<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
EMULEX 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):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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
EMULEX CORPORATION
3535 HARBOR BOULEVARD
COSTA MESA, CALIFORNIA 92626
(714) 662-5600
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 21, 1996
To the Stockholders of EMULEX CORPORATION:
You are cordially invited to attend the Annual Meeting of Stockholders of
Emulex Corporation, a Delaware corporation (the "Company"), which will be held
at the corporate headquarters of the Company at 3535 Harbor Boulevard, Costa
Mesa, California, at 10:00 a.m., California time, on Thursday, November 21,
1996, to consider and act upon the following matters, all as more fully
described in the accompanying Proxy Statement which is incorporated herein by
this reference:
1. To elect a board of five directors to serve until the next annual
meeting of the Company's stockholders and until their successors have been
elected and qualify;
2. To consider and take action concerning approval of an amendment of
the Company's Employee Stock Option Plan (a copy of which, as amended, is
included as Appendix A to the accompanying Proxy Statement) which increases
the number of shares covered by such plan by 200,000 shares;
3. To ratify the selection of KPMG Peat Marwick LLP as the Company's
independent public accountants for fiscal year 1997; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record of the Company's common stock at the close of
business on October 7, 1996, the record date fixed by the Board of Directors,
are entitled to notice of, and to vote at, the meeting.
THOSE WHO CANNOT ATTEND ARE URGED TO SIGN, DATE, AND OTHERWISE COMPLETE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. ANY STOCKHOLDER
GIVING A PROXY HAS THE RIGHT TO REVOKE IT ANY TIME BEFORE IT IS VOTED.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Walter J. McBride
Walter J. McBride
Senior Vice President, Chief Financial
Officer,
Secretary and Treasurer
Costa Mesa, California
October 21, 1996
<PAGE> 3
EMULEX CORPORATION
3535 HARBOR BOULEVARD
COSTA MESA, CALIFORNIA 92626
(714) 662-5600
------------------------
PROXY STATEMENT
------------------------
APPROXIMATE DATE PROXY MATERIAL FIRST SENT
TO STOCKHOLDERS: OCTOBER 21, 1996
The following information is in connection with the solicitation of proxies
for the Annual Meeting of Stockholders of Emulex Corporation, a Delaware
corporation (the "Company"), to be held at the Company's headquarters at 3535
Harbor Boulevard, Costa Mesa, California, at 10:00 a.m., California time, on
Thursday, November 21, 1996, and adjournments thereof (the "Meeting"), for the
purposes stated in the Notice of Annual Meeting of Stockholders preceding this
Proxy Statement.
SOLICITATION AND REVOCATION OF PROXIES
A form of proxy is being furnished herewith by the Company to each
stockholder, and, in each case, is solicited on behalf of the Board of Directors
of the Company for use at the Meeting. The entire cost of soliciting these
proxies will be borne by the Company. The Company may pay persons holding shares
in their names or the names of their nominees for the benefit of others, such as
brokerage firms, banks, depositaries, and other fiduciaries, for costs incurred
in forwarding soliciting materials to their principals. In that connection, the
Company has retained ChaseMellon Shareholder Services, Encino, California, to
deliver soliciting materials to such record holders for distribution by them to
their principals and to assist the Company in collecting proxies from such
holders. The cost of these services, excluding out-of-pocket expenses, is not
expected to exceed $4,000. Members of the Management of the Company may also
solicit some stockholders in person, or by telephone, telegraph or telecopy,
following solicitation by this Proxy Statement, but will not be separately
compensated for such solicitation services.
Proxies duly executed and returned by stockholders and received by the
Company before the Meeting will be voted "FOR" the election of all five of the
nominee-directors specified herein, "FOR" approval of the amendment of the
Company's Employee Stock Option Plan, and "FOR" the ratification of the
selection of KPMG Peat Marwick LLP as the Company's independent public
accountants for fiscal year 1997, unless a contrary choice is specified in the
proxy. Where a specification is indicated as provided in the proxy, the shares
represented by the proxy will be voted and cast in accordance with the
specification made. As to other matters, if any, to be voted upon, the persons
designated as proxies will take such actions as they, in their discretion, may
deem advisable. The persons named as proxies were selected by the Board of
Directors of the Company and each of them is a director of the Company.
Under the Company's bylaws and Delaware law, shares represented by proxies
that reflect abstentions or "broker non-votes" (i.e., shares held by a broker or
nominee which are represented at the Meeting, but with respect to which such
broker or nominee is not empowered to vote on a particular proposal) will be
counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. Any shares not voted (whether by
abstention, broker non-vote or otherwise) will have no impact in the election of
directors, except to the extent that the failure to vote for an individual
results in another individual receiving a larger proportion of votes.
Abstentions as to the proposals to approve of the amendment of the Company's
Employee Stock Option Plan and ratify the selection of KPMG Peat Marwick LLP as
the Company's independent public accountants will have the same effect as votes
against such proposals. Broker non-votes, however, will be treated as unvoted
for purposes of determining approval of such proposals and will not be counted
as votes for or against such proposals.
<PAGE> 4
Your execution of the enclosed proxy will not affect your right as a
stockholder to attend the Meeting and to vote in person. Any stockholder giving
a proxy has a right to revoke it at any time by either (a) a later-dated proxy,
(b) a written revocation sent to and received by the Secretary of the Company
prior to the Meeting, or (c) attendance at the Meeting and voting in person.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
The Company has outstanding only common stock, of which 6,004,520 shares
were outstanding as of the close of business on October 7, 1996 (the "Record
Date"). Only stockholders of record on the books of the Company at the close of
business on the Record Date will be entitled to vote at the Meeting. Each share
of common stock is entitled to one vote.
Representation at the Meeting by the holders of a majority of the
outstanding common stock of the Company, either by personal attendance or by
proxy, will constitute a quorum.
The following table sets forth information as to the beneficial ownership
of the Company's common stock by all directors and the persons identified in the
Summary Compensation Table, as well as by current directors and executive
officers of the Company as a group and, to the best of the Company's knowledge,
beneficial owners of 5% or more of the Company's common stock. The information
in the following table is based on ownership of the Company's common stock as of
the Record Date.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
TITLE OF CLASS NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS(2)
- ------------------------ --------------------------------- ----------------------- -------------------
<S> <C> <C> <C>
DIRECTORS:
Common Stock Fred B. Cox 287,500(3) 4.8%
Common Stock Paul F. Folino 113,324(4) 1.9%
Common Stock Michael P. Downey 10,333(4) *
Common Stock Robert H. Goon 12,776(5) *
Common Stock Gary E. Liebl 12,500(4) *
Common Stock Don M. Lyle 10,833(4) *
NON-DIRECTOR EMPLOYEES:
Common Stock Walter J. McBride 15,937(4) *
Common Stock Michael A. Peitler 22,187(4) *
Common Stock Ronald P. Quagliara 9,374(4) *
Common Stock Charles N. Goff 24,437(6) *
All current directors and (4) %
executive officers as a group (12 540,773 8.7
persons)(7)
5% STOCKHOLDERS:
Common Stock Kopp Investment Advisors, Inc. 652,245(8) 10.9%
6600 France Avenue South,
Suite 672
Edina, Minnesota 55435
</TABLE>
- ---------------
(1) Except as otherwise indicated and subject to applicable community property
and similar laws, the Company assumes that each named person has the sole
voting and investment power with respect to his or its shares (other than
shares subject to options).
(2) Percent of class is based on the number of shares outstanding on the Record
Date plus, with respect to each named person, the number of shares of common
stock, if any, which the stockholder has the right to acquire within 60 days
of such date. Ownership of less than one percent is indicated by an
asterisk.
(3) Consists of 275,000 shares held in a family trust of which Mr. Cox and his
wife are co-trustees and share voting and investment power and 12,500 shares
which are subject to options held by Mr. Cox which are currently
exercisable.
2
<PAGE> 5
(4) Includes shares which are purchasable pursuant to stock options which are
currently, or within the next 60 days will be, exercisable.
(5) Consists of 276 shares held by Mr. Goon's wife and 12,500 shares which are
subject to options held by Mr. Goon which are currently exercisable.
(6) Consists of 11,000 shares held in a family trust of which Mr. Goff and his
wife are co-trustees and share voting and investment power and 13,437 shares
which are subject to options held by Mr. Goff which are currently
exercisable or will become exercisable within the next 60 days.
(7) Includes persons who serve as executive officers of the Company's principal
subsidiaries.
(8) The beneficial owner has informed the Company that (i) these shares are
beneficially owned in the capacity of an investment adviser registered under
the Investment Advisers Act of 1940, (ii) voting power is exercised pursuant
to investment management contracts, and (iii) no single client of the
adviser owns more than 5% of the Company's common stock.
The Company knows of no contractual arrangements which may at a subsequent
date result in a change of control of the Company.
NOMINATION AND ELECTION OF DIRECTORS
The Company's directors are to be elected at each annual meeting of
stockholders. The five nominees for election as directors at this Meeting set
forth in the table below are all recommended by the Board of Directors of the
Company. All of the nominated directors were elected as directors at the 1995
Annual Meeting of Stockholders of the Company. Gary E. Liebl, a current director
of the Company, has advised the Company that for personal reasons he does not
plan to stand for re-election to the Board of Directors and will cease to be a
director of the Company effective on the date of the Meeting.
In the event that any of the nominees for director should become unable to
serve if elected, it is intended that shares represented by proxies which are
executed and returned will be voted for such substitute nominee(s) as may be
recommended by the Company's existing Board of Directors.
The five nominee-directors receiving the highest number of votes cast at
the Meeting will be elected as the Company's directors to serve until the next
annual meeting of stockholders and until their successors are elected and
qualify. Subject to certain exceptions specified below, stockholders of record
on the Record Date are entitled to cumulate their votes in the election of the
Company's directors (i.e., they are entitled to the number of votes determined
by multiplying the number of shares held by them times the number of directors
to be elected) and may cast all of their votes so determined for one person, or
spread their votes among two or more persons as they see fit. No stockholder
shall be entitled to cumulate votes for a given candidate for director unless
such candidate's name has been placed in nomination prior to the vote and the
stockholder has given notice at the Meeting, prior to the voting, of the
stockholder's intention to cumulate his or her votes. If any one stockholder has
given such notice, all stockholders may cumulate their votes for candidates in
nomination. Discretionary authority to cumulate votes is hereby solicited by the
Board of Directors.
The Company's By-laws provide that only persons who are nominated in
accordance with specified By-law procedures shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors may be
made at a meeting of stockholders by or at the direction of the Board of
Directors or by any stockholder entitled to vote for the election of directors
who complies with certain notice procedures set forth in the By-laws. Such
nominations must be made by written notice to the Secretary of the Company and
must be delivered or mailed and received at the principal executive offices of
the Company not less than 60 days or more than 90 days prior to the date of the
meeting. In the event that the first public disclosure of the date of the
meeting is made less than 70 days prior to the date of the meeting, notice by
the stockholder will be timely if received not later than the close of business
on the tenth day following the day on which such disclosure was first made. The
stockholder's notice must set forth certain information concerning the proposed
nominee and the stockholder giving notice, as set forth in the By-laws.
3
<PAGE> 6
The following table sets forth certain information concerning the nominees
for election as directors (all of such nominees being continuing members of the
Company's present Board of Directors):
<TABLE>
<CAPTION>
NOMINEE(1) PRINCIPAL OCCUPATION AGE
- --------------------- ------------------------------------------------- ---
<S> <C> <C>
Fred B. Cox Chairman of the Company and Director of Continuus 62
Software Corporation
Paul F. Folino President and Chief Executive Officer of the 51
Company
Michael P. Downey(2) Executive Vice President and Chief Financial 49
Officer of Nellcor Puritan Bennett, Incorporated,
a manufacturer of medical instruments
Robert H. Goon(2) Lawyer, Partner in the law firm of Jeffer, 55
Mangels, Butler & Marmaro LLP, counsel to the
Company
Don M. Lyle(3) Principal of Technology Management Co., a 57
management consulting firm specializing in high
technology companies
</TABLE>
- ------------------------
(1) The Company does not have a nominating committee of the Board of Directors.
The nominees for election as directors at the Meeting were selected by the
Board of Directors of the Company.
(2) Member of the audit committee of the Board of Directors of the Company,
currently consisting of two directors, neither of whom is an employee of the
Company, which held four meetings during the last fiscal year of the
Company. The audit committee reviews, acts on, and reports to the Board of
Directors with respect to various auditing and accounting matters, including
the selection of the Company's independent public accountants, the scope of
the annual audits, the nature of nonaudit services, the fees to be paid to
the independent public accountants, the performance of the Company's
independent public accountants and the accounting practices of the Company.
(3) Member of the compensation committee of the Board of Directors of the
Company, currently consisting of two directors, neither of whom is an
employee of the Company, which held four meetings during the last fiscal
year of the Company. The compensation committee reviews the performance of
the executive officers of the Company and its subsidiaries and reviews the
compensation programs for other key employees, including salary and cash
bonus levels and option grants under the Emulex Corporation Employee Stock
Option Plan.
Mr. Cox is a founder of the Company and has served as a director since its
inception in 1979. Mr. Cox served as the Company's Chief Executive Officer from
its inception until he retired in October 1990. From November 1991 until
November 1994, Mr. Cox served as President of Continuus Software Corporation, a
developer and marketer of computer software products, and currently serves as a
member of its Board of Directors.
Mr. Folino was elected in May 1993 to serve as the President and Chief
Executive Officer of the Company and as a director of the Company. From January
1991 to May 1993, Mr. Folino was President and Chief Operating Officer of
Thomas-Conrad Corporation, a manufacturer of local area networking products.
Mr. Downey has served as a director of the Company since February 1994. He
is Executive Vice President and Chief Financial Officer of Nellcor Puritan
Bennett, Incorporated, a Nasdaq-listed manufacturer of medical instruments with
which he has been employed for more than the last five years. From 1984 to 1986,
Mr. Downey was Vice President, Finance with Shugart Corporation, a manufacturer
of disk drives.
Mr. Goon has served as a director of the Company since its inception in
1979. He has been engaged in the practice of law for 31 years. For more than the
last five years, he has been a partner in the law firm of Jeffer, Mangels,
Butler & Marmaro LLP, counsel to the Company.
Mr. Lyle has served as a director of the Company since February 1994. Since
1983 he has served as an independent consultant to various computer and venture
capital companies and as a principal of Technology Management Co., a management
consulting firm specializing in high technology companies. Mr. Lyle also serves
as a member of the board of directors of DH Technology, Inc., a print head and
specialty printing
4
<PAGE> 7
company, Systech Corp., a data communications company, and Insync Systems, a
supplier of ultra-clean gas-delivery systems to semiconductor equipment
manufacturers.
There were five meetings of the Board of Directors of the Company during
the last fiscal year of the Company. Each of the directors of the Company
attended 75% or more of the aggregate of the total number of meetings of the
Board of Directors held during the last fiscal year and the total number of
meetings held by all committees of the Board of Directors on which he served
during the last fiscal year.
COMPENSATION OF DIRECTORS
Directors' Fees. Directors who are not employees of the Company receive a
quarterly retainer of $4,000 plus $1,000 for each meeting of the Board of
Directors in excess of five per year, and reimbursement for travel expenses. In
addition, the chairmen of the audit and compensation committees receive an
additional quarterly retainer of $500, while committee members receive an
additional quarterly retainer of $300. Directors who are employees of the
Company receive no additional compensation for serving on the Board of
Directors. Directors are entitled to reimbursement for out-of-pocket expenses in
connection with attendance at Board and committee meetings.
Stock Options. On October 24, 1990, the Board of Directors of the Company
adopted the Emulex Corporation Non-Employee Director Stock Option Plan (the
"Director Plan") under which a maximum of 75,000 shares of common stock of the
Company were authorized to be issued pursuant to exercise of stock options
granted under the plan to directors who are not employees of the Company or any
of its subsidiaries.
At a Special Meeting of Stockholders of the Company held on February 24,
1994, the stockholders approved an increase in the number of shares covered by
the Director Plan by 50,000 to 125,000, an extension of the termination date of
the Director Plan from December 31, 1993 to December 31, 1996, the conversion of
options in connection with the distribution of the outstanding common stock of
QLogic Corporation, a former subsidiary of the Company ("QLogic"), to the
stockholders of the Company on February 28, 1994 (the "Distribution"), and
certain other administrative and conforming amendments.
Each director of the Company is eligible to receive an option under the
Director Plan only if such director (i) is not then an employee of the Company
or any of its subsidiaries, and (ii) has not, within the period of three years
immediately preceding such time, received any stock option, stock bonus, stock
appreciation right, or other similar stock award from the Company or any of its
subsidiaries other than options granted to such director under the Director Plan
("Eligible Director"). Only Eligible Directors may receive options under the
Director Plan.
The Director Plan provides that an option to purchase 12,500 shares of
common stock of the Company shall be granted automatically to each Eligible
Director upon the later to occur of (i) the date of adoption of the Director
Plan by the Board (October 24, 1990), or (ii) the date on which such director
first becomes an Eligible Director. The options are non-qualified stock options
not eligible for the favorable tax consequences given to incentive stock options
by Section 422 of the Internal Revenue Code of 1986 (the "Code"). The purchase
price per share of the common stock of the Company issuable upon exercise of the
option must be 100% of the fair market value per share of such common stock as
of the date the option is granted. Payment for shares purchased on exercise of
an option may be made in either cash or in common stock of the Company having a
fair market value (determined in the manner the exercise price of options is
determined) equal to the aggregate exercise price of the shares being purchased.
No option granted under the Director Plan may be exercised after the
expiration of the earlier of (i) ten years following the date the option is
granted or (ii) one year following the date the optionee ceases to be a director
of the Company for any reason.
5
<PAGE> 8
An option granted under the Director Plan shall be exercisable when it is
granted as to one-third of the shares subject to the option if the director to
whom it is granted has served as a director of the Company for more than five
years prior to the date the option is granted. An option shall also become
exercisable as to one-third of the shares subject to the option on each
anniversary of the date the option is granted if the director to whom the option
is granted is still a director of the Company on such anniversary. For purposes
of determining exercisability of an option, service as a director of the Company
need not be continuous and includes service as a director of Emulex Corporation,
a California corporation, prior to the reincorporation of the Company in 1986 as
a Delaware corporation.
Unless sooner terminated by the Board, the Director Plan expires on
December 31, 1996.
The Board may amend, modify or terminate the Director Plan, but may not
without the prior approval of stockholders make any amendments which would (i)
materially increase the benefits accruing to directors under the Director Plan,
(ii) increase the total number of shares which may be issued under the Director
Plan, or (iii) materially modify the eligibility requirements to receive a stock
option grant under the Director Plan.
In October 1996, the Director Plan was amended by the Board of Directors to
extend the termination date of the plan by five years to December 31, 2001.
In October 1990, Mr. Goon was granted an option under the Director Plan to
purchase 12,500 shares of common stock of the Company at a purchase price of
$3.20 per share. In January 1991, Mr. Cox was granted an option under the
Director Plan to purchase 12,500 shares of common stock of the Company at a
purchase price of $3.61 per share. The purchase price of each option was the
fair market value of the common stock of the Company on the date of grant. In
connection with the Distribution, each option which was outstanding under the
Director Plan at the time of the Distribution was converted into two separately
exercisable options: one to purchase the same number of shares of Emulex common
stock which the option covered as of the time of the Distribution; and one to
purchase that same number of shares of QLogic common stock. Upon completion of
the Distribution, Messrs. Lyle and Downey each were granted an option to
purchase 12,500 shares of the Company's common stock at an exercise price of
$5.125 per share.
Other Compensation. In fiscal 1996, the Company and/or its subsidiaries
obtained legal services from the law firm of Jeffer, Mangels, Butler & Marmaro
LLP, of which Mr. Goon is a partner, on terms which the Company believes were as
favorable as would have been obtained from unaffiliated parties.
6
<PAGE> 9
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth information concerning compensation of the
principal executive officer of the Company and the four most highly compensated
other executive officers of the Company or its subsidiaries for each of the last
three completed fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- ---------------------------
OTHER STOCK ALL
NAME AND ANNUAL OPTION OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) GRANTS(2) COMPENSATION(3)
- ----------------------------- ----- -------- -------- --------------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Paul F. Folino 1996 $270,783 $ -0- $ 687,694(4) 30,000 $ 7,970
President and CEO 1995 243,830 108,640 105,578(4) 50,000 10,920
1994 230,521 37,807 -0- -0- 5,231
Walter J. McBride 1996 183,445 -0- 335,188(5) 15,000 3,928
Senior V.P., CFO, 1995 171,531 54,927 45,570(5) 5,000 3,458
Secretary and Treasurer 1994 106,130 27,524 76,987(5) 40,000 150
(from November 1993)
Michael A. Peitler 1996 183,172 -0- 135,939(6) 15,000 5,593
Senior V.P. 1995 169,692 53,695 108,514(6) 5,000 11,666
Worldwide Sales 1994 124,918 35,485 -0- 40,000 1,479
(from September 1993)
Ronald P. Quagliara 1996 167,213 -0- -0- -0- 1,352
V.P. Research and 1995 38,588 8,272 -0- 25,000 95
Development (from April
1995)
Charles N. Goff 1996 165,267 -0- 17,952 10,000 9,548
V.P. Manufacturing 1995 146,608 45,122 153,334(7) 5,000 11,198
1994 133,584 22,038 24,451 5,000 4,136
</TABLE>
- ---------------
(1) Except where indicated in the Summary Compensation Table, perquisites and
other personal benefits did not in the aggregate equal or exceed the lesser
of $50,000 for any named individual or 10 percent of the total of annual
salary and bonus reported in this table for such person.
(2) The amounts in the table represent shares of the Company's common stock
covered by stock options granted to the named individual under the Emulex
Corporation Employee Stock Option Plan. In connection with the Distribution,
each option outstanding under the Employee Plan (other than certain options
held by Mr. Folino) was converted into two separately exercisable options:
one to purchase the same number of shares of common stock of the Company
which the converted option covered as of the date of the Distribution, and
one to purchase that same number of shares of common stock of QLogic. The
purchase price per share of Emulex common stock was an amount which bears
the same ratio to the exercise price per share under the converted option
that the fair market value per share of Emulex common stock after the
Distribution bore to the sum of the fair market value per share of QLogic
common stock after the Distribution plus the fair market value per share of
Emulex common stock after the Distribution. In the Distribution, Mr.
Folino's option was converted into two separately exercisable options: one
to purchase 125,000 shares of Emulex common stock, and a second option to
purchase 25,000 shares of QLogic common stock. The purchase price per share
of Emulex common stock and QLogic common stock subject to Mr. Folino's
Emulex option and QLogic option was the fair market value per share of
Emulex common stock and QLogic common stock, respectively, after the
Distribution.
(3) This column includes the Company's matching contributions to the Emulex
Retirement Savings Plan, group term life insurance premiums and health care
reimbursement paid with respect to the named executive.
(4) Includes $678,712 and $99,303 which represent the realized value of options
exercised in 1996 and 1995, respectively.
7
<PAGE> 10
(5) Includes $329,188 which represents the realized value of options exercised
in 1996, and $72,987 and $39,570 in relocation expenses for 1994 and 1995,
respectively.
(6) Includes $127,366 and $101,553 which represent the realized value of options
exercised in 1996 and 1995, respectively.
(7) Includes $91,798 which represents the realized value of options exercised in
1995.
KEY EMPLOYEE RETENTION AGREEMENTS
The Company has previously entered into an agreement with Mr. Folino under
which Mr. Folino would be entitled to receive the following payments and
benefits in the event of termination of his employment by the Company without
cause or by Mr. Folino because of a demotion within two years after a change in
control of the Company: (i) a severance payment equal to the present value of
two times the sum of Mr. Folino's annual salary plus the highest annual average
of any two of his last three annual bonuses; (ii) continuation for two years
following termination of employment of his health, life insurance, disability
income, tax assistance, and executive automobile benefits (reduced to the extent
similar benefits are received by him from another employer); and (iii)
acceleration of vesting of his right to exercise his stock options based on the
length of his continued employment following the grant of the option by one year
upon the change in control of the Company and full acceleration of vesting of
such exercise right in the event of termination of his employment without cause
or because of a demotion as aforesaid within two years after the change in
control. The Company also has entered into similar agreements with Messrs.
McBride, Peitler, Quagliara and Goff, and with four other executives of the
Company. The key employee retention agreements for Messrs. McBride, Peitler,
Quagliara and Goff provide for payments and benefits similar to those described
above, except that the severance payment is equal to the present value of one
times the sum of the employee's annual salary plus the highest annual average of
any two of the employee's last three annual bonuses; and continuation following
termination of employment of the employee's health, life insurance, disability
income, tax assistance, and executive automobile benefits (reduced to the extent
similar benefits are received by the employee from another employer) is limited
to one year.
OPTION GRANTS DURING FISCAL 1996
The following table sets forth information on grants of stock options
pursuant to the Emulex Corporation Employee Stock Option Plan during the fiscal
year ended June 30, 1996, to the officers identified in the Summary Compensation
Table:
OPTION GRANTS IN FISCAL YEAR 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION
OPTIONS % OF TOTAL OPTIONS TERM(4)
GRANTED GRANTED TO EMPLOYEES EXERCISE EXPIRATION -----------------------
NAME (1) IN 1996(2) PRICE(3) DATE 5% 10%
- ----------------------- ------- --------------------- -------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Paul F. Folino......... 30,000 10.54 $21.75 8/24/05 $410,212 $1,039,475
Walter J. McBride...... 15,000 5.27 21.75 8/24/05 205,106 519,738
Michael A. Peitler..... 15,000 5.27 21.75 8/24/05 205,106 519,738
Ronald P. Quagliara.... -0- -- -- -- -- --
Charles N. Goff........ 10,000 3.51 21.75 8/24/05 136,737 346,492
</TABLE>
- ---------------
(1) The amounts in the table represent shares of the Company's common stock
covered by stock options granted to the named individual under the Emulex
Corporation Employee Stock Option Plan. Each option becomes exercisable on a
cumulative basis as to 25% of the option shares one year after the date of
grant and as to an additional 6.25% of the option shares each three month
interval thereafter.
8
<PAGE> 11
(2) The number of shares of Company common stock covered by the options granted
to the named individual during the last completed fiscal year of the Company
equals the percentage set forth below of the total number of shares of the
Company common stock covered by all options granted by the Company to
employees of the Company during such year.
(3) The exercise price of each option is the market price of the common stock of
the Company on the date of grant.
(4) These columns present hypothetical future values of the stock obtainable
upon exercise of the options net of the option's exercise price, assuming
that the market price of the Company's common stock appreciates at a five
and ten percent compound annual rate over the ten year term of the options.
The five and ten percent rates of stock price appreciation are presented as
examples pursuant to the Proxy Rules and do not necessarily reflect
management's assessment of the Company's future stock price performance. The
potential realizable values presented are not intended to indicate the value
of the options.
OPTION EXERCISES IN FISCAL 1996 AND YEAR-END OPTION VALUES
The following table sets forth information concerning stock options which
were exercised during, or held at the end of, fiscal 1996 by the officers named
in the Summary Compensation Table:
OPTION EXERCISES AND YEAR-END VALUE TABLE
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT FISCAL YEAR END FISCAL YEAR END(1)
SHARES ACQUIRED VALUE ----------------------------- -----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul F. Folino........ 31,500 $678,712 75,625 89,375 $ 671,284 $ 465,391
Walter J. McBride..... 21,250 329,188 3,124 35,626 18,199 177,876
Michael A. Peitler.... 6,250 127,366 11,875 34,375 105,241 167,391
Ronald P. Quagliara... -0- -- 6,250 18,750 -0- -0-
Charles N. Goff....... -0- -- 9,375 15,625 80,691 32,109
</TABLE>
- ---------------
(1) Valued at $14.625 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In fiscal 1996, Gary E. Liebl and Don M. Lyle served as members of the
Compensation Committee of the Company. After the Meeting, it is anticipated that
the members of the Compensation Committee of the Company will be Messrs. Cox and
Lyle, neither of whom is now, nor was at any time during the last completed
fiscal year of the Company, an officer or employee of the Company. During fiscal
1996, no executive officer of the Company served as a member of the Compensation
Committee (or its equivalent) or as a director of any entity whose executive
officers served on either the Compensation Committee or the Board of Directors
of the Company.
REPORT OF EXECUTIVE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors makes this report on
executive compensation pursuant to Item 402 of Regulation S-K. 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 (the "Exchange Act"), that might incorporate future filings,
including this Proxy Statement, in whole or in part, this report and the graph
which follows this report shall not be incorporated by reference into any such
filings, and such information shall be entitled to the benefits provided in Item
402(a)(9).
9
<PAGE> 12
The Compensation Committee reviews the performance of the executive
officers of the Company, makes recommendations to the Board of Directors as to
the compensation of the executive officers of the Company and its subsidiaries,
reviews the compensation programs for other key employees, including salary and
cash bonus levels, reviews and approves certain employee benefit policies and
programs, and reviews and makes recommendations to management with respect to
executive recruitment. In addition, the Compensation Committee administers the
Emulex Corporation Employee Stock Option Plan ("Employee Plan"), including
review and approval of grants of options under the plan to executive officers
and other key employees of the Company and its subsidiaries.
Compensation Policies and Philosophy. The Company's executive compensation
policies are designed to attract, retain and reward executive officers who
contribute to the Company's success, to provide economic incentives for
executive officers to achieve the Company's business objectives by linking the
executive officers' compensation to the performance of the Company, to
strengthen the relationship between executive pay and stockholder value and to
reward individual performance. The Company uses a combination of base salary,
cash bonuses and stock awards to achieve the aforementioned objectives.
The Compensation Committee considers a number of factors which include the
level and types of compensation paid to executive officers in similar positions
by comparable companies. In addition, the Compensation Committee evaluates
corporate performance by looking at factors such as performance relative to
competitors, performance relative to business conditions, and the success of the
Company in meeting its financial objectives. The Compensation Committee also
reviews the individual performance of each executive officer, including a review
of the ability of a given executive to meet individual performance objectives,
demonstration of job knowledge and skills, and the ability to work with others
toward the achievement of the Company's goals.
Components of Compensation. Executive officer salaries are established in
relation to a range of salaries for comparable positions among a peer group of
other computer companies of comparable size and complexity. The Company seeks to
pay its executive officers salaries that are commensurate with their
qualifications, duties and responsibilities and that are competitive in the
marketplace. In general, the Company attempts to set executive compensation
between the 50th and 75th percentile of salaries paid to executives of the
Company's peer group of corporations. In making its annual salary
recommendations, the Compensation Committee looks at the Company's financial
position and performance, the contribution of the individual executive officers
during the prior fiscal year in helping to meet the Company's financial and
business objectives, and the executive officers' performance of their individual
responsibilities.
Executive officer cash bonuses are used to provide executive officers with
financial incentives to meet performance targets of the Company. Performance
targets and bonus recommendations for executives, other than principal executive
officers, are proposed by the management of the Company based on the Company's
annual operating plan, reviewed and, when appropriate, revised by the
Compensation Committee and approved by the Board of Directors. Personal goals
and bonus recommendations for the principal executive officers are recommended
by the Compensation Committee based on the Company's achievement in comparison
to the annual operating plan, and approved by the Board.
The Compensation Committee believes that equity ownership by executive
officers provides incentives to build stockholder value and align the interests
of executive officers with the stockholders. Upon hiring executive officers, the
Compensation Committee typically recommends stock option grants to the officers
under the Employee Plan, subject to applicable vesting periods. Thereafter, the
Compensation Committee considers awarding additional grants, usually on an
annual basis, under the Employee Plan. The Compensation Committee believes that
these additional annual grants provide incentives for executive officers to
remain with the Company. Options are granted at the current market price for the
Company's common stock and, consequently, have value only if the price of the
Company's common stock increases over the exercise price. The size of the
initial grant is usually based upon factors such as comparable equity
compensation offered by other computer companies, the seniority of the executive
officer and the contribution that the executive officer is expected to make to
the Company. In determining the size of the periodic grants, the Compensation
10
<PAGE> 13
Committee considers prior grants to the executive officer, the executive's
performance during the current fiscal year and his or her expected contributions
during the succeeding fiscal year.
Compensation of the Principal Executive Officer. The Compensation Committee
reviews the performance of the principal executive officer, as well as other
executive officers of the Company and its subsidiaries, annually. Based upon the
Company having met and exceeded the goals that were set for financial
performance for fiscal year 1995 and in consideration and review of other
computer companies of similar size and complexity and the current pay practices
for their industry, in September 1995 the Compensation Committee awarded Mr.
Folino an increase in his annual base salary to $275,000, an increase in his
bonus base to $110,000 and a stock option grant of 30,000 shares under the
Employee Plan at an exercise price of $21.75.
Respectfully submitted,
Compensation Committee:
Gary E. Liebl, Chairman
Don M. Lyle
11
<PAGE> 14
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The graph below compares the cumulative total stockholder return on the
Company's common stock with the cumulative total return on the Standard & Poor's
500 Index and the Hambrecht & Quist Computer Hardware Sector Index for the
period of five fiscal years commencing July 1, 1991 and ended June 30, 1996.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
EMULEX CORPORATION COMMON STOCK, S&P 500 INDEX AND
HAMBRECHT & QUIST COMPUTER HARDWARE SECTOR INDEX
<TABLE>
<CAPTION>
H&Q COMPUTER
MEASUREMENT PERIOD EMULEX COR- HARDWARE
(FISCAL YEAR COVERED) PORATION SECTOR S&P 500
<S> <C> <C> <C>
JUN-91 100.00 100.00 100.00
SEP-91 85.00 107.68 105.35
DEC-91 70.00 100.49 114.19
MAR-92 81.67 105.36 111.30
JUN-92 90.00 106.16 113.41
SEP-92 76.67 95.01 116.99
DEC-92 131.67 86.90 122.88
MAR-93 91.67 86.85 128.25
JUN-93 90.00 84.62 128.88
SEP-93 90.00 74.88 132.21
DEC-93 83.33 91.11 135.27
MAR-94 27.50 96.18 130.15
JUN-94 44.17 83.07 130.69
SEP-94 59.17 99.00 137.08
DEC-94 90.00 113.17 137.06
MAR-95 125.00 116.55 150.41
JUN-95 160.83 145.92 164.77
SEP-95 88.33 157.65 177.86
DEC-95 68.33 162.91 188.57
MAR-96 95.00 159.84 198.69
JUN-96 97.50 171.71 207.61
</TABLE>
- ---------------
* Assumes that the value of the investment in the Company's common stock and
each index was $100 on July 1, 1991. For comparative purposes, effective March
1994, the graph no longer reflects the value of QLogic, shares of which were
distributed to Emulex stockholders in February 1994.
12
<PAGE> 15
AMENDMENT OF THE EMPLOYEE STOCK OPTION PLAN
In 1980, the Board of Directors of the Company adopted the Emulex
Corporation Employee Stock Option Plan (the "Employee Plan"). Under the Employee
Plan, as currently in effect, a maximum of 2,380,000 shares of common stock of
the Company may be issued pursuant to exercise of options granted under the
Plan. As of October 7, 1996, a total of 1,588,861 shares had been issued under
the Employee Plan as a result of exercise of previously granted options; options
were outstanding in respect of an aggregate of 699,010 shares; and an aggregate
of 92,129 shares were available for future grants of options under the Employee
Plan.
In August 1996, the Board of Directors amended the Employee Plan, subject
to approval of the stockholders, to increase the number of shares covered by the
plan by 200,000 shares. The Employee Plan is intended to provide additional
compensation and incentives to eligible individuals whose present and potential
contributions are important to the continued success of the Company, to afford
such persons an opportunity to acquire a proprietary interest in the Company and
to enable the Company to continue to enlist and retain the best available talent
for the successful conduct of its business. The amendment was adopted and is
recommended for approval by the Company's stockholders because the Board
believes that option grants and the stock issuances under the Employee Plan play
an important role in the Company's efforts to attract employees of outstanding
ability and to reward employees for outstanding performance. In the event the
amendment to the Employee Plan is not approved by the stockholders, the Board
believes that the Company's inability to grant additional options under the
Employee Plan will adversely impact the Company's future hiring, promotion and
operating plans.
A copy of the Employee Plan, as amended by the Board subject to stockholder
approval, is set forth in full as Appendix A to this Proxy Statement. Following
is a summary of the principal provisions of the Employee Plan, as so amended:
Purpose. The purpose of the Employee Plan will continue to be to further
the growth and development of the Company and its subsidiaries by providing,
through an equity interest in the Company, an incentive to officers and other
key employees who are in a position to contribute materially to the prosperity
of the Company, to increase such persons' interests in the Company's welfare, to
encourage them to continue their services to the Company or its subsidiaries and
to attract individuals of outstanding ability to enter the employment of the
Company or its subsidiaries.
Types of Options. Two types of options may be granted under the Employee
Plan: options intended to qualify as incentive stock options under Section 422
of the Code; and non-qualified stock options not specifically authorized or
qualified for favorable federal income tax consequences.
Administration. The Employee Plan is administered by the Board of
Directors, or in the discretion of the Board, by a Committee ("Committee")
consisting of two or more Directors of the Company where each such Director is a
"nonemployee director" (within the meaning of amended Rule 16b-3 under the
Securities Exchange Act of 1934). The Employee Plan administrator shall have
exclusive authority to determine employees to whom options will be granted, the
timing and manner of the grant of options, the exercise price, the number of
shares covered by and all of the terms of options, the duration and purpose of
leaves of absence which may be granted to optionees without constituting
termination of employment for purposes of the Employee Plan and all other
determinations necessary or advisable for administration of the Employee Plan.
Members of the Committee are appointed by and serve at the pleasure of the Board
and may be removed by the Board at its discretion. The Company's stockholders
may elect to remove one or all of the members of the Board or of the Committee
by voting for the removal of such members as Directors of the Company.
Eligibility. Any employee of the Company or any of its subsidiaries who
does not own stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or any of its parent or subsidiary
corporations is eligible to receive an option under the Employee Plan.
Shares Subject to the Employee Plan. The aggregate number of shares of
common stock of the Company which may be issued pursuant to exercise of options
granted under the Employee Plan, including shares which have previously been
issued, shall not exceed 2,580,000 shares (subject to adjustment pursuant
13
<PAGE> 16
to the "anti-dilution" provisions of the Employee Plan). This represents an
increase of 200,000 shares in the aggregate number of shares covered by the
Employee Plan prior to amendment. Since an aggregate of 1,588,861 shares have
already been issued as a result of exercise of options previously granted under
the Employee Plan, this amendment would allow the Company to issue in the future
a maximum of 991,139 shares upon exercise of options which are now outstanding
or which may be granted in the future. Subject to the provisions of the Employee
Plan, the Board or the Committee may determine, in its sole discretion, the
number of shares of common stock of the Company with respect to which incentive
stock options and non-qualified stock options may be granted.
Grant, Term and Conditions of Options. The purchase price for the shares
subject to any option granted under the Employee Plan shall not be less than
100% of the fair market value of the shares of common stock of the Company on
the date the option is granted.
The purchase price for any shares purchased pursuant to exercise of an
option granted under the Employee Plan must be paid in full upon exercise of the
option in cash or, at the discretion of the Board or Committee, upon such terms
and conditions as it may approve, by transferring to the Company for redemption
shares of common stock at their fair market value. Notwithstanding the
foregoing, the Company may extend and maintain, or arrange for the extension and
maintenance of, credit to any optionee to finance his or her purchase of shares
pursuant to exercise of an option on such terms as may be approved by the Board
or Committee, subject to applicable regulations of the Federal Reserve Board and
any other laws or regulations in effect at the time such credit is extended.
(Transfer to the Company for redemption of shares of common stock at their fair
market value as payment for the shares acquired upon exercise of the option may
enable employees to use a technique known as "pyramiding," if the fair market
value of the shares acquired upon exercise of the option exceeds the price at
which the option may be exercised. Pyramiding of stock options, in brief, works
as follows: An optionee may exercise a limited portion of his or her option for
cash to acquire a few shares of stock. Because the value of the stock the
optionee acquires exceeds the exercise price of the option, he or she may
immediately exercise his or her option again by exchanging the shares acquired
by the first exercise to acquire a greater number of shares. This process may be
repeated until the optionee has fully exercised his or her option. The optionee
does not keep the shares he or she exchanges upon each exercise of the option.
Pyramiding may result in an optionee fully exercising his or her option at any
one time by this series of stock exchanges with a nominal initial cash payment.)
The Company has not previously permitted any optionee to transfer shares of
common stock of the Company owned by the optionee to the Company as any part of
the purchase price of shares purchased under an option granted under the
Employee Plan.
No option shall be exercisable during the lifetime of an optionee by any
other person. The Board or the Committee has the power to set the time(s) within
which each option shall be exercisable and to accelerate the time(s) of
exercise. Unless otherwise provided by the Board or the Committee, each option
shall become exercisable on a cumulative basis as to 25% of the total number of
shares covered by the option at any time after one year from the date the option
is granted and as to an additional 6 1/4% after the end of each consecutive
calendar quarter thereafter.
No option shall be exercisable after the earliest of the following: the
expiration of ten years after the date the option is granted; three months after
the date the optionee's employment with the Company and its subsidiaries
terminates if termination is for any reason other than permanent disability,
death, or cause; the date the optionee's employment terminates if termination is
for cause; or one year after the date the optionee's employment terminates if
termination is a result of death or permanent disability.
An incentive stock option granted under the Employee Plan on or before
December 31, 1986 may not be exercised while there is outstanding any previously
granted incentive stock option. This limitation does not apply to incentive
stock options granted after 1986.
With respect to incentive stock options granted before 1987, the aggregate
fair market value (determined as of the time the option is granted) of stock for
which any employee may be granted incentive stock options in any calendar year
shall not exceed $100,000 plus an additional amount (which can never exceed
$150,000) determined by adding for each calendar year ended prior to the year of
grant and after December 31, 1980 (but never more than the three prior calendar
years) one-half of the difference between $100,000 and the
14
<PAGE> 17
aggregate fair market value (as of the date of the original grant) of the stock
for which an optionee was granted incentive stock options in such calendar year.
With respect to incentive stock options granted after 1986, the aggregate fair
market value (determined as of the time the option is granted) of stock with
respect to which incentive stock options are exercisable by any employee for the
first time during any calendar year shall not exceed $100,000.
Within certain limitations, the Board or Committee has the power to modify,
extend, or renew outstanding options granted under the Employee Plan, accept the
surrender of outstanding options, and authorize the granting of new options in
substitution therefor.
Mergers, Reorganizations and Consolidations. In the event of a liquidation
of the Company or a merger, reorganization or consolidation of the Company with
any other corporation in which the Company is not the surviving corporation or
the Company becomes a subsidiary of another corporation, any unexercised options
previously granted under the Employee Plan shall be deemed cancelled unless the
surviving corporation elects to assume the options or to use substitute options.
However, unless the surviving corporation elects to assume the options or to use
substitute options, the optionee shall have the right, exercisable during a ten
day period ending on the fifth day prior to such liquidation, merger or
consolidation, to fully exercise the optionee's option in whole or in part
without regard to any installment exercise provisions otherwise provided in the
Employee Plan.
Employee Plan Amendments. The Employee Plan may be terminated or amended by
the Board as it shall deem advisable. Without the authorization and approval of
the stockholders, however, the Board may not make any amendments which would (i)
increase the total number of shares covered by the Employee Plan, (ii) change
the class of persons eligible to participate, or (iii) extend the term of the
Employee Plan beyond ten years from the date of adoption.
Term of Employee Plan. Unless sooner terminated by the Board in its sole
discretion, the Employee Plan will expire on September 30, 2000.
FEDERAL INCOME TAX CONSEQUENCES
Both non-qualified stock options and incentive stock options may be granted
under the Employee Plan. The federal income tax consequences to the Company and
to any person granted an option under the Employee Plan, under the existing
applicable provisions of the Code and the regulations thereunder, are
substantially as set forth below.
Non-Qualified Options. Under current federal income tax law, the grant of a
non-qualified option under the Plan will have no federal income tax consequences
to the Company or the optionee. Generally, upon exercise of a non-qualified
stock option granted under the Employee Plan, the excess of the fair market
value of the stock at the date of exercise over the option price (the "Spread")
is taxable to the optionee as ordinary income. All such amounts taxable to an
employee are deductible by the Company as compensation expense. The deduction
will be allowed for the taxable year of the Company which includes the end of
the taxable year in which the optionee includes an amount in income.
Code Section 162(m) generally denies a tax deduction to any publicly held
corporation for compensation that exceeds one million dollars paid to certain
senior executives in a taxable year, subject to an exception for "performance
based compensation" as defined in the Code and subject to certain transition
provisions. Section 162(m) could limit the deductibility of compensation related
to the exercise of options granted under the Employee Plan.
Generally, the shares received on exercise of an option under the Employee
Plan are not subject to restrictions on transfer or risks of forfeiture and,
therefore, the optionee will recognize income on the date of exercise of a
non-qualified stock option. However, if the optionee is subject to Section 16(b)
of the Exchange Act, the Section 16(b) restriction will be considered a
substantial risk of forfeiture for tax purposes. Under current law, employees
who are either directors or officers of the Company will be subject to
restrictions under Section 16(b) of the Exchange Act during their term of
service and for up to six months after termination of such service. SEC Rule
16b-3 provides an exemption from the restrictions of Section 16(b) for the grant
of
15
<PAGE> 18
derivative securities, such as stock options, under qualifying plans. Because
the Employee Plan satisfies the requirements for exemption under SEC Rule 16b-3,
the grant of options will not be considered a purchase and the exercise of the
options to acquire the underlying shares of the Company Common Stock will not be
considered a purchase or a sale. Thus, ordinary income will be recognized and
the Spread will be measured on the date of exercise.
The taxable income resulting from the exercise of a non-qualified stock
option will constitute wages subject to withholding and the Company will be
required to make whatever arrangements are necessary to ensure that funds
equaling the amount of tax required to be withheld are available for payment,
including the deduction of required withholding amounts from the optionee's
other compensation and requiring payment of withholding amounts as part of the
exercise price. The tax basis for the Company Common Stock acquired is the
option price plus the taxable income recognized. An optionee will recognize gain
or loss on the subsequent sale of shares acquired upon exercise of a
non-qualified stock option in an amount equal to the difference between the
amount realized and the tax basis of such shares. Such gain or loss will be
long-term or short-term capital gain or loss, depending upon whether the shares
have been held for more than one year.
Incentive Stock Options. There will be no federal income tax consequences
to the Company or the employee as a result of the grant of an incentive stock
option. The optionee also will not recognize income when the incentive stock
option is exercised (subject to the alternative minimum tax rules discussed
below). Generally, the Company receives no deduction at the time of exercise.
In the event of a disposition of shares acquired upon exercise of an
incentive stock option, the tax consequences depend upon how long the employee
has held the shares. If the employee does not dispose of the shares within two
years after the incentive stock option was granted, or within one year after the
incentive stock option was exercised and shares were purchased, then the
employee must recognize only a long-term capital gain or loss. The Company is
not entitled to any deduction under these circumstances.
If the optionee fails to satisfy either of the foregoing holding periods,
then he or she must recognize ordinary income in the year of disposition
(referred to as a "disqualifying disposition"). The amount of such ordinary
income generally is determined under the rules applicable to non-qualified
options (see above). However, such ordinary income will in no event exceed the
amount of the gain realized on the sale, provided that the disposition involves
an arm's-length sale or exchange with an unrelated party. Any gain in excess of
the amount taxed as ordinary income will be treated as capital gain. The
Company, in the year of the disqualifying disposition, is entitled to a
deduction equal to the amount of ordinary income recognized by the optionee.
The Spread under an incentive stock option is treated as an adjustment in
computing alternative minimum taxable income ("AMTI") for the year of exercise.
If a taxpayer's AMTI exceeds an exemption amount equal to $45,000 in the case of
a married individual filing a joint return ($33,750 in the case of a single
taxpayer), then the alternative minimum tax equals 26% of the first $175,000 of
the excess and 28% of the taxable excess that exceeds $175,000, reduced by the
amount of the regular federal income tax paid for the same taxable year. The
exemption amount is subject to reduction in an amount equal to 25% of the amount
by which AMTI exceeds $150,000 in the case of a married individual filing a
joint return ($112,500 in the case of a single taxpayer). A subsequent
disqualifying disposition of shares acquired upon exercise of an incentive stock
option will eliminate the AMTI adjustment if the disposition occurs in the same
taxable year as the exercise. A disqualifying disposition in a subsequent
taxable year will not affect the alternative minimum tax computation in the
earlier year.
Payment of Option Exercise Price in Shares. To the extent an optionee pays
all or part of the option exercise price of a non-qualified stock option by
tendering shares of Common Stock owned by the optionee, the tax consequences
described above apply except that the number of shares of Common Stock received
upon such exercise which is equal to the number of shares surrendered in payment
of the option price will have the same tax basis and holding periods as the
shares surrendered. The additional shares of Common Stock received upon such
exercise will have a tax basis equal to the amount of ordinary income recognized
on such exercise and a holding period which commences on the day following the
date of recognition of such income. Under proposed Treasury regulations, if an
optionee exercises an incentive stock option by tendering shares of
16
<PAGE> 19
Company Common Stock previously acquired by the exercise of an incentive stock
option that have not satisfied statutory holding period requirements, a
disqualifying disposition will occur and the optionee will recognize income and
be subject to other basis allocation and holding period requirements.
OPTIONS OUTSTANDING UNDER THE EMPLOYEE PLAN
As of October 7, 1996, a total of 1,588,861 shares had been issued under
the Employee Plan as a result of previously granted awards. As of that date,
options were outstanding under the Employee Plan held by approximately 249
persons to purchase an aggregate of 699,010 shares of Company common stock at an
average exercise price of $12.25 per share, and 92,129 shares were available for
future grants of options under the Employee Plan. Total options granted to date
under the Employee Plan as of October 7, 1996, were as follows: Paul F.
Folino -- 205,000 shares; Walter J. McBride -- 60,000 shares; Michael A.
Peitler -- 60,000 shares; Ronald P. Quagliara -- 25,000 shares; Charles N.
Goff -- 36,249 shares; all current executive officers as a group (seven
persons) -- 446,499 shares; all current employees as a group (excluding
executive officers)(approximately 194 persons) -- 396,012 shares. Directors or
nominees for director who are not employees of the Company have not been granted
any options under the Employee Plan. In addition, no associate of any director,
nominee for director or executive officer has been granted any options under the
Employee Plan.
The market value of the Company's common stock on October 7, 1996 was
$16.625 per share.
REASONS FOR AMENDMENT OF THE EMPLOYEE PLAN
The Board of Directors believes that amendment of the Employee Plan is
necessary because option grants and the stock issuances under the Employee Plan
play an important role in the Company's efforts to attract employees of
outstanding ability and to reward employees for outstanding performance.
VOTE REQUIRED FOR APPROVAL OF AMENDMENT OF THE EMPLOYEE PLAN
Approval of the amendment of the Employee Plan requires the affirmative
vote of the holders of a majority of the shares of common stock of the Company
present, or represented, and entitled to vote at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF AMENDMENT OF THE
EMPLOYEE PLAN.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of KPMG Peat Marwick LLP serves the Company as its
independent public accountants at the direction of the Board of Directors of the
Company. One or more representatives of KPMG Peat Marwick LLP are expected to be
present at the Meeting and will have an opportunity to make a statement, if they
desire to do so, and to be available to respond to appropriate questions.
The Board of Directors recommends a vote "FOR" the ratification of the
selection of KPMG Peat Marwick LLP as the independent public accountants for the
Company for fiscal year 1997. This matter is not required to be submitted for
stockholder approval, but the Board of Directors has elected to seek
ratification of its selection of the independent public accountants by the
affirmative vote of a majority of the shares represented and voting at the
Meeting.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Section 16 of the Exchange Act requires the Company's directors and
executive officers and persons who own more than 10% of a registered class of
the Company's equity securities to file various reports with the Securities and
Exchange Commission and the National Association of Securities Dealers
concerning their holdings of, and transactions in, securities of the Company.
Copies of these filings must be furnished to the Company.
17
<PAGE> 20
Based on a review of the copies of such forms furnished to the Company and
written representations from the Company's executive officers and directors, the
Company believes that during the 1996 fiscal year its officers, directors and
greater than 10% stockholders complied with all applicable Section 16(a) filing
requirements.
STOCKHOLDER PROPOSALS
Stockholders who wish to present proposals for action at the 1997 Annual
Meeting should submit their proposals in writing to the Secretary of the Company
at the address of the Company set forth on the first page of this Proxy
Statement. Proposals must be received by the Secretary no later than April 15,
1997, for inclusion in next year's proxy statement and proxy card.
ANNUAL REPORT TO STOCKHOLDERS
The Annual Report to Stockholders of the Company for the fiscal year ended
June 30, 1996, including audited consolidated financial statements, has been
mailed to the stockholders concurrently herewith, but such report is not
incorporated in this Proxy Statement and is not deemed to be a part of the proxy
solicitation material.
OTHER MATTERS
The Management of the Company does not know of any other matters which are
to be presented for action at the Meeting. Should any other matters come before
the Meeting or any adjournment thereof, the persons named in the enclosed proxy
will have the discretionary authority to vote all proxies received with respect
to such matters in accordance with their collective judgment.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K, as filed with the
Securities and Exchange Commission (exclusive of Exhibits), will be furnished
without charge to any person from whom the accompanying proxy is solicited upon
written request to Investor Relations, Emulex Corporation, 3535 Harbor
Boulevard, Costa Mesa, California 92626. If Exhibit copies are requested, a
copying charge of $.20 per page will be made.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Walter J. McBride
Walter J. McBride
Senior Vice President, Chief Financial
Officer,
Secretary and Treasurer
Costa Mesa, California
October 21, 1996
STOCKHOLDERS ARE URGED TO SPECIFY THEIR CHOICES AND TO DATE, SIGN, AND
RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL
AND YOUR COOPERATION WILL BE APPRECIATED.
18
<PAGE> 21
APPENDIX A
EMULEX CORPORATION
EMPLOYEE STOCK OPTION PLAN
1. PURPOSE. The purpose of this Emulex Corporation Employee Stock Option
Plan ("Plan") is to further the growth and development of Emulex Corporation
("Company") and its subsidiaries by providing, through ownership of stock of the
Company, an incentive to officers and other key employees who are in a position
to contribute materially to the prosperity of the Company, to increase such
persons' interests in the Company's welfare, to encourage them to continue their
services to the Company or its subsidiaries, and to attract individuals of
outstanding ability to enter the employment of the Company or its subsidiaries.
2. INCENTIVE AND NON-QUALIFIED STOCK OPTIONS. Two types of options
(referred to herein as "options" without distinction between such two types) may
be granted under the Plan: Options intended to qualify as incentive stock
options ("incentive stock options") under Section 422 of the Internal Revenue
Code of 1986, as amended, and any successor statutes ("Code"); and other options
not specifically authorized or qualified for favorable income tax treatment by
the Code ("non-qualified stock options").
3. ADMINISTRATION.
3.1 Administration by Board. Subject to Section 3.2, the Plan may be
administered by the Board of Directors of the Company (the "Board"). Subject to
the provisions of the Plan, the Board shall have authority to construe and
interpret the Plan, to promulgate, amend, and rescind rules and regulations
relating to its administration, from time to time to select from among the
eligible employees (as determined pursuant to Section 4) of the Company and its
subsidiaries those employees to whom options will be granted, to determine the
timing and manner of the grant of the options, to determine the exercise price,
the number of shares covered by and all of the terms of the options, to
determine the duration and purpose of leaves of absence which may be granted to
optionees without constituting termination of their employment for purposes of
the Plan, and to make all of the determinations necessary or advisable for
administration of the Plan. The interpretation and construction by the Board of
any provisions of the Plan, or of any agreement issued and executed under the
Plan, shall be final and binding upon all parties. No member of the Board shall
be liable for any action or determination undertaken or made in good faith with
respect to the Plan or any agreement executed pursuant to the Plan.
3.2 Administration by Committee. The Board may, in its sole discretion,
delegate any or all of its administrative duties to a committee (the
"Committee") of not fewer than two (2) members of the Board, all of the members
of which Committee shall be persons who, in the opinion of counsel to the
Company, are "non-employee directors" as defined in Rule 16b-3(b)(3)(i)
promulgated by the Securities and Exchange Commission, as amended and in effect
on and after August 15, 1996, to be appointed by and serve at the pleasure of
the Board. From time to time, the Board may increase or decrease (to not less
than two members) the size of the Committee, and add additional members to, or
remove members from, the Committee. The Committee shall act pursuant to a
majority vote, or the written consent of a majority of its members, and minutes
shall be kept of all of its meetings and copies thereof shall be provided to the
Board. Subject to the provisions of the Plan and the directors of the Board, the
Committee may establish and follow such rules and regulations for the conduct of
its business as it may deem advisable. No member of the Committee shall be
liable for any action or determination undertaken or made in good faith with
respect to the Plan or any agreement executed pursuant to the Plan.
4. ELIGIBILITY. Any employee of the Company or any of its subsidiaries who
does not own stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or any of its parent or subsidiary
corporations shall be eligible to receive an option under the Plan. A director
or employee may receive more than one option under the Plan. No director who is
not also an employee shall be eligible to receive an option under the Plan.
A-1
<PAGE> 22
5. SHARES SUBJECT TO OPTIONS. The stock available for grant of options
under the Plan shall be shares of the Company's authorized but unissued, or
reacquired, common stock. The aggregate number of shares which may be issued
pursuant to exercise of options granted under the Plan (including shares issued
from the date of adoption of the Plan) shall not exceed 2,580,000 shares of
common stock (subject to adjustment as provided in Section 6.14). In the event
that any outstanding option under the Plan for any reason expires or is
terminated, the shares of common stock allocable to the unexercised portion of
the option shall again be available for options under the Plan as if no option
had been granted with respect to such shares.
6. TERMS AND CONDITIONS OF OPTIONS. Options granted under the Plan shall be
evidenced by agreements (which need not be identical) in such form and
containing such provisions which are consistent with the Plan as the Board or
Committee shall from time to time approve. Each agreement shall specify whether
the option granted thereby is an incentive stock option or a non-qualified stock
option. Such agreements may incorporate all or any of the terms hereof by
reference and shall comply with and be subject to the following terms and
conditions:
6.1 Number of Shares Subject to Option. Each option agreement shall
specify the number of shares subject to the option.
6.2 Option Price. The purchase price for the shares subject to any
option shall not be less than 100% of the fair market value of the shares of
common stock of the Company on the date the option is granted. For purposes of
the Plan, the "fair market value" of any share of common stock of the Company at
any date shall be (a) if the common stock is listed on an established stock
exchange or exchanges, the last reported sale price per share on such date on
the principal exchange on which it is traded, or if no sale was made on such
date on such principal exchange, at the closing reported bid price on such date
on such exchange, or (b) if the common stock is not then listed on an exchange,
the last reported sale price per share on such date reported by NASDAQ, or if
sales are not reported by NASDAQ or no sale was made on such date, the average
of the closing bid and asked prices per share for the common stock in the
over-the-counter market as quoted on NASDAQ on such date, or (c) if the common
stock is not then listed on an exchange or quoted on NASDAQ, an amount
determined in good faith by the Board or the Committee.
6.3 Medium and Time of Payment. The purchase price for any shares
purchased pursuant to exercise of an option granted under the Plan shall be paid
in full upon exercise of the option in cash, or by check, or, at the discretion
of the Board or the Committee, upon such terms and conditions as the Board or
the Committee shall approve, by transferring to the Company for redemption
shares of common stock of the Company at their fair market value (determined in
the manner provided in Section 6.2 as of the date provided in Section 6.5).
Shares of common stock transferred to the Company upon exercise of an option
shall not increase the number of shares available for issuance under the Plan.
Notwithstanding the foregoing, the Company may extend and maintain, or arrange
for the extension and maintenance of, credit to any optionee to finance the
optionee's purchase of shares pursuant to exercise of any option, on such terms
as may be approved by the Board or the Committee, subject to applicable
regulations of the Federal Reserve Board and any other laws or regulations in
effect at the time such credit is extended.
6.4 Term of Option. No option granted to an employee (including a
director who is an employee) shall be exercisable after the expiration of the
earliest of (i) ten years after the date the option is granted, (ii) three
months after the date the optionee's employment with the Company and its
subsidiaries terminates if such termination is for any reason other than
permanent disability, death, or cause, (iii) the date the optionee's employment
with the Company and its subsidiaries terminates if such termination is for
cause, as determined by the Board or by the Committee, in its sole discretion,
or (iv) one year after the date the optionee's employment with the Company and
its subsidiaries terminates if such termination is a result of death or
permanent disability, or death or permanent disability results within not more
than three months of the date on which the optionee ceases to be an employee;
provided, however, that the option agreement for any option may provide for
shorter periods in each of the foregoing instances. For the purposes of this
Section 6.4 (a), "permanent disability" shall mean a disability of the type
defined in Section 22(c) (3) of the Code.
6.5 Exercise of Option. No option shall be exercisable during the
lifetime of an optionee by any person other than the optionee. The Board or the
Committee shall have the power to set the time or times
A-2
<PAGE> 23
within which each option shall be exercisable and to accelerate the time or
times of exercise. Unless otherwise provided by the Board or the Committee, each
option granted under the Plan shall become exercisable on a cumulative basis as
to 25% of the total number of shares covered thereby at any time after one year
from the date the option is granted and an additional 6 1/4% of such total
number of shares at any time after the end of each consecutive calendar quarter
thereafter until the option has become exercisable as to all of such total
number of shares. To the extent that an optionee has the right to exercise an
option and purchase shares pursuant thereto, the option may be exercised from
time to time by written notice to the Company, stating the number of shares
being purchased and accompanied by payment in full of the purchase price for
such shares. If shares of common stock of the Company are used in part or full
payment for the shares to be acquired upon exercise of the option, such shares
shall be valued for the purpose of such exchange as of the date of exercise of
the option in accordance with the provisions of Sections 6.2 and 6.3. Any
certificate(s) for shares of outstanding common stock of the Company used to pay
the purchase price shall be accompanied by stock power(s) duly endorsed in blank
by the registered holder of the certificate(s) (with the signature thereon
guaranteed). In the event the certificate(s) tendered by the optionee in such
payment cover more shares than are required for such payment, the certificate(s)
shall also be accompanied by instructions from the optionee to the Company's
transfer agent with respect to disposition of the balance of the shares covered
thereby.
6.6 No Transfer of Option. No option shall be transferable by an
optionee otherwise than by will or the laws of descent and distribution.
6.7 Prior Outstanding Incentive Stock Options. No incentive stock
option granted under the Plan prior to 1987 shall be exercisable to any extent
at any time while there is outstanding any incentive stock option which was
granted prior to the granting of such option to the optionee by the Company or
any subsidiary or parent corporation of the Company or any predecessor
corporation of the Company or any subsidiary or parent corporation of the
Company. For the purpose of this Section 6.7, an option shall be outstanding
until such time as the option is exercised in full or expires by reason of lapse
of time.
6.8 Limit on Incentive Stock Options.
(a) The aggregate fair market value (determined as of the time the
option is granted) of the stock for which any employee may be granted
incentive stock options in any calendar year commencing after December 31,
1980 and continuing before January 1, 1987 (under all option plans of the
Company and its parent and subsidiary corporations) shall not exceed
$100,000 plus any unused limit carryover to such year allowed under Section
422(c)(4) of the Code.
(b) The aggregate fair market value (determined at the time the option
is granted) of the stock with respect to which incentive stock options
granted after December 31, 1986 are exercisable for the first time by an
optionee during any calendar year (under all incentive stock option plans
of the Company and its subsidiaries) shall not exceed $100,000.
6.9 Restriction on Issuance of Shares. The issuance of options and
shares shall be subject to compliance with all of the applicable requirements of
law with respect to the issuance and sale of securities, including, without
limitation, any required qualification under the California Corporate Securities
Law of 1968, as amended.
6.10 Investment Representation. Any optionee may be required, as a
condition of issuance of shares covered by his or her option, to represent that
the shares to be acquired pursuant to exercise of the option will be acquired
for investment and without a view to distribution thereof, and in such case, the
Company may place a legend on the certificate evidencing the shares reflecting
the fact that they were acquired for investment and cannot be sold or
transferred unless registered under the Securities Act of 1933, as amended, or
unless counsel for the Company is satisfied that the circumstances of the
proposed transfer do not require such registration.
6.11 Rights as a Stockholder or Employee. An optionee or transferee of
an option shall have no rights as a stockholder of the Company with respect to
any shares covered by any option until the date of issuance of a share
certificate for such shares. No adjustment shall be made for dividends (ordinary
or extraordinary, whether cash, securities, or other property) or distribution
or other rights for which the record
A-3
<PAGE> 24
date is prior to the date such share certificate is issued, except as provided
in Section 6.14. Nothing in the Plan or in any option agreement shall confer
upon any employee any right to continue in the employ of the Company or any of
its subsidiaries or interfere in any way with any right of the Company or any
subsidiary to terminate the optionee's employment at any time.
6.12 No Fractional Shares. In no event shall the Company be required to
issue fractional shares upon the exercise of an option.
6.13 Exercisability in the Event of Death. In the event of the death of
the optionee while he or she is an employee and/or director of the Company or
any of its subsidiaries or within not more than three months of the date on
which he or she ceased to be an employee and/or director, any option or
unexercised portion thereof granted to the optionee, to the extent exercisable
by him or her on the date of death, may be exercised by the optionee's personal
representatives, heirs, or legatees subject to the provisions of Section 6.4
hereof.
6.14 Recapitalization or Reorganization of Company. Except as otherwise
provided herein, appropriate and proportionate adjustments shall be made in the
number and class of shares subject to the Plan and to the option rights granted
under the Plan, and the exercise price of such option rights, in the event of a
stock dividend (but only on common stock), stock split, reverse stock split,
recapitalization, reorganization, merger, consolidation, separation, or like
change in the capital structure of the Company. In the event of a liquidation of
the Company, or a merger, reorganization, or consolidation of the Company with
any other corporation in which the Company is not the surviving corporation or
the Company becomes a wholly-owned subsidiary of another corporation, any
unexercised options theretofore granted under the Plan shall be deemed canceled
unless the surviving corporation in any such merger, reorganization, or
consolidation elects to assume the options under the Plan or to use substitute
options in place thereof; provided, however, that, notwithstanding the
foregoing, if such options would otherwise be canceled in accordance with the
foregoing, the optionee shall have the right, exercisable during a ten-day
period ending on the fifth day prior to such liquidation, merger, or
consolidation, to exercise the optionee's option in whole or in part without
regard to any installment exercise provisions in the optionee's option
agreement. To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Board or the
Committee, the determination of which in that respect shall be final, binding,
and conclusive, provided that each option granted pursuant to the Plan shall not
be adjusted in a manner that causes the option to fail to continue to qualify as
an incentive stock option within the meaning of Section 422 of the Code.
6.15 Modification, Extension, and Renewal of Options. Subject to the
terms and conditions and within the limitations of the Plan, the Board or
Committee may modify, extend, or renew outstanding options granted under the
Plan, accept the surrender of outstanding options (to the extent not theretofore
exercised), and authorize the granting of new options in substitution therefor
(to the extent not theretofore exercised). The Board or Committee shall not,
however, modify any outstanding incentive stock option in any manner which would
cause the option not to qualify as an incentive stock option within the meaning
of Section 422 of the Code. Notwithstanding the foregoing, no modification of an
option shall, without the consent of the optionee, alter or impair any rights of
the optionee under the option.
6.16 Other Provisions. Each option may contain such other terms,
provisions, and conditions not inconsistent with the Plan as may be determined
by the Board or Committee.
7. TERMINATION OR AMENDMENT OF PLAN. The Board may at any time terminate or
amend the Plan; provided that, without approval of the stockholders of the
Company, there shall be, except by operation of the provisions of Section 6.14,
no increase in the total number of shares covered by the Plan, no change in the
class of persons eligible to receive options granted under the Plan or other
material modification of the requirements as to eligibility for participation in
the Plan, no material increase in the benefits accruing to participants under
the Plan, and no extension of the latest date upon which options may be granted;
and provided further that, without the consent of the optionee, no amendment may
adversely affect any then outstanding option or any unexercised portion thereof.
8. INDEMNIFICATION. In addition to such other rights of indemnification as
they may have as members of the Board or the Committee, the members of the Board
or the Committee administering the Plan shall be
A-4
<PAGE> 25
indemnified by the Company against reasonable expenses, including attorney's
fees, actually and necessarily incurred in connection with the defense of any
action, suit, or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan or any option granted thereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any action, suit, or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit, or
proceeding that such member is liable for negligence or misconduct in the
performance of his duties, provided that within 60 days after institution of any
such action, suit, or proceeding, the member shall in writing offer the Company
the opportunity, at its own expense, to handle and defend the same.
9. NON-QUALIFIED STOCK OPTION PLAN. The Plan as set forth herein
constitutes an amendment and restatement of the Company's Non-Qualified Stock
Option Plan which was adopted in November 1980. The Board or the Committee may,
in its discretion, authorize the conversion, to the fullest extent permitted by
law, of non-qualified stock options granted under the Non-Qualified Stock Option
Plan prior to such amendment to incentive stock options under this Plan, as so
amended. Any such options converted to incentive stock options shall be treated
as incentive stock options for all purposes under the Plan; provided, however,
that none of the terms or conditions of any such options, including, but not
limited to, the exercise price, the term of the option, and the time(s) within
which the option may be exercised, shall be altered or amended by reason of such
conversion.
10. STOCKHOLDER APPROVAL AND TERM OF PLAN. The Plan shall not take effect
until approved by the stockholders of the Company. Unless sooner terminated by
the Board in its sole discretion, the Plan will expire on September 30, 2000.
A-5
<PAGE> 26
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3.
Please mark /X/
your votes as
indicated in
this example
1. ELECTION OF DIRECTORS
FOR all nominees WITHHOLD
listed to the right AUTHORITY
(except as marked to vote for all nominees
to the contrary) listed to the right
/ / / /
(INSTRUCTION: To withhold authority to vote for any individual
nominee mark the box next to the nominee's name below):
/ / Fred B. Cox / / Robert H. Goon
/ / Michael P. Downey / / Don M. Lyle
/ / Paul F. Folino
2. AMENDMENT TO EMPLOYEE STOCK
OPTION PLAN
FOR AGAINST ABSTAIN
/ / / / / /
3. RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
FOR AGAINST ABSTAIN
/ / / / / /
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Dated: ___________________________________________, 1996
________________________________________________________
Signature
________________________________________________________
Signature if held jointly
Please sign exactly as name appears hereon. When
shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by
President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
PLEASE READ, SIGN, DATE, AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
EMULEX CORPORATION
YOUR VOTE IS IMPORTANT TO THE COMPANY. PLEASE SIGN AND RETURN YOUR
PROXY BY TEARING OFF THE TOP PORTION OF THE SHEET AND RETURNING IT IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
ATTENTION STOCKHOLDER:
Our records indicate you have not yet exchanged your $.10 par value (Old
Common) certificate(s) of Emulex Corporation for the new $.20 par value common
shares. Stockholders were notified to send in their shares pursuant to the
one-for-two reverse stock split of the Common Stock which was approved by
Emulex stockholders at a Special Meeting of Stockholders held on February 24,
1994.
It is important to exchange your old shares for the new common stock to
avoid experiencing delays should you wish to change the registration or deliver
the shares to a broker.
Please locate your old Emulex certificate(s) and mail them to our agent.
CHASEMELLON SHAREHOLDER SERVICES
Reorganization Department
PO Box 845
Midtown Station
New York, NY 10018
We recommend you mail your certificate by registered mail.
PLEASE DO NOT MAIL YOUR CERTIFICATE(S) WITH YOUR PROXY.
If you have lost your certificate(s) of Old Common shares or have any
questions relating to the exchange of your shares, contact ChaseMellon at
1-800-648-8169.
<PAGE> 27
- --------------------------------------------------------------------------------
PROXY
EMULEX CORPORATION
3535 Harbor Boulevard
Costa Mesa, California 92626
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Fred B. Cox and Robert H. Goon as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them or either of them to represent and to vote as designated on the reverse
side, all the shares of common stock of Emulex Corporation held of record by
the undersigned on October 7, 1996, at the Annual Meeting of Stockholders to be
held on November 21, 1996, or any adjournment thereof.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 28
- --------------------------------------------------------------------------------
THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED IN THE Please mark
MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. your votes /X/
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR as indicated
PROPOSALS 1, 2 AND 3. in this example
1. ELECTION OF DIRECTORS
FOR all nominees WITHHOLD
listed to the right AUTHORITY
(except as marked to vote for
to the contrary) all nominees
listed to the right
/ / / /
(INSTRUCTION: To withhold authority to vote for any individual nominee
mark the box next to the nominee's name below):
/ / Fred B. Cox / / Robert H. Goon
/ / Michael F. Downey / / Don M. Lyle
/ / Paul F. Folino
2. AMENDMENT TO EMPLOYEE STOCK OPTION PLAN
FOR AGAINST ABSTAIN
/ / / / / /
3. RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
FOR AGAINST ABSTAIN
/ / / / / /
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Dated: , 1996
-------------------------
--------------------------------------
Signature
--------------------------------------
Signature if held jointly
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
PLEASE READ, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
EMULEX CORPORATION
YOUR VOTE IS IMPORTANT TO THE COMPANY
PLEASE SIGN AND RETURN YOUR PROXY BY
TEARING OFF THE TOP PORTION OF THE SHEET
AND RETURNING IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE
- --------------------------------------------------------------------------------
<PAGE> 29
PROXY EMULEX CORPORATION
3535 HARBOR BOULEVARD
COSTA MESA, CALIFORNIA 92626
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Fred B. Cox and Robert H. Goon as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them or either of them to represent and to vote as designated on the reverse
side, all the shares of common stock of Emulex Corporation held of record by
the undersigned on October 7, 1996, at the Annual Meeting of Stockholders to be
held on November 21, 1996, or any adjournment thereof.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
