Schedule 14A
Information Required in Proxy Statement
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-b(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
SYQUEST TECHNOLOGY, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant))
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2), or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6()i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price of other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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4) Proposed maximum aggregate value of transaction:
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5) Total Fee Paid:
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[X] Fee Paid Previously with Preliminary Materials
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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SYQUEST TECHNOLOGY, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
SEPTEMBER 26, 1996
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders
of SYQUEST TECHNOLOGY, INC. (the "Company"), a Delaware corporation, will be
held on September 26, 1996 at 4:00 p.m., local time, at the Company's principal
executive offices at 47071 Bayside Parkway, Fremont, California 94538, for the
following purposes:
1. To approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of the Company's
Common Stock from 20,000,000 to 60,000,000.
2. To approve the issuance of more than 2,291,891 shares of Common
Stock to the holders of the Company's 7% Cumulative Convertible Preferred Stock,
Series 1.
3. To approve an amendment to the Company's 1991 Stock Option Plan to
increase the number of shares issuable under the Plan to 6,000,000 shares.
4. To approve an amendment to the Company's 1992 Non-Employee Director
Stock Option Plan to increase the number of shares issuable under the Plan to
500,000 shares.
5. To approve an amendment to the Company's 1992 Non-Employee Director
Stock Option Plan to increase the number of shares subject to options to be
granted annually to each outside director and to approve a one-time grant of
options to purchase 30,000 shares to each new outside director at the time he or
she becomes a member of the Board (with such 30,000 share option also to be
granted to each present outside director).
6. 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 stockholders of record at the close of business on August 5, 1996
are entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed Proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if he or she has returned a Proxy.
Sincerely,
----------------------------------------------
Edwin L. Harper
President and Chief Executive Officer
Fremont, California
August 21, 1996
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YOUR VOTE IS IMPORTANT
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE
REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE
AND RETURN IT IN THE ENCLOSED ENVELOPE.
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SYQUEST TECHNOLOGY, INC.
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed Proxy is solicited on behalf of the Board of Directors of
SYQUEST TECHNOLOGY, INC. (the "Company") for use at the Special Meeting of
Stockholders to be held Thursday, September 26, 1996 at 4:00 p.m., local time,
or at any continuation or adjournment thereof, for the purposes set forth herein
and in the accompanying Notice of Special Meeting of Stockholders. The Special
Meeting will be held at the Company's principal executive offices, 47071 Bayside
Parkway, Fremont, California 94538. The Company's telephone number at that
location is (510) 226-4000.
These proxy solicitation materials were first mailed on or about August
23, 1996 to all stockholders entitled to vote at the meeting.
Shares represented at such meeting by Proxy in the form enclosed, which
are properly executed, duly returned to the Company and not revoked, will be
voted or not voted in accordance with the instructions contained therein. If no
instructions are given on an executed and returned form of Proxy with respect to
a matter set forth in the Notice of Special Meeting accompanying this Proxy
Statement, shares so represented will be voted in favor thereof.
Record Date and Principal Share Ownership
Stockholders of record at the close of business on August 5, 1996 are
entitled to notice of and to vote at the meeting. At the record date, 11,547,347
shares of the Company's Common Stock, $.001 par value (the "Common Stock"), and
20,000 shares of the Company's 7% Cumulative Convertible Preferred Stock, Series
1, $.001 par value (the "Preferred Stock"), were issued and outstanding. The
Company's Preferred Stock will not be entitled to vote at the meeting. For
information concerning beneficial owners of more than five percent (5%) of the
Company's Common Stock, see "Security Ownership of Management and Certain
Beneficial Owners."
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Company a
written notice of revocation or a duly executed proxy bearing a later date or by
attending the meeting and voting in person.
Voting and Solicitation
On all matters, each share of Common Stock has one vote.
Votes cast by proxy or in person at the Special Meeting will be
tabulated by the inspector of election appointed for the meeting and will
determine whether or not a quorum is present. The inspector of election will
treat abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum but as unvoted for purposes of
determining the approval of any matter submitted to the stockholders for a vote.
In the event that a broker indicates on a proxy that it
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does not have discretionary authority as to certain shares to vote on a
particular matter, those shares will not be considered present and entitled to
vote with respect to that matter.
The cost of soliciting proxies will be borne by the Company. In
addition, the Company will reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in forwarding
solicitation material to such beneficial owners. Proxies may also be solicited
by certain of the Company's directors, officers and regular employees, without
additional compensation, personally or by telephone, telegram or letter. The
Company has engaged the services of Corporate Investor Communications, Inc. to
assist in the solicitation of proxies from the Company's stockholders for a fee
of approximately $4,500, plus reimbursement of out-of-pocket expenses incurred
in connection therewith.
Stockholder Proposals To Be Presented at Next Annual Meeting
Proposals of stockholders of the Company which are intended to be
presented by such stockholders at the Company's 1997 Annual Meeting of
Stockholders must be received by the Company no later than September 30, 1996 in
order that they may be considered for inclusion in the proxy statement and form
of proxy relating to that meeting.
Security Ownership of Management and Certain Beneficial Owners
The following table sets forth beneficial ownership of Common Stock of
the Company as of July 1, 1996 by each present director, by each present
executive officer, by each of the former executive officers of the Company named
in the Summary Compensation Table set forth below, by all present directors and
executive officers as a group, and by all persons known to the Company to be the
beneficial owners of more than five percent (5%) of the Company's Common Stock,
the only class of voting securities of the Company outstanding. The table does
not include the holders of the Company's Preferred Stock even though the
Preferred Stock in the aggregate is convertible into 2,291,891 shares of the
outstanding Common Stock of the Company (which constitutes over 19% of the
shares outstanding on July 1, 1996), because the provisions of the Preferred
Stock do not permit a holder thereof to convert the shares of Preferred Stock at
any time into more than 4.9% of the outstanding Common Stock of the Company
combined with any other shares of Common Stock then beneficially owned by the
holder (other than upon conversion of the Preferred Stock).
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Shares of Common Stock
Beneficially Owned(1)
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Number of Percent of
Name Shares Shares
- ---- ---------- ---------
Syed H. Iftikar(2) 1,363,301 11.8%
Edward L. Marinaro(3) 128,334 1.1%
C. Richard Kramlich(4) 83,844 *
David I. Caplan(5) 59,365 *
Edwin L. Harper 0 --
John W. Luhtala 0 --
Chester Brown 0 --
Dale Pilgeram 0 --
Richard Schulman 0 --
Kenneth Hardesty 0 --
Robert E. Lyon(6) 7,500 *
David Everett 0 --
Michael J. Perez 0 --
Eugene Berti 0 --
J. Brent Nilson 0 --
Venu Menon 0 --
All directors and executive officers as of
July 1, 1996 as a group (11 persons)(7) 1,642,344 14.27%
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* Represents less than 1% of outstanding shares of Common Stock.
(1) Except as otherwise noted, the persons named in the table have sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where
applicable.
(2) Includes options to purchase 266,623 shares which are exercisable within 60
days after July 1, 1996, 46,300 shares held of record by Shawn Iftikar, Jon
Iftikar and Kristina Iftikar, members of Mr. Iftikar's family, and 795,000
shares held of record by Jessi Investments, a family partnership which is a
6.9% stockholder.
(3) Consists of options to purchase 128,334 shares which are exercisable within
60 days after July 1, 1996.
(4) Includes options to purchase 15,000 shares which are exercisable within 60
days after July 1, 1996.
(5) Includes options to purchase 30,000 shares which are exercisable within 60
days after July 1, 1996.
(6) Consists of options to purchase 7,500 shares which are exercisable within
60 days after July 1, 1996.
(7) Includes options to purchase 447,457 shares which are exercisable within 60
days after July 1, 1996.
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<PAGE>
PROPOSAL NO. 1: AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION
The Board of Directors of the Company has adopted a resolution to amend
paragraph (A) of Article IV of the Restated Certificate of Incorporation of the
company to read in its entirety as follows:
(A) Classes of Stock. This corporation is authorized to issue the
following classes of stock: Common Stock ("Common Stock" or
"Common") and Preferred Stock ("Preferred Stock" or "Preferred").
The total number of shares which the corporation is authorized to
issue is Sixty Four Million (64,000,000). Sixty Million
(60,000,000) shares shall be Common Stock and Four Million
(4,000,000) shares shall be Preferred Stock. Each share of Common
and Preferred Stock shall have a par value of $0.001.
The purpose of such amendment is to increase the number of authorized
shares of the Company Common Stock from 20,000,000 to 60,000,000 shares. As of
July 1, 1996, the Company had outstanding 11,508,892 shares of Common Stock and
5,949,726 shares of Common Stock reserved for issuance as follows:
o Common Stock outstanding: 11,508,892
o Common shares reserved:
For conversion of Preferred Stock: 2,291,891(1)
For exercise of 6% Convertible Debenture(2) 400,000
Shares reserved for issuance under 1991 Stock Option Plan(3): 2,766,863
Shares reserved for issuance under the 1992 Non-Employee
Director Stock Option Plan(4): 250,000
Shares reserved for issuance under the 1992 Employee
Stock Purchase Plan: 240,972
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(1) If Proposal No. 2 is adopted the number of shares issuable upon conversion
of the Preferred Stock will increase. As of June 27, 1996 the number of
shares into which the Preferred Stock was convertible (but for the limit of
2,291,891 shares in the Certificate of Designation) was 3,087,549.
(2) The 6% Convertible Debenture was issued in July 1996.
(3) If Proposal No. 3 is adopted the number of shares reserved for issuance
under the 1991 Stock Option Plan will increase by 1,571,476 shares.
(4) If Proposal No. 4 is adopted the number of shares reserved for issuance
under the 1992 Non-Employee Director Stock Option Plan will increase by
250,000 shares.
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The Board of Directors of the Company believes that it is desirable for
the Company to have additional authorized but unissued shares of Common Stock to
provide flexibility to act promptly with respect to public and private
financings, acquisitions, stock dividends and for other appropriate purposes.
Approval of the increase now will eliminate delays and the expense which
otherwise would be incurred if stockholder approval were required to increase
the authorized number of shares of Common Stock for possible future transactions
involving the issuance of additional shares. However, the rules of the National
Association of Securities Dealers, Inc. ("NASD") governing corporations with
securities listed on the Nasdaq National Market would still require stockholder
approval by a majority of the total votes cast in person or by proxy prior to
the issuance of designated securities (i) where the issuance would result in a
change of control of the Company, (ii) in connection with the acquisition of the
stock or assets of another company if an affiliate of the Company has certain
interlocking interests with the company to be acquired or where the Company
issues twenty percent (20%) or more of its currently outstanding shares or (iii)
in connection with a transaction other than a public offering involving the sale
or issuance of twenty percent (20%) or more of the Common Stock or voting power
outstanding before the issuance at less than the book value or market value of
the Company's shares at that time, subject to certain exceptions or application
to Nasdaq in the event delay in the issuance would impair the financial
viability of the Company. The violation of these rules could result in the
Company's Common Stock being removed from listing on the Nasdaq National Market.
The additional shares of Common Stock may be issued, subject to certain
exceptions, by the Company's Board of Directors at such times, in such amounts
and upon such terms as the Board may determine without further approval of the
stockholders. Any such issuance could reduce the current stockholders'
proportionate interests in the Company or dilute the stock ownership of persons
seeking to obtain control of the Company, depending on the number of shares
issued and the purpose, terms and conditions of the issuance. Stockholders have
no preemptive rights to subscribe to additional shares when issued.
As reported by the Company in its filings with the Securities and
Exchange Commission, the Company has had significant losses in the current
fiscal year ($126,223,000 during the nine months ended June 30, 1996) and will
need additional cash in the next fiscal year, and possibly sooner, in order to
meet its commitments. Presently the Company has an insufficient number of
authorized shares of Common Stock to permit it to issue any significant number
of shares of Common Stock or additional shares of Preferred Stock convertible
into Common Stock to raise additional capital. There can be no assurance,
however, following approval of the proposed amendment the Company will be
successful in raising additional capital.
This amendment will, in the opinion of the Board of Directors, increase
the Company's financial flexibility. The Board believes that the complexity of
business financing and acquisition transactions require greater flexibility in
the Company's capital structure than now exists. Preferred Stock is available
for issuance but this amendment will permit the Company to offer additional
shares of Preferred Stock, convertible into Common Stock, from time to time as
determined by the Board for any proper corporate purpose. Such purposes could
include, without limitation, issuance in public or private sales for cash as a
means of obtaining capital for use in the Company's business and operations or
in cancellation of existing indebtedness, as part or all of the consideration
required to be paid by the Company for acquisitions of other businesses or
properties, and issuance under employee benefit plans.
Increasing the number of shares of Common Stock authorized for issuance
could discourage an attempt by a person to acquire control of the Company by a
tender offer or other means if significant additional shares of Common Stock are
issued or reserved for issuance. It could therefore deprive stockholders of
benefits that could result from such an attempt, such as realization of a
premium over the market price of their shares in a tender offer or the temporary
increase in market price that such an
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<PAGE>
attempt could cause. Moreover, the issuance of stock to persons friendly to the
Board of Directors could make it more difficult to remove incumbent management
and directors from office even if such change would be favorable to the
stockholders generally.
The Board of Directors believes that the financial flexibility offered
by the amendment increasing the number of shares of authorized Common Stock
(particularly in light of the desire of the Company to raise additional capital)
far outweighs any of its potential disadvantages.
Vote Required
The approval of the amendment of the Company's Restated Certificate of
Incorporation requires the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock entitled to vote. Consequently, abstentions
and broker non-votes will have the effect of a vote against the proposed
amendment.
The Board of Directors recommends a vote "FOR" approval of the
amendment to the Company's Restated Certificate of Incorporation.
PROPOSAL NO. 2: APPROVAL TO INCREASE NUMBER OF SHARES ISSUABLE UPON CONVERSION
OF PREFERRED STOCK
On June 14, 1996 the Company issued 20,000 shares of its Preferred
Stock at a price of $1,000 per share. The rights, preferences and privileges of
the Preferred Stock are set forth in a Certificate of Designations, Preferences
and Rights (the "Certificate"), as filed with the Delaware Secretary of State.
Conversion Rights
The Preferred Stock is convertible into shares of Common Stock
commencing August 28, 1996 or the date the registration statement registering
the shares for resale which was filed with the Securities and Exchange
Commission on July 2, 1996 is declared effective (whichever is earlier) at a
conversion price per share which is the lesser of $11 or 77% of the average
market price of the Common Stock on the five trading days prior to the
conversion, as such amount may be adjusted. Shares of the Preferred Stock cannot
be converted if the converting holder and its respective affiliates would
beneficially own more than 4.9% of the Common Stock at the time of conversion
(excluding from the calculation shares of Common Stock issuable upon conversion
of the Preferred Stock). If the registration statement registering the resale of
the Common Stock is not effective by September 3, 1996, the $11.00 per share
amount decreases by three percent and the 23% discount increases (and therefore
the 77% factor decreases) at the rate of three percentage points, per each month
of delay.
If the Common Stock is trading below $5 per share when the Preferred
Stock converts, the Company can redeem that Preferred Stock at 130% of the
original purchase price, except that the redemption price is reduced to 110% of
the original purchase price to the extent that the original purchase price of
the amount of Preferred Stock being redeemed (plus one half the amount
previously converted by the holders) exceeds $10 million.
The Company can force conversion after one year after the registration
statement becomes effective, so long as the Common Stock is still a Nasdaq
National Market security or is listed on the Nasdaq Small Cap Market or is
listed on the Electronic Bulletin Board, and subject to the limit
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on any Preferred Stock holder beneficially owning more than 4.9% of the
outstanding shares of Common Stock.
Under no circumstances may more than 2,291,891 shares of Common Stock
be issued on conversion of the Preferred Stock or for dividends, unless the
Company's stockholders vote to increase that number and that vote does not
violate the Nasdaq National Market rule concerning below market value
financings. If the Preferred holders attempt a conversion which would exceed the
limit, the Company must redeem all of the Preferred Stock remaining outstanding
at 130% of the original purchase price, except the redemption price is reduced
to 110% of the original purchase price to the extent more than half of all of
the Preferred Stock is redeemed under that provision.
As of June 27, 1996 the Preferred Stock conversion price was $6.477625
per share. But for the limitation set forth in the Certificate on the number of
shares of Common Stock issuable upon conversion of the Preferred Stock, the
shares of Preferred Stock would have been convertible into 3,087,549 shares of
Common Stock.
Nasdaq Rule
Rule 4460 of the Nasdaq Stock Market, which is applicable to the
Company because the Company's shares of Common Stock are presently Nasdaq
National Market Securities, sets forth the corporate governance standards for
Nasdaq National Market Securities. Section (i) of Rule 4460 (formerly referred
to as Section 6(i) of Part III of Schedule D of the National Association of
Securities Dealers, Inc. By-Laws) provides:
(1) Each NNM [Nasdaq National Market] issuer shall require
shareholder approval of a plan or arrangement under
subparagraph (A) below or, prior to the issuance of designated
securities under subparagraph (B), (C), or (D) below:
(A) when a stock option or purchase plan is to be
established or other arrangement made pursuant to which stock
may be acquired by officers or directors, except for warrants
or rights issued generally to security holders of the company
or broadly based plans or arrangements including other
employees (e.g. ESOPs). In a case where the shares are issued
to a person not previously employed by the company, as an
inducement essential to the individual's entering into an
employment contract with the company, shareholder approval
will generally not be required. The establishment of a plan or
arrangement under which the amount of securities which may be
issued does not exceed the lesser of 1% of the number of
shares of common stock, 1% of the voting power outstanding, or
25,000 shares will not generally require shareholder approval;
(B) when the issuance will result in a change of
control of the issuer;
(C) in connection with the acquisition of the stock
or assets of another company if:
(i) any director, officer or substantial
shareholder of the issuer has a 5% or greater
interest (or such persons collectively have a 10% or
greater interest), directly or indirectly, in the
company or assets to be acquired or in the
consideration to be paid in the transaction or series
of related transactions and the present or potential
issuance of common stock, or securities convertible
into or exercisable for common stock,
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<PAGE>
could result in an increase in outstanding common
shares or voting power of 5% or more; or
(ii) where the present or potential issuance
of common stock, or securities convertible into or
exercisable for common stock, other than a public
offering for cash, if the common stock has or will
have upon issuance voting power equal to or in excess
of 20% of the voting power outstanding before the
issuance of stock or securities convertible into or
exercisable for common stock, or the number of shares
of common stock to be issued is or will be equal to
or in excess of 20% of the number of shares or common
stock outstanding before the issuance of the stock or
securities; or
(D) in connection with a transaction other than a
public offering involving:
(i) the sale or issuance by the issuer of
common stock (or securities convertible into or
exercisable for common stock) at a price less than
the greater of book or market value which together
with sales by officers, directors or substantial
shareholders of the company equals 20% or more of
common stock or 20% or more of the voting power
outstanding before the issuance; or
(ii) the sale or issuance by the company of
common stock (or securities convertible into or
exercisable common stock) equal to 20% or more of the
common stock or 20% or more of the voting power
outstanding before the issuance for less than the
greater of book or market value of the stock.
(2) Exceptions may be made upon application to the
Association when:
(A) the delay in securing stockholder
approval would seriously jeopardize the financial
viability of the enterprise; and
(B) reliance by the company on this
exception is expressly approved by the Audit
Committee of the Board or a comparable body.
A company relying on this exception must mail to all
shareholders not later than ten days before issuance of the
securities a letter alerting them to its omission to seek the
shareholder approval that would otherwise be required and
indicating that the Audit Committee of the Board or a
comparable body has expressly approved the exception.
The issuance of the Preferred Stock constitutes an issuance of stock by
the Company at a price less than the market value of the Common Stock on the
date of issuance due to the adjusting conversion price which may be lower than
the market value of the Company's Common Stock on June 14, 1996. As a result of
this, and because the urgent need for the financing did not permit delay of the
financing in order to obtain stockholder approval prior to the issuance of the
shares of Preferred Stock, the Company and the holders of the Preferred Stock
agreed to limit the number of shares of Common Stock issuable upon conversion of
the Preferred Stock to 2,291,891 shares (which is less than 20% of the
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number of shares of Common Stock of the Company outstanding on June 14, 1996),
in order to comply with Nasdaq Rule 4460(i)(1)(D)(ii) described above. As of
June 14, 1996, there were 11,508,105 shares of Common Stock outstanding and the
closing price of such Common Stock was $9.375 per share.
Section (6) of the Certificate provides that the limit of 2,291,891
shares will no longer be applicable if the Company obtains the approval of its
stockholders for the issuance of shares of Common Stock in excess of 2,291,891
shares upon conversion of the Preferred Stock and such approval is permitted
under the Nasdaq Rule described above. In order to issue in excess of twenty
percent (20%) of the shares of Common Stock issued and outstanding as of June
14, 1996 and in order to comply with Nasdaq Rule 4460(i)(1)(D)(ii), the Company
is requesting that the stockholders approve the issuance of shares in excess of
the 2,291,891 share limit set forth in the Certificate. In the event stockholder
approval is not obtained and the Preferred holders attempt a conversion which
would exceed the limit, the Company must redeem the excess shares of Preferred
Stock as described above.
Stockholder Approval
The Board of Directors of the Company desires to eliminate the limit
set forth in the Certificate. The Board believes it would be in the best
interests of the Company if the Company could issue the additional shares of
Common Stock to the Preferred holders rather than being required to redeem the
Preferred Stock at the required redemption price. The Board believes this
provision could result in a forced redemption at a time when the Company did not
have, and could not raise, the cash necessary to redeem the shares of Preferred
Stock. The Board desires to have the ability to retain the cash for the use of
the Company for other purposes.
Under the Nasdaq Rule and the terms of the Certificate, stockholder
approval is required for the issuance of shares of Common Stock in excess of the
2,291,891 share limit. The Board hereby solicits such approval on behalf of the
Company to issue such additional shares of Common Stock as is required to permit
the Preferred holders to convert the Preferred Stock fully at the then relevant
conversion price. The actual number of shares of Common Stock which will be
issuable upon conversion will not be determinable until the conversion(s) take
place. As of June 27, 1996 the conversion price was $6.477625 per share making
the Preferred Stock convertible into 3,087,549 shares of Common Stock (but for
the limit). If stockholder approval of this proposal is not obtained and the
Preferred holders attempt a conversion which would exceed the limit, a maximum
of 2,291,891 shares will be issued upon the attempted conversion of the
Preferred Stock and the Company will be required to redeem the remaining shares
of Preferred Stock outstanding at the required redemption price.
Vote Required
The affirmative vote of the holders of a majority of the Company's
Common Stock present or represented and entitled to vote at the meeting is
required to approve the proposal to eliminate the restriction on the number of
shares of Common Stock issuable upon conversion of the Preferred Stock. An
abstention from voting by a stockholder present in person or represented by
proxy at the meeting has the same effect as a vote against the matter.
The Board of Directors recommends that the stockholders vote "FOR" the approval
of this proposal.
PROPOSAL NO. 3 APPROVAL OF AMENDMENT TO 1991 STOCK OPTION PLAN TO INCREASE
NUMBER OF SHARES
On October 31, 1991 the Company's Board of Directors approved the
adoption of the Company's 1991 Stock Option Plan (the "1991 Plan"), providing
for the grant of options to acquire an aggregate of 3,403,524 shares of Common
Stock. The number of shares issuable under the Plan was increased to 4,428,524
at the 1995 Annual Meeting of Stockholders. At the Special Meeting, the
stockholders are
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being asked to consider and approve an amendment to the 1991 Plan to increase
the number of shares available for issuance under the 1991 Plan to 6,000,000
shares.
Incentive stock options within the meaning of Section 422 of the
Internal Revenue Code (the "Code") and non-qualified stock options may be
granted under the 1991 Plan.
A description of the principal features of the 1991 Plan is set forth
below. The only change to the existing 1991 Plan effected by the proposed
amendment is an increase in the number of shares available for issuance under
the 1991 Plan from 4,428,424 to 6,000,000 shares.
Purpose
The purpose of the 1991 Plan is to attract, retain and provide equity
incentives to selected persons to promote the financial success of the Company.
Administration
The 1991 Plan is administered by the Board of Directors or by a
committee ("Committee") appointed by the Board, consisting of not less than two
directors of the Company. Prior to August 15, 1996, no director could serve on
the Committee who was not a disinterested person for purposes of Rule 16b-3 as
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Effective August 15, 1996
Rule 16b-3 was amended and as of such date the Committee, if any, will consist
of non-employee directors as defined in Rule 16b-3. The Board or the Committee
is authorized to interpret and carry out the 1991 Plan, subject to the general
purpose, terms and conditions of the 1991 Plan. Commencing August 15, 1996
either the Board or the Committee shall select the individuals to whom options
will be granted and determine the type of option and the number of shares to be
optioned. Option grants after August 15, 1996 under the 1991 Plan will be
determined in the discretion of the Board or a Committee if one is appointed.
The Stock Option Committee of the Board has historically administered the 1991
Plan.
Eligibility
The 1991 Plan provides that options may be granted to employees,
officers, directors, consultants, independent contractors and advisors to or of
the Company or any parent, subsidiary or affiliate of the Company (provided that
the consultants, independent contractors and advisors must render bona fide
services not in connection with the offer and sale of securities in a
capital-raising transaction). Incentive stock options may only be granted to
employees of the Company or a parent or subsidiary of the Company.
Stock Options
Under the 1991 Plan, incentive or non-qualified stock options may be
granted for terms ranging up to ten years. The exercise price per share under
the 1991 Plan shall be no less than 100% of the fair market value of the
Company's Common Stock on the date prior to the date of the grant for incentive
stock options and no less than 85% of the fair market value of the Company's
Common Stock on the date prior to the date of grant for non-qualified stock
options.
The stock option agreement between the Company and each option holder
will specify the number of shares to which it pertains and whether it is an
incentive stock option or a non-qualified stock option. At the time an option is
granted, the Committee will determine the terms and conditions to be satisfied
before shares may be purchased including the type of option and the dates on
which shares
-10-
<PAGE>
subject to the option may first be purchased. At the time an option is granted,
the Committee will fix the period within which it may be exercised which will
not be more than ten years from the date of grant.
In addition, the aggregate fair market value (determined at the time
the stock option is granted) of stock with respect to which incentive stock
options are exercisable for the first time by an employee during any one
calendar year (under all stock option plans of the Company and any parent or
subsidiary) may not exceed $100,000. Presently the 1991 Plan also provides that
no optionee may receive in any one fiscal year options to purchase more than
160,000 shares provided that a newly hired optionee may receive an additional
one-time grant of an option to purchase up to an additional 250,000 shares. This
provision may be eliminated by the Board if appropriate to do so.
Common Stock purchased pursuant to a stock option agreement must be
paid for in full at the time of purchase (i) in cash or (ii) in the discretion
of the Committee, (a) through the delivery of shares of Common Stock of the
Company with a value equal to the total option exercise price, (b) through a
guaranty by the Company of a loan to the option holder of all or part of the
option price, (c) by cancellation of indebtedness of the Company to the option
holder, (d) by waiver of compensation owed to the option holder by the Company,
(e) through a "same day sale" or (f) through a broker margin commitment, or
(iii) by a combination of the methods described in (i) and (ii) above. Provision
for payment by other than cash must be set forth in the original stock option
agreement at the time of the option grant.
Termination of Employment or Death
Except as provided below, no stock option granted under the 1991 Plan
to the extent such option rights are then exercisable, will be exercisable more
than three months after termination of employment of the option holder, except
that (i) if termination is due to the death of the option holder, then such
option will be exercisable no more than twelve months after his or her death,
but only to the extent it was exercisable at the date of death, and (ii) if
termination is due to the permanent and total disability of the employee (as
defined in the Code), then such option will be exercisable no more than twelve
months after said date of termination, but only to the extent it was exercisable
at the date of termination. In no event may a stock option be exercised after
the expiration of the term established in the stock option agreement.
Adjustments in Options
The 1991 Plan provides for appropriate adjustment in the number of
shares subject to outstanding options and in the number of shares available for
future grants, in the event that dividends are paid in Common Stock or in the
event there are splits, subdivisions or combinations of shares of Common Stock
of the Company.
The 1991 Plan provides for the automatic acceleration of the vesting of
all options outstanding under the 1991 Plan in the event of a merger or
consolidation of the Company in which the Company is not the surviving
corporation or in the event of a sale of all or substantially all of the assets
of the Company, if the successor entity does not assume the outstanding options
or provide options in substitution for the outstanding options.
Modification, Suspension and Termination
The 1991 Plan may be modified, amended, suspended or discontinued by
the Board of Directors at any time and from time to time, except that an option
holder's rights under a previously granted option may not be impaired without
his or her consent.
-11-
<PAGE>
The Board of Directors may not amend the 1991 Plan without the consent
of the stockholders in a manner which would: (i) increase the total number of
shares of stock reserved for purposes of the 1991 Plan (except for adjustment as
described above), (ii) extend the duration of the 1991 Plan, (iii) extend the
period during and over which options may be exercised under the 1991 Plan; or
(iv) change the class of persons eligible to participate in the 1991 Plan.
No options may be granted under the 1991 Plan after September 3, 2001.
Nontransferability of Options
No options granted under the 1991 Plan shall be assignable or
transferable by the recipient except by will or the laws of descent and
distribution. During the life of the recipient, the options shall be exercisable
only by the recipient.
Options Outstanding Under the 1991 Plan
As of July 1, 1996, incentive stock options were outstanding covering
1,531,256 shares of Common Stock, nonqualified stock options were outstanding
covering 921,462 shares of Common Stock and 2,205,261 shares had been issued
upon the exercise of options granted under the 1991 Plan. Options were held by
approximately 713 persons.
As of July 1, 1996, the aggregate exercise price of all options
outstanding under the 1991 Plan and the aggregate market value of the Common
Stock of the Company reserved for such outstanding stock options were
$19,491,524.52 and $20,082,854.98 respectively.
As of May 31, 1996, the Committee had authorized the grant of an option
to purchase an aggregate of 256,666 shares of Common Stock which options were
subject to receipt of stockholder approval of the increase in the size of the
1991 Plan. Edward Marinaro, the Chairman of the Board of the Company, was
granted the option to purchase the 256,666 shares which are subject to receipt
of stockholder approval.
Federal Tax Consequences
Non-Qualified Stock Options. An option holder will not be deemed to
have received any compensation for Federal income tax purposes upon the grant of
a non-qualified stock option. Upon exercise of the option, the option holder
will realize taxable ordinary income in the amount of the excess, if any, of the
fair market value of the Common Stock on the date of exercise over the exercise
price. The tax basis of such shares will be equal to the fair market value of
the shares as of the exercise date. The ordinary income recognized by any
employee at the time of exercise of the option will be treated as wages and will
be subject to income tax withholding by the Company.
If the option holder holds such shares for more than one year following
exercise of the option, any gain realized upon disposition will be treated as
long-term capital gain. If the shares are sold within one year after the
exercise date, any gain realized upon disposition will be treated as short-term
capital gain. The gain realized upon disposition will be the excess, if any, of
the sales price over the tax basis of the shares.
The Company will be entitled to a deduction for Federal income tax
purposes in an amount equal to the ordinary income, if any, recognized upon
exercise of the option.
-12-
<PAGE>
Incentive Stock Options. An employee will not be deemed to have
received any compensation for Federal income tax purposes either at the time of
grant or at the time of exercise of an incentive stock option. However, the
excess of the fair market value of the stock acquired upon the exercise of an
incentive stock option on the exercise date over the exercise price will be an
item of tax preference for purposes of computing an employee's alternative
minimum tax liability, if any.
If the employee disposes of the shares within two years from the date
of the granting of the incentive stock option or within one year from the date
of exercise, any gain the employee realizes will be taxed as ordinary income in
an amount equal to the difference between the exercise price and the lesser of
the fair market value of the shares of Common Stock on the date of exercise or
the sales price. The excess, if any, of the sales price over the fair market
value of the shares on the date of exercise will be treated as capital gain. The
Company will be entitled to a deduction for Federal income tax purposes in an
amount equal to the ordinary income, if any, recognized by the employee upon the
premature disposition of shares.
If the employee exercises an incentive stock option and does not
dispose of the shares acquired upon exercise of the incentive stock option
within two years from the date of the granting of such option or within one year
from the date of exercise, any gain the employee realizes will be treated as
long-term capital gain. The Company will not be entitled to a deduction for
Federal income tax purposes in connection with the grant or exercise of the
incentive stock option or the subsequent disposal of the stock by the employee
unless there is a premature disposition of the shares.
The above is not a complete description of the Federal income tax
aspects of options granted under the 1991 Plan. Furthermore, no information is
given herein with respect to any state and local taxes or any non-U.S.
taxes which may be applicable.
Vote Required
The affirmative vote of the holders of a majority of the Company's
Common Stock present or represented and entitled to vote at the meeting is
required to approve the adoption of the amendment to the 1991 Plan. The total
number of shares cast "for" this proposal and the total number of shares
represented by proxy for which no instructions are given will be counted for
purposes of determining whether sufficient affirmative votes have been cast. An
abstention from voting by a stockholder present in person or represented by
proxy at the meeting has the same effect as a vote "against" the matter.
The Board of Directors recommends that the stockholders vote "FOR" the
approval of the amendment to the 1991 Stock Option Plan.
PROPOSAL NO. 4 APPROVAL OF AMENDMENT TO 1992 NON-EMPLOYEE DIRECTOR STOCK OPTION
PLAN TO INCREASE NUMBER OF SHARES
In 1992, the Board of Directors and the stockholders of the Company
approved the adoption of the 1992 Non-Employee Director Stock Option Plan (the
"Director Plan") and the reservation of 150,000 shares of the Company's Common
Stock for issuance thereunder. At the 1995 Annual Meeting of Stockholders, the
stockholders approved an increase in the Director Plan to 250,000 shares. As of
July 1, 1996, options to purchase 65,000 shares remained outstanding under the
Director Plan and options to purchase 185,000 shares remained available for
grant. The Board believes that in order to continue to enable the Company to
attract and retain the best available personnel who are not employees of the
Company to serve as directors ("Outside Directors") of the Company, the Director
Plan should be amended to
-13-
<PAGE>
increase the number of shares of the Company's Common Stock reserved for
issuance under the Director Plan to 500,000 shares.
Summary of the Director Plan and Amendment
The material features of the Director Plan are outlined below. The only
change to the existing Director Plan effected by the proposed amendment is an
increase in the number of shares available for issuance under the Director Plan
from 250,000 to 500,000.
<TABLE>
The benefits that are received by the Outside Directors under the
Director Plan are as follows:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Number of Shares Underlying
Options Granted in Each
Name and Position Dollar Value Fiscal Year(1)(2)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Outside Directors as a Group (3) 15,000
- ---------------------------------------------------------------------------------------------------------------------
<FN>
- ----------------------------------------------------------
(1) Assuming three Outside Directors
(2) If Proposal Number 5 is adopted the number of shares underlying options
granted in each fiscal year will increase to 30,000 shares, and a one-time
grant of options to purchase an additional 90,000 shares would be made to
existing Outside Directors. In addition, any new Outside Director would
receive a one-time grant of options to purchase 30,000 shares.
(3) Not determinable because the market value on the date of exercise is not
presently ascertainable.
</FN>
</TABLE>
No directors other than Outside Directors and no officers or employees of
the Company are eligible to participate in the Director Plan.
Purposes
The purposes of the Director Plan are to attract and retain the best
available personnel to serve as Outside Directors of the Company and to
encourage ownership in the Company by such Outside Directors. Options granted
under the Director Plan are nonstatutory stock options not entitled to special
tax treatment under Section 422 of the Code, or its applicable regulations.
Administration
The Director Plan is administered by the Board of Directors of the
Company. The interpretation and construction of any provision of the Director
Plan by the Board is final and binding. Members of the Board receive no separate
compensation for their services in connection with the administration of the
Director Plan.
-14-
<PAGE>
Eligibility
The Director Plan provides that options may be granted only to Outside
Directors. Outside Directors are directors who are not employees of the Company
or its subsidiaries. The Company currently has a total of five directors, three
of whom are Outside Directors.
Grant of Options
All grants of options under the Director Plan are automatic and
nondiscretionary. Accordingly, no person shall have any discretion to select
which Outside Directors shall be granted options, to determine when such options
shall be granted or to determine the number of shares to be covered by options
granted to Outside Directors. All grants of options are made in strict
accordance with the following provisions (which provisions would be modified as
described in Proposal No. 5 if Proposal No. 5 is adopted):
(a) Immediately after each annual meeting of stockholders of the
Company at which directors are elected, reelected or continuing as
directors, each Outside Director is automatically granted an option or
options to purchase such number of shares of Common Stock as necessary
so that during each of the then four immediately following twelve-month
periods of July 1 through June 30 such Outside Director will have stock
options (including stock options granted under plans other than the
Director Plan) which become exercisable with respect to a minimum of
5,000 shares during each such period. By way of example, if immediately
following such a meeting of stockholders an Outside Director had an
option to purchase 5,000 shares that becomes exercisable during the
first twelve-month period, an option to purchase 3,000 shares that
becomes exercisable during the second twelve-month period, an option to
purchase 2,500 shares that becomes exercisable during the third
twelve-month period and no options that become exercisable during the
fourth twelve-month period, the Outside Director would be awarded the
following options that would become exercisable as follows: (i) zero
options for the first twelve-month period, (ii) an option to purchase
2,000 shares which becomes exercisable on the last day of the second
twelve-month period, (iii) an option to purchase 2,500 shares which
becomes exercisable on the last day of the third twelve-month period,
and (iv) an option to purchase 5,000 shares which becomes exercisable
on the last day of the fourth twelve-month period.
(b) During the term of the Director Plan, if a person first becomes an
Outside Director by appointment by the Board to fill a vacancy or a
newly created directorship, such Outside Director shall be
automatically granted an option or options to purchase such number of
shares of Common Stock necessary so that during each of the then four
immediately following twelve-month periods of July 1 through June 30
such Outside Director will have stock options (including stock options
granted under plans other than the Director Plan) which become
exercisable with respect to a minimum of 5,000 shares.
(c) All options granted shall become exercisable on the last day of the
applicable twelve-month periods, provided the Outside Director is then
a member of the Board of Directors.
(d) No consideration will be received by the Company for the granting
of the options under the Director Plan.
-15-
<PAGE>
Term of Options
The date of grant of each option shall be the date of the applicable
annual meeting of stockholders or the date on which a person is appointed by the
Board of Directors to fill a vacancy or a newly created directorship. Options
granted under the Director Plan have a term of seven years. Each option shall be
evidenced by an agreement between the Company and the Outside Director to whom
such option is granted. Options granted must comply with applicable provisions
of Rule 16b-3 under the Exchange Act, so that they qualify for the exemption
from Section 16 of the Exchange Act set forth in Rule 16b-3.
Option Price
The option price under the Director Plan is 100% of the fair market
value of the Company's Common Stock on the date of grant. Fair market value
shall be determined by reference to the closing sales price on the Nasdaq
National Market system, or in the event that the Common Stock is listed on a
stock exchange, the fair market value shall be the closing price on such
exchange on the grant date. The closing sales price per share of the Company's
Common Stock on July 1, 1996 was $8.188.
The consideration to be paid for shares issued upon exercise of options
granted under the Director Plan, including the method of payment, shall be
determined by the Board and may consist of cash, check, other shares of Common
Stock and certain other consideration and methods permitted by applicable law.
Termination of Status as a Director Through Death, Disability or Otherwise
Under the Director Plan, in the event an optionee ceases to serve as a
director of the Company for any reason other than death or total and permanent
disability, an option may thereafter be exercised, to the extent it was
exercisable at the date of such termination, for three months. If an optionee's
service as a director is terminated as a result of the optionee's permanent and
total disability, the option will be exercisable for twelve months following
such termination, but only to the extent it was exercisable at the date of
termination. If an optionee's service as a director of the Company is terminated
by reason of the optionee's death, the option will be exercisable by the
optionee's estate or successor in interest for twelve months following death,
but only to the extent it was exercisable at the date of death. However, in no
event may an option be exercised once its term has expired.
Nonassignability of Options
Options granted pursuant to the Director Plan are nonassignable and
nontransferable by the optionee, other than by will or by the laws of descent
and distribution and may be exercised, during the lifetime of the optionee, only
by the optionee.
Adjustment Upon Changes in Capitalization and Corporate Transactions
In the event any changes, such as stock splits or dividends, are made
in the capitalization of the Company, which changes result in an increase or
decrease in the number of outstanding shares of Common Stock without receipt of
consideration by the Company, appropriate adjustments shall be made in the
number of shares which have been reserved for issuance under the Director Plan
and the price per share covered by each outstanding option.
In the event of a merger, consolidation or similar occurrence where the
Company is not the surviving corporation, each outstanding option shall be
assumed or substituted by such successor
-16-
<PAGE>
corporation or a parent or subsidiary of such successor corporation. In the
event such successor corporation does not agree to assume or substitute such
option, the Company shall notify the optionee that the option shall be fully
exercisable for a period of twenty (20) days from the date of such notice and
the option will terminate upon the expiration of such period.
Amendment and Termination
The Board of Directors may amend the Director Plan at any time or from
time to time or may terminate the Director Plan without approval of the
stockholders. However, no action by the Board or the stockholders may
unilaterally alter or impair any rights previously granted under the Director
Plan without the consent of the optionee, except as necessary for compliance
with Rule 16b-3. In any event, the Director Plan will terminate in the year
2002.
Stockholder approval is required for amendments of the Director Plan
only as required by Rule 16b-3 as promulgated under the Exchange Act.
Federal Tax Consequences
Options granted under the Director Plan are nonstatutory stock options
not entitled to special tax treatment under the Code. Generally, an optionee
will not recognize any taxable income for the purposes of federal income tax
liability at the time the optionee is granted a nonstatutory option. However,
upon the exercise of the option, the optionee will recognize ordinary income for
income tax purposes equal to the excess of the then market value of the shares
over the option exercise price. The Company will be entitled to a deduction in
the same amount as the ordinary income recognized by the optionee.
The foregoing is not a complete description of the Federal income tax
aspects of options granted under the Director Plan. Furthermore, no information
is given herein with respect to any state and local taxes or any non-U.S. taxes
which may be applicable.
Vote Required
The affirmative vote of the holders of a majority of the Company's
Common Stock present or represented and entitled to vote at the meeting is
required to approve the adoption of the amendment to the Director Plan. The
total number of shares cast "for" this proposal and the total number of shares
represented by proxy for which no instructions are given will be counted for
purposes of determining whether sufficient affirmative votes have been cast. An
abstention from voting by a stockholder present in person or represented by
proxy at the meeting has the same effect as a vote "against" the matter.
The Board of Directors recommends that the stockholders vote "FOR" the
approval of the amendment to the 1992 Non-Employee Director Stock Option Plan.
PROPOSAL NO. 5 APPROVAL OF AMENDMENT TO GRANTS UNDER 1992 NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN
At the Special Meeting, the stockholders are being asked to approve
amendments to the 1992 Non-Employee Director Stock Option Plan which (i)
increase the minimum number of shares of the Company's Common Stock subject to
options to be granted annually to Outside Directors under the Director Plan from
5,000 to 10,000 shares and (ii) provide for a one-time grant of options to
purchase
-17-
<PAGE>
30,000 shares to each new Outside Director at the time he or she becomes a
member of the Board (with such 30,000 share option also to be granted to each
present Outside Director).
Summary of Director Plan and Amendment
The material features of the Director Plan are outlined above under
"Proposal No. 4 -- Approval Of Amendment To 1992 Non-Employee Director Stock
Option Plan To Increase Number Of Shares." The only change to the existing
Director Plan effected by the proposed amendment is the change to "Grant of
Options" discussed below.
<TABLE>
The benefits that will be received by the Outside Directors under the
Director Plan if the proposed amendment to the Director Plan are adopted are as
follows:
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Number of Shares Number of Shares Underlying
Name and Dollar Underlying Options Options Granted in
Position Value Granted in First Year(1)(2)(3) Subsequent Years(1)(2)(3)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Outside Directors as a (4) 120,000 30,000
Group
- ---------------------------------------------------------------------------------------------------------------------
<FN>
- ----------------------------------------------------------
(1) Assuming three Outside Directors.
(2) The number of shares underlying options granted to Outside Directors in any
year would increase by 30,000 for each Outside Director who became a
director in such year.
(3) The benefits that would be received by the Outside Directors under the
Director Plan if the amendment were not adopted are options to purchase
15,000 shares.
(4) Not determinable because the market value on the date of exercise is not
presently ascertainable.
</FN>
</TABLE>
Grant of Options
All grants of options under the Director Plan are automatic and
nondiscretionary. Accordingly, no person shall have any discretion to select
which Outside Directors shall be granted options, to determine when such options
shall be granted or to determine the number of shares to be covered by options
granted to Outside Directors. All grants of options are made in strict
accordance with the following provisions:
(a) Immediately after each annual meeting of stockholders of the
Company at which directors are elected, reelected or continuing as
directors, each Outside Director is automatically granted an option or
options to purchase such number of shares of Common Stock as necessary
so that during each of the then four immediately following twelve-month
periods of July 1 through June 30 such Outside Director will have stock
options (including stock options granted under plans other than the
Director Plan but not including the one-time grant of options to
purchase 30,000 shares which such Outside Director was granted (i) upon
becoming an Outside Director or (ii) for present Outside Directors,
immediately following the stockholder meeting at which the amendment
was approved) which become exercisable with respect to a minimum of
10,000 shares during each such period. By way of example, if
immediately following such a meeting of stockholders an Outside
Director had (in addition to and separate from such Outside Director's
one-time 30,000 share option) an option to purchase 10,000 shares that
becomes exercisable
-18-
<PAGE>
during the first twelve-month period, an option to purchase 6,000
shares that becomes exercisable during the second twelve-month period,
an option to purchase 3,000 shares that becomes exercisable during the
third twelve-month period and no options that become exercisable during
the fourth twelve-month period, the Outside Director would be awarded
the following options that would become exercisable as follows: (i)
zero options for the first twelve-month period, (ii) an option to
purchase 4,000 shares which becomes exercisable on the last day of the
second twelve-month period, (iii) an option to purchase 7,000 shares
which becomes exercisable on the last day of the third twelve-month
period, and (iv) an option to purchase 10,000 shares which becomes
exercisable on the last day of the fourth twelve-month period.
(b) During the term of the Director Plan, if a person first becomes an
Outside Director by appointment by the Board to fill a vacancy or a
newly created directorship, such Outside Director shall be
automatically granted an option or options to purchase such number of
shares of Common Stock necessary so that during each of the then four
immediately following twelve-month periods of July 1 through June 30
such Outside Director will have stock options (including stock options
granted under plans other than the Director Plan but not including the
one-time grant of options to purchase 30,000 shares) which become
exercisable with respect to a minimum of 10,000 shares.
(c) All annual options granted pursuant to (a) and (b) above shall
become exercisable on the last day of the applicable twelve-month
periods, provided the Outside Director is then a member of the Board of
Directors.
(d) During the term of the Director Plan, when a person first becomes
an Outside Director, whether by election at the annual meeting of
stockholders, or by appointment by the Board, such Outside Director
shall be automatically granted a one-time stock option as set forth
below, in addition to any stock options to be granted to such Outside
Director pursuant to (a) or (b) above. Immediately following the
election or appointment of an Outside Director to the Board, such
Outside Director shall be automatically granted a one-time option to
purchase 30,000 Shares, all of which options shall be immediately
exercisable. Notwithstanding the foregoing, immediately after the
meeting of stockholders at which the amendment to the Director Plan is
approved, all Outside Directors of the Company as of such date shall be
granted a one-time option to purchase 30,000 Shares, all of which
options shall be immediately exercisable. Such one-time option to
purchase 30,000 shares shall not be considered in determining the
number of stock options which an Outside Director has for purposes of
the calculation in (a) and (b) above.
(e) No consideration will be received by the Company for the granting
of the options under the Director Plan.
If the proposed amendment to the Director Plan were not adopted, (i)
options would continue to be granted to Outside Directors in accordance with the
foregoing provisions except that each Outside Director would receive options
such that he or she would have stock options (including stock options granted
under plans other than the Director Plan) which would become exercisable with
respect to an annual minimum of 5,000 shares and (ii) Outside Directors would
not receive a one-time grant of options to purchase 30,000 shares. The proposed
amendment will only (i) increase the number of shares subject to stock options
from 5,000 to 10,000 shares for each applicable twelve-month period, beginning
with the four twelve-month periods immediately following the adoption of the
proposed amendment and (ii) provide for a one-time grant of options to purchase
30,000 shares for each new Outside Director at the time he or she becomes a
member of the Board and for each existing Outside Director of the Company on the
date on which stockholder approval of the proposed amendment is received.
-19-
<PAGE>
Vote Required
The affirmative vote of the holders of a majority of the Company's
Common Stock present or represented and entitled to vote at the meeting is
required to approve the adoption of the amendment to the Director Plan. The
total number of shares cast "for" this proposal and the total number of shares
represented by proxy for which no instructions are given will be counted for
purposes of determining whether sufficient affirmative votes have been cast. An
abstention from voting by a stockholder present in person or represented by
proxy at the meeting has the same effect as a vote "against" the matter.
The Board of Directors recommends that the stockholders vote "FOR" the
approval of the amendment to the 1992 Non-Employee Director Stock Option Plan.
<TABLE>
EXECUTIVE COMPENSATION AND OTHER MATTERS
There is shown below information concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal years
ended September 30, 1995, 1994 and 1993 of the chief executive officer of the
Company as of September 30, 1995 and the other six most highly compensated
executive officers of the Company for the year ended September 30, 1995
(collectively the "Named Executive Officers"). Compensation information is only
included for those years during which the named individual served as an
executive officer of the Company.
<CAPTION>
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------------------
Long Term All Other
Annual Compensation Compensation Compensation
Awards ($)(2)
- ------------------------------------------------------------------------------------------------------------------------------
Number of
Securities
Fiscal Underlying
Name and Principal Positions Year Salary($) Bonus($)(1) Options Granted
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Syed H. Iftikar(3) 1995 320,811 0 0 1,000
Chairman of the Board, 1994 319,992 0 45,000 500
President and Chief 1993 268,746 85,000 40,000 250
Executive Officer
David Everett(3) 1995 255,458 0 0 1,000
Executive Vice President, 1994 229,992 0 10,000 500
Sales and Marketing 1993 98,942 27,009 50,000 0
Ken Hardesty(3) 1995 245,620 0 0 1,000
Vice President, Business 1994 231,000 0 10,000 500
Development 1993 135,577 37,639 65,000 0
Eugene Berti(3) 1995 226,699 0 0 1,000
Senior Vice President, 1994 225,000 0 10,000 500
-20-
<PAGE>
Research & Development 1993 93,976 31,459 50,000 250
Michael J. Perez(3) 1995 215,543 0 0 0
Senior Vice President, 1994 203,342 0 16,000 0
Finance Chief Financial 1993 183,163 54,963 16,000 0
Officer
J. Brent Nilson(3) 1995 131,757 0 0 1,000
Senior Vice President, 1994 169,992 0 6,000 500
Quality Assurance 1993 157,471 36,605 36,000 250
Robert E. Lyon(4) 1995 127,778 0 30,000 0
Vice President,
Human Resources
<FN>
- ----------------------------------
(1) Bonus for services rendered during the fiscal year and paid in the following
fiscal year.
(2) Consists of the Company's maximum matching contribution to the officer's
individual 401(k) plan account.
(3) No longer with the Company.
(4) Mr. Lyon commenced employment at the Company in January 1995.
</TABLE>
<TABLE>
The following table sets forth information with respect to each grant
of options to purchase the Company's Common Stock made during the last fiscal
year to each of the Named Executive Officers.
OPTION GRANTS IN FISCAL YEAR 1995
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term(4)
% of Total
No. of Options
Securities Granted to Exercise or
Underlying Employees Base
Options in Fiscal Price(2)(3) Expiration
Name Granted (1) Year ($/Share) Date 0% 5% 10%
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert E. Lyon 30,000 3.69 16.75 12/21/99 -- $138,831 $306,781
<FN>
- -------------
(1) The options were granted under the Company's 1991 Stock Option Plan.
-21-
<PAGE>
(2) Options were granted at an exercise price equal to the fair market value of
the Company's Common Stock, as determined by reference to the closing price
reported on the Nasdaq National Market System on the last trading day prior
to the date of grant.
(3) Exercise price and tax withholding obligations may be paid in cash or by an
alternative method of payment if authorized by the Board of Directors such
as by delivery of already owned shares subject to certain conditions, or
pursuant to a cashless exercise procedure.
(4) Potential realizable value is based on an assumption that the market price
of the stock appreciates at the stated rate, compounded annually, from the
date of grant to the expiration date. These values are calculated on
requirements promulgated by the Securities and Exchange Commission and do
not reflect the Company's estimate of future stock price appreciation.
Actual gains, if any, are dependent on the future market price of the
Company's Common Stock. Gains are reported net of the option exercise price
but before taxes associated with exercise.
</FN>
</TABLE>
<TABLE>
The following table sets forth information with respect to option
exercises and year end stock option values for each of the Named Executive
Officers.
AGGREGATE OPTION EXERCISES LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
<CAPTION>
Number of Securities/ Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Options at FY-End at FY-End(1)
Acquired on Value -------------------------- -----------------------------
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
---- ---------- ------------ ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Syed H. Iftikar(2) -- -- 475,730 58,750 $5,283,756 $207,344
David A. Everett(2) -- -- 25,000 35,000 $ 6,250 $ 47,500
Kenneth Hardesty(2) 20,000 $ 170,500 12,500 42,500 $ 53,125 $179,375
Eugene Berti(2) 25,000 $ 131,875 -- -- $ -- $ --
Michael Perez(2) 38,318 $ 610,918 38,000 24,000 $ 362,750 $ 85,000
J. Brent Nilson(2) 87,244 $ 1,240,654 -- -- $ -- $ --
Robert E. Lyon -- -- -- 30,000 $ -- $ --
<FN>
- -----------------------------
(1) Calculated as the difference between the market value of the Company's
Common Stock at exercise date or fiscal year end, as the case may be, and
the exercise price.
(2) No longer with the Company.
</TABLE>
-22-
<PAGE>
Change of Control Provisions
The 1991 Stock Option Plan of the Company provides for the automatic
acceleration of the vesting of all options outstanding under the Plan in the
event of a merger or consolidation of the Company in which the Company is not
the surviving corporation or in the event of a sale of all or substantially all
of the assets of the Company, if the successor entity does not assume the
outstanding options or provide options in substitution for the outstanding
options.
Compensation of Directors
Non-employee members of the Board receive an annual retainer of $10,000
for serving as a director during the fiscal year. Non-employee directors were
also paid a fee of $1,500 for each Board meeting and $500 for each committee
meeting attended.
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting.
If any other matters properly come before the meeting, it is the intention of
the persons named in the enclosed form of Proxy to vote the shares they
represent as the Board of Directors may recommend.
Dated: August 21, 1996
-23-
<PAGE>
APPENDIX A
- --------------------------------------------------------------------------------
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SYQUEST TECHNOLOGY, INC.
R SPECIAL MEETING OF STOCKHOLDERS
O The undersigned stockholder of SYQUEST TECHNOLOGY, INC., a Delaware
corporation ("Company"), hereby acknowledges receipt of the Notice of
X Special Meeting of Stockholders and Proxy Statement, each dated
August 21, 1996, and hereby appoints Edwin L. Harper and John W.
Y Luhtala, or either of them, proxies and attorneys-in-fact, with full
power to each of substitution, on behalf of and in the name of the
undersigned, to represent the undersigned at the Special Meeting of
Stockholders of SyQuest Technology, Inc. to be held on September
26, 1996 at 4:00 p.m. local time, at the principal executive
offices of SyQuest Technology, Inc., 47071 Bayside Parkway, Fremont,
California 94538, and at any adjournment or adjournments thereof, and
to vote all shares of Common Stock which the undersigned would be
entitled to vote if then and there personally present, on the matters
set forth on the reverse side.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR PROPOSALS NOS. 1, 2, 3, 4, 5 AND 6, AND
AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING.
- --------------------------------------------------------------------------------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
MARK HERE FOR ADDRESS [ ]
1. To approve amendment to Certificate of Incorporation CHANGE AND NOTE AT LEFT
to increase number of authorized shares
(This proxy should be marked, dated and signed by the
[ ] For [ ] Against [ ] Abstain stockholder(s) exactly as his or her name appears
hereon, and returned promptly in the enclosed
2. To approve increase in number of shares issuable upon envelope. Persons signing in a fiduciary capacity
conversion of Preferred Stock should so indicate. If shares are held jointly or as
community property, both stockholders should sign.)
[ ] For [ ] Against [ ] Abstain
Signature: Date:
3. To approve increase in number of shares issuable ---------------------- ----------
under the 1991 Stock Option Plan Signature: Date:
-------------------- ----------
[ ] For [ ] Against [ ] Abstain
4. To approve increase in number of shares issuable
under the 1992 Non-Employee Director Stock Option Plan
[ ] For [ ] Against [ ] Abstain
5. To approve increase in number of shares granted
annually to Outside Directors, and one-time
grants of options to purchase 30,000 shares under
the 1992 Non-Employee Director Stock Option Plan
[ ] For [ ] Against [ ] Abstain
6. To transact such other business as may come before
the meeting or any adjournment thereof.
[ ] For [ ] Against [ ] Abstain
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
-2-
<PAGE>
APPENDIX B
As of 8/21/96
[DELAWARE]
SYQUEST TECHNOLOGY, INC.
1991 STOCK OPTION PLAN
1. PURPOSE. This 1991 Stock Option Plan1/ ("Plan") is
established as a compensatory plan to attract, retain and provide equity
incentives to selected persons to promote the financial success of SyQuest
Technology, Inc., a Delaware corporation (the "Company"). Capitalized terms not
previously defined herein are defined in Section 17 of this Plan.
2. TYPES OF OPTIONS AND SHARES. Options granted under this
Plan (the "Options") may be either (a) incentive stock options ("ISOs") within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or (b) nonqualified stock options ("NQSOs"), as designated at the time
of grant. The shares of stock that may be purchased upon exercise of Options
granted under this Plan (the "Shares") are shares of the common stock of the
Company.
3. NUMBER OF SHARES. The aggregate number of Shares that may
be issued pursuant to Options granted under this Plan is 6,000,000 Shares,
subject to adjustment as provided in the Plan, provided, however, that the
number of Shares set forth in this Section 3 may not be increased except
pursuant to adjustments as provided herein; provided, however, that in no event
shall the Company issue options to purchase more than a combined total of
6,543,700 Shares under the Plan and the 1982 Employee Incentive Stock Option
Plan and the 1982 Stock Option Plan of SyQuest Technology, a California
corporation. If any Option expires or is terminated without being exercised in
whole or in part, the unexercised or released Shares from such Option shall be
available for future grant and purchase under this Plan. At all times during the
term of this Plan, the Company shall reserve and keep available such number of
Shares as shall be required to satisfy the requirements of outstanding Options
under this Plan.
- ----------------
1/ Approved by the Board of Directors on October 31,
1991; Section 3 amended on November 5, 1991.
Approved by the Stockholders on November 5, 1991;
Amended by the Board of Directors on December 21,
1994 which amendment was approved by the
Stockholders on February 28, 1995. Amended by the
Board of Directors on August 21, 1996.
<PAGE>
4. ELIGIBILITY.
(a) General Rules of Eligibility. Options may be
granted to employees, officers, directors, consultants, independent contractors
and advisors (provided such consultants, contractors and advisors render bona
fide services not in connection with the offer and sale of securities in
capital-raising transaction) of the Company or any Parent, Subsidiary or
Affiliate of the Company. ISOs may be granted only to employees (including
officers and directors who are also employees) of the company or a Parent or
Subsidiary of the Company. The Committee (as defined in Section 14) in its sole
discretion shall select the recipients of Options ("Optionees"). An Optionee may
be granted more than one Option under this Plan.
(b) Company Assumption of Options. The Company may
also, from time to time, assume outstanding options granted by another company,
whether in connection with an acquisition of such other company or otherwise, by
either (i) granting an Option under this Plan in replacement of the option
assumed by the Company, or (ii) treating the assumed option as if it had been
granted under this Plan if the terms of such assumed option could be applied to
an option granted under this Plan. Such assumption shall be permissible if the
holder of the assumed option would have been eligible to be granted an option
hereunder if the other company had applied the rules of this Plan to such grant.
5. TERMS AND CONDITIONS OF OPTIONS. The Committee shall
determine whether each Option is to be an ISO or an NQSO, the number of Shares
subject to the Option, the exercise price of the Option, the period during which
the Option may be exercised, and all other terms and conditions of the Option,
subject to the following:
(a) Form of Option Grant. Each Option granted under
this Plan shall be evidenced by a written Stock Option Grant (the "Grant") in
substantially the form attached hereto as Exhibit A or such other form as shall
be approved by the Committee.
(b) Date of Grant. The date of grant of an Option
shall be the date on which the Committee makes the determination to grant such
Option unless otherwise specified by the Committee. The Grant representing the
Option will be delivered to the Optionee with a copy of this Plan within a
reasonable time after the date of grant; provided, however that if, for any
reason, including a unilateral decision by the Company not to execute an
agreement evidencing such option, a written Grant is not executed within sixty
(60) days after the date of grant, such option shall be deemed null and void. No
option shall be exercisable until such Grant is executed by the Company and the
Optionee.
-2-
<PAGE>
(c) Exercise Price. The exercise price of an NQSO
shall be not less than eighty-five percent (85%) of the Fair Market Value of the
Shares on the date the Option is granted. The exercise price of an ISO shall be
not less than one hundred percent (100%) of the Fair Market Value of the Shares
on the date the Option is granted. The exercise price of any ISO granted to a
person owning more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary of the Company
("Ten Percent Stockholders") shall not be less than one hundred ten percent
(110%) of the Fair Market Value of the Shares on the date the Option is granted.
(d) Exercise Period. Options shall be exercisable
within the times or upon the events determined by the Committee as set forth in
the Grant; provided, however, that no Option shall be exercisable after the
expiration of ten (10) years from the date the Option is granted, and provided
further that no ISO granted to a Ten Percent Stockholder shall be exercisable
after the expiration of five (5) years from the date the Option is granted.
(e) Limitations on ISOs. The aggregate Fair Market
Value (determined as of the time an Option is granted) of stock with respect to
which ISOs are exercisable for the first time by an Optionee during any calendar
year (under this Plan or under any other incentive stock option plan of the
Company or any Parent or Subsidiary of the Company) shall not exceed one hundred
thousand dollars ($100,000). If the Fair Market Value of stock with respect to
which ISOs are exercisable for the first time by an Optionee during any calendar
year exceeds $100,000, the Options for the first $100,000 worth of stock to
become exercisable in such year shall be ISOs and the Options for the amount in
excess of $100,000 that becomes exercisable in that year shall be NQSOs. In the
event that the Code or the regulations promulgated thereunder are amended after
the effective date of this Plan to provide for a different limit on the Fair
Market Value of Shares permitted to be subject to ISOs, such different limit
shall be incorporated herein and shall apply to any Options granted after the
effective date of such amendment.
(f) Options Non-Transferable. Options granted under
this Plan, and any interest therein, shall not be transferrable or assignable by
the Optionee, and may not be made subject to execution, attachment or similar
process, otherwise than by will or by the laws of descent and distribution and
shall be exercisable during the lifetime of the Optionee only by the Optionee or
any permitted transferee.
(g) Assumed Options. In the event the Company assumes
an option granted by another company in accordance with 4(b) above, the terms
and conditions of such option shall remain unchanged (except the exercise price
and the number and nature of shares issuable upon exercise, which will be
adjusted appropriately pursuant to Section 424 of the Code and the Treasury
-3-
<PAGE>
Regulations applicable thereto.). In the event the Company elects to grant a new
option rather than assuming an existing option (as specified in Section 4), such
new option need not be granted at Fair Market Value on the date of grant and may
instead be granted with a similarly adjusted exercise price.
(h) Limitations on Grants. The foregoing provisions
of this Plan notwithstanding, after December 21, 1994, no Optionee shall be
granted Options under this Plan in any one fiscal year which in the aggregate
shall permit the Optionee to purchase more than 160,000 shares of Common Stock,
provided that a newly-hired Optionee may in addition receive a one-time Option
grant to purchase up to an additional 250,000 shares of Common Stock upon
acceptance of employment with the Company or any Parent, Subsidiary or Affiliate
of the Company. To the extent the Board of Directors of the Company determines
that the limitations such as the provisions of this Section 5(h) are no longer
required to preserve the deductibility for the Company of option-related
compensation under Section 162(m) of the Internal Revenue Code, the Board of
Directors may modify or eliminate the limitations contained in this Section
5(h).
6. EXERCISE OF OPTIONS.
(a) Notices. Options may be exercised only by
delivery to the Company of a written exercise agreement in a form approved by
the Committee (which need not be the same for each Optionee), stating the number
of Shares being purchased, the restrictions imposed on the Shares, if any, and
such representations and agreements regarding the Optionee's investment intent
and access to information, if any, as may be required by the Company to comply
with applicable securities laws, together with payment in full of the exercise
price for the number of Shares being purchased.
(b) Payment. Payment for the Shares may be made in
cash (by check) or, where approved by the Committee in its sole discretion at
the time of grant and where permitted by law: (i) by cancellation of
indebtedness of the Company to the Optionee; (ii) by surrender of shares of
Common Stock of the Company already owned by the Optionee, having a Fair Market
Value equal to the exercise price of the Option; (iii) by waiver of compensation
due or accrued to Optionee for services rendered; (iv) through a guaranty by the
Company of a loan to the Optionee by a third party of all or part of the option
price (but not more than the option price), and such guaranty may be on an
unsecured or secured basis as the Committee shall approve (including, without
limitation, by a security interest in the shares of the Company); (v) provided
that a public market for the Company's stock exists, through a "same day sale"
commitment from the Optionee and a broker-dealer that is a member of the
National Association of Securities Dealers, Inc. (an "NASD Dealer") whereby the
Optionee irrevocably elects to exercise the Option and to sell
-4-
<PAGE>
a portion of the Shares so purchased to pay for the exercise price and whereby
the NASD Dealer irrevocably commits upon receipt of such Shares to forward the
exercise price directly to the Company; (vi) provided that a public market for
the Company's stock exists, through a "margin" commitment from the Optionee and
an NASD Dealer whereby the Optionee irrevocably elects to exercise the Option
and to pledge the Shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the exercise price,
and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the exercise price directly to the Company; or (vii) by any combination
of the foregoing.
(c) Withholding Taxes. Prior to issuance of the
Shares upon exercise of an Option, the Optionee shall pay or make adequate
provision for any federal or state withholding obligations of the Company, if
applicable. Where approved by the Committee in its sole discretion, the Optionee
may provide for payment of withholding taxes upon exercise of the Option by
requesting that the Company retain Shares with a Fair Market Value equal to the
minimum amount of taxes required to be withheld. In such case, the Company shall
issue the net number of Shares to the Optionee by deducting the Shares retained
from the Shares exercised. The Fair Market Value of the Shares to be withheld
shall be determined on the date that the amount of tax to be withheld is to be
determined in accordance with Section 83 of the Code (the "Tax Date"). All
elections by Optionees to have Shares withheld for this purpose shall be made in
writing in a form acceptable to the Committee and shall be subject to the
following restrictions:
(i) the election must be made on or prior to
the applicable Tax Date;
(ii) once made, the election shall be
irrevocable as to the particular Shares as to which the election is made;
(iii) all elections shall be subject to the
consent or disapproval of the Committee.
(iv) if the Optionee is an officer or
director of the Company or other person (in each case, an "Insider") whose
transactions in the Company's Common Stock are subject to Section 16(b) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and if the
Company is subject to Section 16(b) of the Exchange Act, the election must
comply with Rule 16b-3.
(d) Limitations on Exercise. Notwithstanding anything
else to the contrary in the Plan or any Grant, no Option may be exercisable
later than the expiration date of the Option.
-5-
<PAGE>
7. RESTRICTIONS ON SHARES. At the discretion of the Committee,
the Company may reserve to itself and/or its assignee(s) in the Grant (a) a
right of first refusal to purchase all Shares that an Optionee (or a subsequent
transferee) may propose to transfer to a third party and/or (b) for so long as
the Company's stock is not publicly traded, a right to repurchase a portion of
or all Shares held by an Optionee upon the Optionee's termination of employment
of service with the Company or its Parent, Subsidiary or Affiliate of the
Company for any reason within a specified time as determined by the Committee at
the time of grant at the higher of (i) the Optionee's original purchase price,
(ii) the Fair Market Value of such Shares or (iii) a price determined by a
formula or other provision set forth in the Grant.
8. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. The
Committee shall have the power to modify, extend or renew outstanding Options
and to authorize the grant of new Options in substitution therefor, provided
that any such action may not, without the written consent of the Optionee,
impair any rights under any Option previously granted. Any outstanding ISO that
is modified, extended, renewed or otherwise altered shall be treated in
accordance with Section 424(h) of the Code. The Committee shall have the power
to reduce the exercise price of outstanding options; provided, however, that the
exercise price per share may not be reduced below the minimum exercise price
that would be permitted under Section 5(c) of this Plan for options granted on
the date the action is taken to reduce the exercise price.
9. PRIVILEGES OF STOCK OWNERSHIP. No Optionee shall have any
of the rights of a stockholder with respect to any Shares subject to an Option
until such Option is property exercised. No adjustment shall be made for
dividends or distributions or other rights for which the record date is prior to
such date, except as provided in this Plan. The Company shall provided to each
Optionee a copy of the annual financial statements of the Company, at such time
after the close of each fiscal year of the Company as such statements are
released by the Company to its stockholders.
10. NO OBLIGATION TO EMPLOY; NO RIGHT TO FUTURE GRANTS.
Nothing in this Plan or any Option granted under this Plan shall confer on any
Optionee any right (a) to continue in the employ of, or other relationship with,
the Company or any Parent or Subsidiary of the Company or limit in any way the
right of the Company or any Parent or Subsidiary of the Company to terminate the
Optionee's employment or other relationship at any time, with or without cause
or (b) to have any Option(s) granted to such Optionee under this Plan, or any
other plan, or to acquire any other securities of the Company, in the future.
-6-
<PAGE>
11. ADJUSTMENT OF OPTION SHARES. In the event that the number
of outstanding shares of Common Stock of the Company is changed by a stock
dividend, stock split, reverse stock split, combination, reclassification or
similar change in the capital structure of the Company without consideration, or
if a substantial portion of the assets of the Company are distributed, without
consideration in a spin-off or similar transaction, to the stockholders of the
Company, the number of Shares available under this Plan and the number of Shares
subject to outstanding Options and the exercise price per share of such Options
shall be proportionately adjusted, subject to any required action by the Board
or stockholders of the Company and compliance with applicable securities laws;
provided, however, that a fractional share shall not be issued upon exercise of
any Option and any fractions of a Share that would have resulted shall either be
cashed out at Fair Market Value or the number of Shares issuable under the
Option shall be rounded up to the nearest whole number, as determined by the
Committee; and provided further that the exercise price may not be decreased to
below the par value, if any, for the Shares.
12. ASSUMPTION OF OPTIONS BY SUCCESSORS.
(a) In the event of (i) a dissolution or liquidation
of the Company, (ii) a merger or consolidation in which the Company is not the
surviving corporation (other than a merger or consolidation with a wholly-owned
subsidiary or where there is no substantial change in the stockholders of the
corporation and the Options granted under this Plan are assumed by the successor
corporation), or (iii) the sale of all or substantially all of the assets of the
Company, any or all outstanding Options shall be assumed by the successor
corporation, which assumption shall be binding on all Optionees, an equivalent
option shall be substituted by such successor corporation or the successor
corporation shall provide substantially similar consideration to Optionees as
was provided to stockholders (after taking into account the existing provisions
of the Optionees' options such as the exercise price and the vesting schedule),
and, in the case of outstanding shares subject to a repurchase option, issue
substantially similar shares or other property subject to repurchase
restrictions no less favorable to the Optionee.
(b) In the event such successor corporation, if any,
refuses to assume or substitute, as provided above, pursuant to an event
described in (a) above, or there is no successor corporation, the Options shall,
notwithstanding any contrary terms in the Grant, expire on a date at least
twenty (20) days after the Committee gives written notice to the Optionees
specifying the terms and conditions of such termination.
(c) In the event such successor corporation refuses
to assume or substitute, as provided above, pursuant to an event described in
(a)(ii) above, such Options shall accelerate and
-7-
<PAGE>
become exercisable in full prior to and shall expire on (and, if the Company has
reserved to itself a right to repurchase Shares issued on exercise of Options at
the original purchase price of such Shares, such right shall terminate on) the
consummation of such event at such time and on such conditions as the Committee
shall determine.
(d) The aggregate Fair Market Value (determined at
the time an Option is granted) of Shares with respect to all ISOs held by an
Optionee that first become exercisable in the calendar year of such dissolution,
liquidation, merger, consolidation, sale of Shares or sale of assets may not
exceed $100,000. If the Fair Market Value of stock with respect to which all
ISOs are first exercisable in such calendar year exceeds $100,000, the Options
for the first $100,000 worth of stock to become exercisable in that year shall
be ISOs and the Options for the amount in excess of $100,000 shall be NQSOs.
13. ADOPTION AND STOCKHOLDER APPROVAL. This Plan shall become
effective on the date that it is adopted by the Board of the Company (the
"Board"). This Plan shall be approved by the stockholders of the Company, in any
manner permitted by applicable corporate law, within twelve (12) months before
or after the date this Plan is adopted by the Board. Thereafter, no later than
twelve (12) months after the Company becomes subject to Section 16(b) of the
Exchange Act, the Company will comply with the requirements of Rule 16b-3 (or
its successor) with respect to stockholder approval.
14. ADMINISTRATION. This Plan may be administered by the Board
or a Committee appointed by the Board (the "Committee"). At all times during
which the Company is registered under the Exchange Act, the Committee shall be
comprised solely of two or more Nonemployee Directors. As used in this Plan,
references to the "Committee" shall mean either such Committee or the Board if
no committee has been established. The interpretation by the Committee of any of
the provisions of this Plan or any Option granted under this Plan shall be final
and binding upon the Company and all persons having an interest in any Option or
any Shares purchased pursuant to an Option.
15. TERM OF PLAN. Options may be granted pursuant to this Plan
from time to time on or prior to September 3, 2001.
16. AMENDMENT OR TERMINATION OF PLAN. The Board of Directors
or Committee may, at any time, amend, alter, suspend or discontinue the Plan,
but no amendment, alteration, suspension or discontinuation shall be made which
would impair the rights of any Optionee under any Option theretofore granted,
without his or her
-8-
<PAGE>
consent, or which, without the approval of a majority of the outstanding voting
shares of the Company would:
(a) except as provided in Section 11 of the Plan,
increase the total number of Shares reserved for the purposes of the Plan;
(b) extend the duration of the Plan;
(c) extend the period during and over which Options
may be exercised under the Plan; or
(d) change the class of persons eligible to receive
Options granted hereunder.
Without limiting the foregoing, the Board of Directors may at any time or from
time to time authorize the Company, with the consent of the respective
Optionees, to issue new options in exchange for the surrender and cancellation
of any or all outstanding Options.
17. CERTAIN DEFINITIONS. As used in this Plan, the following
terms shall have the following meanings:
(a) "Parent" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if, at the
time of the granting of the Option, each of the corporations other than the
Company owns stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
(b) "Subsidiary" means any corporation (other than
the Company) in an unbroken chain of corporations beginning with the Company if,
at the time of the granting of the Option, each of the corporations other than
the last corporation in the unbroken chain owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain.
(c) "Affiliate" means any corporation that directly,
or indirectly through one or more intermediaries, controls or is controlled by,
or is under common control with, another corporation, where "control" (including
the terms "controlled by" and "under common control with") means the possession,
direct or indirect, of the power to cause the direction of the management and
policies of the corporation, whether through the ownership of voting securities,
by contract or otherwise.
(d) "Nonemployee Directors" shall have the meaning
set forth in Rule 16b-3(b)(3) as promulgated by the SEC under Section 16(b) of
the Exchange Act, as such rule is amended from time to time and as interpreted
by the SEC.
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(e) "Fair Market Value" shall mean the fair market
value of the Shares as determined by the Committee from time to time in good
faith. If a public market exists for the Shares, the Fair Market Value shall be
the average of the last reported bid and asked prices for Common Stock of the
Company on the last trading day prior to the date of determination or, in the
event the Common Stock of the Company is listed on a stock exchange or on the
NASDAQ National Market System, the Fair Market Value shall be the closing price
on such exchange or quotation system on the last trading day prior to the date
of determination.
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EXHIBIT A
STOCK OPTION GRANT
Optionee:_______________________________________________________
Address:________________________________________________________
________________________________________________________________
Total Shares Subject to Option:_________________________________
Exercise Price Per Share:_______________________________________
Date of Grant:__________________________________________________
Expiration Date of Option:______________________________________
Type of Stock Option: Incentive:_________________
Nonqualified:______________
I. Grant of Option. SyQuest Technology, Inc., a Delaware
corporation (the "Company"), hereby grants to the optionee named above
("Optionee") an option (this "Option") to purchase the total number of shares of
Common Stock of the Company set forth above (the "Shares") at the exercise price
per share set forth above (the "Exercise Price"), subject to all of the terms
and conditions of this Grant and the Company's 1991 Stock Option Plan, as
amended to the date hereof (the "Plan"). If designated as an Incentive Stock
Option above, this Option is intended to qualify as an "incentive stock option"
("ISO") within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"). Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to them in the Plan.
II. Exercise Period of Option. The option rights granted
hereunder are exercisable during the time period or periods, and as to the
number of shares exercisable during each time period, as follows:
A. _____________ shares, or any part thereof, may be
exercised at any time or times, from and including _______________ to and
including ____________________;
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B. an additional ______________ shares, or any part
thereof, may be exercised at any time or times, from and including
__________________ to and including ___________________;
C. an additional _____________ shares, or any part
thereof, may be exercised at any time or times, from and including
__________________ to and including ___________________;
D. an additional _____________ shares, or any part
thereof, may be exercised at any time or times, from and including
__________________ to and including ___________________;
E. and the remaining _____________ shares, or any
part thereof, may be exercised at any time or times, from and including
__________________ to and including _______________.
(i) the Board of Directors (or the Committee), in its sole discretion,
may, upon written notice to the Optionee, accelerate the earliest date or dates
on which any of the Option rights granted hereunder are exercisable, and (ii)
the minimum number of Shares that may be purchased upon any partial exercise of
the Option is one hundred (100) shares, and (iii) this Option shall expire on
the Expiration Date set forth above and must be exercised, if at all, on or
before the Expiration Date. The portion of Shares as to which an Option is
exercisable in accordance with the above schedule as of the applicable dates
shall be deemed "Vested Options."
III. Restriction on Exercise. This Option may not be exercised
unless such exercise is in compliance with the Securities Act of 1933, as
amended, and all applicable state securities laws, as they are in effect on the
date of exercise, and the requirements of any stock exchange or over-the-counter
market on which the Company's Common Stock may be listed or quoted at the time
of exercise. Optionee understands that the Company is under no obligation to
register, qualify or list the Shares with the Securities and Exchange
Commission, any state securities commission or any stock exchange to effect such
compliance.
IV. Termination of Option. Except as provided below in this
Section 4, this Option shall terminate and may not be exercised if Optionee
ceases to be employed by the Company or by any Parent or Subsidiary of the
Company (or, in the case of a nonqualified stock option, by any Affiliate of the
Company). Optionee shall be considered to be employed by the Company for all
purposes under this Section 4 if Optionee is an officer, director or full-time
employee of the Company or any Parent, Subsidiary or Affiliate of the Company or
if the Board of Directors determines that Optionee is rendering substantial
services as a part-time employee, consultant, contractor or advisor to the
Company or any Parent, Subsidiary or Affiliate of the Company. The Board of
Directors of the Company shall have discretion to determine whether Optionee has
ceased to be employed by the Company or any
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<PAGE>
Parent, Subsidiary or Affiliate of the Company and the effective date on which
such employment terminated (the "Termination Date").
A. Termination Generally. If Optionee ceases to be
employed by the Company and all Parents, Subsidiaries or Affiliates of the
Company for any reason except death or disability, this Option, to the extent
(and only to the extent) that it would have been exercisable by Optionee on the
Termination Date, may be exercised by Optionee, but only within three (3) months
after the Termination Date; provided that in all such cases, the Option shall be
deemed to be an NQSO after three (3) months after the Termination Date (even if
the Option is designated an ISO on page 1 of this Grant); and provided further
that this Option may not be exercised in any event after the Expiration Date.
B. Death or Disability. If Optionee's employment with
the Company and all Parents, Subsidiaries and Affiliates of the Company is
terminated because of the death of Optionee or the disability of Optionee within
the meaning of Section 22(e)(3) of the Code, this Option, to the extent (and
only to the extent) that it would have been exercisable by Optionee on the
Termination Date, may be exercised by Optionee (or Optionee's legal
representative), but only within twelve (12) months after the Termination Date;
provided that in all such cases, the Option shall be deemed to be an NQSO after
three (3) months after the Termination Date (even if the Option is designated an
ISO on page 1 of this Grant); and provided further that this Option may not be
exercised in any event later than the Expiration Date.
C. No Right to Employment. Nothing in the Plan or
this Grant shall confer on Optionee any right to continue in the employ of, or
other relationship with, the Company or any Parent, Subsidiary or Affiliate of
the Company or limit in any way the right of the Company or any Parent,
Subsidiary or Affiliate of the Company to terminate Optionee's employment or
other relationship at any time, with or without cause.
V. Manner of Exercise.
A. Exercise Agreement. This Option shall be
exercisable by delivery to the Company of an executed written Stock Option
Exercise Agreement in the form attached hereto as Exhibit 1, or in such other
form as may be approved by the Company, which shall set forth Optionee's
election to exercise some or all of this Option, the number of Shares being
purchased, any restrictions imposed on the Shares and such other representations
and agreements as may be required by the Company to comply with applicable
securities laws.
B. Exercise Price. Such notice shall be accompanied
by full payment of the Exercise Price for the Shares being purchased. Payment
for the Shares may be made in cash (by check), or, where permitted by law, by
any of the following methods
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<PAGE>
approved by the Committee at the date of grant of this Option, or any
combinations thereof:
[ ] 1. by cancellation of indebtedness of the Company to
the Optionee;
[ ] 2. by surrender of shares of Common Stock of the
Company already owned by the Optionee, or which
were obtained by Optionee in the open public
market, having a Fair Market Value equal to the
exercise price of the Option;
[ ] 3. by waiver of compensation due or accrued to
Optionee for services rendered;
[ ] 4. through a guaranty by the Company of a loan to
the Optionee by a third party of all or part of
the option price (but not more than the option
price), and such guaranty may be on an unsecured
or secured basis as the Committee shall approve
(including, without limitation, by a security
interest in the Shares of the Company).
[ ] 5. provided that a public market for the Company's
stock exists, through a "same day sale"
commitment from the Optionee and a broker-dealer
that is a member of the National Association of
Securities Dealers, Inc. (an "NASD Dealer")
whereby the Optionee irrevocably elects to
exercise the Option and to sell a portion of the
Shares so purchased to pay for the exercise price
and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the
exercise price directly to the Company; or
[ ] 6. provided that a public market for the Company's
stock exists, through a "margin" commitment from
the Optionee and an NASD Dealer whereby the
Optionee irrevocably elects to exercise this
option and to pledge the Shares so purchased to
the NASD Dealer in a margin account as security
for a loan from the NASD Dealer in the amount of
the exercise price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares
to forward the exercise price directly to the
Company.
C. Withholding Taxes. Prior to the issuance of the
Shares upon exercise of this Option, Optionee must pay or make adequate
provision for any applicable federal or state withholding obligations of the
Company. The Optionee may provide for payment
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<PAGE>
of Optionee's minimum statutory withholding taxes upon exercise of the Option by
requesting that the Company retain Shares with a Fair Market Value equal to the
minimum amount of taxes required to be withheld, all as set forth in Section
6(c) of the Plan. In such case, the Company shall issue the net number of Shares
to the Optionee by deducting the Shares retained from the Shares exercised.
D. Issuance of Shares. Provided that such notice and
payment are in form and substance satisfactory to counsel for the Company, the
Company shall cause the Shares to be issued in the name of Optionee or
Optionee's legal representative.
VI. Notice of Disqualifying Disposition of ISO Shares. If the
Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after exercise of the ISO with respect to the Shares to be sold or disposed
of, the Optionee shall immediately notify the Company in writing of such
disposition. Optionee acknowledges and agrees that Optionee may be subject to
income tax withholding by the Company on the compensation income recognized by
the Optionee from any such early disposition by payment in cash or out of the
current wages or other earnings payable to the Optionee.
VII. Nontransferability of Option. This Option may not be
transferred in any manner other than by will or by the law of descent and
distribution and may be exercised during the lifetime of Optionee only by
Optionee or other permitted transferee. The terms of this Option shall be
binding upon the executors, administrators, successors and assigns of the
Optionee.
VIII. Federal Tax Consequences. Set forth below is a brief
summary as of the date this form of Option Grant was adopted of some of the
federal tax consequences of exercise of this Option and disposition of the
Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS
ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING
THIS OPTION OR DISPOSING OF THE SHARES.
A. Exercise of ISO. If this Option qualifies as an
ISO, there will be no regular federal income tax liability upon the exercise of
this Option, although the excess, if any, of the Fair Market Value of the Shares
on the date of exercise over the Exercise Price will be treated as an adjustment
to alternative minimum taxable income for federal income tax purposes and may
subject the Optionee to an alternative minimum tax liability in the year of
exercise.
B. Exercise of Nonqualified Stock Option. If this
Option does not qualify as an ISO, there may be a regular federal income tax
liability upon the exercise of the Option. The Optionee will be treated as
having received compensation income
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<PAGE>
(taxable at ordinary income tax rates) equal to the excess, if any, of the Fair
Market Value of the Shares on the date of exercise over the Exercise Price. The
Company will be required to withhold from Optionee's compensation or collect
from Optionee and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income at the time of exercise.
C. Disposition of Shares. In the case of a
nonqualified option, if Shares are held for at least one year before
disposition, any gain on disposition of the Shares will be treated as long-term
capital gain for federal and California income tax purposes. In the case of an
ISO, if Shares are held for at least one year after the date of exercise and at
least two years after the Date of Grant, any gain on disposition of the Shares
will be treated as long-term capital gain for federal and California income tax
purposes. If Shares acquired pursuant to an ISO are disposed of within such
one-year or two-year periods (a "disqualifying disposition"), gain on such
disqualifying disposition will be treated as compensation income (taxable at
ordinary income rates) to the extent of the excess, if any, of the Fair Market
Value of the Shares on the date of exercise over the Exercise Price (the
"Spread"). Any gain in excess of the Spread shall be treated as capital gain.
IX. Interpretation. Any dispute regarding the interpretation
of this Grant shall be submitted by Optionee or the Company to the Company's
Board of Directors or the Committee, which shall review such dispute at its next
regular meeting. The resolution of such a dispute by the Board or Committee
shall be final and binding on the Company and on Optionee.
X. Entire Agreement. The Plan and the Stock Option Exercise
Agreement attached hereto as Exhibit 1 are incorporated herein by this
reference. This Grant, the Plan and the Stock Option Exercise Agreement
constitute the entire agreement of the parties hereto and supersede all prior
undertakings and agreements with respect to the subject matter hereof.
SyQuest Technology, Inc.
By: ___________________________
Name: ___________________________
Title: ___________________________
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<PAGE>
ACCEPTANCE
Optionee hereby acknowledges receipt of a copy of the Plan, represents
that Optionee has read and understands the terms and provisions thereof, and
accepts this Option subject to all the terms and conditions of the Plan and this
Stock Option Grant. Optionee acknowledges that there may be adverse tax
consequences upon exercise of this Option or disposition of the Shares and that
Optionee should consult a tax adviser prior to such exercise or disposition.
OPTIONEE
------------------------------
Signature
------------------------------
Print Name
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<PAGE>
EXHIBIT 1
TO STOCK OPTION GRANT
STOCK OPTION EXERCISE AGREEMENT
This Agreement is made this ____________ day of_________________,
19_______ between SyQuest Technology, Inc. (the "Company"), and the optionee
named below ("Optionee").
Optionee:________________________________________________________________
Social Security Number:__________________________________________________
Address:_________________________________________________________________
_________________________________________________________________________
Number of Shares Purchased:______________________________________________
Price Per Share:_________________________________________________________
Aggregate Purchase Price:________________________________________________
Date of Option Grant:____________________________________________________
Type of Stock Option: Incentive:__________________
Nonqualified:_______________
Optionee hereby delivers to the Company the Aggregate Purchase Price,
to the extent permitted in the Option Grant, as follows [check as applicable and
complete]:
[NOTE: BEFORE GRANTING ANY OPTIONS, THE COMPANY SHOULD DELETE ANY OF
THE FOLLOWING METHODS OF PAYMENT THAT IT DOES NOT WISH TO MAKE AVAILABLE TO THE
OPTIONEES]
[ ] in cash in the amount of $____________, receipt of which is
acknowledged by the Company;
[ ] by delivery of _________ fully-paid, nonassessable and vested shares of
the Common Stock of the Company owned by Optionee and owned free and
clear of all liens, claims, encumbrances or security interests, valued
at the current fair market value of $_______ per share (as determined
by the Board of Directors of the Company in good faith);
[ ] by the waiver hereby of compensation due or accrued for services
rendered in the amount of $___________;
The Company and Optionee hereby agree as follows:
I. Purchase of Shares. On this date and subject to the terms
and conditions of this Agreement, Optionee hereby exercises the Stock Option
Grant between the Company and Optionee dated as of the Date of Option Grant set
forth above (the "Grant"), with
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<PAGE>
respect to the Number of Shares Purchased set forth above of the Company's
Common Stock (the "Shares") at an aggregate purchase price equal to the
Aggregate Purchase Price set forth above (the "Purchase Price") and the Price
per Share set forth above (the "Purchase Price Per Share"). The term "Shares"
refers to the Shares purchased under this Agreement and includes all securities
received (a) in replacement of the Shares, and (b) as a result of stock
dividends or stock splits in respect of the Shares. Capitalized terms used
herein that are not defined herein have the definitions ascribed to them in the
Plan or the Grant.
II. Representations of Purchaser. Optionee represents and
warrants to the Company that:
A. Optionee has received, read and understood the
Plan and the Grant and agrees to abide by and be bound by their terms and
conditions.
[To the Extent Required Under Applicable Securities Laws]
B. Optionee is capable of evaluating the merits and
risks of this investment, has the ability to protect Optionee's own interests in
this transaction and is financially capable of bearing a total loss of this
investment.
C. Optionee is fully aware of (i) the highly
speculative nature of the investment in the Shares; (ii) the financial hazards
involved; and (iii) the lack of liquidity of the Shares and the restrictions on
transferability of the Shares (e.g., that Optionee may not be able to sell or
dispose of the Shares or use them as collateral for loans).
D. Optionee is purchasing the Shares for Optionee's
own account for investment purposes only and not with a view to, or for sale in
connection with, a distribution of the Shares within the meaning of the
Securities Act of 1933, as amended (the "1933 Act").
E. Optionee has no present intention of selling or
otherwise disposing of all or any portion of the Shares.
[To the Extent Required Under Applicable Securities Laws]
III. Compliance with Securities Laws. Optionee understands and
acknowledges that the Shares have not been registered under the 1933 Act and
that, notwithstanding any other provision of the Grant to the contrary, the
exercise of any rights to purchase any Shares is expressly conditioned upon
compliance with the 1933 Act and all applicable state securities laws. Optionee
agrees to cooperate with the Company to ensure compliance with such laws. The
Shares are being issued under the 1933 Act pursuant to [the Company will check
the applicable box]:
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<PAGE>
[ ] the exemption provided by Rule 701;
[ ] the exemption provided by Rule 504;
[ ] Section 4(2) of the 1933 Act;
[ ] other:_______________________________________________________________.
[To the Extent Required Under Applicable Securities Laws]
IV. Federal Restrictions on Transfer. Optionee understands
that the Shares must be held indefinitely unless they are registered under the
1933 Act or unless an exemption from such registration is available and that the
certificate(s) representing the Shares will bear a legend to that effect.
Optionee understands that the Company is under no obligation to register the
Shares, and that an exemption may not be available or may not permit Optionee to
transfer Shares in the amounts or at the times proposed by Optionee.
A. Rule 144. Optionee has been advised that Rule 144
promulgated under the 1933 Act, which permits certain resales or unregistered
securities, is not presently available with respect to the Shares and, in any
event, requires that the Shares be paid for and then held for a minimum of two
(2) years before they may be resold under Rule 144. Prior to an initial public
offering of the Company's stock, "nonaffiliates" (i.e. persons other than
officers, directors and major stockholders of the Company) may resell only under
Rule 144(k), which requires that the Shares be paid for and held for a minimum
of three (3) years. Rule 144(k) is not available to affiliates.
B. Rule 701. If the exemption relied upon for
exercise of the Shares is Rule 701, the Shares will become freely transferrable,
subject to limited conditions regarding the method of sale, by nonaffiliates
ninety (90) days after the first sale of common stock of the Company to the
general public pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission (the "SEC"), subject to any
lengthier market standoff agreement contained in this Agreement or entered into
by Optionee. Affiliates must comply with the provisions (other than the holding
period requirements) of Rule 144.
V. State Law Restrictions on Transfer. Optionee
understands that transfer of the Shares may be restricted by applicable state
securities laws, and that the certificate(s) representing the Shares may bear a
legend or legends to that effect.
VI. Market Standoff Agreement. Optionee agrees in
connection with any registration of the Company's securities that, upon the
request of the Company or the underwriters managing any
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<PAGE>
public offering of the Company's securities, Optionee will not sell or otherwise
dispose of any Shares without the prior written consent of the Company or such
underwriters, as the case may be, for a period of time (not to exceed one
hundred eighty (180) days) from the effective date of such registration as the
Company or the underwriters may specify for employee stockholders generally.
[To the Extent Required Under Applicable Securities Laws]
VII. Legends. Optionee understands and agrees that the
certificate(s) representing the Shares will bear legends in substantially the
following forms, in addition to any other legends required by applicable law:
"THE SECURITIES REPRESENTED HEREBY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE 'SECURITIES ACT'), AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER THE
SECURITIES ACT OR, IN THE OPINION OF
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY
TO THE ISSUER OF THESE SECURITIES, SUCH
OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH."
VIII. Stop-Transfer Notices. Optionee understands and agrees
that, in order or ensure compliance with the restrictions referred to herein,
the Company may issue appropriate "stop-transfer" instructions to its transfer
agent, if any, and that, if the Company transfers its own securities, it may
make appropriate notations to the same effect in its own records.
IX. Tax Consequences. OPTIONEE UNDERSTANDS THAT OPTIONEE MAY
SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF OPTIONEE'S PURCHASE OR
DISPOSITION OF THE SHARES. OPTIONEE REPRESENTS THAT OPTIONEE HAS CONSULTED WITH
ANY TAX CONSULTANT(S) OPTIONEE DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE
OR DISPOSITION OF THE SHARES AND THAT OPTIONEE IS NOT RELYING ON THE COMPANY FOR
ANY TAX ADVICE. IN PARTICULAR, IF OPTIONEE IS AN INSIDER SUBJECT TO SECTION
16(b) OF THE SECURITIES EXCHANGE ACT OF 1934, AND IF THE OPTION BEING EXERCISED
WAS GRANTED WITHIN THE PRECEDING SIX MONTHS, OPTIONEE REPRESENTS THAT OPTIONEE
HAS CONSULTED WITH OPTIONEE'S TAX ADVISERS CONCERNING THE ADVISABILITY OF FILING
A SECTION 83(b) ELECTION (the "ELECTION") WITH THE INTERNAL REVENUE SERVICE. IN
THE EVENT THAT OPTIONEE MAKES AN ELECTION, OPTIONEE AGREES TO IMMEDIATELY SO
NOTIFY COMPANY.
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<PAGE>
X. Entire Agreement. The Plan and Grant are incorporated
herein by reference. This Agreement, the Plan and the Grant constitute the
entire agreement of the parties and supersede in their entirety all prior
undertakings and agreements of the Company and Optionee with respect to the
subject matter hereof, and are governed by California law except for that body
of law pertaining to conflict of laws.
Submitted By: Accepted By:
OPTIONEE:_______________________________ SyQuest Technology, Inc.
[print name]
________________________________________ By:________________________________
[signature]
Its:_______________________________
Dated:__________________________________ Dated:_____________________________
Address:________________________________
________________________________
________________________________
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<PAGE>
APPENDIX C
As of 8/21/96
SYQUEST TECHNOLOGY, INC.
1992 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN1/
1. Purpose. The purposes of the 1992 Non-Employee Director Stock Option
Plan are to attract and retain the best available personnel for service as
Outside Directors of the Company and encourage ownership in the Company by such
Outside Directors.
2. Certain Definitions. As used herein, the following definitions shall
apply:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock" shall mean the Common Stock, par value
$0.001, of the Company.
(d) "Company" shall mean SyQuest Technology, Inc., a Delaware
corporation.
(e) "Continuous Status as a Director" shall mean the absence
of any interruption or termination of service as a Director.
(f) "Director" shall mean a member of the Board.
(g) "Employee" shall mean any person, including officers and
Directors, employed by the Company or any Subsidiary of the Company. The payment
of a Director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.
(h) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
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1/ Adopted by the Board of Directors of the Company in 1992 and approved by
the stockholders of the Company on April 14, 1992. Amended by the Board of
Directors of the Company in 1993, which amendment was approved by the
stockholders of the Company on February 22, 1994. Amended by the Board of
Directors on December 21, 1994, which amendment was approved by the stockholders
of the Company on February 28, 1995. Amended by the Board of Directors on
August 21, 1996.
<PAGE>
(i) "Fair Market Value" shall mean, as of any date, the value
of Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without
limitation the National Market System of the National Association of
Securities Dealers, Inc. Automated Quotation ("NASDAQ") System, the
Fair Market Value of a Share shall be the closing sales price for such
stock (or the closing bid, if no sales were reported, as quoted on such
system or exchange (or the exchange with the greatest volume of trading
in Common Stock)) as reported in the Wall Street Journal or such other
source as the Board deems reliable; or
(ii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good
faith by the Board.
(j) "Option" shall mean a stock option granted pursuant to the
Plan. All Options granted hereunder shall be nonstatutory options not entitled
to special tax treatment under Section 422 of the Code.
(k) "Optioned Stock" shall mean the Common Stock subject to an
Option.
(l) "Optionee" shall mean an Outside Director who receives an
Option.
(m) "Outside Director" shall mean a Director who is not an
Employee.
(n) "Plan" shall mean this 1992 Non-Employee Director Stock
Option Plan.
(o) "Share" shall mean a share of the Common Stock.
(p) "Subsidiary" shall mean a corporation, domestic or
foreign, of which not less than 50% of the total combined voting shares are held
by the Company or a Subsidiary, whether or not such corporation now exists or is
hereafter organized or acquired by the Company or a Subsidiary.
3. Stock Subject to the Plan. Subject to the provisions of Section 10
of the Plan, the maximum aggregate number of Shares which may be subject to
Options and sold under the Plan is 500,000 Shares (the "Pool"). 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
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<PAGE>
have been terminated, become available for future grant and purchase under the
Plan.
4. Administration of and Grants of Options under the Plan.
(a) Administrator. Except as otherwise required herein, the
Plan shall be administered by the Board. Subject to the provisions and
restrictions of the Plan including, without limitation, the terms and provisions
of Section 4(b) hereof, the Board shall have the authority (i) to interpret the
Plan; (ii) to prescribe, amend and rescind rules and regulations relating to the
Plan; (iii) to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option previously granted
hereunder; and (iv) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
(b) Procedure for Grants. All grants of Options hereunder
shall be automatic and nondiscretionary and shall be made strictly in accordance
with the following provisions:
(i) No person shall have any discretion to select
which Outside Directors shall be granted Options, to determine when
such Options shall be granted or to determine the number of Shares to
be covered by Options granted to Outside Directors.
(ii) Immediately after the stockholders of this
Company have approved the adoption of this Plan, and immediately after
each subsequent annual meeting of stockholders at which Directors are
elected, reelected or continuing as Directors, each Outside Director
shall be automatically granted an Option or Options to purchase such
number of Shares as necessary so that during each of the then four
immediately following twelve-month periods of July 1 through June 30
such Outside Director will have stock options (including stock options
granted under plans other than this Plan) which become exercisable with
respect to a minimum of 2,500 Shares during each such period. By way of
example, if immediately following such a meeting of stockholders an
Outside Director had an option to purchase 3,000 Shares that becomes
exercisable during the first twelve-month period, an option to purchase
2,000 Shares that becomes exercisable during the second twelve-month
period, an option to purchase 1,000 Shares that becomes exercisable
during the third twelve-month period and no options that become
exercisable during the fourth twelve-month period, the Director would
be awarded the following Options that would become exercisable as
follows: (i) zero options for the first twelve-month period, (ii) an
Option to purchase 500 Shares which becomes exercisable on the last day
of the second twelve-month period, (iii) an Option to purchase 1,500
Shares which becomes exercisable on the last day of the third
twelve-month period and (iv) an Option to purchase
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<PAGE>
2,500 Shares which becomes exercisable on the last day of the fourth
twelve-month period. Notwithstanding the foregoing, (A) immediately
after the annual meeting of stockholders at which Directors are
elected, reelected or continuing as Directors held in calendar year
1994 (the "1994 Annual Meeting") and immediately after each subsequent
annual meeting of stockholders at which directors are elected,
reelected or continuing as Directors, each Outside Director shall be
automatically granted an Option or Options to purchase such number of
shares as necessary so that during each of the then four immediately
following twelve-month periods of July 1 through June 30 such Outside
Director will have stock options (including stock options granted under
plans other than this Plan) which become exercisable with respect to a
minimum of 5,000 Shares during each such period and (B)immediately
after the annual meeting of stockholders at which Directors are
elected, reelected or continuing as Directors held in calendar year
1997 (the "1997 Annual Meeting") and immediately after each subsequent
annual meeting of stockholders at which directors are elected,
reelected or continuing as Directors, each Outside Director shall be
automatically granted an Option or Options to purchase such number of
shares as necessary so that during each of the then four immediately
following twelve-month periods of July 1 through June 30 such Outside
Director will have stock options (including stock options granted under
plans other than this Plan, but not including the option to purchase
30,000 shares which is to be granted to each Outside Director pursuant
to Section 4(b)(v) below) which become exercisable with respect to a
minimum of 10,000 Shares during each such period.
(iii) During the term of this Plan, if a person first
becomes an Outside Director by appointment by the Board to fill a
vacancy or a newly created directorship, such Outside Director shall be
automatically granted an Option or Options to purchase such number of
Shares necessary so that during each of the then four immediately
following twelve-month periods of July 1 through June 30 such Outside
Director will have stock options (including stock options granted under
plans other than this Plan but not including the option to purchase
30,000 shares which is to be granted to each Outside Director pursuant
to Section 4(b)(v) below) which become exercisable with respect to a
minimum of 2,500 Shares if such person first becomes an Outside
Director by appointment by the Board to fill a vacancy or a newly
created directorship prior to the 1994 Annual Meeting, with respect to
a minimum of 5,000 shares if such person first becomes an Outside
Director by appointment by the Board to fill a vacancy or a newly
created directorship after the 1994 Annual Meeting, and with respect to
a minimum of 10,000 shares if such person first becomes an Outside
Director by appointment by the Board to fill a
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<PAGE>
vacancy or a newly created directorship after the 1997 Annual Meeting.
(iv) All Options granted pursuant to Sections
4(b)(ii) and (iii) above shall become exercisable on the last day of
the applicable twelve-month period, provided the Outside Director is a
member of the Board at such time.
(v) During the term of this Plan, when a person first
becomes an Outside Director, whether by election at the annual meeting
of stockholders, or by appointment by the Board, such Outside Director
shall be automatically granted a one-time stock option as set forth in
this Section 4(b)(v), in addition to any stock options to be granted to
such Outside Director pursuant to Section 4(b)(ii) or (iii).
Immediately following the election or appointment of an Outside
Director to the Board, such Outside Director shall be automatically
granted a one-time Option to purchase 30,000 Shares, all of which
Options shall be immediately exercisable. Notwithstanding the
foregoing, immediately after the meeting of stockholders at which this
Section 4(b)(v) is approved, all Outside Directors of the Company as of
such date shall be granted a one-time Option to purchase 30,000 Shares,
all of which Options shall be immediately exercisable. Such one-time
option to purchase 30,000 shares shall not be considered in determining
the number of stock options which an Outside Director has for purposes
of the calculation in Sections 4(b)(ii) and (iii) above.
(vi) Notwithstanding the foregoing, no Option shall
be granted hereunder unless and until stockholder approval of the Plan
has been obtained in accordance with Section 16 hereof.
(vii) The terms of each Option granted hereunder
shall include the following:
a. The date of grant of an Option granted
pursuant to Sections 4(b)(ii) or (iii) shall be the date of
the applicable annual meeting of stockholders or date on which
a person is appointed by the Board to fill a vacancy or newly
created directorship pursuant to Sections 4(b)(ii) or (iii).
The date of grant of an Option pursuant to Section 4(b)(v)
shall be the date of the election or appointment of such
Outside Director to the Board or, with respect to existing
Outside Directors on the date of the meeting of stockholders
at which Section 4(b)(v) is approved, such date. The Option
shall expire and terminate seven (7) years from the date of
grant.
b. The Option shall be exercisable only
while the Outside Director remains a Director of the
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<PAGE>
Company, except as otherwise set forth in Section 8 hereof.
(viii) In the event that any Option granted under the
Plan would cause the number of Shares subject to outstanding Options
plus the number of Shares previously purchased upon exercise of Options
to exceed the Pool, then each such automatic grant shall be
proportionately reduced. No further grants shall be made until such
time, if any, as additional Shares become available for grant under the
Plan through action of the stockholders to increase the number of
Shares which may be issued under the Plan or through cancellation or
expiration of Options previously granted hereunder.
(c) Effect of Board's Decision. All decisions, determinations
and interpretations of the Board shall be final, conclusive and binding.
5. Eligibility. Options may be granted only to Outside Directors and
shall be automatically granted in accordance with the terms set forth in Section
4(b) hereof. The Plan shall not confer upon any Optionee any right with respect
to continuation of service as a Director or nomination to serve as a Director,
nor shall it interfere in any way with any rights which the Director or the
Company may have to terminate his directorship at any time.
6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the stockholders of the
Company as described in Section 16 hereof. It shall continue in effect for a
term of ten (10) years unless sooner terminated under Section 11 hereof.
7. Exercise Price and Consideration.
(a) Exercise Price. The per Share exercise price for Optioned
Stock shall be 100% of the Fair Market Value per Share on the date of grant of
the Option; provided, however, if the date of grant is a legal holiday on which
Shares are not traded, then the exercise price shall be 100% of the Fair Market
Value per Share on the immediately following business day.
(b) Form of Consideration. The consideration to be paid for
the Shares to be issued upon exercise of an Option, including the method of
payment, shall be determined by the Board and may consist entirely of (i) cash,
(ii) check, (iii) other Shares which 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, (iv) a waiver of compensation due or accrued to
Optionee for services rendered; (v) a guaranty by the Company of a loan to the
Optionee by a third party of all or part of the option price (but not more than
the option price), and such guaranty may be on an unsecured or
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<PAGE>
secured basis as the Board shall approve (including, without limitation, by a
security interest in the Shares); (vi) provided that a public market for the
Company's stock exists, a "same day sale" commitment from the Optionee and a
broker-dealer that is a member of the National Association of Securities
Dealers, Inc. (an "NASD Dealer") whereby the Optionee irrevocably elects to
exercise the Option and to sell a portion of the Shares so purchased to pay for
the exercise price and whereby the NASD Dealer irrevocably commits upon receipt
of such Shares to forward the exercise price directly to the Company; (vii)
provided that a public market for the Company's Common Stock exists, a "margin"
commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably
elects to exercise the Option and to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a loan from the NASD Dealer in the
amount of the exercise price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the exercise price directly to the
Company; or (viii) any combination of the foregoing.
(c) Withholding Taxes. Prior to issuance of the Shares upon
exercise of an Option, the Optionee shall pay or make adequate provision for any
applicable federal or state withholding obligations of the Company. Where
approved by the Board in its sole discretion, the Optionee may provide for
payment of withholding taxes upon exercise of the Option by requesting that the
Company retain Shares with a Fair Market Value equal to the minimum amount of
taxes required to be withheld. In such case, the Company shall issue the net
number of Shares to the Optionee by deducting the Shares retained from the
Shares exercised. The Fair Market Value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be determined
in accordance with Section 83 of the Code (the "Tax Date"). All elections by
Optionees to have Shares withheld for this purpose shall be made in writing in a
form acceptable to the Board and shall be subject to the following restrictions:
(i) the election must be made on or prior to the
applicable Tax Date;
(ii) once made, the election shall be irrevocable as
to the particular Shares as to which the election is made;
(iii) all elections shall be subject to the consent
or disapproval of the Board; and
(iv) the election must comply with Rule 16b-3 under
the Exchange Act.
(d) Limitations on Exercise. Notwithstanding anything else to
the contrary in the Plan or any Grant, no Option may be exercisable later than
the expiration date of the Option.
-7-
<PAGE>
8. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any
Option granted hereunder shall be exercisable at such times as are set forth in
Section 4(b) hereof; provided, however, that no Options shall be exercisable
until stockholder approval of the Plan in accordance with Section 16 hereof has
been obtained.
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
consist of any consideration and method of payment allowable under Section 7(b)
hereof. 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 stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. A share certificate for the
number of Shares so acquired shall be issued to the Optionee as soon as
practicable after 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 10 hereof.
(b) Rule 16b-3. Options granted to Outside Directors must
comply with the applicable provisions of Rule 16b-3 promulgated under the
Exchange Act or any successor thereto and shall contain such additional
conditions or restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act set forth in Rule 16b-3
with respect to Plan transactions. If any provision of this Plan is found not to
be in compliance with Rule 16b-3 and cannot be amended or modified by the Board
to so comply, the provision shall be deemed null and void.
(c) Termination of Status as a Director. If an Outside
Director ceases to serve as a Director, he may, but only within three (3) months
after the date he ceases to be a Director of the Company, exercise his Option or
Options to the extent that he was entitled to exercise it at the date of such
termination. Notwithstanding the foregoing, in no event may the Option be
exercised after its seven (7) year term has expired. To the extent that he was
not entitled to exercise an 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.
(d) Disability of Optionee. Notwithstanding the provisions of
Section 8(c) above, in the event an Optionee is
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<PAGE>
unable to continue his service as a Director 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 from the date he ceases to serve as a Director,
exercise his Option to the extent he was entitled to exercise it at the date of
such termination. Notwithstanding the foregoing, in no event may the Option be
exercised after its seven (7) year term has expired. 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.
(e) Death of Optionee. In the event of the death of an
Optionee, the Option may be exercised, at any time within twelve (12) months
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 that had accrued at the date of death.
Notwithstanding the foregoing, in no event may the Option be exercised after its
seven (7) year term has expired.
9. Non-Transferability of Options. The 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.
10. Adjustments Upon Changes in Capitalization or Merger. Subject to
any required action by the stockholders of the Company and compliance with
applicable securities laws, the number of Shares covered by each outstanding
Option, and the number of Shares which have been authorized for issuance under
the Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per Share covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
Shares 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 aggregate number of issued Shares effected without receipt 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"; and provided further that fractional shares
shall not be issued upon exercise of any Option and any fractions of a Share
that would have resulted shall be cashed out at Fair Market Value. 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
subject to an Option.
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<PAGE>
In the event of the proposed dissolution or liquidation of the Company,
all outstanding Options, shall, notwithstanding any contrary terms in the
Options, terminate on a date at least twenty (20) days after the Board gives
written notice to the Optionees specifying the terms and conditions of such
termination.
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, each outstanding Option shall be assumed or an equivalent option
shall be substituted by such successor corporation or a parent or subsidiary of
such successor corporation or the successor corporation shall provide
substantially similar consideration to Optionees as was provided to stockholders
(after taking into account the existing provisions of the Optionees' Options
such as the exercise price and the vesting schedule). In the event that such
successor corporation does not agree to assume such Options, substitute such
Options or provide similar consideration, Optionees shall have the right to
exercise Options as to all of the Optioned Stock, including Shares as to which
the Option would not otherwise be exercisable. If an Option becomes fully
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Company shall notify the Optionee that the Option shall be
fully exercisable for a period of twenty (20) days from the date of such notice,
and the Option will terminate upon the expiration of such period.
11. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend, or discontinue the Plan, but no amendment, alteration,
suspension, or discontinuation shall be made which would impair the rights of
any Optionee under any grant theretofore made, without his or her consent,
except as necessary for compliance with Rule 16b-3. In addition, to the extent
necessary and desirable to comply with Rule 16b-3 under the Exchange Act (or any
other applicable law or regulation), the Company shall obtain stockholder
approval of any Plan amendment in such a manner and to such a degree as
required.
(b) Effect of Amendment or Termination. Subject to Section
8(b), any such amendment or termination of the Plan shall not affect Options
already granted and such Options shall remain
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<PAGE>
in full force and effect as if this Plan had not been amended or terminated.
12. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the dates set forth in Section 4(b) hereof. Notice of the
determination shall be given to each Outside Director to whom an Option is so
granted within a reasonable time after the date of such grant.
13. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option 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, state securities laws, 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, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise 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.
The 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.
14. 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.
15. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
16. Stockholder Approval. Continuance of the Plan shall be subject to
approval by the stockholders of the Company at or prior to the first annual
meeting of stockholders held subsequent to the granting of an Option hereunder.
Such stockholder approval shall be obtained in the degree and manner required
under applicable state and federal law.
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<PAGE>
FORM OF
SYQUEST TECHNOLOGY, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION GRANT
Optionee:______________________________________________________________________
Address:_______________________________________________________________________
_______________________________________________________________________________
Total Shares Subject to Option:________________________________________________
Exercise Price Per Share:______________________________________________________
Date of Grant: ________________________________________________________________
Expiration Date of Option:_____________________________________________________
1. Grant of Option. SyQuest Technology, Inc., a Delaware corporation
(the "Company"), hereby grants to the optionee named above ("Optionee") an
option (this "Option") to purchase the total number of shares of Common Stock of
the Company set forth above (the "Shares") at the exercise price per share set
forth above (the "Exercise Price"), subject to all of the terms and conditions
of this Stock Option Grant and the Company's 1992 NonEmployee Director Stock
Option Plan, as amended to the date hereof (the "Plan"). This option is a
nonstatutory option and is not intended to qualify for any special tax benefits
to the Optionee. Unless otherwise defined herein, capitalized terms used herein
shall have the meanings ascribed to them in the Plan.
2. Exercise Period of Option. The option rights granted hereunder are
exercisable during the time period or periods, and as to the number of Shares
exercisable during each time period, as follows:
(a) _______________ Shares, or any part thereof, may be
exercised at any time or times, from and including _______________ to and
including___________________;
(b) an additional ____________ Shares, or any part thereof,
may be exercised at any time or times, from and including ______________ to and
including _______________;
(c) an additional __________________ Shares, or any part
thereof, may be exercised at any time or times, from and including
_________________ to and including _____________________;
<PAGE>
(d) and the remaining _________________Shares, or any part
thereof, may be exercised at any time or times, from and including
______________ to and including _______________;
Notwithstanding the above, this Option shall expire on the Expiration
Date set forth above and must be exercised, if at all, on or before the
Expiration Date. The portion of Shares as to which an option is exercisable in
accordance with the above schedule as of the applicable dates shall be deemed
"Vested Options."
3. Restriction on Exercise. This Option may not be exercised unless
such exercise is in compliance with the Securities Act of 1933, as amended, and
all applicable state securities laws, as are in effect on the date of exercise,
and the requirements of any stock exchange or over the counter market on which
the Company's Common Stock may be listed or quoted at the time of exercise.
Optionee understands that the Company is under no obligation to register,
qualify or list the Shares with the Securities and Exchange Commission, any
state securities commission or any stock exchange to effect such compliance.
4. Termination of Option. Except as otherwise provided below in this
Section 4, this Option shall terminate and may not be exercised if Optionee
ceases to serve as a Director of the Company.
(a) Termination Generally. If Optionee ceases to serve as a
Director of the Company for any reason except death or disability, optionee may,
but only within three (3) months after the date optional cease to serve as a
Director, exercise the Option to the extent that he was entitled to exercise it
at the date of such termination. Notwithstanding the foregoing, in no event may
the option be exercised after the Expiration Date. To the extent that Optionee
was not entitled to exercise this Option at the date of such termination, or if
Optionee does not exercise this Option (which Optionee was entitled to exercise)
within the time specified herein, this Option shall terminate.
(b) Disability of Optionee. Notwithstanding the provisions of
Section 4(a) above, in the event Optionee is unable to continue his service as a
Director 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 from
the date Optionee ceases to serve as a Director, exercise his Option to the
extent Optionee was entitled to exercise it at the date of such termination.
Notwithstanding the foregoing, in no event may this option be exercised after
the Expiration Date. To the extent that Optionee was not entitled to exercise
this Option at the date of termination, or if he does not exercise such Option
(which Optionee was entitled to exercise) within the time specified herein, this
Option shall terminate.
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<PAGE>
(c) Death of Optionee. In the event of the death of Optionee,
this Option may be exercised, at any time within twelve (12) months following
the date of death, by Optionee's estate or by a person who acquired the right to
exercise this Option by bequest or inheritance, but only to the extent of the
right to exercise that had accrued at the date of death. Notwithstanding the
foregoing, in no event may this Option be exercised after the Expiration Date.
5. Manner of Exercise.
(a) Exercise Agreement. This Option shall be exercised by
delivery to the Company of an executed written Stock Option Exercise Agreement
in the form attached hereto as Exhibit 1, or in such other form as may be
approved by the Board which shall set forth optionee's election to exercise some
or all of this option, the number of Shares being purchased, any restrictions
imposed on the Shares and such other representations and agreements as may be
required to comply with applicable securities laws.
(b) Exercise Price. Such notice shall be accompanied by full payment of
the Exercise Price for the Shares being purchased. Payment for the Shares may be
made in cash (by check), or, where permitted by law, by any of the following
methods approved by the Board:
[Delete those not authorized by the Board]
|_| By other Shares of the Company which have a Fair Market
Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which this Option is
exercised;
|_| By a waiver of compensation due or accrued to Optionee for
services rendered;
|_| Through a guaranty by the Company of a loan to the Optionee
by a third party of all or part of the Exercise Price (but
not more than the Exercise Price), and such guaranty may be
on an unsecured or secured basis as the Board shall approve
(including, without limitation, by a security interest in
the Shares);
|_| Provided that a public market for the Company's Common Stock
exists, through a "same day sale" commitment from the
Optionee and a broker dealer that is a member of the
National Association of Securities Dealers, Inc. (an "NASD
Dealer") whereby the Optionee irrevocably elects to exercise
this Option and to sell a portion of the Shares so purchased
to pay for the exercise price and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward
the Exercise Price directly to the Company;
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<PAGE>
|_| Provided that a public market for the Company's Common Stock
exists, through a "margin" commitment from the optionee and
an NASD Dealer whereby the Optionee irrevocably elects to
exercise this Option and to pledge the Shares so purchased
to the NASD Dealer in a margin account as security for a
loan from the NASD Dealer in the amount of the Exercise
Price, and whereby the NASD Dealer irrevocably commits upon
receipt of such Shares to forward the Exercise Price
directly to the Company; or
|_| By any combination of the foregoing.
(c) Withholding Taxes. If required under applicable law, prior
to the issuance of the Shares upon exercise of this Option, Optionee must pay or
make adequate provision for any applicable federal or state withholding
obligations of the Company. The Optionee may provide for payment of Optionee's
minimum statutory withholding taxes upon exercise of the option by requesting
that the Company retain Shares with a Fair Market Value equal to the minimum
amount of taxes required to be withheld, all as set forth in Section 7(e) of the
Plan. In such case, the Company shall issue the net number of Shares to the
Optionee by deducting the Shares retained from the Shares exercised. All
elections by Optionee to have Shares withheld for this purpose shall be made in
writing in a form acceptable to the Board and shall be subject to the following
restrictions:
(i) the election must be made on or prior to the applicable Tax
Date;
(ii) once made, the election shall be irrevocable as to the
particular Shares as to which the election is made;
(iii) all elections shall be subject to the consent or
disapproval of the Board; and
(iv) the election must comply with Rule 16b-3 under the
Exchange Act.
(d) Issuance of Shares. Provided that such notice and payment
are in form and substance satisfactory to counsel for the Company, the Company
shall cause the Shares to be issued in the name of Optionee or Optionee's legal
representative.
6. Nontransferability of Option. This Option may not be transferred in
any manner other than by will or by the laws of descent and distribution and may
be exercised during the lifetime of Optionee only by Optionee. The terms of this
option shall be binding upon the executors, administrators, successors and
assigns of the Optionee.
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<PAGE>
7. Taxation Upon Exercise of Option. Optionee understands that, upon
exercise of this Option, he will recognize income for tax purposes in an amount
equal to the excess of the then Fair Market Value of the Shares purchased over
the Exercise Price paid for such Shares. Upon a resale of such Shares by the
Optionee, any difference between the sale price and the Fair Market Value of the
Shares on the date of exercise of the Option will be treated as capital gain or
loss.
8. Interpretation. Any dispute regarding the interpretation of this
Stock Option Grant shall be submitted by Optionee or the Company to the Board,
which shall review such dispute at its next regular meeting. The resolution of
such a dispute by the Board shall be final and binding on the Company and on
Optionee.
9. Entire Agreement. The Plan and the Stock Option Exercise Agreement
attached hereto as Exhibit are incorporated herein by this reference. This Stock
Option Grant, the Plan and the Stock Option Exercise Agreement constitute the
entire agreement of the parties hereto and supersede all prior undertakings and
agreements with respect to the subject matter hereof.
SyQuest Technology, Inc.
By: _____________________________________________
Name: ___________________________________________
Title: __________________________________________
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<PAGE>
ACCEPTANCE
Optionee hereby acknowledges receipt of a copy of the Plan and a
Prospectus related to the Plan, represents that Optionee has read and
understands the terms and provisions thereof, and accepts this Option subject to
all the terms and conditions of the Plan and this Stock Option Grant. Optionee
acknowledges that there may be adverse tax consequences upon exercise of this
Option or disposition of the Shares and that Optionee should consult a tax
advisor prior to such exercise or disposition.
OPTIONEE
___________________________________________
Signature
___________________________________________
Print Name
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<PAGE>
EXHIBIT 1
TO NON-EMPLOYEE DIRECTOR STOCK OPTION GRANT
STOCK OPTION EXERCISE AGREEMENT
This Agreement is made this ____________ day of ___________, 19__
between SyQuest Technology, Inc. (the "Company"), and the optionee named below
("Optionee").
Optionee: ____________________________________________________________________
Phone Number: _________________________ Social Sec. No.: ____________________
Address:______________________________________________________________________
Optionee hereby elects to exercise the following Option(s):
Number of
Date of Shares Price Per
Grant No.: Grant: Purchased: Share:
- --------------- --------------- --------------- ---------------
- --------------- --------------- --------------- ---------------
- --------------- --------------- --------------- ---------------
TOTAL SHARES _______________
AGGREGATE PURCHASE PRICE _______________
Optionee hereby delivers to the Company the Aggregate Purchase Price,
to the extent permitted in the Stock Option Grant to which this Agreement
relates, as follows [check as applicable and complete]:
|_| in cash in the amount of $__________ , which represents
$_____________ for payment in full for the Shares, receipt of which
is acknowledged by the Company;
|_| by check in the amount or $ ______________, which represents $
____________ for payment in full for the Shares receipt or which is
acknowledged by the Company;
|_| ________________________ (broker) has paid to the Company on my
behalf of $_______________, which represents $_____________ for
payment in full for the Shares, receipt or which is acknowledged by
the Company;
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<PAGE>
Optionee hereby directs that the certificate(s) for the Shares being
purchased be registered in the following name(s) and sent to the following
address (if different from above):
___________________________________________
___________________________________________
___________________________________________
Optionee understands that transfer of the Shares being purchased may be
restricted by applicable federal and state securities laws, and that the
certificate(s) representing such shares may bear a legend or legends to that
effect.
OPTIONEE UNDERSTANDS THAT OPTIONEE MAY SUFFER ADVERSE TAX CONSEQUENCES
AS A RESULT OF OPTIONEE'S PURCHASE OR DISPOSITION OF THE SHARES. OPTIONEE
REPRESENTS THAT OPTIONEE HAS CONSULTED WITH ANY TAX CONSULTANT(S) OPTIONEE DEEMS
ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND THAT
OPTIONEE IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.
Optionee represent and warrants to the Company that it has received,
read and understands each of the following documents:
1. The 1992 Non Employee Director Stock Option Plan and the Stock
Option Grant(s) relating to options exercised hereby.
2. A copy of the prospectus relating to the Plan.
3. Any one of the following:
a. A copy of the Company's latest annual report;
b. A copy of the Company's latest Form 10-K; or
c. A copy of a prospectus (other than the prospectus relating
to the Plan) containing audited financial statements for the
Company's most recent fiscal year.
4. Copies of all reports, proxy statements and other communications
distributed generally to the Company's stockholders.
-2-
<PAGE>
Submitted By: Accepted By:
OPTIONEE SyQuest Technology, Inc.
_______________________________
[print name]
_______________________________ By:___________________________
[signature] Stock Option Administrator
______________________________________________________________________________
FOR ADMINISTRATIVE USE ONLY:
BROKER _________________________________
SALE PRICE _____________________________
SALE DATE ______________________________
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