0000912057-95-007966.txt : 19950925
0000912057-95-007966.hdr.sgml : 19950925
ACCESSION NUMBER: 0000912057-95-007966
CONFORMED SUBMISSION TYPE: DEF 14A
PUBLIC DOCUMENT COUNT: 2
CONFORMED PERIOD OF REPORT: 19951026
FILED AS OF DATE: 19950921
SROS: NYSE
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: SEAGATE TECHNOLOGY INC
CENTRAL INDEX KEY: 0000354952
STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER STORAGE DEVICES [3572]
IRS NUMBER: 942612933
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0630
FILING VALUES:
FORM TYPE: DEF 14A
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-11403
FILM NUMBER: 95575296
BUSINESS ADDRESS:
STREET 1: 920 DISC DR
CITY: SCOTTS VALLEY
STATE: CA
ZIP: 95066
BUSINESS PHONE: 4084386550
DEF 14A
1
DEFINITIVE 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
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
SEAGATE TECHNOLOGY, INC.
--------------------------------------------------------------------------------
(Name of Registrant as specified in its charter)
SEAGATE TECHNOLOGY, INC.
--------------------------------------------------------------------------------
(Name of person(s) filing proxy statement)
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(j)(2).
/ / $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 transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11: (A)
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
------------------------
(A) Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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:
SEAGATE TECHNOLOGY, INC.
-----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 26, 1995
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of SEAGATE
TECHNOLOGY, INC. (the "Company"), a Delaware corporation, will be held on
Thursday, October 26, 1995 at 10:00 a.m., local time, at Seascape Resort &
Conference Center, One Seascape Resort Drive, Aptos, California 95003 for the
following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To approve an amendment to the 1991 Incentive Stock Option Plan to
increase the number of shares of Common Stock reserved for issuance
thereunder by 6,000,000.
3. To ratify the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending June 28, 1996.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on September 1, 1995
are entitled to notice of and to vote at the meeting.
All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed Proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any shareholder attending
the meeting may vote in person even if he or she has returned a Proxy.
Sincerely,
Donald L. Waite
Secretary
Scotts Valley, California
September 21, 1995
YOUR VOTE IS IMPORTANT.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING,
YOU ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY
AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE.
SEAGATE TECHNOLOGY, INC.
------------------------
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of SEAGATE TECHNOLOGY, INC. (the
"Company") for use at the Annual Meeting of Shareholders to be held Thursday,
October 26, 1995 at 10:00 a.m., local time, or at any adjournment thereof, for
the purposes set forth herein and in the accompanying Notice of Annual Meeting
of Shareholders. The Annual Meeting will be held at Seascape Resort & Conference
Center, One Seascape Resort Drive, Aptos, California 95003. The Company's
principal executive offices are located at 920 Disc Drive, Scotts Valley,
California 95066, and its telephone number at that location is (408) 438-6550.
These proxy solicitation materials and the Annual Report to Shareholders for
the fiscal year ended June 30, 1995, including financial statements, were first
mailed on or about September 21, 1995 to all shareholders entitled to vote at
the meeting.
RECORD DATE AND PRINCIPAL SHARE OWNERSHIP
Shareholders of record at the close of business on September 1, 1995 are
entitled to notice of and to vote at the meeting. The Company has one series of
Common Shares outstanding, designated Common Stock, $.01 par value. At the
record date, 72,637,095 shares of the Company's Common Stock were issued and
outstanding. No shares of the Company's Preferred Stock were outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company a written
notice of revocation or a duly executed proxy bearing a later date or by
attending the meeting and voting in person.
VOTING AND SOLICITATION
Every shareholder voting for the election of directors (Proposal One) may
cumulate such shareholder's votes and give one candidate a number of votes equal
to the number of directors to be elected multiplied by the number of shares held
by such shareholder, or distribute such shareholder's votes on the same
principle among as many candidates as the shareholder may select, provided that
votes cannot be cast for more than seven (7) candidates. However, no shareholder
shall be entitled to cumulate votes for any individual unless such individual's
name has been placed in nomination prior to the voting and the shareholder, or
any other shareholder, has given notice at the meeting, prior to the voting, of
the intention to cumulate the shareholder's votes. On all other matters, each
share of Common Stock has one vote. A quorum comprising the holders of the
majority of the outstanding shares of Common Stock on the record date must be
present or represented for the transaction of business at the Annual Meeting.
Abstentions and broker non-votes will be counted in establishing the quorum.
The cost of soliciting votes will be borne by the Company. The Company has
retained Corporate Investor Communications, Inc. to provide proxy solicitation
services in connection with the meeting at an estimated cost of $5,500. In
addition, the Company may reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in forwarding
solicitation material to such beneficial owners. Proxies may also be solicited
by certain of the Company's directors, officers and regular employees, without
additional compensation, personally or by telephone or telegram.
SECURITY OWNERSHIP BY PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Common Stock of the Company as of September 1, 1995 by (i) each
person known by the Company to own beneficially more than 5% of the outstanding
shares of Common Stock, (ii) each director of the
Company, (iii) each of the executive officers named in the table under
"Executive Compensation and Other Matters -- Executive Compensation -- Summary
Compensation Table" and (iv) all directors and executive officers as a group:
APPROXIMATE
COMMON STOCK PERCENT OWNED
NAME OWNED (1)
------------------------------------------------------------------------------------ -------------- -------------
FMR Corp (2)........................................................................ 10,906,050 15.0%
82 Devonshire St.
Boston, MA 02109
The Capital Group (3)............................................................... 6,355,000 8.7%
333 South Hope Street
Los Angeles, CA 90071
Alan F. Shugart (4)................................................................. 386,016 *
Robert A. Kleist (5)................................................................ 90,973 *
Kenneth E. Haughton (5)............................................................. 36,864 *
Laurel L. Wilkening (6)............................................................. 23,957 *
Thomas P. Stafford (7).............................................................. 14,582 *
Lawrence Perlman (7)................................................................ 11,249 *
Gary B. Filler (7).................................................................. 7,166 *
Bernardo A. Carballo (7)............................................................ 95,375 *
Donald L. Waite (8)................................................................. 65,513 *
Ronald D. Verdoorn (9).............................................................. 37,313 *
Brendan C. Hegarty (10)............................................................. 10,614 *
All directors and executive officers as a group (15 persons) (11)................... 948,460 1.3%
------------------------
* Less than 1%
(1) Applicable percentage of ownership is based on 72,637,095 shares of Common
Stock outstanding as of September 1, 1995 together with applicable options
for such shareholder. Beneficial ownership is determined in accordance with
the rules of the Securities and Exchange Commission, and includes voting
and investment power with respect to shares. Shares of Common Stock subject
to options currently exercisable or exercisable within 60 days after
September 1, 1995 are deemed outstanding for computing the percentage
ownership of the person holding such options, but are not deemed
outstanding for computing the percentage of any other person.
(2) Reflects ownership as of December 31, 1994 based upon information obtained
from a Schedule 13G dated February 10, 1995, as filed with the Securities
and Exchange Commission. Represents shares beneficially owned by (i) FMR
Corp. through its wholly-owned subsidiaries Fidelity Management & Research
Company, a registered investment advisor ("Fidelity"), and Fidelity
Management Trust Company, a "bank" under the Securities Exchange Act of
1934 ("FMTC"); (ii) certain investment companies (including the Fidelity
Magellan Fund) for which Fidelity serves as an investment advisor (the
"Funds"); (iii) certain institutional accounts for which FMTC serves as an
investment manager (the "Institutional Accounts"); and (iv) Edward C.
Johnson 3d, as Chairman of FMR Corp. and through certain members of his
family by virtue of their controlling interest as a group of the voting
stock of FMR Corp. The Fidelity Magellan Fund is the beneficial owner of
7,269,900 shares, or 10.0% of the outstanding shares of Common Stock as of
September 1, 1995. Fidelity is the beneficial owner of 10,765,600 shares,
or 14.8% of the outstanding shares of Common Stock as of September 1, 1995.
Mr. Johnson and FMR Corp., through control of Fidelity and the Funds, each
has sole dispositive power of 10,765,600 shares owned by the Funds. Neither
FMR Corp. nor Mr. Johnson has the sole power to vote or direct the voting
of the shares owned directly by the Funds, which power resides with the
Funds' Boards of Trustees. Fidelity carries out the voting of these shares
under written guidelines established by the Funds' Board of Trustees. FMTC
is the beneficial owner of 140,450 shares, or 0.2% of the outstanding
shares of Common Stock as of September 1, 1995. FMR Corp., through its
control of FMTC, has sole dispositive power over 140,450 shares and no
power to vote or direct voting of the 140,450 shares owned by the
Institutional Accounts.
(3) Reflects ownership as of June 30, 1995 as reported on Form 13F filed with
the Securities and Exchange Commission by Capital Research and Management
Company and Capital Guardian Trust. The Company does not have knowledge as
to where dispositive or voting power with respect to such shares resides.
(4) Includes 60,000 shares of Common Stock which may be acquired within 60 days
after September 1, 1995 through the exercise of stock options.
(5) Includes 24,164 shares of Common Stock which may be acquired within 60 days
after September 1, 1995 through the exercise of stock options.
(6) Includes 23,757 shares of Common Stock which may be acquired within 60 days
after September 1, 1995 through the exercise of stock options.
2
(7) Represents shares of Common Stock which may be acquired within 60 days
after September 1, 1995 through the exercise of stock options.
(8) Includes 48,400 shares of Common Stock which may be acquired within 60 days
after September 1, 1995 through the exercise of stock options and 2,941
shares of Common Stock issuable upon conversion of the Company's 6 3/4%
Convertible Subordinated Debentures.
(9) Includes 30,000 shares of Common Stock which may be acquired within 60 days
after September 1, 1995 through the exercise of stock options.
(10) Includes 10,000 shares of Common Stock which may be acquired within 60 days
after September 1, 1995 through the exercise of stock options.
(11) Includes 511,132 shares of Common Stock which may be acquired within 60
days after September 1, 1995 through the exercise of stock options and
2,941 shares of Common Stock issuable upon conversion of the Company's
6 3/4% Convertible Subordinated Debentures.
SHAREHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Proposals of shareholders which are intended to be presented by such
shareholders at the Company's 1996 Annual Meeting must be received by the
Secretary of the Company at the Company's principal executive offices no later
than May 24, 1996 in order that they may be included in the proxy statement and
form of proxy relating to that meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
GENERAL
A board of seven (7) directors is to be elected at the meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for Management's seven (7) nominees named below, all of whom are presently
directors of the Company. In the event that any Management nominee is unable or
declines to serve as a director at the time of the Annual Meeting, the proxies
will be voted for any nominee who shall be designated by the present Board of
Directors to fill the vacancy. In the event that additional persons are
nominated for election as directors, the proxy holders intend to vote all
proxies received by them in such a manner (in accordance with cumulative voting)
as will assure the election of as many of the nominees listed below as possible,
and, in such event, the specific nominees to be voted for will be determined by
the proxy holders. The Company is not aware of any nominee who will be unable or
will decline to serve as a director. The term of office for each person elected
as a director will continue until the next Annual Meeting of Shareholders or
until his or her successor has been elected and qualified.
VOTE REQUIRED
If a quorum is present and voting, the seven nominees receiving the highest
number of votes will be elected to the Board of Directors. Abstentions and
broker non-votes are not counted in the election of directors.
3
NOMINEES
The names of the nominees, each of whom is currently a director of the
Company, and certain information about them are set forth below:
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
----------------------------------------- --- ------------------------------------------------------- -----------
Alan F. Shugart.......................... 64 President, Chief Executive Officer and Chairman of the 1979
Board of Directors of the Company
Gary B. Filler........................... 54 Senior Vice President and Chief Financial Officer of 1985
Diamond Multimedia Systems, Inc. (multimedia and
graphics company)
Kenneth E. Haughton...................... 67 Consultant, Engineering 1986
Robert A. Kleist......................... 67 President, Chief Executive Officer and a Director of 1981
Printronix, Inc. (computer printer manufacturer)
Lawrence Perlman......................... 57 Chairman of the Board of Directors and Chief Executive 1989
Officer of Ceridian Corp. (formerly Control Data
Corporation) (information services and defense
electronics company)
Thomas P. Stafford....................... 64 Vice Chairman of Stafford, Burke and Hecker, Inc. (a 1988
consulting firm)
Laurel L. Wilkening...................... 50 Chancellor, University of California, Irvine 1993
Except as set forth below, each of the nominees has been engaged in his or
her principal occupation described above during the past five years. There is no
family relationship between any director or executive officer of the Company.
Mr. Shugart has been President of the Company since September 1991 and has
been Chief Executive Officer since the Company's inception in 1979. Mr. Shugart
also served as Chief Operating Officer of the Company from September 1991 until
March 1995. In addition, Mr. Shugart served as Chairman of the Board of
Directors of the Company from inception until September 1991 and was reappointed
Chairman of the Board of Directors in October 1992. Mr. Shugart is currently a
Director of Valence Technology, Inc. and SanDisk Corporation.
Mr. Filler has been Senior Vice President and Chief Financial Officer of
Diamond Multimedia Systems, Inc. since January 1995. From February 1994 until
June 1994 he served as Executive Vice President and Chief Financial Officer of
ASK Group, Inc., a computer systems company. From June 1993 to January 1994, Mr.
Filler was a business consultant and private investor. Mr. Filler was Chairman
of the Board of Directors of the Company from September 1991 until October 1992.
From October 1990 until September 1991, Mr. Filler served as Vice Chairman of
the Board of Directors of the Company.
Dr. Haughton was Vice President of Engineering of DaVinci Graphics, a
computer plotter manufacturer, from May 1990 to August 1991. Dr. Haughton is
also a director of Solectron Corporation.
Mr. Perlman was appointed Chairman of the Board of Directors of Ceridian
Corp. in November 1992. Mr. Perlman previously held several executive positions
at Control Data Corporation including Chairman of the Board of Directors and
Chief Executive Officer of Imprimis Technology Incorporated ("Imprimis"). Mr.
Perlman is also a Director of Inter-Regional Financial Group, Inc., Computer
Network Technology Corporation, Valspar Corporation, Bio-vascular, Inc. and
Kmart Corporation.
4
General Stafford, a former astronaut, also serves as Director of
Allied-Signal Corporation, Pacific Scientific, Inc., Tremont, Inc., CMI, Inc.,
Fisher Scientific International, Inc., Wackenhut, Inc., Wheelabrator
Technologies, Inc., and Tracor, Inc.
Dr. Wilkening has served as Chancellor of the University of California,
Irvine since July 1993. From September 1988 to June 1993 she was Provost and
Vice President of Academic Affairs at the University of Washington. From May
1991 to January 1993, Dr. Wilkening also served as Chair of the Space Policy
Advisory Board of the National Space Council.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of thirteen meetings
during fiscal 1995. No director attended fewer than 75% of the meetings of the
Board of Directors and committees thereof, if any, upon which such director
served. The Board of Directors has an Audit Committee, an Executive Personnel
and Organization Committee, a Strategic Planning Committee and a Stock Option
Committee.
The Audit Committee, which consisted of directors Filler, Wilkening and
Haughton during fiscal 1995, met twice during the fiscal year. The Audit
Committee reviews and approves the scope of the audit performed by the Company's
independent auditors as well as the Company's accounting principles and internal
accounting controls. In fiscal 1995 the Board of Directors as a whole
recommended engagement of the Company's independent auditors.
The Executive Personnel and Organization Committee, which consisted of
directors Kleist, Stafford and Perlman during fiscal 1995, met four times during
the fiscal year. This Committee reviews the organization of senior management,
including succession planning, recommends to the Board of Directors candidates
for nomination to the Board, administers the Company's stock option and stock
purchase plans and reviews and approves the Company's compensation policies and
distributions to officers under the Company's Performance-Based Executive
Compensation Plan. The Executive Personnel and Organization Committee will
consider nominees to the Board of Directors recommended by shareholders.
Shareholders making such recommendations should follow the procedures outlined
above under "Information Concerning Solicitation and Voting -- Shareholder
Proposals to be Presented at Next Annual Meeting."
The Strategic Planning Committee, which consists of directors Filler,
Perlman and Shugart was appointed in October 1994. This committee reviews the
strategic planning process of the Company. The Strategic Planning Committee did
not meet during fiscal 1995.
The Stock Option Committee, which consists of directors Perlman and Shugart,
was appointed in August 1995. This Committee reviews and approves stock option
grants to non-officer employees. Prior to August 1995 all stock option grants
were reviewed and approved by the Executive Personnel and Organization
Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1995, Mr. Shugart, Chairman, President and Chief Executive
Officer of the Company, participated in deliberations of the Executive Personnel
and Organization Committee concerning executive compensation, other than
deliberations concerning his own compensation.
5
PROPOSAL TWO
AMENDMENT TO 1991 INCENTIVE STOCK OPTION PLAN
TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
RESERVED FOR ISSUANCE THEREUNDER
At the Annual Meeting, the shareholders are being asked to approve an
amendment to the Company's 1991 Incentive Stock Option Plan (the "1991 Plan"),
to increase the number of shares of Common Stock reserved for issuance
thereunder by 6,000,000. In 1993 the shareholders approved an amendment to the
1991 Plan to increase the number of shares reserved for issuance thereunder by
6,000,000. The adoption of the 1991 Plan was approved by the Board of Directors
in August 1991 and by the shareholders in October 1991. As of September 1, 1995,
options to purchase an aggregate of 7,290,196 shares were outstanding and
1,135,532 shares (exclusive of the 6,000,000 shares subject to shareholder
approval at this Annual Meeting) were available for future grant. In addition,
2,574,272 shares had been purchased pursuant to the exercise of stock options
granted under the 1991 Plan. The 1991 Plan authorizes the Board of Directors to
grant stock options to eligible employees and consultants of the Company. The
1991 Plan is structured to allow the Board of Directors broad discretion in
creating equity incentives in order to assist the Company in attracting,
retaining and motivating the best available personnel for the successful conduct
of the Company's business. The Board of Directors believes that the remaining
shares available for grant under the 1991 Plan are insufficient to accomplish
these purposes.
The Board of Directors has established informal guidelines for the annual
grant of options to employees whereby the total shares of Common Stock subject
to options granted in any fiscal year, net of cancellations, will not exceed 3%
of a number based on a formula derived from a modified calculation of the shares
used in the calculation of fully-diluted earnings per share as of the beginning
of each fiscal year. Based upon this formula, such informal guidelines would
result in option grants of approximately 2,800,000 shares per year. As such, the
Board of Directors currently expects that the 6,000,000 additional shares of
Common Stock subject to shareholder approval at this Annual Meeting will be
sufficient to provide for option grants for approximately the next two fiscal
years.
VOTE REQUIRED
The affirmative vote of not less than a majority of the Common Stock
represented either in person or by proxy and entitled to vote at the meeting
will be required to approve the amendment to the 1991 Plan. An abstention would
thus have the effect of a vote against Proposal Two and a broker non-vote would
have no effect on the outcome.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
AMENDMENT TO THE 1991 PLAN.
The essential features of the 1991 Plan are outlined below.
PURPOSE
The purposes of the 1991 Plan are to attract, retain and motivate the most
qualified personnel for positions of substantial responsibility, to provide
additional incentive to employees and consultants of the Company and to promote
the success of the Company's business.
ADMINISTRATION
The 1991 Plan provides for administration by the Board of Directors of the
Company or by a committee of the Board (for the purposes of this plan
description, "Board" shall mean either the Board or a committee appointed by the
Board). All questions of interpretation or application of the 1991 Plan are
determined in the sole discretion of the Board, and its decisions are final and
binding upon all participants. Members of the Board receive no additional
compensation for their services in connection with the administration of the
1991 Plan, although members of the Executive Personnel and Organization
Committee and the Stock Option Committee receive fees in connection with their
service on such committees. See "Executive Compensation and Other Matters --
Compensation of Directors."
6
ELIGIBILITY
The 1991 Plan provides that options may be granted to any employee director,
officer, employee or consultant of the Company or any of its designated
subsidiaries. Incentive stock options may be granted only to employees
(including officers and employee directors). The Board of Directors selects the
recipients of awards under the 1991 Plan and determines the number of shares to
be subject to each option. The 1991 Plan does not otherwise provide for a
maximum nor a minimum number of shares subject to options which may be granted
to any one employee. However, there is a limit on the aggregate fair market
value of shares subject to all incentive stock options which become exercisable
for the first time in any one calendar year.
OPTIONS
Each option is evidenced by a written stock option agreement between the
Company and the optionee and is subject to the terms and conditions listed
below, but specific terms may vary:
(1) EXERCISE OF THE OPTION: The Board of Directors determines when options
granted under the 1991 Plan may be exercised. An option is exercised by giving
written notice of exercise to the Company, specifying the number of full shares
of Common Stock to be purchased and tendering payment to the Company of the
purchase price. Payment for shares issued upon exercise of an option may consist
of cash, a promissory note, an exchange of shares of the Company's Common Stock,
delivery of a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company the amount of sale
or loan proceeds required to pay the exercise price or such other consideration
as determined by the Board of Directors.
(2) EXERCISE PRICE: The exercise price of options granted under the 1991
Plan is determined by the Board of Directors, but the exercise price of
incentive stock options may not be less than 100% of the fair market value of
the Company's Common Stock as reported by the New York Stock Exchange on the
last market trading day prior to the date of the grant of the option. Although
it is currently anticipated that the exercise price of nonstatutory stock
options will generally not be less than 100% of the fair market value of the
Company's Common Stock on the date of grant, the 1991 Plan provides that the
exercise price of nonstatutory stock options may be greater than, equal to or
less than the fair market value of a share of Common Stock on the date the
option is granted and may be as low as 25% of the fair market value of the
Company's Common Stock. The closing sale price of the Company's Common Stock on
September 1, 1995 was $43.25.
(3) TERMINATION OF EMPLOYMENT: The 1991 Plan provides that if the
optionee's employment or consulting relationship with the Company is terminated
for any reason, other than death or permanent disability, an option may
thereafter be exercised (to the extent it was then exercisable) within such time
period as is determined by the Board (which shall be no more than 90 days in the
case of an incentive stock option), subject to the stated term of the option. If
the optionee's employment or consulting relationship with the Company terminates
as a result of the optionee's permanent disability, the optionee may exercise an
option at any time within six months following the date of such termination (but
in no event later than the expiration of the term of the option), but only to
the extent that the optionee was entitled to exercise the option on the date of
such termination.
(4) DEATH: If an optionee should die while an employee or a consultant of
the Company, the optionee's estate may exercise an option at any time within six
months following the date of death (but in no event later than the expiration of
the term of the option), but only to the extent that the optionee was entitled
to exercise the option on the date of death.
(5) TERMINATION OF OPTIONS: The terms of options granted under the 1991
Plan may not exceed ten years from the date of grant. However, any incentive
stock option granted to an optionee who, immediately before the grant of such
option, owned more than 10% of the total combined voting power of all classes of
stock of the Company or a parent or subsidiary corporation, may not have a term
of more than five years. No option may be exercised by any person after such
expiration.
7
(6) NON-TRANSFERABILITY OF OPTIONS: All options are non-transferable by
the optionee, other than by will or by the laws of descent and distribution, and
during the lifetime of the optionee may be exercised only by such optionee.
(7) RIGHTS UPON EXERCISE: Until an option has been properly exercised,
that is, proper written notice and full payment have been received by the
Company, no rights to vote or receive dividends or any other rights as a
shareholder shall exist with respect to the optioned stock.
(8) OTHER PROVISIONS: The option agreement may contain such other terms,
provisions and conditions not inconsistent with the 1991 Plan as may be
determined by the Board of Directors.
ADJUSTMENT UPON CHANGES IN CAPITALIZATION
In the event any change, such as a stock split or dividend, is made in the
Company's capitalization which results in an increase or decrease in the number
of outstanding shares of Common Stock without receipt of consideration by the
Company, an appropriate adjustment shall be made to the exercise price and
number of shares subject to each outstanding option and to the number of shares
which have been reserved for issuance under the 1991 Plan. In the event of a
proposed dissolution or liquidation of the Company, all outstanding options
automatically terminate unless otherwise provided by the Board. The Board of
Directors may in such event and in its sole discretion declare that any option
shall terminate as of a fixed date and give each optionee the right to exercise
his or her option as to all or any part of the optioned stock, including shares
as to which the option would not otherwise be exercisable. Subject to the change
in control provisions described below, in the event of a merger of the Company
with another corporation, or the sale of substantially all of the assets of the
Company, the 1991 Plan provides that each outstanding option shall be assumed or
an equivalent option shall be substituted by the successor corporation. If the
successor corporation does not agree to assume the option or to substitute an
equivalent option, the Board of Directors shall provide for the optionee to have
the right to exercise the option as to all of the optioned stock, including
shares as to which the option would not otherwise be exercisable.
CHANGE OF CONTROL PROVISIONS
The 1991 Plan provides that in the event of a "Change of Control" of the
Company (as defined below) any or all or none of the following acceleration and
valuation provisions shall apply, as determined by the Board of Directors in its
discretion prior to the Change of Control: (i) all stock options granted under
the 1991 Plan outstanding as of the date such Change of Control is determined to
have occurred that are not yet exercisable and vested on such date will become
immediately vested and fully exercisable; and (ii) to the extent exercisable and
vested, the value of all outstanding options, unless otherwise determined by the
Board of Directors prior to any Change of Control but at or after the time of
grant, will be cashed out at the "Change of Control Price" (as defined below)
reduced by the exercise price applicable to such options. A "Change of Control"
means the occurrence of (i) the acquisition by a person or entity (other than
the Company, one of its subsidiaries or a Company employee benefit plan or
trustee thereof) of securities representing 50% or more of the combined voting
power of the Company, (ii) a transaction approved by the shareholders and
involving the sale of all or substantially all of the assets of the Company or
the merger or consolidation of the Company with or into another corporation,
other than a merger or consolidation where the shareholders immediately prior to
such transaction continue to own securities representing at least 50% or more of
the combined voting power of the Company, or (iii) a change in the composition
of the Board of Directors, as a result of which fewer than a majority of the
directors are incumbent directors. The "Change of Control Price" shall be, as
determined by the Board, (i) the highest closing sale price of a share of Common
Stock as reported by the New York Stock Exchange at any time within the 60 day
period immediately preceding the date of determination of the Change of Control
Price by the Board or (ii) the highest price paid or offered, as determined by
the Board, in any bona fide transaction or bona fide offer related to the Change
of Control of the Company at any time within such 60 day period or (iii) such
lower price, as the Board, in its discretion, determines to be a reasonable
estimate of the fair market value of a share of Common Stock.
8
AMENDMENT AND TERMINATION
The Board of Directors may amend, alter, suspend or terminate the 1991 Plan
at any time or from time to time, but any such amendment, alteration, suspension
or termination shall not adversely affect any option then outstanding under the
1991 Plan, without the consent of the holder of the option. In any event, the
1991 Plan will terminate in 2001.
In addition, to the extent necessary to comply with Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, or with Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") (or any other applicable law or
regulation), the Company shall obtain shareholder approval of any amendment of
the 1991 Plan in such a manner and to such a degree as required.
CERTAIN UNITED STATES FEDERAL INCOME TAX INFORMATION
Options granted under the 1991 Plan may be either "incentive stock options",
as defined in Section 422 of the Code, or nonstatutory options.
If an option granted under the 1991 Plan is an incentive stock option, the
optionee will recognize no income upon grant of the incentive stock option and
incur no tax liability due to the exercise unless the optionee is subject to the
alternative minimum tax. The Company will not be allowed a deduction for federal
income tax purposes as a result of the exercise of an incentive stock option
regardless of the applicability of the alternative minimum tax. Upon the sale or
exchange of the shares at least two years after grant of the option and one year
after exercise of the option, any gain will be treated as long-term capital
gain. Under current law, generally the rate of tax on long-term capital gains is
capped at 28%. If the statutory holding periods are not satisfied, the optionee
will recognize ordinary income equal to the difference between the exercise
price and the lower of the fair market value of the stock at the date of the
option exercise or the sale price of the stock. A different rule for measuring
ordinary income upon such a premature disposition may apply if the optionee is
also an officer, director or 10% shareholder of the Company. The Company will be
entitled to a deduction in the same amount as the ordinary income recognized by
the optionee. Any gain recognized on such a premature disposition of the shares
in excess of the amount treated as ordinary income will be characterized as
capital gain. Capital losses are allowed in full against capital gains plus
$3,000 of other income.
All other options which do not qualify as incentive stock options are
referred to as nonstatutory options. An optionee will not recognize any taxable
income at the time he or she is granted a nonstatutory option. However, upon
exercise of the option, the optionee will generally recognize ordinary income
for tax purposes measured by the excess of the then fair market value of the
shares over the exercise price. In certain circumstances, where the shares are
subject to a substantial risk of forfeiture when acquired or where the optionee
is an officer, director or 10% shareholder of the Company, the date of taxation
may be deferred unless the optionee files an election with the Internal Revenue
Service under Section 83(b) of the Code. The income recognized by an optionee
who is also an employee of the Company will be subject to tax withholding by the
Company by payment in cash or Company stock or out of the current earnings paid
to the optionee. Upon resale of such shares by the optionee, any difference
between the sale price and the exercise price, to the extent not recognized as
ordinary income as provided above, will be treated as capital gain or loss. The
Company will be entitled to a tax deduction in the same amount as the ordinary
income recognized by the optionee with respect to shares acquired upon exercise
of a nonstatutory option.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF UNITED STATES FEDERAL
INCOME TAXATION UPON THE OPTIONEE AND THE COMPANY WITH RESPECT TO THE GRANT AND
EXERCISE OF OPTIONS UNDER THE 1991 PLAN AND DOES NOT PURPORT TO BE COMPLETE.
REFERENCE SHOULD BE MADE TO THE APPLICABLE PROVISIONS OF THE CODE. IN ADDITION,
THIS SUMMARY DOES NOT DISCUSS THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR
FOREIGN COUNTRY IN WHICH AN OPTIONEE MAY RESIDE.
PARTICIPATION IN THE 1991 PLAN
Although the grant of stock options under the 1991 Plan to executive
officers, including the executive officers named in the Summary Compensation
Table, is subject to the discretion of the Board of Directors, the Board has
established informal guidelines for future grants to executive
9
officers under the 1991 Plan. Under such guidelines, stock option grants to
executive officers will occur on a quarterly basis, with the chief executive
officer (Mr. Shugart) receiving options to purchase 30,000 shares per quarter
and the other named executive officers (Dr. Hegarty and Messrs. Waite, Verdoorn
and Carballo) receiving options to purchase 15,000 shares per quarter. Under
such guidelines, all current executive officers as a group will receive options
to purchase 135,000 shares per quarter. Such guidelines may be modified by the
Board at any time. As of the date of this proxy statement there has been no
other determination by the Board of Directors with respect to future awards
under the 1991 Plan. Please see "Executive Compensation and Other Matters --
Executive Compensation -- Option Grants in Fiscal 1995" for information with
respect to the grant of options to the named executive officers during fiscal
1995. During fiscal 1995, all current executive officers as a group and all
other employees as a group were granted options to purchase 455,000 shares and
1,907,611 shares, respectively, pursuant to the 1991 Plan.
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP, independent auditors,
to audit the consolidated financial statements of the Company for the fiscal
year ending June 28, 1996 and recommends that shareholders vote for ratification
of such appointment. Notwithstanding the selection, the Board, in its
discretion, may direct the appointment of new independent auditors at any time
during the year, if the Board feels that such a change would be in the best
interests of the Company and its shareholders. In the event of a negative vote
on ratification, the Board of Directors will reconsider its selection.
Ernst & Young LLP has audited the Company's financial statements annually
since 1980. Representatives of Ernst & Young LLP are expected to be present at
the meeting with the opportunity to make a statement if they desire to do so and
are expected to be available to respond to appropriate questions.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
10
EXECUTIVE COMPENSATION AND OTHER MATTERS
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth certain information
regarding the compensation of the Chief Executive Officer of the Company and the
four other most highly compensated executive officers of the Company.
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
-------------------------------- UNDERLYING
OTHER ANNUAL OPTIONS
FISCAL SALARY COMPENSATION GRANTED
NAME AND PRINCIPAL POSITION YEAR ($)(1) BONUS($) ($) (#)
-------------------------------------------------- ------ -------- -------- ------------ ------------
Alan F. Shugart................................... 1995 $600,018 $522,700 $375,724(2) 120,000
Chairman, President, and Chief 1994 603,858 334,200 249,564(3) 120,000
Executive Officer 1993 550,000 411,000 -- 60,000
Bernardo A. Carballo.............................. 1995 $333,078 $373,500 $258,249(4) 45,000
Executive Vice President, 1994 329,128 222,600 167,753(5) 40,000
Sales, Marketing, Product Line Management and 1993 300,019 273,000 -- 20,000
Customer Service
Brendan C. Hegarty................................ 1995 $394,238 $373,500 $272,185(4) 45,000
Executive Vice President and 1994 365,544 212,000 150,175(6) 40,000
Chief Operating Officer, Components Group 1993 350,000 273,000 -- 20,000
Ronald D. Verdoorn................................ 1995 $342,309 $373,500 $260,932(4) 45,000
Executive Vice President and 1994 328,932 222,600 241,702(7) 40,000
Chief Operating Officer, Storage Products Group 1993 300,019 273,000 64,909(8) 20,000
Donald L. Waite................................... 1995 $400,005 $373,500 $257,049(4) 45,000
Executive Vice President, 1994 383,447 222,600 163,286(5) 40,000
Chief Administrative Officer and Chief Financial 1993 357,936 273,000 -- 20,000
Officer
------------------------
(1) Fiscal Year 1994 included 27 bi-weekly pay periods while fiscal years 1993
and 1995 included 26 bi-weekly pay periods.
(2) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $348,500.
(3) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $222,700.
(4) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $248,300.
(5) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $148,500.
(6) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $141,400.
(7) Includes deferred payments under the Performance-Based Executive
Compensation Plan of $148,500 and equalization allowance of $62,592.
(8) Includes relocation allowance of $59,017.
11
OPTION GRANTS IN FISCAL 1995
The following table provides information concerning each grant of options to
purchase the Company's Common Stock made during fiscal year 1995 to the persons
named in the Summary Compensation Table:
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
--------------------------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO FOR
OPTIONS EMPLOYEES EXERCISE OR OPTION TERM(1)
GRANTED IN FISCAL BASE PRICE EXPIRATION --------------------
NAME (#)(2) YEAR ($/SH)(3)(4) DATE 5%($) 10%($)
------------------------------------------------------ ---------- ---------- ------------ ---------- -------- ----------
Alan F. Shugart....................................... 30,000 1.24% $26.813 08/03/04 $505,877 $1,281,991
30,000 1.24 23.625 10/26/04 445,729 1,129,565
30,000 1.24 26.375 01/25/05 497,613 1,261,049
30,000 1.24 33.250 05/03/05 627,322 1,589,758
Bernardo A. Carballo.................................. 10,000 0.41% $26.813 08/03/04 $168,626 $ 427,330
10,000 0.41 23.625 10/26/04 148,576 376,522
10,000 0.41 26.375 01/25/05 165,871 420,350
15,000 0.62 33.250 05/03/05 313,661 794,879
Brendan C. Hegarty.................................... 10,000 0.41% $26.813 08/03/04 $168,626 $ 427,330
10,000 0.41 23.625 10/26/04 148,576 376,522
10,000 0.41 26.375 01/25/05 165,871 420,350
15,000 0.62 33.250 05/03/05 313,661 794,879
Ronald D. Verdoorn.................................... 10,000 0.41% $26.813 08/03/04 $168,626 $ 427,330
10,000 0.41 23.625 10/26/04 148,576 376,522
10,000 0.41 26.375 01/25/05 165,871 420,350
15,000 0.62 33.250 05/03/05 313,661 794,879
Donald L. Waite....................................... 10,000 0.41% $26.813 08/03/04 $168,626 $ 427,330
10,000 0.41 23.625 10/26/04 148,576 376,522
10,000 0.41 26.375 01/25/05 165,871 420,350
15,000 0.62 33.250 05/03/05 313,661 794,879
------------------------
(1) Potential realizable value is based on the assumption that the Common Stock
of the Company appreciates at the annual rate shown (compounded annually)
from the date of grant until the expiration of the ten year option term.
These numbers are calculated based on the requirements promulgated by the
Securities and Exchange Commission and do not reflect the Company's
estimate of future stock price growth.
(2) All stock options granted in fiscal year 1995 are exercisable starting one
year after the date of grant, with 25% of the shares covered thereby
becoming exercisable at that time and with an additional 25% of the option
shares becoming exercisable at the end of each year thereafter, with full
vesting occurring on the fourth anniversary of the date of grant. Optionees
are permitted, with certain limitations, to exercise stock options as to
unvested shares, but Common Stock purchased thereby is subject to
repurchase by the Company until such vesting conditions are met. Under the
1991 Incentive Stock Option Plan, the Board retains discretion to modify
the terms, including the price, of outstanding options.
(3) Options were granted at an exercise price equal to the fair market value of
the Company's Common Stock, as determined by reference to the closing price
reported on the New York Stock Exchange on the last trading day prior to
the date of grant.
(4) Exercise price and tax withholding obligations may be paid in cash, by
delivery of already-owned shares subject to certain conditions, or pursuant
to a cashless exercise procedure under which the optionee provides
irrevocable instructions to a brokerage firm to sell the purchased shares
and to remit to the Company, out of the sale proceeds, an amount equal to
the exercise price plus all applicable withholding taxes.
12
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table sets forth certain information regarding the exercise of
stock options in the last fiscal year by the persons named in the Summary
Compensation Table and the value of options held by such individuals at the end
of the fiscal year.
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED OPTIONS AT FISCAL YEAR END IN-THE-MONEY OPTIONS
ON (#) AT FISCAL YEAR END ($)(2)
EXERCISE VALUE REALIZED --------------------------- --------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------------------------- --------- ---------------- ----------- ------------- ----------- -------------
Alan F. Shugart.................... 309,875 $ 4,710,000 30,000 318,625 $ 510,000 $5,738,828
Bernardo A. Carballo............... 11,500 230,750 102,875 115,625 2,688,156 2,099,838
Brendan C. Hegarty................. 105,000 1,767,734 8,750 85,625 157,812 1,259,838
Ronald D. Verdoorn................. 47,313 1,152,865 20,000 112,994 392,500 2,100,436
Donald L. Waite.................... 61,925 1,519,265 38,400 98,700 965,950 1,609,595
------------------------
(1) Market value of the Company's Common Stock at the exercise date minus the
exercise price.
(2) Market value of the Company's Common Stock at fiscal year-end minus the
exercise price.
EMPLOYMENT CONTRACTS AND CHANGE-OF-CONTROL ARRANGEMENTS
The Company currently has no employment contracts with any of the executive
officers named in the "Summary Compensation Table" above and the Company has no
compensatory plan or arrangement with such executive officers where the amount
to be paid exceeds $100,000 and which are activated upon resignation,
termination or retirement of any such executive officer upon a change of control
of the Company. The Company's 1991 Incentive Stock Option Plan (the "1991 Plan")
provides that in the event of a "change of control" of the Company, the Board of
Directors may, in its discretion, provide that (i) all options granted under the
1991 Plan that are outstanding as of the date of such change of control will
become immediately vested and fully exercisable and (ii) to the extent
exercisable and vested, the value of all outstanding options, unless otherwise
determined by the Board prior to any change of control, will be cashed out at
the change of control price reduced by the exercise price applicable to such
options.
COMPENSATION OF DIRECTORS
Non-employee members of the Board of Directors receive an annual retainer of
$30,000 and a fee of $3,000 per Board meeting attended (excluding telephonic
Board meetings), and $2,000 per Committee meeting attended, if such meeting is
on a day other than the day of a meeting of the Board of Directors. Each of the
persons serving as the Chairman of the Audit Committee and the Executive
Personnel and Organization Committee receives an additional annual retainer of
$8,000. Non-employee members of the Strategic Planning Committee receive an
annual retainer of $6,000. The Company also reimburses the directors for certain
expenses incurred by them in their capacities as directors or in connection with
attendance at Board meetings.
The Company's Directors' Option Plan (the "Directors' Plan") provides for
the grant of non-statutory options to purchase shares of the Company's Common
Stock to non-employee directors. Under the Directors' Plan the timing of option
grants, amount of the grants, exercise price and restrictions on exercise of the
options are established in the plan. The exercise price of options granted under
the Directors' Plan may not be less than 100% of the fair market value of the
Common Stock. The options become exercisable cumulatively for 1/48th of the
shares subject to the option at the end of each full month that the optionee
remains a director following the date of grant. Options granted under the
Director's Plan expire five years from the date of grant and may be exercised
only while the optionee is serving as a member of the Company's Board of
Directors, within six months after termination by death or disability or within
three months after termination as a director except by
13
death or disability. Pursuant to the Directors' Plan, each new non-employee
director is granted an option to purchase 40,000 shares of Common Stock upon the
date on which such person first becomes a director. On November 1 of each year,
each non-employee director is granted an additional option to purchase 10,000
shares of Common Stock; provided, however, that no such additional grant is made
to a non-employee director who has received an initial option grant in the
preceding six months. On November 1, 1994, each of the non-employee directors,
Messrs. Kleist, Filler, Stafford and Perlman and Drs. Haughton and Wilkening was
granted an option to purchase 10,000 shares of the Company's Common Stock at an
exercise price of $25.375 per share.
REPORT OF THE EXECUTIVE PERSONNEL AND ORGANIZATION COMMITTEE OF THE BOARD OF
DIRECTORS
The Executive Personnel and Organization Committee (the "Committee") of the
Board of Directors reviews and approves the Company's executive compensation
policies. The Committee invites all members of the Board of Directors to observe
its meetings and directors who are not members of the Committee generally do so.
The following is the report of the Committee describing compensation policies
and rationale applicable to the Company's executive officers with respect to the
compensation paid to such executive officers for the fiscal year ended June 30,
1995.
The Company's executive compensation policies are designed (i) to provide
competitive levels of overall compensation in order to attract and retain the
most qualified executives in the industry, (ii) to motivate executive officers
to achieve the Company's business objectives and (iii) to reward executive
officers for their achievements on behalf of the Company. To achieve these
goals, the Committee and the Board of Directors have established an executive
compensation program primarily consisting of three integrated components -- Base
Salary, Performance-Based Awards and Stock Options.
BASE SALARY. The base salary component of total compensation is designed to
compensate executives competitively within the industry and the marketplace. In
this regard the Committee considers competitive data obtained from national
executive compensation surveys, a given officer's level of responsibility, past
performance and historical salary level and input from the Company's senior
management. In arriving at fiscal 1995 base salaries, the Committee considered
data from three surveys, one of which contained data concerning computer and
computer peripheral companies (including one of the seven companies in the "Peer
Group" used in the Performance Graph below) and the other two of which contained
data concerning a broad set of industries. The Committee, together with an
independent outside consultant (Frederick W. Cook & Associates), analyzed survey
data for companies of similar revenue size and market capitalization and
developed base salary structural guidelines. The Committee established the
fiscal 1995 base salaries of the Company's executive officers at the beginning
of the fiscal year. The base salary of the Company's executive officers
increased by an average of 9.0% of the base salary levels in fiscal 1994. In
making salary decisions, the Committee exercised its discretion and judgment
based on all of the factors described above and, although the Committee
generally targets base salary levels at the 50th percentile of the survey data,
no specific formula was applied to determine the weight of each of the factors.
The Chief Executive Officer's (the "CEO") base salary for fiscal 1995 was
$600,000. It is the Company's policy to review the base salaries of its
executive officers, including the CEO, on a periodic basis, generally a period
of 18 to 24 months. The CEO's base salary was reviewed and adjusted in fiscal
1994, but was not reviewed in fiscal 1995 and therefore remained unchanged from
the prior fiscal year.
PERFORMANCE-BASED AWARDS. All executive officers, including the CEO,
participate in the Company's Performance-Based Executive Compensation Plan (the
"Plan"). The Plan compensates executive officers in the form of quarterly
awards. Awards under the Plan are intended to reflect the Committee's belief
that a significant portion of the annual compensation of each executive officer
should be contingent upon the performance of the Company and the individual
contribution of each executive officer. Awards under the Plan, including the
CEO's, are contingent upon attainment of specific Company profitability
performance objectives as measured by the Company's computation of a return on
assets ("ROA"), with the performance objectives established by the Committee
early in the fiscal year. The actual payout of each quarterly award varies with
Company performance such that
14
above-average performance results in above-average compensation and
below-average performance results in below-average compensation. In addition,
consideration is given to the relative contribution of each individual within
the executive group in attainment of that performance. Under the Plan, 60% of
the award is paid in cash. The remaining 40% is deferred and may be used solely,
except in the event of the death of the executive, to satisfy a portion of the
exercise price of certain stock options granted under the Company's 1991
Incentive Stock Option Plan. As a result, 40% of each award earned is at risk to
the executive officer until stock options held by such executive officer vest
and are exercised. If a participant's employment with the Company is terminated
prior to the end of a fiscal quarter, other than by death of the executive, the
Plan provides that he or she shall not be eligible for an award for that fiscal
quarter and any deferred accumulated awards relating to unvested stock options
are forfeited. In fiscal 1995, the awards under the Plan represented
approximately 59% of the CEO's total cash compensation, including deferred
awards, and ranged from 61% to 67% of the total cash compensation, including
deferred awards, of the other executive officers. The Company's fiscal 1995
results were judged by the Committee to be excellent. The Company experienced an
earnings increase of 15.5%. Based upon the Company's earnings performance during
fiscal 1995, and the executive officers' individual contributions, awards under
the Plan were made to executive officers, including the CEO, in each of the four
fiscal quarters. The CEO's individual contributions to the Company were his
leadership role in establishing and retaining a strong management team, his
strategic focus on the business to position it for growth and diversification,
and his work in communicating the Company's vision, strategy and performance
throughout the Company.
The Committee believes that the Performance-Based Executive Compensation
Plan provides an excellent link between the Company's earnings performance and
the incentives paid to executives.
STOCK OPTIONS. The grant of stock options to executive officers creates a
direct link between compensation and long-term increases in shareholder value.
The Committee believes that stock option grants provide an incentive that
focuses the executive officers' attention on managing the Company from the
perspective of an owner with an equity stake in the business. Options are
subject to vesting provisions to encourage executive officers to remain employed
with the Company. With respect to executive officers, stock option grants
normally occur on a quarterly basis. The size of each option grant is based upon
the executive officer's responsibilities, relative position with the Company and
the Committee's judgment with respect to the executive's impact on shareholder
value. During fiscal 1995, the CEO received four quarterly stock option grants
of 30,000 shares, one executive officer received four quarterly grants of 7,000
shares, three executive officers received four quarterly grants of 10,000 shares
each and the remaining executive officers received three quarterly grants of
10,000 shares and one quarterly grant of 15,000 shares each.
IMPACT OF SECTION 162(M) OF THE INTERNAL REVENUE CODE. The Committee has
considered the potential impact of Section 162(m) of the Internal Revenue Code
on the compensation paid to the Company's executive officers. Section 162(m)
disallows a tax deduction for any publicly-held corporation for individual
compensation exceeding $1.0 million in any taxable year for any of the executive
officers named in the proxy statement, unless compensation is performance-based.
In general, it is the Company's policy to qualify, to the maximum extent
possible, its executives' compensation for deductibility under applicable tax
laws. As a result, the Committee submitted the Performance-Based Executive
Compensation Plan to the shareholders for ratification and obtained approval at
the 1994 Annual Meeting of Shareholders in order to qualify for deductibility
the compensation realized in connection with payments under this plan. In
addition, at the 1993 Annual Meeting of Shareholders, the shareholders approved
certain amendments to the 1991 Incentive Stock Option Plan to preserve the
Company's ability to deduct the compensation expense relating to stock options
granted under such plan.
15
In approving the amount and form of compensation for the Company's executive
officers, the Committee will continue to consider all elements of the cost to
the Company of providing such compensation, including the potential impact of
Section 162(m).
MEMBERS OF THE EXECUTIVE PERSONNEL AND ORGANIZATION COMMITTEE:
ROBERT A. KLEIST
LAWRENCE PERLMAN
THOMAS P. STAFFORD
PERFORMANCE GRAPH
Set forth below is a line graph comparing the annual percentage change in
the cumulative return to the shareholders of the Company's Common Stock with the
cumulative return of the S&P 500 Index (the "S&P 500") and of a peer group
constructed by the Company (the "Peer Group") for the period commencing July 1,
1990 and ending on June 30, 1995. The Peer Group is composed of Conner
Peripherals, Inc., Komag, Inc., Maxtor Corporation, Micropolis Corporation,
Quantum Corporation, Read-Rite Corporation and Western Digital Corporation.
Returns for the Peer Group are weighted based on market capitalization at the
beginning of each fiscal year.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
SEAGATE TECHNOLOGY, INC. PEER GROUP S & P 500
Jun-90 100 100 100
Jun-91 53 56 107
Jun-92 105 69 122
Jun-93 112 46 138
Jun-94 140 58 140
Jun-95 280 98 177
------------------------
(1) The graph assumes that $100 was invested on July 1, 1990 in the Company's
Common Stock and in the S&P 500 and Peer Group, and that all dividends were
reinvested. No dividends have been declared or paid on the Company's Common
Stock. Shareholder returns over the indicated period should not be
considered indicative of future shareholder returns.
(2) The Company operates on a 52/53 week fiscal year which ends on the Friday
closest to June 30. Accordingly the last trading day of the Company's fiscal
year may vary. For consistent presentation and comparison to the S&P 500 and
Peer Group shown herein, the Company has calculated its stock performance
graph assuming a June 30 year end.
The information contained above under the captions entitled "Report of the
Executive Personnel and Organization Committee of the Board of Directors" and
"Performance Graph" shall not be deemed to be "soliciting material" or to be
"filed" with the Securities and Exchange Commission, nor shall such information
be incorporated by reference into any filing under the Securities Act of 1933 or
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates it by reference into such filing.
16
CERTAIN TRANSACTIONS WITH MANAGEMENT
The Company chartered aviation services from Monterey Airplane Company, a
company 100% owned by Alan F. Shugart, Chairman of the Board of Directors,
President and Chief Executive Officer, and his wife, during the fiscal year
ended June 30, 1995 in the aggregate amount of $1,129,704.
The Company retained the services of OTI, Inc., a company 19% owned by
Thomas P. Stafford, a member of the Board of Directors, during the fiscal year
ended June 30, 1995 in the aggregate amount of $3,626,855. OTI, Inc. provides
temporary employment personnel.
The Company believes that the terms of such transactions were no less
favorable than those which could be obtained from entities unrelated to the
Company.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership with the Securities and Exchange Commission ("SEC") and
the New York Stock Exchange. Executive officers, directors and greater than ten
percent stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file. Based solely in its review of the
copies of such forms received by it, or written representations from certain
reporting persons, the Company believes that, during the period from July 2,
1994 to June 30, 1995, all filing requirements applicable to its executive
officers and directors were complied with.
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of Proxy to vote the shares they represent as
the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: September 21, 1995
17
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SEAGATE TECHNOLOGY, INC.
1995 ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 26, 1995
The undersigned shareholder of SEAGATE TECHNOLOGY, INC., a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated September 21, 1995, and hereby
appoints Alan F. Shugart, Gary B. Filler and Robert A. Kleist, and each of them,
proxies and attorneys-in-fact, with full power to each of substitution, on
behalf and in the name of the undersigned, to represent the undersigned at the
1995 Annual Meeting of Shareholders of SEAGATE TECHNOLOGY, INC. to be held on
October 26, 1995 at 10:00 a.m., local time, at Seascape Resort & Conference
Center, One Seascape Resort Drive, Aptos, California 95003, and at any
adjournment or adjournments thereof, and to vote all shares of Common Stock
which the undersigned would be entitled to vote if then and there personally
present, on the matters set forth on the reverse:
1. ELECTION OF DIRECTORS:
/ / FOR all nominees listed below / / WITHHOLD
(except as indicated)
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THAT NOMINEE'S NAME IN THE LIST BELOW:
Alan P. Shugart; Robert A. Kleist; Gary B. Filler; Kenneth E
Haughton; Thomas P. Stafford; Lawrence Perlman; Laurel L.
Wilkening.
2. PROPOSAL TO APPROVE THE AMENDMENT TO THE 1991 INCENTIVE STOCK OPTION
PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR
ISSUANCE THEREUNDER BY 6,000,000:
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS THE
INDEPENDENT AUDITORS OF THE COMPANY FOR FISCAL 1995:
/ / FOR / / AGAINST / / ABSTAIN
I plan to attend the meeting / /
and, in their discretion, upon such other matter or matters which may properly
come before the meeting of any adjournment or adjournments thereof.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE AMENDMENT TO THE 1991
INCENTIVE STOCK OPTION PLAN, FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST &
YOUNG LLP AS INDEPENDENT AUDITORS AND AS SAID PROXIES DEEM ADVISABLE ON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
Dated : __________________, 1995
--------------------------------
Signature
--------------------------------
Signature
(This Proxy should be marked, dated and signed by the shareholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.)
-2-
EX-99
2
1991 STOCK OPTION PLAN
SEAGATE TECHNOLOGY, INC.
1991 INCENTIVE STOCK OPTION PLAN
(AS AMENDED THROUGH OCTOBER 26, 1995)
1. PURPOSES OF THE PLAN. The purposes of this 1991 Incentive Stock Option
Plan are:
- to attract and retain the best available personnel for positions of
substantial responsibility,
- to provide additional incentive to Employees and Consultants, and
- to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees as shall
be administering the Plan, in accordance with Section 4 of the Plan.
(b) "APPLICABLE LAWS" means the legal requirements relating to the
administration of stock option plans under state corporate and securities
laws and the Code.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" means a Committee appointed by the Board in accordance
with Section 4 of the Plan.
(f) "COMMON STOCK" means the Common Stock of the Company.
(g) "COMPANY" means Seagate Technology, Inc., a Delaware corporation.
(h) "CONSULTANT" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services and who is
compensated for such services, provided that the term "Consultant" shall not
include Directors who are paid only a director's fee by the Company or who
are not compensated by the Company for their services as Directors.
(i) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means that the
employment or consulting relationship is not interrupted or terminated by
the Company, any Parent or Subsidiary. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of: (i) any leave
of absence approved by the Board, including sick leave, military leave, or
any other personal leave; provided, however, that for purposes of Incentive
Stock Options, any such leave may not exceed ninety (90) days, unless
reemployment upon the expiration of such leave is guaranteed by contract
(including certain Company policies) or statute; or (ii) transfers between
locations of the Company or between the Company, its Parent, its
Subsidiaries or its successor.
(j) "DIRECTOR" means a member of the Board.
(k) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(l) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall
be sufficient to constitute "employment" by the Company.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(n) "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the National
Market System of the National
Association of Securities Dealers, Inc. Automated Quotation ("NASDAQ")
System, the Fair Market Value of a Share of Common Stock shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in Common Stock) on the last market trading
day prior to the day of determination, as reported in the Wall Street
Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but not on
the National Market System thereof) or is regularly quoted by a
recognized securities dealer but selling prices are not reported, the
Fair Market Value of a Share of Common Stock shall be the mean between
the high bid and low asked prices for the Common Stock on the last market
trading day prior to the day of determination, as reported in the Wall
Street Journal or such other source as the Administrator deems reliable;
(iii) In the absence of an established market for the Common Stock,
the Fair Market Value shall be determined in good faith by the
Administrator.
(o) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(p) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.
(q) "NOTICE OF GRANT" means a written notice evidencing certain terms
and conditions of an individual Option grant. The Notice of Grant is part of
the Option Agreement.
(r) "OFFICER" means a person who is an officer of the Company within
the meaning of Section 15 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "OPTION" means a stock option granted pursuant to the Plan.
(t) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the
Plan.
(u) "OPTION EXCHANGE PROGRAM" means a program whereby outstanding
options are surrendered in exchange for options with a lower exercise price.
(v) "OPTIONED STOCK" means the Common Stock subject to an Option.
(w) "OPTIONEE" means an Employee or Consultant who holds an
outstanding Option.
(x) "PARENT" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(y) "PLAN" means this 1991 Incentive Stock Option Plan.
(aa) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised
with respect to the Plan.
(bb) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 12 of the Plan.
(cc) "SUBSIDIARY" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares which may be optioned under the
Plan is 17,000,000 Shares of Common
2
Stock. The Shares may be authorized, but unissued, or reacquired Common Stock.
However, should the Company reacquire Shares which were issued pursuant to the
exercise of an Option, such Shares shall not become available for future grant
under the Plan.
If an Option expires or becomes unexercisable without having been exercised
in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated).
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE.
(i) MULTIPLE ADMINISTRATIVE BODIES. If permitted by Rule 16b-3, the
Plan may be administered by different bodies with respect to
Directors, Officers who are not Directors, and Employees who are neither
Directors nor Officers.
(ii) ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS SUBJECT
TO SECTION 16(B). With respect to Option grants made to Employees who
are also Officers or Directors subject to Section 16(b) of the Exchange
Act, the Plan shall be administered by (A) the Board, if the Board may
administer the Plan in compliance with the rules governing a plan
intended to qualify as a discretionary plan under Rule 16b-3, or (B) a
committee designated by the Board to administer the Plan, which committee
shall be constituted to comply with the rules governing a plan intended
to qualify as a discretionary plan under Rule 16b-3. Once appointed, such
Committee shall continue to serve in its designated capacity until
otherwise directed by the Board. From time to time the Board may increase
the size of the Committee and appoint additional members, remove members
(with or without cause) and substitute new members, fill vacancies
(however caused), and remove all members of the Committee and thereafter
directly administer the Plan, all to the extent permitted by the rules
governing a plan intended to qualify as a discretionary plan under Rule
16b-3.
(iii) ADMINISTRATION WITH RESPECT TO OTHER PERSONS. With respect to
Option grants made to Employees or Consultants who are neither
Directors nor Officers of the Company, the Plan shall be administered by
(A) the Board or (B) a committee designated by the Board, which committee
shall be constituted to satisfy Applicable Laws. Once appointed, such
Committee shall serve in its designated capacity until otherwise directed
by the Board. The Board may increase the size of the Committee and
appoint additional members, remove members (with or without cause) and
substitute new members, fill vacancies (however caused), and remove all
members of the Committee and thereafter directly administer the Plan, all
to the extent permitted by Applicable Laws.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(n) of the Plan;
(ii) to select the Consultants and Employees to whom Options may be
granted hereunder;
(iii) to determine whether and to what extent Options are granted
hereunder;
(iv) to determine the number of shares of Common Stock to be covered
by each Option granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to,
3
the exercise price, the time or times when Options may be exercised
(which may be based on performance criteria), any vesting acceleration or
waiver of forfeiture restrictions, and any restriction or limitation
regarding any Option or the shares of Common Stock relating thereto,
based in each case on such factors as the Administrator, in its sole
discretion, shall determine;
(vii) to determine whether, to what extent and under what
circumstances Common Stock and other amounts payable with respect to an
award under this Plan shall be deferred either automatically or at the
election of the participant (including providing for and determining the
amount (if any) of any deemed earnings on any deferred amount during any
deferral period);
(viii) to reduce the exercise price of any Option to the then current
Fair Market Value if the Fair Market Value of the Common Stock covered by
such Option shall have declined since the date the Option was granted;
(ix) to construe and interpret the terms of the Plan;
(x) to prescribe, amend and rescind rules and regulations relating to
the Plan;
(xi) to modify or amend each Option (subject to Section 14(c) of the
Plan);
(xii) to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Option previously granted
by the Administrator;
(xiii) to institute an Option Exchange Program;
(xiv) to determine the terms and restrictions applicable to Options;
and
(xv) to make all other determinations deemed necessary or advisable
for administering the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's decisions,
determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.
5. ELIGIBILITY. Nonstatutory Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. If
otherwise eligible, an Employee or Consultant who has been granted an Option may
be granted additional Options.
6. LIMITATIONS.
(a) Each Option shall be designated in the Notice of Grant as either an
Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair
Market Value:
(i) of Shares subject to an Optionee's incentive stock options
granted by the Company, any Parent or Subsidiary, which (ii) become
exercisable for the first time during any calendar year (under all plans
of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock
Options. For purposes of this Section 6(a), incentive stock options shall be
taken into account in the order in which they were granted, and the Fair
Market Value of the Shares shall be determined as of the time of grant.
(b) Neither the Plan nor any Option shall confer upon an Optionee any
right with respect to continuing the Optionee's employment or consulting
relationship with the Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate such employment or
consulting relationship at any time, with or without cause.
4
(c) Beginning October 28, 1993, the following limitations shall apply to
grants of Options to Officers:
(i) no Officer shall be granted in any fiscal year of the Company,
Options to purchase more than 160,000 Shares, provided that, a
newly-hired Officer may in addition receive a one-time grant of up to
300,000 Shares upon acceptance of employment with the Company; and
(ii) over the remaining term of the Plan, no Officer shall be granted
Options to purchase more than 500,000 Shares.
The foregoing limitations set forth in this Section 6(c) are intended to
satisfy the requirements applicable to Options intended to qualify as
"performance-based compensation" (within the meaning of Section 162(k) of
the Code). In the event the Administrator determines that such limitations
are not required to qualify Options as performance-based compensation, the
Administrator may modify or eliminate such limitations.
7. TERM OF PLAN. Subject to Section 18 of the Plan, the Plan shall become
effective upon the earlier to occur of its adoption by the Board or its approval
by the shareholders of the Company as described in Section 18 of the Plan. It
shall continue in effect for a term of ten (10) years unless terminated earlier
under Section 14 of the Plan.
8. TERM OF OPTION. The term of each Option shall be stated in the Notice
of Grant; provided, however, that in the case of an Incentive Stock Option, the
term shall be ten (10) years from the date of grant or such shorter term as may
be provided in the Notice of Grant. Moreover, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any Parent or Subsidiary, the term of
the Incentive Stock Option shall be five (5) years from the date of grant or
such shorter term as may be provided in the Notice of Grant.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive Stock
Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price shall be no
less than 110% of the Fair Market Value per Share on the date of
grant.
(B) granted to any Employee, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date
of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be no less than 25% of the Fair Market Value per
Share on the date of grant.
(b) WAITING PERIOD AND EXERCISE DATES. At the time an Option is
granted, the Administrator shall fix the period within which the Option may
be exercised and shall determine any con-ditions which must be satisfied
before the Option may be exercised. In so doing, the Administrator may
specify that an Option may not be exercised until the completion of a
service period.
(c) FORM OF CONSIDERATION. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the
method of payment. In the case of an Incentive Stock Option, the
Administrator shall determine the acceptable form of consideration at the
time of grant. Such consideration may consist entirely of:
(i) cash;
5
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six
months on the date of surrender, and (B) have a Fair Market Value on the
date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised;
(v) delivery of a properly executed exercise notice together with
such other documentation as the Administrator and the Optionee's broker,
if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price;
(vi) any combination of the foregoing methods of payment; or
(vii) such other consideration and method of payment for the issuance
of Shares to the extent permitted by Applicable Laws.
10. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option
granted hereunder shall be exercisable according to the terms of the Plan
and at such times and under such conditions as determined by the
Administrator and set forth in the Option Agreement.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company receives: (i)
written notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) full payment for the
Shares with respect to which the Option is exercised. Full payment may
consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares
issued upon exercise of an Option shall be issued in the name of the
Optionee or, if requested by the Optionee, in the name of the Optionee and
his or her spouse. Until the stock certificate evidencing such Shares is
issued (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such stock certificate
promptly after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in Section 12 of the Plan.
Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.
(b) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. In the event
that an Optionee's Continuous Status as an Employee or Consultant terminates
(other than upon the Optionee's death or Disability), the Optionee may
exercise his or her Option, but only within such period of time as is
determined by the Administrator, and only to the extent that the Optionee
was entitled to exercise it at the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the
Notice of Grant). In the case of an Incentive Stock Option, the
Administrator shall determine such period of time (in no event to exceed
ninety (90) days from the date of termination) when the Option is granted.
If, at the date of termination, the Optionee is not entitled to exercise his
or her entire Option, the Shares covered by the unexercisable portion of the
Option shall revert to the Plan. If, after termination, the Optionee does
not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
6
(c) DISABILITY OF OPTIONEE. In the event that an Optionee's Continuous
Status as an Employee or Consultant terminates as a result of the Optionee's
Disability, the Optionee may exercise his or her Option at any time within
six (6) months from the date of such termination, but only to the extent
that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant). If, at the date of termination,
the Optionee is not entitled to exercise his or her entire Option, the
Shares covered by the unexercisable portion of the Option shall revert to
the Plan. If, after termination, the Optionee does not exercise his or her
Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
(d) DEATH OF OPTIONEE. In the event of the death of an Optionee, the
Option may be exercised at any time within six (6) months following the date
of death (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant), by the Optionee's estate or by
a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent that the Optionee was entitled to
exercise the Option at the date of death. If, at the time of death, the
Optionee was not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall immediately revert
to the Plan. If, after death, the Optionee's estate or a person who acquired
the right to exercise the Option by bequest or inheritance does not exercise
the Option within the time specified herein, the Option shall terminate, and
the Shares covered by such Option shall revert to the Plan.
11. NON-TRANSFERABILITY OF OPTIONS.
(a) An Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws
of descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
(b) An Optionee may file a written designation of a beneficiary who is
to receive any options that remain unexercised in the event of the
Optionee's death. If a participant is married and the designated beneficiary
is not the spouse, spousal consent shall be required for such designation to
be effective.
(c) Such designation of beneficiary may be changed by the Optionee at
any time by written notice, subject to the above spousal consent conditions.
In the event of the death of the Optionee and in the absence of a
beneficiary validly designated under the Plan who is living at the time of
such Optionee's, the Company shall deliver such options to the executor or
administrator of the estate of the Optionee, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the
Company, in its discretion, may deliver such options to the spouse or to any
one or more dependents or relatives of the participant, or if no spouse,
dependent or relative is known to the Company, then to such other person as
the Company may designate.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER, ASSET
SALE OR CHANGE OF CONTROL.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have
yet been granted or which have been returned to the Plan upon cancellation
or expiration of an Option, as well as the price per share of Common Stock
covered by each such outstanding Option, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase
or decrease in the number of issued shares of Common Stock effected without
receipt of consideration by the Company; provided, however, that conversion
of any convertible securities of the Company shall not be deemed to have
been "effected without receipt of consideration." Such adjustment shall be
made by the Board, whose determination in that respect shall be final,
7
binding and conclusive. Except as expressly provided herein, no issuance by
the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of
Common Stock subject to an Option.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has
not been previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Board may, in the exercise of its
sole discretion in such instances, declare that any Option shall terminate
as of a date fixed by the Board and give each Optionee the right to exercise
his or her Option as to all or any part of the Optioned Stock, including
Shares as to which the Option would not otherwise be exercisable.
(c) MERGER OR ASSET SALE. Subject to the provisions of paragraph (d)
hereof, in the event of a merger of the Company with or into another
corporation, or the sale of substantially all of the assets of the Company,
each outstanding Option shall be assumed or an equivalent option shall be
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation does not
agree to assume the Option or to substitute an equivalent option, the
Administrator shall, in lieu of such assumption or substitution, provide for
the Optionee to have the right to exercise the Option as to all or a portion
of the Optioned Stock, including Shares as to which it would not otherwise
be exercisable. If the Administrator makes an Option fully exercisable in
lieu of assumption or substitution in the event of a merger or sale of
assets, the Administrator shall notify the Optionee that the Option shall be
fully exercisable for a period of fifteen (15) days from the date of such
notice, and the Option will terminate upon the expiration of such period.
For the purposes of this paragraph, the Option shall be considered assumed
if, following the merger or sale of assets, the option confers the right to
purchase, for each Share subject to the Option immediately prior to the
merger or sale of assets, the consideration (whether stock, cash, or other
securities or property) received in the merger or sale of assets by holders
of Common Stock for each Share held on the effective date of the transaction
(and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the
merger or sale of assets was not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation and the participant, provide for the consideration to
be received upon the exercise of the Option, for each Share of Optioned
Stock subject to the Option, to be solely common stock of the successor
corporation or its Parent equal in Fair Market Value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
(d) CHANGE IN CONTROL. In the event of a "Change in Control" of the
Company, as defined in paragraph (e) below, then the following acceleration
and valuation provisions shall apply:
(i) Except as otherwise determined by the Board, in its discretion,
prior to the occurrence of a Change in Control, any Options outstanding
on the date such Change in Control is determined to have occurred that
are not yet exercisable and vested on such date shall become fully
exercisable and vested;
(ii) Except as otherwise determined by the Board, in its discretion,
prior to the occurrence of a Change in Control, all outstanding Options,
to the extent they are exercisable and vested (including Options that
shall become exercisable and vested pursuant to subparagraph (i) above),
shall be terminated in exchange for a cash payment equal to the Change in
Control Price (reduced by the exercise price applicable to such Options).
These cash proceeds shall be paid to the Optionee or, in the event of
death of an Optionee prior to payment, to the estate of the Optionee or
to a person who acquired the right to exercise the Option by bequest or
inheritance.
8
(e) DEFINITION OF "CHANGE IN CONTROL". For purposes of this Section
12, a "Change in Control" means the happening of any of the following:
(i) When any "person," as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, a Subsidiary or a
Company employee benefit plan, including any trustee of such plan acting
as trustee) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of the combined
voting power of the Company's then outstanding securities entitled to
vote generally in the election of directors; or
(ii) The shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least fifty percent (50%) of the
total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, or the shareholders of the Company approve an agreement
for the sale or disposition by the Company of all or substantially all
the Company's assets; or
(iii) A change in the composition of the Board of Directors of the
Company, as a result of which fewer than a majority of the directors are
Incumbent Directors. "Incumbent Directors" shall mean directors who
either (A) are directors of the Company as of the date the Plan is
approved by the shareholders, or (B) are elected, or nominated for
election, to the Board of Directors of the Company with the affirmative
votes of at least a majority of the Incumbent Directors at the time of
such election or nomination (but shall not include an individual whose
election or nomination is in connection with an actual or threatened
proxy contest relating to the election of directors to the Company).
(f) CHANGE IN CONTROL PRICE. For purposes of this Section 12, "Change
in Control Price" shall be, as determined by the Board, (i) the highest Fair
Market Value of a Share within the 60 day period immediately preceding the
date of determination of the Change in Control Price by the Board (the
"60-Day Period"), or (ii) the highest price paid or offered per Share, as
determined by the Board, in any bona fide transaction or bona fide offer
related to the Change in Control of the Company, at any time within the
60-Day Period, or (iii) some lower price as the Board, in its discretion,
determines to be a reasonable estimate of the fair market value of a Share.
13. DATE OF GRANT. The date of grant of an Option shall be, for all
purposes, the date on which the Administrator makes the determination granting
such Option, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.
14. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time amend, alter,
suspend or terminate the Plan.
(b) SHAREHOLDER APPROVAL. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to
comply with Rule 16b-3 or with Section 422 of the Code (or any successor
rule or statute or other applicable law, rule or regulation, including the
requirements of any exchange or quotation system on which the Common Stock
is listed or quoted). Such shareholder approval, if required, shall be
obtained in such a manner and to such a degree as is required by the
applicable law, rule or regulation.
9
(c) EFFECT OF AMENDMENT OR TERMINATION. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee
and the Company.
15. CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to the
exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares shall comply with all relevant provisions of
law, including, without limitation, the Securities Act of 1933, as amended,
the Exchange Act, the rules and regulations promulgated thereunder,
Applicable Laws, and the requirements of any stock exchange or quotation
system upon which the Shares may then be listed or quoted, and shall be
further subject to the approval of counsel for the Company with respect to
such compliance.
(b) INVESTMENT REPRESENTATIONS. As a condition to the exercise of an
Option, the Company may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the
Company, such a representation is required.
16. LIABILITY OF COMPANY.
(a) INABILITY TO OBTAIN AUTHORITY. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
(b) GRANTS EXCEEDING ALLOTTED SHARES. If the Optioned Stock covered by
an Option exceeds, as of the date of grant, the number of Shares which may
be issued under the Plan without additional shareholder approval, such
Option shall be void with respect to such excess Optioned Stock, unless
shareholder approval of an amendment sufficiently increasing the number of
Shares subject to the Plan is timely obtained in accordance with Section
14(b) of the Plan.
17. RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
18. SHAREHOLDER APPROVAL. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the manner and to the degree required under applicable federal and state law.
10
1991 INCENTIVE STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the 1991 Incentive
Stock Option Plan (the "Plan") shall have the same defined meanings in this
Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
Optionee's Name
Optionee's Address
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Stock Option Agreement,
as follows:
Grant Number ------------------------
Date of Grant ------------------------
Vesting Commencement Date ------------------------
$
Exercise Price per Share
------------------------
Total Number of Shares Granted ------------------------
$
Total Exercise Price
------------------------
Type of Option: ---- Incentive Stock Option
----
Nonstatutory Stock Option
Term/Expiration Date: ------------------------
VESTING SCHEDULE:
This Option may be exercised, in whole or in part, in accordance with the
following schedule:
TERMINATION PERIOD:
This Option may be exercised for ninety (90) days after termination of
employment or consulting relationship, or such longer period as may be
applicable upon death or Disability of Optionee as provided in the Plan, but in
no event later than the Term/Expiration Date as provided above.
II. AGREEMENT
1. GRANT OF OPTION. The Plan Administrator of the Company hereby grants to
the Optionee named in the Notice of Grant attached as Part I of this Agreement
(the "Optionee"), an option (the "Option") to purchase a number of Shares, as
set forth in the Notice of Grant, at the exercise price per share set forth in
the Notice of Grant (the "Exercise Price"), subject to the terms and conditions
of the Plan, which is incorporated herein by reference. Subject to Section 14(c)
of the Plan, in the event of a conflict between the terms and conditions of the
Plan and the terms and conditions of this Option Agreement, the terms and
conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option, this
Option is intended to qualify as an Incentive Stock Option under Section 422 of
the Code.
2. EXERCISE OF OPTION.
(a) RIGHT TO EXERCISE. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement. In the event of
Optionee's death, Disability or other termination of Optionee's employment
or consulting relationship, the exercisability of the Option is governed by
the applicable provisions of the Plan and this Option Agreement.
(b) METHOD OF EXERCISE. This Option is exercisable by delivery of an
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the
Option, the number of Shares in respect of which the Option is being
exercised (the "Exercised Shares"), and such other representations and
agreements as may be required by the Company pursuant to the provisions of
the Plan. The Exercise Notice shall be signed by the Optionee and shall be
delivered in person or by certified mail to the Secretary of the Company.
The Exercise Notice shall be accompanied by payment of the aggregate
Exercise Price as to all Exercised Shares. This Option shall be deemed to be
exercised upon receipt by the Company of such fully executed Exercise Notice
accompanied by such aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option unless
such issuance and exercise complies with all relevant provisions of law and
the requirements of any stock exchange upon which the Shares are then
listed. Assuming such compliance, for income tax purposes the Exercised
Shares shall be considered transferred to the Optionee on the date the
Option is exercised with respect to such Exercised Shares.
3. METHOD OF PAYMENT. Payment of the aggregate Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:
(a) cash; or
(b) check; or
(c) delivery of a properly executed exercise notice together with such
other documentation as the Administrator and the Optionee's broker, if
applicable, shall require to effect an exercise of the Option and delivery
to the Company of the sale or loan proceeds required to pay the exercise
price; or
(d) surrender of other Shares which (i) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than
six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares.
4. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
5. TERM OF OPTION. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
6. TAX CONSEQUENCES. Some of the federal tax consequences relating to this
Option, as of the date of this Option, are set forth below. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
(a) EXERCISING THE OPTION.
(i) NONQUALIFIED STOCK OPTION ("NSO"). If this Option does not
qualify as an ISO, the Optionee may incur regular federal income tax
liability upon exercise. The Optionee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the
excess, if any, of the fair market value of the Exercised Shares on the
date of exercise over their aggregate Exercise Price. If the Optionee is
an employee, the Company will be required to withhold from his or her
compensation or collect from Optionee and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income
at the time of exercise.
(ii) INCENTIVE STOCK OPTION ("ISO"). If this Option qualifies as an
ISO, the Optionee will have no regular federal income tax liability
upon its exercise, although the excess, if any,
2
of the fair market value of the Exercised Shares on the date of exercise
over their aggregate Exercise Price will be treated as an adjustment to
the alternative minimum tax for federal tax purposes and may subject the
Optionee to alternative minimum tax in the year of exercise.
(b) DISPOSITION OF SHARES.
(i) NSO. If the Optionee holds NSO Shares for at least one year,
any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at least one year
after exercise and two years after the grant date, any gain realized
on disposition of the Shares will be treated as long-term capital gain
for federal income tax purposes. If the Optionee disposes of ISO Shares
within one year after exercise or two years after the grant date, any
gain realized on such disposition will be treated as compensation income
(taxable at ordinary income rates) to the extent of the excess, if any,
of the lesser of (A) the difference between the fair market value of the
Shares acquired on the date of exercise and the aggregate Exercise Price,
or (B) the difference between the sale price of such Shares and the
aggregate Exercise Price.
(c) NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Optionee
sells or otherwise disposes of any of the Shares acquired pursuant to an ISO
on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the
Company in writing of such disposition. The Optionee agrees that he or she
may be subject to income tax withholding by the Company on the compensation
income recognized from such early disposition of ISO Shares by payment in
cash or out of the current earnings paid to the Optionee.
By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement.
OPTIONEE: SEAGATE TECHNOLOGY, INC.
By: --------------------------------------
-------------------------------------------
Signature
Title: -------------------------------------
-------------------------------------------
Print Name
3
DESIGNATION OF BENEFICIARY
In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all of my options that are unexercised at that time.
NAME: (Please print)
------------------------------------------------------------------
(First) (Middle) (Last)
----------------------------------------------------
--------------------------
Relationship
----------------------------------------------------
(Address)
----------------------------------------------------
Signature of Employee
Dated: -------------------
4
CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves the terms
and conditions of the Plan and this Option Agreement. In consideration of the
Company's granting his or her spouse the right to purchase Shares as set forth
in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.
--------------------------------------
Spouse of Optionee
5
1991 INCENTIVE STOCK OPTION PLAN
STOCK OPTION AGREEMENT
EARLY EXERCISE
Unless otherwise defined herein, the terms defined in the 1991 Incentive
Stock Option Plan (the "Plan") shall have the same defined meanings in this
Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
Optionee's Name
Optionee's Address
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Stock Option Agreement,
as follows:
Grant Number ------------------------
Date of Grant ------------------------
Vesting Commencement Date ------------------------
$
Exercise Price per Share
------------------------
Total Number of Shares Granted ------------------------
$
Total Exercise Price
------------------------
Type of Option: ---- Incentive Stock Option
----
Nonstatutory Stock Option
Term/Expiration Date: ------------------------
VESTING SCHEDULE:
This Option vests in accordance with the following schedule:
TERMINATION PERIOD:
This Option may be exercised for ninety (90) days after termination of
employment or consulting relationship, or such longer period as may be
applicable upon death or Disability of Optionee as provided in the Plan, but in
no event later than the Term/Expiration Date as provided above.
II. AGREEMENT
1. GRANT OF OPTION. The Plan Administrator of the Company hereby grants to
the Optionee named in the Notice of Grant attached as Part I of this Agreement
(the "Optionee"), an option (the "Option") to purchase a number of Shares, as
set forth in the Notice of Grant, at the exercise price per share set forth in
the Notice of Grant (the "Exercise Price"), subject to the terms and conditions
of the Plan, which is incorporated herein by reference. Subject to Section 14(c)
of the Plan, in the event of a conflict between the terms and conditions of the
Plan and the terms and conditions of this Option Agreement, the terms and
conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option, this
Option is intended to qualify as an Incentive Stock Option under Section 422 of
the Code.
2. EXERCISE OF OPTION.
(a) RIGHT TO EXERCISE. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement; PROVIDED,
HOWEVER, that upon execution of a Restricted Stock Agreement in the form of
Exhibit A-1 hereto and upon compliance with the terms thereof, the Optionee
may exercise this Option with respect to unvested shares. In the event of
Optionee's death, Disability or other termination of Optionee's employment
or consulting relationship, the exercisability of the Option is governed by
the applicable provisions of the Plan and this Option Agreement.
(b) METHOD OF EXERCISE. This Option is exercisable by delivery of an
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares
in respect of which the Option is being exercised (the "Exercised Shares"),
and such other representations and agreements as may be required by the
Company pursuant to the provisions of the Plan. The Exercise Notice shall be
signed by the Optionee and shall be delivered in person or by certified mail
to the Secretary of the Company. The Exercise Notice shall be accompanied by
payment of the aggregate Exercise Price as to all Exercised Shares. This
Option shall be deemed to be exercised upon receipt by the Company of such
fully executed Exercise Notice accompanied by such aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option unless
such issuance and exercise complies with all relevant provisions of law and
the requirements of any stock exchange upon which the Shares are then
listed. Assuming such compliance, for income tax purposes the Exercised
Shares shall be considered transferred to the Optionee on the date the
Option is exercised with respect to such Exercised Shares.
3. METHOD OF PAYMENT. Payment of the aggregate Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:
(a) cash; or
(b) check; or
(c) delivery of a properly executed exercise notice together with such
other documentation as the Administrator and the Optionee's broker, if
applicable, shall require to effect an exercise of the Option and delivery
to the Company of the sale or loan proceeds required to pay the exercise
price; or
(d) surrender of other Shares which (i) in the case of Shares acquired
upon exercise of an option, have been owned by the Optionee for more than
six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares.
4. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
5. TERM OF OPTION. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
6. TAX CONSEQUENCES. Some of the federal tax consequences relating to this
Option, as of the date of this Option, are set forth below. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
(a) EXERCISING THE OPTION.
(i) NONQUALIFIED STOCK OPTION ("NSO"). If this Option does not
qualify as an ISO, the Optionee may incur regular federal income tax
liability upon exercise. The Optionee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the
excess, if any, of the fair market value of the Exercised Shares on the
date of exercise over their aggregate Exercise Price. If the Optionee is
an employee, the Company will be required to withhold from his or her
compensation or collect from Optionee and pay to the applicable taxing
authorities an amount equal to a percentage of this compensation income
at the time of exercise.
2
(ii) INCENTIVE STOCK OPTION ("ISO"). If this Option qualifies as an
ISO, the Optionee will have no regular federal income tax liability
upon its exercise, although the excess, if any, of the fair market value
of the Exercised Shares on the date of exercise over their aggregate
Exercise Price will be treated as an adjustment to the alternative
minimum tax for federal tax purposes and may subject the Optionee to
alternative minimum tax in the year of exercise.
(b) DISPOSITION OF SHARES.
(i) NSO. If the Optionee holds NSO Shares for at least one year,
any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at least one year
after exercise and two years after the grant date, any gain realized
on disposition of the Shares will be treated as long-term capital gain
for federal income tax purposes. If the Optionee disposes of ISO Shares
within one year after exercise or two years after the grant date, any
gain realized on such disposition will be treated as compensation income
(taxable at ordinary income rates) to the extent of the excess, if any,
of the lesser of (A) the difference between the fair market value of the
Shares acquired on the date of exercise and the aggregate Exercise Price,
or (B) the difference between the sale price of such Shares and the
aggregate Exercise Price.
(c) NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Optionee
sells or otherwise disposes of any of the Shares acquired pursuant to an ISO
on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the
Company in writing of such disposition. The Optionee agrees that he or she
may be subject to income tax withholding by the Company on the compensation
income recognized from such early disposition of ISO Shares by payment in
cash or out of the current earnings paid to the Optionee.
By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement.
OPTIONEE: SEAGATE TECHNOLOGY, INC.
By: --------------------------------------
-------------------------------------------
Signature
Title: -------------------------------------
-------------------------------------------
Print Name
3
DESIGNATION OF BENEFICIARY
In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all of my options that are unexercised at that time.
NAME: (Please print)
------------------------------------------------------------------
(First) (Middle) (Last)
----------------------------------------------------
--------------------------
Relationship
----------------------------------------------------
(Address)
----------------------------------------------------
Signature of Employee
Dated: -------------------
4
CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves the terms
and conditions of the Plan and this Option Agreement. In consideration of the
Company's granting his or her spouse the right to purchase Shares as set forth
in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.
--------------------------------------
Spouse of Optionee
5
EXHIBIT A
1991 INCENTIVE STOCK OPTION PLAN
EXERCISE NOTICE
Seagate Technology, Inc.
920 Disc Drive
Scotts Valley, California 95066
Attention: Secretary
1. EXERCISE OF OPTION. Effective as of today, , 199 , the
undersigned ("Purchaser") hereby elects to purchase shares (the
"Shares") of the Common Stock of Seagate Technology, Inc. (the "Company") under
and pursuant to the 1991 Incentive Stock Option Plan (the "Plan") and the Stock
Option Agreement dated (the "Option Agreement"). The purchase
price for the Shares shall be $ , as required by the Option Agreement.
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the
full purchase price for the Shares.
3. REPRESENTATIONS OF OPTIONEE. Optionee acknowledges that Optionee has
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
4. RIGHTS AS SHAREHOLDER. Subject to the terms and condi-tions of this
Agreement, Optionee shall have all of the rights of a shareholder of the Company
with respect to the Shares from and after the date that Optionee delivers full
payment of the Exercise Price until such time as Optionee disposes of the
Shares.
5. TAX CONSULTATION. Optionee understands that Optionee may suffer adverse
tax consequences as a result of Optionee's purchase or disposition of the
Shares. Optionee represents that Optionee has consulted with any tax consultants
Optionee deems advisable in connection with the purchase or disposition of the
Shares and that Optionee is not relying on the Company for any tax advice.
6. ENTIRE AGREEMENT; GOVERNING LAW. The Plan and Option Agreement are
incorporated herein by reference. This Exercise Notice, the Plan and the Option
Agreement constitute the entire agreement of the parties and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and such agreement is governed by Delaware
law except for that body of law pertaining to conflict of laws.
Submitted by: Accepted by:
OPTIONEE: SEAGATE TECHNOLOGY, INC.
By: ------------------------------------
------------------------------------
Signature
Its:
------------------------------------ ------------------------------------
Print Name
ADDRESS: ADDRESS:
920 Disc Drive
------------------------------------
Scotts Valley, California 95066
------------------------------------
EXHIBIT A-1
1991 INCENTIVE STOCK OPTION PLAN
RESTRICTED STOCK AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Restricted Stock Purchase Agreement.
WHEREAS, the Purchaser named in the Notice of Grant, (the "Purchaser") is an
employee or consultant of the Company, and the Purchaser's continued
participation is considered by the Company to be important for the Company's
continued growth; and
WHEREAS, in order to give the Purchaser an opportunity to acquire an equity
interest in the Company as an incentive for the Purchaser to participate in the
affairs of the Company, the Administrator has granted to the Purchaser the right
to exercise options relating to unvested shares subject to the terms and
conditions of the Plan and the Notice of Grant, which are incorporated herein by
reference, and pursuant to this restricted stock purchase agreement (the
"Agreement").
THEREFORE, the parties agree as follows:
1. SALE OF STOCK. The Company hereby agrees to sell to the Purchaser and
the Purchaser hereby agrees to purchase shares of the Company's Common Stock
(the "Shares"), at the exercise price per share and as otherwise described in
the Notice of Grant.
2. PAYMENT OF PURCHASE PRICE. The purchase price for the Shares may be
paid by delivery to the Company at the time of execution of this Agreement by
any of the following, or a combination thereof, at the election of the Optionee:
(a) cash; (b) check; or (c) surrender of other Shares which (i) in the case of
Shares acquired upon exercise of an option, have been owned by the Optionee for
more than six (6) months on the date of surrender, and (ii) have a Fair Market
Value on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares.
3. REPURCHASE OPTION.
a. In the event the Purchaser's Continuous Status as an Employee or
Consultant terminates for any or no reason (including death or disability)
before all of the Shares are released from the Company's repurchase option
(see Section 4), the Company shall, upon the date of such termination (as
reasonably fixed and determined by the Company) have an irrevocable,
exclusive option for a period of sixty (60) days from such date to
repurchase up to that number of shares which constitute the Unreleased
Shares (as defined in Section 4) at the original purchase price per share
(the "Repurchase Price"). Said option shall be exercised by the Company by
delivering written notice to the Purchaser or the Purchaser's executor (with
a copy to the Escrow Holder) AND, at the Company's option, (i) by delivering
to the Purchaser or the Purchaser's executor a check in the amount of the
aggregate Repurchase Price, or (ii) by the Company cancelling an amount of
the Purchaser's indebtedness to the Company equal to the aggregate
Repurchase Price, or (iii) by a combination of (i) and (ii) so that the
combined payment and cancellation of indebtedness equals such aggregate
Repurchase Price. Upon delivery of such notice and the payment of the
aggregate Repurchase Price in any of the ways described above, the Company
shall become the legal and beneficial owner of the Shares being repurchased
and all rights and interests therein or relating thereto, and the Company
shall have the right to retain and transfer to its own name the number of
Shares being repurchased by the Company.
b. Whenever the Company shall have the right to repurchase Shares
hereunder, the Company may designate and assign one or more employees,
officers, directors or shareholders of the Company or other persons or
organizations to exercise all or a part of the Company's purchase rights
under this Agreement and purchase all or a part of such Shares; provided
that if the Fair Market Value of the Shares to be repurchased on the date of
such designation or assignment (the "Repurchase FMV") exceeds the aggregate
Repurchase Price of such Shares, then each such designee or assignee shall
pay the Company cash equal to the difference between the Repurchase FMV and
the aggregate Repurchase Price of such Shares.
4. RELEASE OF SHARES FROM REPURCHASE OPTION.
a.
------------------ (
------------- ) of the Shares shall be released from the Company's
repurchase option
------------------------------------------------------------------------------
---------------------------------------------------------------------------- ,
provided in each case that the Purchaser's Continuous Status as an Employee
or Consultant has not terminated prior to the date of any such release.
b. Any of the Shares which have not yet been released from the
Company's repurchase option are referred to herein as "Unreleased Shares."
c. The Shares which have been released from the Company's repurchase
option shall be delivered to the Purchaser at the Purchaser's request (see
Section 6).
5. RESTRICTION ON TRANSFER. Except for the escrow described in Section 6
or transfer of the Shares to the Company or its assignees contemplated by this
Agreement, none of the Shares or any beneficial interest therein shall be
transferred, encumbered or otherwise disposed of in any way until the release of
such Shares from the Company's repurchase option in accordance with the
provisions of this Agreement, other than by will or the laws of descent and
distribution.
6. ESCROW OF SHARES.
a. To ensure the availability for delivery of the Purchaser's
Unreleased Shares upon repurchase by the Company pursuant to the Company's
repurchase option under Section 3 above, the Purchaser shall, upon execution
of this Agreement, deliver and deposit with an escrow holder designated by
the Company (the "Escrow Holder") the share certificates representing the
Unreleased Shares, together with the stock assignment duly endorsed in
blank, attached hereto as Exhibit A-2. The Unreleased Shares and stock
assignment shall be held by the Escrow Holder, pursuant to the Joint Escrow
Instructions of the Company and Purchaser attached as Exhibit A-3 hereto,
until such time as the Company's repurchase option expires. As a further
condition to the Company's obligations under this Agreement, the spouse of
Purchaser, if any, shall execute and deliver to the Company the Consent of
Spouse attached hereto as Exhibit A-4.
b. The Escrow Holder shall not be liable for any act it may do or omit
to do with respect to holding the Unreleased Shares in escrow and while
acting in good faith and in the exercise of its judgment.
c. If the Company or any assignee exercises its repurchase option
hereunder, the Escrow Holder, upon receipt of written notice of such option
exercise from the proposed transferee, shall take all steps necessary to
accomplish such transfer.
d. When the repurchase option has been exercised or expires unexercised
or a portion of the Shares has been released from such repurchase option,
upon Purchaser's request the Escrow Holder shall promptly cause a new
certificate to be issued for such released Shares and shall deliver such
certificate to the Company or the Purchaser, as the case may be.
e. Subject to the terms hereof, the Purchaser shall have all the rights
of a shareholder with respect to such Shares while they are held in escrow,
including without limitation, the right to vote the Shares and receive any
cash dividends declared thereon. If, from time to time during the term of
the Company's repurchase option, there is (i) any stock dividend, stock
split or other change in the Shares, or (ii) any merger or sale of all or
substantially all of the assets or other acquisition of the Company, any and
all new, substituted or additional securities to which the Purchaser is
entitled by reason of the Purchaser's ownership of the Shares shall be
immediately subject to this escrow, deposited with the Escrow Holder and
included thereafter as "Shares" for purposes of this Agreement and the
Company's repurchase option.
7. LEGENDS. The share certificate evidencing the Shares issued hereunder
shall be endorsed with the following legend (in addition to any legend required
under applicable state securities laws):
2
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN AGREEMENT
BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY.
8. ADJUSTMENT FOR STOCK SPLIT. All references to the number of Shares and
the purchase price of the Shares in this Agreement shall be appropriately
adjusted to reflect any stock split, stock dividend or other change in the
Shares which may be made by the Company after the date of this Agreement.
9. TAX CONSEQUENCES. The Purchaser has reviewed with the Purchaser's own
tax advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contem-plated by this Agreement. The Purchaser
is relying solely on such advisors and not on any statements or representations
of the Company or any of its agents. The Purchaser understands that the
Purchaser (and not the Company) shall be responsible for the Purchaser's own tax
liability that may arise as a result of this investment or the transactions
contemplated by this Agreement. The Purchaser understands that Section 83 of the
Internal Revenue Code of 1986, as amended (the "Code"), taxes as ordinary income
the difference between the purchase price for the Shares and the Fair Market
Value of the Shares as of the date any restrictions on the Shares lapse. In this
context, "restriction" includes the right of the Company to buy back the Shares
pursuant to its repurchase option. The Purchaser understands that the Purchaser
may elect to be taxed at the time the Shares are purchased rather than when and
as the Company's repurchase option expires by filing an election under Section
83(b) of the Code with the I.R.S. within 30 days from the date of purchase. The
form for making this election is attached as Exhibit A-5 hereto.
THE PURCHASER ACKNOWLEDGES THAT IT IS THE PURCHASER'S SOLE RESPONSIBILITY
AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF
THE PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON
THE PURCHASER'S BEHALF.
10. GENERAL PROVISIONS.
a. This Agreement shall be governed by the laws of the State of
California. This Agreement, subject to the terms and conditions of the Plan
and the Notice of Grant, represents the entire agreement between the parties
with respect to the purchase of Common Stock by the Purchaser. Subject to
Section 15(c) of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Agreement, the
terms and conditions of the Plan shall prevail. Unless otherwise defined
herein, the terms defined in the Plan shall have the same defined meanings
in this Agreement.
b. Any notice, demand or request required or permitted to be given by
either the Company or the Purchaser pursuant to the terms of this Agreement
shall be in writing and shall be deemed given when delivered personally or
deposited in the U.S. mail, First Class with postage prepaid, and addressed
to the parties at the addresses of the parties set forth at the end of this
Agreement or such other address as a party may request by notifying the
other in writing.
Any notice to the Escrow Holder shall be sent to the Company's address
with a copy to the other party not sending the notice.
c. The rights and benefits of the Company under this Agreement shall be
transferable to any one or more persons or entities, and all covenants and
agreements hereunder shall inure to the benefit of, and be enforceable by
the Company's successors and assigns. The rights and obligations of the
Purchaser under this Agreement may only be assigned with the prior written
consent of the Company.
d. Either party's failure to enforce any provision or provisions of
this Agreement shall not in any way be construed as a waiver of any such
provision or provisions, nor prevent that party
3
from thereafter enforcing each and every other provision of this Agreement.
The rights granted both parties herein are cumulative and shall not
constitute a waiver of either party's right to assert all other legal
remedies available to it under the circumstances.
e. The Purchaser agrees upon request to execute any further documents
or instruments necessary or desirable to carry out the purposes or intent of
this Agreement.
f. PURCHASER ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES
PURSUANT TO SECTION 4 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN
EMPLOYEE OR CONSULTANT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF
BEING HIRED OR PURCHASING SHARES HEREUNDER). PURCHASER FURTHER ACKNOWLEDGES
AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND
THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR
IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE OR CONSULTANT FOR THE
VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH
PURCHASER'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE PURCHASER'S EMPLOYMENT
OR CONSULTING RELATIONSHIP AT ANY TIME, WITH OR WITHOUT CAUSE.
By Purchaser's signature below, Purchaser represents that he or she is
familiar with the terms and provisions of the Plan, and hereby accepts this
Agreement subject to all of the terms and provisions thereof. Purchaser has
reviewed the Plan and this Agreement in their entirety, has had an opportunity
to obtain the advice of counsel prior to executing this Agreement and fully
understands all provisions of this Agreement. Purchaser agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Agreement.
Purchaser further agrees to notify the Company upon any change in the residence
indicated in the Notice of Grant.
OPTIONEE: SEAGATE TECHNOLOGY, INC.
By: --------------------------------------
-------------------------------------------
Signature
Title: -------------------------------------
-------------------------------------------
Print Name
4
EXHIBIT A-2
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I,
------------------------------------ , hereby sell, assign and transfer unto
------------------------------------ (
-------------- ) shares of the Common Stock of Seagate Technology, Inc. standing
in my name of the books of said corporation represented
by Certificate No.
---- herewith and do hereby irrevocably constitute and appoint
------------------------------------ to transfer the said stock on the books of
the within named corporation with full power of substitution in the premises.
This Stock Assignment may be used only in accordance with the Restricted
Stock Purchase Agreement between Seagate Technology, Inc. and the undersigned
dated
-------------- , 19
---- .
Dated:
-------------- , 19
----
Signature:
------------------------------------
INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise its
"repurchase option," as set forth in the Agreement, without requiring additional
signatures on the part of the Purchaser.
EXHIBIT A-3
JOINT ESCROW INSTRUCTIONS
-------------- , 19
----
Seagate Technology, Inc.
920 Disc Drive
Scotts Valley, California 95066
Attention: Secretary
Dear Secretary:
As Escrow Agent for both Seagate Technology, Inc., a Delaware corporation
(the "Company"), and the undersigned purchaser of stock of the Company (the
"Purchaser"), you are hereby authorized and directed to hold the documents
delivered to you pursuant to the terms of that certain Restricted Stock Purchase
Agreement ("Agreement") between the Company and the undersigned, in accordance
with the following instructions:
1. In the event the Company and/or any assignee of the Company
(referred to collectively for convenience herein as the "Company") exercises
the Company's repurchase option set forth in the Agreement, the Company
shall give to Purchaser and you a written notice specifying the number of
shares of stock to be purchased, the purchase price, and the time for a
closing hereunder at the principal office of the Company. Purchaser and the
Company hereby irrevocably authorize and direct you to close the transaction
contemplated by such notice in accordance with the terms of said notice.
2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company or its
assignee, against the simultaneous delivery to you of the purchase price (by
cash, a check, or some combination thereof) for the number of shares of
stock being purchased pursuant to the exercise of the Company's repurchase
option.
3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with
respect to such securities all documents necessary or appropriate to make
such securities negotiable and to complete any transaction herein
contemplated, including but not limited to the filing with any applicable
state blue sky authority of any required applications for consent to, or
notice of transfer of, the securities. Subject to the provisions of this
paragraph 3, Purchaser shall exercise all rights and privileges of a
shareholder of the Company while the stock is held by you.
4. Upon written request of the Purchaser, but no more than once per
calendar year, unless the Company's repurchase option has been exercised,
you will deliver to Purchaser a certificate or certificates representing so
many shares of stock as are not then subject to the Company's repurchase
option. Within 90 days after cessation of Purchaser's continuous employment
by or services to the Company, or any parent or subsidiary of the Company,
you will deliver to Purchaser a certificate or certificates representing the
aggregate number of shares held or issued pursuant to the Agreement and not
purchased by the Company or its assignees pursuant to exercise of the
Company's repurchase option.
5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to
Purchaser, you shall deliver all of the same to Purchaser and shall be
discharged of all further obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as
are specifically set forth herein and may rely and shall be protected in
relying or refraining from acting on any instrument reasonably believed by
you to be genuine and to have been signed or presented by the proper party
or parties. You shall not be personally liable for any act you may do or
omit to do hereunder as Escrow Agent or as attorney-in-fact for Purchaser
while acting in good faith, and any act done or omitted by you pursuant to
the advice of your own attorneys shall be conclusive evidence of such good
faith.
8. You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and are
hereby expressly authorized to comply with and obey orders, judgments or
decrees of any court. In case you obey or comply with any such order,
judgment or decree, you shall not be liable to any of the parties hereto or
to any other person, firm or corporation by reason of such compliance,
notwithstanding any such order, judgment or decree being subsequently
reversed, modified, annulled, set aside, vacated or found to have been
entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting
to execute or deliver the Agreement or any documents or papers deposited or
called for hereunder.
10. You shall not be liable for the outlawing of any rights under the
Statute of Limitations with respect to these Joint Escrow Instructions or
any documents deposited with you.
11. You shall be entitled to employ such legal counsel and other experts
as you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.
12. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be an officer or agent of the Company or if you shall
resign by written notice to each party. In the event of any such
termination, the Company shall appoint a successor Escrow Agent.
13. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain
in your possession without liability to anyone all or any part of said
securities until such disputes shall have been settled either by mutual
written agreement of the parties concerned or by a final order, decree or
judgment of a court of competent jurisdiction after the time for appeal has
expired and no appeal has been perfected, but you shall be under no duty
whatsoever to institute or defend any such proceedings.
15. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit
in the United States Post Office,
2
by registered or certified mail with postage and fees prepaid, addressed to
each of the other parties thereunto entitled at the following addresses or
at such other addresses as a party may designate by ten days' advance
written notice to each of the other parties hereto.
COMPANY: Seagate Technology, Inc.
920 Disc Drive
Scotts Valley, California 95066
PURCHASER: ---------------------------------------
ESCROW AGENT: Seagate Technology, Inc.
920 Disc Drive
Scotts Valley, California 95066
Attention: Secretary
16. By signing these Joint Escrow Instructions, you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not
become a party to the Agreement.
17. This instrument shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and permitted assigns.
18. These Joint Escrow Instructions shall be governed by, and construed
and enforced in accordance with, the laws of the State of California.
Very truly yours,
SEAGATE TECHNOLOGY, INC.
By: ----------------------------------------
Title:
----------------------------------------
PURCHASER:
--------------------------------------------
(Signature)
--------------------------------------------
(Typed or Printed Name)
ESCROW AGENT:
--------------------------------------------
Secretary
3
EXHIBIT A-4
CONSENT OF SPOUSE
I,
------------------------------------ , spouse of
------------------------------------ , have read and approve the foregoing
Agreement. In consideration of granting of the right to my spouse to purchase
shares of Seagate Technology, Inc., as set forth in the Agreement, I hereby
appoint my spouse as my attorney-in-fact in respect to the exercise of any
rights under the Agreement and agree to be bound by the provisions of the
Agreement insofar as I may have any rights in said Agreement or any shares
issued pursuant thereto under the community property laws or similar laws
relating to marital property in effect in the state of our residence as of the
date of the signing of the foregoing Agreement.
Dated:
-------------- , 19
----
--------------------------------------
EXHIBIT A-5
ELECTION UNDER SECTION 83(B)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to the above-referenced
Federal Tax Code, to include in taxpayer's gross income for the current taxable
year, the amount of any compensation taxable to taxpayer in connection with his
receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of
the undersigned are as follows:
NAME: TAXPAYER: SPOUSE:
ADDRESS:
IDENTIFICATION NO.: TAXPAYER: SPOUSE:
TAXABLE YEAR:
2. The property with respect to which the election is made is described as
follows:
--------------------- shares (the "Shares") of the Common Stock of
Seagate Technology, Inc. (the "Company").
3. The date on which the property was transferred is:
-------------- , 19
---- .
4. The property is subject to the following restrictions:
The Shares may be repurchased by the Company, or its assignee, on
certain events. This right lapses with regard to a portion of the Shares
based on the continued performance of services by the taxpayer over time.
5. The fair market value at the time of transfer, determined without regard
to any restriction other than a restriction which by its terms will never
lapse, of such property is:
$
--------------------- .
6. The amount (if any) paid for such property is:
$
-------------- .
The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property. THE
UNDERSIGNED UNDERSTANDS THAT THE FOREGOING ELECTION MAY NOT BE REVOKED EXCEPT
WITH THE CONSENT OF THE COMMISSIONER.
Dated: -------------- , 19 ---- --------------------------------------------
---------------------------------- , Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated: -------------- , 19 ---- --------------------------------------------
Spouse of Taxpayer