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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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 Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
ADAPTIVE SOLUTIONS, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed per Exchange Act Rules 14a-6(i)(4) and 0-11.
[ ] 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.
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ADAPTIVE SOLUTIONS, INC.
1400 N.W. COMPTON DRIVE, SUITE 340
BEAVERTON, OREGON 97006
______________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
______________________
To the Shareholders of Adaptive Solutions, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Adaptive
Solutions, Inc., an Oregon corporation (the "Company"), will be held on
Wednesday, May 21, 1997, at 8:30 a.m. local time, at 1600 N.W. Compton Drive,
Tenant Conference Room, Beaverton, Oregon, 97006, for the following purposes:
1. ELECTION OF DIRECTORS. To elect six (6) Directors to serve
until the next annual meeting and until their successors
have been duty elected and qualified.
2 RATIFICATION OF APPOINTMENT OF AUDITORS. To ratify the
appointment of KPMG Peat Marwick LLP as independent auditors
of the Company for the fiscal year ending December 31, 1997.
3. AMENDMENTS TO THE COMPANY'S 1988 STOCK INCENTIVE PLAN. To approve
amendments to the Company's 1988 Stock Incentive Plan to
increase the number of shares of Common Stock authorized for
issuance thereunder by 600,000 shares, and to reserve
100,000 shares, of the additional 600,000 shares, for
issuance upon exercise of options which may be granted to
Directors of the Company. The 1988 Stock Incentive Plan, as
amended, is attached as Exhibit A.
4. OTHER BUSINESS. To transact such other business as may
properly come before the meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Only shareholders of record at the close of
business on March 28, 1997 are entitled to notice of and to vote at the Annual
Meeting.
All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the Annual Meeting, you are urged to
mark, sign, date and return the enclosed proxy card as promptly as possible in
the postage-prepaid envelope enclosed for that purpose. Any shareholder
attending the meeting may vote in person even if he or she returned a proxy.
By Order of the Board of Directors,
Daniel J. Meub
President and Chief Executive Officer
Beaverton, Oregon
April 16, 1997
IT IS IMPORTANT THE PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT YOU
PLAN TO ATTEND THE ANNUAL MEETING, PLEASE DATE, SIGN AND COMPLETE THE ENCLOSED
PROXY AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE.
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ADAPTIVE SOLUTIONS, INC.
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 21, 1997
_________________
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Adaptive Solutions, Inc., an Oregon
corporation (the "Company" or "Registrant"), for use at the Annual Meeting of
Shareholders of the Company (the "Annual Meeting") to be held on Wednesday,
May 21, 1997, at 8:30 a.m. local time, at 1600 N.W. Compton Drive, Tenant
Conference Room, Beaverton, OR 97006, and at any adjournment or adjournments
thereof.
At the Annual Meeting, the shareholders of the Company (the "Shareholders")
will be asked to elect six (6) Directors to the Company's Board of Directors, to
ratify the appointment of KPMG Peat Marwick LLP as the Company's independent
auditors for the fiscal year ending December 31, 1997, to approve amendments to
the Company's 1988 Stock Incentive Plan to increase the number of shares of
Common Stock authorized for issuance thereunder by 600,000 shares, and to
reserve 100,000 shares, of the additional 600,000 shares, for issuance upon
exercise of options which may be granted to Directors of the Company, and to
transact such other business as may properly come before the Annual Meeting. All
proxies that are properly completed, signed and returned to the Company prior to
the Annual Meeting will be voted.
Any proxy given by a Shareholder may be revoked at any time before it is
exercised by filing with the Secretary of the Company an instrument revoking it,
by duly executed proxy bearing a later date or by a Shareholder attending the
Annual Meeting and expressing a desire to vote his or her shares in person. This
Proxy Statement and the accompanying form of Proxy are being mailed to the
Shareholders on or about April 16, 1997.
The Board of Directors has fixed the close of business on March 28, 1997 as
the record date for the determination of Shareholders entitled to vote at the
Annual Meeting and any adjournment or adjournments thereof. At the close of
business on the record date there were 6,987,864 shares of common stock, no par
value, of the Company (the "Common Stock") outstanding. Holders of shares of
Common Stock on the record date are entitled to one vote for each share held.
The presence at the Annual Meeting, either in person or by proxy, of the holders
of a majority of the outstanding shares entitled to vote shall constitute a
quorum for the transaction of business. If a choice is specified in the proxy as
to the manner in which it is to be voted, the persons acting under the proxy
will vote the shares of Common Stock represented thereby in accordance with such
choice. If no choice is specified, the shares will be voted FOR the Directors
nominated, FOR the ratification of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending December 31, 1997, FOR the
amendments to the Company's 1988 Stock Incentive Plan, and in the discretion of
the proxy holders as to any other matter to properly come before the meeting.
In the event that sufficient votes in favor of proposals are not received
by the date of the Annual Meeting, persons named as proxies may propose one or
more adjournments of the Annual Meeting to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of the holders
of a majority of the outstanding shares present in person or by proxy at the
Annual Meeting.
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The cost of preparing, assembling, printing and mailing the Proxy
Statement, the Notice of Meeting and the enclosed form of proxy, as well as
the cost of soliciting proxies relating to the Annual Meeting will be borne
by the Company. The Company will request banks, brokers, dealers and voting
trustees or other nominees to solicit their customers who are owners of
shares listed of record and names of nominees, and will reimburse them for
reasonable out-of-pocket expenses of such solicitations. The original
solicitation of proxies by mail may be supplemented by telephone, telegram
and personal solicitation by officers and other regular employees of the
Company.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
The authorized number of Directors of the Company is between three (3) and
seven (7) and is currently set at six (6). At the Annual Meeting, six (6)
Directors will be elected to serve until the next annual meeting or until their
successors are duly elected and qualified. The Company intends to nominate for
election as Directors the persons named below, all of whom are incumbent
Directors. All of these nominees have indicated that they are able and willing
to serve as Directors. In the event that any nominee of the Company is unable or
declines to serve as a Director at the time of the Annual Meeting, the proxies
will be voted for any nominee who shall be designated by the present Board of
Directors to fill the vacancy. In the event that additional persons are
nominated for election as Directors, the proxy holders intend to vote all
proxies received by them in such a manner as will assure the election of as many
of the nominees listed below as possible, and, in such event, the specific
nominees to be voted for will be determined by the proxy holders. Unless
otherwise instructed, the proxy holders intend to vote the shares of Common
Stock represented by the proxies in favor of the election of these nominees.
INFORMATION CONCERNING NOMINEES
All Directors are elected at the Annual Meeting to serve until the
following Annual Meeting and until their successors are duly elected and have
been qualified. There is no family relationship among any officers or Directors.
The following table sets forth the names of and certain information about the
Board of Directors' nominees for election as a Director.
NAME AGE POSITION WITH THE COMPANY
---- --- --------------------------
C. Scott Gibson 44 Chairman of the Board of Directors
Daniel J. Meub 43 President, Chief Executive Officer
and Director
Dan Hammerstrom, Ph.D. 48 Chief Technical Officer and Director
T. Peter Thomas 50 Director
Frederick M. Haney, Ph.D. 56 Director
Jean-Claude Peterschmitt 63 Director
C. SCOTT GIBSON has served as a Director since August 1992 and was
elected Chairman of the Board in December 1992. Mr. Gibson co-founded
Sequent Computer Systems, Inc., a computer supplier, in 1983 and served as
Sequent's President from 1988 through March 1992. Prior to founding Sequent,
Mr. Gibson was General Manager of the Memory Components Operation at Intel
Corporation, a chip manufacturer. Mr. Gibson received a B.S. in Electrical
Engineering and MBA from the University of Illinois. He currently serves as
Chairman of the Board of the Oregon Graduate Institute of Science and
Technology, and as a Director of Radisys Corporation, Triquint Semiconductor,
Inc., Integrated Measurement Systems, Inc., Inference Corporation and of
several privately held technology companies.
DANIEL J. MEUB has been President and Chief Executive Officer and a Director
of the Company since December 1996. From 1995 to 1996 Mr. Meub was Executive
Vice President of Marketing and Product Development with Now Software, a
supplier of Macintosh and PC based time management and utility
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software. From 1993 to 1994 Mr. Meub was employed by Central Point Software,
a supplier of PC and Macintosh software utilities, first as Vice President of
Corporate Marketing and then as Vice President/General Manager of the Desktop
Product Group. From 1991 to 1993 Mr. Meub was Vice President of Marketing
and Product Development for Calera Recognition Systems, a supplier of optical
character recognition software and hardware. Prior to 1991 Mr. Meub held
positions with Software Publishing Corporation and the Clorox Company. Mr.
Meub holds a B.A. from Stanford University and an M.B.A. from Northwestern
University.
DAN HAMMERSTROM, PH.D., the founder of the Company, served as interim
President and Chief Executive Officer from September 1996 until December
1996, has been a Director of the Company since September 1988, Chief
Technical Officer of the Company since May 1991 and President of the Company
until June 1990. He was an Associate Professor in the Computer
Science/Engineering Department at the Oregon Graduate Institute from 1985
until 1988 where he conducted research in VLSI neurocomputers. From 1980 to
1985 he was a computer architect and chip designer at Intel Corporation where
he worked on the iAPX-432 and i960 family of chips. From 1977 to 1980 he was
an Assistant Professor in the Electrical Engineering Department at Cornell
University. Dr. Hammerstrom received a B.S.E.E. from Montana State
University, an M.S.E.E. from Stanford University and a Ph.D. in Electrical
Engineering from the University of Illinois.
T. PETER THOMAS has served as a Director of the Company since September
1988. Mr. Thomas is a general partner of Institutional Venture Management
III, IV and V, the general partners of Institutional Venture Partners III,
IV, and V, respectively, all of which are venture capital funds.
Institutional Venture Partners IV is a shareholder of the Company. Mr. Thomas
has been a general partner with Institutional Venture Partners since November
1985. He received a B.S. in Electrical Engineering from Utah State
University and an M.S. in Computer Science from the University of Santa
Clara. Mr. Thomas is also a Director of Atmel Corporation, TelCom
Semiconductor Inc., and various private companies.
FREDERICK M. HANEY, PH.D. has served as a Director of the Company since
April 1991. Since August 1991, he has served as President of Venture
Management Company, a technology-based business development firm. From 1984
through 1991 he was Executive Vice President of 3i Ventures Corporation,
where he was responsible for founding and managing 3i Ventures California, a
high technology venture capital firm. Dr. Haney received a B.A. in
Mathematics from Ohio Wesleyan University, an M.S. in Mathematics from
Colorado State University and a Ph.D. in Computer Sciences from
Carnegie-Mellon University. Dr. Haney is also a Director of Rainbow
Technologies, Inc. Cam Data Systems, Inc., Helisys, Inc. and various
private companies.
JEAN-CLAUDE PETERSCHMITT has served as a Director of the Company since
May 1995. From 1967 to 1987, Mr. Peterschmitt served in various capacities
with Digital Equipment Corporation, a corporate information systems supplier,
most recently as General Manager, Vice President, Europe and Chairman of the
European Board of Directors. Prior to that time, Mr. Peterschmitt was a
member of Arthur D. Little's European Operations Research Group. He currently
serves on the board of Radisys Corporation, Euroventures B.V., an association
of European venture funds, Cabinet Benoit, a French consulting firm, as well
as on a number of advisory boards such as the European Advisory Board of
Sybase, Inc., a database and client-server software producer, Health on the
Net Foundation and ACE Technology Fund. Mr. Peterschmitt received an
engineering degree from Eidgenssische Technische Hochschule (Zurich) and an
M.S. degree from the MIT Sloan School of Business.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held a total of eight (8) meetings
during the year ended December 31, 1996. The Board of Directors has an Audit
Committee and a Compensation Committee. It does not have a nominating
committee or a committee performing the functions of a nominating committee.
No Director attended fewer than 75% of the aggregate of all meetings of the
Board of Directors, or its committees on which he served, during the time
each Director was a member of the Board of Directors.
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The Audit Committee, which consisted of Messrs. Meub, Haney and Thomas,
met two (2) times during fiscal 1996. The Audit Committee approves the
engagement of the Company's independent auditors and services to be performed
by such independent auditors and reviews the Company's accounting principles
and its system of internal accounting controls.
The Compensation Committee, which consisted of Messrs. Gibson and Thomas,
met two (2) times during fiscal 1996. The Compensation Committee reviews and
approves the Company's executive compensation policy, makes recommendations
concerning the Company's employee benefit policies and approves option grants
to employees, including officers and eligible directors.
COMPENSATION OF DIRECTORS
Nonemployee Directors were paid an annual fee of $10,000, plus reasonable
expenses pertaining to their service as Directors in 1996. Mr. Gibson
received $4,375 per month from the Company as compensation for his services
as Chairman of the Board of Directors and for consulting services in 1996. In
1996, options previously granted to Directors were canceled and repriced at
$1.375 per share, for the purchase of the number of shares as follows; Mr.
Gibson - 20,000 shares, Mr. Haney - 15,000 shares, Mr. Peterschmitt - 15,000
shares, and Mr. Thomas -15,000. Additionally, in 1996, Mr. Gibson was granted
options to purchase 25,000 shares at $1.375 per share and 25,000 shares at
$1.25 per share.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ELECTION OF THE SIX NOMINEES FOR DIRECTOR. If a quorum is present, each of
the six (6) nominees for Director who receives the greatest number of votes
will be elected. The shareholders are not entitled to cumulative voting
rights in electing Directors. Abstentions and 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 determination of elections for
Director.
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL NO. 2)
KPMG Peat Marwick LLP has been the independent auditors for the Company
since 1990 and, upon recommendation of the Audit Committee, their appointment as
independent auditors for the 1997 fiscal year has been approved by the Board of
Directors, subject to ratification by the Shareholders.
Representatives of KPMG Peat Marwick LLP are expected to be present at
the Annual Meeting and will be given an opportunity to make a statement, if
they so desire, and to answer appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997. If a
quorum is present, the ratification of the independent auditors will be
approved if the votes cast by the shareholders entitled to vote favoring the
ratification exceeds the votes cast opposing the ratification. Abstentions
and 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
determination of the outcome of this proposal.
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AMENDMENTS TO THE 1988 STOCK INCENTIVE PLAN
(PROPOSAL NO. 3)
The Company maintains its 1988 Stock Incentive Plan, as amended, (the
"1988 Plan") to provide incentives to the Company's key employees and others
who provide services to the Company. The Board of Directors believes that the
availability of stock incentives is an important factor in the Company's
ability to attract and retain the best available personnel for positions of
substantial responsibility and to provide an incentive for them to exert
their best efforts on behalf of the Company. A total of 1,800,000 shares of
Common Stock have been reserved for issuance under the 1988 Plan. As of April
8, 1997, only 376,918 shares remained available for grant under the 1988 Plan
and approximately 24 persons were eligible to participate in the 1988 Plan.
The Board of Directors believes that additional shares will be needed under
the 1988 Plan to provide appropriate incentives to employees and others.
Accordingly, in March 1997, the Board of Directors approved, and
recommends shareholder adoption of, an amendment to the 1988 Plan that would
increase the number of shares reserved for issuance by an additional 600,000
shares, for an aggregate of 2,400,000 shares reserved for issuance under the
1988 Plan. In connection with this amendment, the Board of Directors has also
approved an amendment to the 1988 Plan reserving 100,000 shares of the
600,000 additional shares for issuance upon exercise of options which may be
granted to Directors in consideration of their services to the Company. The
remaining 500,000 shares will be reserved for issuance upon exercise of
options which may be granted to officers, employees and consultants of the
Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
AMENDMENTS TO THE 1988 PLAN. If a quorum is present, the affirmative vote of
the holders of a majority of the shares represented, in person or by proxy,
and voting at the Annual Meeting will be required to approve the amendment to
the 1988 Plan. Abstentions and 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 determination of the outcome of this
proposal.
SUMMARY OF THE 1988 PLAN
The following discussion is intended only as a summary of the material
provisions of the 1988 Plan. Shareholders are encouraged to review the
complete copy of the 1988 Plan, which is included herein as Exhibit A and
marked to indicate the proposed amendments, in its entirety before voting on
this proposal.
GENERAL. The 1988 Plan gives the Board, or a committee which the Board
appoints, authority to grant options to purchase Common Stock and stock
purchase rights. Options granted under the 1988 Plan may be either
"incentive stock options" as defined in Section 422 of the Code, or
nonstatutory stock options, at the discretion of the Board or its committee.
PURPOSES. The purposes of the 1988 Plan are to attract and retain the
best available personnel for positions of substantial responsibility within
the Company, to provide additional incentive to the employees of the Company
and to promote the success of the Company's business.
ADMINISTRATION. The 1988 Plan is administered by the Board or a
committee of the Board in compliance with Rule 16b-3 so as to qualify the
1988 Plan for exemption from Section 16(b) of the Securities Exchange Act of
1934, as amended (the "Exchange Act").
ELIGIBILITY. The 1988 Plan provides that stock options and stock
purchase rights may be granted to employees (including officers and directors
who are also employees) and consultants of the Company. Incentive stock
options may be granted only to employees. The Board or a committee of the
Board selects the participants and determines the number of shares to be
subject to each stock option or stock purchase right.
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EXERCISE PRICE. The per share exercise price for shares issued pursuant
to options or stock purchase rights granted under the 1988 Plan is determined
by the Board or its committee and must not be less than 100% of the fair
market value of the Common Stock, in the case of incentive stock options, and
85% of the fair market value of the Common Stock, in the case of nonstatutory
stock options or stock purchase rights, on the date of the grant. Fair
market value per share is the closing price as reported on the Nasdaq Stock
Market on the date of grant. Incentive and nonstatutory stock options
granted to Shareholders owning more than 10% of the Company's outstanding
stock are subject to the additional restriction that the exercise price must
be equal to at least 110% of the fair market value on the date of grant.
OPTIONS. Each option is evidenced by a written agreement between the
Company and the person to whom such option is granted. The Board or its
committee determines the terms of the options granted under the 1988 Plan.
Each option shall be designated either an incentive stock option or a
nonstatutory stock option except that, to the extent that the aggregate fair
market value of the shares with respect to which options designated as
incentive stock options are exercisable for the first time by an optionee
during any calendar year (under all plans of the Company) exceeds $100,000,
such excess options shall be treated as nonstatutory stock options. Options
granted typically vest 25% after one year and ratably each month over the
next three years. Pursuant to the 1988 Plan, options may be subject to the
following additional terms and conditions.
(a) TERM OF OPTIONS. The term of each option granted under the 1988
Plan is ten years from the date of grant in the case of incentive
stock options and ten years and one day in the case of
nonstatutory options, unless a shorter period is provided in the
stock option agreement. However, options granted to an optionee
who, at the time of the grant, owns stock representing more than
10% of the Company's outstanding stock, expire five years from
the date of grant in the case of incentive stock options and five
years and one day from the date of grant in the case of
nonstatutory options.
(b) EXERCISE OF OPTION. The optionee must earn the right to exercise
the option by continuing to work for the Company. The Board or a
committee of the Board may determine when options are
exercisable. An option is exercised by giving written notice of
exercise to the Company specifying the number of full shares of
Common Stock to be purchased and tendering payment of the
purchase price to the Company. The method of payment of the
exercise price of the shares purchased upon exercise of an option
is determined by the Board or its committee.
(c) TERMINATION OF EMPLOYMENT. If an optionee's employment or
consulting relationship with the Company is terminated for any
reason other than death or permanent disability, options
outstanding under the 1988 Plan may be exercised within three
months (or with respect to non-qualified Options, such other
period of time as determined by the Board, not to exceed certain
limits) after the date of such termination to the extent the
options were exercisable on the date of termination.
(d) DISABILITY. If an optionee's employment by the Company
terminates because of total and permanent disability, options
outstanding under the 1988 Plan may be exercised within twelve
months (or with respect to non-qualified Options, such other
period of time as determined by the Board not to exceed certain
limits, but in no event later than the date of expiration of the
term of such option) after termination to the extent such options
were exercisable at the date of termination.
(e) DEATH OF OPTIONEE. If an optionee should die while employed by
the Company, options may be exercised at any time within twelve
months (or such other period of time as determined by the Board
not to exceed certain limits, but in no event later than the date
of expiration of the term of such option) after death to the
extent the options were exercisable at the date of death.
STOCK PURCHASE RIGHTS. Each stock purchase right is evidenced by a
written agreement between the Company and the person to whom such right is
granted. The Board or its committee determines the terms relating to the right,
including the time within which such person must accept the offer to purchase,
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which shall in no event exceed six months from the date of grant. Unless the
Board determines otherwise, the Company will have a right to repurchase shares
in the event of termination of the purchaser's employment. Such repurchase
right will lapse at a rate determined by the Board.
OTHER PROVISIONS. The option or stock purchase right may contain other
terms, provisions and conditions not inconsistent with the 1988 Plan as may be
determined by the Board or its committee.
NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS. The options and
stock purchase rights may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
optionee or purchaser, only by such optionee or purchaser.
ADJUSTMENT UPON CHANGES IN CAPITALIZATION OR MERGER. In the event any
change is made in the Company's capitalization, such as a stock split or reverse
stock split, appropriate adjustment shall be made to the purchase price and to
the number of shares subject to the stock option or stock purchase right. In
the event of the proposed dissolution or liquidation of the Company, all options
will terminate immediately prior to the consummation of such action, unless
otherwise provided by the Board. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, the successor corporation shall assume all
outstanding options or substitute new options therefor, unless the Board
determines in its discretion to accelerate the exercisability of such options.
AMENDMENT AND TERMINATION OF THE 1988 PLAN. The Board may amend or
terminate the 1988 Plan from time to time in such respects as the Board may deem
advisable without approval of the Shareholders; provided, however, that
stockholder approval of amendments to the 1988 Plan shall only be required to
the extent necessary to comply with Rule 16b-3 or Section 422 of the Code (or
any other applicable law or regulation). In any event, the 1988 Plan shall
terminate in 1998. Any options or stock purchase rights outstanding under the
1988 Plan at the time of its termination shall remain outstanding until they
expire by their terms.
TAX INFORMATION. Options granted under the 1988 Plan may be either
"incentive stock options," as defined in Section 422 of the Code, or
nonstatutory options.
An optionee who is granted an incentive stock option will not recognize
taxable income either at the time the option is granted or upon its exercise,
although the exercise may subject the optionee to the alternative minimum tax.
Upon the sale or exchange of the shares more than two years after grant of the
option and one year after exercising the option, any gain or loss will be
treated as long-term capital gain or loss. If these holding periods are not
satisfied, the optionee will recognize ordinary income at the time of sale or
exchange equal to the difference between the exercise price and the lower of
(i) the fair market value of the shares at the date of the option exercise or
(ii) the sale price of the shares. A different rule for measuring ordinary
income upon such a premature disposition may apply if the optionee is also an
officer, director, or 10% shareholder of the Company. The Company will be
entitled to a deduction in the same amount as the ordinary income recognized by
the optionee. Any gain or loss recognized on such a premature disposition of
the shares in excess of the amount treated as ordinary income will be
characterized as long-term or short-term capital gain or loss, depending on the
holding period.
All other options which do not qualify as incentive stock options are
referred to as nonstatutory options. An optionee will not recognize any taxable
income at the time he or she is granted a nonstatutory option. However, upon
its exercise, the optionee will recognize taxable income generally measured as
the excess of the then fair market value of the shares purchased over the
purchase price. Any taxable income recognized in connection with an option
exercise by an optionee who is also an employee of the Company will be subject
to tax withholding by the Company. Upon resale of such shares by the optionee,
any difference between the sales price and the optionee's purchase price, to the
extent not recognized as taxable income as described above, will be treated as
long-term or short-term capital gain or loss, depending on the holding period.
The Company will be entitled to a tax deduction in the same amount as
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the ordinary income recognized by the Optionee with respect to shares acquired
upon exercise of a nonstatutory option.
The foregoing summary of the effects of federal income taxation upon the
participant and the Company with respect to the purchase of shares under the
1988 Plan does not purport to be complete, and reference should be made to the
applicable provisions of the Internal Revenue Code of 1986, as amended. In
addition, this summary does not discuss the provisions of the income tax laws of
any municipality, state or foreign country in which the participant may reside.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 28, 1997 by (i) each person
who is known by the Company to be the beneficial owner of more than 5% of the
Company's Common Stock, (ii) each of the Company's Directors, the Chief
Executive Officer and the four other most highly compensated executive officers
and (iii) all Directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED (1)
-----------------------------
NAME OF BENEFICIAL OWNER SHARES PERCENT
------------ -----------
<S> <C> <C>
Institutional Venture Partners IV (2) 883,463 12.2%
3000 Sand Hill Road, Bldg. 2, Suite 290
Menlo Park, CA 94025
T. Peter Thomas (3) 913,985 12.6
3000 Sand Hill Road, Bldg. 2, Suite 290
Menlo Park, CA 94025
Daniel J. Meub 41,667 *
Dan Hammerstrom, Ph.D. 170,030 2.3
C. Scott Gibson (4) 101,600 1.4
Wendell Henry 56,521 *
Michael Amundson 3,389 *
Frederick M. Haney, Ph.D. 13,467 *
Jean-Claude Peterschmitt 11,250 *
All Executive Officers and Directors, as
a group (nine (9) persons) 1,311,909 17.9%
</TABLE>
--------------------------
* Less than one percent (1%).
8
<PAGE>
(1) Except as indicated in other notes to this table, each Shareholder
listed has sole voting and dispositive power with respect to the shares
beneficially owned, subject to applicable community property laws. As
required by applicable regulations adopted by the Securities and
Exchange Commission, the calculations assume that the shares of Common
Stock subject to options or warrants or convertible securities that are
exercisable or convertible within sixty days of March 28, 1997 are
outstanding with respect to the Shareholder who owns such options or
warrants or convertible securities, but not with respect to any other
Shareholder. The number of stock options that are exercisable within 60
days of March 28, 1997 is as follows: Mr. Thomas - 11,250, Mr. Meub -
41,667, Dr. Hammerstrom - 149,363, Mr. Gibson - 46,650, Mr. Henry -
56,521, Mr. Amundson - 3,389, Dr. Haney - 11,800, Mr. Peterschmitt -
11,250, and all executive officers and directors as a group - 328,501.
(2) Institutional Venture Partners IV is the record holder of 598,050
shares of Common Stock and 285,413 shares of Common Stock subject
to warrants exercisable through November 2, 1998. Mr. Thomas is a
Director of the Company and General Partner of Institutional
Venture Management IV, which is the General Partner of
Institutional Venture Partners IV. Mr. Thomas disclaims
beneficial ownership of these shares except to the extent of his
individual partnership interest.
(3) Of the shares indicated as owned by Mr. Thomas, 838,208 are
owned by Institutional Venture Partners IV. Mr. Thomas is the
General Partner of Institutional Venture Management IV, which is
the General Partner of Institutional Venture Partners IV, and all
of such shares are included because of his affiliation with those
entities. As such, Mr. Thomas may be deemed to have an indirect
pecuniary interest in an indeterminate portion of the shares
beneficially owned by Institutional Venture Partners IV. Mr.
Thomas disclaims beneficial ownership of these shares except to
the extent of his individual partnership interest.
(4) Of the shares indicated as owned by Mr. Gibson, 54,950 are held
by the Charles Scott Gibson Living Trust, over which Mr. Gibson
has sole voting power.
MANAGEMENT
EXECUTIVE OFFICERS
Information with respect to the Company's current executive officers is set
forth below. Officers of the Company are elected by the Board of Directors and
hold office until their successors are elected and qualified.
Name Age Position
---------------- --- -------------------------------------
Daniel J. Meub 43 President, Chief Executive Officer and
Director
Dan Hammerstrom, Ph D 48 Chief Technical Officer and Director
Wendell Henry 53 Vice President, Engineering
Michael Amundson 41 Vice President, California Operations
Information concerning Dr. Hammerstrom and Mr. Meub is set forth under
"Election of Directors."
WENDELL HENRY has served as Vice President of Engineering since October 1989.
Mr. Henry was Director of Engineering of the Context Division of Mentor Graphics
Corp, a supplier of computer aided design equipment and software, from March
1989 to October 1989. Mr. Henry was Vice President of Software Engineering for
Saba Technologies, a startup company developing OCR products for the PC
marketplace, from 1984 until 1989. Prior to joining Saba, Mr. Henry was Manager
of System Software
9
<PAGE>
Development for Apple Computer from 1980 until 1984. Mr. Henry holds a
B.S.A.A.E. from Northrop Institute of Technology and an M.S. in Computer
Science from San Jose State University.
MICHAEL AMUNDSON resigned from the Company on January 1, 1997. Mr. Amundson
had served as Vice President of California Operations since May 1992.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth certain summary information concerning
compensation awarded to, earned by or paid to the Company's Chief Executive
Officer and each of the four other most highly compensated executive officers
of the Company determined as of the end of the last fiscal year (hereafter
referred to as the "named executive officers") for the fiscal years ended
December 31, 1996, 1995 and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION
---------- ----------------
COMPENSATION($) STOCK
-------------------- OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) GRANTED(#)(2) COMPENSATION($)(3)
- --------------------------- ---- ------ -------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
Daniel J. Meub (4) 1996 10,961 -- 200,000 --
President and Chief Executive 1995 -- -- -- --
Officer since December 1996 1994 -- -- -- --
Dan Hammerstrom (4) 1996 118,125 -- 38,150 5,555
Chief Technical Officer 1995 113,287 -- -- 4,618
1994 108,150 -- -- 2,993
Michael Amundson 1996 122,909 115,000 18,150 5,109
Vice President, California 1995 110,250 -- -- 3,647
Operations 1994 90,500 -- -- 2,594
Wendell Henry 1996 111,286 -- 28,150 4,401
Vice President, Engineering 1995 109,961 -- -- 3,647
1994 106,000 -- -- 2,594
John J. Migliore (4) 1996 149,423 -- 210,000 4,755
President and Chief Executive 1995 -- -- -- --
Officer until September 1996 1994 -- -- -- --
</TABLE>
(1) Amount represents a bonus paid to Mr. Amundson for work completed
under a product development incentive agreement with the Company.
(2) Options to purchase 18,150, 18,150, 18,150 and 150,000 shares of
the Company's Common Stock granted to Dr. Hammerstrom and Messrs.
Amundson, Henry and Migliore, respectively, in 1994 and 1995,
were repriced in 1996. Pursuant to the rules of the Securities
and Exchange
10
<PAGE>
Commission, such repriced options are included as options granted in
1996 in this table. See "Ten-Year Option Repricing", below.
(3) Amounts represent premium payments made by the Company with
respect to (i) insurance policies for the lives of Dr.
Hammerstrom and Messrs. Amundson, Henry and Migliore for which
the Company is not the beneficiary, and (ii) various health
insurance policies for each of Dr. Hammerstrom and Messrs.
Amundson, Henry and Migliore and for their respective dependents.
(4) Mr. Migliore served as President and Chief Executive Officer of
the Company from March 4, 1996 through September 17, 1996, at
which time Dr. Hammerstrom was named Interim President and Chief
Executive Officer. In December 1996, Mr. Meub was hired as the
Company's President and Chief Executive Officer.
STOCK OPTIONS
The following table sets forth, for each of the named executive officers,
information concerning options granted during the fiscal year ended December 31,
1996 under the Company's stock option plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL OPTIONS ANNUAL RATES OF
GRANTED TO EXERCISE APPRECIATION
OPTIONS EMPLOYEES PRICE EXPIRATION OPTION TERMS($)(3)
NAME GRANTED(1) IN 1996 ($/SH) DATE 5% 10%
---- --------- ------- ----- ---- --- -----
<S> <C> <C> <C> <C> <C> <C>
Daniel J. Meub 160,000 18.8 1.25 11/29/2006 125,779 318,749
40,000 4.7 1.25 11/29/2006 31,445 79,687
------- ----- -------- -------
200,000 23.5 157,224 398,436
Dan Hammerstrom(2) 18,150 2.0 1.375 7/16/2006 15,695 39,774
10,000 1.2 1.375 8/9/2006 8,647 21,914
10,000 1.2 1.25 10/9/2006 7,861 19,922
------- ----- -------- -------
38,150 4.4 32,203 81,610
Michael Amundson(2) 18,150 2.0 1.375 7/16/2006 15,695 39,774
Wendell Henry(2) 18,150 2.0 1.375 7/16/2006 15,695 39,774
10,000 1.2 1.375 8/9/2006 7,861 19,922
------- ----- -------- -------
28,150 3.2 23,556 59,696
John J. Migliore(2) 210,000 24.6 1.375 7/16/2006 181,593 460,193
</TABLE>
(1) Stock options are granted at an exercise price equal to the fair
market value of the Company's Common Stock on date of grant.
Options granted to Mr. Meub vest ratably over a 24 month period,
and options granted to Dr. Hammerstrom and Messrs. Amundson,
Henry, and Migliore vest ratably over a twelve month period.
11
<PAGE>
(2) Options to purchase shares of the Company's Common Stock granted to
Dr. Hammerstrom and Messrs. Amundson, Henry and Migliore in 1994 and
1995 were repriced in 1996. Pursuant to the rules of the Securities and
Exchange Commission, such repriced options are included as options
granted in 1996 in this table. See "Ten-Year Option Repricing", below.
Mr. Migliore's options to purchase 210,000 shares of the Company's
Common Stock expired on March 16, 1997.
(3) The potential realizable value is calculated based on the term of
the option at time of grant (10 years) and is calculated by
assuming that the stock price on the date of grant appreciates at
the indicated annual rate compounded annually for the entire term
of the option and that the option is exercised and sold on the
last day of its term for the appreciated price. Actual gains, if
any, on stock option exercises are dependent on the future
performance of the Common Stock and overall stock market
conditions
FISCAL YEAR END OPTION VALUES
The following table sets forth, for each of the named executive officers,
the aggregate dollar value realized upon exercise of stock options in 1996
and the number and value of unexercised options as of December 31, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS
ACQUIRED (1) DECEMBER 31, 1996 AT DECEMBER 31, 1996(2)
ON VALUE ------------------- -----------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Daniel J. Meub -- -- 8,333 191,667 -- --
Dan Hammerstrom -- -- 137,063 12,300 $105,420 --
Michael Amundson 2,000 $7,100 26,357 16,210 20,269 --
Wendell Henry -- -- 50,997 17,254 31,908 --
</TABLE>
(1) The value realized on options exercised was calculated based on
the net amount received per share from the sale of shares of
stock minus the exercise price of the options.
(2) The value of unexercised in-the-money options is calculated based
on the closing price of the Company's Common Stock on December
31, 1996, $1.219 per share. Amounts reflected are based on the
assumed value minus the exercise price and do not necessarily
indicate that the optionee sold such stock.
12
<PAGE>
TEN-YEAR OPTION REPRICINGS
In connection with its restructuring in 1996, the Company was unable to
retain certain of its key personnel. This resulted in an examination of the
Company's incentive compensation programs available to such key personnel to
retain and motivate them to complete the Company's restructuring efforts.
The Company's Board of Directors noted that a significant difference between
the exercise prices of certain stock options held by key personnel and the
current market price of the underlying stock resulted in options providing
little incentive, and that attractive offers from competitive companies
resulted in key employees leaving the Company for other opportunities. The
Board of Directors, therefore determined that establishing new, short term
options based on pricing which more closely reflected the underlying stock
price, was crucial to retention of key personnel who could see the Company
through its restructuring efforts.
The following table sets forth, for each of the named executive officers,
information concerning the repricing of certain option grants in the last fiscal
year. No other repricing has occurred in the previous ten years. Pursuant to the
rules of the Securities and Exchange Commission, such repriced options are
included as options granted in 1996 in the Summary Compensation Table and the
Option Grants in Last Fiscal Year table, above.
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
NUMBER ORIGINAL
OF MARKET OPTION TERM
SECURITIES PRICE OF EXERCISE PRICE REMAINING AT
UNDERLYING STOCK AT AT TIME DATE OF
OPTIONS TIME OF OF NEW REPRICING OR
REPRICED OR REPRICING OR REPRICING OR EXERCISE AMENDMENT
NAME DATE AMENDED AMENDMENT AMENDMENT PRICE (YEARS)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dan Hammerstrom 7/16/1996 3,150 $1.375 $3.375 $1.375 8.20
15,000 1.375 6.50 1.375 9.21
Michael Amundson 7/16/1996 3,150 1.375 3.375 1.375 8.20
15,000 1.375 6.50 1.375 9.21
Wendell Henry 7/16/1996 3,150 1.375 3.375 1.375 8.20
15,000 1.375 6.50 1.375 9.21
John J. Migliore 7/16/1996 80,000 1.375 4.00 1.375 9.70
70,000 1.375 4.125 1.375 9.85
60,000 1.375 4.00 1.375 9.70
</TABLE>
13
<PAGE>
EMPLOYMENT AGREEMENTS
The Company enters into confidentiality agreements with its full-time
employees (including its executive officers) that prohibit disclosure of
confidential information to anyone outside of the Company both during and
subsequent to employment and require disclosure to the Company of ideas,
discoveries or inventions relating to or resulting from the employee's work
for the Company and assignment to the Company of all proprietary rights to
such ideas, discoveries or inventions.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Under rules established by the Securities and Exchange Commission, the
Company is required to provide certain data and information with regard to
the compensation and benefits provided to the Company's Chief Executive
Officer and the four other most highly compensated executive officers. In
fulfillment of this requirement, the Compensation Committee, has prepared the
following report for inclusion in this Proxy Statement.
COMPENSATION PHILOSOPHY
The Compensation Committee establishes the general compensation policies
for the Company's executive officers. The Compensation Committee is
responsible for reviewing and approving the Company's compensation practices,
executive pay levels and variable compensation programs. The Compensation
Committee also grants stock options. The Omnibus Budget Act of 1993 added
Section 162(m) to the Internal Revenue Code of 1986, which limits to $1
million the deductibility of compensation (including stock-based
compensation) individually paid to a publicly-held Company's chief executive
officer and the four other most highly compensated executive officers.
Compensation Committee intends to take all steps necessary to cause its
compensation practices to comply with this limit on deductibility of
executive compensation.
The Compensation Committee has adopted an executive pay for performance
philosophy covering the CEO and other executive officers emphasizing variable
compensation in order to align executive compensation with business
objectives and performance, and to attract, retain and reward executives who
contribute to the long-term success of the Company. The Company's philosophy
is based on a comprehensive review of competition, retention factors, and
short-term and long-term prospects. The Company's compensation program for
the CEO and executive officers is also applicable to the compensation
policies for all other employees of the Company.
SALARIES. The Company provides competitive salaries. The Company
regularly surveys high-growth, development-stage high technology companies to
ensure that its salary structure is competitive. The Company also utilizes
the wage and salary surveys of the American Electronics Association targeting
the fiftieth percentile for this purpose. The Compensation Committee annually
assesses the performance and sets the salary of the Company's President and
Chief Executive Officer, Daniel J. Meub. Mr. Meub annually assesses the
performance of all other executive officers and recommends salary increases
which are reviewed and approved by the Board of Directors.
STOCK OPTIONS. The Compensation Committee believes that employee equity
ownership provides significant motivation to executive officers to maximize
value for the Company's shareholders and, therefore, periodically grants
stock options under the Company's stock option plans. Stock options are
granted at the current market price and will only have value if the Company's
stock price increases over the exercise price. The Compensation Committee
determines the size and frequency of option grants for executive officers,
after consideration of recommendations from the Chief Executive Officer.
Recommendations for option grants are based upon the relative position and
responsibilities of each
14
<PAGE>
executive officer, expected contributions of each officer to the Company and
previous option grants to such executive officers.
In 1996, options to purchase shares of the Company's Common Stock which
had been granted to Dr. Hammerstrom and Messrs. Amundson, Henry and Migliore
in 1994 and 1995 were repriced. Pursuant to the rules of the Securities and
Exchange Commission, such repriced options are included as options granted in
1996 in compensation tables in this proxy statement. See "Option Grants in
Last Fiscal Year" and "Ten-Year Option Repricings."
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The compensation of the Company's Chief Executive Officer for fiscal
1996 was based in part upon the same criteria described above. In addition,
the Board of Directors broadly considered his personal skills, including
leadership and the establishment and implementation of strategic direction
for the Company. The Compensation Committee approved Mr. Meub's 1996 annual
base salary of approximately $180,000.
The Compensation Committee considers equity based compensation, in the
form of stock options, to be an important component of the CEO's
compensation. In 1996, the Compensation Committee granted Mr. Meub options to
purchase 200,000 shares of the Company's Common Stock based on the standards
described above. These grants are intended to motivate leadership for
long-term Company growth and profitability.
COMPENSATION COMMITTEE
C. SCOTT GIBSON
T. PETER THOMAS
15
<PAGE>
STOCK PERFORMANCE GRAPH
The Securities and Exchange Commission requires a comparison on an
indexed basis of cumulative total shareholder return for the Company, a
relevant broad equity market index and a published industry or
line-of-business index. Cumulative total shareholder return represents share
value appreciation assuming dividend reinvestment. The Common Stock of the
Company is traded on the Nasdaq Stock Market. Set forth below is a graph
comparing cumulative total shareholder return (commencing with the November
3, 1993 initial public offering) of the Company's Common Stock, the Nasdaq
Stock Market (US) Index and the H&Q Technology Index.
[performance graph]
The following contains monthly data of stock and index prices scaled to 100 at
November 4, 1993, which were used to create the stock performance graph.
H&Q
ADAPTIVE TECHNOLOGY NASDAQ
DATES SOLUTIONS, INC. INDEX U.S. INDEX
----- -------------- ----- ----------
Nov-4-93 $100.00 $100.00 $100.00
Dec-93 83.02 107.54 102.75
Feb-94 62.26 115.21 104.88
Apr-94 67.92 106.3 97.15
Jun-94 43.40 100.6 93.83
Aug-94 54.72 114.92 101.86
Oct-94 67.92 122.94 103.60
Dec-94 64.15 124.83 100.44
Feb-95 59.44 133.57 106.34
Apr-95 83.02 147.76 112.94
Jun-95 116.98 168.54 125.24
Aug-95 101.89 186.62 137.17
Oct-95 92.45 194.40 139.52
Dec-95 81.13 187.42 142.04
Feb-96 83.02 198.90 148.18
Apr-96 66.04 212.02 161.01
Jun-96 29.25 199.94 160.81
Aug-96 24.53 191.65 154.70
Oct-96 22.64 209.27 164.71
Dec-96 18.40 224.89 174.72
16
<PAGE>
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
Shareholder proposals complying with the applicable proxy solicitation
regulations of the Securities and Exchange Commission, intended to be
presented at the Annual Meeting, must be received by the Company by Decemb er
17, 1997 to be eligible for inclusion in the Company's proxy materials for
such Annual Meeting. Such proposals should be directed to the attention of
Daniel J. Meub, President and Chief Executive Officer, Adaptive Solutions,
Inc., 1400 N.W. Compton Drive, Suite 340, Beaverton, Oregon 97006.
OTHER MATTERS
The Board of Directors is not aware of any other business to be presented
at the Annual Meeting. If any other matters should properly come before the
meeting, it is intended that the persons named in the accompanying form of Proxy
will vote such proxy in accordance with their best judgment on such matters.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's directors and executive officers and
persons who own more than ten percent of a registered class of the Company's
equity securities, to file initial reports of ownership and reports of changes
in ownership of shares with the Securities and Exchange Commission. Such persons
also are required to furnish the Company with copies of all Section 16(a)
reports they file.
Based solely on its review of the copies of such received by it with
respect to 1996, or written representations from certain reporting persons, the
Company believes that all filing requirements applicable to its directors,
officers and persons who own more than ten percent of a registered class of the
Company's equity securities have been complied with for 1996, except for late
filings on Form 4 by Mr. Amundson reporting the exercise of options and the sale
of stock, and by Dr. Hammerstrom reporting the sale of stock in May 1996 and a
late filing on Form 3 by Mr. Meub reporting initial option holdings in December
1996.
ADDITIONAL INFORMATION
A copy of the Company's Annual Report to Shareholders for the year ended
December 31, 1996 accompanies this Proxy Statement, and includes the Company's
Annual Report on Form 10-K as filed with the SEC for the year ended December 31,
1996.
By Order of the Board of Directors,
Daniel J. Meub
President and Chief Executive Officer
Beaverton, Oregon
April 16, 1997
17
<PAGE>
APPENDIX A
ADAPTIVE SOLUTIONS, INC.
1988 STOCK INCENTIVE PLAN
NOTE: Material in BOLDFACE is new, and material in [brackets] has been deleted.
1. PURPOSES OF THE PLAN. The purposes of this Stock Incentive Plan are
to attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees and Consultants
of the Company and to promote the success of the Company's business.
Options granted hereunder may be either "incentive stock options," as
defined in Section 422A of the Internal Revenue Code of 1986, as amended, or
"non-qualified stock options," at the discretion of the Board and as reflected
in the terms of the written option agreement. In addition, shares of the
Company's Common Stock may be sold hereunder independent of any Option grant.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "BOARD" shall mean the Committee, if one has been appointed, or the
Board of Directors of the Company, if no Committee is appointed.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" shall mean the Common Stock of the Company.
(d) "COMPANY" shall mean Adaptive Solutions, Inc., an Oregon corporation.
(e) "COMMITTEE" shall mean the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan, if one is
appointed.
(f) "CONSULTANT" shall mean any person who is engaged by the Company or
any Subsidiary to render consulting services and its compensated for such
consulting services, and any director of the Company whether compensated for
such services or not; provided that if and in the event the Company registers
any class of any equity security pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the term Consultant shall
thereafter not include directors who are not compensated for their services or
are paid only a director's fee by the Company.
(g) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" shall mean the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of sick leave, military leave, or any other
leave of absence approved by the Board; provided that such leave is for a period
of not more than ninety (90) days or reemployment upon the expiration of such
leave is guaranteed by contract or statute.
(h) "EMPLOYEE" shall mean any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.
(i) "INCENTIVE STOCK OPTION" shall mean an Option intended to qualify as
an incentive stock option within the meaning of Section 422A of the Code.
(j) "OPTION" shall mean a stock option granted pursuant to the Plan.
(k) "OPTIONED STOCK" shall mean the Common Stock subject to an Option.
<PAGE>
(l) "OPTIONEE" shall mean an Employee or Consultant who receives an Option.
(m) "PARENT" shall mean a "parent corporation," whether now or hereafter
existing, as defined in Section 425(e) of the Code.
(n) "PLAN" shall mean this Stock Incentive Plan.
(o) "SHARE" shall mean a share of the of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(p) "SUBSIDIARY" shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 425(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of shares which may be optioned and/or
sold under the Plan is 2,400,000 [1,800,000] shares of Common Stock. 100,000 OF
THE 2,400,000 SHARES SUBJECT TO THE PLAN SHALL BE RESERVED FOR OPTION GRANTS OR
SHARE SALES TO DIRECTORS OF THE COMPANY. ALL REMAINING SHARES SHALL BE
AVAILABLE FOR OPTION GRANTS OR SHARE SALES TO THOSE PERSONS SET FORTH IN SECTION
5 OF THE PLAN. The Shares may be authorized, but unissued, or reacquired Common
Stock.
If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available
for future grant and/or sale under the Plan. If Shares purchased under the
Plan are repurchased by the Company pursuant to restrictions applicable to
such Shares, the number of Shares repurchased shall, unless the Plan shall
have been terminated, become available for future grant and/or sale under the
Plan only if the purchaser of those Shares received no benefits of ownership
from the Shares other than voting rights or unrealized accumulated dividends.
4. ADMINISTRATION OF THE PLAN.
(a) INITIAL PLAN PROCEDURE. Prior to the date, if any, upon which
the Company becomes subject to the Exchange Act, the Plan shall be
administered by the Board.
(b) PLAN PROCEDURE AFTER THE DATE, IF ANY, UPON WHICH THE COMPANY
BECOMES SUBJECT TO THE EXCHANGE ACT.
(i) MULTIPLE ADMINISTRATIVE BODIES. If permitted by Rule
16b-3, the Plan may be administered by different bodies with respect to
directors, non-director officers and Employees who are neither directors nor
officers.
(ii) ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS. With
respect to grants of Options to Employees who are also officers or directors
of the Company, the Plan shall be administered by (A) the Board if the Board
may administer the Plan in compliance with Rule 16b-3 promulgated under the
Exchange Act or any successor thereto ("Rule 16b-3") with respect to a plan
intended to qualify thereunder as a discretionary plan, or (B) a Committee
designated by the Board to administer the Plan, which Committee shall be
constituted in such a manner as to permit the Plan to comply with Rule 16b-3
with respect to a plan intended to qualify thereunder as a discretionary
plan. Once appointed, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board. From time to time
the Board may increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause) and appoint new
members in substitution therefor, fill vacancies, however caused, and remove
all members of the Committee and thereafter directly administer the Plan, all
to the extent permitted by Rule 16b-3 with respect to a plan intended to
qualify thereunder as a discretionary plan.
-2-
<PAGE>
(iii) ADMINISTRATION WITH RESPECT TO CONSULTANTS AND OTHER
EMPLOYEES. With respect to grants of Options to Employees or Consultants who
are neither directors nor officers of the Company, the Plan shall be
administered by (A) the Board or (B) a Committee designated by the Board, which
Committee shall be constituted in such a manner as to satisfy the legal
requirements relating to the administration of incentive stock option plans, if
any, of Oregon corporate and securities laws, of the Code, and of any applicable
stock exchange (the "Applicable Laws"). Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of the Committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies, however caused,
and remove all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by the Applicable Laws.
(c) EFFECT OF BOARD'S DECISION. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.
5. ELIGIBILITY.
(a) PERSONS ELIGIBLE. Options may be granted and/or Shares sold
only to Employees and Consultants. Incentive Stock Options may be granted
only to Employees. An Employee or Consultant who has been granted an Option
or sold Shares may, if he is otherwise eligible, be granted an additional
Option or Options or sold additional Shares.
(b) ISO LIMITATION. No Incentive Stock Option may be granted to an
Employee which, when aggregated with all other Incentive Stock Options
granted to such Employee by the Company or any Parent or Subsidiary, would
result in Shares having an aggregate fair market value (determined for each
Share as of the date of grant of the Option covering such Share) in excess of
$100,000 becoming first available for purchase upon exercise of one or more
Incentive Stock Options during any calendar year.
(c) SECTION 5(b) LIMITATIONS. Section 5(b) of the Plan shall apply
only to an Incentive Stock Option evidenced by an "Incentive Stock Option
Agreement" which sets forth the intention of the Company and the Optionee
that such Option shall qualify as an Incentive Stock Option. Section 5(b) of
the Plan shall not apply to any Option evidenced by a "non-qualified Stock
Option Agreement" which sets forth the intention of the Company and the
Optionee that such Option shall be a non-qualified stock Option.
(d) NO RIGHT TO CONTINUED EMPLOYMENT. The Plan shall not confer upon
any Optionee any right with respect to continuation of employment or
consulting relationship with the Company, nor shall it interfere in any way
with his right or the Company's right to terminate his employment or
consulting relationship at any time.
6. TERM OF PLAN. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company as described in Section 17 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 13 of the Plan.
7. TERM OF OPTION. The term of each Incentive Stock Option shall be ten
(10) years from the date of grant thereof or such shorter term as may be
provided in the Stock Option Agreement. The term of each Option that is not an
Incentive Stock Option shall be ten (10) years and one (1) day from the date of
grant thereof or such shorter term as may be provided in the Stock Option
Agreement. However, in the case of an Option granted to an Optionee who, at the
time the Option is granted, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, (a) if the Option is an Incentive Stock Option, the term of the
Option shall be five (5) years from the date of grant thereof or such shorter
time as may be provided in the Stock Option Agreement, or (b) if
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the Option is not an Incentive Stock Option, the term of the Option shall be
five (5) years and one (1) day from the date of grant thereof or such shorter
term as may be provided in the Stock Option Agreement.
8. EXERCISE/PURCHASE PRICE AND CONSIDERATION.
(a) EXERCISE/PURCHASE PRICE. The per Share exercise/purchase price
for the Shares to be issued pursuant to exercise of an Option or a direct
sale shall be such price as is determined by the Board, but shall be subject
to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the grant of
such Incentive Stock Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than one
hundred ten percent (110%) of the fair market value per Share on the date of
the grant;
(B) granted to any other Employee, the per Share exercise
price shall be no less than one hundred percent (100%) of the fair market
value per Share on the date of grant.
(ii) In the case of a non-qualified stock Option or direct sale
(A) granted or sold to a person who, at the time of the
grant of such Option or authorization of such sale, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of
the Company or any Parent or Subsidiary, the per Share exercise/purchase
price shall be no less than one hundred ten percent (110%) of the fair market
value per Share on the date of the grant or authorization of sale;
(B) granted or sold to any other person, the per Share
exercise/purchase price shall be no less than eighty-five percent (85%) of
the fair market value per Share on the date of grant or authorization of sale.
(b) FAIR MARKET VALUE. The fair market value shall be determined by the
Board in its discretion; provided, however, that where there is a public
market for the Common Stock, the fair market value per Share shall be the
mean of the bid and asked prices of the Common Stock for the date of grant or
authorization of sale, as reported in THE WALL STREET JOURNAL (or if not so
reported, as otherwise reported by the National Association of Securities
Dealers Automated Quotation (NASDAQ) System) or, in the event the Common
Stock is listed on a stock exchange, the fair market value per Share shall be
the closing price on such exchange on the date of grant of the Option or
authorization of sale, as reported in THE WALL STREET JOURNAL.
(c) CONSIDERATION. The consideration to be paid for the Shares to be
issued upon exercise of an Option or pursuant to a direct sale, including the
method of payment, shall be determined by the Board and may consist entirely
of cash, check, promissory note, other Shares which (x) in the case of Shares
acquired upon exercise of an Option either have been owned by the Optionee
for more than six months on the date of surrender or were not acquired,
directly or indirectly, from the Company, and (y) have a fair market value on
the date of surrender equal to the aggregate exercise price of the Shares as
to which said option shall be exercised, or any combination of such methods
of payment for the issuance of shares.
9. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option
granted hereunder shall be exercisable at such times and under such
conditions as determined by the Board, including
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performance criteria with respect to the Company and/or the Optionee, and as
shall be permissible under the terms of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(c) of the Plan.
Each Optionee who exercises an Option shall, upon notification of the amount
due (if any) and prior to or concurrent with delivery of the certificate
representing the Shares, pay to the Company amounts necessary to satisfy
applicable federal, state and local tax withholding requirements. An
Optionee must also provide a duly executed copy of any stock transfer
agreement then in effect and determined to be applicable by the Board. Until
the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 11 of the
Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) TERMINATION OF STATUS AS AN EMPLOYEE OR CONSULTANT. If an Employee
or Consultant ceases to serve as an Employee or Consultant (as the case may
be), he may, but only within three (3) months (or with respect to
non-qualified Options, such other period of time not exceeding the
limitations of Section 7 above as is determined by the Board at the time of
grant of the non-qualified Option) after the date he ceases to be an Employee
or Consultant (as the case may be) of the Company, exercise his Option to the
extent that he was entitled to exercise it at the date of such termination.
To the extent that he was not entitled to exercise the Option at the date of
such termination, or if he does not exercise such Option (which he was
entitled to exercise) within the time specified herein, the Option shall
terminate.
(c) DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section 9(b)
above, in the event an Employee or Consultant is unable to continue his
employment or consulting relationship (as the case may be) with the Company
as a result of his total and permanent disability (as defined in Section
22(e)(3) of the Code), he may, but only within twelve (12) months (or with
respect to non-qualified Options, such other period of time not exceeding the
limitations of Section 7 above as is determined by the Board at the time of
grant of the non-qualified Option) from the date of termination, exercise his
Option to the extent he was entitled to exercise it at the date of such
termination. To the extent that he was not entitled to exercise the Option
at the date of termination, or if he does not exercise such Option (which he
was entitled to exercise) within the time specified herein, the Option shall
terminate.
(d) DEATH OF OPTIONEE. In the event of the death of an Optionee during
the term of the Option who is at the time of his death an Employee or
Consultant of the Company and who shall have been in Continuous Status as an
Employee or Consultant since the date of grant of the Option, the Option may
be exercised, at any time within twelve (12) months (or such other period of
time not exceeding the limitations of Section 7 above as is determined by the
Board at the time of grant of the Option) following the date of death, by the
Optionee's estate or by a person who acquired the right to exercise the
Option by bequest or inheritance, but only to the extent of the right to
exercise as of the date of death.
(e) RULE 16b-3. Options granted to individuals subject to Section 16 of
the Exchange Act ("Insiders") must comply with the applicable provisions of
Rule 16b-3 and shall contain such additional
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conditions or restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
10. NON-TRANSFERABILITY OF OPTIONS. An Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than
by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject to
any required action by the shareholders of the Company, the number of shares
of Common Stock covered by each outstanding Option, and the number of shares
of Common Stock which have been authorized for issuance under the Plan but as
to which no Options have yet been granted or sales made or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per share of Common Stock covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number
of issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock,
or any other increase or decrease in the number of issued shares of Common
Stock effected without receive of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall
not be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein,
no issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the Company,
the Option will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. The Board may, in
the exercise of its sole discretion in such instances, declare that any
Option shall terminate as of a date fixed by the Board and give each Optionee
the right to exercise his Option as to all or any part of the Optioned Stock,
including Shares as to which the Option would not otherwise be exercisable.
In the event of a proposed sale of all or substantially all of the assets of
the Company, or the merger of the Company with or into another corporation,
the Option shall be assumed or an equivalent option shall be substituted by
such successor corporation or a parent or subsidiary of such successor
corporation, unless the Board determines, in the exercise of its sole
discretion and in lieu of such assumption or substitution, that the Optionee
shall have the right to exercise the Option as to all of the Optioned Stock,
including Shares as to which the Option would not otherwise be exercisable.
If the Board makes an Option fully exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Board shall
notify the Optionee that the Option shall be fully exercisable for a period
of thirty (30) days from the date of such notice or such shorter period as
the Board may specify in the notice, and the Option will terminate upon the
expiration of such period.
12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date on which the Board makes the determination granting
such Option. Notice of the determination shall be given to each Employee or
Consultant to whom an Option is so granted within a reasonable time after the
date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable;
provided that, the following revisions or amendments shall require approval
of the shareholders of the Company in the manner described in Section 17 of
the Plan:
(i) any increase in the number of Shares subject to the Plan, other
than in connection with an adjustment under Section 11 of the Plan;
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(ii) any change in the designation of the class of employees or
consultants eligible to be granted Options; or
(iii) if the Company has a class of equity security registered
under Section 12 of the Exchange Act at the time of such revision or
amendment, any material increase in the benefits accruing to participants
under the Plan.
(b) SHAREHOLDER APPROVAL. If any amendment requiring shareholder
approval under Section 13(a) of the Plan is made subsequent to the first
registration of any class of equity security by the Company under Section 12
of the Exchange Act, such shareholder approval shall be solicited as
described in Section 17(a) of the plan.
(c) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee
and the Board, which agreement must be in writing and signed by the Optionee
and the Company.
14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option or a sale unless the exercise of such
Option or consummation of the sale and the issuance and delivery of such
Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
As a condition to the exercise of an Option or a sale, the Company may
require the person exercising such Option or purchasing the Shares to
represent and warrant at the time of any such exercise or sale that the
Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
relevant provisions of law.
15. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall
be sufficient to satisfy the requirements of the Plan.
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
16. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
17. SHAREHOLDER APPROVAL. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve months before or
after the date the Plan is adopted. If such shareholder approval is obtained
at a duly held shareholders' meeting,it may be obtained by the affirmative
vote of the holders of a majority of the outstanding shares of the Company,
such holders being present or represented and entitled to vote thereon. If
and in the event that the Company registers any class of any equity security
pursuant to Section 12 of the Exchange Act, the approval of such shareholders
of the Company shall be:
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(a) SOLICITATION.
(i) solicited substantially in accordance with Section 14(a) of
the Exchange Act and the rules and regulations promulgated thereunder, or
(ii) solicited after the Company has furnished in writing to the
holders entitled to vote substantially the same information concerning the
Plan as that which would be required by the rules and regulations in effect
under Section 14(a) of the Exchange Act at the time such information is
furnished; and
(b) TIME. Obtained at or prior to the first annual meeting of
shareholders held subsequent to the first registration of any class of equity
securities of the Company under Section 12 of the Exchange Act.
If such shareholders approval is obtained by written consent, it must be
obtained by the unanimous written consent of all shareholders of the Company.
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ADAPTIVE SOLUTIONS, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 21, 1997
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement, each dated April 16, 1997 and
hereby names, constitutes and appoints Mr. Daniel J. Meub with full power of
substitution, my true and lawful attorney and Proxy for me and in my place
and stead to attend the Annual Meeting of the Shareholders of Adaptive
Solutions, Inc. (the Company) to be held at 8:30 a.m. on Wednesday, May 21,
1997 and at any adjournments thereof, and to vote all the shares of Common
Stock held of record in the name of the undersigned on March 28, 1997, with
all the powers that the undersigned would possess if he were personally
present.
(TO BE SIGNED ON REVERSE SIDE) SEE REVERSE
SIDE
<PAGE>
|
/X/ PLEASE MARK YOUR |__ __
VOTES AS IN THIS
EXAMPLE.
FOR ALL NOMINEES LISTED WITHHOLD AUTHORITY
BELOW (EXCEPT AS MARKED (TO VOTE FOR ALL
TO THE CONTRARY) NOMINEES LISTED BELOW)
1. PROPOSAL 1 --
Election of / / / /
Directors
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
C. SCOTT GIBSON DANIEL J. MEUB DAN HAMMERSTROM, PH.D.
T. PETER THOMAS FREDERICK M. HANEY, PH.D. JEAN-CLAUDE PETERSCHMITT
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE
NOMINEES NAMED ABOVE.
FOR AGAINST ABSTAIN
2. PROPOSAL 2 -- To ratify the appointment of
KPMG Peat Marwick LLP as the Company's / / / / / /
independent auditors for the fiscal year
ending December 31, 1997.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
PROPOSAL 2.
3. PROPOSAL 3 -- To approve the proposed
amendments to the Companys 1988 Stock / / / / / /
Incentive Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF
PROPOSAL 3.
4. Upon such other matters as may properly come before, or incident to the
conduct of the annual meeting, the Proxy holders shall vote in such manner
as they determine to be in the best interests of the Company. The Company
is not presently aware of any such matters to be presented for action at
the meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY. IF NO
SPECIFIC DIRECTION IS GIVEN AS TO ANY OF THE ABOVE ITEMS, THIS PROXY WILL BE
VOTED FOR THE SIX NOMINEES NAMED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3.
I do / / do not / / plan to attend the meeting. (Please check)
Dated ____________
Shareholder (print name)________________Shareholder (sign name)________________
The shareholder signed above reserves the right to revoke this Proxy at any
time prior to its exercise by written notice delivered to the Company's
Secretary at the Company's corporate offices, 1400 NW Compton Drive, Suite
340, Beaverton, Oregon, 97006, prior to the annual meeting. The power of
Proxy holders shall also be suspended if the shareholder signed above appears
at the annual meeting and elects in writing to vote in person.
