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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. ____ )
Filed by the Registrant: /X/
Filed by a Party other than the Registrant: / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
WEITEK CORPORATION
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(Name of Registrant as specified in its charter)
PAUL K. KIDMAN, DIRECTOR OF FINANCE
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(Name of person(s) filing proxy statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14-a6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: $ (A)
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(4) Proposed maximum aggregate value of transaction: $
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(A) Set forth the amount on which the filing fee is calculated and state how
it was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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WEITEK CORPORATION
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JULY 26, 1995
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN, that the 1995 Annual Meeting of Shareholders of
Weitek Corporation, a California corporation (the "Company" or "Weitek"), will
be held on July 26, 1995, at 3:00 p.m. at the Company's principal executive
office at 1060 E. Arques Avenue, Sunnyvale, California 94086, for the following
purposes:
1. To elect five directors to serve for the following year and until
their successors are duly elected;
2. To approve amendment of the Company's 1991 Stock Option Plan (i) to
increase the number of shares subject to, and to alter the terms of,
options which are automatically granted to Outside Directors of the Company
and (ii) to provide a limitation on the number of shares that may be
granted to any optionee during any single fiscal year in order to preserve
certain federal income tax deductions for the Company.
3. To ratify the appointment of Price Waterhouse LLP as independent
accountants of the Company for the year ending December 31, 1995; and
4. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on May 31, 1995, are
entitled to notice of and to vote at the meeting.
All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed Proxy as promptly as possible in the envelope
enclosed for that purpose. Any shareholder attending the meeting may vote in
person even if he or she previously returned a Proxy.
Sincerely,
PAUL K. KIDMAN
Secretary
Sunnyvale, California
June 12, 1995
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WEITEK CORPORATION
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PROXY STATEMENT
1995 ANNUAL MEETING OF SHAREHOLDERS
JULY 26, 1995
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of Weitek Corporation (the
"Company") for the Annual Meeting of Shareholders to be held on July 26, 1995,
at 3:00 p.m. at the Company's executive offices at 1060 E. Arques Avenue,
Sunnyvale, California 94086, or any adjournment or adjournments thereof, for the
purposes set forth herein and in the accompanying Notice of Annual Meeting.
These Proxy solicitation materials were mailed on or about June 12, 1995 to
all shareholders entitled to vote at the meeting.
RECORD DATE; OUTSTANDING SHARES
Only shareholders of record at the close of business on May 31, 1995, are
entitled to receive notice of and to vote at the meeting. The outstanding voting
securities of the Company as of such date consisted of 8,411,615 shares of
Common Stock. For information regarding holders of more than five percent of the
outstanding Common Stock, see "Security Ownership of Certain Beneficial Owners
and Management."
REVOCABILITY OF PROXIES
The enclosed Proxy is revocable at any time before its use by delivering to
the Company a written notice of revocation or a duly executed proxy bearing a
later date. If a person who has executed and returned a proxy is present at the
meeting and wishes to vote in person, he or she may elect to do so and thereby
suspend the power of the proxy holders to vote his or her proxy.
VOTING AND SOLICITATION
Every shareholder voting at the election of directors may cumulate such
shareholder's votes and give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of shares held by the
shareholder, or distribute the shareholder's votes on the same principle among
as many candidates as the shareholder desires, provided that votes cannot be
cast for more than the number of directors to be elected. However, no
shareholder shall be entitled to cumulate votes unless the candidate's name has
been placed in nomination prior to the voting and the shareholder, or any other
shareholder, has given notice at the meeting prior to the voting of the
intention to cumulate the shareholder's votes. On all other matters, each share
is entitled to one vote.
The cost of soliciting proxies will be borne by the Company. In addition,
the Company may reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
material to such beneficial owners. Proxies may also be solicited by certain of
the Company's directors, officers and regular employees, without additional
compensation personally or by telephone, telecopy, or telegram.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company which are intended to be presented
by such shareholders at the Company's 1996 Annual Meeting must be received by
the Company no later than February 12, 1996 in order that they may be included
in the proxy statement and form of proxy relating to that meeting.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of May 31, 1995 certain information with
respect to the beneficial ownership of the Company's Common Stock by (i) each
person known by the Company to own beneficially more than five percent of the
outstanding shares of Common Stock, (ii) each director and nominee to become a
director of the Company, (iii) the Chief Executive Officer and each of the other
five most highly compensated executive officers of the Company (the "Named
Executive Officers") and (iv) all directors and executive officers as a group.
Except as otherwise noted below, the Company knows of no agreements among its
shareholders which relate to voting or investment power of its shares of Common
Stock.
SHARES OF COMMON
STOCK BENEFICIALLY
OWNED(1)
----------------------
DIRECTORS, EXECUTIVE OFFICERS AND PERCENTAGE
FIVE PERCENT SHAREHOLDERS NUMBER OWNERSHIP
-------------------------------------------------------- -------- ----------
Willoughby, Holin, Harris & Rentner, Inc................ 935,350 11.1%
4440 PGA Blvd. #308,
Palm Beach Gardens, FL 33410
Dimensional Fund Advisors............................... 477,800 5.7%
1299 Ocean Ave. 11th Floor,
Santa Monica, CA 90401
Arthur J. Collmeyer(2).................................. 268,450 3.2%
Barry L. Cox(3)......................................... 229,222 2.7%
Benjamin M. Warren(4)................................... 88,425 1.0%
Howard J. Gopen(5)...................................... 74,000 *
Allen R. Samuels(6)..................................... 69,447 *
John H. Steinhart(7).................................... 64,074 *
Jack C. Carsten(8)...................................... 59,500 *
James L. Patterson(9)................................... 56,571 *
W. Frank King, III(10).................................. 34,250 *
David L. Gellatly....................................... -- --
Timothy J. Propeck...................................... -- --
All directors and executive officers as a group
(11 persons)(11)...................................... 943,939 10.5%
- ---------------
* Less than one percent.
(1) Beneficial Ownership is defined as shares owned plus options that are
exercisable, but not necessarily vested, on or before July 31, 1995.
(2) Includes 6,000 shares subject to options exercisable on or before July 31,
1995, of which 1,000 will be vested as of such date and the remaining 5,000
would be subject to repurchase by the Company until vested; also includes
58,000 shares held in trust for the benefit of Dr. Collmeyer's children.
Dr. Collmeyer disclaims beneficial ownership of shares held in trust for
the benefit of his children.
(3) Includes 220,000 shares subject to options exercisable on or before July
31, 1995, of which 99,667 will be vested as of such date and the remaining
120,333 would be subject to repurchase by the Company until vested.
(4) Includes 84,000 shares subject to options exercisable on or before July 31,
1995, of which 19,549 will be vested as of such date and the remaining
64,451 would be subject to repurchase by the Company until vested; also
includes 2,000 shares owned by Mr. Warren's child. Mr. Warren disclaims
beneficial ownership of shares held by his children.
(5) Represents 74,000 shares subject to options exercisable on or before July
31, 1995, of which 26,708 will be vested as of such date and the remaining
47,292 would be subject to repurchase by the Company until vested.
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(6) Includes 66,571 shares subject to options exercisable on or before July 31,
1995, of which 31,571 will be vested as of such date and the remaining
35,000 would be subject to repurchase by the Company until vested.
(7) Includes 59,416 shares subject to options exercisable on or before July 31,
1995, all of which will be vested as of such date.
(8) Includes 37,500 shares subject to options exercisable on or before July 31,
1995, of which 25,000 will be vested as of such date and the remaining
12,500 would be subject to repurchase by the Company until vested.
(9) Includes 33,000 shares subject to options exercisable on or before July 31,
1995, of which 28,000 will be vested as of such date and the remaining
5,000 would be subject to repurchase by the Company until vested.
(10) Represents 34,250 shares subject to options exercisable on or before July
31, 1995, of which 21,750 will be vested as of such date and the remaining
12,500 would be subject to repurchase by the Company until vested.
(11) Includes 614,737 shares subject to options held by executive officers and
directors exercisable on or before July 31, 1995, 312,661 of which will be
vested as of such date and the remaining 302,076 of which would be subject
to repurchase by the Company until vested. See Notes 1 through 10.
ELECTION OF DIRECTORS
A Board of five directors is to be elected at the meeting. Unless otherwise
instructed, the proxy holders will vote all of the proxies received by them for
the Company's five nominees named below. In the event that additional persons
are nominated for election as directors, the proxy holders intend to vote all
proxies received by them in such a manner and in accordance with cumulative
voting as will ensure the election of as many of the nominees listed below as
possible, and, in such event, the specific nominees to be voted for will be
determined by the proxy holders. In the event that any of the nominees shall
become unavailable, the proxy holders will vote in their discretion for a
substitute nominee. It is not expected that any nominee will be unavailable. The
term of office of each person elected as a director will continue until the next
Annual Meeting of Shareholders and until his successor has been elected and
qualified.
VOTE REQUIRED
The five nominees receiving the highest number of affirmative votes of the
shares entitled to be voted shall be elected to the Board of Directors. Votes
withheld from any director are counted for purposes of determining the presence
or absence of a quorum, but have no legal effect under California law. While
there is no definitive statutory or case law authority in California as to the
proper treatment of abstentions and broker non-votes in the election of
directors, the Company believes that both abstentions and broker non-votes
should be counted for purposes of whether a quorum is present at the Annual
Meeting, but are not counted toward the election of any nominee. In the absence
of precedent to the contrary, the Company intends to treat abstentions and
broker non-votes with respect to the election of directors in this manner.
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NOMINEES FOR ELECTION TO BOARD
The names and certain information about the nominees of management are set
forth below. The Board of Directors recommends that shareholders vote "FOR" the
nominees listed below.
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- --------------------- --- ------------------------------------- --------
Jack C. Carsten 53 Private Investor and Consultant 1990
Arthur J. Collmeyer 53 Chairman of the Board of the Company 1981
Barry L. Cox 52 President and Chief Executive Officer 1992
of the Company
David L. Gellatly 52 Marketing Consultant --
W. Frank King III 55 President, Pencom Software 1989
Except as set forth below, each of the nominees has been engaged in the
principal occupation described above during the past five years. There is no
family relationship between any director or executive officer of the Company.
Jack C. Carsten has been a director of the Company since March 1990. Mr.
Carsten has over 25 years of experience in the semiconductor business, having
worked for Texas Instruments from 1963 to 1975, and as a Vice President of Intel
Corporation from 1975 to 1987, where he was responsible for their Microcomputer
and Memory businesses. In 1988, he became a General Partner of U.S. Venture
Partners, a venture capital partnership, and in 1990 he formed a private
investment firm, Technology Investments. Mr. Carsten is on the board of
Comerica-California, a bank and savings and loan holding company, and three
privately held firms. He holds a B.S. degree in physics from Duke University.
Arthur J. Collmeyer joined the Company in November 1981 and has been the
Chairman of the Board since that time. He also served as President of the
Company from November 1981 until April 1992, and as Chief Executive Officer from
November 1981 until October 1993. Dr. Collmeyer has more than 20 years of
experience in the electronics industry. Prior to joining the Company, Dr.
Collmeyer served as Senior Vice President and General Manager of the
Microelectronics Division of Calma Company. Before that, he served as manager of
CAD systems development at Xerox Corporation, and also spent several years at
Motorola. Dr. Collmeyer is a director of STAC Electronics, a data compression
company, and one privately held company. Dr. Collmeyer holds a B.S. and an M.S.
in electrical engineering from the University of Illinois, and a Ph.D. in
electrical engineering from Southern Methodist University.
Barry L. Cox joined the Company in April 1992 as President and Chief
Operating Officer and was named Chief Executive Officer in October 1993. Mr. Cox
was a founder of ATEQ Corporation, a semiconductor capital equipment
manufacturer, and from 1987 to 1992 served as its President and Chief Executive
Officer. Mr. Cox's experiences prior to joining ATEQ include eight years with
Intel Corporation, most recently as Vice President and General Manager of Intel
Europe, six years with Texas Instruments in various marketing positions and four
years as a U.S. Air Force officer. Mr. Cox is a director of Photon Dynamics,
Inc. He holds a B.S. in engineering from the U.S. Air Force Academy and an
M.B.A. from Boston University.
David L. Gellatly has over 20 years of marketing experience in the
semiconductor business including various positions with Intel's microprocessor
group from 1976 to 1981. Since 1982, with the exception of a brief period from
1991 to 1992 when he served as President and Chief Executive Officer of Austek
Microsystems, he has been an independent marketing consultant providing services
to many leading companies in semiconductor and other high technology businesses.
His clients have included IBM, Apple, Intel, Cyrix, National Semiconductor,
Siemens and others. Mr. Gellatly holds a B.S. degree and an M.S. in electrical
engineering, both from the University of Minnesota.
W. Frank King III became a director of the Company in July 1989. Dr. King
became President of Pencom Software in 1992. From 1991 to 1992, Dr. King was an
independent business consultant and from 1988 to November 1991 he was the Senior
Vice President of the Software Business Group of Lotus Development Corporation,
a software company. Prior to joining Lotus, Dr. King held various positions with
International Business Machines Corporation for over 19 years, most recently as
Vice President of Develop-
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ment for IBM's Entry Systems Division. He is a director of Excalibur
Technologies, State of the Art, Inc., Auspex, Inc. and System Soft, Inc., as
well as one privately held company. Dr. King holds a B.S. in electrical
engineering from the University of Florida, an M.S. in electrical engineering
from Stanford University and a Ph.D. in electrical engineering from Princeton
University.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of eight meetings during
the year ended December 31, 1994.
The Audit Committee, which in 1994 consisted of directors Carsten and
Patterson, met two times during the last fiscal year. This Committee recommends
engagement of the Company's independent public accountants and is primarily
responsible for approving the services performed by such accountants and for
reviewing and evaluating the Company's accounting principles and its system of
internal accounting controls.
The Compensation Committee, which in 1994 consisted of directors King and
Patterson, met once during the last fiscal year. This Committee establishes the
salary and incentive compensation of the executive officers of the Company.
The Option Committee, which in 1994 consisted of directors Carsten and
King, met eight times during the last fiscal year. The Option Committee
administers the Company's employee benefits plans.
During the year ended December 31, 1994, no director attended fewer than
seventy-five percent of the Board of Directors' meetings or any committee
meeting on which such director served.
BOARD COMPENSATION
Non-employee directors are compensated at the rate of $2,250 per quarter
for their services as members of the Board of Directors. In addition,
non-employee directors are automatically granted options to purchase shares of
the Company's Common Stock pursuant to the terms of the Company's 1991 Stock
Option Plan (the "Option Plan") on a quarterly basis. Pursuant to the Option
Plan, on January 1, April 1, July 1 and October 1, 1994 each non-employee
director was granted options to purchase 1,000 shares of Common Stock at
exercise prices of $8.31, $7.94, $3.86 and $3.61 per share, respectively. The
Board has approved amendment of the Option Plan with respect to grants of
options to non-employee directors, and is soliciting shareholder approval for
such amendment. For a description of the amendment, please see "Amendment of the
1991 Stock Option Plan" below.
In addition to the foregoing, two non-employee directors, Jack C. Carsten
and W. Frank King III, are performing consulting services for the Company. In
connection with the consulting services, such directors have each been granted
options to purchase 9,000 shares of Common Stock at an exercise price of $4.63
(the fair market value of the Common Stock on the date of grant). Such options
vest monthly over a period of one year.
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EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the
compensation paid by the Company for each of the three years in the period ended
December 31, 1994 to the Chief Executive Officer and each of the other five most
highly compensated executive officers of the Company (the "Named Executive
Officers"):
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -----------
----------------------------------------- SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION OPTIONS(#) COMPENSATION(2)
- -------------------------- ----- ------------ ----------- ------------ ----------- ---------------
Barry L. Cox(3) 1994 $218,231 $ -- $ -- -- $ 1,440
President and Chief 1993 194,615 -- 11,092 70,000 1,440
Executive Officer 1992 135,192 -- 29,836 150,000 1,052
Howard J. Gopen 1994 148,673 -- -- 18,000 858
Vice President, 1993 141,731 -- -- -- 812
Operations 1992 142,260 -- -- 66,000 813
Timothy J. Propeck(4) 1994 143,231 -- -- 18,000 73,322
Vice President, Sales 1993 135,000 -- -- -- 766
and Marketing 1992 140,192 -- -- 55,000 795
John H. Steinhart(5) 1994 133,850 -- -- 11,000 68,753
Vice President, 1993 128,500 -- -- 11,000 720
Administration 1992 133,442 -- -- -- 748
Allen R. Samuels 1994 128,673 -- -- 15,400 273
Vice President, 1993 117,231 -- -- 6,000 243
Business Development 1992 98,819 -- -- 6,500 205
Benjamin M. Warren 1994 128,231 -- -- 19,000 1,183
Vice President, 1993 83,077 -- -- 30,000 758
Engineering 1992 -- -- -- -- --
- ---------------
(1) The Company has adopted an Executive Bonus Plan (the "Bonus Plan") pursuant
to which officers of the Company may earn annual cash bonuses based on the
Company achieving specified profit objectives. No bonuses were paid to
officers for 1992, 1993 or 1994.
(2) Amounts indicated under "All Other Compensation" reflect term life insurance
premiums paid by the Company under a Company-wide plan and accrued severance
benefits, if any.
(3) Mr. Cox joined the Company in April 1992. The amounts indicated under "Other
Annual Compensation" reflect relocation and housing support amounts paid to
Mr. Cox in 1992 and the first part of 1993.
(4) Mr. Propeck resigned as an officer of the Company in December 1994. Amounts
indicated under "All Other Compensation" include $72,500 of severance
benefits accrued in 1994, pursuant to an agreement for termination of
employment.
(5) Mr. Steinhart resigned as an officer of the Company in December 1994.
Amounts indicated under "All Other Compensation" include $67,500 of
severance benefits accrued in 1994, pursuant to an agreement for termination
of employment.
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Option Grants in Last Fiscal Year. The following table sets forth each
grant of stock options made during the year ended December 31, 1994 to each of
the Named Executive Officers:
POTENTIAL
REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------ ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5% 10%
- --------------------------------- --------- ------------ -------- ---------- -------- --------
Barry L. Cox..................... -- -- $ -- -- $ -- $ --
Howard J. Gopen.................. 18,000 4% 8.30 3/11/04 93,957 238,105
Timothy J. Propeck............... 18,000 4% 8.30 3/11/04 93,957 238,105
John H. Steinhart................ 11,000 2% 8.30 3/11/04 57,418 145,509
Allen R. Samuels................. 15,400 3% 8.30 3/11/04 80,385 203,712
Benjamin M. Warren............... 12,000 3% 8.30 3/11/04 62,638 158,737
7,000 2% 3.64 7/19/04 16,024 40,609
- ---------------
(1) Potential realizable value is based on an assumption that the stock price
appreciates at the annual rate shown (compounded annually) from the date of
grant until the end of the ten-year option term. These numbers are
calculated based on the requirements promulgated by the Securities and
Exchange Commission and do not reflect the Company's estimate of future
stock price growth.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values. None of the Named Executive Officers exercised options in 1994. The
following table sets forth, for each of the Named Executive Officers, the
year-end value of unexercised options as of December 31, 1994:
NUMBER OF SECURITIES
UNDERLYING VALUE(1) OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY
AT YEAR-END(#): OPTIONS AT YEAR-END:
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(2)
- ------------------------------------------------- ------------------------- ----------------------------
Barry L. Cox..................................... 77,500/142,500 --
Howard J. Gopen.................................. 18,105/ 45,895 --
Timothy J. Propeck............................... 30,283/ 42,717 --
John H. Steinhart................................ 55,667/ 33,083 --
Allen R. Samuels................................. 26,188/ 30,383 --
Benjamin M. Warren............................... 13,104/ 35,896 --
- ---------------
(1) Market value of underlying securities at year-end minus the exercise price.
At December 31,1994, option exercise prices exceeded market value.
(2) Options granted pursuant to the 1991 Option Plan are generally exercisable
by the optionee ahead of vesting. Unvested shares purchased on exercise of
an option are subject to a repurchase right of the Company, and may not be
sold by an optionee until the shares vest. Options indicated as
"Exercisable" are those options which were both vested and exercisable as of
December 31, 1994. All other options are indicated as "Unexercisable."
REPORT OF THE COMPENSATION COMMITTEE
The following is the Report of the Compensation Committee of the Company,
describing the compensation policies and rationale applicable to the Company's
executive officers with respect to the compensation paid to such executive
officers for the year ended on December 31, 1994. The information contained in
the
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report shall not be deemed to be "soliciting material" or to be "filed" with the
Securities and Exchange Commission, nor shall such information be incorporated
by reference into any future filing under the Securities Act of 1933, as amended
(the "Securities Act"), or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), except to the extent that the Company specifically incorporates
it by reference into such filing.
TO THE BOARD OF DIRECTORS:
This report is provided by the Compensation Committee of the Board of
Directors (the "Committee") to assist shareholders in understanding the
Committee's objectives and procedures in establishing the compensation of
Weitek's Chief Executive Officer and other executive officers of the Company.
The Committee is responsible for determining the base salaries and target
incentives for the executive officers of the Company at the beginning of the
fiscal year.
The objectives of the Committee are to provide the Company a means of
attracting and retaining outstanding executives by providing total compensation
opportunity that is competitive with semiconductor companies of comparable size
and complexity; to align executive compensation with long-term business and
performance objectives; to maintain an appropriate balance between base salary
and short-term and long-term incentive opportunity; and to recognize sustained
outstanding individual performance by rewarding individuals who contribute
significantly to the long-term success of the Company. The executive
compensation program is based on the same principles that guide compensation for
all of the Company's employees.
Committee members in 1994 were W. Frank King III and James L. Patterson,
both of whom were independent, non-employee members of the Board of Directors.
The Committee generally meets one to three times a year. The Committee solicits
performance information and competitive salary data from the Company's Chief
Executive Officer and the Director of Human Resources. Neither member of the
Committee has any interlocking relationship as defined by the Securities and
Exchange Commission.
In making its compensation decisions, the Committee considers base
compensation, incentive bonus compensation and long-term compensation. Over the
past several years, including 1994, the Committee believes that the base
salaries and annual incentive bonus of the Company's executives are at or
slightly below the levels of comparable semiconductor companies. The long-term
incentive in the form of stock options is intended to provide higher returns
than competitors' plans when the Company outperforms its competitors and peer
companies.
Base Compensation. The Committee uses an independent compensation survey
that focuses on high technology companies to provide compensation data for
companies similar in size and business and which would likely compete for
persons of similar skill and experience in the hiring of their executive
officers. The Committee then determines base salaries after an analysis of
competitive salary ranges provided by the independent compensation survey, other
relevant survey data, and careful consideration of the Company's performance
over the past year and the individual officer's contribution to the Company's
business and financial results. Among the specific factors the Committee takes
into consideration in determining base salaries are: (1) the overall economy;
(2) long-term Company goals and objectives, including new product hardware and
software development, improvements in hardware design methodology and
development tools, new foundry arrangements and penetration of target markets;
and (3) comparison of the Company's growth rate and financial results against
those of the previous year and against the growth rates and financial results of
the Company's competitors and other peer companies.
In March 1994, Barry Cox, President and Chief Executive Officer, was given
a salary increase of ten thousand dollars, raising his annual salary from
$210,000 to $220,000. The base compensation of the four other highest paid
officers was also increased in March 1994. These salary adjustments were based
on individual performance and contribution, a review of competitive salary data
from peer companies and data from independent compensation surveys.
Bonus Plan. All officers and a number of key employees are included in the
annual incentive compensation plan (the "Bonus Plan"). The Bonus Plan is
proposed to the Committee each fiscal year by the
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Chief Executive Officer based on the year's operating plans. Compensation under
the Bonus Plan is based primarily on the Company's operating income; however,
other strategic goals may also be considered in the Bonus Plan. For 1994, the
Bonus Plan provided for up to 75% of base salary to Chairman and the
CEO/President and 60% of base salary to other officers of the Company based on
exceeding 1994 financial objectives. Since the operating income target for the
year was not met, no bonuses were paid to any officer.
Long-Term Incentive Compensation. Long-term compensation approved by the
Committee is in the form of stock options. The Committee places special emphasis
on equity-based compensation to attract outstanding leadership for the Company,
to motivate officers to keep a focus on multi-year objectives, growth and
shareholder value, and to preserve cash for its operations. Stock options are
granted under the Company's 1991 Stock Option Plan in accordance with the
Company's objectives. Upon joining the Company, officers are granted options to
purchase Common Stock at the fair-market value in effect on the date of grant.
These initial options vest over a period of five years. Additional grants may be
made to officers when the Committee believes that the officer has demonstrated
greater potential, ability or output than may have been evident upon hire, or on
the basis of expanded responsibilities and to remain competitive with similar
companies. After two years of vesting of the initial stock option, officers are
eligible for a "replenishment" option. The effect of this replenishment option
is to keep four years' worth of options out in front of each officer as a form
of long-term incentive to increase the stock value for all shareholders.
W. FRANK KING III JAMES L. PATTERSON
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership on Form 3 and changes in ownership on Form 4 or Form 5 with the
Securities and Exchange Commission (the "SEC"). Such officers, directors and
ten-percent shareholders are also required by SEC rules to furnish the Company
with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, the
Company believes that, during the fiscal year ended December 31, 1994, all
Section 16(a) filing requirements applicable to its officers, directors and
ten-percent shareholders were complied with.
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PERFORMANCE GRAPH
The following is a line graph comparing the cumulative total return to
shareholders of the Company's Common Stock since December 31, 1989 to the
cumulative total return over such period of (i) the NASDAQ Stock Market (U.S.)
Index and (ii) the NASDAQ Electronic Component Stock Index. The information
contained in the Performance Graph shall not be deemed to be "soliciting
material" or to be "filed" with the Securities and Exchange Commission, nor
shall such information be incorporated by reference into any future filing under
the Securities Act or the Exchange Act, except to the extent that the Company
specifically incorporates it by reference into such filing.
COMPARISON OF CUMULATIVE TOTAL RETURN* AMONG WEITEK CORPORATION,
THE NASDAQ STOCK MARKET (U.S.) INDEX AND NASDAQ ELECTRONIC COMPONENT STOCK
INDEX**
NASDAQ ELEC-
NASDAQ STOCK TRONIC COM-
MEASUREMENT PERIOD MARKET (U.S.) PONENT STOCK
(FISCAL YEAR COVERED) WEITEK INDEX INDEX
1989 100 100 100
1990 45 85 97
1991 36 136 138
1992 42 159 216
1993 52 181 296
1994 12 177 328
AMENDMENT OF THE 1991 STOCK OPTION PLAN
BACKGROUND; PROPOSED AMENDMENT
The 1991 Stock Option Plan (the "Option Plan") was adopted by the Board of
Directors and shareholders of the Company in 1991. A total of 2,100,000 shares
of Common Stock have been reserved for issuance under the Option Plan.
The Board of Directors has approved amendments to the Option Plan:
(i) to increase the number of and to alter the terms of options to
purchase shares of Common Stock which are automatically granted to the
Outside Directors (as defined) of the Company.
(ii) to limit the discretion allowed with respect to the number of
options that may be granted to any optionee in a single fiscal year of the
Company.
The amendment to the Option Plan with respect to automatic grants of
options to Outside Directors would change the procedure in which Outside
Directors receive options to purchase shares of Common Stock. Currently, Outside
Directors are granted an initial option to purchase 12,000 shares of Common
Stock when they become an Outside Director and quarterly options to purchase
1,000 shares of Common Stock. The
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initial options vest quarterly over three years. The quarterly options vest on
the third anniversary of the date of grant. The proposed amendment provides that
each Outside Director will automatically be granted an initial option to
purchase up to 6,000 shares of Common Stock (the actual number is determined
according to a formula that considers how much time will elapse between the date
of joining the Board and the date of the next annual meeting at which additional
options will automatically be granted) and an annual option to purchase 6,000
shares of Common Stock. In addition, in connection with adoption of these
amendments to the Option Plan, each person who was an outside director on May 5,
1995 was granted an option to purchase 6,000 shares of common stock. All of such
options vest as to one-twelfth of the shares of Common Stock subject to such
options each full month following the date of grant. The Company believes that
this amendment to its Option Plan will enable the Company to attract and retain
the best available Outside Directors. For a further description of the terms of
Outside Director Options, see "Summary of the 1991 Stock Option Plan -- Outside
Directors' Options."
The limitation on the discretion allowed with respect to the number of
options that may be granted to any given optionee in a single fiscal year is
intended to preserve the Company's ability to deduct for federal income tax
purposes, the compensation expense relating to stock options granted to certain
executive officers under the Option Plan. Without this provision in the Option
Plan, the federal tax legislation enacted in August 1993 might limit the
Company's ability to deduct such compensation expense. The limitation provides
that no employee may be granted in any one fiscal year options to receive more
than 250,000 shares of Common Stock.
The shareholders are being requested to consider and approve the amendments
to the Option Plan described above.
As of May 31, 1995, a total of 2,100,000 shares of Common Stock had been
reserved for issuance under the Option Plan, of which options to purchase
1,570,076 shares were outstanding and 466,894 shares were available for future
grant.
VOTE REQUIRED
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
AMENDMENTS TO THE OPTION PLAN.
The affirmative vote of a majority of the Votes Cast will be required under
California law to approve the amendment to the Plan. For this purpose, the
"Votes Cast" are defined under California law to be the shares of the Company's
Common Stock represented and "voting" at the Annual Meeting. In addition, the
affirmative votes must constitute at least a majority of the required quorum,
which quorum is a majority of the shares outstanding on the Record Date. Votes
that are cast against the proposal will be counted for purposes of determining
(i) the presence or absence of a quorum and (ii) the total number of Votes Cast
with respect to the proposal. While there is no definitive statutory or case law
authority in California as to the proper treatment of abstentions in the
counting of votes with respect to a proposal such as the amendment of the Plan,
the Company believes that abstentions should be counted for purposes of
determining both (i) the presence or absence of a quorum for the transaction of
business and (ii) the total number of Votes Cast with respect to the proposal.
In the absence of controlling precedent to the contrary, the Company intends to
treat abstentions in this manner. Accordingly, abstentions will have the same
effect as a vote against the proposal. Broker non-votes will be counted for
purposes of determining the presence or absence of a quorum for the transaction
of business, but will not be counted for purposes of determining the number of
Votes Cast with respect to the proposal.
SUMMARY OF 1991 STOCK OPTION PLAN
GENERAL
The Option Plan was adopted by the Board in April 1991, and approved by the
shareholders in June 1991. Options granted under the Option Plan may be either
"incentive stock options" (as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code")) or non-statutory options (collectively,
the
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"Options"). See the section entitled "Tax Information" concerning the tax
treatment of both incentive stock options and non-statutory stock options.
The Option Plan is not qualified under Section 401(a) of the Code and is
not subject to the Employee Retirement Income Security Act of 1974, as amended.
PURPOSE
The purposes of the Option Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to directors, employees and consultants of Weitek and its
subsidiaries and to promote the success of Weitek's business.
ADMINISTRATION
The Option Plan is administered either by the Board or by a committee of
the Board consisting of at least two persons, all of whom must be directors of
Weitek ("Directors"). The Option Plan is currently administered by the Option
Committee of the Board. The interpretation of the Option Plan by the Board is
final and conclusive. Members of the Board receive no compensation for their
services in connection with the administration of the Option Plan.
ELIGIBILITY
The Option Plan provides that Options may be granted to the directors,
officers, employees and consultants of Weitek and its majority-owned
subsidiaries. Except for non-employee Directors ("Outside Directors"), the Board
selects the optionees and determines the number of shares subject to each
Option. In making this determination, the Board takes into account the duties
and responsibilities of the optionee, the value of the optionee's services, the
optionee's present and potential contributions to the success of Weitek and
other relevant factors.
OUTSIDE DIRECTORS' OPTIONS
Options may be granted to Outside Directors under the Option Plan only
pursuant to an automatic, non-discretionary grant mechanism. The Option Plan
provides that on May 5, 1995, each person who is then an Outside Director will
automatically be granted a "1995 Option" to purchase 6,000 shares of Common
Stock. Additionally, on the day following the date of each of the Company's
annual shareholders' meetings (beginning with the shareholders' meeting in
1996), each Outside Director will automatically be granted a "Renewal Option" to
purchase 6,000 shares of Common Stock. Finally, on the date that a person
becomes an Outside Director (other than by vote of the shareholders at the
Company's annual meeting) such Outside Director shall be granted an "Initial
Option", on a one time basis, to purchase a fraction (based on the length of
time elapsed from the most recently held annual shareholders' meeting of Weitek)
of 6,000 shares of Common Stock. The terms of 1995, Renewal and Initial Options
granted to Outside Directors are as follows: (1) the term of the option shall be
ten (10) years; (2) the option shall be exercisable only while the Outside
Director remains a Director or within three months after termination of status
as a Director (except upon the death of such Director); (3) the exercise price
per share of Common Stock shall be 100% of the fair market value on the date of
grant of the option; and (4) the options shall vest as to one-twelfth of the
shares of Common Stock subject to such options each full month following the
date of grant of the options with such vesting conditioned upon the Outside
Director remaining in continuous status as a Director upon such vesting dates.
The Option Plan provides that the provisions relating to grants of options to
Outside Directors may not be amended more than once every six months.
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TERMS OF OPTIONS
Except for option grants to Outside Directors, the provisions that apply to
Options granted under the Option Plan are determined by the Board. Each Option
is evidenced by an option agreement between Weitek and the optionee receiving
the Option, and is subject to the following:
Exercisability. The Board has the discretion to determine when Options can
be exercised. Generally, Options granted to employees may be exercised at any
time before expiration and so long as the optionee remains employed by Weitek
and enters into a Stock Restriction Agreement which grants Weitek the right to
repurchase, at the original exercise price, any shares that are not vested at
the time the optionee's employment is terminated. Initial options typically vest
over a five-year period at the rate of 1/5 of the shares subject to the Option
at the end of the first year and at the rate of 1/60 of the shares at the end of
each calendar month thereafter. An Option is exercised by giving written notice
to Weitek, which specifies the number of shares to be purchased, and by
tendering payment of the purchase price. Payment for shares issued upon exercise
of an option may consist of cash, check or such other consideration as may be
determined by the Board.
Exercise Price. The exercise price of Options is determined by the Board
but may in no event be less than the fair market value of the Common Stock on
the date the Option is granted, in the case of incentive stock options, and not
less than 85% of fair market value of the Common Stock on the date the Option is
granted, in the case of non-statutory stock options. Options granted to 10%
shareholders are subject to the additional restriction that the exercise price
be at least 110% of fair market value of the Common Stock on the date of grant.
To the extent that the aggregate fair market value of shares (determined as of
the date of grant) under an "incentive stock option" which can be exercised for
the first time by an optionee during any calendar year exceeds $100,000, such
excess amount will be treated as a non-statutory stock option.
Termination of Status. If an optionee's consulting relationship or director
status is terminated for any reason other than death, the Option may be
exercised within 30 days after termination (or such other period set by the
Board at the time of grant, which may not exceed three months) to the same
extent the Option could have been exercised on the date of termination.
Death. If an optionee dies while an employee, consultant or director,
Options may be exercised at any time within six months after death to the extent
they could have been exercised had the optionee not died but continued his or
her employment, consulting or service on the Board of Directors for another six
months. If an optionee dies within one month after termination, Options may be
exercised within six months after death, but only to the same extent they could
have been exercised on the date of termination.
Term. Non-statutory options have a maximum term of ten years and one day
from the date of grant and incentive stock options have a maximum term of ten
years from the date of grant. Non-statutory options granted to 10% shareholders
have a maximum term of five years and one day from the date of grant and
incentive stock options granted to 10% shareholders have a maximum term of five
years from the date of grant or, in either such case, such shorter time as may
be provided in the optionee's option agreement. No Option may be exercised after
it expires.
Nontransferability. Options cannot be transferred, other than by will or
the laws of descent and distribution. Options can be exercised only by the
optionee during the optionee's lifetime or, if the optionee dies, by a person
who acquires the right to exercise the Option by bequest, inheritance or
otherwise by reason of the optionee's death.
Limitations. No employee of Weitek shall be granted in any fiscal year
Options to purchase more than 250,000 shares of Common Stock, which limitation
shall be adjusted proportionately in connection with any change in Weitek's
capitalization as discussed below. If an Option is canceled in the same fiscal
year in which it was granted, the canceled Option will be counted against the
limit set forth above.
Other Provisions. The option agreement may contain such other terms,
provisions and conditions not inconsistent with the Option Plan as may be
determined by the Board.
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ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
If a change in Weitek's capitalization results in an exchange of Common
Stock for a greater or lesser number of shares (such as a stock split),
appropriate adjustment will be made in the exercise price and in the number of
shares subject to the Option. If a stock dividend is declared while an Option is
outstanding, upon exercise of the Option, each optionee will receive the
equivalent number of shares that would have been received had the optionee been
the holder of record of the Option shares on the record date of the dividend.
Unless the Board provides otherwise, Options will automatically terminate
immediately prior to a dissolution or liquidation. In this event, the Board may
(in its discretion) accelerate the ability to exercise the Option. If the
Company sells all or substantially all of its assets, or merges with or into
another corporation, Options shall be assumed or substituted by the successor
corporation (or its parent or subsidiary). However, if such successor
corporation refuses to assume or substitute an Option, the Board shall, in lieu
of such assumption or substitution, make the Option fully exercisable. If the
Board, in such event, makes an Option fully exercisable, the Board shall notify
the optionee that the optionee has thirty (30) days from the date of the notice
to exercise the Option, after which period the Option expires.
AMENDMENT AND TERMINATION OF THE PLAN
The Board may amend the Option Plan from time to time or may terminate it
without approval of the shareholders; provided, however, that the approval of
the holders of a majority of the outstanding shares entitled to vote is required
for any amendment which increases the number of shares for which Options may be
granted, materially changes the standards of eligibility or constitutes an
amendment for which shareholders approval is required in order to comply with
Rule 16b-3 under the Securities Exchange Act of 1934, as amended ("Exchange
Act"), or any successor rule. No action by the Board or the shareholders may
unilaterally alter or impair Options previously granted without the consent of
the optionee. In any event, the 1991 Option Plan shall terminate on April 10,
2001.
TAX INFORMATION
Options granted under the Option Plan may be either "incentive stock
options," as defined in Section 422 of the Code, or non-statutory stock options.
Non-Statutory Stock Options. All Options which do not qualify as incentive
stock options or which are not specifically designated as such are referred to
as non-statutory options. An optionee will not recognize any taxable income at
the time a non-statutory option is granted. However, upon exercise, the optionee
will recognize ordinary income equal to the excess, if any, of the fair market
value of the shares at the time of exercise over the exercise price. Different
rules may apply if the optionee is also a director, officer or 10% shareholder,
or if the Option is exercised before it is fully vested. Such income, when
recognized by Weitek employees, will be subject to tax withholding, either in
cash or out of current earnings. Upon resale of the shares by the optionee, any
difference between the sales price and the exercise price (to the extent not
recognized as ordinary income as provided above) will be treated as capital gain
or loss.
Incentive Stock Options. If an Option granted under the Option Plan is an
incentive stock option, the optionee will recognize no income upon grant of the
Option and incur no tax liability upon the exercise of the Option unless the
optionee is subject to the alternative minimum tax. Weitek will not be allowed a
deduction for federal income tax purposes as a result of the exercise of an
incentive stock option regardless of the applicability of the alternative
minimum tax. Gain will be treated as long-term capital gain if a sale or
exchange of the shares occurs at least two years after grant and one year after
exercise. If these holding periods are not satisfied at the time of sale, the
optionee will recognize ordinary income equal to the difference between the
exercise price and the lower of either the fair market value of the stock at the
date of the option exercise or the sale price of the stock. A different rule may
apply if the optionee is also a director, officer or 10% shareholder. Any gain
recognized on a premature disposition of the shares in excess of the amount
treated as ordinary income will be characterized as capital gain.
The foregoing is only a summary of the effect of United States federal
income taxation. It does not purport to be complete and does not discuss the
income tax laws of any municipality, state or other country.
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Optionees should consult with their own tax advisors regarding the tax
consequences arising from the receipt and exercise of Options and the
disposition of Common Stock issued upon exercise of Options.
RESTRICTION ON RESALE
Certain directors and officers may be deemed to be "affiliates" as that
term is defined under the Securities Act of 1933, as amended. Common Stock
acquired under the Option Plan by an affiliate may only be reoffered or resold
under an effective registration statement, under Rule 144 or under another
exemption from the registration requirements of the Act.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Company has selected Price Waterhouse LLP, independent accountants, to
audit the books, records and accounts of the Company for the current fiscal year
ending December 31, 1995. Price Waterhouse LLP has audited the Company's
financial statements since the fiscal year ended December 31, 1981.
The affirmative vote of the holders of a majority of the Company's Common
Stock represented and voting at the meeting will be required to approve and
ratify the Board's selection of Price Waterhouse LLP. THE BOARD OF DIRECTORS
RECOMMENDS VOTING "FOR" APPROVAL AND RATIFICATION OF SUCH SELECTION. In the
event of a negative vote on such ratification, the Board of Directors will
reconsider its selection.
A representative of Price Waterhouse LLP is expected to be available at the
Annual Meeting to make a statement if such representative desires to do so and
to respond to appropriate questions.
OTHER MATTERS
Management does not intend to bring before the meeting any matters other
than those set forth herein, and has no present knowledge that any other matters
will or may be brought before the meeting by others. However, if any other
matters properly come before the meeting, it is the intention of the persons
named in the enclosed form of Proxy to vote the Proxies in accordance with their
judgement.
The Company has borne the cost of preparing, assembling and mailing this
proxy solicitation material.
BY ORDER OF THE BOARD OF DIRECTORS
PAUL K. KIDMAN
Secretary
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APPENDIX A
WEITEK CORPORATION
1991 STOCK OPTION PLAN
AMENDED AND RESTATED EFFECTIVE AS OF MAY 5, 1995
1. Purposes of the Plan. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees, Consultants
and Directors of the Company and to promote the success of the Company's
business. Options granted hereunder may be either "Incentive Stock Options," as
defined in Section 422 of the Internal Revenue Code of 1986 or "non-statutory
stock options," at the discretion of the Board and as reflected in the terms of
the written option agreement.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Board" shall mean the Committee, if one has been appointed, or
the Board of Directors of the Company, if no Committee is appointed.
(b) "Common Stock" shall mean the Common Stock of the Company.
(c) "Company" shall mean Weitek Corporation, a California
corporation.
(d) "Committee" shall mean the Committee appointed by the Board in
accordance with paragraph (a) of Section 4 of the Plan, if one is appointed.
(e) "Consultant" shall mean any person who is engaged by the Company
or any Subsidiary to render consulting services and is compensated for such
consulting services.
(f) "Continuous Status as an Employee, Consultant or Director" shall
mean the absence of any interruption or termination of service as an Employee,
Consultant or Director. Continuous Status as an Employee, Consultant or Director
shall not be considered interrupted in the case of sick leave, military leave,
or any other leave of absence approved by the Board, provided, however, that
such leave is for a period of not more than 90 days, or reemployment upon the
expiration of such leave is guaranteed by contract or statute.
(g) "Director" means a member of the Board of Directors of the
Company.
(h) "Employee" shall mean any person, including officers and
directors, employed by the Company or any Subsidiary of the Company which now
exists or is hereafter organized or acquired by the Company. The payment of
directors' fees by the Company shall not be sufficient to constitute
"employment" by the Company.
(i) "Incentive Stock Option" shall mean an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
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(j) "New Outside Director" shall mean a person who first becomes an
Outside Director on or after the date on which this Plan is first approved by
the Company's shareholders.
(k) "Option" shall mean a stock option granted pursuant to the Plan.
(l) "Optioned Stock" shall mean the Common Stock subject to an
Option.
(m) "Optionee" shall mean an Employee, Consultant or Director who
receives an Option.
(n) "Outside Director" shall mean a Director who is not an Employee
of the Company.
(o) "Plan" shall mean this 1991 Incentive Stock Option Plan.
(p) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.
(q) "Subsidiary" shall mean a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Internal Revenue Code
of 1986.
(r) "Parent" shall mean a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 12
of the Plan, the maximum aggregate number of shares which may be optioned and
sold under the Plan is 2,100,000 shares of Common Stock. The Shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any
reason without having been exercised in full, the unpurchased Shares which were
subject thereto shall, unless the Plan shall have been terminated, become
available for future grant under the Plan.
4. Administration of the Plan.
(a) Procedure. The Plan shall be administered by (i) the
Board, if the Board may administer the Plan in compliance with Rule 16b-3
promulgated under the Exchange Act, or any successor rule thereto ("Rule
16b-3"), with respect to a plan intended to qualify under Rule 16b-3 as a
discretionary plan, or (ii) a Committee designated by the Board to administer
the Plan, which Committee shall be constructed to permit the Plan to comply with
Rule 16b-3 which respect to a plan intended to qualify thereunder as a
discretionary plan. Once appointed, the Committee shall continue to serve until
otherwise directed by the Board. From time to time the Board may increase the
size of the Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies,
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however caused, and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by Rule 16b-3 with respect to
a plan intended to qualify thereunder as a discretionary plan.
(b) Authority. Subject to the general purposes, terms, and conditions
of the Plan, the Board shall have full power to implement and carry out the Plan
including, but not limited to, the following:
(i) to select the Employees and Consultants of the Company and its
Subsidiaries to whom Options may from time to time be granted hereunder;
(ii) to determine whether and to what extent Options are granted
hereunder;
(iii) to determine the number of shares of Common Stock to be
covered by each such Option granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any Option granted hereunder (including, but not limited
to, the share price and any restriction or limitation, or any vesting or
exercise acceleration or waiver of forfeiture restrictions regarding any Option
and/or the shares of Common Stock relating thereto, based in each case on such
factors as the Committee shall determine, in its sole discretion);
(vi) to determine the form of payment that will be acceptable
consideration for exercise of an Option granted under the Plan;
(vii) to determine the fair market value of the Common Stock in
accordance with the provisions of Section 8(b); and
(viii) to reduce the exercise price of any Option to the then
current fair market value if the fair market value of the Common Stock covered
by such Option shall have declined since the date the Option was granted.
The Board shall have the authority to construe and interpret the
Plan, to authorize any person to execute on behalf of the Company any instrument
required to effectuate the grant of an Option previously made by the Board, to
prescribe, amend and rescind rules and regulations relating to the Plan, and to
make all other determinations necessary or advisable for the administration of
the Plan.
(c) Effect of Board's Decision. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.
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5. Eligibility.
(a) Any Director, Employee or Consultant of the Company or a
subsidiary whom the Board deems to have the potential to contribute to the
future success of the Company shall be eligible to receive Options under the
Plan; provided, however, that any Options granted to Outside Directors shall
only be made in accordance with Section 11 and that Incentive Stock Options may
be granted only to Employees.
(b) Each Option shall be designated in the written option agreement
as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate fair market
value of the shares with respect to which Options designated as Incentive Stock
Options are exercisable for the first time by any Optionee during any calendar
year (under all plans of the Company) exceed $100,000, such Options shall be
treated as Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Options shall be taken into
account in the order in which they were granted, and the fair market value of
the shares shall be determined as of the time the Option with respect to such
shares is granted.
(d) The Plan shall not confer upon any Optionee any right with
respect to continuation of employment by the Company, nor shall it interfere in
any way with his or her right or the Company's right to terminate his or her
employment at any time.
(e) The following limitations shall apply to grants of Options to
Employees:
(i) No Employee shall be granted, in any fiscal year of the
Company, Options to purchase more than 250,000 Shares.
(ii) The foregoing limitation shall be adjusted proportionately
in connection with any change in the Company's capitalization as described in
Section 12.
(iii) If an Option is canceled in the same fiscal year of the
Company in which it was granted (other than in connection with a transaction
described in Section 12), the canceled Option will be counted against the limit
set forth in Section 5(e)(i). For this purpose, if the exercise price of an
Option is reduced, the transaction will be treated as a cancellation of the
Option and the grant of a new Option.
6. Term of Plan. The Plan shall become effective upon its adoption by
the Board and its approval by vote of the holders of a majority of the
outstanding shares of the Company entitled to vote on the adoption of the Plan.
The Plan shall continue in effect for a term of ten (10) years unless sooner
terminated under Section 14 of the Plan.
7. Term of Option; Rule 16b-3; Option Agreements.
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(a) The term of each Option shall be ten (10) years and one
(1) day from the date of grant thereof or such shorter term as may be provided
in the Stock Option Agreement; provided, however, that the term of an Incentive
Stock Option shall not exceed ten (10) years from the date of grant. However, in
the case of an Option granted under the Plan to an Employee, Consultant or
Director who, immediately before the option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option shall be (i) in the
case of an Incentive Stock Option, five (5) years from the date of grant or (ii)
in the case of a nonstatutory stock option, five (5) years and one (1) day from
the date of grant, or, in either such case, such shorter time as may be provided
in the Stock Option Agreement.
(b) Options granted to persons subject to Section 16(b) of the
Exchange Act must comply with Rule 16b-3 and shall contain such additional
conditions or restrictions as may be required thereunder to qualify for the
maximum exemptions of the Exchange Act with respect to Plan transactions.
(c) Options shall be evidenced by written option agreements in
such form as the Board shall approve. The Board shall cause each option granted
hereunder to be clearly designated in such option agreement, at the time of
grant, as to whether or not it is intended to qualify as an Incentive Stock
Option.
8. Exercise Price; Determination of Fair Market Value;
Consideration.
(a) The per Share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Board, but shall be subject to the following:
(i) In the case of an Incentive Stock Option:
(1) granted to an Employee who, at the time of the
grant of the Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the per Share exercise price shall be no less than 110% of the fair market value
per Share on the date of grant; or
(2) granted to any Employee who, at the time of
grant of the Option owns stock representing ten percent (10%) or less of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the per Share exercise price shall be no less than 100% of the fair market value
per Share on the date of grant.
(ii) In the case of a non-statutory stock option:
(1) granted to a person who at the time of the grant
of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the per Share exercise price shall be no less than 110% of the fair market value
per Share on the date of the grant; or
23
(2) subject to Section 11 if applicable, granted to
any person who, at the time of grant of the Option owns stock representing ten
percent (10%) or less of the voting power of all classes of stock of the Company
or any Parent or Subsidiary, the per Share exercise price shall be no less than
85% of the fair market value per Share on the date of grant.
(b) The fair market value shall be determined by the Board in
its discretion; provided, however, that where there is a public market for the
Common Stock, the fair market value per Share shall be the mean of the reported
bid and asked prices for the Common Stock as of the date of grant, or, in the
event the Common Stock is listed on a stock exchange or quoted on the NASDAQ
National Market System, the fair market value per Share shall be the average of
the closing prices on such exchange or NASDAQ for the ten (10) business days
preceding the date of grant of the Option.
(c) The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be determined
by the Board and may consist entirely of cash or promissory notes, a combination
thereof, or such other consideration and method of payment for the issuance of
Shares to the extent permitted under Sections 408 and 409 of the California
General Corporation Law. In making its determination as to the type of
consideration to accept, the Board shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company (Section 315(b)
of the California General Corporation Law).
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Board, including performance criteria with
respect to the Company and/or the Optionee, and as shall be permissible under
the terms of the Plan; provided, however, that in no event shall any Option be
exercisable prior to obtaining shareholder approval of the Plan. For purposes of
this provision, an incentive stock option shall be treated as outstanding until
such option is exercised in full or expires by reason of lapse of time.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the Company. Full payment may, as authorized by the Board, consist of cash, a
promissory note, or by surrender of shares of Common Stock which (i) either have
been owned by the Optionee for more than six (6) months on the date or surrender
or were not acquired directly or indirectly from the Company, and (ii) have a
fair market value on the date of surrender equal to the purchase price of the
shares as to which said Option shall be exercised, delivery of a properly
executed exercise notice together with such other documentation as the
Administrator and the broker, if applicable, shall require to effect an exercise
of the Option and delivery to the
24
Company of the sale or loan proceeds required to pay the exercise price, or any
combination of such consideration. Until the Company receives written notice of
such exercise and full payment for the Shares, no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the
Optioned Shares. No adjustment will be made for a dividend or other right for
which the record date is prior to the date the stock certificate is issued,
except as provided in Section 12 of the Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Status as an Employee, Consultant or
Director. If an Employee, Consultant or Director ceases to serve as an Employee,
Consultant or Director, as the case may be, he may, but only within thirty (30)
days (or such other period of time not exceeding three (3) months as is
determined by the Board at the time of grant) after the date he ceases to be an
Employee, Consultant or Director, as the case may be, of the Company, exercise
his Option to the extent that he was entitled to exercise it at the date of such
termination. To the extent that he was not entitled to exercise the Option at
the date of such termination, or if he does not exercise an Option (which he was
entitled to exercise) within the time specified herein, the Option shall
terminate.
(c) Death of Optionee. In the event of the death of an
Optionee:
(i) during the option period who is at the time of his death
an Employee, Consultant or Director of the Company and who shall have been in
Continuous Status as an Employee, Consultant or Director, as the case may be,
since the date of grant of the Option, the Option may be exercised, at any time
within six (6) months following the date of death, by the Optionee's estate or
by a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the right to exercise that would have
accrued had the Optionee continued living six (6) months after the date of
death; or
(ii) within one (1) month after the termination of
Continuous Status as an Employee, Consultant or Director, the Option may be
exercised, at any time within six (6) months following the date of death, by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise that
had accrued at the date of termination.
(d) Rule 16b-3. Options granted to persons subject to Section
16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemptions of the Exchange Act with respect to Plan
transactions.
10. Non-Transferability of Options. The Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of
25
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
11. Grants to Outside Directors. The provisions set forth in this
Section 11 shall not be amended more than once every six months. All grants of
Options hereunder shall be automatic and non-discretionary and shall be made
strictly in accordance with the following provisions:
(a) No Discretion. No person shall have any discretion to select
which Outside Directors shall be granted Options or to determine the number of
shares to be covered by Options granted to Outside Directors; provided, however,
that nothing in this Plan shall be construed to prevent an Outside Director from
declining to receive an Option under this Plan.
(b) 1995 Options. On April 18, 1995, each person who is then an
Outside Director shall be granted an Option (a "1995 Option") to purchase 6,000
Shares.
(c) Annual Renewal Options. On the day following the date of each
Company annual shareholders' meeting (beginning with the shareholders' meeting
in 1996) each person who is then an Outside Director shall be granted an Option
(a "Renewal Option") to purchase 6,000 Shares.
(d) Initial Options. Each New Outside Director who becomes such
other than by the vote of the shareholders of the Company at the Company's
annual meeting of shareholders shall be granted an initial option (an "Initial
Option"), on a one-time basis, on the date that such person becomes an Outside
Director. The number of Shares subject to such Initial Option shall be
determined by multiplying 6,000 by a fraction, the numerator of which shall be
determined by subtracting the number of full days elapsed from the most recently
held Company annual shareholders' meeting to the day of such individual becoming
an Outside Director from three hundred and sixty-five and the numerator of which
shall be three hundred and sixty-five.
(e) Option Terms. The terms of the 1995, Renewal and Initial
Options shall be as follows:
(i) the term shall be ten (10) years;
(ii) the Options shall be exercisable only while the Outside
Director remains a Director or within three months after termination of status
as a Director (except upon the Death of such an Optionee, in which case the
provisions of Section 9(c) shall apply;
(iii) the exercise price per share of Common Stock shall be
100% of the fair market value on the date of grant of the Options (such fair
market value to be calculated as set forth in Section 8(b) hereof);
(iv) the Options shall vest as to one-twelfth of the Shares
subject to such Options each full month following the date of grant of the
Options (e.g., an Option granted on April 6, 1996 would be one-twelfth vested on
May 6, 1996), with such vesting conditioned upon
26
the Outside Director remaining in Continuous Status as a Director upon such
vesting dates; provided, however, that the 1995 Options shall not become
exercisable until shareholder approval of the April 18 amendments to the Plan
is obtained;
(v) Full payment for the Shares may consist of any of the
following types of consideration:
(1) cash; or
(2) check; or
(3) delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price; or
(4) surrender of shares of Common Stock which (i)
either have been owned by the Optionee for more than six (6) months on the date
or surrender or were not acquired directly or indirectly from the Company, and
(ii) have a fair market value on the date of surrender equal to the purchase
price of the shares as to which said Option shall be exercised.
12. Adjustments Upon Changes in Capitalization or Merger. Subject to
any required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation of an Option (collectively, the "Reserves"), as well as the
price per share of Common Stock covered by each such outstanding Option, shall
be proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split or the payment of a stock
dividend (but only on the Common Stock) or any other increase or decrease in the
number of such shares of Common Stock effected without receipt of consideration
by the Company; provided, however, that conversion of any convertible securities
of the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the
Company, the Option will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. The Board may, in the
exercise of its sole discretion in such instances, declare that any Option shall
terminate as of a date fixed by the Board and give each Optionee the right to
exercise his Option as to all or any part of the Optioned Stock, including
Shares as to which the Option would not otherwise be exercisable. In the event
of a proposed sale of all or
27
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, the Option shall be assumed or an equivalent
option shall be substituted by such successor corporation (or a parent or
subsidiary of such successor corporation), unless such successor corporation
does not agree to assume the Option or to substitute an equivalent option, in
which case the Board shall, in lieu of such assumption or substitution, provide
for the Optionee to have the right to exercise the Option as to all of the
Optioned Stock, including Shares as to which the Option would not otherwise be
exercisable. If the Board makes an Option fully exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the Board
shall notify the Optionee that the Option shall be fully exercisable for a
period of thirty (30) days from the date of such notice, and the Option will
terminate upon the expiration of such period.
13. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date on which the Board makes the determination granting
such Option. Notice of the determination shall be given to each Employee,
Consultant or Director to whom an Option is so granted within a reasonable time
after the date of such grant.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board of Directors may
amend the Plan at any time or from time to time or may terminate it without
approval of the stockholders; provided, however, that the approval of the
holders of a majority of the outstanding shares of the Company entitled to vote
is required for any amendment which increases the number of shares for which
options may be granted, materially changes the standards of eligibility, or
constitutes an amendment for which stockholder approval is required in order to
comply with Rule 16b-3 under the Exchange Act or Section 422 of the Code.
However, no such action by the Board of Directors or stockholders may
unilaterally alter or impair any option previously granted under the Plan
without the consent of the optionee.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless otherwise agreed in writing by the Optionee and
the Company.
15. Conditions Upon Issuance of Shares. Shares shall not be issued
with respect to an Option granted under the Plan unless the exercise of such
Option and the issuance and delivery of such Shares pursuant thereto shall
comply with all relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the Shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such
28
Shares if, in the opinion of counsel for the Company, such a representation is
required by any of the aforementioned relevant provisions of law.
16. Reservation of Shares. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
Inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
17. Shareholder Approval.
(a) Continuance of the Plan shall be subject to approval by
the shareholders of the Company within twelve (12) months before or after the
date the Plan is adopted. If such shareholder approval is obtained at a duly
held shareholders' meeting, it must be obtained by the affirmative vote of the
holders of a majority of the outstanding shares of the Company, or if such
shareholder approval is obtained by written consent it must be obtained by the
unanimous written consent of all shareholders of the Company; provided, however,
that approval at a meeting or by written consent may be obtained by a lesser
degree of shareholder approval if the Board determines, in its discretion after
consolation with the Company's legal counsel, that such a lesser degree of
shareholder approval will comply with all applicable laws and will not adversely
affect the qualification of the Plan under Section 422 of the Code.
(b) For so long as the Company has a class of equity
securities registered pursuant to Section 12 of the Exchange Act, any required
approval of the shareholders of the Company obtained after such registration
shall be solicited substantially in accordance with Section 14(a) of the
Exchange Act and the rules and regulations promulgated thereunder.
Adopted by the Board of Directors on
April 10, 1991 and approved by the
shareholders on June 18, 1991.
Amended by the Board of Directors on
April 16, 1992 and approved by the
Shareholders on June 18, 1992
Amended by the Board of Directors on
March 18, 1993 and approved by the
Shareholders on June 17, 1993.
Amended by the Board of Directors on
April 18, 1995 and approved by the
Shareholders on [July , 1995].
29
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
P
R WEITEK CORPORATION
O
X PROXY FOR 1995 ANNUAL MEETING OF SHAREHOLDERS
Y JULY 26, 1995
The undersigned shareholder of Weitek Corporation, a California
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement and hereby appoints Barry L. Cox and Paul K.
Kidman, or either of them, proxies and attorneys-in-fact, with full power to
each of substitution, on behalf and in the name of the undersigned, to represent
the undersigned at the Annual Meeting of Shareholders of Weitek Corporation, to
be held on July 26, 1995, at 3:00 p.m., local time, at the Company's
headquarters located at 1060 E. Arques Ave., Sunnyvale, California, and at any
adjournment or adjournments thereof, and to vote all shares of Common Stock
which the undersigned would be entitled to vote if then and there personally
present, on the following matters and in the following manner as set forth on
the reverse side.
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE MARK,
SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENEVELOPE.
-----------
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
-----------
30
/X/ Please mark
votes as in
this example.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS, "FOR" THE AMENDMENT OF THE
COMPANY'S 1991 STOCK OPTION PLAN AND "FOR" THE RATIFICATION OF THE APPOINTMENT
OF PRICE WATERHOUSE LLP AS INDEPENDENT ACCOUNTANTS OF THE COMPANY AND AS SAID
PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING.
1. ELECTION OF DIRECTORS:
Nominees: Jack C. Carsten; Arthur J. Collmeyer; Barry L. Cox; David L.
Gellatly; and W. Frank King, III.
/ / FOR / / WITHHELD
For, all nominees except as noted below
- --------------------------------------------------------------------------------
2. Proposal to approve the amendment of the Company's 1991 Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. Proposal to ratify the appointment of Price Waterhouse LLP as the
independent accountants of the Company for the year ending December 31,
1995:
/ / FOR / / AGAINST / / ABSTAIN
and, in their discretion to vote upon such other matter or matters which
may properly come before the meeting, or any adjournment or adjournments
thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
MARK HERE IF YOU PLAN TO ATTEND THE MEETING / /
This Proxy should be marked, dated and signed by the shareholder(s) exactly as
his or her name appears hereon. Persons signing in a fiduciary capacity should
so indicate. If shares are held by joint tenants or as community property, both
should sign.
Signature: ____________________________________ Date _____________
Signature: ____________________________________ Date _____________