<PAGE> 1
VISIONEER, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 1998
TO THE STOCKHOLDERS OF VISIONEER, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Visioneer, Inc. (the "Company") will be held on Friday, May 22, 1998, at 1:00
p.m., local time, at The Hotel Sofitel, located at 223 Twin Dolphin Drive,
Redwood City, CA 94065 for the following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected and qualified;
2. To ratify the appointment of Price Waterhouse LLP as the Company's
independent public accountants for the fiscal year ending December 27,
1998; and
3. To transact such other business as may properly come before the meeting
or any postponement or adjournment(s) thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on April 10, 1998 are
entitled to notice of and to vote at the meeting and any adjournment(s) thereof.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed Proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if such stockholder returned a Proxy.
BY ORDER OF THE BOARD OF DIRECTORS
Joshua L. Green
Secretary
Fremont, California
April 21, 1998
<PAGE> 2
VISIONEER, INC.
------------------------
PROXY STATEMENT
------------------------
FOR ANNUAL MEETING OF STOCKHOLDERS OF VISIONEER, INC.
------------------------
TO BE HELD MAY 22, 1998
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
Visioneer, Inc. (the "Company"), for use at the Annual Meeting of Stockholders
to be held on Friday, May 22, 1998, at 1:00 p.m., local time, or at any
postponement or adjournment(s) thereof, for the purposes set forth herein and in
an accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting
will be held at The Hotel Sofitel, located at 223 Twin Dolphin Drive, Redwood
City, California 94065. The Company's telephone number at that location is (650)
598-9000.
SOLICITATION
These proxy solicitation materials were mailed on or about April 21, 1998
to all stockholders entitled to vote at the meeting. The costs of soliciting
these proxies will be borne by the Company. These costs will include the
expenses of preparing and mailing proxy materials for the Annual Meeting and
reimbursement paid to brokerage firms and others for their expenses incurred in
forwarding solicitation material regarding the Annual Meeting to beneficial
owners of the Company's Common Stock. The Company may conduct further
solicitation personally, telephonically or by facsimile through its officers,
directors and regular employees, none of whom will receive additional
compensation for assisting with the solicitation.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use either (i) by delivering to the Company
(Attention: Geoffrey C. Darby) a written notice of revocation or a duly executed
proxy beating a later date or (ii) by attending the meeting of stockholders and
voting in person.
VOTING
Each share of Common Stock entitles its holder to one vote on matters to be
acted upon at the meeting, including the election of directors. Votes cast in
person or by proxy at the Annual Meeting will be tabulated by U.S. Stock
Transfer Corporation, the Inspector of Elections. Any proxy that is returned
using the form of proxy enclosed and which is not marked as to a particular item
will be voted for the elections of directors, for ratification of the
appointment of the designated independent public accountants and as the proxy
holders deem advisable on other matters that may come before the meeting, as the
case may be with respect to the item not marked. A stockholder may indicate on
the enclosed Proxy or its substitute that it is abstaining from voting on a
particular matter (an "abstention"). A broker may indicate on the enclosed Proxy
or its substitute that it does not have discretionary authority as to certain
shares to vote on a particular matter (a "broker non-vote"). Abstentions and
broker non-votes are each tabulated separately.
The Inspector of Elections will determine whether or not a quorum is
present at the Annual Meeting. In general, Delaware law provides that a majority
of the shares entitled to vote, present in person or represented by proxy
constitutes a quorum. Abstentions and broker non-votes of shares that are
entitled to vote are treated as shares that are present in person or represented
by proxy for purposes of determining the presence of a quorum. Except in
specific circumstances, the affirmative vote of the majority of shares entitled
to vote and present in person or represented by proxy at a duly held meeting at
which a quorum is present is required under Delaware law for approval of
proposals presented to stockholders.
1
<PAGE> 3
In determining whether a proposal has been approved, abstentions of shares
that are entitled to vote are treated as present in person or represented by
proxy, but not as voting for such proposal, and hence have the same effect as
votes against such proposal, while broker non-votes of shares that are entitled
to vote are not treated as present in person or represented by proxy, and hence
have no effect on the vote for such proposal.
RECORD DATE AND SHARE OWNERSHIP
Only stockholders of record at the close of business on April 10, 1998 are
entitled to notice of and to vote at the meeting. At the record date, 19,644,417
shares of the Company's Common Stock, with a par value of $0.001 per share, were
issued and outstanding.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company that are intended to be presented
by such stockholders at the Company's 1999 Annual Meeting of Stockholders must
be received by the Company no later than March 31, 1999 in order that they may
be considered for inclusion in the proxy statement and form of proxy relating to
that meeting.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES
The Company's bylaws provide for a board of five directors. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the Company's five nominees named below, regardless of whether any other
names are placed in nomination by anyone other than one of the proxy holders. In
the event that any such nominee is unable or declines to serve as a director at
the time of the Annual Meeting, the proxy holders will vote in their discretion
for a substitute nominee. It is not expected that any nominee will be
unavailable. The term of office of each person elected as a director will
continue until the next Annual Meeting of Stockholders or until his or her
successor has been elected and qualified.
The names of the nominees, their ages as of April 10, 1998, and certain
other information about them are set forth below:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
--------------- --- -------------------- --------
<S> <C> <C> <C>
J. Larry Smart..................... 50 President and Chief Executive 1997
Officer
William J. Harding, Ph.D........... 50 General Partner of Morgan Stanley 1995
Venture Partners
Jeffrey Heimbuck................... 51 Private Investor 1997
David F. Marquardt................. 49 General Partner of Technology 1992
Venture Investors
Vincent Worms...................... 45 General Partner and co-President of 1992
Partech International Venture
Capital
</TABLE>
Except as set forth below, each of the nominees has been engaged in his
principal occupation set forth above during the past five years and was a
director of the Company as of December 31, 1997. There is no family relationship
between any director or executive officer of the Company.
Mr. Smart has served as President and Chief Executive Officer of the
Company since April 1997. Mr. Smart served as Chairman of the Board of Directors
from February 1997 until assuming the position of President and Chief Executive
Officer. From April 1996 to March 1997, Mr. Smart was Chairman, President and
Chief Executive Officer of StreamLogic Corporation, a network storage company.
From July 1995 to March 1996, Mr. Smart was President and CEO of Micropolis
Corporation, a disk drive design and manufacturing company. From March 1994 to
February 1995, Mr. Smart was President and CEO of Maxtor Corporation, a disk
drive development and manufacturing company. Mr. Smart currently serves as
Chairman
2
<PAGE> 4
of the Board of Southwall Technologies, a thin film technology company, and is a
director of Savoir Technology, a distributor of electronic components and
systems, International Manufacturing Services, Inc., a turnkey manufacturer of
electronic components, and Midisoft Corp., a developer of music and sound
software for personal computers.
Dr. Harding has served as a director of the Company since May 1995. Since
1994, Dr. Harding has been a general partner of Morgan Stanley Venture Partners
II, L.P., which manages the Morgan Stanley Venture Capital Funds. During 1994,
Dr. Harding was a private investor. From 1985 through 1993, Dr. Harding was a
general partner of J.H. Whitney & Co., a venture capital firm.
Mr. Heimbuck has served as a director of the Company since April 1997. From
July 1992 to July 1996, Mr. Heimbuck served as President and Chief Executive
Officer of Inmac Corp., a direct marketer of computer related products. From
July 1988 to July 1992, Mr. Heimbuck served as President of Plus Development and
Quantum Commercial Products, a division of Quantum Corporation, a manufacturer
of disk drives and other mass storage products. Mr. Heimbuck currently serves as
a director of Wall Data Incorporated.
Mr. Marquardt has served as a director of the Company since November 1992.
Since August 1980, Mr. Marquardt has been a general partner of Technology
Venture Investors, a venture capital firm. Mr. Marquardt currently serves as a
director of Auspex Systems, Inc., a provider of network server hardware and
software, and Microsoft Corporation.
Mr. Worms has served as a director of the Company since March 1992. Since
1982, Mr. Worms has been a general partner and co-President of Partech
International Venture Capital, a venture capital firm. Mr. Worms currently
serves as a director of Sangstat Medical Corporation, a specialty pharmaceutical
company and Business Objects, Inc., a maker of business decision software tools.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held a total of fifteen meetings during the fiscal
year ended December 28, 1997, including one meeting by unanimous written
consent. The Board of Directors has an Audit Committee and a Compensation
Committee. It does not have a nominating committee or a committee performing the
functions of a nominating committee.
The Audit Committee of the Board of Directors which was constituted in
August 1995 and currently consists of directors Harding and Worms held three
meetings during 1997. The Audit Committee, which meets periodically with
management and the Company's independent public accountants, recommends
engagement of the Company's independent public accountants and is primarily
responsible for approving the service performed by the Company's independent
public accountants and reviewing and evaluating the Company's accounting
principles and the adequacy of the Company's internal auditing procedures and
controls.
The Compensation Committee of the Board of Directors which was constituted
in August 1995 and currently consists of directors Harding and Marquardt held
three meetings by written consent during 1997. The Compensation Committee, in
conjunction with the Board of Directors, establishes salaries, incentives and
other forms of compensation for directors, officers and other employees,
administers the various incentive compensation and benefit plans (including the
Company's stock purchase and stock option plans) and recommends policies
relating to such plans.
No incumbent director attended fewer than 75% of the aggregate number of
meetings of the Board of Directors and meetings of the committees of the Board
of Directors that he was eligible to attend during 1997, except that Mr.
Heimbuck attended 66% of the meetings of the Board of Directors that he was
eligible to attend during 1997.
COMPENSATION OF DIRECTORS
Directors receive no cash compensation for their services as directors,
except that Mr. Heimbuck receives an annual stipend of $25,000. Directors are
reimbursed for out-of-pocket travel expenses associated with their
3
<PAGE> 5
attendance at Board meetings. Nonemployee directors of the Company are
automatically granted options to purchase shares of the Company's Common Stock
pursuant to the terms of the Company's 1995 Directors' Stock Option Plan (the
"Directors' Option Plan"). Under such plan, each person who was a nonemployee
director of the Company on the date of the Company's initial public offering,
which was December 11, 1995, was granted an option to purchase 20,000 shares of
Common Stock on the date of such offering and each person who thereafter first
becomes a nonemployee director will be granted an option to purchase 20,000
shares of Common Stock on the date on which he or she first becomes a
nonemployee director (the "First Option"). Thereafter, on January 1 of each
year, commencing January 1, 1997, each nonemployee director shall be
automatically granted an additional option to purchase 5,000 shares of Common
Stock (a "Subsequent Option") if, on such date, he or she shall have served on
the Company's Board of Directors for at least six months. The Directors' Plan
provides that the First Option shall become exercisable in installments as to
25% of the total number of shares subject to the First Option on each
anniversary of the date of grant of the First Option and each Subsequent Option
shall become exercisable in full on the first anniversary of the date of grant
of that Subsequent Option. Options granted under the Directors' Option Plan have
an exercise price equal to the fair market value of the Company's Common Stock
on the date of grant, and a term of ten years. Pursuant to the Directors' Option
Plan, on January 1, 1997, each nonemployee director was granted an option to
purchase 5,000 shares of Common Stock at an exercise price of $4.50 per share,
and on January 1, 1998, each nonemployee director was granted an option to
purchase 5,000 shares of Common Stock at an exercise price of $1.75 per share.
In addition, the Board of Directors granted Mr. Heimbuck options for 25,000 and
5,000 shares of Common Stock at an exercise price of $3.50 per share, which
options were approved by the Company's stockholders in October 1997. The terms
of such options, including vesting terms, are substantially similar to the terms
of the First Option.
REQUIRED VOTE
The five nominees receiving the highest number of affirmative votes of
shares of the Company's Common Stock present at the Annual Meeting in person or
by proxy and entitled to vote shall be elected as directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES LISTED ABOVE TO SERVE AS A DIRECTOR FOR THE ENSUING YEAR AND UNTIL HIS
SUCCESSOR IS ELECTED AND QUALIFIED.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Price Waterhouse LLP,
independent public accountants, to audit the financial statements of the Company
for the fiscal year ending December 27, 1998, and recommends that stockholders
vote for ratification of this appointment. In the event the stockholders do not
ratify such appointment, the Board of Directors will reconsider its selection.
Price Waterhouse LLP has audited the Company's financial statements since
inception (March 10, 1992). Representatives of Price Waterhouse LLP are expected
to be present at the meeting with the opportunity to make a statement if they
desire to do so, and are expected to be available to respond to appropriate
questions.
REQUIRED VOTE
The ratification of the appointment of Price Waterhouse LLP as the
Company's independent public accountants requires the affirmative vote of the
holders of a majority of the shares of the Company's Common Stock present at the
Annual Meeting in person or by proxy and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF PRICE
WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL
YEAR ENDING DECEMBER 27, 1998.
4
<PAGE> 6
EXECUTIVE OFFICERS OF THE COMPANY
The following sets forth certain information with respect to the executive
officers of the Company as of December 31, 1997. See "Proposal No. 1
-- Election of Directors" for certain information with respect to the directors
of the Company as of December 31, 1997.
<TABLE>
<CAPTION>
NAME OF EXECUTIVE OFFICER AGE POSITION
------------------------- --- --------
<S> <C> <C>
J. Larry Smart............... 50 President and Chief Executive Officer, and a Director
Rudolph E. Burger, Ph.D...... 39 Senior Vice President of Business Development
Michael T. Burt.............. 48 Vice President of Operations
Geoffrey C. Darby............ 51 Vice President of Finance and Administration and Chief
Financial Officer
Murray Dennis................ 51 Vice President of Sales and Marketing
Jay Hanson................... 51 Vice President of Engineering
</TABLE>
Mr. Smart has served as President and Chief Executive Officer of the
Company since April 1997. Mr. Smart served as Chairman of the Board of Directors
from February 1997 until assuming the position of President and Chief Executive
Officer. From April 1996 to March 1997, Mr. Smart was Chairman, President and
Chief Executive Officer of StreamLogic Corporation, a network storage company.
From July 1995 to March 1996, Mr. Smart was President and CEO of Micropolis
Corporation, a disk drive design and manufacturing company. From March 1994 to
February 1995, Mr. Smart was President and CEO of Maxtor Corporation, a disk
drive development and manufacturing company. Mr. Smart currently serves as
Chairman of the Board of Southwall Technologies, a thin film technology company,
and is a director of Savoir Technology, a distributor of electronic components
and systems, International Manufacturing Services, Inc., a turnkey manufacturer
of electronic components, and Midisoft Corp., a developer of music and sound
software for personal computers.
Dr. Burger has served as Senior Vice President of Business Development of
the Company since December 1997. From May 1997 until December 1997, Dr. Burger
was the Senior Vice President of Technology of the Company. From July 1995 to
May 1997, Dr. Burger was the Company's Vice President of Business Development.
Prior to that from September, 1993 to July 1995, Dr. Burger was the Vice
President, Software Products for Xerox Desktop Document Systems, a manufacturer
of copiers, scanners, printers and document processing software. In May 1989 Dr.
Burger founded Savitar, Inc., a developer of color imaging software, where he
served as president until September, 1993.
Mr. Burt has served as Vice President of Operations of the Company since
May 1997, replacing David C. Craft who resigned at that time. From October 1996
to April 1997, Mr. Burt was director of Operations for Be Inc., a developer of
computer operating system software. Prior to that from June 1983 to October
1996, Mr. Burt managed various manufacturing and corporate functions for Apple
Computer, Inc., a developer and manufacturer of computer hardware and software
products.
Mr. Darby has served as Vice President of Finance and Administration and
Chief Financial Officer of the Company since September 1994. From February 1989
to August 1994, Mr. Darby was Vice President of Finance and Administration and
Chief Financial Officer at Megatest Corporation, Inc., a semiconductor test
equipment company.
Mr. Dennis has served as Vice President of Sales and Marketing since
December 1997. Mr. Dennis became responsible for the Company's marketing
function upon the resignation of Michael Weissman from the position of Vice
President of Marketing in December 1997. From July 1996 until December 1997, Mr.
Dennis served as Vice President of Worldwide Sales of the Company, and
previously served as a consultant to the Company from May 1996 to July 1996.
From October 1994 to May 1996, Mr. Dennis was President and Chief Executive
Officer of Socket Communications, a maker of wireless and wired data
communication products. From October 1991 to October 1994, Mr. Dennis served as
Senior Vice President, Sales and Service of SuperMac Technology, a company
specializing in desktop publishing and video editing systems which was acquired
by Radius, Inc.
Mr. Hanson has served as Vice President of Engineering since December 1997.
Prior to being promoted to this position, Mr. Hanson was Director of Software
Quality Assurance for the Company from September 1996 to December 1997. From
January 1994 until September 1996, Mr. Hanson was Manager of Software Quality
Assurance for the Company.
5
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
Common Stock as of March 31, 1998 as to (i) each person (or group of affiliated
persons) who is known by the Company to beneficially own more than five percent
of the Company's Common Stock, (ii) each of the Company's directors, (iii) each
of the Named Executive Officers (as named in the Summary Compensation Table),
and (iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
--------------------
NAME OF STOCKHOLDER NUMBER PERCENT
------------------- --------- -------
<S> <C> <C>
Technology Venture Investors -- IV, L.P.(2)................. 2,204,649 11.2%
2480 Sand Hill Road
Menlo Park, CA 94025
Morgan Stanley Venture Capital Fund II, L.P.(3)............. 1,765,000 9.0
3000 Sand Hill Road
Building 4, Suite 250
Menlo Park, CA 94025
Parvest U.S. Partners II, C.V.(4)........................... 1,707,661 8.7
Partech International, Inc.
50 California Street, Suite 3200
San Francisco, CA 94111
William J. Harding(3)....................................... 1,765,000 9.0
Jeffrey Heimbuck(4)......................................... 12,500 *
David F. Marquardt(2)....................................... 2,204,649 11.2
Vincent Worms (5)........................................... 1,707,661 8.7
J. Larry Smart(6)........................................... 273,214 1.4
Rudolph E. Burger(6)........................................ 55,827 *
Geoffrey C. Darby(6)........................................ 93,095 *
Murray Dennis(6)............................................ 61,790 *
Michael T. Burt(6).......................................... 24,255 *
All directors and executive officers as a group ((10)
persons)(2)(3)(4)(5)(6)................................... 6,291,635 31.3%
</TABLE>
- ---------------
* Less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage of ownership of that
person, shares of Common Stock subject to options held by that person that
are currently exercisable or exercisable within 60 days of March 31, 1998
are deemed outstanding. Such shares, however, are not deemed outstanding for
the purposes of computing the percentage ownership of each other person. The
persons named in this table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to community property laws where applicable and except as indicated
in the other footnotes to this table.
(2) Includes 2,186,199 shares owned by Technology Venture Investors IV, L.P.,
and 15,000 shares issuable upon exercise of outstanding options exercisable
within 60 days of March 31, 1998 held by David F. Marquardt, a director of
the Company. Mr. Marquardt is a general partner of TVI Management -- IV,
L.P., which is the sole general partner of Technology Venture Investors IV,
L.P., and, as such, Mr. Marquardt may be deemed to share voting and
investment power with respect to such shares. Mr. Marquardt disclaims
beneficial ownership of such shares except to the extent of his pecuniary
interest in such shares. Also includes 3,450 shares held directly by Mr.
Marquardt.
(3) Includes 1,159,959 shares owned by Morgan Stanley Venture Capital Fund II,
L.P., 301,052 shares owned by Morgan Stanley Venture Investors, L.P. and
288,989 shares owned by Morgan Stanley Venture Capital Fund II, C.V., and
15,000 shares issuable upon exercise of outstanding options exercisable
within
6
<PAGE> 8
60 days of March 31, 1998 held by William J. Harding, a director of the
Company. Dr. Harding is a general partner of Morgan Stanley Venture Partners
II, L.P., the general partner of Morgan Stanley Venture Capital Fund II,
L.P., Morgan Stanley Venture Investors, L.P. and Morgan Stanley Venture
Capital Fund II, C.V. and, as such, may be deemed to share voting and
investment power with respect to such shares. Dr. Harding disclaims
beneficial ownership with respect to such shares except to the extent of his
pecuniary interest in such shares.
(4) Comprised of 12,500 shares issuable upon exercise of outstanding options
exercisable within 60 days of March 31, 1998 held by Mr. Heimbuck.
(5) Includes 869,722 shares owned by Parvest U.S. Partners II, C.V., 361,945
shares owned by Paribas U.S. Partners, V.O.F. and 405,494 shares held by
certain entities that may be deemed affiliated with Parvest U.S. Partners
II, C.V. and Paribas U.S. Partners, V.O.F. and 15,000 shares issuable upon
exercise of outstanding options exercisable within 60 days of March 31, 1998
held by Vincent Worms, a director of the Company. Mr. Worms is a general
partner of Parvest U.S. Partners II, C.V. and is a general partner of the
general partner of the investment general partner of Paribas U.S. Partners,
V.O.F. and, as such, may be deemed to share voting and investment power with
respect to such shares. Mr. Worms disclaims beneficial ownership with
respect to such shares except to the extent of his pecuniary interest in
such shares. Also includes 55,500 shares held directly by Mr. Worms.
(6) Includes 268,214 shares issuable upon exercise of outstanding options held
by Mr. Smart, 55,827 shares issuable upon the exercise of outstanding
options held by Dr. Burger, 11,250 shares issuable upon exercise of
outstanding options held by Mr. Darby, 61,790 shares issuable upon exercise
of outstanding options held by Mr. Dennis, and 24,255 shares issuable upon
exercise of outstanding options held by Mr. Burt, all of which are currently
exercisable or exercisable within 60 days of March 31, 1998.
7
<PAGE> 9
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement in whole or in part, the following report and the
Performance Graph on page 16 shall not be incorporated by reference into any
such filings.
REPORT OF COMPENSATION COMMITTEE
The Company's compensation policies for its executive officers and Chief
Executive Officer are determined by the Compensation Committee of the Board of
Directors (the "Committee"). The Committee sets the base salary and bonus
programs to be in effect for executive officers each fiscal year. In addition,
the Committee administers the Company's 1993 Incentive Stock Option Plan under
which option grants may be made to such officers and other key employees and the
Company's 1997 Employee Stock Option Plan under which option grants may be made
to new officers as an inducement essential to such officers' joining the
Company, and other key employees. The Committee was established in August 1995.
Prior to such date, the Company's compensation policies for its executive
officers were determined by the Board of Directors.
GENERAL COMPENSATION POLICY
The Company's executive compensation program consists of three main
components: (1) base salary which reflects individual performance and Company
performance and is designed generally to be competitive with salary levels in
the Company's industry and geographical area, (2) potential for a quarterly or
annual bonus payable in cash and based on individual performance and Company
performance, and (3) long-term stock option awards that provide executive
officers with the opportunity to build a meaningful stake in the Company, with
the objective of aligning executive officers' long-range interests with those of
the stockholders and encouraging the achievement of superior results over time.
FACTORS
Several of the more important factors which were considered in establishing
the components of each executive officer's compensation package for the 1997
fiscal year are summarized below. Additional factors were also taken into
account to a lesser degree. The Committee may at its discretion apply entirely
different factors, particularly different measures of financial performance, in
setting executive compensation for future fiscal years.
O Base Salary. The base salary for each executive officer is set on the
basis of personal performance, internal comparability standards, and the
salary levels in effect for comparable positions with companies in the
Company's industry and at high technology companies generally in Silicon
Valley that are of comparable size to the Company and with which the
Company competes for executive personnel. External salary data is
obtained by reviewing data from specific companies in Silicon Valley in
the Company's industry and a variety of compensation surveys. The
Committee believes that the Company's most direct competitors for
executive talent are not necessarily all of the companies that the
Company would use in a comparison for stockholder returns. Therefore, the
compensation comparison group is not the same as the industry group index
in the "Performance Graph" included below.
O Annual Incentive Compensation. Bonuses were paid to executive officers
for fiscal 1996 and 1997. The Company had adopted a Management Incentive
Program in December 1995 pursuant to which bonuses were payable to
eligible employees for fiscal 1996 and 1997 upon achievement of
individual goals established for each employee and Company performance
goals. Individual goals and Company performance goals were allocated 40%
and 60%, respectively, of the total bonus amount to be paid to any
particular executive officer. No such program was in effect for fiscal
1995, except that the Company paid bonuses to certain executive officers
during fiscal 1995 based upon the achievement of individual goals
established for such officers for fiscal 1995.
8
<PAGE> 10
O Long-term Incentive Compensation. The Committee periodically approves
grants of stock options to each of the Company's executive officers under
the Company's 1993 Incentive Stock Option Plan and, if applicable, the
Company's 1997 Employee Stock Option Plan. The grants are designed to
give executive officers the opportunity to build a meaningful stake in
the Company, with the objective of aligning executive officers'
long-range interests with those of the stockholders and encouraging the
achievement of superior results over time. Each grant generally allows
the officer to acquire shares of the Company's Common Stock at a fixed
price per share (the fair market value on the grant date) over a
specified period of time (up to 10 years), thus providing a return to the
executive officer only if the market price of the shares appreciates over
the option term. During the 1997 fiscal year, the Committee approved
grants to Messrs. Burger, Darby, Dennis and Burt with vesting commencing
on the date of grant, after taking into account the option holdings and
direct stock holdings of such individuals. The size of such grants was
set to achieve a potential percentage ownership stake in the Company that
the Committee deemed appropriate to create a meaningful opportunity for
stock ownership based upon such individuals' current position with the
Company, but also taking into account the individual's potential for
future responsibility and promotion over the option term and the
individual's personal performance in recent periods.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Committee meets without the Chief Executive Officer's presence to
evaluate his performance and reports on that evaluation to the independent
members of the Board of Directors. The compensation payable to J. Larry Smart in
his capacity as the Company's Chief Executive Officer for fiscal 1997 was based
on a number of factors, including comparative salaries of chief executive
officers of similar companies of comparable sales and capitalization in the
Company's industry and geographical area. Mr. Smart was awarded quarterly
bonuses totaling $98,429 based on Mr. Smart's fulfillment of certain Company
performance objectives agreed to between Mr. Smart and the Company's Board of
Directors for the third and fourth quarters of 1997. In addition, Mr. Smart is
eligible for future quarterly bonuses based on future performance objectives to
be agreed upon. Furthermore, the Company entered into certain Letter Agreements
with Mr. Smart setting forth his employment terms. The Letter Agreements are
described in the section of the Company's Proxy Statement entitled "Employment
Contracts and Change-In-Control Arrangements." Mr. Smart was appointed President
and Chief Executive Officer of the Company in April 1997, succeeding Michael A.
McConnell who resigned at such time.
REPORT ON REPRICED OPTIONS
In January 1998 and July 1996, the Committee determined that it was in the
best interests of the Company to reprice then-existing stock option grants under
the Company's 1993 Incentive Stock Option Plan and 1997 Employee Stock Option
Plan (applicable only to options repriced in January 1998) with exercise prices
in excess of the then-current fair market value of the Company's Common Stock.
The objectives of the Company's stock option plans (the "Stock Option
Plans") are to promote the interests of the Company by providing employees and
certain consultants or independent contractors an incentive to acquire a
proprietary interest in the Company and to continue to render services to the
Company. It was the view of the Committee that stock options with exercise
prices substantially above the current market price of the Company's Common
Stock were viewed negatively by most employees of the Company, and provided
little, if any, equity incentive to the optionees. The Committee thus concluded
that such option grants seriously undermined the specific objectives of the
Stock Option Plans and should properly be repriced. In making this decision, the
Committee also considered the fairness of such a determination in relation to
other stockholders. In the opinion of the Committee, the stockholders' long-term
best interests were clearly served by the retention and motivation of optionees.
In this context, the Committee decided that effective July 25, 1996 and
January 9, 1998, all Company employees (including executive officers) holding
stock options with exercise prices in excess of the fair market value of the
Company's Common Stock could receive a repricing of their then-existing
unexercised stock options with a new exercise price set at $6.50 per share, the
fair market value of the Company's Common
9
<PAGE> 11
Stock on July 25, 1996 and $1.75, the fair market value of the Company's Common
Stock on January 9, 1998, respectively. The first repricing allowed employees to
receive a one-for-one repricing of their then-existing unexercised stock options
while the second repricing permitted employees to exchange options to acquire
seven shares of the Company's Common Stock for each new option to acquire six
shares of the Company's Common Stock.
None of the Company's non-employee members of the Board of Directors
received any repriced stock options. It is the opinion of the Committee that
this program succeeded in its objectives of building employee morale and
providing new incentives for the Company's employees and management.
COMPENSATION COMMITTEE
William J. Harding
David F. Marquardt
10
<PAGE> 12
SUMMARY COMPENSATION TABLE
The following table shows the compensation received by the Company's Chief
Executive Officer and the four other most highly compensated executive officers
of the Company for the fiscal years ended December 28, 1997, December 29, 1996
and December 31, 1995 (collectively, the "Named Executive Officers"):
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION -----------------------------
------------------------------------------- RESTRICTED SECURITIES
SALARY BONUS OTHER ANNUAL STOCK UNDERLYING
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) COMPENSATION($) AWARDS($)(2) OPTIONS (#)(7)
--------------------------- ---- -------- ------- --------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
J. Larry Smart(3)....................... 1997 $190,500 $98,429 $21,500 $ -- 815,000
President and Chief 1996 -- -- -- -- --
Executive Officer 1995 -- -- -- -- --
Rudolph E. Burger(4).................... 1997 173,077 27,424 -- -- 205,000
Senior Vice President of 1996 137,307 -- -- -- --
Business Development 1995 53,077 -- -- 14,000 100,000
Geoffrey C. Darby....................... 1997 159,346 17,498 -- -- 10,000
Vice President of Finance and 1996 156,000 20,000 -- -- 30,000
Administration and Chief 1995 135,000 30,000 -- -- 20,000
Financial Officer
Murray Dennis(5)........................ 1997 175,000 80,045 -- -- 75,000
Vice President of Sales and 1996 87,500 51,023 -- -- 150,000
Marketing 1995 -- -- -- -- --
Michael T. Burt(6)...................... 1997 83,077 21,522 -- -- 100,000
Vice President of Operations 1996 -- -- -- -- --
1995 -- -- -- -- --
</TABLE>
- ---------------
(1) Includes amounts paid in the subsequent year for bonuses earned in the
indicated year.
(2) There were no restricted stock awards to the Named Executive Officers during
1996 and 1997. In 1995, the Company sold 14,000 shares of Common Stock to
Dr. Burger pursuant to the Company's 1993 Restricted Stock Purchase Plan.
The shares were sold to Dr. Burger at a price of $0.40 per share and were
fully vested on grant. The aggregate number and value of shares of
restricted Common Stock of the Company outstanding at December 28, 1997 and
held by the Named Executive Officers as a group was 86,845 shares and
$120,703 (net of the consideration paid by the Named Executive Officers),
respectively, based on the closing price of the Company's Common Stock of
$1.88 per share as reported in the Nasdaq National Market on December 26,
1997.
(3) Mr. Smart joined the Company in April 1997. Mr. Smart's annualized base
salary for the year ended December 28, 1997 was $293,500.
(4) Dr. Burger joined the Company in July 1995. Dr. Burger's annualized base
salary for the year ended December 31, 1995 was $120,000.
(5) Mr. Dennis joined the Company in May 1996. Mr. Dennis' annualized base
salary for the year ended December 29, 1996 was $175,000.
(6) Mr. Burt joined the Company in April 1997. Mr. Burt's annualized base salary
for the year ended December 28, 1997 was $120,000.
(7) See "Stock Option Grants in Fiscal Year 1997."
11
<PAGE> 13
STOCK OPTION GRANTS IN FISCAL YEAR 1997
The following table sets forth information for the Named Executive Officers
with respect to grants of options to purchase Common Stock of the Company made
in the fiscal year ended December 28, 1997 and the value of all options held by
such executive officers on December 28, 1997.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------------------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCKPRICE
SECURITIES OPTIONS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO OR OPTION TERM(3)(4)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED(#)(1)(3) FISCAL YEAR(2)(3) ($/SH)(3) DATE(3) 5%($) 10%($)
---- ---------------- ----------------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
J. Larry Smart............... 135,000 5.26% $ 3.75 04/01/97 $114,980 $ 284,938
180,000 7.01 3.4375 07/07/97 158,831 396,591
500,000 19.40 3.875 10/06/97 455,772 1,146,159
Rudolph E. Burger............ 200,000 7.79 2.69 05/20/07 158,384 393,998
5,000 0.19 3.875 10/06/07 4,558 11,462
Geoffrey C. Darby............ 10,000 0.39 3.875 10/06/97 9,116 22,925
Murray Dennis................ 50,000 1.95 3.50 02/04/07 51,166 126,249
25,000 0.97 3.875 10/06/07 22,789 57,309
Michael T. Burt.............. 100,000 3.90 2.81 05/08/97 86,336 214,571
</TABLE>
- ---------------
(1) No stock appreciation rights (SARs) were granted during 1997. Except where
noted below, all options were granted pursuant to the Company's 1993
Incentive Stock Option Plan, each grant continues to vest as long as the
optionee remains an employee with or consultant to the Company, the maximum
term of each option granted is ten years from the date of grant, and the
exercise price is equal to the fair market value of the stock on the grant
date.
Mr. Smart's grants vest as follows: (i) the option to purchase 135,000
shares (the "April Option") vests at the rate of 15,000 shares per month
commencing April 1, 1997, (ii) the option to purchase 180,000 shares (the
"June Option") vests at the rate of 15,000 shares per month commencing
January 1, 1998 and vesting of an additional 45,000 shares was accelerated
by the Board in October 1997 based on the achievement by Mr. Smart of
certain performance milestones specified in such option, and (iii) the
option to purchase 500,000 shares (the "October Option") vests at the rate
of approximately 2% per month commencing October 6, 1997. Mr. Smart is
entitled to additional vesting under the October Option in the event of a
merger or acquisition of the Company. See "Employment Contracts and
Change-In-Control Arrangements." The April Option was granted pursuant to
the Company's 1997 Employee Stock Plan.
Dr. Burger's grant of 200,000 shares and Mr. Dennis' grant of 50,000 shares
commence vesting upon the date of grant of May 20, 1997 and February 4,
1997, respectively, and vest at a rate of approximately 2% per month.
Dr. Burger's grant of 5,000 shares vests as to 100% of such shares on the
first anniversary of the date of grant of October 6, 1997. Mr. Darby's grant
of 10,000 shares and Mr. Dennis' grant of 25,000 shares vest as to 50% of
such shares on each of the first and second anniversaries of the date of
grant of October 6, 1997.
Mr. Burt's grant vests at the rate of 25% on the first anniversary of the
vesting commencement date of April 21, 1997 and approximately 2% per month
thereafter, and was granted pursuant to the Company's 1997 Employee Stock
Plan.
The Company has entered into Employment Agreements with each Named Executive
Officer (excluding J. Larry Smart, the terms of whose employment
relationship with the Company is governed by separate letter agreements)
pursuant to which such individuals are entitled to acceleration of vesting
of a portion of unvested stock options and restricted stock grants in the
event of a merger or acquisition of the Company. See "Employment Contracts
and Change-In-Control Arrangements."
(2) There were an aggregate of 1,878,200 shares granted in 1997 under the
Company's 1993 Incentive Stock Option Plan with an aggregated negative value
of $(155,131), and an aggregate of 718,000 shares granted in 1997 under the
Company's 1997 Employee Stock Plan, with an aggregated negative value of
12
<PAGE> 14
$(106,080), each as determined based on the closing price of the Company's
Common Stock of $1.88 per share as reported on the Nasdaq National Market on
December 26, 1997 and assuming the exchange and repricing of certain of such
options pursuant to the Company program described in footnote (3) below and
the Report of the Compensation Committee.
(3) On January 9, 1998, the Company implemented a stock option exchange and
repricing program whereby certain outstanding options held by officers and
employees were exchanged for new options to purchase 6/7ths of the shares
subject to outstanding options at an exercise price of $1.75 per share with
a maximum term of ten years from the date of grant of January 9, 1998. The
data set forth in the columns entitled "% of Total Options Granted to
Employees in Fiscal Year" and "Potential Realizable Value at Assumed Annual
Rates of Stock Price Appreciation for Option Term" reflects the
implementation of such stock option exchange and repricing program and the
exchange of such options pursuant to such program. See "Report of the
Compensation Committee."
(4) Potential realizable values are reported net of the option exercise price
but before taxes associated with the exercise. The 5% and 10% assumed annual
rates of compounded stock appreciation are mandated by the rules of the
Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Common Stock price. Actual gains, if
any, on stock option exercises are dependent on the future financial
performance of the Company, overall market conditions and the option
holders' continued employment through the vesting period.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997
AND YEAR END OPTION VALUES
The following table sets forth information for each of the Named Executive
Officers concerning options exercised during the fiscal year ended December 28,
1997. Also reported are values for "in-the-money" options that represent the
positive spread between the respective exercise prices of outstanding options
and the fair market value of the Company's Common Stock as of December 28, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES VALUE DECEMBER 31, 1997(2) AT DECEMBER 31, 1997(3)
ACQUIRED ON REALIZED ---------------------------- ----------------------------
NAME EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Larry Smart....... -- -- 140,833 674,167 15,693 75,121
Rudolph E. Burger.... 36,102 $70,305 30,691 223,207 5,006 56,586
Geoffrey C. Darby.... -- -- 10,625 49,375 1,184 5,502
Murray Dennis........ -- -- 67,437 157,563 7,514 17,557
Michael T. Burt...... -- -- -- 100,000 -- 11,143
</TABLE>
- ---------------
(1) Value realized is calculated based on the closing price of the Company's
Common Stock as reported in the Nasdaq National Market on the date of
exercise minus the exercise price of the option, and does not necessarily
indicate that the optionee sold such stock.
(2) No stock appreciation rights (SARs) were outstanding during 1997.
(3) Based on the closing price of the Company's Common Stock of $1.88 per share
as reported on the Nasdaq National Market on December 26, 1997 minus the
exercise price of the options of $1.75 per share and assuming for purposes
of the data set forth solely in the column entitled "Value of Unexercised
In-the-Money Options at December 31, 1997" the exchange of certain of such
options pursuant to the Company program described in footnote (3) of the
preceding table and the Report of the Compensation Committee.
13
<PAGE> 15
OPTION CANCELLATIONS AND REISSUANCES
The following table provides information regarding the cancellation and
reissuance of certain options held by the Company's executive officers during
the last ten completed fiscal years.
<TABLE>
<CAPTION>
MARKET PRICE EXERCISE NEW
DATE OF AT PRICE AT EXERCISE
CANCELLATION NUMBER NUMBER CANCELLATION CANCELLATION PRICE OF
AND OF SHARES OF SHARES AND AND REISSUED
NAME TITLE REISSUANCE CANCELLED REISSUED REISSUANCE REISSUANCE OPTIONS
---- ----- ------------ --------- --------- ------------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
J. Larry Smart President and Chief 01/09/98 135,000 115,715 $1.75 $ 3.75 $1.75
Executive Officer 01/09/98 180,000 154,287 1.75 3.4375 1.75
01/09/98 500,000 428,572 1.75 3.875 1.75
Rudolph E. Burger Senior Vice 01/09/98 40,000 34,286 1.75 7.00 1.75
President of 01/09/98 182,648 156,536 1.75 2.69 1.75
Business
Development 01/09/98 5,000 4,286 1.75 3.875 1.75
Geoffrey C. Darby Vice President of 01/09/98 20,000 17,143 1.75 4.25 1.75
Finance and 01/09/98 30,000 25,715 1.75 6.50 1.75
Administration and 01/09/98 10,000 8,572 1.75 3.875 1.75
Chief Financial
Officer
Murray Dennis Vice President of 01/09/98 150,000 128,572 1.75 6.50 1.75
Sales and Marketing 01/09/98 50,000 41,968 1.75 3.50 1.75
01/09/98 25,000 21,429 1.75 3.875 1.75
07/25/96 150,000 150,000 6.50 10.75 6.50
Michael T. Burt Vice President of 01/09/98 100,000 85,715 1.75 2.81 1.75
Operations
Jay Hanson Vice President of 01/09/98 14,375 8,572 1.75 4.25 1.75
Engineering 01/09/98 10,000 4,286 1.75 6.50 1.75
01/09/98 10,000 8,572 1.75 3.50 1.75
01/09/98 8,000 6,858 1.75 2.625 1.75
01/09/98 3,300 2,829 1.75 3.625 1.75
01/09/98 30,000 25,715 1.75 3.875 1.75
07/25/96 5,000 5,000 6.50 10.75 6.50
Bruce Mowery Vice President of 07/25/96 150,000 150,000 6.50 10.75 6.50
Marketing
<CAPTION>
EXPIRATION
DATE OF
REISSUED
NAME OPTIONS
---- ----------
<S> <C>
J. Larry Smart 04/01/07
07/07/07
10/06/07
Rudolph E. Burger 09/27/05
05/20/07
10/06/07
Geoffrey C. Darby 08/16/05
07/25/06
10/06/07
Murray Dennis 07/25/06
02/04/07
10/06/07
07/25/96
Michael T. Burt 05/08/07
Jay Hanson 08/16/05
07/25/06
02/04/07
05/21/07
08/12/07
10/06/07
07/25/06
Bruce Mowery 07/25/06
</TABLE>
14
<PAGE> 16
PERFORMANCE GRAPH
The following graph compares, for the period of time since the Company's
Common Stock was first registered under Section 12 of the Securities Exchange
Act of 1934 (December 11, 1995), the cumulative total stockholder return for the
Company with the cumulative total return of the Standard & Poor's 500 Stock
Index, and the Nasdaq Computer Manufacturer Stocks Index assuming $100 was
invested on December 11, 1995 in the Company's Common Stock and on November 30,
1995 in both of the indices. The stock price performance on the following graph
is not necessarily indicative of future stock price performance.
COMPARISON OF 26 MONTH CUMULATIVE TOTAL RETURN*
AMONG VISIONEER, INC., S & P 500 INDEX AND
THE NASDAQ COMPUTER MANUFACTURER STOCKS INDEX
LOGO
* $100 INVESTED ON 12/11/95 IN STOCK OR INDEX -- INCLUDING REINVESTMENT OF
DIVIDENDS.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee was formed in August 1995 to review
and approve the compensation and benefits for the Company's executive officers,
administer the Company's stock purchase and option plans and make
recommendations to the Board of Directors regarding such matters. Directors
Harding and Marquardt comprised the compensation Committee of the Board of
Directors during 1997. Neither Dr. Harding nor Mr. Marquardt has ever been an
officer or employee of the Company or any of its subsidiaries, nor were there
any compensation committee interlocks or other relationships during 1997
requiring disclosure under item 402(j) of Regulation S-K of the Securities and
Exchange Commission.
15
<PAGE> 17
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company has entered into Employment Agreements with each of its Named
Executive Officers (excluding J. Larry Smart, the terms of whose employment
relationship with the Company is governed by certain letter agreements between
Mr. Smart and the Company dated April 1, 1997, July 7, 1997 and October 6, 1997
(the "Letter Agreements")) pursuant to which such individuals, in the event of
an involuntary termination of their employment with the Company (other than for
cause), which involuntary termination includes a material reduction in job
responsibilities, a greater than 20% reduction in annual base compensation, or
the requirement that such executive officer relocate to a location outside of
the San Francisco Bay Area prior to, but in contemplation of, or within twelve
(12) months after, a Change of Control of the Company (as defined below), will
be entitled to receive payment of six (6) months severance and acceleration of
vesting on the greater of one-half of their unvested stock options or restricted
stock grants previously granted by the Company or the number of option shares or
shares of restricted stock previously granted by the Company that would have
vested if such individual remained an employee of the Company for one year after
the date of such involuntary termination. A Change of Control is deemed to
include: (i) the acquisition by any individual person or entity of twenty
percent (20%) or more of the Company's total voting power without the consent of
the Company or its Board of Directors; (ii) a merger or consolidation of the
Company, not approved by the Company or its Board of Directors, pursuant to
which at least fifty percent (50%) of the total voting power represented by the
voting securities of the Company prior to such Change of Control does not
continue to represent at least fifty percent (50%) of the total voting power of
the Company after such occurrence; (iii) a liquidation or sale or disposition of
all or substantially all of the Company's assets without approval by the
Company's stockholders; or (iv) a change in the composition of the Company's
Board of Directors such that fewer than a majority of the directors are either
those who were serving as of October 22, 1996 ("Incumbent Directors") or are
elected to the Board by the Incumbent Directors.
Pursuant to the Letter Agreements, Mr. Smart was granted options to
purchase an aggregate of 815,000 shares of the Company's Common Stock at a
weighted average exercise price of $3.76 per share, which options were exchanged
under a Company stock option exchange and repricing program implemented on
January 9, 1998 for new options to purchase 6/7ths of the shares subject to
outstanding options at an exercise price of $1.75 per share. See "Stock Option
Grants in Fiscal Year 1997." In addition, pursuant to the Letter Agreements, Mr.
Smart is entitled to a base salary of $293,500 per year, and commencing in the
fourth quarter of 1997, is eligible for quarterly bonuses based on the
fulfillment of certain performance objectives agreed to between Mr. Smart and
the Company on a quarterly basis. In the event of the termination of Mr. Smart's
employment relationship with the Company (other than for cause), Mr. Smart will
be entitled to receive payment of six (6) months severance at the time of
termination. In addition, in the event of a merger or sale of the Company, Mr.
Smart will be entitled to additional vesting of 125,000 shares under the option
to purchase 500,000 shares granted to him on October 6, 1997 (the "October
Option"). Furthermore, in the event Mr. Smart's employment is terminated by the
Company (other than for cause) as a result of a merger or sale of the Company,
Mr. Smart will be entitled to additional vesting of shares in the amount of the
greater of (i) one-half of the unvested shares subject to the October Option
that are not vested as of the effective date of such merger or acquisition or
(ii) that number of shares subject to the October Option that would have vested
if Mr. Smart had remained President and Chief Executive Officer of the Company
for one year after the date of such termination.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has entered into Employment Agreements with each of its Named
Executive Officers, excluding J. Larry Smart, the terms of whose employment
relationship with the Company is governed by the Letter Agreements. See
"Employment Contracts and Change-In-Control Arrangements."
See "Proposal No. 1 -- Election of Directors" for a discussion of option
grants to Jeffrey Heimbuck made outside of the 1995 Directors' Stock Option
Plan.
The Company believes that the relationships set forth above are on terms no
less favorable to the Company than could have been obtained from unaffiliated
third parties. All future transactions, including
16
<PAGE> 18
loans, between the Company and its officers, directors, principal stockholders
and affiliates will be approved by a majority of the Board of Directors,
including a majority of the independent and disinterested outside directors on
the Board of Directors, and will be on terms no less favorable to the Company
than could be obtained from unaffiliated third parties.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities
to file with the Securities and Exchange Commission (the "SEC") initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Officers, directors and holders of more than
ten percent of the Company's Common Stock are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely upon review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 28, 1997 the
Company's officers, directors and holders of more than ten percent of the
Company's Common Stock complied with all applicable Section 16(a) Filing
requirements, except that Jay Hanson, the Company's Vice President of
Engineering, did not timely file a Form 3 required to be filed in December 1997
and a Form 5 required to be filed in February 1998.
OTHER MATTERS
The Board of Directors knows of no other matters to be submitted to the
meeting. If any other matters properly come before the meeting, then the persons
named in the enclosed form of proxy will vote the shares they represent in such
manner as the Board may recommend.
BY ORDER OF THE BOARD OF DIRECTORS
Joshua L. Green
Secretary
Dated: April 21, 1998
17
<PAGE> 19
VISIONEER, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 1998
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below (except as indicated).
[ ] WITHHOLD authority to vote for all nominees listed below.
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THAT NOMINEE'S NAME IN THE LIST BELOW:
J. Larry Smart, William J. Harding, Jeffrey Heimbuck, David F. Marquardt,
Vincent Worms
2. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICE WATERHOUSE LLP AS THE INDEPENDENT
PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 27,
1998:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
and, in their discretion, upon such other matter or matters that may properly
come before the meeting and any postponement(s) or adjournment(s) thereof.
(Please sign on reverse side and return immediately)
<PAGE> 20
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED AS FOLLOWS: (1) FOR THE ELECTION OF DIRECTORS AND (2)
FOR RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE LLP AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER
MATTERS AS MAY COME BEFORE THE MEETING.
Date:
-----------------------------------------------------------------------------
------------------------
Signature
Date:
-----------------------------------------------------------------------------
------------------------
Signature
(This Proxy should be
marked, dated, signed by
the stockholder(s)
exactly as his or her
name appears hereon, and
returned promptly in the
enclosed envelope.
Persons signing in a
fiduciary capacity
should so indicate. If
shares are held by joint
tenants or as community
property, both should
sign.)
