<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] CONFIDENTIAL, FOR USE OF THE
[_] Preliminary Proxy Statement COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
SYQUEST TECHNOLOGY, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- -------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- -------------------------------------------------------------------------------
(5) Total fee paid:
- -------------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
- -------------------------------------------------------------------------------
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
- -------------------------------------------------------------------------------
(1) Amount Previously Paid:
- -------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- -------------------------------------------------------------------------------
(3) Filing Party:
- -------------------------------------------------------------------------------
(4) Date Filed:
- -------------------------------------------------------------------------------
<PAGE>
Dear Fellow SyQuest Shareholder:
Accompanying this letter are additional proxy materials relating to SyQuest
Technology, Inc.'s November 5, 1997, Special Meeting of Stockholders. As
described more fully in those additional materials, there are two proposals
for your consideration. The first proposal is to approve an increase in the
number of authorized shares of the Company's common stock. The second proposal
is to approve the adoption of an incentive stock plan that the Company can use
to reward individuals who make significant contributions to the Company. I
encourage you to review carefully these materials in order to better
understand the details of, and risks associated with, each proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS AN AFFIRMATIVE VOTE ON BOTH
PROXY PROPOSALS
The need for an increase in the number of authorized shares of common stock
relates directly to the high level of success the Company has had in raising
additional financing. In the year since the Company's last special meeting of
stockholders, the Company has, through the issuance of its securities, raised
approximately $60,000,000 and converted to equity approximately $25,000,000 of
debt owed to creditors. As a result, the Company has either issued or reserved
for issuance the vast majority of the 120,000,000 shares of common stock
currently authorized. Additional shares will be required for satisfaction of
commitments to reserve shares of common stock relating to certain of those
transactions, for taking advantage of additional financing opportunities as
they may arise, for maintaining the financial flexibility necessary to raise
additional cash and for potential joint ventures and acquisitions. For these
and other general corporate purposes, and notwithstanding the risk of dilution
to current stockholders' equity, stockholders are urged to approve the
recommended increase to the amount of the Company's authorized common stock to
240,000,000 shares.
ADOPTION OF THE 1997 STOCK INCENTIVE PLAN IS VITAL TO THE COMPANY'S
TURNAROUND EFFORTS
As in most high-tech companies, SyQuest's highly skilled and motivated work
force is essential to its success. Being located in the world famous Silicon
Valley, a region where there is tremendous competition for skilled engineers,
technicians, managers and executives, SyQuest faces especially tough
competition for high quality employees at all levels. The existing Stock
Option and Non-Employee Director Option Plans, established in 1991 and 1992,
respectively, do not have sufficient shares or the flexibility required to
motivate employees through equity incentives. Management believes that without
stockholder approval of this Plan, SyQuest will be at a significant
disadvantage in its efforts to attract and to retain the caliber of
individuals necessary to design, produce and market state of the art products
and turn the Company around. Upon approval of the proposed Plan, both of the
existing Option Plans will be terminated. AS A FELLOW STOCKHOLDER, I URGE YOU
TO VOTE IN FAVOR OF ADOPTING THE 1997 STOCK INCENTIVE STOCK OPTION PLAN.
Sincerely,
Edward L. Marinaro
Chairman of the Board
NO MATTER HOW MANY SHARES YOU HOLD, YOUR VOTE IS IMPORTANT. PLEASE VOTE IN
FAVOR OF ALL PROPOSALS AND RETURN YOUR PROXY CARD TODAY.
<PAGE>
SYQUEST TECHNOLOGY, INC.
47071 BAYSIDE PARKWAY
FREMONT, CALIFORNIA 94538
(510) 226-4000
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 5, 1997
TO OUR STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Special Meeting of Stockholders of SYQUEST
TECHNOLOGY, INC. (the "Company"), a Delaware corporation, will be held on
Wednesday, November 5, 1997, at 10:00 a.m., Pacific Daylight Savings 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 120,000,000 to 240,000,000.
2. To approve the adoption of the Company's 1997 Stock Incentive Plan.
3. 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 September 22, 1997,
are entitled to notice of, and to vote at, the meeting.
All stockholders are cordially invited to attend the meeting in person. To
assure your representation at the meeting, however, you are urged to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the meeting may vote in person even if he or she has returned a proxy.
By Order of the Board of Directors,
Thomas C. Tokos
Secretary
Fremont, California
October 6, 1997
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.
<PAGE>
SYQUEST TECHNOLOGY, INC.
47071 BAYSIDE PARKWAY
FREMONT, CALIFORNIA 94538
----------------
PROXY STATEMENT FOR SPECIAL MEETING OF
STOCKHOLDERS TO BE HELD ON NOVEMBER 5, 1997
----------------
The accompanying 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 on Wednesday, November 5, 1997, at 10:00 a.m., Pacific
Daylight Savings Time, or at any continuation or adjournment thereof, for the
purposes set forth 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 will first be mailed to stockholders on
or about October 6, 1997.
GENERAL INFORMATION
RECORD DATE AND VOTING SECURITIES
Only holders of record of the Company's Common Stock, $.0001 par value, at
the close of business on September 22, 1997 (the "Record Date"), are entitled
to notice of and to vote at the meeting. On the Record Date, 59,200,000 shares
of the Company's Common Stock, $.0001 par value, were issued and outstanding.
For information concerning beneficial owners of more than five percent of the
Company's Common Stock, see "Security Ownership of Management and Certain
Beneficial Owners."
VOTING AND REVOCABILITY OF PROXIES
The Common Stock represented by valid proxies received, properly dated and
executed, and not revoked, will be voted at the Special Meeting in accordance
with the instructions thereon. If, however, voting instructions are not given
on the proxy, the shares represented thereby will be voted for each of the
three proposals described in this Proxy Statement. Any proxy given pursuant to
this solicitation may be revoked by the person giving it at any time prior to
the time it is voted by delivering to the Secretary of the Company, no later
than the start of the Special Meeting, a written notice of revocation or a
duly executed proxy bearing a later date than the revoked proxy, or by
attending the Special Meeting and voting in person.
Each holder of shares of Common Stock is entitled to one vote for each share
on the proposals presented in this Proxy Statement. The Company's Bylaws
provide that a majority of all of the shares of the stock entitled to vote,
whether present in person or represented by proxy, shall constitute a quorum
for the transaction of business at the meeting. If a proxy is accompanied by
instructions to withhold authority, or is marked with an abstention, the
shares represented thereby will be considered to be present at the meeting for
purposes of determining the existence of a quorum for the transaction of
business.
Abstentions will be determined as shares that are present and entitled to
vote for purposes of determining the presence of a quorum, but the Company
will not treat abstentions as votes in favor of approving any matter submitted
to the stockholders for a vote. Shares held by brokers that are present, but
not voted on a particular matter because the brokers were prohibited from
exercising discretionary authority on that matter (that is, "broker non-
votes"), will also be determined as present for determining the presence of a
quorum for the meeting, but will not be considered as present with respect to
that matter. The Company believes that these tabulation procedures are
consistent with Delaware statutory requirements concerning voting of shares
and determination of a quorum.
<PAGE>
SOLICITATION EXPENSES
The Company will bear the expense of preparing, printing and mailing this
Proxy Statement and the proxies solicited hereby and will reimburse brokerage
firms and other persons representing beneficial owners of shares of Common
Stock for their expenses in forwarding solicitation material to such
beneficial owners. In addition to the solicitation of proxies by mail,
solicitation may be made by certain officers, directors and regular employees
by personal interview, telephone or facsimile; no additional compensation will
be paid for such solicitation. The Company has retained Morrow & Co., Inc.
(the "Solicitor"), at an estimated cost of $15,000.00 plus reimbursement of
reasonable expenses, to assist in the solicitation of proxies from brokers,
nominees, institutions and individuals.
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") and Preferred Stock
("Preferred Stock"). The total number of shares which the corporation is
authorized to issue is Two Hundred Forty-Four Million (244,000,000). Two
Hundred Forty Million (240,000,000) 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 $0.0001.
The purpose of such amendment is to increase the number of authorized shares
of the Company's Common Stock from 120,000,000 to 240,000,000 shares. As of
September 12, 1997, the Company had outstanding 56,800,000 shares of Common
Stock and approximately 54,700,000 shares of Common Stock reserved for
issuance as follows:
<TABLE>
<S> <C>
Common Stock outstanding....................................... 56,800,000
Common shares reserved for:
Conversion of Preferred Stock(1)............................. 14,100,000
Exercise of Warrants(1)...................................... 35,900,000
Issuance for Stock Options and Other Employee Commitments.... 4,500,000
Other Commitments (principally Preferred Stock Dividends).... 200,000
</TABLE>
- --------
(1) Amount of shares reserved is based on the hypothetical conversion of
preferred stock and exercise of warrants on September 12, 1997.
The Board of Directors of the Company believes that it is essential 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 other general corporate
purposes.
As reported by the Company in its filings with the Securities and Exchange
Commission (the "Commission"), the Company had significant losses in fiscal
1996 of approximately $136,651,000 and an unaudited net loss from operations
in the first three quarters of fiscal 1997 of approximately $51,200,000, and
will need additional cash to meet its commitments. As set forth above, the
Company currently has a total of one hundred twenty million (120,000,000)
shares of Common Stock authorized and as of September 12, 1997, has authorized
or reserved approximately 111,500,000 shares of Common Stock. Without an
increase in the authorized number of shares of Common Stock, the Company
believes it may not be able to raise additional cash, because the number of
shares of Common Stock currently authorized is inadequate to permit the
Company to issue a sufficient number of additional shares of Common Stock,
warrants to purchase Common Stock or Preferred Stock convertible into Common
Stock, to raise additional capital. Without the requested increase, the
2
<PAGE>
Company also may be unable to issue Common Stock upon the exercise of certain
warrants, resulting in the Company having to pay to the holders of those
warrants the difference between the exercise price and the market value of the
Common Stock at the time of the attempted exercise.
This amendment will, in the opinion of the Board of Directors, increase the
Company's financial flexibility in attempting to raise additional cash. The
Board of Directors of the Company believes that the complexity of business
financing and acquisition transactions requires greater flexibility in the
Company's capital structure than now exists. This amendment will permit the
Company to offer additional shares of Common Stock or Preferred Stock that are
convertible into Common Stock, from time to time, as determined by the Board
for proper corporate purposes. 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 for
acquisitions by the Company of other businesses or properties, and issuance
under employee benefit plans.
The Company intends to enter into future financing transactions in order to
raise capital pursuant to which it would issue (or obligate itself to issue)
some of the shares of Common Stock that would be authorized if this Proposal
is approved. The precise terms of such transactions, however, have not as yet
been determined. Furthermore, the Company can give no assurance even if the
proposed amendment is adopted, that the Company will be successful in raising
additional capital.
Approval of the increase now will eliminate delays, give management greater
flexibility in negotiating terms and conditions and reduce the expense that
otherwise would be incurred if stockholder approval were needed on short
notice 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.
governing corporations with securities listed on the Nasdaq National Market
would require stockholder approval by a majority of the total votes cast in
person or by proxy prior to the issuance of designated securities (a) where
the issuance would result in a change of control of the Company, (b) 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 or more of
its outstanding shares or (c) in connection with a transaction other than a
public offering involving the sale or issuance of twenty percent 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 if delay in the issuance would
impair the financial viability of the Company.
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 on 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, depending on the number shares issued
and the purpose, terms and conditions of the issuance. Stockholders have no
preemptive rights to subscribe for additional shares.
Issuance of additional shares could discourage attempts to acquire control
of the Company by tender offer or other means. In such a case, stockholders
might be deprived 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 could result from such an
attempt. Also, 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.
The Board of Directors believes that the need to obtain additional financing
and the flexibility to respond to opportunities for acquisitions or joint
ventures offered by the amendment outweighs any of its potential
disadvantages. Without this flexibility, the Company's ability to implement
the business plan currently in process could be severely compromised or
rendered unsuccessful.
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.
3
<PAGE>
CONSEQUENTLY, ABSTENTIONS AND BROKER NON-VOTES WILL HAVE THE EFFECT OF A VOTE
AGAINST THE PROPOSED AMENDMENT.
RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION.
PROPOSAL NO. 2
ADOPTION OF THE 1997 STOCK INCENTIVE PLAN
On July 22, 1997, the Board of Directors of the Company approved the
adoption of the 1997 Stock Incentive Plan (the "1997 Plan"), providing for the
grant of options to purchase shares of Common Stock and restricted shares of
Common Stock. The number of shares of Common Stock issuable under the proposed
1997 Plan is 4,000,000 shares. At the Special Meeting, the Stockholders are
being asked to approve the 1997 Plan. A description of the principal features
of the 1997 Plan is set forth below. If the Stockholders approve the 1997
Plan, the Board plans to terminate the Company's 1991 Stock Option Plan (the
"1991 Plan") and 1992 Non-Employee Director Stock Option Plan (the "1992
Plan") and make available for issuance under the 1997 Plan any shares
previously reserved for, but not subject to, issuance under the 1991 Plan or
the 1992 Plan.
PURPOSE
The purpose of the 1997 Plan is to attract, retain and provide equity
incentives to the Company's employees, outside directors and consultants. The
1997 Plan seeks to achieve this purpose by providing for the award of
restricted shares ("Restricted Shares") of Common Stock or options ("Options")
to purchase shares of Common Stock (which may take the form of incentive stock
options ("Incentive Stock Options"), as described in section 422(b) of the
Internal Revenue Code of 1986, as amended (the "Code"), or Options not
described in sections 422 or 423 of the Code ("Nonstatutory Stock Options")
(Restricted Shares and Options, collectively, "Awards")).
ADMINISTRATION
The 1997 Plan shall be administered by a committee (the "Committee")
appointed by the Board, consisting exclusively of two or more directors of the
Company, each of whom is a non-employee director as defined in Rule 16b-3 (or
its successor) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and who meets the requirements of the Internal Revenue
Service for outside directors with respect to plans designed to qualify for
exemption under Section 162(m)(4)(C) of the Code. The Board may also appoint
one or more separate committees of the Board, each composed of one or more
directors of the Company who need not satisfy the foregoing requirements, who
may administer the 1997 Plan with respect to Employees (as defined below) and
Consultants (as defined below) who are not considered officers or directors of
the Company under Section 16 of the Exchange Act. Either the Committee or a
committee of the Board as described above is authorized to interpret and carry
out the 1997 Plan, subject to the general purpose, terms and conditions of the
1997 Plan. The Committee or a committee of the Board as described above, if
appropriate, shall select the individuals to whom Awards will be granted and
determine the type, number, vesting requirements and other features and
conditions of such awards, interpret the 1997 Plan, and make all other
decisions relating to the administration of the 1997 Plan. The Committee may
adopt such rules or guidelines as it deems appropriate to implement the 1997
Plan. The Committee's determinations under the 1997 Plan shall be final and
binding on all persons.
ELIGIBILITY
The 1997 Plan provides that Awards may be granted to employees ("Employees")
of the Company or its parents, subsidiaries or affiliates, directors ("Outside
Directors") who are not Employees, and consultants ("Consultants") who provide
bona fide services as independent contractors to the Company or its parents,
4
<PAGE>
subsidiaries or affiliates. Incentive Stock Options may only be granted to
Employees. In addition, an Employee who owns more than 10% of the total
combined voting power of all classes of outstanding stock of the Company shall
not be eligible for the grant of an Incentive Stock Option unless the
requirements set forth in Section 422(c)(6) of the Code are satisfied.
STOCK OPTIONS
For each Option granted under the 1997 Plan, a stock option agreement (an
"Option Agreement") between the Company and the Option grantee (the
"Optionee") will specify the number of shares to which such Option pertains
and whether it is an Incentive Stock Option or a Nonstatutory 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, the exercise price of the Option, the dates on which shares subject
to the Option may first be purchased and the period within which the Option
may be exercised, which will not be more than ten years from the date of the
grant.
The exercise price per share for an Option granted under the 1997 Plan shall
be 100% of the fair market value (the "Fair Market Value") of the Company's
common stock on the date of the grant of such Option, unless otherwise
specified by the Committee. The Fair Market Value of the Company's Common
Stock is to be determined in good faith by the Committee. In addition, the
Options granted to any Optionee in a single fiscal year of the Company shall
not cover more than 1,000,000 shares of Common Stock.
The entire exercise price (the "Exercise Price") of an Option shall be
payable in cash or cash equivalents at the times such Option is exercised,
except as follows. In the case of an Incentive Stock Option granted under the
1997 Plan, payment shall be made only pursuant to the express provisions of
the applicable Option Agreement, which may specify that payment of all or any
part of the Exercise Price may be made: (a) through the delivery of shares of
Common Stock of the Company with a value equal to the total Exercise Price;
(b) through an irrevocable direction to a securities broker approved by the
Company to sell all or some of the shares of Common Stock purchased on
exercise of an Option and to deliver all or part of the proceeds to the
Company; (c) through an irrevocable direction to pledge all or part of the
shares of Common Stock being purchased under the 1997 Plan to a securities
broker or lender approved by the Company, as security for a loan, and to
deliver all or part of the loan proceeds to the Company; (d) by delivery of a
promissory note on a form prescribed by the Company, provided that the par
value of the shares of Common Stock being purchased under the 1997 Plan shall
be paid in cash or cash equivalents; or (e) by any other form of payment
consistent with applicable laws, regulations and rules. In the case of a
Nonstatutory Stock Option, the Committee may at any time accept payment of all
or any part of the Exercise Price in any of the forms described in this
paragraph.
RESTRICTED SHARES
The Committee may sell or award Restricted Shares under the 1997 Plan for
such consideration as the Committee may determine, including, without
limitation, cash, cash equivalents, promissory notes, past services and future
services. The recipient (the "Recipient") of any newly issued Restricted
Shares shall furnish to the Company consideration for the value not less than
the par value of such Restricted Shares in the form of cash, cash equivalents
or past services rendered to the Company for a parent or subsidiary of the
Company, as the Committee may determine. Each grant of Restricted Shares under
the 1997 Plan shall be evidenced by an agreement (a "Restricted Stock
Agreement") between the Recipient and the Company. Restricted Shares granted
under the 1997 Plan shall be subject to all applicable terms of the 1997 Plan
and may be subject to other terms consistent with the 1997 Plan. The
provisions of the various Restricted Stock Agreements under the 1997 Plan need
not be identical.
Awards of Restricted Shares may be subject to vesting, which shall occur on
satisfaction of conditions specified in the appropriate Restricted Stock
Agreement. A Restricted Stock Agreement may provide or accelerate the vesting
in the event of a Recipient's death, disability, retirement or other events.
The Committee may determine at the time of granting Restricted Shares or
thereafter, that all or part of such Restricted Shares
5
<PAGE>
shall be deemed vested in the event of: (a) a merger, consolidation or similar
occurrence in which more than half of the voting securities of the surviving
entity are owned by persons who are not stockholders of the Company
immediately prior to such event; (b) the sale, transfer or other disposition
of all or substantially all of the Company's assets; (c) a change in control
of the Company's Board of Directors; or (d) any transaction as a result of
which any person, other than (1) a fiduciary holding securities under an
employee benefit plan of the Company or its parents or subsidiaries or (2) a
corporation owned directly or indirectly by the Company's stockholders,
becomes a beneficial owner (as defined in Rule 13d-3 under the Exchange Act)
of at least 5% of the Company's outstanding voting securities. Notwithstanding
the preceding sentence, however, if the Company and the other party to a
transaction described in the preceding sentence agree that such transaction is
to be treated as a "pooling of interests" for financial reporting purposes,
and if such transaction in fact is so treated, then the acceleration of
vesting shall not occur to the extent that the Company's independent
accountants and such other party's independent accountants separately
determine in good faith that such acceleration would preclude the use of
"pooling of interests" accounting.
Recipients of Restricted Shares awarded under the 1997 Plan shall have the
same voting, dividend and other rights as the Company's other stockholders. A
Restricted Stock Agreement, however, may require that the holders of
Restricted Shares invest any cash dividends in additional Restricted Shares.
Such additional Restricted Shares shall be subject to the same conditions and
restrictions as the Restricted Shares with respect to which the dividends were
paid.
DEFERRAL OF DELIVERY OF SHARES ISSUABLE ON EXERCISE OF OPTIONS
The Committee may, in its discretion, permit an Optionee to have shares of
Common Stock, that otherwise would be delivered to such Optionee as a result
of his or her exercise of an Option, converted into an amount credited to a
deferred compensation account established for such Optionee by the Committee
as an entry on the Company's books. Such amount shall be determined by
reference to the Fair Market Value of the Common Stock as of the date when
such Shares otherwise would have been delivered to such Optionee. Such a
deferred compensation account may be credited with interest or other forms of
investment return, as determined by the Committee. An Optionee for whom such
an account is established shall have no rights other than those of a general
creditor of the Company. Such an account shall represent an unfunded and
unsecured obligation of the Company and shall be subject to the terms and
conditions of the applicable agreement between such Optionee and the Company.
If the conversion of Options is permitted, the Committee, in its sole
discretion, may establish rules, procedures and forms pertaining to such
conversion, including, without limitation, the settlement of deferred
compensation accounts.
ADJUSTMENTS
In the event of (a) a subdivision of the outstanding shares of Common Stock,
(b) a declaration of a dividend payable in Common Stock, (c) a declaration of
a dividend payable in a form other than Common Stock in an amount that has a
material effect on the price of the Common Stock, (d) a combination or
consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise) into a lesser number of shares or (e) a recapitalization, spin-
off or similar occurrence, the 1997 Plan provides for appropriate adjustment
in the number of future Awards available under the 1997 Plan, the number of
shares of Common Stock covered by each outstanding Option and the Exercise
Price for each outstanding Option.
In the event the Company is a party to a merger or other reorganization,
outstanding Options and Restricted Shares shall be subject to the agreement of
merger or reorganization. Such agreement shall provide for (a) continuation of
outstanding Awards by the Company, if the Company is a surviving corporation,
(b) the assumption of outstanding Awards by the surviving corporation or its
parent or subsidiary, (c) the substitution of awards of the surviving
corporation or its parent or subsidiary for outstanding Awards, (d) full
exercisability or vesting and accelerated expiration of outstanding Awards or
(e) settlement of the full value of outstanding Awards in cash or cash
equivalents followed by cancellation of such Awards.
6
<PAGE>
TERM
If approved by the stockholders, the 1997 Plan shall become effective as of
July 22, 1997. The 1997 Plan shall remain in effect until it is terminated
according to its terms, except that no Incentive Stock Options shall be
granted after July 22, 2007.
MODIFICATION, SUSPENSION AND TERMINATION
The Board may, at any time and for any reason, amend or terminate the 1997
Plan. An amendment of the 1997 Plan shall be subject to the approval of the
Company's stockholders only to the extent required by applicable laws,
regulations or rules. No Award shall be granted under the 1997 Plan after the
termination thereof. The termination of the 1997 Plan, or any amendment
thereof, shall not affect any Award previously granted under the 1997 Plan.
FEDERAL TAX CONSEQUENCES
NON-QUALIFIED STOCK OPTIONS. An Optionee will not be deemed to have received
any compensation for Federal income tax purposes upon the grant of a
Nonstatutory Stock Option. Upon exercise of such Option, the Optionee 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 Optionee 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 Optionee 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.
INCENTIVE STOCK OPTIONS. An Optionee 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 such Option on
the exercise date over the exercise price will be an item of tax preference
for purposes of computing an Optionee's alternative minimum tax liability, if
any.
If the Optionee 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 Optionee 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 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 Optionee upon
the premature disposition of shares. If the Optionee exercises an Incentive
Stock Option or does not dispose of the shares acquired upon exercise of such
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 Optionee 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 by the
Optionee of the shares acquired on exercise of such Option 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 1997 Plan. Furthermore, no information is given
herein with respect to any state or local taxes or other non-U.S. taxes which
may be applicable.
7
<PAGE>
The following table sets forth the principal participants to the 1997 Stock
Incentive Plan, the number of stock options designated for each group, and the
estimated value of those options.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
DOLLAR 1997 STOCK INCENTIVE PLAN
NAME AND PRINCIPAL POSITION VALUE(1) NUMBER 0F UNITS
--------------------------- ---------- -------------------------
<S> <C> <C>
Edwin L. Harper - President
and Chief Executive Officer............ $1,411,540 1,000,000
Edward L. Marinaro
Chairman of the Board.................. $1,411,540 1,000,000
Dale W. Pilgeram - Vice President
and Chief Technical Officer............ $ 282,308 200,000
Joseph Smith - Executive Vice
President, Global Operations........... $ 282,308 200,000
Gary Marks - Executive Vice
President, Marketing................... $ 282,308 200,000
Executive Group......................... $1,355,079 960,000
Non-Executive Director Group............ $ 0 0
Non-Executive Employee Group............ $ 374,058 265,000
</TABLE>
(1) The dollar value of the stock options as of September 12, 1997 has been
calculated under the Black Scholes valuation method using the Fair Market
Value of the Company's Common Stock as of February 25, 1997 as the
exercise price of the options. These values are calculated as a result of
regulations promulgated by the Securities and Exchange Commission and do
not reflect the Company's estimate of future stock price appreciation. The
actual value of these stock options, if any, is dependent on the future
market price of the Company's stock.
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 special meeting is
required to approve the adoption of the 1997 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.
RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
ADOPTION OF THE 1997 STOCK INCENTIVE PLAN.
8
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth beneficial ownership of Common Stock of the
Company as of September 12, 1997, by (i) each present director, (ii) each
executive officer of the Company and (iii) all present directors and executive
officers as a group. There are no persons known to the Company to be the
beneficial owners of more than five percent of the Company's Common Stock, the
only class of voting securities of the Company outstanding.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED (1)
-------------------------
NUMBER OF PERCENT OF
NAME SHARES SHARES
- ---- ------------- -----------
<S> <C> <C>
Edward L. Marinaro.................................. 268,281 *
Edwin L. Harper..................................... 109,300 *
C. Richard Kramlich................................. 137,644 *
Joseph Baia......................................... 35,000 *
Dale W. Pilgeram.................................... 25,000 *
Joseph Smith........................................ 0 *
Gary Marks.......................................... 5,000 *
All other executive officers of the Company as a
group (4 persons).................................. 26,500 *
</TABLE>
- --------
* Less than one percent.
9
<PAGE>
EXECUTIVE COMPENSATION AND OTHER MATTERS
GENERAL
Shown below is information concerning the annual and long-term compensation
for services in all capacities to the Company for the fiscal years ended
September 30, 1997, 1996 and 1995, of the Chief Executive Officer of the
Company and the four other most highly compensated executive officers with the
Company as of the end of fiscal 1997 (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.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
----------------
ANNUAL COMPENSATION NUMBER OF SHARES
NAME AND PRINCIPAL ---------------------- UNDERLYING ALL OTHER
POSITIONS FISCAL SALARY ($) BONUS ($) OPTIONS GRANTED COMPENSATION ($)
------------------ YEAR ---------- --------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Edwin L. Harper(1)...... 1997 307,200 0 0 0
President and Chief Ex- 1996 113,665 0 390,000 14,175(2)
ecutive Officer 1995 0 0 0 0
Edward L. Marinaro(3)... 1997 307,200 0 0 0
Chairman of the Board 1996 99,662 0 390,000 8,500(4)
1995 0 0 0 0
Dale W. Pilgeram(5)..... 1997 243,000 0 0 0
Vice President, Chief 1996 139,927(6) 0 100,000 1,000(7)
Technical Officer 1995 0 0 0 0
Joseph Smith(8)......... 1997 210,000 0 0 0
Executive Vice Presi- 1996 55,095 0 130,000 0
dent, Global Operations 1995 0 0 0 0
Gary Marks(9)........... 1997 191,740 0 50,000 0
Executive Vice Presi- 1996 0 0 0 0
dent, Marketing 1995 0 0 0 0
</TABLE>
- --------
(1) Joined the Company in May 1996. Fiscal 1996 salary includes $29,423,
deferred until fiscal 1997 at Mr. Harper's election. Such deferred
compensation accrues interest at ten percent per annum, compounded
quarterly.
(2) Represents moving expenses.
(3) Joined the Company in May 1996. Fiscal 1996 salary includes $29,423,
deferred until fiscal 1997 at Mr. Marinaro's election. Such deferred
compensation accrues interest at ten percent per annum, compounded
quarterly.
(4) Represents the Company's maximum contribution to Mr. Marinaro's 401(k)
plan ($1,000), plus $7,500 paid to Mr. Marinaro for his attendance at
meetings of the Board of Directors before he became Chairman of the Board.
(5) Joined the Company in March 1996.
(6) Includes $10,000 paid to Mr. Pilgeram as a private contractor prior to his
employment with the Company.
(7) Represents the Company's maximum contribution to Mr. Pilgeram's 401(k)
plan.
(8) Joined the Company in August 1996.
(9) Joined the Company in November 1996.
10
<PAGE>
The following table sets forth information with respect to each grant of
options to purchase the Company's Common Stock made during the last fiscal
year to each of the Named Executive Officers named in the Summary Compensation
Table.
OPTION GRANTS IN FISCAL YEAR 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------- VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES
NO. OF OPTIONS OF STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION FOR
UNDERLYING EMPLOYEES OR BASE OPTION TERM ($)(3)
OPTIONS IN FISCAL PRICE (2) EXPIRATION --------------------
NAME GRANTED(1) YEAR ($/SHARES) DATE 5% 10%
---- ---------- ---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Edwin L. Harper......... 0 0 N/A N/A N/A N/A
Edward L. Marinaro...... 0 0 N/A N/A N/A N/A
Dale W. Pilgeram........ 0 0 N/A N/A N/A N/A
Joseph Smith............ 0 0 N/A N/A N/A N/A
Gary Marks(4)........... 50,000 .03093 $5.69 11/13/01 $ 61,312 $ 132,036
</TABLE>
- --------
(1) All options were granted under the Company's 1991 Stock Option Plan.
(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. Exercise price and tax withholding
obligations may be paid in cash or by an alternate 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.
(3) 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 as a
result of regulations 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 stock. Gains are reported net of the option exercise
price but before taxes associated with exercise.
(4) Options vest over four years.
The following table sets forth information with respect to option exercises
and year-end stock option values for each of the Named Executive Officers.
AGGREGATED OPTIONS EXERCISED IN FISCAL 1997 YEAR TO DATE
AND FISCAL YEAR TO DATE OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT FY-END AT FY-END(1)
ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edwin L. Harper......... -- -- 97,500 292,500 (2) (2)
Edward L. Marinaro...... -- -- 256,667 133,333 (2) (2)
Dale W. Pilgeram........ -- -- 25,000 75,000 (2) (2)
Joseph Smith............ -- -- -- 130,000 (2) (2)
Gary Marks.............. -- -- -- 50,000 (2) (2)
</TABLE>
- --------
11
<PAGE>
(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) At September 12, 1997, there were no in-the-money options for the
individuals noted.
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 on a
merger or consolidation of the Company in which the Company is not the
surviving corporation or on 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.
Pursuant to their respective employment agreements, if there is a change in
control of the Company, each of Mr. Harper and Mr. Marinaro, upon termination
other than for cause, will be entitled to twenty-four months salary, a bonus
equal to a pro-rata portion of annual salary, immediate vesting of outstanding
options and continuation of benefits for twenty-four months.
COMPENSATION OF DIRECTORS
Each member of the Board of Directors who is not an employee of the Company
receives an annual retainer of $15,000 for serving as a director during the
fiscal year. Each nonemployee director was also paid a fee of $1,500 for each
Board meeting and $500 for each committee meeting attended. An amendment to
the 1992 Non-Employee Director Stock Option Plan granting each director a one
time option to acquire 30,000 shares of the Company's Common Stock was
approved at the special meeting of the stockholders of the Company on
September 26, 1996. Each director is also granted an option each year to
purchase 10,000 shares of the Company's Common Stock. All options are valued
at the fair market value of the Company's Common Stock on the date of the
grant.
EMPLOYMENT AGREEMENTS
The Company has written employment agreements with the following named
executive officers which are summarized below:
Edward L. Marinaro, Chairman of the Board
Annual Base Salary: $307,200
Eligibility in the Company's Incentive Compensation Plan
Full health benefits
If terminated other than for cause and other than after a change in
control, Mr. Marinaro will be entitled to salary continuation for eighteen
months, a pro-rata portion of any performance bonus otherwise payable to
him, benefits continuation for twenty-four months, and his options will
continue to vest for a period of twelve months after termination. If
terminated after a change in control, other than for cause, Mr. Marinaro
will be entitled to a payment equal to twenty-four months of salary, a
bonus equal to a pro-rata portion of his annual salary, twenty-four months
of benefits and immediate vesting of all options. In the event of death or
disability, his salary will be continued for a period of twelve months and
his stock options will continue to vest during that period.
Edwin L. Harper, President and Chief Executive Officer
Annual Base Salary: $307,200
Eligibility in the Company's Incentive Compensation Plan
Full health benefits
If terminated other than for cause and other than after a change in
control, Mr. Harper will be entitled to salary continuation for eighteen
months, a pro-rata portion of any performance bonus otherwise payable to
him, benefits continuation for twenty-four months, and his options will
continue to vest for a period of
12
<PAGE>
twelve months after termination. If terminated after a change in control,
other than for cause, Mr. Harper will be entitled to a payment equal to
twenty-four months of salary, a bonus equal to a pro-rata portion of his
annual salary, twenty-four months of benefits and immediate vesting of all
options. In the event of death or disability, his salary will be continued
for a period of twelve months and his stock options will continue to vest
during that period.
STOCK PERFORMANCE GRAPH
The Stock Performance Graph below shall not be deemed incorporated by
reference in any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or the Exchange
Act, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under either
of such Acts.
The following line graph compares the cumulative total returns to holders of
the Company's Common Stock during the fiscal periods since September 30, 1992,
to September 30, 1997, with the Nasdaq Composite (US) Index and a peer group
constructed by the Company, comprising Connor Peripherals, Inc., Maxtor
Corporation, Micropolis Corporation, Quantum Corporation, Western Digital
Corporation, Iomega Corporation and Exabyte Corporation. (1)
The Stock Performance Graph assumes that $100 was invested on September 30,
1992, at the closing sale price for the Company's Common Stock and in the
NASDAQ (U.S.) Composite Index and Peer Group, and that all dividends were
reinvested. No dividends have been declared or paid on the Company's Common
Stock. Stockholder returns over the indicated period should not be considered
indicative of future stockholder returns. Returns for the Peer Group are
weighted based on market capitalization at each data point.
(1) No data is available for Maxtor Corporation, Micropolis Corporation or
Connor Peripherals, Inc. after February 1996 because these companies were
acquired by other companies.
13
<PAGE>
[PERFORMANCE GRAPH APPEARS HERE]
SYQUEST TECHNOLOGY
HISTORICAL QUARTERLY PRICE--CLOSE
RELATIVE TO DISK DRIVE COMPANIES AND SELECTED MARKET INDICES
<TABLE>
<CAPTION>
SEP 92 DEC 92 MAR 93 JUNE 93
------ ------ ------ -------
<S> <C> <C> <C> <C>
SyQuest Technology, Inc....................... 100 148 75 62
Peer Group.................................... 100 105 75 56
Nasdaq (U.S.) Composite....................... 100 116 118 120
<CAPTION>
SEP 93 DEC 93 MAR 94 JUNE 94
------ ------ ------ -------
<S> <C> <C> <C> <C>
SyQuest Technology, Inc....................... 61 58 64 56
Peer Group.................................... 58 82 98 76
Nasdaq (U.S.) Composite....................... 130 133 128 124
<CAPTION>
SEP 94 DEC 94 MAR 95 JUNE 95
------ ------ ------ -------
<S> <C> <C> <C> <C>
SyQuest Technology, Inc....................... 61 103 70 75
Peer Group.................................... 87 91 79 110
Nasdaq (U.S.) Composite....................... 132 130 142 162
<CAPTION>
SEP 95 DEC 95 MAR 96 JUNE 96
------ ------ ------ -------
<S> <C> <C> <C> <C>
SyQuest Technology, Inc....................... 77 58 35 46
Peer Group.................................... 112 70 100 247
Nasdaq (U.S.) Composite....................... 182 184 193 208
<CAPTION>
SEP 96 DEC 96 MAR 97 JUNE 97
------ ------ ------ -------
<S> <C> <C> <C> <C>
SyQuest Technology, Inc....................... 37 21 15 13
Peer Group.................................... 282 332 355 352
Nasdaq (U.S.) Composite....................... 216 227 215 254
<CAPTION>
SEP 97
------
<S> <C> <C> <C> <C>
SyQuest Technology, Inc....................... 18
Peer Group.................................... 445
Nasdaq (U.S.) Composite....................... N/A*
</TABLE>
--------
* Not available as of printing date
14
<PAGE>
REPORT OF COMPENSATION COMMITTEE
The role of the Compensation Committee (the "Committee") is to administer
the Company's 1991 Stock Option Plan and authorize the grant of options to all
employees, including the executive officers; administer the Company's 1992
Employee Stock Purchase Plan; review and recommend salaries and incentive
programs and review and recommend executive officers' compensation under the
aforementioned elements. The Committee comprises two independent non-employee
directors.
GENERAL COMPENSATION PHILOSOPHY
The Company's overall compensation philosophy is to provide competitive
levels of total compensation that will enable the Company to attract,
motivate, retain and reward qualified employees. The Committee believes that
compensation should vary with the performance of the Company and any long-term
incentive should be aligned with the interest of the stockholders. The
Company's executive compensation policies are designed to provide competitive
levels of compensation to motivate officers to achieve the Company's business
objectives and to reward such officers based on their achievements. The
executive compensation program primarily consists of three main elements --
Base Salary, Incentive Bonuses and Stock Options.
Compensation for the Named Executive Officers consists of the following
components:
Base Salary: In setting compensation levels for officers, the Committee
reviews competitive information relating to compensation levels at other
disk drive companies and the information reported in the proxy statements
of those companies. Recommendations by management are examined by the
Committee in the light of this information. Officer base compensation may
vary based on time in position, assessment of individual performance,
salary relative to internal and external equity and critical nature of the
position relative to the success of the Company.
Incentive Bonuses: The incentive bonus program provides a variable
compensation opportunity for the executive officers. A payout, if any, is
based on a combination of corporate financial performance and individual
officer performance relative to achievement of the pre-established
specified strategic objectives (such as new product development milestones,
marketing/sales results, productivity enhancements and manufacturing yield
improvements). Awards under this program depend on achieving certain levels
of profitability based on after-tax net income and determined and approved
by the Board annually. Target bonuses for executive officers range from
twenty-five to one hundred percent of base salary of the executive
officers. The Company has a profit sharing plan in existence for employees
of the Company who do not participate in the foregoing bonus arrangements.
Since the Company posted a loss in fiscal 1997, no incentive bonuses were
awarded to the executive officers and no profit sharing payments were
awarded to the employees for 1997.
Stock Options: The Committee believes that stock ownership provides
significant incentive to employees by providing an opportunity to receive
additional compensation through building stockholder value. This
compensation element aligns the interests of employees with those of the
stockholders. The long-term incentive is realized through the granting of
stock options to employees and eligible Named Executive Officers. Stock
Options have value for the employee only if the price of the Company's
stock increases above the exercise price, which typically is set at the
fair market value of the Common Stock on the grant date. The number of
shares subject to each stock option grant is based on guidelines that take
into consideration the employee's current and anticipated future
performance and ability to promote achievement of strategic corporate goals
and anticipated future performance, as well as internal equity within the
employee's peer group. The Committee reviews Named Executive Officers'
stock option holdings annually to determine whether additional grants are
appropriate. Stock options granted are generally exercisable over a four-
year period, thus providing an incentive to remain in the Company's employ.
15
<PAGE>
Other: In addition to the compensation paid to the Named Executive
Officers as described above, executive officers and all other participating
regular employees of the Company receive each year matching contributions
by the Company of up to $1,000 under the Company's 401(k) plan. Executive
officers, subject to plan provisions, and all other regular employees are
eligible to participate in the Company's Employee Stock Purchase Plan
(which qualifies under section 423 of the Internal Revenue Code of 1986).
COMPANY PERFORMANCE AND CEO COMPENSATION
Edwin L. Harper was named Chief Executive Officer and President of the
Company during fiscal 1996. In setting compensation levels for the Chief
Executive Officer, the Committee reviews competitive information reflecting
compensation practices for disk drive companies and examines the Chief
Executive Officer's performance relative to overall Company financial results.
The Committee also considers the Chief Executive Officer's achievements
against the same pre-established objectives and determines whether the Chief
Executive Officer's base salary, target bonus and target total compensation
approximate the competitive range of compensation for chief executive officer
positions in the disk drive industry.
In establishing his compensation, the Committee reviewed Mr. Harper's
qualifications and past performance and compared them with chief executive
officers of other companies.
In the fiscal year ended September 30, 1997, Mr. Harper received $307,200.
Mr. Harper did not earn an incentive bonus in fiscal year 1997. Overall, Mr.
Harper's base and incentive compensation are below the median compensation for
disk drive companies, but within the competitive range.
With respect to matters of executive compensation, stock option grants and
to all other elements of compensation, the Committee submits the foregoing
report as of July 22, 1997.
Joseph Baia
C. Richard Kramlich
OTHER MATTERS
ACCOUNTANTS
Representatives of Price Waterhouse LLP, the Company's principal accountants
will be present at the meeting, will have the opportunity to make a statement
if they so desire and are expected to be available to respond to appropriate
questions from stockholders.
INFORMATION INCORPORATED BY REFERENCE
The Commission allows the Company to "incorporate by reference" certain
information into this Proxy Statement, which means that we can disclose
important information to you by referring you to another document filed
separately with the Commission. This Proxy Statement hereby incorporates by
reference: (a) the documents set forth below and previously filed with the
Commission; and (b) any documents that the Company may file with the
Commission in the future under the Exchange Act. The information incorporated
by reference is deemed to be part of this Proxy Statement, except for any
information superseded by information in this Proxy Statement or by
information contained in the Company's future filings with the Commission.
16
<PAGE>
<TABLE>
<CAPTION>
DOCUMENT FILED PERIOD/DATE
-------------- -----------
<S> <C>
Annual Report on Form 10-K/A Fiscal Year Ended September 30, 1996
Quarterly Reports on Form 10- Q Quarters Ended December 31, 1996, March 31, 1997,
and June 30, 1997
Current Reports on Form 8- K January 23, 1997, February 3, 1997, February 28, 1997,
May 30, 1997, July 2, 1997, August 4, 1997 and August 11, 1997
1997 Notice of Annual Meeting
and Proxy Statement April 16, 1997
</TABLE>
GENERAL
The Company knows of no other matters to be submitted to the stockholders at
the meeting. If any other matters properly come before the meeting, the
persons named in the enclosed form of Proxy intend to vote the shares they
represent in a manner consistent with the recommendations of the Board of
Directors.
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Proposals of stockholders of the Company that are intended to be presented
by such stockholders at the Company's 1998 Annual Meeting of Stockholders had
to have been received by the Company no later than September 30, 1997, to be
considered for inclusion in the proxy statement and form of proxy relating to
that meeting.
By Order Of The Board of Directors
Thomas C. Tokos
Secretary
Fremont, California
Dated: October 6, 1997
17
<PAGE>
P
R
O
X
Y
DETACH HERE SYQ F
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SYQUEST TECHNOLOGY, INC.
NOVEMBER 5, 1997 SPECIAL MEETING OF STOCKHOLDERS
The undersigned stockholder of SYQUEST TECHNOLOGY, INC., a Delaware
corporation ("Company"), hereby acknowledges receipt of the Notice of Special
Meeting of Stockholders and Proxy Statement, each dated October 6, 1997, and
hereby appoints Edwin L. Harper and Bob L. Corey, 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 November 5, 1997, at
10:00 a.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 AND 3, 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
SEE REVERSE
SIDE
<PAGE>
DETACH HERE SYQ F
Please mark
votes as in
[X] this example.
The Board of Directors Recommends Voting FOR Proposals 1, 2 and 3.
---
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
1. To approve an amendment to the [_] [_] [_]
Company's Certificate of
Incorporation to increase the
the Company's Common Stock
from 120,000,000 to
240,000,000.
FOR AGAINST ABSTAIN
2. To approve the adoption of the [_] [_] [_]
Company's 1997 Stock Incentive
Plan.
FOR AGAINST ABSTAIN
3. To transact such other business [_] [_] [_]
as may come before the meeting
or any adjournment thereof.
(This proxy should be marked, dated and signed by the stockholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
jointly or as community property, both stockholders should sign.)
MARK HERE
FOR ADDRESS ______________________________________________________________
CHANGE AND ______________________________________________________________
NOTE AT RIGHT [_] ______________________________________________________________
Signature ________________ Date ______ Signature _________________ Date _____
</TABLE>
