<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the
Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definite Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Amdahl Corporation
(Name of Registrant as Specified in Its Charter)
Gregory Handschuh
(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:*
4) Proposed maximum aggregate value of transaction:
* Set forth the amount on which the filing fee is calculated
and state how it was determined.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
2) Form Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[LOGO] AMDAHL
CORPORATION
Sunnyvale, California
March 24, 1994
Dear Amdahl Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders to be
held at 11:00 A.M. on May 5, 1994, at the Fairmont Hotel, 170 South Market
Street, San Jose, California.
Details with respect to the meeting are set forth in the attached Notice of
Annual Meeting and Proxy Statement.
Whether or not you plan to attend the meeting, we urge you to complete, date,
sign and return your proxy.
Very truly yours,
/s/ John C. Lewis
John C. Lewis
Chairman of the Board
<PAGE>
AMDAHL CORPORATION
1250 EAST ARQUES AVENUE
SUNNYVALE, CALIFORNIA 94088-3470
MARCH 24, 1994
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 5, 1994
To the Stockholders:
The Annual Meeting of Stockholders of Amdahl Corporation will be held at the
Fairmont Hotel, 170 South Market Street, San Jose, California at 11:00 A.M. on
May 5, 1994 to:
1. elect eleven directors to serve until the next Annual Meeting of
Stockholders, and until their successors have been duly elected and
qualified;
2. adopt the Amdahl Corporation 1994 Stock Incentive Plan;
3. consider and vote upon a proposal to ratify the selection of Arthur
Andersen & Co. as independent public accountants for Amdahl Corporation for
the 1994 fiscal year; and
4. consider and act upon such other business as may properly come before
the meeting or any adjournment or postponement thereof.
Items 1 through 3 are more fully presented in the Proxy Statement. The Board
of Directors has fixed the close of business on March 7, 1994 as the record
date for determining those stockholders who will be entitled to vote at the
meeting. A list of stockholders will be kept at the principal executive offices
of Amdahl Corporation for ten days before the meeting. The transfer books will
not be closed between the record date and the date of the meeting.
Representation of at least a majority of all outstanding shares of Amdahl
Corporation common stock is required to constitute a quorum. Accordingly, it is
important that your stock be represented at the meeting. WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
CARD AND RETURN IT IN THE ENCLOSED ENVELOPE. You may revoke your proxy at any
time before it is voted.
By Order of the Board of Directors
/s/ EDWARD F. THOMPSON
Edward F. Thompson
Vice President, Chief Financial Officer
and Secretary
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
AMDAHL CORPORATION
MAY 5, 1994
These proxy materials are furnished in connection with solicitation of
proxies by the Board of Directors of Amdahl Corporation, a Delaware corporation
("Amdahl" or the "Company"), for the Annual Meeting of Stockholders of Amdahl
(the "Annual Meeting") to be held at 11:00 A.M. on May 5, 1994 at the Fairmont
Hotel, 170 South Market Street, San Jose, California, and for any adjournment
or postponement thereof, for the purposes set forth in the accompanying Notice
of Annual Meeting of Stockholders. These proxy materials were first mailed to
stockholders on or about March 24, 1994. The address of the principal executive
office of Amdahl is 1250 East Arques Avenue, Sunnyvale, California 94088-3470.
Amdahl will bear the entire cost of soliciting proxies. Arrangements may be
made with brokerage houses and other custodians, nominees and fiduciaries to
send proxies and proxy materials to the beneficial owners of stock, and
expenses may be reimbursed. Directors, officers or regular employees of Amdahl
may solicit proxies in person or by telephone or telegraph and will receive no
additional compensation for these services.
It is important that proxies be returned promptly. Stockholders are requested
to complete, sign, date and return the proxy in the enclosed self-addressed
envelope.
Securities and Exchange Commission ("SEC") rules require that an annual
report precede or be included with proxy materials. However, stockholders with
multiple accounts may be receiving more than one annual report, which is costly
to Amdahl and may be inconvenient to these stockholders. Stockholders may
discontinue receiving extra reports by marking the appropriate box on the proxy
card for the accounts selected. At least one account must continue to receive
an annual report. Eliminating these duplicate mailings will not affect receipt
of future Proxy Statements and proxy cards. To resume the mailing of an annual
report to an account, please call the Amdahl stockholder service number, 800-
446-2617.
VOTING
Shares of Amdahl common stock, par value of $.05 per share ("common stock"),
represented by proxies in the accompanying form, which are properly executed
and returned to Amdahl before the Annual Meeting, will be voted at the meeting
in accordance with the stockholders' instructions contained in the proxies. In
the absence of contrary instructions, proxies representing these shares will be
voted: FOR the nominees listed herein, FOR items 2 and 3, and in the discretion
of the proxy holders on such other matters as may properly come before the
meeting. As of the date of this Proxy Statement, the Board of Directors knows
of no other business that will be presented for consideration at the Annual
Meeting. Any stockholder has the power to revoke his or her proxy at any time
before it is voted.
It is Company policy (i) that proxies, ballots and voting tabulations be kept
confidential except when disclosure is necessary to meet applicable legal
requirements or to assert or defend claims for or against the Company, when
disclosure is expressly requested by a stockholder or the stockholder has made
written comments on a proxy card, or during a contested election for the Board
of Directors, and (ii) that the tabulators and inspectors of election be
independent. First Chicago Trust Company of New York has been appointed as the
Company's independent tabulators and inspectors of election.
The close of business on March 7, 1994 was the record date for stockholders
entitled to notice of and voting rights at the Annual Meeting. Shares of common
stock outstanding on the record date are entitled to be voted at the Annual
Meeting, and the holders of record will have one vote for each share held on
the matters to be voted on. Stockholders are entitled to cumulate their votes
for the
<PAGE>
election of directors. Cumulative voting enables a stockholder to cumulate his
or her votes and give one nominee a number of votes equal to the number of
directors to be elected (i.e., eleven) multiplied by the number of votes to
which the stockholder is entitled, or the stockholder may distribute these
votes among as many nominees as he or she chooses. The proxies which withhold
authority to vote as to specific directors shall not be deemed to cast votes
for any other directors unless, in order to effect the election of the eleven
nominees, it is necessary to cumulate votes to elect such other directors. The
proxy holders shall not cumulate votes for any other purpose. The eleven
candidates receiving the highest number of votes will be elected. Abstentions
and broker non-votes are included in the determination of the number of shares
present and voting. Each is tabulated separately. Abstentions are counted in
determining the number of shares voted on proposals presented to stockholders,
whereas broker non-votes are not counted. The affirmative vote of a majority of
the shares of common stock represented or present and entitled to vote at the
meeting is required to approve items 2 and 3.
As of the record date, March 7, 1994, there were 115,120,751 shares of common
stock outstanding.
PRINCIPAL STOCKHOLDERS
The following table sets forth the beneficial ownership of Amdahl common
stock as of March 7, 1994 for each person who is known by Amdahl to
beneficially own 5 percent or more of the outstanding shares of the common
stock:
<TABLE>
<CAPTION>
NUMBER APPROXIMATE
NAME AND ADDRESS OF SHARES PERCENT OWNED
---------------- ---------- -------------
<S> <C> <C>
FMR Corp.(1)...................................... 6,923,650 6.01%
82 Devonshire Street
Boston, Massachusetts 02109
Fujitsu Limited(2)................................ 51,811,664 45.01%
6-1 Marunouchi 1-chome
Chiyoda-ku
Tokyo, 100 Japan
</TABLE>
- --------
(1) Pursuant to a Schedule 13G filed with the Securities and Exchange
Commission dated February 11, 1994, as of December 31, 1993, Fidelity
Management & Research Company ("Fidelity"), a wholly-owned subsidiary of
FMR Corp. and an investment adviser, is the beneficial owner of 6,816,422
shares through its various Funds. Edward C. Johnson 3d, Chairman of FMR
Corp., FMR Corp. and the Funds each has power to dispose of 6,805,822
shares owned by the Funds. The power to vote these shares resides with the
Funds' Board of Trustees, which has established written guidelines used by
Fidelity in carrying out the voting of these shares. Fidelity International
Limited, a Bermuda company ("FIL"), is an investment adviser and Fidelity
is a sub-advisor to Fidelity American Special Situations Trust, a unit
trust established under the laws of England ("FASST"). FASST owns 10,600
shares of which FIL is a beneficial owner. FIL, FMR Corp. and FASST each
has voting and dispositive power over the 10,600 shares owned by FASST.
Fidelity Management Trust Company, a wholly-owned subsidiary of FMR Corp.
and a bank, is the beneficial owner of 107,228 shares as investment manager
of the institutional account(s). FMR Corp. has sole voting and dispositive
power over these shares.
(2) Fujitsu Limited ("Fujitsu") has sole dispositive and voting power over
these shares. Fujitsu and Amdahl entered into an agreement in 1984 which
provides that for a period of ten years Fujitsu will not purchase
additional shares of Amdahl common stock if these purchases would cause
Fujitsu's percentage ownership of outstanding Amdahl common stock, computed
on a fully diluted basis, to exceed 49.5 percent. This agreement expires on
April 19, 1994. In addition to its share ownership, Fujitsu, a manufacturer
of computers, telecommunication systems and equipment, and semiconductor
and other advanced electronic components, has extensive business
relationships with Amdahl. See "Compensation Committee Interlocks and
Insider Participation".
2
<PAGE>
CERTAIN INFORMATION WITH RESPECT TO DIRECTORS AND EXECUTIVE OFFICERS
At the Annual Meeting, stockholders will elect eleven directors to hold
office until the next Annual Meeting and until their respective successors are
duly elected and qualified. The current Board of Directors' nominees for
election as directors are set forth below. The proxy holders intend to vote all
proxies received by them in the accompanying form for the eleven nominees. If
any nominee is unable or declines to serve as a director at the time of the
Annual Meeting, the proxies will be voted for any nominee that the present
Board of Directors designates to fill the vacancy. In the event that additional
persons are nominated for election as directors, the proxy holders intend to
vote all proxies received by them cumulatively to assure the election of as
many of the nominees listed below as possible. If this situation occurs, the
proxy holders will determine the distribution of votes among the nominees. As
of the date of this Proxy Statement, the Board of Directors is not aware of any
nominee who is unable or will decline to serve as a director.
NOMINEES TO BOARD OF DIRECTORS
<TABLE>
<CAPTION>
DIRECTOR AGE AT
OF AMDAHL FEBRUARY 1,
NAME PRINCIPAL OCCUPATION SINCE 1994
- ---- -------------------- --------- -----------
<S> <C> <C> <C>
John C. Lewis........... Chairman of the Board, Amdahl 1977 58
Corporation
E. Joseph Zemke......... President, Chief Executive Officer and 1987 53
Director, Amdahl Corporation
Keizo Fukagawa.......... Managing Director, Fujitsu Limited 1992 57
E. F. Heizer, Jr........ Private Investor and Business 1972 64
Consultant
Kazuto Kojima........... General Manager, Corporate Marketing 1993 51
and Strategy, Fujitsu Limited
R. Stanley Laing........ Real Estate Developer 1984 75
Burton G. Malkiel....... Chemical Bank Chairman's Professor of 1981 61
Economics, Princeton University
George R. Packard....... Professor and Director, Reischauer 1987 61
Center for East Asian Studies, School
of Advanced International Studies,
The Johns Hopkins University
Walter B. Reinhold...... Chairman of the Board, Varco 1981 69
International, Inc.
Takamitsu Tsuchimoto.... Director of the Board and General 1993 53
Manager, Technology Development
Group, Fujitsu Limited
J. Sidney Webb.......... Chairman of the Board, The Titan 1984 74
Corporation
</TABLE>
3
<PAGE>
Mr. Lewis was elected Chairman of the Board in 1987. He was President of
Amdahl from 1977, when he joined the Company, until 1987. He was the Company's
Chief Executive Officer from 1983 until 1992. He is a director of Cypress
Semiconductor, SynOptics Communications, Inc. and Vitesse Semiconductor
Corporation.
Mr. Zemke was elected President in 1987 and has been the Company's Chief
Executive Officer since 1992. He was the Chief Operating Officer from 1985,
when he joined the Company, until 1992.
Mr. Fukagawa has been with Fujitsu since 1960. After having held managerial
positions in a variety of departments and divisions, he held the office of
General Manager of the Accounting Division from 1986 to 1989, and was elected
as a Director of the Board of Fujitsu Limited in 1989. He was appointed as a
Managing Director of Fujitsu Limited in 1992 and is now responsible for all
Corporate Affairs.
Mr. Heizer is engaged in the formation and development of businesses from
both a management and investment standpoint. He was Chairman of the Board of
Directors and Chief Executive Officer of Heizer Corporation, a business
development firm, from 1969 until 1985. Mr. Heizer is currently a director of
Chesapeake Energy Corporation and Material Sciences Corporation. He is also a
Director of a number of private companies. He has been Chairman of Amdahl's
Audit Committee since 1974.
Mr. Kojima has been with Fujitsu since 1965. He has held multiple managerial
positions in various departments and divisions. In 1993 he was appointed as
General Manager of Corporate Marketing and Strategy.
Mr. Laing has been in real estate development since 1972 and is a consultant
to Fujitsu and certain of its United States subsidiaries. From 1947 to 1972 he
was employed by NCR Corporation in a variety of management positions. Mr. Laing
was President and a director of NCR from 1964 to 1972.
Dr. Malkiel has been Chemical Bank Chairman's Professor of Economics at
Princeton University since 1988. Dr. Malkiel was the Dean of the Yale School of
Organization and Management from 1981 through 1987. Dr. Malkiel served on
President Ford's Council of Economic Advisors. He is currently a director of
Baker Fentress Inc., the Jeffrey Co., Prudential Insurance Company, Southern
New England Telecommunications Co. and the Vanguard Group of Investment
Companies.
Dr. Packard is Professor and Director of the Reischauer Center for East Asian
Studies of the School of Advanced International Studies at the John Hopkins
University. He was the Dean of the School from 1979 through 1993. Prior to
entering academe, he was a journalist with Newsweek Magazine (1965-1967), the
-----------------
Philadelphia Bulletin (1967-1968), and editor of the Philadelphia Evening and
- --------------------- --------------------
Sunday Bulletin (1968-1975). From 1976 to 1979 he was Deputy Director of the
- ---------------
Woodrow Wilson International Center in Washington, D.C. He is currently a
director of the Mercantile-Safe Deposit and Trust Funds, the Offitbank in New
York City and Interlott Corporation.
Mr. Reinhold has been Chairman since 1976, and was Chief Executive Officer
from 1976 to 1991, of Varco International, Inc., a manufacturer of oil tools,
drilling systems, flow-control devices and electronic instrumentation systems
for the oil and gas well drilling and production industry. He currently is a
member of the Board of Directors of Revco D.S., Inc. and The Petroleum
Equipment Suppliers Association. Mr. Reinhold was Chairman of Amdahl's
Compensation and Benefit Plan Administration Committees from 1983 through 1992.
He was appointed Chairman of the new Compensation Committee and Human Resources
Advisory Committee in January 1993.
Mr. Tsuchimoto has been with Fujitsu since 1963. He has held managerial
positions in a variety of departments and divisions. He was appointed General
Manager of Technology Development Group in 1990. In addition, he has been
serving as Director of the Board of Fujitsu Limited since 1992.
4
<PAGE>
Mr. Webb has been Chairman of the Board since 1984 of The Titan Corporation,
a supplier of high technology products to industrial companies and the defense
industry, and an independent consultant since his retirement in 1982 from TRW-
Fujitsu Co., a joint venture between Fujitsu and TRW, Inc. From 1980 to 1982,
Mr. Webb was President of TRW-Fujitsu Co. In addition, he was a director of TRW
from 1966 until 1981. Mr. Webb is a director of Avnet Inc., Brooktree Corp.,
EIP Microwave, Inc. and National TechTeam, Inc.
Eugene R. White, age 62, is currently a member of the Board of Directors. Mr.
White has been Vice Chairman of the Board since 1987. He served as Chairman of
the Board from 1979 to 1987, and Chief Executive Officer from 1979 to 1983.
From 1977 until 1979, Mr. White was Deputy Chairman of the Board and was
Amdahl's President from 1974 to 1977. He has been a consultant to Fujitsu since
1991, and he is a director of St. Ives Laboratories Corporation and Varco
International, Inc.
See "Principal Stockholders" and "Compensation Committee Interlocks and
Insider Participation" for additional information regarding Fujitsu.
SECURITY OWNERSHIP
The following table sets forth the beneficial ownership of common stock of
Amdahl as of March 7, 1994 by each director and nominee, the chief executive
officer and the five other most highly compensated executive officers, and all
directors and executive officers as a group.
<TABLE>
<CAPTION>
NUMBER OF APPROXIMATE
NAME SHARES(1) PERCENT OWNED
---- --------- -------------
<S> <C> <C>
John C. Lewis.................................. 357,723 *
E. Joseph Zemke................................ 356,304 *
Keizo Fukagawa(2).............................. 2,500 *
E. F. Heizer, Jr............................... 16,000 *
Kazuto Kojima(2)............................... 0 *
R. Stanley Laing............................... 10,000 *
Burton G. Malkiel.............................. 16,000(3) *
George R. Packard.............................. 8,000 *
Walter B. Reinhold............................. 77,305 *
Takamitsu Tsuchimoto(2)........................ 0 *
J. Sidney Webb................................. 12,000 *
Eugene R. White................................ 402,153 *
William F. O'Connell, Jr....................... 126,300 *
Anthony M. Pozos............................... 110,045 *
David L. Anderson.............................. 59,222 *
Joseph J. Francesconi(4)....................... 158,000 *
All current directors and executive officers as
a group (24 persons).......................... 1,990,202 1.73%
</TABLE>
- --------
*Less than 1 percent
(1) These shares are subject to the sole voting and investment power of the
indicated person(s). The figures include shares that could be purchased by
exercise of options within 60 days of March 7, 1994 and held by: Mr. Lewis,
247,200 shares; Mr. Zemke, 210,000 shares; Mr. Fukagawa, 2,500 shares; Mr.
Heizer, 16,000 shares; Mr. Laing, 8,000 shares; Dr. Malkiel, 8,000 shares;
Dr. Packard, 8,000 shares; Mr. Reinhold, 8,000 shares; Mr. Webb, 8,000
shares; Mr. White, 196,000 shares; Mr. O'Connell, 121,000 shares; Mr.
Pozos, 72,680 shares; Mr. Anderson, 38,200 shares; Mr. Francesconi, 136,400
shares; and all current directors and executive officers as a group,
1,172,336 shares.
(2) See "Principal Stockholders" for information regarding securities held by
Fujitsu.
(3) Includes 8,000 shares held by the Jonathan P. Malkiel Trust of which Dr.
Malkiel is a trustee, with sole voting and investment power.
(4) Served as an executive officer during the fiscal year but terminated
employment before year end.
5
<PAGE>
BOARD MEETINGS AND COMMITTEES
The Board of Directors held six meetings during 1993, including two telephone
conference meetings.
The Board has an Audit Committee, a Compensation Committee and a Human
Resources Advisory Committee.
The Audit Committee is primarily responsible for approving the services
performed by the Company's independent public accountants and for reviewing and
evaluating the Company's accounting principles and reporting practices and its
system of internal accounting controls. This committee, currently consisting of
Messrs. Fukagawa, Heizer and Laing and Dr. Malkiel, held four meetings during
1993.
The Compensation Committee is responsible for reviewing and approving the
Company's compensation policies and administering the Company's employee
benefit programs. It held five meetings during 1993, and currently consists of
Messrs. Reinhold, Kojima and Webb and Dr. Packard. Mr. Kojima was appointed to
the Compensation Committee on August 5, 1993. He missed the meeting held in
Sunnyvale on October 27, 1993 and the telephone conference call meeting of
December 17, 1993, both held subsequent to his appointment.
In January 1993, the Board established the Human Resources Advisory Committee
("HRAC"). The charter of this Committee is to serve as a forum for discussion
of human resource strategy for the Company and evaluation of the Company from
an employee perspective, planning senior level succession, consideration and
assessment of human resource management practices, and consideration of
significant new personnel programs. The Human Resources Advisory Committee will
periodically present its findings and recommendations to the Board or to the
Compensation Committee for consideration and implementation. This committee,
currently consisting of Messrs. Kojima, Reinhold, Lewis, Webb and White and Dr.
Packard, held four meetings during 1993. Mr. Kojima was appointed to the HRAC
on August 5, 1993 and he missed the one meeting held subsequent to his
appointment.
DIRECTOR COMPENSATION
Each non-employee director receives an annual fee of $20,000 and $1,000 for
full-day and $500 for half-day attendance at Board and committee meetings, and
is reimbursed for expenses incurred in connection with these meetings. Of these
fees, $70,000 earned in 1993 by Messrs. Tanaka and Yoshioka, who both resigned
in August 1993, and Messrs. Fukagawa, Kojima and Tsuchimoto was paid to
Fujitsu. These amounts are not included in the payments to Fujitsu discussed
under "Compensation Committee Interlocks and Insider Participation". Directors
may defer all or part of their compensation to selected later years to be paid
with interest at a specified formula rate, on a lump sum or annual installment
basis.
Under the Company's Stock Option Plan (1974), any person who first becomes a
non-employee member of the Board receives an initial automatic option grant for
5,000 shares of the Company's common stock, and thereafter receives an
automatic option grant for 1,000 shares of the Company's common stock on the
date of each Annual Stockholders Meeting at which he or she is re-elected as a
non-employee Board member. Accordingly, each non-employee Board member re-
elected at the 1993 Annual Stockholders Meeting received a 1,000-share option
grant on May 7, 1993, with an exercise price of $5.06 per share (the fair
market value of the stock on the grant date). Each option is exercisable in two
equal annual installments over the optionee's period of continued Board
service, measured from the grant date, but the option will immediately become
exercisable should the Company be acquired by merger or asset sale. The option
will have a maximum term of ten years measured from the grant date, subject to
earlier termination upon the optionee's cessation of Board
6
<PAGE>
service. Upon the successful completion of a hostile tender offer for 25
percent or more of the Company's outstanding common stock, each option may be
surrendered to the Company for a cash distribution based upon the tender-offer
price of the shares subject to the surrendered option, whether or not the
option is otherwise at the time exercisable for those shares.
Under the Company's 1994 Stock Incentive Plan (the "1994 Plan"), adopted by
the Board of Directors on January 27, 1994, and subject to stockholder approval
at the May 5, 1994 Annual Meeting, the grant program described above will be
replaced with the 5,000 share option grants to be made under the 1994 Plan
Automatic Grant Program. Non-employee Board members will also be eligible to
participate in the 1994 Plan Stock Fee Program. See "APPROVAL OF AMDAHL
CORPORATION 1994 STOCK INCENTIVE PLAN" for more details on these programs.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Reinhold, Kojima and Webb and Dr. Packard, all non-employee Directors
of the Board, comprise the Compensation Committee.
Mr. White, an executive officer of the Company, serves as a member of the
Board of Directors of Varco International, Inc. ("Varco"), but is not a member
of the Compensation Committee of the Board of Varco. Mr. Reinhold, Chairman of
the Board of Varco, serves as a Director of the Board and as a member of the
Compensation Committee of Amdahl.
Mr. Kojima is the General Manager of Corporate Marketing and Strategy of
Fujitsu. Mr. Tanaka, who resigned as a Director of the Board and a member of
the Compensation Committee in August 1993, is Managing Director of the Board of
Fujitsu and Chairman of the Board of Fujitsu America, Inc.
Amdahl purchases both components and subassemblies for its computer systems
as well as certain other equipment and supplies from Fujitsu. The aggregate
amount of these purchases during 1993 was approximately $435 million. The
Company has been advised by Fujitsu that because of the difficulty of
allocating expenditures for research and development, creation of new
manufacturing facilities, and general and administrative costs for the
production of the computer subassemblies and other equipment sold by Fujitsu to
the Company, it is difficult to determine the relative profitability of such
sales. However, subject to the foregoing uncertainties, Fujitsu believes that
the profitability of these sales is approximately equivalent to the
profitability of sales by Fujitsu of computer products to customers in which it
has no ownership interest. Although some of the materials and other equipment
are custom manufactured by Fujitsu for Amdahl and are not available from third
parties, Amdahl believes that the prices it pays Fujitsu for these products are
comparable to those it would pay to an unaffiliated supplier.
Amdahl has committed to purchase a minimum number of certain components,
subassemblies and other equipment from Fujitsu. On December 31, 1993 the
aggregate remaining commitment for these materials and equipment was
approximately $34 million. Delivery of these materials and other equipment, and
the related payments, is generally expected to occur during 1994. In addition,
Fujitsu supplies Amdahl with services and material related to the Company's
development of current and future products, including the 5995 Series of
processors. The Company charged engineering and development expense for
approximately $9 million in 1993 relating to these efforts.
Amdahl has also entered into agreements with Fujitsu or certain of its
subsidiaries for the distribution of Amdahl computer systems in Brazil, Japan,
Malaysia, South Korea and Spain. In 1993 Amdahl recognized approximately $28
million in revenue from equipment sales to Fujitsu.
In 1993 Amdahl and Fujitsu entered into a preliminary agreement pursuant to
which Amdahl and Fujitsu agreed to participate in the joint development of the
Company's next generation of IBM compatible systems. Under the agreement,
Fujitsu will undertake primary responsibility for the design and manufacture of
these systems.
7
<PAGE>
In January 1994 the Company and Fujitsu entered into an agreement under which
Fujitsu would provide loans to the Company in an aggregate amount not to exceed
$100,000,000.
COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
The members of the Board of Directors, the executive officers of the Company
and persons who hold more than 10 percent of the Company's outstanding common
stock are subject to the reporting requirements of Section 16(a) of the
Securities Exchange Act of 1934, which require them to file reports with
respect to their ownership of and transactions in the Company's securities.
Officers, directors and greater than 10 percent stockholders are required to
furnish the Company with copies of all reports they file.
Based upon the copies of those reports furnished to the Company, and written
representations that no other reports were required to be filed, the Company
believes that all reporting requirements under Section 16(a) for the fiscal
year ended December 31, 1993 were met in a timely manner by its executive
officers, Board members and greater than 10 percent stockholders, with the
following exceptions: (i) Fujitsu made one late filing of a Form 4 relating to
one transaction; and (ii) David B. Wright, Vice President and General Manager
of the Company had a discrepancy in his ownership number on his Form 3, and one
transaction reportable on his Form 5 was omitted, both of which have
subsequently been amended.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Company and its subsidiaries, to or on
behalf of the Company's Chief Executive Officer, each of the four other most
highly compensated executive officers of the Company at the end of the fiscal
year, and one additional highly compensated individual who served as an
executive officer during the fiscal year but terminated employment before year
end (hereafter referred to as the named executive officers) for the last three
fiscal years ended December 27, 1991, December 25, 1992 and December 31, 1993:
8
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------- -----------------------
RESTRICTED
NAME AND STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS($)(1) OPTIONS(#) COMPENSATION($)(2)
------------------ ---- --------- -------- ------------ ---------- ------------------
<S> <C> <C> <C> <C> <C> <C>
E. Joseph Zemke 1993 $616,366 $ 0 $ 0 156,000 $ 3,538
Chief Executive Officer 1992 $521,172 $ 0 $175,750 78,000 $ 3,433
1991 $472,136 $ 0 $ 0 18,000
John C. Lewis 1993 $660,036 $ 0 $ 0 148,000 $ 3,538
Chairman of the Board 1992 $641,192 $ 0 $ 0 109,000 $ 3,433
1991 $623,308 $ 0 $300,262 30,000
William F. O'Connell, Jr. 1993 $299,790 $30,000 $ 0 72,500 $ 3,538
Sr. Vice President 1992 $288,192 $ 0 $ 0 56,000 $ 3,433
1991 $282,894 $ 0 $ 0 12,000
Anthony M. Pozos 1993 $253,186 $65,000 $ 62,400 86,500 $ 3,538
Sr. Vice President 1992 $239,692 $ 0 $ 0 103,200 $ 3,433
1991 $233,074 $ 0 $ 0 12,000
David L. Anderson 1993 $252,794 $65,000 $ 62,400 75,500 $ 0
Vice President & 1992 $189,120 $ 0 $ 0 50,000 $ 0
General Manager 1991 $176,712 $ 0 $ 0 6,000
Joseph J. Francesconi 1993 $333,600 $ 0 $ 0 36,000 $1,391,001(3)
Executive Vice President 1992 $277,868 $ 0 $ 79,500 56,000 $ 3,432
1991 $263,082 $ 0 $140,750 12,000
</TABLE>
- --------
(1) Restricted Stock Plan shares, subject to the Company's repurchase rights,
were held by the following named executive officers with an aggregate value
(closing price less consideration paid) as of December 31, 1993: Mr. Zemke,
18,000 shares, $107,100; Mr. Pozos, 12,000 shares, $71,400; Mr. Anderson,
12,000 shares, $71,400; Mr. Francesconi, 14,000 shares, $83,300. Mr. Zemke
was awarded 10,000 shares in 1992, and 25,000 shares in 1990, which awards
vest in 20 percent increments over five years from the award date. Mr.
Lewis was awarded 21,333 shares in 1991, which vested in 1992. Mr. Pozos
and Mr. Anderson were each awarded 12,000 shares in 1993, which vest in 33
percent increments over three years from the award date. Mr. Francesconi
was awarded 10,000 shares in 1992 and 10,000 shares in 1991, which awards
vest in 20 percent increments over five years from the award date.
Restricted stock is awarded under the Company's Restricted Stock Plan.
Restricted stock not yet vested to the individual at the time of his
termination of employment will be forfeited. Shares issued pursuant to the
Restricted Stock Plan and subject to the Company's repurchase rights have
the same dividend rights as the common stock held by all other
stockholders.
(2) Amounts reported as All Other Compensation represent Company matching
contributions to the Employee Savings Plan.
(3) Includes cash payments to which Mr. Francesconi is entitled pursuant to the
separation agreement entered into in connection with his resignation as an
executive officer on July 1, 1993. The cash payments consist of the
following items: salary continuation payments for the 1994 calendar year
totaling $333,944, payouts in the 1994 calendar year of approximately
$77,000 under the short-term account maintained for him under the Company's
Executive Incentive Performance Plan, quarterly payouts through the end of
the 1994 calendar year of approximately $879,311 in the aggregate from his
long-term account under the Executive Incentive Performance Plan and up to
$5,000 reimbursement of financial planning expenses. Also included in the
total is $2,692 in Company matching contributions to the Employee Savings
Plan in 1993 and payment of $93,054 for accrued vacation.
9
<PAGE>
STOCK OPTIONS
The following table contains information concerning the grant of stock
options in fiscal 1993 to the named executive officers:
OPTION GRANTS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- ----------------------------------------------------------- -------------------
% OF
TOTAL
OPTIONS
NUMBER OF GRANTED
SECURITIES TO EXERCISE
UNDERLYING EMPLOYEES OR BASE
OPTIONS IN FISCAL PRICE EXPIRATION 5% 10%
NAME GRANTED(2) YEAR ($/SH)(3) DATE ($)(4) ($)(4)
---- ---------- --------- --------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
E. Joseph Zemke 24,000 .24% $8.1875 01/27/03 $123,578 $313,170
32,000 .33% $4.8125 05/05/03 $ 96,850 $245,436
100,000 1.03% $4.71875 10/26/03 $296,760 $752,047
------- -----
156,000 1.60%
John C. Lewis 24,000 .25% $8.1875 01/27/03 $123,578 $313,170
40,000 .41% $4.8125 05/05/03 $121,062 $306,795
84,000 .86% $4.71875 10/26/03 $249,278 $631,720
------- -----
148,000 1.52%
William F.
O'Connell, Jr. 12,000 .12% $8.1875 01/27/03 $ 61,789 $156,585
18,500 .19% $4.8125 05/05/03 $ 55,991 $141,893
42,000 .43% $4.71875 10/26/03 $124,639 $315,860
------- -----
72,500 .74%
Anthony M. Pozos 12,000 .12% $8.1875 01/27/03 $ 61,789 $156,585
18,500 .19% $4.8125 05/05/03 $ 55,991 $141,893
56,000 .58% $4.71875 10/26/03 $166,185 $421,146
------- -----
86,500 .89%
David L. Anderson 8,000 .08% $8.1875 01/27/93 $ 41,193 $104,390
11,500 .12% $4.8125 05/05/03 $ 34,805 $ 88,204
56,000 .58% $4.71875 10/26/03 $166,185 $421,146
------- -----
75,500 .78%
Joseph J.
Francesconi 16,000 .16% $8.1875 01/27/03 $ 82,385 $208,780
20,000 .21% $4.8125 05/05/03 $ 60,531 $153,398
------- -----
36,000 .37%
</TABLE>
- --------
(1) No stock appreciation rights have been granted to date.
(2) The options which expire on January 27, 2003 and October 26, 2003 are
exercisable in a series of five equal and successive annual installments
over the optionee's period of service with the Company, measured from the
grant date. The options which expire on May 5, 2003 are exercisable for 40
percent of the shares upon the optionee's completion of one year of service
with the Company, measured from the grant date, and are exercisable for the
balance of the shares in three equal and successive annual installments
upon the optionee's completion of each additional year of service. Upon an
acquisition of the Company by a merger or asset sale, each option becomes
immediately and fully exercisable. Each option has a maximum term of 10
years, subject to earlier termination in the event of the optionee's
cessation of service with the Company. The Compensation Committee has the
discretion to accelerate any option in whole or in part in connection with
the optionee's cessation of service. The Committee may also grant
10
<PAGE>
stock appreciation rights with respect to one or more outstanding options.
These rights will allow the holders to elect to exercise the option or to
surrender it in exchange for cash or common stock equal to the fair market
value of the shares subject to the surrendered option less the option
exercise price payable for those shares. To date no stock appreciation
rights have been granted.
(3) The exercise price may be paid in cash, in shares of common stock valued at
fair market value on the exercise date or through a cashless exercise
involving a same-day sale of the purchased shares. The Company may also
finance an option exercise by loaning the optionee sufficient funds to pay
the exercise price for the purchased shares and the federal and state
income tax liability incurred in connection with the exercise. The optionee
may be permitted, subject to the approval of the Compensation Committee, to
apply a portion of the shares purchased under the option (or to deliver
existing shares of common stock) in satisfaction of such tax liability. The
Compensation Committee also has the discretion to reprice outstanding
options by canceling them and granting replacement options with an exercise
price equal to the fair market value of the option shares on the regrant
date.
(4) These columns reflect the potential realizable value of each grant assuming
the market value of the Company's stock appreciates at 5 percent and 10
percent annually from the date of grant over the term of the option. There
is no assurance that the actual stock price appreciation over the 10-year
option term will be at the assumed 5 percent or 10 percent levels or at any
other level. Unless the market price of the stock does in fact appreciate
over the option term, no value will be realized from the option grants.
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to the named executive
officers concerning the exercise of options during the last fiscal year and
unexercised options held as of the end of the fiscal year:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END AT FY-END ($)(2)
ACQUIRED ON VALUE ---------------------- --------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------ ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
E. Joseph Zemke......... 0 0 181,600/235,200 $10,150/$166,125
John C. Lewis........... 0 0 232,000/260,200 $23,850/$155,125
William F. O'Connell,
Jr..................... 0 0 104,000/122,900 $4,500/ $75,781
Anthony M. Pozos........ 0 0 62,880/141,220 $11,700/ $93,719
David L. Anderson....... 0 0 32,000/ 99,500 $0/ $85,406
Joseph J. Francesconi... 0 0 118,000/ 86,400 $16,650/ $23,750
</TABLE>
- --------
(1)No stock appreciation rights have been granted to date.
(2)Closing market price at fiscal year end ($6.00) less exercise price.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AGREEMENTS
The Company currently has no employment contracts with any of its executive
officers. However, the Company has implemented the Executive Incentive
Performance Plan, which provides benefits upon termination of employment. Under
this plan executive officers and other key employees may receive incentive
awards each year based upon the Company's progress in achieving long-term
business objectives. The aggregate annual award for all plan participants may
not exceed 2 percent of the Company's consolidated pre-tax earnings for the
year. The annual award is allocated to two separate components in effect under
the plan: a short-term incentive program and a long-term income accumulation
program. Allocations to the short-term program are based upon each
participant's compensation (salary and bonus) for the year, with vesting and
payout to occur generally over four years beginning one year after the award
date.
11
<PAGE>
The long-term income accumulation program is designed to create a source of
retirement income for each participant in the plan. The Compensation Committee
determines the dollar amount of the retirement income target applicable to each
participant and periodically adjusts that target as circumstances change. The
long-term component of each annual award to the plan is allocated to each
participant's long-term account in proportion to his or her share of the
aggregate retirement income targets in effect for all participants at that
time. Vesting in this account (including the individual retirement income
target) will begin upon the latest to occur of (i) the participant's completion
of ten years of service with the Company, (ii) the attainment of age 55 or
(iii) the attainment of combined age and years of service totalling 70. At that
time, the participant will initially vest in the portion of the long-term
account equal to his or her years of service multiplied by 5 percent and will
vest in an additional 5 percent upon completion of each additional year of
service thereafter. No payments will be made from the participant's account
until termination of service, and the payment at that time may be made either
in a lump sum or in annual installments in accordance with the participant's
prior election. Special vesting provisions will apply in the event the
participant's service with the Company terminates by reason of death or
disability. In addition, the participant may receive the entire balance
credited to his or her long-term account upon termination of service in the
event that such balance is less than the portion of the retirement income
target in which the participant is vested at that time.
No trust fund or other segregated account has been established as an actual
funding vehicle for the payment of the participant's long-term account, and the
account is simply a record entry upon the Company's books. Accordingly, each
participant is a general creditor of the Company with respect to his or her
unpaid account balance.
The Company entered into a severance agreement with Mr. Francesconi at the
time of his resignation as an executive officer on July 1, 1993. Under this
agreement, Mr. Francesconi will be provided with the following benefits: (i)
salary continuation payments of $6,422 per week through December 31, 1994, (ii)
continued coverage under the Company's life insurance, long-term disability and
medical and dental plans at the Company's expense through December 31, 1994,
(iii) payout of his short-term account under the Executive Incentive
Performance Plan, with approximately $49,000 to be paid in January 1994 and the
remaining balance (approximately $28,000) to be paid on December 31, 1994, (iv)
quarterly payments from his long-term account under the Executive Incentive
Performance Plan commencing September 30, 1993 and continuing through December
31, 1994 in the aggregate amount of approximately $879,311, (v) continued
vesting of his outstanding stock options and restricted stock holdings through
January 31, 1996 and the extension of the exercise period of his outstanding
options through April 30, 1996, (vi) reimbursement of up to $5,000 for
financial planning expenses, and (vii) payment for accrued vacation. As part of
the severance arrangement, Mr. Francesconi has agreed not to engage in any
competitive activities with the Company through January 31, 1996.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
The Compensation Committee of the Board of Directors is responsible for the
administration of the compensation programs in effect for the Company's
executive officers. These programs have been designed to ensure that the
compensation paid to the executive officers is substantially linked to both
Company and individual performance. Accordingly, a substantial portion of the
compensation paid to each executive officer is comprised of variable components
based upon individual achievement and Company performance, such as pre-tax
profit, attainment of predetermined goals and the improvement in the market
price of the Company's stock.
The Compensation Committee met 5 times during 1993 and initiated a detailed
study of executive compensation for Amdahl. The Committee felt that a study,
led by an independent consultant of their choice, was appropriate given the
significant changes taking place in the market place and the proposed
reorganization within Amdahl.
12
<PAGE>
The study of executive compensation in the market place confirmed that
competing in the traditional IBM compatible mainframe market requires
compensation practices that are competitive with other major mainframe
companies. As Amdahl establishes new business lines, it will also have to
develop compensation practices that make it competitive with smaller,
entrepreneurial companies in the software, professional services and other non-
mainframe businesses with which it will be competing for talented employees.
The study will conclude in 1994.
COMPENSATION PRINCIPLES
The design and implementation of all executive compensation programs are
based on a series of guiding principles derived from Company values, business
strategy and management requirements. These principles may be summarized as
follows:
. Attract and retain key executives essential to the long-term success of
the Company.
. Reward executives for long-term corporate success by facilitating their
ability to acquire an ownership interest in the Company.
. Provide direct linkage between the compensation payable to executives and
the Company's attainment of annual and long-term financial goals and
targets.
. Emphasize reward for performance at the individual, team and corporate
level.
No changes have been made to executive compensation programs as a result of
the $1 million tax deduction limitation provisions of The Omnibus Budget
Reconciliation Act of 1993. Whether any future changes are appropriate will be
determined as part of the executive compensation study described above.
BASE SALARY
The base salary for each executive officer is determined on the basis of
personal performance, the relative importance of the functions he or she
performs, the scope of his or her ongoing responsibilities and the salary
levels in effect for comparable positions with the Company's principal
competitors. The weight given to each of these factors may vary from individual
to individual. In general, base salary is designed primarily to be competitive
within the relevant market, and the salary levels of the Company's executive
officers range from the 50th percentile to the 75th percentile for the
companies taken into account. The stockholder returns for these companies are
included within the Standard & Poor's Computer Systems Index which has been
chosen as the Company's industry index for purposes of the stock price
performance graph which appears on page 17 of the Proxy Statement.
Each officer's base salary is reviewed annually to ensure appropriateness,
and increases to base salary are made to reflect competitive increases awarded
to executives in comparable companies. Company performance does not play a
significant role in the determination of base salary.
ANNUAL BONUS
Annual bonuses for the 1993 fiscal year were to be earned by a structured
formula that considered the following factors:
. Company Financial Performance
Each year the Board approves revenue and pre-tax profit goals for the
Company. The Company's performance against these goals is assessed by
the Committee at the close of each year and measured against an
established scale to determine the relevant bonus. The scale is
nonlinear and provides the maximum award for above target performance
while reducing the award for performance below the target. This element
of bonus compensation can range from zero, if company performance is
55% of target or less, to 40 percent of base salary if performance is
at least 145% of target. Because the Company failed to achieve the
performance goals established for 1993, no bonuses based upon Company
financial performance were awarded to executive officers for 1993.
13
<PAGE>
. Company Qualitative Performance
Upon the completion of each fiscal year, the Committee reviews the
major factors that affected the Company's business during the year.
Factors considered include the Company's response to competitive
issues, the ability demonstrated by management to deal with adverse
economic situations, the innovation shown in the management of
unanticipated events and the preparation made for the future success of
the Company. The Committee may then grant an award for this measure of
Company performance, which can range from zero to 15 percent of base
salary. Company qualitative performance was a factor used in awarding
bonuses to executive officers for 1993.
. Individual Performance
Each executive officer's personal performance is measured against
goals established for that individual. Leadership, planning, management
and innovation are also considered, and the weight assigned to each of
these factors will vary from individual to individual. Overall
performance is determined and a rating assigned to each executive
officer that may qualify him or her for a bonus determined in
accordance with an established scale. This element of bonus
compensation can range from zero to 15 percent of base salary.
Individual performance was one of the components used in determining
the bonuses awarded for 1993.
. Discretionary Awards
The Committee also has discretion under extraordinary circumstances
to award bonuses from zero to 10 percent of base salary. No
discretionary bonuses were awarded for 1993.
The foregoing Company and individual performance factors were the principal,
although not the sole, elements taken into account in determining whether
bonuses were to be awarded for 1993. The Committee may in its discretion apply
entirely different factors, such as different measures of Company or individual
performance, in setting bonus levels for executive officers in future years.
Given the circumstances in 1993, including the need to retain key executives
and the considerable work done to restructure the Company, the Committee
determined that a reduced bonus should be awarded to select individuals.
LONG TERM INCENTIVES
Long-term incentives are provided primarily through annual option grants,
with the select use of supplemental option grants and restricted stock awards,
and participation in an income accumulation program funded out of the Company's
pre-tax profits. These incentives are intended to motivate the executive
officer to improve long-term Company performance. Customarily, option grants
are made with exercise prices equal to the market price of the shares on the
grant date and will be of no value unless the market price of the Company's
outstanding common stock appreciates, thereby aligning a substantial part of
the executive officer's compensation package with the return realized by
stockholders.
. Stock Options
The size of the option grant is designed to create a meaningful
opportunity for stock ownership and is based upon the individual's
current position with the Company, internal comparability with option
grants made to other Company executives and the individual's potential
for future responsibility and promotion over the option term. The
Committee has established certain general guidelines in making option
grants to executive officers in an attempt to target a fixed number of
unvested option shares based upon the individual's position with the
Company and his or her existing holdings of unvested options. However,
the Committee does not adhere strictly to these guidelines and will
occasionally vary the size of the option grant made to each executive
officer as circumstances warrant.
14
<PAGE>
Each grant allows the executive officer to acquire shares of the
Company's common stock at a fixed price per share (traditionally the
market price on the grant date) over a specified period of time (up to
ten years). The option generally vests in equal installments over a
period of five years, contingent upon the executive officer's continued
employment with the Company. Accordingly, the option will provide a
return to the executive officer only if he or she remains employed by
the Company and the market price of the underlying securities
appreciates over the option term.
. Restricted Stock
Grants of restricted stock are not made by reference to formulas or
guidelines but are provided solely at the Committee's discretion. These
grants are usually awarded under limited circumstances, such as the
recognition of a significant contribution made to the Company's
performance, an incentive to achieve future performance objectives or
in connection with a significant promotion. The vesting schedules for
restricted stock awards are tailored to meet the particular purposes of
the awards, unlike the more uniform vesting schedules utilized for
stock option grants.
EXECUTIVE INCENTIVE PERFORMANCE PLAN
The Executive Incentive Performance Plan is designed to retain key executives
and to provide retirement income for them through their participation in an
income accumulation program funded out of the Company's pre-tax profits. The
plan has two separate components: a short-term accumulation program which
provides for vesting and payout in four equal annual installments beginning one
year after the award, and a long-term income accumulation program. This latter
program serves as the vehicle to meet the specific retirement income target
which the Committee has established for the participant, and vesting in this
benefit will occur as the age and years of service requirements of the Plan are
met.
Actual allocations to the two programs will occur only if the Company's
operations are profitable. Because of the Company's performance in 1993, no
amounts were allocated to the plan for that year.
CEO COMPENSATION
In setting the compensation payable to the Chief Executive Officer, Mr. E.
Joseph Zemke, the Compensation Committee's goal is to provide a package which
is competitive with other companies in the industry and which at the same time
ties a significant percentage of his compensation to positive Company
performance and stock price appreciation. In general, the factors utilized in
determining Mr. Zemke's compensation were similar to those applied to the other
executive officers in the manner described in the preceding paragraphs,
although more weight was given to Company performance factors and less to
individual performance factors.
An independent review of CEO compensation was conducted by an individual
compensation consultant during 1993. CEO total compensation practices of 34
high technology companies were reviewed. This reference group includes all of
the companies in the S&P Computer Systems Index (the industry index used for
the stock price performance graph in this proxy).
In establishing Mr. Zemke's base salary, it was the Committee's intent to
provide him with a level of stability and certainty each year, and not to have
this particular component of compensation affected to any significant degree by
Company performance factors. His base salary for the 1993 fiscal year
approximates the 50th percentile of reported base salaries for Chief Executive
Officers in the relevant industry segment. The next component of Mr. Zemke's
compensation package, his annual bonus, was based upon specific corporate goals
such as revenue growth and pre-tax profit and, to a lesser extent, upon other
key aspects of his management of the Company. Based upon the Company's
performance in 1993, Mr. Zemke did not receive any cash bonuses from the plans
described above.
15
<PAGE>
The long-term incentive component of Mr. Zemke's compensation consisted of
three stock option grants made during 1993: an option to purchase 24,000 shares
of the Company's common stock granted on January 28, 1993, an option to
purchase an additional 32,000 shares granted on May 6, 1993, and an option to
purchase 100,000 shares granted on October 27, 1993. The number of shares
included in these grants was based primarily on two factors: (i) recognizing
that during this period of transition Mr. Zemke's major challenge is to return
the company to profitability and improve shareholder return, the Committee
believes that a significant portion of Mr. Zemke's total compensation should be
dependent upon appreciation in the price of company stock, and (ii) the CEO
compensation review described above indicated that Mr. Zemke's stock option
position was quite low in comparison to the reference companies. The shares
granted bring him more in line with the median position of the reference
companies. Past Company performance was not taken into account in making these
awards, but as indicated above, these options will not have any value unless
the market price of the Company's common stock appreciates over the option
term.
Members of the Compensation Committee
Walter B. Reinhold, Chairman
Kazuto Kojima
George R. Packard
J. Sidney Webb
16
<PAGE>
COMPANY STOCK PRICE PERFORMANCE
The following graph shows a five-year comparison of cumulative total
stockholder returns for the Company, the Standard & Poor's 500 Stock Index and
the Standard & Poor's Computer Systems Index from December 31, 1988 through
December 31, 1993:
[GRAPH]
<TABLE>
<CAPTION>
FISCAL YEAR ENDING
-------------------------------------------------
1988 1989 1990 1991 1992 1993
---- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Amdahl................... $100 $ 71.45 $ 70.75 $ 79.42 $ 36.85 $ 30.73
S&P 500.................. $100 $131.68 $127.58 $156.47 $179.20 $197.26
S&P Computer Systems..... $100 $ 83.00 $ 93.00 $ 82.65 $ 60.67 $ 62.97
</TABLE>
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, or the Exchange Act that
might incorporate future filings made by the Company under those statutes,
including this Proxy Statement, the preceding Compensation Committee Report on
Executive Compensation and the preceding stock price performance graph shall
not be incorporated by reference into any such filings; nor shall such report
or graph be incorporated by reference into any future filings made by the
Company under those statutes.
17
<PAGE>
LOANS TO EXECUTIVE OFFICERS
Amdahl makes available loans to certain officers under its Officer Loan
Program for the acquisition of shares under the Company's Stock Option Plans or
for the payment of tax obligations incurred in connection with the acquisition
of these shares or Restricted Stock Plan shares. These loans may not be
outstanding for more than 120 months and bear interest at the applicable
federal rate. Loans are secured by common stock valued between 150 percent and
200 percent of the principal balance, depending on the purpose for which the
loan was made.
In 1993, the Company extended to Mr. Cavalier a loan for $400,000, for the
purpose of assisting Mr. Cavalier with his relocation to Dallas, Texas, the
headquarters of Antares Alliance Group, where Mr. Cavalier is President and
Chief Executive Officer. The note bears interest at 5.25%, compounded semi-
annually. This note will become due and payable within ten years except to the
extent previously forgiven or paid.
There is currently outstanding an interest free loan for $24,000 for business
related purposes to Mr. O'Connell.
The Company has extended loans of more than $60,000 to the following
executive officers:
<TABLE>
<CAPTION>
MAXIMUM AMOUNT AMOUNT
LOANED SINCE OUTSTANDING ON
NAME DECEMBER 25, 1992 MARCH 7, 1994
---- ----------------- --------------
<S> <C> <C>
John C. Cavalier............................... $411,691.71 $411,691.71
Orval J. Nutt.................................. $122,898.62 $122,898.62
William F. O'Connell, Jr. ..................... $ 77,907.71 $ 77,907.71
Anthony M. Pozos............................... $ 69,344.79 $ 69,344.79
Edward F. Thompson............................. $594,829.77 $594,829.77
Eugene R. White................................ $122,358.51 0
</TABLE>
CERTAIN TRANSACTIONS
See "Compensation Committee Interlocks and Insider Participation" for
information regarding Fujitsu.
APPROVAL OF AMDAHL CORPORATION
1994 STOCK INCENTIVE PLAN
The stockholders are being asked to approve the Amdahl Corporation 1994 Stock
Incentive Plan (the "1994 Plan"), pursuant to which up to 14,300,000 shares of
the Company's common stock (the "Common Stock") will be reserved for issuance.
The Board of Directors (the "Board") has authorized the implementation of the
1994 Plan as the successor equity incentive program to the Company's Restricted
Stock Plan and three existing stock option programs: the Stock Option Plan
(1971), the Stock Option Plan (1974) and the Non-Qualified Stock Option Plan
(1982). The Restricted Stock Plan and the three stock option plans will be
collectively referred to in this summary as the "Predecessor Plans." By
consolidating all outstanding options and awards into the 1994 Plan and
eliminating the Predecessor Plans, the Company will save administrative and
legal costs associated with maintaining four separate stock incentive programs.
18
<PAGE>
The 1994 Plan will become effective upon approval by the stockholders. If the
1994 Plan is approved, all outstanding options under the Predecessor Plans and
all unvested share issuances thereunder will be incorporated into the 1994
Plan. The Predecessor Plans will thereupon terminate, and no further option
grants or share issuances will be made under the Predecessor Plans. However,
all such options and share issuances will continue to be governed by the terms
and conditions of the instruments evidencing those grants and issuances.
The following is a summary of the principal features of the 1994 Plan. The
summary, however, does not purport to be a complete description of all the
provisions of the 1994 Plan. Any stockholder who wishes to obtain a copy of the
actual plan document may do so by written request to the Corporate Secretary at
the Company's principal executive offices in Sunnyvale, California.
EQUITY INCENTIVE PROGRAMS
The 1994 Plan contains five separate equity incentive programs: (i) a
Discretionary Grant Program, under which key employees and consultants may be
granted either stock options to purchase shares of Common Stock or stock
appreciation rights exercisable for cash or shares of Common Stock, (ii) an
Automatic Grant Program, under which option grants will be made at specified
intervals to the non-employee Board members, (iii) a Salary Reduction Grant
Program, under which key employees may elect to have a portion of their base
salary reduced each year in return for options to purchase shares of Common
Stock at a discount from current fair market value equal to the amount of their
salary reduction, (iv) a Stock Fee Program under which the non-employee Board
members may elect to apply all or a portion of their annual retainer fee to the
acquisition of shares of Common Stock and (v) a Stock Issuance Program, under
which eligible individuals may be issued shares of Common Stock directly,
through the immediate purchase of the shares, or as a bonus tied to the
performance of services or the Company's attainment of financial milestones, or
pursuant to the individual's election to receive such shares in lieu of base
salary.
Options granted under the Discretionary Grant Program may be either incentive
stock options designed to meet the requirements of Section 422 of the Internal
Revenue Code or non-statutory options not intended to satisfy such
requirements. All grants under the Automatic Grant and the Salary Reduction
Grant Programs will be non-statutory options.
SHARE RESERVE
The initial share reserve under the 1994 Plan will consist of (i) the number
of shares of Common Stock which remain available for grant under the
Predecessor Plans at the time the 1994 Plan becomes effective (2,293,728 shares
as of January 1, 1994), (ii) the shares subject to outstanding unexercised
options under the Predecessor Plans at the time the 1994 Plan becomes effective
(10,736,213 as of January 1, 1994), and (iii) an additional increase not to
exceed 1,400,000 shares of Common Stock, for a total initial reserve not to
exceed 14,300,000 shares. The number of shares available for issuance under the
1994 Plan will automatically increase on the first trading day of each calendar
year, beginning with the 1995 calendar year, by an amount equal to 1% of the
shares of Common Stock outstanding on December 31 of the immediately preceding
calendar year; provided, however, that each such 1% annual increase will be
subject to reduction to the extent necessary to assure that the maximum number
of shares of Common Stock available immediately thereafter for future option
grants and share issuances under the 1994 Plan will not exceed 5,000,000
shares, subject to periodic adjustment for certain changes in the Company's
capital structure.
The shares issuable under the 1994 Plan may be drawn from either authorized
but previously unissued shares of Common Stock or from reacquired shares of
Common Stock, including shares purchased by the Company on the open market and
held as treasury shares.
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Should an option expire or terminate for any reason prior to exercise in full
(including options canceled in accordance with the cancellation-regrant
provisions of the 1994 Plan), the shares subject to the portion of the option
not so exercised will be available for subsequent issuance under the 1994 Plan.
Shares subject to any option surrendered in accordance with the stock
appreciation right provisions of the 1994 Plan and all share issuances under
the 1994 Plan, whether or not the shares are subsequently reacquired by the
Company pursuant to its repurchase rights under the 1994 Plan, will reduce on a
share-for-share basis the number of shares of Common Stock available for
subsequent issuance.
After the 1994 Plan becomes effective, in no event will any one individual
participating in the 1994 Plan be granted stock options and receive direct
stock issuances exceeding 2,000,000 shares in the aggregate over the term of
the 1994 Plan, subject to periodic adjustment for certain changes in the
Company's capital structure.
PLAN ADMINISTRATION
The 1994 Plan (other than the Automatic Option Grant and the Stock Fee
Programs) will be administered by the Compensation Committee of the Board. This
committee (the "Plan Administrator") will be comprised of two or more non-
employee Board members appointed by the Board and will have complete discretion
(subject to the express provisions of the 1994 Plan) to authorize stock option
grants and direct stock issuances under the 1994 Plan. However, all grants
under the Automatic Grant and the Stock Fee Programs will be made in strict
compliance with the express provisions of those programs, and no administrative
discretion will be exercised by the Plan Administrator with respect to the
grants made under such programs.
ELIGIBILITY
Officers and other key employees of the Company and its subsidiaries (whether
now existing or subsequently established) and independent consultants and
advisors to the Company and its subsidiaries will be eligible to participate in
the Discretionary Grant and Stock Issuance Programs. Officers and other key
employees will also be eligible to participate in the Salary Reduction Grant
Program. Non-employee members of the Board will only be eligible to participate
in the Automatic Grant and the Stock Fee Programs.
For purposes of all non-statutory option grants and direct stock issuances
under the 1994 Plan, the Company's subsidiaries will include not only the
corporations of which the Company owns, directly or indirectly, at least 50% of
the outstanding capital stock but also any partnership, joint venture or other
entity of which the Company owns, directly or through one or more other
subsidiaries, at least 50% of the outstanding capital or profits interests.
As of March 7, 1994, 14 executive officers and approximately 900 other key
employees were eligible to participate in the 1994 Plan, and 9 non-employee
Board members were eligible to participate in the Automatic Grant and the Stock
Fee Programs.
VALUATION
The fair market value per share of Common Stock on any relevant date under
the 1994 Plan will be the mean between the lowest and highest selling prices
per share on that date on the principal exchange on which the Common Stock is
then listed or admitted to trading, as the prices are officially quoted by the
composite tape of transactions on the exchange. If there are no reported sales
for such date, then the mean of the lowest and highest selling prices for the
last previous date for which such quotations exist will determine the fair
market value. On March 7, 1994, the fair market value per share of Common Stock
was $5.6875.
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<PAGE>
DISCRETIONARY GRANT PROGRAM
The principal features of the Discretionary Option Grant Program may be
summarized as follows:
The exercise price per share for incentive stock options will not be less
than 100% of the fair market value per share of Common Stock on the grant date.
For non-statutory options, the exercise price per share may be less than, equal
to or greater than such fair market value, as the Plan Administrator deems
appropriate. No incentive stock option will have a maximum term in excess of
ten (10) years measured from the grant date, and no non-statutory stock option
will have a maximum term in excess of fifteen (15) years. The Plan
Administrator will have complete discretion to grant options (i) which are
immediately exercisable for vested shares, (ii) which are immediately
exercisable for unvested shares subject to the Company's repurchase rights or
(iii) which become exercisable in installments for vested shares over the
optionee's period of service.
The exercise price may be paid in cash or in shares of Common Stock valued at
fair market value on the exercise date. The option may also be exercised for
vested shares through a same-day sale program pursuant to which the purchased
shares are to be sold immediately and a portion of the sale proceeds applied to
the payment of the exercise price for those shares on the settlement date.
Any option held by the optionee at the time of cessation of service will
normally not remain exercisable beyond the limited period designated by the
Plan Administrator (not to exceed 36 months) at the time of the option grant.
During that period, the option will generally be exercisable only for the
number of shares of Common Stock in which the optionee is vested at the time of
cessation of service. For purposes of the 1994 Plan, an individual will be
deemed to continue in service for so long as that person performs services for
the Company or any parent or subsidiary corporation, whether as an employee,
non-employee board member or independent consultant or advisor.
The Plan Administrator will have complete discretion to extend the period
following the optionee's cessation of service during which his or her
outstanding options may be exercised and/or to accelerate the exercisability or
vesting of such options in whole or in part. Such discretion may be exercised
at any time while the options remain outstanding, whether before or after the
optionee's actual cessation of service.
Any unvested shares of Common Stock will be subject to repurchase by the
Company, at the original exercise price paid per share, upon the optionee's
cessation of service prior to vesting in those shares. The Plan Administrator
will have complete discretion in establishing the vesting schedule for any such
unvested shares and will have full authority to cancel the Company's
outstanding repurchase rights with respect to those shares in whole or in part
at any time.
The optionee is not to have any stockholder rights with respect to the option
shares until the option is exercised and the exercise price is paid for the
purchased shares. Options are not assignable or transferable other than by will
or by the laws of inheritance following the optionee's death, and the option
may, during the optionee's lifetime, be exercised only by the optionee.
The Plan Administrator is authorized to issue four types of stock
appreciation rights:
. Tandem stock appreciation rights provide the holders with the right to
surrender their options for an appreciation distribution from the Company
equal in amount to the excess of (a) the fair market value of the vested
shares of Common Stock subject to the surrendered option over (b) the
aggregate exercise price payable for such shares. Such appreciation
distribution may, at the discretion of the Plan Administrator, be made in
cash or in shares of Common Stock.
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<PAGE>
. Concurrent stock appreciation rights will automatically be exercised for
an appreciation distribution at the same time the underlying stock option
is exercised for the shares of Common Stock subject to such rights.
Accordingly, the option holder will, upon the option exercise, receive
both the purchased shares of Common Stock and the appreciation
distribution payable on the covered shares. The amount of the
distribution payable per purchased option share will not exceed the fair
market value of that share on the exercise date, less the option exercise
price paid for such share. The distribution may, in the discretion of the
Plan Administrator, be made in cash or in shares of Common Stock.
. Independent stock appreciation rights will be free-standing rights not
tied to any underlying stock option and will entitle the holder upon
exercise to an appreciation distribution from the Company equal to the
fair market value of the shares of Common Stock subject to the exercised
rights, less the base price in effect for those shares. The base price
will be determined by the Plan Administrator at the time the rights are
granted and may be less than, equal to or greater than the fair market
value of the underlying shares of Common Stock on the grant date. The
appreciation distribution payable on the exercised rights may, in the
discretion of the Plan Administrator, be made in cash or in shares of
Common Stock.
. Limited stock appreciation rights may be granted to officers of the
Company subject to the short-swing profit restrictions of the federal
securities laws in connection with their option grants. Any option with
such a limited stock appreciation right in effect for at least six (6)
months may be surrendered to the Company upon the successful completion
of a hostile tender offer for securities possessing more than 50% of the
combined voting power of the Company's outstanding securities. In return
for the surrendered option, the officer will be entitled to a cash
distribution from the Company in an amount per surrendered option share
equal to the excess of (a) the price per share of Common Stock paid in
such hostile tender offer over (b) the exercise price payable for such
share.
The Plan Administrator will have the authority to effect, on one or more
separate occasions, the cancellation of outstanding options under the
Discretionary Grant Program which have exercise prices in excess of the then
current market price of Common Stock and to issue replacement options with an
exercise price based on the market price of Common Stock at the time of the new
grant.
AUTOMATIC GRANT PROGRAM
Under the Automatic Grant Program a 5,000 share option grant will be made to
each individual who first becomes a non-employee Board member, whether through
election by the stockholders or appointment by the Board. In addition, on the
date of each Annual Stockholders Meeting, beginning with the 1994 Annual
Meeting, each individual re-elected to serve as a non-employee Board member
will automatically be granted a stock option to purchase 5,000 shares of Common
Stock, provided such individual has served as a non-employee Board member for
at least twelve months. There will be no limit on the number of such additional
5,000 share option grants any one non-employee Board member may receive over
his or her period of Board service.
Each option granted under the Automatic Grant Program will be subject to the
following terms and conditions:
. The exercise price per share will be equal to 100% of the fair market
value per share of Common Stock on the automatic grant date.
. Each option will have a maximum term of ten years measured from the grant
date.
. Each option will be immediately exercisable for all the option shares,
but any purchased shares will be subject to repurchase by the Company at
the exercise price paid per share.
. Each option will vest (and the Company's repurchase rights will lapse) in
two equal annual installments over the optionee's period of Board
service, with the first such installment to vest upon the completion of
one year of Board service measured from the automatic grant date.
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<PAGE>
. The option will remain exercisable for a six-month period following the
optionee's cessation of Board service for any reason other than death or
permanent disability. Should the optionee die within such six-month
period, then each such option will remain exercisable for a twelve-month
period following such optionee's death and may be exercised by the
personal representative of the optionee's estate or the person to whom
the grant is transferred by the optionee's will or the laws of
inheritance. In no event, however, may the option be exercised after the
expiration date of the option term. During the applicable exercise
period, the option may not be exercised for more than the number of
shares (if any) in which the optionee is vested at the time of cessation
of Board service.
. Should the optionee die or become permanently disabled while serving as a
Board member, then the shares of Common Stock subject to each automatic
option grant held by that individual optionee will immediately vest in
full, and those vested shares may be purchased at any time within the
twelve-month period following the date of the optionee's cessation of
Board service.
. The shares subject to each automatic option grant will immediately vest
upon certain changes in control or ownership of the Company, as discussed
in more detail below.
. Upon the successful completion of a hostile tender offer for securities
possessing more than 50% of the combined voting power of the Company's
outstanding securities, each automatic option grant which has been
outstanding for at least six months may be surrendered to the Company for
a cash distribution per surrendered option share in an amount equal to
the excess of (A) the highest price per share of Common Stock paid in
such hostile tender offer over (B) the exercise price payable for such
share.
. The remaining terms and conditions of the option will in general conform
to the terms described above for option grants made under the
Discretionary Grant Program and will be incorporated into the option
agreement evidencing the automatic grant.
SALARY REDUCTION GRANT PROGRAM
The Plan Administrator will have complete discretion in selecting the
individuals who are to participate in the Salary Reduction Grant Program. As a
condition to such participation, each selected individual must, prior to the
start of the calendar year of participation, file with the Plan Administrator
an irrevocable authorization for the Company to reduce, by a designated
multiple of 1%, his or her base salary for the upcoming calendar year. To the
extent the Plan Administrator approves one or more salary reduction
authorizations, the individuals who filed those authorizations will be granted
options under the Salary Reduction Grant Program.
Each option will be subject to substantially the same terms and conditions
applicable to option grants made under the Discretionary Grant Program, except
for the following differences:
. The exercise price per share will be equal to one-third of the fair
market value per share of Common Stock on the grant date.
. The number of option shares will be determined by dividing the total
dollar amount of the approved reduction in the participant's base salary
by two-thirds of the fair market value per share of Common Stock on the
grant date. As a result, the total spread on the option (the fair market
value of the option shares on the grant date less the aggregate exercise
price payable for those shares) will equal the dollar amount of the
reduction to the optionee's base salary to be in effect for the calendar
year for which the grant is made.
. Provided the optionee continues in service, the option will become
exercisable for 50% of the option shares on the last day of June in the
calendar year for which the grant is made and will become exercisable for
the balance of the option shares in a series of six successive monthly
installments on the last day of each of the next six calendar months.
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<PAGE>
. Should the optionee die or become disabled while in service, the option
will immediately become exercisable for that number of option shares
equal to (A) one-twelfth of the total number of option shares multiplied
by (B) the number of full calendar months which have elapsed from the
first day of the calendar year for which the option is granted and the
last day of the calendar month during which the optionee ceases service.
. Each option will have a term of ten years measured from the grant date,
whether or not the individual continues in service.
STOCK ISSUANCE PROGRAM
Shares may be sold under the Stock Issuance Program at a price per share less
than, equal to or greater than the fair market value, payable in cash or
through a promissory note payable to the Company. Shares may also be issued
solely as a bonus for past services or pursuant to an irrevocable election by
the individual to receive such shares in lieu of a portion of his or her
salary.
Shares issued under the Stock Issuance Program may either be immediately
vested upon issuance or subject to a vesting schedule tied to the participant's
period of service or the Company's attainment of designated performance goals.
Unvested shares will be subject to certain transfer restrictions and to
repurchase or cancellation by the Company upon either the participant's
cessation of service prior to vesting in those shares or the non-attainment of
the applicable performance goals. The Plan Administrator will, however, have
the discretionary authority to accelerate the vesting of any issued shares in
whole or in part at any time. Individuals holding shares under the Stock
Issuance Program will have full stockholder rights with respect to those
shares, whether the shares are vested or unvested.
The issuance of shares of Common Stock pursuant to the participant's election
to receive such shares in lieu of base salary will be subject to the following
guidelines:
. On the first trading day in January of the calendar year for which the
election is effective, the portion of base salary subject to such
election will automatically be applied to the acquisition of Common Stock
by dividing the elected dollar amount by the fair market value per share
on that trading day. The issued shares will be held in escrow by the
Company until the participant vests in those shares.
. Upon completion of each calendar month of service during the year for
which the election is in effect, the participant will vest in one-twelfth
of the issued shares, and the stock certificate for those shares will be
released from escrow.
STOCK FEE PROGRAM
Under the Stock Fee Program, each individual serving as a non-employee Board
member will be eligible to elect to apply all or any portion of the annual
retainer fee otherwise payable in cash to such individual to the acquisition of
unvested shares of Common Stock. The non-employee Board member must make the
stock election prior to the start of the calendar year for which the election
is to be in effect. On the first trading day in January of the calendar year
for which the election is in effect, the portion of the retainer fee subject to
such election will be applied to the acquisition of Common Stock by dividing
the elected dollar amount by the fair market value per share of Common Stock on
that trading day. The issued shares will be held in escrow by the Company until
the individual vests in those shares. The non-employee Board member will have
full stockholder rights, including voting and dividend rights, with respect to
all issued shares held in escrow on his or her behalf.
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Upon completion of each month of Board service during the year for which the
election is in effect, the non-employee Board member will vest in one-twelfth
of the issued shares, and the stock certificate for those shares will be
released from escrow. Immediate vesting in all the issued shares will occur in
the event the individual dies or becomes disabled during his or her period of
Board service or certain changes in control or ownership of the Company are
effected during such period. Should the Board member cease service prior to
vesting in one or more monthly installments of the issued shares, then those
installments will be forfeited, and the individual will not be entitled to any
cash payment from the Company with respect to the forfeited shares.
GENERAL PROVISIONS
OPTION/VESTING ACCELERATION.
Outstanding options under the 1994 Plan will become immediately exercisable,
and unvested shares issued or issuable under the 1994 Plan will be subject to
accelerated vesting, in the event of certain changes in the ownership or
control of the Company. The transactions which will trigger such option/vesting
acceleration are as follows:
Corporate Transaction: any one of the following stockholder-approved
transactions:
. a merger or consolidation in which the Company is not the surviving
entity,
. the sale, transfer or other disposition of substantially all of the
Company's assets in liquidation or dissolution of the Company, or
. any reverse merger in which the Company is the surviving entity but in
which securities possessing more than 50% of the total combined voting
power of the Company's outstanding securities are transferred to persons
other than those who held such securities immediately prior to the
merger.
Change in Control: any of the following events:
. a direct acquisition by any person (or related group of persons) of
securities possessing more than 10% of the total combined voting power of
the Company's outstanding securities,
. the acquisition by any person (or related group of persons), whether by
tender or exchange offer made directly to the Company's stockholders,
private purchases from one or more of the Company's stockholders, open
market purchases or any other transaction, of additional securities of
the Company which increase the total holdings of such person (or group)
to a level of securities possessing more than 50% of the total combined
voting power of the Company's outstanding securities, or
. the acquisition by any person (or related group of persons), whether by
tender or exchange offer made directly to the Company's stockholders,
private purchases from one or more of the Company's stockholders, open
market purchases or any other transaction, of securities of the Company
possessing sufficient voting power in the aggregate to elect an absolute
majority of the members of the Board (rounded up to the nearest whole
number).
In the event of a Corporate Transaction, each option at the time outstanding
under the Discretionary Grant Program or Salary Reduction Program will
automatically become exercisable for all of the shares of Common Stock at the
time subject to that option and may be exercised for any or all of such shares
as fully-vested shares. However, an outstanding option under the Discretionary
Grant Program will not so accelerate if and to the extent: (i) such option is
either to be assumed by the successor corporation (or parent thereof) or is
otherwise to be replaced by a comparable option to purchase shares of the
capital stock of the successor corporation (or parent thereof) or (ii) the
acceleration of such option is subject to other limitations imposed by the Plan
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Administrator at the time of grant. Upon the consummation of the Corporate
Transaction, all outstanding options under the 1994 Plan will, to the extent
not previously exercised by the optionees or assumed by the successor
corporation (or its parent company), terminate and cease to be exercisable. The
Plan Administrator will have the discretion to provide for the subsequent
acceleration of any option which does not accelerate at the time of the
Corporate Transaction, in the event the optionee's service terminates within a
designated period following such Corporate Transaction.
The Company's outstanding repurchase rights under the Discretionary Option
Grant and Stock Issuance Programs will also terminate, and the shares subject
to those terminated rights will become fully vested, upon the Corporate
Transaction, except to the extent (i) one or more of such repurchase rights are
expressly assigned to the successor corporation (or its parent company) or (ii)
such accelerated vesting is precluded by other limitations imposed by the Plan
Administrator at the time the unvested shares are issued. The Plan
Administrator will have the discretion to provide for the subsequent
termination of any repurchase rights which remain in existence after the
Corporate Transaction, in the event the optionee's service terminates within a
designated period following such Corporate Transaction.
The Plan Administrator will also have full power and authority, exercisable
either in advance of any actually-anticipated Change in Control or at the time
of an actual Change in Control, to provide for the acceleration of one or more
outstanding options under the Discretionary Grant Program so that each such
option will, immediately prior to the Change in Control, become exercisable for
the total number of shares of Common Stock at the time subject to such option
and may be exercised for any or all of such shares as fully-vested shares. The
Plan Administrator may also provide for the automatic termination of all of the
outstanding repurchase rights held by the Company under the Discretionary
Option Grant and Stock Issuance Programs (with the concurrent vesting of the
shares subject to those terminated rights) in the event of such Change in
Control. Alternatively, the Plan Administrator may condition such accelerated
option vesting and termination of the repurchase rights upon the optionee's
cessation of service under certain prescribed circumstances following the
Change in Control.
Upon either a Corporate Transaction or a Change in Control, the shares of
Common Stock subject to each outstanding option under the Automatic Grant
Program will immediately vest, and the options will accordingly become
exercisable for all of the shares of Common Stock at the time subject to such
option as fully-vested shares. In addition, all unvested shares issued under
the Stock Fee Program or issued under the Stock Issuance Program in lieu of
base salary will immediately vest.
The acceleration of options or vesting in the event of a Corporate
Transaction or Change in Control may be seen as an anti-takeover provision and
may have the effect of discouraging a merger proposal, a takeover attempt or
other efforts to gain control of the Company.
CHANGES IN CAPITALIZATION
In the event any change is made to the outstanding shares of Common Stock by
reason of any recapitalization, stock dividend, stock split, combination of
shares, exchange of shares or other change in corporate structure effected
without the Company's receipt of consideration, appropriate adjustments will be
made to (i) the maximum number and/or class of securities issuable under the
1994 Plan and the maximum number and/or class of securities which may remain
available for future issuance in connection with the automatic 1% increase to
the share reserve to be effected each year under the Plan, (ii) the maximum
number and/or class of securities for which any one individual may be granted
stock options and direct share issuances over the term of the 1994 Plan, (iii)
the number and/or class of securities and price per share in effect under each
outstanding option and (iv) the number and/or class of securities for which
option grants will subsequently be made under the Automatic Grant Program per
each newly-elected or continuing non-employee Board member.
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FINANCIAL ASSISTANCE
The Plan Administrator may institute a loan program in order to assist one or
more optionees in financing their exercise of outstanding options under the
Discretionary Grant or Salary Reduction Grant Program or the purchase of shares
under the Stock Issuance Program. The form in which such assistance is to be
made available (including loans or installment payments) and the terms upon
which such assistance is to be provided will be determined by the Plan
Administrator. However, the maximum amount of financing provided any
participant may not exceed the amount of cash consideration payable for the
issued shares plus all applicable federal, state and local taxes incurred in
connection with the acquisition of the shares. Any such financing may be
subject to forgiveness in whole or in part, at the discretion of the Plan
Administrator, over the participant's period of service.
SPECIAL TAX ELECTION
The Plan Administrator may provide one or more holders of non-statutory
options or unvested shares under the Discretionary Grant, Salary Reduction
Grant or Stock Issuance Program with the right to have the Company withhold a
portion of the shares of Common Stock otherwise issuable to such individuals in
satisfaction of the federal and state income and employment tax liability
incurred by such individuals in connection with the exercise of those options
or the vesting of the shares. Alternatively, the Plan Administrator may allow
such individuals to deliver previously acquired shares of Common Stock in
payment of such tax liability.
AMENDMENT AND TERMINATION
The Board may amend or modify the 1994 Plan in any or all respects
whatsoever. However, no such amendment may adversely affect the rights of
existing optionees or holders of unvested shares without their consent. In
addition, the Board may not, without the approval of the stockholders, (i)
materially increase the maximum number of shares issuable under the 1994 Plan,
the number of shares for which automatic option grants will be made to newly-
elected or continuing non-employee Board members or the maximum number of
shares for which any one individual may be granted options or direct stock
issuances, except to reflect certain changes in the Company's capital
structure, (ii) materially modify the eligibility requirements for option
grants or share issuances or (iii) otherwise materially increase the benefits
accruing to participants under the 1994 Plan. The Board may terminate the 1994
Plan at any time, and the 1994 Plan will in all events terminate on December
31, 2008. Each stock option or unvested share issuance outstanding at the time
of such termination will remain in force in accordance with the provisions of
the instruments evidencing such grant or issuance.
STOCK AWARDS
The table below shows, as to each of the Company's executive officers named
in the Summary Compensation Table and the various indicated individuals and
groups, the following information with respect to stock option transactions and
direct stock issuances effected during the period from December 26, 1992 to
March 7, 1994 under the Predecessor Plans: (i) the number of shares of Common
Stock subject to options granted during that period and the weighted average
option price payable per share, (ii) the net value realized (fair market value
of the option shares on the exercise date less the option price) upon the
exercise of outstanding options during such period, (iii) the number of shares
of Common Stock directly issued without an intervening option grant and (iv)
the dollar amount paid per issued share.
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OPTION TRANSACTIONS
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
EXERCISE PRICE NET VALUE
OPTIONS GRANTED OF OPTIONS REALIZED FROM
NAME (NUMBER OF SHARES) GRANTED OPTIONS EXERCISED
---- ------------------ ---------------- -----------------
<S> <C> <C> <C>
E. Joseph Zemke.......... 156,000 $5.27 0
John C. Lewis............ 148,000 $5.31 $50,350
William F. O'Connell, Jr. 72,500 $5.32 0
Anthony M. Pozos......... 86,500 $5.22 0
David L. Anderson........ 75,500 $5.10 0
Joseph J. Francesconi.... 36,000 $6.31 0
All current executive
officers as a group
(15 persons)............ 1,285,350 $5.03 $50,350
Keizo Fukagawa........... 0 0 0
E.F. Heizer, Jr.......... 1,000 $4.81 0
Kazuto Kojima............ 5,000 $5.31 0
R. Stanley Laing......... 1,000 $4.81 0
Burton G. Malkiel........ 1,000 $4.81 0
George R. Packard........ 1,000 $4.81 0
Walter B. Reinhold....... 1,000 $4.81 0
Takamitsu Tsuchimoto..... 5,000 $5.31 0
J. Sidney Webb........... 1,000 $4.81 0
All current non-employee
directors as a group
(9 persons)............. 16,000 $5.13 0
All individuals,
including current
officers who are not
executive officers as a
group (approximately
1,050 persons).......... 8,407,702 $5.13 $85,120
</TABLE>
DIRECT SHARE ISSUANCES
<TABLE>
<CAPTION>
NUMBER OF PURCHASE PRICE
NAME ISSUED SHARES PER SHARE
---- ------------- --------------
<S> <C> <C>
E. Joseph Zemke................................... 100,000 $.05
John C. Lewis..................................... 0 0
William F. O'Connell, Jr.......................... 0 0
Anthony M. Pozos.................................. 12,000 $.05
David L. Anderson................................. 12,000 $.05
Joseph J. Francesconi............................. 0 0
All current executive officers as a group who
received direct share issuances (10 persons)..... 178,000 $.05
All employees, including current officers who are
not executive officers as a group (12 persons)... 59,000 $.05
</TABLE>
FEDERAL INCOME TAX CONSEQUENCES
OPTION GRANTS
Options granted under the 1994 Plan may be either incentive stock options
which satisfy the requirements of Section 422 of the Internal Revenue Code or
non-statutory options which are not intended to meet such requirements. The
federal income tax treatment for the two types of options differs as described
below:
28
<PAGE>
Incentive Options. No taxable income is recognized by the optionee at the
time of the option grant, and no taxable income is generally recognized at the
time the option is exercised. The optionee will, however, recognize taxable
income in the year in which the purchased shares are sold or otherwise made the
subject of disposition. For federal tax purposes, dispositions are divided into
two categories: (i) qualifying and (ii) disqualifying. The optionee will make a
qualifying disposition of the purchased shares if the sale or other disposition
of such shares is made after the optionee has held the shares for more than two
years after the grant date of the option and more than one year after the
exercise date. If the optionee fails to satisfy either of these two minimum
holding periods prior to the sale or other disposition of the purchased shares,
then a disqualifying disposition will result.
Upon a qualifying disposition of the shares, the optionee will recognize
long-term capital gain in an amount equal to the excess of (i) the amount
realized upon the sale or other disposition of the purchased shares over (ii)
the exercise price paid for those shares. If there is a disqualifying
disposition of the shares, then the excess of (i) the fair market value of
those shares on the option exercise date over (ii) the exercise price paid for
the shares will be taxable as ordinary income. Any additional gain recognized
upon the disposition will be a capital gain.
If the optionee makes a disqualifying disposition of the purchased shares,
then the Company will be entitled to an income tax deduction, for the taxable
year in which such disposition occurs, equal to the excess of (i) the fair
market value of such shares on the option exercise date over (ii) the exercise
price paid for the shares. In no other instance will the Company be allowed a
deduction with respect to the optionee's disposition of the purchased shares.
The Company anticipates that the compensation deemed paid in connection with
most disqualifying dispositions of incentive stock option shares under the 1994
Plan will be deductible by it and will not be subject to the annual $1 Million
limitation per covered individual on the deductibility of the compensation paid
to certain executive officers of the Company.
Non-Statutory Options. No taxable income is recognized by an optionee upon
the grant of a non-statutory option. The optionee will in general recognize
ordinary income, in the year in which the option is exercised, equal to the
excess of the fair market value of the purchased shares on the exercise date
over the exercise price paid for the shares, and the optionee will be required
to satisfy the tax withholding requirements applicable to such income.
Special provisions of the Internal Revenue Code apply to the acquisition of
unvested shares of Common Stock under a non-statutory option. These special
provisions may be summarized as follows:
. If the shares acquired upon exercise of the non-statutory option are
subject to repurchase by the Company at the original exercise price in
the event of the optionee's termination of service prior to vesting in
those shares, then the optionee will not recognize any taxable income at
the time of exercise but will have to report as ordinary income, as and
when the Company's repurchase right lapses, an amount equal to the excess
of (i) the fair market value of the shares on the date the repurchase
right lapses with respect to those shares over (ii) the exercise price
paid for the shares.
. The optionee may, however, elect under Section 83(b) of the Internal
Revenue Code to include as ordinary income in the year of exercise of the
non-statutory option an amount equal to the excess of (i) the fair market
value of the purchased shares on the exercise date over (ii) the exercise
price paid for such shares. If the Section 83(b) election is made, the
optionee will not recognize any additional income as and when the
repurchase right lapses.
The Company will be entitled to an income tax deduction equal to the amount
of ordinary income recognized by the optionee with respect to the exercised
non-statutory option. The deduction will in general be allowed for the taxable
year of the Company in which such ordinary income is recognized by the
optionee. The Company anticipates that the compensation deemed paid upon the
exercise of most non-statutory options under the 1994 Plan will be deductible
by it and will not be subject to the annual $1 Million limitation per covered
individual on the deductibility of the compensation paid to certain executive
officers of the Company.
29
<PAGE>
STOCK APPRECIATION RIGHTS.
An optionee who is granted a stock appreciation right will recognize ordinary
income in the year of exercise equal to the amount of the appreciation
distribution. The Company will be entitled to an income tax deduction equal to
the appreciation distribution for the taxable year in which the ordinary income
is recognized by the optionee.
DIRECT STOCK ISSUANCE.
The tax principles applicable to direct stock issuances under the 1994 Plan
will be substantially the same as those summarized above for the exercise of
non-statutory option grants.
ACCOUNTING TREATMENT
Under the current accounting rules expected to remain in effect through 1997,
option grants or stock issuances with exercise or issue prices equal to the
fair market value of the shares on the grant or issue date will not result in
any compensation expense to the Company for financial reporting purposes. To
the extent the exercise or issue price is less than such fair market value, a
compensation expense will arise which will have to be amortized against the
Company's earnings over the vesting period in effect for the option grant or
share issuance. Such amortization is heavily front-loaded. In addition,
outstanding options will in all events be taken into account in the calculation
of earnings per share on a fully-diluted basis.
Should the new Financial Accounting Standards Board exposure draft on the
compensatory treatment of stock option grants become effective, then all stock
options granted during the three-year phase-in period (which has under the
current draft a start date retroactive to January 1, 1994) with an exercise
price equal to the fair market value of the option shares on the grant date
will be subject to footnote disclosure in the Company's financial statements.
Such footnote must reflect the reduction to the Company's reported earnings
which would have arisen had the value of the option been recorded as a
compensation expense. Below-market option grants will continue to be treated in
the same manner as under the current rules. Beginning in 1997, all stock option
grants will result in a direct compensation expense against the Company's
reported earnings.
Should one or more optionees be granted stock appreciation rights which have
no conditions upon exercisability other than a service or employment
requirement, then such rights will result in a compensation expense to be
charged against the Company's earnings. Accordingly, at the end of each fiscal
quarter, the amount (if any) by which the fair market value of the shares of
Common Stock subject to such outstanding stock appreciation rights has
increased from the prior quarter-end will be accrued as compensation expense,
to the extent such fair market value is in excess of the aggregate exercise
price in effect for those rights.
STOCKHOLDER APPROVAL
The affirmative vote of a majority of the shares of Common Stock of the
Company present or represented and entitled to vote on the proposal at the 1994
Annual Meeting is required for approval of the 1994 Plan. If such approval is
obtained, the 1994 Plan will become effective upon the date of the 1994 Annual
Meeting, and the initial option grants under the Automatic Option Grant Program
will be made at such time. Should such stockholder approval not be obtained,
then the 1994 Plan will not become effective. The Predecessor Plans will,
however, continue to remain in effect, and option grants and stock issuances
may continue to be made pursuant to the provisions of such plans until the
available reserve of Common Stock under each such plan is issued.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE APPROVAL
OF THE 1994 PLAN. THE BOARD BELIEVES THAT IT IS IN THE BEST INTERESTS OF THE
COMPANY TO IMPLEMENT A COMPREHENSIVE INCENTIVE PROGRAM FOR THE COMPANY WHICH
WILL PROVIDE A MEANINGFUL OPPORTUNITY FOR OFFICERS, KEY EMPLOYEES AND NON-
EMPLOYEE BOARD MEMBERS TO ACQUIRE A SUBSTANTIAL PROPRIETARY INTEREST IN THE
ENTERPRISE AND THEREBY ENCOURAGE SUCH INDIVIDUALS TO REMAIN IN THE COMPANY'S
SERVICE AND MORE CLOSELY ALIGN THEIR INTERESTS WITH THOSE OF THE STOCKHOLDERS.
30
<PAGE>
NEW PLAN BENEFITS
The following table sets forth certain information regarding the options that
are expected to be granted under the 1994 Plan on or before the date of the
1994 Stockholders Meeting, to the extent such information is currently
determinable.
<TABLE>
<CAPTION>
NAME NUMBER OF OPTION SHARES WEIGHTED AVERGE EXERCISE PRICE
---- ----------------------- ------------------------------
<S> <C> <C>
Keizo Fukagawa.......... 5,000 *
E. F. Heizer, Jr........ 5,000 *
Kazuto Kojima........... 0 0
R. Stanley Laing........ 5,000 *
Burton G. Malkiel....... 5,000 *
George R. Packard....... 5,000 *
Walter B. Reinhold...... 5,000 *
Takamitsu Tsuchimoto.... 0 0
J. Sidney Webb.......... 5,000 *
All current non-employee
directors as a group
(9 persons)............ 35,000 *
All current executive
officers as a group
(15 persons)........... 0 0
All employees, including
current officers who
are not executive offi-
cers as a group
(1 person)(1).......... 2,000 $6.875
</TABLE>
- --------
*All of these stock options will have an exercise price per share equal to
the mean between the highest and lowest selling price per share of Common
Stock on the American Stock Exchange on the date of the meeting.
(1) One person was granted a stock option on January 27, 1994. The Company
anticipates that other than the automatic grants to non-employee directors,
less than 20 employees will receive stock option grants totaling less than
100,000 shares between March 7, 1994 and May 5, 1994.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has recommended that Arthur
Andersen & Co., independent public accountants for Amdahl during fiscal 1993,
serve in the same capacity for the current fiscal year. A resolution will be
presented at the meeting to ratify the Board of Directors' selection of Arthur
Andersen & Co. as independent public accountants to audit the accounts and
records of Amdahl for the fiscal year ending December 30, 1994 and to perform
other appropriate services.
Representatives of Arthur Andersen & Co. are expected to be present at the
Annual Meeting to make a statement if they desire and to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION OF
ARTHUR ANDERSEN & CO. AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS.
FUTURE STOCKHOLDER PROPOSALS
Amdahl must receive stockholder proposals intended to be considered at the
1995 Annual Meeting no later than November 24, 1994. These proposals may be
included in next year's Proxy Statement if they comply with applicable
regulations under the Securities Exchange Act of 1934.
31
<PAGE>
INCORPORATION BY REFERENCE
According to the provisions of Schedule 14A under the Securities Exchange Act
of 1934, the following document or portion thereof is incorporated by
reference:
"Executive Officers of Amdahl" from Part 1 of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1993.
The Board of Directors knows of no other matters that may be presented for
stockholder action at the meeting. However, if other matters do properly come
before the meeting, the persons named in the proxies will vote them according
to their best judgment.
By Order of the Board of Directors
/s/ Edward F. Thompson
Edward F. Thompson
Vice President, Chief Financial Officer
and Secretary
March 24, 1994
32
<PAGE>
[MAP]
<PAGE>
Graphics Appendix List
<TABLE>
<CAPTION>
pages description
- ----- -----------
<S> <C>
17 A description of the performance graph that appears in the
Company's Proxy Statement is provided in the body of the
electronic document in tabular form as permitted by
Rule 304 of Regulation S-T.
outside back cover A graphic composed of a map of a portion of the City of San
Jose indicating the location of the Fairmont Hotel, the
site of the Company's 1994 Annual Meeting of Stockholders.
</TABLE>
<PAGE>
AMDAHL CORPORATION
1994 STOCK INCENTIVE PLAN
-------------------------
ARTICLE ONE
GENERAL
-------
I. PURPOSE OF THE PLAN
A. This 1994 Stock Incentive Plan (the "Plan") is intended to promote
the interests of Amdahl Corporation, a Delaware corporation (the "Corporation"),
by providing (i) key employees (including officers) of the Corporation (or its
subsidiary corporations) who are responsible for the management, growth and
financial success of the Corporation (or its subsidiary corporations), (ii) the
non-employee members of the Corporation's Board of Directors or the board of
directors of any subsidiary corporation and (iii) those consultants and other
independent contractors who provide valuable services to the Corporation (or its
subsidiary corporations) with the opportunity to acquire a proprietary interest,
or otherwise increase their proprietary interest, in the Corporation as an
incentive for them to remain in the service of the Corporation (or its
subsidiary corporations).
B. The Plan shall become effective upon its approval by the
Corporation's stockholders at the 1994 Annual Meeting of Stockholders to be
held on May 5, 1994. Such date is hereby designated as the Effective Date of
the Plan.
C. This Plan shall serve as the successor to the Corporation's four
existing stock programs - the Stock Option Plan (1971), the Stock Option Plan
(1974), the Non-Qualified Stock Option Plan (1982) and the Restricted Stock
Plan (collectively, the "Predecessor Plans"), and no further option grants or
stock issuances shall be made under the Predecessor Plans after the Effective
Date. All options outstanding under the Predecessor Plans and all unvested
shares issued thereunder as of such Effective Date shall immediately be
incorporated into this Plan and treated as outstanding options and share
issuances under this Plan. However, each outstanding option and share issuance
so incorporated shall continue to be governed solely by the express terms and
conditions of the instrument evidencing such option grant or share issuance, and
no provision of this Plan shall be deemed to affect or otherwise modify the
rights or obligations of the holders of such incorporated options or share
issuances with respect to their acquisition of shares of the Corporation's
common stock, par value of $0.05 per share thereunder.
1
<PAGE>
II. DEFINITIONS
A. For purposes of the Plan, the following definitions shall be in effect:
BOARD: the Corporation's Board of Directors.
CHANGE IN CONTROL: a change in ownership or control of the Corporation
effected through any of the following transactions:
- a direct acquisition by any person (or related group of persons) of
beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of
securities possessing more than ten percent (10%) of the total combined
voting power of the Corporation's outstanding securities,
- the direct or indirect acquisition by any person or related group
of persons, whether by tender or exchange offer made directly to the
Corporation's stockholders, private purchases from one or more of the
Corporation's stockholders, open market purchases or any other transaction,
of additional securities of the Corporation which increases the beneficial
ownership (within the meaning of Rule 13d-3 of the 1934 Act) of the total
securities holdings of such person (or related group of persons) to a level
of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities, or
- the direct or indirect acquisition by any person or related group
of persons, whether by tender or exchange offer made directly to the
Corporation's stockholders, private purchases from one or more of the
Corporation's stockholders, open market purchases or any other transaction,
of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act)
of securities of the Corporation possessing sufficient voting power in the
aggregate to elect an absolute majority of the Board (rounded up to the
next whole number).
CODE: the Internal Revenue Code of 1986, as amended.
COMMITTEE: a committee of two (2) or more non-employee Board members
appointed by the Board.
2
<PAGE>
COMMON STOCK: shares of the Corporation's common stock, par value of
$0.05 per share.
CORPORATE TRANSACTION: any of the following stockholder-approved
transactions to which the Corporation is a party:
- a merger or consolidation in which the Corporation is not the
surviving entity, except for a transaction the principal purpose of which
is to change the state in which the Corporation is incorporated,
- the sale, transfer or other disposition of all or substantially all
of the assets of the Corporation in complete liquidation or dissolution of
the Corporation, or
- any reverse merger in which the Corporation is the surviving entity
but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities are
transferred to a person or persons different from those who held such
securities immediately prior to such merger.
EMPLOYEE: an individual who performs services while in the employ of the
Corporation or one or more Subsidiaries, subject to the control and direction of
the employer entity not only as to the work to be performed but also as to the
manner and method of performance.
EXERCISE DATE: the date on which the Corporation shall have received
written notice of the option exercise.
FAIR MARKET VALUE: the mean between the highest and lowest selling prices
per share on the date in question on the principal exchange on which the Common
Stock is then listed or admitted to trading, as the prices are officially quoted
by the composite tape of transactions on the exchange. If there are no reported
sales of the Common Stock on the date in question, then the Fair Market Value
shall be the mean between the highest and lowest selling prices on the last
previous date for which quotations exist.
HOSTILE TAKE-OVER: a change in ownership of the Corporation effected
through the following transaction:
- the direct or indirect acquisition by any person or related group
of persons of securities possessing more than fifty percent (50%) of the
total
3
<PAGE>
combined voting power of the Corporation's outstanding securities pursuant
to a tender or exchange offer made directly to the Corporation's
stockholders which the Board does not recommend such stockholders to
accept, and
- more than fifty percent (50%) of the acquired securities are
accepted from holders other than the officers and directors of the
Corporation subject to the short-swing profit restrictions of Section 16 of
the 1934 Act.
INCENTIVE OPTION: a stock option which satisfies the requirements of Code
Section 422.
INVOLUNTARY TERMINATION: the termination of the Service of any Optionee or
Participant which occurs by reason of:
- such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
- such individual's voluntary resignation following (A) a change in
his or her position with the Corporation which materially reduces his or
her level of responsibility, (B) a reduction in his or her level of
compensation (including base salary, fringe benefits and any non-
discretionary and objective-standard incentive payment or bonus award) by
more than five percent (5%) or (C) a relocation of such individual's place
of employment by more than fifty (50) miles, provided and only if such
change, reduction or relocation is effected by the Corporation without the
individual's consent.
MISCONDUCT: the commission of any act of fraud, embezzlement or dishonesty
by the Optionee or Participant, any unauthorized use or disclosure by such
individual of confidential information or trade secrets of the Corporation or
its Subsidiaries, or any other intentional misconduct by such individual
adversely affecting the business or affairs of the Corporation in a material
manner. The foregoing definition shall not be deemed to be inclusive of all the
acts or omissions which the Corporation or any Subsidiary may consider as
grounds for the dismissal or discharge of any Optionee, Participant or other
individual in the Service of the Corporation.
NEWLY ISSUED SHARES: shares of Common Stock drawn from the Corporation's
authorized but unissued shares of Common Stock.
4
<PAGE>
1934 ACT: the Securities and Exchange Act of 1934, as amended.
NON-STATUTORY OPTION: a stock option not intended to meet the requirements
of Code Section 422.
OPTIONEE: any person to whom an option is granted under the Discretionary
Option Grant, Automatic Option Grant or Salary Reduction Grant Program in effect
under the Plan.
PARTICIPANT: any person who receives a direct issuance of Common Stock
under the Stock Issuance Program in effect under the Plan.
PERMANENT DISABILITY OR PERMANENTLY DISABLED: the inability of the
Optionee or the Participant to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment expected to
result in death or to be of continuous duration of twelve (12) months or more.
PLAN ADMINISTRATOR: the committee of two (2) or more non-employee Board
members appointed by the Board to administer the Discretionary Option Grant, the
Salary Reduction and the Stock Issuance Programs.
SERVICE: the provision of services on a periodic basis to the Corporation
or any Subsidiary in the capacity of an Employee, a non-employee member of the
board of directors or an independent consultant or advisor, except to the extent
otherwise specifically provided in the applicable stock option or stock issuance
agreement.
SUBSIDIARY: each corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation, provided each such
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in any other corporation in
such chain. For purposes of the grant of Non-Statutory Options and stock
appreciation rights under the Discretionary Option Grant Program, the grant of
Non-Statutory Options under the Salary Reduction Grant Program and direct stock
issuances under the Stock Issuance Program, the term Subsidiary shall also
include any partnership, joint venture or other business entity in which the
Corporation owns, directly or indirectly through one or more Subsidiaries, a
fifty percent (50%) or greater capital or profit interest.
5
<PAGE>
TAKE-OVER PRICE: the greater of (i) the Fair Market Value per share of
Common Stock on the date the option is surrendered to the Corporation in
connection with a Hostile Take-Over or (ii) the highest reported price per share
of Common Stock paid by the tender offeror in effecting such Hostile Take-Over.
However, if the surrendered option is an Incentive Option, the Take-Over Price
shall not exceed the clause (i) price per share.
TREASURY SHARES: shares of Common Stock reacquired by the Corporation and
held as treasury shares.
III. STRUCTURE OF THE PLAN
A. Stock Programs. The Plan shall be divided into five separate
components:
- The Discretionary Option Grant Program, under which eligible
individuals may, at the discretion of the Plan Administrator, be granted
options to purchase shares of Common Stock in accordance with the
provisions of Article Two.
- The Automatic Option Grant Program, under which non-employee Board
members shall automatically receive special option grants at periodic
intervals to purchase shares of Common Stock in accordance with the
provisions of Article Three.
- The Stock Fee Program, under which the non-employee Board members
may elect to apply all or a portion of their annual retainer fee to the
acquisition of shares of Common Stock in accordance with the provisions of
Article Four.
- The Salary Reduction Grant Program, under which eligible
individuals may, pursuant to the provisions of Article Five, elect to have
a portion of their base salary reduced each year in return for options to
purchase shares of Common Stock at an aggregate discount from the Fair
Market Value of the option shares on the grant date equal to the salary
reduction amount.
- The Stock Issuance Program, under which eligible individuals may,
pursuant to the provisions of Article Six, be issued shares of Common Stock
directly, through the immediate purchase of such shares at a price less
than, equal to or greater than their Fair Market Value at the time of
issuance, as a bonus tied to the
6
<PAGE>
performance of services or the Corporation's attainment of financial
objectives, or pursuant to the individual's election to receive such shares
in lieu of base salary.
B. General Provisions. Unless the context clearly indicates otherwise,
the provisions of Articles One and Seven shall apply to the Discretionary Option
Grant, Automatic Option Grant, Salary Reduction Grant, Stock Issuance and Stock
Fee Programs and shall accordingly govern the interests of all individuals under
the Plan.
IV. ADMINISTRATION OF THE PLAN
A. The Committee shall have sole and exclusive authority to administer the
Discretionary Option Grant, Salary Reduction Grant and Stock Issuance Programs.
No Board member shall be eligible to serve on the Committee if such individual
has, within the twelve (12)-month period immediately preceding the date such
individual is to be appointed to the Committee, received an option grant or
stock issuance under this Plan or any other stock option, stock appreciation,
stock bonus or other stock plan of the Corporation (or any Subsidiary), other
than pursuant to the Automatic Option Grant Program specified in Article Three
or the Stock Fee Program specified in Article Four or the predecessor automatic
option grant program in effect under the Stock Option Plan (1974). Members of
the Committee shall serve for such period as the Board may determine and shall
be subject to removal by the Board at any time.
B. The Plan Administrator shall have full power and discretion (subject to
the express provisions of the Plan) to establish such rules and regulations as
it may deem appropriate for the proper administration of the Discretionary
Option Grant, Salary Reduction Grant and Stock Issuance Programs and to make
such determinations under, and issue such interpretations of, the provisions of
each such program and any outstanding option grants or stock issuances
thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator shall be final and binding on all parties who have an interest in
the Discretionary Option Grant, Salary Reduction Grant or Stock Issuance Program
or any outstanding option or stock issuance thereunder.
D. Service on the Committee shall constitute service as a Board member,
and members of the Committee shall accordingly be entitled to full
indemnification and reimbursement as Board members
7
<PAGE>
for their service on the Committee. No member of the Committee shall be liable
for any act or omission made in good faith with respect to the Plan or any
option granted or shares issued under the Plan.
E. Administration of the Automatic Option Grant and the Stock Fee Programs
shall be self-executing in accordance with the express terms and conditions of
Articles Three and Four, respectively, and the Plan Administrator shall not
exercise any discretionary functions with respect to the option grants or stock
issuances made pursuant to such programs.
V. ELIGIBILITY
A. The persons eligible to participate in the Discretionary Option Grant
Program under Article Two, the Salary Reduction Grant Program under Article Five
and the Stock Issuance Program under Article Six are as follows:
- officers and other key employees of the Corporation (or its
Subsidiaries) who render services which contribute to the management,
growth and financial success of the Corporation (or its Subsidiaries); and
- those consultants or other independent contractors who provide
valuable services to the Corporation (or its Subsidiaries).
B. Non-employee Board members shall not be eligible to participate in the
Discretionary Option Grant, Salary Reduction Grant or Stock Issuance Program or
in any other stock option, stock purchase, stock bonus or other stock plan of
the Corporation (or its Subsidiaries). Such non-employee Board members shall,
however, be eligible to participate in the Automatic Option Grant Program under
Article Three and the Stock Fee Program under Article Four.
C. The Plan Administrator shall have full authority to determine, (i) with
respect to grants made under the Discretionary Option Grant and Salary Reduction
Grant Programs, which eligible individuals are to receive such grants, the
number of shares to be covered by each such grant, the status of any granted
option as either an Incentive Option or a Non-Statutory Option, the time or
times at which each granted option is to become exercisable and the maximum term
for which the option may remain outstanding and (ii) with respect to stock
issuances under the Stock Issuance Program, which eligible individuals are to be
selected for participation, the number of shares to be issued to each selected
individual, the vesting schedule (if any) to be applicable to the issued shares
and the consideration to be paid for such shares.
8
<PAGE>
VI. STOCK SUBJECT TO THE PLAN
A. Shares of Common Stock shall be available for issuance under the Plan
and shall be drawn from either the Corporation's authorized but unissued shares
of Common Stock or from reacquired shares of Common Stock, including shares
repurchased by the Corporation on the open market. The number of shares of
Common Stock reserved for issuance over the term of the Plan shall initially be
fixed at 14,300,000 shares, subject to adjustment from time to time in
accordance with the provisions of this Section VI. Such authorized share
reserve shall be comprised of (i) the number of shares which remain available
for issuance under the Predecessor Plans as of the Effective Date, including the
shares subject to the outstanding options incorporated into this Plan and any
other shares which would have been available for future option grant under the
Predecessor Plans (estimated to be 12,900,000 shares in the aggregate), plus
(ii) an additional increase of 1,400,000 shares of Common Stock. To the extent
one or more outstanding options under the Predecessor Plans which have been
incorporated into this Plan are subsequently exercised, the number of shares
issued with respect to each such option shall reduce, on a share-for-share
basis, the number of shares available for issuance under this Plan.
B. The number of shares of Common Stock available for issuance under the
Plan shall automatically increase on the first trading day of each calendar year
during the term of the Plan, beginning with the 1995 calendar year, by an amount
equal to one percent (1%) of the shares of Common Stock outstanding on December
31 of the immediately preceding calendar year; provided, however that each such
one percent (1%) annual increase shall be subject to reduction to the extent
necessary so that the maximum number of shares of Common Stock available
immediately thereafter for future option grants and share issuances under the
Plan shall not exceed 5,000,000 shares, subject to adjustment from time to time
in accordance with the provisions of this Section VI. None of the additional
shares resulting from such annual increases may be made the subject of Incentive
Options granted under the Plan.
C. After the Effective Date of the Plan, in no event may any one individual
participating in the Plan be granted stock options, concurrently or
independently exercisable stock appreciation rights and receive direct stock
issuances exceeding 2,000,000 shares in the aggregate over the term of the Plan,
subject to periodic adjustment for certain changes in the Company's capital
structure in accordance with the provisions of this Section VI. E.
D. Should one or more outstanding options under this Plan (including
outstanding options under the Predecessor Plans incorporated into this Plan)
expire or terminate for any reason prior to exercise in full (including any
option cancelled in
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accordance with the cancellation-regrant provisions of Section IV of Article
Two), then the shares subject to the portion of each option not so exercised
shall be available for subsequent issuance under the Plan. Shares subject to
any stock appreciation rights exercised under the Plan and all share issuances
under the Plan (other than issuances in payment of exercised stock appreciation
rights), whether or not the issued shares are subsequently repurchased by the
Corporation pursuant to its repurchase rights under the Plan, shall reduce on a
share-for-share basis the number of shares of Common Stock available for
subsequent issuance under the Plan. In addition, should the exercise price of
an outstanding option under the Plan (including any option incorporated from the
Predecessor Plans) be paid with shares of Common Stock or should shares of
Common Stock otherwise issuable under the Plan be withheld by the Corporation in
satisfaction of the withholding taxes incurred in connection with the exercise
of an outstanding option under the Plan or the vesting of a share issuance under
the Plan, then the number of shares of Common Stock available for issuance under
the Plan shall be reduced by the gross number of shares for which the option is
exercised or which vest under the share issuance, and not by the net number of
shares of Common Stock actually issued to the holder of such option or share
issuance.
E. Should any change be made to the Common Stock issuable under the Plan
by reason of any stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration, then
appropriate adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the limit on the number and/or class of
securities which are allowed to remain available for future option grants and
stock issuances in connection with the automatic one percent (1%) increase to
the share reserve effected each year under the Plan, (iii) the maximum number
and/or class of securities for which any one individual participating in the
Plan may be granted stock options, concurrently or independently exercisable
stock appreciation rights and direct stock issuances in the aggregate over the
term of the Plan, (iv) the number and/or class of securities for which automatic
option grants are to be subsequently made to each newly elected or continuing
non-employee Board member under the Automatic Option Grant Program and (v) the
number and/or class of securities and price per share in effect under each
option and stock appreciation right outstanding under the Plan (including each
option incorporated into this Plan from the Predecessor Plans). Such
adjustments to the outstanding options are to be effected in a manner which
shall preclude the enlargement or dilution of rights and benefits under such
options. The adjustments determined by the Plan Administrator shall be final,
binding and conclusive.
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ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
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I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Discretionary Option Grant Program shall be
authorized by action of the Plan Administrator and may, at the Plan
Administrator's discretion, be either Incentive Options or Non-Statutory
Options. Individuals who are not Employees may only be granted Non-Statutory
Options. Each granted option shall be evidenced by one or more instruments in
the form approved by the Plan Administrator; provided, however, that each such
instrument shall comply with the terms and conditions specified below. Each
instrument evidencing an Incentive Option shall, in addition, be subject to the
applicable provisions of Section II of this Article Two.
A. Exercise Price.
1. The exercise price per share under this Article Two shall be fixed by
the Plan Administrator in accordance with the following provisions:
The exercise price per share of Common Stock subject to an
Incentive Option shall in no event be less than one hundred percent (100%)
of the Fair Market Value of such Common Stock on the grant date.
The exercise price per share of Common Stock subject to a Non-
Statutory Option shall be the amount determined by the Plan Administrator
at the time of grant and may be less than, equal to or greater than the
Fair Market Value of such Common Stock on the grant date.
2. The exercise price shall become immediately due upon exercise of the
option and, subject to the provisions of Section I of Article Seven and the
instrument evidencing the grant, shall be payable in one of the alternative
forms specified below:
(i) full payment in cash or check made payable to the Corporation's
order,
(ii) full payment in shares of Common Stock held for the requisite
period necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date,
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(iii) full payment in a combination of shares of Common Stock held
for the requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at Fair Market Value on the
Exercise Date and cash or check made payable to the Corporation's order, or
(iv) to the extent the option is exercised for vested shares, full
payment through a broker-dealer sale and remittance procedure pursuant to which
the Optionee shall provide concurrent irrevocable written instructions (I) to a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable federal,
state and local income and employment taxes required to be withheld by the
Corporation in connection with such purchase and (II) to the Corporation to
deliver the certificates for the purchased shares directly to such brokerage
firm in order to complete the sale transaction (the "Immediate Sale Program").
B. Term and Exercise of Options. Each option granted under this
Article Two shall be exercisable at such time or times, during such period and
for such number of shares as shall be determined by the Plan Administrator and
set forth in the instrument evidencing such option. No Incentive Option shall,
however, have a maximum term in excess of ten (10) years, and no Non-Statutory
Option shall have a maximum term in excess of fifteen (15) years. During the
lifetime of the Optionee, the option, together with any stock appreciation
rights pertaining to such option, shall be exercisable only by the Optionee and
shall not be assignable or transferable except for a transfer of the option
effected by will or by the laws of descent and distribution following the
Optionee's death.
C. Termination of Service.
1. Should an Optionee cease Service for any reason (including
death or Permanent Disability) while holding one or more outstanding options
under this Article Two, then none of those options shall (except to the extent
otherwise provided pursuant to subparagraph I.C.7 below) remain exercisable for
more than a thirty-six (36)-month period (or such shorter period determined by
the Plan Administrator and set forth in the instrument evidencing the grant)
measured from the date of such cessation of Service.
2. Any option held by the Optionee under this Article Two and
exercisable in whole or in part on the date of his or her death may be
subsequently exercised by the personal representative of the Optionee's estate
or by the person or persons to whom the
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option is transferred pursuant to the Optionee's will or in accordance with the
laws of descent and distribution. However, the right to exercise such option
shall lapse upon the earlier of (i) the third anniversary of the date of the
Optionee's death (or such shorter period determined by the Plan Administrator
and set forth in the instrument evidencing the grant) or (ii) the specified
expiration date of the option term. Accordingly, upon the occurrence of the
earlier event, the option shall terminate and cease to remain outstanding.
3. Under no circumstances shall any such option be exercisable
after the specified expiration date of the option term.
4. During the applicable post-Service exercise period, the option
may not be exercised in the aggregate for more than the number of shares (if
any) in which the Optionee is vested at the time of his or her cessation of
Service. Upon the expiration of the limited post-Service exercise period or (if
earlier) upon the specified expiration date of the option term, each such option
shall terminate and cease to remain outstanding with respect to any vested
shares for which the option has not otherwise been exercised. However, each
outstanding option shall immediately terminate and cease to remain outstanding,
at the time of the Optionee's cessation of Service, with respect to any shares
for which the option is not otherwise at that time exercisable or in which the
Optionee is not otherwise vested.
5. Should the Optionee's Service be terminated for Misconduct, all
outstanding options held by the Optionee under this Article Two shall terminate
immediately and cease to remain outstanding.
6. The Plan Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to permit one or more options held by the Optionee
under this Article Two to be exercised, during the limited post-Service exercise
period applicable under this Section I.C, not only with respect to the number of
vested shares of Common Stock for which each such option is exercisable at the
time of the Optionee's cessation of Service but also with respect to one or more
subsequent installments of vested shares for which the option would otherwise
have become exercisable had such cessation of Service not occurred.
7. The Plan Administrator shall have full power and authority,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to extend the period of time for which the option is
to remain exercisable following the Optionee's cessation of Service or death
from the
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limited period in effect under subparagraphs I.C.1 and I.C.2 above to such
greater period of time as the Plan Administrator shall deem appropriate. In no
event, however, shall such option be exercisable after the specified expiration
date of the option term.
D. Stockholder Rights. An Optionee shall have none of the rights
of a stockholder with respect to any option shares until such individual shall
have exercised the option and paid the exercise price for the purchased shares.
E. Repurchase Rights. The shares of Common Stock acquired under
this Article Two may be subject to repurchase by the Corporation in accordance
with the following provisions:
1. The Plan Administrator shall have the discretion to grant options
which are exercisable for unvested shares of Common Stock under this Article
Two. Should the Optionee cease Service while holding any unvested shares
purchased under such options, then the Corporation shall have the right to
repurchase any or all of those unvested shares at the exercise price paid per
share. The terms and conditions upon which such repurchase right shall be
exercisable (including the period and procedure for exercise and the appropriate
vesting schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the instrument evidencing such repurchase right.
2. All of the Corporation's outstanding repurchase rights under
this Article Two shall automatically terminate, and all shares subject to such
terminated rights shall immediately vest in full, upon the occurrence of a
Corporate Transaction, except to the extent: (i) any such repurchase right is
expressly assigned to the successor corporation (or parent thereof) in
connection with the Corporate Transaction or (ii) such accelerated vesting is
precluded by other limitations imposed by the Plan Administrator at the time the
repurchase right is issued.
3. The Plan Administrator shall have the discretionary authority,
exercisable either before or after the Optionee's cessation of Service, to
cancel the Corporation's outstanding repurchase rights with respect to one or
more shares purchased or purchasable by the Optionee under this Article Two and
thereby accelerate the vesting of such shares in whole or in part at any time.
II. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under this Article Two. Incentive Options may only be
granted to individuals who are
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Employees. Options which are specifically designated as Non-Statutory Options
when issued under the Plan shall not be subject to such terms and conditions.
A. Dollar Limitation. The aggregate Fair Market Value (determined
as of the respective date or dates of grant) of the Common Stock for which one
or more options granted to any Employee under this Plan (or any other option
plan of the Corporation or its Subsidiaries) may for the first time become
exercisable as incentive stock options under the federal tax laws during any one
calendar year shall not exceed the sum of One Hundred Thousand Dollars
($100,000). To the extent the Employee holds two (2) or more such options which
become exercisable for the first time in the same calendar year, the foregoing
limitation on the exercisability of such options as incentive stock options
under the federal tax laws shall be applied on the basis of the order in which
such options are granted. Should the number of shares of Common Stock for which
any Incentive Option first becomes exercisable in any calendar year exceed the
applicable One Hundred Thousand Dollar ($100,000) limitation, then the option
may nevertheless be exercised in that calendar year for the excess number of
shares as a Non-Statutory Option under the federal tax laws.
B. 10% Stockholder. If any individual to whom an Incentive Option
is granted is the owner of stock (as determined under Section 424(d) of the
Code) possessing ten percent (10%) or more of the total combined voting power of
all classes of stock of the Corporation or any one of its Subsidiaries, then the
exercise price per share shall not be less than one hundred ten percent (110%)
of the Fair Market Value per share of Common Stock on the grant date and the
option term shall not exceed five (5) years measured from the grant date.
Except as modified by the preceding provisions of this Section II, the
provisions of Articles One, Two and Seven shall apply to all Incentive Options
granted hereunder.
III. CORPORATE TRANSACTIONS/CHANGES IN CONTROL/
HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction, each option which is
at the time outstanding under this Article Two shall automatically accelerate so
that each such option shall, immediately prior to the specified effective date
for such Corporate Transaction, become fully exercisable with respect to the
total number of shares of Common Stock at the time subject to such option and
may be exercised for all or any portion of such shares. However, an outstanding
option under this Article Two shall NOT so
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accelerate if and to the extent: (i) such option is, in connection with the
Corporate Transaction, either to be assumed by the successor corporation or
parent thereof or to be replaced with a comparable option to purchase shares of
the capital stock of the successor corporation or parent thereof, (ii) such
option is to be replaced with a cash incentive program of the successor
corporation which preserves the option spread existing at the time of the
Corporate Transaction and provides for subsequent payout in accordance with the
same vesting schedule applicable to such option or (iii) the acceleration of
such option is subject to other limitations imposed by the Plan Administrator at
the time of the option grant. The determination of option comparability under
clause (i) above shall be made by the Plan Administrator, and its determination
shall be final, binding and conclusive.
B. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to provide for the automatic acceleration of one or
more outstanding options under this Article Two upon the occurrence of a
Corporate Transaction, whether or not those options are to be assumed or
replaced in the Corporate Transaction, or alternatively to provide for the
subsequent acceleration of any outstanding options under this Article Two which
do not otherwise accelerate at the time of the Corporate Transaction, should the
Optionee's Service terminate through an Involuntary Termination effected within
a designated period following the effective date of such Corporate Transaction.
The Plan Administrator shall also have the authority to provide for the
immediate termination of any of the Corporation's outstanding repurchase rights
under this Article Two which do not otherwise terminate at the time of the
Corporate Transaction, upon the subsequent termination of the Optionee's Service
through an Involuntary Termination effected within a designated period following
the effective date of such Corporate Transaction.
C. Immediately following the consummation of the Corporate
Transaction, all outstanding options under this Article Two shall terminate and
cease to remain outstanding, except to the extent assumed by the successor
corporation or its parent company.
D. Each outstanding option under this Article Two that is assumed
in connection with the Corporate Transaction or is otherwise to continue in
effect shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply and pertain to the number and class of securities which
would have been issued to the option holder, in consummation of such Corporate
Transaction, had such person exercised the option immediately prior to such
Corporate Transaction. Appropriate adjustments shall also be made to the
exercise price payable per share, provided the
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aggregate exercise price payable for such securities shall remain the same. In
addition, the class and number of securities available for issuance under the
Plan on both an aggregate and per individual basis following the consummation of
the Corporate Transaction shall be appropriately adjusted.
E. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the option is granted or at any time while the
option remains outstanding, to provide for the automatic acceleration of one or
more outstanding options under this Article Two (and the termination of one or
more of the Corporation's outstanding repurchase rights under this Article Two)
upon the occurrence of a Change in Control or Hostile Take-Over. The Plan
Administrator shall also have full power and authority to condition any such
option acceleration (and the termination of any outstanding repurchase rights)
upon the subsequent termination of the Optionee's Service through an Involuntary
Termination effected within a specified period following the Change in Control
or Hostile Take-Over.
F. Any options accelerated in connection with the Change in
Control or Hostile Take-Over shall remain fully exercisable until the expiration
or sooner termination of the option term or the surrender of such option in
accordance with Section V of this Article Two.
G. The grant of options under this Article Two shall in no way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
H. The portion of any Incentive Option accelerated under this
Section III in connection with a Corporate Transaction, Change in Control or
Hostile Take-Over shall remain exercisable as an incentive stock option under
the federal tax laws only to the extent the dollar limitation of Section II of
Article Two is not exceeded. To the extent such dollar limitation is exceeded,
the accelerated portion of such option shall be exercisable as a non-statutory
option under the federal tax laws.
IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the sole and exclusive authority to
effect, at any time and from time to time, with the consent of the affected
Optionees, the cancellation of any or all outstanding options under this Article
Two (including outstanding options under the Predecessor Plans incorporated into
this Plan) and to grant in substitution new options under the Plan covering
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the same or different numbers of shares of Common Stock but with an exercise
price per share based upon the Fair Market Value of the Common Stock on the new
grant date.
V. STOCK APPRECIATION RIGHTS
A. The Plan Administrator shall have full power and authority,
exercisable in its sole discretion, to grant to selected Optionees or other
individuals eligible to receive option grants under the Discretionary Option
Grant Program stock appreciation rights.
B. Four types of stock appreciation rights shall be authorized for
issuance under the Plan: (i) Tandem Stock Appreciation Rights ("Tandem Rights"),
Concurrent Stock Appreciation Rights ("Concurrent Rights"), Independent Stock
Appreciation Rights ("Independent Rights") and Limited Stock Appreciation Rights
("Limited Rights").
C. The following terms and conditions shall govern the grant and
exercise of Tandem Rights under this Article Two:
1. One or more Optionees may be granted the Tandem Right,
exercisable upon such terms and conditions as the Plan Administrator may
establish, to elect between the exercise of the underlying Article Two
stock option for shares of Common Stock and the surrender of that option in
exchange for a distribution from the Corporation in an amount equal to the
excess of (i) the Fair Market Value (on the option surrender date) of the
number of shares in which the Optionee is at the time vested under the
surrendered option (or surrendered portion thereof) over (ii) the aggregate
exercise price payable for such vested shares.
2. No such option surrender shall be effective unless it is
approved by the Plan Administrator. If the surrender is so approved, then
the distribution to which the Optionee shall accordingly become entitled
under this Section V may be made in shares of Common Stock valued at Fair
Market Value on the option surrender date, in cash, or partly in shares and
partly in cash, as the Plan Administrator shall in its sole discretion deem
appropriate.
3. If the surrender of an option is rejected by the Plan
Administrator, then the Optionee shall retain whatever rights the Optionee
had under the surrendered option (or surrendered portion thereof) on the
option
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surrender date and may exercise such rights at any time prior to the later
of (i) five (5) business days after the receipt of the rejection notice or
(ii) the last day on which the option is otherwise exercisable in
accordance with the terms of the instrument evidencing such option, but in
no event may such rights be exercised more than ten (10) years after the
date of the option grant.
D. The following terms and conditions shall govern the grant and
exercise of Concurrent Rights under this Article Two:
1. One or more Optionees may be granted,
upon such terms and conditions as the Plan Administrator may establish, the
Concurrent Right to automatically receive an appreciation distribution from
the Corporation at the same time the underlying stock option under this
Article Two is exercised for the shares of Common Stock subject to such
right. Accordingly, the Optionee shall, upon exercise of the option,
receive both the purchased shares of Common Stock and the appreciation
distribution payable on the covered shares.
2. The amount of the distribution payable upon exercise of the
Concurrent Right shall not exceed an amount equal to the excess of (i) the
Fair Market Value (on the option exercise date) of the number of shares for
which the option is exercised over (ii) the aggregate exercise price
payable for such shares under that option.
3. The distribution to which the Optionee shall become entitled
under this Section V may be made in shares of Common Stock valued at Fair
Market Value on the option exercise date, in cash, or partly in shares and
partly in cash, as the Plan Administrator shall in its sole discretion deem
appropriate.
E. The following terms and conditions shall govern the grant and
exercise of Independent Rights under this Article Two:
1. One or more individuals eligible to participate in the
Discretionary Option Grant Program may be granted an Independent Right not
tied to any underlying Article Two stock option. The Independent Right
shall be exercisable upon such terms and conditions as the Plan
Administrator may establish and shall entitle the holder to receive a
distribution from the Corporation in an amount equal to the excess of (i)
the aggregate Fair Market Value (on the exercise date of such right) of
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the shares of Common Stock subject to the exercised right over (ii) the
aggregate base price in effect for those shares.
2. The number of shares subject to the Independent Right and the
base price in effect for those shares shall be determined by the Plan
Administrator in its sole discretion at the time the Independent Right is
granted. The base price may be less than, equal to or greater than the
Fair Market Value (on the grant date of the right) of the shares subject to
that right.
3. The distribution to which the holder of the Independent Right
shall become entitled under this Section V may be made in shares of Common
Stock valued at Fair Market Value on the exercise date of such right, in
cash, or partly in shares and partly in cash, as the Plan Administrator
shall in its sole discretion deem appropriate.
F. The following terms and conditions shall govern the grant and
exercise of Limited Rights under this Article Two:
1. One or more officers of the Corporation subject to the short-
swing profit restrictions of the federal securities laws may, in the Plan
Administrator's sole discretion, be granted Limited Rights with respect to their
outstanding options under this Article Two.
2. Upon the occurrence of a Hostile Take-Over, each such officer
holding one or more options with such a Limited Right in effect for at least six
(6) months shall have the unconditional right (exercisable for a thirty (30)-day
period following such Hostile Take-Over) to surrender each such option to the
Corporation, to the extent the option is at the time exercisable for fully
vested shares of Common Stock. The officer shall in return be entitled to a cash
distribution from the Corporation in an amount equal to the excess of (i) the
Take-Over Price of the vested shares of Common Stock at the time subject to each
surrendered option (or surrendered portion of such option) over (ii) the
aggregate exercise price payable for such vested shares. Such cash distribution
shall be made within five (5) days following the option surrender date.
3. Neither the approval of the Plan Administrator nor the consent
of the Board shall be required in connection with such option surrender and cash
distribution. Any unsurrendered portion of the option shall continue to remain
outstanding and become exercisable in accordance with the terms of the
instrument evidencing such grant.
G. The shares of Common Stock subject to any stock appreciation
right exercised under this Section V shall NOT be available for subsequent
issuance under the Plan.
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ARTICLE THREE
AUTOMATIC OPTION GRANT PROGRAM
I. ELIGIBILITY
A. Eligible Optionees. The individuals eligible to receive
automatic option grants pursuant to the provisions of this Article Three shall
be limited to (i) those individuals who are first elected as non-employee Board
members at the 1994 Annual Meeting of Stockholders, (ii) those individuals who
are first elected or appointed as non-employee Board members after the date of
such Annual Meeting, whether through appointment by the Board or election by the
Corporation's stockholders, and (iii) those individuals who are re-elected to
serve as non-employee Board members at one or more Annual Stockholder Meetings
beginning with the 1994 Annual Meeting. Any non-employee Board member eligible
to participate in the Automatic Option Grant Program pursuant to the foregoing
criteria shall be designated an Eligible Director for purposes of this Article
Three.
B. Limitation. Except for the option grants to be made pursuant
to the provisions of this Automatic Option Grant Program and any share issuance
to be made pursuant to the provisions of the Stock Fee Program under Article
Four, non-employee Board members shall not be eligible to receive any option
grants or stock issuances under this Plan or any other stock plan of the
Corporation (or its Subsidiaries).
II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. Grant Dates. Option grants shall be made under this Article
Three on the dates specified below:
1. Each individual who is first elected as an Eligible Director at
the 1994 Annual Meeting of Stockholders shall automatically be granted on the
date of such Meeting a Non-Statutory Option to purchase 5,000 shares of Common
Stock upon the terms and conditions of this Article Three.
2. Each individual who first becomes an Eligible Director after
the date of the 1994 Annual Meeting of Stockholders, whether through election by
the Corporation's stockholders or appointment by the Board, shall automatically
be granted, at the time of such initial election or appointment, a Non-Statutory
Option to purchase 5,000 shares of Common Stock upon the terms and conditions of
this Article Three.
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3. On the date of each Annual Meeting of Stockholders, beginning with
the 1994 Annual Meeting, each individual who is at that time re-elected as a
non-employee Board member shall automatically be granted a Non-Statutory Option
to purchase an additional 5,000 shares of Common Stock upon the terms and
conditions of this Article Three, provided such individual has served as a Board
member for at least twelve (12) months.
B. No Limitation. There shall be no limit on the number of such
5,000-share annual option grants any one Eligible Director may receive over his
or her period of Board service. The number of shares for which the automatic
option grants are to be made to newly elected or continuing Eligible Directors
shall be subject to periodic adjustment pursuant to the applicable provisions of
Section VI.E. of Article One.
C. Exercise Price. The exercise price per share of Common Stock
of each automatic option grant made under this Article Three shall be equal to
one hundred percent (100%) of the Fair Market Value per share of Common Stock on
the automatic grant date.
D. Payment. The exercise price shall be payable in any of the
alternative forms authorized under Section I.A.2 of Article Two. To the extent
the option is exercised for any unvested shares, the Optionee must execute and
deliver to the Corporation a stock purchase agreement for those unvested shares
which provides the Corporation with the right to repurchase, at the exercise
price paid per share, any unvested shares held by the Optionee at the time of
cessation of Board service and which precludes the sale, transfer or other
disposition of the purchased shares at any time while those shares remain
subject to the Corporation's repurchase right.
E. Option Term. Each automatic grant under this Article Three
shall have a maximum term of ten (10) years measured from the automatic grant
date.
F. Exercisability/Vesting. Each automatic grant shall be
immediately exercisable for any or all of the option shares. However, any
shares purchased under the option shall be subject to repurchase by the
Corporation, at the exercise price paid per share, upon the Optionee's cessation
of Board service prior to vesting in those shares. Each automatic grant shall
vest, and the Corporation's repurchase right shall lapse, in a series of two (2)
equal and successive annual installments over the Optionee's period of continued
service as a Board member, with the first such installment to vest upon
Optionee's completion of one (1) year of Board service measured from the
automatic grant date.
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Vesting of the option shares shall be subject to acceleration as
provided in Section II.H.3 and Section III of this Article Three. In no event
shall any additional option shares vest after the Optionee's cessation of Board
service, except as otherwise provided pursuant to Section II.H.3 of this Article
Three.
G. Non-Transferability. During the lifetime of the Optionee, the
automatic option grant, together with the limited stock appreciation right
pertaining to such option, shall be exercisable only by the Optionee and shall
not be assignable or transferable except for a transfer of the option effected
by will or by the laws of descent and distribution following the Optionee's
death.
H. Termination of Board Service.
1. Should the Optionee cease to serve as a Board member for any
reason (other than death or Permanent Disability) while holding one or more
automatic option grants under this Article Three, then such individual shall
have a six (6)-month period following the date of such cessation of Board
service in which to exercise each such option for any or all of the option
shares in which the Optionee is vested at the time of such cessation of Board
service. However, each such option shall immediately terminate and cease to
remain outstanding, at the time of such cessation of Board service, with respect
to any option shares in which the Optionee is not otherwise at that time vested
under such option.
2. Should the Optionee die within six (6) months after cessation
of Board service, then any automatic option grant held by the Optionee at the
time of death may subsequently be exercised, for any or all of the option shares
in which the Optionee is vested at the time of his or her cessation of Board
service (less any option shares subsequently purchased by the Optionee prior to
death), by the personal representative of the Optionee's estate or by the person
or persons to whom the option is transferred pursuant to the Optionee's will or
in accordance with the laws of descent and distribution. The right to exercise
each such option shall lapse upon the expiration of the twelve (12)-month period
measured from the date of the Optionee's death.
3. Should the Optionee die or become Permanently Disabled while
serving as a Board member, then the shares of Common Stock at the time subject
to each automatic option grant held by the Optionee shall immediately vest in
full (and the Corporation's repurchase right with respect to such shares shall
terminate), and the Optionee (or the representative of the Optionee's estate or
the person or persons to whom the option is transferred upon the
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Optionee's death) shall have a twelve (12)-month period following the date of
the Optionee's cessation of Board service in which to exercise such option for
any or all of those vested shares of Common Stock.
4. In no event shall any automatic grant under this Article Three
remain exercisable after the expiration date of the ten (10)-year option term.
Upon the expiration of the applicable post-service exercise period under
subparagraphs 1 through 3 above or (if earlier) upon the expiration of the ten
(10)-year option term, the automatic grant shall terminate and cease to be
outstanding for any option shares in which the Optionee was vested at the time
of his or her cessation of Board service but for which such option was not
otherwise exercised.
I. Stockholder Rights. The holder of an automatic option grant
under this Article Three shall have none of the rights of a stockholder with
respect to any shares subject to that option until such individual shall have
exercised the option and paid the exercise price for the purchased shares.
J. Remaining Terms. The remaining terms and conditions of each
automatic option grant shall be as set forth in the form Automatic Stock Option
Agreement attached as Exhibit A to the Plan.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL/
HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction, the shares of Common
Stock at the time subject to each outstanding option under this Article Three
but not otherwise vested shall automatically vest in full and the Corporation's
repurchase right with respect to those shares shall terminate, so that each such
option shall, immediately prior to the specified effective date for the
Corporate Transaction, become fully exercisable for all of the shares of Common
Stock at the time subject to that option and may be exercised for all or any
portion of such shares as fully vested shares of Common Stock. Immediately
following the consummation of the Corporate Transaction, all automatic option
grants under this Article Three shall terminate and cease to remain outstanding,
except to the extent one or more such grants are assumed by the successor entity
or its parent corporation.
B. In connection with any Change in Control or Hostile Take-Over
of the Corporation, the shares of Common Stock at the time subject to each
outstanding option under this Article Three but not otherwise vested shall
automatically vest in full and the Corporation's repurchase right with respect
to those shares shall terminate, so that each such option shall, immediately
prior to the
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specified effective date for the Change in Control or Hostile Take-Over, become
fully exercisable for all of the shares of Common Stock at the time subject to
that option and may be exercised for all or any portion of such shares as fully
vested shares of Common Stock. Each option shall remain so exercisable for all
the option shares following the Change in Control or Hostile Take-Over until the
expiration or sooner termination of the option term.
C. Upon the occurrence of a Hostile Take-Over, the Optionee shall
also have a thirty (30)-day period in which to surrender to the Corporation each
option held by him or her under this Article Three for a period of at least six
(6) months. The Optionee shall in return be entitled to a cash distribution
from the Corporation in an amount equal to the excess of (i) the Take-Over Price
of the shares of Common Stock at the time subject to the surrendered option over
(ii) the aggregate exercise price payable for such shares. Such cash
distribution shall be paid within five (5) days following the surrender of the
option to the Corporation. Neither the approval of the Plan Administrator nor
the consent of the Board shall be required in connection with such option
surrender and cash distribution. The shares of Common Stock subject to each
option surrendered in connection with the Hostile Take-Over shall NOT be
available for subsequent issuance under the Plan.
D. The automatic option grants outstanding under this Article
Three shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
IV. AMENDMENT OF THE AUTOMATIC GRANT PROVISIONS
The provisions of this Automatic Option Grant Program, together with
the automatic option grants outstanding under this Article Three, may not be
amended at intervals more frequently than once every six (6) months, other than
to the extent necessary to comply with applicable federal income tax laws and
regulations.
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ARTICLE FOUR
STOCK FEE PROGRAM
I. ELIGIBILITY
Each individual serving as a non-employee Board member shall be
eligible to elect to apply all or any portion of the annual retainer fee
otherwise payable to such individual in cash to the acquisition of unvested
shares of Common Stock upon the terms and conditions of this Article Four.
II. ELECTION PROCEDURE
A. Filing. The non-employee Board member must make the stock-in-
lieu-of-fee election prior to the start of the calendar year for which the
election is to be effective. The first calendar year for which any such
election may be filed shall be the 1995 calendar year. The election, once
filed, shall be irrevocable. The election for any upcoming calendar year may be
filed at any time prior to the start of that year, but in no event later than
December 31 of the immediately preceding calendar year. The non-employee Board
member may file a standing election to be in effect for two (2) or more
consecutive calendar years or to remain in effect indefinitely until revoked by
written instrument filed with the Plan Administrator at least six (6) months
prior to the start of the first calendar year for which such standing election
is no longer to remain in effect.
B. Election Form. The election must be filed with the Plan
Administrator on the appropriate form provided for this purpose. On the
election form, the non-employee Board member must indicate the percentage or
dollar amount of his or her annual retainer fee to be applied to the acquisition
of unvested restricted shares under this Article Six Program.
III. SHARE ISSUANCE
A. Issue Date. On the first trading day in January of the
calendar year for which the election is effective, the portion of the retainer
fee subject to such election shall automatically be applied to the acquisition
of shares of Common Stock by dividing the elected dollar amount by the Fair
Market Value per share of Common Stock on that trading day. The number of
issuable shares shall be rounded down to the next whole share, and the issued
shares shall be held in escrow by the Secretary of the Corporation as partly-
paid shares until the non-employee Board member vests in
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those shares. The non-employee Board member shall have full shareholder rights,
including voting, dividend and liquidation rights, with respect to all issued
shares held in escrow on his or her behalf, but such shares shall not be
assignable or transferable while they remain unvested.
B. Vesting. Upon completion of each calendar month of Board
service during the year for which the election is in effect, the non-employee
Board member shall vest in one-twelfth (1/12) of the issued shares, and the
stock certificate for those shares shall be released from escrow. Immediate
vesting in all the issued shares shall occur in the event (i) the non-employee
Board member should die or become Permanently Disabled during his or her period
of Board service or (ii) there should occur a Corporate Transaction, Change in
Control or Hostile Take-Over occur while such individual remains in Board
service. Should such individual cease Board service prior to vesting in one or
more monthly installments of the issued shares, then those unvested shares shall
be immediately cancelled by the Corporation for cancellation, and the non-
employee Board member shall not be entitled to any cash payment or other
consideration from the Corporation with respect to the cancelled shares and
shall have no further shareholder rights with respect to such shares.
IV. AMENDMENT OF THE STOCK FEE PROGRAM PROVISIONS
A. Limited Amendments. The provisions of this Stock Fee Program,
together with the unvested share issuances outstanding under this Article Four,
may not be amended at intervals more frequently than once every six (6) months,
other than to the extent necessary to comply with applicable federal income tax
laws and regulations.
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ARTICLE FIVE
SALARY REDUCTION GRANT PROGRAM
I. ELIGIBILITY
The Plan Administrator shall have plenary authority to select, prior
to the start of each calendar year, the particular key employees who shall be
eligible for participation in the Salary Reduction Grant Program for that
calendar year. In order to participate for a particular calendar year, each
selected individual must, prior to the start of that calendar year, file with
the Plan Administrator (or its designate) an irrevocable authorization directing
the Corporation to reduce his or her base salary for that calendar year by a
designated multiple of one percent (1%), but in no event less than five percent
(5%).
The Plan Administrator shall review the filed authorizations and
determine whether to approve, in whole or in part, one or more of those
authorizations. To the extent the Plan Administrator approves one or more
authorizations, the individuals who filed those authorizations shall be granted
options under this Salary Reduction Grant Program. To the extent one or more
authorizations are not approved by the Primary Committee, those authorizations
shall have no force or effect and no options shall be granted under this Article
Five to the individuals who filed those authorizations.
To the extent options are granted under the Salary Reduction Grant
Program, such options shall be Non-Statutory Options evidenced by instruments in
such form as the Primary Committee shall from time to time approve; provided,
however, that each such instrument shall comply with and incorporate the terms
and conditions specified below.
II. TERMS AND CONDITIONS OF OPTION
A. Exercise Price.
1. The exercise price per share shall be thirty-three and one-
third percent (33-1/3%) of the Fair Market Value per share of Common Stock on
the grant date.
2. The exercise price shall become immediately due upon exercise
of the option and shall be payable in any of the alternative forms authorized
under Section I.A.2 of Article Two.
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B. Number of Option Shares. The number of shares of Common Stock for
which each grant under this Article Five is to be made to a selected Optionee
shall be determined pursuant to the following formula (rounded down to the
nearest whole number):
X = A / (B x 66-2/3%), where
X is the number of option shares,
A is the dollar amount of the approved reduction in the
Optionee's base salary for the calendar year, and
B is the Fair Market Value per share of Common Stock on the date
of the grant.
C. Term and Exercise of Options.
1. Each option shall have a maximum term of ten (10) years
measured from the grant date. Provided the Optionee continues in Service, the
option shall become exercisable for (i) fifty percent (50%) of the option shares
on the last day of June in the calendar year for which the option is granted and
for (ii) the balance of the option shares in a series of six (6) successive
equal monthly installments on the last day of each of the next six (6) calendar
months.
2. During the Optionee's lifetime, the option shall be exercisable
only by the Optionee and shall not be assignable or transferable other than by
transfer of the option effected by will or by the laws of descent and
distribution following the Optionee's death.
D. Effect of Termination of Service.
1. Should an Optionee cease Service for any reason AFTER his or
her outstanding option under this Article Five has become exercisable in whole
or in part, then that option shall remain exercisable, for any or all of the
shares for which the option is exercisable on the date of such cessation of
Service, until the expiration of the ten (10)-year option term or its sooner
termination under Section III.A. of this Article Five. Following the Optionee's
death, such option may be exercised, for any or all of the shares for which the
option is exercisable at the time of the Optionee's death, by the personal
representative of the
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Optionee's estate or by the person or persons to whom the option is transferred
pursuant to the Optionee's will or in accordance with the laws of descent and
distribution. Such right of exercise shall lapse, and the option shall
terminate, upon the expiration of the ten (10)-year option term or its sooner
termination under Section III.A. of this Article Five.
2. Should the Optionee die BEFORE his or her outstanding option
under this Article Five becomes exercisable for any of the option shares, then
the personal representative of the Optionee's estate or the person or persons to
whom the option is transferred pursuant to the Optionee's will or in accordance
with the laws of descent and distribution shall nevertheless have the right to
exercise such option for up to that number of option shares equal to (i) one-
twelfth (1/12) of the total number of option shares multiplied by (ii) the
number of full calendar months which have elapsed between the first day of the
calendar year for which the option was granted and the last day of the calendar
month during which the Optionee ceases Service. Such right of exercise shall
lapse, and the option shall terminate, upon the earliest to occur of (i) the
specified expiration date of the option term, (ii) the termination of the option
under Section III.A. of this Article Five or (iii) the third anniversary of the
date of the Optionee's death. However, the option shall, with respect to any
and all option shares for which it is not exercisable at the time of the
Optionee's cessation of Service, terminate immediately upon such cessation of
Service and shall cease to remain outstanding with respect to those option
shares.
3. Should the Optionee become Permanently Disabled and cease by
reason thereof to remain in Service BEFORE his or her outstanding option under
this Article Five becomes exercisable for any of the option shares, then the
Optionee shall nevertheless have the right to exercise such option for up to
that number of option shares equal to (i) one-twelfth (1/12) of the total number
of option shares multiplied by (ii) the number of full calendar months which
have elapsed between the first day of the calendar year for which the option was
granted and the last day of the calendar month during which the Optionee ceases
Service. Such right of exercise shall lapse, and the option shall terminate,
upon the expiration of the ten (10)-year option term or its sooner termination
under Section III.A. of this Article Five. However, the option shall, with
respect to any and all option shares for which it is not exercisable at the time
of the Optionee's cessation of Service, terminate immediately upon such
cessation of Service and shall cease to remain outstanding with respect to those
option shares.
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4. Except to the limited extent specifically provided in
subparagraphs 2 and 3 above, should the Optionee cease for any reason to remain
in Service before his or her outstanding option under this Article Five first
become exercisable for one or more option shares, then that option shall
immediately terminate upon such cessation of Service and shall cease to remain
outstanding.
E. Stockholder Rights. The Optionee shall have none of the rights
of a stockholder with respect to any option shares until such individual shall
have exercised the option and paid the exercise price for those shares.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL/
HOSTILE TAKE-OVER
A. Should any Corporate Transaction occur while the Optionee
remains in Service, then each outstanding option held by such Optionee under
this Article Five shall become exercisable, immediately prior to the specified
effective date of such Corporate Transaction, for all of the shares at the time
subject to such option and may be exercised for any or all of such shares as
fully-vested shares of Common Stock. Immediately following the consummation of
the Corporate Transaction, each such option shall terminate unless assumed by
the successor entity or its parent corporation.
B. Upon the occurrence of (i) a Hostile Take-Over while the
Optionee remains in Service or (ii) the Involuntary Termination of the
Optionee's Service following a Change in Control, each outstanding option held
by such Optionee under this Article Five shall immediately become exercisable
for all of the shares at the time subject to such option and may be exercised
for any or all of such shares as fully-vested shares of Common Stock. The
option shall remain so exercisable until the expiration of the ten (10)-year
option term.
C. Option grants under this Article Five shall not affect the
Corporation's right to adjust, reclassify, reorganize or change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer any or all of its assets.
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ARTICLE SIX
STOCK ISSUANCE PROGRAM
I. TERMS AND CONDITIONS OF STOCK ISSUANCES
Shares of Common Stock may be issued under the Stock Issuance Program
through direct and immediate purchases without any intervening stock option
grants. The issued shares shall be evidenced by a Stock Issuance Agreement
("Issuance Agreement") that complies with the terms and conditions of this
Article Six.
A. Consideration
1. Newly Issued Shares shall be issued under the Stock Issuance
Program for one or more of the following items of consideration that the Plan
Administrator may deem appropriate in each individual instance:
(i) full payment in cash or check made payable to the
Corporation's order,
(ii) a promissory note payable to the Corporation's order in one
or more installments, which may be subject to cancellation in whole or in
part upon terms and conditions established by the Plan Administrator, or
(iii) past services rendered to the Corporation or any
Subsidiary.
2. Newly Issued Shares may, in the absolute discretion of the Plan
Administrator, be issued for consideration with a value less than, equal to or
greater than the Fair Market Value of such shares at the time of issuance, but
in no event less than the par value per issued share of Common Stock.
3. Treasury Shares may be issued under the Stock Issuance Program for
such consideration (including one or more of the items of consideration
specified in subparagraph 1 above) as the Plan Administrator may deem
appropriate, whether such consideration is in an amount less than, equal to or
greater than the Fair Market Value of the Treasury Shares at the time of
issuance. Treasury Shares may, in lieu of any cash consideration, be issued
subject to such vesting requirements tied to the Participant's period of future
Service or the Corporation's attainment of specified performance objectives as
the Plan Administrator may establish at the time of issuance.
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4. Treasury Shares may also, in the Plan Administrator's absolute
discretion, be issued pursuant to an irrevocable election by the Participant to
receive a portion of his or her base salary in shares of Common Stock in lieu of
such base salary. Any such issuance shall be effected in accordance with the
following guidelines:
- On the first trading day in January of the calendar year for which
the election is effective, the portion of base salary subject to such
election shall automatically be applied to the acquisition of Common Stock
by dividing the elected dollar amount by the Fair Market Value per share of
the Common Stock on that trading day. The number of issuable shares shall
be rounded down to the next whole share, and the issued shares shall be
held in escrow by the Secretary of the Corporation until the Participant
vests in those shares. The Participant shall have full stockholder rights,
including voting, dividend and liquidation rights, with respect to all
issued shares held in escrow on his or her behalf, but such shares shall
not be assignable or transferable while they remain unvested.
- Upon completion of each calendar month of Service during the year
for which the election is in effect, the Participant shall vest in one-
twelfth (1/12) of the issued shares, and the stock certificate for those
shares shall be released from escrow. All the issued shares shall
immediately vest upon (i) the occurrence of a Corporate Transaction or
Hostile Take-Over while such individual remains in Service or (ii) the
Involuntary Termination of the Participant's Service following a Change in
Control. Should the Participant otherwise cease Service prior to vesting
in one or more monthly installments of the issued shares, then those
unvested shares shall immediately be surrendered to the Corporation for
cancellation, and the Participant shall not be entitled to any cash payment
or other consideration from the Corporation with respect to the cancelled
shares and shall have no further stockholder rights with respect to such
shares.
B. Vesting Provisions
1. The shares of Common Stock issued under the Stock Issuance Program
(other than shares issued in lieu of salary) may, in the absolute discretion of
the Plan Administrator, be fully and immediately vested upon issuance or may
vest in installments over the Participant's period of Service. The elements of
the vesting
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schedule applicable to any unvested shares of Common Stock issued under the
Stock Issuance Program, namely:
(i) the Service period to be completed by the Participant or the
performance objectives to be achieved by the Corporation,
(ii) the number of installments in which the shares are to vest,
(iii) the interval or intervals (if any) which are to lapse
between installments, and
(iv) the effect which death, Permanent Disability or other event
designated by the Plan Administrator is to have upon the vesting schedule,
shall be determined by the Plan Administrator and incorporated into the Issuance
Agreement executed by the Corporation and the Participant at the time such
unvested shares are issued.
2. The Participant shall have full stockholder rights with respect to
any shares of Common Stock issued to him or her under the Stock Issuance
Program, whether or not his or her interest in those shares is vested.
Accordingly, the Participant shall have the right to vote such shares and to
receive any regular cash dividends paid on such shares. Any new, additional or
different shares of stock or other property (including money paid other than as
a regular cash dividend) which the Participant may have the right to receive
with respect to his or her unvested shares by reason of any stock dividend,
stock split, recapitalization, combination of shares, exchange of shares or
other change affecting the outstanding Common Stock as a class without the
Corporation's receipt of consideration shall be issued, subject to (i) the same
vesting requirements applicable to the Participant's unvested shares and (ii)
such escrow arrangements as the Plan Administrator shall deem appropriate.
3. Should the Participant cease to remain in Service while holding one
or more unvested shares of Common Stock under the Stock Issuance Program, then
those shares shall be immediately cancelled by the Corporation, and the
Participant shall have no further stockholder rights with respect to those
shares. To the extent the cancelled shares were previously issued to the
Participant for consideration paid in cash or cash equivalent (including the
Participant's purchase-money promissory note), the Corporation shall repay to
the Participant the cash consideration paid for the surrendered shares and shall
cancel the unpaid principal balance of any outstanding purchase-
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money note of the Participant attributable to such cancelled shares. The
cancelled shares may, at the Plan Administrator's discretion, be retained by the
Corporation as Treasury Shares or may be retired to authorized but unissued
share status.
4. The Plan Administrator may in its discretion elect to waive the
cancellation of one or more unvested shares of Common Stock (or other assets
attributable thereto) which would otherwise occur upon the non-completion of the
vesting schedule applicable to such shares. Such waiver shall result in the
immediate vesting of the Participant's interest in the shares of Common Stock as
to which the waiver applies. Such waiver may be effected at any time, whether
before or after the Participant's cessation of Service or the attainment or non-
attainment of the applicable performance objectives.
II. CORPORATE TRANSACTIONS/CHANGE IN CONTROL/
HOSTILE TAKE-OVER
A. Upon the occurrence of any Corporate Transaction, all unvested
shares of Common Stock at the time outstanding under this Stock Issuance Program
(other than shares issued in lieu of base salary) shall immediately vest in full
and the Corporation's repurchase rights shall terminate, except to the extent:
(i) any such repurchase right is expressly assigned to the successor corporation
(or parent thereof) in connection with the Corporate Transaction or (ii) such
termination is precluded by other limitations imposed in the Issuance Agreement.
B. The Plan Administrator shall have the discretionary authority,
exercisable at any time while unvested shares remain outstanding under this
Stock Issuance Program, to provide for the immediate and automatic vesting of
those unvested shares in whole or in part, and the termination of the
Corporation's repurchase rights with respect to those shares, upon the
occurrence of a Change in Control or Hostile Take-Over. The Plan Administrator
shall also have full power and authority to condition any such accelerated
vesting upon the subsequent termination of the Participant's Service through an
Involuntary Termination effected within a specified period following the Change
in Control or Hostile Take-Over.
II. TRANSFER RESTRICTIONS/SHARE ESCROW
A. Unvested shares may, in the Plan Administrator's discretion, be
held in escrow by the Corporation until the Participant's interest in such
shares vests or may be issued directly to the Participant with restrictive
legends on the certificates evidencing such unvested shares. To the extent an
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escrow arrangement is utilized, the unvested shares and any securities or other
assets issued with respect to such shares (other than regular cash dividends)
shall be delivered in escrow to the Corporation to be held until the
Participant's interest in such shares (or other securities or assets) vests.
Alternatively, if the unvested shares are issued directly to the Participant,
the restrictive legend on the certificates for such shares shall read
substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE UNVESTED AND ARE
SUBJECT TO (I) CERTAIN TRANSFER RESTRICTIONS AND (II) CANCELLATION OR
REPURCHASE IN THE EVENT THE REGISTERED HOLDER (OR HIS/HER PREDECESSOR IN
INTEREST) CEASES TO REMAIN IN THE CORPORATION'S SERVICE. SUCH TRANSFER
RESTRICTIONS AND THE TERMS AND CONDITIONS OF SUCH CANCELLATION OR
REPURCHASE ARE SET FORTH IN A STOCK ISSUANCE AGREEMENT BETWEEN THE
CORPORATION AND THE REGISTERED HOLDER (OR HIS/HER PREDECESSOR IN INTEREST)
DATED ________________, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF THE CORPORATION."
B. The Participant shall have no right to transfer any unvested
shares of Common Stock issued to him or her under the Stock Issuance Program.
For purposes of this restriction, the term "transfer" shall include (without
limitation) any sale, pledge, assignment, encumbrance, gift, or other
disposition of such shares, whether voluntary or involuntary. Upon any such
attempted transfer, the unvested shares shall immediately be cancelled in
accordance with substantially the same procedures in effect under Section I.B.3
of this Article Six, and neither the Participant nor the proposed transferee
shall have any rights with respect to such cancelled shares. However, the
Participant shall have the right to make a gift of unvested shares acquired
under the Stock Issuance Program to the Participant's spouse or issue, including
adopted children, or to a trust established for such spouse or issue, provided
the transferee of such shares delivers to the Corporation a written agreement to
be bound by all the provisions of the Stock Issuance Program and the Issuance
Agreement applicable to the transferred shares.
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ARTICLE SEVEN
MISCELLANEOUS
I. LOANS OR INSTALLMENT PAYMENTS
A. The Plan Administrator may, in its discretion, assist any Optionee
or Participant (including an Optionee or Participant who is an officer of the
Corporation), in the exercise of one or more options granted to such Optionee
under the Discretionary Option Grant Program or the Salary Reduction Grant
Program or the purchase of one or more shares issued to such Participant under
the Stock Issuance Program, including the satisfaction of any federal, state and
local income and employment tax obligations arising therefrom, by (i)
authorizing the extension of a loan from the Corporation to such Optionee or
Participant or (ii) permitting the Optionee or Participant to pay the exercise
price or purchase price for the acquired shares in installments over a period of
years. The terms of any loan or installment method of payment (including the
interest rate and terms of repayment) shall be upon such terms as the Plan
Administrator specifies in the applicable option or issuance agreement or
otherwise deems appropriate under the circumstances. Loans or installment
payments may be authorized with or without security or collateral. However, the
maximum credit available to the Optionee or Participant may not exceed the
exercise or purchase price of the acquired shares (less the par value of such
shares) plus any federal, state and local income and employment tax liability
incurred by the Optionee or Participant in connection with the acquisition of
such shares.
B. The Plan Administrator may, in its absolute discretion, determine
that one or more loans extended under this financial assistance program shall be
subject to forgiveness by the Corporation in whole or in part upon such terms
and conditions as the Plan Administrator may deem appropriate.
II. AMENDMENT OF THE PLAN AND AWARDS
A. The Board has complete and exclusive power and authority to amend
or modify the Plan (or any component thereof) in any or all respects whatsoever.
However, (i) no such amendment or modification shall adversely affect rights and
obligations with respect to stock options, stock appreciation rights or unvested
stock issuances at the time outstanding under the Plan, unless the Optionee or
Participant consents to such amendment, and (ii) any amendment made to the
Automatic Option Grant Program or the Stock
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Fee Program (or any stock options or unvested shares outstanding thereunder)
shall be in compliance with the applicable limitations of Section IV of Article
Three and Section III of Article Four. In addition, the Board may not, without
the approval of the Corporation's stockholders, amend the Plan to (i) materially
increase the maximum number of shares issuable under the Plan, the number of
shares for which options may be granted to newly elected or continuing non-
employee Board members under Article Three or the maximum number of shares for
which any one individual participating in the Plan may be granted stock options,
concurrently or independently exercisable stock appreciation rights and direct
stock issuances in the aggregate over the term of the Plan, except for
permissible adjustments under Section VI.E. of Article One, (ii) materially
modify the eligibility requirements for Plan participation or (iii) materially
increase the benefits accruing to Optionees or Participants.
B. Options to purchase shares of Common Stock may be granted under
the Discretionary Option Grant Program and the Salary Reduction Grant Program
and shares of Common Stock may be issued under the Stock Issuance Program, which
are in excess of the number of shares then available for issuance under the
Plan, provided any excess shares actually issued under the Discretionary Option
Grant Program, the Salary Reduction Grant Program or the Stock Issuance Program
are held in escrow until stockholder approval is obtained for a sufficient
increase in the number of shares available for issuance under the Plan. If such
stockholder approval is not obtained within twelve (12) months after the date
the first such excess option grants or excess share issuances are made, then (i)
any unexercised excess options shall terminate and cease to be exercisable and
(ii) the Corporation shall promptly refund the purchase price paid for any
excess shares actually issued under the Plan and held in escrow, together with
interest (at the applicable short term federal rate) for the period the shares
were held in escrow.
III. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common Stock
upon the exercise of stock options or stock appreciation rights or the direct
issuance or vesting of such shares under the Plan shall be subject to the
satisfaction of all applicable federal, state and local income tax and
employment tax withholding requirements.
B. The Plan Administrator may, in its discretion and in accordance
with the provisions of this Section III and such supplemental rules as the Plan
Administrator may from time to time adopt (including the applicable safe-harbor
provisions of
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Securities and Exchange Commission Rule 16b-3), provide any or all holders of
Non-Statutory Options (other than the automatic option grants made pursuant to
Article Three) or unvested shares under the Stock Issuance Program with the
right to use shares of Common Stock in satisfaction of all or part of the
federal, state and local income and employment tax liabilities (the "Taxes")
incurred by such holders in connection with the exercise of their options or the
vesting of their shares. Such right may be provided to any such holder in
either or both of the following formats:
- Stock Withholding: The holder of the Non-Statutory Option or
unvested shares may be provided with the election to have the Corporation
withhold, from the shares of Common Stock otherwise issuable upon the exercise
of such Non-Statutory Option or the vesting of such shares, a portion of those
shares with an aggregate Fair Market Value equal to the percentage of the Taxes
(up to one hundred percent (100%)) specified by such holder.
- Stock Delivery: The holder of the Non-Statutory Option or the
unvested shares may be provided with the election to deliver to the Corporation,
at the time the Non-Statutory Option is exercised or the shares vest, one or
more shares of Common Stock previously acquired by such individual (other than
in connection with the option exercise or share vesting triggering the Taxes)
with an aggregate Fair Market Value equal to the percentage of the Taxes (up to
one hundred percent (100%)) specified by such holder.
IV. EFFECTIVE DATE AND TERM OF PLAN
A. This Plan shall become effective immediately upon approval by the
Corporation's stockholders at the 1994 Annual Meeting. The Plan shall serve as
the successor to the Predecessor Plans, and no further option grants or stock
issuances shall be made under the Predecessor Plans from and after the date of
1994 Annual Meeting, if this Plan is approved.
B. Each option issued and outstanding under the Predecessor Plans and
each unvested share issued thereunder immediately prior to the Effective Date of
this Plan shall be incorporated into this Plan and treated as an outstanding
option or share issuance under this Plan, but each such option and share
issuance shall continue to be governed solely by the terms and conditions of the
instrument evidencing such grant or issuance, and nothing in this Plan shall be
deemed to affect or otherwise modify the rights or obligations of the holders of
such options or share issuances with respect to their acquisition of shares of
Common Stock thereunder.
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C. One or more provisions or features of this Plan may, in the Plan
Administrator's discretion, be extended to any or all stock options or share
issuances outstanding under the Predecessor Plans on the Effective Date and
incorporated into this Plan.
D. The Plan shall terminate upon the earlier of (i) December 31, 2008
or (ii) the date on which all shares available for issuance under the Plan shall
have been issued or cancelled pursuant to the exercise of options or stock
appreciation rights or the issuance of shares (whether vested or unvested) under
the Plan. If the date of termination is determined under clause (i) above, then
all option grants and unvested stock issuances outstanding on such date shall
thereafter continue to have force and effect in accordance with the provisions
of the instruments evidencing such grants or issuances.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
pursuant to option grants or stock issuances under the Plan shall be used for
general corporate purposes.
VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option or
stock appreciation right under the Plan, the issuance of any shares under the
Stock Issuance Program, and the issuance of Common Stock upon the exercise of
the stock options and stock appreciation rights granted hereunder shall be
subject to the Corporation's procurement of all approvals and permits required
by regulatory authorities having jurisdiction over the Plan, the stock options
and stock appreciation rights granted under it and the Common Stock issued
pursuant to it.
B. No shares of Common Stock or other assets shall be issued or
delivered under this Plan unless and until there shall have been compliance with
all applicable requirements of federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any securities exchange on which the Common Stock is then listed for trading.
VII. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing the Plan, nor
any action taken by the Plan Administrator hereunder, nor any provision of the
Plan shall be construed so as to grant any individual the right to remain in the
Service of the Corporation
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(or Subsidiary) for any period of specific duration, and the Corporation (or any
Subsidiary retaining the services of such individual) may terminate such
individual's Service at any time and for any reason, with or without cause.
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ADDENDUM I
AMDAHL CORPORATION UNITED KINGDOM STOCK OPTION SCHEME
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ADDENDUM I TO AMDAHL 1994 STOCK INCENTIVE PLAN
AMDAHL CORPORATION UNITED KINGDOM STOCK OPTION SCHEME
Preamble
This scheme is for the benefit of those employees of Amdahl
Corporation and its subsidiary corporations who are subject to taxation in the
United Kingdom. The terms and conditions of this scheme are established in order
to render the scheme capable of approval as an approved share option scheme
under Schedule 10 of the United Kingdom Finance Act of 1984 ("Schedule 10").
Accordingly, the terms and conditions of this scheme shall be interpreted in a
manner consistent with Schedule 10. All options subject to the provisions of
this scheme shall be specifically designated as "Approved U.K. Stock Options."
This scheme is an addendum to the 1994 Stock Incentive Plan (the
"Plan") and should be read in conjunction with the Plan. Accordingly, any
options specifically designated as Approved U.K. Stock Options will be subject
to the terms and conditions of the Plan except to the extent that such terms and
conditions differ from (or are otherwise in conflict with) the express
provisions of this scheme. Any term not otherwise defined in this scheme shall
have the meaning set forth in Section II, Article One of the Plan.
(a) Eligibility. The individuals eligible to receive Approved U.K.
Stock Options shall be limited to:
(i) any director of the Corporation or one or more of its
Subsidiaries who normally devotes not less than an aggregate of 25 hours
per week (excluding meal breaks) to the duties of such directorships,
provided any such grant to a non-employee director shall be subject to the
limitations of Article Three of the Plan; or
(ii) any non-director employee of the Corporation or its
Subsidiaries who is required under his terms of employment to provide not
less than an aggregate of 20 hours per week of service (excluding meal
breaks) to the Corporation or its Subsidiaries.
An individual may not be granted, nor may an individual exercise, an
Approved U.K. Stock Option if such individual has at the time (or had at any
time during the preceding twelve (12) months) a material interest (within the
meaning of paragraph 4(1)(b) of Schedule 10) in a close company (as defined
under Chapter III of Part XI of the Taxes Act) which (i) is able to
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control the affairs of the Corporation or (ii) is one of a number of companies
which among themselves beneficially own Qualified Stock possessing not less than
three-quarters (3/4) of the total combined voting power of all classes of
Qualified Stock of the Corporation and each of which beneficially owns not less
than one-twentieth (1/20) of the total combined voting power of all classes of
such stock. For purposes of this Paragraph (a), the term "Qualified Stock" shall
mean all stock of the Corporation other than stock which entitles its holders to
no right to share in the profits of the Corporation other than the right to
receive a dividend at a fixed rate.
(b) Stock Issued Pursuant to Exercise of Approved U.K. Stock Options.
The shares of Common Stock issued pursuant to the exercise of Approved U.K.
Stock Options shall not be subject to any restrictions (as such term is defined
in Schedule 10) other than restrictions which apply to all outstanding shares of
Common Stock. The issuance of such shares must be effected within thirty (30)
days after the date of exercise of the Approved U.K. Stock Options.
(c) Loans or Guarantee of Loans. Notwithstanding the provisions of
Section I, Article Seven of the Plan, (i) no financing shall be provided
directly or indirectly by the Corporation or any of its Subsidiaries to the
holders of Approved U.K. Stock Options for the purposes of assisting such
individuals in the exercise of their Approved U.K. Stock Options and (ii) no
holder of an Approved U.K. Stock Option shall be permitted to pay in
installments the purchase price of stock acquired pursuant to the exercise of
such option.
(d) Limitation of Rights. Except as may subsequently be permitted by
amendment to Schedule 10, no Optionee may be granted an Approved U.K. Stock
Option under the Plan if such option would, at the time of grant, cause the Fair
Market Value (as of the date of grant) of the Common Stock purchasable under all
Approved U.K. Stock Options granted to such Optionee by (i) the Corporation,
(ii) any company which controls (or at any time within the preceding twelve (12)
months controlled) the Corporation, (iii) any company which is controlled by (or
within the preceding twelve (12) months was controlled by) the Corporation, or
(iv) any company which is (or within the preceding twelve (12) months was) under
the control of the same person or persons as control the Corporation to exceed
in the aggregate the greatest of:
(A) 100,000 pounds sterling,
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(B) four (4) times the Optionee's Earnings for his current or
immediately preceding tax year (whichever is greater), or
(C) if there are no Earnings for the previous tax year, four
(4) times the Optionee's Earnings for the twelve (12)-month period
measured from the first day of the current tax year for which there
are Earnings.
For purposes of this scheme, the term "Earnings" shall mean the Optionee's
income from the office or position of employment which renders him eligible to
receive Approved U.K. Stock Options, but only to the extent such income is
subject to United Kingdom withholding taxes (i.e., PAYE). The term "Earnings",
however, shall not include any taxable benefits-in-kind included in the
Optionee's income pursuant to Chapter II of Part III of the Finance Act 1976.
(e) Changes in Capitalization. No change or adjustment shall be
effected pursuant to Section VI, Article One of the Plan to (i) the number
and/or class of shares or other securities covered by an outstanding Approved
U.K. Stock Option or (ii) the exercise price payable per share under an
outstanding Approved U.K. Stock Option unless any approval required by the Board
of Inland Revenue is first obtained.
(f) Amendment of the Scheme. This scheme may not be amended without
prior Inland Revenue approval. Accordingly, unless Board of Inland Revenue
approval shall have been obtained for any amendment to the Plan, the terms and
conditions of this scheme shall be determined by reference to the provisions of
the Plan as in existence prior to such amendment.
(g) Surrender of Options. Notwithstanding Section III and V, Article
Two and Section III, Article Three of the Plan, no Approved U.K. Stock Option
may be surrendered for a cash or stock payment from the Corporation.
(h) Exercise Upon Death. Notwithstanding Section I.C. of Article Two
and Section II.H. of Article Three of the Plan, upon the Optionee's death an
Approved U.K. Stock Option may (i) in no event remain outstanding for more than
one (1) year and (ii) be exercised only by the deceased Optionee's personal
representatives.
(i) Share Limitations. Notwithstanding Section II.B., Article Seven of
the Plan, no Approved U.K. Stock Option may be granted pursuant to the
provisions of this scheme to purchase
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shares of Common Stock in excess of the number of shares then available for
issuance under the Plan.
(j) Stock Subject to the Scheme. No Approved U.K. Stock Option may be
granted pursuant to the provisions of this scheme to purchase stock which does
not satisfy the requirements of paragraphs 7 to 11 of Schedule 10.
(k) Immediate Sale Program: Date of Exercise. Notwithstanding Section
I.A., Article Two of the Plan, with respect to the exercise of an Approved U.K.
Stock Option for which the option price is being provided through use of the
Immediate Sale Program, the option shall be considered to have been exercised as
of the date written notice of exercise of the option is delivered to the
Corporation provided the option price is paid within thirty (30) days thereof.
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ADDENDUM II
AMDAHL CORPORATION REPUBLIC OF IRELAND STOCK OPTION SCHEME
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ADDENDUM II TO AMDAHL 1994 STOCK INCENTIVE PLAN
AMDAHL CORPORATION REPUBLIC OF IRELAND STOCK OPTION SCHEME
----------------------------------------------------------
Preamble
- --------
This scheme is for the benefit of those employees and directors of
Amdahl Corporation and its subsidiary corporations who are subject to taxation
in the Republic of Ireland with respect to the receipt or exercise of options
under the 1994 Stock Incentive Plan (the "Plan"). The terms and conditions of
this scheme are established in order to render the scheme capable of approval as
an approved share option scheme under Schedule 2 of the Republic of Ireland
Finance Act, 1986 ("Schedule 2"). Accordingly, the terms and conditions of this
scheme shall be interpreted in a manner consistent with Schedule 2. All options
subject to the provisions of this scheme shall be specifically designated as
"Approved Irish Stock Options."
This scheme is an addendum to the Plan and should be read in
conjunction therewith. Accordingly, any options specifically designated as
Approved Irish Stock Options will be subject to the terms and conditions of the
Plan except to the extent that such terms and conditions differ from (or
otherwise are in conflict with) the express provisions of this scheme. It is
intended that options granted under the Plan which are not specifically
designated as Approved Irish Stock Options will not come within the scope of
Section 10 of the Republic of Ireland Finance Act, 1986. Any term not defined
in this scheme shall have the meaning set forth in Section II, Article One of
the Plan.
(a) Eligibility. The individuals eligible to receive Approved Irish
Stock Options shall be limited to:
(i) Any director of the Corporation or one or more of its
Subsidiaries who is required to devote substantially the whole of his time
to such directorship or directorships, provided any such grant to a non-
employee director shall be subject to the limitations of Article Three of
the Plan; or
(ii) Any non-director employee of the Corporation or one or more
of its Subsidiaries who is required under the terms of his employment to
work for such company or companies for at least twenty (20) hours per week.
An individual may not be granted, nor may an individual exercise, an
Approved Irish Stock Option if such individual has at
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the time (or had at any time during the preceding twelve (12) months) a material
interest (within the meaning of paragraph 5(4) of Schedule 2) in a close company
(as defined under Part X of the Republic of Ireland Corporation Tax Act, 1976,
as modified by Paragraph 5(3) of Schedule 2) which is able to control the
affairs of the Corporation or is a member of a consortium (within the meaning of
Paragraph 1(4) of Schedule 2) which owns such a company.
(b) Stock Subject to the Scheme. The shares of Common Stock issued
pursuant to exercise of an Approved Irish Stock Option shall not be subject to
any restrictions which apply to all Common Stock and shall otherwise satisfy the
requirements of paragraphs 7 to 11 of Schedule 2.
(c) Plan Amendments. No amendment to the Plan shall affect the terms
and conditions of this scheme or of any Approved Irish Stock Option until the
earlier of (i) the date the Revenue Commissioner shall have approved such
amendment or (ii) the date the Board specifies that, whether or not approval of
the Revenue Commissioner shall have first been obtained, such amendment is to
become effective with respect to this scheme and Approved Irish Stock Options.
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EXHIBIT A
---------
AUTOMATIC STOCK OPTION AGREEMENT
--------------------------------
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NOTICE OF
AUTOMATIC STOCK OPTION GRANT
Notice is hereby given of the following stock option (the "Option") to
purchase shares of the common stock of Amdahl Corporation (the "Corporation")
which has been granted pursuant to the Automatic Option Grant Program in effect
under the Corporation's 1994 Stock Incentive Plan ( the "Plan"):
OPTIONEE: _______________________________
GRANT DATE: _______________________________
TYPE OF OPTION: Non-Statutory Stock Option
EXERCISE PRICE: $_________________ per share
NUMBER OF OPTION SHARES: 5,000 shares
EXPIRATION DATE: _____________________________
EXERCISE SCHEDULE: The Option is immediately exercisable for all the
Option Shares
VESTING SCHEDULE: The Option Shares shall initially be unvested and
subject to repurchase by the Corporation, at the Exercise Price paid
per share, upon Optionee's cessation of service as a member of the
Corporation's Board of Directors (the "Board") prior to vesting in the
Option Shares. Optionee shall acquire a vested interest in the Option
Shares, and the Corporation's repurchase right with respect to the
Option Shares shall lapse, in two (2) equal and successive annual
installments over Optionee's continued period of Board service, with
the first such installment to vest upon Optionee's completion of one
(1) year of Board service measured from the Grant Date. In no event
shall any additional Option Shares vest following Optionee's cessation
of Board service for any reason other than death or permanent
disability.
Optionee understands and agrees that the Option is granted subject to
and in accordance with the express terms and conditions of the Plan governing
automatic option grants to Board members. Optionee further agrees to be bound
by the terms and
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conditions of the Plan and the terms and conditions of the Option as set forth
in the Automatic Stock Option Agreement attached hereto as Exhibit A.
Optionee hereby acknowledges receipt of a copy of the official Plan
Summary and Prospectus. A copy of the Plan is also available upon request made
to the Corporate Secretary at the Corporate Offices at 1250 East Arques Avenue,
P.O. Box 3470, Sunnyvale, California 94088-3470.
REPURCHASE RIGHT. OPTIONEE HEREBY AGREES THAT ALL UNVESTED OPTION
SHARES ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL NOT BE TRANSFERABLE AND
SHALL BE SUBJECT TO REPURCHASE BY THE CORPORATION AND ITS ASSIGNS, AT THE
EXERCISE PRICE PAID PER SHARE, UPON OPTIONEE'S CESSATION OF SERVICE AS A MEMBER
OF THE CORPORATION'S BOARD OF DIRECTORS. THE TERMS AND CONDITIONS OF SUCH
REPURCHASE RIGHT SHALL BE SET FORTH IN A STOCK ISSUANCE AGREEMENT, IN FORM AND
SUBSTANCE SATISFACTORY TO THE CORPORATION, EXECUTED BY OPTIONEE AT THE TIME OF
THE OPTION EXERCISE.
No provision of this Notice of Automatic Stock Option Grant or the
attached Automatic Stock Option Agreement shall in any way be construed or
interpreted so as to affect adversely or otherwise impair the right of the
Corporation or the stockholders to remove Optionee from the Board at any time in
accordance with the provisions of applicable law.
DATED: ____________________, 199__
AMDAHL CORPORATION
By: ______________________________
Title: ___________________________
______________________________
OPTIONEE
Address: ________________________
________________________
ATTACHMENTS:
- -----------
EXHIBIT A: AUTOMATIC STOCK OPTION GRANT AGREEMENT
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AMDAHL CORPORATION
AUTOMATIC STOCK OPTION GRANT AGREEMENT
RECITALS
A. The Corporation has approved an Automatic Option Grant Program under
the 1994 Stock Incentive Plan (the "Plan"), pursuant to which special option
grants are to be made to eligible members of the Corporation's Board of
Directors (the "Board") at periodic intervals over their period of Board service
in order to encourage such individuals to remain in the Corporation's service.
B. Optionee is an eligible Board member, and this Agreement is executed
pursuant to, and is intended to carry out the purposes of, the Plan in
connection with the automatic grant of a stock option to purchase shares of the
Corporation's common stock ("Common Stock") under the Plan.
C. The granted option is intended to be a non-statutory option which does
not meet the requirements of Section 422 of the Internal Revenue Code and is
designed to provide Optionee with a meaningful incentive to continue to serve as
a member of the Board.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. Subject to and upon the terms and conditions set
forth in this Agreement, there is hereby granted to Optionee, as of the date of
grant (the "Grant Date") specified in the accompanying Notice of Grant of
Automatic Stock Option (the "Grant Notice"), a stock option to purchase up to
that number of shares of Common Stock (the "Option Shares") as is specified in
the Grant Notice. The Option Shares shall be purchasable from time to time
during the option term at the price per share (the "Exercise Price") specified
in the Grant Notice.
2. OPTION TERM. This option shall have a maximum term of ten (10)
years measured from the Grant Date and shall expire at the close of business on
the Expiration Date specified in the Grant Notice, unless sooner terminated
under Paragraph 5, 7 or 8.
3. LIMITED TRANSFERABILITY. This option, together with the special
stock appreciation right provided under Paragraph 8.b, shall be neither
transferable nor assignable by Optionee, other than a transfer of this option
effected by will or by the laws of descent and distribution following Optionee's
death, and may be exercised, during Optionee's lifetime, only by Optionee.
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4. EXERCISABILITY. This option shall be immediately exercisable for any
or all of the Option Shares, whether or not the Option Shares are at the time
vested in accordance with the Vesting Schedule set forth in the Grant Notice,
and this option shall remain so exercisable until the expiration or sooner
termination of the option term. In no event, however, shall any additional
Option Shares vest following Optionee's cessation of service as a Board member
for any reason other than death or permanent disability.
5. CESSATION OF BOARD SERVICE. Should Optionee's service as a Board
member cease while this option remains outstanding, then the option term
specified in Paragraph 2 shall terminate (and this option shall cease to remain
outstanding) prior to the Expiration Date in accordance with the following
provisions:
a. Should Optionee cease to serve as a Board member for any reason
(other than death or permanent disability) while holding this option, then
the period for exercising this option shall be reduced to a six (6)-month
period commencing with the date of such cessation of Board service, but in
no event shall this option be exercisable at any time after the Expiration
Date. During such limited period of exercisability, this option may not be
exercised for more than the number of Option Shares (if any) in which
Optionee is vested on the date Optionee ceases service as a Board member.
Upon the earlier of (i) the expiration of such six (6)-month period or (ii)
the specified Expiration Date, the option shall terminate and cease to be
exercisable with respect to any vested Option Shares for which the option
has not otherwise been exercised.
b. Should Optionee die during the six (6)-month period following his
or her cessation of Board service, then the personal representative of
Optionee's estate or the person or persons to whom the option is
transferred pursuant to Optionee's will or in accordance with the laws of
descent and distribution shall have the right to exercise this option for
any or all of the Option Shares in which Optionee is vested at the time of
Optionee's cessation of Board service (less any Option Shares subsequently
purchased by Optionee prior to death). Such right of exercise shall
terminate, and this option shall accordingly cease to remain exercisable
for such vested Option Shares, upon the earlier of (i) the expiration of
the twelve (12)-month period measured from the date of Optionee's death or
(ii) the specified Expiration Date of the option term.
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c. Should Optionee die or become permanently disabled while serving
as a Board member, then all the Option Shares subject to this option at the
time of such cessation of Board service shall immediately vest, and
Optionee (or the personal representative of Optionee's estate or the person
or persons to whom the option is transferred pursuant to Optionee's will or
in accordance with the laws of descent and distribution) shall have the
right to exercise this option for any or all of those vested Option Shares.
Such right of exercise shall terminate, and this option shall accordingly
cease to remain outstanding with respect to the Option Shares, upon the
earlier of (i) the expiration of the twelve (12)-month period measured from
the date on which Optionee dies or becomes permanently disabled or (ii) the
specified Expiration Date of the option term.
d. Upon Optionee's cessation of Board service for any reason other
than death or permanent disability, this option shall immediately terminate
and cease to remain outstanding with respect to any and all Option Shares
in which Optionee is not otherwise at that time vested in accordance with
the normal Vesting Schedule set forth in the Grant Notice or the special
vesting acceleration provisions of Paragraph 7 or 8.
e. Optionee shall be deemed to be PERMANENTLY DISABLED if Optionee
is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment expected to result in
death or to be of continuous duration of twelve (12) months or more.
6. ADJUSTMENT IN OPTION SHARES.
A. Should any change be made to the Common Stock issuable under the Plan
by reason of any stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting such Common Stock as a
class without the Corporation's receipt of consideration, then the number and
class of securities purchasable under this option and the Exercise Price payable
per share shall be appropriately adjusted to prevent the dilution or enlargement
of Optionee's rights hereunder; provided, however, the aggregate Exercise Price
shall remain the same.
B. To the extent this option is assumed in connection with any Corporate
Transaction under Paragraph 7 or is otherwise to continue in effect, this option
shall be appropriately adjusted,
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immediately after such Corporate Transaction, to apply and pertain to the number
and class of securities which would have been issued to Optionee, in
consummation of such Corporate Transaction, had this option been exercised
immediately prior to such Corporate Transaction. Appropriate adjustments shall
also be made to the Exercise Price payable per share, provided the aggregate
Exercise Price payable for such securities shall remain the same.
7. CORPORATE TRANSACTION. In the event of any of the following
stockholder-approved transactions to which the Corporation is a party (a
"Corporate Transaction"):
a. a merger or consolidation in which the Corporation is not the
surviving entity, except for a transaction the principal purpose of which
is to change the state in which the Corporation is incorporated,
b. the sale, transfer or other disposition of all or substantially
all of the assets of the Corporation in complete liquidation or dissolution
of the Corporation, or
c. any reverse merger in which the Corporation is the surviving
entity but in which securities possessing more than fifty percent (50%) of
the total combined voting power of the Corporation's outstanding securities
are transferred to a person or persons different from those who held such
securities immediately prior to such merger,
all Option Shares at the time subject to this option but not
otherwise vested shall automatically vest in full and the Corporation's
repurchase right with respect to those shares shall immediately terminate, so
that this option shall, immediately prior to the specified effective date for
the Corporate Transaction, become fully exercisable for all of the Option
Shares at the time subject to this option and may be exercised for all or any
portion of such shares as fully vested shares of Common Stock. Immediately
following the consummation of the Corporate Transaction, this option shall
terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof).
8. CHANGE IN CONTROL/HOSTILE TAKEOVER.
a. All Option Shares subject to this option at the time of a
Change in Control or Hostile Take-Over (as such terms are defined below) but
not otherwise vested shall automatically vest in full, and the Corporation's
repurchase right shall immediately terminate with respect to those shares, so
that this option shall,
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immediately prior to the effective date of such Change in Control or Hostile
Take-Over, become fully exercisable for all of the Option Shares at the time
subject to this option and may be exercised for all or any portion of such
shares as fully vested shares of Common Stock. This option shall remain
exercisable for such fully vested Option Shares until the earliest to occur of
(i) the specified Expiration Date of the option term, (ii) the sooner
termination of this option in accordance with Paragraph 5 or 7 or (iii) the
surrender of this option under Paragraph 8.b.
b. Provided this option has been outstanding for at least six
(6) months prior to the occurrence of a Hostile Take-Over, Optionee shall also
have the unconditional right (exercisable during the thirty (30)-day period
immediately following the consummation of such Hostile Take-Over) to surrender
this option to the Corporation in exchange for a cash distribution from the
Corporation in an amount equal to the excess of (i) the Take-Over Price of the
Option Shares at the time subject to the surrendered option over (ii) the
aggregate Exercise Price payable for such shares.
To exercise this limited stock appreciation right, Optionee must,
during the applicable thirty (30)-day exercise period, provide the Corporation
with written notice of the option surrender in which there is specified the
number of Option Shares as to which the Option is being surrendered. Such
notice must be accompanied by the return of Optionee's copy of this Agreement,
together with any written amendments to such Agreement. The cash distribution
shall be paid to Optionee within five (5) days following such delivery date,
and neither the approval of the Plan Administrator nor the consent of the Board
shall be required in connection with the option surrender and cash
distribution. Upon receipt of such cash distribution, this option shall be
cancelled with respect to the shares subject to the surrendered option (or the
surrendered portion), and Optionee shall cease to have any further right to
acquire those Option Shares under this Agreement. However, should this option
be surrendered for only a portion of the Option Shares at the time subject to
the option, a new stock option agreement (substantially in the form of this
Agreement) shall be issued by the Corporation for the balance of the Option
Shares for which this option is not surrendered.
This limited stock appreciation right shall in all events terminate
upon the expiration or sooner termination of the option term and may not be
assigned or transferred by Optionee.
c. Definitions: For purposes of this Agreement, the following
definitions shall be in effect:
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CHANGE IN CONTROL: a change in ownership or control of the
Corporation effected through either of the following transactions:
- a direct acquisition by any person (or related group of persons)
of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Act of 1934, as amended (the "1934 Act"), of
securities possessing more than ten percent (10%) of the total combined
voting power of the Corporation's outstanding securities,
- the direct or indirect acquisition by any person or related group
of persons, whether by tender or exchange offer made directly to the
Corporation's stockholders, private purchases from one or more of the
Corporation's stockholders, open market purchases or any other
transaction, of additional securities of the Corporation which increases
the beneficial ownership (within the meaning of Rule 13d-3 of the 1934
Act) of the total securities holdings of such person (or related group of
persons) to a level of securities possessing more than fifty percent (50%)
of the total combined voting power of the Corporation's outstanding
securities, or
- the direct or indirect acquisition by any person or related group
of persons, whether by tender or exchange offer made directly to the
Corporation's stockholders, private purchases from one or more of the
Corporation's stockholders, open market purchases or any other
transaction, of beneficial ownership (within the meaning of Rule 13d-3 of
the 1934 Act) of securities of the Corporation possessing sufficient
voting power in the aggregate to elect an absolute majority of the Board
(rounded up to the next whole number).
HOSTILE TAKE-OVER: a change in ownership of the Corporation effected
through the following transaction:
- the direct or indirect acquisition by any person or related group
of persons of beneficial ownership (within the meaning of Rule 13d-3 of
the 1934 Act) of securities possessing more than fifty percent (50%) of
the total combined voting power of the Corporation's outstanding
securities pursuant to a tender or exchange offer made directly to the
Corporation's stockholders which the Board does not recommend such
stockholders to accept, and
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- more than fifty percent (50%) of the acquired securities are
accepted from holders other than the officers and directors of the
Corporation subject to the short-swing profit restrictions of Section 16
of the 1934 Act.
TAKE-OVER PRICE: the greater of (i) the Fair Market Value (as defined
in subparagraph 9.b. below) per share of Common Stock on the date the option is
surrendered to the Corporation in connection with the Hostile Take-Over or (ii)
the highest reported price per share of Common Stock paid by the tender offeror
in effecting such Hostile Take-Over.
9. MANNER OF EXERCISING OPTION.
a. In order to exercise this option for all or any part of the
Option Shares for which the option is at the time exercisable, Optionee (or in
the case of exercise after Optionee's death, Optionee's executor,
administrator, heir or legatee, as the case may be) must take the following
actions:
(1) To the extent the option is exercised for vested Option
Shares, the Secretary of the Corporation shall be provided with written
notice of the option exercise (the "Exercise Notice"), in substantially
the form of Exhibit I attached hereto, in which there is specified the
number of vested Option Shares which are to be purchased under the
exercised option. To the extent the option is exercised for one or more
unvested Option Shares, Optionee (or other person exercising the option)
shall deliver to the Secretary of the Corporation a stock Issuance
Agreement (in form and substance satisfactory to the Corporation) which
grants the Corporation the right to repurchase, at the Exercise Price, any
and all unvested Option Shares held by Optionee at the time of his or her
cessation of Board service and which precludes the sale, transfer or other
disposition of any purchased Option Shares subject to such repurchase
right ("the Issuance Agreement").
(2) The aggregate Exercise Price for the purchased shares shall
be paid in one of the following alternative forms:
(a) full payment in cash or check made payable to the
Corporation's order;
(b) full payment in shares of Common Stock held by Optionee
for the requisite period necessary to avoid a charge to the
Corporation's earnings for financial reporting
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purposes and valued at Fair Market Value on the Exercise Date (as
defined below);
(c) full payment in a combination of shares of Common Stock
held for the requisite period necessary to avoid a charge to the
Corporation's earnings for financial reporting purposes and valued at
Fair Market Value on the Exercise Date and cash or check made payable
to the Corporation's order; or
(d) to the extent the option is exercised for vested Option
Shares, full payment effected through the Immediate Sale Program: a
broker-dealer sale and remittance procedure pursuant to which
Optionee shall provide concurrent irrevocable written instructions
(i) to a Corporation-designated brokerage firm to effect the
immediate sale of the vested shares purchased under the option and
remit to the Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate Exercise
Price payable for those shares and (ii) to the Corporation to deliver
the certificates for the purchased shares directly to such brokerage
firm in order to complete the sale.
(3) Appropriate documentation evidencing the right to exercise
this option shall be furnished the Corporation if the person or persons
exercising the option is other than Optionee.
b. For purposes of subparagraph 9.a. above and for all other
valuation purposes under this Agreement, the Fair Market Value per share of
Common Stock on any relevant date shall be the mean between the highest and
lowest selling prices per share on the date in question on the principal
exchange on which the Common Stock is then listed or admitted to trading, as
such prices are reported on the composite tape of transactions on such
exchange. If there are no reported sales of the Common Stock on the date in
question, then the Fair Market Value shall be the mean between the highest and
lowest selling prices on the last preceding date for which such quotations
exist.
c. The Exercise Date shall be the date on which the Exercise
Notice is delivered to the Secretary of the Corporation, together with the
appropriate Issuance Agreement for any unvested shares acquired under the
option. Except to the extent the Immediate Sale Program specified above
is
60
<PAGE>
utilized in connection with the exercise of the option for vested Option
Shares, payment of the Exercise Price for the purchased shares must accompany
such notice.
d. As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or other person or persons
exercising this option) a certificate or certificates representing the
purchased Option Shares. To the extent any such Option Shares are unvested,
the certificates for those Option Shares shall be endorsed with an appropriate
legend evidencing the Corporation's repurchase rights and may be held in escrow
with the Corporation until such shares vest.
e. In no event may this option be exercised for any fractional
share.
10. STOCKHOLDER RIGHTS. The holder of this option shall not have any
of the rights of a stockholder with respect to the Option Shares until such
individual shall have exercised this option and paid the Exercise Price for
the purchased shares.
11. NO IMPAIRMENT OF RIGHTS. This Agreement shall not in any way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise make changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets. Nor shall this Agreement in any way be construed or
interpreted so as to affect adversely or otherwise impair the right of the
Corporation or the stockholders to remove Optionee from the Board at any time
in accordance with the provisions of applicable law.
12. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of this
option and the issuance of the Option Shares upon such exercise shall be
subject to compliance by the Corporation and Optionee with all applicable
requirements of law relating thereto and with all applicable regulations of any
securities exchange on which shares of the Common Stock may be listed for
trading at the time of such exercise and issuance.
13. SUCCESSORS AND ASSIGNS. Except to the extent otherwise
provided in Paragraph 3 or 7, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, the successors, administrators, heirs,
legal representatives and assigns of Optionee and the Corporation's successors
and assigns.
14. DISCHARGE OF LIABILITY. The inability of the Corporation to
obtain approval from any regulatory body having authority deemed by the
Corporation to be necessary to the lawful issuance and sale of any Common Stock
pursuant to this option shall
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<PAGE>
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been
obtained. However, the Corporation shall use its best efforts to obtain all
such applicable approvals.
15. NOTICES. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation in care of the Corporate Secretary at the Corporate Offices
at 1250 East Arques Avenue, P.O. Box 3470, Sunnyvale, California 94088-3470.
Any notice required to be given or delivered to Optionee shall be in writing
and addressed to Optionee at the address indicated below Optionee's signature
line on the Grant Notice. All notices shall be deemed to have been given or
delivered upon personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the party to be notified.
16. CONSTRUCTION/GOVERNING LAW. This Agreement and the option
evidenced hereby are made and granted pursuant to the Plan and are in all
respects limited by and subject to the express terms and provisions of the
Plan, including the Automatic Option Grant Program provisions of Article Three
of the Plan. The interpretation, performance and enforcement of this Agreement
shall be governed by the laws of the State of California without resort to that
State's conflict-of-laws provisions.
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EXHIBIT I
NOTICE OF EXERCISE OF
AUTOMATIC STOCK OPTION
I hereby notify Amdahl Corporation (the "Corporation") that I elect
to purchase ____________________ shares of the Corporation's common stock par
value of $.05 per share (the "Purchased Shares") at the option exercise price
of $______ per share (the "Exercise Price") pursuant to that certain option
(the "Option") granted to me under the Corporation's 1994 Stock Incentive Plan
on ___________, 199_ to purchase up to 5,000 shares of the Corporation's common
stock.
Concurrently with the delivery of this Exercise Notice to the
Secretary of the Corporation, I shall hereby pay to the Corporation the
Exercise Price for the Purchased Shares in accordance with the provisions of my
agreement with the Corporation evidencing the Option and shall deliver whatever
additional documents may be required by such agreement as a condition for
exercise. Alternatively, I may utilize the special Immediate Sale Program
procedure specified in my agreement to effect payment of the Exercise Price for
any Purchased Shares in which I am vested at the time of exercise.
- ----------------------------------- ------------------------------------------
Date Optionee
Address: _______________________________
_______________________________
Print name in exact manner
it is to appear on the
stock certificate: __________________________________________
Address to which certificate
is to be sent, if different
from address above: __________________________________________
__________________________________________
Social Security Number: __________________________________________
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<PAGE>
AMDAHL CORPORATION
P STOCKHOLDER'S PROXY SOLICITED BY BOARD OF DIRECTORS OF THE COMPANY
R
O The undersigned hereby appoint(s) John C. Lewis and E. Joseph Zemke,
X each with power of substitution, as its proxy to vote all of its shares
Y of common stock of Amdahl Corporation, $0.05 par value, at the Annual
Meeting of Stockholders of Amdahl Corporation to be held at the Fairmont
Hotel, 170 South Market, San Jose, California, on Thursday, May 5, 1994
at 11:00 a.m., and at any adjournment or postponement thereof.
This Proxy when properly executed will be voted in the manner directed
herein. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ITEMS 1
THROUGH 3, AND IN THE DISCRETION OF THE PROXYHOLDER ON OTHER MATTERS AS
MAY PROPERLY COME BEFORE THE MEETING. You are encouraged to specify your
choices by marking the appropriate boxes. SEE REVERSE SIDE. Your shares
cannot be voted unless you sign and return this card.
Election of Directors, Nominees:
John C. Lewis, E. Joseph Zemke, Keizo
Fukagawa, E. F. Heizer, Jr., Kazuto
Kojima, R. Stanley Laing, Burton G.
Malkiel, George R. Packard, Walter B.
Reinhold, Takamitsu Tsuchimoto, J. Sidney
Webb.
YOU MAY WITHHOLD AUTHORITY TO VOTE FOR ANY OF THE NOMINEES BY
LISTING THAT NOMINEE'S NAME AND MARKING THE WITHHOLD LIMITED
BOX IN ITEM 1 ON THE REVERSE SIDE.
SEE
REVERSE
SIDE
<PAGE>
- --------------------------------------------------------------------------------
5134
Please mark your votes as in this example.
X
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
ITEMS 1, 2, AND 3.
- --------------------------------------------------------------------------------
1. Election of Directors
(see reverse)
FOR ALL
WITHHOLD LIMITED
WITHHOLD ALL
Withhold authority for:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. Adoption
of the
1994
Stock
Incentive
Plan.
FOR
AGAINST
ABSTAIN
3. Ratification
of the
selection
of
Arthur
Andersen
& Co. as
independent
public
accountants
for
1994.
FOR
AGAINST
ABSTAIN
Mark the box on the right if you wish to withhold discretionary
authority to act upon such other business as may properly come before
the meeting. WITHHOLD
Mark the box on the right if you receive Amdahl Corporation's Annual
Report from some other source and wish not to receive one with your Proxy
Statement in 1995.
SIGNATURE(S) ___________________________ DATE _________________________________
NOTE: Please sign exactly as name(s) appears
hereon. When signing as attorney, executor,
administrator, trustee or guardian, please
give full title as such. If shares are held
jointly, each holder should sign. If the
stockholder is a corporation, please sign
the full corporate name, by duly authorized
officer.
