<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
COMDISCO, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] 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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
LOGO
6111 N. RIVER ROAD
ROSEMONT, ILLINOIS 60018
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 20, 1998
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders (the "Annual Meeting") of Comdisco, Inc.,
a Delaware corporation ("Comdisco"), will be held on Tuesday, January 20,
1998, at 3:00 p.m. (C.S.T.). The Annual Meeting will be convened at Comdisco's
corporate office, 6111 N. River Road, Rosemont, Illinois 60018, in the first
floor auditorium for the purpose of considering and acting upon the following:
1. The election of five Class III Directors of Comdisco for a term of three
years;
2. The ratification of a new Employee Stock Purchase Plan;
3. The amendment of Comdisco's Restated Certificate of Incorporation to
increase the number of authorized shares of Comdisco, Inc. common stock
by 550,000,000 shares;
4. The ratification of the appointment by the Board of Directors of KPMG
Peat Marwick LLP as independent auditors of Comdisco for the current
fiscal year; and
5. The transaction of such other business as may properly be brought before
the meeting or any adjournment thereof.
Only stockholders of record at the close of business on December 8, 1997
("Stockholders" and individually a "Stockholder"), are entitled to notice of
and to vote at the Annual Meeting. For at least ten days prior to the Annual
Meeting, a list of Stockholders entitled to vote at the Annual Meeting will be
available for examination by any Stockholder, for any purpose germane to the
Annual Meeting, during ordinary business hours at Comdisco's corporate office.
Stockholders are cordially invited to attend the Annual Meeting. However,
whether or not a Stockholder plans to attend, each Stockholder is urged to
vote by one of the following methods: (i) signing, dating and promptly
returning the enclosed proxy in the accompanying envelope or (ii) by using a
toll-free telephone number as described on the enclosed proxy card.
The Annual Report, Proxy Statement and Proxy are enclosed with this notice.
Dated and mailed at New York, New York, December 22, 1997.
By order of the Board of Directors
PHILIP A. HEWES
Secretary
IMPORTANT
Please complete, sign and return the enclosed Proxy immediately or use the
telephone voting procedure. A return envelope, which requires no postage
if mailed in the United States, is enclosed as well as the option to vote
by using a toll-free telephone number.
<PAGE>
LOGO
6111 NORTH RIVER ROAD
ROSEMONT, ILLINOIS 60018
PROXY STATEMENT
ANNUAL REPORT AND PROXY SOLICITATION INFORMATION
ANNUAL MEETING
This Proxy Statement, which is being mailed to Stockholders on or about
December 22, 1997, is furnished in connection with the solicitation by the
Board of Directors of Comdisco, Inc., a Delaware corporation ("Comdisco" or
the "Company"), of proxies for use at its Annual Meeting of Stockholders (the
"Annual Meeting") to be held on Tuesday, January 20, 1998, at 3:00 p.m.
(C.S.T.) at Comdisco's corporate office, 6111 N. River Road, Rosemont,
Illinois 60018, and at any adjournment of the Annual Meeting.
At the Annual Meeting, Stockholders will be asked to elect five Class III
Directors, to ratify a new Employee Stock Purchase Plan, to ratify a proposal
to amend Comdisco's Restated Certificate of Incorporation to increase the
number of authorized shares of Comdisco, Inc. common stock by 550,000,000
shares, and to ratify the appointment of independent auditors. Because many of
our Stockholders are unable to personally attend the Annual Meeting, the Board
of Directors solicits the enclosed proxy so that each Stockholder is given an
opportunity to vote. This proxy enables each Stockholder to vote on all
matters scheduled to come before the Annual Meeting. When a properly executed
proxy card is returned or a vote is received through Automated Telephone
Voting using the toll-free number listed on the proxy card, the Stockholder's
shares will be voted according to the Stockholder's directions. Stockholders
are urged to specify their choices by marking the appropriate boxes on the
enclosed proxy card or by voting by phone. If no choice has been specified,
the shares will be voted FOR the election of the Director-nominees listed
below, FOR the ratification of a new Employee Stock Purchase Plan, FOR
amending Comdisco's Restated Certificate of Incorporation to increase the
number of authorized shares of Comdisco, Inc. common stock by 550,000,000
shares, and FOR the ratification of the appointment of KPMG Peat Marwick LLP
as independent auditors.
Stockholders of record can vote their shares by calling the toll-free
telephone number on the proxy card or by mailing their signed proxy card. The
Automated Telephone Voting procedure is designed to authenticate Stockholders
by use of a Personal Identification Number. The procedure allows Stockholders
to vote their shares and to confirm that their instructions have been properly
recorded. The Company has been advised by counsel that the procedures which
have been put in place are consistent with the requirements of applicable law.
Specific instructions to be followed by any owner of record interested in
voting by telephone are set forth on the enclosed proxy card.
VOTING AND RECORD DATE
The Board of Directors knows of no other business that will be presented at
the Annual Meeting. If, however, other matters are properly presented, the
persons named in the enclosed proxy statement will vote the shares represented
thereby in accordance with their judgment on such matters. A proxy may be
revoked by giving the Secretary of Comdisco written notice of revocation at
any time before the voting of the shares represented by the proxy. A
Stockholder who attends the Annual Meeting may cancel any proxy by voting at
the Annual Meeting. Only holders of record of Common Stock at the close of
business on December 8, 1997 are entitled to notice of and to vote at the
Annual Meeting.
COST OF PROXY SOLICITATION
The cost of soliciting proxies will be borne by Comdisco. In addition to
solicitation by mail, proxies may be solicited by Directors, officers and
employees of Comdisco by personal interview, telephone or telegram.
<PAGE>
Comdisco may request brokerage houses and other custodians, nominees and
fiduciaries to forward proxy soliciting material to the beneficial owners of
stock held of record by such persons. Comdisco will reimburse its transfer
agent for charges and expenses incurred in connection with the distribution of
proxy material and brokers or other persons holding stock in their names or in
the names of their nominees for out-of-pocket expenses in forwarding proxy
material to the beneficial owners. Two companies have been retained to assist
in the solicitation of the proxies: (i) ChaseMellon Shareholder Services, New
York, New York, for a fee of $5,500.00, plus out-of-pocket expenses, and (ii)
Proxy Services Corporation (a telephone proxy solicitation services company)
for a fee of $750.00, plus out of pocket expenses.
QUORUM AND REQUIRED VOTE
The presence, in person or by proxy, of the holders of a majority of the
issued and outstanding shares of common stock of the Company (the "Common
Stock") entitled to vote (exclusive of shares held by or for the account of
the Company) is necessary to constitute a quorum at the Annual Meeting.
Abstentions and broker non-votes will be counted for purposes of determining
whether a quorum is present. The election of Directors will be decided by a
plurality of the votes represented in person or by proxy at the Annual
Meeting. The affirmative vote of the holders of a majority of the shares of
Common Stock present in person or by proxy at the Annual Meeting is required
for the approval of each of the other matters to be presented.
STOCKHOLDER COMMUNICATIONS
Comdisco information can be received in the following manner:
1) To have information, such as the Company's latest earnings release, Form
10-K, Form 10-Q or Annual Report mailed to you, please contact Comdisco
Investor Relations at (847) 518-5853 or via the internet
[email protected]
2) To view Comdisco's web site on the Internet, use Comdisco's website
address: http://www.comdisco.com. Comdisco's web site allows you to view
information concerning Comdisco, including press releases and the annual
report.
If you would like to write to Comdisco, please send your correspondence to
the following address: Comdisco, Inc. 6111 North River Road, Rosemont,
Illinois 60018, Attention: Investor Relations.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
As of December 8, 1997, the Company had issued and outstanding [ ]
shares of Common Stock. Each share of Common Stock entitles the Stockholder to
one vote upon each matter to be voted upon.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table lists all persons known to be the beneficial owner of
more than 5% of Comdisco's outstanding Common Stock as of December 1, 1997.
<TABLE>
<CAPTION>
NUMBER PERCENT OF
NAME AND ADDRESS OF SHARES* CLASS
---------------- ---------- ----------
<S> <C> <C>
Fidelity Management and Research Corporation........ 7,750,000 10%
1 Federal Street
Boston, MA 02110-2003
Pontikes Family Trusts**............................ 3,744,312 5%
6111 N. River Road
Rosemont, IL 60018
Pontikes Trust**.................................... 9,337,328 13%
6111 N. River Road
Rosemont, IL 60018
Ponchil Limited Partnership**....................... 4,909,253 7%
6111 N. River Road
Rosemont, IL 60018
</TABLE>
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* Number of shares reported throughout this proxy reflects the 3 for 2
stock split of Common Stock authorized by the Board of Directors on May
6, 1997, and distributed to stockholders of record on June 16, 1997.
** See footnote (c) in the section entitled Security Ownership of Directors
and Management.
2
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth certain information regarding the stock
ownership of each Director and nominee for directorship, the Chief Executive
Officer and the next four most highly compensated Executive Officers, and all
Directors and Executive Officers as a group.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED % OF
NAME ON DECEMBER 1, 1997* CLASS
---- -------------------- -----
<S> <C> <C>
Alan J. Andreini............................ 294,649(a,b) (d)
Robert A. Bardagy........................... 264,024(b) (d)
C. Keith Hartley............................ 86,202(a,b) (d)
Philip A. Hewes............................. 149,632(a,b) (d)
Rick Kash................................... 97,226(b) (d)
Harry M. Jansen Kraemer, Jr................. -0-
Carolyn L. Murphy........................... -0-
Thomas H. Patrick........................... 96,862(a,b) (d)
Nicholas K. Pontikes........................ 18,407,775(b,c) 25%
William N. Pontikes......................... 1,087,202(a,b) (d)
Jack Slevin................................. 853,266(a,b) (d)
John J. Vosicky............................. 384,819(a,b) (d)
All Directors and Executive Officers as a
group, including four officers not named
above...................................... 21,721,657(a,b,c) 29%
</TABLE>
- --------
* Number of shares reported throughout this proxy reflects the 3 for 2
stock split of Common Stock.
(a) Includes shares held by or for the benefit of the immediate families of
the above individuals and for which the named Stockholders disclaim any
beneficial interest, as follows: Mr. W. Pontikes, 227,186 shares; Mr.
Andreini, 955 shares; Mr. Slevin, 87,250 shares; Mr. Vosicky, 6,700
shares; and Directors and Executive Officers as a group, 322,091 shares.
Also includes other shares held by or for the benefit of the immediate
families of the above individuals, over which such individuals hold no
voting or dispositive powers and for which the named Stockholders disclaim
any beneficial interest, as follows: Mr. W. Pontikes, 74,742 shares; Mr.
Hartley, 235 shares; Mr. Hewes, 3,193 shares; Mr. Patrick, 7,964 shares;
Mr. Vosicky, 6,513 shares; and Directors and Executive Officers as a group,
92,647 shares.
(b) Includes shares obtainable upon exercise of stock options which are or
become exercisable prior to January 30, 1998 as follows: Mr. N. Pontikes,
84,077 shares; Mr. W. Pontikes, 104,311 shares; Mr. Andreini, 202,844
shares; Mr. Bardagy, 122,504 shares; Mr. Hartley, 49,612 shares; Mr.
Hewes, 104,111 shares; Mr. Kash, 49,612 shares; Mr. Patrick, 49,612
shares; Mr. Slevin, 530,878 shares; Mr. Vosicky, 169,259 shares; and
Directors and Executive Officers as a group, 1,888,555 shares. The
percentages set forth in the above table give effect to the exercise of
these options.
(c) Includes shares over which Nicholas Pontikes exercises sole or shared
voting and dispositive powers but with respect to which he disclaims any
beneficial interest (with the exception of a percentage of the shares
owned by Ponfam Corp. and Ponchil Limited Partnership equal to his
proportionate ownership interest in those entities), which shares are held
of record as follows: Pontikes Trust, 9,337,328 shares; Pontikes Nonexempt
Marital Trust, 3,380,964 shares; Pontikes Exempt Marital Trust, 134,077
shares; Ponchil Limited Partnership, 4,909,253 shares; Ponfam Corp.,
144,031 shares; Pontikes Family Foundation, 112,015 shares; and various
family trusts, 229,271 shares.
(d) Percentage of shares beneficially owned does not exceed 1% of the class
outstanding.
3
<PAGE>
ELECTION OF DIRECTORS
Pursuant to Comdisco's Restated Certificate of Incorporation, the Board of
Directors is divided into three classes, with each class as equal in number as
reasonably possible. Each year the stockholders elect the members of one of
the three classes to a three year term of office. There are twelve Directors
with Class I having three members, Class II having four members and Class III
having five members.
The term of office of each of the five Class III Directors will expire at
the 1998 Annual Meeting. The term of office for each of the Class III nominees
to be elected at the 1998 Annual Meeting will expire at the 2001 Annual
Meeting, the term of office for each of the Class I Directors will expire at
the 1999 Annual Meeting, and the term of office of each of the Class II
Directors will expire at the 2000 Annual Meeting, or in each case when their
respective successors have been duly elected and qualified.
NOMINEES FOR TERMS EXPIRING IN 1998
(CLASS III DIRECTORS)
ALAN J. ANDREINI (Age 51--Director since 1992)
Mr. Andreini was Executive Vice President from July, 1994 through April,
1997 and Senior Vice President from July, 1986 to July, 1994. Mr. Andreini
resigned as Executive Vice President effective May 1, 1997 and currently
serves as President, Chief Operating Officer and Director of InterWorld
Corporation. Mr. Andreini is also a Director of Hugoton Energy Corporation,
Milwaukee Land Company and Youth Services International, Inc.
ROBERT A. BARDAGY (Age 58--Director since 1983)
Mr. Bardagy was Executive Vice President from July, 1986 to April, 1996. Mr.
Bardagy retired from his position as Executive Vice President effective April
30, 1996 and currently serves as a consultant to the Company.
PHILIP A. HEWES (Age 45--Director since 1992)
Senior Vice President and Secretary(a)
Mr. Hewes has been Senior Vice President since January, 1992 and Secretary
since October, 1991.
THOMAS H. PATRICK (Age 54--Director since 1971)
Mr. Patrick has been Executive Vice President, Member of the Office of the
Chairman of Merrill Lynch & Co., Inc. ("Merrill Lynch") since May, 1993 and
was Executive Vice President, Equity Markets Group from June, 1992 to May,
1993. Mr. Patrick is also a director of Baldwin & Lyons, Inc. and AMLI Realty
Co.
NICHOLAS K. PONTIKES (Age 33--Director since 1993)
Vice President and Chief Operating Officer(a)
Mr. Pontikes has been Chief Operating Officer of Comdisco since November,
1997. He was Executive Vice President of Comdisco from July, 1994 through
October, 1997 and Vice President and President of the Business Continuity
Services Division from September, 1993 to July, 1994. He was Vice President--
Business Controls of Business Continuity Services from January, 1993 to
September, 1993 and was Director--International Marketing for the Comdisco
Electronics Group from July, 1992 to January, 1993. Mr. Pontikes is the nephew
of William N. Pontikes.
4
<PAGE>
DIRECTORS CONTINUING IN OFFICE UNTIL 1999
(CLASS I DIRECTORS)
HARRY M. JANSEN KRAEMER, JR. (b) (Age 42--Director since 1997)
Mr. Kraemer has been President of Baxter International, Inc. ("Baxter")
since April, 1997. Prior to that, he was Senior Vice President from 1993
through May, 1997 and Chief Financial Officer of Baxter and Vice President of
Finance and Operations for a subsidiary of Baxter. Mr. Kraemer also serves as
a director of MedPartners, Inc. and Science Applications International
Corporation.
CAROLYN L. MURPHY (b) (Age 52--Director since 1997)
Ms. Murphy has been President, Commercial Operations for CNA Insurance
Companies since May, 1995, and was Senior Vice President, Field Operations
from January, 1984 to May, 1995. After 20 years of various executive
positions, she will retire from CNA effective February 1, 1998.
JOHN J. VOSICKY (Age 49--Director since 1986)
Executive Vice President and Chief Financial Officer(a)
Mr. Vosicky has been Executive Vice President and Chief Financial Officer of
Comdisco since July, 1994. He was Senior Vice President and Chief Financial
Officer from November, 1985 to July, 1994. Mr. Vosicky serves as director of
Racing Champions Corporation.
DIRECTORS CONTINUING IN OFFICE UNTIL 2000
(CLASS II DIRECTORS)
C. KEITH HARTLEY (Age 55--Director since 1978)
Mr. Hartley has been Managing Partner of Forum Capital Markets L.P. since
August 1995. From May, 1991 to August, 1995 he was an independent financial
consultant. Mr. Hartley is also a director of Phoenix Shannon p.l.c., Swisher
International Group Inc. and U.S. Diagnostics, Inc.
RICK KASH (Age 55--Director since 1987)
Mr. Kash has been President and Managing Partner of The Cambridge Group,
management consultants, since 1975. Mr. Kash is also a director of U.S. Auto
Glass.
WILLIAM N. PONTIKES (Age 56--Director since 1977)
Executive Vice President(a)
Mr. Pontikes has been Executive Vice President since October, 1989. Mr.
Pontikes is the uncle of Nicholas K. Pontikes.
JACK SLEVIN (Age 61--Director since 1979)
Chairman of the Board, Chief Executive Officer and President(a)
Mr. Slevin has been Chairman of the Board since January, 1996 and has been
President and Chief Executive Officer since July, 1994. He was Interim Chief
Operating Officer from December, 1993 to July, 1994 and Executive Vice
President from April, 1992 to July, 1994.
(a) These individuals, along with Thomas Flohr, David J. Keenan, John C.
Kenning, and Martin C. Walsh are the current executive officers of
Comdisco. Mr. Flohr, age 37, has been Senior Vice President since
April, 1995. Mr. Keenan, age 49, has been Senior Vice President and
Controller since January, 1985. Mr. Kenning, age 36, has been National
Sales Manager and Senior Vice President since August, 1995. He was Vice
President/Marketing from April, 1995 to August, 1995, and Regional
Marketing Manager
5
<PAGE>
from October, 1986 to August, 1995. Mr. Walsh, age 45, has been
Executive Vice President since August, 1996. He was Senior Vice
President from July, 1987 to August, 1996 and President Large Systems
Division from October, 1995 to August, 1996. Mr. Walsh has resigned from
Comdisco, effective December 31, 1997.
(b) Harry M. Jansen Kraemer, Jr. and Carolyn L. Murphy were each appointed
by the Board as Class I Directors on January 21, 1997 to fill the
vacancies of the resignations of Basil R. Twist, Jr. and Edward H.
Fiedler, Jr.
GOVERNANCE OF THE COMPANY
During the last fiscal year, the Board of Directors held six meetings (two
of which were telephonic). All incumbent directors, including those standing
for re-election, attended at least seventy-five percent of the meetings of the
Board of Directors and of the committees on which they served (with the
exception of Harry M. Jansen Kraemer, Jr. and Carolyn L. Murphy, who were not
appointed as Directors until January 21, 1997).
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established Executive, Audit, Stock Option and
Compensation Committees as follows:
THE EXECUTIVE COMMITTEE, which acts on behalf of the Board of Directors in
connection with the regular conduct of Comdisco's business, is composed of
Messrs. N. Pontikes, W. Pontikes, Slevin and Vosicky. It has been the practice
of the Executive Committee to act by unanimous consent without a meeting.
THE AUDIT COMMITTEE is composed of Messrs. Hartley, Kash and Patrick. The
Audit Committee, which met once during the last fiscal year, has the general
responsibility for establishing and maintaining communications with Comdisco's
internal and independent accountants, reviewing the methods used and audits
made by the auditors in connection with Comdisco's published financial
statements, and reviewing with the auditors Comdisco's financial and operating
controls.
THE STOCK OPTION COMMITTEE consists of Messrs. Hartley and Kash each of whom
is a "non-employee director" as defined in the Securities Exchange Act of 1934
and "outside director" as defined in the U.S. Internal Revenue Code of 1986,
as amended. The committee makes the determination as to options awarded to the
Executive Officers and makes recommendations to the Board of Directors as to
all other officers and employees with regard to the granting of stock options
and the administration of stock option plans. The Stock Option Committee has
the practice of taking formal actions by unanimous consent without a meeting.
THE COMPENSATION COMMITTEE consists of Messrs. Hartley and Kash. The
Compensation Committee has the general responsibility for determining the
compensation arrangements of Executive Officers (including the compensation
arrangements for Comdisco's President and Chairman of the Board, Mr. Jack
Slevin), and evaluating the compensation arrangements for all other officers
and employees. The Compensation Committee met once during the last fiscal
year.
The Board of Directors has no nominating committee.
COMPENSATION OF DIRECTORS
Non-employee Directors are paid a quarterly retainer of $6,000, a Board
meeting fee of $2,000 plus expenses, and a Committee meeting fee of $2,000
plus expenses if the Committee meeting is on a date other than that scheduled
for a full Board of Directors meeting. The non-employee Directors may elect,
in advance, to receive a restricted stock award or a stock option in lieu of
the cash compensation referred to in the preceding
6
<PAGE>
sentence. The restricted stock award would be issued under the 1992 or 1995
Comdisco, Inc. Long-Term Stock Ownership Incentive Plans and would be based on
the following formula: Number of Shares of Restricted Stock = (Retainer and
Board Meeting Fees x 1.5) divided by the Closing Price of the Common Stock on
the first day of the ensuing fiscal year. The stock options would be issued
under the Comdisco, Inc. Outside Director Deferred Fee Option Plan and would
be based on the following formula: Number of Options = (Retainer and Board
Meeting Fees x 1.5) divided (Closing Price of the Common Stock on the last day
of the fiscal year--$1.00). The options would have a ten year term, would vest
after six months and would have an exercise price of $1.00. On January 21,
1997, Messrs. Fiedler, Hartley, Kash, Patrick, and Twist each received 1,725
shares at $1.00 per share (or 2,587 shares at $.67 post split) under the
Outside Director Deferred Fee Option Plan. In addition to the foregoing, in
October of 1997, each non-employee Director was granted an option to acquire
4,725 shares of Common Stock at a price equal to the closing price on the date
of grant ($31.75) pursuant to Comdisco's Non-Employee Directors' Stock Option
Plan. These options also vest in six months from the date granted and expire
10 years from the date of grant.
EMPLOYMENT AND CONSULTING AGREEMENTS
The Company entered into an agreement with Robert Bardagy relating to
compensation commencing June 30, 1996, the effective date of his retirement
from the position of Executive Vice President of the Company. The agreement
provides for a minimum eighteen-month term during which Mr. Bardagy, in
addition to his service as Director, remains available to consult with the
Company. Under the terms of the agreement, Mr. Bardagy receives compensation
(payable in bi-monthly installments) equal to the average of his total
compensation paid in the three fiscal years prior to his retirement. The
Company will continue to provide its customary insurance benefits (other than
disability and accidental death plans) to Mr. Bardagy through his 65th
birthday, provided that he pays the regular employee portion of the cost of
these benefits. As long as Mr. Bardagy provides services under this agreement,
he will remain eligible to retain stock options previously granted in
accordance with the terms of the relevant grant agreements and stock option
plans. Amounts payable, if any, under previously awarded senior management
incentive plans will be distributed in accordance with the terms of those
plans.
The Company entered into an agreement with Alan Andreini relating to
compensation commencing May 1, 1997, the effective date of his resignation
from the position of Executive Vice President of the Company. The agreement
provides for a minimum twelve-month term during which Mr. Andreini, in
addition to his service as Director, remains available to consult with the
Company. Under the terms of the agreement, Mr. Andreini's base salary ended on
his resignation date but he was eligible to receive 7/12ths of his annual cash
incentive bonus payment that was payable based upon the Company attaining
certain pre-tax earnings objectives for the fiscal year ended September 30,
1997. All performance unit awards that were previously granted to Mr. Andreini
were terminated, but Mr. Andreini did receive a payment of $448,000 in lieu of
certain performance units that would have been payable for the three year
performance period ending September 30, 1997. The Company paid Mr. Andreini
$1,163,516 on June 1, 1997. This amount represented the spread between the
option exercise price and the market price of certain options that were
cancelled by the Company. As long as Mr. Andreini remains a Director of the
Company, he will remain eligible to retain certain stock options (as set forth
in the Aggregated Option Exercises Table set forth below) previously granted
in accordance with the terms of the relevant grant agreements and stock option
plans.
Mr. Slevin's employment agreement is discussed in the section entitled
Compensation Committee Report.
BUSINESS RELATIONSHIPS
The Company and its subsidiaries have transactions in the ordinary course of
business with other corporations of which certain Comdisco directors are
executive officers. The Company does not consider the amounts involved in such
transactions to be material in relation to its business and believes that such
amounts are not material in relation to the business of such other
corporations or the interests of the directors involved.
7
<PAGE>
Mr. Patrick is an Executive Vice President of Merrill Lynch. In fiscal 1997,
Merrill Lynch acted as one of Comdisco's agents in connection with the sale of
Comdisco's medium term notes and served as one of the underwriters of
Comdisco's senior notes. Merrill Lynch also acted as a dealer in the sale of
Comdisco's domestic commercial paper. In addition, Merrill Lynch Group
Employee Services, a division of Merrill Lynch, has agreed to perform various
services in connection with the implementation and ongoing administration of
Comdisco's U.S. and International Employee Stock Purchase Plans. Once
implemented, Merrill Lynch will execute trades and maintain accounts on behalf
of the Comdisco employee participants.
As of May 1, 1997, Mr. Alan Andreini became President, Chief Operating
Officer and Director of InterWorld Corporation. In January, 1997, Comdisco
issued a $1,500,000 Letter of Credit on behalf of InterWorld. The Letter of
Credit has a one year term with an option to extend for a period of one year
ending January, 1998. During fiscal 1997, Comdisco leased computer related
equipment to InterWorld for an aggregate of $54,511 from April through June,
$112,890 from July through September. In September of 1997, Comdisco made an
investment of $1,000,000 in InterWorld preferred stock.
TRANSACTIONS WITH MANAGEMENT
During fiscal 1995, Comdisco made personal loans in an aggregate amount of
$704,405.00 to Mr. Slevin. The loans were evidenced by a demand note bearing
interest at the LIBOR rate plus 3/4% and secured by the mortgage of his
personal residence. In April of 1997, Mr. Slevin retired the loans by paying
Comdisco the then outstanding balance of $694,573.37, plus accrued interest to
the date of payment.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Comdisco's
Officers and Directors, and persons who own more than ten percent of a
registered class of Comdisco's equity securities, to file reports of ownership
and changes in ownership with the Securities and Exchange Commission ("SEC")
and the New York Stock Exchange. Officers, Directors and greater than ten
percent stockholders are required by SEC regulation to furnish Comdisco with
copies of all Section 16(a) forms filed.
Based solely on the Company's review of the copies of such forms received by
it, or on written representations from certain reporting persons that no Forms
5 were required for those persons during fiscal year 1997, all filing
requirements applicable to its Directors, Officers and greater than ten
percent beneficial owners were complied with except as follows: Messrs.
Vosicky, Flohr and W. Pontikes each did not timely file a monthly report of
one transaction. However, Messrs. Vosicky, Flohr and W. Pontikes did report
these transaction on Form 5 as soon as the omissions were discovered.
8
<PAGE>
EXECUTIVE COMPENSATION AND BENEFITS
SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to
compensation for services in all capacities paid by Comdisco and its
subsidiaries for the past three years, to or on behalf of (i) Jack Slevin,
Chairman, Chief Executive Officer and President, (ii) each of the four other
most highly compensated Executive Officers of Comdisco serving on September
30, 1997, and (iii) Alan Andreini, who was not serving as an executive officer
on the last day of the fiscal year.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------ --------------------------- ---------
RESTRICTED SECURITIES LONG-TERM ALL OTHER
NAME AND OTHER ANNUAL STOCK UNDERLYING INCENTIVE COMPENSATION
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS (SHARES) PAYOUTS (A)
- ------------------------ ---- -------- -------- ------------ ---------- ---------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jack Slevin 1997 -0- 29,425
Chairman, President 1996 $500,000 $580,000 -0- -0- 490,752 $420,000 $ 9,425
and CEO 1995 400,000 401,000 -0- -0- 199,469 6,074
Nicholas K. Pontikes 1997 -0- 13,350
Vice President & 1996 230,000 230,000 -0- -0- 66,801 201,000 9,425
Chief Operating Officer 1995 230,000 230,000 -0- -0- 102,462 6,074
William N. Pontikes 1997 -0- 13,350
Executive Vice President 1996 220,000 220,000 -0- -0- 76,155 300,000 9,425
1995 225,000 230,000 -0- -0- 131,796 6,074
John J. Vosicky 1997 -0- 13,350
Executive Vice President 1996 240,000 200,000 -0- -0- 42,444 225,000 9,425
& Chief Financial Offi-
cer 1995 235,000 235,000 -0- -0- 80,047 6,074
Alan J. Andreini 1997 -0- -0-
Executive Vice President 1996 200,000 200,000 -0- -0- 94,867 9,425
through April 30, 1997 1995 200,000 200,000 -0- -0- 317,858 43,392(b)
</TABLE>
- --------
* Number of shares reported throughout this proxy reflects the 3 for 2
stock split of Common Stock.
(a) Amounts of All Other Compensation are amounts contributed by Comdisco
under Comdisco's Profit Sharing and Employee Stock Ownership Plans for the
persons named above.
(b) Includes $6,074 in Comdisco contributions to retirement plans as outlined
in footnote (a) above and $37,318 paid pursuant to the terms of the
Comdisco Financial Services, Inc. Residual Incentive Compensation Plan.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to stock
option grants made to named executive officers during the fiscal year ended
September 30, 1997.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS* TERM
------------------------------------------------ ------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 0% 5% 10%
- ---- ------------ ------------ ----------- ---------- ---- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Jack Sle-
vin..... 29,425 24 $32.6875 09/30/07 $-0- $604,890 $1,532.909
Nicholas
K.
Pontikes. 13,350 11 32.6875 09/30/07 -0- 274,436 695,474
William
N.
Pontikes. 13,350 11 32.6875 09/30/07 -0- 274,436 695,474
John J.
Vosicky. 13,350 11 32.6875 09/30/07 -0- 274,436 695,474
Alan J.
Andreini. -0- -0- -0- -0- -0- -0- -0-
</TABLE>
- --------
* Number of shares reported throughout this proxy reflects the 3 for 2
stock split of Common Stock
9
<PAGE>
The amounts under the columns labeled "5%" and "10%" are included by the
Company pursuant to certain rules promulgated by the SEC and are not intended
to forecast future appreciation, if any, in the price of the Common Stock.
Such amounts are based on the assumption that the named persons hold the
options granted for their full term. The actual value of the options will vary
in accordance with the market price of the Common Stock. The column headed
"0%" is included to demonstrate that the options were granted at fair market
value and optionees will not recognize any gain without an increase in the
stock price, which increase benefits all stockholders commensurately.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END VALUE
The following table sets forth information with respect to the named
executive officers in the Summary Compensation Table concerning the exercise
of options* during the last fiscal year and unexercised options held as of the
end of the last fiscal year.
<TABLE>
<CAPTION>
TOTAL NUMBER OF
SHARES UNDERLYING TOTAL VALUE OF
UNEXERCISED OPTIONS UNEXERCISED,
NUMBER OF HELD AT IN-THE-MONEY OPTIONS
SHARES SEPTEMBER 30, 1997 HELD AT SEPTEMBER 30, 1997**
ACQUIRED VALUE ------------------------- ------------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Jack Slevin............. 355 $ 4,299 523,194 558,463 $ 11,238,189 $ 9,935,415
Nicholas K. Pontikes.... 0 0 80,455 158,408 1,566,980 3,021,222
William N. Pontikes..... 0 0 98,823 122,478 1,947,406 1,928,538
John J. Vosicky......... 23,625 299,801 165,197 74,145 3,838,444 1,082,200
Alan J. Andreini........ 47,248 568,157 180,344 220,197 3,778,070 4,372,952
</TABLE>
- --------
* Number of shares reported throughout this proxy reflects the 3 for 2
stock split of Common Stock
**Based on the closing price of the Common Stock, $32.6875, on September 30,
1997.
LONG TERM INCENTIVE PLAN ("LTIP") AWARDS
The following table sets forth information with respect to the grants of
Performance Unit Awards under the Comdisco, Inc. 1992 Long-Term Stock
Ownership Incentive Plan to the named executive officers during the fiscal
year ended September 30, 1997. The target performance objective is that
Comdisco's Total Shareholder Return, the sum of the stock price appreciation
plus dividends (reinvested), be ranked at or above the sixtieth percentile of
the Total Shareholder Return of all companies in the S&P 500 for the period
running from October 2, 1996 through September 30, 1999. The minimum
performance objective is a fiftieth percentile ranking. If the actual ranking
is less than the fiftieth percentile, no compensation will be paid under these
awards.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER
NUMBER PERFORMANCE OR OTHER NON-STOCK PRICE-BASED PLANS
OF PERIOD UNTIL MATURATION -----------------------------
NAME UNITS OR PAYMENT THRESHOLD TARGET MAXIMUM
- ---- ------ ----------------------- --------- -------- ----------
<S> <C> <C> <C> <C> <C>
Jack Slevin............. 366 September 30, 1999 $183,000 $366,000 $1,098,000
Nicholas K. Pontikes.... 167 September 30, 1999 83,500 167,000 501,000
William N. Pontikes..... 167 September 30, 1999 83,500 167,000 501,000
John J. Vosicky......... 167 September 30, 1999 83,500 167,000 501,000
Alan J. Andreini........ 167 September 30, 1999 83,500 167,000 501,000
</TABLE>
COMPENSATION COMMITTEE REPORT
ROLE OF THE COMMITTEE
In 1993, the Board of Directors defined the scope of authority that would be
delegated to the non-employee Directors who serve as members of the
Compensation Committee. Overall direction was given to this Committee to
review and approve the Company's compensation policies to ensure that
Executive Officers are rewarded appropriately for their contributions to
Comdisco's growth and profitability and to ensure that compensation policies
support Comdisco's business objectives, organization structure and stockholder
interests. Specific direction was given to determine the compensation of the
Chief Executive Officer and to review and approve the compensation of the
executive officers of the Company.
10
<PAGE>
CONTINUING COMPENSATION STRATEGY
The Compensation Committee has continued to evaluate Comdisco's compensation
plans in accordance with the Committee's objectives of linking compensation to
profit measures and increasing stockholder value. The senior management team
continues to be compensated in the following manner as originally suggested by
outside compensation consultants in 1994. The total compensation for the Chief
Executive Officer and certain Executive Officers is comprised of the following
components: (i) base salary, (ii) annual incentive (cash and stock options)
based on Company pre-tax earnings objectives, and (iii) long term performance
units based on Total Shareholder Return objectives. Each of the foregoing
components constituted approximately one-third of the executive's total
compensation. Thus, approximately two-thirds of the executive's compensation
is subject to both the Company's pre-tax earnings performance and stockholder
returns. The Committee has been extremely pleased with the fact that the
Company has exceeded the maximum goal by placing above the 90th percentile in
Total Shareholder Return for the three year Performance Periods ended
September 30, 1996 and 1997. This is a clear reflection that senior management
has been able to manage the Company in a manner that directly correlates with
stockholder interests.
CHIEF EXECUTIVE OFFICER COMPENSATION
1997 FISCAL YEAR. Jack Slevin's compensation package for fiscal 1997
reflects the Committee's strategy of placing a majority of the compensation at
risk subject to the attainment of pre-tax earnings goals and longer-term Total
Shareholder Return goals. The Company had an employment agreement with Mr.
Slevin which provided for a base salary of $600,000 for fiscal 1997. Annual
cash incentive compensation for Mr. Slevin was equal to 1% of Comdisco's 1997
fiscal year pre-tax earnings between $150 million and $200 million and 2% of
pre-tax earnings in excess of $200 million. The amount of annual cash
incentive payments can be found in the Summary Compensation Table. Mr. Slevin
also earned an annual stock option award which was based upon the attainment
of pre-tax earnings objectives for fiscal 1997. Pursuant to this award, Mr.
Slevin received 29,425 option shares at $32.6875 (the closing price of Common
Stock on September 30, 1997). Mr. Slevin was granted 366 Performance Units
under the Comdisco, Inc. 1995 Long-Term Stock Ownership Incentive Plan. The
performance period and performance objectives are set forth in the LTIP Awards
section above. To further align Mr. Slevin's interests with those of the
Company's stockholders, the Committee offered Mr. Slevin the right to forego
cash compensation in exchange for stock options. Under this "Cash-to-Option
Alternative", Mr. Slevin elected to forego $150,000 in cash compensation. In
return, Mr. Slevin received a stock option to acquire 46,777 shares at the
closing price ($19.25) of Comdisco's Common Stock on the date of such
election.
1998 FISCAL YEAR. In continuance of its past practices, the Committee
increased the pre-tax earnings targets for 1998 such that Mr. Slevin's annual
cash incentive compensation will be equal to 1% of Comdisco's 1998 fiscal year
pre-tax earnings between $190 million and $230 million and 2% of pre-tax
earnings in excess of $230 million. Mr. Slevin will also earn an annual stock
option award of 29,585 options if the Company attains certain pre-tax earnings
objectives for fiscal 1998. The exercise price of these options, if earned,
will be at the closing price of Comdisco's stock on September 30, 1998. For
the long term perspective, Mr. Slevin was granted 366 Performance Units under
the Comdisco, Inc. 1995 Long Term Stock Ownership Incentive Plan. The
performance period and performance objectives are set forth in the LTIP Awards
section above. The Committee again offered Mr. Slevin the right to forego cash
compensation to be earned in 1998 in exchange for stock options. Under this
"Cash-to-Option Alternative", Mr. Slevin elected to forego $150,000 in cash
compensation. In return, Mr. Slevin received a stock option to acquire 27,525
shares at the closing price ($31.75) of Comdisco's Common Stock on the date of
such election.
1997 OTHER EXECUTIVE OFFICER COMPENSATION
During fiscal year 1997, the Company entered into incentive compensation
agreements certain of its executive officers. The agreements included the
following elements which are similar to the components discussed above for Mr.
Slevin: (i) base salary, (ii) annual incentive (cash and stock options) based
on Company
11
<PAGE>
pre-tax earnings objectives and (iii) long term performance units based on
Total Shareholder Return objectives. The executive officers also participated
in the "Cash-to-Option Alternative" under which they had the right to forego
cash compensation in exchange for stock options.
This report has been provided by C. Keith Hartley and Rick Kash, the members
of the Compensation Committee.
COMPANY STOCK PRICE PERFORMANCE GRAPH
The following performance graph compares the performance of Comdisco's
Common Stock for the last five fiscal years (October 1, 1992--September 30,
1997) to that of the Standard & Poor's 500 Stock Index and the Standard &
Poor's Midcap 400 Index. The S&P Midcap 400 Index, in which Comdisco is
included, represents a comparison to companies with similar market
capitalization. Comdisco's most similar peers are divisions or subsidiaries of
large publicly-held companies. At this time, therefore, the Company feels that
the most appropriate comparison is to publicly-held companies with similar
market capitalizations.
LOGO
(1) Assumes $100 invested on September 30, 1992 in Comdisco Common Stock, S&P
500 Index and S&P Midcap 400 Index. Each of the three measures of
cumulative total return assumes reinvestment of dividends.
(2) The S&P Midcap Index consists of the issuers with market capitalizations
of $200 million to $5 billion.
In accordance with rules promulgated by the Securities and Exchange
Commission, the information included under captions "Compensation Committee
Report" and "Performance Graph" will not be deemed to be filed or to be proxy
soliciting material or incorporated by reference in any prior or future
filings by the Company under the Securities Act of 1933 or the Securities
Exchange Act of 1934.
12
<PAGE>
1998 PROXY PROPOSALS
PROPOSAL 1: ELECTION OF DIRECTORS
Five Directors are to be elected at the Annual Meeting for three year terms
expiring at the 2001 Annual Meeting: A. Andreini, R. Bardagy, P. Hewes, T.
Patrick and N. Pontikes, all of whom are presently Directors of the Company
and have been nominated by the Board of Directors for election at this Annual
Meeting. The accompanying proxy will be voted on behalf of the Stockholders
for the Board of Directors' nominees, except where the authority to vote is
withheld.
The nominees for Director will be elected if they receive the affirmative
vote of a plurality of all votes entitled to be cast at the Annual Meeting.
The Board of Directors has no reason to believe that any nominee will be
unable to serve if elected. If any nominee becomes unavailable for election,
those shares voted for such nominee will be voted for the election of a
substitute nominee selected by the persons named in the enclosed proxy.
RECOMMENDATION: The Board of Directors favors a vote "FOR" each of the
nominees.
PROPOSAL 2: 1998 EMPLOYEE STOCK PURCHASE PLAN
The Comdisco Employee Stock Purchase Plan (the "Plan") is intended to be a
successor to the Comdisco 1982 Employee Stock Purchase Plan which shall
terminate on December 31, 1997.
On November 4, 1997, the Board of Directors adopted the Plan and a
substantially similar plan for non-U.S. employees (the "International Plan",
and collectively with the Plan, the "Plans"). The Effective Date of the Plan
is April 1, 1998, subject to the approval of the Stockholders. The Plans will
allow, in the aggregate, up to 3% of the shares of the Common Stock to be
purchased by employees who are not: (i) subject to the provisions of Section
16(b) of the Securities Exchange Act of 1934 (certain Executive Officers, any
directors and beneficial owners of more than 10% of any class of any equity
security) ("Section 16(b) Persons") or (ii) persons who, immediately after the
grant of rights under the Plans, would own or hold outstanding options or
other rights to purchase stock consisting of 5% or more of the total combined
voting power or value of all classes of stock of the Company. The purpose of
the Plans are to promote the interests of the Company by providing eligible
employees with the opportunity to share in the fortunes of the Company by
acquiring a proprietary interest in the Company. The Plan is intended to
qualify under Section 423 of the U.S. Internal Revenue Code of 1986, as
amended (the "Code").
DESCRIPTION OF MATERIAL FEATURES OF THE PLAN
The following is a summary of the material features of the Plan. The full
text of the Plan as submitted for approval is set forth in Exhibit A. The
following description is subject in all respects to the provisions of the
Plan. Capitalized terms used herein shall have the same meanings as defined in
the Plan.
Administration. The Plan Administrator will consist of two or more non-
employee Board Members appointed by the Board to administer the Plan. The Plan
Administrator shall interpret and construe any provision of the Plan and adopt
any rules and regulations necessary to administer the Plan. The Plan
Administrator shall have authority to delegate ministerial tasks related to
the Plan to the Company's Human Resources, Accounting and Payroll Departments,
and any decisions made by the Plan Administrator shall be final and binding on
all parties having an interest in the Plan.
Eligibility. A U.S. resident employee who is employed more than twenty (20)
hours per week for more than five (5) months per calendar year by the Company
or any of its majority owned subsidiaries is eligible to participate in the
Plan, provided that he or she completes and submits the appropriate form at
designated times and enters during the appropriate Plan time periods. Each
individual who is an Eligible Employee on the start
13
<PAGE>
day of any offering period may enter that offering period on such start date
by completing enrollment forms as required by the Plan. Section 16(b) Persons
are not eligible. Employees may actively particpate in only one Company
sponsored stock purchase plan at a time that qualifies under Section 423 of
the Code. As of December 1, 1997, there were approximately 1,850 employees
eligible to participate in the Plan.
Stock Subject to the Plan. The stock purchasable under the Plan consists of
Common Stock, par value $.10 per share. The maximum number of shares of the
Common Stock which will be available for sale under the Plan shall be three
percent (3%) of the shares of the Common Stock issued and outstanding on the
Effective Date, subject to annual adjustments. The maximum number of shares of
the Common Stock which shall be available for sale under the Plans shall be
increased on the first day of each fiscal year, beginning in the fiscal year
ending September 30, 1999, by an amount equal to (x) 3% of the shares of the
Common Stock issued and outstanding on the last day of the immediately
preceding fiscal year less (y) the number of shares available for future
option grants under the Plans on the last day of the immediately preceding
fiscal year. If the Plans were in effect as of December 1, 1997, there would
be approximately 3,303,980 million shares of Common Stock reserved for
issuance under the Plans. The Company anticipates that on the Effective Date
the number of shares will not have materially changed.
Offering Periods. The initial offering period shall commence on the
Effective Date, April 1, 1998, and terminate on the last business day in June,
1998. The second offering period shall commence on the first business day in
July, 1998 and terminate on the last business day in December, 1998.
Subsequent semi-annual offering periods shall commence as of the first
business day in January and July, respectively, and terminate on the last
business day in June and December, respectively, of each calendar year, unless
otherwise designated by the Plan Administrator.
Purchase of Stock. The Plan grants, to each Eligible Employee, a right to
purchase shares of Common Stock on the last business day of each Purchase
Interval within the offering period. The Plan Administrator shall establish a
purchase price for each offering period, provided however, that the purchase
price shall not be less than 85% of the lower of either the Subscription Price
or the Market Price. The initial price paid per share, until changed by the
Plan Administrator, shall be the lesser of 85% of the Subscription Price or
the Market Price.
The purchase price of the shares to be acquired under the Plan is
accumulated by payroll deductions over the offering period. The rate of the
deduction may be, at the election of the Participant, any multiple of 1% up to
a maximum of 10% of the Participant's Base Salary.
The maximum number of shares of Common Stock purchasable per Participant in
any one calendar year shall not exceed twenty five hundred (2,500) shares, and
Participants are prohibited from purchasing more than $25,000 worth of Common
Stock (determined on the basis of the Fair Market Value per share of stock on
the date or dates purchase rights under the Plan are granted) for each
calendar year such rights are at any time outstanding.
Participation. Participants may reduce the payroll deduction, provided the
Participant complies with the administrative and timing requirements necessary
to effectuate such a reduction. Participation in the Plan will automatically
continue at the Participant's chosen participation level until he or she files
a new enrollment form, withdraws, changes particpation levels or becomes
ineligible.
Withdrawal. A Participant may terminate his or her outstanding purchase
rights by filing a form with the Plan Administrator anytime prior to the last
business day of a Purchase Interval and elect either to have the Company
refund all the Participant's payroll deductions for that Purchase Interval or
to have those payroll deductions applied to the purchase of shares of the
Common Stock at the end of such interval. The termination shall be irrevocable
and the Participant may not rejoin until the next offering period. Also, if
the Participant ceases to remain an Eligible Employee for any reason, the
purchase right shall immediately terminate.
Amendments. The Board may alter, amend, suspend or discontinue the Plan at
any time to become effective immediately following the close of any Purchase
Interval. However, certain amendments may require stockholder
14
<PAGE>
approval pursuant to applicable laws or regulations. Any such amendment or
termination of the Plan shall not affect options already granted and such
options shall remain in full force and effect as if the Plan had not been
amended or terminated.
Federal Income Tax Consequences. The federal income tax consequences of an
employee's purchases under the Plan will vary. The following discussion is
only a summary of the general federal income tax rules applicable to the Plan.
Employees should consult their own tax advisors since a taxpayer's particular
situation may be such that some variation of the rules described below will
apply.
The Plan and the right of Participants to make purchases thereunder are
intended to qualify under the provisions of Sections 421 and 423 of the Code.
Under those provisions, no income will be taxable to a Participant at the time
of grant of the option or purchase of shares. However, a Participant may
become liable for tax upon dispositions of shares acquired under the Plan (or
if he or she dies holding such shares), and the tax consequences will depend
on how long a Participant has held the shares prior to disposition.
If the shares are disposed of (a) at least two years after the date of the
beginning of the offering period and (b) at least one year after the stock is
purchased in accordance with the Plan (or if the employee dies while holding
the shares), the following tax consequences will apply.
In this event, the lesser of (a) the excess of fair market value of the
shares at the time of such disposition over the purchase price of the shares
(the "option price"), or (b) the excess of the fair market value of the shares
at the time the option was granted over the option price (which option price
will be computed as of the offering date) will be treated as ordinary income
to the Participant. Any further gain upon disposition generally will be taxed
at long-term capital gain rates. If the shares are sold and the sales price is
less than the option price, there is no ordinary income and the Participant
has a long-term capital loss equal to the difference. If an employee holds the
shares for this period, no deduction in respect of the disposition of such
shares will be allowed to the Company.
If the shares are sold or disposed of (including by way of gift) before the
expiration of either the two year or the one year holding periods described
above, the following tax consequences will apply.
In this event, the amount by which the fair market value of the shares on
the date the option is exercised (which is the last business day of the
offering period and which is hereafter referred to as the "termination date")
exceeds the option price will be treated as ordinary income to the
Participant. This excess will constitute ordinary income in the year of sale
or other disposition even if no gain is realized on the sale or a gratuitous
transfer of the shares is made. The balance of any gain will be treated as
capital gain and will qualify for long-term capital gain treatment if the
shares have been held for more than one year following the exercise of the
option. Even if the shares are sold for less than their fair market value on
the termination date, the same amount of ordinary income is attributed to a
Participant and a capital loss is allowed equal to the difference between the
sales price and the value of such shares on such termination date. The
Company, in the event of an early disposition, will be allowed a deduction for
federal income tax purposes equal to the ordinary income realized by the
disposing employee.
The maximum income tax rates applicable to long-term capital gains
recognized by individual U.S. taxpayers have been affected by the recently
enacted Taxpayer Relief Act of 1997, Public Law No. 105-34. Generally, for
sales and exchanges of capital assets after May 6, 1997, the maximum tax rate
on long-term capital gains is twenty percent (20%), but only ten percent (10%)
for individual sellers in the 15-percent tax bracket. However, capital assets
sold after July 28, 1997, must be held for more than 18 months in order to
qualify for these rates. Any gain from the sale of a capital asset sold after
July 28, 1997, that was held for more than 12 months but not more than 18
months, will be taxed at a maximum rate of twenty-eight percent (28%),
although the maximum rate is fifteen percent (15%) for individuals in the 15-
percent tax bracket. Furthermore, for sales after December 31, 2000, a maximum
capital gain rate of eighteen percent (18%) will apply to gain from the
disposition of a capital asset acquired after December 31, 2000, if the asset
was held for at least five years, and a maximum tax rate of eight percent (8%)
will apply to long-term capital gain from the sale or exchange of a capital
asset held for more than five years by individuals in the 15-percent tax
bracket.
15
<PAGE>
Plan Duration. Unless sooner terminated by the Board, the Plan shall
terminate upon the earliest to occur of (i) the last business day in December,
2008, (ii) the date which all shares available for issuance in the aggregate
under the Plan and the International Plan have been sold pursuant to purchase
rights exercised under such Plans, or (iii) the date on which all purchase
rights are exercised in connection with a Corporate Transaction.
Participation in the Plan is voluntary and is dependent upon each eligible
employee's election to particpate and such employee's determination as to the
level of payroll deductions. Accordingly, future purchases under the Plan are
not determinable, and in addition it would not be meaningful to include
information as to the amount of shares which would have been distributable
during fiscal 1997 to all employees, or to groups of employees, or to any
particular employee of the Company had the Plan been in effect during the
fiscal year.
RECOMMENDATION: The Board of Directors recommends a vote "FOR" the proposal
to adopt the 1998 Comdisco Employee Stock Purchase Plan.
PROPOSAL 3: PROPOSAL TO AMEND COMDISCO'S RESTATED CERTIFICATE OF INCORPORATION
GENERAL
The Board of Directors has unanimously adopted and is recommending that the
Stockholders approve a proposed amendment to Comdisco's Restated Certificate
of Incorporation. The Proposed Amendment would amend Article 4 of Comdisco's
Restated Certificate of Incorporation to increase the number of authorized
shares of Comdisco Common Stock, $0.10 par value, from 200,000,000 to
750,000,000 shares. On the basis of the number of shares outstanding on
December 1, 1997, the Proposed Amendment would result in an increase in the
number of authorized and unissued shares of Common Stock from 89,589,245 to
639,589,245 shares.
PURPOSE, EFFECTS AND DESCRIPTION OF PROPOSED AMENDMENT
The Board of Directors believes that it is in the Company's best interests
to increase the number of authorized shares of Common Stock, and that the
availability of such additional shares will provide Comdisco with additional
flexibility to issue Common Stock for proper corporate purposes which may be
identified by the Board of Directors in the future, such as for possible
future acquisitions, stock dividends, stock splits, financing transactions,
employee benefits, and other corporate purposes, without the expense and delay
of a special stockholders' meeting. No such transaction is currently
contemplated by the Company.
Substantially all of the 200,000,000 shares of Common Stock currently
authorized for issuance are either issued or reserved for issuance. As of
December 1, 1997, of the 200,000,000 shares currently authorized, there were
110,410,755 shares issued and reserved for issuance under the
Company's various employee stock purchase and options plans. If the proposed
amendment to the Restated Certificate of Incorporation is approved, the
authorized shares of Common Stock in excess of those issued and reserved will
be available for issuance at such times and for such corporate purposes as the
Board of Directors may deem advisable without further action by the Company's
Stockholders, except as may be required by applicable laws or the rules of any
stock exchange or national securities association trading system on which the
Company's securities may be listed or traded. The Board of Directors does not
intend to issue any Common Stock except on terms which the Board deems to be
in the best interests of the Company and its Stockholders. The Company has no
arrangements, agreements, understandings or plans at the present time for the
issuance or use of the additional shares of Common Stock proposed to be
authorized, except for contemplated issuances under the 1998 Employee Stock
Purchase Plan, if the Plan is approved. Because holders of Common Stock do not
have preemptive rights, any future issuances of Common Stock will have a
dilutive effect on present Stockholders.
Pursuant to the proposal, Section (a) of Article 4 will be amended to read
as follows:
(a) The aggregate number of shares which Comdisco shall have authority to
issue is 850,000,000 of which 750,000,000 shares shall be designated as
"Common Stock" of the par value of $0.10 per share and 100,000,000 shares
shall be designated as "Preferred Stock" of the par value of $0.10 per
share.
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Other than increasing the authorized shares of Common Stock from 200,000,000
to 750,000,000, the proposed amendment in no way changes Comdisco's Restated
Certificate of Incorporation.
RECOMMENDATION: The Board of Directors recommends that the Stockholders vote
"FOR" this proposal to increase the number of authorized shares of Common
Stock from 200,000,000 to 750,000,000.
PROPOSAL 4: APPOINTMENT OF AUDITORS
The Board of Directors has approved the appointment of KPMG Peat Marwick
LLP, independent certified public accountants, as auditors, to audit the
financial statements of Comdisco for the current fiscal year and to perform
other accounting services, as appropriate. KPMG Peat Marwick LLP has audited
the financial statements of Comdisco since 1971. The ratification of the
appointment of KPMG Peat Marwick LLP is being submitted to the Stockholders at
the Annual Meeting.
Comdisco has been advised by KPMG Peat Marwick LLP that representatives of
the firm will be present at the Annual Meeting. Such representatives will have
the opportunity to respond to appropriate questions and make a statement if
they desire to do so.
RECOMMENDATION: The Board of Directors favors a vote "FOR" the appointment
of KPMG Peat Marwick LLP. If such appointment is not ratified, the Board of
Directors will consider the appointment of other auditors.
SUBMISSION OF STOCKHOLDER PROPOSALS
FOR THE 1998 PROXY STATEMENT
Stockholder proposals intended to be presented at the next Annual Meeting of
Stockholders must be received by Comdisco, in writing, no later than August
23, 1998, in order to be considered for inclusion in the Proxy Statement and
Proxy form for the Comdisco Annual Meeting of Stockholders anticipated to be
held in January, 1999.
DIRECTOR NOMINATIONS: Under the Company's by-laws, timely notice of a
nomination must be received by the Company in advance of an Annual Meeting.
Ordinarily, such notice must be received not less than 120 nor more than 150
days before the date corresponding to the date of mailing the Company's Proxy
Statement in connection with the previous year's Annual Meeting. The
stockholder filing the notice of nomination (the "Nominating Stockholder")
must provide information on the nominee, including: (i) name, (ii) age, (iii)
business and residence address, (iv) principal occupation, and (v) class and
number of shares beneficially owned by such nominee. Additionally, the
Nominating Stockholder must include: (i) whether he or she intends to appear
at the meeting in person or by proxy to make the nomination specified in the
notice, (ii) give a description of all arrangements or understandings among
the Nominating Stockholder and each nominee, and any other person or persons
pursuant to which the nomination is to be made by the Nominating Stockholder,
and (iii) any other information required to be disclosed in that connection,
pursuant to Regulation 14A under the Securities Exchange Act of 1934. Finally,
the following information must be given with respect to the Nominating
Stockholder, the nominee, and any other stockholder known by the Nominating
Stockholder to be supporting the nominee on the date of Nominating Stockholder
notice: (i) the name and address as they appear on the Company's books, and
(ii) the class and number of shares of the Company which are beneficially
owned and of record.
OTHER BUSINESS: Notice must be received by the Company within the time
limits described above. Notice must include a description of proposed business
(including the complete text of any such resolution to be presented at the
Annual Meeting), the reason for conducting such business at the Annual
Meeting, and other specific matters set forth in Section 9, Article 1 of the
Company's by-laws (including any material interest of stockholder or
beneficial owner, a representation that the stockholder intends to appear at
the meeting in person or by proxy to submit the business specified in such
notice, and the name and address as they appear on the Company's books of: (i)
the stockholder proposing such business, (ii) the beneficial owner, if any, on
whose behalf the proposal is made, and (iii) of any other stockholder known by
such stockholder to be supporting such proposal on the date of the
stockholder's notice).
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These requirements are separate from and in addition to the requirements a
stockholder must meet to have a proposal considered for inclusion in the
Company's 1998 Proxy Statement.
In each case, the notice must be given to the Secretary of the Company, 6111
N. River Road, Rosemont, Illinois 60018. Any stockholder desiring a copy of
the Company's by-laws will be furnished one without charge upon written
request to the Secretary.
The foregoing Notice, Proxy Statement and Proxy are sent by order of the
Board of Directors.
Philip A. Hewes
Secretary
December, 1997
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EXHIBIT A
COMDISCO, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
I. PURPOSE OF THE PLAN
This 1998 Employee Stock Purchase Plan is intended to promote the interests
of Comdisco, Inc. by providing eligible employees in the United States with
the opportunity to share in the fortunes of the Corporation by acquiring a
proprietary interest in the Corporation through participation in a payroll
deduction based employee stock purchase plan designed to qualify under Section
423 of the Code.
Capitalized terms herein shall have the meanings assigned to such terms in
the attached Appendix.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret and construe
any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. The Plan Administrator shall have authority
to delegate ministerial tasks related to the Plan to the Corporation's Human
Resources and Accounting and Payroll Departments and the Human Resources
Departments of Subsidiaries which employ Participants. Decisions of the Plan
Administrator shall be final and binding on all parties having an interest in
the Plan. The Plan Administrator shall not be liable for any action or
determination made in good faith with respect to the Plan or any right granted
under it.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares of Common Stock
purchased on the open market. Subject to the provision for increase, the
maximum number of shares of the Corporation's Common Stock which shall be
available for sale under the Plan and the International Plan shall be 3% of
the shares of the Corporation's Common Stock issued and outstanding on the
Effective Date. The maximum number of shares of the Corporation's Common Stock
which shall be available for sale under the Plan and the International Plan
shall be increased on the first day of each fiscal year, beginning in the
fiscal year ended September 30, 1999, by an amount equal to (x) 3% of the
shares of the Corporation's Common Stock issued and outstanding on the last
day of the immediately preceding fiscal year less (y) the number of shares
available for future option grants under the Plan and the International Plan
on the last day of the immediately preceding fiscal year.
B. Should any change be made to the Common Stock by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and class of securities issuable in
the aggregate under the Plan and the International Plan, (ii) the maximum
number and class of securities purchasable per Participant on any one Purchase
Date and (iii) the number and class of securities and the price per share in
effect under each outstanding purchase right in order to prevent the dilution
or enlargement of benefits thereunder.
IV. OFFERING PERIODS
A. Shares of Common Stock shall be offered for purchase under the Plan
through a series of successive offering periods until such time as (i) the
maximum number of shares of Common Stock available for issuance in the
aggregate under the Plan and the International Plan shall have been purchased
or (ii) the Plan shall have been sooner terminated.
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B. Each offering period shall be of such duration (not to exceed twenty-
seven (27) months) as determined by the Plan Administrator prior to the start
date. The initial offering period shall commence on the Effective Date, April
1, 1998, and terminate on the last business day in June, 1998. The second
offering period shall commence on the first business day in July, 1998 and
terminate on the last business day in December, 1998. Subsequent semi-annual
offering periods shall commence as of the first business day in January and
July, respectively, and terminate on the last business day in June and
December, respectively, of each calendar year, unless otherwise designated by
the Plan Administrator.
C. Each offering period shall be comprised of a series of one or more
successive Purchase Intervals. Purchase Intervals shall be three-month periods
ending March 31, June 30, September 30 and December 31 of each year. The
Initial Purchase Interval in effect under the initial offering period shall
commence on the Effective Date and terminate on the last business day in June,
1998.
V. ELIGIBILITY
A. Each individual who is an Eligible Employee on the start date of any
offering period under the Plan may enter that offering period on such start
date provided he or she remains an Eligible Employee, by completing and
submitting the appropriate form at designated times. An employee may actively
participate in only one corporation sponsored stock purchase plan at a time.
B. The date an individual enters an offering period shall be designated his
or her Entry Date for purposes of that offering period.
C. To participate in the Plan for a particular offering period, the Eligible
Employee must complete the enrollment form(s) prescribed by the Plan
Administrator (including a stock purchase agreement and a payroll deduction
authorization) and file such form(s) with the Plan Administrator (or its
designate) on or before his or her scheduled Entry Date. In such forms, the
Eligible Employee must state the percentage of Base Salary to be deducted from
the Eligible Employee's paycheck. Eligible Employees may enter the Plan only
at the beginning of a calendar year. The Eligible Employee will be deemed to
have elected to continue to participate at the same contribution previously
selected (subject to the limitations in Article VI and VIII) and will
automatically be enrolled in subsequent offering periods at the same level
unless the Eligible Employee files a new enrollment form, withdraws, changes
participation levels or becomes ineligible.
VI. PAYMENT FOR THE SHARES
A. The Participant shall authorize the percentage of Base Salary which may
be applied to the acquisition of shares of Common Stock under the Purchase
Plan during the offering period by such Participant. Such Authorization shall
be delivered to the Human Resources Department. Such percentage may be any
multiple of one percent (1%) of the Base Salary paid to the Participant during
each Purchase Interval within that offering period, up to a maximum of ten
percent (10%). Whenever an increase, decrease or adjustment in a participating
employee's Base Salary is reflected on a pay day within a Purchase Interval,
the amount of said Participant's deductions will be automatically adjusted to
reflect such change, unless the Participant indicates otherwise.
B. The deduction rate nominated by the Participant shall continue in effect
throughout the offering period, the Participant may, at any time during the
offering period, reduce his or her rate of payroll deduction to become
effective on the next Purchase Interval after timely filing of the appropriate
form with the Plan Administrator. A Change Authorization must be received in
writing by the Human Resources Department at least 15 days before the next
Purchase Interval. The Participant may not, however, effect more than one (1)
such reduction per Purchase Interval.
C. Payroll deductions shall begin on the first pay day following the
Participant's Entry Date into the offering period and shall (unless sooner
terminated by the Participant) continue through the pay day ending with or
immediately prior to the last day of the offering period. The payroll
deductions so collected shall be credited
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to the Participant's book account under the Plan. Participants shall receive
periodic statements detailing their account balances. A Participant may not
make any additional payments on such account nor may payment for shares be
made other than by payroll deductions. The funds allocated to an employee's
account shall remain the property of the respective employee at all times.
Except to the extent otherwise provided by the Plan Administrator, no interest
shall be paid on the balance from time to time outstanding in such account and
the amounts collected from the Participant shall not be held in any segregated
account or trust fund and may be commingled with the general assets of the
Corporation and used for general corporate purposes.
D. Payroll deductions shall automatically cease upon the termination of the
Participant's purchase right in accordance with the provisions of the Plan.
E. The Participant's acquisition of Common Stock under the Plan on any
Purchase Date shall neither limit nor require the Participant's acquisition of
Common Stock on any subsequent Purchase Date, whether within the same or a
different offering period.
VII. PURCHASE RIGHTS
A. Grant of Purchase Right. As soon as practicable after the Corporation has
satisfied the requirements of the applicable federal and state securities laws
relating to the offer and sale of Common Stock to Eligible Employees pursuant
to this Plan, a Participant shall be granted a separate purchase right for
each offering period in which he or she participates. The purchase right shall
be granted on the Participant's Entry Date into the offering period and shall
provide the Participant with the right to purchase shares of Common Stock, in
a series of successive installments over the remainder of such offering period
on the condition that such employee remains eligible to participate in the
Plan throughout such offering period, upon the terms set forth below. The
Participant shall execute a stock purchase agreement embodying such terms and
such other provisions (not inconsistent with the Plan) as the Plan
Administrator may deem advisable.
Under no circumstances shall purchase rights be granted under the Plan to
any Eligible Employee if such individual would, immediately after the grant,
own (within the meaning of Code Section 424(d)) or hold outstanding options or
other rights to purchase, stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the
Corporation or any Corporate Affiliate.
B. Exercise of Purchase Right. Each purchase right shall be automatically
exercised in installments on each successive Purchase Date within the offering
period, and shares of Common Stock shall accordingly be purchased on behalf of
each Participant (other than any Participant whose payroll deductions have
previously been refunded pursuant to the Termination of Purchase Right
provisions below) on such date. The purchase shall be effected by applying the
Participant's payroll deductions for the Purchase Interval ending on such
Purchase Date to the purchase of whole shares of Common Stock (subject to the
limitation on the maximum number of shares purchasable per Participant on any
one Purchase Date) at the purchase price in effect for the Participant for
that Purchase Date. If a Participant is not an Eligible Employee on the last
business day of a Purchase Interval, he or she shall not be entitled to
exercise his or her Purchase Right.
C. Purchase Price. The purchase price per share at which Common Stock will
be purchased on the Participant's behalf on each Purchase Date shall for each
offering period be established by the Plan Administrator, provided however,
that the purchase price shall not be less than eighty-five percent (85%) of
the lower of (y) the Subscription Price relating to that offering period or
(z) Market Price. The initial purchase price for the initial and each
subsequent offering period, until changed by the Plan Administrator, shall be
the lesser of 85% (i) the Subscription Price or the (ii) the Market Price.
D. Number of Purchasable Shares. The number of shares of Common Stock
purchasable by a Participant on each Purchase Date shall be the number of
whole or fractional shares obtained by dividing the amount collected from the
Participant through payroll deductions during the Purchase Interval ending
with that Purchase Date by the purchase price per share in effect for that
Purchase Date. However, the maximum number of shares of Common Stock
purchasable per participant in any one calendar year shall not exceed twenty
five hundred (2,500) shares, subject to periodic adjustments in the event of
certain changes in the Corporation's capitalization.
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E. Termination of Purchase Right. The following provisions shall govern the
termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the next scheduled Purchase
Date in the offering period, terminate his or her outstanding purchase
right by filing the appropriate form with the Plan Administrator (or its
designate), and no further payroll deductions shall be collected from the
Participant with respect to the terminated purchase right. Any payroll
deductions collected during the Purchase Interval in which such termination
occurs shall, at the Participant's election, be immediately refunded or
held for the purchase of shares on the next Purchase Date. If no such
election is made at the time such purchase right is terminated, then the
payroll deductions collected with respect to the terminated right shall be
refunded as soon as possible.
(ii) The termination of such purchase right shall be irrevocable, and the
Participant may not subsequently rejoin the offering period for which the
terminated purchase right was granted. In order to resume participation in
any subsequent offering period, such individual must re-enroll in the Plan
(by making a timely filing of the prescribed enrollment forms) on or before
his or her scheduled Entry Date into that offering period.
(iii) Should the Participant cease to remain an Eligible Employee for any
reason (including death, disability or change in status) while his or her
purchase right remains outstanding, then that purchase right shall
immediately terminate, and all of the Participant's payroll deductions for
the Purchase Interval in which the purchase right so terminates shall be
immediately refunded. However, should the Participant cease to remain in
active service by reason of an approved unpaid leave of absence, then the
Participant shall have the right, exercisable up until the last business
day of the Purchase Interval in which such leave commences, to (a) withdraw
all of the payroll deductions collected to date on his or her behalf for
that Purchase Interval or (b) have such funds held for the purchase of
shares on his or her behalf on the next scheduled Purchase Date. In no
event, however, shall any further payroll deductions be collected on the
Participant's behalf during such leave. Upon the Participant's return to
active service, his or her payroll deductions under the Plan shall
automatically resume at the rate in effect at the time the leave began,
unless the Participant withdraws from the Plan prior to his or her return.
F. Transfer of Employment. In the event that an Eligible Employee of the
Corporation who is a participant in the Plan is transferred and becomes an
Eligible Employee of a Foreign Subsidiary during an offering period in effect
under the Plan, such individual shall automatically become a Participant under
the International Plan for the duration of the Purchase Interval in effect at
that time under the International Plan and the balance in such individual's
book account maintained under the Plan shall be transferred as a balance to a
book account opened for such individual under the International Plan. Such
balance, together with all other payroll deductions collected from such
individual by the Foreign Subsidiary for the remainder of the Purchase
Interval under the International Plan (as converted into U.S. Dollars), shall
be applied on the next Purchase Date to the purchase of Stock under the
International Plan.
G. Corporate Transaction. Each outstanding purchase right shall
automatically be exercised, immediately prior to the effective date of any
Corporate Transaction, by applying the payroll deductions of each Participant
for the Purchase Interval in which such Corporate Transaction occurs to the
purchase of whole or fractional shares of Common Stock at a purchase price per
share equal to the lower of (i) the Subscription Price for the offering period
in which such Corporate Transaction occurs or (ii) the Fair Market Value per
share of Common Stock immediately prior to the effective date of such
Corporate Transaction. However, the applicable limitation on the number of
shares of Common Stock purchasable per Participant shall continue to apply to
any such purchase.
The Corporation shall use its best efforts to provide at least ten (10) days
prior written notice of the occurrence of any Corporate Transaction, and
Participants shall, following the receipt of such notice, have the right to
terminate their outstanding purchase rights prior to the effective date of the
Corporate Transaction.
H. Proration of Purchase Rights. If at the termination of any Purchase
Interval the total number of shares which would otherwise be subject to
options granted pursuant to Section VII A hereof exceeds the number of
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shares then available under the Plan and the International Plan (after
deduction of all shares for which options have been exercised or are then
outstanding), the Corporation shall promptly notify the Participants of the
Plan and the International Plan, and shall, in its sole discretion (i) make a
pro rata allocation of the shares remaining available for option grant in as
uniform a manner as shall be practicable and as it shall determine to be
equitable, (ii) terminate the offering period without issuance of any shares
or (iii) obtain shareholder approval of an increase in the number of shares
authorized under the Plan and the International Plan such that all options
could be exercised in full.
The Corporation may delay determining which of (i), (ii) or (iii) above it
shall decide to effect, and may accordingly delay issuance of any shares under
the Plan and the International Plan, for such time as is necessary to attempt
to obtain shareholder approval of any increase in shares authorized under the
Plan and the International Plan. The Corporation shall promptly notify
Participants of its determination to effect (i), (ii) or (iii) above upon
making such decision. A Participant may withdraw all but not less than all
payroll deductions credited to his or her account under the Plan at any time
prior to such notification from the Corporation. In the event the Corporation
determines to effect (i) or (ii) above, it shall promptly upon such
determination return to each Participant all payroll deductions not applied
towards the purchase of shares.
I. Assignability. The purchase right shall be exercisable during the
Participant's lifetime only by the Participant and shall not be assignable or
transferable by the Participant other than by will or the laws of descent and
such right and interest shall not be liable for, or subject to, the debts,
contracts or liabilities of the employee. If any such action is taken by the
employee, or any claim is asserted by any other party in respect of such right
and interest whether by garnishment, levy, attachment or otherwise, such
action or claim will be treated as an election to withdraw funds in accordance
with Section VII E.
J. Shareholder Rights. A Participant shall have no shareholder rights with
respect to the shares subject to his or her outstanding purchase right until
the shares are purchased on the Participant's behalf in accordance with the
provisions of the Plan and the Participant has become a holder of record of
the purchased shares.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to acquire Common Stock
pursuant to any purchase right outstanding under this Plan if and to the
extent such accrual, when aggregated with (i) rights to purchase Common Stock
accrued under any other purchase right granted under this Plan and (ii)
similar rights accrued under other employee stock purchase plans (within the
meaning of Code Section 423) of the Corporation or any Corporate Affiliate,
would otherwise permit such Participant to purchase more than Twenty-Five
Thousand Dollars ($25,000) worth of stock of the Corporation or any Corporate
Affiliate (determined on the basis of the Fair Market Value per share of such
stock on the date or dates such rights are granted) for each calendar year
such rights are at any time outstanding.
B. For purposes of applying such accrual limitations to the purchase rights
granted under the Plan, the following provisions shall be in effect:
(i) The right to acquire Common Stock under each outstanding purchase
right shall accrue in a series of installments on each successive Purchase
Date during the offering period on which such right remains outstanding.
(ii) No right to acquire Common Stock under any outstanding purchase
right shall accrue to the extent the Participant has already accrued in the
same calendar year the right to acquire Common Stock under one (1) or more
other purchase rights at a rate equal to Twenty-Five Thousand Dollars
($25,000) worth of Common Stock (determined on the basis of the Fair Market
Value per share on the date or dates of grant) for each calendar year such
rights were at any time outstanding.
C. If by reason of such accrual limitations, any purchase right of a
Participant does not accrue for a particular Purchase Interval, then the
payroll deductions which the Participant made during that Purchase Interval
with respect to such purchase right shall be promptly refunded.
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D. In the event there is any conflict between the provisions of this Article
and one or more provisions of the Plan or any instrument issued thereunder,
the provisions of this Article shall be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on November 4, 1997 and shall become
effective on the Effective Date, provided no purchase rights granted under the
Plan shall be exercised, and no shares of Common Stock shall be issued
hereunder, until (i) the Plan shall have been approved by the shareholders of
the Corporation and (ii) the Corporation shall have complied with all
applicable requirements of the 1933 Act (including the registration of the
shares of Common Stock issuable under the Plan on a Form S-8 registration
statement filed with the Securities and Exchange Commission), all applicable
listing requirements of any stock exchange (or the NASDAQ National Market, if
applicable) on which the Common Stock is listed for trading and all other
applicable requirements established by law or regulation. In the event such
shareholder approval is not obtained, or such compliance is not effected,
within twelve (12) months after the date on which the Plan is adopted by the
Board, the Plan shall terminate and have no further force or effect and all
sums collected from Participants during the initial offering period hereunder
shall be refunded.
B. Unless sooner terminated by the Board, the Plan shall terminate upon the
earliest to occur of (i) the last business day in December, 2008, (ii) the
date on which all shares available for issuance in the aggregate under the
Plan and the International Plan shall have been sold pursuant to purchase
rights exercised under such plans or (iii) the date on which all purchase
rights are exercised in connection with a Corporate Transaction. No further
purchase rights shall be granted or exercised, and no further payroll
deductions shall be collected, under the Plan following such termination.
X. ISSUANCE OF STOCK
Upon purchase of one or more full or fractional shares by a Participant
hereunder, such purchase shall be recorded on the stock transfer records of
the Corporation in book entry form in the name of the Participant to reflect
the shares purchased at that time. Certificates shall be issued only upon the
Participant's request for full shares and also, when necessary to comply with
transaction requirements outside the United States. To request certificates,
Participant may call Merrill Lynch Service Center at 1-800-621-3777. In the
event a Participant terminates his or her account, any fractional share held
in the account will be paid to the Participant in cash. Participants shall
receive periodic statements detailing their account balances. A Participant
will receive Statements of Ownership for stock purchased under the Plan, or
may elect to receive stock certificates instead of Statements of Ownership.
Stock purchased under the Plan will be issued only in the name of the
Participant, or if his or her Authorization so specifies, in the name of
Participant and another person of legal age as joint tenants with rights of
survivorship.
The Plan Administrator, at its sole discretion, may determine that the
shares shall be delivered by (1) issuing and delivering to the Participant a
certificate for the number of shares purchased by such Participant on an
exercise date; (2) issuing and delivering a certificate or certificates for
the number of share purchased by all Participants on an exercise date to a
member firm of the New York Stock Exchange which is also a member of the
National Association of Securities Dealers, as selected by the Plan
Administrator from time to time, which shares shall be maintained by such
member firm in separate brokerage accounts for each Participant; or (3)
issuing and delivering a certificate or certificates for the number of shares
purchased by all Participants on an exercise date to a bank or trust company
or affiliate thereof, as selected by the Plan Administrator from time to time
which shares shall be maintained by such bank or trust company or affiliate in
separate accounts for each Participant. Each certificate or account, as the
case may be, may be in the name of the Participant, or, if the Participant
designates on the form prescribed by the Plan Administrator, in the
Participant's name jointly with another individual, with right of
survivorship.
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XI. AMENDMENT OF THE PLAN
The Board may alter, amend, suspend or discontinue the Plan at any time to
become effective immediately following the close of any Purchase Interval.
However, certain amendments may require shareholder approval pursuant to
applicable laws or regulations.
Any such amendment or termination of the Plan shall not affect options
already granted hereunder and such options shall remain in full force and
effect as if this Plan had not been amended or terminated.
XII. NOTICES
All notices or other communications by a Participant to the Corporation
under or in connection with the Plan shall be deemed to have been duly given
when received in the form specified by the Corporation at the location, or by
the person, designated by the Corporation for the receipt thereof. All notices
or other communications to a Participant by the Corporation shall be deemed to
have been duly given when sent by the Corporation by regular mail to the
address of the Participant on the human resources records of the Corporation
or when posted on any general electronic messaging and bulletin board system
utilized by the Corporation.
XIII. LIMITATIONS ON SALE OF STOCK PURCHASED UNDER THE PLAN
The Plan is intended to provide Common Stock for investment and not for
resale. The Corporation does not, however, intend to restrict or influence any
employee in the conduct of his or her own affairs. Subject to the
Corporation's compliance with applicable federal and sate securities laws,
Participant may, therefore, sell stock purchased under the Plan at any time he
or she chooses. The Participant assumes the risk of any market fluctuations in
the price of such stock.
XIV. GOVERNMENTAL REGULATION
The Corporation's obligation to sell and deliver shares of the Corporation's
Common Stock under this Plan is subject to the approval of any governmental
authority, domestic or foreign, required in connection with the authorization,
issuance or sale of such stock.
XV. GENERAL PROVISIONS
A. All costs and expenses incurred in the administration of the Plan shall
be paid by the Corporation, however, each Plan Participant shall bear all
costs and expenses incurred by such individual in the sale, other disposition
or transfer of any shares purchased under the Plan.
B. Nothing in the Plan shall confer upon the Participant any right to
continue in the employ of the Corporation or any Corporate Affiliate for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Corporate Affiliate employing such
person) or of the Participant, which rights are hereby expressly reserved by
each, to terminate such person's employment at any time for any reason, with
or without cause.
C. The provisions of the Plan shall be governed by the laws of the State of
Illinois without resort to that State's conflict-of-laws rules.
D. As a condition to the exercise of an option, the Corporation may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Corporation, such a representation is required by
any of the aforementioned applicable provisions of law.
A-7
<PAGE>
SCHEDULE A
CORPORATIONS PARTICIPATING IN
1998 EMPLOYEE STOCK PURCHASE PLAN
AS OF THE EFFECTIVE DATE
A-8
<PAGE>
APPENDIX
The following definitions shall be in effect under the Plan:
A. Board shall mean the Corporation's Board of Directors.
B. Base Salary shall mean the regular base salary paid to a Participant by
one or more Participating Companies during such individual's period of
participation in one or more offering periods under the Plan. The following
items of compensation shall NOT be included in Base Salary: (i) all overtime
payments, bonuses, commissions (other than those functioning as base salary
equivalents), profit-sharing distributions and other incentive-type payments
and (ii) any and all contributions made on the Participant's behalf by the
Corporation or any Corporate Affiliate under any employee benefit or welfare
plan now or hereafter established.
C. Code shall mean the U.S. Internal Revenue Code of 1986, as amended.
D. Common Stock shall mean the Corporation's common stock $0.10 par value.
E. Corporate Affiliate shall mean any "parent" or "subsidiary" corporation
of the Corporation, whether now existing or subsequently established. "Parent"
and "subsidiary" shall be determined as follows:
(i) "parent" shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations ending with the Corporation, provided
each corporation in the unbroken chain (other than the Corporation) owns,
at the time of the determination, stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of
the other corporations in such chain, and
(ii) "subsidiary" shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation,
provided each corporation (other than the last corporation) in the unbroken
chain owns, at the time of determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
F. Corporate Transaction shall mean either of the following shareholder-
approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different
from the persons holding those securities immediately prior to such
transaction, or
(ii) the sale, transfer or other disposition of all or substantially all
of the assets of the Corporation in complete liquidation or dissolution of
the Corporation.
G. Corporation shall mean Comdisco, Inc., a Delaware corporation, and any
corporate successor to all or substantially all of the assets or voting stock
of Comdisco, Inc. which shall by appropriate action adopt the Plan.
H. Effective Date shall mean the first business day in April, 1998. Any
Corporate Affiliate which becomes a Participating Corporation after such
Effective Date shall designate a subsequent Effective Date with respect to its
employee-Participants.
I. Eligible Employee shall mean any person who is employed and has been
continuously employed for at least one year as of the start date of an
offering period by a Participating Corporation on a basis under which he or
she is regularly expected to render more than twenty (20) hours of service per
week for more than five (5) months per calendar year for earnings considered
wages under Code Section 3401(a), and who are not designated by the
Corporation as officers under Section 16 of the Securities Exchange Act of
1934, as amended.
J. Entry Date shall mean the date an Eligible Employee first commences
participation in the offering period in effect under the Plan. The earliest
Entry Date under the Plan shall be the Effective Date. Unless otherwise
provided by the Plan Administrator, all subsequent Entry Dates shall be the
first business day in January of each calendar year.
A-9
<PAGE>
K. Fair Market Value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the NASDAQ National
Market, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question, as such price is reported by
the National Association of Securities Dealers on the NASDAQ National
Market or any successor system. If there is no closing selling price for
the Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists.
(ii) If the Common Stock is at the time listed on any Stock Exchange,
then the Fair Market Value shall be the closing selling price per share of
Common Stock on the date in question on the Stock Exchange determined by
the Plan Administrator to be the primary market for the Common Stock, as
such price is officially quoted in the composite tape of transactions on
such exchange. Initially the primary market is designated to be the New
York Stock Exchange. If there is no closing selling price for the Common
Stock on the date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which such quotation
exists.
L. Foreign Subsidiary shall mean any Corporate Affiliate which employs
Eligible Employees outside the United States and which may be authorized from
time to time by the Board to participate in the International Plan.
M. International Plan shall mean the Corporation's 1998 International
Employee Stock Purchase Plan.
N. Market Price shall be the closing price of the Common Stock on the New
York Stock Exchange (or such other Stock Exchange designated as the primary
market by the Plan Administrator) on the day prior to the Purchase Date or, if
the Corporation purchases such Common Stock, the actual cost to the
Corporation per share (exclusive of brokerage fees and expenses) on the
Purchase Date.
O. 1933 Act shall mean U.S. Securities Act of 1933, as amended.
P. Participant shall mean any Eligible Employee of a Participating
Corporation who is actively participating in the Plan.
Q. Participating Corporation shall mean the Corporation and such Corporate
Affiliate or Affiliates as may be authorized form time to time by the Board to
extend the benefits of the Plan to their Eligible Employees. The Participating
Corporations in the Plan as of the Effective Date are listed in the attached
Schedule A.
R. Plan shall mean the Corporation's 1998 Employee Stock Purchase Plan, as
set forth in this document.
S. Plan Administrator shall mean the committee of two (2) or more non-
employee Board members appointed by the Board to administer the Plan, none of
whom shall be eligible to participate in the Plan.
T. Purchase Date shall mean the last business day of each Purchase Interval.
The initial Purchase Date shall be the last business day in June, 1998.
U. Purchase Interval shall mean each successive three (3)-month period
within the offering period at the end of which there shall be purchased shares
of Common Stock on behalf of each Participant. The initial Purchase Interval,
however, shall end on the last business day in June, 1998.
V. Stock Exchange shall mean either the American Stock Exchange or the New
York Stock Exchange.
W. Subscription Price shall mean the closing price of the Common Stock on
the New York Stock Exchange (or such other Stock Exchange designated as the
primary market by the Plan Administrator) on the start date of an offering
period.
A-10
<PAGE>
LOGO
Printed on
recycled paper
LOGO
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4
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7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7
s FOLD AND DETACH HERE s
Please mark
your votes as
indicated in
this example
X
For
Withhold
For all
Except
For
Against
Abstain
1. Election of directors--NOMINEES
01 A. ANDREINI
02 R. BARDAGY
03 P. HEWES
04 T. PATRICK
05 N. PONTIKES
- -------------------------------------------------------------------------------
Except Nominee(s) written above
3. Approval of amendment to Comdisco's Restated Certificate of Incorporation
to increase the number of authorized shares of Comdisco, Inc. common stock by
550,000,000 shares
4. The ratification of KPMG Peat Marwick LLP as Auditors
For
Against
Abstain
2. Ratification of a new Employee Stock Purchase Plan
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting and any adjournment(s)
thereof.
- --
DATE _____________________________________________________________________ 1997
- -------------------------------------------------------------------------------
Signature
- -------------------------------------------------------------------------------
Signature, if Jointly Held
IF ACTING AS ATTORNEY, EXECUTOR, TRUSTEE OR IN OTHER REPRESENTATIVE CAPACITY,
PLEASE SIGN NAME AND TITLE
*** IF YOU WISH TO VOTE BY TELEPHONE, PLEASE READ THE INSTRUCTIONS BELOW ***
<PAGE>
- --------------------------------------------------------------------------------
=VOTE BY TELEPHONE=
QUICK MMM EASY MMM IMMEDIATE
Your telephone vote authorizes the named proxies to vote your shares in the
same manner as if you marked, signed and returned your proxy card.
. You will be asked to enter a Control Number which is located in the box in
the lower right hand corner of this form.
OPTION #1: To vote as the Board of Directors
recommends on ALL proposals: Press 1.
YOUR VOTE WILL BE CONFIRMED AND CAST AS YOU DIRECTED. END OF CALL.
OPTION #2: If you choose to vote on each proposal
separately, press 0. You will hear these
instructions:
Proposal 1: To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL nominees,
press 9.
To withhold FOR AN INDIVIDUAL nominee, press 0 and listen to the
instructions.
Proposal 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
The Instructions are the same for all remaining proposals.
YOUR VOTE WILL BE CONFIRMED AND CAST AS YOU DIRECTED. END OF CALL.
IF YOU VOTE BY TELEPHONE, THERE IS NO NEED FOR YOU
TO MAIL BACK YOUR PROXY.
THANK YOU FOR VOTING.
CALL MM TOLL FREE MM ON A TOUCH TONE TELEPHONE
1-800-840-1208 - ANYTIME
CONTROL
There is NO CHARGE to you for this NUMBER
call.
<PAGE>
- -------------------------------------------------------------------------------
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7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7
s FOLD AND DETACH HERE s
PROXY
LOGO
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS IN CONNECTION WITH THE
ANNUAL MEETING OF STOCKHOLDERS
3:00 P.M. (C.S.T.)
JANUARY 20, 1998
PLACE: Comdisco, Inc., at its offices
1st Floor, 6111 N. River Road
Rosemont, Illinois 60018
PROXY: JACK SLEVIN and PHILIP A. HEWES and each of them, are hereby appointed
by the undersigned as attorneys and proxies with full power of substitution,
to vote all the shares of Common Stock held of record by the undersigned on
December 8, 1997 at the Annual Meeting of Stockholders of Comdisco, Inc. or at
any adjournment(s) of the meeting, on each of the items on the reverse side
and in accordance with the directions given therein.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
<PAGE>
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF TWO WAYS:
1. Call TOLL FREE 1-800-840-1208 on a Touch Tone telephone and follow the
instructions on the reverse side. There is NO CHARGE to you for this call.
OR
2. Mark, sign and date your proxy card and return it promptly in the enclosed
envelope.
PLEASE VOTE
