<PAGE> 1
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 Rule 14a-11(c) or Rule 14a-12
ROSS Technology, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions 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:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[ROSS LOGO]
5316 HIGHWAY 290 WEST, SUITE 500
AUSTIN, TEXAS 78735
July 19, 1996
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
ROSS Technology, Inc., to be held at 10:00 a.m. on Tuesday, August 13, 1996, at
the Omni Hotel, 700 San Jacinto Boulevard, Austin, Texas 78701.
At the meeting, we will vote on the proposals described in the accompanying
Notice and Proxy Statement. We will also report to you on the operations of the
Company. You will have the opportunity to ask questions about the Company that
may be of general interest to stockholders.
The enclosed proxy statement contains important information concerning the
Directors to be elected at the Annual Meeting. We hope you will take the time to
study it carefully. Your vote is very important, regardless of how many shares
you own. Even if you presently plan to attend our Annual Meeting, please
complete, sign, date and return the enclosed proxy card promptly in the
accompanying self-addressed postage prepaid envelope. If you do join us at the
Annual Meeting and wish to vote in person, you may revoke your proxy at that
time.
The other members of the Board of Directors and I look forward to seeing
you at the meeting.
Sincerely,
/s/ ROGER D. ROSS
Roger D. Ross
Chairman of the Board, President
and Chief Executive Officer
PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY CARD WHETHER
OR NOT YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING.
<PAGE> 3
[ROSS LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 13, 1996
TO THE STOCKHOLDERS OF ROSS TECHNOLOGY, INC.:
The 1996 Annual Meeting of Stockholders of ROSS Technology, Inc., a
Delaware corporation (the "Company"), will be held at the Omni Hotel, 700 San
Jacinto Boulevard, Austin, Texas 78701 on Tuesday, August 13, 1996, at 10:00
a.m., local time, for the following purposes:
1. To elect a board of eight Directors for the Company to hold office
until the next annual meeting of stockholders and until their respective
successors have been elected and qualified.
2. To approve the restatement of the Company's 1995 Qualified Employee
Stock Purchase Plan.
3. To consider and transact such other business as may properly come
before the Annual Meeting and at any adjournments or postponements thereof
(the "Annual Meeting").
Only stockholders of record on the books of the Company as of the close of
business on July 12, 1996 will be entitled to notice of and to vote at the
Annual Meeting. A list of stockholders entitled to vote will be available for
inspection at the offices of the Company, 5316 Highway 290 West, Suite 500,
Austin, Texas 78735, for ten days prior to the Annual Meeting.
PLEASE READ THE ENCLOSED PROXY STATEMENT CAREFULLY.
It is important that your shares be represented at the Annual Meeting.
THEREFORE, WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED SELF ADDRESSED, POSTAGE PREPAID ENVELOPE. If you later find that you
can be present or desire to revoke your proxy for any reason, you may do so at
any time before the voting at the Annual Meeting.
By Order of the Board of Directors
of the Company
/s/ DAVID A. ZELENIAK
David A. Zeleniak
Secretary
July 19, 1996
Austin, Texas
<PAGE> 4
ROSS TECHNOLOGY, INC.
5316 HIGHWAY 290 WEST, SUITE 500
AUSTIN, TEXAS 78735
PROXY STATEMENT RELATING TO
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 13, 1996
---------------------
This Proxy Statement is furnished in connection with the solicitation of
the enclosed proxy by the Board of Directors of ROSS Technology, Inc., a
Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders of the Company to be held at the Omni Hotel, 700 San Jacinto
Boulevard, Austin, Texas 78701, on Tuesday, August 13, 1996, beginning at 10:00
a.m., local time, and at any adjournment or postponement thereof (the "Annual
Meeting"), pursuant to the accompanying Notice of Annual Meeting. The
stockholders of the Company will consider (i) the election of eight Directors
for the Company who would serve for the coming year, (ii) the restatement of the
Company's 1995 Qualified Employee Stock Purchase Plan, and (iii) any other
business that properly comes before the Annual Meeting.
---------------------
This Proxy Statement is dated July 19, 1996 and, together with the form of
proxy, shall first be mailed to the Company's stockholders on or about July 22,
1996.
1
<PAGE> 5
VOTING RIGHTS AND PROXIES
RECORD DATE; OUTSTANDING SECURITIES
Only common stockholders of record on the books of the Company as of the
close of business on July 12, 1996 (the "Record Date") will be entitled to
notice of and to vote at the Annual Meeting. On that date, the Company had
23,386,604 shares of common stock (the "Common Stock") issued and outstanding.
Each share of Common Stock outstanding on the Record Date is entitled to one
vote at the Annual Meeting on each matter to be voted on.
QUORUM
The holders of a majority of the outstanding shares entitled to vote at the
Annual Meeting, present in person or represented by proxy (including abstentions
and broker non-votes), constitute a quorum for the transaction of business at
the Annual Meeting.
PROXIES AND SOLICITATION OF PROXIES
Your proxy may be revoked by you at any time prior to its use by (i) filing
with the Secretary of the Company a written revocation or a duly executed proxy
bearing a later date or (ii) attending the Annual Meeting and voting in person.
Subject to such revocation, all shares represented by valid proxies will be
voted at the Annual Meeting in accordance with the specifications on such
proxies. If no specifications are given by the stockholder executing the proxy
card, valid proxies will be voted to elect the persons nominated for election to
the Board of Directors of the Company listed on the proxy card, to approve the
restatement of the Company's 1995 Qualified Employee Stock Purchase Plan, and in
the discretion of the appointed proxies upon such other matters as may properly
come before the Annual Meeting. The Company is not aware of any other matters to
be considered at the Annual Meeting. Under the Company's By-Laws, stockholders
may not present proposals for action, or nominate Directors, at the Annual
Meeting unless written notice thereof, containing the information required by
such By-Laws, was delivered to the Secretary of the Company no later than June
23, 1996. No such proposals or nominations were received by such date.
Proxies may be solicited by mail, personal interview, telephone and
telecopy by Directors, officers and employees of the Company on a part-time
basis and for no additional compensation. The entire cost of soliciting proxies
under this Proxy Statement will be borne by the Company and will include amounts
paid in reimbursement to banks, brokerage firms and others for their expenses in
forwarding soliciting material.
If you have any questions or need further assistance in voting your shares,
please call Jon Dorton of the Company at (512) 436-2507.
2
<PAGE> 6
ELECTION OF DIRECTORS
(ITEM NO. 1 ON PROXY CARD)
At the Company's Annual Meeting, common stockholders will be asked to vote
on the election of eight Directors who will constitute the full Board of
Directors of the Company (the "Board"). The eight nominees receiving the highest
number of votes from holders of shares of the Common Stock of the Company
represented and voting at the Annual Meeting will be elected to the Board of
Directors of the Company. Unless a nominee other than the nominees listed below
is properly nominated, abstentions and broker non-votes will not have an effect
on the election of the nominees listed below. Each Director so elected will hold
office until the next annual meeting and until his successor is elected and
qualified.
GENERAL
Each proxy received will be voted for the election of the persons named
below, unless the stockholder signing such proxy withholds authority to vote for
one or more of these nominees in the manner described on the proxy. Although it
is not contemplated that any nominee named below will decline or be unable to
serve as a Director, in the event any nominee declines or is unable to serve as
a Director, the proxies will be voted by the proxy holders as directed by the
Board of Directors.
There are no family relationships between any Director, nominee or
executive officer and any other Director, nominee or executive officer of the
Company. Except as described in this Proxy Statement, there are no arrangements
or understandings between any Director, nominee or executive officer and any
other person pursuant to which he has been or will be selected as a Director
and/or executive officer of the Company.
INFORMATION REGARDING THE NOMINEES FOR THE BOARD OF DIRECTORS OF THE COMPANY
The following is a list of and certain biographical information for the
persons nominated by the Board of Directors of the Company for election as
Directors of the Company. All of the nominees are currently Directors of the
Company. Directors' ages are as of July 1, 1996.
MR. ROGER D. ROSS, 50, is one of the founders of the Company and has served
as its chief executive officer and a Director since the Company's inception in
1988. Prior to founding the Company, Mr. Ross spent five years at Motorola,
Inc., where, among other things, he served as General Manager for the Advanced
Microprocessor Operation and led the design team for the Motorola 88000 RISC
microprocessor program. Mr. Ross also spent nine years at NCR Corporation where
he held various positions including that of Engineering Director for the NCR
7000 Fault Tolerant Computer System. Mr. Ross holds a B.S. in Abstract
Mathematics, cum laude, from Ohio University and has more than 20 years of
experience in the computer and microprocessor industry.
MR. RYUSUKE HOSHIKAWA, 53, has served as a Director of the Company since
1993. He joined Fujitsu Limited ("Fujitsu") in 1968 and is presently a Director
of Fujitsu and the Group Senior Vice President of Fujitsu's Logic LSI Group.
Prior to holding that position, Mr. Hoshikawa held various engineering and
management positions with Fujitsu including that of General Manager of its Logic
LSI Design Division and Manager of the IC Design Group. Mr. Hoshikawa graduated
from Hokkaido University with a Masters degree in Electronics.
MR. FRED T. MAY, 59, has served as a Director of the Company since 1991
(except for the period from July 1993, when Fujitsu acquired the Company, to
December 1993), and served as Secretary of the Board from February 1994 until
October 1995. He retired from IBM in 1987 after serving 26 years in various
positions including Vice President of Engineering and Vice President of Product
Development for the Office Products Division, Development Laboratory Director in
Austin, Texas, and Development Engineering Manager for Advanced IBM
Workstations. Mr. May was on the staff of the Electrical and Computer
Engineering Department of the University of Texas at Austin from 1987 until
1993. Mr. May holds a B.S. in Electrical Engineering from the University of
Kentucky and a M.S. in Electrical Engineering from the University of Tennessee,
and has over 30 years of experience in the computer industry. He has been self-
employed as a management consultant since 1987.
3
<PAGE> 7
MR. WILLIAM J. RADUCHEL, 50, has served as a Director of the Company since
January 1996. He has been an officer of Sun Microsystems, Inc. since 1988 and a
corporate executive officer since 1989. His current positions are Vice President
of Corporate Planning and Development and Chief Information Officer. He also
serves as an independent general partner of Technology Funding Venture Partners
IV, a venture capital fund. He has previously worked at Xerox Corporation,
McGraw Hill, Inc., Data Resources, Inc., the Institute for Defense Analyses and
Harvard University.
MR. MASAHIRO SAIDA, 51, has served as a Director of the Company since 1993.
He joined Fujitsu in 1967 and is presently the Deputy Group Manager of Fujitsu's
Computer Systems Group. Prior to holding that position, Mr. Saida held various
engineering and management positions with Fujitsu including that of Manager of
Workstation Development and General Manager of its Open Systems Division. Mr.
Saida graduated from Kyoto University with a degree in Electronics.
MR. YASUSHI TAJIRI, 50, has served as a Director of the Company since 1993.
He joined Fujitsu in 1970 and is presently the General Manager of Fujitsu's
Business Development Division, International Computer Business Group. Prior to
holding that position, Mr. Tajiri held various management positions with Fujitsu
including that of Manager of its Information Systems Division, International
Operations Group, and Manager of its Business Development Department II,
International Operations Group. Mr. Tajiri graduated from Otaru Business College
with a degree in Commerce.
MR. EDWARD F. THOMPSON, 58, has served as a Director of the Company since
1995. He also serves as a Senior Advisor to Fujitsu and acts as an independent
board member for or advisor to various other Fujitsu subsidiaries. From 1976 to
1994, Mr. Thompson was employed by Amdahl Corporation (a manufacturer of
mainframe computers, approximately 45% of the stock of which is owned by
Fujitsu) in Sunnyvale, California, where he held various management positions
including Chief Financial Officer and Corporate Secretary, as well as Chairman
of the Board of its subsidiary, Amdahl Capital Corporation. Mr. Thompson
presently serves on the Boards of Directors of HAL Computer Systems and Fujitsu
Computer Products of America, each of which is a subsidiary of Fujitsu. He also
serves on the Boards of Directors of Systems Integrators Incorporated (where he
chairs the Finance and Audit Committee) and AHI Healthcare Systems, Inc. (where
he chairs the Finance and Audit Committee), which companies are not affiliated
with Fujitsu. Mr. Thompson has over 30 years of experience in the computer and
high technology fields. Mr. Thompson holds a B.S. in Aeronautical and
Astronautical Engineering from the University of Illinois and an M.B.A. from
Santa Clara University.
MR. SEIICHI YOSHIKAWA, 50, has served as a Director of the Company since
January 1996. Since 1969, Mr. Yoshikawa has served in a number of positions with
Fujitsu, including, since 1995, as Group Senior Vice President of Fujitsu's
Legal and Industry Relations Group. Mr. Yoshikawa graduated from Tokyo
University with a degree in law.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ELECTION OF THE
NOMINEES LISTED ABOVE AS DIRECTORS.
CERTAIN INFORMATION CONCERNING THE BOARD OF
DIRECTORS AND ITS COMMITTEES
There are currently four committees of the Board, each of which was
established on September 12, 1995. These committees meet both formally and
informally and the members of the Committees speak frequently with each other.
The Executive Committee currently consists of Messrs. Tajiri (its Chairman),
May, Ross, Saida and Thompson. The Executive Committee has all the powers of the
full Board, except that it is not authorized (i) to amend the Certificate of
Incorporation or Bylaws of the Company, (ii) to adopt an agreement of merger or
consolidation pursuant to Section 251 or 252 of the Delaware General Corporation
Law or to adopt a certificate of ownership and merger pursuant to Section 253 of
the Delaware General Corporation Law, (iii) to recommend to the stockholders the
sale, lease or exchange of all or substantially all of the Company's property
and assets, (iv) to recommend to the stockholders a dissolution of the Company
or (v) to declare a dividend or authorize the issuance of stock, in each case
except as may be reasonably necessary to implement any decision of the full
Board or to act on any matters previously considered and
4
<PAGE> 8
approved by the full Board (with such technical changes and corrections as the
Executive Committee deems appropriate). The Executive Committee had one formal
meeting in the fiscal year ended April 1, 1996 ("Fiscal 1996").
The Finance and Audit Committee currently consists of Messrs. Thompson (its
Chairman), May and Tajiri. The Finance and Audit Committee recommends to the
Board for its approval a certified public accounting firm to conduct the
Company's annual audit. The Finance and Audit Committee will also (i) confer
from time to time with the Company's certified public accountants regarding
their audit work and the details thereof, (ii) review management letters of the
Company's certified public accounting firm, (iii) meet and consult with the
Company's executive and financial officers to discuss accounting policies,
internal controls and procedures and implement recommendations of the Board
relating to financial matters, (iv) review staffing of the Company's accounting
and financial departments and make recommendations to the Board relating to
these departments, (v) review the Company's budgets and long range financial
planning, (vi) review, evaluate and report to the Board with respect to
operating plans and budgets proposed from time to time by management, (vii)
report to the Board regarding contracts, arrangements and commitments materially
affecting the finances of the Company, (viii) report to the Board regarding
significant economic and fiscal data which may produce an impact upon the
Company's operating results or financial condition or may affect decisions to be
made by the Board, and (ix) provide assistance and recommendations to the Board
with respect to the general financial needs, policies and practices of the
Company. The Finance and Audit Committee had one formal meeting in Fiscal 1996.
The Human Resources Committee currently consists of Messrs. May (its
Chairman), Tajiri and Thompson. The Human Resources Committee has full power and
authority to (i) consider and approve all matters with respect to executive
officer and employee compensation, and management development and succession,
(ii) assist with the administration of the Company's compensation plans,
including the making of recommendations to the Board with respect to the
establishment of such plans and the terms and provisions thereof, (iii) make
recommendations to the Board with respect to the annual salaries and other
compensation of the officers of the Company, (iv) provide assistance and
recommendations to the Board with respect to the compensation policies and
practices of the Company, and (v) provide assistance and recommendations to the
Board with respect to policies and practices regarding executive performance
measurement, management effectiveness and employee incentives. The Human
Resources Committee had two formal meetings in Fiscal 1996.
The Stock Option Committee currently consists of Messrs. May (its Chairman)
and Tajiri. The Stock Option Committee considers and reviews all matters with
respect to the grant and issuance of options and restricted stock purchase
rights to purchase shares of Common Stock pursuant to, and administers, the
Stock Option and Restricted Stock Purchase Plan 2.0 and the 1995 Qualified
Employee Stock Purchase Plan. The Stock Option Committee had one formal meeting
in Fiscal 1996.
An ad hoc Independent Committee (the "Independent Committee"), consisting
of Messrs. May and Ross, was established in 1996 in connection with the transfer
by the Company of its ROSS Computer Corp. subsidiary ("RCC") to Fujitsu. The
Independent Committee had three formal meetings in Fiscal 1996. The Independent
Committee was disbanded following consummation of the transfer of RCC.
New committees may be added, existing committees may be disbanded, and the
composition of any committee may be modified at any time in the discretion of
the Board.
During Fiscal 1996, the Board of Directors held seven regularly scheduled
and special meetings and acted by unanimous written consent on one occasion.
Except for Mr. Hoshikawa and Mr. Satoshi Imokawa, a current Director of the
Company who is not standing for re-election at the Annual Meeting, each
incumbent Director attended at least 75% of (i) the seven formal meetings of the
Board of Directors and (ii) the total number of formal meetings of the
committees on which he served (during the periods that he served).
The members of the Board of Directors who are employed by Fujitsu or by the
Company receive no separate remuneration for acting as Directors of the Company.
Mr. May has in the past received payments for his attendance at Board meetings
and for certain services rendered to the Company. Excluding travel expense
5
<PAGE> 9
reimbursements, Mr. May received approximately $22,950, $57,300 and $59,500 for
rendering various services to the Company, including directorial services, for
the fiscal years ended April 4, 1994 and April 3, 1995 ("Fiscal 1995") and
Fiscal 1996, respectively. Mr. Thompson has in the past been compensated
directly by Fujitsu for serving on the boards of various Fujitsu affiliates
including the Company. However, effective upon the Company's initial public
offering of its Common Stock on November 7, 1995, the Board implemented a policy
pursuant to which Messrs. May and Thompson and all other Directors who are not
employees of the Company or of any 5% stockholder of the Company will be paid an
annual fee of $10,000 per year for service on the Board of Directors, plus
$10,000 per year for each committee on which such Director also serves. Each
such Director will also be paid $1,500 per day for in-person attendance at Board
and committee meetings and $500 per day for telephonic attendance at such
meetings. Under the current policy, a Director's aggregate compensation
(excluding reimbursement of expenses) for service as a Director for any calendar
year may not exceed $50,000. The Board has the authority to revise this fee
structure in its discretion. All Directors are entitled to receive reimbursement
for expenses incurred in connection with service on the Board or Board
committees. In addition, all Directors are eligible to participate in, and
(other than Mr. Raduchel) have received option grants under, the stock option
plan described below.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the formation of the Human Resources Committee on September 12,
1995, the full Board of Directors, of which Mr. Ross and Mr. May were both
members, made all determinations with respect to compensation of the Company's
employees and executive officers. As disclosed elsewhere herein, Mr. Ross was an
executive officer and Mr. May was an employee of the Company and received
compensation therefor. However, effective upon the Company's initial public
offering of its Common Stock on November 7, 1995, Mr. May was no longer employed
by the Company, although he remains a member of the Company's Board of
Directors. The Human Resources Committee consists of Messrs. May, Tajiri and
Thompson.
EXECUTIVE OFFICERS OF THE COMPANY
Each of the executive officers of the Company holds office at the pleasure
of the Board of Directors, subject to any rights he may have under any
employment contract. The current executive officers of the Company are as
follows:
<TABLE>
<CAPTION>
NAME POSITION
----------------------------------------- -----------------------------------------
<S> <C>
Roger D. Ross Chairman of the Board, President and
Chief Executive Officer
David A. Zeleniak Chief Financial Officer and Secretary
Mitchell K. Alsup Chief Architect
Matthew R. Gutierrez Vice President of Marketing
Glen C. Iaggi Vice President of Manufacturing
Joe D. Jones Vice President of Operations
Trevor S. Smith Vice President of Design
Carter L. Godwin Chief Accounting Officer and Corporate
Controller
</TABLE>
Background information for Mr. Ross is provided above. See "Election of
Directors".
MR. ZELENIAK, 38, joined the Company in 1994 as its Chief Financial
Officer. From 1990 until joining the Company, Mr. Zeleniak was the Chief
Financial Officer and a co-owner of American Innovations, Inc., a privately-held
company specializing in the design, manufacture and sales of automatic meter
reading technology to electric utilities. From 1983 to 1990, Mr. Zeleniak worked
at Motorola, where he served in various positions including that of Manager of
Financial Analysis. Mr. Zeleniak also served three years with Intel Corporation
as a financial analyst. Mr. Zeleniak holds a B.B.A. in Finance and Economics
from Penn State University and an M.B.A. from the University of Cincinnati and
has more than 15 years of experience in the computer and microprocessor
industry.
6
<PAGE> 10
MR. ALSUP, 43, the Company's Chief Architect, joined the Company in 1991
and since that time has been responsible for architectural development of the
latest generation of hyperSPARCTM microprocessors and other microprocessor
products. Prior to joining the Company, Mr. Alsup spent 10 years at Motorola,
Inc., where he acted as, among other things, the principal designer of
Motorola's 88000 line of microprocessors. Mr. Alsup spent three years at NCR
where he acted as a project leader. Mr. Alsup graduated from Carnegie-Mellon
University in 1975 with a B.S. in Electrical Engineering.
MR. GUTIERREZ, 32, joined the Company in 1989 as an applications engineer
and has since held various other positions with the Company including
Applications Engineering Manager, Manager of Product Marketing, Director of
Product Marketing, and since January 1996, Vice President of Marketing. Prior to
joining the Company, Mr. Gutierrez served five years with General Motors
Corporation where he held various engineering and test positions. Mr. Gutierrez
holds a B.S. in Electrical Engineering from GMI Engineering and Management
Institute and an M.S. in Electrical Engineering from the University of Texas at
Austin.
MR. IAGGI, 47, joined the Company in 1989 and currently serves as Vice
President of Manufacturing. Prior to joining the Company, Mr. Iaggi spent 18
years with Motorola's Microprocessor Group where he held various engineering and
management positions including Production Control Manager of the Microprocessors
Division and Senior Operations Manager in charge of manufacturing. Mr. Iaggi
holds a B.S. in Data Processing and Statistics from Arizona State University and
has approximately 23 years of production control and manufacturing experience in
the high technology industry.
MR. JONES, 38, joined the Company in 1991 as the Director of Quality
Assurance, in 1993 assumed the position of Vice President of hyperSPARC
Operations and in December 1995 became Vice President of Operations. Mr. Jones
performs production control, outside manufacturing management and customer
quality engineering functions for the Company. Prior to joining the Company, Mr.
Jones served as Quality Assurance Manager with Cypress Semiconductor (a producer
of semiconductor electronic devices) for five years, and in addition spent four
years with Advanced Micro Devices in various engineering and management
positions. Mr. Jones holds a B.S. in Chemical Engineering from the University of
Texas at Austin and has approximately 14 years of experience in the
semiconductor industry.
MR. SMITH, 43, is one of the founders of the Company and has served as its
Vice President of Design since its inception in 1988. Prior to founding the
Company, he spent three years with Motorola, serving as, among other things,
manager of MPU standard cell cores and cell library development, and three years
at ICL Limited, a European computer design and manufacturing company where he
served as manager of CPU development for Emitter Coupled Logic (a high speed
bipolar transistor-based technology) and CMOS mainframe CPUs. Mr. Smith holds a
B.Sc. in Physics and Electronic Engineering from the University of Manchester,
England, and has over 18 years of experience in the computer and microprocessor
industry.
MR. GODWIN, 30, joined the Company in 1992 as a financial analyst and has
since held various other positions with the Company including Accounting Manager
and his current position of Chief Accounting Officer and Corporate Controller.
From 1988 to 1991, Mr. Godwin worked as a staff accountant for Price Waterhouse
LLP. Mr. Godwin received his B.B.A. in Accounting from the University of Texas
at Austin.
7
<PAGE> 11
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth the compensation earned
by the Company's President and the six other most highly compensated executive
officers of the Company whose annual salaries and bonuses exceeded $100,000 in
total during Fiscal 1996 (collectively, the "Named Officers") for services
rendered in all capacities to the Company and its subsidiaries for that and the
previous fiscal year:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL ------------
COMPENSATION(1) SECURITIES
------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS(2) OPTIONS(#) COMPENSATION(3)
- -------------------------------------- ----------- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Roger D. Ross(4)...................... 1996 $264,706 $299,960 177,778 $ 109,556(5)
Chairman, President and CEO......... 1995 248,550 99,606 -- 4,497
Mitchell K. Alsup(4).................. 1996 205,196 235,319 35,556 --
Chief Architect..................... 1995 189,928 76,519 -- --
Trevor S. Smith(4).................... 1996 196,630 237,690 44,444 4,620
Vice President of Design............ 1995 184,275 72,981 -- 4,238
John T. Horner(4)..................... 1996 147,835 170,448 44,444 91,020(6)
Vice President of Product
Engineering...................... 1995 136,884 54,941 -- 3,058
Glen C. Iaggi......................... 1996 115,988 45,947 8,889 4,620
Vice President of Manufacturing..... 1995 110,465 14,546 -- 4,497
Joe D. Jones.......................... 1996 105,748 43,873 8,889 4,231
Vice President of Operations........ 1995 101,511 13,326 -- 4,466
Michael E. Beals(7)................... 1996 72,113 132,663(8) 4,444 1,116
Vice President of Worldwide Sales... 1995 47,115 59,603(8) -- --
</TABLE>
- ---------------
(1) Certain of the Named Officers received personal benefits in addition to
salary and cash bonuses. However, the aggregate amount of such personal
benefits for any Named Officer did not exceed the lesser of $50,000 and 10%
of the total of the annual salary and bonus reported for such Named Officer.
(2) Except as otherwise noted, reflects (a) for Fiscal 1995, payment of bonuses
earned through June 30, 1994, but paid in Fiscal 1995, and (b) for Fiscal
1996, payment of bonuses earned through June 30, 1995, but paid in Fiscal
1996.
(3) Consists of matching contributions by the Company under its 401(k) Plan and
Trust, except as otherwise noted.
(4) Messrs. Ross, Alsup, Smith and Horner received the above-described
compensation pursuant to employment agreements with the Company, which
expired in accordance with their terms on June 30, 1996. In February 1996,
Mr. Horner became general manager of the Company's ROSS Microcomputer
division. Mr. Horner resigned from the Company effective June 30, 1996.
Messrs. Ross, Alsup and Smith continue to be employed by the Company. See
"-- Employment Agreements."
(5) Includes $104,936 relating to the purchase of an automobile by the Company
for Mr. Ross's use pursuant to the terms of his employment agreement
(including a tax "gross up" payment to Mr. Ross with respect to the taxes
incurred by him as the result of such purchase).
(6) Includes $86,400 relating to the purchase of an automobile by the Company
for Mr. Horner's use pursuant to the terms of his employment agreement
(including a tax "gross up" payment to Mr. Horner with respect to the taxes
incurred by him as the result of such purchase).
(7) Mr. Beals resigned from the Company on June 25, 1996.
(8) Consists of sales bonuses received in Fiscal 1996 and Fiscal 1995,
respectively.
8
<PAGE> 12
OPTION GRANTS DURING FISCAL 1996
The following table lists the stock options granted to the Named Officers
during Fiscal 1996:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT
---------------------------------------------------- ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(A)
OPTIONS EMPLOYEES PRICE PER EXPIRATION -----------------------------
NAME GRANTED IN FISCAL YEAR SHARE DATE 0% 5% 10%
- ------------------------------------- -------------- --------- ---------- --- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Roger D. Ross.............. 177,778 24.2% $ 12.00 9/12/2005 $ 0 $1,341,644 $3,399,988
Mitchell K. Alsup.......... 35,556 4.7% 12.00 9/12/2005 0 268,332 680,005
Trevor S. Smith............ 44,444 5.9% 12.00 9/12/2005 0 335,407 849,987
John T. Horner............. 44,444 5.9% 12.00 9/12/2005 0 335,407 849,987
Glen C. Iaggi.............. 8,889 1.2% 12.00 9/12/2005 0 67,083 170,001
Joe D. Jones............... 8,889 1.2% 12.00 9/12/2005 0 67,083 170,001
Michael E. Beals........... 4,444 0.6% 12.00 9/12/2005 0 33,538 84,991
</TABLE>
- ---------------
(a) The amounts shown are not the values of the options on the dates they were
granted. Instead, these are hypothetical future values based on the
difference between the option exercise price and the assumed future Common
Stock price at the end of the 10-year term of the options using hypothetical
rates of growth of 0%, 5% and 10%, respectively. There can be no assurance
that the growth rates specified in the table will be achieved.
Options granted to the Named Officers in Fiscal 1996 vest starting December
31, 1995 with 1/48 of the shares covered thereby vesting at that time, and with
an additional 1/48 of the option shares vesting on the last day of each
successive month, and may be exercised as to the vested portion beginning six
months after the grant date. In addition, all of the options will vest in
connection with a "change of control", which will be deemed to have occurred if
(a) there is a change in the identity of more than half of the members of the
Board (excluding redesignation by Fujitsu and/or Sun or any of their respective
designees) over any six month period or (b) the Company within a 12-month period
ceases to own more than one half of its gross assets (measured at the
commencement of such period) by virtue of one or more bulk transfers of its
assets. The options expire 10 years from the date of grant, six months after
termination of employment, or eighteen months after termination of employment
due to the death or permanent disability of the optionee. Each of the options
was granted under the Stock Option and Restricted Stock Purchase Plan 2.0 with
an exercise price equal to $12.00 per share (which was less than the closing
price of the Company's Common Stock on the NASDAQ National Market System on
April 1, 1996, the last day of Fiscal 1996).
AGGREGATED OPTION EXERCISES IN FISCAL 1996 AND FISCAL 1996 YEAR-END OPTION
VALUES
The following table sets forth information with respect to the exercise of
stock options during Fiscal 1996 and the fiscal year-end value of unexercised
in-the-money stock options held by the Named Officers as of April 1, 1996:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED VALUE FISCAL YEAR END: FISCAL YEAR ENDED($)(2):
ON EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Roger D. Ross............... 1,600,000 $17,957,334 14,815 162,963 $ 0 $ 0
Mitchell K. Alsup........... 320,000 4,468,800 2,963 32,593 0 0
Trevor S. Smith............. 400,000 4,295,440 3,704 40,741 0 0
John T. Horner.............. 166,667 1,074,159 237,037 40,741 2,500,163 0
Glen C. Iaggi............... 80,000 890,557 741 8,148 0 0
Joe D. Jones................ 80,000 1,017,200 741 8,148 0 0
Michael E. Beals............ 40,000 598,601 370 4,074 0 0
</TABLE>
- ---------------
(1) Values realized on exercises during the period prior to the Company's
initial public offering have been computed using the exercise price of new
options granted by the Company during the month of exercise. Values realized
on exercises after the date of the Company's initial public offering have
been computed using the closing price of the Company's Common Stock on the
NASDAQ National Market System on the date of exercise.
(2) Calculated by determining the difference between the closing price on the
NASDAQ National Market System of the shares of Common Stock underlying the
options at April 1, 1996 ($10.75) and the exercise price of the option.
9
<PAGE> 13
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements, effective June 1993, with
Roger Ross, Mitchell Alsup, Trevor Smith and John Horner, which agreements
expired in accordance with their respective terms on June 30, 1996. During the
term of their respective agreements, Mr. Ross served as the Company's President
and as the Chairman of the Company's Board of Directors, Mr. Alsup served as the
Company's Chief Architect, Mr. Smith served as the Company's Vice President of
Design and Mr. Horner served as the Company's Vice President of Product
Engineering and later as general manager of the Company's ROSS Microcomputer
division. Under their respective employment agreements, as of the end of Fiscal
1996, Messrs. Ross, Alsup, Smith and Horner were entitled to receive base
salaries of $264,706, $205,196, $196,630 and $147,835 per year, respectively,
each payable in bi-weekly installments. In addition, these agreements entitled
Messrs. Ross, Alsup, Smith and Horner to certain life, health, dental insurance
and other benefits, and to receive each year a minimum annual incentive bonus,
which for the twelve months ending June 30, 1996 was equal to 100% of their then
respective base salaries.
Following the expiration of each of the above-listed employment agreements,
each of the officers named (other than Mr. Horner) has continued to be employed
by the Company in his current position without an employment contract. The
Company is currently negotiating new employment agreements with each of these
executive officers, each of which agreements is expected to be retroactive to
July 1, 1996.
STOCK OPTION AND RESTRICTED STOCK PURCHASE PLAN 2.0
On August 18, 1994, the Company's Board of Directors approved and
implemented the Company's Stock Option and Restricted Stock Purchase Plan 2.0
(the "Option Plan"), which was amended and restated by the Board on September
12, 1995. The Option Plan was approved by Fujitsu, as the Company's majority
stockholder, on November 14, 1994 and again on October 30, 1995. Under the
Option Plan, a maximum of 5,575,000 shares of Common Stock may be issued
pursuant to the exercise of options which have been or may be granted under the
Option Plan. The Option Plan provides for the grant of both incentive stock
options ("ISOs") intended to qualify for preferential tax treatment under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and
nonstatutory stock options ("NSOs") that do not qualify for such treatment. All
officers and other selected employees, Directors, consultants and advisors of
the Company or its subsidiaries are eligible for the grant of NSOs. Only
employees are eligible for the grant of ISOs.
Under the Option Plan, the Company may in its discretion grant to eligible
participants (in lieu of options) rights to purchase shares of restricted Common
Stock. Such shares would be purchased pursuant to restricted stock purchase
agreements that grant the Company certain rights to repurchase the restricted
shares at their original issue price in the event that the participant's
employment or other qualifying relationship with the Company is terminated prior
to certain predetermined vesting dates.
The Option Plan also provides for the automatic grant of NSOs to Directors
who are not substantially full-time employees of the Company, including any
Director who is an employee or designee of any stockholder if such stockholder
permits the Director to hold the options as his or her personal property (a
"Qualifying Director"). Commencing September 1995, each person who thereafter
becomes a Qualifying Director will initially be granted on the date he or she
first becomes a Qualifying Director, unless he or she otherwise received Company
options within one year prior to such date, an NSO to purchase 10,000 shares of
Common Stock, which NSO shall vest ratably each month over four years and shall
have a term of ten years from the grant date. In addition, on each August 31
thereafter, each Qualifying Director shall receive another NSO to purchase an
additional 2,000 shares of Common Stock, which will vest ratably each month
during the 37th through 48th months following the grant date. All such NSOs must
have an exercise price not less than the per share fair market value on the date
of grant, and commencing September 1995, no Qualifying Director is eligible to
receive additional grants under the Option Plan.
The Option Plan is administered by the Stock Option Committee, which has
authority to construe and interpret the Option Plan, to define the terms used
therein, to prescribe, amend and rescind rules and regulations relating to the
Option Plan, to determine the individuals to whom and the time or times at which
options shall be granted, whether any option will be ISO or NSO, the number of
shares to be subject to each
10
<PAGE> 14
option or restricted stock purchase rights, the option price or restricted stock
purchase price, the number of installments, if any, in which each option or
restricted stock purchase right may be exercised, the circumstances under which
such exercisability may be accelerated, the duration of each option, and the
duration of leaves of absence which may be granted to participants without
constituting a termination of their employment for the purposes of the Option
Plan. The Stock Option Committee also has the authority to amend the terms of
any outstanding option or shares of restricted stock (with the consent of the
option holder or stockholder or as otherwise provided in the Option Plan or the
individual option or restricted stock purchase agreement) and to make all other
determinations necessary or advisable for the administration of the Option Plan.
Effective November 7, 1995, the Stock Option Committee must be comprised of
Directors of the Company who are disinterested within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Prior to the establishment of the Stock Option Committee, the Option Plan was
administered by the entire Board of Directors.
The purchase price for shares subject to any ISO granted under the Option
Plan shall not be less than 100% of the fair market value (as defined in the
Option Plan) of the shares of Common Stock on the date such option is granted.
Any NSO (excluding formula grants to non-employee Directors) or restricted stock
purchase right may provide for the purchase of shares of Common Stock at less
than fair market value, which would result in compensation expense to the
Company equal to the difference, on the date of grant of such NSO or purchase
right, between the fair market value of the Common Stock and the purchase price.
Any compensation expense is recognized ratably over the vesting period of the
option. In August 1995, the Company granted to each of five Directors options to
purchase 10,000 shares of Common Stock at an exercise price of $4.80 per share.
As a result, the Company will recognize a compensation expense for each month
from August 1995 through July 1999 at the rate of $1,500 per month for each such
Director, so long as such Director continues to serve on the Board. The purchase
price may be paid in the form of cash, check, exchange of shares of Common
Stock, or a five year, full recourse promissory note from the option holder or
restricted stock purchaser, as the case may be. The purchase price payable upon
exercise of any option may also be paid through a so-called "cashless exercise."
No option shall be exercisable after the earliest of the following: the
expiration of the option period as determined by the committee upon the grant
thereof (which in no event shall exceed ten years from the date of grant or, in
the case of ISOs held by any 10% stockholder, five years from the date of
grant); in the case of ISOs, six months after the date on which the optionee's
employment with the Company or its subsidiaries terminates (eighteen months in
the event of termination resulting from death or permanent disability); or, in
the case of NSOs, the expiration of such period following the termination of the
optionee's employment or other relationship with the Company or its
subsidiaries, as may be specified in the applicable option agreement.
A total of 5,575,000 shares of Common Stock has been reserved for issuance
under the Option Plan. As of July 1, 1996, the Company had granted options to
purchase an aggregate of 5,200,776 shares, net of cancellations, at a weighted
average exercise price of $1.60 per share. Of these 5,200,776 shares, 3,033,751
shares have been purchased by, or are subject to options held by, executive
officers or Directors of the Company. As of July 1, 1996, a total of 4,221,114
shares had been purchased upon exercise of a portion of such options. As of June
30, 1996, NSOs to purchase a total of 100,000 shares have been granted to
Directors, which generally vest ratably each month over a four-year period
commencing on the grant date. Options granted through July 1, 1996 to employees
at the commencement of their employment (covering an aggregate of 4,623,504
shares, including the 4,221,114 shares previously purchased) pursuant to the
Option Plan generally vest 40% on a date 18 to 24 months following the date of
grant, with the remaining 60% vesting ratably over the 36 months following such
initial vesting date. However, all options granted prior to August 1995 to
persons employed by the Company on or before June 28, 1993 became fully vested
upon the consummation of the Company's initial public offering of its Common
Stock. Further, all options granted prior to August 1995 to persons who became
employees of the Company after June 28, 1993 but before January 1, 1995 became
fully vested upon such consummation, which constituted "a change of control" (as
defined). As a result, options granted under the Option Plan to purchase a total
of 2,985,123 shares vested in full upon consummation of such initial public
offering. With respect to all options granted prior to August 1995 to
11
<PAGE> 15
employees hired on or after January 1, 1995, such acceleration of vesting will
only occur if (a) there is a sale of all or substantially all of the Company's
assets, (b) Fujitsu ceases to own, directly or indirectly, more than 51% of the
total voting power and fair market value of the Company's outstanding stock (or
ceases to have voting power with respect to such stock), subject to certain
exceptions, or (c) the Company within a 12-month period ceases to own more than
one half of its gross assets by virtue of one or more bulk transfers of its
assets. With respect to options granted during and after August 1995, a "change
of control" requiring acceleration of vesting will be deemed to have occurred
only if (a) there is a change in the identity of more than half of the members
of the Board (excluding redesignation by Fujitsu and/or Sun or any of their
respective designees) over any six month period or (b) the Company within a
12-month period ceases to own more than one half of its gross assets (measured
at the commencement of such period) by virtue of one or more bulk transfers of
its assets.
In order to encourage retention of employees whose options would vest upon
consummation of the Company's initial public offering, in September 1995 the
Company issued to such employees additional options to purchase an aggregate of
478,047 shares (generally allocated such that, as of December 1995, each such
employee would hold unvested options equal to 10% of his or her aggregate option
and option share holdings) with an exercise price of $12.00 per share. Such
options vest ratably each month over the four year period commencing December
31, 1995.
The Board of Directors may terminate, suspend or, subject to certain
restrictions, amend the Option Plan at any time.
1995 QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
To provide employees with an opportunity to purchase Common Stock through
payroll deductions, the Company established the 1995 Qualified Employee Stock
Purchase Plan (the "ESPP") on September 12, 1995, which was approved by Fujitsu
as the Company's majority stockholder on October 30, 1995. The ESPP is intended
to qualify for preferential tax treatment under Section 423 of the Code. Under
the ESPP, the Company's employees, subject to certain restrictions described
below, may purchase in the aggregate up to 40,000 shares of Common Stock at less
than the fair market value of such shares.
The ESPP is administered by the Stock Option Committee, which will
establish consecutive offering periods under the plan, none of which may exceed
twelve months. Each eligible employee who enrolls at the commencement of any
such offering period will be given an option to purchase shares during such
period at the lesser of 85% of (a) the fair market value on the commencement
date of the offering period or (b) the fair market value on the date of
exercise. Such purchases will be funded with deductions from such employee's
compensation, which may not exceed 10% nor be less than 2% of such employee's
compensation during any offering period. Further, no employee may be granted
options to purchase more than $25,000 of fair market value of Common Stock
during any calendar year.
A total of 40,000 shares of Common Stock have been reserved for issuance
under the ESPP, and, as of July 1, 1996, 4,774 shares of Common Stock have been
issued under the ESPP.
The Company has proposed an amendment and restatement of the ESPP. See
"Restatement of 1995 Qualified Employee Stock Purchase Plan."
401(K) PLAN
Effective January 1, 1989, the Company implemented its 401(k) Plan and
Trust (the "401(k) Plan"), pursuant to which each employee of the Company may
elect to defer into the 401(k) Plan a percentage of his or her salary, not to
exceed certain statutory limits. Each employee is eligible to begin
participation in the 401(k) Plan on the first day of the first month coinciding
with or following his or her date of hire by the Company. The Company may make
discretionary contributions to the 401(k) Plan on behalf of any participating
employee in an amount to be determined by the Board. Such discretionary Company
contributions are 20% vested after two years of service and continue to vest at
a rate of 20% per additional year
12
<PAGE> 16
of service thereafter. Salary deferral contributions are 100% vested when made.
As of July 1, 1996, the Company had not made a contribution to the 401(k) Plan
for Fiscal 1996.
EMPLOYEE BONUS PROGRAM
Under the Company's employee bonus program in effect during Fiscal 1996, if
during any fiscal quarter the Company's net sales for such quarter equaled or
exceeded (a) 110% of the Company's net sales for the immediately preceding
fiscal quarter or (b) 115% of the Company's net sales for the corresponding
fiscal quarter during the immediately preceding year, then the Company paid to
its employees (including all executive officers) aggregate bonuses equal to 3%
of the Company's net sales for such quarter, with each individual employee's
bonus being equal to his or her pro rata share of the aggregate bonus pool based
on the employees' respective compensation received in such quarter. The Board of
Directors, acting through the Human Resources Committee, is currently
considering various alternatives and additions to the bonus program, although
any replacement plan or revisions will likely continue to apply objective,
Company-wide performance criteria.
INDEMNIFICATION AGREEMENTS
The Company has entered into separate indemnification agreements with its
current Directors and officers that may require the Company, among other things,
to indemnify them against certain liabilities which may arise by reason of their
status or service as Directors or officers. The Company believes that these
agreements and its Certificate of Incorporation and Bylaw provisions regarding
indemnification of Directors and officers are necessary to attract and retain
qualified persons as Directors and officers.
HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Human Resources Committee, which is composed entirely of outside
directors, is responsible for making recommendations to the Board regarding
annual salaries and other compensation of the officers of the Company, providing
assistance and recommendations with respect to the compensation policies and
practices of the Company and assisting with the administration of the Company's
compensation plans.
The goals of the Human Resources Committee are to align executive officer
compensation with the Company's business performance and objectives, as well as
to enable the Company to attract, retain and reward well-qualified executives,
which the Human Resources Committee believes is crucial to the Company's
long-term success. In support of these goals, the Committee's general approach
towards executive compensation is to pay cash salaries commensurate with the
executives' experience and expertise and, where relevant, competitive with the
salaries paid to executives in the semiconductor industry and workstation
systems business in which the Company competes. To ensure competitive pay, the
Company from time to time reviews the compensation practices of other leading
companies in that industry and business, and believes that its compensation
levels fall in the upper-range in them.
In addition, to further align its executives' compensation with the
Company's short- and long-term business strategies, management initiatives and
values, the Human Resources Committee may, with the Board's approval, authorize
the payment of discretionary bonuses based upon an assessment of each
executive's contributions to the Company (although Messrs. Ross, Alsup, Smith
and Horner received contractual bonuses in Fiscal 1996 pursuant to the terms of
their respective employment agreements, which have since expired in accordance
with their terms). While the Committee believes that, in general, discretionary
bonuses should be related to Company, business unit and executive performance,
specific performance criteria have not been established, although the Committee
is in the process of reviewing various alternative bonus arrangements and
criteria for use in the future.
The Company's compensation program consists of both cash- and equity-based
compensation, which the Human Resource Committee believes permits the Company to
attract, retain and motivate well-qualified executive officers and employees who
can enhance stockholder value and manage and timely deliver increasingly
successful and complex products to the Company's customers. The components of
the Company's compensation program are the following:
13
<PAGE> 17
Cash-Based Compensation
The Human Resources Committee sets base salary guidelines and percentage
average annual merit increases on the basis of level of responsibility, prior
performance, the Committee's perception of the executive's ability to deliver
future performance and other factors. Compensation levels for competitive
positions in the Company's industries as well as geographic demographics are
considered in making this determination.
Under the Company's employee bonus program in effect during Fiscal 1996, if
during any fiscal quarter the Company's net sales achieved certain established
net sales targets, the Company distributed bonuses to all of its employees,
including its executive officers, with each individual employee's bonus being
equal to his or her pro rata share of the aggregate bonus pool based on the
employee's respective wages or salaries received in that quarter. In Fiscal
1996, the Company met these criteria during all quarters. The Committee is
currently considering various alternatives and additions to the bonus program,
although it anticipates that any replacement plan or revisions will also apply
objective, Company-wide performance criteria relative to shareholder value.
Equity-Based Compensation
The Human Resources Committee believes that stock ownership by key
executives provides a valuable incentive for such executives and helps align
executives' and stockholders' interests. To facilitate these objectives, the
Company adopted the Stock Option and Restricted Stock Purchase Plan 2.0 (the
"Stock Plan"), pursuant to which the Company may grant stock options to
executives (as well as other employees and Directors) to purchase up to
5,575,000 shares of the Company's Common Stock. The options become exercisable
over a defined period of employment with the Company in order to encourage
continued employment with the Company. In addition, under the Stock Plan, the
Company may in its discretion grant to eligible participants (in lieu of
options) rights to purchase shares of restricted Common Stock. In order to
encourage retention of employees (including executive officers) whose options
vested in connection with the Company's initial public offering, in September
1995 the Company granted to those employees whose options would become fully
vested in connection with the Company's initial public offering additional
options to purchase an aggregate of 478,047 shares (generally allocated such
that, as of December 1995, each such employee held unvested options equal to 10%
of his or her aggregate option and option share holdings), with an exercise
price equal to $12.00 per share. The Human Resources Committee makes
recommendations to the Stock Option Committee, which administers the Stock Plan,
regarding option grants and sales of restricted stock to the Company's executive
officers.
Roger Ross is one of the founders of the Company and has been the Company's
chief executive officer since its inception in 1988. Prior to the establishment
of the Human Resources Committee in September 1995, Mr. Ross's compensation was
set by the entire Board (with Mr. Ross abstaining). In determining Mr. Ross's
compensation, the Board evaluated, and the Committee in the future will
evaluate, Company and individual performance, compensation paid to the Company's
other executive officers and total compensation (including salary, bonus and
equity compensation) paid to chief executive officers of comparable
semiconductor and systems companies. In Fiscal 1996, Mr. Ross's salary was
$264,706, and he received cash bonuses of $299,960 under the terms of his
employment agreement and the Company's employee bonus plan. In order to
strengthen the link between Mr. Ross's compensation and the Company's growth and
profitability, the Company also awards Mr. Ross with compensation in the form of
stock options. The Committee believes that the market will reward superior
performance by the Company by increasing the value of his (and the other
stockholders') equity and will penalize unsatisfactory performance by
diminishing or eliminating that value. As of July 1, 1996, Mr. Ross owned
1,600,000 shares of Common Stock, and had options to purchase 177,778 shares
(all of which were granted in Fiscal 1996). Accordingly, Mr. Ross has, together
with the Company's other stockholders, a substantial stake in the Company's
future performance and success.
Recent changes in the federal tax law include new requirements in order for
annual compensation in excess of $1 million payable to the chief executive
officer and certain executive officers of the Company to be fully deductible.
The Company will not necessarily and in all circumstances limit executive
compensation to that deductible under these provisions, which are set forth in
Section 162(m) of the Internal Revenue Code.
14
<PAGE> 18
The Committee will consider, however, various alternatives to preserve the
deductibility of compensation payments and benefits to the extent reasonably
practicable and to the extent consistent with its other objectives.
HUMAN RESOURCES COMMITTEE
Fred T. May (Chairman)
Yasushi Tajiri
Edward F. Thompson
July 17, 1996
15
<PAGE> 19
PERFORMANCE GRAPH
Set forth below is a comparison of the percentage change in total
shareholder return of the Company's Common Stock and the returns for the NASDAQ
National Market System and the S&P Electronic Index for Semiconductor Companies.
The total shareholder return calculation is for the period commencing on
November 7, 1995 (the date of the Company's initial public offering of Common
Stock) and includes the reinvestment of dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN* AMONG THE COMPANY,
S&P ELECTRONIC INDEX FOR SEMICONDUCTOR COMPANIES & THE
NASDAQ NATIONAL MARKET SYSTEM INDEX**
<TABLE>
<CAPTION>
MEASUREMENT PERIOD S & P ELEC-
(FISCAL YEAR COVERED) COMPANY NASDAQ TRONIC
<S> <C> <C> <C>
NOV. 7, 1995 100.00 100.00 100.00
APRIL 1, 1996 076.79 104.18 074.61
</TABLE>
* ASSUMES $100 INVESTED ON NOVEMBER 7, 1995 IN COMMON STOCK OF THE COMPANY, S&P
ELECTRONIC INDEX FOR SEMICONDUCTOR COMPANIES & THE NASDAQ NATIONAL MARKET
SYSTEM INDEX
** TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
The above graph shows historical stock price performance (including
reinvestment of dividends) and is not necessarily indicative of future
performance.
16
<PAGE> 20
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From April 4, 1995 to July 1, 1996, the Company purchased a significant
portion of its wafer fabrication needs, in addition to other computer related
products, from Fujitsu. Such purchases totaled $44.0 million in the aggregate
over such period. From April 4, 1995 to July 1, 1996, the Company sold
microprocessor products to Fujitsu and ICL (a subsidiary of Fujitsu) for an
aggregate amount of $24.3 million. The Company believes that the above-described
purchases from and sales to Fujitsu were on terms comparable to those available
from unaffiliated suppliers or purchasers (as the case may be) except that
Fujitsu provides more favorable payment terms to the Company (depending on the
type of product).
Sun, which was a beneficial owner of more than five percent of the
Company's Common Stock during a portion of Fiscal 1996, is the Company's largest
customer and, in Fiscal 1996, the Company had approximately $45.0 million of
sales to Sun, including sales pursuant to a letter agreement between the Company
and Sun dated December 5, 1995 relating to the "Colorado 3" microprocessor. The
terms of such sales were negotiated on an arms-length basis.
Fujitsu was a guarantor of the Company's obligations under its credit
facility but will not continue to so guarantee these obligations following the
Company's repayment of outstanding amounts under the facility, which repayment
occurred in January 1996.
In June 1995, the Company obtained a sublicense from Fujitsu to use certain
Solaris software distributed by Sun, in exchange for an up-front fee of $72,000
and an annual maintenance fee of $25,000 to be paid in each year beginning in
1996. The Company believes that this fee is lower than that which the Company
would be required to pay if such software had been acquired directly from Sun.
On November 6, 1995, the Company entered into an indemnification agreement
with Fujitsu pursuant to which the Company agreed to indemnify Fujitsu against
certain liabilities that Fujitsu might incur in connection with the Company's
initial public offering of Common Stock, including under the federal securities
laws.
On November 6, 1995, the Company entered into a Securities Purchase
Agreement (the "Purchase Agreement") with Sun pursuant to which the Company sold
Sun 1,057,143 shares of the Company's Common Stock for an aggregate purchase
price of $13,764,000. The purchase price of $13.02 per share equalled the net
price per share received by the Company in its initial public offering of Common
Stock. Under the terms of the Purchase Agreement, the Company agreed to
indemnify Sun against certain liabilities that Sun might incur in connection
with the Company's initial public offering of Common Stock, including under the
federal securities laws and Sun agreed to certain "standstill" provisions.
Pursuant to the Purchase Agreement, the Company also issued to Sun a warrant to
purchase additional shares of the Company's Common Stock at the same per share
price, which warrant expired unexercised on May 8, 1996 in accordance with its
terms.
On November 10, 1995, the Company, Fujitsu, Sun and Roger Ross entered into
a Shareholders Agreement relating to voting rights and certain other matters.
See "Security Ownership of Certain Beneficial Owners and Management."
On March 26, 1996, the Company consummated the transfer of all of the
outstanding capital stock of ROSS Computer Corp. ("RCC"), which was a
wholly-owned subsidiary of the Company, to Fujitsu. As consideration for the
transfer to Fujitsu of the Company's interest in RCC, Fujitsu transferred to the
Company 321,429 shares of the Company's Common Stock. The terms of the transfer
were approved by the Independent Committee.
As described under "Executive Compensation," the Company had employment
agreements with certain of its executive officers.
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<PAGE> 21
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth as of July 1, 1996 information as to the
beneficial ownership of the Company's Common Stock by (i) each person who is
known by the Company to own beneficially more than 5% of its outstanding shares
of Common Stock (for whom addresses are also provided), (ii) each of the
Company's Directors, (iii) each Named Officer (other than Mr. Horner and Mr.
Beals, who resigned effective June 30, 1996 and June 25, 1996, respectively),
and (iv) all executive officers and Directors of the Company as a group. In each
instance, information as to the number of shares owned and the nature of
ownership has been provided by the individual or entity identified or described
and is not within the direct knowledge of the Company.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF SHARES BENEFICIALLY PERCENT OF
BENEFICIAL OWNER(1) OWNED CLASS(2)
- ------------------------------------------------------------------ ------------------- ----------
<S> <C> <C>
Fujitsu Limited(3)................................................ 14,078,571 60.2%
1-1, Kamikodanaka 4-Chome
Nakahara-ku
Kawasaki 211-88, Japan
Roger D. Ross(3)(4)............................................... 1,643,541 7.0%
c/o ROSS Technology, Inc.
5316 Highway 290 West
Suite 500
Austin, TX 78735
Mitchell K. Alsup(5).............................................. 326,667 1.4%
Trevor S. Smith(6)................................................ 408,333 1.7%
Glen C. Iaggi(7).................................................. 81,667 *
Joe D. Jones(7)................................................... 81,667 *
Fred T. May(8).................................................... 98,708 *
Edward F. Thompson(9)............................................. 12,083 *
Ryusuke Hoshikawa(8)(10).......................................... 2,708 *
Satoshi Imokawa(8)(10)............................................ 2,708 *
William J. Raduchel(11)........................................... 0 *
Masahiro Saida(8)(10)............................................. 2,708 *
Yasushi Tajiri(8)(10)............................................. 2,708 *
Seiichi Yoshikawa(10)(12)......................................... 1,458 *
All Directors and Executive....................................... 2,740,197 11.7%
Officers as a group
(16 persons)(4)-(12)
</TABLE>
- ---------------
* Represents beneficial ownership of less than 1% of the Common Stock.
(1) Address provided for beneficial owners of more than 5% of the Common Stock.
(2) Applicable percentages of beneficial ownership are based on 23,386,604
shares of Common Stock outstanding as of July 1, 1996. Additionally, where
applicable, shares of Common Stock underlying options exercisable by any
listed stockholder within 60 days of the date of this Proxy Statement have
been deemed to be outstanding and beneficially owned by such stockholder,
but only for purposes of determining such stockholder's (and not any other
stockholder's) percentage holdings.
(3) The Company, Fujitsu, Sun and Mr. Ross have entered into a Shareholders
Agreement pursuant to which Sun and Mr. Ross have agreed to vote their
respective shares of Common Stock in favor of the slate of nominees to the
Company's Board of Directors approved by the Board, which slate will
include, under certain circumstances, an individual designated by Sun.
Pursuant to this agreement, Fujitsu and Mr. Ross (so long as he owns at
least 5% of the outstanding shares of the Company's Common Stock) have
agreed to vote under certain circumstances for a designee of Sun. Pursuant
to this agreement, Fujitsu and Mr. Ross will vote to elect Sun's designee,
Mr. Raduchel, to the Company's Board of Directors.
(4) Includes options exercisable for 33,333 shares of Common Stock which will
vest within 60 days of the date of this Proxy Statement. Also includes
10,208 shares beneficially held by Mr. Ross' spouse (including 208 shares
purchasable upon exercise of stock options which will vest within 60 days
of the date of this Proxy Statement), although Mr. Ross disclaims
beneficial ownership of such shares.
(5) Includes options exercisable for 6,667 shares of Common Stock which will
vest within 60 days of the date of this Proxy Statement.
(6) Includes options exercisable for 8,333 shares of Common Stock which will
vest within 60 days of the date of this Proxy Statement.
18
<PAGE> 22
(7) Includes options exercisable for 1,667 shares of Common Stock which will
vest within 60 days of the date of this Proxy Statement.
(8) Includes options exercisable for 2,708 shares of Common Stock which will
vest within 60 days of the date of this Proxy Statement.
(9) Includes options exercisable for 7,083 shares of Common Stock which will
vest within 60 days of the date of this Proxy Statement.
(10) Beneficial ownership of shares held by Fujitsu is not attributed to
Directors who are employees of Fujitsu.
(11) Mr. Raduchel is an employee of Sun. Pursuant to Sun's internal policies,
Mr. Raduchel declined to accept a grant of options to purchase shares of
Common Stock pursuant to the Company's Stock Option and Restricted Stock
Purchase Plan 2.0. In addition, beneficial ownership of shares held by Sun
is not attributed to Mr. Raduchel.
(12) Includes options exercisable for 1,458 shares of Common Stock which will
vest within 60 days of the date of this Proxy Statement.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Under Section 16(a) of the Exchange Act, the officers and Directors of the
Company and certain shareholders beneficially owning more than 10% of the
Company's Common Stock ("Ten Percent Shareholders") are required to file with
the Securities and Exchange Commission and the Company reports of ownership, and
changes in ownership, of Company Common Stock. Based solely on a review of the
reports received by it, the Company believes that, during Fiscal 1996, all of
its officers and Directors and Ten Percent Shareholders complied with all
applicable filing requirements under Section 16(a), except that Messrs.
Thompson, Beals and Gutierrez each filed one late report relating to a single
acquisition of Common Stock, and David Pulling, a former executive officer of
the Company, failed to file two reports with respect to two acquisitions of
Common Stock.
19
<PAGE> 23
APPROVAL OF THE RESTATED 1995 QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
(ITEM NO. 2 ON PROXY CARD)
The Company's stockholders are being asked to approve the restatement of
the ESPP (as restated, the "Purchase Plan"). Under the Purchase Plan, the
Company's employees, subject to certain restrictions, may purchase in the
aggregate up to 40,000 shares of Common Stock at less than the fair market value
of such shares. There are currently a total of 35,226 shares of Common Stock
available for sale and reserved for issuance under the Purchase Plan.
The Purchase Plan is intended as an employment incentive and to encourage
equity ownership by certain employees of the Company and of certain of its
participating subsidiaries (if any) in order to increase their proprietary
interest in the Company's success through participation in a payroll
deduction-based employee stock purchase plan under Section 423 of the Code. The
restatement of the Purchase Plan was approved by the Board on July 17, 1996 and
will become effective on August 1, 1996, subject to stockholder approval at the
Annual Meeting. The restatement is intended to provide the Plan administrator
with more flexibility in structuring the offering periods and purchase intervals
in effect under the Purchase Plan, to increase the incentives provided by the
Purchase Plan by revising the offering price every six months if the value of
the Company's Common Stock declines between Offering Periods, and to make
certain other minor changes, including with respect to eligibility standards.
The following is a summary of the principal features of the Purchase Plan
as restated. The summary, however, does not purport to be a complete description
of all of the provisions of the Purchase Plan, a copy of which is attached as
Annex A to this Proxy Statement and incorporated herein by reference.
PURPOSE
The Purchase Plan is intended as an employment incentive and to encourage
equity ownership by certain employees of the Company and any subsidiary
designated by the Board of Directors ("Designated Subsidiaries") in order to
increase their proprietary interest in the Company's success.
ADMINISTRATION
The Purchase Plan will be administered by the Stock Option Committee or
such other committee of the Board as the Board may designate from time to time
to administer the Purchase Plan (the "Committee"). All questions and
interpretations of the Purchase Plan are determined by the Committee and its
determinations are final and conclusive. Members of the Board of Directors who
are eligible employees are entitled to participate in the Purchase Plan.
ELIGIBILITY
Any person who is customarily employed by the Company or a Designated
Subsidiary for at least twenty hours per week and more than five months in a
calendar year is eligible to participate in the Purchase Plan, provided that the
employee has been employed by the Company or a Designated Subsidiary for at
least one year immediately prior to the commencement of an offering period and
subject to certain limitations imposed by Section 423(b) of the Code. In
addition, under the Purchase Plan, as restated, after July 31, 1996 no employee
will be eligible to participate in the Purchase Plan if as of any offering date
such employee is subject to the restrictions imposed under Section 16(b) of the
Securities Exchange Act, such employee is a highly compensated employee within
the meaning of Section 414 of the Code and such employee is otherwise entitled
to participate in an employee stock purchase plan established by the Company
which is not qualified under Section 423 of the Code. As of July 15, 1996,
approximately 139 employees were eligible to participate in the Purchase Plan.
OFFERING DATES
The Purchase Plan, as restated, provides for 24-month offering periods,
beginning every six months, with exercise dates at the end of each six-month
period, at which time payroll deductions are used to purchase the Company's
Common Stock. The first 24-month period will commence on August 1, 1996. Subject
to certain limitations, the Committee may change the duration of the offering
periods without stockholder approval,
20
<PAGE> 24
provided that the change is announced at least 15 days prior to the beginning of
the first offering period to be affected. As originally adopted, the Purchase
Plan established consecutive offering periods, none of which could exceed 12
months.
PARTICIPATION IN THE PLAN
Eligible employees become participants in the Purchase Plan by delivering
to the Committee an election to participate authorizing payroll deductions over
the following offering period. An employee who becomes eligible to participate
in the Purchase Plan after the commencement of an offering period may not
participate in the Purchase Plan until the commencement of the next offering
period.
PURCHASE PRICE
The purchase price of shares of Common Stock sold under the Purchase Plan
is the lower of 85% of the fair market value of a share of Common Stock on the
date of commencement of the offering period or 85% of the fair market value of a
share of Common Stock on the day prior to the last day of the six-month exercise
period. As long as the Common Stock is traded on the NASDAQ National Market
System and does not trade on a national securities exchange, the fair market
value shall be the closing sales price of the Common Stock as of such date.
PAYMENT OF PURCHASE PRICE
The purchase price of the shares is accumulated through payroll deductions
during the offering period. The deductions may not be less than 2% or more than
10% of a participant's eligible compensation, which is defined in the Purchase
Plan to include the regular straight time salary or earnings (and, in the case
of sales persons, sales commissions) during the offering period, as well as,
unless otherwise specified by the Committee, any payments for overtime, shift
premiums, incentive compensation, bonuses and commissions. A participant may
discontinue his or her participation in the Purchase Plan and, subject to such
rules as the Committee may establish, may change the rate of payroll deductions
at any time during the offering period, provided that no more than one such
change may be made during any six-month exercise period and no more than two
such changes may be made during any offering period. Payroll deductions begin on
the first payday following the offering date and continue at the same rate until
the end of the offering period unless changed or terminated as provided in the
Purchase Plan.
All payroll deductions are credited to the participant's account under the
Purchase Plan and are deposited with the general funds of the Company. All
payroll deductions received or held by the Company may be used by the Company
for any corporate purpose.
PURCHASE OF STOCK; EXERCISE OF OPTIONS
At the beginning of each offering period, by executing a subscription
agreement to participate in an offering under the Purchase Plan, the participant
is in effect given an option which may or may not be exercised during each
six-month exercise period during the offering period. The maximum number of
shares of Common Stock available to a participant in an offering is determined
by dividing $100,000 by the fair market value of a share of Common Stock at the
beginning of the offering period. If the number of shares that would otherwise
be placed under option at the beginning of an offering period exceeds the number
of shares then available under the Purchase Plan, the Company shall make a pro
rata allocation of the shares remaining in as uniform a manner as practicable
and as it shall determine to be equitable. Unless the participant's
participation is discontinued, each participant's option for the purchase of
shares will be exercised automatically at the end of the exercise period for the
maximum number of shares at the applicable price. See "Withdrawal" and
"Termination of Employment."
Notwithstanding the foregoing, no employee will be eligible to subscribe
for shares of Common Stock pursuant to the Purchase Plan if, immediately after
the grant of such option, the employee would own 5% or more of the voting power
or value of all classes of stock of the Company (including stock which may be
21
<PAGE> 25
purchased under the Plan or pursuant to any other options), nor shall any
employee be granted an option which would permit the employee to purchase more
than $25,000 worth of stock (determined at the fair market value of the shares
at the time the option is granted) in any calendar year.
OFFERING PERIOD ROLL-OVER
Under the Purchase Plan, as restated, if the fair market value of the
Company's common stock is lower at the end of any six-month exercise period than
it was at the beginning of the offering period, a new offering period will
commence on the day after that exercise date and all participants will be
automatically re-enrolled in a new 24-month offering period, unless a
participant objects by written statement prior to the occurrence of such
re-enrollment. The Purchase Plan, as originally adopted, did not include a
similar provision.
WITHDRAWAL
A participant may terminate participation in a given offering period in
whole, but not in part, by signing and delivering to the Company a notice of
withdrawal from the Purchase Plan. Such withdrawal may be elected at any time
prior to the end of the applicable six-month exercise period. Any withdrawal by
a participant of accumulated payroll deductions for a given offering period
automatically terminates the participant's interest in the offering. An
employee's failure to maintain any of the requirements necessary for
participation in the Purchase Plan during an offering period will be deemed to
be a withdrawal from that offering. A participant's withdrawal from an offering
will not affect such participant's participation in subsequent offerings under
the Purchase Plan.
TERMINATION OF EMPLOYMENT
Termination of a participant's employment for any reason, including
retirement or death, prior to the end of the offering period immediately cancels
the employee's participation in the Purchase Plan. In such event, the payroll
deductions credited to the participant's account will be returned to such
participant, or, in the case of the participant's death, to the participant's
beneficiary, unless the beneficiary elects prior to the exercise date to
exercise the participant's option.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
If any change is made in the Company's capitalization, such as a stock
dividend or stock split, which results in an increase or decrease in the number
of outstanding shares of Common Stock without receipt of consideration by the
Company, appropriate adjustments will be made by the Committee in the shares
subject to the Purchase Plan and in the purchase price per share for each
option.
AMENDMENT AND TERMINATION OF THE PLAN
The Committee may from time to time alter, amend, suspend, or discontinue
the Purchase Plan or alter or amend any and all agreements granted under the
Purchase Plan to the extent permitted by law. However, no such action of the
Committee may, without the approval of the Board of Directors and the Company's
stockholders, alter the provisions of the Purchase Plan so as to (i) increase
the maximum number of shares that may be issued pursuant to all offerings under
the Purchase Plan or the maximum number of shares that each employee may
purchase pursuant to the exercise of an option in an offering; (ii) extend the
term of the Purchase Plan beyond August 31, 2005 or the maximum term of
agreements entered into under the Purchase Plan or the maximum term of offering
periods beyond twenty-seven months; (iii) decrease the minimum purchase price
under the Purchase Plan; or (iv) otherwise materially increase the benefits
accruing to Purchase Plan participants or materially modify the requirements as
to eligibility for participation in the Purchase Plan.
TAX INFORMATION
The Purchase Plan, and the right of participants to make purchases
thereunder, is intended to qualify under the provisions of Sections 421 and 423
of the Code. Under these provisions, no income will be taxable to
22
<PAGE> 26
a participant and no compensation deduction is available to the Company at the
time of grant of an option or purchase of shares. Upon disposition of the
shares, the participant will generally be subject to tax and the amount of the
tax will depend upon the holding period. If the shares have been held by the
participant for more than two years after the date of option grant and more than
one year from the date the shares are purchased, the lesser of (a) the excess of
the fair market value of the shares at the time of such disposition over the
option price, or (b) 15% of the fair market value of the shares at the time the
option was granted, will be treated as ordinary income, and any further gain
will be treated as long-term capital gain. No compensation deduction will be
available to the Company in such circumstances. If the shares are disposed of
before the expiration of these holding periods, the excess of the fair market
value of the shares on the purchase date over the option price will be treated
as ordinary income in the year of disposition and will generally be allowed as a
compensation deduction to the Company. Any further gain or loss on such
disposition will be long-term or short-term capital gain or loss, depending on
the holding period, and no deduction will be available to the Company for such
further gain or loss. Different rules may apply with respect to participants
subject to Section 16(b) of the Exchange Act.
The excess of the fair market value of the shares purchased pursuant to the
Purchase Plan over the option price may give rise at the time of exercise to
alternative minimum taxable income subject to the alternative minimum tax for
the participant.
Section 162(m) of the Code bars the deduction of compensation in excess of
$1 million per year paid to certain of the Company's employees that is not
performance-based compensation within the meaning of that provision. Shares
obtained pursuant to the Purchase Plan will not be treated as performance-based
compensation. Accordingly, a disposition of such shares by an employee whose
compensation is subject to Section 162(m) may not be deductible to the Company.
The preceding discussion of federal income tax consequences does not
purport to be a complete analysis of all of the potential tax effects of the
Purchase Plan. It is based upon laws, regulations, rulings and decisions now in
effect, all of which are subject to change. No information is provided with
respect to persons who are not citizens or residents of the United States, or
foreign, state or local tax laws, or estate and gift tax considerations. In
addition, the tax consequences to a particular participant may be affected by
matters not discussed above.
Affirmative votes representing a majority of shares of Common Stock present
in person or represented by proxy at the Annual Meeting and entitled to vote on
this proposal will be required to approve this proposal. Abstentions will count
as a vote against this proposal because they will be counted as present at the
meeting and entitled to vote on this proposal. However, broker non-votes will
not be so considered and thus will not affect the determination as to whether
the requisite majority has been obtained with respect to this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RESTATEMENT
OF THE PURCHASE PLAN.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of KPMG Peat Marwick LLP ("KPMG") has served as the Company's
independent certified public accountants for Fiscal 1996. Representatives of
KPMG are expected to be present at the Annual Meeting and will be available to
respond to appropriate questions and to make any statements they desire. The
Company is in the process of selecting its independent accountants for the
fiscal year ending March 31, 1997.
23
<PAGE> 27
OTHER
The Company does not know of any other business to be presented to the
Annual Meeting and does not intend to bring any other matters before the Annual
Meeting. However, if any other matters properly come before the Annual Meeting,
the persons named in the accompanying proxy are empowered, in the absence of
contrary instructions, to vote according to their best judgment.
STOCKHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Stockholders who wish to present proposals for action, or to nominate
Directors, at the next annual meeting of stockholders of the Company (that is,
the next annual meeting following the Annual Meeting that is now scheduled to be
held on August 13, 1996) must give written notice thereof to the Secretary of
the Company at the address set forth on the cover page of this Proxy Statement
not less than sixty days in advance of such meeting or, if later, the tenth day
following the first public announcement of such meeting. Such written notice
must contain the information required by Section 2.14 of Article II of the
Company's Bylaws.
In order to be eligible for inclusion in the Company's proxy statement and
proxy card for the next annual meeting of stockholders pursuant to Rule 14a-8
under the Securities Exchange Act of 1934, stockholder proposals must be
received by the Secretary of the Company at its principal executive offices no
later than March 21, 1997. However, in order for such stockholder proposals to
be eligible to be brought before the stockholders at the next annual meeting,
the stockholder submitting such proposals must also comply with the procedures,
including the deadlines, required by Section 2.14 of Article II of the Company's
Bylaws, as referenced in the preceding paragraph. Stockholder nominations of
Directors are not stockholder proposals within the meaning of Rule 14a-8 and are
not eligible for inclusion in the Company's proxy statement.
ANNUAL REPORT
The Company is delivering with this Proxy Statement a copy of its Annual
Report to Stockholders for Fiscal 1996. However, it is not intended that the
Annual Report to Stockholders be a part of this Proxy Statement or a
solicitation of proxies.
By Order of the Board Directors
/s/ ROGER D. ROSS
Roger D. Ross
Chairman of the Board, President
and Chief Executive Officer
Austin, Texas
July 19, 1996
PLEASE PROMPTLY VOTE, DATE, SIGN AND RETURN THE ENCLOSED PROXY, WHETHER OR NOT
YOU EXPECT TO ATTEND THE MEETING. A RETURN SELF-ADDRESSED ENVELOPE IS ENCLOSED
FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
A PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE APPRECIATED. AT ANY
TIME BEFORE A VOTE AT THE ANNUAL MEETING YOU MAY REVOKE YOUR PROXY BY (1) A
LATER DATED PROXY OR A WRITTEN NOTICE OF REVOCATION DELIVERED TO THE INSPECTOR
OF ELECTIONS OR (2) ADVISING THE INSPECTOR OF ELECTIONS AT THE MEETING THAT YOU
ELECT TO VOTE IN PERSON. ATTENDANCE AT THE MEETING WILL NOT IN AND OF ITSELF
REVOKE A PROXY.
THE ANNUAL MEETING IS ON AUGUST 13, 1996. PLEASE RETURN YOUR PROXY IN TIME.
24
<PAGE> 28
ANNEX A
ROSS TECHNOLOGY, INC.
RESTATED 1995 QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
THE ROSS TECHNOLOGY, INC. 1995 QUALIFIED EMPLOYEE STOCK PURCHASE PLAN is
hereby restated in its entirety as of August 1, 1996, as follows:
1. DEFINITIONS.
(a) "Beneficiary" means the beneficiary, executor, administrator, or
personal representative selected by an Employee or determined by the Company in
accordance with the procedures set forth in Paragraph 9(b) below.
(b) "Board" means the Board of Directors of ROSS Technology, Inc.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the Stock Option Committee of the Board or such other
committee of the Board as the Board may designate from time to time to
administer the Plan.
(e) "Common Stock" means the Common Stock, no par value, of ROSS
Technology, Inc.
(f) "Company" means ROSS Technology, Inc., a Delaware corporation.
(g) "Compensation" means all total regular compensation (consisting of
regular fixed basic salary, straight time earnings and, in the case of
salespersons, sales commissions). In addition, unless otherwise specified by the
Committee with respect to all participants, "Compensation" shall include all
cash payments for overtime, shift premium, incentive compensation, incentive
payments, bonuses and commissions.
(h) "Designated Subsidiaries" shall mean the Subsidiaries which have been
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan.
(i) "Eligible Employee" means an individual who satisfies the requirements
set forth in Paragraph 3.
(j) "Exercise Date" shall mean the date occurring one day prior to the last
day of the sixth, twelfth, eighteenth and twenty-fourth months after the
Offering Date of each Offering Period.
(k) "Exercise Period" shall mean a period commencing on an Offering Date or
on the day after an Exercise Date and terminating one (1) day prior to the date
six (6) months later.
(l) "Fair Market Value" as of any given date means (i) the average of the
highest and the lowest sale prices of the Common Stock on the principal national
securities exchange on which the Common Stock is traded, or (ii) if such Common
Stock is not traded on any such exchange, the closing sales price of the Common
Stock on the NASDAQ National Market System, or (iii) if the Common Stock is not
traded on any such exchange or the NASDAQ National Market System, the average of
the last bid and asked prices of the Common Stock in the "over the counter"
market, or (iv) if the Common Stock is not publicly traded as of such date, the
fair market value of a share of Common Stock as determined by the Committee with
reference to the most recent sale price of the Common Stock, the earnings
history, book value, prospects of the Company in light of market conditions
generally and such other factors as the Committee may deem appropriate to
reflect the fair market value thereof.
(m) "Offering Date" shall mean the first day of each Offering Period of the
Plan.
(n) "Offering Period" shall mean a period of twenty-four (24) months
consisting of four (4) six-month Exercise Periods during which options granted
pursuant to the Plan may be exercised.
(o) "Plan" means this 1995 Qualified Employee Stock Purchase Plan.
A-1
<PAGE> 29
(p) "Subsidiary" shall mean a corporation, domestic or foreign, of which
not less than fifty percent (50%) of the voting shares are held by the Company
or a Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
2. PURPOSE.
This 1995 Qualified Employee Stock Purchase Plan is intended as an
employment incentive and to encourage equity ownership by certain employees of
the Company and of certain of its Designated Subsidiaries in order to increase
their proprietary interest in the Company's success. It is the intention of the
Company to have the Plan qualify as an "employee stock purchase plan" under
Section 423 of the Code. The provisions of the Plan shall, accordingly, be
construed so as to extend and limit the participation in a manner consistent
with the requirements of the Code.
3. ELIGIBILITY.
(a) Requirements. The individuals eligible to participate in the Plan shall
be the employees (including officers) of the Company or of a participating
Designated Subsidiary who, immediately prior to the commencement of an Offering
Period hereunder:
(i) Have entered into an Employee Subscription Agreement with the
Company governing participation in the Plan in a form approved by the
Committee and substantially similar to Exhibit 1 hereto;
(ii) Have been employed by the Company or a Designated Subsidiary for
at least one (1) year (regardless of whether such Designated Subsidiary was
a Designated Subsidiary during the entire one-year period);
(iii) Are customarily employed by the Company or a Designated
Subsidiary for more than twenty (20) hours per week;
(iv) Are customarily employed by the Company or a Designated
Subsidiary for more than five (5) months per calendar year; and
(v) Have executed and delivered to the Company (if requested by the
Committee) an Investment Representation Letter in a form approved by the
Committee and substantially similar to Exhibit 2 hereto.
(b) Limitations on Eligibility.
(i) No employee will be eligible to participate in the Plan if,
immediately after the grant of an option under the Plan, such employee
would own stock and/or hold outstanding options to purchase stock
possessing five percent (5%) or more of the total combined voting power or
value of all classes of stock of the Company or any Subsidiary. For this
purpose, the rules promulgated under Section 425(d) of the Code shall apply
in determining the stock ownership of an employee, and stock which the
employee may purchase under outstanding agreements shall be treated as
stock owned by the employee.
(ii) After July 31, 1996, no employee will be eligible to participate
in the Plan if as of any Offering Date such employee is subject to the
restrictions imposed under Section 16(b) of the Securities Exchange Act,
such employee is a highly compensated employee within the meaning of
Section 414 of the Code and such employee is otherwise entitled to
participate in an employee stock purchase plan established by the Company
which is not qualified under Section 423 of the Code.
(c) Determination of One-Year Employment. For purposes of determining
whether or not an employee of the Company or a Designated Subsidiary has met the
one-year employment requirement set forth above:
(i) Employment by an entity all or substantially all of the assets of
which have been acquired by or which have been merged into the Company or a
Designated Subsidiary shall be considered as employment by the Company or a
Designated Subsidiary; and
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(ii) Employment by any other entity which the Committee designates,
under nondiscriminatory rules uniformly applied to similarly situated
persons, shall be deemed to be employment by the Company or a Designated
Subsidiary.
4. PARTICIPATION AND PAYROLL DEDUCTIONS.
(a) Election To Participate. Each Eligible Employee may participate in the
Plan with respect to an Offering Period by filing with the Committee or its
designee, prior to the commencement of that Offering Period, an Election to
Participate form authorizing specified regular payroll deductions over the
following Offering Period. A participant's Election to Participate shall remain
in effect for successive Offering Periods unless revised as provided herein or
terminated as provided in Paragraph 6. Subject to such rules as the Committee
may establish, a participant may also change the percentage of payroll
deductions during the Offering Period by filing a new Election to Participate
form prior to the end of the Offering Period. A subsequent Election to
Participate form received by the Company shall be made effective as soon as
practicable by the Company, but there can be no guaranty that any Election to
Participate will be given effect with respect to the immediately following
payroll period. No Election to Participate form increasing or decreasing payroll
deduction levels for an Offering Period will affect previously deducted amounts,
and no such amended Election to Participate forms may be filed more than one (1)
time during any six-month Offering Period or two (2) times during any
twelve-month Offering Period or more often than as designated by the Committee
with respect to an Offering Period of any other duration.
(b) Amount of Payroll Deductions. Participants may authorize payroll
deductions in amounts from two percent (2%) to ten percent (10%) of the
participant's Compensation. The aggregate of such payroll deductions during any
Offering Period shall not exceed ten percent (10%) of a participant's aggregate
Compensation during such Offering Period.
(c) Timing of Payroll Deductions. Payroll deductions shall be made
regularly and in equal percentages of Compensation earned during each payroll
period commencing with the first payroll period following the Offering Date.
(d) Payroll Deduction Accounts. Each account for the accumulation of
payroll deductions shall be in the name of the participant. Contributions into
such account for the purchase of shares under the Plan shall be made only from
payroll deductions. Statements of account will be given to participant promptly
following any Exercise Date, which statements will set forth the amounts of
payroll deductions, the per share purchase price, the number of shares purchased
and the remaining cash balance, if any. Such accounts shall be record-keeping
entries only, and no funds will be separately deposited into a trust fund or
otherwise segregated from the general funds of the Company or a Designated
Subsidiary. No interest shall be payable in respect of payroll deduction
accounts or shares of Common Stock pending issuance or repayment. As provided in
Paragraph 6(a), a participant may at any time withdraw from the account the
balance of his payroll deductions not theretofore invested and thereby cease to
be a participating Employee in the Plan for the current Offering Period.
5. OPERATION OF THE PLAN.
(a) Offering Periods. The Plan shall be implemented by consecutive Offering
Periods beginning every six months. The Committee shall distribute to each
Eligible Employee a Notice of Offering. Such Notice of Offering shall set forth
the first and last days of each Offering Period. The Plan shall continue
thereafter until terminated in accordance with Paragraph 10 hereof. Subject to
the requirements of Paragraph 10, the Committee shall have the power to change
the duration of Offering Periods with respect to future offerings without
shareholder approval if such change is announced at least fifteen (15) days
prior to the scheduled beginning of the first Offering Period to be affected.
For all purposes of the Plan, the "grant date" of each Offering Period shall be
deemed to be the Offering Date.
(b) Grant of Options. On the Offering Date of each Offering Period, each
participant shall be granted an option to purchase on the Exercise Date of such
Offering Period such number of whole shares of the Company's Common Stock equal
to the participant's payroll deductions accumulated prior to such Exercise
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Date and retained in the participant's account as of such Exercise Date divided
by the lower of (i) eighty-five percent (85%) of the Fair Market Value of a
share of the Company's Common Stock on the Offering Date or (ii) eighty-five
percent (85%) of the Fair Market Value of a share of the Company's Common Stock
on the Exercise Date; provided, however, that the maximum number of shares an
employee may purchase during each Offering Period shall be determined at the
Offering Date by dividing One Hundred Thousand Dollars ($100,000) by the fair
market value of a share of the Company's Company Stock on the Offering Date and
provided, further, that such purchase shall be subject to the limitations set
forth in Paragraphs 3(b), 5(d) and 7(a) hereof.
(c) Price per Share. The exercise price per share of the shares offered in
a given Offering Period shall be the lower of: (i) eighty-five percent (85%) of
the Fair Market Value of a share of the Common Stock of the Company on the
Offering Date; or (ii) eighty-five percent (85%) of the Fair Market Value of a
share of the Common Stock of the Company on the Exercise Date.
(d) Limitation on Option Grants. No Eligible Employee will be granted an
option if such option would permit the Eligible Employee's rights to purchase
stock under all employee stock purchase plans of the Company and its
Subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) of Fair Market Value of such stock, determined at the time such option
is granted, for each calendar year in which such option is outstanding at any
time. Any offering to an Eligible Employee which causes such total to exceed
Twenty-Five Thousand Dollars ($25,000) in Fair Market Value (determined at the
date of such agreement) shall be null and void as to that Employee to the extent
of such excess.
(e) Exercise Date. Unless a participant withdraws from the Plan as provided
in Paragraph 6(a), such participant's option for the purchase of shares will be
exercised automatically on the Exercise Date of the Offering Period. The number
of shares that will be purchased pursuant to the participant's option will be
the number of whole shares determined by dividing the amount of a participant's
accumulated payroll deductions not theretofore invested by the exercise price as
determined in Paragraph 5(c). No fractional shares will be purchased. Any amount
remaining in the participant's account after an Exercise Date shall be held in
the account until the Exercise Date of the following Offering Period, unless
such following Offering Period has been oversubscribed or has terminated prior
to its Exercise Date, in which case such amount shall be refunded to the
participant. During a participant's lifetime, a participant's option to purchase
shares hereunder is exercisable only by him.
(f) Distribution of Shares. As soon as reasonably practicable following
each Exercise Date, the Committee or its designee will take such steps as may be
necessary to cause the issuance of share certificates representing the Common
Stock purchased for the account of each participant as of such Exercise Date in
the name of such participant. Shares to satisfy purchases pursuant to the Plan
will be newly issued shares of authorized but unissued Common Stock.
(g) Automatic Transfer to Low Price Offering Period. In the event that the
fair market value of the Company's Common Stock is lower on an Exercise Date
than it was on the first Offering Date for that Offering Period, all employees
participating in the Plan on the Exercise Date shall be deemed to have withdrawn
from the Offering Period immediately after the exercise of their option on such
Exercise Date and to have enrolled as participants in a new Offering Period
which begins on or about the day following such Exercise Date. A participant may
elect to remain in the previous Offering Period by filing a written statement
declaring such election with the Company prior to the time of the automatic
change to the new Offering Period.
6. WITHDRAWAL, DEATH AND TERMINATION OF EMPLOYMENT.
(a) Withdrawals. A participant may at any time prior to the Exercise Date
with respect to any Offering Period withdraw from his or her account all, but
not less than all, of the accumulated payroll deductions in such account. Such a
withdrawal shall be effected by filing a Withdrawal form in the form specified
by the Committee and shall terminate the participation by that Eligible Employee
in the Plan for that Offering Period. Withdrawal of funds from an account during
an Offering Period shall not affect an Eligible Employee's
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right to participate in the Plan in future Offering Periods or in any other
similar plans which may hereafter be adopted by the Company.
(b) Retirement and Termination of Employment. In the event of a
participant's retirement, termination of employment (otherwise than on account
of death) or failure to satisfy the requirements to be an eligible Employee
under Paragraph 3, the cash amounts credited to the name of such participant not
theretofore invested shall be refunded to the participant without interest and
such participant's option will be automatically terminated.
(c) Death of Employee. In the event of the death of a participant, such
participant's account shall be distributed to his or her Beneficiary, unless
such Beneficiary elects to exercise the participant's option as provided in
Paragraph 9(a) below.
(d) Termination of Plan. In the event of termination of the Plan, the cash
amounts credited to the name of each participant not theretofore invested shall
be refunded to each participant without interest.
7. STOCK.
(a) Available Number of Shares. The maximum number of shares of the
Company's Common Stock which shall be made available for sale under the Plan
shall be forty thousand (40,000) shares, subject to adjustment upon changes in
capitalization of the Company as provided in Paragraph 7(e). If the total number
of shares which would otherwise be subject to options granted pursuant to
Paragraph 5 hereof on the Exercise Date exceeds the number of shares then
available under the Plan (after deduction of all shares for which options have
been exercised or are then outstanding), the Company shall make a pro rata
allocation of the shares remaining available for option grant in as uniform a
manner as shall be practicable and as it shall determine to be equitable. In
such event, the Company shall give written notice of such reduction of the
number of shares subject to the option to each Eligible Employee affected
thereby and shall similarly reduce the rate of payroll deductions, if necessary.
(b) Undersubscription. In the event that any subscription agreement entered
into under the Plan for any reason expires or is terminated, or less than all
offered shares are purchased in an offering, any unpurchased shares of Common
Stock may again be subject to offerings made under the Plan.
(c) Rights as Stockholder. An Eligible Employee who participates in an
offering under the Plan shall have no rights as a stockholder with respect to
shares covered by such offering until the date that such participant's option
has been exercised and the corresponding purchased shares are registered of
record in the name of the participant. No adjustment will be made for dividends
or other rights for which the record date is prior to such date. Shares to be
delivered to a participant under the Plan will be registered in the name of the
participant or in the name of the participant and his spouse.
(d) Compliance with Securities Laws. No shares issuable pursuant to this
Agreement shall be issued and delivered unless and until there shall have been
full compliance with all applicable requirements of the Securities Act of 1933,
as amended (whether by registration or satisfaction of exemption conditions),
all applicable listing requirements of any principal securities exchange on
which shares of the same class are then listed and any other requirements of law
or of any regulatory bodies having jurisdiction over such issuance and delivery.
Without limiting the foregoing, unless and until the shares of stock covered by
the Plan have been registered with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, participants will purchase all shares of
stock to be issued under the Plan for investment and not for resale or for
distribution and upon each issuance of shares each participant shall, upon the
request of the Company, furnish evidence to that effect in form and substance
satisfactory to the Company. Furthermore, the Company may, if it deems
appropriate, affix a legend to certificates representing shares of stock issued
under the Plan indicating that such shares have not been registered with the
Securities and Exchange Commission and may so notify its Transfer Agent, and may
take such other action as it deems necessary or advisable to comply with any
other regulatory or governmental requirements.
(e) Recapitalization. The aggregate number of shares of Common Stock which
may be covered by options offered under the Plan, the number of shares covered
by each option, and the price per share of the
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<PAGE> 33
exercise of such option in each offering shall all be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock
resulting from a subdivision or consolidation of shares or other capital
adjustment, or the payment of a stock dividend or other increase or decrease in
such shares, effected without receipt of consideration by the Company; provided,
however, that any fractional shares resulting from any such adjustment shall be
eliminated. The Committee may also make proportional adjustments in the terms of
an offering in its sole discretion if an increase or decrease in the number of
issued shares results from events other than those described in the preceding
sentence.
(f) Merger or Consolidation. If the Company shall at any time merge with
another corporation and the Company is the surviving entity, the holder of each
option to purchase one share of Common Stock then outstanding will thereafter be
entitled to receive at the next Exercise Date upon the exercise of such option,
in lieu of Common Stock, the securities or property which a holder of one share
of the Common Stock was entitled to upon and at the time of such merger, and the
Board shall take such steps in connection with such merger as the Board shall
deem necessary to assure that the provisions of Paragraph 7 shall thereafter be
applicable, as nearly as reasonably may be, in relation to the said securities
or property as to which such holder of such options might thereafter be entitled
to receive thereunder. In the event of a merger in which the Company is not the
surviving entity or in the event of a consolidation, the Plan shall terminate,
and all payroll deductions credited to participants' accounts shall be returned
to them, without interest. A sale of all or substantially all the assets of the
Company shall be deemed a merger or consolidation for the foregoing purposes.
8. ADMINISTRATION.
The Plan will be administered by the Committee. The Committee may (but is
under no obligation to) in its sole discretion determine, from time to time,
that the Company shall make an offering of options to purchase Common Stock to
all Eligible Employees. The Committee may also, in its sole discretion but
subject to the express provisions of the Plan:
(a) Determine the form and provisions of the Employee Subscription
Agreements to be entered into hereunder to govern the terms of each
offering;
(b) Determine which Designated Subsidiaries shall participate in the
Plan;
(c) Decide questions which may arise with respect to the
interpretation, construction or application of the Plan or any stock
purchase agreement;
(d) Prescribe, amend and rescind rules and regulations relating to the
Plan; and
(e) Establish Offering Periods and set maximum participation levels
(expressed as a uniform percentage of Eligible Employees' Compensation,
which percentage shall not exceed ten percent (10%) with respect thereto).
Any interpretation and construction by the Committee of any Plan provision
or any agreement entered into under the Plan, or determination by the Committee
pursuant to any Plan provision or any agreement entered into under the Plan,
shall be final and conclusive. No member of the Committee shall be liable for
any action or determination made in good faith, and the members shall be
entitled to indemnification and reimbursement in the manner provided in the
Company's Restated Articles of Incorporation and Bylaws, as they may be amended
from time to time.
9. TRANSFERABILITY.
(a) Assignability of Option. No option under the Plan shall be assignable
or transferable except by will or by the laws of descent and distribution.
During the lifetime of any participant, the shares that may be acquired pursuant
to an offering may be purchased only by such participant. Upon termination of a
participant's employment because of his death, such participant's Beneficiary,
as determined in accordance with Paragraph 9(b), shall have the right to elect,
by written notice given to the Committee on a form provided by the Committee for
such purpose, prior to the Exercise Date either:
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(i) To withdraw all of the uninvested payroll deductions credited to
the participant's account under the Plan; or
(ii) To exercise the participant's option on the Exercise Date next
following the date of the participant's death for the purchase of the
number of full shares of Common Stock which the accumu-lated payroll
deductions in the participant's account at the date of the participant's
death will purchase at the applicable purchase price, and any excess in
such account will be returned without interest to said Beneficiary.
In the event that no such written notice of election shall be duly received
by the Company prior to the Offering Date, the Beneficiary shall automatically
be deemed to have elected to withdraw the payroll deductions credited to the
participant's account at the date of the participant's death and the same will
be paid promptly to the said Beneficiary.
(b) Designation of Beneficiary. A participant may file a written
designation of Beneficiary to enjoy the rights hereinbefore described. Such
designation of Beneficiary may be changed by the participant at any time by
written notice. In the event of the death of a participant and in the absence of
a Beneficiary validly designated under the Plan who is living at the time of
such participant's death, the Beneficiary shall be the participant's surviving
spouse or, if no such spouse shall survive the employee, the Beneficiary shall
be executor or administrator of the estate of the participant, and if no such
executor or administrator is appointed within one (1) year of the employee's
death, the rights of the employee and any Beneficiary hereunder shall terminate.
(c) Prohibition on Assignment of Funds in Account. Funds in a participant's
account established pursuant to Paragraph 4 may not be voluntarily or
involuntarily assigned, transferred, hypothecated, or encumbered by such
participant. Any such attempt at assignment, transfer, hypothecation, or
encumbrance shall, except to the extent that applicable state or federal law
requires a contrary result, be void and shall not be recognized by the Committee
or the Company. Any such attempted assignment, transfer, hypothecation, or
encumbrance, in addition, shall result in a termination of the participant's
participation in the Plan for the corresponding Offering Period and, to the
extent indicated by the Committee, future Offering Periods.
10. AMENDMENT OR TERMINATION.
The Committee may from time to time alter, amend, suspend, or discontinue
the Plan or alter or amend any and all agreements granted under the Plan to the
extent permitted by law. However, no such action of the Committee may, without
the approval of the Board and the stockholders, alter the provisions of the Plan
so as to:
(a) Increase the maximum number of shares that may be issued pursuant
to all offerings under the Plan or the maximum number of shares that each
Employee may purchase pursuant to the exercise of an option in an offering;
(b) Extend the term of the Plan beyond August 31, 2005 or the maximum
term of agreements entered into under the Plan or the maximum term of
Offering Periods beyond twenty-seven (27) months;
(c) Decrease the minimum purchase price specified in Paragraph 5(c)
hereof; or
(d) Otherwise materially increase the benefits accruing to Plan
participants or materially modify the requirements as to eligibility for
participation in the Plan.
11. MISCELLANEOUS.
(a) Notices. All notices or other communications by an Eligible Employee to
the Committee or Company under or in connection with the Plan shall be deemed to
have been duly given when received in the form specified by the Company at the
location, or by the person, designated by the Company for the receipt thereof.
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(b) Term of Plan. The effective date of this Plan is August 11, 1995, and
the effective date of the Restatement of this Plan is August 1, 1996, subject to
its approval by the stockholders of the Company within one year thereafter. No
Offering Period under the Plan shall continue after August 11, 2005.
(c) Withholding. Any amounts to be paid or shares to be delivered by the
Company under the Plan shall be reduced by or conditioned upon the payment of
any sums required by law to be withheld by the Company.
(d) Governing Law. This Plan and all agreements entered into under this
Plan shall be construed in accordance with the applicable provisions of the Code
and the Regulations thereunder, and, to the extent such provisions are not
applicable, governed by the laws of the State of Delaware.
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PROXY
COMMON STOCK
ROSS TECHNOLOGY, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 13, 1996
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders of ROSS Technology, Inc. (the "Company") dated July 19,
1996 and the accompanying Proxy Statement relating to the above-referenced
Annual Meeting, and hereby appoints Roger D. Ross or, in his absence, David A.
Zeleniak, with full power of substitution in each, as attorneys and proxies of
the undersigned.
Said proxies are hereby given authority to vote all shares of common
stock of the Company which the undersigned may be entitled to vote at the
Annual Meeting of Stockholders of the Company, to be held on August 13, 1996
at the Omni Hotel, 700 San Jacinto Boulevard, Austin, Texas 78701, at 10:00
a.m., local time, and at any and all adjournments or postponements thereof (the
"Annual Meeting") on behalf of the undersigned on the following matters and in
the manner designated on the reverse side:
(PLEASE DATE AND SIGN ON REVERSE SIDE)
- --------------------------------------------------------------------------------
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A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
FOR all of the nominees WITHHOLD authority
listed at right (except as to vote for all
withheld in the space below) nominees listed at right
1. Election of
Eight (8) [ ] [ ]
Directors:
NOMINEES: RYUSUKE HOSHIKAWA
FRED T. MAY
WILLIAM J. REDUCHEL
ROGER D. ROSS
MASAHIRO SAIDA
YASUSHI TAJIRI
EDWARD F. THOMPSON
SEIICHI YOSHIKAWA
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided:
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2. Approval of the Company's Restated 1995 Qualified Employee Stock
Purchase Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion, the proxies are authorized to vote on such other
matters as may come before the Annual Meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY, AND WHEN
PROPERLY EXECUTED, THE SHARES REPRESENTED HEREBY WILL BE VOTED IN ACCORDANCE
WITH THE INSTRUCTIONS IN THIS PROXY. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF ALL NOMINEES NAMED ABOVE AS DIRECTORS OF THE
COMPANY AND FOR THE APPROVAL OF THE COMPANY'S RESTATED 1995 QUALIFIED EMPLOYEE
STOCK PURCHASE PLAN.
PLEASE DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
SELF-ADDRESSED, POSTAGE PAID ENVELOPE.
Signature_________________________ _________________________ Dated:_______, 1996
SIGNATURE IF HELD JOINTLY
NOTE: Please date and sign exactly as your name(s) appear on this proxy card.
If shares are registered in more than one name, all such persons should
sign. A corporation should sign in its full corporate name by a duly
authorized officer, stating his or her title. When signing as attorney,
executor, administrator, trustee or guardian, please sign in your
official capacity and give your full title as such. If a partnership,
please sign in the partnership name by an authorized person.
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