SILICON VALLEY RESEARCH INC, DEF 14A, 1996-07-26

SILICON VALLEY RESEARCH INC
DEF 14A, 1996-07-26
PREPACKAGED SOFTWARE

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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 / / Confidential, for Use of the
Commission Only (as permitted by
Rule 4a-6(e) (2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12

SILICON VALLEY RESEARCH
- --------------------------------------------------------------------------------
(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), or 14a-6(i) (1), or 14a-6(i)
(2) or Item 22(a) (2) of Schedule 14A.

/ / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i) (3).

/ / Fee computed on table below per Exchange Act Rules 14a-6(i) (4) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

/ / Fee paid previously with preliminary materials.

/ / Check box if any part of the fee is offset as provided by Exchange Act
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paid previously. Identify the previous filing by registration statement
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Definitive Proxy Material

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Registrant

(4) Date Filed:
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SILICON VALLEY RESEARCH, INC.
6360 SAN IGNACIO AVENUE
SAN JOSE, CA 95119

August 8, 1996
To Our Shareholders:

You are cordially invited to attend the Annual Meeting of Shareholders of
SILICON VALLEY RESEARCH, INC. on Thursday, September 19, 1996, at the new
corporate headquarters, 6360 San Ignacio Avenue, San Jose, California, at 3:00
p.m., Pacific Daylight Time.

The matters expected to be acted upon at the meeting are described in
detail in the attached Notice of Annual Meeting of Shareholders and Proxy
Statement. Also enclosed is a copy of the 1996 SILICON VALLEY RESEARCH, INC.
Annual Report, which includes audited financial statements and certain other
information.

It is important that you use this opportunity to take part in the affairs
of SILICON VALLEY RESEARCH, INC. by voting on the business to come before this
meeting. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN,
DATE AND RETURN THE ACCOMPANYING PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. Returning the proxy does not deprive you of your right to attend the
meeting and vote your shares in person.

We look forward to seeing you at the meeting.

Sincerely,

Robert R. Anderson
Chairman

Enclosures
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SILICON VALLEY RESEARCH, INC.
6360 SAN IGNACIO AVENUE
SAN JOSE, CA 95119
______________

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, SEPTEMBER 19, 1996
______________

Dear Shareholders:

You are invited to attend the Annual Meeting of Shareholders of SILICON
VALLEY RESEARCH, INC. (the "Company"), which will be held at 3:00 p.m., Pacific
Daylight Time, on Thursday, September 19, 1996, at the new corporate
headquarters, 6360 San Ignacio Avenue, San Jose, California, for the following
purposes:

1. To elect seven directors of the Company to serve until the next
Annual Meeting of Shareholders and until their respective
successors have been elected and qualified or until their earlier
resignation or removal.

2. To approve an amendment to the Company's 1988 Stock Option Plan
that increases the number of shares authorized to be issued
thereunder from 1,745,976 to 2,745,976.

3. To approve an amendment to the Company's 1993 Employee Stock
Purchase Plan that increases the number of shares authorized to
be issued thereunder from 350,000 to 650,000.

4. To approve amendments to the Company's 1990 Directors' Stock
Option Plan to (i) increase the number of shares for the initial
grant, to nonemployee directors who own less than 1% of the total
combined voting power of the Company from 15,000 shares to
20,000, (ii) increase the number of shares for the annual stock
option grant to nonemployee directors who own less than 1% of the
total combined voting power of the Company from 1,500 shares to
3,000, (iii) provide that each nonemployee director who owns less
than 1% of the combined voting power of the Company, received an
initial stock option grant under the Directors Plan prior to June
20, 1996 and is serving as a director at the time of shareholder
approval of these amendments, shall be granted an additional
option to purchase 5,000 shares pursuant to the Directors Plan,
effective upon shareholder approval of these proposed amendments
to the Directors Plan, and (iv) provide that each nonemployee
director who owns less than 1% of the combined voting power of
the Company, received an annual stock option grant under the
Directors Plan prior to June 20, 1996 and is serving as a
director at the time of shareholder approval of these proposed
amendments shall be granted an additional option to purchase
1,500 shares pursuant to the Directors Plan, effective upon
shareholder approval of these proposed amendments to the
Directors Plan.

5. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.

The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.

Shareholders of record of the Company's Common Stock at the close of
business on July 24, 1996 are entitled notice of, and to vote at, the meeting
and any adjournment thereof.

By Order of the Board of Directors

Robert R. Anderson
Chairman

San Jose, California
August 8, 1996

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WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO
THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.
- --------------------------------------------------------------------------------

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PROXY STATEMENT

AUGUST 8, 1996

The accompanying proxy is solicited on behalf of the Board of Directors of
SILICON VALLEY RESEARCH, INC., a California corporation (the "Company"), for use
at the Annual Meeting of Shareholders to be held on September 19, 1996, or any
adjournment thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting. The date of this Proxy Statement is August 8, 1996, the
approximate date on which this Proxy Statement and the accompanying form of
proxy were first sent or given to shareholders.

GENERAL INFORMATION

Annual Report. An annual report for the fiscal year ended March 31, 1996
is enclosed with this Proxy Statement.

Voting Securities. Only shareholders of record as of the close of business
on July 24, 1996 will be entitled to vote at the meeting and any adjournment
thereof. As of that date, there were 11,403,542 shares of Common Stock of the
Company issued and outstanding. Shareholders may vote in person or by proxy.
Each holder of shares of Common Stock is entitled to one (1) vote for each share
of stock held on the proposals presented in this Proxy Statement. The Company's
Bylaws provide that a majority of all of the shares of the stock entitled to
vote, whether present in person or represented by proxy, shall constitute a
quorum for the transaction of business at the meeting.

Shareholders have cumulative voting rights in the election of directors.
Under the cumulative voting method, a shareholder may multiply the number of
shares owned by the number of directors to be elected and cast this total number
of votes for any one candidate or distribute the total number of votes in any
proportion among as many candidates as the shareholder desires. A shareholder
may not cumulate his or her votes for a candidate unless such candidate's name
has been placed in nomination prior to the voting and unless a shareholder has
given notice at the meeting, prior to the voting, of his or her intention to
cumulate his or her votes. If any shareholder gives such notice, all
shareholders may then cumulate their votes. Management is hereby soliciting
discretionary authority to cumulate votes represented by proxies if cumulative
voting is invoked.

Solicitation of Proxies. The cost of soliciting proxies will be borne by
the Company. In addition, the Company will solicit shareholders by mail through
its regular employees and will request banks and brokers, and other custodians,
nominees and fiduciaries, to solicit their customers who have stock of the
Company registered in the names of such persons and will reimburse them for
their reasonable, out-of-pocket costs. The Company may use the services of its
officers, directors and others to solicit proxies, personally or by telephone,
without additional compensation.

Voting of Proxies. All valid proxies received prior to the meeting will be
voted. All shares represented by a proxy will be voted, and where a shareholder
specifies by means of the proxy a choice with respect to any matter to be acted
upon, the shares will be voted in accordance with the specification so made. If
no choice is indicated on the proxy, the shares will be voted in favor of the
proposal. A shareholder giving a proxy has the power to revoke his or her
proxy, at any time prior to the time it is voted, by delivery to the Secretary
of the Company of a written instrument revoking the proxy or a duly executed
proxy with a later date, or by attending the meeting and voting in person.

Stock Ownership of Certain Beneficial Owners and Management. The following
table sets forth certain information as of July 24, 1996, with respect to the
beneficial ownership of the

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Company's Common Stock by (i) all persons known by the Company to be the
beneficial owners of more than 5% of the outstanding Common Stock of the
Company, (ii) each director and director-nominee of the Company, (iii) the
persons named in the Summary Compensation Table below and (iv) all executive
officers and directors of the Company as a group.

Name and Address of Beneficial Amount and Nature of Percent
Owner or Identity of Group Beneficial Ownership (1) of Class
- ------------------------------ ------------------------ --------
<S> <C> <C>
Roy L. Rogers (2) .................................. 828,379 7.3%
2800 Sand Hill Road, Suite 120
Menlo Park, California 94025

J.F. Shea (3)....................................... 786,001 6.9%
655 Brea Canyon Road
Walnut, California 91789

Robert R. Anderson (4).............................. 764,338 6.7%
6360 San Ignacio Avenue
San Jose, California 95119

Glenn E. Abood (5).................................. 88,325 *

John L. Doyle....................................... 39,700 *

Arthur E.B. Monk (6)................................ 39,570 *

Minoru Takagi (7)................................... 30,833 *

Randall L. Smith (8)................................ 21,345 *

Thomas A. Sherby (9)................................ 7,614 *

Yoshio Nishi (10)................................... 6,562 *

Benjamin Huberman................................... 5,000 *

All executive officers and directors as a group
(15 persons) (11)................................... 1,897,730 16.6%
- ----------
* Less than 1%

</TABLE>

(1) Unless otherwise indicated below, each person or entity named in the
table has sole voting and sole investment power with respect to all
shares shown as beneficially owned, subject to community party laws
where applicable.

(2) Represents 283,333 shares held by R & W Ventures II (a limited partnership
of which Roy L. Rogers serves as a general partner), 473,026 shares held by
the Rogers Family Trust (of which Roy L. Rogers serves as trustee) and
15,000 shares held by the Roy L. Rogers IRA and 7,020 shares subject to
options which are exercisable within 60 days of July 24, 1996.

(3) Includes 558,743 shares held by J.F. Shea Co. (of which Mr. Shea is Vice
President) and 127,258 shares held by the E&M RP Trust (of which Mr. Shea
is trustee). Also includes 100,000 shares subject to warrants exercisable
within 60 days of July 24, 1996.

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(4) Includes 450,956 shares held in trusts of which Mr. Anderson is trustee,
including 380,956 shares held by the Robert R. and Sally E. Anderson Trust,
12,500 shares held by the Robert K. Anderson Trust, 12,500 shares held by
the Sharon Davidson Trust, 35,000 shares held by the Timothy R. Anderson
Trust and 10,000 shares held by the Steven Davidson Trust. Also includes
17,550 shares of which Mr. Anderson disclaims beneficial ownership,
including 2,550 shares owned by Sharon Davidson and 15,000 shares owned by
Steven Davidson, two of Mr. Anderson's children. Also includes 175,000
shares subject to warrants exercisable within 60 days of July 24, 1996 and
20,832 shares subject to options exercisable within 60 days of July 24,
1996.

(5) Includes 83,333 shares subject to options exercisable within 60 days of
July 24, 1996.

(6) Includes 28,645 shares subject to options exercisable within 60 days of
July 24, 1996.

(7) Includes 30,833 shares subject to options exercisable within 60 days of
July 24, 1996.

(8) Includes 19,791 shares subject to options exercisable within 60 days of
July 24, 1996.

(9) Includes 7,614 shares subject to options exercisable within 60 days of July
24, 1996.

(10) Includes 5,312 shares subject to options exercisable within 60 days of July
24, 1996.

(11) Includes 241,585 shares subject to options exercisable within 60 days of
July 24, 1996 and 225,000 shares subject to warrants exercisable within 60
days of July 24, 1996.

PROPOSAL NO. 1

ELECTION OF DIRECTORS

The Company's directors are elected annually to serve until the next annual
meeting of shareholders and thereafter until their successors are elected and
are qualified. The Bylaws of the Company authorize a flexible number of
directors ranging from five to nine, currently fixed at seven.

Unless otherwise directed by shareholders, the proxyholders will vote all
shares represented by proxies held by them for the election of the following
nominees, all of whom are now members of and constitute the Company's Board of
Directors. The Company is advised that all of the nominees have indicated their
availability and willingness to serve if elected. In the event that any nominee
becomes unavailable or unable to serve as a director of the Company prior to the
voting, the proxyholders will refrain from voting for the unavailable nominee
and will vote for a substitute nominee for the office of director as the Board
may recommend. If a quorum is present and voting, the seven nominees for
director receiving the highest number of votes will be elected directors.
Abstentions will be counted as present for purposes of determining if a quorum
is present.

DIRECTORS/NOMINEES

The names of the nominees to the Board and their respective ages are as
follows:
<TABLE>
<CAPTION>

Name Age Director Since
- ---- --- --------------
<S> <C> <C>

Robert R. Anderson (1) (3) 58 January 1994
Glenn E. Abood 35 July 1995
John L. Doyle 64 February 1996
</TABLE>

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<TABLE>
<S> <C> <C>
Benjamin Huberman 58 October 1995
Yoshio Nishi (3) 56 April 1995
Roy L. Rogers (1) (2) 61 January 1994
Thomas A. Sherby (1) (2) 62 September 1994
</TABLE>
__________________

(1) Member of Audit Committee
(2) Member of Compensation Committee
(3) Member of Nominating Committee

Mr. Anderson became Chairman of SVR in January 1994 and was Chief Executive
Officer from April 1994 until July 1995 and was named Chief Financial Officer in
September 1994. Mr. Anderson co-founded KLA Instruments Corporation ("KLA"), a
supplier of equipment for semiconductor companies, in 1975. He served as Vice-
Chairman of the Board of KLA from November 1991 to March 1994 and served as
Chairman of the Board of KLA from May 1985 to November 1991. Prior to that, Mr.
Anderson served as Chief Operating Officer and Chief Financial Officer of KLA
for nine years. Mr. Anderson currently serves as a director of Applied Science &
Technology Inc., a supplier of systems components for the semiconductor
industry, and Tegal Corporation, a designer and manufacturer of etch systems.

Mr. Abood joined SVR in May 1995 and was named President, Chief Executive
Officer and a director in July 1995. Mr. Abood was employed by Zycad Corp., an
electronic design automation company ("Zycad"), from July 1984 to July 1995 with
his most recent positions as Vice President and General Manager of Zycad's New
Jersey operations. Mr. Abood has over twelve years in the electronic design
automation industry and has held positions in engineering, sales, marketing and
management. Mr. Abood holds an MSEE from Worcester Polytechnic Institute.

Mr. Doyle has been a director of SVR since February 1996. For the past five
years, Mr. Doyle has been a consultant, having retired from Hewlett Packard
Company in September 1991. Mr. Doyle's career with Hewlett Packard began in 1957
when he was hired as a manufacturing engineer and he retired as Executive Vice
President, Business Development of Hewlett Packard in September 1991. In
addition, between 1988 to 1991 Mr. Doyle served as Chairman of the Open Software
Foundation which was formed to establish a standard operating environment for
computer systems from various manufacturers. Mr. Doyle currently serves on
the Boards of Analog Devices, Inc., XILINX, Inc., and DuPont Photomask, Inc.

Mr. Huberman has been a director of SVR since October 1995. For the past
five years, Mr. Huberman has been President of the Huberman Consulting Group in
Washington, D.C. He has held numerous governmental positions, including Deputy
Director of the White House Office of Science and Technology Policy. He is also
a member of the Chief of Naval Operations' Executive Panel and has been Chairman
of the Technical Advisory Panel to the U.S. Space Command. He currently serves
on the boards of Zycad and Audre Recognition Systems, Inc., a developer of
software which is used to convert documents into digital data.

Dr. Nishi has been a director of SVR since April 1995. He has been Vice
President and Director of Research and Development for Texas Instruments
Incorporated, a manufacturer of high-tech operating units, since May 1995. For
the prior nine years, he was director of ULSI Labs for Hewlett Packard. Dr.
Nishi has been a Consulting Professor in the Department of Electrical
Engineering at Stanford University since 1986. He currently serves as a director
of KLA.

Mr. Rogers has been a director of SVR since January 1994. For the last nine
years, Mr. Rogers has served as a general partner of two venture capital limited
partnerships, R & W Ventures I and R &W Ventures II. Previously, for a 15-year
period, he held management positions in research, institutional sales and
corporate finance at Hambrecht & Quist, an investment banking firm.

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Mr. Sherby has been a director of SVR since September 1994. He has
served as the Chief Executive Officer and Chairman of the Board of Directors of
Knights Technology, Inc. a supplier of prepackaged software since April 1989. He
has over 20 years of management experience in the electronics and computer
industries with Fairchild Semiconductor, Dataproducts Corp., a manufacturer of
peripheral data processing equipment, and AT & T Global Information Solutions
(formerly NCR Corporation), a manufacturer of computers and peripherals.

BOARD MEETINGS AND COMMITTEES

The Board met five times during the fiscal year ended March 31, 1996.
Each director attended at least 75% of the meetings of the Board and the
Committees on which he served during such period, except Benjamin Huberman who
was elected to the Board on October 17, 1995 and attended at least 50% of the
meetings thereafter.

Standing committees of the Board include an Audit Committee, a
Compensation Committee and a Nominating Committee. The Audit Committee
recommends engagement of the Company's independent accountants, reviews the
scope of the audit, considers comments made by the independent accountants and
reviews the non-audit services provided by the Company's independent
accountants. The Audit Committee met one time during fiscal 1996. Robert R.
Anderson, Thomas A. Sherby and Roy L. Rogers are the current members of the
Audit Committee.

The Compensation Committee reviews and sets the level of cash and
other remuneration for the executive officers of the Company, subject to
approval by the Board. The Compensation Committee met one time during fiscal
1996. Roy L. Rogers and Thomas A. Sherby are the current members of the
Compensation Committee.

The Nomination Committee searches for and selects new members to fill
vacancies on the Board occurring between shareholder meetings and determines
which candidates will be presented to the shareholders as nominees for election,
subject to approval by the Board. The Nominating Committee met twice during
fiscal 1996. Robert R. Anderson and Yoshio Nishi are the current members of the
Nominating Committee. The Nominating Committee will consider nominees for
director recommended by the shareholders of the Company to the Secretary at the
corporate headquarters.

PROPOSAL NO. 2

AMENDMENT TO 1988 STOCK OPTION PLAN

The 1988 Stock Option Plan (the "1988 Plan") was adopted by the Board
on May 16, 1988 and was approved by the Company's shareholders on August 23,
1988. The 1988 Plan initially provided for the issuance of options to purchase
up to 300,000 shares of Common Stock, plus any shares that were or that became
available for issuance under the Company's 1984 Employee Stock Option Plan which
expired in August 1989. Options to purchase 375,976 shares became available for
issuance under the former 1984 Employee Stock Option Plan. An amendment to the
1988 Plan to increase by 320,000 the number of shares reserved for issuance
thereunder and to make certain changes required by the California Department of
Corporations was approved by the Board on March 22, 1993 and by the Company's
shareholders on August 26, 1993. An amendment to the 1988 Plan to increase by
250,000 the number of shares reserved for issuance thereunder was approved by
the Board on May 16, 1994 and by the Company's shareholders on September 8,
1994. An amendment to the 1988 Plan to increase by 500,000 the number of shares
reserved for issuance thereunder was approved by the Board on July 24, 1995 and
by the Company's shareholders on September 6, 1995. Accordingly, a total of
1,745,976 shares have been reserved for issuance under the 1988 Plan and as of
July 24, 1996 there were approximately 24,951 shares available for issuance.

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On May 15, 1996, the Board amended the 1988 Plan, subject to
shareholder approval, to increase the number of shares authorized to be issued
thereunder from 1,745,976 to 2,745,976. As of July 24, 1996, options to purchase
1,377,462 shares were outstanding under the 1988 Plan, with exercise prices
ranging from $0.8750 to $8.8750 , a weighted average exercise price of $4.1100
and expiration dates ranging from October 1, 1997 to July 23, 2006, and 68
persons were eligible to participate in the 1988 Plan.

A summary of the principal provisions of the 1988 Plan and the
proposed amendments thereto is set forth below under "1988 Stock Option Plan."

The Board of Directors now seeks shareholder approval of the amendment
to the Company's 1988 Plan to increase the number of shares of the Company's
Common Stock available for issuance thereunder by 1,000,000 shares from a total
of 1,745,976 shares to a total of 2,745,976 shares. An increase in the number
of shares reserved for issuance under the 1988 Plan is needed to enable the
Company to continue to grant options to employees in accordance with its
existing compensation policies. Management of the Company believes that the
ability to grant options to employees is essential to the Company's ability to
attract and retain highly qualified employees.

Since each executive officer of the Company is eligible to participate
in the 1988 Plan, each such officer has a personal interest in the proposed
amendment to the 1988 Plan.

VOTE REQUIRED AND BOARD OF DIRECTORS RECOMMENDATION.

The affirmative vote of a majority of the votes present and entitled
to vote at the Annual Meeting of Shareholders, at which a quorum representing a
majority of all outstanding shares of Common Stock of the Company is present and
voting, either in person or by proxy, is required for approval of this proposal.
Abstentions and broker non-votes will each be counted as present for purposes of
determining the presence of a quorum. Abstentions will have the same effect as
a negative vote on this proposal. Broker non-votes will have no effect on the
outcome of this vote.

The Board of Directors believes that the proposed amendment to
increase the share reserve of the 1988 Stock Option Plan is in the best
interests of the shareholders and the Company for the reasons stated above.
THEREFORE, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL
OF THIS PROPOSAL TO INCREASE THE AGGREGATE MAXIMUM NUMBER OF SHARES ISSUABLE
UNDER THE 1988 PLAN BY 1,000,000 SHARES.

PROPOSAL NO. 3

APPROVAL OF THE AMENDMENT TO THE 1993 EMPLOYEE STOCK PURCHASE PLAN

The 1993 Employee Stock Purchase Plan (the "Stock Purchase Plan") was
approved by the Company's shareholders on August 26, 1993. A total of 100,000
shares of Common Stock was reserved for issuance under the Stock Purchase Plan.
An Amendment to the Stock Purchase Plan to increase the number of shares of the
Company's Common Stock available for issuance thereunder by 50,000 shares was
approved by the Board on May 16, 1994 and by the Company's shareholders on
September 8, 1994. On July 24, 1995 the Board approved an amendment to increase
by 200,000 shares the number shares available for issuance under the Stock
Purchase Plan. The shareholders approved this amendment on September 6, 1995.

On May 15, 1996, the Board amended the Stock Purchase Plan, subject to
shareholder approval, to increase the number of shares of the Company's Common
Stock available for

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issuance thereunder by 300,000 shares from a total of shares of 350,000 shares
to a total of 650,000 shares. As of July 24, 1996, 171,554 shares had been
issued pursuant to the Stock Purchase Plan, and 68 employees were eligible to
participate in the Stock Purchase Directors Plan.

A summary of the principal provisions of the Stock Purchase Plan and the
proposed amendment thereto is set forth below under "1993 Stock Purchase Plan."

The Board of Directors now seeks shareholder approval of the amendment to
the Company's Stock Purchase Plan to increase the number of shares of the
Company's Common Stock available for issuance thereunder by 300,000 shares from
a total of shares of 350,000 shares to a total of 650,000 shares. An increase in
the number of shares reserved for issuance under the Stock Purchase Plan is
needed to enable employees of the Company to continue to participate in the
Stock Purchase Plan, and management of the Company believes that increasing the
number of shares available thereunder is essential to the Company's ability to
attract and retain highly qualified employees.

Since each executive officer of the Company is eligible to participate in
the Stock Purchase Plan, each such officer has a personal interest in the
proposed amendment to the Stock Purchase Plan.

VOTE REQUIRED AND BOARD OF DIRECTORS RECOMMENDATION

The affirmative vote of a majority of the votes present and entitled to
vote at the Annual Meeting of Shareholders, at which a quorum representing a
majority of all outstanding shares of Common Stock of the Company is present and
voting, either in person or by proxy, is required for approval of this proposal.
Abstentions and broker non-votes will each be counted as present for purposes of
determining the presence of a quorum. Abstentions will have the same effect as a
negative vote on this proposal. Broker non-votes will have no effect on the
outcome of this vote.

The Board of Directors believes that the proposed amendment to increase the
share reserve of the 1993 Employee Stock Purchase Plan is in the best interests
of the Shareholders and the Company for the reasons stated above. THEREFORE, THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THIS PROPOSAL
TO INCREASE THE AGGREGATE MAXIMUM NUMBER OF SHARES ISSUABLE UNDER THE STOCK
PURCHASE PLAN BY 300,000 SHARES.

PROPOSAL NO. 4

APPROVAL OF THE AMENDMENT TO THE 1990 DIRECTORS' STOCK OPTION PLAN.

The 1990 Directors' Stock Option Plan (the "Directors Plan") was adopted by
the Board on May 14, 1990 and was approved by the Company's shareholders on July
10, 1990. A total of 75,000 shares of Common Stock has been reserved for
issuance under the Directors Plan. To the extent that any outstanding option
under the Directors Plan expires or terminates prior to exercise in full, the
shares of Common Stock for which such option is not exercised become available
for future grants under the Directors Plan. On January 23, 1995 and July 24,
1995, the Board amended the Directors Plan to (i) increase the number of shares
of the Company's Common Stock issuable under the Directors Plan from 75,000 to
125,000, (ii) eliminate the 12,500 share limit on the number of shares which may
be granted to a director under the Directors Plan, (iii) provide for the
automatic grant of options to non-employee directors of the Company, and (iv)
provide that options granted under the Directors Plan (including currently
outstanding options) will become immediately exercisable and fully vested in the
event of certain transfer of control transactions. The shareholders approved
these amendments on September 6, 1995.

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On June 20, 1996, the Board amended the Directors Plan, subject to
shareholder approval, to (i) increase the number of shares for the initial stock
option grant to nonemployee directors who own less than 1% of the total combined
voting power of the Company from 15,000 shares to 20,000, (ii) increase the
number of shares for the annual stock option grant to nonemployee directors who
own less than 1% of the total combined voting power of the Company from 1,500
shares to 3,000, (iii) provide that each nonemployee director who owns less than
1% of the combined voting power of the Company and who received an initial stock
option grant under the Directors Plan prior to June 20, 1996 and is serving as a
director at the time of shareholder approval of these amendments, shall be
granted an additional option to purchase 1,500 shares pursuant to the Directors
Plan, effective upon shareholder approval of these proposed amendments to the
Directors Plan. As of July 24, 1996, options to purchase 89,500 shares were
outstanding under the Directors Plan, with exercise prices ranging from $ 0.8750
to $8.2500, a weighted average exercise price of $3.8418, and expiration dates
ranging from January 24, 2000 to April 1, 2006.

A summary of the principal provisions of the Directors Plan and the
proposed amendments thereto is set forth below under "1990 Directors' Stock
Option Plan."

The Board of Directors now seeks shareholder approval of the
amendments to the Company's Directors Plan to (i) increase the number of shares
for the initial stock option grant to nonemployee directors who own less than 1%
of the total combined voting power of the Company from 15,000 shares to 20,000,
(ii) increase the number of shares for the annual stock option grant to
nonemployee directors who own less than 1% of the total combined voting power of
the Company from 1,500 shares to 3,000, (iii) provide that each nonemployee
director who owns less than 1% of the combined voting power of the Company and
who received an initial stock option grant under the Directors Plan prior to
June 20, 1996 and is serving as a director at the time of shareholder approval
of these amendments, shall be granted an additional option to purchase 5,000
shares pursuant to the Directors Plan, effective upon shareholder approval of
these proposed amendments to the Directors Plan, and (iv) to provide that each
nonemployee director who owns less than 1% of the combined voting power of the
Company, who received an annual stock option grant under the Directors Plan
prior to June 20, 1996 and who is serving as a director at the time of
shareholder approval of these proposed amendments shall be granted an additional
option to purchase 1,500 shares pursuant to the Directors Plan, effective upon
shareholder approval of these proposed amendments to the Directors Plan.
Management of the Company believes that approval of the amendments is in the
best interests of the Company and its shareholders because adoption of the
amendments will enable the Company to attract and retain qualified persons to
serve as non-employee directors of the Company.

Since each director of the Company is eligible to participate in the
Directors Plan, each such director has a personal interest in the proposed
amendment to the Directors Plan.

VOTE REQUIRED AND BOARD OF DIRECTORS RECOMMENDATION

The Board of Directors believes that the proposed amendments to the
1990 Directors' Stock Option Plan are in the best interests of the shareholders
and the Company for the reasons stated above. THEREFORE, THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THIS PROPOSAL TO (I) INCREASE
THE NUMBER OF SHARES FOR THE INITIAL STOCK OPTION GRANT TO NONEMPLOYEE DIRECTORS
WHO OWN LESS THAN 1% OF THE TOTAL COMBINED VOTING POWER OF THE COMPANY FROM
15,000 SHARES TO 20,000, (II) INCREASE THE NUMBER OF SHARES FOR THE ANNUAL
STOCK OPTION GRANT TO NONEMPLOYEE DIRECTORS WHO OWN LESS THAN 1% OF THE TOTAL
COMBINED VOTING POWER OF THE COMPANY, FROM 1,500 SHARES TO 3,000, (III) PROVIDE
THAT EACH NONEMPLOYEE DIRECTOR WHO OWNS LESS THAN 1% OF THE

8
<PAGE>

TOTAL COMBINED VOTING POWER OF THE COMPANY FROM 15,000 SHARES TO 20,000, (ii)
INCREASE THE NUMBER OF SHARES FOR THE ANNUAL STOCK OPTION GRANT TO NONEMPLOYEE
DIRECTORS WHO OWN LESS THAN 1% OF THE TOTAL COMBINED VOTING POWER OF THE
COMPANY, FROM 1,500 SHARES TO 3,000, (iii) PROVIDE THAT EACH NONEMPLOYEE
DIRECTOR WHO OWNS LESS THAN 1% OF THE COMBINED VOTING POWER OF THE COMPANY,
RECEIVED AN INITIAL STOCK OPTION GRANT UNDER THE DIRECTORS PLAN PRIOR TO JUNE
20, 1996 AND IS SERVING AS A DIRECTOR AT THE TIME OF SHAREHOLDER APPROVAL OF
THESE AMENDMENTS, SHALL BE GRANTED AN ADDITIONAL OPTION TO PURCHASE 5,000 SHARES
PURSUANT TO THE DIRECTORS PLAN, AND (iv) TO PROVIDE THAT EACH NONEMPLOYEE
DIRECTOR WHO OWNS LESS THAN 1% OF THE COMBINED VOTING POWER OF THE COMPANY,
RECEIVED AN ANNUAL STOCK OPTION GRANT UNDER THE DIRECTORS PLAN PRIOR TO JUNE 20,
1996 AND IS SERVING AS A DIRECTOR AT THE TIME OF SHAREHOLDER APPROVAL OF THESE
PROPOSED AMENDMENTS SHALL BE GRANTED AN ADDITIONAL OPTION TO PURCHASE 1,500
SHARES PURSUANT TO THE DIRECTORS PLAN.

EXECUTIVE COMPENSATION AND OTHER MATTERS

The following table sets forth information concerning the compensation
paid to the two persons who served as the Company's Chief Executive Officer
during fiscal 1996 and the three other executive officers whose total salary and
bonus exceeded $100,000 for fiscal 1996, for services in all capacities to the
Company during fiscal 1996, 1995 and 1994.

SUMMARY COMPENSATION TABLE

ANNUAL LONG-TERM
COMPENSATION COMPENSATION
----------------------------------- ------------
ALL OTHER
FISCAL SALARY BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (1) (#) ($) (2)
- --------------------------- ---- --- ------- --- -------
<S> <C> <C> <C> <C> <C>
Glenn E. Abood 1996 131,415 51,701 250,000 31,408
Chief Executive Officer (3) 1995 - - - -
1994 - - - -

Robert R. Anderson 1996 85,322 85,803 40,000 0
Chairman, Chief Executive Officer 1995 2,000 0 0 (5)
and Chief Financial Officer (4) 1994 - - - -

Minoru Takagi 1996 260,047(6) 0 20,000 0
Vice President 1995 271,930(7) 0 12,500 0
1994 226,215(8) 0 20,000 0

Arthur E.B. Monk 1996 121,501 45,303 16,000 9,326
Vice President of Marketing 1995 83,689 10,000 50,000 6,248
and Corporate Development (9) 1994 - - - -

Randall L. Smith 1996 115,000 35,617 5,000 16,971
Vice President of Product 1995 17,029 - 50,000 4,665
Marketing (10) 1994 - - - -
</TABLE>
- ----------------------

(1) The CEOs and other Executive Officers participate in a Bonus Plan known as
the "Management By Objectives" ("MBO") plan. Under this plan bonuses are
paid to officers

9
<PAGE>

quarterly based in part on the officer achieving predetermined goals and
in part on the profitability of the Company.

(2) Other Compensation paid to the CEOs and other executive officers comprise
moving expenses, car allowance, and insurance premiums. Amounts paid to
Mr. Abood were for moving expenses and car allowances. Amounts paid to Mr.
Monk were for car allowances. Amounts paid to Mr. Smith were for car
allowances and insurance premiums.

(3) Mr. Abood became Chief Executive Officer of the Company in July 1995.

(4) Mr. Anderson, who is Chairman of the Board, served as Chief Executive
Officer from April 1994 until July 1995 and Chief Financial Officer from
September 1994 to February 1996.

(5) The Company issued to Mr. Anderson 125,000 warrants of Common Stock in
January 1994 at an exercise price of $0.88 per share which was fair market
value at the date of issuance. The Company issued to Mr. Anderson 50,000
warrants of Common Stock in September 1994 at an exercise price of $1.50
per share which was fair market value at the date of issuance.

(6) Represents a base salary of $211,449 and commissions in the amount of
$48,598.

(7) Represents a base salary of $197,348 and commissions in the amount of
$74,582.

(8) Represents a base salary of $181,852 and commissions in the amount of
$44,363.

(9) Mr. Monk joined SVR as Vice President of Marketing in July 1994, was named
Vice President of Corporate Development in February 1995 and was named
Vice President of Marketing and Corporate Development in April 1996.

(10) Mr. Smith joined SVR as Vice President of Marketing in February 1995 and
was named Vice President of Product Marketing in April 1996.

The following table sets forth certain information regarding individual
grants of stock options pursuant to the Company's 1988 Stock Option Plan during
fiscal 1996 to each of the persons named in the Summary Compensation Table
above.

OPTION GRANTS IN FISCAL 1996

POTENTIAL REALIZED VALUE AT
PERCENT OF ASSUMED ANNUAL RATES OF STOCK
OPTIONS TOTAL OPTIONS PRICE APPRECIATION FOR OPTION
GRANTED GRANTED TO EXERCISE TERM (1)
(SHARES) EMPLOYEES IN PRICE EXPIRATION --------
(#)(2) FISCAL 1996 ($/SH)(3) DATE (4) 5% 10%
------ ----------- --------- -------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Glenn E. Abood 250,000 28% 3.1250 5/10/05 $488,750 $1,246,250

Robert R. Anderson 40,000 5% 3.4376 4/03/05 86,496 219,296

Minoru Takagi 12,500 1% 3.4376 4/03/05 27,030 68,530
7,500 1% 4.7500 2/27/06 22,425 56,925

Arthur E.B. Monk 5,000 1% 5.0000 6/01/05 15,750 39,950
5,000 1% 4.7850 2/13/06 15,025 38,175
6,000 1% 4.7500 2/27/06 17,940 45,540

Randall L. Smith 5,000 1% 4.7500 2/27/06 14,950 37,950
</TABLE>
- -----------------

10
<PAGE>

(1) Potential gains are net of exercise price, but before taxes associated with
exercise. These amounts represent certain assumed rates of appreciation
only, based on Securities and Exchange Commission rules. Actual gains, if
any, on stock option exercises are dependent on future performance of the
Common Stock, overall market conditions and the individual option holder's
continued employment through the vesting period.

(2) Unless otherwise indicated, all options were granted under the Company's
1988 Stock Option Plan. Options become exercisable as the underlying
shares. Generally, 25% of the shares subject to an option vest one year
after the date of grant, and the remaining shares vest in equal monthly
installments over the following three years. The Board retains discretion
to modify the terms (including the price) of outstanding options granted
under the 1988 Stock Option Plan. See also "Change-in-Control
Arrangements."

(3) All of these options have an exercise price equal to the fair market value
of the Company's Common Stock on the date of grant.

(4) The expiration date is the earlier to occur of six years after the options
have become fully vested or ten years after the date of grant. These
options vest over four years, 25% the first year, plus 1/48 per month over
the next three years.

The following table sets forth certain information concerning the
number and value at March 31, 1996 of unexercised options held by each of the
persons named in the Summary Compensation Table.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>

NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
UNDERLYING UNEXERCISED MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR END(#) FISCAL YEAR END ($)(1)
----------------------------- ---------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>

Glenn E. Abood 0 - 0 250,000 0 359,375.00

Robert R. Anderson 0 - 5,416 44,584 19,971.50 61,899.50

Minoru Takagi 52,500 193,781 22,759 33,491 70,409.41 58,667.46

Arthur E.B. Monk 0 - 20,833 45,167 53,384.56 74,740.44

Randall L. Smith 0 - 13,541 41,459 10,154.40 27,340.60
- -------------------
</TABLE>

(1) These amounts represent the difference between the exercise price of the
stock options and the average of the high and low market price of the
Company's Common Stock on March 29, 1996 (the last day of trading for the
fiscal year ended March 31, 1996) for all options exercisable by each named
executive officer whether vested or unvested. The average of the high and
low market price as of March 29, 1996 was $4.5625.

DIRECTOR COMPENSATION

11
<PAGE>

Mr. Anderson received $171,125 for serving as an officer and no fee for
serving as a director. Mr. Anderson received warrants/options as set forth below
under "Certain Transactions". Mr. Abood received $214,524 for serving as an
officer and no fee for serving as a director. Mr. Abood received options as set
forth below "Employment Agreements and Change-in-Control Arrangements". Officer
Directors (defined below) receive no fee for serving as directors. Effective
April 1, 1995, Investor Directors (as defined below) are paid a retainer of
$6,000 per year, $500 for each Board meeting attended and $250 for each
Committee meeting attended; and Outside Directors (as defined below) are paid a
retainer of $8,000 per year, $1,000 for each Board Meeting attended and $500 for
each Committee meeting attended. Each of the Company's non-employee directors is
eligible to receive options under the Company's 1990 Directors' Stock Option
Plan, the terms of which are described below under "1990 Directors' Stock
Option Plan."

CERTAIN TRANSACTIONS

In January 1994, the Company issued to Robert R. Anderson, for $25,000, a
warrant to purchase 125,000 shares of the Company's Common Stock at $0.88 per
share. This warrant expires on January 20, 1999.

The subordinated debt which was issued in September 1994, under an
agreement with certain investors, required quarterly payments of interest at 7
1/2% and was subordinated to all indebtedness of the Company to banks, insurance
companies, factors or other lending or financial institutions regularly engaged
in the business of lending money, and was due in September 1996. One of the
investors was a 5% shareholder, J.F. Shea, and two were directors, Robert R.
Anderson and Roy L. Rogers, of the Company. The investors also purchased
warrants for $52,000 in cash entitling them to purchase 258,333 shares of
unregistered Common Stock of the Company at a price of $1.50 per share at any
time prior to September 1, 1999. This subordinated debt was paid in full by the
Company in February 1996.

On June 6, 1995, the Company entered into a Stock Purchase Agreement with a
limited group of existing and new accredited investors. One of the investors is
a 5% shareholder, J.F. Shea, who held more than 5% of the Company's outstanding
common stock and participated in the offering. Under the terms of the
Agreement, the Company sold 1,172,000 newly issued, unregistered shares of the
Company's Common Stock in exchange for $2,860 in cash (cost of issuance amounted
to approximately $25). No officers or directors participated in the offering.
The holders may request the Company to effect a registration of the securities
at anytime.

On February 13, 1996 the Company closed on a public offering selling 2
million shares of common stock for $9.4 million. Two 5% shareholders purchased
stock in this offering. Roy L. Rogers, a director of the Company, purchased
40,000 shares for the Rogers Family Trust. Robert R. Anderson, an officer and
director of the Company, purchased 20,000 for the Anderson Family Trust and
10,000 shares for the Timothy R. Anderson Trust.

EMPLOYMENT AGREEMENTS AND CHANGE-IN-CONTROL ARRANGEMENTS

Under the Company's 1988 Stock Option Plan, in the event of a dissolution
or liquidation of the Company, a merger in which the Company is not the
surviving corporation, a transaction or series of transactions in which 50% or
more of the then outstanding voting stock is sold or otherwise transferred to a
single transferee or group of related transferees, or the sale of all or
substantially all of the assets of the Company, any or all outstanding options
may be assumed or replaced by the successor corporation, which assumption or
replacement shall be binding on all optionees. In the alternative, the
successor corporation may substitute equivalent options or provide substantially
similar consideration to optionees as was provided to shareholders (after taking
into account the existing provisions of the options). The successor corporation
may also issue, in place of outstanding shares of the Company held by the
optionee, substantially similar shares or other property subject to repurchase
restrictions no less favorable to the optionee.

12
<PAGE>

Under the Company's Directors Plan, in the event of a Transfer of Control
(as defined in the Directors Plan) of the Company, any unexercisable or unvested
portion of outstanding options will be immediately exercisable and vested in
full as of the date 10 days prior to the date of the Transfer of Control. In
addition, the Board of Directors of the Company, in its sole discretion, may
arrange for the acquiring corporation to either assume the Company's rights and
obligations under outstanding options or substitute substantially equivalent
options for the acquiring corporation's stock for outstanding options. Any
options which are neither assumed or substituted by the acquiring corporation in
connection with the Transfer of Control nor exercised as of the date of the
Transfer of Control will terminate and cease to be outstanding as of the date of
the Transfer of Control.

The Company has entered into an employment agreement with its President and
Chief Executive Officer, Glenn Abood, pursuant to which Mr. Abood is entitled to
an annual salary of $175,008, participation in the Company's employee benefit
Plans and annual incentive compensation payments for the 1996 fiscal year of
between 40% and 60% of his base salary, prorated for the period of employment
during the fiscal year. The agreement further provides that Mr. Abood is
entitled to an annual incentive compensation payment of between 50% and 75% of
his base salary for fiscal 1997. Annual incentive compensation payments are
payable if the Company achieves certain earnings goals for the fiscal year and
if Mr. Abood achieves management and performance objectives established by the
Company's Compensation Committee. Pursuant to the agreement the Company has
advanced Mr. Abood $100,000 as a three year forgivable loan bearing interest at
5.9% per annum (one third of the principal and all accrued interest on such
loan will be forgiven annually beginning on the first anniversary of the loan,
October 15, 1996). Additionally, the contract provides for approximately
$32,000 in reimbursement of relocation expenses. Pursuant to the agreement,
Mr. Abood was granted an option to purchase 250,000 shares of the Company's
Common Stock at the fair market value on date of grant, vesting 25% at the end
of Mr. Abood's first year of employment and thereafter at 2.083% per month. The
agreement provides that Mr. Abood will receive stock option grants to purchase
50,000 shares at the fair market value on the date of grant on each of the first
and second anniversaries of Mr. Abood's employment with the Company, with the
same vesting provisions as described above. On April 8, 1996 the Compensation
Committee of the Board of Directors granted Mr. Abood a stock option for 100,000
shares pursuant to Mr. Abood's employment contract.

If Mr. Abood's employment is terminated by the Company other than following
a change of control or for cause, Mr. Abood is entitled to receive monthly
severance payments at his final salary rate for the greater of six months or the
remainder of the term of the agreement. In the event that Mr. Abood is
terminated other than for cause (as defined in the agreement), prior to the last
day of fiscal 1996 or 1997, Mr. Abood is entitled to a prorated payment of the
applicable incentive compensation payment if the Board determines in good faith
that the objectives and the applicable earnings goals have been met. In the
event of a change of control (as defined in the agreement), Mr. Abood will be
entitled to one year acceleration of vesting in stock options granted at the
time of the change of control, and in the event of termination of Mr. Abood's
employment within one year after a change of control, Mr. Abood is entitled to
continuation of his final salary for the twelve month period following
termination and an additional one year of acceleration of vesting of the stock
options then held by Mr. Abood.

INDEPENDENT PUBLIC ACCOUNTANTS

The Company's Board of Directors approved a change in the Company's
independent accountants for the fiscal year ending March 31, 1996, from Coopers
& Lybrand L.L.P. to Price Waterhouse LLP on March 29, 1996, based on the
recommendation of the Audit Committee of the Board of Directors. The former
accountants neither resigned nor declined to stand for reelection. The
Registrant's Audit Committee and Board of Directors determined that sound
business practice suggested that it would be appropriate to consider
periodically whether the Registrant would be able to reduce its overall
accounting costs, while maintaining or enhancing the efficiency of the audit
process, by seeking competitive proposals on its accounting work. After
reviewing the

13
<PAGE>

proposals received (including a fee quote from its former accountants), the
Audit Committee recommended to the full Board that the Registrant change
accounting firms.

The report of Coopers & Lybrand L.L.P. on the Company's financial
statements for the fiscal year ended March 31, 1994, contained no adverse
opinion; or disclaimer of opinion, and was not qualified or modified as to
uncertainty, audit scope, or accounting principles. The report of Coopers &
Lybrand L.L.P. on the Company's financial statements for the fiscal year ended
March 31, 1995 contained an explanatory paragraph regarding the uncertainty as
to the outcome of litigation in which the Company was defendant alleging unfair
competition and breach of contract. During the fiscal years ended March 31,
1994, and March 31, 1995, and the interim period from April 1, 1995 through
March 29, 1996 there were no disagreements between the Company and Coopers &
Lybrand L.L.P. on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which, if not resolved to
the satisfaction of Coopers & Lybrand L.L.P. would have caused it to make
reference to the subject matter of the disagreement in connection with its
report. No "reportable event" described in Item 304 of Regulation S-B (during
such period of time the Company was a small business issuer reporting under
Regulation S-B) has occurred within the Company's fiscal years ending March 31,
1994, or March 31, 1995, or the period from April 1, 1995 through March 29,
1996.

The Company did not consult with Price Waterhouse LLP during the fiscal
years ended March 31, 1994 and March 31, 1995, and the period from April 1, 1995
through March 29, 1996, on any matter which was the subject of any disagreement
or any reportable event or on the application of accounting principals to a
specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on the Company's financial statements.

Members of the firm of Price Waterhouse LLP, the Company's principal
accountant for the current fiscal year, and for the most recently completed
fiscal year, are invited to the shareholders' meeting and are expected to
attend. They will have an opportunity, if they so desire, to make a statement
and will be available to respond to appropriate questions, if any there be.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than ten percent of a registered class of the Company's
equity securities, to file with the 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 beneficial owners are
required by SEC regulation to furnish the Company with copies of all reports
they file under Section 16(a).

To the Company's knowledge, based solely on its review of the copies of
such reports furnished to the Company and written representation that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten-percent beneficial owners were complied
with during the fiscal year ended March 31, 1996, except that Mr. Anderson
failed to timely file a Schedule 13D and required amendments; the required
Schedule 13D was subsequently filed. Mr. Anderson has potential liability under
the Securities Exchange Act of 1934, as amended, for the failure to timely file
such Schedule 13D. Mr. Abood failed to file a timely Form 5.

REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION

The Compensation Committee (The "Committee") of the Board of Directors is
comprised of two nonemployee directors; Roy L. Rogers and Thomas A. Sherby.

14
<PAGE>

COMPENSATION COMMITTEE POLICY

The Committee establishes base salary levels and target bonuses for the
Chief Executive Officer ("CEO") and other executive officers of the Company at,
or about, the beginning of each fiscal year. The Committee acts on behalf of
the Board of Directors to establish the general compensation policy of the
company for all executive officers of the Company. The Committee administers
the equity incentive plans, including the Company's 1988 Stock Option Plan and
the "Management By Objectives" Bonus Plan (The "Bonus Plan") for executive
officers. The Committee believes that the compensation of the CEO and the other
executive officers should be commensurate with Company performance and the
individual executive's performance. The Committee also believes that such
compensation should be competitive with the compensation executive officers
receive at similar companies for similar services. In this way, the Company
will be able to attract and retain competent executive talent. Consistent with
this, a designated portion of the compensation of each executive officer is
contingent upon corporate performance and the executive's performance and the
executive's performance against personal performance objectives. Equity
incentives for executive officers are provided through the granting of stock
options under the Company's 1988 Stock Option Plan. During the formal Committee
meetings in fiscal year 1996, all discussions regarding compensation of the then
CEO, Robert R. Anderson, were held without his attendance. None of the other
executive officers of the Company were present during the discussions regarding
their compensation. Glenn E. Abood became Chief Executive Officer of the
Company in July 1995, subsequent to the meeting of the Committee for fiscal year
1996. Mr. Abood's employment terms were negotiated on an arms-length basis by
Mr. Anderson on behalf of the Board of Directors and were approved by the
Compensation Committee.

In determining the executive officers' salaries, incentive compensation,
and stock option grants, the Committee makes reference to the Radford Survey of
competitive salaries in the technology sector for similar positions, informal
surveys and inquiries, which may be conducted by the Company from time to time,
and the Committee members' own knowledge and familiarity with competitive
compensation rates of executive officers within the electronics industry.

In preparing the performance graph for this Proxy Statement, The Company
has selected the Standard & Poors' High Technology Composite Index (The "S&P
High Technology Index"). The companies that the Company included in its
stratified salary surveys are not necessarily those included in the indices, as
such companies may not be competitive with the Company for executive talent.

FISCAL YEAR 1996 EXECUTIVE COMPENSATION

Base Salary. The base salaries of the executive officers for fiscal year
1996 were set by the Committee in April of 1995. The Committee set these
salaries on the basis of personal performance and the levels it believes are
comparable with other companies that compete for similar executive talent and
intends to compensate executive officers at the middle of the range of employees
of similar rank. The executive officers also qualify for and enjoy the standard
benefits that are available to full-time employees of the Company including
participation in a 401(k) plan.

Bonus Plan. This plan was established, and is administered, to encourage
personal performance and enhance overall company performance. One half of the
bonuses paid to executive officers is paid quarterly and is contingent upon each
officer achieving his or her individual predetermined quarterly goals. The
quarterly goals for the executive officers are set by the CEO. Pursuant to the
CEO's employment agreement, the CEO's quarterly goals are set by the Committee.
The other half of the bonus is paid annually and is based on the Company's
profit and revenue goals (one half of which is based on achievement of the
annual revenue goal and one half of which is based on achievement of the annual
profit goal). The maximum potential bonus payment for each executive officer who
is a vice president is up to 35% (25% for executive officers

15
<PAGE>

who are not vice presidents) of his or her annual base salary if all goals are
achieved and lower amounts are payable for partial achievement of goals. This
plan was in effect throughout fiscal year 1996 and bonuses were paid to all
executive officers except the Vice President of Sales who does not participate
in this plan but participates in an incentive-driven commission plan not
administered by the Committee. The Committee believes that the Company's bonus
plan is instrumental in encouraging top performance from its executive officers.

Stock Options. Stock options are granted to executive offices when they
first join the Company, in connection with a significant increase in
responsibility, or to attain equality with a peer group. The Committee may grant
additional stock options to executive offices to continue to retain such
executives and provide incentives. The size of the option grants are determined
based on expected future performance, existing options held by each optionee and
other employees of similar rank and past performance. Generally stock options
become exercisable as they vest at a price that is equal to the fair market
value of the Company's common stock on the date of grant. Generally, stock
options vest over a four-year period and are contingent on the continued
employment of the executive officer with the Company. At the beginning of fiscal
year 1996, the Committee granted incentive stock options to six then executive
officers. During fiscal year 1996, the Committee granted stock options to two
new executive officers as an incentive to join the Company; and stock options
were granted to two employees who were promoted to executive officers.
Additional stock options were granted by the Committee during fiscal year 1996
as incentives to eight executive officers. CEO, Glenn E. Abood, was granted
stock options pursuant to the terms of his employment agreement when he became
CEO in July 1995.

FISCAL YEAR 1996 CEO COMPENSATION

Compensation for the CEO is determined through a process similar to that
discussed above for executive officers.

In April 1995, the Committee established a base salary for then President
and CEO, Robert R. Anderson. The Committee's decision was made primarily on the
basis of Mr. Anderson's performance of his duties and with reference to
competitive salaries for similar positions.

Glenn E. Abood became the President and CEO of the Company in July 1995.
The Company and Mr. Abood have entered into an employment agreement following
arms-length negotiations. Under this agreement, Mr. Abood is entitled to an
annual salary, participation in the Company's employee benefit plans, and annual
incentive compensation payments for the 1996 fiscal year (prorated) and for the
1997 fiscal year. Under the agreement, amounts paid to Mr. Abood as incentive
compensation for the 1996 fiscal year were predicated on achieving certain
earnings goals for the fiscal year 1996 as well as quarterly objectives set by
the Committee all related to achieving profit and revenue goals. The full
targeted earnings figure for fiscal year 1996 was not achieved. However, Mr.
Abood received a prorated bonus for the figure attained for fiscal year 1996 as
well as the achievement of objectives set by the Committee that were related to
achieving profit and revenue goals. Amounts paid to Mr. Abood as incentive
compensation for the 1997 fiscal year will similarly be based on the Company
achieving certain earnings goals for the fiscal year 1997 as well as objectives
set by the Committee related to achieving those earnings goals. Pursuant to this
employment agreement, Mr. Abood was also granted stock options. Mr. Abood will
be granted additional stock options on each of the first and second
anniversaries of Mr. Abood's employment with the Company. See "Employment
Agreements and Change-in-Control Agreements" for a description of the terms of
Mr. Abood's employment agreement.

TAX LIMITATION

Section 162(m) of the Internal Revenue Code limits deductions for
compensation paid to certain executive officers to the extent that such
compensation exceeds $1 million per officer in any

16
<PAGE>

year. An exemption from the Section 162(m) limit exists for "performance-based"
compensation. Compensation recognized by an executive officer when he or she
exercises an outstanding option under the 1988 Stock Option Plan with an
exercise price equal to the fair market value of the option shares on the grant
date will qualify as performance-based compensation that will not be subject to
the Section 162(m) $1 million limitation. The Company did not pay any
nondeductible compensation to any of its executive officers in fiscal year 1996.
Since it is not expected that the cash compensation to be paid to the Company's
executive officers for fiscal year 1997 will exceed the $1 million limit per
officer, the Committee will defer any decision on whether to limit the dollar
amount of all other compensation payable to the Company's executive officers to
the $1 million upper limit.

Compensation Committee

Roy L. Rogers

Thomas A. Sherby

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee of the Company's Board of Directors was formed
on January 23, 1995. The members of the Compensation Committee are Mr. Rogers
and Mr. Sherby. Neither of these persons was at any time during fiscal year
1996, or at any other time, an officer or employee of the Company. No executive
officer of the Company serves as a member of the board of directors or
Compensation Committee of any entity that has one or more executive officers
serving as a member of the Company's Board of Directors or Compensation
Committee, except that Mr. Anderson serves as a member of the Board of Directors
of Knights Technology, Inc., a privately held company, which Mr. Sherby serves
as CEO and Chairman.

PERFORMANCE MEASUREMENT COMPARISON

The following graph shows the total shareholder return of an investment of
$100 in cash on March 31, 1991 for (i) the Company's Common Stock, (ii) the
Standard & Poor's 500 Composite Index (the "S&P 500") and (iii) the S&P High
Technology Index (the "S&P HTC"). All values assume reinvestment of the full
amount of all dividends and are calculated as of March 31 of each year:

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG SILICON VALLEY RESEARCH, INC. THE S&P 500 INDEX
AND THE S&P HIGH TECH COMPOSITE INDEX
<TABLE>
<CAPTION>

Measurement Period Silicon Valley S&P High Tech
(Fiscal Year Covered) Research, Inc. S&P 500 Composite
<S> <C> <C> <C>
3/91 $100 $100 $100
3/92 90 111 102
3/93 119 128 112
3/94 58 130 132
3/95 177 150 167
3/96 238 198 226
</TABLE>

17
<PAGE>

*ASSUMES $100 INVESTED ON MARCH 31 1991 IN STOCK OR INDEX--INCLUDING
REINVESTMENT OF DIVIDENDS, FISCAL YEAR ENDING MARCH 31.

CHANGES TO BENEFIT DIRECTORS PLANS

The Company has proposed amendments to the Directors Plan to (i) increase the
number of shares for the initial stock option grant to nonemployee directors who
own less than 1% of the total combined voting power of the Company from 15,000
shares to 20,000, (ii) increase the number of shares for the annual stock
option grant to nonemployee directors who own less than 1% of the total combined
voting power of the Company from 1,500 shares to 3,000, (iii) provide that each
nonemployee director who owns less than 1% of the combined voting power of the
Company and who received an initial stock option grant under the Directors Plan
prior to June 20, 1996 and is serving as a director at the time of shareholder
approval of these amendments, shall be granted an additional option to purchase
5,000 shares pursuant to the Directors Plan, and (iv) provide that each
nonemployee director who owns less than 1% of the combined voting power of the
Company, received an annual stock option grant under the Directors Plan prior to
June 20, 1996 and is serving as a director at the time of shareholder approval
of these proposed amendments shall be granted an additional option to purchase
1,500 shares pursuant to the Directors Plan. If the proposed amendments to the
Directors Plan are approved by the Company's shareholders, each nonemployee
director who own less than 1% of the combined voting power of the company, who
received an initial stock option grant under the Directors Plan prior to June
20, 1996, and who is serving as a director at the time of shareholder approval
of the amendments, shall be granted on additional option to purchase 5,000
shares pursuant to the Directors Plan. The directors so affected would be
Benjamin Huberman, John L. Doyle, Yoshio Nishi and Thomas A. Sherby. Further,
if the proposed amendments to the Directors Plan are approved by the Company's
shareholders, each nonemployee director who owns less than 1% of the combined
voting power of the Company, who received an annual stock option grant under the
Directors Plan prior to the shareholder meeting, and who is serving as a
director at the time of shareholder approval of the amendments, shall be granted
an additional option to purchase 1,500 shares pursuant to the Directors Plan.
The following tables sets forth the options that will be immediately granted
under the Directors Plan to directors who are not executive officers as a group
if amendments to the Directors Plan are approved as proposed. Employee
directors are not eligible to participate in the Directors Plan.

The Company has also proposed an amendment to increase the number of shares
available for issuance under the Company's Stock Purchase Plan. The following
table sets forth purchases of shares under the Stock Purchase Plan during the
fiscal year ended March 31, 1996 by (1) the Company's executive officers listed
in the Summary Compensation Table above; (2) all other executive officers as a
group; (3) all outside directors as a group; and (4) all employees as a group.
Non-employee directors are not eligible to participate in the Stock Purchase
Directors Plan. Purchases of stock under the Stock Purchase Directors Plan are
made at the discretion of participants. Accordingly, future purchases under the
Stock Purchase Directors Plan are not determinable.

NEW PLAN BENEFITS
<TABLE>
<CAPTION>

1990 DIRECTORS' 1993 EMPLOYEE
STOCK OPTION PLAN (1) STOCK PURCHASE PLAN (2)
--------------------------- -----------------------------
EXERCISE PRICE NUMBER OF PURCHASE PRICE NUMBER OF
NAME AND PRINCIPAL POSITION PER SHARE (3) SHARES PER SHARE SHARES
- --------------------------- -------------- --------- -------------- ---------
<S> <C> <C> <C> <C>
Glenn E. Abood - 0 $3.51 - 5.95 323
Chief Executive Officer
and President
</TABLE>
18
<PAGE>

<TABLE>

<S> <C> <C> <C> <C>
Robert R. Anderson - 0 0 0
Chairman

Minoru Takagi - 0 0 0
Vice President

Arthur E.B. Monk - 0 0 0
Vice President of Marketing
and Corporate Development

Randall L. Smith - 0 $2.66 1,146
Vice President of Product
Marketing

All Other Executive Officers - 0 $2.66 - 2.71 7,706
as a group (2 persons)

All Outside Directors as a - 26,000 0 0
group (5 persons)

All Non-Executive Officer
Employees as a group - 0 $2.66 - 5.95 64,531
- -------------------
</TABLE>

(1) Only non-employee directors of the Company are eligible to participate in
the Directors Plan.

(2) Only employees of the Company are eligible to participate in the Stock
Purchase Plan.

(3) Exercise prices per share will be based upon fair market value at the date
of grant.

(4) Represents automatic grants of options for 5,000 shares which will be
granted to four Outside Directors on the first day after the shareholders
meeting and four automatic grants of 1500 shares each to four Outside
Directors. It does not include the grants of any options contained in the
amendments as proposed herein for shareholder approval.

1988 STOCK OPTION PLAN

Set forth below is a summary of the principal features of the 1988
Plan, which summary is qualified in its entirety by reference to the terms and
conditions of the 1988 Plan. The Company will provide, without charge, to each
person to whom a proxy statement is delivered, upon request of such person and
by first class mail, a copy of the 1988 Plan. Any such request should be
delivered as follows: Secretary, Silicon Valley Research, Inc., 6360 San
Ignacio Avenue, San Jose, CA 95119.

SUMMARY OF THE PROVISIONS OF THE 1988 PLAN

General. The 1988 Plan was adopted by the Board on May 16, 1988 and
was approved by the Company's shareholders on August 23, 1988. As adopted, the
1988 Plan provided for the issuance of options to purchase up to 300,000 shares
of Common Stock, plus any shares that were or that became available for issuance
under the Company's 1984 Employee Stock Option Plan which expired in August
1989. Options to purchase 375,976 shares became available for issuance under
the former 1984 Employee Stock Option Plan. An amendment to the 1988 Plan to
increase by 320,000 the number of shares reserved for issuance thereunder and to
make certain changes required by the California Department of Corporations was
approved by the Board on March 22, 1993 and by the Company's shareholders on
August 26, 1993. An amendment to the 1988 Plan to increase by 250,000 the
number of shares reserved for issuance thereunder was approved by the Board on
May 16, 1994 and by the Company's shareholders on September 8, 1994. An

19
<PAGE>

amendment to the 1988 Plan to increase by 500,000 the number of shares reserved
for issuance thereunder was approved by the Board on July 24, 1995 and by the
Company's shareholders on September 6, 1995. Accordingly, a total of 1,745,976
shares have been reserved for issuance under the 1988 Plan and as of July 24,
1996 there were approximately 24,951 shares available for issuance.

On May 15, 1996, the Board amended the 1988 Plan, subject to
shareholder approval, to (i) increase the number of shares authorized to be
issued thereunder from 1,745,976 to 2,745,976. As of July 24, 1996, options to
purchase 1,377,462 shares were outstanding under the 1988 Plan, with exercise
prices ranging from $0.8750 to $8.8750, a weighted average exercise price of
$4.1100, and expiration dates ranging from October 1, 1997 to July 23, 2006
and 68 persons were eligible to participate in the 1988 Plan.

Eligibility. Options may be granted under the 1988 Plan to employees,
officers, directors who are also employees, consultants, independent contractors
and advisers of the Company, or of any parent, subsidary or affiliate of the
Company. Options granted under the 1988 Plan may be incentive stock options
("ISOs") within the meaning of section 422(b) of the Code or non-qualified stock
options ("NQSOs"); however, only employees (including officers and directors who
are also employees) of the Company, or a parent or subsidary of the Company, may
be granted ISOs. No person may be granted options under the 1988 Plan to
purchase in excess of 250,000 shares in any fiscal year.

Administration. The 1988 Plan may be administered by the Board or by
a committee appointed by the Board. The Board or committee has discretion to
select optionees and to establish the terms and conditions of each option,
subject to the provisions of the 1988 Plan.

Terms and Conditions of Options. Each option granted under the 1988
Plan is evidenced by a written stock option grant between the Company and the
optionee, specifying the number of shares subject to the option and the other
terms and conditions of the option, consistent with the requirements of the 1988
Plan. The exercise price of an option granted under the 1988 Plan must be at
least 100% of the fair market value of the Company's Common Stock on the date of
grant, except that for the grant of an option to a person holding 10% or more of
the total combined voting power of all classes of stock of the Company or any
parent or subsidary of the Company (a "10% Shareholder") the exercise price must
be at least 110% of the fair market value of the Company's Common Stock on the
date of grant. As of July 24, 1996, the closing price the Company's Common
Stock was $5.1250.

Options granted under the 1988 Plan will become exercisable and vested
at such times as specified by the Board or committee. Generally, options
granted under the 1988 Plan become exercisable as the underlying shares vest.
Generally, 25% of the shares subject to an option vest one year after the date
of grant and the remaining shares in equal monthly installments over the
following three years, subject to the optionee's continued employment or
service. The maximum term of options granted under the Option Plan is ten years
(except in the case of an option granted to a 10% Shareholder, which must be
exercised within five years of the date of grant). Options are nontransferable
by the optionee other than by will or by the laws of descent and distribution,
and are exercisable during the optionee's lifetime only by the optionee.

Upon the termination of employment of an optionee for any reason other
than death or disability, the optionee's option may be exercised to the extent
(and only to the extent) that it was exercisable by the optionee on the date of
termination, within three months of the date of termination or such shorter
period as specified in the stock option grant. If the termination is due to the
death or disability of an optionee, this exercise period is extended to 12
months from the date of termination, or such shorter period as specified in the
stock option grant. No option granted under the 1988 Plan is transferable by
the optionee other than by will or under the laws of descent and distribution
and each option is exercisable during the lifetime of the optionee only by the
optionee.

20
<PAGE>

FEDERAL INCOME TAX INFORMATION

The following summary is intended only as a general guide as to the
United States federal income tax consequences under current law with respect to
participation in the 1988 Plan and does not attempt to describe all possible
federal or other tax consequences of such participation. Furthermore, the tax
consequences of options are complex and subject to change, and a taxpayer's
particular situation may be such that some variation of the described rules is
applicable. Optionees should consult their own tax advisors prior to the
exercise of any option and prior to the disposition of any shares of Common
Stock acquired upon the exercise of an option.

ISOs. The optionee will recognize no income upon the grant of an ISO
and incur no tax on its exercise (unless the optionee is subject to the
alternative minimum tax (the "AMT") described below). If the optionee holds the
stock acquired upon exercise of an ISO (the "ISO Shares") for at least one year
after the date the option was exercised and for at least two years after the
date the option was granted, the optionee generally will realize long-term
capital gain or loss (rather than ordinary income or loss) upon the disposition
of the ISO Shares. This gain or loss will be equal to the difference between
the amount realized upon such disposition and the amount paid for the ISO
Shares.

If the optionee disposes of ISO Shares prior to the expiration of
either required holding period (a "disqualifying disposition"), the difference
between the fair market value of the ISO Shares on the date of exercise and the
option exercise price will be treated as ordinary income. Any gain in excess of
that amount will be a capital gain, If a loss is recognized, there will be
treated as ordinary income. Any gain in excess of that amount will be a capital
gain. If a loss is recognized, there will be no ordinary income, and such loss
will be a capital loss. A capital gain or loss will be long-term if the
optionee's holding period is more than 12 months. Any ordinary income
recognized by the optionee upon the disposition of the shares should be
deductible by the Company for federal income tax purposes.

Alternative Minimum Tax. Generally, the difference between the fair
market value of stock purchased by an exercise of an ISO (generally measured as
of the date of exercise) and the amount paid for that stock upon exercise of an
ISO is an adjustment to income for purposes of calculating the AMT (which is
imposed only to the extent that it exceeds the taxpayer's regular tax). Special
rules may apply with respect to certain subsequent sales of the shares in a
disqualifying disposition, certain basis adjustments for purposes of computing
the AMT income on a subsequent sale of the shares and certain tax credits which
may arise with respect to optionees subject to the AMT.

NQSOs. An optionee will not recognize any taxable income at the time
a NQSO is granted. However, upon exercise of a NQSO the optionee will include
in income as compensation an amount equal to the difference between the fair
market value of the shares on the date of exercise (in most cases) and the
optionee's purchase price. The included amount will be treated as ordinary
income by the optionee and may be subject to income and employment tax
withholding by the Company (either by payment in cash by the optionee or
withholding from the optionee's salary) if the optionee is an employee or former
employee. Upon resale of the shares by the optionee, any subsequent
appreciation or depreciation in the value of the shares will be treated as
capital gain or loss. A capital gain or loss will be long-term if the
optionee's holding period is more than 12 months. The Company will generally be
entitled to a deduction to the extent that the optionee recognizes ordinary
income upon the exercise of a NQSO and the Company satisfies any applicable
withholding and reporting requirements.

PROPOSED AMENDMENT

21
<PAGE>

The amendment to the 1988 Plan, if approved by the required vote of
the shareholders of the Company at the Meeting, will increase the number of
shares of the Company's Common Stock that may be issued under the 1988 Plan from
1,745,976 to 2,745,976.

1993 EMPLOYEE STOCK PURCHASE PLAN

Set forth below is a summary of the principal features of the Stock
Purchase Plan which summary is qualified in its entirety be reference to the
terms and conditions of the Stock Purchase Plan. The Company will provide,
without charge, to each person to whom a proxy statement is delivered, upon
request of such person and by first class mail, a copy of the Stock Purchase
Plan. Any such request should be delivered as follows: Secretary, Silicon
Valley Research, Inc., 6360 San Ignacio Avenue, San Jose, CA 95119.

General. The Stock Purchase Plan was approved by the Company's
shareholders on August 26, 1993. A total of 100,000 shares of Common Stock were
reserved for issuance under the Stock Purchase Plan. An amendment to the Stock
Purchase Plan to increase the number of shares of the Company's Common Stock
available for issuance thereunder by 50,000 shares was approved by the Board on
May 16, 1994 and by the Company's shareholders on September 8, 1994. On July 24,
1995 the Board approved an amendment to increase by 200,000 shares the number of
shares available for issuance under the Stock Purchase Plan. The shareholders
approved this amendment on September 6, 1995. The shareholders of the Company
are being asked to approve an amendment to the Stock Purchase Plan to increase
the number of shares of the Company's Common Stock available for issuance
thereunder by 300,000 shares from a total of shares of 350,000 shares to a total
of 650,000 shares. This amendment was approved by the Board on May 15, 1996,
subject to shareholder approval. As of July 24, 1996, 171,554 shares had been
issued pursuant to the Stock Purchase Plan and 70 employees were eligible to
participate in the Stock Purchase Plan.

Purpose. The purpose of the Stock Purchase Plan is to provide
employees of the Company and subsidiaries, designated by the Board as eligible
to participate in the Stock Purchase Plan, with a convenient means to acquire
equity in the Company through payroll deductions, and to provide an incentive
for continued employment.

Administration. The Stock Purchase Plan is administered by the Board.
The interpretation or construction by the Board of any provisions of the Stock
Purchase Plan, or of any option granted under it, is final and binding on all
participating employees.

Eligibility. All employees of the Company, or any designated
subsidary thereof, are eligible to participate in the Stock Purchase Plan except
the following:

(a) employees who are not employed by the Company on the 15th day of
the month before the beginning of an Offering Period (as defined below);

(b) employees who are customarily employed for fewer than 20 hours per
week;

(d) employees who own or hold options to purchase or who, as a result
of participation in the Stock Purchase Plan, would own stock, or hold options to
purchase stock processing five percent or more of the total combined voting
power or value of all classes of stock of the Company pursuant to section 424(d)
of the Code.

Offerings. Effective for the offering commencing on November 1, 1994,
the Board amended the Stock Purchase Plan to provide that each offering a Common
Stock under the Stock Purchase Plan is for a period of 24 months (an "Offering
Period"), rather than 3 months. Offering

22
<PAGE>

Periods are overlapping, with a new 24-month Offering Period beginning every
three months. However, employees may participate in only one offering at a time.
New Offering Periods will begin on each February 1, May 1, August 1 and November
1. Each Offering Period is comprised of eight consecutive three-month purchase
periods ("Purchase Periods"), and shares are purchased on the last day of each
Purchase Period ("Purchase Dates"). The Board may establish different Offerings
Periods or Purchase Periods under the Stock Purchase Plan without shareholder
approval.

Participation. Participation in the Stock Purchase Plan is limited to
eligible employees who authorize payroll deductions pursuant to the Stock
Purchase Plan. Such payroll deductions must be at least 2% but may not exceed
10% of an employee's compensation for the pay period. The Board is authorized by
the Stock Purchase Plan to change the limits on payroll deductions effective as
of the commencement of a future Offering Period without shareholder approval. No
interest is paid on amounts withheld from a participant's compensation under the
Stock Purchase Plan. Once an employee becomes a participant in the Stock
Purchase Plan, that employee will automatically participate in each successive
offering until such time as that employee withdraws from the Stock Purchase
Plan, or his or her employment ceases.

Purchase of Shares. The purchase price per share at which the shares
of the Company's Common Stock are sold in an offering will be equal to 85% of
the lesser of the fair market value of the Common Stock on the first day of the
Offering Period or on the Purchase Date. As of July 24, 1996, the closing price
of the Company's Common Stock was $5.1250. If the fair market value of a share
of the Company's Common Stock on a Purchase Date (other than the final Purchase
Date of an Offering Period) is less than such fair market value on the first day
of the Offering Period, then (unless a participant otherwise elects) all
participants will automatically be withdrawn from that offering and enrolled in
the new Offering Period.

Subject to certain limitations, the number of shares of the Company's
Common Stock a participant purchases in each Purchase Period is determined by
dividing the total amount of payroll deductions withheld from the participant's
compensation during the Purchase Period by the purchase price per share.
Participants may not purchase shares of the Company's Common Stock having a fair
market value exceeding $25,000 for each calendar year in which the participant
participates in the Stock Purchase Plan (measured by the fair market value of
the Company's Common Stock on the first day of the Offering Period in which the
shares are purchased) or more than 1,000 shares of the Company's Common Stock in
a single Purchase Period. Any cash not applied to the purchase of shares will be
returned to the participant unless the amount of such cash is less than the
amount necessary to purchase a whole share of Common Stock, in which case the
Company may establish procedures to apply the remaining amount to a subsequent
Offering Period or Purchase Period.

FEDERAL INCOME TAX INFORMATION

The following summary is intended only as a general guide as to the
United States federal income tax consequences under current law of participant
in the Stock Purchase Plan and does not attempt to describe all possible federal
or other tax consequences of such participation. Furthermore, the tax
consequences of the Stock Purchase Plan are complex and subject to change, and a
taxpayer's particular situation may be such that some variation of the described
rules is applicable.

A participant recognizes no taxable income either as a result of
enrolling in the Stock Purchase Plan or purchasing shares of the Company's
Common Stock under the terms of the Stock Purchase Plan. If a participant
disposes of shares purchased under the Stock Purchase Plan within two years from
the first day of the applicable Offering Period or within one year from the
Purchase Date (a "disqualifying disposition"), the participant will realize
ordinary income in the year of such disposition equal to the amount by which the
fair market value of the shares on the

23
<PAGE>

purchase date exceeds the purchase price. The amount of the ordinary income will
be added to the participant's basis in the shares, and any additional gain or
resulting loss recognized on the disposition of the shares will be capital gain
or loss. A capital gain or loss will be long-term if the participant's holding
period is more than 12 months.

If the participant disposes of shares purchased under the Stock
Purchase Plan at least two years after the first day of the applicable Offering
Period and at least one year after the date of purchase, the participant will
realize ordinary income in the year of disposition equal to the lesser of (i)
the excess of the fair market value of the shares on the date of disposition
over the purchase price or (ii) 15% of the fair market value of the shares on
the first day of the applicable Offering Period. The amount of any ordinary
income will be added to the participant's basis in the shares, and any
additional gain recognized upon the disposition after such basis adjustment will
be a long-term capital gain. If the fair market value of the shares on the date
of disposition is less than the purchase price, there will be no ordinary income
and any loss recognized will be a long-term capital loss.

If the participant still owns the shares at the time of death, the
lesser of the (i) the excess of the fair market value of the shares on the date
of death over the purchase price or (ii) 15% of the fair market value of the
shares on the first day of the Offering Period in which the shares were
purchased will constitute ordinary income in the year of death.

The Company should be entitled to a deduction in the year of a
disqualifying disposition equal to the amount of ordinary income recognized by
the participant as a result of the disposition. In all other cases, no
deduction is allowed to the Company.

PROPOSED AMENDMENT

The amendment to the Stock Purchase Plan, if approved by the required
vote of the shareholders at the Meeting, will increase the number of shares of
the Company's Common Stock that may be issued under the Stock Purchase Plan from
350,000 to 650,000.

1990 DIRECTORS' STOCK OPTION PLAN

Set forth below is a summary of the principal features of the
Directors Plan, as amended, which summary is qualified in its entirety by
reference to the terms and conditions of the Directors Plan. The Company will
provide, without charge, to each person to whom a proxy statement is delivered,
upon request of such person and by first class mail, a copy of the Directors
Plan. Any such request should be delivered as follows: Secretary, Silicon Valley
Research, Inc., 6360 San Ignacio Avenue, San Jose, CA 95119.

SUMMARY OF THE PROVISIONS OF THE PLAN AS AMENDED

General. The Directors Plan was adopted by the Board on May 14, 1990
and was approved by the Company's shareholders July 10, 1990. A total of 75,000
shares of Common Stock have been reserved for issuance under the Directors Plan.
To the extent that any outstanding option under the Directors Plan expires or
terminates prior to exercise in full, the shares of Common Stock for which such
option is not exercised become available for future grants under the Directors
Plan. On January 23, 1995 and July 24, 1995, the Board adopted amendments, to
(i) increase the number of shares of the Company's Common Stock issuable under
the Directors Plan from 75,000 to 125,000, (ii) eliminate the 12,500 share limit
on the number of shares which may be granted to a director under the Directors
Plan, (iii) provide for the automatic grant of options to non-employee directors
of the Company as described below, and (iv) provide that options granted under
the Directors Plan (including currently outstanding options) will become
immediately exercisable and fully vested in the event of certain transfer of
control transactions. The shareholders approved these amendments on September 6,
1995.

24
<PAGE>

Administration. The Directors Plan is administered by the Board or a
duly appointed committee of the Board. However, under the Directors Plan, as
amended, the Board or the committee has no discretion to select the non-employee
directors of the Company who are granted options under the Directors Plan, to
set the exercise price of such options, to determine the number of shares for
which or the time at which particular options are granted or to establish the
duration of such options. The Board or committee is authorized to interpret the
Directors Plan and options granted under the Directors Plan, and all such
determinations of the Board or committee will be final and binding on all
persons having an interest in the Directors Plan or any option.

Eligibility. The Directors Plan currently provides for the grant of
options to directors of the Company or of any parent, subsidary or affiliate of
the Company. As amended, the Directors Plan provides for the automatic grant of
stock options (as discussed below) to directors of the Company who are not at
the time of option grant employees of the Company or of any parent or subsidary
corporation of the Company (the "Outside Directors"). As of July 24, 1996,
options to purchase 89,500 shares were outstanding under the Directors Plan,
with exercise prices ranging from $0.8750 to $8.2500, a weighted average
exercise price of $3.8418, and expiration dates ranging from January 24, 2000 to
April 1, 2006. As of July 24, 1996, five Outside Directors were eligible to
participate in the Directors Plan.

Automatic Grant of Options. In order to establish levels of automatic
grants to attract and retain qualified Outside Directors to contribute to the
long-term success of the Company, the Board amended the Directors Plan effective
January 23, 1995 (the "Effective Date") to provide that each Outside Director
who is initially elected or appointed to the Board after the Effective Date will
automatically be granted an option to purchase 15,000 shares of the Company's
Common Stock on the day immediately following such initial election or
appointment; provided, however, that for Outside Directors who own 1% or more of
the total combined voting power of the Company ("Investor Directors"), the
option will be for 10,000 shares (the "Initial Option"). Subject to shareholder
approval, the Board has amended the Directors Plan to provide that the size of
the Initial Option for each Outside Director (who is not an Investor Director)
elected after the date of this Meeting will be 20,000 shares. In addition,
subject to shareholder approval, the Board has amended the Directors Plan to
provide that each Outside Director (who is not an Investor Director) who
received an Initial Option prior to June 20, 1996 will receive an additional
grant of 5,000 shares pursuant to the Directors Plan, effective as of this
Meeting, provided that he is serving as an Outside Director as of the date of
this Meeting. To provide options of the same size to the Outside Directors
serving on the Board on the Effective Date each Outside Director then holding
office will automatically be granted an option to purchase 15,000 shares of the
Company's Common Stock (10,000 shares for an Investor Director), less the number
of shares subject to options granted to such Outside Director under the
Directors Plan prior to the Effective Date. The Directors Plan also provides
for the automatic grant of an option to purchase 1,500 shares of the Company's
Common Stock to each Outside Director on April 1, 1995 and each anniversary
thereof; provided, however, that the size of such option will be 1,000 shares
for Investor Directors (the "Annual Option"). Subject to shareholder approval,
the Board has amended the Directors Plan to provide that the size of the Annual
Option for each Outside Director (who is not an Investor Director) granted after
the date of this Meeting will be 3,000 shares. In addition, subject to
shareholder approval, the Board has amended the Directors Plan to provide that
each Outside Director (who is not an Investor Director) who received an Annual
Option prior to June 20, 1996 will receive an additional grant of 1,500 shares
pursuant to the Directors Plan, effective as of this Meeting, provided that he
is serving as an Outside Director as of the date of this Meeting.

Terms and Conditions of Options. The exercise price of any option
granted under the Directors Plan must equal the fair market value, as determined
pursuant to the Directors Plan, of a share of the Company's Common Stock on the
date of grant. As of July 24, 1996, the closing price of the Company's Closing
Stock was $5.1250. Each option granted under the Directors Plan is evidenced
by a written agreement between the Company and the Outside Director specifying
the number of shares subject to the option and the other terms and conditions of
the option, consistent with the requirements of the Directors Plan. No option
is exercisable after the

25
<PAGE>

expiration of 10 years after the date such option is granted, subject to earlier
termination in the event the optionee ceases to be a director of the Company or
in the event of a Transfer of Control of the Company, as discussed below. One-
fourth of the shares subject to an option granted under the Directors Plan
generally become vested and exercisable one year after the date of grant and the
remaining shares vest in equal monthly installments over a three-year period
thereafter.

Shares subject to an option granted under the Directors Plan may be
purchased for cash, or in cash equivalent, by tender of shares of the Company's
Common Stock owned by the optionee having a fair market value not less than the
exercise price, by the assignment of the proceeds of a sale of some or all of
the shares of Common Stock being acquired upon the exercise of the option, or by
any combination of these. During the lifetime of the optionee, the option may be
exercised only by the optionee or the optionee's guardian or legal
representative. An option may not be transferred or assigned, except by will or
the laws of descent and distribution.

Transfer of Control. A "Transfer of Control" will be deemed to occur
upon any of the following events in which the shareholders of the Company do not
retain, directly or indirectly, at least a majority of the beneficial interest
in the voting stock of the Company or its successor: (i) the direct or indirect
sale or exchange by the shareholders of the Company of all or substantially all
of the stock of the Company, (ii) a merger in which the Company is a party, or
(iii) the sale, exchange or transfer of all or substantially all of the assets
of the Company. A Transfer of Control will also occur in the event of a
liquidation or dissolution of the Company. In the event of a Transfer of Control
of the Company, all shares subject to options outstanding under the Directors
Plan will become immediately exercisable and fully vested as of the date 10 days
prior to such event. In addition, the Board may arrange with the surviving,
continuing, successor, or purchasing corporation or parent corporation thereof
(the "Acquiring Corporation") to either assume outstanding options or substitute
options for the Acquiring Corporation's stock for the outstanding options. Any
options which are neither assumed or substituted for by the Acquiring
Corporation nor exercised as of the date of the Transfer of Control will
terminate effective as of such date.

Termination or Amendment. All options must be granted, if at all,
within 10 years from May 14, 1990, the date the Directors Plan was initially
adopted by the Board. The Board or committee may terminate or amend the
Directors Plan at any time, but, without shareholder approval, the Board may not
amend the Directors Plan to increase the total number of shares of Common Stock
reserved for issuance thereunder or expand the class of persons eligible to
receive options.

SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES OF THE DIRECTORS PLAN

The federal income tax consequences of the options granted under the
Directors Plan are the same as the federal income tax consequences described for
nonqualified stock options granted pursuant to the Directors Plan set forth
above.

PROPOSED AMENDMENTS

The amendments to the Directors Plan, if approved by the required vote
of the shareholders at the Meeting, will (i) increase the number of shares for
the initial stock option grant to nonemployee directors who own less than 1% of
the total combined voting power of the Company from 15,000 shares to 20,000,
(ii) increase the number of shares for the annual stock option grant to
nonemployee directors who own less than 1% of the total combined voting power of
the Company from 1,500 shares to 3,000, (iii) provide that each nonemployee
director who owns less than 1% of the combined voting power of the Company and
who received an initial stock option grant under the Directors Plan prior to
June 20, 1996 and is serving as a director at the time of shareholder approval
of these amendments, shall be granted an additional option to purchase 5,000
shares pursuant to the Directors Plan, and (iv) provide that each nonemployee
director who owns less than 1% of the combined voting power of the Company, who
received an annual stock option grant under the Directors Plan prior to June 20,
1996 and who is serving as a director at the time of

26
<PAGE>

shareholder approval of these proposed amendments shall be granted an additional
option to purchase 1,500 shares pursuant to the Directors Plan.

SHAREHOLDER PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL MEETING

Proposals of shareholders intended to be presented at the next Annual
Meeting of the Shareholders of the Company must be received at the Company's
principal office not later than January 31, 1997, and satisfy the conditions
established by the Securities and Exchange Commission for shareholder proposals
to be included in the Company's proxy statement for that meeting.

OTHER BUSINESS

The Board does not presently intend to bring any other business before
the Meeting, and, so far as is known to the Board, no matters are to be brought
before the Meeting except as specified in the accompanying notice. As to any
business that may properly come before the Meeting, however, it is intended that
proxies, in the form enclosed, will be voted in respect thereof, in accordance
with the judgment of the persons voting such proxies.

By Order of the
Board of Directors

Robert R. Anderson
Chairman

Dated August 8, 1996

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO
THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING.

27
<PAGE>

SILICON VALLEY RESEARCH
Annual Meeting of Shareholders
______________________________
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Robert R. Anderson and Glenn E. Abood with
full power of substitution, to vote all shares of Silicon Valley Research (the
"Company"), which the undersigned is entitled to vote at the Annual Meeting of
Shareholders to be held at our corporate headquarters, located at 6360 San
Ignacio Avenue, San Jose, California 95119, on Thursday, September 19, 1996, at
3:00 p.m. Pacific Daylight Time, and at any adjournment thereof, hereby
ratifying all that said proxy or his substitute may do by virtue hereof, and the
undersigned authorizes and instructs said proxy to vote as follows:

(Continued and to be dated and signed on the other side.)

<TABLE>
<S> <C> <C> <C>
A [X] Please mark your
votes as in this
sample.

FOR WITHHELD Nominees: FOR AGAINST ABSTAIN
1. Election of [_] [_] Robert R. Anderson 2. TO APPROVE AN AMENDMENT TO THE COMPANY'S [_] [_] [_]
Directors Glenn E. Abood 1988 STOCK OPTION PLAN THAT INCREASES THE
John L. Doyle NUMBER OF SHARES AUTHORIZED TO BE ISSUED
For all nominees except as noted below. Benjamin Huberman THEREUNDER FROM 1,745,976 TO 2,745,976.
Yoshio Nishi
_______________________________________ Roy L. Rogers 3. TO APPROVE AN AMENDMENT TO THE COMPANY'S [_] [_] [_]
Thomas A. Sherby 1993 EMPLOYEE STOCK OPTION PLAN THAT
INCREASES THE NUMBER OF SHARES AUTHORIZED
TO BE ISSUED THEREUNDER FROM 350,000
TO 650,000.

4. TO APPROVE AMENDMENTS TO THE COMPANY'S [_] [_] [_]
DIRECTORS' STOCK OPTION PLAN, AS SET
FORTH IN THE ACCOMPANYING PROXY
STATEMENT.

*NOTE* SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF.
</TABLE>

__________________________ __________________________ Dated: _________, 1996
(Signature of Stockholder) (Signature of Stockholder)

NOTE: Your signature should appear the same as your name appears herein. If
signing as an attorney, executor, administrator, trustee or guardian,
please indicate the capacity in which signing. When signing as joint
tenants, all parties to the joint tenancy must sign. When the proxy is
given by a corporation, it should be signed by an authorized officer.