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:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
MERIX CORPORATION
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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>
MERIX CORPORATION
Notice of Annual Meeting of Shareholders
September 23, 1997
To the Shareholders of Merix Corporation:
The Annual Meeting of Shareholders of Merix Corporation, an Oregon
corporation, will be held on Tuesday, September 23, 1997 at 9:00 a.m., local
time, at the Corporate Offices of the Company, 1521 Poplar Lane, Forest Grove,
Oregon 97116, for the following purposes, as more fully described in the
accompanying Proxy Statement:
1. To elect six directors to serve for the ensuing year and until their
successors are elected.
2. To amend the 1994 Stock Incentive Plan to add 600,000 shares of common
stock to be used only for option grants at fair market value, and to
make other changes to the plan.
3. To ratify the appointment of the independent auditor of the Company
for fiscal 1998.
4. To transact any other business that may properly come before the
meeting or any adjournment of the meeting.
You are respectfully requested to date and sign the enclosed proxy and
return it in the postage prepaid envelope enclosed for that purpose. You may
attend the meeting in person even though you have sent in your proxy, since
retention of the proxy is not necessary for admission to or identification at
the meeting.
By Order of the Board of Directors
Samuel R. DeSimone, Jr.
Vice President of Corporate Development
and Secretary
Forest Grove, Oregon
August 11, 1997
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THIS MEETING IN
PERSON, PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE SO THAT YOUR STOCK WILL BE VOTED. THE ENVELOPE REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
<PAGE>
MERIX CORPORATION
1521 Poplar Lane
Forest Grove, Oregon 97116
--------------
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Directors of
Merix Corporation, an Oregon corporation ("Merix" or the "Company"), for use at
the annual meeting of shareholders to be held on Tuesday, September 23, 1997 at
9:00 a.m., local time, and at any adjournment or adjournments thereof. The
Company will hold the annual meeting at the Corporate Offices of the Company,
1521 Poplar Lane, Forest Grove, Oregon 97116. The approximate date this proxy
statement and accompanying proxy card are first being sent to shareholders is
August 11, 1997.
Merix will bear the cost of preparing and mailing the proxy, proxy
statement and any other material furnished to the shareholders by the Company in
connection with the annual meeting. Proxies will be solicited by the use of the
mails. Officers and employees of the Company may also solicit proxies by
telephone or personal contact. The Company has retained ChaseMellon Shareholder
Services, L.L.C. to aid in the solicitation of proxies; its fee for the
solicitation of proxies is estimated to be $4,500, plus reimbursement of
out-of-pocket costs and expenses. Costs of solicitation will be borne by the
Company. Copies of solicitation materials will be furnished to fiduciaries,
custodians and brokerage houses for forwarding to beneficial owners of the stock
held in their names.
Any person giving a proxy in the form accompanying this proxy statement has
the power to revoke it at any time before its exercise. The proxy may be revoked
by filing with the Secretary of the Company an instrument of revocation or duly
executed proxy bearing a later date. The proxy may also be revoked by
affirmatively electing to vote in person while in attendance at the meeting.
However, a shareholder who attends the meeting need not revoke the proxy and
vote in person, unless so desired. The shares represented by each proxy will be
voted in accordance with the instructions specified in the proxy, if given. If a
signed proxy is returned without instructions, it will be voted for the
directors, for amendments to the 1994 Stock Incentive Plan, for approval of
Deloitte & Touche LLP as independent auditor and in accordance with this proxy
statement on any other business that may properly come before the meeting.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
The Common Stock is the only outstanding voting security of the Company.
The record date for determining holders of Common Stock entitled to vote at the
annual meeting is August 1, 1997. On that date, there were 6,188,748 shares of
Common Stock outstanding, entitled to one vote per share. The Common Stock does
not have cumulative voting rights.
<PAGE>
The following table shows Common Stock ownership on July 1, 1997 by (i)
each person who, to knowledge of the Company, beneficially owns more than 5% of
the Common Stock, (ii) each of the current or former executive officers named in
the Summary Compensation Table below and (iii) all current executive officers
and directors of the Company as a group:
<TABLE>
<CAPTION>
Approximate
Shares(1) Percent
--------- -------
<S> <C> <C>
Tektronix, Inc.
PO Box 1000
Wilsonville, OR 97070 2,105,000 34.04%
Deborah A. Coleman 309,532 (2) 4.86%
Lawrence Neitling 46,500 *
Joseph H. Howell 44,054 (3) *
Terri L. Timberman 18,820 (4) *
Samuel R. DeSimone, Jr. 8,565 (5) *
Charles W. Payne 5,600 (6) *
All current executive officers
and directors as a group 2,570,132 (7) 39.69%
(12 persons)
* Less than one percent
- --------------
(1) Shares are held directly with sole voting and dispositive power except as
otherwise indicated.
(2) Includes stock options for 183,750 shares that are currently exercisable or
become exercisable before August 31, 1997.
(3) Includes 3,334 shares of unvested restricted stock held by Mr. Howell, as
to which he does not have the power to sell, and stock options for 35,500
shares that are currently exercisable or become exercisable before August
31, 1997.
(4) Includes stock options for 12,500 shares that are currently exercisable or
become exercisable before August 31, 1997.
(5) Includes 1,600 shares of unvested restricted stock held by Mr. DeSimone, as
to which he does not have the power to sell, and stock options for 5,000
shares that are currently exercisable or become exercisable before August
31, 1997.
(6) Includes 1,500 shares of unvested restricted stock held by Mr. Payne, as to
which he does not have the power to sell, and stock options for 3,800
shares that are currently exercisable or become exercisable before August
31, 1997.
(7) Includes 2,105,000 shares held by Tektronix, Inc. ("Tektronix") as to which
directors of the Company disclaim beneficial ownership. Also includes
25,434 shares of unvested restricted stock and stock options for 291,800
shares held by executive officers and directors that are currently
exercisable or become exercisable before August 31, 1997.
</TABLE>
2
<PAGE>
1. ELECTION OF DIRECTORS
The Board of Directors of the Company consists of six directors who are
elected at the annual meeting to serve until the next annual meeting of
shareholders and until their respective successors are elected and qualified.
The nominees for director are listed below, together with certain information
about each of them. Ms. Coleman and Messrs. Karalis and Neun have served as
directors of the Company since its inception in March 1994. Mr. Boesenberg, Ms.
Ellis and Dr. Nishimura were elected directors of the Company immediately prior
to its initial public offering in May 1994.
<TABLE>
<CAPTION>
Shares of Common
Stock Beneficially
Owned as of
July 1, 1997(1)
----------------------------
Number Approximate
Name, Principal Occupation and Directorships Age of Shares(2) Percent
- -------------------------------------------- --- ------------ -----------
<S> <C> <C> <C>
Charles M. Boesenberg...................................... 49 13,750 *
Mr. Boesenberg has served as President and Chief
Executive Officer of Ashtech, Inc. since February
1995. During 1994 he served as Executive Vice
President of Symantec Corporation's Central Point
Division. Prior to the merger of Central Point
Software Inc. and Symantec, Mr. Boesenberg was
President, Chief Executive Officer and Chairman of
Central Point. Mr. Boesenberg joined Central Point
as President and Chief Operating Officer in
February 1992, and was elected Chief Executive
Officer and Chairman of the Board in March 1992.
From 1990 to 1992 Mr. Boesenberg was President of
MIPS Computer Systems, Inc., a semiconductor and
computer systems company. Mr. Boesenberg serves on
the Board of Directors of Symantec Corporation.
Deborah A. Coleman........................................ 44 309,532(3) 4.86%
Chair of the Board of Directors, Chief Executive
Officer and President of the Company. From
November 1992 to the inception of the Company, Ms.
Coleman served as Vice President of Materials
Operations of Tektronix and was responsible for
management of the operations of the Circuit Board
Division of Tektronix. Prior to joining Tektronix,
Ms. Coleman held various positions at Apple
Computer, Inc. for 11 years, most recently as Vice
President of Information Systems and Technology
from April 1990 to October 1992. Previous
positions at Apple Computer included Chief
Financial Officer and Vice President of Worldwide
Manufacturing Operations. Ms. Coleman serves on
the Board of Directors of Synopsys Inc., Octel
Communications, Inc. and Applied Materials, Inc.
3
<PAGE>
Shares of Common
Stock Beneficially
Owned as of
July 1, 1997(1)
----------------------------
Number Approximate
Name, Principal Occupation and Directorships Age of Shares(2) Percent
- -------------------------------------------- --- ------------ -----------
Carlene M. Ellis........................................... 50 18,750 *
Ms. Ellis has served as Corporate Vice President
and Director of the Information Technology Group
of Intel Corporation since September 1992. Ms.
Ellis was Intel's Director of Human Resources from
September 1990 to September 1992 and Vice
President of its Administration Group from January
1989 to September 1992.
John P. Karalis............................................ 59 2,105,000(4) 34.04%
Mr. Karalis has served as Senior Vice President,
Corporate Development of Tektronix since June
1995. He has served as Secretary of Tektronix
since September 1992. From September 1992 to June
1995 he served as Vice President, Corporate
Development of Tektronix. From May 1989 to
September 1992, Mr. Karalis practiced law with
Brown and Bain in Phoenix, Arizona. From January
1987 to May 1989, Mr. Karalis served as Vice
President and General Counsel of Apple Computer.
Carl W. Neun............................................... 53 2,106,000(4) 34.05%
Mr. Neun has served as Senior Vice President and
Chief Financial Officer of Tektronix since June
1995. From March 1993 to June 1995 he served as
Vice President and Chief Financial Officer of
Tektronix. From September 1987 to March 1993, Mr.
Neun served as Senior Vice President of
Administration and Chief Financial Officer of
Conner Peripherals, Inc.
Dr. Koichi Nishimura....................................... 58 18,750 *
Dr. Nishimura has served as Chairman of the Board
of Solectron Corporation since September 1996,
Chief Executive Officer since September 1992 and
President since 1990. He was Co-Chief Executive
Officer from 1991 to 1992 and Chief Operating
Officer of Solectron from 1988 to 1991. He became
a director of Solectron in February 1991.
4
<PAGE>
* Less than one percent.
- --------------
(1) Shares are held directly with sole voting and dispositive power except as
otherwise indicated.
(2) Amounts for Mr. Boesenberg, Ms. Ellis and Dr. Nishimura represent
exercisable options granted to them pursuant to the Company's 1994 Stock
Incentive Plan, as amended.
(3) Includes stock options for 183,750 shares that are currently exercisable or
become exercisable before August 31, 1997.
(4) Includes 2,105,000 shares held by Tektronix, Inc. Messrs. Karalis and Neun
serve as directors of the Company as representatives of Tektronix. In their
capacities as executive officers of Tektronix, they may be deemed to share
with the board of directors of Tektronix voting and/or dispositive power
with respect to such shares of Common Stock. Messrs. Karalis and Neun
disclaim beneficial ownership of such shares.
</TABLE>
The Board of Directors met four times during the fiscal year ended May 31,
1997. Each director attended at least 75% of the aggregate of the meetings of
the Board of Directors and the committees of which the director was a member.
The only standing committees of the Board of Directors are the Audit and Finance
Committee and the Human Resources and Compensation Committee. The Company does
not have a Nominating Committee. Shareholders who wish to submit names for
consideration as potential directors should do so in writing addressed to the
Board of Directors, c/o Samuel R. DeSimone, Jr., Secretary, Merix Corporation,
1521 Poplar Lane, Forest Grove, Oregon 97116.
The Audit and Finance Committee is comprised of Messrs. Boesenberg and Neun
and Dr. Nishimura and met four times during the last fiscal year. The Audit and
Finance Committee nominates the independent auditor of the Company for approval
by the Board of Directors and the shareholders, reviews the planned scope and
results of the annual audit, confers with the independent auditor, reviews the
auditors' recommendations with respect to accounting, internal control and other
matters and makes recommendations to the Board of Directors with respect to
audit and finance matters.
The Human Resources and Compensation Committee is comprised of Ms. Ellis
and Messrs. Boesenberg and Karalis and met five times during the last fiscal
year. The Human Resources and Compensation Committee makes recommendations to
the Board of Directors on executive and director compensation plans, approves
salaries for executive officers of the Company and administers compensation
plans as authorized by the Board of Directors.
Directors not affiliated with the Company or Tektronix receive an annual
retainer of $6,000, a fee of $500 for attendance at each Board or committee
meeting, an automatic option grant of 20,000 shares under the Company's 1994
Stock Incentive Plan at the time first elected or appointed to the Board of
Directors, and annual automatic option grants thereafter of 5,000 shares. The
options are 10-year options granted at the market price on the date of grant and
vest in four equal installments beginning one year after the date of grant. All
directors are reimbursed for expenses incurred in connection with attending
Board and committee meetings.
The proxies will be voted with respect to the election of the nominees in
accordance with the instructions specified in the proxy form. If no instructions
are given, proxies will be voted for the election of the nominees. If for some
unforeseen reason any of the nominees would not be available as a candidate for
director, the number of directors constituting the Board of Directors may be
reduced prior to the meeting or the proxies may be voted for such other
candidate or candidates as may be nominated by the Board of Directors, in
accordance with the authority conferred in the proxy.
The Board of Directors recommends a vote FOR the election of the nominees
listed above. Directors are elected by a plurality of the votes cast by the
shares entitled to vote if a quorum is present at the annual meeting.
Abstentions are counted for purposes of determining whether a quorum exists at
the annual meeting, but are not counted and have no effect on the determination
of whether a plurality exists with respect to a given nominee.
5
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth compensation information for the Chief
Executive Officer and certain other current and former executive officers of the
Company.
<TABLE>
<CAPTION>
Long-Term
Compensation Awards
-------------------------------
Annual Compensation Securities
Fiscal ----------------------- Restricted Underlying All Other
Year Salary Bonus(1) Stock Awards($)(2) Options(#) Compensation(3)
------ -------- ------- ------------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Deborah A. Coleman 1997 $276,302 $ -- $ -- 15,000 $ 5,714
(Chair, Chief Executive 1996 217,642 34,500 -- 15,000 9,843
Officer and President) 1995 222,046 178,112 -- -- 5,095
Lawrence C. Neitling 1997 198,799 -- -- 10,000 4,251
(former President and 1996 207,690 25,000 -- 30,000 8,306
Chief Operating 1995 177,894 89,984 -- -- 4,056
Officer)(4)
Joseph H. Howell 1997 187,375 -- -- 10,000 4,981
(Senior Vice President 1996 165,000 16,500 -- 8,000 11,848
and Chief Financial 1995(5) 53,942 26,452 232,500 75,000 64,335
Officer)
Samuel R. DeSimone, Jr. 1997 135,529 -- -- 10,000 3,833
(Vice President of 1996(5) 88,976 12,500 84,637 20,000 12,453
Corporate Development
and Secretary)
Terri L. Timberman 1997 131,981 -- -- 10,000 4,003
(Vice President, Human 1996 120,000 12,000 -- 10,000 4,918
Resources and Quality) 1995 107,310 38,520 -- -- 3,219
Charles W. Payne 1997(6) 136,689 3,000 -- 4,650 2,734
(Vice President -
Engineering and Chief
Technology Officer)
- --------------
(1) Bonus amounts for fiscal 1995 and 1996 represent amounts paid under the
Company's Corporate Incentive Plan. No bonuses were paid for fiscal 1997,
other than to Mr. Payne.
(2) Dollar amounts set forth in the table represent the value of the shares on
the date of grant. As of May 31, 1997, the number of unvested shares of
restricted stock held by the named executives and the value of such shares
on such date were as follows: Ms. Coleman - 8,334 shares ($135,428), Mr.
Neitling - 0 shares, Mr. Howell - 3,334 shares ($54,178), Ms. Timberman -
1,667 shares ($27,089), Mr. DeSimone - 1,600 shares ($26,000) and Mr. Payne
- 1,500 shares ($24,375).
(3) Amounts for 1995, 1996 and 1997 consist principally of amounts contributed
by the Company under its 401(k) Plan. Mr. Howell's fiscal 1995 amount
includes $62,716 in compensation for relocation. Mr. DeSimone's fiscal 1996
amount includes a starting bonus of $10,000.
(4) Mr. Neitling resigned as President and Chief Operating Officer in March
1997.
6
<PAGE>
(5) Messrs. Howell and DeSimone began their employment with the Company in
fiscal 1995 and 1996, respectively.
(6) Mr. Payne became an executive officer in March 1997.
</TABLE>
Stock Option Grants in Last Fiscal Year
The following table provides information regarding stock options granted to
certain current and former executive officers in fiscal 1997.
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------- Potential Realizable Value at
Number of Percent of Assumed Annual Rates
Shares Total Options of Stock Price Appreciation
Underlying Granted to for Option Term(2)
Options Employees in Exercise Price Expiration -----------------------------
Name Granted(1) Fiscal Year per Share Date 5% 10%
---- ---------- ------------- --------------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Deborah A. Coleman 15,000 3.29% $18.6875 9/23/06 $176,287 $446,746
Lawrence C. Neitling 10,000 2.19% $18.6875 9/23/06 117,525 297,831
Joseph H. Howell 10,000 2.19% $18.6875 9/23/06 117,525 297,831
Samuel R. DeSimone, Jr. 10,000 2.19% $18.6875 9/23/06 117,525 297,831
Terri L. Timberman 10,000 2.19% $18.6875 9/23/06 117,525 297,831
Charles W. Payne 1,250 0.27% $18.6875 9/23/06 14,691 37,229
1,000 0.22% $19.75 2/07/03 12,421 31,476
2,400 0.53% $19.75 2/07/03 29,810 75,543
- --------------
(1) Under the terms of the option agreements with these executive officers,
each of the options is subject to accelerated vesting in the event of a
future change in control of the Company or the occurrence of certain events
indicating an imminent change in control of the Company. Each of the
options is subject to early termination in the event of termination of
employment. Each option terminates 12 months after termination following
death or disability and 90 days after termination for any other reason.
These options become exercisable in four equal annual installments
beginning one year after the date of grant.
(2) In accordance with rules of the Securities and Exchange Commission, these
amounts are the hypothetical gains or "option spreads" that would exist for
the options based on assumed rates of annual compound stock price
appreciation of 5% and 10% from the date the options were granted over the
full option term.
</TABLE>
7
<PAGE>
Fiscal Year-End Option Values
The following table indicates the number of shares acquired upon exercise
of options during the last fiscal year and the value realized, the number of
shares subject to exercisable (vested) and unexercisable (unvested) stock
options as of May 31, 1997 and the value of exercisable and unexercisable
"in-the-money" options, which represents the positive spread between the
exercise price of existing stock options and the price of the Common Stock at
May 31, 1997.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at May 31, 1997(#) at May 31, 1997(1)($)
Shares Acquired Value ----------------------------- ----------------------------
on Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
--------------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Deborah A. Coleman -- -- 173,750 96,250 $1,232,500 $507,500
Lawrence C. Neitling -- -- 34,000 -- 192,125 --
Joseph H. Howell -- -- 35,500 53,500 -- --
Samuel R. DeSimone, Jr. -- -- 5,000 25,000 -- --
Terri L. Timberman -- -- 7,500 27,500 36,250 72,500
Charles W. Payne -- -- 2,550 7,200 18,194 18,194
- ---------------------
(1) Calculated based on the May 30, 1997 closing stock price of $16.25 per
share.
</TABLE>
Ten-Year Option Repricings
In February 1997 the Company offered to all employee option holders (other
than executive officers) the opportunity to surrender options granted prior to
January 1997 with an exercise price of more than $19.75 in exchange for new
options for an equal number of shares with an exercise price equal to the then
current fair market value of $19.75 per share. The new options have a new four
year vesting schedule and expire six years from the new grant date. Two
employees later became executive officers of the Company. The following table
provides information relating to regrants to these two executive officers.
<TABLE>
<CAPTION>
Number of Market Length of
Securities Price of Exercise Original Option
Underlying Stock at Price at New Term Remaining
Options Time of Time of Exercise at Date of
Name Date Repriced Repricing Repricing Price Repricing
- ---- ---- -------- --------- --------- ----- ----------
<S> <C> <C> <C> <C> <C> <C>
Charles W. Payne 2/07/97 1,000 $19.75 $31.375 $19.75 8.67 years
2/07/97 2,400 $19.75 $24.50 $19.75 8.31 years
Mark Hynes 2/07/97 25,000 $19.75 $37.75 $19.75 8.74 years
</TABLE>
Severance and Change of Control Agreements
The Company has entered into Executive Severance Agreements with Ms.
Coleman, Mr. Howell, Ms. Timberman, Mr. DeSimone and Mr. Payne, pursuant to
which the Company has agreed to provide each executive severance benefits upon
the Company's termination of employment without cause. "Cause" is generally
defined as (a) the willful and continued failure to perform substantially the
executive's reasonably assigned duties
8
<PAGE>
(except a failure resulting from incapacity due to physical or mental illness)
after a demand for performance has been made and the manner of nonperformance
has been specifically identified or (b) the willful engaging in illegal conduct
materially injurious to the Company. Termination of employment does not include
assignment to the executive of different responsibilities consistent with the
executive's area of professional expertise, except in the case of Ms. Coleman,
with respect to whom termination of employment would include her removal as
Chief Executive Officer of the Company. In the event of a termination of
employment without cause, Ms. Coleman would receive a lump sum payment equal to
twice her annual base pay and each of the other executives would receive a lump
sum payment equal to his or her annual base pay, and each executive would also
be entitled to a portion of the benefits under any incentive plan in which the
executive participates and certain heath insurance and out placement benefits.
In the event that an executive is terminated within 24 months following a change
of control of the Company (as defined in the agreement), the executive would
receive, in addition to such benefits, an additional cash payment so that the
total amount equaled two times his or her annual base pay, an additional portion
of his or her targeted cash bonus, accelerated vesting of all stock options and
bonus stock awards and extension of the option exercise period, and certain life
insurance benefits. However, such benefits will not be payable if termination is
due to death or voluntary action of the employee other than for good reason (as
defined in the agreement), or by the Company for cause or permanent disability.
Payment of the benefits following a change of control is conditioned on the
executive's agreement to continue his or her employment with the Company or the
surviving company (if so requested) for a period up to six months following a
change of control.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
Human Resources and Compensation Committee
The Human Resources and Compensation Committee of the Board of Directors
(the "Committee") consists of three outside directors. Pursuant to authority
delegated by the Board of Directors, the Committee approves compensation of
executive officers, including the Chief Executive Officer. The Committee is also
responsible for reviewing and approving executive compensation programs and
administering the Company's stock incentive and executive compensation plans.
The Committee also provides advice on a broad range of human resources issues
including best practices in the areas of benefits, staffing, succession planning
and general compensation.
Compensation Policy
The Board of Directors and the Committee believe that the Company's total
executive compensation programs should be related to corporate performance. The
Company has developed a total compensation strategy that ties a significant
portion of executive compensation to achievement of pre-established financial
results. The primary objective of the executive compensation program is to:
o Attract and retain talented executives;
o Motivate executives to achieve long term business strategies while
achieving near term and financial targets; and
o Align executive performance with Merix's strategic and tactical goals.
The Company has base pay and annual incentive compensation programs for its
executive officers, as well as a 401(k) plan. These programs are designed to
offer compensation that is competitive with compensation offered by companies of
similar size and complexity within the electronics and similar industries. The
Company targets the 50th percentile for base pay and 65-70th percentile for
total compensation. The Committee uses comparative information from a group of
companies in the electronics industry for establishing executive compensation,
general compensation structures and Company performance goals. The Committee
periodically engages a compensation consulting firm to assist in this process.
Base Salaries
Base salaries for the Chief Executive Officer and other executive officers
are initially determined by evaluating the responsibilities of the position and
the experience of the individual, and by reference to the
9
<PAGE>
competitive marketplace for corporate executives. This includes a comparison of
base salary and total compensation for comparable positions at other companies.
Annual salary adjustments are considered and determined by evaluating the
performance of the Company and each executive officer, and also take into
account any new responsibilities. The Committee, when appropriate, also
considers non-financial performance measures that focus attention on improvement
in management processes.
Corporate Plan
The Company's executive officers participate in the Company's Corporate
Incentive Plan, an annual cash incentive compensation plan. Company performance
objectives are established and approved by the Board of Directors at the
beginning of the fiscal year. Performance measures have established thresholds,
targets and maximums that determine the amount of cash payment under the plan.
The Company's performance objectives for the fiscal year are specified each year
and reviewed by the full Board of Directors.
The Corporate Incentive Plan for fiscal 1997 provided for bonuses based on
operating income. Each participant was assigned a leverage percentage, which
represented the percent of base salary that would be received under the plan if
the plan criterion was met, and the leverage percentages ranged from 10% to 60%.
The plan provided for additional cash payments if the target was exceeded,
subject to a maximum amount of twice the leverage percentage. The Company's
sales and net income for fiscal 1997 did not meet the predetermined plan level
for the year and no bonuses were paid to the Chief Executive Officer or other
senior officers for 1997.
Stock Options
All employees of the Company, including executive officers, are eligible to
participate in the Company's 1994 Stock Incentive Plan. All option grants are
approved by the Committee. Guidelines for the number of options granted have
been established and are reviewed periodically to ensure competitiveness. Actual
grants are based on individual performance and contribution to the Company's
strategic success. The Stock Incentive Plan supports the linkage between
executives, employees and other shareholders to the long term business
strategies. Option and restricted stock grants made to executive officers for
fiscal 1995, 1996 and 1997 are reflected in the Summary Compensation Table. In
February 1997 the Committee approved offering to all employee option holders,
other than executive officers, the opportunity to surrender options granted
prior to January 1997 with an exercise price of more than $19.75 in exchange for
new options for an equal number of shares with an exercise price equal to the
then current fair market value of $19.75 per share. (Two employees later became
executive officers of the Company.) The Committee concluded that, with the
decline in the market price of the stock, the options no longer provided a
significant incentive to key employees and that the options were no longer
serving the purposes intended. A significant portion of the options were held by
employees who began their employment with the Company following the Company's
acquisition of its Colorado facility, and the Committee was particularly
concerned that the Company was at risk of losing these key employees. The new
options have a new four year vesting schedule and expire six years from the new
grant date.
Section 162(m)
Section 162(m) of the Internal Revenue Code of 1986 limits to $1,000,000
per person the amount that the Company may deduct for compensation paid to any
of its most highly compensated officers in any year after 1993. The Company
anticipates that the levels of salary and bonus to be paid by the Company will
not generally exceed that limit. Under the 162(m) regulations, the $1,000,000
cap on deductibility will not apply to compensation received through the
exercise of nonqualified stock options that meet certain requirements. This
option exercise compensation is equal to the excess of the market price at the
time of exercise over the option price and, unless limited by Section 162(m), is
generally deductible by the Company. The Company's current policy is generally
to grant options that meet the requirements of the proposed regulations.
Human Resources and Compensation Committee Report Submitted By:
Charles M. Boesenberg, Chairman
Carlene M. Ellis
John P. Karalis
10
<PAGE>
Compensation Committee Interlocks and Insider Participation
John P. Karalis is an executive officer of Tektronix, Inc. See "Certain
Relationships and Transactions" regarding transactions between Tektronix and the
Company.
Performance Graph
The graph below compares the cumulative total stockholder return on the
Company's Common Stock with the cumulative total return on the Nasdaq Composite
U.S. Index and a peer group of companies in the Company's industry over the
period indicated, assuming the investment of $100 on May 25, 1994, the date of
the Company's initial public offering, and reinvestment of any dividends. In
accordance with guidelines of the SEC, the stockholder return for each entity in
the peer group index has been weighted on the basis of market capitalization as
of each semi-annual measurement date set forth on the graph. The stock price
performance shown on the graph below is not necessarily indicative of future
price performance.
<TABLE>
<CAPTION>
[GRAPHIC OMITTED] 5/25/94 11/30/94 5/27/95 11/30/95 5/26/96 11/30/96 5/31/97
=================================== =========== ============ =========== ============ =========== ============ ===========
<S> <C> <C> <C> <C> <C> <C> <C>
MERIX CORP $ 100.0 $ 170.5 $ 248.7 $ 371.8 $ 315.4 $ 166.7 $ 166.7
NASDAQ INDEX $ 100.0 $ 102.8 $ 119.0 $ 146.6 $ 172.9 $ 179.5 $ 194.6
PEER GROUP(1) $ 100.0 $ 129.5 $ 185.6 $ 265.0 $ 281.8 $ 343.4 $ 426.2
(1) The selected peer group consists of ADFlex Solutions, Inc., Altron, Inc.,
Advance Circuits, Inc., Continental Circuits Corporation, Elexsys
International, Inc., Hadco Corporation, M-Wave, Inc., Parlex Corporation,
Sanmina Corporation, Sheldahl, Inc. and Sigma Circuits, Inc. Such companies
have been selected for the peer group on the basis of, among other factors,
the similarity of their business to that of the Company and their market
capitalization relative to that of the Company.
</TABLE>
11
<PAGE>
2. APPROVAL OF AMENDMENTS TO 1994 STOCK INCENTIVE PLAN
In March 1994, the Company adopted the 1994 Stock Incentive Plan (the
"Plan"), reserving 1,000,000 shares of Common Stock for issuance, and in 1995
the Board of Directors and shareholders approved reserving an additional 500,000
shares of Common Stock for issuance under the Plan pursuant to options granted
at fair market value. The Board of Directors of the Company believes that the
availability of stock options and other stock incentives is an important factor
in the Company's ability to attract and retain qualified employees and to
provide an incentive for them to exert their best efforts on behalf of the
Company. As of July 1, 1997, 102,100 shares of stock had been issued under the
Plan as restricted stock, 1,170,965 shares were subject to outstanding options
and 226,935 shares were available for future grants. In order to continue to
attract and retain key employees, in July 1997 the Board of Directors approved
an amendment to the Plan, subject to shareholder approval, to reserve an
additional 600,000 shares for issuance under the Plan. The additional 600,000
shares can only be issued pursuant to options granted at not less than fair
market value. Other amendments approved by the Board of Directors and submitted
to the shareholders for approval principally relate to administration of the
Plan and the elimination of certain restrictions in the Plan that are no longer
necessary or appropriate based on recent changes to the rules under Section 16
of the Securities Exchange Act of 1934.
Approval of the foregoing amendments will also constitute reapproval of
per-employee limits on the grant of stock and dollar awards under Section 162(m)
of the Internal Revenue Code of 1986 (the "Code). Shareholder approval of
per-employee limits is required every five years for continued compliance with
regulations under Section 162(m) in order to permit the grant of stock and
dollar awards that will qualify as "performance-based compensation." See "Tax
Consequences."
Certain provisions of the Plan are summarized below. The complete text of
the Plan, as proposed to be amended, is attached to this proxy statement as
Appendix A.
Description of the 1994 Stock Incentive Plan
Eligibility. All employees, officers and directors of the Company and its
subsidiaries are eligible to participate in the Plan. Also eligible are
nonemployee consultants and advisors to the Company.
Administration. The Plan is administered by the Human Resources and
Compensation Committee of the Board of Directors (the "Committee"), which
designates from time to time the individuals to whom awards are made under the
Plan, the amount of any such award and the price and other terms and conditions
of any such award. Under the proposed amendments the Committee could appoint a
committee of officers of the Company to make awards to employees who are not
officers of the Company. Subject to the provisions of the Plan, the Committee
may adopt and amend rules and regulations relating to the administration of the
Plan. Only the Board of Directors may amend, modify or terminate the Plan.
Except for automatic grants to non-employee directors, as described below,
non-employee directors are not eligible to receive awards under the Plan.
Shares Available. The Plan permits the grants of incentive stock options,
non-statutory stock options, stock appreciation rights, cash bonus rights,
performance based awards and restricted stock and stock bonus awards. If an
option, stock appreciation right or performance unit granted under the Plan
expires, terminates or is canceled, or if shares sold or awarded as a bonus are
forfeited to the Company or repurchased by the Company, the shares again become
available for issuance under the Plan.
Term of Plan. The Plan will continue until all shares available for
issuance under the plan have been issued and all restrictions on such shares,
have lapsed. The Board of Directors may suspend or terminate the Plan at any
time.
Stock Options. The Committee determines the persons to whom options are
granted, the option price, the number of shares subject to each option, the
period of each option and the times at which options may be exercised and
whether the option is an Incentive Stock Option ("ISO"), as defined in Section
422 of the Code or an option other than an ISO (a "Non-Statutory Stock Option"
or "NSO"). If the option is an ISO, the option price cannot be less than the
fair market value of the Common Stock on the date of grant. If an optionee of an
ISO at the time of grant owns stock possessing more than 10% of the combined
voting power of the Company, the option price may not be less than 110% of the
fair market value of the Common Stock on the date of grant. If the option is an
NSO, the option price may be any price determined by the Committee except that
options to purchase 500,000 shares
12
<PAGE>
added to the Plan in 1995 and the additional 600,000 shares to be added to the
Plan by the proposed amendment can be granted at a price of not less than fair
market value of the shares on the valuation date selected by the Committee. The
Committee may select the valuation date from among the following dates (i) the
date of commitment by the Company to grant the option, (ii) the date of approval
of the option grant by the Committee or (iii) the effective date of the option.
The fair market value of such shares shall be deemed to be the closing price of
the Common Stock as reported in The Wall Street Journal on the valuation date,
or if there has been no sale on that date, on the last preceding date on which a
sale occurred, or such other reported value of the Common Stock, or average
closing prices for a period of up to 10 trading dates including or preceding the
valuation date, as shall be specified by the Committee. No ISO may be granted on
or after the tenth anniversary of the date that the Plan was adopted by the
Board of Directors. No employee may be granted options or stock appreciation
rights for more than an aggregate of 300,000 shares of Common Stock in any
calendar year. The aggregate fair market value, on the date of the grant, of the
stock for which ISOs are exercisable for the first time by an employee during
any calendar year may not exceed $100,000. No monetary consideration is paid to
the Company upon the granting of options.
Options granted under the Plan generally continue in effect for the period
fixed by the Committee, except that ISOs are not exercisable after the
expiration of 10 years from the date of grant or five years in the case of 10%
shareholders. Options are exercisable in accordance with the terms of an option
agreement entered into at the time of grant and, except as otherwise determined
by the Committee with respect to a NSO granted to a person who is neither an
officer or a director of the Company, are nontransferable except on death of a
holder or pursuant to a qualified domestic relations order. Options may be
exercised only while an optionee is employed by or in the service of the Company
or a subsidiary or within 12 months following termination of employment by
reason of death or disability or 90 days following termination for any other
reason. The Plan provides that the Committee may extend the exercise period for
any period up to the expiration date of the option and may increase the number
of shares for which the option may be exercised up to the total number
underlying the option. The purchase price for each share purchased pursuant to
exercise of options must be paid in cash, including cash which may be the
proceeds of a loan from the Company, or, with the consent of the Committee, in
whole or in part, in shares of Common Stock valued at fair market value, in
restricted stock, in performance units or other contingent awards denominated in
either stock or cash, in deferred compensation credits, in promissory notes, or
in other forms of consideration. Upon the exercise of an option, the number of
shares subject to the option and the number of shares available under the Plan
for future option grants are reduced by the number of shares with respect to
which the option is exercised, less any shares surrendered in payment or
withheld to satisfy withholding obligations.
Stock Option Grants to Non-employee Directors. Under the Plan, each person
who becomes a non-employee director will automatically be granted an initial
option to purchase 20,000 shares. A "non-employee director" is a director who is
not an employee of the Company or Tektronix or any of their respective
subsidiaries and has not been such within the prior year. Each non-employee
director automatically receives additional annual grants of options to purchase
5,000 shares, provided the non-employee director continues to serve in that
capacity. Options granted to non-employee directors generally are governed by
the terms discussed above and must have an exercise price equal to 100% of fair
market value, become exercisable ratably over a four-year period with 25% of the
options becoming exercisable one year after the date of grant and expire 10
years after the date of grant. Non-employee directors may exercise the options
in the same manner described above for other stock options.
Stock Appreciation Rights. Stock appreciation rights ("SARs") may be
granted under the Plan. SARs may, but need not, be granted in connection with an
option grant or an outstanding option previously granted under the Plan. A SAR
gives the holder the right to payment from the Company of an amount equal in
value to the excess of fair market value on the date of exercise of a share of
Common Stock of the Company over its fair market value on the date of grant, or
if granted in connection with an option, the option price per share under the
option to which the SAR relates.
A SAR is exercisable only at the time or times established by the
Committee. If a SAR is granted in connection with an option it is exercisable
only to the extent and on the same conditions that the related option is
exercisable. Payment by the Company upon exercise of a SAR may be made in Common
Stock of the Company valued at its fair market value, in cash, or partly in
stock and partly in cash, as determined by the Committee. The Committee may
withdraw any SAR granted under the Plan at any time and may impose any condition
upon the exercise of a SAR or adopt rules and regulations from time to time
affecting the rights of holders of SARs.
13
<PAGE>
The existence of SARs, as well as certain bonus rights described below,
would require charges to income over the life of the right based upon the amount
of appreciation, if any, in the market value of the Common Stock of the Company
over the exercise price of shares subject to exercisable SARs or bonus rights.
No SARs have been granted under the Plan.
Stock Bonus Awards. The Committee may award Common Stock of the Company as
a stock bonus under the Plan. The Committee may determine the recipients of the
awards, the number of shares to be awarded and the time of the award. Stock
received as a stock bonus is subject to the terms, conditions and restrictions
determined by the Committee at the time the stock is awarded.
Restricted Stock. The Plan provides that the Company may issue restricted
stock in such amounts, for such consideration, subject to such restrictions and
on such terms as the Committee may determine.
Cash Bonus Rights. The Committee may grant cash bonus rights under the Plan
in connection with (i) options granted or previously granted, (ii) SARs granted
or previously granted, (iii) stock bonuses awarded or previously awarded, and
(iv) shares sold or previously sold under the Plan. Bonus rights granted in
connection with options entitle the optionee to a cash bonus if and when the
related option is exercised or terminates in connection with the exercise of a
SAR related to the option. If the shares are purchased on the exercise of an
option and the optionee does not exercise a related SAR, the amount of the bonus
shall be determined by multiplying the excess of the total fair market value for
the shares to be acquired upon the exercise over the total option price for the
shares by the applicable bonus percentage. If an optionee exercises a related
SAR in connection with the termination of an option, the amount of the bonus
shall be determined by multiplying the total fair market value of the shares and
cash received pursuant to the exercise of the SAR by the applicable bonus
percentage. The bonus percentage applicable to any bonus right is determined by
the Committee but may in no event exceed 75%. Bonus rights granted in connection
with stock bonuses entitle the recipient to a cash bonus, in an amount
determined by the Committee, at the time the stock is awarded or at such time as
any restrictions to which the stock is subject lapse. Bonus rights granted in
connection with restricted stock purchases entitle the recipient to a cash bonus
in an amount determined by the Committee, payable when the shares are purchased
or restrictions, if any, to which the stock is subject lapse. Bonus rights
granted in connection with restricted stock purchased or stock bonuses terminate
in the event that restricted stock is repurchased by the Company or forfeited by
the holder pursuant to the restrictions. No bonus rights have been granted under
the Plan.
Performance Units. The Committee may grant Performance-based Awards
denominated either in Common Stock or in dollar amounts. All or part of the
awards will be earned if performance goals established by the Committee for the
period covered by the awards are met and the employee satisfies any other
restrictions established by the Committee. The performance goals will be
expressed as one or more targeted levels of performance with respect to one or
more of the following objective measures with respect to the Company or any
subsidiary, division or other unit of the Company: earnings, earnings per share,
total shareholder return (stock price increase plus dividends), return on
equity, return on assets, revenues, operating income, inventories, inventory
turns, cash flows, return on capital, economic value added (operating income
after taxes minus a charge for the cost of capital) or any of the foregoing
before the effect of acquisitions, divestitures, accounting changes, and
restructuring and special charges. Performance-based Awards may be paid in cash
or Common Stock and may be made as awards of restricted shares subject to
forfeiture if performance goals are not satisfied, as determined by the
Committee. No employee may receive in any fiscal year Performance-based Awards
denominated in Common Stock under which more than 20,000 shares may be issued or
Performance-based Awards denominated in dollars under which more than $500,000
may be paid. The payment of a Performance-based Awards in cash will not reduce
the number of shares reserved under the plan.
Foreign Qualified Grants. Awards under the Plan may be granted to eligible
persons residing in foreign jurisdictions. The Committee may adopt such
supplements to the Plan as may be necessary to comply with the applicable laws
of such foreign jurisdictions and to afford participants favorable treatment
under such laws except that no award shall be granted under any such supplement
with terms which are more beneficial to the participants than the terms
permitted by the Plan.
Changes in Capital Structure. The Plan provides that if the outstanding
Common Stock of the Company is increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the
Company or of another corporation by reason of any recapitalization, stock split
or certain other transactions,
14
<PAGE>
appropriate adjustment will be made by the Committee in the number and kind of
shares available for awards under the Plan. In addition, the Committee will make
appropriate adjustments in outstanding options and SARs. In the event of
dissolution of the Company or a merger, consolidation or plan of exchange
affecting the Company, in lieu of the foregoing treatment for options and SARs,
the Committee may, in its sole discretion, provide a 30-day period prior to such
event during which optionees shall have the right to exercise options and SARs
in whole or in part without any limitation on exercisability and upon the
expiration of which 30-day period all unexercised options and SARs shall
immediately terminate.
Amendments. The Board of Directors may at any time amend the Plan in such
respects as it shall deem advisable because of changes in the law while the Plan
is in effect or for any other reason.
Tax Consequences. Certain options authorized to be granted under the Plan
are intended to qualify as ISOs for federal income tax purposes. Under federal
income tax law currently in effect, the optionee will recognize no income upon
grant or upon a proper exercise of the ISO. If an employee exercises an ISO and
does not dispose of any of the option shares within two years following the date
of grant and within one year following the date of exercise, then any gain
realized upon subsequent disposition of the shares will be treated as income
from the sale or exchange of a capital asset. If an employee disposes of shares
acquired upon exercise of an ISO before the expiration of either the one-year
holding period or the two-year waiting period, any amount realized will be
taxable as ordinary compensation income in the year of such disqualifying
disposition to the extent that the lesser of the fair market value of the shares
on the exercise date or the fair market value of the shares on the date of
disposition exceeds the exercise price. The Company will not be allowed any
deduction for federal income tax purposes at either the time of the grant or
exercise of an ISO. Upon any disqualifying disposition by an employee, the
Company will generally be entitled to a deduction to the extent the employee
realized ordinary income.
Certain options authorized to be granted under the Plan will be treated as
NSOs for federal income tax purposes. Under federal income tax law presently in
effect, no income is realized by the grantee of an NSO pursuant to the Plan
until the option is exercised. At the time of exercise of an NSO, the optionee
will realize ordinary compensation income, and the Company will generally be
entitled to a deduction, in the amount by which the market value of the shares
subject to the option at the time of exercise exceeds the exercise price. The
Company's deduction is conditioned upon withholding on the income amount. Upon
the sale of shares acquired upon exercise of an NSO, the excess of the amount
realized from the sale over the market value of the shares on the date of
exercise will be taxable.
An employee who receives stock in connection with the performance of
services will generally realize taxable income at the time of receipt unless the
shares are not substantially vested for purposes of Section 83 of the Code and
no Section 83(b) election is made. If the shares are not vested at the time of
receipt, the employee will realize taxable income in each year in which a
portion of the shares substantially vest, unless the employee elects under
Section 83(b) of the Code within 30 days after the original transfer. The
Company generally will be entitled to a tax deduction in the amount includable
as income by the employee at the same time or times as the employee recognizes
income with respect to the shares, provided the Company withholds on the income
amount. A participant who receives a cash bonus right under the plan generally
will recognize income equal to the amount of any cash bonus paid at the time of
receipt of that bonus, and the Company generally will be entitled to a deduction
equal to the income recognized by the participant.
Section 162(m) of the Code limits to $1,000,000 per person the amount that
the Company may deduct for compensation paid to any of its most highly
compensated officers in any year after 1993. Under regulations, compensation
received through the exercise of an option or stock appreciation right will not
be subject to the $1,000,000 limit if the option or stock appreciation right and
the plan pursuant to which it is granted meet certain requirements of the
exception for performance-based compensation. One such requirement is that
shareholders approve per-employee limits on the number of shares as to which
options and stock appreciation rights may be granted each year. As discussed
above under "Stock Options," the Plan limits the options or stock appreciation
rights that an employee may be granted to no more than an aggregate of 300,000
shares of Common Stock in any calendar year. For other performance-based awards,
shareholders must approve the performance criteria upon which award payouts will
be based and the maximum amount payable under awards, both of which are set
forth in Section 11 of the Plan on Performance-based Awards. Other requirements
of the exception for performance-based compensation are that the option or stock
appreciation right be granted by a committee of at least two outside directors
and that the exercise price of the option or the stock appreciation right be not
less than fair market value
15
<PAGE>
of the Common Stock on the date of grant. The Committee is composed of three
outside directors and, thus, meets the requirements of the regulations. Assuming
that future option grants are made at not less than fair market value, the
Company believes that the options will be in compliance with the above
requirements. The regulations provide that Section 162(m) of the Code will not
apply to compensation paid under plans or arrangements that are in existence
when a corporation becomes a publicly held corporation, provided that those
plans or arrangements are adequately disclosed as part of the public offering.
Accordingly, the Company believes that the compensation received upon the
exercise of the options granted under the Plan as of the time of the Company's
initial public offering will not be subject to the $1,000,000 deduction limit.
Recommendation by the Board of Directors
The proposal to approve the amendments to the Plan must be approved by the
holders of at least a majority of the outstanding shares of Common Stock
present, or represented by proxy, and entitled to vote on the matter at the
annual meeting. Abstentions have the effect of "no" votes in determining whether
the amendment is approved. Broker nonvotes are counted for purposes of
determining whether a quorum exists at the annual meeting but are not counted
and have no effect on the results of the vote.
The Board of Directors recommends a vote FOR approval of the amendments to
the Plan.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
The Company was formed in March 1994 to succeed to the business conducted
by the Circuit Board Division of Tektronix. Pursuant to an Asset Transfer
Agreement dated as of May 31, 1994 (the "Asset Transfer Agreement"), all of the
business of the Circuit Board Division of Tektronix was transferred to the
Company immediately prior to the consummation of the Company's initial public
offering (the "Reorganization and Offering"). Tektronix transferred to the
Company all of the assets used exclusively in the Division's business and
approximately $17.5 million in cash in exchange for 6,000,000 shares of Common
Stock and a note in the principal amount of $10 million (the "Note"). The Note
bears interest at the rate of 7.5% per annum and is payable over five years. The
Company granted Tektronix a security interest in the Company's real property
(including improvements) to secure repayment of the Note pursuant to a Trust
Deed. Tektronix may set off any amounts not paid by the Company when due under
the Note against any amounts Tektronix or its subsidiaries owe the Company under
the Supply Agreements described below.
The Asset Transfer Agreement provides that the Company will use all
reasonable efforts to nominate and maintain as members of its Board of Directors
two individuals designated by Tektronix and three additional independent
individuals, so long as Tektronix holds at least 25% of the outstanding shares
of the Company's Common Stock. Messrs. Karalis and Neun have been nominated
pursuant to the agreement. If the Company increases the size of its Board of
Directors beyond seven while this covenant is in effect, Tektronix is entitled
to designate such number of directors as represents two-sevenths of the total
number of directors.
In May 1994 Tektronix, through certain participating divisions and
subsidiaries, and the Company also entered into seven separate Supply
Agreements. During the three-year term of the Supply Agreements, the
participating divisions and subsidiaries agreed to purchase from the Company
annually at least the lesser of 90% of their aggregate annual requirements for
the type of products sold by the Company or $28.5 million, at prices calculated
in accordance with an agreed-upon formula, subject to certain adjustments. The
pricing methodology for products sold under the Supply Agreements was based upon
the Company's cost (as defined) plus a margin (expressed as a multiple) for
accelerated delivery. Prices could not exceed prices charged to other customers
by the Company for comparable products and quantities. During the last fiscal
year net sales to Tektronix pursuant to the Supply Agreements were $28,766,000.
The Supply Agreements have expired and have not been renewed, although Tektronix
continues to be a significant customer of the Company.
In addition, the Company and Tektronix entered into Waste Management and
Services Agreements covering certain environmental matters. During the last
fiscal year, the Company paid $291,000 to Tektronix pursuant to these
agreements.
16
<PAGE>
In June 1996 the Company loaned $99,726 to Ms. Coleman to cover tax
liabilities associated with the vesting of restricted stock. A promissory note
from Ms. Coleman to the Company, bearing interest at an annual rate of 7.25
percent, was paid in full in June 1997.
3. APPOINTMENT OF INDEPENDENT AUDITOR
The Board of Directors has appointed Deloitte & Touche LLP as the Company's
independent auditor for the current fiscal year, subject to ratification of the
appointment by the shareholders of the Company at the annual meeting. Deloitte &
Touche LLP has audited the financial statements of the Company since
incorporation. Proxies will be voted in accordance with the instructions
specified in the proxy form. If no instructions are given, proxies will be voted
for approval of Deloitte & Touche LLP as independent auditor. Representatives of
Deloitte & Touche LLP are expected to be present at the annual meeting, will
have the opportunity to make a statement, if they so desire, and will be
available to respond to appropriate questions.
The Board of Directors recommends a vote FOR this proposal.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who own more than 10% of the Common
Stock to file reports of ownership and changes in ownership with the Securities
and Exchange Commission ("SEC"). Executive officers, directors and beneficial
owners of more than 10% of the Common Stock are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on a review of the copies of such forms received by the Company and on
written representations from certain reporting persons that they have complied
with the relevant filing requirements, the Company believes that all Section
16(a) filing requirements applicable to its executive officers and directors
were complied with during the fiscal year ended May 31, 1997.
OTHER MATTERS
Shareholder Proposals to be Included in the Company's Proxy Statement
A shareholder proposal to be considered for inclusion in proxy materials
for the Company's 1998 annual meeting must be received by the Company not later
than April 14, 1998.
Shareholder Proposals Not in the Company's Proxy Statement
Shareholders wishing to present proposals for action at this annual meeting
or at another shareholders' meeting must do so in accordance with the Company's
Bylaws. A shareholder must give timely notice of the proposed business to the
Secretary. To be timely, a shareholder's notice must be in writing, delivered to
or mailed and received at the principal executive offices of the Company not
less than 60 days nor more than 90 days prior to the first anniversary of the
preceding year's annual meeting; provided, however, that if the date of the
annual meeting is more than 30 days before or more than 60 days after such
anniversary date, notice by the shareholder, to be timely, must be received no
later than the close of business on the 90th day prior to such annual meeting
and not later than the close of business on the later of the 60th day prior to
such annual meeting or the tenth day following the day on which public
announcement of the date of such meeting is first made. For each matter the
shareholder proposes to bring before the meeting, the notice to the Secretary
must include (a) a brief description of the business desired to be brought
before the meeting and the reasons for conducting such business at the meeting,
(b) the name and address of the shareholder proposing such business, (c) the
class and number of shares of the Company which are beneficially owned by the
shareholder and (d) any material interest of the shareholder in such business.
The officer presiding at the meeting may, if in the officer's opinion the facts
warrant, determine that business was not properly brought before the meeting in
accordance with the Company's Bylaws. If such officer does so, such officer
shall so declare to the meeting and any such business not properly brought
before the meeting shall not be transacted.
17
<PAGE>
Shareholder Nominations for Director
Shareholders wishing to directly nominate candidates for election to the
Board of Directors at an annual meeting must do so in accordance with the
Company's Bylaws by giving timely notice in writing to the Secretary as defined
above. The notice shall set forth (a) the name and address of the shareholder
who intends to make the nomination, (b) the name, age, business address and
residence address of each nominee, (c) the principal occupation or employment of
each nominee, (d) the class and number of shares of the Company which are
beneficially owned by each nominee and by the nominating shareholder, (e) any
other information concerning the nominee that must be disclosed of nominees in
proxy solicitations pursuant to Regulation 14A of the Securities Exchange Act of
1934, and (f) the executed consent of each nominee to serve as a director of the
Company if elected. Shareholders wishing to make any director nominations at any
special meeting of shareholders held for the purpose of electing directors must
do so, in accordance with the Bylaws, by delivering timely notice to the
Secretary setting forth the information described above for annual meeting
nominations. To be timely, the notice must be given (a) if given by any
shareholder who made a demand for the meeting, concurrently with the delivery of
such demand, and (b) otherwise, not later than the close of business on the
tenth day following the day on which the notice of the special meeting was
mailed. The officer presiding at the meeting may, if in the officer's opinion
the facts warrant, determine that a nomination was not made in accordance with
the procedures prescribed by the Bylaws. If such officer does so, such officer
shall so declare to the meeting and the defective nomination shall be
disregarded.
Other Business
The Board of Directors does not intend to present any business for action
of the shareholders at the annual meeting except the matters referred to in this
proxy statement. If any other matters should properly come before the meeting,
it is the intention of the persons named in the accompanying form of proxy to
vote thereon in accordance with their judgment on such matters.
Whether or not you expect to be present at the meeting, please sign the
accompanying form of proxy and return it promptly in the enclosed stamped return
envelope.
By Order of the Board of Directors
Samuel R. DeSimone, Jr.
Vice President of Corporate Development
and Secretary
August 11, 1997
18
<PAGE>
APPENDIX A
MERIX CORPORATION
1994 STOCK INCENTIVE PLAN, AS PROPOSED TO BE AMENDED*
1. Purpose. The purpose of this 1994 Stock Incentive Plan (the "Plan") is
to enable Merix Corporation (the "Company") to attract and retain the services
of (1) selected employees, officers and directors of the Company or of any
subsidiary of the Company and (2) selected nonemployee consultants and advisors
to the Company.
2. Shares Subject to the Plan. Subject to adjustment as provided below and
in paragraph 14, the shares to be offered under the Plan shall consist of Common
Stock of the Company, and the total number of shares of Common Stock that may be
issued under the Plan shall not exceed 1,000,000 shares plus an additional
1,100,000 [500,000] shares that may be issued pursuant to options granted at
- ---------
prices not less than fair market value in accordance with paragraphs 6 and 13 of
the Plan. If an option, stock appreciation right or Performance-based Award
granted under the Plan expires, terminates or is canceled, the unissued shares
subject to such option, stock appreciation right or Performance-based Award
shall again be available under the Plan. If shares sold or awarded as a bonus or
Performance-based Award under the Plan are forfeited to the Company or
repurchased by the Company, the number of shares forfeited or repurchased shall
again be available under the Plan.
3. Effective Date and Duration of Plan.
(a) Effective Date. The Plan shall become effective when adopted by
the Board of Directors; provided, however, that prior to shareholder approval of
the Plan, any awards shall be subject to and conditioned on approval of the Plan
by a majority of the votes cast at a meeting of shareholders at which a quorum
is present. Options, stock appreciation rights and Performance-based Awards may
be granted and shares may be awarded as bonuses or sold under the Plan at any
time after the effective date and before termination of the Plan.
(b) Duration. The Plan shall continue in effect until all shares
available for issuance under the Plan have been issued and all restrictions on
such shares have lapsed. The Board of Directors may suspend or terminate the
Plan at any time except with respect to options, Performance-based Awards and
shares subject to restrictions then outstanding under the Plan. Termination
shall not affect any outstanding options, any right of the Company to repurchase
shares or the forfeitability of shares issued under the Plan.
4. Administration. The Plan shall be administered by a committee of the
Board of Directors of the Company (the "Committee"), which, subject to paragraph
5, below, shall determine and designate from time to time the individuals to
whom awards shall be made, the amount of the awards, and the other terms and
conditions of the awards. [The Committee shall consist of two or more members of
the Board or such lesser number of members of the Board as permitted by Rule
16b-3 promulgated under the Securities Exchange Act of 1934, as amended ("Rule
16b-3"). Except as permitted by Rule 16b-3, none of the members of the Committee
shall receive, while serving on the Committee, or during the one-year period
preceding appointment to the Committee, a grant or award of equity securities
under (i) the Plan or (ii) any other plan of the Company or its subsidiaries
under which the participants are entitled to acquire Common Stock (including
restricted Common Stock), stock options, stock bonuses, related rights or stock
appreciation rights of the Company or any of its affiliates, other than pursuant
to transactions in any such other plan which do not disqualify a director from
being a disinterested person under Rule 16b-3. The limitations set forth in this
paragraph 4 shall automatically
- -----------------------
* Note: Underlined matter is new; matter in [brackets and italics] is to be
deleted.
A-1
<PAGE>
incorporate any additional requirements that may in the future be necessary for
the Plan to comply with Rule 16b-3.] Members of the Committee shall serve at the
pleasure of the Board. The Committee shall select one of its members as
chairman, and shall hold meetings at such times and places as it may determine.
A majority of the Committee shall constitute a quorum and acts of the Committee
at which a quorum is present, or acts reduced to or approved in writing by all
the members of the Committee, shall be the valid acts of the Committee. Subject
to the provisions of the Plan, the Committee may from time to time adopt and
amend rules and regulations relating to administration of the Plan, advance the
lapse of any waiting period, accelerate any exercise date, provide for automatic
acceleration upon the occurrence of specified events, waive or modify any
restriction applicable to shares (except those restrictions imposed by law) and
make all other determinations in the judgment of the Committee necessary or
desirable for the administration of the Plan. The interpretation and
construction of the provisions of the Plan and related agreements by the
Committee shall be final and conclusive. The Committee may correct any defect or
supply any omission or reconcile any inconsistency in the Plan or in any related
agreement in the manner and to the extent it shall deem expedient to carry the
Plan into effect, and it shall be the sole and final judge of such expediency.
The Committee may designate a committee of officers of the Company which shall
- ------------------------------------------------------------------------------
have all authority of the Committee to make and amend awards under the Plan to
- ------------------------------------------------------------------------------
employees who are not officers. [Notwithstanding the foregoing, the Committee
- -------------------------------
shall not exercise any discretionary functions with respect to options granted
to Non-Employee Directors pursuant to paragraph 13.]
5. Types of Awards; Eligibility; Limitations on Certain Awards. The
Committee may, from time to time, take the following actions, separately or in
combination, under the Plan: (i) grant Incentive Stock Options, as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), as
provided in paragraphs 6(a) and 6(b); (ii) grant options other than Incentive
Stock Options ("Non-Statutory Stock Options") as provided in paragraphs 6(a) and
6(c); (iii) award stock bonuses as provided in paragraph 7; (iv) sell shares
subject to restrictions as provided in paragraph 8; (v) grant stock appreciation
rights as provided in paragraph 9; (vi) grant cash bonus rights as provided in
paragraph 10; (vii) grant Performance-based Awards as provided in paragraph 11
and (viii) grant foreign qualified awards as provided in paragraph 12. Any such
awards may be made to employees, including employees who are officers or
directors, and to other individuals described in paragraph 1 who the Committee
believes have made or will make an important contribution to the Company or its
subsidiaries; provided, however, that only employees of the Company shall be
eligible to receive Incentive Stock Options under the Plan and Non-Employee
Directors shall be eligible to receive awards under the Plan only pursuant to
paragraph 13. Except as for options granted pursuant to paragraph 13, the
Committee shall select the individuals to whom awards shall be made and shall
specify the action taken with respect to each individual to whom an award is
made. At the discretion of the Committee, an individual, other than a
Non-Employee Director, may be given an election to surrender an award in
exchange for the grant of a new award. No individual may be granted options or
stock appreciation rights under the Plan for more than an aggregate of 300,000
shares of Common Stock in any calendar year. To the extent required by Section
162(m) of the Code or the regulations thereunder, in applying the foregoing
limitation with respect to an employee, if any option or stock appreciation
right is canceled, the canceled option or stock appreciation right shall
continue to count against the maximum number of shares for which options or
stock appreciation may be granted to an employee under this paragraph 5. For
this purpose, the repricing of an option or stock appreciation right shall be
treated as a cancellation of the existing option or stock appreciation right and
the grant of a new option or stock appreciation right. Notwithstanding the
foregoing provisions of this paragraph 5, grants of options or Performance-based
Awards to any "Covered Employee," as such term is defined by Section 162(m) of
the Code shall be made only by a subcommittee of the Committee which, in
addition to meeting other applicable requirements of paragraph 4, is composed
solely of two or more "outside directors," within the meaning of Section 162(m)
of the Code and the regulations thereunder (the "Subcommittee") to the extent
necessary to qualify such grants as "performance-based compensation" under
Section 162(m). In the case of such grants to Covered Employees, references to
the "Committee" shall be deemed to be references to the Subcommittee as
specified above.
A-2
<PAGE>
6. Option Grants.
(a) General Rules Relating to Options.
(i) Terms of Grant. The Committee may grant options under the
Plan. With respect to each option grant (except for options granted pursuant to
paragraph 13), the Committee shall determine the number of shares subject to the
option, the option price, the period of the option, the time or times at which
the option may be exercised and whether the option is an Incentive Stock Option
or a Non-Statutory Stock Option. At the time of the grant of an option or at any
time thereafter (except for options granted pursuant to paragraph 13), the
Committee may provide that an optionee who exercises an option with Common Stock
of the Company shall automatically receive a new option to purchase additional
shares equal to the number of shares surrendered and may specify the terms and
conditions of such new options.
(ii) Exercise of Options. Except as provided in paragraphs
6(a)(iv) and 13 or as determined by the Committee, no option granted under the
Plan may be exercised unless at the time of such exercise the optionee is
employed by or in the service of the Company or any subsidiary of the Company
and shall have been so employed or provided such service continuously since the
date such option was granted. Absence on leave or on account of illness or
disability under rules established by the Committee shall not, however, be
deemed an interruption of employment or service for this purpose. Unless
otherwise determined by the Committee, vesting of options shall not continue
during an absence on leave (including an extended illness) or on account of
disability. Except as provided in paragraphs 6(a)(iv), 13 and 14, options
granted under the Plan may be exercised from time to time over the period stated
in each option in such amounts and at such times as shall be prescribed by the
Committee, provided that options shall not be exercised for fractional shares.
Unless otherwise determined by the Committee (except for options granted
pursuant to paragraph 13), if the optionee does not exercise an option in any
one year with respect to the full number of shares to which the optionee is
entitled in that year, the optionee's rights shall be cumulative and the
optionee may purchase those shares in any subsequent year during the term of the
option. [Unless otherwise determined by the Committee (except for options
granted pursuant to paragraph 13), if an officer subject to Section 16 of the
Securities Exchange Act of 1934 (an "Officer") or a director exercises an option
within six months of the grant of the option, the shares acquired upon exercise
of the option may not be sold until six months after the date of grant of the
option.]
(iii) Nontransferability. Each Incentive Stock Option and, unless
otherwise determined by the Committee [with respect to an option granted to a
person who is neither an Officer nor a director of the Company, except as
provided in paragraph 13], each other option granted under the Plan by its terms
shall be nonassignable and nontransferable by the optionee, either voluntarily
or by operation of law, except by will or by the laws of descent and
distribution of the state or country of the optionee's domicile at the time of
death, and each option by its terms shall be exercisable during the optionee's
lifetime only by the optionee; provided, however, that a Non-Statutory Stock
Option shall also be transferable pursuant to a qualified domestic relations
order as defined under the Code or Title I of the Employee Retirement Income
Security Act.
(iv) Termination of Employment or Service.
(A) General Rule. Unless otherwise determined by the
Committee, [except as provided in paragraph 13,] in the event the
employment or service of the optionee with the Company or a subsidiary
terminates for any reason other than because of physical disability or
death as provided in subparagraphs 6(a)(iv)(B) and (C), the option may
be exercised at any time prior to the expiration date of the option or
the expiration of 90 days after the date of such termination,
whichever is the shorter period, but only if and to the extent the
optionee was entitled to exercise the option at the date of such
termination.
(B) Termination Because of Total Disability. Unless
otherwise determined by the Committee, [except as provided in
paragraph 13,] in the event of the termination of employment or
service because of total disability, the option may be exercised
A-3
<PAGE>
at any time prior to the expiration date of the option or the
expiration of 12 months after the date of such termination, whichever
is the shorter period, but only if and to the extent the optionee was
entitled to exercise the option at the date of such termination. The
term "total disability" means a mental or physical impairment which is
expected to result in death or which has lasted or is expected to last
for a continuous period of 12 months or more and which causes the
optionee to be unable, in the option of the Company and two
independent physicians, to perform his or her duties as an employee,
director, officer or consultant of the Company and to be engaged in
any substantial gainful activity. Total disability shall be deemed to
have occurred on the first day after the Company and the two
independent physicians have furnished their opinion of total
disability to the Company.
(C) Termination Because of Death. Unless otherwise
determined by the Committee, [except as provided in paragraph 13,] in
the event of the death of an optionee while employed by or providing
service to the Company or a subsidiary, the option may be exercised at
any time prior to the expiration date of the option or the expiration
of 12 months after the date of such death, whichever is the shorter
period, but only if and to the extent the optionee was entitled to
exercise the option at the date of such termination and only by the
person or persons to whom such optionee's rights under the option
shall pass by the optionee's will or by the laws of descent and
distribution of the state or country of domicile at the time of death.
(D) Amendment of Exercise Period Applicable to Termination.
[Except for options granted pursuant to paragraph 13,] The Committee,
at the time of grant or at any time thereafter, may extend the 90-day
and 12-month exercise periods any length of time not later than the
original expiration date of the option, and may increase the portion
of an option that is exercisable, subject to such terms and conditions
as the Committee may determine.
(E) Failure to Exercise Option. To the extent that the
option of any deceased optionee or of any optionee whose employment or
service terminates is not exercised within the applicable period, all
further rights to purchase shares pursuant to such option shall cease
and terminate.
(v) Purchase of Shares. Unless the Committee determines
otherwise, shares may be acquired pursuant to an option granted under the Plan
only upon receipt by the Company of notice in writing from the optionee of the
optionee's intention to exercise, specifying the number of shares as to which
the optionee desires to exercise the option and the date on which the optionee
desires to complete the transaction, and if required in order to comply with the
Securities Act of 1933, as amended, containing a representation that it is the
optionee's present intention to acquire the shares for investment and not with a
view to distribution. Unless the Committee determines otherwise, on or before
the date specified for completion of the purchase of shares pursuant to an
option, the optionee must have paid the Company the full purchase price of such
shares in cash (including, with the consent of the Committee, cash that may be
the proceeds of a loan from the Company) or, with the consent of the Committee,
in whole or in part, in Common Stock of the Company valued at fair market value,
restricted stock, Performance-based Awards or other contingent awards
denominated in either stock or cash, deferred compensation credits, promissory
notes and other forms of consideration. The fair market value of Common Stock
provided in payment of the purchase price shall be the closing price of the
Common Stock as reported in The Wall Street Journal on the day the option is
exercised, or such other reported value of the Common Stock as shall be
specified by the Committee. No shares shall be issued until full payment
therefor has been made. With the consent of the Committee, an optionee may
request the Company to apply automatically the shares to be received upon the
exercise of a portion of a stock option (even though stock certificates have not
yet been issued) to satisfy the purchase price for additional portions of the
option. Each optionee who has exercised an option shall immediately upon
notification of the amount due, if any, pay to the Company in cash amounts
necessary to satisfy any applicable federal, state and local tax withholding
requirements. If additional withholding is or becomes required beyond any amount
deposited before delivery of the certificates, the optionee shall pay such
amount to the Company on demand. If the
A-4
<PAGE>
optionee fails to pay the amount demanded, the Company may withhold that amount
from other amounts payable by the Company to the optionee, including salary,
subject to applicable law. With the consent of the Committee an optionee may
satisfy this obligation, in whole or in part, by having the Company withhold
from the shares to be issued upon the exercise that number of shares that would
satisfy the withholding amount due or by delivering Common Stock to the Company
to satisfy the withholding amount. Upon the exercise of an option, the number of
shares reserved for issuance under the Plan shall be reduced by the number of
shares issued upon exercise of the option. [Notwithstanding the foregoing,
Non-Employee Directors may pay the purchase price of options granted pursuant to
paragraph 13 and satisfy any withholding obligations by any of the means
specified above and the Committee shall not exercise any discretionary functions
with respect to options granted to Non-Employee Directors pursuant to paragraph
13.]
(b) Incentive Stock Options. Incentive Stock Options shall be subject
to the following additional terms and conditions:
(i) Limitation on Amount of Grants. No employee may be granted
Incentive Stock Options under the Plan if the aggregate fair market value, on
the date of grant, of the Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by that employee during any calendar
year under the Plan and under any other incentive stock option plan (within the
meaning of Section 422 of the Code) of the Company or any parent or subsidiary
of the Company exceeds $100,000.
(ii) Limitations on Grants to 10 Percent Shareholders. An
Incentive Stock Option may be granted under the Plan to an employee possessing
more than 10 percent of the total combined voting power of all classes of stock
of the Company or of any parent or subsidiary of the Company only if the option
price is at least 110 percent of the fair market value of the Common Stock
subject to the option on the date it is granted, as described in paragraph
6(b)(iv), and the option by its terms is not exercisable after the expiration of
five years from the date it is granted.
(iii) Duration of Options. Subject to paragraphs 6(a)(ii) and
6(b)(ii), Incentive Stock Options granted under the Plan shall continue in
effect for the period fixed by the Committee, except that no Incentive Stock
Option shall be exercisable after the expiration of 10 years from the date it is
granted.
(iv) Option Price. The option price per share shall be determined
by the Committee at the time of grant. Except as provided in paragraph 6(b)(ii),
the option price shall not be less than 100 percent of the fair market value of
the Common Stock covered by the Incentive Stock Option at the date the option is
granted. The fair market value shall be deemed to be the closing price of the
Common Stock as reported in The Wall Street Journal on the day the option is
granted, or if there has been no sale on that date, on the last preceding date
on which a sale occurred, or such other value of the Common Stock as shall be
specified by the Committee.
(v) Limitation on Time of Grant. No Incentive Stock Option shall
be granted on or after the tenth anniversary of the last action by the Board of
---------------------------
Directors approving an increase in the number of shares available for issuance
- ------------------------------------------------------------------------------
under the Plan, which action was subsequently approved within 12 months by the
- ------------------------------------------------------------------------------
shareholders. [date the Plan was adopted by the Board of Directors.]
- -------------
(vi) Conversion of Incentive Stock Options. The Committee may at
any time without the consent of the optionee convert an Incentive Stock Option
to a Non-Statutory Stock Option.
(vii) Limit on Shares. Subject to adjustment as provided in
paragraph 14, the total number of Common Shares that may be issued under the
Plan upon exercise of Incentive Stock Options shall not exceed 2,100,000
---------
[1,500,000] shares.
(c) Non-Statutory Stock Options. Non-Statutory Stock Options[, other
than options granted pursuant to paragraph 13,] shall be subject to the
following additional terms and conditions:
A-5
<PAGE>
(i) Option Price. The option price for Non-Statutory Stock
Options shall be determined by the Committee at the time of grant and may be any
amount determined by the Committee, except that with respect to options that are
required by paragraph 2 to be granted at a price not less than fair market
value, the option price shall not be less than 100% of the fair market value of
the shares on the valuation date selected by the Committee. The Committee may
select the valuation date from among the following dates (i) the date of
commitment by the Company to grant the option, (ii) the date of approval of the
option grant by the Committee or (iii) the effective date of the option. The
fair market value of such shares shall be deemed to be the closing price of the
Common Stock as reported in The Wall Street Journal on the valuation date, or if
there has been no sale on that date, on the last preceding date on which a sale
occurred, or such other reported value of the Common Stock, or average closing
prices for a period of up to 10 trading dates including or preceding the
valuation date, as shall be specified by the Committee.
(ii) Duration of Options. Non-Statutory Stock Options granted
under the Plan shall continue in effect for the period fixed by the Committee.
7. Stock Bonuses. The Committee may award shares under the Plan as stock
bonuses. Shares awarded as a bonus shall be subject to the terms, conditions and
restrictions determined by the Committee. The restrictions may include
restrictions concerning transferability and forfeiture of the shares awarded,
together with such other restrictions as may be determined by the Committee. [If
shares are subject to forfeiture, all dividends or other distributions paid by
the Company with respect to the shares shall be retained by the Company until
the shares are no longer subject to forfeiture, at which time all accumulated
amounts shall be paid to the recipient.] The Committee may require the recipient
to sign an agreement as a condition of the award, but may not require the
recipient to pay any monetary consideration other than amounts necessary to
satisfy tax withholding requirements. The agreement may contain any terms,
conditions, restrictions, representations and warranties required by the
Committee. The certificates representing the shares awarded shall bear any
legends required by the Committee. [Unless otherwise determined by the
Committee, shares awarded as a stock bonus to an Officer or director may not be
sold until six months after the date of the award.] The Company may require any
recipient of a stock bonus to pay to the Company in cash upon demand amounts
necessary to satisfy any applicable federal, state or local tax withholding
requirements. If the recipient fails to pay the amount demanded, the Company may
withhold that amount from other amounts payable by the Company to the recipient,
including salary or fees for services, subject to applicable law. With the
consent of the Committee, a recipient may deliver Common Stock to the Company to
satisfy this withholding obligation. Upon the issuance of a stock bonus, the
number of shares reserved for issuance under the Plan shall be reduced by the
number of shares issued.
8. Restricted Stock. The Committee may issue shares under the Plan for such
consideration (including promissory notes and services) as determined by the
Committee. Shares issued under the Plan shall be subject to the terms,
conditions and restrictions determined by the Committee. The restrictions may
include restrictions concerning transferability, repurchase by the Company and
forfeiture of the shares issued, together with such other restrictions as may be
determined by the Committee. [If shares are subject to forfeiture or repurchase
by the Company, all dividends or other distributions paid by the Company with
respect to the shares shall be retained by the Company until the shares are no
longer subject to forfeiture or repurchase, at which time all accumulated
amounts shall be paid to the recipient.] All Common Stock issued pursuant to
this paragraph 8 shall be subject to a purchase agreement, which shall be
executed by the Company and the prospective recipient of the shares prior to the
delivery of certificates representing such shares to the recipient. The purchase
agreement may contain any terms, conditions, restrictions, representations and
warranties required by the Committee. The certificates representing the shares
shall bear any legends required by the Committee. [Unless otherwise determined
by the Committee, shares issued under this paragraph 8 to an Officer or director
may not be sold until six months after the shares are issued.] The Company may
require any purchaser of restricted stock to pay to the Company in cash upon
demand amounts necessary to satisfy any applicable federal, state or local tax
withholding requirements. If the purchaser fails to pay the amount demanded, the
Company may withhold that amount from other amounts payable by the Company to
the purchaser, including salary, subject to applicable law. With the consent of
the Committee, a purchaser may deliver Common Stock to the Company to satisfy
this withholding obligation. Upon the issuance of restricted stock, the number
of shares reserved for issuance under the Plan shall be reduced by the number of
shares issued.
A-6
<PAGE>
9. Stock Appreciation Rights.
(a) Grant. Stock appreciation rights may be granted under the Plan by
the Committee, subject to such rules, terms and conditions as the Committee
prescribes.
(b) Exercise.
(i) Each stock appreciation right shall entitle the holder, upon
exercise, to receive from the Company in exchange therefor an amount equal in
value to the excess of the fair market value on the date of exercise of one
share of Common Stock of the Company over its fair market value on the date of
grant (or, in the case of a stock appreciation right granted in connection with
an option, the excess of the fair market value of one share of Common Stock of
the Company over the option price per share under the option to which the stock
appreciation right relates), multiplied by the number of shares covered by the
stock appreciation right or the option, or portion thereof, that is surrendered.
Payment by the Company upon exercise of a stock appreciation right may be made
in Common Stock valued at fair market value, in cash, or partly in Common Stock
and partly in cash, all as determined by the Committee.
(ii) A stock appreciation right shall be exercisable only at the
time or times established by the Committee. If a stock appreciation right is
granted in connection with an option, the following rules shall apply: (1) the
stock appreciation right shall be exercisable only to the extent and on the same
conditions that the related option could be exercised; (2) upon exercise of the
stock appreciation right, the option or portion thereof to which the stock
appreciation right relates terminates; and (3) upon exercise of the option, the
related stock appreciation right or portion thereof terminates. [Unless
otherwise determined by the Committee, no stock appreciation right granted to an
Officer or director may be exercised during the first six months following the
date it is granted.]
(iii) The Committee may withdraw any stock appreciation right
granted under the Plan at any time and may impose any conditions upon the
exercise of a stock appreciation right or adopt rules and regulations from time
to time affecting the rights of holders of stock appreciation rights. Such rules
and regulations may govern the right to exercise stock appreciation rights
granted prior to adoption or amendment of such rules and regulations, as well as
stock appreciation rights granted thereafter.
(iv) For purposes of this paragraph 9, the fair market value of
the Common Stock shall be the closing price of the Common Stock as reported in
The Wall Street Journal, or such other reported value of the Common Stock as
shall be specified by the Committee, on the trading day the stock appreciation
right is exercised.
(v) No fractional shares shall be issued upon exercise of a stock
appreciation right. In lieu thereof, cash may be paid in an amount equal to the
value of the fraction or, if the Committee shall determine, the number of shares
may be rounded downward to the next whole share.
(vi) Each Stock appreciation right granted in connection with an
Incentive Stock Option and, unless otherwise determined by the Board of
Directors [with respect to a stock appreciation right granted to a person who is
neither an Officer nor a director of the Company], each other stock appreciation
right granted under the Plan by its terms shall be nonassignable and
nontransferable by the holder, either voluntarily or by operation of law, except
by will or by the laws of descent and distribution of the state or country of
the holder's domicile at the time of death, and each stock appreciation right by
its terms shall be exercisable during the holder's lifetime only by the holder;
provided, however, that a stock appreciation right not granted in connection
with an Incentive Stock Option shall also be transferable pursuant to a
qualified domestic relations order as defined under the Code or Title I of the
Employee Retirement Income Security Act.
(vii) Each participant who has exercised a stock appreciation
right shall, upon notification of the amount due, pay to the Company in cash
amounts necessary to satisfy any applicable federal, state and local tax
withholding requirements. If the participant fails to pay the amount demanded,
the Company
A-7
<PAGE>
may withhold that amount from other amounts payable by the Company to the
participant including salary, subject to applicable law. With the consent of the
Committee a participant may satisfy this obligation, in whole or in part, by
having the Company withhold from any shares to be issued upon the exercise that
number of shares that would satisfy the withholding amount due or by delivering
Common Stock to the Company to satisfy the withholding amount.
(viii) Upon the exercise of a stock appreciation right for
shares, the number of shares reserved for issuance under the Plan shall be
reduced by the number of shares issued. Cash payments of stock appreciation
rights shall not reduce the number of shares of Common Stock reserved for
issuance under the Plan.
10. Cash Bonus Rights.
(a) Grant. The Committee may grant cash bonus rights under the Plan in
connection with (i) options granted or previously granted, (ii) stock
appreciation rights granted or previously granted, (iii) stock bonuses awarded
or previously awarded and (iv) shares sold or previously sold under the Plan.
Cash bonus rights will be subject to rules, terms and conditions as the
Committee may prescribe. Unless otherwise determined by the Committee [with
respect to a cash bonus right granted to a person who is neither an Officer nor
a director of the Company], each cash bonus right granted under the Plan by its
terms shall be nonassignable and nontransferable by the holder, either
voluntarily or by operation of law, except by will or by the laws of descent and
distribution of the state or country of the holder's domicile at the time of
death or pursuant to a qualified domestic relations order as defined under the
Code or Title I of the Employee Retirement Income Security Act. The payment of a
cash bonus shall not reduce the number of shares of Common Stock reserved for
issuance under the Plan.
(b) Cash Bonus Rights in Connection With Options. A cash bonus right
granted in connection with an option will entitle an optionee to a cash bonus
when the related option is exercised (or terminates in connection with the
exercise of a stock appreciation right related to the option) in whole or in
part. If an optionee purchases shares upon exercise of an option and does not
exercise a related stock appreciation right, the amount of the bonus shall be
determined by multiplying the excess of the total fair market value of the
shares to be acquired upon the exercise over the total option price for the
shares by the applicable bonus percentage. If the optionee exercises a related
stock appreciation right in connection with the termination of an option, the
amount of the bonus shall be determined by multiplying the total fair market
value of the shares and cash received pursuant to the exercise of the stock
appreciation right by the applicable bonus percentage. The bonus percentage
applicable to a bonus right shall be determined from time to time by the
Committee but shall in no event exceed 75 percent.
(c) Cash Bonus Rights in Connection With Stock Bonus. A cash bonus
right granted in connection with a stock bonus will entitle the recipient to a
cash bonus payable when the stock bonus is awarded or restrictions, if any, to
which the stock is subject lapse. If bonus stock awarded is subject to
restrictions and is repurchased by the Company or forfeited by the holder, the
cash bonus right granted in connection with the stock bonus shall terminate and
may not be exercised. The amount and timing of payment of a cash bonus shall be
determined by the Committee.
(d) Cash Bonus Rights in Connection With Stock Purchases. A cash bonus
right granted in connection with the purchase of stock pursuant to paragraph 8
will entitle the recipient to a cash bonus when the shares are purchased or
restrictions, if any, to which the stock is subject lapse. Any cash bonus right
granted in connection with shares purchased pursuant to paragraph 8 shall
terminate and may not be exercised in the event the shares are repurchased by
the Company or forfeited by the holder pursuant to applicable restrictions. The
amount and timing of payment of a cash bonus shall be determined by the
Committee.
(e) Taxes. The Company shall withhold from any cash bonus paid
pursuant to paragraph 10 the amount necessary to satisfy any applicable federal,
state and local withholding requirements.
A-8
<PAGE>
11. Performance-based Awards. The Committee may grant awards intended to
qualify as performance-based compensation under Section 162(m) of the Code and
the regulations thereunder ("Performance-based Awards"). Performance-based
Awards shall be denominated at the time of grant either in Common Stock ("Stock
Performance Awards") or in dollar amounts ("Dollar Performance Awards"). Payment
under a Stock Performance Award or a Dollar Performance Award shall be made, at
the discretion of the Committee, in Common Stock ("Performance Shares"), or in
cash or in any combination thereof. Performance-based Awards shall be subject to
the following terms and conditions:
(a) Award Period. The Committee shall determine the period of time for
which a Performance-based Award is made (the "Award Period").
(b) Performance Goals and Payment. The Committee shall establish in
writing objectives ("Performance Goals") that must be met by the Company or any
subsidiary, division or other unit of the Company ("Business Unit") during the
Award Period as a condition to payment being made under the Performance-based
Award. The Performance Goals for each award shall be one or more targeted levels
of performance with respect to one or more of the following objective measures
with respect to the Company or any Business Unit: earnings, earnings per share,
total shareholder return (stock price increase plus dividends), return on
equity, return on assets, revenues, operating income, inventories, inventory
turns, cash flows, economic value added (operating income after taxes minus a
charge for the cost of capital) or any of the foregoing before the effect of
acquisitions, divestitures, accounting changes, and restructuring and special
charges (determined according to criteria established by the Committee). The
Committee shall also establish the number of Performance Shares or the amount of
cash payment to be made under a Performance-based Award if the Performance Goals
are met or exceeded, including the fixing of a maximum payment (subject to
Section 11(d)). The Committee may establish other restrictions to payment under
a Performance-based Award, such as a continued employment requirement, in
addition to satisfaction of the Performance Goals. Some or all of the
Performance Shares may be issued at the time of the award as restricted shares
subject to forfeiture in whole or in part if Performance Goals or, if
applicable, other restrictions are not satisfied.
(c) Computation of Payment. After an Award Period, the financial
performance of the Company or Business Unit, as applicable, during the period
shall be measured against the Performance Goals. If the Performance Goals are
not met, no payment shall be made under a Performance-based Award. If the
Performance Goals are met or exceeded, the Committee shall certify that fact in
writing and certify the number of Performance Shares earned or the amount of
cash payment to be made under the terms of the Performance-based Award. The
Committee, in its sole discretion, may elect to pay part or all of a
Performance-based Award in cash in lieu of issuing or transferring Performance
Shares.
(d) Maximum Awards. No participant may receive Stock Performance
Awards in any fiscal year under which the maximum number of Common Shares
issuable under the award exceeds 20,000 Common Shares or Dollar Performance
Awards in any fiscal year under which the maximum amount of cash payable under
the award exceeds $500,000.
(e) Tax Withholding. Each participant who has received Performance
Shares shall, upon notification of the amount due, pay to the Company in cash
amounts necessary to satisfy any applicable federal, state and local tax
withholding requirements. If the participant fails to pay the amount demanded,
the Company may withhold that amount from other amounts payable by the Company
to the participant, including salary, subject to applicable law. With the
consent of the Committee, a participant may satisfy this obligation, in whole or
in part, by having the Company withhold from any shares to be issued that number
of shares that would satisfy the withholding amount due or by delivering Common
Stock to the Company to satisfy the withholding amount.
(f) Effect on Shares Available. The payment of a Performance-based
Award in cash shall not reduce the number of shares of Common Stock reserved for
issuance under the Plan. The number of Common Shares reserved for issuance under
the Plan shall be reduced by the number of shares issued upon payment of an
award, less the number of shares surrendered or withheld to satisfy withholding
obligations.
A-9
<PAGE>
12. Foreign Qualified Grants. Awards under the Plan may be granted to such
officers and employees of the Company and its subsidiaries and such other
persons described in paragraph 1 residing in foreign jurisdictions as the
Committee may determine from time to time. The Committee may adopt such
supplements to the Plan as may be necessary to comply with the applicable laws
of such foreign jurisdictions and to afford participants favorable treatment
under such laws; provided, however, that no award shall be granted under any
such supplement with terms which are more beneficial to the participants than
the terms permitted by the Plan.
13. Option Grants to Non-Employee Directors.
(a) Initial Grants. Each person who becomes a Non-Employee Director
shall be automatically granted an option to purchase 20,000 shares of Common
Stock on the date he or she becomes a Non-Employee Director. A "Non-Employee
Director" is a director who is not an employee of the Company or Tektronix, Inc.
or any of their respective subsidiaries and has not been an employee of the
Company or Tektronix, Inc. or any of their respective subsidiaries within one
year of any date as of which a determination of eligibility is made.
(b) Additional Grants. Each Non-Employee Director shall be
automatically granted an option to purchase additional shares of Common Stock in
each calendar year subsequent to the year in which such Non-Employee Director
became a director, such option to be granted as of the anniversary date of such
Non-Employee Director's appointment to the Board of Directors, provided that the
Non-Employee Director continues to serve in such capacity as of such date. The
number of shares subject to each additional grant shall be 5,000 shares.
(c) Exercise Price. The exercise price of the options granted pursuant
to this paragraph 13 shall be equal to 100 percent of the closing price of the
Common Stock on the day the option is granted as reported in The Wall Street
Journal, unless the individual becomes a Non-Employee Director prior to the date
of the Company's initial public offering of Common Stock, in which case the
exercise price shall be the offering price in such initial public offering.
(d) Term of Option. The term of each option granted pursuant to this
paragraph 13 shall be 10 years from the date of grant.
(e) Exercisability. Until an option expires or is terminated and
except as provided in paragraphs 13(f), 14 and 16, an option granted under this
paragraph 13 shall be exercisable according to the following schedule:
Period of Non-Employee
Director's Continuous
Service as a Director of Portion of Total
the Company from the Option Which
Date the Option is Granted is Exercisable
- ------------------------------------ -----------------------------
Less than 1 year 0%
1 year 25%
2 years 50%
3 years 75%
4 years or more 100%
(f) Termination As a Director. Subject to paragraph 6(a)(iv)(D), if a
--------------------------------
Non-Employee Director ceases to be a director of the Company for any reason,
including death, the option granted pursuant to this paragraph 13 may be
exercised at any time prior to the expiration date of the option or the
expiration of 90 days (or 12 months in the event of death) after the last day
the Non-Employee Director served as a director,
A-10
<PAGE>
whichever is the shorter period, but only if and to the extent the Non-Employee
Director was entitled to exercise the option as of the last day the Non-Employee
Director served as a director.
(g) Nontransferability. Each option granted pursuant to this paragraph
13 by its terms shall be nonassignable and nontransferable by the Non-Employee
Director, either voluntarily or by operation of law, except by will or by the
laws of descent and distribution of the state or country of the optionee's
domicile at the time of death, and each option by its terms shall be exercisable
during the Non-Employee Director's lifetime only by the Non-Employee Director;
provided, however, that an option shall also be transferable pursuant to a
qualified domestic relations order as defined under the Code or Title I of the
Employee Retirement Income Security Act.
(h) Exercise of Options. Options granted pursuant to this paragraph 13
may be exercised in accordance with paragraph 6(a)(v). [If an option is
exercised within six months of the date of grant, the shares acquired upon
exercise of the option may not be sold until six months after the date of
grant.]
14. Changes in Capital Structure. If the outstanding Common Stock of the
Company is hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company or of
another corporation by reason of any reorganization, merger, consolidation, plan
of exchange, recapitalization, reclassification, stock split-up, combination of
shares or dividend payable in shares, appropriate adjustment shall be made by
the Committee in the number and kind of shares available for awards under the
Plan. In addition, the Committee shall make appropriate adjustment in the number
and kind of shares as to which outstanding options and stock appreciation
rights, or portions thereof then unexercised, shall be exercisable, so that the
optionee's proportionate interest before and after the occurrence of the event
is maintained. Notwithstanding the foregoing, the Committee shall have no
obligation to effect any adjustment that would or might result in the issuance
of fractional shares, and any fractional shares resulting from any adjustment
may be disregarded or provided for in any manner determined by the Committee.
Any such adjustments made by the Committee shall be conclusive. In the event of
dissolution of the Company or a merger, consolidation or plan of exchange
affecting the Company, in lieu of providing for options and stock appreciation
rights as provided above in this paragraph 14 or in lieu of having the options
and stock appreciation rights continue unchanged, the Committee, [except for
options granted pursuant to paragraph 13,] may, in its sole discretion, provide
a 30-day period prior to such event during which optionees shall have the right
to exercise options and stock appreciation rights in whole or in part without
any limitation on exercisability and upon the expiration of which 30-day period
all unexercised options and stock appreciation rights shall immediately
terminate.
15. Corporate Mergers, Acquisitions, etc. The Committee may[, except for
options granted pursuant to paragraph 13], also grant options, stock
appreciation rights, Performance-based Awards stock bonuses and cash bonuses and
issue restricted stock under the Plan having terms, conditions and provisions
that vary from those specified in this Plan provided that any such awards are
granted in substitution for, or in connection with the assumption of, existing
options, stock appreciation rights, stock bonuses, cash bonuses, restricted
stock and Performance-based Awards granted, awarded or issued by another
corporation and assumed or otherwise agreed to be provided for by the Company
pursuant to or by reason of a transaction involving a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation to which the Company or a subsidiary is a party.
16. Amendment of Plan. The Board of Directors may at any time, and from
time to time, modify or amend the Plan in such respects as it shall deem
advisable because of changes in the law while the Plan is in effect or for any
other reason[, except that no amendment to paragraph 13 shall be made within six
months of a prior amendment to that paragraph other than to comport with changes
to the Code, the Employee Retirement Income Security Act, as amended, or any
applicable rules and regulations thereunder]. Except as provided in paragraphs
6(a)(iv), 9 and 14 however, no change in an award already granted shall be made
without the written consent of the holder of such award.
17. Approvals. The obligations of the Company under the Plan are subject to
the approval of state and federal authorities or agencies with jurisdiction in
the matter. The Company will use its best efforts to
A-11
<PAGE>
take steps required by state or federal law or applicable regulations, including
rules and regulations of the Securities and Exchange Commission and any stock
exchange on which the Company's shares may then be listed, in connection with
the grants under the Plan. The foregoing notwithstanding, the Company shall not
be obligated to issue or deliver Common Stock under the Plan if such issuance or
delivery would violate applicable state or federal securities laws.
18. Employment and Service Rights. Nothing in the Plan or any award
pursuant to the Plan shall (i) confer upon any employee any right to be
continued in the employment of the Company or any subsidiary or interfere in any
way with the right of the Company or any subsidiary by whom such employee is
employed to terminate such employee's employment at any time, for any reason,
with or without cause, or to decrease such employee's compensation or benefits,
or (ii) confer upon any person engaged by the Company any right to be retained
or employed by the Company or to the continuation, extension, renewal, or
modification of any compensation, contract, or arrangement with or by the
Company.
19. Rights as a Shareholder. The recipient of any award under the Plan
shall have no rights as a shareholder with respect to any Common Stock until the
date of issue to the recipient of a stock certificate for such shares. Except as
otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date occurs prior to the date
such stock certificate is issued.
[20. Rule 16b-3 Compliance. Transactions under the Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors under the
Exchange Act. To the extent any provision of the Plan or action by the Board or
the Committee fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Board or the Committee.
Moreover, in the event the Plan does not include a provision required by Rule
16b-3 to be stated therein in order to qualify the grants under paragraph 13
hereof as grants under a non-discretionary formula under Rule 16b-3 such
provision (other than one relating to eligibility requirements, or the price and
amount of awards) shall be deemed automatically to be incorporated by reference
into the Plan with respect to grants of options to Non-Employee Directors.]
[21]20. Applicable Law. The law of the State of Oregon will govern all
---
matters relating to this Plan except to the extent it is superseded by the laws
of the United States.
A-12
<PAGE>
MERIX CORPORATION
P
R
O Proxy Solicited on Behalf of the Board of Directors of
X the Company for the Annual Meeting September 23, 1997
Y
The undersigned hereby appoints Deborah A. Coleman, Charles M. Boesenberg and
John P. Karalis, and each of them, proxies with full power of substitution, to
vote in behalf of the undersigned at the Annual Meeting of Shareholders of Merix
Corporation on September 23, 1997, and at any adjournment thereof, all shares of
the undersigned in Merix Corporation. The proxies are instructed to vote as
follows:
The shares represented by this proxy will be voted in accordance with
instructions, if given. If no instructions are given, they will be voted for the
directors, for the amendments to the 1994 Stock Incentive Plan and for the
independent auditor. The proxies may vote in their discretion as to other
matters that may come before the meeting.
<TABLE>
<CAPTION>
<S> <C>
1. Election of Directors, Nominees: (change of address/comments)
Charles M. Boesenberg, Deborah A. Coleman, Carlene M. Ellis, ----------------------------------------
John P. Karalis, Carl W. Neun,
Dr. Koichi Nishimura. ----------------------------------------
2. Approval of amendments to the 1994 Stock Incentive Plan. ----------------------------------------
3. Approval of Deloitte & Touche as independent auditor. ----------------------------------------
The shares represented by this proxy will be voted in accordance with ----------------------------------------
instructions, if given. If no instructions are given, they will be voted (If you have written in the above space,
for the directors, for the amendments to the 1994 Stock Incentive Plan please mark the corresponding box on
and for the independent auditor. the reverse side of this card)
</TABLE>
SEE
REVERSE
SIDE
(The Board of Directors recommends a vote FOR Items 1, 2 and 3.)
PLEASE SIGN ON OTHER SIDE AND RETURN PROMPTLY
- ----- Please mark your
| x | votes as in this
- ----- example.
<TABLE>
<CAPTION>
<S> <C> <C>
1. Election of 2. Approval of amendments to the 3. Approval of Deloitte & Touche as
Directors 1994 Stock Incentive Plan. Independent auditor.
FOR WITHHELD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
For, except vote withheld from the following nominee(s):
___________________________________________________ To facilitate meeting
arrangements, please [ ]
check here if you plan to
attend the meeting in
person.
Please check here if you [ ]
have a change of
address or comments on the
reverse side.
</TABLE>
SIGNATURE(S)________________________________________________ DATE ___________
NOTE: Please sign exactly as name(s) appears hereon. Joint owners should each
sign. Please mark, date, sign and return proxy card promptly. Receipt is
acknowledged of the notice and proxy statement relating to this meeting.
