<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
[_] Confidential, for Use Of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material under Section 240.14a-12
QUALSTAR CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
--------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act 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:
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(4) Date Filed:
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<PAGE>
[QUALSTAR LOGO]
October 27, 2000
Dear Shareholder:
You are cordially invited to attend the 2000 Annual Meeting of Shareholders
of Qualstar Corporation to be held on Tuesday, December 12, 2000, at the
Marriott Warner Center Hotel located at 21850 Oxnard Street, Woodland Hills,
California 91367, beginning at 9:00 a.m. Pacific Time.
At this meeting you will be asked to elect six directors to serve a term of
one year. We urge you to read the attached Notice of Annual Meeting and Proxy
Statement, which contains detailed information about management's nominees and
other matters related to the Annual Meeting. In addition to the formal business
to be conducted, management will report on developments of the past year and
respond to questions and comments of general interest to shareholders.
It is important that your shares be represented. Therefore, even if you
presently plan to attend the Annual Meeting, please complete, sign and date and
promptly return the enclosed proxy card in the envelope provided. If you do
attend the Annual Meeting and wish to vote in person, you may withdraw your
proxy at that time.
I look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ William J. Gervais
William J. Gervais
Chief Executive Officer and President
<PAGE>
QUALSTAR CORPORATION
6709 Independence Avenue
Canoga Park, California 91303
___________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held December 12, 2000
__________________________________
NOTICE IS HEREBY GIVEN that Qualstar's Annual Meeting of Shareholders (the
"Annual Meeting") will be held at the Marriott Warner Center Hotel located at
21850 Oxnard Street, Woodland Hills, California 91367, on Tuesday, December 12,
2000, at 9:00 a.m. Pacific Time, for the following purposes:
1. To elect six directors to serve one year terms expiring at the Annual
Meeting of Shareholders to be held in 2001, or until their successors have been
duly elected and qualified; and
2. To transact any other business as may properly come before the Annual
Meeting and any adjournment thereof.
Shareholders of record at the close of business on October 23, 2000, are
entitled to notice of, and to vote at, the Annual Meeting and any adjournment
thereof. All shareholders are cordially invited to attend the Annual Meeting in
person.
By Order of the Board of Directors
/s/ Richard A. Nelson
Richard A. Nelson
Secretary
Canoga Park, California
October 27, 2000
--------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT. THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING YOU SHOULD COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD, AND RETURN
IT IN THE PREADDRESSED ENVELOPE PROVIDED. NO POSTAGE IS NECESSARY IF MAILED IN
THE UNITED STATES.
--------------------------------------------------------------------------------
<PAGE>
QUALSTAR CORPORATION
6709 Independence Avenue
Canoga Park, California 91303
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF SHAREHOLDERS
To Be Held December 12, 2000
General Information
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Qualstar Corporation, a California
corporation, for use at the Annual Meeting of Shareholders of the Company to be
held on Tuesday, December 12, 2000, at 9:00 a.m. Pacific Time. The Annual
Meeting will be held at the Marriott Warner Center Hotel located at 21850 Oxnard
Street, Woodland Hills, California 91367. This Proxy Statement and the
accompanying proxy are first being mailed to shareholders on or about October
27, 2000.
Voting and Solicitation of Proxies
On October 23, 2000, the record date with respect to this solicitation,
12,546,751 shares of the our common stock were outstanding. No other securities
are entitled to vote at the Annual Meeting. Only shareholders of record on such
date are entitled to notice of and to vote at the Annual Meeting and at any
adjournment thereof. Each shareholder of record is entitled to one vote for
each share held as of the record date on all matters to come before the Annual
Meeting and at any adjournment thereof.
Quorum. The holders of a majority of the outstanding shares of our common
stock, present in person or by proxy and entitled to vote, will constitute a
quorum at the Annual Meeting. We count proxies marked "withhold authority" as
to any director nominee or "abstain" as to a particular proposal as well as
broker non-votes for purposes of determining the presence or absence of a quorum
at the Annual Meeting for the transaction of business.
Vote Required. The six director nominees receiving the highest number of
affirmative votes of the shares present or represented by proxy and entitled to
vote will be elected as directors. Accordingly, proxies marked "withhold
authority" and broker non-votes will have no effect in determining which
directors receive the highest number of votes. The approval of any other matter
that properly comes before the Annual Meeting will require the affirmative votes
of a majority of the shares present or represented and entitled to be voted at
the Annual Meeting.
The shares represented by all valid proxies received will be voted in
accordance with the instructions specified therein. Unless otherwise directed
in the proxy, the persons named therein will vote FOR the election of each of
the director nominees named below. As to any other business that may properly
come before the Annual Meeting, the persons named in the enclosed proxy will
vote in accordance with their best judgment. We presently do not know of any
other business which will be presented for consideration at the Annual Meeting.
Solicitation. Proxies for use at the Annual Meeting are being solicited by
our Board of Directors. Proxies will be solicited principally by mail. If
desirable, to ensure a quorum at the Annual Meeting, our
<PAGE>
officers, directors, agents and employees may contact shareholders, banks,
brokerage houses and others, by telephone, facsimile or in person to request
that proxies be furnished. Qualstar will bear all expenses incurred in
connection with this solicitation. These costs include reimbursements to banks,
brokerage houses and other custodians, nominees and fiduciaries for their
reasonable expenses in forwarding proxy materials to beneficial owners of our
common stock. However, officers, directors and employees will not receive
additional compensation for these services.
Revocability of Proxies
An executed proxy may be revoked at any time before its exercise by
delivering to the Secretary of Qualstar a written notice of revocation or a duly
executed proxy bearing a later date. Prior to the date of the Annual Meeting,
any notice of revocation or subsequent proxy must be delivered to our Secretary
at 6709 Independence Avenue, Canoga Park, California 91303, the principal
executive office of Qualstar. On the date of the Annual Meeting, such notice or
subsequent proxy should be delivered in person at the Annual Meeting prior to
the time of the vote. Accordingly, the execution of the enclosed proxy will not
affect a shareholder's right to vote in person should such shareholder find it
convenient to attend the Annual Meeting and desire to vote in person, so long as
the shareholder has revoked his or her proxy prior to its exercise in accordance
with these instructions.
ELECTION OF DIRECTORS
(Proposal 1)
In accordance with Qualstar's bylaws, the number of directors constituting
the Board of Directors is currently fixed at six. All six directors are to be
elected at the 2000 Annual Meeting and will hold office until the 2001 Annual
Meeting and until their respective successors are elected and have qualified.
It is intended that the persons named in the enclosed proxy will, unless such
authority is withheld, vote for the election of the six nominees proposed by the
Board. In the event that any of them should become unavailable prior to the
Annual Meeting, the proxy will be voted for a substitute nominee or nominees
designated by the Board, or the number of directors may be reduced accordingly.
All of the nominees named below have consented to being named herein and to
serve if elected. The Board has no reason to believe that any of the nominees
will be unable to serve.
The following table provides information regarding the nominees, their
ages, the year in which each first became a director of Qualstar, their
principal occupations or employment during the past five years, directorships
held with other public companies, and other biographical data:
Business Experience During Last
Name and Age Five Years and Other Directorships
------------ ----------------------------------
William J. Gervais (57) William J. Gervais is a founder of Qualstar, has been
our President and a director since our inception in
1984, and was elected Chief Executive Officer in
January 2000. From 1984 until January 2000, Mr. Gervais
also served as our Chief Financial Officer. From 1981
until 1984, Mr. Gervais was President of Northridge
Design Associates, Inc., an engineering consulting
firm. Mr. Gervais was a co-founder, and served as
Engineering Manager from 1976 until 1981, of Micropolis
Corporation, a former manufacturer of hard disk drives.
Mr. Gervais earned a B.S. degree in Mechanical
Engineering from California State Polytechnic
University in 1967.
Richard A. Nelson (57) Richard A. Nelson is a founder of Qualstar and has been
our Vice President of Engineering, Secretary and a
director since our
2
<PAGE>
inception in 1984. From 1974 to 1984, Mr. Nelson was
self employed as an engineering consultant specializing
in microprocessor technology. Mr. Nelson earned a B.S.
in Electronic Engineering from California State
Polytechnic University in 1966.
Bruce E. Gladstone (65) Bruce E. Gladstone has been a director of Qualstar
since 1994. Since April 2000, Mr. Gladstone has served
as Executive Vice President of 2KSounds, Inc., a
company engaged in the production and distribution of
music. In 1997, Mr. Gladstone was a co-founder of
ComCore Semiconductor, a fabless semiconductor company,
and served as its Vice President and as a director from
1997 until its sale in 1998. From 1996 until 1997, Mr.
Gladstone was a consultant in the area of high
technology startup companies. In 1990, Mr. Gladstone
co-founded Chronology Corporation, a company that
provides tools for electronic engineers, and served as
an executive officer and director from 1990 until 1995.
During the period 1974 through 1990, Mr. Gladstone
founded and served as chief executive officer and
president of three companies providing electronic
engineering and software development tools. Mr.
Gladstone began his career in electrical engineering
and received B.S. and M.S. degrees in Engineering from
the University of California, Los Angeles in 1957 and
1962.
Robert E. Rich (50) Robert E. Rich has served as a director of Qualstar
since January 2000. Mr. Rich has been engaged in the
private practice of law since 1975 and has been a
shareholder of Stradling Yocca Carlson & Rauth, legal
counsel to Qualstar, since 1984. Mr. Rich received a
B.A. degree in Economics from the University of
California, Los Angeles in 1972 and his J.D. degree
from the University of California, Los Angeles in 1975.
Trude C. Taylor (78) Trude C. Taylor served as a director of Qualstar from
October 1989 until December 1995, and rejoined our
board in January 2000. Since 1984, Mr. Taylor has been
a principal of TC Associates, a private investment
firm. Mr. Taylor served as Chairman of the Board, Chief
Executive Officer and a director of Zehntel
Corporation, an automatic electronic test equipment
manufacturer, from 1984 until 1988. Mr. Taylor was a
founder and served as Chief Executive Officer,
President and a director of EM&M Corporation, a
computer components and memory products company, from
1961 until 1984, and served as its Chairman of the
Board from 1984 until 1986. Mr. Taylor served on the
board of directors of Xylan Corporation until it was
acquired by Alcatel S.A. in 1999, and currently serves
on the board of directors of Plantronics, Inc. Mr.
Taylor also serves as a trustee of Harvey Mudd College,
and as an arbitrator for the New York Stock Exchange
and the National Association of Securities Dealers,
Inc. Mr. Taylor received a B.S. degree in Mechanical
Engineering from the University of California, Los
Angeles in 1949, and an M.B.A. degree from Harvard
University in 1951.
Robert T. Webber (59) Robert T. Webber has served as a director of Qualstar
since January 2000. Prior to his retirement in 1999,
Mr. Webber was employed for 32 years by Lockheed-Martin
Skunk Works and its
3
<PAGE>
predecessors, where he served in various positions, most
recently as Chief Engineer and Division Manager for the
Systems Requirements & Analysis Division. Mr. Webber
currently serves on the executive board of the National
Defense Industrial Association's Combat Survivability
Division, a professional trade association. Mr. Webber
received a B.S. degree in Engineering from the University
of California, Los Angeles in 1963 and an M.B.A. degree
from Pepperdine University in 1971.
INFORMATION REGARDING THE BOARD AND ITS COMMITTEES
Board Committees and Meetings
During the fiscal year ended June 30, 2000, our Board of the Directors met
two times. Each incumbent director attended at least 75% of the aggregate of all
meetings of the Board of Directors and the committees of the Board, if any, on
which he served during fiscal 2000, except Richard A. Nelson, who was unable to
attend one Board meeting. There are no family relationships among any of the
directors or executive officers of Qualstar.
Our Board has two committees: the Audit Committee and the Compensation
Committee.
The Audit Committee is comprised of Bruce E. Gladstone, Trude C. Taylor and
Robert T. Webber. The Audit Committee oversees management's fulfillment of its
financial reporting and disclosure responsibilities and its maintenance of an
appropriate internal control system. It also recommends the appointment of our
independent public accountants and oversees the activities of our financial
reporting function. All members of the Audit Committee are non-employee
directors and satisfy Securities and Exchange Commission and National
Association of Securities Dealers, Inc. standards with respect to independence,
financial expertise and experience.
The Audit Committee has a written charter that specifies its
responsibilities and the Audit Committee believes that it fulfills its charter.
The Board of Directors, upon the recommendation of the Audit Committee, approved
the charter in response to the audit committee requirements recently adopted by
the Securities and Exchange Commission and the National Association of
Securities Dealers, Inc.
The Audit Committee, which was appointed in February 2000, held only one
meeting during fiscal 2000. To ensure independence, the Audit Committee also
meets separately with our independent public accountants and members of
management.
The Compensation Committee is comprised of Bruce E. Gladstone, Trude C.
Taylor and Robert T. Webber. The Compensation Committee reviews and recommends
the salaries and bonuses of our executive officers, establishes compensation and
incentive plans for our executive officers, and determines other fringe
benefits. The Compensation Committee, which was appointed in February 2000, did
not meet during fiscal 2000.
We do not have a nominating committee. Instead, the Board, as a whole,
identifies and screens candidates for membership on the Board.
Compensation of Directors
Each of our non-employee directors receives $1,500 per quarter as
compensation for his service on the Board, and is reimbursed for expenses
incurred in connection with attendance at Board meetings. We have in the past
granted non-employee directors options to purchase shares of our common stock
pursuant to our 1985 Stock Option Plan. Directors are eligible to receive
options and rights to purchase
4
<PAGE>
restricted stock under our 1998 Stock Incentive Plan. In January 2000, we
granted to each of our four non-employee directors the right to purchase 54,000
shares of restricted stock at a price of $2.78 per share, which each director
purchased with a full-recourse promissory note. We have the right to repurchase
a director's restricted shares at the original purchase price upon termination
of his service for any reason. Our repurchase right lapses and the director's
shares vest at the rate of 25% per year of service following the date of grant.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of our common stock as of October 23, 2000 for:
. each person (or group of affiliated persons) who we know beneficially
owns more than 5% of our common stock;
. each of our directors and nominees for election to the Board;
. each of the named executive officers; and
. all of our directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting and investment power with
respect to shares. Except as indicated by footnote, the persons named in the
table have sole voting and sole investment control with respect to all shares
beneficially owned, subject to community property laws where applicable. Shares
of common stock subject to options currently exercisable or exercisable within
60 days of October 23, 2000, are deemed outstanding for computing the percentage
of the person holding such options, but are not deemed outstanding for computing
the percentage of any other person. The address for those individuals for which
an address is not otherwise indicated is: c/o Qualstar Corporation, 6709
Independence Avenue, Canoga Park, California 91303.
<TABLE>
<CAPTION>
Shares Beneficially Percent of Shares
Name of Beneficial Owner Owned Outstanding
--------------------------------------------------------------------- --------------------- -------------------
<S> <C> <C>
William J. Gervais................................................... 3,119,850 24.9%
Richard A. Nelson.................................................... 2,247,750 17.9%
Daniel O. Thorlakson................................................. 548,100 4.4%
Robert K. Covey...................................................... 194,400 1.6%
Bruce E. Gladstone(1)................................................ 54,000 0.4%
Robert E. Rich(1).................................................... 131,400 1.0%
Trude C. Taylor(1)................................................... 201,920 1.6%
Robert T. Webber(1).................................................. 108,000 0.9%
All directors and officers as a group (9 persons)(2)................. 6,620,420 52.8%
</TABLE>
_______________________
(1) Includes 54,000 shares that we have the right to repurchase if the
shareholder's service on our board of directors terminates. Our repurchase
right lapses in four equal annual installments commencing January 14, 2001.
(2) Includes an aggregate of 216,000 shares subject to a right of repurchase in
favor of Qualstar which lapses in four equal annual installments commencing
January 14, 2001.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes all compensation earned by our Chief
Executive Officer and the three other most highly compensated executive officers
whose total salary and bonus exceeded $100,000 for services rendered in all
capacities to us during the fiscal year ended June 30, 2000. These individuals
are referred to as our named executive officers in other parts of this proxy
statement. The amounts shown below under "All Other Compensation" represent
matching contributions under our 401(k) plan.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation Awards
---------------------------- ----------------------------------
Name and Principal Position Year Salary ($) Bonus ($) Securities Underlying Options (#) All Other Compensation ($)
--------------------------------- ----- ----------- ---------- ---------------------------------- ---------------------------
<S> <C> <C> <C> <C> <C>
William J. Gervais 2000 $151,200 $40,000 -- --
Chief Executive Officer 1999 138,400 25,000 -- --
and President
Richard A. Nelson 2000 136,080 20,000 -- $1,376
Vice President of Engineering 1999 126,720 15,000 -- 1,354
Daniel O. Thorlakson 2000 172,800 25,000 -- 1,444
Vice President of Operations 1999 155,600 20,000 -- 1,434
Robert K. Covey 2000 155,520 15,000 -- 1,481
Vice President of Marketing 1999 152,540 10,000 -- 1,483
</TABLE>
Option Grants
We did not grant any stock options to our named executive officers during
the fiscal year ended June 30, 2000. On January 14, 2000, we granted options to
four of our employees to purchase a total of 137,700 shares of our common stock
at an exercise price of $2.78 per share, which was the fair market value of our
common stock on the date of grant as determined by our Board of Directors. This
amount includes an option to purchase 97,200 shares granted to our Chief
Financial Officer, Matthew Natalizio, who became an employee of Qualstar on
January 10, 2000. These options were granted under our 1998 Stock Incentive
Plan, have a term of ten years and vest at a rate of 25% per year over four
years following the date of grant.
6
<PAGE>
Options Exercised and Fiscal Year-End Values
The following table sets forth information regarding options exercised by
our named executive officers during the fiscal year ended June 30, 2000. None
of our named executive officers held any options as of June 30, 2000.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options at
Acquired Value Options at June 30, 2000 June 30, 2000
Name on Exercise Realized/(1)/ Exercisable Unexercisable Exercisable Unexercisable
------------------- ---------------- -------------- ------------- --------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
William J. Gervais -- -- -- -- -- --
Richard A. Nelson -- -- -- -- -- --
Daniel O. Thorlakson -- -- -- -- -- --
Robert K. Covey 194,400 $489,600 -- -- -- --
</TABLE>
___________________
(1) The value realized is based on the fair market value of the common stock on
the date of exercise, minus the exercise price.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
Prior to establishing the Compensation Committee of our Board of Directors
in February 2000, our Board of Directors as a whole performed the functions
delegated to the Compensation Committee. No executive officer serves as a
member of the board of directors or compensation committee of any entity that
has one or more executive officers serving on our Board of Directors.
REPORT OF THE COMPENSATION COMMITTEE AND
THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
Introduction
The Compensation Committee of the Board of Directors was appointed in
February 2000 and held its first meeting in July 2000 to review and approve
executive officer bonuses for the fiscal year ended June 30, 2000. Prior to the
appointment of the Compensation Committee, matters related to executive officer
compensation were determined by William J. Gervais, Qualstar's Chief Executive
Officer, and approved by the full Board. In the future, decisions regarding
executive officer compensation will be made by the Compensation Committee, which
is composed of three non-employee directors. The following report is submitted
by the Compensation Committee and the full Board of Directors.
Compensation Philosophy
Qualstar's compensation program is intended to attract, retain, motivate
and reward highly qualified executives who are expected to manage both the
short-term and long-term success of Qualstar. The level of compensation that is
paid to executive officers is based on both the performance of Qualstar and the
individual officer. Qualstar's performance is judged primarily upon the results
and profitability for the immediately preceding fiscal year. Individual
performance is measured based on an evaluation of the executive officer's
particular responsibilities, his performance in relation to specific goals
established in the prior year or years, and his general management skills.
7
<PAGE>
Compensation Program
Qualstar's compensation program for executive officers consists of cash
compensation, both fixed and variable, and, if the situation warrants, equity
based compensation. The principal elements of this program are the following:
Salary. The base salary component of an executive officer's compensation
is intended to reward the executive for normal levels of performance, as opposed
to the bonus component which is intended to compensate for performance exceeding
expected levels. When reviewing base salaries, the Committee will consider the
following factors: (1) individual performance, (2) the performance of Qualstar
and the extent to which the executive contributed to that performance, and (3)
the executive's level of responsibility and prior experience. The Committee
will also review published information regarding the compensation of executives
at companies comparable to Qualstar to ascertain whether or not Qualstar's
compensation rates are both competitive and reasonable. Lastly, the CEO's
evaluation of the performance and his recommendation regarding the compensation
of other executive officers is also considered.
Bonus Compensation. Based on the quality of Qualstar's financial
performance over time and over the immediately preceding year, as well as the
qualitative performance of each individual executive officer, the Committee
determines whether a cash bonus should be awarded to an executive and, if so,
also the amount of the bonus to be awarded. The recommendation of the CEO is
also considered in determining the amount of any bonus.
The Compensation Committee met in July 2000 to determine and award bonuses
to executive officers for their performance during the fiscal year ended June
30, 2000. The bonus awarded to Mr. Gervais reflects the strong financial
performance of Qualstar during fiscal 2000 and Mr. Gervais' substantial
contribution to the successful completion of Qualstar's initial public offering.
Stock Options. In order to align the financial interests of executive
officers with those of the shareholders, the Board of Directors grants stock
options to its executives on a periodic basis. Options are granted with an
exercise price equal to the market value of Qualstar's shares on the date of
grant. Since the financial reward provided by stock options will be dependent
on appreciation in the market value of Qualstar's shares, stock options
effectively reward executives only for performance that results in improved
market performance of our common stock, which directly benefits all
shareholders. Generally, the number of shares included in each stock option
grant is determined based on an evaluation of the executive's importance to the
future performance of Qualstar, as well as his past performance. Options are
granted on terms that provide that they will become exercisable (or "vest") in
annual or other periodic installments (such as, for example, 25% per year over
four years), so that if an executive's employment is terminated, whether by
Qualstar or by the executive, prior to the full vesting of the options, the
unvested portion terminates automatically, thereby creating an incentive for the
executive to remain in Qualstar's employ for at least the vesting period.
Members of the Board of Directors Members of the Compensation Committee
William J. Gervais Bruce E. Gladstone
Richard A. Nelson Trude C. Taylor
Bruce E. Gladstone Robert T. Webber
Robert E. Rich
Trude C. Taylor
Robert T. Webber
8
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January 2000 each of our four non-employee directors purchased 54,000
shares of restricted stock pursuant to our 1998 Stock Incentive Plan at a price
of $2.78 per share, which was the fair market value of our stock on the date of
grant as determined by our board of directors. Each director paid for his shares
with a full-recourse promissory note in the amount of $150,000, secured by a
pledge of the purchased shares. Payments of principal on the notes are due in
four equal annual installments commencing on the second anniversary of the date
of the note. Interest on the notes accrues at the rate of 6.21%, and is payable
annually.
STOCK PRICE PERFORMANCE GRAPH
Qualstar first offered shares of its common stock to the public on June 23,
2000 at a price of $7.00 per share. Our stock traded for only six days between
the date of the initial public offering and June 30, 2000, the end of our fiscal
year. We do not believe that a graph comparing the performance of our stock to
the performance of a broad-based market index or to a peer group index for a
six-day period would be meaningful. Accordingly, we have not included a stock
price performance graph in this proxy statement.
SHAREHOLDER PROPOSALS
Proposals to be Included in Our Proxy Statement
A shareholder who wishes to have a proposal considered for inclusion in our
proxy statement for action at the 2001 Annual Meeting of Shareholders must
comply with the requirements of Rule 14a-8 under the Securities Exchange Act of
1934. The proposal must be in writing and be received by the Secretary of
Qualstar at our principal place of business no later than June 29, 2001.
Advance Notice Procedures
If a shareholder desires to have a proposal acted upon at the 2001 Annual
Meeting of Shareholders that is not included in our proxy statement in
accordance with SEC Rule 14a-8, or if a shareholder desires to nominate someone
for election to our Board of Directors, the shareholder must follow the
procedures outlined in our bylaws. Our bylaws provide that in order for a
shareholder proposal to be considered at an annual meeting of shareholders,
written notice of the proposal must be received by the Secretary of Qualstar
generally not less than 60 days nor more than 90 days prior to the anniversary
of the preceding year's annual meeting of shareholders. The notice must contain
information required by our bylaws, including a description of the proposal and
any material interest of the shareholder relating to such proposal.
In order to nominate someone for election to our Board of Directors at an
annual meeting of shareholders, written notice of the proposed nomination must
be received by the Secretary of Qualstar not less than 60 days nor more than 90
days prior to the anniversary of the preceding year's annual meeting of
shareholders. The notice must contain information required by our bylaws
regarding the shareholder and the nominee, as well as information required to be
included in a proxy statement by SEC rules and regulations.
Accordingly, in order for a shareholder proposal or nomination to be
considered at the 2001 Annual Meeting of Shareholders, a written notice of the
proposal or the nomination, which includes the information required by our
bylaws, must be received by the Secretary of Qualstar between September 13, 2001
and October 13, 2001.
9
<PAGE>
A copy of the full text of the bylaw provisions containing the advance
notice procedures described above may be obtained upon written request to the
Secretary of Qualstar at our principal place of business.
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP, independent public accountants, audited Qualstar's
financial statements for the fiscal year ended June 30, 2000. Representatives
of Ernst & Young LLP will be present at the Annual Meeting to respond to
appropriate questions and will be given an opportunity to make a statement if
they so desire.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Qualstar's executive officers and directors, and persons who beneficially own
more than ten percent of Qualstar's common stock, to file initial reports of
ownership and reports of changes in ownership with the SEC and the National
Association of Securities Dealers, Inc. Executive officers, directors and
persons who beneficially own more than ten percent of Qualstar's common stock
are required by SEC regulations to furnish Qualstar with copies of all Section
16(a) forms they file.
Based solely upon our review of the copies of reporting forms furnished to
Qualstar, and written representations that no other reports were required, we
believe that all filing requirements under Section 16(a) of the Securities
Exchange Act of 1934 applicable to directors, officers and any persons holding
more than ten percent of Qualstar's common stock with respect to the fiscal year
ended June 30, 2000, were satisfied on a timely basis.
October 27, 2000 By Order of the Board of Directors
/s/ Richard A. Nelson
Richard A. Nelson
Secretary
10
<PAGE>
PROXY
QUALSTAR CORPORATION
6709 Independence Avenue
Canoga Park, California 91303
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF QUALSTAR
CORPORATION.
The undersigned hereby appoints William J. Gervais and Richard A. Nelson, and
each of them individually, the attorney, agent and proxy of the undersigned,
with full power of substitution, to vote all the shares of QUALSTAR CORPORATION
which the undersigned is entitled to vote at the 2000 Annual Meeting of
Shareholders to be held at the Marriott Warner Center Hotel located at 21850
Oxnard Street, Woodland Hills, California, 91367 on December 12, 2000, at 9:00
a.m. Pacific Time, and at any and all adjournments or postponements thereof, as
follows:
1. Election of Directors:
[_] FOR [_] WITHHOLD AUTHORITY
all nominees listed below (except to vote for all nominees listed
as indicated to the contrary below) below
William J. Gervais, Richard A. Nelson, Bruce E. Gladstone, Robert E. Rich,
Trude C. Taylor, and Robert T. Webber
(INSTRUCTIONS: To withhold authority to vote for any nominee, print that
nominee's name in the space provided below.)
This Proxy when properly executed will be voted in the manner directed above.
If no direction is given, this Proxy will be voted FOR the election of the
nominees listed above.
-----------------------------------------------------------------------------
IMPORTANT--PLEASE SIGN AND DATE ON OTHER SIDE AND RETURN PROMPTLY
<PAGE>
This Proxy confers discretionary authority to vote on any other matters as may
properly come before the meeting. The undersigned acknowledges receipt of the
Notice of Annual Meeting of Shareholders and Proxy Statement dated October 27,
2000.
Please date this Proxy and sign it exactly as your name or names appear hereon.
When shares are held by two or more persons, both should sign. When signing as
an attorney, executor, administrator, trustee or guardian, please give full
title as such. If shares are held by a corporation, please sign in full
corporate name by the President or other authorized officer. If shares are held
by a partnership, please sign in partnership name by an authorized person.
Dated: ____ , 2000
_________________________
Signature
_________________________
Signature if held
jointly
Please mark, sign, date
and return this Proxy
promptly using the
enclosed envelope. If
your address is
incorrectly shown,
please print changes.
