SEQUENT COMPUTER SYSTEMS, INC.
Notice of Annual Meeting of Shareholders to be Held
May 20, 1998
To the Shareholders of Sequent Computer Systems, Inc.:
The Annual Meeting of Shareholders of Sequent Computer Systems, Inc., an
Oregon corporation, will be held on Wednesday, May 20, 1998 at 9:00 am,
Pacific Time, at the Company's facilities at 15450 S.W. Koll Parkway,
Beaverton, Oregon, for the following purposes:
1. Electing six directors;
2. Voting on approval of the Company's Employee Stock Purchase Plan,
as amended;
3. Voting on approval of the selection of Price Waterhouse as the
Company's independent auditors; and
4. Transacting such other business as may properly come before the
meeting.
You are respectfully requested to date and sign the enclosed proxy and
return it in the postage prepaid envelope enclosed for that purpose. You may
attend the meeting in person even though you have sent in your proxy, since
retention of the proxy is not necessary for admission to or identification at
the meeting.
By Order of the Board of Directors
Karl C. Powell, Jr.,
Chairman of the Board
and Chief Executive Officer
March 18, 1998
Beaverton, Oregon
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THIS MEETING IN
PERSON, PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE SO THAT YOUR STOCK WILL BE VOTED. THE ENVELOPE REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
SEQUENT COMPUTER SYSTEMS, INC.
PROXY STATEMENT
The mailing address of the principal executive offices of Sequent Computer
Systems, Inc., an Oregon corporation (the "Company" or "Sequent"), is 15450
S.W. Koll Parkway, Beaverton, Oregon 97006-6063. The approximate date this
proxy statement and the accompanying proxy form are first being sent to
shareholders is April 10, 1998.
Upon written request to the Secretary, any person whose proxy is solicited
by this proxy statement will be provided without charge a copy of the
Company's Annual Report on Form 10-K.
SOLICITATION AND REVOCABILITY OF PROXY
The enclosed proxy is solicited on behalf of the Board of Directors of the
Company for use at the annual meeting of shareholders to be held on Wednesday,
May 20, 1998. The Company will bear the cost of preparing and mailing the
proxy, proxy statement and any other material furnished to the shareholders by
the Company in connection with the annual meeting. Proxies will be solicited
by use of the mails. Officers and employees of the Company may also solicit
proxies by telephone or personal contact. Copies of solicitation materials
will be furnished to fiduciaries, custodians and brokerage houses for
forwarding to beneficial owners of the stock held in their names. The Company
has retained ChaseMellon Shareholder Services to assist in the solicitation of
proxies from brokers and other nominees at an estimated cost of $5,500 plus
certain expenses.
Any person giving a proxy in the form accompanying this proxy statement
has the power to revoke it at any time before its exercise. The proxy may be
revoked by filing with the Company, attention David B. Cunningham, Assistant
Secretary, an instrument of revocation or a duly executed proxy bearing a
later date. The proxy may also be revoked by affirmatively electing to vote in
person while in attendance at the meeting. However, a shareholder who attends
the meeting need not revoke his proxy and vote in person unless he wishes to
do so. All valid, unrevoked proxies will be voted at the annual meeting.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
The Common Stock is the only outstanding voting security of the Company.
The record date for determining holders of Common Stock entitled to vote at
the annual meeting is March 18, 1998. On that date there were 43,493,962
shares of Common Stock outstanding, entitled to one vote per share. The Common
Stock does not have cumulative voting rights.
The following table shows Common Stock ownership on March 1, 1998 by (i)
each person who, to the knowledge of the Company, beneficially owns more than
5% of the Common Stock, (ii) the Chief Executive Officer of the Company, (iii)
the other executive officers of the Company named in the executive
compensation table set forth below, and (iv) all directors and executive
officers of the Company as of March 1, 1998 as a group:
Name and Address Shares(1) Percent
The Capital Group Companies, Inc. 3,740,000(2) 8.7%
333 South Hope St.
Los Angeles, CA 90071
T. Rowe Price Associates, Inc. 3,480,000(3) 8.1%
100 E. Pratt St.
Baltimore, MD 21202
Karl C. Powell, Jr. 789,049(4) 1.8%
John McAdam 284,804(5) *
Steve S. Chen 47,750(6) *
Robert S. Gregg 220,906(7) *
7 directors and executive officers
as a group 1,622,339(8) 3.6%
- ------------------------
*Less than 1%.
(1) Shares are held directly with sole voting and dispositive power except as
otherwise indicated. Shares issuable pursuant to outstanding stock options
that are currently exercisable or become exercisable within 60 days of the
date of this table are considered outstanding for the purpose of
calculating the percentage of Common Stock owned by such person, but not
for the purpose of calculating the percentage of Common Stock owned by any
other person.
(2) Based solely on information provided as of December 31, 1997 in a Schedule
13G filed by the shareholder. The shareholder reports sole dispositive
power with respect to 3,740,000 shares.
(3) Based solely on information provided as of December 31, 1997 in a Schedule
13G filed by the shareholder. These securities are owned by various
individuals and institutional investors which T. Rowe Price Associates
Inc. ("Price Associates") serves as investment advisor with power to
direct investments and/or sole power to vote the securities. For
purposes of reporting requirements of the Securities Exchange Act of 1934,
Price Associates is deemed to be a beneficial owner of such securities,
however Price Associates expressly disclaims that it is in fact the
beneficial owner of such securities.
(4) Includes 112,000 shares held in trust for the benefit of Mr. Powell's
family, as to which Mr. Powell has shared voting and dispositive power,
and 632,237 shares of Common Stock subject to options that are currently
exercisable or become exercisable within 60 days. Mr. Powell also holds
100,000 shares of Common Stock of DP Applications, Inc., a subsidiary of
the Company, representing approximately 2% of the equity of DP
Applications, Inc. on a fully diluted basis.
(5) Includes 272,335 shares of Common Stock subject to options that are
currently exercisable or become exercisable within 60 days. Mr. McAdam
also holds 100,000 shares of Common Stock of DP Applications, Inc., a
subsidiary of the Company, representing approximately 2% of the equity of
DP Applications, Inc. on a fully diluted basis.
(6) Includes 47,750 shares of Common Stock subject to options that are
currently exercisable or become exercisable within 60 days.
(7) Includes 202,667 shares of Common Stock subject to options that are
currently exercisable or become exercisable within 60 days. Mr. Gregg also
holds 100,000 shares of Common Stock of DP Applications, Inc., a
subsidiary of the Company, representing approximately 2% of the equity of
DP Applications, Inc. on a fully diluted basis.
(8) Includes 1,348,819 shares of Common Stock subject to options that are
currently exercisable or become exercisable within 60 days.
<TABLE>
ELECTION OF DIRECTORS
Immediately prior to the annual meeting, the Board of Directors of the
Company will consist of six directors who are elected at the annual meeting to
serve until the next annual meeting of shareholders and until their successors
are elected. The Company's nominees for director are listed below, together
with certain information about each of them. Mr. Gill is not currently a
director.
<CAPTION>
Shares of
Common Stock
Position with the held on
Company and Principal March 1, Approximate
Name Occupation Age 1998(1) percent
<S> <S> <S> <S> <S>
Karl C. Powell, Jr. Chairman of the Board, 54 789,049(2) 1.8%
Chief Executive Officer and
Director of the Company
John McAdam President, Chief Operating 47 284,804(3) *
Officer and Director of
the Company
Steve S. Chen Executive Vice President, 54 47,750(4) *
Chief Technology Officer and
Director of the Company
Frank C. Gill Nominee for Director 54 0 *
of the Company;
Executive Vice President
of Intel Corporation
Michael S. Scott Morton(5)(7) Director of the Company; 60 43,900(8) *
Professor of Management at
the Massachusetts Institute
of Technology
Robert W. Wilmot(5)(6) Director of the Company; 53 235,930(9) *
Chairman of the Board of
Wilmot Capital
- -----------------
*Less than 1%.
</TABLE>
(1) Shares held directly with sole voting and sole dispositive power
unless otherwise indicated.
(2) Includes 112,000 shares held in trust for the benefit of Mr. Powell's
family, as to which Mr. Powell has shared voting and dispositive power,
and 632,237 shares of Common Stock subject to options that are currently
exercisable or become exercisable within 60 days. Mr. Powell also holds
100,000 shares of Common Stock of DP Applications, Inc., a subsidiary of
the Company, representing approximately 2% of the equity of DP
Applications, Inc. on a fully diluted basis.
(3) Includes 272,335 shares of Common Stock subject to options that are
currently exercisable or become exercisable within 60 days. Mr. McAdam
also holds 100,000 shares of Common Stock of DP Applications, Inc., a
subsidiary of the Company, representing approximately 2% of the equity of
DP Applications, Inc. on a fully diluted basis.
(4) Includes 47,750 shares of Common Stock subject to options that are
currently exercisable or become exercisable within 60 days.
(5) Member of Compensation Committee.
(6) Member of Audit Committee.
(7) Member of Nominating Committee.
(8) Includes 42,900 shares of Common Stock subject to options that are
currently exercisable or become exercisable within 60 days.
(9) Includes 150,930 shares of Common Stock subject to options that are
currently exercisable or become exercisable within 60 days. Dr. Wilmot
also holds 180,000 shares of Restricted Common Stock, 695,537 shares of
Preferred Stock and warrants to purchase 193,548 shares of Preferred Stock
of DP Applications Inc., a subsidiary of the Company, representing
approximately 19% of the equity of DP Applications, Inc. on a fully
diluted basis.
Mr. Powell, a co-founder of the Company, is Chairman of the Board and
Chief Executive Officer and has been a director since 1983. Mr. Powell has
served as the Company's sole Chief Executive Officer or shared the Office of
the Chief Executive with the other co-founder of the Company since the
Company's inception. From 1974 to 1983, Mr. Powell was employed by Intel
Corporation, where his most recent position was General Manager for
Microprocessor Operations. Mr. Powell served on the National Board of
Directors of the American Electronics Association from 1985 to 1986. He holds
a B.S. degree in mechanical engineering from the U.S. Merchant Marine Academy.
Mr. McAdam, President and Chief Operating Officer, became a director of
the Company in November 1995. Mr. McAdam joined the Company in August 1989 as
U.K. Sales Director. He became U.K. General Manager in January 1991, Vice
President and General Manager of European Operations in October 1992, and
Senior Vice President of European and Asian Operations in January 1994. He was
promoted to President and Chief Operating Officer in February 1995. Prior to
joining the Company, Mr. McAdam was employed for 10 years by Data General U.K.
Ltd., serving most recently as Regional Manager, Public Sector, Finance and
Government Market. Mr. McAdam holds a degree in Computer Sciences from Glasgow
University.
Mr. Chen joined the Company in July 1996 as Executive Vice President,
Chief Technology Officer and a Director. Prior to joining Sequent, Mr. Chen
served as President and Chief Executive Officer of Chen Systems Corporation,
co-founded by Mr. Chen in 1993. From 1979 to 1987, Mr. Chen was employed by
Cray Research Inc., serving most recently as a Senior Vice President. In
1987, Mr. Chen co-founded Supercomputer Systems, Inc., serving as President
and Chief Executive Officer, responsible for funding, formation and management
of an international multi-corporation supercomputer development partnership.
He is also a director of Storage Computer Corporation.
Mr. Gill is Executive Vice President of Intel Corporation and has been
employed there since 1975. Since 1997 he has been running the Small Business
and Networking Group. From 1990 to 1997, he lead the Systems Group which
included the OEM motherboard and systems operations and networking products.
From 1987 to 1990 Mr. Gill was head of Intel's world wide sales operations and
was elected senior vice president in 1989. Prior to 1987 he held a variety of
sales and marketing roles. Mr. Gill holds a BS degree in electrical
engineering from the University of California at Davis. He is a director of
Telcom Semiconductor.
Dr. Scott Morton has been a director of the Company since 1991. Dr. Scott
Morton is the Jay W. Forrester Professor of Management at the Sloan School of
Management and was Chairman of the Faculty for the Senior Executive Program at
M.I.T. He has also served as Program Director of the Management in the 1990s
Research Program and as Associate Dean of the Sloan School of Management at
M.I.T. Dr. Scott Morton is a Trustee of the State Street Research Funds , the
Metropolitan Life Series Funds and a director of the Merrill Corporation.
Dr. Wilmot has been a director of the Company since 1992. Dr. Wilmot is
Chairman of Wilmot Capital, a private venture capital firm with a high tech
portfolio, and has been a consultant to the Company since January 1987. He has
also been an advisor to the Board of Directors since November 1988. Dr. Wilmot
was a managing director of Texas Instruments, Ltd. from 1978 to 1981. From
1981 to 1985 he was Chief Executive and then Chairman of I.C.L., Britain's
major computer company. Previous founding investments include The OASIS
Group (now a Sybase subsidiary), Poqet Compute (now a Fujitsu subsidiary),
Integrity Arts (now a Sun Microsystems subsidiary) and Vxtreme (now a
Microsoft subsidiary).
The Board of Directors met eight times during the last fiscal year. Each
director attended at least 75 percent of the aggregate of the meetings of the
Board of Directors and the committees of which he was a member. The only
standing committees of the Board of Directors are the Audit Committee, the
Compensation Committee and the Nominating Committee. The Audit Committee,
which met three times in 1997, recommends selection of independent accountants
to the Board of Directors and reviews the scope and results of audits. The
Compensation Committee, which met eight times during 1997, reviews and
establishes compensation for executive officers and considers incentive
compensation alternatives for the Company's employees. The Nominating
Committee, which met two times during 1997, seeks and makes recommendations
concerning qualified candidates to serve on the Company's Board of Directors.
Shareholders who wish to submit names to the Nominating Committee for
consideration should do so in writing addressed to the Nominating Committee,
c/o David B. Cunningham, Assistant Secretary, c/o Sequent Computer Systems,
Inc., 15450 SW Koll Parkway, Beaverton, Oregon 97006.
Director Compensation
Directors who are not employees of the Company are paid an annual retainer
of $15,000 plus an attendance fee of $1,000 per day for each board meeting and
related travel expenses. Members of the Audit, Compensation and Nominating
Committees receive $1,000 per meeting, whether such meeting is held in person
or via teleconference, provided such meeting is held independent of and not
during a regular session of the Board of Directors. Under the Company's
stock plans, each person who becomes a non-employee director of the Company
automatically receives an initial option to purchase 10,000 shares of the
Company's Common Stock. Each non-employee director automatically receives
additional annual grants of options to purchase 5,000 shares, provided the
non-employee director continues to serve in that capacity. Members of the
Compensation, Audit and Nominating Committees receive annual option grants for
2,000 shares for participation on each such committee. Each option granted to
a non-employee director has an exercise price equal to 85% of the fair market
value of the Company's Common Stock on the date of grant and has a term of ten
years. Options become exercisable to the extent of 24% of the shares one year
after the date of grant and become exercisable to the extent of 2% each month
thereafter. Dr. Wilmot performs consulting services relating to the Company's
European operations (for which he is paid $1,000 per day plus travel
expenses). In 1997 he was paid $26,800 under this consulting arrangement and
received options to purchase a total of 5,333 shares of Common Stock (with
exercise prices equal to 85% of fair market value on the date of grant). Dr.
Wilmot also performs consulting services for DP Applications, Inc., a
subsidiary of the Company. In connection with these consulting services he
purchased 180,000 shares of Restricted Common Stock of DP Applications at $.15
per share, which was determined by the Board of Directors of DP Applications
to be equal to the fair market value of the stock.
Voting
The proxies will be voted with respect to the election of the nominees in
accordance with the instructions specified in the proxy form. If no
instructions are given, proxies will be voted for the election of the
nominees. If for some unforeseen reason any of the nominees would not be
available as a candidate for director, the number of directors constituting
the Board of Directors may be reduced prior to the meeting or the proxies may
be voted for such other candidate or candidates as may be nominated by the
Board of Directors, in accordance with the authority conferred in the proxy.
The Board of Directors recommends election of the nominees listed above.
Directors are elected by a plurality of the votes cast by the shares entitled
to vote if a quorum is present at the annual meeting. Abstentions are counted
for purposes of determining whether a quorum exists at the annual meeting but
are not counted and have no effect on the determination of whether a plurality
exists with respect to a given nominee.
<TABLE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth compensation paid to the Chief Executive
Officer of the Company and the other three executive officers of the Company
for services in all capacities to the Company and its subsidiaries during each
of the last three fiscal years.
<CAPTION>
Long-Term Compensation
Annual Compensation (1) Awards
Name and Restricted Securities
Principal Stock Underlying All Other
Position Year Salary Bonus Other Awards($) Options(#)(2) Compensation(3)
<S> <C> <C> <C> <C> <C> <C> <C>
Karl C. Powell, Jr. 1997 $577,512 $575,221 _ _ 375,000 $11,550
Chairman of the 1996 $550,008 $210,309 _ _(4) 600,000(5) $7,603
Board and Chief 1995 $517,342 $112,868 _ _ 562,500 $9,587
Executive Officer
John McAdam 1997 $428,017 $385,937 _ _ 300,000 $104,062(6)
President , Chief 1996 $400,008 $131,103 _ _(4) 275,000(5) $69,444(6)
Operating Officer 1995 $364,582 $63,754 _ $108,750(7) 155,000 $613,570(6)
and Director
Steve S. Chen 1997 $309,000 $216,766 _ _ 48,000 $29,941(8)
Executive Vice 1996 $150,000 $37,691 _ _ 100,000 $33,425(8)
President, Chief 1995 _ _ _ _ _ _
Technology Officer
and Director
Robert S. Gregg 1997 $272,520 $204,309 _ _ 48,000 $9,537
Sr. Vice President of 1996 $250,238 $68,346 _ _(4) 174,500(5) $3,185
Finance & Legal and 1995 $233,758 $34,496 _ _ 89,500 $4,980
Chief Financial Officer
</TABLE>
(1) Includes compensation deferred at the election of the executive under
the Company's 401(k) Plan. Under the Company's 401(k) Plan, officers and
other employees of the Company may elect to defer up to 15% of their
compensation, subject to limitations under the Internal Revenue Code.
Amounts deferred are deposited by the Company in a trust account for
distribution to employees upon retirement, attainment of age 59 to 62,
permanent disability, death, termination of employment or the occurrence of
conditions constituting extraordinary hardship.
(2) Represents shares of Common Stock issuable upon exercise of
nonstatutory stock options granted under the Company's 1989 Stock Incentive
Plan, the 1995 Stock Incentive Plan and/or the 1997 Stock Option Plan.
(3) Represents Company contributions under the Company's deferred
compensation plan, retirement plan for a foreign subsidiary and matching
contributions under the Company's 401(k) Plan, except as otherwise
indicated.
(4) During 1996 Messrs. Powell, McAdam and Gregg each purchased 100,000
shares of restricted Common Stock of DP Applications, Inc., a subsidiary of
the Company ("DP") , at a price of $.15 per share. These shares vest over
approximately four years based on continued employment of the executive
with Sequent. There is no public market for the stock of DP and the market
value of these shares at the end of fiscal 1997 was not readily
ascertainable.
(5) Represents options granted in 1996 in replacement of options granted
during 1995 at higher exercise prices. The number of options granted in
1996 (excluding options granted to replace cancelled options) was 37,500
shares for Mr. Powell, 120,000 shares for Mr. McAdam and 85,000 shares for
Mr. Gregg.
(6) In connection with Mr. McAdam's appointment as President and Chief
Operating Officer, the Company made special payments on his behalf related
to the relocation of Mr. McAdam and his family from England to the United
States. The amounts include relocation expenses, the down payment on his
new home, a relocation bonus, travel costs for his family, interest, tax
and insurance payments for his new home in the US, overseas expatriate
reimbursement for property management of his home in the UK, pension
payments and reimbursements of taxes to cover the withholding due on the
above mentioned payments. These amounts totaled $613,570 in 1995,
$69,444 in 1996 and $104,062 in 1997.
(7) Represents the market price of the Common Stock on the grant date
multiplied by the number of shares granted. On December 31, 1997 5,000
shares of Common Stock were restricted. These shares become vested to the
extent of 2,500 shares on each of February 7, 1998 and February 7, 1999
subject to continued employment and, once vested, will no longer be subject
to any restrictions.
(8) In connection with Mr. Chen's appointment as Executive Vice President
and Chief Technical Officer, the Company agreed to pay for expenses related
to the relocation of Mr. Chen and his family. The total amount paid for
relocation expenses was $33,425 in 1996 and $26,741 in 1997.
<TABLE>
Stock Option Grants in Last Fiscal Year
The following table provides information regarding stock options granted
in 1997 to the named executive officers.
<CAPTION>
Individual Grants
Percent of
Total
Number of Options Grant
Shares Granted to Date Fair
Underlying Employees Market Exercise Grant Date
Options in Fiscal Value Price Expiration Present Value
Name Granted(1) Year per Share per Share Date $ (2)
<S> <C> <C> <C> <C> <C> <C>
Karl C. Powell, Jr. 125,000(3) 3.5% $17.44 $17.44 1/02/07 $1,021,888
250,000(4) 7.0% $21.38 $21.38 12/16/07 $2,129,825
John McAdam 100,000(3) 2.8% $17.44 $17.44 1/02/07 $817,510
200,000(4) 5.6% $21.38 $21.38 12/16/07 $1,703,860
Steve S. Chen 23,000(3) * $17.44 $17.44 1/02/07 $188,027
25,000(4) * $21.38 $21.38 12/16/07 $212,983
Robert S. Gregg 23,000(3) * $17.44 $17.44 1/02/07 $188,027
25,000(4) * $21.38 $21.38 12/16/07 $212,983
- ----------------
* Less than 1%.
</TABLE>
(1) Under the terms of the Company's stock incentive plans, each of the
options is subject to accelerated vesting in the event of a future change
in control of the Company or the occurrence of certain events indicating an
imminent change in control of the Company. Upon such acceleration, the
optionee has the right to cause the Company to repurchase the option for a
cash amount calculated in accordance with a formula set forth in the plan.
Each of the options is subject to early termination in the event of
termination of employment. Each option terminates 12 months after
termination following death or disability and 30 days after termination for
any other reason.
(2) Although the Company believes that it is not possible to place a value on
an option, in accordance with the rules of the Securities and Exchange
Commission, the Company has used a Black-Scholes model of option valuation
to estimate grant date present value. The actual value realized, if any,
may vary significantly from the values estimated by this model. Any
future values realized will ultimately depend upon the excess of the stock
price over the exercise price on the date the option is exercised. The
assumptions used to estimate the grant date present value of this option
were volatility (56%), average risk-free rate of return (5.97%), dividend
yield (0) and time of exercise (3 years).
(3) This option becomes exercisable in equal installments of 25% in 1998,
1999, 2000 and 2001, subject to continued employment.
(4) This option becomes exercisable in equal installments of 50% in 1998 and
1999, subject to continued employment.
<TABLE>
Stock Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
The following table indicates (i) stock options exercised by the named
executive officers during 1997, including the value realized on the date of
exercise, (ii) the number of shares subject to exercisable (vested) and
unexercisable (unvested) stock options as of January 3, 1998, and (iii) the
value of "in-the-money" options, which represents the positive spread between
the exercise price of existing stock options and the year-end price of the
Common Stock.
<CAPTION>
Number of Value of
Shares Subject Unexercised
to Unexercised In-the-Money
Number of Options Options
Shares at Fiscal Year End at Fiscal Year End
Acquired Value (Exercisable/ (Exercisable/
Name on Exercise Realized(1) Unexercisable)(2) (Unexercisable)
<S> <C> <C> <C> <C>
Karl C. Powell, Jr. 62,953 $688,548 461,403(exercisable) $4,509,700(exercisable)
1,005,776(unexercisable) $6,611,097(unexercisable)
John McAdam 0 _ 215,668(exercisable) $2,024,231(exercisable)
428,332(unexercisable) $1,805,541(unexercisable)
Steve S. Chen 0 _ 39,750(exercisable) $451,696(exercisable)
108,250(unexercisable) $922,179(unexercisable)
Robert S. Gregg 0 _ 172,834(exercisable) $1,683,480(exercisable)
113,166(unexercisable) $691,764(unexercisable)
</TABLE>
(1) Aggregate market value of the shares covered by the option, less the
aggregate price paid by the executive.
(2) Calculated based on the stock price on January 2, 1998.
Change of Control Agreements
The Board of Directors has approved change of control agreements between
the Company and the executive officers. If an executive officer is
involuntarily terminated within 18 months after a change of control, the
executive officer would receive a severance payment equal to 12 or 24 months
of base salary, a bonus based on "on-target earnings" and continued health
insurance for 12 months. The severance amount would be 24 months for Messrs.
Powell, McAdam and Gregg and 12 months for Mr. Chen. In addition, if Mr.
Powell leaves the Company voluntarily within 12 months following a change of
control, he would receive a severance payment equal to 12 months of his base
salary plus a bonus based on "on-target earnings" and Mr. Powell would receive
an additional amount to reimburse him for any excise taxes incurred in
connection with any change of control severance payments.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
The Compensation Committee of the Board of Directors (the "Committee") is
composed of three outside directors and, pursuant to authority delegated by
the Board, determines the compensation to be paid to the Chief Executive
Officer and each of the other executive officers of the Company. The Committee
also is responsible for developing and making recommendations to the Board
with respect to the Company's executive compensation policies.
The Company's objectives for executive compensation are to (i) attract and
retain key executives important to the long term success of the Company; (ii)
reward executives for performance and enhancement of shareholder value; and
(iii) align the interests of the executive officer with the success of the
Company by basing a portion of the compensation upon corporate performance.
Executive Officer Compensation Program. The Company's executive officer
compensation program is comprised of base salary, quarterly and annual cash
incentive compensation, and long term incentive compensation in the form of
stock options.
Base salary levels for the Company's executive officers are set relative
to companies of similar size in the electronics industry and other comparable
companies. There are 54 companies in the comparative group, 6 of which are
included in the S&P Computer Systems Index referred to in the table on page 12
of this proxy statement. The companies included in the comparative group sell
electronic hardware and software and are believed to be companies that the
Company competes with in attracting and retaining executives. Of the 54
companies included in the comparative group, 31 companies have revenues under
$500 million and 23 companies have revenues over $500 million. Base salaries
for executive officers of the Company are generally in the 50 to 75 percentile
of the range of salaries of the comparable companies in the surveys considered
by the Committee. In determining salaries, the Company also takes into account
individual experience, job responsibility and individual performance. The
Committee does not assign a specific weight to each of these factors in
establishing base salaries.
The Company's Management Incentive Plan is an annual incentive program for
executive officers and key managers based on quarterly and annual performance
of the Company and individual contributions. The purpose of the plan is to
provide a direct financial incentive in the form of quarterly and annual cash
bonuses to executives to achieve predetermined levels of Company performance.
Company performance measures and participant target bonus amounts are set at
the beginning of each fiscal year. The performance measures for 1997 and
relative importance in calculating the bonus amount were: revenues (50%),
economic value added (25%) and achieving individual performance goals (25%).
The bonus amount based on Company performance is multiplied by a revenue
multiplier. Target bonuses for each executive officer were set by the
Committee in relation to base salary and level of responsibility within the
Company and are generally in the 50 to 75 percentile of the range of cash
bonuses of the comparable companies in the survey considered by the Committee.
The Company's performance in 1997 resulted in bonus amounts equal to 127% of
the target bonus amounts, prior the application of the factor relative to
individual performance.
The Company's stock option program is intended as a long term incentive
plan for executives, managers and other employees broadly within the Company.
The objectives of the program are to align employee and shareholder long term
interests by creating a strong and direct link between compensation and
shareholder value. The Company's stock incentive plans authorize the Committee
to award stock options to executive officers and other employees of the
Company. Stock options for new employees (including new officers) are granted
at an option price equal to 85 percent of fair market value of the Company's
Common Stock on the date of grant. Options are granted to new officers at a
discount from market as an additional incentive for new officers to join the
Company. In most cases new officers will forfeit significant stock options or
other benefits from a prior employer. Options granted to existing officers and
employees are granted at fair market value of the Common Stock on the date of
grant. Initial stock options become exercisable to the extent of 24 percent of
the shares one year after the date of grant and to the extent of 2 percent of
the shares each month thereafter. Additional grants to existing officers and
employees are generally made annually. Stock options have 10-year terms and
generally terminate in the event of termination of employment. The amount of
stock option grants for an individual is at the discretion of the Committee
and depends upon the level of responsibility and position in the Company.
Section 162(m) of the Internal Revenue Code of 1986, as adopted in 1993,
limits to $1,000,000 per person the amount that the Company may deduct for
compensation paid to any of its most highly compensated officers in any year
after 1993. The levels of salary and bonus generally paid by the Company do
not exceed this limit. Under IRS regulations, the $1,000,000 cap on
deductibility will not apply to compensation received through the exercise of
a nonqualified stock option that meets certain requirements. This option
exercise compensation is equal to the excess of the market price at the time
of exercise over the option price and, unless limited by Section 162(m), is
generally deductible by the Company. It is the Company's current policy
generally to grant options that meet the requirements of the regulations.
Chief Executive Officer Compensation. The Committee determined the Chief
Executive Officer's compensation for 1997 based upon a number of factors and
criteria. The Chief Executive Officer's base salary was determined based upon
a review of the salaries of chief executive officers for similar companies of
comparable size and complexity and upon a review by the Committee of the Chief
Executive Officer's performance and is not based on the Company's performance.
The Chief Executive Officer's 1997 salary and target bonus amounts were set at
approximately the median for salaries and bonuses for chief executive officers
of the companies in the comparative group. The Chief Executive Officer
received a bonus for 1997 based on Company performance as measured under the
Company's 1997 Management Incentive Plan described above and his individual
performance.
During 1997 the Chief Executive Officer was granted options to purchase
375,000 shares of Common Stock as a part of the Company's annual option grant
programs. The number of shares granted in 1997 was based on a subjective
determination of the number of shares needed in 1997 as part of this long-term
program.
Robert C. Mathis
Michael S. Scott Morton
Robert W. Wilmot
Comparison of Five Year Cumulative Total Return
The following graph provides a comparison of the five year cumulative
total shareholder return on (i) the Company's Common Stock, (ii) the S&P 500
Index and (iii) the S&P Computer Systems Index, in each case assuming the
reinvestment of any dividends.
1992 1993 1994 1995 1996 1997
S&P Computer
Systems Index 100 103.79 134.04 178.38 238.84 349.61
S&P 500 Index 100 110.08 111.53 153.45 188.68 251.63
Sequent Computer
Systems, Inc. 100 73.05 94.61 69.46 85.03 95.81
The graph assumes that $100 was invested on January 3, 1993 in Company Common
Stock, the S&P 500 Index and the S&P Computer Systems Index, and that all
dividends were reinvested.
CERTAIN TRANSACTIONS
During 1996 Sequent leased an airplane (the "Airplane") from a
corporation owned by Karl C. Powell, Jr. The Airplane is leased by Sequent
pursuant to a three-year lease ending on September 30, 1999 and providing for
monthly airplane lease fees of $50,000. Under the lease, Sequent is
responsible for all maintenance expenses, storage expenses and insurance
premiums relating to the Airplane. The terms of this lease including the
monthly fees, are believed to be more favorable to Sequent than the rates that
would be charged by an unrelated lessor to lease a comparable airplane, and,
based on Sequent's usage of the Airplane, are also less than the amounts
Sequent would pay to lease a comparable airplane on an hourly basis. During
the last fiscal year, Sequent paid $1,516,246 in lease fees, insurance
premiums, hangar fees, maintenance expenses and reserves related to the
Airplane.
In 1997, Sequent paid $451,000 to Team Scandia (and its predecessor) to
sponsor a race car in professional competitions in connection with the
promotion, marketing and advertising of Sequent's products. For the 1998
racing season, Sequent will pay Team Scandia $450,000 under a similar
sponsorship arrangement. Since January 1997, the race car has been driven in
professional competitions by Karl C. Powell, Jr.'s daughter, Cristen Powell.
Ms. Powell is paid $65,000 a year for driving the Team Scandia car in
professional competitions.
During the period July 1996 through December 1997 the Company loaned a
total of $936,000 to DP Applications, Inc., a subsidiary of the Company, to
fund its start-up operation. During 1997 the Board of Directors approved a
$2.5 million line of credit to fund additional start-up costs, fixed assets
and receivables. The loan of $936,000 is due on demand and loans under the
line of credit are due in December 1998. The loans bear interest at 10%. At
February 28, 1998 an aggregate of $1,490,000 was outstanding under these
loans. Dr. Wilmot, a director of the Company, owns or has the right to
acquire approximately 19% of the equity of DP Applications on a fully diluted
basis and Messrs. Powell, McAdam and Gregg each own approximately 2% of the
equity on a fully diluted basis.
PROPOSAL TO APPROVE
THE EMPLOYEE STOCK PURCHASE PLAN,
AS AMENDED
A total of 6,950,000 shares of Common Stock have been reserved for the
Employee Stock Purchase Plan (the "Purchase Plan"). As of March 1, 1998, only
1,546,245 shares remained available for purchase under the Purchase Plan. The
Board of Directors believes that it is desirable for the Company to continue
to provide the opportunity for employees to acquire Common Stock through the
Purchase Plan. Accordingly, subject to shareholder approval, the Board of
Directors has adopted an amendment to the Purchase Plan reserving an
additional 1,750,000 shares for issuance under the Purchase Plan. The Board
has made other changes to the Purchase Plan, subject to shareholder approval.
The following is a summary of the basic provisions of the Purchase Plan, a
complete copy of which, marked to indicate the proposed changes, is attached
to this Proxy Statement as Appendix B.
Description of the Purchase Plan
The purpose of the Purchase Plan is to provide a convenient and
practical means by which employees may participate in stock ownership of the
Company. The Board of Directors believes that the opportunity to acquire a
proprietary interest in the success of the Company through the acquisition of
shares of Common Stock pursuant to the Purchase Plan is an important aspect of
the Company's ability to attract and retain highly qualified and motivated
employees.
The Purchase Plan is intended to qualify as an "employee stock purchase
plan" within the meaning of Section 423 of the Internal Revenue Code of 1986,
as amended (the "Code"). The Purchase Plan is administered by the Board of
Directors. The Board has the power to make and interpret all rules and
regulations it deems necessary to administer the Purchase Plan and has broad
authority to amend the Purchase Plan, subject to certain amendments requiring
shareholder approval.
All regular status employees of the Company and its subsidiaries,
including the Company's officers, are eligible to participate in the Purchase
Plan. Eligible employees may elect to contribute from 2% to 10% of their cash
compensation during each pay period. Each participant may enroll in an 18-
month offering in which shares of Common Stock are purchased on the last
business day of each three-month period of an offering. A separate offering
commences on March 1, June 1, September 1 and December 1 of each year (the
"Enrollment Dates"). The purchase price per share is equal to 85% of the lower
of (a) the fair market value of the Common Stock on the Enrollment Date of the
Offering or (b) the fair market value on the date of purchase.
Neither payroll deductions credited to a participant's account nor any
rights with regard to the purchase of shares under the Purchase Plan may be
assigned, transferred, pledged or otherwise disposed of in any way by the
participant. Upon termination of a participant's employment for any reason
other than death, retirement or disability of the participant, the payroll
deductions credited to the participant's account will be returned to the
participant. Upon termination of the participant's employment because of
death, retirement or disability, the payroll deductions credited to the
participant's account will be used to purchase shares on the next purchase
date. Any remaining balance will be returned to the participant or his or her
beneficiary. As of March 1, 1998, there were 2,913 employees of the Company
eligible to participate in the Purchase Plan and 2,165 employees
participating.
The Board of Directors has approved amendments to the Purchase Plan,
subject to shareholder approval, that would (a) add an additional 1,750,000
shares to the Purchase Plan, (b) permit the Board of Directors to designate
subsidiaries of the Company whose employees can participate in the Purchase
Plan, (c) permit the plan administrator to adopt procedures to permit
participation in the Purchase Plan by employees who are foreign nationals or
employed outside the United States and (d) permit the Board of Directors to
change the duration of offering periods with respect to future offerings,
except that no offering period can be longer than 18 months. The purpose of
the amendments are to increase the number of shares available under the
Purchase Plan and to increase the Company's flexibility in administering the
Purchase Plan.
Federal Income Tax Consequences
The Purchase Plan is intended to qualify as an "employee stock purchase
plan" within the meaning of Section 423 of the Code. Under the Code, no
taxable income is recognized by the participant with respect to shares
purchased under the Purchase Plan either at the time of enrollment or at any
purchase date within an Offering.
If the participant disposes of shares purchased pursuant to the Purchase
Plan more than two years from the Enrollment Date and more than one year from
the date on which the shares were purchased, the participant will recognize
ordinary income equal to the lesser of (i) the excess of the fair market value
of the shares at the time of disposition over the purchase price, or (ii) 15%
of the fair market value of the shares on the Enrollment Date. Any gain on the
disposition in excess of the amount treated as ordinary income will be capital
gain. The Company is not entitled to take a deduction for the amount of the
discount in the circumstances indicated above.
If the participant disposes of shares purchased pursuant to the Purchase
Plan within two years after the Enrollment Date or within one year after the
Purchase Date, the employee will recognize ordinary income on the excess of
the fair market value of the stock on the purchase date over the purchase
price. Any difference between the sale price of the shares and the fair market
value on the purchase date will be capital gain or loss. The Company is
entitled to a deduction from income equal to the amount the employee is
required to report as ordinary compensation income.
The federal income tax rules relating to employee stock purchase plans
qualifying under Section 423 of the Code are complex. Therefore, the foregoing
outline is intended to summarize only certain major federal income tax rules
concerning employee stock purchase plans.
Purchases Under the Purchase Plan
The following table indicates shares purchased under the Purchase Plan
during the last fiscal year and since the inception of the plan in 1987 by the
named executive officers, by all executive officers as a group and by all
employees (excluding executive officers) as a group:
Shares Purchased Shares Purchased
in 1997 since 1987
Name Dollar Number Dollar Number
and Position Value(1) of Shares Value(1) of Shares
Karl C. Powell, Jr. $24,006 1,754 $216,853 26,094
John McAdam $23,033 2,039 $118,884 17,374
Steve S. Chen $0 0 $0 0
Robert S. Gregg $31,866 2,698 $156,135 19,837
All Executive Officers
(4 persons) $78,905 6,491 $491,872 63,305
All employees,
excluding executive
officers $12,707,229 1,120,937 $34,617,936 4,940,121
(1) "Dollar Value" equals the difference between the price paid for shares
purchased under the Purchase Plan and the fair market value of the shares
on the purchase date.
Recommendation by the Board of Directors
The Board of Directors recommends that the Purchase Plan, as amended, be
approved. The proposal must be approved by the holders of at least a majority
of the shares of Common Stock present or represented by proxy and entitled to
vote at the annual meeting. Abstentions have the effect of "no" votes in
determining whether the Purchase Plan, as amended, is approved. Broker non-
votes are counted for purposes of determining whether a quorum exists at the
annual meeting but are not counted and have no effect on the results of the
vote. The proxies will be voted for or against the proposal, or an abstention,
in accordance with the instructions specified on the proxy form. If no
instructions are given, proxies will be voted for approval of the amendment to
the Purchase Plan.
APPROVAL OF SELECTION OF AUDITORS
The Board of Directors has selected Price Waterhouse LLP as the
Company's independent auditors for the current fiscal year and is submitting
the selection to the shareholders for approval. Price Waterhouse LLP has
audited the financial statements of the Company since incorporation. Proxies
will be voted in accordance with the instructions specified in the proxy form.
If no instructions are given, proxies will be voted for approval of the
selection of Price Waterhouse LLP as independent auditors. Representatives of
Price Waterhouse LLP are expected to be present at the annual meeting, will
have the opportunity to make a statement if they so desire and will be
available to respond to appropriate questions.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, directors and persons who own more than ten
percent of the Common Stock to file reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC"). Executive
officers, directors and beneficial owners of more than ten percent of the
Common Stock are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on a review of the copies
of such forms received by the Company and on written representations from
certain reporting persons that they have complied with the relevant filing
requirements, the Company believes that all Section 16(a) filing requirements
applicable to its executive officers and directors were complied with during
the last fiscal year ending on January 3, 1998.
DISCRETIONARY AUTHORITY
While the Notice of Annual Meeting of Shareholders provides for
transaction of such other business as may properly come before the meeting,
the Board of Directors has no knowledge of any matters to be presented at the
meeting other than those referred to herein. However, the enclosed proxy gives
discretionary authority in the event that any other matters should be
presented.
SHAREHOLDER PROPOSALS
Any shareholder proposals to be considered for inclusion in proxy
material for the Company's 1999 annual meeting must be received at the
principal executive offices of the Company not later than December 11, 1998.
By Order of the Board of Directors
Karl C. Powell, Jr.
Chairman of the Board
and Chief Executive Officer
April 13, 1998
Appendix A
SEQUENT COMPUTER SYSTEMS, INC.
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
PURPOSE
The purpose of the Sequent Computer Systems, Inc. Employee Stock Purchase
Plan (the "Plan") is to provide a convenient and practical means through which
eligible employees of Sequent Computer Systems, Inc. (the "Company") and its
Participating Subsidiaries (hereinafter defined) may participate in stock
ownership of the Company. The Company believes the Plan will be to the mutual
benefit of the employees and the Company by creating a greater community of
interest between the Company's stockholders and its employees and by permitting
the Company to compete with other companies in obtaining and retaining the
services of competent employees. The Company intends that the Plan shall
constitute an "employee stock purchase plan" within the meaning of Section 423
of the Internal Revenue Code of 1986. Further, the Company intends that the
Plan shall satisfy the requirements of Rule 16b-3 under the Securities Exchange
Act of 1934.
ARTICLE II
DEFINITIONS
The following terms, when capitalized, shall have the meanings specified
below unless the context clearly indicates to the contrary.
2.1 Account shall mean each separate account maintained for a
Participant under the Plan, collectively or singly as the context requires.
Each Account shall be credited with a Participant's contributions, and shall be
charged for the purchase of Shares. A Participant shall be fully vested in the
cash contributions to his or her Account at all times. The Plan Administrator
may create special types of accounts for administrative reasons, even though
the accounts are not expressly authorized by the Plan.
2.2 Beneficiary shall mean a person or entity entitled under Section 7.2
to receive shares purchased by, and any remaining balance in, a Participant's
Account on the Participant's death.
2.3 Board of Directors shall mean the Board of Directors of the Company.
2.4 Business Day shall mean a day on which the public equity securities
markets in the United States are open for trading.
2.5 Code shall mean the Internal Revenue Code of 1986, as amended from
time to time.
2.6 Committee shall mean the Committee appointed by the Board of
Directors in accordance with Section 9.1 of the Plan.
2.7 Compensation shall mean the total cash compensation (except as
otherwise set forth below) paid to an Employee in the period in question for
services rendered to the Employer by the Employee while a Participant.
Compensation shall include the earnings waived by an Employee pursuant to a
salary reduction arrangement under any cash or deferred or cafeteria plan that
is maintained by the Employer. An Employee's Compensation shall not include:
(a) severance pay;
(b) hiring or relocation bonuses;
(c) pay in lieu of vacations or sick leave.
2.8 Common Stock shall mean the common stock, par value $.01 per share,
of the Company.
2.9 Company shall mean Sequent Computer Systems, Inc., an Oregon
corporation.
2.10 Custodian shall mean the investment or financial firm appointed by
the Plan Administrator to hold all Shares issued pursuant to the Plan.
2.11 Custodian Account shall mean the account maintained by the Custodian
for a Participant under the Plan. By enrolling in the Plan initially and
completing a Payroll Deduction Authorization Form, the Participant authorizes
the Company to open an account with the Custodian and authorizes the delivery
to the Custodian all Shares issued for the Participant Account.
2.12 Disability shall refer to a mental or physical impairment which is
expected to result in death or which has lasted or is expected to last for a
continuous period of twelve (12) months or more and which causes the Employee
to be unable, in the opinion of the Company and two independent physicians, to
perform his or her duties as an Employee of the Company. Disability shall be
deemed to have occurred on the first day after the Company and two independent
physicians have furnished their opinion of Disability to the Plan Administrator.
2.13 Employee shall mean an individual who renders services to his or her
Employer pursuant to a regular-status Employment relationship with such
Employer. A person rendering services to an Employer purportedly as an
independent consultant or contractor shall not be an Employee for purposes of
the Plan.
2.14 Employer shall mean, collectively, the Company and any Participating
Subsidiary (as hereinafter defined) [Subsidiary], or any successor entity that
continues the Plan, or all such entities collectively. All Employees of
entities which constitute the Employer shall be treated as employed by a single
company for all Plan purposes, except that:
(a) No person shall become a Participant except while employed by an
entity which is an Employer;
(b) A Participant shall cease to be a Participant if he or she
transfers to an entity which is not an Employer and ceases to be employed by
an Employer;
(c) An Employer shall cease to be an Employer for purposes of the
Plan, and a Participant who is an employee of such an Employer shall cease to
be a Participant, upon the happening of any event or the consummation of any
transaction which causes such Employer to cease being an Employer, as defined
above; and
(d) Amounts paid by entities other than the Employer shall be
ignored in determining Compensation under the Plan.
In contexts in which actions are required or permitted to be taken or notices
to be given, the Employer shall mean the Company or any successor corporation.
2.15 Employment shall mean the period during which an individual is an
Employee. Employment shall commence on the day the individual first performs
services for the Employer as an Employee and shall terminate on the day such
services cease, except as determined under Article XI.
2.16 Enrollment Date shall mean the first day of each Offering.
2.17 Offering shall mean any one of the separate overlapping 18-month
periods commencing on March 1, June 1, September 1, and December 1 of each
calendar year under the Plan; provided, however, that the first Offering shall
commence on the date set by the Plan Administrator as of the Enrollment Date
for the first Offering and shall continue for 18 months thereafter. The Board
of Directors shall have the power to change the duration of Offering Periods
(including the commencement dates thereof) with respect to future offerings,
however, in no event, shall the duration of an Offering extend beyond 18
months. Any such change shall be announced at least five (5) days prior to
the scheduled beginning of the first Offering Period to be affected thereafter.
2.18 Participant shall mean any Employee who is participating in any
Offering under the Plan pursuant to Article III.
2.19 Participating Subsidiary shall mean each Subsidiary designated by
the Board of Directors of the Company as a Participant in the Plan.
2.20 Payroll Deduction Authorization Form shall mean the form provided by
the Company on which a Participant shall elect to participate in the Plan and
designate the percentage of his or her Compensation to be contributed to his or
her Account through payroll deductions.
2.21 Plan shall mean this document.
2.22 Plan Administrator shall mean the Board of Directors or the
Committee, whichever shall be administering the Plan from time to time in the
discretion of the Board of Directors, as described in Article IX.
2.23 Purchase Date shall mean the last Business Day of each of the third,
sixth, ninth, twelfth, fifteenth and eighteenth months of the Offering.
2.24 Retirement shall mean a Participant's termination of Employment on
or after attaining the age of 65 or after the Plan Administrator has determined
that he or she has suffered a Disability.
2.25 Share shall mean one share of Common Stock.
2.26 Subsidiary shall mean any corporation, association or other business
entity at least fifty percent (50%) or more of the total combined voting power
of all classes of stock of which is owned or controlled directly or indirectly
by the Company or one or more of such Subsidiaries or both.
2.27 Valuation Date shall mean the date upon which the fair market value
of Shares is to be determined for purposes of setting the price of Shares under
Section 6.2 (a). If the Enrollment Date is not a date on which the fair market
value may be determined in accordance with Section 6.3, the Valuation Date
shall be the last Business Day prior to the Enrollment Date for which such
fair market value may be determined.
2.28 Vested shall mean non-forfeitable.
ARTICLE III
EMPLOYEE PARTICIPATION
3.1 Participation. Subject to the provisions of this Article III, an
Employee may elect to participate in the Plan effective as of any Enrollment
Date, by completing and filing a Payroll Deduction Authorization Form as
provided in Section 4.1. As of each Enrollment Date, the Company hereby grants
a right to purchase Shares under the terms of the Plan to each eligible
Employee who has elected to participate in the Offering commencing on that
Enrollment Date.
3.2 Requirements for Participation.
(a) A person shall become eligible to participate in the Plan on the
first Enrollment Date on which he or she first meets all of the following
requirements; provided, however, that no one shall become eligible to
participate in the Plan prior to the Enrollment Date of the first Offering
provided for in Section 2.17:
(i) The person is an Employee of the Employer;
(ii) The person's customary period of Employment is for
more than twenty (20) hours per week;
(iii) The person's customary period of Employment is for
more than five (5) months in any calendar year.
(b) Employees who are also directors or officers of the Company may
participate only in accordance with Rule 16b-3 under the Securities Exchange
Act of 1934, as in effect from time to time.
(c) Any eligible Employee may enroll or be automatically re-enrolled
in the Plan as of the Enrollment Date of any Offering, subject to the
following provisions:
(i) In order to enroll in the Plan initially, an eligible
Employee must complete, sign and submit to the Company the following
form:
(A) Payroll Deduction Authorization Form. Any
Payroll Deduction Authorization Form received by the Company on or
before any Enrollment Date will be effective on that Enrollment
Date.
(ii) Automatic re-enrollment to a lower priced Offering. If the
fair market value on the Valuation Date of an Offering in which a
Participant is enrolled (the "Current Offering") is equal to or greater
than the fair market value on the Valuation Date of a succeeding Offering
(the "Succeeding Offering"), the Participant's enrollment in the Current
Offering automatically will be terminated following the Purchase of Shares
under the Current Offering on the Purchase Date that occurs immediately
prior to the Enrollment Date of the Succeeding Offering, and the
Participant will automatically be enrolled in the Succeeding Offering. A
participant may elect to remain in the Current Offering by delivery of a
written notice to the Company declaring such election prior to the
Enrollment Date of the Succeeding Offering.
(iii) Absent withdrawal from the Plan pursuant to Section 7.4, a
Participant will automatically be re-enrolled in the Plan on the next
Enrollment Date immediately following the expiration of the Offering of
which he or she is then a Participant.
(d) An Employee may participate in only one Offering at any one
time.
(e) A Participant shall become ineligible to participate in the
Plan and shall cease to be a Participant when any of the following occurs:
(i) The entity of which the Participant is an Employee
ceases to be an Employer as defined in Section 2.14.
(ii) The Participant ceases to meet the eligibility
requirements of Section 3.2(a).
3.3 Limitations on Participation.
(a) No Employee may obtain a right to purchase Shares under the Plan
if, immediately after the right is granted, the Employee owns or is deemed to
own Shares possessing five percent (5%) or more of the combined voting power
or value of all classes of stock of the Company or any parent or Subsidiary
of the Company. For purposes of determining share ownership, the rules of
Section 425(d) of the Code shall apply and Shares that the Employee may
purchase under any options or rights to purchase, whether or not Vested,
shall be treated as Shares owned by the Employee.
(b) No Employee may obtain a right to purchase Shares under the
Plan that permits the Employee's rights to purchase Shares under the Plan and
any other employee stock purchase plan of the Company or any parent or
Subsidiary of the Company to accrue at a rate which exceeds $25,000 in fair
market value of Shares (determined as of the Enrollment Date ) for each
calendar year of the Offering. This section shall be interpreted to permit
an Employee to purchase the maximum number of Shares permitted under Section
423(b)(8) of the Code and regulations and interpretations adopted thereunder.
(c) The maximum number of Shares that an Employee may purchase in
an Offering shall not exceed 10,000 Shares, no more than one-sixth of which
may be purchased on any Purchase Date with respect to that Offering.
3.4 Termination of Participation. Unless Section 7.2 applies, a
Participant whose participation is terminated in accordance with Section 3.2(e)
shall have the rights provided in Section 7.1.
3.5 Voluntary Participation. Participation in the Plan shall be
voluntary.
ARTICLE IV
PAYROLL DEDUCTIONS
4.1 Payroll Deduction Authorization. An Employee may contribute to the
Plan only by means of payroll deductions. A Payroll Deduction Authorization
Form must be filed with the Company's stock administration department no later
than the Enrollment Date for an Offering, provided that payroll deductions will
not become effective sooner than the next pay period after receipt of the
authorization.
4.2 Amount of Deductions. A Participant may specify that he or she
desires to make contributions to the Plan at a rate not less than two percent
(2%) and not more than ten percent (10%) of the Participant's Compensation
during each pay period in the Offering, or such other minimum or maximum
percentages as the Plan Administrator shall establish from time to time. Such
specification shall apply during any period of continuous participation in the
Plan, unless modified or terminated as provided in Section 4.5 or as otherwise
provided in the Plan. If a payroll deduction cannot be made in whole or in
part because the Participant's pay for the period in question is insufficient
to fund the deduction after having first withheld all other amounts
deductible from his or her pay, the amount that was not withheld cannot be
made up by the Participant nor will it be withheld from subsequent pay checks.
4.3 Commencement of Deductions. Payroll deductions for a Participant
shall commence with the next pay period following receipt of the Payroll
Deduction Authorization Form and shall continue indefinitely, unless modified
or terminated as provided in Section 4.5 or as otherwise provided in the Plan.
4.4 Accounts. All payroll deductions made for a Participant shall be
credited to his or her Account under the Plan. Following each Purchase Date,
the Plan Administrator shall promptly deliver a report to each Participant
setting forth the aggregate payroll deductions credited to such Participant's
Account during the preceding three months and the number of Shares purchased
and delivered to the Custodian for deposit into the Participant's Custodian
Account.
4.5 Modification of Authorized Deductions. A Participant may increase
or decrease the amount of his or her payroll deduction by filing an amended
Payroll Deduction Authorization Form with the Company's stock administration
department at any time. The change may not become effective sooner than the
next pay period after receipt of the authorization.
ARTICLE V
CUSTODY OF SHARES
5.1 Delivery and Custody of Shares. Shares purchased pursuant to the
Plan shall be delivered to and held by the Custodian.
5.2 Custodian Account. As soon as practicable after each Purchase Date,
the Company shall deliver to the Custodian the full Shares purchased for each
Participant's Account. The Shares will be held in a Custodian Account
specifically established for this purpose. An Employee must open a Custodian
Account with the Custodian in order to be eligible to purchase Shares under the
Plan. By enrolling in the Plan initially and completing a Payroll Deduction
Authorization Form, the Participant authorizes the Company to open an Account
with the Custodian.
5.3 Transfer of Shares. Upon receipt of appropriate instructions from a
Participant on forms provided for that purpose, the Custodian will transfer
into the Participant's own name all or part of the Shares held in the
Participant's Custodian Account and deliver such Shares to the Participant.
5.4 Statements. The Custodian will deliver to each Participant a
quarterly statement showing the activity of the Participant's Custodian Account
and the balance as to both Shares and cash. Participants will be furnished
such other reports and statements, and at such intervals, as the Custodian
and Plan Administrator shall determine from time to time.
ARTICLE VI
PURCHASE OF SHARES
6.1 Purchase of Shares. Subject to the limitations of Article III and
Article VII, on each Purchase Date in an Offering, the Company shall apply the
amount credited to each Participant's Account to the purchase of as many full
Shares that may be purchased with such amount at the price set forth in Section
6.2, and shall promptly deliver such Shares to the Custodian for deposit into
the Participant's Custodian Account. Payment for Shares purchased under the
Plan will be made only through payroll withholding in accordance with Article
IV.
6.2 Price. The price of Shares to be purchased under Section 6.1 on any
Purchase Date shall be the lower of:
(a) Eighty-five percent (85%) of the fair market value of the Shares
on the Enrollment Date of the Offering; or
(b) Eighty-five percent (85%) of the fair market value of the Shares
on the Purchase Date.
6.3 Fair Market Value.
(a) The fair market value of the Shares on any date shall be equal
to the closing price of such Shares on the Valuation Date, as reported on the
NASDAQ National Market System or such other quotation system that supersedes
it.
(b) If (a) is not applicable, the fair market value of the Shares
shall be determined by the Plan Administrator in good faith. Such
determination shall be conclusive and binding on all persons.
6.4 Unused Contributions. Any amount credited to a Participant's Account
and remaining herein immediately after a Purchase Date because it was less than
the amount required to purchase a full Share shall be carried forward in such
Participant's Account for application on the next Purchase Date under the
Current Offering or the Succeeding Offering.
ARTICLE VII
TERMINATION AND WITHDRAWAL
7.1 Termination of Employment. Upon termination of a Participant's
Employment for any reason other than as set forth in Section 7.2, the payroll
deductions credited to such Participant's Account shall be returned to the
Participant. A Participant shall have no right to acquire Shares upon
termination of his or her Employment.
7.2 Termination upon Death, Retirement or Disability. Upon termination
of the Participant's Employment because of his or her Death, Retirement or
Disability, the payroll deductions credited to his or her Account shall be used
to purchase Shares as provided in Article VI on the next Purchase Date. Any
remaining balance in the Participant's Account shall be returned to him or her
or, in the case of death, any Shares purchased and any remaining balance shall
be transferred to the deceased Participant's Beneficiary, or if none, to his or
her estate.
7.3 Designation of Beneficiary. Each Participant may designate, revoke
and re-designate Beneficiaries. This action shall be taken in writing on a
form provided by the Plan Administrator and shall be effective upon delivery
to the Plan Administrator.
7.4 Withdrawal. A Participant may withdraw the entire amount credited to
his or her Account under the Plan and thereby terminate participation in the
current Offering at any time by giving written notice to the Company, but in no
case may a Participant withdraw amounts within the 15 days immediately
preceding a Purchase Date for that Offering. Any amount withdrawn shall be
paid to the Participant promptly after receipt of proper notice of withdrawal
and no further payroll deductions shall be made from his or her Compensation
unless a Payroll Deduction Authorization Form directing further deductions is
or has been submitted.
7.5 Status of Custodian Account.
(a) Upon the termination of a Participant's Employment as set forth
in Section 7.1, the Participant may,
(i) Elect to retain with the Custodian the Shares held in the
Participant's Custodian Account. The Participant will bear the cost of
any annual fees resulting from maintaining such account.
(ii) Request issuance of the Shares held in the Participant's
Custodian Account by submitting to the Custodian the appropriate forms
provided for that purpose.
(b) Upon the termination of a Participant's Employment as set forth
in Section 7.2, any shares held by the Custodian for the Participant's
Account shall be transferred to the persons entitled thereto under the laws
of the state of domicile of the Participant upon a proper showing of
authority.
ARTICLE VIII
SHARES PURCHASED UNDER THE PLAN
8.1 Source and Limitation of Shares.
(a) The Company has reserved for sale under the Plan 8,700,000
[6,950,0006,950,000] shares of its Common Stock, subject to adjustment upon
changes in capitalization of the Company as provided in Section 10.2. Shares
sold under the Plan may be newly issued shares or shares reacquired in
private transactions or open market purchases, but all Shares sold under the
Plan regardless of source shall be counted against the 8,700,000
[6,950,0006,950,000] Share limitation.
(b) If there is an insufficient number of Shares to permit the full
exercise of all existing rights to purchase Shares, or if the legal
obligations of the Company prohibit the issuance of all Shares purchasable
upon the full exercise of such rights, the Plan Administration shall make a
pro rata allocation of the Shares remaining available in as nearly a uniform
and equitable manner as possible, based pro rata on the aggregate amounts
then credited to each Participant's Account. In such event, payroll
deductions to be made shall be reduced accordingly and the Plan Administrator
shall give written notice of such reduction to each Participant affected
thereby. Any amount remaining in a Participant's Account immediately after
all available Shares have been purchased will be promptly remitted to such
Participant. Determination by the Plan Administrator in the regard shall be
final, binding and conclusive on all persons. No deductions shall be
permitted under the Plan at any time when no Shares are available.
8.2 Delivery of Shares. As promptly as practicable after each Purchase
Date, the Company shall deliver to the Custodian the full Shares purchased for
each Participant's Account.
8.3 Interest in Shares. The rights to purchase Shares granted pursuant
to this Plan will in all respects be subject to the terms and conditions of the
Plan, as interpreted by the Plan Administrator from time to time. The
Participant shall have no interest in Shares purchasable under the Plan until
payment for the shares has been completed at the close of business on the
relevant Purchase Date. The Plan provides only an unfunded, unsecured promise
by the Employer to pay money or property in the future. Except with respect to
the Shares purchased on a Purchase Date, an Employee choosing to participate in
the Plan shall have no greater rights than an unsecured creditor of the
Company. After the purchase of the Shares, the Participant shall be entitle
to all rights of a stockholder of the Company.
ARTICLE IX
ADMINISTRATION
9.1 Plan Administrator. At the discretion of the Board of Directors, the
Plan shall be administered by the Board of Directors or by a Committee
appointed by the Board of Directors in accordance with Rule 16b-3 under the
Securities Exchange Act of 1934, as in effect from time to time. Each
member of the Committee shall be either a director, an officer or an Employee
of the Company. Each member shall serve for a term commencing on a date
specified by the Board of Directors and continuing until he or she dies,
resigns or is removed from office by the Board of Directors.
9.2 Powers.
(a) The Plan Administrator shall be vested with full authority to
make, administer and interpret all rules and regulations, as it deems
necessary to administer the Plan. Any determination, decision or act of the
Plan Administrator with respect to any action in connection with the
construction, interpretation, administration or application of the Plan shall
be final, conclusive and binding upon all Participants and any and all other
persons claiming under or through any Participant.
(b) The Plan Administrator shall adopt such procedures as are
necessary and appropriate to permit participation in the Plan by eligible
Employees who are foreign nationals or employed outside of the United States.
(c) The provisions of the Plan shall be construed in a manner
consistent with the requirements of Section 423 of the Code.
ARTICLE X
CHANGES IN CAPITALIZATION, MERGER, ETC.
10.1 Rights of the Company. The grant of a right to purchase Shares
pursuant to this Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassification, reorganizations or other changes
of its capital or business structure or to merge or to consolidate or to
dissolve, liquidate or transfer all or any part of its divisions, subsidiaries,
business or assets.
10.2 Recapitalization. Subject to any required action by the
stockholders, the number of Shares covered by the Plan as provided in Section
8.1 and the price per share shall be proportionately adjusted for any increase
of decrease in the number of issued Shares of the Company resulting from a
subdivision or consolidation of Shares or the payment of a stock dividend (but
only on the Shares) or any other increase or decrease in the number of such
Shares effected without receipt or payment of consideration by the Company.
10.3 Consolidation or Merger. In the event of the consolidation or
merger of the Company with or into any other business entity, or the sale by
the Company of substantially all of its assets, the successor may continue
the Plan by adopting the same by resolution of its board of directors or
agreement of its partners or proprietors. If, within 90 days after the
effective date of a consolidation, merger or sale of assets, the successor
corporation, partnership or proprietorship does not adopt the Plan, the Plan
shall be terminated in accordance with Section 13.1.
ARTICLE XI
TERMINATION OF EMPLOYMENT
11.1 Vacation or Leave of Absence. A person's Employment shall not
terminate on account of an authorized leave of absence, sick leave or vacation,
or on account of a military leave described in Section 11.2, or a direct
transfer between Employers. Failure to return to work upon expiration of any
leave of absence, sick leave or vacation shall be considered a resignation
effective as of the expiration of such leave of absence, sick leave or vacation.
11.2 Military Leave. Any Employee who leaves the Employer directly to
perform services in the Armed Forces of the United States or in the United
States Public Health Service under conditions entitling the Employee to
reemployment rights provided by the laws of the United States, shall be on
military leave. An Employee's military leave shall expire if the Employee
voluntarily resigns from the Employer during the leave or if he or she fails to
make application for reemployment within a period specified by such law for the
preservation of employment rights. In such event, the individual's Employment
shall terminate by resignation on the day the military leave expires.
ARTICLE XII
STOCKHOLDER APPROVAL AND RULINGS
The Plan is expressly made subject (a) to the approval of the holders of a
majority of the outstanding shares of the Company within 12 months after the
date the Plan is adopted and (b) at its election, to the receipt by the Company
from the Internal Revenue Service of a ruling in scope and content satisfactory
to counsel to the Company, affirming the qualification of the Plan within the
meaning of Section 423 of the Internal Revenue Code of 1986. If the Plan is
not so approved by the stockholders within 12 months after the date the Plan
is adopted and if, at the election of the Company a ruling from the Internal
Revenue Service is sought but is not received on or before one year after this
Plan's adoption by the Board of Directors, this Plan shall not come into
effect. In that case, the Account of each Participant shall forthwith be
paid to him.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 Amendment and Termination of the Plan.
(a) The Board of Directors of the Company may at any time amend the
Plan. Except as otherwise provided herein, no amendment may adversely affect
or change any right to purchase Shares previously granted to any Participant.
No amendment shall be made without prior approval of the stockholders of the
Company if the amendment would:
(i) Permit the sale of more Shares than are authorized
under Section 8.1;
(ii) Permit the sale of Shares to Employees of entities
which are not Employers as defined in Section 2.13;
(iii) Materially increase the benefits accruing to
Participants under the Plan; or
(iv) Materially modify the requirements as to
eligibility for participation in the Plan.
(b) The Plan is intended to be a permanent program, but an Employer
shall have the right at any time to declare the Plan terminated completely as
to it. Upon such termination, amounts credited to the Accounts of
Participants with respect to whom the Plan has been terminated shall be
returned to such Participants.
13.2 Non-Transferability. Neither payroll deductions credited to a
Participant's Account nor any rights with regard to the purchase of Shares
under the Plan may be assigned, transferred, pledged or otherwise disposed of
in any way by the Participant except as provided in Section 7.2, and any
attempted assignment, transfer, pledge, or other disposition shall be null
and void. The Company may treat any such act as an election to withdraw
funds in accordance with Section 7.4.
13.3 Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purposes
and the Company shall not be obligated to segregate the payroll deductions.
13.4 Expenses. All expenses of administering the Plan shall be borne by
the Company and its Subsidiaries. The Company will not pay expenses,
commission or taxes incurred in connection with sales of Shares by the
Custodian at the request of a Participant. Expenses to be paid by a
Participant will be deducted from the proceeds of sale prior to remittance.
13.5 No Interest. No Participant shall be entitled, at any time, to any
payment or credit for interest with respect to or on the payroll deductions
contemplated herein, or on any other assets held hereunder for the
Participant's Account.
13.6 Registration and Qualification of Shares. The offering of Shares
hereunder shall be subject to the effecting by the Company of any registration
or qualification of the Shares under any federal or state law or the obtaining
of the consent or approval of any governmental regulatory body which the
Company shall determine, in its sole discretion, is necessary or desirable as
a condition to, or in connection with, the offering or the issue or purchase
of the Shares covered thereby. The Company shall make every reasonable
effort to effect such registration or qualification or to obtain such consent
or approval.
13.7 Responsibility and Indemnity. Neither the Company, any Subsidiary
of the Company, its Board of Directors, the Custodian, nor any member, officer,
agent, or employee of any of them, shall be liable to any Participant under the
Plan for any mistake of judgment or for any omission or wrongful act unless
resulting from gross negligence, willful misconduct or intentional
misfeasance. The Company will indemnify and save harmless its Board of
Directors, the Custodian and any such member, office, agent or employee
against any claim, loss, liability or expense arising out of the Plan, except
such as may result from the gross negligence, willful misconduct or
intentional misfeasance of such entity or person.
13.8 Plan Not a Contract of Employment. The Plan is strictly a voluntary
undertaking on the part of the Employer and shall not constitute a contract
between the Employer and any Employee, or consideration for or an inducement or
a condition of the employment of an Employee. Except as otherwise required by
law, or any applicable collective bargaining agreement, nothing contained in
the Plan shall give any Employee the right to be retained in the service of the
Employer or to interfere with or restrict the right of the Employer, which is
hereby expressly reserved, to discharge or retire any Employee at any time,
with or without cause and with or without notice. Except as otherwise
required by law, inclusion under the Plan will not give any Employee any
right or claim to any benefit hereunder except to the extent such right has
specifically become fixed under the terms of the Plan. The doctrine of
substantial performance shall have no application to any Employee,
Participant, or Beneficiary. Each condition and provision, including
numerical items, has been carefully considered and constitutes the minimum
limit on performance which will give rise to the applicable right.
13.9 Service of process. The Secretary of the Company is hereby
designated agent for service or legal process on the Plan.
13.10 Notice. All notices or other communications by a Participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received by the Plan Administrator. Any notice required by the Plan
to be received by the Company prior to an Enrollment Date, payroll period or
other specified date, and received by the Plan Administrator subsequent to such
date shall be effective on the next occurring Enrollment Date, payroll period
or other specified date to which such notice applies.
13.11 Governing Law. The Plan shall be interpreted, administered and
enforced in accordance with the Code, and the rights of Participants, former
Participants, Beneficiaries and all other persons shall be determined in
accordance with it. To the extent that state law is applicable, however, the
laws of the State of Oregon shall apply.
13.12 Plurals. Where the context so indicates, the singular shall include
the plural and vice versa.
13.13 Titles. Titles of Articles and Sections are provided herein for
convenience only and are not to serve as the basis for interpretation or
construction of the Plan.
13.14 References. Unless the context clearly indicates to the contrary,
reference to a Plan provision, statute, regulation or document shall be
construed as referring to any subsequently enacted, adopted or executed
counterpart.
PROXY
VOTING INSTRUCTIONS
TO THE TRUSTEE SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SEQUENT COMPUTER SYSTEMS, INC.
For the Annual Meeting of Shareholders on May 20, 1998
The undersigned hereby authorizes and instructs the Trustee of the
Sequent Computer Systems, Inc. 401(K) Plan to represent and vote, as
designated below, all shares of Common Stock of Sequent Computer Systems,
Inc. which the undersigned would be entitled to vote at the Annual Meeting of
Shareholders of said corporation to be held on May 20, 1998 and any
adjournments thereof, with all powers that the undersigned would possess if
personally present, with respect to the following:
Please mark this proxy as indicated on the reverse side to vote on any
item.
Promptly return this proxy in the enclosed envelope.
COMMENT/ADDRESS CHANGE: PLEASE MARK
COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed on other side)
Annual Meeting of Shareholders
Wednesday, May 20, 1998
9:00 a.m.
Sequent Computer Systems, Inc.
15450 S.W. Koll Parkway
Beaverton, Oregon
_____________________
COMMON - 401(K)
The Board of Directors recommends a vote for the nominees and proposals listed
below.
FOR AGAINST ABSTAIN
Item 1 - ELECTION OF DIRECTORS
FOR all nominees listed (except for those nominees
whose names are lined through below), or, if any
named nominee is unable to serve, for a substitute
nominee.
Steve S. Chen, John McAdam, Frank C. Gill, Michael S.
Scott Morton, Karl C. Powell, Jr., Robert W. Wilmot
__ WITHHELD AUTHORITY to vote for all nominees
listed above.
Item 2 - PROPORSAL TO APPROVE THE COMPANY'S
EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED
Item 3 - PROPOSAL TO RATIFY SELECTION OF
PRICE WATERHOUSE AS INDEPENDENT
AUDITORS OF THE COMPANY.
Item 4 - IN THEIR DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING
THE SHARES REPRESENTED BY THIS PROXY WILL
BE VOTED AS SPECIFIED HEREON, BUT IF NO
SPECIFICATION IS MADE, THE TRUSTEE WILL
VOTE ALL OF THE SHARES FOR WHICH YOU ARE
ENTITLED TO PROVIDE INSTRUCTION IN THE
SAME PROPORTION AS SHARES FOR WHICH
INSTRUCTIONS ARE RECEIVED. THE TRUSTEE
MAY VOTE ACCORDING TO ITS DISCRETION ON
ANY OTHER MATTER WHICH MAY PROPERLY COME
BEFORE THE MEETING.
COMMENTS/ADDRESS CHANGE
Please mark this box if you have
written comments/address change on the
reverse side.
Receipt is hereby acknowledged of the
Sequent Computer Systems, Inc. Notice
of Meeting and Proxy Statement.
Signature(s):
______________________________________________________________________
Date: ______________________
NOTE: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
FOLD AND DETACH HERE
PROXY
Annual Meeting of Shareholders of Sequent Computer Systems, Inc. May 20, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Karl C. Powell, Jr., John McAdam and
Robert S. Gregg, and each of them, proxies with power of substitution to vote
on behalf of the undersigned all shares which the undersigned may be entitled
to vote at the Annual Meeting of Shareholders of Sequent Computer Systems,
Inc. on May 20, 1998 and any adjournments thereof, with all powers that the
undersigned would possess if personally present, with respect to the
following:
Please mark this proxy as indicated on the reverse side to vote on any
item. If you wish to vote in accordance with the Board of Directors'
recommendations, please sign the reverse side; no boxes need to be checked.
COMMENT/ADDRESS CHANGE: PLEASE MARK
COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed on other side)
Annual Meeting of Shareholders
Wednesday, May 20, 1998
9:00 a.m.
Sequent Computer Systems, Inc.
15450 S.W. Koll Parkway
Beaverton, Oregon
_____________________
COMMON
The Board of Directors recommends a vote for the nominees and proposals listed
below.
FOR AGAINST ABSTAIN
Item 1 - ELECTION OF DIRECTORS
FOR all nominees listed (except for those nominees
whose names are lined through below), or, if any
named nominee is unable to serve, for a substitute
nominee.
Steve S. Chen, John McAdam, Frank C. Gill, Michael S.
Scott Morton, Karl C. Powell, Jr., RObert W. Wilmot
__ WITHHELD AUTHORITY to vote for all nominees
listed above.
Item 2 - PROPOSAL TO APPROVE THE COMPANY'S
EMLOYEE STOCK PURCHASE PLAN, AS AMENDED.
Item 3 - PROPOSAL TO RATIFY SELECTION OF
INDEPENDENT AUDITORS OF THE COMPANY.
Item 4 - IN THEIR DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING
THE SHARES REPRESENTED BY THIS PROXY WILL
BE VOTED AS SPECIFIED HEREON, BUT IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES
INDICATED AND FOR APPROVAL OF PROPOSAL
NOS. 2 AND 3.
COMMENTS/ADDRESS CHANGE
Please mark this box if you have
written comments/address change on the
reverse side.
Receipt is hereby acknowledged of the
Sequent Computer Systems, Inc. Notice
of Meeting and Proxy Statement.
Signature(s):
______________________________________________________________________
Date: ______________________
NOTE: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
FOLD AND DETACH HERE
