<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a Party other than the registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/X/ Preliminary proxy statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
SEEQ Technology Incorporated
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
SEEQ TECHNOLOGY INCORPORATED
47200 BAYSIDE PARKWAY
FREMONT, CALIFORNIA 94538
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MARCH 21, 1996
TO OUR STOCKHOLDERS:
You are invited to attend the Annual Meeting of Stockholders of SEEQ
TECHNOLOGY INCORPORATED, a Delaware corporation (the "Company"), to be held on
Thursday, March 21, 1996 at 3:00 p.m., local time, at the offices of the Company
at 47200 Bayside Parkway, Fremont, California 94538, for the following purposes:
1. To elect directors to serve for the ensuing year.
2. To approve and ratify an amendment to the Company's Restated 1982 Stock
Option Plan to increase the number of shares issuable thereunder by
Three Million (3,000,000) shares.
3. To ratify the appointment of Price Waterhouse LLP as independent
accountants of the Company for the fiscal year ending September 29,
1996.
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 that accompanies this Notice.
Only stockholders of record at the close of business on February 7, 1996,
are entitled to notice of and to vote at the Annual Meeting and at any
continuation or adjournment thereof.
By order of the Board of Directors
ROBERT O. HERSH
Secretary
Fremont, California
February 15, 1996
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU ARE
URGED TO VOTE, SIGN, AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN
THE POSTAGE-PREPAID ENVELOPE ENCLOSED FOR THAT PURPOSE.
<PAGE> 3
SEEQ TECHNOLOGY INCORPORATED
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS OF
SEEQ TECHNOLOGY INCORPORATED
TO BE HELD MARCH 21, 1996
GENERAL
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of SEEQ Technology Incorporated, a Delaware corporation
(the "Company" or "SEEQ"), of proxies to be voted at the Annual Meeting of
Stockholders to be held on March 21, 1996, or at any adjournment or postponement
thereof, for the purposes set forth in the accompanying Notice of Annual Meeting
of Stockholders. Stockholders of record on February 7, 1996 will be entitled to
vote at the Annual Meeting. The Annual Meeting will be held at 3:00 p.m. at the
principal executive offices of the Company located at 47200 Bayside Parkway,
Fremont, California 94538.
It is anticipated that this Proxy Statement and the enclosed proxy card
will be first mailed to stockholders on or about February 15, 1996.
VOTING RIGHTS
The close of business on February 7, 1996 was the record date for
stockholders entitled to notice of and to vote at the Annual Meeting and any
adjournments thereof. As of that date, the Company had 29,996,644 shares of its
common stock, $0.01 par value, outstanding and entitled to vote at the Annual
Meeting. Holders of common stock are entitled to one vote for each share of
common stock so held. A majority of the shares of common stock entitled to vote
will constitute a quorum for the transaction of business at the Annual Meeting.
If any stockholder is unable to attend the Annual Meeting, such stockholder
may vote by proxy. The enclosed proxy card is solicited by the Company's Board
of Directors (the "Board of Directors" or the "Board") and, when the proxy card
is returned properly completed, it will be voted as directed by the stockholder
on the proxy card. Stockholders are urged to specify their choices on the proxy
card. If a proxy card is signed and returned without choices specified, in the
absence of contrary instructions, the shares of common stock represented by such
proxy will be voted FOR Proposals 1, 2 and 3. Management does not know of any
matters to be presented at this Annual Meeting other than those set forth in
this Proxy Statement and in the Notice accompanying this Proxy Statement. If
other matters should properly come before the meeting, the proxy holders will
vote on such matters in accordance with their best judgment.
An affirmative vote of a majority of the shares present and voting at the
meeting is required for approval of all items being submitted to the
stockholders for their consideration. Abstentions and broker non-votes each are
included in determining the number of shares present and voting at the Annual
Meeting and each is tabulated separately. Abstentions are counted in tabulations
of the votes cast on proposals presented to stockholders, whereas broker
non-votes are not counted for purposes of determining whether a proposal has
been approved.
The Annual Report of the Company for the fiscal year ended September 24,
1995 has been mailed concurrently with the mailing of the Notice of Annual
Meeting and Proxy Statement to all stockholders entitled to notice of and to
vote at the Annual Meeting.
REVOCABILITY OF PROXIES
Any person giving a proxy has the power to revoke it at any time before its
exercise. A proxy may be revoked by filing with the Secretary of the Company an
instrument of revocation or a duly executed proxy bearing a later date, or may
be revoked by attending the Annual Meeting and voting in person.
<PAGE> 4
SOLICITATION OF PROXIES
The Company will bear the cost of solicitation of proxies. Copies of
solicitation material will be furnished to brokerage houses, fiduciaries, and
custodians holding shares in their names that are beneficially owned by others
to forward to such beneficial owners. The Company may reimburse such persons for
their costs of forwarding the solicitation material to such beneficial owners.
The original solicitation of proxies by mail may be supplemented by solicitation
by telephone, telegram, or other means by directors, officers, employees or
agents of the Company. No additional compensation will be paid to these
individuals for any such services. Except as described above, the Company does
not intend to solicit proxies other than by mail.
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
Each director to be elected at the Annual Meeting will hold office until
the next annual meeting of stockholders and until a successor for such director
is elected and has qualified, or until the death, resignation, or removal of
such director. There are four nominees, each of whom is currently a director of
the Company. Each of the Company's current directors was elected to the Board by
the stockholders at the last annual meeting. Each person nominated for election
has agreed to serve if elected, and the Board of Directors has no reason to
believe that any nominee will be unavailable or will decline to serve. In the
event, however, 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 current Board of Directors to fill the vacancy. In
the event that additional persons are nominated for election as directors, the
proxyholders intend to vote all proxies received by them for the nominees listed
below. Unless otherwise instructed, the proxyholders will vote the proxies
received by them for the nominees named below. The four candidates receiving the
highest number of the affirmative votes of the shares entitled to vote at the
Annual Meeting will be elected directors of the Company. The proxies solicited
by this Proxy Statement may not be voted for more than four nominees.
NOMINEES
Set forth below is information regarding the nominees to the Board of
Directors.
<TABLE>
<CAPTION>
NAME AGE
--------------------------------------- ---
<S> <C>
Alan V. Gregory........................ 62
Charles C. Harwood..................... 68
Phillip J. Salsbury.................... 53
Peter C. Chen.......................... 56
</TABLE>
Alan V. Gregory has served as a member of the Board of Directors of the
Company since August 1992 and has served as the Company's Chairman of the Board
since October 1993. Since 1983, Mr. Gregory has been President, Chief Executive
Officer and Chairman of the Board of Directors of XECOM, Inc., a modem
manufacturer. From 1978 to 1983, Mr. Gregory was a private investor. From 1975
to 1978, he served as Vice President and General manager of the MOS Divisions of
Fairchild Semiconductor Incorporated, a semiconductor manufacturer. From 1969 to
1975, Mr. Gregory was employed by Signetics Corporation, a semiconductor
manufacturer, and served as Corporate Vice President and General manager of the
Analog Division from 1973 to 1975. Mr. Gregory was also a co-founder of Omni
Technology Incorporated, an electronics test services company, and served as one
of its directors from 1980 to 1986.
Charles C. Harwood has served as a member of the Board of Directors of the
Company since May 1994. Since December 1992, Mr. Harwood has been an independent
management consultant. From 1985 through December 1992, Mr. Harwood was a
co-founder of The Quality Improvement Company, a management consulting firm.
From 1970 through 1985, Mr. Harwood served as President of Signetics
Corporation. Mr. Harwood is also a director of XECOM and North American
Management Company, an investment advisory firm.
2
<PAGE> 5
Phillip J. Salsbury, a founder of the Company, has served as the Company's
President and Chief Executive Officer since October 1993. Dr. Salsbury has
served as a member of the Board of Directors since the founding of the Company
in 1981 and, from 1981 through September 1993, served as the Company's Vice
President, Chief Technical Officer and Secretary. From 1973 until 1980, Dr.
Salsbury served in various engineering management positions for Intel
Corporation, a semiconductor manufacturer. Dr. Salsbury is a co-inventor under
nine patents in the area of MOS (metal oxide silicon) devices and circuits.
Peter C. Chen has served as a member of the Board of Directors of the
Company since January 18, 1994. Since December 1992, Dr. Chen has been Chairman
of Specom Technology Corporation, a multimedia communications subsystem
manufacturer, and President of Crosslink Semiconductor Corporation, a
semiconductor design company. From December 1991 to May 1992, Dr. Chen was the
Chairman of Mosel-Vitelic Corporation, a semiconductor manufacturer. From 1983
to December 1991, Dr. Chen served as the President and CEO of MOS Electronics
Corporation, a semiconductor manufacturer. Dr. Chen received a Ph.D. in
Electrical Engineering from Cornell University in 1971. Dr. Chen was appointed
to the Board of Directors of the Company pursuant to the right of Hualon
Microelectronics Corporation to designate one member of the Board of Directors
for election by the stockholders. See the "Certain Transactions" section below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL OF THE
ABOVE NOMINEES FOR ELECTION AS DIRECTORS.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held seven (7) meetings during fiscal 1995. Each
director, other than Mr. Chen, attended more than seventy-five percent (75%) of
the aggregate of (i) the total number of meetings of the Board of Directors held
during the fiscal year, or portion of the fiscal year, during which such
director served as a member of the Board, and (ii) the total number of meetings
held by all committees of the Board on which such director served.
The Audit Committee of the Board of Directors recommends engagement of the
Company's independent accountants, approves services performed by such
accountants, and reviews and evaluates the Company's accounting system and its
system of internal controls. This committee, which consists of Directors Gregory
and Harwood, held two (2) meetings during fiscal 1995.
The Compensation Committee of the Board of Directors has overall
responsibility for the Company's compensation policies and determines the
compensation payable to the Company's executive officers, including their
participation in certain of the Company's employee benefit plans. This
committee, which consists of Directors Gregory, Harwood and Salsbury, held one
(1) meeting during fiscal 1995.
The Stock Option Committee of the Board of Directors has the exclusive
authority to administer the Company's Restated 1982 Stock Option Plan (the "1982
Stock Option Plan") and to make stock option grants under the Plan, including
grants to executive officers. This committee, which consists of Directors
Gregory and Harwood, held three (3) meetings during fiscal 1995.
The Nominating Committee of the Board of Directors nominates persons to
serve on the Board of Directors. Any stockholder who wishes to recommend a
prospective nominee for the Board of Directors for consideration by the
Nominating Committee may submit such recommendation to Mr. Alan V. Gregory,
Chairman of the Board of Directors, SEEQ Technology Incorporated, 47200 Bayside
Parkway, Fremont, California 94538. This Committee, which consists of Directors
Gregory, Harwood and Salsbury, held one (1) meeting during fiscal 1995.
DIRECTOR COMPENSATION
It is the general policy of the Company that each non-employee director of
the Company who is not appointed as a director pursuant to any contractual or
other right or arrangement be paid $2,000 for each quarterly meeting of the
Board of Directors attended and $1,000 for certain additional Board or committee
meetings attended. In addition, each such director is eligible for reimbursement
in accordance with Company
3
<PAGE> 6
policy for expenses incurred in connection with his attendance at meetings of
the Board of Directors and the committees thereof.
Under the Company's 1989 Non-Employee Director Stock Option Plan (the "1989
Stock Option Plan"), an individual who is not an employee of the Company and has
not been appointed or elected as a director pursuant to any contractual or other
right or arrangement will receive an automatic option grant for 20,000 shares of
the Company's common stock upon becoming a member of the Board, and each such
individual who continues to serve as a non-employee Board member will receive
additional automatic option grants, each for 10,000 shares, at annual intervals
over his period of Board service, beginning with the second Annual Stockholders
Meeting following his initial election or appointment to the Board. Under this
Plan, Mr. Gregory received a 20,000 share option grant in August 1992 with an
exercise price of $1.4375 per share, a 10,000 share option grant in February
1994 with an exercise price of $1.375 per share, and a 10,000 share option grant
in March 1995 with an exercise price of $2.438 per share; and Mr. Harwood
received a 20,000 share option grant in April 1994 with an exercise price of
$1.125 per share. Each option granted under the 1989 Stock Option Plan will have
an exercise price per share equal to the fair market value of the Company's
common stock on the automatic grant date and will have a maximum term of 10
years. The option will become exercisable for all the option shares upon the
optionee's completion of 6 months of Board service measured from the grant date,
but any shares purchased under the option will be subject to repurchase by the
Company, at the original exercise price paid per share, should the optionee
cease Board service prior to vesting in the purchased shares. Each 20,000 share
option grant will vest in two equal annual installments over the optionee's
period of Board service measured from the grant date, and the 10,000 share
option grant which will be made to each eligible non-employee Board member at
the time of the 1996 Annual Stockholders Meeting will vest upon that
individual's completion of two years of Board service measured from the grant
date. However, the shares subject to each outstanding option grant under the
1989 Stock Option Plan will immediately vest should the Company be acquired by
merger or asset sale or should the optionee die or become disabled while serving
as a Board member or should there occur a hostile takeover of the Company
through tender offer for 25% or more of the outstanding common stock or change
in the majority of the Board by proxy contest. Upon the successful completion of
a hostile tender offer for 25% or more of the outstanding common stock, each
automatic option grant will be canceled in return for a cash payment from the
Company in an amount per canceled option share equal to the greater of (i) the
highest tender offer price per share paid for the common stock or (ii) the fair
market value per share on the option cancellation date, less the option exercise
price per share.
No other compensation is paid to directors of the Company in respect of
their services as directors.
MANAGEMENT
Set forth below is information regarding the executive officers of the
Company who are not directors:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------- --- ----------------------------------------------
<S> <C> <C>
Robert O. Hersh.................. 42 Vice President, Finance, Chief Financial
Officer and Secretary
Philip A. Ortiz.................. 49 Vice President, Worldwide Sales
Walter P. Gebauer................ 48 Vice President, Manufacturing
Stephen F. Dreyer................ 43 Vice President and Chief Technical Officer
Barry C. Gray.................... 39 Vice President, Marketing
</TABLE>
Robert O. Hersh has served as the Company's Vice President, Finance and
Chief Financial Officer since October 1995 and as the Company's Secretary since
January 1996. From 1987 to September 1995, he served in various capacities at
Alps Electric (North America), Inc., a manufacturer of computer peripheral
equipment, and its subsidiaries, including as Executive Vice President and Chief
Operating Officer and Senior Vice President and Chief Financial Officer.
Philip A. Ortiz has served as the Company's Vice President, Worldwide Sales
since September 1992. From October 1988 until June 1992, he was the Company's
Vice President, Worldwide Sales. From June 1992 to September 1992, Mr. Ortiz was
on leave from the Company. Mr. Ortiz served as the Company's Vice
4
<PAGE> 7
President, International Sales from March 1988 to October 1988. Mr. Ortiz has
served in international and domestic sales activities for the Company since 1983
and was first appointed as Vice President in January 1987. From 1980 to 1983,
Mr. Ortiz was director of marketing and sales for California Devices, Inc., a
semiconductor manufacturer. From 1970 to 1980, he held various marketing and
sales positions at American Micro-Systems, Inc., a semiconductor manufacturer.
Walter P. Gebauer has served as the Company's Vice President of
Manufacturing since July 1994. From February 1992 to June 1994, Mr. Gebauer
served as General Manager and Director of Operations for Kodiak Technology
Incorporated, a subsidiary of the Company. From March 1991 to January 1992, Mr.
Gebauer served as Director of Operations for the Company. Prior to joining the
Company, Mr. Gebauer spent twelve years in various management positions with
National Semiconductor and five years with Signetics Corporation, both
semiconductor manufacturers.
Stephen F. Dreyer has served as the Company's Vice President and Chief
Technical Officer since April 1995. From June 1993 to March 1995, Mr. Dreyer
served as the President of Talus Technology Incorporated, which was a wholly
owned subsidiary of the Company. From November 1991 to June 1993, Mr. Dreyer was
a consultant in the area of analog integrated circuit design. From October 1984
to October 1991, Mr. Dreyer served as the CMOS Design Manager for Micro Linear
Corporation, a semiconductor manufacturer.
Barry C. Gray has served as the Company's Vice President of Marketing since
September 1995. From 1990 to August 1995, Mr. Gray served in various marketing
positions at Integrated Device Technology, a semiconductor manufacturer,
including Strategic Marketing Manager, Marketing Manager and Product Marketing
Engineer.
CERTAIN TRANSACTIONS
SEEQ and Hualon Microelectronics Corporation, a corporation organized under
the laws of Taiwan, the Republic of China ("Hualon"), entered into a Stock
Purchase Agreement dated July 16, 1990 (the "Stock Purchase Agreement") pursuant
to which Hualon purchased for cash 1,625,000 shares of SEEQ common stock at
$3.25 per share, for an aggregate purchase price of $5,281,250. In addition, the
Stock Purchase Agreement provides for the election of a representative of Hualon
to the SEEQ Board of Directors on the terms set forth in the Stock Purchase
Agreement. Pursuant to this right, Hualon has appointed Dr. Peter C. Chen to the
Company's Board of Directors. SEEQ and Hualon also entered into a Technology
Transfer and Foundry Agreement dated July 16, 1990 (the "Foundry Agreement")
pursuant to which SEEQ agreed to license to Hualon certain of SEEQ's processes
and products, and the underlying technology with respect thereto, and Hualon
agreed to manufacture products on SEEQ's behalf and act as an alternate source
for certain of such products in certain geographical markets (in exchange for
which SEEQ will receive royalty payments). In addition, the Foundry Agreement
provides for the joint development of new products and processes based on
certain of the products and processes licensed by SEEQ under such Agreement.
Pursuant to a settlement of certain litigation between the Company and Hualon,
an Amendment to the Foundry Agreement was entered into by and between the
Company and Hualon during fiscal 1995. Pursuant to the Foundry Agreement, as
amended, the Company paid to Hualon an aggregate of approximately $400,000
during fiscal 1995.
On March 30, 1994 the Company filed a lawsuit in the United States District
Court for the Northern District of California against Hualon, which had
previously been one of the Company's former foundries and joint development
partners. In the lawsuit, the Company originally sought injunctive relief from
the court to prevent Hualon from using certain of the nonvolatile memory
technology previously sold by the Company to Atmel Corporation, to which Hualon
had asserted certain license rights under an alleged license agreement. In
response to the Company's claims, Hualon asserted affirmative defenses and
counterclaims seeking a declaration by the court that the alleged license
agreement was valid and seeking specific performance of the alleged license
agreement and other agreements previously entered into by the two parties.
Hualon subsequently amended its counterclaims for damages for breach of, and for
money owed pursuant to, other agreements between the Company and Hualon. The
Company subsequently amended its original complaint to
5
<PAGE> 8
include a number of additional claims against Hualon, including claims for
damages for breach of, and for money owed pursuant to, such other agreements.
On August 16, 1995, the Company and Hualon entered into a Settlement
Agreement, Release and Tolling Agreement. The terms of such Agreement provided,
among other things, for the payment by the Company to Hualon of $500,000 in cash
and the issuance by the Company to Hualon of 100,000 shares of the Company's
Common Stock. In addition, under the terms of such Agreement, the Company agreed
that the claims asserted against Hualon in respect of the alleged license
agreement would be tolled for such time and on such terms as provided therein.
As a result, the Company is not currently pursuing such claims. The Company is
entitled to pursue such claims in the future, however, subject to the terms of
the Settlement Agreement, Release and Tolling Agreement.
SHARE OWNERSHIP
The following table sets forth certain information regarding the ownership
of the Company's common stock as of December 31, 1995 by (i) all persons known
by the Company to be beneficial owners of five percent (5%) or more of its
outstanding common stock, (ii) each director of the Company and each nominee for
director, (iii) each of the Named Executive Officers (as herein defined), and
(iv) all executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP(1)
--------------------------
NUMBER OF PERCENT OF
NAME OF BENEFICIAL OWNER SHARES CLASS
- --------------------------------------------------------------------- --------- ----------
<S> <C> <C>
Atmel Corporation.................................................... 3,614,701 12.1%
2125 O'Nel Drive
San Jose, CA 95131
Hualon Microelectronics Corporation.................................. 1,637,000 5.5
c/o The E-Hsin International Corporation
42 Station 2, 6th Floor
Chung Shan North Road
Taipei, Taiwan
Phillip J. Salsbury.................................................. 688,930(2) 2.2
Alan V. Gregory...................................................... 128,500(3) *
Peter C. Chen........................................................ 0(4) *
Charles C. Harwood................................................... 87,000(5) *
Robert O. Hersh...................................................... 0 *
Philip A. Ortiz...................................................... 22,522(6) *
Stephen F. Dreyer.................................................... 54,877(7) *
Barry C. Gray........................................................ 0 *
Walter P. Gebauer.................................................... 5,274(8) *
All current directors and executive officers as a group (9
persons)........................................................... 967,103(9) 3.2
</TABLE>
- ---------------
* Less than one percent.
(1) Unless otherwise indicated, each of the beneficial owners named in the table
has sole voting and investment power with respect to all shares shown as
owned by them, subject to applicable community property laws.
(2) Excludes 1,333 shares of common stock owned by trusts for the benefit of Mr.
Salsbury's children, as to which Mr. Salsbury disclaims beneficial
ownership. Includes 595,327 shares of common stock subject to issuance upon
exercise of options exercisable within 60 days after December 31, 1995.
(3) Includes 40,000 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days after December 31, 1995.
(4) Does not include the 1,637,000 shares held by Hualon. Dr. Chen has been
appointed to the Company's Board of Directors as the representative of
Hualon. See "Certain Transactions."
6
<PAGE> 9
(5) Includes 20,000 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days after December 31, 1995.
(6) Includes 22,515 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days after December 31, 1995.
(7) Includes 54,877 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days after December 31, 1995.
(8) Includes 5,274 shares of Common Stock issuable upon exercise of options that
are exercisable within 60 days after December 31, 1995.
(9) Includes 737,993 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days after December 31, 1995.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES ACT OF 1934
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission (the "SEC") initial reports of ownership
and reports of changes in ownership of common stock and other equity securities
of the Company. Officers, directors and greater than ten percent stockholders
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based solely upon review of copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended September 24, 1995, all
Section 16(a) filing requirements applicable to the Company's officers,
directors and greater than ten percent beneficial owners stock were complied
with, other than a Form 3 for Stephen F. Dreyer which was filed late.
7
<PAGE> 10
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation earned by the Company's Chief Executive Officer and each of the
three other most highly compensated executive officers of the Company
(determined as of the end of the last fiscal year) for services rendered in all
capacities to the Company and its subsidiaries for the 1995, 1994 and 1993
fiscal years. In addition, the table includes certain summary compensation
information for Mr. Ralph Harms who terminated his employment in June 1995. Such
individuals will be hereinafter referred to as the Named Executive Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
OTHER COMPENSATION
ANNUAL COMPENSATION ANNUAL AWARDS ALL OTHER
FISCAL -------------------------- COMPENSATION (OPTIONS) COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(1) ($)(2)(3) (NO. OF SHARES) ($)(4)
- --------------------------- ------ ------------ ----------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Phillip J. Salsbury........ 1995 $205,400 -- $ 4,103 -- $182,682
President and Chief 1994 214,499 -- 62,519 400,000 362,536
Executive Officer(5) 1993 148,843 $ 3,588 40,588 185,208(6) --
Ralph J. Harms............. 1995 97,269 5,000 2,175 -- 50,315
Vice President, Finance 1994 130,000 20,000 62,360 135,000 72,872
and Administration, 1993 123,982 2,949 9,328 94,370(6) --
Chief Financial Officer
and Secretary(7)
Philip A. Ortiz............ 1995 100,001 -- 92,592(8) -- 66,877
Vice President, 1994 100,001 -- 81,999(8) 20,000 98,560
Worldwide Sales 1993 90,963 1,125 77,531(8) 109,728(6) --
Walter P. Gebauer.......... 1995 127,036 -- -- -- --
Vice President, 1994 117,162 -- -- 100,000 --
Manufacturing(9) 1993 109,154 -- -- -- --
Stephen F. Dreyer.......... 1995 102,846 -- -- 540,000 --
Vice President, Research 1994 100,000 -- -- -- --
and Development(10) 1993 28,846 -- 13,188(10) -- --
</TABLE>
- ---------------
(1) Includes amounts deferred under the Company's Retirement Income (401(k))
Plan.
(2) Except where otherwise specifically noted, all amounts shown in the column
"Other Annual Compensation" represent amounts reimbursed to the named
executive officers in respect of certain financial and tax preparation
services and automobile allowances.
(3) Except where otherwise specifically described in footnotes (2) and (7), all
amounts shown in the column "Other Annual Compensation" represent amounts
paid to each Named Executive Officer pursuant to the Company's Supplemental
Cash Bonus Plan. A portion of each such award was immediately repaid to the
Company in satisfaction of the accrued interest on the outstanding
promissory notes which the Named Executive Officer delivered to the Company
in payment of the exercise price of shares purchased by that individual
under the Company's 1982 Stock Option Plan, and the remainder of the award
represented a reimbursement for income taxes payable by the Named Executive
Officer with respect to the bonus award. The bonus awards for each Named
Executive Officer were as follows: (i) for fiscal year 1995: Dr. Salsbury:
$4,103, of which $2,551 represented the amount repaid to the Company as
interest and $1,552 represented the tax reimbursement on the award; Mr.
Harms: $825, of which $513 represented the amount repaid to the Company as
interest and $312 represented the tax reimbursement on the award; and Mr.
Ortiz: $1,115, of which $694 represented the amount repaid to the Company
as interest and $421 represented the tax reimbursement on the award; (ii)
for fiscal year 1994: Dr. Salsbury: $62,519, of which $39,075 represented
the amount repaid to the Company as interest and $23,444 represented the
tax reimbursement on the award; Mr. Harms: $8,870, of which
8
<PAGE> 11
$5,544 represented the amount repaid to the Company as interest and $3,326
represented the tax reimbursement on the award; and Mr. Ortiz: $17,411, of
which $10,882 represented the amount repaid to the Company as interest and
$6,529 represented the tax reimbursement on the award; (iii) for fiscal
year 1993: Dr. Salsbury: $39,203, of which $24,502 represented the amount
repaid to the Company as interest and $14,701 represented the tax
reimbursement on the award; Mr. Harms: $7,767, of which $4,854 represented
the amount repaid to the Company as interest and $2,913 represented the tax
reimbursement on the award; and Mr. Ortiz: $11,080, of which $6,925
represented the amount repaid to the Company as interest and $4,155
represented the tax reimbursement on the award. For a description of the
Supplemental Cash Bonus Plan, see "Supplemental Cash Bonus Plan" below.
(4) All amounts shown in the column "All Other Compensation" represents: (i)
the amount of forgiveness of indebtedness which the Named Executive Officer
owed to the Company under the promissory notes such Named Executive Officer
delivered in payment of the option exercise price of certain stock options
granted under the 1982 Stock Option Plan. Under the terms of the Special
Loan Forgiveness Program adopted by the Company, such indebtedness is to be
forgiven over an 18-month period beginning October 1, 1993 so long as such
Named Executive Officer continues as an employee of the Company; and (ii)
the amount reimbursed to the Named Executive Officer for the income tax
liability incurred as a result of the forgiveness of such promissory notes;
provided, however, that, for accounting purposes, the entire amount of such
forgiveness and reimbursement has been accrued as compensation expense for
the 1995 fiscal year. During fiscal 1994, the amounts forgiven and
reimbursed to the Named Executive Officers under the Special Loan
Forgiveness Program were as follows: Dr. Salsbury: $226,584 forgiven and
$135,952 reimbursed; Mr. Harms: $45,544 forgiven and $27,328 reimbursed;
and Mr. Ortiz: $61,600 forgiven and $39,960 reimbursed. During fiscal 1995,
the amounts forgiven and reimbursed to the Named Executive Officers under
the Special Loan Forgiveness Program were as follows: Dr. Salsbury:
$113,291 forgiven and $69,391 reimbursed; Mr. Harms: $22,773 forgiven and
$27,542 reimbursed; and Mr. Ortiz: $30,798 forgiven and $36,079 reimbursed.
See "Special Loan Forgiveness Program."
(5) Dr. Salsbury was appointed to be President and Chief Executive Officer of
the Company on October 1, 1993. Prior thereto, Dr. Salsbury was the
Company's Vice President and Chief Technical Officer.
(6) The options granted to the named executive officers during fiscal 1993
include options to purchase shares of common stock granted under the
Company's 1982 Stock Option Plan in replacement of the shares previously
purchased upon the exercise of options and subsequently sold by such
officers pursuant to the Company's Loan Forgiveness Program in the
following amounts: Mr. Salsbury: 110,208 shares; Mr. Harms: 19,370 shares;
and Mr. Ortiz: 29,728 shares. See "Special Loan Forgiveness Program."
(7) Mr. Harms terminated his employment in June 1995.
(8) Includes sales commissions paid to Mr. Ortiz in the amount of $82,600,
$56,349 and $58,463 for fiscal years 1995, 1994 and 1993, respectively.
(9) Mr. Gebauer terminated his employment effective January 31, 1996.
(10) Mr. Dreyer was appointed to be the Company's Vice President and Chief
Technical Officer in April 1995. From June 1993 to April 1995, Mr. Dreyer
was the President of Talus Technology Incorporated, a wholly owned
subsidiary of the Company. Prior thereto, Mr. Dreyer was employed as a
consultant to the Company. The amounts paid to Mr. Dreyer in fiscal 1993
represent consulting fees.
SUPPLEMENTAL CASH BONUS PLAN
The Supplemental Cash Bonus Plan was implemented as a special program to
provide the Named Executive Officers with an opportunity to earn additional
compensation to be applied to the satisfaction of their outstanding indebtedness
to the Company arising from the exercise of the stock options granted to them
under the Company's 1982 Stock Option Plan. At the time when those options were
exercised, the rules of the Securities and Exchange Commission applicable to
short-swing trading transactions in the Company's common stock required the
officer to hold the purchased shares for at least six months before those shares
could be sold without short-swing liability. In order to avoid liquidity
problems for the Named Executive
9
<PAGE> 12
Officers, the Company permitted the option exercise price to be paid through a
promissory note. The purchased shares were then held by the Company as security
for the notes and were to be released as the shares were sold and the proceeds
applied to the payment of the notes. During fiscal 1987 and 1988, the Company
accepted promissory notes from the following Named Executive Officers in payment
of the option exercise price for the number of shares specified for each such
individual: Dr. Salsbury: 110,208 shares at an average exercise price of $4.18
per share; Mr. Harms: 19,370 shares at an average exercise price of $4.68 per
share; and Mr. Ortiz: 29,728 shares at an average exercise price of $4.27 per
share. Accordingly, the amount of the promissory notes delivered under the 1982
Stock Option Plan in payment for the shares purchased by the Named Executive
Officers were in the following aggregate amounts: Dr. Salsbury: $460,539; Mr.
Harms: $90,748; and Mr. Ortiz: $126,831. Each promissory note is full recourse
and currently bears interest at 6% per annum. The promissory notes were
originally due and payable within three years after issuance, but the due date
for payment has been extended on several occasions, including the recent
extension to March 1995 under the terms of the Loan Forgiveness Program, as
described below. During fiscal year 1994, the amount of the outstanding notes of
each Named Executive Officer was reduced through payments applied to such
indebtedness pursuant to the Loan Forgiveness Program.
Under the Supplemental Cash Bonus Plan, each officer of the Company with an
outstanding promissory note under the 1982 Stock Option Plan is to receive an
annual cash payment equal to the interest due and payable on his promissory note
plus an additional amount to reimburse him for the additional income tax
incurred as a result of the payment. No executive officer to whom payments have
been made under the Supplemental Cash Bonus Plan has received any amounts
thereunder in excess of the amount necessary to satisfy the interest payment due
on his promissory note and the taxes payable on the bonus. The total amounts
accrued and paid in fiscal 1995, 1994 and 1993 under the Supplemental Cash Bonus
Plan on behalf of the Named Executive Officers are included in the Summary
Compensation Table and described in footnote (3) thereto.
SPECIAL LOAN FORGIVENESS PROGRAM
The Special Loan Forgiveness Program (the "Loan Forgiveness Program")
adopted by the Company was designed to achieve two primary purposes: (i) obtain
working capital for the Company and (ii) allow the Named Executive Officers who
have outstanding promissory notes under the 1982 Stock Option Plan the
opportunity to have that indebtedness forgiven over their period of continued
service with the Company. The Loan Forgiveness Program consists of three
separate components: the sale of the pledged shares and the paydown of the
promissory note, the grant of new stock options and the forgiveness of the
balance of the note over a period of future service.
Accordingly, each Named Executive Officer was required to sell all the
shares of Company's common stock securing his promissory note and to apply the
entire sale proceeds (net of sales commissions) to the partial payment of such
note. The remaining balance of the note is forgiven in six equal and successive
quarterly increments. However, unless otherwise provided by the Company, the
Named Executive Officer must continue in the Company's employ through each
forgiveness date in order to have the increment for that quarter forgiven. If
the Named Executive Officer leaves the Company's employ prior to full
forgiveness of his promissory note, then, unless otherwise provided by the
Company, the entire unpaid balance of that note will become due and payable on
the fifteenth (15th) day following such cessation of employee status.
The number of shares of the Company's common stock sold by each of the
Named Executive Officers under the Loan Forgiveness Program, the sales prices
per share, and the total net proceeds paid to the Company as a result of such
sales were as follows: Mr. Salsbury sold 52,650 shares at $1.0625 per share and
57,567 shares at $1.15625 per share, for total net proceeds of approximately
$120,664; Mr. Ortiz sold 14,250 shares at $1.0625 per share and 15,478 shares at
$1.3125 per share, for total net proceeds of approximately $34,433; and Mr.
Harms sold 9,300 shares at $1.0625 per share and 10,070 shares at $1.1325 per
share, for total net proceeds of approximately $22,431.
As the promissory note is forgiven in quarterly increments, the Named
Executive Officer receives a cash bonus as a reimbursement from the Company in
an amount equal to the Federal and state income tax liability incurred as a
result of (i) the loan forgiveness and (ii) the cash bonus. As a result, the
officer incurs no
10
<PAGE> 13
additional tax liability in connection with the forgiveness of his promissory
note. The total amounts forgiven and reimbursed under the Loan Forgiveness
Program on behalf of the Named Executive Officers are included in the Summary
Compensation Table and described in footnote (4) thereto.
Each Named Executive Officer was granted a new stock option under the 1982
Stock Option Plan for the same number of shares of common stock as were sold in
connection with the paydown of his promissory note. The exercise price is equal
100% of the fair market value per share of the Company's common stock on the
grant date and the option will vest on a daily basis over an 18-month period
over the officer's continued service with the Company, measured from the grant
date. Any shares purchased by the Named Executive Officer under the new option
will automatically be pledged as security for the unpaid balance of his
promissory note and will be released incrementally as that note is forgiven.
STOCK OPTIONS
The following table sets forth information concerning the stock options
granted under the 1982 Stock Option Plan during the 1995 fiscal year to the
Named Executive Officers. The table also sets forth hypothetical gains or
potential "option spreads" for those options at the end of their respective
ten-year terms. These potential realizable values are based on the assumption
that the market price of the Company's common stock will appreciate at the rate
of five percent (5%) and ten percent (10%), compounded annually, from the date
the option was granted to the last day of the full option term. The actual value
realized upon the exercise of these options, if any, will be dependent upon the
future performance of the Company's common stock and overall market conditions.
During the 1995 fiscal year, no stock appreciation rights were granted to the
Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF STOCK
OPTIONS GRANTED TO EXERCISE PRICE APPRECIATION
GRANTED EMPLOYEES PRICE FOR OPTION TERM(2)
(NO. OF IN FISCAL PER EXPIRATION -----------------------
NAME SHARES) YEAR(1) SHARE($) DATE 5%($) 10%($)
- ------------------------------ -------- ---------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Philip J. Salsbury............ -- -- -- -- -- --
Ralph J. Harms................ -- -- -- -- -- --
Philip A. Ortiz............... -- -- -- -- -- --
Walter P. Gebauer............. -- -- -- -- -- --
Stephen F. Dreyer............. 540,000 36.3% 1.375 March 2005 $466,954 $1,183,354
</TABLE>
- ---------------
(1) The Company granted options to purchase a total of 1,487,000 shares of
common stock during the year ended September 24, 1995.
(2) The five percent (5%) and ten percent (10%) assumed annual rates of compound
stock price appreciation are mandated by the rules of the SEC and do not
represent the Company's estimate or a projection by the Company of future
stock prices.
STOCK OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information concerning the number of
options exercised during the fiscal year ended September 24, 1995 and the number
of shares subject to exercisable and unexercisable stock options held by the
Named Executive Officers as of September 24, 1995.
11
<PAGE> 14
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS AT
NUMBER OF UNEXERCISED OPTIONS FISCAL YEAR END (MARKET PRICE
AT FISCAL YEAR END OF SHARES LESS
SHARES (NO. OF SHARES) EXERCISE PRICE)($)(2)(3)
ACQUIRED ON VALUE ----------------------------- -----------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Phillip J.
Salsbury......... -- -- 566,818 207,211 $ 1,915,542 $ 690,094
Ralph J. Harms..... 202,539 $ 288,721 -- -- -- --
Philip A. Ortiz.... 62,000 98,672 25,806 41,922 90,537 148,701
Walter P.
Gebauer.......... -- -- 101,802 33,198 336,545 114,135
Stephen F.
Dreyer........... -- -- 75,888 464,112 251,417 1,537,603
</TABLE>
- ---------------
(1) The "value realized" represents the difference between the base (or
exercise) price of the option shares and the market price of the option
shares on the date the option was exercised. The value realized was
determined without considering any taxes which may have been owed.
(2) "In-the-money" options are options whose base (or exercise) price was less
than the market price of common stock at September 24, 1995.
(3) Assuming a stock price of $4.688 per share, which was the closing price of a
share of the Company's common stock reported on the Nasdaq National Market
on September 24, 1995.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committees of the Board of Directors (the
"Committees") administer the Company's compensation policies and programs. The
Compensation Committee makes and reviews recommendations regarding the Company's
compensation policies and executive compensation, including setting the base
salaries of the Company's executive officers, approving individual bonuses and
bonus programs for executive officers, and administering certain of the
Company's stock option and other employee benefit plans. The Stock Option
Committee is solely responsible for administering the Company's 1982 Stock
Option Plan, under which grants may be made to executive officers and other key
employees. The following is a summary of policies of the Committees that affect
the compensation paid to executive officers, as reflected in the tables and text
set forth elsewhere in this proxy statement.
General Compensation Policy. The overall policy of the Committees is to
offer the Company's executive officers competitive compensation opportunities
based upon their personal performance, the financial performance of the Company
and their contribution to that performance. One of the primary objectives is to
have a substantial portion of each executive officer's compensation contingent
upon the Company's performance as well as upon such executive officer's own
level of performance. Each executive officer's compensation package is generally
comprised of three elements: (i) base salary, which reflects an individual's
position and responsibilities, as well as past performance, and is generally
designed primarily to be competitive with the salary levels of the Company's
competitors in the semiconductor industry, (ii) annual variable performance
awards payable in cash and tied to the achievement of annual performance goals,
and (iii) long-term stock-based incentive awards designed to strengthen the
mutuality of interests between the executive officers and the Company's
stockholders. Generally, as an executive officer's level of responsibility
increases, a greater portion of such executive officer's total compensation will
be dependent upon Company performance and stock price appreciation rather than
base salary.
Factors. Several important factors considered in establishing the
components of each executive officer's compensation package for the 1995 fiscal
year are summarized below. Additional factors were taken into account to a
lesser degree. The Committees may in their discretion apply entirely different
factors, such as different measures of financial performance, for future fiscal
years. However, it is currently contemplated that all compensation decisions
will be designed to further the overall compensation policy described above.
Base Salary. The base salary for each officer is primarily set on the
basis of personal performance and internal comparability considerations, and, to
a lesser extent, on the financial performance of the Company. Because of the
Company's financial performance over the past three fiscal years, the base
salary levels of the
12
<PAGE> 15
executive officers have not increased significantly above the levels in effect
for the 1993 fiscal year, except to compensate them for the promotions and the
accompanying additional responsibilities assumed by Dr. Salsbury, Mr. Harms and
Mr. Gebauer.
Annual Incentive Compensation. For the 1995 fiscal year, a bonus program
was established under which each executive officer could earn a series of
quarterly bonuses on the basis of the Company's pre-tax profits for each fiscal
quarter. Under the program, a specified portion of the pre-tax profits for each
quarter was to be reserved for allocation to all individuals employed by the
Company at the end of that quarter. The amount allocated to each employee was to
be based upon such employee's salary for that quarter, and the allocated amount
was to be paid out at the end of each quarter. The amounts paid to each
executive officer under the program were not substantial and ranged from a high
of $5,000 to a low of $0 for the entire 1995 fiscal year. A similar program was
implemented for the 1994 fiscal year. For prior fiscal years, the bonuses
payable to executive officers were based primarily on individual performance and
were not tied to Company performance.
Long-Term Stock-Based Incentive Compensation. Generally, the Stock Option
Committee approves annual grants of stock options to each of the Company's
executive officers under the 1982 Stock Option Plan. The grants are designed to
align the interests of each executive officer with those of the stockholders and
provide each individual with a significant incentive to manage the Company from
the perspective of an owner with an equity stake in the business. Each grant
generally allows the officer to acquire shares of the Company's common stock at
a fixed price per share (the market price on the grant date) over a specified
period of time (up to 10 years), thus providing a return to the executive
officer only if the market price of the shares appreciates over the option term
and the officer continues in the Company's employ. The size of the option grant
to each executive officer is designed to create a meaningful opportunity for
stock ownership based upon the executive officer's current position with the
Company, internal comparability with option grants made to other Company
executives, the executive officer's current level of performance and the
executive officer's potential for future responsibility and promotion over the
option term. The Stock Option Committee also takes into account the number of
vested and unvested options held by the executive officer in order to maintain
an appropriate level of equity incentive for that individual. However, the Stock
Option Committee does not adhere to any specific guidelines as to the relative
option holdings of the Company's executive officers. In fiscal year 1995, no
option grants were made to the executive officers other than to Mr. Dreyer in
connection with his appointment to his position at the Company. In fiscal year
1994, larger than normal option grants were made to the executive officers to
compensate for the lack of any significant increase in their base salaries, to
compensate them for their promotions and the accompanying additional promotions,
and to make their total compensation more dependent upon future appreciation in
the market price of the Company's common stock.
CEO Compensation. In setting the compensation payable to Mr. Salsbury, the
Company's Chief Executive Officer during fiscal 1995, the Compensation Committee
sought to be competitive with the Company's competitors in the semiconductor
industry, while at the same time tying a significant percentage of such
compensation to Company performance and stock price appreciation. The
Compensation Committee established Mr. Salsbury's base salary for fiscal 1995
with the intent to provide him with a minimum level of compensation not tied to
any significant degree to Company performance factors.
The incentive bonus component of Mr. Salsbury's compensation for the 1995
fiscal year was dependent primarily upon the Company's pre-tax quarterly profits
and provided no dollar guarantees. No bonus was earned by Mr. Salsbury during
fiscal 1995 on the basis of this performance factor. However, as described
above, Mr. Salsbury also participated in the Supplemental Cash Bonus Plan and
the Loan Forgiveness Program, along with other executive officers of the
Company, and earned compensation under those programs solely on the basis of his
continued employment.
Submitted by the Compensation Committee and Stock Option Committee of the
Board of Directors:
Alan V. Gregory, Member, Compensation and Stock Option Committees
Charles C. Harwood, Member, Compensation and Stock Option Committees
Phillip J. Salsbury, Member, Compensation Committee
13
<PAGE> 16
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Dr. Salsbury, a member of the Company's Board of Directors and the
Compensation Committee, is currently the President and Chief Executive Officer
of the Company.
No executive officer of the Company serves as a member of the board of
directors or compensation committee of any entity which has one or more
executive officers serving as a member of the Company's Board of Directors or
Compensation Committee.
TERMINATION OF EMPLOYMENT ARRANGEMENTS
In July 1987, the Company's Board of Directors adopted a special Severance
Pay Program for the benefit of its executive officers. Under the program, a
participant who voluntarily terminates such participant's employment within 12
months following a change in control of the Company will remain as a consultant
to the Company for a maximum of six months following such termination of
employment. For each month during the period the participant is available to
provide consulting services, the Company will pay the participant 1/12th of such
participant's then current annual compensation (i.e., annualized base salary for
the year plus the amount of any commissions, cash bonuses and deferred
compensation for the prior year). A participant whose employment is
involuntarily terminated within 18 months of a change in control will receive a
lump sum severance payment equal to 1.5 times such participant's then current
annual compensation. Under the program, full vesting of all outstanding stock
options may also occur upon certain changes in control, and the participants
will have the right, in the event of a hostile change in control, to surrender
their options for a cash distribution equal to the difference between the
aggregate fair market value of the shares purchasable under their options and
the aggregate exercise price payable for such shares ("limited stock
appreciation rights"). Under no circumstances may the aggregate value of the
payments and benefits under the program exceed three times the participant's
average W-2 wages for the five calendar years immediately preceding the calendar
year in which the change in control occurs. For purposes of the program, a
change in control will occur in the event of (i) a stockholder-approved merger
or acquisition of the Company in which 50% or more of the Company's outstanding
voting stock is transferred to different holders, (ii) the acquisition of 25% or
more of the Company's outstanding voting stock pursuant to a tender or exchange
offer which the Company's Board of Directors does not recommend the stockholders
of the Company accept, or (iii) a change in the composition of the Board of
Directors which results in members of the Board who were elected at the last
uncontested election of Board members ceasing to comprise a majority of the
Board by reason of a contested election. Each of the named executive officers is
a participant in the Severance Pay Program.
Under the terms of the 1982 Stock Option Plan, an officer or director
subject to the short-swing profit trading restrictions of the Federal securities
laws may be granted a limited right to surrender an option upon the occurrence
of a change in control (as defined in the 1982 Stock Option Plan). Such a
limited right will not require the approval of the Board of Directors or any
committee thereof and will be paid in cash. For purposes of computing the
appreciation distribution payable on a limited right, the fair market value of
the shares subject to the surrendered option will be the greater of (i) the fair
market value of such shares on the date of surrender (as determined in
accordance with the valuation provisions of the 1982 Stock Option Plan) or (ii)
the highest reported price per share paid by the acquiring entity in effecting
the change in control. For these purposes, a "change in control" will be deemed
to occur should either of the following occur: (i) a person or related group of
persons, other than the Company or a person that directly or indirectly
controls, is controlled by, or is under common control with the Company, acquire
(i) twenty-five percent (25%) or more of the outstanding common stock pursuant
to a tender or exchange offer which the Board of Directors does not recommend
the stockholders to accept or (ii) fifty percent (50%) or more of the Company's
outstanding common stock in a single transaction or in a series of related
transactions (other than a "corporate transaction" (as such term is defined in
the 1982 Stock Option Plan)), or (ii) there occurs a change in the composition
of the Board of Directors such that the individuals elected to the Board at the
last stockholder meeting at which there is not a contested election subsequently
cease to comprise a majority of the Board by reason of a contested election for
Board membership. Each of the named executive officers is a participant in the
1983 Stock Option Plan and, as a result, is eligible to benefit from these
provisions.
14
<PAGE> 17
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
common stock of the Company with that of the S&P 500 Stock Index, a broad market
index published by the Standard & Poor's Corporation, and the H&Q Semiconductor
Index, a semiconductor company stock index published by Hambrecht & Quist
Incorporated. The comparison for each of the periods assumes that $100 was
invested on September 30, 1990 in the Company's common stock, the stocks
included in the S&P 500 Stock Index and the stocks included in the H&Q
Semiconductor Index. These indices, which reflect formulas for dividend
reinvestment and weighting of individual stocks, do not necessarily reflect
returns that could be achieved by individual investors.
CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
MEASUREMENT PERIOD H&Q SEMI-
(FISCAL YEAR COVERED) SEEQ S&P 500 CONDUCTOR
<S> <C> <C> <C>
9/30/90 100 100 100
9/30/91 129 131 132
9/30/92 67 146 192
9/30/93 92 165 407
9/30/94 75 171 419
9/30/95 313 221 848
</TABLE>
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended or the Securities
Exchange Act of 1934, as amended that might incorporate future filings,
including this Proxy Statement, in whole or in part, the preceding Compensation
and Stock Option Committee Report on Executive Compensation and the preceding
Company Stock Performance Graph shall not be incorporated by reference into any
such filings; nor shall such Report or Graph be incorporated by reference into
any future filings.
PROPOSAL NO. 2:
APPROVAL AND RATIFICATION OF AMENDMENT TO
RESTATED 1982 STOCK OPTION PLAN
The stockholders are being asked to vote on a proposal to approve and
ratify an amendment to the Restated 1982 Stock Option Plan (the "1982 Stock
Option Plan") to provide for an increase in the number of shares available for
issuance pursuant to the 1982 Stock Option Plan by Three Million (3,000,000)
shares.
The terms and provisions of the 1982 Stock Option Plan are described more
fully below. The description, however, is not intended to be a complete
exposition of all the terms of the 1982 Stock Option Plan. A copy of the 1982
Stock Option Plan will be furnished by the Company to any stockholder upon
written request to the Corporate Secretary.
15
<PAGE> 18
The affirmative vote of a majority of the shares represented and voted at
the Annual Meeting is required for the approval of the amendment to the 1982
Stock Option Plan.
The Board of Directors recommends to the stockholders that they vote FOR
the proposal to approve and ratify the amendments to the 1982 Stock Option Plan.
ADMINISTRATION
The 1982 Stock Option Plan provides for administration by the Board or by a
committee appointed by the Board. The 1982 Stock Option Plan is currently being
administered by the Stock Option Committee of the Company's Board (the "Stock
Option Committee"). None of the members of the Stock Option Committee is
eligible to participate in the 1982 Stock Option Plan or any other stock plan of
the Company, other than the automatic grant program for non-employee members of
the Company's Board of Directors under the 1989 Non-Employee Director Option
Plan. The Stock Option Committee has full authority to determine the eligible
individuals who are to receive option grants, the number of shares to be covered
by each granted option, the date or dates on which the option is to become
exercisable, and the maximum term for which the option is to be outstanding. The
Stock Option Committee also has the discretion to determine whether the granted
option is to be an incentive stock option under the Federal tax laws or a
non-statutory option. In addition, the Stock Option Committee has full authority
to accelerate the exercisability of outstanding options and to terminate
outstanding repurchase rights, all upon such terms and conditions as it deems
appropriate.
ELIGIBILITY
Under the 1982 Stock Option Plan, employees (including officers who are
directors) and independent consultants of the Company, or its parent or
subsidiary corporations, are eligible for option grants. As of December 31,
1995, approximately 69 employees of the Company (including the Company's six (6)
executive officers, of whom one (1) is currently a member of the Company's Board
of Directors) were eligible to receive option grants under the 1982 Stock Option
Plan.
PRICE AND EXERCISABILITY
The option price per share may not be less than 85% of the fair market
value of the Company's common stock on the grant date, and no option may be
outstanding for more than a 10-year term. If the granted option is intended to
be an incentive stock option under the Federal tax laws, the option price must
not be less than 100% of the fair market value per share of the common stock on
the grant date. Granted options may be immediately exercisable for any or all of
the option shares, or such options may become exercisable in installments over a
period of months or years. The aggregate fair market value (as of the respective
date or dates of grant) of shares of common stock for which options may for the
first time become exercisable as incentive stock options under the Federal tax
laws in a single year may not exceed $100,000 per optionee.
For purposes of establishing the option price and for all other valuation
purposes under the 1982 Stock Option Plan, the market value per share of common
stock on any relevant date will be the closing selling price per share on such
date as reported on the Nasdaq National Market. As of December 31, 1995, the
fair market value per share of the Company's common stock was $4.375 per share,
based on the closing selling price per share on such date on the Nasdaq National
Market.
Upon exercise, the option price may be paid in cash or in shares of the
Company's common stock. The Stock Option Committee may also assist any optionee
(including an officer) in the exercise of the option by (a) authorizing a loan
from the Company, (b) permitting the optionee to pay the option price in
installments over a period of years or (c) authorizing a guarantee by the
Company of a third-party loan to the optionee. The terms and conditions of any
such loan, installment payment or guarantee will be established by the Stock
Option Committee in its sole discretion, but in no event may the maximum credit
extended to the optionee exceed the aggregate option price payable for the
purchased shares, plus any federal and state income or employment taxes incurred
in connection with the purchase.
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No optionee is to have any stockholder rights with respect to the option
shares until such optionee has exercised the option and paid the option price
for the purchased shares. Options are not assignable or transferable other than
by will or the laws of inheritance, and, during the optionee's lifetime, the
option may be exercised only by such optionee.
SECURITIES SUBJECT TO PLAN
The total number of shares of the Company's common stock issuable over the
term of the 1982 Stock Option Plan may not exceed 9,360,000 shares,(1) assuming
stockholder approval of this Proposal 2. Such shares will be made available
either from the Company's authorized but unissued common stock or from common
stock reacquired by the Company. Should an option be terminated or canceled for
any reason prior to exercise or surrender in full, the shares subject to the
portion of the option not so exercised or surrendered will be available for
subsequent grant.
CHANGES IN CAPITALIZATION
In the event any change is made to the Company's common stock issuable
under the 1982 Stock Option Plan (by reason of any stock split, stock dividend,
combination of shares, exchange of shares or other change in the corporate
structure of the Company effected without receipt of consideration), appropriate
adjustments will be made to (i) the aggregate number and/or class of shares of
common stock available for issuance under the 1982 Stock Option Plan, and (ii)
the number and/or class of shares of common stock purchasable under each
outstanding option and the exercise price payable per share so that no dilution
or enlargement of benefits will occur under such option.
TERMINATION OF EMPLOYMENT OR SERVICE AND REPURCHASE RIGHTS
All options granted under the 1982 Stock Option Plan must be exercised
within 24 months (or such shorter period as the Stock Option Committee may
establish at the time of grant) after the optionee ceases for any reason to be
in the employ or service of the Company or its parent or subsidiary
corporations. In the event of the optionee's death, the option may be exercised
within eighteen (18) months of the optionee's death by the personal
representative of the optionee's estate or by the person inheriting the option.
The Stock Option Committee will, however, have complete discretion to extend the
period of time for which any option is to remain exercisable following the
optionee's cessation of employment or service, but under no circumstances may an
option be exercised after the specified expiration date of the option term.
Each option will be exercisable only to the extent of the number of shares
for which such option is exercisable at the time of the optionee's cessation of
employment or service, unless the Stock Option Committee determines at such time
to accelerate the exercisability of the option in whole or in part. However, if
the optionee's employment or service is terminated for misconduct, all options
held by such individual will immediately expire on the date of such termination.
Unvested shares of common stock acquired upon the exercise of one or more
options will be subject to repurchase by the Company, at the original option
price, upon the optionee's cessation of employment or service. The Stock Option
Committee has complete discretion in establishing the terms and conditions upon
which such repurchase rights are to be exercisable, including the establishment
of appropriate vesting schedules and other provisions for the expiration of such
rights in one or more installments. Any shares so repurchased by the Company
will not be available for reissuance under the 1982 Stock Option Plan.
SURRENDER OF OPTIONS
The 1982 Stock Option Plan includes a stock appreciation rights feature,
whereby the Stock Option Committee has the authority to accept the surrender of
one or more outstanding options under the 1982 Stock Option Plan and authorize
in exchange the payment by the Company of an appreciation distribution equal to
- ---------------
(1) This number is subject to adjustment in the event of certain changes to the
capitalization of the Company. See "Changes in Capitalization" below.
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the excess of (i) the fair market value (on the date of surrender) of the vested
shares of common stock for which the surrendered option is at the time
exercisable over (ii) the option price payable for such vested shares
("Appreciation Distribution"). Such payment may be made, at the discretion of
the Stock Option Committee, in shares of common stock valued at fair market
value on the date of surrender, in cash, or partly in shares and partly in cash.
Such surrenders may be made only under circumstances which the Stock Option
Committee determines to be consistent with the purposes of the 1982 Stock Option
Plan.
An officer or director subject to the short-swing profit trading
restrictions of the Federal securities laws may be granted a limited right to
surrender an option upon the occurrence of a Change in Control (as defined
below). Such a limited right will not require the approval of the Stock Option
Committee and will be paid in cash. For purposes of computing the appreciation
distribution payable on a limited right, the fair market value of the shares
subject to the surrendered option will be the greater of (i) the fair market
value of such shares on the date of surrender (as determined in accordance with
the valuation provisions of the 1982 Stock Option Plan) or (ii) the highest
reported price per share paid by the acquiring entity in effecting the Change in
Control. A Change in Control will be deemed to occur should either of the
following occur:
(i) a person or related group of persons, other than the Company or a
person that directly or indirectly controls, is controlled by, or is under
common control with the Company, acquire (i) twenty-five percent (25%) or
more of the outstanding common stock pursuant to a tender or exchange offer
which the Board of Directors does not recommend the stockholders to accept
or (ii) fifty percent (50%) or more of the Company's outstanding common
stock in a single transaction or in a series of related transactions (other
than a Corporate Transaction (as such term is defined below)), or
(ii) there occurs a change in the composition of the Board of
Directors such that the individuals elected to the Board at the last
stockholder meeting at which there is not a contested election subsequently
cease to comprise a majority of the Board by reason of a contested election
for Board membership.
Whether an option is surrendered for cash or common stock, the shares
covered by the surrendered option will not thereafter be available for
subsequent option grants under the 1982 Stock Option Plan.
CORPORATE TRANSACTION
Each option outstanding under the 1982 Stock Option Plan will become
immediately exercisable for all of the shares of common stock subject to such
option in the event of one or more of the following transactions ("Corporate
Transaction"): (i) a merger or acquisition in which the Company is not the
surviving entity, (ii) the sale, transfer or other disposition of substantially
all of the Company's assets, or (iii) any reverse merger in which the Company is
the surviving entity but in which 50% or more of the Company's outstanding
voting stock is transferred to holders different from those who held the stock
prior to such merger, unless (i) such option is assumed by the successor
corporation (or its parent company) or replaced with a comparable option to
purchase shares of stock of the successor corporation (or its parent company),
or (ii) the acceleration of such option would, when added to the present value
of other compensatory payments which become due and payable to the option holder
in connection with the Corporate Transaction, result in the payment to such
individual of an excess parachute payment under the Federal tax laws.
Outstanding repurchase rights under the 1982 Stock Option Plan will also
terminate upon the Corporate Transaction, unless (i) the repurchase right is to
be assigned to the successor corporation or (ii) the termination of such
repurchase right would result in an excess parachute payment under the Federal
tax laws to the individual whose shares are subject to such repurchase right.
Upon the consummation of the Corporate Transaction, all outstanding options
will, to the extent not previously exercised by the optionees or assumed by the
successor corporation (or its parent company), terminate and cease to be
exercisable.
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CANCELLATION AND NEW GRANT OF OPTIONS
The Stock Option Committee has the authority to effect, at any time and
from time to time, with the consent of the affected optionees, the cancellation
of any or all options outstanding under the 1982 Stock Option Plan and to grant
in substitution therefor new options covering the same or different numbers of
shares of common stock but having an exercise price per share not less than 85%
of the fair market value per share of the Company's common stock on the new
grant date (or 100% of fair market value if the new option is to be an incentive
stock option). However, it is expected that the fair market value exercise price
in effect under the new grant will in all instances be less than the exercise
price in effect under the canceled option.
SPECIAL TAX WITHHOLDING ELECTION
The Stock Option Committee may provide one or more holders of nonstatutory
options under the 1982 Stock Option Plan with the election to have the Company
withhold shares purchased under their options in order to satisfy the Federal
and state income taxes required to be withheld in connection with the exercise
of such options.
Any such withholding election will be subject to the following terms and
conditions:
(i) The election must be made on or before the date the amount of the
Federal and state income tax liability incurred in connection with the
exercise of such nonstatutory option is determined (the "Tax Determination
Date").
(ii) The election must be irrevocable.
(iii) The election will be subject to the approval of the Stock Option
Committee, and no shares of the Company's common stock will be accepted in
satisfaction of the withholding taxes unless the election is approved by
the Stock Option Committee.
(iv) The shares of common stock to be withheld pursuant to the
election will be valued on the Tax Determination Date in accordance with
the valuation provisions of the 1982 Stock Option Plan.
(v) In no event may the optionee's requested withholding exceed the
amount of Federal and state income taxes required to be withheld as a
result of the exercise of the option.
Additional restrictions apply to a withholding election made by an officer
or director subject to the short-swing profit restrictions of the Federal
securities laws.
EXCESS GRANTS
The 1982 Stock Option Plan permits the grant of options to purchase shares
of the Company's common stock in excess of the number of shares then available
for issuance under the 1982 Stock Option Plan. Any option so granted cannot be
exercised prior to stockholder approval of an amendment increasing the number of
shares available for issuance under the 1982 Stock Option Plan.
AMENDMENT AND TERMINATION OF THE PLAN
The Company's Board may amend or modify the 1982 Stock Option Plan in any
or all respects whatsoever; provided, however, that the rights of existing
optionees may not be altered without their consent. Further, the Board may not
amend the 1982 Stock Option Plan without the approval of the stockholders of the
Company if such amendment would increase the maximum number of issuable shares
under the 1982 Stock Option Plan (other than in connection with certain changes
in the Company's capital structure), materially increase the benefits accruing
to participants under the 1982 Stock Option Plan, or materially modify the
eligibility requirements for option grants under the 1982 Stock Option Plan.
The Board may terminate the 1982 Stock Option Plan at any time, but in all
events the 1982 Stock Option Plan will terminate upon the earlier of November
30, 2000 or the date all shares available for issuance under the 1982 Stock
Option Plan are issued or canceled pursuant to the exercise or surrender of
options granted under the 1982 Stock Option Plan. Any options outstanding at the
time of the termination of the 1982
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Stock Option Plan will remain in force in accordance with the provisions of the
instruments evidencing such grants.
FEDERAL TAX CONSEQUENCES
Options granted under the 1982 Stock Option Plan may be either incentive
stock options which satisfy the requirements of Section 422A of the Internal
Revenue Code or nonstatutory options which are not intended to satisfy such
requirements. The Federal income tax treatment for the two types of options
differ as follows:
Incentive Options. No taxable income is recognized by the optionee at the
time of the option grant, and no taxable income is generally recognized at the
time the option is exercised, unless the optionee is subject to the alternative
minimum tax. Upon exercise, the difference between the fair market value of the
purchased shares and the exercise price is generally included in alternative
minimum taxable income for purposes of the alternative minimum tax. The optionee
will, however, recognize regular taxable income in the year in which the
purchased shares are sold or otherwise made the subject of disposition.
If the optionee does not make a disposition of the purchased shares within
the two-year period following the grant date of the option nor within the
one-year period following the exercise date of the option, any profit or loss
recognized upon the subsequent disposition will be long-term capital gain or
loss. If the optionee disposes of the purchased shares within either the
two-year or one-year period mentioned above (a "disqualifying disposition"),
then the optionee will in general recognize ordinary income in the year of
disposition equal to the amount by which the fair market value of the shares on
the date the option was exercised exceeded the exercise price (the "option
spread"). Any additional gain recognized upon such disposition will be a capital
gain, which will be long-term if the shares are held for at least one year.
So long as the optionee does not make a disqualifying disposition of the
purchased shares, no business expense deduction may be taken by the company
employing him or her. To the extent that the optionee must recognize ordinary
income due to a disqualifying disposition, the employer corporation will be
allowed an income tax deduction equal to the option spread. The deduction will
in general be allowed for the taxable year of the employer corporation in which
the ordinary income is recognized by the optionee.
Nonstatutory Options. No taxable income is recognized by an optionee upon
the grant of a nonstatutory option. The optionee will in general recognize
ordinary income in the year in which the option is exercised equal to the excess
of the fair market value of the purchased shares at the date of exercise over
the exercise price, and the optionee will be required to satisfy the tax
withholding requirements applicable to such income.
Special provisions of the Internal Revenue Code apply to the acquisition of
shares under a nonstatutory option if the purchased shares are subject to
repurchase by the Company or other substantial risk of forfeiture. These special
provisions may be summarized as follows:
If the shares acquired upon exercise of the nonstatutory option are subject
to repurchase by the Company at the original option price in the event the
optionee's employment or service terminates prior to vesting in the shares or
are otherwise subject to a substantial risk of forfeiture (such as the
short-swing profit restrictions of the Federal securities laws), the optionee
will not recognize any taxable income at the time of exercise but will have to
report as ordinary income, as and when the Company's repurchase right or the
risk of forfeiture lapses, an amount equal to the difference between the fair
market value of the shares on the date the Company's repurchase right or the
risk of forfeiture lapses and the option price paid for the shares.
The optionee may, however, elect under Section 83(b) of the Internal
Revenue Code to include as ordinary income in the year of exercise an amount
equal to the difference between the fair market value of the purchased shares on
the date of exercise (determined as if the shares were not subject to the
Company's repurchase right or risk of forfeiture) and the option price paid for
the shares. If the Section 83(b) election is made, the optionee will not
recognize any additional income as and when the Company's repurchase right or
risk of forfeiture lapses.
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<PAGE> 23
The employer corporation will be entitled to a business expense deduction
equal to the amount of ordinary income recognized by the optionee in connection
with the exercise of the nonstatutory option. The deduction will in general be
allowed for the taxable year of the employer corporation in which such ordinary
income is recognized by the optionee.
Surrender Rights. An optionee who is granted the right to surrender an
option for cash or common stock will recognize ordinary income in the year of
surrender equal to the amount of the Appreciation Distribution. The employer
corporation will be entitled to a business expense deduction equal to the
Appreciation Distribution for the taxable year of the employer corporation in
which the ordinary income is recognized by the optionee.
ACCOUNTING TREATMENT
Option grants with exercise prices less than the fair market value of the
option shares on the grant date will give rise to compensation expense equal to
the amount of the discount. Such expense will be accrued as the optionee vests
in the shares purchasable under the option. Option grants at 100% of fair market
value will not result in any charge to the Company's earnings. The number of
outstanding options may, however, be a factor in determining earnings per share
on a fully-diluted basis.
Should one or more optionees be granted the right to surrender their
options for cash or common stock, then a compensation expense will arise as a
charge to earnings if it is deemed more likely under the circumstances that the
options will be surrendered rather than exercised. Accordingly, at the end of
each fiscal quarter, the amount (if any) by which the fair market value of any
common stock subject to any such surrenderable options has increased from the
end of the prior quarter will be accrued as compensation expense, to the extent
the increased fair market value continues to exceed the option price. In the
event the fair market value of such common stock declines from quarter to
quarter, appropriate adjustments to current compensation expense will be made.
All of the existing accounting rules for employee stock option plans are
currently being reviewed by the Financial Accounting Standards Board.
Accordingly, the accounting treatment for options and stock issuances as
described above may change significantly in the future.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL NO. 3:
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Company is asking the stockholders to ratify the selection of Price
Waterhouse LLP as the Company's independent public accountants for the fiscal
year ending September 29, 1996. The affirmative vote of the holders of a
majority of the shares represented and voting at the Annual Meeting will be
required to ratify the selection of Price Waterhouse LLP.
In the event the stockholders fail to ratify the appointment, the Audit
Committee of the Board of Directors will consider it as a direction to select
other auditors for the subsequent year. Even if the selection is ratified, the
Board in its discretion may direct the appointment of a different independent
accounting firm at any time during the year if the Board determines that such a
change would be in the best interest of the Company and its stockholders.
Price Waterhouse LLP has audited the Company's financial statements
annually since its inception. Its representatives are expected to be present at
the Annual Meeting, will have the opportunity to make a statement if they desire
to do so, and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
SELECTION OF PRICE WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR ENDING SEPTEMBER 29, 1996.
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OTHER BUSINESS
The Board of Directors knows of no other business that will be presented
for consideration at the Annual Meeting. If other matters are properly brought
before the Annual Meeting, however, it is the intention of the persons named in
the accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the
Company's annual meeting of stockholders to be held in 1997 must be received by
October 16, 1996 in order to be included in the proxy statement and proxy
relating to that meeting.
By order of the Board of Directors
ROBERT O. HERSH
Secretary
February 15, 1996
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SEEQ TECHNOLOGY INCORPORATED
PHILLIP J. SALSBURY and ROBERT O. HERSH, or either of them, are hereby
appointed as the lawful agents and proxies of the undersigned (with all powers
the undersigned would possess if personally present, including full power of
substitution) to represent and to vote all shares of capital stock of SEEQ
Technology Incorporated (the "Company") which the undersigned is entitled to
vote at the Company's Annual Meeting of Shareholders on March 21, 1996, and at
any adjournments or postponements thereof as follows:
1. The election of all nominees listed below for the Board of
Directors, as described in the Proxy Statement:
Alan V. Gregory, Charles C. Harwood, Phillip J. Salsbury and
Peter C. Chen
FOR / / AUTHORIZATION WITHHELD / /
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write such name or names in the space
provided below.)
- -------------------------------------------------------------------------------
2. Proposal to approve and ratify an amendment to the Company's
Restated 1982 Stock Option Plan to increase the number of shares
issuable thereunder by Three Million (3,000,000) shares:
FOR / / AGAINST / / ABSTAIN / /
3. Proposal to ratify the appointment of Price Waterhouse LLP as
independent accountants of the Company for the fiscal year ending
September 29, 1996:
FOR / / AGAINST / / ABSTAIN / /
4. Transaction of any other business which may properly come before
the meeting and any adjournment or postponement thereof.
<PAGE> 26
The Board of Directors recommends a vote FOR each of the above
proposals. THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO DIRECTION IS
INDICATED, WILL BE VOTED FOR EACH OF THE ABOVE PROPOSALS AND, AT THE DISCRETION
OF THE PERSONS NAMED AS PROXIES, UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING. This proxy may be revoked at any time before it is voted.
DATE: , 1996
-----------------------
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(Signature)
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(Signature if held jointly)
(Please sign exactly as shown on your stock certificate and on the
envelope in which this proxy was mailed. When signing as partner,
corporate officer, attorney, executor, administrator, trustee,
guardian or in any other representative capacity, give full title as
such and sign your own name as well. If stock is held jointly, each
joint owner should sign.)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY,
USING THE ENCLOSED ENVELOPE.
