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
[ ] Definitive Addition Materials by 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.
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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paid previously. Identify the previous filing by registration statement
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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 Crowne Plaza
Hotel & Resorts, 777 Bellew Drive, Milpitas, California 95035 on Friday, January
14, 2000 at 9:00 a.m., local time, for the following purposes:
1. To elect four 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:
Chuck K. Chan, James V. Diller, Alan V. King and Umesh Padval.
2. To amend the 1995 Equity Incentive Plan to increase the number
of shares of Common Stock reserved for issuance thereunder by
470,000 shares.
3. To ratify the selection of Deloitte & Touche 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 or postponement 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 November 19, 1999 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
______________________________________
James V. Diller
Milpitas, California President, Chief Executive Officer and
December 15, 1999 Chairman of the Board
<PAGE>
ELANTEC SEMICONDUCTOR, INC.
675 Trade Zone Boulevard
Milpitas, California 95035
PROXY STATEMENT
December 15, 1999
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 Crowne Plaza Hotel & Resorts, 777 Bellew Drive,
Milpitas, California 95035 on Friday, January 14, 2000 at 9:00 a.m., local time
(the "Annual Meeting"). This Proxy Statement and the accompanying form of Proxy
were first mailed to stockholders on or about December 15, 1999. An annual
report for the fiscal year ended September 30, 1999 is enclosed with the Proxy
Statement.
VOTING RIGHTS AND SOLICITATION OF PROXIES
Only holders of record of the Company's Common Stock at the close of
business on November 19, 1999 will be entitled to vote at the Annual Meeting. At
the close of business on that date, the Company had 9,433,122 shares of Common
Stock outstanding and entitled to vote. A majority, or 4,716,562 of these
shares, will constitute a quorum for the transaction of business. 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.
All Proxies will be voted in accordance with the instructions contained
therein, and if no choice is specified, each valid returned Proxy 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 or
postpone the Annual Meeting).
In the event that sufficient votes in favor of the proposals are not
received by the date of the Annual Meeting, the persons named as proxies may
propose one or more adjournments of the Annual Meeting to permit further
solicitations of proxies. Any such adjournment would require the affirmative
vote of the majority of the outstanding shares present in person or represented
by proxy at 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, telephone 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.
<PAGE>
If your shares are registered in the name of a bank or brokerage firm,
you may be eligible to vote your shares by telephone. A large number of banks
and brokerage firms are participating in the ADP Investor Communication Services
telephone voting program. This program provides eligible stockholders the
opportunity to vote by telephone. If your bank or brokerage firm is
participating in ADP's program, your voting form will provide instructions. If
your voting form does not reference telephone information, please complete and
return the paper proxy card in the self-addressed, postage paid envelope
provided.
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 written instrument 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.
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:
Chuck K. Chan, James V. Diller, Alan V. King and Umesh Padval. 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 four 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.
Directors/Nominees
<TABLE>
The names of the nominees for the Board and certain information about
them as of November 19, 1999 are set forth below:
<CAPTION>
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Name of Nominee and/or Director Age Principal Occupation Director Since
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
President, Chief Executive
James V. Diller (1) 64 Officer, and Chairman of the Board 1986
Chuck K. Chan (1, 2) 49 Director 1992
Alan V. King (1, 2) 64 Director 1997
Umesh Padval 42 Director 1999
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<FN>
- ------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
</FN>
</TABLE>
Dr. Chan and Messrs. Diller and King were re-elected to the Board at
the Company's last annual meeting of stockholders held on January 22, 1999. Mr.
Padval was appointed to the Board on November 24, 1999. 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:
Mr. Diller has been the Company's President and Chief Executive Officer
since April 1999 and prior to this served as interim President and Chief
Executive Officer since November 1998. In addition, Mr. Diller has been Chairman
of the Board since 1997 and was previously a Director of the Company since 1986.
Mr. Diller was a Founder of PMC-Sierra, Inc. a communications semiconductor
company, was its President and Chief Executive Officer from 1983 to 1997 and is
currently its Chairman of the Board. Mr. Diller holds a B.S. degree in physics
from the University of Rhode Island.
<PAGE>
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. In addition, Dr. Chan serves on the Board of a number of privately held
companies. Dr. Chan holds B.S., M.S. and Ph.D. degrees in physics from the
Massachusetts Institute of Technology and a M.B.A. degree from Harvard
University.
Mr. King has been a Director of the Company since December 1997. Mr.
King has been Chairman of the Board and Chief Executive Officer of Volterra
Semiconductor Corporation, a start-up company developing power management
integrated circuits, since September 1996. Mr. King was President and Chief
Executive Officer of Silicon Systems, Inc., a semiconductor company, from
September 1991 to November 1994 and was President and Chief Executive Officer of
Precision Monolithics, Inc., a semiconductor company, from September 1987 to
September 1991, and from September 1986 to September 1987 he was its Executive
Vice President. Mr. King holds a B.S. degree in ceramic engineering from the
University of Washington.
Mr. Padval was appointed a Director of the Company in November 1999.
Mr. Padval has been the President of C-Cube Microsystem's Semiconductor Division
since October 1998, managing all aspects of C-Cube's semiconductor business,
which focuses on providing digital video solutions into the communications and
consumer markets. Mr. Padval joined C-Cube Microsystems from VLSI Technology,
Inc., where he was Senior Vice President and General Manager of the Digital
Entertainment Division from May 1997 to October 1998. Prior to this role, Mr.
Padval served in several Business Unit Management, Sales and Marketing roles at
VLSI Technology, Inc from September 1987. Mr. Padval holds a B.S. degree in
engineering from the Indian Institute of Mumbai, India; a M.S. degree in
engineering from Pennsylvania State University; and a M.S. degree in engineering
from Stanford University.
The Board of Directors recommends a vote FOR the election
of each of the nominated Directors.
<PAGE>
Board of Directors' Meetings and Committees
The Board of Directors met four (4) times, held a special meeting by
conference call one (1) time and acted by unanimous written consent eight (8)
times during the fiscal year ended September 30, 1999 ("fiscal 1999"). 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 1999. 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. Diller, Dr. Chan and Mr. King are currently members of the Audit
Committee.
The Compensation Committee acted by unanimous written consent five (5)
times during fiscal 1999. 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. King are currently members of the
Compensation Committee. The Compensation Committee administers the Company's
1995 Equity Incentive Plan and the Company's 1995 Employee Stock Purchase Plan.
Directors' Compensation
Directors who are not employees of the Company receive cash
compensation of $1,500 for each of the Company's Board of Directors meetings
attended. Members of the committees of the Board of Directors who are not
employees of the Company receive cash compensation of $500 for each committee
meeting attended.
Directors of the Company periodically receive options under the
Company's 1995 Directors Stock Option Plan (the "Directors Plan"). In fiscal
1999 each of the non-employee directors of the Company received a formula grant
of 10,000 shares subject to stock options.
<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 2,350,000 to
2,820,000, an increase of 470,000 shares. The Board of Directors of the Company
approved the proposed amendment described above on November 4, 1999 to be
effective upon stockholder approval.
Equity Incentive Plan History
In August 1995, the Board of Directors of the Company adopted the
Equity Incentive Plan and in September 1995 it was approved by the stockholders
of the Company. 550,000 shares of Common Stock were originally reserved for
issuance under the Equity Incentive Plan.
In December 1996, the Board of Directors approved an amendment to the
Equity Incentive Plan to increase the number of shares reserved for issuance
thereunder to 950,000, and on February 21, 1997 it was approved by the
stockholders of the Company.
In December 1997, the Board of Directors approved an amendment to the
Equity Incentive Plan to increase the number of shares reserved for issuance
thereunder to 1,350,000, and on February 20, 1998 it was approved by the
stockholders of the Company.
In November 1998, the Board of Directors approved an amendment to the
Equity Incentive Plan to increase the number of shares reserved for issuance
thereunder to 2,350,000, and on January 22, 1999 it was approved by the
stockholders of the Company.
Description of the 1995 Equity Incentive Plan
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.
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.
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. As of November 19,
1999, a total of 403,125 shares of Common Stock subject to stock options were
available for grant. The aggregate number of shares that may be issued pursuant
to awards granted under the Equity Incentive Plan is 2,820,000 shares (assuming
approval of the proposal) 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. During the term of the Equity
Incentive Plan, 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: Jim Diller - 330,000 shares; Richard E.
Corbin - 172,000 shares; Ralph S. Granchelli, Jr. - 118,400 shares and Ephraim
Kwok - 80,000 shares. During the term of the Equity Incentive Plan, all
employees and consultants other than the Named Executive Officers were granted
options to purchase an aggregate of 3,766,444 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 November 19,
1999, approximately 175 persons were eligible to receive awards under the Equity
Incentive Plan. The fair market value of the Common Stock on that date was
$27.625. Subject to the terms of the Equity Incentive Plan,
<PAGE>
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 Alan V. King, 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.
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 25% of the shares annually
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 ISO
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 three months
(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
Board may determine.
<PAGE>
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.
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 stockholder 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 capital gain or loss (rather than ordinary
income or loss) upon disposition of the ISO Shares. If there is capital
gain, the ISO shares will be taxed at a rate that depends on whether
they were held for more than twelve months (long-term). 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 capital gain.
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 the portion of
an individual taxpayer's alternative minimum taxable income that would
otherwise be taxable as ordinary income (28% in the case of alternative
minimum taxable income in excess of $175,000). A maximum 20% AMT rate
applies with respect to the portion of a taxpayer's alternative minimum
taxable income that would otherwise be taxable as net capital gain.
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.
Non Qualified 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
<PAGE>
Company (either by payment in cash or withholding out of the
Participant's salary). The required flat federal withholding rate is
currently 28%. 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.
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
<PAGE>
PROPOSAL NO. 3 - RATIFICATION OF SELECTION OF
INDEPENDENT AUDITORS
The Company has selected Deloitte & Touche LLP as its independent
auditors to perform the audit of the Company's financial statements for fiscal
2000, and the stockholders are being asked to ratify such selection.
Representatives of Deloitte & Touche LLP are expected to 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.
On May 29, 1998, the Board of Directors of the Company approved the
dismissal of the Company's previous independent accountants, Ernst & Young LLP,
and the appointment of Deloitte & Touche LLP for the fiscal year ended 1998. The
report of Ernst and Young LLP for the fiscal years ended 1996 and 1997 contained
no adverse opinion, disclaimer of opinion or qualification or modification as to
uncertainty, audit scope or accounting principles. During the fiscal years ended
1996 and 1997, and the interim period from October 1, 1997 through May 29, 1998,
there were no disagreements between the Company and Ernst & Young LLP on any
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which, if not resolved to the satisfaction of Ernst & Young
LLP would have caused it to make reference to the subject matter of the
disagreement in connection with its report.
The Company did not consult with Deloitte & Touche LLP during the
fiscal years ended 1996 and 1997, and the interim period from October 1, 1997
through May 29, 1998, on any matter which was the subject of any disagreement or
any reportable event or on the application of accounting principles to a
specified transaction, either completed or proposed.
The Board of Directors recommends a vote FOR ratification
of Deloitte & Touche LLP as the Company's independent auditors
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
The following table sets forth certain information, as of November 19,
1999 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.
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership (1) Percent of Class
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Velocity Capital Management LLC (2) 715,000 7.6%
Kennedy Capital Management (3) 583,700 6.2
James V. Diller (4) 330,214 3.5
David O'Brien (5) 263,799 2.8
Richard E. Corbin (6) 193,792 2.1
Ralph S. Granchelli, Jr. (7) 80,130 *
Chuck K. Chan (8) 58,708 *
Ephraim Kwok (9) 45,000 *
Alan V. King (10) 27,290 *
Umesh Padval (11) -- --
All current officers and directors as a group (7 persons) (12) 711,907 7.5
- --------------------------------------------------------------------------------------------------------------
<FN>
- -------------
*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) Based on information obtained from Velocity Capital Management LLC, 261
Hamilton Avenue, Suite 212, Palo Alto, California 94301, Velocity
Technology and Communications Trust A was the beneficial owner of
715,000 shares on November 19, 1999.
(3) Based on information obtained from Kennedy Capital Management, 10829
Oliver Boulevard, St. Louis, Missouri 63141, Kennedy Capital Management
was the beneficial owner of 583,700 shares on November 19, 1999.
(4) Represents 157,405 shares held by Mr. Diller and 172,809 shares subject
to options exercisable within 60 days of November 19, 1999.
(5) Represents 123,974 shares held by Dr. O'Brien, 3,399 shares held by Dr.
O'Brien as Custodian and 136,426 shares subject to options exercisable
within 60 days of November 19, 1999.
(6) Represents 92,905 shares held by Mr. Corbin, 39,221 shares held by
Richard Corbin as Trustee and 61,666 shares subject to options
exercisable within 60 days of November 19, 1999.
(7) Represents 19,500 shares held by Mr. Granchelli and 60,630 shares
subject to options exercisable within 60 days of November 19, 1999.
(8) Represents 21,898 shares held by Dr. Chan, 13,583 shares held by Chuck
Chan as Trustee and 23,227 shares subject to options exercisable within
60 days of November 19, 1999.
(9) Represents 12,500 shares held by Mr. Kwok and 32,500 shares subject to
options exercisable within 60 days of November 19, 1999.
(10) Represents 10,000 shares held by Mr. King and 17,290 shares subject to
options exercisable within 60 days of November 19, 1999.
(11) Mr. Padval did not hold any shares or have options exercisable as of
November 19, 1999.
(12) Includes the shares subject to options exercisable within 60 days of
November 19, 1999 described in footnotes (4) through (11) and excludes
shares and options held by David O'Brien who resigned from the Company
on November 10, 1998.
</FN>
</TABLE>
<PAGE>
EXECUTIVE COMPENSATION
<TABLE>
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 1997, 1998 and 1999 by (i) each person who
served as the Company's Chief Executive Officer in fiscal 1999 and (ii) the
Company's three most highly compensated executive officers other than the Chief
Executive Officer who were serving as executive officers at the end of fiscal
1999 and whose total salary and bonus was more than $100,000 in fiscal 1999
(together, the "Named Executive Officers"). This information includes the dollar
values of base salaries and bonus awards, the number of shares subject to stock
options granted and certain other compensation, if any, whether paid or
deferred. The Company does not grant SARs and has no long-term compensation
benefits other than stock options.
<CAPTION>
Summary Compensation Table
- -----------------------------------------------------------------------------------------------------------------------------
Long-Term
Compensation
Annual Compensation(1) Awards
-------------------------- ---------------
Securities
Underlying All Other
Options Compensation
Name and Principal Position Year Salary ($) Bonus ($)(2) (No. of Shares) ($)(3)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
James V. Diller(4) 1999 $179,481(5) $165,510 290,000 $ 3,169
President, Chief Executive Officer 1998 -- -- -- --
And Chairman of the Board 1997 -- -- -- --
David O'Brien(6) 1999 213,491 -- -- 7,928
President and Chief Executive Officer 1998 189,515 65,000 75,000 5,179
1997 175,381 -- 100,000(7) 2,265
Ephraim Kwok(8) 1999 151,271 52,089 15,000 4,720
Vice President of Finance and Admin. 1998 100,958 19,800 65,000 2,763
And Chief Financial Officer
Richard E. Corbin 1999 144,055 52,089 15,000 6,782
Vice President of Technology 1998 158,785 21,600 25,000 4,436
1997 135,588 -- 77,000(7) 3,045
Ralph S. Granchelli, Jr 1999 147,060 62,366 25,000 425
Vice President of Marketing 1998 131,907 25,200 20,000 343
1997 121,442 -- 33,000(7) 398
- -----------------------------------------------------------------------------------------------------------------------------
<FN>
- ----------------------
(1) 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.
(2) Represents bonuses earned for services rendered during the fiscal year
listed, even if paid after the end of the fiscal year.
(3) Represents insurance premiums paid by the Company with respect to term
life insurance for the benefit of the Named Executive Officers and
401(k) employer matched contributions totaling 2.5% of plan
participant's base salary.
(4) Mr. Diller served as interim President and Chief Executive Officer from
November 1998 to March 1999. On April 1, 1999, Mr. Diller became the
Company's President and Chief Executive Officer.
(5) Includes $86,250 of compensation earned under a consulting agreement
with the Company.
(6) Dr. O'Brien resigned from the Company as of November 10, 1998.
(7) Represents an option for 100,000 shares granted in fiscal 1995 and
repriced in fiscal 1997 for Dr. O'Brien; an option for 45,000 shares
granted in fiscal 1995 and repriced in fiscal 1997 and an option for
16,000 shares granted in fiscal 1997 and repriced in fiscal 1997 for
Mr. Corbin; and an option for 25,000 shares granted in fiscal 1995 and
repriced in fiscal 1997 and an option for 8,000 shares granted in
fiscal 1997 that was not repriced for Mr. Granchelli.
(8) Mr. Kwok joined the Company on January 5, 1998.
</FN>
</TABLE>
<PAGE>
Option Grants in Fiscal 1999
<TABLE>
The following table sets forth information concerning individual stock
option grants during the fiscal year ended September 30, 1999 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.
<CAPTION>
Option Grants Table
- ---------------------------------------------------------------------------------------------------------------------------
Individual Grants
--------------------------------------------------------- Potential Realizable Value
Number of % of Total at Assumed Annual Rates of
Securities Options Granted Stock Price Appreciation
Underlying to Employees in Exercise For Option Term (3)
Options Fiscal Year Price Expiration --------------------------
Name Granted (#)(1) 1999 (2) ($/Share) Date 5% ($) 10% ($)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James V. Diller 50,000(4) 5.2% $ 3.5305 11/06/08 $ 111,017 $ 281,328
240,000(5) 24.9% 6.3750 04/01/09 962,217 2,438,361
David O'Brien -- -- -- -- -- --
Ephraim Kwok 15,000(6) 1.6% 4.1250 02/05/09 38,913 98,610
Richard E. Corbin 15,000(6) 1.6% 6.3750 04/01/09 60,139 152,398
Ralph S. Granchelli, Jr. 25,000(6) 2.6% 4.1250 02/05/09 64,855 164,350
- ---------------------------------------------------------------------------------------------------------------------------
<FN>
- ---------------
(1) 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.
(2) The Company granted options to purchase 965,500 shares in fiscal 1999.
(3) 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.
(4) Stock option became fully vested and exercisable on August 6, 1999.
(5) Stock option vests in equal monthly installments over a two year
period.
(6) Stock options vest as to 25% of the shares on the first anniversary of
the date of grant and 1/48th of the total number of shares on a monthly
basis.
</FN>
</TABLE>
<PAGE>
<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, 1999 by
each of the Named Executive Officers.
<CAPTION>
Aggregated Option Exercises in Fiscal 1999 and
September 30, 1999 Option Values
- ---------------------------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Options at 9/30/99 at 9/30/99 ($)(2)
Acquired on Value ----------------------------------------------------------
Name Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James V. Diller -- -- 134,999 195,001 $1,654,714 $2,145,011
David O'Brien -- -- 129,134 79,166 1,661,773 965,358
Richard E. Corbin 1,578 $ 5,918 58,083 52,917 755,178 646,385
Ralph S. Granchelli, Jr 15,000 192,625 58,197 50,434 810,581 644,233
Ephraim Kwok -- -- 29,791 50,209 335,149 599,539
- ---------------------------------------------------------------------------------------------------------------------------
<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, 1999 ($17.6875 per share).
</FN>
</TABLE>
EMPLOYMENT AGREEMENTS
The Company has entered into Executive Compensation Agreements (the
"Agreements"), dated as of March 22, 1991, with Messrs. Granchelli and Corbin.
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 each of these
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 twelve months after the end of the notice
period will become fully vested.
The Company has also entered into a Settlement and General Release
Agreement and an Employment Agreement with Mr. Corbin in March 1999. The
combined effects of the agreements provide for severance payments and benefits
for a period of 12 months after Mr. Corbin's separation from the Company. Mr.
Corbin will continue to make himself available up to 20 days over the 12 months
separation period. Mr. Corbin has agreed to remain an employee of the Company
through March 15, 2000. However, the Company has the option to extend Mr.
Corbin's employment for two additional six-month periods to commence on (a)
March 16, 2000 through September 16, 2000; and (b) September 16, 2000 through
March 16, 2001. The Company will provide Mr. Corbin with thirty days advance
notice if the Company decides to terminate his employment prior to utilizing the
extension options.
Under a consulting arrangement with the Company, Mr. Diller has
received an option on December 8, 1997 for 10,000 shares of Common Stock at an
exercise price of $6.625 that became fully vested and exercisable on December 8,
1998. Mr. Diller also received an option for 30,000 shares of Common Stock on
February 25, 1998 at an exercise price of $8.8125 per share that vest quarterly
over a period of four years and will become fully vested and exercisable on
February 25, 2002.
On April 1, 1999, Mr. Diller became President and Chief Executive
Officer of the Company. Prior to this, from November 1998, Mr. Diller served as
interim President and Chief Executive Officer of the Company. During his interim
period, Mr. Diller received compensation of $1,500 per day, and a stock option
grant for 50,000 shares subject to stock options that vested ratably over a
period of nine months and became fully vested and exercisable on August 6, 1999.
<PAGE>
SEVERANCE
in November 1998, David O'Brien, former President, Chief Executive
Officer and Director resigned from the Company. Dr. O'Brien is a party to an
Executive Compensation Agreement (the "Agreement") with the Company. The
Agreement states that Dr. O'Brien will continue to make himself available to the
Company as a consultant and in consideration for these consultancy services, the
Company agrees to pay Dr. O'Brien $14,362 per month for a twenty-one month
period that began in November 1998. In addition, the Company will continue to
provide medical, dental and life insurance benefits during the twenty-one month
payment period. Dr. O'Brien's stock options will continue to vest over a
twenty-four month period and as of November 19, 1999, Dr. O'Brien has stock
options outstanding for 208,300 shares of Common Stock, of which 129,134 shares
are fully vested and exercisable.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Dr.
Chan and Mr. King, neither of whom has been or is an officer or an employee of
the Company. No member of the Compensation Committee served on the Compensation
Committee of another entity or 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
This 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 (`the "Securities Act"), or the Securities Exchange Act of
1934, as amended (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 Alan V. King. James V. Diller,
President, Chief Executive Officer of the Company, attended certain of the
meetings of the Compensation Committee and makes recommendations regarding
executive compensation. Mr. Diller did not attend any Compensation Committee
meetings where Mr. Diller'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.
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
<PAGE>
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.
1999 Executive Compensation
Base Salaries. The base salary for each executive officer for fiscal
1999 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.
1999 CEO Compensation
In fiscal 1999, Mr. Diller's base salary was $179,481, this includes
$86,250 of compensation earned as a consultant for the Company from the period
of November 10, 1998 to April 1, 1999. Mr. Diller also received bonuses totaling
$165,510 based upon the actual pre-tax income of the Company related to fiscal
1999. As part of a consulting arrangement with the Company, Mr. Diller received
stock options totaling 50,000 shares on November 6, 1998 and upon his
appointment as the Company's President and Chief Executive Officer on April 1,
1999, Mr. Diller received stock options totaling 240,000 shares.
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 1999. 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 1998 to be
affected by the requirements of Section 162(m).
COMPENSATION COMMITTEE
Chuck K. Chan
Alan V. King
<PAGE>
PERFORMANCE GRAPH
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 stockholder
return, calculated on a dividend reinvested basis, for the Company, 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, 1999. Note that historic
stock price performance is not necessarily indicative of future stock price
performance.
[The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T]
- --------------------------------------------------------------------------------
Cumulative Total Return
-------------------------------------------
09/30/96 09/30/97 09/30/98 09/30/99
-------- -------- -------- --------
Elantec Semiconductor, Inc. 100 91.07 51.79 252.68
H&Q Semiconductor Sector Index 76.12 152.01 86.90 237.08
Nasdaq Stock Market - U.S. Index 125.93 172.87 176.44 285.54
- - - - - - - - - - - - - - - - - - -------------------------------------------
$100 Invested on October 10, 1995 in Stock or Index.
Fiscal Year Ending September 30.
- --------------------------------------------------------------------------------
<PAGE>
CERTAIN TRANSACTIONS
From October 1, 1998 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 executive 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.
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 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. Such executive 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 1999.
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 2001 must be received by August 17, 2000. Stockholders wishing to bring
a proposal before the annual meeting for 2001 (but not include it in the
Company's proxy materials) must provide written notice of such proposal to the
Secretary of the Company at the principal executive offices of the Company by
October 31, 2000.
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 or postponement 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
______________________________________
James V. Diller
President, Chief Executive Officer and
Chairman of the Board
<PAGE>
Appendix A
ELANTEC SEMICONDUCTOR, INC.
1995 EQUITY INCENTIVE PLAN
As Adopted August 23, 1995 and Amended
Through November 4, 1999
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 2,820,000 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
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"),
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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 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
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1995 Equity Incentive Plan
(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 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
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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.
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;
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1995 Equity Incentive Plan
(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 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
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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 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
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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.
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.
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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 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
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1995 Equity Incentive Plan
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.
"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
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Elantec Semiconductor, Inc.
1995 Equity Incentive Plan
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 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.
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<PAGE>
Elantec Semiconductor, Inc.
1995 Equity Incentive Plan
"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 James V. Diller and Ephraim Kwok 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 name 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 Crown Plaza
Hotel & Resorts at 777 Bellew Drive, Milpitas, California 95035 on January 14,
2000 or any adjournment or postponement thereof.
(Continued, and to be marked, dated and signed, on the other side)
^ FOLD AND DETACH HERE ^
<PAGE>
<TABLE>
Please mark
your votes as [X]
indicated in
this example
<S> <C> <C> <C> <C>
The Board of Directors recommends a vote
FOR all nominees and for Items 2 and 3
WITHHELD FOR AGAINST ABSTAIN
Item 1 - ELECTION OF DIRECTORS FOR FOR ALL Item 2 - AMENDMENT TO
Nominees: [ ] [ ] 1995 EQUITY [ ] [ ] [ ]
INCENTIVE PLAN
Chuck K. Chan
James V. Diller Item 3 - RATIFICATION OF
Alan V. King SELECTION OF [ ] [ ] [ ]
Umesh Padval INDEPENDENT
AUDITORS
WITHHELD FOR: (Write that nominee's name in the space
provided below).
________________________________________________________
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: __________________________________________
__________________________________________________
__________________________________________________
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 ^
</TABLE>
