<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT /X/
FILED BY A PARTY OTHER THAN THE REGISTRANT / /
CHECK THE APPROPRIATE BOX:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
DATA GENERAL CORPORATION
- --------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
JAMES K. JACOBS
- --------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:*
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
*/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
(DATA GENERAL LOGO) (508) 898-5000
- --------------------------------------------------------------------------------
4400 COMPUTER DRIVE, WESTBORO, MASSACHUSETTS 01580
December 20, 1995
Dear Fellow Stockholder:
You are cordially invited to attend the Company's Annual Meeting of
Stockholders to be held at 11:00 A.M., Eastern Standard Time, on Wednesday,
January 31, 1996, at the Enterprise Room, Fifth Floor, State Street Bank and
Trust Company, 225 Franklin Street, Boston, Massachusetts.
This year you are being asked to reelect the Company's directors. Your
Board of Directors urges you to read the accompanying proxy statement and
recommends that you vote to elect each of the nominated directors by voting
"FOR" Proposal No. 1.
At the meeting, the Board of Directors will also report on the Company's
affairs and a discussion period will be provided for questions and comments.
The Board of Directors and I appreciate and encourage stockholder
participation in the Company's affairs. Whether or not you plan to attend the
meeting, it is important that your shares be represented. Accordingly, I urge
you to sign, date, and mail the enclosed proxy in the envelope provided at your
earliest convenience.
Thank you for your cooperation.
Very truly yours,
/s/ Ronald L. Skates
Ronald L. Skates
President and Chief Executive Officer
<PAGE> 3
DATA GENERAL CORPORATION
-------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-------------------
Westboro, Massachusetts
December 20, 1995
The Annual Meeting of Stockholders of Data General Corporation will be
held at the Enterprise Room, Fifth Floor, State Street Bank and Trust Company,
225 Franklin Street, Boston, Massachusetts, on Wednesday, January 31, 1996, at
11:00 A.M., Eastern Standard Time, for the following purposes:
1. To elect seven directors for the ensuing year.
2. To transact such other business as may properly come
before the meeting or any adjournment thereof.
Stockholders of record at the close of business on December 4, 1995 will
be entitled to notice of and to vote at the meeting or any adjournment thereof.
Stockholders are requested promptly to complete, sign, date and return the
enclosed form of proxy in the envelope provided. No postage is required if
mailed in the United States.
Carl E. Kaplan
Secretary
<PAGE> 4
DATA GENERAL CORPORATION
4400 COMPUTER DRIVE
WESTBORO, MASSACHUSETTS 01580
---------------
PROXY STATEMENT
---------------
GENERAL INFORMATION
PROXY SOLICITATION
This Proxy Statement is furnished to the holders of the Common Stock
("Common Stock"), $.01 par value per share, of Data General Corporation (the
"Company") in connection with the solicitation of proxies on behalf of the
Board of Directors of the Company for use at the Annual Meeting of Stockholders
to be held on January 31, 1996, or at any adjournment thereof, pursuant to the
accompanying Notice of Annual Meeting of Stockholders. The purposes of the
meeting and the matters to be acted upon are set forth in the accompanying
Notice of Annual Meeting of Stockholders. The Board of Directors knows of no
other business that will come before the meeting.
Proxies for use at the meeting will be mailed to stockholders on or about
December 20, 1995, and will be solicited chiefly by mail, but additional
solicitations may be made by telephone or telegram. The Company has retained
Morrow & Co., Inc. to assist it with the solicitation at a cost to the Company
not expected to exceed $5,000. The Company will also enlist the assistance of
brokerage houses and banks in soliciting proxies. All solicitation expenses
will be borne by the Company.
REVOCABILITY AND VOTING OF PROXY
A form of proxy for use at the meeting and a return envelope for the proxy
are enclosed. Stockholders may revoke the authority granted by their execution
of proxies at any time before their effective exercise by filing with the
Secretary of the Company a written revocation or duly executed proxy bearing a
later date or by voting in person at the meeting. Shares represented by
executed and unrevoked proxies will be voted in accordance with the choice or
instructions specified thereon. Shares represented by executed proxies which
abstain from one or all matters to be acted upon at the meeting and broker
non-votes will be considered for the purpose of determining whether or not a
quorum is present at the meeting but will not be considered in determining
whether or not the matter abstained from is approved by an affirmative vote of
the requisite percentage of the shares voting on such matter. ("Broker
non-votes" are shares held by brokers or nominees which are present in person
or represented by proxy, but which are not voted on a particular matter because
instructions have not been received from the beneficial owner.) If no
specifications are given, the proxies intend to vote the shares represented
thereby to approve Proposal No. 1 as set forth in the accompanying Notice of
Annual Meeting of Stockholders and in accordance with their best judgment on
any other matters that may properly come before the meeting.
RECORD DATE AND VOTING RIGHTS
Only stockholders of record at the close of business on December 4, 1995,
are entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof. The Company had outstanding on December 4, 1995, 38,161,476 shares
of Common Stock, each of which is entitled to one vote upon the matters to be
presented at the meeting. The affirmative vote of the holders of a plurality
of the shares of Common Stock present or represented at the meeting is required
for the election of directors.
1
<PAGE> 5
<TABLE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as of November 15, 1995,
regarding the beneficial ownership of the Company's Common Stock of (i) each
person known to the Company to own beneficially more than five percent of the
Company's outstanding Common Stock, (ii) the most highly compensated executive
officers of the Company, other than the chief executive officer, and (iii) all
present officers and directors of the Company as a group.
<CAPTION>
AMOUNT AND NATURE PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP COMMON STOCK
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Norwest Corporation
Sixth and Marquette
Minneapolis, Minnesota 55479 .................. 3,008,650 (1) 7.9%
J. Thomas West ................................... 182,061 (2) 0.5%
William J. Cunningham ............................ 154,147 (3) 0.4%
Joel Schwartz .................................... 139,462 (4) 0.4%
Arthur W. DeMelle ................................ 122,500 (5) 0.3%
William L. Wilson ................................ 73,171 (6) 0.2%
All present officers and directors
as a group (24 persons) ........................ 3,320,586 (7) 8.7%
<FN>
(1) This figure is based on information set forth in the amendment to the Schedule 13G, dated January 31, 1995 (the "Schedule"),
filed by Norwest Corporation and affiliates, as a group ("Norwest"), with the Securities and Exchange Commission. The
Schedule states that Norwest has the sole power to dispose or direct the disposition of 3,006,050 of such shares and that
Norwest has the sole power to vote or direct the vote of 2,837,250 of such shares.
(2) Includes 181,861 shares of Common Stock that may be acquired through exercise of stock options.
(3) Includes 139,256 shares of Common Stock that may be acquired through exercise of stock options.
(4) Includes 139,362 shares of Common Stock that may be acquired through exercise of stock options.
(5) Includes 122,500 shares of Common Stock that may be acquired through exercise of stock options.
(6) Includes 70,000 shares of Common Stock that may be acquired through exercise of stock options.
(7) Includes 2,874,164 shares of Common Stock that may be acquired through exercise of stock options.
</TABLE>
2
<PAGE> 6
PROPOSAL NO. 1 -- ELECTION OF SEVEN DIRECTORS
Seven directors (constituting the entire Board) are to be elected at the
meeting. Unless otherwise specified, the enclosed proxy will be voted in favor
of the persons named below to serve until the next annual meeting of
stockholders and until their successors shall have been duly elected and shall
qualify. Each person named below is now a director of the Company. In the
event any of these nominees shall be unable to serve as a director,
discretionary authority is reserved to vote for a substitute. The Board of
Directors has no reason to believe that any of these nominees will be unable to
serve.
<TABLE>
The nominees, their ages, the year in which each first became a director,
their principal occupations or employment during the past five years, and the
number and percentage of shares of Common Stock beneficially owned by each,
are:
<CAPTION>
YEAR AMOUNT AND
FIRST NATURE (1) PERCENTAGE
BECAME PRINCIPAL OCCUPATION DURING OF BENEFICIAL OF COMMON
NOMINEE AGE DIRECTOR THE PAST FIVE YEARS OWNERSHIP STOCK (2)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Frederick R. Adler 69 1968 Chairman of the Executive Committee 384,873 1.0%
of the Board of Directors from July (7)
1982 to date; retiring Senior Partner
of Fulbright & Jaworski L.L.P.,
Attorneys; Managing General Partner
of Adler & Company, a venture capital
investment firm, and a General
Partner of its related investment
funds. (3)(5)
Ferdinand Colloredo- 56 1986 Chairman of the Board and Chief 18,208
Mansfeld Executive Officer of Cabot Partners (8)
Limited Partnership, a real estate
investment firm, since 1990;
Chairman, Chief Executive Officer and
Chief Investment Officer of Cabot,
Cabot & Forbes Realty Advisors, Inc.,
1986 to 1990. (3)(4)(5)(6)
John G. McElwee 74 1989 Retired; Chairman of Board of 15,000
Directors and Chief Executive Officer (9)
of John Hancock Mutual Life Insurance
Company from 1982 until 1986.
(3)(4)(6)
Ronald L. Skates 54 1989 President and Chief Executive Officer 1,279,828 3.4%
of the Company from November 1989 to (10)
date; Executive Vice President and
Chief Operating Officer from 1988 to
1989; Senior Vice President from 1986
to 1988. (3)
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
YEAR AMOUNT AND
FIRST NATURE (1) PERCENTAGE
BECAME PRINCIPAL OCCUPATION DURING OF BENEFICIAL OF COMMON
NOMINEE AGE DIRECTOR THE PAST FIVE YEARS OWNERSHIP STOCK (2)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
W. Nicholas Thorndike 62 1994 Chairman of the Board of Trustees of 18,000
Massachusetts General Hospital from (11)
1987 to 1992, and President from 1992
to 1994. (4)(5)
Donald H. Trautlein 69 1989 Retired; Chairman of the Board of 10,000
Directors and Chief Executive Officer (11)
of Bethlehem Steel Corp. from 1980 to
1986. (3)(4)(5)
Richard L. Tucker 55 1994 Managing Director of Trinity 8,200
Investment Management Corporation. (11)
(4)(5)
<FN>
(1) As of November 15, 1995, unless otherwise indicated, the persons shown have sole voting and investment power over the
shares listed.
(2) Messrs. Colloredo-Mansfeld, McElwee, Thorndike, Trautlein and Tucker own less than 1% of the Company's Common Stock.
(3) Member of Executive Committee of Board of Directors.
(4) Member of Audit Committee of Board of Directors.
(5) Member of Compensation Committee of Board of Directors.
(6) Member of Nominating Committee of Board of Directors.
(7) Includes 16,654 shares of Common Stock that may be acquired through exercise of stock options.
(8) Includes 5,208 shares of common stock issuable upon conversion of $100,000 principal amount of 7-3/4% convertible debentures
due 2001. Also includes 12,000 shares of Common Stock that may be acquired through exercise of stock options.
(9) Includes 10,000 shares of Common Stock that may be acquired through exercise of stock options.
(10) Includes 1,255,063 shares of Common Stock that may be acquired through exercise of stock options. Includes also 4,500 shares
of Common Stock owned by family members as to which Mr. Skates disclaims beneficial ownership.
(11) Includes 8,000 shares of Common Stock that may be acquired through exercise of stock options.
</TABLE>
Mr. Adler is a director of Life Technologies, Inc., MicroLinear
Corporation and USA Detergents, Inc. Mr. Colloredo-Mansfeld is a director of
Raytheon Company, and until November 30, 1995 was a director of Shawmut
National Corporation. Mr. Colloredo-Mansfeld also serves as Chairman of the
Board of Trustees of The Massachusetts General Hospital and Co-Chair of the
Partners HealthCare System. Mr. Thorndike serves as a corporate director or
trustee of a number of organizations, including Bradley Real
4
<PAGE> 8
Estate Inc., Courier Corporation, Providence Journal Company, Eastern Utility
Associates and The Putnam Funds. He also serves as a Trustee of Massachusetts
General Hospital. In February, 1994, Mr. Thorndike accepted appointment as a
successor trustee of private trusts in which he has no beneficial interest, and
concurrently became, serving until October 1994, Chairman of the Board of two
privately owned corporations controlled by such trusts that filed voluntary
petitions for relief under Chapter 11 of the United States Bankruptcy Code in
August, 1994. Mr. Trautlein is a director of Chase Manhattan Corporation and
PXRE Corporation.
The Board of Directors has an Audit Committee which met four times during
the 1995 fiscal year. Representatives of Price Waterhouse LLP, the Company's
auditors, were present at three of such meetings. The primary functions of the
Audit Committee are to provide assistance to the Board of Directors in
fulfilling its responsibilities relating to corporate accounting and reporting
practices and to maintain, by way of regularly scheduled meetings, a direct
line of communication among the directors, the Company's internal auditors and
independent accountants. In addition, the Audit Committee is responsible for
reviewing and monitoring the performance of nonaudit services by the Company's
independent accountants and for considering the range of nonaudit and audit
fees.
The Board of Directors has a Nominating Committee. During the 1995 fiscal
year, the Nominating Committee did not meet. The primary functions of the
Nominating Committee are to consider qualified candidates to fill vacant seats
on the Board which may arise during the year and to recommend to the Board for
nomination for election to fill any such vacancies such candidates as it deems,
in its discretion, appropriate. The Nominating Committee does not consider
nominees recommended by stockholders for election as directors.
The Board of Directors has a Compensation Committee. During the 1995
fiscal year, the Compensation Committee met three times. The Compensation
Committee's functions are to review the compensation of the Company's executive
officers and recommend to the Board of Directors the compensation of such
executive officers.
Other committees on which directors serve include the Executive Committee,
the Restricted Stock Option Committee, the Employee Stock Option Committee and
the Employee Qualified Stock Purchase Plan Committee.
During the 1995 fiscal year, the Board of Directors held seven meetings.
Each director attended all of the Board meetings and the meetings of Board
committees on which he served, excepting one director who did not attend one of
the Board of Directors' meetings.
THE BOARD OF DIRECTORS DEEMS THE ELECTION TO THE BOARD OF
DIRECTORS OF ALL THE ABOVE-DESCRIBED NOMINEES TO BE IN THE BEST
INTEREST OF THE COMPANY AND ITS STOCKHOLDERS AND
RECOMMENDS A VOTE "FOR" APPROVAL OF PROPOSAL NO. 1.
5
<PAGE> 9
<TABLE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the annual and long-term compensation for services rendered in all
capacities to the Company for the 1993, 1994 and 1995 fiscal years of those persons who were (i) during fiscal year 1995, the chief
executive officer and (ii) at September 30, 1995, the most highly compensated executive officers.
<CAPTION>
SUMMARY COMPENSATION TABLE
- -------------------------------------------------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION (000'S) COMPENSATION (1)
---------------------------------------------------- ----------------
OTHER SHARES
FISCAL YEAR ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION ENDING SALARY (2) BONUS COMPENSATION (3) OPTIONS
- --------------------------- ------------ ---------- ----- ---------------- ---------
<S> <C> <C> <C> <C> <C>
Ronald L. Skates 1995 $611.5 $0 $3.0 225,000
President & 1994 $577.5 $0 $3.0 250,000
Chief Executive Officer 1993 $577.5 $0 $4.0 125,000
J. Thomas West 1995 $326.2 $0 $3.0 20,000
Senior Vice President 1994 $300.0 $0 $4.0 25,000
1993 $272.0 $0 $3.0 75,000
William J.Cunningham 1995 $305.8 $0 $0 20,000
Vice President 1994 $280.0 $0 $0 25,000
1993 $235.0 $0 $0 30,000
Arthur W. DeMelle 1995 $305.8 $0 $3.0 20,000
Vice President 1994 $285.0 $0 $3.0 20,000
1993 $270.0 $40 $3.0 7,500
Joel Schwartz 1995 $305.8 $50 $2.7 20,000
Vice President 1994 $275.0 $100 $5.0 25,000
1993 $235.0 $0 $3.0 35,000
William L. Wilson 1995 $244.6 $275 (5) $2.5 10,000
Vice President 1994 $127.4 (4) $100 (5) $0 40,000
1993 --- --- --- ---
<FN>
(1) The Company does not maintain any long-term incentive plans other than its option plans. All long-term compensation made by
the Company during the years shown has been in the form of stock option grants under those option plans.
(2) Fiscal year 1995 salary numbers reflect 53 weeks of pay.
</TABLE>
6
<PAGE> 10
(3) Amounts shown reflect benefits received under a Company program
providing certain executives with tax preparation assistance.
(4) Mr. Wilson began his employment with the Company in March, 1994. Amount
shown reflects his prorated salary for a portion of the 1994 fiscal year.
(5) Amounts shown for fiscal years 1994 and 1995 reflect guaranteed bonus
payments committed in connection with the hiring of Mr. Wilson in fiscal
year 1994, and a separate bonus awarded in fiscal year 1995 based on
operating unit performance.
<TABLE>
OPTIONS GRANTS IN THE 1995 FISCAL YEAR
The following table sets forth further information on grants of stock options to the named executive officers during the
1995 fiscal year. The Company does not have a stock appreciation rights plan.
<CAPTION>
OPTION GRANTS IN THE 1995 FISCAL YEAR
- ----------------------------------------------------------------------------------------------------------------------
NUMBER % OF TOTAL
OF OPTIONS MARKET POTENTIALLY REALIZABLE VALUE AT
SHARES GRANTED PRICE ASSUMED (4)
UNDERLYING TO AT ANNUAL RATES OF STOCK PRICE
OPTIONS EMPLOYEES OPTION DATE OF OPTION APPRECIATION FOR OPTION TERM
GRANTED IN FISCAL EXERCISE GRANT EXPIRATION -------------------------------
NAME (1) (2) YEAR PRICE (3) DATE 0% 5% 10%
- ---------------- --------- --------- ----- ----- --------- -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R. L. Skates 225,000 13.8% $9.75 $9.75 11/1/04 $0 $1,379,250 $3,496,500
J. T. West 20,000 1.2% $4.88 $9.75 11/1/04 $97,400 $220,040 $408,200
W. J. Cunningham 20,000 1.2% $4.88 $9.75 11/1/04 $97,400 $220,040 $408,200
A. W. DeMelle 20,000 1.2% $4.88 $9.75 11/1/04 $97,400 $220,040 $408,200
J. Schwartz 20,000 1.2% $4.88 $9.75 11/1/04 $97,400 $220,040 $408,200
W. L. Wilson 10,000 .6% $4.88 $9.75 11/1/04 $48,700 $110,020 $204,100
<FN>
(1) The grants described above were made in the 1995 fiscal year. Thereafter, on November 1, 1995, the following options
were granted: to Mr. Skates, 75,000 shares at an exercise price of $11.88 per share; to Messrs. Cunningham, DeMelle and
Schwartz, 30,000 shares each at an exercise price of $5.94 per share; to Mr. West, 25,000 shares at an exercise price of $5.94
per share; and to Mr. Wilson, 20,000 shares at an exercise price of $5.94 per share. The closing market price of the Company's
stock at the date of these grants was $11.88 per share.
(2) All of the options shown in this table, although immediately exerciseable, are also subject to disposition restrictions and
to a requirement that the underlying shares be offered for resale to the Company at the original option exercise price upon
termination of the optionee's employment with the Company for any reason except death or retirement with the consent of the
Company. These restrictions lapse in 25% installments on each of the first four anniversaries of the option grant.
(3) The market price shown is the closing price of the Company's Common Stock as reported, based on New York Stock Exchange
Composite Tape trading, for the date on which the option was granted.
</TABLE>
7
<PAGE> 11
(4) The potential realizable values shown are provided for illustration
purposes only and are calculated in accordance with rules promulgated by
the Securities and Exchange Commission, based on arbitrarily assumed
annual stock price appreciation rates of 0%, 5% and 10% for the full
terms of the options. The Company makes no representation or prediction
as to what the actual future price or appreciation of the Company's
stock will be at any point in time or over any period.
<TABLE>
OPTIONS EXERCISED AND FISCAL YEAR-END VALUES
The following table sets forth information with respect to (i) stock options exercised by the chief executive officer and
the other named executive officers during the 1995 fiscal year, and (ii) unexercised, in-the-money stock options held by such
individuals at September 30, 1995.
<CAPTION>
OPTION EXERCISES IN THE 1995 FISCAL YEAR AND
1995 FISCAL YEAR-END OPTION VALUES
- -------------------------------------------------------------------------------------------------------
NUMBER OF SHARES UNDER- VALUE OF UNEXERCISED
LYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT FISCAL YEAR END FISCAL YEAR END (1)
SHARES ------------------------- --------------------------
ACQUIRED EXERCISABLE EXERCISABLE
ON VALUE EXERCISABLE BUT UNVESTED EXERCISABLE BUT UNVESTED
NAME EXERCISE REALIZED AND VESTED (2) AND VESTED (2)
- -------------------- -------- -------- ----------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Ronald L. Skates 0 $0 665,063 515,000 $3,138,241 $429,687
J. Thomas West (3) 31,777 $253,886 97,861 89,000 $471,394 $502,962
William J. Cunningham 0 $0 50,506 58,750 $284,064 $305,269
Arthur W. DeMelle 0 $0 42,500 50,000 $277,426 $289,563
Joel Schwartz (3) 8,000 $45,240 57,112 61,250 $302,786 $316,657
William L. Wilson 0 $0 10,000 40,000 $78,350 $290,000
<FN>
(1) Year-end spread value of options are calculated based on the closing price of the Company's Common Stock on September 29,
1995, as reported, based on New York Stock Exchange Composite Tape trading for such day.
(2) All of the options shown in this table, although immediately exercisable, are for the purchase of shares which are coupled
with a prohibition against disposition and with an obligation to offer such shares for resale to the Company at the original
option exercise price upon termination of the optionee's employment with the Company for any reason except death or retirement
with the consent of the Company. These restrictions lapse and the shares fully vest in 25% installments on each of the first
four anniversaries of the option grant. The option data shown in this column relate only to the portion of the named officers'
exercisable options that have not yet vested and thus are not yet free of the disposition and resale obligation restrictions,
and thus can be viewed as comparable to unexercisable options.
(3) The table shows the option exercises made in the 1995 fiscal year. Thereafter, Mr. West exercised options for 10,000 shares
on November 3, 1995; 10,000 shares on November 6, 1995; and 10,000 shares on November 8, 1995, with a net value of $81,475,
$93,100 and $91,000, respectively. Also, Mr. Schwartz exercised options for 9,000 shares on November 13, 1995 with a net value
of $87,400.
</TABLE>
8
<PAGE> 12
COMPENSATION PURSUANT TO PLANS
PENSION PLANS
The Company maintains a noncontributory, defined benefit pension plan (the
"Pension Plan"). Substantially all domestic employees of the Company are
eligible to participate in the Pension Plan. All executive officers of the
Company participate in the Pension Plan. The amount of the contribution
accrued each year by the Company and participating affiliates under the Pension
Plan is actuarially determined and equals at least the minimum amount required
under the Internal Revenue Code of 1986, as amended (the "Code"). Pension
benefits paid from the Pension Plan are based on base salary, exclusive of
overtime, bonuses, nonsales incentive compensation and other similar types of
payments, but inclusive of sales incentives and commissions, up to a certain
maximum, and on an employee's period of service. In general, pension benefits
become nonforfeitable (vested) after the completion of five years of service.
Under the Pension Plan, a participant's pension at normal retirement (age
65) is equal to the sum of yearly benefits accrued during the participant's
period of service. In general, for each year of credited service completed
after becoming a participant in the Pension Plan, the employee accrues an
annual benefit in an amount equal to 1.5% of compensation. Effective in 1989,
the amount of compensation taken into account to calculate the Pension Plan
benefit may not exceed $150,000 per annum under the Code. Each employee who
was a participant on October 1, 1991 had his benefit updated based on his
compensation on October 1, 1991, for each year of service as a participant in
the Pension Plan to that date. Retirees received a supplemental benefit based
on a percentage of the retirement benefit they were receiving on October 1,
1991. As of September 30, 1995, the estimated annual benefits payable upon
retirement at age 65, based on a single life annuity, pursuant to the Pension
Plan for the following individuals would be: to Mr. Skates, $56,925; to Mr.
West, $95,053; to Mr. Cunningham, $36,137; to Mr. DeMelle, $33,087; to Mr.
Schwartz, $47,767; and to Mr. Wilson, $35,197.
In addition to pension benefits, the Pension Plan provides amounts to fund
medical benefits for certain retired employees and their dependents.
In June 1989, the Board of Directors adopted the Data General Corporation
Supplemental Retirement Benefit Plan (the "Supplemental Plan") effective
October 1, 1989. The Supplemental Plan provides additional retirement benefits
for eligible employees, including executive officers of the Company, who retire
under the Company's Pension Plan. The Supplemental Plan was adopted in order
to compensate eligible employees for reductions in the benefits calculated
under the Pension Plan due to the change in the formula for the calculation of
benefits under the Pension Plan and/or legislative and regulatory limitations.
The Supplemental Plan benefit equals a participant's retirement benefit
calculated in an amount equal to 1% of that part of compensation not in excess
of the Federal Insurance Contribution Act ("FICA") wage base and 2% of that
part of compensation in excess of the FICA wage base, reduced by an amount
equal to the actual amount of the benefit that is payable under the normal form
of payment provided for under the Pension Plan. The Supplemental Plan was also
updated by basing the benefit thereunder on the participant's compensation on
October 1, 1991. The Supplemental Plan is funded pursuant to a non-qualified
deferred compensation arrangement under which the Company transfers certain
amounts to a trust to be held for the benefit of the Supplemental Plan
participants, except in the event of the insolvency of the Company. As of
September 30, 1995, the estimated annual benefits payable upon retirement at
age 65, based on a single life annuity, pursuant to the Supplemental Plan for
the following individuals would be: to Mr. Skates, $178,446; to Mr. West,
$73,012; to Mr. Cunningham, $35,534; to Mr. DeMelle, $41,818; to Mr. Schwartz,
$50,168; and to Mr. Wilson, $35,921.
In December 1994, the Board of Directors adopted a Supplemental Retirement
Benefit (the "Supplemental Benefit") to provide Mr. Skates a retirement benefit
to supplement that available to him under the Company's Pension Plan and
Supplemental Plan. The Supplemental Benefit provides that if Mr. Skates
retires from service to the Company at age 65, he will receive from the
Company's Pension Plan,
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<PAGE> 13
current Supplemental Plan and the Supplemental Benefit a combined joint and
survivor annuity equal to 60% of the average of his three highest years of cash
compensation excluding any bonuses he may be awarded. Mr. Skates will not be
provided the Supplemental Benefit if he voluntarily terminates his employment
with the Company prior to his attaining age 55. If Mr. Skates retires after
attaining age 55, but prior to age 65, the 60% benefit rate will be reduced by
two percentage points for each year his retirement precedes age 65. If at any
time Mr. Skates dies, is terminated due to disability, is terminated by the
Board without cause, or his employment is terminated other than for cause after
a Change in Control (as defined in the discussion under the heading EMPLOYMENT
AGREEMENTS, below), payment of the Supplemental Benefit may commence prior to
age 65, at the reduced rate described above. Based upon his compensation
during the three highest years to date, the estimated annual benefit payable
upon retirement at age 65 pursuant to the Pension Plan, the Supplemental Plan
and the Supplemental Benefit to Mr. Skates would be $361,500.
SAVINGS AND INVESTMENT PLAN
Effective January 1, 1983, the Company adopted the Data General
Corporation Savings and Investment Plan (the "Savings and Investment Plan"), a
qualified plan under Sections 401(a) and 401(k) of the Code that included a
cash or deferred arrangement ("CODA") and established a related trust.
Substantially all of the Company's domestic employees are eligible to
participate in the Savings and Investment Plan. Under the CODA provisions of
the Savings and Investment Plan, eligible employees may elect to defer a
portion of their salary and have such amount contributed to the Savings and
Investment Plan to be invested in one or more of seven savings and investment
funds. In general, distribution of an employee's interest in the Savings and
Investment Plan may occur upon hardship, termination of employment or after
reaching age 59-1/2. Amounts attributable to the Savings and Investment Plan
are distributed in cash. In addition, employees may borrow money from the
Savings and Investment Plan. For Federal income tax purposes, the Company is
entitled to a deduction for the CODA contributions. During the period from
October 1, 1994 to September 30, 1995, Messrs. Skates, West, Cunningham and
Wilson have each deferred amounts equal to $9,980, while, Messrs. DeMelle and
Schwartz did not defer any amounts.
STOCK OPTIONS
The Company maintains a Restricted Stock Option Plan, Employee Stock
Option Plan, Employee Qualified Stock Purchase Plan, Non-Employee Director
Restricted Stock Option Plan and 1994 Non-Employee Director Stock Option Plan.
Restricted Stock Option Plan. The Restricted Stock Option Plan (the
"Restricted Plan"), which was originally adopted by the Board of Directors on
November 19, 1976 and approved by the stockholders on January 18, 1977,
authorizes the Company to grant "restricted stock options" to employees and
consultants of the Company and its subsidiaries. The Restricted Plan, which
was amended in 1988 to extend the termination date of the Restricted Plan to
December 31, 1998 and which has been amended from time to time to increase the
number of shares available thereunder, provides for the granting of options to
purchase up to 11,000,000 shares of Common Stock coupled with a prohibition
against disposition of the shares and an obligation to offer such shares for
resale to the Company at their original purchase price upon termination of
employment for any reason except death or retirement with the consent of the
Company. The restrictions against disposition and the obligation of resale
lapse from time to time as to portions of the grant, as determined by the
Restricted Stock Option Plan Committee (the "Restricted Plan Committee"). The
Restricted Plan Committee which administers the Restricted Plan consists of not
fewer than three "disinterested directors" as defined in the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and currently consists
of Messrs Ferdinand Colloredo-Mansfeld, Donald H. Trautlein and Richard L.
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Tucker. The Restricted Plan provides for the issuance of Common Stock to
employees for any lawful consideration as determined by the Board of Directors
so long as it is not less than the lower of (i) 50% of the book value per share
of Common Stock as of the end of the fiscal year immediately preceding the date
of such grant or (ii) 25% of the fair market value per share of Common Stock on
the date of such grant. Subject to the terms of the Restricted Plan, the
Restricted Plan Committee has exclusive authority to select the employees or
others to whom options are granted and to determine the number of shares
subject to such options and the time or times when options are exercisable.
Employees of the Company and its subsidiaries, including officers and
consultants, who have not attained the age of 65 (approximately 5,000 persons)
are eligible to receive options under the Restricted Plan. Directors who are
also employees are eligible to receive options if they are not members of the
Restricted Plan Committee. Directors who are not employees may receive options
under the 1994 Non-Employee Director Stock Option Plan (see the heading "1994
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN", below). Options may be granted to
the same employee on more than one occasion. However, the number of shares
issued to any one employee under the Restricted Plan may not exceed 10% of the
aggregate number of shares issuable nor exceed 3% of the shares issuable during
any consecutive twelve-month period. The Company reserves the right under the
Restricted Plan to terminate an employee's option with the employee's consent
and to substitute one or more options with different terms and conditions,
including a lower option price. Options may be granted under the Restricted
Plan from time to time through December 31, 1998, the termination date of the
Plan.
The Restricted Plan provides for a stock-for-stock payment method. Under
this method of payment, an option holder may tender previously acquired shares
of Common Stock of the Company, if held for at least three months, at the
shares' current market value in payment of the exercise price of an option.
An option granted under the Restricted Plan is a non-statutory option and
is taxed in accordance with Section 83 of the Code and the regulations
thereunder. An employee granted an option under the Restricted Plan generally
will realize income when the shares purchased pursuant to the option become
transferable or are no longer subject to a substantial risk of forfeiture. The
income realized (the difference between the exercise price of the option and
the fair market value of the shares at the time the shares are transferable or
are no longer subject to a substantial risk of forfeiture) will be ordinary
income to the employee for which the Company can claim a business expense
deduction.
EMPLOYEE STOCK OPTION PLAN. The Employee Stock Option Plan (the "Stock
Option Plan"), which was adopted by the Board of Directors on October 6, 1981,
approved by the stockholders on January 19, 1982 and amended from time to time
thereafter, authorizes the Company to grant to employees of the Company or its
subsidiaries either "incentive stock options" under Section 422 of the Code or
non-qualified options not meeting the requirements of Section 422. Substantially
all employees of the Company and its subsidiaries (approximately 5,000 persons)
are eligible to participate in the Stock Option Plan. The purpose of the Stock
Option Plan is to strengthen the Company's ability to attract, motivate, and
retain key employees and, in particular, to provide the Company with the
necessary flexibility to compete for highly skilled personnel. Options may be
granted to the same employee on more than one occasion, from time to time
through the termination date of the Stock Option Plan in 2004. However, the
number of shares issued to any one employee under the Stock Option Plan shall
not exceed 400,000 shares in any calendar year.
The Stock Option Plan is administered by an Employee Stock Option Plan
Committee appointed by the Board of Directors (the "Stock Option Committee"),
currently consisting of Messrs. Ferdinand Colloredo-Mansfeld, Donald H.
Trautlein and Richard L. Tucker, which, subject to the provisions of the Stock
Option Plan, has exclusive authority to select the times when and the employees
to whom stock options may be granted, the number of shares of Common Stock to
be acquired by the exercise of stock options, the exercise price and the term
during which options may be exercised.
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To qualify as an incentive stock option under Section 422 of the Code, an
option, among other things, must have an exercise price equal to or in excess
of the fair market value of the Common Stock on the date of grant.
Non-qualified options may be granted with an exercise price as determined by
the Stock Option Committee so long as it is not less than the lower of (i) 50%
of the book value per share of Common Stock as of the end of the fiscal year
immediately preceding the date of such grant or (ii) 25% of the fair market
value per share of Common Stock on the date of such grant.
Options granted under the Stock Option Plan shall not be exercisable more
than ten years from the date of grant. Except by will or the laws of descent
and distribution, or as the Stock Option Committee shall determine, stock
options granted under the Stock Option Plan shall not be transferable and,
during an employee's lifetime, shall be exerciseable only by the employee. The
Stock Option Plan provides that no stock option may be granted to an employee
who owns capital stock constituting more than 10% of the total combined voting
power of all classes of capital stock of the Company or any of its
subsidiaries. The Stock Option Plan also provides that the exercise price of
stock options may be paid in cash, by certified check or in shares of the
Company's Common Stock. Non-qualified options granted under the Stock Option
Plan are subject to restrictions against disposition of the shares acquired
upon exercise of the options and require the optionee to offer such shares for
resale to the Company at their original purchase price upon termination of the
optionee's employment with the Company for any reason except death or
retirement with the consent of the Company; the restrictions against
disposition and the obligation of resale lapse from time to time as to portions
of the grant, as determined by the Stock Option Committee.
An employee who is granted an incentive stock option will generally
recognize no income or gain on the grant or exercise of the incentive stock
option. If stock purchased pursuant to the exercise of an incentive stock
option is sold more than two years from the date the option is granted and one
year from the date of exercise, the gain realized on the sale of the stock (the
difference between the exercise price of the option and the amount realized on
the sale) will be treated as long-term capital gain rather than as ordinary
income. In general, in the case of incentive stock options, the excess of
the fair market value of the shares on the date of exercise (or, if later, the
date the shares become vested for purposes of Section 83 of the Code) over the
exercise price is included in alternative minimum taxable income for purposes
of the "alternative minimum tax" provisions of the Code. The non-qualified
options are taxed in accordance with Section 83 of the Code and regulations
thereunder in the same manner as stock options granted under the Restricted
Plan. (See previous discussion of tax consequences under the heading
RESTRICTED STOCK OPTION PLAN, above.)
In general, the Company can deduct as a business expense only the amount
equal to the ordinary income, if any, recognized by an employee upon his sale
of Common Stock purchased pursuant to an incentive stock option, as well as the
ordinary income realized by an optionee with respect to the exercise of a
non-qualified option. Under current accounting practice, no charge to the
income of the Company will result from the grant or exercise of an incentive
stock option because the exercise price of the incentive stock option must
equal or exceed the fair market value of the Common Stock on the date of grant.
In the case of a grant of a non-qualified stock option an amount equal to the
excess of the fair market value of the Common Stock at the date of grant over
the exercise price would be amortized as a charge over the option's vesting
period. The tax effect of the benefit of such business expense in excess of
that charged to earnings will be credited to the Company's additional paid-in
capital.
EMPLOYEE QUALIFIED STOCK PURCHASE PLAN. The Employee Qualified Stock
Purchase Plan (the "Purchase Plan") was adopted by the Board of Directors on
November 10, 1970 and approved by the stockholders on January 12, 1971. The
Purchase Plan, which has been amended from time to time to increase the number
of shares available thereunder, authorizes the Company to issue up to 8,600,000
shares of Common Stock.
Substantially all employees of the Company and its designated subsidiaries
who have completed ninety days' employment (approximately 5,000 persons) are
eligible to participate in the Purchase Plan. The
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Company believes that the Purchase Plan has advanced the interests of the
Company and its subsidiaries and furthered its growth and development by
encouraging and enabling employees to acquire the Common Stock of the Company
and an increased personal and proprietary interest in the continued success and
progress of the Company.
Under the Purchase Plan, options are granted twice yearly and are
exercisable six months from the date of grant. The option price is the lesser
of 85% of the average market price of the Common Stock of the Company on (i)
the date the option is granted or (ii) the last day of the six month period.
Each eligible employee who continues to be a participant in the Purchase Plan
on the last day of the six month period is deemed to have exercised his option
on such date. The number of shares purchased at the option price by each
participating employee is determined by the amounts accumulated through payroll
deductions of up to 10% of such employee's regular base pay during such
six-month period.
Under the Purchase Plan, options granted to participants are intended to
constitute options granted pursuant to an "employee stock purchase plan" within
the meaning of Section 423 of the Code. Accordingly, no taxable income will be
realized by an employee until the shares purchased pursuant to an option are
sold. Under certain circumstances, all or a portion of the gain realized may
be treated as ordinary income to the employee, and the Company will be entitled
to claim a business expense deduction in the same amount as the ordinary income
recognized by the employee.
The Purchase Plan is administered by the Employee Qualified Stock Purchase
Plan Committee (the "Purchase Plan Committee"), which is composed of at least
three members of the Board of Directors. The Purchase Plan Committee currently
consists of Messrs. Adler, McElwee, Trautlein and Tucker. Members of the
Purchase Plan Committee are presently not eligible to participate in the
Purchase Plan, nor is any employee entitled to participate in the Purchase Plan
to the extent his or her rights to purchase Common Stock would accrue at a rate
which exceeds $25,000 of fair market value of such stock, as determined at the
time such option is granted, for each calendar year in which such option is
outstanding at any time, or that, after the granting of the option, such
employee would own more than 5% of the Common Stock of the Company, as defined
and prescribed by the Code.
During the period of September 25, 1994 to September 30, 1995, pursuant to
the Purchase Plan, Mr. Skates purchased 3,201 shares of Common Stock at an
average per share price of $6.64; Mr. Cunningham purchased 3,237 shares of
Common Stock at an average per share price of $6.56; Mr. Wilson purchased 3,171
shares of Common Stock at an average per share price of $6.56; and all
executive officers as a group purchased 10,964 shares of Common Stock at an
average per share price of $6.59. During this period Messrs. DeMelle, Schwartz
and West did not purchase any shares pursuant to the Purchase Plan. As of
November 1, 1995, an aggregate of 7,535,209 shares of the Company's Common
Stock had been purchased under the Purchase Plan.
NON-EMPLOYEE DIRECTOR RESTRICTED STOCK OPTION PLAN. The Non-Employee
Director Restricted Stock Option Plan (the "Directors' Plan") was adopted by
the Board of Directors on November 1, 1983 and approved by the stockholders on
January 17, 1984. The Directors' Plan terminated on December 31, 1994 pursuant
to its terms. The Directors' Plan authorized the Company to issue up to 32,000
shares of the Company's Common Stock. The Directors' Plan provided for the
automatic issuance of an option to purchase 4,000 shares of the Company's
Common Stock to each non-employee director upon his initial election to the
Board of Directors.
The Directors' Plan was established to serve the best interests of the
Company and its stockholders by enhancing the ability of the Company to attract
and retain the services of knowledgeable and experienced persons who, through
their efforts and expertise, could make a significant contribution to the
success of the Company by serving as members of the Company's Board of
Directors.
Pursuant to the Directors' Plan, no non-employee director who had been
granted an option was eligible to receive additional options. Directors who,
on their election to the Board, were also officers were
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not eligible to receive options under the Directors' Plan. The exercise price
per share was the lesser of (i) 50% of the book value per share of Common Stock
as of the end of the fiscal year immediately preceding the date of grant or
(ii) 25% of the fair market value per share of Common Stock on the date of such
grant. Although the Directors' Plan has terminated, certain options granted
under the Directors' Plan remain outstanding.
The exercise price of options granted under the Directors' Plan may be
paid in shares of the Company's Common Stock. Options granted under the
Directors' Plan to purchase Common Stock are coupled with a prohibition against
disposition of the shares and an obligation to offer such shares for resale to
the Company at their original purchase price if the optionee ceases to serve as
director of the Company for any reason except death or with the consent of the
Company. The restrictions against disposition and obligation of resale lapse
cumulatively to the extent of 25% of the grant on each anniversary of the date
of grant of the option. Options granted under the Directors' Plan are not
transferable other than by will or the laws of descent and distribution and are
exercisable during the lifetime of an optionee only by the optionee while he is
serving as a director of the Company. If, however, the optionee ceases to
serve as a director with the consent of the Company or by reason of death, the
option may be exercised within ninety days or twelve months, respectively, of
his cessation of service as a director. Options granted under the Directors'
Plan terminate ten years from the date of grant.
An option granted under the Directors' Plan is a non-statutory stock
option taxed in accordance with Section 83 of the Code and the regulations
thereunder. In general, a director granted an option under the Directors' Plan
will realize income when the shares purchased pursuant to the option become
transferable or are no longer subject to a substantial risk of forfeiture. The
income realized (the difference between the exercise price of the option and
the fair market value of the shares at the time the shares become transferable
or are no longer subject to a substantial risk of forfeiture) will be ordinary
income to the optionee for which the Company will be able to claim a business
expense deduction.
During the period from September 25, 1994 to termination of the Directors'
Plan on December 31, 1994, Mr. Thorndike received options for 4,000 shares
under the Directors' Plan at an exercise price per share of $2.66, and Mr.
Trautlein exercised an option for and received 2,000 shares with a net value of
$10,740.
1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN. The 1994 Non-Employee
Director Stock Option Plan (the "1994 Directors' Plan") was adopted by the
Board of Directors on October 31, 1993 and approved by the stockholders on
January 26, 1994. The 1994 Directors' Plan authorizes the Company to issue up
to 150,000 shares of the Company's Common Stock. The 1994 Directors' Plan
provides for the issuance of an annual option to purchase 4,000 shares of the
Company's Common Stock to each non-employee director who is elected to the
Board of Directors at the Annual Meeting of Stockholders. The exercise price
per share will be equal to 100% of the closing price of the Company's Common
Stock on the date of the Company's Annual Meeting of Stockholders at which the
subject director is elected to the Board of Directors. The exercise price of
options granted under the 1994 Directors' Plan may be paid in shares of the
Company's Common Stock.
The 1994 Directors' Plan was established to serve the best interests of
the Company by enhancing the ability of the Company to attract and retain the
services of knowledgeable and experienced persons who, through their efforts
and expertise, can make a significant contribution to the success of the
Company by serving as members of the Company's Board of Directors.
The 1994 Directors' Plan provides that the option to purchase Common Stock
will be coupled with a prohibition against disposition of the shares and an
obligation to offer such shares for resale to the Company for any reason except
death, disability, or retirement with the consent of the Company. The
restrictions against disposition and the obligation of resale will lapse
cumulatively to the extent of 25% of the grant on each anniversary date of
grant of the option. Options will not be transferable other than by will
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or the laws of descent and distribution, and will be exercisable during the
lifetime of an optionee only by the optionee. Options will be exercisable only
while the optionee is serving as a director of the Company or (i) within 12
months of the optionee's retirement from the Board of Directors with the
consent of the Company; (ii) within 12 months of the optionee becoming disabled
to serve as a director of the Company; (iii) by the optionee's heirs or estate
within 12 months of the optionee's death. Options terminate ten years from the
date of grant. In the event of a Change in Control (as defined in the
discussion under the heading EMPLOYMENT AGREEMENTS, below) the restrictions
against disposition and the obligation of resale of the shares acquired
pursuant to an option under the 1994 Directors' Plan will lapse and the shares
will become freely tradeable.
An option granted under the 1994 Directors' Plan will be a non-statutory
stock option and will be taxed in accordance with Section 83 of the Code and
the regulations thereunder. A director granted an option pursuant to the 1994
Directors' Plan generally will realize income when the shares purchased under
the option become transferable or are no longer subject to a substantial risk
of forfeiture. The income realized (the difference between the exercise price
of the option and the fair market value of the shares at the time the shares
become transferable or are no longer subject to a substantial risk of
forfeiture) will be ordinary income to the optionee for which the Company will
be able to claim a business expense deduction.
The Board may terminate, modify or suspend the 1994 Directors' Plan,
provided that no such modification shall, without further stockholders'
approval, increase the maximum number of shares which may be issued under the
1994 Directors' Plan (other than adjustments for capital changes), shorten the
period over which restrictions against disposition and obligation of resale
lapse, amend the option exercise price (other than adjustments for capital
changes), or extend the period during which options may be granted or exercised
under the 1994 Directors' Plan. During the period from September 25, 1994 to
November 1, 1995, Messrs. Adler, Colloredo-Mansfeld, McElwee, Thorndike,
Trautlein and Tucker were each granted an option under the 1994 Directors' Plan
to purchase 4,000 shares of the Company's Common Stock with an exercise price
per share of $8.38.
EMPLOYMENT AGREEMENTS
Beginning in February 1989, the Company has entered into employment
agreements (the "Agreements") which become effective upon a "Change in Control"
of the Company with its full-time executive officers, including Messrs. Skates,
West, Cunningham, DeMelle, Schwartz and Wilson. The Board of Directors
believes that such Agreements will encourage retention of the current officers
and attract the services of new officers. The Board also believes that under
such Agreements officers are able to devote their full attention and energies
to the conduct of the Company's business without the potentially disturbing
distractions that might arise from a change in control of the Company. Should
the Company receive any proposals with respect to any change in its control,
such officers could then, without being influenced by the uncertainties of
their own situations, assess such proposals, formulate an objective opinion as
to whether such proposals would be in the best interests of the Company and its
stockholders and take such other action regarding such proposals as the Board
of Directors might determine to be appropriate. Each Agreement has a three
year term and becomes effective upon a Change in Control of the Company as
defined in the Agreements.
The Agreements provide that, if a Change in Control of the Company should
occur, and if within three years thereafter (i) the employment of the officer
is terminated for reasons other than death, disability, retirement or "Cause"
(as defined in the Agreements); or (ii) the officer voluntarily terminates his
or her employment for "Good Reason" (as defined in the Agreements); or (iii)
the officer voluntarily terminates his or her employment for any reason or for
no reason within thirty days of the first anniversary of a Change in Control of
the Company (the "Window Period"), the officer would receive specified
severance compensation. The Agreements provide generally for the continuation
of employment of the officer with the Company for a
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three year period following the date of the Change in Control upon
substantially the same terms and conditions with respect to duties,
responsibilities, salaries, bonuses, welfare, and fringe and other benefits as
those enjoyed prior to the date of the Change in Control of the Company.
"Good Reason" permitting an officer to receive the specified severance
compensation upon voluntary termination of his or her employment with the
Company during the three year term of the Agreements is defined as a diminution
of responsibilities, assignment of inappropriate duties, failure of the Company
to comply with the compensation and benefit provisions of the Agreement,
failure of the Company to comply with any relocation provisions of the
Agreement, any purported termination of the officer's employment in violation
of the Agreements or the failure of any successor to comply with the
Agreements.
Upon termination of employment with the Company for death, disability,
retirement or by the officer without Good Reason (other than during the Window
Period) the Company has no obligations under the Agreement other than those
accrued on the date of termination and the customary Company-provided death
benefits, disability benefits or retirement benefits, as the case may be. Upon
termination by the Company for Cause, the only obligation of the Company to the
officer is for salary and deferred compensation accrued by the officer to the
date of termination. If during the term of the Agreement the officer
terminates his or her employment with the Company for Good Reason, or without
any reason during the Window Period, or his or her employment with the Company
is terminated by the Company without Cause, then the officer is entitled to (a)
a lump sum cash payment equal to the sum of (1) his or her accrued salary,
accrued annual bonus and deferred compensation to the date of termination, (2)
three times his or her annual base salary and three times his or her "Highest
Annual Bonus" (as defined in the Agreements); (b) retirement benefits and
health benefits for the remainder of the term of the Agreement; (c) certain
legal fees and expenses incurred as a result of termination of employment; and
(d) immediate acceleration of the exercisability of the options granted to the
officer pursuant to the Company's Restricted Stock Option Plan and Employee
Stock Option Plan, and immediate lapse of any restrictions against disposition
and obligation of resale of the Common Stock to the Company, with the officer
being able to exercise his or her options under the Restricted Stock Option
Plan and the Employee Stock Option Plan within a period of 60 days following
the termination date. The definition of Highest Annual Bonus is the greater of
the highest annual bonus paid in the past three years or 30% of the officer's
annual base salary.
The Company has established a trust fund, with the Boston Safe Deposit and
Trust Company as Trustee. The trust fund is to be funded upon a Change in
Control of the Company. The purpose of the trust fund is to ensure the proper
payment of the Company's obligations under the Agreements.
In the event that the amount payable to an officer under his or her
Agreement would be subject to the excise tax pursuant to Section 4999 of the
Code (the "Excise Tax"), then, unless the value of the payment of the Excise
Tax by the Company to the officer is less than $50,000, the officer is entitled
to receive an additional payment in an amount such that, after payment by the
officer of all taxes, including income taxes and the Excise Tax imposed upon
such additional payment, the officer is in the same after-tax position as would
have resulted had no Excise Tax been imposed upon the officer. If the value to
the officer is less than $50,000, then the lump sum cash payment to that
officer will be reduced by the amount necessary to avoid the Excise Tax.
A "Change in Control" of the Company means for purposes of the Agreements:
(i) the acquisition, other than from the Company, by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 25% or more of either the then outstanding shares of Common
Stock of the Company (the "Outstanding Company Common Stock") or the combined
voting power of the then outstanding voting securities of the Company entitled
to vote generally in the election of directors (the "Outstanding Company Voting
Securities"), provided, however, that any acquisition by the Company or any of
its subsidiaries, or by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any of its subsidiaries, or by any corporation
with respect to which, following such acquisition,
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more than 60% of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such acquisition in substantially the same proportion as
their ownership, immediately prior to such acquisition, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may
be, shall not constitute a Change in Control; or (ii) individuals who, as of
January 1, 1989, constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board, provided that any
individual becoming a director subsequent to January 1, 1989 whose election, or
nomination for election, by the Company's stockholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the Directors of the Company (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act);
or (iii) approval by the stockholders of the Company of a reorganization,
merger or consolidation, in each case, with respect to which all or
substantially all of the individuals and entities who were the respective
beneficial owners of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization, merger or
consolidation do not, following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 60% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election
of directors, as the case may be, of the corporation resulting from such
reorganization, merger or consolidation, or of a complete liquidation or
dissolution of the Company or of the sale or other disposition of all or
substantially all of the assets of the Company.
The Code limits the business expense deduction available for so-called
golden parachute payments. A portion of the payments (if any) made (or deemed
made) by the Company under the Agreements may not be deductible as a result of
those limits.
COMPENSATION OF DIRECTORS
Directors who are full-time officers of the Company receive no additional
compensation for serving on the Board of Directors or its committees.
Directors who are not full-time officers receive an annual retainer of $25,000
in addition to $1,000 for each meeting attended. Directors who serve on one or
more than one of the Audit Committee, the Compensation Committee, the
Restricted Plan Committee, the Stock Option Committee and the Nominating
Committee receive an additional annual retainer of $5,000, but directors who
serve on more than one such committee are limited to only one additional
retainer of $5,000. Directors serving on such committees receive $1,000 for
each committee meeting they attend. For a description of options granted to
non-employee directors, see the headings "NON-EMPLOYEE DIRECTOR RESTRICTED
STOCK OPTION PLAN" AND "1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN", above.
DIRECTORS' RETIREMENT PROGRAM
In November, 1991 the Company adopted a retirement program for
non-employee directors. This program provides a retirement benefit to each
non-employee director who either reaches age 72 (the established retirement age
for members of the Company's Board of Directors) or completes at least five
years of service as a non-employee director. The retirement benefit is equal
to the highest Board retainer paid to the director during his years of service
to the date of the director's retirement and is payable for a period of years
(not to exceed a maximum of 15 years) equal to the director's years of service
on the Board. The
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<PAGE> 21
Board of Directors waived the mandatory retirement age for Mr. McElwee and
nominated him for reelection to the Board of Directors at the current Annual
Meeting of Stockholders.
The five-year eligibility service requirement is waived in the event of
death in service, retirement due to poor health, or retirement within two years
of a Change in Control (as defined in the discussion under the heading
EMPLOYMENT AGREEMENTS, above). In the event of death after retirement, the
director's spouse (if any) is entitled to a death benefit equal to the
remaining balance (if any) of benefits otherwise payable to the director at the
time of his or her death.
JOINT REPORT OF COMPENSATION COMMITTEE
AND STOCK OPTION COMMITTEES
The Compensation Committee and Stock Option Committees of the Board of
Directors (respectively, the "Compensation Committee" and "Stock Option
Committees", and collectively the "Committees") are each composed entirely of
non-employee directors, as named below.
The Compensation Committee is responsible for establishing and
administering the overall compensation policies applicable to the Company's
corporate officers, and determining the annual cash compensation levels of the
Company's senior management. The two Stock Option Committees (which are both
comprised of the same directors) are responsible for establishing the general
policies applicable to the granting, vesting and other terms of stock options
granted to current and newly hired key employees under the Company's stock
option plans, and for determining the size and terms of the option grants made
to the Company's executive officers, among others.
The Committees view their charter as being to insure that the Company's
officer compensation programs are structured and implemented in a manner that
recognizes the Company's need to attract and retain the caliber of senior
executives and other key employees required for the Company to compete in a
highly competitive and rapidly evolving business sector, while also recognizing
and emphasizing the importance and value of achieving targeted annual and
long-term performance objectives at the individual, operating unit and Company
level.
SECTION 162(M)
Due to the Company's net operating loss carryover position, the
restrictions imposed by Section 162(m) of the Code on the deductibility of the
compensation paid to named executive officers only have a limited impact on the
Company. However, the Committees have nonetheless adopted a general policy of
paying senior executive compensation that complies with the requirements of
Section 162(m), while reserving the right to exceed the Section 162(m) limits
where the Committees believe such action to be in the Company's best interest.
ANNUAL REVIEW PROCESS REGARDING PERFORMANCE AND CASH AND STOCK COMPENSATION
LEVELS
During the summer and fall of 1995, the Committees and the Company's Chief
Executive Officer (the "CEO") conducted, with the assistance and advice of an
independent executive compensation consultant, detailed reviews of the levels
and mix of officer cash and stock compensation, taking into account corporate,
operating unit and individual performance for the fiscal year ended in
September 1995.
This annual review process included interim meetings involving the CEO,
designated Committee representatives and the compensation consultant, as well
as formal Committee meetings to consider the progress of the annual reviews and
review the recommendations of the working group. As part of the process, the
CEO reviewed with the Committees (i) the assessment of each officer's
performance by his/her immediate supervisor, (ii) the CEO's assessment of the
performance of each officer, each operating unit and group and the Company as a
whole, and (iii) the CEO's specific recommendations regarding salary, annual
18
<PAGE> 22
bonus and stock option grant actions for the officer group, and the rationale
for such actions. In addition, the Committees held various private discussions
regarding such matters.
REVIEW OF BASE SALARIES
As part of the annual compensation review process, the base salary rate of
each corporate officer was reviewed, taking into account: (i) each officer's
individual performance for the preceding 12 months compared against assigned
revenue, margin, net income and other goals, and against fiscal 1994
performance, (ii) the scope and importance of the functions the officer
performed or was responsible for as of the end of the 1995 fiscal year, (iii)
the assessment of the officer's initiative, managerial ability and overall
contributions to corporate performance, (iv) the advice of the independent
executive compensation consultant regarding the competitiveness of current
officer salary levels compared to the external market based on 1995 survey
data, and, in certain cases, available 1994-95 proxy data, and (v) internal
equity considerations.
The weighting given to these factors varied from officer to officer, based
in part upon the importance of the officer's position to the Company and the
caliber of the incumbent, but the Compensation Committee intended that
executive officer base salaries generally be competitive with the estimated
relevant market for each position. Based on 1995 survey data (including a
survey of more than 25 large computer sector companies)(1) and the advice of the
outside compensation consultant regarding such data, the Compensation Committee
believes that the base salaries for the Company's current executive officers
are generally in the 50th to 75th percentile compared to other large computer
companies.
As a result of the 1995 review and after taking into account the Company's
performance during the fourth quarter of the 1995 fiscal year as well as such
year as a whole, the Compensation Committee decided, effective October 1, 1995,
to increase the salaries of Messrs. Cunningham, DeMelle, Schwartz and West by
$15,000 each and to also increase the salary of Mr. Wilson by $25,000 to
reflect recent increases in the scope of his responsibilities.
ANNUAL BONUS AWARDS
The Company grants discretionary annual bonuses to executive officers and
others from time to time based on corporate performance, taking into account
(i) the Company's financial performance relative to key competitors and in
absolute terms, (ii) such other corporate performance criteria as are
determined to be appropriate by the Compensation Committee for a given year,
(iii) the level and importance of an officer's contribution to the Company's
overall performance, (iv) the officer's actual performance versus such
officer's assigned business plan goals, and (v) the estimated competitive level
of bonus compensation at other large computer companies based on available
survey data.
Based on the Company's overall performance for the 1995 fiscal year, the
Compensation Committee determined that no discretionary corporate bonus awards
would be made to any executive officers for such year.
For the 1995 fiscal year, consistent with prior practice, sales-based
incentive opportunities were provided to certain sales executives, and certain
"overgoal" bonus opportunities were provided to certain officers. For the 1995
fiscal year, one executive officer (Mr. Schwartz) received a discretionary
award based on sales performance and one executive officer (Mr. Wilson)
received an overgoal bonus based on unit performance.
- -----------------
(1) The computer industry survey group for 1995 included the Company, eleven of
the twelve other companies in the S&P Computer Systems Index that is
referred to in the Performance Graph that appears on Page 22 of this
Proxy Statement, and fourteen additional large computer companies that
are not included in that index.
19
<PAGE> 23
STOCK OPTION GRANTS
As part of its officer compensation programs, the Company utilizes stock
options priced primarily at 50% of market on the date of grant (25% of market
for a portion of the initial grants to certain newly hired officers, and 100%
of market in the case of all recent option grants to the Company's CEO) and
vesting generally in four equal annual installments. The Stock Option
Committees believe that such grants have been effective for both new hire and
retention purposes in establishing substantial stock-based investment risks for
key employees that emphasize the importance of shareholder return and encourage
a focus on long-term results.
The Stock Option Committees also have established general guidelines
regarding the size and pricing of officer stock option grants, which establish
certain target parameters for officer option grants, based on various factors,
and are intended to provide a consistent basis for judging the internal
fairness and external competitiveness of officer stock option grants. The
Stock Option Committees believe that the stock option grants made in the 1995
fiscal year and the 1996 fiscal year option grants made in November, 1995(2)
reflect, and, in the aggregate, are consistent with, such guidelines.
CEO COMPENSATION
The compensation paid to Mr. Ronald L. Skates, the Company's President and
Chief Executive Officer, is separately reviewed each year by the Committees.
CEO CASH COMPENSATION. The Compensation Committee's actions in 1994 (see
the Company's December 14, 1994 Proxy Statement) and in 1995 with respect to
Mr. Skates' cash compensation for the 1995 fiscal year (as reflected in the
SUMMARY COMPENSATION TABLE, above) were based on reviews of both proxy and
survey data regarding the CEO cash compensation practices of other large
computer companies, as well as the Committee's evaluations of Mr. Skates'
performance as CEO during the year and the Company's performance during the
year on an overall basis and in terms of key strategic initiatives.
Based on (i) the Company's progress during the 1994 fiscal year in
increasing product revenues and reducing costs, (ii) the Committee's assessment
of Mr. Skates' efforts and performance during that year, and (iii) survey and
proxy data for more than 20 large computer companies, and the advice of the
Company's outside compensation consultant, indicating that Mr. Skate's base
salary rate was about 10% below the median rate for other large computer
companies, the Compensation Committee increased Mr. Skates' salary at the start
of the 1995 fiscal year by 3.9% to $600,000 - the first salary increase that
Mr. Skates had received since October, 1991.
Based on (i) the Committee's views regarding Mr. Skates' efforts and the
Company's continuing progress during the 1995 fiscal year with respect to
increasing AViiON[registered trademark] and CLARiiON[registered trademark]
revenues, developing and launching Intel-based versions of the AViiON systems,
and further reducing costs (meeting various targets by year end), and (ii) 1995
survey and 1994-95 proxy data for more than 25 large computer companies, and the
advice of the Company's outside compensation consultant, indicating that Mr.
Skates' $600,000 base salary rate was generally competitive with the median rate
paid by large computer companies (after adjusting for the Company's relative
size), the Compensation Committee increased Mr. Skates' salary at the start of
the 1996 fiscal year by 5.0% to $630,000.
Based on the Company's results for the 1995 fiscal year, the Committee
decided not to award Mr. Skates an annual bonus for 1995, even though the
Committee believes that Mr. Skates has continued to perform well under very
difficult circumstances. In this connection, the Committee notes that Mr.
Skates
- ----------------
(2) See Footnote No. 1 describing the stock options granted to Messrs.
Cunningham, DeMelle, Schwartz, West and Wilson on November 1, 1995, in the
OPTION GRANTS IN THE 1995 FISCAL YEAR TABLE, at Page 7 above.
20
<PAGE> 24
did not receive a bonus in the 1993 and 1994 fiscal years, and that, based on
available 1995 survey and 1994-1995 proxy data and the advice of the Company's
outside compensation consultant regarding such data, Mr. Skates' resulting
total cash compensation for the 1995 fiscal year was below the estimated market
median for CEOs of large computer companies.
At the Compensation Committee's recommendation, the Board decided, on
December 6, 1995, to provide Mr. Skates with a special cash bonus opportunity
for the 1996 fiscal year related to the Company's performance, as measured
against goals relating to earnings per share (with a maximum of 250% of base
salary) or, if greater, based on an increase in the Company's market
capitalization calculated on 30 days' average share price prior to the end of
the 1996 fiscal year over its market capitalization based on the average price
of the Company's common shares during the period October 2, 1995 through
December 6, 1995. The Board reserved the right to award other bonuses and to
adjust the bonus opportunity in the event of extraordinary corporate
transactions.
CEO STOCK OPTION AWARDS. After taking into account the recommendations of
the Compensation Committee, the Stock Option Committees decided in November,
1995 to award Mr. Skates a stock option for 75,000 shares. As disclosed in the
Company's December, 1994 Proxy Statement, the Stock Option Committees had
previously in November, 1994, awarded Mr. Skates a stock option for 225,000
shares. In each case, the options were priced at 100% of the market price of
the Company's stock at the time of grant. The Stock Option Committees based
these actions on a number of factors, including (i) their assessment of the
overall quality and value of Mr. Skates' efforts and the Company's progress
during the 1994 and 1995 fiscal years (as discussed above), and the Company's
cost reduction efforts, strategic initiatives and stock price performance
during such years; (ii) information regarding the median size and value of CEO
stock option grants among other large computer companies, based, for the 1994
grant, on 1994 survey and 1993-1994 proxy data for more than 20 large computer
companies and, for the 1995 grant, on 1995 survey and 1994-95 proxy data for
more than 25 large computer companies, and the advice of the Company's outside
compensation consultant regarding such data; (iii) the size and pricing of Mr.
Skates' prior stock option grants; (iv) the size and value of the vested
in-the-money stock options still held by Mr. Skates as of the end of the 1995
fiscal year; (v) the opinion of the Compensation Committee regarding the
competitiveness of Mr. Skates' base salary and total cash compensation; and
(vi) the size and terms of Mr. Skates' supplemental pension benefit
arrangements which were adopted by the Company's Board of Directors last year
(as described in the Company's 1994 Proxy Statement).
CONCLUSION
The Compensation Committee and Stock Option Committees are of the opinion
that the Company's senior management compensation programs strike an
appropriate risk/reward balance, and are consistent with the Committees' goals
of having programs that enable the Company to compete for high caliber
executives in a highly competitive and continually evolving sector, while also
emphasizing the importance of achieving annual and longer-term performance
goals.
<TABLE>
<CAPTION>
COMPENSATION COMMITTEE STOCK OPTION COMMITTEES
---------------------------- ----------------------------
<S> <C>
Frederick R. Adler Ferdinand Colloredo-Mansfeld
Ferdinand Colloredo-Mansfeld Donald H. Trautlein
W. Nicholas Thorndike Richard L. Tucker
Donald H. Trautlein
Richard L. Tucker
</TABLE>
21
<PAGE> 25
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
cumulative total stockholder return on the Company's Common Stock during the
five fiscal years ended September 30, 1995 with the cumulative total return on
the Standard & Poors 500 Index and the Standard & Poors Computer Systems Index.
The comparison assumes $100 was invested on September 30, 1990 in the
Company's Common Stock and in each of such indices and assumes reinvestment of
dividends, where applicable.
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
9/30/90 9/30/91 9/30/92 9/30/93 9/30/94 9/30/95
-------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Data General Corporation $100 $371 $210 $195 $190 $198
S&P 500 Index $100 $131 $146 $165 $171 $221
S&P Computer Systems Index $100 $110 $ 91 $ 61 $ 89 $128
- -------------------------------------------------------------------------------
</TABLE>
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP has been the independent accountants for the Company
and will serve in that capacity for the 1996 fiscal year. A representative of
Price Waterhouse LLP will be present at the Annual Meeting, will have an
opportunity to make a statement if he or she desires to do so, and will be
available to respond to appropriate questions from stockholders.
22
<PAGE> 26
STOCKHOLDER PROPOSALS
All stockholder proposals that are intended to be presented at the January,
1997 Annual Meeting of Stockholders of the Company must be received by the
Company no later than August 21, 1996, for inclusion in the Board of Directors'
proxy statement and form of proxy relating to that meeting.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the
meeting. However, if any other business properly comes before the meeting, it
is the intention of the persons named in the enclosed proxy to vote on such
matters in accordance with their best judgment.
The prompt return of your proxy will be appreciated and helpful in
obtaining the necessary vote. Therefore, whether or not you expect to attend
the meeting, please sign the proxy and return it in the enclosed envelope.
By Order of the Board of Directors
Carl E. Kaplan
Secretary
Dated: December 20, 1995
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WILL BE
SENT WITHOUT CHARGE TO ANY STOCKHOLDER REQUESTING IT IN WRITING FROM:
DATA GENERAL CORPORATION, ATTN: DAVID ROY, INVESTOR RELATIONS DEPARTMENT,
3400 COMPUTER DRIVE, WESTBORO, MASSACHUSETTS 01580.
23
<PAGE> 27
DATA GENERAL CORPORATION
P R O X Y
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD JANUARY 31, 1996
Ronald L. Skates and Frederick R. Adler, and each of them, as the true
and lawful attorneys, agents and proxies of the undersigned, with full power of
substitution, are hereby authorized to represent and to vote, as designated
below, all shares of Common Stock of Data General Corporation held of record by
the undersigned on December 4, 1995, at the Annual Meeting of Stockholders to
be held at 11:00 A.M. on January 31, 1996, at the Enterprise Room, Fifth Floor,
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts, and at any adjournments thereof. Any and all proxies heretofore
given are hereby revoked.
PLEASE MARK, DATE AND SIGN THE REVERSE SIDE AND MAIL PROMPTLY IN THE
ENCLOSED ENVELOPE.
(SEE REVERSE SIDE)
DATA GENERAL CORPORATION
P.O. BOX 11122
NEW YORK, N.Y. 19203-0122
<PAGE> 28
[LOGO] DATA GENERAL
DATA GENERAL CORPORATION
4400 Computer Drive, Westboro, MA 01580
Telephone (508) 366-8011
Dear Shareholder:
Attached below is your proxy card for the January 31, 1996 Annual
Meeting of Shareholders of Data General Corporation. Also
enclosed please find the Notice of Annual Meeting and Proxy
Statement.
YOUR VOTE IS IMPORTANT. UNLESS ENOUGH SHAREHOLDERS VOTE THEIR
PROXIES, THE COMPANY WILL NOT BE ABLE TO COMPLETE THE BUSINESS AT
ITS MEETING, WHICH WILL RESULT IN THE ADDITIONAL EXPENSE OF
FURTHER MAILINGS TO SHAREHOLDERS UNTIL ENOUGH VOTES ARE RECEIVED.
Whether or not you plan to attend the Shareholder's Meeting,
please immediately complete and sign the proxy card, and return it
in the envelope provided.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN.
Thank you.
PLEASE DETACH PROXY CARD HERE
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
UNLESS OTHERWISE SPECIFIED THIS PROXY WILL BE VOTED FOR PROPOSAL NO. 1.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL NO. 1.
<TABLE>
<S> <C> <C> <C>
1. Election of Directors FOR all nominees /X/ WITHHOLD AUTHORITY to vote /X/ *EXCEPTIONS /X/
listed below for all nominees listed below
Nominees: Frederick F. Adler, Ferdinand Colloredo-Mansfeld, John G. McElwee, Ronald L. Skates, W. Nicholas Thorndike, Donald H.
Trautlein and Richard L. Tucker.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the "Exceptions" box and write that nominee's name in
the space provided below.)
*Exceptions _______________________________________________________________________________________________________________________
Change of Address and
of Commitments Mark Here /X/
Discretionary authority is hereby granted with
respect to such other matters as may properly
come before the meeting. The signer acknowledges
receipt of the Notice of Annual Meeting of
Stockholders and the Proxy Statement furnished
therewith.
IMPORTANT: Please sign exactly as name appears
hereon. Each joint owner shall sign. Executors,
administrators, trustees, etc. should give full
title.
Dated: _______________________________________ 1995
___________________________________________________
Signature
___________________________________________________
Signature
Please Sign, Date and Return the Proxy Card Promptly. Vote MUST be indicated
(x) in Black or Blue ink. /X/
</TABLE>
