<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant To Section 14(a) of the Securities Exchange Act Of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
HMT Technology Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------
(3) Filing Party:
---------------------------------------------------------------------
(4) Date Filed:
---------------------------------------------------------------------
<PAGE> 2
HMT TECHNOLOGY CORPORATION
1055 PAGE AVENUE
FREMONT, CA 94538
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 22, 1998
TO THE STOCKHOLDERS OF HMT TECHNOLOGY CORPORATION:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of HMT
TECHNOLOGY CORPORATION, a Delaware corporation (the "Company"), will be held on
Wednesday, April 22, 1998 at 9:00 a.m., local time, at the Company's executive
offices at 47700 Kato Road, Fremont, California 94538 for the following purpose:
1. To approve the Company's Employee Stock Purchase Plan, as amended, to
increase the aggregate number of shares of Common Stock authorized for
issuance under such plan by 1,000,000 shares.
The foregoing item of business is more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on March 2, 1998, as
the record date for the determination of stockholders entitled to notice of and
to vote at this Special Meeting and at any adjournment or postponement thereof.
BY ORDER OF THE BOARD OF DIRECTORS
LOGO
Peter S. Norris
Vice President, Finance, Chief
Financial Officer
Treasurer and Assistant Secretary
Fremont, California
March 20, 1998
ALL STOCKHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR REPRESENTATION AT
THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED
STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE GIVEN YOUR PROXY, YOU MAY
STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE NOTE, HOWEVER, THAT IF
YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER NOMINEE AND YOU WISH
TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN
YOUR NAME.
<PAGE> 3
HMT TECHNOLOGY CORPORATION
1055 PAGE AVENUE
FREMONT, CA 94538
PROXY STATEMENT
FOR A SPECIAL MEETING OF STOCKHOLDERS
APRIL 22, 1998
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of HMT
Technology Corporation, a Delaware corporation (the "Company" or "HMT"), for use
at a Special Meeting of Stockholders to be held on April 22, 1998, at 9:00 a.m.,
local time (the "Special Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Special Meeting. The Special Meeting will be held at the Company's executive
offices at 47700 Kato Road, Fremont, California. The Company intends to mail
this proxy statement and accompanying proxy card on or about March 20, 1998 to
all stockholders entitled to vote at the Special Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of Common Stock beneficially owned by
others to forward to such beneficial owners. The Company may reimburse persons
representing beneficial owners of Common Stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram or personal
solicitation by directors, officers or other regular employees of the Company
or, at the Company's request, CIC Express Service, Inc. ("CIC"). No additional
compensation will be paid to directors, officers or other regular employees for
such services, but CIC will be paid by the Company its customary fee, estimated
to be about $5,000, if it renders solicitation services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on March 2,
1998 will be entitled to notice of and to vote at the Special Meeting. At the
close of business on March 2, 1998 the Company had outstanding and entitled to
vote 43,084,583 shares of Common Stock. Each holder of record of Common Stock on
such date will be entitled to one vote for each share held on all matters to be
voted upon at the Special Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 1055 Page
Avenue, Fremont, California 94538, a written notice of revocation or a duly
executed proxy bearing a later date, or it may be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
<PAGE> 4
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the
Company's 1998 Annual Meeting of Stockholders must have been received by the
Company not later than March 11, 1998 in order to be included in the proxy
statement and proxy relating to that Annual Meeting. Stockholders are also
advised to review the Company's By-laws, which contain additional requirements
with respect to advance notice of stockholder proposals and director
nominations.
PROPOSAL 1
APPROVAL OF AMENDMENT TO EMPLOYEE STOCK PURCHASE PLAN
In January 1996, the Board of Directors adopted, and in February 1996 the
stockholders approved, the Company's Employee Stock Purchase Plan (the "Purchase
Plan") authorizing the issuance of up to 500,000 shares of the Company's Common
Stock. As of December 31, 1997, an aggregate of 397,006 shares had been issued
under the Purchase Plan and only 102,994 shares remained for the grant of future
rights under the Purchase Plan. In January 1998, the Board of Directors of the
Company adopted amendments to the Purchase Plan to increase the number of shares
authorized for issuance under the Purchase Plan by 1,000,000 shares to a total
of 1,500,000 shares. This amendment is intended to continue to afford the
Company the opportunity of providing employees with stock incentives and to
ensure that the Company can continue to provide such incentives at levels
determined appropriate by the Board. During the last completed fiscal year
(ended March 31, 1997), shares were purchased in the amounts and at the weighted
average prices per share under the Purchase Plan as follows: Mr. Ronald L.
Buschur 186 shares ($8.50); Mr. George J. Hall 1,821 shares ($8.50); Dr. Michael
A. Russak 899 shares ($8.50); Mr. Peter S. Norris 1,545 shares ($8.50); Mr.
Larry J. Anderson 491 shares ($8.50); all current executive officers as a group
6,410 shares ($8.50), and all employees (excluding executive officers) as a
group 115,334 shares ($8.50).
Stockholders are requested in this Proposal 1 to approve the Purchase Plan,
as amended. The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and entitled to vote at the meeting
will be required to approve the Purchase Plan, as amended. Abstentions will be
counted toward the tabulation of votes cast on proposals presented to the
stockholders and will have the same effect as negative votes. Broker non-votes
are counted towards a quorum, but are not counted for any purpose in determining
whether this proposal has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 1.
The essential features of the Purchase Plan, as amended, are outlined
below:
PURPOSE
The Purchase Plan provides a means by which employees of the Company (and
any parent or subsidiary of the Company designated by the Board of Directors to
participate in the Purchase Plan) may be given an opportunity to purchase Common
Stock of the Company through payroll deductions, to assist the Company in
retaining the services of its employees, to secure and retain the services of
new employees, and to provide incentives for such persons to exert maximum
efforts for the success of the Company. Approximately 2,064 of the Company's
approximately 2,213 employees are eligible to participate in the Purchase Plan.
The rights to purchase Common Stock granted under the Purchase Plan are
intended to qualify as options issued under an "employee stock purchase plan" as
that term is defined in Section 423(b) of the Internal Revenue Code of 1986, as
amended (the "Code").
ADMINISTRATION
The Purchase Plan is administered by the Board of Directors, which has the
final power to construe and interpret the Purchase Plan and the rights granted
under it. The Board has the power, subject to the provisions
2
<PAGE> 5
of the Purchase Plan, to determine when and how rights to purchase Common Stock
of the Company will be granted, the provisions of each offering of such rights
(which need not be identical), and whether any parent or subsidiary of the
Company shall be eligible to participate in such plan. The Board has the power
to delegate administration of such plan to a committee of not less than two
Board members. The Board may abolish any such committee at any time and revest
in the Board the administration of the Purchase Plan.
OFFERINGS
The Purchase Plan is implemented by offerings of rights to all eligible
employees from time to time by the Board. Generally, each such offering is of
six months' duration.
ELIGIBILITY
Any person who is customarily employed at least 20 hours per week and five
months per calendar year by the Company (or by any parent or subsidiary of the
Company designated from time to time by the Board) on the first day of an
offering is eligible to participate in that offering under the Purchase Plan,
provided such employee has been in the continuous employ of the Company for such
continuous period preceding the first day of the offering period as the Board
may require, but in no event shall the required period of continuous employment
be greater than two (2) years. The Board may provide in any offering that
certain employees of the Company who are "highly compensated" as defined in the
Code are not eligible to be granted rights under the Purchase Plan.
Notwithstanding the foregoing, no employee is eligible for the grant of any
rights under the Purchase Plan if, immediately after such grant, the employee
would own, directly or indirectly, stock possessing five percent (5%) or more of
the total combined voting power or value of all classes of stock of the Company
or of any parent or subsidiary of the Company (including any stock which such
employee may purchase under all outstanding rights and options), nor will any
employee be granted rights that would permit him to buy more than $25,000 worth
of stock (determined at the fair market value of the shares at the time such
rights are granted) under all employee stock purchase plans of the Company in
any calendar year.
PARTICIPATION IN THE PLAN
Eligible employees become participants in the Purchase Plan by delivering
to the Company, prior to the date selected by the Board as the offering date for
the offering, an agreement authorizing payroll deductions of up to fifteen
percent (15%) of such employees' base total compensation during the purchase
period.
PURCHASE PRICE
The purchase price per share at which shares are sold in an offering under
the Purchase Plan is the lower of (a) 85% of the fair market value of a share of
Common Stock on the date of commencement of the offering, or (b) 85% of the fair
market value of a share of Common Stock on the specified purchase date.
PAYMENT OF PURCHASE PRICE; PAYROLL DEDUCTIONS
The purchase price of the shares is accumulated by payroll deductions over
the offering period. At any time during the purchase period, a participant may
reduce or terminate his or her payroll deductions. A participant may not
increase or begin such payroll deductions after the beginning of any purchase
period, except, if the Board provides, in the case of an employee who first
becomes eligible to participate as of a date specified during the purchase
period. All payroll deductions made for a participant are credited to his or her
account under the Purchase Plan and deposited with the general funds of the
Company. A participant may make additional payments into such account only as
specifically provided for in the offering and only if the participant has not
had the maximum amount withheld during such offering period.
3
<PAGE> 6
PURCHASE OF STOCK
By executing an agreement to participate in the Purchase Plan, the employee
is entitled to purchase shares under such plan. In connection with offerings
made under the Purchase Plan, the Board may specify a maximum number of shares
any employee may be granted the right to purchase and the maximum aggregate
number of shares which may be purchased pursuant to such offering by all
participants. If the aggregate number of shares to be purchased upon exercise of
rights granted in the offering would exceed the maximum aggregate number, the
Board would make a pro rata allocation of shares available in a uniform and
equitable manner. Unless the employee's participation is discontinued, his right
to purchase shares is exercised automatically at the end of the purchase period
at the applicable price. See "Withdrawal" below.
WITHDRAWAL
While each participant in the Purchase Plan is required to sign an
agreement authorizing payroll deductions, the participant may withdraw from a
given offering by terminating his or her payroll deductions and by delivering to
the Company a notice of withdrawal from the Purchase Plan. Such withdrawal may
be elected at any time except ten days prior to the end of the applicable
offering period.
Upon any withdrawal from an offering by the employee, the Company will
distribute to the employee his or her accumulated payroll deductions without
interest, less any accumulated deductions previously applied to the purchase of
stock on the employee's behalf during such offering, and such employee's
interest in the offering will be automatically terminated. The employee is not
entitled to again participate in such offering. An employee's withdrawal from an
offering will not have any effect upon such employee's eligibility to
participate in subsequent offerings under the Purchase Plan.
TERMINATION OF EMPLOYMENT
Rights granted pursuant to any offering under the Purchase Plan terminate
immediately upon cessation of an employee's employment for any reason, and the
Company will distribute to such employee all of his or her accumulated payroll
deductions, without interest.
RESTRICTIONS ON TRANSFER
Rights granted under the Purchase Plan are not transferable and may be
exercised only by the person to whom such rights are granted.
DURATION, AMENDMENT AND TERMINATION
The Board may suspend or terminate the Purchase Plan at any time. Unless
terminated earlier, such plan will terminate at the time that all of the shares
subject to the Purchase Plan's share reserve, as increased and/or adjusted from
time to time, have been issued under the terms of the Purchase Plan.
The Board may amend the Purchase Plan at any time. Any amendment of the
Purchase Plan must be approved by the stockholders within 12 months of its
adoption by the Board if the amendment would (a) increase the number of shares
of Common Stock reserved for issuance under the Purchase Plan, (b) modify the
requirements relating to eligibility for participation in the Purchase Plan, or
(c) modify any other provision of the Purchase Plan in a manner that would
materially increase the benefits accruing to participants under the Purchase
Plan.
Rights granted before amendment or termination of the Purchase Plan will
not be altered or impaired by any amendment, suspension or termination of such
plan without consent of the person to whom such rights were granted.
EFFECT OF CERTAIN CORPORATE EVENTS
In the event of a dissolution, liquidation or specified type of merger,
consolidation or similar transaction in which the Company is not the surviving
corporation, the Board has discretion to provide that each right to
4
<PAGE> 7
purchase Common Stock under the Purchase Plan will be assumed or an equivalent
rights substituted by the surviving entity, or the Board may shorten the
offering period and provide for all sums collected by payroll deductions to be
applied to purchase stock immediately prior to such merger or other transaction.
STOCK SUBJECT TO PURCHASE PLAN
If rights granted under the Purchase Plan expire, lapse or otherwise
terminate without being exercised, the Common Stock not purchased under such
rights again becomes available for issuance under such plan.
FEDERAL INCOME TAX INFORMATION
Rights granted under the Purchase Plan are intended to qualify for
favorable federal income tax treatment associated with rights granted under an
employee stock purchase plan which qualifies under provisions of Section 423 of
the Code.
A participant will be taxed on amounts withheld for the purchase of shares
as if such amounts were actually received. Other than this, no income will be
taxable to a participant until disposition of the shares acquired, and the
method of taxation will depend upon the holding period of the purchased shares.
If the stock is disposed of at least two years after the beginning of the
offering period and at least one year after the stock is transferred to the
participant, then the lesser of (a) the excess of the fair market value of the
stock at the time of such disposition over the purchase price or (b) the excess
of the fair market value of the stock as of the beginning of the offering period
over the purchase price will be treated as ordinary income. Any further gain or
any loss will be taxed as a long-term capital gain or loss. Capital gains
currently are generally subject to lower tax rates than ordinary income. The
maximum capital gains rate for federal income tax purposes is 28% while the
maximum ordinary rate is effectively 39.6% at the present time.
If the stock is sold or disposed of before the expiration of either of the
holding periods described above, then the excess of the fair market value of the
stock on the purchase date over the purchase price will be treated as ordinary
income at the time of such disposition, and the Company may, in the future, be
required to withhold income taxes relating to such ordinary income from other
payments made to the participant. The balance of any gain will be treated as
capital gain. Even if the stock is later disposed of for less than its fair
market value on the purchase date, the same amount of ordinary income is
attributed to the participant, and a capital loss is recognized equal to the
difference between the sales price and the fair market value of the stock on
such purchase date. Any capital gain or loss will be long-term, mid-term or
short-term depending on the length of time the stock has been held.
There are no federal income tax consequences to the Company by reason of
the grant or exercise of rights under the Purchase Plan. The Company is entitled
to a deduction to the extent amounts are taxed as ordinary income to a
participant (subject to the requirement of reasonableness, the provisions of
Section 162(m) of the Code and the satisfaction of a tax reporting obligation).
5
<PAGE> 8
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of February 16, 1998 by: (i) each director;
(ii) each of the executive officers named in the Summary Compensation Table;
(iii) all executive officers and directors of the Company as a group; and (iv)
all those known by the Company to be beneficial owners of more than five percent
of its Common Stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
------------------------
NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES TOTAL
---------------- ---------- ----------
<S> <C> <C>
Summit Partners, L.P.(2).............................. 9,420,940 21.9
499 Hamilton Avenue, Suite 200
Palo Alto, CA 94301
Walter G. Kortschak(2)................................ 9,420,940 21.9
c/o Summit Partners, L.P.
499 Hamilton Avenue, Suite 200
Palo Alto, CA 94301
Neil M. Garfinkel..................................... -- --
Hitachi Metals, Ltd................................... 2,998,255 7.0
Chiyoda Building, 2nd Floor
1-2 Marunouchi
Tokyo 100 Japan
Bruce C. Edwards(3)................................... 34,500 *
Ronald L. Schauer(4).................................. 2,046,000 4.8
Ronald J. Buschur(5).................................. 649,826 1.5
George J. Hall(6)..................................... 439,215 1.0
Michael A. Russak(7).................................. 556,754 1.3
Peter S. Norris(8).................................... 460,769 1.1
Larry J. Anderson(9).................................. -- --
All directors and executive officers as a group....... 13,684,672 31.8%
(10 persons)(10)
</TABLE>
- ---------------
* Less than one percent (1%).
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the Securities
and Exchange Commission (the "SEC"). Unless otherwise indicated in the
footnotes to this table and subject to community property laws where
applicable, the Company believes that each of the stockholders named in
this table has sole voting and investment power with respect to the shares
indicated as beneficially owned. Beneficial ownership also includes shares
of stock subject to options and warrants currently exercisable or
convertible within 60 days of the date of this table. Applicable
percentages are based on 43,062,291 shares outstanding on February 16,
1998, adjusted as required by rules promulgated by the SEC.
(2) Includes (i) 4,338,070 shares beneficially owned by Summit Ventures III,
L.P. ("Summit III"), (ii) 4,338,070 shares beneficially owned by Summit
Ventures IV, L.P. ("Summit IV"), (iii) 162,437 shares beneficially owned by
Summit Investors II, L.P. ("Summit Investors II") and (iv) 582,363 shares
beneficially owned by Summit Subordinated Debt Fund, L.P. ("Summit Sub Debt
Fund"). Mr. Kortschak, a director of the Company, is a general partner of
Summit Partners, L.P., the general partner of Summit III, Summit IV, Summit
Investors II and Summit Sub Debt Fund. Mr. Kortschak disclaims beneficial
ownership of such shares held by Summit III, Summit IV, Summit Investors II
and Summit Sub Debt Fund, except to the extent of his pecuniary interest
therein.
(3) Represents 22,281 shares held by Bruce C. Edwards and Susan E. Edwards, as
co-trustees of the Bruce C. Edwards and Susan E. Edwards Living Trust u/a/d
06/26/91 ("Edwards Living Trust"). Includes 20,344 shares that are subject
to a right of repurchase in favor of the Company that expires ratably
beginning January 1997 through January 2000.
6
<PAGE> 9
(4) Represents 1,773,670 shares held by The Schauer Living Trust under
agreement dated March 15, 1996 ("Schauer Living Trust"). Mr. Schauer is a
co-trustee of the Schauer Living Trust. Also represents 136,165 shares held
by the Ronald L. Schauer 1997 Grantor Retained Annuity Trust and 136,165
shares held by the Marlys A. Schauer 1997 Grantor Retained Annuity Trust
("Marlys Schauer Trust"). Marlys A. Schauer, the beneficiary of the Marlys
Schauer Trust, is the spouse of Mr. Schauer. Mr. Schauer disclaims
beneficial ownership of the shares held in the Marlys Schauer Trust.
Includes 744,646 shares that are subject to a right of repurchase in favor
of the Company that expires ratably through November 1999 and 171,258
shares that are subject to a right of repurchase in favor of the Company
that expires upon the earlier of the Company achieving certain performance
goals on March 31, 1998, or ratably beginning December 2000 through
December 2004.
(5) Represents 538,330 shares held by The Buschur Living Trust under agreement
dated March 11, 1996 ("Buschur Living Trust"), 36,528 shares held by the
Ronald J. Buschur 1997 Grantor Retained Annuity Trust, 36,528 shares held
by The Lisa A. Buschur 1997 Grantor Retained Annuity Trust ("Lisa Buschur
Trust"), 19,220 shares held by The Ryan Buschur 1996 Irrevocable Trust
under agreement dated February 9, 1996 ("Ryan Buschur Trust") and 19,220
shares held by The Lynsey Buschur 1996 Irrevocable Trust under agreement
dated February 6, 1996 ("Lynsey Buschur Trust"). Mr. Buschur is a
co-trustee of the Buschur Living Trust. Lisa A. Buschur, the beneficiary of
the Lisa Buschur Trust, is the spouse of Mr. Buschur. Ryan Buschur, the
beneficiary of the Ryan Buschur Trust, and Lynsey Buschur, the beneficiary
of the Lynsey Buschur Trust, are the children of Mr. Buschur. Mr. Buschur
disclaims beneficial ownership of the shares held in the Lisa Buschur
Trust, the Ryan Buschur Trust and the Lynsey Buschur Trust. Includes
205,375 shares that are subject to a right of repurchase in favor of the
Company that expires ratably through November 1999 and 47,233 shares that
are subject to a right of repurchase in favor of the Company that expires
upon the earlier of the Company achieving certain performance goals on
March 31, 1998, or ratably beginning December 2000 through December 2004.
(6) Represents 413,715 shares held by The George J. Hall Family Trust ("Hall
Family Trust") and 25,500 shares held by The Anne T. Hall Foundation ("Hall
Foundation"). Mr. Hall is a co-trustee of the Hall Family Trust and trustee
of the Hall Foundation. Mr. Hall disclaims beneficial ownership of the
shares held in the Hall Foundation. Includes 205,375 shares that are
subject to a right of repurchase in favor of the Company that expires
ratably through November 1999 and 47,233 shares that are subject to a right
of repurchase that expires upon the earlier of the Company achieving
certain performance goals on March 31, 1998 or ratably beginning December
2000 through December 2004.
(7) Represents 544,119 shares held by The Russak Living Trust U/A/D under
agreement dated May 31, 1996 ("Russak Living Trust"). Mr. Russak is
co-trustee of the Russak Living Trust. Includes 12,000 shares held by The
Mary Lynn Russak 1996 Irrevocable Trust ("Mary Lynn Russak Trust") and 635
shares held by Dr. Russak's spouse. Mary Lynn Russak, the beneficiary of
the Mary Lynn Russak Trust, is a daughter of Dr. Russak. Dr. Russak
disclaims beneficial ownership of the shares held in the Mary Lynn Russak
Trust. Includes 205,375 shares that are subject to a right of repurchase in
favor of the Company that expires ratably through November 1999 and 47,233
shares that are subject to a right of repurchase that expires upon the
earlier of the Company achieving certain performance goals on March 31,
1998 or ratably beginning December 2000 through December 2004.
(8) Includes 166,108 shares that are subject to a right of repurchase in favor
of the Company that expires ratably through November 1999 and 26,562 shares
that are subject to a right of repurchase in favor of the Company that
expires upon the earlier of the Company achieving certain performance goals
on March 31, 1998 or ratably beginning December 2000 through December 2004.
(9) Mr. Anderson resigned his position with the Company in May 1997.
(10) Includes 1,565,371 shares that are subject to a right of repurchase in
favor of the Company that expires ratably through November 1999, 20,344
shares that are subject to a right of repurchase in favor of the Company
that expires ratably through January 2000, and 348,356 shares that are
subject to a right of repurchase which expires upon the earlier of the
Company achieving certain performance goals on March 31, 1998 or ratably
beginning December 2000 through December 2004.
7
<PAGE> 10
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Non-employee directors are paid $1,500 per meeting for attendance at
meetings of the Board of Directors and $500 per meeting for attendance at
meetings of any committee thereof. In the fiscal year ended March 31, 1997, the
total cash compensation paid to non-employee directors was $48,000. Directors
are reimbursed for reasonable out-of-pocket expenses incurred in connection with
attendance at such meetings in accordance with Company policy.
Each non-employee director of the Company (other than employees or
affiliates of Summit Partners) receives stock options under the 1996
Non-Employee Directors' Stock Option Plan (the "Directors' Plan") as
compensation for services of the Board of Directors. Option grants under the
Directors' Plan are automatic and non-discretionary. The Directors' Plan
provides for the grant of an option to purchase 8,000 shares of Common Stock to
each person who is first elected as a non-employee director after the plan's
adoption date. Each director who continues to serve as a non-employee director
is granted an additional option to purchase 2,000 shares of Common Stock on the
anniversary of the date of his or her initial grant or annually commencing with
the fourth anniversary of the plan's adoption date. During the last fiscal year,
no options to purchase shares of the Company's Common Stock were granted under
the Directors' Plan. As of December 31, 1997, no options had been exercised
under the Directors' Plan.
The 1996 Equity Incentive Plan (the "Incentive Plan") provides for grants
of incentive stock options to employees (including officers and employee
directors) and nonstatutory stock options, restricted stock purchase awards,
stock bonuses and stock appreciation rights to employees (including officers and
employee directors). The Incentive Plan is administered by the Compensation
Committee, which determines recipients and types of awards to be granted,
including the exercise price, number of shares subject to the award and the
exercisability thereof. Restricted stock purchase awards granted under the
Incentive Plan may be granted pursuant to a repurchase option in favor of the
Company in accordance with a service vesting schedule determined by the Board.
During the last completed fiscal year, 109 employees and consultants received
options to purchase 556,700 shares of the Company's Common Stock. As of December
31, 1997, 8,158 options had been exercised under the Incentive Plan.
COMPENSATION OF EXECUTIVE OFFICERS
Bonus Plan. The Company has a discretionary bonus program for certain
designated key employees of the Company, including all executive officers,
pursuant to which such employees are paid cash bonuses based upon the attainment
of certain specified corporate goals for the year established by the Board of
Directors. The amount of the cash bonus to which each such employee is entitled
is determined by the Board.
Profit Sharing Plan. In May 1996, the Board of Directors approved an
incentive-based profit sharing plan for employees of the Company, including all
executive officers. Under this Plan, employees are paid cash bonuses on a
quarterly basis based upon the attainment of certain specified corporate goals
determined by the Board of Directors.
In addition to cash compensation, the Company's executive officers are
eligible to receive stock options under the Employee Stock Purchase Plan (the
"Purchase Plan") and Incentive Plan. For a description of the Incentive Plan,
see COMPENSATION OF DIRECTORS, above. For a description of the Purchase Plan,
see PROPOSAL ONE above.
8
<PAGE> 11
The following table shows for the fiscal years ended March 31, 1997, 1996
and 1995, certain compensation awarded or paid to, or earned by, the Company's
Chief Executive Officer and its other four most highly compensated executive
officers (the "Named Executive Officers") at March 31, 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
------------------------------------------- COMPENSATION
OTHER ANNUAL AWARDS/SECURITIES
NAME AND FISCAL COMPENSATION UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) OPTIONS(#) COMPENSATION($)
------------------ ------ --------- -------- ------------ ----------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Ronald L. Schauer........... 1997 271,635 105,165 1,535 -- 2,344(2)
President and Chief 1996 249,995 113,557 -- 3,596,000 3,593(3)
Executive Officer 1995 220,001 15,000 184,542 -- --
Mr. George J. Hall.............. 1997 179,286 69,411 -- -- 2,313(4)
Vice President, 1996 165,675 63,811 -- 992,000 3,012(5)
Operations 1995 22,212 -- -- --
Dr. Michael A. Russak........... 1997 190,861 59,164 12,704 -- 2,951(6)
Vice President, Research 1996 176,673 18,360 73,331 992,000 3,043(7)
and Development............... 1995 163,652 15,000 54,035 -- --
Mr. Peter S. Norris............. 1997 152,125 39,989 93,467 -- 2,835(8)
Vice President and 1996 42,001 22,692 -- 558,000 --
Chief Financial Officer
Mr. Larry J. Anderson(9)........ 1997 146,693 39,917 72,823(10) -- 2,742(11)
Former Vice President, 1996 29,022 10,000 -- 465,000 --
Marketing and Sales
</TABLE>
- ---------------
(1) Consists of relocation payments.
(2) Consists of $252 paid by the Company in life insurance premiums and $2,092
in 401(k) employer matching contributions.
(3) Consists of $306 paid by the Company in life insurance premiums and $3,286
in 401(k) employer matching contributions.
(4) Consists of $252 paid by the Company in life insurance premiums and $2,061
in 401(k) employer matching contributions.
(5) Consists of $306 paid by the Company in life insurance premiums and $2,706
in 401(k) employer matching contributions.
(6) Consists of $252 paid by the Company in life insurance premiums and $2,699
in 401(k) employer matching contributions.
(7) Consists of $306 paid by the Company in life insurance premiums and $2,737
in 401(k) employer matching contributions.
(8) Consists of $252 paid by the Company in life insurance premiums and $2,583
in 401(k) employer matching contributions.
(9) Mr. Anderson resigned from the Company in May 1997.
(10) Consists of $66,823 in relocation payments and $6,000 car allowance.
(11) Consists of $252 paid by the Company in life insurance premiums and $2,490
in 401(k) employer matching contributions.
EMPLOYMENT AND SEVERANCE AGREEMENTS
Severance Plan. In January 1996, the Company adopted an Executive Severance
Plan (the "Severance Plan") providing for certain benefits to executive officers
of the Company in the event an executive's employment is involuntary terminated
without cause (generally meaning without any misconduct on the executive's part)
or that the executive voluntarily terminates employment with good reason
(generally meaning that the executive's responsibilities, title or compensation
was materially reduced). Upon the
9
<PAGE> 12
occurrence of such an event, the Severance Plan provides for salary continuation
for a period no greater than one year. In addition, the Severance Plan provides
for continued health benefits coverage to the extent permitted by the
Consolidated Omnibus Budget Reconciliation Act of 1985 and the Company's group
health policies.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee is an officer or employee of the
Company.
BY ORDER OF THE BOARD OF DIRECTORS
LOGO
Peter S. Norris
Vice President, Finance, Chief
Financial Officer
Treasurer and Assistant Secretary
March 20, 1998
10
<PAGE> 13
HMT TECHNOLOGY CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
ADOPTED BY THE BOARD ON JANUARY 23, 1996
APPROVED BY STOCKHOLDERS ON FEBRUARY 9, 1996
AMENDED BY THE BOARD ON JANUARY 14, 1998
APPROVED BY STOCKHOLDERS ON __________ __, 1998
1. PURPOSE.
(a) The purpose of the Employee Stock Purchase Plan (the "Plan") is to
provide a means by which employees of HMT Technology Corporation (the
"Company"), and its Affiliates, as defined in subparagraph 1(b), which are
designated as provided in subparagraph 2(b), may be given an opportunity to
purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
its employees, to secure and retain the services of new employees, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
(d) The Company intends that the rights to purchase stock of the Company
granted under the Plan be considered options issued under an "employee stock
purchase plan" as that term is defined in Section 423(b) of the Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors (the
"Board") of the Company unless and until the Board delegates administration to a
Committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i) To determine when and how rights to purchase stock of the
Company shall be granted and the provisions of each offering of such rights
(which need not be identical).
<PAGE> 14
(ii) To designate from time to time which Affiliates of the
Company shall be eligible to participate in the Plan.
(iii) To construe and interpret the Plan and rights granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective.
(iv) To amend the Plan as provided in paragraph 13.
(v) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company and its Affiliates and to carry out the intent that the Plan be treated
as an "employee stock purchase plan" within the meaning of Section 423 of the
Code.
(c) The Board may delegate administration of the Plan to a Committee
composed of not fewer than two (2) members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 12 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to rights granted
under the Plan shall not exceed in the aggregate one million five hundred
thousand (1,500,000) shares of the Company's common stock (the "Common Stock").
If any right granted under the Plan shall for any reason terminate without
having been exercised, the Common Stock not purchased under such right shall
again become available for the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. GRANT OF RIGHTS; OFFERING.
(a) The Board or the Committee may from time to time grant or provide
for the grant of rights to purchase Common Stock of the Company under the Plan
to eligible employees (an "Offering") on a date or dates (the "Offering
Date(s)") selected by the Board or the Committee. Each Offering shall be in such
form and shall contain such terms and conditions as the Board or the Committee
shall deem appropriate, which shall comply with the requirements of Section
423(b)(5) of the Code that all employees granted rights to purchase stock under
the Plan shall have the same rights and privileges. The terms and conditions of
an Offering shall be incorporated by reference into the Plan and treated as part
of the Plan. The provisions of separate Offerings need not be identical, but
each Offering shall include (through incorporation of the provisions of this
Plan by reference in the memorandum documenting the Offering or
2
<PAGE> 15
otherwise) the period during which the Offering shall be effective, which period
shall not exceed twenty-seven (27) months beginning with the Offering Date, and
the substance of the provisions contained in paragraphs 5 through 8, inclusive.
(b) If an employee has more than one right outstanding under the Plan,
unless he or she otherwise indicates in agreements or notices delivered
hereunder: (1) each agreement or notice delivered by that employee will be
deemed to apply to all of his or her rights under the Plan, and (2) a right with
a lower exercise price (or an earlier-granted right, if two rights have
identical exercise prices), will be exercised to the fullest possible extent
before a right with a higher exercise price (or a later-granted right, if two
rights have identical exercise prices) will be exercised.
5. ELIGIBILITY.
(a) Rights may be granted only to employees of the Company or, as the
Board or the Committee may designate as provided in subparagraph 2(b), to
employees of any Affiliate of the Company. Except as provided in subparagraph
5(b), an employee of the Company or any Affiliate shall not be eligible to be
granted rights under the Plan, unless, on the Offering Date, such employee has
been in the employ of the Company or any Affiliate for such continuous period
preceding such grant as the Board or the Committee may require, but in no event
shall the required period of continuous employment be greater than two (2)
years. In addition, unless otherwise determined by the Board or the Committee
and set forth in the terms of the applicable Offering, no employee of the
Company or any Affiliate shall be eligible to be granted rights under the Plan,
unless, on the Offering Date, such employee's customary employment with the
Company or such Affiliate is for at least twenty (20) hours per week and at
least five (5) months per calendar year.
(b) The Board or the Committee may provide that, each person who, during
the course of an Offering, first becomes an eligible employee of the Company or
designated Affiliate will, on a date or dates specified in the Offering which
coincides with the day on which such person becomes an eligible employee or
occurs thereafter, receive a right under that Offering, which right shall
thereafter be deemed to be a part of that Offering. Such right shall have the
same characteristics as any rights originally granted under that Offering, as
described herein, except that:
(i) the date on which such right is granted shall be the
"Offering Date" of such right for all purposes, including determination of the
exercise price of such right;
(ii) the period of the Offering with respect to such right shall
begin on its Offering Date and end coincident with the end of such Offering; and
(iii) the Board or the Committee may provide that if such person
first becomes an eligible employee within a specified period of time before the
end of the Offering, he or she will not receive any right under that Offering.
(c) No employee shall be eligible for the grant of any rights under the
Plan if, immediately after any such rights are granted, such employee owns stock
possessing five percent
3
<PAGE> 16
(5%) or more of the total combined voting power or value of all classes of stock
of the Company or of any Affiliate. For purposes of this subparagraph 5(c), the
rules of Section 424(d) of the Code shall apply in determining the stock
ownership of any employee, and stock which such employee may purchase under all
outstanding rights and options shall be treated as stock owned by such employee.
(d) An eligible employee may be granted rights under the Plan only if
such rights, together with any other rights granted under "employee stock
purchase plans" of the Company and any Affiliates, as specified by Section
423(b)(8) of the Code, do not permit such employee's rights to purchase stock of
the Company or any Affiliate to accrue at a rate which exceeds twenty-five
thousand dollars ($25,000) of fair market value of such stock (determined at the
time such rights are granted) for each calendar year in which such rights are
outstanding at any time.
(e) Officers of the Company and any designated Affiliate shall be
eligible to participate in Offerings under the Plan, provided, however, that the
Board may provide in an Offering that certain employees who are highly
compensated employees within the meaning of Section 423(b)(4)(D) of the Code
shall not be eligible to participate.
6. RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, each eligible employee, pursuant to an
Offering made under the Plan, shall be granted the right to purchase up to the
number of shares of Common Stock of the Company purchasable with a percentage
designated by the Board or the Committee not exceeding fifteen (15%) of such
employee's Earnings (as defined in subparagraph 7(a)) during the period which
begins on the Offering Date (or such later date as the Board or the Committee
determines for a particular Offering) and ends on the date stated in the
Offering, which date shall be no later than the end of the Offering. The Board
or the Committee shall establish one or more dates during an Offering (the
"Purchase Date(s)") on which rights granted under the Plan shall be exercised
and purchases of Common Stock carried out in accordance with such Offering.
(b) In connection with each Offering made under the Plan, the Board or
the Committee may specify a maximum number of shares which may be purchased by
any employee as well as a maximum aggregate number of shares which may be
purchased by all eligible employees pursuant to such Offering. In addition, in
connection with each Offering which contains more than one Purchase Date, the
Board or the Committee may specify a maximum aggregate number of shares which
may be purchased by all eligible employees on any given Purchase Date under the
Offering. If the aggregate purchase of shares upon exercise of rights granted
under the Offering would exceed any such maximum aggregate number, the Board or
the Committee shall make a pro rata allocation of the shares available in as
nearly a uniform manner as shall be practicable and as it shall deem to be
equitable.
(c) The purchase price of stock acquired pursuant to rights granted
under the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Offering Date; or
4
<PAGE> 17
(ii) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Purchase Date.
7. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An eligible employee may become a participant in the Plan pursuant
to an Offering by delivering a participation agreement to the Company within the
time specified in the Offering, in such form as the Company provides. Each such
agreement shall authorize payroll deductions of up to the maximum percentage
specified by the Board or the Committee of such employee's Earnings during the
Offering. "Earnings" is defined as an employee's regular salary or wages
(including amounts thereof elected to be deferred by the employee, that would
otherwise have been paid, under any arrangement established by the Company
intended to comply with Section 401(k), Section 402(e)(3), Section 125, Section
402(h), or Section 403(b) of the Code, and also including any deferrals under a
non-qualified deferred compensation plan or arrangement established by the
Company), which shall include or exclude bonuses, commissions, overtime pay,
incentive pay, profit sharing, other remuneration paid directly to the employee,
the cost of employee benefits paid for by the Company or an Affiliate, education
or tuition reimbursements, imputed income arising under any group insurance or
benefit program, traveling expenses, business and moving expense reimbursements,
income received in connection with stock options, contributions made by the
Company or an Affiliate under any employee benefit plan, and similar items of
compensation, as determined by the Board or Committee. The payroll deductions
made for each participant shall be credited to an account for such participant
under the Plan and shall be deposited with the general funds of the Company. A
participant may reduce (including to zero) or increase such payroll deductions,
and an eligible employee may begin such payroll deductions, after the beginning
of any Offering only as provided for in the Offering. A participant may make
additional payments into his or her account only if specifically provided for in
the Offering and only if the participant has not had the maximum amount withheld
during the Offering.
(b) At any time during an Offering, a participant may terminate his or
her payroll deductions under the Plan and withdraw from the Offering by
delivering to the Company a notice of withdrawal in such form as the Company
provides. Such withdrawal may be elected at any time prior to the end of the
Offering except as provided by the Board or the Committee in the Offering. Upon
such withdrawal from the Offering by a participant, the Company shall distribute
to such participant all of his or her accumulated payroll deductions (reduced to
the extent, if any, such deductions have been used to acquire stock for the
participant) under the Offering, without interest, and such participant's
interest in that Offering shall be automatically terminated. A participant's
withdrawal from an Offering will have no effect upon such participant's
eligibility to participate in any other Offerings under the Plan but such
participant will be required to deliver a new participation agreement in order
to participate in subsequent Offerings under the Plan.
(c) Rights granted pursuant to any Offering under the Plan shall
terminate immediately upon cessation of any participating employee's employment
with the Company and any designated Affiliate, for any reason, and the Company
shall distribute to such terminated employee all of his or her accumulated
payroll deductions (reduced to the extent, if any, such
5
<PAGE> 18
deductions have been used to acquire stock for the terminated employee), under
the Offering, without interest.
(d) Rights granted under the Plan shall not be transferable by a
participant otherwise than by will or the laws of descent and distribution, or
by beneficiary designation as provided in paragraph 14, and otherwise during his
or her lifetime, shall be exercisable only by the person to whom such rights are
granted.
8. EXERCISE.
(a) On each date specified therefor in the relevant Offering ("Purchase
Date"), each participant's accumulated payroll deductions and other additional
payments specifically provided for in the Offering (without any increase for
interest) will be applied to the purchase of whole shares of stock of the
Company, up to the maximum number of shares permitted pursuant to the terms of
the Plan and the applicable Offering, at the purchase price specified in the
Offering. No fractional shares shall be issued upon the exercise of rights
granted under the Plan. The amount, if any, of accumulated payroll deductions
remaining in each participant's account after the purchase of shares which is
less than the amount required to purchase one share of stock on the final
Purchase Date of an Offering shall be held in each such participant's account
for the purchase of shares under the next Offering under the Plan, unless such
participant withdraws from such next Offering, as provided in subparagraph 7(b),
or is no longer eligible to be granted rights under the Plan, as provided in
paragraph 5, in which case such amount shall be distributed to the participant
after such final Purchase Date, without interest. The amount, if any, of
accumulated payroll deductions remaining in any participant's account after the
purchase of shares which is equal to the amount required to purchase whole
shares of stock on the final Purchase Date of an Offering shall be distributed
in full to the participant after such Purchase Date, without interest.
(b) No rights granted under the Plan may be exercised to any extent
unless the shares to be issued upon such exercise under the Plan (including
rights granted thereunder) are covered by an effective registration statement
pursuant to the Securities Act of 1933, as amended (the "Securities Act") and
the Plan is in material compliance with all applicable state, foreign and other
securities and other laws applicable to the Plan. If on a Purchase Date in any
Offering hereunder the Plan is not so registered or in such compliance, no
rights granted under the Plan or any Offering shall be exercised on such
Purchase Date, and the Purchase Date shall be delayed until the Plan is subject
to such an effective registration statement and such compliance, except that the
Purchase Date shall not be delayed more than twelve (12) months and the Purchase
Date shall in no event be more than twenty-seven (27) months from the Offering
Date. If on the Purchase Date of any Offering hereunder, as delayed to the
maximum extent permissible, the Plan is not registered and in such compliance,
no rights granted under the Plan or any Offering shall be exercised and all
payroll deductions accumulated during the Offering (reduced to the extent, if
any, such deductions have been used to acquire stock) shall be distributed to
the participants, without interest.
9. COVENANTS OF THE COMPANY.
6
<PAGE> 19
(a) During the terms of the rights granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such rights.
(b) The Company shall seek to obtain from each federal, state, foreign
or other regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to issue and sell shares of stock upon exercise of
the rights granted under the Plan. If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such rights unless and until
such authority is obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to rights granted under the
Plan shall constitute general funds of the Company.
11. RIGHTS AS A SHAREHOLDER.
A participant shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to rights granted
under the Plan unless and until the participant's shareholdings acquired upon
exercise of rights under the Plan are recorded in the books of the Company.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan and outstanding rights will
be appropriately adjusted in the class(es) and maximum number of shares subject
to the Plan and the class(es) and number of shares and price per share of stock
subject to outstanding rights. Such adjustments shall be made by the Board or
Committee, the determination of which shall be final, binding and conclusive.
(The conversion of any convertible securities of the Company shall not be
treated as a "transaction not involving the receipt of consideration by the
Company.")
(b) In the event of: (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise; or (4) any other capital
reorganization in which more than fifty percent (50%) of the shares of the
Company entitled to vote are exchanged, then, as determined by the Board in its
sole discretion (i) any surviving corporation may assume outstanding rights or
substitute similar rights for those under the Plan, (ii) such rights may
continue in full force and effect, or (iii) participants' accumulated payroll
deductions may be used to purchase Common Stock immediately prior to the
transaction described above and the participants' rights under the ongoing
Offering terminated.
7
<PAGE> 20
13. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the shareholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(i) Increase the number of shares reserved for rights under
the Plan;
(ii) Modify the provisions as to eligibility for participation in
the Plan (to the extent such modification requires shareholder approval
in order for the Plan to obtain employee stock purchase plan treatment
under Section 423 of the Code or to comply with the requirements of Rule
16b-3 promulgated under the Securities Exchange Act of 1934, as amended
("Rule 16b-3")); or
(iii) Modify the Plan in any other way if such modification
requires shareholder approval in order for the Plan to obtain employee
stock purchase plan treatment under Section 423 of the Code or to comply
with the requirements of Rule 16b-3.
It is expressly contemplated that the Board may amend the Plan in any respect
the Board deems necessary or advisable to provide eligible employees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to employee stock purchase plans
and/or to bring the Plan and/or rights granted under it into compliance
therewith.
(b) Rights and obligations under any rights granted before amendment of
the Plan shall not be impaired by any amendment of the Plan, except with the
consent of the person to whom such rights were granted, or except as necessary
to comply with any laws or governmental regulation, or except as necessary to
ensure that the Plan and/or rights granted under the Plan comply with the
requirements of Section 423 of the Code.
14. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary who is
to receive any shares and cash, if any, from the participant's account under the
Plan in the event of such participant's death subsequent to the end of an
Offering but prior to delivery to the participant of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death during an Offering.
(b) Such designation of beneficiary may be changed by the participant at
any time by written notice. In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its sole discretion, may deliver such shares
and/or cash to the
8
<PAGE> 21
spouse or to any one or more dependents or relatives of the participant, or if
no spouse, dependent or relative is known to the Company, then to such other
person as the Company may designate.
15. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate at the time that all of the shares
subject to the Plan's share reserve, as increased and/or adjusted from time to
time, have been issued under the terms of the Plan. No rights may be granted
under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any rights granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except as expressly provided in the Plan or with the consent of the person
to whom such rights were granted, or except as necessary to comply with any laws
or governmental regulation, or except as necessary to ensure that the Plan
and/or rights granted under the Plan comply with the requirements of Section 423
of the Code.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective upon the adoption of enabling
resolutions by the Company's Board of Directors (the "Effective Date"), but no
rights granted under the Plan shall be exercised unless and until the Plan has
been approved by the shareholders of the Company within 12 months before or
after the date the Plan is adopted by the Board or the Committee, which date may
be prior to the Effective Date.
9
<PAGE> 22
HMT TECHNOLOGY CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR A SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 22, 1998
The undersigned hereby appoints MR. PETER S. NORRIS and MR. JAMES C.
KITCH, and each of them, as proxies and attorneys-in-fact of the undersigned,
with full power of substitution, to vote all of the shares of stock of HMT
Technology Corporation which the undersigned may be entitled to vote at the
Special Meeting of Stockholders of HMT Technology Corporation to be held at the
Company's executive offices at 47700 KATO ROAD, FREMONT, CALIFORNIA 94538 on
WEDNESDAY, APRIL 22, 1998 at 9:00 a.m., local time, and at any and all
postponements, continuations and adjournments thereof, with all powers that the
undersigned would possess if personally present, upon and in respect of the
following matters and in accordance with the following instructions, with
discretionary authority as to any and all other matters that may properly come
before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR
PROPOSAL 1 AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC
INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 1.
PROPOSAL 1: To approve the Company's Employee Stock Purchase Plan, as
amended, to increase the aggregate number of shares of Common
Stock authorized for issuance under such plan by 1,000,000
shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 23
DATED
- ------------------------- ---------------------------------------------
---------------------------------------------
SIGNATURE(S)
Please sign exactly as your name appears
hereon. If the stock is registered in the
names of two or more persons, each should
sign. Executors, administrators, trustees,
guardians and attorneys-in-fact should add
their titles. If signer is a corporation,
please give full corporate name and have a
duly authorized officer sign, stating title.
If signer is a partnership, please sign in
partnership name by authorized person.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
