STB SYSTEMS INC, 10-K405/A, 1997-02-28

STB SYSTEMS INC
10-K405/A, 1997-02-28
COMPUTER PERIPHERAL EQUIPMENT, NEC

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<PAGE>

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K/A
Amendment No. 1

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended October 31, 1996

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from ________________ to ________________
Commission file number 0-25540

STB SYSTEMS, INC.
(Exact name of registrant as specified in its charter)

Texas 75-1855896
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

1651 North Glenville Drive
Richardson, Texas 75081
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (972) 234-8750

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

None

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

Common Stock, par value $0.01 per share
(Title of class)

<PAGE>

Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes X No
------- -------

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

The aggregate market value on January 27, 1997 of the registrant's voting
securities held by non-affiliates was $122,584,214.

Number of shares of registrant's Common Stock, par value $0.01 per share,
outstanding as of January 27, 1996: 4,521,394.

DOCUMENTS INCORPORATED BY REFERENCE

(a) Selected portions of the registrant's Annual Report to Shareholders for
the fiscal year ended October 31, 1996. - Part II

(b) Selected portions of the registrant's preliminary Proxy Statement for
the 1997 Annual Meeting of Shareholders - Part III
<PAGE>

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

This information is set forth under the captions "Election of Directors"
and "Executive Officers of the Company" of the Company's preliminary Proxy
Statement for the Company's 1997 Annual Meeting of Shareholders which portion
of such preliminary Proxy Statement is filed herein as Exhibit 99 and
incorporated herein by reference.

-1-
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION.

This information is set forth under the caption "Executive Compensation
and Other Matters" of the Company's preliminary Proxy Statement for the
Company's 1997 Annual Meeting of Shareholders which portion of such
preliminary Proxy Statement is filed herein as Exhibit 99 and incorporated
herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

This information is set forth under the caption "Outstanding Capital
Stock and Stock Ownership of Directors, Certain Executive Officers and
Principal Shareholders" of the Company's preliminary Proxy Statement for the
Company's 1997 Annual Meeting of Shareholders which portion of such
preliminary Proxy Statement is filed herein as Exhibit 99 and incorporated
herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

This information is set forth under the caption "Certain Transactions"
and "Compensation and Other Committee Interlocks and Insider Participation"
of the Company's preliminary Proxy Statement for the Company's 1997 Annual
Meeting of Shareholders which portion of such preliminary Proxy Statement is
filed herein as Exhibit 99 and incorporated herein by reference.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a) 1. The following financial statements are incorporated by reference
from the Company's 1996 Annual Report to Shareholders, which
financial statements are filed herein as Exhibit 13:

Report of Independent Accountants.
Consolidated Balance Sheets dated October 31, 1996 and 1995.
Consolidated Statement of Operations for the three years ended
October 31, 1996.
Consolidated Statement of Changes in Shareholders' Equity for
the three years ended October 31, 1996.
Consolidated Statement of Cash Flows for the three years ended
October 31, 1996.
Notes to Consolidated Financial Statements.

-2-
<PAGE>

2. Consolidated Financial Statement Schedule Page
----
**Report of Independent Accountants on
Financial Statement Schedule. S-1

**Consolidated Valuation and Qualifying
Accounts. S-2

All other schedules for which provision is made in the applicable
accounting regulation of the Securities & Exchange Commission are
not required under the related instructions or are inapplicable
and therefore have been omitted.

3. The following documents are filed or incorporated by reference
as exhibits to this Report:

2 Share Exchange Agreement dated December 16, 1994 by and among
the Company and the shareholders of STB Assembly, Inc.
(incorporated by reference to Exhibit 2 to the Company's
Registration Statement on Form S-1 (Registration No.
33-87612))

3.1 Amended and Restated Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the Company's
Registration Statement on Form S-1 (Registration No.
33-87612))

3.2 Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2 to the Company's Registration
Statement on Form S-1 (Registration No. 33-87612))

4.1 Specimen of Common Stock Certificate (incorporated by
reference to Exhibit 4.1 to the Company's Registration
Statement on Form S-1 (Registration No. 33-87612))

4.2 Amended and Restated Articles of Incorporation and Bylaws of
the Company (see Exhibits 3.1 and 3.2)

4.3 Right of First Refusal Agreement dated December 16, 1994 by
and among the Company and Messrs. Ogle, Balthaser and Sims
(incorporated by reference to Exhibit 4.3 to the Company's
Registration Statement on Form S-1 (Registration No.
33-87612))

-3-
<PAGE>
10.1 Lease Agreement dated December 6, 1988 by and between STB de
Mexico S.A. de C.V. (formerly known as Industrias Fronterizas
de Chihuahua, S.A. de C.V.) (a subsidiary of the Company, as
lessee) and Complejo Industrial Fuentes, S.A. de C.V (as
lessor), including an Agreement for Modification dated
February 25, 1994 by and between the same parties
(incorporated by reference to Exhibit 10.1 to the Company's
Registration Statement on Form S-1 (Registration No.
33-87612))

10.2 Lease Agreement, as amended, dated July 8, 1986 by and
between the Company (as lessee) and Central Park Associates,
Ltd. (as lessor) (incorporated by reference to Exhibit 10.2
to the Company's Registration Statement on Form S-1
(Registration No. 33-87612))

10.3 Intentionally omitted.

10.4 Loan and Security Agreement dated December 21, 1993 by and
between Sanwa Business Credit Corporation and STB Systems,
Inc. (incorporated by reference to Exhibit 10.4 to the
Company's Registration Statement on Form S-1 (Registration
No. 33-87612))

10.5 First Amendment to Loan and Security Agreement dated October
14, 1994 by and between Sanwa Business Credit Corporation and
the Company (incorporated by reference to Exhibit 10.5 to the
Company's Registration Statement on Form S-1 (Registration
No. 33-87612))

10.6 Second Amendment to Loan and Security Agreement dated
December 9, 1994 by and between Sanwa Business Credit
Corporation and the Company (incorporated by reference to
Exhibit 10.6 to the Company's Registration Statement on
Form S-1 (Registration No. 33-87612))

10.7 Amended and Restated Support Agreements dated October 14,
1994 from each of Messrs. Ogle, Balthaser and Sims to Sanwa
Business Credit Corporation (incorporated by reference to
Exhibit 10.7 to the Company's Registration Statement on
Form S-1 (Registration No. 33-87612))

10.8 Depository Account Agreement dated December 21, 1993 by and
among Sanwa Business Credit Corporation, Bank One, Texas,
N.A. and the Company (incorporated by reference to Exhibit
10.8 to the Company's Registration Statement on Form S-1
(Registration No. 33-87612))

-4-
<PAGE>

10.9 Trademark Security Agreement dated December 21, 1993 by and
between Sanwa Business Credit Corporation and the Company
(incorporated by reference to Exhibit 10.9 to the Company's
Registration Statement on Form S-1 (Registration No.
33-87612))

10.10 Contingent Payment Agreement dated October 17, 1994 by and
between Sanwa Business Credit Corporation and the Company
(incorporated by reference to Exhibit 10.10 to the Company's
Registration Statement on Form S-1 (Registration No.
33-87612))

10.11 Collateral Agency Agreement dated November 30, 1994 by and
among STB de Mexico, S.A. de C.V. (formerly known as
Industrias Fronterizas de Chihuahua, S.A. de C.V.), Sanwa
Business Credit Corporation and the Company (incorporated by
reference to Exhibit 10.11 to the Company's Registration
Statement on Form S-1 (Registration No. 33-87612))

*10.12 Company's Stock Option Plan for Non-Employee Directors
(incorporated by reference to Exhibit 10.12 to the Company's
Registration Statement on Form S-1 (Registration No.
33-87612))

*10.13 Company's 1995 Long Term Incentive Plan (incorporated by
reference to Exhibit 10.13 to the Company's Registration
Statement on Form S-1 (Registration No. 33-87612))

10.14 Intentionally omitted.

10.15 Tax Allocation and Indemnification Agreement dated December
16, 1994 by and among the Company and Messrs. Ogle,
Balthaser and Sims (incorporated by reference to Exhibit
10.15 to the Company's Registration Statement on Form S-1
(Registration No. 33-87612))

*10.16 Founding Shareholder Note by and between the Company and
William E. Ogle (incorporated by reference to Exhibit 10.16
to the Company's Annual Report on Form 10-K for the fiscal
year ended October 1, 1995)

*10.17 Agreements by and between Breedlove Wesneski & Co. (and one
of its affiliates) and the Company dated July 16, 1993,
April 6, 1994 and October 18, 1994 (incorporated by
reference to Exhibit 10.17 to the Company's Registration
Statement on Form S-1 (Registration No. 33-87612))

10.18 Intentionally omitted.

10.19 Intentionally omitted.

10.20 Intentionally omitted.

-5-
<PAGE>
10.21 Agreement dated September 9, 1994, by and between the
Company and Gateway 2000, Inc. (incorporated by reference
to Exhibit 10.21 to the Company's Registration Statement on
Form S-1 (Registration No. 33-87612))

10.22 Third Amendment to Loan and Security Agreement dated
February 8, 1995 by and between Sanwa Business Credit
Corporation and the Company (incorporated by reference to
Exhibit 10.22 to the Company's Registration Statement on
Form S-1 (Registration No. 33-87612))

*10.23 Indemnification Agreement dated February 8, 1995 by and
between William E. Ogle and the Company (incorporated by
reference to Exhibit 10.23 to the Company's Registration
Statement on Form S-1 (Registration No. 33-87612))

*10.24 Indemnification Agreement dated February 8, 1995 by and
between Randall D. Eisenbach and the Company (incorporated
by reference to Exhibit 10.24 to the Company's Registration
Statement on Form S-1 (Registration No. 33-87612))

*10.25 Indemnification Agreement dated February 8, 1995 by and
between James L Hopkins and the Company (incorporated by
reference to Exhibit 10.25 to the Company's Registration
Statement on Form S-1 (Registration No. 33-87612))

*10.26 Indemnification Agreement dated February 8, 1995 by and
between Mark S. Sims and the Company (incorporated by
reference to Exhibit 10.26 to the Company's Registration
Statement on Form S-1 (Registration No. 33-87612))

*10.27 Indemnification Agreement dated February 8, 1995 by and
between William D. Balthaser Jr. and the Company
(incorporated by reference to Exhibit 10.27 to the
Company's Registration Statement on Form S-1 (Registration
No. 33-87612))

*10.28 Indemnification Agreement dated February 8, 1995 by and
between James J. Byrne and the Company (incorporated by
reference to Exhibit 10.28 to the Company's Registration
Statement on Form S-1 (Registration No. 33-87612))

-6-
<PAGE>

*10.29 Indemnification Agreement dated February 8, 1995 by and
between Lawrence E. Wesneski and the Company (incorporated
by reference to Exhibit 10.29 to the Company's Registration
Statement on Form S-1 (Registration No. 33-87612))

*10.30 Indemnification Agreement dated February 8, 1995 by and
between J. Shane Long and the Company (incorporated by
reference to Exhibit 10.30 to the Company's Registration
Statement on Form S-1 (Registration No. 33-87612))

10.31 Underwriting Agreement by and among the Company, Messrs.
Balthaser and Sims (the selling shareholders) and Rauscher
Pierce Refsnes, Inc. and Sutro & Co. Incorporated
(incorporated by reference to Exhibit 10.31 to the Company's
Annual Report on Form 10-K for the fiscal year ended
October 31, 1995)

10.32 Lease Agreement dated June, 1995, by and between the Company
(as lessee) and Springcreek Place, Ltd. (as lessor)
(incorporated by reference to Exhibit 10.32 to the Company's
Annual Report on Form 10-K for the fiscal year ended October
31, 1995)

10.33 Lease Agreement dated December 19, 1994, by and between the
Company (as lessee) and 50 Walter Jones Blvd., Inc. (as
lessor) (incorporated by reference to Exhibit 10.33 to the
Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1995)

10.34 Fourth Amendment to Loan and Security Agreement dated
January 5, 1996, by and between Sanwa Business Credit
Corporation and the Company (incorporated by reference to
Exhibit 10.34 to the Company's Annual Report on Form 10-K or
the fiscal year ended October 31, 1995)

*10.35 Founding Shareholder Note by and between the Company and
William D. Balthaser, Jr. (incorporated by reference to
Exhibit 10.35 to the Company's Annual Report on Form 10-K
for the fiscal year ended October 31, 1995)

*10.36 Founding Shareholder Note by and between the Company and
Mark S. Sims (incorporated by reference to Exhibit 10.36 to
the Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1995)

-7-
<PAGE>

10.37 Addendum to Lease Agreement dated March 7, 1996 by and
between the Company (as lessee) and Springcreek Place, Ltd.
(as lessor) (incorporated by reference to Exhibit 10.37 to
the Company's Quarterly Report on Form 10-Q for the quarter
ended January 31, 1996)

*10.38 STB Systems, Inc. 1995 Employee Stock Option Purchase Plan
(as amended) (incorporated by reference to Exhibit 10.38 to
the Company's Quarterly Report on Form 10-Q for the quarter
ended January 31, 1996)

10.39 Lease Agreement dated April 18, 1996 by and between the
Company (as lessee) and I Cypresswood Building (as lessor)
(incorporated by reference to Exhibit 10.39 to the Company's
Quarterly Report on Form 10-Q for the quarter ended April
30, 1996)

10.40 Sublease Agreement dated August 1996 by and between ADC
Telecommunications, Inc. (as sublessor) and the Company (as
sublessee) (incorporated by reference to Exhibit 10.40 to
the Company's Registration Statement on Form S-1
(Registration No. 333-14313))

10.41 Lease Contract dated October 4, 1996 by and between STB de
Mexico, S.A. de C.V. (as lessee) and Complejo Industrial
Fuentes, S.A. de C.V. (as lessor) (incorporated by reference
to Exhibit 10.41 to the Company's Registration Statement on
Form S-1 (Registration No. 333-14313))

*10.42 Employment Agreement dated November 1, 1996 by and between
the Company and William E. Ogle (incorporated by reference
to Exhibit 10.42 to the Company's Registration Statement on
Form S-1 (Registration No. 333-14313))

*10.43 Employment Agreement dated November 1, 1996 by and between
the Company and Randall D. Eisenbach (incorporated by
reference to Exhibit 10.43 to the Company's Registration
Statement on Form S-1 (Registration No. 333-14313))

*10.44 Employment Agreement dated November 1, 1996 by and between
the Company and James L. Hopkins (incorporated by reference
to Exhibit 10.44 to the Company's Registration Statement on
Form S-1 (Registration No. 333-14313))

-8-
<PAGE>

*10.45 Employment Agreement dated November 1, 1996 by and between
the Company and J. Shane Long (incorporated by reference to
Exhibit 10.45 to the Company's Registration Statement on
Form S-1 (Registration No. 333-14313))

10.46 Modification Agreement dated October 4, 1996 by and between
STB de Mexico, S.A. de C.V. and Complejo Industrial Fuentes,
S.A. de C.V. (relating to the Lease Agreement filed as
Exhibit 10.1 hereto) (incorporated by reference to Exhibit
10.46 to the Company's Registration Statement on Form S-1
(Registration No. 333-14313))

*10.47 Amended and Restated Profit Sharing Incentive Plan
(incorporated by reference to Exhibit 10.47 to the Company's
Registration Statement on Form S-1 (Registration No.
333-14313))

10.48 Lease Agreement by and between the Company and Banc One
Leasing Corporation dated October 30, 1996, together with
related attachments (incorporated by reference to Exhibit
10.48 to the Company's Registration Statement on Form S-1
(Registration No. 333-14313))

**11.1 Computation of Earnings Per Common Share and Common
Equivalent Share

**13 Selected portions of the Company's Annual Report to
Shareholders for fiscal year ended October 31, 1996

**21 Subsidiaries of the Company

**23 Consent of Price Waterhouse LLP

**24 Powers of Attorney

**27 Financial Data Schedule

***99 Selected portions of the Company's preliminary
Proxy Statement for the Company's 1997 Annual Meeting
of Shareholders

-------------------
* Management contract or compensatory plan or arrangement.
** Previously filed.
*** Filed herewith.

-9-
<PAGE>
The Company will furnish a copy of any exhibit listed above
to any shareholder without charge upon written request to
Mr. Bryan F. Keyes, Treasurer, 1651 North Glenville Drive,
Richardson, Texas 75081.

(b) No reports on Form 8-K were filed during the last quarter of the
period covered by this Report.

-10-

<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

STB SYSTEMS, INC.

By: /s/ William E. Ogle
------------------------------
William E. Ogle
Chairman of the Board
and Chief Executive Officer

Dated: February 28, 1997

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<PAGE>

EXHIBIT INDEX

EXHIBIT
-------
2 Share Exchange Agreement dated December 16, 1994 by and among the
Company and the shareholders of STB Assembly, Inc. (incorporated
by reference to Exhibit 2 to the Company's Registration Statement
on Form S-1 (Registration No. 33-87612))

3.1 Amended and Restated Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the Company's
Registration Statement on Form S-1 (Registration No. 33-87612))

3.2 Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2 to the Company's Registration Statement
on Form S-1 (Registration No. 33-87612))

4.1 Specimen of Common Stock Certificate (incorporated by reference
to Exhibit 4.1 to the Company's Registration Statement on Form
S-1 (Registration No. 33-87612))

4.2 Amended and Restated Articles of Incorporation and Bylaws of the
Company (see Exhibits 3.1 and 3.2)

4.3 Right of First Refusal Agreement dated December 16, 1994 by and
among the Company and Messrs. Ogle, Balthaser and Sims
(incorporated by reference to Exhibit 4.3 to the Company's
Registration Statement on Form S-1 (Registration No. 33-87612))

10.1 Lease Agreement dated December 6, 1988 by and between STB de Mexico
S.A. de C.V. (formerly known as Industrias Fronterizas de Chihuahua,
S.A. de C.V.) (a subsidiary of the Company, as lessee) and Complejo
Industrial Fuentes, S.A. de C.V (as lessor), including an Agreement
for Modification dated February 25, 1994 by and between the same
parties (incorporated by reference to Exhibit 10.1 to the Company's
Registration Statement on Form S-1 (Registration No. 33-87612))

10.2 Lease Agreement, as amended, dated July 8, 1986 by and between the
Company (as lessee) and Central Park Associates, Ltd. (as lessor)
(incorporated by reference to Exhibit 10.2 to the Company's
Registration Statement on Form S-1 (Registration No. 33-87612))

10.3 Intentionally Omitted

10.4 Loan and Security Agreement dated December 21, 1993 by and between
Sanwa Business Credit Corporation and STB Systems, Inc. (incorporated
by reference to Exhibit 10.4 to the Company's Registration Statement
on Form S-1 (Registration No. 33-87612))

<PAGE>

EXHIBIT
-------
10.5 First Amendment to Loan and Security Agreement dated October 14, 1994
by and between Sanwa Business Credit Corporation and the Company
(incorporated by reference to Exhibit 10.5 to the Company's
Registration Statement on Form S-1 (Registration No. 33-87612))

10.6 Second Amendment to Loan and Security Agreement dated December 9, 1994
by and between Sanwa Business Credit Corporation and the Company
(incorporated by reference to Exhibit 10.6 to the Company's
Registration Statement on Form S-1 (Registration No. 33-87612))

10.7 Amended and Restated Support Agreements dated October 14, 1994 from
each of Messrs. Ogle, Balthaser and Sims to Sanwa Business Credit
Corporation (incorporated by reference to Exhibit 10.7 to the
Company's Registration Statement on Form S-1 (Registration No.
33-87612))

10.8 Depository Account Agreement dated December 21, 1993 by and among
Sanwa Business Credit Corporation, Bank One, Texas, N.A. and the
Company (incorporated by reference to Exhibit 10.8 to the Company's
Registration Statement on Form S-1 (Registration No. 33-87612))

10.9 Trademark Security Agreement dated December 21, 1993 by and between
Sanwa Business Credit Corporation and the Company (incorporated by
reference to Exhibit 10.9 to the Company's Registration Statement on
Form S-1 (Registration No. 33-87612))

10.10 Contingent Payment Agreement dated October 17, 1994 by and between
Sanwa Business Credit Corporation and the Company (incorporated by
reference to Exhibit 10.10 to the Company's Registration Statement on
Form S-1 (Registration No. 33-87612))

10.11 Collateral Agency Agreement dated November 30, 1994 by and among STB
de Mexico, S.A. de C.V. (formerly known as Industrias Fronterizas de
Chihuahua, S.A. de C.V.), Sanwa Business Credit Corporation and the
Company (incorporated by reference to Exhibit 10.11 to the Company's
Registration Statement on Form S-1 (Registration No. 33-87612))

*10.12 Company's Stock Option Plan for Non-Employee Directors (incorporated
by reference to Exhibit 10.12 to the Company's Registration Statement
on Form S-1 (Registration No. 33-87612))

*10.13 Company's 1995 Long Term Incentive Plan (incorporated by reference to
Exhibit 10.13 to the Company's Registration Statement on Form S-1
(Registration No. 33-87612))

10.14 Intentionally Omitted

<PAGE>

EXHIBIT
-------
10.15 Tax Allocation and Indemnification Agreement dated December 16, 1994
by and among the Company and Messrs. Ogle, Balthaser and Sims
(incorporated by reference to Exhibit 10.15 to the Company's
Registration Statement on Form S-1 (Registration No. 33-87612))

*10.16 Founding Shareholder Note by and between the Company and William E.
Ogle (incorporated by reference to Exhibit 10.16 to the Company's
Annual Report on Form 10-K for the fiscal year ended October 1, 1995)

*10.17 Agreements by and between Breedlove Wesneski & Co. (and one of its
affiliates) and the Company dated July 16, 1993, April 6, 1994 and
October 18, 1994 (incorporated by reference to Exhibit 10.17 to the
Company's Registration Statement on Form S-1 (Registration No.
33-87612))

10.18 Intentionally Omitted

10.19 Intentionally Omitted

10.20 Intentionally Omitted

10.21 Agreement dated September 9, 1994, by and between the Company and
Gateway 2000, Inc. (incorporated by reference to Exhibit 10.21 to
the Company's Registration Statement on Form S-1 (Registration No.
33-87612))

10.22 Third Amendment to Loan and Security Agreement dated February 8, 1995
by and between Sanwa Business Credit Corporation and the Company
(incorporated by reference to Exhibit 10.22 to the Company's
Registration Statement on Form S-1 (Registration No. 33-87612))

*10.23 Indemnification Agreement dated February 8, 1995 by and between
William E. Ogle and the Company (incorporated by reference to
Exhibit 10.23 to the Company's Registration Statement on Form S-1
(Registration No. 33-87612))

*10.24 Indemnification Agreement dated February 8, 1995 by and between
Randall D. Eisenbach and the Company (incorporated by reference to
Exhibit 10.24 to the Company's Registration Statement on Form S-1
(Registration No. 33-87612))

*10.25 Indemnification Agreement dated February 8, 1995 by and between
James L. Hopkins and the Company (incorporated by reference to
Exhibit 10.25 to the Company's Registration Statement on Form S-1
(Registration No. 33-87612))

*10.26 Indemnification Agreement dated February 8, 1995 by and between Mark
S. Sims and the Company (incorporated by reference to Exhibit 10.26
to the Company's Registration Statement on Form S-1 (Registration No.
33-87612))

*10.27 Indemnification Agreement dated February 8, 1995 by and between
William D. Balthaser Jr. and the Company (incorporated by reference to
Exhibit 10.27 to the Company's Registration Statement on Form S-1
(Registration No. 33-87612))

<PAGE>

EXHIBIT
-------
*10.28 Indemnification Agreement dated February 8, 1995 by and between
James J. Byrne and the Company (incorporated by reference to Exhibit
10.28 to the Company's Registration Statement on Form S-1
(Registration No. 33-87612))

*10.29 Indemnification Agreement dated February 8, 1995 by and between
Lawrence E. Wesneski and the Company (incorporated by reference to
Exhibit 10.29 to the Company's Registration Statement on Form S-1
(Registration No. 33-87612))

*10.30 Indemnification Agreement dated February 8, 1995 by and between J.
Shane Long and the Company (incorporated by reference to Exhibit 10.30
to the Company's Registration Statement on Form S-1 (Registration No.
33-87612))

10.31 Underwriting Agreement by and among the Company, Messrs. Balthaser and
Sims (the selling shareholders) and Rauscher Pierce Refsnes, Inc. and
Sutro & Co. Incorporated (incorporated by reference to Exhibit 10.31
to the Company's Annual Report on Form 10-K for the fiscal year ended
October 31, 1995)

10.32 Lease Agreement dated June, 1995, by and between the Company (as
lessee) and Springcreek Place, Ltd. (as lessor) (incorporated by
reference to Exhibit 10.32 to the Company's Annual Report on Form 10-K
for the fiscal year ended October 31, 1995)

10.33 Lease Agreement dated December 19, 1994, by and between the Company
(as lessee) and 50 Walter Jones Blvd., Inc. (as lessor) (incorporated
by reference to Exhibit 10.33 to the Company's Annual Report on Form
10-K for the fiscal year ended October 31, 1995)

10.34 Fourth Amendment to Loan and Security Agreement dated January 5, 1996,
by and between Sanwa Business Credit Corporation and the Company
(incorporated by reference to Exhibit 10.34 to the Company's Annual
Report on Form 10-K or the fiscal year ended October 31, 1995)

*10.35 Founding Shareholder Note by and between the Company and William D.
Balthaser, Jr. (incorporated by reference to Exhibit 10.35 to the
Company's Annual Report on Form 10-K for the fiscal year ended
October 31, 1995)

*10.36 Founding Shareholder Note by and between the Company and Mark S. Sims
(incorporated by reference to Exhibit 10.36 to the Company's Annual
Report on Form 10-K for the fiscal year ended October 31, 1995)

10.37 Addendum to Lease Agreement dated March 7, 1996 by and between the
Company (as lessee) and Springcreek Place, Ltd. (as lessor)
(incorporated by reference to Exhibit 10.37 to the Company's Quarterly
Report on Form 10-Q for the quarter ended January 31, 1996)

<PAGE>

EXHIBIT
-------
*10.38 STB Systems, Inc. 1995 Employee Stock Option Purchase Plan (as
amended) (incorporated by reference to Exhibit 10.38 to the Company's
Quarterly Report on Form 10-Q for the quarter ended January 31, 1996)

10.39 Lease Agreement dated April 18, 1996 by and between the Company (as
lessee) and I Cypresswood Building (as lessor) (incorporated by
reference to Exhibit 10.39 to the Company's Quarterly Report on Form
10-Q for the quarter ended April 30, 1996)

10.40 Sublease Agreement dated August 1996 by and between ADC
Telecommunications, Inc. (as sublessor) and the Company (as sublessee)
(incorporated by reference to Exhibit 10.40 to the Company's
Registration Statement on Form S-1 (Registration No. 333-14313))

10.41 Lease Contract dated October 4, 1996 by and between STB de Mexico,
S.A. de C.V. (as lessee) and Complejo Industrial Fuentes, S.A. de C.V.
(as lessor) (incorporated by reference to Exhibit 10.41 to the
Company's Registration Statement on Form S-1 (Registration No.
333-14313))

*10.42 Employment Agreement dated November 1, 1996 by and between the Company
and William E. Ogle (incorporated by reference to Exhibit 10.42 to the
Company's Registration Statement on Form S-1 (Registration No.
333-14313))

*10.43 Employment Agreement dated November 1, 1996 by and between the Company
and Randall D. Eisenbach (incorporated by reference to Exhibit 10.43
to the Company's Registration Statement on Form S-1 (Registration No.
333-14313))

*10.44 Employment Agreement dated November 1, 1996 by and between the Company
and James L. Hopkins (incorporated by reference to Exhibit 10.44 to
the Company's Registration Statement on Form S-1 (Registration No.
333-14313))

*10.45 Employment Agreement dated November 1, 1996 by and between the Company
and J. Shane Long (incorporated by reference to Exhibit 10.45 to the
Company's Registration Statement on Form S-1 (Registration No.
333-14313))

10.46 Modification Agreement dated October 4, 1996 by and between STB de
Mexico, S.A. de C.V. and Complejo Industrial Fuentes, S.A. de C.V.
(relating to the Lease Agreement filed as Exhibit 10.1 hereto)
(incorporated by reference to Exhibit 10.46 to the Company's
Registration Statement on Form S-1 (Registration No. 333-14313))

<PAGE>

EXHIBIT
-------
*10.47 Amended and Restated Profit Sharing Incentive Plan (incorporated by
reference to Exhibit 10.47 to the Company's Registration Statement on
Form S-1 (Registration No. 333-14313))

10.48 Lease Agreement by and between the Company and Banc One Leasing
Corporation dated October 30, 1996, together with related attachments
(incorporated by reference to Exhibit 10.48 to the Company's
Registration Statement on Form S-1 (Registration No. 333-14313))

**11.1 Computation of Earnings Per Common Share and Common Equivalent Share

**13 Selected portions of the Company's Annual Report to Shareholders for
fiscal year ended October 31, 1996

**21 Subsidiaries of the Company

**23 Consent of Price Waterhouse LLP

**24 Powers of Attorney (included on first signature page)

**27 Financial Data Schedule

***99 Selected portions of the Company's preliminary Proxy Statement for
the Company's 1997 Annual Meeting of Shareholders

--------------------
* Management contract or compensatory plan or arrangement. The
Company will furnish a copy of any exhibit listed above to any
shareholder without charge upon written request to Mr. Bryan F.
Keyes, Treasurer, 1651 North Glenville Drive, Richardson, Texas
75081.
** Previously filed.
***Filed herewith.

<PAGE>

EXHIBIT 99

OUTSTANDING CAPITAL STOCK AND STOCK OWNERSHIP OF
DIRECTORS, CERTAIN EXECUTIVE OFFICERS
AND PRINCIPAL SHAREHOLDERS

The record date for the determination of the shareholders entitled to notice
of and to vote at the Annual Meeting has been established by the Board of
Directors as the close of business on March 7, 1997. As of February 26, 1997,
the Company had issued and outstanding and entitled to vote at the Annual
Meeting 4,522,647 shares of Common Stock, par value $.01 per share ("Common
Stock"). (For a description of the voting rights of the Common Stock, see
"Quorum and Voting" herein.)

The following table sets forth information as of February 26, 1997,
regarding the beneficial ownership of the Company's Common Stock by each person
or group known by management of the Company to own more than five percent of the
outstanding shares of Common Stock of the Company, by each of the Company's
executive officers named in the Summary Compensation Table below, by each of the
Company's directors and nominees, and by all of its directors and executive
officers as a group.

<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY
OWNED AND PERCENTAGE OF
OUTSTANDING
SHARES AS OF FEBRUARY
26, 1997
------------------------
NAME NUMBER(1) PERCENT
- ------------------------------------------------------------------------ ----------- -----------
<S> <C> <C>
William E. Ogle (2)(3)(4)(5)............................................ 747,269 16.4%
William D. Balthaser, Jr. (4)(5)........................................ 363,333 8.0%
Mark S. Sims (4)(5)..................................................... 360,001 8.0%
FMR Corp. (6)........................................................... 355,500 7.9%
Mitchell Hutchins Asset Management, Inc. (7)............................ 254,800 5.6%
Randall D. Eisenbach (2)(3)............................................. 18,640 *
James L. Hopkins (2).................................................... 13,400 *
J. Shane Long (2)....................................................... 12,400 *
Bryan F. Keyes (2)...................................................... 4,300 *
James J. Byrne (2)...................................................... 5,000 *
Lawrence E. Wesneski (2)(8)............................................. 11,000 *
Dennis G. Sabo.......................................................... -- --
----------- ---
Directors and executive officers as a group (7 persons)(2).............. 812,009 17.7%
</TABLE>

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

* Less than 1%

(1) Unless otherwise indicated, to the knowledge of the Company, all shares are
owned directly and the owner has sole voting and investment power.

(2) Includes options to purchase 21,600, 16,800, 12,400, 12,400, 3,800, 4,000,
6000 and 77,000 shares of Common Stock granted to Messrs. Ogle, Eisenbach,
Hopkins, Long, Keyes, Byrne, Wesneski and all directors and executive
officers as a group, respectively, that are exercisable within 60 days of
February 26, 1997. Does not include options to purchase 72,400, 65,200,
58,600, 58,600, 12,200, 6,000,

2
<PAGE>

9,000 and 282,000 shares of Common Stock granted to Messrs. Ogle, Eisenbach,
Hopkins, Long, Keyes, Byrne, Wesneski and all directors and executive
officers as a group, respectively, that are not exercisable within 60 days
of February 26, 1997.

(3) Includes for William E. Ogle, 1,500 shares owned by a trust benefiting
his children, 5,500 shares held by him pursuant to an Individual Retirement
Account and 2,335 shares held by him pursuant to the Company's 401(k)
Savings Plan. Includes for Randall D. Eisenbach 840 shares held by him
pursuant to the Company's 401(k) Savings Plan.

(4) Messrs. Ogle, Balthaser and Sims are parties to a Right of First Refusal
Agreement pursuant to which either the Company or Mr. Ogle have the right to
purchase the shares of Messrs. Ogle, Balthaser or Sims under certain
circumstances. See "Certain Transactions--Right of First Refusal."

(5) The address of each of Messrs. Ogle, Balthaser and Sims is 1651 North
Glenville, Richardson, Texas 75081.

(6) The address of FMR Corp. is 82 Devonshire Street, Boston, MA 02109-3614. FMR
Corp. has sole voting power with respect to 25,000 shares and sole
disposition power with respect to all 355,500 shares. Information with
respect to the beneficial ownership of FMR Corp. was obtained from that
shareholder's Schedule 13G filed February 13, 1997.

(7) The address of Mitchell Hutchins Asset Management, Inc. ("MHAM") is 1285
Avenue of the Americas, New York, NY 10019. MHAM disclaims direct beneficial
ownership of all Common Stock held by it. Information with respect to the
beneficial ownership of MHAM was obtained from that shareholder's Schedule
13G dated February 13, 1996.

(8) Includes 5,000 shares held by Twin Lakes Partners, L.P. ("Twin Lakes"). Mr.
Wesneski is the sole general partner of Twin Lakes.

QUORUM AND VOTING

The presence, in person or by proxy, of the holders of a majority of the
voting power of the outstanding shares of Common Stock of the Company entitled
to vote is necessary to constitute a quorum at the meeting. The affirmative vote
of a plurality of the voting power represented at the meeting and entitled to
vote is required for the election of directors. Approval of the amendment of the
1995 Long Term Incentive Plan and the Stock Option Plan for Non-Employee
Directors will be decided by the holders of a majority of the voting power
represented at the meeting and entitled to vote. Approval of the Company's
reincorporation in Delaware will be decided by the holders of two-thirds of the
voting power of the outstanding shares of Common Stock of the Company entitled
to vote. A holder of shares of Common Stock will be entitled to one vote per
share of Common Stock as to each matter properly brought before the meeting.
Cumulative voting is not permitted in the election of directors. Abstentions and
votes "withheld" are included in the determination of the number of shares
present at the meeting for purposes of determining a quorum. Broker non-votes
are counted for purposes of determining whether a quorum is present on any
particular matter only if authority to vote on the matter is granted by the
respective proxy. Abstentions and broker non-votes have no effect on
determinations of plurality, except to the extent that they affect the total
votes received by any particular candidate, and have the effect of negative
votes on matters requiring approval of a specified percentage of the outstanding
shares. For matters requiring approval of a specified percentage of the
outstanding shares represented at the meeting, abstentions will have the effect
of negative votes but broker non-votes will have no effect.

PROPOSAL ONE

ELECTION OF DIRECTORS

Seven directors will be elected at the Annual Meeting for terms expiring at
the next Annual Meeting. The directors will continue to serve until their
respective successors are duly elected and qualified. Each of the Board of
Directors' nominees currently serves as a director of the Company except Dennis
G. Sabo

3
<PAGE>
who has been nominated to fill a vacancy created by a recent increase in the
number of directors serving on the Board.

Shares represented by proxies returned duly executed will be voted, unless
otherwise specified, in favor of the seven nominees for the Board of Directors
named below. The proxies cannot be voted for more than seven nominees. The
nominees have indicated that they are able and willing to serve as directors. If
any (or all) such persons should be unable to serve, the persons named in the
enclosed proxy will vote the share covered thereby for such substitute nominee
(or nominees) as the Board of Directors may select. Shareholders may withhold
authority to vote for any nominee by striking a line through the name of such
nominee in the space provided for such purpose on the form of Proxy.

NOMINEES FOR DIRECTORS

WILLIAM E. OGLE, age 50, is a co-founder of the Company and has served as
Chief Executive Officer since 1981 and Chairman of the Board since 1985. Prior
to founding the Company, Mr. Ogle co-founded Sundance Sales, Inc., a
manufacturer's sales representative organization selling a broad variety of
electronic components, and served as President of that company from 1978 to
1983.

RANDALL D. EISENBACH, age 46, has served as a director since December 1994,
as Executive Vice President and Chief Operating Officer of the Company since
December 1993 and as Assistant Secretary since December 1994. From August 1990
to December 1993, Mr. Eisenbach served as Director of Operations of the Company.
From November 1985 to December 1993, Mr. Eisenbach served as Director of
Manufacturing for the Company.

JAMES L. HOPKINS, age 51, has served as a director and as Chief Financial
Officer and Vice President of Strategic Marketing of the Company since December
1994. Mr. Hopkins' present responsibilities include directing European sales and
marketing, managing specialized technology products, and planning financial
strategy. From 1987 through December 1994, Mr. Hopkins was active as general
partner of H&H Management Systems, a consulting firm owned by Mr. Hopkins and
his wife. H&H Management Systems, through Mr. Hopkins, provided a broad spectrum
of consulting services to the Company from March 1990 through December 1994. Mr.
Hopkins' responsibilities to the Company pursuant to STB's arrangement with H&H
Management Systems were substantially identical to Mr. Hopkins' current
responsibilities as an officer of the Company. Mr. Hopkins also served as an
advisory director for the Company from 1992 until his election as a director in
December 1994.

J. SHANE LONG, age 29, has served as Vice President of Sales and Marketing
of the Company since November 1994. Mr. Long served as National Sales Manager of
the Company from November 1992 to October 1994 and as Western Area Sales Manager
from July 1992 to October 1992. From January 1991 to July 1992, Mr. Long served
as a field sales employee for Quad State Sales, a manufacturer's representative
company specializing in the sale of high-technology products. Mr. Long was
elected a director of the Company following the completion of the Company's
initial public offering.

JAMES J. BYRNE, age 60, has been a director of the Company since February
1995. Mr. Byrne has served as Managing Partner of Byrne Technology Partners,
Ltd. since January 1996. The firm provides professional services for strategic
alliances and mergers within the computer industry and offers technology
consulting services for corporate re-engineering. From April 1990 to its sale in
March 1995, Mr. Byrne served as President of Harris Adacom Corporation, a
company formed from the merger of the data communications division of Harris
Corp. and Adacom Inc., which was engaged in network systems and services. From
December 1986 to April 1990, Mr. Byrne was the Vice President and General
Manager of the data communications division of Harris Corp. Mr. Byrne serves on
the board of directors of Lennox International, Inc., a manufacturer of heating,
ventilation and air conditioning systems and is also a member of the national
board of directors of the American Electronics Association (AEA). He is also a
member of the Advisory Council of the University of Texas School of Engineering
and Computer Science.

LAWRENCE E. WESNESKI, age 49, has been a director of the Company since
February, 1995. He has served as President and Chief Executive Officer of Hoak
Breedlove Wesneski & Co. ("HBW") (the successor to

4
<PAGE>
BW Securities, Inc. ("BWS"), an investment banking firm, since August 1996.
Prior to that time, Mr. Wesneski was President of BWS, which provided certain
financial advisory services to the Company. See "Compensation and Other
Committee Interlocks and Insider Participation." From January 1987 to August
1996, Mr. Wesneski was President and Managing Director of Breedlove Wesneski &
Co., a private merchant banking firm. From 1987 to 1995, Mr. Wesneski served as
an advisory director for the Company. Mr. Wesneski serves on the board of
directors of TPG Holdings, Inc., a defense products manufacturing company, and
TelServe Communication, Inc., an independent operator of private pay telephones.

DENNIS G. SABO, age 48, has served as the President and Chief Executive
Officer of Arithmos, Inc., a privately held company engaged in the development
of integrated circuits and technology for LCD flat panel displays, since March,
1996. From 1990 through February, 1996, Mr. Sabo served as the Senior Vice
President of graphics accelerator products for S3, Incorporated, a designer and
manufacturer of integrated circuits, where he was involved in the early
development and introduction of "Windows Accelerators." Prior to being employed
by S3, Incorporated, Mr. Sabo held management positions in the field of
integrated circuit design technology for approximately 20 years.

MEETINGS AND COMMITTEES OF BOARD OF DIRECTORS

The Board of Directors held a total of six meetings in fiscal 1996. Each
director attended at least 75% of the meetings held by the Board of Directors
and by committees of the Board on which he served. The Board of Directors has an
Audit Committee, a Compensation Committee, and a Stock Option Committee, the
members of each of which are Lawrence E. Wesneski and James J. Byrne, the
Company's non-employee directors. The Board of Directors does not have a
nominating committee.

AUDIT COMMITTEE. The Audit Committee recommends annually to the Board of
Directors an accounting firm to serve as the Company's independent public
accountants, consults with the Company's independent auditors and with personnel
from the internal audit and financial staffs with respect to corporate
accounting, reporting, and internal control practices and reviews and approves
transactions with parties affiliated with the Company. The Audit Committee met
two times during fiscal 1996.

COMPENSATION COMMITTEE. The Compensation Committee approves annual salary,
bonus and sales commission levels for executive officers, oversees
administration of the Company's employment agreements, and administers the
Company's Profit Sharing Incentive Plan. The Compensation Committee met three
times during fiscal 1996.

STOCK OPTION COMMITTEE. The Stock Option Committee administers the
Company's 1995 Long Term Incentive Plan and 1995 Employee Stock Option Purchase
Plan. The Stock Option Committee met ten times in fiscal 1996.

<PAGE>

EXECUTIVE OFFICERS OF THE COMPANY

The executive officers and key employees of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
- --------------------------- --- -------------------------------------------------------------------------
<S> <C> <C>
William E. Ogle............ 50 Chief Executive Officer and Chairman of the Board of Directors

Randall D. Eisenbach....... 46 Executive Vice President, Chief Operating Officer, Assistant Secretary
and Director

James L. Hopkins........... 51 Chief Financial Officer, Vice President of Strategic Marketing and
Director

J. Shane Long.............. 29 Vice President of Sales and Marketing and Director

Bryan F. Keyes............. 48 Director of Legal and Finance, Secretary and Treasurer

William R. Milford......... 34 Chief Engineer
</TABLE>

Information concerning the business experience of Messrs Ogle, Eisenbach,
Hopkins and Long is provided under the caption "Election of Directors" above.
Set forth below is information concerning the business experience of the other
executive officers and key employees of the Company.

BRYAN F. KEYES has served as Director of Legal and Finance of the Company
since April 1993 and as Secretary and Treasurer since December 1994. Mr. Keyes
is responsible for all legal matters, vendor and customer financial relations
and inventory and cash flow management. From November 1992 to April 1993, Mr.
Keyes was self-employed as a financial consultant. From January 1988 to November
1992, Mr. Keyes served as Vice President of Finance and Administration for
Trammell Crow Distribution Corporation, a national warehousing and logistics
company. From 1972 to 1987, Mr. Keyes was employed by Coopers & Lybrand, where
he was a partner from 1980 to 1987. Mr. Keyes is a member of the American
Institute of Certified Public Accountants, the Texas Society of CPAs and the
State Bar of Texas.

WILLIAM R. MILFORD has served as Chief Engineer of the Company since July
1996. Mr. Milford served as Senior Hardware Engineer of the Company from
November 1992 to June 1996. Prior to joining the Company, Mr. Milford served as
an Electronic Systems Engineer at E-Systems, Garland Division, a major defense
contractor, from January 1986 to November 1992.

All executive officers are elected annually by the Board of Directors to
serve until the next annual meeting of the Board of Directors and until their
respective successors are chosen and qualified.

27
<PAGE>
EXECUTIVE COMPENSATION AND OTHER MATTERS

The following information summarizes annual and long-term compensation for
services in all capacities to the Company for the fiscal years ended October 31,
1996, 1995 and 1994, of the Chief Executive Officer and the other four most
highly compensated executive officers of the Company:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION SECURITIES
---------------------- UNDERLYING ALL OTHER
NAME AND BONUS OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) ($)(1)(2) (#) ($)(3)
- --------------------------------------------------- --------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
William E. Ogle.................................... 1996 $ 200,000 $ 96,741 40,000 $ 1,974
Chairman and Chief Executive Officer 1995 $ 175,000 $ 79,814 54,000 $ 2,685
1994 $ 152,882 $ 196,650 -- $ 4,000

J. Shane Long (4).................................. 1996 $ 212,993 $ 55,626 40,000 $ 1,150
Vice President of Sales and Marketing 1995 $ 153,349 $ 20,393 31,000 $ 975
1994 $ 149,502 $ 32,189 -- --

Randall D. Eisenbach............................... 1996 $ 177,770 $ 83,197 40,000 $ 1,746
Executive Vice President and 1995 $ 150,000 $ 28,275 42,000 $ 8,148
Chief Operating Officer 1994 $ 115,000 $ 61,696 -- $ 4,000

James L. Hopkins (5)............................... 1996 $ 162,066 $ 60,463 40,000 $ 1,250
Chief Financial Officer and Vice President 1995 $ 108,199 $ 7,701 31,000 $ 1,917
of Strategic Marketing

Bryan F. Keyes..................................... 1996 $ 97,767 $ 27,540 8,000 $ 712
Director of Legal and Finance, 1995 $ 91,267 $ 18,678 8,000 $ 400
Secretary and Treasurer 1994 $ 80,208 $ 42,538 -- $ --
</TABLE>

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

(1) All amounts reported as bonus for fiscal 1994 were paid pursuant to the
Company's former Profit Sharing Plan, which, except for the percentage of
pretax income allocated to the Plan and the relative amounts allocated among
participants, was substantially identical to the Company's current Profit
Sharing Plan. The Company's current Profit Sharing Plan became effective
upon the consummation of the Company's initial public offering, and amounts
reported as bonus for fiscal 1995 include certain payments that were made
pursuant to the former Profit Sharing Plan prior to such consummation.

(2) None of the named executive officers received any perquisites or other
personal benefits in fiscal 1994, fiscal 1995 or fiscal 1996 that in the
aggregate exceeded the lesser of $50,000 or 10% of such named executive
officer's salary and bonus for such year.

(3) Reflects for fiscal 1996 matching contributions made by the Company pursuant
to its 401(k) Savings Plan to Messrs. Ogle, Long, Eisenbach, Hopkins and
Keyes in the amounts of $1,974, $1,150, $1,746, $1,250 and $712,
respectively.

(4) Salary amount includes for fiscal 1994 $60,000 paid as base salary and
$89,502 paid as sales commissions, for fiscal 1995 $97,500 paid as base
salary and $55,849 paid as sales commissions, and for fiscal 1996 $115,000
paid as base salary and $97,993 paid as sales commissions.

(5) Salary amount includes for fiscal 1995 (beginning January 1, 1995, when Mr.
Hopkins was first compensated as an officer of the Company) $91,667 paid as
base salary and $16,532 paid as sales commissions, and for fiscal 1996
$125,000 paid as base salary and $37,065 paid as sales commissions.

28
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR

The following table provides information regarding options granted during
fiscal 1996 to the named executive officers:

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED ANNUAL
SECURITIES % OF TOTAL RATES OF STOCK PRICE
UNDERLYING OPTIONS EXERCISE APPRECIATION FOR OPTION
OPTIONS GRANTED TO OR BASE TERM (3)
GRANTED EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME (#)(1) FISCAL YEAR ($/SH)(2) DATE 5% ($) 10% ($)
- ---------------------------------------- ----------- -------------- --------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
William E. Ogle......................... 40,000 9.8% $ 22.00 10/11/06 $ 553,427 $ 1,402,493
J. Shane Long........................... 40,000 9.8% $ 22.00 10/11/06 $ 553,427 $ 1,402,493
Randall D. Eisenbach.................... 40,000 9.8% $ 22.00 10/11/06 $ 553,427 $ 1,402,493
James L. Hopkins........................ 40,000 9.8% $ 22.00 10/11/06 $ 553,427 $ 1,402,493
Bryan F. Keyes.......................... 3,000 0.7% $ 10.38 2/22/06 $ 19,584 $ 49,629
5,000 1.2% $ 22.00 10/11/06 $ 69,178 $ 175,312
</TABLE>

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

(1) All options awarded to Messrs. Ogle, Long, Eisenbach and Hopkins were
granted on October 11, 1996 and vest at the rate of 20% per year on each of
the first five anniversaries of the date of grant. Of the 8,000 options
awarded to Mr. Keyes, 3,000 were granted on February 22, 1996 and 5,000 were
granted on October 11, 1996, and all options vest at the rate of 20% per
year on each of the first five anniversaries of the dates of grant. The 1995
Long Term Incentive Plan allows for the payment of the exercise price of an
option with shares of Common Stock, upon the approval of the Company's Stock
Option Committee. In addition, the 1995 Long Term Incentive Plan permits an
optionee under certain circumstances to cause the Company to withhold shares
issued upon the exercise of an option granted under that plan in payment of
the taxes due upon the exercise of such option.

(2) The exercise price per share of all of the options granted to Messrs. Ogle,
Long, Eisenbach and Hopkins is $22.00. The exercise price per share of 3,000
of the options granted to Mr. Keyes is $10.38, and the exercise price per
share of 5,000 of the options granted to Mr. Keyes is $22.00.

(3) Calculated based on the market price per share of the Common Stock on the
date of grant, which in each case equaled the exercise price. The amounts
represent only certain assumed rates of appreciation. Actual gains, if any,
on stock option exercises and Company Common Stock holdings cannot be
predicted, and there can be no assurance that the gains set forth in the
table will be achieved.

<PAGE>
AGGREGATED OPTION EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES

The following table shows information concerning the number and estimated
value of unexercised options held by the named executive officers at fiscal 1996
year-end. No options were exercised by such persons during fiscal 1996:

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR-END(#) AT FISCAL YEAR-END ($)(1)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
William E. Ogle........................................... 10,800 83,200 $ 88,605 $ 354,418
J. Shane Long............................................. 6,200 64,800 $ 56,606 $ 226,424
Randall D. Eisenbach...................................... 8,400 73,600 $ 76,692 $ 306,768
James L. Hopkins.......................................... 6,200 64,800 $ 56,606 $ 226,424
Bryan F. Keyes............................................ 1,600 14,400 $ 14,608 $ 90,682
</TABLE>

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

(1) Based on the last sale price of $21.13 of the Company's Common Stock on the
Nasdaq National Market on October 31, 1996. The exercise prices of the
options in this table ranged from $12.00 to $22.00 per share.

EMPLOYMENT AGREEMENTS

The Company is a party to employment agreements with each of Messrs. Ogle,
Eisenbach, Hopkins and Long. Each agreement has a term extending through October
31, 1997, and automatically renews for an additional year on each subsequent
October 31, subject to the right of the Company or the employee to terminate the
agreement with a 30-day notice prior to the date of renewal. Under the
agreements, Messrs. Ogle, Eisenbach, Hopkins and Long will receive base annual
salaries in fiscal 1997 of $260,000, $212,000, $180,000 and $160,000,
respectively, and each is eligible to receive incentive compensation under the
Company's Profit Sharing Plan. The agreements with Messrs. Hopkins and Long also
provide for the payment of sales commissions, the amount of which is subject to
annual adjustment by the Compensation Committee. Each agreement provides for a
severance payment if the agreement is terminated under certain circumstances
(including termination of an agreement during the period immediately preceding a
renewal date). The amounts of the severance payments are as follows: Mr. Ogle
would receive two times the sum of his base annual salary and annualized
incentive compensation; Mr. Eisenbach would receive the sum of his base annual
salary and annualized incentive compensation; each of Mr. Hopkins and Mr. Long
would receive the sum of his base annual salary, annualized incentive
compensation and annualized sales commissions. If an agreement is terminated
under certain circumstances within 12 months after a change in control of the
Company, such agreement also provides for a parachute payment in an amount that
is two times the severance payment. For purposes of calculating severance and
parachute payments, the employee's base annual salary is equal to the employee's
then current base annual salary; the annualized incentive compensation is four
times the average of the amount earned in the eight full quarters preceding the
termination; and the annualized sales commissions is 12 times the average of the
amount earned in the 24 full months preceding the termination. Except in the
event of a termination that requires payment of a parachute payment, Messrs.
Ogle, Eisenbach, Hopkins and Long also agree not to participate, in any manner,
during the term of their respective agreements and for two years thereafter, in
the development, manufacture or sale of graphics adapters for desktop PCs or in
any other business in which the Company may be engaged at the time of
termination of employment.

30
<PAGE>
COMPENSATION OF DIRECTORS

Prior to its initial public offering, the Company paid each director a fee
of $1,000 per meeting and paid advisory director fees of $1,000 per meeting to
Messrs. Eisenbach, Hopkins and Wesneski. Beginning in the second quarter of
fiscal 1995, the Company stopped paying directors fees for their services as
directors, although the Company continues to reimburse directors for all
expenses incurred in connection with their activities as directors. Non-Employee
Directors of the Company are entitled to receive certain stock option awards
under the Company's Stock Option Plan for Non-Employee Directors.

COMPENSATION AND OTHER COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Before the Company's initial public offering, decisions concerning
compensation, including decisions concerning compensation for fiscal 1995, were
made by the Company's Board of Directors. At the time such decisions were made
concerning compensation for fiscal 1995, the Board of Directors consisted of Mr.
Ogle, Mr. Mark S. Sims and Mr. William D. Balthaser, Jr. Mr. Eisenbach also
participated in deliberations concerning such compensation. Each of Messrs.
Ogle, Eisenbach, Balthaser and Sims served as officers of the Company during
fiscal 1995. In March, 1995, the Company's Board of Directors appointed a
Compensation Committee comprised of Messrs. Byrne and Wesneski and a Stock
Option Committee comprised of Messrs. Byrne and Wesneski, the Company's
independent directors.

Lawrence E. Wesneski, a director of the Company, serves as President and
Chief Executive Officer of Hoak Breedlove Wesneski & Co. ("HBW"), the successor
pursuant to an acquisition of BW Securities, Inc. ("BWS"), and owns a portion of
the equity securities of HBW. Mr. Wesneski served as President of Breedlove
Wesneski & Company ("BWC") and its affiliate, BWS, and before the acquisition of
BWS, owned a portion of the equity of BWC and BWS. The Company paid BWC and its
affiliates $57,922 in fiscal 1996 for the performance of certain services
relating to the arrangement of credit facilities for the Company. It is
anticipated that HBW or an affiliate thereof will provide financial services to
the Company in the future, including participation in the Company's future
securities offerings.

CERTAIN TRANSACTIONS

RIGHT OF FIRST REFUSAL. The Company and Messrs. Ogle, Sims and Balthaser
have entered into a Right of First Refusal Agreement providing that if Mr. Ogle,
Mr. Sims or Mr. Balthaser proposes to sell any shares of Common Stock registered
in his name as of the date of the closing of the Company's initial public
offering, then the Company will have a right of first refusal to purchase such
shares on terms similar to those proposed. If the Company does not exercise its
right to purchase all of the shares of Common Stock proposed to be sold by
either Mr. Sims or Mr. Balthaser, then Mr. Ogle will have a right of first
refusal to purchase those shares of Common Stock that the Company does not wish
to purchase. Mr. Ogle will not participate in any decision by the Company to
exercise its right of first refusal to purchase shares proposed to be sold by
Mr. Ogle, Mr. Sims or Mr. Balthaser. If the foregoing rights of first refusal
are not independently or collectively fully exercised, then the shares not
purchased may be sold in accordance with the proposed terms of sale.
Notwithstanding the foregoing, the Right of First Refusal Agreement does not
restrict the ability of Messrs. Ogle, Sims or Balthaser to sell shares of Common
Stock in the public market pursuant to Rule 144 promulgated under the Securities
Act.

CERTAIN PRODUCT SALES. Paul A. Ogle, the father of William E. Ogle, was a
Company employee and sales agent for certain products prior to his retirement
effective October 15, 1996. Paul Ogle paid to the Company $110,580 in fiscal
1996, in connection with the purchase of products from the Company that he
resold to certain customers. The Company sold the products to Mr. Ogle on terms
roughly comparable to those provided to other distributors. In addition, the
Company paid compensation to Paul Ogle in the amount of $14,410 in fiscal 1996.

TAX AGREEMENT. As of December 16, 1994, the Company, on the one hand, and
Messrs. Ogle, Balthaser and Sims (the "Founding Shareholders"), on the other,
(the "parties") entered into a Tax

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Allocation and Indemnification Agreement (the "Tax Agreement") relating to their
respective income tax liabilities. Since the Company became fully subject to
corporate income taxation as a C corporation after its status as an S
corporation terminated prior to its initial public offering, the reallocation of
income and deductions between the period during which the Company was treated as
an S corporation and a period during which the Company was or will be subject to
corporate income taxation as a C corporation may increase the taxable income of
one party in one period while decreasing that of another party in another
period. The Tax Agreement generally provides that the Founding Shareholders will
be indemnified by the Company with respect to income taxes (plus interest and
penalties) arising due to taxable income shifted from a C corporation taxable
year to a taxable year in which the Company was an S corporation, and that the
Company will be indemnified by the Founding Shareholders with respect to income
taxes (plus interest and penalties) arising due to taxable income shifted from
an S corporation taxable year to a C corporation taxable year; provided,
however, that only in the case of the Founding Shareholders' obligation to
indemnify the Company, such obligation shall be reduced by an amount equal to
the federal or state tax benefit (if any) derived by the Company due to the
shift of taxable income from a taxable year in which the Company was an S
corporation to a C corporation taxable year and shall not exceed the amount, if
any, by which (i) the amount of the reduction in the liability for taxes and
interest thereon of a Founding Shareholder that results from the shifting of S
corporation taxable income to a C corporation taxable year of the Company,
exceeds (ii) all reasonable costs incurred by the Founding Shareholder
reasonably attributable to securing such reduction in liability for taxes. The
Company will also be indemnified by the Founding Shareholders for any federal or
state taxes that arise because the Company's status as an S corporation was
ineffective, revoked or terminated prior to the termination of the Company's S
corporation status. Any payment made by the Company to the Founding Shareholders
pursuant to the Tax Agreement may be considered by the Internal Revenue Service
or the state taxing authorities to be nondeductible by the Company for income
tax purposes.

S CORPORATION DISTRIBUTION. Prior to its initial public offering, the
Company declared a dividend (the "S Corporation Distribution") in an amount
equal to its undistributed S corporation earnings through the date immediately
prior to the completion of the initial public offering, or approximately $4.2
million (the "Undistributed S Corporation Earnings"), approximately one-half of
which was paid in cash to the Founding Shareholders out of the proceeds of the
Company's initial public offering. The remaining half of the S Corporation
Distribution was distributed to the Founding Shareholders in the form of
promissory notes providing for 12 equal monthly payments of both principal and
interest and bearing interest at 9%, the prime rate in effect on the date of
issuance (the "Founding Shareholder Notes"). The Company paid $700,422 in fiscal
1996 from cash generated from operations in connection with its obligations
under the Founding Shareholder Notes. The final payment on the remaining
outstanding balance under the Founding Shareholder Notes was made in February
1996.

FUTURE TRANSACTIONS. The Company has adopted a policy that all transactions
between the Company and related parties are subject to approval by a majority of
all disinterested directors and must be on terms no less favorable than those
that could be obtained from unrelated third parties.