<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CONVEX COMPUTER CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
CONVEX COMPUTER CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[CONVEX LOGO]
CONVEX COMPUTER CORPORATION
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 1995
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the 1995 Annual Meeting of Stockholders of
Convex Computer Corporation (the "Company"), a Delaware corporation, will be
held on Thursday, May 11, 1995, at 10:00 a.m., local time, at the UTD Conference
Center Auditorium, 2601 North Floyd Road, Richardson, Texas, for the following
purposes as more fully described in the Proxy Statement accompanying this
Notice:
1. To elect seven directors to serve for the ensuing year and until
their successors are elected.
2. To approve and ratify an amendment to the 1991 Stock Option Plan
that would increase the number of shares reserved for issuance from
4,960,000 to 6,160,000.
3. To approve the adoption of the 1995 Employee Stock Purchase Plan
that would reserve 900,000 shares for issuance thereunder.
4. To approve amendment and restatement of the Company's Certificate of
Incorporation for the purpose of increasing the authorized number of shares
of Common Stock by 40,000,000 shares.
5. To ratify the appointment of Ernst & Young LLP as the Company's
independent public accountants for the 1995 fiscal year.
6. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 17, 1995, are
entitled to receive notice of and vote at the meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Stockholders attending the
meeting may vote in person even if they have returned a proxy.
Sincerely,
PHILIP N. CARDMAN
SECRETARY
Richardson, Texas
March 31, 1995
<PAGE>
CONVEX COMPUTER CORPORATION
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of Convex Computer Corporation
(the "Company") for use at its 1995 Annual Meeting of Stockholders to be held
Thursday, May 11, 1995, at 10:00 a.m., local time, or at any adjournments or
postponements thereof, for the purposes set forth in this Proxy Statement and in
the accompanying Notice of Annual Meeting of Stockholders. The Meeting will be
held at the UTD Conference Center Auditorium, 2601 North Floyd Road, Richardson,
Texas. The Company's principal executive offices are located at 3000 Waterview
Parkway, Richardson, Texas 75080. The Company's telephone number is (214)
497-4000.
These proxy solicitation materials were mailed on or about March 31, 1995 to
all stockholders entitled to vote at the meeting.
RECORD DATE; OUTSTANDING SHARES
Stockholders of record at the close of business on March 17, 1995 (the
"Record Date"), are entitled to receive notice of and vote at the Meeting. On
the Record Date, 26,689,983 shares of the Company's Common Stock, $.01 par
value, were issued and outstanding. For information regarding holders of more
than five percent of the outstanding Common Stock, see "Election of Directors --
Security Ownership."
REVOCABILITY OF PROXIES
Proxies given pursuant to this solicitation may be revoked at any time
before they have been used. Revocation will occur by delivering a written notice
of revocation to the Company or by duly executing a proxy bearing a later date.
Revocation will also occur if the individual attends the Meeting and votes in
person.
VOTING AND SOLICITATION
Every stockholder of record on the Record Date is entitled, for each share
held, to one vote on each proposal or item that comes before the Meeting. In the
election of directors, each stockholder will be entitled to vote for seven
nominees and the seven nominees with the greatest number of votes will be
elected.
The cost of this solicitation will be borne by the Company. The Company may
reimburse expenses incurred by brokerage firms and other persons representing
beneficial owners of shares in forwarding solicitation material to beneficial
owners. Proxies may be solicited by certain of the Company's directors, officers
and regular employees, without additional compensation, personally, by telephone
or by telegram.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Stockholder proposals which are intended to be presented at the Company's
Annual Meeting of Stockholders for fiscal 1995 must be received by the Company
no later than December 1, 1995, in order that they may be included in the proxy
statement and form of proxy for that meeting.
<PAGE>
ELECTION OF DIRECTORS
NOMINEES
A board of seven directors is to be elected at the Meeting. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for the
Company's seven nominees named below, all but one of whom are presently
directors of the Company. If any nominee of the Company is unable or declines to
serve as a director at the time of the Meeting, the proxies will be voted for
any nominee who is designated by the present Board of Directors to fill the
vacancy. It is not expected that any nominee will be unable or will decline to
serve as a director. The term of office of each person elected as a director
will continue until the next Annual Meeting of Stockholders or until his
successor has been elected and qualified.
The names of the nominees, and certain information about them, are set forth
below:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
- ----------------------------------- --- ---------------------------------------------------- -----------
<S> <C> <C> <C>
Robert J. Paluck(1)................ 47 Chairman of the Board and Chief Executive Officer of 1982
the Company
Erich Bloch(1)(3).................. 70 Distinguished Fellow, Council on Competitiveness 1992
H. Berry Cash(1)................... 56 General Partner of InterWest Partners, a venture 1993
capital limited partnership, and General Partner
of Berry Cash Southwest Partners
Max D. Hopper...................... 60 Principle of Max D. Hopper Associates, Inc., an
information technologies consulting firm.
Sam K. Smith(2)(3)................. 62 Chairman of the Board of Merit Technology, Inc., a 1985
military systems analysis and simulation company
Steven J. Wallach(1)............... 49 Senior Vice President, Technology of the Company 1982
Howard D. Wolfe(2)(3).............. 53 Special Partner of New Enterprise Associates and 1982
Managing General Partner of New Venture Partners,
venture capital limited partnerships
There is no family relationship between any director or executive officer of the Company.
<FN>
- ------------------------
(1) Member of Nominating Committee
(2) Member of Compensation Committee
(3) Member of Audit Committee
</TABLE>
Except for Mr. Hopper, each of the nominees has been engaged in his
principal occupation set forth above during the past five years. Mr. Hopper
formed Max D. Hopper Associates, Inc. in January 1995. From 1985 to January
1995, Mr. Hopper was a Senior Vice President of AMR Corporation, an air
2
<PAGE>
transportation company. From April 1993 to January 1995, he also served as
Chairman of The SABRE Group, an affiliate of AMR Corporation. Mr. Hopper is also
a director of Computer Language Research, Inc., Gartner Group, and Legent
Corporation. In addition:
Mr. Bloch is also a director of Motorola, Inc.
Mr. Cash is also a director of Cirrus Logic, ProNet, Cyrix Corporation and
Aurora Electronics.
Mr. Smith is also a director of Landmark Graphics.
SECURITY OWNERSHIP
The following table sets forth the beneficial ownership of the Company's
Common Stock as of the Record Date (a) by each director and nominee, (b) by the
executive officers named in the summary compensation table, (c) by all persons
known to the Company to be the beneficial owners of more than five percent of
the Company's Common Stock and (d) all directors and executive officers as a
group:
<TABLE>
<CAPTION>
APPROXIMATE
PERCENTAGE OF
NAME OF PERSON NUMBER OF TOTAL VOTING
OR IDENTITY OF GROUP SHARES(1) POWER
- -------------------------------------------------------------------------- ----------- ---------------
<S> <C> <C>
Merrill Lynch & Co., Inc.(2).............................................. 2,501,900 9.4%
World Financial Center, North Tower
250 Vesey Street
New York, New York 10281
The Capital Group Companies, Inc.(3)...................................... 1,933,000 7.2
333 South Hope Street
Los Angeles, CA 90071
Robert J. Paluck(4)....................................................... 881,056 3.3
Steven J. Wallach(4)...................................................... 892,228 3.3
Terrence L. Rock(4)....................................................... 270,462 1.0
Thomas M. Jones(4)........................................................ 182,500 *
Philip N. Cardman(4)...................................................... 120,039 *
Erich Bloch(4)............................................................ 26,000 *
H. Berry Cash(4).......................................................... 41,500 *
Max D. Hopper(5).......................................................... 10,000 *
Sam K. Smith(4)........................................................... 59,000 *
Howard D. Wolfe(4)........................................................ 44,271 *
All directors and executive officers as a group (14 persons)(4)........... 2,856,300 10.1
<FN>
- --------------------------
* Represents less than 1%.
(1) The persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to community property laws where applicable and the information
contained in this table.
(2) Represents shares beneficially owned by affiliates of Merrill Lynch & Co.,
Inc.
(3) Represents 913,000 shares owned by Capital Guardian Trust Company and
1,020,000 shares owned by Capital Research and Management Company,
operating subsidiaries of The Capital Group Companies, Inc.
(4) Includes shares issuable upon exercise of options which are exercisable at
or within 60 days of the Record Date, the total of which for all executive
officers and directors is 2,856,300 shares.
(5) Represents options granted March 23, 1995.
</TABLE>
3
<PAGE>
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of nine meetings during
the fiscal year ended December 31, 1994.
The Audit Committee met two times during the fiscal year. This Committee
recommends engagement of the Company's independent public accountants. It is
primarily responsible for approving the services performed by the independent
public accountants and for overseeing the Company's accounting principles and
its system of internal accounting controls.
The Compensation Committee met one time during the fiscal year. This
Committee defines and oversees the Company's compensation and benefit programs.
The Nominating Committee met one time during the fiscal year. This Committee
recommends nominees for election to the Board of Directors and the committees of
the Board of Directors. The Nominating Committee will consider nominees
recommended by security holders if submitted in writing to the Nominating
Committee. Security holders should send names of nominees to the Secretary of
the Company, who will forward the recommendations to the Nominating Committee.
The Nominating Committee also makes recommendations to the Board of Directors
with regard to the appointment of the Company's officers.
During the fiscal year ended December 31, 1994, all but one director
attended at least 75% of all meetings of the Board of Directors and the
committees, if any, upon which the director served. Berry Cash attended 70% of
the meetings of the Board of Directors and the Nominating Committee of the Board
of Directors.
COMPENSATION OF DIRECTORS
Outside directors are paid $10,000 per year, plus $1,000 for each Board of
Directors meeting they attend. In addition, under the Company's 1991 Stock
Option Plan, outside directors are automatically granted options to purchase
5,000 shares of the Company's Common Stock on an annual basis. These options
vest over a four year period. Accordingly, during 1994 each outside director was
granted an option to purchase 5,000 shares of the Company's Common Stock.
Employee directors receive no compensation for services rendered as a
director.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1994, Sam K. Smith and Howard D. Wolfe, both outside directors,
served as members of the Compensation Committee.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
composed of the individuals listed below this report, both of whom are outside
directors of the Company. The Committee is responsible for administering the
Company's compensation and benefits programs. The Committee sets executive
salary levels and determines the amounts to be awarded to executives under the
Company's bonus and stock option programs.
The Company's executive compensation program has been designed to align the
interests of executives with the interest of the stockholders by creating a
performance-oriented environment that
4
<PAGE>
rewards performance related to the goals of the Company. The program is also
designed to ensure the competitiveness of executive compensation to enable the
Company to attract and retain key executives critical to the long-term success
of the Company.
The level of compensation provided to the Chief Executive Officer ("CEO")
and other executive officers is tied to the achievement of key corporate and
individual objectives, as well as progress made towards the achievement of
strategic plan milestones. At the beginning of each year, each officer develops
a set of individual objectives. The Committee reviews these objectives with the
CEO and the President to ensure congruence with corporate objectives. Individual
objectives may be more subjective than corporate objectives and may not be
measureable by financial results at the corporate level. In that respect, the
Committee exercises significant judgment in measuring the achievement of, or
progress toward the achievement of these objectives. After approval of these
objectives by the Committee, each officer submits a quarterly progress report to
the President.
The key components of the compensation program are base salary, annual
incentive award, and equity participation through stock option awards. If all
annual objectives are met, total cash compensation for executives is targeted to
be competitive at the 75th percentile with that of executives holding similar
positions with other companies in the computer industry that are similar in size
to Convex. In 1992 executive compensation comparisons were made with six
specific companies the Committee judged to be comparable to Convex based on
factors including their technology, the markets in which the companies operate
and their potential competition with the Company for qualified employees. In
addition, executive compensation was compared to the 777 Executive Compensation
survey conducted by Hewitt and Associates which reports on 16 U.S. computer
companies, including two of the six specific companies judged to be comparable
to Convex as described above. The 777 Executive Compensation survey includes
nine of the eleven companies comprising the S&P Computer index shown in the
performance graph. Based on both these comparisons, the Committee concluded the
base salaries of Convex officers were slightly below the average base salaries
for equivalent positions, and in mid-1992 increased the annual base salary for a
number of executive officers, including the CEO. No new comparisons were
conducted in 1993 or 1994 and no base salary adjustments were granted for
executive officers in 1993 or 1994.
Annual incentive awards are designed to provide a direct link between an
executive's compensation and the executive's attainment of annually-defined
corporate and individual objectives. Based on the same survey data and the
judgment of the Committee, a total targeted annual incentive award is developed
for each executive with 50% of that award being tied to the achievement of
specific corporate objectives, which may include earnings or revenue targets.
The remaining 50% is tied to the achievement of the executive's individual
objectives. Annual incentives may also be related to short-term objectives that
improve the competitive posture or profitability of the Company and may include
order targets, operating margin percentage targets or progress towards desirable
levels of performance. If an executive's performance significantly exceeds
expectations, the Committee may increase that executive's incentive award over
the targeted level. If an executive's performance falls below approximately 80%
of targeted levels, no incentive award is paid.
In 1994 no incentive awards were given for the attainment of corporate
objectives. Although there are no minimum levels of corporate performance which
must be met before any bonuses are paid, with the Company's revenue and
profitability well below expectations, the Committee canceled all executive
officer incentive awards for achievement of individual objectives.
5
<PAGE>
The Company uses stock option grants as its long-term incentive mechanism.
These grants are intended to strengthen the link between executive compensation
and long-term Company performance by encouraging executives to obtain and hold
the Company's common stock. Stock options are granted at 100% of fair market
value on the date of grant and generally have a 10 year term. Stock options vest
over a four year period. In determining the number of stock options to be
awarded, the Committee considers the executive's performance in meeting annual
individual and corporate objectives, the executive's expected contributions to
the Company in the future, and comparisons to the companies in the surveys
discussed above.
Options are normally granted once a year, at or near the end of each year.
However, no grants were made in 1994, although the Company anticipates granting
options based on 1994 contributions in 1995.
CEO COMPENSATION
In 1994 Mr. Paluck's annual base salary of $240,000 was unchanged from the
previous year.
The Company's financial performance in 1994 was below expectations and no
annual incentive awards related to the achievement of corporate objectives were
paid to Mr. Paluck or any other officer of the Company. In addition, Mr. Paluck
received no awards for the achievement of individual objectives.
In 1994, the CEO received no option grants but will be eligible for any
option grants awarded in 1995 based on 1994 contributions.
COMPENSATION COMMITTEE
Sam K. Smith Howard D. Wolfe
6
<PAGE>
PERFORMANCE GRAPH
The following graph compares the change in the Company's cumulative total
stockholder return on its common stock with the Standard and Poor's 500 Stock
Index and the Standard and Poor's Computers Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CONVEX COMPUTER S&P COMPUTERS S&P 500
<S> <C> <C> <C>
1989 100 100 100
1990 72.36 112.04 96.87
1991 69.92 99.86 125.81
1992 52.03 73.97 134.93
1993 35.77 76.6 148.01
1994 51.22 98.65 145.73
</TABLE>
7
<PAGE>
SUMMARY COMPENSATION TABLE
The following table summarizes compensation earned in 1994, 1993 and 1992 by
the Chief Executive Officer and the four other most highly compensated executive
officers in 1994.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION:
ANNUAL COMPENSATION STOCK
------------------------------------- OPTIONS
OTHER ANNUAL (IN
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) SHARES)
- ----------------------------------------------- ---- ----------- ------ --------------- ----------
<S> <C> <C> <C> <C> <C>
Robert J. Paluck............................... 1994 $ 240,000 $ 0 $ 2,078 0
Chairman and 1993 240,000 0 0 320,000(2)
Chief Executive 1992 227,692 45,000 13,853 230,000(3)
Officer
Terrence L. Rock............................... 1994 $ 190,000 $ 0 $ 0 0
President 1993 190,000 0 2,917 230,000(4)
1992 175,769 60,000 8,353 140,000(5)
Steven J. Wallach.............................. 1994 $ 190,000 $ 0 $ 5,187 0
Senior Vice President, 1993 190,000 0 2,345 320,000(2)
Technology Director 1992 186,538 45,000 0 230,000(3)
Philip N. Cardman.............................. 1994 $ 138,000 $ 0 $ 0 0
Vice President, 1993 138,000 0 0 112,500(6)
General Counsel, 1992 136,659 20,000 0 80,500(7)
and Secretary
Thomas M. Jones................................ 1994 $ 135,000 $ 0 $ 0 0
Vice President, 1993 135,000 0 0 132,500(8)
Data Management Systems 1992 129,423 30,000 0 95,000(9)
<FN>
- ------------------------
(1) Represents imputed value of costs associated with attendance of annual
employee recognition events.
(2) Includes 230,000 options granted in previous years that were repriced in
the current year.
(3) Includes 180,000 options granted in previous years that were repriced in
the current year.
(4) Includes 140,000 options granted in previous years that were repriced in
the current year.
(5) Includes 110,000 options granted in previous years that were repriced in
the current year.
(6) Includes 80,000 options granted in previous years that were repriced in the
current year.
(7) Includes 65,000 options granted in previous years that were repriced in the
current year.
(8) Includes 95,000 options granted in previous years that were repriced in the
current year.
(9) Includes 75,000 options granted in previous years that were repriced in the
current year.
</TABLE>
8
<PAGE>
TABLE OF OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth information with respect to the named
executive officers concerning the exercise of options during 1994, and
unexercised options held as of December 31, 1994.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES DECEMBER 31, 1994(1) AT DECEMBER 31, 1994(2)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Paluck.............. -0- $0 238,958 81,042 $ 913,462 $ 276,538
Terrence L. Rock.............. -0- $0 154,375 75,625 $ 585,703 $ 255,547
Steven J. Wallach............. -0- $0 238,958 81,042 $ 913,462 $ 276,538
Philip N. Cardman............. -0- $0 84,063 28,437 $ 320,275 $ 93,787
Thomas M. Jones............... -0- $0 98,958 33,542 $ 377,994 $ 113,569
<FN>
- ------------------------
(1) Options granted pursuant to the 1991 Option Plan are generally exercisable
by the optionee ahead of vesting. Unvested shares purchased on exercise of
an option are subject to a repurchase right of the Company, and may not be
sold by an optionee, until the shares vest. Options indicated in this table
as "Exercisable" are those options which were vested and exercisable as of
December 31, 1994. All other options are indicated as "Unexercisable."
(2) Based on a share price of $7.875 at December 31, 1994.
</TABLE>
9
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership on Form 3 and changes in ownership on Form 4 or Form 5 with the
Securities and Exchange Commission (the "SEC"). Such officers, directors and
ten-percent shareholders are also required by SEC rules to furnish the Company
with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Form 5s were
required for such persons, the Company believes that, during the fiscal year
ended December 31, 1994, the Company's officers, directors and ten-percent
shareholders complied with all applicable Section 16(a) filing requirements.
AMENDMENT OF THE 1991 STOCK OPTION PLAN
In January 1995, the Board of Directors authorized an amendment to the 1991
Option Plan to increase the shares reserved for issuance by 1,200,000. This
would bring the total number of shares issuable under the 1991 Option Plan to
6,160,000. Before giving effect to this proposed amendment, 1,428,777 shares are
available for issuance under the 1991 Option Plan.
At the Annual Meeting, the stockholders are being asked to approve this
amendment to the 1991 Option Plan. The affirmative vote of the holders of a
majority of the shares of the Company's Common Stock present or represented and
voting at the Meeting will be required to approve the amendment. The essential
features of the 1991 Option Plan are outlined below.
GENERAL
Options granted under the 1991 Option Plan may be either "incentive stock
options," as defined in Section 422 of the Code, or nonstatutory stock options.
SEE "Tax Information" below for information concerning the tax treatment of both
incentive stock options and nonstatutory stock options. Generally, options
granted by the Company are nonstatutory stock options.
PURPOSE
The purposes of the 1991 Option Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentives to employees, consultants and directors of the Company and
its subsidiaries and to promote the success of the Company's business.
ADMINISTRATION
The 1991 Option Plan is administered by the Board of Directors or by a
committee appointed by the Board of Directors of at least two persons. The
interpretation and construction of the 1991 Option Plan by the Board is final
and conclusive. Members of the Board of Directors receive no remuneration for
their services in connection with the administration of the 1991 Option Plan.
ELIGIBILITY
The 1991 Option Plan provides that options may be granted to employees
(including officers, consultants and directors of the Company and its
majority-owned subsidiaries), all of whom are eligible to participate in the
1991 Option Plan. Subject to special provisions relating to non-employee
directors ("Outside Directors"), the Board of Directors selects the optionees
and determines the number of shares to be subject to each option. In making this
determination, the Board of Directors
10
<PAGE>
takes into account the duties and responsibilities of the optionee, the value of
the optionee's services, the optionee's present and potential contributions to
the success of the Company, the anticipated years of future service of the
employee and other relevant factors.
OUTSIDE DIRECTORS' OPTIONS
Options may be granted to Outside Directors under the 1991 Option Plan only
in accordance with an automatic, non-discretionary grant mechanism. The 1991
Option Plan provides that, on December 1 of each year in which the 1991 Option
Plan is in effect, each Outside Director will automatically be granted an option
to purchase 5,000 shares of the Company's Common Stock. The terms of options
granted to Outside Directors are as follows: (a) the term of the option is ten
years; (b) the option can be exercised only while the Outside Director remains a
director or within three months after termination; (c) the exercise price per
share of Common Stock is 100% of the fair market value on the date the option is
granted; and (d) the option vests over a four-year period at the rate of 1/4 of
the shares subject to the option at the end of each year. The 1991 Option Plan
provides that the provisions relating to grants of options to Outside Directors
may not be amended more than once every six months.
TERMS OF OPTIONS
Subject to the provisions relating to option grants to Outside Directors,
the term of options granted under the 1991 Option Plan are determined by the
Board of Directors. Each option is evidenced by a stock option agreement between
the Company and the employee receiving the option, and is subject to the
following additional terms:
(a) EXERCISE. The Board of Directors has the discretion to determine when
options can be exercised. Generally, options granted to employees, but not to
directors, may be exercised at any time before expiration so long as the
optionee remains employed by the Company and enters into a Stock Restriction
Agreement that grants the Company the right to repurchase, at the original
exercise price, any shares that are not vested at the time the optionee's
employment is terminated. Generally, options vest over a four-year period at the
rate of 1/4 of the shares subject to the option at the end of each of the first
two years and as to 1/48 of the shares at the end of each calendar month
thereafter. An option is exercised by giving written notice to the Company,
specifying the number of full shares to be purchased, and by tendering payment
of the purchase price. Payment for shares issued upon exercise of an option may
consist of cash, check, other shares of Common Stock or such other consideration
as determined by the Board of Directors.
(b) EXERCISE PRICE. The exercise price of options is determined by the
Board but may in no event be less than the fair market value of the Company's
Common Stock on the date the option is granted, in the case of incentive stock
options, and not less than 85% of fair market value of the Company's Common
Stock on the date the option is granted, in the case of nonstatutory stock
options. Incentive stock options granted to 10% stockholders are subject to the
additional restriction that the exercise price be at least 110% of fair market
value on the date of grant.
(c) TERMINATION OF EMPLOYMENT. If the optionee's employment by the Company
is terminated for any reason other than death, the option may be exercised
within 30 days after termination (or such other period as is determined by the
Board of Directors, which determination, in the case of an incentive stock
option, is made at the time of grant and will not exceed 90 days) and may be
exercised to the extent the option could have been exercised on the date of
termination.
(d) DEATH. If an optionee dies while employed by the Company, his options
may be exercised at any time within six months after death, but only to the
extent the options could have been exercised
11
<PAGE>
had the optionee not died but continued his employment for another six months.
If any optionee dies within one month after termination of employment, his
options may be exercised within six months after death to the extent the options
could have been exercised on the date of termination.
(e) TERM. All options have a maximum term of ten years from the date of
grant, unless a lesser period is provided for in the option agreement. No option
may be exercised by any person after its expiration.
(f) NONTRANSFERABILITY. An option cannot be transferred by the optionee,
other than by will or the laws of descent and distribution, and can be exercised
only by him during his lifetime or, if he dies, by a person who acquires the
right to exercise the option by bequest or inheritance or otherwise by reason of
the optionee's death.
(g) OTHER PROVISIONS. The option agreement may contain such other terms,
provisions and conditions not inconsistent with the 1991 Option Plan as may be
determined by the Board of Directors.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
If a change is made in the Company's capitalization, such as a stock split,
which results in an exchange of the Company's Common Stock for a greater or
lesser number of shares, appropriate adjustment will be made in the option price
and in the number of shares subject to the option. If there is a stock dividend,
each optionee will be entitled to receive, upon exercise of his option, the
equivalent
of any stock dividend which he would have received had he been the holder of
record of the shares being purchased. If a dissolution, liquidation, merger or
sale of substantially all of the assets of the Company is proposed, all
outstanding options automatically terminate unless otherwise provided by the
Board of Directors or unless assumed by the acquiror in the case of a merger or
sale. In this event, the Board of Directors may, in its discretion, make
provision for accelerating the ability to exercise shares subject to option.
AMENDMENT AND TERMINATION OF THE PLAN
The Board may, from time to time, amend the 1991 Option Plan or terminate it
without approval of the stockholders; provided, however, that the approval of
the holders of a majority of the outstanding shares of the Company entitled to
vote is required for any amendment which increases the number of shares for
which options may be granted, materially changes the standards of eligibility or
constitutes an amendment for which stockholder approval is required to comply
with Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or any
successor rule. However, no such action by the Board of Directors or the
stockholders may unilaterally alter or impair options previously granted without
the consent of the optionee. In all events, the 1991 Option Plan will terminate
in March 2001.
TAX INFORMATION
Options granted under the 1991 Option Plan may be either "incentive stock
options," as defined in Section 442 of the Code, or nonstatutory stock options.
If an option granted under the 1991 Option Plan is an incentive stock
option, the optionee will recognize no income upon grant of the option and incur
no tax liability due to its 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. A gain on a sale
or exchange of shares will be treated as a long-term capital gain if it is
realized at least two years after the option is granted and one year after the
option is exercised. If these holding periods are not satisfied at the time of
sale, the optionee will recognize
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ordinary income equal to the difference between the exercise price and the lower
of the fair market value of the stock on the date of exercise or the sale price
of the stock. A different rule for measuring ordinary income upon 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 a premature disposition of the shares in excess of the amount
treated as ordinary income will be characterized as long-term capital gain.
All options which do not qualify as incentive stock options are referred to
as nonstatutory options. An optionee will not recognize taxable income at the
time he is granted a nonstatutory option. However, upon exercise, the optionee
will recognize ordinary income for tax purposes measured by the excess, if any,
of the then fair market value of the shares over the exercise price. A different
rule for measuring ordinary income upon option exercise may apply if the
optionee is also an officer, director or 10% stockholder of the Company. The
income recognized by an optionee who is also an employee of the Company will be
subject to tax withholding by the Company, either in cash or out of the current
earnings paid to the optionee. Upon resale of the shares by the optionee, any
difference between the sales price and the exercise price, to the extent not
recognized as ordinary income, will be treated as a capital gain or loss.
VOTE REQUIRED
The affirmative votes of the holders of a majority of the shares of Common
Stock present or represented and "voting" on the proposed amendment (the "Voting
Shares") will be required to approve the increase in shares reserved under the
1991 Option Plan. Votes that are cast against the proposal are counted for
purposes of determining the total number of Voting Shares with respect to this
proposal. While there is no definitive statutory authority or case law in
Delaware as to the proper treatment of abstentions, the Company believes that
abstentions should also be counted for purposes of determining the number of
Voting Shares with respect to the proposal. In the absence of controlling
precedent to the contrary, the Company intends to treat abstentions on this
proposal in this manner. With respect to broker non-votes, there is Delaware
case law to the effect that, while such shares may be counted for determining
the presence or absence of a quorum for the transaction of business at a
meeting, broker non-votes should not be counted for purposes of determining the
number of shares voting with respect to the particular proposal(s) on which the
broker has expressly not voted. Accordingly, broker non-votes will not be
counted as Voting Shares with respect to this propsal. THE BOARD OF DIRECTORS
RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE AMENDMENT TO THE 1991 OPTION PLAN.
APPROVAL OF THE 1995 EMPLOYEE STOCK PURCHASE PLAN
The 1995 Employee Stock Purchase Plan was adopted by the Convex Board of
Directors ("Board") in January 1995, subject to stockholder approval; and
900,000 shares of Convex Common Stock, $.01 par value ("Stock") were initially
reserved for issuance under the Plan.
The Plan is not qualified under Section 401(a) of the Internal Revenue Code
of 1986, as amended ("Code"), and is not subject to ERISA.
At the Annual Meeting, the stockholders are being asked to approve the
adoption of the Plan. The affirmative vote of the holders of a majority of the
shares of the Company's Common Stock present or represented at the Meeting will
be required to approve the Plan. The essential features of the Plan are outlined
below.
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PURPOSE
The purpose of the Plan is to attract and retain the best available
personnel by providing the opportunity to purchase Stock through payroll
deductions, thereby promoting the success of Convex' business.
ADMINISTRATION
The Plan is administered by the Board. All questions of interpretation or
application of the Plan are determined by the Board, and its decisions are
binding on all participants. Members of the Board who are eligible employees can
participate in the Plan. Members of the Board who administer the Plan will
receive no additional compensation for doing so. Convex will not charge
participants for administrating the Plan.
ELIGIBILITY
Employees who have begun service by an enrollment date and who are
customarily employed for at least 20 hours per week and five months per calendar
year are eligible to participate in the Plan, subject to limitations imposed by
Sections 423(b) of the Code and limitations on stock ownership defined in the
Plan.
OFFERING PERIODS
Overlapping offerings under the Plan begin on the first business day after
the first payday in February and August of each year and last for twenty-four
months (each an "Offering Period"). Each Offering Period consists of four
six-month exercise periods, with the accrued payroll deductions of participants
applied toward the purchase of Stock at the end of each six-month exercise
period ("Exercise Date"). The Board can alter the commencement date and/or term
of an Offering Period for future offerings if announced at least five days
before the scheduled beginning of the first Offering Period affected.
PARTICIPATION IN THE PLAN
Eligible employees become participants in the Plan by filing a Subscription
Agreement, authorizing payroll deductions, with the Convex Payroll
Administrator. Subscription Agreements for the next available Offering Period
may be filed during open enrollment periods before the beginning of each
Offering Period and are accepted through the end of the day on the first day of
an Offering Period ("Enrollment Date"). Employees who become eligible to
participate in the Plan after an Offering Period begins will not be able to
participate in the Plan until the next Offering Period. Employees may be
enrolled in only one Offering Period at a time.
GRANT OF OPTION
On the Enrollment Dates, participants are granted an option to purchase
Stock on each Exercise Date. The amount of Stock is fixed by dividing the
payroll deductions accumulated during the exercise period by the lower of (1)
85% of the fair market value of the Stock on the Enrollment Date, or (2) 85% of
the fair market value of the Stock on the Exercise Date.
The total amount of Stock subject to an option during an Offering Period can
not exceed $75,000 divided by the fair market value of the Stock on the
Enrollment Date. The amount of Stock subject to an option will be reduced, if
necessary, to assure that the following limitations are not exceeded.
(1) No participant will be granted an option under the Plan if, immediately
after the grant, the participant (or any other person whose stock would
be attributed to the participant under
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Section 424(d) of the Code) would own Stock and/or hold outstanding
options to purchase Stock representing 5% or more of the total combined
voting power or value of all classes of Stock or the shares of any
subsidiary.
(2) No option will permit a participant's right to purchase Stock under the
Plan to accrue at a rate exceeding $25,000 of fair market value
(determined at the time the option is granted) for each calendar year in
which the option is outstanding.
(3) If the total amount of Stock subject to option on a given Exercise Date
exceeds the amount of Stock that is then available under the Plan, Convex
will make a pro rata allocation of the Stock available as it deems
equitable. If it does so, Convex will give notice of the reduced amount
of Stock which each employee will be allowed to purchase.
PURCHASE PRICE
The purchase price per share under the Plan is the lower of (1) 85% of the
fair market value of the Stock on the Enrollment Date, or (2) 85% of the fair
market value of the Stock on the current Exercise Date. The fair market value of
Stock will be its closing price on the New York Stock Exchange.
PAYROLL DEDUCTIONS
Funds used to purchase Stock are accumulated by regular payroll deductions
during the Offering Period. Deductions may not exceed 10% of the eligible
compensation, which consists of regular and commission earnings. Payroll
deductions begin on the first payday after the Enrollment Date and continue at
the same rate until the end of the Offering Period, unless changed by the
participant. An employee may stop participating in the Plan, or may increase or
decrease the percentage rate of payroll deductions, at any time during the
Offering Period. The changes in payroll deduction rates are effective on the
next regularly scheduled payroll cycle.
Payroll deductions are credited to a participant's account in the Plan and
are deposited with Convex' general funds. Payroll deductions held by Convex may
be used for any corporate purpose. Convex is not obligated to segregate these
funds.
PURCHASE OF SHARES; EXERCISE OF OPTION
By executing a Subscription Agreement, each participant is, in effect,
granted an option at the beginning of each Offering Period which will
automatically be exercised on each Exercise Date in the Offering Period. By
signing a Subscription Agreement, the employee is not required to purchase
Stock. The Subscription Agreement is merely an election by the employee to have
Stock placed under option. However, unless the employee withdraws from
participation, the maximum number of whole shares of Stock that can be purchased
with the employee's accumulated payroll deductions will be automatically
purchased.
A certificate representing the Stock will be delivered to the employee, or a
book entry will be made reflecting the Employee's ownership, as promptly as
practical after the Exercise Date. Any cash insufficient to purchase a whole
share of Stock will remain in the employee's account until the next Exercise
Date unless the Offering Period has expired or the employee has withdrawn from
the Offering or Exercise Period. If the Offering Period has expired or the
employee has withdrawn, the funds will be returned to the employee without
interest. Any amounts deferred in excess of the Plan limits will also be
returned to the Employee without interest.
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WITHDRAWAL FROM THE PLAN
A participant can withdraw at any time from an Offering Period (or an
exercise period within an Offering Period) by giving written notice to Convex.
On withdrawal, the employee's accumulated payroll deductions will be promptly
refunded and the option for the current exercise period or Offering Period
(specified in the notice) will automatically be canceled. On withdrawal, no
further payroll deductions will be made. If an employee withdraws from the
Exercise Period only, participation in subsequent Exercise Periods may be
resumed by submitting a notice to resume payroll deductions. An employee who
withdraws from an Offering Period may participate in a different Offering Period
provided it begins on or after the date of withdrawal.
TERMINATION OF EMPLOYMENT
Termination of employment for any reason, or failure to remain in continuous
employment, cancels participation in the Plan immediately. If this happens, a
participant's payroll deductions will be returned without interest. If a
participant dies, accumulated payroll deductions will be provided to the
beneficiary designated by the participant.
LEAVES OF ABSENCE
Employees who are on leave of absence for 90 days or less are permitted to
remain in the Plan. However, if the leave extends beyond 90 days and the
employee is not guaranteed reemployment by contract or statute, the employee is
deemed to have been terminated for purposes of the Plan on the 91st day of the
leave. Payroll deductions for participants who are returning from a leave will
resume at the same rate as in effect before the leave unless the Offering Period
in which the employee was enrolled has expired. In addition, the employee will
not be allowed to reenter the Plan until a new Subscription Agreement is filed
for an Offering Period that begins after the employee returns to work.
CAPITAL CHANGES
If a change in Convex' capitalization results in an exchange of Stock for a
greater or lesser number of shares (such as a stock split), an appropriate
adjustment will be made in the amount of Stock available for issuance under the
Plan, the exercise price and in the amount of Stock which may be purchased. If a
stock dividend is declared during an Offering Period, participants will receive
the equivalent amount of Stock that would have been received had they been the
holder of record of the Stock on the record date of the dividend. Unless the
Board provides otherwise, the right to purchase Stock under the Plan will
automatically end immediately before a dissolution or liquidation. If Convex is
merged with another company, or if all or substantially all of its assets are
sold, the right to purchase Stock under the Plan will be assumed, substituted or
accelerated, or the Offering Period then in progress may be shortened.
NONASSIGNABILITY
Neither accumulated payroll deductions nor rights to receive Stock under the
Plan may be assigned, transferred, pledged or otherwise disposed of in any way
(other than upon death as provided in the Plan). Any attempt to do so will be
treated as an election to withdraw from the Plan.
DESIGNATION OF BENEFICIARY
A participant may designate a beneficiary who is to receive any Stock and/or
cash from the participant's account in the Plan if the participant dies. This
designation may be changed at any time
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by delivering a new Subscription Agreement to Convex. If a participant dies
without designating a then-living beneficiary, Convex will deliver the
participant's holdings to the executor or administrator of the participant's
estate.
REPORTS
Individual accounts will be maintained for each participant. After each
Exercise Date, participants will receive a summary of their accounts including
the total payroll deductions accumulated, the per share purchase price, the
number of shares purchased and the remaining cash balance.
AMENDMENT AND TERMINATION OF THE PLAN
The Board can amend or terminate the Plan at any time. Amendments of the
Plan may not adversely affect outstanding options. Approval of Plan amendments
by stockholders will be obtained when required by law.
TAX INFORMATION
The Plan, and the right of participants to make purchases, is intended to
qualify under Sections 421 and 423 of the Code. Under these provisions, no
income will be taxable to a participant either at the time of option grant or on
purchase of the Stock.
A participant may become liable for tax when Stock is disposed of, as
follows:
(1) If Stock is sold or otherwise disposed of (for example, by gift) more
than two years after the Offering Date (the first day of the offering
period during which Stock was purchased) and more than one year after the
Exercise Date, the participant will recognize ordinary income in an
amount equal to the lesser of (a) the difference between the sale price
(or the fair market value on the date of disposition) and the purchase
price, or (b) 15% of the fair market value of the Stock on the first day
of the Offering Period. Any additional profit or loss is taxable as
long-term capital gain or loss, as appropriate. If Stock is sold and the
sale price is less than the option price, the difference is treated as a
long term capital loss.
(2) If the holding periods described above have not been met, the amount by
which the fair market value on the purchase date exceeds the purchase
price will be treated as ordinary income. This excess is considered
ordinary income in the year of disposition even if no gain is realized or
the Stock is gifted. The balance of any gain will be treated as capital
gain and will be a long-term capital gain if the Stock has been held for
more than one year. Even if Stock is sold for less than its fair market
value on the Exercise Date, the same amount of ordinary income is
attributed to a participant and a capital loss is recognized equal to the
difference between the sales price and the value of the Stock on the
Exercise Date.
(3) Different rules may apply for directors and officers subject to Section
16(b) liability under the Securities Exchange Act of 1934. These
individuals should consult with their personal tax advisors before buying
or selling Stock under the Plan.
The ordinary income reported under the above rules, added to the actual
purchase price of the Stock, determines the tax basis of the Stock in
determining capital gain or loss on a sale or exchange of the Stock.
Convex is entitled to a deduction for amounts taxed as ordinary income to a
participant only to the extent that ordinary income must be reported on
disposition of Stock by the participant before the expiration of the above
holding periods.
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RESTRICTIONS ON RESALE
Some officers and directors may be "Affiliates" as defined under the
Securities and Exchange Act of 1934, as amended. Stock acquired under the Plan
by an affiliate may only be reoffered or resold under an effective registration
statement, under Rule 144 or under another exemption from the registration
requirements of the Securities and Exchange Act.
VOTE REQUIRED
The affirmative votes of the holders of a majority of the shares of Common
Stock present or represented and "voting" on the proposed amendments (the
"Voting Shares") will be required to approve the Plan. (For a description of the
method of determining the number of Voting Shares and vote, see the "Vote
Required" paragraph relating to amendment of the 1991 Option Plan above). THE
BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ADOPTION OF THE
PLAN AND TO RESERVE 900,000 SHARES FOR ISSUANCE UNDER THE PLAN.
APPROVAL OF AMENDMENT AND RESTATEMENT OF
CERTIFICATE OF INCORPORATION TO INCREASE AUTHORIZED SHARES
GENERAL
The Company's Restated Certificate of Incorporation as currently in effect
(the "Certificate"), provides that the Company is authorized to issue two
classes of stock, consisting of 40,000,000 shares designated as Common Stock,
$.01 par value per share, and 5,000,000 shares designated as Preferred Stock,
$.01 par value per share.
The Board of Directors of the Company has authorized amendment and
restatement of the Certificate, subject to stockholder approval, to increase the
authorized number of shares of Common Stock by 40,000,000 shares, bringing the
total authorized Common Stock up to 80,000,000 shares. Under the proposed
amendment and restatement, the first paragraph of Section 4, Article Fourth of
the Certificate would be amended and restated to read as follows:
"4. The total number of shares of stock which the Corporation shall
have authority to issue is eighty-five million (85,000,000) which shall
be divided into two (2) classes as follows: eighty million (80,000,000)
shares of Common Stock, par value One Cent ($0.01) per share, amounting
in the aggregate to eight hundred thousand dollars ($800,000) ("Common
Stock"), and five million (5,000,000) shares of Preferred Stock, par
value One Cent ($0.01) per share, amounting in the aggregate to fifty
thousand dollars ($50,000) ("Preferred Stock")."
The stockholders are being asked to approve such amendment. The proposed
amendment would give the Board the authority to issue additional shares of
Common Stock without requiring future stockholder approval of such issuances,
except as may otherwise be required by applicable law.
Of the 40,000,000 currently authorized shares of Common Stock, 26,689,983
shares of Common Stock were issued and outstanding as of March 17, 1995 (the
Record Date for the 1995 Annual Meeting). In addition, as of such date,
approximately 4,628,122 shares were reserved for issuance upon exercise of
outstanding options; approximately 1,428,717 shares were reserved for future
grant under the Company's 1991 Stock Option Plan; and approximately 2,459,770
shares were reserved for issuance upon conversion of the Company's outstanding
6% Convertible Subordinated Debentures due 2012. Accordingly, as of March 17,
1995, and giving effect to the adoption of the 1995 Stock
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Purchase Plan, subject to stockholder approval, and the reservation of 900,000
shares of Common Stock for issuance thereunder (as described in this Proxy
Statement) and the reservation of 1,200,000 shares for issuance under the
Company's 1991 Stock Option Plan, the Company has only 2,693,408 shares of
authorized but unissued and unreserved Common Stock available for issuance.
PURPOSE AND EFFECT OF THE AMENDMENT
The principal purpose of this proposed amendment and restatement of the
Company's Certificate of Incorporation to increase the authorized shares of
Common Stock is to make such shares available for use by the Board of Directors
as it deems appropriate or necessary. For example, such shares may be needed in
connection with raising additional capital through the sale of the Company's
securities, providing options or other stock incentives to the Company's
employees, consultants or others, acquisition of another company or its business
or assets, or establishing a strategic relationship with a corporate partner.
While the Company has had discussions with certain investment banks
concerning a potential offering of shares of Common Stock, the Board of
Directors has no present agreement, arrangement, plan or understanding with
respect to the issuance of any such shares. If the amendment is approved by the
stockholders, the Board of Directors does not intend to solicit further
stockholder approval prior to the issuance of any additional shares of Common
Stock, except as may be required by applicable law. Holders of the Company's
securities as such have no statutory preemptive rights with respect to issuances
of Common Stock.
The increase in authorized Common Stock will not have any immediate effect
on the rights of existing stockholders. To the extent that the additional
authorized shares are issued in the future, they will decrease the existing
stockholders' percentage equity ownership and, depending on the price at which
they are issued, could be dilutive to the existing stockholders.
POTENTIAL ANTI-TAKEOVER EFFECT
The increase in the authorized number of shares of Common Stock and the
subsequent issuance of such shares could have the effect of delaying or
preventing a change-in-control of the Company without further action by the
stockholders. Shares of authorized and unissued Common Stock could (within the
limits imposed by applicable law) be issued in one or more transactions that
would make a change-in-control of the Company more difficult, and therefore less
likely. Any such issuance of additional stock could have the effect of diluting
the earnings per share and book value per share of outstanding shares of Common
Stock, and such additional shares could be used to dilute the stock ownership or
voting rights of a person seeking to obtain control of the Company. Convex has
previously adopted certain measures that may have the effect of helping to
resist an unsolicited takeover attempt, including provisions in the Company's
1991 Stock Option Plan permitting the acceleration of exercisability of
outstanding options in the event of a sale or assets or merger and provisions of
the Certificate authorizing the Board to issue up to 5,000,000 shares of
Preferred Stock, the terms, provisions and rights of which may be fixed by the
Board without stockholder action or approval.
VOTE REQUIRED
The affirmative votes of the holders of a majority of the shares of Common
Stock issued and outstanding on the Record Date will be required to approve the
amendment and restatement of the Certificate of Incorporation. The effect of an
abstention is the same as that of a vote against the proposal. If the amendment
is not approved, the Company's authorized capital stock will not change.
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<PAGE>
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
AMENDMENT AND RESTATEMENT OF THE CERTIFICATE OF INCORPORATION TO INCREASE THE
AUTHORIZED NUMBER OF SHARES OF COMMON STOCK.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Ernst & Young LLP, independent public
accountants, to audit the financial statements of the Company for the fiscal
year ending December 31, 1995. Representatives of Ernst & Young LLP are expected
to be present at the meeting with the opportunity to make a statement, if they
desire to do so, and are expected to be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy card to vote the shares they represent as
the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: March 31, 1995
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PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
CONVEX COMPUTER CORPORATION
ANNUAL MEETING OF STOCKHOLDERS - MAY 11, 1995
The undersigned stockholder of CONVEX COMPUTER CORPORATION, a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated March 31, 1995, and hereby
appoints Robert J. Paluck, David W. Craig and Philip N. Cardman, and each of
them, proxies and attorneys-in-fact, with full power to each of substitution,
on behalf and in the name of the undersigned, to represent the undersigned at
the 1995 Annual Meeting of Stockholders of CONVEX COMPUTER CORPORATION to be
held on May 11, 1995 at 10:00 a.m. local time, at the UTD Conference Center
Auditorium at 2601 North Floyd Road, Richardson, Texas, and at any
adjournment or adjournments thereof, and to vote all shares of Common Stock
which the undersigned would be entitled to vote if then and there personally
present, on the matters set forth on the reverse side.
A majority of such attorneys or substitutes as shall be present and shall
act at said meeting or any adjournment or adjournments thereof (or if only
one shall be present and act, then that one) shall have and may exercise all
of the powers of said attorneys-in-fact hereunder.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE SIDE
<PAGE>
/X/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE AMENDMENT OF
THE 1991 STOCK OPTION PLAN, FOR THE ADOPTION OF THE 1995 EMPLOYEE STOCK
PURCHASE PLAN, FOR THE AMENDMENT OF THE COMPANY'S CERTIFICATE OF
INCORPORATION, FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH
OTHER MATTERS AS MAY COME BEFORE THE MEETING.
1. ELECTION OF DIRECTORS:
NOMINEES: Robert J. Paluck; Steven J. Wallach; Erich Bloch; Sam K. Smith;
Howard D. Wolfe; H. Berry Cash; Max D. Hopper
FOR WITHHELD
/ / / /
MARK HERE
FOR ADDRESS
CHANGE AND
/ / __________________________________ NOTE BELOW / /
For all nominees except as noted above
2. PROPOSAL TO AMEND THE 1991 STOCK FOR AGAINST ABSTAIN
OPTION PLAN TO INCREASE THE NUMBER / / / / / /
OF SHARES FOR ISSUANCE FROM
4,960,000 TO 6,160,000
3. PROPOSAL TO ADOPT THE 1995 FOR AGAINST ABSTAIN
EMPLOYEE STOCK PURCHASE PLAN AND / / / / / /
RESERVE 900,000 SHARES FOR
ISSUANCE.
4. PROPOSAL TO AMEND THE COMPANY'S FOR AGAINST ABSTAIN
CERTIFICATE OF INCORPORATION TO / / / / / /
INCREASE THE AUTHORIZED NUMBER OF
SHARES OF COMMON STOCK BY
40,000,000.
5. PROPOSAL TO RATIFY THE APPOINTMENT FOR AGAINST ABSTAIN
OF ERNST & YOUNG LLP AS THE / / / / / /
COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE 1995 FISCAL YEAR
and upon such other matter or matters which may properly come before the
meeting or any adjournment or adjournments thereof.
(This proxy should be dated, signed by the stockholder(s) exactly as his or
her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are
held by joint tenants or as community property, both should sign.)
Signature: _________________________________ Date ________________________
Signature: _________________________________ Date ________________________
