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**UNITEDSTATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-K/A**

 

**(Amendment No. 1)**

 

**x****                ****ANNUAL REPORT PURSUANTTO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For the Fiscal Year December 31, 2009 or**

 

**o****                   ****TRANSITION REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934**

 

**Commission file number: 000-32929**

 

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**MOSYS, INC.**

(Exact name of registrant as specified in its charter)

 

| **Delaware**                                                     | ** ** | **77-0291941**                         |
|------------------------------------------------------------------|------------|----------------------------------------|
| (State  or other jurisdiction of  incorporation or organization) |       | (IRS  Employer  Identification Number) |

 

**755 N. Mathilda Avenue, Suite 100**

**Sunnyvale, California 94085**

(Address of principal executive offices)

 

**(408) 731-1800**

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 
| **Title of each class**                  | ** ** | **Name of each exchange on which registered**       |
|------------------------------------------|------------|-----------------------------------------------------|
| Common  Stock, par value $0.01 per share |       | Global  Market of the NASDAQ Stock Market, LLC |

 

Securities registered pursuantto Section 12(g) of the Act:

 
| **Title of each class**                     | ** ** | **Name of each exchange on which registered** |
|------------------------------------------------------------|------------|-----------------------------------------------------------------------------|
| Series AA  Preferred Stock, par value $0.01 per share |       | None                                                                        |

 

Indicateby check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405of the Securities Act.  Yes o No x

 

Indicateby check mark if the registrant is not required to file reports pursuant to Section 13or Section 15(d) of the Act. Yes o No x

 

Indicateby check mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days.  Yes x No o

 

Indicateby check mark whether the registrant has submitted electronically and posted onits corporate Web site, if any, every Interactive Data File required to besubmitted and posted pursuant to Rule 405 of Regulation S-T (§232.405of this chapter) during the preceding 12 months (or for such shorterperiod that the registrant was required to submit and post such files).  Yes o No o

 

Indicateby check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K (§ 229.405 of this chapter) is not contained herein,and will not be contained, to the best of registrant’s knowledge, in definitiveproxy or information statements incorporated by reference in Part III ofthis Form 10-K or any amendment to this Form 10-K. o

 

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, a non-accelerated filer, or a smaller reporting company. Seedefinition of “large accelerated filer,” “large accelerated filer” and “smallerreporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 
| Large accelerated  filer  ̈           |   | Accelerated  filer  ̈    |
|------------------------------------------------|--------|-----------------------------------|
|                                           |   |                              |
| Non-accelerated filer  ̈              |   | Smaller  reporting company x |
| (Do not check if a smaller  reporting company) |   |                              |

 

Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2of the Act).  Yes  ̈ No x

 

Theaggregate market value of the common stock held by non-affiliates of theRegistrant, as of June 30, 2009 was $48,966,700 based upon the last saleprice reported for such date on the Global Market of the NASDAQ Stock Market.For purposes of this disclosure, shares of common stock held by persons whobeneficially own more than 5% of the outstanding shares of common stock andshares held by officers and directors of the Registrant have been excludedbecause such persons may be deemed to be affiliates. This determination is notnecessarily conclusive.

 

Asof April 14, 2010, 31,287,317 shares of the registrant’s common stock,$0.01 par value per share, were outstanding.

 

**DOCUMENTS INCORPORATED BY REFERENCE:**

 

None

 

 

 

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**TABLE OF CONTENTS**

 
| Explanatory note  | 3                                                                                               |
|-------------------|-------------------------------------------------------------------------------------------------|
|              |                                                                                            |
| **Part III** |
| Item 10.     | Directors, Executive Officers and Corporate  Governance                                         | 4 |
| Item 11.     | Executive Compensation                                                                          | 9 |
| Item 12.     | Security Ownership of Certain  Beneficial Owners and Management and Related Stockholder Matters | 17 |
| Item 13.     | Certain Relationships and  Related Transactions, and Director Independence                      | 19 |
| Item 14.     | Principal Accountant Fees  and Services                                                         | 19 |
|              |                                                                                            |   |
| **Part IV**  |
| Item 15.     | Exhibits and Financial Statement  Schedules                                                     | 20 |
|              | Signature                                                                                       | 21 |

 

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**ExplanatoryNote**:

 

This Amendment No. 1 on Form 10-K/A (the “Amendment”) amendsand supplements the Annual Report on Form 10-K of MoSys, Inc. (“MoSys,”the “Company,” “we” or “us”) for the year ended December 31, 2009,originally filed with the Securities and Exchange Commission on March 26,2010.  We are filing this Amendment toprovide the information required by Items 10, 11, 12, 13 and 14 rather thanincorporating such information by reference to our proxy statement for our 2010annual stockholders meeting. This Amendment does not otherwise modify or updatedisclosures in the original filing, or change our previously reported financialstatements and other financial disclosures.

 

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**Part III**

 

***Item 10.  Directors,Executive Officers and Corporate Governance***

 

The names of our board ofdirectors and certain information about them are set forth below:

 
| **Name**                | ** ** | **Age** | ** ** | **Position(s) with  the Company**          |
|-------------------------|------------|---------|------------|-------------------------------------------------|
| Leonard Perham          |       | 66      |       | Chief Executive Officer, President and Director |
| Carl E. Berg(1)(2)      |       | 72      |       | Director                                        |
| Tommy Eng(1)(3)         |       | 52      |       | Director                                        |
| Chi-Ping Hsu(2)(3)      |       | 55      |       | Director                                        |
| James D. Kupec(1)(2)(3) |       | 55      |       | Director                                        |
| Chenming Hu             |       | 62      |       | Director                                        |

 

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(1)                                  Member of Audit Committee

 

(2)                                  Member of Compensation Committee

 

(3)                                  Member of Technology Strategy Committee

 

The principal occupationsand positions for at least the past five years of our directors and directornominees are described below. There are no family relationships among any ofour directors or executive officers.

 

*LenPerham.*  Mr. Perham was appointed to be our chiefexecutive officer and president and a member of our board of directors in November 2007.Mr. Perham was one of the original investors in MoSys and initially servedon our board of directors from 1991 to 1997. Since retiring from IntegratedDevice Technology, Inc. in 2000, where he served as chief executiveofficer from 1991 to 2000 and as President and a board member from 1986, Mr. Perhamhas served as chairman of the board of directors of NetLogic Microsystems, Inc.,a fabless semiconductor company, and has been a private investor holdingofficer and director positions with various private companies. Mr. Perhamholds a B.S. in electrical engineering from Northeastern University.

 

*Carl E.Berg.*  Mr. Berg has served as a member of our board ofdirectors since September 1992. Since 1997, Mr. Berg has been thechairman of the board and chief executive officer of Mission West Properties, Inc.,a real estate investment trust. Mr. Berg has been actively engaged in theownership, development and management of industrial real estate and in venturecapital investment for over 30 years. He currently serves as a member of theboards of directors of Mission West Properties, Inc., Hancock Fabrics, Inc.and Valence Technology, Inc. Mr. Berg served on the board ofdirectors of Focus Enhancements, Inc., a developer of video scanconversion products, from January 2004 until September 2008. Mr. Bergholds a B.A. in business from the University of New Mexico.

 

*TommyEng.*  Mr. Eng was appointed to our board ofdirectors in August 2004. Mr. Eng is a partner of EXA Ventures, aventure capital investment firm specializing in IT, semiconductor,communication, multimedia technology/services/content, software, and theincubation of early stage technology companies. Mr. Eng has been an investorholding officer and director positions with various private companies. Prior tofounding EXA Ventures, Mr. Eng was an entrepreneur and executive in thesemiconductor industry. Mr. Eng held various executive and engineeringpositions at Tera Systems from 1996 to 2004, Mentor Graphics, Silicon CompilerSystems, and Bell Labs. Mr. Eng served on the board of directors of FocusEnhancements, Inc., a developer of video scan conversion products, from January 2004until September 2008. Mr. Eng holds a B.S. in electrical engineeringfrom Polytechnic University in New York and a M.S. in electrical engineeringfrom the University of California at Berkeley.

 

*Chi-PingHsu.*  Dr. Hsu was appointed to our board ofdirectors in August 2004. Since April 2003, Dr. Hsu has heldexecutive positions at Cadence Design Systems, an electronic design automationsoftware and engineering services company, most recently as senior vice presidentof research and development for the Implementation Products Group. From November 2001to April 2003, Dr. Hsu was president and chief operating officer ofGet2Chip, a supplier of high-performance system-on-chip synthesis, which wasacquired by Cadence. A graduate of the Taiwan National University with a B.S.in electrical engineering, Dr. Hsu also holds a Ph.D. in electricalengineering and computer science from the University of California at Berkeley.

 

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*JamesD. Kupec.*  Mr. Kupec was appointed to our board ofdirectors in August 2004. Mr. Kupec is currently senior vicepresident of worldwide sales and marketing at GLOBALFOUNDRIES, a semiconductorfoundry. Previously, from September 2004 until March 2009, Mr. Kupecserved as chief operating officer of eSilicon Corporation, a customsemiconductor chip supplier. From April 2003 to September 2004, Mr. Kupecwas president of JDK Group, a semiconductor consultancy firm that he founded.Previously, Mr. Kupec served as a consultant to and chief executiveofficer of Ammocore, a privately-held electronic design automation company andpresident of UMC-USA, a semiconductor foundry. Mr. Kupec holds a B.S. inelectrical engineering from the University of Illinois and a M.B.A. fromSouthern Methodist University.

 

*ChenmingHu.*  Dr. Hu was appointed to our board ofdirectors in January 2005. Dr. Hu is currently the TSMC DistinguishedChair Professor in Electrical Engineering and Computer Sciences at theUniversity of California, Berkeley. From 2001 to 2004, Dr. Hu was thechief technology officer of Taiwan SemiconductorManufacturing Co. Ltd., or TSMC, an integrated circuit manufacturingcompany. Dr. Hu received his B.S. degree in electrical engineering fromNational Taiwan University and M.S. and Ph.D. degrees in electrical engineeringfrom the University of California at Berkeley.

 

The names of our executive officers and certain informationabout them are set forth below:

 
| **Name**          | ** ** | **Age** | ** ** | **Position(s) with the Company**                  |
|-------------------|------------|---------|------------|--------------------------------------------------------|
|              |       |    |       |                                                   |
| Leonard Perham    |       | 66      |       | President and Chief Executive Officer                  |
|              |       |    |       |                                                   |
| James W. Sullivan |       | 41      |       | Vice President of Finance and Chief Financial  Officer |
|              |       |    |       |                                                   |
| Sundari Mitra     |       | 46      |       | Executive Vice President of Engineering                |
|              |       |    |       |                                                   |
| David DeMaria     |       | 48      |       | Vice President of Business Operations                  |

 

*LeonardPerham.*    Mr. Perhamwas appointed president and chief executive officer in November 2007. Mr. Perhamis also a member of our board of directors and his background is discussedelsewhere within this Item 10.

 

*JamesW. Sullivan.*   Mr. Sullivanbecame our vice president of finance and chief financial officer in January 2008.From July 2006 until January 2008, Mr. Sullivan served as vicepresident of finance and chief financial officer at Apptera, Inc., aventure-backed company providing software for mobile advertising, search andcommerce. From July 2002 until June 2006, Mr. Sullivan was thevice president of finance and chief financial officer at 8x8, Inc., aprovider of voice over Internet protocol communication services. Mr. Sullivan’sprior experience includes various positions at 8x8, Inc. andPricewaterhouseCoopers LLP. He received a Bachelor of Science degree inAccounting from New York University and is a Certified Public Accountant.

 

*SundariMitra*.   Ms. Mitrabecame our executive vice president of engineering in June 2009.  Prior to joining the Company, Ms. Mitrafounded and served as chief executive officer of Prism Circuits from its inceptionin February 2006 until our acquisition of Prism Circuits on June 5,2009. Prior to joining Prism Circuits, Ms. Mitra served as a director ofengineering at Sun Microsystems, Inc. from June 2002 to August 2004.Ms. Mitra holds a Masters of Science degree in Electrical Engineering fromthe University of Illinois and a Bachelor of Science degree in ElectricalEngineering from Baroda University in India.

 

*DavidDeMaria.* Mr. DeMariabecame our vice president of business operations in August 2008. From November 2007until August 2008, Mr. DeMaria served as senior vice president atApache Design Solutions, an electronic design automation software company. FromJanuary 2006 until November 2007, Mr. DeMaria was chiefexecutive officer of Optimal Corporation, an electronic design automationsoftware company that he helped grow and ultimately merge with Apache DesignSolutions. From October 1999 to March 2004, Mr. DeMaria servedin various positions, including executive vice president of the systemsbusiness unit and senior vice president of worldwide marketing and strategy, atCadence Design Systems. Mr. DeMaria attended Boston University for aBachelor of Science degree in Computer Engineering.

 

**CORPORATEGOVERNANCE**

 

**DirectorIndependence**

 

Our board of directorshas determined that Carl E. Berg, Tommy Eng, Chi-Ping Hsu, James D.Kupec and Chenming Hu are “independent,” as defined by the listing rules ofthe NASDAQ Stock Market, or NASDAQ, and Securities and Exchange Commission, orSEC, rules and regulations. Our board of directors has standing Audit andCompensation Committees, each of which is comprised solely of independentdirectors in accordance with the NASDAQ listing rules. No 

 

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director qualifies as independent unless the board ofdirectors determines that the director has no direct or indirect materialrelationship with us. We independently review the relationship of the Companyto any entity employing a director or on whose board of directors he is servingcurrently. The board of directors also has considered share ownership of thedirectors or their family members and determined in the case of Mr. Bergthat his ownership of approximately 5% of our outstanding stock and theownership of approximately 7% of our outstanding stock by his daughter’s trustdo not interfere with his exercise of independent judgment in carrying out theresponsibilities of a director.

 

**AuditCommittee**

 

Our board of directorsestablished the Audit Committee for the purpose of overseeing the accountingand financial reporting processes and audits of our financial statements. TheAudit Committee also is charged with reviewing reports regarding violations ofour Code of Ethics and complaints with respect thereto, and internal controlviolations under our whistleblower policy are directed to the Chairman of theAudit Committee. The responsibilities of our Audit Committee are described inthe Audit Committee Charter adopted by our board of directors, a current copyof which can be found on the investors section of our website, *www.mosys.com*.

 

Messrs. Berg, Engand Kupec are the current members of the Audit Committee. All are “independent,”as defined by Rule 5605(a)(2) of the NASDAQ listing rules. Mr. Bergserves as chairman and has been designated by the board of directors as the “auditcommittee financial expert,” as defined by Item 407(d)(5)(i) ofRegulation S-K under the Securities Act of 1933 and the SecuritiesExchange Act of 1934. That status does not impose on him duties, liabilities orobligations that are greater than the duties, liabilities or obligationsotherwise imposed on him as a member of the Audit Committee and the board ofdirectors, however. The Audit Committee has delegated authority to Mr. Bergfor review and approval of non-audit services proposed to be provided by ourindependent auditors.

 

**CompensationCommittee**

 

Messrs. Berg, Hsuand Kupec are the current members of the Compensation Committee, with Mr. Kupecserving as the chairman.

 

Our CompensationCommittee does not have a charter; rather, its duties and obligations have beenspecified by the board of directors. The Compensation Committee is responsiblefor reviewing, recommending and approving our compensation policies andbenefits, including the compensation of all of our executive officers anddirectors. Our Compensation Committee also has the principal responsibility forthe administration of our stock option and stock purchase plans.

 

**TechnologyStrategy Committee**

 

Our board of directorsestablished the Technology Strategy Committee in August 2004 to overseethe development, planning and implementation of our long-term intellectualproperty strategy. Messrs. Eng, Hsu and Kupec are the current members ofthe Technology Strategy Committee. Mr. Eng is chairman of this committee.This committee does not meet regularly but confers with management informallyfrom time to time.

 

**NominationsProcess**

 

We do not have anominating committee. Instead of having such a committee, our board ofdirectors has appointed Messrs. Berg, Eng, Hsu, Hu and Kupec, whoconstitute all of the independent directors on our board, to search for andevaluate qualified individuals to become nominees for director and boardcommittee members. The independent directors recommend candidates fornomination for election or reelection for each annual meeting of stockholdersand, as necessary, to fill vacancies and newly created directorships, andevaluate candidates for appointment to and removal from committees. Theindependent directors operate in this capacity under authority granted byresolution of the board of directors, rather than by charter.

 

When new candidates forour board of directors are sought, the independent directors evaluate eachcandidate for nomination as director within the context of the needs and thecomposition of the board as a whole. The independent directors conduct anyappropriate and necessary inquiries into the backgrounds and qualifications ofcandidates. When evaluating director nominees, our board of directors generallyseeks to identify individuals with diverse, yet complementary backgrounds.Although we have no formal policy regarding diversity, our directors considerboth the personal characteristics and experience of director nominees,including each nominee’s independence, diversity, age, skills, expertise, time 

 

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availability and industry background in the context ofthe needs of the board of directors and the Company. The board of directorsbelieves that director nominees should exhibit proven leadership capabilitiesand experience at a high level of responsibility within their chosen fields,and have the experience and ability to analyze complex business issues facingMoSys, specifically, those issues that are inherent in the semiconductorindustry. In addition to business expertise, the board of directors requiresthat director nominees have the highest personal and professional ethics,integrity and values and, above all, are committed to representing thelong-term interests of our stockholders and other stakeholders. To date, all newcandidates have been identified by members of our board of directors, and wehave not paid any fee to a third party to assist in the process of identifyingor evaluating director candidates.

 

Our independent directorswill consider candidates for nomination as director who are recommended by astockholder and will not evaluate any candidate for nomination for directordifferently because the candidate was recommended by a stockholder. To date, wehave not received or rejected any suggestions for a director candidaterecommended by any stockholder or group of stockholders owning more than 5% ofour common stock. When submitting candidates for nomination to be elected atour annual meeting of stockholders, stockholders must also follow the noticeprocedures and provide the information required by our bylaws. To consider acandidate recommended by a stockholder for nomination at the 2011 AnnualMeeting of Stockholders, the recommendation must be delivered or mailed to andreceived by our Secretary within the time periods discussed in our proxystatement under the heading “Stockholder Proposals for 2011 Annual Meeting.”The recommendation must include the information specified in our bylaws forstockholder nominees to be considered at an annual meeting, including thefollowing:

 

·                  The stockholder’s name and address and the beneficialowner, if any, on whose behalf the nomination is proposed;

 

·                  The stockholder’s reason for making the nomination atthe annual meeting, and the signed consent of the nominee to serve if elected;

 

·                  The number of shares owned by, and any materialinterest of, the record owner and the beneficial owner, if any, on whose behalfthe record owner is proposing the nominee;

 

·                  A description of any arrangements or understandingsbetween the stockholder, the nominee and any other person regarding thenomination; and

 

·                  Information regarding the nominee that would berequired to be included in our proxy statement by the rules of theSecurities and Exchange Commission, including the nominee’s age, businessexperience for the past five years and any other directorships held by thenominee.

 

The information listedabove is not a complete list of the information required by the bylaws. Thesecretary will forward any timely recommendations containing the requiredinformation to our independent directors for consideration.

 

**Board Leadership Structure**

 

Our Amended and Restated Bylaws provide the board ofdirectors with flexibility to combine or separate the positions of chairman ofthe board of directors and chief executive officer in accordance with itsdetermination that utilizing one or the other structure is in the bestinterests of our company. Currently, the board of directors has not appointed achairman or lead independent director. From time to time, each of the independentdirectors works with Mr. Perham to perform a variety of functions relatedto our corporate governance, including coordinating board activities, settingrelevant items on the agenda (in consultation with Mr. Perham, asnecessary or appropriate) and ensuring adequate communication between the boardof directors and management. In addition, our board of directors has determinedthat maintaining the independence of a majority of our directors helps maintainits independent oversight of management.  Our Audit Committee, whichoversees critical matters such as our compliance with accounting principles,financial reporting practices and system of disclosure controls and internalcontrols over financial reporting, and our Compensation Committee, which overseesour executive compensation program, each consists entirely of independentdirectors.

 

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**Risk Oversight**

 

The board of directors is actively involved in theoversight of risks, including strategic, credit, liquidity, operational andother risks, which could affect our business.  The board of directorsdoes not have a standing risk management committee, but administers thisoversight function directly through the board of directors as a whole andthrough its committees, which oversee risks relevant to their respectivefunctions. For example, the Audit Committee assists the board of directors inits risk oversight function by reviewing and discussing with management ourcompliance with accounting principles, financial reporting practices, system ofdisclosure controls and internal controls over financial reporting and thetreasury function, including management of our cash and investments. TheCompensation Committee assists the board of directors in its risk oversightfunction by considering risks relating to the design of our executivecompensation programs and arrangements and employee benefitplans.  The Technology Strategy Committee monitors and evaluatesrisks associated with the development, planning and implementation of ourlong-term intellectual property strategy. The full board of directors considers strategic risks and opportunitiesand receives reports from the committees regarding risk oversight in theirareas of responsibility as necessary. The board of directors and each committee administers its respectiverisk oversight function by evaluating management’s monitoring, assessment andmanagement of risks, including steps taken to limit our exposure to knownrisks, through regular interaction with our senior management and in board andcommittee deliberations that are closed to members of management.  The interaction with management occurs notonly at formal board and committee meetings but also through periodic and otherwritten and oral communications.

 

**StockholderCommunications with the Board**

 

Stockholders who desireto communicate with the board, or a specific director, may do so by sending thecommunication addressed to either the board of directors or any director, c/oMoSys, Inc., 755 N. Mathilda Avenue, Sunnyvale, California94085. These communications will be delivered to the board, or any individualdirector, as specified.

 

**AnnualMeeting Attendance**

 

We have a policy ofencouraging each director to attend the Annual Meeting, but attendance is notrequired. Mr. Perham, our president and chief executive officer, attendedthe 2009 Annual Meeting of Stockholders.

 

**Meetingsof the Board and Committees**

 

During 2009, there weresix meetings of the board of directors, four meetings of the Audit Committeeand three meetings of the Compensation Committee. Other than Mr. Kupec,each current director attended at least 75% of the total number of meetings ofthe board held in 2009 and the meetings of each committee on which he served. Mr. Kupecattended approximately 65% of the meetings of the board of directors and thecommittees upon which he served during 2009. The board of directors and theCompensation Committee also acted at times by unanimous written consent, asauthorized by our bylaws and the Delaware General Corporation Law.

 

**CompensationCommittee Interlocks and Insider Participation**

 

During 2009, noneof our executive officers served as a member of the board of directors orcompensation committee of any entity that had one or more of its executiveofficers serving as a member of our board of directors or CompensationCommittee. Messrs. Berg, Hsu and Kupec, the Compensation Committeemembers, were not officers or employees of ours during 2009 or at any othertime.

 

**Section 16(a) BeneficialOwnership Reporting Compliance**

 

Section 16(a) of the Exchange Act requires our directors,executive officers and persons who own more than 10% of a registered class ofour equity securities to file with the SEC initial reports of ownership andreports of changes in ownership of common stock and other equity securities ofours. Directors, executive officers and greater than 10% holders are requiredby SEC regulation to furnish us with copies of all Section 16(a) reportsthey file. Based solely on our review of Forms 3 and 4 received during 2009 andForms 5 (or and any written representations to us by such persons) receivedwith respect to fiscal year 2009, we believe that all directors, executiveofficers and 10% stockholders complied with all applicable Section 16(a) filingrequirements during 2009, except that Mr. Berg, a director, failed totimely file a Form 4 to report the option grant he received in July 2009.

 

**Code of Ethics**

 

We have adopted a code ofethics that applies to all of our employees. The code of ethics is designed todeter wrongdoing and to promote, among other things, honest and ethicalconduct, full, fair, accurate, timely, and understandable disclosures inreports and documents submitted to the SEC and other public communications,compliance with applicable governmental laws, rules and regulations, the promptinternal reporting of violations of the code to an appropriate person orpersons identified in the code and accountability for adherence to such code.

 

The code of ethics isavailable on our website www.mosys.com. If we make any substantive amendmentsto the code of ethics or grant any waiver, including any implicit waiver, froma provision of the code to our Chief Executive Officer or Chief FinancialOfficer, or persons performing similar functions, where such amendment orwaiver is required to be disclosed under applicable SEC rules, we intend todisclose the nature of such amendment or waiver on our website. 

 

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***Item 11.  Executive Compensation***

 

**CompensationDiscussion and Analysis**

 

*Overviewof Compensation Program*

 

The CompensationCommittee of the board of directors has responsibility for establishing,implementing and monitoring adherence to our compensation philosophy. The boardof directors has delegated to the Compensation Committee the responsibility fordetermining our compensation policies and procedures for senior management,including the named executive officers, periodically reviewing these policiesand procedures, and making recommendations concerning executive compensation tobe considered by the full board of directors, when such approval is requiredunder any of our plans or policies or by applicable laws. The CompensationCommittee also has the principal responsibility for the administration of ourstock plans, including the approval of stock option grants to the namedexecutive officers.

 

The compensation receivedby our named executive officers in fiscal year 2009 is set forth in the SummaryCompensation Table, below. As a result of our acquisition of Prism Circuits, Inc.in June 2009, Sundari Mitra, formerly the founder and chief executiveofficer of Prism Circuits, Inc., became our executive vice president ofengineering. For 2009, the named executive officers included Mr. Perham, Mr. Sullivan,Mr. DeMaria and Ms. Mitra. All of our named executive officers for2009 are still executive officers.

 

*CompensationPhilosophy*

 

In general, our executivecompensation policies are designed to recruit, retain and motivate qualifiedexecutives by providing them with a competitive total compensation package basedin large part on the executive’s contribution to our financial and operationalsuccess, the executive’s personal performance and increases in stockholdervalue as measured by the price of our common stock. We believe that the totalcompensation paid to our executives should be fair, reasonable and competitive.

 

We seek to have abalanced approach to executive compensation with each primary element ofcompensation (base salary, variable compensation and equity incentives)designed to play a specific role. Overall, we design our compensation programsto allow for the recruitment, retention and motivation of the key executivesand high-level talent required in order for us to:

 

·                  supply high-value and high-quality intellectualproperty content solutions to our customer base;

 

·                  achieve or exceed our annual financial plan and beprofitable;

 

·                  make continuous progression towards achieving ourlong-term strategic objectives to be a high-growth company with growingprofitability; and

 

·                  increase our share price to provide greater value toour stockholders.

 

*Role ofExecutive Officers in Compensation Decisions*

 

The chief executiveofficer (“CEO”) makes recommendations based on guidelines for equity andnon-equity compensation for executives that have been approved by theCompensation Committee. The Compensation Committee reviews these guidelinesannually. The CEO annually reviews the performance of our executives (otherthan himself) and presents his recommendations for proposed salary adjustments,bonus awards and option grants to the Compensation Committee once a year. Inits discretion, the Compensation Committee may accept, modify or reject the CEO’srecommendations. Only the Compensation Committee and the board of directors areauthorized to approve the compensation for any named executive officer.Compensation of new executives is based on hiring negotiations between theindividuals and our CEO and/or Compensation Committee.

 

*Elementsof Compensation*

 

Consistent with ourcompensation philosophy and objectives, we offer executive compensationpackages consisting of the following three components:

 

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·                  base salary;

 

·                  annual incentive compensation; and

 

·                  stock option grants.

 

In each fiscal year, theCompensation Committee determines the amount and relative weighting of eachcomponent for all executives, including the named executive officers.

 

*BaseSalary*

 

Because our compensationphilosophy stresses performance-based awards, base salary is intended to be asmaller portion of total executive compensation relative to long-term equity.Therefore, we target executive base salary at the median level of thecompensation guidelines that have been approved by the Compensation Committee.In addition, the Compensation Committee takes into account the executive’sscope of responsibility and significance to the execution of our long-termstrategy, past accomplishments, experience and personal performance andcompares each executive’s base salary with those of the other members of seniormanagement. The Committee may give different weighting to each of these factorsfor each executive, as it deems appropriate. The Committee did not retain acompensation consultant or determine a compensation peer group for 2009.

 

*AnnualIncentive Compensation*

 

The CompensationCommittee did not adopt an executive bonus plan for 2009 because theCompensation Committee believed that such a plan should be based on pre-taxprofit. To date, the Compensation Committee has not adopted an executive bonusplan for 2010 for the same reason. As soon as we achieve profitability on apre-tax basis, the Compensation Committee intends to implement a bonus plan forour executives. Mr. DeMaria’s August 2008 employment offer letterprovided for an incentive bonus of up to $25,000 for fiscal year 2008 with suchbonus to be determined based on the achievement of certain objectives mutuallyagreed upon between him and Mr. Perham. Based on the achievement of thoseobjectives, Mr. DeMaria earned a bonus of $20,000, which was paid February 2009.During 2009, Mr. DeMaria had responsibility for our sales efforts and wascompensated for these efforts under a sales compensation plan.  Under his 2009 sales compensation plan, wepaid Mr. DeMaria $9,826 in commissions during 2009 and $27,181 in January 2010.

 

*StockOptions*

 

Although we do not have amandated policy regarding the ownership of shares of common stock by officersand directors, we believe that granting stock options to executives and otherkey employees on an ongoing basis gives them a strong incentive to maximizestockholder value and aligns their interests with those of our otherstockholders on a long-term basis. Our Amended 2000 Plan enables us to grantstock options, as well as other types of stock-based compensation, to ourexecutive officers and other employees. Under authority delegated to it by the board of directors, the CompensationCommittee reviews and approves all stock option grants to named executiveofficers under the Amended 2000 Plan. Typically, these options vest withrespect to one-fourth of the total number of shares subject to the grant on thefirst anniversary of the grant date and with respect to 1/48th of the sharesmonthly thereafter. Our general policy is to grant the options with an exerciseprice equal to fair market value, which currently is the closing price of thecommon stock on the Nasdaq GM on the grant date.

 

We intend to grant equityawards to achieve retention and motivation:

 

·                  upon the hiring of key executives and other personnel;

 

·                  annually, when we review progress against corporateand personal goals; and

 

·                  when we believe that competitive forces or economicconditions threaten to cause our key executives to lose their motivation and/orwhere retention of these key executives is in jeopardy.

 

With the CompensationCommittee’s approval, we grant options to purchase shares of common stock whenwe initially hire executives and other employees, as a long-term performanceincentive. The Compensation Committee has determined the size of the initialoption grants to newly hired executives with reference to existing guidelinesand hiring negotiations with the individual, in addition to other relevantinformation regarding the size and type of compensation package considerednecessary to enable us to recruit, retain and motivate the executive. In June 2009,the Compensation Committee authorized the grant of an option to purchase675,000 shares of common stock to Ms. Mitra when she became our executivevice president of engineering upon our acquisition of Prism Circuits, Inc.In November 2009, the Compensation 

 

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Committee authorized the grant of an additional optionto purchase 450,000 shares of common stock to Mr. Perham, as a significantportion of his previous option grant made in November 2007 had fully vested.  The Compensation Committee believed it wasimportant that Mr. Perham vest new options to retain him, as Mr. Perham’sbase salary is significantly below the base salaries of chief executiveofficers of comparable companies in our industry and options are the primarycomponent of Mr. Perham’s compensation package. There were no other equityincentive awards made to any of our named executive officers in 2009.

 

No employee is eligiblefor an annual performance grant until the employee has worked for us for atleast 12 months. Annual performance reviews are generally conducted in thesecond quarter of each fiscal year. Our CEO conducts the performance review ofthe other executives and advises the Compensation Committee of any recommendednew option grants. In addition to reviewing the CEO’s recommendations for otherexecutives, the Compensation Committee also reviews the CEO’s annualperformance and determines whether he should be granted an option to purchaseadditional shares. Aside from option grants in connection with annualperformance reviews, we do not have a policy of granting additional options toexecutives and, consequently, the board of directors and the CompensationCommittee have not adopted a policy with respect to granting options in coordinationwith the release of material non-public information.

 

In determining the sizeof stock option grants in connection with the annual performance reviews of ourexecutives, the Compensation Committee takes into account the executive’scurrent position with and responsibilities to us along with the CompensationCommittee-approved guidelines. In 2009, there were no annual performance reviewoption grants to executives due to the short length of service for someexecutives.

 

Only the board ofdirectors or the Compensation Committee may approve options or otherequity-based compensation to our executives. However, the board of directorshas authorized the CEO to approve option grants to employees at the seniordirector level and below for the purchase of not more than 100,000 shares byany employee during any calendar year. All such grants must be consistent withstock option guidelines approved by the Compensation Committee. The exerciseprice for such grants must be equal to the closing price of a share of thecommon stock on the Nasdaq GM on the date of grant.

 

Going forward, we intendto continue to evaluate and consider equity grants to our executives on anannual basis. We expect to consider potential equity grants for executives atthe same time as we annually review our employees’ performance and determinewhether to award grants for all employees.

 

*Accountingand Tax Considerations*

 

Our CompensationCommittee has reviewed the impact of tax and accounting treatment on thevarious components of our executive compensation program. We endeavor to awardcompensation that will be deductible for income tax purposes. Section 162(m) ofthe Internal Revenue Code generally disallows a tax deduction to publicly-heldcompanies for compensation paid to “covered” executive officers, to the extentthat compensation paid to such an officer exceeds $1 million during thetaxable year. None of the compensation paid to our covered executive officersfor the year ended December 31, 2009 that would be taken into account indetermining a Section 162(m) limitation exceeded the $1 millionlimit. Our employee stock option plans and option grants to executives havebeen structured so that any compensation deemed paid to an executive officer inconnection with the exercise of options with an exercise price equal to thefair market value of the shares on the grant date will qualify asperformance-based compensation that will not be subject to the $1 millionlimitation. The Compensation Committee does not expect to take any action atthis time to modify cash compensation payable to the executive officers thatwould result in the application of Section 162(m).

 

**COMPENSATIONCOMMITTEE REPORT**

 

The CompensationCommittee has reviewed and discussed with management the CompensationDiscussion and Analysis provisions to be included in this Amendment for theyear ended December 31, 2009. Based on this review and discussion, theCompensation Committee has recommended to the board of directors that theCompensation Discussion and Analysis be included in this Amendment for the yearended December 31, 2009.

 
|   | The Compensation Committee of the Board of  Directors: |
|--------|--------------------------------------------------------|
|   |                                                   |
|   |                                                   |
|   | James D. Kupec (Chairman)                         |
|   | Carl E. Berg                                      |
|   | Chi-Ping Hsu                                           |

 

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**SUMMARYCOMPENSATION TABLE**

 
| **Name and principal  position**              | ** ** | **Year** | ** ** | **Salary  ($)** | ** ** | **Bonus  ($)** | ** ** | **Option  Awards  ($)(1)** | ** ** | **Non-Equity  Incentive  Compensation  ($)** | ** ** | **Total  ($)** | ** ** |
|-----------------------------------------------|------------|----------|------------|-----------------|------------|----------------|------------|----------------------------|------------|----------------------------------------------|------------|----------------|------------|
| Leonard  Perham(2)                            |       | 2009     |       | 200,000         |       | —         |       | 534,555                    |       | —                                       |       | 734,555        |       |
| Chief Executive  Officer & President |       | 2008     |       | 200,000         |       | —         |       | —                     |       | —                                       |       | 200,000        |       |
|                                          |       | 2007     |       | 26,667          |       | —         |       | 2,710,520                  |       | —                                       |       | 2,737,187      |       |
| James  Sullivan(3)                            |       | 2009     |       | 195,000         |       | —         |       | —                     |       | —                                       |       | 195,000        |       |
| Vice President  of Finance & Chief   |       | 2008     |       | 186,250         |       | —         |       | 295,925                    |       | —                                       |       | 482,175        |       |
| Financial  Officer                            |       | 2007     |       | —          |       | —         |       | —                     |       | —                                       |       | —         |       |
| David DeMaria(4)                              |       | 2009     |       | 212,000         |       | —         |       | —                     |       | 27,181                                       |       | 239,181        |       |
| Vice President  of Business Operations        |       | 2008     |       | 78,820          |       | 20,000         |       | 527,643                    |       | 9,826                                        |       | 636,289        |       |
|                                          |       | 2007     |       | —          |       | —         |       | —                     |       | —                                       |       | —         |       |
| Sundari Mitra(5)                              |       | 2009     |       | 115,772         |       | —         |       | 487,822                    |       | —                                       |       | 603,594        |       |
| Executive Vice  President of Engineering      |       | 2008     |       | —          |       | —         |       | —                     |       | —                                       |       | —         |       |
|                                          |       | 2007     |       | —          |       | —         |       | —                     |       | —                                       |       | —         |       |

 

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(1)                                 Option award amounts reflect theaggregate grant date fair value with respect to stock options granted duringthe years indicated, as determined pursuant to FASB ASC Topic 718. Theassumptions used to calculate the aggregate grant date fair value of optionawards are set forth in the notes to the audited consolidated financialstatements included in our 2009 Annual Report on Form 10-K. These amountsdo not reflect actual compensation earned or to be earned by our namedexecutive officers.

 

(2)                                 Mr. Perham became our CEO, presidentand a director in November 2007.

 

(3)                                 Mr. Sullivan became our chieffinancial officer and vice president of finance in January 2008.

 

(4)                                 Mr. DeMaria became our vicepresident of business operations in August 2008.  Mr. DeMaria earned a $20,000 incentivebonus (paid to him in February 2009) based on the achievement of certainfiscal year 2008 objectives mutually agreed upon between him and Mr. Perham.  In addition, Mr. DeMaria earned theamounts listed for him in the non-equity incentive plan column for performancein 2008 and 2009 pursuant to a sales commission incentive plan.

 

(5)                                 Ms. Mitra became our executive vicepresident of engineering in June 2009. Ms. Mitra’s annual salary is$205,000.  Although not part of hercompensation, we expect to make significant cash payments to Ms. Mitra in2010 as a former principal stockholder of Prism Circuits, Inc. contingentupon the achievement of performance-based and other milestones pursuant to theterms of our asset purchase agreement with Prism Circuits, Inc.

 

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**GRANTSOF PLAN-BASED AWARDS**

 

The following tableprovides information on plan-based awards granted in 2009 to each of the namedexecutive officers.

 
| **Name**       | ** ** | **Grant  Date** | ** ** | **All  Other  Option  Awards:  Number of  Securities  Underlying  Options  (#)** | ** ** | **Exercise  of  Base Price  of Option  Awards  ($/Share)(1)** | ** ** | **Grant  Date Fair  Value of Stock  Option Awards  ($)(2)** | ** ** |
|----------------|------------|-----------------|------------|----------------------------------------------------------------------------------|------------|---------------------------------------------------------------|------------|-------------------------------------------------------------|------------|
| Leonard Perham |       | 10/22/09        |       | 450,000                                                                          |       | $                                                             | 2.45       |                                                        | $          | 534,555 |   |
| Sundari Mitra  |       | 6/26/09         |       | 675,000                                                                          | (3)        | $                                                             | 1.55       |                                                        | 487,822    |   |
|                |            |                 |            |                                                                                  |            |                                                               |            |                                                             |            |  |  |

 

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(1)                                 Each option was granted at an exerciseprice equal to the fair market value of our common stock on the grant datewhich was equal to the closing price of a share of our common stock on theNasdaq GM on the date of grant.

 

(2)                                 Amount shown reflects the aggregate grantdate fair value for financial statement reporting purposes, as determinedpursuant to FASB ASC Topic 718, which utilizes certain assumptions as outlinedin the notes to the audited consolidated financial statements included in our 2009Annual Report on Form 10-K.

 

(3)                                 This option grant was made to Ms. Mitrain connection with her appointment as executive vice president of engineering.

 

**OUTSTANDINGEQUITY AWARDS AT FISCAL YEAR-END**

 

The following table setsforth information regarding the outstanding equity awards held by our namedexecutive officers as of December 31, 2009.

 
| **Name**       | ** ** | **Number  of  Securities  Underlying  Unexercised  Options  (#) Exercisable** | ** ** | **Number  of  Securities  Underlying  Unexercised  Options  (#)  Unexercisable** | ** ** | **Option  Exercise  Price($)** | ** ** | **Option  Expiration  Date(7)** | ** ** |
|----------------|------------|-------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|--------------------------------|------------|---------------------------------|------------|
| Leonard Perham |       | 800,000                                                                       | (1)        | 450,000                                                                          | (6)        | 5.61                           |       | 11/8/2014                       |       |
|           |       | 37,500                                                                        | (2)        | 412,500                                                                          |       | 2.45                           |       | 10/22/2016                      |       |
| James Sullivan |       | 88,750                                                                        | (3)        | 101,250                                                                          |       | 3.73                           |       | 1/18/2018                       |       |
| David DeMaria  |       | 85,938                                                                        | (4)        | 189,062                                                                          |       | 4.57                           |       | 8/18/2014                       |       |
| Sundari Mitra  |       | 67,373                                                                        | (5)        | 590,627                                                                          |       | 1.55                           |       | 6/26/2015                       |       |

 

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(1)                                 These options were granted pursuant tothe terms of an employment offer letter agreement between us and Mr. Perhamdated as of November 8, 2007. The shares subject to these options vestedover 24 months and were fully vested as of November 8, 2010.

 

(2)                                 The stock option was granted on October 22,2009, and the shares subject to this option vest monthly over 24 months subjectto continued employment.

 

(3)                                 The stock option was granted on January 18,2008 pursuant to the terms of an employment offer letter agreement between usand Mr. Sullivan dated as of December 21, 2007.   The shares subject to the option vest over48 months, with 25% vesting at the end of the first year of employment and theremaining shares monthly thereafter.

 

(4)                                 The stock option was granted on August 18,2008 pursuant to the terms of an employment offer letter agreement between usand Mr. DeMaria dated as of July 31, 2008.  The shares subject to the option vest over 48months, with 

 

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25% vesting at the end ofthe first year of employment and the remaining shares monthly thereafter.

 

(5)                             The stock option was granted on June 26,2009 pursuant to the terms of an employment offer letter agreement between usand Ms. Mitra dated as of June 4, 2009.   The shares subject to the option vestmonthly over 48 months subject to continued employment.

 

(6)                                 Consists of anoption for 350,000 shares and an option for 100,000 shares granted pursuant tothe terms of an employment offer letter agreement between us and Mr. Perhamdated as of November 8, 2007.  350,000shares vest as to 80% of these shares if the average closing price of ourcommon stock for any 90-day period is at least $10.00 per share, and vests asto the remaining 20% of these shares pro rata for each $0.01 increase in theaverage price up to $12.00 per share during any 90-day period.  100,000 shares vest as to 50% of the sharesif the average closing price of our common stock for any 90-day period is atleast $13.00 per share, and as to the remaining 50% of these shares pro ratafor each $0.01 increase up to $15.00 per share during any 90-day period. Thevesting of such options is subject to Mr. Perham’s continued employment orservice as a director or consultant.

 

(7)                                 The standard option term prior to 2006was ten years and subsequently generally six years, but all of the optionsexpire automatically unless exercised within 90 days after the cessation ofservice as an employee, director or consultant of ours.

 

**OPTIONEXERCISES AND STOCK VESTED**

 

The following table setsforth the number of shares acquired pursuant to the exercise of options by ournamed executive officers during 2009 and the aggregate dollar amount realizedupon exercise of the options.

 
| ** **    | ** ** | **Option  Awards**                               | ** ** |
|---------------|------------|--------------------------------------------------|------------|
| **Name**      | ** ** | **Number  of  Shares  Acquired on  Exercise(#)** | ** ** | **Value  Realized  on Exercise($)(1)** | ** ** |
| Sundari Mitra |       | 17,000                                           |       | 15,810 |   |

 

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(1)                                 The aggregate dollar value realized uponthe exercise of an option represents the difference between the value of theunderlying shares on the date of exercise as measured by the closing price of ashare of common stock on the Nasdaq GM on that date and the exercise price ofthe option, multiplied by the total number of shares acquired.

 

**EMPLOYMENTAND CHANGE-IN-CONTROL ARRANGEMENTS AND AGREEMENTS**

 

We have entered intoagreements with each of Messrs. Perham, Sullivan and DeMaria that providefor benefits in the event of a “Change in Control,” which is generally definedas:

 

·                  an acquisition of 45% or more of our common stock orvoting securities by any “person” as defined under the Securities Exchange Act;or

 

·                  consummation of a complete liquidation or dissolutionof the Company or a merger, consolidation, reorganization or sale of all orsubstantially all of our assets (collectively, a “Business Combination”) otherthan a Business Combination in which (A) our stockholders receive 50% ormore of the stock of the corporation resulting from the Business Combinationand (B) at least a majority of the board of directors of such resultingcorporation were our incumbent directors immediately prior to the consummationof the Business Combination, and (C) after which no individual, entity orgroup (excluding any corporation or other entity resulting from the BusinessCombination or any employee benefit plan of such corporation or of ours) whodid not own 45% or more of the stock of the resulting corporation or otherentity immediately before the Business Combination owns 45% or more of thestock of such resulting corporation or other entity.

 

Except as set forthbelow, in the event such benefits are triggered by a Change in Control and thesubsequent termination of employment without cause (as defined in the relatedagreements) within 24 months of the Change in Control, each of these threeofficers will be entitled to:

 

·                  any base salary earned but not yet paid through thedate of termination

 

·                  any annual or discretionary bonus earned but not yetpaid to him for any calendar year prior to the year in which his terminationoccurs;

 

·                  any compensation under any deferred compensation planof ours or deferred compensation agreement with us then in effect;

 

·                  any other compensation or benefits, including withoutlimitation any benefits under long-term incentive compensation plans, anybenefits under equity grants and awards and employee benefits under plans thathave vested through the date of termination or to which he may then be entitledin accordance with the applicable terms of each grant, award or plan;

 

·                  reimbursement of any business expenses incurred by himthrough the date of termination but not yet paid; and

 

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·                  acceleration of vesting of stock options:

 

·                  Mr. Perham will be entitled to the immediate andunconditional vesting of the unvested portion of the 450,000 share option grantawarded to him on October 22, 2009 upon the Change in Control; and

 

·                  Messrs. Sullivan and DeMaria will be entitled tothe immediate and unconditional vesting of one year of the remaining thenunvested option shares previously granted to him.

 

We entered into anemployment agreement with Ms. Mitra in June 2009 under which she maybe entitled to receive severance upon the termination of her employment with usunder limited circumstances.  If weterminate Ms. Mitra’s employment with us without cause (as defined in heremployment agreement) at any time prior to December 2010, she will beentitled to receive as severance (1) payment of her monthly base salary, (2) medicalbenefit coverage and (3) acceleration of vesting of her stock option, ineach case calculated based on the number of months between the date of hertermination and December 2010.

 

If a Change in Controloccurred on December 31, 2009, under the agreements we entered into withthe named executive officers, the following payments would have been requiredto the named officers:

 
| **Name**       | ** ** | **Base********Salary** | ** ** | **Unused********Vacation** | ** ** | **Bonus** | ** ** | **Other  Compensation  & Benefits** | ** ** | **Stock  Option  Vesting (1)** | ** ** | **Total** | ** ** |
|----------------|------------|------------------------|------------|----------------------------|------------|-----------|------------|-----------------------------------------|------------|--------------------------------|------------|-----------|------------|
| Leonard Perham |       | —                 |       | $                          | 7,779      |      | —     |                                    | —     |                           | $          | 670,500   |       | $ | 678,279 |   |
| James Sullivan |       | —                 |       | 8,013                      |       | —    |       | —                                  |       | 8,550                          |       | 16,563    |       |
| David DeMaria  |       | —                 |       | 11,110                     |       | —    |       | —                                  |       | —                         |       | 11,110    |       |
| Sundari Mitra  |       | —                 |       | —                     |       | —    |       | —                                  |       | —                         |       | —    |       |
|                |            |                        |            |                            |            |           |            |                                         |            |                                |            |           |            |  |  |  |

 

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(1)                                  The value is calculated as the intrinsicvalue per share, multiplied by the number of shares that would become fullyvested upon the Change in Control. The intrinsic value per share would becalculated as the excess of the closing price of the common stock on the NasdaqGM of $3.94 on December 31, 2009 over the exercise price of the option. Ifthe value is less than zero, it is deemed to be zero for the purposes of thesecalculations.

 

If a Change in Controloccurred on December 31, 2009, and the employment of each of our namedexecutive officers was terminated without cause, under the agreements enteredinto by us and the named executive officers, the following numbers of optionshares would have vested immediately as a result of acceleration on December 31,2009:

 
| **Name**       | ** ** | **Number  of  Accelerated  Option Shares** | ** ** |
|----------------|------------|--------------------------------------------|------------|
| Leonard Perham |       | 412,500                                    |       |
| James Sullivan |       | 47,500                                     |       |
| David DeMaria  |       | 68,750                                     |       |
| Sundari Mitra  |       | —                                     |       |

 

Noneof the shares subject to either of Mr. Perham’s outstanding options for350,000 and 100,000 shares (granted in November 2007) would have vestedbecause the price of our common stock (calculated as if the Change of Controlhad occurred on December 31, 2009) was lower than the specified thresholdprice at which vesting occurs under each option.

 

**EmploymentAgreements**

 

In addition to theagreements containing the change-in-control provisions summarized above, wehave entered into a mutual agreement to arbitrate and our standard form ofemployment, confidential information and invention assignment agreement witheach of the named executive officers.

 

We also have entered intoagreements to indemnify its current and former directors and executiveofficers, in addition to the indemnification provided for in our certificate ofincorporation and bylaws. These agreements, among other things, provide forindemnification of our directors and executive officers for many expenses,including attorneys’ fees, judgments, fines and settlement amounts incurred byany such person in any action or proceeding, including any action by or in theright of the Company, arising out of such person’s services as a director orexecutive officer of the Company, any subsidiary of the Company or any othercompany or enterprise to which the person provided services at our request.

 

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**SECURITIESAUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS**

 

The following tableprovides information as of December 31, 2009 regarding equity compensationplans approved by our security holders and equity compensation plans that havenot been approved by our security holders.

 
| **Plan Category**                                              | ** ** | **Number  of Securities  to be Issued  Upon Exercise of  Outstanding Options,  Awards,  Warrants and Rights** | ** ** | **Weighted  Average  Exercise Price of  Outstanding Options,  Warrants and Rights** | ** ** | **Number  of Securities  Remaining Available for  Future Issuance under  Equity Compensation Plans  (excluding Securities  reflected in Column (a))(1)** | ** ** |
|----------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| ** **                                                     | ** ** | **(a)**                                                                                                       | ** ** | **(b)**                                                                             | ** ** | **(c)**                                                                                                                                                       | ** ** |
| Equity  compensation plans approved by security holders        |       | 5,475,516                                                                                                     |       | $                                                                                   | 4.37       |                                                                                                                                                          | 2,375,347  |   |
| Equity  compensation plans not approved by security holders(2) |       | 5,315,300                                                                                                     |       | $                                                                                   | 2.81       |                                                                                                                                                          | —     |   |

 

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(1)                                 Consists of 1,875,347 shares of commonstock available for future issuance under the Amended 2000 Plan and 500,000shares of common stock available for future issuance under the 2000 EmployeeStock Purchase Plan, or the 2000 ESPP). The Amended 2000 Plan provides for anannual increase of 500,000 shares on January 1 of each year or a lesseramount determined by our board of directors. Pursuant to action by theCompensation Committee, our 2000 ESPP is currently inactive.

 

(2)                                 This reflects stock options granted inaccordance with Marketplace Rule 5635(c)(4) of the NASDAQ listing rules tonew employees as inducements material to their entering into employment withus. Such options have terms ranging from six to ten years. Except for theoptions granted to Mr. Perham in November 2007 and for the optionsgranted to employees hired as a result of our acquisition of Prism Circuits, Inc.in June 2009, all such options vest at the rate of 25% of the sharessubject to the option after the first anniversary of the grant date, and as to1/48th of the total number of shares each month thereafter, subject tocontinued employment (or service as a director or consultant). The exerciseprice of all of the outstanding options was equal to the closing price of ashare of common stock on the Nasdaq GM on the grant date.

 

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**DIRECTORCOMPENSATION**

 

The following tablesummarizes the compensation we paid to our non-employee directors in 2009:

 
| **Name**           | ** ** | **Fees  Earned or  Paid in  Cash ($)** | ** ** | **Option  Awards ($)(1)(2)** | ** ** | **All  Other  Compensation ($)** | ** ** | **Total  ($)** | ** ** |
|--------------------|------------|----------------------------------------|------------|------------------------------|------------|----------------------------------|------------|----------------|------------|
| Carl E.  Berg |       | —                                 |       | 15,490                       |       | —                           |       | 15,490         |       |
| Tommy Eng          |       | —                                 |       | 15,490                       |       | —                           |       | 15,490         |       |
| Chi-Ping Hsu       |       | —                                 |       | 15,490                       |       | —                           |       | 15,490         |       |
| James Kupec        |       | —                                 |       | 15,490                       |       | —                           |       | 15,490         |       |
| Chenming Hu        |       | —                                 |       | 15,490                       |       | —                           |       | 15,490         |       |

 

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(1)                                  Option award amounts reflect the grantdate fair value with respect to stock options granted to the non-employeedirectors, as determined pursuant to FASB ASC Topic 718. The assumptions usedto calculate the aggregate grant date fair value of option awards are setforth in the notes to the audited consolidated financial statements included inour 2009 Annual Report on Form 10-K. These amounts do not reflect actualcompensation earned or to be earned by our non-employee directors.

 

(2)                                  As of December 31, 2009, ournon-employee directors held outstanding options to purchase the followingnumber of shares of our common stock: Carl E. Berg, 130,000; Tommy Eng,260,000; Chi-Ping Hsu, 180,000; James Kupec, 180,000; and Chenming Hu, 160,000.

 

In 2009, members of ourboard of directors did not receive any cash compensation for their service asdirectors. Under our Amended and Restated 2000 Stock Option and EquityIncentive Plan, or the Amended 2000 Plan, each non-employee director isentitled to receive an annual option grant for the purchase of 20,000 shares ofcommon stock, which is awarded automatically at the first regular meeting ofthe board of directors following the date of each annual meeting ofstockholders. The exercise price per share under each such option grant isequal to the fair market value of a share of our common stock on the date ofgrant on the principal trading market for our common stock at the time ofgrant, which is the NASDAQ Global Market, or the Nasdaq GM. These option grantsvest monthly over a 12 month period. Pursuant to the Amended 2000 Plan, on July 23, 2009, we grantedoptions to purchase 20,000 shares to each of Messrs. Berg, Eng, Hsu, Kupecand Hu at an exercise price of $1.65 per share.

 

The Amended 2000 Planalso provides that the board of directors, in its discretion, may authorizeadditional shares to be awarded or granted under stock options to committeechairs and other non-employee directors for extraordinary service on the boardof directors. There were no such additional grants or awards in 2009.

 

***Item 12.  Security Ownershipof Certain Beneficial Owners and Management and Related Stockholder Matters***

 

The following table setsforth certain information as of March 31, 2010 concerning the ownership ofour common stock by:

 

·                  each stockholder known by us to be the beneficialowner of more than 5% of the outstanding shares of our common stock (currentlyour only class of voting securities);

 

·                  each of our directors;

 

·                  each of the named executive officers; and

 

·                  all directors and executive officers as a group.

 

Beneficial ownership isdetermined in accordance with Rule 13d-3 of the Exchange Act, and includesall shares over which the beneficial owner exercises voting or investmentpower. Shares that are issuable upon the exercise of options, warrants andother rights to acquire common stock that are presently exercisable orexercisable within sixty days are reflected in a separate column in the tablebelow. These shares are taken into account in the calculation of the totalnumber of shares beneficially owned by a particular holder and the total numberof shares outstanding for the purpose of calculating percentage ownership ofthe particular holder. We have relied on information supplied by our officers,directors and certain stockholders and on information contained in filings withthe SEC. Except as otherwise indicated, and subject to community property lawswhere applicable, we believe, based on information provided by these persons,that the persons named in the table have sole voting and investment power withrespect to all shares of common stock shown as beneficially owned by them. The 

 

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percentage of beneficial ownership is based on31,272,933 shares of common stock outstanding as of March 31, 2010.

 

Unless otherwise stated,the business address of each of our directors and executive officers listed inthe table is 755 N. Mathilda Avenue, Sunnyvale, California 94085.

 
| ** **                                                                                           | ** ** | **Amount  and Nature  of Beneficial  Ownership**                                | ** ** | ** **                                                                | ** ** |
|------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------|------------|
| **Name and Address of Beneficial Owner**                                                             | ** ** | **Number  of Shares  Beneficially Owned  (Excluding  Outstanding Options) (1)** | ** ** | **Number  of Shares  Issuable on  Exercise of  Outstanding  Options (2)** | ** ** | **Percent  of  Class** | ** ** |
| Ingalls &  Snyder LLC  61 Broadway  New York, NY 10006(3)                              |       | 5,008,105                                                                       |       | —                                                                    |       | 16.0 |   |
| 1981 Kara Ann  Berg Trust, Clyde J. Berg, Trustee  10050 Bandley Drive,  Cupertino, CA 94014(5) |       | 2,304,830                                                                       |       | —                                                                    |       | 7.4 |   |
| Artis Capital Management, L.P.One Market Plaza,  Suite 2700San Francisco, CA  94105(4)          |       | 1,896,871                                                                       |       | —                                                                    |       | 6.1 |   |
| **Directors  and Officers:**                                                                         |       |                                                                            |       |                                                                      |       |   |   |
| Leonard Perham                                                                                       |       | 275,000                                                                         |       | 950,000                                                                   |       | 3.8 |   |
| Carl E.  Berg  10050 Bandley Drive,  Cupertino, CA 95014(6)                                     |       | 1,558,433                                                                       |       | 128,333                                                                   |       | 5.4 |   |
| Tommy Eng                                                                                            |       | —                                                                          |       | 258,333                                                                   |       | * |   |
| Chi-Ping Hsu                                                                                         |       | —                                                                          |       | 178,333                                                                   |       | * |   |
| James Kupec                                                                                          |       | —                                                                          |       | 178,333                                                                   |       | * |   |
| Chenming Hu                                                                                          |       | —                                                                          |       | 158,333                                                                   |       | * |   |
| James Sullivan                                                                                       |       | 5,000                                                                           |       | 120,314                                                                   |       | * |   |
| David DeMaria                                                                                        |       | 15,000                                                                          |       | 111,250                                                                   |       | * |   |
| Sundari Mitra                                                                                        |       | 17,000                                                                          |       | 151,746                                                                   |       | * |   |
| All current  directors and executive officers as a group (9 persons)                            |       | 1,870,433                                                                       |       | 2,234,975                                                                 |       | 12.2 |   |

 

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*                                         Represents holdings of less than onepercent.

 

(1)                                  Excludes shares subject to outstandingoptions, warrants or other rights to acquire common stock that are exercisablewithin 60 days.

 

(2)                                  Represents the number of shares subjectto outstanding options, warrants or other rights to acquire common stock thatare exercisable within 60 days.

 

(3)                                  According to a Schedule 13G/A filedwith the SEC on January 8, 2010, Ingalls & Snyder LLC,reported that it had shared dispositive power over 5,008,105 shares, but novoting authority with respect to those shares and therefore disclaimedbeneficial ownership of such shares pursuant to Rule 13d-3(d)(2) ofthe Exchange Act.

 

(4)                                  According to a Schedule 13G/A filedwith the SEC on February 7, 2010, Artis Capital Management, L.P., reportedthat it had shared voting and dispositive power over 1,896,871 shares withArtis Capital Management, Inc. and Stuart Peterson.

 

(5)                                  Clyde J. Berg is Carl E. Berg’sbrother, and Kara Berg, Carl Berg’s adult daughter, is the sole beneficiary ofthis trust. Carl E. Berg has no power over voting or investment decisionswith respect to any of these shares and disclaims beneficial ownership of them.

 

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(6)                                  Includes 124,998 shares held by Berg &Berg Enterprises, LLC, of which Carl E. Berg is the sole manager. Mr. Bergdisclaims beneficial ownership of these shares, except to the extent of hispecuniary interest in them. Also includes 169,998 shares owned by Mr. Berg’swife. Mr. Berg disclaims beneficial ownership of these shares.

 

***Item 13.  Certain Relationshipsand Related Transactions, and Director Independence***

 

Our Audit CommitteeCharter requires that the members of our Audit Committee, all of whom areindependent directors, review and approve all related party transactions asdefined in Item 404 of Regulation S-K promulgated by the SEC.

 

In 2009, a company owned by Mr. Perham’s brotherserved as a general contractor and performed and managed construction servicesat our corporate headquarters. The services were completed and fully paid in2009 at a cost of approximately $145,000. This transaction was reviewed and approved by our Audit Committee inaccordance with its charter.

 

**Director Independence**

 

For information regarding director independence, please see Item 10above under the caption “Corporate Governance.”

 

***Item 14.  Principal Accountant Fees and Services***

 

The following table showsthe fees billed (in thousands of dollars) to us by Burr Pilger Mayer, Inc.,or BPM, our independent registered public accounting firm, for the audit andother services provided for fiscal 2009 and 2008.

 
| ** **             | ** ** | **2009** | ** ** | **2008** | ** ** |
|------------------------|------------|----------|------------|----------|------------|
| Audit Fees(1)          |       | $        | 428        |     | $          | 527 |   |
| Audit-Related  Fees(2) |       | 84       |       | 4        |       |
| Tax Fees(3)            |       | —   |       | —   |       |
| Total(4)               |       | $        | 512        |     | $          | 531 |   |

 

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(1)                                  Audit fees were attributable to theannual audit of our consolidated financial statements and internal control overfinancial reporting in compliance with regulatory requirements under theSarbanes-Oxley Act and reviews of condensed consolidated financial statementsincluded in quarterly reports on Forms 10-Q.

 

(2)                                  Audit-related fees consisted primarily ofaccounting consultations and services related to our acquisition of PrismCircuits, Inc. in 2009.

 

(3)                                  Tax fees consisted primarily of incometax compliance and related tax services.

 

(4)                                  BPM did not provide any non-auditservices other than those reported under “Audit Fees,” “Audit Related Fees” and“Tax Fees.”

 

The AuditCommittee meets with our independent registered public accounting firm at leastfour times a year. At such times, the Audit Committee reviews both audit andnon-audit services performed by the independent registered public accountingfirm, as well as the fees charged for such services. The Audit Committee hasdelegated its authority to the Chairman of the Audit Committee to pre-approverequests for audit and non-audit services. Among other things, the AuditCommittee or the chairman of the Audit Committee examines the effect thatperformance of non-audit services may have upon the independence of theauditors.

 

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**Part IV**

 

***Item 15.  Exhibits andFinancial Statement Schedules***

 

(a)                                  The followingdocuments are filed as part of this report:

 

(1) Exhibits: The following exhibits are filed as part of, orincorporated by reference into, this report:

 
| 31.1 | Rule 13a-14  certification  |
|------|----------------------------------|
| 31.2 | Rule 13a-14  certification  |
| 32   | Section 1350  certification |

 

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**SIGNATURE**

 

Pursuantto the requirements of the Section 13 or 15(d) of the SecuritiesExchange Act of 1934, the Registrant has duly caused this report to be signedon its behalf by the undersigned, thereunto duly authorized, on the30th day of April 2010.

 
|   | MOSYS, INC. |
|--------|------------------|
|   |             |   |
|   | By:              | /s/ LEONARD PERHAM |
|   |             | Leonard Perham |
|   |             | *President  and Chief Executive Officer* |

 

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