AST RESEARCH, INC.
16215 ALTON PARKWAY
IRVINE, CALIFORNIA 92718
September 26, 1994
Dear Stockholders:
Our Annual Meeting of Stockholders will be held on October 27, 1994, at 9:00
a.m., Pacific Standard Time, in the Deauville South Room of Le Meridien Hotel,
4500 MacArthur Blvd., Newport Beach, California. I urge you to attend this
meeting to give us an opportunity to meet you personally, to allow us to
introduce to you the key personnel responsible for management of your Company
and to answer questions you may have.
The formal Notice of Meeting, the Proxy Statement, the proxy card, the Annual
Report to Stockholders and the Form 10-K describing the Company's operations
during the fiscal year ended July 2, 1994 are enclosed.
I hope that you will be able to attend the meeting in person. Whether or not
you plan to attend the meeting, please sign and return the enclosed proxy card
promptly. A prepaid return envelope is provided for this purpose. Your shares
will be voted at the meeting in accordance with your proxy.
If you have shares in more than one name, or if your stock is registered in
more than one way, you may receive more than one copy of the proxy material. If
so, please sign and return each of the proxy cards you receive so that all of
your shares may be voted. I look forward to seeing you at the October 27, 1994
Annual Meeting of Stockholders.
Very truly yours,
AST RESEARCH, INC.
Safi U. Qureshey,
Chief Executive Officer
and Chairman of the Board
AST RESEARCH, INC.
16215 ALTON PARKWAY
IRVINE, CALIFORNIA 92718
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of AST Research, Inc. (the "Company") will
be held in the Deauville South Room of Le Meridien Hotel, 4500 MacArthur Blvd.,
Newport Beach, California on Thursday, October 27, 1994, at 9:00 a.m., Pacific
Standard Time, for the following purposes:
1. To elect seven directors to hold office until the next annual meeting
and until their successors are elected and duly qualified;
2. The approval (recommended by the Board of Directors) of the amendment
of the Certificate of Incorporation to increase the authorized number
of shares of Common Stock from 70,000,000 shares to 200,000,000
shares, which may be deemed to have anti-takeover effects (see
Proposal 2, at pages 16-18 of the attached Proxy Statement);
3. The approval (recommended by the Board of Directors) of the amendment
of the Certificate of Incorporation to increase the size of the Board
of Directors from a range of three to seven members to a range of five
to nine members, which may be deemed to have anti-takeover effects
(see Proposal 3, at pages 19-20 of the attached Proxy Statement);
4. The approval (recommended by the Board of Directors) of the AST
Research, Inc. Performance Based Annual Management Incentive Plan (see
Proposal 4, at pages 21-22 of the attached Proxy Statement);
5. The approval (recommended by the Board of Directors) of an amendment
to the 1989 Long-Term Incentive Program to increase the number of
shares of Common Stock reserved for issuance thereunder by 2,000,000
shares (see Proposal 5, at pages 23-27 of the attached Proxy
Statement);
6. The approval (recommended by the Board of Directors) of the 1994 One-
Time Grant Stock Option Plan for Non-Employee Directors (see Proposal
6, at pages 28-30 of the attached Proxy Statement);
7. The approval (recommended by the Board of Directors) of the
appointment of Ernst & Young as independent auditors for the fiscal
year ending July 1, 1995 (see Proposal 7, at page 31 of the attached
Proxy Statement); and
8. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on Friday, September 16, 1994 is the date of record
("Record Date") for the determination of stockholders entitled to notice of, to
attend and to vote at the Annual Meeting. Stockholders, including those whose
shares are held by a brokerage firm or in "street" name, may be asked to verify
their stockholder status as of the Record Date upon entrance to the Annual
Meeting. Accordingly, stockholders attending the meeting should bring some form
of identification to the meeting evidencing such stockholder status as of the
Record Date. A list ofstockholders at the Record Date will be available
during normal business hours for examination by any stockholder for any
purpose germane to the Annual Meeting for a period of ten days prior to
October 27, 1994, at the offices of the Company, 16215 Alton Parkway, Irvine,
California 92718.
All stockholders are urged to attend the meeting in person or by proxy.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTPAID ENVELOPE. The
proxy is revocable and will not affect your right to vote in person in the event
you attend the meeting.
By Order of the Board of Directors
Irvine, California DENNIS R. LEIBEL
September 26, 1994 Secretary
AST RESEARCH, INC.
16215 ALTON PARKWAY
IRVINE, CALIFORNIA 92718
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 27, 1994
SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy is solicited by and on behalf of the Board of Directors of
AST Research, Inc. (the "Company") for use in connection with the Annual Meeting
of Stockholders to be held on Thursday, October 27, 1994, at 9:00 a.m., Pacific
Standard Time, and at any and all adjournments or postponements thereof.
The persons named as proxies were designated by the Board of Directors and
are officers and/or directors of the Company. Any proxy may be revoked or
superseded by executing a later proxy or by giving notice of revocation in
writing to the Secretary prior to, or at, the Annual Meeting, or by attending
the Annual Meeting and voting in person. All proxies which are properly
completed, signed and returned to the Company prior to the meeting, and not
revoked, will be voted in accordance with the instruction given in the proxy. If
a choice is not specified in the proxy, the proxy will be voted FOR the election
of the director nominees listed below, FOR the proposal to increase the number
of authorized shares, FOR the proposal to increase the size of the Board of
Directors, FOR the proposal to approve the Performance Based Annual Management
Incentive Plan, FOR the proposal to amend the 1989 Long-Term Incentive Program
to increase the number of shares available thereunder, FOR the proposal to
approve the 1994 One-Time Grant Stock Option Plan for Non-Employee Directors,
and FOR the proposal to ratify the appointment of Ernst & Young as independent
auditors for the Company.
This Proxy Statement and the accompanying proxy are being mailed to
stockholders on or about September 26, 1994. The Company has retained the
services of American Stock Transfer & Trust Co. and D.F. King & Co., Inc. to
assist in soliciting proxies from brokers and nominees for the Annual Meeting.
The estimated cost for these services including mailing costs is $65,000 and
will be borne by the Company. It is contemplated that this solicitation will be
primarily by mail. In addition, some of the officers, directors and employees
of the Company may solicit proxies personally, by telephone or fax.
VOTING AT THE MEETING
The shares of Common Stock constitute the only class of securities of the
Company entitled to notice of, to attend and to vote at, the Annual Meeting.
Only stockholders of record at the close of business on September 16, 1994 will
be entitled to vote at the meeting or any adjournment or postponement thereof.
As of September 16, 1994, there were 32,355,000 shares of Common Stock issued
and outstanding, each share being entitled to one vote on each matter to be
voted upon.
Votes at the Annual Meeting, including those cast in person or by proxy, will
be tabulated by the Inspector of Elections appointed by the Board of Directors.
Abstentions and broker non-votes will be counted as present for purposes of
determining the existence of a quorum. Abstentions will be treated as shares
present and entitled to vote for purposes of any matter requiring affirmative
vote of a majority or other proportion of the shares present and entitled to
vote. With respect to shares relating to any proxy as to which a broker non-
vote is indicated on a proposal, those shares will not be considered present and
entitled to vote with respect to any such proposal. Abstentions or non-votes or
other failures to vote will have no such effect in the election of directors,
who will be elected by a plurality of the affirmative votes cast. With respect
to any matter brought before the Annual Meeting requiring the affirmative vote
of a majority or other proportion of the outstanding shares, an abstention or
non-vote will have the same effect as a vote against the matter being voted
upon.
PROPOSAL 1
ELECTION OF DIRECTORS
The Certificate of Incorporation of the Company fixes the number of directors
at not less than three nor more than seven, with the exact number to be set by
resolution of the Board of Directors. The Board of Directors has set the
authorized number of directors at seven and proposes the election of seven
directors to hold office until the next annual meeting and until their
successors are elected and qualified. Unless authority to vote for directors
has been withheld in the proxy, the persons named in the enclosed proxy intend
to vote at the meeting for the election of the seven nominees presented below.
Persons named as proxies may not vote for the election of any person to the
office of director for which a bona fide nominee is not named in the Proxy
Statement. All nominees have consented to serve as a director for the ensuing
year. Although the Board of Directors does not contemplate that any of the
nominees will be unable to serve, if any nominee withdraws or otherwise becomes
unavailable to serve, the persons named in the enclosed proxy will vote for any
substitute nominee designated by the Board of Directors. The nominees
receiving a plurality of the affirmative vote will be elected.
The names and certain information concerning the persons to be nominated as
directors by the Board of Directors at the Annual Meeting are set forth below.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES NAMED BELOW.
BRUCE C. EDWARDS, 40, rejoined the Company in March 1988 as Senior Vice
President, Finance and Chief Financial Officer. In July 1994, Mr. Edwards was
named Executive Vice President and Chief Financial Officer and appointed to the
Company's Board of Directors. Mr. Edwards was first with the Company as Vice
President, Finance from August 1983 and Chief Financial Officer from November
1983 to September 1986. Mr. Edwards currently serves on the Board of Directors
of Xircom, Inc. and Platinum Software Corporation.
RICHARD J. GOEGLEIN, 60, has served as a director since May 1987. Mr.
Goeglein is founder and principal of Gaming Associates, a casino management
company which develops and operates hotels/casinos at selected locations in the
United States. Mr. Goeglein served as President and Chief Executive Officer of
Dakin, Inc. from April 1990 through September 1991. Since January 1988, Mr.
Goeglein has also been the Chairman of ConServ International, a consulting and
real estate development business. From 1984 to his retirement date of December
31, 1987, Mr. Goeglein was the President and Chief Operating Officer of Holiday
Corporation, the holding company of Holiday Inns, Inc. Mr. Goeglein also served
on the Board of Directors of Holiday Corporation from 1978 to 1987. Mr.
Goeglein currently serves as a director of Boomtown Hotels and Casinos and
Hornblower Dining Yachts, Inc.
JACK W. PELTASON, 71, was appointed as a director in July 1993. Mr. Peltason
has served as President of the University of California system since October
1992, following eight year tenures as Chancellor of the University of
California, Irvine and President of the American Council of Education, and a 10
year term as Chancellor at the University of Illinois at Urbana-Champaign. Mr.
Peltason is currently on the Board of Directors of Koll Management Services and
Irvine Apartment Communities and serves as a member of the Board of Trustees for
the FHP Foundation, Irvine Health Foundation, and Teachers Insurance and Annuity
Association.
SAFI U. QURESHEY, 43, one of the founders of the Company, has served as a
director since the Company's inception and as President from the Company's
inception through July 1994. In July 1988, Mr. Qureshey was elected Chief
Executive Officer. Mr. Qureshey served as Co-Chairman of the Board from 1988
through June 1992, and was elected Chairman of the Board in November 1993. Mr.
Qureshey currently serves on the Board of the American Business Conference and
the Technology Leadership Council of California and is Chairman of the Corporate
Council on Africa and the California Business Higher Education Forum.
CARMELO J. SANTORO, PH.D., 53, served as Chairman of the Board from June 1992
until November 1993 and as a director since September 1990. Effective November
1993, Dr. Santoro was elected Vice Chairman of the Board. Dr. Santoro is
Chairman and Chief Executive Officer of Platinum Software Corporation.
Dr. Santoro was President and Chief Executive Officer of Silicon Systems, Inc.
from 1982 through 1991 and was Chairman from 1984 through 1989, when Silicon
Systems, Inc. was acquired by TDK Corporation of Tokyo, Japan. From 1980 to
1982, Dr. Santoro was Vice President, Integrated Circuits at the Solid State
Division of RCA. In addition to Platinum Software Corporation, Dr. Santoro is
currently a director of Dallas Semiconductor Corporation, S3, Inc. and the
Cerplex Group.
JAMES T. SCHRAITH, 37, was named President and Chief Operating Officer and
was appointed to the Company's Board of Directors in July 1994. Mr. Schraith
joined the Company in March 1987 as Director of Customer Support. He was
appointed Vice President, North American Services in November 1988 and in August
1990, became Vice President, Channel Sales and Services. In July 1992, Mr.
Schraith was promoted to Vice President, U.S. Sales and Service and in July 1993
was appointed Senior Vice President, Sales and Service. Prior to joining the
Company, Mr. Schraith was employed for nine years by Schlumberger Ltd., where he
served as Manager, Technical Services, National Product Sales Manager and
Director of Marketing. Mr. Schraith currently serves on the Board of Directors
of Pinnacle Micro, Inc.
DELBERT W. YOCAM, 50, has been a director of the Company since August 1992.
He is currently President, Chief Operating Officer and a director of Tektronix,
Inc. Prior to joining Tektronix, Mr. Yocam was an independent consultant. From
1979 to 1989, Mr. Yocam was employed by Apple Computer, Inc., serving as
President of Apple Pacific from 1988 to 1989 and Executive Vice President and
Chief Operating Officer of Apple Computer, Inc. from 1986 to 1988. Mr. Yocam is
a director of Adobe Systems, Inc. and Oracle Corporation.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of September 1, 1994,
with respect to all those known by the Company to be the beneficial owners of
more than 5% of its outstanding Common Stock, each director, the Chief Executive
Officer and the four most highly compensated other executive officers, and all
directors and executive officers of the Company as a group. Unless otherwise
noted, each of the stockholders listed owns less than 1% and has sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by him, subject to community property laws where applicable,
and the information contained in the footnotes to this table. The Company had
32,255,000 shares outstanding at September 1, 1994.
<TABLE>
NUMBER OF SHARES PERCENTAGE OF
NAME OF BENEFICIAL OWNER OPTIONS (a) TOTAL SHARES OUTSTANDING
<S> <C> <C> <C>
Connor, Clark & Company, Ltd. (b) 0 1,723,035 5.34%
Richard J. Goeglein 49,000 66,000 ---
Jack W. Peltason 5,000 5,300 ---
Carmelo J. Santoro, Ph.D. 15,500 15,500 ---
Delbert W. Yocam 13,000 13,000 ---
Safi U. Qureshey (c) 590,000 3,056,412 9.31%
James T. Schraith 15,000 21,000 ---
Bruce C. Edwards (d) 110,000 161,400 ---
James L. Forquer 25,000 25,000 ---
Richard P. Ottaviano 48,000 48,000 ---
All directors and executive officers as a group 976,500 3,540,838 10.66%
</TABLE>
____________________
(a)Includes shares which executive officers and directors have the right to
acquire within 60 days of September 1, 1994 under stock option and warrant
agreements.
(b)These shares are beneficially owned by Connor, Clark & Company, Ltd. 40 King
Street, Suite 2020, Toronto, Ontario, Canada M5H3Y2.
(c)Includes 92,572 shares held by Nancy Marshall as custodian for minor
children of Mr. Qureshey to which Mr. Qureshey disclaims any beneficial
interest.
(d)Includes 1,000 shares held by Mary Pat DeMayo Buskard as trustee for
minor children of Mr. Edwards to which Mr. Edwards disclaims any beneficial
interest.
EXECUTIVE OFFICERS
The following table sets forth the name and age of each executive officer of
the Company at September 16, 1994, his positions and offices with the Company
and the period during which he has served as an executive officer of the
Company:
<TABLE>
EXECUTIVE
OFFICER
NAME AGE POSITION(S) SINCE
<S> <C> <C> <C>
Safi U. Qureshey 43 Chief Executive Officer 1980
and Chairman of the Board
James T. Schraith 37 President and Chief Operating Officer 1991
Bruce C. Edwards 40 Executive Vice President and 1988
Chief Financial Officer
James L. Forquer 44 Senior Vice President, Worldwide 1993
Operations
Richard P. Ottaviano 48 Senior Vice President, Administration 1991
Dennis R. Leibel 50 Vice President, Legal and Treasury 1986
Operations and Secretary
Scott A. Smith 39 Vice President and General Manager, 1993
Server Products
Wai S. Szeto 46 Vice President, Corporate Development 1987
</TABLE>
For information on the business background of Mr. Qureshey, Mr. Schraith and
Mr. Edwards see "Directors" above.
JAMES L. FORQUER joined the Company in July 1993 as Senior Vice President,
Worldwide Operations. Prior to joining the Company, he served most recently as
Vice President, Worldwide Operations for Apple Computer, Inc. During his 12
years with Apple, Mr. Forquer also held the positions of Senior Director, U.S.
Operations and Managing Director, Singapore Operations. Prior to Apple
Computer, Inc., he served in various management positions for Recognition
Equipment and Texas Instruments.
RICHARD P. OTTAVIANO joined the Company in October 1990 as Vice President,
Human Resources and was promoted to Senior Vice President, Administration in
August 1992. Prior to joining the Company, he served as Corporate Vice
President, Human Resources for Cipher Data Products. From 1973 to 1986, Mr.
Ottaviano held various positions with Xerox Corporation, including Vice
President, Human Resources. Mr. Ottaviano currently serves on the Board of
Directors for Irvine Medical Center and PACE Therapy, Inc.
DENNIS R. LEIBEL joined the Company in December 1985 as Treasurer and in
March 1988, was elected Vice President, Administration and General Counsel. In
January 1989, Mr. Leibel was elected Vice President, Legal and Treasury
Operations and Secretary. Prior to joining the Company, Mr. Leibel was employed
for over seven years by Smith International, Inc., where he served as Director
of Taxes, Vice President, Tax and Financial Planning and subsequently as Vice
President, Finance. Mr. Leibel currently serves on the Executive Committee of
the Board of Directors of the World Trade Center Association of Orange County
and the Advisory Board of Directors of Court Appointed Special Advocates of
Orange County (CASA).
SCOTT A. SMITH joined the Company in January 1993 as Vice President,
Engineering. In March 1994, Mr. Smith was appointed Vice President and General
Manager for Server Products. Prior to joining the Company, Mr. Smith served at
IBM for 16 years, most recently as Director, Visual Subsystems with
responsibility for IBM's high volume monitor business and as Systems Manager,
Advanced Personal Systems.
WAI S. SZETO joined the Company in February 1985 as Director of New Products.
In July 1985, Mr. Szeto became Vice President, Strategic Planning and New
Business Development and in April 1986, was elected Vice President, Sub-Systems
Group. In November 1987, Mr. Szeto was elected Vice President, Worldwide
Manufacturing Planning and in April 1989, was elected Vice President,
Engineering. In January 1993, Mr. Szeto was appointed Vice President, Corporate
Development. Prior to joining the Company, Mr. Szeto was founder and Executive
Vice President of High-Tech Peripherals Corporation.
COMPENSATION OF DIRECTORS
The directors of the Company serve until their successors are elected and
duly qualified. Non-employee directors receive annual retainers of $30,000 paid
at the rate of $2,500 per month and additional committee meeting fees of $2,000
per meeting for the Chairman and $1,000 per meeting per committee member.
Commencing November 1993, Dr. Carmelo J. Santoro, Vice Chairman of the Board of
Directors, receives an additional annual retainer of $95,000. Prior to November
1993, Dr. Santoro was paid a retainer for consulting services to the Company.
See "Compensation Committee Interlocks and Insider Participation" below.
The 1991 Stock Option Plan for Non-Employee Directors provides for an initial
grant of options to purchase 20,000 shares of the Company's Common Stock to each
newly elected or appointed non-employee director. In addition, on January 1 of
each year, each participant will receive an option to purchase 12,000 shares of
the Company's Common Stock. The aggregate number of shares that may be issued
under the plan is 250,000. Options vest and become exercisable at the rate of
25% per year commencing on the first anniversary of the date of grant.
The 1994 One-Time Grant Stock Option Plan for Non-Employee Directors
provides, subject to stockholder approval (see Proposal 6), that each member of
the Company's Board of Directors on July 1, 1994 who is not an employee of the
Company be granted an option to purchase 50,000 shares of the Company's Common
Stock. The aggregate number of shares of Common Stock which may be issued
pursuant to the plan is 250,000 and no participant may receive options covering
more than 50,000 shares in any calendar year. Options vest and become
exercisable at the rate of 12.5% per year, commencing on the first anniversary
of the date of grant. Based upon the performance of the Company's Common Stock,
vesting may be accelerated, but in no event prior to July 1, 1995.
In December 1990, the Board of Directors authorized the issuance of warrants
to purchase an aggregate of 80,000 shares of the Company's Common Stock to its
then non-employee Board members. Such warrants are exercisable at $13.875 per
share and vest over a three-year period. During fiscal 1994, 40,000 of such
warrants were exercised and at July 2, 1994, 40,000 shares remained exercisable.
In July 1992, the Board of Directors authorized the issuance of warrants to
purchase 50,000 shares of Common Stock to Dr. Santoro, the Company's then
Chairman of the Board. Such warrants are exercisable at $13.50 per share and
vest over a four-year period. During fiscal 1994, 12,500 of such warrants were
exercised and the balance were not exercisable at fiscal year end.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Goeglein, Mr. Peltason, Dr. Santoro, and Mr. Yocam served on the
Compensation Committee during fiscal 1994. Dr. Santoro, Vice Chairman of the
Board of Directors, served as Chairman of the Compensation Committee until
October 1993, at which time he resigned from the Committee. In addition to his
compensation as a director, the Company had entered into a consulting agreement
(which commenced in July 1992 and expired in November 1993) with Dr. Santoro to
provide assistance in corporate organization and other matters. Pursuant to and
during the term of such agreement, Dr. Santoro received an aggregate of $99,167.
In addition to serving on the Company's Board of Directors, both Dr. Santoro and
Mr. Edwards serve on the Board of Directors of Platinum Software Corporation
("Platinum"), which manufactures accounting software systems. At Platinum, Dr.
Santoro, is also an executive officer and Mr. Edwards serves on the Compensation
Committee of the Board of Directors. In such capacities, each of Dr. Santoro
and Mr. Edwards has influence over the fees, equity participation and other
compensation paid to the other person by Platinum. Dr. Santoro, as a member of
AST's Board and Compensation Committee, had direct influence over the equity
participation awards and compensation paid to Mr. Edwards in his capacity as an
executive officer of AST. As continuing AST Board members, each will continue
to have influence over the equity participation and compensation paid to the
other by AST. Prior to either Dr. Santoro's or Mr. Edwards' joining the
Platinum Board of Directors, AST purchased certain accounting software systems
from Platinum. In fiscal 1994, amounts paid to Platinum by AST were less than
$2,000 and related primarily to service and maintenance of previously purchased
products. The Company believes that the terms and conditions of its purchase
relationship with Platinum are as favorable to AST as those that could have been
obtained from any other third party vendor of similar products and services.
COMMITTEES OF THE BOARD
The Board of Directors is responsible for the overall affairs of the Company.
Authority with respect to certain matters of the Company has been delegated to
standing committees of the Board of Directors, which are the Executive
Committee, Audit Committee and Compensation Committee. The Board of Directors
does not have a standing Nominating Committee.
The Executive Committee was established in January 1987 and is empowered to
act for and on behalf of the Board of Directors and its committees, but may not
undertake actions reserved in the Bylaws to the Board itself, such as filling
vacancies on the Board and declaring certain dividends to stockholders. Actions
by the Executive Committee are to be reported for review and ratification by
written consent or at a subsequent meeting of the Board of Directors. Messrs.
Qureshey and Santoro served on the Committee during fiscal 1994. Mr. Schraith
was appointed to the Committee in July 1994. No meetings were held in fiscal
1994.
The Audit Committee has the responsibility of recommending to the Board of
Directors the appointment of the Company's outside auditors, reviewing the
auditors' reports, management reports and various audit criteria, and consulting
with the auditors concerning the adequacy of internal accounting controls.
Mr. Goeglein, Mr. Peltason, Dr. Santoro, and Mr. Yocam are the members of the
Audit Committee, which held three meetings in fiscal 1994.
The Compensation Committee is empowered to review and administer the
Company's compensation practices and policies, which include administering the
Company's incentive compensation plans, reviewing compensation levels of the
Company's officers and directors, reviewing the Company's long range plans for
management development and examining the Company's compensation structure as it
relates to industry practices. Mr. Goeglein, Mr. Peltason, and Mr. Yocam are
the members of the Compensation Committee. Dr. Santoro served on the
Compensation Committee until October 1993. The Compensation Committee held four
meetings in fiscal 1994.
ATTENDANCE AT MEETINGS
During fiscal 1994, the Board of Directors held a total of seven meetings, of
which three were special meetings conducted by telephone. Each member of the
Board of Directors attended 75 percent or more, aggregately, of the meetings of
the Board of Directors during the period in which he was a director and meetings
of the committees of which he was a member.
EXECUTIVE COMPENSATION
The following tables and report present information concerning the cash
compensation and stock options provided to Messrs. Qureshey, Schraith, Edwards,
Forquer and Ottaviano. The notes to these tables provide more specific
information regarding compensation.
SUMMARY COMPENSATION TABLE
<TABLE>
Annual Compensation Long-Term Compensation
------------------------------ -----------------------------
Restricted Incentive All
Other Annual Stock Plan Other
Name and Fiscal Salary Bonus Compensation Awards Options Payouts Compensation
Principal Position Year ($) ($) ($) ($) (#) ($) ($)
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Safi U. Qureshey 1994 623,076 236,221 36,465 (a) - 125,000 - 148,119(b)(c)
Chief Executive 1993 543,700 514,298 93,960 - 60,000 - 184,580
Officer and Chairman of the Board 1992 498,270 777,379 - - 60,000 - -
James T. Schraith 1994 314,009 130,191 - - 65,000 - 9,173(b)
President and Chief 1993 228,256 124,168 1,095 - 20,000 - 5,673
Operating Officer 1992 171,077 162,139 - - 10,000 - -
Bruce C. Edwards 1994 297,337 80,137 3,496 - 75,000 - 7,021(b)
Executive Vice President 1993 251,873 256,454 4,980 - 30,000 - 6,283
and Chief Financial Officer 1992 224,615 287,348 - - 15,000 - -
James L. Forquer 1994 263,815 74,798 447,019 (d) - 115,000 - 846(b)
Sr. Vice President, 1993 - - - - - - -
Worldwide Operations 1992 - - - - - - -
Richard P. Ottaviano 1994 223,683 63,868 600 - 55,000 - 6,609(b)
Sr. Vice President, 1993 184,373 154,620 2,442 - 30,000 - 5,919
Administration 1992 149,231 208,196 - - 10,000 - -
</TABLE>
(a)Other Annual Compensation includes Medical Reimbursement and Tax and Estate
Planning. Tax and Estate Planning for Mr. Qureshey in fiscal 1994
aggregated $36,465.
(b)The Company's matching contribution to the Company 401(k) Plan. The
contribution for Mr. Qureshey was $5,140.
(c)The Company maintains an aggregate of $24,000,000 of split dollar life
insurance policies insuring the survivor of Mr. Qureshey and his spouse.
The portion of the premium paid for term life insurance coverage in fiscal
1994 was $19,679. The remainder of the premium paid in fiscal 1994, less
the projected present value of the repayment due the Company, was $123,300.
(d)In August 1993, the Company entered into an agreement with Mr. Forquer to
assist in his relocation. The Company purchased the equity interest in Mr.
Forquer's northern California residence for $900,000 allowing for a quick
sale in otherwise unfavorable market conditions. The Company ultimately
recognized $615,000 of the equity upon the sale of the property. In
addition, the Company paid $152,850 and $7,215 for additional real estate
and temporary living costs, respectively.
AGGREGATED OPTION EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES
<TABLE>
Number of Value of Unexercised
Unexercised In-the-Money
Options at Options at
Shares Value Fiscal Year-End (#) Fiscal Year-End ($)
Acquired on Realized
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Safi U. Qureshey - - 590,000 205,000 4,577,500 -
James T. Schraith 33,000 388,375 15,000 78,500 10,156 -
Bruce C. Edwards - - 110,000 100,000 509,375 -
James L. Forquer - - 25,000 90,000 - -
Richard P. Ottaviano 15,000 311,250 40,500 86,000 - 50,625
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term
% of Total
Options
Options Granted to Exercise or
Granted (a) Employees Base Price Expiration
Name (#) in Fiscal Year ($/Share) Date 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
Safi U. Qureshey 100,000 7.38% 15.75 7/27/03 990,509 2,510,144
25,000 1.84% 16.88 6/01/04 (b) 265,315 672,360
James T. Schraith 50,000 3.69% 15.75 7/27/03 495,255 1,255,072
15,000 1.11% 16.88 6/01/04 (b) 159,189 403,416
Bruce C. Edwards 60,000 4.43% 15.75 7/27/03 594,305 1,506,087
15,000 1.11% 16.88 6/01/04 (b) 159,189 403,416
James L. Forquer 100,000 7.38% 15.75 7/27/03 990,509 2,510,144
15,000 1.11% 16.88 6/01/04 (b) 159,189 403,416
Richard P. Ottaviano 40,000 2.95% 15.75 7/27/03 396,204 1,004,058
15,000 1.11% 16.88 6/01/04 (b) 159,189 403,416
</TABLE>
(a)All option grants were new and not granted in connection with an option
repricing transaction. All options vest and become exercisable at the rate
of 25% per year commencing on the first anniversary of the date of grant or
at the discretion of the Board of Directors or Compensation Committee.
Options expire 10 years from the date of grant.
(b)June 1, 1994 option grants are part of a split option grant to key
executives which requires the Company to grant an equivalent number of
options to the grantees on November 1, 1994. Under the provisions of the
split-grant, the Company will grant Messrs. Qureshey, Schraith, Edwards,
Forquer and Ottaviano options of 25,000, 15,000, 15,000, 15,000, and
15,000, respectively, on November 1, 1994, with an exercise price equal to
the fair market value of the Company's Common Stock on that date.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
On July 27, 1993, the Company entered into a five-year revolving term
employment agreement with Mr. Qureshey ("Agreement" or "Founder's Agreement"),
which provides in certain circumstances for a possible consulting term and other
post-termination benefits. All post-termination benefits are conditioned upon
Mr. Qureshey's not undertaking competing employment and his not soliciting away
Company employees. In addition, Mr. Qureshey agreed that he will vote his
shares along with the other stockholders in the election of directors and will
not join or participate against the Board in any proxy solicitation, and will
offer the Company a right of first refusal on any 100,000 or more share blocks
proposed to be sold by him in any private sale. If Mr. Qureshey should accept
non-competing but substantial employment with any other company or firm during
any period of active employment, consulting, or post-termination benefits under
the Founder's Agreement, the Company may elect that Mr. Qureshey cease to be an
employee or consultant and be entitled to receive an aggregate lump sum equal to
50% of the salary and/or bonus, if any, which he is then receiving and which he
otherwise would be entitled to receive for the remaining balance of the
employment or post-termination benefit or consulting period, as described below;
however, all other benefits would cease and Mr. Qureshey would continue to be
bound by the restrictions concerning competing employment, non-solicitation of
employees, the voting of shares and the right of first refusal. At any time
following one year from a date of employment termination, Mr. Qureshey may elect
to terminate the foregoing restrictions upon 90 days' written notice, in which
event all Company obligations and benefits payable under the Founder's Agreement
would cease, all stock option acceleration would be rescinded and any
outstanding loans to Mr. Qureshey would have to be repaid to the Company within
90 days. Nevertheless, Mr. Qureshey would continue to be bound by the
provisions of the Founder's Agreement pertaining to the Company's confidential
and proprietary information.
If Mr. Qureshey's employment is terminated for "cause," the Company will be
obligated to pay him only such severance compensation as shall have vested and
as the Board otherwise deems appropriate, or none at all, and the Company's
obligations under the Founder's Agreement will be null and void. If Mr.
Qureshey becomes disabled, upon the expiration of six consecutive months of
disability, Mr. Qureshey's employment may be terminated by the Company. In such
event or in the event of Mr. Qureshey's death, in addition to amounts paid from
insurance policies, Mr. Qureshey or his estate will be entitled to receive his
base salary and bonus for at least one year, the restriction period on all
restricted stock granted to him under Company plans shall lapse and all stock
options or other such rights which otherwise would have vested within two years
of such event will accelerate and become fully vested and remain exercisable in
accordance with their respective terms.
During employment, Mr. Qureshey will receive his salary, bonus and all other
benefits, including a $25,000 financial planning allowance and a gross-up for
income tax on such allowance, consistent with past practices. If Mr. Qureshey's
active employment is terminated by him for "good reason" or by the Company
without "cause," Mr. Qureshey shall continue to receive his base salary for a
benefit period of five years following termination. In either event, (a) Mr.
Qureshey shall be entitled to receive his annual bonus for the year in which
termination occurs, pro rated to the date of termination, as well as bonuses for
the two fiscal years following termination, such bonus amounts being determined
by taking the average of the bonuses paid to Mr. Qureshey in the preceding two
years; (b) all stock options shall accelerate and become exercisable and all
restrictions on restricted stock awards shall lapse; (c) the benefits allowance
for death or disability shall continue for a period of five years from the date
of termination; and (d) all of his benefits payable under the Company's tax-
qualified employee benefit plans or other programs pertaining to deferred
compensation, retirement, profit sharing, 401(k), or employee stock ownership
(if any) will be paid. In addition, if Mr. Qureshey enters into loan
agreements for the purpose of exercising options or other rights to acquire
securities, the Company will guarantee such loans (up to $3,000,000) and pay the
interest on them for a period ending 13 months after the date of the event
causing tax liability to be incurred by reason of such exercise.
In the event of Mr. Qureshey's disability or of his termination by the
Company without "cause" or termination of employment by Mr. Qureshey for "good
reason," Mr. Qureshey will also be entitled to receive additional benefits
during the first five-year post-termination benefit period including an office,
health and welfare benefits, continued use of a Company automobile followed by
transfer of title of such automobile to Mr. Qureshey at the end of the five-year
period, and up to $25,000 per year grossed up for income taxes for estate, tax
and financial planning services.
Following such five-year post-termination benefits period, provided Mr.
Qureshey has not and does not undertake substantial or competing employment, the
Company indefinitely will provide continued health and welfare benefits, with
Mr. Qureshey paying or reimbursing the Company the average cost of such
coverages, and Mr. Qureshey will have the title Vice Chairman. For a period of
up to five years following the first five-year post-termination benefits period,
Mr. Qureshey may elect to become a consultant and receive 60% of his former base
and be entitled to receive the additional benefits described in the foregoing
paragraph. If prior to any termination Mr. Qureshey undertakes an "early
retirement" from active employment and otherwise is not receiving the post-
termination benefits enumerated above, he may at his election become a
consultant to the Company and become subject to the restrictions under the
Founder's Agreement and also become entitled to receive 80% of his then base
salary for a period of five years, as well as the additional benefits listed
above. Bonus amounts will not be required during any consulting period.
Mr. Qureshey's benefits under the Founder's Agreement are in addition to and
not in lieu of the benefits payable to him under the Severance Compensation
Agreement (see below) entered into between the Company and Mr. Qureshey. Mr.
Qureshey will be entitled to all of the benefits specified in the Severance
Compensation Agreement, whether or not his active employment is terminated
following a change of control of the Company, but will not otherwise participate
in the officer involuntary termination policy described below.
At the Annual Meeting of Stockholders held in May 1987, the stockholders
authorized and approved an indemnification program for corporate officers and
directors under which the Company and each corporate officer and director
entered into an Indemnification Agreement, substantially in the form approved by
the stockholders.
The Company has entered into Severance Compensation Agreements with each of
the persons named under the caption "Executive Officers" above. Under the
agreements, in the event of a "change in control" of the Company and either the
Company terminates the officer's employment for any reason other than death,
disability or retirement or if the officer terminates his employment for good
reason, as defined in the agreement, then (a) the Company shall pay the officer
severance compensation equal to two years' salary and bonuses and (b) all stock
options held by the officer, to the extent that they would become exercisable
within two years of the change in control, shall to that extent be accelerated
and expire at the end of six months following termination. Under the agreements
the Company will indemnify the officer in case of imposition of excise taxes on
excess "parachute payments" under Section 4999 of the Internal Revenue Code of
1986, as amended. The agreements terminate two years following the date on
which notice of termination is given by either the Company or the officer to the
other, or upon the death, disability, retirement or upon termination of
employment for cause, or two years following a change in control if the officer
has not terminated employment for good reason. The Board has discretion to
offer similar agreements to new or other officers of the Company.
The Company has a severance policy for its executive officers which, in the
event of an involuntary termination, other than in connection with a "change in
control," requires the Company to pay its President severance equal to two years
salary and its other executive officers severance equal to six months salary
plus an additional month of salary for each year of employment with the Company,
up to a maximum of 12 months. Benefits are also continued during this period.
CERTAIN TRANSACTIONS
In August 1993, the Company entered into an agreement with Senior Vice
President James L. Forquer to assist in his relocation. The Company purchased
the equity interest in Mr. Forquer's northern California residence for $900,000,
allowing for a quick sale in otherwise unfavorable market conditions. The
Company ultimately realized approximately $615,000 of the equity upon sale of
the property. In addition, the Company paid $152,850 and $7,215 for additional
real estate and temporary living costs, respectively.
In September 1993, the Company loaned Vice President Scott A. Smith $100,000
for the purchase of a primary residence, evidenced by a promissory note secured
by a deed of trust. The loan was issued interest free and is payable in full
three years from the date of the loan. At September 16, 1994, the entire amount
remained outstanding.
See "Compensation Committee Interlocks and Insider Participation" above.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Company's compensation policies applicable to its executive officers are
administered by the Compensation Committee (the "Committee") of the Board of
Directors. The Committee is made up entirely of non-employee directors. The
Committee retains the services of an independent compensation consultant to
assist the Committee with formulating and evaluating the Company's compensation
policies and programs. These programs and policies are designed to enhance
stockholder value by aligning the financial interests of the executive officers
of the Company with those of its stockholders.
There are four primary components of executive compensation: Base Salary,
the Employee Quarterly Bonus Plan, the Annual Management Incentive Plan, and
Stock Option Grants.
Base Salary. Base salaries for fiscal 1994 reported herein were determined
by the Committee in October 1993. The Committee reviews salaries recommended by
the Chief Executive Officer for executive officers other than the Chief
Executive Officer. In conducting its review, the Committee takes into
consideration survey data on (1) comparable organizations supplied by its
consultant, (2) the overall performance of the Company, and (3) the Chief
Executive Officer's evaluation of individual executive officer performance.
Final decisions on base salary adjustments for executives other than the Chief
Executive Officer are made in conjunction with the Chief Executive Officer. The
Committee independently determines the base salary for the Chief Executive
Officer by: (1) reviewing data supplied by its consultant on comparable
organizations, (2) examining the Company's performance against its preset goals,
(3) examining the Company's performance within the industry, and (4) evaluating
the overall performance of the Chief Executive Officer. Based upon the data and
performance, the Chief Executive Officer's base salary was raised from $550,000
to $650,000 per year, effective October 1, 1993.
Employee Quarterly Bonus Plan. This is a nonqualified bonus plan under which
all employees of the Company, including officers, are eligible to receive, on a
quarterly basis, an equal percentage of their base compensation as a cash bonus.
All employees, including officers, receive the same percentage. The bonus,
which is generally based upon pre-tax income for the quarter against preset
income objectives, is approved by the Committee, and is limited to a maximum of
15% of quarterly base compensation. For fiscal 1994, the quarterly percentage
payments were 0%, 4.0%, 0%, and 2.5%, respectively.
Annual Management Incentive Plan. The Annual Management Incentive Plan is
designed to provide incentive compensation to key officers and employees who
contribute substantially to the success of the Company. For fiscal 1994,
approximately 375 employees received incentive awards under this program. The
plan is designed to create a strong link between preset performance objectives
and enhanced shareholder value by providing targets that exceed industry
averages. The performance objectives of the plan for fiscal 1994 were revenue
growth and profitability. Performance targets are set above industry norms,
requiring above average performance against the industry for significant awards
under this program. The incentive funding formula provides an opportunity for
up to 100% of base salary plus a share of profits as set in advance by the
Committee if the maximum performance targets are exceeded. The maximum award
allowable under the plan cannot exceed $3,000,000 for the Chief Executive
Officer and $1,500,000 for any other participant in any plan year. The
Committee may reduce an individual's bonus otherwise payable under this plan at
its sole discretion. During fiscal 1994, results did not exceed the maximum
targets and, therefore, no additional share of profits was awarded. Mr.
Qureshey earned an award of $225,000 in fiscal 1994 based upon achievement of
predetermined performance goals, specifically revenue growth and pre-tax profit
weighted equally. The awards were granted by the Committee in August 1994.
Stock Option Grants. The Committee periodically grants options under the
stockholder-approved option plans with an exercise price equal to the fair
market value on the date of grant. The grants are nonqualified stock options
with a ten year term which vest over four years in equal installments. The
awards are intended to retain and motivate key executives and to provide a
direct link with the interests of the stockholders of the Company. The
Committee, in making its determination as to award levels, takes into
consideration: (1) information provided by its consultant on competitive
practices, (2) prior award levels, (3) total awards received to date by
individual executives, (4) the total stock award to be made and the executive's
percentage participation in that award, (5) the executive's direct ownership of
the Company's shares, (6) the number of options vested and nonvested, and (7)
the options outstanding as a percentage of total shares outstanding. The grants
for the executives were made by the Committee in July 1993 and June 1994 at the
fair market value on the date of grant of $15.75 and $16.88, respectively. The
Chief Executive Officer was awarded grants totaling 125,000 shares, representing
9.22% of the total options granted to employees during the fiscal year. In
addition, pursuant to the provisions of the June 1, 1994 split grant, he will be
granted an additional 25,000 shares on November 1, 1994 with an exercise price
equal to the fair market value of the Company's Common Stock at that date.
Compliance with Internal Revenue Code Section 162(m). Internal Revenue Code
Section 162(m), enacted in 1993, precludes a public corporation from taking a
deduction in 1994 or subsequent years for compensation in excess of $1 million
for its chief executive officer or any of its four other highest-paid executive
officers. Certain performance-based compensation that has been approved by
stockholders, however, is specifically exempt from the deduction limit. The
Company currently intends to structure the performance-based portion of the
compensation of its executive officers (which currently consists of stock option
grants, the Employee Quarterly Bonus Plan and the Annual Management Incentive
Plan) in a manner that it believes will comply with the new statute. Pursuant
thereto, the Company is requesting that stockholders approve the Performance
Based Annual Management Incentive Plan at the Annual Meeting (see Proposal 4).
Further, interpretations of and changes in the tax laws and other factors beyond
the Committee's control may affect the deductibility of compensation. In
addition, the Committee reserves the right to award compensation to the
Company's officers that is not considered performance based under Section 162(m)
when the Committee determines that such compensation is appropriate.
Change in Control Arrangements. In addition, the Committee reviews and
administers policies and programs with respect to employment agreements and
change in control arrangements with executives. The Committee believes that
change in control arrangements with executives serve the important purpose of
assuring continuing loyalty and concentration despite the anticipated
distractions inherent in change of control transactions.
Compensation Committee:
Delbert W. Yocam, Chairman
Richard J. Goeglein
Jack W. Peltason
STOCK PERFORMANCE GRAPH
The following stock performance graph shows the cumulative total return
(assuming dividend reinvestment) on $100 invested June 30, 1989, in shares of
the Company's Common Stock, the S&P 500 Index selected by Standard & Poors, and
the S&P Computer Systems Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
PERFORMANCE GRAPH MEASUREMENT POINTS
S&P 500 COMPUTER
MEASUREMENT DATE AST RESEARCH, INC. S&P 500 INDEX SYSTEMS INDEX
- - ----------------- ----------------- ----------------- -----------------
June 30, 1989 $100 $100 $100
June 29, 1990 273 113 100
June 28, 1991 463 117 84
June 26, 1992 294 127 80
July 2, 1993 343 140 52
July 1, 1994 326 140 55
PROPOSAL 2
AMENDMENT OF CERTIFICATE OF INCORPORATION TO
INCREASE AUTHORIZED COMMON STOCK
The Board of Directors has directed that there be submitted to the
stockholders of the Company at the meeting a proposed amendment to Article 4 of
the Company's Certificate of Incorporation to increase the number of authorized
shares of Common Stock of the Company from 70,000,000 shares to 200,000,000
shares. Such amendment was declared advisable and unanimously approved by the
Company's Board of Directors on August 1, 1994. No increase in the number of
authorized shares of Preferred Stock of the Company, currently 1,000,000 shares,
is anticipated. As more fully set forth below, the proposed amendment is
intended to improve the Company's flexibility in meeting its future needs for
unreserved Common Stock. However, in addition to general corporate purposes, the
proposed amendment can be used to make more difficult a change in control of the
Company.
As of the close of business on September 16, 1994, 32,355,000 shares of
Common Stock of the Company were issued and outstanding, and 4,043,020 shares
of Common Stock were committed for issuance pursuant to outstanding stock
options and stock purchase warrants. In addition, an aggregate of 4,092,795
shares of Common Stock are reserved for the possible conversion of up to an
aggregate of $315,000,000 principal amount of the Company's Liquid Yield Option
Notes due 2013, leaving 29,509,185 shares of Common Stock unreserved. As of the
close of business on September 16, 1994, no shares of Preferred Stock were
issued and outstanding, but shares of the Company's Series A Junior
Participating Preferred Stock are reserved for issuance pursuant to the
Company's Shareholder Rights Plan described below, in an amount equal to one
one-hundredth of a share of such Preferred Stock for each outstanding share of
Common Stock.
If approved, the increased number of authorized shares of Common Stock will
be available for issue from time to time for such purposes and consideration as
the Board of Directors may approve and no further vote of stockholders of the
Company will be required, except as provided under Delaware law or under the
rules of any national securities exchange on which shares of Common Stock of the
Company are at the time listed. The availability of additional shares for
issue, without the delay and expense of obtaining the approval of stockholders
at a special meeting, will afford the Company greater flexibility in acting upon
proposed transactions in which shares of Common Stock may be issued. The
increase in the authorized Common Stock may facilitate certain anti-takeover
devices that may be advantageous to management if management attempts to prevent
or delay a change of control, but employing such devices may adversely impact
stockholders who desire a change in management or who desire to participate in a
tender offer or other sale transaction involving the Company. By use of anti-
takeover devices, management may thwart a merger or tender offer even though
stockholders might be offered a substantial premium over the then current market
price of the Common Stock.
The Company's reserve of authorized but unissued shares of Common Stock has
been depleted in recent years as a result of the exercise of stock options
granted under employee plans, the 100% stock dividend paid in February 1991 and
the reservation for conversion or acquisition of the Company's Liquid Yield
Option Notes due 2013. In addition, in connection with the Company's
acquisition in June 1993 of Tandy Corporation's PC manufacturing business, the
Company issued a three-year $96.7 million promissory note to Tandy Corporation,
of which up to 50% of the initial principal amount may be converted, at the
Company's option, into shares of Common Stock based upon the stock's fair market
value at the note's maturity. The Tandy acquisition also increased
significantly the number of employees eligible to participate in the Company's
equity incentive plans.
The additional shares of Common Stock for which authorization is sought
would be identical to the shares of Common Stock of the Company now authorized.
Holders of Common Stock do not have preemptive rights to subscribe to additional
securities which may be issued by the Company, which means that current
stockholders do not have a prior right to purchase any new issue of capital
stock of the Company in order to maintain their proportionate ownership thereof.
The additional authorized shares of Common Stock will restore the Company's
flexibility to issue Common Stock to a level that the Board of Directors
believes advisable. The Company currently has no plans to issue any additional
shares of Common Stock or Preferred Stock other than the shares that previously
have been reserved for issuance as described above. However, the additional
shares of Common Stock for which authorization is sought would be available for
issuance by the Company by action of the Board of Directors and could be used
for such purposes as stock dividends, stock splits, acquisitions, offerings of
stock or additional compensation plans.
In addition to such corporate purposes, under certain circumstances the
Board of Directors could create impediments to, or frustrate persons seeking to
effect, a takeover or transfer of control of the Company, by causing such
additional authorized shares to be issued to a holder or holders who might side
with the Board in opposing a takeover bid that the Board of Directors determines
is not in the best interests of the Company and its stockholders. In this
connection, the Board could issue shares of Common Stock to a holder that would
thereby have sufficient voting power to assure that certain types of proposals,
including any proposal to remove directors, to accomplish certain business
combinations opposed by the Board, or to alter, amend or repeal provisions in
the Company's Certificate of Incorporation or Bylaws relating to any such
action, would not receive the requisite stockholder vote. Furthermore, the
existence of such shares might have the effect of discouraging any attempt by a
person or entity, through the acquisition of a substantial number of shares of
Common Stock, to acquire control of the Company, since the issuance of such
shares could dilute the Common Stock ownership of such person or entity. As set
forth above, such devices may adversely impact stockholders who desire a change
in management or to participate in a tender offer or other sale transaction
involving a change in control of the Company. While it may be deemed to have
potential anti-takeover effects, the proposed amendment to increase the
authorized Common Stock is not prompted by any specific effort or takeover
threat currently perceived by management. Moreover, management does not
currently intend to propose additional anti-takeover measures in the foreseeable
future.
In 1989, the Board of Directors established a Shareholder Rights Plan
("Rights Plan") and issued under the Rights Plan, as a dividend to the holders
of Common Stock, rights to purchase Series A Junior Participating Preferred
Stock. The Rights Plan, as amended by the Board in 1991 and amended and
restated in 1994, is designed to protect stockholders against the adverse
consequences of partial takeovers and other abusive takeover tactics which the
Board of Directors believes are not in the best interests of the Company's
stockholders. Until certain contingencies set forth in the Rights Plan occur,
each issued and outstanding share of Common Stock carries such a right and the
right is not separable from the Common Stock. Certain circumstances described
in the Rights Plan (including an attempt to acquire the Company without the
approval of the Board of Directors) may result in such rights becoming rights to
purchase Common Stock of the Company or of an acquiring entity at one-half of
its market price, thus possibly deterring any such transaction and thus possibly
having an adverse impact on stockholders in the ways described above.
The Rights Plan is more fully described in the letter dated August 15, 1989
from Mr. Safi U. Qureshey, Chairman and Chief Executive Officer of the Company,
to the Company's stockholders, and is embodied in the amended and restated
Rights Agreement between the Company and American Stock Transfer & Trust Company
(which has succeeded Bank of America, NT & SA as Rights Agent). A copy of the
original Rights Agreement was filed with the Securities and Exchange Commission
as an exhibit to the Company's Registration Statement on Form 8-A with respect
to the rights covered by the Rights Plan, and the amended and restated Rights
Agreement was filed as an exhibit to the Company's Quarterly Report on Form 10-Q
for the quarter ended January 1, 1994. The foregoing brief description of the
Rights Plan is qualified in its entirety by reference to the text of the Rights
Agreement, as amended.
In the event the rights become exercisable for Common Stock of the Company,
the Company might have to issue a substantial number of new shares of Common
Stock. Although under the Rights Plan the Company is not now obligated to
reserve shares of Common Stock for issuance thereunder, a failure to have
sufficient shares available could result in a delay or failure of implementation
of all aspects of the Rights Plan. An increase in the authorized number of
shares of Common Stock could therefore make a change in control of the Company
more difficult by facilitating the complete operation of the Rights Plan.
Other potential anti-takeover measures were placed into effect when the
Company reincorporated in Delaware in 1987. In the reincorporation, the Company
became subject to the laws of Delaware, which generally may be considered more
favorable to management retention of control than are the corporate laws of
California. In conjunction with the reincorporation, proportional
representation through cumulative voting by stockholders in the election of
directors was eliminated in favor of straight voting by stockholders in which a
majority of a quorum of the shares voting elect the full Board. Under Delaware
statutes, a change in control may be delayed unless holders of a substantial
percentage of the outstanding voting securities approve a change of control
transaction. Although the Delaware statutes may protect stockholders against
partial takeovers and abusive takeover tactics, the effects of the statutes may
negatively impact stockholders desiring a change of control in the ways set
forth above. The reincorporation and related transactions were unanimously
approved by the Board of Directors and thereafter approved by the stockholders
at the Annual Meeting of Stockholders held on May 19, 1987.
In addition, the Company amended its Certificate of Incorporation in 1991
to establish that its Board of Directors consist of not less than three nor more
than seven members, which may be deemed to be an anti-takeover measure. See
"Proposal 3 - Amendment of Certificate of Incorporation to Increase Size of
Board of Directors." In July 1991, the Board also adopted certain amendments to
the Bylaws, for which stockholder approval was not required. Such amendments
(a) conformed the Bylaw provision fixing the size of the Board to the provision
added by the aforesaid amendment to the Certificate of Incorporation,
(b) limited the right to call special stockholder meetings to holders of shares
entitled to cast not less than a majority, as opposed to not less than 10%, of
the votes at such meetings, and (c) required that any stockholder action by
written consent be unanimous. Such previous amendments to the Company's
Certificate of Incorporation and Bylaws may be deemed to be anti-takeover
measures and, as such, would have the advantages and disadvantages to
stockholders set forth above.
On August 1, 1994, the Board of Directors adopted additional amendments to
both the Company's Bylaws and, subject to stockholder approval, Certificate of
Incorporation to increase the size of the Board from its then present range of
three to seven members to a range of five to nine members. See "Proposal 3 -
Amendment of Certificate of Incorporation to Increase Size of Board of
Directors."
VOTE REQUIRED; BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock entitled to vote at the Annual Meeting is required to authorize
the proposed increase in the authorized number of shares of Common Stock.
Abstentions and broker non-votes will be treated as shares outstanding and
entitled to vote. If the amendment is authorized, the text of paragraph (a) of
Article 4 of the Company's Certificate of Incorporation will be as follows:
"ARTICLE 4 - AUTHORIZED CAPITAL. (a) The total number of shares
of capital stock which the Company has the authority to issue is
201,000,000 consisting of 200,000,000 shares of Common Stock, $0.01 par
value per share (the 'Common Stock'), and 1,000,000 shares of Preferred
Stock, $0.01 par value per share (the 'Preferred Stock')."
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO AMEND
THE CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF
COMMON STOCK. Proxies solicited by management will be voted FOR the proposal
unless a vote against the proposal or abstention is specifically indicated.
PROPOSAL 3
AMENDMENT OF CERTIFICATE OF INCORPORATION TO
INCREASE SIZE OF BOARD OF DIRECTORS
The Board of Directors has directed that there be submitted to the
stockholders of the Company a proposed amendment to Article 5 of the Company's
Certificate of Incorporation, which would increase the size of the Board of
Directors and establish that the Company's Board of Directors consist of not
less than five nor more than nine members. Under the proposed amendment, the
exact number of directors would initially be fixed at seven and, thereafter, may
be fixed from time to time within such limits by resolution of the Company's
Board of Directors. As presently in effect, the Company's Certificate of
Incorporation, the amendment of which requires stockholder approval, specifies
that the Board of Directors consist of not less than three nor more than seven
members, and there currently are seven members serving on the Company's Board of
Directors.
In July 1994, Messrs. James T. Schraith and Bruce C. Edwards were promoted
to the offices of President and Executive Vice President, respectively, and each
was then elected to the Board of Directors, which resulted in the expansion of
Board membership from five to seven members and eliminated potential vacancies
on the Board. "See Proposal 1 - Election of Directors." The proposed amendment
to the Certificate of Incorporation to expand the size of the Board to a range
of five to nine members was unanimously approved on August 1, 1994 by the
Company's Board of Directors, which deemed it to be advisable and in the best
interests of the Company and all its stockholders. Concurrent with its approval
of the proposed amendment of the Certificate of Incorporation, the Board
approved a conforming amendment of the Bylaws to increase the maximum number of
directors from seven to nine. In the opinion of management, the proposed
amendment of the Certificate of Incorporation will benefit the stockholders
because, if approved, the Company will have the flexibility to expand its
current Board membership and, if desired, retain the services of additional
wellqualified persons to serve on the Company's Board. However, establishing a
maximum number of directors in the Company's Certificate of Incorporation may be
deemed to be an anti-takeover measure.
The Company previously amended its Certificate of Incorporation in 1991 to
establish that its Board of Directors consist of not less than three nor more
than seven members. Such prior amendment of the Certificate of Incorporation
was unanimously approved by the Company's Board of Directors on July 25, 1991,
and approved by the stockholders at the Annual Meeting of Stockholders held
October 30, 1991. Prior to 1991, only the Company's Bylaws, amendment of which
does not require stockholder approval, contained a provision establishing the
maximum number of directors. By amending the Certificate of Incorporation so
that it, too, contains a provision identical to the Bylaws with respect the size
of the Board, a potential acquiror of the Company could be deterred from or
delayed in gaining control of the Board, which may afford the Company greater
flexibility if management attempts to prevent or delay a change of control.
Otherwise, such an acquiror could potentially create and/or fill several
vacancies on the Board and, while leaving the existing directors in place, gain
control of the Board. However, by requiring stockholder approval of such an
increase in the maximum number of directors, such an acquiror could be deterred
or delayed, and such provision may, therefore, be deemed to be an anti-takeover
measure. See "Proposal 2 - Amendment of Certificate of Incorporation to
Increase Authorized Common Stock" for a discussion of other measures implemented
by the Company that may be deemed to be anti-takeover devices and the potential
advantages and disadvantages of anti-takeover devices to the Company's
stockholders.
VOTE REQUIRED; BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock entitled to vote at the Annual Meeting is required to authorize
the proposed amendment of the Company's Certificate of Incorporation.
Abstentions and broker non-votes will be treated as shares outstanding and
entitled to vote. If the amendment is authorized, the text of paragraph (a) of
Article 5 of the Company's Certificate of Incorporation will be as follows:
"ARTICLE 5 - ELECTION OF DIRECTORS. (a) The Board of Directors
shall consist of not less than five nor more than nine members. The
exact number of authorized directors shall initially be seven and,
thereafter, shall be fixed from time to time, within the foregoing
limits, by resolution of the Board of Directors."
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO AMEND
THE CERTIFICATE OF INCORPORATION TO PROVIDE THAT THE BOARD CONSIST OF NOT LESS
THAN FIVE NOR MORE THAN NINE MEMBERS. Proxies solicited by management will be
voted FOR the proposal unless a vote against the proposal or abstention is
specifically indicated.
PROPOSAL 4
APPROVAL OF THE AST RESEARCH, INC.
PERFORMANCE BASED ANNUAL MANAGEMENT INCENTIVE PLAN
The Board of Directors of the Company adopted on August 1, 1994, the AST
Research, Inc. Performance Based Annual Management Incentive Plan ("Performance
Based Plan"). This plan is substantially the same as the Management Incentive
Plan that the Company has been using. The Performance Based Plan is intended to
preserve the Company's tax deduction for payments thereunder for fiscal 1995 and
thereafter by meeting the requirements for performance based compensation under
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
The material terms of the Performance Based Plan are discussed below.
PURPOSE
The purpose of the Performance Based Plan is to promote the interests of
the Company by attracting, motivating, rewarding and retaining officers and key
employees who substantially contribute to the success of the Company. Under the
Performance Based Plan, participants may receive cash bonuses based upon the
achievement of objective revenue and/or profitability criteria of the Company or
of a specific business unit.
ELIGIBILITY
Participation in the Performance Based Plan is limited to Company officers
and key employees who contribute substantially to the success of the Company.
GENERAL DESCRIPTION OF PERFORMANCE GOALS
The performance criteria are revenue growth and profitability. Specific
annual targets will be established in advance, in writing, by the Compensation
Committee.
PAYOUT CRITERIA AND MAXIMUM BONUS
Annual bonus payments are made in cash. The bonus is based upon a two tier
formula consisting of a base formula and a top hat formula. The base formula
refers to the primary incentive which has both a specified stated minimum level
of performance before any incentive is paid and a stated maximum level of
performance at which the maximum incentive opportunity is earned. The maximum
opportunity under the base formula is 100% of base salary. The top hat formula
refers to that portion of an award earned by a participant based upon
performance achievement above the maximum of the base formula. This formula is
set as a percentage of Company profits in excess of the maximum level set for
the base plan and such percentage is set in advance by the Compensation
Committee each year. The maximum award allowable under the Performance Based
Plan cannot exceed $3,000,000 for the Chief Executive Officer and $1,500,000 for
any other participant in any plan year. Benefits payable for fiscal 1995, if
any, are not determinable, and benefits payable for fiscal 1994 under the
Company's existing Management Incentive Plan are included as bonus amounts in
the Summary Compensation Table above. The Committee may reduce an individual's
bonus otherwise payable under this plan at its sole discretion.
PLAN ADMINISTRATION
The Performance Based Plan shall be administered by the Compensation
Committee of the Board of Directors, comprised solely of two or more outside
directors.
AMENDMENT
The Performance Based Plan provides that it may be amended by the Company's
Board of Directors; provided, however, that the Board may condition amendment on
approval of stockholders if necessary or desirable.
DISCUSSION OF FEDERAL INCOME TAX CONSEQUENCES
The Revenue Reconciliation Act of 1993 (the "1993 Tax Act") added Section
162(m) to the Code. Section 162(m) generally limits the corporate income tax
deduction to $1,000,000 in any tax year for compensation paid to each of the
then Chief Executive Officer and the four highest paid other executive officers.
This rule generally applies to all deductible compensation including the
deduction arising from the payment of annual bonuses. Certain types of
compensation are exempted from this deduction limitation, including payments:
(a) subject to the attainment of preestablished objective performance goals, (b)
established and administered by outside directors and (c) approved by the
shareholders. The Company believes payments made under the Performance Based
Plan will qualify for exemption from the operation of Section 162(m), and,
therefore, will qualify for deduction by the Company.
VOTE REQUIRED; BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of the holders of a majority of the outstanding Common
Stock of the Company present in person or represented by proxy at the Annual
Meeting and entitled to vote on the subject matter shall be required to approve
this proposal. Broker non-votes will not be treated as shares present or
represented and entitled to vote. The Board of Directors believes that the
approval of the Performance Based Plan is in the best interests of the Company
because it will enhance the ability of the Company to attract, motivate and
retain key executives, while maintaining the Company's ability to fully deduct
its performance based compensation under Section 162(m) of the Code. THE BOARD
OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE AST RESEARCH, INC.
PERFORMANCE BASED ANNUAL MANAGEMENT INCENTIVE PLAN. Proxies solicited by
management will be voted FOR the proposal unless a vote against the proposal or
abstention is specifically indicated.
PROPOSAL 5
APPROVAL OF ADDITIONAL SHARES TO BE AVAILABLE
UNDER THE AST RESEARCH, INC. 1989 LONG-TERM INCENTIVE PROGRAM
At the Annual Meeting, the stockholders of the Company will be asked to
approve an amendment to the AST Research, Inc. 1989 Long-Term Incentive Program
(the "Program"). The proposed amendment, which is described below, will
increase the maximum number of shares of Common Stock available for awards
granted under the Program.
Currently, a maximum of 5,893,993 shares of Common Stock (as adjusted to
reflect the automatic "evergreen" increase effective July 2, 1994) are
authorized for issuance under the Program.
The proposed amendment, which was adopted by the Board of Directors on
August 1, 1994, subject to stockholder approval at the Annual Meeting, will
increase the maximum number of shares of Common Stock available for awards under
the Program by 2,000,000 shares, in addition to the annual evergreen increase
that is equal to 2% of the total number of shares of Common Stock issued and
outstanding as of the last day of each fiscal year. The proposed amendment
further provides that, notwithstanding the provision for annual increases in the
number of shares available under the Program, the maximum number of shares which
may be issued pursuant to incentive stock options granted under the Program may
not exceed 6,000,000. No change is made to the existing provision of the
Program that shares relating to any award which expires or lapses without being
exercised, and shares of restricted stock which are forfeited to or repurchased
by the Company, will again be available for use under the Program.
The Company is requesting the increase in shares authorized for issuance
under the Program in order to enable the Company to continue to attract,
motivate and retain key employees. Due to the acquisition of Tandy Corporation's
personal computer operations in June 1993 and overall revenue growth, the number
of employees eligible to participate under the Program has increased
substantially. The authorization of additional options which may be granted
under the Program will continue to enable the Company to attract, motivate and
retain its key employees.
The principal features of the Program are summarized below, but the summary
is qualified in its entirety by reference to the Program itself. Copies of the
Program and of the proposed amendment will be available at the Annual Meeting
and can be obtained by writing to the Corporate Secretary, AST Research, Inc.,
16215 Alton Parkway, Irvine, California 92718.
PURPOSE OF THE PROGRAM
The purpose of the Program is to advance the interests of the Company by
encouraging and providing for the acquisition of an equity interest in the
Company by key employees, by providing additional incentives and motivation
toward superior performance, and by enabling the Company to attract and retain
the services of key employees. In order to provide maximum flexibility, the
Program consists of separate plans. The Program provides for three types of
stock options: "Incentive Stock Options" within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), "Nonqualified Stock
Options" and "Discounted Stock Options" (collectively, "Options" or "Stock
Options"). Participants may also receive "Stock Appreciation Rights" ("SARs")
coupled to Incentive or Nonqualified Stock Options. The Program also provides
for the issuance of shares of "Restricted Stock" which are subject to forfeiture
on certain events and for the grant of "Performance Units" which are payable in
cash if the Company meets certain preset goals. Neither benefits payable nor
awards made in fiscal 1995 are determinable and awards made in fiscal 1994 are
included in the Option Grants Table set forth above.
PARTICIPATION IN THE PROGRAM
Participants under the Program may be selected from among all regular
employees (including any director who is also an officer or key employee) of the
Company or any parent or any subsidiary corporation. At July 2, 1994,
approximately nine executive officers and directors (who are also employees) of
the Company and its subsidiaries were eligible to participate under the Program
and approximately 6,000 other employees of the Company and its subsidiaries were
eligible to participate. The Program provides that no one person may receive
more than 200,000 Options or restricted shares in any calendar year.
The Program is administered by, and participants are selected by, a
committee (the "Committee") appointed by the Board to serve as the Compensation
Committee of the Board. The Program requires that the Committee be constituted
so as to comply with Rule 16(b)-3 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). The current members of the
Compensation Committee are Company directors Richard J. Goeglein, Jack W.
Peltason, and Delbert W. Yocam.
STOCK OPTIONS
Options may be exercised at such times and be subject to such restrictions
and conditions as the Committee approves, which need not be the same for all
optionees. Each Option which is intended to qualify as an Incentive Stock
Option shall comply with the applicable provisions of the Code. The exercise
prices of options are fixed by the Committee, but no Option shall have an
exercise price that is less than the fair market value of the Common Stock on
the date the Option is granted, except Discounted Stock Options.
If the employment of an optionee is terminated by reason of death,
disability or retirement, any outstanding Options then exercisable may be
exercised at any time prior to the expiration date of the Options or within 12
months after such date of termination of employment, whichever is shorter,
except in the case of retirement, when a three-year period shall be substituted
for the 12-month period.
If the employment of an optionee is terminated for any reason other than
death, disability, retirement or termination for cause, any outstanding Options
then exercisable may be exercised at any time prior to the expiration date of
the Options or within three months after such date of termination of employment,
whichever is shorter. Upon a termination for cause, rights under all Options
shall terminate immediately. All Options granted to an optionee under the
Program shall be exercisable during his or her lifetime only by such optionee.
Discounted Stock Options may be granted only in lieu of part or all of any
cash or other taxable payments under the Program or any other management
incentive plan of the Company, with the aggregate discount of the Discounted
Stock Options (calculated on the difference between the fair market value on the
date of grant and the Discounted Stock Option exercise price) equal to not more
than the amount of such cash or other taxable payment. The exercise price of a
Discounted Stock Option shall be determined by the Committee, but in no event
shall the price be less than the greater of $.50 or 25% of the fair market value
of the stock covered by the Discounted Stock Option on the date of grant.
STOCK APPRECIATION RIGHTS
The Committee may grant SARs to those participants who, upon the exercise
of an Option and the sale at a profit of the stock acquired pursuant to such
exercise, would be subject to suit under the "short-swing" profit rules of
Section 16(b) of the Exchange Act. An SAR may be granted only in connection
with Options previously or simultaneously granted, and the term of an SAR
granted under the Program shall not exceed the term of any related Option.
SARs may be exercised for all or part of the shares of Common Stock subject
to the related Option upon the surrender of the right to exercise an equivalent
number of shares of Common Stock. Upon exercise of an SAR, the participant
shall be entitled to receive payment of an amount equal to the difference
between the fair market value of a share of Common Stock at the date of exercise
over the related Option exercise price, times the number of shares with respect
to which the SAR is exercised. At the time of grant of an SAR, the Committee
may establish a maximum amount per share which will be payable upon exercise of
an SAR.
RESTRICTED STOCK
The Committee may grant shares of Restricted Stock to participants for such
consideration as it may determine, subject to forfeiture for a period of time
(the "Period of Restriction"). The shares of Restricted Stock may not be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated during the
Period of Restriction.
In the event that a participant terminates employment due to death,
disability or retirement, the Period of Restriction shall immediately lapse, and
the shares of Restricted Stock shall be free of restrictions and freely
transferable; provided, however, that in the event of termination due to
retirement, the Committee may impose additional restrictions on shares on which
the Period of Restriction had not lapsed on the date of termination. In the
event that a participant's employment with the Company terminates for other
reasons during the Period of Restriction, any shares of Restricted Stock still
subject to restrictions at the date of such termination shall be immediately
forfeited and returned to the Company. In the event of an involuntary
termination of the employment of a participant by the Company other than a
termination for cause, the Committee in its sole discretion may waive any
automatic forfeiture of any or all of such shares.
Participants holding shares of Restricted Stock will be entitled to vote or
to receive all dividends and other distributions paid with respect to those
shares.
PERFORMANCE UNITS
Performance Units may be granted to participants at any time as determined
by the Committee. Each Performance Unit shall have an arbitrary value to be
determined by the Committee at the time of grant. The Committee shall establish
performance goals which, depending on the extent to which they are met, will
determine the ultimate value of the Performance Unit to the participant. The
time period during which the performance goals must be met is called a
"Performance Period," and also is determined by the Committee. After a
Performance Period has ended, the holder of a Performance Unit will be entitled
to receive the value thereof. Payment will be made in cash, stock, Discounted
Stock Options or a combination thereof, as determined by the Committee. Payment
may be made in a lump sum or installments as prescribed by the Committee.
In the event a participant terminates employment with the Company due to
death, disability or retirement, the holder of a Performance Unit shall receive
a pro rata payment based on the number of full months of service completed
during the Performance Period and on the achievement of performance goals during
the entire Performance Period. Payment shall be made at the time payments are
made to participants who did not terminate service during the Performance
Period. In the event that a participant terminates employment with the Company
for any reason other than death, disability or retirement, all Performance Units
shall be forfeited automatically; provided, however, that in the event of an
involuntary termination of employment of the participant by the Company other
than a termination for cause, the Committee in its sole discretion may waive the
automatic forfeiture provisions and make payment on a pro rata basis.
CERTAIN ADJUSTMENTS ON CHANGE IN CAPITALIZATION OR CONTROL
In the event of any change in the outstanding shares of Common Stock by
reason of a stock dividend or split, recapitalization, merger, consolidation,
combination, exchange of shares or other similar corporate change, the aggregate
number of shares issuable under the Program and the aggregate number of shares
of stock subject to each outstanding Option, and its stated Option price, shall
be adjusted appropriately by the Committee. If the Company is not the surviving
corporation in a merger, the Program, and all Options then outstanding under the
Program which are not exercised prior to such transaction, shall terminate, and
all Periods of Restriction of Restricted Stock shall lapse.
Upon, or immediately prior to, a change in control of the Company, in the
Committee's discretion, the Period of Restriction on any Restricted Stock shall
end and all unexpired Options held by participants shall immediately vest and
become exercisable (except as otherwise required for Options intended to qualify
as Incentive Stock Options). For purposes of the Program, a "change in control"
shall occur if (i) there shall be (x) any consolidation or merger of the Company
in which the Company is not the continuing or surviving corporation or pursuant
to which shares of stock would be converted into cash, securities or other
property, other than a merger of the Company in which the holders of the stock
immediately prior to the merger have the same proportionate ownership of stock
of the surviving corporation immediately after the merger, or (y) any sale,
lease, exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company, or
(ii) the stockholders of the Company approve any program or proposal for the
liquidation or dissolution of the Company, or (iii) any "person" (as such term
is used in Sections 13(d) and 14(d) of the Exchange Act), other than the Company
or any "person" who on the date of adoption of the Program was a director or
officer of the Company, is or becomes the "beneficial owner" (as defined in Rule
13(d)-3 under the Exchange Act), of securities of the Company representing 50%
or more of the combined voting power of the Company's then outstanding
securities.
TERMINATION AND AMENDMENT OF PROGRAM
The Program expires on January 18, 1999, and may at any time be amended or
terminated by the Board. However, no such amendment or termination can be made
which would substantially affect or impair the rights of any person under any
award previously granted, without his or her consent. Additionally, no such
action of the Board, without approval of the stockholders, may
(a) Increase the total number of shares of Common Stock which may be
issued under the Program.
(b) Change the provisions of the Program regarding Stock Option prices.
(c) Change the class of employees entitled to participate in the Program.
(d) Materially increase the cost of the Program or materially increase the
benefits to participants.
(e) Extend the term of the Program.
(f) Extend the maximum period after the date of grant during which Stock
Options may be exercised.
FEDERAL INCOME TAX CONSEQUENCES
The Company believes the following is a brief summary of the tax effects
under the Code that may accrue to the Company and participants in the Program.
Incentive Stock Options. No taxable income is recognized by an optionee
or the Company under the Program upon either the grant or the exercise of an
Incentive Stock Option. When an optionee sells or otherwise disposes of the
shares acquired upon the exercise of an Incentive Stock Option, the entire gain
or loss realized will be treated as long-term capital gain if the disposition
occurs more than one year after the option was exercised and more than two years
after the date of grant of the option. If, however, the disposition occurs
before either the one-year or two-year periods have elapsed (a "disqualifying
disposition"), any gain realized will be taxed as ordinary income in an amount
equal to the difference between the option price and either the fair market
value of the shares at the time of exercise or the sales price, whichever is
less, and the balance, if any, will be treated as a capital loss. Special rules
apply in specific circumstances, such as the use of already-owned stock to
exercise an Incentive Stock Option. The Company will be entitled to a deduction
for federal income tax purposes only to the extent that an optionee recognizes
ordinary income upon a disqualifying disposition of shares. The difference
between the option price and the fair market value of the shares at the time of
exercise of an Incentive Stock Option will be an item of tax preference to an
optionee for the purposes of computing the alternative minimum tax under Section
55 of the Code.
Nonqualified Stock Options. No taxable income is recognized by an optionee
upon the grant of a Nonqualified Stock Option. Upon exercise, however, the
optionee will recognize ordinary income in the amount by which the fair market
value of the shares purchased, on the date of exercise, exceeds the exercise
price paid for such shares. The income recognized by the optionee will be
subject to income tax withholding by the Company out of the optionee's current
compensation. If such compensation is insufficient to pay the taxes due, the
optionee will be required to make a direct payment to the Company for the
balance of the tax withholding obligation. The Company will be entitled to a
tax deduction equal to the amount of ordinary income recognized by the optionee,
provided the applicable withholding requirements are satisfied.
Discounted Stock Options. The Company believes that upon the acquisition
of Discounted Stock Options pursuant to the exercise of Stock Appreciation
Rights and/or Performance Units, no taxable income will be recognized by the
optionee and no deduction will be available to the Company. The tax
consequences upon exercise of the Discounted Stock Options will be the same as
the tax consequences of the exercise of a Nonqualified Stock Option as described
above.
Stock Appreciation Rights. No taxable income is recognized by an optionee
upon the grant of a Stock Appreciation Right. Upon exercise for cash or Common
Stock, the optionee will recognize ordinary income in the amount of the cash
received or the fair market value of the Common Stock received. The income
recognized by the optionee will be subject to income tax withholding by the
Company. The Company will be entitled to a tax deduction equal to the amount of
ordinary income recognized by the optionee, provided the applicable withholding
requirements are satisfied.
If upon exercise an optionee receives Discounted Stock Options, the Company
believes that the optionee will not recognize taxable income. In such case, the
tax consequences on the receipt and subsequent exercise of the Discounted Stock
Options will be the same as the tax consequences upon receipt and exercise of a
Nonqualified Stock Option as described above.
Restricted Stock. The receipt of Restricted Stock will not result in a
taxable event until the applicable Period(s) of Restriction lapse, unless the
participant makes an election under Section 83(b) of the Code to be taxed as of
the date of grant. If a Section 83(b) election is made, the participant will
recognize ordinary income in an amount equal to the excess of the fair market
value of such shares on the date of grant over the amount, if any, paid for such
shares. Even if the amount paid and the fair market value of the shares are the
same (in which case there would be no ordinary income), a Section 83(b) election
must be made to avoid deferral of the date ordinary income is recognized. If no
Section 83(b) election is made, a taxable event will occur on each date the
participant's ownership rights vest (i.e., when the Period(s) of Restriction
lapse) as to the number of shares that vest on that date, and the holding period
for long-term capital gain purposes will not commence until the date the shares
vest. The participant will recognize ordinary income on each date shares vest
in an amount equal to the excess of the fair market value of such shares on that
date over the amount paid for such shares.
Tax Withholding. To the extent permissible under applicable tax,
securities and other laws, the Committee may permit a participant to satisfy an
obligation to pay any tax to any governmental entity in respect of any Option,
SAR or Restricted Stock, up to an amount determined on the basis of the highest
marginal tax rate applicable to such participant, in whole or in part, by (i)
directing the Company to apply shares of stock to which the participant is
entitled as a result of the exercise of an Option or SAR or as a result of a
lapse of a Period of Restriction or (ii) delivering to the Company shares of
Common Stock owned by the participant.
ACCOUNTING CONSEQUENCES OF STOCK APPRECIATION RIGHTS
The Company will record as compensation expense the amount, if any, by
which the market value of the Common Stock exceeds the initial value of any
outstanding SAR. Compensation expense, net of the related tax benefit, will be
recorded ratably over the vesting period and will be adjusted for subsequent
changes in the market value of the Common Stock until the SAR is exercised. Any
tax benefit realized by the Company from the above charges will be reflected in
earnings for the same period. If an SAR is forfeited or expires, any amount
previously recorded will be reversed.
VOTE REQUIRED; BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of the holders of a majority of the outstanding Common
Stock of the Company present in person or represented by proxy at the Annual
Meeting and entitled to vote on the subject matter shall be required to approve
this proposal. Broker non-votes will not be treated as shares present or
represented and entitled to vote. The Board of Directors believes that the
amendment to the Program is in the best interests of the Company because it will
further the purposes of the Program by enhancing the ability of the Company to
attract, motivate and retain key employees of the Company. THE BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE AMENDMENT FOR ADDITIONAL
SHARES TO BE AVAILABLE UNDER THE 1989 LONG-TERM INCENTIVE PROGRAM. Proxies
solicited by management will be voted FOR the proposal unless a vote against the
proposal or abstention is specifically indicated.
PROPOSAL 6
APPROVAL OF THE AST RESEARCH, INC.
1994 ONE-TIME GRANT STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
The Board of Directors of the Company adopted, on January 28, 1994, the AST
Research, Inc. 1994 One-Time Grant Stock Option Plan for Non-Employee Directors
(the "Plan") and directed that it be submitted to the stockholders for approval
at the Annual Meeting. The primary purpose of Plan is to provide incentive to
those persons who are non-employee directors ("Participants") of AST Research,
Inc. on July 1, 1994 (the "grant date"), to encourage such Participants to
acquire a proprietary interest in the Company and to continue their association
with the Company.
The Plan provides that each member of the Company's Board of Directors on
July 1, 1994 who is not an employee of the Company be granted an option covering
50,000 shares of Common Stock. Accordingly, the Participants named below
received, subject to stockholder approval, the following respective number of
Options to purchase Common Stock at an exercise price of $14.25 per share, which
was the closing market price of the Common Stock on July 1, 1994.
NEW PLAN BENEFITS
<TABLE>
1994 ONE-TIME STOCK OPTION
GRANT PLAN FOR NON-EMPLOYEE DIRECTORS
IN-THE-MONEY NO. OF
NAME AND POSITION (a) DOLLAR VALUE ($) (b) OPTIONS
<S> <C> <C>
Richard J Goeglein, Director and Nominee 0 50,000
Jack W. Peltason, Director and Nominee 0 50,000
Carmelo J. Santoro, Director and Nominee 0 50,000
Delbert W. Yocam, Director and Nominee 0 50,000
All current directors who are not
executive officers as a group 0 200,000
</TABLE>
(a) Only the Company's non-employee directors are eligible to participate in
the Plan. Accordingly, information with respect to each of Messrs.
Qureshey, Schraith, Edwards, Forquer and Ottaviano, as well as with respect
to all current executive officers as a group and all employees, including
all current officers who are not executive officers, as a group, is omitted
from the foregoing new plan benefits table.
(b) Subject to stockholder approval, the options were granted at an exercise
price of $14.25 per share of Common Stock, the closing sale price of the
Company's Common Stock as reported by NASDAQ on July 1, 1994. The in-the-
money dollar value of the options was calculated on the basis of $13.06 per
share of Common Stock, the closing sale price of the Company's Common Stock
as reported by NASDAQ on September 1, 1994.
The aggregate number of shares of Common Stock which may be issued pursuant
to the Plan is 250,000. The number of shares available for issuance under the
Plan is subject to adjustment, however, in the event of any increase or decrease
in the number of issued shares of the Company's Common Stock resulting from a
stock split, stock dividend, reorganization, recapitalization, merger,
consolidation, exchange of shares or the like.
In the event that the outstanding shares of Common Stock are hereafter
increased or decreased or changed into or exchanged for a different number or
kind of shares or other securities of the Company by reason of merger,
consolidation or reorganization in which the Company is the surviving
corporation or of a recapitalization, stock split, combination of shares,
reclassification, reincorporation, stock dividend (in excess of 2%), or other
change in the capital structure of the Company, the number and kind of shares
subject to the Plan and the rights under outstanding options, both as to the
number of shares and the price, will be adjusted appropriately. However, if the
Company at any time proposes to (i) dissolve or liquidate, or merge into,
consolidate with or enter into any other reorganization (including the sale of
substantially all of its assets) in which the Company is not the surviving
corporation, or (ii) enter into a merger or other reorganization as a result of
which the outstanding shares of Common Stock will be exchanged or changed for
shares of the capital stock or other securities of another corporation or for
cash or other property, then each Participant shall have the right to exercise
his or her outstanding options for up to the full number of covered shares.
Option Grants. On the grant date, subject to the approval of the Plan by
the stockholders, each Participant was granted an option under the Plan covering
50,000 shares of Common Stock. All such option grants are subject to the
limitation that not more than 250,000 shares be issued under the Plan and that
no Participant may receive options covering more than 50,000 shares of Common
Stock in any calendar year. Options shall vest and become exercisable at the
rate of 12.5% per year, commencing on the first anniversary of the date of the
grant. Based upon the performance of the Company's Common Stock, vesting may be
accelerated, but in no event prior to July 1, 1995.
Exercise Price. Each option granted under the Plan shall be exercisable at
100% of the fair market value on the date of grant of the option, which was
$14.25 per share on July 1, 1994. The purchase price, payable in full upon the
exercise of the option, may be paid (i) in cash or by check; (ii) subject to any
legal restrictions and obligations regarding the purchase of shares for
promissory notes or evidences of indebtedness, by delivery of the Participant's
promissory note in a form satisfactory to the Company and (at the election of
the Company) secured by a pledge of the shares purchased or other security; or
(iii) by the surrender of shares of the Common Stock owned by the person
exercising the option and having an aggregate fair market value on the date of
exercise equal to the purchase price; or in any combination of the foregoing, so
long as the total thereof equals the purchase price.
Registration Rights. Options may provide for the right of the Participant
to require the Company to register the shares issuable on exercise of an option
and the right to include such shares in other registrations of the Company.
Termination of Status as Director. In the event that a Participant shall
cease to be a director of the Company for any reason, including death or
disability, such Participant or his heirs and personal representatives, as the
case may be, shall have the right to exercise options at any time within 90 days
after such termination to the extent that, at the date of such termination, the
Participant's right to exercise such options had vested pursuant to the terms of
the Plan and had not previously been exercised. A Participant's right to
exercise the then unvested portion of his options shall terminate as of the date
of termination of the Participant's status as a director.
Nontransferability of Options. During the lifetime of a Participant, his
options shall be exercisable only by him and shall not be assignable or
transferable, except to a qualified domestic relations order, as defined in the
Code or the Employee Retirement Income Security Act, or the rules thereunder.
In the event of the Participant's death, no option shall be transferable by the
Participant otherwise than by will or by the laws of descent and distribution.
Repurchase. The Plan also provides for a resale to the Company in certain
circumstances. In the event of certain specified changes in the composition of
the Board of Directors of the Company or if any person or group makes a tender
offer or exchange offer or enters into a merger or other acquisition agreement
(collectively, the "Offer") to acquire the beneficial ownership, directly or
indirectly, of securities of the Company representing 15% or more of the
combined voting power of the then outstanding securities of the Company, and
such person or group does not substantially concurrently offer to purchase each
of the then outstanding options in connection with the Offer for a price at
least equal to the Repurchase Price (as defined below), then the option holder
shall have the right to require the Company to repurchase (the "Repurchase") the
then outstanding options (including options which are unvested on the date set
for the Repurchase) at the Repurchase Price for a period ending 180 days
following the date on which (i) such person or group actually acquires any
securities of the Company pursuant to such Offer or (ii) a majority of the Board
of Directors of the Company shall be comprised of persons who were not elected
as part of the "Company Nominated Slate" of directors. In the event of an
"Offer", the Repurchase Price shall be equal to the difference between the
Acquisition Price (as defined below) and the Exercise Price. The Acquisition
Price equals the sum of all (i) money and (ii) the fair market value of any
property actually paid or transferred for a share of the Common Stock of the
Company by the person or group pursuant to such Offer. In the event of certain
specified changes in the composition of the Board of Directors, the Repurchase
Price shall be equal to the difference between the highest fair market value
during the ten trading days prior to such event and the exercise price. The
Repurchase Price shall be paid in cash or by certified or bank cashier's check.
Amendment of the Plan. The Plan provides that it may be amended by the
Company's Board of Directors; provided, however, that the Board may condition
amendment on approval of stockholders if necessary or desirable.
Administration of the Plan. The Plan shall be administered by the Board of
Directors of the Company or by a committee of two or more persons appointed by
the Board of Directors. The administrative function of the Board of Directors
or such committee, as the case may be, shall be responsible for carrying out the
terms of the Plan with respect to all Plan administration matters.
Federal Income Tax Consequences. The Company believes the following is a
brief summary of the tax effects under the Code which may accrue to Participants
and to the Company.
There are no federal income tax consequences to either the Company or the
optionee upon the grant of an option under the Plan. Upon the exercise of an
option, the optionee will recognize ordinary income in an amount equal to the
difference between the fair market value of the shares acquired on the date of
exercise and the option price for such shares. The Company is entitled to a tax
deduction in an amount equal to the ordinary income recognized by an optionee as
a result of the exercise of an option. The optionee's basis in the shares
acquired pursuant to an option will be increased by the amount of ordinary
income recognized. Any subsequent gain or loss recognized upon the sale of such
shares will be treated as capital gain or loss.
The terms of the Plan require stockholder approval of the Plan prior to its
effectiveness. Such approval is being sought because the Board values the
stockholders' advice and consent on such matters and also for purposes of
complying with certain securities laws, regulations of the National Association
of Securities Dealers, Inc., and stock exchange regulations in anticipation of
future possible listing on exchanges. Stockholder approval also is being sought
in order that the grant of options to directors pursuant to the Plan will be
exempt from the operation of Section 16(b) and to qualify the Participants under
the Plan as disinterested persons for purposes of serving on the Board of
Directors or a committee of the Board administering equity participation plans.
Generally, in the context of the Plan, Section 16(b) provides for forfeiture of
any profit realized by any Participant from any combination of purchase and sale
of Common Stock within a six-month period. Exemption from the application of
Section 16(b) is conditioned upon obtaining the approval of the Plan by the
stockholders of the Company and the satisfaction by the Company and the Plan of
certain other conditions. Also, stockholder approval is being sought to exempt
the Plan from the deduction limitation of Section 162(m) of the Code. See
"Proposal 4 - Approval of the AST Research, Inc. Performance Based Annual
Incentive Plan."
VOTE REQUIRED; BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote on the subject matter shall be required to approve this
proposal. Broker non-votes will not be treated as shares present or represented
and entitled to vote. The Board of Directors believes that the Plan is in the
best interests of the Company because it will enhance the ability of the Company
to motivate and retain well-qualified directors. THE BOARD OF DIRECTORS
RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE 1994 ONE-TIME GRANT STOCK
OPTION PLAN FOR NON-EMPLOYEE DIRECTORS. Proxies solicited by management will be
voted FOR the Plan unless a vote against the proposal or abstention is
specifically indicated.
PROPOSAL 7
SELECTION OF AUDITORS
The Board of Directors has appointed Ernst & Young, independent auditors, as
auditors of the Company for the fiscal year ending July 1, 1995, subject to
ratification by the stockholders. It is intended that, in the absence of
contrary specifications, the shares represented by the proxies will be voted FOR
the following resolution ratifying the appointment of Ernst & Young.
"RESOLVED, that the stockholders of AST Research, Inc. hereby ratify
and approve the appointment of Ernst & Young as the independent auditors
of such Company for the fiscal year ending July 1, 1995."
The affirmative vote of the holders of a majority of the shares of Common
Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote on the subject matter shall be required to adopt the
foregoing resolution. A representative of Ernst & Young is expected to be
present at the Annual Meeting, will be given an opportunity to make a
statement on behalf of his firm if such representative so desires, and will be
available to respond to any appropriate questions of any stockholder. Ernst &
Young were the Company's auditors for the fiscal year ended July 2, 1994.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE
FISCAL YEAR ENDING JULY 1, 1995.
ANNUAL REPORT AND FORM 10-K
The Annual Report and Form 10-K of the Company, including financial
statements for the fiscal year ended July 2, 1994, are being forwarded to each
stockholder with this Proxy Statement.
OTHER MATTERS
The Board of Directors has no knowledge of any other matters which shall come
before the Annual Meeting. If any other matters shall properly come before the
meeting, the persons named in the proxies will have discretionary authority to
vote the shares thereby represented in accordance with their best judgment.
SECTION 16(a) COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership with the Securities and Exchange Commission ("SEC") and the NASDAQ
Stock Market. Directors, executive officers and greater than ten-percent
beneficial owners are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms received by the Company
and on written representations from certain reporting persons that no Forms 5
were required for those persons, the Company believes that, during the period
from July 3, 1993 to July 2, 1994, all filing requirements applicable to its
directors, executive officers and greater than ten-percent beneficial owners
were met.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the Company's next
Annual Meeting of Stockholders should be received by the Secretary of the
Company prior to May 31, 1995 for inclusion in the Proxy Statement for the
Annual Meeting of Stockholders scheduled to be held on or about November 2,
1995.
Dennis R. Leibel
Secretary
Dated: September 26, 1994
COPIES OF THE COMPANY'S ANNUAL REPORT AND FORM 10-K AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION WILL BE PROVIDED TO STOCKHOLDERS WITHOUT
CHARGE UPON WRITTEN REQUEST TO THE CORPORATE SECRETARY, AST RESEARCH, INC.,
16215 ALTON PARKWAY, IRVINE, CALIFORNIA 92718.
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PROXY
AST RESEARCH, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
Safi U. Qureshey, Dr. Carmelo J. Santoro, James T. Schraith, and each or all
of them, with full power of substitution, are hereby appointed Proxies to vote
the stock of the undersigned in AST Research, Inc. at the Annual Meeting of
Stockholders on October 27, 1994, and at any adjournments, to be held at Le
Meridien Hotel, 4500 MacArthur Blvd., Newport Beach, California at 9:00 a.m.,
Pacific Standard Time.
Management recommends that you vote FOR the election of the seven director
nominees (Proposal 1), FOR the increase in authorized Common Stock (Proposal 2),
FOR the increase in the size of the Board of Directors (Proposal 3), FOR the
approval of the Performance Based Annual Management Incentive Plan (Proposal 4),
FOR the amendment to the 1989 Long-Term Incentive Program (Proposal 5), FOR the
approval of the 1994 One-Time Grant Stock Option Plan for Non-Employee Directors
(Proposal 6), and FOR the approval of Ernst & Young as the auditors for fiscal
year 1995 (Proposal 7).
1. PROPOSAL 1. ELECTION OF DIRECTORS
_____ FOR all nominees _____ WITHHOLD
listed below AUTHORITY to
except as indi- vote for all
cated to the nominees listed
contrary below below
Bruce C. Edwards, Richard J. Goeglein, Jack W. Peltason, Safi U. Qureshey,
Carmelo J. Santoro, Ph.D., James T. Schraith and Delbert W. Yocam.
INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space
provided below.
________________________________________________________________________________
2. PROPOSAL 2 to approve the amendment to the Certificate of Incorporation to
increase the authorized number of shares of Common Stock from 70,000,000 shares
to 200,000,000 shares.
_____ FOR _____ AGAINST _____ ABSTAIN
3. PROPOSAL 3 to approve the amendment to the Certificate of Incorporation to
increase the size of the Board of Directors from a range of three to seven
members to a range of five to nine members.
_____ FOR _____ AGAINST _____ ABSTAIN
4. PROPOSAL 4 to approve the AST Research, Inc. Performance Based Annual
Management Incentive Plan.
_____ FOR _____ AGAINST _____ ABSTAIN
5. PROPOSAL 5 to approve the amendment to increase the authorized number of
shares reserved for issuance under the AST Research, Inc. 1989 Long-Term
Incentive Program by 2,000,000 shares.
_____ FOR _____ AGAINST _____ ABSTAIN
6. PROPOSAL 6 to approve the AST Research, Inc. 1994 One-Time Grant Stock Option
Plan for Non-Employee Directors.
_____ FOR _____ AGAINST _____ ABSTAIN
7. PROPOSAL 7 to ratify appointment of Ernst & Young as auditors for fiscal
1995.
_____ FOR _____ AGAINST _____ ABSTAIN
8. In their discretion, the Proxies are authorized to vote upon any other
business as may properly come before the meeting or any adjournments thereof,
including matters of which the Board of Directors did not know a reasonable
time before the date of the Proxy Statement are to be presented.
THIS PROXY WILL BE VOTED AS DIRECTED. UNLESS OTHERWISE DIRECTED, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE SEVEN DIRECTOR NOMINEES, FOR PROPOSAL 2,
FOR PROPOSAL 3, FOR PROPOSAL 4, FOR PROPOSAL 5, FOR PROPOSAL 6, AND FOR
PROPOSAL 7.
Please sign exactly as name appears hereon.
__________________________________________
__________________________________________
Date: _____________________________________
[When shares are held by joint tenants,
both should sign. When signing as attorney,
executor, administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full corporate
name by President or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.]
PLEASE DATE, SIGN AND RETURN THIS CARD IN THE ENCLOSED ENVELOPE.
