UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
TRIQUINT SEMICONDUCTOR, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(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 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
TRIQUINT SEMICONDUCTOR, INC.
2300 N.E. BROOKWOOD PARKWAY
HILLSBORO, OREGON 97124
April 20, 1998
Dear Stockholders:
Our Annual Meeting of Stockholders will be held on Thursday, May 28, 1998,
at 2:00 p.m., local time, at the Company's principal executive offices, located
at 2300 N.E. Brookwood Parkway, Hillsboro, Oregon 97124. You are invited to
attend this meeting to give us an opportunity to meet you personally, to allow
us to introduce to you the key management and Directors of your Company and to
answer any questions you may have.
The formal Notice of Meeting, the Proxy Statement, the proxy card and a copy
of the Annual Report to Stockholders for the year ended December 31, 1997 are
enclosed.
I hope that you will be able to attend the meeting in person. Whether or not
you plan to attend the meeting, please sign and return the enclosed proxy card
promptly. A prepaid return envelope is provided for this purpose. Your shares
will be voted at the meeting in accordance with your proxy.
If you have shares in more than one name, or if your stock is registered in
more than one way, you may receive multiple copies of the proxy materials. If
so, please sign and return each proxy card you receive so that all of your
shares may be voted. I look forward to meeting you at the Annual Meeting.
Very truly yours,
TRIQUINT SEMICONDUCTOR, INC.
[LOGO]
STEVEN J. SHARP
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
TRIQUINT SEMICONDUCTOR, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 28, 1998
TO OUR STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of TRIQUINT
SEMICONDUCTOR, INC., a Delaware corporation (the "Company"), will be held on
Thursday, May 28, 1998 at 2:00 p.m., local time, at the Company's principal
executive offices, located at 2300 N.E. Brookwood Parkway, Hillsboro, Oregon
97124, for the following purposes:
1. To elect six Directors to serve until the next Annual Meeting of
Stockholders or until their successors are duly elected and qualified
(Proposal No. 1);
2. To ratify the appointment of KPMG Peat Marwick LLP as independent
accountants of the Company for the fiscal year ending December 31, 1998
(Proposal No. 2);
3. To approve an amendment to the TriQuint Semiconductor, Inc. 1996 Stock
Incentive Program to increase the aggregate number of shares of Common
Stock that may be issued thereunder by 450,000 shares to a total of
1,250,000 shares as summarized in the attached proxy statement (Proposal
No. 3);
4. To approve the adoption of the TriQuint Semiconductor, Inc. 1998
Employee Stock Purchase Plan, the reservation of 400,000 shares of Common
Stock that may be issued thereunder; and the adoption of a provision for
an annual increase in the number of shares available for issuance under
the Plan on May 1st of each year beginning in 1999 equal to the lesser
of: (i) the number of shares of Common Stock needed to restore the number
of shares available for purchase to 400,000 or (ii) a lesser amount
determined by the Board; and
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Only stockholders of record at the close of
business on April 6, 1998 are entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed Proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if he or she has returned a Proxy.
By Order of the Board of Directors:
[LOGO]
Edward C.V. Winn
EXECUTIVE VICE PRESIDENT, FINANCE AND
ADMINISTRATION,
CHIEF FINANCIAL OFFICER AND SECRETARY
Hillsboro, Oregon
April 20, 1998
YOUR VOTE IS IMPORTANT.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING,
YOU ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY
AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE.
TRIQUINT SEMICONDUCTOR, INC.
2300 N.E. BROOKWOOD PARKWAY
HILLSBORO, OREGON 97124
------------------------
PROXY STATEMENT FOR 1998
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 28, 1998
SOLICITATION AND REVOCATION OF PROXIES
The enclosed Proxy is solicited on behalf of the Board of Directors of
TRIQUINT SEMICONDUCTOR, INC., a Delaware corporation (the "Company"), for use at
the Annual Meeting of Stockholders to be held Thursday, May 28, 1998 at 2:00
p.m., local time, or at any adjournment thereof, for the purposes set forth
herein and in the accompanying Notice of Annual Meeting of Stockholders. The
Annual Meeting will be held at the Company's principal executive offices,
located at 2300 N.E. Brookwood Parkway, Hillsboro, Oregon 97124. The Company's
telephone number at that location is (503) 615-9000. All expenses of the Company
associated with this solicitation 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 other employees, without additional compensation,
personally or by telephone or telegram. The Company may also retain an outside
proxy solicitation firm for which the Company would pay not more than $10,000.
The two persons named as proxies on the enclosed proxy card, Steven J. Sharp
and Edward C.V. Winn, were designated by the Board of Directors. All properly
executed proxies will be voted (except to the extent that authority to vote has
been withheld) and where a choice has been specified by the stockholder as
provided in the proxy card, it will be voted in accordance with the
specification so made. Proxies submitted without specification will be voted FOR
Proposal No. 1 to elect the nominees for Directors proposed by the Board of
Directors, FOR Proposal No. 2 to ratify the appointment of KPMG Peat Marwick LLP
as independent accountants for the Company, FOR Proposal No. 3 to approve an
amendment to the TriQuint Semiconductor, Inc. 1996 Stock Incentive Program to
increase the aggregate number of shares of Common Stock that may be issued
thereunder by 450,000 shares to a total of 1,250,000 shares as described in the
"1996 Stock Incentive Program Summary" below and FOR Proposal No. 4 to approve
the adoption of the TriQuint Semiconductor, Inc. 1998 Employee Stock Purchase
Plan and the reservation of 400,000 shares of Common Stock for issuance
thereunder along with a provision for an annual increase in the number of shares
available for issuance thereunder as described in the "1998 Employee Stock
Purchase Plan Summary" below.
A proxy may be revoked by a stockholder prior to its exercise by written
notice to the Secretary of the Company, by submission of another proxy bearing a
later date or by voting in person at the Annual Meeting of Stockholders. Such
notice or later proxy will not affect a vote on any matter taken prior to the
receipt thereof by the Company.
These proxy solicitation materials and the Company's Annual Report to
Stockholders for the year ended December 31, 1997, including financial
statements, were first mailed on or about April 20, 1998 to all stockholders
entitled to vote at the meeting.
VOTING AT THE MEETING
Stockholders of record at the close of business on April 6, 1998 are
entitled to notice of, and to vote at, the Annual Meeting. The Company has one
series of Common Stock outstanding, designated Common Stock, $.001 par value. At
the record date, 9,383,976 shares of the Company's Common Stock were issued
1
and outstanding and held by 275 stockholders of record. The closing price of the
Company's Common Stock on the record date was $21.25. No shares of the Company's
Preferred Stock were outstanding.
Every stockholder voting for the election of Directors (Proposal No. 1) may
cumulate such stockholder's votes and give one candidate a number of votes equal
to the number of Directors to be elected multiplied by the number of shares that
such stockholder is entitled to vote, or distribute such stockholder's votes on
the same principle among as many candidates as the stockholder may select,
provided that votes cannot be cast for more than six candidates. However, no
stockholder shall be entitled to cumulate votes unless the candidate's name has
been placed in nomination prior to the voting and the stockholder, or any other
stockholder, has given notice at the meeting, prior to the voting, of the
intention to cumulate the stockholder's votes.
On all other matters, each share of Common Stock outstanding on the record
date is entitled to one vote per share at the Annual Meeting. If a quorum is
present at the Annual Meeting: (i) the six nominees for election as Directors
who receive the greatest number of votes cast for the election of Directors
shall be elected Directors and (ii) Proposal No. 2 to ratify the appointment of
KPMG Peat Marwick LLP as independent accountants for the Company, (iii) Proposal
No. 3 to approve an amendment to the TriQuint Semiconductor, Inc. 1996 Stock
Incentive Program to increase the aggregate number of shares of Common Stock
that may be issued thereunder by 450,000 shares to a total of 1,250,000 shares
as described in the "1996 Stock Incentive Program Summary" below and (iv)
Proposal No. 4 to approve the adoption of the TriQuint Semiconductor, Inc. 1998
Employee Stock Purchase Plan and the reservation of 400,000 shares of Common
Stock for issuance thereunder along with a provision for an annual increase in
the number of shares available for issuance as described in the "1998 Employee
Stock Purchase Plan Summary" below will be approved if the proposal receives the
affirmative vote of the holders of a majority of shares of Common Stock present
in person or represented by proxy at the Annual Meeting and entitled to vote.
With respect to the election of Directors, Directors are elected by a
plurality of the votes cast and only votes cast in favor of a nominee will have
an effect on the outcome. Therefore, abstention from voting or nonvoting by
brokers will have no effect thereon. With respect to voting on Proposal No. 2,
abstention from voting or nonvoting by brokers will have no effect thereon. With
respect to voting on Proposals No. 3 and No. 4, abstention from voting will have
the same effect as voting against the proposal and nonvoting by brokers will
have no effect thereon.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
NOMINEES
A board of six Directors is to be elected at the Annual Meeting of
Stockholders. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ELECTION OF EACH OF THE NOMINEES NAMED BELOW. Unless otherwise instructed, the
proxy holders will vote the proxies received by them for the Company's six
nominees named below, all of whom are presently Directors of the Company. In the
event that any nominee of the Company is unable or declines to serve as a
Director at the time of the Annual Meeting of Stockholders, the proxies will be
voted for any nominee who shall be designated by the present Board of Directors
to fill the vacancy. The Company is not aware of any nominee who will be unable
or will decline to serve as a Director. In the event that additional persons are
nominated for election as Directors, the proxy holders intend to vote all
proxies received by them in such a manner (in accordance with cumulative voting)
as will assure the election of as many of the nominees listed below as possible,
and, in such event, the specific nominees to be voted for will be determined by
the proxy holders. The term of office for each person elected as a Director will
continue until the next Annual
2
Meeting of Stockholders or until a successor has been elected and qualified. The
following table lists the persons nominated by the Board of Directors to be
elected as Directors along with certain information:
NAME OF NOMINEE AGE POSITION WITH THE COMPANY SINCE
- ------------------------- --- -------------------------------------- ---------
Steven J. Sharp 56 President, Chief Executive Officer and 1991
Chairman of the Board
Dr. Paul A. Gary 57 Director 1996
Charles Scott Gibson 45 Director 1992
E. Floyd Kvamme 60 Director 1991
Dr. Walden C. Rhines 51 Director 1995
Edward F. Tuck 66 Director 1994
There is no family relationship between any director or executive officer of
the Company.
Mr. Sharp joined the Company in September 1991 as President, Chief Executive
Officer and Director. In May 1992 he became Chairman of the Board of Directors.
For the prior eight years he had served in various roles associated with venture
capital financed semiconductor companies. From April 1988 to June 1989, Mr.
Sharp was the founder and served as Chief Executive Officer of Power
Integrations, Inc., a semiconductor manufacturing company. Previously, Mr. Sharp
was employed for 14 years by Signetics Corporation, a semiconductor
manufacturer, and for nine years by Texas Instruments, a semiconductor
manufacturer. Mr. Sharp also serves as a director of Power Integrations (an
integrated circuit company). He received a B.S. degree in Mechanical Engineering
from Southern Methodist University, an M.S. degree in Engineering Science from
California Institute of Technology and an M.B.A. from Stanford University.
Dr. Gary has been a director of the Company since May 1996. From May 1987
until June 1996, Mr. Gary served in various capacities for AT&T
Microelectronics, a telecommunications company, with his last position being
Vice President of the Netcom IC Business Unit. Mr. Gary retired from AT&T in
June 1996. Mr. Gary holds a B.S. degree in Electrical Engineering from Lafayette
College, an M.S. degree in Electrical Engineering from Stanford University and a
Ph.D. in Electrical Engineering from Stanford University.
Mr. Gibson has been a director of the Company since September 1992. Since
March 1992, Mr. Gibson has been a director and consultant to high technology
companies. He co-founded Sequent Computer Systems Inc., a computer systems
company, in 1983 and served as President from January 1988 to February 1992.
From 1976 to 1983, Mr. Gibson was employed at Intel Corporation as General
Manager, Memory Components Operations. Mr. Gibson also serves as a director and
Chairman of Adaptive Solutions Inc., RadiSys Corporation, Inference Software,
Integrated Measurement Systems Corporation, Health Systems Technology, Telemark,
and Webridge. Mr. Gibson is also the Chairman of the Board of the Oregon
Graduate Institute of Science and Technology. He received a B.S. in Electrical
Engineering and an M.B.A. from the University of Illinois.
Mr. Kvamme has been a director of the Company since May 1991. He was a
director of Gazelle Microcircuits, Inc. ("Gazelle"), a predecessor corporation
of the Company, from its inception in 1986 to May 1991. He has been a General
Partner of Kleiner Perkins Caufield & Byers, a venture capital firm, since 1984.
He is also a director of Photon Dynamics, Inc. (a display equipment company),
Harmonic Lightwaves, Inc. (a telecom/cable equipment supplier company), Prism
Solutions ( a software company), Power Integrations (an integrated circuit
company), and several private companies. He received a B.S. in Electrical
Engineering from the University of California at Berkeley and an M.S. in
Engineering from Syracuse University.
Dr. Rhines has been a director of the Company since May 1995. Dr. Rhines has
been the President, Chief Executive Officer and a director of Mentor Graphics
Corporation ("Mentor"), an electronic design automation company, since 1993.
Prior to joining Mentor, Dr. Rhines spent twenty-one years at Texas
3
Instruments, Inc. ("TI"), with his most recent position having responsibility
for directing TI's worldwide semiconductor business as the Executive Vice
President of TI's Semiconductor Group. Dr. Rhines holds a B.S. degree in
Metallurgical Engineering from the University of Michigan, an M.S. and Ph.D. in
Materials Science and Engineering from Stanford University and an M.B.A. from
Southern Methodist University.
Mr. Tuck has been a director of the Company since November 1994. He is a
Managing Director of Kinship Venture Management LLP, which is the general
partner of Kinship Partners II, a venture capital firm. From January 1986 to May
1995, he was also a Managing Director of Boundary LLP, which is the general
partner of the Boundary Fund III, a venture capital fund. Mr. Tuck is Chairman
of Endgate Technology Corporation, Chairman of Space Destinations Services,
Inc., Vice Chairman of Teledesic Corporation and a director of Applied Digital
Access, Inc., Angel Technologies and TeleQual Corporation. Mr. Tuck holds a B.S.
degree in Electrical Engineering from the University of Missouri at Rolla and
serves on its Board of Trustees.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held a total of seven (7) meetings
during fiscal 1997. No director attended fewer than 75 percent of the meetings
of the Board of Directors and committees thereof, if any, during the period that
he was a member of the Board of Directors. The Board of Directors has an Audit
Committee and a Compensation Committee. The Board of Directors has no Nominating
Committee or any committee performing such functions.
The Audit Committee consisted of Directors Tuck (Chairman), Kvamme and Gary.
The Audit Committee is responsible for overseeing actions taken by the Company's
independent accountants and reviews the Company's internal financial controls.
The Audit Committee met twice during 1997, with all then current members present
at each meeting except Director Gary who was not present at the December
meeting.
The Compensation Committee, which consisted of Directors Kvamme (Chairman),
Gibson and Rhines during 1997, is responsible for determining salaries,
incentives and other forms of compensation for the executive officers of the
Company as well as overseeing the administration of various incentive
compensation and benefit plans, including the 1996 Stock Incentive Program. The
Compensation Committee met twice during 1997, with all members present at each
meeting.
4
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(PROPOSAL NO. 2)
The Board of Directors has selected KPMG Peat Marwick LLP, independent
accountants, to audit the financial statements of the Company for the fiscal
year ending December 31, 1998, subject to ratification by the stockholders of
the Company. In the absence of contrary specifications, the shares represented
by the proxies will be voted FOR the following resolution ratifying the
appointment of KPMG Peat Marwick LLP as the Company's independent accountants
for the fiscal year ending December 31, 1998.
RESOLVED, that the stockholders of TriQuint Semiconductor, Inc. hereby
ratify the appointment of KPMG Peat Marwick LLP as the Company's independent
accountants for the fiscal year ending December 31, 1998.
KPMG Peat Marwick LLP has audited the Company's financial statements
annually since 1991. Representatives of KPMG Peat Marwick LLP are expected to be
present at the meeting with the opportunity to make a statement if they desire
to do so and are expected to be available to respond to appropriate questions.
In the event of a negative vote on ratification, the Board of Directors will
reconsider its selection.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION
OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT ACCOUNTANTS
OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998.
5
AMENDMENT TO THE TRIQUINT SEMICONDUCTOR, INC.
1996 STOCK INCENTIVE PROGRAM
(PROPOSAL NO. 3)
The Board of Directors has approved an amendment to the TriQuint
Semiconductor, Inc. 1996 Stock Incentive Program (the "Program") to increase the
aggregate number of shares of Common Stock that may be issued thereunder by
450,000 shares to a total of 1,250,000 shares. For a description of the Program
see "1996 Stock Incentive Program Summary" below.
The amendment to the Program was adopted by the Board in order to provide
additional long-term incentives to all employees of the Company as well as to
maintain competitive compensation packages for key employees of the Company. As
of April 6, 1998, options to purchase 710,089 shares of the Company's Common
Stock have been granted pursuant to the Program, 87,712 of which were vested.
This proposal increases the number of shares authorized for issuance under the
Program to provide sufficient shares for anticipated grants to be issued to both
new and existing employees through May 1999. The Company intends to utilize the
options available for grant to attract and retain both executive and other key
employees.
In the absence of contrary specifications, the shares represented by proxies
will be voted FOR the following resolution approving the above:
RESOLVED, that the stockholders of TriQuint Semiconductor, Inc. hereby
approve the amendment to the 1996 Stock Incentive Program to increase the
aggregate number of shares of Common Stock that may be issued thereunder by
450,000 shares to a total of 1,250,000 shares.
The affirmative vote of the holders of at least a majority of the shares of
Common Stock present in person or represented by proxy and entitled to vote at
the Annual Meeting is required to adopt the foregoing resolution. The award of
options under the Program is at the discretion of the Compensation Committee of
the Board of Directors. See "Executive Compensation--Stock Incentive Program"
below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL
OF THE AMENDMENT TO THE TRIQUINT SEMICONDUCTOR, INC.
1996 STOCK INCENTIVE PROGRAM.
6
ADOPTION OF THE TRIQUINT SEMICONDUCTOR, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
(PROPOSAL NO. 4)
The Board of Directors has approved the adoption of the TriQuint
Semiconductor, Inc. 1998 Employee Stock Purchase Plan (the "Purchase Plan"), the
reservation of 400,000 shares of Common Stock that may be issued thereunder and
the adoption of a provision for an annual increase in the number of shares
available for issuance under the plan on May 1st of each year beginning in 1999
equal to the lesser of: (i) the number of shares of Common Stock needed to
restore the number of shares available for purchase to 400,000 or (ii) a lesser
amount determined by the Board. For a description of the Purchase Plan see "1998
Employee Stock Purchase Plan Summary" below.
This was adopted by the Board of Directors in order to provide sufficient
shares to allow employees the opportunity to purchase shares of the Company's
Common Stock through payroll deductions and encourage employee ownership of the
Company's Common Stock.
In the absence of contrary specifications, the shares represented by proxies
will be voted FOR the following resolution approving the amendment to the Plan:
RESOLVED, that the stockholders of TriQuint Semiconductor, Inc. hereby
approve the adoption of the 1998 Employee Stock Purchase Plan, the reservation
of 400,000 shares of Common Stock for issuance thereunder, and the adoption of a
provision for an annual increase in the number of shares available for issuance
under the plan on May 1st of each year beginning in 1999 equal to the lesser of:
(i) the number of shares of Common Stock needed to restore the number of shares
available for purchase to 400,000 or (ii) a lesser amount determined by the
Board.
The affirmative vote of the holders of at least a majority of the shares of
Common Stock present in person or represented by proxy at the Annual Meeting is
required to adopt the foregoing resolution.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE
TRIQUINT SEMICONDUCTOR, INC. 1998 EMPLOYEE STOCK PURCHASE PLAN.
7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Stock of the Company as of April 6, 1998 as to (i) each
person who is known by the Company to own beneficially 5% or more of the
outstanding shares of Common Stock, (ii) each Director of the Company, (iii) the
Chief Executive Officer and the next four most highly compensated executive
officers as of December 31, 1997 (the "Named Executive Officers") and (iv) the
Directors and the executive officers as a group.
COMMON STOCK APPROXIMATE
FIVE PERCENT STOCKHOLDERS, DIRECTORS BENEFICIALLY PERCENTAGE
AND CERTAIN EXECUTIVE OFFICERS OWNED OWNED (1)
- ------------------------------------------------------------------------------------ -------------- ---------------
Raytheon TI Systems, Inc.(2)........................................................ 844,613 9.00%
13510 N. Central Expressway
Dallas, Texas 75243
Lucent Technologies, Inc. (3)....................................................... 661,059 7.04%
600 Mountain Avenue
Murray Hill, NJ 07974
Steven J. Sharp (4)................................................................. 193,483 2.02%
E. Floyd Kvamme (5)................................................................. 91,406 *
Edward C. V. Winn (6)............................................................... 43,598 *
Charles Scott Gibson (7)............................................................ 34,990 *
Bruce Fournier (8).................................................................. 31,839 *
Walden C. Rhines (9)................................................................ 30,000 *
Ronald R. Ruebusch (10)............................................................. 23,876 *
Edward F. Tuck (11)................................................................. 23,000 *
J. David Pye (12)................................................................... 22,700 *
Paul A. Gary (13)................................................................... 2,000 *
All Directors and executive officers as a group (12 persons) (14)................... 558,536 5.70%
- ------------------------
* Less than 1%
(1) Applicable percentage of ownership is based on 9,383,976 shares of Common
Stock outstanding as of April 6, 1998 together with applicable options for
such stockholders. Beneficial ownership is determined in accordance with
the rules of the Securities and Exchange Commission the ("SEC"), and
includes voting and investment power with respect to shares. Shares of
Common Stock subject to options or warrants currently exercisable or
exercisable within 60 days after April 6, 1998 are deemed outstanding for
computing the percentage ownership of the person holding such options or
warrants, but are not deemed outstanding for computing the percentage of
any other person.
(2) The Company has been advised in a Schedule 13-G filed with the SEC on
January 22, 1998 by Raytheon TI Systems, Inc., ("RTIS") that on January 13,
1998 the Company issued 844,613 shares of TriQuint Common Stock (the
"Shares") to RTIS as partial consideration for the purchase of the
Monolithic Microwave Integrated Circuit ("MMIC") operations of the former
Texas Instruments' Defense Systems & Electronics Group from RTIS. Pursuant
to a requirement for approval of the transaction by the Department of
Justice, RTIS entered into a Voting Trust Agreement with State Street Bank
and Trust Company on January 13, 1998 with respect to the Shares, which
TriQuint issued in the name of "State Street Bank and Trust Company, as
Trustee" and delivered to State Street to be held pursuant to the terms of
the Voting Trust Agreement. Under the terms of the Voting Trust Agreement,
State Street has sole voting power with respect to the Shares. Pursuant to
8
Rule 13d-3(a)(2) promulgated under the Securities Exchange Act of 1934,
RTIS may be deemed to have sole dispositive power with respect to the
Shares.
(3) The Company has been advised in a Schedule 13-D filed with the SEC on
December 11, 1996 by Lucent Technologies, Inc. ("Lucent") as follows:
Lucent acquired sole voting and dispositive power over 661,059 shares of
the Company's Common Stock from AT&T Corp. ("AT&T") on September 27, 1996.
The interest in the Company's Common Stock was transferred to Lucent from
AT&T pursuant to the Separation and Distribution Agreement dated February
1, 1996 and Amended and Restated as of March 29, 1996 between AT&T, Lucent
and NCR Corporation. Lucent's beneficial ownership of 661,059 shares
includes 200,000 shares issuable pursuant to a presently exercisable
warrant.
(4) Represents 184,417 shares issuable pursuant to options exercisable within
60 days of April 6, 1998.
(5) Represents 6,938 shares issuable pursuant to options exercisable within 60
days of April 6, 1998.
(6) Represents 41,155 shares issuable pursuant to options exercisable within 60
days of April 6, 1998.
(7) Represents 5,000 shares held by Mr. Gibson's wife and 10,000 shares
issuable pursuant to options exercisable within 60 days of April 6, 1998.
(8) Represents 29,263 shares issuable pursuant to options exercisable within 60
days of April 6, 1998.
(9) Represents 2,000 shares held by Mr. Rhines wife and daughter and 15,000
shares issuable pursuant to options exercisable within 60 days of April 6,
1998.
(10) Represents 22,401 shares issuable pursuant to options exercisable within 60
days of April 6, 1998.
(11) Represents 21,000 shares issuable pursuant to options exercisable within 60
days of April 6, 1998.
(12) Represents 22,700 shares issuable pursuant to options exercisable within 60
days of April 6, 1998.
(13) Mr. Gary is a former employee of the predecessor of Lucent Technologies,
Inc., AT&T. Mr. Gary has no shared voting or investment control over the
shares of the Company's Common Stock held by Lucent Technologies, Inc.
(14) Represents 413,885 shares issuable pursuant to options exercisable within
60 days of April 6, 1998.
9
EXECUTIVE OFFICERS OF THE REGISTRANT
The names, ages and positions of the Company's current executive officers
are as follows:
POSITION HELD
NAME AGE CURRENT POSITION(S) WITH COMPANY SINCE
- ------------------------------ --- --------------------------------------------------------------- -------------
Steven J. Sharp 56 Chairman of the Board of Directors, President and Chief 1992
Executive Officer
Thomas Cordner 53 Vice President and General Manager, TriQuint Texas 1998
Bruce R. Fournier 41 Vice President, Sales 1994
Donald H. Mohn 45 Vice President, Telecommunications and Computing 1995
J. David Pye 48 Vice President, Manufacturing Operations 1996
E.K. Ranjit 48 Vice President, Finance, Treasurer and Assistant Secretary 1996
Ronald R. Ruebusch 48 Vice President and General Manager, Wireless Communications 1996
Edward C.V. Winn 59 Executive Vice President, Finance and Administration, Chief 1996
Financial Officer and Secretary
For information on the business background of Mr. Sharp, see "Nominees for
Director" above.
Mr. Cordner joined the Company as Vice President and General Manager of
TriQuint Semiconductor Texas as a result of the January 1998 acquisition of the
MMIC Business from Raytheon TI Systems. Mr. Cordner was an employee of Texas
Instruments for 32 years before joining TriQuint. He held various management
positions at TI engineering and manufacturing. He managed the GaAs Operations
Group at Texas Instruments since the technology was transferred from research to
production in 1982. Mr. Cordner graduated from the University of Texas at
Arlington in 1969 with a B.S. degree in Mathematics.
Mr. Fournier has held the position of Vice President, Sales since September
1994. Mr. Fournier joined the Company in June 1987 as the Eastern Area Sales
Manager. In July 1991, Mr. Fournier was promoted to National Sales Manager,
Wireless Products and in January 1994 was promoted to Director of World Wide
Sales. Prior to joining the Company, Mr. Fournier was a sales manager for the
semiconductor division at Honeywell, SPT. Mr. Fournier received an A.S. degree
in Electrical Engineering from the University of Maine in 1977, a B.S. degree in
Business Administration from the University of Maine in 1979 and an M.B.A. from
the University of Southern Maine in 1982.
Mr. Mohn joined the Company in June 1995 as Vice President,
Telecommunications and Computing. From July 1993 until June 1995, Mr. Mohn was
Vice President, Marketing for IC Works, Inc. where he was responsible for
product strategy development, tactical marketing, marketing communications and
public relations. From 1989 until July 1993, Mr. Mohn held various positions at
AT&T Microelectronics, with his last position there being Director/General
Manager of the Application Specific Standard Products Group, which he started in
1989 and grew to $100 million in revenue by 1993. Mr. Mohn received a B.S.
degree in electrical engineering from the University of Minnesota and an M.B.A.
from the University of Dallas, Texas.
Mr. Pye joined the Company in June 1996 as Vice President, Manufacturing
Operations. Prior to joining the Company, Mr. Pye was Vice President and General
Manager at VLSI Technology from 1983 to 1986, where he served in various
capacities. From 1973 to 1983, Mr. Pye worked at Texas Instruments, Inc.,
involved in process engineering and process development. Mr. Pye holds a B.A.
degree from Napier College of Science and Technology in Edinburgh, Scotland
Mr. Ranjit joined the Company in May 1991 and from that date until June
1996, served as Corporate Controller and Treasurer. In June 1996, Mr. Ranjit was
promoted to Vice President, Finance, Treasurer and Assistant Secretary. From
1986 until May 1991, Mr. Ranjit held various positions at GigaBit Logic, a
10
predecessor of the Company, including Controller, Director of Finance and
Corporate Secretary. Previously, Mr. Ranjit spent nine years in various
management positions in finance and administration at Mostek Semiconductor and
Controltronics, Inc. Mr. Ranjit received an Accounting degree from the
University of Calicut, India, a B.S in Business Administration from the
University of Texas and is a Certified Public Accountant.
Mr. Ruebusch joined the Company in May 1996 as Vice President and General
Manager, Wireless Communications. From 1993 to 1996, Mr. Ruebusch was Vice
President, Semiconductor Product Development at Celeritek, Inc. From 1991 to
1993, Mr. Ruebusch held management positions at Pacific Monolithics. Prior to
that, Mr. Ruebusch spent thirteen years in various management positions at
Advanced Micro Devices and Signetics Corp. Mr. Ruebusch holds B.S.E.E., M.S.E.E.
and M.B.A. degrees from the University of Santa Clara.
Mr. Winn was a consultant to the Company and Acting Vice President,
Computing and Networking from March 1992 to January 1993. In January 1993 he
joined the Company as Vice President and General Manager, Computing and
Networking and in September 1994 was promoted to Executive Vice President and
Chief Operating Officer. In May 1996, Mr. Winn was promoted to Executive Vice
President, Finance and Administration and Chief Financial Officer and in
December 1996, became the Company's Secretary. From 1985 until December 1991,
served in various capacities with Avantek, Inc., a microwave semiconductor
company, most recently as Product Group Vice President. Mr. Winn's prior
experience includes 14 years with Signetics Corporation, a manufacturer of
integrated circuits, where he held various marketing and operations management
positions. He received a B.S. in Physics from Rensselaer Polytechnic Institute
and an M.B.A. from Harvard University.
11
EXECUTIVE COMPENSATION AND OTHER MATTERS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information for fiscal years
1997, 1996 and 1995 concerning compensation awarded to, earned by or paid to the
Company's Chief Executive Officer and each of the four other most highly
compensated executive officers of the Company determined as of the end of the
last fiscal year (hereafter referred to as the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -------------
------------------------------------------- SECURITIES ALL OTHER
NAME AND OTHER ANNUAL UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION($) OPTIONS(#) ($)(2)
- ---------------------------------------- --------- ------------ ----------- ---------------- ------------- ---------------
Steven J. Sharp 1997 268,000 17,818 30,000(3) 107,000 4,232
Chairman of the Board, 1996 265,000 2,938 31,704(3) -- 4,239
President and Chief 1995 245,463 3,034 33,408(3) -- 2,480
Executive Officer
Edward C. V. Winn 1997 216,949 14,386 -- 24,000 3,339
Executive Vice President, 1996 206,042 2,297 -- -- 3,244
Finance and Administration, 1995 195,664 2,352 -- -- 3,071
Chief Financial Officer and Secretary
Bruce R. Fournier 1997 201,165(4) 3,010 -- 16,000 362
Vice President, Sales 1996 187,267(4) 1,828 -- -- 340
1995 163,227(4) 1,240 -- -- 206
J. David Pye 1997 187,134 12,849 23,424(6) 9,000 1,117
Vice President, 1996 81,827(5) 785 28,949(6) 55,000 516
Manufacturing Operations 1995 -- -- -- -- --
Ronald R. Ruebusch 1997 154,592 10,546 -- 9,000 510
Vice President & Gen Manager 1996 92,308(7) 470 106,897(6) 40,000 490
Wireless Communications 1995 -- -- -- -- --
- ------------------------
(1) Represents payments under the Key Employee Incentive Plan and the Company
wide profit sharing program.
(2) Represents premiums for group term life insurance.
(3) Represents forgiveness of Mr. Sharp's relocation loan and associated
interest charges (see "Employment Contracts and Change-in-Control
Arrangements").
(4) Includes sales commissions of $74,816, $67,709 and $48,472 earned in 1997,
1996, and 1995, respectively.
(5) Includes compensation earned from June 1996 when Mr. Pye joined the Company
to the end of fiscal 1996.
(6) Represents reimbursement of relocation expenses.
(7) Includes compensation earned from May 1996 when Mr. Ruebusch joined the
Company to the end of fiscal 1996.
12
STOCK OPTION GRANTS
The following table contains information concerning the grant of stock
options under the Company's 1996 Stock Incentive Program (the "Program") to the
Named Executive Officers in 1997.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE
INDIVIDUAL GRANTS(1) AT ASSUMED ANNUAL
------------------------------------------------------ RATES
NUMBER OF OF STOCK PRICE
SECURITIES % OF TOTAL APPRECIATION
UNDERLYING OPTIONS GRANTED FOR OPTION TERM(2)
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION ----------------------
NAME GRANTED FISCAL YEAR PRICE($/SH.) DATE 5%($) 10%($)
- ------------------------------------ ----------- --------------- ----------- ----------- ---------- ----------
Steven J. Sharp (3)................. 80,000 14.17% $ 23.25 03/20/07 1,169,744 2,964,361
Steven J. Sharp (3)................. 27,000 4.78% $ 20.25 12/03/07 343,848 871,379
Edward C. V. Winn (4)............... 15,000 2.66% $ 23.25 03/20/07 219,327 555,818
Edward C. V. Winn (4)............... 9,000 1.59% $ 20.25 12/03/07 114,616 290,460
Bruce R. Fournier (5)............... 10,000 1.77% $ 23.25 03/20/07 146,218 370,545
Bruce R. Fournier (5)............... 6,000 1.06% $ 20.25 12/03/07 76,411 193,640
J. David Pye (6).................... 9,000 1.59% $ 20.25 12/03/07 114,616 290,460
Ronald Ruebusch (7)................. 9,000 1.59% $ 20.25 12/03/07 114,616 290,460
- ------------------------
(1) The grant of options under the Program to executive officers, including the
officers named in the Summary Compensation Table above, is subject to the
discretion of the Compensation Committee of the Board of Directors.
(2) These calculations are based on certain assumed annual rates of appreciation
as required by rules adopted by the SEC requiring additional disclosure
regarding executive compensation. Under these rules, an assumption is made
that the shares underlying the stock options shown in this table could
appreciate at rates of 5% and 10% per annum on a compounded basis over the
ten-year term of the stock options. Actual gains, if any, on stock option
exercises are dependent on the future performance of the Company's Common
Stock and overall stock market conditions. There can be no assurance that
amounts reflected in this table will be achieved.
(3) Options vest per the following schedules: The 80,000 share grant vests
20,000 shares from 6/1/97 through 5/31/98 in equal monthly installments;
30,000 shares from 6/1/98 through 5/31/99 in equal monthly installments; and
30,000 shares from 6/1/99 through 5/31/00 in equal monthly installments. The
27,000 share grant vests from 6/1/00 through 5/31/01 in equal monthly
installments.
(4) Options vest per the following schedules: The 15,000 share grant vests 5,000
shares from 6/1/98 through 5/31/99 in equal monthly installments; and 10,000
shares from 6/1/99 through 5/31/00 in equal monthly installments. The 9,000
share grant vests from 6/1/00 through 5/31/01 in equal monthly installments.
(5) Options vest per the following schedules: The 10,000 share grant vests 3,500
shares from 6/1/98 through 5/31/99 in equal monthly installments; and 6,500
shares from 6/1/99 through 5/31/00 in equal monthly installments. The 6,000
share grant vests from 6/1/00 through 5/31/01 in equal monthly installments.
(6) The 9,000 share grant vests from 6/1/00 through 5/31/01 in equal monthly
installments.
(7) The 9,000 share grant vests from 6/1/00 through 5/31/01 in equal monthly
installments.
13
STOCK OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information with respect to the
exercise of stock options and the value of stock options held by each of the
Named Executive Officers at December 31, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
VALUE AT FY-END (#) AT FY-END($)(2)
SHARES ACQUIRED REALIZED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) ($)(1) UNEXERCISABLE UNEXERCISABLE
- --------------------------------- --------------- ------------ -------------------- ------------------------
Steven J. Sharp.................. 40,000 $ 1,148,909 289,417 97,000 $ 4,769,510 $ 0
Edward C.V. Winn................. 22,188 $ 635,618 46,245 34,680 $ 689,523 $ 148,845
Bruce R. Fournier................ 3,650 $ 111,100 31,010 22,490 $ 447,032 $ 93,592
J. David Pye..................... 7,000 $ 102,375 22,000 42,000 $ 2,750 $ 4,125
Ronald R. Ruebusch............... -- -- 16,800 32,200 $ 31,500 $ 43,500
- ------------------------
(1) Market value of the underlying securities at exercise date, minus the
exercise price of the options.
(2) Based on the closing price of $20.25 of the Company's Common Stock on
December 31, 1997 as reported by The NASDAQ National Market, minus the
exercise price of the unexercised options.
DIRECTOR COMPENSATION
Until April 3, 1996, Directors received no cash fees for services provided
in that capacity but were reimbursed for out-of-pocket expenses incurred in
connection with attendance at meetings of the Board of Directors. From and after
April 3, 1996, each non-employee Directors receives, in addition to
reimbursement for out-of-pocket expenses, $1,000 per Board meeting attended in
person and $500 for each Board meeting in which he participates by phone and for
each committee meeting he attends. The Company's 1987 and 1996 Stock Incentive
Programs provide that options may not be granted to non-employee Directors who
represent stockholders holding more than 1% of the outstanding shares. Options
may be granted to non-employee Directors who do not represent such stockholders
("Outside Directors") only pursuant to a nondiscretionary, automatic grant
mechanism, whereby each Outside Director is automatically granted an option to
purchase 6,000 shares on the date of each Annual Meeting of Stockholders. Each
new Outside Director who joins the Board on a date other than the date of an
Annual Meeting of Stockholders is entitled to automatically receive an option to
purchase a prorata number of shares of the Company's Common Stock based upon the
portion of the period between the Annual Meetings of Stockholders remaining.
Options granted to Outside Directors have an exercise price equal to the fair
market value of the Company's Common Stock as of the date of grant and vest at a
rate of 12.5% per calendar quarter following the date of grant so long as the
optionee remains a Director of the Company.
14
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
EDWARD C.V. WINN. In February 1995, Edward C.V. Winn, the Company's Chief
Financial Officer, Executive Vice President, Finance and Administration and
Secretary, entered into a letter agreement with the Company pursuant to which he
is to receive an annual base salary of $190,000. The agreement provides that,
with certain exceptions, in the event that Mr. Winn's employment is terminated
by the Company for other than just cause, he will receive severance pay equal to
nine months salary at his then current salary (not less than $190,000 per year)
paid every two weeks and fully paid Company insurance benefits for nine months.
Should the Company experience a change in control and Mr. Winn elects to leave
the Company for good reason, Mr. Winn will become vested in the last eight
months of his unvested stock options (see "Change-in-Control Arrangements"
below) and receive a lump-sum payment equal to six months pay at his then
current salary (not less than $190,000 per year) plus fully paid Company
insurance benefits for six months.
STEVEN J. SHARP. In September 1991, under the terms of his acceptance of
employment with the Company, Steven J. Sharp, President, Chief Executive Officer
and Chairman of the Board of Directors, entered into a letter agreement with the
Company pursuant to which he was to receive an annual base salary of $225,000,
subject to annual review, and a quarterly bonus of $18,750 if the Company
achieved its operating income goals in the relevant quarter. The Company also
granted Mr. Sharp an option to purchase 178,571 shares of Common Stock with an
exercise price of $1.40 per share which option vested at a rate of 2% per month
over a 50-month period. Upon the closing of the Company's initial public
offering in December 1993, that portion of Mr. Sharp's option which would
otherwise have vested over the final 12 months of the 50 month vesting period
(42,857 shares) vested immediately.
In the event that the Company desires to terminate Mr. Sharp's employment
for any reason, it must provide Mr. Sharp with one year's advance notice or, in
lieu of such notice, a payment equal to one year's compensation at the
then-current rate. In conjunction with his acceptance of employment, Mr. Sharp
also received a loan from the Company in the amount of $150,000 in lieu of
relocation assistance. The loan agreement provides that the loan will be
forgiven in the amount of $30,000 (and any accrued interest) on each of January
1, 1993, 1994, 1995, 1996 and 1997. The agreement also provides that if Mr.
Sharp's employment with the Company is terminated for any reason, the entire
principal amount remaining, and any accrued interest, will be forgiven as of the
date of termination. The balance of this loan was $30,000. The final debt
forgiveness was recorded on January 1, 1997 in the amount of $31,704.
CHANGE-IN-CONTROL ARRANGEMENTS
In January 1995, the Board approved an amendment to the option agreements
held by each current and future executive officer (an "Executive Officer") of
the Company, as determined from time to time by the Board of Directors or
committee thereof, to provide that, in the event of a change of control of the
Company, certain outstanding options held by each Executive Officer listed on
page X of this Proxy Statement to purchase Common Stock of the Company granted
pursuant to the Company's incentive stock programs, regardless of whether such
stock options are then exercisable in accordance with their terms, shall become
vested and exercisable as follows:
1. The Chief Executive Officer shall become immediately vested for those
shares that would have otherwise become vested over the last twelve months of
the options' vesting schedules.
2. The Chief Financial Officer shall become immediately vested for those
shares that would otherwise have become vested over the last eight months of the
options' vesting schedules.
15
3. All other Executive Officers shall become immediately vested for those
shares that would have otherwise become vested over the last four months of the
options' vesting schedules.
However, the amendment prohibits such acceleration if the Board of Directors
determines, based on written opinion of the Company's independent public
accountants, that the enforcement of the foregoing amendments to the option
agreements of the Executive Officers, which require the acceleration of vesting
of options to purchase shares of the Company's Common Stock under certain
circumstances upon a change of control, would preclude accounting for any
proposed business combination of the Company as a "pooling of interests," and
the Board of Directors otherwise desires to approve a proposed business
combination, a condition to the closing of which is that it be accounted for as
a "pooling of interests," then the foregoing amendments to the option agreements
of the Executive Officers shall be null and void.
The reincorporation of the Company from California to Delaware on February
18, 1997 was not a change in control and no acceleration of option vesting
occurred as a result.
1996 STOCK INCENTIVE PROGRAM SUMMARY
BACKGROUND. The 1996 Stock Incentive Program (the "1996 Program"), which
was approved by the Company's Board of Directors in February 1996 and, replaced
the existing 1987 Stock Incentive Program (the "1987 Program" ) when, pursuant
to its terms, the 1987 Program terminated. The Program provides for the grant of
incentive stock options ("ISOs") to officers and other employees of the Company
or any parent or subsidiary, and non-qualified stock options ("NQSOs") to
officers and other employees of the Company, Directors, and consultants of the
Company. As of March 31, 1998 the persons eligible to participate in the Program
included 8 officers, 4 Directors and 639 non-executive officer employees of the
Company. During the year ended December 31, 1997, options to purchase 588,591
shares of Common Stock were granted under the Program at an average exercise
price of approximately $22.55 per share. As of March 31, 1998, options to
purchase 707,789 shares of Common Stock (82,204 of which were vested) were
outstanding under the Program at an average exercise price of approximately
$22.08 per share and 1,699 shares of Common Stock had been issued upon exercise
of options under the Program. At March 31, 1998, 90,512 shares were available
under the Program.
ADMINISTRATION. The Board of Directors has vested the Compensation
Committee with full authority to administer the Programs in accordance with its
terms and to determine all questions arising in connection with the
interpretation and application of the Program. Currently, a Compensation
Committee consisting of Outside Directors Gibson, Kvamme and Rhines, all
Disinterested Persons, are administering the Programs. In any calendar year, no
person may be granted options under the Programs exercisable for more than
125,000 shares, except the Chief Executive Officer who may not receive options
under the Programs exercisable for more than 250,000 shares.
MINIMUM OPTION PRICE. The exercise prices of ISOs granted under the
Programs must equal or exceed the fair market value of the Common Stock on the
date of grant (110% of the fair market value in the case of employees who holds
10% or more of the voting power of the Common Stock (a "10 percent
stockholder")), and the exercise price of NQSOs must equal or exceed 50% of the
fair market value of Common Stock on the date of grant. As defined in the
Programs, "fair market value" means the last reported sales price of the Common
Stock on The NASDAQ National Market System on the date of grant.
DURATION OF OPTIONS. Subject to earlier termination of the option as a
result of termination of employment, death or disability, each option granted
under the Programs expires on the date specified by the Compensation Committee,
but in no event more than (i) ten years and one day from the date of grant in
the case of NQSOs, (ii) ten years from the date of grant in the case of ISOs
generally, and (iii) five years from the date of grant in the case of ISOs
granted to a 10% Stockholder.
MEANS OF EXERCISING OPTIONS. The Board of Directors, or the Compensation
Committee, as the case may be, may determine the consideration to be paid for
the shares to be issued upon exercise of an Option,
16
including the method of payment, and may consist entirely of: (i) cash, (ii)
check, (iii) promissory note, (iv) other shares of the Company's Common Stock
which (i) either have been owned by the Optionee for more than six (6) months on
the date of 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
aggregate exercise price of the shares as to which said option shall be
exercised, (v) 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 (vi) any
combination of such methods of payment, or such other consideration and method
of payment for the issuance of shares to the extent permitted under federal and
state law.
TERM AND AMENDMENT OF THE PROGRAM. The Programs became effective when
adopted by the Board of Directors. The 1996 Program will continue in effect
until February 1, 2006 unless earlier terminated, and the 1987 Program
terminated on March 26, 1997, in accordance with its terms. The Board of
Directors may terminate or amend the Programs at any time, provided, however,
that the Company must obtain stockholder approval of any amendment to the extent
necessary and desirable to comply with Rule 16b-3 or with Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or any successor rule,
regulation or statute. Such stockholder approval, if required, must be obtained
in such a manner and to such a degree as is required by the applicable law, rule
or regulation.
ASSIGNABILITY. Unless otherwise indicated, no option granted under the
Program is assignable or transferable by the optionee except by will or by the
laws of descent and distribution.
FEDERAL TAX EFFECTS OF ISOS. The Company intends that ISOs granted under
the Program will qualify as incentive stock options under Section 422 of the
Code. An optionee acquiring stock pursuant to an ISO receives favorable tax
treatment in that the optionee does not recognize any taxable income at the time
of the grant of the ISO or upon exercise. The tax treatment of the disposition
of ISO stock depends upon whether the stock is disposed of within the holding
period, which is the later of two years from the date the ISO is granted or one
year from the date the ISO is exercised. If the optionee disposes of ISO stock
after completion of the holding period, the optionee will recognize as capital
gains income the difference between the amount received in such disposition and
the basis in the ISO stock, i.e. the option's exercise price. If the optionee
disposes of ISO stock before the holding period expires, it is considered a
disqualifying disposition and the optionee must recognize the gain on the
disposition as ordinary income in the year of the disqualifying disposition.
Generally, the gain is equal to the difference between the option's exercise
price and the stock's fair market value at the time the option is exercised and
sold (the "bargain purchase element"). While the exercise of an ISO does not
result in taxable income, there are implications with regard to the alternative
minimum tax ("AMT"). When calculating income for AMT purposes, the favorable tax
treatment granted ISOs is disregarded and the bargain purchase element of the
ISO will be considered as part of AMT income. Just as the optionee does not
recognize any taxable income on the grant or exercise of an ISO, the Company is
not entitled to a deduction on the grant or exercise of an ISO. Upon a
disqualifying disposition of ISO stock, the Company may deduct from taxable
income in the year of the disqualifying disposition an amount generally equal to
the amount that the optionee recognizes as ordinary income due to the
disqualifying disposition.
FEDERAL TAX EFFECTS OF NQSOS. If an option does not meet the statutory
requirements of Section 422 of the Code and therefore does not qualify as an
ISO, the difference, if any, between the option's exercise price and the fair
market value of the stock on the date the option is exercised is considered
compensation and is taxable as ordinary income to the optionee in the year the
option is exercised. The Company may deduct the amount of expense recognized by
an employee as compensation expense. Although an optionee will generally realize
ordinary income at the time the NQSO is exercised, if the stock issued upon
exercise of the option is considered subject to a "substantial risk of
forfeiture" and the employee has not filed a "Section 83 Election," then the
optionee is not taxed when the option is exercised, but rather when the
forfeiture restriction lapses. At that time, the optionee will realize ordinary
income in an amount equal to
17
the difference between the option's exercise price and the fair market value of
the stock on the date the forfeiture restriction lapses.
The foregoing summary of federal income tax consequences of stock options
does not purport to be complete, nor does it discuss the provisions of the
income tax laws of any state or foreign country in which the optionee resides.
PARTICIPATION IN THE PROGRAMS. The grant of options under the Programs to
executive officers is subject to the discretion of the Board of Directors and
the recommendation of the Board's Compensation Committee. The following
executive officers of the Company received grants covering the following number
of shares on March 20, 1997 at $23.25 per share, the fair market value of the
Company's Common Stock on the date of grant: Mr. Mohn--7,000 shares; Mr.
Fournier--10,000 shares; Mr. Ranjit--6,800 shares; Mr. Winn--15,000 shares; and
Mr. Sharp--80,000 shares. On December 3, 1997 the following executive officers
of the Company received grants covering the following number of shares at
$20.50, the fair market value of the Company's Common Stock on the date of
grant: Mr. Fournier--6,000 shares; Mr. Mohn--9,000 shares; Mr. Ruebusch--9,000
shares; Mr. Pye--9,000 shares; Mr. Ranjit--4,500 shares; Mr. Winn--9,000 shares;
and Mr. Sharp--27,000 shares. The table of option grants under "Executive
Compensation and Other Matters--Option Grants in Last Fiscal Year" provides
information concerning the grant of options to the Named Executive Officers
during fiscal 1997. Information regarding the automatic, nondiscretionary
options granted to non-employee Directors during fiscal 1997 is set forth under
the heading "Executive Compensation and Other matters--Compensation of
Directors." During fiscal 1997, all current officers and Directors, as a group,
and all non-officer employees, as a group received options to purchase 216,300
shares and 372,291 shares, respectively under the Programs. In fiscal 1998, the
Outside Directors will each receive an option to purchase 6,000 shares of the
Company's Common Stock, or an aggregate of 24,000 shares, at fair market value
on the date of grant, pursuant to the nondiscretionary grant mechanism in place
for such Directors.
1998 EMPLOYEE STOCK PURCHASE PLAN SUMMARY
BACKGROUND. The 1998 Employee stock Purchase Plan (the "Purchase Plan") was
adopted by the Board of Directors in December 1997. As of April 6, 1998, no
shares had been issued pursuant to the Purchase Plan. The Purchase Plan will
replace the Company's existing Employee Stock Purchase Plan (the "Existing
Plan") with respect to future offerings to employees. As of April 6, 1998, an
aggregate of 115,542 shares were available for issuance under the Existing Plan.
Based on present participation levels, the Company expects that it will issue
all such available shares pursuant to current obligations under the Existing
Plan within the next several months, and the Existing Plan will terminate when
all such shares have been issued. The Purchase Plan is substantially identical
to the Existing Plan except that (I) the Purchase Plan shall initially have
400,000 shares of Common Stock reserved for issuance thereunder, rather than
200,000; and (ii) the Purchase Plan shall include a Renewal Feature (as defined
below). During any period of overlap in the existence of the Existing Plan and
the Purchase Plan, each employee will be restricted to participation in the
plans only to the extent permitted under Section 423 of the Internal Revenue
Code of 1986, as amended (the "Code").
For future issuances, the stockholders are being asked to approve the
adoption of the Purchase Plan and the reservation of 400,000 shares thereunder,
plus an annual increase (the "Renewal Feature") to be added on May 1 of each
year beginning in 1999 equal to the lesser of: (i) the number of shares of
Common Stock needed to restore the number of shares available for purchase to
400,000 or (ii) a lesser amount determined by the Board. The Company believes
that the Purchase Plan is a key component of its strategy to attract and retain
skilled employees and quality management. The Board of Directors believes it is
in the Company's best interests to adopt the Purchase Plan so that the Company
may continue to provide eligible employees the opportunity to purchase the
Company's Common Stock through payroll deductions, thereby aligning their
individual financial interest more closely with those of the stockholders.
18
ADMINISTRATION. The Purchase plan is intended to qualify as an "Employee
Stock Purchase Plan" under Section 423 of the Internal Revenue Code of 1986, as
amended (the "Code"). The provisions of the Plan, accordingly, shall be
construed so as to extend and limit participation in a manner consistent with
the requirement of that section of the Code. The Purchase Plan shall be
administered by the Board of Directors or a committee thereof (the
"Administrator"). Every finding, decision and determination by the Administrator
shall, to the full extent permitted by law, be final and binding upon all
parties.
ELIGIBILITY. All persons who are employed by the Company on a given
enrollment date and who are customarily employed by the Company for at least
twenty hours per week and more than five months per calendar year are eligible
to participate in the Purchase Plan. Participation in the Purchase Plan ends
automatically on termination of employment with the Company. An eligible
employee may become a participant by completing a subscription agreement
authorizing payroll deductions and filing it with the Company's payroll office
at least 5 business days prior to the applicable enrollment date.
OFFERING AND EXERCISE PERIODS. The Purchase Plan is implemented by
overlapping offering periods of 24 months each ("Offering Periods"). Offering
Periods commence every six months, beginning on the first trading day on or
after December 1 and June 1 each year, and consist of four exercise periods of
six months each ("Exercise Periods"). The Board may change the duration of the
Exercise Periods or the length or date of commencement of an Offering Period. To
the extent the fair market value of the Common Stock on any exercise date in an
Offering Periods is lower than the fair market value of the Common Stock on the
first day of the Offering Period, then all participants in such Offering Periods
will be automatically withdrawn from such Offering Period immediately after the
exercise of their options on such exercise date and automatically re-enrolled in
the immediately following Offering Period as of the first day thereof.
GRANT OF OPTION; PURCHASE PRICE. On the first day of each Offering Periods
(the "Offering Date"), each eligible employee participating in the Purchase Plan
is granted an option to purchase on the last day of each Exercise Period in such
Offering Period (the "Exercise Date") a number of shares of Common Stock of the
company determined by dividing such employee's accumulated payroll deductions by
the lower of: (i) 85% of the fair market value of one share of the Company's
Common Stock on the Offering Date or (ii) 85% of the fair market value of one
share of the company's Common Stock on the applicable Exercise Date. Unless a
participating employee withdraws from the Purchase Plan, his or her option is
automatically exercised on each Exercise Date of the Offering Period; provided
that in no event will an employee be permitted to purchase during an Exercise
Period more than 7,500 shares.
In addition, no employee will be permitted to subscribe for shares under the
purchase Plan if, immediately after such subscription, the employee would own 5%
or more of the voting power or value of all classes of stock of the Company or
of any of its subsidiaries (including stock which may be purchased under the
Purchase Plan or pursuant to any other options), nor will any employee be
permitted to participate in the Purchase Plan to the extent such employee could
buy under all employee stock purchase plans of the Company more than $25,000
worth of stock (determined at the fair market value of the shares at the time
the option is granted) in any one calendar year. The fair market value of the
Common Stock on a given date is the closing sale price of the Common Stock for
such date as quoted on the NASDAQ National Market.
PAYROLL DEDUCTIONS. The purchase price for the shares is accumulated by
payroll deductions during the Offering Period. The deductions may not exceed 15%
of a participant's eligible compensation, which is defined in the Purchase Plan
to include all base straight time gross earnings, exclusive of payment for
overtime, shift premium incentive compensation, incentive payments, bonuses,
commissions and other compensation. A participant may discontinue his or her
participation in the Purchase Plan at any time during the Offering Period.
Payroll deductions commence on the first payday following the Offering Date, and
continue at the same rate with automatic enrollment in subsequent Offering
Periods, unless sooner terminated, increased or decreased by the participant.
19
WITHDRAWAL; TERMINATION OF EMPLOYMENT. Employees may end their
participation in an offering at any time during the Offering Period, and
participation ends automatically on termination of employment with the Company
or failure of the participant to remain in the continuous scheduled employment
of the Company for at least 20 hours per week. Once a participant withdraws from
a particular offering, that participant may withdraw all, but not less than all,
of the payroll deductions credited to such participant's account by giving
written notice to the Company.
TRANSFERABILITY. No rights or accumulated payroll deductions of a
participant under the Purchase Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or pursuant to the Purchase Plan), and any such attempt may be
treated by the Company as an election to withdraw from the Purchase Plan.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER, ASSET SALE
OR CHANGE OF CONTROL. The shares reserved under the Purchase Plan, as well as
the price per share of Common Stock covered by each option under the Purchase
Plan which has not yet been exercised, will be proportionately adjusted for any
stock split, reverse stock split, stock dividend, combination or
reclassification of the Common stock, or any other increase or decrease in the
number of shares of Common Stock effected without receipt of consideration by
the Company. In the event of the proposed dissolution or liquidation of the
Company, the pending Offering Periods will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the Board. In
the event of a proposed sale of all or substantially all the assets of the
Company or a merger of the Company with or into another corporation, the
Purchase Plan provides that each option under the purchase Plan will be assumed
or an equivalent option will be substituted by the successor or purchaser
corporation, unless the Board determines, in its sole discretion, to shorten the
Exercise Periods and Offering Periods then in progress or to cancel each
outstanding right to purchase and refund all sums collected from participants
during the Offering Periods then in progress.
AMENDMENT AND TERMINATION. The Board of Directors of the Company may at any
time and for any reason terminate or amend the Purchase Plan. Except as provided
in the Purchase Plan, no termination can affect options previously granted, nor
may any amendment make any change in any option already granted which adversely
affects the rights of any participant. Shareholder approval may be required for
certain amendments in order to comply with the federal securities or tax laws,
or any other applicable law or regulation. Unless terminated sooner, the
Purchase Plan will terminate 10 years from its effective date.
FEDERAL TAX INFORMATION. The Purchase Plan, and the right of participants
to make purchases thereunder, is intended to qualify under the provisions of
Section 423 of the Code. Under these provisions, no income will be taxable to a
participant until the shares purchased under the Purchase Plan are sold or
otherwise disposed of. Upon sale or other disposition of the shares the
participant will generally be subject to tax and the amount of the tax will
depend upon the holding period. If the shares are sold or otherwise disposed of
more than two years from the first day of the Offering Period and one year from
the date the shares are purchased, the participant will recognize ordinary
income measured as the lesser of (a) the excess of the fair market value of the
shares at the time of such sale or disposition over the purchase price, or (b)
an amount equal to fifteen percent (15%) of the fair market value of the shares
as of the first day of the Offering Period. Any additional gain will be treated
as long-term capital gain. If the shares are sold or otherwise disposed of
before the expiration of these holding periods, the participant will recognize
ordinary income generally measured as the excess of the fair market value of the
shares on the date the shares are purchased over the purchase price. Any
additional gain or loss on such sale or disposition will be long-term or
short-term capital gain or loss, depending on the holding period. The Company is
not entitled to a deduction for amounts taxed as ordinary income or capital gain
to a participant except to the extent of ordinary income recognized by
participants upon a sale or disposition of shares prior to the expiration of the
holding periods described above.
The foregoing is only a summary of the effect of federal income taxation
upon the participant and the company with respect to the shares purchased under
the Purchase plan. Reference should be made to the
20
applicable provisions of the Code. In addition, the summary does not discuss the
tax consequences of participant's death or the income tax laws of any state or
foreign country in which the participant may reside.
PARTICIPATION IN THE PURCHASE PLAN. Eligible employees participate in the
Purchase Plan voluntarily and each such employee determines his or her level of
payroll deductions within the guidelines fixed by the Purchase Plan.
Accordingly, future purchases under the Purchase Plan are not determinable at
this time.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Gibson, Kvamme and Rhines.
Mr. Sharp who is President, Chief Executive Officer and Chairman of the Board of
Directors of the Company, participates in the discussions and decisions
regarding salaries and incentive compensation for all executive officers of the
Company, except that Mr. Sharp is excluded from discussions regarding his own
salary and incentive compensation.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors
reviews and approves the Company's executive compensation policies. The
following is the report of the Committee describing compensation policies and
rationale applicable to the Company's executive officers with respect to the
compensation paid to such executive officers for the fiscal year ended December
31, 1997. The information contained in such 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 or Exchange Act, except to the extent
that the Company specifically incorporates it by reference into such filing.
COMPENSATION PHILOSOPHY AND POLICIES FOR EXECUTIVE OFFICERS
The Company's 1997 executive compensation program was designed to align the
interests of executives with the interest of the stockholders by creating a
performance-oriented environment that rewards performance related to the goals
of the Company. The Company's executive compensation program was also designed
to attract and retain qualified executives in the highly competitive high
technology marketplace in which the Company competes. In this regard, the levels
of executive compensation established by the Committee were designed to be
consistent with those available to other executives in the industry. The
Company's executive compensation program consists primarily of the following
integrated components:
1. BASE SALARY--which was designed to compensate executives competitively
within the industry and the marketplace.
2. QUARTERLY PROFIT SHARING--which provided a direct link between executive
compensation and the quarterly performance of the Company.
3. KEY EMPLOYEE INCENTIVE PLAN--which provided for a direct link between
executive compensation and the quarterly and annual performance of the Company.
4. LONG TERM INCENTIVES--which consisted of stock options that link
management decision making with long-term Company performance and stockholder
interests.
The Committee has considered the potential impact of Section 162(m) of the
Internal Revenue Code on the compensation paid to the Company's executive
officers. Section 162(m) disallows a tax deduction for any publicly-held
corporation for individual compensation exceeding $1.0 million in any taxable
year for any of the named executive officers, unless compensation is
performance-based. In general it is the Committee's policy to qualify, to the
maximum extent possible, its executives' compensation for deductibility under
applicable tax laws.
21
BASE SALARIES
Base salary levels for the Chief Executive Officer (the "CEO") and other
executive officers of the Company are reviewed annually by the Compensation
Committee. The Committee's current policy is to maintain base salary levels in
the median range for the industry when compared with those of executives holding
similar positions with other companies in the high technology and semiconductor
industries that are similar in size to the Company. Certain companies included
in the peer group index of the stock performance graph are also included in
surveys reviewed by the Company in determining salary levels for the CEO and
other executive officers of the Company.
QUARTERLY PROFIT SHARING
All employees participate in the profit sharing program. Profit sharing is
paid quarterly and equals a percentage of the employees' quarterly W-2 income.
In 1997, the profit sharing pool was equal to 10 percent of operating income.
One half of the profit sharing amount is paid quarterly in cash, with the other
half paid as an employer contribution to employees' 401(k) account. Only
employees who are employees at the end of the fiscal year receive the 401(k)
portion of the profit sharing. Profit sharing amounts, as a percentage of Base
Salary, ranged from approximately 2.1 percent to 3.7 percent, 2.1 percent to 4.0
percent, 1.0 percent to 1.7 percent and 0.75 percent to 1.1 percent for the
first, second, third and fourth quarters of 1997, respectively, for the CEO and
the Named Executive Officers.
KEY EMPLOYEE INCENTIVE PLAN
The Company provides for bonuses for its key employees. Participants must be
employed full time by the Company during the entire fiscal quarter to be
eligible for a bonus that quarter. The bonus is based on actual versus budgeted
Operating Income measured after Profit Sharing and Bonus accruals. The bonuses
vary linearly between 80% and 150% of the level of achievement of the budgeted
Operating Income. Individual bonuses will be reduced by the amount of Profit
Sharing (both cash and 401(k) contribution) earned by each participant. During
1997, bonuses totaling $13,055.71 were paid to the CEO and $27,567.57 to the
Named Executive Officers for the first and second quarters.
LONG TERM INCENTIVES
The Company provides long term incentives through the grant of stock options
under its 1996 Stock Incentive Program (the "Program"). The purpose of the
Program is to create a direct link between compensation and the long-term
performance of the Company. Stock options under this Program are generally
granted at an exercise price equaling 100% of fair market value, have a ten year
term and generally vest in installments over four years. Because the receipt of
value by an executive officer under a stock option is dependent upon an increase
in the price of the Company's Common Stock, this portion of the executives'
compensation is directly aligned with an increase in stockholder value. The
primary stock options granted to executive officers are generally in conjunction
with the executive officer's acceptance of employment with the Company, or upon
promotion to executive officer. When determining the number of stock options to
be awarded to an executive officer, the Compensation Committee considers (i) the
executive's current contribution to the Company's performance, (ii) the
executive's anticipated contribution in meeting the Company's long-term
strategic performance goals and (iii) comparisons to an internally generated
informal survey of executive stock option grants made by other high technology
and semiconductor companies at a similar stage of development as the Company.
Individual considerations, such as the executive's current and anticipated
contributions to the Company's performance may be more subjective and less
measurable by financial results at the corporate level. In this respect, the
Committee exercises significant judgment in measuring the contribution or
anticipated contribution to the Company's performance. The Compensation
Committee also periodically reviews the stock options granted to insure
equitable distribution of such options among the officers.
22
Under the guidelines stated above, the Compensation Committee did review and
grant on March 20, 1997 and December 3, 1997 stock options to the CEO and Named
Executive Officers as detailed in the Executive Compensation and Other
Matters--Stock Option Grants.
OTHER
The Company's executive officers are also eligible to participate in
compensation and benefit programs generally available to other employees,
including the Company's Employee Stock Purchase Plan.
CEO COMPENSATION
The Committee reviews the Chief Executive Officer's compensation annually
using the same criteria and policies as are employed for the other executive
officers. The compensation of the Company's CEO is determined in part by the
terms of a letter agreement entered into with the CEO upon his acceptance of
employment with the Company in September 1991. See "Employment Contracts and
Change-In-Control Arrangements" above. However, the Committee retains the
discretion to increase the CEO's compensation to levels above those provided in
the letter agreement. The Committee raised Mr. Sharp's salary to $260,000 for
fiscal 1996. Mr. Sharp received an aggregate bonus of $4,363 during 1997 under
the Company's Profit Sharing Plan described above. Such amount reflected 2.0
percent, 2.7 percent, 1.0 percent and 0.80 percent of Mr. Sharp's Base Salary
for the first, second, third and fourth quarter, respectively. In addition, he
received an aggregate bonus of $13,055.71 during 1997 under the Company's Key
Employee Incentive Plan described above. Mr. Sharp received stock option grants
totaling 107,000 shares under the Company's 1996 Stock Incentive Program during
1997 (See "Executive Compensation and Other Matters--Stock Option Grants").
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS:
E. Floyd Kvamme
Charles Scott Gibson
Dr. Walden C. Rhines
23
STOCK PERFORMANCE GRAPH
The SEC requires that registrants include in their proxy statement a
line-graph presentation comparing cumulative five-year stockholder returns on an
indexed basis, assuming a $100 initial investment and reinvestment of dividends,
of (a) the Company, (b) a broad-based equity market index and (c) an industry-
specific index or a registrant-constructed peer group index. Set forth below is
a line graph comparing the annual percentage change in the cumulative return to
the stockholders of the Company's Common Stock with the cumulative return of the
NASDAQ U.S. Index and of the SIC Code 3674--Electronic Components and
Accessories Index for the period commencing December 13, 1993 (the date of the
Company's initial public offering) and ending on December 31, 1997. The
information contained in such graph shall not be deemed to be "soliciting
material" or to be "filed" with the Securities and Exchange Commission, nor
shall such information be incorporated by reference into any future filing under
the Securities Act of 1933 or Securities Exchange Act of 1934, except to the
extent that the Company specifically incorporates it by reference into such
filing.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
TOTAL SHAREHOLDER RETURNS
DOLLARS
YEARS ENDING
TRIQUINT SEMICONDUCTOR INC NASDAQ U.S. INDEX PEER GROUP
12/13/93 100 100 100
Dec93 111.36 102.79 105.08
Dec94 59.09 100.51 131.41
Dec95 122.72 142.10 196.39
Dec96 239.76 174.78 303.00
Dec97 184.08 214.57 316.21
No dividends have been declared or paid on the Company's Common Stock.
Stockholder returns over the indicated period should not be considered
indicative of future stockholder returns.
The peer group index used, SIC Code 3674--Electronic Components and
Accessories, utilizes the same the same methods of presentation and assumptions
for the total return calculation as the Company and the NASDAQ U.S. Index. All
companies in the peer group index are weighted in accordance with their market
capitalizations.
24
Companies included in the peer group index are as follows:
3D Labs Inc. Ltd
8X8 Inc.
Actel Corp.
Advanced Micro Devices
Advanced Photonix, Inc.
Aeroflex, Inc.
Alliance Semiconductor Corporation
Alpha Industries
Altera Corporation
Anadigics, Inc.
Analog Devices
Applied Micro Circuits Corp.
Artisan Components Inc.
Atmel Corporation
Aureal Semiconductor
Benchmarq Microelectronics
BKC Semiconductor, Inc.
Bowmar Instrument Corporation
Burr-Brown Corporation
Catalyst Semiconductor, Inc.
Chips & Technologies, Inc.
Cree Research Inc.
Cypress Semiconductor Corporation
Dallas Semiconductor Corporation
Data Systems & Software, Inc.
Dense-Pac Microsystems, Inc.
Diodes, Inc.
Dionics, Inc.
Elantec Semiconductor, Inc.
Electronic Designs Inc.
ESS Technology, Inc.
Exar Corporation
Fairchild Semiconductor Corp.
Galileo Technology Ltd.
General Semiconductor, Inc.
Harman Industries, Inc.
HEI, Inc.
Hytek Microsystems, Inc.
IBIS Technology, Inc.
IMP, Inc.
Information Storage Devices
Integrated Circuit systems
Integrated Device Technology, Inc.
Integrated Silicon Solution
Intel Corporation
International Rectifier Corporation
Jetronic Industries, Inc.
Kopin Corp.
Kyocera Corporation--ADR
Lattice Semiconductor Corporation
Level One Communications, Inc.
Linear Technology Corporation
Logic Devices, Inc.
LSI Logic Corporation
Macronix International Ltd.--ADR
Maxim Integrated Products
MEMC Electronic Materials, Inc.
Micrel, Inc.
Micro Linear Corporation
Microchip Technology Inc.
Microchip Technology, Inc.
Microelectronic Packaging
Micron Technology Inc.
Micropac Industries, Inc.
Microsemi Corp.
Mitsubishi Electronics Corporation--ADR
Mizar, Inc.
MRV Communications, Inc.
National Semiconductor Corporation
Neomagic Corp.
Nuwave Technologies, Inc.
Oak Technology, Inc.
Optek Technology, Inc.
Opti, Inc.
Panda Project, Inc.
Paradigm Technology, Inc.
Pericom Semiconductor Corp.
PMC-Sierra, Inc.
Power Integrations, Inc.
Qlogic Corporation
Quality Semiconductor, Inc.
Quicklogic Corp.
Ramtron International Corporation
Remec, Inc.
RF Micro Devices, Inc.
Ross Technologies, Inc.
SDL Inc.
Semicon, Inc.
Semiconductor Laser Intl. Corporation
Semtech Corporation
SGS-Thomson Microelectronics
Sigma Designs Inc.
Silicon Storage Technology
Siliconix Inc.
Simtek Corporation
Sipex Corporation
Smart Modular Technologies, Inc.
Solitron Devices, Inc.
25
Spectrum Signal Processing
Standard Microsystems Corp.
Supertex, Inc.
Taiwan Semiconductor--ADR
Telcom Semiconductor, Inc.
Texas Instruments, Inc.
Three-Five Systems, Inc.
Tower Semiconductor, Ltd.
Transwitch Corporation
Trident Microsystems, Inc.
TriQuint Semiconductor, Inc.
Uniphase Corporation
Unitrode Corporation
Universal Display Corp.
Vitesse Semiconductor Corporation
VLSI Technology, Inc.
Xerographic Laser Images CP
Xicor, Inc.
Xilinx Inc.
Zilog, Inc.
Zing Technologies, Inc.
Zoran Corporation
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In September 1991, the Company entered into an employment agreement with
Steven Sharp, the Company's Chairman of the Board of Directors, Chief Executive
Officer and President, providing for certain relocation benefits. The Company
provided such relocation benefits through a loan to Mr. Sharp, and on November
30, 1992, Mr. Sharp executed a promissory note evidencing a $150,000 loan at a
rate of 5.68 percent per annum and due in 1997. This promissory note provided
for annual forgiveness of $30,000 of principal plus any accrued and unpaid
interest on January 1 of each year until such time as the loan was repaid or
forgiven in full as long as Mr. Sharp was an employee of the Company. The
agreement also provided that if Mr. Sharp's employment with the Company was
terminated for any reason, the entire principal amount remaining, and any
accrued interest, would be forgiven as of the date of termination. The Company
forgave $31,704, $33,408 and $31,704 on January 1, 1995, January 1, 1996 and
January 1, 1997, respectively. As of January 1, 1996 and January 1, 1997, the
outstanding principal and accrued interest on the loan was $31,704 and $30,000,
respectively. The Company forgave the loan in full on January 1, 1997.
Until June 1996, Paul Gary, a Director of the Company, was employed by AT&T,
a stockholder of the Company. Although, Mr. Gary is no longer an employee of
AT&T or its successor Lucent Technologies, Inc. (collectively "Lucent"), his
nomination was proposed to the Board of Directors by Lucent. Mr. Gary serves as
a representative of Lucent on the Company's Board of Directors and he is
compensated for his services on the Company's Board of Directors by Lucent.
However, the Company reimburses Mr. Gary for any out-of-pocket expenses incurred
in connection with travel to meetings of the Company's Board of Directors. As a
result of his relationship with Lucent, Mr. Gary did not receive a partial
nondiscretionary stock option for the Company's Common Stock in fiscal 1997 and
will not receive such an automatic grant in fiscal 1998.
Lucent Technologies, Inc., a spin-off of AT&T, holds 661,059 shares of the
Company's Common Stock and a warrant to purchase 200,000 additional shares of
the Company's Common Stock at $24.00 per share (the "Warrant"). In conjunction
with Lucent's acquisition of the Company's Common Stock and the Warrant in
August 1993, Lucent entered into a series of agreements with the Company,
including an Asset Purchase Agreement, a Joint Development and Technology
Transfer Agreement, a Manufacturing Services Agreement, and a Patent License
Agreement. The Lucent agreements provide for the Company to work jointly with
Lucent to develop and market certain GaAs wafers and other products. The
agreements do not provide any minimum order or development requirements for
Lucent, and there can be no assurance that a substantial relationship with
Lucent will result. The sale of the Company's products to Lucent occurs at
prices no more favorable than those charged to other customers.
On January 13, 1998, the Company acquired substantially all of the assets of
the Monolithic Microwave Integrated Circuit ("MMIC") operations of the former
Texas Instruments' Defense Systems & Electronics Group from Raytheon TI Systems,
Inc., a Delaware corporation ("RTIS") and a wholly owned subsidiary of the
Raytheon Company ("Raytheon"). The MMIC operations include the Gallium Arsenide
26
("GaAs") foundry and MMIC business of the R/F Microwave Business Unit that RTIS
acquired on July 11 from Texas Instruments Incorporated, a Delaware corporation
("TI") which MMIC business includes without limitation, TI's GaAs Operations
Group, TI's Microwave GaAs Products Business Unit, the MMIC component of TI's
Microwave gas Products Business Unit, the MAC component of It's Microwave
Integrated Circuits Center of Excellence and the MAC research and development
component of TI's Systems Component Research Laboratory (collectively, the "MMIC
Business").
Pursuant to a Final Judgment entered on November 6, 1997 (the "Final
Judgment") in the United States District Court for the District of Columbia in
Civil Case No. 97-1515 known as United States of America v. Raytheon Company and
Texas Instruments, Inc., a related Stipulation and Order entered in the same
case on July 2, 1997, and a related Hold Separate and Partition Plan Stipulation
and Order entered in the same case on July 2, 1997 (the "Hold Separate Order"),
Raytheon agreed to promptly divest the MMIC Business and, pending such
divestiture, to maintain the MMIC Business as an independent competitor held
separate from Raytheon. Pursuant to and in accordance with the Final Judgment,
the acquisition was accomplished pursuant to an Asset Purchase Agreement (the
"Agreement"), dated as of January 8, 1998, by and between the Company and RTIS.
The Company has assigned its rights under the Agreement to a wholly owned
subsidiary, TriQuint Semiconductor Texas, Inc., a Delaware corporation, which
will operate the MMIC Business, located primarily in Dallas, Texas.
Under the terms of the Agreement, TriQuint acquired the MMIC Business for
approximately $19.5 million in cash and 844,613 shares of TriQuint Common Stock
(the "Shares") valued at approximately $19,500,000 for a total purchase
consideration of approximately $39 million. The Shares are redeemable at
TriQuint's option at any time within 360 days of January 13, 1998 at a price of
approximately $23 per share. The cash portion of the purchase price was financed
through an equipment leasing arrangement through General Electric Capital
Corporation involving certain assets acquired pursuant to the Agreement. The
terms of the Agreement were the result of arm's-length negotiations between the
parties.
In connection with its approval of the transaction, the Department of
Justice required that RTIS place all the Shares into a voting trust in order to
divest itself of voting power with respect to the Shares. Accordingly, on
January 13, 1998, RTIS entered into a Voting Trust Agreement with State Street
Bank and Trust Company, a Massachusetts trust company ("State Street"), under
which, for any matter for which any vote or consent is requested from holders of
TriQuint Common Stock, State Street will vote the Shares as practicable in the
same proportion as the other holders of TriQuint Common Stock.
All future transactions, including loans between the Company and its
officers, directors, principal stockholders and their affiliates, will be
approved by a majority of the Board of Directors, including a majority of the
independent and disinterested outside directors, and will be on terms no less
favorable to the Company than could be obtained from unaffiliated third parties.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's executive officers and Directors, and persons who own
more than ten percent of a registered class of the Company's equity securities
to file reports of ownership and changes in ownership with the SEC and the
National Association of Securities Dealers, Inc. Executive officers, Directors
and greater than ten percent stockholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on its review of the copies of such forms received by it, or written
representations from certain reporting persons, the Company believes that,
during fiscal 1997 all executive officers and other employees of the Company who
are subject to Section 16 of the Exchange Act, Directors and greater than 10%
stockholders complied with all applicable filing requirements.
27
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company that are intended to be presented
by such stockholders at the Company's 1999 Annual Meeting of Stockholders must
be received by the Company no later than December 21, 1998 in order that they
may be considered for inclusion in the proxy statement and form of proxy
relating to that meeting.
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of Proxy to vote the shares they represent as
the Board of Directors may recommend.
By Order of the Board of Directors:
[LOGO]
Edward C.V. Winn
EXECUTIVE VICE PRESIDENT,
FINANCE AND ADMINISTRATION,
CHIEF FINANCIAL OFFICER AND SECRETARY
Dated: April 20, 1998
28
TRIQUINT SEMICONDUCTOR, INC.
1996 STOCK INCENTIVE PROGRAM
(AS AMENDED AND RESTATED EFFECTIVE MAY 29, 1997)
1. Purposes of the Program. The purposes of this Stock Incentive Program
are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to the Employees,
Consultants and certain Outside Directors of the Company and to promote the
success of the Company's business.
Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Board and as reflected in
the terms of the written option agreement. The Program also provides for
automatic grants of Nonstatutory Stock Options to Outside Directors who are
neither representatives nor employees or shareholders owning more than one
percent (1%) of the outstanding shares of the Company.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" shall mean the Board or any of its Committees as
shall be administering the Program, in accordance with Section 4 of the Program.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Common Stock" shall mean the Common Stock of the Company.
(f) "Company" shall mean TriQuint Semiconductor, Inc., a Delaware
corporation.
(g) "Committee" shall mean a Committee appointed by the Board of
Directors in accordance with Section 4 of the Program.
(h) "Consultant" shall mean any person who is engaged by the Company
or any Parent or Subsidiary to render consulting services and is compensated for
such consulting services; provided that the term Consultant shall not include
directors who are not compensated for their services; or are paid only a
director's fee by the Company.
1
(i) "Director " shall mean a member of the Board.
(j) "Continuous Status as an Employee, Consultant or Outside
Director" shall mean the absence of any interruption or termination of service
as an Employee, Consultant or Outside Director. Continuous Status as an
Employee, Consultant or Outside Director shall not be considered interrupted in
the case of sick leave, military leave, or any other leave of absence approved
by the Administrator; provided 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.
(k) "Employee" shall mean any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(m) "Incentive Stock Option" shall mean an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.
(n) "Nonstatutory Stock Option" shall mean an Option not intended to
qualify as an Incentive Stock Option.
(o) "Officer " shall mean a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(p) "Option" shall mean a stock option granted pursuant to the
Program.
(q) "Optioned Stock" shall mean the Common Stock subject to an
Option.
(r) "Optionee" shall mean an Employee, Consultant or Outside Director
who holds an outstanding Option.
(s) "Outside Director" shall mean a member of the Board of Directors
of the Company who is not an Employee.
(t) "Parent" shall mean a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(u) "Program" shall mean this 1996 Stock Incentive Program.
(v) "Rule 16b-3" shall mean Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Program.
(w) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 10 of the Program.
2
(x) "Subsidiary" shall mean a "subsidiary corporation", whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Program. Subject to the provisions of Section 10
of the Program, the maximum aggregate number of shares under the Program is
800,000 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 Program shall have been terminated, become available
for future grant under the Program. Notwithstanding the above, however, if
Shares are issued upon exercise of an Option and later repurchased by the
Company, such Shares shall not become available for future grant or sale under
the Program.
4. Administration of the Program.
(a) Procedure.
(i) Multiple Administrative Bodies. The Plan may be
administered by different Committees with respect to different groups of Service
Providers.
(ii) Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.
(iv) Other Administration. Other than as provided above, the
Plan shall be administered by (A) the Board or (B) a Committee, which committee
shall be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
Program, the Administrator shall have the authority, in its discretion: (i) to
grant Incentive Stock Options or Nonstatutory Stock Options; (ii) to determine,
upon review of relevant information and in accordance with Section 7 of the
Program, the fair market value of the Common Stock; (iii) to determine the
exercise price per share of Options to be granted, which exercise price shall be
determined in accordance with Section 7 of the Program; (iv) to determine the
Employees or Consultants to whom, and the time or times at which, Options shall
be granted and the number of shares to be represented by each Option (except
with respect to automatic Option grants made to certain Outside Directors);
(v) to interpret the Program; (vi) to prescribe, amend and rescind rules and
regulations relating to the Program; (vii) to determine the terms and provisions
of each Option granted (which need not be identical) and, with the consent of
the holder thereof, modify or amend each Option; (viii) to authorize any person
to execute on behalf of the Company any instrument required to
3
effectuate the grant of an Option previously granted by the Administrator;
(ix) to allow Optionees to satisfy withholding tax obligations by electing to
have the Company withhold from the Shares to be issued upon exercise of an
Option that number of Shares having a Fair Market Value equal to the amount
required to be withheld; and (x) to make all other determinations deemed
necessary or advisable for the administration of the Program. However, with
respect to Options granted to certain Outside Directors pursuant to Section
8(b)(ii) hereof, the Administrator shall exercise no discretion and such
awards shall be administered solely according to their terms.
(c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options granted under the
Program.
5. Eligibility.
(a) Options may be granted to Employees and Consultants; Options may
also be granted to Outside Directors who are neither employees nor
representatives of shareholders owning more than one percent (1%) of the
outstanding shares of the Company. However, (i) Incentive Stock Options may be
granted only to Employees, and (ii) Options may only be granted to Outside
Directors who are neither employees nor representatives of shareholders owning
more than one percent (1%) of the outstanding shares of the Company in
accordance with the provisions of Section 8(b)(ii) hereof. An Employee,
Consultant or Outside Director who has been granted an Option may, if he is
otherwise eligible, be granted an additional Option or Options.
(b) To the extent that the aggregate fair market value of Shares
subject to an Optionee's incentive stock options granted by the Company, any
Parent or Subsidiary, which become exercisable for the first time during any
calendar year (under all plans or programs of the Company or any Parent or
Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options. For purposes of this Section 5(b), incentive stock
options shall be taken into account in the order in which they were granted, and
the fair market value of the Shares shall be determined as of the time of grant.
(c) Neither the Program nor any Option shall confer upon any Optionee
any right with respect to continuation of employment or consulting relationship
with the Company, nor shall it interfere in any way with the Optionee's right or
the Company's right to terminate such employment or consulting relationship at
any time with or without cause.
(d) The following limitations shall apply to grants of Options under
the Program (defined below):
(i) The President of the Company shall not be granted, in
any fiscal year of the Company, options to purchase more than 250,000 Shares,
and no other Employee shall be granted, in any fiscal year of the Company,
Options to purchase more than 125,000 Shares.
(ii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 10.
4
(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 10), the canceled Option will be counted
against the limit set forth in Section (i) above. 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.
(iv) The foregoing limitations set forth in this Section
5(d) are intended to satisfy the requirements applicable to Options intended to
qualify as "performance-based compensation" (within the meaning of Section
162(m) of the Code). In the event the Administrator determines that such
limitations are not required to qualify Options as performance-based
compensation, the Administrator may modify or eliminate such limitations.
6. Term of Program. The Program shall become effective upon the earlier
to occur of its adoption by the Board of Directors or its approval by vote of
the shareholders of the Company as described in Section 16 of the Program. It
shall continue in effect for a term of ten (10) years unless sooner terminated
under Section 12 of the Program.
7. Exercise Price and Consideration of Shares.
(a) The per Share exercise price for the Shares to be issued pursuant
to exercise of a Nonstatutory Stock Option shall be such price as is determined
by the Administrator, but in no event shall it be (i) less than 50% of the fair
market value per Share on the date of grant and (ii) in the case of an Incentive
Stock Option, not less than 100% of the fair market value per Share on the date
of grant. In the case of an Incentive Stock Option granted to an Employee who,
at the time of grant of such Incentive Stock 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.
(b) The fair market value shall be determined by the Administrator;
provided, however, in the event that the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, its fair market value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or system for the last market trading day prior to the time of
determination, as reported in THE WALL STREET JOURNAL or such other source as
the Administrator deems reliable; or in the event that the Common Stock is
regularly quoted by a recognized securities dealer but selling prices are not
reported, the fair market value of a Share of Common Stock shall be the mean
between the high bid and low asked prices for the Common Stock on the last
market trading day prior to the day of determination, as reported in THE WALL
STREET JOURNAL or such other source as the Administrator deems reliable.
(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:
(i) cash,
5
(ii) check,
(iii) promissory note,
(iv) other Shares of Common Stock which (i) either have been
owned by the Optionee for more than six (6) months on
the date of 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
aggregate exercise price of the Shares as to which said
option shall be exercised,
(v) 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
(vi) any combination of such methods of payment, 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
Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company.
However, with respect to Options granted to certain Outside Directors
pursuant to Section 8(b)(ii) hereof, the consideration to be paid for the Shares
to be issued upon exercise of an Option, including the method of payment, shall
consist entirely of:
(i) cash,
(ii) check,
(iii) other Shares of Common Stock which (i) either have
been owned by the Optionee for more than six (6)
months on the date of 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 aggregate exercise
price of the Shares as to which said option shall
be exercised,
(iv) 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
(v) any combination of such methods of payment.
6
8. Options.
(a) Term of Option. The term of each Option shall be ten (10) years
from the date of grant thereof or such shorter term as may be provided in the
Incentive Stock Option Agreement in the form attached hereto as Exhibit A. The
term of each Option that is not an Incentive Stock 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 Nonstatutory Stock Option Agreement in the form attached
hereto as Exhibit B-1 or B-2. However, in the case of an Option granted to an
Optionee who, at the time the Option is granted, owns stock representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, (a) if the Option is an Incentive Stock
Option, the term of the Option shall be five (5) years from the date of grant
thereof or such shorter time as may be provided in the Incentive Stock Option
Agreement, or (b) if the Option is not an Incentive Stock Option, the term of
the Option shall be five (5) years and one (1) day from the date of grant
thereof or such shorter term as may be provided in the Nonstatutory Stock Option
Agreement. However, with respect to Options granted to certain Outside
Directors pursuant to Section 8(b)(ii) hereof the term shall be as stated in
such Section.
(b) Exercise of Option.
(i) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder, except for Options granted to certain Outside
Directors in accordance with Section 8(b)(ii) below, shall be exercisable at
such times and under such conditions as determined by the Administrator,
including performance criteria with respect to the Company and/or the Optionee,
and shall be permissible under the terms of the Program.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 7(c) of the Program.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, which issuance shall be made as soon as is
practicable, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificate promptly upon exercise of the Option. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 10 of the
Program.
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
Program and for sale under the Option, by the number of Shares as to which the
Option is exercised.
7
(ii) Automatic Option Grants to Certain Outside Directors.
The provisions set forth in this Section 8(b)(ii) shall not be amended more than
once every six months, other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974 as amended, or the rules or
regulations promulgated thereunder. All grants of Options to Outside Directors
under this Program shall be automatic and non-discretionary and shall be made
strictly in accordance with the following provisions:
(A) 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 Program shall be construed to prevent an Outside Director
from declining to receive an Option under this Program.
(B) On the date of each annual meeting of the
Company's shareholders (beginning with the 1996 annual meeting of shareholders),
each person who is then an Outside Director (including any person who first
becomes an Outside Director as of such date) and who is not a representative of
shareholders owning more than one percent (1%) of the outstanding shares of the
Company shall automatically receive an Option to purchase 6,000 Shares;
provided, however, that no options shall be granted to an Outside Director
pursuant to Section 8(b)(ii)(B) of this Program for any calendar year in which
the Outside Director has been granted options under the TriQuint Semiconductor,
Inc. 1987 Stock Incentive Program.
(C) Each Outside Director who is not a representative
of shareholders owning more than one percent (1%) of the outstanding shares of
the Company and who first becomes an Outside Director as of a date other than
the date of an annual meeting of the Company's shareholders shall automatically
receive, upon such date, an Option to purchase that number of Shares obtained by
multiplying 6,000 by a fraction, the numerator of which is the difference
obtained by subtracting from 12 the number of whole calendar months that have
elapsed since the date of the previous annual meeting of the Company's
shareholders and the denominator of which is 12; provided, however, that no
options shall be granted to any Outside Director pursuant to Section 8(b)(ii)(C)
of this Program for any calendar year in which such Outside Director has been
granted options under the TriQuint Semiconductor, Inc. 1987 Stock Incentive
Program..
(D) The terms of an Option granted pursuant to this
Section 8(b)(ii) shall be as follows:
(1) the term of the Option shall be five (5)
years;
(2) except as provided in Sections 8(b)(iii),
8(b)(iv) and 8(b)(v) of this Program, the
Option shall be exercisable only while the
Outside Director remains a 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, provided that,
with respect to the Options granted on the
date on which the Company's registration
statement on Form S-1 (or any successor form
thereof) is declared effective by the
8
Securities and Exchange Commission, the fair
market value of the Common Stock shall be the
Price to Public as set forth in the final
prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424
under the Securities Act of 1933, as amended;
(4) the Option shall become exercisable in
installments cumulatively with respect to
twenty-five percent (25%) of the Optioned
Stock six months after the date of grant and
as to an additional twelve and one-half
percent (12.5%) of the Optioned Stock each
calendar quarter thereafter, so that one
hundred percent (100%) of the Optioned Stock
shall be exercisable two years after the date
of grant; provided, however, that in no event
shall any Option be exercisable prior to
obtaining shareholder approval of the
Program.
(iii) Termination of Status as an Employee, Consultant
or Outside Director. In the event of termination of an Optionee's Continuous
Status as an Employee, Consultant or Outside Director, such Optionee may, but
only within three (3) months (or, for Options not granted pursuant to Section
8(b)(ii) hereof, for such other period of time, not exceeding three (3) months
in the case of an Incentive Stock Option or six (6) months in the case of a
Nonstatutory Stock Option, as is determined by the Administrator, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option) after the date of such termination (but in no event later
than the date of expiration of the term of such Option as set forth in the
Option Agreement), exercise his or her Option to the extent that the Optionee
was entitled to exercise it as of the date of such termination. To the extent
that the Optionee was not entitled to exercise the Option at the date of such
termination, or if the Optionee does not exercise such Option (which the
Optionee was entitled to exercise) within the time specified herein, the Option
shall terminate.
(iv) Disability of Optionee. Notwithstanding the provisions
of Section 8(b)(iii) above, in the event of termination of an Optionee's
Continuous Status as an Employee, Consultant or Outside Director as a result of
his or her total and permanent disability (as defined in Section 22(e)(3) of the
Code), the Optionee may, but only within six (6) months (or, for Options not
granted pursuant to Section 8(b)(ii) hereof, for such other period of time not
exceeding twelve (12) months as is determined by the Board, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option) from the date of such termination (but in no event later
than the date of expiration of the term of such Option as set forth in the
Option Agreement), exercise his or her Option to the extent the Optionee was
entitled to exercise it at the date of such termination. To the extent that the
Optionee was not entitled to exercise the Option at the date of termination, or
if the Optionee does not exercise such Option (which the Optionee was entitled
to exercise) within the time specified herein, the Option shall terminate.
(v) Death of Optionee. In the event of the death of an
Optionee:
(A) during the term of the Option, where the Optionee
is at the time of his or her death an Employee, Consultant or Outside Director
of the Company and where such Optionee shall
9
have been in Continuous Status as an Employee, Consultant or Outside Director
since the date of grant of the Option, the Option may be exercised, at any
time within one (1) year 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, to the extent that he and she was entitled to
exercise it at the date of death; or
(B) within three (3) months after the termination of
Continuous Status as an Employee, Consultant or Outside Director for any reason
other than for cause or a voluntary termination initiated by the Optionee, the
Option may be exercised, at any time within one (1) year 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.
(vi) Buyout Provisions. The Administrator may at any time
offer to buy out for a payment in cash or Shares, an Option previously granted
based on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made; provided,
however, that the Administrator shall not offer to buy out any Options granted
pursuant to Section 8(b)(ii) of the Program.
9. Non-Transferability of Options. Unless determined otherwise by the
Administrator, an Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee. If the Administrator makes an Option
transferable, such option shall contain such additional terms and conditions as
the Administrator deems appropriate.
10. 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 Program but as to
which no Options have yet been granted or which have been returned to the
Program upon cancellation or expiration of an Option, 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, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued 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 Administrator, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an Option.
In the event of the proposed dissolution or liquidation of the
Company, the Board shall notify the holder of an Option at least fifteen (15)
days prior to such proposed action. To the extent it has not been previously
exercised, the Option will terminate immediately prior to the consummation of
such proposed action.
10
In the event of a merger of the Company with or into another
corporation, or the sale of all or substantially all of the Company's assets,
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 the Board determines, in the exercise of its sole discretion and in lieu
of such assumption or substitution, that the Optionee shall have the right to
exercise the Option as to all of the Optioned Stock, including as to 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.
Provided, however, that notwithstanding any other provision of this Program,
Options granted pursuant to Section 8(b)(ii) hereof shall, in the event of a
merger of the Company with or into another corporation or the sale of all or
substantially all of the Company's assets, be assumed or an equivalent option
shall be substituted by such successor corporation or a parent or subsidiary of
such successor corporation; provided, further, however, that in the event the
successor corporation or a parent or subsidiary of such successor corporation
refuses to so assume or substitute such options, such options shall become fully
vested and exercisable including as to Shares as to which such options would not
otherwise be exercisable. For the purposes of this paragraph, the Option shall
be considered assumed if, following the merger or asset sale, the option confers
the right to purchase, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or asset sale, the consideration (whether stock,
cash, or other securities or property) received in the merger or asset sale by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets was not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option, for each
Share of Optioned Stock subject to the Option, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
11. Time of Granting Options. The date of grant of an Option shall be the
date on which the Administrator makes the determination granting such Option,
except with respect to the date of grant of Options to certain Outside
Directors, which is set by the terms of the Program. Notice of the
determination shall be given to each Employee or Consultant to whom an Option is
granted within a reasonable time after the date of such grant.
12. Amendment and Termination of the Program.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Program.
(b) Shareholder Approval. The Company shall obtain shareholder
approval of any Program amendment to the extent necessary and desirable to
comply with Section 422 of the Code (or any successor rule or statute or other
applicable law, rule or regulation, including the requirements of any exchange
or quotation system on which the Common Stock is listed or quoted). Such
shareholder approval,
11
if required, shall be obtained in such a manner and to such a degree as is
required by the applicable law, rule or regulation.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Program shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company.
13. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended (the "Securities Act"), the Exchange Act, 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 or making such purchase to represent and
warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required by any of the aforementioned relevant provisions of law.
14. Reservation of Shares. The Company, during the term of this Program,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Program.
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.
15. Option Agreements. Each Option shall be designated in a written
option agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option. Such agreements shall be subject to amendment from time to time as
shall be determined by the Administrator; provided, however, that agreements
reflecting option grants pursuant to Section 8(b)(ii) hereof shall contain only
the terms and conditions as set forth in this Program.
16. Shareholder Approval. Continuance of the Program shall be subject to
approval by the shareholders of the Company within twelve months before or after
the date the Program is adopted. Such shareholder approval shall be obtained in
the manner and to the degree required under applicable federal and state law.
12
TRIQUINT SEMICONDUCTOR, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 1998 Employee Stock
Purchase Plan of TriQuint Semiconductor, Inc.
1. PURPOSE. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase
Common Stock of the Company through accumulated payroll deductions. It is
the intention of the Company to have the Plan qualify as an "Employee Stock
Purchase Plan" under Section 423 of the Internal Revenue Code of 1986, as
amended. The provisions of the Plan, accordingly, shall be construed so as
to extend and limit participation in a manner consistent with the
requirements of that section of the Code.
2. DEFINITIONS.
(a) "BOARD" shall mean the Board of Directors of the Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "COMMON STOCK" shall mean the Common Stock of the Company.
(d) "COMPANY" shall mean TriQuint Semiconductor, Inc., a Delaware
corporation.
(e) "COMPENSATION" shall mean all base straight time gross
earnings, exclusive of payments for overtime, shift premium, incentive
compensation, incentive payments, bonuses, commissions and other compensation.
(f) "DESIGNATED SUBSIDIARIES" shall mean the Subsidiaries which
have been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
(g) "EMPLOYEE" shall mean any individual who is an employee of
the Company for purposes of tax withholding under the Code whose customary
employment with the Company or any Designated Subsidiary is at least twenty
(20) hours per week and more than five (5) months in any calendar year. For
purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90 days
and the individuals right to reemployment is not guaranteed either by statute
or by contract, the employment relationship will be deemed to have terminated
on the 91st day of such leave.
(h) "ENROLLMENT DATE" shall mean the first day of each Offering
Period.
(i) "EXERCISE DATE" shall mean the last day of each Purchase
Period.
(j) "FAIR MARKET VALUE" shall mean, as of any date, the value of
Common Stock determined as follows:
(1) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system
for the last market trading day on the date of such determination, as
reported in THE WALL STREET JOURNAL or such other source as the Administrator
deems reliable, or;
(2) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean of the closing bid and asked prices for the Common Stock on
the date of such determination, as reported in THE WALL STREET JOURNAL or
such other source as the Board deems reliable, or;
(3) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board.
(k) "OFFERING PERIOD" shall mean the periods of approximately
twenty-four (24) months during which an option granted pursuant to the Plan
may be exercised, commencing on the first Trading Day on or after December 1
and June 1 of each year and terminating on the last Trading Day in the
periods ending twenty-four months later. The duration and timing of Offering
Periods may be changed pursuant to Section 4 of this Plan.
(l) "PLAN" shall mean this 1998 Employee Stock Purchase Plan.
(m) "PURCHASE PRICE" shall mean an amount equal to 85% of the
Fair Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.
(n) "PURCHASE PERIOD" shall mean the approximately six month
period commencing after one Exercise Date and ending with the next Exercise
Date, except that the first Purchase Period of any Offering Period shall
commence on the Enrollment Date and end with the next Exercise Date.
(o) "RESERVES" shall mean the number of shares of Common Stock
covered by each option under the Plan which have not yet been exercised and
the number of shares of Common Stock which have been authorized for issuance
under the Plan but not yet placed under option.
(p) "SUBSIDIARY" shall mean a corporation, domestic or foreign, of
which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
-2-
(q) "TRADING DAY" shall mean a day on which national stock
exchanges and the National Association of Securities Dealers Automated
Quotation (NASDAQ) System are open for trading.
3. ELIGIBILITY.
(a) Any Employee who shall be employed by the Company on a given
Enrollment Date shall be eligible to participate in the Plan.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) to the extent,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of the capital stock of the
Company or of any Subsidiary, or (ii) to the extent his or her rights to
purchase stock under all employee stock purchase plans of the Company and its
subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) worth of stock (determined at the fair market value of the shares
at the time such option is granted) for each calendar year in which such
option is outstanding at any time.
4. OFFERING PERIODS. The Plan shall be implemented by consecutive,
overlapping Offering Periods with a new Offering Period commencing on the
first Trading Day on or after December 1 and June 1 each year, or on such
other date as the Board shall determine, and continuing thereafter until
terminated in accordance with Section 20 hereof The Board shall have the
power to change the duration of offering Periods (including the commencement
dates thereof) with respect to future offerings without stockholder approval
if such change is announced at least fifteen (15) days prior to the scheduled
beginning of the first Offering Period to be affected thereafter.
5. PARTICIPATION.
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the
form of Exhibit A to this Plan and filing it with the Company's payroll
office at least five (5) business days prior to the applicable Enrollment
Date, unless a later time for filing the subscription agreement is set by the
Board for all eligible Employees with respect to a given offering Period.
(b) Payroll deductions for a participant shall commence on the
first payroll following the Enrollment Date and shall end on the last payroll
in the Offering Period to which such authorization is applicable, unless
sooner terminated by the participant as provided in Section 10 hereof.
-3-
6. PAYROLL DEDUCTIONS.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay
day during the Offering Period in an amount not exceeding fifteen percent
(15%) of the Compensation which he or she receives on each pay day during the
Offering Period, and the aggregate of such payroll deductions during the
Offering Period shall not exceed fifteen percent (15%) of the participant's
Compensation during said Offering Period. Moreover, a participant's
aggregate payroll deductions under two or more Plan offering periods that are
overlapping may not exceed fifteen percent (15%) of the participant's
Compensation.
(b) All payroll deductions made for a participant shall be
credited to his or her account under the Plan and will be withheld in whole
percentages only. A participant may not make any additional payments into
such account.
(c) A participant may discontinue his or her participation in the
Plan as provided in Section 10 hereof, or may increase or decrease the rate
of his or her payroll deductions during the Offering Period by completing or
filing with the Company a new subscription agreement authorizing a change in
payroll deduction rate. The Board may, in its discretion, limit the number
of participation rate changes during any Offering Period. The change in rate
shall be effective with the first full payroll period following five (5)
business days after the Company's receipt of the new subscription agreement
unless the Company elects to process a given change in participation more
quickly. A participant's subscription agreement shall remain in effect for
successive offering Periods unless terminated as provided in Section 10
hereof.
(d) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a
participant's payroll deductions may be decreased to 0% at such time during
any Purchase Period which is scheduled to end during the current calendar
year (the "Current Purchase Period") that the aggregate of all payroll
deductions which were previously used to purchase stock under the Plan in a
prior offering period or Purchase Period which ended during that calendar
year plus all payroll deductions accumulated with respect to the Current
Offering Period equal $21,250. Payroll deductions shall recommence at the
rate provided in such participant's subscription agreement at the beginning
of the first Purchase Period which is scheduled to end in the following
calendar year, unless terminated by the participant as provided in Section 10
hereof.
(e) At the time the option is exercised, in whole or in part, or
at the time some or all of the Company's Common Stock issued under the Plan
is disposed of, the participant must make adequate provision for the
Company's federal, state, or other tax withholding obligations, if any, which
arise upon the exercise of the option or the disposition of the Common Stock.
At any time, the Company may, but will not be obligated to, withhold from
the participant's compensation the amount necessary for the Company to meet
applicable withholding obligations, including any withholding required to
make available to the Company any tax deductions or benefits attributable to
sale or early disposition of Common Stock by the Employee.
-4-
7. GRANT OF OPTION. On the Enrollment Date of each Offering Period,
each eligible Employee participating in such Offering Period shall be granted
an option to purchase on the Exercise Date of such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participants account as of
the Exercise Date by the applicable Purchase Price; provided that in no event
shall an Employee be permitted to purchase during each Purchase Period more
than seven thousand five hundred (7,500) Shares (subject to any adjustment
pursuant to Section 18), and provided further that such purchase shall be
subject to the limitations set forth in Sections 3(b) and 12 hereof.
Exercise of the option shall occur as provided in Section 8 hereof, unless
the participant has withdrawn pursuant to Section 10 hereof, and the option
shall expire on the last day of the Offering Period.
8. EXERCISE OF OPTION. Unless a participant withdraws from the Plan
as provided in Section 10 hereof, his or her option for the purchase of
shares will be exercised automatically on the Exercise Date, and the maximum
number of full shares subject to option shall be purchased for such
participant at the applicable Purchase Price with the accumulated payroll
deductions in his or her account. No fractional shares will be purchased;
any payroll deductions accumulated in a participant's account which are not
sufficient to purchase a full share shall be retained in the participant's
account for the subsequent Purchase Period or Offering Period, subject to
earlier withdrawal by the participant as provided in Section 10 hereof. Any
other monies left over in a participant's account after the Exercise Date
shall be returned to the participant. During a participant's lifetime, a
participant's option to purchase shares hereunder is exercisable only by him
or her.
9. DELIVERY. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option.
10. WITHDRAWAL; TERMINATION OF EMPLOYMENT.
(a) A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet used to
exercise his or her option under the Plan at any time by giving written
notice to the Company in the form of Exhibit B to this Plan. All of the
participant's payroll deductions credited to his or her account will be paid
to such participant promptly after receipt of notice of withdrawal and such
participant's option for the Offering Period will be automatically
terminated, and no further payroll deductions for the purchase of shares will
be made during the Offering Period. If a participant withdraws from an
Offering Period, payroll deductions will not resume at the beginning of the
succeeding Offering Period unless the participant delivers to the Company a
new subscription agreement.
(b) Upon a participant's ceasing to be an Employee (as defined in
Section 2(g) hereof), for any reason, including by virtue of him or her
having failed to remain scheduled as an Employee of the Company for at least
twenty (20) hours per week during an Offering Period in which the Employee is
a participant, he or she will be deemed to have elected to withdraw from the
Plan and the payroll deductions credited to such participant's account during
the Offering Period but not yet
-5-
used to exercise the option will be returned to such participant or, in the
case of his or her death, to the person or persons entitled thereto under
Section 14 hereof, and such participant's option will be automatically
terminated.
(c) A participant's withdrawal from an Offering Period will not
have any effect upon his or her eligibility to participate in any similar
plan which may hereafter be adopted by the Company or in succeeding Offering
Periods which commence after the termination of the offering Period from
which the participant withdraws.
11. INTEREST. No interest shall accrue on the payroll deductions of a
participant in the Plan.
12. STOCK.
(a) Subject to any adjustment upon changes in capitalization of
the Company as provided in Section 18 hereof, the maximum number of shares of
the Company's Common Stock which shall be made available for sale under the
Plan shall be 400,000 shares, plus an annual increase to be added on May 1
(beginning in 1999) of each year equal to the lesser of (i) the number of
shares of Common Stock needed to restore the maximum aggregate number of
shares of Common Stock which may be optioned and sold under the Plan to
400,000 shares or (ii) a lesser amount determined by the Board. If on a
given Exercise Date the number of shares with respect to which options are to
be exercised exceeds the number of shares then available under the Plan, the
Company shall make a pro rata allocation of the shares remaining available
for purchase in as uniform a manner as shall be practicable and as it shall
determine to be equitable.
(b) The participant will have no interest or voting right in
shares covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant
and his or her spouse.
13. ADMINISTRATION. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision
and determination made by the Board or its committee shall, to the full
extent permitted by law, be final and binding upon all parties.
14. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary
who is to receive any shares and cash, if any, from the participant's account
under the Plan in the event of such participant's death subsequent to an
Exercise Date on which the option is exercised but prior to delivery to such
participant of such shares and cash. In addition, a participant may file a
written designation of a
-6-
beneficiary who is to receive any cash from the participant's account under
the Plan in the event of such participant's death prior to exercise of the
option. If a participant is married and the designated beneficiary is not
the spouse, spousal consent shall be required for such designation to be
effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the
estate of the participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its discretion,
may deliver such shares and/or cash to the spouse or to any one or more
dependents or relatives of the participant, or if no spouse, dependent or
relative is known to the Company, then to such other person as the Company
may designate.
15. TRANSFERABILITY. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option
or to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the participant. Any
such attempt at assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an election to
withdraw funds from an Offering Period in accordance with Section 10 hereof.
16. USE OF FUNDS. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose,
and the Company shall not be obligated to segregate such payroll deductions.
17. REPORTS. Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to
participating Employees at least annually, which statements will set forth
the amounts of payroll deductions, the Purchase Price, the number of shares
purchased and the remaining cash balance, if any.
18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by
the stockholders of the Company, the maximum number of shares each
participant may purchase each Purchase Period (pursuant to Section 7), as
well as the Reserves and the price per share of Common Stock covered by each
option under the Plan which has not yet been exercised shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other increase or decrease in the number of shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration". Such adjustment
shall be made by the Board, whose determination in that respect shall be
final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by
-7-
reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an option.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Offering Periods will
terminate immediately prior to the consummation of such proposed action,
unless otherwise provided by the Board.
(c) MERGER OR ASSET SALE. In the event of a proposed sale of all
or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, each option under the Plan shall be
assumed or an equivalent option shall be substituted by such successor
corporation or a parent or subsidiary of such successor corporation, unless
the Board determines, in the exercise of its sole discretion and in lieu of
such assumption or substitution, to shorten the Purchase Periods and Offering
Periods then in progress by setting a new Exercise Date (the "New Exercise
Date") or to cancel each outstanding right to purchase and refund all sums
collected from participants during the Offering Periods then in progress. If
the Board shortens the Purchase Periods and Offering Periods then in progress
in lieu of assumption or substitution in the event of a merger or sale of
assets, the Board shall notify each participant in writing, at least ten (10)
business days prior to the New Exercise Date, that the Exercise Date for his
option has been changed to the New Exercise Date and that his option will be
exercised automatically on the New Exercise Date, unless prior to such date
he has withdrawn from the offering Period as provided in Section 10 hereof.
For purposes of this paragraph, an option granted under the Plan shall be
deemed to be assumed if, following the sale of assets or merger, the option
confers the right to purchase, for each share of option stock subject to the
option immediately prior to the sale of assets or merger, the consideration
(whether stock, cash or other securities or property) received in the sale of
assets or merger by holders of Common Stock for each share of Common Stock
held on the effective date of the transaction (and if such holders were
offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding shares of Common Stock); provided,
however, that if such consideration received in the sale of assets or merger
was not solely common stock of the successor corporation or its parent (as
defined in Section 424(e) of the Code), the Board may, with the consent of
the successor corporation and the participant, provide for the consideration
to be received upon exercise of the option to be solely common stock of the
successor corporation or its parent equal in fair market value to the per
share consideration received by holders of Common Stock and the sale of
assets or merger.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the
price per share of Common Stock covered by each outstanding option, in the
event the Company effects one or more reorganizations, recapitalization,
rights offerings or other increases or reductions of shares of its
outstanding Common Stock, and in the event of the Company being consolidated
with or merged into any other corporation.
19. AMENDMENT OR TERMINATION.
(a) The Board of Directors of the Company may at any time and for
any reason terminate or amend the Plan. Except as provided in Section 18
hereof, no such termination can affect
-8-
options previously granted, provided that an Offering Period may be
terminated by the Board of Directors on any Exercise Date if the Board
determines that the termination of the Plan is in the best interests of the
Company and its stockholders. Except as provided in Section 18 hereof, no
amendment may make any change in any option theretofore granted which
adversely affects the rights of any participant. To the extent necessary to
comply with Section 423 of the Code (or any successor rule or provision or
any other applicable law, regulation or stock exchange rule), the Company
shall obtain stockholder approval in such a manner and to such a degree as
required.
(b) Without stockholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods,
establish the exchange ratio applicable to amounts withheld in a currency
other than U.S. dollars, permit payroll withholding in excess of the amount
designated by a participant in order to adjust for delays or mistakes in the
Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or
procedures as the Board (or its committee) determines in its sole discretion
advisable which are consistent with the Plan.
20. NOTICES. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the
location, or by the person, designated by the Company for the receipt thereof.
21. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
with respect to an option unless the exercise of such option and the issuance
and delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the 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 shares if, in the
opinion of counsel for the Company, such a representation is required by any
of the aforementioned applicable provisions of law.
22. TERM OF PLAN. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
stockholders of the Company. It shall continue in effect for a term of
ten (10) years unless sooner terminated under Section 19 hereof.
23. AUTOMATIC TRANSFER TO LOW PRICE OFFERING PERIOD. To the extent
permitted by any applicable laws, regulations, or stock exchange rules if the
Fair Market Value of the Common Stock
-9-
on any Exercise Date in an Offering Period is lower than the Fair Market
Value of the Common Stock on the Enrollment Date of such Offering Period,
then all participants in such Offering Period shall be automatically
withdrawn from such Offering Period immediately after the exercise of their
option on such Exercise Date and automatically re-enrolled in the immediately
following Offering Period as of the first day thereof.
-10-
EXHIBIT A
TRIQUINT SEMICONDUCTOR, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ New Application Enrollment Date: _________________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. I hereby authorize payroll deductions from each paycheck in the amount
of _____% of my Compensation on each payday (not to exceed 15% under all
offering periods of all employee stock purchase plans of the Company)
during the Offering Period in accordance with the Employee Stock Purchase
Plan. (Please note that no fractional percentages are permitted.)
2. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise my
option.
3. I have received a copy of the complete "TriQuint Semiconductor, Inc. 1998
Employee Stock Purchase Plan." I understand that my participation in the
Employee Stock Purchase Plan is in all respects subject to the terms of
the Plan.
4. Shares purchased for me under the Employee Stock Purchase Plan should be
issued in the name(s) of (Employee or Employee and Spouse Only):__________
__________________________________________________________________________
5. I understand that if I dispose of any shares received by me pursuant to
the Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares) or one year after
the Exercise Date, I will be treated for federal income tax purposes as
having received ordinary income at the time of such disposition in an
amount equal to the excess of the fair market value of the shares at the
time such shares were purchased by me over the price which I paid for
the shares. I HEREBY AGREE TO NOTIFY THE COMPANY IN WRITING WITHIN
30 DAYS AFTER THE DATE OF ANY DISPOSITION OF MY SHARES AND I WILL MAKE
ADEQUATE PROVISION FOR FEDERAL, STATE OR OTHER TAX WITHHOLDING
OBLIGATIONS, IF ANY, WHICH ARISE UPON THE DISPOSITION OF THE COMMON
STOCK. The Company may, but will not be obligated to, withhold from my
compensation the amount necessary to meet any applicable withholding
obligation including any withholding necessary to make available to the
Company any tax deductions or benefits attributable to sale or early
disposition of Common Stock by me. If I dispose of such shares at any
time after the expiration of the 2-year and 1-year holding periods, I
understand that I will be treated for federal income tax purposes as
having received income only at the time of such disposition, and that
such income will be taxed as ordinary income only to the
extent of an amount equal to the lesser of (1) the excess of the fair
market value of the shares at the time of such disposition over the
purchase price which I paid for the shares, or (2) 15% of the fair market
value of the shares on the first day of the Offering Period. The
remainder of the gain, if any, recognized on such disposition will be
taxed as capital gain.
6. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent
upon my eligibility to participate in the Employee Stock Purchase Plan.
7. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print) _________________________________________________________
(First) (Middle) (Last)
_______________________________ _________________________________________
Relationship
_________________________________________
(Address)
NAME: (Please print) _________________________________________________________
(First) (Middle) (Last)
_______________________________ _________________________________________
Relationship
_________________________________________
(Address)
Employee's Social
Security Number: _________________________________________
Employee's Address: _________________________________________
_________________________________________
_________________________________________
-2-
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT
THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated:_________________________ _________________________________________
Signature of Employee
_________________________________________
Spouses Signature (If beneficiary other
than spouse)
-3-
EXHIBIT B
TRIQUINT SEMICONDUCTOR, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the TriQuint
Semiconductor, Inc. 1998 Employee Stock Purchase Plan which began on
_________________ 19___ (the "Enrollment Date") hereby notifies the Company
that or she hereby withdraws from the Offering Period. He or she hereby
directs the Company to pay to the undersigned as promptly as practicable all
the payroll deductions credited to his or her account with respect to such
Offering Period. The undersigned understands and agrees that his or her
option for such Offering Period will be automatically terminated. The
undersigned understands further that no further payroll deductions will be
made for the purchase of shares in the current Offering Period and the
undersigned shall be eligible to participate in succeeding Offering Periods
only by delivering to the Company a new Subscription Agreement.
Name and Address of Participant:
_________________________________________
_________________________________________
_________________________________________
Signature:
_________________________________________
Date:____________________________________
TRIQUINT SEMICONDUCTOR, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 28, 1998
The undersigned hereby acknowledges receipt for the Notice of Annual
Meeting of Shareholders and Proxy Statement, each dated April 20, 1998 and
hereby names, constitutes and appoints Steven J. Sharp and Edward C. V. Winn,
or either of them acting in absence of the other, with full power of
substitution, my true and lawful attorneys and Proxies for me and in my place
and stead to attend the Annual Meeting of the Shareholders of TriQuint
Semiconductor, Inc. (the "Company") to be held at 2:00 p.m. on Thursday, May
28, 1998, and at any adjournment thereof, and to vote all the shares of
Common Stock held of record in the name of the undersigned on April 6, 1998,
with all the powers that the undersigned would possess if he were personally
present.
1. PROPOSAL 1--Election of Directors
/ / FOR all nominees listed below (except as marked to the contrary below)
/ / WITHHOLD AUTHORITY to vote for all nominees listed below
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
STEVEN J. SHARP DR. PAUL A. GARY CHARLES SCOTT GIBSON E. FLOYD KVAMME
DR. WALDEN C. RHINES EDWARD F. TUCK
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE
NOMINEES NAMED ABOVE. ---
2. PROPOSAL 2--To ratify the appointment of KPMG Peat Marwick LLP as the
Company's independent accountants for the year ending December 31, 1998.
FOR PROPOSAL 2 / / AGAINST PROPOSAL 2 / / ABSTAIN ON PROPOSAL 2 / /
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
PROPOSAL 2 ---
3. PROPOSAL 3--To approve an amendment to the TriQuint Semiconductor, Inc.
1996 Stock Incentive Program to increase the aggregate number of shares of
Common Stock that may be issued thereunder by 450,000 shares to a total of
1,250,000 shares, as summarized in the accompanying proxy statement.
FOR PROPOSAL 3 / / AGAINST PROPOSAL 3 / / ABSTAIN ON PROPOSAL 3 / /
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
PROPOSAL 3 ---
4. PROPOSAL 4--To approve the adoption of the TriQuint Semiconductor, Inc.
1998 Employee Stock Purchase Plan and to reserve 400,000 shares of Common
Stock that may be issued thereunder and the adoption of a provision for an
annual increase in the number of shares available for issuance under the Plan
on May 1st of each year beginning in 1999 equal to the lesser of: (1) the
number of shares of Common Stock needed to restore the number of shares
available for purchase to 400,000 or (ii) a lesser amount determined by the
Board, as summarized in the accompanying proxy statement.
FOR PROPOSAL 4 / / AGAINST PROPOSAL 4 / / ABSTAIN ON PROPOSAL 4 / /
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
PROPOSAL 4 ---
5. Upon such other matters as may properly come before, or incident to the
conduct of the Annual Meeting, the Proxy holders shall vote in such manner
as they determine to be in the best interests of the Company. The Company is
not presently aware of any such matters to be presented for action at the
meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY. IF NO
SPECIFIC DIRECTION IS GIVEN AS TO ANY OF THE ABOVE ITEMS, THIS PROXY WILL BE
VOTED FOR EACH OF THE NOMINEES NAMED IN PROPOSAL 1 AND FOR PROPOSALS 2, 3, AND
4. --- ---
I plan to attend the meeting [ ]
---------------------------------------
Dated
---------------------------------------
Shareholder (print name)
---------------------------------------
Shareholder (sign name)
This proxy should be marked, dated and signed by the shareholder(s) exactly
as his or her name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. If
shares are held by joint tenant or as community property, both should sign.