SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [ x ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[ x ] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Addition Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ELANTEC SEMICONDUCTOR, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ x ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
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>
ELANTEC SEMICONDUCTOR, INC.
675 Trade Zone Boulevard
Milpitas, California 95035
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Our Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Elantec Semiconductor, Inc. (the "Company") will be held at the Holiday Inn, 777
Bellew Drive, Milpitas, California 95035 on Friday, February 21, 1997 at 9:00
a.m., local time, for the following purposes:
1. To elect five directors of the Company, with each director to serve until
the next annual meeting of stockholders and until his successor has been
elected and qualified or until his earlier resignation, death or removal.
The Company's Board of Directors has nominated the following individuals
to serve: David O'Brien, Chuck K. Chan, James V. Diller, B. Yeshwant
Kamath and Donald T. Valentine.
2. To amend the 1995 Equity Incentive Plan to increase the number of shares
of Common Stock reserved for issuance thereunder by 400,000 shares.
3. To ratify the selection of Ernst & Young LLP as independent auditors for
the Company for the current fiscal year.
4. To transact any other business as may properly come before the meeting or
any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Only stockholders of record at the close of
business on December 31, 1996 are entitled to notice of and to vote at the
meeting or any adjournment or postponement thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO
COMPLETE, DATE AND SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY IN THE RETURN
POSTAGE-PAID ENVELOPE PROVIDED SO THAT YOUR SHARES WILL BE REPRESENTED AT THE
MEETING.
By Order of the Board of Directors
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Milpitas, California David O'Brien
January 15, 1997 President and Chief Executive Officer
<PAGE>
ELANTEC SEMICONDUCTOR, INC.
675 Trade Zone Boulevard
Milpitas, California 95035
PROXY STATEMENT
January 15, 1997
The accompanying proxy (the "Proxy") is solicited on behalf of the
Board of Directors of Elantec Semiconductor, Inc., a Delaware corporation
("Elantec" or the "Company"), for use at the Annual Meeting of Stockholders of
the Company to be held at the Holiday Inn, 777 Bellew Drive, Milpitas,
California 95035 on Friday, February 21, 1997 at 9:00 a.m., local time (the
"Annual Meeting"). Only holders of record of the Company's Common Stock at the
close of business on December 31, 1996 will be entitled to vote at the Annual
Meeting. At the close of business on that date, the Company had 8,763,965 shares
of Common Stock outstanding and entitled to vote. A majority, or 4,381,983 of
these shares, will constitute a quorum for the transaction of business. This
Proxy Statement and the accompanying form of Proxy were first mailed to
stockholders on or about January 15, 1997. An annual report for the fiscal year
ended September 30, 1996 is enclosed with the Proxy Statement.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Holders of Common Stock are entitled to one vote for each share held as
of the above record date. Shares of Common Stock may not be voted cumulatively.
Directors will be elected by a plurality of the votes of the shares of
Common Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote on the election of directors. Proposal Nos. 2 and 3 require for
approval the affirmative vote of the majority of shares of Common Stock present
in person or represented by proxy at the Annual Meeting and entitled to vote on
the proposals. All votes will be tabulated by the inspector of election
appointed for the Annual Meeting who will separately tabulate for each proposal,
affirmative and negative votes, abstentions and broker non-votes. Abstentions
will be counted towards a quorum and have the same effect as a negative vote
with respect to Proposal Nos. 2 and 3. In the event that a broker indicates on a
Proxy that it does not have discretionary authority to vote certain shares on a
particular matter, such broker non-votes will also be counted towards a quorum
but will not be counted for any purpose in determining whether a proposal has
been approved.
Unless otherwise instructed by the stockholder or described herein,
each valid returned Proxy in the form accompanying this Proxy Statement that is
not revoked will be voted in the election of directors "FOR" the nominees of the
Board of Directors and "FOR" Proposal Nos. 2 and 3 described in this Proxy
Statement, and at the Proxy holder's discretion, on such other matters, if any,
that may come before the Annual Meeting (including any proposal to adjourn the
Annual Meeting).
The expenses of soliciting Proxies to be voted at the Annual Meeting
will be paid by the Company. Proxies may also be solicited by the Company and/or
its agents, in person or by mail, telphone or telegram. Following the original
mailing of the Proxies and other soliciting materials, the Company will request
brokers, custodians, nominees and other record holders to forward copies of the
Proxies and other soliciting materials to persons for whom they hold shares of
Common Stock and to request authority for the exercise of Proxies. In such
cases, the Company, upon the request of the record holders, will reimburse such
holders for their reasonable expenses.
REVOCABILITY OF PROXIES
Any person signing a Proxy in the form accompanying this Proxy
Statement has the power to revoke it prior to the Annual Meeting or at the
Annual Meeting prior to the vote pursuant to the Proxy. A Proxy may be revoked
by a writing delivered to the Secretary of the Company stating that the Proxy is
revoked, by a subsequent Proxy that is signed by the person who signed the
earlier Proxy and is presented at the Annual Meeting or by attendance at the
Annual Meeting and voting in person. Please note, however, that if a
stockholder's shares are held of record by a broker, bank or other nominee and
that stockholder wishes to vote at the Annual Meeting, the stockholder must
bring to the Annual Meeting a letter from the broker, bank or other nominee
confirming that stockholder's beneficial ownership of the shares.
2
<PAGE>
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The Board of Directors of the Company (the "Board" or "Board of
Directors") has nominated for election as directors each of the following
persons to serve until the next annual meeting of stockholders and until his
successor has been elected or until his earlier resignation, death or removal:
David O'Brien, Chuck K. Chan, James V. Diller, B. Yeshwant Kamath and Donald T.
Valentine. Unless otherwise instructed, the Proxy holders will vote the Proxies
received by them for the Company's nominees named below. The size of the
Company's Board is currently set at five members. Each of the nominees is
currently a director of the Company. In the event that any nominee is unable or
declines to serve as a director at the time of the Annual Meeting, the Proxies
will be voted for any nominee who shall be designated by the present Board of
Directors to fill the vacancy. It is not expected that any nominee will be
unable, or will decline, to serve as a director.
<TABLE>
Directors/Nominees
The names of the current members of the Board and certain information
about them as of December 31, 1996 are set forth below:
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Name of Nominee and/or Director Age Principal Occupation Director Since
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<S> <C> <C> <C>
David O'Brien 57 President, Chief Executive Officer and Director 1987
Donald T. Valentine (1) 64 Director and Chairman of the Board 1992
Chuck K. Chan (2) 46 Director 1992
James V. Diller (2) 61 Director 1986
B. Yeshwant Kamath (1) 48 Director 1993
- ----------------------------------------------------------------------------------------------------------------
<FN>
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
</FN>
</TABLE>
Drs. O'Brien, Chan and Kamath and Messrs. Diller and Valentine were
re-elected to the Board at the Company's last annual meeting of shareholders
held on February 16, 1996. Each of the nominees, if elected, will serve as a
director until the next annual meeting of stockholders and until his successor
has been elected and qualified or until his earlier resignation, death or
removal. Vacancies on the Board occurring prior to an annual meeting may be
filled by the Board.
Further information regarding the Company's nominees is as follows:
Dr. O'Brien has served as President, Chief Executive Officer and a
director of the Company since September 1987 and served as Chief Financial
Officer from August 1995 to December 1995. From 1982 to September 1987, he
served as President and Chief Executive Officer of Precision Monolithics, Inc.
("Precision Monolithics"), a semiconductor company. From 1979 to 1982, he was
Vice President of Engineering and Senior Vice President of Operations at
Precision Monolithics. Previously, Dr. O'Brien was employed by Fairchild
Semiconductor Corporation from 1973 to 1979, where he served in several
managerial positions in engineering and operations. Dr. O'Brien holds a B.S.
degree in physics and M.S. and Ph.D. degrees in electrical engineering from the
University of Wales, Swansea, United Kingdom, and an M.B.A. degree from the
University of Santa Clara, California.
Mr. Valentine has been a director of the Company since January 1992 and
Chairman of the Board since March 1994. Mr. Valentine has been a general partner
of Sequoia Capital, a venture capital firm, since 1974. He is also Chairman of
the Board of C-Cube Microsystems, Inc., a semiconductor video compression
company, Vice Chairman of Cisco Systems, Inc., an internetworking communications
company and Chairman of the Board of Network Appliance Corporation, a company in
the network file server business.
Dr. Chan has been a director of the Company since January 1992 and also
served as a director from 1983 to 1984. Dr. Chan has been a partner in Alpine
Technology Ventures, a venture capital firm, since December 1994 and was a
partner in Associated Venture Investors, a venture capital firm from 1982 to
1996. Dr. Chan holds B.S., M.S. and Ph.D. degrees in physics from the
Massachusetts Institute of Technology and an M.B.A. degree from Harvard
University.
3
<PAGE>
Mr. Diller has been a director of the Company since 1986. Mr. Diller
was a founder of Sierra Semiconductor Corporation, a communications
semiconductor company, was its President from 1983 to 1993 and is currently its
Chairman of the Board of Directors and Chief Executive Officer. Mr. Diller holds
a B.S. degree in physics from the University of Rhode Island.
Dr. Kamath has been a director of the Company since July 1993. Dr.
Kamath is the Division President of the KUB division of Videonics, Inc. KUB
Systems, a company that manufactures video special effects equipment which was
founded by Dr. Kamath in February 1992 and acquired by Videonics in May 1996.
Previously, Dr. Kamath was a founder of Abekas Video Systems, Inc., a subsidiary
of Carlton Communications PLC, where he was President from 1982 to August 1990.
Dr. Kamath is also a director of Euphonix, Inc., a company that manufactures
digitally controlled analog audio consoles for the music industry. Dr. Kamath
holds a B.Tech. degree in electrical engineering from the Indian Institute of
Technology, and M.S. and Ph.D. degrees in electrical engineering from the
University of California, Berkeley.
The Board of Directors recommends a vote FOR the
---
election of each of the nominated Directors.
Board of Directors' Meetings and Committees
The Board of Directors met six (6) times and acted by unanimous written
consent four (4) times during the fiscal year ended September 30, 1996 ("fiscal
1996"). No incumbent director attended fewer than 75% of the total number of
meetings of the Board of Directors and of the committees of the Board on which
he served. Standing committees of the Board currently include an Audit Committee
and a Compensation Committee. The Board does not have a nominating committee or
a committee performing a similar function.
The Audit Committee did not meet separately from the full Board and
took no actions by written consent during fiscal 1996. No actions were taken by
written consent during fiscal 1996. The Audit Committee exercises the following
powers: (1) nominates the independent auditors of the Company to be approved by
the Board of Directors; (2) meets with the independent auditors to review the
annual audit; (3) assists the full Board in evaluating the auditor's
performance; and (4) reviews internal control procedures, related party
transactions and, where appropriate, potential conflict of interest situations.
Mr. Valentine and Dr. Kamath are currently members of the Audit Committee.
The Compensation Committee did not meet separately from the full Board,
but acted by unanimous written consent four (4) times during fiscal 1996. The
Compensation Committee administers the Company's cash bonus and profit sharing
plans and sets all stock and other compensation for the Company's officers. Dr.
Chan and Mr. Diller are currently members of the Compensation Committee.
Additionally, the Compensation Committee administers the Company's 1995 Equity
Incentive Plan and the Company's 1995 Employee Stock Purchase Plan.
Directors' Compensation
Directors are reimbursed for reasonable expenses associated with their
attendance at meetings of the Board and Board committees.
The Board of Directors adopted the 1995 Directors Stock Option Plan
(the "Directors Plan") in August 1995, and the Company's stockholders approved
the Directors Plan in September 1995. Each non-employee director who first
becomes a member of the Board of Directors on or after October 10, 1995, the
Effective Date of the Company's initial public offering (the "Offering") will
automatically be granted an option under the Directors Plan to purchase 20,000
shares of Common Stock on the date he or she joins the Board of Directors. Each
year following the Offering, on the date of the Company's annual meeting of
stockholders, each non-employee director who serves on the Board of Directors
will automatically be granted an option for 5,000 shares of Common Stock, until
the director receives options to purchase up to a maximum of 40,000 shares. Each
option granted under the Directors Plan vests as to 1/48th of the shares subject
to it on the last day of each month following the date of grant. A total of
150,000 shares of Common Stock is reserved for issuance under the Directors
Plan. As of September 30, 1996, a total of 20,000 options (5,000 each) have been
granted to non-employee directors Chuck K. Chan, James V. Diller, B. Yeshwant
Kamath and Donald T. Valentine under the Directors Plan, leaving 130,000 options
available for grant.
4
<PAGE>
PROPOSAL NO. 2 - APPROVAL OF AMENDMENT
TO THE 1995 EQUITY INCENTIVE PLAN
Stockholders are being asked to approve an amendment to the Company's
1995 Equity Incentive Plan (the "Equity Incentive Plan") to increase the number
of shares of Common Stock reserved for issuance thereunder from 550,000 to
950,000, an increase of 400,000 shares, or 4.6% of the shares outstanding as of
the Record Date. The Board of Directors of the Company approved the proposed
amendment described above on December 12, 1996 to be effective upon stockholder
approval.
Equity Incentive Plan History
The Board of Directors of the Company adopted the Company's Equity
Incentive Plan in August 1995 and it was approved by the Company's shareholders
in September 1995.
Purpose
The purpose of the Equity Incentive Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company by offering them an
opportunity to participate in the Company's future performance through awards of
options, restricted stock and performance stock bonuses.
Below is a summary of the principal provisions of the Equity Incentive
Plan. The summary is qualified in its entirety by reference to the full text of
the Equity Incentive Plan.
Shares Subject to the Equity Incentive Plan. The stock reserved for
issuance pursuant to awards granted under the Equity Incentive Plan consists of
shares of the Company's authorized but unissued Common Stock. The aggregate
number of shares that may be issued pursuant to awards granted under the Equity
Incentive Plan is 550,000 shares plus any shares issuable upon exercise of
options granted pursuant to the Company's 1994 Equity Incentive Plan that have
or will expire or become unexercisable for any reason. If any option granted
under the Equity Incentive Plan expires or terminates for any reason without
being exercised in whole or in part, or any award terminates without being
issued, the shares released from such option or award will again become
available for grant and purchase under the Equity Incentive Plan. Over the term
of the Equity Incentive Plan through December 31, 1996, a total of 555,650 stock
options were granted. During the same period, the following named Executive
Officers (as defined below) were granted options under the Equity Incentive Plan
to purchase the following number of shares of the Company's Common Stock: David
O'Brien -- 100,000 shares; Richard E. Corbin -- 45,000 shares; Terrence W.
Plette -- 45,400 shares; Barry L. Siegel -- 20,400 shares; and Ralph S.
Granchelli -- 30,400 shares. During the same period, all employees and
consultants other than the named Executive Officers were granted options to
purchase an aggregate of 314,450 shares under the Equity Incentive Plan.
Eligibility. The Equity Incentive Plan provides for the grant of stock
options and stock bonuses and the issuance of restricted stock by the Company to
its employees, officers, directors, consultants, independent contractors and
advisers. No person will be eligible to receive more than 100,000 shares in any
calendar year pursuant to grants under the Equity Incentive Plan, except that a
new employee of the Company (including a new employee who is also an officer or
director of the Company) may receive up to a maximum of 400,000 shares in the
calendar year in which the employee commences employment. As of December 31,
1996, approximately 167 persons were eligible to receive awards under the Equity
Incentive Plan. The fair market value of the Common Stock on that date was
$5.00. Subject to the terms of the Equity Incentive Plan, the Compensation
Committee determines the persons who are to receive awards, the number of shares
subject to each such award and the terms and conditions of such awards.
Administration. The Equity Incentive Plan is administered by a Committee
appointed by the Board (the "Compensation Committee") consisting of Chuck K.
Chan and James V. Diller, each of whom is a "non-employee director" within the
meaning of Rule 16b-3 promulgated under the Exchange Act and an "outside
director" within the meaning of Section 162(m) of the Code of 1986, as amended
(the "Code"). The interpretation or construction by the Compensation Committee
of any provision of the Equity Incentive Plan or of any option granted under it
is final and binding on all Participants.
5
<PAGE>
Stock Options. The Equity Incentive Plan permits the granting of options
that are intended to qualify either as Incentive Stock Options ("ISOs") or
Nonqualified Stock Options ("NQSOs"). Subject to the terms of the Equity
Incentive Plan, the Compensation Committee determines for each option whether
the option is to be an ISO or a NQSO, the number of shares for which the option
will be granted, the exercise price of the option, the period during which the
option may be exercised and other terms and conditions. Each option granted
under the Equity Incentive Plan is evidenced by an option grant in such form as
the Compensation Committee approves and is subject to the following conditions:
Limitation on ISOs. A Participant may receive an ISO only if he or she
is an employee of the Company or of a parent or subsidiary of the
Company.
Number of Shares. Each option grant states the number of shares to
which it pertains.
Option Exercise Period. Options granted under the Equity Incentive Plan
are generally exercisable with respect to 2.0833% of the shares for
each month elapsed from the date of grant.
Option Exercise Price. The option exercise price of an ISO may not be
less than 100% of the "fair market value" (as defined in the Equity
Incentive Plan) of the shares subject to the ISO on the date of grant.
The option exercise price of a NQSO may not be less than 85% of the
fair market value of the shares subject to the NQSO on the date of
grant. However, any options granted to a holder of more than 10% of the
total combined voting shares of the company may not be less than 110%
of the fair market value of the shares subject to such an option.
Form of Payment. The exercise price of options granted under the Equity
Incentive Plan, plus any applicable income tax withholding, is
typically payable in cash or by check. The option exercise price may
also be payable in shares of fully paid Common Stock of the Company
that have been owned by the Participant for more than six months, by a
full recourse promissory note, by waiver of compensation due or accrued
to the Participant, by tender of property, through a "same day sale,"
through a "margin commitment" or by any combination of the foregoing
that the Compensation Committee may authorize.
Term of Options. Options granted under the Equity Incentive Plan are
permitted to be exercisable for up to ten years, except that an option
granted to a holder of greater than 10% of the total combined voting
shares of the Company may not be exercisable for more than five years.
Effect of Participant's Termination of Employment. If a Participant
terminates employment with the Company, or any parent, subsidiary or
affiliate of the Company, the Participant typically has ninety days (or
twelve months in the case of the Participant's death or disability) to
exercise any options exercisable on the date the Participant's
employment with the Company terminates.
Restricted Stock Awards. The Compensation Committee may grant Participants
restricted stock awards to purchase stock either in addition to, or in tandem
with, other awards under the Equity Incentive Plan, under such terms, conditions
and restrictions as the Compensation Committee may determine. The purchase price
for such awards must be no less than 85% of the fair market value of the
Company's Common Stock on the date of the award, and can be paid for as
described under Option Exercise Price above.
Stock Bonus Awards. The Compensation Committee may grant Participants
stock bonus awards either in addition to, or in tandem with, other awards under
the Equity Incentive Plan, under such terms, conditions and restrictions as the
Compensation Committee may determine.
Mergers, Consolidations, Change of Control. In the event of a merger,
consolidation, dissolution or liquidation of the Company, the sale of
substantially all of the assets of the Company or any other similar corporate
transaction, the successor corporation may assume, replace or substitute
equivalent awards in exchange for those granted under the Equity Incentive Plan
or provide substantially similar consideration, shares or other property subject
to repurchase restrictions no less favorable to the Participants under the
Equity Incentive Plan. In the event that the successor corporation does not
assume or substitute the awards, the awards, including outstanding options,
shall expire on such transaction at such time and upon such conditions as the
Compensation Committee determines.
6
<PAGE>
Amendment of the Equity Incentive Plan. The Board may at any time
terminate or amend the Equity Incentive Plan, including amending any form or
award agreement or instrument to be executed pursuant to the Equity Incentive
Plan. The Board may not amend the Equity Incentive Plan in any manner that
requires shareholder approval pursuant to the Code or the regulations
promulgated thereunder or pursuant to the Exchange Act or Rule 16b-3 promulgated
thereunder (or its successor) without such approval.
Term of the Equity Incentive Plan. Awards may be granted pursuant to
the Equity Incentive Plan from time to time until August 22, 2005, which is ten
years after the date the Equity Incentive Plan was originally adopted by the
Board.
Federal Income Tax Information. THE FOLLOWING IS A GENERAL SUMMARY AS OF
THE DATE OF THIS PROXY STATEMENT OF THE FEDERAL INCOME TAX CONSEQUENCES TO THE
COMPANY AND PARTICIPANTS UNDER THE EQUITY INCENTIVE PLAN. THE FEDERAL TAX LAWS
MAY CHANGE AND THE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES FOR ANY PARTICIPANT
WILL DEPEND UPON HIS OR HER INDIVIDUAL CIRCUMSTANCES. EACH PARTICIPANT HAS BEEN
AND IS ENCOURAGED TO SEEK THE ADVICE OF A QUALIFIED TAX ADVISOR REGARDING THE
TAX CONSEQUENCES OF PARTICIPATION IN THE EQUITY INCENTIVE PLAN.
Incentive Stock Options. A Participant recognizes no income upon grant
of an ISO and incurs no tax on its exercise (unless the Participant is
subject to the alternative minimum tax ("AMT")). If the Participant
holds the stock acquired upon exercise of an ISO (the "ISO Shares") for
more than one year after the date the option was exercised and for more
than two years after the date the option was granted, the Participant
generally will realize long-term capital gain or loss (rather than
ordinary income or loss) upon disposition of the ISO Shares. This gain
or loss will be equal to the difference between the amount realized
upon such disposition and the amount paid for the ISO Shares.
If the Participant disposes of ISO Shares prior to the expiration of
either required holding period (a "disqualifying disposition"), the
gain realized upon such disposition, up to the difference between the
fair market value of the ISO Shares on the date of exercise (or, if
less, the amount realized on a sale of such shares) and the option
exercise price, will be treated as ordinary income. Any additional gain
will be long-term or short-term capital gain, depending upon the amount
of time the ISO Shares were held by the Participant.
Alternative Minimum Tax. The difference between fair market value of
the ISO Shares on the date of exercise and the exercise price is an
adjustment to income for purposes of the AMT. The AMT (imposed to the
extent it exceeds the taxpayer's regular tax) is 26% of an individual
taxpayer's alternative minimum taxable income (28% in the case of
alternative minimum taxable income in excess of $175,000). Alternative
minimum taxable income is determined by adjusting regular taxable
income for certain items, increasing that income by certain tax
preference items (including the difference between the fair market
value of the ISO shares on the date of exercise and the exercise price)
and reducing this amount by the applicable exemption amount ($45,000 in
case of a joint return, subject to reduction under certain
circumstances). If a disqualifying disposition of the ISO Shares occurs
in the same calendar year as exercise of the ISO, there is no AMT
adjustment with respect to those ISO Shares. Also, upon a sale of ISO
Shares that is not a disqualifying disposition, alternative minimum
taxable income is reduced in the year of sale by the excess of the fair
market value of the ISO Shares at exercise over the amount paid for the
ISO Shares.
Nonqualified Stock Options. A Participant will not recognize any
taxable income at the time a NQSO is granted. However, upon exercise of
a NQSO the Participant will include in income as compensation an amount
equal to the difference between the fair market value of the shares on
the date of exercise and the Participant's purchase price. The included
amount will be treated as ordinary income by the Participant and may be
subject to withholding by the Company (either by payment in cash or
withholding out of the Participant's salary). Upon resale of the shares
by the Participant, any subsequent appreciation or depreciation in the
value of the shares will be treated as capital gain or loss.
Restricted Stock and Stock Bonus Awards. Restricted stock and stock
bonus awards will generally be subject to tax at the time of receipt, unless
there are restrictions that enable the Participant to defer tax. At the time
that tax is incurred, the tax treatment will be similar to that discussed above
for NQSOs.
7
<PAGE>
Omnibus Budget Reconciliation Act of 1993. The Omnibus Budget
Reconciliation Act of 1993, provides that the maximum tax rate
applicable to ordinary income is 39.6%. Long-term capital gain will be
taxed at a maximum tax rate of 28%. For this purpose, in order to
receive long-term capital gain treatment, the stock must be held for
more than one year. Capital gains will continue to be offset by capital
losses and up to $3,000 of capital losses may be offset annually
against ordinary income.
Tax Treatment of the Company. The Company generally will be entitled to
a deduction in connection with the exercise of a NQSO by a Participant
or the receipt of restricted stock or stock bonuses by a Participant to
the extent that the Participant recognizes ordinary income. The Company
will be entitled to a deduction in connection with the disposition of
ISO Shares only to the extent that the Participant recognizes ordinary
income on a disqualifying disposition of the ISO Shares.
ERISA. The Equity Incentive Plan is not qualified under Section 401(a) of
the Code or subject to any of the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
The Board of Directors recommends a vote FOR amendment
---
of the Company's 1995 Equity Incentive Plan
PROPOSAL NO. 3 - RATIFICATION OF SELECTION OF
INDEPENDENT AUDITORS
The Company has selected Ernst & Young LLP as its independent auditors
to perform the audit of the Company's financial statements for fiscal 1997, and
the stockholders are being asked to ratify such selection. Ernst & Young LLP was
engaged as the Company's independent auditors in 1984 and performed the
Company's audit for fiscal years 1990 through 1996. Representatives of Ernst &
Young LLP will be present at the Annual Meeting, will have the opportunity to
make a statement at the Annual Meeting if they desire to do so, and will be
available to respond to appropriate questions.
The Board of Directors recommends a vote FOR ratification
---
of Ernst & Young LLP as the Company's principal
independent auditors
8
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of December 31,
1996 with respect to the beneficial ownership of the Company's Common Stock by:
(a) each stockholder known by the Company to be the beneficial owner of more
than five percent of the Company's Common Stock; (b) each director nominee; (c)
the named Executive Officers (as defined below) and (d) all current executive
officers and directors as a group.
- -------------------------------------------------------------------------------
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership (1) Percent of Class
- -------------------------------------------------------------------------------
RCM Capital Management, L.L.C.(2) 590,000 6.7%
Wall Street Associates (3) 541,900 6.2
Donald T. Valentine (4) 535,377 6.1
David O'Brien (5) 378,764 4.2
Richard E. Corbin (6) 185,563 2.1
Barry L. Siegel (7) 164,030 1.9
Ralph S. Granchelli, Jr. (8) 92,535 1.0
James V. Diller (9) 35,865 *
Chuck K. Chan (10) 33,064 *
B. Yeshwant Kamath (11) 30,166 *
Terrence W. Plette (12) 12,116 *
All current officers and directors as
a group (9 persons) (13) 1,467,480 16.0
- -------------------------------------------------------------------------------
- -------------
* Less than 1%.
(1) Unless otherwise indicated below, the persons named in the table have sole
voting and sole investment power with respect to all shares beneficially
owned, subject to community property laws where applicable.
(2) Represents 590,000 shares owned by RCM Capital Management, L.L.C. ("RCM"),
Four Embarcadero Center, San Francisco, California 94111, a registered
investment adviser and a wholly owned subsidiary of Dresdner Bank AG, an
international banking organization headquartered in Frankfurt, Germany. In
its capacity as investment adviser, RCM may have discretionary authority to
dispose of or to vote securities that are under its management, and as a
result may be deemed to have beneficial ownership of such securities.
However, RCM does not have any economic interest in such securities;
clients are the actual owners of the securities listed above and have the
sole right to receive and the power to direct the receipt of dividends from
or proceeds from the sale of such securities. RCM Limited L.P. ("RCM
Limited") is the Managing Agent of RCM. RCM General Corporation ("RCM
General") is the General Partner of RCM Limited. RCM General and RCM
Limited may be deemed to have beneficial ownership of shares as to which
RCM is deemed to have beneficial ownership. RCM had sole dispositive power
with respect to 590,000 shares set forth above, sole voting power with
respect to 490,000 of such shares and no voting power with respect to
100,000 of such shares.
(3) According to a Form 13F filed with the Securities and Exchange Commission,
Wall Street Associates, 1200 Prospect Street, Suite 100, La Jolla,
California 92037, was the beneficial owner of 541,900 shares on September
30, 1996.
(4) Represents 482,018 shares held by Sequoia Capital Growth Fund, 30,766
shares held by Sequoia Technology Partners III, and 2,533 shares held by
Sequoia XXII. Mr. Valentine, a director of the Company, is a general
partner of Sequoia Capital Growth Fund and Sequoia Technology Partners III.
As such, he may be deemed to share voting and investment power for the
shares held by such funds. He serves as an advisor to Sequoia XXII. He
disclaims beneficial ownership of all such shares held by all the foregoing
funds, except to the extent of his pecuniary interest in the above
partnerships. Also includes 8,749 shares subject to options exercisable
within 60 days of December 31, 1996, 364 shares held by Mr. Valentine, 352
shares held by Rachel C. Valentine, a member of Mr. Valentine's immediate
family, and 10,595 shares held by the Donald T. Valentine Family Trust, of
which Mr. Valentine is a trustee. Mr. Valentine's address is Sequoia
Capital, 3000 Sand Hill Road, Building 4, Suite 280, Menlo Park, California
94025.
(5) Represents 192,400 shares held by Dr. O'Brien, 5,099 shares held by Dr.
O'Brien as Custodian and 181,265 shares subject to options exercisable
within 60 days of December 31, 1996.
(6) Represents 69,221 shares held by Richard Corbin Trustee, 42,611 shares held
by Mr. Corbin and 73,731 shares subject to options exercisable within 60
days of December 13, 1996.
(7) Represents 154,518 shares held by Mr. Siegel and 9,512 shares subject to
options exercisable within 60 days of December 31, 1996.
(8) Represents 19,500 shares held by Mr. Granchelli, 500 shares held by Ralph
and Avon Granchelli Joint Tenants, 500 shares held by H. Gregg Granchelli
an immediate family member and 72,035 shares subject to options exercisable
within 60 days of December 31, 1996.
(9) Represents 4,615 shares held by Mr. Diller and 31,250 shares subject to
options exercisable within 60 days of December 31, 1996.
(10) Represents 25,981 shares held by Dr. Chan and 7,083 shares subject to
options exercisable within 60 days of December 31, 1996.
(11) Represents 11,000 shares held by Mr. Kamath and 19,166 shares subject to
options exercisable within 60 days of December 31, 1996.
(12) Represents 12,116 shares subject to options exercisable within 60 days of
December 31, 1996.
(13) Includes the shares subject to options exercisable within 60 days of
December 31, 1996 described in footnotes (4) through (12).
9
<PAGE>
<TABLE>
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, or earned
or paid for services rendered in all capacities to the Company and its
subsidiaries during each of fiscal 1994, 1995 and 1996 by (I) the Company's
Chief Executive Officer and (ii) the Company's four most highly compensated
executive officers other than the Chief Executive Officer who were serving as
executive officers at the end of fiscal 1996 (together, the "Named Executive
Officers"). This information includes the dollar values of base salaries and
bonus awards, the number of shares subject to stock options granted and certain
other compensation, if any, whether paid or deferred. The Company does not grant
SARs and has no long-term compensation benefits other than stock options.
Summary Compensation Table
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Long-Term
Compensation
Annual Compensation Awards
---------------------------------------------
Securities
Underying
Options
(No. of Shares) All Other
Name and Principal Position Year Salary ($) Bonus ($)(1) Compensation ($)(2)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
David O'Brien 1996 187,218 42,000 -- 1,008
President and Chief Executive 1995 175,476 54,000 100,000 1,350
Officer 1994 165,047 -- 33,300 1,229
Richard E. Corbin 1996 127,477 26,600 -- 1,518
Vice President of Bipolar Design 1995 125,254 32,400 45,000 1,917
Engineering 1994 123,260 -- 10,000 1,350
Barry L. Siegel 1996 123,650 16,800 -- 1,008
Vice President of Engineering 1995 120,065 18,900 15,000 1,350
1994 115,540 -- 10,000 1,229
Ralph S. Granchelli, Jr. 1996 121,281 21,000 -- 219
Vice President of Marketing 1995 121,417 27,000 25,000 279
1994 111,379 -- 10,000 198
Terrence W. Plette (3) 1996 105,593 19,600 40,000 375
Vice President of Finance and
Administration, Chief Financial
Officer and Secretary
- ---------------------------------------------------------------------------------------------------------------------------
<FN>
- ----------------------
(1) Represents bonuses earned for services rendered during the fiscal year
listed, even if paid after the end of the fiscal year.
(2) Represents insurance premiums paid by the Company with respect to term
life insurance for the benefit of the Named Officers. Perquisites are
excluded as their aggregate value did not meet the reporting threshold
of the lesser of $50,000 or 10% of the individual's salary plus bonus.
(3) Mr. Plette has served as the Company's Vice President of Finance and
Administration, Chief Financial Officer and Secretary since December 4,
1995.
</FN>
</TABLE>
<TABLE>
The following table sets forth information concerning individual stock
option grants during the fiscal year ended September 30, 1996 to each of the
Named Executive Officers. In accordance with the rules of the Securities and
Exchange Commission (the "SEC"), the table sets forth the hypothetical gains or
"option spreads" that would exist for the options at the end of their respective
ten-year terms. These gains are based on assumed rates of annual compound stock
appreciation of 5% and 10% from the date the option was granted to the end of
the option terms. Actual gains, if any, on option exercises are dependent on the
future performance of the Company's Common Stock and overall market conditions.
There can be no assurance that the potential realizable values shown in this
table will be achieved.
10
<PAGE>
<CAPTION>
Option Grants In Fiscal 1996
- ------------------------------------------------------------------------------------------------------------------------------
Individual Grants
--------------------------------------------------------------------
Potential Realizable Value
Number of at Assumed Annual Rates of
Securities % of Total Stock Price Appreciation
Underlying Options Granted Exercise for Option Term (1)
Options Granted to Employees in Price Expiration ------------------------------
Name (#) (2) Fiscal Year (3) ($/Sh) Date 5%($) 10%($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David O'Brien -- -- -- -- -- --
Richard E. Corbin -- -- -- -- -- --
Barry L. Siegel -- -- -- -- -- --
Ralph S. Granchelli -- -- -- -- -- --
Terrence W. Plette 40,000 21.7% $9.00 12/12/05 $226,402 $573,747
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
- --------------
(1) The 5% and 10% assumed rates of annual compound stock price appreciation
are mandated by rules of the SEC and do not represent the Company's
estimate or projection of future Common Stock prices.
(2) Stock options are granted with an exercise price equal to the fair market
value of the Company's Common Stock on the date of grant and become
exercisable at a rate of 2.0833% per month.
(3) The Company granted options to purchase 184,000 shares in fiscal 1996.
</FN>
</TABLE>
<TABLE>
The following table sets forth information concerning the number of
shares acquired on exercise of stock options, the value realized on such
exercise, and the number and value of unexercised stock options held at
September 30, 1996 by each of the Named Executive Officers.
Aggregated Option Exercises in Fiscal 1996 and
September 30, 1996 Option Values
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Options at 9/30/96 at 9/30/96 ($)(2)
Acquired on Value Realized -------------------------------------------------------------------
Name Exercise (1) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David O'Brien 90,000 $881,605 167,380 86,794 $897,214 $41,279
Richard E. Corbin 79,221 $534,742 68,002 37,292 $324,367 $12,397
Barry L. Siegel -- -- 6,458 14,792 $9,478 $12,397
Ralph S. Granchelli 30,000 $244,000 67,939 22,292 $398,174 $12,397
Terrence W. Plette -- -- 7,500 32,500 -- --
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
- --------------
(1) "Value Realized" represents the fair market value of the shares
underlying the option on the date of exercise less the aggregate
exercise price.
(2) These values, unlike the amounts set forth in the column entitled
"Value Realized," have not been and may never be realized. They are
based on the positive spread between the respective exercise prices of
outstanding stock options and the fair market value of the Company's
Common Stock on September 30, 1996 ($7.00).
</FN>
</TABLE>
11
<PAGE>
EMPLOYMENT AGREEMENTS
The Company has entered into Executive Compensation Agreements, dated
as of March 22, 1991, with Dr. O'Brien and Messrs. Granchelli, Corbin and
Siegel. The agreements provide for severance payments and benefits following
termination of their employment, other than for cause or disability, in the
event of a change in control of the Company. The Company must provide Dr.
O'Brien with at least six months advance notice of such termination and a
severance payment equal to six months base salary at the end of the notice
period. The Company must provide each of the other officers with at least three
months advance notice of such termination and severance payments equal to three
months base salary at the end of the notice period. In each case, any unvested
stock options that are held by the officer that would have become vested within
12 months after the end of the notice period will become fully vested.
Dr. O'Brien's agreements also provides that if, for any reason other
than for cause, disability or a change in control, the Company terminates his
employment or fails to retain him as President and Chief Executive Officer of
the Company and as a result he terminates his employment, then the Company will
continue to pay him his base salary and benefits for three months and up to an
additional three months, until such time as he begins comparable full-time
employment with another employer. Upon such a termination, no stock options held
by Dr. O'Brien will vest after the date of such employment termination.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Dr.
Chan and Mr. Diller, neither of whom has been or is an officer or an employee of
the Company. No member of the Compensation Committee has a relationship that
would constitute an interlocking relationship with executive officers or
directors of another entity.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee report is required by the SEC and shall not
be deemed to be incorporated by reference by any general statement incorporating
by reference this Proxy Statement into any filing under the Securities Act of
1933, as amended, or the Exchange Act, except to the extent the Company
specifically incorporates this information by referencing and shall not
otherwise be deemed soliciting material or filed under such Acts.
The Compensation Committee establishes the general compensation policy
of the Company. The role of the Compensation Committee is to review, establish
guidelines, and approve salaries, cash bonuses, stock options and other
compensation of the executive officers. As discussed, the Compensation Committee
consists solely of directors Chuck K. Chan and James V. Diller. David O'Brien,
President and CEO of the Company, attends certain of the meetings of the
Compensation Committee and makes recommendations regarding executive
compensation. Dr. O'Brien did not attend any Compensation Committee meetings
where Dr. O'Brien's compensation package was being discussed by the Compensation
Committee. The Compensation Committee also administers the 1995 Equity Incentive
Plan and the 1995 Stock Purchase Plan.
General Compensation Policy
The Compensation Committee has set forth the following as criteria for
total executive compensation:
o The Company's total executive compensation package must be
competitive in the marketplace so as to enable the Company to
attract and retain top caliber executive talent.
o The Company's executive compensation must be linked to the
Company's overall performance. The philosophy of the Compensation
Committee is that base salary should be on par with industry
averages for comparable companies; however, the executive officers
should have significant cash bonus incentives if the Company meets
or exceeds the goals committed to the Board, particularly in view
of the Board's opinion of the relative difficulty in reaching
these goals given competitive market conditions and other factors
affecting the Company's performance.
o The Compensation Committee believes that stock options play an
important role in attracting and retaining qualified personnel in
that stock options provide personnel with a reward directly tied
to increased stock values.
12
<PAGE>
The Committee's philosophy in compensating executive officers,
including the CEO, is to relate compensation directly to corporate performance.
Thus, the Company's compensation policy, which applies to management and other
employees of the Company, relates a portion of each individual's total
compensation to the Company's corporate objectives set forth at the beginning of
the Company's fiscal year, as well as to individual contributions. Consistent
with this policy, a designated portion of the compensation of the executive
officers of the Company is contingent on corporate performance and adjusted
based on the individual officer's performance as measured against established
personal objectives. Long-term equity incentives for executive officers are
effected through the granting of stock options under the 1995 Equity Incentive
Plan. Stock options generally have value for the executive only if the price of
the Company's stock increases above the fair market value on the grant date and
the executive remains in the Company's employ for the period required for the
shares to vest.
In preparing the performance graph for this Proxy Statement, the
Company used the Nasdaq Composite Stock Market Index ("Nasdaq Index") as its
published line of business index as the Company believes that the Nasdaq Index
is a good indicator of stock price performance with respect to the Company's
industry. The Company further believes that the data contained in the executive
compensation survey described in the foregoing paragraph, which includes certain
companies on the Nasdaq Index, is a good benchmark with respect to executive
compensation practices in the Company's industry.
1996 Executive Compensation
Base Salaries. The base salary for each executive officer for fiscal
1996 was determined by the Compensation Committee after considering the relative
compensation for comparable positions at comparable companies from various
available industry sources.
Incentive Compensation. Once base salaries were determined, an
additional portion of total compensation was awarded to Company executives based
upon the actual pre-tax income of the Company.
Stock Options. Stock options granted by the Compensation Committee take
into consideration the anticipated future contribution and ability to impact
corporate business results of each affected executive officer. In fiscal 1996,
the Committee determined that each executive officer should have an approximate
equal number of shares of Company stock that can be exercised, each year,
through 1999. The number and vesting of stock options for each executive officer
was based on the foregoing criteria, as well as the Compensation Committee's
determination that stock option grants are an effective technique to enhance
executive officer performance and retention.
1996 CEO Compensation
In fiscal 1996, Dr. O'Brien's base salary was $187,218 (as compared to
$175,476 in fiscal 1995). Dr. O'Brien received a $42,000 bonus in fiscal 1996
(payable in fiscal 1997). The basis for the bonus paid to Dr. O'Brien was based
solely upon the actual pre-tax income of the Company. No stock options were
granted to Dr. O'Brien in fiscal 1996.
Compliance with Section 162(m) of the Internal Revenue Code of 1986
The Company intends to comply with the requirements of Section 162(m)
of the Internal Revenue Code of 1986 (the "Code") for fiscal 1996. The 1995
Equity Incentive Plan is currently in compliance with Section 162(m) of the
Code. The Company does not expect cash compensation for fiscal 1996 to be
affected by the requirements of Section 162(m).
COMPENSATION COMMITTEE
Chuck K. Chan
James V. Diller
13
<PAGE>
PERFORMANCE
The stock price performance graph below is required by the SEC and
shall not be deemed to be incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act of 1933, as amended, or the Exchange Act, except to the extent
the Company specifically incorporates this information by referencing and shall
not otherwise be deemed soliciting material or filed under such acts.
The following graph shows a comparison of cumulative total shareholder
return, calculated on a dividend reinvested basis, for Elantec, the NASDAQ
Composite Stock Market Index (US) and the Hambrecht and Quist [Semiconductor
Sector Index]. The graph assumes that $100 was invested in the Company's Common
Stock, the NASDAQ Composite Stock Market (US) and the Hambrecht and Quist
[Semiconductor Sector Index] from the date of the Company's initial public
offering on October 10 1995 through September 30, 1996. Note that historic stock
price performance is not necessarily indicative of future stock price
performance.
Elantec Semiconductor, Inc.
H&Q Semiconductor Sector Index
Nasdaq Stock Market -U.S. Index
[GRAPHIC OMITTED]
[The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T.]
Cumulative Total Return
-------------------------------------------------
10/10/95 12/30/95 03/30/96 06/30/96 09/30/96
Elantec Semiconductor, Inc. 100 146.43 128.57 128.57 100
H&Q Semiconductor Sector Index 100 74.08 69.96 67.05 76.12
Nasdaq Stock Market - U.S. Index 100 107.43 112.44 121.60 125.87
- ----------------------
$100 Invested on October 10, 1995 in Stock or Index.
Fiscal Year Ending September 30.
14
<PAGE>
CERTAIN TRANSACTIONS
From October 1, 1995 to the present, there have been no (and there are
no currently proposed) transactions in which the amount involved exceeded
$60,000 to which the Company or any of its subsidiaries was (or is to be) a
party and in which any exective officer, director, 5% beneficial owner of the
Company's Common Stock or member of the immediate family of any of the foregoing
persons had (or will have) a direct or indirect material interest, except as set
forth under "Executive Compensation" and "Directors' Compensation" above.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of the Company's Common
Stock ("10% Stockholders"), to file with the Securities and Exchange Commission
("SEC") initial reports of ownership on a Form 3 and reports of changes in
ownership of Common Stock and other equity securities of the Company on a Form 4
or Form 5. Officers, directors and 10% Stockholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on its reviews of the copies of such forms furnished to the
Company and written representations from the executive officers and directors,
the Company believes that all of the Company's directors, officers and 10%
stockholders made all the necessary filings under Section 16(a) during fiscal
1996, except for the late Form 4 filing in connection with the purchase of
11,000 shares by B. Yeshwant Kamath.
STOCKHOLDER PROPOSALS
Stockholder proposals for inclusion in the Company's Proxy Statement
and form of proxy relating to the Company's annual meeting of stockholders to be
held in 1998 must be received by September 17, 1997.
OTHER BUSINESS
The Board of Directors does not presently intend to bring any other
business before the Annual Meeting and, so far as is known to the Board, no
matters are to be brought before the Annual Meeting except as specified in the
notice of such meeting. As to any business that may properly come before the
Meeting, or any adjournment thereof, however, it is intended that Proxies, in
the form enclosed, will be voted in the respect thereof in accordance with the
judgment of the persons voting such Proxies.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO
COMPLETE, DATE AND SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY IN THE RETURN
POSTAGE-PAID ENVELOPE PROVIDED SO THAT YOUR SHARES WILL BE REPRESENTED AT THE
MEETING.
By Order of the Board of Directors
----------------------------------------------
David O'Brien
President and Chief Executive Officer
15
<PAGE>
APPENDIX A
ELANTEC SEMICONDUCTOR, INC.
1995 EQUITY INCENTIVE PLAN
As Adopted August 23, 1995 and Amended
Through December 12, 1996
1. PURPOSE. The purpose of this Plan is to provide
incentives to attract, retain and motivate eligible persons whose present and
potential contributions are important to the success of the Company, its Parent,
Subsidiaries and Affiliates, by offering them an opportunity to participate in
the Company's future performance through awards of Options, Restricted Stock and
Stock Bonuses. Capitalized terms not defined in the text are defined in Section
23.
2. SHARES SUBJECT TO THIS PLAN.
2.1 Number of Shares Available. Subject to Sections 2.2
and 18, the total number of Shares reserved and available for grant and issuance
pursuant to this Plan will be 950,000 Shares plus any Shares that are made
available for grant and issuance under this Plan pursuant to the following
sentence. Any shares remaining unissued and not subject to outstanding options
or other awards under the 1994 Equity Incentive Plan (the "Prior Plan") adopted
by Elantec, Inc., a California corporation, that is the Company's predecessor
("Elantec California") on the Effective Date (as defined below) and any shares
issuable upon exercise of options granted pursuant to the Prior Plan that expire
or become unexercisable for any reason without having been exercised in full,
will no longer be available for grant and issuance under the Prior Plan, but
will also be available for grant and issuance under this Plan. Subject to
Sections 2.2 and 18, Shares that: (a) are subject to issuance upon exercise of
an Option but cease to be subject to such Option for any reason other than
exercise of such Option; (b) are subject to an Award granted hereunder but are
forfeited or are repurchased by the Company at the original issue price; or (c)
are subject to an Award that otherwise terminates without Shares being issued;
will again be available for grant and issuance in connection with future Awards
under this Plan. At all times the Company shall reserve and keep available a
sufficient number of Shares as shall be required to satisfy the requirements of
all outstanding Options granted under this Plan and all other outstanding but
unvested Awards granted under this Plan.
2.2 Adjustment of Shares. In the event that the number
of outstanding Shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under this Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and (c)
the number of Shares subject to other outstanding Awards will be proportionately
adjusted, subject to any required action by the Board or the stockholders of the
Company and compliance with applicable securities laws; provided, however, that
fractions of a Share will not be issued but will either be replaced by a cash
payment equal to the Fair Market Value of such fraction of a Share or will be
rounded up to the nearest whole Share, as determined by the Committee; and
provided, further, that the Exercise Price of any Option may not be decreased to
below the par value of the Shares.
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be
granted only to employees (including officers and directors who are also
employees) of the Company or of a Parent or Subsidiary of the Company. All other
Awards may be granted to employees, officers, directors, consultants,
independent contractors and advisors of the Company or any Parent, Subsidiary or
Affiliate of the Company; provided such consultants, contractors and advisors
render bona fide services not in connection with the offer and sale of
securities in a capital-raising transaction. No person will be eligible to
receive more than 100,000 Shares in any calendar year under this Plan pursuant
to the grant of Awards hereunder, other than new employees of the Company or of
a Parent, Subsidiary or Affiliate of the Company (including new employees who
are also officers and directors of the Company or any Parent, Subsidiary or
Affiliate of the Company) who are eligible to receive up to a maximum of 400,000
Shares in the calendar year in which they commence their employment. A person
may be granted more than one Award under this Plan.
<PAGE>
Elantec Semiconductor, Inc.
1995 Equity Incentive Plan
4. ADMINISTRATION.
4.1 Committee Authority. This Plan will be administered
by the Committee or by the Board acting as the Committee. Subject to the general
purposes, terms and conditions of this Plan, and to the direction of the Board,
the Committee will have full power to implement and carry out this Plan. Without
limitation, the Committee will have the authority to:
(a) construe and interpret this Plan, any Award Agreement
and any other agreement or document executed pursuant
to this Plan;
(b) prescribe, amend and rescind rules and regulations
relating to this Plan;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration
subject to Awards;
(f) determine whether Awards will be granted singly, in
combination with, in tandem with, in replacement of, or
as alternatives to, other Awards under this Plan or any
other incentive or compensation plan of the Company or
any Parent, Subsidiary or Affiliate of the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of
Awards;
(i) correct any defect, supply any omission, or reconcile
any inconsistency in this Plan, any Award or any Award
Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable
for the administration of this Plan.
4.2 Committee Discretion. Any determination made by the
Committee with respect to any Award will be made in its sole discretion at the
time of grant of the Award or, unless in contravention of any express term of
this Plan or Award, at any later time, and such determination will be final and
binding on the Company and on all persons having an interest in any Award under
this Plan. The Committee may delegate to one or more officers of the Company the
authority to grant an Award under this Plan to Participants who are not Insiders
of the Company.
4.3 Exchange Act Requirements. If two or more members
of the Board are Outside Directors, the Committee will be comprised of at least
two (2) members of the Board, all of whom are Outside Directors and
Disinterested Persons. During all times that the Company is subject to Section
16 of the Exchange Act, the Company will take appropriate steps to comply with
the disinterested administration requirements of Section 16(b) of the Exchange
Act, which will consist of the appointment by the Board of a Committee
consisting of not less than two (2) members of the Board, each of whom is a
Disinterested Person.
5. OPTIONS. The Committee may grant Options to eligible persons
and will determine whether such Options will be Incentive Stock Options within
the meaning of the Code ("ISOs") or Nonqualified Stock Options ("NQSOs"), the
number of Shares subject to the Option, the Exercise Price of the Option, the
period
-2-
<PAGE>
Elantec Semiconductor, Inc.
1995 Equity Incentive Plan
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following:
5.1 Form of Option Grant. Each Option granted under
this Plan will be evidenced by an Award Agreement which will expressly identify
the Option as an ISO or an NQSO ("Stock Option Agreement"), and will be in such
form and contain such provisions (which need not be the same for each
Participant) as the Committee may from time to time approve, and which will
comply with and be subject to the terms and conditions of this Plan.
5.2 Date of Grant. The date of grant of an Option will
be the date on which the Committee makes the determination to grant such Option,
unless otherwise specified by the Committee. The Stock Option Agreement and a
copy of this Plan will be delivered to the Participant within a reasonable time
after the granting of the Option.
5.3 Exercise Period. Options will be exercisable within
the times or upon the events determined by the Committee as set forth in the
Stock Option Agreement governing such Option; provided, however, that no Option
will be exercisable after the expiration of ten (10) years from the date the
Option is granted; and provided, further, that no ISO granted to a person who
directly or by attribution owns more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of any Parent or
Subsidiary of the Company ("Ten Percent Stockholder") will be exercisable after
the expiration of five (5) years from the date the ISO is granted. The Committee
also may provide for the exercise of Options to become exercisable at one time
or from time to time, periodically or otherwise, in such number of Shares or
percentage of Shares as the Committee determines.
5.4 Exercise Price. The Exercise Price of an Option
will be determined by the Committee when the Option is granted and may be not
less than 85% of the Fair Market Value of the Shares on the date of grant;
provided that: (i) the Exercise Price of an ISO will be not less than 100% of
the Fair Market Value of the Shares on the date of grant; and (ii) the Exercise
Price of any ISO granted to a Ten Percent Stockholder will not be less than 110%
of the Fair Market Value of the Shares on the date of grant. Payment for the
Shares purchased may be made in accordance with Section 8 of this Plan.
5.5 Method of Exercise. Options may be exercised only
by delivery to the Company of a written stock option exercise agreement (the
"Exercise Agreement") in a form approved by the Committee (which need not be the
same for each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price for the number of Shares being
purchased.
5.6 Termination. Notwithstanding the exercise periods
set forth in the Stock Option Agreement, exercise of an Option will always be
subject to the following:
(a) If the Participant is Terminated for any reason except
death or Disability, then the Participant may exercise
such Participant's Options only to the extent that such
Options would have been exercisable upon the
Termination Date no later than three (3) months after
the Termination Date (or such shorter or longer time
period not exceeding five (5) years as may be
determined by the Committee, with any exercise beyond
three (3) months after the Termination Date deemed to
be an NQSO), but in any event, no later than the
expiration date of the Options.
(b) If the Participant is Terminated because of the
Participant's death or Disability (or the Participant
dies within three (3) months after a Termination other
than because of Participant's death or disability),
then Participant's Options may be exercised only to the
extent that such Options would have been exercisable by
Participant on the Termination
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Date and must be exercised by Participant (or
Participant's legal representative or authorized
assignee) no later than twelve (12) months after the
Termination Date (or such shorter or longer time period
not exceeding five (5) years as may be determined by
the Committee, with any such exercise beyond (a) three
(3) months after the Termination Date when the
Termination is for any reason other than the
Participant's death or Disability, or (b) twelve (12)
months after the Termination Date when the Termination
is for Participant's death or Disability, deemed to be
an NQSO), but in any event no later than the expiration
date of the Options.
5.7 Limitations on Exercise. The Committee may specify
a reasonable minimum number of Shares that may be purchased on any exercise of
an Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.8 Limitations on ISOs. The aggregate Fair Market
Value (determined as of the date of grant) of Shares with respect to which ISOs
are exercisable for the first time by a Participant during any calendar year
(under this Plan or under any other incentive stock option plan of the Company
or any Affiliate, Parent or Subsidiary of the Company) will not exceed $100,000.
If the Fair Market Value of Shares on the date of grant with respect to which
ISOs are exercisable for the first time by a Participant during any calendar
year exceeds $100,000, then the Options for the first $100,000 worth of Shares
to become exercisable in such calendar year will be ISOs and the Options for the
amount in excess of $100,000 that become exercisable in that calendar year will
be NQSOs. In the event that the Code or the regulations promulgated thereunder
are amended after the Effective Date of this Plan to provide for a different
limit on the Fair Market Value of Shares permitted to be subject to ISOs, such
different limit will be automatically incorporated herein and will apply to any
Options granted after the effective date of such amendment.
5.9 Modification, Extension or Renewal. The Committee
may modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefor, provided that any such action may not, without
the written consent of a Participant, impair any of such Participant's rights
under any Option previously granted. Any outstanding ISO that is modified,
extended, renewed or otherwise altered will be treated in accordance with
Section 424(h) of the Code. The Committee may reduce the Exercise Price of
outstanding Options without the consent of Participants affected by a written
notice to them; provided, however, that the Exercise Price may not be reduced
below the minimum Exercise Price that would be permitted under Section 5.4 of
this Plan for Options granted on the date the action is taken to reduce the
Exercise Price; and provided, further, that the Exercise Price will not be
reduced below the par value of the Shares.
5.10 No Disqualification. Notwithstanding any other
provision in this Plan, no term of this Plan relating to ISOs will be
interpreted, amended or altered, nor will any discretion or authority granted
under this Plan be exercised, so as to disqualify this Plan under Section 422 of
the Code or, without the consent of the Participant affected, to disqualify any
ISO under Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer
by the Company to sell to an eligible person Shares that are subject to
restrictions. The Committee will determine to whom an offer will be made, the
number of Shares the person may purchase, the price to be paid (the "Purchase
Price"), the restrictions to which the Shares will be subject, and all other
terms and conditions of the Restricted Stock Award, subject to the following:
6.1 Form of Restricted Stock Award. All purchases under
a Restricted Stock Award made pursuant to this Plan will be evidenced by an
Award Agreement ("Restricted Stock Purchase Agreement") that will be in such
form (which need not be the same for each Participant) as the Committee will
from time to time approve, and will comply with and be subject to the terms and
conditions of this Plan. The offer of Restricted Stock will be accepted by the
Participant's execution and delivery of the Restricted Stock Purchase Agreement
and full payment for the Shares to the Company within thirty (30) days from the
date the Restricted Stock Purchase Agreement is delivered to the person. If such
person does not execute and deliver the Restricted Stock Purchase
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Agreement along with full payment for the Shares to the Company within thirty
(30) days, then the offer will terminate, unless otherwise determined by the
Committee.
6.2 Purchase Price. The Purchase Price of Shares sold
pursuant to a Restricted Stock Award will be determined by the Committee and
will be at least 85% of the Fair Market Value of the Shares on the date the
Restricted Stock Award is granted, except in the case of a sale to a Ten Percent
Stockholder, in which case the Purchase Price will be 100% of the Fair Market
Value. Payment of the Purchase Price may be made in accordance with Section 8 of
this Plan.
6.3 Restrictions. Restricted Stock Awards will be
subject to such restrictions (if any) as the Committee may impose. The Committee
may provide for the lapse of such restrictions in installments and may
accelerate or waive such restrictions, in whole or part, based on length of
service, performance or such other factors or criteria as the Committee may
determine.
7. STOCK BONUSES.
7.1 Awards of Stock Bonuses. A Stock Bonus is an award
of Shares (which may consist of Restricted Stock) for services rendered to the
Company or any Parent, Subsidiary or Affiliate of the Company. A Stock Bonus may
be awarded for past services already rendered to the Company, or any Parent,
Subsidiary or Affiliate of the Company (provided that the Participant pays the
Company the par value of the Shares awarded by such Stock Bonus in cash)
pursuant to an Award Agreement (the "Stock Bonus Agreement") that will be in
such form (which need not be the same for each Participant) as the Committee
will from time to time approve, and will comply with and be subject to the terms
and conditions of this Plan. A Stock Bonus may be awarded upon satisfaction of
such performance goals as are set out in advance in the Participant's individual
Award Agreement (the "Performance Stock Bonus Agreement") that will be in such
form (which need not be the same for each Participant) as the Committee will
from time to time approve, and will comply with and be subject to the terms and
conditions of this Plan. Stock Bonuses may vary from Participant to Participant
and between groups of Participants, and may be based upon the achievement of the
Company, Parent, Subsidiary or Affiliate and/or individual performance factors
or upon such other criteria as the Committee may determine.
7.2 Terms of Stock Bonuses. The Committee will
determine the number of Shares to be awarded to the Participant and whether such
Shares will be Restricted Stock. If the Stock Bonus is being earned upon the
satisfaction of performance goals pursuant to a Performance Stock Bonus
Agreement, then the Committee will determine: (a) the nature, length and
starting date of any period during which performance is to be measured (the
"Performance Period") for each Stock Bonus; (b) the performance goals and
criteria to be used to measure the performance, if any; (c) the number of Shares
that may be awarded to the Participant; and (d) the extent to which such Stock
Bonuses have been earned. Performance Periods may overlap and Participants may
participate simultaneously with respect to Stock Bonuses that are subject to
different Performance Periods and different performance goals and other
criteria. The number of Shares may be fixed or may vary in accordance with such
performance goals and criteria as may be determined by the Committee. The
Committee may adjust the performance goals applicable to the Stock Bonuses to
take into account changes in law and accounting or tax rules and to make such
adjustments as the Committee deems necessary or appropriate to reflect the
impact of extraordinary or unusual items, events or circumstances to avoid
windfalls or hardships.
7.3 Form of Payment. The earned portion of a Stock
Bonus may be paid currently or on a deferred basis with such interest or
dividend equivalent, if any, as the Committee may determine. Payment may be made
in the form of cash, whole Shares, including Restricted Stock, or a combination
thereof, either in a lump sum payment or in installments, all as the Committee
will determine.
7.4 Termination During Performance Period. If a
Participant is Terminated during a Performance Period for any reason, then such
Participant will be entitled to payment (whether in Shares, cash or otherwise)
with respect to the Stock Bonus only to the extent earned as of the date of
Termination in accordance with the Performance Stock Bonus Agreement, unless the
Committee will determine otherwise.
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8. PAYMENT FOR SHARE PURCHASES.
8.1 Payment. Payment for Shares purchased pursuant to
this Plan may be made in cash (by check) or, where expressly approved for the
Participant by the Committee and where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares that either: (1) have been owned
by Participant for more than six (6) months and have
been paid for within the meaning of SEC Rule 144 (and,
if such shares were purchased from the Company by use
of a promissory note, such note has been fully paid
with respect to such shares); or (2) were obtained by
Participant in the public market;
(c) by tender of a full recourse promissory note having
such terms as may be approved by the Committee and
bearing interest at a rate sufficient to avoid
imputation of income under Sections 483 and 1274 of the
Code; provided, however, that Participants who are not
employees or directors of the Company will not be
entitled to purchase Shares with a promissory note
unless the note is adequately secured by collateral
other than the Shares; provided, further, that the
portion of the Purchase Price equal to the par value of
the Shares must be paid in cash;
(d) by waiver of compensation due or accrued to the
Participant for services rendered; provided that the
portion of the Purchase Price equal to the par value of
the Shares must be paid in cash;
(e) by tender of property;
(f) with respect only to purchases upon exercise of an
Option, and provided that a public market for the
Company's stock exists:
(1) through a "same day sale" commitment from the
Participant and a broker-dealer that is a
member of the National Association of
Securities Dealers (an "NASD Dealer") whereby
the Participant irrevocably elects to exercise
the Option and to sell a portion of the Shares
so purchased to pay for the Exercise Price,
and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward
the Exercise Price directly to the Company; or
(2) through a "margin" commitment from the
Participant and a NASD Dealer whereby the
Participant irrevocably elects to exercise the
Option and to pledge the Shares so purchased
to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in
the amount of the Exercise Price, and whereby
the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the Exercise
Price directly to the Company; or
(g) by any combination of the foregoing.
8.2 Loan Guarantees. The Committee may help the
Participant pay for Shares purchased under this Plan by authorizing a guarantee
by the Company of a third-party loan to the Participant.
9. WITHHOLDING TAXES.
9.1 Withholding Generally. Whenever Shares are to be
issued in satisfaction of Awards granted under this Plan, the Company may
require the Participant to remit to the Company an amount
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sufficient to satisfy federal, state and local withholding tax requirements
prior to the delivery of any certificate or certificates for such Shares.
Whenever, under this Plan, payments in satisfaction of Awards are to be made in
cash, such payment will be net of an amount sufficient to satisfy federal,
state, and local withholding tax requirements.
9.2 Stock Withholding. When, under applicable tax laws,
a Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may allow the
Participant to satisfy the minimum withholding tax obligation by electing to
have the Company withhold from the Shares to be issued that number of Shares
having a Fair Market Value equal to the minimum amount required to be withheld,
determined on the date that the amount of tax to be withheld is to be determined
(the "Tax Date"). All elections by a Participant to have Shares withheld for
this purpose will be made in writing in a form acceptable to the Committee and
will be subject to the following restrictions:
(a) the election must be made on or prior to the applicable
Tax Date;
(b) once made, then except as provided below, the election
will be irrevocable as to the particular Shares as to
which the election is made;
(c) all elections will be subject to the consent or
disapproval of the Committee;
(d) if the Participant is an Insider and if the Company is
subject to Section 16(b) of the Exchange Act: (1) the
election may not be made within six (6) months of the
date of grant of the Award, except as otherwise
permitted by SEC Rule 16b-3(e) under the Exchange Act,
and (2) either (A) the election to use stock
withholding must be irrevocably made at least six (6)
months prior to the Tax Date (although such election
may be revoked at any time at least six (6) months
prior to the Tax Date) or (B) the exercise of the
Option or election to use stock withholding must be
made in the ten (10) day period beginning on the third
day following the release of the Company's quarterly or
annual summary statement of sales or earnings; and
(e) in the event that the Tax Date is deferred until six
(6) months after the delivery of Shares under Section
83(b) of the Code, the Participant will receive the
full number of Shares with respect to which the
exercise occurs, but such Participant will be
unconditionally obligated to tender back to the Company
the proper number of Shares on the Tax Date.
10. PRIVILEGES OF STOCK OWNERSHIP.
10.1 Voting and Dividends. No Participant will have any
of the rights of a stockholder with respect to any Shares until the Shares are
issued to the Participant. After Shares are issued to the Participant, the
Participant will be a stockholder and have all the rights of a stockholder with
respect to such Shares, including the right to vote and receive all dividends or
other distributions made or paid with respect to such Shares; provided, that if
such Shares are Restricted Stock, then any new, additional or different
securities the Participant may become entitled to receive with respect to such
Shares by virtue of a stock dividend, stock split or any other change in the
corporate or capital structure of the Company will be subject to the same
restrictions as the Restricted Stock; provided, further, that the Participant
will have no right to retain such stock dividends or stock distributions with
respect to Shares that are repurchased at the Participant's original Purchase
Price pursuant to Section 12.
10.2 Financial Statements. The Company will provide
financial statements to each Participant prior to such Participant's purchase of
Shares under this Plan, and to each Participant annually during the period such
Participant has Awards outstanding; provided, however, the Company will not be
required to
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provide such financial statements to Participants whose services in connection
with the Company assure them access to equivalent information.
11. TRANSFERABILITY. Awards granted under this Plan, and
any interest therein, will not be transferable or assignable by Participant, and
may not be made subject to execution, attachment or similar process, otherwise
than by will or by the laws of descent and distribution or as consistent with
the specific Plan and Award Agreement provisions relating thereto. During the
lifetime of the Participant an Award will be exercisable only by the
Participant, and any elections with respect to an Award, may be made only by the
Participant.
12. RESTRICTIONS ON SHARES. At the discretion of the
Committee, the Company may reserve to itself and/or its assignee(s) in the Award
Agreement (a) a right of first refusal to purchase all Shares that a Participant
(or a subsequent transferee) may propose to transfer to a third party, and/or
(b) a right to repurchase a portion of or all Shares held by a Participant
following such Participant's Termination at any time within ninety (90) days
after the later of Participant's Termination Date and the date Participant
purchases Shares under this Plan, for cash and/or cancellation of purchase money
indebtedness, at: (A) with respect to Shares that are "Vested" (as defined in
the Award Agreement), the higher of: (l) Participant's original Purchase Price,
or (2) the Fair Market Value of such Shares on Participant's Termination Date,
provided, that such right of repurchase (i) must be exercised as to all such
"Vested" Shares unless a Participant consents to the Company's repurchase of
only a portion of such "Vested" Shares and (ii) terminates when the Company's
securities become publicly traded; or (B) with respect to Shares that are not
"Vested" (as defined in the Award Agreement), at the Participant's original
Purchase Price, provided, that the right to repurchase at the original Purchase
Price lapses at the rate of at least 20% per year over five (5) years from the
date the Shares were purchased (or from the date of grant of options in the case
of Shares obtained pursuant to a Stock Option Agreement and Stock Option
Exercise Agreement), and if the right to repurchase is assignable, the assignee
must pay the Company, upon assignment of the right to repurchase, cash equal to
the excess of the Fair Market Value of the Shares over the original Purchase
Price.
13. CERTIFICATES. All certificates for Shares or other
securities delivered under this Plan will be subject to such stock transfer
orders, legends and other restrictions as the Committee may deem necessary or
advisable, including restrictions under any applicable federal, state or foreign
securities law, or any rules, regulations and other requirements of the SEC or
any stock exchange or automated quotation system upon which the Shares may be
listed or quoted.
14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions
on a Participant's Shares, the Committee may require the Participant to deposit
all certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the Committee will from time to time approve. The
Shares purchased with the promissory note may be released from the pledge on a
pro rata basis as the promissory note is paid.
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at
any time or from time to time, authorize the Company, with the consent of the
respective Participants, to issue new Awards in exchange for the surrender and
cancellation of any or all outstanding Awards. The Committee may at any time buy
from a Participant an Award previously granted with payment in cash, Shares
(including Restricted Stock) or other consideration, based on such terms and
conditions as the Committee and the Participant may agree.
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16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An
Award will not be effective unless such Award is in compliance with all
applicable federal and state securities laws, rules and regulations of any
governmental body, and the requirements of any stock exchange or automated
quotation system upon which the Shares may then be listed or quoted, as they are
in effect on the date of grant of the Award and also on the date of exercise or
other issuance. Notwithstanding any other provision in this Plan, the Company
will have no obligation to issue or deliver certificates for Shares under this
Plan prior to: (a) obtaining any approvals from governmental agencies that the
Company determines are necessary or advisable; and/or (b) completion of any
registration or other qualification of such Shares under any state or federal
law or ruling of any governmental body that the Company determines to be
necessary or advisable. The Company will be under no obligation to register the
Shares with the SEC or to effect compliance with the registration, qualification
or listing requirements of any state securities laws, stock exchange or
automated quotation system, and the Company will have no liability for any
inability or failure to do so.
17. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any
Award granted under this Plan will confer or be deemed to confer on any
Participant any right to continue in the employ of, or to continue any other
relationship with, the Company or any Parent, Subsidiary or Affiliate of the
Company or limit in any way the right of the Company or any Parent, Subsidiary
or Affiliate of the Company to terminate Participant's employment or other
relationship at any time, with or without cause.
18. CORPORATE TRANSACTIONS.
18.1 Assumption or Replacement of Awards by Successor.
In the event of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which the stockholders of the Company (other than any stockholder
which merges (or which owns or controls another corporation which merges) with
the Company in such merger) cease to own their shares or other equity interests
in the Company, (d) the sale of substantially all of the assets of the Company,
or (e) any other transaction which qualifies as a "corporate transaction" under
Section 424(a) of the Code wherein the stockholders of the Company give up all
of their equity interest in the Company (except for the acquisition, sale or
transfer of all or substantially all of the outstanding shares of the Company
from or by the stockholders of the Company), any or all outstanding Awards may
be assumed, converted or replaced by the successor corporation (if any), which
assumption, conversion or replacement will be binding on all Participants. In
the alternative, the successor corporation may substitute equivalent Awards or
provide substantially similar consideration to Participants as was provided to
stockholders (after taking into account the existing provisions of the Awards).
The successor corporation may also issue, in place of outstanding Shares of the
Company held by the Participant, substantially similar shares or other property
subject to repurchase restrictions no less favorable to the Participant. In the
event such successor corporation (if any) refuses to assume or substitute
Options, as provided above, pursuant to a transaction described in this
Subsection 18.1, such Options will expire on such transaction at such time and
on such conditions as the Board will determine.
18.2 Other Treatment of Awards. Subject to any greater
rights granted to Participants under the foregoing provisions of this Section
18, in the event of the occurrence of any transaction described in Section 18.1,
any outstanding Awards will be treated as provided in the applicable agreement
or plan of merger, consolidation, dissolution, liquidation, sale of assets or
other "corporate transaction."
18.3 Assumption of Awards by the Company. The Company,
from time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other company
or otherwise, by either: (a) granting an Award under this Plan in substitution
of such other company's award; or (b) assuming such award as if it had been
granted under this Plan if the terms of such assumed award could be applied to
an Award granted under this Plan. Such substitution or assumption will
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1995 Equity Incentive Plan
be permissible if the holder of the substituted or assumed award would have been
eligible to be granted an Award under this Plan if the other company had applied
the rules of this Plan to such grant. In the event the Company assumes an award
granted by another company, the terms and conditions of such award will remain
unchanged (except that the exercise price and the number and nature of Shares
issuable upon exercise of any such option will be adjusted appropriately
pursuant to Section 424(a) of the Code). In the event the Company elects to
grant a new Option rather than assuming an existing option, such new Option may
be granted with a similarly adjusted Exercise Price.
19. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will
become effective at the effective time of the merger of Elantec California with
the Company (the "Effective Date"). This Plan will be approved by the
stockholders of the Company (excluding Shares issued pursuant to this Plan),
consistent with applicable laws, within twelve (12) months before or after the
date this Plan is adopted by the Board. Upon the Effective Date, the Board may
grant Awards pursuant to this Plan; provided, however, that: (a) no Option may
be exercised prior to initial stockholder approval of this Plan; (b) no Option
granted pursuant to an increase in the number of Shares subject to this Plan
approved by the Board will be exercised prior to the time such increase has been
approved by the stockholders of the Company; and (c) in the event that
stockholder approval of such increase is not obtained within the time period
provided herein, all Awards granted hereunder will be cancelled, any Shares
issued pursuant to any Award will be cancelled and any purchase of Shares
hereunder will be rescinded. So long as the Company is subject to Section 16(b)
of the Exchange Act, the Company will comply with the requirements of Rule 16b-3
(or its successor), as amended, with respect to stockholder approval.
20. TERM OF PLAN. Unless earlier terminated as provided
herein, this Plan will terminate ten (10) years from the date this Plan is
adopted by the Board or, if earlier, the date of stockholder approval.
21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any
time terminate or amend this Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed pursuant
to this Plan; provided, however, that the Board will not, without the approval
of the stockholders of the Company, amend this Plan in any manner that requires
such stockholder approval pursuant to the Code or the regulations promulgated
thereunder as such provisions apply to ISO plans or (if the Company is subject
to the Exchange Act or Section 16(b) of the Exchange Act) pursuant to the
Exchange Act or Rule 16b-3 (or its successor), as amended, thereunder,
respectively.
22. NONEXCLUSIVITY OF THIS PLAN. Neither the adoption of
this Plan by the Board, the submission of this Plan to the stockholders of the
Company for approval, nor any provision of this Plan will be construed as
creating any limitations on the power of the Board to adopt such additional
compensation arrangements as it may deem desirable, including, without
limitation, the granting of stock options and bonuses otherwise than under this
Plan, and such arrangements may be either generally applicable or applicable
only in specific cases.
23. DEFINITIONS. As used in this Plan, the following terms
will have the following meanings:
"Affiliate" means any corporation that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, another corporation, where "control" (including
the terms "controlled by" and "under common control with") means the possession,
direct or indirect, of the power to cause the direction of the management and
policies of the corporation, whether through the ownership of voting securities,
by contract or otherwise.
"Award" means any award under this Plan, including any
Option, Restricted Stock or Stock Bonus.
"Award Agreement" means, with respect to each Award,
the signed written agreement between the Company and the Participant setting
forth the terms and conditions of the Award.
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<PAGE>
Elantec Semiconductor, Inc.
1995 Equity Incentive Plan
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Committee" means the committee appointed by the Board
to administer this Plan, or if no such committee is appointed, the Board.
"Company" means Elantec Semiconductor, Inc., a
corporation organized under the laws of the State of Delaware, or any successor
corporation.
"Disability" means a disability, whether temporary or
permanent, partial or total, within the meaning of Section 22(e)(3) of the Code,
as determined by the Committee.
"Disinterested Person" means a director who has not,
during the period that person is a member of the Committee and for one year
prior to commencing service as a member of the Committee, been granted or
awarded equity securities pursuant to this Plan or any other plan of the Company
or any Parent, Subsidiary or Affiliate of the Company, except in accordance with
the requirements set forth in Rule 16b-3(c)(2)(i) (and any successor regulation
thereto) as promulgated by the SEC under Section 16(b) of the Exchange Act, as
such rule is amended from time to time and as interpreted by the SEC.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Exercise Price" means the price at which a holder of
an Option may purchase the Shares issuable upon exercise of the Option.
"Fair Market Value" means, as of any date, the value of
a share of the Company's Common Stock, par value $0.01, determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq
National Market, its last reported sale price on the
Nasdaq National Market or, if no such reported sale
takes place on such date, the average of the closing
bid and asked prices;
(b) if such Common Stock is publicly traded and is then
listed on a national securities exchange, the last
reported sale price or, if no such reported sale takes
place on such date, the average of the closing bid and
asked prices on the principal national securities
exchange on which the Common Stock is listed or
admitted to trading;
(c) if such Common Stock is publicly traded but is not
quoted on the Nasdaq National Market nor listed or
admitted to trading on a national securities exchange,
the average of the closing bid and asked prices on such
date, as reported by The Wall Street Journal, for the
over-the-counter market; or
(d) if none of the foregoing is applicable, by the Board of
Directors of the Company in good faith.
"Insider" means an officer or director of the Company
or any other person whose transactions in the Company's Common Stock, par value
$0.01, are subject to Section 16 of the Exchange Act.
"Outside Director" means any director who is not: (a) a
current employee of the Company or any Parent, Subsidiary or Affiliate of the
Company; (b) a former employee of the Company or any Parent, Subsidiary or
Affiliate of the Company who is receiving compensation for prior services (other
than benefits under a tax-qualified pension plan); (c) a current or former
officer of the Company or any Parent, Subsidiary or Affiliate of the Company; or
(d) currently receiving compensation for personal services in any capacity,
other than as a
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<PAGE>
Elantec Semiconductor, Inc.
1995 Equity Incentive Plan
director, from the Company or any Parent, Subsidiary or Affiliate of the
Company; provided, however, that at such time as the term "Outside Director", as
used in Section 162(m) of the Code is defined in regulations promulgated under
Section 162(m) of the Code, "Outside Director" will have the meaning set forth
in such regulations, as amended from time to time and as interpreted by the
Internal Revenue Service.
"Option" means an award of an option to purchase Shares
pursuant to Section 5.
"Parent" means any corporation (other than the Company)
in an unbroken chain of corporations ending with the Company, if at the time of
the granting of an Award under this Plan, each of such corporations other than
the Company owns stock possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
"Participant" means a person who receives an Award
under this Plan.
"Plan" means this Elantec Semiconductor, Inc. 1995
Equity Incentive Plan, as amended from time to time.
"Restricted Stock Award" means an award of Shares
pursuant to Section 6.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
"Shares" means shares of the Company's Common Stock,
par value $0.01, reserved for issuance under this Plan, as adjusted pursuant to
Sections 2 and 18, and any successor security.
"Stock Bonus" means an award of Shares, or cash in lieu
of Shares, pursuant to Section 7.
"Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if, at
the time of granting of the Award, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
"Termination" or "Terminated" means, for purposes of
this Plan with respect to a Participant, that the Participant has for any reason
ceased to provide services as an employee, director, consultant, independent
contractor or advisor to the Company or a Parent, Subsidiary or Affiliate of the
Company, except in the case of sick leave, military leave, or any other leave of
absence approved by the Committee, provided that such leave is for a period of
not more than ninety (90) days, or reinstatement upon the expiration of such
leave is guaranteed by contract or statute. The Committee will have sole
discretion to determine whether a Participant has ceased to provide services and
the effective date on which the Participant ceased to provide services (the
"Termination Date").
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<PAGE>
APPENDIX B
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ELANTEC SEMICONDUCTOR, INC.
The undersigned hereby appoints David O'Brien and Terrence Plette proxies, with
power to act without the other and with power of substitution, and hereby
authorizes them to represent and vote, as designated on the other side, all the
shares of stock of Elantec Semiconductor, Inc. standing in the mane of the
undersigned with all powers which the undersigned would possess if present at
the Annual Meeting of Stockholders of the Company to be held at the Holiday Inn
at 777 Bellew Drive, Milpitas, California 95035 on February 21, 1997 or any
adjournment thereof.
(Continued, and to be marked, dated and signed, on the other side)
FOLD AND DETACH HERE
<PAGE>
Please mark
your votes as [ X ]
indicated in
this example
The Board of Directors recommends a vote
FOR all nominees and for Items 2 and 3
WITHHELD
FOR FOR ALL
Item 1 - ELECTION OF DIRECTORS [ ] [ ]
Nominees:
Chuck K. Chan
James V. Diller
B. Yeshwant Kamath
David O'Brien
Donald T. Valentine
WITHHELD FOR: (Write that nominee's name in the space
provided below).
- -----------------------------------------------------------------
FOR AGAINST ABSTAIN
Item 2 - AMENDMENT TO [ ] [ ] [ ]
1995 EQUITY
INCENTIVE PLAN
Item 3 - RATIFICATION OF [ ] [ ] [ ]
SELECTION OF
INDEPENDENT
AUDITORS
THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY
WILL BE VOTED FOR THE PROPOSAL.
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting or any adjournment or postponement there
of to the extent authorized by Rule 14a-4(c) promulgated by the Securities and
Exchange Commission.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
Dated: , 1997
--------------------------------------
------------------------------------------------
------------------------------------------------
Signature(s)
Note: Please sign exactly as your name(s) appear on your stock certificate. If
shares are held of record in the names of two or more persons or in the name of
the husband and wife, whether as joint tenants or otherwise, both or all of such
persons should sign the proxy. If shares of stock are held of record by a
corporation, the proxy should be executed by the president or vice president and
the secretary or assistant secretary. Executors, administrators or other
fiduciaries who execute the above proxy for a deceased stockholder should give
their full title. Please date the proxy
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE,
SIGN AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO
THAT YOUR SHARES WILL BE REPRESENTED AT THE MEETING.
FOLD AND DETACH HERE
