MERIX CORP, DEF 14A, 2000-08-17

MERIX CORP
DEF 14A, 2000-08-17
PRINTED CIRCUIT BOARDS

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<PAGE>

SCHEDULE 14A
(Rule 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT
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
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to [_] 240.14a-11(c) or [_] 240.14a-12

MERIX CORPORATION
(Name of Registrant as Specified In Its Charter)

______________________________
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box)

[x] No fee required.

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:

[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

6. Amount Previously Paid:
7. Form, Schedule or Registration Statement No.:
8. Filing Party:
9. Date Filed:
<PAGE>

Merix
Corporation
Interconnect
Solutions

1521 Poplar
[LOGO OF MERIX CORPORATION] Lane
P.O. Box 5000
Forest Grove,
OR 97116

August 14, 2000

To Our Shareholders:

You are cordially invited to attend the 2000 Annual Meeting of Shareholders
of Merix Corporation, which will be held at 9:00 a.m., local time, on
Thursday, September 28, 2000, at our Corporate Offices located at 1521 Poplar
Lane, Forest Grove, Oregon 97116. In addition to the matters described in the
Notice of Annual Meeting and Proxy Statement, there will be a report of the
progress of the Company and an opportunity to ask questions of general
interest to you as a Shareholder.

In addition to the election of Directors at this year's Annual Meeting, you
will be considering a proposal to approve an amendment to Merix's 1994 Stock
Incentive Plan that increases the amount of Common Stock available for option
grants by 425,000 shares. These additional 425,000 shares will be available
only for option grants at not less than fair market value. The Board of
Directors and management believe 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.

The Board of Directors declared a three-for-two stock dividend on July 28,
2000, which is payable on August 25, 2000. Assuming no further grants or
exercises of options, after giving effect to the stock dividend and assuming
adoption of the proposed amendment to the plan, as of September 28, 2000 there
will be 13,497,000 shares of Common Stock outstanding, 2,148,036 shares
subject to outstanding options and 776,375 shares available for future grants.

YOUR VOTE IS VERY 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.

Sincerely,

/s/ Janie S. Brown

Janie S. Brown
Vice President, Chief Financial Officer
and Secretary
<PAGE>

MERIX CORPORATION

----------------

Notice of Annual Meeting of Shareholders
To Be Held September 28, 2000

----------------

To the Shareholders of Merix Corporation:

The Annual Meeting of Shareholders of Merix Corporation will be held on
Thursday, September 28, 2000 at 9:00 a.m., local time, at its Corporate
Offices located at 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 approve an amendment to the 1994 Stock Incentive Plan that increases
the amount of Common Stock available only for option grants at fair market
value by 425,000 shares.

3. To transact any other business that may properly come before the meeting
or any adjournment of the meeting.

Please 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,

/s/ Janie S. Brown

Janie S. Brown,
Vice President, Chief Financial
Officer and Secretary

Forest Grove, Oregon
August 14, 2000
<PAGE>

MERIX CORPORATION
1521 Poplar Lane
Forest Grove, Oregon 97116

----------------

PROXY STATEMENT

----------------

For Annual Meeting of Shareholders
To be Held on September 28, 2000

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 Thursday, September 28, 2000 at
9:00 a.m., local time, and at any adjournment or adjournments thereof. Merix
will hold the annual meeting at its corporate offices located at 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 14,
2000.

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, employees and other representatives and agents 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 $7,500, 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 and in accordance with this proxy statement on any
other business that may properly come before the meeting.

1
<PAGE>

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 3, 2000. On that date, there were 8,996,844 shares of
Common Stock outstanding, entitled to one vote per share. The Common Stock
does not have cumulative voting rights.

The following table shows Common Stock ownership on July 1, 2000 by (i) each
person who, to the knowledge of the Company, beneficially owned 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>
Shares Beneficially
Owned
-----------------------
Approximate
Name Number(1) Percent
---- --------- -----------
<S> <C> <C>
Kern Capital Management LLC........................ 984,200(2) 11.1%
114 West 47th Street, Suite 1926
New York, NY 10036
Navellier & Associates............................. 579,800(3) 6.5%
One E. Liberty Street, 3rd Fl.
Reno, NV 89501
Tektronix, Inc. ................................... 506,500 5.7%
14200 SW Karl Braun Drive
Beaverton, OR 97077
Deborah A. Coleman................................. 433,792(4) 4.9%
Mark R. Hollinger.................................. 89,558(5) 1.0%
Terri L. Timberman................................. 59,498(6) *
Janie S. Brown..................................... 24,305(7) *
Daniel T. Olson.................................... 375 *
Anaya K. Vardya.................................... 10,750(8) *
All executive officers and directors as a group (10
people)........................................... 715,278(9) 8.1%
</TABLE>
--------
* Less than one percent.

(1) Shares are held directly with sole voting and dispositive power except as
otherwise indicated.

(2) Based upon a Schedule 13G filed with the Securities and Exchange
Commission on May 31, 2000 by Kern Capital Management, LLC.

(3) Based upon a Schedule 13F filed with the Securities and Exchange
Commission on March 31, 2000 by Navellier & Associates Inc.

(4) Includes stock options for 300,000 shares that are currently exercisable
or become exercisable before August 31, 2000.

(5) Includes stock options for 81,298 shares that are currently exercisable
or become exercisable before August 31, 2000.

(6) Includes stock options for 51,250 shares that are currently exercisable
or become exercisable before August 31, 2000.

(7) Includes stock options for 16,543 shares that are currently exercisable
or become exercisable before August 31, 2000.

(8) Includes stock options for 8,750 shares that are currently exercisable or
become exercisable before August 31, 2000.

(9) Includes stock options for 545,341 shares held by executive officers and
directors that are currently exercisable or become exercisable before
August 31, 2000.

2
<PAGE>

1. ELECTION OF DIRECTORS

Six directors will be 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.

<TABLE>
<CAPTION>
Shares of Common Stock
Beneficially Owned as of
July 1 , 2000(1)
Merix ------------------------
Name, Principal Occupation and Director Number Approximate
Directorships Age Since of Shares(2) Percent
------------------------------ --- -------- ------------ -----------
<S> <C> <C> <C> <C>
Deborah A. Coleman....................... 47 1994 433,792 4.9%
Ms. Coleman has served as Chair of the
Board of Directors since March 1994. Ms.
Coleman has served as a General Partner
of SmartForest Ventures LLC since
November 1999. She served as Chief
Executive Officer of Merix from March
1994 to September 1999 and as President
of Merix from March 1997 to May 1999.
From November 1992 to the inception of
the Company, Ms. Coleman served as Vice
President of Materials Operations of
Tektronix, Inc. 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. and
Applied Materials, Inc.

Carlene M. Ellis......................... 53 1994 45,000 *
Ms. Ellis has served as a member of the
Board of Directors since 1994. Ms. Ellis
has served as Vice President of
Education of Intel Corporation since
January 1999. She served as Corporate
Vice President and Director of the
Information Technology Group of Intel
from 1992 to 1998 and was Intel's
Director of Human Resources from 1990 to
1992. She was Vice President of its
Administration Group from 1989 to 1992.

Mark R. Hollinger........................ 42 1999 89,558 1.0%
Mr. Hollinger has served as Chief
Executive Officer since September 1999
and as President since May 1999. He was
elected to the Board of Directors in May
1999. Mr. Hollinger joined Merix in
September 1997 as Senior Vice President
of Operations and served as the Chief
Operating Officer from August 1998 to
September 1999. Prior to joining Merix,
he spent three years as Vice President
of Operations at Continental Circuits
Corporation. His experience also
includes more than a decade at IBM where
he served in a variety of positions
including PCB Manufacturing
Superintendent.

William C. McCormick..................... 66 1997 13,250 *
Mr. McCormick has served as a member of
the Board of Directors since 1997. Mr.
McCormick has served as Chairman of
Precision Castparts Corporation since
October 1994 and its Chief Executive
Officer since August 1991. From 1985 to
1997 he served as President of Precision
Castparts, and from 1985 to 1991 he
served as Chief Operating Officer.
</TABLE>

3
<PAGE>

Robert C. Strandberg..................... 43 1998 11,250 *
Mr. Strandberg has served as a member of
the Board of Directors since 1998. Mr.
Strandberg has served as the President
and Chief Executive Officer of PSC, Inc.
since April 1997 and as its Executive
Vice President from November 1996 to
April 1997. Between 1991 and 1996, Mr.
Strandberg was Chairman of the Board of
Directors, President and Chief Executive
Officer of Datamax International
Corporation. Mr. Strandberg is also a
director of Sawtek, Inc.
</TABLE>
--------
* Less than one percent.

(1) Shares are held directly with sole voting and dispositive power except as
otherwise indicated.

(2) Includes stock options granted pursuant to the Company's 1994 Stock
Incentive Plan that are currently exercisable or become exercisable
before August 31, 2000 as follows: Ms. Coleman--300,000 shares;
Ms. Ellis--37,500 shares; Mr. Hollinger--81,298 shares; Mr. McCormick--
11,250 shares; Dr. Nishimura--27,500 shares; and Mr. Strandberg--11,250
shares.

The Board of Directors met eight times during the fiscal year ended May 27,
2000. Each director attended at least 75% of the aggregate number of 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, the Human Resources and Compensation Committee and the
Nominating Committee.

The Audit and Finance Committee is comprised of Mr. McCormick and Mr.
Strandberg and met five times during the last fiscal year. The Audit and
Finance Committee recommends the independent auditor of the Company for
approval by the Board of Directors, reviews the planned scope and results of
the annual audit, confers with the independent auditor, reviews the auditor's
recommendations with respect to accounting, internal controls and other
matters and makes other recommendations to the Board of Directors with respect
to audit and finance matters.

The Human Resources and Compensation Committee is comprised of Ms. Ellis,
Dr. Nishimura and Mr. Strandberg and met seven 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.

The Nominating Committee is comprised of Ms. Ellis, Ms. Coleman and Mr.
Hollinger and did not meet during the last fiscal year. The Nominating
Committee reviews possible nominees for membership on the Board of Directors,
including any nominees recommended in good faith by a registered shareholder
with the consent of the proposed nominee, and makes recommendations concerning
nominees to the Board of Directors. Shareholders who wish to submit names for
consideration as potential directors should do so in writing addressed to the
Secretary, Janie S. Brown, Vice President and Chief Financial Officer, Merix
Corporation, 1521 Poplar Lane, Forest Grove, Oregon 97116.

4
<PAGE>

Directors not affiliated with the Company or Tektronix, Inc. 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 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 annual 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
Annual Compensation
Compensation Awards
--------------------- ------------
Securities
Name and Principal Underlying All Other
Position Fiscal Year Salary Bonus Options (#) Compensation(1)
------------------ ----------- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Mark R. Hollinger....... 2000(2) $238,077 $161,400 50,000 $9,582
(Chief Executive 1999 199,615 84,000 75,000 7,044
Officer and President) 1998 138,846 85,584 85,000 5,568(3)

Terri L. Timberman...... 2000 150,923 83,600 0 7,248
(Senior Vice President 1999 143,308 55,251 50,000 8,212
and Chief Administrative 1998 137,609 6,876 10,000 4,335
Officer)

Janie S. Brown.......... 2000 145,673 79,800 22,500 8,614
(Vice President and 1999(4) 127,732 34,901 22,825(5) 5,698
Chief Financial Officer)

Daniel T. Olson......... 2000(6) 115,385 142,284 75,000 9,299(7)
(Vice President, Sales
and Marketing)

Anaya K. Vardya......... 2000(8) 131,385 59,060 15,000 6,862
(Vice President of
Operations)

Deborah A. Coleman...... 2000(9) 58,835 53,200 0 4,527
(Chair and Former Chief 1999 86,433(10) 119,700 160,000 5,158
Executive Officer) 1998 271,278 21,301 20,000 4,671
</TABLE>
--------
(1) Consists principally of amounts contributed by the Company under its
401(k) Plan unless otherwise indicated.

(2) Mr. Hollinger was appointed the Company's Chief Executive Officer in
September 1999.

(3) Includes $1,184 paid for relocation expenses.

(4) Ms. Brown became an executive officer in August 1998.

(5) Includes options for 12,825 shares granted in June 1998 in exchange for
the surrender of options for a greater number of shares.

(6) Mr. Olson became an executive officer in October 1999. The 2000 bonus
amount includes payments made pursuant to his employment letter.

(7) Includes $3,616 paid for relocation expenses.

(8) Mr. Vardya became an executive officer in December 1999.

(9) Ms. Coleman resigned as Chief Executive Officer in September 1999.

(10) Ms. Coleman voluntarily lowered her annual salary from $285,000 to
Oregon's minimum wage for a period of one year beginning September 1,
1998.

6
<PAGE>

Stock Option Grants in Last Fiscal Year

The following table provides information regarding stock options granted
during the fiscal year ended May 27, 2000 to certain current and former
executive officers named in the Summary Compensation Table.

<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------
Potential
Realizable Value
at Assumed Annual
Rates of Stock
Number of Percent of Price
Shares Total Options Appreciation for
Underlying Granted to 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>
Mark R. Hollinger....... 50,000 14.9% $ 7.625 6/30/04 $105,332 $232,757
Janie S. Brown.......... 15,000 4.5% $10.0625 8/30/04 $ 41,701 $ 92,149
7,500 2.2% $11.75 12/20/04 $ 24,347 $ 53,801
Daniel T. Olson......... 75,000 22.4% $10.75 10/25/04 $222,752 $492,224
Anaya K. Vardya......... 7,500 2.2% $10.0625 8/30/04 $ 20,851 $ 46,074
7,500 2.2% $11.75 12/20/04 $ 24,347 $ 53,801
</TABLE>
--------
(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 of
employment as a result of death or disability and 90 days after
termination of employment 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. The hypothetical gains are not intended by Merix to
forecast future appreciation, if any, of the price of its Common Stock,
and Merix expressly disclaims any representation to that effect.

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 27, 2000 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 27,
2000.

<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at May 27, 2000 In-the-Money Options at
(#) May 27, 2000 ($)(1)
Shares Acquired Value ------------------------- -------------------------
Name On Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mark R. Hollinger....... 1,000 $1,813 66,500 142,500 $ 904,438 $2,500,625
Terri L. Timberman...... 0 0 53,750 41,250 736,719 796,719
Janie S. Brown.......... 1,000 $3,750 14,293 30,032 273,167 545,734
Daniel T. Olson......... 0 0 0 75,000 0 1,293,750
Anaya K. Vardya......... 500 $4,344 6,875 23,625 125,039 425,086
Deborah A. Coleman...... 0 0 290,000 110,000 5,635,625 2,504,375
</TABLE>
--------
(1) Calculated based on the May 26, 2000 closing stock price of $28.00 per
share.

Ten-Year Option Repricings

The Company has never regranted options to executive officers. In June 1998,
the Company offered to all employee option holders (other than executive
officers) the opportunity to surrender options granted prior to

7
<PAGE>

June 30, 1998 with an exercise price of more than $9.9375 in exchange for new
options for a lesser number of shares with an exercise price equal to the then
current fair market value of $9.9375 per share. Option holders received a new
option for ninety percent of the option shares surrendered. The new options
retained the original vesting period and expiration date. Two such employees
later became executive officers of the Company. The following table provides
information relating to regrants to these executive officers.

<TABLE>
<CAPTION>
Length of
Number of Market Price Original Option
Securities of Stock at Exercise Price at Term Remaining
Underlying Time of Time of New Exercise at Date of
Name Date Options Replaced Replacement Replacement Price Replacement
---- ------- ---------------- ------------ ----------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Janie S. Brown.......... 6/30/98 4,500 $9.9375 $23.625 $9.9375 6.93 years
Janie S. Brown.......... 6/30/98 1,125 $9.9375 $18.6875 $9.9375 8.23 years
Janie S. Brown.......... 6/30/98 5,400 $9.9375 $19.75 $9.9375 4.61 years
Janie S. Brown.......... 6/30/98 1,800 $9.9375 $17.875 $9.9375 9.23 years
Anaya K. Vardya......... 6/30/98 13,500 $9.9375 $13.75 $9.9375 9.33 years
</TABLE>

Severance and Change of Control Agreements

The Company has entered into Executive Severance Agreements with Mr.
Hollinger, Ms. Timberman, Ms. Brown, Mr. Olson and Mr. Vardya pursuant to
which the Company has agreed to provide severance benefits upon the Company's
termination of any such executive's employment without cause. "Cause" is
generally defined as (a) the willful and continued failure to perform
substantially the executive's reasonably assigned duties (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. In the event of a
termination of employment without cause, the executive would receive a lump
sum payment equal to his or her annual base pay, and 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 of employment is due to death or voluntary action of
the executive 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 of up to six months following a change of control.

In September 1999, the Company entered into the Second Amended Executive
Severance Agreement with Ms. Coleman in connection with her resignation as the
Company's Chief Executive Officer. The agreement provides that Ms. Coleman
will continue to serve as Chair of the Company's Board of Directors until the
annual meeting of the Company's shareholders to be held in 2001. Pursuant to
the agreement, Ms. Coleman surrendered a portion of the options granted to
her, acknowledged that no further grants would be made to her by the Company
and is no longer participating in the Company's management and incentive bonus
plans. The other material terms of the agreement are substantially the same as
the Executive Severance Agreements described above.

8
<PAGE>

REPORT OF THE HUMAN RESOURCES AND 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:

. Attract and retain talented executives;

. Motivate executives to achieve long term business strategies while
achieving near term financial targets; and

. 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 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.

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 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.

Management Incentive Plan

The Company's executive officers participate in the Company's Management
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
quarterly targets that determine the amount of cash payment under the plan.
The Company's performance objectives for the fiscal year are specified twice
each year and reviewed by the full Board of Directors.

The Management Incentive Plan for fiscal 2000 provided for quarterly bonuses
based on operating profit and a fiscal year end bonus based on individual
performance on specified critical operating tasks. Each participant

9
<PAGE>

was assigned a leverage percentage representing the percent of base salary
that would be received under the plan if the plan criterion was met, which
leverage percentages ranged from 15% to 70%. The Chief Executive Officer and
other senior officers received quarterly bonuses under this plan each fiscal
quarter (equal to one-fifth of the targeted annual incentive). The Chief
Executive Officer and other senior officers were awarded fiscal year end
bonuses for performance on critical operating metrics (including Quality,
Technology Leadership, Customer Satisfaction and Asset Utilization).

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 Company's long
term business strategies. Option grants made to executive officers for fiscal
1998, 1999 and 2000 are reflected in the Summary Compensation Table.

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:

Robert C. Strandberg, Chair
Carlene M. Ellis
Dr. Koichi Nishimura

Compensation Committee Interlocks and Insider Participation

The Human Resources and Compensation Committee is comprised of Robert C.
Strandberg, Carlene M. Ellis and Dr. Koichi Nishimura each a non-employee
director of the Company. No executive officer of the Company serves as a
member of the board of directors or compensation committee of any entity that
has one or more executive officers serving as a member of the Company's Board
of Directors or Human Resources and Compensation Committee.

10
<PAGE>

Performance Graph

The graph below compares the cumulative total shareholder return on the
Company's Common Stock for the fiscal year ended May 27, 2000 and the
preceding four fiscal years with the cumulative total return on the Nasdaq
Composite U.S. Index, the peer group of companies used in the Company's proxy
statement last year (the "Old Peer Group") and an SIC Index that includes
organizations in the Company's Standard Industrial Code Classification (SIC)
Code 3672--Printed Circuit Design (the "New Peer Group").

The Company believes that, prior to this year, the Old Peer Group included
those publicly traded companies that had the most comparable operating
characteristics of the Company. The Company also believes, however, that the
business activities of certain other companies are closer to that of the
Company than some of the companies included in the Old Peer Group, and that as
a result, the Old Peer Group now does not include all of those companies with
which a comparison would be meaningful, and includes certain companies with
which a comparison is now less meaningful. In addition, certain companies
traditionally included by the Company in the Old Peer Group have been
consolidated and are no longer reportable as separate companies upon which to
base a comparison with the Company. The Company has replaced the Old Peer Group
with the New Peer Group and believes that the performances of the members of the
New Peer Group provide the most meaningful basis for comparison with the
Company's performance. The Company intends to include the New Peer Group for
comparison purposes in this and future proxy statements.

The comparison below assumes $100 was invested on May 26, 1995 in the
Company's Common Stock, in the NASDAQ Market Index, in the Old Peer Group and
in the New Peer Group and assumes reinvestment of dividends, if any. In
accordance with guidelines of the SEC, the shareholder return for each entity
in the Old Peer Group index has been weighted on the basis of market
capitalization as of each 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.

Total Shareholder Return

[PERFORMANCE CHART]

<TABLE>
<CAPTION>
5/26/95 5/24/96 5/30/97 5/29/98 5/28/99 5/26/00
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
MERIX CORP...................... $100.0 $126.8 $ 67.0 $ 47.9 $ 24.7 $115.5
NASDAQ INDEX.................... $100.0 $145.3 $163.7 $207.7 $293.2 $402.5
OLD PEER GROUP.................. $100.0 $171.4 $346.6 $233.6 $209.6 $504.4
NEW PEER GROUP.................. $100.0 $159.6 $245.2 $282.3 $624.0 $799.1
</TABLE>
--------
(1) The Old Peer Group consists of Hadco Corporation, M-Wave, Inc., Parlex
Corporation and Sheldahl, Inc., which were 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. The New Peer Group is an SIC Index that includes
organizations in the Company's Standard Industrial Classification Code
3672--Printed Circuit Design, currently consisting of 24 organizations.

11
<PAGE>

2. APPROVAL OF AMENDMENT TO THE 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
and 1997 the Board of Directors and shareholders approved reserving an
additional 500,000 shares and 600,000 shares, respectively, 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.

On July 28, 2000 the Board of Directors declared a 3-for-2 stock dividend,
which is payable August 25, 2000. In order to continue to attract and retain
key employees, in June 2000 the Board of Directors approved an amendment to
the Plan, subject to shareholder approval, to reserve an additional 425,000
shares for issuance under the Plan. The additional 425,000 shares can only be
issued pursuant to options granted at not less than fair market value.
Assuming no further grants or exercises of options, after giving effect to the
stock dividend and assuming adoption of the proposed amendment to the plan, as
of September 28, 2000 there will be 13,497,000 shares of Common Stock
outstanding, 2,148,036 shares subject to outstanding options and 776,375 shares
available for future grants.

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 non-employee
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. The
Committee may also 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.

12
<PAGE>

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 Internal
Revenue Code of 1986, as amended (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 is to receive an ISO and 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 1,650,000 shares added to the Plan in 1995 and 1997 and the
additional 425,000 shares to be added to the Plan by the proposed amendment
can be granted at a price of not less than the fair market value of the
underlying 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
that 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, Inc. 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

13
<PAGE>

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.

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

14
<PAGE>

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 Award 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 that 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,
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 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,
the optionee will recognize no income upon grant or upon a proper

15
<PAGE>

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, 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. Compensation received through the
exercise of an option or stock appreciation right, however, 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 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.

16
<PAGE>

Recommendation by the Board of Directors

The proposal to approve the amendment 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 amendment to
the Plan.

CERTAIN RELATIONSHIPS AND TRANSACTIONS

The Company has a secured note payable to Tektronix, Inc. which had an
outstanding principal balance of $2.3 million at May 31, 2000 and bears
interest at the rate of 7.5% per year. The Company made an interest only
payment of $171,920 in May 1999 and a principal payment of $1.1 million in
June 2000. The remaining principal balance of $1.2 million is payable in June
2001.

The Company and Tektronix, Inc. were parties to Waste Management and
Services Agreements covering certain environmental matters. During the last
fiscal year, the Company paid $90,000 to Tektronix, Inc. pursuant to these
agreements.

In May 2000, the Company completed a public offering of 3,450,000 shares of
Common Stock at an offering price of $19.25 per share. Of the shares
registered for sale in the offering, 1,150,000 shares were sold by Tektronix,
Inc.

INDEPENDENT AUDITORS

PricewaterhouseCoopers LLP, the Company's independent auditors, audited the
Company's financial statements for the year ended May 27, 2000 and has been
selected to audit the Company's financial statements for the fiscal year
ending May 26, 2001. Representatives of PricewaterhouseCoopers 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.

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 during its fiscal year ended May 27, 2000, all reports required under
Section 16(a) were timely filed, other than as follows: the Initial Statement
of Beneficial Ownership filing for Anaya K. Vardya was filed six days late.

17
<PAGE>

OTHER MATTERS

Shareholder Proposals to be Included in the Company's Proxy Statement

A shareholder proposal must be received by the Company not later than April
16, 2001 to be considered for inclusion in proxy materials for the Company's
2001 annual meeting. In addition, if the Company receives notice of a
shareholder proposal after June 30, 2001, the persons named as proxies in the
proxy statement and accompanying proxy will have discretionary authority to
vote on that shareholder proposal.

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 earlier 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 a 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. For the purposes of the Company's 2001 annual
meeting, such notice, to be timely, must be received by the Company between
June 30, 2001 and July 30, 2001.

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.

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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,

/s/ Janie S. Brown

Janie S. Brown,
Vice President, Chief Financial
Officer and Secretary

August 14, 2000

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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 1,500,000 shares plus an
additional 2,075,000 [1,650,000] 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. 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
--------
Note: Stock plan is shown as amended as of September 28, 2000 and gives effect
to the 3-for-2 stock dividend payable August 25, 2000
Underlined matter is new; matter in [brackets and italics] is to be deleted.

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<PAGE>

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.

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.

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

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<PAGE>

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.

(iii) Nontransferability. Each Incentive Stock Option and, unless
otherwise determined by the Committee, 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, 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, in the event of the termination of
employment or service because of total disability, 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 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, 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. 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.

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<PAGE>

(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 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.

(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

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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.

(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 3,575,000 [3,150,000]
---------
shares.

(c) Non-Statutory Stock Options. Non-Statutory Stock Options shall be
subject to the following additional terms and conditions:

(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.
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. 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. 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

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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. 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.

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.

(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, 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

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<PAGE>

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 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, 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.

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(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.

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.

A-8
<PAGE>

(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.

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:

<TABLE>
<CAPTION>
Period of Non-Employee
Director's Continuous Service
as a Director of the Company Portion of Total
from the Date the Option is Granted Option Which is Exercisable
----------------------------------- ---------------------------
<S> <C>
Less than 1 year................................. 0%
1 year......................................... 25%
2 years........................................ 50%
3 years........................................ 75%
4 years or more.................................. 100%
</TABLE>

(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, 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.

A-9
<PAGE>

(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).

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, 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, 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 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 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.

A-10
<PAGE>

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. 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-11
<PAGE>

PROXY

MERIX CORPORATION

Proxy Solicited on Behalf of the Board of Directors of
the Company for the Annual Meeting on September 28, 2000

The undersigned hereby appoints Deborah A. Coleman, Mark R. Hollinger and
Robert C. Strandberg, and each of them, proxies with full power of substitution,
to vote on behalf of the undersigned at the Annual Meeting of Shareholders of
Merix Corporation on September 28, 2000, 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. The proxies may vote in their discretion as to other matters that may
come before the meeting.

1. Election of Directors, Nominees:

Deborah A. Coleman, Carlene M. Ellis, Mark R. Hollinger, William C.
McCormick, Dr. Koichi Nishimura, Robert C. Strandberg

2. Approve an amendments to the 1994 Stock Incentive Plan that increases the
amount of Common Stock available only for option grants at fair market value
by 425,000 shares

(change of address/comments)

----------------------------------

----------------------------------
(If you have written in the above space,
please mark the corresponding box on
the reverse side of this card)

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.

(The Board of Directors recommends a vote FOR Items 1 and 2.)
PLEASE SIGN ON OTHER SIDE AND RETURN PROMPTLY

SEE
REVERSE
<PAGE>

Please mark
your votes [X]
as in this
example

1. Election of Directors

FOR WITHHHELD
[ ] [ ]

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.

2. Approval of amendment to 1994 Stock Incentive Plan

FOR AGAINST ABSTAIN
[ ] [ ] [ ]

Please check here if you have a change
of address or comments on the reverse [ ]
side.

SIGNATURE(S) DATE
------------------------------------------ --------------------
NOTE: Please sign exactly as name(s) appears hereon. Joint owners should sign.
Please mark, date, sign and return proxy card promptly. Receipt is acknowledged
of the notice and proxy statement to this meeting.

. FOLD AND DETACH HERE .