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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
HMT TECHNOLOGY CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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LOGO
HMT TECHNOLOGY CORPORATION
1055 PAGE AVENUE
FREMONT, CA 94538
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 28, 1999
TO THE STOCKHOLDERS OF HMT TECHNOLOGY CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of HMT
TECHNOLOGY CORPORATION, a Delaware corporation (the "Company"), will be held on
Wednesday, July 28, 1999 at 10:00 a.m., local time, at the Company's executive
offices at 47700 Kato Road, Fremont, California 94538 for the following
purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To approve the Company's Employee Stock Purchase Plan, as amended, to
increase the aggregate number of shares of Common Stock authorized for
issuance under such plan by 1,500,000 shares.
3. To ratify the selection of PricewaterhouseCoopers LLP as independent
auditors of the Company for its fiscal year ending March 31, 2000.
4. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on June 16, 1999, as
the record date for the determination of stockholders entitled to notice of and
to vote at this Annual Meeting and at any adjournment or postponement thereof.
By Order of the Board of Directors
LOGO
Peter S. Norris
Vice President, Finance, Chief
Financial
Officer, Treasurer and Assistant
Secretary
Fremont, California
June 23, 1999
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
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HMT TECHNOLOGY CORPORATION
1055 PAGE AVENUE
FREMONT, CA 94538
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
JULY 28, 1999
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of HMT
Technology Corporation, a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held on Wednesday, July 28, 1999, at 10:00
a.m., local time (the "Annual Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at the Company's executive
offices at 47700 Kato Road, Fremont, California. The Company intends to mail
this proxy statement and accompanying proxy card on or about June 28, 1999 to
all stockholders entitled to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
card and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of the Company's common stock (the
"Common Stock") beneficially owned by others to forward to such beneficial
owners. The Company may reimburse persons representing beneficial owners of
Common Stock for their costs of forwarding solicitation materials to such
beneficial owners. Original solicitation of proxies by mail may be supplemented
by telephone, telegram or personal solicitation by directors, officers or other
regular employees of the Company or, at the Company's request, CIC Express
Service, Inc. ("CIC"). No additional compensation will be paid to directors,
officers or other regular employees for such services, but CIC will be paid its
customary fee, estimated to be about $30,000, if it renders solicitation
services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on June 16,
1999 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on June 16, 1999, the Company had outstanding and entitled to
vote 45,032,634 shares of Common Stock. Each holder of record of Common Stock on
such date will be entitled to one vote for each share held on all matters to be
voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 1055 Page
Avenue, Fremont, California 94538, a written notice of revocation or a duly
executed proxy
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bearing a later date, or it may be revoked by attending the meeting and voting
in person. Attendance at the meeting will not, by itself, revoke a proxy.
STOCKHOLDER PROPOSALS
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2000 annual
meeting of stockholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission is February 23, 2000. Stockholders wishing to submit proposals or
director nominations that are not to be included in such proxy statement and
proxy must do so not later than May 29, 2000 and not earlier than April 29,
2000. Stockholders are also advised to review the Company's By-laws, which
contain additional requirements with respect to advance notice of stockholder
proposals and director nominations.
PROPOSAL 1
ELECTION OF DIRECTORS
There are currently six Board positions authorized by resolution of the
Board in accordance with the Company's By-laws. Walter G. Kortschak is not
standing for re-election as a director of the Company. By resolution of the
Board in accordance with the Company's By-laws, the Board was reduced to five
Board positions effective upon the Annual Meeting. There are five nominees for
the five Board positions. Each director to be elected will hold office until the
next annual meeting of stockholders and until his successor is elected and has
qualified, or until such director's earlier death, resignation or removal. Each
nominee listed below is currently a director of the Company, who was previously
elected by the stockholders.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote. Shares represented by executed
proxies will be voted, if authority to do so is not withheld, for the election
of the five nominees named below. In the event that any nominee should be
unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of such substitute nominee as management may
propose. Each person nominated for election has agreed to serve if elected and
management has no reason to believe that any nominee will be unable to serve.
NOMINEES FOR ELECTION FOR A ONE-YEAR TERM EXPIRING AT THE 2000 ANNUAL MEETING
The names of the nominees and certain information about them are set forth
below:
NAME AGE POSITION HELD WITH THE COMPANY
---- --- ------------------------------
Ronald L. Schauer.... 55 President, Chief Executive Officer and Chairman of the
Board
Donald P. Beadle..... 63 Director
Bruce C. Edwards..... 45 Director
Richard S. Love...... 61 Director
Harry G. Van 52 Director
Wickle.............
Ronald L. Schauer joined the Company as President and Chief Executive
Officer and a member of the Board of Directors in February 1994. From June 1993
to February 1994, he was the owner, President and Chief Executive Officer of
PAWS, Inc., a plastics manufacturing company. From June 1991 to June 1993, he
was President and Chief Operating Officer of Magnetic Data, Inc., a contract
manufacturer of disk drives and computers. From June 1983 to May 1991, he was
Corporate Vice President and General Manager of the Memory Products Division of
Stolle Corporation, a wholly owned subsidiary of Alcoa, a diversified aluminum
manufacturing company. From 1972 to May 1983, Mr. Schauer held various technical
and general management positions in the Data Recording Products Divisions at 3M
Company, a diversified manufacturing company. Mr. Schauer holds a B.S. in
Electrical Engineering from South Dakota State University.
Donald P. Beadle joined the Company's Board of Directors in May 1998. Mr.
Beadle spent 34 years at National Semiconductor Corp., a semiconductor
manufacturing company ("NSC"), to his retirement in 1994. Since that time, he
has been a consultant to various companies, including having spent three months
as
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the acting Vice President, Sales, Marketing and Sales Support for Interwave
Communications, a wireless communications device manufacturer. From 1991 to
1994, Mr. Beadle was the Senior Vice President/ Managing Director, Far East, of
NSC, reporting to the Chief Executive Officer of NSC. Mr. Beadle's previous
positions with NSC included Senior Vice President, Worldwide Sales and Marketing
of NSC and Managing Director, Europe.
Bruce C. Edwards joined the Company's Board of Directors in January 1996.
Since February 1996, he has been President, Chief Executive Officer and a
director of Powerwave Technologies, Inc., a manufacturer of power amplifiers for
wireless telecommunications applications. Mr. Edwards was employed by AST
Research, Inc., a computer company, as Senior Vice President and Chief Financial
Officer from 1988 until July 1994 and as Executive Vice President, Chief
Financial Officer and a director from July 1994 to December 1995. Mr. Edwards is
also a director of Diamond Multimedia Systems, Inc.
Richard S. Love joined the Company's Board of Directors in May 1998. Mr.
Love retired from Hewlett-Packard Company, a computer engineering company, in
March 1997 after 35 years. Mr. Love was most recently Vice President and General
Manager of the Computer Order Fulfillment and Manufacturing Group responsible
for worldwide manufacturing and distribution of networked computer systems and
workstations.
Harry G. Van Wickle joined the Company's Board of Directors in May 1998.
Since December 1997, Mr. Van Wickle has been President and Chief Executive
Officer of Intarsia Corporation, an integrated electronic component design and
manufacturing company ("Intarsia"). Mr. Van Wickle is a twenty-six year veteran
in semiconductor and disk drive manufacturing. From 1974 to 1992, Mr. Van Wickle
held top management positions at Texas Instruments, Fairchild Semiconductor,
AT&T and Micropolis Corporation. From 1992 and prior to joining Intarsia, he has
been a Vice President in Operations at Dastek, a subsidiary of Komag, Vice
President of Manufacturing at Cypress Semiconductor and President of Alphatec
Electronics Corporation.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended March 31, 1999, the Board of Directors (the
"Board") held six meetings. The Board has an Audit Committee and a Compensation
Committee.
The Audit Committee meets with the Company's independent auditors at least
annually to review the results of the annual audit and discuss the financial
statements; recommends to the Board the independent auditors to be retained; and
receives and considers the accountants' comments as to controls, adequacy of
staff and management performance and procedures in connection with audit and
financial controls. The Audit Committee is composed of two non-employee
directors: Messrs. Edwards and Kortschak. It met twice during such fiscal year.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation, awards stock options to employees and consultants under
the Company's stock option plans and otherwise determines compensation levels
and performs such other functions regarding compensation as the Board may
delegate. In connection with the award of stock options to employees and
consultants, the Committee has delegated limited authority to the Company's
Chief Executive Officer for making such awards. The Compensation Committee is
currently composed of three non-employee directors: Messrs. Beadle, Love and Van
Wickle. The Compensation Committee met twice during the last fiscal year.
During the fiscal year ended March 31, 1999, each current director attended
75% or more of the aggregate of the requisite meetings of the Board and of the
committees on which he served, held during the period for which he was a
director or committee member, respectively.
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PROPOSAL 2
APPROVAL OF AMENDMENT TO EMPLOYEE STOCK PURCHASE PLAN
The Company's Employee Stock Purchase Plan (the "Purchase Plan") was
adopted by the Board in January 1996 and approved by the stockholders in
February 1996. As of March 31, 1999, there were 1,500,000 shares of Common Stock
reserved for issuance under the Purchase Plan.
As of May 31, 1999, an aggregate of 1,379,696 shares of Common Stock had
been issued under the Purchase Plan, and only 120,304 shares of Common Stock
remained available for the grant of future rights under the Purchase Plan.
During the last fiscal year, all employees as a group (excluding current
executive officers) purchased 371,103 shares of Common Stock under the Purchase
Plan at the weighted average price per share of $8.977. No executive officers
participated in the Purchase Plan.
In April 1999, the Board approved an amendment to the Purchase Plan,
subject to stockholder approval, to increase the number of shares by 1,500,000
shares authorized for issuance under the Purchase Plan from 1,500,000 shares to
3,000,000 shares. This amendment is intended to afford the Company the
opportunity to provide employees with stock incentives and to ensure that the
Company can continue to provide such incentives at levels determined appropriate
by the Board.
Stockholders are requested in this Proposal 2 to approve the Purchase Plan,
as amended. If the stockholders fail to approve this Proposal 2, the Company may
experience difficulty in attracting and retaining employees and in motivating
them to exert their best efforts for the success of the Company. The affirmative
vote of the holders of a majority of the shares present in person or represented
by proxy and entitled to vote at the meeting will be required to approve the
Purchase Plan, as amended. Abstentions will be counted toward the tabulation of
votes cast on proposals presented to the stockholders and will have the same
effect as negative votes. Broker non-votes are counted towards a quorum, but are
not counted for any purpose in determining whether this matter has been
approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
The essential features of the Purchase Plan, as amended, are outlined
below:
PURPOSE
The purpose of the Purchase Plan is to provide a means by which employees
of the Company (and employees of any parent or subsidiary of the Company
designated by the Board to participate in the Purchase Plan) may be given an
opportunity to purchase Common Stock of the Company through payroll deductions,
to assist the Company in retaining the services of its employees, to secure and
retain the services of new employees, and to provide incentives for such persons
to exert maximum efforts for the success of the Company. Approximately 1,800 of
the Company's approximately 1,900 employees are eligible to participate in the
Purchase Plan.
The rights to purchase Common Stock granted under the Purchase Plan are
intended to qualify as options issued under an "employee stock purchase plan" as
that term is defined in Section 423(b) of the Internal Revenue Code of 1986, as
amended (the "Code").
ADMINISTRATION
The Board administers the Purchase Plan and has the final power to construe
and interpret both the Purchase Plan and the rights granted under it. The Board
has the power, subject to the provisions of the Purchase Plan, to determine when
and how rights to purchase Common Stock of the Company will be granted, the
provisions of each offering of such rights (which need not be identical), and
whether employees of any parent or subsidiary of the Company will be eligible to
participate in the Purchase Plan.
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The Board has the power to delegate administration of the Purchase Plan to
a committee composed of not fewer than two members of the Board. As used herein
with respect to the Purchase Plan, the "Board" refers to any committee the Board
appoints as well as to the Board itself.
OFFERINGS
The Purchase Plan is implemented by offerings of rights to all eligible
employees from time to time by the Board. Under the Purchase Plan an offering
may run as long as twenty-seven months. Offerings currently adopted under the
Purchase Plan run for approximately twenty-four months and are divided into four
shorter "purchase periods" approximately six months long. A new offering
commences under the Purchase Plan on each May 1 and November 1.
ELIGIBILITY
Any person who is customarily employed at least 20 hours per week and five
months per calendar year by the Company (or by any parent or subsidiary of the
Company designated by the Board) on the first day of an offering is eligible to
participate in that offering, provided such employee has been continuously
employed by the Company or the designated affiliate for at least such continuous
period preceding the first day of the offering period as the Board may require,
but in no event shall the required period of continuous employment be greater
than two years. Current offerings under the Purchase Plan impose a ten-day
employment requirement. The Board may provide in any offering that certain
officers of the Company who are "highly compensated" as defined in the Code are
not eligible to participate in the offering.
However, no employee is eligible to participate in the Purchase Plan if,
immediately after the grant of purchase rights, the employee would own, directly
or indirectly, stock possessing 5% or more of the total combined voting power or
value of all classes of stock of the Company or of any parent or subsidiary of
the Company (including any stock which such employee may purchase under all
outstanding rights and options). Also, in any calendar year no employee may
purchase more than $25,000 worth of Common Stock (determined at the fair market
value of the shares at the time such rights are granted) under all employee
stock purchase plans of the Company and its affiliates multiplied by the number
of calendar years in which the right, or rights, had been outstanding.
PARTICIPATION IN THE PLAN
Eligible employees enroll in the Purchase Plan by delivering to the
Company, prior to the date selected by the Board as the offering date for the
offering, an agreement authorizing payroll deductions of up to 15% of such
employees' base total compensation during the purchase period.
PURCHASE PRICE
The purchase price per share at which shares of Common Stock are sold in an
offering under the Purchase Plan is the lower of (i) 85% of the fair market
value of a share of Common Stock on first day of the offering or (ii) 85% of the
fair market value of a share of Common Stock on the specified purchase date.
PAYMENT OF PURCHASE PRICE; PAYROLL DEDUCTIONS
The purchase price of the shares is accumulated by payroll deductions over
the offering. At any time during the offering, a participant may reduce or
terminate his or her payroll deductions as the Board provides in the offering. A
participant may not increase or begin such payroll deductions after the
beginning of any purchase period, except as the Board provides, in an offering
(such as the case of an employee who first becomes eligible to participate as of
a date specified during an offering). All payroll deductions made for a
participant are credited to his or her account under the Purchase Plan and
deposited with the general funds of the Company. A participant may make
additional payments into such account, only as specifically provided for an
offering and only if the participant has not had the maximum amount withheld
during such offering period.
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PURCHASE OF STOCK
By executing an agreement to participate in the Purchase Plan, the employee
is entitled to purchase shares under the Purchase Plan. In connection with
offerings made under the Purchase Plan, the Board may specify the maximum number
of shares of Common Stock an employee may be granted the right to purchase and
the maximum aggregate number of shares of Common Stock that may be purchased
pursuant to such offering by all participants. If the aggregate number of shares
to be purchased upon exercise of rights granted in the offering would exceed the
maximum aggregate number of shares of Common Stock then available under the
Purchase Plan, the Board would make a pro rata allocation of available shares in
a uniform and equitable manner. Unless the employee's participation is
discontinued (see "Withdrawal" below), his or her right to purchase shares is
exercised automatically at the end of each purchase period at the applicable
price. Funds not used to purchase shares are returned to the employee unless
they are less than the amount then necessary to purchase a whole share, in which
case that amount is carried over for the purchase of shares in the next purchase
period or offering.
WITHDRAWAL
While each participant in the Purchase Plan is required to sign an
agreement authorizing payroll deductions, the participant may withdraw from a
given offering by terminating his or her payroll deductions and by delivering to
the Company a notice of withdrawal from the Purchase Plan. Such withdrawal may
be elected at any time up to ten (10) days prior to the end of the applicable
offering.
Upon any withdrawal from an offering by the employee, the Company will
distribute to the employee his or her accumulated payroll deductions without
interest, less any accumulated deductions previously applied to the purchase of
shares of Common Stock on the employee's behalf during such offering, and such
employee's interest in the offering will be automatically terminated. The
employee is not entitled to again participate in that offering. However, an
employee's withdrawal from an offering will not have any effect upon such
employee's eligibility to participate in subsequent offerings under the Purchase
Plan.
TERMINATION OF EMPLOYMENT
Rights granted pursuant to any offering under the Purchase Plan terminate
immediately upon cessation of an employee's employment for any reason, and the
Company will distribute to such employee all of his or her accumulated payroll
deductions, without interest.
RESTRICTIONS ON TRANSFER
Rights granted under the Purchase Plan are not transferable and may be
exercised only by the person to whom such rights are granted.
DURATION, AMENDMENT AND TERMINATION
The Board may suspend or terminate the Purchase Plan at any time. Unless
terminated earlier, the Purchase Plan will terminate at the time that all of the
shares subject to the Purchase Plan's share reserve, as increased and/or
adjusted from time to time, have been issued under the terms of the Purchase
Plan.
The Board may amend the Purchase Plan at any time. Any amendment of the
Purchase Plan must be approved by the stockholders within 12 months of its
adoption by the Board if the amendment would (i) increase the number of shares
of Common Stock reserved for issuance under the Purchase Plan, (ii) modify the
requirements relating to eligibility for participation in the Purchase Plan, or
(iii) modify any other provision of the Purchase Plan, if such approval is
required in order to comply with the requirements of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or to obtain
"employee stock purchase plan" treatment under Section 423 of the Code.
Rights granted before amendment or termination of the Purchase Plan will
not be impaired by any amendment or termination of the Purchase Plan without the
consent of the employee to whom such rights were granted.
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EFFECT OF CERTAIN CORPORATE EVENTS
In the event of a dissolution, liquidation or specified type of merger,
consolidation or similar transaction in which the Company is not the surviving
corporation, the Board has discretion to provide that the rights under the
Purchase Plan will be assumed or equivalent rights substituted by the surviving
entity, or the Board may shorten the offering period and provide for all sums
collected by payroll deductions to be applied to purchase stock immediately
prior to, or concurrent with, any such event.
STOCK SUBJECT TO PURCHASE PLAN
Subject to this Proposal, an aggregate of 3,000,000 shares of Common Stock
are reserved for issuance under the Purchase Plan. If rights granted under the
Purchase Plan expire, lapse or otherwise terminate without being exercised, the
shares of Common Stock not purchased under such rights again becomes available
for issuance under the Purchase Plan.
FEDERAL INCOME TAX INFORMATION
Rights granted under the Purchase Plan are intended to qualify for
favorable federal income tax treatment associated with rights granted under an
employee stock purchase plan which qualifies under provisions of Section 423 of
the Code.
A participant will be taxed on amounts withheld for the purchase of shares
of Common Stock as if such amounts were actually received. Other than this, no
income will be taxable to a participant until disposition of the acquired
shares, and the method of taxation will depend upon the holding period of the
acquired shares.
If the stock is disposed of at least two years after the beginning of the
offering period and at least one year after the stock is transferred to the
participant, then the lesser of (i) the excess of the fair market value of the
stock at the time of such disposition over the exercise price or (ii) the excess
of the fair market value of the stock as of the beginning of the offering period
over the exercise price (determined as of the beginning of the offering period)
will be treated as ordinary income. Any further gain or any loss will be taxed
as a long-term capital gain or loss. Such capital gains currently are generally
subject to lower tax rates than ordinary income.
If the stock is sold or disposed of before the expiration of either of the
holding periods described above, then the excess of the fair market value of the
stock on the exercise date over the exercise price will be treated as ordinary
income at the time of such disposition. The balance of any gain will be treated
as capital gain. Even if the stock is later disposed of for less than its fair
market value on the exercise date, the same amount of ordinary income is
attributed to the participant, and a capital loss is recognized equal to the
difference between the sales price and the fair market value of the stock on
such exercise date. Any capital gain or loss will be short-term or long-term,
depending on how long the stock has been held.
There are no federal income tax consequences to the Company by reason of
the grant or exercise of rights under the Purchase Plan. The Company is entitled
to a deduction to the extent amounts are taxed as ordinary income to a
participant (subject to the requirement of reasonableness and the satisfaction
of tax reporting obligations).
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected PricewaterhouseCoopers LLP as the
Company's independent auditors for the fiscal year ending March 31, 2000 and has
further directed that management submit the selection of independent auditors
for ratification by the stockholders at the Annual Meeting.
PricewaterhouseCoopers LLP has audited the Company's financial statements since
December 1995. Representatives of PricewaterhouseCoopers LLP are expected to be
present at the Annual Meeting, will have an opportunity to make a statement if
they so desire and will be available to respond to appropriate questions.
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Stockholder ratification of the selection of PricewaterhouseCoopers LLP as
the Company's independent auditors is not required by the Company's By-laws or
otherwise. However, the Board is submitting the selection of
PricewaterhouseCoopers LLP to the stockholders for ratification as a matter of
good corporate practice. If the stockholders fail to ratify the selection, the
Audit Committee and the Board will reconsider whether or not to retain that
firm. Even if the selection is ratified, the Audit Committee and the Board in
their discretion may direct the appointment of different independent auditors at
any time during the year if they determine that such a change would be in the
best interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of PricewaterhouseCoopers LLP Abstentions
will be counted toward the tabulation of votes cast on proposals presented to
the stockholders and will have the same effect as negative votes. Broker
non-votes are counted towards a quorum, but are not counted for any purpose in
determining whether this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3.
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SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of May 31, 1999 by: (i) each director and
nominee for director; (ii) each of the executive officers named in the Summary
Compensation Table; (iii) all executive officers and directors of the Company as
a group; and (iv) all those known by the Company to be beneficial owners of more
than five percent of its Common Stock.
BENEFICIAL OWNERSHIP(1)
------------------------
NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES TOTAL
---------------- ---------- -----------
State of Wisconsin Investment Board......................... 4,600,000 10.22
121 East Wilson Street
Madison, WI 53702
Fidelity Management & Research.............................. 3,338,000 7.42
One Federal Street
Boston, MA 02109
Crabbe Huson Group, Inc..................................... 3,189,400 7.09
121 S.W. Morrison, Suite 1400
Portland, OR 97204
Summit Partners, L.P.(2).................................... 2,733,940 6.08
499 Hamilton Avenue, Suite 200
Palo Alto, CA 94301
Walter G. Kortschak(2)...................................... 2,733,940 6.08
Donald P. Beadle............................................ -- --
Bruce C. Edwards(3)......................................... 46,500 *
Richard S. Love............................................. -- --
Harry G. Van Wickle......................................... -- --
Ronald L. Schauer(4)........................................ 1,986,000 4.41
Ronald J. Buschur(5)........................................ 529,826 1.18
George J. Hall(6)........................................... 329,125 *
Michael A.Russak(7)......................................... 419,119 *
Peter S. Norris(8).......................................... 460,769 1.02
All directors and executive officers as a group (10
persons)(9)............................................... 6,497,529 14.44
- ---------------
* Less than one percent (1%).
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the Securities
and Exchange Commission (the "SEC"). Unless otherwise indicated in the
footnotes to this table and subject to community property laws where
applicable, the Company believes that each of the stockholders named in this
table has sole voting and investment power with respect to the shares
indicated as beneficially owned. Beneficial ownership also includes shares
of stock subject to options and warrants currently exercisable or
convertible within 60 days of the date of this table. Applicable percentages
are based on 44,998,605 shares outstanding on May 31, 1999, adjusted as
required by rules promulgated by the SEC.
(2) Includes (i) 1,258,902 shares beneficially owned by Summit Ventures III,
L.P. ("Summit III"), (ii) 1,258,902 shares beneficially owned by Summit
Ventures IV, L.P. ("Summit IV"), (iii) 47,137 shares beneficially owned by
Summit Investors II, L.P. ("Summit Investors II") and (iv) 168,999 shares
beneficially owned by Summit Subordinated Debt Fund, L.P. ("Summit Sub Debt
Fund"). Mr. Kortschak, a director of the Company, is a general partner of
Summit Partners, L.P., the general partner of Summit III, Summit IV, Summit
Investors II and Summit Sub Debt Fund. Mr. Kortschak disclaims beneficial
ownership of such shares held by Summit III, Summit IV, Summit Investors II
and Summit Sub Debt Fund, except to the extent of his pecuniary interest
therein.
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(3) Represents 46,500 shares held by Bruce C. Edwards and Susan E. Edwards, as
co-trustees of the Bruce C. Edwards and Susan E. Edwards Living Trust under
agreement dated June 26, 1991. Includes 9,687 shares that are subject to a
right of repurchase in favor of the Company that expires ratably through
January 2000.
(4) Represents 1,769,478 shares held by The Schauer Living Trust under agreement
dated March 15, 1996 ("Schauer Living Trust"). Mr. Schauer is a co-trustee
of the Schauer Living Trust. Also represents 108,261 shares held by the
Ronald L. Schauer 1997 Grantor Retained Annuity Trust and 108,261 shares
held by the Marlys A. Schauer 1997 Grantor Retained Annuity Trust ("Marlys
Schauer Trust"). Marlys A. Schauer, the beneficiary of the Marlys Schauer
Trust, is the spouse of Mr. Schauer. Mr. Schauer disclaims beneficial
ownership of the shares held in the Marlys Schauer Trust. Includes 297,858
shares that are subject to a right of repurchase in favor of the Company
that expires ratably through November 1999 and 52,500 shares Mr. Schauer has
the right to acquire pursuant to an option exercisable within 60 days of May
31, 1999.
(5) Represents 401,496 shares held by The Buschur Living Trust under agreement
dated March 11, 1996 ("Buschur Living Trust"), 44,945 shares held by the
Ronald J. Buschur 1997 Grantor Retained Annuity Trust, 44,945 shares held by
The Lisa A. Buschur 1997 Grantor Retained Annuity Trust ("Lisa Buschur
Trust"), 19,220 shares held by The Ryan Buschur 1996 Irrevocable Trust under
agreement dated February 9, 1996 ("Ryan Buschur Trust") and 19,220 shares
held by The Lynsey Buschur 1996 Irrevocable Trust under agreement dated
February 6, 1996 ("Lynsey Buschur Trust"). Mr. Buschur is a co-trustee of
the Buschur Living Trust. Lisa A. Buschur, the beneficiary of the Lisa
Buschur Trust, is the spouse of Mr. Buschur. Ryan Buschur, the beneficiary
of the Ryan Buschur Trust, and Lynsey Buschur, the beneficiary of the Lynsey
Buschur Trust, are the children of Mr. Buschur. Mr. Buschur disclaims
beneficial ownership of the shares held in the Lisa Buschur Trust, the Ryan
Buschur Trust and the Lynsey Buschur Trust. Includes 82,150 shares that are
subject to a right of repurchase in favor of the Company that expires
ratably through November 1999 and 34,000 shares Mr. Buschur has the right to
acquire pursuant to an option exercisable within 60 days of May 31, 1999.
(6) Represents 304,625 shares held by The George J. Hall Family Trust ("Hall
Family Trust") and 24,500 shares held by The Anne T. Hall Foundation ("Hall
Foundation"). Mr. Hall is a co-trustee of the Hall Family Trust and trustee
of the Hall Foundation. Mr. Hall disclaims beneficial ownership of the
shares held in the Hall Foundation. Includes 82,150 shares that are subject
to a right of repurchase in favor of the Company that expires ratably
through November 1999 and 34,000 shares Mr. Hall has the right to acquire
pursuant to an option exercisable within 60 days of May 31, 1999.
(7) Represents 419,119 shares held by The Russak Living Trust under agreement
dated May 31, 1996 ("Russak Living Trust"). Mr. Russak is co-trustee of the
Russak Living Trust. Includes 82,150 shares that are subject to a right of
repurchase in favor of the Company that expires ratably through November
1999 and 34,000 shares Mr. Russak has the right to acquire pursuant to an
option exercisable within 60 days of May 31, 1999.
(8) Includes 66,443 shares that are subject to a right of repurchase in favor of
the Company that expires ratably through November 1999 and 22,501 shares Mr.
Norris has the right to acquire pursuant to an option exercisable within 60
days of May 31,1999.
(9) Includes 610,751 shares that are subject to a right of repurchase in favor
of the Company that expires ratably through November 1999, 9,687 shares that
are subject to a right of repurchase in favor of the Company that expires
ratably through January 2000, and 177,001 shares issuable upon the exercise
of options within 60 days of May 31, 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the SEC initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. 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.
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To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended March 31, 1999, all Section
16(a) filing requirements applicable to its officers, directors and greater than
ten percent beneficial owners were complied with.
MANAGEMENT
Set forth below is information regarding current executive officers of the
Company:
NAME AGE POSITION
---- --- --------
Ronald L. Schauer.................... 55 President, Chief Executive Officer and Chairman
of the Board
Ronald J. Buschur.................... 35 Vice President, Worldwide Quality and Marketing
George J. Hall....................... 54 Vice President, Operations
Peter S. Norris...................... 48 Vice President, Finance, Chief Financial
Officer, Treasurer and Assistant Secretary
Michael A. Russak, Ph.D. ............ 52 Vice President, Chief Technical Officer
Biographical information about Mr. Schauer is set forth under Proposal I above.
Ronald J. Buschur joined the Company as Director of Quality Systems in June
1994, was appointed Vice President, Quality Assurance in February 1995 and
promoted to Vice President, Worldwide Quality and Marketing in June 1998. From
December 1993 to June 1994, he was a Customer Account Manager at StorMedia, a
thin-film disk manufacturer. From July 1993 to December 1993, he was a Supplier
Accounts Manager at Maxtor, a disk drive company. From May 1987 to July 1993, he
held various managerial positions at Digital Equipment Corporation, a computer
manufacturer. Mr. Buschur holds a B.A. in Business Administration and Management
from the University of Phoenix and an Associate Degree in Electrical Engineering
Technology from ITT Technical Institute.
George J. Hall joined the Company as Vice President, Operations in February
1995. From December 1990 to February 1995, he was General Manager of the Rigid
Media Division of Sequel, Inc., a media drive company. From 1988 to 1989, he was
Director of Operations at Seagate Magnetics, a media manufacturer. From 1985 to
1988, he was employed in development of rigid disk media for vertical recording
at Censtor Corporation, a thin film media/head company. From 1983 to 1985, he
was Vice President of Operations of Domain Technology, a thin film manufacturer,
which he co-founded. Prior to 1983, he held various positions relating to the
manufacture of rigid disk media at IBM Corporation, a computer company ("IBM").
Mr. Hall holds a B.S. in Industrial Technology from San Jose State University.
Peter S. Norris joined the Company as Vice President, Finance, Chief
Financial Officer and Treasurer in December 1995. From 1975 to December 1995, he
held various positions at General Instrument Corporation, an electronics
company, most recently as Assistant Treasurer since 1981. Mr. Norris holds a
B.A. in Economics from Upsala College.
Michael A. Russak joined the Company as Vice President, Research and
Development in August 1993 and promoted to Chief Technical Officer in 1998. From
October 1988 to August 1992, he was a manager at the Research Division of IBM.
He then transferred to IBM's Storage Products Division in San Jose, California
in 1992. Dr. Russak holds a B.S. in Ceramic Engineering and a Ph.D. in Materials
Science from Rutgers University.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Non-employee directors are paid an $10,000 annual retainer fee, $1,500 per
meeting for attendance at meetings of the Board of Directors and $500 per
meeting for attendance at meetings of any committee thereof. In the fiscal year
ended March 31, 1999, the total cash compensation paid to non-employee directors
was
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$65,000. Directors are reimbursed for reasonable out-of-pocket expenses incurred
in connection with attendance at such meetings in accordance with Company
policy.
Each non-employee director of the Company (other than employees or
affiliates of Summit Partners) receives stock options under the 1996
Non-Employee Directors' Stock Option Plan (the "Directors' Plan") as
compensation for services of the Board of Directors. Option grants under the
Directors' Plan are automatic and non-discretionary. The Directors' Plan
provides for the grant of an option to purchase 10,000 shares of Common Stock to
each person who is first elected as a non-employee director after the plan's
adoption date. Each director who continues to serve as a non-employee director
is granted an additional option to purchase 2,000 shares of Common Stock on the
anniversary of the date of his or her initial grant or annually commencing with
the fourth anniversary of the plan's adoption date. During the last fiscal year,
30,000 options to purchase shares of the Company's Common Stock were granted
under the Directors' Plan. As of March 31, 1999, no options had been exercised
under the Directors' Plan.
The 1996 Equity Incentive Plan (the "Incentive Plan") provides for grants
of incentive stock options to employees (including officers and employee
directors) and nonstatutory stock options, restricted stock purchase awards,
stock bonuses and stock appreciation rights to employees (including officers and
employee directors). The Incentive Plan is administered by the Compensation
Committee, which determines recipients and types of awards to be granted,
including the exercise price, number of shares subject to the award and the
exercisability thereof. Restricted stock purchase awards granted under the
Incentive Plan may be granted pursuant to a repurchase option in favor of the
Company in accordance with a service vesting schedule determined by the Board.
During the last completed fiscal year, 1,304 employees and consultants received
options to purchase 1,188,650 shares of the Company's Common Stock. As of March
31, 1999, 37,500 options had been exercised under the Incentive Plan.
COMPENSATION OF EXECUTIVE OFFICERS
BONUS PLAN. The Company has a discretionary bonus program for certain
designated key employees of the Company, including all executive officers,
pursuant to which such employees are paid cash bonuses based upon the attainment
of certain specified corporate goals for the year established by the Board of
Directors. The amount of the cash bonus to which each such employee is entitled
is determined by the Board.
PROFIT SHARING PLAN. In May 1996, the Board of Directors approved an
incentive-based profit sharing plan for employees of the Company, including all
executive officers. Under this Plan, employees are paid cash bonuses on a
quarterly basis based upon the attainment of certain specified corporate goals
determined by the Board of Directors.
In addition to cash compensation, the Company's executive officers are
eligible to receive stock options under the Employee Stock Purchase Plan and the
Incentive Plan. For a description of the Incentive Plan, see above. For a
description of the Purchase Plan, see Proposal 2, above.
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The following table shows for the fiscal years ended March 31, 1999, 1998
and 1997, certain compensation awarded or paid to, or earned by, the Company's
Chief Executive Officer and its other four most highly compensated executive
officers (the "Named Executive Officers") at March 31, 1999:
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------------------- AWARDS/SECURITIES
FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) OPTIONS(#) COMPENSATION($)(2)
- --------------------------- ------ --------- -------- ------------------ ----------------- ------------------
Mr. Ronald L. Schauer.... 1999 352,603 34,092 -- -- 5,242
President and Chief 1998 291,060 132,714 -- -- 3,701
Executive Officer 1997 271,635 105,165 1,535 -- 2,344
Mr. George J. Hall....... 1999 229,825 22,279 -- -- 3,242
Vice President, 1998 191,285 86,710 -- -- 2,440
Operations 1997 179,286 69,411 -- -- 2,313
Dr. Michael A. Russak.... 1999 238,213 23,562 -- -- 3,535
Vice President, Research 1998 205,037 91,809 1,685 -- 2,732
and Development 1997 190,861 59,164 12,704 -- 2,951
Mr. Peter S. Norris...... 1999 207,996 18,936 -- -- 3,318
Vice President and Chief 1998 161,835 73,589 2,631 -- 2,331
Financial Officer 1997 152,125 39,989 93,467 -- 2,835
Mr. Ronald J. Buschur.... 1999 218,066 18,702 -- -- 3,385
Vice President, 1998 159,103 70,917 -- -- 2,360
Worldwide Quality & 1997 142,940 38,896 -- -- 2,460
Marketing
- ---------------
(1) Consists of relocation payments.
(2) Includes with respect to 1999 (i) $410 paid by the Company in life insurance
premiums for each of Mr. Schauer, Mr. Hall, Dr. Russak, Mr. Norris and Mr.
Buschur; (ii) $2,914, $2,808, $2,975, $3,125 and $2,975 in 401(k) employer
matching contributions for Mr. Schauer, Mr. Hall, Mr. Buschur, Dr. Russak
and Mr. Norris respectively; and (iii) $1,917 for car allowance for Mr.
Schuaer. Includes with respect to 1998 (i) $102 paid by the Company in life
insurance premiums for each of Messrs. Schauer, Hall and Norris and Dr.
Russak; (ii) $2,279, $2,338, $2,630 and $2,229 in 401(k) employer matching
contributions for Mr. Schauer, Mr. Hall, Dr. Russak and Mr. Norris,
respectively; and (iii) $1,320 for car allowance for Mr. Schauer. Includes
with respect to 1997 (i) $252 paid by the Company in life insurance premiums
for each of Messrs. Schauer, Hall and Norris and Dr. Russak; and (ii)
$2,092, $2,061, $2,699 and $2,583 in 401(k) employer matching contributions
for Mr. Schauer, Mr. Hall, Dr. Russak and Mr. Norris, respectively.
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OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth each grant of stock options made during the
fiscal year ended March 31, 1999 to each of the Named Executive Officers:
INDIVIDUAL GRANTS
----------------------------------------------------------
NUMBER OF POTENTIAL REALIZABLE VALUE
SECURITIES % OF TOTAL AT ASSUMED ANNUAL RATES
UNDERLYING OPTIONS GRANTED OF STOCK PRICE APPRECIATION
OPTIONS TO EMPLOYEES IN FOR OPTION TERM(4)
GRANTED FISCAL YEAR EXERCISE PRICE EXPIRATION ----------------------------
NAME AND PRINCIPAL POSITION (#)(1) YEAR (%)(2) ($/SH)(3) DATE 5%($) 10%($)
- --------------------------- ---------- --------------- -------------- ---------- ----------- -------------
Ronald L. Schauer......... 100,000 8.41 7.469 8/27/08 $469,721 $1,190,366
George J. Hall............ 60,000 5.05 7.469 8/27/08 $281,833 $ 714,220
Michael A. Russak......... 60,000 5.05 7.469 8/27/08 $281,833 $ 714,220
Peter S. Norris........... 50,000 4.21 7.469 8/27/08 $234,861 $ 595,183
Ronald J. Buschur......... 60,000 5.05 7.469 8/27/08 $281,833 $ 714,220
- ---------------
* Less than 1%.
(1) Generally 20% of the options became exercisable immediately upon grant and
the remaining 80% will vest semi-annually for the next 24 months. The term
of each option granted is generally the earlier of (i) ten years or (ii) 30
days after termination of the employment of the holder.
(2) Based on an aggregate of 1,188,650 options granted to employees, consultants
and directors, including the Named Executive Officers, of the Company during
the fiscal year ended March 31, 1999.
(3) The exercise price per share of each option was equal to the fair market
value of the Common Stock on the date of grant.
(4) The potential realizable value is calculated based on the term of the option
at its time of grant. It is calculated by assuming that the stock price on
the date of grant appreciates at the indicated annual rate, compounded
annually for the entire term of the option and that the option is exercised
and sold on the last day of its term for the appreciated stock price. All
calculations are based on rounding the number of years remaining on the term
of the option to the nearest whole number. No gain to the option holder is
possible unless the stock price increases over the option term. The 5% and
10% assumed rates of appreciation are derived from the rules of the
Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Common Stock price.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
This table discloses the aggregate dollar value realized upon exercise of
stock options in the last fiscal year by the Named Executive Officers. For each
Named Executive Officer, the table also includes the total number of unexercised
options and the aggregate dollar value of in-the-money unexercised options held
at the end of the last completed fiscal year, separately identifying the
exercisable and unexercisable options.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF IN-THE-MONEY
OPTIONS OPTIONS AS OF
SHARES AS OF MARCH 31, 1999 MARCH 31, 1999(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
---- ----------- -------- ----------- ------------- ----------- -------------
Ronald L. Schauer.............. 0 0 40,000 60,000 -- --
George J. Hall................. 0 0 24,000 36,000 -- --
Michael A. Russak.............. 0 0 24,000 36,000 -- --
Peter S. Norris................ 0 0 12,501 37,499 -- --
Ronald J. Buschur.............. 0 0 24,000 36,000 -- --
- ---------------
(1) Based on the fair market value of $3.50 per share at March 31, 1999, the
named Executive Officers had no unexercised in-the-money options.
EMPLOYMENT AND SEVERANCE AGREEMENTS
SEVERANCE PLAN. In January 1996, the Company adopted an Executive Severance
Plan (the "Severance Plan") providing for certain benefits to executive officers
of the Company in the event an executive's employment is involuntary terminated
without cause (generally meaning without any misconduct on the executive's part)
or that the executive voluntarily terminates employment with good reason
(generally meaning that the executive's responsibilities, title or compensation
was materially reduced). Upon the occurrence of such an event, the Severance
Plan provides for salary continuation for a period no greater than one year. In
addition, the Severance Plan provides for continued health benefits coverage to
the extent permitted by the Consolidated Omnibus Budget Reconciliation Act of
1985 and the Company's group health policies.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION(1)
The Compensation Committee is currently composed of three non-employee
directors: Messrs. Beadle, Love and Van Wickle. The Committee is responsible for
establishing the Company's compensation programs for all employees, including
executives. For executive officers, the Committee evaluates performance and
determines compensation policies and levels.
COMPENSATION PHILOSOPHY
The goals of the compensation program are to align compensation with
business objectives and performance and to enable the Company to attract and
retain the highest quality executive officers and other key employees, reward
them for the Company's progress and motivate them to enhance long-term
stockholder value. Key elements of this philosophy are as follows:
- The Company pays competitively with comparable technology companies, both
inside and outside its industry, with which the Company competes for
talent. To ensure that compensation is competitive,
- ---------------
(1) The material in this report is not "soliciting material," is not deemed
"filed" with the SEC and is not to be incorporated by reference in any
filing of the Company under the Securities Act or the Exchange Act
whether made before or after the date hereof and irrespective of any
general incorporation language in any such filing.
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the Company compares its practices with data storage companies and sets
its parameters based on this comparison.
- The Company maintains short- to long-term incentive opportunities
sufficient to provide motivation to achieve specific operating goals and
to generate rewards that bring total compensation to competitive levels.
- The Company provides significant equity-based incentives for executives
and other key employees to ensure that they are motivated over the
long-term to respond to the Company's business challenges and
opportunities as owners and not just as employees.
BASE SALARY. The Committee annually reviews each executive officer's base
salary. When reviewing base salaries, the Committee considers individual and
corporate performance, levels of responsibility, prior experience, breadth of
knowledge and competitive pay practices. Base salaries for executive officers
were increased by 28% to 55% for fiscal 1999 compared to fiscal 1998. The
increases were due to fiscal 1998 financial performance and the need to remain
within the range of competitive salaries for comparable companies.
NEAR-TERM INCENTIVES. In May 1996, the Company adopted the HMT Employee
Quarterly Profit Sharing Plan (the "Profit Sharing Plan"), an incentive award
plan for certain designated key employees of the Company, including all
executive officers. The actual incentive award earned depends on the achievement
of specified financial goals of the Company and individual performance
objectives. The Committee and the full Board of Directors review and approve the
annual performance objectives for the Company. The Company objectives consist of
operating, strategic and financial goals that are considered to be critical to
the Company's fundamental long-term goal of building stockholder value.
The Company has also adopted a Key Employee Quarterly Bonus Plan (the
"Quarterly Bonus Plan") for employees of the Company, including all executive
officers. Cash bonuses are paid on a quarterly basis based upon achievement of
certain specified corporate goals. The Board of Directors determines the
percentage of salary to be paid on an individual basis.
Amounts reflected as "bonuses" in the "Summary Compensation Table" above,
were paid based on the criteria set forth in the Profit Sharing Plan and the
Quarterly Bonus Plan.
LONG-TERM INCENTIVES. The Company's long-term incentive program consists of
the 1995 Management Stock Option Plan ("Management Plan"), the 1995 Stock Option
Plan ("Stock Plan"), the Incentive Plan and the Purchase Plan. As of March 31,
1999, 8,399,000 shares have been awarded to certain key officers of the Company
under the Management Plan, and 3,945,150 shares have been granted under the
Stock Plan. The Management Plan utilizes a combination of vesting plans designed
to enhance the long-term goals of the Company. A portion of the options have a
performance-based vesting provision which allows the acceleration of vesting
based upon the attainment of a number of performance milestones. The remainder
of the options have a time-based vesting provision which encourages employees to
remain with the Company. The Stock Plan options vest on a monthly basis which
the Company believes provides a strong incentive for employees to remain with
the Company.
Through option grants, executives and employees receive significant equity
incentives to build long-term stockholder value. Grants are made at 100% of fair
market value on the date of grant. Executives receive value from these grants
only if the Company's Common Stock appreciates over the long-term. The size of
prior option grants was initially determined at the discretion of the Board of
Directors, which adopted the Management Plan and Stock Plan in connection with
the Leveraged Recapitalization of the Company on November 30, 1995. The Board
awarded grants in order to provide significant links between executive
compensation and stockholder interests. Such grants were intended to provide
incentive to successfully complete the Company's initial public offering, to
successfully achieve certain specified revenue and profitability targets and to
maximize stockholder value over the next several years.
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The Board has elected not to grant any further options under either the
Management Plan or Stock Plan. Future grants will be made under the Incentive
Plan. Employees will also be allowed to participate in the Purchase Plan.
CORPORATE PERFORMANCE AND CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Schauer's base salary during fiscal 1999 as President and Chief
Executive Officer was $352,603. His bonus for the fiscal year was $34,902. Mr.
Schauer's fiscal 1999 base salary was based on compensation data for chief
executives of comparable companies and Mr. Schauer's performance in fiscal 1996,
1997, and 1998. Accordingly, Mr. Schauer received an increase in base salary of
$61,543 for fiscal 1999 over the prior year. Mr. Schauer's fiscal 1999 cash
bonus of $34,902 was paid pursuant to the Profit Sharing Plan and the Quarterly
Bonus Plan. In fiscal 1999, Mr. Schauer received an additional stock option
grant for 100,000 shares of Common Stock.
LIMITATION ON DEDUCTION OF COMPENSATION PAID TO CERTAIN EXECUTIVE OFFICERS
Section 162(m) of the Code limits the Company to a deduction for federal
income tax purposes of no more than $1 million of compensation paid to certain
Named Executive Officers in a taxable year. Compensation above $1 million may be
deducted if it is "performance-based compensation" within the meaning of the
Code.
The statute containing this law and the applicable proposed Treasury
regulations offer a number of transitional exceptions to this deduction limit
for pre-existing compensation plans, arrangements and binding contracts. As a
result, the Compensation Committee believes that at the present time it is quite
unlikely that the compensation paid to any Named Executive Officer in a taxable
year which is subject to the deduction limit will exceed $1 million. Therefore,
the Compensation Committee has not yet established a policy for determining
which forms of incentive compensation awarded to its Named Executive Officers
shall be designed to qualify as "performance-based compensation."
CONCLUSION
Through the plans described above, a significant portion of the Company's
executive compensation program, including Mr. Schauer's compensation, is
contingent on Company performance, and realization of benefits is closely linked
to increases in long-term stockholder value. The Company remains committed to
this philosophy of pay for performance, recognizing that the competitive market
for talented executives and the volatility of the Company's business may result
in highly variable compensation for a particular time period.
From the members of the Compensation Committee of HMT Technology
Corporation.
Donald P. Beadle
Richard S. Love
Harry G. Van Wickle
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is currently composed of three non-employee
directors. No member of the Compensation Committee is an officer or employee of
the Company.
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PERFORMANCE MEASUREMENT COMPARISON(1)
The following graph shows the total stockholder return of an investment of
$100 in cash on March 13, 1996 for (i) the Company's Common Stock, (ii) the
Nasdaq Composite and (iii) the Nasdaq Computer Manufacturers Index. All values
assume reinvestment of the full amount of all dividends and are calculated as of
March 31 of each year:
COMPARISON OF 36 MONTH CUMULATIVE TOTAL RETURN*
AMONG HMT TECHNOLOGY CORPORATION, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ COMPUTER MANUFACTURER INDEX
LOGO
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(1) This Section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any filing of the Company
under the Securities Act or the Exchange Act whether made before or after
the date hereof and irrespective of any general incorporation language in
any such filing.
(2) $100 invested on 03/13/96 in stock or index, including reinvestment of
dividends. Fiscal years ended March 31.
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CERTAIN TRANSACTIONS
INDEMNIFICATION AGREEMENTS
The Company has entered into indemnity agreements with certain officers and
directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided
therein, for expenses, damages, judgments, fines and settlements he or she may
be required to pay in actions or proceedings which he or she is or may be made a
party by reason of his position as a director, officer or other agent of the
Company, and otherwise to the full extent permitted under Delaware law and the
Company's Bylaws.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
LOGO
Peter S. Norris
Vice President, Finance, Chief
Financial Officer,
Treasurer and Assistant Secretary
June 23, 1999
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HMT TECHNOLOGY CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
ADOPTED BY THE BOARD ON JANUARY 23, 1996
APPROVED BY STOCKHOLDERS ON FEBRUARY 9, 1996
AMENDED BY THE BOARD ON JANUARY 14, 1998
APPROVED BY STOCKHOLDERS ON APRIL 22, 1998
AMENDED BY THE BOARD ON April 16, 1999
1. PURPOSE.
(a) The purpose of the Employee Stock Purchase Plan (the "Plan") is to
provide a means by which employees of HMT Technology Corporation (the
"Company"), and its Affiliates, as defined in subparagraph 1(b), which are
designated as provided in subparagraph 2(b), may be given an opportunity to
purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
its employees, to secure and retain the services of new employees, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
(d) The Company intends that the rights to purchase stock of the Company
granted under the Plan be considered options issued under an "employee stock
purchase plan" as that term is defined in Section 423(b) of the Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors (the
"Board") of the Company unless and until the Board delegates administration to a
Committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
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(i) To determine when and how rights to purchase stock of the
Company shall be granted and the provisions of each offering of such rights
(which need not be identical).
(ii) To designate from time to time which Affiliates of the
Company shall be eligible to participate in the Plan.
(iii) To construe and interpret the Plan and rights granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective.
(iv) To amend the Plan as provided in paragraph 13.
(v) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company and its Affiliates and to carry out the intent that the Plan be treated
as an "employee stock purchase plan" within the meaning of Section 423 of the
Code.
(c) The Board may delegate administration of the Plan to a Committee
composed of not fewer than two (2) members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 12 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to rights granted
under the Plan shall not exceed in the aggregate three million (3,000,000)
shares of the Company's common stock (the "Common Stock"). If any right granted
under the Plan shall for any reason terminate without having been exercised, the
Common Stock not purchased under such right shall again become available for the
Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. GRANT OF RIGHTS; OFFERING.
(a) The Board or the Committee may from time to time grant or provide
for the grant of rights to purchase Common Stock of the Company under the Plan
to eligible employees (an "Offering") on a date or dates (the "Offering
Date(s)") selected by the Board or the Committee. Each Offering shall be in such
form and shall contain such terms and conditions as the Board or the Committee
shall deem appropriate, which shall comply with the requirements of Section
423(b)(5) of the Code that all employees granted rights to purchase stock under
the Plan shall
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have the same rights and privileges. The terms and conditions of an Offering
shall be incorporated by reference into the Plan and treated as part of the
Plan. The provisions of separate Offerings need not be identical, but each
Offering shall include (through incorporation of the provisions of this Plan by
reference in the memorandum documenting the Offering or otherwise) the period
during which the Offering shall be effective, which period shall not exceed
twenty-seven (27) months beginning with the Offering Date, and the substance of
the provisions contained in paragraphs 5 through 8, inclusive.
(b) If an employee has more than one right outstanding under the Plan,
unless he or she otherwise indicates in agreements or notices delivered
hereunder: (1) each agreement or notice delivered by that employee will be
deemed to apply to all of his or her rights under the Plan, and (2) a right with
a lower exercise price (or an earlier-granted right, if two rights have
identical exercise prices), will be exercised to the fullest possible extent
before a right with a higher exercise price (or a later-granted right, if two
rights have identical exercise prices) will be exercised.
5. ELIGIBILITY.
(a) Rights may be granted only to employees of the Company or, as the
Board or the Committee may designate as provided in subparagraph 2(b), to
employees of any Affiliate of the Company. Except as provided in subparagraph
5(b), an employee of the Company or any Affiliate shall not be eligible to be
granted rights under the Plan, unless, on the Offering Date, such employee has
been in the employ of the Company or any Affiliate for such continuous period
preceding such grant as the Board or the Committee may require, but in no event
shall the required period of continuous employment be greater than two (2)
years. In addition, unless otherwise determined by the Board or the Committee
and set forth in the terms of the applicable Offering, no employee of the
Company or any Affiliate shall be eligible to be granted rights under the Plan,
unless, on the Offering Date, such employee's customary employment with the
Company or such Affiliate is for at least twenty (20) hours per week and at
least five (5) months per calendar year.
(b) The Board or the Committee may provide that, each person who, during
the course of an Offering, first becomes an eligible employee of the Company or
designated Affiliate will, on a date or dates specified in the Offering which
coincides with the day on which such person becomes an eligible employee or
occurs thereafter, receive a right under that Offering, which right shall
thereafter be deemed to be a part of that Offering. Such right shall have the
same characteristics as any rights originally granted under that Offering, as
described herein, except that:
(i) the date on which such right is granted shall be the
"Offering Date" of such right for all purposes, including determination of the
exercise price of such right;
(ii) the period of the Offering with respect to such right shall
begin on its Offering Date and end coincident with the end of such Offering; and
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(iii) the Board or the Committee may provide that if such person
first becomes an eligible employee within a specified period of time before the
end of the Offering, he or she will not receive any right under that Offering.
(c) No employee shall be eligible for the grant of any rights under the
Plan if, immediately after any such rights are granted, such employee owns stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any Affiliate. For purposes of this
subparagraph 5(c), the rules of Section 424(d) of the Code shall apply in
determining the stock ownership of any employee, and stock which such employee
may purchase under all outstanding rights and options shall be treated as stock
owned by such employee.
(d) An eligible employee may be granted rights under the Plan only if
such rights, together with any other rights granted under "employee stock
purchase plans" of the Company and any Affiliates, as specified by Section
423(b)(8) of the Code, do not permit such employee's rights to purchase stock of
the Company or any Affiliate to accrue at a rate which exceeds twenty-five
thousand dollars ($25,000) of fair market value of such stock (determined at the
time such rights are granted) for each calendar year in which such rights are
outstanding at any time.
(e) Officers of the Company and any designated Affiliate shall be
eligible to participate in Offerings under the Plan, provided, however, that the
Board may provide in an Offering that certain employees who are highly
compensated employees within the meaning of Section 423(b)(4)(D) of the Code
shall not be eligible to participate.
6. RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, each eligible employee, pursuant to an
Offering made under the Plan, shall be granted the right to purchase up to the
number of shares of Common Stock of the Company purchasable with a percentage
designated by the Board or the Committee not exceeding fifteen (15%) of such
employee's Earnings (as defined in subparagraph 7(a)) during the period which
begins on the Offering Date (or such later date as the Board or the Committee
determines for a particular Offering) and ends on the date stated in the
Offering, which date shall be no later than the end of the Offering. The Board
or the Committee shall establish one or more dates during an Offering (the
"Purchase Date(s)") on which rights granted under the Plan shall be exercised
and purchases of Common Stock carried out in accordance with such Offering.
(b) In connection with each Offering made under the Plan, the Board or
the Committee may specify a maximum number of shares which may be purchased by
any employee as well as a maximum aggregate number of shares which may be
purchased by all eligible employees pursuant to such Offering. In addition, in
connection with each Offering which contains more than one Purchase Date, the
Board or the Committee may specify a maximum aggregate number of shares which
may be purchased by all eligible employees on any given Purchase Date under the
Offering. If the aggregate purchase of shares upon exercise of rights granted
under the Offering would exceed any such maximum aggregate number, the Board or
the
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Committee shall make a pro rata allocation of the shares available in as nearly
a uniform manner as shall be practicable and as it shall deem to be equitable.
(c) The purchase price of stock acquired pursuant to rights granted
under the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Offering Date; or
(ii) an amount equal to eighty-five percent (85%) of the fair
market value of the stock on the Purchase Date.
7. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An eligible employee may become a participant in the Plan pursuant
to an Offering by delivering a participation agreement to the Company within the
time specified in the Offering, in such form as the Company provides. Each such
agreement shall authorize payroll deductions of up to the maximum percentage
specified by the Board or the Committee of such employee's Earnings during the
Offering. "Earnings" is defined as an employee's regular salary or wages
(including amounts thereof elected to be deferred by the employee, that would
otherwise have been paid, under any arrangement established by the Company
intended to comply with Section 401(k), Section 402(e)(3), Section 125, Section
402(h), or Section 403(b) of the Code, and also including any deferrals under a
non-qualified deferred compensation plan or arrangement established by the
Company), which shall include or exclude bonuses, commissions, overtime pay,
incentive pay, profit sharing, other remuneration paid directly to the employee,
the cost of employee benefits paid for by the Company or an Affiliate, education
or tuition reimbursements, imputed income arising under any group insurance or
benefit program, traveling expenses, business and moving expense reimbursements,
income received in connection with stock options, contributions made by the
Company or an Affiliate under any employee benefit plan, and similar items of
compensation, as determined by the Board or Committee. The payroll deductions
made for each participant shall be credited to an account for such participant
under the Plan and shall be deposited with the general funds of the Company. A
participant may reduce (including to zero) or increase such payroll deductions,
and an eligible employee may begin such payroll deductions, after the beginning
of any Offering only as provided for in the Offering. A participant may make
additional payments into his or her account only if specifically provided for in
the Offering and only if the participant has not had the maximum amount withheld
during the Offering.
(b) At any time during an Offering, a participant may terminate his or
her payroll deductions under the Plan and withdraw from the Offering by
delivering to the Company a notice of withdrawal in such form as the Company
provides. Such withdrawal may be elected at any time prior to the end of the
Offering except as provided by the Board or the Committee in the Offering. Upon
such withdrawal from the Offering by a participant, the Company shall distribute
to such participant all of his or her accumulated payroll deductions (reduced to
the extent, if any, such deductions have been used to acquire stock for the
participant) under the
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Offering, without interest, and such participant's interest in that Offering
shall be automatically terminated. A participant's withdrawal from an Offering
will have no effect upon such participant's eligibility to participate in any
other Offerings under the Plan but such participant will be required to deliver
a new participation agreement in order to participate in subsequent Offerings
under the Plan.
(c) Rights granted pursuant to any Offering under the Plan shall
terminate immediately upon cessation of any participating employee's employment
with the Company and any designated Affiliate, for any reason, and the Company
shall distribute to such terminated employee all of his or her accumulated
payroll deductions (reduced to the extent, if any, such deductions have been
used to acquire stock for the terminated employee), under the Offering, without
interest.
(d) Rights granted under the Plan shall not be transferable by a
participant otherwise than by will or the laws of descent and distribution, or
by beneficiary designation as provided in paragraph 14, and otherwise during his
or her lifetime, shall be exercisable only by the person to whom such rights are
granted.
8. EXERCISE.
(a) On each date specified therefor in the relevant Offering ("Purchase
Date"), each participant's accumulated payroll deductions and other additional
payments specifically provided for in the Offering (without any increase for
interest) will be applied to the purchase of whole shares of stock of the
Company, up to the maximum number of shares permitted pursuant to the terms of
the Plan and the applicable Offering, at the purchase price specified in the
Offering. No fractional shares shall be issued upon the exercise of rights
granted under the Plan. The amount, if any, of accumulated payroll deductions
remaining in each participant's account after the purchase of shares which is
less than the amount required to purchase one share of stock on the final
Purchase Date of an Offering shall be held in each such participant's account
for the purchase of shares under the next Offering under the Plan, unless such
participant withdraws from such next Offering, as provided in subparagraph 7(b),
or is no longer eligible to be granted rights under the Plan, as provided in
paragraph 5, in which case such amount shall be distributed to the participant
after such final Purchase Date, without interest. The amount, if any, of
accumulated payroll deductions remaining in any participant's account after the
purchase of shares which is equal to the amount required to purchase whole
shares of stock on the final Purchase Date of an Offering shall be distributed
in full to the participant after such Purchase Date, without interest.
(b) No rights granted under the Plan may be exercised to any extent
unless the shares to be issued upon such exercise under the Plan (including
rights granted thereunder) are covered by an effective registration statement
pursuant to the Securities Act of 1933, as amended (the "Securities Act") and
the Plan is in material compliance with all applicable state, foreign and other
securities and other laws applicable to the Plan. If on a Purchase Date in any
Offering hereunder the Plan is not so registered or in such compliance, no
rights granted under the Plan or any Offering shall be exercised on such
Purchase Date, and the Purchase Date shall be delayed
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until the Plan is subject to such an effective registration statement and such
compliance, except that the Purchase Date shall not be delayed more than twelve
(12) months and the Purchase Date shall in no event be more than twenty-seven
(27) months from the Offering Date. If on the Purchase Date of any Offering
hereunder, as delayed to the maximum extent permissible, the Plan is not
registered and in such compliance, no rights granted under the Plan or any
Offering shall be exercised and all payroll deductions accumulated during the
Offering (reduced to the extent, if any, such deductions have been used to
acquire stock) shall be distributed to the participants, without interest.
9. COVENANTS OF THE COMPANY.
(a) During the terms of the rights granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such rights.
(b) The Company shall seek to obtain from each federal, state, foreign
or other regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to issue and sell shares of stock upon exercise of
the rights granted under the Plan. If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such rights unless and until
such authority is obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to rights granted under the
Plan shall constitute general funds of the Company.
11. RIGHTS AS A SHAREHOLDER.
A participant shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to rights granted
under the Plan unless and until the participant's shareholdings acquired upon
exercise of rights under the Plan are recorded in the books of the Company.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan and outstanding rights will
be appropriately adjusted in the class(es) and maximum number of shares subject
to the Plan and the class(es) and number of shares and price per share of stock
subject to outstanding rights. Such adjustments shall be made by the Board or
Committee, the determination of which shall be final, binding and conclusive.
(The conversion of any convertible securities of the Company shall not be
treated as a "transaction not involving the receipt of consideration by the
Company.")
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(b) In the event of: (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise; or (4) any other capital
reorganization in which more than fifty percent (50%) of the shares of the
Company entitled to vote are exchanged, then, as determined by the Board in its
sole discretion (i) any surviving corporation may assume outstanding rights or
substitute similar rights for those under the Plan, (ii) such rights may
continue in full force and effect, or (iii) participants' accumulated payroll
deductions may be used to purchase Common Stock immediately prior to the
transaction described above and the participants' rights under the ongoing
Offering terminated.
13. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the shareholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(i) Increase the number of shares reserved for rights under the
Plan;
(ii) Modify the provisions as to eligibility for participation
in the Plan (to the extent such modification requires shareholder
approval in order for the Plan to obtain employee stock purchase plan
treatment under Section 423 of the Code or to comply with the
requirements of Rule 16b-3 promulgated under the Securities Exchange Act
of 1934, as amended ("Rule 16b-3")); or
(iii) Modify the Plan in any other way if such modification
requires shareholder approval in order for the Plan to obtain employee
stock purchase plan treatment under Section 423 of the Code or to comply
with the requirements of Rule 16b-3.
It is expressly contemplated that the Board may amend the Plan in any respect
the Board deems necessary or advisable to provide eligible employees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to employee stock purchase plans
and/or to bring the Plan and/or rights granted under it into compliance
therewith.
(b) Rights and obligations under any rights granted before amendment of
the Plan shall not be impaired by any amendment of the Plan, except with the
consent of the person to whom such rights were granted, or except as necessary
to comply with any laws or governmental regulation, or except as necessary to
ensure that the Plan and/or rights granted under the Plan comply with the
requirements of Section 423 of the Code.
14. DESIGNATION OF BENEFICIARY.
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(a) A participant may file a written designation of a beneficiary who is
to receive any shares and cash, if any, from the participant's account under the
Plan in the event of such participant's death subsequent to the end of an
Offering but prior to delivery to the participant of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death during an Offering.
(b) Such designation of beneficiary may be changed by the participant at
any time by written notice. In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its sole discretion, may deliver such shares
and/or cash 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.
15. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate at the time that all of the shares
subject to the Plan's share reserve, as increased and/or adjusted from time to
time, have been issued under the terms of the Plan. No rights may be granted
under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any rights granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except as expressly provided in the Plan or with the consent of the person
to whom such rights were granted, or except as necessary to comply with any laws
or governmental regulation, or except as necessary to ensure that the Plan
and/or rights granted under the Plan comply with the requirements of Section 423
of the Code.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective upon the adoption of enabling
resolutions by the Company's Board of Directors (the "Effective Date"), but no
rights granted under the Plan shall be exercised unless and until the Plan has
been approved by the shareholders of the Company within 12 months before or
after the date the Plan is adopted by the Board or the Committee, which date may
be prior to the Effective Date.
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DETACH HERE
PROXY
HMT TECHNOLOGY CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 28, 1999
The undersigned hereby appoints Mr. Peter S. Norris and Mr. James C.
Kitch, and each of them, as proxies and attorneys-in-fact of the undersigned,
with full power of substitution, to vote all of the shares of stock of HMT
Technology Corporation which the undersigned may be entitled to vote at the
Annual Meeting of Stockholders of HMT Technology Corporation to be held at the
Company's executive offices at 47700 Kato Road, Fremont, California 94538 on
Wednesday, July 28, 1999 at 10:00 a.m., local time, and at any and all
postponements, continuations and adjournments thereof, with all powers that the
undersigned would possess if personally present, upon and in respect of the
following matters and in accordance with the following instructions, with
discretionary authority as to any and all other matters that may properly come
before the meeting.
Unless a contrary direction is indicated, this Proxy will be voted FOR all
nominees listed in Proposal 1 and FOR Proposals 2 and 3, as more specifically
described in the Proxy Statement. If specific instructions are indicated, this
Proxy will be voted in accordance therewith.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
32
DETACH HERE
Please mark
/X/ votes as in
this example.
Management recommends a vote FOR the nominees for director and FOR
Proposals 2 and 3 listed below.
1. To elect directors to serve for the ensuing year and until their
successors are elected.
Nominees: Ronald L. Schauer, Donald P. Beadle, Bruce C. Edwards,
Richard S. Love and Harry G. Van Wickle
FOR WITHHELD
ALL FROM ALL
NOMINEES / / / / NOMINEES
/ /
-----------------------------------------------
For all nominees except as noted above
2. To approve the Company's Employee Stock Purchase Plan, as amended, to
increase the aggregate number of shares of Common Stock authorized
for issuance under such plan by 1,500,000 shares.
FOR AGAINST ABSTAIN
/ / / / / /
3. To ratify the selection of PricewaterhouseCoopers L.L.P. as independent
auditors of the Company for the fiscal year ending March 31, 2000.
FOR AGAINST ABSTAIN
/ / / / / /
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
Please vote, date and promptly return this proxy in the enclosed return
envelope which is postage prepaid if mailed in the United States.
Please sign exactly as your name appears hereon. If the stock is registered
in the names of two or more persons, each should sign. Executors,
administrators, trustees, guardians and attorneys-in-fact should add their
titles. If signer is a corporation, please give full corporate name and have a
duly authorized officer sign, stating title. If signer is a partnership, please
sign in partnership name by authorized person.
Signature: Date:
----------------------------------- --------------------
Signature: Date:
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