persons, the
Company believes that during fiscal 1996 all executive officers and directors of
the Company complied with all applicable filing requirements.
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of Proxy to vote the shares they represent as
the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: May 17, 1996
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APPENDIX A
SPECTRIAN CORPORATION
1994 EMPLOYEE STOCK PURCHASE PLAN
AS AMENDED THROUGH JUNE 14, 1996
The following constitute the provisions of the 1994 Employee Stock
Purchase Plan of Spectrian Corporation.
1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" shall mean the Common Stock of the Company.
(d) "Company" shall mean Spectrian Corporation and any
Designated Subsidiary of the Company.
(e) "Compensation" shall mean all base straight time gross
earnings, commissions, payments for overtime, shift premium, variable
compensation, incentive payments, bonuses, and other cash compensation.
(f) "Designated Subsidiaries" shall mean the Subsidiaries
which have been designated by the Board from time to time in its sole discretion
as eligible to participate in the Plan.
(g) "Employee" shall mean any individual who is an Employee of
the Company for tax purposes whose customary employment with the Company is at
least twenty (20) hours per week and more than five (5) months in any calendar
year. For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90 days and
the individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship will be deemed to have terminated on the
91st day of such leave.
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(h) "Enrollment Date" shall mean the first day of each
Offering Period.
(i) "Exercise Date" shall mean the last day of each Purchase
Period.
(j) "Fair Market Value" shall mean, as of any date, the value
of Common Stock determined as follows:
(1) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market of the National Association of Securities Dealers, Inc.
Automated Quotation ("Nasdaq") System, its Fair Market Value shall be the
closing sale price for the Common Stock (or the mean of the closing bid and
asked prices, if no sales were reported), as quoted on such exchange (or the
exchange with the greatest volume of trading in Common Stock) or system on the
date of such determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable, or;
(2) If the Common Stock is quoted on the Nasdaq
System (but not on the National Market thereof) or is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean of the closing bid and asked prices for the
Common Stock on the date of such determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable, or;
(3) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Board.
For purposes of the Enrollment Date under the first Offering
Period under the Plan, the Fair Market Value shall be the initial price to the
public as set forth in the final Prospectus included within the Registration
Statement on Form S-1 filed with the Securities and Exchange Commission for the
initial public offering of the Company's Common Stock.
(k) "Offering Period" shall mean the period of approximately
twenty-four (24) months during which an option granted pursuant to the Plan may
be exercised, commencing on the first Trading Day on or after December 31 and
June 30 of each year and terminating on the last Trading Day in the periods
ending twenty-four months later. The first Offering Period shall begin on the
effective date of the Company's initial public offering of its Common Stock that
is registered with the Securities and Exchange Commission and shall end on the
last Trading Day on or before June 30, 1996. The duration and timing of Offering
Periods may be changed pursuant to Section 4 of this Plan.
(l) "Plan" shall mean this Employee Stock Purchase Plan.
(m) "Purchase Price" shall mean an amount equal to 85% of the
Fair Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.
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(n) "Purchase Period" shall mean the approximately six month
period commencing after one Exercise Date and ending with the next Exercise
Date, except that the first Purchase Period of any Offering Period shall
commence on the Enrollment Date and end with the next Exercise Date. The first
Purchase Period of the first Offering Period shall begin on the effective date
of the Company's initial public offering of its Common Stock that is registered
with the Securities and Exchange Commission and shall end on the last Trading
Day on or before December 31, 1994.
(o) "Reserves" shall mean the number of shares of Common Stock
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
(p) "Subsidiary" shall mean a corporation, domestic or
foreign, of which not less than 50% of the voting shares are held by the Company
or a Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
(q) "Trading Day" shall mean a day on which national stock
exchanges and the National Association of Securities Dealers Automated Quotation
(Nasdaq) System are open for trading.
3. Eligibility.
(a) Any Employee (as defined in Section 2(g)) who shall be
employed by the Company on the 1st day of April or the 1st day of October
immediately preceding a given Enrollment Date shall be eligible to participate
in the Plan; provided, however, that with respect to the first Offering Period,
any Employee who shall be employed by the Company five (5) business days prior
to the first Enrollment Date shall be eligible to participate in the Plan.
(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i) if,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Subsidiary, or (ii) which permits his or her rights to purchase stock under
all employee stock purchase plans of the Company and its subsidiaries to accrue
at a rate which exceeds twenty-five thousand dollars ($25,000) worth of stock
(determined at the fair market value of the shares at the time such option is
granted) for each calendar year in which such option is outstanding at any time.
4. Offering Periods. The Plan shall be implemented by consecutive,
overlapping Offering Periods. Except for the first Offering Period, a new
Offering Period shall commence on the first Trading Day on or after December 31
and June 30 each year, or on such other date as the Board shall determine, and
continue thereafter until terminated in accordance with Section 19 hereof. The
first Offering Period shall begin on the effective date of the Company's initial
public offering of its
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Common Stock that is registered with the Securities and Exchange Commission. The
Board shall have the power to change the duration of Offering Periods (including
the commencement dates thereof) with respect to future offerings without
shareholder approval if such change is announced at least five (5) days prior to
the scheduled beginning of the first Offering Period to be affected thereafter.
5. Participation.
(a) An eligible Employee may become a participant in the Plan
by completing a subscription agreement authorizing payroll deductions in the
form of Exhibit A to this Plan and filing it with the Company's payroll office
five (5) business days prior to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on the
first payroll following the Enrollment Date and shall end on the last payroll in
the Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
6. Payroll Deductions.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding fifteen percent (15%) of
the Compensation which he or she receives on each pay day during the Offering
Period, and the aggregate of such payroll deductions during the Offering Period
shall not exceed fifteen percent (15%) of the participant's Compensation during
said Offering Period.
(b) All payroll deductions made for a participant shall be
credited to his or her account under the Plan and will be withheld in whole
percentages only. A participant may not make any additional payments into such
account.
(c) A participant may discontinue his or her participation in
the Plan as provided in Section 10 hereof. A participant may decrease the rate
of his or her payroll deductions to 0% at any time during the Offering Period by
completing and filing with the Company a new subscription agreement authorizing
the reduction in payroll deduction rate. At the beginning of each Purchase
Period, a participant may increase the rate of his or her payroll deductions by
completing or filing with the Company a new subscription agreement authorizing a
change in payroll deduction rate. A participant may resume participation by
completing and filing with the Company a new subscription agreement at least
five (5) days prior to the commencement of the next Offering Period or Purchase
Period, as applicable. A participant's subscription agreement shall remain in
effect for successive Offering Periods unless terminated as provided in Section
10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a
participant's payroll deductions may be decreased to 0% at such time during any
Purchase Period which is scheduled to end during the current calendar
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year (the "Current Purchase Period") that the aggregate of all payroll
deductions which were previously used to purchase stock under the Plan in a
prior Purchase Period which ended during that calendar year plus all payroll
deductions accumulated with respect to the Current Purchase Period equal
$21,250. Payroll deductions shall recommence at the rate provided in such
participant's subscription agreement at the beginning of the first Purchase
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part,
or at the time some or all of the Company's Common Stock issued under the Plan
is disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but will not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period,
each eligible Employee participating in such Offering Period shall be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Purchase Period more than a
number of Shares determined by dividing $12,500 by the Fair Market Value of a
share of the Company's Common Stock on the Enrollment Date, and provided further
that such purchase shall be subject to the limitations set forth in Sections
3(b) and 12 hereof. Exercise of the option shall occur as provided in Section 8
hereof, unless the participant has withdrawn pursuant to Section 10 hereof, and
shall expire on the last day of the Offering Period.
8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in Section 10 hereof, his or her option for the purchase of shares will
be exercised automatically on the Exercise Date, and the maximum number of full
shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares will be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Purchase Period or Offering Period, subject to earlier withdrawal by the
participant as provided in Section 10 hereof. Any other monies left over in a
participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to purchase
shares hereunder is exercisable only by him or her.
9. Delivery. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of the shares purchased upon exercise of his
or her option.
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10. Withdrawal; Termination of Employment.
(a) A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet used to exercise
his or her option under the Plan at any time by giving written notice to the
Company in the form of Exhibit B to this Plan. All of the participant's payroll
deductions credited to his or her account will be paid to such participant
promptly after receipt of notice of withdrawal and such participant's option for
the Offering Period will be automatically terminated, and no further payroll
deductions for the purchase of shares will be made for such Offering Period. If
a participant withdraws from an Offering Period, payroll deductions will not
resume at the beginning of the succeeding Offering Period unless the participant
delivers to the Company a new subscription agreement.
(b) Upon a participant's ceasing to be an Employee (as defined
in Section 2(g) hereof), for any reason, he or she will be deemed to have
elected to withdraw from the Plan and the payroll deductions credited to such
participant's account during the Offering Period but not yet used to exercise
the option will be returned to such participant or, in the case of his or her
death, to the person or persons entitled thereto under Section 14 hereof, and
such participant's option will be automatically terminated.
11. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.
12. Stock.
(a) The maximum number of shares of the Company's Common Stock
which shall be made available for sale under the Plan shall be two hundred
seventy five thousand (275,000) shares, subject to adjustment upon changes in
capitalization of the Company as provided in Section 18 hereof. If, on a given
Exercise Date, the number of shares with respect to which options are to be
exercised exceeds the number of shares then available under the Plan, the
Company shall make a pro rata allocation of the shares remaining available for
purchase in as uniform a manner as shall be practicable and as it shall
determine to be equitable.
(b) The participant will have no interest or voting right in
shares covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan
will be registered in the name of the participant or in the name of the
participant and his or her spouse.
13. Administration.
(a) Administrative Body. The Plan shall be administered by the
Board or a committee of members of the Board appointed by the Board. The Board
or its committee shall have full and exclusive discretionary authority to
construe, interpret and apply the terms of the Plan, to determine eligibility
and to adjudicate all disputed claims filed under the Plan. Every finding,
decision and
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determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.
(b) Rule 16b-3 Limitations. Notwithstanding the provisions of
Subsection (a) of this Section 13, in the event that Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
any successor provision ("Rule 16b-3") provides specific requirements for the
administrators of plans of this type, the Plan shall be only administered by
such a body and in such a manner as shall comply with the applicable
requirements of Rule 16b-3. Unless permitted by Rule 16b-3, no discretion
concerning decisions regarding the Plan shall be afforded to any committee or
person that is not "disinterested" as that term is used in Rule 16b-3.
14. Designation of Beneficiary.
(a) A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such partici pant's death
subsequent to an Exercise Date on which the option is exercised but prior to
delivery to such participant of such shares and cash. In addition, a participant
may file a written designation of a beneficiary who is to receive any cash from
the participant's account under the Plan in the event of such participant's
death prior to exercise of the option. If a participant is married and the
designated beneficiary is not the spouse, spousal consent shall be required for
such designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.
15. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
16. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.
17. Reports. Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to participating
Employees at least annually, which statements
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will set forth the amounts of payroll deductions, the Purchase Price, the number
of shares purchased and the remaining cash balance, if any.
18. Adjustments Upon Changes in Capitalization, Dissolution,
Liquidation, Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any required action
by the shareholders of the Company, the Reserves as well as the price per share
of Common Stock covered by each option under the Plan which has not yet been
exercised shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration". Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Periods will end
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board, and all options granted thereunder will be exercised at
such time. Such exercise shall take place according to the provisions of Section
8 hereof.
(c) Merger or Asset Sale. In the event of a proposed sale of
all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, each option under the Plan shall be
assumed or an equivalent option shall be substituted by such successor
corporation or a parent or subsidiary of such successor corporation, unless the
Board determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, to shorten the Offering Periods then in progress by
setting a new Exercise Date (the "New Exercise Date"). If the Board shortens the
Offering Periods then in progress in lieu of assumption or substitution in the
event of a merger or sale of assets, the Board shall notify each participant in
writing, at least ten (10) business days prior to the New Exercise Date, that
the Exercise Date for his option has been changed to the New Exercise Date and
that his option will be exercised automatically on the New Exercise Date, unless
prior to such date he has withdrawn from the Offering Period as provided in
Section 10 hereof. For purposes of this paragraph, an option granted under the
Plan shall be deemed to be assumed if, following the sale of assets or merger,
the option confers the right to purchase, for each share of option stock subject
to the option immediately prior to the sale of assets or merger, the
consideration (whether stock, cash or other securities or property) received in
the sale of assets or merger by holders of Common Stock for each share of Common
Stock held on the effective date of the transaction (and if such holders were
offered a choice of consideration, the type of consideration
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chosen by the holders of a majority of the outstanding shares of Common Stock);
provided, however, that if such consideration received in the sale of assets or
merger was not solely common stock of the successor corporation or its parent
(as defined in Section 424(e) of the Code), the Board may, with the consent of
the successor corporation, provide for the consideration to be received upon
exercise of the option to be solely common stock of the successor corporation or
its parent equal in fair market value to the per share consideration received by
holders of Common Stock and the sale of assets or merger.
19. Amendment or Termination.
(a) The Board of Directors of the Company may at any time and
for any reason terminate or amend the Plan. Except as provided in Section 18
hereof, no such termination can affect options previously granted, provided that
an Offering Period may be terminated by the Board of Directors on any Exercise
Date if the Board determines that the termination of the Plan is in the best
interests of the Company and its shareholders. Except as provided in Section 18
hereof, no amendment may make any change in any option theretofore granted which
adversely affects the rights of any participant. To the extent necessary to
comply with Rule 16b-3 or under Section 423 of the Code (or any successor rule
or provision or any other applicable law or regulation), the Company shall
obtain shareholder approval in such a manner and to such a degree as required.
(b) Without shareholder consent and without regard to whether
any participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.
20. Notices. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
21. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended (the "1933 Act"), the Securities Exchange Act
of 1934, as amended, the rules and regulations promulgated thereunder, and the
requirements of any
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stock exchange upon which the shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may
require the person exercising such option to represent and warrant at the time
of any such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
22. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 19 hereof.
24. Automatic Transfer to Low Price Offering Period. To the extent
permitted by Rule 16b-3 of the Exchange Act, if the Fair Market Value of the
Common Stock on any Exercise Date in an Offering Period is lower than the Fair
Market Value of the Common Stock on the Enrollment Date of such Offering Period,
then all participants in such Offering Period shall be automatically withdrawn
from such Offering Period immediately after the exercise of their option on such
Exercise Date and automatically re-enrolled in the immediately following
Offering Period as of the first day thereof.
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EXHIBIT A
SPECTRIAN CORPORATION
1994 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
Enrollment Date:
_____ Original Application
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. _______________________ hereby elects to participate in the Spectrian
Corporation 1994 Employee Stock Purchase Plan (the "Employee Stock
Purchase Plan") and subscribes to pur chase shares of the Company's
Common Stock in accordance with this Subscription Agreement and the
Employee Stock Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of ____% of my Compensation on each payday (1-15%) during the Offering
Period in accordance with the Employee Stock Purchase Plan. (Please
note that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise
my option.
4. I have received a copy of the complete "Spectrian Corporation 1994
Employee Stock Purchase Plan." I understand that my participation in
the Employee Stock Purchase Plan is in all respects subject to the
terms of the Plan. I understand that my ability to exercise the option
under this Subscription Agreement is subject to obtaining shareholder
approval of the Employee Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should
be issued in the name(s) of (Employee or Employee and spouse only):
________________________.
6. I understand that if I dispose of any shares received by me pursuant to
the Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares) or one year after
the Exercise Date, I will be treated for federal income tax purposes as
having received ordinary income at the time of such disposition in an
amount equal to the excess of the fair market value of the shares at
the time such shares were purchased over the price which I paid for the
shares. I HEREBY AGREE TO NOTIFY THE COMPANY IN WRITING WITHIN
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30 DAYS AFTER THE DATE OF ANY DISPOSITION OF MY SHARES AND I WILL MAKE
ADEQUATE PROVISION FOR FEDERAL, STATE OR OTHER TAX WITHHOLDING
OBLIGATIONS, IF ANY, WHICH ARISE UPON THE DISPOSITION OF THE COMMON
STOCK. The Company may, but will not be obligated to, withhold from my
compensation the amount necessary to meet any applicable withholding
obligation including any withholding necessary to make available to the
Company any tax deductions or benefits attributable to sale or early
disposition of Common Stock by me. If I dispose of such shares at any
time after the expiration of the 2-year and 1-year holding periods, I
understand that I will be treated for federal income tax purposes as
having received income only at the time of such disposition, and that
such income will be taxed as ordinary income only to the extent of an
amount equal to the lesser of (1) the excess of the fair market value
of the shares at the time of such disposition over the purchase price
which I paid for the shares, or (2) 15% of the fair market value of the
shares on the first day of the Offering Period. The remainder of the
gain, if any, recognized on such disposition will be taxed as capital
gain.
7. I hereby agree not to sell or otherwise transfer any shares or other
securities of the Company during the 180-day period following the
effective date of a registration statement of the Company filed under
the 1933 Act; provided, however, that such restriction shall only apply
to the first two registration statements of the Company to become
effective under the 1933 Act which include securities to be sold on
behalf of the Company to the public in an underwritten public offering
under the 1933 Act. I hereby acknowledge that the Company may impose
stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such 180-day period.
8. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent
upon my eligibility to participate in the Employee Stock Purchase Plan.
9. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print) __________________________________________________________
(First) (Middle) (Last)
_______________________________ ____________________________________________
Relationship
____________________________________________
(Address)
Employee's Social
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Security Number: ____________________________________________
Employee's Address: ____________________________________________
____________________________________________
____________________________________________
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated:_______________ ______________________________________________________
Signature of Employee
______________________________________________________
Spouse's Signature (If beneficiary other than spouse)
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EXHIBIT B
SPECTRIAN CORPORATION
1994 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Spectrian
Corporation 1994 Employee Stock Purchase Plan which began on ____________,
19____ (the "Enrollment Date") hereby notifies the Company that he or she hereby
withdraws from the Offering Period. He or she hereby directs the Company to pay
to the undersigned as promptly as practicable all the payroll deductions
credited to his or her account with respect to such Offering Period. The
undersigned understands and agrees that his or her option for such Offering
Period will be automatically termi nated. The undersigned understands further
that no further payroll deductions will be made for the purchase of shares in
the current Offering Period and the undersigned shall be eligible to participate
in succeeding Offering Periods only by delivering to the Company a new
Subscription Agreement.
Name and Address of Participant:
____________________________________________
____________________________________________
____________________________________________
Signature:
____________________________________________
Date:_______________________________________
<PAGE>
APPENDIX B
SPECTRIAN CORPORATION
1992 STOCK PLAN
(AS AMENDED THROUGH JUNE 14, 1996)
1. Purposes of the Plan. The purposes of this Stock Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be incentive stock options (as
defined under Section 422 of the Code) or nonstatutory stock options, as
determined by the Administrator at the time of grant of an option and subject to
the applicable provisions of Section 422 of the Code, as amended, and the
regulations promulgated thereunder.
2. Definitions. As used herein, the following definitions shall
apply:
(a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the legal requirements relating to the
administration of stock option plans of California corporate and securities laws
and of the Code.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto.
(e) "Committee" means a Committee appointed by the Board in
accordance with paragraph (a) of Section 4 of the Plan.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means Spectrian Corporation, a California
corporation.
(h) "Consultant" means any person, including an advisor, engaged
by the Company or a Parent or Subsidiary to render services and who is
compensated for such services. 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 Status as an Employee or Consultant" means that
the employment or consulting relationship with the Company, any Parent or
Subsidiary is not interrupted or terminated. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor. A
leave of absence approved by the Company shall include sick leave, military
leave, or any other personal leave. For purposes of Incentive Stock Options, no
such leave may exceed 90 days, unless reemployment upon expiration of
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such leave is guaranteed by statute or contract, including Company policies. If
reemployment upon expiration of a leave of absence approved by the Company is
not so guaranteed, on the 91st day of such leave any Incentive Stock Option held
by the Optionee shall cease to be treated as an Incentive Stock Option and shall
be treated for tax purposes as a Nonstatutory Stock Option.
(j) "Director" means a member of the Board.
(k) "Disability" means total and permanent disability as defined
in Section 22(e)(3) of the Code.
(l) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor the payment of Director's fee by the Company shall not
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 Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, 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 system or exchange (or the
exchange with the greatest volume of trading in Common Stock) on the last market
trading day prior to the day of determination, as reported in the Wall Street
Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System
(but not on the Nasdaq National Market thereof) or regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high and
low asked prices for the Common Stock or on the last market trading day prior to
the day of determination, as reported in the Wall Street Journal or such other
source as the Administrator deems reliable;
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Administrator.
(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) "Nonstatutory Stock Option" means an Option that is not
intended to qualify as an Incentive Stock Option.
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(q) "Notice of Grant" means a written notice evidencing certain
terms and conditions of an individual Option. The Notice of Grant is part of the
Option Agreement.
(r) "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.
(s) "Option" means a stock option granted pursuant to the Plan.
(t) "Option Agreement" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
Option grant. The Option Agreement is subject to the terms and conditions of the
Plan.
(u) "Option Exchange Program" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.
(v) "Optioned Stock" means the Common Stock subject to an Option.
(w) "Optionee" means an Employee or Consultant who holds an
outstanding Option.
(x) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(y) "Plan" means this 1992 Stock Plan.
(z) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b- 3, as in effect when discretion is being exercised with
respect to the Plan.
(aa) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(bb) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 11 of
the Plan, the total number of Shares reserved and available for distribution
pursuant to awards made under the Plan shall be 2,950,886 (as adjusted for a
one-for-two reverse stock split approved by the Board of Directors in May 1994).
The Shares may be authorized, but unissued or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant or sale under the Plan. Should the Company reacquire vested Shares
which were issued pursuant to the exercise of an Option, such Shares shall
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<PAGE>
not become available for future grant under the Plan. However, if unvested
Shares are repurchased by the Company at their original purchase price, and the
original purchaser of such Shares did not receive any benefits of ownership of
such Shares, such Shares shall become available for future grant under the Plan.
For purposes of the preceding sentence, voting rights shall not be considered a
benefit of Share ownership.
4. Administration of the Plan.
(a) Procedure.
(i) Administration With Respect to Directors and Officers.
With respect to grants of Options to Employees who are also Officers or
Directors of the Company, the Plan shall be administered by (A) the Board if the
Board may administer the Plan in compliance with Rule 16b-3 promulgated under
the Exchange Act or any successor rule ("Rule 16b-3") with respect to a plan
intended to qualify thereunder as a discretionary plan, or (B) a Committee
designated by the Board to administer the Plan, which Committee shall be
constituted in such a manner as to permit the Plan to comply with Rule 16b-3
with respect to a plan intended to qualify thereunder as a discretionary plan.
Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies, however caused, and remove all members of the
Committee and thereafter directly administer the Plan, all to the extent
permitted by Rule 16b-3 with respect to a plan intended to qualify thereunder as
a discretionary plan.
(ii) Administration With Respect to Consultants and Other
Employees. With respect to grants of Options to Employees or Consultants who are
neither Directors nor Officers of the Company, the Plan shall be administered by
(A) the Board or (B) a Committee designated by the Board, which Committee shall
be constituted in such a manner as to satisfy Applicable Laws. Once appointed,
such Committee shall continue to serve in its designated capacity until
otherwise directed by the Board. From time to time the Board may increase the
size of the Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies, however caused, and remove all members of the Committee and
thereafter directly administer the Plan, all to the extent permitted by the
Applicable Laws.
(iii) Multiple Administrative Bodies. If permitted by Rule
16b-3, the Plan may be administered by different bodies with respect to
Directors, non-Director Officers and Employees who are neither Directors nor
Officers and Consultants who are not Directors.
(b) Powers of the Administrator. Subject to the provisions of the
Plan and in the case of a Committee, the specific duties delegated by the Board
to such Committee, the Administrator shall have the authority, in its
discretion:
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(i) to determine the Fair Market Value of the Common Stock,
in accordance with Section 2(n) of the Plan;
(ii) to select the Officers, Consultants and Employees to
whom Options may from time to time be granted hereunder;
(iii) to determine whether and to what extent Options are
granted hereunder;
(iv) to determine the number of shares of Common Stock to
be covered by each award granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder
(including, but not limited to, the share price and any restriction or
limitation or waiver of forfeiture restrictions regarding any Option
and/or the shares of Common Stock relating thereto, based in each case on
such factors as the Administrator shall determine, in its sole
discretion);
(vii) to determine whether and under what circumstances an
Option may be settled in cash under subsection 9(f) instead of Common
Stock;
(viii) to reduce the exercise price of any Option to the
then current Fair Market Value if the Fair Market Value of the Common
Stock covered by such Option shall have declined since the date the
Option was granted;
(ix) to determine the terms and restrictions applicable to
Options;
(x) to provide for the early exercise of Options for the
purchase of unvested Shares, subject to such terms and conditions as the
Administrator may determine; and
(xi) to modify or amend each Option (subject to Section
13(b) of the Plan), including the discretionary authority to extend the
post-termination exercisability period of Options longer than is
otherwise provided for in the Plan;
(xii) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option
previously granted by the Administrator;
(xiii) to institute an Option Exchange Program; and
(xiv) to make all other determinations deemed necessary or
advisable for administering the Plan.
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(c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding.
5. Eligibility.
(a) Nonstatutory Stock Options may be granted only to Employees
and Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if he or she is
otherwise eligible, be granted additional Options.
(b) Each Option shall be evidenced by a written Option agreement,
which shall expressly identify the Options as Incentive Stock Options or as
Nonstatutory Stock Options, and which shall be in such form and contain such
provisions as the Administrator shall from time to time deem appropriate.
However, notwithstanding such designations, to the extent that the aggregate
Fair Market Value of the Shares with respect to which Options designated as
Incentive Stock Options are exercisable for the first time by any Optionee
during any calendar year (under all plans of the Company or any Parent or
Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options.
(c) For purposes of Section 5(b) above, Incentive Stock Options
shall be taken into account in the order in which they were granted, and the
Fair Market Value of the Shares shall be determined as of the time the Option
with respect to such Shares is granted.
(d) Neither the Plan nor any Option shall confer upon any Optionee
any right with respect to continuation of employment or consulting relationship
with the Company, nor shall it interfere in any way with the Optionee's right or
the Company's right to terminate the Optionee's employment or consulting
relationship at any time, with or without cause.
(e) The following limitations shall apply to grants of Options to
Employees:
(i) No Employee shall be granted, in any fiscal year of the
Company, Options to purchase more than 200,000 Shares.
(ii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 11.
(iii) If an Option is canceled (other than in connection
with a transaction described in Section 11, the canceled Option will be counted
against the limit set forth in Section 5(e)(i). For this purpose, if the
exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.
6. Term of Plan. Subject to Section 17 of this Plan, the Plan shall
become effective upon the earlier to occur of its adoption by the Board or its
approval by the shareholders of the Company as
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described in Section 17. It shall continue in effect for a term of ten (10)
years unless sooner ter minated under Section 13 of this Plan.
7. Term of Option. The term of each Option shall be the term stated in
the Notice of Grant; provided, however, that in the case of an Incentive Stock
Option, the term shall be no more than ten (10) years from the date of grant
thereof or such shorter term as may be provided in the Notice of Grant. However,
in the case of an Option granted to an Optionee who, at the time the Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of
the Option shall be five (5) years from the date of grant thereof or such
shorter term as may be provided in the Notice of Grant.
8. Option Exercise Price and Consideration.
(a) The per Share exercise price for the Shares issuable pursuant
to an Option shall be such price as is determined by the Administrator, but
shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the
grant of such Incentive Stock Option, owns stock representing more than ten
percent (10%) of the voting power or value of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price shall be no
less than 110% of the Fair Market Value per Share on the date of grant.
(B) granted to any other Employee, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a person who, at the time of the
grant of such Incentive Stock Option, owns stock representing more than ten
percent (10%) of the voting power or value of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price shall be no
less than 110% of the Fair Market Value per Share on the date of grant.
(B) granted to any person, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option either have been owned by the Optionee for
more than six months on the date of surrender or were not acquired, directly or
indirectly, from the Company, and (y) have a Fair
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Market Value on the date of surrender equal to the aggregate exercise price of
the Shares as to which said Option shall be exercised, (6) delivery of a
properly executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company the amount of sale or loan proceeds
required to pay the exercise price, (7) a reduction in the amount of any Company
liability to the Optionee, including any liability attributable to the
Optionee's participation in any Company-sponsored deferred compensation program
or arrangement; (8) any combination of the foregoing methods of payment, or (9)
such other consideration and method of payment for the issuance of Shares to the
extent permitted under Applicable Laws.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator and as shall be permissible under the terms
of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may, as authorized by the Administrator
(and, in the case of an Incentive Stock Option, determined at the time of grant)
and permitted by the Option Agreement consist of any consideration and method of
payment allowable under subsection 8(b) of the Plan. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter shall be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.
(b) Rule 16b-3. Options granted to persons who are subject to
Section 16 of the Exchange Act ("Insiders") must comply with the applicable
provisions of Rule 16b-3 and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum exemption
from Section 16 of the Exchange Act with respect to Plan transactions.
(c) Termination of Employment or Consulting Relationship. Upon
termination of an Optionee's Continuous Status as an Employee or Consultant
(other than upon the Optionee's death or Disability), the Optionee may, but only
within thirty (30) days (or such other period of time not
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exceeding three (3) months (three (3) months in the case of an Incentive Stock
Option) as is determined by the Administrator at the time of grant) after the
date of such termination, exercise his or her Option to the extent that it was
exercisable at the date of such termination.
(d) Disability of Optionee. In the event of termination of an
Optionee's Continuous Status as an Employee or Consultant as a result of the
Optionee's Disability, the Optionee may, but only within twelve (12) months from
the date of such termination (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement), exercise the Option
to the extent that the Optionee was entitled to exercise it at the date of such
termination. If after termination the Optionee does not exercise such Option to
the extent so entitled within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(e) Death of Optionee. In the event of an Optionee's death, the
Option may be exercised at any time within six (6) months following the date of
death by the Optionee's estate or by a person who acquired the right to exercise
the Option by bequest or inheritance, but only to the extent of the right to
exercise that had accrued at the date of the Optionee's death (but in no event
later than the expiration of the term of such Option as set forth in the Notice
of Grant). If, after death, the Optionee's estate or a person who acquires the
right to exercise the Option by bequest or inheritance does not exercise the
Option within the time specified herein, the Option shall terminate and the
Shares covered by such Option shall revert to the Plan.
(f) The Administrator may at any time offer to buy out for a
payment in cash or Shares, an Option previously granted, based on such terms and
conditions as the Administrator shall establish and communicate to the Optionee
at the time such offer is made.
10. Non-Transferability of Options. Options may not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
11. Adjustments Upon Changes in Capitalization or Merger.
(a) Subject to any required action by the shareholders of the
Company, the number of Shares covered by each outstanding Option, and the number
of Shares which have been authorized for issuance under the Plan but as to which
no Options have yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Option, as well as the price per Share covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued Shares resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the aggregate number of
issued Shares effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the
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Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
Shares of stock of any class, or securities convertible into Shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to an Option.
In the event of the proposed dissolution or liquidation of
the Company, the Board shall notify the Optionee at least fifteen (15) days
prior to such proposed action. To the extent it has not been previously
exercised, the Option will terminate immediately prior to the consummation of
such proposed action. In the event of a merger of the Company with or into
another corporation, or the sale of substantially all of the assets of the
Company, each outstanding Option shall be assumed or an equivalent option shall
be substituted by such successor corporation or a parent or subsidiary of such
successor corporation. For the purposes of this paragraph, the Option shall be
considered assumed if, following the merger or sale of assets, the option
confers the right to purchase, for each Share of Optioned Stock subject to the
Option immediately prior to the merger or sale of assets, the consideration
(whether stock, cash, or other securities or property) received in the merger or
sale of assets by holders of Common Stock for each Share held on the effective
date of the transaction (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the merger or
sale of assets was not solely common stock of the successor corporation or its
Parent, the Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the Option,
for each Share of Optioned Stock subject to the Option, to be solely common
stock of the successor corporation or its Parent equal in fair market value to
the per share consideration received by holders of Common Stock in the merger or
sale of assets.
12. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such later date as is determined by the Administrator.
Notice of the determination shall be given to each Employee or Consultant to
whom an Option so granted within a reasonable time after the date of such grant.
13. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend, or discontinue the Plan, but no amendment, alteration,
suspension, or discontinuation shall be made which would impair the rights of
any Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 under
the Exchange Act or under Section 422 of the Code (or any other applicable law
or regulation), the Company shall obtain shareholder approval of any Plan
amendment in such a manner and to such a degree as required.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.
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<PAGE>
14. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an Option unless the exercise of such Option and the issuance and
delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and
the require ments of any stock exchange upon which the Shares may then be
listed, and shall be further subject to the approval of counsel for the Company
with respect to such compliance.
As a condition to the exercise of an Option or the issuance of
Shares on exercise of an Option, the Company may require the person exercising
such Option to represent and warrant at the time of any such exercise that the
Shares are being purchased only for investment and without any present intention
to sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required by any of the aforementioned relevant
provisions of law.
15. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
Inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the non-issuance or sale of
such Shares as to which such requisite authority shall not have been obtained.
16. Agreements. Options shall be evidenced by written agreements in such
form as the Board shall approve from time to time.
17. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted as provided in Section 6. Such shareholder
approval shall be obtained in the degree and manner required under applicable
state and federal law.
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<PAGE>
APPENDIX C
PROXY SPECTRIAN CORPORATION PROXY
1996 ANNUAL MEETING OF SHAREHOLDERS
June 14, 1996
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned shareholder of SPECTRIAN CORPORATION, a California
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated May 17, 1996, and hereby appoints
Garret A. Garrettson and Edward A. Supplee, Jr., and each of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 1996 Annual Meeting
of Shareholders of SPECTRIAN CORPORATION to be held on June 14, 1996 at 8:00
a.m. local time, at 160 Gibralter Court, Sunnyvale, California 94089 and at any
adjournment or adjournments thereof, and to vote all shares of Common Stock
which the undersigned would be entitled to vote if then and there personally
present, on the matters set forth below.
(Continued, and to be signed on the other side)
<PAGE>
Please mark your votes as this [X]
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE AMENDMENT OF THE 1994
EMPLOYEE STOCK PURCHASE PLAN, FOR THE AMENDMENT TO THE 1992 STOCK PLAN, FOR THE
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS
AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING.
1. ELECTION OF DIRECTORS: WITHHOLD
FOR FOR ALL
If you wish to withhold authority to vote [ ] [ ]
for any individual nominee, strike a line
through that nominee's name in the list below: (except as indicated)
Garrett A. Garrettson, David S. Wisherd, James A. Cole, Martin Cooper,
Robert C. Wilson, Eric A. Young.
FOR AGAINST ABSTAIN
2. AMENDMENT OF 1994 EMPLOYEE STOCK PURCHASE [ ] [ ] [ ]
PLAN TO INCREASE THE NUMBER OF SHARES
RESERVED FOR ISSUANCE THEREUNDER:
FOR AGAINST ABSTAIN
3. AMENDMENT OF 1992 STOCK PLAN TO INCREASE [ ] [ ] [ ]
THE NUMBER OF SHARES RESERVED FOR GRANT
THEREUNDER:
FOR AGAINST ABSTAIN
4. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG [ ] [ ] [ ]
PEAT MARWICK LLP AS THE INDEPENDENT AUDITORS
OF THE COMPANY FOR THE FISCAL PERIOD ENDED
MARCH 31, 1997:
and, in their discretion, upon such other matter or matters which may properly
come before the meeting or any adjournment or adjournments thereof.
Signature(s)_____________________________________________________ Date _________
(This Proxy should be marked, dated and signed by the shareholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.)
