<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended April 1, 1994
Commission file no. 1-7713
AMDAHL CORPORATION
(Exact name of registrant as specified in its charter)
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<CAPTION>
<S> <C>
Delaware 94-1728548
(State of incorporation) (I.R.S. Employer
Identification No.)
1250 East Arques Avenue
Sunnyvale, California 94088-3470
(Address of principal executive offices) (Zip code)
Registrant's telephone number: (408) 746-6000
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X
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No
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Number of shares of common stock, $.05 par value, outstanding at May 10, 1994:
115,468,754.
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PART I. FINANCIAL INFORMATION
AMDAHL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The following unaudited consolidated financial statements reflect, in the
opinion of management, all adjustments (which, other than the accounting change
described in the notes and the restructuring charges described in Management's
Discussion and Analysis of Financial Condition and Results of Operations,
include only normal recurring adjustments) necessary to present fairly the
financial position as of the dates and results of operations for the periods
indicated.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the Securities and Exchange
Commission rules and regulations. Amdahl Corporation (the Company) believes the
information included in the following report on Form 10-Q, when read in
conjunction with the financial statements and related notes included in the
Company's 1993 Annual Report to Stockholders, not to be misleading.
The results of operations for the three months ended April 1, 1994, are not
necessarily indicative of results for the entire year ending December 30, 1994.
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AMDAHL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 1, 1994 AND DECEMBER 31, 1993
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(Dollars in thousands)
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<CAPTION>
1994 1993
----------- ----------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 251,739 $ 149,484
Short-term investments 94,359 103,585
Receivables, net of allowances 270,845 307,747
Inventories -
Purchased materials 146,706 134,615
Systems in process 182,057 233,560
Finished goods 105,899 142,527
Prepaid expenses and deferred tax benefit 53,132 53,629
---------- ----------
Total current assets 1,104,737 1,125,147
---------- ----------
Long-term receivables and other assets 45,647 45,620
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Property and equipment, at cost
Leased systems 55,216 60,229
System spares 401,887 418,057
Production and data processing equipment 499,423 667,137
Office furniture, equipment, and improvements 153,592 158,062
Land and buildings 155,757 177,791
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1,265,875 1,481,276
Less - Accumulated depreciation and amortization (821,241) (979,856)
---------- ----------
Property and equipment, net 444,634 501,420
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$1,595,018 $1,672,187
========== ==========
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Liabilities and stockholders' equity
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<S> <C> <C>
Current liabilities:
Notes payable and short-term debt $ 12,250 $ 137,056
Accounts payable 46,675 54,331
Accounts payable - stockholder (Fujitsu Limited) 20,395 18,092
Accrued liabilities 535,279 561,281
---------- ----------
Total current liabilities 614,599 770,760
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Long-term debt - stockholder (Fujitsu Limited) 80,000 -
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Long-term liabilities 47,401 52,208
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Deferred income taxes 54,604 59,013
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Stockholders' equity:
Common stock, $.05 par value -
Authorized - 200,000,000 shares
Outstanding - 115,154,000 at April 1, 1994
and 114,578,000 shares at December 31, 1993 5,758 5,729
Additional paid-in capital 510,850 507,895
Retained earnings 274,774 267,664
Cumulative translation adjustments 8,572 8,918
Unrealized holding losses on securities (1,540) -
---------- ----------
Total stockholders' equity 798,414 790,206
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$1,595,018 $1,672,187
========== ==========
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AMDAHL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
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(In thousands, except per common share amounts)
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<CAPTION>
FOR THE THREE MONTHS ENDED
APRIL 1, 1994 MARCH 26, 1993
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<S> <C> <C>
REVENUES
Equipment sales $235,716 $ 253,087
Equipment lease, maintenance and other 143,075 127,626
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378,791 380,713
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COST OF REVENUES
Equipment sales 170,977 214,836
Equipment lease, maintenance and other 78,745 83,168
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249,722 298,004
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Gross margin 129,069 82,709
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OPERATING EXPENSES
Engineering and development 55,481 89,015
Marketing, general and administrative 69,206 91,458
Restructuring charges - 243,000
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124,687 423,473
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Income (loss) from operations 4,382 (340,764)
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INTEREST
Income 5,036 6,642
Expense (2,308) (6,231)
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2,728 411
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<S> <C> <C>
Income (loss) before benefit from income taxes 7,110 (340,353)
BENEFIT FROM INCOME TAXES - (91,900)
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Income (loss) before change in accounting principle 7,110 (248,453)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE - 8,746
NET INCOME (LOSS) $ 7,110 $(239,707)
======== =========
PER COMMON SHARE AMOUNTS:
Income (loss) before change in accounting principle $ .06 $(2.19)
Effect of change in accounting principle - .07
-------- ---------
Net income (loss) $ .06 $(2.12)
======== =========
Average outstanding shares 117,193 113,253
======== =========
DIVIDENDS PER COMMON SHARE $ - $ .0125
======== =========
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AMDAHL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(In thousands)
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<CAPTION>
FOR THE THREE MONTHS ENDED
APRIL 1, 1994 MARCH 26, 1993
-------------- ---------------
<S> <C> <C>
Cash and cash equivalents at beginning of period $149,484 $ 173,012
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Cash flows from operating activities:
Net income (loss) 7,110 (239,707)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 35,416 58,487
Restructuring charges - 243,000
Deferred income tax provision (4,362) (10,749)
(Gain) loss on dispositions of property, plant
and equipment (4,416) 798
Decrease in receivables 35,060 197,270
(Increase) decrease in inventories 104,165 (51,208)
(Increase) decrease in prepaid expenses
and deferred tax benefit 373 (60,531)
(Increase) decrease in long-term receivables
and other assets (186) 5,244
Decrease in accounts payable (5,244) (10,415)
Decrease in accrued liabilities (24,100) (25,773)
Decrease in long-term liabilities (4,737) (231)
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Net cash provided by operating activities 139,079 106,185
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<CAPTION>
<S> <C> <C>
Cash flows from investing activities:
(Increase) decrease in short-term investments 7,686 (48,072)
Capital expenditures:
Leased systems (6,865) (4,879)
System spares (754) (25,117)
Other property and equipment (11,559) (9,860)
Proceeds from dispositions of property,
plant and equipment 15,767 6,803
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Net cash provided by (used for) investing activities 4,275 (81,125)
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Cash flows from financing activities:
Increase (decrease) in notes payable and short-
term debt 5,375 (35,800)
Repayments of borrowings under revolving
credit agreement (130,000) -
Long-term borrowings 80,000 -
Sale of common stock and exercise of options 2,984 2,849
Dividends paid - (2,829)
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Net cash used for financing activities (41,641) (35,780)
--------- ---------
Effect of exchange rate changes on cash 542 (789)
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Net increase (decrease) in cash and cash equivalents 102,255 (11,509)
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Cash and cash equivalents at end of period $ 251,739 $ 161,503
========= =========
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<PAGE>
AMDAHL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The accompanying interim financial statements and related notes should be read
in conjunction with the financial statements and related notes included in the
Company's 1993 Annual Report to Stockholders.
ACCOUNTING CHANGE
In the first quarter of 1994 the Company implemented Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt and
Equity Securities. As a result, stockholders' equity was decreased by
$1,540,000 for unrealized holding losses on available-for-sale securities. The
cumulative effect of this accounting change on earnings was immaterial.
RELATIONSHIP WITH FUJITSU LIMITED
During the first quarter of 1994 the Company recognized equipment sales to
Fujitsu Limited (Fujitsu) under distributorship arrangements which contributed
$11,997,000 and $4,222,000 to equipment sales and gross margin, respectively,
compared to $871,000 and $358,000 in the first quarter of 1993. Amounts due
from Fujitsu included in receivables were $9,862,656 and $35,931,000 as of April
1, 1994 and December 31, 1993, respectively.
In the first quarters of 1994 and 1993 the Company charged engineering and
development expense approximately $1,490,000 and $952,000, respectively, for
services and materials supplied by Fujitsu.
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. Such loans bear interest at a rate based upon the London
Interbank Offered Rate. Any outstanding loan balance is payable to Fujitsu on
January 28, 1997. At April 1, 1994, $80,000,000 was outstanding under this
agreement.
SUPPLEMENTARY CASH FLOW DISCLOSURE
Income taxes, net, of $823,000 were refunded to the Company in the first three
months of 1994, and income taxes, net, of $710,000 were paid by the Company in
the first three months of 1993. Interest paid on all borrowings was $1,668,000
and $5,666,000 for the first three months of 1994 and 1993, respectively.
<PAGE>
AMDAHL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis should be read in conjunction
with the Management's Discussion and Analysis included in the Company's 1993
Annual Report to Stockholders.
Results of Operations
First quarter of 1994 compared to first quarter of 1993:
Revenues decreased 0.5% to $378,791,000 in the first quarter of 1994 from
$380,713,000 in the first quarter of 1993, and equipment sales decreased 7%.
Equipment sales of the 5995M mainframe computers increased as levels of demand
rose during the first quarter of 1994 compared to the same quarter in the prior
year. Offsetting this increase were decreases in equipment sales of the
Company's storage products and the older 5995A line of mainframe computers.
Also, prices for the Company's 5995M mainframe computers continued to decline,
but at a rate less severe than the declines experienced in 1992 and 1993, which
the Company believes indicated an improved balance between supply and demand in
the mainframe marketplace in the first quarter of 1994. Equipment lease,
maintenance and other revenues increased 12% in the first quarter of 1994 from
the first quarter of 1993, reflecting increased maintenance revenues from a
larger customer installed base and increased consulting, services and software
revenues.
The gross margin was 34% of revenues in the first quarter of 1994 and 22% in the
first quarter of 1993. The improvement in margins was primarily due to lower
production costs resulting from reductions in excess manufacturing capacity and
other Company-wide restructuring actions begun in 1993. In addition, the
provision charged to cost of equipment sales for implementation of engineering
changes to support IBM features on certain 5995M processors shipped decreased
from the first quarter of 1993 compared to the first quarter of 1994. Also,
gross margins on maintenance service revenues improved, which reflected cost
reduction benefits realized from the restructuring of operations.
Operating expenses, excluding first quarter 1993 restructuring charges of
$243,000,000, declined $56 million or 31% from the first quarter of 1993 to the
first quarter of 1994 and were 33% and 47% of revenues in the first quarters of
1994 and 1993 respectively. First quarter 1994 engineering and development
expenses decreased $34 million or 38% when compared to the first quarter of
1993, primarily due to cancellation of certain of the Company's product
development activities and reduction in the scope of other development projects
as well as other cost reduction benefits
<PAGE>
realized from the restructuring of operations. Engineering and development
expenses also decreased due to the November 1993 agreement with Fujitsu for the
joint development of the next generation of IBM compatible systems. The
decrease in marketing, general and administrative expenses of $22 million or 24%
also reflected cost reduction benefits realized from the restructuring.
First quarter 1994 net interest income increased $2,317,000 from the first
quarter of 1993 due primarily to decreased debt levels, which was partially
offset by decreased interest income from lower levels of sales-type lease
receivables.
The Company made no provision for income taxes in the first quarter of 1994,
which reflected utilization of domestic and foreign net operating loss
carryforward benefits. The effective income tax rate was 27% in the first
quarter of 1993.
Although the Company's performance improved during the first quarter of 1994
when compared to previous quarters in 1993, positive future results over the
near term will depend on a continuation of improved economic conditions in the
Company's primary markets, continued stabilization of pricing for large
mainframe systems, and the ability of the market for mainframe systems to grow
in the face of competition from smaller, less costly computer systems. Also,
stabilization of pricing is dependent on a continued improvement in the balance
between the supply of mainframe systems and customer demand. In addition,
certain component failures associated with the 5995M series, which, as earlier
reported, have affected some 5995M systems at a limited number of customers,
could, unless satisfactorily resolved, adversely impact future results.
The Company believes that the restructuring actions which it took in 1993 will
bring its costs in line with anticipated levels of business for the balance of
1994 and beyond. However, any significant deterioration in these levels of
business would likely require the Company to make additional adjustments to
expense structures and associated additional restructuring charges.
In the latter part of 1993 the Company reorganized along lines of business
consisting of its compatible processors, storage products, maintenance and
consulting services, open systems and Huron software businesses, in order to
enable the Company to more effectively enhance and expand its product offerings.
Because of the factors noted above affecting its traditional mainframe business,
the Company intends to rely increasingly on its ability to utilize lower cost
technologies in future compatible processor products and on the ability of its
newer lines of business to contribute a higher percentage of revenues and
profits to overall operations. Successful implementation of this strategy is,
however, subject to the inherent risks associated with the introduction of new
technologies and the Company's lack of
<PAGE>
extensive experience in developing product offerings not related to its
traditional compatible processor business.
Because of the uncertainties described in the preceding paragraphs, the Company
is unable to predict that it will be able to sustain profitability over the near
term.
<PAGE>
Financial Condition
April 1, 1994, compared to December 31, 1993:
The Company's net cash and investment position (cash and short-term investments
net of short-term and long-term borrowings) improved by $138 million, from $117
million at December 31, 1993 to $255 million at April 1, 1994. Cash, cash
equivalents, and short-term investments increased $93 million and borrowings
decreased $45 million.
Receivables decreased $37 million primarily due to decreases in revenues in the
first quarter of 1994 compared to the fourth quarter of 1993. The Company's
continued efforts to reduce inventory levels resulted in a gross decline of $104
million, which was offset by the transfer of $29 million ($69 million cost and
$40 million accumulated depreciation) of Amdahl manufactured systems to
inventory from property, plant and equipment in the first quarter of 1994 as
part of the downsizing of internal data centers. Net property and equipment
decreased by $57 million primarily due to this transfer as well as ongoing
depreciation charges.
At December 31, 1993, $130,000,000 classified as short-term debt was outstanding
under the Company's revolving credit agreement with a group of banks. This
amount was repaid by the Company upon expiration of the facility on January 31,
1994. At April 1, 1994, $80,000,000 was outstanding under the Fujitsu loan
agreement (see Notes to the Consolidated Financial Statements).
Liquidity
The nature of the computer industry, combined with the current economic
environment, makes it very difficult for the Company to predict future liquidity
requirements with certainty. However, the Company believes that internally
generated cash and borrowings under its loan agreement with Fujitsu will be
adequate to finance continuing operations, investments in plant and equipment,
inventories and spare parts, and expenditures for the development of new
products at least through the next twelve months, providing that financial
results are not significantly less favorable than planned, and objectives for a
further reduction in inventories are achieved. The Company also expects that
other sources of capital will be available to meet any additional financing
requirements during and beyond 1994.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings:
Not applicable.
Item 2. Changes in Securities:
Not applicable.
Item 3. Defaults upon Senior Securities:
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders:
Not applicable.
Item 5. Other information:
Not applicable.
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
10(a) Amdahl Corporation Officer Loan Program, as amended.
10(b) Amdahl Corporation 1994 Stock Incentive Plan.
10(c) Loan Agreement between Amdahl and Fujitsu dated
January 29, 1994.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended
April 1, 1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMDAHL CORPORATION
Date: May 13, 1994 By: /s/ E. Joseph Zemke
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E. Joseph Zemke
President and
Chief Executive Officer
Date: May 13, 1994 By: /s/ Ernest B. Thompson
------------ --------------------------------
Ernest B. Thompson
Vice President and Controller
(Principal Accounting Officer)
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EXHIBIT INDEX
Exhibit
Number Exhibit
- - ------- -------
10(a) Amdahl Corporation Officer Loan Program, as amended
10(b) Amdahl Corporation 1994 Stock Incentive Plan
10(c) Loan Agreement between Amdahl Corporation and Fujitsu Limited
<PAGE>
Exhibit 10(a)
AMDAHL CORPORATION
OFFICER LOAN PROGRAM
(As amended through January 26, 1994)
A. PURPOSE: Pursuant to the specific authority granted to the Board of
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Directors ("Board") under the Company's Stock Option Plan (1971), Stock Option
Plan (1974) and Non-Qualified Stock Option Plan (1982), and pursuant to the
general authority conferred upon the Board by the Delaware General Corporation
Law, the Board hereby implements this Officer Loan Program ("Loan Program") in
order to enable the Company to provide its officers with limited financial
assistance in connection with (i) the acquisition of shares of Company common
stock ("Shares") under the employee stock plans identified below and/or (ii) the
satisfaction of the federal, state and other tax withholding obligations
incurred in connection with such acquisition. The plans (collectively the
"Plans") to which this Program shall pertain are the following employee stock
plans approved by the Company's shareholders:
1. Amdahl Corporation Stock Option Plan (1971),
2. Amdahl Corporation Stock Option Plan (1974),
3. Amdahl Corporation Non-Qualified Stock Option Plan (1982), and
4. Amdahl Corporation Restricted Stock Plan.
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UNDER NO CIRCUMSTANCES SHALL ANY FINANCIAL ASSISTANCE BE PROVIDED
UNDER THIS LOAN PROGRAM IN CONNECTION WITH THE ACQUISITION OF SHARES UPON
EXERCISE OF AN INCENTIVE STOCK OPTION (WITHIN THE MEANING OF SECTION 422A OF THE
INTERNAL REVENUE CODE) GRANTED UNDER ANY OF THE PLANS, UNLESS (A) THE INCENTIVE
STOCK OPTIONS ARE OUTSTANDING ON NOVEMBER 1, 1986 AND HELD BY OFFICERS SUBJECT
TO THE PROVISIONS OF SECTION 16(b) OF THE SECURITIES EXCHANGE ACT OF 1934 OR (B)
THE INSTRUMENT EVIDENCING THE GRANT SPECIFICALLY PERMITS THE OPTIONEE TO APPLY
FOR A LOAN OR GUARANTY FROM THE COMPANY.
B. ADMINISTRATION: The Loan Program shall be administered by the
--------------
Board. The Board may at any time appoint a committee ("Committee") comprised of
three or more members of the Board to administer the provisions of the Loan
Program. The Board or the Committee, whichever is the program administrator,
shall have full authority to adopt rules and regulations for the proper
administration of the Loan Program and may from time to time establish general
policies for the approval of loans (as well as the guarantees of third-party
loans) under the Loan Program and delegate the administration of such policies
to one or more officers of the Company. The program administrator (whether the
Board or the Committee) shall also have the authority to delegate to any officer
or officers of the Company one or more of its other administrative duties
(including, without limitation, the authority to accept promissory notes and
stock pledge agreements on behalf of the Company and to extend the term of one
or more outstanding notes or guarantees). Decisions of the program
administrator (or its
<PAGE>
delegate) with respect to any issue or matter which may arise under the Loan
Program shall be final and binding on all interested parties.
C. ELIGIBILITY FOR FINANCIAL ASSISTANCE: Officers or other
------------------------------------
specifically designated employees of the Company who, under the Company's Policy
"Transactions in Amdahl Securities", are subject to restrictions on trading in
Amdahl Securities during the periods specified in the Policy, and who acquire or
vest in Shares under one or more of the Plans may in connection with such
acquisition or vesting apply to the program administrator for (i) a loan from
the Company or (ii) a guarantee by the Company of a third-party loan in
accordance with the provisions of this Loan Program.
The program administrator shall have complete discretion in
determining whether to approve an application for a loan or guarantee in whole
or in part and shall not recommend the extension of any loan or guarantee unless
it is reasonably assured that the loan proceeds are to be applied solely to (i)
the satisfaction of the applicant's obligations to the Company with respect to
the acquisition cost of Shares acquired under the Plans and/or (ii) the
satisfaction of federal, state and other tax withholding requirements which
arise by reason of such acquisition or by reason of the applicant's vesting in
Shares issued under the Restricted Stock Plan. Loans shall not be made, nor
guarantees extended, under this Loan Program for any other purposes.
<PAGE>
D. EXTENSION OF LOANS: The Company shall, upon the program
------------------
administrator's recommendation, extend a loan to an eligible applicant (for
purposes of this Section D, the "Borrower"); provided, however, that such loan
shall be subject to the following terms and conditions:
1. The proceeds of the loan must be used solely for the purposes
specified in Section C.
2. The principal balance of the loan shall not exceed the following
limits:
(a) If the loan is extended on the date that Shares are acquired
under one of the Plans, the principal balance of the loan shall not exceed the
acquisition cost of the Shares, plus the amount of federal, state, and other
applicable taxes required to be withheld with respect to the acquired Shares.
However, if the Shares are being acquired under the Restricted Stock Plan, the
principal balance of the loan shall in no event exceed 50 percent of the fair
market value of such Shares on the date of acquisition.
(b) If the loan is extended on the date that the applicant vests
in Shares acquired under the Restricted Stock Plan, the principal balance of the
loan shall not exceed the lesser of (i) the amount of federal, state and other
------
applicable taxes
<PAGE>
required to be withheld on the vested Shares or (ii) 50 percent of the fair
market value of such Shares on the date of vesting.
(c) The value of the Shares on the date in question shall be
determined on the basis of the mean of the lowest and highest selling prices of
one share of Amdahl common stock on such date on the principal exchange on which
Amdahl common stock is at the time listed or admitted to trading, as officially
quoted by the composite tape of transactions on such exchange.
3. The loan shall have an initial term of six months and shall
accrue interest at not less than the minimum per annum rate required to avoid
the imputation of interest income to the Company and compensation income to the
Borrower under Section 483 or Section 7872 of the Internal Revenue Code.
Principal and accrued interest shall be payable in one lump sum at the end of
such six-month period.
4. The loan shall be evidenced by the Borrower's promissory note
made payable to the Company's order. The note shall be substantially in the
form of attached Exhibit A for loans extended under the Restricted Stock Plan in
the form of attached Exhibit B for loans extended under all other Plans.
5. Payment of the note is to be secured by a pledge of Shares with
a fair market value (at the date the loan is made) equal to (A) 200 percent of
the principal balance of the note if
<PAGE>
the loan pertains to Shares issued under the Restricted Stock Plan or (B) 150
percent of the principal balance of the note if the loan pertains to Shares
issued under any other of the Plans. The Borrower shall effect such pledge by
delivering to the Company (i) the certificates for the pledged Shares,
accompanied by a duly endorsed assignment of stock powers, and (ii) a properly
executed stock pledge agreement in substantially the form attached as Exhibit C.
6. Provided the Borrower continues in the service of the Company or
its subsidiaries, the program administrator shall be authorized to extend the
period for payment of the note (principal plus accrued interest) for one or more
additional 6-month periods up to a maximum aggregate term of 120 months. Each
such extension shall be effected through the Borrower's delivery of a new
interest-bearing note in a principal amount equal to the unpaid principal
balance of the old note, plus all accrued and unpaid interest thereon. If the
fair market value of the pledged Shares (at the time the term of the loan it
extended) is less than 150 percent or the principal balance of the new note (or
200 percent in the case of loans pertaining to Shares issued under the
Restricted Stock Plan), then the Borrower shall pledge additional shares of
Amdahl common stock to the extent necessary to increase the aggregate value of
the pledged Shares to the applicable 150 percent or 200 percent level.
<PAGE>
If insufficient Amdahl Stock is owned to reach the collateral
requirements on extension, the program administrator shall accept as collateral
the shares of other publicly traded companies that have readily ascertainable
market value and are readily marketable, CD's or other secure long term
interest bearing instruments subject to the applicable provisions of Regulation
G of the Federal Reserve System.
7. For loans outstanding as of August 1, 1985 under any of the Plans
other than the Restricted Stock Plan, the increase in the aggregate fair market
value required for shares of Amdahl common stock pledged as Collateral hereunder
which became effective with this August 1, 1985 restatement shall be phased in
pursuant to the following transitional rules:
(i) The new 150 percent fair market value requirement shall not
be applicable to any such outstanding loan for the balance of the current six-
month term.
(ii) Such loan may be extended for up to two additional six-month
terms under the predecessor requirement that the fair market value of the
pledged shares at the time of the extension be not less than 100 percent of the
principal balance of the new note.
(iii) Any additional extension of such loan beyond the two
extensions referred to in subparagraph (ii) above
<PAGE>
shall be subject to the new requirement that the fair market value of the
pledged shares at the time of such extension be not less that 150 percent of the
principal balance of the new note.
8. Each outstanding note under the Loan Program shall provide that
upon the occurrence of one or more of the following events, the entire unpaid
principal balance, together with accrued and unpaid interest, shall become
immediately due and payable at the Company's election:
(a) the Borrower's cessation of employment with the Company;
(b) the insolvency of the Borrower, the commission of any act of
bankruptcy by the Borrower, the execution by the Borrower of a general
assignment for the benefit of creditors, the filing by or against the Borrower
of any petition in bankruptcy or any petition for relief under the provisions of
the federal bankruptcy act or any other state or federal law for the relief of
debtors and the continuation of such petition without dismissal for a period of
fifteen (15) days or more, or the appointment of a receiver or trustee to take
possession of the property or assets of the Borrower; and
(c) the reduction in the fair market value of the pledged Shares
to less than 100 percent of the unpaid principal balance of the note (or 110
percent in the case of loans pertaining
<PAGE>
to Shares issued under the Restricted Stock Plan); provided, however, that no
such acceleration shall occur, if the Borrower shall, within five (5) business
days following notification by the Company of such reduction, (i) pledge
additional shares of Company common stock and/or (ii) reduce the unpaid
principal balance of the note, so that the fair market value of the pledged
shares shall, after such action, equal at least the applicable 100 percent or
110 percent of the then unpaid principal balance.
For purposes of applying the acceleration provisions above, the
following provisions shall be controlling:
(i) the Borrower shall be deemed to be in the employ of the
Company for so long as he is an employee of the company or any subsidiary
corporation in which the Company owns (directly or indirectly) 50 percent or
more of the voting power; and
(ii) the fair market value of the pledged Shares at any
particular time shall be determined in accordance with the valuation provisions
of paragraph D.2(c) above.
9. No extension of an outstanding loan hereunder to a final due date
which is more that 120 months after the date the loan was initially made
hereunder shall be permitted without the prior written authorization of the
Benefit Plan Administration Committee, which shall have absolute discretion in
the matter.
<PAGE>
E. GUARANTEE OF THIRD-PARTY LOANS. The program administrator may, in
------------------------------
its sole discretion, determine that the Company shall be a guarantor of a third-
party loan procured by an eligible applicant; provided, however, that such loan
shall be subject to the following terms and conditions:
1. The loan must be procured from a commercial bank or other
reputable financial institution.
2. The proceeds of the loan must be used solely for the purposes
specified in Section C.
3. The principal balance of the loan must within the limits imposed
by paragraph 2 of Section D. If the loan (or guaranty) is secured by a pledge
of the acquired Shares, the value of the pledged shares must satisfy the
applicable requirement of paragraph 5 of Section D.
4. The initial term of the loan shall not exceed six months;
however, the program administrator may, in its discretion, extend the term of
the guaranty for one more successive 6-month periods, up to a maximum aggregate
term of 120 months, in connection with any similar extension of the term of the
loan by the lender.
5. All other terms and conditions of the loan (including the
interest rate, the amortization schedule, and the
<PAGE>
default and acceleration provisions) shall be reasonable and customary in
relation to loans which other lenders in the same geographical area are at the
time extending to employees for the purpose of financing stock acquisitions
under employee stock option or stock purchase plans.
6. The applicant shall have the obligation to furnish the program
administrator with satisfactory evidence confirming that the terms and
conditions of the loan which the applicant requests the Company to guarantee
meet all of the criteria specified above.
F. AMENDMENT AND TERMINATION. The Board may at any time and from
-------------------------
time to time suspend or terminate the operation of the Loan Program and the
extension of Company loans and guarantees hereunder. Under no circumstances,
however, shall any such termination or suspension adversely affect the rights
and obligations of officers under any loans or guarantees at the time
outstanding under the Loan Program.
<PAGE>
EXHIBIT A
RESTRICTED SHARES
-----------------
NOTE SECURED BY STOCK PLEDGE AGREEMENT
$___________________ ______________,19___
Sunnyvale, California
FOR VALUE RECEIVED, the undersigned Maker promised to pay to the order of
Amdahl Corporation ("Amdahl"), at its principal offices at 1250 East Arques
Avenue, Sunnyvale, California, the principal sum of
_____________________________________________________________($____________),
together with interest (from the date of this note until the date of payment) on
the unpaid principal balance at higher of (i) ______ percent, compounded semi-
annually, or (ii) the minimum per annum rate, compounded semi-annually, required
to avoid the imputation of interest income to Amdahl and compensation income to
the Maker under Section 483 or Section 7872 of the Internal Revenue Code.
Principal and accrued interest shall be payable in one lump sum on
____________________, 19____.
Payment shall be made in lawful tender of the United States and shall be
credited first to the accrued interest then due and payable and the remainder
applied to principal. Prepayment of principal, together with accrued interest,
may be made at any time without penalty.
Payment of this note is secured by shares of Amdahl common stock pledged as
collateral (the "Collateral Shares") under the Maker's Stock Pledge Agreement
with Amdahl, but the Maker shall remain personally liable for payment of this
note and assets of the Maker, other than the Collateral Shares, may be applied
to the satisfaction of the Maker's obligations hereunder. If action is
instituted to collect this note, the Maker promises to pay all costs and
expenses, including reasonable attorney's fees, incurred in connection with such
action.
The entire unpaid principal sum of this note, together with accrued and
unpaid interest to date, shall at the election of the holder of this note become
immediately due and payable upon one or more of the following events:
1. the Maker's cessation of employment with Amdahl;
2. the insolvency of the Maker, the commission of any act of bankruptcy
by the Maker, the execution by the Maker of a general assignment for
the benefit of creditors, the filing by or against the Maker of any
petition in bankruptcy or any petition for relief under the provisions
of the federal bankruptcy act or any other
<PAGE>
state or federal law for the relief of debtors and the continuation of
such petition without dismissal for a period of fifteen (15) days or
more, or the appointment of a receiver or trustee to take possession
of the property or assets of the Maker.
3. the reduction in the fair market value of the Collateral Shares to an
amount less than 110 percent of the unpaid principal balance of the
note; provided, however, that no such acceleration shall occur under
this paragraph 3 if the Maker shall, within five (5) business days
following notification by Amdahl of such reduction in value, (i)
pledge additional shares of Amdahl common stock as collateral and/or
(ii) reduce the principal balance of this note, so that the fair
market value of the pledged shares (the Collateral Shares and any
additional shares pledged with Amdahl) shall, after such action, equal
at least 110 percent of the then unpaid principal balance of this
note.
For purposes of applying the acceleration provisions of Paragraph 1 above,
the Maker shall be deemed to be in the employ of Amdahl for so long as the Maker
is an employee of Amdahl or any subsidiary corporation in which Amdahl owns
(directly or indirectly) 50 percent or more of the voting power.
For purposes of applying the acceleration provisions of Paragraph 3 above,
the fair market value of a share of Amdahl common stock on any date in question
shall be the mean of the lowest and highest selling prices of such share on such
date on the principal exchange on which Amdahl common stock is at the time
listed or admitted to trading, as such prices are officially quoted by the
composite tape of transactions on such exchange.
The Maker hereby waives notice of default, presentment or demand for
payment, protest or notice of nonpayment of dishonor and all other notices or
demands relative to this instrument.
This note shall be construed in accordance with the laws of the State of
California.
--------------------------
Maker
<PAGE>
EXHIBIT B
OPTION SHARES
-------------
NOTE SECURED BY STOCK PLEDGE AGREEMENT
$__________________ ____________, 19___
Sunnyvale, California
FOR VALUE RECEIVED, the undersigned Maker promised to pay to the order of
Amdahl Corporation ("Amdahl"), at its principal offices at 1250 East Arques
Avenue, Sunnyvale, California, the principal sum of ___________________________
_____________________________________________________________($________),
together with interest (from the date of this note until the date of payment) on
the unpaid principal balance at higher of (i) ______ percent, compounded semi-
annually, or (ii) the minimum per annum rate, compounded semi-annually, required
to avoid the imputation of interest income to Amdahl and compensation income to
the Maker under Section 483 or Section 7872 of the Internal Revenue Code.
Principal and accrued interest shall be payable in one lump sum on
____________________, 19___.
Payment shall be made in lawful tender of the United States and shall be
credited first to the accrued interest then due and payable and the remainder
applied to principal. Prepayment of principal, together with accrued interest,
may be made at any time without penalty.
Payment of this note is secured by shares of Amdahl common stock pledged as
collateral (the "Collateral Shares") under the Maker's Stock Pledge Agreement
with Amdahl, but the Maker shall remain personally liable for payment of this
note and assets of the Maker, other than the Collateral Shares, may be applied
to the satisfaction of the Maker's obligations hereunder. If action is
instituted to collect this note, the Maker promises to pay all costs and
expenses, including reasonable attorney's fees, incurred in connection with such
action.
The entire unpaid principal sum of this note, together with accrued and
unpaid interest to date, shall at the election of the holder of this note become
immediately due and payable upon one or more of the following events:
1. the Maker's cessation of employment with Amdahl;
2. the insolvency of the Maker, the commission of any act of bankruptcy
by the Maker, the execution by the Maker of a general assignment for
the benefit of creditors, the filing by or against the Maker of any
petition in bankruptcy or any petition for relief under the provisions
of the federal bankruptcy act or any other
<PAGE>
state or federal law for the relief of debtors and the continuation of
such petition without dismissal for a period of fifteen (15) days or
more, or the appointment of a receiver or trustee to take possession
of the property or assets of the Maker.
3. the reduction in the fair market value of the Collateral Shares to an
amount less than 100 percent of the unpaid principal balance of the
note; provided, however, that no such acceleration shall occur under
this paragraph 3 if the Maker shall, within five (5) business days
following notification by Amdahl of such reduction in value, (i)
pledge additional shares of Amdahl common stock as collateral and/or
(ii) reduce the principal balance of this note, so that the fair
market value of the pledged shares (the Collateral Shares and any
additional shares pledged with Amdahl) shall, after such action, equal
at least 100 percent of the then unpaid principal balance of this
note.
For purposes of applying the acceleration provisions of Paragraph 1 above,
the Maker shall be deemed to be in the employ of Amdahl for so long as the Maker
is an employee of Amdahl or any subsidiary corporation in which Amdahl owns
(directly or indirectly) 50 percent or more of the voting power.
For purposes of applying the acceleration provisions of Paragraph 3 above,
the fair market value of a share of Amdahl common stock on any date in question
shall be the mean of the lowest and highest selling prices of such share on such
date on the principal exchange on which Amdahl common stock is at the time
listed or admitted to trading, as such prices are officially quoted by the
composite tape of transactions on such exchange.
The Maker hereby waives notice of default, presentment or demand for
payment, protest or notice of nonpayment of dishonor and all other notices or
demands relative to this instrument.
This note shall be construed in accordance with the laws of the State of
California.
-------------------------
Maker
<PAGE>
EXHIBIT C
STOCK PLEDGE AGREEMENT
----------------------
In consideration of the loan which Amdahl Corporation, a California
corporation ("Amdahl") having its principal offices at 1250 East Arques Avenue,
Sunnyvale, California, has on this day extended to the undersigned
____________________ in connection with the undersigned's acquisition of (or
vesting in) __________ shares of Amdahl common stock under the Amdahl
Corporation _____________ ("Plan"), and as security for the payment of that
certain promissory note ("Note") in the principal sum of $_________ payable to
Amdahl or order which the undersigned has on this day executed to evidence such
loan, the undersigned hereby grants Amdahl a security interest in, and assigns,
transfers to and pledges with Amdahl, the following securities and other
property:
(i) _______ shares of Amdahl common stock which have on this day been
delivered to and deposited with Amdahl;
(ii) any and all new, additional or different securities subsequently
distributed with respect to the shares identified in clause (i) above which are
to be delivered to and deposited with Amdahl pursuant to the requirements of
paragraph 3 of this agreement;
(iii) any and all other property and money which is delivered to or comes
into the possession of Amdahl pursuant to the terms and provisions of this
agreement; and
(iv) the proceeds of any sale, exchange or disposition of the property and
securities described in clauses (i), (ii) or (iii) above.
All securities, property and money so assigned, transferred to and pledged
with Amdahl shall be herein referred to as the "Collateral". Amdahl shall hold
the Collateral in accordance with the following terms and provisions:
1. Warranties. The undersigned hereby warrants that the undersigned
----------
is the owner of the Collateral and has the right to
<PAGE>
pledge the Collateral and that the Collateral is free from liens, adverse claims
and other security interests.
2. Rights and Powers.
-----------------
(a) Amdahl may, without obligation to do so, exercise at any time and from
time to time one or more of the following rights and powers with respect to any
or all of the Collateral:
(i) accept in its discretion, but subject to the limitations of paragraph 8
of this agreement, other property of the undersigned in substitution for all or
part of the Collateral and release Collateral to the undersigned to the extent
necessary to effect such substitution, and in such event the money, property or
securities received in substitution shall be held by Amdahl as security for the
Note and all other indebtedness secured hereunder;
(ii) perform such acts as are necessary to preserve and protect the
Collateral and the rights, powers and remedies granted with respect to such
Collateral by this agreement; and
(iii) transfer record ownership of the Collateral to Amdahl or its
nominee and receive, endorse and give receipt for, or collect by legal
proceedings or otherwise, dividends or other distributions made or paid with
respect to the Collateral, provided and only if there exists at the time an
outstanding event of default under paragraph 9 of this agreement.
(b) Expenses reasonably incurred in the exercise of such rights and powers
shall be payable by the undersigned and form part of the indebtedness secured
hereunder as provided in paragraph 11.
(c) So long as there exists no event of default under paragraph 9 of this
agreement, the undersigned may exercise all shareholder voting rights and be
entitled to receive any cash distribution with respect to the Collateral.
Accordingly, until such time as an event of default occurs under this agreement,
all proxy statements and other shareholder materials which Amdahl receives with
respect to the Collateral shall be delivered to the undersigned at the address
indicated below.
<PAGE>
3. Duty to Deliver.
---------------
(a) Any new, additional or different securities or other property which may
now or hereafter become distributable with respect to the Collateral by reason
of a stock dividend, stock split or reclassification of the capital stock of
Amdahl or by reason of a merger, consolidation or other reorganization affecting
the capital structure of Amdahl shall, upon receipt by the undersigned, be
promptly delivered to and deposited with Amdahl as part of the Collateral
hereunder. Any securities so delivered shall be accompanied by one or more
properly endorsed stock power assignments.
(b) The undersigned may, from time to time to the extent required to avoid
the acceleration of payment under the Note, deliver additional shares of Amdahl
common stock to be held in pledge hereunder. The certificates evidencing such
additional shares shall be endorsed in blank by the undersigned or shall be
accompanied by a property endorsed assignment of stock powers. The pledged
certificates shall be subject to all the terms and provisions of this agreement
and shall be released from pledge solely in accordance with the provisions of
paragraphs 7 and 8 hereof.
4. Care of Collateral.
------------------
(a) Amdahl shall exercise reasonable care in the custody and preservation
of the Collateral, but shall have no obligation to initiate any action with
respect to, or otherwise inform the undersigned of, any conversion, call,
exchange right, preemption right, subscription right, purchase offer or other
right or privilege relating to or affecting the Collateral. Amdahl shall have
no duty to preserve the rights of the undersigned against adverse claims or to
protect the Collateral against the possibility of a decline in market value.
Amdahl shall not be obligated to take any action with respect to the Collateral
requested by the
<PAGE>
undersigned unless the request is made in writing and Amdahl determines that the
requested action will not unreasonably jeopardize the value of the Collateral as
security for the Note and other indebtedness secured hereunder.
(b) Amdahl may at any time deliver all or part of the Collateral to the
undersigned, and the receipt thereof by the undersigned shall constitute a
complete and full acquittance for the Collateral so delivered. Amdahl shall
accordingly be discharged from any further liability or responsibility for the
delivered Collateral.
5. Payment of Taxes and Other Charges. The undersigned shall pay, prior
----------------------------------
to the delinquency date, all taxes, liens, assessments and other charges against
the Collateral, and in the event of the undersigned's failure to do so, Amdahl
may at its election pay any or all of such taxes and charges without contesting
the validity or legality thereof. The payments so made shall become part of the
indebtedness secured hereunder and shall bear interest until paid at the minimum
per annum rate of interest, compounded annually, required to avoid the
imputation of interest income to Amdahl and compensation income to the
undersigned under Section 483 or Section 7872 of the Internal Revenue Code.
6. Transfer of Collateral. In connection with the transfer or assignment
----------------------
of the Note (whether by negotiation, discount or otherwise), Amdahl may transfer
all or any part of the Collateral, and the transferee shall thereupon succeed to
all the rights, powers and remedies granted Amdahl hereunder with respect to the
Collateral so transferred. Upon such transfer, Amdahl shall be fully discharged
from all liability and responsibility for the transferred Collateral.
<PAGE>
7. Release of Collateral.
---------------------
(a) The shares of Amdahl common stock which have on this date been pledged
and deposited hereunder shall be released from pledge and returned to the
undersigned within thirty (30) days after payment in full of the Note and all
other indebtedness secured hereunder. There shall also be released at the same
time any additional Collateral which may hereafter be pledged and deposited with
Amdahl pursuant to the requirements of paragraph 3 as well as any substitute
Collateral pledged hereunder pursuant to the requirements of paragraph 2(a)(i).
(b) Provided the undersigned is not at the time otherwise in default in any
of his obligations hereunder, should the undersigned make a prepayment of
principal under the Note, together with payment of all accrued interest to date,
then one or more shares of Amdahl common stock held as Collateral hereunder
shall, subject to the limitations of paragraph 8, be released to the undersigned
within thirty (30) days after such prepayment. The number of shares to be so
released shall be equal to the number obtained by multiplying (i) the total
number of such shares held under this Agreement at the time of the prepayment,
by (ii) a fraction the numerator of which shall be the principal amount of the
prepayment and the denominator of which shall be the unpaid principal balance of
the Note immediately prior to such prepayment. In no event shall any
fractional shares be released.
8. Substitution or Release Collateral. The provisions of this paragraph
----------------------------------
8 shall be applicable to all shares of Amdahl common stock held hereunder as
Collateral and to all other property which becomes Collateral hereunder. No
shares of Amdahl common stock or other Collateral held hereunder shall be
substituted for any new Collateral pursuant to the provisions of paragraph 2 (a)
(i) or shall be released under paragraph 7 (b), unless there is compliance with
each of the following requirements:
<PAGE>
(i) The substitution or release must not result in such a reduction to the
aggregate fair market value of the Collateral remaining after the substitution
or release that an event of acceleration will occur pursuant to the provisions
of the Note.
(ii) The substitution or release must not increase the amount by which the
indebtedness secured hereunder exceeds the maximum loan value of the shares of
Amdahl common stock and other Collateral immediately prior to such substitution
or release.
(iii) The substitution or release must not cause the amount of
indebtedness secured hereunder to exceed the maximum loan value of the shares of
Amdahl common stock and any other Collateral remaining after such substitution
or release is effected. This requirement (iii), however, will be applicable
only if the maximum loan value of such Amdahl shares and other Collateral prior
to the substitution or release equals or exceeds the indebtedness at the time
secured hereunder.
(iv) For purposes of clauses (ii) and (iii) above, the maximum loan value
of the Collateral shall be determined on the date the substitution or release is
effected. The following valuation principles shall be applicable to such
determination:
a. For shares of Amdahl common stock acquired under one or more of the
Amdahl employee stock option plans, the maximum loan value shall be equal to
their good faith loan value under Section 207.2(e)(1) of Regulation G of the
Federal Reserve Board.
b. For shares of Amdahl common stock acquired under the Amdahl Restricted
Stock Plan, the maximum loan value shall be equal to fifty percent (50%) of
their fair market value at the time.
c. For all other margin securities, the maximum loan value shall be equal
to fifty percent (50%) of their fair market value at the time.
d. For all other Collateral, the maximum loan value shall be equal to its
good faith loan value under Section 207.2(e)(1) of Regulation G.
9. Events of Default.
-----------------
(a) The occurrence of one or more of the following events shall constitute
an event of default under this agreement:
(i) failure of the undersigned to pay principal and interest when due under
the Note;
(ii) the occurrence of any event of acceleration specified in the Note;
<PAGE>
(iii) the failure of the undersigned to perform any obligation imposed upon
the undersigned by reason of this agreement; or
(iv) the breach of any warranty of the undersigned contained in this
agreement.
(b) Upon the occurrence of any such event of default, Amdahl may, at its
election, declare the Note and all other indebtedness secured hereunder to
become immediately due and payable (to the extent not already so due and
payable) and may exercise any or all of the rights and remedies granted to a
secured party under the provisions of the California Uniform Commercial Code (as
now or hereafter in effect), including (without limitation) the power to dispose
of the Collateral by public or private sale or to accept the Collateral in full
payment of the Note and all other indebtedness secured hereunder. Any proceeds
realized from the disposition of the Collateral pursuant to the power of sale
hereby granted to Amdahl shall first be applied to the payment of expenses
incurred by Amdahl in connection with the disposition, and the balance shall be
applied to the payment of the Note and any other indebtedness secured hereunder
in such order of application as Amdahl shall deem appropriate. Any surplus
proceeds shall be paid over to the undersigned. In the event such proceeds
prove insufficient to satisfy all indebtedness secured hereunder, then the
undersigned shall be personally liable for the deficiency.
10. Other Remedies. The rights, powers and remedies granted to Amdahl
--------------
pursuant to the provisions of this agreement shall be in addition to all rights
powers and remedies granted to Amdahl under any statute or rule of law. Any
forebearance, failure or delay by Amdahl in exercising any right, power or
remedy under this agreement shall not be deemed to be a waiver of such right,
power or remedy. Any single or partial exercise of any right, power or remedy
under this agreement shall not preclude the further exercise thereof, and every
right, power and remedy of Amdahl under this agreement shall continue in full
force and effect until such right, power or remedy is specifically waived by an
instrument executed by Amdahl.
<PAGE>
11. Costs and Expenses. All costs and expenses (including reasonable
------------------
attorneys' fees) incurred by Amdahl in the exercise or enforcement of any right,
power of remedy granted it under this agreement shall become part of the
indebtedness secured hereunder and shall be payable immediately by the
undersigned, without demand, and until paid shall bear interest at the minimum
per annum rate of interest, compounded annually, required to avoid the
imputation of interest income to Amdahl and compensation income to the
undersigned under Section 483 or section 7872 of the Internal Revenue code.
12. Applicable Law. This agreement shall be governed by and construed
--------------
in accordance with the laws of the State of California and shall be binding upon
the executors, administrators, heirs and assigns of the undersigned.
13. Severability. If any provision of this agreement is held to be
------------
invalid under applicable law, then such provision shall be ineffective only to
the extent of such invalidity, and neither the remainder of such provision nor
any other provisions of this agreement shall be affected thereby.
IN WITNESS WHEREOF, this agreement has been executed by the undersigned on
this _____day of ___________________, 1994.
-
_______________________________
Address: _______________________________
_______________________________
<PAGE>
Exhibit 10(b)
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.
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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.
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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
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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
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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.
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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
----------------------------------
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 Sections 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.
54
<PAGE>
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,
55
<PAGE>
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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<PAGE>
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
59
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<PAGE>
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: __________________________________________
63
<PAGE>
Portions of this exhibit have been omitted pursuant to a request
for confidential treatment
- - ----------------------------
Exhibit 10(c)
DATED January 27, 1994
AMDAHL CORPORATION
and
FUJITSU LIMITED
LOAN AGREEMENT
(The indebtedness evidenced by this instrument is subordinated to the prior
payment in full of the Senior Obligations (as defined in Schedule II hereof)
pursuant to, and to the extent provided in, Schedule II, by the maker hereof
and the payee named herein in favor of the Senior Creditors referred to in
Schedule II)
<PAGE>
CONTENTS
Clause Heading
1. Definitions
2. The Facility and Subordination
3. Purpose
4. Maximum Amount
5. Conditions Precedent
6. Conditions Subsequent
7. Availability of the Loan Facility
8. Interest Period for the Loan
9. Interest on the Loan
10. Alternative Interest Rates and
Interest on Late Payments
11. Repayment of Loan Facility
12. Prepayment of Loan
13. Payments; Subordination
14. Deduction of Tax
15. Representations and Warranties
16. Affirmative Covenants
17. Acceleration and Termination
in Case of Default
18. Expenses
19. Stamp Duty
20. Assignments and Transfers
21. Calculations and evidence of debt
22. Notices
23. Invalidity of Provisions
24. Waivers and Counterparts
25. Governing Law and Jurisdiction
SCHEDULES
Schedule I Form of Notice of Drawdown
Schedule II Terms and Conditions of Subordination
<PAGE>
THIS AGREEMENT (together with the Schedules hereto, "the Agreement") is made on
January 27, 1994
BETWEEN
(1) AMDAHL CORPORATION, a U.S. corporation incorporated under the laws of
the state of Delaware, with its principal office at 1250 East Arques
Avenue, P.O. Box 3470, Sunnyvale, California, 94088-3470, U.S.A. ("the
Borrower"); and
(2) FUJITSU LIMITED, a Japanese company, with its principal office at 6-1
Marunouchi 1-chome, Chiyoda-ku, Tokyo 100, Japan ("the Lender").
WHEREAS
(A) The Borrower is negotiating a credit facility whereby the Syndicate
Banks would agree to make certain loans available to the Borrower upon
and subject to the terms and conditions of the Syndicate Credit
Agreement and the Offshore Credit Facilities, respectively; and
(B) The Lender has agreed to make available to the Borrower the Loan
Facility and has further agreed that its rights and obligations in
respect of the Loan Facility shall be subordinated to those of the
Syndicate Banks and Offshore Lenders on the terms and conditions set out
herein; and
(C) The Lender has accordingly agreed to make available to the Borrower the
Loan Facility upon and subject to the terms and conditions of this
Agreement.
<PAGE>
NOW IT IS HEREBY AGREED as follows:-
DEFINITIONS
-----------
1. Definitions
-----------
1.1 In this Agreement, save where the context otherwise requires:
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. (S)101, et seq.).
------
"Borrowings" means in relation to any person, at any time, any
indebtedness incurred in respect of:-
(i) the principal amount outstanding in respect
of moneys borrowed or raised other than, in
the case of the Borrower, between members
of the Borrower's group of companies, but
including bank borrowings as defined in
Clause 6.1;
(ii) the capital portion of any hire purchase
and finance lease commitments;
(iii) the principal amount outstanding in respect
of any indebtedness in respect of any
debenture, loan, stock, note, bond or other
security or acceptance credit bill
discounting or note purchase facility;
(iv) any indebtedness in respect of the
acquisition cost of assets or services to
the extent payable more than six months
after the time of acquisition or possession
thereof by the party liable;
(v) any guarantee (other than guarantees of the
obligations of other group companies) or
other assurance against financial loss in
respect of such monies, capital portion or
indebtedness;
(vi) any letters of credit, stand-by letters of
credit or other instruments issued in
connection with the performance of
contracts; and
<PAGE>
(vii) any forward overseas exchange contracts
entered into with indebtedness calculated
at the rate of 10% of the contract value
for contracts of up to twelve months
duration and 20% of the contract value for
contracts in excess of twelve months;
"Business Day" means any weekday which is not a public holiday in
Japan, California, New York or London;
"Closing Date" means the date on which all conditions precedent set
forth in Clause 5 are satisfied or waived by the Lender.
"Code" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"Commitment Period" means, in relation to the Loan Facility, the period
beginning on the Closing Date and ending on the
Repayment Date;
"Contractual
Obligation" means as to any Person any provision of any security
issued by such Person or any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other
instrument, document or agreement to which such Person
is a party or by which it or any of its property is
bound;
"Drawdown" means the making of an advance under the Loan Facility;
"Drawdown Date" means the date of Drawdown of a tranche in accordance
with the terms of Clause 7.2;
"Environmental
Claims" means all claims, however asserted, by any Governmental
Authority or other Person alleging potential liability
or responsibility for violation of any Environmental
Law, or for release or injury to the environment or
threat to public health, personal injury (including
sickness, disease or death), property damage, natural
resources damage, or otherwise alleging liability or
responsibility for damages (punitive or otherwise),
cleanup, removal, remedial or response costs,
restitution, civil or criminal penalties, injunctive
relief, or other type of relief, resulting from or based
upon the presence, placement,
<PAGE>
discharge, emission or release (including intentional
and unintentional, negligent and non-negligent, sudden
or non-sudden, accidental or non-accidental, placement,
spills, leaks, discharges, emissions or releases) of any
Hazardous Material at, in, or from property, whether or
not owned by the Borrower or any of its Subsidiaries.
"Environmental Laws" means all federal, state or local laws, statutes, common
law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed
duties, requests, licenses, authorizations and permits
of, and agreements with, any Governmental Authorities,
in each case relating to environmental, health, safety
and land use matters; including the Comprehensive
Environmental Response, Compensation and Liability Act
of 1980 ("CERCLA"), the Clean Air Act, the Federal Water
--------
Pollution Control Act 1972, the Solid Waste Disposal
Act, the Federal Resource Conservation and Recovery Act,
the Toxic Substances Control Act, the Emergency Planning
and Community Right-to-Know Act, the California
Hazardous Waste Control Law, the California Solid Waste
Management, Resource, Recovery and Recycling Act, the
California Water Code and the California Health and
Safety Code.
"ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.
"ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Borrower from a Pension
Plan subject to Section 4063 of ERISA during a plan year
in which it was a substantial employer (as defined in
Section 4001 (a)(2) of ERISA) or a cessation of
operations which is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) the filing of a notice of
intent to terminate, the treatment of a plan amendment
as a termination under Section 4041 or 4041A of ERISA or
the commencement of proceedings by the PBGC to terminate
a Pension Plan subject to Title IV of ERISA; (d) a
failure by the Borrower to make required contributions
to a Pension Plan or other Plan subject to Section 412
<PAGE>
of the Code; (e) an event or condition which might
reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension
Plan; (f) the imposition of any liability under Title IV
of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the
Borrower; or (g) an application for a funding waiver or
an extension of any amortization period pursuant to
Section 412 of the Code with respect to any Pension
Plan.
"Event of Default" means any of the events specified in Clause 17.1;
"Exchange Act" means the Securities and Exchange Act of 1934, and
regulations promulgated thereunder.
"FRB" means the Board of Governors of the Federal Reserve
System, and any Governmental Authority succeeding to any
of its principal functions.
"Governmental
Authority" means any nation or government, any state or other
political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any
entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned
or controlled, through stock or capital ownership or
otherwise, by any of the foregoing.
"Hazardous
Materials" means all those substances that are regulated by, or
which may form the basis of liability under, any
Environmental Law, including all substances identified
under any Environmental Law as a pollutant, contaminant,
hazardous waste, hazardous constituent, special waste,
hazardous substance, hazardous material, or toxic
substance, or petroleum or petroleum derived substance
or waste.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of
<PAGE>
its principal functions.
"Intercreditor
Agreement" means the agreement to be entered into from time to time
between the Syndicate Banks and certain financial
institutions providing for sharing of collateral and
other matters relating to the Offshore Credit Facilities
and the Syndicate Credit Agreement with the same period
as the Syndicate Credit Agreement.
"Interest means in respect of the Loan and any Interest Period
Determination relating thereto the Interest Determination Date as
Date" defined in Clause 9.2;
"Interest Payment means the last day of an Interest Period;
Date"
"Interest Period" means, in relation to the Loan a period of three months
as determined in accordance with Clause 8 for the
purpose of determining the rate of interest applicable
to the Loan from time to time;
"LIBOR" means LIBOR as determined pursuant to Clause 9;
"Loan" means the principal amount for the time being
outstanding under the Loan Facility;
"Loan Facility" means the term loan facility in the maximum aggregate
principal United States dollars amount of US$100,000,000
granted to the Borrower by the Lender pursuant to Clause
2;
"Margin Stock" means "margin stock" as such term is defined in
Regulation U of the FRB.
"Material Adverse
Effect" means (a) a material adverse change in, or a material
adverse effect upon, the financial condition of the
Borrower and its Subsidiaries taken as a whole; (b) a
material impairment of the ability of the Borrower to
perform under any Subordinated Loan Document and avoid
any Event of Default (other than an Event of Default
waived by the Lender in its sole discretion); or (c) a
material adverse effect upon the legality, validity,
binding
<PAGE>
effect or enforceability against the Borrower of
any Subordinated Loan Document;
"Notice of Drawdown" means a notice in the form set out in Schedule I duly
completed and signed by the Borrower;
"Offshore Credit means any loan agreement, credit agreement, note, letter
Facilities" of credit reimbursement agreement or other document,
instrument or agreement governing the extension of
credit by any Offshore Lender now or hereafter existing,
in the amount of up to $70,000,000, to the extent that
the obligations of the Subsidiaries of the Borrower to
the Offshore Lenders are secured by the security
interests which are the subject of the Intercreditor
Agreement, and guaranties and collateral documents
relating thereto.
"Offshore Lender" means any bank or other financial institution which is
or becomes a party to the Intercreditor Agreement in a
capacity other than as a Syndicate Bank.
"Organization
Documents" means, for any corporation, the certificate or articles
of incorporation, the bylaws, any certificate of
determination or instrument relating to the rights of
preferred shareholders of such corporation, any
shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee
thereof) of such corporation.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its
principal functions under ERISA.
"Person" means an individual, corporation, partnership, joint
venture, trust, unincorporated organization or any other
juridical entity.
"Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which the Borrower sponsors or maintains
or to which the Borrower makes, or is obligated to make
contributions and includes any Pension Plan.
<PAGE>
Portions of this exhibit have been omitted pursuant to a request
for confidential treatment
- - --------------------------
"Potential Event of means any event which, with the giving of notice and/or
Default" the lapse of time would constitute an Event of Default;
"Reference Banks" means the principal London office of Bank of America and
The Industrial Bank of Japan, Limited;
"Repayment Date" means January 28, 1997;
"Reportable Event" means, any of the events set forth in Section 4043 (b)
of ERISA, other than any such event for which the 30-day
notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"Responsible means the chairman, chief executive officer, chief
Officer" financial officer, treasurer or assistant treasurer of
the Borrower, or any other officer having substantially
the same authority and responsibility.
"Senior Creditor means the Agent under the Intercreditor Agreement and
Agent" any successor thereto.
"Senior Loan means the Syndicate Loan Documents and the Offshore
Documents" Credit Facilities.
"Spread" means [ ]% ([ ] per cent);
"Subordinated Loan means this Agreement and all other documents delivered
Documents" by or on behalf of the Borrower or any Subsidiary to the
Lender in connection herewith or therewith.
"Subordinated means any obligations of the Borrower to the Lender
Obligations" under this Agreement, whether for principal, interest
(including without limitation interest accruing after
the filing of any bankruptcy or insolvency proceedings),
fees, expenses or otherwise.
"Subsidiary" of a Person means any corporation of which more than 50%
of the voting stock is owned or controlled directly or
indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof.
Unless the context otherwise clearly requires,
references herein to a "Subsidiary" refer to a
Subsidiary of the Borrower, and include Amdahl Capital
<PAGE>
Corporation.
"Syndicate Banks" means any and all banks and other financial institutions
with Bank of America National Trust and Saving
Association as Agent as are from time to time party to
the Syndicate Credit Agreement.
"Syndicate Credit means an agreement being negotiated or to be negotiated
Agreement" among the Syndicate Banks, the Borrower and Amdahl
Capital Corporation providing for a secured revolving
credit facility in the amount of up to $100,000,000 with
the committed period of not more than two (2) years.
"Syndicate Loan means the Syndicate Credit Agreement, and all Notes,
Documents" Guaranties, Collateral Documents, the Fee Letter, and
the L/C Related Documents referred to (and as defined
in) in the Syndicate Credit Agreement, and all other
documents delivered by the Borrower to the Syndicate
Banks or the agent for the Syndicate Banks in connection
with the Syndicate Credit Agreement, but shall not
include any extension, or renewal or replacement thereof
beyond the original revolving commitment termination
date unless such extension, renewal or replacement was
entered into at a time when there is an "Event of
Default" (or an event which with the passage of time,
giving of notice, or both, would become an "Event of
Default" thereunder) existing under the Syndicate Loan
Documents.
"Taxes" means all present and future taxes, levies, duties,
charges, fees, deductions and withholdings imposed or
levied by any governmental, fiscal or other competent
authority in the U.S.A. or any other jurisdiction from
which the Borrower makes payment not being a tax on
overall net income and "Tax" and "Taxation" shall be
construed accordingly;
"Writing" includes tested telex and facsimile transmission legibly
received, except in relation to any certificate,
forecast, report, notice, resolution or other document
which is expressly required by this Agreement to be
signed, and "written" has a corresponding meaning.
<PAGE>
1.2 Save as otherwise expressly provided, references in this Agreement to
this Agreement or to any other agreement, instrument or document include
references to this Agreement or such other document (including the
Senior Loan Documents) as varied, supplemented, novated and/or replaced
in any manner from time to time.
1.3 References in this Agreement to clauses, sub-clauses, paragraphs,
schedules and annexes are to be construed as references to clauses, sub-
clauses, paragraphs, schedules and annexes of this Agreement unless
otherwise stated.
1.4 References in this Agreement to any enactment shall be deemed to include
references to such enactment as re-enacted, amended or extended.
1.5 References in this Agreement to the Borrower or the Lender shall, where
relevant, be deemed to be references to or to include, as appropriate,
their respective successors or permitted assigns.
1.6 Clause headings in this Agreement are for convenience only and shall in
no way affect the construction hereof.
THE FACILITY
------------
2. The Facility and Subordination
------------------------------
2.1 Upon and subject to the terms and conditions of this Agreement and in
reliance on the representations and warranties contained in Clause 15
the Lender agrees to make the Loan Facility available to the Borrower.
2.2 The parties agree that the Loan Facility shall be subordinated on the
terms and conditions set out in Schedule II.
3. Purpose
-------
The Loan Facility shall be used by the Borrower for its working capital
requirements and general corporate purposes.
4. Maximum Amount
--------------
Notwithstanding any other provision of this Agreement the aggregate
principal amount of the Loan outstanding shall not exceed
U.S.$100,000,000.
<PAGE>
CONDITIONS PRECEDENT AND SUBSEQUENT
-----------------------------------
5. Conditions Precedent
--------------------
5.1 The obligation of the Lender hereunder to make any advance under the
Loan Facility is subject to the condition that the Lender shall first
have received all of the documents specified in Clause 5.3.
5.2 The obligation of the Lender hereunder to make any advance under the
Loan Facility is subject to the further conditions precedent that on
each Drawdown Date:-
5.2.1 the matters represented and warranted by the Borrower in Clause
15 are true and correct in all material respects and will be
true and correct in all material respects immediately after the
advance is made; and
5.2.2 no Event of Default or Potential Event of Default has occurred
and is continuing and has not been waived by the Lender or would
result from the making of the advance.
5.3 The documents referred to in Clause 5.1 are as follows:-
5.3.1 a copy, certified by a duly authorised officer of the Borrower
as being a true copy, of the certificate of incorporation and
By-Laws of the Borrower;
5.3.2 a certificate of the Secretary or Assistant Secretary of the
Borrower to the effect that the requisite board resolutions in
the agreed terms have been duly and properly passed at a duly
convened and constituted meeting of the Borrower:-
5.3.2.1 authorising the execution, delivery and performance on
behalf of the Borrower of this Agreement; and
5.3.2.2 authorising a named person or persons specified therein
and whose specimen signature(s) appear thereon to sign
on behalf of the Borrower this Agreement and to give
any notices or certificates required in connection
therewith and confirming that such resolutions are
still in effect and have not been varied or rescinded;
5.3.3 a certificate of a duly authorised officer of the
<PAGE>
Borrower confirming that at the Drawdown Date the aggregate of
the Borrowings of the Borrower (including borrowing under the
Senior Loan Documents) do not or, as the case may be would not,
if fully drawn, exceed any borrowing limit contained in the
Borrower's constitutional documents or in any trust deed or
other agreement or instrument to which the Borrower is a party;
5.3.4 this Agreement executed by each of the parties hereto;
5.3.5 the foreign exchange clearance document to be issued by the
Minister of Finance of Japan for the Loan Facility; and
5.3.6 such other documents and information as the Lender may
reasonably require.
6. Conditions Subsequent
---------------------
6.1 In respect of each fiscal month of each year of the Commitment Period
the Borrower shall deliver to the Lender within 15 days of the end of
such fiscal month a report on its outstanding bank credit usage,
including details of the aggregate bank borrowings outstanding at the
end of such fiscal month, with a breakdown of such aggregate bank
borrowings between U.S. and offshore loans, between secured and
unsecured debt and between Senior Obligations (referred to in SCHEDULE
II) and other obligations. For these purposes, "bank borrowings" means
any indebtedness of the Borrower and its consolidated subsidiaries
incurred in respect of moneys borrowed from, or guaranties provided by,
any bank, including without limitation indebtedness outstanding under
the Loan Facility and indebtedness outstanding in favor of the Syndicate
Banks and the Offshore Lenders. The first relevant fiscal month for such
reporting shall be January, 1994.
6.2 The Borrower shall deliver to the Lender, promptly upon execution
thereof, duly executed copies of the Senior Loan Documents and the
Intercreditor Agreement.
6.3 The Borrower shall not enter into any loan, credit, or other finance
agreement with any third party under which any rights whatsoever of the
lender(s) thereunder rank senior in priority to any of the rights of the
Lender hereunder, without the prior written approval of the Lender. The
Borrower shall, for the purposes of obtaining such approval, supply the
Lender with all and any documents and information which are relevant
thereto in sufficient time to allow the Lender to consider the same.
This Sub-clause 6.3 shall not apply to the Senior Loan Document upon
condition that the
<PAGE>
Senior Loan Documents are submitted to the Lender well in advance for
the execution thereof.
AVAILABILITY OF THE FACILITY
----------------------------
7. Availability of the Loan Facility
---------------------------------
7.1 The availability of the Loan Facility shall be subject to the provisions
of Clause 5.
7.2 The Loan Facility shall be available for drawdown in two or more
tranches as follows:
7.2.1 the first tranche shall be in the amount of US$80,000,000;
7.2.2 the second and subsequent tranches, which shall be in the amount
of US$20,000,000 or any smaller amount, may be drawn down on the
request of the Borrower at any time after January 28, 1994 but
during the Commitment Period,
and any undrawn part of the Loan Facility shall be cancelled at the end
of the Commitment Period.
7.3 No Drawdown under the Loan Facility shall be made if an Event of Default
or Potential Event of Default has occurred and is continuing and has not
been waived by the Lender whether or not the Lender shall have made any
declaration pursuant to Clause 17.
7.4 As agreed by the parties, the first Drawdown shall be made on January
28, 1994. A subsequent Drawdown may not be made unless a Notice of
Drawdown has been delivered to the Lender not later than 60 calendar
days before the proposed Drawdown Date.
INTEREST
--------
8. Interest Periods for the Loan
-----------------------------
Subject to Clause 10 the period for which the Loan is outstanding shall
be divided into successive Interest Periods of three months duration
(ending April 28, July 28, October 28 and January 28 each year) with the
first such Interest Period commencing on the initial Drawdown Date,
<PAGE>
provided that any Interest Period that would otherwise end at any time
after the Repayment Date shall end on that date. As to the second and
subsequent tranches, the same Interest Periods as the first such
Interest Period commencing on such second and subsequent Drawdown Date
shall be applicable, and if such Drawdown Date is not the first day of
the Interest Period, the interest on the first such Interest Period
shall be calculated on an accrual basis.
9. Interest on the Loan
--------------------
9.1 For each tranche, the Borrower shall pay interest in arrears on the Loan
on each Interest Payment Date, such interest to be computed during all
or part of the Interest Period current or ending on that date at a rate
per annum equal to the aggregate sum of (i) LIBOR for the advance and
that Interest Period and (ii) the Spread for that Interest Period. Such
interest shall be calculated on the basis of a 360 day year and actual
days elapsed and shall accrue from day to day.
9.2 For the purpose of the determination of LIBOR applicable during each
Interest Period, the Lender will, on the second London business day
(being a day on which commercial banks and foreign exchange markets
settle payments in London) prior to the commencement of each Interest
Period (the "Interest Determination Date"), record at 11:00 a.m. (London
time) the offered rate for U.S. dollar deposits in London for a three-
month period ("Three Month Deposits") as at 11:00 a.m. (London time) on
the Interest Determination Date in question, as displayed on the
Telerate System as Telerate Page No. 3750 or such other page or pages as
may replace Telerate Page No. 3750 on that system or such other system
as may be nominated by British Banker's Association as the information
vendor for the purpose of displaying British Banker's Association
offered rates for U.S. dollars (the "Screen Page"). Subject as follows,
such rate shall be "LIBOR" for the purposes of this Agreement.
9.3 If for any reason the Screen Page does not display the information
referred to in Clause 9.2 above by 1:00 p.m. (London time) on any
Interest Determination Date then the Lender will, on such Interest
Determination Date, request the Reference Banks to provide the Lender
with their offered quotations to lending banks for Three Month Deposits
as at 11:00 a.m. (London time) on the Interest Determination Date in
question and, in this event, LIBOR shall, subject as provided below, be
the arithmetic average (rounded if necessary to the nearest 0.00001 per
cent., 0.000005 per cent. being rounded upwards) of such offered
quotations, as determined by the Lender.
<PAGE>
9.4 If on any Interest Determination Date on which the provisions of Clause
9.3 above apply one only or none of the Reference Banks provides such an
offered quotation to the Lender then the applicable LIBOR shall be
determined pursuant to Clause 10.1 and 10.2.
10. Alternative Interest Rates and Interest on Late Payments
--------------------------------------------------------
10.1 Notwithstanding anything to the contrary herein contained, if prior to
or on an Interest Payment Date the Lender acting reasonably and in good
faith determines (which determination shall be conclusive and binding on
the Borrower) that, by reason of circumstances affecting the London
Interbank Market generally, adequate and fair means do not exist for
ascertaining LIBOR applicable to the Loan for the relevant Interest
Period the Lender shall promptly give written notice of such
determination to the Borrower.
10.2 If the Lender gives a notice under Clause 10.1, during such Interest
Period the rate of interest applicable to the Loan shall be the rate of
interest calculated in respect of the immediately preceding Interest
Period in accordance with Clause 9.
10.3 The Borrower shall pay interest on any amount (each an "overdue amount")
of principal, interest or any other sum payable hereunder which is not
paid when due hereunder for the period from the due date to the date of
actual payment (as well after as before judgment) and such interest
shall be due and payable on the last day of each successive default
interest period (each a "default period") selected by the Lender into
which such period shall be divided, each of which (other than the first)
shall start on the last day of the immediately preceding default period.
10.4 During all or part of each default period for an overdue amount,
interest shall accrue thereon at the rate per annum determined by the
Lender as being the sum of (i) 2%, (ii) the Spread and (iii) LIBOR
calculated as if that overdue amount was an advance under the Loan
Facility and that the default period was the Interest Period therefor,
for the relevant overdue amount.
10.5 Anything herein to the contrary notwithstanding, the obligations of the
Borrower hereunder shall be subject to the limitation that payments of
interest shall not be required, for any period for which interest is
computed hereunder, to the extent that contracting for or receiving such
payment by the Lender would be contrary to the provisions of any law
applicable to the Lender limiting the highest rate of interest which may
be lawfully contracted for, charged or received by the Lender.
<PAGE>
REPAYMENT, PREPAYMENT AND PAYMENTS
----------------------------------
11. Repayment of Loan Facility
--------------------------
Subject to the terms of Schedule II, the Loan shall be repaid in full by
the Borrower on the Repayment Date.
12. Prepayment of Loan
------------------
12.1 At any time after the expiry of 2 years from the initial Drawdown Date
the Borrower may, with any required prior written consent of, or on
behalf of, all the Syndicate Banks addressed to the Borrower and the
Lender, give the Lender not less than three months' prior written notice
that it wishes to prepay the whole of the Loan, or any part of the Loan
in increments of US$20,000,000, on any Interest Payment Date for the
Loan. No prepayment fee shall be payable by the Borrower in such case.
12.2 Any notice of intended prepayment shall be irrevocable and shall specify
the date upon which such prepayment is to be made and the amount of such
prepayment and the Borrower shall be obliged to make such prepayment on
such date.
12.3 No amount prepaid shall be redrawn.
13. Payments; Subordination
-----------------------
13.1 Each payment of interest and the repayment and any prepayment of
principal under this Agreement shall be made in U.S. dollars.
13.2 Each payment due from the Borrower shall be made to the Lender in
immediately available freely transferable cleared funds not later than
11.00 a.m. (Japan time) on the due date at such bank account in Tokyo as
the Lender shall have notified to the Borrower. The Lender shall also
notify the Borrower of the amount to be paid by the Borrower and the
relevant due date thereof.
13.3 If any date for payment of any sum due is not a Business Day then such
payment shall be made on the next following Business Day or, if that
Business Day would fall in the following month, such payment shall be
made on the preceding Business Day.
13.4 Subject to Clause 14 all payments to be made by the Borrower
<PAGE>
in respect of the Loan Facility (whether of principal, interest, or
otherwise) shall be made free and clear of and without any deduction for
or on account of any set-off or counterclaim or, except to the extent
compelled by law, any deduction on account of any Taxes.
13.5 The Lender's right to receive any payments hereunder and to enforce
certain remedies upon an Event of Default is subject to the provisions
of Schedule II incorporated herein by reference.
14. Deduction of Tax
----------------
If the Borrower is compelled by law to withhold or deduct any Taxes from
any sum payable hereunder the Borrower shall deliver to the Lender (as
the case may be) as soon as reasonably practicable but not later than
one month after the payment, an original receipt or a certified copy
thereof for the Lender evidencing the payment by the Borrower to the
appropriate authority of all amounts so required to be withheld or
deducted.
REPRESENTATIONS, COVENANTS AND TERMINATION
--------------------------------------------
15. Representations and Warranties
------------------------------
The Borrower represents and warrants to the Lender with respect to
itself and its Subsidiaries as follows:
15.1 Corporate Existence and Power. The Borrower and each of its
-----------------------------
Subsidiaries:
(a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its
incorporation;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry
on its business and to execute, delivery, and perform its
obligations under this Agreement;
(c) is duly qualified as a foreign corporation and is licensed and
in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its
business requires such qualification or license; and
(d) is in compliance with all Requirements of Law; except, in each
case referred to in paragraph (c) or paragraph
<PAGE>
(d), to the extent that the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
15.2 Corporate Authorization: No Contravention. The execution, delivery
------------------------------------------
and performance by the Borrower of this Agreement have been duly
authorized by all necessary corporate action, and do not and will not:
(a) contravene the terms of any of the Organization Documents;
(b) conflict with or result in any breach or contravention of, or
the creation of any Lien under, any document evidencing any
Contractual Obligation to which the Borrower is a party or any
order, injunction, writ or decree of any Governmental Authority
to which the Borrower or its property is subject; or
(c) violate any Requirement of Law.
15.3 Governmental Authorization. No approval, consent, exemption,
--------------------------
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the
Borrower or any of its Subsidiaries of the Agreement.
15.4 Binding Effect. This Agreement constitutes the legal, valid and binding
--------------
obligation of the Borrower, enforceable against the Borrower in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally or by equitable principles
relating to enforceability.
15.5 Litigation. Except as specifically disclosed, there are no actions,
----------
suits, proceedings, claims or disputes pending, or to the best knowledge
of the Borrower, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, against the Borrower
or its Subsidiaries or any of their respective properties which may
purport to, affect or pertain to this Agreement, or any of the
transactions contemplated hereby or thereby.
15.6 No Default. No Event of Default exists or would result from the
----------
incurring of any obligations hereunder by the Borrower. As of the
Closing Date, neither the Borrower nor any of its Subsidiaries is in
default under or with respect to any
<PAGE>
Contractual Obligation in any respect which, individually or together
with all such defaults, could reasonably be expected to have a Material
Adverse Effect, or that would, if such default had occurred after the
Closing Date, create an Event of Default under Clause 17.
15.7 ERISA Compliance.
----------------
(a) Except as specifically disclosed, each Plan is in compliance in
all material respects with the applicable provisions of ERISA,
the Code and other federal or state law. Each Plan which is
intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS and to
the best knowledge of the Borrower, nothing has occurred which
would cause the loss of such qualification.
(b) There are no pending, or to the best knowledge of the Borrower,
threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan which has
resulted or could reasonably be expected to result in a Material
Adverse Effect. There has been no prohibited transaction or
other violation of the fiduciary responsibility rule with
respect to any Plan which could reasonably result in a Material
Adverse Effect.
(c) Except as specifically disclosed, no ERISA Event has occurred or
is reasonably expected to occur with respect to any Pension
Plan.
(d) Except as specifically disclosed, no Pension Plan has any
unfunded pension liability. The aggregate unfunded pension
liability for all Pension Plans does not exceed $10,000,000.
(e) Except as specifically disclosed, the Borrower has not incurred,
nor does it reasonably expect to incur, any liability under
Title IV of ERISA with respect to any Pension Plan (other than
premiums due and not delinquent under Section 4007 of ERISA).
(f) Except as specifically disclosed, the Borrower has not
transferred any unfunded pension liability to any Person or
otherwise engaged in a transaction that could be subject to
Section 4069 of ERISA.
(g) No trade or business (whether or not incorporated under common
control with the Borrower within the meaning of Section 414(b),
(c), (m) or (o) of the Code) maintains or contributes to any
Pension Plan or other Plan subject to Section 412 of the Code.
Neither
<PAGE>
the Borrower nor any Person under common control with the
Borrower (as defined in the preceding sentence) has ever
contributed to any multiemployer plan within the meaning of
Section 4001(a)(3) of ERISA.
15.8 Use of Proceeds: Margin Regulations. The proceeds of the Loans are to be
-----------------------------------
used solely for the purposes set forth in and permitted by Clause 3.
Neither the Borrower nor any Subsidiary is generally engaged in the
business of purchasing or selling Margin Stock or extending credit for
the purpose of purchasing or carrying Margin Stock.
15.9 Title to Properties. The Borrower and each of its Subsidiaries have good
-------------------
record and marketable title in fee simple to, or valid leasehold
interests in, all real property necessary or used in the ordinary
conduct of their respective businesses, except for such defects in title
as could not, individually or in the aggregate, have a Material Adverse
Effect.
15.10 Taxes. The Borrower and its Subsidiaries have filed all Federal and
-----
other material tax returns and reports required to be filed, and have
paid all Federal and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except those which are being
contested in good faith by appropriate proceedings and for which
adequate reserves have been provided in accordance with GAAP. There is
no proposed tax assessment against the Borrower or any Subsidiary that
would, when finally resolved reasonably be expected to have a Material
Adverse Effect.
15.11 Financial Conditions.
--------------------
(a) When issued, the unaudited consolidated financial statements of
the Borrower and its Subsidiaries dated December 31, 1993, and
the related consolidated statements of income or operations,
shareholders' equity and cash flows for the year ended on that
date:
(i) will be prepared in accordance with GAAP consistently
applied throughout the period convered thereby, except
as otherwise expressly noted therein, subject to
ordinary, good faith year end audit adjustments;
(ii) will fairly present the financial condition of the
Borrower and its Subsidiaries as of the date thereof and
results of operations for the period covered thereby;
and
<PAGE>
(iii) except as specifically disclosed, will show all material
indebtedness and other liabilities, direct or
contingent, of the Borrower and its consolidated
Subsidiaries as of the date thereof, including
liabilities for taxes and other material commitments.
15.12 Environmental Matters.
---------------------
(a) Except as specifically disclosed, the on-going operations of the
Borrower and each of its Subsidiaries comply in all material
respects with all Environmental Laws, except such non-compliance
which would not (if enforced in accordance with applicable law)
result in liability in excess of $10,000,000 in the aggregate.
(b) Except as specifically disclosed, the Borrower and each of its
Subsidiaries have obtained all material licenses, permits,
authorizations and registrations required under any
Environmental Law ("Environmental Permits") and necessary for
their respective ordinary course operations, all such
Environmental Permits are in good standing, and the Borrower and
each of its Subsidiaries is in compliance with all material
terms and conditions of such Environmental Permits.
(c) Except as specifically disclosed, none of the Borrower, any of
its Subsidiaries or any of their respective present property or
operations, is subject to any outstanding written order from or
agreement with any Governmental Authority, nor subject to any
judicial or docketed administrative proceeding, respecting any
Environmental Law, Environmental Claim or Hazardous Material.
(d) Except as specifically disclosed, there are no Hazardous
Materials or other conditions or circumstances existing with
respect to any property of the Borrower or any of its
Subsidiaries, or arising from operations prior to the Closing
Date, of the Borrower or any of its Subsidiaries that would
reasonably be expected to give rise to Environmental Claims with
a potential liability of the Borrower and its Subsidiaries in
excess of $10,000,000 in the aggregate for any such condition,
circumstance or property.
The above warranties of this Clause apply except to the extent that any
failure to comply described in sub-Clause (a), failure to obtain
described in sub-Clause (b), or circumstance or condition described in
sub-Clause (c) or (d) could not reasonably be expected to have a
Material Adverse
<PAGE>
Effect.
15.13 Regulated Entities. None of the Borrower or any Subsidiary is an
------------------
"Investment Company" within the meaning of the Investment Company Act of
1940. The Borrower is not subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interests
Commerce Act, any state public utilities code, or any other Federal or
state statute or regulation limiting its ability to incur Borrowings.
15.14 Copyrights, Patents, Trademarks and Licenses, etc. The Borrower or its
-------------------------------------------------
Subsidiaries own or are licensed or otherwise have the right to use all
of the material patents, trademarks, service marks, trade names,
copyrights, contractual franchises, authorizations and other rights that
are reasonably necessary for the operation of their respective
businesses, without conflict with the rights of any other Person. To the
best knowledge of the Borrower, no slogan or other advertising device,
product, process, method, substance, part or other material now
employed, or now contemplated to be employed, by the Borrower or any
Subsidiary materially infringes upon any rights held by any other
Person. Except as specifically disclosed, no claim or litigation
regarding any of the foregoing is pending or threatened, and no patent,
invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of the
Borrower, proposed, which, in either case, could reasonably be expected
to have a Material Adverse Effect.
15.15 Subsidiaries. As of the Closing Date, the Borrower has no Subsidiaries
------------
other than those specifically disclosed and has no equity investments in
any other corporation or entity other than those specifically disclosed.
15.16 Insurance. Except as specifically disclosed, the properties of the
---------
Borrower and its Subsidiaries are insured with financially sound and
reputable insurance companies not Affiliates of the Borrower, in such
amounts, with such deductibles and self-insured retentions and covering
such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where the
Borrower or such Subsidiary operates.
15.17 Full Disclosure. None of the representations or warranties made by the
---------------
Borrower in this Agreement as of the date such representations and
warranties are made or deemed made, and none of the statements contained
in any exhibit,
<PAGE>
report, statement or certificate furnished by or on behalf of the
Borrower in connection with this Agreement, contains any untrue
statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in
light of the circumstances under which they are made, not misleading as
of the time when made or delivered.
16. Affirmative Covenants
---------------------
So long as the Lender shall have any commitment or obligations
hereunder, or any part of the Loan or other Contractual Obligation of
the Borrower hereunder shall remain unpaid or unsatisfied unless the
Lender waives compliance in writing:
16.1 Financial Statements. The Borrower shall deliver to the Lender, in form
and detail satisfactory to the Lender:-
(a) as soon as available, but not later than 90 days after the end
of each fiscal year (commencing with the fiscal year ended
December 31, 1993), a copy of the audited consolidated balance
sheet of the Borrower and its Subsidiaries as at the end of such
year and the related consolidated statements of income or
operations, shareholders' equity and cash flows for such year,
setting forth in each case in comparative form the figures for
the previous fiscal year, and accompanied by the opinion of
Arthur Anderson & Co. or another nationally-recognized
independent public accounting firm ("Independent Auditor") which
--------------------
report shall state that such consolidated financial statements
present fairly the financial position for the periods indicated
in conformity with GAAP applied on a basis consistent with prior
years. Such opinion shall not be qualified or limited because of
a restricted or limited examination by the Independent Auditor
of any material portion of the Borrower's or any Subsidiary's
records; and
(b) as soon as available, but not later than 60 days after the end
of each of the first three fiscal quarters of each fiscal year
(commencing with the fiscal quarter ending April 1, 1994), a
copy of the unaudited consolidated balance sheets of the
Borrower and its Subsidiaries as of the end of such quarter and
the related consolidated statements of income, shareholders'
equity and cash flows for the period commencing on the first day
and ending on the last day of such quarter.
<PAGE>
16.2 Certificates; Other Information. The Borrower shall furnish to the
-------------------------------
Lender:
(a) promptly, copies of all financial statements and reports that
the Borrower sends to its shareholders, and copies of all
financial statements and regular, periodical or special reports
(including Forms 10K, 10Q and 8K) that the Borrower or any
Subsidiary may make to, or file with, the SEC;
(b) promptly, such additional information regarding the business,
financial or corporate affairs of the Borrower or any Subsidiary
as the Lender may from time to time reasonably request; and
(c) promptly, copies of all certificates and any other documents
whatsoever delivered to the Syndicate Banks pursuant to the
Syndicate Loan Documents.
16.3 Notices. The Borrower shall promptly notify the Lender:
-------
(a) of the occurrence of any Event of Default, and of the occurrence
or existence of any event or circumstance that could reasonably
be expected to become an Event of Default;
(b) of (i) any breach or non-performance of, or any default under,
any Contractual Obligation of the Borrower or any of its
Subsidiaries which could result in a Material Adverse Effect;
and (ii) any dispute, litigation, investigation, proceeding or
suspension which may exist at any time between the Borrower or
any of its Subsidiaries and any Governmental Authority that
could reasonably be expected to have a Material Adverse Effect;
(c) of the commencement of, or any material development in, any
litigation or proceeding affecting the Borrower or any
Subsidiary (i) in which the amount of damages claimed is
$25,000,000 (or its equivalent in another currency or
currencies) or more, (ii) in which injunctive or similar relief
is sought and which, if adversely determined, would reasonably
be expected to have a Material Adverse Effect, or (iii) in which
the relief sought is an injunction or other stay of the
performance of this Agreement;
(d) of any other litigation or proceeding affecting the Borrower or
any of its Subsidiaries which the Borrower would be required to
report to SEC pursuant to the Exchange Act, within four days
after reporting the same to the SEC;
<PAGE>
(e) of any of the following events affecting the Borrower, together
with a copy of any notice with respect to such event that may be
required to be filed with a Governmental Authority and any
notice delivered by a Governmental Authority to the Borrower
with respect to such event:
(i) an ERISA Event;
(ii) if any of the representations and warranties in Clause
15.7 ceases to be true and correct;
(iii) the adoption of any new Pension Plan or other Plan
subject to Section 412 of the Code;
(iv) the adoption of any amendment to a Pension Plan or other
Plan subject to Section 412 of the Code, if such
amendment results in a material increase in
contributions or Unfunded Pension Liability; or
(v) the commencement of contributions to any Pension Plan or
other Plan subject to Section 412 of the Code; and
(f) of any material change in accounting policies or financial
reporting practices by the Borrower or any of its Subsidiaries.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the
occurrence referred to therein, and stating what action the Borrower or
any affected Subsidiary proposes to take with respect thereto and at
what time. Each notice under Clause 16.3(a) shall describe with
particularity any and all clauses or provisions of this Agreement that
have been (or foreseeably will be) breached or violated.
16.4 Preservation of Corporate Existence, Etc. The Borrower shall:
----------------------------------------
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or
jurisdiction of incorporation;
(b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its
business;
(c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; and
<PAGE>
(d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which
could reasonably be expected to have a Material Adverse Effect.
16.5 Maintenance of Property. The Borrower shall maintain, and preserve all
-----------------------
its property which is used or useful in its business in good working
order and condition, ordinary wear and tear excepted and make all
necessary repairs thereto and renewals and replacements thereof except
where the failure to do so could not reasonably be expected to have a
Material Adverse Effect.
16.6 Insurance. The Borrower shall maintain, and shall cause each of its
---------
Subsidiaries to maintain, with financially sound and reputable
independent insurers, insurance with respect to its properties and
business against loss or damage of the kinds customarily insured by
persons engaged in the same or similar business, of such types and in
such amounts as are customarily carried under similar circumstances by
such other persons; including workers' compensation insurance, public
liability and property and casualty insurance.
16.7 Payment of Obligations. Except to the extent any failure to do so could
----------------------
not reasonably be expected to have a Material Adverse Effect, the
Borrower shall, and shall require each Subsidiary to, pay and discharge
as the same shall become due and payable, all their respective
obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are
being contested in good faith by appropriate proceedings and
adequate reserves in accordance with GAAP are being maintained
by the Borrower or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien
upon its property; and
(c) all indebtedness, as and when due and payable, but subject to
any subordination provisions contained in any instrument or
agreement evidencing such indebtedness.
16.8 Compliance with Laws. Except to the extent any failure to do so could
--------------------
not reasonably be expected to have a Material Adverse Effect, the
Borrower shall comply, and shall require each of its Subsidiaries to
comply, in all material respects with all Requirements of Law of any
Governmental Authority
<PAGE>
having jurisdiction over it or its business (including the Federal Fair
Labor Standards Act), except such as may be contested in good faith or
as to which a bona fide dispute may exist.
16.9 Inspection of Property and Books and Records. The Borrower shall
--------------------------------------------
maintain and shall cause each Subsidiary to maintain proper books of
record and account, in which full, true and correct entries in
conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of the
Borrower and such Subsidiary. The Borrower shall permit, and shall cause
each Subsidiary to permit, representatives and independent contractors
of the Lender to visit and inspect any of their respective properties,
to examine their respective corporate financial and operating records,
and make copies thereof or abstracts therefrom, and to discuss their
respective affairs, finances and accounts with their respective
directors, officers, and independent public accountants, all at such
reasonable times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to the Borrower;
provided, however, when an Event of Default exists the Lender may do any
-------- -------
of the foregoing at the expense of the Borrower at any time during
normal business hours.
16.10 Environmental Laws. Except to the extent any failure to do so could not
------------------
reasonably be expected to have a Material Adverse Effect, the Borrower
shall, and shall cause each Subsidiary to, conduct their operations and
keep and maintain their property in compliance with all Environmental
Laws.
16.11 Further Assurances. The Borrower shall ensure that all written
------------------
information, exhibits and reports furnished to the Lender do not and
will not contain any untrue statement of a material fact and do not and
will not omit to state any material fact or any fact necessary to make
the statements contained therein not misleading in light of the
circumstances in which made, and will promptly disclose to the Lender
and correct any defect or error that may be discovered therein or in the
execution, acknowledgement or recordation thereof.
17. Acceleration and Termination in Case of Default
-----------------------------------------------
17.1 Any of the following events which shall occur shall constitute an "Event
of Default":
<PAGE>
(a) Payments. The Borrower shall fail to pay (i) any amount of
--------
principal of the Loan on the date due or (ii) any amount of
interest on the Loan or any other amount payable hereunder
within five (5) Business Days after the date due.
(b) Representations and Warranties. Any representation or warranty
------------------------------
by the Borrower under this Agreement shall prove to have been
incorrect in any material respect when made or deemed made.
(c) Failure by Borrower to Perform Other Covenants. The Borrower
----------------------------------------------
shall fail in any material respect to perform or observe any
other term, covenant or agreement contained in this Agreement on
its part to be performed or observed and any such failure shall
to the Borrower by the Lender of such failure, subject to
subsection (f) below.
(d) Bankruptcy. The Borrower shall file a voluntary petition in
----------
bankruptcy or a petition or answer seeking reorganization, to
effect a plan or other arrangement with creditors or any other
relief under the U.S. Bankruptcy Code or under any other state
or U.S. federal law relating to bankruptcy or reorganization
granting relief to debtors, whether now or hereafter in effect,
or shall file an answer admitting the jurisdiction of the court
and the material allegations of any involuntary petition filed
against the Borrower pursuant to the Bankruptcy Code or any such
other state or federal law; or the Borrower shall be adjudicated
a bankrupt, or shall make an assignment for the benefit of
creditors, or shall apply for or consent to the appointment of
any custodian, receiver or trustee for all or any substantial
part of the Borrower's property, or shall take any action to
authorize any of the actions set forth above in this subsection;
or an involuntary petition seeking any of the relief specified
in this subsection shall be filed against the Borrower and shall
not be dismissed within 60 days; or any order for relief shall
be entered against the Borrower in any involuntary proceeding
under the Bankruptcy Code or any such other state or federal law
referred to in this subsection (d).
(e) Syndicate Credit Agreement. All principal and interest of the
--------------------------
Senior Obligations under the Syndicate Credit Agreement or the
Offshore Credit Facilities
<PAGE>
shall have become due and payable (whether by acceleration or
otherwise) and shall not have been paid within five (5) days
after it has become due and payable.
(f) Failure to Obtain Approval Under Clause 6.3. The entering into
-------------------------------------------
by the Borrower of any relevant agreement without obtaining the
prior requisite approval of the Lender pursuant to Clause 6.3
17.2 If any Event of Default shall occur, the Lender may, subject to Schedule
II hereof, (i) by notice to the Borrower, (A) declare its obligation to
make Loans hereunder to be terminated, whereupon the same shall
forthwith terminate, and (B) declare the entire unpaid principal amount
of the Loan, all interest accrued and unpaid thereon and all other
amounts payable under this Agreement to be forthwith due and payable
together with the default penalty interest at the rate of 2% per annum
and all actual losses incurred with the Lender (all amount payable, the
"Default Amount Payable") due to the penalty, damage exchange loss or
other payment required to be made to the swap counterparties of the
Lender in connection with the Loan Facility, whereupon the Default
amount payable shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower, provided that if an event
described in Clause 17.1(d) shall occur, the result which would
otherwise occur only upon giving of notice by the Lender to the Borrower
as specified in subclause (A) or (B) of this Clause 17.2 shall occur
automatically, without the giving of any such notice, and (ii), whether
or not the actions referred to in the preceding subsection (i) have been
taken, proceed to enforce all other rights and remedies available to the
Lender under applicable law.
EXPENSES AND STAMP DUTY
-----------------------
18. Expenses
--------
18.1 The Borrower shall reimburse the Lender in respect of legal fees up to
US$25,000 and all other reasonable expenses (and any value added or
similar tax thereon) incurred by the Lender in connection with the
negotiation, preparation, execution and completion of this Agreement
save as otherwise expressly provided herein.
18.2 The Borrower shall reimburse the Lender for all actual expenses
including without limitation legal fees (and any value added or similar
tax thereon) incurred by it in connection with the enforcement or
preservation of any of
<PAGE>
its rights under this Agreement.
19. Stamp Duty
----------
The Borrower shall pay all present and future stamp, registration and
similar taxes or charges which may be payable or determined to be payable in
connection with the execution, delivery, performance or enforcement of this
Agreement.
ASSIGNMENTS AND TRANSFERS
-------------------------
20. Assignments and Transfers
-------------------------
20.1 Subject to Schedule II, the Lender may assign all or any of its rights
and benefits or transfer all or any of its rights, benefits and
obligations hereunder.
20.2 This Agreement shall be binding upon and inure for the benefit of each
party hereto and its successors and permitted assigns.
20.3 The Borrower shall not be entitled to assign or transfer all or any of
its rights benefits or obligations hereunder without the prior written
consent of the Lender.
MISCELLANEOUS
-------------
21. Calculations and evidence of debt
---------------------------------
21.1 The Lender will maintain and keep accounts showing the aggregate amount
of all sums advanced from time to time by the Lender hereunder and all
payments made from time to time by the Borrower in respect thereof. The
accounts kept by the Lender shall in the absence of manifest error
constitute prima facie evidence of the advances made by the Lender
pursuant to this Agreement and of such payments.
21.2 A certificate of the Lender as to an interest rate for the purposes of
Clause 9 or 10 shall constitute prima facie evidence thereof in the
absence of manifest error.
22. Notices
-------
22.1 All communications to be made hereunder shall be made in writing.
<PAGE>
22.2 Any notices, proceedings or other documents to be served on a party
pursuant to this Agreement shall be addressed to it at its principal
office as first set out herein or at such other address as that party
may hereafter advise the other party in writing.
22.3 Any notice shall be deemed to have been given:-
22.3.1 if posted, on the seventh Business Day following the day on
which it has been properly despatched by airmail postage
prepaid; and
22.3.2 if sent by facsimile transmission, on the Business Day on which
transmitted or, in the case of a written notice lodged by hand,
at the time of actual delivery thereof at the address referred
to above.
23. Invalidity of Provisions
------------------------
If at any time any provision hereof is or becomes illegal, invalid or
unenforceable in any respect neither the legality, validity nor enforceability
of the remaining provisions hereof shall in any way be affected or impaired
thereby.
24. Waivers and Counterparts
------------------------
24.1 No failure to exercise and no delay in exercising on the part of the
Lender any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise of any such right,
power or privilege preclude any other or further exercise thereof or the
exercise of any other power or right.
24.2 This Agreement shall be executed in California in two counterparts each
of which shall be an original, but all the counterparts shall together
constitute one and the same instrument.
25. Governing Law and Jurisdiction
------------------------------
25.1 This Agreement (except Schedule II) shall be governed by and construed
in accordance with the laws of Japan.
25.2 The parties hereby submit for all purposes of or in connection with this
Agreement (except Schedule II) to the non-exclusive jurisdiction of the
Tokyo District Court, and solely for such purposes the Borrower hereby
appoints Keiji Matsumoto at the office of Hamada & Matsumoto Law Office,
Tokyo, Japan, or such other person having an address for
<PAGE>
service in Tokyo, Japan as the Borrower may appoint, to accept service
on its behalf in any proceedings in such court.
25.3 Schedule II shall be governed by and construed in accordance with the
laws of the State of California.
25.4 The parties hereby submit in connection with Schedule II to the non-
exclusive jurisdiction of the courts of the State of California and of
the United States District Court for the Northern District of
California.
AS WITNESS the hands of the authorised signatories of the parties hereto the day
and year first above written.
<PAGE>
The Borrower
- - ------------
Signed by /s/ E. Joseph Zemke
for and on behalf of President and
AMDAHL CORPORATION Chief Executive Officer
in the presence of :- /s/ Michael B. Shahbazian
Vice President and
Treasurer
The Lender
- - ----------
Signed by /s/ Tadashi Sekizawa
for and on behalf of President and
FUJITSU LIMITED Representative Director
in the presence of :- /s/ Satoshi Sugimoto
General Manager
Finance Division
