1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] 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 Rule 14a-11(c) or Rule 14a-12
Catalyst 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:
2
CATALYST SEMICONDUCTOR, INC.
1250 BORREGAS AVENUE
SUNNYVALE, CA 94089
Dear Fellow Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of Catalyst Semiconductor, Inc. ("Catalyst" or the "Company")
which will be held on Thursday, August 23, 2001, at 10:00 a.m., local time, at
the Company's principal executive offices in Sunnyvale, California.
At the Annual Meeting, you will be asked to consider and vote upon the
proposals set forth in the Notice of Annual Meeting accompanying this Letter.
The enclosed Proxy Statement more fully describes the details of the business to
be conducted at the Annual Meeting.
After reading the Proxy Statement, please mark, date, sign and return, if
possible by no later than August 20, 2001, the proxy card in the accompanying
reply envelope. If you decide to attend the Annual Meeting, please notify the
Secretary of the Company that you wish to vote in person and your proxy will not
be voted. YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN, DATE AND RETURN THE
ENCLOSED PROXY, OR ATTEND THE ANNUAL MEETING IN PERSON.
A copy of the Catalyst Semiconductor, Inc. Annual Report on Form 10-K for
the year ended April 30, 2001, is enclosed.
We look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ Radu M. Vanco
Radu M. Vanco
President, Chief Executive Officer
and Chairman of the Board
Sunnyvale, California
July 25, 2001
IMPORTANT
PLEASE MARK, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT AT YOUR
EARLIEST CONVENIENCE IN THE ENCLOSED POSTAGE-PREPAID RETURN ENVELOPE SO THAT IF
YOU ARE UNABLE TO ATTEND THE ANNUAL MEETING, YOUR SHARES MAY BE VOTED.
3
CATALYST SEMICONDUCTOR, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 23, 2001
------------------------
To The Stockholders of Catalyst Semiconductor, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Catalyst
Semiconductor, Inc., a Delaware corporation (Catalyst), will be held on August
23, 2001 at 10:00 a.m., local time, at our principal executive offices located
at 1250 Borregas Avenue, Sunnyvale, California 94089 for the following purposes:
1. To elect two Class III Directors to serve for a three-year term expiring
upon the Annual Meeting of Stockholders next following April 30, 2004 or
until such directors' respective successors are duly elected and
qualified.
2. To ratify the appointment of PricewaterhouseCoopers LLP as our
independent accountants for the fiscal year ending April 30, 2002.
3. To transact such other business as may properly come before the meeting
and any adjournment or postponement thereof.
The enclosed Proxy Statement (Proxy Statement) more fully describes the
foregoing items and business to be conducted at the Annual Meeting.
The Board of Directors has fixed the close of business on July 18, 2001 as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and any adjournments and postponements thereof.
After careful consideration, the Catalyst Board of Directors recommends a
vote IN FAVOR OF each such proposal.
After reading the Proxy Statement, please mark, date, sign and return, as
soon as possible, the enclosed proxy card in the accompanying reply envelope. If
you decide to attend the Annual Meeting, please notify in writing the Secretary
of the Catalyst at our principal executive offices, that you wish to vote in
person and your proxy will not be voted. Our principal executive offices are
located at 1250 Borregas Avenue, Sunnyvale, California 94089. YOUR SHARES CANNOT
BE VOTED UNLESS YOU SIGN, DATE AND RETURN THE ENCLOSED PROXY, OR ATTEND THE
ANNUAL MEETING IN PERSON.
By Order of the Board of Directors
Peter Cohn
Secretary
Sunnyvale, California
July 25, 2001
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND IN ANY EVENT NO LATER THAN
AUGUST 20, 2001 IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE. IF A QUORUM IS NOT
REACHED, WE WILL HAVE THE ADDED EXPENSE OF RE-ISSUING THESE PROXY MATERIALS. IF
YOU ATTEND THE MEETING AND SO DESIRE, YOU MAY WITHDRAW YOUR PROXY AND VOTE IN
PERSON.
THANK YOU FOR ACTING PROMPTLY.
4
CATALYST SEMICONDUCTOR, INC.
------------------------
PROXY STATEMENT FOR THE 2001 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 23, 2001
------------------------
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
Catalyst Semiconductor, Inc. (Catalyst, we, us) for use at the Annual Meeting of
Stockholders to be held on August 23, 2001 at 10:00 a.m., local time, or at any
adjournment thereof (Annual Meeting) for the purposes set forth herein and in
the accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting
will be held at our principal executive offices located at 1250 Borregas Avenue,
Sunnyvale, California 94089.
We currently anticipate that definitive proxy materials will be released to
our stockholders on or about July 25, 2001. No preliminary proxy materials have
been or will be released to our stockholders.
RECORD DATE AND VOTING SECURITIES
Only stockholders of record at the close of business on July 18, 2001
(Record Date) are entitled to notice of and to vote at the meeting. As of the
close of business on July 18, 2001, there were 17,803,623 shares of our Common
Stock outstanding and entitled to vote and approximately 164 stockholders of
record, including one holder who is a nominee for an undetermined number of
beneficial owners.
REVOCABILITY OF PROXIES
You may revoke any proxy given pursuant to this solicitation at any time
before its use by delivering a written notice of revocation or a duly executed
proxy bearing a later date to the Secretary of Catalyst at our principal
executive offices at 1250 Borregas Avenue, Sunnyvale, California 94089, or by
attending the meeting and voting in person.
VOTING GENERALLY; SOLICITATION
Each stockholder is entitled to one vote for each share of Common Stock on
all matters presented at the Annual Meeting. Stockholders do not have the right
to cumulate their votes in the election of our directors.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted toward the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes, whereas broker non-votes will not be
counted for purposes of determining whether a proposal has been approved or not.
The cost of soliciting proxies, consisting of the printing, handling and
mailing of the proxy card and related material, and the actual expense incurred
by brokerage houses, custodians, nominees and fiduciaries in forwarding proxy
material to the beneficial owners of stock, will be paid by us. In order to
assure that a majority vote will be present in person or by proxy at the Annual
Meeting, it may be necessary for certain of our officers, directors, regular
employees and other representatives to solicit proxies by telephone, facsimile,
telegraph, electronic means, or in person. These persons will receive no extra
compensation for their services. We reserve the right to have an outside
solicitor conduct the solicitation of proxies and to pay such solicitor for its
services.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting
is a majority of the votes eligible to be cast by holders of shares of Common
Stock issued and outstanding on the Record Date. Shares that are voted "FOR,"
"AGAINST," "WITHHELD" or "ABSTAIN" are treated as being present at the
5
meeting for purposes of establishing a quorum and are also treated as shares
entitled to vote at the Annual Meeting (Votes Cast) with respect to such matter.
While there is no definitive statutory or case law authority in Delaware as
to the proper treatment of abstentions, we believe that abstentions should be
counted for purposes of determining both (i) the presence or absence of a quorum
for the transaction of business and (ii) the total number of Votes Cast with
respect to a proposal (other than the election of directors). In the absence of
controlling precedent to the contrary, we intend to treat abstentions in this
manner. Accordingly, abstentions will have the same effect as a vote against the
proposal.
The Delaware Supreme Court has held that, while broker non-votes should be
counted for purposes of determining the presence or absence of a quorum for the
transaction of business, broker non-votes should not be counted for purposes of
determining the number of Votes Cast with respect to the particular proposal on
which the broker has expressly not voted. Accordingly, we intend to treat broker
non-votes in this manner. Thus, a broker non-vote will not affect the outcome of
the voting on a proposal.
CATALYST INFORMATION
Our principal executive offices are located at 1250 Borregas Avenue,
Sunnyvale, California 94089. The telephone number of our principal offices is
(408) 542-1000.
PROPOSAL 1
ELECTION OF TWO CLASS III DIRECTORS
NOMINEES
Our Bylaws provide that the number of directors shall be established by the
Board or our stockholders. Our Certificate of Incorporation provides that the
directors shall be divided into three classes, with the classes serving for
staggered, three year terms. Pursuant to our Bylaws, the Board has currently set
the number of Directors at six, consisting of two Class I directors, two Class
II directors and two Class III directors. The two Class III directors are to be
elected at the Annual Meeting. These Class III directors will hold office until
the Annual Meeting next following the fiscal year ending April 30, 2004 or until
their successors have been duly elected and qualified. The terms of the Class I
and Class II directors will expire at the Annual Meeting of Stockholders next
following the fiscal year ending April 30, 2002 and April 30, 2003,
respectively.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the nominees named below, each of whom is currently is a
director. In the event that one of our nominees becomes unable or declines to
serve as director at the time of the Annual Meeting, the proxy holders will vote
the proxies for any substitute nominee who is designated by the current Board of
Directors to fill such vacancy. We do not expect that the nominees listed below
will be unable or will decline to serve as a director.
2
6
INFORMATION WITH RESPECT TO NOMINEES AND CONTINUING DIRECTORS
Set forth below are the names of, and certain information as of July 25,
2001 about, the nominees for and current Class III directors and the current
Class II and Class I directors with unexpired terms.
NAME AGE PRINCIPAL OCCUPATION
---- --- --------------------
Nominees for and Current Class III Directors
Lionel M. Allan........................... 58 President and Chief Executive Officer of
Allan Advisors, Inc.
Roland Duchatelet......................... 54 Chairman of the Board, Elex NV; Chairman
of Melexis NV
Continuing Class II Directors
Cynthia M. Butitta........................ 46 Principal, Altair Capital Associates
Glen G. Possley........................... 61 Managing General Partner, Glen-Ore
Associates
Continuing Class I Directors
Henry C. Montgomery....................... 65 Chairman of the Board of Montgomery
Financial Services Corporation
Radu M. Vanco............................. 51 President, Chief Executive Officer and
Chairman of the Board of Catalyst
Semiconductor, Inc.
Except as indicated below, each director has been engaged in the principal
occupation set forth above during the past five years. There are no family
relationships between any of our directors or executive officers.
Lionel M. Allan has served as a director since August 1995. Mr. Allan is
President and Chief Executive Officer of Allan Advisors, Inc., a legal
consulting firm that he founded in 1992. Mr. Allan is also a director and past
Chairman of the Board of KTEH Public Television Channel 54, in San Jose,
California, a director of Accom, Inc., a digital video systems company. Mr.
Allan is a past director of Global Motorsport Group, Inc. (formerly known as
Custom Chrome, Inc.) and is also a director of several privately held
corporations. Mr. Allan received an AB from the University of Michigan in 1965
and a JD from Stanford University in 1968.
Roland M. Duchatelet has served as a director since September 1999. From
September of 1989 to present, Mr. Duchatelet has served as Chairman of Elex NV,
a holding company in Belgium which owns 5,500,000 shares of our Common Stock
representing approximately 30.9% of our outstanding Common Stock. Additionally,
Mr. Duchatelet serves as Chairman of the Board of Directors of Melexis NV, a
position he has held since May of 1994 and is also a director of EPIQ NV.
Cynthia M. Butitta has served as a director since June 2000. Ms. Butitta
co-founded Altair Capital Associates, LLC, a provider of financial advisory
services in November 1998 where she continues to serve as a principal and she
founded Butitta Consulting Services LLC in September 1997. From December 1995 to
September 1997, she served as the CFO and Vice President of Finance and
Administration for Connetics, Inc., a biopharmaceutical company. She also served
as the CFO of Telik, Inc. from August 1998 to May of 2001, and presently serves
Telik as both its CFO and Chief Operating Officer. From June 1994 to December
1995, Ms. Butitta served as the CFO and Vice President of Finance and
Administration at InSite Vision, Inc. Ms. Butitta holds a BS in Business and
Accounting from Edgewood College in Madison, Wisconsin and a MBA from the
University of Wisconsin, Madison.
Dr. Glen G. Possley has served as a director since July 2000 and as our
lead director since May 2001. He is currently a managing general partner at
Glen-Ore Associates. From January 1998 through January 2000, Dr. Possley was a
partner at International Technology Ventures and N-Able Group. From June 1994 to
December 1997 Dr. Possley was President of SubMicron Technology, Inc., a
semiconductor company. From April 1992 to May 1994 he was Senior Vice President
of Manufacturing at Ramtron International, a semiconductor company. Dr. Possley
is currently a director of Novellus Systems, Inc., a semiconductor company. He
received a BS in Mathematics from Western University in 1963 and a PhD in
Physical Chemistry from the University of Kentucky in 1969.
3
7
Henry C. Montgomery has served as a director since July 2000. Mr.
Montgomery previously served as a member of our Board of Directors from 1990 to
1995. Since 1980, Mr. Montgomery has been and continues to serve as the Chairman
of the Board of Montgomery Financial Services Corporation, a management
consulting and financial services firm, which has assisted companies in
transition or that are financially troubled from time to time. From January 2000
to March 2001, Mr. Montgomery served as Executive Vice President, Finance and
Administration and Chief Financial Officer of Indus International, Inc., a
public company engaged in enterprise asset management systems. From May to
September 1999 he served as interim Executive Vice President of Finance and
Administration and currently serves on the board of directors at Spectrian
Corporation, a public company engaged in making cellular base station power
amplifiers and power transistors. From November 1996 through July 1997, Mr.
Montgomery served as Executive Vice President of SyQuest Technology, Inc., a
public company engaged in the development, manufacture and sale of computer hard
drives. On November 17, 1998, SyQuest filed a petition under Chapter 11 of the
U.S. Bankruptcy Code. From March 1995 to November 1996, Mr. Montgomery served as
President and Chief Executive Officer of New Media Corporation, a privately-held
company engaged in developing, manufacturing and selling PCMCIA cards for the
computer industry. On October 14, 1998, New Media filed a petition under Chapter
11 of the U.S. Bankruptcy Code. Mr. Montgomery also serves as a director of
Consolidated Freightways Corporation, a trucking company, and Swift Energy
Company, an independent oil and gas company. He holds a BA in Economics from
Miami University in Oxford, Ohio.
Radu M. Vanco has served as President and Chief Executive Officer since
March 1998, as the Chairman of our Board since February 2001 and as a director
since November 1995. From October 1996 to March 1998 he served as Executive Vice
President of Engineering, from October 1996 to December 1997 as Chief Operating
Officer, and from November 1992 to October 1995 as Vice President, Engineering.
Mr. Vanco holds an MS in Electrical Engineering from the Polytechnical
Institute, Bucharest, Romania.
BOARD MEETINGS AND COMMITTEES
Our Board of Directors held a total of six meetings during the period from
May 1, 2000 to April 30, 2001 (Fiscal 2001) and also took action by unanimous
written consent two times during this period. The Board of Directors has an
Audit Committee, a Compensation Committee and a Non-Section 16 Option Committee.
The Board of Directors has no nominating committee or any committee performing
similar functions.
The Audit Committee currently consists of Ms. Butitta and Messrs.
Montgomery and Possley. Pursuant to its written charter, the Audit Committee is
charged with reviewing our annual audit and meeting with our independent
auditors to review our internal controls and financial management practices. The
Audit Committee held five meetings during the last fiscal year. The members of
our Audit Committee are independent (as independence is defined in Rule
4200(a)(15) of the National Association of Securities Dealers' listing
standards, as applicable and as may be modified or supplemented).
The Compensation Committee currently consists of Messrs. Allan and Possley
and Ms. Butitta. The Compensation Committee is responsible for reviewing and
approving our compensation policies and the compensation paid to executive
officers. The Compensation Committee held two meetings during the last fiscal
year.
In addition to serving on the Audit and Compensation Committees, effective
May 2001, Dr. Possley, a non-employee director, was appointed to serve as the
lead independent director of the Board. The responsibilities of the lead
independent director include, among other things, assisting the Chairman of the
Board with certain Board-related matters, and acting, as necessary, as the
principal liaison between the independent directors and the Chairman of the
Board.
The Non-Section 16 Option Committee, which may make grants of up to 50,000
shares to persons who are not executive officers or directors, currently
consists of our Chief Executive Officer. The Non-Section 16 Option Committee
acted by written consent on four occasions during Fiscal 2001.
4
8
No incumbent director attended fewer than 80% of the meetings of the Board
of Directors and of the committees on which such director served and that were
held during the period such individual was a director during Fiscal 2001.
COMPENSATION OF DIRECTORS
During Fiscal 2001, our non-employee directors, currently consisting of
Messrs. Allan, Duchatelet, Montgomery and Possley and Ms. Butitta, each received
quarterly fees in an amount equal to $3,600 for each quarter in which they
attended a Board meeting. During Fiscal 2002, each of our directors will receive
director fees in the amount of $25,000 per year (with the exception of the lead
independent director who will receive a fee of $50,000 per year), plus $2,500
per Board meeting attended and $1,000 for each committee meeting attended. In
addition, directors are reimbursed for reasonable out-of-pocket expenses
incurred in connection with attendance at such meetings.
Each of our non-employee directors is entitled to participate in our 1993
Director Stock Option Plan (Director Option Plan) by receiving automatic annual
grants of our Common Stock. Ms. Butitta was granted options to purchase 30,000
shares on June 14, 2000 at an exercise price of $9.50 and Messrs. Montgomery and
Possley were each granted options to purchase 30,000 shares on July 9, 2000 at
an exercise price of $7.875. All options granted prior to May 1, 2000 under the
Director Option Plan are subject to cumulative yearly vesting as to one-third of
the total grant on each anniversary of the date of grant, and terminate five
years from the date of grant unless terminated sooner upon termination of the
optionee's status as a director or otherwise pursuant to the Director Option
Plan. Grants made subsequent to May 1, 2000 are subject to monthly vesting for a
period of thirty-six months and terminate ten years from the date of grant
unless terminated sooner upon termination of the optionee's status as a director
or otherwise pursuant to the Director Option Plan.
VOTE REQUIRED FOR ELECTION
The affirmative vote of a majority of the Votes Cast is required for each
nominee to be elected as Class III director. Votes withheld from a director will
be counted for purposes of determining the presence or absence of a quorum but
will not be counted as affirmative votes. A broker non-vote will be counted for
purposes of determining the presence or absence of a quorum, but, under Delaware
law, will have no other legal effect upon the election of a Class III director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE CLASS III DIRECTOR
NOMINEES SET FORTH HEREIN.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected PricewaterhouseCoopers LLP, independent
auditors, to audit our financial statements for the year ending April 30, 2002,
and recommends that the stockholders vote for ratification of such appointment.
In the event of a negative vote on such ratification, the Board of Directors
will reconsider its selection.
Representatives of PricewaterhouseCoopers LLP are expected to be present at
the Annual Meeting and will have the opportunity to make a statement if they
desire to do so. The representatives also are expected to be available to
respond to appropriate questions from stockholders. The Board of Directors
believes that reappointing PricewaterhouseCoopers LLP is in our best interest.
5
9
VOTE REQUIRED
The affirmative vote of a majority of the Votes Cast is required to ratify
the appointment of PricewaterhouseCoopers LLP as our independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING APRIL 30, 2002.
EXECUTIVE COMPENSATION
The following table shows the compensation paid by us in Fiscal 2001, 2000
and 1999 to (i) our Chief Executive Officer and (ii) our four most highly
compensated officers other than the Chief Executive Officer who served as
executive officers at April 30, 2001 (collectively, Named Officers).
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
----------------------------------------------------
AWARDS PAYOUTS
OTHER ---------- ------------------------
ANNUAL COMPENSATION ANNUAL RESTRICTED SECURITIES ALL OTHER
FISCAL -------------------- COMPENSATION STOCK UNDERLYING LTIP COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) AWARDS($) OPTIONS(#) PAYOUTS($) ($)(2)
- --------------------------- ------ --------- -------- ------------ ---------- ---------- ---------- ------------
Radu M. Vanco.............. 2001 $344,500 $391,869 -- -- 500,000 -- $8,676
President, Chief 2000 337,500 422,500 -- -- -- -- 8,688
Executive Officer and 1999 265,000 60,000 -- -- 1,413,166(1) -- 8,574
Chairman of the Board
Gelu Voicu................. 2001 197,788 160,417 -- -- 100,000 -- 8,676
Vice President of 2000 164,349 157,500 -- -- -- -- 1,688
Product Engineering and 1999 134,769 30,000 -- -- 303,000(1) -- 174
Manufacturing
Thomas E. Gay III.......... 2001 149,536 133,058 -- -- 75,000 -- 8,651
Vice President, 2000 130,000 97,500 -- -- -- -- 5,888
Finance and 1999 106,375 25,000 -- -- 260,000(1) -- 121
Administration, and Chief
Financial Officer
Irvin W. Kovalik........... 2001 156,923 148,779 -- -- 75,000 -- 9,192
Vice President, Sales 2000 150,000 126,874 -- -- -- -- 9,102
1999 80,000 -- -- -- 250,000 -- 5,188
Barry Wiley................ 2001 150,000 8,885 -- -- 50,000 -- 792
Vice President, 2000 90,196 -- -- -- -- -- --
Programmable Analog 1999 -- -- -- -- -- -- --
Business Unit
- ---------------
(1) Options listed for fiscal 1999 long-term compensation awards include the
following number of options granted as a result of repricings (and
consequent cancellation of previously granted options) on September 22, 1998
for each of the following named executive officers: Mr. Vanco, 413,166
shares; Mr. Voicu, 103,000 shares; and Mr. Gay, 60,000 shares. The repriced
options retain the same vesting schedule as the options that were replaced
but may be exercised for a period of ten years following the date of the
repricing.
(2) Amounts included under "All Other Compensation" represent the dollar value
of car allowances and term life insurance premiums paid by us for the
benefit of such Named Officer for Fiscal 2001, 2000 and 1999 as follows: Mr.
Vanco -- $276, $288 and $174 respectively for life insurance and $8,400,
$8,400 and $8,400 respectively, for a car allowance; Mr. Voicu -- $276, $288
and $174 respectively for life insurance and $8,400, $1,400 and $0
respectively, for a car allowance; Mr. Gay -- $251, $288 and $121
respectively for life insurance and $8,400, $5,600 and $0 respectively, for
a car allowance; Mr. Kovalik -- $792, $702 and $288 respectively for life
insurance and $8,400, $8,400 and $4,900 respectively, for a car allowance;
and Mr. Wiley -- $792, $0 and $0 respectively for life insurance.
6
10
EMPLOYEE BENEFIT PLANS
Each current Named Officer is entitled to participate in our Stock Option
Plan (Option Plan). The Option Plan provides for the grant of options, stock
purchase rights, Stock Appreciation Rights (SARs) and long-term performance
awards.
The following table sets forth certain information with respect to stock
options granted during Fiscal 2001 to the Named Officers. No SARs were granted
in Fiscal 2001. In accordance with the rules of the Securities and Exchange
Commission, also shown below is the potential realizable value over the term of
the option (the period from the grant date to the expiration date) based on
assumed rates of stock appreciation from the option exercise price of 5% and
10%, compounded annually. These amounts are based on certain assumed rates of
appreciation and do not represent our estimate of future stock price. Actual
gains, if any, on stock option exercises will be dependent on the future
performance of the Common Stock.
OPTION GRANTS IN FISCAL 2001
INDIVIDUAL GRANTS
---------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS STOCK PRICE APPRECIATION FOR OPTION TERM
UNDERLYING GRANTED TO EXERCISE ----------------------------------------
OPTIONS EMPLOYEES IN OR BASE EXPIRATION
NAME GRANTED(#) FISCAL YEAR PRICE($/SH) DATE 5%($) 10%($)
---- ---------- ------------- ----------- ----------- ----------- ------------
Radu M. Vanco.............. 250,000 15.5% $7.250 5/18/2010 $(208,039) $ 742,336
250,000 15.5 5.375 2/15/2011 260,711 1,211,086
Gelu Voicu................. 25,000 1.6 7.250 5/18/2010 (20,804) 74,234
75,000 4.7 5.375 2/15/2011 78,213 363,326
Thomas E. Gay III.......... 25,000 1.6 7.250 5/18/2010 (20,804) 74,234
50,000 3.1 5.375 2/15/2011 52,142 242,217
Irv Kovalik................ 25,000 1.6 7.250 5/18/2010 (20,804) 74,234
50,000 3.1 5.375 2/15/2011 52,142 242,217
Barry Wiley................ 50,000 3.1 5.375 2/15/2011 52,142 242,217
The following table sets forth information with respect to options
exercised in Fiscal 2001 by the Named Officers and the value of unexercised
options at April 30, 2001.
AGGREGATE OPTION EXERCISES IN FISCAL 2001 AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES APRIL 30, 2001(#) APRIL 30, 2001(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) RECEIVED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
Radu M. Vanco............. 347,500 $2,473,597 338,998 941,668 $1,293,277 $1,684,963
Gelu Voicu................ 25,000 171,700 187,791 240,209 675,888 336,994
Thomas E. Gay III......... 0 0 133,124 196,876 507,868 369,582
Irv Kovalik............... 125,000 486,092 20,833 204,167 79,477 397,397
Barry Wiley............... 58,000 172,115 17,000 175,000 49,980 367,500
- ---------------
(1) Represents the market price at fiscal year end ($3.94) less the exercise
price. For purposes of this calculation, the fiscal year end market price of
the shares is deemed to be the closing sale price of our Common Stock as
reported on the NASDAQ SmallCap market on April 27, 2001.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The following is a report of the Compensation Committee of our Board of
Directors (Committee) describing the compensation philosophy and parameters
applicable to our executive officers with respect to the compensation paid to
such officers during Fiscal 2001. The actual compensation paid to the Named
Officers during Fiscal 2001 is shown in the "Summary Compensation Table."
7
11
The Committee is responsible for reviewing and approving our compensation
policies and the actual compensation paid to our executive officers. At the end
of Fiscal 2001, the Committee was comprised of three (3) of the non-employee
directors, Messrs. Allan and Possley and Ms. Butitta.
Compensation Philosophy. The general philosophy of our compensation program
is to offer our Chief Executive Officer and other executive officers competitive
compensation packages based upon both our performance as well as the
individual's performance and contributions. Our compensation policies are
intended to motivate and reward highly qualified executives for long-term
strategic management and the enhancement of stockholder value, to support a
performance-oriented environment that rewards achievement of our specific
internal goals and to attract and retain executives whose abilities are critical
to our long-term success and competitiveness. This is further subject to our
financial condition and results of operations. Our compensation program is
comprised of three main components, Base Salary, Bonus Plan and Stock Options.
Base Salary. Base salary for executive officers is set annually by
reviewing the competitive pay practices of comparable companies, the skills and
performance level of the individual executives and our the needs.
Bonus Plan. Our officers are eligible for bonuses under the terms of
individual bonus arrangements. When bonuses are given, they are based upon the
individual's achievement of specific corporate goals as well as the individual's
experience and contributions to our success.
During Fiscal 2001, Messrs. Gay, Kovalik, Vanco, Voicu and Wiley received
bonuses. No other current executive officer received a bonus during Fiscal 2001.
See "Certain Relationships and Related Transactions."
Stock Options. The Committee believes that stock options provide additional
incentives to officers to work toward maximizing stockholder value. The
Committee views stock options as one of the more important components of our
long-term, performance-based compensation philosophy. These options are provided
through initial grants at or near the date of hire and through subsequent
periodic grants based upon performance and promotions, as well as additional
grants to provide continuing motivation as earlier grants vest in full. Options
granted by us to our executive officers and other employees have exercise prices
equal to fair market value at the time of grant and, generally, vest over a
four-year period.
Severance Arrangements. See "Certain Relationships and Related
Transactions" for a description of severance arrangements for certain executive
officers.
Compensation for the Chief Executive Officer. Mr. Vanco's base salary was
established at a level which the Committee determined to be similar to the
amounts paid by comparably sized companies. Effective May 1, 2000, Mr. Vanco's
base annual salary was increased to $344,500.
The Committee considers equity based compensation, in the form of stock
options, to be an important component of a Chief Executive Officer's
compensation. These grants are intended to motivate leadership for our long-term
growth and profitability. Options to purchase 500,000 shares of stock were
granted to Mr. Vanco in Fiscal 2001.
8
12
Tax Deductibility of Executive Compensation. The Committee has considered
the potential impact of Section 162(m) of the Internal Revenue Code adopted
under the federal Revenue Reconciliation Act of 1993. This Section disallows a
tax deduction for any publicly-held corporation for individual compensation
exceeding $1,000,000 in any taxable year for any of the executive officers named
in the Proxy Statement, unless compensation is performance-based. The Committee
has studied the impact of Section 162(m) on our Option Plan.
THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS
Cynthia M. Butitta, Lionel M. Allan
and Glen G. Possley
THE BOARD OF DIRECTORS
Lionel M. Allan, Cynthia M. Butitta,
Roland Duchatelet, Henry C.
Montgomery, Radu M. Vanco and Glen G.
Possley
AUDIT COMMITTEE REPORT
The Audit Committee acts pursuant to a written charter which was amended
and restated effective May 23, 2001. The Audit Committee has reviewed and
discussed the audited financial statements with management and it has discussed
with the independent auditors the matters required to be discussed by SAS 61
(Codification of Statements on Auditing Standards, AU sec. 380), as it may be
modified or supplemented. The Audit Committee has received written disclosures
and a letter from the independent accountants as required by Independence
Standards Board Standard No. 1 (Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees), as it may be modified or
supplemented, and has discussed with the independent accountant the independent
accountant's independence. Based upon the above materials and discussions, the
Audit Committee recommended to the Board of Directors that the audited financial
statements be included in our Annual Report on Form 10-K, for the last fiscal
year for filing with the Commission.
THE AUDIT COMMITTEE OF THE BOARD OF
DIRECTORS
Cynthia M. Butitta, Glen G. Possley,
Henry C. Montgomery
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of our executive officers serves as a member of the board of directors
or compensation committee of any entity which has one or more executive officers
serving as a member of our Board of Directors. During Fiscal 2001, Messrs. Allan
and Possley and Ms. Butitta served as the members of the Compensation Committee
of the Board of Directors. Mr. Vanco participated in the Board's final approval
of executive compensation matters.
9
13
PERFORMANCE GRAPH
The following line graph compares the annual percentage change in the
cumulative total stockholder return for our Common Stock with the S&P 500 Index
and the S&P Electronics (Semiconductors) Index for the period commencing April
30, 1996 and ending on April 30, 2001. The graph assumes that $100 was invested
on April 30, 1996, and that all dividends are reinvested. Historic stock price
performance should not necessarily be considered indicative of future stock
price performance.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG CATALYST SEMICONDUCTOR, INC., THE S&P 500 INDEX
AND THE S&P ELECTRONICS (SEMICONDUCTORS) INDEX
[PERFORMANCE GRAPH]
Cumulative Total Return
--------------------------------------------------------------
- -------------------------------------------------------------------------------------
4/30/96 4/30/97 4/30/98 4/30/99 4/30/00 4/29/01
- -------------------------------------------------------------------------------------
Catalyst
Semiconductor,
Inc. $100.00 $ 25.00 $ 12.04 $ 4.44 $112.96 $ 62.67
S&P 500 100.00 125.13 176.52 215.04 236.82 206.10
S&P Electronics
(Semiconductors) 100.00 197.23 208.68 305.73 725.81 241.58
- -------------------------------------------------------------------------------------
* $100 invested on 4/30/96 in stock or index-including reinvestment of
dividends. Fiscal year ending April 30.
Notwithstanding anything to the contrary set forth in any our previous
filings under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, which might incorporate future filings made by us under
those statutes, the preceding Report of the Compensation Committee of the Board
of Directors on Executive Compensation, the Audit Committee Report and the
Performance Graph are not to be incorporated by reference into any of those
previous filings; nor is such report or graph to be incorporated by reference
into any future filings which we may make under those statutes.
10
14
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information known to us regarding beneficial
ownership of our common stock as of July 18, 2001 by:
- each person known by us to beneficially own more than 5% of the
outstanding common stock;
- each of our executive officers listed on the Summary Compensation Table
under "Executive Compensation";
- each of our directors; and
- all of our executive officers and directors as a group.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting or investment power with
respect to securities. All shares of common stock subject to options exercisable
within 60 days following July 18, 2001 are deemed to be outstanding and
beneficially owned by the persons holding those options for the purpose of
computing the number of shares beneficially owned and the percentage of
ownership of that person. They are not, however, deemed to be outstanding and
beneficially owned for the purpose of computing the percentage ownership of any
other person. Except as otherwise indicated the address for each person listed
as a director or officer is c/o Catalyst Semiconductor, Inc., 1250 Borregas
Avenue, Sunnyvale, California. Unless otherwise indicated, each person has sole
voting and investment power with respect to all shares shown as beneficially
owned, subject to community property laws where applicable. Percentage of
beneficial ownership prior to this offering is based on 17,803,623 common stock
outstanding as of July 18, 2001.
SHARES BENEFICIALLY
OWNED
---------------------
NUMBER PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OF SHARES OF TOTAL
------------------------------------ --------- --------
Elex NV..................................................... 5,500,000 30.9%
Transportstraat 1
B 3980
Tessenderlo, Belgium
Roland Duchatelet(1)(2)..................................... 5,518,609 30.9
Radu M. Vanco(1)............................................ 359,094 2.0
Gelu Voicu(1)............................................... 251,316 1.4
Thomas E. Gay III(1)........................................ 194,790 1.1
Irvin W. Kovalik(1)......................................... 38,539 *
Barry Wiley................................................. 33,666 *
Henry C. Montgomery......................................... 24,245 *
Lionel M. Allan(1).......................................... 24,195 *
Cynthia Butitta............................................. 15,278 *
Glen G. Possley............................................. 14,445 *
All current directors and executive officers as a group (10
persons)(3)............................................... 6,474,177 34.6
- ---------------
* Percentage of shares beneficially owned is less than one percent of total.
11
15
(1) Includes shares issuable upon exercise of stock options as of July 18, 2001
or within 60 days thereafter as follows:
Radu M. Vanco............................... 275,181 shares at $0.1250
83,332 shares at $7.2500
Lionel M. Allan............................. 13,917 shares at $0.1250
2,500 shares at $0.4690
2,501 shares at $0.90625
1,111 shares at $4.0700
1,666 shares at $4.1800
2,500 shares at $8.3750
Cynthia Butitta............................. 1,111 shares at $4.0700
1,666 shares at $4.1800
12,501 shares at $9.5000
Glen G. Possley............................. 1,111 shares at $4.0700
1,666 shares at $4.1800
11,668 shares at $7.8750
Henry C. Montgomery......................... 1,111 shares at $4.0700
1,666 shares at $4.1800
11,668 shares at $7.8750
Gelu Voicu.................................. 212,270 shares at $0.1250
25,000 shares at $7.2500
Thomas E. Gay III........................... 158,125 shares at $0.1250
16,665 shares at $7.2500
Irvin W. Kovalik............................ 21,874 shares at $0.1250
16,665 shares at $7.2500
Roland Duchatelet........................... 13,332 shares at $2.0000
1,111 shares at $4.0700
1,666 shares at $4.1800
2,500 shares at $8.3750
Barry Wiley................................. 33,666 shares at $1.0000
(2) Includes 5,500,000 shares held by Elex NV of which Mr. Duchatelet is a
controlling person.
(3) Includes 929,750 shares issuable upon exercise of stock options as of July
18, 2001 or within 60 days thereafter, held by Messrs. Vanco, Allan,
Possley, Montgomery, Voicu, Gay, Kovalik, Duchatelet and Wiley and Ms.
Butitta as described in Note 1 above.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fourth quarter of fiscal 2000, we began taking delivery of
wafers fabricated at X-fab Texas, Inc. (Xfab), a wholly owned subsidiary of Elex
NV, a Belgian holding company that owns 30.9% of our outstanding shares. The
wafers provided by Xfab supplement the same designs fabricated at Oki
Semiconductor in Japan, our principal wafer fab since 1985. We believe that the
cost of such wafers is no greater than comparable materials available from
alternative foundry services. During the fiscal year ended April 30, 2001, our
purchases from Xfab totaled $6,641,000. As of April 30, 2001, the total amount
owed to Xfab was $169,000. Mr. Duchatelet is the Chairman and CEO and a major
stockholder of Elex NV and has served as a member of our Board of Directors
since 1999.
In addition, we have an arrangement to obtain engineering services from Lxi
Corporation, a California corporation (Lxi), a provider of engineering services.
Lxi currently provides these services through Essex com SRL (Essex), its wholly
owned Romanian subsidiary. As of April 30, 2001, Essex employed approximately 11
engineers to perform the services on our behalf. This number fluctuates from
time to time, depending upon the needs of the project. The services relate to
our key development projects including development, design, layout and test
program development services. Messrs. Vanco, Voicu and Gay own approximately
91%, 3% and 1%, respectively, of Lxi. We believe the fees for such engineering
services are provided on terms that are fair and no less favorable to us than
those we would receive in an arms-length commercial transaction. During the
fiscal year ended April 30, 2001 we recorded $759,000 of engineering fees to
Essex and Lxi for engineering
12
16
design services. As of April 30, 2001 the total amount owed to Essex and Lxi was
$122,000. Messrs. Vanco, Voicu and Gay received no payments during the fiscal
years ended April 30, 2001 and April 30, 2000. Mr. Gay continues to serve as a
director of Lxi.
We entered into agreements with Mr. Vanco in May 1998, Mr. Voicu in April
1998, Mr. Gay in June 1998, Mr. Kovalik in May 1999 and Mr. Wiley in September
1999, which entitle such officers to certain severance payments in the event of
a termination as a result of a merger, sale or change in ownership of Catalyst
(Change of Control) and certain other benefits upon any involuntary termination
by us without cause (Involuntary Termination). Pursuant to the terms and
conditions of said agreements, such individuals will receive the following
benefits: (a) Mr. Vanco -- for termination as a result of a Change of Control he
shall receive severance payments equal to 2, 1 1/2 and 1 times his annual salary
if terminated within one, two or three or more years, respectively, following
his agreement; for an Involuntary Termination he shall receive a severance
payment equal to his annual salary; upon a Change of Control or his death or
Involuntary Termination, all stock options shall be immediately vested and be
exercisable for a period of three years following any such death or Involuntary
Termination; and (b) each of Messrs. Gay, Kovalik, Voicu and Wiley for
termination as a result of a Change of Control shall receive a severance payment
equal to one-half his annual salary; for an Involuntary Termination each shall
receive a severance payment equal to one-quarter of his annual salary; upon a
Change of Control or his death or Involuntary Termination, all stock options
shall be immediately vested and be exercisable for a period of one year
following any such death or Involuntary Termination. For the purposes of
determining the severance payments described above, salary is defined as the
annual salary payable to an officer for the fiscal year in which such officer's
termination occurs plus any guaranteed bonus. The agreements with Messrs. Voicu
and Gay have recently expired and new agreements have not yet been executed.
However, we do intend to enter into new severance agreements with each of Mr.
Voicu and Gay on terms substantially similar to the terms of the expired
agreements.
Mr. Allan serves as a consultant to us through his consulting company,
Allan Advisors, Inc., which received consulting fees of $8,333 per month
throughout Fiscal 2001. Pursuant to an Extension of Consulting Agreement,
entered into between us and Mr. Allan, effective as of June 7, 2001, we extended
the term of the consulting agreement to August 14, 2003.
Our Certificate of Incorporation limits the liability of directors to the
maximum extent permitted by the Delaware General Corporation Law. Our Bylaws
also provide that we will indemnify our directors, officers, employees and
agents in such circumstances. In addition, we have entered into separate
indemnification agreements with our officers and directors that may require us,
among other things, to indemnify them against certain liabilities that may arise
by reason of their status or service as directors or officers and to advance
their expenses incurred as a result of any proceeding against them as to which
they could be indemnified.
The transactions described above were negotiated at arms length such that
their terms are as favorable to us as we believe could have been obtained from
an unaffiliated third party.
SECTION 16(a) BENEFICIAL REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (Exchange
Act) requires our executive officers and directors and persons who own more than
ten percent of a registered class of our equity securities to file an initial
report of ownership on Form 3 and changes in ownership on Form 4 or 5 with the
Securities and Exchange Commission (SEC). Executive officers, directors and
greater than ten percent stockholders are also required by SEC rules to furnish
us with copies of all Section 16(a) forms they file. Based solely on our review
of copies of such forms received by us, we believe that during the fiscal year
ended April 30, 2001, all such reports were timely filed. Again based solely on
our review of copies of such forms received by us, we believe that all filing
requirements applicable to our officers, directors and ten percent stockholders
have been complied with.
13
17
1934 EXCHANGE ACT REPORTS
We hereby undertake to mail, without charge, to any of our stockholders
upon written request, copies of reports we file with the Securities and Exchange
Commission, including financial statements, schedules and exhibit lists
contained therein. Requests should be sent to our Chief Financial Officer at our
principal executive offices located at 1250 Borregas Avenue, Sunnyvale,
California 94089. Such documents are also available on EDGAR at the website of
the Securities and Exchange Commission at www.sec.gov.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS TO BE
PRESENTED AT NEXT ANNUAL MEETING
Proposals to be presented by our stockholders at our 2002 Annual Meeting
must be received by us at our principal executive offices no later than April
21, 2002. Such proposals may be included in next year's proxy statement if they
comply with the applicable rules and regulations promulgated by the United
States Securities and Exchange Commission.
INDEPENDENT ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP served as our independent
accountants for Fiscal 2001.
Audit Fees. The aggregate fees billed for professional services rendered
was $150,200 for the audit of Catalyst's annual financial statements for the
year ended April 30, 2001 and the reviews of the financial statements included
in Catalyst's Forms 10-Q for that fiscal year.
Financial Information Systems Design and Implementation Fees. None of the
professional services described in Paragraphs (c)(4)(ii) of Rule 2-01 of
Regulation S-X were rendered by PricewaterhouseCoopers LLP for the year ended
April 30, 2001.
All Other Fees. Other than the services described above under the captions
"Audit Fees" and "Financial Information Systems Design and Implementation Fees,"
the aggregate fees billed for services rendered by the Principal Accountant was
$59,000 for the year ended April 30, 2001.
The members of our Audit Committee took into consideration whether the
provision of these services is compatible with maintaining the principal
accountant's independence.
OTHER MATTERS
We know of no other matters to be submitted at the meeting. If any other
matters properly come before the meeting or any adjournment or postponement
thereof, 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.
FOR THE BOARD OF DIRECTORS
Peter Cohn
Secretary
Dated: July 25, 2001
14
18
CATALYST SEMICONDUCTOR, INC.
AMENDED & RESTATED
CHARTER FOR THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
(AS OF MAY 23, 2001)
PURPOSE
The purpose of the Audit Committee established by this charter will be to
make such examinations as are necessary to monitor the corporate financial
reporting and the internal and external audits of Catalyst Semiconductor, Inc.
(the "Company"), to provide to the Board of Directors (the "Board") the results
of its examinations and recommendations derived therefrom, to outline to the
Board improvements made, or to be made, in internal accounting controls, to
nominate independent auditors, to supervise the finance function of the Company
(which will include, among other matters, the Company's investment activities)
and to provide the Board such additional information and materials as it may
deem necessary to make the Board aware of significant financial matters which
require Board attention.
The Audit Committee shall have the authority to retain special legal,
accounting or other consultants to advise the Committee. The Audit Committee may
request any officer or employee of the Company or the Company's outside counsel
or independent auditors to attend a meeting of the Committee or to meet with
members of, or consultants to, the Committee. The Audit Committee will undertake
those specific duties and responsibilities listed below, and such other duties
as the Board from time to time may prescribe.
CHARTER REVIEW
The Audit Committee will review and reassess the adequacy of this charter
at least once per year. This review is initially intended to be conducted at the
first Audit Committee meeting following the Company's Annual Meeting of
Stockholders, but may be conducted at any time the Audit Committee desires to do
so. Additionally, to the extent and in the manner that the Company is legally
required to do by the rules of the Securities and Exchange Commission (the
"SEC"), this charter (as then constituted) shall be publicly filed.
MEMBERSHIP
The Audit Committee must be comprised of at least three members of the
Board. Such members will be elected and serve at the pleasure of the Board. The
members of the Audit Committee will not be employees of the Company. Each member
of the Audit Committee shall be an "independent director," as defined by and to
the extent required by the Rules of the National Association of Securities
Dealers, Inc. ("NASD").
Further, each member of the Audit Committee must be able to read and
understand fundamental financial statements, including the Company's balance
sheet, income statement, and
19
cash flow statement, or must become able to do so within a reasonable period of
time after his or her appointment to the Audit Committee. Additionally, at least
one member of the Audit Committee must have past employment experience in
finance or accounting, requisite professional certification in accounting, or
any other comparable experience or background which results in the individual's
financial sophistication, including being or having been a chief executive
officer, chief financial officer or other senior officer with financial
oversight responsibilities. Notwithstanding the foregoing, one director who is
not independent, as defined in the NASD Rules, and who is not a current employee
or an immediate family member of such employee, may be appointed to the Audit
Committee, if the board, under exceptional and limited circumstances, determines
that membership on the Audit Committee by the individual is required by the best
interests of the Company and its stockholders, and the Board discloses, in the
next annual proxy statement subsequent to such determination, the nature of the
relationship and the reasons for that determination.
MEETINGS
The Audit Committee will meet separately with the Chief Executive Officer
and separately with the Chief Financial Officer of the Company at least
quarterly to review the financial affairs of the Company. The Audit Committee
will meet with the independent auditors of the Company (i) quarterly, prior to
the Company's release of financial data relating to the results of operations
for each of its fiscal quarters, (ii) upon the completion of the annual audit,
and (iii) at such other times as it deems appropriate, to review the independent
auditors' examination and management report.
KEY RESPONSIBILITIES
The key responsibilities of the Audit Committee shall include:
1. Nominating the independent auditors for annual approval by the Board
and ratification by the stockholders;
2. Reviewing the plan for the audit and related services at least
annually;
3. Reviewing audit results and annual and interim financial statements
and all filings required by the SEC;
4. Ensuring the receipt of, and reviewing, a written statement from the
Company's auditors delineating all relationships between the auditor
and the Company, consistent with Independence Standards Board Standard
1;
5. Reviewing and actively discussing with the Company's auditors any
disclosed relationship or service that may impact the objectivity and
independence of the auditor;
6. Taking, or recommending that the Board take, appropriate action to
oversee the independence of the outside auditor;
7. Overseeing the adequacy of the Company's system of internal accounting
controls, including obtaining from the independent auditors management
letters or summaries on such internal accounting controls;
8. Overseeing the effectiveness of the internal audit function and
reviewing the adequacy of internal accounting and financial controls;
2
20
9. Overseeing the Company's compliance with the Foreign Corrupt Practices
Act;
10. Overseeing the Company's compliance with SEC requirements for
disclosure of auditor's services and Audit Committee members and
activities; and
11. Overseeing the Company's finance function, which may include the
adoption from time to time of a policy with regard to the investment
of the Company's assets, and which also includes a review of the
Company's significant accounting principles, policies and practices
and the quality of the accounting principles adopted, as well as a
review of the Company's financial reporting policies and practices.
12. Reviewing management and independent auditor procedures and their
execution established to prevent and uncover unlawful political
contributions, bribes, unexplained and unaccounted for payments to
intermediaries (foreign or US); ascertaining whether there are any
unaccounted for or off-book transactions; and identifying whether
there have been any payments made in violation of applicable laws and
standards of business which are intended to influence employees of
potential customers to purchase their products (commercial bribes,
kickbacks, etc.).
13. Reviewing annually the Company's policies, and compliance with
policies relating to legal matters, conflicts of interest, etc.
14. Reviewing annually with the independent auditors and/or internal
auditors, if applicable, audits of employee benefit plans to determine
that there are proper Company procedures to ensure compliance with all
relevant laws and regulations.
15. Additionally, the Committee will
- Review annually the adequacy of the Company's insurance coverage;
- Review the Company's policies regarding information technology
and management information systems; and
- Review the adequacy of protection of technology, including (i)
physical security, (ii) the Company's patent and trademark
program, and (iii) the Company's proprietary information.
In addition to the above responsibilities, the Audit Committee will
undertake such other duties as the Board delegates to it.
Finally, the Audit Committee shall ensure that the Company's auditors
understand both (i) their ultimate accountability to the Board and the Audit
Committee, as representatives of the Company's stockholders, and (ii) the
Board's and the Audit Committee's ultimate authority and responsibility to
select, evaluate and, where appropriate, replace the Company's independent
auditors (or to nominate the outside auditor to be proposed for stockholder
approval in any proxy statement).
REPORTS
The Audit Committee will to the extent deemed appropriate record its
summaries of recommendations to the Board in written form that will be
incorporated as a part of the minutes of the Board. To the extent required, the
Audit Committee will also prepare and sign a Report of
3
21
the Audit Committee for inclusion in the Company's proxy statement for its
Annual Meeting of Stockholders.
LIMITATIONS
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent auditors. Nor is it
the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditors or to
assure compliance with laws and regulations.
4
22
PROXY
CATALYST SEMICONDUCTOR, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 23, 2001
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Radu M. Vanco and Thomas E. Gay III, and
each of them with full power of substitution, to represent the undersigned and
to vote all shares of stock in CATALYST SEMICONDUCTOR, INC., a Delaware
corporation (the "Company") which the undersigned is entitled to vote at the
Annual Meeting of Stockholders of the Company to be held at 1250 Borregas
Avenue, Sunnyvale, California 94089 at 10:00 a.m., local time, and at any
adjournment or postponement thereof (i) as hereinafter specified upon the
proposals listed on the reverse side and as more particularly described in the
Proxy Statement of the Company dated July 25, 2001 (the "Proxy Statement"),
receipt of which is hereby acknowledged, and (ii) in their discretion upon such
other matters as may properly come before the meeting.
THE SHARES REPRESENTED HEREBY SHALL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, SUCH SHARES SHALL BE VOTED FOR PROPOSALS 1 AND 2.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE SEE REVERSE SIDE
23
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO SIGN
AND PROMPTLY MAIL THIS PROXY IN THE RETURN ENVELOPE SO THAT YOUR STOCK MAY BE
REPRESENTED AT THE MEETING. A vote FOR the following proposals is recommended by
the Board of Directors.
1. To elect the following two persons as Class III 2. To ratify the appointment of PriceWaterhouseCoopers LLP
directors to hold office for a three-year term and as independent accountants of the Company for the fiscal
until their successors are elected and qualified: year ending April 30, 2002.
Nominees: (01) Roland Duchatelet and (02) Lionel Allan [ ] FOR [ ] AGAINST [ ] ABSTAIN
[ ] FOR [ ] WITHHELD 3. The proxies are also authorized to vote, in their
discretion on such other business as may properly come
before the meeting or any adjournment or postponement
hereof.
[ ] ---------------------------------------------
For both nominees except as noted
[ ] Mark here if you PLEASE SIGN HERE. Sign exactly as your name(s) appear on
plan to attend the your stock certificate. If shares of stock are held of record
Annual Meeting. in the name of two or more persons or in the name of husband
and wife, whether as joint tenants or otherwise, both or all
[ ] Mark here for of such persons should sign the Proxy. If shares of stock are
address change and note below. held of record by a corporation, the Proxy should be executed
by the President or Vice President and the Secretary or
Assistant Secretary. Executors or administrators or other
fiduciaries who execute the Proxy for a deceased stockholder
should give their full title. Please date the Proxy.
Signature:___________________________ Date:_____________________ Signature:____________________________ Date:_________________