<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
MYLEX CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
[LOGO]
June 11, 1997
Dear Mylex Stockholder:
Your Board of Directors has announced the adoption of a Common Stock Rights
Plan. This letter explains our reasons for adopting the Plan and, together with
the enclosed document captioned, "Summary of Rights to Purchase Common Stock,"
provides detailed information about the Plan. We urge you to read carefully the
Summary of Rights.
The Plan is intended to protect your interests in the event the Company is
confronted with coercive or unfair takeover tactics. The Plan contains
provisions to safeguard you in the event of an unsolicited offer to acquire the
Company, whether through a gradual accumulation of shares of Common Stock in the
open market, a partial or two-tiered tender offer that does not treat all
stockholders equally, the acquisition in the open market or otherwise of shares
of Common Stock constituting control without offering fair value to all
stockholders, or other abusive takeover tactics which can arise in today's
takeover environment and which your Board believes are not in the best interests
of the Company's stockholders. These tactics can unfairly pressure stockholders,
squeeze them out of their investment without giving them any real choice, and
deprive them of the full value of their shares.
A large percentage of public companies have adopted Rights Plans very
similar to the one that we have adopted. We consider this Rights Plans to be one
of the best available means of protecting your right to retain your equity
investment in the Company and the full value of that investment, while not
preventing a fair acquisition bid for the Company.
The Plan is not intended to prevent a takeover of the Company on terms that
are favorable and fair to all stockholders. The Plan is designed to deal with
the very serious problem of unilateral actions by hostile acquirors which
actions are calculated to deprive the Company's Board of Directors and its
stockholders of their ability to determine the destiny of the Company.
The mere declaration of the Rights dividend should not, however, affect any
prospective offeror willing to negotiate with your Board of Directors. The
Rights may generally be redeemed by the Company at $.01 per Right at any time
prior to their exercisability triggered by the acquisition of 20% or more of the
Company's shares of Common Stock by any person or group. Accordingly the Rights
should not interfere with any merger or other business combination approved by
your Board.
Issuance of the Rights does not weaken the financial strength of the Company
nor interfere with its business plans. The issuance of the Rights has no
dilutive effect, will not affect reported earnings per share, is not taxable to
the Company or to you, and will not change the way in which you can currently
trade the Company's shares of Common Stock. As explained in detail in the
Summary of Rights, the Rights will only be exercisable if and when an even
arises which triggers their effectiveness. They will then operate to protect you
against being deprived of your right to share in the full measure of your
Company's long-term potential.
Your Board was aware when it acted that some people have advanced arguments
that securities of the type we are issuing deter legitimate acquisition
proposals. We carefully considered these views and concluded that the arguments
are speculative and do not justify leaving stockholders without this protection
against unfair treatment by an acquiror -- who, after all, is seeking his own
company's
<PAGE>
advantage, not yours. Your Board believes that these Rights represent a sound
and reasonable means of addressing the complex issues of corporate policy
created by today's takeover environment.
We believe that there are substantial long-term values inherent in our
Company, and we are working hard to achieve those values. Building our basic
business for the future and striving to maximize stockholder values are the
preeminent goals of your management and Board of Directors.
Sincerely,
/s/ Al Montross
Al Montross
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
MYLEX CORPORATION
SUMMARY OF RIGHTS TO PURCHASE COMMON STOCK
On May 12, 1997, the Board of Directors of Mylex Corporation (the "Company")
authorized the distribution of one common stock purchase right (a "Right") for
each outstanding share of common stock, $0.01 par value per share, of the
Company ("Common Stock") to stockholders of record at the close of business on
May 23, 1997 (the "Record Date"). In addition, the Company has authorized the
issuance of one Right with respect to each share of Common Stock that shall
become outstanding between the Record Date and the earlier of the Distribution
Date or Expiration Date (as such terms are hereinafter defined) or the date, if
any, on which the Rights may be redeemed. Each Right, when exercisable, entitles
the registered holder to purchase from the Company a quarter ( 1/4) share of
Common Stock (or other shares, securities or property, as the case may be, of
equivalent value) at a price of $2.65 per share (the "Purchase Price"), subject
to adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and BankBoston, N.A., as
Rights Agent.
Initially, the Rights will not be exercisable and will be attached to, and
evidenced only by, the Common Stock certificates representing the shares of
Common Stock then outstanding. The Rights will become exercisable, will separate
from the Common Stock, and will become transferrable apart from the Common Stock
on a date (the "Distribution Date") that is the earlier of the close of business
on the tenth business day following (i) a public announcement that a person or
group of affiliated or associated persons (an "Acquiring Person") has acquired
or obtained the right to acquire, in a transaction or series of transactions not
approved by the Board of Directors of the Company (the "Board"), beneficial
ownership of 20% or more of the outstanding shares of Common Stock (the "Shares
Acquisition Date") or (ii) the commencement of a tender or exchange offer by any
person (other than the Company or an employee benefit plan of the Company or any
of its subsidiaries) for 20% or more of the outstanding shares of Common Stock.
Until the Distribution Date (or earlier redemption, exchange or expiration
of the Rights), the Rights will be transferred with and only with the Common
Stock certificates to which the Rights are attached. New Common Stock
certificates after the Record Date upon transfer or new issuance of Common Stock
will contain a notation incorporating the Rights Agreement by reference, and the
surrender for transfer of any certificates for Common Stock outstanding on or
after the Record Date, with or without such notation or a copy of this Summary
of Rights being attached thereto, will also constitute the transfer of the
Rights associated with the shares of Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights (the "Rights Certificates") will be mailed to
holders of record of the Common Stock as of the close of business on the
Distribution Date and, thereafter, the separate Rights Certificates alone will
evidence the Rights.
In the event that at any time following the Distribution Date, (i) the
Company is the surviving corporation in a merger with an Acquiring Person and
the Company's Common Stock is not changed or exchanged, (ii) a person becomes
the beneficial owner of 20% or more of the then outstanding shares of Common
Stock (except pursuant to an offer for which all outstanding shares of Common
Stock which the Continuing Directors (as defined) determine to be fair to and
otherwise in the best interest of the Company and its stockholders), (iii) an
Acquiring Person engages in one or more "self dealing" transactions as set forth
in the Rights Agreement, or (iv) during such time as there is an Acquiring
Person, an event occurs which results in such Acquiring Person's ownership
interest being increased by more than 1% (e.g., a reverse stock split), each
holder of a Right will thereafter have the right to receive, upon exercise and
payment of the Purchase Price, Common Stock (or, in certain circumstances, cash,
property or other securities of the Company, subject to certain limitations)
having a value equal to two times the Purchase Price of the Right.
Notwithstanding the foregoing, all Rights that are, under certain circumstances
specified in the Rights Agreement were, beneficially owned by an Acquiring
Person (or any of its affiliates or associates, as defined) will be null and
void. The Rights are, however, not exercisable following the
1
<PAGE>
occurrence of any of the events set forth above until such time as the Rights
are no longer redeemable by the Company.
For example, at a Purchase Price of $2.65 per Right, each Right not owned by
an Acquiring Person (or certain related parties) following an event described in
the preceding paragraph would entitle its holder to purchase $5.30 worth of
Common Stock (or other consideration) as noted above, for $2.65. Assuming that
the Common Stock had a per share value of $10.60 at such time, the holder of
each valid Right would be entitled to purchase one-half ( 1/2) share of Common
Stock for $2.65.
In the event that at any time following the Share Acquisition Date, (i) the
Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving Corporation, or (ii) 50 percent or more
of the Company's assets or earning power is sold or transferred, each holder of
a Right (except Rights which previously have been voided as set forth above)
shall thereafter have the right to receive, upon exercise thereof and payment of
the then current Purchase Price, Common Stock of the acquiring company having a
value equal to two times the Purchase Price of the Right.
The Purchase Price payable, and the number of shares of Common Stock (or the
number and kind of other securities or property, as the case may be) issuable,
upon exercise of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on or a subdivision
combination or reclassification of, the Common Stock, (ii) upon the grant to
owners of the Common Stock of certain rights or warrants to subscribe for Common
Stock or convertible securities at less than the current market price of the
Common Stock, or (iii) upon the distribution of holders of the Common Stock of
evidences of indebtedness or assets (excluding regular quarterly cash dividends
or of subscription rights or warrants (other than those referred to above)). At
any time after a person or group of affiliated or associated person becomes an
acquiring person, an until the beneficial ownership level of such acquiring
person, together with all affiliates and associates of such acquiring person,
reaches 50 percent, the Board of Directors may exchange the Rights (other than
the Rights held by the acquiring person, affiliates or associates of the
acquiring person and certain other persons whose Rights can be traced to an
acquiring person) in whole or in part, at an exchange ratio of a quarter ( 1/4)
share of the Common Stock per Right. The exchange must also be approved by a
majority of the Continuing Directors.
At any time prior to the close of business on the 10th business day
following the Share Acquisition Date, the Company may redeem the Rights in whole
but not in part at a redemption price of $0.01 per Right. Under certain
circumstances, the redemption must also be approved by a majority of the
Continuing Directors. Immediately upon the action of the Board of Directors
electing to redeem the Rights, with, where required, the concurrence of the
Continuing Directors, the Rights will terminate and the only right of the
holders of Rights will be to receive the redemption price. With certain
exceptions, no adjustment in the Purchase Price will be required until
accumulative adjustments amount to at least 1 percent of the Purchase Price. No
fractional shares will be issued and in lieu thereof an adjustment in cash will
be made based on the market price of the Common Stock on the last trading day
prior to the date of exercise.
The term "Continuing Directors" means any member of the Board of Directors
of the Company who was a member of the Board prior to the date of the Rights
Agreement, and any person who is subsequently elected to the Board if such
person is recommended or approved by a majority of the Continuing Directors, but
shall not include an Acquiring Person or an affiliate or associate of an
Acquiring Person or any representative of the foregoing entities.
Until the Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
At any time prior to the Distribution Date, the Board of Directors may amend
any provision of the Rights Agreement in any manner, including to change the
Purchase Price, without the approval of the holders of the Common Stock.
Thereafter, subject to certain limitations, the Board of Directors (with the
concurrence of the Continuing Directors) may amend the Rights Agreement without
the approval of the
2
<PAGE>
holders of the Common Stock in order to cure any ambiguity, to make changes
which do not adversely affect the interest of holders of Rights (excluding the
interest of any acquiring person), or to shorten or lengthen any time period
under the Rights Agreement. A copy of the Rights Agreement has been filed with
the Securities and Exchange Commission as an exhibit to a Registration Statement
on Form 8-A dated June 11, 1997. A copy of the Rights Agreement is available
free of charge from the Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement which is hereby incorporated herein by reference.
3
<PAGE>
[LOGO]
June , 1997
Dear Fellow Stockholder:
The Board of Directors of Mylex Corporation are pleased to invite you to
attend the Company's 1997 Annual Meeting of Stockholders to be held on
July , 1997, at 2:00 p.m., at the Holiday Inn, located at 625 El Camino
Real, Palo Alto, California 94301.
At the meeting, we will vote to elect seven directors and vote on the
proposals described in the accompanying Notice and Proxy Statement. We will also
report to you on the operations of the Company. You will have the opportunity to
ask questions about the business that may be of general interest to
stockholders.
I urge you to vote your proxy as soon as possible. Your vote is very
important regardless of the number of shares you own. Please mark, sign and date
each proxy card you receive and return it, at your earliest convenience, in the
postage-paid envelope provided, even if you currently plan to attend the Annual
Meeting. Returning your proxy card will not prevent you from voting in person,
but will assure that your vote is counted if you are unable to attend. I
encourage you to vote "FOR" each of the Board's nominees for director and "FOR"
each of the proposals discussed in the accompanying Notice and Proxy Statement.
Please vote and promptly return your proxy card.
Sincerely,
/s/ Al Montross
Al Montross
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
[LOGO]
MYLEX CORPORATION
------------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
---------------------
TO THE STOCKHOLDERS OF MYLEX CORPORATION:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders of Mylex
Corporation, a Delaware corporation (the "Company"), will be held on July
, 1997, at 2:00 p.m. at the Holiday Inn, located at 625 El Camino Real, Palo
Alto, California 94301, for the following purposes:
1. To elect seven directors as follows:
(a) if Proposal 3(a) below is approved, two directors to serve a
three-year term, two directors to serve a two-year term, and three
directors to serve a one-year term; or
(b) if Proposal 3(a) below is not approved, seven directors to serve a
one-year term.
2. To approve an amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of common stock, $0.01 par
value, of the Company from 40,000,000 shares to 120,000,000 shares for
the purposes described in the accompanying Proxy Statement.
3. To approve further amendments to the Company's Certificate of
Incorporation:
(a) to provide for the classification of the Board of Directors and
related matters;
(b) to limit stockholder action by written consent;
(c) to limit the calling of special meetings of the stockholders.
4. To approve an amendment to the Company's 1993 Stock Option Plan to
increase the number of shares of Common Stock authorized for issuance
thereunder by an additional 1,900,000, for an aggregate of 4,825,000
shares.
5. To ratify the appointment of KPMG Peat Marwick LLP as independent public
accountants of the Company for the fiscal year ending December 31, 1997.
6. To transact such other business as may properly come before the meeting
or any adjournments thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on May 23, 1997 are
entitled to notice of and to vote at the meeting. A list of stockholders
eligible to vote at the Annual Meeting will be available for inspection at the
Annual Meeting.
<PAGE>
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
HOWEVER, TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO MARK,
SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENVELOPE
ENCLOSED FOR THAT PURPOSE. ANY STOCKHOLDER ATTENDING THE MEETING MAY VOTE IN
PERSON EVEN IF HE OR SHE PREVIOUSLY RETURNED A PROXY.
By Order of the Board of Directors,
/s/ Al Montross Al Montross
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Fremont, California
June , 1997
YOUR VOTE IS IMPORTANT.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE AND RETURN
IT IN THE ENCLOSED ENVELOPE.
<PAGE>
[LOGO]
MYLEX CORPORATION
------------------
PROXY STATEMENT
------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 30, 1997
GENERAL
This Proxy Statement is furnished in connection with the solicitation on
behalf of the Board of Directors of Mylex Corporation, a Delaware corporation
(the "Company"), of proxies for use at the Annual Meeting of Stockholders to be
held on July , 1997, at 2:00 p.m. at the Holiday Inn, 625 El Camino Real, Palo
Alto, California 94301, or any adjournment or adjournments thereof, for the
purposes set forth herein and in the accompanying Notice of Annual Meeting of
Stockholders. The Company's telephone number is (510) 796-6100.
This Proxy Statement and the accompanying proxy card are first being mailed
on or about June , 1997 to all stockholders entitled to notice of and vote at
the Annual Meeting.
RECORD DATE AND SHARES OUTSTANDING
Only stockholders of record at the close of business on May 23, 1997 (the
"Record Date") are entitled to receive notice of and to vote at the Annual
Meeting. The issued and outstanding voting securities of the Company at May 9,
1997 consisted of 20,811,501 shares of Common Stock, par value $0.01.
REVOCABILITY OF PROXIES
The enclosed Proxy is revocable at any time before its use by delivering to
the Secretary of the Company a written notice of revocation or a duly executed
proxy bearing a later date. If a person who has executed and returned a proxy is
present at the meeting and wishes to vote in person, he or she may elect to do
so and thereby suspend the power of the proxy holders to his or her proxy.
VOTING AND SOLICITATION
Each outstanding share of the Company's Common Stock is entitled to one vote
on all matters submitted to a vote at a meeting of stockholders.
The cost of soliciting proxies will be borne by the Company. In addition,
the Company may reimburse brokerage firms and other persons representing
beneficial owners of shares for their expenses in forwarding solicitation
material to such beneficial owners. The Company has contracted with an investor
communications firm, Georgeson & Company Inc., to solicit proxies by telephone
or mail. Proxies may also be solicited by certain of the Company's directors,
officers and regular employees, without additional compensation, personally or
by telephone, telegraph, telefax, or otherwise. If not otherwise specified, all
proxies received pursuant to this solicitation will be voted FOR each of the
proposals identified in the foregoing Notice and described herein.
<PAGE>
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The Company's Bylaws provide that the presence in person or by proxy of
stockholders holding a majority of the shares of stock issued and outstanding
and entitled to vote shall constitute a quorum at an annual meeting of
stockholders.
For determining whether a proposal has received a majority vote, abstentions
will be included in the vote totals, with the result that an abstention will
have the same effect as a negative vote. In instances where brokers are
prohibited from exercising discretionary authority for beneficial holders who
have not returned a proxy (so called "broker non-votes"), those shares will not
be included in the vote totals and, therefore, will have no effect on the
outcome of the vote. However, broker non-votes shares that abstain and shares
for which the authority to vote is withheld on certain matters will be treated
as present for quorum purposes on all matters.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company that are intended to be presented
by such stockholders at the Company's 1998 Annual Meeting must be received by
the Company no later than on March 20, 1998 in order that they may be considered
for inclusion in the proxy statement and form of proxy relating to that meeting.
2
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
The Company's Bylaws provide that the Board of Directors shall consist of
one (1) or more members. The specific number of Board members is established by
the Board of Directors and is currently set at seven. The six persons now
serving on the Board and a seventh person not presently on the Board are being
proposed for election to the Board of Directors at the 1997 Annual Meeting of
Stockholders. In connection with the election of Directors, the Board proposes
the adoption of an amendment to the Certificate of Incorporation establishing a
"classified board" by which the Board of Directors will be divided into three
classes (see Proposal 3A hereinafter). If such amendment is adopted by the
stockholders, the Board will consist of three classes with, initially, three
directors in Class I and two directors in each of the other two classes. Three
of the directors elected at this year's Annual Meeting will be placed in the
class whose terms of office will continue until the 1998 Annual Meeting of
Stockholders ("Class I"); two of the directors elected at this year's Annual
Meeting will be placed in the class whose terms of office will continue until
the 1999 Annual Meeting of Stockholders ("Class II"); and the other two
directors elected at this year's Annual Meeting will be placed in the class
whose terms of office will continue until the 2000 Annual Meeting of
Stockholders ("Class III"). The identities of the directors nominated for each
such class are set forth in the table below. If the amendment establishing the
classified board is not adopted by the stockholders, each of the directors
elected at the Annual Meeting will serve for a one-year term and until his
successor is elected and qualified. The amendment provides that the Board shall
maintain the three classes so as to be as nearly equal in number as the then
total number of directors permits.
While there is no reason to believe that any of the nominees will, prior to
the date of the meeting, refuse or be unable to accept the nomination, should
any nominee or nominees so refuse or become unable to accept, it is the
intention of the persons named in the Proxy to vote for such other person or
persons as the directors may recommend.
NOMINEES
The names of the nominees for the Board of Directors and certain information
about them, and the respective class in which each would serve if the classified
board amendment is adopted, are set forth below.
<TABLE>
<CAPTION>
DIRECTOR NOMINATED
NAME AGE PRINCIPAL OCCUPATION SINCE FOR CLASS(1)
- ----------------------------- --- ----------------------------------------------------- ----------- ---------------
<S> <C> <C> <C> <C>
Mr. Ismael Dudhia 62 Independent Consultant 1991 III
Mr. Richard Love 63 Principal, RJL Capital Management 1993 I
Mr. Stephen McKenzie 67 Chief Executive Officer of Resource Management 1995 II
Dr. M. Yaqub Mirza 50 President of Mar-Jac Investments, Inc. 1988 I
Mr. Al Montross 60 Chief Executive Officer and President of the Company 1994 III
Dr. Inder M. Singh 51 Chief Executive Officer and Chairman of Lynx 1986 II
Real-Time System, Inc.
Mr. Walter Wilson 53 President of Solectron Americas and Senior Vice -- I
President of Solectron Corporation
</TABLE>
- ------------------------
(1) Assumes adoption of the proposed amendment to establish a classified board.
Except as set forth below, each of the nominees has been engaged in the
principal occupation described above during the past five years.
3
<PAGE>
ISMAEL DUDHIA
Mr. Dudhia was elected Director of the Company in July 1991 and became
Chairman in December 1993. Mr. Dudhia has been an independent consultant since
late 1991. From 1983 until 1991, Mr. Dudhia was Chairman of the Board and active
in the management of Coolidge Bank and Trust Company of Boston, Massachusetts,
which Mr. Dudhia owned from 1986 until 1991. In 1961, Mr. Dudhia obtained a
degree of Barrister-at-Law from Lincolns Inn, an education institution in
England. From November 1993 until April 1994, Mr. Dudhia served as a director of
Northgate Computer Systems, Inc. a Minnesota based computer company
("Northgate"). In late 1994, a liquidation of Northgate under Chapter 7 of the
Federal Bankruptcy Act was converted to a reorganization under Chapter 11 of
that Act.
RICHARD LOVE
Mr. Love has served as a Director of the Company since July 1993 and was
appointed Treasurer in January 1995. Mr. Love is currently a principal of RJL
Capital Management of Santa Barbara, an investment management firm. From 1973 to
1988, Mr. Love served as an investment counselor, then senior partner, with
Loomis, Sayles & Co. Before joining Loomis, Sayles & Co., Mr. Love held
positions with James Capel Investment Banking of San Francisco from 1969 to 1973
and with Stein, Roe & Farnham from 1959 to 1969. Mr. Love attended the
Lawrenceville School and received a Bachelor's degree in Metallurgical
Engineering from Cornell University. He is an ICAA Chartered Investment
Counselor. From July 1992 to September 1993, Mr. Love served as a member of the
Board of Directors of Northgate. In late 1994, a liquidation of Northgate under
Chapter 7 of the Federal Bankruptcy Act was converted to a reorganization under
Chapter 11 of that Act.
STEPHEN MCKENZIE
Mr. McKenzie was appointed Director in January 1995. Mr. McKenzie is
currently Chief Executive Officer of Resource Management, a receivables
financing company. From 1989 to 1991, he was Senior Vice President of Sales and
Marketing and co-founder of Reply Corporation, a manufacturer of microchannel
personal computers. From 1987 to 1989, Mr. McKenzie was President of Acer
America, Inc., a computer clone manufacturer. He currently serves as a member of
the Board of Directors of Microspeed Corporation, a manufacturer of personal
computer input devices. Mr. McKenzie holds a Bachelor's degree in Political
Science from the University of Nebraska.
M. YAQUB MIRZA
Dr. Mirza has served as a Director of the Company since December 1988 and as
Secretary since February 1989. He is currently President and Chief Executive
Officer of Mar-Jac Investments, Inc. an investment and management consulting
firm that is one of the Company's stockholders. He currently serves as a Trustee
and Treasurer on the Board of Trustees of Amana Mutual Funds Trust, a mutual
fund. He is also Chairman of the Board of Jugos Concetrados, S.A., which is
traded on the Santiago, Chile, Stock Exchange. Dr. Mirza also serves as an
officer of Safa Trust. Dr. Mirza holds a Doctorate in Physics from the
University of Texas. From July 1992 until April 1994, Dr. Mirza served as a
member of the Board of Directors of Northgate. In late 1994, a liquidation of
Northgate under Chapter 7 of the Federal Bankruptcy Act was converted to a
reorganization under Chapter 11 of that Act.
4
<PAGE>
AL MONTROSS
Mr. Montross was appointed President and Chief Executive Officer of the
Company in April, 1994 and became a Director in May 1994. In September 1993, Mr.
Montross joined the Company as Executive Vice President and in December 1993 was
appointed Acting President and Chief Operating Officer. From August 1992 to
September 1993 he held the position of Senior Vice President at Distributed
Processing Technology of Maitland, Florida, a computer peripherals manufacturer.
From 1989 to 1992, Mr. Montross held the position of President and Chief
Operating Officer at Inacomp Computer Centers, Inc., of Troy Michigan, a
computer equipment and network reseller. He currently serves as a director of
American Speedy Printing Centers, Inc. Mr. Montross holds a Bachelor's degree in
Economics from Siena College in New York.
INDER M. SINGH
Dr. Singh has served as a Director of the Company since December 1986. Since
March 1988, Dr. Singh has been the Chief Executive Officer and Chairman of Lynx
Real-Time System, Inc., a software company. From 1985 to 1988, he was the owner
and operator of Simran Associates, a computer consulting firm. From 1982 to
1985, he served as Chief Executive Officer and President of Excelan, Inc. Before
forming Excelan, Inc., Dr. Singh held executive level positions with Zilog
Incorporated and Amdahl Corporation. Dr. Singh holds a Doctorate in Computer
Science from Yale University.
WALTER WILSON
Mr. Wilson is currently a Senior Vice President of Solectron Corporation and
the President of Solectron Americas, and has been with the electronics
manufacturing services provider since 1989. Mr. Wilson directs all activities
for Solectron Corporation's subsidiaries in California, Mexico, Massachusetts,
North Carolina, Texas, and Washington. From 1993 until February 1996, Mr. Wilson
served as President of Solectron California Corporation, the company's Silicon
Valley operation. From September 1995 until February 1996, Mr. Wilson served as
President of Solectron North America, a wholly-owned subsidiary of Solectron
Corporation. From June 1990 until February 1996, Mr. Wilson served as Senior
Vice President, Operations, of Solectron. Mr. Wilson has served as a director of
Solectron Corporation since January 1995. Before joining Solectron, in a 24 year
career with the IBM Corporation, Mr. Wilson served in diverse domestic and
overseas management positions, including manufacturing, headquarters operations,
and technology and product development. A graduate of California State
Polytechnic University, Mr. Wilson holds Bachelor of Science degrees in
Electrical Engineering and Applied Mathematics. He earned a Master of Business
Administration degree from Santa Clara University. Mr. Wilson also serves as a
director of Asyst Technologies, Inc.
VOTE REQUIRED AND BOARD OF DIRECTOR'S RECOMMENDATION
The seven nominees for director receiving the highest number of affirmative
votes of the shares entitled to be voted for them shall be elected as directors.
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES LISTED
ABOVE.
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PROPOSAL TWO
AMENDMENT TO CERTIFICATE OF
INCORPORATION TO INCREASE AUTHORIZED COMMON STOCK
DESCRIPTION OF THE PROPOSED AMENDMENT
The Board of Directors of the Company has adopted and declared it to be
advisable that the stockholders of the Company approve an amendment to the
Company's Certificate of Incorporation to increase the number of shares of
Common Stock, $.01 par value ("Common Stock"), authorized for issuance from
40,000,000 shares to 120,000,000 shares (the "Authorized Common Stock
Amendment"), and has directed that such proposed amendment be submitted to the
stockholders of the Company at the Annual Meeting for their approval.
REASONS FOR THE PROPOSED AMENDMENT
The number of authorized shares of Common Stock of the Company is currently
40,000,000 shares. As of May 2, 1997, 20,811,501 shares of Common Stock were
outstanding and 2,925,000 shares were reserved for issuance pursuant to the
Company's stock option plans, leaving 16,263,499 unissued shares not reserved.
On May 12, 1997, the Board of Directors of the Company authorized a dividend
distribution of one common stock purchase right (a "Right") for each outstanding
share of Common Stock. When exercisable, each Right entitles the holder to
purchase from the Company a quarter ( 1/4) share of Common Stock at a price of
$2.65 per share (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in the Common Stock Rights Agreement (the
"Rights Agreement") dated as of May 23, 1997, between the Company and
BankBoston, N.A. as rights agent (the "Rights Agent"). The foregoing brief
description of the Rights is qualified by reference to the detailed terms and
conditions of the Rights Agreement. A Summary of Rights was previously
distributed to the stockholders of the Company. The Rights have certain
anti-takeover effects. The Rights are intended to cause substantial dilution to
a person or group that attempts to acquire the Company without the approval of
the Board of Directors. Following a triggering event, each Right will be
adjusted to permit the holder to receive Common Stock having a value equal to
two times the exercise price of the Right.
If the Authorized Common Stock Amendment is approved, the Board intends to
amend the Rights Agreement to eliminate the fractional share ( 1/4 share)
arrangement under the current Rights Agreement and to substitute a Right that
will entitle the holder to purchase one (1) share of Common Stock for the
appropriate purchase price as then determined by the Board, subject to
adjustment. Although the Rights Agreement, as currently in effect, should impose
meaningful dilution on a person that attempts a takeover without Board approval,
approval of the Authorized Common Stock Amendment would provide additional
authorized shares of Common Stock for issuance in the event of the future
exercise or exchange of Rights under the Rights Agreement and would thereby
substantially increase the intended dilution and deterrent affect of the Rights
Plan. Approval of the Authorized Common Stock Amendment by stockholders is not,
however, a condition to the basic effectiveness of the Rights Agreement, and
therefore, is not intended as a ratification of the Rights Plan.
Based on the initial terms of the Rights and the Rights Agreement, the Board
of Directors will not need to reserve all newly authorized but unissued shares
of Common Stock for purposes of the Rights Plan. Accordingly, the additional
authorized shares that will be available for issuance if the Authorized Common
Stock Amendment is approved may be used for other purposes as described below.
If the authorized Common Stock Amendment is approved, the Board intends to
reserve, subject to adjustment, approximately seventy million (70,000,000)
shares for possible issuance under the Rights Plan, leaving more than
twenty-four million (24,000,000) shares available for other purposes.
In addition to having additional authorized shares for purposes of the
Rights Agreement, the Board of Directors believes that it is prudent to have
additional authorized shares of Common Stock readily
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available for issuance in connection with possible future financing, corporate
mergers, acquisition transactions, establishing strategic relationships with
corporate partners, employee benefit plans, and for other general corporate
purposes. The Authorized Common Stock Amendment will also provide a reserve of
shares available for issuance in connection with possible stock splits or stock
dividends. Currently, the Company has no plans, agreements or arrangements in
place requiring the issuance of additional shares of Common Stock for these or
other purposes, other than possible future issuances pursuant to existing share
reservations for the Company's stock option plans and the Rights Agreement.
Having such additional authorized Common Stock available for issuance in the
future would allow the Board of Directors to issue shares of Common Stock,
including through private placements of securities, without the delay and
expense associated with seeking stockholder approval (other than stockholder
approval required by applicable laws or the rules of any national securities
exchange market on which the shares of Common Stock of the Company are then
listed). Elimination of such delays and the expense occasioned by the necessity
of obtaining stockholder approval will better enable the Company, among other
things, to engage in financing transactions and acquisitions as well as to take
advantage of changing market and financial conditions on a more competitive
basis as determined by the Board of Directors.
TERMS OF ADDITIONAL AUTHORIZED SHARES
The additional shares of Common Stock to be authorized by the Authorized
Common Stock Amendment would, if and when issued, have rights identical to the
currently outstanding shares of Common Stock. Set forth as Exhibit A is the text
of Article Fourth of the Certificate of Incorporation increasing the number of
shares of Common Stock that the Company has authority to issue.
VOTE REQUIRED AND BOARD OF DIRECTOR'S RECOMMENDATION
The affirmative vote of the majority of the votes present or represented by
proxy and entitled to vote at the Annual Meeting, at which a quorum representing
a majority of all outstanding shares of Common Stock is present and voting, is
required for approval of this proposal. Abstentions and broker nonvotes will
each be counted present for purposes of determining the presence of a quorum.
Abstentions will have the same effect as a negative vote, broker nonvotes, on
the other hand, will have no effect on the outcome of the vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR AMENDING
THE CERTIFICATE OF INCORPORATION OF THE COMPANY TO INCREASE AUTHORIZED SHARES OF
COMMON STOCK FROM 40,000,000 TO 120,000,000.
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PROPOSALS THREE A, B AND C
AMENDMENTS TO CERTIFICATE OF INCORPORATION
GENERAL
In addition to the Authorized Common Stock Amendment, the Board of Directors
has unanimously approved and declared it to be advisable that the Company's
stockholders approve amendments to the Certificate of Incorporation, that would:
(1) classify the Board of Directors into three classes of directors, as
nearly equal in number of directors as possible, with each director,
after an interim arrangement, serving for three years, and with one class
being elected each year, and adopt certain related matters (herein
referred to as "Proposal 3A");
(2) provide that stockholder action may be taken only at annual or special
meetings of the stockholders and not by stockholder written consent
(herein referred to as "Proposal 3B"); and
(3) provide that special meetings of stockholders of the Company may be
called only by the Company's Board of Directors pursuant to a resolution
adopted by a majority of the entire Board or by an affirmative vote of
66 2/3% of all shares of capital stock entitled to vote on such matters
(herein referred to as "Proposal 3C").
The Board believes that corporations can be and are acquired and changes in
control of corporations can and do occur at prices below the reasonably full
fair value of the corporation's shares when their directors do not have measures
in place to require an acquiror to negotiate or to pay the highest price. The
Board of Directors has adopted a Common Stock Rights Plan which it believes is
designed to ensure that stockholders will receive full fair value for their
shares in the event of such an acquisition or change of control. Among other
reasons for the proposed amendments, the Board believes they will support the
efficacy of the Rights Plan. These amendments are not proposed in response to
any specific effort by any person or entity, of which the Company is aware, to
accumulate the Company's stock or to obtain control of the Company.
The accumulation of a substantial stock position in a public company by a
third party may constitute a prelude to proposing a takeover, a restructuring, a
sale of all or part of the company, or other similar extraordinary corporate
actions. Such actions are often undertaken by the third party without advance
notice to or consultation with the corporation's management. In many cases, the
purchaser seeks representation on the corporation's Board of Directors in order
to increase the likelihood that his proposal will be implemented by the
corporation. If the corporation resists the efforts of the purchaser to obtain
representation on the corporation's Board, the purchaser may commence a proxy
contest to have its nominees elected to the Board in place of certain directors,
or the entire Board.
Takeover attempts that have not been negotiated or approved by the Board of
Directors of a corporation can seriously disrupt the business and management of
a corporation and may offer to the stockholders terms that may be less favorable
to all of the stockholders than would be available in a Board approved
transaction. Board approved transactions may be carefully planned and undertaken
in order to obtain maximum value for the corporation and all of its
stockholders. The Board believes that it is in the best interest of the Company
and its stockholders to adopt the amendments to the Certificate of Incorporation
represented by Proposals 3A, B and C, in part, to eliminate certain procedural
advantages in favor of a hostile acquire and to strengthen the ability of the
Board to resist takeovers deemed undesirable.
The Board of Directors recognizes that takeover attempts do not always have
the unfavorable consequences or affects discussed above and may frequently be
beneficial to the stockholders, providing all of the stockholders with
considerable value for their shares. The Board of Directors believes, however,
that the potential disadvantages of unapproved takeover attempts are
sufficiently great that prudent steps to reduce the likelihood of such
unapproved takeover attempts are in the best interest of Company and its
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stockholders. Accordingly, the Board of Directors believes that the amendments
to the Certificate of Incorporation, in the form of Proposals 3A, B and C,
should be adopted. Notwithstanding the belief of the Board of Directors as to
the benefits to stockholders of the amendments, stockholders should recognize
that one of the affects of such amendments may be to discourage a future attempt
to acquire control of the Company. Additionally the proposed amendments could
make it more difficult to implement a change in control of the Company that is
opposed by the Board of Directors. This strengthened authority of the Board of
Directors could enable the Board to resist the removal of one or more of its
members.
While it is possible for the proposed amendments to be misused in an attempt
to resist reasonable takeover actions contrary to a board's fiduciary
obligation, the Board of Mylex is aware of and committed to its fiduciary
obligations. Moreover, there are fiduciary conduct standards in place to prevent
such misuse.
The Board of Directors has no current intention to propose to the Company's
stockholders other measures designed to discourage takeovers or proxy contests
other than those included in Proposals 3A, B and C, although additional measures
may be proposed if warranted from time to time in the judgment of the Board of
Directors.
VOTE REQUIRED AND BOARD OF DIRECTOR'S RECOMMENDATION
Approval of each of the proposed amendments requires the affirmative vote of
owners of a majority of the outstanding shares of the Company's common stock
entitled to vote in person or by proxy at the Annual Meeting, at which a quorum
representing a majority of all outstanding shares of Common Stock is present and
voting. As more fully discussed below, the Board of Directors believes the
proposed amendments, taken together, would, if adopted, reduce the possibility
that a third party could effect a sudden or surprise change in majority control
of the Company's Board of Directors without the support of the incumbent Board.
The Common Stock does not have cumulative voting rights, which means the holder
or holders of more than half of the shares voting for the election of Directors
can elect all Directors then being elected.
THE BOARD OF DIRECTORS BELIEVES THAT THE PROPOSED AMENDMENTS ARE IN THE BEST
INTEREST OF THE COMPANY AND ITS STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS A VOTE
FOR APPROVAL OF EACH OF THE PROPOSED AMENDMENTS. THE FOLLOWING SUMMARY
DESCRIPTION OF EACH OF THE PROPOSED AMENDMENTS IS NOT INTENDED TO BE COMPLETE
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE COMPLETE TEXT OF THE
AMENDMENTS WHICH APPEAR AS EXHIBITS B, C AND D HERETO.
PROPOSAL 3A: CLASSIFICATION OF THE BOARD OF DIRECTORS AND RELATED MATTERS
The Board of Directors proposes to amend the Company's Certificate of
Incorporation by adding Article Twelfth which provides that the Board of
Directors will be divided into three classes of directors serving staggered
terms (the "Classified Board Amendment"). Proposal 3A also contains provisions
concerning the size of the Board, quorum requirements, the filling of Board
vacancies and procedures for altering or repealing the Classified Board
Amendment. Proposal 3A provides for three classes of directors, each class to be
as nearly equal in number of directors as possible given the size of the Board.
Directors will serve for three years, with one class being elected each year.
However, if Proposal 3A is adopted, members of all three classes will be elected
initially at the 1997 Annual Meeting. If Proposal 3A is approved and the slate
of seven directors proposed for election at the 1997 Annual Meeting are elected,
they would be elected in three separate classes as follows: three "Class I
Directors" would be elected for a term expiring at the 1998 Annual Meeting, two
"Class II Directors" would be elected for a term expiring at the 1999 Annual
Meeting, and two "Class III Directors" would be elected for a term expiring at
the 2000 Annual Meeting. At each annual meeting after the 1997 Annual Meeting,
only directors within the class whose term is expiring that year would be voted
upon, and upon election each such director would serve a
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three-year term. It should be noted that this Classified Board Amendment
(Proposal 3A), if approved, will apply to every election of directors, including
the election of directors at the 1997 Annual Meeting, whether or not any threat
of a change in control exists at that time.
Under Proposal 3A the Board of Directors would be empowered to determine
from time to time the size of the Board of Directors, but in no event could they
determine to have a Board consisting of less than three directors. The total
number of directors and the number of directors constituting each class of
directors (with each of the three classes being as nearly equal as possible)
could be fixed or changed from time to time by the Board of Directors, subject
to the three director minimum. Currently, the Company's Certificate of
Incorporation provides that the number of directors of the Company shall be
fixed by the Bylaws, and the Bylaws provide that the number of directors shall
be one or more.
Subject to Delaware law, Proposal 3A expressly delegates to incumbent
directors sole power to fill vacancies whether occurring by an increase in the
number of directors or otherwise. A director elected to fill a vacancy would
hold office for the unexpired portion of the term of the director who was being
replaced. A director elected to fill a newly created directorship would hold
office until the next election for the class to which such director was elected.
If the size of the Board is increased, the additional directors would be
apportioned among the three classes of directors to keep all such classes as
nearly equal in number as possible.
Proposal 3A, if approved, would require the affirmative vote of at least
66 2/3% of all shares of capital stock entitled to vote on such matters to amend
or repeal, or to adopt any inconsistent provisions.
The number of directors to be elected at the 1997 Annual Meeting is seven,
which is the number currently set by the Board of Directors pursuant to the
Company's Bylaws. The Board of Directors has no present plans, arrangements,
commitments or understandings with respect to increasing or decreasing the size
of the Board or any class of directors.
REASONS FOR AND EFFECT OF PROPOSAL 3A
The Board of Directors believes that the adoption of Proposal 3A is
advantageous to the Company and its stockholders for a number of reasons. The
text of the Classified Board Amendment to the Certificate of Incorporation is
attached to this Proxy Statement as Exhibit B.
Public companies are potentially subject to attempts by various individuals
and entities to acquire significant minority positions in the company with the
intent either of obtaining actual control of the company by electing their own
slate of directors, or of achieving some other goal. Such individuals or
entities may be in a position to elect a company's entire board of directors
through a proxy contest or otherwise even though they do not own a majority of
the company's outstanding shares at the time. If Proposal 3A is approved, a
majority of the Company's directors could not be removed by such persons until
two annual meetings of stockholders have occurred, unless such removal was for
cause and the requisite vote was obtained. The Classified Board Amendment is
intended to promote the continuity and stability of the Company's business and
management by making it more difficult and time consuming to change majority
control of the Board. By providing this additional time to the Board of
Directors and eliminating the possibility of rapid removal of the Board, the
directors of the Company will have the time necessary to effectively satisfy
their responsibility to the Company's stockholders by evaluating any proposal
and assessing and developing alternatives without the pressure created by the
threat of imminent removal. In addition, Proposal 3A, by providing that
directors will serve three-year terms rather than one-year terms, will enhance
continuity and stability in the composition of the Company's Board of Directors
and in the policies formulated by the Board. The Board believes that this
increased stability will permit it to represent more effectively the interests
of all stockholders, including the ability to respond to demands or actions by
any stockholder or group.
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Proposal 3A may discourage potential purchasers because its provisions would
operate to delay a purchaser's ability to obtain control of the Board of
Directors since it will generally take a purchaser two annual meetings of
stockholders to elect a majority of the Board. In addition, Proposal 3A would
similarly delay stockholders who do not approve of policies of the Board from
replacing a majority of the directors, unless they can show cause, obtain the
requisite vote and then convince the remaining directors to elect more
acceptable replacements. For the same reasons, the adoption of Proposal 3A may
also deter certain mergers, tender offers or other takeover attempts which some
or a majority of holders of the Company's voting stock may deem to be in the
best interest of the stockholders.
The Board has no knowledge of any present effort to gain control of the
Company or to organize a proxy contest. In addition, there has been no problem
in the past or at the present time with the Board's continuity or stability.
However, the Board believes that adopting Proposal 3A is prudent, advantageous
and in the best interests of stockholders because it will give the Board more
time to fulfill its responsibilities to stockholders and provide greater
assurance of continuity and stability in the composition and policies of the
Board of Directors. The Board also believes such advantages outweigh any
disadvantage relating to discouraging potential acquirors from attempting to
obtain control of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF PROPOSAL 3A.
PROPOSAL 3B: STOCKHOLDER ACTION BY WRITTEN CONSENT
The Board of Directors proposes to amend the Company's Certificate of
Incorporation to add a new provision to require that stockholder action must be
taken at an annual or special meeting of stockholders and to prohibit
stockholder action by written consent. Under Delaware law, any actions required
or permitted to be taken by stockholders may be taken (unless a company's
certificate of incorporation otherwise provides) without a meeting, without
prior notice and without a stockholder vote if a written consent setting forth
the action to be taken is signed by the holders of stock having the requisite
number of votes. The Company's existing Certificate of Incorporation does not
prohibit such action by written consent and the Company's present Bylaws provide
that action may be taken by written consent. Consequently, unless Proposal 3B is
approved, persons holding a majority interest in the Company could take
significant corporate action without giving all stockholders notice or the
opportunity to vote.
Proposal 3B, if approved, would also require the affirmative vote of the
holders of at least 66 2/3% of all shares of capital stock entitled to vote on
such matters to amend or repeal, or to adopt any inconsistent provisions.
REASONS FOR AND CERTAIN EFFECTS OF PROPOSAL 3B
The Board of Directors believes that the approval of Proposal 3B is
advantageous to the Company and its stockholders. The provision of Proposal 3B
prohibiting stockholder action by written consent would give all stockholders of
the Company, entitled to vote on a particular matter, notice of and the
opportunity to participate in the determination of any proposed action on such
matter and the chance to take judicial or other action to protect their
interests. The text of this proposed amendment to the Certificate of
Incorporation is attached to this Proxy Statement as Exhibit C.
Persons attempting unfriendly takeovers of corporations have attempted to
use written consent procedures in order to deal directly with a limited number
of stockholders and avoid a stockholder meeting and negotiations with the Boards
of Directors of such companies. The Board of Directors believes that this change
to eliminate stockholder action by written consent is desirable to avoid
untimely action and to ensure that all of the stockholders have the full benefit
of the knowledge, advice and participation of the Company's management and Board
of Directors. In the event of a proposed acquisition of the Company, the Board
of Directors believes that the interests of stockholders will best be served by
a transaction that results from negotiations based on careful consideration of
the proposed terms by the Board.
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However, any provision in the Company's Certificate of Incorporation which
effectively requires a potential acquiror to negotiate with the Company's
management and Board of Directors could be characterized as increasing
management's and the Board's ability to retain their positions with the Company
and to resist a transaction which may be deemed advantageous by certain
stockholders. While it is possible for this proposed amendment to be misused in
an attempt to resist reasonable takeover actions contrary to a board's fiduciary
obligation, the Board of Mylex is aware of and committed to its fiduciary
obligations. Moreover, there are fiduciary conduct standards in place to prevent
such misuse.
The elimination of action by written consent may deter acquisitions of the
Company's stock and may delay, deter or impede stockholder action not approved
by the Board of Directors. Such actions may include stockholder attempts to
obtain control of the Board, unsolicited tender offers or other efforts to
acquire control of the Company. Proposal 3B may impede or delay, at least until
the next regularly scheduled annual meeting (and, if the proposal to adopt a
classified Board of Directors is approved, beyond such meeting), the initiation
or consummation of business transactions, such as reorganizations, mergers, or
recapitalizations, which are opposed by the Board of Directors even though
sought by a majority of the stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF PROPOSAL 3B.
PROPOSAL 3C: LIMITATION ON CALLING SPECIAL MEETINGS OF STOCKHOLDERS
The Board of Directors proposes to amend the Company's Certificate of
Incorporation to add a new provision which provides that only a majority of the
Board of Directors or a supermajority of 66 2/3% of all shares of capital stock
entitled to vote for the election of directors may call a special meeting of the
stockholders. Under Delaware law, a special meeting can be called by the Board
of Directors or any other person or persons as may be authorized by the
certificate of incorporation or by the Bylaws. The Company's existing
Certificate of Incorporation does not address special meetings and the Company's
Bylaws provide that a special meeting may be called by the President, a majority
of the Board of Directors, or by a majority of the stockholders.
Proposal 3C, if approved, would require the affirmative vote of the holders
of at least 66 2/3% of all shares of capital stock entitled to vote on the
matter to amend or repeal, or to adopt any inconsistent provisions.
REASON FOR AND CERTAIN EFFECTS OF PROPOSAL 3C
The Board of Directors believes that approval of Proposal 3C is advantageous
to the Company and its stockholders. The provision of Proposal 3C permitting
only a majority of the Board of Directors or a supermajority of 66 2/3% of all
shares of capital stock entitled to vote to call a special meeting ensures that
special meetings are only called to address issues which have the support of a
supermajority of the stockholders or a majority of the Board. The text of this
proposed amendment to the Certificate of Incorporation is attached to this Proxy
statement as Exhibit D.
The Board believes that this change to require a supermajority of 66 2/3% of
all shares of capital stock entitled to vote to call a special meeting will
protect the rights of minority stockholders as well as limit the ability of
stockholders to remove the Board of Directors prior to an annual meeting.
This amendment, when coupled with the requirement that voting stockholders
act only at meetings and not by written consent, will have the effect of
limiting voting on matters initiated by stockholders prior to the Company's
annual meeting. It is the Company's intention that the restriction of the
ability of stockholders to call a special meeting, in conjunction with the
existing restriction on the use of the written consent procedure, will encourage
persons seeking to acquire control of the Company to initiate such an
acquisition through arm's-length negotiations with the Company's management and
Board of Directors. This amendment, when coupled with the requirement that
voting stockholders act only at meetings and not
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by written consent, could, however, have the effect of enabling a majority of
the incumbent Board of Directors to delay until the annual meeting any action
that required stockholder approval, even if the proponents of the action had
sufficient stockholder votes to obtain approval of the action at a special
meeting of stockholders.
Any provision in the Company's Certificate of Incorporation which
effectively requires a potential acquiror to negotiate with the Company's
management and Board of Directors could be characterized as increasing
management's and the Board's ability to retain their positions with the Company
and to resist a transaction which may be deemed advantageous by certain
stockholders. While it is possible for this amendment to be misused in an
attempt to resist reasonable takeover actions contrary to a board's fiduciary
obligation, the Board of Mylex is aware of and committed to its fiduciary
obligations. Moreover, there are fiduciary conduct standards in place to prevent
such misuse.
The limitation on the calling of special meetings may deter acquisitions of
the Company's stock and may delay, deter or impede stockholder action not
approved by the Board of Directors. Such actions may include stockholder
attempts to obtain control of the Board, unsolicited tender offers or other
efforts to acquire control of the Company. Proposal 3C may impede or delay, at
least until the next regularly scheduled annual meeting (and, if the proposal to
adopt a classified Board of Directors is approved and/or the prohibition on
stockholder action by written consent, beyond such meeting), the initiation or
consummation of business transactions, such as reorganizations, mergers, or
recapitalizations, which are opposed by the Board of Directors even though
sought by a majority of the stockholders.
This proposed amendment has been unanimously recommended by the Board of
Directors. Accordingly, adoption of this proposed amendment requires the
favorable vote of the holders of a majority of the outstanding shares of Common
Stock of the Company. Proxies of the holders of such stock will be voted on this
amendment as specified thereon, but in the absence of such a specification, the
proxies will be voted in favor of the proposed amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF PROPOSAL 3C.
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PROPOSAL FOUR
AMENDMENT TO THE 1993 STOCK OPTION PLAN
The Company's 1993 Employee Stock Option Plan (the "Option Plan"), was
approved by the Board of Directors on May 9, 1993 and by the stockholders on
July 26, 1993. The Option Plan was amended in 1996 to increase the number of
reserved shares. As of May 2, 1997, options to purchase 3,216,684 shares have
been granted. Shares in excess of the 2,925,000 authorized total were granted
subject to stockholder approval.
PROPOSED AMENDMENT
In January 1997, the Board, subject to stockholder approval, approved an
amendment increasing the number of shares reserved for issuance under the Option
Plan by an additional 1,900,000, for an aggregate of 4,825,000 shares reserved
for issuance under the Option Plan.
SUMMARY OF THE OPTION PLAN
PURPOSE. The principal purpose of the Option Plan is to provide equity
incentives to the Company's employees, consultants, and outside directors by
enabling them to participate in the Company's success and to encourage the
participants' continued service to the Company.
ADMINISTRATION. The Option Plan is administered by the Board of Directors
of the Company or a committee that is intended to comply with Rule 16b-3 under
the 1934 Act and other applicable laws (the "Administrator"). The Administrator
has the power to determine eligibility to receive an option, the terms of
options granted, including the exercise or purchase price, number of shares
subject to the option, the vesting schedule and the term of the option.
ELIGIBILITY. The Option Plan provides that options may be granted to
employees (including officers and directors who are also employees) of the
Company or any majority-owned subsidiary, and members of the Board of Directors
of the Company who are not officers or employees of the Company (Outside
Directors). As of the Record Date, there were 250 employees and five Outside
Directors eligible to be granted Options under the Option Plan. Incentive stock
options may be granted only to employees. Except with respect to Outside
Directors, the Administrator selects the optionees and determines the number of
shares to be subject to each option and the time or times at which shares become
exercisable under the option. Generally, such options become exercisable or
"vest" over a three to four year period. Each option may be exercised only to
the extent it is vested.
OUTSIDE DIRECTORS' OPTIONS. The Option Plan provides that a nonstatutory
option to purchase 50,000 shares of the Company's Common Stock (the "First
Option") shall be automatically granted (the "Automatic Grant Program") to
Outside Directors who are elected or appointed to the Board subsequent to May 9,
1993. An additional option to purchase 50,000 shares of the Company's Common
Stock shall be automatically granted to Outside Directors who remain on the
Board of Directors of the Company three years following the grant of the First
Option. This additional Option shall be the "Second Option." The exercise price
of options granted under the Automatic Grant Program is the fair market value of
the Company's Common Stock on the date of the automatic grant. Outside Directors
may not be granted options under the Option Plan except under the Automatic
Grant Program. The First Option becomes exercisable cumulatively with respect to
1/36 of the underlying shares on the first day of each month following the date
of grant of such option. The Second Option becomes exercisable cumulatively with
respect to 1/60 of the underlying shares on the first day of each month
following the date of grant of such option.
TERMS OF OPTIONS. The terms of options granted under the Option Plan (other
than options granted to Outside Directors pursuant to the Automatic Grant
Program (the "Outside Director Options")), are
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determined by the Administrator. Each option granted under the Option Plan is
evidenced by a written stock option agreement between the Company and the
optionee and is subject to the following additional terms and conditions:
(a) EXERCISE OF OPTION. An option granted under the Option Plan is
exercised by giving written notice of exercise to the Company, specifying
the number of full shares of Common Stock to be purchased and tendering
payment of the purchase price to the Company. Payment for shares issued upon
exercise of an option may consist of cash, check, promissory note, other
shares of the Company's Common Stock or any combination of such methods of
payment, or such other consideration and method of payment as is permitted
under the law.
(b) EXERCISE PRICE. The per share exercise price of options under the
Option Plan (other than Outside Director Options) is determined by the
Administrator and, in the case of incentive stock options, may not be less
than 100% of the fair market value on the date of grant. The Administrator
may grant nonstatutory stock options at less than fair market value. For so
long as the Company's Common Stock is listed on any established stock
exchange or a national market system, including without limitation the
NASDAQ-NMS, the fair market value of a share of Common Stock shall be the
closing sale price for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in Common Stock) on the date of grant of the
Option, as reported in THE WALL STREET JOURNAL or such other source as the
Administrator deems reliable.
(c) TERMINATION OF STATUS AS AN EMPLOYEE, CONSULTANT, OR OUTSIDE
DIRECTOR. If the optionee's employment or consulting relationship with the
Company or status as an Outside Director is terminated for any reason (other
than death or disability), options may be exercised within six (6) months
(or such other period of time not exceeding six (6) months as is determined
by the Administrator) after such termination as to all or part of the shares
as to which the optionee was entitled to exercise at the date of such
termination.
(d) DEATH OR DISABILITY OF OPTIONEE. Options may be exercised within
no more than twelve (12) months following termination because of a permanent
and total disability or by the employee's estate after his or her death.
(e) TERMS AND TERMINATION OF OPTIONS. Options granted under the Option
Plan may have a term of up to ten (10) years. No option may be exercised by
any person after the expiration of its term. In the case of an incentive
stock option granted to an optionee who, immediately before the grant of
such option, owns more than 10% of the voting power or value of all classes
of stock of the Company, the term of such incentive stock option may not
exceed five (5) years.
(f) TRANSFERABILITY OF OPTIONS. An option is not transferable by the
optionee, other than by will or the laws of descent or distribution, and is
exercisable during the optionee's life time only by the optionee. In the
event of the optionee's death, options may be exercised by a person who
acquires the right to exercise the option by bequest or inheritance.
(g) OTHER PROVISIONS. The option agreement may contain such other
terms, provisions, and conditions not inconsistent with the Option Plan as
may be determined by the Administrator.
CHANGES IN CAPITALIZATION. In the event a change, such as a stock split or
stock dividend payable in Common Stock, is made in the Company's capitalization
that results in an exchange of Common Stock for a greater or lesser number of
shares without receipt of consideration by the Company, appropriate adjustment
shall be made in the option price and number of shares subject to outstanding
options. Appropriate adjustment will also be made in the number of shares of
Common Stock that have been authorized for issuance under the Option Plan but as
to which no options have yet been granted or which have been returned to the
Option Plan upon cancellation of an option. Such adjustments shall be made by
15
<PAGE>
the Board of Directors, whose determination shall be final and conclusive,
subject to any required action by the stockholders of the Company.
In the event of the proposed dissolution or liquidation of the Company,
options outstanding under the Option Plan will terminate immediately prior to
the consummation of such proposed action, unless otherwise provided by the
Board. The Board may, in the exercise of its discretion, declare that any
outstanding option (except an Outside Director Option) shall terminate as of a
date fixed by the Board and give each optionee the right to exercise his or her
option as to all or any part of the optioned stock, including shares as to which
the option would not otherwise be exercisable. In the event of a proposed sale
of all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, outstanding options shall be assumed
or an equivalent option shall be substituted by such successor corporation (or a
parent or subsidiary of such successor corporation), unless such successor
corporation does not agree to assume the options or to substitute an equivalent
option, in which case the optionee shall have the right to exercise all
outstanding options as to all of the optioned stock, including shares as to
which the option would not otherwise be exercisable. If the Board makes an
outstanding option fully exercisable in lieu of assumption or substitution in
the event of a merger or sale of assets, the Board shall notify the optionee
that his or her outstanding options shall be fully exercisable for a period of
fifteen (15) days from the date of such notice, and the option will terminate
upon the expiration of such period.
AMENDMENT AND TERMINATION OF THE OPTION PLAN. Except with respect to the
Automatic Grant Program, the Board may amend or terminate the Option Plan from
time to time in such respects as the Board may deem advisable; provided that, to
the extent necessary and desirable to comply with Rule 16b-3 promulgated under
the 1934 Act, or with Section 422 of the Code or any other successor or
applicable law or regulation, the Company shall obtain stockholder approval of
any Option Plan amendment in such a manner and to such a degree as is required
by the applicable law, rule, or regulation. The Automatic Grant Program may not
be amended more than once every six months. Any amendment or termination of the
Option Plan shall not affect options already granted and such options shall
remain in full force and effect as if the Option Plan had not been amended or
terminated, unless mutually agreed otherwise between the optionee and the Board,
which agreement must be in writing and signed by the optionee and the Company.
In any event, the Option Plan shall terminate in 2003. Any options
outstanding under the Option Plan at the time of its termination shall remain
outstanding until they expire by their terms.
TAX INFORMATION. Options granted under the Option Plan may be either
"Incentive stock options," as defined in Section 422 of the Code, or
nonstatutory options.
INCENTIVE STOCK OPTIONS. If an option granted under the Option Plan is an
incentive stock option, the optionee will recognize no income upon grant of the
incentive stock option and incur no tax liability due to the exercise unless the
optionee is subject to the alternative minimum tax. The Company will not be
allowed a deduction for federal income tax purposes as a result of the exercise
of an incentive stock option, regardless of the applicability of the alternative
minimum tax. Upon the sale or exchange of the shares at least two (2) years
after grant of the option and one (1) year after receipt of the shares by the
optionee, any gain will be treated as a long-term capital gain. If these holding
periods are not satisfied, the optionee will recognize ordinary income equal to
the difference between the exercise price and the lower of the fair market value
of the stock at the date of the option exercise or the price of the stock. A
different rule for measuring ordinary income upon such a premature disposition
may apply if the optionee is also an officer; director; or 10% stockholder of
the Company. The Company will be entitled to a deduction in the same amount as
the ordinary income recognized by the optionee. Any gain recognized on such a
premature disposition of the shares in excess of the amount treated as ordinary
income will be characterized as long-term capital gain. Currently, tax on net
capital gain (net long-term capital gain minus net short-term capital loss) is
capped at 28%. Capital losses are allowed in full against capital gains plus
$3,000 of individual's other income.
16
<PAGE>
NONSTATUTORY OPTIONS. All options that do not qualify as incentive stock
options are referred to as nonstatutory options. An optionee will not recognize
any taxable income at the time he is granted a nonstatutory option. However,
upon its exercise, the optionee will recognize ordinary income for tax purposes
measured by the excess of the then fair market value of the shares over the
option price. In certain circumstances, where the shares are subject to a
substantial risk of forfeiture when acquired or where the optionee is an
officer, director, or 10% stockholder of the Company, the date of taxation may
be deferred unless the optionee files an election with the Internal Revenue
Service under Section 83(b) of the Code. The income recognized by an optionee
who is also an employee of the Company will be subject to tax withholding by the
Company by payment in cash or out of the current earnings paid to the optionee.
Upon resale of such shares by the optionee, any difference between the sales
price and the exercise price, to the extent not recognized as ordinary income as
provided above, will be treated as capital gain or loss.
The Company will be entitled to a tax deduction in the amount and at the
time that the optionee recognizes ordinary income with respect to shares
acquired upon exercise of a nonstatutory option.
The foregoing is only a summary of the effect of federal income taxation
upon the optionee and the Company with respect to the grant and exercise of
options under the Option Plan, does not purport to be complete, and does not
discuss the income tax laws of any municipality, state, or foreign country in
which an optionee may reside.
PLAN BENEFITS. The Company cannot now determine the number of options to be
received in the future by the executive officers named under "EXECUTIVE OFFICER
COMPENSATION--Summary Compensation Table," all current executive officers as a
group or all employees (including current officers who are not executive
officers) as a group. See "EXECUTIVE COMPENSATION--Option Grants in the Last
Fiscal Year" for the number of stock options granted to the executive officers
named in the Summary Compensation Table in the fiscal year ended December 31,
1996. In the fiscal year ended December 31, 1996, options to purchase 230,000
shares of the Common Stock of the Company were granted to all current executive
officers as a group and options to purchase 670,000 shares of Common Stock of
the Company were granted to all other employees. (Options granted amounts are
net of options cancelled and reissued as a result of a repricing of outstanding
options in October 1996. See "Executive Officer Compensation--Ten Year Options"
below.)
VOTE REQUIRED AND BOARD OF DIRECTOR'S RECOMMENDATION
The affirmative vote of the holders of a majority of the shares represented,
in person or by proxy, and voting at the Meeting (which shares voting
affirmatively also constitute at least a majority of the required quorum) will
be required to approve the amendment to the Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" APPROVAL
OF THE AMENDMENT TO THE 1993 STOCK OPTION PLAN.
17
<PAGE>
PROPOSAL FIVE
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Management has selected KPMG Peat Marwick LLP, independent public
accountants, to audit the books, records and accounts of the Company for the
current fiscal year ending December 31, 1997. KPMG Peat Marwick LLP has audited
the Company's financial statements since the fiscal year ended December 31,
1987.
A representative of KPMG Peat Marwick LLP is expected to be available at the
Annual Meeting to make a statement if such representative desires to do so and
to respond to appropriate questions.
VOTE REQUIRED AND BOARD OF DIRECTOR'S RECOMMENDATION
The affirmative vote of the holders of a majority of the Company's Common
Stock represented and voting at the Annual Meeting will be required to approve
and ratify the Board's selection of KPMG Peat Marwick LLP. In the event of a
negative vote on such ratification, the Board of Directors will reconsider its
selection.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT AUDITORS FOR THE 1997
FISCAL YEAR.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held a total of eight meetings during 1996. During
the year, no director attended fewer than 75% of the meetings of the Board and
committees thereof, if any, upon which such director served. The Board had an
Audit Committee, a Compensation Committee and a Stock Option Plan Committee. The
Board of Directors does not have a Nominating Committee or any committee
performing similar functions.
During 1996, the Audit Committee, which met one time, consisted of Messrs.
Love, McKenzie, Mirza and Singh. The Audit Committee approves the engagement of
and the services to be performed by the Company's independent auditors and
reviews the Company's accounting principles and its system of internal
accounting controls. The Audit Committee's functions include (i) recommending to
the Board the selection of the independent accountants, (ii) reviewing with the
independent accountants the scope of their examination, (iii) receiving the
reports of the independent accountants and meeting with representatives of such
accountants for the purpose of reviewing and considering questions relating to
their examination and such reports, (iv) reviewing, either directly or through
the independent accountants, the Company's system of internal accounting
controls and the Company's accounting principles, policies and practices, and
financial reporting.
The Stock Option Plan Committee, which met four times in 1996, consisted of
Messrs. Dudhia, Mirza and McKenzie. The charter of the Stock Option Plan
Committee is to review and approve grants of stock options to employees,
including officers, of the Company and to administer the Company's Employee
Stock Purchase Plan. The Compensation Committee, consisting of Messrs. Dudhia,
Love and Singh, met one time in 1996. The Compensation Committee's role is as
described in the Compensation Committee Report in this proxy statement.
18
<PAGE>
COMPENSATION OF DIRECTORS
Each of the Company's directors who do not also serve as employees ("Outside
Directors") is renumerated for each Board meeting he attends. In 1996, the
Outside Directors were paid a fee of $2,000 for each meeting, other than
telephonic meetings, and a $1,000 fee for each telephonic meeting. The Company
also reimburses all directors for their reasonable out-of-pocket expenses
incurred in connection with their attendance at Board or Committee meetings. In
addition, Outside Directors are entitled to participate in the Company's Option
Plan. See "PROPOSAL FOUR--AMENDMENTS TO THE 1993 STOCK OPTION PLAN--Summary of
the Option Plan."
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth the beneficial ownership of Common Stock as
of May 9, 1997, (i) by each director, (ii) by each executive officer named in
the Summary Compensation Table, (iii) by all directors and executive officers as
a group and (iv) by all persons known to the Company to be the beneficial owners
of more than five percent of the Company's Common Stock:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
NAME AND ADDRESS(1) OWNERSHIP OF CLASS
- --------------------------------------------------------------- ------------------ -----------
<S> <C> <C>
DIRECTORS AND OFFICERS
Mr. Al Montross.............................................. 300,489(2) 1.43%
Mr. Alonzo Wilson............................................ 36,888(3) 0.18%
Ms. Colleen Gray............................................. 19,746(4) 0.09%
Mr. Peter Shambora........................................... 36,640(5) 0.18%
Mr. KK Rao................................................... 25,000(6) 0.12%
Mr. Bal Singh................................................ 4,193(7) 0.02%
Mr. Ismael Dudhia............................................ 79,984(8) 0.38%
Dr. Inder M. Singh........................................... 316,847(9) 1.52%
Dr. M. Yaqub Mirza........................................... 811,106(10) 3.89%
Mr. Richard Love............................................. 317,547(11) 1.52%
Mr. Stephen McKenzie......................................... 40,548(12) 0.19%
All current directors and executive officers as a group (13
persons)................................................... 1,996,829(13) 9.40%
CERTAIN 5% BENEFICIAL OWNERS
J. & W. Seligman & Co. (14).................................. 2,244,000 10.41%
</TABLE>
- ------------------------
(1) All addresses, other than for 5% Beneficial Owners, are at the Company,
34551 Ardenwood Boulevard, Fremont, California 94555.
(2) Includes 69,319 shares owned and options for 231,170 shares exercisable
within sixty days of May 9, 1997.
(3) Includes options for 36,888 shares exercisable within sixty days of May 9,
1997.
(4) Includes 8,243 shares owned and options for 11,503 shares exercisable
within sixty days of May 9, 1997.
(5) Includes 640 shares owned and options for 36,000 shares exercisable within
sixty days of May 9, 1997.
19
<PAGE>
(6) Includes options for 25,000 shares exercisable within sixty days of May 9,
1997.
(7) Includes options for 4,193 shares exercisable within sixty days of May 9,
1997.
(8) Includes 79,984 shares owned.
(9) Includes 307,500 shares owned and options for 9,347 shares exercisable
within sixty days of May 9, 1997.
(10)Includes options for 14,347 shares exercisable within sixty days of May 9,
1997 and 769,759 shares held in the following names: Dr. Mirza, 105,000;
Mirza Living Trust, 55,000; SAFA Trust, 216,759; and Mar-Jac Investments,
330,000. Dr. Mirza is an officer of SAFA Trust. Dr. Mirza is an officer and
director of Mar-Jac Investments, and, therefore, may be deemed to
beneficially own the shares held by that stockholder. However, Dr. Mirza
disclaims beneficial ownership of all such shares.
(11) Includes 307,700 shares owned and options for 9,847 shares exercisable
within sixty days of May 9, 1997.
(12) Includes options for 40,548 shares exercisable within sixty days of May 9,
1997.
(13) Includes options to purchase an aggregate of 425,343 shares of Common Stock
exercisable within sixty days of May 9, 1997.
(14) Based upon information provided by J. & W. Seligman & Co. on May 9, 1997.
The stockholders' ownership position may have changed since that date. The
stockholders' address is 100 Park Avenue, New York, New York 10017.
20
<PAGE>
EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The Summary Compensation Table sets forth information with respect to
compensation earned for services rendered to the Company during each of the last
three fiscal years for the Chief Executive Officer and the Company's four other
most highly compensated executive officers whose cash compensation exceeded
$100,000 in 1996.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------- -------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(6) ($)(7) (#) ($)
- -------------------------------------- --------- --------- --------- ------------- ------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Al Montross(1) ................... 1996 250,000 856,232 19,683 630,000 0
President and Chief Executive 1995 249,038 664,184 11,604 500,000 0
Officer 1994 200,000 398,771 6,480 430,000 0
Mr. Alonzo Wilson(2) ................. 1996 161,635 93,159 3,624 100,481 0
Vice President and Chief Operating 1995 -- -- -- -- --
Officer 1994 -- -- -- -- --
Ms. Colleen Gray(3) .................. 1996 171,269 107,609 2,722 65,000 0
Vice President Finance and Chief 1995 140,922 70,847 557 78,000 0
Financial Officer 1994 110,832 20,040 329 60,000 0
Mr. Peter Shambora(4) ................ 1996 168,233 62,704 5,201 84,000 0
Vice President, Marketing 1995 144,000 60,523 2,288 69,000 0
1994 137,638 41,741 1,743 50,000 0
Mr. KK Rao(5) ........................ 1996 162,192 53,103 4,243 60,000 0
Vice President and Chief Technology 1995 144,999 45,379 1,941 125,000 0
Officer 1994 118,274 6,292 1,920 115,000 --
</TABLE>
- ------------------------
(1) Mr. Montross joined the Company in September 1993 as Executive Vice
President, was appointed Acting President and Chief Operating Officer in
December 1993 and was appointed President and Chief Executive Officer in
April 1994.
(2) Mr. Wilson joined the Company in February 1996 as a Vice President and was
appointed Chief Operating Officer in June 1996.
(3) Ms. Gray was promoted to Chief Financial Officer in December 1993. In
December 1994, she became Vice President Finance.
(4) Mr. Shambora joined the Company in October 1993 as Vice President of Sales
and Marketing for alternate channel sales. In April 1996, he became Vice
President of Marketing.
(5) Mr. Rao joined the Company in February 1992, became Vice President of
Engineering in July 1994, and became Vice President and Chief Technology
Officer in October 1996.
(6) Except as described in this footnote, the bonus payments were made pursuant
to the Company's Executive Bonus Plan described below. Mr. Montross' bonuses
were paid pursuant to his employment agreement with the Company (see
"Employment Agreement" below). A portion of the bonus paid to Ms. Gray in
1995 ($30,000) and in 1996 ($45,000) was discretionary and approved by the
Board in recognition of her performance in those years.
(7) Other Annual Compensation consists of certain insurance premiums paid by the
Company, the Company's contributions to the accounts of the officers under
the Company's 401(k) Plan, and, in the case of Mr. Montross, a car
allowance.
21
<PAGE>
All executive officers other than the President and Chief Executive Officer
are eligible to receive a quarterly cash bonus under the Company's Executive
Bonus Plan. The amount of the cash bonus payable to each executive officer is a
percentage of the officer's salary and is typically determined based on 50% of
the Company's financial performance, and 50% on the officer's personal
performance, during the applicable quarter.
STOCK OPTION AND STOCK PURCHASE PLANS
STOCK OPTION PLAN. The Company has one stock option plan, its 1993 Stock
Option Plan, which provides for the granting of options to directors, officers
and other employees of the Company. A description of the material terms and
conditions of the Plan is set forth under Proposal Four, "Amendment to the 1993
Stock Option Plan" in this proxy statement.
EMPLOYEE STOCK PURCHASE PLAN. In 1996, the stockholders of the Company
approved the Company's 1995 Employee Stock Purchase Plan (the "Purchase Plan"),
which is intended to qualify under the provisions of Section 421 and 423 of the
Internal Revenue Code of 1986, as amended (the "Code"). The Purchase Plan gives
employees of the Company an opportunity to acquire shares of Common Stock at a
discount from fair market value by means of payroll deductions. The Purchase
Plan, which is administered by the Stock Option Plan Committee of the Board (the
"Independent Committee") covers an aggregate of 300,000 shares of Common Stock
and terminates in December 2006. Through April 1, 1997, a total of 35,498 shares
have been sold under the Purchase Plan, and 264,502 shares are reserved for
issuance. As of that date, there were approximately 350 employees eligible to
participate in the Purchase Plan.
The Purchase Plan is implemented by a series of 24-month (formerly 12-month)
offering periods, with a new offering period commencing on each June 1 and
December 1. The last day of each of the four six-month exercise periods during
each offering period is an exercise date under the Purchase Plan. The purchase
price for the shares is accumulated by voluntary employee payroll deductions of
between 1% and 10% of an employee's eligible compensation during each offering
period. The purchase price per share at which shares are sold under the Purchase
Plan is equal to 85% of the fair market value of the Common Stock on the first
day of each offering period or last day of the applicable exercise period,
whichever price is lower. In the event that the purchase price per share at the
beginning of any offering period is less than the purchase price per share at
the beginning of any prior offering period which has not then ended, the
Independent Committee in its discretion may terminate the participation of all
participants in the prior offering period and enroll them in the new offering
period at the same payroll deduction rate.
No employee will be permitted to purchase, pursuant to the Purchase Plan and
any other similar purchase plans of the Company, more than $25,000 worth of
stock in any calendar year. In addition, no employee who owns 5% or more of the
voting power or value of all classes of stock of the Company will be permitted
to purchase shares under the Purchase Plan. Any participant may withdraw from
the Purchase Plan at any time prior to the end of the applicable offering
period.
Options under the Purchase Plan may not be transferred by a participant
other than by will or under the laws of descent and distribution, and may be
exercised during a participant's lifetime only by the participant. In the event
of a sale, merger, dissolution of liquidation of the Company or a sale of all or
substantially all of the Company's assets, any then current offering periods and
exercise periods will terminate immediately prior to the date on which such
proposed action is to be consummated, unless otherwise determined by the
Independent Committee. Upon any such termination, unless otherwise determined by
the Independent Committee, all options to purchase shares will be exercised
automatically, on such date, to purchase the maximum number of full shares that
may be purchased at the applicable exercise price with each participant's
accumulated payroll deductions. Although the Board may at any time amend or
terminate the Purchase Plan, no amendment may be made that would cause the
Purchase Plan to fail to meet the requirements for employee stock purchase plans
in Section 423 of the Code.
22
<PAGE>
401(k) PROFIT SHARING PLAN
In 1994, the Company adopted its 401(k) Profit Sharing Plan (the "401(k)
Plan"), pursuant to Section 401(k) of the Code. Each Employee may participate in
the 401(k) Plan beginning the first day of the calendar quarter after he or she
has been employed by the Company. Pursuant to the 401(k) Plan, each eligible
participant may contribute up to 15% of his or her eligible compensation to the
maximum amount permitted under the Code. The Company makes an additional
matching contribution each year equal to 50% of each participant's contributions
for the year (up to 6% of such participant's eligible compensation for the year)
up to a maximum of $2,250 per employee. The Company also may contribute such
additional discretionary amount as it may determine. Matching amounts
contributed by the Company in 1996 for the benefit of its executive officers are
included in the Summary Compensation Table set forth above.
OPTIONS GRANTED IN THE LAST FISCAL YEAR
The following table discloses, for each executive named in the Summary
Compensation Table (the "Named Executives"), options granted during the last
fiscal year and the gain or "spread" that would be realized if the options were
exercised on the expiration date, assuming that the Company's stock had
appreciated at the level indicated, compounded annually over the life of the
options.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------- VALUE OF ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
NUMBER OF OPTIONS PRICE APPRECIATE FOR
SECURITIES GRANTED TO EXERCISE OPTION TERM(1)
UNDERLYING EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME OPTIONS GRANTED FISCAL YEAR ($SH) DATE 5%($) 10%($)
- ---------------------------------- --------------- ----------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Al Montross....................... 130,000 9.4 12.875 1/18/06 1,052,612 2,667,526
Alonzo Wilson..................... 20,000 1.4 12.875 7/25/06 161,940 410,389
Colleen Gray...................... 24,000 1.7 12.875 1/18/06 194,328 492,446
Peter Shambora.................... 20,000 1.4 12.875 1/18/06 161,940 410,389
KK Rao............................ 20,000 1.4 12.875 1/18/06 161,940 410,389
</TABLE>
- ------------------------
(1) Potential realizable value less exercise price.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
This table discloses the aggregate dollar value realized upon exercise of
stock options in the last fiscal year by each Named Executive, as well as the
total number of unexercised options and the aggregate dollar value of
unexercised options held at the end of the last fiscal year.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT 1996 1996
SHARES FISCAL YEAR-END(#) FISCAL YEAR-END($)(1)
ACQUIRED ON VALUE -------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ----------- ---------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Al Montross................... -- -- 217,500 412,500 $ 1,426,250 $ 1,556,250
Alonzo Wilson................. -- -- 25,151 75,330 173,758 382,253
Colleen Gray.................. 37,000 735,084 7,500 57,500 59,167 148,875
Peter Shambora................ 5,000 104,824 21,750 62,250 131,500 222,000
KK Rao........................ 85,000 1,786,875 15,000 45,000 88,750 108,750
</TABLE>
- ------------------------
(1) Total value of options based on fair market value of Company Stock of $12.50
as of December 31, 1996.
23
<PAGE>
TEN-YEAR OPTIONS
On October 24, 1996, the Company repriced stock options granted to the
Company's employees with exercise prices above the then effective market price
of the Company's Common Stock. The following table sets forth, for each of the
Named Executives, a summary of the repricing of such options held by such
person.
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET PRICE OPTION TERM
UNDERLYING OF STOCK AT EXERCISE REMAINING AT
OPTIONS TIME OF PRICE AT TIME DATE OF
REPRICED OR REPRICING OR OF REPRICING NEW EXERCISE REPRICING OR
NAME DATE AMENDED(#) AMENDMENT ($) OR AMENDMENT ($) PRICE($) AMENDMENT
- -------------------------- --------------- ------------ --------------- ----------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Al Montross............... Oct. 24, 1996 130,000 12.750 16.000 12.875 9 1/4 years
Alonzo Wilson............. Oct. 24, 1996 -- -- -- -- --
Colleen Gray.............. Oct. 24, 1996 24,000 12.750 16.000 12.875 9 1/4 years
Peter Shambora............ Oct. 24, 1996 24,000 12.750 16.000 12.875 9 1/4 years
KK Rao.................... Oct. 24, 1996 24,000 12.750 16.000 12.875 9 1/4 years
</TABLE>
EMPLOYMENT AGREEMENT
The Company and Mr. Montross, the Company's President, entered into an
employment agreement, dated January 1, 1995. The agreement will extend for a
term of four years. The basic terms provide for an annual salary of $250,000, a
bonus based upon the Company's performance against operating income and net
sales objectives, and a discretionary bonus based on Mr. Montross' performance.
The terms also provide that Mr. Montross be granted options to purchase shares
of Common Stock as follows: 130,000 shares in January 1995; 130,000 shares in
January 1996; and 110,000 shares in January 1997. Pursuant to the agreement, Mr.
Montross was paid a discretionary bonus of $165,000 and $200,000 for 1995 and
1996, respectively, based on his performance during those years and a
discretionary bonus of $75,000 in 1994, in recognition of his contributions to
the Company prior to 1995.
EXECUTIVE OFFICERS
The following provides information about the Company's executive officers
who do not also serve as directors:
COLLEEN M. GRAY
Ms. Gray, age 43, joined the Company in April 1992 as Controller and in
December 1993 she was appointed Chief Financial Officer. She was appointed Vice
President Finance in December 1994. From 1989 until 1991, she served as
Controller of Voicemail International, Inc., a voice messaging equipment
manufacturer. From March 1987 through June 1989, she was Assistant Controller
for Alcatel Business Systems, Inc. From 1978 to 1987, Ms. Meyers held a series
of financial management positions with ITT Courier Terminal Systems. She
received a Bachelor of Science degree in Accounting from Arizona State
University.
AL WILSON
Mr. Wilson, age 64, joined Mylex in 1995 through the BusLogic acquisition in
February 1996 as a Vice President and the General Manager of the Santa Clara
BusLogic facility. He was appointed Chief Operating Officer in June 1996. Mr.
Wilson has more than 20 years of executive management experience in the RAID and
data storage industries. Prior to joining BusLogic in 1995, he was general
manager of Array Technology, a division of EMC. Mr. Wilson's past posts include
Vice President of Operations with Toshiba America Information Systems, where he
established and managed Toshiba's disk drive development in the U.S. He also
held executive positions at IBM, Memorex Corporation, Priam Corporation, and
Executive Computer Systems.
24
<PAGE>
JOSEPH A. SCHMIDT
Mr. Schmidt, age 53, joined the Company in March 1995 as Vice President,
Human Resources. Mr. Schmidt served as Vice President, Human Resources and
Corporate Officer to Power Up Software Corp., a utility software developer, from
January 1991 to May 1993 and as Director of Corporate Human Resources Planning
for Diasonics, Inc., a medical equipment manufacturer, from 1986 through 1990.
Mr. Schmidt holds a Bachelors degree from the University of Waterloo, and a
Masters degree in Human Resources and Manpower Development from the New School
for Social Research.
PETER SHAMBORA
Mr. Shambora, age 53, joined the Company in October 1993, as Vice President,
Sales and Marketing of alternate channel sales. In April 1996, he became Vice
President, Marketing. From February 1992 to October 1993, he served as Vice
President, Sales and Marketing of Mass Microsystems, a storage subsystem
manufacturer. From 1987 to 1992, he served as Vice President, Worldwide Sales of
Storage Dimensions. Prior to these positions, Mr. Shambora held positions at
various technology companies, including Atasi, Four Phase Systems and Ampex. Mr.
Shambora received his undergraduate degree from San Jose State University in
Industrial Management and a Masters degree from the University of Southern
California in Systems Management.
KRISHNAKUMAR RAO SURUGUCCHI ("KK RAO")
Mr. Surugucchi, age 41, joined the Company in February 1992, as Director of
Hardware Engineering. He became Vice President of Engineering in July 1994. He
subsequently became Chief Technology Officer and a Vice President in October
1996. Prior to joining the Company, Mr. Surugucchi was Director of Engineering
for the Company's subsidiary, Mylex India, from April 1991 to February 1992.
Prior to these positions, Mr. Surugucchi was Deputy General Manager for PSI
India from 1979 to 1991. Mr. Surgucchi received his undergraduate degree and
Masters degree in Electrical Engineering from The Indian Institute of
Technology, Bombay, India.
BAL SINGH
Mr. Singh, age 48, joined the Company in May 1996, as Senior Director of
Product Engineering. He was promoted to Vice President, Operations in December
1996. Prior to joining the Company, Mr. Singh served as Vice
President-Operations for Buslogic, Inc., a manufacturer of host bus adapters,
from June 1995 through April 1996. He also served as the Senior Manager of
Product Engineering for Buslogic from September 1994 through May 1995. Buslogic
was acquired by the Company in February 1996. Mr. Singh also served as Director
of Quality and Operations for AT&T-EO, a company in the communications industry,
from August 1993 through August 1994. Prior to that position, he served as
Director of Quality and Test Engineering for Comptronix, from July 1990 through
July 1993. Prior to these positions, Mr. Singh held a variety of engineering and
management positions with several technology companies. Mr. Singh received an
undergraduate degree in Engineering from Coventry Technical College in England.
W. HUGH DURDAN
Mr. Durdan, age 38, joined the Company in February 1997 as its Vice
President, Engineering. From August 1980 through January 1997, he served in a
number of engineering and engineering management positions with Digital
Equipment Corporation ("Digital"), a server manufacturer. From September 1994
until he joined the Company, Mr. Durdan was the Director of Engineering for the
Digital Prioris line of servers. He received a Bachelor of Science degree in
Computer and Systems Engineering from Rensselaer Polytechnic Institute.
25
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Montross, the Company's President, is employed pursuant to an employment
agreement, dated January 1, 1995, with the Company. The agreement will extend
for a term of four years. The basic terms provide for an annual salary of
$250,000 and a bonus based upon the Company's performance against operating
income and net sales objectives. The terms also provide that Mr. Montross be
granted options to purchase shares of Common Stock as follows: 130,000 shares in
January 1995; 130,000 shares in January 1996; and 110,000 shares in January
1997.
In January 1996, the Company loaned Colleen Gray, the Company's Vice
President-Finance, $100,000 in connection with her purchase of a home. The loan
was evidenced by a non-interest bearing promissory note, and was due one year
from funding. The loan was repaid in May of 1996. The obligation to repay the
loan was secured by shares of Common Stock of the Company subject to vested
options granted to Mrs. Gray.
In 1996, the Company made loans to certain directors, as listed below,
related to their exercise of options. The loans are evidenced by interest
bearing, full recourse promissory notes with terms described below.
<TABLE>
<CAPTION>
NAME AMOUNT ISSUE DATE MATURITY DATE RATE
- ---------------------------------------- ---------- --------------- --------------- ---------
<S> <C> <C> <C> <C>
Dr. Inder Singh......................... $ 116,250 July 26, 1996 July 26, 1997 6.50%
Mr. Richard Love........................ $ 193,750 July 26, 1996 July 26, 1997 6.50%
Mr. Ismael Dudhia....................... $ 154,938 Sept. 9, 1996 Sept. 9, 1997 6.50%
----------
$ 464,938
</TABLE>
In 1997, the Company made loans to certain officers, as listed below,
related to their exercise of options. The loans are evidenced by interest
bearing, full recourse promissory notes with terms described below.
<TABLE>
<CAPTION>
NAME AMOUNT ISSUE DATE MATURITY DATE RATE
- ------------------------------------- ---------- ---------------- ---------------- ---------
<S> <C> <C> <C> <C>
Al Montross.......................... $ 199,974 March 3, 1997 March 3, 1998 6.50%
Colleen Gray......................... $ 54,907 March 3, 1997 March 3, 1998 6.50%
----------
$ 254,881
</TABLE>
COMPENSATION COMMITTEE REPORT
The Compensation Committee (the "Committee") of the Board of Directors
establishes the general compensation policies of the Company as well as the
compensation plans and specific compensation levels for executive officers. The
Committee is currently composed of three non-employee directors.
The Committee believes that the compensation of the executive officers,
including that of the Chief Executive Officer, (collectively, the "Executive
Officers") should be influenced by the Company's performance. The Committee
establishes the salaries of all the Executive Officers by considering (1) the
salaries of executive officers in similar positions of comparably-sized
companies, (2) the Company's financial performance, and (3) the achievement of
certain objectives related to the particular Executive Officer's area of
responsibility. Key target performance objectives used in determining executive
compensation include the attainment of certain levels of revenue and operating
income. Base salaries for Executive Officers other than the Chief Executive
Officer are set by the Committee, in consultation with the Chief Executive
Officer.
26
<PAGE>
The Company has adopted an Executive Bonus Plan. The purposes of the
Executive Bonus Plan are to tie compensation to achievement of performance
measures that influence the creation of stockholder value, and to ensure
payments are targeted to provide a competitive level of compensation, taking
into account the Company's performance against its revenue and operating income
objectives, which are set annually by the Committee. The Company achieved its
operating income objectives in 1996, and as a result paid a bonus to the Chief
Executive Officer of $856,232 and a total of $316,575 to other officers named in
the Summary Compensation Table (the "Named Executives").
The Company's 1993 Stock Option Plan provides for long-term incentive
compensation for employees of the Company, including Executive Officers. An
important objective of the plan is to provide additional incentives to employees
to work to maximize stockholder value. The option program utilizes vesting
periods to encourage retention of employees and Executive Officers and reward
long-term commitment to employment with the Company. The Stock Option Plan
Committee of the Board, in consultation with the Committee and the Chief
Executive Officer, is responsible for determining, subject to the terms of the
Option Plan, the individuals to whom grants should be made, the timing of
grants, the exercise price per share, the number of shares subject to each
grant, and the vesting under each grant.
On October 24, 1996, upon recommendation of the Stock Option Plan Committee,
the Board approved the reduction of the exercise price of all stock options
previously granted to employees of the Company with exercise price above the
then fair market value for the Company's Common Stock, including to Al Montross,
Colleen Gray, Peter Shambora and KK Rao, certain of the Named Executives.
Subsequent to the original grant of the above-referenced stock options, the
price of the Company's Common Stock remained substantially lower than the
exercise price for those options. As a result, the Stock Option Plan Committee
believed that those options were not serving their primary purpose of
incentivizing the employees of the Company, including its officers. Accordingly,
the exercise price of all the affected options was reduced to $12.875, slightly
above the closing market price of the Company's Common Stock as reported on the
NASDAQ National Market as of the date of the repricing.
The terms of the President and Chief Executive Officer's compensation plan,
which is set forth in an Employment Agreement with the Company for a four year
term, commencing January 1, 1995, provides for (1) a base salary of $250,000,
which may be increased annually by the Board, (2) a cash bonus payable on the
achievement of certain objectives based on the Company's operating income and
net sales, and (3) grants of options to purchase shares of the Company's Common
Stock, vesting at a stated percentage per year. The factors taken into
consideration in determining this compensation were generally the same factors
used in determining the compensation of each of the Company's other executive
officers.
Dr. Inder Singh
Mr. Ismael Dudhia
Mr. Richard Love
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Dudhia, Mr. Love and Dr. Singh comprise the Compensation Committee for
the Board. Mr. Love is the current Treasurer of the Company and was appointed in
January 1995. Dr. Singh was Treasurer of the Company from February 1989 to
November 1989.
27
<PAGE>
STOCK PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative return to the Company's
stockholders of an investment in the Company's Common Stock with the cumulative
return of the NASDAQ National Market Index and the NASDAQ Computer Manufacturer
Index for the period commencing January 1, 1991 and ending Decmber 31, 1996. No
assurance can be given that the return to stockholders over the specified period
will be indicative of future returns to stockholders.
PERFORMANCE GRAPH FOR MYLEX CORPORATION
FIVE YEAR CUMULATIVE TOTAL RETURN
MYLEX CORPORATION, NASDAQ NATIONAL MARKET INDEX (USA)
AND NASDAQ COMPUTER MANUFACTURER STOCK INDEX (#357)*
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MYLEX NASDAQ MARKET (USA) NASDAQ COMPUTER MANUFACTURER
<S> <C> <C> <C>
1991 $100.00 $100.00 $100.00
1992 222.73 116.38 134.42
1993 240.91 133.59 127.39
1994 406.84 130.59 139.92
1995 695.45 184.67 220.39
1996 454.55 227.16 295.94
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR END
----------------------------------------------------------------
1991 1992 1993 1994 1995 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Mylex..................................................... 100.00 222.73 240.91 406.84 695.45 454.55
NASDAQ National Market Index (USA)........................ 100.00 116.38 133.59 130.59 184.67 227.16
NASDAQ Computer Manufacturer Stock Index.................. 100.00 134.42 127.39 139.92 220.39 295.94
</TABLE>
- ------------------------
* Assumes $100 invested on December 31, 1991 in the Company's Common Stock, in
the NASDAQ Market (USA) and in the NASDAQ Computer Manufacturer Stock Index,
and that any dividends were reinvested. The Company has not paid any dividend
on the Common Stock.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of registered class of the
Company's equity securities, to file certain reports of ownership with the
Security and Exchange Commission (the "SEC"). Such officers, directors and
stockholders are also required by SEC rules to furnish the Company with copies
of all Section 16(a) forms that they file. Based solely on its review of the
copies of such forms received by it, with respect to the year ended December 31,
1996, or written representations from certain reporting persons, the Company
believes that, except as described below, all such reports required to be filed
by such reporting persons during or with respect to such year have been filed in
a timely manner.
28
<PAGE>
Peter Shambora, the Company's Vice President, Marketing, filed a Form 4 in
June 1996, reporting the exercise of options to purchase Common Stock and the
disposition of such shares, which transactions should have been reported in a
Form 4 in April 1996. KK Rao, a Vice President of the Company, filed a Form 4 in
June 1996, reporting the exercise of options to purchase Common Stock and the
disposition of such shares, which transactions should have been reported in a
Form 4 in April 1996. Sherman Tom, the Company's former Vice
President-Operations, filed a Form 4 in June 1996, reporting the exercise of
options to purchase Common Stock and the disposition of such shares, which
transactions should have been reported in a Form 4 in April 1996. Colleen Gray,
the Company's Vice President-Finance, filed a Form 4 in June 1996, reporting the
exercise of options to purchase Common Stock and the disposition of such shares,
which transactions shares should have been reported in a Form 4 in April 1996.
Ismael Dudhia, a Director of the Company, filed a Form 4 in June 1996, reporting
the exercise of options to purchase Common Stock and the disposition of a
portion of such shares, which transactions should have been reported in a Form 4
in April 1996.
ANNUAL REPORT
The Company's Annual Report to Stockholders for its fiscal year ended
December 31, 1996 has been mailed to stockholders concurrently with the mailing
of this Proxy Statement, but such report is not incorporated herein and is not
deemed to be a part of the Company's proxy solicitation materials.
UPON THE WRITTEN REQUEST OF ANY STOCKHOLDER, THE COMPANY WILL PROVIDE TO
SUCH STOCKHOLDER, WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K FOR THE YEAR ENDED DECEMBER 31, 1996, WITHOUT EXHIBITS, AS FILED WITH THE
SEC. SUCH REQUESTS SHOULD BE DIRECTED IN WRITING TO THE SECRETARY OF THE COMPANY
AT 34551 ARDENWOOD BOULEVARD, FREMONT, CALIFORNIA 94555.
OTHER MATTERS
Management does not intend to bring before the meeting any matters other
than those set forth herein, and has no present knowledge that any other matters
will or may be brought before the meeting by others. However, if any other
matters properly come before the meeting, it is the intention of the persons
named in the enclosed form of Proxy to vote the proxies in accordance with their
judgment.
ON BEHALF OF THE BOARD OF DIRECTORS
/s/ Al Montross
Al Montross
CHIEF EXECUTIVE OFFICER AND PRESIDENT
29
<PAGE>
EXHIBIT A
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION INCREASING THE NUMBER OF
SHARES OF COMMON STOCK
IF THE PROPOSED AMENDMENT INCREASING THE NUMBER OF SHARES OF COMMON STOCK THAT
THE COMPANY HAS AUTHORITY TO ISSUE IS ADOPTED, ARTICLE FOURTH OF THE CERTIFICATE
OF INCORPORATION WILL BE AMENDED TO READ AS FOLLOWS:
"The total number of shares of common stock which the Corporation shall have
authority to issue is 120,000,000. The par value of each of such shares is
$0.01. All such shares are of one class and shares of Common Stock."
EXHIBIT B
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION ESTABLISHING A CLASSIFIED
BOARD OF DIRECTORS
IF THE PROPOSED AMENDMENT ESTABLISHING A CLASSIFIED BOARD OF DIRECTORS IS
ADOPTED, THE CERTIFICATE OF INCORPORATION WILL BE AMENDED BY ADDING ARTICLE
TWELFTH, WHICH WILL READ AS FOLLOWS:
"(a) The business and affairs of the Corporation shall be managed by or
under the direction of a Board of Directors consisting of such number of
directors as is determined from time to time by resolution adopted by
affirmative vote of a majority of the entire Board of Directors; provided,
however, that in no event shall the number of directors be less than three. The
directors shall be divided into three classes, designated Class I, Class II and
Class III. Each class shall consist, as nearly as may be possible, of one-third
of the total number of directors constituting the entire Board of Directors. At
the 1997 annual meeting of stockholders, Class I directors shall be elected for
a one-year term, Class II directors for a two-year term and Class III directors
for a three-year term. At each succeeding annual meeting of stockholders
beginning in 1998, successors to the class of directors whose term expires at
that annual meeting shall be elected for a three-year term. If the number of
directors is changed, any increase or decrease shall be apportioned among the
classes so as to maintain the number of directors in each class as nearly equal
as possible, and any additional director of any class elected to fill a vacancy
resulting from an increase in such class shall hold office for a term that shall
coincide with the remaining term of that class, but in no case will a decrease
in the number of directors shorten the term of any incumbent director. A
director shall hold office until the annual meeting for the year in which his or
her term expires and until his or her successor shall be elected and shall
qualify, subject, however, to prior death, resignation, retirement,
disqualification or removal from office. A majority of total directors shall
constitute a quorum for the transaction of business.
(b) Except as otherwise required by law, any vacancy on the Board of
Directors that results from an increase in the number of directors shall be
filled only by a majority of the Board of Directors then in office, provided
that a quorum is present, and any other vacancy occurring in the Board of
Directors shall be filled by a majority of the directors then in office, even if
less than a quorum. or by a sole remaining director. Any director elected to
fill a vacancy not resulting from an increase in the number of directors shall
have the same remaining term as that of his or her predecessor.
(c) Notwithstanding anything contained in this Certificate of Incorporation
to the contrary, the affirmative vote of the holders of at least 66 2/3% of all
shares of capital stock entitled to vote for the election of directors, shall be
required to amend or repeal, or to adopt any provision inconsistent with, this
Article Twelfth."
30
<PAGE>
EXHIBIT C
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO PROVIDE THAT
STOCKHOLDER ACTION MAY ONLY BE TAKEN AT ANNUAL OR SPECIAL MEETINGS OF
STOCKHOLDERS AND NOT BY STOCKHOLDER WRITTEN CONSENT
IF THE PROPOSED AMENDMENT PROVIDING THAT STOCKHOLDER ACTION MAY ONLY BE TAKEN AT
ANNUAL OR SPECIAL MEETINGS OF STOCKHOLDERS AND NOT BY STOCKHOLDER WRITTEN
CONSENT, THE CERTIFICATE OF INCORPORATION WILL BE AMENDED BY ADDING ARTICLE
THIRTEENTH, WHICH WILL READ AS FOLLOWS:
"(a) Any action required or permitted to be taken by the stockholders of the
Corporation must be effected at a duly called annual or special meeting of such
holders and may not be effected by a consent in writing by any such holders.
(b) Notwithstanding anything contained in this Certificate of Incorporation
to the contrary, the affirmative vote of the holders of at least 66 2/3% of all
shares of capital stock entitled to vote on the matter, shall be required to
amend or repeal, or to adopt any provision inconsistent with, this Article
Thirteenth."
* In the event that the proposal relating to classification of the Company's
Board of Directors and other related provisions is not approved and this
proposed Article Thirteenth is approved, this Article shall be numbered Article
Twelfth.
EXHIBIT D
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO PROVIDE THAT SPECIAL
MEETINGS OF STOCKHOLDERS MAY ONLY BE CALLED BY A MAJORITY OF THE BOARD OF
DIRECTORS OR BY A SUPERMAJORITY OF 66 2/3% OF ALL SHARES OF CAPITAL STOCK
ENTITLED TO VOTE FOR THE MEETING
IF THE PROPOSED AMENDMENT PROVIDING THAT SPECIAL MEETINGS OF STOCKHOLDERS MAY
ONLY CALLED BY A MAJORITY OF THE BOARD OF DIRECTORS OR BY A SUPERMAJORITY OF
66 2/3% OF ALL SHARES OF CAPITAL STOCK ENTITLED TO VOTE FOR THE MEETING, THE
CERTIFICATE OF INCORPORATION WILL BE AMENDED BY ADDING ARTICLE FOURTEENTH, WHICH
WILL READ AS FOLLOWS:
"(a) Special meetings of stockholders may only be called by a majority of
the Board of Directors or by a supermajority of 66 2/3 of all shares of capital
stock entitled to vote for the meeting.
(b) Notwithstanding anything contained in this Certificate of Incorporation
to the contrary, the affirmative vote of the holders of at least 66 2/3% of all
shares of capital stock entitled to vote for the meeting, shall be required to
amend or repeal, or to adopt any provision inconsistent with, this Article
Fourteenth."
* In the event that the proposal relating to classification of the Company's
Board of Directors and other related provisions is not approved and the proposal
relating to the provision that stockholder action may only be taken at annual or
special meetings of stockholders and not by stockholder written consent is
approved, and this proposed Article Fourteenth is approved, this Article shall
be numbered Article Thirteenth. If neither proposal is approved, and this
proposal Article Fourteenth is approved, this Article shall be numbered Article
Twelfth.
31
<PAGE>
MYLEX CORPORATION
PROXY FOR 1997 ANNUAL MEETING OF STOCKHOLDERS
----------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of MYLEX CORPORATION, a Delaware corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and
Proxy Statement, each dated May 28, 1997, and hereby appoints Al Montross,
Colleen Gray and Ismael Dudhia, each with the power to act without the others
and with full power of substitution, to vote and otherwise represent all of the
shares registered in the name of the undersigned at the 1997 Annual Meeting of
Stockholders of MYLEX CORPORATION to be held on June 30, 1997 at 2:00 p.m.,
local time, at the Holiday Inn, 625 El Camino Real, Palo Alto, California 94301,
and at any adjournment or adjournments thereof, with the same effect as if the
undersigned were present and voting such shares, on the matters set forth below:
<TABLE>
<S> <C> <C>
1. Election of Directors. FOR all nominees listed below WITHHOLD AUTHORITY to vote
(except as marked to the for all nominees listed below
contrary below) / / / /
</TABLE>
AL MONTROSS, DR. INDER M. SINGH, DR. M. YAQUB MIRZA, ISMAEL DUDHIA, RICHARD
LOVE, STEPHEN MCKENZIE, AND WALTER WILSON
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THAT NOMINEE'S NAME IN THE LIST ABOVE.)
(a) If Proposal 3(a) below is approved, Directors Montross and Dudhia
will serve a three-year term, Directors Singh and McKenzie will serve a
two-year term, and Directors Mirza, Love and Wilson will serve a one-year
term; or
(b) if Proposal 3(a) below is not approved, all seven Directors will
serve a one-year term.
2. To amend the Company's Certificate of Incorporation to increase its
authorized shares of Common Stock from 40,000,000 to 120,000,000 shares.
FOR / / AGAINST / / ABSTAIN / /
3. To approve further amendments to the Company's Certificate of Incorporation:
(a) to provide for the classification of the Board of Directors and
related matters;
FOR / / AGAINST / / ABSTAIN / /
(b) to limit stockholder action by written consent; and
FOR / / AGAINST / / ABSTAIN / /
(c) to limit the calling of special meetings of the stockholders.
FOR / / AGAINST / / ABSTAIN / /
4. To amend the Company's 1993 Stock Option Plan to increase the number of
shares of Common Stock authorized for issuance by an additional 1,900,000
shares, for an aggregate of 4,825,000 shares.
FOR / / AGAINST / / ABSTAIN / /
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
5. To ratify the appointment of KPMG Peat Marwick LLP as independent public
accountants of the Company for the fiscal year ending December 31, 1997.
FOR / / AGAINST / / ABSTAIN / /
6. To transact such other business as may properly come before the meeting or
any adjournments thereof.
FOR / / AGAINST / / ABSTAIN / /
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATION MADE. IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED FOR EACH OF THE ABOVE NOMINEES AND PROPOSALS, AND FOR SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING, AS THE PROXY HOLDERS DEEM
ADVISABLE.
_______________________________
(Name typed or printed)
_______________________________
(Signature)
_______________________________
(Title, if appropriate)
Date: ___________________, 1997
I plan to attend the
meeting: Yes / / No / /
Please sign exactly as your
name appears on your stock
certificate. If such stock is
held by joint tenants, both
persons should sign. When
signing as attorney, executor,
administrator, trustee or
guardian, please note your
title as such. If the stock is
registered in the name of a
corporation, please sign in the
corporation's name by the
president or any other
authorized officer. If the
stock is registered in the name
of a partnership, please sign
in the partnership's name by an
authorized person.
TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE MARK, SIGN AND DATE
THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
