<PAGE> 1
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
Raychem Corporation
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Raychem Corporation
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(A)
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/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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4) Date Filed:
(A) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
RAYCHEM
RAYCHEM CORPORATION
300 Constitution Drive
Menlo Park, California 94025-1164
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
NOVEMBER 9, 1994
10:00 A.M.
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of Raychem
Corporation, a Delaware corporation (the "Company"), will be held at the
Company's principal office, 300 Constitution Drive, Menlo Park, California, on
Wednesday, November 9, 1994, at 10:00 a.m. local time, for the following
purposes:
1. To elect directors;
2. To approve amendments to the Company's employee stock purchase
plans to provide additional shares;
3. To approve an amendment to the Company's 1990 Incentive Plan to
limit the number of shares that may be granted to any participant in any
one-year period;
4. To approve an amendment to the Company's 1990 Incentive Plan to
extend to up to five years the period during which awards may be exercised
following retirement from the Company;
5. To ratify the appointment by the Company's Board of Directors of
Price Waterhouse LLP to audit the accounts of the Company and its
subsidiaries for the 1995 fiscal year; and
6. To consider and transact such other business as may properly come
before the meeting.
The Board of Directors has fixed the close of business on September 12,
1994, as the record date for the determination of stockholders entitled to
notice of, and to vote at, the meeting and at any adjournment or postponement of
the meeting.
By Order of the Board of Directors
ROBERT J. VIZAS
Secretary
Menlo Park, California
September 21, 1994
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY SIGN THE ACCOMPANYING PROXY AND
MAIL IT IN THE ENCLOSED POSTAGE PRE-PAID ENVELOPE.
<PAGE> 3
RAYCHEM CORPORATION
------------------------
PROXY STATEMENT
------------------------
TO THE STOCKHOLDERS:
The enclosed proxy is solicited on behalf of the Board of Directors of
Raychem Corporation, a Delaware corporation (the "Company"), for use at the
annual meeting of stockholders to be held at the Company's principal office on
November 9, 1994, at 10:00 a.m. local time, or any adjournment or postponement,
at which stockholders of record at the close of business on September 12, 1994,
will be entitled to vote. On August 23, 1994, the Company had issued and
outstanding 43,344,332 shares of Common Stock, par value $1.00 per share
("Common Stock").
Holders of Common Stock are entitled to one vote for each share held. A
majority of the outstanding shares of Common Stock is required for a quorum.
Any person giving a proxy in the form accompanying this proxy statement has
the power to revoke it at any time before its exercise. It may be revoked by
filing with the Secretary of the Company at the Company's principal office, 300
Constitution Drive, Menlo Park, California 94025-1164, an instrument of
revocation or a duly executed proxy bearing a later date, or it may be revoked
by attending the meeting and voting in person.
The Company will bear the entire cost of solicitation, including
preparation, assembly, printing, and mailing of this proxy statement, the proxy,
and any additional material furnished to stockholders. Copies of solicitation
material will be furnished to brokerage houses, fiduciaries, and custodians
holding in their names shares that are beneficially owned by others to forward
to such beneficial owners. Raychem will reimburse brokerage houses, fiduciaries,
and custodians for their expense in forwarding solicitation material to such
beneficial owners. The original solicitation of proxies by mail may be
supplemented by one or more of telephone, telegram, or personal solicitation by
directors, officers, or employees of the Company. No additional compensation
will be paid for any such services.
The Company intends to mail this proxy statement on or about September 21,
1994.
1
<PAGE> 4
ELECTION OF DIRECTORS
GENERAL
Each director to be elected will hold office until the next annual meeting
of stockholders and until his successor is elected and has qualified, or until
his death, resignation, or removal. There are eight nominees for the eight
positions on the Board of Directors. All of the nominees are currently directors
of the Company having been elected by the stockholders at the 1993 Annual
Meeting of Stockholders, with the exception of Cyril J. Yansouni, who was
elected by the Board in June 1994 to fill a seat recently created by the Board,
and John P. McTague, who was elected by the Board in August 1994 to fill the
vacancy created by J. Kenneth Jamieson's retirement. Each person nominated for
election has agreed to serve if elected, and management has no reason to believe
that any nominee will be unavailable to serve.
On July 1, 1994, Mr. Jamieson, a valued member of the Board of Directors
since 1977, retired. Mr. Jamieson was an active participant in all Board
activities and served as a member of the audit and compensation committees.
Mr. Robert M. Halperin, a valued Board member since 1961, has decided to
retire from the Board and not stand for reelection. Mr. Halperin retired as
President and Chief Operating Officer of the Company on April 1, 1990. He has
served as Vice Chairman of the Board of Raychem and Chairman of the Board of
Raynet Corporation since then.
NOMINEES
Set forth below is information regarding the nominees, including
information furnished by them as to their principal occupations for the last
five years, certain directorships, and their ages as of June 30, 1994.
<TABLE>
<CAPTION>
DIRECTOR
AGE SINCE
--- --------
<S> <C> <C>
Paul M. Cook is Chairman of the Board and was the Chief Executive Officer of
the Company until April 1, 1990, when he retired. He is the President of
PMC Associates, Inc., Chairman of the Board of SRI International, and a
director of Chemical Fabrics Corporation and CellNet Data Systems, Inc..... 70 1957
Richard Dulude is the retired Chairman and Chief Executive Officer of Corning
Vitro Corporation. He also was the Vice Chairman of Corning Incorporated
and a director of Dow Corning Corporation. He is a director of AMBAC,
Inc........................................................................ 61 1991
James F. Gibbons has been the Dean of the School of Engineering at Stanford
University since 1984. He has been a professor of electronics at Stanford
since 1964. He is a director of Lockheed Corporation, Cisco Systems, Inc.,
Centigram Communications Company, Amati Communications, Inc., Comtech,
Inc., SERA Learning Technologies, and El Paso Natural Gas.................. 62 1987
John P. McTague has been a Vice President of Ford Motor Company since 1986,
and has held the position of Vice President of Technical Affairs for Ford
Motor Company since March 1, 1990. He is a director of Argonne National
Laboratory and the National Center for Manufacturing Sciences.............. 55 1994
Dean O. Morton is the retired Executive Vice President and Chief Operating
Officer of Hewlett-Packard Company. He is currently a director of ALZA
Corporation, Tencor Instruments, Centigram Communications Corporation,
MetLife Portolios, Inc., Metropolitan Series Fund, Inc. and The Clorox
Company. He is also a trustee of the State Street Reserved Funds Group..... 62 1989
Robert J. Saldich has been the President and Chief Executive Officer of the
Company since April 1, 1990. For six years prior to that, he was a Senior
Vice President of the Company. Mr. Saldich joined the Company in 1964...... 61 1990
Isaac Stein is the President of Waverley Associates, Inc. From 1990 to 1992,
he served as Chairman of the Board of Esprit de Corp, and from 1991 to 1992
was its acting President and Chief Executive Officer. Mr. Stein is a
director of ALZA Corporation and the Benham Group of mutual funds.......... 47 1993
Cyril J. Yansouni is Chairman and CEO of Read-Rite Corporation. Prior to
March 1991, he was Executive Vice President and President of the Computer
Systems Product Group of Unisys Corporation. Mr. Yansouni serves on the
boards of PeopleSoft, Inc. and Informix Software Inc....................... 52 1994
</TABLE>
2
<PAGE> 5
STOCK OWNERSHIP
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock, as of June 30, 1994, (i) by each person
known by the Company to own beneficially more than 5% of the outstanding Common
Stock, (ii) by each director, (iii) by each executive officer named in the
Summary Compensation Table herein, and (iv) by all executive officers and
directors as a group.
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE
COMMON STOCK OF
BENEFICIALLY COMMON STOCK
NAME AND ADDRESS OWNED(A) OUTSTANDING(B)
- - ---------------------------------------------------------------- ------------ ------------
<S> <C> <C>
State Farm Insurance Companies.................................. 2,726,500 6.3%
1 State Farm Plaza
Bloomington, Illinois 61710
TCW Group Inc. ................................................. 2,651,917 6.2%
865 South Figueroa Street
Los Angeles, California 90017
Wellington Management Co........................................ 2,256,510 5.2%
75 State Street
Boston, Massachusetts 02109
State of Wisconsin Investment Board............................. 2,180,500 5.1%
121 East Wilson Street
Madison, Wisconsin 53703
Paul M. Cook.................................................... 286,817
Richard Dulude.................................................. 1,688
James F. Gibbons................................................ 14,149
Robert M. Halperin.............................................. 673,140 1.6%
John P. McTague................................................. 0
Dean O. Morton.................................................. 5,876
Isaac Stein..................................................... 1,557
Cyril J. Yansouni............................................... 0
Robert J. Saldich............................................... 189,395
Harry O. Postlewait............................................. 62,693
Michael T. Everett.............................................. 142,316
James B. Spradling.............................................. 50,422
Joseph G. Wirth................................................. 36,250
All executive officers and directors as a group (22 persons).... 1,738,209 4.0%
</TABLE>
- - ---------------
(a) The figures include options to purchase shares of Common Stock exercisable
within 60 days following June 30, 1994, and held by: Mr. Cook, 4,126 shares;
Mr. Dulude, 938 shares; Dr. Gibbons, 14,149 shares; Mr. Halperin, 89,710
shares; Mr. Morton, 4,876 shares; Mr. Stein, 750 shares; Mr. Saldich,
170,056 shares; Mr. Postlewait, 61,000 shares; Mr. Everett, 142,250 shares;
Mr. Spradling, 50,250 shares; Mr. Wirth, 36,250 shares; and all executive
officers and directors as a group, 828,633 shares.
(b) Amounts less than 1.00% are not shown.
BOARD COMMITTEES AND MEETINGS
The Board of Directors has standing audit, compensation and nominating
committees.
The functions of the audit committee are as follows: to review and report
to the Board with respect to the annual audit by the Company's independent
accountants, including the scope and general extent of their examination, the
audit procedures that will be utilized by the independent accountants, and the
compensation of the independent accountants; to review and report to the Board
on the general policies and procedures utilized by the Company with respect to
internal auditing, accounting, and financial controls; and to review and report
to the Board on the subject of the retention of the Company's independent
accountants. Messrs. Jamieson, Dulude, and Stein and Dr. Gibbons were the
members of the committee in fiscal year 1994.
3
<PAGE> 6
The functions of the compensation committee are to determine the general
compensation policies of the Company, establish compensation plans and determine
senior management compensation. The members of the compensation committee in
fiscal year 1994 were Messrs. Jamieson, Dulude and Morton. Mr. Yansouni was
appointed a member of the committee in August 1994. A Report of the Compensation
Committee on Executive Compensation is included herein.
The functions of the nominating committee are to recommend candidates for
election to the Board of Directors and to develop policies for the size and
composition of the Board. The present members of the nominating committee are
Dr. Gibbons and Mr. Morton. Stockholder proposals for nominees will be accepted
by the nominating committee and will be given due consideration for
recommendation to the Board in light of the nominees' qualifications.
Stockholder nominees for future years should be submitted in writing to the
nominating committee in care of the Corporate Secretary by August 1 or 90 days
prior to the annual meeting of stockholders, whichever is earlier.
In April 1994, the Board of Directors established a Raynet oversight
committee composed of Messrs. Stein and Morton and Dr. Gibbons. The function of
this committee is to review the operations of Raynet and its strategic plans.
In August 1994, the Board of Directors established an executive committee
composed of Messrs. Stein, Morton, and Saldich. The executive committee will
initially focus on completion of a strategic alliance for Raynet, management
succession within Raychem, and the general operation of the Board.
During the fiscal year ended June 30, 1994, the Board of Directors held
eleven meetings, the audit committee held two meetings, the compensation
committee held four meetings, and the nominating committee held two meetings.
Each director attended at least 75% of the aggregate number of Board meetings
and meetings of committees of which he is a member that were held during the
fiscal year, except Mr. Jamieson, who attended 71%.
4
<PAGE> 7
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table shows compensation paid by the Company for services
rendered in all capacities during the latest three fiscal years ending June 30
by the Chief Executive Officer and each of the other four most highly
compensated executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS(B)
------------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING
COMPENSATION OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (A)(C) (#) COMPENSATION
- - ----------------------------- ---- -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Saldich............ 1994 $548,877 $220,000 $ 0 36,000 $ 0
President and 1993 497,289 110,000 0 30,000 0
Chief Executive Officer 1992 448,766 0 -- 40,000 --
Harry O. Postlewait.......... 1994 $369,255 $130,000 $ 0 24,000 $ 0
Executive Vice President 1993 307,155 65,000 0 20,000 0
1992 274,247 0 -- 20,000 --
Michael T. Everett........... 1994 $319,917 $120,000 $ 0 12,000 $164,271(d)
Sr. Vice President 1993 283,950 46,500 0 12,500 0
1992 274,247 0 -- 20,000 --
James B. Spradling........... 1994 $257,619 $ 85,000 $101,225(e) 12,000 $ 0
Sr. Vice President 1993 277,689 0 23,310 17,500 0
1992 234,357 0 -- 20,000 --
Joseph G. Wirth.............. 1994 $294,268 $ 75,000 $ 0 12,000 $ 9,221(g)
Sr. Vice President and 1993 283,950 35,000 12,789(f) 12,500 29,574(g)
Chief Technical Officer 1992 274,247 0 -- 20,000 --
</TABLE>
- - ---------------
(a) In accordance with Securities and Exchange Commission regulations,
perquisites less than the lesser of (a) $50,000 or (b) 10% of salary and
bonus are not shown.
(b) No Restricted Stock Awards or stock appreciation rights ("SAR") grants were
made to any named executive officer during the three year period ended June
30, 1994.
(c) In accordance with Securities and Exchange Commission transition rules, no
data is shown for fiscal year 1992.
(d) This amount represents a special allowance paid to Mr. Everett to cover
additional costs of living overseas.
(e) This amount represents foreign tax expenses paid on behalf of Mr. Spradling.
(f) This amount represents tax expenses reimbursed as part of relocation.
(g) This amount represents mortgage interest differential paid as part of
relocation.
5
<PAGE> 8
STOCK OPTIONS
The following table shows for each executive officer named in the Summary
Compensation Table certain information regarding options granted during fiscal
year 1994.
OPTION/SAR GRANTS IN LAST FISCAL YEAR(A)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------------ VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATE OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM(C)
OPTIONS EMPLOYEES IN EXERCISE OR BASE EXPIRATION ----------------------
NAME GRANTED(#)(B) FISCAL YEAR PRICE($/SH) DATE 5%($) 10%($)
- - ------------------------- ------------- ------------ ---------------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Saldich........ 36,000 4.0% $ 38.125 10/20/03 $863,158 $2,187,412
Harry O. Postlewait...... 24,000 2.7% $ 38.125 10/20/03 $575,439 $1,458,274
Michael T. Everett....... 12,000 1.3% $ 38.125 10/20/03 $287,719 $ 729,137
James B. Spradling....... 12,000 1.3% $ 38.125 10/20/03 $287,719 $ 729,137
Joseph G. Wirth.......... 12,000 1.3% $ 38.125 10/20/03 $287,719 $ 729,137
</TABLE>
- - ---------------
(a) No SAR grants were made to any named executive officer during the fiscal
year ended June 30, 1994.
(b) All options granted to executive officers in fiscal 1994 are exercisable as
follows: 25% of the options on or after the first grant date anniversary;
50% on or after the second anniversary; 75% on or after the third
anniversary, and 100% on or after the fourth anniversary. Exercisability of
options may be accelerated by the Board of Directors. At the time of
exercise, price may be paid in cash, by delivery of shares already owned
(subject to certain conditions), by a secured loan from the Company, or by
cashless exercise. The option plan permits withholding of shares to satisfy
tax obligations upon exercise.
(c) Potential Realizable Value is based on the assumed annual share price
appreciation for the ten-year option term. The 5% annual growth rate results
in a stock price of $62.10 per share and the 10% annual growth rate results
in a price of $98.89 per share. The actual value, if any, an executive may
realize will depend on the excess of the stock price over the exercise price
on the date the option is exercised.
OPTION EXERCISES AND VALUATION
The following table shows for each executive officer named in the Summary
Compensation Table certain information regarding option exercises during fiscal
year 1994 and options outstanding as of June 30, 1994.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES(A)
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END AT FISCAL YEAR-END
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE(#) UNEXERCISABLE($)(B)(C)
- - --------------------------------- --------------- ----------- --------------------- ---------------------
<S> <C> <C> <C> <C>
Robert J. Saldich................ 0 $ 0 152,556/101,444 $ 393,720/$591,820
Harry O. Postlewait.............. 0 $ 0 61,000/ 24,000 $ 58,500/$ 0
Michael T. Everett............... 2,500 $ 11,358 134,125/ 31,375 $ 258,677/$112,266
James B. Spradling............... 3,500 $ 38,500 36,375/ 39,625 $ 167,391/$178,172
Joseph G. Wirth.................. 0 $ 0 28,125/ 36,375 $ 231,172/$161,016
</TABLE>
- - ---------------
(a) No SARs were outstanding at June 30, 1994, nor were any SAR grants made to
any named executive officer during the year ended June 30, 1994.
(b) The market value of the underlying securities at the fiscal year-end minus
the exercise price of in-the-money options. The market value (closing share
price) on June 30, 1994 was $36.00.
(c) Average exercise price of all options outstanding for named executive
officers are: Mr. Saldich, $33.46; Mr. Postlewait, $37.46; Mr. Everett,
$35.50; Mr. Spradling, $32.83; and Mr. Wirth, $30.32.
6
<PAGE> 9
DIRECTORS' FEES AND STOCK OPTIONS
Directors not employed by the Company (all directors except Mr. Saldich)
are paid an annual fee of $20,000 plus $1,000 for each Board or committee
meeting attended in person. In addition, the chairman of the audit committee
receives an annual fee of $7,500; the chairman of the nominating committee
receives an annual fee of $16,000; and the chairman of the oversight committee
for Raynet receives an annual fee of $25,000. Mr. Cook, Mr. Stein and Mr.
Halperin receive, and Mr. Jamieson received until his retirement, additional
compensation for providing consulting services to the Company or its
subsidiaries. Mr. Cook provides advice to the Company with respect to
technologies and management development. Mr. Halperin provides advice to Raynet
with respect to sales, marketing, and recruiting. Mr. Jamieson provided advice
to the Company with respect to organizational development. Mr. Stein provides
advice to the Company with respect to financing alternatives and other Company
issues.
The Company entered into a consulting agreement with Mr. Cook upon his
retirement on April 1, 1990, providing for an annual retainer of $100,000,
payment of one-half of his office rent, and the assignment of a Company employee
as his secretary. The agreement includes a commitment from Mr. Cook to consult
for the Company on an as-needed basis and not to consult or work for a
competitor of the Company during the term of the agreement. The agreement may be
terminated by either party for any reason at the end of any fiscal year upon 90
days' prior written notice.
The Company entered into a consulting agreement with Mr. Stein on January
25, 1994, providing for a retainer of $32,000 per quarter to be paid to Waverley
Associates, Inc. and an option grant of 10,000 shares at fair market value on
the date of grant. The agreement includes a commitment from Waverley Associates,
Inc. to hold Mr. Stein available for up to 20% of his time for such consulting.
Raynet Corporation entered into a consulting agreement with Mr. Halperin
upon his retirement on April 1, 1990, providing for an annual retainer of
$150,000 and an office and secretary at Raynet. Under the agreement, Mr.
Halperin was required to devote 20% of his time to Raynet and not to consult or
work for a competitor of the Company during the term of the agreement. Another
agreement, which was executed by Mr. Halperin and the Company as of April 1,
1990, granted him supplementary pension benefits of $150,000 as a lifetime
annuity, extended the vesting of certain options through the period of his
consultancy for Raynet, and extended the exercise period for certain options
that were already vested. On April 18, 1994, Raynet and Mr. Halperin entered
into a new consulting agreement that superseded the old agreements. The new
agreement continued Mr. Halperin's compensation level through June 30, 1994,
then provided for a monthly retainer of $12,500 from July 1, 1994 through
December 31, 1994 and $6,250 for January 1, 1995 through November 30, 1995. In
addition, Raynet agreed to reimburse Mr. Halperin for relocation of his office
and for office rent and secretarial services, at a rate of 100% of costs
incurred from July 1, 1994 through December 31, 1994, and at a rate of 50% from
January 1, 1995 through November 30, 1995. The Company guaranteed Raynet's
obligations under the new consulting agreement and agreed to assume them in the
event of a disposition of Raynet.
Until his retirement, Mr. Jamieson provided organizational development
advice to the Company as requested on a periodic basis. He received $7,500 per
quarter for such services.
Under the 1987 Directors Stock Option Plan, each director who is not an
employee of the Company receives an option to purchase 3,000 shares of Common
Stock on the date he or she first serves as a non-employee director. Thereafter,
each non-employee director receives an option to purchase 750 shares of Common
Stock upon re-election at the annual meeting of stockholders. A total of 150,000
shares of Common Stock have been reserved for issuance under this plan. The
exercise price of options granted under this plan is the fair market value of
the Common Stock on the grant date. For the fiscal year ended June 30, 1994,
each director (except Mr. Saldich, who was not eligible, and Mr. Yansouni and
Dr. McTague, who had not yet been elected) received an option to purchase 750
shares of Common Stock at a grant price of $38.125 per share. Upon election, Mr.
Yansouni and Dr. McTague each received an option to purchase 3,000 shares of
Common Stock at a grant price of $35.25 and $35.875, respectively. If re-elected
at the annual meeting, each director, other than Mr. Saldich, will receive an
option to purchase an additional 750 shares.
7
<PAGE> 10
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors determines the general
compensation policies of the Company, establishes compensation plans, and sets
specific compensation levels for executive officers. During the 1994 fiscal year
the Compensation Committee was composed of Messrs. Morton (Chairman), Dulude,
and Jamieson. All of the Committee members are "disinterested" as that term
applies under the Securities and Exchange Commission's Rule 16b-3.
The Committee reviews executive compensation matters not less than once
annually. At the request of the Committee, the Company's Human Resources
Department presents analyses and recommendations on executive compensation for
the next fiscal year. The Committee thereafter makes specific determinations for
each executive officer.
Executive officer compensation typically consists of three components: base
salary, an annual cash bonus award, and long-term incentive compensation in the
form of stock options. Salary ranges, along with "target" levels for cash
bonuses and stock option grants, are established by the Committee based on
median competitive market levels indicated from pay surveys and other
information obtained by the Company regarding selected U.S. companies of similar
size, complexity, and quality to that of the Company.
BASE SALARIES. For fiscal year 1994, the Committee obtained an independent
consultant's report summarizing executive salary levels at over 25 comparison
companies. Included were prominent electronics, telecommunications, computer
software and hardware, and industrial manufacturing companies, representing
organizations with whom the Company competes for talent and/or which have market
capitalization or other attributes similar to the Company. Salary data from the
report were adjusted to reflect relative sales volumes and differences in
business unit size, as appropriate. Publicly available surveys and salary data
reported in proxy statements were used to provide supplementary information.
Additionally, in setting salary levels, the Committee considers the executive
officer's individual experience and sustained performance, as well as salary
levels within the Company.
ANNUAL BONUSES. A variable cash bonus plan was implemented in fiscal year
1993 and continued during 1994 for all non-Raynet employees, except the Chief
Executive Officer (CEO), corporate Executive Vice President, Chief Financial
Officer, and Chief Legal Officer. There are two formula-derived components to
the plan, a corporate profit sharing pool and a business unit incentive pool.
The corporate profit sharing pool is based on the Company's pre-tax return on
assets (exclusive of Raynet); the business unit pool is based on individual
business sector return on controllable assets and provides the opportunity for
additional compensation based on sales growth. Specific financial thresholds
must be met before any awards may be paid for financial performance. Financial
goals are set at absolute levels, not relative to internal budgets or
projections. Furthermore, each officer in the variable cash bonus plan may be
eligible for an additional amount above the formula-derived bonus. For executive
officers, such additional amounts are awarded at the discretion of the
Committee, depending on individual performance.
The four corporate officers who do not participate in the variable cash
bonus plan may receive annual bonus awards only at the discretion of the
Committee. Bonuses for these individuals, if any, reflect the overall
performance of the entire Company including Raynet, the Company's financial
results as compared to prior years, and progress during the year toward the
Company's long-term strategic objectives.
LONG-TERM INCENTIVES. Stock option grants recently have been the only form
of long-term incentive compensation used by the Committee. The Committee
believes that stock options play an important role in attracting, retaining, and
motivating executives and in providing executives with a means of accumulating
Company stock ownership. The Committee's practice is to grant options annually
at 100% of the fair market value at the date of grant. Subsequently, options
typically vest at a rate of 25% per year over four years.
The Committee determines option grant levels for executive officers based
on competitive data gathered from relevant comparison companies by independent
consultants. The Committee considers the aggregate stock option shares granted
throughout the Company, individual experience and performance of recipients, and
past individual grant amounts in determining appropriate grant levels.
8
<PAGE> 11
CEO COMPENSATION. The Committee believes that the compensation level for
the CEO should be determined by the results of the Company and its subsidiaries,
as well as progress made in positioning the Company for sustained future growth.
The Committee reviews competitive CEO compensation packages and related
financial performance data at selected comparison companies to determine a
reasonable level and mix of pay for the Company's CEO.
Robert J. Saldich became president and CEO of the Company on April 1, 1990.
Initially, Mr. Saldich's base salary as CEO was $450,000 per year. Mr. Saldich
received no increase in his base salary in fiscal years 1991 and 1992 as the
Company faced the economic challenge of worldwide recession along with
significant downsizing of the defense industry, while continuing to support its
Raynet investment. He then received an increase to $500,000 at the beginning of
fiscal year 1993, and to $550,000 at the beginning of fiscal year 1994. The
Committee believes that his salary history accords with the Company's
performance (return on assets, sales growth, and progress towards strategic
initiatives) since Mr. Saldich became president and CEO. Nonetheless, external
market indices of comparably sized businesses show that his base salary remains
below the competitive median.
For fiscal year 1994, the Committee awarded a cash bonus of $220,000 to Mr.
Saldich. This is double the bonus that he earned for fiscal year 1993, which
followed three years (fiscal years 1990, 1991, and 1992) when he earned no
bonuses. The combination of Mr. Saldich's fiscal year 1994 bonus and salary
earnings is less than the competitive median for CEOs of comparable companies.
However, the bonus reflects the Committee's recognition that return on assets,
sales growth, and revenues were improved over fiscal year 1993. The Committee
also recognizes significant strategic accomplishments involving the development
of financing alternatives for Raynet.
Stock options are granted to the CEO, as to other executive officers,
primarily based on position, individual performance and prior grant history. The
Committee determines grant levels after measurement against the external market
both in terms of individual option grant size and aggregate shares granted as a
percent of total outstanding Company shares.
Mr. Saldich was granted options on 36,000 shares of the Company's Common
Stock in fiscal year 1994. Competitive data analyzed by the Committee indicate
that this is substantially less than the median competitive grant. Mr. Saldich's
grant reflects an adjustment to maintain the aggregate option shares granted by
the Company for fiscal year 1994 at an acceptable overall level. His 1994
options were granted at fair market value at the time of grant and vest ratably
over four years. Options on 25,600 shares are "non-qualified options" and
options on 10,400 shares are "incentive stock options", as those terms are
defined by the Internal Revenue Code.
COMPANY POLICY ON DEDUCTIBILITY OF EXECUTIVE OFFICER COMPENSATION. The
Board has decided to amend the Company's 1990 Incentive Plan in light of Section
162(m) of the Internal Revenue Code. Section 162(m) generally places a $1
million per person limit on the deduction a publicly held corporation may take
for compensation paid to its CEO and its four other highest paid executive
officers, unless, in general, the compensation is exempt as "performance based."
For stock compensation to be "performance based," a requirement of Section
162(m) is that there be a limit on the number of shares that may be granted to
employees subject to the deduction cap. The Board of Directors approved a limit
of 200,000 shares as the maximum number of shares that may be granted to any
participant under the 1990 Incentive Plan in any one-year period. If approved by
stockholders, this amendment to the 1990 Incentive Plan will allow gains
realized upon exercise of options to qualify as "performance based" and,
therefore, to be excluded from compensation subject to the $1 million
deductibility limit.
[SIGNED:] Messrs. Dulude, Jamieson, and Morton (Chairman)
9
<PAGE> 12
RAYCHEM STOCK PERFORMANCE CHART
The chart below compares the Company's cumulative total stockholder return
(overall market performance with reinvested dividends) during the five-year
period ended June 30, 1994, against the Standard & Poor's 500 Stock Index and
the Standard & Poor's Electrical Equipment Index, both of which are established
and well-known industry indices.
The Company is a broadly diversified materials science business and is not
easily categorized within any specific industry index.
RAYCHEM CORPORATION
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN(A)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD S&P ELEC
(FISCAL YEAR COVERED) RAYCHEM S&P 500 EQUIP INDEX
<S> <C> <C> <C>
30/JUN/89 100.00 100.00 100.00
30/JUN/90 97.43 124.54 152.08
30/JUN/91 76.23 142.33 192.00
30/JUN/92 93.77 168.82 226.08
30/JUN/93 116.50 199.12 304.25
30/JUN/94 106.47 208.68 326.00
</TABLE>
- - ---------------
(a) Total return assumes reinvestment of dividends. Assumes $100 invested June
30, 1989.
(b) S&P Electrical Equipment Index includes AMP, Emerson Electric, General
Electric, W.W. Grainger, Honeywell, Raychem, Thomas & Betts, and
Westinghouse Electric.
PENSION PLANS
The Company has a defined benefit pension plan that provides retirement
benefits to eligible United States employees. Subject to certain exceptions, for
each year of credited service after 1992, each eligible employee accrues an
annual benefit equal to 1.375% of compensation plus 0.625% of compensation in
excess of Social Security compensation. In addition, the plan provides for a
past service benefit of the sum of 1.375% of the average compensation of a
participant for the three highest consecutive years of compensation prior to
1992 plus 0.625% of such average compensation in excess of Social Security
compensation, multiplied by the years of credited service prior to 1992. Years
of credited service are limited to a total of 35 years, and these years comprise
the 35 highest-paid years worked. The benefits payable to any employee are
payable upon retirement from the Company at age 65 and are subject to certain
limitations established by applicable law
10
<PAGE> 13
and the plan. An employee who retires after age 65 receives the greater of the
benefit at age 65 increased by 1/180 per month for each month of service
thereafter or the benefit for all years of service.
The Company has adopted a supplemental executive retirement plan for all
United States employees whose benefits under the Company's pension plan are
limited by United States federal tax laws. The plan provides these employees
with benefits equivalent to those not paid under the pension plan because of the
federal tax law limitations. However, the supplemental retirement plan limits
years of credited service to 35, and no benefits are payable under the plan
subsequent to the participant's engaging in any activity in competition with the
Company. The plan authorizes the Board, at its discretion, to accelerate the
payment of benefits or establish a trust fund for participants upon a change in
control of the Company.
The estimated annual aggregate benefit payable under the plans upon
retirement from the Company at age 65 to each of the executive officers named in
the Summary Compensation Table (assuming that each person's covered compensation
in future years remains at its 1993 calendar year-end annualized level) is
$312,554 for Robert J. Saldich, $192,228 for Harry O. Postlewait, $150,760 for
Michael T. Everett, $159,378 for James B. Spradling, and $50,053 for Joseph G.
Wirth.
COMPANY LOANS TO DIRECTORS AND EXECUTIVE OFFICERS
In connection with option exercises and the purchase of its Common Stock
under equity incentive plans, the Company has made available to employees,
including directors and executive officers, deferred payment arrangements and
advances to cover income tax liabilities. The indebtedness resulting from such
arrangements has a five-year term and bears interest, which is accruing at rates
ranging from 5.0% to 9.1% per year, payable in annual installments. The maximum
amounts of such indebtedness outstanding during the fiscal year ended June 30,
1994, together with the amounts outstanding at June 30, 1994, for each person
who was a director or executive officer during the fiscal year and for whom the
principal amount exceeded $60,000 at any time during such period, is as follows:
$230,275 and $192,474 for Robert J. Saldich.
The Company has also extended to certain executive officers loans on a
secured basis for relocation expense and other personal needs. The loans are
repayable over four to five years and bear interest, accruing at rates between
0% and 6%. As of June 30, 1994, the maximum amount of such indebtedness
outstanding during the 1994 fiscal year, together with the amount outstanding at
June 30, 1994, for each such executive officer for whom the principal amount
exceeded $60,000 at any time during such period was as follows: Harry O.
Postlewait, $254,414 and $233,414; James B. Spradling, $217,244 and $215,744;
and Joseph G. Wirth, $600,000 and $600,000.
11
<PAGE> 14
ADDITION OF SHARES TO EMPLOYEE STOCK PURCHASE PLANS
BACKGROUND
The Company maintains an Amended and Restated 1984 Employee Stock Purchase
Plan and an Amended and Restated 1985 Supplemental Employee Stock Purchase Plan
that permit United States employees and employees of certain domestic and
foreign subsidiaries to purchase the Company's Common Stock at a discounted
price. These plans are designed to encourage and assist a broad spectrum of
employees of the Company and participating subsidiaries to acquire an equity
interest in the Company through the purchase of Common Stock. They are also
intended to provide to United States employees participating in the plan the tax
benefits available under Section 421 of the Internal Revenue Code. At June 30,
1994, 4,979 of 9,843 eligible employees were participants in the plans.
The Board of Directors has adopted, subject to stockholder approval, an
amendment to these plans to increase the aggregate number of shares issuable
under the two plans by 700,000 shares to 14,000,000 shares. As of August 1,
1994, approximately 691,804 shares remained available for issuance under these
plans. A summary of the principal provisions of these plans is set forth below.
If approved by stockholders, approximately 1,391,804 shares would be available
for issuance. Management expects this share increase to be sufficient for all
stock purchases under these plans for the next year.
DESCRIPTION OF PLANS
All employees, including executive officers and directors who are
employees, customarily employed more than 15 hours per week and more than five
months per year by the Company or a participating subsidiary are eligible to
participate in these plans as of the first quarterly enrollment date following
employment. Participants may elect to make contributions up to a maximum of 15%
of base earnings. On the last trading date of each period, the Company applies
the funds then in each participant's account to the purchase of shares. The
purchase dates are the last business day of each of January, April, July, and
October. The cost of each share purchased is 85% of the lower of the closing
prices for Common Stock on (i) the first trading day in the enrollment period in
which the purchase is made and (ii) the purchase date. (The closing price of the
Company's Common Stock on the New York Stock Exchange composite tape on August
23, 1994, was $40.75 per share.) The length of the enrollment period may not
exceed 12 months. Enrollment dates are the first business day of each of
February, May, August, and November. The Board has limited the maximum number of
shares that may be purchased by a participant during any enrollment period, and
no participant's right to acquire shares may accrue at a rate exceeding $25,000
of fair market value of Common Stock (determined as of the first business day in
an enrollment period) in any calendar year.
The Board of Directors administers these plans but has delegated routine
matters to management committees. The Board of Directors may amend or terminate
these plans at any time and may provide for an adjustment in the purchase price
and the number and kind of securities available under the plan in the event of a
reorganization, recapitalization, stock split, or other similar event. However,
amendments that would increase the number of shares reserved for purchase,
materially increase the benefits to participants, or materially modify the
requirements for participation under these plans require stockholder approval.
Shares available under these plans may be either outstanding shares repurchased
by the Company or newly issued shares.
FEDERAL INCOME TAX CONSEQUENCES
In general, participants who are citizens or residents of the United States
("U.S. Participants") will not have taxable income or loss under these plans
until they sell or otherwise dispose of shares acquired under these plans (or
die holding such shares). If the shares are held, as of the date of sale or
disposition, for longer than both (i) two years after the beginning of the
enrollment period during which the shares were purchased, and (ii) one year
following purchase, a U.S. Participant will have taxable ordinary income equal
to 15% of the fair market value of the shares on the first day of the enrollment
period (but not in excess of the gain on the
12
<PAGE> 15
sale). Any additional gain from the sale will be long-term capital gain. The
Company is not entitled to an income tax deduction if the holding periods are
satisfied.
If the shares are disposed of within either of the foregoing holding
periods (a "disqualifying disposition"), a U.S. Participant will have taxable
ordinary income equal to the excess of the fair market value of the shares on
the purchase date over the purchase price. In addition, the U.S. Participant
will have taxable capital gain (or loss) measured by the difference between the
sale price and the U.S. Participant's purchase price plus the amount of ordinary
income recognized, which gain (or loss) will be long-term if the shares have
been held as of the date of sale for more than one year. The Company is entitled
to an income tax deduction equal to the amount of ordinary income taxable to a
U.S. Participant in a disqualifying disposition.
Special rules apply to U.S. Participants who are directors or officers. The
consequences to non-U.S. Participants are governed by foreign laws, which
typically do not offer the same tax advantages as United States law.
PROPOSED AMENDMENTS
At the annual meeting, the Company's stockholders will be asked to approve
the increase in the total number of shares authorized under both plans by
700,000 shares to 14,000,000 shares.
The following table shows the "Dollar Value" and number of shares purchased
by the named individuals and groups under the Amended and Restated 1984 Employee
Stock Purchase Plan and/or the Amended and Restated 1985 Supplemental Employee
Stock Purchase Plan during the fiscal year ended June 30, 1994. The "Dollar
Value" is the difference between the fair market value of the stock at the date
of purchase and the participant's purchase price for the stock.
PLAN BENEFITS
AMENDED AND RESTATED 1984 EMPLOYEE STOCK PURCHASE PLAN AND
AMENDED AND RESTATED 1985 SUPPLEMENTAL EMPLOYEE STOCK PURCHASE PLAN(A)
<TABLE>
<CAPTION>
DOLLAR NUMBER
NAME AND POSITION VALUE VALUE($) OF SHARES
------------------------------------------------------ ---------- ---------
<S> <C> <C>
Robert J. Saldich..................................... $ 3,659 680
President and Chief Executive Officer
Harry O. Postlewait................................... $ 4,048 758
Executive Vice President
Michael T. Everett.................................... $ 3,680 689
Senior Vice President
James B. Spradling.................................... $ 514 94
Senior Vice President
Joseph G. Wirth....................................... $ 0 0
Senior Vice President and Chief Technical Officer
Executive Officers as a Group (14 persons)............ $ 43,675 8,094
Non-Executive Director Group(b)....................... $ 0 0
Non-Executive Officer Employee Group.................. $4,893,637 892,805
</TABLE>
- - ---------------
(a) Future benefits or amounts received cannot be calculated as they are
dependent on each individual's decision as to the amount of salary to be
deducted to be used for stock purchases and the stock price in effect at the
time of purchase.
(b) Members of the Board of Directors are ineligible to participate in these
Plans, unless they are also an employee of the Company. Presently, only Mr.
Saldich is eligible.
13
<PAGE> 16
RECOMMENDATION
The Board of Directors believes that the proposed amendments are in the
best interests of the Company, its stockholders, and its employees and
unanimously recommends a vote "FOR" approval. Approval of the amendments
requires the affirmative vote of the holders of a majority of the voting power
of the Company's outstanding shares of Common Stock.
AMENDMENTS TO 1990 INCENTIVE PLAN
BACKGROUND
In order to attract, retain, and motivate selected employees of, and
consultants to, the Company and its subsidiaries and affiliates, the Board of
Directors adopted, and the stockholders approved, the 1990 Incentive Plan. At
the Annual Meeting, the stockholders are being asked to approve an amendment to
the 1990 Incentive Plan to impose a limit on the number of shares of Common
Stock with respect to which option awards may be made to any one participant
thereunder in any one-year period. The stockholders are also being asked to
approve an amendment to the plan to extend to up to five years the time that
awards may be exercised after retirement.
DESCRIPTION OF THE PROPOSALS
Limit on Number of Shares. Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), enacted in August 1993, limits the deductibility
by public companies of compensation in excess of $1 million per year (subject to
some exemptions) paid to certain executive officers (generally, the CEO and the
four most highly compensated executive officers). As the limit applies in the
year in which the compensation is paid, it could apply to income derived from
the exercise of certain stock options, measured by the spread between the
exercise price and the fair market value at the time the option is exercised.
Options granted prior to February 17, 1993 are not subject to the deduction
limitation under this law.
"Performance based" compensation is excluded from compensation counted
toward the $1 million deduction limit if certain conditions are met.
Compensation resulting from the exercise of stock options will be treated as
"performance based" and excluded from the limit on deductibility if, among other
things, the plan under which the options are granted specifies limits on the
number of shares issuable to any participant under the plan and these limits are
approved by the issuer's stockholders.
In order to exclude from the $1 million deduction limit compensation
resulting from the exercise of options granted under the 1990 Incentive Plan,
the Board of Directors adopted, subject to stockholder approval, an amendment to
the plan to limit the number of shares with respect to which options may be
granted to no more than 200,000 shares to any one participant in any one-year
period.
Extension of Post-Retirement Exercisability. On August 12, 1994, the Board
of Directors adopted, subject to stockholder approval, an amendment to the
Incentive Plan that would extend to up to five years the time that awards
granted on or after August 12, 1994 under the plan may be exercised after
retirement. Currently, awards are exercisable after retirement for up to three
years. The Board believes that a longer time to exercise after retirement is in
line with plans of other companies and presents employees with greater personal
financial flexibility.
DESCRIPTION OF THE PLAN
The 1990 Incentive Plan provides for the discretionary award of options,
restricted stock, performance share awards, or any combination thereof
(collectively, the "awards") to eligible employees, including executive
officers, and consultants. The Incentive Plan is administered by the Board of
Directors. The Board may delegate its authority to a committee composed of not
less than three outside directors and may delegate routine matters to
management.
14
<PAGE> 17
A total of 3,700,000 shares of Common Stock is reserved for issuance under
the Incentive Plan. To the extent an award is paid in cash, the number of shares
of Common Stock, based on the fair market value thereof on the payment date,
that represent the value of the cash payment will not be available for later
grant under the Incentive Plan. No award may be granted under the Incentive Plan
after October 31, 2000, but outstanding awards may extend beyond that date.
As stated, awards may be granted in the form of stock options, restricted
stock, or performance shares (as defined in the Incentive Plan). Since the
Incentive Plan was approved by the stockholders in 1990, the Board has granted
only stock option awards. The other forms of awards were included in the
Incentive Plan in order to provide the Board with sufficient flexibility to
respond to such circumstances as changes in accounting rules or tax laws, a
different competitive environment for attracting and retaining employees, or
unforeseen conditions. The Board has broad discretion to determine the amount
and type of awards and the terms and conditions of awards. Any award may be
granted either alone or in addition to other awards granted under the Incentive
Plan. The Board may condition the grant of an award upon the attainment of
specified Company, group, division, or subsidiary performance goals or other
criteria, which need not be the same for all participants, and may adjust the
performance goals and measurements applicable to awards. The Board also may
waive in whole or in part any or all restrictions, conditions, vesting, or
forfeiture with respect to any outstanding award.
The consideration payable in connection with an award (including any
related taxes) may, as authorized by the Board, be paid by promissory note of
the participant, or by delivery of other property, including securities of the
Company. Except as provided in the Incentive Plan or in an award agreement,
awards generally terminate 90 days after termination of a participant's
employment, with the following exceptions: if the employment termination is due
to the participant's death, disability, or retirement (and the award was made
prior to August 2, 1991), then the award may be exercised for two years after
the date of termination. For awards made after August 2, 1991, if termination is
due to retirement, then the award may be exercised for three years after the
date of termination. If approved by stockholders, for awards made after August
12, 1994, if termination is due to retirement, then the award may be exercised
for five years after the date of termination.
The Board may amend, alter, or discontinue the Incentive Plan or any award
thereunder at any time, except that the consent of a participant is required if
the participant's existing rights under an outstanding award would be impaired.
In addition, to the extent required under applicable tax and securities laws and
regulations, the stockholders of the Company must approve any amendment,
alteration, or discontinuance of the Incentive Plan that would (i) increase the
total number of shares reserved under the Incentive Plan, (ii) permit incentive
stock options to be exercisable at less than fair market value on the date of
grant, (iii) extend the maximum option exercise period, (iv) change the class of
employees or consultants eligible to participate in the Incentive Plan, or (v)
materially increase the benefits accruing to participants under the Incentive
Plan.
The Incentive Plan is an unfunded plan for incentive and deferred
compensation. Although it has not done so, the Board may establish trusts or
other arrangements to meet the obligations under the Incentive Plan to deliver
stock or make payments.
Options. Stock options granted under the Incentive Plan may be incentive
stock options under Section 422 of the Internal Revenue Code ("ISOs") or
non-qualified stock options ("Non-Qualified Options"). The exercise price of
ISOs may not be less than the fair market value of the shares subject to the
option on the date of grant. The exercise price of Non-Qualified Options must be
at least 85% of the fair market value of the shares subject to the option on the
date of grant. The term of any ISO granted under the Incentive Plan may not
exceed ten years, and the term of any Non-Qualified Option may not exceed 15
years. Certain other limitations are also applicable to ISOs in order to take
advantage of tax treatment that may be favorable to holders of ISOs.
Restricted Stock. Restricted Common Stock awards consist of
nontransferable shares of Common Stock of the Company. The Board may provide for
the lapse of the transfer restrictions over a period of not more than ten years,
or may accelerate or waive such restrictions, in whole or in part, based on
service, performance, or other criteria.
15
<PAGE> 18
Performance Shares. Performance shares, which are shares of stock issuable
upon the attainment of certain performance criteria, may also be granted under
the Incentive Plan. At the time a grant is made, the Board will determine the
number of shares of Common Stock to be awarded at the end of the performance
period if and to the extent that the specified performance targets are met. The
Board will determine the performance period, which must be at least two years
and not more than six years, the performance objectives to be used in granting
the awards, and the extent to which awards have been earned. Performance periods
may overlap, and participants may be awarded performance shares having different
performance criteria. Performance share awards may be payable in cash or stock,
at the discretion of the Board, and may bear interest or earn dividends.
Change in Control. In the event of a "change in control" of the Company,
as defined in the Incentive Plan, the Board may, in its discretion and subject
to certain limitations, elect to accelerate the vesting provisions of awards or
may cash out the awards. A "change in control" is defined to include the
acquisition of 20% or more of the voting power of the Company's outstanding
stock, a proxy solicitation for one or more directors without support of the
then-current Board, and certain mergers or reorganizations or other changes in
ownership of the Company's assets or stock.
FEDERAL INCOME TAX CONSEQUENCES
In general, an employee who is a citizen or resident of the United States
("U.S. Employee") will recognize no income (and the Company will receive no
deduction) upon the grant or exercise of an ISO. However, exercise of an ISO by
a U.S. Employee could give rise to liability of the U.S. Employee for
alternative minimum tax.
A U.S. Employee generally will be entitled to long-term capital gain
treatment upon the sale of shares ("Option Shares") acquired upon the exercise
of an option if the shares have been held for more than two years after the
grant date and for more than one year after the exercise date. If the Option
Shares are disposed of before both of these holding periods have expired, the
U.S. Employee will have taxable ordinary income and/or capital gain (or loss) in
the year of sale determined as if the option had been a Non-Qualified Option
(see below), except that the amount of ordinary income will not exceed the
actual gain on the sale, and the Company will be entitled to a corresponding
deduction.
In general, a U.S. Employee should not have taxable income upon the grant
of a Non-Qualified Option or performance share award. Upon exercise or
conversion of either of these instruments, the U.S. Employee will generally have
ordinary income subject to withholding taxes (and the Company will be entitled
to a corresponding deduction) in the amount by which the fair market value of
the stock at that time exceeds the purchase (or conversion) price. A U.S.
Employee should not have taxable income upon the grant of restricted stock but
would have taxable income upon the lapse of any restrictions. A U.S. Employee
receiving restricted stock, however, may make an election to be taxed at grant
on any excess of fair market value over the amount paid, in which case the lapse
of any restrictions will not be a taxable event. If shares are held at least one
year after the date the U.S. Employee has taxable income from acquiring them,
then upon sale of the shares the employee will have long-term capital gain or
loss equal to the difference between the sale price and the fair market value of
the shares on the date taxable income is recognized. Under current federal
income tax law, long-term capital gain is taxable at a maximum rate of 28%,
while ordinary income is taxable at a maximum stated rate of 39.6%
(disallowances of deductions at certain income levels may result in a higher
implicit rate).
The tax consequences to non-U.S. Employees are governed by foreign law,
which typically does not offer the same tax advantages as United States law.
Special rules apply to participants who are directors or officers.
PROPOSED AMENDMENTS
At the annual meeting, the Company's stockholders will be asked to approve
the proposal to amend the 1990 Incentive Plan to limit the number of shares with
respect to which options may be granted to no more than 200,000 shares to any
one participant in any one-year period. In addition, stockholders will be asked
to approve the proposal to amend the plan to extend the period during which
awards granted on or after August 12, 1994 may be exercised to up to five years
following retirement from the Company.
16
<PAGE> 19
The following table shows the number of shares of Common Stock currently
issuable upon exercise of options granted to the named individuals and groups
under the 1990 Incentive Plan during the fiscal year ended June 30, 1994.
PLAN BENEFITS
1990 INCENTIVE PLAN
<TABLE>
<CAPTION>
NUMBER AVERAGE
OF EXERCISE
NAME AND POSITION OPTIONS(A) PRICE
-------------------------------------------------------- -------- --------
<S> <C> <C>
Robert J. Saldich....................................... 0 $ 0
President and Chief Executive Officer
Harry O. Postlewait..................................... 0 $ 0
Executive Vice President
Michael T. Everett...................................... 0 $ 0
Senior Vice President
James B. Spradling...................................... 0 $ 0
Senior Vice President
Joseph G. Wirth......................................... 0 $ 0
Senior Vice President and Chief Technical Officer
Executive Officers as a Group (14 persons).............. 19,800 $37.97
Non-Executive Director Group(b)......................... 10,000 $35.00
Non-Executive Officer Employee Group.................... 684,200 $38.00
</TABLE>
- - ---------------
(a) All options granted at fair market value as of date of grant.
(b) Only officers and other key employees (including consultants) are eligible
to participate in this Plan.
The closing price of the Common Stock on the New York Stock Exchange on
August 23, 1994 was $40.75 per share.
RECOMMENDATION
The Board of Directors believes that the proposed amendments are in the
best interests of the Company, its stockholders, and its employees and
unanimously recommends a vote "FOR" approval. Approval of each of the amendments
requires the affirmative vote of the majority of the votes cast at a duly held
stockholder's meeting at which a quorum of the voting power is represented.
17
<PAGE> 20
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 with the Securities
and Exchange Commission ("SEC") initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of the Company.
Officers, directors and greater than 10% shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, for the fiscal year ended June 30, 1994, its executive
officers, directors and greater than 10% beneficial owners complied with all
applicable Section 16(a) filing requirements.
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors recommends to the stockholders ratification of the
appointment of Price Waterhouse LLP as the Company's independent accountants.
Price Waterhouse LLP has been acting as the Company's independent accountants
since fiscal year 1984.
Representatives of Price Waterhouse LLP will be present at the meeting.
They do not expect to make any statement, but will have the opportunity to make
a statement if they so desire and will be available to respond to appropriate
questions.
CERTAIN RELATIONSHIPS AND TRANSACTIONS WITH MANAGEMENT
Mr. Cook is a director and shareholder of Chemical Fabrics Corporation, a
New Hampshire company founded by Mr. Cook's brother and principally engaged in
the manufacture and sale of flexible, high-performance materials for use in
severe environments. Mr. Cook has been a director of Chemical Fabrics
Corporation for many years and has been a major shareholder since his brother's
death in 1977. While Chemical Fabrics is not in direct competition with Raychem,
the company possesses wire coating technology which may be useful to competitors
of Raychem. Chemical Fabrics produces a composite film product which it sells to
customers who use it to manufacture wire and cable. At the present time, it does
not appear likely that Chemical Fabrics itself would compete directly with
Raychem in the wire and cable business. In the past, Chemical Fabrics has had
discussions with Raychem concerning the possibility of Chemical Fabrics and
Raychem working together. The parties mutually concluded that such a
relationship was unlikely to be productive for either company at that time.
ANNUAL REPORT
The Company's annual report for the 1994 fiscal year is being mailed with
this proxy statement to stockholders entitled to notice of the meeting.
OTHER BUSINESS
The Board of Directors knows of no other business that will be presented
for consideration at the meeting. If other matters are properly brought before
the meeting, however, it is the intention of the persons named in the
accompanying proxy to vote the shares represented on such matters in accordance
with their best judgment.
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<PAGE> 21
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the
Company's 1995 annual meeting of stockholders must be received by the Company no
later than May 24, 1995, in order to be considered for inclusion in the proxy
statement and proxy related to the meeting.
Stockholder proposals for nominees to the Board of Directors must be
submitted in writing to the nominating committee in care of the Corporate
Secretary by August 1 or 90 days prior to the annual meeting of stockholders,
whichever is earlier.
By Order of the Board of Directors
ROBERT J. VIZAS
Secretary
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<PAGE> 22
RAYCHEM CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS -- NOVEMBER 9, 1994
Robert J. Saldich, Bruce E. MacMillan, and Robert J. Vizas, or any of them,
each with the power of substitution and revocation, are hereby authorized to
represent the undersigned, with all powers which the undersigned would possess
if personally present, to vote the Common Stock of the undersigned at the annual
meeting of stockholders of RAYCHEM CORPORATION to be held at the Company's
principal office, 300 Constitution Drive, Menlo Park, California 94025, at 10:00
a.m. on Wednesday, November 9, 1994, and at any postponements or adjournments of
that meeting, as set forth below, and in their discretion upon any other
business that may properly come before the meeting.
THIS PROXY WILL BE VOTED AS SPECIFIED OR, IF NO CHOICE IS SPECIFIED, WILL
BE VOTED FOR THE ELECTION OF THE NOMINEES NAMED AND FOR EACH OF THE OTHER
PROPOSALS SPECIFIED HEREIN.
1. Nominees: Paul M. Cook, Richard Dulude, James F. Gibbons, John P. McTague,
Dean O. Morton, Robert J. Saldich, Isaac Stein and Cyril J. Yansouni.
FOR all nominees WITHHELD from all nominees
FOR all nominees, except vote withheld from the following nominee(s):
FOR AGAINST ABSTAIN
2. To approve amendments to the Company's employee stock purchase plans to
provide additional shares.
FOR AGAINST ABSTAIN
3. To approve an amendment to the Company's 1990 Incentive Plan to limit the
number of shares that may be granted to any participant in any one-year
period.
FOR AGAINST ABSTAIN
4. To approve an amendment to the Company's 1990 Incentive Plan to extend to up
to five years the period during which awards may be exercised following
retirement from the Company.
FOR AGAINST ABSTAIN
5. To ratify the appointment of Price Waterhouse LLP as the Company's
independent accountants.
FOR AGAINST ABSTAIN
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS. IF ACTING AS ATTORNEY, EXECUTOR,
TRUSTEE, OR IN REPRESENTATIVE CAPACITY, SIGN NAME AND INDICATE TITLE.
Signature Date
Signature Date
Check here for address change. New Address:
Check here if you plan to attend the meeting.
PLEASE VOTE, SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
<PAGE> 23
RAYCHEM CORPORATION
AMENDED AND RESTATED 1990 INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS.
(a) Purpose. The purpose of the Plan is to provide selected
eligible employees of, and consultants to, Raychem Corporation, a Delaware
corporation, its subsidiaries and affiliates an opportunity to participate in
the Company's future by offering them an opportunity to acquire stock in the
Company so as to retain, attract and motivate them.
(b) Definitions. For purposes of the Plan, the following
terms have the following meanings:
(i) "Award" means any award under the Plan, including
any Option, Restricted Stock, or Performance Share Award.
(ii) "Award Agreement" means, with respect to each Award, the
signed written agreement between the Company and the Plan participant
setting forth the terms and conditions of the Award.
(iii) "Board" means the Board of Directors of the Company.
(iv) "Change in Control" has the meaning set forth in
Section 8(a).
(v) "Change in Control Price" has the meaning set forth in
Section 8(c).
(vi) "Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute.
(vii) "Commission" means the Securities and Exchange
Commission and any successor agency.
(viii) "Committee" means the Committee referred to in
Section 2, or the Board in its capacity as administrator of the Plan
in accordance with Section 2.
(ix) "Company" means Raychem Corporation, a Delaware
corporation.
(x) "Disability" means permanent and total disability as
determined by the Committee for purposes of the Plan.
<PAGE> 24
(xi) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, and any successor statute.
(xii) "Fair Market Value" means as of any given date the closing
sales price of the Stock reported on the New York Stock Exchange
Composite Tape or, if no sale of Stock occurs on such date, the fair
market value of the Stock as determined by the Committee in good faith.
(xiii) "Incentive Stock Option" means any Option intended to be and
designated as an "incentive stock option" within the meaning of Section
422 of the Code.
(xiv) "Option" means an option granted under Section 5.
(xv) "Performance Period" means the period determined by the
Committee under Section 7(a).
(xvi) "Performance Share" means the equivalent, as of any time such
assessment is made, of the Fair Market Value of one share of Stock.
(xvii) "Performance Share Award" means an Award under Section 7.
(xviii) "Plan" means this Raychem Corporation 1990 Incentive Plan,
as amended from time to time.
(xix) "Restricted Stock" means an Award of Stock subject to
restrictions, as more fully described in Section 6.
(xx) "Restriction Period" means the period determined by the
Committee under Section 6(b).
(xxi) "Retirement" has the same meaning as in the "Raychem
Corporation Pension Plan" as in effect from time to time.
(xxii) "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the
Exchange Act, as amended from time to time, and any successor rule.
(xxiii) "Stock" means the Common Stock, $1.00 par value, of the
Company, and any successor security.
(xxiv) "Subsidiary" has the meaning set forth in Section 424 of
the Code.
(xxv) "Supplemental Stock Option" means any Option that is not
an Incentive Stock Option.
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<PAGE> 25
(xxvi) "Tax Date" means the date defined in Section 9(f).
(xxvii) "Termination" means, for purposes of the Plan, with respect
to a participant, that the participant has ceased to be, for any reason,
employed by, or consulting to, the Company, a subsidiary or an affiliate;
provided, however, that for purposes of this definition, if so
determined by the President of the Company, in his sole discretion,
Termination shall not include a change in status from an employee of,
to a consultant to, the Company or any subsidiary or affiliate, or
vice versa.
SECTION 2. ADMINISTRATION.
(a) Committee. The Plan shall be administered by the Board or,
upon delegation by the Board, either in its entirety or only as it relates to
persons subject to Section 16 of the Exchange Act, by a committee of the Board.
In connection with the administration of the Plan, the Committee shall have the
powers possessed by the Board. The Committee may act only by a majority of its
members, except that the Committee (i) may authorize any one or more of its
members or any officer of the Company to execute and deliver documents on
behalf of the Committee and (ii) so long as not otherwise required for the Plan
to comply with Rule 16b-3, may delegate to one or more officers or directors of
the Company authority to grant Awards to persons who are not subject to Section
16 of the Exchange Act with respect to Stock. The Board at any time may
abolish the Committee and revest in the Board the administration of the Plan.
(b) Authority. The Committee shall grant Awards to eligible
employees and consultants. In particular and without limitation, the
Committee, subject to the terms of the Plan, shall:
(i) select the officers, employees and consultants to whom
Awards may be granted;
(ii) determine whether and to what extent Awards are to be
granted under the Plan;
(iii) determine the number of shares to be covered by each Award
granted under the Plan;
(iv) determine the terms and conditions of any Award granted
under the Plan and any related loans to be made by the Company, based
upon factors determined by the Committee; and
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<PAGE> 26
(v) determine to what extent and under what circumstances any
Award payments may be deferred by a participant.
(c) Committee Determinations Binding. The Committee may adopt,
alter and repeal administrative rules, guidelines and practices governing the
Plan as it from time to time shall deem advisable, may interpret the terms and
provisions of the Plan, any Award and any Award Agreement and may otherwise
supervise the administration of the Plan. Any determination made by the
Committee pursuant to the provisions of the Plan with respect to any Award
shall be made in its sole discretion at the time of the grant of the Award or,
unless in contravention of any express term of the Plan or Award, at any later
time. All decisions made by the Committee under the Plan shall be binding on
all persons, including the Company and Plan participants.
SECTION 3. STOCK SUBJECT TO PLAN.
(a) Number of Shares. The total number of shares of Stock
reserved and available for issuance pursuant to Awards under the Plan shall be
3,700,000 shares. Such shares may consist, in whole or in part, of authorized
and unissued shares or treasury shares or shares reacquired in private
transactions or open market purchases, but all shares issued under the Plan
regardless of source shall be counted against the 3,700,000-share limitation.
If (i) any Option terminates or expires without being exercised in full, (ii)
any shares of Stock issued as Restricted Stock or Performance Shares or issued
pursuant to Stock Purchase Rights are forfeited prior to conferring on their
holder benefits of ownership other than voting rights or accumulated dividends
that are not realized, or (iii) an Award otherwise terminates without a payment
being made to the participant in the form of Stock, the shares issuable under
such Option or Award, or forfeited without conferring benefits as described
above, shall again be available for issuance in connection with other Awards.
If any shares of Stock subject to an Award are repurchased by the Company or
are forfeited after conferring benefits as described above, such shares of
Stock shall not again be available for issuance in connection with Awards. To
the extent an Award is paid in cash, the number of shares of Stock
representing, at Fair Market Value on the date of payment, the value of the
cash payment shall not be available for later grant under the Plan.
(b) Adjustments. In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split or other change in
corporate structure affecting the Stock, such substitution or adjustments shall
be made in the aggregate number of shares of Stock reserved for issuance under
the Plan, in the number of shares of Stock specified in
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<PAGE> 27
Section 3(c), in the number and exercise price of shares subject to outstanding
Options, and in the number of shares subject to other outstanding Awards, as
may be determined to be appropriate by the Committee, in its sole discretion;
provided, however, that the number of shares subject to any Award shall always
be a whole number.
(c) Individual Limitation. The Company may not issue Options with
a Fair Market Value exercise price as of the date of grant covering in the
aggregate more than 200,OOO shares of Stock (subject to adjustments and
substitutions as required under Section 3(b) above) to any one participant in
any one-year period. If and when the Committee establishes performance
criteria for the award of Options with an exercise price of less than Fair
Market Value, the award of Restricted Stock or Performance Share Awards, the
Company may limit the number of shares issuable under such Awards to the extent
required to comply with the limitation on amounts deductible by the Company
under Section 162(m) of the Code.
SECTION 4. ELIGIBILITY.
Awards may be granted to officers and other key employees of, and
consultants to, the Company, its subsidiaries and affiliates (excluding members
of the Committee and any person who serves only as a director).
SECTION 5. STOCK OPTIONS.
(a) Types. Any Option granted under the Plan shall be in such
form as the Committee may from time to time approve. The Committee shall have
the authority to grant to any participant Incentive Stock Options, Supplemental
Stock Options or both types of Options. Incentive Stock Options may be granted
only to employees of the Company, its parent (within the meaning of Section 424
of the Code) or Subsidiaries. Any portion of an Option that is not designated
as, or does not qualify as, an Incentive Stock Option shall constitute a
Supplemental Stock Option.
(b) Terms and Conditions. Options granted under the Plan shall be
subject to the following terms and conditions:
(i) Option Term. The term of each Option shall be fixed
by the Committee, but no Incentive Stock Option shall be exercisable
more than ten (10) years after the date the Option is granted, and no
Supplemental Stock Option shall be exercisable more than fifteen (15)
years after the date the Option is granted. If, at the time the
Company grants an Incentive Stock Option, the optionee owns directly
or by attribution stock possessing more than 10% of the total
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<PAGE> 28
combined voting power of all classes of stock of the Company, or any
parent or Subsidiary of the Company, the Incentive Stock Option shall not
be exercisable more than five (5) years after the date of grant.
(ii) Grant Date. The Company may grant Options under the Plan at any
time and from time to time before the Plan terminates. The Committee shall
specify the date of grant or, if it fails to, the date of grant shall be
the date of action taken by the Committee to grant the Option. However, if
an Option is approved in anticipation of employment, the date of grant
shall be the date the intended optionee is first treated as an employee for
payroll purposes.
(iii) Exercise Price. The exercise price per share of Stock
purchasable under an Option shall be equal to at least 85% of the Fair
Market Value on the date of grant, and in the case of Incentive Stock
Options shall be equal to at least the Fair Market Value on the date of
grant; provided, however, that if, at the time the Company grants an
Incentive Stock Option, the optionee owns directly or by attribution stock
possessing more than 10% of the total combined voting power of all classes
of stock of the Company, or any parent or Subsidiary of the Company, then
the exercise price shall be not less than 110% of the Fair Market Value on
the date the Incentive Stock Option is granted.
(iv) Exercisability. Subject to the other provisions of the
Plan, an Option shall be exercisable in its entirety at grant or at such
times and in such amounts as are specified in the Award Agreement
evidencing the Option. The Committee, in its absolute discretion, at any
time may waive any limitations respecting the time at which an Option first
becomes exercisable in whole or in part.
(v) Method of Exercise; Payment. To the extent the right to
purchase shares has accrued, Options may be exercised, in whole or in part,
from time to time, by written notice from the optionee to the Company
stating the number of shares being purchased, accompanied by payment of the
exercise price for the shares.
(vi) No Disqualification. Notwithstanding any other provision in
the Plan, no term of the Plan relating to Incentive Stock Options shall be
interpreted, amended or altered nor shall any discretion or authority
granted under the Plan be exercised so as to disqualify the Plan under
Section 422 of the Code or, without the consent of the optionee affected,
to disqualify any Incentive Stock Option under such Section 422.
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<PAGE> 29
SECTION 6. RESTRICTED STOCK.
(a) Price. Participants awarded Restricted Stock, within
forty-five (45) days of receipt of the applicable Award Agreement, which in no
event shall be later than ten (10) days after the Award grant date, shall pay
to the Company an amount equal to the par value of the Stock subject to the
Award. If such payment is not made and received by the Company by such date,
the Award of Restricted Stock shall lapse.
(b) Restrictions. Subject to the provisions of the Plan and the
Award Agreement, during the Restriction Period set by the Committee, commencing
with, and not exceeding ten (10) years from, the date of such award, the
participant shall not be permitted to sell, assign, transfer, pledge or
otherwise encumber shares of Restricted Stock. Within these limits, the
Committee may provide for the lapse of such restrictions in installments and
may accelerate or waive such restrictions, in whole or in part, based on
service, performance or such other factors or criteria as the Committee may
determine.
(c) Dividends. Unless otherwise determined by the Committee, with
respect to dividends on shares of Restricted Stock, dividends payable in cash
shall be automatically reinvested in additional Restricted Stock, and dividends
payable in Stock shall be paid in the form of Restricted Stock.
(d) Termination. Except to the extent otherwise provided in the
Award Agreement and pursuant to Section 6(b), in the event of a Termination
during the Restriction Period, all shares still subject to restriction shall be
forfeited by the participant.
SECTION 7. PERFORMANCE SHARES.
(a) Awards. The Committee shall determine the nature, length and
starting date of the Performance Period for each Performance Share Award, which
period shall be at least two (2) years (subject to Section 8) and not more than
six (6) years. The consideration payable by a participant with respect to a
Performance Share Award shall be an amount determined by the Committee in the
exercise of the Committee's discretion at the time of the Award; provided,
however, that the amount of consideration may be zero and may in no event
exceed 50% of the Fair Market Value at the time of grant. The Committee shall
determine the performance objectives to be used in awarding Performance Shares
and the extent to which such Performance Shares have been earned. Performance
Periods may overlap and participants may participate simultaneously with
respect to Performance Share Awards that are subject to different Performance
Periods and different performance factors and criteria. At the beginning of
each Performance Period, the
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<PAGE> 30
Committee shall determine for each Performance Share Award subject to
such Performance Period the number of shares of Stock (which may consist of
Restricted Stock) to be awarded to the participant at the end of the
Performance Period if and to the extent that the relevant measures of
performance for such Performance Share Award are met. Such number of shares of
Stock may be fixed or may vary in accordance with such performance or other
criteria as may be determined by the Committee. The Committee may provide that
(i) amounts equivalent to interest at such rates as the Committee may
determine, or (ii) amounts equivalent to dividends paid by the Company upon
outstanding Stock shall be payable with respect to Performance Share Awards.
(b) Termination. Except as otherwise provided in the Award
Agreement or determined by the Committee, in the event of a Termination during
a Performance Period, the participant shall not be entitled to any payment with
respect to the Performance Shares subject to the Performance Period.
(c) Form of Payment. Payment shall be made in the form of cash or
whole shares of Stock, as the Committee, in its discretion, shall determine.
SECTION 8. CHANGE IN CONTROL.
(a) Definition of "Change in Control". For purposes of Section
8(b), a "Change in Control" means the occurrence of any one of the following:
(i) Any "person", as such term is used in Sections 13(d) and 14(d)
of the Exchange Act (other than the Company, a subsidiary, an affiliate, or
a Company employee benefit plan, including any trustee of such plan acting
as trustee) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of the
Company's then outstanding securities;
(ii) the solicitation of proxies (within the meaning of Rule
14a-1(k) under the Exchange Act and any successor rule with respect to the
election of any director of the Company where such solicitation is for any
candidate who is not a candidate proposed by a majority of the Board in
office prior to the time of such election; or
(iii) the dissolution or liquidation (partial or total) of the
Company or a sale of assets involving 30% or more of the assets of the
Company, any merger or reorganization of the Company whether or not another
entity is the survivor, a transaction pursuant to which the holders, as a
group, of
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<PAGE> 31
all of the shares of the Company outstanding prior to
the transaction hold, as a group, less than 70% of the shares of the
Company outstanding after the transaction, or any other event which
the Committee determines, in its discretion, would materially alter
the structure of the Company or its ownership.
(b) Impact of Event. In the event of a "Change in Control" as
defined in Section 8(a), but only if and to the extent so specifically
determined by the Committee in its discretion, which determination may be
amended or reversed only by the affirmative vote of a majority of the persons
who were members of the Committee at the time such determination was made,
acceleration and valuation provisions no more favorable to participants than
the following may apply:
(i) Subject to Section 5(b)(vi), any Options
outstanding as of the date such Change in Control is determined to
have occurred and not then exercisable and vested shall become fully
exercisable and vested.
(ii) The restrictions and limitations applicable to any
Restricted Stock shall lapse, and such Restricted Stock shall become
fully vested.
(iii) The value (net of any exercise price) of all
outstanding Options and Restricted Stock, unless otherwise determined
by the Committee at or after grant and subject to Rule 16b-3, shall be
cashed out on the basis of the "Change in Control Price", as defined
in Section 8(c), as of the date such Change in Control is determined
to have occurred or such other date as the Committee may determine
prior to the Change in Control.
(iv) Any outstanding Performance Share Awards shall be
vested and paid in full as if all performance criteria had been met.
(c) Change in Control Price. For purposes of this Section 8,
"Change in Control Price" means the highest price per share paid in any
transaction reported on the New York Stock Exchange Composite Tape or paid or
offered in any bona fide transaction related to a potential or actual Change in
Control of the Company at any time during the preceding 60-day period as
determined by the Committee, except that, in the case of Incentive Stock
Options, such price shall be based only on transactions reported for the date
on which the Committee decides to cash out such Options.
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<PAGE> 32
SECTION 9. GENERAL PROVISIONS.
(a) Award Grants. Any Award may be granted either alone or in
addition to other Awards granted under the Plan. Subject to the terms and
restrictions set forth elsewhere in the Plan, the Committee shall determine the
consideration, if any, payable by the participant for any Award and, in
addition to those set forth in the Plan, any other terms and conditions of the
Awards. The Committee may condition the grant or payment of any Award upon the
attainment of specified performance goals or such other factors or criteria,
including vesting based on continued employment or consulting, as the Committee
shall determine. Performance objectives may vary from participant to
participant and among groups of participants and shall be based upon such
Company, subsidiary, group or division factors or criteria as the Committee may
deem appropriate, including, but not limited to, earnings per share or return
on equity. The other provisions of Awards also need not be the same with
respect to each recipient. Unless specified otherwise in the Plan or by the
Committee, the date of grant of an Award shall be the date of action by the
Committee to grant the Award. The Committee may also substitute new Options
for previously granted options, including previously granted Options having
higher exercise prices.
(b) Award Agreement. As soon as practicable after the date of an
Award grant, the Company and the participant shall enter into a written Award
Agreement identifying the date of grant, and specifying the terms and
conditions of the Award. Options are not exercisable until after execution of
the Award agreement by the Company and the Plan participant, but a delay in
execution of the agreement shall not affect the validity of the Option grant.
(c) Certificates. All certificates for shares of Stock or other
securities delivered under the Plan shall be subject to such stock transfer
orders, legends and other restrictions as the Committee may deem advisable
under the rules, regulations and other requirements of the Commission, any
stock exchange upon which the Stock is then listed and any applicable federal,
state or foreign securities law.
(d) Termination. Unless otherwise provided in the applicable
Award Agreement or by the Committee, in the event of Termination for any reason
other than death, Retirement or Disability, Awards held at the date of
Termination (and only to the extent then exercisable or payable, as the case
may be) may be exercisable in whole or in part at any time within three (3)
months after the date of Termination, or such lesser period specified in the
Award Agreement (but in no event after the expiration date of the Award), but
not thereafter. If Termination is due to death or Disability or, in the case of
Awards granted prior to August 2, 1991, Retirement, Awards held at the date of
Termination (and only to the extent then
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<PAGE> 33
exercisable or payable, as the case may be) may be exercised in whole
or in part by the participant in the case of Retirement or Disability, by the
participant's guardian or legal representative or by the person to whom the
Award is transferred by will or the laws of descent and distribution, at any
time within two (2) years from the date of Termination or any lesser period
specified in the Award Agreement (but in no event after the expiration of the
Award). For Awards granted on or after August 2, 1991 and before August 12,
1994, if Termination is due to Retirement, Awards held at the date of
Termination shall become fully exercisable or payable, as the case may be, and
may be exercised, in whole or in part, by the participant, by the participant's
guardian or legal representative or by the person to whom the Award is
transferred by will or the laws of descent and distribution, at any time within
three (3) years from the date of such Termination or any lesser period
specified in the Award Agreement (but in no event after the expiration of the
Award). For Awards granted on or after August 12, 1994, if Termination is due
to Retirement, Awards held at the date of Termination shall become fully
exercisable or payable, as the case may be, and may be exercised, in whole or
in part, by the participant, by the participant's guardian or legal
representative or by the person to whom the Award is transferred by will or the
laws of descent and distribution, at any time within five (5) years from the
date of such Termination or any lesser period specified in the Award Agreement
(but in no event after the expiration of the Award).
(e) Delivery of Purchase Price. If and only to the extent
authorized by the Committee, participants may make all or any portion of any
payment due to the Company
(i) with respect to the consideration payable for an Award,
(ii) upon exercise of an Award, or
(iii) with respect to federal, state, local or foreign tax
payable in connection with an Award,
by delivery of (x) cash, (y) check, or (z) any property other than cash
(including a promissory note of the participant or shares of Stock or
securities) so long as, if applicable, such property constitutes valid
consideration for the Stock under applicable law. No promissory note under the
Plan shall have a term (including extensions) of more than five (5) years or
shall be of a principal amount exceeding 90% of the purchase price paid by the
borrower. To the extent participants may make payments due to the Company upon
grant or exercise of Awards by the delivery of shares of Stock or other
securities, the Committee, in its discretion, may permit participants
constructively to deliver for any such payment securities of the Company held
by the participant for at least three (3) months or, if such
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<PAGE> 34
securities were acquired through the exercise of an Award, for at least
six (6) months. Constructive delivery shall be effected by (i) identification
by the participant of shares intended to be delivered constructively, (ii)
confirmation by the Company of participant's ownership of such shares (for
example, by reference to the Company's stock records, or by some other means of
verification), and (iii) if applicable, upon exercise, delivery to the
participant of a certificate for that number of shares equal to the number of
shares for which the Award is exercised less the number of shares
constructively delivered. If authorized by the Committee, exercise of an
Option may be made pursuant to a "cashless exercise/sale" procedure pursuant to
which funds to pay for exercise of the Option are delivered to the issuer by a
broker upon receipt of stock certificates from the issuer, or pursuant to which
participants obtain margin loans from brokers to fund the exercise of the
Option.
(f) Tax Withholding. If and to the extent authorized by the
Committee, in its sole discretion, a person who has received an Award or
payment under an Award, may make an election (i) to deliver to the Company a
promissory note of the participant on the terms set forth in Section 9(e), (ii)
to tender to the Company previously owned shares of Stock, or (iii) to have
shares of Stock to be obtained upon exercise of the Award or lapse of
restrictions applicable to an Award withheld by the Company on behalf of the
participant, to pay the amount of tax that the Committee, in its discretion,
determines to be required to be withheld by the Company. Any election pursuant
to clause (iii) above by a participant subject to Section 16 of the Exchange
Act shall be subject to the following limitations: (1) such election must be
made at least six (6) months before the date that the amount of tax to be
withheld in connection with such exercise or lapse of restrictions is
determined (the "Tax Date") and shall be irrevocable; or (2) (x) such election
must be made in (or made earlier to take effect in) any ten-day period
beginning on the third business day following the date of release for
publication of the Company's quarterly or annual summary statements of earnings
and shall be subject to approval by the Committee at any time after such
election has been made, and (y) the Award must be held at least six (6) months
prior to the Tax Date. The right to so withhold shares of Stock shall attach
separately to each Award.
Any shares tendered to or withheld by the Company shall be valued at
Fair Market Value on such date. The value of the shares of Stock tendered or
withheld may not exceed the required federal, state, local and foreign
withholding tax obligations as computed by the Company.
Unless the Committee permits otherwise, the participant shall pay to
the Company in case, promptly when the amount of such obligations becomes
determinable, all applicable federal,
12
<PAGE> 35
state, local and foreign withholding taxes that the Committee, in its
discretion, determines to result from the lapse of restrictions imposed upon an
Award or upon exercise of an Award or from a transfer or other disposition of
shares of Stock acquired upon exercise or payment of an Award or otherwise
related to the Award or shares of Stock acquired in connection with an Award.
(g) No Transferability. No Award shall be assignable or otherwise
transferable by the participant other than by will or by the laws of descent
and distribution. During the life of a participant, an Award shall be
exercisable, and any elections with respect to an Award may be made, only by
the participant or participant's guardian or legal representative.
(h) Adjustment of Awards; Waivers. Subject to Section 5(b)(vi),
the Committee may adjust the performance goals and measurements applicable to
Awards (i) to take into account changes in law and accounting and tax rules,
(ii) to make such adjustments as the Committee deems necessary or appropriate
to reflect the inclusion or exclusion of the impact of extraordinary or unusual
items, events or circumstances in order to avoid windfalls or hardships, and
(iii) to make such adjustments as the Committee deems necessary or appropriate
to reflect any material changes in business conditions. In the event of
hardship or other special circumstances of a participant and otherwise in its
discretion, the Committee may waive in whole or in part any or all
restrictions, conditions, vesting, or forfeiture with respect to any Award
granted to such participant.
(i) Non-Competition. The Committee may condition its
discretionary waiver of a forfeiture, the acceleration of vesting at the time
of Termination of a participant holding any unexercised or unearned Award, the
waiver of restrictions on any Award, or the extension of the expiration period
to a period not longer than that provided by the Plan upon such participant's
agreement (and compliance with such agreement) to (i) not engage in any
business or activity competitive with any business or activity conducted by the
Company and (ii) be available for consultations at the request of the Company's
management, all on such terms and conditions (including conditions in addition
to (i) and (ii)) as the Committee may determine.
(j) Dividends. The reinvestment of dividends in additional Stock
or Restricted Stock at the time of any dividend payment pursuant to Section
6(c) shall only be permissible if sufficient shares of Stock are available
under Section 3 for such reinvestment (taking into account then outstanding
Awards).
(k) Regulatory Compliance. Each Award under the Plan shall be
subject to the condition that, if at any time the Committee shall determine
that (i) the listing, registration or
13
<PAGE> 36
qualification of the shares of Stock, Common Shares, or Preferred Shares upon
any securities exchange or under any state or federal law, (ii) the consent or
approval of any government or regulatory body or (iii) an agreement by the
participant with respect thereto, is necessary or desirable, then such Award
shall not be consummated in whole or in part unless such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee.
(l) Listing. So long as the Stock is listed on the New York Stock
Exchange, shares of Stock for use under the provisions of the Plan shall not be
issued until they have been duly listed, upon official notice of issuance, on
the New York Stock Exchange and any other exchanges determined by the Board.
(m) Rights as Stockholder. Unless the Plan or the Committee
expressly specifies otherwise, an optionee shall have no rights as a
stockholder with respect to any shares covered by an Award until the issuance
(as evidenced by the appropriate entry on the books of the Company or a duly
authorized transfer agent) of a certificate evidencing the shares of Stock.
Subject to Sections 3(b) and 6(c), no adjustment shall be made for dividends or
other rights for which the record date precedes the date the certificate is
issued.
(n) Beneficiary Designation. The Committee, in its discretion,
may establish procedures for a participant to designate a beneficiary to whom
any amounts payable in the event of the participant's death are to be paid.
(o) Additional Plans. Nothing contained in the Plan shall prevent
the Company, a subsidiary or an affiliate from adopting other or additional
compensation arrangements for its employees and consultants.
(p) No Employment Rights. The adoption of the Plan shall not
confer upon any employee any right to continued employment nor shall it
interfere in any way with the right of the Company, a subsidiary or an
affiliate to terminate the employment of any employee at any time.
(q) Rule 16b-3. Notwithstanding any provision of the Plan, the
Plan shall always be administered, and Awards shall always be granted and
exercised, in such a manner as to conform to the provisions of Rule 16b-3.
(r) Governing Law. Except as required by the Delaware General
Corporation Law, the Plan and all Awards shall be governed by and construed in
accordance with the laws of the State of California.
14
<PAGE> 37
(s) Use of Proceeds. All cash proceeds to the Company under the
Plan shall constitute general funds of the Company.
(t) Unfunded Status of Plan. The Plan shall constitute an
"unfunded" plan for incentive and deferred compensation. The Committee may
authorize the creation of trusts or arrangements to meet the obligations
created under the Plan to deliver Stock or make payments; provided, however,
that unless the Committee otherwise determines, the existence of such trusts or
other arrangements shall be consistent with the "unfunded" status of the Plan.
(u) Assumption by Successor. The obligations of the Company under
the Plan and under any outstanding Award may be assumed by any successor
corporation, which for purposes of the Plan shall be included within the
meaning of "Company".
SECTION 10. AMENDMENTS AND TERMINATION.
The Board may amend, alter or discontinue the Plan or any Award, but
no amendment, alteration or discontinuance shall be made which would impair the
rights of a participant under an outstanding Award without the participant's
consent. In addition, to the extent required for the Plan to comply with Rule
16b-3 or, with respect to provisions solely as they relate to Incentive Stock
Options, to the extent required for the Plan to comply with Section 422 of the
Code, the Board may not amend or alter the Plan without the approval of a
majority of the votes cast at a duly held stockholders' meeting at which a
quorum of the voting power of the Company is represented in person or by proxy,
where such amendment or alteration would:
(a) except as expressly provided in the Plan, increase the total
number of shares reserved for issuance pursuant to Awards under the Plan;
(b) except as expressly provided in the Plan, change the minimum
price terms of Section 5(b)(iii);
(c) change the class of employees and consultants eligible to
participate in the Plan;
(d) extend the maximum Option period under Section 5(b)(i);
or
(e) materially increase the benefits accruing to participants
under the Plan.
15
<PAGE> 38
SECTION 11. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on the date it is adopted by the Board but
all Awards shall be conditioned upon approval of the Plan at a duly held
stockholders' meeting by the affirmative vote of the holders of a majority of
the voting power of the shares of the Company represented in person or by proxy
and entitled to vote at the meeting.
SECTION 12. TERM OF PLAN.
No Award shall be granted on or after October 31, 2000, but Awards
granted prior to October 31, 2000 may extend beyond that date.
16
<PAGE> 39
RAYCHEM CORPORATION
AMENDED AND RESTATED 1984 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose
The Amended and Restated 1984 Employee Stock Purchase Plan (the "Plan")
is designed to encourage and assist employees of Raychem Corporation and
participating subsidiaries (together, the "Company") to acquire an equity
interest in the Company through the purchase of shares of Common Stock.
2. Administration
(a) The Plan shall be administered by the Board of Directors except to
the extent the Board of Directors, by resolution, delegates administration of
the Plan, either in its entirety or only as it relates to persons subject to
Section 16 of the Securities Exchange Act of 1934, as amended, to a committee
of the Board. The Board of Directors or the committee to which the Board of
Directors delegates administration hereunder, in either case, are hereinafter
referred to as the "Board."
(b) The Corporate Benefits Committee, or such other committee or
persons as the Board may from time to time select (the "Administrator"), shall
be responsible any matters for which disinterested administration is not
required for purposes of Rule 16b-3 promulgated under the Securities Exchange
Act of 1934 and for such additional matters as the Board shall determine from
time to time. Subject to the express provisions of the Plan, to the overall
supervision of the Board, and to the limitations of Section 423 or any
successor provision of the Internal Revenue Code of 1986, as amended (the
"Code"), the Administrator may administer and interpret the Plan in any manner
it believes to be desirable and any such interpretation shall be conclusive and
binding on the Company and all participants.
3. Shares Subject to Plan
(a) Number of Shares. The Company has reserved for sale under the
Plan 14,000,0000 shares of Common Stock, less any shares sold under either the
Plan, the Amended and Restated Raychem Limited Employee Stock Purchase Plan or
the Amended and Restated 1985 Supplemental Employee Stock Purchase Plan.
Shares sold under the Plan may be newly issued shares or shares reacquired in
private transactions or open market purchases, but all shares sold under the
Plan regardless of source shall be counted against the 14,000,000 share
limitation.
<PAGE> 40
(b) Adjustments. In the event of any reorganization, recapitalization,
stock split, reverse stock split, stock dividend, combination of shares,
merger, consolidation, offering of rights, or other similar change in the
capital structure of the Company, the Administrator may make such adjustment,
if any, as it deems appropriate in the number, kind, and purchase price of the
shares available for purchase under the Plan and in the maximum number of
shares subject to any option under the Plan.
4. Eligibility Requirements
Each employee, except those described in the next paragraph, shall
become eligible to participate in the Plan in accordance with Section 5 on the
first Enrollment Date (as herein defined) following employment by the Company.
Participation in the Plan is entirely voluntary.
The following employees are not eligible to participate in the Plan:
(i) employees who would, immediately upon enrollment in the Plan, own
directly or indirectly, or hold options or rights to acquire, an aggregate
of 5% or more of the total combined voting power or value of all
outstanding shares of all classes of the Company or any subsidiary;
(ii) employees who are customarily employed by the Company less than 15
hours per week or less than five months in any calendar year; and
(iii) employees who are prohibited by the laws of the nation of their
residence or employment from participating in the Plan.
"Employee" shall mean any individual who performs services for Raychem
Corporation or a participating subsidiary pursuant to an employment
relationship described in Treasury Regulations Section 31.3401(c)-1 or any
successor provision. "Subsidiary" shall mean any corporation in an unbroken
chain of corporations beginning with Raychem Corporation if, as of the
applicable Enrollment Date, each of the corporations other than the last
corporation in the chain owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other corporations
in the chain. "Participating Subsidiary" shall mean a Subsidiary which has
been designated by the Administrator as covered by the Plan.
5. Participation
<PAGE> 41
Enrollment. Any eligible employee may enroll or re-enroll in the Plan
(i) prior to January 1, 1993, as of the first trading day of any January,
April, July and October, and (ii)after January 1, 1993, as of the first trading
day of any February, May, August and November, or as of such other specific
trading days established by the Administrator from time to time (each an
"Enrollment Date"). Notwithstanding the foregoing, the first Enrollment Date
after December 31, 1992 shall be the first trading day in January 1993 in lieu
of the first trading day in February 1993. In order to enroll an eligible
employee must complete, sign, and submit to the Company an enrollment form. An
enrollment form must be received by the Company before the date established by
the Administrator from time to time (each a "Cut-Off Date"); provided, however,
that in no event shall a Cut-Off Date be more than 60 days before to an
Enrollment Date. An enrollment form that is received before a Cut-Off Date
shall be effective on the Enrollment Date to which such Cut-Off Date relates.
6. Options to Purchase Common Stock
(a) Grant of Options. Enrollment by a participant in the Plan on an
Enrollment Date will constitute the grant by the Company to the participant of
options to purchase shares of Common Stock under the Plan. The number of
options granted will equal the number of percentage points of salary the
participant elects to have withheld. Re-enrollment by a participant in the
Plan will constitute cancellation by the participant of one or more outstanding
options and the grant by the Company to the participant of new options (equal
in number to the number of options canceled) on the Enrollment Date on which
re-enrollment occurs. An increase (but not a decrease) in the level of payroll
withholding also constitutes the grant of new options for the incremental
change in the percentage withheld but does not cancel outstanding options. Any
participant whose options expire and who has not withdrawn from the Plan will
automatically be re-enrolled in the Plan and granted new options (equal in
number to the number of expiring options) on the Enrollment Date immediately
following the Purchase Date on which his then current options expire. Any date
on which a participant is granted options under the Plan is referred to as a
"Grant Date."
(b) Terms and Conditions of Options. Each option granted under the
Plan shall have the following terms:
(i) except as otherwise provided in Section 6(c), whether or not all
shares of Common Stock have been purchased thereunder, the option will
expire on the earliest to occur of (A) the completion of the purchase of
shares on the last Purchase Date occurring within 12 months of the
<PAGE> 42
Grant Date for such option, or such shorter option period as may be
established by the Board from time to time prior to an Enrollment Date for
all options to be granted on such Enrollment Date, or (B) the date on which
participation of such participant in the Plan terminates for any reason;
(ii) payment for shares purchased under the option will be made only
through payroll withholding in accordance with Section 7;
(iii) purchase of shares upon exercise of the option will be
accomplished only in installments in accordance with Section 8;
(iv) the price per share under the option will be determined as
provided in Section 8;
(v) unless otherwise determined by the Administrator, the number of
shares available for purchase under each option shall be equal to the
number of shares determined by dividing $3333 1/3 by the fair market value
of a share determined at the Grant Date of such option;
(vi) notwithstanding clause (v), no option (taken together with all
other options then outstanding under this Plan and under all other similar
stock purchase plans of the Raychem Corporation or any Subsidiary) shall in
any event give the participant the right to purchase shares at a rate which
accrues in excess of $25,000 of fair market value of such shares determined
at the applicable Grant Dates in any calendar year during which such
participant is enrolled in the Plan at any time; and
(vii) the option will in all respects be subject to the terms and
conditions of the Plan, as interpreted by the Administrator from time to
time.
(c) Special Provisions Governing Options Granted Before or During
January 1993. Whether or not all shares have been purchased thereunder, each
option granted before January 1, 1993 will terminate on the earliest to occur
of (i) the completion of the purchase of shares on the Purchase Date in
December 1992, (ii) the date on which participation of such participant
terminates for any reason, or (iii) December 31, 1992. Whether or not all
shares have been purchased thereunder, each option granted on the January 1993
Enrollment Date will expire on the earlier to occur of (i) the completion of
the purchase of shares on the Purchase Date in January 1994, or (ii) the date
on which participation of such participant in the Plan terminates for any
reason.
<PAGE> 43
7. Payroll Withholding
(a) Withholding Elections. Each participant may elect to make
contributions at a rate equal to any whole percentage up to a maximum of 15%,
or such other maximum percentage as the Board may establish from time to time
before an Enrollment Date for all options to be granted on such Enrollment
Date, of his or her monthly base earnings from the Company (excluding bonuses,
overtime pay, shift premiums, long term disability or workers' compensation
payments and similar amounts, but including elective qualified contributions by
the participant to employee benefit plans). The rate of contribution shall be
designated by the participant in the enrollment form. A participant may elect
to increase or decrease the rate of contribution effective as of any Enrollment
Date by delivery to the Company not later than the related Cut-Off Date of a
new enrollment form indicating the revised rate of contribution. An increase
(but not a decrease) in the contribution rate constitutes the grant of new
options. If the rate is decreased and there is more than one option
outstanding, the participant may specify the option to which such decrease
should apply.
(b) Use of Funds. Contributions shall be credited to a participant's
account as soon as administratively feasible after payroll withholding. The
Company shall be entitled to use of the contributions immediately after payroll
withholding and shall have no obligation to pay interest on the contributions
to any participant.
8. Purchase of Shares
(a) Purchase Procedures. On the last trading day of (i) each March,
June, September, and December prior to January 1, 1993, and (ii) each January,
April, July and October after January 1, 1993, or on such other specific
trading days as may be established by the Administrator from time to time prior
to an Enrollment Date for all options to be granted on such Enrollment Date
(each a "Purchase Date"), the Company shall apply the funds then credited to
each participant's account to the purchase of whole and fractional shares of
Common Stock. Notwithstanding the foregoing, no purchase of shares shall occur
on the last trading day of January 1993; instead, the first purchase of shares
during 1993 shall occur on the last trading day of April 1993. The cost to the
participant for the shares purchased under any option shall be 85% of the lower
of:
(i) the closing price of Common Stock on the New York Stock Exchange
composite transactions tape on the Grant Date for such option; or
<PAGE> 44
(ii) the closing price of Common Stock on the New York Stock Exchange
composite transactions tape on that Purchase Date.
Any cash equal to less than the price of the smallest fractional share
of Common Stock which may be purchased under the Plan left in a participant's
payroll deduction account on a Purchase Date shall be carried forward in such
participant's account for application on the next Purchase Date.
The Administrator may in the case of participants employed by
participating subsidiaries provide for Common Stock to be sold through the
relevant Participating Subsidiaries to such participants, to the extent
consistent with Section 423 of the Code.
(b) Certificates Evidencing Common Stock. At the election of the
participant, certificates evidencing shares purchased on any Purchase Date
shall be delivered as soon as administratively feasible or a notation of
noncertificated shares shall be made on the stock records of the Company, but,
in either case, participants shall be treated as the owners of their shares
effective as of the Purchase Date.
9. Withdrawal From the Plan
A participant may withdraw from the Plan in full (but not in part) at
any time. All funds credited to a participant's payroll deduction account shall
be distributed to him or her without interest as soon as administratively
feasible after notice of withdrawal is received by the Company. An employee
who has withdrawn may not return funds to the Company and require the Company
to apply those funds to the purchase of shares. Any eligible employee who has
withdrawn from the Plan may, however, enroll in the Plan again on any
subsequent Enrollment Date in accordance with the provisions of Section 5.
10. Termination of Employment
Participation in the Plan terminates immediately when a participant
ceases to be employed by the Company for any reason whatsoever (including death
or disability) or otherwise becomes ineligible to participate in the Plan. As
soon as administratively feasible after termination, the Company shall pay to
the participant or his or her beneficiary or legal representative all amounts
credited to the participant's payroll deduction account.
11. Leave of Absence
<PAGE> 45
Unless a participant has voluntarily withdrawn from the Plan, shares
will be purchased for that participant's account on the Purchase Date next
following commencement of a leave of absence by such participant.
Participation in the Plan will terminate immediately after the purchase of
shares on such Purchase Date, however, unless:
(i) the leave of absence is of less than 90 days' duration and is due
to illness, injury or other reason approved by the Administrator; or
(ii) the participant's right to reemployment after such leave is
guaranteed by contract or statute.
12. Designation of Beneficiary
Each participant may designate one or more beneficiaries in the event
of death and may, in his or her sole discretion, change such designation at any
time. Any such designation shall be effective upon receipt by the Company and
shall control over any disposition by will or otherwise.
As soon as administratively feasible after the death of a participant,
fractional shares will be sold and the cash proceeds along with a certificate
representing whole shares credited to his or her account shall be delivered to
the designated beneficiaries or, in the absence of a designation, to the
executor, administrator or other legal representative of the participant's
estate. Such delivery shall relieve the Company of further liability with
respect to the Plan on account of the deceased participant. If more than one
beneficiary is designated, each beneficiary shall receive an equal portion of
the account unless the participant has given express contrary instructions.
13. Assignment
The rights of a participant under the Plan shall not be assignable by
such participant, by operation of law, or otherwise. No participant may create
a lien on any funds, securities, rights or other property held by the Company
for the account of the participant under the Plan, except to the extent that
there has been a designation of beneficiaries in accordance with the Plan, and
except to the extent permitted by the laws of descent and distribution if
beneficiaries have not been designated.
A participant's right to purchase shares under the Plan shall be
exercisable only during the participant's lifetime and
<PAGE> 46
only by him or her, except that a participant may direct the Company in
the enrollment form to issue share certificates to the participant jointly with
one or more other persons with right of survivorship, or to certain forms of
trusts approved by the Administrator.
14. Administrative Assistance
The Administrator may, in its sole discretion, retain a brokerage firm,
bank, or other financial institution to assist in the purchase of shares,
delivery of reports, or other administrative aspects of the Plan. If the
Administrator so elects, each participant shall (unless prohibited by the laws
of the nation of his or her employment or residence) be deemed upon enrollment
in the Plan to have authorized the establishment of an account on his or her
behalf at such institution. Shares purchased by a participant under the Plan
shall be held in the account in the participant's name, or if the participant
so indicates in the enrollment form, in the participant's name together with
the name of one or more other persons, in joint tenancy with right of
survivorship or spousal community property, or in certain forms of trusts
approved by the Administrator.
15. Costs
All costs and expenses incurred in administering the Plan shall be paid
by the Company, except that any stamp duties or transfer taxes applicable to
participation in the Plan may be charged to a participant's account. Any
brokerage fees for the purchase of shares by a participant shall be paid by the
Company, but brokerage and/or bank fees for the resale of shares by a
participant shall be borne by the participant.
16. Reports
The Company shall provide or cause to be provided to each participant a
report of his or her contributions and the shares purchased by that participant
on each Purchase Date.
17. Equal Rights and Privileges
All eligible employees shall have equal rights and privileges with
respect to the Plan so that the Plan qualifies as an "employee stock purchase
plan" within the meaning of Section 423 or any successor provision of the Code
and the related regulations. Any provision of the Plan which is inconsistent
with Section 423 or any successor provision of the Code shall without further
act or amendment by the Company or the Board be reformed to comply with the
requirements of Section 423. This
<PAGE> 47
Section 17 shall take precedence over all other provisions in the Plan.
18. Applicable Law
The Plan shall be governed by the substantive laws (excluding the
conflict of laws rules) of the State of California.
19. Modification and Termination
The Board may amend, alter or terminate the Plan at any time. No
amendment shall be effective unless within one year after it is adopted by the
Board it is approved by the holders of a majority of the voting power of the
Company's outstanding shares, if such amendment would:
(i) increase the number of shares reserved for purchase under the Plan;
(ii) materially increase the benefits to participants; or
(iii) materially modify the requirements for participation.
The Board may elect to terminate any or all outstanding options at any
time. In the event the Plan is terminated, the Board may also elect either to
terminate outstanding options upon completion of the purchase of shares on the
next Purchase Date, or to permit options to expire in accordance with their
terms (and participation to continue through such expiration dates). If the
options are terminated prior to expiration, all funds contributed to the Plan
that have not been used to purchase shares shall be returned to the
participants as soon as administratively feasible.
If at any time the shares available under the Plan are over-enrolled,
enrollments shall be reduced proportionately to eliminate the over-enrollment.
Any funds that cannot be applied to the purchase of shares due to
over-enrollment shall be refunded to participants as soon as administratively
feasible.
20. Board and Stockholder Approval
This Plan was approved by the Board of Directors on August 3, 1984 and
by the holders of a majority of the voting power of all outstanding shares of
the Company on October 1, 1984. Amendments to this Plan were approved by the
Board of Directors on August 9, 1985, January 24, 1986, August 8,
<PAGE> 48
1986, August 3, 1990, August 2, 1991, May 8, 1992, August 20, 1993, April 15,
1994 and by the stockholders of the Company on October 14, 1985, November 11,
1986, October 31, 1990, October 30, 1991, October 28, 1992 and October 27,
1993.
<PAGE> 49
RAYCHEM CORPORATION
AMENDED AND RESTATED 1985 SUPPLEMENTAL EMPLOYEE
STOCK PURCHASE PLAN
1. Purpose
The Amended and Restated 1985 Supplemental Employee Stock Purchase Plan
(the "Plan") is designed to encourage and assist employees of participating
subsidiaries (the "Participating Subsidiaries") of Raychem Corporation (the
"Company") to acquire an equity interest in the Company through the purchase of
shares of Common Stock of the Company. The terms and conditions of purchase
are designed to be substantially the same in economic substance as the terms
for employees of the Company under the Amended and Restated 1984 Employee Stock
Purchase Plan (the "1984 Plan") but may vary as to procedures for purchase as
desirable or necessary to reflect the tax, employment, securities, foreign
exchange or other applicable laws and regulations in effect from time to time
in the nations in which the Participating Subsidiaries are located.
2. Administration
(a) The Plan shall be administered by the Board of Directors of the
Company unless and until such time as the Board of Directors delegates
administration to a committee pursuant to Section 2(b).
(b) The Board of Directors, by resolution, may delegate administration
of the Plan, either in its entirety or only as it relates to persons subject to
Section 16 of the Securities Exchange Act of 1934, as amended, to a committee
of the Board. The Board of Directors or the committee to which the Board of
Directors delegates administration hereunder, in either case, are hereafter
referred to as the "Board."
(c) The Corporate Benefits Committee, or such other committee or
persons as the Board may from time to time select (the "Administrator") shall
be responsible for the matters set forth herein and for such additional matters
as the Board shall determine from time to time. At the time that the Plan is
adopted by a Participating Subsidiary, the Administrator, after consultation
with the management of the Participating Subsidiary and local legal and
financial advisors, shall publish supplemental rules for administration of the
Plan (the "Rules") for that Participating Subsidiary. The Rules shall specify
purchase procedures under the Plan for that Participating Subsidiary so as to
comply with the tax, employment, securities, foreign exchange or other
applicable laws of the nation where the
<PAGE> 50
Participating Subsidiary is located without materially affecting the economic
substance of the Plan with respect to the Company or participants.
(d) The Administrator shall have the power, subject to, and within the
limits of, the express provisions of the Plan and the overall supervision of
the Board:
(1) To construe and interpret the Plan and to establish, amend, and
revoke the Rules. The Administrator, in the exercise of this power, shall
generally determine all questions of policy and expediency that may arise
and may correct any defect, omission, or inconsistency in the Plan or the
Rules in a manner and to the extent it shall deem necessary or expedient to
make the Plan fully effective.
(2) To prescribe the terms and provisions of participation by eligible
employees which shall be identical for all employees of each Participating
Subsidiary but may vary among Participating Subsidiaries to the extent
deemed necessary or desirable by the Administrator; provided, however, that
in no event shall such variation materially alter the economic substance of
the Plan with respect to the Company or participants.
(3) To designate from time to time which subsidiaries shall become
Participating Subsidiaries.
(4) To provide for Common Stock to be sold through the Participating
Subsidiaries to participants, if the Administrator in its discretion so
elects.
(5) To retain a brokerage firm, bank or other financial institution to
act as trustee, depositary, pledgeholder, escrowholder, or in such other
capacity as specified by the Administrator to assist in the purchase and
sale of shares, delivery of reports, holding or delivery of funds or share
certificates or other administrative aspects of the Plan, and to make such
provision for currency translation as the Administrator deems appropriate.
(6) To establish a mechanism to enable the participants to purchase
shares with U.S. dollars should exchange control regulations, or any other
law or regulation be enacted which in any way limits or restricts the
purchase of Common Stock by participants through limitations on transfer of
funds into or out of the country in which the Participating Subsidiaries
are located.
2
<PAGE> 51
(7) To specify the method of designation of funds to be applied to the
purchase of shares which may include, without limitation, payroll
withholding, payment in full in cash upon purchase, loans from the Company
or Participating Subsidiary with appropriate escrow and repurchase
agreements, or any other arrangement not inconsistent with the Plan which
the Administrator in its discretion may approve.
(8) To exercise such powers and to perform such acts as are deemed
generally necessary or expedient to promote the best interests of the
Company or any Participating Subsidiary, and to enable the general purpose
of the Plan, as expressed in Section 1, to be accomplished.
3. Shares Subject to Plan
(a) Number of Shares. The Company has reserved for sale under the Plan
14,000,0000 shares of Common Stock, less any shares sold under either the 1984
Plan, the Amended and Restated Raychem Limited Employee Stock Purchase Plan, or
the Plan. Shares sold under the Plan may be newly issued shares or shares
reacquired in private transactions or open market purchases, but all shares
sold under the Plan regardless of source shall be counted against the
14,000,0000 share limitation.
(b) Adjustments. In the event of any reorganization, recapitalization,
stock split, reverse stock split, stock dividend, combination of shares,
merger, consolidation, offering of rights or other similar change in the
capital structure of the Company, the Administrator may make such adjustment,
if any, as it deems appropriate in the number, kind and purchase price of the
shares available for purchase under the Plan and in the maximum number of
shares subject to any grant under the Plan.
4. Eligibility Requirements
Each employee of a Participating Subsidiary, except those described in
the next paragraph, shall be eligible to participate in the Plan.
Participation in the Plan is entirely voluntary.
The following employees are not eligible to participate in the Plan:
(a) employees who would, immediately upon enrollment in the Plan, own
directly or indirectly, or hold options or rights to acquire, an aggregate
of 5% or more of the total
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combined voting power or value of all outstanding shares of all classes
of the Company or any Subsidiary;
(b) employees who are customarily employed for less than five months in
any calendar year or less than 15 hours per week; and
(c) employees who are prohibited by the laws of the nation of their
residence or employment from participating in the Plan.
"Employee" shall mean any individual who performs services for a
Participating Subsidiary and is deemed to be an employee under the laws of
the country in which such Subsidiary is located.
"Subsidiary" shall mean any company whose financial statements are
consolidated with those of the Company.
5. Participation
Enrollment. Any eligible employee may enroll or re-enroll in the Plan
as of such specific trading days as are established for the Plan and the 1984
Plan by the Administrator from time to time ("Enrollment Dates"). The
Administrator may require eligible employees to complete, sign and submit to
the Company an enrollment form in order to enroll or re-enroll in the Plan and
may establish deadlines prior to Enrollment Dates by which such enrollment
forms must be received so as to effect enrollment on such Enrollment Date.
Enrollment or re-enrollment by a participant in the Plan on an Enrollment Date
will constitute the one or more grants by the Company to the participant of the
right to apply funds to the purchase of shares of Common Stock from the Company
under the Plan, in accordance with Section 6.
6. Purchase
(a) Designated Funds. Each participant may elect to purchase shares
with designated funds in an amount equal to any whole percentage, up to 15
percent (or such other maximum percentage as the Board may specify for the Plan
and the 1984 Plan), of such participant's base pay (the "Designated Funds").
(b) Grant of Right to Apply Designated Funds. Enrollment or
re-enrollment by a participant in the Plan on an Enrollment Date will
constitute the grant by the Company to the participant of the right to apply
Designated Funds to the purchase of shares of Common Stock from the Company
under the Plan. The number of
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grants granted on any such Enrollment Date will be equal to the number of
percentage points of Designated Funds specified by the participant. Any date
on which a participant is granted the right to apply Designated Funds to the
purchase of shares of Common Stock under the Plan is referred to as a "Grant
Date."
(c) Terms and Conditions of Rights to Apply Designated Funds. For each
grant made under the Plan the Administrator must set forth in the Rules the
following terms (and, in its discretion, may set forth in the Rules any
additional terms of grant not inconsistent with the terms below):
(1) except as otherwise provided in Section 6(d), the expiration date
of the grant shall be the earlier to occur of (A) the completion of the
purchase of shares within 12 months of the applicable Grant Date, (or such
shorter period as the Board may establish) or (B) the date on which
participation of such participant in the Plan terminates for any reason;
(2) the per share price which shall be paid in U.S. dollars and shall
be 85% of the lower of:
(A) the closing price of Common Stock reported by the New York
Stock Exchange on the applicable Grant Date; or
(B) the closing price of Common Stock reported by the New York
Stock Exchange on the Delivery Date; and
(3) unless otherwise determined by the Administrator, the number of
shares available for purchase under each grant shall be determined by
dividing $3333-1/3 by the fair market value of a share of Common Stock
determined at the Grant Date of such grant for each 1% of Designated Funds;
(4) notwithstanding clause (3), the grant (taken together with all
other grants then outstanding under this Plan and under all other similar
stock purchase plans of the Company or any subsidiary) will in no event
give the participant the right to purchase shares at a rate which accrues
in excess of U.S. $25,000 of fair market value of such shares determined at
the applicable Grant Dates in any calendar year during which such
participant is enrolled in the Plan at any time.
(d) Special Provisions Governing Grants Prior to or During January
1993. Whether or not all shares have been purchased thereunder, each grant
that was granted prior to January 1, 1993
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will terminate on the earliest to occur of (i) the completion of the purchase
of shares on the Delivery Date in December 1992, (ii) the date on which
participation of such participant terminates for any reason, or (iii) December
31, 1992. Whether or not all shares have been purchased thereunder, each grant
that was granted during the January 1993 Enrollment Date will expire on the
earlier to occur of (i) the completion of the purchase of shares on the
Delivery Date in January 1994, or (ii) the date on which participation of such
participant in the Plan terminates for any reason.
(e) Delivery Dates. On such specific trading days as may be
established by the Administrator from time to time prior to an Enrollment Date
for all enrollments or re-enrollments made on such Enrollment Date ("Delivery
Dates"), the Company shall apply the equivalent in U.S. dollars of the
Designated Funds of each participant to whole and fractional shares of Common
Stock.
7. Withdrawal from the Plan
A participant may withdraw from the Plan in full (but not in part) at
any time. All Designated Funds not applied or to be applied to the purchase of
shares under the Plan by such participant shall be distributed to such
participant without interest as soon as administratively feasible after notice
of withdrawal is received by the Company. Any eligible employee who has
withdrawn from the Plan may enroll in the Plan again on any subsequent
Enrollment Date in accordance with the provisions of Section 5.
8. Termination of Employment
Participation in the Plan ceases immediately when the employment of a
participant by a Participating Subsidiary terminates (such that after
employment termination such participant is not employed by any Participating
Subsidiary) for any reason whatsoever, including death or disability, or when
such participant otherwise becomes ineligible to participate in the Plan. As
soon as administratively feasible after termination, the Company shall pay to
the participant or his or her beneficiary or legal representative all
Designated Funds of such participant not applied or to be applied to the
purchase of shares under the Plan.
9. Leave of Absence
Unless a participant has voluntarily withdrawn from the Plan,
Designated Funds will be applied to the purchase of shares on the Delivery Date
next following commencement of a leave of
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absence by such participant. Participation in the Plan will terminate
immediately after the application of funds on such Delivery Date, however,
unless:
(a) the leave of absence is of less than 90 days duration and is due to
illness, injury or other reason approved by the Administrator; or
(b) the participant's right to reemployment after such leave is
guaranteed by contract or statute.
10. Costs
All costs and expenses incurred in administering the Plan shall be paid
by the Participating Subsidiary, except that any stamp duties or transfer taxes
applicable to participation in the Plan may be charged to the account of such
participant. Any brokerage fees for the purchase of shares by a participant
shall be paid by the Company, but brokerage and/or bank fees for the resale of
shares by a participant shall be borne by the participant.
11. Reports
The Company shall provide or cause to be provided to each participant a
report of his or her Designated Funds and the application of such Designated
Funds on each Delivery Date.
12. Modification and Termination
(a) Modification. The Board may amend, alter or terminate the Plan at
any time. No amendment shall be effective unless within one year after it is
adopted by the Board it is approved by the holders of a majority of the voting
power of the Company's outstanding shares, if such amendment would:
(i) increase the number of shares reserved for purchase under the Plan;
(ii) materially increase the benefits to participants; or
(iii) materially modify the requirements for participation.
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(b) Termination. The Board may elect to terminate any or all
outstanding options at any time. In the event the Plan is terminated, the
Board may also elect to either terminate outstanding grants upon completion of
the application of Designated Funds on the next Delivery Date, or to permit
grants to expire in accordance with their terms (and participation to continue
through such expiration dates). If the grants are terminated prior to
expiration, all Designated Funds that have not been and will not be applied to
the purchase of shares shall be returned to the participants as soon as
administratively feasible.
If at any time the shares available under the Plan are overenrolled,
enrollments shall be reduced proportionately to eliminate the overenrollment.
Any Designated Funds that cannot be applied to the purchase of shares due to
overenrollment shall be refunded to participants as soon as administratively
feasible.
13. Effective Date; Approvals
(a) Effective Date. The Plan shall be effective with respect to each
Participating Subsidiary on the date specified by the Administrator for such
Participating Subsidiary.
(b) Approvals. This Plan was approved by the Board of Directors on
August 9, 1985 and by the holders of a majority of the voting power of all
outstanding shares of the Company on October 14, 1985. Amendments to this Plan
were approved by the Board of Directors on August 8, 1986, August 3, 1990,
August 2, 1991, May 8, 1992, August 20, 1993, April 15, 1994 and by the
stockholders of the Company on November 11, 1986, October 31, 1990, October 30,
1991, October 28, 1992 and October 27, 1993.
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