Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CRAY RESEARCH, INC.
(Exact name of registrant as specified in its charter)
Delaware 39-1161138
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
655A Lone Oak Drive
Eagan, Minnesota 55121
(Address of Principal Executive Offices) (Zip Code)
1989 EMPLOYEE BENEFIT STOCK PLAN
(Full title of the plan)
JOHN F. CARLSON
Chairman of the Board and Chief Executive Officer
Cray Research, Inc.
655A Lone Oak Drive
Eagan, Minnesota 55121
(Name and address of agent for service)
(612) 452-6650
(Telephone number, including area code, of agent for service)
Copy to:
DEAN R. EDSTROM
Doherty, Rumble & Butler
Professional Association
3500 Fifth Street Towers
150 South Fifth Street
Minneapolis, Minnesota 55402-4235
(612) 340-5575
Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effective.
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------
Title of Proposed Max. Proposed Max.
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registra.
Registered Registered Per Share Price Fee
- --------------------------------------------------------------------------
Common Stock,
$1.00 par
value(1) 779,000 shrs(2) $21.125(3) $16,456,375(3) $5,675
- --------------------------------------------------------------------------
(1) With Common Share Purchase Rights attached.
(2) The 1989 Employee Benefit Stock Plan authorizes the issuance of
4,000,000 shares of Common Stock, plus a number of shares equal to 3% of
the total outstanding shares of Common Stock as of the first day of each
calendar year beginning in 1992, such increases to be cumulative. A total
of 5,579,000 shares of Common Stock have previously been registered
pursuant to four Registration Statements on Form S-8, Registration Nos.
33-25858, 33-33374, 33-49396 and 33-62410. 779,000 shares were added to
the Plan in 1994 as a consequence of the described provisions.
(3) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(h) on the basis of the average of
the high and low prices of the Registrant's shares of Common Stock on the
New York Stock Exchange as reported by The Wall Street Journal. On August
22, 1994, the average of the high and low prices was $21.125.
- --------------------------------------------------------------------------
In accordance with Rule 429, the prospectus used in connection with
this Registration Statement also relates to the Registrant's Registration
Statements on Form S-8, Registration Nos. 33-25858, 33-33374, 33-49396 and
33-62410.
PROSPECTUS
CRAY RESEARCH, INC.
6,358,000 SHARES
of
COMMON STOCK
($1.00 par value)
(With Common Share Purchase Rights Attached)
Offered as set forth herein to eligible employees of
CRAY RESEARCH, INC.
and participating subsidiaries
pursuant to the
1989 EMPLOYEE BENEFIT STOCK PLAN
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is August 24, 1994
TABLE OF CONTENTS
Page
Available Information 3
Description of the Plan 4
Tax Information 12
Outstanding Stock Plans 15
Indemnification for Securities Act Liabilities 16
Experts 16
Legal Opinions 16
Incorporation of Certain Documents by Reference 16
_____________________
AVAILABLE INFORMATION
Cray Research, Inc. (the "Company") is subject to the informational
requirements of the Securities Exchange Act of 1934 and in accordance
therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and
other information filed by the Company can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
regional offices in New York (7 World Trade Center, 13th Floor, New York,
New York 10048) and Chicago (Northwest Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661). Copies of such material can
also be obtained from the Public Reference Section of the Commission, Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
Certain securities of the Company are listed on the New York Stock
Exchange. Such reports, proxy statements and other information concerning
the Company can be inspected at the offices of the New York Stock Exchange
at 20 Broad Street, New York, New York 10005.
The Common Share Purchase Rights are subject to a Rights Agreement dated
as of May 15, 1989, between the Company and Norwest Bank Minnesota, N.A.,
Rights Agent. A copy of the Rights Agreement may be obtained upon written
request to the Investor Relations Department, Cray Research, Inc., 655A
Lone Oak Drive, Eagan, Minnesota 55121.
A copy of the Company's most recent Annual Report to Stockholders and
any information that has been incorporated by reference in this Prospectus
(not including exhibits to the information that is incorporated by
reference unless such exhibits are specifically incorporated by reference
into such information) will be promptly furnished, without charge, upon
written or oral request to the Investor Relations Department, Cray
Research, Inc., 655A Lone Oak Drive, Eagan, Minnesota 55121 (telephone
number (612) 452-6650).
______________________
No person has been authorized to give any information or make
any representations other than as contained herein in connection
with the offer described in this Prospectus and, if given or
made, such information or representation must not be relied upon
as having been authorized. This Prospectus does not constitute
an offer in any state in which such offer may not be lawfully
made.
The delivery of this Prospectus at any time does not imply
that information herein is correct as of any time subsequent to
its date.
DESCRIPTION OF THE PLAN
The 1989 Employee Benefit Stock Plan (the "Plan"), was adopted by the
Board of Directors of the Company on September 7, 1988 and approved by the
Company's stockholders on May 16, 1989. The Plan provides for the
issuance to selected management and other key employees of the Company and
its subsidiaries of shares of authorized but unissued or reacquired $1.00
par value Common Stock of the Company (and Common Share Purchase Rights
attached thereto) ("Common Stock"). The Board of Directors of the Company
amended the Plan on January 25, 1990, to increase the number of shares
authorized for issuance under the Plan, which amendment was approved by
the stockholders of the Company on May 15, 1990. The Board of Directors
of the Company further amended the Plan on January 22 and March 26, 1992
to increase further the number of shares authorized for issuance under the
Plan and to make other amendments to the Plan, which amendments were
approved by the stockholders of the Company on May 14, 1992.
The 1992 amendments increased the number of shares authorized for
issuance under the Plan from 4,000,000 shares to a number determined by
adding to such 4,000,000 shares a number of shares equal to 3% of the
total outstanding shares of Common Stock as of the first day of each
calendar year beginning in 1992, such increases to be cumulative, provided
that no more than 9,000,000 shares shall be cumulatively available for the
grant of incentive stock options under the Plan. As a result of the
amendments, 798,000 shares were added to the Plan effective in 1992,
781,000 shares were added to the Plan effective in 1993 and 779,000 shares
were added to the Plan effective in 1994 (representing 3% of the total
outstanding shares of Common Stock on January 1, 1992, January 1, 1993 and
January 1, 1994, respectively) for a total of 6,358,000 shares authorized
and reserved for issuance under the Plan.
The shares reserved for issuance under the Plan will be issued to
participating employees through the grant by the Company to, and exercise
by, participating employees of either incentive or nonstatutory stock
options and through stock grants and grants of restricted stock.
The Plan will remain in existence for ten years and will terminate on
September 7, 1998 unless all of the shares authorized for issuance under
the Plan have been issued before that date. The Plan is not subject to
any of the provisions of the Employment Retirement Income Security Act of
1974, nor is it qualified under Section 401(a) of the Internal Revenue
Code of 1986, as amended (the "Code").
The Company was incorporated as a Delaware corporation on April 6, 1972.
Its principal executive offices are located at 655A Lone Oak Drive, Eagan,
Minnesota 55121, and its telephone number is (612) 452-6650.
The descriptions contained herein of the Plan and the Stock Option
Agreements and Restricted Stock Award Agreements thereunder do not purport
to be complete, and reference is made to the Plan and the particular
agreements thereunder, and any amendments thereto, for a full statement of
the terms and provisions thereof.
This Prospectus relates to Registration Statements on Form S-8 which the
Company has filed with the Securities and Exchange Commission in
connection with shares being registered for issuance under the Plan. For
further information about the Company, reference is made to such
Registration Statements and accompanying exhibits.
Purpose of the Plan
The purpose of the Plan is to provide a means whereby the Company may be
able to attract and retain persons of ability and to motivate them to
advance the interests of the Company.
It is intended that some of the options granted under the Plan will
constitute "incentive stock options" as defined in Section 422 of the
Code. Employees who are granted incentive stock options will be entitled
to certain favorable income tax advantages described more fully under "Tax
Information" below. The remaining options granted under the Plan will be
"nonstatutory options"; that is, options not qualifying for favorable tax
treatment under Section 422 or other similar provisions of the Code.
Shares Subject to the Plan
A total of 6,358,000 shares of authorized but unissued or reacquired
Common Stock of the Company is currently authorized for issuance under the
Plan; provided, however, that in each calendar year during any part of
which the Plan is effective commencing in 1992 the total number of shares
authorized will be increased by a number of shares equal to three percent
(3%) of the total outstanding shares of Common Stock as of the first day
of such year, such increases to be cumulative. No more than 9,000,000
shares shall be cumulatively available for the grant of incentive stock
options under the Plan. If any option expires or terminates without
having been exercised in full, the unacquired shares will be available for
future grants.
Administration of the Plan
The Plan is administered by the Compensation and Development Committee
of the Board of Directors of the Company (the "Committee"), which is
comprised of at least two disinterested persons not eligible to
participate under the Plan. The Committee has full power to construe and
interpret the Plan and to establish and amend rules and regulations for
its administration. On August 24, 1994, the Committee had as its members:
Lawrence E. Eaton, Catherine M. Hapka, Philip G. Heasley, Robert G. Potter
and Jan H. Suwinski. The Committee members are selected by and serve at
the pleasure of the Board of Directors of the Company. The address of
each Committee member is c/o Cray Research, Inc., 655A Lone Oak Drive,
Eagan, Minnesota 55121.
Eligibility
The Plan provides that incentive and/or nonstatutory options may be
granted and stock grants or grants of restricted stock may be made to any
management or other key employee of the Company and its subsidiaries who
the Committee determines has contributed, or in the future may reasonably
be anticipated to contribute, materially to the success of the Company.
The Committee has complete discretion in determining which employees
should be granted options or stock and the number of shares covered by
each option or grant, taking into consideration such factors, including
any recommendations of the Chief Executive Officer of the Company, as it
deems relevant to select and motivate employees of ability to advance the
interests of the Company. Only employees of the Company and its
subsidiaries are eligible to be granted options or to receive stock grants
or grants of restricted stock under the Plan.
Additional eligibility restrictions are imposed by law in connection
with the grant of incentive stock options under the Plan. The Code
requires that the aggregate fair market value (determined at the time an
incentive stock option is granted) of the stock with respect to which
incentive stock options are exercisable for the first time by an employee
during any calendar year under all of the Company's stock option plans may
not exceed $100,000. An employee is also not eligible to receive an incen-
tive stock option under the Plan if immediately before the option is to be
granted the employee owns, directly or constructively through Section
424(d) of the Code, more than 10% of the total combined voting power of
all classes of stock of the Company. These eligibility restrictions do
not pertain to nonstatutory options granted under the Plan or to stock
grants or grants of restricted stock.
Option Price and Term
The option price per share for options granted under the Plan is equal
to 100% of the "fair market value" of the subject shares on the date the
option is granted. "Fair market value" will be established by the
Committee at a price equal to the closing market price for a share of
Common Stock on the New York Stock Exchange on the date of grant. Should
the Committee in the future determine that this method of establishing
exercise prices for both incentive and nonstatutory options is not
reflective of the full fair market value of the Company's Common Stock, it
may determine the fair market value through such alternative measure or
means as it may in good faith determine to be then appropriate.
Unless otherwise determined by the Committee, options are exercisable
after one year from the date of grant in four successive annual 25%
cumulative installments. Unless otherwise specified by the Committee,
options granted prior to May 1992 expire seven years from the date of
grant if unexercised, and options granted in May 1992 or thereafter will
expire ten years from the date of grant. The options will become
immediately exercisable in full in the event of a Change of Control of the
Company. See "Change of Control" and "Tax Information" below.
Options outstanding at the time of the termination of the Plan remain in
effect until they are exercised or expire in accordance with their terms.
See "Exercise of Options."
Exercise of Options
Options may be exercised, in whole or in part, by delivering to the
Company a written notice specifying the number of shares desired to be
purchased and accompanied by payment for the full purchase price of the
shares to be acquired. At the election of the employee, the option price
may be paid in cash and/or by delivery of certificate(s), duly endorsed
for transfer of shares of the Company's Common Stock already held by the
employee. In addition, the Employee may deliver a notice of exercise and
simultaneously sell the shares of Common Stock thereby acquired pursuant
to a brokerage or similar arrangement approved in advance by an
appropriate officer of the Company, using the proceeds from such sale as
payment of the exercise price. The Plan satisfies the requirements of
Rule 16b-3 under the Securities Exchange Act of 1934, thereby entitling
officer employees to exercise options through a sale of previously
acquired shares to the Company without violating the short swing profit
restrictions found in Section 16(b) of the Act.
Any shares sold to the Company in payment of the option price will be
valued at the closing price of such shares on the New York Stock Exchange
(or other appropriate market price) on the last business day preceding the
exercise date. Any fractional share not required for payment of the
option price will be paid for by the Company in cash.
Options granted under the Plan are nontransferable. Options held by an
employee may be exercised only by the employee and only while an employee
of the Company or a parent or subsidiary of the Company and only if
continuously so employed since the options were granted; provided,
however, that:
(i) Unless the Committee establishes provisions to the contrary, in the
event of the death of an employee options held will become immediately
exercisable, without regard to any vesting requirements or periods by
employee's estate and will remain exercisable until the expiration of the
Option.
(ii) In the event of termination due to disability of an employee,
options held will become immediately exercisable, without regard to any
vesting requirements or periods, and may be exercised not later than the
earlier of the date the options expire or one year after the date
employment ceases by reason of disability.
(iii) In the event of retirement at or after the age of 55, options held
by an employee on the last date of service will become immediately
exercisable, without regard to any vesting requirements or periods, and
may be exercised not later than the earlier of the date the options expire
or two years after the date of retirement.
(iv) Any absence on leave approved by the Company shall not be deemed a
termination or interruption of employment for the purposes of the Plan.
In the event an employee terminates employment for any other reason, all
options held shall expire. Except as otherwise provided, in no event
shall any Option be exercisable at any time after its expiration date,
provided, that on a case-by-case basis, the Committee may, in its sole
discretion, accelerate the schedule of the time or times when an Option
granted under this Plan may be exercised or extend the period for exercise
to a time after the expiration date.
If an employee exercises an incentive stock option more than three
months after the termination of the employee's employment with the Company
due to retirement as specified above, the incentive stock option will be
treated as a nonstatutory option for tax purposes. See "Tax Information"
below.
No holder of an option acquires rights as a stockholder with respect to
the shares covered by his or her option until such shares have been issued
upon exercise of the option.
Option Agreement
Each option granted under the Plan will be evidenced by a Stock Option
Agreement executed by the Company and the employee and subject to the
terms and conditions set forth in the Plan and any other terms and
conditions that may be prescribed by the Committee. Each Stock Option
Agreement will indicate whether the option granted is an incentive stock
option or a nonstatutory option. Except in the case of the adjustments of
shares described below, neither the Committee nor the Board of Directors
may alter or impair any option previously granted to an employee under the
Plan without his or her consent.
Stock Grants
The Committee may award stock grants to employees for up to 50 shares of
Common Stock of the Company per calendar year. Employees receiving stock
grants will be entitled to all of the rights and privileges in the shares
as of the date on which the award is made.
Grants of Restricted Stock
The Committee may grant restricted stock to an employee. The Committee
will determine the employees to whom grants of restricted stock will be
made, the number of shares to be awarded, the length of the restricted
period, if any, the performance and/or employment conditions under which
the restricted stock may be forfeited to the Company, the purchase price,
if any, to be paid for the restricted stock, and any other restrictions.
The terms of each award of restricted stock will be set forth in a
written award agreement. Certificates representing the shares granted
will be legended as to sale, transfer, assignment, pledge or other
encumbrances during the restricted period and will be deposited with the
Company by the employee, together with a stock power endorsed in blank.
Such certificates will be held in the custody of the Company until the
restricted period expires or until all restrictions thereon otherwise
lapse.
Subject to the restrictions imposed, employees who receive restricted
stock will have all rights as stockholders with respect to such shares,
including the right to vote and receive dividends and other distributions.
The award agreement may provide, or the Committee may subsequently
determine in its discretion, that, in the case of death, disability or
other special circumstances, any or all applicable restrictions may be
waived.
Except as otherwise provided, no shares of restricted stock shall be
sold, exchanged, transferred, pledged or otherwise disposed of during the
restricted period.
When restrictions have lapsed, the restrictive legend shall be removed
and a new certificate representing the shares shall be delivered to the
employee. The Committee may, in its sole discretion, modify or cancel the
restrictions imposed on restricted stock or otherwise accelerate the
vesting of shares of restricted stock.
Restricted stock outstanding at the time of termination of the Plan
shall remain subject to the restrictions imposed at the time of grant
until the restricted period expires or until all conditions with respect
thereto otherwise lapse or are satisfied.
Change of Control
The Plan provides for certain effects upon a Change of Control
(hereinafter defined) of the Company. If a Change of Control of the
Company occurs which, in the opinion of the Company's independent
certified public accountants may not be accounted for under generally
accepted accounting principles as a "pooling of interests", then from and
after the Change of Control Date (hereinafter defined) all outstanding
options shall be exercisable in full. The Committee may, in its
discretion, declare restrictions applicable to shares of restricted stock
to lapse in similar circumstances. A "Change of Control" of the Company
would include (a) a business combination, which means: (i) a consolidation
or merger pursuant to which more than 75% of the Company's voting stock is
transferred to different holders, (ii) more than 75% of the assets of the
Company are disposed of, or (iii) the Company dissolves or liquidates or
effects a partial liquidation involving more than 75% of its assets; (b)
the acquisition by any person as beneficial owner of 30% or more of the
combined voting power of the Company; or (c) a change in the composition
of the Board of Directors of the Company, as a result of which fewer than
a majority of the directors are incumbent directors. The "Change of
Control Date" is the date as of which a Change of Control shall be deemed
by resolution of the Board of Directors of the Company to have occurred.
If incentive stock options are accelerated due to a Change of Control with
the result that incentive stock options for more than $100,000 of stock
become exercisable for the first time during any calendar year, the
incentive stock options pertaining to stock in excess of $100,000 will be
treated as nonstatutory options. See "Tax Information" below.
Adjustment of Shares
In the event there is any change in the outstanding number of shares of
Common Stock of the Company by reason of any recapitalization, merger,
consolidation, reorganization, stock dividend, stock split or other change
in capitalization affecting the Common Stock of the Company, the number of
shares authorized for the Plan will be adjusted and appropriate equitable
share and exercise price adjustments in outstanding options will be made
by the Committee to prevent dilution or enlargement of rights. Any
additional shares of Common Stock or other securities or property issued
in respect of outstanding shares of restricted stock in such event shall
be issued subject to the same restrictions applicable to the shares of
restricted stock in respect of which they are issued.
Restrictions on Resale of Shares
If an employee sells, exchanges or otherwise disposes of shares acquired
upon exercise of an incentive stock option within two years of the date of
the grant, or one year after the date of exercise, he or she is required
to notify the Company promptly in writing and disclose the amount of gain
or loss resulting from the sale, exchange or other disposition of the
shares. This reporting requirement does not apply to any shares sold that
were acquired upon exercise of a nonstatutory option. See "Tax
Information" below.
Officers and directors of the Company, and certain members of their
families and others who may be deemed to be "affiliates" of the Company
under the Securities Act of 1933, may be required to comply with the
requirements and limitations imposed by Rule 144 of the Securities and
Exchange Commission promulgated under the Securities Act of 1933, by
Section 16(b) of the Securities Exchange Act of 1934. All employees are
required to comply with "insider" trading restrictions generally in
connection with resales of the shares received under the Plan.
Amendments to the Plan
The Board of Directors, without the approval of the stockholders of the
Company, may amend the Plan in any manner it deems advisable and in the
best interests of the Company. The Board of Directors may not, however,
without stockholder approval, increase the maximum number of shares
subject to the Plan or restrict the class of management and other key
employees eligible to be awarded stock grants, restricted stock or options
under the Plan.
TAX INFORMATION
This Prospectus does not make representations concerning specific
individual tax consequences because the tax result of an option exercise
and subsequent stock sale, or a stock grant, will vary depending upon each
employee's particular facts. Employees are urged to consult with their
personal tax advisors concerning federal, state and local income tax
consequences of grants and exercises of options under the Plan.
Incentive stock options granted under the Plan are treated differently
for income tax purposes than nonstatutory options. General discussion of
the federal tax treatment for both types of option is presented in this
section.
Incentive Stock Options - Payment of Exercise Price in Cash.
An employee will in most cases realize no taxable income and the Company
will not be entitled to a compensation deduction at either the date of the
grant or exercise of an incentive stock option. The excess of the stock's
date of exercise fair market value less the exercise price, however,
constitutes tax preference income to the employee which may result in an
alternative minimum tax. If an employee exercises an incentive stock
option more than three months after the termination of the employee's
employment with the Company (one year in the case of disability), the
incentive stock option will be treated as a nonstatutory option for tax
purposes.
If the employee sells or otherwise disposes of the stock following
expiration of the "statutory holding period," he or she will realize the
difference between disposition proceeds and the stock's exercise price as
long-term capital gain or loss in the year of disposition. The statutory
holding period is the later of (i) one year after the date of exercise; or
(ii) two years after the date of grant.
If the employee sells or otherwise disposes of his or her stock acquired
upon exercise of an incentive stock option prior to meeting the statutory
holding period requirements (a "disqualifying disposition"), all or a
portion of any gain will be treated as ordinary income to the employee and
the Company will be entitled to deduct an equal amount as compensation
expense. The amount of ordinary income realized is the lesser of (i) the
stock's date of exercise fair market value less the stock's exercise
price; or (ii) the gain on the sale (the amount realized less the exercise
price). The excess, if any, of the date of sale fair market value over
the date of exercise fair market value will be treated as long-term
capital gain if the stock was held for more than one year; otherwise it
will be short-term capital gain.
If the employee realizes an amount upon a subsequent sale of his or her
option shares that is less than the exercise price or other tax basis of
the shares, the resulting loss will be a short or long-term capital loss
depending upon the capital asset holding periods stated above.
Incentive Stock Options - Payment of Exercise Price with
Stock. The exercise of an incentive stock option by payment in shares of
Common Stock previously owned by the employee will generally have the same
tax consequences as described above.
However, under the "pyramiding" rules, a taxable disposition of shares
will occur upon the exercise of an incentive stock option if the payment
shares were acquired pursuant to an earlier exercise of an incentive stock
option and those shares have not been held for the statutory holding
period. The deposition will be treated as a "disqualifying disposition"
with tax results as described above.
A taxable pyramiding will not occur if the payment stock was acquired
pursuant to the exercise of a nonstatutory option or if the statutory
holding period has expired for payment stock acquired upon a prior
exercise of an incentive stock option.
Employees should also be aware of the following tax items even if the
payment stock has been held for the statutory holding period:
(1) If the stock acquired upon exercise of an incentive stock option is
sold prior to expiration of the statutory holding period, the capital gain
or loss holding period for this stock is considered to have commenced on
the date an equal number of payment shares were acquired.
(2) The tax basis of the payment stock becomes the tax basis for an equal
number of incentive stock option shares for purposes of determining
capital gain or loss on disposition of the new stock. The tax basis of
any additional stock acquired upon exercise will be zero. If the
statutory holding period is not met, the payment stock's basis will be
increased to the fair market value on the date the option was exercised or
such other amount taxable to the employee as ordinary income.
(3) If basis is allocated between payment stock and additional stock,
proposed regulations under Section 422A provide that a disqualifying
disposition of stock transferred pursuant to the exercise will be a
disqualifying disposition of stock with the lowest basis.
Nonstatutory Options. There will be no federal income tax consequences
to the employee or the Company when an option is granted, provided the
option does not have a readily ascertainable fair market value. The
Company believes that the options granted under the present Plan will not
have such a value at the date of grant.
Upon the exercise of a nonstatutory option, the employee will realize
ordinary income equal to the stock's date of exercise fair market value
less the option price. The Company will be entitled to a deduction equal
to the employee's ordinary income and is required to withhold taxes on
this amount.
An employee will realize capital gain or loss upon any subsequent sale
or disposition of stock equal to the difference between the amount
realized and the stock's date of exercise fair market value. The capital
gain or loss will be long-term if the stock has been held for more than
one year; otherwise, it will be a short-term gain or loss.
Different rules apply to the timing of income recognition if the
employee is an officer or director subject to the insider trading rules of
Section 16(b) of the Securities Exchange Act of 1934. This would occur
only if an option is granted without the normal requirement that exercise
cannot occur within one year of the grant.
Generally no gain or loss will be realized on previously acquired stock
used in payment upon exercise of a nonstatutory option. The acquisition
date of the payment stock is substituted as the capital gain holding
period commencement date for an equal number of new shares. Any
additional stock acquired upon exercise will use the exercise date as the
capital gain holding period commencement date.
The tax basis of the payment stock will be substituted as the tax basis
of an equal number of shares acquired upon exercise of the option. The
tax basis of additional shares acquired upon exercise will be equal to the
total taxable income realized by the employee plus any cash paid.
If the payment shares were acquired through the exercise of incentive
stock options and the stock has not been held for the statutory holding
period, no gain or loss is realized on the payment shares. Instead, an
equal number of new shares acquired upon exercise of the option assume the
payment shares' tax characteristics. If the new shares are held for the
balance of the payment stock's statutory holding period, any gain on dispo-
sition (sale proceeds less the payment share's original exercise price)
will be long-term capital gain.
Stock Grants. Employees receiving a stock grant will realize ordinary
income in the amount of the fair market value of the stock on the date the
stock is transferred. The Company will correspondingly be entitled to a
tax deduction in the same amount, which will also be the employee's tax
basis in the stock. Gain realized from any subsequent sale of shares ori-
ginally acquired by an employee through a stock grant will be taxed at
long-term capital gain rates if the shares were held for more than one
year and at short-term rates if held for a shorter period of time.
Similarly, any loss realized from a subsequent sale of shares will be
treated as a long-term loss if the shares were held for longer than one
year and otherwise as a short-term loss.
Restricted Stock. Employees receiving grants of restricted stock
will normally not be required to recognize income for federal or state
income tax purposes at the time the shares of restricted stock are
transferred nor will the Company be entitled to a tax deduction at that
time. When the restrictions lapse or are satisfied with respect to any
shares of restricted stock, the employee holding such stock will be
required to recognize ordinary income based on the fair market value of
the stock on the date that the restrictions lapse or are satisfied.
However, if an employee receiving restricted stock elects to accelerate
recognition of income under Section 83(b) of the Code by filing an
appropriate election within thirty days of the transfer of the restricted
stock, the employee will be deemed to have received ordinary income in an
amount equal to the fair market value of the shares on the date of
transfer. In that case, the employee will not be entitled to a deduction
if the restricted stock is subsequently forfeited due to a failure to
satisfy the restrictions applicable to the stock. Dividends received on
restricted stock before the restrictions lapse or are satisfied will be
taxed as ordinary income to the employee. Upon the recognition of income
by the employee, the Company will be entitled to a deduction in an equal
amount only if the Company withholds income tax on such amount pursuant to
Section 3402 of the Code.
Gain realized on a sale of shares of stock with respect to which
restrictions have previously lapsed or been satisfied will be taxed at
long-term capital gain rates if the shares have been held for more than
one year after the date that the employee recognized income with respect
to the receipt of the stock and at short-term rates if held for a shorter
period of time. Similarly, any loss realized from such a sale of shares
will be treated as a long-term loss if the shares were held for longer
than one year since the date of income recognition and otherwise as a
short-term loss.
OUTSTANDING STOCK PLANS
In addition to the Plan to which this Prospectus pertains, the Company
also presently has an Annual Incentive Award Plan for the benefit of its
management and key employees. Management and key employees, other than
officer and director employees, are also eligible to participate with
other Company employees in the 1981 Qualified Stock Purchase Investment
Plan. Non-employee directors of the Company are eligible to participate
in the 1989 Non-Employee Directors' Stock Option Plan.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Article VIII of the Company's Bylaws provides that the Company "shall
indemnify its officers, directors, employees and agents to the extent
permitted by the General Corporation Law of Delaware and shall advance
expenses to its officers and directors to the extent permitted
thereunder." Section 145 of the Delaware General Corporation Law provides
broad authority for such indemnification. Further, there is in effect an
officers' and directors' insurance policy providing indemnity coverage to
the Company and its officers and directors.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling
the Company pursuant to the foregoing provisions, the Company has been
informed that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and
is therefore unenforceable.
EXPERTS
The consolidated financial statements and schedules of the Company as of
December 31, 1992 and 1993 and for each of the years in the three-year
period ended December 31, 1993 incorporated by reference herein and
elsewhere in the Registration Statement have been incorporated herein and
in the Registration Statement in reliance upon the reports of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in
accounting and auditing. To the extent that KPMG Peat Marwick LLP audits
and reports on financial statements of the Company issued at future dates,
and consents to the use of their report thereon, such financial statements
also will be incorporated by reference in the Registration Statement in
reliance upon their report and said authority.
LEGAL OPINIONS
Legal matters in connection with this offering have been passed upon for
the Company by Doherty, Rumble & Butler Professional Association, 3500
Fifth Street Towers, 150 South Fifth Street, Minneapolis, Minnesota 55402-
4235.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed, and to be filed, with the Securities and
Exchange Commission (the "Commission") are hereby incorporated herein by
reference:
(a) The Company's latest Annual Report on Form 10-K filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, which
contains, either directly or by incorporation by reference, audited
financial statements for the year ended December 31, 1993, the Company's
latest fiscal year for which such statements have been filed.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 since the end of the fiscal year covered
by the Annual Report referred to in paragraph (a) above.
(c) The Company's definitive Proxy Statement dated March 31, 1994 filed
pursuant to Section 14 of the Securities Exchange Act of 1934 in
connection with its Annual Meeting of Stockholders to be held on May 17,
1994.
(d) The descriptions of the Common Stock and Common Share Purchase Rights
contained in the Company's registration statements filed pursuant to
Section 12 of the Securities Exchange Act of 1934, including any amendment
or report filed for the purpose of updating such descriptions.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended, prior to the filing of any post-effective amendment which
indicates that all the securities offered hereby have been sold or which
deregisters all securities remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of
their filing.
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 8. Exhibits
5 - Opinion of Doherty, Rumble & Butler Professional Association, with
respect to the legality of the securities to be issued pursuant to the
1989 Employee Benefit Stock Plan.
24.1 - Consent of KPMG Peat Marwick LLP, independent auditors.
24.2 - Consent of Doherty, Rumble & Butler Professional Association,
counsel to the Company (included in Exhibit 5).
28.1 - 1989 Employee Benefit Stock Plan, as amended.*
28.2 - Form of Incentive Stock Option Agreement utilized under the 1989
Employee Benefit Stock Plan.**
28.3 - Form of Nonstatutory Option Agreement utilized under the 1989
Employee Benefit Stock Plan.**
28.4 - Form of Restrictive Stock Award Agreement utilized under the 1989
Employee Benefit Stock Plan.**
28.5 - Form of Performance Shares Award Agreement utilized under the 1989
Employee Benefit Stock Plan.
* Incorporated by reference to Registration Statement No. 33-62410.
** Incorporated by reference to Registration Statement No. 33-49396.
Item 9. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement: (i) To include
any prospectus required by section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; (iii) To include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to which information in the
registration statement; Provided, however, That paragraphs (i) and (ii) do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with
or furnished to the Commission by the Registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 that is incorporated by reference
in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Eagan, and the State of
Minnesota, on this 23rd day of August, 1994.
CRAY RESEARCH, INC.
By /s/ JOHN F. CARLSON
John F. Carlson
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities, and on the dates, indicated. Each person whose signature to
the Registration Statement appears below hereby appoints John F. Carlson
and Michael J. Lindseth, or either of them, as his attorney-in-fact with
full power to act alone, with full power of substitution or
resubstitution, for him and in his name, place and stead, in any and all
capacities to sign on his behalf, individually and in the capacity stated
below, and to file any and all amendments and post-effective amendments to
this Registration Statement, which amendment or amendments may make such
changes and additions as such attorney-in-fact may deem necessary or
appropriate.
Signature Title Date
/s/ JOHN F. CARLSON Chairman of the Board, August 23, 1994
John F. Carlson Chief Executive Officer
(Principal Executive
Officer) and Director
/s/ MICHAEL J. LINDSETH
Michael J. Lindseth Chief Financial Officer August 23, 1994
(Principal Financial
Officer)
/s/ CHARLES T. ROEHRICK
Charles T. Roehrick Corporate Controller August 23, 1994
(Principal Accounting
Officer)
/s/ LESTER T. DAVIS Director August 23, 1994
Lester T. Davis
/s/ LAWRENCE E. EATON Director August 23, 1994
Lawrence E. Eaton
/s/ CATHERINE M. HAPKA Director August 23, 1994
Catherine M. Hapka
/s/ PHILIP G. HEASLEY Director August 23, 1994
Philip G. Heasley
/s/ ROBERT G. POTTER Director August 23, 1994
Robert G. Potter
/s/ ANDREW SCOTT Director August 23, 1994
Andrew Scott
/s/ JAN H. SUWINSKI Director August 23, 1994
Jan H. Suwinski
EXHIBIT INDEX
EXHIBITS FILED AS PART OF THE REGISTRATION STATEMENT ON FORM S-8 OF CRAY
RESEARCH, INC. FOR THE 1989 EMPLOYEE BENEFIT STOCK PLAN.
Page
5 - Opinion of Doherty, Rumble & Butler
Professional Association, with respect to
the legality of the securities to be issued
pursuant to the 1989 Employee Benefit
Stock Plan 9
24.1 - Consent of KPMG Peat Marwick LLP, independent auditors 12
24.2 - Consent of Doherty, Rumble & Butler Professional
Association, counsel to the Company (included
in Exhibit 5) 9
28.1 - 1989 Employee Benefit Stock Plan, as amended* _
28.2 - Form of Incentive Stock Option Agreement
utilized under the 1989 Employee Benefit Stock Plan** _
28.3 - Form of Nonstatutory Option Agreement
utilized under the 1989 Employee Benefit Stock
Plan** _
28.4 - Form of Restrictive Stock Award Agreement
utilized under the 1989 Employee Benefit Stock
Plan** _
28.5 - Form of Performance Shares Award Agreement
utilized under the 1989 Employee
Benefit Stock Plan 14
* Incorporated by reference to Registration Statement No. 33-62410.
** Incorporated by reference to Registration Statement No. 33-49396.
Exhibit 5
August 23, 1994
Cray Research, Inc.
655A Lone Oak Drive
Eagan, MN 55121
Re: Cray Research, Inc.
1989 Employee Benefit Stock Plan
Gentlemen:
We are acting as special counsel for Cray Research, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), of an aggregate of 779,000
shares of common stock, $1.00 par value (with related Common Share
Purchase Rights) (collectively, the "Common Stock", issuable pursuant to
the Company's 1989 Employee Benefit Stock Plan (the "Plan"). A
Registration Statement on Form S-8 has been prepared for filing under the
Act.
In connection with the offering of the Common Stock, we have examined
originals or copies submitted to us that we have assumed are genuine,
accurate and complete, of all such corporate records of the Company,
agreements and other instruments, certificates of public officials,
officers and representatives of the Company, and other documents we have
deemed necessary or appropriate to require as the basis for the opinions
hereinafter expressed. As to various questions of fact material to this
opinion, where relevant facts were not independently established, we have
relied upon statements of officers of the Company.
Based and relying solely upon the foregoing, it is our opinion that when
the 779,000 shares of the Common Stock, or any portion thereof, are issued
pursuant to and in accordance with the Plan, such shares will be validly
issued, fully paid and nonassessable.
This opinion may be filed as an exhibit to the above-referenced
Registration Statement. Consent is also given to the reference to this
firm under the caption "Legal Opinions" in the prospectus included in the
Registration Statement as having passed upon the validity of the issuance
of the Common Stock. In giving this consent, we do not hereby admit that
we come within the category of persons whose consent is required under
Section 7 of the Act or the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.
Very truly yours,
DOHERTY, RUMBLE & BUTLER
PROFESSIONAL ASSOCIATION
By:
Dean R. Edstrom
Exhibit 24.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and
Stockholders of Cray Research, Inc.:
We consent to the use of our reports incorporated herein by reference
and to the reference to our firm under the caption "Experts" in the
Prospectus included in this Registration Statement on Form S-8.
KPMG PEAT MARWICK LLP
Minneapolis, Minnesota
August 23, 1994
Exhibit 28.5
CRAY RESEARCH, INC.
PERFORMANCE SHARES AWARD AGREEMENT
THIS AGREEMENT, made this ____________ day of __________, 199__, by and
between Cray Research, Inc., a Delaware corporation (the "Company"), and
_________________ ("Employee").
The Cray Research, Inc. 1989 Employee Benefit Stock Plan (the "Plan")
permits the Company to award shares of its Common Stock to the Employee on
the restricted basis set forth herein.
Accordingly, in consideration of the agreements hereinafter set forth,
the parties hereto hereby agree as follows:
1. Award of Performance Shares
The Company hereby awards to the Employee _________ shares of its Common
Stock, subject to the restrictions set forth in the Plan and herein (the
"Performance Shares"). Upon satisfaction of the conditions for the
termination of the restrictions set forth in the Plan and herein, the
restrictions shall lapse and the Performance Shares shall vest in the
Employee free of any restrictions. In the event the conditions for the
termination of such restrictions are not satisfied, the Performance Shares
shall be forfeited to the Company and shall be surrendered to and
cancelled by the Company.
2. Vesting and Forfeiture
(a) The Performance Shares shall vest in the Employee free of the
restrictions in the Plan and herein at the end of the applicable period
(the "Restricted Period") set forth in Section 3 hereof and upon
satisfaction of the conditions for release or lapse of other restrictions
contained in the Plan or herein. In the event that the conditions for
release or lapse of the restrictions are not satisfied with respect to any
Performance Shares, such shares shall be forfeited, and all rights of the
Employee in such Performance Shares (and to other securities and other
property, other than cash dividends, distributed with respect to such
shares) shall terminate.
(b) Upon satisfaction of the conditions for release of restrictions
applicable to any Performance Shares, the Company shall issue a
certificate representing such shares and deliver the certificate to the
Employee free of any restriction, subject to any applicable federal or
state securities laws or other laws.
3. Restrictions
The Performance Shares shall be forfeited to the Company in the event
that the conditions set forth in Exhibit A hereto are not fulfilled. Such
conditions are cumulative, and failure to satisfy any condition shall be
sufficient to cause the Performance Shares to be forfeited.
4. General Conditions Applicable to Performance Shares
(a) Performance Shares may not be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of until the shares vest and are issued
free of any restriction.
(b) A certificate or certificates evidencing the Performance Shares
awarded hereby shall be prepared and registered in the name of the
Employee but shall be held in the custody of the Company until all
conditions for the termination of restrictions thereon are satisfied.
Prior to issuance of the Performance Shares, Employee shall deliver to the
Company a stock power or stock powers endorsed in blank relating to the
Performance Shares sufficient to permit the Company to transfer the
Performance Shares to it or to cancel the Performance Shares.
Certificates issued with respect to the Performance Shares shall bear a
restrictive legend in substantially the following form:
The transferability of this certificate and the shares represented
hereby are subject to the terms and conditions (including forfeiture)
contained in the Cray Research, Inc. 1989 Employee Benefit Stock Plan and
a Performance Shares Agreement entered into between the registered owner
and Cray Research, Inc. Copies of such Plan and Agreement are on file in
the offices of Corporate Secretary of Cray Research, Inc. The shares
represented by this certificate may not be sold, exchanged, transferred,
pledged or otherwise disposed of without the prior written consent of the
Company.
When Performance Shares vest and are issued free of any restrictions,
the Employee's certificate(s) being held by the Company shall be delivered
to the Employee and the above restrictive legend shall be removed
therefrom subject only to such further restrictive legend, if any, as may
be required under the then applicable securities laws.
(c) Any additional shares of Common Stock or other securities or property
issued in respect of outstanding Performance Shares shall be issued
subject to the same restrictions applicable to the Performance Shares in
respect of which they are issued.
(d) In the event of forfeiture of any Performance Shares, any additional
shares of Common Stock or other securities or property (other than cash
dividends) distributed with respect to such Performance Shares shall be
forfeited as well and the Company shall be entitled to have any and all
certificates and other instruments evidencing such Performance Shares and
other securities and property transferred to it or cancelled.
(e) If, prior to vesting of Performance Shares in accordance with the
above performance goals or forfeiture thereof, a Change of Control (as
defined in the Plan) of the Company occurs which, in the opinion of the
Company's independent certified public accountants may not be accounted
for under generally accepted accounting principles as a "pooling of
interests", then, effective upon the Change of Control Date (as so
defined), all Performance Shares to which the Employee is then entitled to
hold shall vest immediately. The committee of the Board of Directors of
the Company which administers the Plan may make such provision as it deems
equitable respecting the continuance of the restrictions contained herein
on any Performance Shares held by the Employee during an approved leave of
absence.
5. Rights of a Stockholder
The Employee to whom such Performance Shares has been awarded shall have
all of the rights and privileges of a stockholder and owner as of the date
on which the Performance Shares are awarded, including (i) the right to
vote the Performance Shares and (ii) the right to receive all dividends or
other distributions paid or made with respect to the Performance Shares;
provided, however, that all distributions with respect to Performance
Shares (with the exception of cash dividends) shall be deposited with the
Company and held during the Restricted Period and shall be subject to
forfeiture in accordance with the Plan and this Agreement to the same
extent as the Performance Shares in respect of which such shares of Common
Stock or securities or other property were issued.
6. Miscellaneous
(a) The Performance Shares are awarded pursuant to the Plan and are
subject to its terms. A copy of the Plan is available to the Employee
upon request.
(b) This Agreement shall not confer on the Employee any right with
respect to continuance of employment at any time.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the date first set forth above.
CRAY RESEARCH, INC.
By ___________________________
Its __________________________
EMPLOYEE
______________________________
Signature Date