<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_]Preliminary Proxy Statement
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SEAGATE TECHNOLOGY, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Seagate Technology, Inc.
-------------------------------
(Name of person(s) filing proxy statement)
Payment of Filing Fee (Check the appropriate box):
[X]No Fee Required
[_]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
[_]$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:__________________________________(A)
(4) Proposed maximum aggregate value of transaction:________________________
- --------
(A) Set forth the amount on which the filing fee is calculated and state how
it was determined.
[_]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>
SEAGATE TECHNOLOGY, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 30, 1997
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of SEAGATE
TECHNOLOGY, INC. (the "Company"), a Delaware corporation, will be held on
Thursday, October 30, 1997 at 10:00 a.m., local time, at Seascape Resort &
Conference Center, One Seascape Resort Drive, Aptos, California 95003 for the
following purposes:
1. To elect directors to serve for the ensuing year or until their
successors are elected.
2. To approve an amendment to the 1991 Incentive Stock Option Plan to
increase the number of shares of Common Stock reserved for issuance
thereunder by 15,000,000.
3. To ratify the appointment of Ernst & Young LLP as independent auditors
of the Company for the fiscal year ending July 3, 1998.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on September 5, 1997
are entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed Proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if he or she has returned a Proxy.
Sincerely,
Donald L. Waite
Secretary
Scotts Valley, California
September 25, 1997
YOUR VOTE IS IMPORTANT.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING,
YOU ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY
AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE>
SEAGATE TECHNOLOGY, INC.
----------------
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of SEAGATE TECHNOLOGY, INC. (the
"Company") for use at the Annual Meeting of Stockholders to be held Thursday,
October 30, 1997 at 10:00 a.m., local time, or at any adjournment thereof, for
the purposes set forth herein and in the accompanying Notice of Annual Meeting
of Stockholders. The Annual Meeting will be held at Seascape Resort &
Conference Center, One Seascape Resort Drive, Aptos, California 95003. The
Company's principal executive offices are located at 920 Disc Drive, Scotts
Valley, California 95066, and its telephone number at that location is (408)
438-6550.
These proxy solicitation materials and the Annual Report to Stockholders for
the fiscal year ended June 27, 1997, including financial statements, were
first mailed on or about September 25, 1997 to all stockholders entitled to
vote at the meeting.
RECORD DATE AND PRINCIPAL SHARE OWNERSHIP
Stockholders of record at the close of business on September 5, 1997 are
entitled to notice of and to vote at the meeting. The Company has one series
of Common Stock outstanding, designated Common Stock, $.01 par value. At the
record date, 244,948,158 shares of the Company's Common Stock were issued and
outstanding. No shares of the Company's Preferred Stock were outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company a written
notice of revocation or a duly executed proxy bearing a later date or by
attending the meeting and voting in person.
VOTING AND SOLICITATION
Every stockholder voting for the election of directors (Proposal One) may
cumulate such stockholder's votes and give one candidate a number of votes
equal to the number of directors to be elected multiplied by the number of
shares held by such stockholder, or distribute such stockholder's votes on the
same principle among as many candidates as the stockholder may select,
provided that votes cannot be cast for more than seven (7) candidates.
However, no stockholder shall be entitled to cumulate votes for any individual
unless such individual's name has been placed in nomination prior to the
voting and the stockholder has given notice, prior to the voting, of the
intention to cumulate the stockholder's votes. On all other matters, each
share of Common Stock has one vote. A quorum comprising the holders of the
majority of the outstanding shares of Common Stock on the record date must be
present or represented for the transaction of business at the Annual Meeting.
Abstentions and broker non-votes will be counted in establishing the quorum.
The cost of soliciting votes will be borne by the Company. The Company has
retained D.F. King & Co., Inc. to provide proxy solicitation services in
connection with the meeting at an estimated cost of $6,500. In addition, the
Company may reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
material to such beneficial owners. Proxies may also be solicited by certain
of the Company's directors, officers and regular employees, without additional
compensation, personally or by telephone, facsimile or other means.
STOCK SPLIT
In November 1996, the Company effected a two-for-one stock split in the form
of a stock dividend. All share and per share information herein reflects such
stock split except as otherwise noted.
<PAGE>
SECURITY OWNERSHIP BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Stock of the Company as of September 5, 1997 by (i) each
person known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) each director of the Company, (iii)
each of the executive officers named in the table under "Executive
Compensation and Other Matters--Executive Compensation--Summary Compensation
Table" and (iv) all directors and executive officers as a group:
<TABLE>
<CAPTION>
APPROXIMATE
COMMON STOCK PERCENT
NAME OWNED OWNED (1)
- ---- ------------ -----------
<S> <C> <C>
Wellington Management Group (2)...................... 19,802,716 8.1%
75 State Street
Boston, MA 02109
Sanford C. Bernstein & Co.(3)........................ 18,823,319 7.7%
767 Fifth Avenue
New York, NY 10153
Montag & Caldwell (4)................................ 12,296,895 5.0%
1100 Atlanta Financial Center
3343 Peachtree Street
Atlanta, GA 30326-1022
Alan F. Shugart(5)................................... 1,077,197 *
Robert A. Kleist(6).................................. 225,112 *
Laurel L. Wilkening(7)............................... 71,094 *
Kenneth E. Haughton(6)............................... 69,494 *
Thomas P. Stafford(8)................................ 51,494 *
Lawrence Perlman(9).................................. 18,996 *
Gary B. Filler(10)................................... 17,747 *
Bernardo A. Carballo(11)............................. 482,500 *
Donald L. Waite(12).................................. 349,163 *
Ronald D. Verdoorn(13)............................... 342,626 *
Stephen J. Luczo(14)................................. 337,231 *
Brendan C. Hegarty(15)............................... 250,362 *
All directors and executive officers as a group (14
persons)(16)........................................ 3,580,596 1.5%
</TABLE>
- --------
* Less than 1%
(1) Applicable percentage of ownership is based on 244,948,158 shares of
Common Stock outstanding as of September 5, 1997 together with applicable
options for such stockholder. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission, and
includes voting and investment power with respect to shares. Shares of
Common Stock subject to options currently exercisable or exercisable
within 60 days after September 5, 1997 are deemed outstanding for
computing the percentage ownership of the person holding such options,
but are not deemed outstanding for computing the percentage of any other
person.
(2) Reflects ownership as reported on Schedule 13G/A dated February 14, 1997
as filed with the Securities and Exchange Commission by Wellington
Management Co. LLP ("WMC"), which in its capacity as investment advisor,
may be deemed to beneficially own such shares. Such shares are owned by a
variety of investment advisory clients of WMC, which clients receive
dividends and the proceeds from the sale of such shares. WMC has shared
dispositive power with respect to all shares beneficially owned and
shared voting power with respect to 43,800 of such shares. The Company
does not have any knowledge as to where dispositive or voting power with
respect to such shares resides.
(3) Reflects ownership as reported on Schedule 13G dated January 30, 1997 as
filed with the Securities and Exchange Commission by Sanford C. Bernstein
& Co., Inc. ("Bernstein"), a registered investment advisor, pursuant to
the Investment Advisor's Act of 1940, as amended. Bernstein has sole
voting power over 9,561,142 shares of the Company's Common Stock, shared
voting power over 2,432,247 shares of
2
<PAGE>
the Company's Common Stock, sole dispositive power over 18,823,319 shares
of the Company's Common Stock and shared dispositive power over no shares.
With respect to those shares over which Bernstein has shared voting power,
such shares are held by clients of Bernstein who have appointed an
independent voting agent. Such agent has been instructed to vote shares in
the same manner as Bernstein.
(4) Reflects ownership as of August 12, 1997 based upon information provided
by a representative of Montag & Caldwell. The Company does not have
knowledge as to where dispositive or voting power with respect to such
shares resides.
(5) Includes 330,000 shares of Common Stock which may be acquired within 60
days after September 5, 1997 through the exercise of stock options.
(6) Includes 51,494 shares of Common Stock which may be acquired within 60
days after September 5, 1997 through the exercise of stock options.
(7) Includes 70,694 shares of Common Stock which may be acquired within 60
days after September 5, 1997 through the exercise of stock options.
(8) Represents 51,494 shares of Common Stock which may be acquired within 60
days after September 5, 1997 through the exercise of stock options.
(9) Represents 18,996 shares of Common Stock which may be acquired within 60
days after September 5, 1997 through the exercise of stock options.
(10) Represents 17,747 shares of Common Stock which may be acquired within 60
days after September 5, 1997 through the exercise of stock options.
(11) Includes 329,500 shares of Common Stock which may be acquired within 60
days after September 5, 1997 through the exercise of stock options.
(12) Includes 112,500 shares of Common Stock which may be acquired within 60
days after September 5, 1997 through the exercise of stock options.
(13) Includes 175,000 shares of Common Stock which may be acquired within 60
days after September 5, 1997 through the exercise of stock options.
(14) Includes 177,500 shares of Common Stock which may be acquired within 60
days after September 5, 1997 through the exercise of stock options.
(15) Includes 95,626 shares of Common Stock which may be acquired within 60
days after September 5, 1997 through the exercise of stock options.
(16) Includes 1,556,187 shares of Common Stock which may be acquired within
60 days after September 5, 1997 through the exercise of stock options.
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Proposals of stockholders which are intended to be presented by such
stockholders at the Company's 1998 Annual Meeting must be received by the
Secretary of the Company at the Company's principal executive offices no later
than May 28, 1998 in order that they may be included in the proxy statement
and form of proxy relating to that meeting.
3
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
GENERAL
A board of seven (7) directors is to be elected at the meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the seven (7) nominees named below, all of whom are presently directors of
the Company. In the event that any nominee is unable or declines to serve as a
director at the time of the Annual Meeting, the proxies will be voted for any
nominee who shall be designated by the present Board of Directors to fill the
vacancy. In the event that additional persons are nominated for election as
directors, the proxy holders intend to vote all proxies received by them in
such a manner (in accordance with cumulative voting) as will assure the
election of as many of the nominees listed below as possible, and, in such
event, the specific nominees to be voted for will be determined by the proxy
holders. The Company is not aware of any nominee who will be unable or will
decline to serve as a director. The term of office for each person elected as
a director will continue until the next Annual Meeting of Stockholders or
until his or her successor has been elected and qualified.
VOTE REQUIRED
If a quorum is present and voting, the seven nominees receiving the highest
number of votes will be elected to the Board of Directors. Votes withheld from
all directors, are counted for the purposes of determining the presence or
absence of a quorum for the transaction of business, but have no other effect
under Delaware law.
NOMINEES
The names of the nominees, each of whom is currently a director of the
Company, and certain information about them are set forth below:
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
--------------- --- ----------------------------------- --------------
<C> <C> <S> <C>
Alan F. Shugart...... 66 Chief Executive Officer and 1979
Chairman of the Board
of the Company
Gary B. Filler....... 56 Consultant, Financial 1985
Kenneth E. Haughton.. 69 Consultant, Engineering 1986
Robert A. Kleist..... 68 President, Chief Executive Officer 1981
and a Director of Printronix,
Inc. (computer printer manufacturer)
Lawrence Perlman..... 59 Chairman of the Board of Directors 1989
and Chief Executive Officer
of Ceridian Corporation
(technology-based services company)
Thomas P. Stafford... 66 Vice Chairman of Stafford, Burke 1988
and Hecker, Inc. (a consulting
firm)
Laurel L. Wilkening.. 52 Chancellor, University of 1993
California, Irvine
</TABLE>
Except as set forth below, each of the nominees has been engaged in his or
her principal occupation described above during the past five years. There is
no family relationship between any director or executive officer of the
Company.
Mr. Shugart was President of the Company from September 1991 until September
1997. He has been Chief Executive Officer since the Company's inception in
1979. Mr. Shugart also served as Chief Operating Officer of the Company from
September 1991 until March 1995. In addition, Mr. Shugart served as Chairman
of the Board of Directors of the Company from inception until September 1991
and was reappointed Chairman of the Board of Directors in October 1992. Mr.
Shugart is currently a Director of Valence Technology, Inc., SanDisk
Corporation and Seagate Software, Inc., a subsidiary of the Company.
4
<PAGE>
Mr. Filler has been a financial consultant since September 1996. He was
Senior Vice President and Chief Financial Officer of Diamond Multimedia
Systems, Inc., a multimedia and graphics company from January 1995 to
September 1996. From June 1994 to January 1995, Mr. Filler was a business
consultant and private investor. From February 1994 until June 1994 he served
as Executive Vice President and Chief Financial Officer of ASK Group, Inc., a
computer systems company. Mr. Filler was Chairman of the Board of Directors of
the Company from September 1991 until October 1992. From October 1990 until
September 1991, Mr. Filler served as Vice Chairman of the Board of Directors
of the Company. Mr. Filler also serves as a director of Seagate Software,
Inc., a subsidiary of the Company.
Dr. Haughton is also a director of Solectron Corporation.
Mr. Perlman was appointed Chairman of the Board of Directors of Ceridian
Corporation, a technology-based services company, in November 1992. Mr.
Perlman previously held several executive positions at Ceridian Corporation
(formerly Control Data Corporation) including President and Chief Executive
Officer of Imprimis Technology Incorporated ("Imprimis"). Mr. Perlman is also
a Director of Computer Network Technology Corporation, Valspar Corporation and
Seagate Software, Inc., a subsidiary of the Company. He was a regent of the
University of Minnesota from 1992 to 1995.
General Stafford, a former astronaut, also serves as Director of Allied-
Signal Corporation, CMI, Inc., Cycomm International, Fisher Scientific, Inc.,
Timet, Inc., Tracor, Inc., Tremont, Inc., and Wheelabrator Technologies, Inc.
Dr. Wilkening has served as Chancellor of the University of California,
Irvine since July 1993. From September 1988 to June 1993 she was Provost and
Vice President of Academic Affairs at the University of Washington. From May
1991 to January 1993, Dr. Wilkening also served as Chair of the Space Policy
Advisory Board of the National Space Council.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of seven meetings during
fiscal 1997. No director attended fewer than 75% of the meetings of the Board
of Directors and committees thereof, if any, upon which such director served.
The Board of Directors has an Audit Committee, an Executive Personnel and
Organization Committee, a new special committee whose mission is to review the
Performance-Based Executive Compensation Plan, a Strategic Planning Committee
and a Stock Option Committee. The Board of Directors nominates candidates to
stand for annual election to the Board and to fill Board vacancies as they may
occur.
The Audit Committee, which consists of directors Filler, Wilkening and
Haughton, met twice during fiscal 1997. The Audit Committee reviews and
approves the scope of the audit performed by the Company's independent
auditors as well as the Company's accounting principles and internal
accounting controls. In fiscal 1997 the Board of Directors as a whole
recommended engagement of the Company's independent auditors.
The Executive Personnel and Organization Committee, which consists of
directors Kleist, Stafford and Perlman, met five times during fiscal 1997.
This Committee reviews the structure and performance of senior management, as
well as the Company's plans for management succession, recommends to the Board
of Directors candidates for nomination to the Board, administers the Company's
stock option and stock purchase plans and reviews and approves the Company's
compensation policies and distributions to officers under the Company's
Performance-Based Executive Compensation Plan. The Executive Personnel and
Organization Committee will consider nominees to the Board of Directors
recommended by stockholders. Stockholders making such recommendations should
follow the procedures outlined above under "Information Concerning
Solicitation and Voting--Stockholder Proposals to be Presented at Next Annual
Meeting."
During fiscal 1997, the Board of Directors of the Company appointed a
special committee of the Board comprised of directors Filler and Perlman. This
Committee met twice during fiscal 1997 to review and modify the Company's
Performance-Based Executive Compensation Plan for fiscal 1998.
5
<PAGE>
The Strategic Planning Committee, which consists of directors Filler,
Perlman and Shugart, as well as Messrs. Luczo and Waite, held three meetings
during fiscal 1997. This committee reviews the Company's strategic plans and
consults with the Company's management with respect to its proposed
acquisitions, strategic investments and other such matters.
The Stock Option Committee, which consists of directors Perlman and Shugart,
reviews and approves stock option grants to non-officer employees and
consultants by written consent on a periodic basis, generally weekly.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Executive Personnel and Organization Committee currently consists of
directors Kleist, Stafford and Perlman. During fiscal 1997, there were no
transactions requiring disclosure hereunder.
PROPOSAL TWO
AMENDMENT TO 1991 INCENTIVE STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES
OF COMMON STOCK RESERVED FOR ISSUANCE THEREUNDER
At the Annual Meeting, the stockholders are being asked to approve an
amendment to the Company's 1991 Incentive Stock Option Plan (the "1991 Plan"),
to increase the number of shares of Common Stock reserved for issuance
thereunder by 15,000,000. The adoption of the 1991 Plan and the reservation of
10,000,000 shares for issuance thereunder was approved by the Board of
Directors in August 1991 and by the stockholders in October 1991. In 1993 and
1995 the stockholders approved amendments to the 1991 Plan to increase the
number of shares reserved for issuance thereunder by 12,000,000 at each such
annual meeting. As of September 5, 1997, options to purchase an aggregate of
21,993,013 shares were outstanding and 813,829 shares (exclusive of the
15,000,000 shares subject to stockholder approval at this Annual Meeting) were
available for future grant. In addition, 11,193,158 shares had been purchased
pursuant to the exercise of stock options granted under the 1991 Plan. The
1991 Plan authorizes the Board of Directors to grant stock options to eligible
employees and consultants of the Company. The 1991 Plan is structured to allow
the Board of Directors broad discretion in creating equity incentives in order
to assist the Company in attracting, retaining and motivating the best
available personnel for the successful conduct of the Company's business. The
Board of Directors believes that the remaining shares available for grant
under the 1991 Plan are insufficient to accomplish these purposes.
The Board of Directors has established informal guidelines for the annual
grant of options to employees whereby the total shares of Common Stock subject
to options granted in any fiscal year, net of cancellations, will not exceed
3% of a number based on a formula derived from a modified calculation of the
shares used in the calculation of fully diluted earnings per share as of the
beginning of each fiscal year. Based upon this formula, such informal
guidelines would result in option grants of approximately 7,500,000 shares per
year. As such, the Board of Directors currently expects that the 15,000,000
additional shares of Common Stock subject to stockholder approval at this
Annual Meeting will be sufficient to provide for option grants for
approximately the next two fiscal years.
VOTE REQUIRED
The affirmative vote of not less than a majority of the Votes Cast will be
required to approve the amendment to the 1991 Plan. The "Votes Cast" are
defined under Delaware law to be the shares of the Company's Common Stock
present in person or represented by proxy at the Annual Meeting and entitled
to vote on the subject matter. Votes that are cast against the proposal will
be counted for purposes of determining (i) the presence or absence of a quorum
for the transaction of business and (ii) the total number of Votes Cast with
respect to the proposal. Abstentions are counted for purposes of determining
both (i) the presence or absence of a quorum and (ii) the total numbers of
Votes Cast with respect to the proposal. Broker non-votes are counted for the
purpose of determining the presence or absence of a quorum, but are not
counted for purposes of determining the number of Votes Cast with respect to
the proposal.
6
<PAGE>
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
AMENDMENT TO THE 1991 PLAN.
The essential features of the 1991 Plan are outlined below.
PURPOSE
The purposes of the 1991 Plan are to attract, retain and motivate the most
qualified personnel for positions of substantial responsibility, to provide
additional incentive to employees and consultants of the Company and to
promote the success of the Company's business.
ADMINISTRATION
The 1991 Plan provides for administration by the Board of Directors of the
Company or by a committee of the Board (for the purposes of this plan
description, "Board of Directors" shall mean either the Board or a committee
appointed by the Board of Directors). All questions of interpretation or
application of the 1991 Plan are determined in the sole discretion of the
Board, and its decisions are final and binding upon all participants. Members
of the Board receive no additional compensation for their services in
connection with the administration of the 1991 Plan, although members of the
Executive Personnel and Organization Committee and the Stock Option Committee
receive fees in connection with their service on such committees. See
"Executive Compensation and Other Matters--Compensation of Directors."
ELIGIBILITY
The 1991 Plan provides that options may be granted to any employee director,
officer, employee or consultant of the Company or any of its designated
subsidiaries. Incentive stock options may be granted only to employees
(including officers and employee directors). The Board of Directors selects
the recipients of awards under the 1991 Plan and determines the number of
shares to be subject to each option. The 1991 Plan does not otherwise provide
for a maximum nor a minimum number of shares subject to options which may be
granted to any one officer in a single fiscal year. In addition there is a
limit on the aggregate fair market value of shares subject to all incentive
stock options which become exercisable for the first time in any one calendar
year.
OPTIONS
Each option is evidenced by a written stock option agreement between the
Company and the optionee and is subject to the terms and conditions listed
below, but specific terms may vary:
(1) Exercise of the Option: The Board of Directors determines when
options granted under the 1991 Plan may be exercised. An option is
exercised by giving written notice of exercise to the Company, specifying
the number of full shares of Common Stock to be purchased and tendering
payment to the Company of the purchase price. Payment for shares issued
upon exercise of an option may consist of cash, a promissory note, an
exchange of shares of the Company's Common Stock, delivery of a properly
executed exercise notice together with irrevocable instructions to a broker
to promptly deliver to the Company the amount of sale or loan proceeds
required to pay the exercise price ("cashless exercise") or such other
consideration as determined by the Board of Directors.
(2) Exercise Price: The exercise price of options granted under the 1991
Plan is determined by the Board of Directors, but may not be less than 100%
of the fair market value of the Company's Common Stock as reported by the
New York Stock Exchange on the last market trading day prior to the date of
the grant of the option. The closing sale price of the Company's Common
Stock on September 5, 1997 was $36.125.
(3) Termination of Employment: The 1991 Plan provides that if the
optionee's employment or consulting relationship with the Company is
terminated for any reason, other than death or permanent disability, an
option may thereafter be exercised (to the extent it was then exercisable)
within such time period as is determined by the Board of Directors (which
shall be no more than 90 days in the case of an incentive stock option),
subject to the stated term of option. If the optionee's employment or
consulting
7
<PAGE>
relationship with the Company terminates as a result of the optionee's
permanent disability, the optionee may exercise an option at anytime within
six months following the date of such termination (but in no event later
than the expiration of the term of the option), but only to the extent that
the optionee was entitled to exercise the option on the date of such
termination.
(4) Death: If an optionee should die while an employee or consultant of
the Company, the optionee's estate may exercise an option at any time
within six months following the date of death (but in no event later than
the expiration of the term of the option), but only to the extent that the
optionee was entitled to exercise the option on the date of death.
(5) Termination of Options: The term of an option granted under the 1991
Plan may not exceed ten years from date of grant. No option may be
exercised by any person after such expiration.
(6) Non-transferability of Options: Unless determined otherwise by the
Board of Directors, all options are non-transferable by the optionee, other
than by will or by the laws of descent and distribution, and during the
lifetime of the optionee may be exercised only by such optionee.
(7) Rights Upon Exercise: Until an option has been properly exercised,
that is, proper written notice and full payment have been received by the
Company, no rights to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the optioned stock.
(8) Other Provisions: The option agreement may contain such other items,
provisions and conditions not inconsistent with the 1991 Plan as may be
determined by the Board of Directors.
ADJUSTMENT UPON CHANGES IN CAPITALIZATION
In the event any change, such as a stock split or dividend, is made in the
Company's capitalization which results in an increase or decrease in the
number of outstanding shares of Common Stock without receipt of consideration
by the Company, an appropriate adjustment shall be made to the exercise price
and number of shares subject to each outstanding option and to the number of
shares which have been reserved for issuance under the 1991 Plan. In the event
of the proposed dissolution or liquidation of the Company, all outstanding
options automatically terminate unless otherwise provided by the Board of
Directors. The Board of Directors may in such event and at its sole discretion
declare that any option shall terminate as of a fixed date and give each
optionee the right to exercise his or her option as to all or any part of the
optioned stock, including shares as to which the option would not otherwise be
exercisable. Subject to the change of control provisions described below, in
the event of a merger of the Company with another corporation, or the sale of
substantially all of the assets of the Company, the 1991 Plan provides that
each outstanding option shall be assumed or an equivalent option shall be
substituted by the successor corporation. If the successor corporation does
not agree to assume the option or to substitute an equivalent option, the
Board of Directors shall provide for the optionee to have the right to
exercise the option as to all of the optioned stock, including shares as to
which the option would not otherwise be exercisable.
CHANGE OF CONTROL PROVISIONS
The 1991 Plan provides that in the event of a "Change of Control" of the
Company (as defined below) any or all or none of the following acceleration
and valuation provisions shall apply, as determined by the Board of Directors
in its discretion prior to the Change of Control: (i) all stock options
granted under the 1991 Plan outstanding as of the date such Change of Control
is determined to have occurred that are not yet exercisable and vested on such
date will become immediately vested and fully exercisable; and (ii) to the
extent exercisable and vested, the value of all outstanding options, unless
otherwise determined by the Board of Directors prior to any Change of Control
but at or after the time of grant, will be cashed out at the "Change of
Control Price" (as defined below) reduced by the exercise price applicable to
such options. A Change of Control means the occurrence of (i) the acquisition
by a person or entity (other than the Company, one of its subsidiaries or a
Company employee benefit plan or trustee thereof) of securities representing
50% or more of the combined voting power of the Company, (ii) a transaction
approved by the stockholders and involving the sale of all or substantially
all of the assets of the Company or the merger or consolidation of the Company
with or into another
8
<PAGE>
corporation, other than a merger or consolidation where the stockholders
immediately prior to such transaction continue to own securities representing
at least 50% or more of the combined voting power of the Company, or (iii) a
change in the composition of the Board of Directors, as a result of which
fewer than a majority of the directors are incumbent directors. The Change of
Control Price shall be, as determined by the Board, (i) the highest closing
sale price of a share of Common Stock as reported by the New York Stock
Exchange at any time within the 60 day period immediately preceding the date
of determination of the Change of Control Price by the Board or (ii) the
highest price paid or offered, as determined by the Board, in any bona fide
transaction or bona fide offer related to the Change of Control of the Company
at any time within such 60 day period or (iii) such lower price, as the Board,
in its discretion, determines to be a reasonable estimate of the fair market
value of a share of Common Stock.
AMENDMENT AND TERMINATION
The Board of Directors may amend, alter, suspend or terminate the 1991 Plan
at any time or from time to time, but any such amendment, alteration,
suspension or termination shall not adversely affect any option then
outstanding under the 1991 Plan, without the consent of the holder of the
option. In any event, the 1991 Plan will terminate in 2001.
In addition, to the extent necessary to comply with applicable laws or
regulations, the Company shall obtain stockholder approval of any amendment of
the 1991 Plan in such a manner and to such a degree as required.
CERTAIN UNITED STATES FEDERAL INCOME TAX INFORMATION
Options granted under the 1991 Plan may be either "incentive stock options",
as defined in Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), or nonstatutory options.
If an option granted under the 1991 Plan is an incentive stock option, the
optionee will recognize no income upon grant of the incentive stock option and
incur no tax liability upon exercise, unless the optionee is subject to the
alternative minimum tax. The Company will not be allowed a deduction for
federal income tax purposes as a result of the exercise of an incentive stock
option regardless of the applicability of the alternative minimum tax. Upon
the sale or exchange of shares at least two years after the grant of the
option and one year after exercise of the option (the "Incentive Stock Option
Holding Periods"), any gain will be treated as long-term capital gain. For
dispositions occurring after July 28, 1997, long-term capital gains will be
taxed at a rate of 10% (for persons in the 15% tax bracket) or 20% (for other
individuals), if the stock was held for more than 18 months from the date of
exercise. A rate of 28% will apply in the case of stock held more than one
year after exercise but not more than 18 months. If the Incentive Stock Option
Holding Periods are not satisfied, the optionee will recognize ordinary income
equal to the difference between the exercise price and the lower of the fair
market value of the stock at the date of the option exercise or the sale price
of the stock. A different rule for measuring ordinary income upon such a
premature disposition may apply if the optionee is also an executive officer,
director or 10% stockholder of the Company. The Company will be entitled to a
deduction in the same amount as the ordinary income recognized by the
optionee. Any gain recognized on such a premature disposition of the shares in
excess of the amount treated as ordinary income will be taxed as a capital
gain, as discussed above. Capital losses are allowed in full against capital
gains and $3,000 of other income.
All other options which do not qualify as incentive stock options are
referred to as nonstatutory options. An optionee will not recognize any
taxable income at the time he or she is granted a nonstatutory option.
However, upon exercise of the option, the optionee will generally recognize
ordinary income for tax purposes measured by the excess of the then fair
market value of the shares over the exercise price. In certain circumstances,
where the shares are subject to substantial risk of forfeiture when acquired
or where the optionee is an executive officer, director or 10% stockholder of
the Company, the date of taxation may be deferred unless the optionee files an
election with the Internal Revenue Service under Section 83(b) of the Code.
The income recognized by an optionee who is also an employee of the Company
will be subject to tax withholding by the Company. Upon resale of such shares
by the optionee, any difference between the sale price and the exercise price,
to the extent
9
<PAGE>
not recognized as ordinary income as provided above, will be treated as
capital gain or loss. The Company will be entitled to a tax deduction in the
same amount as the ordinary income recognized by the Optionee with respect to
shares acquired upon exercise of a nonstatutory option.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF THE UNITED STATES FEDERAL
INCOME TAXATION UPON THE OPTIONEE AND THE COMPANY WITH RESPECT TO THE GRANT
AND EXERCISE OF OPTIONS UNDER THE 1991 PLAN AND DOES NOT PURPORT TO BE
COMPLETE. REFERENCE SHOULD BE MADE TO THE APPLICABLE PROVISIONS OF THE CODE.
IN ADDITION, THIS SUMMARY DOES NOT DISCUSS THE INCOME TAX LAWS OF ANY
MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH AN OPTIONEE MAY RESIDE.
PARTICIPATION IN THE 1991 PLAN
Although the grant of stock options under the 1991 Plan to executive
officers, including the executive officers named in the Summary Compensation
Table below (the "Named Officers"), is subject to the discretion of the Board
of Directors, the Board has established informal guidelines for future grants
to executive officers under the 1991 Plan. Effective November 1996, under such
guidelines, stock option grants to executive officers will occur on a
quarterly basis, with the Chief Executive Officer (Mr. Shugart) receiving
options to purchase 40,000 shares per quarter and the other Named Officers
(Dr. Hegarty and Messrs. Carballo, Luczo, Verdoorn and Waite) receiving
options to purchase 20,000 shares per quarter. Under such guidelines, all
current executive officers as a group (including the Named Officers) will
receive options to purchase 170,000 shares per quarter. Such guidelines may be
modified by the Board of Directors at any time. As of the date of this proxy
statement there has been no other determination by the Board of Directors with
respect to future awards under the 1991 Plan. Please see "Executive
Compensation and Other Matters--Executive Compensation--Option Grants in
Fiscal 1997" for information with respect to the grant of options to the Named
Officers during fiscal 1997. During fiscal 1997, all current executive
officers as a group (including the Named Officers) and all other employees as
a group were granted options to purchase 848,000 shares and 4,945,329 shares,
respectively, pursuant to the 1991 Plan.
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP, independent auditors,
to audit the consolidated financial statements of the Company for the fiscal
year ending July 3, 1998 and recommends that stockholders vote for
ratification of such appointment. Notwithstanding the selection, the Board of
Directors, in its discretion, may direct the appointment of new independent
auditors at any time during the year, if the Board of Directors feels that
such a change would be in the best interests of the Company and its
stockholders. In the event of a negative vote on ratification, the Board of
Directors will reconsider its selection.
Ernst & Young LLP has audited the Company's financial statements annually
since 1980. Representatives of Ernst & Young LLP are expected to be present at
the meeting with the opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate questions.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
10
<PAGE>
EXECUTIVE COMPENSATION AND OTHER MATTERS
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth certain information
regarding the compensation of the Chief Executive Officer of the Company and
the five other most highly compensated executive officers of the Company (the
"Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION AWARDS
------------------------------------
SECURITIES UNDERLYING
ANNUAL COMPENSATION OPTIONS GRANTED (1)
------------------------------------- ------------------
FISCAL OTHER ANNUAL RESTRICTED STOCK
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) AWARDS ($) COMPANY SUBSIDIARY
- --------------------------- ------ ---------- --------- ---------------- ---------------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Alan F. Shugart.......... 1997 $750,006 $658,000 $529,478(2) -- 200,000 --
Chairman of the Board 1996 680,781 447,000 312,558(3) $7,704,750(8) 240,000 30,000
of Directors and Chief 1995 600,018 522,700 375,724(4) -- 240,000 --
Executive Officer
Bernardo A. Carballo..... 1997 $500,011 $547,000 $455,352(5) -- 100,000 --
Executive Vice President, 1996 440,778 373,000 294,660(6) $3,929,423(9) 120,000 20,000
Worldwide Sales, 1995 333,078 373,500 258,249(7) -- 90,000 --
Marketing, Product Line
Management and Customer
Service Operations
Brendan C. Hegarty....... 1997 $500,011 $547,000 $481,122(5) -- 100,000 --
Executive Vice President and 1996 468,278 373,000 289,234(6) $3,929,423(9) 120,000 20,000
Chief Operating Officer, 1995 394,238 373,500 272,185(7) -- 90,000 --
Recording Heads
Stephen J. Luczo......... 1997 $500,011 $547,000 $439,294(5) -- 100,000 80,000
President and Chief 1996 436,546 373,000 256,270(6) $3,929,423(9) 120,000 20,000
Operating Officer of the 1995 311,539 373,500 258,416(7) -- 70,000 --
Company and Chairman of
the Board, Seagate
Software Inc.
Ronald D. Verdoorn....... 1997 $500,011 $547,000 $451,024(5) -- 100,000 --
Executive Vice President and 1996 457,701 373,000 261,805(6) $3,929,423(9) 120,000 20,000
Chief Operating Officer, 1995 342,309 373,500 260,932(7) -- 90,000 --
Storage Products Group
Donald L. Waite.......... 1997 $500,011 $547,000 $452,650(5) -- 100,000 --
Executive Vice President, 1996 457,701 373,000 276,729(6) $3,852,375(10) 120,000 20,000
Chief Administrative Of- 1995 400,005 373,500 257,049(7) -- 90,000 --
ficer and Chief Finan-
cial Officer
</TABLE>
- -------
(1) The Stock Options listed in the table include options to purchase Common
Stock of the Company and options to purchase Common Stock of a
subsidiary, Seagate Software Inc. ("Seagate Software"). The Company's
subsidiary, Seagate Software, granted stock options to purchase Seagate
Software Common Stock to virtually all of the Seagate Software employees
and certain Seagate Technology, Inc. employees, including Named Officers,
pursuant to the Seagate Software Inc. 1996 Stock Option Plan (the
"Software Stock Plan"). See "Executive Officer Compensation--Stock
Options" below for additional information regarding options to purchase
stock of Seagate Software granted in fiscal 1997.
11
<PAGE>
(2) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $516,000.
(3) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $298,000.
(4) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $348,500.
(5) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $431,000.
(6) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $249,000.
(7) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $248,300.
(8) Pursuant to the Company's Executive Stock Plan, in November 1995 stock
purchase rights to purchase 300,000 shares of Common Stock at an exercise
price of $0.005 per share were granted to, and in March 1996 exercised by
Mr. Shugart. The amount shown in the table represents the dollar value
(net of the consideration paid) of the award of restricted stock,
calculated by multiplying the closing market price of the Company's Common
Stock on the date of grant by the number of shares awarded. As of June 27,
1997, Mr. Shugart held 300,000 unvested shares of stock having a value of
$10,181,400 based upon the fair market value of the Common Stock on June
27, 1997 of $33.938 per share. All of such unvested shares are subject to
repurchase by the Company at the original purchase price in the event of a
termination of Mr. Shugart's employment with the Company. The shares are
released from the Company's repurchase option after five years from date
of grant. See "Report of the Executive Personnel and Organization
Committee of the Board of Directors--Stock Options and Restricted Stock
Awards" for further information on vesting provisions. Mr. Shugart will
receive the same dividends on all shares of restricted stock as all other
stockholders; however, the Company does not anticipate paying any cash
dividends in the foreseeable future.
(9) Pursuant to the Company's Executive Stock Plan, in November 1995 stock
purchase rights to purchase 153,000 shares of Common Stock at an exercise
price of $0.005 per share were granted to, and in March 1996 exercised by
Messrs. Carballo, Luzco and Verdoorn, and Dr. Hegarty. The amount shown in
the table represents the dollar value (net of the consideration paid) of
the award of restricted stock, calculated by multiplying the closing
market price of the Company's Common Stock on the date of grant by the
number of shares awarded. As of June 27, 1997, each of these executive
officers held 153,000 unvested shares of stock having a value of
$5,192,514 based upon the fair market value of the Common Stock on June
27, 1997 of $33.938 per share. All of such unvested shares are subject to
repurchase by the Company at the original purchase price in the event of a
termination of employment with the Company. The shares are released from
the Company's repurchase option after ten years from date of grant. See
"Report of the Executive Personnel and Organization Committee of the Board
of Directors--Stock Options and Restricted Stock Awards" for further
information on vesting provisions. They will receive the same dividends on
all shares of restricted stock as all other stockholders; however, the
Company does not anticipate paying any cash dividends in the foreseeable
future.
(10) Pursuant to the Company's Executive Stock Plan, in November 1995 stock
purchase rights to purchase 150,000 shares of Common Stock at an exercise
price of $0.005 per share were granted to, and in March 1996 exercised by
Mr. Waite. The amount shown in the table represents the dollar value (net
of the consideration paid) of the award of restricted stock, calculated by
multiplying the closing market price of the Company's Common Stock on the
date of grant by the number of shares awarded. As of June 27, 1997, Mr.
Waite held 150,000 unvested shares of stock having a value of $5,090,700
based upon the fair market value of the Common Stock on June 27, 1997 of
$33.938 per share. All of such unvested shares are subject to repurchase
by the Company at the original purchase price in the event of a
termination of Mr. Waite's employment with the Company. The shares are
released from the Company's repurchase option after five years from date
of grant. See "Report of the Executive Personnel and Organization
Committee of the Board of Directors-- Stock Options and Restricted Stock
Awards" for further information on vesting provisions. Mr. Waite will
receive the same dividends on all shares of restricted stock as all other
stockholders; however, the Company does not anticipate paying any cash
dividends in the foreseeable future.
12
<PAGE>
OPTION GRANTS IN FISCAL 1997
The following table provides information concerning each grant of options to
purchase the Company's Common Stock and Seagate Software's Common Stock made
during fiscal 1997 to the Named Officers in the Summary Compensation Table:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS EXERCISE PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM (1)($)
OPTIONS EMPLOYEES PRICE EXPIRATION -----------------------
NAME GRANTED ($) (2) IN FISCAL YEAR ($/SH) (3) (4) DATE ($) 5% 10%
---- --------------- -------------- -------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Alan F. Shugart......... 60,000 1.04% $23.8750 07/31/06 $ 900,892 $ 2,283,036
60,000 1.04 32.3125 10/23/06 1,219,269 3,089,868
40,000 .70 47.7500 01/28/07 1,201,189 3,044,048
40,000 .70 45.7500 04/30/07 1,150,877 2,916,549
Bernardo A. Carballo.... 30,000 .52% $23.8750 07/31/06 $ 450,446 $ 1,141,518
30,000 .52 32.3125 10/23/06 609,635 1,544,934
20,000 .35 47.7500 01/28/07 600,594 1,522,024
20,000 .35 45.7500 04/30/07 575,439 1,458,274
Brendan C. Hegarty...... 30,000 .52% $23.8750 07/31/06 $ 450,446 $ 1,141,518
30,000 .52 32.3125 10/23/06 609,635 1,544,934
20,000 .35 47.7500 01/28/07 600,594 1,522,024
20,000 .35 45.7500 04/30/07 575,439 1,458,274
Stephen J. Luczo........ 80,000(5) 2.81% $ 6.0000 01/09/97 $ 301,869 $ 769,996
30,000 .52 23.8750 07/31/06 450,446 1,141,518
30,000 .52 32.3125 10/23/06 609,635 1,544,934
20,000 .35 47.7500 01/28/07 600,594 1,522,024
20,000 .35 45.7500 04/30/07 575,439 1,458,274
Ronald D. Verdoorn...... 30,000 .52% $23.8750 07/31/06 $ 450,446 $ 1,141,518
30,000 .52 32.3125 10/23/06 609,635 1,544,934
20,000 .35 47.7500 01/28/07 600,594 1,522,024
20,000 .35 45.7500 04/30/07 575,439 1,458,274
Donald L. Waite......... 30,000 .52% $23.8750 07/31/06 $ 450,446 $ 1,141,518
30,000 .52 32.3125 10/23/06 609,635 1,544,934
20,000 .35 47.7500 01/28/07 600,594 1,522,024
20,000 .35 45.7500 04/30/07 575,439 1,458,274
</TABLE>
- --------
(1) Potential realizable value is based on the assumption that the Common
Stock of the Company or Seagate Software, as applicable, appreciates at
the annual rate shown (compounded annually) from the date of grant until
the expiration of the ten year option term. These numbers are calculated
based on the requirements promulgated by the Securities and Exchange
Commission and do not reflect the Company's estimate of future stock price
growth.
(2) All stock options granted in fiscal year 1997 begin to vest one year after
the date of grant, with 25% of the shares covered thereby vesting at that
time and with an additional 25% of the option shares vesting at the end of
each year thereafter, with full vesting occurring on the fourth
anniversary of the date of grant. Optionees are permitted, with certain
limitations, to exercise stock options as to unvested shares, but Common
Stock purchased thereby is subject to repurchase by the Company until such
vesting conditions are met. Under the 1991 Plan, the Board retains
discretion to modify the terms, including the price, of outstanding
options.
(3) Options were granted at an exercise price equal to the fair market value
of the Company's Common Stock, as determined by reference to the closing
price reported on the New York Stock Exchange on the last trading day
prior to the date of grant.
13
<PAGE>
(4) Exercise price and tax withholding obligations may be paid in cash,
delivery of already-owned shares subject to certain conditions,
utilization of deferred compensation subject to certain limitations (see
"Report of Executive Personnel and Organization Committee of the Board of
Directors--Performance-Based Awards") or pursuant to a cashless exercise
procedure under which the optionee provides irrevocable instructions to a
brokerage firm to sell the purchased shares and to remit to the Company,
out of the sale proceeds, an amount equal to the exercise price plus all
applicable withholding taxes.
(5) Represents options to purchase shares of Seagate Software, Inc., a
subsidiary of the Company, granted to Mr. Luczo in fiscal 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information regarding the exercise of
stock options in fiscal 1997 by the Named Officers in the Summary Compensation
Table and the value of options held by such individuals at the end of the
fiscal year.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END ($)(2)
--------------------------- ---------------------------
SHARES EXERCISABLE/ EXERCISABLE/ EXERCISABLE/ EXERCISABLE/
ACQUIRED ON VALUE UNEXERCISABLE UNEXERCISABLE UNEXERCISABLE UNEXERCISABLE
NAME EXERCISE REALIZED($)(1) SEAGATE SOFTWARE SEAGATE SOFTWARE
---- ----------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alan F. Shugart......... 0 $ 0 210,000/ 6,000/ $3,828,383/ $12,000/
560,000 24,000 5,974,920 48,000
Bernardo A. Carballo.... 67,500 1,443,123 279,500/ 4,000/ 7,225,421/ 8,000/
255,000 16,000 2,443,543 32,000
Brendan C. Hegarty...... 52,500 1,264,686 45,626/ 4,000/ 891,496/ 8,000/
255,000 16,000 2,443,543 32,000
Stephen J. Luczo........ 113,330 3,748,033 55,000/ 4,000/ 1,442,403/ 8,000/
312,500 96,000 3,922,793 32,000
Ronald D. Verdoorn...... 50,000 1,940,000 125,000/ 4,000/ 2,279,123/ 8,000/
255,000 16,000 2,443,543 32,000
Donald L. Waite......... 176,700 4,517,758 62,500/ 4,000/ 954,563/ 8,000/
255,000 16,000 2,443,543 32,000
</TABLE>
- --------
(1) Market value of the Company's Common Stock at the exercise date minus the
exercise price.
(2) Market value of the Company's Common Stock at fiscal year-end minus the
exercise price. The fair market value of Seagate Software common stock at
fiscal 1997 year-end, as determined by the Seagate Software Board of
Directors, was $6.00 per share.
EMPLOYMENT CONTRACTS AND CHANGE-OF-CONTROL ARRANGEMENTS
The Company currently has no employment contracts with any of the Named
Officers and the Company has no compensatory plan or arrangement with such
Named Officers where the amount to be paid exceeds $100,000 and which are
activated upon resignation, termination or retirement of any such Named
Officer upon a change of control of the Company.
The Company's 1991 Plan provides that in the event of a "change of control"
of the Company, the Board of Directors may, in its discretion, provide that
(i) all options granted under the 1991 Plan that are outstanding as of the
date of such change of control will become immediately vested and fully
exercisable and (ii) to the extent exercisable and vested, the value of all
outstanding options, unless otherwise determined by the Board prior to any
change of control, will be cashed out at the change of control price reduced
by the exercise price applicable to such options. The Company's Executive
Stock Plan provides that in the event of a "change of control" of the Company,
if constructive termination of an executive occurs within the two-year period
following
14
<PAGE>
such change of control, then there shall be released from the Company's
repurchase option that percentage of the executive's unreleased shares
determined by dividing (i) the number of months that have elapsed from the
date of grant to the date of such termination, by (ii) one hundred twenty
(120) in the case of awards that vest at the end of ten years or sixty (60) in
the case of awards that vest at the end of five years.
COMPENSATION OF DIRECTORS
Non-employee members of the Board of Directors receive an annual retainer of
$30,000 and a fee of $3,000 per Board meeting attended (excluding telephonic
Board meetings), and $2,000 per Committee meeting attended, if such meeting is
on a day other than the day of a meeting of the Board of Directors. Each of
the persons serving as the Chairman of the Audit Committee and the Executive
Personnel and Organization Committee receives an additional annual retainer of
$8,000. Non-employee members of the Strategic Planning Committee receive an
annual retainer of $8,000. The Company also reimburses the directors for
certain expenses incurred by them in their capacities as directors or in
connection with attendance at Board meetings. Messrs. Shugart, Filler and
Perlman are members of the Board of Directors of Seagate Software. Messrs.
Filler and Perlman receive quarterly retainer fees of $1,000 per quarter for
service on the Board of Seagate Software. Mr. Shugart does not receive any
additional fees for his service on Seagate Software's Board of Directors.
The Company's Directors' Option Plan (the "Directors' Plan") provides for
the grant of non-statutory options to purchase shares of the Company's Common
Stock to non-employee directors. Under the Directors' Plan the timing of
option grants, amount of the grants, exercise price and restrictions on
exercise of the options are established in the Plan. The exercise price of
options granted under the Directors' Plan may not be less than 100% of the
fair market value of the Common Stock on the date of grant. Options granted
under the Directors' Plan become exercisable cumulatively for 1/48th of the
shares subject to the option at the end of each full month that the optionee
remains a director following the date of grant. Options granted under the
Directors' Plan expire ten years from the date of grant and may be exercised
only while the optionee is serving as a member of the Company's Board of
Directors, within twelve months after termination by death, within three
months after termination for cause or within five years after termination for
any other reason, but cannot be exercised after the original term expires.
Pursuant to the Directors' Plan, each new non-employee director is granted an
option to purchase 50,000 shares of Common Stock upon the date on which such
person first becomes a director (the "Initial Option"). Prior to January 1997,
on November 1 of each year, each non-employee director was granted an
additional option to purchase 20,000 shares of Common Stock; provided,
however, that no such additional grant was made to a non-employee director who
received an Initial Option grant in the preceding six months. Effective
January 1997, the terms of the plan were amended such that each Outside
Director shall automatically receive an option to purchase 4,000 shares of
Common Stock (the "Quarterly Option") on each February 1, May 1, August 1 and
November 1 following the grant of the Initial Option; provided, however, that
no Quarterly Option shall be granted to an Outside Director who received an
Initial Option in the preceding six months. On November 1, 1996, each of the
non-employee directors, Messrs. Kleist, Filler, Stafford and Perlman and Drs.
Haughton and Wilkening, was granted an option to purchase 20,000 shares of the
Company's Common Stock at an exercise price of $33.375 per share. On February
3, 1997, each of the non-employee directors was granted an option to purchase
4,000 shares of the Company's Common Stock at an exercise price of $51.50 per
share. On May 1, 1997, each of the non-employee directors was granted an
option to purchase 4,000 shares of the Company's Common Stock at an exercise
price of $46.00 per share.
Each of the non-employee directors, Messrs. Kleist, Filler, Stafford and
Perlman and Drs. Haughton and Wilkening, was granted options to purchase
20,000 shares of Seagate Software's Common Stock at an exercise price of $4.00
per share. The Seagate Software options become exercisable cumulatively as
follows: on the first and second anniversaries of the grant date 20% each
year; and on the third and fourth anniversaries of the grant date 30% each
year. Options granted under the Seagate Software Stock Option Plan expire ten
years from grant date.
15
<PAGE>
REPORT OF THE EXECUTIVE PERSONNEL AND ORGANIZATION COMMITTEE OF THE BOARD OF
DIRECTORS
The Executive Personnel and Organization Committee (the "Committee") of the
Board of Directors reviews and approves the Company's executive compensation
policies. The following is the report of the Committee describing compensation
policies and rationale applicable to the Company's executive officers with
respect to the compensation paid to such executive officers for the fiscal
year ended June 27, 1997 ("fiscal 1997").
The Company's executive compensation policies are designed (i) to provide
competitive levels of overall compensation in order to attract and retain the
most qualified executives in the industry, (ii) to motivate executive officers
to achieve the Company's business objectives and (iii) to reward executive
officers for their achievements on behalf of the Company. To support these
goals, the Committee and the Board of Directors have established an executive
compensation program primarily consisting of four integrated components--Base
Salary, Performance-Based Awards, Stock Options and Restricted Stock Awards.
BASE SALARY. The base salary component of total compensation is designed to
be competitive at approximately the 50th percentile or median for similar
companies in terms of industry group, technology, complexity and company size.
Company size reflects both sales and market capitalization.
The Committee, on behalf of the Board, works with management to maintain an
executive salary structure based on extensive competitive analyses including
two published national pay surveys and proxy statement pay comparisons for
selected companies. Between the survey companies and the proxy comparison
companies, there are several from the Hambrecht & Quist Computer Hardware
Index used in the Performance Graph for this proxy statement. Frederic W. Cook
& Co. conducts the competitive analyses and acts as an independent consultant
to the Committee on executive compensation matters.
Committee discretion is used in determining individual salary amounts for
Named Officers, with no specific formula. Generally, executive officer
salaries, including the Chief Executive Officer ("CEO"), are reviewed on a
periodic basis every 18-24 months. None of the Named Officers, including the
CEO, received salary increases during fiscal 1997. However, all six received
increases on November 11, 1995 (fiscal 1996). At that time, salary increases
for the five Named Officers other than the CEO averaged 29.9%, and the CEO's
increase was 25%. The CEO's annual salary rate was $750,000 as of the end of
fiscal 1997. All five Named Officers other than the CEO had annual salary
rates of $500,000 as of the end of fiscal 1997, reflecting their relatively
equivalent contributions for the period.
PERFORMANCE-BASED AWARDS. All executive officers, including the CEO,
participate in the Company's Performance-Based Executive Compensation Plan
(the "Plan"). The Plan compensates executive officers in the form of quarterly
awards. Awards under the Plan are intended to reflect the Committee's belief
that a significant portion of the annual compensation of each executive
officer should be contingent upon the financial performance of the Company and
the individual contribution of each executive officer. Awards under the Plan,
including those to the CEO, are contingent upon attainment of specific Company
financial performance goals, with a return on adjusted assets threshold and
profitability targets established by the Committee at the time of the approval
of the budget for the fiscal year. The actual payout of each quarterly award
varies with the Company's quarterly profitability and return on adjusted
assets. It is intended that over achievement of goals should result in above-
median total annual compensation and under achievement of goals should result
in below-median total annual compensation. In addition, consideration is given
to the relative contribution of each executive officer in attainment of that
performance.
Under the Plan, 60% of the award is paid in cash. The remaining 40% is
deferred and is used solely to reduce the exercise price of stock options
granted for the corresponding quarter under the Plan. As a result, 40% of each
award earned is at risk to the executive officer until stock options held by
such executive officer vest and are exercised. If an executive officer's
employment with the Company is terminated prior to the end of a fiscal
quarter, other than by death or disability of the executive officer, the Plan
provides that he or she shall not be eligible for an award for that fiscal
quarter and any accumulated deferred awards relating to unvested stock
16
<PAGE>
options are forfeited. In the event an executive officer dies or is
permanently disabled, all deferred award amounts related to unvested options
will become vested.
Company performance exceeded goals for the first three quarters of fiscal
1997 and the Named Officers earned above-median awards for each such quarter,
while below-median awards were earned for the fourth quarter. Overall fiscal
1997 awards (i.e., the sum of all awards for all four quarters) for the Named
Officers, including the CEO, were 57.3% above awards earned for performance in
fiscal 1996, reflecting the Company's net earnings growth of 48.1% (before
restructuring and other unusual charges) and generally high individual
performance. The CEO's individual contributions to the Company were his
leadership role in establishing and retaining a strong management team, his
strategic focus on the business to position it for growth and diversification,
and his work in communicating the Company's vision, strategy and performance.
Immediately following the end of fiscal 1997, the Committee reviewed the
Plan and recommended revisions for approval by the Board for fiscal 1998
designed to maintain an appropriate competitive pay-for-performance
relationship going forward. The Plan for fiscal 1998 will continue to focus on
profits above a threshold return on assets. A revised formula for funding the
Plan was adopted to calibrate competitive total annual compensation in
relation to relative competitive performance, and to increase the downside
risk for under achievement while maintaining high leverage for over
achievement. In addition, the distribution of earned awards was changed so
that 60% of each quarter's earned awards are paid in cash following the end of
the quarter, 20% are deferred and used to "buy down" the future exercise price
of corresponding quarterly stock option grants, and the remaining 20% is
distributed in cash, or is forfeited, following the end of the fiscal year
based on achievement of overall annual objectives (i.e., the equally weighted
sum of the four quarters). Furthermore, efforts will be intensified to
meaningfully differentiate the executive officer awards for individual
contributions.
STOCK OPTIONS AND RESTRICTED STOCK AWARDS. The grant of stock options and
restricted stock awards to executive officers creates a direct link between
compensation and long-term increases in stockholder value. The Committee
believes that stock option grants provide an incentive that focuses the
executive officer's attention on managing the Company from the perspective of
an owner with an equity stake in the business. Options and awards are subject
to vesting provisions to encourage executive officers to remain employed with
the Company. With respect to executive officers, stock option grants normally
occur on a quarterly basis. The size of each option grant is based upon the
executive officer's responsibilities, relative position with the Company and
the Committee's judgment with respect to the executive officer's impact on
stockholder value.
Options of Seagate Technology, Inc: There was a two-for-one stock split on
November 25, 1996. For each of the two fiscal quarters prior to the stock
split, the CEO was granted options to purchase 30,000 shares and each of the
other five Named Officers was granted options to purchase 15,000 shares. These
shares are equivalent to 60,000 and 30,000 shares, respectively on a post-
split basis. However, subsequent quarterly grants of stock options were
adjusted downward at the time of the stock split to maintain median
competitive grant values. As a result, for each of the two fiscal quarters
after the stock split, the CEO was granted options to purchase 40,000 shares
per quarter and each of the other five Named Officers was granted options to
purchase 20,000 shares per quarter.
Options of Seagate Software, Inc: During fiscal 1996, each of the Named
Officers provided valuable leadership to Seagate Software, Inc. ("Seagate
Software") when it was established as a subsidiary of the Company. At that
time, each Named Officer was granted options to purchase Common Stock of
Seagate Software. During fiscal 1997, there were no additional option grants
of Seagate Software Common Stock made to the CEO or any of the other Named
Officers of Seagate Technology, except that Stephen J. Luczo received an
option to purchase 80,000 shares of Seagate Software's Common Stock. These
options were granted under the Seagate Software Stock Option Plan at exercise
prices not less than the estimated fair market value on the grant date, as
determined by the Board of Directors of Seagate Software.
Restricted Stock Awards: Seagate has no pension or other retirement benefits
for executive officers. During fiscal 1996, the Committee considered whether
or not such benefits might be appropriate, primarily as a vehicle for long-
term employment retention of experienced individuals. Several alternative
arrangements were
17
<PAGE>
considered including the use of corporate-owned life insurance. After
thoroughly analyzing the alternatives, the Committee determined that it could
best combine the retention objectives for providing retirement benefits with
the advantages of stock-based incentives and executive stock ownership by
granting restricted stock with extended future vesting, in lieu of some type
of guaranteed pension.
As a result, special one-time restricted stock grants were made to each
executive officer. The special restricted stock grants were made under the
stockholder-approved 1991 Executive Stock Plan, where the Committee has the
authority to set the vesting schedule. Restricted stock awards made during
fiscal 1996 vest in full, i.e., "cliff vesting," at the end of ten years;
except for the restricted stock awards to the CEO and Chief Administrative
Officer which vest in full at the end of five years. There may be pro-rata
vesting under certain circumstances including death, disability, termination
of employment by the Company other than for cause, and constructive
termination following a change of control. In addition, if an executive
voluntarily resigns on or after attaining age 65 the Board may grant pro-rata
vesting. The size of the restricted stock awards was established by the
Committee taking into account what would be representative, equivalent
retirement benefit values under alternative arrangements based on reasonable
stock-price growth-rate assumptions. There were no additional restricted stock
grants made to any of the Named Officers, including the CEO, during fiscal
1997.
Impact of Section 162(m) of the Internal Revenue Code. The Committee has
considered the potential impact of Section 162(m) of the Internal Revenue Code
on the compensation paid to the Company's executive officers. Section 162(m)
disallows a tax deduction for any publicly-held corporation for individual
compensation exceeding $1 million in any taxable year for any of the Named
Officers, including the CEO, unless such compensation is performance-based. In
general, it is the Company's policy to qualify, to the maximum extent
possible, its executives' compensation for deductibility under applicable tax
laws. As a result, the Committee submitted the Performance-Based Executive
Compensation Plan to the stockholders for ratification and obtained approval
at the 1994 Annual Meeting of Stockholders in order to qualify for
deductibility the compensation realized in connection with payments under this
Plan. In addition, at the 1993 Annual Meeting of Stockholders, the
stockholders approved certain amendments to the 1991 Incentive Stock Option
Plan to preserve the Company's ability to deduct the compensation expense
relating to stock options granted under such Plan. There can be no assurance
that the Internal Revenue Service will grant such treatment to the
compensation paid.
In approving the amount and form of compensation for the Company's Named
Officers, the Committee will continue to consider all elements of the cost to
the Company of providing such compensation, including the potential impact of
Section 162(m).
MEMBERS OF THE EXECUTIVE PERSONNEL AND ORGANIZATION COMMITTEE:
Robert A. Kleist
Lawrence Perlman
Thomas P. Stafford
18
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the annual percentage change in
the cumulative return to the stockholders of the Company's Common Stock with
the cumulative return of the S&P 500 Index (the "S&P 500") and of the
Hambrecht & Quist Computer Hardware Index for the period commencing July 1,
1992 and ending on June 30, 1997.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION> H & Q
Measurement Period S&P Computer
(Fiscal Year Covered) Seagate 500 INDEX Hardware
- ------------------- ---------- --------- ----------
<S> <C> <C> <C>
Measurement Pt- 6/92 $100 $100 $100
FYE 6/93 $107 $114 $ 80
FYE 6/94 $133 $115 $ 78
FYE 6/95 $266 $145 $137
FYE 6/96 $303 $183 $162
FYE 6/97 $474 $247 $248
</TABLE>
- -------
(1) The graph assumes that $100 was invested on July 1, 1992 in the Company's
Common Stock and in the S&P 500 and the Hambrecht & Quist Computer
Hardware Index, and that all dividends were reinvested. No dividends have
been declared or paid on the Company's Common Stock. Stockholder returns
over the indicated period should not be considered indicative of future
stockholder returns.
(2) The Company operates on a 52/53 week fiscal year which ends on the Friday
closest to June 30. Accordingly the last trading day of the Company's
fiscal year may vary. For consistent presentation and comparison to the
S&P 500 and the Hambrecht & Quist Computer Hardware Index shown herein,
the Company has calculated its stock performance graph assuming a June 30
year end.
The information contained above under the captions entitled "Report of the
Executive Personnel and Organization Committee of the Board of Directors" and
"Performance Graph" shall not be deemed to be "soliciting material" or to be
"filed" with the Securities and Exchange Commission, nor shall such
information be incorporated by reference into any filing under the Securities
Act of 1933 or Securities Exchange Act of 1934, except to the extent that the
Company specifically incorporates it by reference into such filing.
19
<PAGE>
CERTAIN TRANSACTIONS WITH MANAGEMENT
During the fiscal year ended June 27, 1997, the Company paid the amount of
$931,577 for chartered aviation services to Monterey Airplane Company, a
company 100% owned by Alan F. Shugart, Chairman of the Board of Directors and
Chief Executive Officer, and his wife. The Company believes that the terms of
such transactions were no less favorable than those which could be obtained
from entities unrelated to the Company.
In connection with the Company's merger with Conner Peripherals, the Company
assumed the two loans, one in the amount of $250,000 and one in the amount of
$125,000, which had been made by Conner Peripherals to William D. Watkins,
Executive Vice President, Disc Drive Operations and Chief Operating Officer,
Recording Media. During the fiscal year ended June 27, 1997, the largest
aggregate amount outstanding under each loan was $189,868 and $98,503,
respectively. Neither loan bore interest. The larger of the two loans was
forgiven and the smaller of the two loans was repaid by Mr. Watkins during
fiscal 1997.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of
a registered class of the Company's equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC") and the New York Stock Exchange. Executive officers, directors and
greater than ten percent stockholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on its review of the copies of such forms received by it, or written
representations from certain reporting persons, the Company believes that,
during the period from June 29, 1996 to June 27, 1997, its executive officers
and directors complied with all filing requirements.
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of Proxy to vote the shares they represent
as the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: September 25, 1997
20
<PAGE>
SEAGATE TECHNOLOGY, INC.
1991 INCENTIVE STOCK OPTION PLAN
(AS AMENDED THROUGH OCTOBER 1997)
1. Purposes of the Plan. The purposes of this 1991 Incentive Stock
--------------------
Option Plan are:
o to attract and retain the best available personnel for positions of
substantial responsibility,
o to provide additional incentive to Employees and Consultants, and
o to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant.
2. Definitions. As used herein, the following definitions shall apply:
-----------
(a) "Administrator" means the Board or any of its Committees as shall
-------------
be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the legal requirements relating to
---------------
the administration of stock option plans under state corporate and securities
laws and the Code.
(c) "Board" means the Board of Directors of the Company.
-----
(d) "Code" means the Internal Revenue Code of 1986, as amended.
----
(e) "Committee" means a Committee appointed by the Board in
---------
accordance with Section 4 of the Plan.
(f) "Common Stock" means the Common Stock of the Company.
------------
(g) "Company" means Seagate Technology, Inc., a Delaware corporation.
-------
(h) "Consultant" means any person, including an advisor, engaged by
----------
the Company or a Parent or Subsidiary to render services and who is compensated
for such services, provided that the term "Consultant" shall not include
Directors who are paid only a director's fee by the Company or who are not
compensated by the Company for their services as Directors.
<PAGE>
(i) "Continuous Status as an Employee or Consultant" means that the
----------------------------------------------
employment or consulting relationship is not interrupted or terminated by the
Company, any Parent or Subsidiary. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of: (i) any leave of
absence approved by the Board, including sick leave, military leave, or any
other personal leave; provided, however, that for purposes of Incentive Stock
Options, any such leave may not exceed ninety (90) days, unless reemployment
upon the expiration of such leave is guaranteed by contract (including certain
Company policies) or statute; or (ii) transfers between locations of the Company
or between the Company, its Parent, its Subsidiaries or its successor.
(j) "Director" means a member of the Board.
--------
(k) "Disability" means total and permanent disability as defined in
----------
Section 22(e)(3) of the Code.
(l) "Employee" means any person, including Officers and Directors,
--------
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
(n) "Fair Market Value" means, as of any date, the value of Common
-----------------
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, the Fair Market Value of a Share of Common Stock
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in Common Stock) on the last market trading day prior
to the day of determination, as reported in the Wall Street Journal or such
other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but not
on the National Market System thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the last market trading day prior to the day of
determination, as reported in the Wall Street Journal or such other source as
the Administrator deems reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
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<PAGE>
(o) "Incentive Stock Option" means an Option intended to qualify as an
----------------------
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(p) "Nonstatutory Stock Option" means an Option not intended to
-------------------------
qualify as an Incentive Stock Option.
(q) "Notice of Grant" means a written notice evidencing certain
---------------
terms and conditions of an individual Option grant. The Notice of Grant is part
of the Option Agreement.
(r) "Officer" means a person who is an officer of the Company within
-------
the meaning of Section 15 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "Option" means a stock option granted pursuant to the Plan.
------
(t) "Option Agreement" means a written agreement between the
----------------
Company and an Optionee evidencing the terms and conditions of an individual
Option grant. The Option Agreement is subject to the terms and conditions of
the Plan.
(u) "Option Exchange Program" means a program whereby outstanding
-----------------------
options are surrendered in exchange for options with a lower exercise price.
(v) "Optioned Stock" means the Common Stock subject to an Option.
--------------
(w) "Optionee" means an Employee or Consultant who holds an
--------
outstanding Option.
(x) "Parent" means a "parent corporation", whether now or hereafter
------
existing, as defined in Section 424(e) of the Code.
(y) "Plan" means this 1991 Incentive Stock Option Plan.
----
(aa) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
----------
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(bb) "Share" means a share of the Common Stock, as adjusted in
-----
accordance with Section 12 of the Plan.
(cc) "Subsidiary" means a "subsidiary corporation", whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 13 of
-------------------------
the Plan, the maximum aggregate number of Shares which may be optioned under the
Plan is 49,000,000 Shares
-3-
<PAGE>
of Common Stock. The Shares may be authorized, but unissued, or reacquired
Common Stock. However, should the Company reacquire Shares which were issued
pursuant to the exercise of an Option, such Shares shall not become available
for future grant under the Plan.
If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated).
4. Administration of the Plan.
--------------------------
(a) Procedure.
---------
(i) Multiple Administrative Bodies. If permitted by Rule 16b-3,
------------------------------
the Plan may be administered by different bodies with respect to Directors,
Officers who are not Directors, and Employees who are neither Directors nor
Officers.
(ii) Administration With Respect to Directors and Officers
-----------------------------------------------------
Subject to Section 16(b). With respect to Option grants made to Employees who
- ------------------------
are also Officers or Directors subject to Section 16(b) of the Exchange Act, the
Plan shall be administered by (A) the Board, if the Board may administer the
Plan in compliance with the rules governing a plan intended to qualify as a
discretionary plan under Rule 16b-3, or (B) a committee designated by the Board
to administer the Plan, which committee shall be constituted to comply with the
rules governing a plan intended to qualify as a discretionary plan under Rule
16b-3. Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase the size of the Committee and appoint additional members, remove
members (with or without cause) and substitute new members, fill vacancies
(however caused), and remove all members of the Committee and thereafter
directly administer the Plan, all to the extent permitted by the rules governing
a plan intended to qualify as a discretionary plan under Rule 16b-3.
(iii) Administration With Respect to Other Persons. With respect
--------------------------------------------
to Option grants made to Employees or Consultants who are neither Directors nor
Officers of the Company, the Plan shall be administered by (A) the Board or (B)
a committee designated by the Board, which committee shall be constituted to
satisfy Applicable Laws. Once appointed, such Committee shall serve in its
designated capacity until otherwise directed by the Board. The Board may
increase the size of the Committee and appoint additional members, remove
members (with or without cause) and substitute new members, fill vacancies
(however caused), and remove all members of the Committee and thereafter
directly administer the Plan, all to the extent permitted by Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the
---------------------------
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
-4-
<PAGE>
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(n) of the Plan;
(ii) to select the Consultants and Employees to whom Options may
be granted hereunder;
(iii) to determine whether and to what extent Options are granted
hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each Option granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder. Such terms and conditions
include, but are not limited to, the exercise price, the time or times when
Options may be exercised (which may be based on performance criteria), any
vesting acceleration or waiver of forfeiture restrictions, and any restriction
or limitation regarding any Option or the shares of Common Stock relating
thereto, based in each case on such factors as the Administrator, in its sole
discretion, shall determine;
(vii) to determine whether, to what extent and under what
circumstances Common Stock and other amounts payable with respect to an award
under this Plan shall be deferred either automatically or at the election of the
participant (including providing for and determining the amount (if any) of any
deemed earnings on any deferred amount during any deferral period);
(viii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;
(ix) to construe and interpret the terms of the Plan;
(x) to prescribe, amend and rescind rules and regulations
relating to the Plan;
(xi) to modify or amend each Option (subject to Section 14(c) of
the Plan);
(xii) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option previously granted by
the Administrator;
(xiii) to institute an Option Exchange Program;
(xiv) to determine the terms and restrictions applicable to
Options; and
-5-
<PAGE>
(xv) to make all other determinations deemed necessary or
advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
----------------------------------
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.
5. Eligibility. Nonstatutory Stock Options may be granted to Employees
-----------
and Consultants. Incentive Stock Options may be granted only to Employees. If
otherwise eligible, an Employee or Consultant who has been granted an Option may
be granted additional Options.
6. Limitations.
-----------
(a) Each Option shall be designated in the Notice of Grant as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value:
(i) of Shares subject to an Optionee's incentive stock options
granted by the Company, any Parent or Subsidiary, which (ii) become
exercisable for the first time during any calendar year (under all plans of
the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock
Options. For purposes of this Section 6(a), incentive stock options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time of grant.
(b) Neither the Plan nor any Option shall confer upon an Optionee any
right with respect to continuing the Optionee's employment or consulting
relationship with the Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate such employment or
consulting relationship at any time, with or without cause.
(c) Beginning October 28, 1993, the following limitations shall apply
to grants of Options to Officers:
(i) no Officer shall be granted in any fiscal year of the Company,
Options to purchase more than 160,000 Shares, provided that, a newly-hired
Officer may in addition receive a one-time grant of up to 300,000 Shares upon
acceptance of employment with the Company; and
(ii) over the remaining term of the Plan, no Officer shall be
granted Options to purchase more than 500,000 Shares.
The foregoing limitations set forth in this Section 6(c) are intended to
satisfy the requirements applicable to Options intended to qualify as
"performance-based compensation" (within the meaning of Section 162(k) of the
Code). In the event the Administrator determines that
-6-
<PAGE>
such limitations are not required to qualify Options as performance-based
compensation, the Administrator may modify or eliminate such limitations.
7. Term of Plan. Subject to Section 18 of the Plan, the Plan shall
------------
become effective upon the earlier to occur of its adoption by the Board or its
approval by the shareholders of the Company as described in Section 18 of the
Plan. It shall continue in effect for a term of ten (10) years unless
terminated earlier under Section 14 of the Plan.
8. Term of Option. The term of each Option shall be stated in the Notice
--------------
of Grant; provided, however, that in the case of an Incentive Stock Option, the
term shall be ten (10) years from the date of grant or such shorter term as may
be provided in the Notice of Grant. Moreover, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of
the Incentive Stock Option shall be five (5) years from the date of grant or
such shorter term as may be provided in the Notice of Grant.
9. Option Exercise Price and Consideration.
---------------------------------------
(a) Exercise Price. The per share exercise price for the Shares to be
--------------
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.
(B) granted to any Employee, the per Share exercise price
shall be no less than 100% of the Fair Market Value per Share on the date of
grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(b) Waiting Period and Exercise Dates. At the time an Option is
---------------------------------
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised. In so doing, the Administrator may specify that an
Option may not be exercised until the completion of a service period.
(c) Form of Consideration. The Administrator shall determine the
---------------------
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an
-7-
<PAGE>
Incentive Stock Option, the Administrator shall determine the acceptable form of
consideration at the time of grant. Such consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six months
on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;
(v) delivery of a properly executed exercise notice together with
such other documentation as the Administrator and the Optionee's broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price;
(vi) any combination of the foregoing methods of payment; or
(vii) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
------------------
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
-----------------------------------------------
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives:
(i) written notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the stock
certificate evidencing such Shares is issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
shareholder sh all exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Company shall issue (or cause to be issued) such
stock certificate promptly after the Option is exercised. No adjustment
-8-
<PAGE>
will be made for a dividend or other right for which the record date is prior to
the date the stock certificate is issued, except as provided in Section 12 of
the Plan.
Exercising an Option in any manner shall decrease the number of
Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.
(b) Termination of Employment or Consulting Relationship. In the
----------------------------------------------------
event that an Optionee's Continuous Status as an Employee or Consultant
terminates (other than upon the Optionee's death or Disability), the Optionee
may exercise his or her Option, but only within such period of time as is
determined by the Administrator, and only to the extent that the Optionee was
entitled to exercise it at the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Notice of Grant).
In the case of an Incentive Stock Option, the Administrator shall determine such
period of time (in no event to exceed ninety (90) days from the date of
termination) when the Option is granted. If, at the date of termination, the
Optionee is not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
(c) Disability of Optionee. In the event that an Optionee's
----------------------
Continuous Status as an Employee or Consultant terminates as a result of the
Optionee's Disability, the Optionee may exercise his or her Option at any time
within six (6) months from the date of such termination, but only to the extent
that the Optionee was entitled to exercise it at the date of such termination
(but in no event later than the expiration of the term of such Option as set
forth in the Notice of Grant). If, at the date of termination, the Optionee is
not entitled to exercise his or her entire Option, the Shares covered by the
unexercisable portion of the Option shall revert to the Plan. If, after
termination, the Optionee does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
(d) Death of Optionee. In the event of the death of an Optionee, the
-----------------
Option may be exercised at any time within six (6) months following the date of
death (but in no event later than the expiration of the term of such Option as
set forth in the Notice of Grant), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent that the Optionee was entitled to exercise the Option at the date of
death. If, at the time of death, the Optionee was not entitled to exercise his
or her entire Option, the Shares covered by the unexercisable portion of the
Option shall immediately revert to the Plan. If, after death, the Optionee's
estate or a person who acquired the right to exercise the Option by bequest or
inheritance does not exercise the Option within the time specified herein, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.
-9-
<PAGE>
11. Non-Transferability of Options.
------------------------------
(a) Unless determined otherwise by the Administrator, an Option may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent and distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option transferable, such Option shall contain such
additional terms and conditions as the Administrator deems appropriate.
(b) An Optionee may file a written designation of a beneficiary who
is to receive any options that remain unexercised in the event of the Optionee's
death. If a participant is married and the designated beneficiary is not the
spouse, spousal consent shall be required for such designation to be effective.
(c) Such designation of beneficiary may be changed by the Optionee at
any time by written notice, subject to the above spousal consent conditions. In
the event of the death of the Optionee and in the absence of a beneficiary
validly designated under the Plan who is living at the time of such Optionee's,
the Company shall deliver such options to the executor or administrator of the
estate of the Optionee, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its discretion, may
deliver such options to the spouse or to any one or more dependents or relatives
of the participant, or if no spouse, dependent or relative is known to the
Company, then to such other person as the Company may designate.
12. Adjustments Upon Changes in Capitalization, Dissolution, Merger, Asset
----------------------------------------------------------------------
Sale or Change of Control.
-------------------------
(a) Changes in Capitalization. Subject to any required action by the
-------------------------
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it will
-10-
<PAGE>
terminate immediately prior to the consummation of such proposed action. The
Board may, in the exercise of its sole discretion in such instances, declare
that any Option shall terminate as of a date fixed by the Board and give each
Optionee the right to exercise his or her Option as to all or any part of the
Optioned Stock, including Shares as to which the Option would not otherwise be
exercisable.
(c) Merger or Asset Sale. Subject to the provisions of paragraph (d)
--------------------
hereof, in the event of a merger of the Company with or into another
corporation, or the sale of substantially all of the assets of the Company, each
outstanding Option shall be assumed or an equivalent option shall be substituted
by the successor corporation or a Parent or Subsidiary of the successor
corporation. In the event that the successor corporation does not agree to
assume the Option or to substitute an equivalent option, the Administrator
shall, in lieu of such assumption or substitution, provide for the Optionee to
have the right to exercise the Option as to all or a portion of the Optioned
Stock, including Shares as to which it would not otherwise be exercisable. If
the Administrator makes an Option fully exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator shall
notify the Optionee that the Option shall be fully exercisable for a period of
fifteen (15) days from the date of such notice, and the Option will terminate
upon the expiration of such period. For the purposes of this paragraph, the
Option shall be considered assumed if, following the merger or sale of assets,
the option confers the right to purchase, for each Share subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets was not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation and the
participant, provide for the consideration to be received upon the exercise of
the Option, for each Share of Optioned Stock subject to the Option, to be solely
common stock of the successor corporation or its Parent equal in Fair Market
Value to the per share consideration received by holders of Common Stock in the
merger or sale of assets.
(d) Change in Control. In the event of a "Change in Control" of the
-----------------
Company, as defined in paragraph (e) below, then the following acceleration and
valuation provisions shall apply:
(i) Except as otherwise determined by the Board, in its
discretion, prior to the occurrence of a Change in Control, any Options
outstanding on the date such Change in Control is determined to have
occurred that are not yet exercisable and vested on such date shall become
fully exercisable and vested;
(ii) Except as otherwise determined by the Board, in its
discretion, prior to the occurrence of a Change in Control, all outstanding
Options, to the extent they are exercisable and vested (including Options
that shall become exercisable and vested pursuant to subparagraph (i)
above), shall be terminated in exchange for a cash payment equal to the
Change in Control Price (reduced by the exercise price applicable to such
Options). These
-11-
<PAGE>
cash proceeds shall be paid to the Optionee or, in the event of death of an
Optionee prior to payment, to the estate of the Optionee or to a person who
acquired the right to exercise the Option by bequest or inheritance.
(e) Definition of "Change in Control". For purposes of this Section
---------------------------------
12, a "Change in Control" means the happening of any of the following:
(i) When any "person," as such term is used in Sections 13(d)
and 14(d) of the Exchange Act (other than the Company, a Subsidiary or a
Company employee benefit plan, including any trustee of such plan acting as
trustee) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company representing fifty percent (50%) or more of the combined voting
power of the Company's then outstanding securities entitled to vote
generally in the election of directors; or
(ii) The shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least fifty percent (50%) of the
total voting power repre sented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or the shareholders of the Company approve an agreement for
the sale or disposition by the Company of all or substantially all the
Company's assets; or
(iii) A change in the composition of the Board of Directors of
the Company, as a result of which fewer than a majority of the directors
are Incumbent Directors. "Incumbent Directors" shall mean directors who
either (A) are directors of the Company as of the date the Plan is approved
by the shareholders, or (B) are elected, or nominated for election, to the
Board of Directors of the Company with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or
nomination (but shall not include an individual whose election or
nomination is in connection with an actual or threatened proxy contest
relating to the election of directors to the Company).
(f) Change in Control Price. For purposes of this Section 12, "Change
-----------------------
in Control Price" shall be, as determined by the Board, (i) the highest Fair
Market Value of a Share within the 60 day period immediately preceding the date
of determination of the Change in Control Price by the Board (the "60-Day
Period"), or (ii) the highest price paid or offered per Share, as determined by
the Board, in any bona fide transaction or bona fide offer related to the Change
in Control of the Company, at any time within the 60-Day Period, or (iii) some
lower price as the Board, in its discretion, determines to be a reasonable
estimate of the fair market value of a Share.
-12-
<PAGE>
13. Date of Grant. The date of grant of an Option shall be, for all
-------------
purposes, the date on which the Administrator makes the determination granting
such Option, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.
14. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment and Termination. The Board may at any time amend,
-------------------------
alter, suspend or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain shareholder
--------------------
approval of any Plan amendment to the extent necessary and desirable to comply
with Rule 16b-3 or with Section 422 of the Code (or any successor rule or
statute or other applicable law, rule or regulation, including the requirements
of any exchange or quotation system on which the Common Stock is listed or
quoted). Such shareholder approval, if required, shall be obtained in such a
manner and to such a degree as is required by the applicable law, rule or
regulation.
(c) Effect of Amendment or Termination. No amendment, alteration,
----------------------------------
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
15. Conditions Upon Issuance of Shares.
----------------------------------
(a) Legal Compliance. Shares shall not be issued pursuant to the
----------------
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, Applicable Laws,
and the requirements of any stock exchange or quotation system upon which the
Shares may then be listed or quoted, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of an
--------------------------
Option, the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required.
16. Liability of Company.
--------------------
(a) Inability to Obtain Authority. The inability of the Company to
-----------------------------
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the
-13-
<PAGE>
Company of any liability in respect of the failure to issue or sell such Shares
as to which such requisite authority shall not have been obtained.
(b) Grants Exceeding Allotted Shares. If the Optioned Stock covered
--------------------------------
by an Option exceeds, as of the date of grant, the number of Shares which may be
issued under the Plan without additional shareholder approval, such Option shall
be void with respect to such excess Optioned Stock, unless shareholder approval
of an amendment sufficiently increasing the number of Shares subject to the Plan
is timely obtained in accordance with Section 14(b) of the Plan.
17. Reservation of Shares. The Company, during the term of this Plan,
---------------------
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
18. Shareholder Approval. Continuance of the Plan shall be subject
--------------------
to approval by the shareholders of the Company within twelve (12) months before
or after the date the Plan is adopted. Such shareholder approval shall be
obtained in the manner and to the degree required under applicable federal and
state law.
-14-
<PAGE>
1991 INCENTIVE STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the 1991 Incentive
Stock Option Plan (the "Plan") shall have the same defined meanings in this
Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
----------------------------
Optionee's Name
Optionee's Address
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Stock Option Agreement,
as follows:
Grant Number __________________
Date of Grant __________________
Vesting Commencement Date __________________
Exercise Price per Share $_________________
Total Number of Shares Granted __________________
Total Exercise Price $_________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: _________________________
Vesting Schedule:
----------------
This Option may be exercised, in whole or in part, in accordance with the
following schedule:
<PAGE>
Termination Period:
------------------
This Option may be exercised for ninety (90) days after termination of
employment or consulting relationship, or such longer period as may be
applicable upon death or Disability of Optionee as provided in the Plan, but in
no event later than the Term/Expiration Date as provided above.
II. AGREEMENT
---------
1. Grant of Option. The Plan Administrator of the Company hereby grants
---------------
to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee"), an option (the "Option") to purchase a number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to
Section 14(c) of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option Agreement,
the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option,
this Option is intended to qualify as an Incentive Stock Option under Section
422 of the Code.
2. Exercise of Option.
------------------
(a) Right to Exercise. This Option is exercisable during its term in
-----------------
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement. In the event of
Optionee's death, Disability or other termination of Optionee's employment or
consulting relationship, the exercisability of the Option is governed by the
applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of an
------------------
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The Exercise Notice shall be accompanied by payment
of the aggregate Exercise Price as to all Exercised Shares. This Option shall
be deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with all relevant provisions of law
and the requirements of any stock exchange
-2-
<PAGE>
upon which the Shares are then listed. Assuming such compliance, for income tax
purposes the Exercised Shares shall be considered transferred to the Optionee on
the date the Option is exercised with respect to such Exercised Shares.
3. Method of Payment. Payment of the aggregate Exercise Price shall be
-----------------
by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash; or
(b) check; or
(c) delivery of a properly executed exercise notice together with such
other documentation as the Administrator and the Optionee's broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price; or
(d) surrender of other Shares which (i) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than six
(6) months on the date of surrender, AND (ii) have a Fair Market Value on the
date of surrender equal to the aggregate Exercise Price of the Exercised Shares.
4. Transferability of Option. This Option may not be transferred in any
-------------------------
manner otherwise than by will or by the laws of descent and distribution and may
be exercised during the lifetime of Optionee only by the Optionee. The terms of
the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
5. Term of Option. This Option may be exercised only within the term set
--------------
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
6. Tax Consequences. Some of the federal tax consequences relating to
----------------
this Option, as of the date of this Option, are set forth below. THIS SUMMARY
IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO
CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION
OR DISPOSING OF THE SHARES.
(a) Exercising the Option.
---------------------
(i) Nonqualified Stock Option ("NSO"). If this Option does not
---------------------------------
qualify as an ISO, the Optionee may incur regular federal income tax liability
upon exercise. The Optionee will be treated as having received compensation
income (taxable at ordinary income tax rates) equal to the excess, if any, of
the fair market value of the Exercised Shares on the date of exercise over their
aggregate Exercise Price. If the Optionee is an employee, the Company will be
required to withhold
-3-
<PAGE>
from his or her compensation or collect from Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.
(ii) Incentive Stock Option ("ISO"). If this Option qualifies
------------------------------
as an ISO, the Optionee will have no regular federal income tax liability upon
its exercise, although the excess, if any, of the fair market value of the
Exercised Shares on the date of exercise over their aggregate Exercise Price
will be treated as an adjustment to the alternative minimum tax for federal tax
purposes and may subject the Optionee to alternative minimum tax in the year of
exercise.
(b) Disposition of Shares.
---------------------
(i) NSO. If the Optionee holds NSO Shares for at least one year,
---
any gain realized on disposition of the Shares will be treated as long-term
capital gain for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at least one year
---
after exercise AND two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the LESSER OF (A) the difference
between the FAIR MARKET VALUE OF THE SHARES ACQUIRED ON THE DATE OF EXERCISE and
the aggregate Exercise Price, or (B) the difference between the SALE PRICE of
such Shares and the aggregate Exercise Price.
(c) Notice of Disqualifying Disposition of ISO Shares. If the
-------------------------------------------------
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the Company
in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.
By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement.
OPTIONEE: SEAGATE TECHNOLOGY, INC.
______________________________ By:___________________________
Signature
______________________________ Title:________________________
Print Name
-4-
<PAGE>
DESIGNATION OF BENEFICIARY
--------------------------
In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all of my options that are unexercised at that time.
NAME: (Please print) ___________________________________________________
(First) (Middle) (Last)
_______________________ _____________________________________
Relationship
_____________________________________
(Address)
Dated: ______________ _____________________________________
Signature of Employee
-5-
<PAGE>
CONSENT OF SPOUSE
-----------------
The undersigned spouse of Optionee has read and hereby approves the terms
and conditions of the Plan and this Option Agreement. In consideration of the
Company's granting his or her spouse the right to purchase Shares as set forth
in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.
____________________________________________
Spouse of Optionee
-6-
<PAGE>
1991 INCENTIVE STOCK OPTION PLAN
STOCK OPTION AGREEMENT
EARLY EXERCISE
Unless otherwise defined herein, the terms defined in the 1991 Incentive
Stock Option Plan (the "Plan") shall have the same defined meanings in this
Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
----------------------------
Optionee's Name
Optionee's Address
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Stock Option Agreement,
as follows:
Grant Number __________________
Date of Grant __________________
Vesting Commencement Date __________________
Exercise Price per Share $_________________
Total Number of Shares Granted __________________
Total Exercise Price $_________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: _________________________
Vesting Schedule:
- ----------------
This Option vests in accordance with the following schedule:
Termination Period:
- ------------------
This Option may be exercised for ninety (90) days after termination of
employment or consulting relationship, or such longer period as may be
applicable upon death or Disability of
-1-
<PAGE>
Optionee as provided in the Plan, but in no event later than the Term/Expiration
Date as provided above.
II. AGREEMENT
---------
1. Grant of Option. The Plan Administrator of the Company hereby grants
---------------
to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee"), an option (the "Option") to purchase a number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to
Section 14(c) of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option Agreement,
the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option,
this Option is intended to qualify as an Incentive Stock Option under Section
422 of the Code.
2. Exercise of Option.
------------------
(a) Right to Exercise. This Option is exercisable during its term in
-----------------
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement; provided, however,
-------- -------
that upon execution of a Restricted Stock Agreement in the form of Exhibit A-1
hereto and upon compliance with the terms thereof, the Optionee may exercise
this Option with respect to unvested shares. In the event of Optionee's death,
Disability or other termination of Optionee's employment or consulting
relationship, the exercisability of the Option is governed by the applicable
provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of an
------------------
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The Exercise Notice shall be accompanied by payment
of the aggregate Exercise Price as to all Exercised Shares. This Option shall
be deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with all relevant provisions of law
and the requirements of any stock exchange upon which the Shares are then
listed. Assuming such compliance, for income tax purposes the Exercised Shares
shall be considered transferred to the Optionee on the date the Option is
exercised with respect to such Exercised Shares.
-2-
<PAGE>
3. Method of Payment. Payment of the aggregate Exercise Price shall be
-----------------
by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash; or
(b) check; or
(c) delivery of a properly executed exercise notice together with such
other documentation as the Administrator and the Optionee's broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price; or
(d) surrender of other Shares which (i) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than six
(6) months on the date of surrender, AND (ii) have a Fair Market Value on the
date of surrender equal to the aggregate Exercise Price of the Exercised Shares.
4. Transferability of Option. This Option may not be transferred in any
-------------------------
manner otherwise than by will or by the laws of descent and distribution and may
be exercised during the lifetime of Optionee only by the Optionee. The terms of
the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
5. Term of Option. This Option may be exercised only within the term set
--------------
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
6. Tax Consequences. Some of the federal tax consequences relating to
----------------
this Option, as of the date of this Option, are set forth below. THIS SUMMARY
IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO
CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION
OR DISPOSING OF THE SHARES.
(a) Exercising the Option.
---------------------
(i) Nonqualified Stock Option ("NSO"). If this Option does not
---------------------------------
qualify as an ISO, the Optionee may incur regular federal income tax liability
upon exercise. The Optionee will be treated as having received compensation
income (taxable at ordinary income tax rates) equal to the excess, if any, of
the fair market value of the Exercised Shares on the date of exercise over their
aggregate Exercise Price. If the Optionee is an employee, the Company will be
required to withhold from his or her compensation or collect from Optionee and
pay to the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.
-3-
<PAGE>
(ii) Incentive Stock Option ("ISO"). If this Option qualifies
------------------------------
as an ISO, the Optionee will have no regular federal income tax liability upon
its exercise, although the excess, if any, of the fair market value of the
Exercised Shares on the date of exercise over their aggregate Exercise Price
will be treated as an adjustment to the alternative minimum tax for federal tax
purposes and may subject the Optionee to alternative minimum tax in the year of
exercise.
(b) Disposition of Shares.
---------------------
(i) NSO. If the Optionee holds NSO Shares for at least one year,
---
any gain realized on disposition of the Shares will be treated as long-term
capital gain for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at least one year
---
after exercise AND two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the LESSER OF (A) the difference
between the FAIR MARKET VALUE OF THE SHARES ACQUIRED ON THE DATE OF EXERCISE and
the aggregate Exercise Price, or (B) the difference between the SALE PRICE of
such Shares and the aggregate Exercise Price.
(c) Notice of Disqualifying Disposition of ISO Shares. If the
-------------------------------------------------
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the Company
in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.
By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement.
OPTIONEE: SEAGATE TECHNOLOGY, INC.
______________________________ By:___________________________
Signature
______________________________ Title:________________________
Print Name
-4-
<PAGE>
DESIGNATION OF BENEFICIARY
--------------------------
In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all of my options that are unexercised at that time.
NAME: (Please print) _____________________________________________
(First) (Middle) (Last)
_____________________ _____________________________________
Relationship
_____________________________________
(Address)
Dated: ______________ _____________________________________
Signature of Employee
-5-
<PAGE>
CONSENT OF SPOUSE
-----------------
The undersigned spouse of Optionee has read and hereby approves the terms
and conditions of the Plan and this Option Agreement. In consideration of the
Company's granting his or her spouse the right to purchase Shares as set forth
in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.
____________________
Spouse of Optionee
-6-
<PAGE>
EXHIBIT A
---------
1991 INCENTIVE STOCK OPTION PLAN
EXERCISE NOTICE
Seagate Technology, Inc.
920 Disc Drive
Scotts Valley, California 95066
Attention: Secretary
1. Exercise of Option. Effective as of today, ___________, 199__, the
------------------
undersigned ("Purchaser") hereby elects to purchase _________ shares (the
"Shares") of the Common Stock of Seagate Technology, Inc. (the "Company") under
and pursuant to the 1991 Incentive Stock Option Plan (the "Plan") and the Stock
Option Agreement dated _______________ (the "Option Agreement"). The purchase
price for the Shares shall be $__________, as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company
-------------------
the full purchase price for the Shares.
3. Representations of Optionee. Optionee acknowledges that Optionee has
---------------------------
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Subject to the terms and conditions of this
---------------------
Agreement, Optionee shall have all of the rights of a shareholder of the Company
with respect to the Shares from and after the date that Optionee delivers full
payment of the Exercise Price until such time as Optionee disposes of the
Shares.
5. Tax Consultation. Optionee understands that Optionee may suffer
----------------
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
-------------------------------
incorporated herein by reference. This Exercise Notice, the Plan and the Option
Agreement constitute the entire agreement of the parties and supersede in their
entirety all prior undertakings and agreements of the
<PAGE>
Company and Optionee with respect to the subject matter hereof, and such
agreement is governed by Delaware law except for that body of law pertaining to
conflict of laws.
Submitted by: Accepted by:
OPTIONEE: SEAGATE TECHNOLOGY, INC.
______________________________ By:___________________________
Signature
______________________________ Its:__________________________
Print Name
Address: Address:
- ------- -------
______________________________ 920 Disc Drive
______________________________ Scotts Valley, California 95066
-2-
<PAGE>
EXHIBIT A-1
-----------
1991 INCENTIVE STOCK OPTION PLAN
RESTRICTED STOCK AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Restricted Stock Purchase Agreement.
WHEREAS, the Purchaser named in the Notice of Grant, (the "Purchaser") is
an employee or consultant of the Company, and the Purchaser's continued
participation is considered by the Company to be important for the Company's
continued growth; and
WHEREAS, in order to give the Purchaser an opportunity to acquire an equity
interest in the Company as an incentive for the Purchaser to participate in the
affairs of the Company, the Admin istrator has granted to the Purchaser the
right to exercise options relating to unvested shares subject to the terms and
conditions of the Plan and the Notice of Grant, which are incorporated herein by
reference, and pursuant to this restricted stock purchase agreement (the
"Agreement").
THEREFORE, the parties agree as follows:
1. Sale of Stock. The Company hereby agrees to sell to the Purchaser and
-------------
the Purchaser hereby agrees to purchase shares of the Company's Common Stock
(the "Shares"), at the exercise price per share and as otherwise described in
the Notice of Grant.
2. Payment of Purchase Price. The purchase price for the Shares may be
-------------------------
paid by delivery to the Company at the time of execution of this Agreement by
any of the following, or a combination thereof, at the election of the Optionee:
(a) cash; (b) check; or (c) surrender of other Shares which (i) in the case of
Shares acquired upon exercise of an option, have been owned by the Optionee for
more than six (6) months on the date of surrender, AND (ii) have a Fair Market
Value on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares.
3. Repurchase Option.
-----------------
a. In the event the Purchaser's Continuous Status as an Employee or
Consultant terminates for any or no reason (including death or disability)
before all of the Shares are released from the Company's repurchase option (see
Section 4), the Company shall, upon the date of such termination (as reasonably
fixed and determined by the Company) have an irrevocable, exclusive option for a
period of sixty (60) days from such date to repurchase up to that number of
shares which constitute the Unreleased Shares (as defined in Section 4) at the
original purchase price per share (the "Repurchase Price"). Said option shall
be exercised by the Company by delivering written notice to the Purchaser or the
Purchaser's executor (with a copy to the Escrow Holder) AND, at the Company's
option, (i) by delivering to the Purchaser or the Purchaser's executor a check
in the amount of the aggregate Repurchase Price, or (ii) by the Company
canceling an amount of the
<PAGE>
Purchaser's indebtedness to the Company equal to the aggregate Repurchase Price,
or (iii) by a combination of (i) and (ii) so that the combined payment and
cancellation of indebtedness equals such aggregate Repurchase Price. Upon
delivery of such notice and the payment of the aggregate Repurchase Price in any
of the ways described above, the Company shall become the legal and beneficial
owner of the Shares being repurchased and all rights and interests therein or
relating thereto, and the Company shall have the right to retain and transfer to
its own name the number of Shares being repurchased by the Company.
b. Whenever the Company shall have the right to repurchase Shares
hereunder, the Company may designate and assign one or more employees, officers,
directors or shareholders of the Company or other persons or organizations to
exercise all or a part of the Company's purchase rights under this Agreement and
purchase all or a part of such Shares; provided that if the Fair Market Value of
the Shares to be repurchased on the date of such designation or assignment (the
"Repurchase FMV") exceeds the aggregate Repurchase Price of such Shares, then
each such designee or assignee shall pay the Company cash equal to the
difference between the Repurchase FMV and the aggregate Repurchase Price of such
Shares.
4. Release of Shares From Repurchase Option.
----------------------------------------
a. ___________________ (_______) of the Shares shall be released
from the Company's repurchase option
_________________________________________________________________, provided in
each case that the Purchaser's Continuous Status as an Employee or Consultant
has not terminated prior to the date of any such release.
b. Any of the Shares which have not yet been released from the
Company's repurchase option are referred to herein as "Unreleased Shares."
c. The Shares which have been released from the Company's repurchase
option shall be delivered to the Purchaser at the Purchaser's request (see
Section 6).
5. Restriction on Transfer. Except for the escrow described in Section 6
-----------------------
or transfer of the Shares to the Company or its assignees contemplated by this
Agreement, none of the Shares or any beneficial interest therein shall be
transferred, encumbered or otherwise disposed of in any way until the release of
such Shares from the Company's repurchase option in accordance with the provi
sions of this Agreement, other than by will or the laws of descent and
distribution.
6. Escrow of Shares.
----------------
a. To ensure the availability for delivery of the Purchaser's
Unreleased Shares upon repurchase by the Company pursuant to the Company's
repurchase option under Section 3 above, the Purchaser shall, upon execution of
this Agreement, deliver and deposit with an escrow holder designated by the
Company (the "Escrow Holder") the share certificates representing the Unreleased
Shares, together with the stock assignment duly endorsed in blank, attached
hereto as Exhibit A-2. The Unreleased Shares and stock assignment shall be held
by the Escrow Holder, pursuant to the Joint Escrow Instructions of the Company
and Purchaser attached as Exhibit A-3
<PAGE>
hereto, until such time as the Company's repurchase option expires. As a further
condition to the Company's obligations under this Agreement, the spouse of
Purchaser, if any, shall execute and deliver to the Company the Consent of
Spouse attached hereto as Exhibit A-4.
b. The Escrow Holder shall not be liable for any act it may do or
omit to do with respect to holding the Unreleased Shares in escrow and while
acting in good faith and in the exercise of its judgment.
c. If the Company or any assignee exercises its repurchase option
hereunder, the Escrow Holder, upon receipt of written notice of such option
exercise from the proposed transferee, shall take all steps necessary to
accomplish such transfer.
d. When the repurchase option has been exercised or expires
unexercised or a portion of the Shares has been released from such repurchase
option, upon Purchaser's request the Escrow Holder shall promptly cause a new
certificate to be issued for such released Shares and shall deliver such
certificate to the Company or the Purchaser, as the case may be.
e. Subject to the terms hereof, the Purchaser shall have all the
rights of a shareholder with respect to such Shares while they are held in
escrow, including without limitation, the right to vote the Shares and receive
any cash dividends declared thereon. If, from time to time during the term of
the Company's repurchase option, there is (i) any stock dividend, stock split or
other change in the Shares, or (ii) any merger or sale of all or substantially
all of the assets or other acquisition of the Company, any and all new,
substituted or additional securities to which the Purchaser is entitled by
reason of the Purchaser's ownership of the Shares shall be immediately subject
to this escrow, deposited with the Escrow Holder and included thereafter as
"Shares" for purposes of this Agreement and the Company's repurchase option.
7. Legends. The share certificate evidencing the Shares issued hereunder
-------
shall be endorsed with the following legend (in addition to any legend required
under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN AGREEMENT
BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY.
8. Adjustment for Stock Split. All references to the number of Shares
--------------------------
and the purchase price of the Shares in this Agreement shall be appropriately
adjusted to reflect any stock split, stock dividend or other change in the
Shares which may be made by the Company after the date of this Agreement.
9. Tax Consequences. The Purchaser has reviewed with the Purchaser's own
----------------
tax advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement. The Purchaser
is relying solely on such advisors and not on any statements or representations
of the Company or any of its agents. The Purchaser understands that
<PAGE>
the Purchaser (and not the Company) shall be responsible for the Purchaser's own
tax liability that may arise as a result of this investment or the transactions
contemplated by this Agreement. The Purchaser understands that Section 83 of the
Internal Revenue Code of 1986, as amended (the "Code"), taxes as ordinary income
the difference between the purchase price for the Shares and the Fair Market
Value of the Shares as of the date any restrictions on the Shares lapse. In this
context, "restriction" includes the right of the Company to buy back the Shares
pursuant to its repurchase option. The Purchaser understands that the Purchaser
may elect to be taxed at the time the Shares are purchased rather than when and
as the Company's repurchase option expires by filing an election under Section
83(b) of the Code with the I.R.S. within 30 days from the date of purchase. The
form for making this election is attached as Exhibit A-5 hereto.
THE PURCHASER ACKNOWLEDGES THAT IT IS THE PURCHASER'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION
83(b), EVEN IF THE PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE
THIS FILING ON THE PURCHASER'S BEHALF.
10. General Provisions.
------------------
a. This Agreement shall be governed by the laws of the State of
California. This Agreement, subject to the terms and conditions of the Plan and
the Notice of Grant, represents the entire agreement between the parties with
respect to the purchase of Common Stock by the Purchaser. Subject to Section
15(c) of the Plan, in the event of a conflict between the terms and conditions
of the Plan and the terms and conditions of this Agreement, the terms and
conditions of the Plan shall prevail. Unless otherwise defined herein, the
terms defined in the Plan shall have the same defined meanings in this
Agreement.
b. Any notice, demand or request required or permitted to be given
by either the Company or the Purchaser pursuant to the terms of this Agreement
shall be in writing and shall be deemed given when delivered personally or
deposited in the U.S. mail, First Class with postage prepaid, and addressed to
the parties at the addresses of the parties set forth at the end of this
Agreement or such other address as a party may request by notifying the other in
writing.
Any notice to the Escrow Holder shall be sent to the Company's address
with a copy to the other party not sending the notice.
c. The rights and benefits of the Company under this Agreement shall
be transferable to any one or more persons or entities, and all covenants and
agreements hereunder shall inure to the benefit of, and be enforceable by the
Company's successors and assigns. The rights and obligations of the Purchaser
under this Agreement may only be assigned with the prior written consent of the
Company.
d. Either party's failure to enforce any provision or provisions of
this Agreement shall not in any way be construed as a waiver of any such
provision or provisions, nor prevent that party from thereafter enforcing each
and every other provision of this Agreement. The rights granted
<PAGE>
both parties herein are cumulative and shall not constitute a waiver of either
party's right to assert all other legal remedies available to it under the
circumstances.
e. The Purchaser agrees upon request to execute any further
documents or instruments necessary or desirable to carry out the purposes or
intent of this Agreement.
f. PURCHASER ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES
PURSUANT TO SECTION 4 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN EMPLOYEE
OR CONSULTANT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED OR
PURCHASING SHARES HEREUNDER). PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT
THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE
SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS AN EMPLOYEE OR CONSULTANT FOR THE VESTING PERIOD, FOR ANY PERIOD,
OR AT ALL, AND SHALL NOT INTERFERE WITH PURCHASER'S RIGHT OR THE COMPANY'S RIGHT
TO TERMINATE PURCHASER'S EMPLOYMENT OR CONSULTING RELATIONSHIP AT ANY TIME, WITH
OR WITHOUT CAUSE.
By Purchaser's signature below, Purchaser represents that he or she is
familiar with the terms and provisions of the Plan, and hereby accepts this
Agreement subject to all of the terms and provisions thereof. Purchaser has
reviewed the Plan and this Agreement in their entirety, has had an opportunity
to obtain the advice of counsel prior to executing this Agreement and fully
understands all provisions of this Agreement. Purchaser agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Agreement.
Purchaser further agrees to notify the Company upon any change in the residence
indicated in the Notice of Grant.
PURCHASER: SEAGATE TECHNOLOGY, INC.
______________________________ By:____________________________
Signature
______________________________ Title:_________________________
Print Name
<PAGE>
EXHIBIT A-2
-----------
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I, __________________________, hereby sell, assign and
transfer unto _________________________________________________________________
________________ (__________) shares of the Common Stock of Seagate Technology,
Inc. standing in my name of the books of said corporation represented by
Certificate No. _____ herewith and do hereby irrevocably constitute and appoint
_____________________________________________ to transfer the said stock on the
books of the within named corporation with full power of substitution in the
premises.
This Stock Assignment may be used only in accordance with the Restricted
Stock Purchase Agreement between Seagate Technology, Inc. and the undersigned
dated ______________, 19__.
Dated: _______________, 19__
Signature:______________________________
INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise its
"repurchase option," as set forth in the Agreement, without requiring additional
signatures on the part of the Purchaser.
<PAGE>
EXHIBIT A-3
-----------
JOINT ESCROW INSTRUCTIONS
-------------------------
______________________________, 19__
Seagate Technology, Inc.
920 Disc Drive
Scotts Valley, California 95066
Attention: Secretary
Dear Secretary:
As Escrow Agent for both Seagate Technology, Inc., a Delaware corporation
(the "Company"), and the undersigned purchaser of stock of the Company (the
"Purchaser"), you are hereby authorized and directed to hold the documents
delivered to you pursuant to the terms of that certain Restricted Stock Purchase
Agreement ("Agreement") between the Company and the undersigned, in accordance
with the following instructions:
1. In the event the Company and/or any assignee of the Company (referred
to collectively for convenience herein as the "Company") exercises the Company's
repurchase option set forth in the Agreement, the Company shall give to
Purchaser and you a written notice specifying the number of shares of stock to
be purchased, the purchase price, and the time for a closing hereunder at the
principal office of the Company. Purchaser and the Company hereby irrevocably
authorize and direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.
2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company or its
assignee, against the simultaneous delivery to you of the purchase price (by
cash, a check, or some combination thereof) for the number of shares of stock
being purchased pursuant to the exercise of the Company's repurchase option.
3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with any applicable state blue sky
authority of any required applications for consent to, or notice of transfer of,
the securities. Subject to the provisions of this paragraph 3, Purchaser shall
exercise all rights and privileges of a shareholder of the Company while the
stock is held by you.
<PAGE>
4. Upon written request of the Purchaser, but no more than once per
calendar year, unless the Company's repurchase option has been exercised, you
will deliver to Purchaser a certificate or certificates representing so many
shares of stock as are not then subject to the Company's repurchase option.
Within 90 days after cessation of Purchaser's continuous employment by or
services to the Company, or any parent or subsidiary of the Company, you will
deliver to Purchaser a certificate or certificates representing the aggregate
number of shares held or issued pursuant to the Agreement and not purchased by
the Company or its assignees pursuant to exercise of the Company's repurchase
option.
5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of the same to Purchaser and shall be discharged of all
further obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties.
You shall not be personally liable for any act you may do or omit to do
hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in
good faith, and any act done or omitted by you pursuant to the advice of your
own attorneys shall be conclusive evidence of such good faith.
8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court.
In case you obey or comply with any such order, judgment or decree, you shall
not be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the outlawing of any rights under the
Statute of Limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. You shall be entitled to employ such legal counsel and other experts
as you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.
<PAGE>
12. Your responsibilities as Escrow Agent hereunder shall terminate if you
shall cease to be an officer or agent of the Company or if you shall resign by
written notice to each party. In the event of any such termination, the Company
shall appoint a successor Escrow Agent.
13. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the securities held
by you hereunder, you are authorized and directed to retain in your possession
without liability to anyone all or any part of said securities until such
disputes shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
15. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses or at such other addresses as a party may designate by ten
days' advance written notice to each of the other parties hereto.
COMPANY: Seagate Technology, Inc.
920 Disc Drive
Scotts Valley, California 95066
PURCHASER: _______________________________
ESCROW AGENT: Seagate Technology, Inc.
920 Disc Drive
Scotts Valley, California 95066
Attention: Secretary
16. By signing these Joint Escrow Instructions, you become a party hereto
only for the purpose of said Joint Escrow Instructions; you do not become a
party to the Agreement.
17. This instrument shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and permitted assigns.
<PAGE>
18. These Joint Escrow Instructions shall be governed by, and construed
and enforced in accordance with, the laws of the State of California.
Very truly yours,
SEAGATE TECHNOLOGY, INC.
By: ___________________________________
Title: ________________________________
PURCHASER:
_________________________________________
(Signature)
_________________________________________
(Typed or Printed Name)
ESCROW AGENT:
____________________________
Secretary
<PAGE>
EXHIBIT A-4
-----------
CONSENT OF SPOUSE
-----------------
I, ____________________, spouse of ___________________, have read and
approve the foregoing Agreement. In consideration of granting of the right to
my spouse to purchase shares of Seagate Technology, Inc., as set forth in the
Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the
exercise of any rights under the Agreement and agree to be bound by the
provisions of the Agreement insofar as I may have any rights in said Agreement
or any shares issued pursuant thereto under the community property laws or
similar laws relating to marital property in effect in the state of our
residence as of the date of the signing of the foregoing Agreement.
Dated: _______________, 19____
______________________________
<PAGE>
EXHIBIT A-5
-----------
ELECTION UNDER SECTION 83(b)
----------------------------
OF THE INTERNAL REVENUE CODE OF 1986
------------------------------------
The undersigned taxpayer hereby elects, pursuant to the above-referenced Federal
Tax Code, to include in taxpayer's gross income for the current taxable year,
the amount of any compensation taxable to taxpayer in connection with his
receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of the
undersigned are as follows:
NAME : TAXPAYER: SPOUSE:
ADDRESS: :
IDENTIFICATION NO.: TAXPAYER: SPOUSE:
TAXABLE YEAR:
2. The property with respect to which the election is made is described as
follows: __________ shares (the "Shares") of the Common Stock of Seagate
Technology, Inc. (the "Company").
3. The date on which the property was transferred is: ______________, 19__.
4. The property is subject to the following restrictions:
The Shares may be repurchased by the Company, or its assignee, on certain
events. This right lapses with regard to a portion of the Shares based on
the continued performance of services by the taxpayer over time.
5. The fair market value at the time of transfer, determined without regard to
any restriction other than a restriction which by its terms will never
lapse, of such property is:
$_______________.
6. The amount (if any) paid for such property is:
$_______________.
The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person per
forming the services in connection with the transfer of said property.
The undersigned understands that the foregoing election may not be revoked
- --------------------------------------------------------------------------
except with the consent of the Commissioner.
- -------------------------------------------
Dated: _______________, 19__ ___________________________________
_________________________, Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated: _______________, 19__ ___________________________________
Spouse of Taxpayer
<PAGE>
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SEAGATE TECHNOLOGY, INC.
1997 ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 30, 1997
The undersigned stockholder of SEAGATE TECHNOLOGY, INC., a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated September 25, 1997, and hereby
appoints Alan F. Shugart, Gary B. Filler and Robert A. Kleist, and each of
them, proxies and attorneys-in-fact, with full power to each of substitution,
on behalf and in the name of the undersigned, to represent the undersigned at
the 1997 Annual Meeting of Stockholders of SEAGATE TECHNOLOGY, INC. to be held
on October 30, 1997 at 10:00 a.m., local time, at Seascape Resort & Conference
Center, One Seascape Resort Drive, Aptos, California 95003, and at any
adjournment or adjournments thereof, and to vote all shares of Common Stock
which the undersigned would be entitled to vote if then and there personally
present, on the matters set forth on the reverse.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(Continued and to be signed on reverse side.)
<PAGE>
SEAGATE TECHNOLOGY, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
1. Election of Directors For All
Nominees: Alan F. Shugart; For Withheld Except _________________
Robert A. Kleist; Gary B. [_] [_] [_] Nominee Exception
Filler; Kenneth E. Haughton;
Thomas P. Stafford; Lawrence
Perlman; Laurel L. Wilkening.
2. To approve an amendment to the 1991 Incentive Stock For Against Abstain
Option Plan to increase the number of shares of [_] [_] [_]
common stock reserved for issuance thereunder by
15,000,000 shares.
3. To ratify the appointment of Ernst & Young LLP as For Against Abstain
the independent auditors of the Company for fiscal [_] [_] [_]
1998.
4. In their discretion, upon such other matter or matters which may properly
come before the meeting or any adjournment or adjournments thereof.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE AMENDMENT TO THE 1991 IN-
CENTIVE STOCK OPTION PLAN, FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST &
YOUNG LLP AS INDEPENDENT AUDITORS AND AS SAID PROXIES DEEM ADVISABLE ON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
Dated: ____________________________________________ , 1997
Signature(s)____________________________________________________________________
________________________________________________________________________________
(This Proxy should be marked, dated and signed by the stockholder(s) exactly as
his or her name(s) appears hereon, and returned promptly in the enclosed enve-
lope. Persons signing in a fiduciary capacity should so indicate. If shares are
held by joint tenants or as community property, both should sign.)
