SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, For Use of the
Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] 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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[X] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
Preliminary Copy
Filed May 22, 1997
SPECTRIAN CORPORATION
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held July 31, 1997
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
Thursday, July 31, 1997, at 10:00 a.m. local time, at 160 Gibraltar Court,
Sunnyvale, California 94089, for the following purposes:
1. To elect five (5) directors to serve for the ensuing year and
until their successors are duly elected and qualified.
2. To approve the reincorporation of the Company as a Delaware
corporation by means of a merger of the Company with and into
a wholly owned Delaware subsidiary of the Company.
3. 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 200,000 shares.
4. To approve amendments to the 1994 Director Option Plan to (i)
increase the number of shares of Common Stock reserved for
issuance thereunder by 60,000 shares, (ii) increase the size
of the annual, nondiscretionary grants thereunder to 5,000
shares per annum and (iii) decrease the rate at which the
annual grants vest from 8.34% per month to 2.08% per month.
5. To approve an amendment to the 1992 Stock Plan to increase the
number of shares of Common Stock reserved for issuance
thereunder by 350,000 shares.
6. To ratify the appointment of KPMG Peat Marwick LLP as
independent accountants of the Company for the fiscal year
ending March 31, 1998.
7. To transact such other business as may properly came before
the Annual Meeting, including any motion to adjourn to a later
date to permit further solicitation of proxies if necessary,
or before any adjournments thereof.
The foregoing item of business is more fully described in the Proxy
Statement accompanying this Notice. Only shareholders of record at the close of
business on June 5, 1997 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,
Bruce R. Wright
Secretary
Sunnyvale, California
June 23, 1997
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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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<PAGE>
Preliminary Copy
Filed May 22, 1997
SPECTRIAN CORPORATION
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PROXY STATEMENT FOR 1997
ANNUAL MEETING OF SHAREHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of the Board of Directors
(the "Board") of SPECTRIAN CORPORATION, a California corporation (the "Company"
or "Spectrian"), for use at the Annual Meeting of Shareholders (the "Annual
Meeting") to be held Thursday, July 31, 1997, at 10:00 a.m. local time, or at
any adjournment thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Shareholders. The Annual Meeting will
be held at 160 Gibraltar Court, Sunnyvale, California 94089. The Company's
principal executive offices are located at 350 W. Java Drive, Sunnyvale,
California 94089, and its telephone number at that location is (408) 745-5400.
These proxy solicitation materials were first mailed on or about June
23, 1997 to all shareholders entitled to vote at the meeting.
Record Date; Outstanding Shares
Shareholders of record at the close of business on June 5, 1997 (the
"Record Date") 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. As of June 5, 1997, _________ shares of the Company's Common Stock were
issued and outstanding and held of record by ________ shareholders.
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 (a) delivering to the Secretary
of the Company a written notice of revocation or a duly executed proxy bearing a
later date or (b) attending the meeting and voting in person.
Voting and Solicitation
Each shareholder is entitled to one vote for each share of Common Stock
held by the shareholder on the Record Date. A quorum comprising the holders of a
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 nonvotes will be counted in establishing the quorum.
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 five 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.
<PAGE>
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. The Company has also retained Corporate Investor
Communications, Inc. to assist in the solicitation of proxies at a cost of
approximately $____ plus reasonable and customary reimbursement for expenses.
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 1998 Annual Meeting of
Shareholders must be received by the Company no later than April 15, 1998 in
order that they may be considered for inclusion in the proxy statement and form
of proxy relating to that meeting.
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<PAGE>
<TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of Common Stock of the Company as of May 16, 1997 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.
<CAPTION>
Common
Stock
Five Percent Shareholders, Beneficially Approximate Percentage
Directors and Certain Executive Officers Owned Owned (1)
- -------------------------------------------------------- ------------ -----------------------
<S> <C> <C>
Kopp Investment Advisors, Inc (2) .............................. 1,708,855 20.6%
6600 France Avenue South
Suite 672
Edina, MN 55433
Denver Investment Advisors LLC (3) .............................. 911,300 11.0%
1225 17th Street, 26th Floor
Denver, CO 80217
Chancellor LGT Asset Management, Inc. (4) ....................... 569,500 6.9%
50 California Street
27th Floor
San Francisco, CA 94111-4624
Garrett A. Garrettson (5) ....................................... 79,956 *
James A. Cole (6) ............................................... 6,034 *
Eric A. Young (7) ............................................... 5,887 *
David S. Wisherd (8 ) ........................................... 37,550 *
Stephen B. Greenspan (9) ........................................ 23,743 *
William Zucker (10) ............................................. 619 *
Martin Cooper (11) .............................................. 16,875 *
Edward A. Supplee, Jr. (12) ..................................... 36,873 *
Joseph M. Veni (13) ............................................. 7,585 *
Gary R. Gianatasio (14) ......................................... 4,489 *
Robert Wilson (15) .............................................. 2,500 *
All Directors and executive officers as a group (13 persons) (16) 232,576 2.7%
<FN>
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* Less than 1%
(1) Applicable percentage ownership is based on 8,281,304 shares of Common
Stock outstanding as of May 16, 1997 together with applicable options
for such shareholder. Beneficial ownership is determined in accordance
with the rules of the Securities and Exchange Commission (the
"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 June 5, 1997 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) Reflects ownership as reported on Schedule 13G/A dated March 10, 1997
with the Commission by Kopp Investment Advisors, Inc. ("KIA").
Represents shares beneficially owned by (i) KIA, a registered
investment advisor, (ii) Kopp Investment Advisors, Inc. Profit Sharing
Plan ("Profit"), (iii) Kopp Family Foundation ("Foundation"), (iv)
LeRoy C. Kopp Individual Retirement Account ("IRA"), and (v) LeRoy C.
Kopp individually and through his ownership of a controlling interest
in KIA, his position as sole trustee of Profit, his control over
Foundation and his IRA. KIA has sole voting power over 135,000 shares
of the Company's Common Stock and shared dispositive power over
1,678,855 shares of the Company's Common Stock. Profit has sole voting
and dispositive power over 6,000 shares of the Company's Common Stock.
Foundation has sole voting and dispositive power over 10,000 shares of
the Company's Common Stock. IRA has sole voting and dispositive power
over 30,000 shares of the Company's Common Stock. Mr. Kopp has sole
voting power and shared voting power over 201,000 and 10,000 shares,
respectively, of the Company's Common Stock and sole dispositive power
and shared dispositive power over 96,000 and 1,688,855 shares,
respectively, of the Company's Common Stock.
(3) Reflects ownership as reported on Schedule 13G/A dated February 12,
1997 with the Commission by Denver Investment Advisors LLC ("DIA").
DIA, a registered investment advisor has sole power to vote 588,200
shares of the Company's Common Stock and no shared voting power with
respect to any of the Company's Common Stock. DIA has sole dispositive
power over 911,300 shares of the Company's Common Stock.
(4) Reflects ownership as reported on Schedule 13G/A dated April 9, 1997
with the Commission by Chancellor LGT Asset Management, Inc.
("Chancellor"). Chancellor is a wholly owned subsidiary of LGT Asset
Management, Inc. ("LGT"). LGT is an indirect wholly
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<PAGE>
owned subsidiary of Liechtenstein Global Trust, AG, an entity
controlled by the Prince of Liechtenstein Foundation, the parent
organization of various business enterprises of the Princely Family of
Liechtenstein. Chancellor and its wholly owned subsidiary Chancellor
LGT Trust Company, a New York state chartered trust company, as
investment advisors for various fiduciary accounts, have sole voting
and dispositive power over 569,500 shares of the Company's Common
Stock.
(5) Includes 76,956 shares issuable pursuant to options exercisable within
60 days of June 5, 1997.
(6) Includes 2,500 shares issuable pursuant to options exercisable within
60 days of June 5, 1997.
(7) Includes 3,387 shares owned by Canaan Capital Limited Partnership, over
which Mr. Young may be deemed to share voting and investment power and
2,500 shares issuable pursuant to options exercisable within 60 days of
June 5, 1997.
(8) Includes 37,500 shares issuable pursuant to options exercisable within
60 days of June 5, 1997.
(9) Includes 23,743 shares issuable pursuant to options exercisable within
60 days of June 5, 1997.
(10) Includes 0 shares issuable pursuant to options exercisable within 60
days of June 5, 1997.
(11) Includes 16,875 shares issuable pursuant to options exercisable within
60 days of June 5, 1997.
(12) Includes 30,000 shares issuable pursuant to options exercisable within
60 days of June 5, 1997.
(13) Includes 7,585 shares issuable pursuant to options exercisable within
60 days of June 5, 1997.
(14) Includes 3,697 shares issuable pursuant to options exercisable within
60 days of June 5, 1997.
(15) Includes 2,500 shares issuable pursuant to options exercisable within
60 days of June 5, 1997.
(16) Includes 208,598 shares issuable pursuant to options exercisable within
60 days of June 5, 1997.
</FN>
</TABLE>
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<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
A board of five 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 five 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. Should the Company's shareholders approve the proposed
reincorporation to Delaware (Proposal Two), the directors elected at the
Company's Annual Meeting will remain directors of the Company after the closing
of the proposed reincorporation and will serve until the next Annual Meeting of
Stockholders of the Company.
Vote Required
If a quorum is present and voting, the five 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.
<TABLE>
Nominees
The names of the nominees and certain information about them are set
forth below:
<CAPTION>
Director
Name of Nominee Age Position with the Company Since
- ------------------------------------------------- ---- ------------------------- ------
<S> <C> <C>
Garrett A. Garrettson ........................... 53 President, Chief Executive Officer 1996
and Director
James A. Cole (1) ............................... 54 Director 1985
Martin Cooper (2) ............................... 68 Director 1994
Robert C. Wilson (2) ............................ 77 Director 1995
Eric A. Young (1) ............................... 41 Director 1991
<FN>
- --------------
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
</FN>
</TABLE>
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, a company that
designs and sells 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 Division of Control Data Corporation, a computer systems company
and subsequently with Seagate Technology, Inc., ("Seagate") a company that
designs and manufactures disk drives, when Seagate acquired the Imprimis
division 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 and Physics and a Ph.D. in Mechanical
Engineering from Stanford University.
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 New Enterprise Associates, a venture capital firm,
since 1986. Prior to 1986, Mr. Cole spent twenty years in various microwave
integrated circuit companies, including Amplica Inc., 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 Censtor Corp., a company that designs and sells
-5-
<PAGE>
technology related to magnetic recording heads for the disk drive industry,
Vitesse Semiconductor Corp., a semiconductor manufacturer, and Gigatronics Inc.,
a microwave instrument supplier.
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, a wireless technology manufacturer, 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. Mr. Cooper currently serves on
the Board of Directors of Conductus, Inc., a superconducting products company.
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 1982. 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 Chairman of the Board of Carco
Electronics, a precision servo controlled systems manufacturer and is a member
of the Board of Directors of Gigatronics Inc., a microwave instrument supplier,
and of Resound Corporation, a hearing device manufacturer company. Mr. Wilson
received a B.S. in Engineering from the University of California at Berkeley.
Eric A. Young has been a director of the Company since January 1991. He
is a co-founder of Canaan Partners, a venture capital investment firm, and has
served as a General Partner of Canaan Partners 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 Visigenic Software, Inc.
and of Integrated Packaging Assembly Corporation. 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 1997. 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 Messrs. Cooper and Wilson
during fiscal 1997, 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 1997.
The Compensation Committee, which consisted of Messrs. Cole and Young
during fiscal 1997, met once during fiscal 1997. 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.
Garrettson, who is President and Chief Executive Officer of the Company, has
participated in all discussions and decisions regarding salaries and incentive
compensation for all employees and consultants to the Company, except that Mr.
Garrettson was excluded from discussions regarding his own salary and incentive
compensation.
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<PAGE>
PROPOSAL TWO
REINCORPORATION IN DELAWARE
Introduction
The Board of Directors believes that the best interests of the Company
and its shareholders will be served by changing the state of incorporation of
the Company from California to Delaware (the "Reincorporation Proposal" or the
"Proposed Reincorporation"). As discussed below, the principal reasons for
reincorporation are the greater flexibility of Delaware corporate law, the
substantial body of case law interpreting Delaware corporate law and the
increased ability of the Company to attract and retain qualified directors. The
Company believes that its shareholders will benefit from the well established
principles of corporate governance that Delaware law affords. Although Delaware
law provides the opportunity for the Board of Directors to adopt various
mechanisms which may enhance the Board's ability to negotiate favorable terms
for the shareholders in the event of an unsolicited takeover attempt, the
proposed Delaware certificate of incorporation and bylaws are substantially
similar to those currently in effect in California. However, the Board of
Directors proposes in connection with the Reincorporation Proposal to include in
the Company's bylaws a provision that stockholders intending to nominate
candidates for election as directors or to propose items of business for
consideration at stockholder meetings must meet certain advance notice
requirements.
The Reincorporation Proposal is not being proposed in order to prevent
an unsolicited takeover attempt, nor is it in response to any present attempt
known to the Board of Directors to acquire control of the Company, obtain
representation on the Board of Directors or take significant action that affects
the Company. Shareholders are urged to read carefully the following sections of
this Proxy Statement, including the related exhibits, before voting on the
Reincorporation Proposal. Throughout the Proxy Statement, the term "Spectrian
California" refers to the existing California corporation and the term
"Spectrian Delaware" refers to the new proposed Delaware corporation, a
wholly-owned subsidiary of Spectrian California, which is the proposed successor
to Spectrian California.
The Reincorporation Proposal will be effected by merging Spectrian
California into Spectrian Delaware (the "Merger"). Upon completion of the
Merger, Spectrian California will cease to exist and Spectrian Delaware will
continue to operate the business of the Company under the name Spectrian
Corporation. Pursuant to the Agreement and Plan of Merger between Spectrian
California and Spectrian Delaware, a copy of which is attached hereto as
Appendix A (the "Merger Agreement"), each outstanding share of Spectrian
California Common Stock, no par value, will automatically be converted into one
share of Spectrian Delaware Common Stock, $.001 par value. IT IS NOT NECESSARY
FOR SHAREHOLDERS TO EXCHANGE THEIR EXISTING STOCK CERTIFICATES FOR STOCK
CERTIFICATES OF SPECTRIAN DELAWARE.
Upon the date on which the Merger is effective (the "Effective Date"),
Spectrian Delaware will also assume and continue the outstanding stock options
and all other employee benefit plans of Spectrian California. Each outstanding
and unexercised option, warrant or other right to purchase shares of Spectrian
California Common Stock will become an option, warrant or right to purchase the
same number of shares of Spectrian Delaware Common Stock on the same terms and
conditions and at the same exercise price applicable to any such Spectrian
California option, warrant or right at the Effective Date.
The Proposed Reincorporation has been unanimously approved by Spectrian
California's Board of Directors. If approved by the shareholders, it is
anticipated that the Effective Date of the Merger will be as soon as practicable
following the Annual Meeting of Shareholders. However, pursuant to the Merger
Agreement, the Merger may be abandoned or the Merger Agreement may be amended by
the Board of Directors (except that certain principal terms may not be amended
without further shareholder approval) either before or after shareholder
approval has been obtained and prior to the Effective Date of the Proposed
Reincorporation if, in the opinion of the Board of Directors of either company,
circumstances arise that make it inadvisable to proceed.
Shareholders of Spectrian California will have no dissenters' rights of
appraisal with respect to the Reincorporation Proposal. See "Significant
Differences Between the Corporation Laws of California and Delaware--Dissenters'
Rights." The discussion set forth below is qualified in its entirety by
reference to the Merger Agreement, the Certificate of Incorporation and the
Bylaws of Spectrian Delaware, copies of which are attached hereto as Appendix A,
Appendix B and Appendix C, respectively.
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<PAGE>
Vote Required for the Reincorporation Proposal
Approval of the Reincorporation Proposal which will also constitute
approval of the (i) Merger Agreement, the Certificate of Incorporation and the
Bylaws of Spectrian Delaware, (ii) the assumption of Spectrian California's
employee benefit plans and outstanding stock options by Spectrian Delaware and
(iii) adoption of the Company's new indemnification agreements with its officers
and directors to conform those agreements to Delaware law, will require the
affirmative vote of the holders of a majority of the outstanding shares of
Spectrian California Common Stock. The effect of an abstention or a broker
non-vote is the same as that of a vote against the Reincorporation Proposal.
The Board recommends a vote "FOR" the Proposed Reincorporation in
Delaware.
Principal Reasons for the Proposed Reincorporation
As the Company plans for the future, the Board of Directors and
management believe that it is essential to be able to draw upon well established
principles of corporate governance in making legal and business decisions. The
prominence and predictability of Delaware corporate law provide a reliable
foundation on which the Company's governance decisions can be based and the
Company believes that shareholders will benefit from the responsiveness of
Delaware corporate law to their needs and to those of the corporation they own.
Prominence, Predictability and Flexibility of Delaware Law. For many
years Delaware has followed a policy of encouraging incorporation in that state
and, in furtherance of that policy, has been a leader in adopting, construing
and implementing comprehensive, flexible corporate laws responsive to the legal
and business needs of corporations organized under its laws. Many corporations
have chosen Delaware initially as a state of incorporation or have subsequently
changed corporate domicile to Delaware in a manner similar to that proposed by
the Company. Because of Delaware's prominence as the state of incorporation for
many major corporations, both the legislature and courts in Delaware have
demonstrated an ability and a willingness to act quickly and effectively to meet
changing business needs. The Delaware courts have developed considerable
expertise in dealing with corporate issues and a substantial body of case law
has developed construing Delaware law and establishing public policies with
respect to corporate legal affairs.
Increased Ability to Attract and Retain Qualified Directors. Both
California and Delaware law permit a corporation to include a provision in its
charter documents which reduces or limits the monetary liability of directors
for breaches of fiduciary duty in certain circumstances. The increasing
frequency of claims and litigation directed against directors and officers has
greatly expanded the risks facing directors and officers of corporations in
exercising their respective duties. The amount of time and money required to
respond to such claims and to defend such litigation can be substantial. It is
the Company's desire to reduce these risks to its directors and officers and to
limit situations in which monetary damages can be recovered against directors so
that the Company may continue to attract and retain qualified directors who
otherwise might be unwilling to serve because of the risks involved. The Company
believes that, in general, Delaware law provides greater protection to directors
than California law and that Delaware case law regarding a corporation's ability
to limit director liability is more developed and provides more guidance than
California law. See "The Charters and Bylaws of Spectrian California and
Spectrian Delaware -- Monetary Liability of Directors."
Well Established Principles of Corporate Governance. There is
substantial judicial precedent in the Delaware courts as to the legal principles
applicable to measures that may be taken by a corporation and as to the conduct
of the Board of Directors under the business judgment rule. The Company believes
that its shareholders will benefit from the well established principles of
corporate governance that Delaware law affords.
No Change in the Name, Board Members, Business, Management, Employee Plans or
Location of Principal Facilities of the Company
The Reincorporation Proposal will effect a change in the legal domicile
of the Company, but not its physical location. The Proposed Reincorporation will
not result in any change in the name, business, management, fiscal year, assets
or liabilities (except to the extent of legal and other costs of effecting the
reincorporation) or location of the principal facilities of the Company. The
five directors who are elected at the 1997 Annual Meeting of Shareholders will
become the directors of Spectrian Delaware. All employee benefit plans of
Spectrian California will be assumed and continued by Spectrian Delaware. All
stock options, warrants or other rights to acquire Common Stock of Spectrian
California will automatically be converted into an option, warrant
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or right to purchase the same number of shares of Spectrian Delaware Common
Stock at the same price per share, upon the same terms, and subject to the same
conditions. Spectrian California's other employee benefit arrangements will also
be continued by Spectrian Delaware upon the terms and subject to the conditions
currently in effect.
Anti-takeover Implications
Delaware, like many other states, permits a corporation to adopt a
number of measures through amendment of the certificate of incorporation or
bylaws or otherwise, which measures are designed to reduce a corporation's
vulnerability to unsolicited takeover attempts. The Reincorporation Proposal is
not being proposed in order to prevent an unsolicited takeover attempt, nor is
it in response to any present attempt known to the Board of Directors to acquire
control of the Company, obtain representation on the Board of Directors or take
significant action that affects the Company.
Nevertheless, certain effects of the Reincorporation Proposal may be
considered to have anti-takeover implications. Section 203 of the Delaware
General Corporation Law ("Section 203"), from which Spectrian Delaware does not
intend to opt out, restricts certain "business combinations" with "interested
stockholders" for three years following the date that a person or entity becomes
an interested stockholder, unless the Board of Directors approves the business
combination and/or other requirements are met. See "Significant Differences
Between the Corporation Laws of California and Delaware -- Stockholder Approval
of Certain Business Combinations." Consistent with the Articles of Incorporation
of Spectrian California, the Certificate of Incorporation of Spectrian Delaware
permits cumulative voting, and such method of voting may make it more difficult
to remove any given board member. Other measures permitted under Delaware law,
which the Company does not intend to implement include the establishment of a
staggered board of directors, elimination of the ability of 10% or more
shareholders to call special meetings of the shareholders, and elimination of
actions by written consent of the shareholders. The elimination of cumulative
voting and the establishment of a classified board of directors can also be
undertaken under California law in certain circumstances. For a detailed
discussion of all of the changes that will be implemented as part of the
Proposed Reincorporation, see "The Charters and Bylaws of Spectrian California
and Spectrian Delaware." For a discussion of differences between the laws of
California and Delaware, see "Significant Differences Between the Corporation
Laws of California and Delaware."
In addition, Delaware law permits a corporation to adopt such measures
as shareholder rights plans designed to reduce a corporation's vulnerability to
unsolicited takeover attempts. The Company adopted such a plan in October 1996
(the "Rights Plan"), and the Reincorporation will not constitute a triggering
event pursuant to such plan or affect the Rights Plan in any material respect.
There is substantial judicial precedent in the Delaware courts as to the legal
principles applicable to such defensive measures and as to the conduct of a
board of directors under the business judgment rule with respect to unsolicited
takeover attempts. The Board of Directors has no present intention following the
Proposed Reincorporation to amend the Certificate of Incorporation or Bylaws to
include additional provisions other than those now present in its California
Articles of Incorporation and Bylaws which might deter an unsolicited takeover
attempt. However, in the discharge of its fiduciary obligations to its
shareholders, the Board of Directors of the Company will continue to evaluate
the Company's vulnerability to potential unsolicited bids to acquire the Company
on unfavorable terms and to consider strategies to enhance the Board's ability
to negotiate with an unsolicited bidder.
The Charters and Bylaws of Spectrian California and Spectrian Delaware
The provisions of the Spectrian Delaware Certificate of Incorporation
and Bylaws are similar to those of the Spectrian California Articles of
Incorporation and Bylaws in many respects. However, the Reincorporation Proposal
includes the implementation of certain provisions in the Spectrian Delaware
Certificate of Incorporation and Bylaws that alter the rights of stockholders
and the powers of management. In addition, Spectrian Delaware could implement
certain other changes by amending its Certificate of Incorporation and Bylaws in
the future. For a discussion of such changes, see "Significant Differences
Between the Corporation Laws of California and Delaware."
The Articles of Incorporation of Spectrian California currently
authorize the Company to issue up to 20,000,000 shares of Common Stock, no par
value, and 5,000,000 shares of Preferred Stock, no par value of which 20,000
shares are designated Series A Participating Preferred Stock in connection with
the Company's Rights Plan. None of Spectrian California's Series A Participating
Preferred Shares have been issued. The Certificate of Incorporation of Spectrian
Delaware provides that Spectrian Delaware will have 20,000,000 authorized shares
of Common Stock, $.001 par value, and 5,000,000 shares of Preferred Stock, $.001
par value of which 20,000 shares would be designated as Series A Participating
Preferred Stock in connection with the Rights Plan. Like Spectrian California's
Articles of Incorporation, Spectrian Delaware's Certificate of Incorporation
provides
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that the Board of Directors is entitled to determine the powers, preferences and
rights, and the qualifications, limitations or restrictions, of the authorized
and unissued Preferred Stock. Thus, although it has no present intention of
doing so, the Board of Directors, without stockholder approval, could authorize
the issuance of Preferred Stock upon terms which could have the effect of
delaying or preventing a change in control of the Company or modifying the
rights of holders of the Company's Common Stock under either California or
Delaware law. The Board of Directors could also utilize such shares for future
financings, possible acquisitions and other uses.
Monetary Liability of Directors. The Articles of Incorporation of
Spectrian California and the Certificate of Incorporation of Spectrian Delaware
both provide for the elimination of personal monetary liability of directors to
the fullest extent permissible under law. The provision eliminating monetary
liability of directors set forth in the Spectrian Delaware Certificate of
Incorporation is potentially more expansive than the corresponding provision in
the Spectrian California Articles of Incorporation in that Delaware permits
indemnification to occur with respect to certain actions that California does
not and under certain circumstances Delaware does not require the director or
office to prevail in an action in order for indemnification to be available. In
connection with the Proposed Reincorporation, the Company will enter into new
indemnification agreements with officers and directors to conform the agreements
to Delaware law. For a more detailed explanation of the foregoing, see
"Significant Differences Between the Corporation Laws of California and
Delaware--Indemnification and Limitation of Liability." A copy of the form of
Spectrian Delaware Indemnification Agreement is attached hereto as Appendix D.
Size of the Board of Directors. The Bylaws of Spectrian Delaware
provide for a Board of Directors consisting of five directors. The Bylaws of
Spectrian California provide for a Board of Directors of from five to nine
members, with the exact number currently set at five directors. Under California
law, although changes in the number of directors, in general, must be approved
by a majority of the outstanding shares, the Board of Directors may fix the
exact number of directors within a stated range set forth in the articles of
incorporation or bylaws, if the stated range has been approved by the
shareholders. Delaware law permits the board of directors acting alone, to
change the authorized number of directors by amendment to the bylaws, unless the
directors are not authorized to amend the bylaws or the number of directors is
fixed in the certificate of incorporation (in which case a change in the number
of directors may be made only by amendment to the certificate of incorporation
following approval of such change by the stockholders). The Spectrian Delaware
Certificate of Incorporation provides that the number of directors will be as
specified in the Bylaws and authorizes the Board of Directors to adopt, alter,
amend or repeal the Bylaws. Following the Proposed Reincorporation, the Board of
Directors of Spectrian Delaware could amend the Bylaws to change the size of the
Board of Directors from five directors without further stockholder approval. If
the Reincorporation Proposal is approved, the five directors of Spectrian
California who are elected at the 1997 Annual Meeting of Shareholders will
continue as the five directors of Spectrian Delaware after the Proposed
Reincorporation is consummated.
Removal of Directors. Pursuant to Section 141 of the Delaware General
Corporation Law, if a corporation's stockholders may cumulate their votes for
directors, a director may not be removed without cause if the number of votes
cast against such director's removal would be sufficient to elect such director
under cumulative voting. As the stockholders of Spectrian Delaware will be
entitled to cumulate their votes for the election of directors, like the
shareholders of Spectrian California, the limitations on removal of directors
shall apply to Spectrian Delaware.
Although Section 141 of the Delaware General Corporation Law limits
removal of directors without cause, the section does not define the actions
constituting cause. Therefore, the Bylaws of Spectrian Delaware set forth a
definition of "cause" to be applied to the removal of directors by Spectrian
Delaware's stockholders. For purposes of these provisions, "cause" means (i)
continued willful failure to perform the obligations of a director, (ii) gross
negligence by the director, (iii) engaging in transactions that defraud the
Company, (iv) fraud or intentional misrepresentation including falsifying use of
funds and intentional misstatements made in financial statements, books, records
or reports to shareholders or governmental agencies, (v) material violation of
any agreement between the director and the Company, (vi) knowingly causing the
Company to commit violations of applicable law (including by failure to act),
(vii) acts of moral turpitude or (viii) conviction of a felony.
The provisions relating to removal of directors preclude the removal of
any particular director or group of directors unless removal is warranted and
for cause. One method employed by takeover bidders to obtain control of a
company is to acquire a significant percentage of the outstanding shares through
a tender offer or open market purchases and to use that voting power to remove
the existing directors and replace them with persons chosen by the takeover
bidder. Requiring cause in order to remove a director defeats this strategy,
thereby encouraging potential takeover bidders to obtain the cooperation of the
existing Board before attempting a takeover.
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Authorization of a Requirement of Advance Notice. Effective upon the
Proposed Reincorporation, the Company proposes to establish an advance notice
procedure with regard to the nomination, other than by or at the direction of
the Board of Directors, of candidates for election as directors (the "Nomination
Procedure") and with regard to certain matters to be brought before an annual
meeting of stockholders (the "Business Procedure").
The Nomination Procedure provides that only persons nominated by or at
the direction of the Board of Directors or by a stockholder who has given timely
written notice to the Secretary of the Company prior to the meeting, will be
eligible for election as directors. The Business Procedure provides that at an
annual meeting of stockholders, and subject to any other applicable
requirements, only such business may be conducted as has been brought before the
meeting by or at the direction of the Board of Directors or by a stockholder who
has given timely written notice to the Secretary of the Company of such
stockholder's intention to bring such business before the meeting. In all cases,
to be timely, notice must be received by the Company prior to the date specified
in the Corporation's proxy statement released to the stockholders in connection
with the previous year's annual meeting (approximately 60 days prior to the
meeting). In the event that no annual meeting was held in the previous year or
the date of the annual meeting has been changed by more than 30 days from the
date contemplated at the time of the previous year's proxy statement, notice by
the stockholder to be timely must be received by the Company a reasonable time
before the solicitation is made.
Under the Nomination Procedure, a stockholder's notice to the Company
must contain certain information about the nominee, including name, address, the
consent to be nominated and such other information as would be required to be
included in a proxy statement soliciting proxies for the election of the
proposed nominee, and certain information about the stockholder proposing to
nominate that person, including name, address, a representation that the
stockholder is a holder of record of stock entitled to vote at the meeting and a
description of all arrangements or understandings between the stockholder and
each nominee. Under the Business Procedure, notice relating to the conduct of
business at an annual meeting of stockholders other than the nomination of
directors must contain a brief description of the business to be brought before
the meeting, the reason for conducting such business at the annual meeting, and
certain information about the stockholder proposing such business, including
name, address and a representation that the stockholder is a holder of record of
stock entitled to vote at the meeting. If the Chairman or other officer
presiding at the meeting determines that a person was not nominated in
accordance with the Nomination Procedure, such person will not be eligible for
election as a director, or if he or she determines that other business was not
properly brought before such meeting in accordance with the Business Procedure,
such business will not be conducted at such meeting. Nothing in the Nomination
Procedure or the Business Procedure will preclude discussion by any stockholder
of any nomination or business properly made or brought before the annual meeting
of stockholders in accordance with the above-described procedures.
By requiring advance notice of nominations by stockholders, the
Nomination Procedure affords the Board of Directors an opportunity to consider
the qualification of the proposed nominees and, to the extent deemed necessary
or desirable by the Board, to inform the stockholders about such qualifications.
By requiring advance notice of proposed business, the Business Procedure
provides the Board with an opportunity to inform stockholders of any business
proposed to be conducted at a meeting and the Board's position on any such
proposal, enabling stockholders to better determine whether they desire to
attend the meeting or grant a proxy to the Board of Directors as to the
disposition of such business. In addition, the Business Procedure provides for a
more orderly procedure for conducting the annual meeting of stockholders.
Although the Spectrian Delaware Bylaws do not give the Board any power to
approve or disapprove stockholder nominations for the election of directors or
any other business desired by stockholders to be conducted at an annual meeting,
the Spectrian Delaware Bylaws may have the effect of precluding a nomination for
the election of directors or of precluding any other business at a particular
annual meeting if the proper procedures are not followed. In addition, the
procedures may discourage or deter a third party from conducting a solicitation
of proxies to elect its own slate of directors or otherwise attempting to obtain
control of the Company, even if the conduct of such business or such attempt
might be beneficial to the Company and its stockholders. The Board of Directors
has considered the possible deterrent effect of such provision and has limited
to the extent possible the time between the submission deadline and the relevant
annual meeting.
Compliance With Delaware and California Law
Following the Annual Meeting of Shareholders, if the Reincorporation
Proposal is approved, the Company will submit the Merger Agreement to the office
of the California Secretary of State and to the office of the Delaware Secretary
of State for filing.
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Significant Differences Between the Corporation Laws of California and Delaware
The corporation laws of California and Delaware differ in many
respects. Although all the differences are not set forth in this Proxy
Statement, certain provisions, which could materially affect the rights of
shareholders, are discussed below.
Stockholder Approval of Certain Business Combinations.
In recent years, a number of states have adopted special laws designed
to make certain kinds of "unfriendly" corporate takeovers, or other transactions
involving a corporation and one or more of its significant shareholders, more
difficult. Under Section 203, certain "business combinations" with "interested
stockholders" of Delaware corporations are subject to a three-year moratorium
unless specified conditions are met.
Section 203 prohibits a Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for three years
following the date that such person or entity becomes an interested stockholder.
With certain exceptions, an interested stockholder is a person or entity who or
which owns, individually or with or through certain other persons or entities,
fifteen percent (15%) or more of the corporation's outstanding voting stock
(including any rights to acquire stock pursuant to an option, warrant,
agreement, arrangement or understanding, or upon the exercise of conversion or
exchange rights, and stock with respect to which the person has voting rights
only), or is an affiliate or associate of the corporation and was the owner,
individually or with or through certain other persons or entities of fifteen
percent (15%) or more of such voting stock at any time within the previous three
years, or is an affiliate or associate of any of the foregoing.
For purposes of Section 203, the term "business combination" is defined
broadly to include mergers with or caused by the interested stockholder, sales
or other dispositions to the interested stockholder (except proportionately with
the corporation's other stockholders) of assets of the corporation or a direct
or indirect majority-owned subsidiary equal in aggregate market value to ten
percent (10%) or more of the aggregate market value of either the corporation's
consolidated assets or all of its outstanding stock, the issuance or transfer by
the corporation or a direct or indirect majority-owned subsidiary of stock of
the corporation or such subsidiary to the interested stockholder (except for
certain transfers in a conversion or exchange or a pro rata distribution or
certain other transactions, none of which increase the interested stockholder's
proportionate ownership of any class or series of the corporation's or such
subsidiary's stock or of the corporation's voting stock); or receipt by the
interested stockholder (except proportionately as a stockholder), directly or
indirectly, of any loans, advances, guarantees, pledges or other financial
benefits provided by or through the corporation or a subsidiary.
The three-year moratorium imposed on business combinations by Section
203 does not apply if: (i) prior to the date on which such stockholder becomes
an interested stockholder the board of directors approves either the business
combination or the transaction that resulted in the person or entity becoming an
interested stockholder; (ii) upon consummation of the transaction that made him
or her an interested stockholder, the interested stockholder owns at least
eighty-five percent (85%) of the corporation's voting stock outstanding at the
time the transaction commenced (excluding from the eighty-five percent (85%)
calculation shares owned by directors who are also officers of the target
corporation and shares held by employee stock plans that do not give employee
participants the right to decide confidentially whether to accept a tender or
exchange offer); or (iii) on or after the date such person or entity becomes an
interested stockholder, the board approves the business combination and it is
also approved at a stockholder meeting by sixty-six and two-thirds percent (66
2/3 %) of the outstanding voting stock not owned by the interested stockholder.
Section 203 only applies to certain publicly held corporations that
have a class of voting stock that is (i) listed on a national securities
exchange, (ii) quoted on an interdealer quotation system of a registered
national securities association or (iii) held of record by more than 2,000
stockholders. Although a Delaware corporation to which Section 203 applies may
elect not to be governed by Section 203, Spectrian Delaware does not intend to
so elect to be excluded from the statutory provisions of Section 203. Should a
majority of the outstanding shares of Spectrian Delaware vote at a later date to
opt out of Section 203, such action by the stockholders would not take effect
until one year after the vote occurred.
Section 203 will encourage any potential acquiror to negotiate with the
Company's Board of Directors. Section 203 also might have the effect of limiting
the ability of a potential acquiror to make a two-tiered bid for Spectrian
Delaware in which all stockholders would not be treated equally. Shareholders
should note, however, that the application of Section 203 to Spectrian Delaware
will confer upon the Board the power to reject a proposed business combination
in certain circumstances, even though a potential acquiror may be offering a
substantial premium for Spectrian Delaware's shares over the then-current market
price.
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Section 203 would also discourage certain potential acquirors unwilling to
comply with its provisions. See "Shareholder Voting" herein.
Shareholder Rights Plan
In October 1996, the Board of Directors of Spectrian California adopted
the Rights Plan. Pursuant to the Rights Plan, Spectrian California declared a
dividend of one Common Share Purchase Right (a "Right") for each outstanding
share of Common Stock and each share of Common Stock issued thereafter.
Initially, each Right entitles holders of Common Stock to purchase from
Spectrian California one share of Common Stock at an exercise price of $126.00,
subject to adjustment. The Rights are not exercisable until the occurrence of
specified events.
The Rights will become exercisable only if a person or group acquires
15% or more of the Company's Common Stock or announces a tender offer or
exchange offer which would result in its ownership of 15% or more of the Common
Stock. At the time the Board of Directors adopted the Rights Plan, a shareholder
of the Company, Kopp Investment Advisors and its affiliates ("Kopp"), held more
than 15% of the Company's Common Stock. In order to avoid triggering the Rights
Plan by virtue of such pre-existing interest, the Company and Kopp entered into
an agreement and the Rights Plan was amended such that the Rights will become
exercisable upon Kopp acquiring or announcing a tender offer or exercise offer
which would result in its ownership of 25% or more of the outstanding shares of
Spectrian California. Ten days after such acquisition or offer, each Right
becomes exercisable at the Right's then current exercise price, for shares of
Common Stock of the Company (or, in certain circumstances as determined by the
Board of Directors, a combination of cash, property, Common Stock or other
securities) having a value of twice the Right's exercise price. Alternatively,
if the Company is involved in a merger or other business combination transaction
with another person ten or more days after such acquisition or offer, each Right
becomes exercisable, at the Right's then current exercise price, for shares of
common stock of such other person having a value of twice the Right's exercise
price. The Rights are redeemable up to ten days following the announcement of
such acquisition or offer, subject to extension by the Board of Directors, at a
price of $0.01 per Right. The Rights Plan expires in October 2006 unless the
Rights are earlier redeemed by the Company.
The Rights Plan is intended to protect the shareholders in the event of
an unsolicited offer to acquire, or the acquisition of, 15% or more of the
Common Stock of Spectrian California. The Rights are not intended to prevent a
takeover of the Company and will not interfere with any tender offer or business
combination approved by the Board of Directors. The Rights encourage persons
seeking control of the Company to initiate such an acquisition or offer to
acquire through arm's-length negotiations with the Board of Directors.
The Rights Plan will be assumed by Spectrian Delaware pursuant to the
terms of the Merger Agreement. In the past, Delaware courts have upheld the
validity of plans such as the Rights Plan. To date, the California courts have
not considered the validity of such a plan. In any event, the Company believes
that the Rights Plan is more likely to be upheld in the event of a challenge if
the Reincorporation Proposal is effected and Spectrian California is merged into
Spectrian Delaware.
Power to Call Special Shareholders' Meetings
Under California law, a special meeting of shareholders may be called
by the Board of Directors, the Chairman of the Board, the President, the holders
of shares entitled to cast not less than ten percent (10%) of the votes at such
meeting and such additional persons as are authorized by the articles of
incorporation or the bylaws. Under Delaware law, a special meeting of
stockholders may be called by the Board of Directors or by any other person
authorized to do so in the Certificate of Incorporation or the Bylaws. To
conform the rights of Spectrian Delaware's stockholders to those of the
shareholders of Spectrian California, the Bylaws of Spectrian Delaware authorize
the Board of Directors the Chairman of the Board, the President, and the holders
of shares entitled to cast not less than ten percent (10%) of the votes at such
meeting to call a special meeting of stockholders. However, the Spectrian
Delaware Board of Directors could amend the Bylaws of the Company at any time to
eliminate the right of stockholders to call a special meeting. The elimination
of the right of shareholders to call a special meeting would mean that a
shareholder could not force shareholder consideration of a proposal over the
opposition of the Board of Directors by calling a special meeting of
shareholders prior to such time as the Board believed such consideration to be
appropriate or until the next annual meeting provided that the requestor meets
the notice requirements. The restriction on the ability of stockholders to call
a special meeting would mean that a proposal to replace the Board could be
delayed until the next annual meeting.
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Actions by Written Consent of Shareholders
Under California and Delaware law, shareholders may execute an action
by written consent in lieu of a shareholder meeting. Delaware law permits a
corporation to eliminate such actions by written consent in its charter.
Elimination of written consents of shareholders could lengthen the amount of
time required to take shareholder actions since certain actions by written
consent are not subject to the minimum notice requirement of a shareholders'
meeting. The elimination of shareholders' written consents, however, would deter
hostile takeover attempts. Without the shareholder's written consent, a holder
or group of holders controlling a majority in interest of Spectrian Delaware's
capital stock would not be able to amend Spectrian Delaware's Bylaws or remove
directors pursuant to a stockholder's written consent. Any such holder or group
of holders would have to call a stockholders' meeting and wait the notice
periods determined by the Board of Directors pursuant to Spectrian Delaware's
Bylaws prior to taking any such action. Consistent with the Board of Directors'
intention to retain the rights of Spectrian California's shareholders after the
Reincorporation, the Bylaws of Spectrian Delaware provide for the retention of
actions by written consent of stockholders following the Reincorporation.
Elimination of actions by written consent of stockholders at a later date would
require the approval of Spectrian Delaware's stockholders to amend the Company's
Certificate of Incorporation.
Cumulative Voting for Directors
Under California law, if any shareholder has given notice of an
intention to cumulate votes for the election of directors, any other shareholder
of the corporation is also entitled to cumulate his or her votes at such
election. Cumulative voting provides that each share of stock normally having
one vote is entitled to a number of votes equal to the number of directors to be
elected. A shareholder may then cast all such votes for a single candidate or
may allocate them among as many candidates as the shareholder may choose. In the
absence of cumulative voting, the holders of a majority of the shares present or
represented at a meeting in which directors are to be elected would have the
power to elect all the directors to be elected at such meeting, and no person
could be elected without the support of holders of a majority of the shares
present or represented at such meeting. Elimination of cumulative voting could
make it more difficult for a minority shareholder adverse to a majority of the
shareholders to obtain representation on the Company's Board of Directors.
California corporations whose stock is listed on a national stock exchange or
whose stock is held by 800 shareholders of record and included in the Nasdaq
National Market System (a "Listed Company") can also eliminate cumulative voting
with shareholder approval. Although the Company may qualify as a Listed Company,
it has not sought shareholder approval to eliminate cumulative voting. Under
Delaware law, cumulative voting in the election of directors is not mandatory,
but is a permitted option. The Spectrian Delaware Certificate of Incorporation
provides for cumulative voting rights and thus the voting rights are unchanged
from those of the Spectrian California Articles of Incorporation.
Removal of Directors
Under California law, any director or the entire board of directors may
be removed, with or without cause, with the approval of a majority of the
outstanding shares entitled to vote; however, no individual director may be
removed (unless the entire board is removed) if the number of votes cast against
such removal would be sufficient to elect the director under cumulative voting.
In the case of a Delaware corporation having cumulative voting, if less than the
entire board is to be removed, a director may not be removed without cause if
the number of votes cast against such removal would be sufficient to elect the
director.
Filling Vacancies on the Board of Directors
Under California law, any vacancy on the Board of Directors other than
one created by removal of a director may be filled by the Board. If the number
of directors is less than a quorum, a vacancy may be filled by the unanimous
written consent of the directors then in office, by the affirmative vote of a
majority of the directors at a meeting held pursuant to notice or waivers of
notice or by a sole remaining director. A vacancy created by removal of a
director may be filled by the board only if so authorized by a corporation's
articles of incorporation or by a bylaw approved by the corporation's
shareholders. Spectrian California's Articles of Incorporation and Bylaws do not
permit directors to fill vacancies created by removal of a director unless such
director has been convicted of a felony or found to be of unsound mind. Under
Delaware law, vacancies and newly created directorships may be filled by a
majority of the directors then in office (even though less than a quorum) or by
a sole remaining director, unless otherwise provided in the certificate of
incorporation or bylaws (or unless the certificate of incorporation directs that
a particular class of stock is to elect such director(s), in which case a
majority of the directors elected by such class, or a sole remaining director so
elected, shall fill such vacancy or newly created directorship). However, to
make the Bylaws of Spectrian
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Delaware consistent with those of Spectrian California, the Bylaws of Spectrian
Delaware include a provision that limits the remaining directors' ability to
fill a vacancy created by removal of directors by the stockholders to those
circumstances where the removed director was convicted of a felony or found to
be of unsound mind.
Classified Board of Directors
A classified board is one on which a certain number, but not all, of
the directors are elected on a rotating basis each year. This method of electing
directors makes changes in the composition of the board of directors more
difficult, and thus a potential change in control of a corporation a lengthier
and more difficult process. California law permits certain qualifying
corporations to provide for a classified board of directors by adopting
amendments to their articles of incorporation or bylaws, which amendments must
be approved by the shareholders. Although Spectrian California qualifies to
adopt a classified board of directors, its Board of Directors has no present
intention of doing so. Delaware law permits, but does not require, a classified
board of directors, pursuant to which the directors can be divided into as many
as three classes with staggered terms of office, with only one class of
directors standing for election each year. The Spectrian Delaware Certificate of
Incorporation and Bylaws do not provide for a classified board and Spectrian
Delaware presently does not intend to propose establishment of a classified
board. The establishment of a classified board following the Proposed
Reincorporation would require the approval of the stockholders of Spectrian
Delaware.
Indemnification and Limitation of Liability
California and Delaware have similar laws respecting indemnification by
a corporation of its officers, directors, employees and other agents. The laws
of both states also permit, with certain exceptions, a corporation to adopt a
provision in its articles of incorporation or certificate of incorporation, as
the case may be, eliminating the liability of a director to the corporation or
its shareholders for monetary damages for breach of the director's fiduciary
duty. There are nonetheless certain differences between the laws of the two
states respecting indemnification and limitation of liability.
California law does not permit the elimination of monetary liability
where such liability is based on: (a) intentional misconduct or knowing and
culpable violation of law; (b) acts or omissions that a director believes to be
contrary to the best interests of the corporation or its shareholders, or that
involve the absence of good faith on the part of the director; (c) receipt of an
improper personal benefit; (d) acts or omissions that show reckless disregard
for the director's duty to the corporation or its shareholders, where the
director in the ordinary course of performing a director's duties should be
aware of a risk of serious injury to the corporation or its shareholders; (e)
acts or omissions that constitute an unexcused pattern of inattention that
amounts to an abdication of the director's duty to the corporation and its
shareholders; (f) interested transactions between the corporation and a director
in which a director has a material financial interest; and (g) liability for
improper distributions, loans or guarantees.
Delaware law permits a corporation to eliminate the liability of
directors to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director to the fullest extent permissible under Delaware
law, as such law exists currently or as it may be amended in the future.
However, such provision may not eliminate or limit director monetary liability
for: (a) breaches of the director's duty of loyalty to the corporation or its
stockholders; (b) acts or omissions not in good faith or involving intentional
misconduct or knowing violations of law; (c) the payment of unlawful dividends
or unlawful stock repurchases or redemptions; or (d) transactions in which the
director received an improper personal benefit. Such limitation of liability
provisions also may not limit a director's liability for violation of, or
otherwise relieve a corporation or its directors from the necessity of
complying, with federal or state securities laws, or affect the availability of
non-monetary remedies such as injunctive relief or rescission.
California law permits indemnification of expenses incurred in
derivative or third-party actions, except that with respect to derivative
actions (a) no indemnification may be made when a person is adjudged liable to
the corporation in the performance of that person's duty to the corporation and
its shareholders unless a court determines such person is entitled to indemnity
for expenses, and then such indemnification may be made only to the extent that
such court shall determine, and (b) no indemnification may be made without court
approval in respect of amounts paid or expenses incurred in settling or
otherwise disposing of a threatened or pending action or amounts incurred in
defending a pending action that is settled or otherwise disposed of without
court approval.
California law requires indemnification when the individual has
defended successfully the action on the merits (as opposed to Delaware law,
which requires indemnification relating to a successful defense on the merits or
otherwise).
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Delaware law generally permits indemnification of expenses, including
attorney's fees, actually and reasonably incurred in the defense or settlement
of a derivative or third-party action, provided there is a determination by a
majority vote of a disinterested quorum of the directors, by independent legal
counsel or by a majority vote of a quorum of the stockholders that the person
seeking indemnification acted in good faith and in a manner reasonably believed
to be in or (in contrast to California law) not opposed to the best interests of
the corporation. Without court approval, however, no indemnification may be made
in respect of any derivative action in which such person is adjudged liable for
negligence or misconduct in the performance of his or her duty to the
corporation. Delaware law requires indemnification of expenses when the
individual being indemnified has successfully defended any action, claim, issue,
or matter therein, on the merits or otherwise.
Expenses incurred by an officer or director in defending an action may
be paid in advance, under Delaware law and California law, if such director or
officer undertakes to repay such amounts if it is ultimately determined that he
or she is not entitled to indemnification. In addition, the laws of both states
authorize a corporation's purchase of indemnity insurance for the benefit of its
officers, directors, employees and agents whether or not the corporation would
have the power to indemnify against the liability covered by the policy.
California law permits a California corporation to provide rights to
indemnification beyond those provided therein to the extent such additional
indemnification is authorized in the corporation's articles of incorporation.
Thus, if so authorized, rights to indemnification may be provided pursuant to
agreements or bylaw provisions which make mandatory the permissive
indemnification provided by California law. Under California law, there are two
limitations on such additional rights to indemnification: (i) such
indemnification is not permitted for acts, omissions or transactions from which
a director of a California corporation may not be relieved of personal
liability, as described above; and (ii) such indemnification is not permitted in
circumstances where California law expressly prohibits indemnification, as
described above.
Delaware law also permits a Delaware corporation to provide
indemnification in excess of that provided by statute. By contrast to California
law, Delaware law does not require authorizing provisions in the certificate of
incorporation and does not contain express prohibitions on indemnification in
certain circumstances; limitations on indemnification may be imposed by a court,
however, based on principles of public policy. A provision of Delaware law
states that the indemnification provided by statute shall not be deemed
exclusive of any other rights under any bylaw, agreement, vote of stockholders
or disinterested directors or otherwise.
Inspection of Shareholder List
Both California and Delaware law allow any shareholder to inspect the
shareholder list for a purpose reasonably related to such person's interest as a
shareholder. California law provides, in addition, for an absolute right to
inspect and copy the corporation's shareholder list by persons holding an
aggregate of five percent (5%) or more of a corporation's voting shares, or
shareholders holding an aggregate of one percent (1%) or more of such shares who
have filed a Schedule 14B with the Securities and Exchange Commission in
connection with a contested election of directors. The latter provision has not
been amended in response to the elimination of Schedule 14B under the revised
proxy rules. Under California law, such absolute inspection rights also apply to
a corporation formed under the laws of any other state if its principal
executive offices are in California or if it customarily holds meetings of its
board in California. Delaware law also provides for inspection rights as to a
list of stockholders entitled to vote at a meeting within a ten day period
preceding a stockholders' meeting for any purpose germane to the meeting.
However, Delaware law contains no provisions comparable to the absolute right of
inspection provided by California law to certain shareholders.
Dividends and Repurchases of Shares
California law dispenses with the concepts of par value of shares as
well as statutory definitions of capital, surplus and the like. The concepts of
par value, capital and surplus are retained under Delaware law.
Under California law, a corporation may not make any distribution
(including dividends, whether in cash or other property, and repurchases of its
shares, other than repurchases of its shares issued under employee stock plans
contemplated by Section 408 of the California Corporations Code) unless either
(i) the corporation's retained earnings immediately prior to the proposed
distribution equal or exceed the amount of the proposed distribution or (ii)
immediately after giving effect to such distribution, the corporation's assets
(exclusive of goodwill, capitalized research and development expenses and
deferred charges) would be at least equal to 1.25 times its liabilities (not
including deferred taxes, deferred income and other deferred credits), and
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the corporation's current assets would be at least equal to its current
liabilities (or 1.25 times its current liabilities if the average pre-tax and
pre-interest expense earnings for the preceding two fiscal years were less than
the average interest expense for such years). Such tests are applied to
California corporations on a consolidated basis.
Delaware law permits a corporation to declare and pay dividends out of
surplus or, if there is no surplus, out of net profits for the fiscal year in
which the dividend is declared and/or for the preceding fiscal year as long as
the amount of capital of the corporation following the declaration and payment
of the dividend is not less than the aggregate amount of the capital represented
by the issued and outstanding stock of all classes having a preference upon the
distribution of assets. In addition, Delaware law generally provides that a
corporation may redeem or repurchase its shares only if the capital of the
corporation is not impaired and such redemption or repurchase would not impair
the capital of the corporation.
To date, the Company has not declared or paid cash dividends on its
capital stock. The Company currently expects it will retain its future earnings
for use in the operation and expansion of its business and does not anticipate
paying any cash dividends in the foreseeable future.
Shareholder Voting
Both California and Delaware law generally require that a majority of
the shareholders of both acquiring and target corporations approve statutory
mergers. Delaware law does not require a stockholder vote of the surviving
corporation in a merger (unless the corporation provides otherwise in its
certificate of incorporation) if (a) the merger agreement does not amend the
existing certificate of incorporation, (b) each share of the stock of the
surviving corporation outstanding immediately before the effective date of the
merger is an identical outstanding or treasury share after the merger, and (c)
either no shares of common stock of the surviving corporation and no shares,
securities or obligations convertible into such stock are to be issued or
delivered under the plan of merger, or the authorized unissued shares or the
treasury shares of common stock of the surviving corporation to be issued or
delivered under the plan of merger plus those initially issuable upon conversion
of any other shares, securities or obligations to be issued or delivered under
such plan do not exceed twenty percent (20%) of the shares of common stock of
such constituent corporation outstanding immediately prior to the effective date
of the merger. California law contains a similar exception to its voting
requirements for reorganizations where shareholders or the corporation itself,
or both, immediately prior to the reorganization will own immediately after the
reorganization equity securities constituting more than five sixths of the
voting power of the surviving or acquiring corporation or its parent entity.
Both California law and Delaware law also require that a sale of all or
substantially all of the assets of a corporation be approved by a majority of
the outstanding voting shares of the corporation transferring such assets.
With certain exceptions, California law also requires that mergers,
reorganizations, certain sales of assets and similar transactions be approved by
a majority vote of each class of shares outstanding. In contrast, Delaware law
generally does not require class voting, except in certain transactions
involving an amendment to the certificate of incorporation that adversely
affects a specific class of shares. As a result, shareholder approval of such
transactions may be easier to obtain under Delaware law for companies which have
more than one class of shares outstanding.
California law also requires that holders of nonredeemable common stock
receive nonredeemable common stock in a merger of the corporation with the
holder of more than fifty percent (50%) but less than ninety percent (90%) of
such common stock or its affiliate unless all of the holders of such common
stock consent to the transaction. This provision of California law may have the
effect of making a "cash-out" merger by a majority shareholder more difficult to
accomplish. Although Delaware law does not parallel California law in this
respect, under some circumstances Section 203 does provide similar protection
against coercive two-tiered bids for a corporation in which the stockholders are
not treated equally. See "Significant Differences Between the Corporation Laws
of California and Delaware Stockholder Approval of Certain Business
Combinations."
California law provides that, except in certain circumstances, when a
tender offer or a proposal for a reorganization or for a sale of assets is made
by an interested party (generally a controlling or managing person of the target
corporation), an affirmative opinion in writing as to the fairness of the
consideration to be paid to the shareholders must be delivered to shareholders.
This fairness opinion requirement does not apply to a corporation that does not
have shares held of record by at least 100 persons, or to a transaction that has
been qualified under California state securities laws. Furthermore, if a tender
of shares or vote is sought pursuant to an interested party's proposal and a
later proposal is made by another party at least ten days prior to the date of
acceptance of the interested party proposal, the shareholders must be informed
of the later offer and be
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afforded a reasonable opportunity to withdraw any vote, consent or proxy, or to
withdraw any tendered shares. Delaware law has no comparable provision.
Voting by Ballot
California law provides that the election of directors may proceed in
the manner described in a corporation's bylaws. Spectrian California's Bylaws
provide that the election of directors at a shareholders' meeting may be by
voice vote or ballot, unless prior to such vote a shareholder demands a vote by
ballot, in which case such vote must be by ballot. Under Delaware law, the right
to vote by written ballot may be restricted if so provided in the Certificate of
Incorporation. The Bylaws of Spectrian Delaware do not address election by
ballot, but the Certificate of Incorporation of Spectrian Delaware, consistent
with Spectrian California's Bylaws, provides that if a stockholder specifically
demands election of directors by ballot (or if the Bylaws provide that elections
shall be by ballot) then elections shall be held by ballot. Stockholders of
Spectrian Delaware may therefore continue to demand election by ballot, unless
and until the Certificate of Incorporation is amended, which amendment would
require a majority stockholder vote. It may be more difficult for a stockholder
to contest the outcome of a vote that has not been conducted by written ballot.
Loans to Officers and Employees
Under California law, any loan or guaranty to or for the benefit of a
director or officer of the corporation or its parent requires approval of the
shareholders unless such loan or guaranty is provided under a plan approved by
shareholders owning a majority of the outstanding shares of the corporation.
However, under California law, shareholders of any corporation with 100 or more
shareholders of record, such as the Company, may approve a bylaw authorizing the
board of directors alone to approve loans or guaranties to or on behalf of
officers (whether or not such officers are directors) if the board determines
that any such loan or guaranty may reasonably be expected to benefit the
corporation. The Bylaws of Spectrian California contain such a provision.
Pursuant to the Spectrian Delaware Bylaws and in accordance with Delaware law,
Spectrian Delaware may make loans to, guarantee the obligations of or otherwise
assist its officers or other employees and those of its subsidiaries (including
directors who are also officers or employees) when such action, in the judgment
of the Board of Directors, may reasonably be expected to benefit the
corporation.
Interested Director Transactions
Under both California and Delaware law, certain contracts or
transactions in which one or more of a corporation's directors has an interest
are not void or voidable because of such interest provided that certain
conditions, such as obtaining the required approval and fulfilling the
requirements of good faith and full disclosure, are met. With certain
exceptions, the conditions are similar under California and Delaware law. Under
California and Delaware law (a) either the shareholders or the board of
directors must approve any such contract or transaction after full disclosure of
the material facts, and, in the case of board approval, the contract or
transaction must also be "just and reasonable" (in California) or "fair" (in
Delaware) to the corporation or (b) the contract or transaction must have been
just and reasonable or fair as to the corporation at the time it was approved.
In the latter case, California law explicitly places the burden of proof on the
at interested director. Under California law, if shareholder approval is sought,
the interested director is not entitled to vote his shares at a shareholder
meeting with respect to any action regarding such contract or transaction. If
board approval is sought, the contract or transaction must be approved by a
majority vote of a quorum of the directors, without counting the vote of any
interested directors (except that interested directors may be counted for
purposes of establishing a quorum). Under Delaware law, if board approval is
sought, the contract or transaction must be approved by a majority of the
disinterested directors (even if the disinterested directors are less than a
quorum). Therefore, certain transactions that the Board of Directors of
Spectrian California might not be able to approve because of the number of
interested directors, could be approved by a majority of the disinterested
directors of Spectrian Delaware, although less than a majority of a quorum. The
Company is not aware of any plans to propose any transaction involving directors
of the Company that could not be so approved under California law but could be
so approved under Delaware law.
Shareholder Derivative Suits
California law provides that a shareholder bringing a derivative action
on behalf of a corporation need not have been a shareholder at the time of the
transaction in question, provided that certain tests are met. Under Delaware
law, a stockholder may bring a derivative action on behalf of the corporation
only if the stockholder was a stockholder of the corporation at the time of the
transaction in question or if his or her stock thereafter devolved upon him or
her by operation of law. California law also
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provides that the corporation or the defendant in a derivative suit may make a
motion to the court for an order requiring the plaintiff shareholder to furnish
a security bond. Delaware does not have a similar bonding requirement.
Dissenters' Rights
Under both California and Delaware law, a shareholder of a corporation
participating in certain major corporate transactions may, under varying
circumstances, be entitled to dissenters' rights of appraisal pursuant to which
such shareholder may receive cash in the amount of the fair market value of his
or her shares in lieu of the consideration he or she would otherwise receive in
the transaction. Under Delaware law, such fair market value is determined
exclusive of any element of value arising from the accomplishment or expectation
of the merger or consolidation, and such appraisal rights are not available (a)
with respect to the sale, lease or exchange of all or substantially all of the
assets of a corporation, (b) with respect to a merger or consolidation by a
corporation the shares of which are either listed on a national securities
exchange or are held of record by more than 2,000 holders if such stockholders
receive only shares of the surviving corporation or shares of any other
corporation that are either listed on a national securities exchange or held of
record by more than 2,000 holders, plus cash in lieu of fractional shares of
such corporations. or (c) to stockholders of a corporation surviving a merger if
no vote of the stockholders of the surviving corporation is required to approve
the merger under certain provisions of Delaware law.
The limitations on the availability of appraisal rights under
California law are different from those under Delaware law. Shareholders of a
California corporation whose shares are listed on a national securities exchange
or on a list of over-the-counter margin stocks issued by the Board of Governors
of the Federal Reserve System generally do not have such appraisal rights unless
the holders of at least five percent (5%) of the class of outstanding shares
claim the right or the corporation or any law restricts the transfer of such
shares. Appraisal rights are also unavailable if the shareholders of a
corporation or the corporation itself, or both, immediately prior to the
reorganization will own immediately after the reorganization equity securities
constituting more than five-sixths of the voting power of the surviving or
acquiring corporation or its parent entity (as will be the case in the
Reincorporation Proposal). Appraisal or dissenters' rights are, therefore, not
available to shareholders of Spectrian California with respect to the
Reincorporation Proposal. California law generally affords appraisal rights in
sale of asset reorganizations.
Dissolution
Under California law, shareholders holding fifty percent (50%) or more
of the total voting power may authorize a corporation's dissolution, with or
without the approval of the corporation's board of directors, and this right may
not be modified by the articles of incorporation. Under Delaware law, unless the
board of directors approves the proposal to dissolve, the dissolution must be
approved by all the stockholders entitled to vote thereon. Only if the
dissolution is initially approved by the board of directors may it be approved
by a simple majority of the outstanding shares of the corporation's stock en-
titled to vote. In the event of such a board-initiated dissolution, Delaware law
allows a Delaware corporation to include in its certificate of incorporation a
super majority (greater than a simple majority) voting requirement in connection
with dissolutions. Spectrian Delaware's Certificate of Incorporation contains no
such super majority voting requirement, however, and a majority of the
outstanding shares entitled to vote, voting at a meeting at which a quorum is
present, would be sufficient to approve a dissolution of Spectrian Delaware that
had previously been approved by its Board of Directors.
Certain Federal Income Tax Considerations
The following is a discussion of certain federal income tax
considerations that may be relevant to holders of Spectrian California Common
Stock who receive Spectrian Delaware Common Stock in exchange for their
Spectrian California Common Stock as a result of the Proposed Reincorporation.
The discussion does not address all of the tax consequences of the Proposed
Reincorporation that may be relevant to particular Spectrian California
shareholders, such as dealers in securities, or those Spectrian California
shareholders who acquired their shares upon the exercise of stock options, nor
does it address the tax consequences to holders of options or warrants to
acquire Spectrian California Common Stock. Furthermore, no foreign, state, or
local tax considerations are addressed herein. IN VIEW OF THE VARYING NATURE OF
SUCH TAX CONSEQUENCES, EACH SHAREHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX
ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE PROPOSED REINCORPORATION,
INCLUDING THE APPLICABILITY OF FEDERAL, STATE, LOCAL OR FOREIGN TAX LAWS. This
discussion is based on the Internal Revenue Code of 1986, as amended (the
"Code"), the applicable Treasury Regulations promulgated thereunder, judicial
authority and current administrative rulings and practices in effect on the date
of this Proxy Statement.
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The Proposed Reincorporation is expected to qualify as a reorganization
within the meaning of Section 368(a) of the Code, with the following tax
consequences:
(a) No gain or loss should be recognized by holders of
Spectrian California Common Stock upon receipt of Spectrian Delaware
Common Stock pursuant to the Proposed Reincorporation;
(b) The aggregate tax basis of the Spectrian Delaware Common
Stock received by each shareholder in the Proposed Reincorporation
should be equal to the aggregate tax basis of the Spectrian California
Common Stock surrendered in exchange therefor; and
(c) The holding period of the Spectrian Delaware Common Stock
received by each shareholder of Spectrian California should include the
period for which such shareholder held the Spectrian California Common
Stock surrendered in exchange therefor, provided that such Spectrian
California Common Stock was held by the shareholder as a capital asset
at the time of Proposed Reincorporation.
The Company has not requested a ruling from the Internal Revenue
Service (the "IRS") or an opinion of counsel with respect to the federal income
tax consequences of the Proposed Reincorporation under the Code. A successful
IRS challenge to the reorganization status of the Proposed Reincorporation (in
consequence of a failure to satisfy the "continuity of interest" requirement or
otherwise) would result in a shareholder recognizing gain or loss with respect
to each share of Spectrian California Common Stock exchanged in the Proposed
Reincorporation equal to the difference between the shareholder's basis in such
share and the fair market value, as of the time of the Proposed Reincorporation,
of the Spectrian Delaware, Common Stock received in exchange therefor. In such
event, a shareholder's aggregate basis in the shares of Spectrian Delaware
Common Stock received in the exchange would equal their fair market value on
such date, and the shareholder's holding period for such shares would not
include the period during which the shareholder held Spectrian California Common
Stock.
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PROPOSAL THREE
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
200,000 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 275,000 shares of Common
Stock have been reserved for issuance under the Purchase Plan. As of June 5,
1997, a total of 267,450 shares had been issued to employees at an average
purchase price of $9.66 per share pursuant to five offerings under the Purchase
Plan and 7,550 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 $6.59 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 1st day of April or the 1st 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 of the Nasdaq National
Market. The closing sale price per share of the Company's Common Stock on the
Nasdaq National Market on June 5, 1997 was [$______].
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 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.
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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. No change in the
Purchase Plan would result from the reincorporation of the Company as a Delaware
corporation as set forth in Proposal Two.
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.
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.
-23-
<PAGE>
<TABLE>
The following table sets forth certain information regarding shares
purchased during the fiscal year ended March 31, 1997 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>
Name of Individual or Identity Number of Shares Dollar
of Group and Position Purchased (#) Value ($) (1)
- --------------------------------------------------------------- --------------- -------------
<S> <C> <C>
Garrett A. Garrettson, President, Chief Executive Officer and . -- --
Director
Stephen B. Greenspan, Chief Operating Officer ................. -- --
David S. Wisherd, Executive Vice President, Chief Technical ... -- --
Officer and Chairman of the Board of Directors (2)
Edward A. Supplee, Jr., Executive Vice President, Finance and . 2,614 5,501
Administration, Chief Financial Officer and Secretary (3)
Gary R. Gianatasio, Senior Vice President, Business Development 792 3,871
Joseph M. Veni, Senior Vice President, Sales and Marketing .... 2,497 5,080
William Zucker, Vice President, Marketing ..................... 619 720
All Current Executive Officers as a group (7 Persons) ......... 10,788 22,982
Non-Executive Officer Directors as a group .................... * *
All Other Employees as a group ................................ 125,246 270,200
<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. Wisherd resigned his position as Chief Technical Officer and Chairman of the Board of Directors in
October 1996 and resigned as Executive Vice President in February 1997.
(3) Mr. Supplee resigned as Executive Vice President, Finance and Administration, Chief Financial Officer and
Secretary in January 1997.
</FN>
</TABLE>
-24
<PAGE>
PROPOSAL FOUR
AMENDMENT OF 1994 DIRECTOR OPTION PLAN
At the Annual Meeting, the shareholders are being asked to approve an
amendment of the Company's 1994 Director Option Plan (the "Director Plan") to
(i) increase the number of shares of Common Stock reserved for issuance
thereunder by 50,000 shares, (ii) increase the amount of the annual grants to
5,000 shares per annum and (iii) decrease the amount of such annual grants that
vest per month to 2.08% per month from 8.34% per month. The adoption of the
Director Plan was approved by the Board of Directors in May 1994 and
subsequently by the shareholders in June 1994. As of June 5, 1997, options to
purchase an aggregate of 25,000 shares of the Company's Common Stock were
outstanding, with a weighted average exercise price of $22.98 per share, and
60,000 shares (including the 60,000 shares subject to shareholder approval at
this Annual Meeting) were available for future grant. No shares have been
purchased pursuant to exercise of stock options under the Director Plan.
The Director Plan provides for the grant of nonqualified stock options
to non-employee directors of the Company who do not represent shareholders
holding more than 1% of the Company's outstanding Common Stock ("Outside
Directors") pursuant to an automatic, non-discretionary grant mechanism. The
Company believes that the grant of options to the non-employee directors has
enabled the Company to attract and retain directors with the talent that it
continues to require.
The Board of Directors seeks to replenish the authorized and reserved
shares for the Director Plan to enable the Company to continue its automatic,
non-discretionary grants at their present levels through Fiscal 1999, assuming
(i) the size of the Company's Board of Directors is expanded to include one to
two additional non-employee directors and (ii) that the current Outside
Directors remain eligible for the Director Plan. In addition, the Board of
Directors seeks to increase the size of the annual grants to Outside Directors
to enable the Company to attract and retain talented, qualified directors and to
bring the automatic, nondiscretionary grants under the Director Plan to a level
in order to make the Company competitive with others in its market. The Board of
Directors seeks to extend the vesting period of the annual grants under the
Director Plan in order to incentivize Outside Directors to remain on its Board
and to bring the vesting schedule of the Outside Director's options to more
closely reflect that of the employees of the Company.
For these reasons, the Board of Directors recommends that the
shareholders vote FOR approval of the amendments to the Plan.
Vote Required
The affirmative vote of a majority of the Votes Cast will be required
to approve the amendments 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 Director Plan are summarized as follows:
Purpose
The purposes of the Plan are to attract, retain and motivate the best
available non-employee directors and to promote the success of the Company's
business.
Automatic, Non-Discretionary Grants and Eligibility
The Director Plan provides that each future Outside Director
automatically will be granted an option to purchase 5,000 shares of Common Stock
of the Company on the date upon which such person becomes an Outside Director
(the "First Option").
-25-
<PAGE>
Subsequently, each Outside Director is granted an additional option to purchase
1,250 shares of Common Stock (a "Subsequent Option") at the next meeting of the
Board of Directors following the Annual Meeting of Shareholders (if, on such
date, he or she has served as a director for at least six months), so long as he
or she remains an Outside Director. The Board of Directors has approved the
increase of the amount of the Subsequent Option to 5,000 shares of Common Stock
per year. If approved by the Company's shareholders, the increase in the
Subsequent Option amount would take effect at the meeting of the Board of
Directors of the Company immediately following the 1997 Annual Meeting of
Shareholders.
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 options granted under the Director Plan
may be exercised after the shares subject to the option become vested. The
Director Plan provides for vesting of 25% of the First Option on each
anniversary of the date of grant, and the Subsequent Options vest as to 8.34% of
the shares subject to the Option on each monthly anniversary of the date of
grant. The Board of Directors has approved a proposal to increase the vesting
period of the Subsequent Options such that any option granted after the 1997
Annual Meeting of Shareholders would vest at a rate of 2.08% on each monthly
anniversary of the date of grant. The vesting period of Subsequent Options
granted prior to the 1997 Annual Meeting of Shareholders will not be affected by
the proposed amendments. 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. Payment may also be made by 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 nonqualified stock options under
the Director Plan is 100% of 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.
(3) Termination Of Employment: The Director Plan provides that if the
optionee's status as a non-employee director of the Company is terminated for
any reason, other than death or disability, options may be exercised within
Three months 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 a non-employee director of
the Company, options may be exercised at any time within twelve months after the
date of death but only to the extent that the options were exercisable on the
date of death and in no event later than the expiration of the term of such
option.
(5) Disability: If an optionee's status as a non-employee director 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 the individual's status
as an Outside Director and in no event later than the expiration of the term of
such option.
(6) Termination of Options: Options granted under the Director Plan
expire ten years from the date of grant. 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 or a
qualified domestic relations order, 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.
-26-
<PAGE>
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 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. If the options are not assumed or substituted by the
successor corporation, the options vest in full immediately but terminate 30
days from the date notice is given to the optionee of the fully vested status of
the option. Should the shareholders of the Company approve the Reincorporation
of the Company as a Delaware corporation as set forth in Proposal Two, the
Director Plan and all outstanding options thereunder would be assumed by
Spectrian Delaware upon the closing of the Reincorporation.
Amendment and Termination
With the exception of the Administration of the Director Plan,
including the number, frequency and price of grants and the eligibility and
vesting of options, the Board of Directors may amend the Directors 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
Director Plan or for any amendment that would be required to enable the Director
Plan to comply with Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended. 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 May 2004.
Tax Information
Options granted under the Director Plan are nonqualified options.
An optionee will not recognize any taxable income at the time he or she
is granted a nonqualified 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 nonqualified 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 Director Plan to non-employee directors
who do not represent greater than 1% shareholders of the Company is automatic
and non-discretionary. Assuming the proposed amendments are approved the
Company's shareholders at the 1997 Annual Meeting of Shareholders, at the first
meeting of the Board of Directors held thereafter, each of Messrs. Cole, Cooper,
Wilson and Young, if re-elected by the shareholders, will receive an automatic,
non-discretionary grant of an option to purchase 5,000 shares of the Company's
Common Stock at an exercise price equal to the fair market value on that day and
such Subsequent Options will vest at a rate of 2.08% per month. In the event the
proposed amendments are not approved by the shareholders, each such option will
be in the amount of 1,250 shares of the Company's Common Stock and will vest at
a rate of 8.34% per month so long as the optionee remains a non-employee
director of the Company. Information regarding options granted to non-employee
Directors pursuant to the 1994 Director Option Plan during Fiscal 1997 is set
forth under the heading "Executive Compensation and Other Matters--Compensation
of Directors." During
-27-
<PAGE>
Fiscal 1997, all current non-employee directors as a group received options to
purchase 10,000 shares pursuant to the Director Plan. No other employee or
director of the Company received any shares pursuant to the Director Plan.
-28-
<PAGE>
PROPOSAL FIVE
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 350,000 shares.
The adoption of the Plan was approved by the Board of Directors in July 1992 and
subsequently by the shareholders. In June 1996 the shareholders approved an
amendment to the Plan to increase the number of shares of Common Stock reserved
for issuance thereunder by 625,000 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 June 5, 1997, options to purchase an aggregate of
1,338,603 shares of the Company's Common Stock were outstanding, with a weighted
average exercise price of $13.02 per share, and 593,531 shares (including the
350,000 shares subject to shareholder approval at this Annual Meeting) were
available for future grant. In addition, 1,368,751 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 longstanding 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.
During fiscal 1997 most of the authorized shares in the Plan were
granted, because the Company assembled a new management team through hiring and
promotions and hired a number of key technical contributors. 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. The
Company anticipates there will be a need to hire additional technical or
management employees during fiscal 1998 and it will be necessary to offer equity
incentives to attract and motivate these individuals, particularly in the
extremely competitive job market in Silicon Valley. In addition, 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.
-29-
<PAGE>
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 nonqualified 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 nonqualified stock options may be granted to consultants of the Company or
any of its designated subsidiaries. The Administrator 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.
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. Payment may also be made
by 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
nonqualified 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), 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 and in no event later than the expiration of
the term of such option as set forth in the Notice of Grant.
-30-
<PAGE>
(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 no
later than 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 or a
qualified domestic relations order, 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 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. Should the shareholders of the Company approve the
Reincorporation of the Company as a Delaware corporation as set forth in
Proposal Two, the Plan and all outstanding options thereunder would be assumed
by Spectrian Delaware upon the closing of the Reincorporation.
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 nonqualified 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 nonqualified options. An optionee will not recognize any taxable
income at the time he or she is granted a nonqualified 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
-31-
<PAGE>
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 nonqualified 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 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. The table of
option grants under "Executive Compensation and Other Matters--Option Grants in
Last Fiscal Year" provides information with respect to the grant of options to
the named executive officers during fiscal 1997. Information regarding options
granted to non-employee Directors pursuant to the 1994 Director Option Plan
during fiscal 1997 is set forth under the heading "Executive Compensation and
Other Matters--Compensation of Directors." During fiscal 1997, all current
executive officers as a group and all other employees as a group received
options to purchase 603,000 shares and 887,780 shares, respectively, pursuant to
the Plan.
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<PAGE>
PROPOSAL SIX
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, 1998, 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 of the Company for
the fiscal year ending March 31, 1998.
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<PAGE>
EXECUTIVE COMPENSATION AND OTHER MATTERS
Executive Compensation
<TABLE>
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 four most highly compensated executive officers of the Company for
services rendered in all capacities to the Company for the fiscal year.
<CAPTION>
Long-Term
Compensation
Awards
---------------
Number of
Annual Compensation (1) Securities
Fiscal ------------------------- Underlying
Name and Principal Position Year Salary Bonus (2) Options
- ----------------------------------------------------- ---- ------ --------- ------------
<S> <C> <C> <C> <C>
Garrett A. Garrettson 1997 $250,159 $21,470 250,000
President, Chief Executive Officer and Director (3) 1996 -- -- --
1995 -- -- --
Stephen B. Greenspan 1997 153,831 81,433 100,000
Chief Operating Officer (4) 1996 -- -- --
1995 -- -- --
David S. Wisherd 1997 210,866 43,000 --
Executive Vice President, 1996 167,404 8,809 --
Chief Technical Officer and 1995 132,029 64,813 55,000
Chairman of the Board of
Directors (5)
Edward A. Supplee, Jr. 1997 173,515 -- 120,000
Executive Vice President, Finance and 1996 138,950 18,388 --
Administration, Chief Financial Officer and 1995 118,428 55,406 5,000
Secretary (6)
Gary R. Gianatasio 1997 112,045 53,000 20,000
Senior Vice President, Business Development 1996 107,407 13,095 --
1995 96,820 53,775 --
Joseph M. Veni 1997 120,803 31,779 75,000
Senior Vice President, Sales and Marketing (7) 1996 65,356 38,516 --
1995 78,998 53,434 --
William Zucker 1997 135,503 25,721 --
Vice President, Marketing (8) 1996 46,154 18,750 --
1995 -- -- --
- ----------
<FN>
(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 Named
Executive Officer's salary.
(2) Represents bonuses relating to performance of services for the Company
in Fiscal 1997, some of which was paid in Fiscal 1998.
(3) Mr. Garrettson became President, Chief Executive Officer and director
of the Company in April 1996.
(4) Mr. Greenspan became Executive Vice President, Operations in April 1996
and was appointed Chief Operating Officer in April 1997.
(5) Mr. Wisherd resigned his position as Chairman of the Board of Directors
and Chief Technical Officer in October 1996. In February 1997, Mr.
Wisherd resigned as Executive Vice President.
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<PAGE>
(6) Mr. Supplee resigned as Executive Vice President, Finance and
Administration, Chief Financial Officer and Secretary in January 1997.
(7) Mr. Veni joined the Company in April 1, 1992 as Vice President of
Sales. He was named Senior Vice President, Sales and Marketing in April
1996.
(8) Mr. Zucker joined the Company in October 1995 as Vice President of
Engineering. He was named Vice President of Product Line Management in
August 1996 and he became Vice President of Marketing in April 1997.
</FN>
</TABLE>
Option Grants in Last Fiscal Year
<TABLE>
The following table provides information concerning each grant of
options to purchase the Company's Common Stock made during the fiscal year ended
March 31, 1997 to the Named Executive Officers.
<CAPTION>
Potential Realizable Value
Minus Exercise Price at
Number of % of Total Assumed Annual Rates of
Securities Options Exercise Stock Price Appreciation
Underlying Granted to Price for Option Term(1)
Option Employees in Per Share Expiration -------------------------
Name Granted(2) Fiscal Year (3)(4) Date 5% 10%
- ------------------------ ------------- ------------ ---------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Garrett A. Garrettson 250,000 12% $14.50 4/17/06 1,926,406 5,067,215
Stephen B. Greenspan 80,000 4% $21.38 4/17/06 1,075,410 2,725,300
20,000 1% $14.50 8/7/06 182,379 462,185
David S. Wisherd -- -- -- -- -- --
Edward A. Supplee, Jr.(5) 120,000 6% $14.50 1/31/00 322,493 685,492
Gary R. Gianatasio 20,000 1% $ 9.50 10/23/06 119,490 302,811
Joseph M. Veni 50,000 3% $14.50 8/7/06 455,948 1,155,463
25,000 1% $ 9.50 1/15/07 149,363 378,514
William Zucker -- -- -- -- -- --
- ----------
<FN>
(1) Potential realizable value is based on the assumption that the Common
Stock of the Company appreciates at the annual rate shown (compounded
annually) from the date of grant until the expiration of the 10 years
option term. These numbers are calculated based on the requirements
promulgated by the Commission and do not reflect the Company's estimate
of future stock price growth.
(2) Except as noted, all options shown granted in fiscal 1997 are
exercisable starting one year after the date of grant, with 25% of the
shares becoming exercisable each month thereafter, with full vesting
occurring on the fourth anniversary of the date of grant. Under the
1992 Stock Plan, the Board of Directors retains the discretion to
modify the terms, including the price, of outstanding options.
(3) Options were granted at an exercise price equal to the fair market
value of the Company's Common Stock, as determined by reference to the
closing price reported on the Nasdaq National Market on the date of
grant, or as determined by the Board of Directors prior to the
Company's securities being traded on the Nasdaq National Market.
(4) Exercise price and tax withholding obligations may be paid in cash,
promissory note, by delivery of already-owned shares subject to certain
conditions, or 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.
(5) Mr. Supplee resigned as the Company's Chief Financial Executive in
January 1997. As a result, 90,000 shares of the 120,000 share option
grant Mr. Supplee received in Fiscal 1997 terminated and the shares
were returned to the 1992 Stock Plan.
</FN>
</TABLE>
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<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
The following table sets forth certain information regarding the exercise
of stock options during fiscal 1997 and the value of options held as of March
31, 1997 by the Named Executive Officers.
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-the-
Options at Money Options at March 31,
Shares March 31, 1997(#) 1997($)(2)
Acquired Value ----------------------------- ------------------------------
on Realized
Name Exercise (1) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------- ------------ ------------ -------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Garrett A. Garrettson -- $ -- -- 250,000 $ -- $ --
David S. Wisherd 5,836 $ 56,386 37,500 364 $ -- $ 1,456
Stephen B. Greenspan -- $ -- -- 100,000 $ -- $ --
Edward A. Supplee, Jr.(3) 21,572 $ 190,945 32,687 -- $ 23,469 $ --
Gary R. Gianatasio 1,095 $ 26,236 3,385 20,312 $ 35,621 $ 33,276
Joseph M. Veni 2,000 $ 46,150 10,101 77,468 $ 26,838 $ 40,412
William Zucker -- $ -- -- 50,000 $ -- $ --
- ----------
<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) 90,000 shares of Mr. Supplee's stock options terminated upon his
resignation from the Company in January 1997.
</FN>
</TABLE>
Employment Contracts and Change-In-Control Arrangements
The Company has entered into employment agreements with Garrett A.
Garrettson and Stephen B. Greenspan (the "Employees"). The Employees are
eligible to participate in the Company's employee benefit plans and executive
compensation programs.
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 receives an annual base salary of $275,000 and a one-time signing bonus
of $25,000. The agreement provides for additional 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, Chief Operating Officer, 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 additional 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.
Upon the termination of the Employees' 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, the Employees are entitled to a severance payment at the
then applicable base salary rate, and payment of COBRA benefits for nine months
in the case of Mr. Garrettson and six months in the case of Mr. Greenspan. In
addition, the Employees 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 their stock options. Upon the termination of the 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
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<PAGE>
exceeds all disability payments under the Company's insurance plans and any
state or federal disability plans. Such severance payment shall be made for nine
months for Mr. Garrettson and six months for Mr. Greenspan. The 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 expense of
the Company, (ii) willful, deliberate and persistent failure by the Employee to
perform his duties, or (iii) the Employee's conviction of a felony.
In May 1997 the Company appointed Bruce R. Wright as the Company's
Executive Vice President, Finance and Administration, Chief Financial Officer
and Secretary. Mr. Wright entered into an Employment Offer Letter with the
Company pursuant to which he is to receive an annual base salary of $200,000.
Mr. Wright is also eligible for up to $100,000 of variable compensation per year
in connection with the Company's Executive Variable Compensation Plan. Mr.
Wright received an option to acquire 100,000 shares of the Company's 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 date of grant.
In the event there is a change in control of the Company in which
substantially all the Company's assets are acquired, Mr. Garrettson's, Mr.
Greenspan's and Mr. Wright's options will vest in full.
Compensation of Directors
Non-employee directors currently receive an quarterly 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 Director 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
is 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 is
thereafter 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
six (6) months. Should Proposal Four, the amendments to the Director Plan be
approved by the Company's shareholders, the number of shares of the annual grant
will be increased to 5,000 shares effective the first meeting of the Board of
Directors after the Annual Meeting of Shareholders. 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
are 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. Should Proposal Four, the amendments
to the Director Plan be approved by the Company's shareholders, the future
annual grants of options pursuant to the Director Plan will vest at a rate of
2.08% per month.
Report of the Board of Directors on Executive Compensation
During the fiscal year ended March 31, 1997 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 1997. 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. 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
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<PAGE>
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 1997 base salaries
for the Chief Executive Officer and other Named 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. Garrettson, the Chief Executive
Officer, and Mr. Greenspan were governed by employment agreements entered into
with such executives in connection with their original employment with the
Company, and such employment agreements were reviewed and approved by the Board
of Directors. The terms of these employment agreements are described in the
section entitled, "Employment Contracts and Change-In-Control Arrangements."
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 1997, 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 60% of base salaries. 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 Named
Executive Officers, including Mr. Garrettson and Mr. Greenspan, 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, may be 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 Named Executive Officer's performance,
such as having received an order from a specific customer, 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 awarded during Fiscal
1997 ranged from 8% to 57% of the Named Executive Officers' base salaries.
-38-
<PAGE>
Long-Term Stock Option Incentives
The Board provides the Company's Named 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 Named 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, reviewing
factors such as the individual performance of the Named Executive Officer and
the anticipated contribution of the Named 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 account.
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 Named Executive Officers, 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
Robert C. Wilson James A. Cole
Eric A. Young
-39-
<PAGE>
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, 1997. Returns for the indices are weighted based on market
capitalization at the beginning of each fiscal year.
[DESCRIPTION OF GRAPH: line graph showing the returns for three items:
Spectrian Corporation's Common Stock, the S&P 500 and the S&P Communications
Equipment Index. The date points are as follows:
08/03/94 3/31/95 3/31/96 3/31/97
Spectrian Corporation 100 236 175 86
S&P 500 Index 100 111 147 176
S&P Communications Equipment Index 100 142 205 242]
(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 of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates it by reference into such filing.
-40-
<PAGE>
Section 16 Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (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 ("Commission") and the National Association
of Securities Dealers, Inc. Executive officers, directors and greater than ten
percent shareholders are required by Commission 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 1997
all executive officers and directors of the Company complied with all applicable
filing requirements.
CERTAIN TRANSACTIONS
On November 7, 1996, Edward A. Supplee, Jr., the Company's Executive
Vice President, Finance and Administration, Chief Financial Officer and
Secretary, entered into a Letter Agreement with the Company regarding his
resignation. In connection with Mr. Supplee's Agreement to continue to serve as
the Company's Chief Financial Officer until January 31, 1997, Mr. Supplee
received the following compensation in addition to his regular base salary and
benefits until January 31, 1997 whose aggregate total value cannot be estimated
at this time but may be in excess of $60,000: (i) medical and life insurance
benefits from February 1997 through the earlier of July 1997 or until Mr.
Supplee obtained a full-time position elsewhere; (ii) acceleration of vesting of
options to purchase approximately 30,000 shares of the Company's Common Stock;
and (iii) the extension of the time period for Mr. Supplee to exercise all
vested options to purchase the Company's Common Stock to January 31, 2000 from
the 90 day post-employment period set forth in the Company's Option Agreements
with Mr. Supplee.
The Company believes that all of the transactions set forth above were
made on terms no less favorable to the Company than could have been obtained
from unaffiliated third parties. All future transactions, including loans,
between the Company and its officers, directors, principal shareholders and
their affiliates will be approved by a majority of the Board of Directors,
including a majority of the independent and disinterested outside directors, and
will continue to be on terms no less favorable to the Company than could be
obtained from unaffiliated third parties.
DIVIDEND POLICY
The Company has not declared or paid cash dividends on its Common Stock
and does not anticipate paying cash dividends in the foreseeable future.
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 1998 Annual Meeting of
Shareholders must be received by the Company no later than April 15, 1998 in
order that they may be considered for inclusion in the proxy statement and form
of proxy relating to that meeting.
ADJOURNMENT OF THE ANNUAL MEETING
In the Event that there are not sufficient votes to approve the
Reincorporation Proposal at the time of the Annual Meeting, such proposal could
not be approved unless the Annual Meeting were adjourned in order to permit
further solicitation of proxies from holders of the Company's Common Stock.
Proxies that are being solicited by the Company's Board grant discretionary
authority to vote for any such adjournment, if necessary. If it is necessary to
adjourn the Annual Meeting, and the adjournment is for a period of less than 45
days, no notice of the time and place of the adjourned meeting is required to be
given to the shareholders other than an announcement of such time and place at
the Annual Meeting. A majority of the shares represented and voting at the
Annual Meeting is required to approve such adjournment, regardless of whether
there is a quorum present at the Annual Meeting.
-41-
<PAGE>
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: June 23, 1997
-42-
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
OF SPECTRIAN CORPORATION
A DELAWARE CORPORATION,
AND
SPECTRIAN CORPORATION
A CALIFORNIA CORPORATION
THIS AGREEMENT AND PLAN OF MERGER dated as of August ___, 1997 (the
"Agreement") is between Spectrian Corporation, a Delaware corporation
("Spectrian Delaware"), and Spectrian Corporation, a California corporation
("Spectrian California"). Spectrian Delaware and Spectrian California are
sometimes referred to herein as the "Constituent Corporations."
RECITALS
A. Spectrian Delaware is a corporation duly organized and existing
under the laws of the State of Delaware and has an authorized capital of
25,000,000 shares, $.001 par value, of which 20,000,000 shares are designated
"Common Stock," and 5,000,000 shares are designated "Preferred Stock." Of the
Preferred Stock, 20,000 shares are designated Series A Participating Preferred
in connection with Spectrian California's Shareholders' Rights Plan. The
remaining shares of Preferred Stock of Spectrian Delaware is undesignated as to
series, rights, preferences, privileges or restrictions. As of August ___, 1997,
100 shares of Common Stock were issued and outstanding, all of which are held by
Spectrian California, and no shares of Preferred Stock were issued and
outstanding.
B. Spectrian California is a corporation duly organized and existing
under the laws of the State of California and has an authorized capital of
25,000,000 shares, no par value, of which 20,000,000 are designated "Common
Stock," and 5,000,000 shares are designated "Preferred Stock." Of the Preferred
Stock, 20,000 shares of Preferred Stock are designated Series A Participating
Preferred and the remaining shares of Preferred Stock of Spectrian California is
undesignated as to series, rights, preferences, privileges or restrictions. As
of June 5, 1997, [________] shares of Common Stock were issued and outstanding,
and no shares of Preferred Stock were issued and outstanding.
C. The Board of Directors of Spectrian California has determined that,
for the purpose of effecting the reincorporation of Spectrian California in the
State of Delaware, it is advisable and in the best interests of Spectrian
California and its shareholders that Spectrian California merge with and into
Spectrian Delaware upon the terms and conditions herein provided.
D. The respective Boards of Directors of Spectrian Delaware and
Spectrian California have approved this Agreement and have directed that this
Agreement be submitted to a vote of their respective shareholders and executed
by the undersigned officers.
NOW, THEREFORE, in consideration of the mutual agreements and covenants
set forth herein, Spectrian Delaware and Spectrian California hereby agree,
subject to the terms and conditions hereinafter set forth, as follows:
<PAGE>
I
MERGER
1.1. Merger. In accordance with the provisions of this Agreement, the
Delaware General Corporation Law and the California General Corporation Law,
Spectrian California shall be merged with and into Spectrian Delaware (the
"Merger"), the separate existence of Spectrian California shall cease and
Spectrian Delaware shall survive the Merger and shall continue to be governed by
the laws of the State of Delaware, and Spectrian Delaware shall be, and is
herein sometimes referred to as, the "Surviving Corporation," and the name of
the Surviving Corporation shall be Spectrian Corporation.
1.2. Filing and Effectiveness. The Merger shall become effective when
the following actions shall have been completed:
(a) This Agreement and the Merger was adopted and approved by
the shareholders of each Constituent Corporation in accordance with the
requirements of the Delaware General Corporation Law and the California
General Corporation Law on May ___, 1997 and July 31, 1997,
respectively;
(b) All of the conditions precedent to the consummation of the
Merger specified in this Agreement shall have been satisfied or duly
waived by the party entitled to satisfaction thereof;
(c) An executed Certificate of Merger or an executed,
acknowledged and certified counterpart of this Agreement meeting the
requirements of the Delaware General Corporation Law shall have been
filed with the Secretary of State of the State of Delaware; and
(d) An executed Certificate of Merger or an executed
counterpart of this Agreement meeting the requirements of the
California General Corporation Law shall have been filed with the
Secretary of State of the State of California.
The date and time when the Merger shall become effective, as aforesaid,
is herein called the "Effective Date of the Merger."
1.3. Effect of the Merger. Upon the Effective Date of the Merger, the
separate existence of Spectrian California shall cease and Spectrian Delaware,
as the Surviving Corporation, (i) shall continue to possess all of its assets,
rights, powers and property as constituted immediately prior to the Effective
Date of the Merger, (ii) shall be subject to all actions previously taken by its
and Spectrian California's Boards of Directors, (iii) shall succeed, without
other transfer, to all of the assets, rights, powers and property of Spectrian
California in the manner as more fully set forth in Section 259 of the Delaware
General Corporation Law, (iv) shall continue to be subject to all of its debts,
liabilities and obligations as constituted immediately prior to the Effective
Date of the Merger, and (v) shall succeed, without other transfer, to all of the
debts, liabilities and obligations of Spectrian California in the same manner as
if
A-2
<PAGE>
Spectrian Delaware had itself incurred them, all as more fully provided under
the applicable provisions of the Delaware General Corporation Law and the
California General Corporation Law.
II
CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1. Certificate of Incorporation. The Certificate of Incorporation of
Spectrian Delaware as in effect immediately prior to the Effective Date of the
Merger shall continue in full force and effect as the Certificate of
Incorporation of the Surviving Corporation until duly amended in accordance with
the provisions thereof and applicable law.
2.2. Bylaws. The Bylaws of Spectrian Delaware as in effect immediately
prior to the Effective Date of the Merger shall continue in full force and
effect as the Bylaws of the Surviving Corporation until duly amended in
accordance with the provisions thereof and applicable law.
2.3. Directors and Officers. The directors and officers of Spectrian
California immediately prior to the Effective Date of the Merger shall be the
directors and officers of the Surviving Corporation until their respective
successors shall have been duly elected and qualified or until as otherwise
provided by law, or the Certificate of Incorporation of the Surviving
Corporation or the Bylaws of the Surviving Corporation.
III
MANNER OF CONVERSION OF STOCK
3.1. Spectrian California Common Stock. Upon the Effective Date of the
Merger, each share of Spectrian California Common Stock, no par value, issued
and outstanding immediately prior thereto shall, by virtue of the Merger and
without any action by the Constituent Corporations, the holder of such shares or
any other person, be changed and converted into and exchanged for one fully paid
and nonassessable share of Common Stock, $.001 par value, of the Surviving
Corporation.
3.2. Spectrian California Options and Stock Purchase Rights. Upon the
Effective Date of the Merger, the Surviving Corporation shall assume and
continue the stock option plans (including without limitation the 1994 Stock
Option Plan and the 1994 Director Option Plan) and all other employee benefit
plans (including without limitation the 1994 Employee Stock Purchase Plan) of
Spectrian California. Each outstanding and unexercised option or other right to
purchase or security convertible into Spectrian California Common Stock shall
become an option or right to purchase or a security convertible into the
Surviving Corporation's Common Stock on the basis of one share of the Surviving
Corporation's Common Stock for each share of Spectrian California Common Stock
issuable pursuant to any such option, stock purchase right or convertible
security, on the same terms and conditions and at an exercise price per share
equal to the exercise price applicable to any such Spectrian California option,
stock purchase right or convertible security at the Effective Date of the
Merger. Except as set forth in Section
A-3
<PAGE>
3.3, there are no options, purchase rights for or securities convertible into
Preferred Stock of Spectrian California.
A number of shares of the Surviving Corporation's Common Stock shall be
reserved for issuance upon the exercise of options, stock purchase rights or
convertible securities equal to the number of shares of Spectrian California
Common Stock so reserved immediately prior to the Effective Date of the Merger.
3.3 Spectrian California Preferred Share Purchase Rights. Upon the
Effective Date of the Merger, the Surviving corporation shall assume and convert
the Series A Preferred Stock Purchase Rights declared and issued by Spectrian
California on March 21, 1997 and the rights and obligations of Spectrian
California pursuant to the Amended and Restated Preferred Share Rights Agreement
dated as of January 15, 1997 by and among Spectrian California and Chase Mellon
Shareholder Services LLC (the "Rights Agreement"). The Merger shall not be
deemed a "Triggering Event" as such term is defined in the Rights Agreement.
A number of shares of the Surviving Corporation's Common Stock
shall be reserved for issuance upon the exercise of stock purchase rights and
convertible securities equal to the number of shares of Spectrian California
Common Stock so reserved immediately prior to the Effective Date of the Merger.
3.4 Spectrian Delaware Common Stock. Upon the Effective Date of the
Merger, each share of Common Stock, $.001 par value, of Spectrian Delaware
issued and outstanding immediately prior thereto shall, by virtue of the Merger
and without any action by Spectrian Delaware, the holder of such shares or any
other person, be canceled and returned to the status of authorized but unissued
shares.
3.5 Exchange of Certificates. After the Effective Date of the Merger,
each holder of an outstanding certificate representing shares of Spectrian
California Common Stock may, at such stockholder's option, surrender the same
for cancellation to Chase Mellon Shareholder Services, Inc. as exchange agent
(the "Exchange Agent"), and each such holder shall be entitled to receive in
exchange therefor a certificate or certificates representing the number of
shares of the Surviving Corporation's Common Stock into which such holders'
shares of Spectrian California Common Stock were converted as herein provided.
Unless and until so surrendered, each outstanding certificate theretofore
representing shares of Spectrian California Common Stock shall be deemed for all
purposes to represent the number of whole shares of the Surviving Corporation's
Common Stock into which such shares of Spectrian California Common Stock were
converted in the Merger.
The registered owner on the books and records of the Surviving
Corporation or the Exchange Agent of any shares of stock represented by such
outstanding certificate shall, until such certificate shall have been
surrendered for transfer or conversion or otherwise accounted for to the
Surviving Corporation or the Exchange Agent, have and be entitled to exercise
any voting and other rights with respect to and to receive dividends and other
distributions upon the shares of Common Stock of the Surviving Corporation
represented by such outstanding certificate as provided above.
A-4
<PAGE>
Each certificate representing Common Stock of the Surviving Corporation
so issued in the Merger shall bear the same legends, if any, with respect to the
restrictions on transferability as the certificates of Spectrian California so
converted and given in exchange therefor, unless otherwise determined by the
Board of Directors of the Surviving Corporation in compliance with applicable
laws.
If any certificate for shares of Spectrian Delaware stock is to be
issued in a name other than that in which the certificate surrendered in
exchange therefor is registered, it shall be a condition of issuance thereof
that the certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer, that such transfer otherwise be proper and that the
person requesting such transfer pay to Spectrian Delaware or the Exchange Agent
any transfer or other taxes payable by reason of the issuance of such new
certificate in a name other than that of the registered holder of the
certificate surrendered or establish to the satisfaction of Spectrian Delaware
that such tax has been paid or is not payable.
IV
GENERAL
4.1. Covenants of Spectrian Delaware. Spectrian Delaware covenants and
agrees that it will, on or before the Effective Date of the Merger:
(a) Qualify to do business as a foreign corporation in the
State of California and in connection therewith irrevocably appoint an
agent for service of process as required under the provisions of
Section 2105 of the California General Corporation Law;
(b) File any and all documents with the California Franchise
Tax Board necessary for the assumption by Spectrian Delaware of all of
the franchise tax liabilities of Spectrian California; and
(c) Take such other actions as may be required by the
California General Corporation Law.
4.2. Further Assurances. From time to time, as and when required by
Spectrian Delaware or by its successors or assigns, there shall be executed and
delivered on behalf of Spectrian California such deeds and other instruments,
and there shall be taken or caused to be taken by Spectrian Delaware and
Spectrian California such further and other actions, as shall be appropriate or
necessary in order to vest or perfect in or conform of record or otherwise by
Spectrian Delaware the title to and possession of all the property, interests,
assets, rights, privileges, immunities, powers, franchises and authority of
Spectrian California and otherwise to carry out the purposes of this Agreement,
and the officers and directors of Spectrian Delaware are fully authorized in the
name and on behalf of Spectrian California or otherwise to take any and all such
action and to execute and deliver any and all such deeds and other instruments.
4.3. Abandonment. At any time before the filing of this Agreement with
the Secretary of State of the State of Delaware, this Agreement may be
terminated and the Merger may be abandoned for any
A-5
<PAGE>
reason whatsoever by the Board of Directors of either Spectrian California or
Spectrian Delaware, or both, notwithstanding the approval of this Agreement by
the shareholders of Spectrian California or by the sole stockholder of Spectrian
Delaware, or by both.
4.4. Amendment. The Boards of Directors of the Constituent Corporations
may amend this Agreement at any time prior to the filing of this Agreement (or
certificate in lieu thereof) with the Secretaries of State of the States of
California and Delaware, provided that an amendment made subsequent to the
adoption of this Agreement by the shareholders of either Constituent Corporation
shall not: (1) alter or change the amount or kind of shares, securities, cash,
property and/or rights to be received in exchange for or on conversion of all or
any of the shares of any class or series thereof of such Constituent
Corporation, (2) alter or change any term of the Certificate of Incorporation of
the Surviving Corporation to be effected by the Merger, or (3) alter or change
any of the terms and conditions of this Agreement if such alteration or change
would adversely affect the holders of any class of shares or series thereof of
such Constituent Corporation.
4.5. Registered Office. The registered office of the Surviving
Corporation in the State of Delaware is located at Corporation Trust Center,
1209 Orange Street, in the City of Wilmington, Delaware 19801, County of New
Castle, and The Corporation Trust Company is the registered agent of the
Surviving Corporation at such address.
4.6. Agreement. Executed copies of this Agreement will be on file at
the principal place of business of the Surviving Corporation at 350 West Java
Drive, Sunnyvale, California 94089 and copies thereof will be furnished to any
shareholder of either Constituent Corporation, upon request and without cost.
4.7. Governing Law. This Agreement shall in all respects be construed,
interpreted and enforced in accordance with and governed by the laws of the
State of Delaware and, so far as applicable, the merger provisions of the
California General Corporation Law.
4.8. Counterparts. In order to facilitate the filing and recording of
this Agreement, the same may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
A-6
<PAGE>
IN WITNESS WHEREOF, this Agreement, having first been approved by
resolutions of the Boards of Directors of Spectrian Delaware and Spectrian
California, is hereby executed on behalf of each of such two corporations and
attested by their respective officers thereunto duly authorized.
SPECTRIAN CORPORATION
a Delaware corporation
By:
----------------------------
Garrett A. Garrettson,
President and Chief
Executive Officer
ATTEST:
- ------------------------------------------
Bruce R. Wright, Executive Vice President,
Finance & Administration, Chief Financial
Officer and Secretary
SPECTRIAN CORPORATION
a California corporation
By:
----------------------------
Garrett A. Garrettson,
President and Chief
Executive Officer
ATTEST:
- ------------------------------------------
Bruce R. Wright
Executive Vice President, Finance &
Administration, Chief Financial Officer
and Secretary
A-7
<PAGE>
SPECTRIAN CORPORATION
(California Corporation)
OFFICERS' CERTIFICATE
Garrett A. Garrettson and Bruce R. Wright certify that:
1. They are the President and the Secretary, respectively, of Spectrian
Corporation, a corporation organized under the laws of the State of California.
2. The corporation has authorized two classes of stock, designated
"Common Stock" and "Preferred Stock". There are authorized 20,000,000 shares of
Common Stock and 5,000,000 shares of Preferred Stock. Of the Preferred Stock,
20,000 shares of Preferred Stock is designated Series A Participating Preferred
and the remaining shares of Preferred Stock are undesignated as to series,
rights, preferences or restrictions.
3. There were __________ shares of Common Stock, and no shares of
Preferred Stock, outstanding as of the record date (the "Record Date") of the
shareholders' meeting at which the Agreement and Plan of Merger attached hereto
(the "Merger Agreement") was approved. All shares of Common stock outstanding
were entitled to vote on the merger.
4. The principal terms of the Merger Agreement were approved by the
Board of Directors and by the vote of a number of shares of each class of stock
which equaled or exceeded the vote required.
5. The percentage vote required was more than 50% of the votes entitled
to be cast by holders of Common Stock outstanding as of the Record Date, voting
as a single class.
6. Garrett A. Garrettson and Bruce R. Wright further declare under
penalty of perjury under the laws of the State of California that each has read
the foregoing certificate and knows the contents thereof and that the same is
true of their own knowledge.
Executed in Sunnyvale, California on August ___, 1997.
--------------------------------------
Garrett A. Garrettson, Chief Executive
Officer and President
--------------------------------------
Bruce R. Wright, Executive Vice
President, Finance & Administration,
Chief Financial Officer and Secretary
<PAGE>
SPECTRIAN CORPORATION
(Surviving Corporation)
OFFICERS' CERTIFICATE
Garrett A. Garrettson and Bruce R. Wright certify that:
1. They are the President and the Secretary, respectively, of Spectrian
Corporation, a corporation organized under the laws of the State of Delaware.
2. The corporation has authorized two classes of stock, designated
"Common Stock" and "Preferred Stock". There are authorized 20,000,000 shares of
Common Stock and 5,000,000 shares of Preferred Stock. Of the Preferred Stock,
20,000 shares of Preferred Stock is designated Series A Participating Preferred
and the remaining shares of Preferred Stock are undesignated as to series,
rights, preferences or restrictions.
3. There were 100 shares of Common Stock outstanding and entitled to
vote on the Agreement and Plan of Merger attached hereto (the "Merger
Agreement"). There were no shares of Preferred Stock outstanding.
4. The principal terms of the Merger Agreement were approved by the
Board of Directors and by the vote of a number of shares of each class of stock
which equaled or exceeded the vote required.
5. The percentage vote required was more than 50% of the votes entitled
to be cast by holders of outstanding shares of Common Stock.
6. Garrett A. Garrettson and Bruce R. Wright further declare under
penalty of perjury under the laws of the State of Delaware that each has read
the foregoing certificate and knows the contents thereof and that the same is
true of their own knowledge.
Executed in Sunnyvale, California on August ___, 1997.
--------------------------------------
Garrett A. Garrettson, Chief Executive
Officer and President
--------------------------------------
Bruce R. Wright, Executive Vice
President, Finance & Administration,
Chief Financial Officer and Secretary
<PAGE>
APPENDIX B
CERTIFICATE OF INCORPORATION
OF
SPECTRIAN CORPORATION
FIRST: The name of the Corporation is Spectrian Corporation (the
"Corporation").
SECOND: The address of the Corporation's registered office in the State
of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, zip code 19801. The name of its registered
agent at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The Corporation is authorized to issue two classes of stock to
be designated respectively Common Stock and Preferred Stock. The total number of
shares of all classes of stock which the Corporation has authority to issue is
Twenty-five Million (25,000,000), consisting of Twenty Million (20,000,000)
shares of Common Stock, $0.001 par value (the "Common Stock"), and Five Million
(5,000,000) shares of Preferred Stock, $0.001 par value (the "Preferred Stock").
Of the authorized shares of Preferred Stock, Twenty Thousand (20,000) shares
shall be designated "Series A Participating Preferred Stock" (sometimes referred
to herein as "Series A Preferred").
The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized subject to limitations
prescribed by law, to fix by resolution or resolutions the designations, powers,
preferences and rights, and the qualifications, limitations or restrictions
thereof, of each such series of Preferred Stock, including without limitation
authority to fix by resolution or resolutions, the dividend rights, dividend
rate, conversion rights, voting rights, rights and terms of redemption
(including sinking fund provisions), redemption price or prices, and liquidation
preferences of any wholly unissued series of Preferred Stock, and the number of
shares constituting any such series and the designation thereof, or any of the
foregoing.
The Board of Directors is further authorized to increase (but not above
the total number of authorized shares of the class) or decrease (but not below
the number of shares of any such series then outstanding) the number of shares
of any series, the number of which was fixed by it, subsequent to the issue of
shares of such series then outstanding, subject to the powers, preferences and
rights, and the qualifications, limitations and restrictions thereof stated in
the resolution of the Board of Directors originally fixing the number of shares
of such series. If the number of shares of any series is so decreased, then the
shares constituting such decrease shall resume the status which they had prior
to the adoption of the resolution originally fixing the number of shares of such
series.
The relative rights, preferences, privileges, and restrictions granted
to or imposed upon the Common Stock, the Series A Preferred and the holders
thereof (collectively, the "Stockholders") are as follows:
<PAGE>
1. Dividends and Distributions.
a. Subject to the prior and superior right of the holders of any shares
of any series of Preferred Stock ranking prior and superior to the shares of
Series A Participating Preferred Stock with respect to dividends, the holders of
shares of Series A Participating Preferred Stock shall be entitled to receive
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the last day
of January, April, July and October in each year (each such date being referred
to herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Participating Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to, subject to the provision for adjustment
hereinafter set forth, 1,000 times the aggregate per share amount of all cash
dividends, and 1,000 times the aggregate per share amount (payable in kind) of
all non-cash dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock of the
Corporation (the "Common Stock") since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series A
Participating Preferred Stock. In the event the Corporation shall at any time
after October 23, 1996 (the "Rights Dividend Declaration Date") (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount to which holders of
shares of Series A Participating Preferred Stock were entitled immediately prior
to such event under the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
b. The Corporation shall declare a dividend or distribution on the
Series A Participating Preferred Stock as provided in paragraph (a) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock).
c. Dividends shall begin to accrue on outstanding shares of Series A
Participating Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Participating Preferred
Stock, unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such shares, or unless
the date of issue is a Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of Series A Participating
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series A
Participating Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of holders of
shares of Series A Participating Preferred Stock
B-2
<PAGE>
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 30 days prior to the date fixed for the
payment thereof.
2. Voting Rights. The holders of shares of Series A Participating
Preferred Stock shall have the following voting rights:
a. Subject to the provision for adjustment hereinafter set forth, each
share of Series A Participating Preferred Stock shall entitle the holder thereof
to 1,000 votes on all matters submitted to a vote of the shareholders of the
Corporation. In the event the Corporation shall at any time after the Rights
Dividend Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the number of votes per share to which holders of shares of
Series A Participating Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
b. Except as otherwise provided herein or by law, the holders of shares
of Series A Participating Preferred Stock and the holders of shares of Common
Stock shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
c. Except as required by law, holders of Series A Participating
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
3. Certain Restrictions.
a. The Corporation shall not declare any dividend on, make any
distribution on, or redeem or purchase or otherwise acquire for consideration
any shares of Common Stock after the first issuance of a share or fraction of a
share of Series A Participating Preferred Stock unless concurrently therewith it
shall declare a dividend on the Series A Participating Preferred Stock as
required by Section 1 hereof.
b. Whenever quarterly dividends or other dividends or distributions
payable on the Series A Participating Preferred Stock as provided in Section 1
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Participating
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not
(1) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Participating Preferred Stock;
B-3
<PAGE>
(2) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with Series A
Participating Preferred Stock, except dividends paid ratably on the Series A
Participating Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the holders of
all such shares are then entitled;
(3) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Participating
Preferred Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such parity stock in exchange for shares of
any stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Participating Preferred
Stock;
(4) purchase or otherwise acquire for consideration any shares
of Series A Participating Preferred Stock, or any shares of stock ranking on a
parity with the Series A Participating Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment among
the respective series or classes.
c. The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this Section 3,
purchase or otherwise acquire such shares at such time and in such manner.
4. Reacquired Shares. Any shares of Series A Participating Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
5. Liquidation, Dissolution or Winding Up.
a. Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Participating Preferred Stock unless,
prior thereto, the holders of shares of Series A Participating Preferred Stock
shall have received one hundred twenty-six thousand dollars ($126,000) per
share, plus an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment (the "Series A
Liquidation Preference"). Following the payment of the full amount of the Series
A Liquidation Preference, no additional distributions shall be made to the
holders of shares of Series A Participating Preferred Stock unless, prior
thereto, the holders of shares of Common Stock
B-4
<PAGE>
shall have received an amount per share (the "Common Adjustment") equal to the
quotient obtained by dividing (i) the Series A Liquidation Preference by (ii)
1,000 (as appropriately adjusted as set forth in subparagraph (c) below to
reflect such events as stock splits, stock dividends and recapitalization with
respect to the Common Stock) (such number in clause (ii), the "Adjustment
Number"). Following the payment of the full amount of the Series A Liquidation
Preference and the Common Adjustment in respect of all outstanding shares of
Series A Participating Preferred Stock and Common Stock, respectively, holders
of Series A Participating Preferred Stock and holders of shares of Common Stock
shall receive their ratable and proportionate share of the remaining assets to
be distributed in the ratio of the Adjustment Number to 1 with respect to such
Preferred Stock and Common Stock, on a per share basis, respectively.
b. In the event, however, that there are not sufficient assets
available to permit payment in full to the Series A Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if any,
which rank on a parity with the Series A Participating Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock.
c. In the event the Corporation shall at any time after the Rights
Dividend Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to such event
shall be adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
d. Consolidation, Merger, etc. In case the Corporation shall enter into
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case the shares of Series A
Participating Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the Rights Dividend
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Participating Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
B-5
<PAGE>
6. No Redemption. The shares of Series A Participating Preferred Stock
shall not be redeemable.
7. Ranking. The Series A Participating Preferred Stock shall rank junior
to all other series of the Corporation's Preferred Stock as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise.
8. Amendment. This Certificate of Incorporation of the Corporation shall
not be further amended in any manner which would materially alter or change the
powers, preference or special rights of the Series A Participating Preferred
Stock so as to affect them adversely without the affirmative vote of the holders
of a majority or more of the outstanding shares of Series A Participating
Preferred Stock, voting separately as a class.
9. Fractional Shares. Series A Participating Preferred Stock may be issued
in fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Participating Preferred Stock.
FIFTH: The name and mailing address of the incorporator are as follows:
Bruce R. Wright
Spectrian Corporation
350 W. Java Drive
Sunnyvale, CA 94089
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: The election of directors need not be by written ballot unless
a stockholder demands election by written ballot at a meeting of stockholders
and before voting begins or unless the Bylaws of the Corporation shall so
provide.
EIGHTH: The number of directors which constitute the whole Board of
Directors of the Corporation shall be designated in the Bylaws of the
Corporation.
NINTH: In furtherance and not in limitation of the powers conferred by
the laws of the State of Delaware, the Board of Directors is expressly
authorized to adopt, alter, amend or repeal the Bylaws of the Corporation.
TENTH: To the fullest extent permitted by the Delaware General
Corporation Law as the same exists or may hereafter be amended, no director of
the Corporation shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
B-6
<PAGE>
Neither any amendment nor repeal of this Article, nor the adoption of
any provision of this Certificate of Incorporation inconsistent with this
Article, shall eliminate or reduce the effect of this Article in respect of any
matter occurring, or any cause of action, suit or claim that, but for this
Article, would accrue or arise, prior to such amendment, repeal or adoption of
an inconsistent provision.
ELEVENTH: At the election of directors of the Corporation, each holder
of stock or of any class or series of stock shall be entitled to as many votes
as shall equal the number of votes which such stockholder would be entitled to
cast for the election of directors with respect to his or her shares of stock
multiplied by the number of directors to be elected and may cast all such votes
for any director or for any two or more of them as such stockholder may see fit.
TWELFTH: Meetings of stockholders may be held within or without the
State of Delaware, as the Bylaws may provide. The books of the Corporation may
be kept (subject to any provision contained in the laws of the State of
Delaware) outside of the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors or in the Bylaws of the
Corporation.
THIRTEENTH: The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by the laws of the State of Delaware, and all
rights conferred herein are granted subject to this reservation.
The undersigned incorporator hereby acknowledges that the foregoing
Certificate of Incorporation is his act and deed and that the facts stated
herein are true.
Dated: May 21, 1997 /s/ Bruce R. Wright
---------------------------
Bruce R. Wright
Incorporator
B-7
<PAGE>
APPENDIX C
BYLAWS
OF
SPECTRIAN CORPORATION
(a Delaware corporation)
(Adopted as of May 21, 1997)
<PAGE>
BYLAWS
OF
SPECTRIAN CORPORATION
(a Delaware corporation)
TABLE OF CONTENTS
Page
----
ARTICLE I - CORPORATE OFFICES ............................................. 1
1.1 REGISTERED OFFICE ............................................... 1
1.2 OTHER OFFICES ................................................... 1
ARTICLE II - MEETINGS OF STOCKHOLDERS ..................................... 1
2.1 PLACE OF MEETINGS ............................................... 1
2.2 ANNUAL MEETING .................................................. 1
2.3 SPECIAL MEETING ................................................. 3
2.4 NOTICE OF STOCKHOLDERS' MEETINGS ................................ 3
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND
STOCKHOLDER BUSINESS .......................................... 3
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE .................... 4
2.7 QUORUM .......................................................... 4
2.8 ADJOURNED MEETING; NOTICE ....................................... 4
2.9 VOTING .......................................................... 5
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING ...................... 5
2.12 PROXIES ......................................................... 6
2.13 ORGANIZATION .................................................... 6
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE ........................... 6
ARTICLE III - DIRECTORS ................................................... 7
3.1 POWERS .......................................................... 7
3.2 NUMBER OF DIRECTORS ............................................. 7
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS ........................ 7
3.4 RESIGNATION AND VACANCIES ....................................... 7
3.5 REMOVAL OF DIRECTORS ............................................ 8
3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE ........................ 9
3.7 FIRST MEETINGS .................................................. 9
3.8 REGULAR MEETINGS ................................................ 9
3.9 SPECIAL MEETINGS; NOTICE ........................................ 10
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TABLE OF CONTENTS
(Continued)
Page
----
3.10 QUORUM .......................................................... 10
3.11 WAIVER OF NOTICE ................................................ 10
3.12 ADJOURNMENT ..................................................... 10
3.13 NOTICE OF ADJOURNMENT ........................................... 11
3.14 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING ............... 11
3.15 FEES AND COMPENSATION OF DIRECTORS .............................. 11
3.16 APPROVAL OF LOANS TO OFFICERS ................................... 11
3.17 SOLE DIRECTOR PROVIDED BY CERTIFICATE OF INCORPORATION .......... 11
ARTICLE IV - COMMITTEES ................................................... 12
4.1 COMMITTEES OF DIRECTORS ......................................... 12
4.2 MEETINGS AND ACTION OF COMMITTEES ............................... 13
4.3 COMMITTEE MINUTES ............................................... 13
ARTICLE V - OFFICERS ...................................................... 13
5.1 OFFICERS ........................................................ 13
5.2 ELECTION OF OFFICERS ............................................ 14
5.3 SUBORDINATE OFFICERS ............................................ 14
5.4 REMOVAL AND RESIGNATION OF OFFICERS ............................. 14
5.5 VACANCIES IN OFFICES ............................................ 14
5.6 CHAIRMAN OF THE BOARD ........................................... 15
5.7 CHIEF EXECUTIVE OFFICER AND PRESIDENT ........................... 15
5.8 VICE PRESIDENTS ................................................. 15
5.9 SECRETARY ....................................................... 15
5.10 CHIEF FINANCIAL OFFICER ......................................... 16
5.11 ASSISTANT SECRETARY ............................................. 16
5.12 ADMINISTRATIVE OFFICERS ......................................... 16
5.13 AUTHORITY AND DUTIES OF OFFICERS ................................ 17
ARTICLE VI - INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND OTHER AGENTS ................................... 17
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS ....................... 17
6.2 INDEMNIFICATION OF OTHERS ....................................... 18
6.3 INSURANCE ....................................................... 18
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TABLE OF CONTENTS
`
(Continued)
Page
----
ARTICLE VII - RECORDS AND REPORTS ......................................... 19
7.1 MAINTENANCE AND INSPECTION OF RECORDS ........................... 19
7.2 INSPECTION BY DIRECTORS ......................................... 19
7.3 ANNUAL STATEMENT TO STOCKHOLDERS ................................ 19
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS .................. 19
7.5 CERTIFICATION AND INSPECTION OF BYLAWS .......................... 20
ARTICLE VIII - GENERAL MATTERS ............................................ 20
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING ........... 20
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS ....................... 20
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED ............... 20
8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES ................ 21
8.5 SPECIAL DESIGNATION ON CERTIFICATES ............................. 22
8.6 LOST CERTIFICATES ............................................... 22
8.7 TRANSFER AGENTS AND REGISTRARS .................................. 22
8.8 CONSTRUCTION; DEFINITIONS ....................................... 22
ARTICLE IX - AMENDMENTS ................................................... 23
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<PAGE>
BYLAWS
OF
SPECTRIAN CORPORATION
(a Delaware corporation)
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the corporation shall be fixed in the
certificate of incorporation of the corporation.
1.2 OTHER OFFICES
The board of directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place within or outside
the State of Delaware designated by the board of directors. In the absence of
any such designation, stockholders' meetings shall be held at the principal
executive office of the corporation.
2.2 ANNUAL MEETING
The annual meeting of stockholders shall be held each year on a date
and at a time designated by the board of directors. At the meeting, directors
shall be elected, and any other proper business may be transacted.
At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be properly
brought before an annual meeting, business must be: (A) specified in the notice
of meeting (or any supplement thereto) given by or at
<PAGE>
the direction of the Board of Directors, (B) otherwise properly brought before
the meeting by or at the direction of the Board of Directors, or (C) otherwise
properly brought before the meeting by a stockholder. For business to be
properly brought before an annual meeting by a stockholder, the stockholder must
have given timely notice thereof in writing to the Secretary of the corporation.
To be timely, a stockholder's notice must be delivered to or mailed and received
at the principal executive offices of the corporation not less than thirty (30)
calendar days in advance of the estimated mailing date for the proxy statement
relating to the corporation's next annual meeting as specified in the
corporation's proxy statement released to stockholders in connection with the
previous year's annual meeting of stockholders; provided, however, that in the
event that no annual meeting was held in the previous year or the date of the
annual meeting has been changed by more than thirty (30) days from the date
contemplated at the time of the previous year's proxy statement, notice by the
stockholder to be timely must be so received a reasonable time before the
solicitation is made. A stockholder's notice to the Secretary shall set forth as
to each matter the stockholder proposes to bring before the annual meeting: (i)
a brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (ii)
the name and address, as they appear on the corporation's books, of the
stockholder proposing such business, (iii) the class and number of shares of the
corporation which are beneficially owned by the stockholder, (iv) any material
interest of the stockholder in such business and (v) any other information that
is required to be provided by the stockholder pursuant to Regulation 14A under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), in his
capacity as a proponent to a stockholder proposal. Notwithstanding the
foregoing, in order to include information with respect to a stockholder
proposal in the proxy statement and form of proxy for a stockholder's meeting,
stockholders must provide notice as required by the regulations promulgated
under the 1934 Act. Notwithstanding anything in these Bylaws to the contrary, no
business shall be conducted at any annual meeting except in accordance with the
procedures set forth in this paragraph. The chairman of the annual meeting
shall, if the facts warrant, determine and declare at the meeting that business
was not properly brought before the meeting and in accordance with the
provisions of this paragraph, and, if he should so determine, he shall so
declare at the meeting that any such business not properly brought before the
meeting shall not be transacted.
Only persons who are nominated in accordance with the procedures set
forth in this paragraph shall be eligible for election as Directors. Nominations
of persons for election to the Board of Directors of the corporation may be made
at a meeting of stockholders by or at the direction of the Board of Directors or
by any stockholder of the corporation entitled to vote in the election of
Directors at the meeting who complies with the notice procedures set forth in
this paragraph. Such nominations, other than those made by or at the direction
of the Board of Directors, shall be made pursuant to timely notice in writing to
the Secretary of the corporation in accordance with the provisions of the prior
paragraph of this Section 2.2. Such stockholder's notice shall set forth (i) as
to each person, if any, whom the stockholder proposes to nominate for election
or re-election as a Director: (A) the name, age, business address and residence
address of such person, (B) the principal occupation or employment of such
person, (C) the class and number of shares of the corporation which are
beneficially owned by such person, (D) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nominations are to
be made by the stockholder, and (E) any other
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<PAGE>
information relating to such person that is required to be disclosed in
solicitations of proxies for elections of Directors, or is otherwise required,
in each case pursuant to Regulation 14A under the 1934 Act (including without
limitation such person's written consent to being named in the proxy statement,
if any, as a nominee and to serving as a Director if elected); and (ii) as to
such stockholder giving notice, the information required to be provided pursuant
to the preceding paragraph of this Section 2.2. At the request of the Board of
Directors, any person nominated by a stockholder for election as a Director
shall furnish to the Secretary of the corporation that information required to
be set forth in the stockholder's notice of nomination which pertains to the
nominee. No person shall be eligible for election as a Director of the
corporation unless nominated in accordance with the procedures set forth in this
paragraph (c). The chairman of the meeting shall, if the facts warrants,
determine and declare at the meeting that a nomination was not made in
accordance with the procedures prescribed by these Bylaws, and if he should so
determine, he shall so declare at the meeting, and the defective nomination
shall be disregarded.
2.3 SPECIAL MEETING
A special meeting of the stockholders may be called at any time by the
board of directors, or by the chairman of the board, or by the president, or by
one or more stockholders holding shares in the aggregate entitled to cast not
less than ten percent (10%) of the votes of all shares of stock owned by
stockholders entitled to vote at that meeting.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings of stockholders shall be sent or otherwise
given in accordance with Section 2.5 of these bylaws not less than ten (10) nor
more than sixty (60) days before the date of the meeting. The notice shall
specify the place, date and hour of the meeting and (i) in the case of a special
meeting, the purpose or purposes for which the meeting is called (no business
other than that specified in the notice may be transacted) or (ii) in the case
of the annual meeting, those matters which the board of directors, at the time
of giving the notice, intends to present for action by the stockholders (but any
proper matter may be presented at the meeting for such action). The notice of
any meeting at which directors are to be elected shall include the name of any
nominee or nominees who, at the time of the notice, the board intends to present
for election.
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER
BUSINESS
To be properly brought before an annual meeting or special meeting,
nominations for the election of directors or other business must be (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the board of directors, (b) otherwise properly brought before
the meeting by or at the direction of the board of directors or (c) otherwise
properly brought before the meeting by a stockholder.
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
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<PAGE>
Written notice of any meeting of stockholders shall be given either
personally or by first-class mail or by telegraphic or other written
communication. Notices not personally delivered shall be sent charges prepaid
and shall be addressed to the stockholder at the address of that stockholder
appearing on the books of the corporation or given by the stockholder to the
corporation for the purpose of notice. Notice shall be deemed to have been given
at the time when delivered personally or deposited in the mail or sent by
telegram or other means of written communication.
An affidavit of the mailing or other means of giving any notice of any
stockholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.
2.7 QUORUM
The holders of a majority in voting power of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum is not present or
represented at any meeting of the stockholders, then either (i) the chairman of
the meeting or (ii) the stockholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the meeting in accordance
with Section 2.7 of these bylaws.
When a quorum is present at any meeting, the vote of the holders of a
majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which, by express provision of the laws of the State of Delaware or
of the certificate of incorporation or these bylaws, a different vote is
required, in which case such express provision shall govern and control the
decision of the question.
If a quorum be initially present, the stockholders may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken is approved by a
majority of the stockholders initially constituting the quorum.
2.8 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time and place, unless these
bylaws otherwise require, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the adjournment
is taken. At the adjourned meeting the corporation may transact any business
that might have been transacted at the original meeting. If the adjournment is
for more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
2.9 VOTING
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<PAGE>
The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to the provisions of Sections 217 and 218 of the General Corporation Law
of Delaware (relating to voting rights of fiduciaries, pledgers and joint
owners, and to voting trusts and other voting agreements).
Except as may be otherwise provided in the certificate of incorporation
or these bylaws, each stockholder shall be entitled to as many votes as shall
equal the number of votes which such stockholder would be entitled to cast for
the election of directors with respect to his or her shares of stock multiplied
by the number of directors to be elected and may cast all such votes for any
director or for any two or more of them as such stockholder may see fit.
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT
Any action which may be taken at any meeting of stockholders may be
taken without a meeting and without prior notice, except as required by the
Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder, if a consent in writing, setting forth the actions so taken, shall
be signed by the holders of outstanding shares having not less than the minimum
number of votes which would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING
For purposes of determining the stockholders entitled to notice of any
meeting or to vote thereat, the board of directors may fix, in advance, a record
date, which shall not precede the date upon which the resolution fixing the
record date is adopted by the board of directors and which shall not be more
than sixty (60) days nor less than ten (10) days before the date of any such
meeting, and in such event only stockholders of record on the date so fixed are
entitled to notice and to vote, notwithstanding any transfer of any shares on
the books of the corporation after the record date.
If the board of directors does not so fix a record date, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the business day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the business day next preceding the day on which the
meeting is held.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting
unless the board of directors fixes a new record date for the adjourned meeting,
but the board of directors shall fix a new record date if the meeting is
adjourned for more than thirty (30) days from the date set for the original
meeting.
The record date for any other purpose shall be as provided in Section
8.1 of these bylaws.
2.12 PROXIES
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<PAGE>
Every person entitled to vote for directors, or on any other matter,
shall have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the person and filed with the secretary
of the corporation, but no such proxy shall be voted or acted upon after 11
months from its date, unless the proxy provides for a longer period. A proxy
shall be deemed signed if the stockholder's name is placed on the proxy (whether
by manual signature, typewriting, telegraphic transmission, tele-facsimile or
otherwise) by the stockholder or the stockholder's attorney-in-fact. The
revocability of a proxy that states on its face that it is irrevocable shall be
governed by the provisions of Section 212(e) of the General Corporation Law of
Delaware.
2.13 ORGANIZATION
The president, or in the absence of the president, the chairman of the
board, shall call the meeting of the stockholders to order, and shall act as
chairman of the meeting. In the absence of the president, the chairman of the
board, and all of the vice presidents, the stockholders shall appoint a chairman
for such meeting. The chairman of any meeting of stockholders shall determine
the order of business and the procedures at the meeting, including such matters
as the regulation of the manner of voting and the conduct of business. The
secretary of the corporation shall act as secretary of all meetings of the
stockholders, but in the absence of the secretary at any meeting of the
stockholders, the chairman of the meeting may appoint any person to act as
secretary of the meeting.
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the General Corporation Law of Delaware
and to any limitations in the certificate of incorporation or these bylaws
relating to action required to be approved by the stockholders or by the
outstanding shares, the business and affairs of the corporation shall be
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<PAGE>
managed and all corporate powers shall be exercised by or under the direction of
the board of directors.
3.2 NUMBER OF DIRECTORS
The board of directors shall consist of five (5) members. The number of
directors may be changed by an amendment to this bylaw, duly adopted by the
board of directors or by the stockholders, or by a duly adopted amendment to the
certificate of incorporation.
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these bylaws, directors shall be
elected at each annual meeting of stockholders to hold office until the next
annual meeting. Each director, including a director elected or appointed to fill
a vacancy, shall hold office until the expiration of the term for which elected
and until a successor has been elected and qualified.
3.4 RESIGNATION AND VACANCIES
Any director may resign effective on giving written notice to the
chairman of the board, the president, the secretary or the board of directors,
unless the notice specifies a later time for that resignation to become
effective. If the resignation of a director is effective at a future time, the
board of directors may elect a successor to take office when the resignation
becomes effective.
Vacancies in the board of directors may be filled by a majority of the
remaining directors, even if less than a quorum, or by a sole remaining
director. Each director so elected shall hold office until the next annual
meeting of the stockholders and until a successor has been elected and
qualified.
Unless otherwise provided in the certificate of incorporation or these
bylaws:
(i) Vacancies and newly created directorships resulting from
any increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.
(ii) Whenever the holders of any class or classes of stock or
series thereof are entitled to elect one or more directors by the provisions of
the certificate of incorporation, vacancies and newly created directorships of
such class or classes or series may be filled by a majority of the directors
elected by such class or classes or series thereof then in office, or by a sole
remaining director so elected.
(iii) A vacancy created by the removal of a director, except a
removal by the stockholders for cause, may be filled by a majority of directors
then in office or the stockholders.
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<PAGE>
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten (10) percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as aforesaid,
which election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.
3.5 REMOVAL OF DIRECTORS
Unless otherwise restricted by statute, by the certificate of
incorporation or by these bylaws, any director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors; provided, however,
that, if and so long as stockholders of the corporation are entitled to
cumulative voting, if less than the entire board is to be removed, no director
may be removed without cause if the votes cast against his removal would be
sufficient to elect him if then cumulatively voted at an election of the entire
board of directors, pursuant to Delaware General Corporation Law Section
141(k)(2).
For purposes of the foregoing paragraph, "cause" shall mean (i)
continued willful failure to perform obligations of a director, (ii) gross
negligence by a director, (iii) engaging in transactions that defraud the
corporation, (iv) fraud or intentional misrepresentation, including falsifying
use of funds and intentional misstatements made in financial statements, books,
records or reports to stockholders or governmental agencies, (v) material
violation of any agreement between the director and the corporation, (vi)
knowingly causing the corporation to commit violations of applicable law
(including by failure to act), (vii) acts of moral turpitude or (viii)
conviction of a felony.
No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of such director's term
of office.
3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
Regular meetings of the board of directors may be held at any place
within or outside the State of Delaware that has been designated from time to
time by resolution of the board. In the absence of such a designation, regular
meetings shall be held at the principal executive office of the
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<PAGE>
corporation. Special meetings of the board may be held at any place within or
outside the State of Delaware that has been designated in the notice of the
meeting or, if not stated in the notice or if there is no notice, at the
principal executive office of the corporation.
Any meeting of the board, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in the meeting can hear one another; and all such participating
directors shall be deemed to be present in person at the meeting.
3.7 FIRST MEETINGS
The first meeting of each newly elected board of directors shall be
held at such time and place as shall be fixed by the vote of the stockholders at
the annual meeting. In the event of the failure of the stockholders to fix the
time or place of such first meeting of the newly elected board of directors, or
in the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
board of directors, or as shall be specified in a written waiver signed by all
of the directors.
3.8 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice
at such time as shall from time to time be determined by the board of directors.
If any regular meeting day shall fall on a legal holiday, then the meeting shall
be held at the same time and place on the next succeeding full business day.
3.9 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail,
telecopy or telegram, charges prepaid, addressed to each director at that
director's address as it is shown on the records of the corporation. If the
notice is mailed, it shall be deposited in the United States mail at least four
(4) days before the time of the holding of the meeting. If the notice is
delivered personally or by telephone, telecopy or telegram, it shall be
delivered personally or by telephone or to the telegraph company at least
forty-eight (48) hours before the time of the holding of the meeting. Any oral
notice given personally or by telephone may be communicated either to the
director or to a person at the office of the director who the person giving the
notice has reason to believe will promptly communicate it to the director. The
notice need not specify the purpose or the place of the meeting, if the meeting
is to be held at the principal executive office of the corporation.
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3.10 QUORUM
A majority of the authorized number of directors shall constitute a
quorum for the transaction of business, except to adjourn as provided in Section
3.12 of these bylaws. Every act or decision done or made by a majority of the
directors present at a duly held meeting at which a quorum is present shall be
regarded as the act of the board of directors, subject to the provisions of the
certificate of incorporation and applicable law.
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the quorum for that meeting.
3.11 WAIVER OF NOTICE
Notice of a meeting need not be given to any director (i) who signs a
waiver of notice, whether before or after the meeting, or (ii) who attends the
meeting other than for the express purposed of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. All such waivers shall be filed with the corporate records
or made part of the minutes of the meeting. A waiver of notice need not specify
the purpose of any regular or special meeting of the board of directors.
3.12 ADJOURNMENT
A majority of the directors present, whether or not constituting a
quorum, may adjourn any meeting of the board to another time and place.
3.13 NOTICE OF ADJOURNMENT
Notice of the time and place of holding an adjourned meeting of the
board need not be given unless the meeting is adjourned for more than
twenty-four (24) hours. If the meeting is adjourned for more than twenty-four
(24) hours, then notice of the time and place of the adjourned meeting shall be
given before the adjourned meeting takes place, in the manner specified in
Section 3.9 of these bylaws, to the directors who were not present at the time
of the adjournment.
3.14 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action required or permitted to be taken by the board of directors
may be taken without a meeting, provided that all members of the board
individually or collectively consent in writing to that action. Such action by
written consent shall have the same force and effect as a unanimous vote of the
board of directors. Such written consent and any counterparts thereof shall be
filed with the minutes of the proceedings of the board of directors.
3.15 FEES AND COMPENSATION OF DIRECTORS
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Directors and members of committees may receive such compensation, if
any, for their services and such reimbursement of expenses as may be fixed or
determined by resolution of the board of directors. This Section 3.15 shall not
be construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee or otherwise and receiving compensation
for those services.
3.16 APPROVAL OF LOANS TO OFFICERS
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or any of its
subsidiaries, including any officer or employee who is a director of the
corporation or any of its subsidiaries, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing contained in this section shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
3.17 SOLE DIRECTOR PROVIDED BY CERTIFICATE OF INCORPORATION
In the event only one director is required by these bylaws or the
certificate of incorporation, then any reference herein to notices, waivers,
consents, meetings or other actions by a majority or quorum of the directors
shall be deemed to refer to such notice, waiver, etc., by such sole director,
who shall have all the rights and duties and shall be entitled to exercise all
of the powers and shall assume all the responsibilities otherwise herein
described as given to the board of directors.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution adopted by a majority of the
authorized number of directors, designate one (1) or more committees, each
consisting of two or more directors, to serve at the pleasure of the board. The
board may designate one (1) or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. The appointment of members or alternate members of a committee
requires the vote of a majority of the authorized number of directors. Any
committee, to the extent provided in the resolution of the board, shall have and
may exercise all the powers and authority of the board, but no such committee
shall have the power or authority to (i) amend the certificate of incorporation
(except that a committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of stock adopted by the board
of directors as provided in Section 151(a) of the
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General Corporation Law of Delaware, fix the designations and any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the conversion
into, or the exchange of such shares for, shares of any other class or classes
or any other series of the same or any other class or classes of stock of the
corporation), (ii) adopt an agreement of merger or consolidation under Sections
251 or 252 of the General Corporation Law of Delaware, (iii) recommend to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, (iv) recommend to the stockholders a
dissolution of the corporation or a revocation of a dissolution or (v) amend the
bylaws of the corporation; and, unless the board resolution establishing the
committee, the bylaws or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend, to
authorize the issuance of stock, or to adopt a certificate of ownership and
merger pursuant to Section 253 of the General Corporation Law of Delaware.
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4.2 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the following provisions of Article III of these
bylaws: Section 3.6 (place of meetings; meetings by telephone), Section 3.8
(regular meetings), Section 3.9 (special meetings; notice), Section 3.10
(quorum), Section 3.11 (waiver of notice), Section 3.12 (adjournment), Section
3.13 (notice of adjournment) and Section 3.14 (board action by written consent
without meeting), with such changes in the context of those bylaws as are
necessary to substitute the committee and its members for the board of directors
and its members; provided, however, that the time of regular meetings of
committees may be determined either by resolution of the board of directors or
by resolution of the committee, that special meetings of committees may also be
called by resolution of the board of directors, and that notice of special
meetings of committees shall also be given to all alternate members, who shall
have the right to attend all meetings of the committee. The board of directors
may adopt rules for the government of any committee not inconsistent with the
provisions of these bylaws.
4.3 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report
the same to the board of directors when required.
ARTICLE V
OFFICERS
5.1 OFFICERS
The Corporate Officers of the corporation shall be a chief executive
officer and president, a secretary and a chief financial officer. The
corporation may also have, at the discretion of the board of directors, a
chairman of the board, one or more vice presidents (however denominated), one or
more assistant secretaries, one or more assistant treasurers, and such other
officers as may be appointed in accordance with the provisions of Section 5.3 of
these bylaws. Any number of offices may be held by the same person.
In addition to the Corporate Officers of the Company described above,
there may also be such Administrative Officers of the corporation as may be
designated and appointed from time to time by the president of the corporation
in accordance with the provisions of Section 5.12 of these bylaws.
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5.2 ELECTION OF OFFICERS
The Corporate Officers of the corporation, except such officers as may
be appointed in accordance with the provisions of Section 5.3 or Section 5.5 of
these bylaws, shall be chosen by the board of directors, subject to the rights,
if any, of an officer under any contract of employment, and shall hold their
respective offices for such terms as the board of directors may from time to
time determine.
5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or may empower the president to
appoint, such other Corporate Officers as the business of the corporation may
require, each of whom shall hold office for such period, have such power and
authority, and perform such duties as are provided in these bylaws or as the
board of directors may from time to time determine.
The president may from time to time designate and appoint
Administrative Officers of the corporation in accordance with the provisions of
Section 5.12 of these bylaws.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of a Corporate Officer under any
contract of employment, any Corporate Officer may be removed, either with or
without cause, by the board of directors at any regular or special meeting of
the board or, except in case of a Corporate Officer chosen by the board of
directors, by any Corporate Officer upon whom such power of removal may be
conferred by the board of directors.
Any Corporate Officer may resign at any time by giving written notice
to the corporation. Any resignation shall take effect at the date of the receipt
of that notice or at any later time specified in that notice; and, unless
otherwise specified in that notice, the acceptance of the resignation shall not
be necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the Corporate
Officer is a party.
Any Administrative Officer designated and appointed by the president
may be removed, either with or without cause, at any time by the president. Any
Administrative Officer may resign at any time by giving written notice to the
president or to the secretary of the corporation.
5.5 VACANCIES IN OFFICES
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these bylaws for regular appointments to that office.
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5.6 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise such other
powers and perform such other duties as may from time to time be assigned to him
by the board of directors or as may be prescribed by these bylaws. If there is
no president, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.7 of these bylaws.
5.7 CHIEF EXECUTIVE OFFICER AND PRESIDENT
Subject to such supervisory powers, if any, as may be given by the
board of directors to the chairman of the board, if there be such an officer,
the president shall be the chief executive officer of the corporation and shall,
subject to the control of the board of directors, have general supervision,
direction and control of the business and the officers of the corporation. He or
she shall preside at all meetings of the stockholders and, in the absence or
nonexistence of a chairman of the board, at all meetings of the board of
directors. He or she shall have the general powers and duties of management
usually vested in the office of president of a corporation, and shall have such
other powers and perform such other duties as may be prescribed by the board of
directors or these bylaws.
5.8 VICE PRESIDENTS
In the absence or disability of the president, and if there is no
chairman of the board, the vice presidents, if any, in order of their rank as
fixed by the board of directors or, if not ranked, a vice president designated
by the board of directors, shall perform all the duties of the president and
when so acting shall have all the powers of, and be subject to all the
restrictions upon, the president. The vice presidents shall have such other
powers and perform such other duties as from time to time may be prescribed for
them respectively by the board of directors, these bylaws, the president or the
chairman of the board.
5.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal
executive office of the corporation or such other place as the board of
directors may direct, a book of minutes of all meetings and actions of the board
of directors, committees of directors and stockholders. The minutes shall show
the time and place of each meeting, whether regular or special (and, if special,
how authorized and the notice given), the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
stockholders' meetings and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register or a duplicate share register, showing the names of
all stockholders and their addresses, the number and classes of shares held by
each, the number and date
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of certificates evidencing such shares and the number and date of cancellation
of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors required to be given by law or
by these bylaws. He or she shall keep the seal of the corporation, if one be
adopted, in safe custody and shall have such other powers and perform such other
duties as may be prescribed by the board of directors or by these bylaws.
5.10 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings and shares. The books of account shall at all reasonable times
be open to inspection by any director for a purpose reasonably related to his
position as a director.
The chief financial officer shall deposit all money and other valuables
in the name and to the credit of the corporation with such depositaries as may
be designated by the board of directors. He or she shall disburse the funds of
the corporation as may be ordered by the board of directors, shall render to the
president and directors, whenever they request it, an account of all of his or
her transactions as chief financial officer and of the financial condition of
the corporation, and shall have such other powers and perform such other duties
as may be prescribed by the board of directors or these bylaws.
5.11 ASSISTANT SECRETARY
The assistant secretary, if any, or, if there is more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his or her inability or refusal
to act, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
5.12 ADMINISTRATIVE OFFICERS
In addition to the Corporate Officers of the corporation as provided in
Section 5.1 of these bylaws and such subordinate Corporate Officers as may be
appointed in accordance with Section 5.3 of these bylaws, there may also be such
Administrative Officers of the corporation as may be designated and appointed
from time to time by the president of the corporation. Administrative Officers
shall perform such duties and have such powers as from time to time may be
determined by the president or the board of directors in order to assist the
Corporate Officers in the furtherance of their duties. In the performance of
such duties and the exercise of such powers, however, such Administrative
Officers shall have limited authority to act on behalf of the corporation as the
board of directors shall establish, including but not limited to limitations on
the dollar amount and on the scope of agreements or commitments that may be made
by such Administrative Officers on behalf of the
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corporation, which limitations may not be exceeded by such individuals or
altered by the president without further approval by the board of directors.
5.13 AUTHORITY AND DUTIES OF OFFICERS
In addition to the foregoing powers, authority and duties, all officers
of the corporation shall respectively have such authority and powers and perform
such duties in the management of the business of the corporation as may be
designated from time to time by the board of directors.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND OTHER AGENTS
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the maximum extent and in the manner
permitted by the General Corporation Law of Delaware as the same now exists or
may hereafter be amended, indemnify any person against expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred in connection with any threatened, pending or completed
action, suit, or proceeding in which such person was or is a party or is
threatened to be made a party by reason of the fact that such person is or was a
director or officer of the corporation. For purposes of this Section 6.1, a
"director" or "officer" of the corporation shall mean any person (i) who is or
was a director or officer of the corporation, (ii) who is or was serving at the
request of the corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or (iii) who was a
director or officer of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
The corporation shall be required to indemnify a director or officer in
connection with an action, suit, or proceeding (or part thereof) initiated by
such director or officer only if the initiation of such action, suit, or
proceeding (or part thereof) by the director or officer was authorized by the
board of directors of the corporation.
The corporation shall pay the expenses (including attorney's fees)
incurred by a director or officer of the corporation entitled to indemnification
hereunder in defending any action, suit or proceeding referred to in this
Section 6.1 in advance of its final disposition; provided, however, that payment
of expenses incurred by a director or officer of the corporation in advance of
the final disposition of such action, suit or proceeding shall be made only upon
receipt of an undertaking by the director or officer to repay all amounts
advanced if it should ultimately be determined that the director or officer is
not entitled to be indemnified under this Section 6.1 or otherwise.
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The rights conferred on any person by this Article shall not be
exclusive of any other rights which such person may have or hereafter acquire
under any statute, provision of the corporation's Certificate of Incorporation,
these bylaws, agreement, vote of the stockholders or disinterested directors or
otherwise.
Any repeal or modification of the foregoing provisions of this Article
shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification.
6.2 INDEMNIFICATION OF OTHERS
The corporation shall have the power, to the maximum extent and in the
manner permitted by the General Corporation Law of Delaware as the same now
exists or may hereafter be amended, to indemnify any person (other than
directors and officers) against expenses (including attorneys' fees), judgments,
fines, and amounts paid in settlement actually and reasonably incurred in
connection with any threatened, pending or completed action, suit, or
proceeding, in which such person was or is a party or is threatened to be made a
party by reason of the fact that such person is or was an employee or agent of
the corporation. For purposes of this Section 6.2, an "employee" or "agent" of
the corporation (other than a director or officer) shall mean any person (i) who
is or was an employee or agent of the corporation, (ii) who is or was serving at
the request of the corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or (iii) who was an
employee or agent of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
6.3 INSURANCE
The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity, or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify him or her
against such liability under the provisions of the General Corporation Law of
Delaware.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive office or at
such place or places as designated by the board of directors, keep a record of
its stockholders listing their names and
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addresses and the number and class of shares held by each stockholder, a copy of
these bylaws as amended to date, accounting books and other records of its
business and properties.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders and its other books and records for a purpose
reasonably related to his or her position as a director.
7.3 ANNUAL STATEMENT TO STOCKHOLDERS
The board of directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the corporation.
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, if any, the president, any vice president,
the chief financial officer, the secretary or any assistant secretary of this
corporation, or any other person authorized by the board of directors or the
president or a vice president, is authorized to vote, represent and exercise on
behalf of this corporation all rights incident to any and all shares of the
stock of any other corporation or corporations standing in the name of this
corporation. The authority herein granted may be exercised either by such person
directly or by any other person authorized to do so by proxy or power of
attorney duly executed by such person having the authority.
7.5 CERTIFICATION AND INSPECTION OF BYLAWS
The original or a copy of these bylaws, as amended or otherwise altered
to date, certified by the secretary, shall be kept at the corporation's
principal executive office and shall be open to inspection by the stockholders
of the corporation, at all reasonable times during office hours.
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ARTICLE VIII
GENERAL MATTERS
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING
For purposes of determining the stockholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the board of directors may fix, in advance, a record date, which shall not
precede the date upon which the resolution fixing the record date is adopted and
which shall not be more than sixty (60) days before any such action. In that
case, only stockholders of record at the close of business on the date so fixed
are entitled to receive the dividend, distribution or allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after the record date so fixed, except as
otherwise provided by law.
If the board of directors does not so fix a record date, then the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the board of directors adopts the
applicable resolution.
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED
The board of directors, except as otherwise provided in these bylaws,
may authorize and empower any officer or officers, or agent or agents, to enter
into any contract or execute any instrument in the name of and on behalf of the
corporation; such power and authority may be general or confined to specific
instances. Unless so authorized or ratified by the board of directors or within
the agency power of an officer, no officer, agent or employee shall have any
power or authority to bind the corporation by any contract or engagement or to
pledge its credit or to render it liable for any purpose or for any amount.
8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES
The shares of the corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply to
shares represented by a certificate until such certificate is surrendered to the
corporation.
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Notwithstanding the adoption of such a resolution by the board of directors,
every holder of stock represented by certificates and, upon request, every
holder of uncertificated shares, shall be entitled to have a certificate signed
by, or in the name of the corporation by, the chairman or vice-chairman of the
board of directors, or the president or vice-president, and by the treasurer or
an assistant treasurer, or the secretary or an assistant secretary of such
corporation representing the number of shares registered in certificate form.
Any or all of the signatures on the certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate has ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if he or she were such officer, transfer
agent or registrar at the date of issue.
Certificates for shares shall be of such form and device as the board
of directors may designate and shall state the name of the record holder of the
shares represented thereby; its number; date of issuance; the number of shares
for which it is issued; a summary statement or reference to the powers,
designations, preferences or other special rights of such stock and the
qualifications, limitations or restrictions of such preferences and/or rights,
if any; a statement or summary of liens, if any; a conspicuous notice of
restrictions upon transfer or registration of transfer, if any; a statement as
to any applicable voting trust agreement; if the shares be assessable, or, if
assessments are collectible by personal action, a plain statement of such facts.
Upon surrender to the secretary or transfer agent of the corporation of
a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, or upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
8.5 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock
or more than one series of any class, then the powers, the designations, the
preferences and the relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the
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designations, the preferences and the relative, participating, optional or other
special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
8.6 LOST CERTIFICATES
Except as provided in this Section 8.6, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and canceled at the same time. The board of
directors may, in case any share certificate or certificate for any other
security is lost, stolen or destroyed, authorize the issuance of replacement
certificates on such terms and conditions as the board may require; the board
may require indemnification of the corporation secured by a bond or other
adequate security sufficient to protect the corporation against any claim that
may be made against it, including any expense or liability, on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
8.7 TRANSFER AGENTS AND REGISTRARS
The board of directors may appoint one or more transfer agents or
transfer clerks, and one or more registrars, each of which shall be an
incorporated bank or trust company -- either domestic or foreign, who shall be
appointed at such times and places as the requirements of the corporation may
necessitate and the board of directors may designate.
8.8 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction and definitions in the General Corporation Law of Delaware shall
govern the construction of these bylaws. Without limiting the generality of this
provision, as used in these bylaws, the singular number includes the plural, the
plural number includes the singular, and the term "person" includes both an
entity and a natural person.
ARTICLE IX
AMENDMENTS
The original or other bylaws of the corporation may be adopted, amended
or repealed by the stockholders entitled to vote; provided, however, that the
corporation may, in its certificate of incorporation, confer the power to adopt,
amend or repeal bylaws upon the directors. The fact that such power has been so
conferred upon the directors shall not divest the stockholders of the power, nor
limit their power to adopt, amend or repeal bylaws.
Whenever an amendment or new bylaw is adopted, it shall be copied in
the book of bylaws with the original bylaws, in the appropriate place. If any
bylaw is repealed, the fact of repeal with the
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<PAGE>
date of the meeting at which the repeal was enacted or the filing of the
operative written consent(s) shall be stated in said book.
-23-
<PAGE>
CERTIFICATE OF ADOPTION OF BYLAWS
OF
SPECTRIAN CORPORATION
a Delaware corporation
Certificate by Secretary of Adoption by Board of Directors
The undersigned hereby certifies that he is the duly elected,
qualified, and acting Secretary of Spectrian Corporation, a Delaware
corporation, and that the foregoing Bylaws, comprising twenty-seven (27) pages,
were adopted as the Bylaws of the corporation on May 21, 1997, by the members of
the corporation's Board of Directors.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and
affixed the corporate seal this 21st day of May, 1997.
/s/ Bruce R. Wright
------------------------------------------
Bruce R. Wright, Executive Vice President,
Chief Financial Officer and Secretary
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<PAGE>
APPENDIX D
SPECTRIAN CORPORATION
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is effective as of
______________________ , 1997 by and between Spectrian Corporation, a Delaware
corporation (the "Company"), and [name of director/officer to be indemnified],
("Indemnitee").
WHEREAS, effective as of the date hereof, Spectrian Corporation, a
California corporation, is reincorporating into Delaware;
WHEREAS, the Company desires to attract and retain the services of
highly qualified individuals, such as Indemnitee, to serve the Company and its
related entities;
WHEREAS, in order to induce Indemnitee to continue to provide services
to the Company, the Company wishes to provide for the indemnification of, and
the advancement of expenses to, Indemnitee to the maximum extent permitted by
law;
WHEREAS, the Company and Indemnitee recognize the continued difficulty
in obtaining liability insurance for the Company's directors, officers,
employees, agents and fiduciaries, the significant increases in the cost of such
insurance and the general reductions in the coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting directors, officers,
employees, agents and fiduciaries to expensive litigation risks at the same time
as the availability and coverage of liability insurance has been severely
limited; and
WHEREAS, in connection with the Company's reincorporation, the Company
and Indemnitee desire to continue to have in place the additional protection
provided by an indemnification agreement to provide indemnification and
advancement of expenses to the Indemnitee to the maximum extent permitted by
Delaware law;
WHEREAS, in view of the considerations set forth above, the Company
desires that Indemnitee shall be indemnified and advanced expenses by the
Company as set forth herein;
NOW, THEREFORE, the Company and Indemnitee hereby agree as set forth
below.
1. Certain Definitions.
1. "Change in Control" shall mean, and shall be deemed to have
occurred if, on or after the date of this Agreement, (i) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended) or group acting in concert, other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company acting in such
capacity or a corporation owned directly or indirectly by the stockholders of
the Company in substantially the same
<PAGE>
proportions as their ownership of stock of the Company, becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing more than 50% of the total voting power
represented by the Company's then outstanding Voting Securities, (ii) during any
period of two consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the Company and any new director whose
election by the Board of Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof, (iii) the stockholders of
the Company approve a merger or consolidation of the Company with any other
corporation other than a merger or consolidation which would result in the
Voting Securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into Voting Securities of the surviving entity) at least 80% of the total voting
power represented by the Voting Securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or (iv) the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of (in one
transaction or a series of related transactions) all or substantially all of the
Company's assets.
(b) "Claim" shall mean with respect to a Covered Event: any
threatened, pending or completed action, suit, proceeding or alternative dispute
resolution mechanism, or any hearing, inquiry or investigation that Indemnitee
in good faith believes might lead to the institution of any such action, suit,
proceeding or alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other.
(c) References to the "Company" shall include, in addition to
Spectrian Corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger to which Spectrian
Corporation (or any of its wholly owned subsidiaries) is a party which, if its
separate existence had continued, would have had power and authority to
indemnify its directors, officers, employees, agents or fiduciaries, so that if
Indemnitee is or was a director, officer, employee, agent or fiduciary of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee, agent or fiduciary of another
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise, Indemnitee shall stand in the same position under the provisions of
this Agreement with respect to the resulting or surviving corporation as
Indemnitee would have with respect to such constituent corporation if its
separate existence had continued.
(d) "Covered Event" shall mean any event or occurrence related
to the fact that Indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company, or any subsidiary of the Company, or is or was serving
at the request of the Company as a director, officer, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust or other
enterprise, or by reason of any action or inaction on the part of Indemnitee
while serving in such capacity.
(e) "Expenses" shall mean any and all expenses (including
attorneys' fees and all other costs, expenses and obligations incurred in
connection with investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, to be a witness in or to
participate in,
D-2
<PAGE>
any action, suit, proceeding, alternative dispute resolution mechanism, hearing,
inquiry or investigation), judgments, fines, penalties and amounts paid in
settlement (if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld) of any Claim and any federal,
state, local or foreign taxes imposed on the Indemnitee as a result of the
actual or deemed receipt of any payments under this Agreement.
(f) "Expense Advance" shall mean a payment to Indemnitee
pursuant to Section 3 of Expenses in advance of the settlement of or final
judgement in any action, suit, proceeding or alternative dispute resolution
mechanism, hearing, inquiry or investigation which constitutes a Claim.
(g) "Independent Legal Counsel" shall mean an attorney or firm
of attorneys, selected in accordance with the provisions of Section 2(d) hereof,
who shall not have otherwise performed services for the Company or Indemnitee
within the last three years (other than with respect to matters concerning the
rights of Indemnitee under this Agreement, or of other Indemnitees under similar
indemnity agreements).
(h) References to "other enterprises" shall include employee
benefit plans; references to "fines" shall include any excise taxes assessed on
Indemnitee with respect to an employee benefit plan; and references to "serving
at the request of the Company" shall include any service as a director, officer,
employee, agent or fiduciary of the Company which imposes duties on, or involves
services by, such director, officer, employee, agent or fiduciary with respect
to an employee benefit plan, its participants or its beneficiaries; and if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit
plan, Indemnitee shall be deemed to have acted in a manner "not opposed to the
best interests of the Company" as referred to in this Agreement.
(i) "Reviewing Party" shall mean, subject to the provisions of
Section 2(d), any person or body appointed by the Board of Directors in
accordance with applicable law to review the Company's obligations hereunder and
under applicable law, which may include a member or members of the Company's
Board of Directors, Independent Legal Counsel or any other person or body not a
party to the particular Claim for which Indemnitee is seeking indemnification.
(j) "Section" refers to a section of this Agreement unless
otherwise indicated.
(k) "Voting Securities" shall mean any securities of the
Company that vote generally in the election of directors.
2. Indemnification.
(a) Indemnification of Expenses. Subject to the provisions of
Section 2(b) below, the Company shall indemnify Indemnitee for Expenses to the
fullest extent permitted by law if Indemnitee was or is or becomes a party to or
witness or other participant in, or is threatened to be made a party to or
witness or other participant in, any Claim (whether by reason of or arising in
part out of a Covered
D-3
<PAGE>
Event), including all interest, assessments and other charges paid or payable in
connection with or in respect of such Expenses.
(b) Review of Indemnification Obligations. Notwithstanding the
foregoing, in the event any Reviewing Party shall have determined (in a written
opinion, in any case in which Independent Legal Counsel is the Reviewing Party)
that Indemnitee is not entitled to be indemnified hereunder under applicable
law, (i) the Company shall have no further obligation under Section 2(a) to make
any payments to Indemnitee not made prior to such determination by such
Reviewing Party, and (ii) the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees to reimburse the Company) for all Expenses
theretofore paid to Indemnitee to which Indemnitee is not entitled hereunder
under applicable law; provided, however, that if Indemnitee has commenced or
thereafter commences legal proceedings in a court of competent jurisdiction to
secure a determination that Indemnitee is entitled to be indemnified hereunder
under applicable law, any determination made by any Reviewing Party that
Indemnitee is not entitled to be indemnified hereunder under applicable law
shall not be binding and Indemnitee shall not be required to reimburse the
Company for any Expenses theretofore paid in indemnifying Indemnitee until a
final judicial determination is made with respect thereto (as to which all
rights of appeal therefrom have been exhausted or lapsed). Indemnitee's
obligation to reimburse the Company for any Expenses shall be unsecured and no
interest shall be charged thereon.
(c) Indemnitee Rights on Unfavorable Determination; Binding
Effect. If any Reviewing Party determines that Indemnitee substantively is not
entitled to be indemnified hereunder in whole or in part under applicable law,
Indemnitee shall have the right to commence litigation seeking an initial
determination by the court or challenging any such determination by such
Reviewing Party or any aspect thereof, including the legal or factual bases
therefor, and, subject to the provisions of Section 15, the Company hereby
consents to service of process and to appear in any such proceeding. Absent such
litigation, any determination by any Reviewing Party shall be conclusive and
binding on the Company and Indemnitee.
(d) Selection of Reviewing Party; Change in Control. If there
has not been a Change in Control, any Reviewing Party shall be selected by the
Board of Directors, and if there has been such a Change in Control (other than a
Change in Control which has been approved by a majority of the Company's Board
of Directors who were directors immediately prior to such Change in Control),
any Reviewing Party with respect to all matters thereafter arising concerning
the rights of Indemnitee to indemnification of Expenses under this Agreement or
any other agreement or under the Company's Certificate of Incorporation or
Bylaws as now or hereafter in effect, or under any other applicable law, if
desired by Indemnitee, shall be Independent Legal Counsel selected by Indemnitee
and approved by the Company (which approval shall not be unreasonably withheld).
Such counsel, among other things, shall render its written opinion to the
Company and Indemnitee as to whether and to what extent Indemnitee would be
entitled to be indemnified hereunder under applicable law and the Company agrees
to abide by such opinion. The Company agrees to pay the reasonable fees of the
Independent Legal Counsel referred to above and to indemnify fully such counsel
against any and all expenses (including attorneys' fees), claims, liabilities
and damages arising out of or relating to this Agreement or its engagement
pursuant hereto. Notwithstanding any other provision of this Agreement, the
Company shall not be required to pay Expenses of more than one Independent Legal
Counsel in connection with all
D-4
<PAGE>
matters concerning a single Indemnitee, and such Independent Legal Counsel shall
be the Independent Legal Counsel for any or all other Indemnitees unless (i) the
employment of separate counsel by one or more Indemnitees has been previously
authorized by the Company in writing, or (ii) an Indemnitee shall have provided
to the Company a written statement that such Indemnitee has reasonably concluded
that there may be a conflict of interest between such Indemnitee and the other
Indemnitees with respect to the matters arising under this Agreement.
(e) Mandatory Payment of Expenses. Notwithstanding any other
provision of this Agreement other than Section 10 hereof, to the extent that
Indemnitee has been successful on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, in defense of any
Claim, Indemnitee shall be indemnified against all Expenses incurred by
Indemnitee in connection therewith.
3. Expense Advances.
(a) Obligation to Make Expense Advances. Upon receipt of a
written undertaking by or on behalf of the Indemnitee to repay such amounts if
it shall ultimately be determined that the Indemnitee is not entitled to be
indemnified therefore by the Company hereunder under applicable law, the Company
shall make Expense Advances to Indemnitee.
(b) Form of Undertaking. Any obligation to repay any Expense
Advances hereunder pursuant to a written undertaking by the Indemnitee shall be
unsecured and no interest shall be charged thereon.
(c) Determination of Reasonable Expense Advances. The parties
agree that for the purposes of any Expense Advance for which Indemnitee has made
written demand to the Company in accordance with this Agreement, all Expenses
included in such Expense Advance that are certified by affidavit of Indemnitee's
counsel as being reasonable shall be presumed conclusively to be reasonable.
4. Procedures for Indemnification and Expense Advances.
(a) Timing of Payments. All payments of Expenses (including
without limitation Expense Advances) by the Company to the Indemnitee pursuant
to this Agreement shall be made to the fullest extent permitted by law as soon
as practicable after written demand by Indemnitee therefor is presented to the
Company, but in no event later than thirty (30) business days after such written
demand by Indemnitee is presented to the Company, except in the case of Expense
Advances, which shall be made no later than ten (10) business days after such
written demand by Indemnitee is presented to the Company.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to Indemnitee's right to be indemnified or Indemnitee's
right to receive Expense Advances under this Agreement, give the Company notice
in writing as soon as practicable of any Claim made against Indemnitee for which
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to the Chief Executive Officer of the Company at the
address shown on the
D-5
<PAGE>
signature page of this Agreement (or such other address as the Company shall
designate in writing to Indemnitee). In addition, Indemnitee shall give the
Company such information and cooperation as it may reasonably require and as
shall be within Indemnitee's power.
(c) No Presumptions; Burden of Proof. For purposes of this
Agreement, the termination of any Claim by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that Indemnitee
did not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by this
Agreement or applicable law. In addition, neither the failure of any Reviewing
Party to have made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief, nor an actual
determination by any Reviewing Party that Indemnitee has not met such standard
of conduct or did not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under this Agreement under applicable law, shall be a
defense to Indemnitee's claim or create a presumption that Indemnitee has not
met any particular standard of conduct or did not have any particular belief. In
connection with any determination by any Reviewing Party or otherwise as to
whether the Indemnitee is entitled to be indemnified hereunder under applicable
law, the burden of proof shall be on the Company to establish that Indemnitee is
not so entitled.
(d) Notice to Insurers. If, at the time of the receipt by the
Company of a notice of a Claim pursuant to Section 4(b) hereof, the Company has
liability insurance in effect which may cover such Claim, the Company shall give
prompt notice of the commencement of such Claim to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the Indemnitee, all amounts payable as a result of such Claim in
accordance with the terms of such policies.
(e) Selection of Counsel. In the event the Company shall be
obligated hereunder to provide indemnification for or make any Expense Advances
with respect to the Expenses of any Claim, the Company, if appropriate, shall be
entitled to assume the defense of such Claim with counsel approved by Indemnitee
(which approval shall not be unreasonably withheld) upon the delivery to
Indemnitee of written notice of the Company's election to do so. After delivery
of such notice, approval of such counsel by Indemnitee and the retention of such
counsel by the Company, the Company will not be liable to Indemnitee under this
Agreement for any fees or expenses of separate counsel subsequently retained by
or on behalf of Indemnitee with respect to the same Claim; provided that, (i)
Indemnitee shall have the right to employ Indemnitee's separate counsel in any
such Claim at Indemnitee's expense and (ii) if (A) the employment of separate
counsel by Indemnitee has been previously authorized by the Company, (B)
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and Indemnitee in the conduct of any such defense,
or (C) the Company shall not continue to retain such counsel to defend such
Claim, then the fees and expenses of Indemnitee's separate counsel shall be
Expenses for which Indemnitee may receive indemnification or Expense Advances
hereunder.
D-6
<PAGE>
5. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. The Company hereby agrees to indemnify the
Indemnitee to the fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by the other provisions of this
Agreement, the Company's Certificate of Incorporation, the Company's Bylaws or
by statute. In the event of any change after the date of this Agreement in any
applicable law, statute or rule which expands the right of a Delaware
corporation to indemnify a member of its board of directors or an officer,
employee, agent or fiduciary, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits afforded by such
change. In the event of any change in any applicable law, statute or rule which
narrows the right of a Delaware corporation to indemnify a member of its board
of directors or an officer, employee, agent or fiduciary, such change, to the
extent not otherwise required by such law, statute or rule to be applied to this
Agreement, shall have no effect on this Agreement or the parties' rights and
obligations hereunder except as set forth in Section 10(a) hereof.
(b) Nonexclusivity. The indemnification and the payment of
Expense Advances provided by this Agreement shall be in addition to any rights
to which Indemnitee may be entitled under the Company's Certificate of
Incorporation, its Bylaws, any other agreement, any vote of stockholders or
disinterested directors, the General Corporation Law of the State of Delaware,
or otherwise. The indemnification and the payment of Expense Advances provided
under this Agreement shall continue as to Indemnitee for any action taken or not
taken while serving in an indemnified capacity even though subsequent thereto
Indemnitee may have ceased to serve in such capacity.
6. No Duplication of Payments. The Company shall not be liable under
this Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, provision of the Company's Certificate of
Incorporation, Bylaws or otherwise) of the amounts otherwise payable hereunder.
7. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of Expenses incurred in connection with any Claim, but not, however, for
all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
8. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge
that in certain instances, federal law or applicable public policy may prohibit
the Company from indemnifying its directors, officers, employees, agents or
fiduciaries under this Agreement or otherwise. Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future to
undertake with the Securities and Exchange Commission to submit the question of
indemnification to a court in certain circumstances for a determination of the
Company's right under public policy to indemnify Indemnitee.
9. Liability Insurance. To the extent the Company maintains liability
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are provided to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee
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<PAGE>
is not a director of the Company but is an officer; or of the Company's key
employees, agents or fiduciaries, if Indemnitee is not an officer or director
but is a key employee, agent or fiduciary.
10. Exceptions. Notwithstanding any other provision of this Agreement,
the Company shall not be obligated pursuant to the terms of this Agreement:
(a) Excluded Action or Omissions. To indemnify or make Expense
Advances to Indemnitee with respect to Claims arising out of acts, omissions or
transactions for which Indemnitee is prohibited from receiving indemnification
under applicable law.
(b) Claims Initiated by Indemnitee. To indemnify or make
Expense Advances to Indemnitee with respect to Claims initiated or brought
voluntarily by Indemnitee and not by way of defense, counterclaim or crossclaim,
except (i) with respect to actions or proceedings brought to establish or
enforce a right to indemnification under this Agreement or any other agreement
or insurance policy or under the Company's Certificate of Incorporation or
Bylaws now or hereafter in effect relating to Claims for Covered Events, (ii) in
specific cases if the Board of Directors has approved the initiation or bringing
of such Claim, or (iii) as otherwise required under Section 145 of the Delaware
General Corporation Law, regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, Expense Advances, or
insurance recovery, as the case may be.
(c) Lack of Good Faith. To indemnify Indemnitee for any
Expenses incurred by the Indemnitee with respect to any action instituted (i) by
Indemnitee to enforce or interpret this Agreement, if a court having
jurisdiction over such action determines as provided in Section 13 that each of
the material assertions made by the Indemnitee as a basis for such action was
not made in good faith or was frivolous, or (ii) by or in the name of the
Company to enforce or interpret this Agreement, if a court having jurisdiction
over such action determines as provided in Section 13 that each of the material
defenses asserted by Indemnitee in such action was made in bad faith or was
frivolous.
(d) Claims Under Section 16(b). To indemnify Indemnitee for
Expenses and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
12. Binding Effect; Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns (including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), spouses, heirs and
personal and legal representatives. The Company shall require and cause any
successor (whether direct or indirect, and whether by purchase, merger,
consolidation or otherwise) to all, substantially all, or a substantial part, of
the business or assets of the Company, by written agreement in form and
substance satisfactory to Indemnitee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place. This
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<PAGE>
Agreement shall continue in effect regardless of whether Indemnitee continues to
serve as a director, officer, employee, agent or fiduciary (as applicable) of
the Company or of any other enterprise at the Company's request.
13. Expenses Incurred in Action Relating to Enforcement or
Interpretation. In the event that any action is instituted by Indemnitee under
this Agreement or under any liability insurance policies maintained by the
Company to enforce or interpret any of the terms hereof or thereof, Indemnitee
shall be entitled to be indemnified for all Expenses incurred by Indemnitee with
respect to such action (including without limitation attorneys' fees),
regardless of whether Indemnitee is ultimately successful in such action, unless
as a part of such action a court having jurisdiction over such action makes a
final judicial determination (as to which all rights of appeal therefrom have
been exhausted or lapsed) that each of the material assertions made by
Indemnitee as a basis for such action was not made in good faith or was
frivolous; provided, however, that until such final judicial determination is
made, Indemnitee shall be entitled under Section 3 to receive payment of Expense
Advances hereunder with respect to such action. In the event of an action
instituted by or in the name of the Company under this Agreement to enforce or
interpret any of the terms of this Agreement, Indemnitee shall be entitled to be
indemnified for all Expenses incurred by Indemnitee in defense of such action
(including without limitation costs and expenses incurred with respect to
Indemnitee's counterclaims and cross-claims made in such action), unless as a
part of such action a court having jurisdiction over such action makes a final
judicial determination (as to which all rights of appeal therefrom have been
exhausted or lapsed) that each of the material defenses asserted by Indemnitee
in such action was made in bad faith or was frivolous; provided, however, that
until such final judicial determination is made, Indemnitee shall be entitled
under Section 3 to receive payment of Expense Advances hereunder with respect to
such action.
14. Period of Limitations. No legal action shall be brought and no
cause of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two year period; provided, however, that if any shorter
period of limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.
15. Notice. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and signed for by the party addressed, on the date of such
delivery, or (ii) if mailed by domestic certified or registered mail with
postage prepaid, on the third business day after the date postmarked. Addresses
for notice to either party are as shown on the signature page of this Agreement,
or as subsequently modified by written notice.
16. Consent to Jurisdiction. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be commenced, prosecuted and continued only in the Court of
Chancery of the State of Delaware in and for New Castle County, which shall be
the exclusive and only proper forum for adjudicating such a claim.
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<PAGE>
17. Severability. The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including without limitation each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.
18. Choice of Law. This Agreement, and all rights, remedies,
liabilities, powers and duties of the parties to this Agreement, shall be
governed by and construed in accordance with the laws of the State of Delaware
as applied to contracts between Delaware residents entered into and to be
performed entirely in the State of Delaware without regard to principles of
conflicts of laws.
19. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
20. Amendment and Termination. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless it is in writing
signed by both the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed to be or shall constitute a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver.
21. Integration and Entire Agreement. This Agreement sets forth the
entire understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations, commitments, understandings and
agreements relating to the subject matter hereof between the parties hereto.
22. No Construction as Employment Agreement. Nothing contained in this
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries or affiliated entities.
D-10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement as of the date first above written.
SPECTRIAN CORPORATION
By:
----------------------------
Print Name:
----------------------------
Title:
----------------------------
Address: 350 West Java Drive
Sunnyvale, California 94089
AGREED TO AND ACCEPTED
INDEMNITEE:
----------------------------
(signature)
Print Name:
------------------------
Address:
---------------------------
D-11
<PAGE>
Preliminary Copy
Filed May 22, 1997
This Proxy is solicited on behalf of the Board of Directors
SPECTRIAN CORPORATION
1997 ANNUAL MEETING OF SHAREHOLDERS
July 31, 1997
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 June 23, 1997, and hereby appoints
Garrett A. Garrettson and Bruce R. Wright, 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 1997 Annual Meeting
of Shareholders of SPECTRIAN CORPORATION to be held on July 31, 1997 at 10:00
a.m. local time, at 160 Gibraltar 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:
1. ELECTION OF THE FOLLOWING INDIVIDUALS AS DIRECTORS:
FOR AGAINST ABSTAIN
--- ------- -------
GARRETT A. GARRETTSON [ ] [ ] [ ]
JAMES A. COLE [ ] [ ] [ ]
ERIC A. YOUNG [ ] [ ] [ ]
ROBERT C. WILSON [ ] [ ] [ ]
MARTIN COOPER [ ] [ ] [ ]
2. REINCORPORATION OF THE COMPANY AS A DELAWARE CORPORATION:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. AMENDMENT OF 1994 EMPLOYEE STOCK PURCHASE PLAN TO INCREASE THE
NUMBER OF SHARES RESERVED FOR ISSUANCE THEREUNDER:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. AMENDMENT OF 1994 DIRECTOR OPTION PLAN TO INCREASE THE NUMBER OF
SHARES RESERVED FOR GRANT THEREUNDER, INCREASE THE SIZE OF THE
ANNUAL GRANT AND DECREASE THE NUMBER OF SHARES VESTING MONTHLY WITH
RESPECT TO SUCH ANNUAL GRANTS:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. AMENDMENT OF 1992 STOCK PLAN TO INCREASE THE NUMBER OF SHARES
RESERVED FOR GRANT THEREUNDER:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. APPOINTMENT OF KPMG PEAT MARWICK AS INDEPENDENT AUDITORS OF
SPECTRIAN CORPORATION FOR THE FISCAL YEAR ENDING MARCH 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
and, in their discretion, upon such other matter or matters which may properly
come before the meeting or any adjournment or adjournments thereof.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE REINCORPORATION OF THE COMPANY INTO DELAWARE, AS SAID
PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING, INCLUDING, AMONG OTHER THINGS,
<PAGE>
CONSIDERATION OF ANY MOTION MADE FOR ADJOURNMENT OF THE MEETING (INCLUDING,
WITHOUT LIMITATION, FOR PURPOSES OF SOLICITING ADDITIONAL VOTES TO APPROVE THE
REINCORPORATION).
Dated: __________________, 1997
-----------------------------------
Signature
-----------------------------------
Signature
(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.)
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