SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted
by Rule 14a-6(c)(2))
[X] Definitive Proxy Statement
[ ] Definite Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Amdahl Corporation
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(l)(ii), 14a-6(i)(l),
14a-6(i)(2)or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and state
how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
AMDAHL
CORPORATION
1250 East Arques Avenue
Sunnyvale, California 94088-3470
March 23, 1995
Notice of Annual Meeting of Stockholders
To Be Held May 4, 1995
The Annual Meeting of Stockholders of Amdahl Corporation, a
Delaware corporation (the "Company"), will be held at the Fairmont
Hotel, 170 South Market Street, San Jose, California at 11:00 a.m.
on May 4, 1995 to:
1. elect eleven directors to serve until the next
Annual Meeting of Stockholders, and until their
successors have been duly elected and qualified;
2. approve the restatement of the Company's
Employee Stock Purchase Plan;
3. approve the amendments to the Company's 1994 Stock
Incentive Plan;
4. approve the Company's Short-Term Executive
Incentive Performance Plan;
5. ratify the selection of Arthur Andersen LLP as
independent public accountants for the Company for
the 1995 fiscal year;
6. consider and vote upon a stockholder proposal
relating to an independent nominating committee of
the Board of Directors;
7. consider and vote upon a stockholder proposal
relating to a "high-performance workplace"; and
8. consider and act upon such other business as may
properly come before the meeting or any adjournment
or postponement thereof.
Items 1 through 7 are more fully presented in the Proxy
Statement. The Board of Directors has fixed the close of business
on March 6, 1995 as the record date for determining those
stockholders who will be entitled to vote at the meeting. A list
of stockholders will be kept at the principal executive offices of
Amdahl Corporation for ten days before the meeting. The transfer
books will not be closed between the record date and the date of
the meeting.
Representation of at least a majority of all outstanding
shares of Amdahl Corporation common stock, par value of $0.05 per
share, is required to constitute a quorum. Accordingly, it is
important that your stock be represented at the meeting. Whether
or not you plan to attend the meeting, please complete, date and
sign the enclosed proxy card and return it in the enclosed
envelope. The giving of such proxy does not affect your right to
vote in person if you attend the Annual Meeting of Stockholders.
By Order of the Board of Directors
/s/ Bruce J. Ryan
BRUCE J. RYAN
Senior Vice President, Chief Financial Officer
and Corporate Secretary
<PAGE>
PROXY STATEMENT
Annual Meeting of Stockholders
Amdahl Corporation
May 4, 1995
These proxy materials are furnished in connection with
solicitation of proxies by the Board of Directors of Amdahl
Corporation, a Delaware corporation ("Amdahl" or the "Company"),
for the Annual Meeting of Stockholders of Amdahl (the "Annual
Meeting") to be held at 11:00 a.m. on May 4, 1995 at the Fairmont
Hotel, 170 South Market Street, San Jose, California, and for any
adjournment or postponement thereof, for the purposes set forth in
the accompanying Notice of Annual Meeting of Stockholders. These
proxy materials were first mailed to stockholders on or about March
23, 1995. The address of the principal executive office of Amdahl
is 1250 East Arques Avenue, Sunnyvale, California 94088-3470.
Amdahl will bear the entire cost of soliciting proxies.
Arrangements may be made with brokerage houses and other
custodians, nominees and fiduciaries to send proxies and proxy
materials to the beneficial owners of stock, and expenses may be
reimbursed. Directors, officers or regular employees of Amdahl may
solicit proxies in person or by telephone or telegraph and will
receive no additional compensation for these services.
It is important that proxies be returned promptly.
Stockholders are requested to complete, sign, date and return the
proxy in the enclosed self-addressed envelope.
Securities and Exchange Commission ("SEC") rules require that
an annual report precede or be included with proxy materials.
However, stockholders with multiple accounts may be receiving more
than one annual report, which is costly to Amdahl and may be
inconvenient to these stockholders. Stockholders may discontinue
receiving extra reports by marking the appropriate box on the proxy
card for the accounts selected. At least one account must continue
to receive an annual report. Eliminating these duplicate mailings
will not affect receipt of future Proxy Statements and proxy cards.
To resume the mailing of an annual report to an account, please
call the Amdahl stockholder service number, 800-524-4458, at Bank
of New York.
VOTING
Shares of Amdahl common stock, par value of $.05 per share
("common stock"), represented by proxies in the accompanying form,
which are properly executed and returned to Amdahl before the
Annual Meeting, will be voted at the meeting in accordance with the
stockholders' instructions contained in the proxies. In the
absence of contrary instructions, proxies representing these shares
will be voted: FOR the nominees listed herein, FOR items 2 through
5, AGAINST items 6 and 7 and in the discretion of the proxy holders
on such other matters as may properly come before the meeting. As
of the date of this Proxy Statement, the Board of Directors knows
of no other business that will be presented for consideration at
the Annual Meeting. Any stockholder has the power to revoke his or
her proxy at any time before it is voted at the meeting.
It is Company policy that proxies, ballots and voting
tabulations be kept confidential except: (i) when disclosure is
necessary to meet applicable legal requirements; (ii) to assert or
defend claims for or against the Company; (iii) when disclosure is
expressly requested by a stockholder; (iv) the stockholder has made
written comments on a proxy card; or (v) during a contested
election for the Board of Directors. It is also Company policy that
the tabulators and inspectors of election be independent. Bank of
New York has been appointed as the Company's independent tabulators
and inspectors of election.
The close of business on March 6, 1995 was the record date for
stockholders entitled to notice of and voting rights at the Annual
Meeting. Shares of common stock outstanding on the record date are
entitled to be voted at the Annual Meeting, and the holders of
record will have one vote for each share held on the matters to be
voted on. Stockholders are entitled to cumulate their votes for
the election of directors. Cumulative voting enables a stockholder
to cumulate his or her votes and give one nominee a number of votes
equal to the number of directors to be elected (i.e. eleven)
multiplied by the number of votes to which the stockholder is
entitled, or the stockholder may distribute these votes among as
many nominees as he or she chooses. The proxies which withhold
authority to vote as to specific directors shall not be deemed to
cast votes for any other directors unless, in order to effect the
election of the eleven nominees, it is necessary to cumulate votes
to elect such other directors. The proxy holders shall not
cumulate votes for any other purpose. The eleven candidates
receiving the highest number of votes will be elected. Abstentions
and broker non-votes are included in the determination of the
number of shares present and voting. Each is tabulated separately.
Abstentions are counted in determining the number of shares voted
on proposals presented to stockholders, whereas broker non-votes
are not counted. The affirmative vote of a majority of the shares
of common stock represented and entitled to vote at the meeting is
required to approve items 2 through 7.
As of the record date, March 6, 1995, there were 117,504,131
shares of common stock outstanding.
PRINCIPAL STOCKHOLDERS
The following table sets forth the beneficial ownership of
Amdahl common stock as of March 6, 1995 for each person who is
known by Amdahl to beneficially own 5 percent or more of the
outstanding shares of the common stock:
<TABLE>
<CAPTION>
Number Approximate
Name and Address of Shares Percent Owned
---------------- --------- -------------
<S> <C> <C>
FMR Corp. (1) 8,793,050 7.48%
82 Devonshire Street
Boston, Massachusetts 02109
Fujitsu Limited (2) 51,811,664 44.09%
6-1 Marunouchi 1-chome
Chiyoda-ku
Tokyo, 100 Japan
</TABLE>
- -------------------------
(1) Pursuant to a Schedule 13G filed with the Securities and
Exchange Commission dated February 13, 1995, as of December 31,
1994, Fidelity Management & Research Company ("Fidelity"), a
wholly-owned subsidiary of FMR Corp., is the beneficial owner of
8,769,922 shares as investment adviser to several investment
companies (the "Funds"). The ownership of one of the Funds,
Fidelity Magellan Fund (principal business office: 82 Devonshire
Street, Boston, Massachusetts 02109) amounted to 8,248,400 shares.
Edward C. Johnson 3d, Chairman of FMR Corp., FMR Corp. and the
Funds each has power to dispose of 8,769,922 shares owned by the
Funds. The power to vote these shares resides with the Funds'
Board of Trustees, which has established written guidelines used by
Fidelity in carrying out the voting of these shares. Fidelity
Management Trust Company, a wholly owned subsidiary of FMR Corp.
and a bank (principal business office: 82 Devonshire Street,
Boston, Massachusetts 02109) ("FMTC"), is the beneficial owner of
23,128 shares as investment manager of the institutional
account(s). Edward C. Johnson 3d and FMR Corp., through its
control of FMTC, each has sole voting and dispositive power over
the 23,128 shares owned by FMTC. Edward C. Johnson 3d and Abigail
P. Johnson each own 24.9% of the outstanding voting common stock of
FMR Corp. Various Johnson family members and trusts for the
benefit of Johnson family members own FMR Corp. voting common
stock. These Johnson family members, through their ownership of
voting common stock and the execution of a family shareholders'
voting agreement, form a controlling group with respect to FMR
Corp.
(2) Fujitsu Limited ("Fujitsu") has sole dispositive and voting
power over these shares. In addition to its share ownership,
Fujitsu, a manufacturer of computers, telecommunication systems and
equipment, and semiconductor and other advanced electronic
components, has extensive business relationships with Amdahl. See
"Compensation Committee Interlocks and Insider Participation".
CERTAIN INFORMATION WITH RESPECT TO
DIRECTORS AND EXECUTIVE OFFICERS
At the Annual Meeting, stockholders will elect eleven
directors to hold office until the next Annual Meeting and until
their respective successors are duly elected and qualified. The
current Board of Directors' nominees for election as directors are
set forth below. The proxy holders intend to vote all proxies
received by them in the accompanying form for the eleven nominees.
If any nominee is unable or declines to serve as a director at the
time of the Annual Meeting, the proxies will be voted for any
nominee that the present Board of Directors designates to fill the
vacancy. In the event that additional persons are nominated for
election as directors, the proxy holders intend to vote all proxies
received by them cumulatively to assure the election of as many of
the nominees listed below as possible. If this situation occurs,
the proxy holders will determine the distribution of votes among
the nominees. As of the date of this Proxy Statement, the Board of
Directors is not aware of any nominee who is unable or will decline
to serve as a director.
<PAGE>
<TABLE>
<CAPTION>
Nominees to Board of Directors
Director Age at
of Amdahl February 1,
Name Principal Occupation Since 1995
- ----------- -------------------- --------- ----------
<S> <C> <C> <C>
John C. Lewis Chairman of the Board, 1977 59
Amdahl Corporation
E. Joseph Zemke President, Chief Executive Officer and 1987 54
Director, Amdahl Corporation
Keizo Fukagawa Managing Director, Fujitsu Limited 1992 58
Michael R. Hallman President and Founder, 49
The Hallman Group
E. F. Heizer, Jr. Private Investor and Business 1972 65
Consultant
Kazuto Kojima Director of the Board, General Manager 1993 52
Corporate Marketing and Strategy and
General Manager of Digital Media
Group, Fujitsu Limited
Burton G. Malkiel Chemical Bank Chairman's Professor of 1981 62
Economics, Princeton University
George R. Packard Professor and Director, 1987 62
Reischauer Center for East Asian
Studies, School of Advanced
International Studies, The Johns
Hopkins University
Walter B. Reinhold Chairman of the Board, 1981 70
Varco International, Inc.
Takamitsu Tsuchimoto Director of the Board, General Manager 1993 54
of Electronic Devices Group and
General Manager of CAD Group,
Fujitsu Limited
J. Sidney Webb Chairman of the Board, 1984 75
The Titan Corporation
</TABLE>
<PAGE>
Mr. Lewis was elected Chairman of the Board in 1987. He was
President of Amdahl from 1977, when he joined the Company, until
1987. He was the Company's Chief Executive Officer from 1983 until
1992. He is a director of Cypress Semiconductor and Vitesse
Semiconductor Corporation.
Mr. Zemke was elected President in 1987 and has been the
Company's Chief Executive Officer since 1992. He was the Chief
Operating Officer from 1985, when he joined the Company, until
1992.
Mr. Fukagawa has been with Fujitsu since 1960. After having
held managerial positions in a variety of departments and
divisions, he held the office of General Manager of the Accounting
Division from 1986 to 1989, and was appointed as a Director of the
Board of Fujitsu Limited in 1989. He was appointed as a Managing
Director of Fujitsu Limited in 1992 and is now responsible for all
Corporate Affairs.
Mr. Hallman is the founder and President of The Hallman Group,
a management consulting firm which focuses on marketing, sales,
business development and strategic planning for the information
systems industry. Mr. Hallman was President and Chief Operating
Officer of Microsoft Corporation from 1990 until 1992, and Vice
President of the Boeing Company and President of Boeing Computer
Services from 1987 until 1990. From 1967 until 1987, he worked for
IBM Corporation in various sales and marketing executive positions.
Mr. Hallman is currently a director of Intuit; In Focus Systems,
Inc.; Timeline Inc.; and Keytronics Corporation, as well as a
number of private hardware and software technology startups. He
provided consulting services to Amdahl in 1994. See "Certain
Transactions" for additional information regarding Mr. Hallman.
Mr. Heizer is engaged in the formation and development of
businesses from both a management and investment standpoint. He
was Chairman of the Board of Directors and Chief Executive Officer
of Heizer Corporation, a business development firm, from 1969 until
1985. Mr. Heizer is currently a director of Chesapeake Energy
Corporation and Material Sciences Corporation. He is also a
Director of a number of private companies. He has been Chairman of
Amdahl's Audit Committee since 1974.
Mr. Kojima has been with Fujitsu since 1965. He has held
multiple managerial positions in various departments and
divisions. In 1993 he was appointed General Manager of Corporate
Marketing and Strategy and in 1994 he was appointed as a Director
of the Board of Fujitsu and General Manager of Digital Media Group.
Dr. Malkiel has been Chemical Bank Chairman's Professor of
Economics at Princeton University since 1988. Dr. Malkiel was Dean
of the Yale School of Organization and Management from 1981 through
1987. Dr. Malkiel served on President Ford's Council of Economic
Advisors. He is currently a director of Baker Fentress Inc.; the
Jeffrey Co.; Prudential Insurance Company; Southern New England
Telecommunications Co.; and the Vanguard Group of Investment
Companies.
Dr. Packard is Professor and Director of the Reischauer Center
for East Asian Studies of the School of Advanced International
Studies at the John Hopkins University. He was Dean of the School
from 1979 through 1993. Since 1994 he has concurrently served as
Professor and Director of the Reischauer Center and Visiting
President of the International University of Japan. Prior to
entering academe, he was a journalist with Newsweek Magazine
(1965-1967), the Philadelphia Bulletin (1967-1968), and editor of
the Philadelphia Evening and Sunday Bulletin (1968-1975). From
1976 to 1979 he was Deputy Director of the Woodrow Wilson
International Center in Washington, D.C. He is currently a
director of the Mercantile-Safe Deposit and Trust Funds; the
Offitbank in New York City; GRC International Corp.; and the Japan-
America Institute of Management Science, in Honolulu.
Mr. Reinhold has been Chairman of the Board since 1976, and
was Chief Executive Officer from 1976 to 1991, of Varco
International, Inc., a manufacturer of oil tools, drilling systems,
flow-control devices and electronic instrumentation systems for the
oil and gas well drilling and production industry. He currently is
a member of the Board of Directors of Revco D.S., Inc. and The
Petroleum Equipment Suppliers Association. Mr. Reinhold was
Chairman of Amdahl's Compensation and Benefit Plan Administration
Committees from 1983 through 1992. He was appointed Chairman of
the new Compensation Committee and Human Resources Advisory
Committee in January 1993.
Mr. Tsuchimoto has been with Fujitsu since 1963. He has held
managerial positions in a variety of departments and divisions. He
was appointed General Manager of the Technology Development Group
in 1990. In 1994 he was appointed as General Manager of the
Electronic Devices Group and General Manager of the CAD Group. In
addition, he has been serving as Director of the Board of Fujitsu
Limited since 1992.
Mr. Webb has been Chairman of the Board since 1984 of The
Titan Corporation, a supplier of high technology products to
industrial companies and the defense industry, and an independent
consultant since his retirement in 1982 from TRW-Fujitsu Co., a
joint venture between Fujitsu and TRW, Inc. From 1980 to 1982, Mr.
Webb was President of TRW-Fujitsu Co. In addition, he was a
director of TRW from 1966 until 1981. Mr. Webb is a director of
EIP Microwave, Inc. and Plantronics, Inc.
See "Principal Stockholders" and "Compensation Committee
Interlocks and Insider Participation" for additional information
regarding Fujitsu. See "Certain Transactions" for additional
information regarding Michael R. Hallman.
Security Ownership
The following table sets forth the beneficial ownership of
common stock of Amdahl as of March 6, 1995 by each director and
nominee, the chief executive officer and the four other most highly
compensated executive officers, and all directors and executive
officers as a group.
<PAGE>
<TABLE>
<CAPTION>
Number of Approximate
Name Shares(1) Percent Owned
------------------- --------- -------------
<S> <C> <C>
John C. Lewis . . . . . . . . . . . . . 430,323 *
E. Joseph Zemke . . . . . . . . . . . . 353,704 *
Keizo Fukagawa (2). . . . . . . . . . . 7,500 *
Michael R. Hallman. . . . . . . . . . . -0- *
E. F. Heizer, Jr. . . . . . . . . . . . 19,000 *
Kazuto Kojima (2) . . . . . . . . . . . 2,500 *
R. Stanley Laing. . . . . . . . . . . . 13,000 *
Burton G. Malkiel . . . . . . . . . . . 12,451 (3) *
George R. Packard . . . . . . . . . . . 11,000 *
Walter B. Reinhold. . . . . . . . . . . 89,605 *
Takamitsu Tsuchimoto (2). . . . . . . . 2,500 *
J. Sidney Webb. . . . . . . . . . . . . 15,000 *
David B. Wright . . . . . . . . . . . . 51,467 *
David L. Anderson . . . . . . . . . . . 61,463 *
Orval J. Nutt . . . . . . . . . . . . . 81,400 *
All current directors and executive
officers as a group (23 persons) 2,855,174 2.43%
</TABLE>
<PAGE>
- ------------------------
* Less than 1 percent
(1) These shares are subject to the sole voting and investment
power of the indicated person(s). The figures include shares that
could be purchased by exercise of options within 60 days of March
6, 1995 and held by: Mr. Lewis, 315,800 shares; Mr. Zemke, 228,400
shares; Mr. Fukagawa, 7,500 shares; Mr. Heizer, 11,000 shares; Mr.
Laing, 11,000 shares; Dr. Malkiel, 11,000 shares; Dr. Packard,
10,500 shares; Mr. Reinhold, 11,000 shares; Mr. Webb, 11,000
shares; Mr. Wright, 24,920 shares; Mr. Anderson, 47,000 shares; Mr.
Nutt, 70,600 shares; and all current directors and executive
officers as a group, 1,907,880 shares.
(2) See "Principal Stockholders" for information regarding
securities held by Fujitsu.
(3) Includes 1,000 shares held by the Jonathan P. Malkiel Trust of
which Dr. Malkiel is a trustee, with shared voting, but sole
investment power.
Board Meetings and Committees
The Board of Directors held four meetings during 1994.
The Board has an Audit Committee, a Compensation Committee and
a Human Resources Advisory Committee.
The Audit Committee is primarily responsible for approving the
services performed by the Company's independent public accountants
and for reviewing and evaluating the Company's accounting
principles and reporting practices and its system of internal
accounting controls. This committee, currently consisting of
Messrs. Fukagawa, Heizer and Laing and Dr. Malkiel, held three
meetings during 1994. Mr. Fukagawa attended fewer than 75 percent
of the meetings.
The Compensation Committee is responsible for reviewing and
approving the Company's compensation policies and administering the
Company's employee benefit programs. It held four meetings during
1994, and currently consists of Messrs. Reinhold, Kojima and Webb
and Dr. Packard.
The Human Resources Advisory Committee is to serve as a forum
for (i) discussion of human resource strategy for the Company; (ii)
evaluation of the Company from an employee perspective; (iii)
planning senior level succession; (iv) consideration and assessment
of human resource management practices; and (v) consideration of
significant new personnel programs. The Human Resources Advisory
Committee will periodically present its findings and
recommendations to the Board or to the Compensation Committee for
consideration and implementation. This committee, currently
consisting of Messrs. Kojima, Reinhold, Lewis and Webb and Dr.
Packard, held one meeting during 1994.
Director Compensation
Each non-employee director receives an annual fee of $20,000
and $1,000 for full-day and $500 for half-day attendance at Board
and committee meetings, and is reimbursed for expenses incurred in
connection with these meetings. Of these fees, $72,500 earned in
1994 by Messrs. Fukagawa, Kojima and Tsuchimoto was paid to
Fujitsu. These amounts are not included in the payments to Fujitsu
discussed under "Compensation Committee Interlocks and Insider
Participation". Directors may defer all or part of their
compensation to selected later years to be paid with interest at a
specified formula rate, on a lump sum or annual installment basis.
Each non-employee Board member will also receive annual option
grants for shares of the Company's common stock pursuant to the
Automatic Option Grant Program in effect under the Company's 1994
Stock Incentive Plan. Accordingly, on May 5, 1994, an automatic
option grant for 5,000 shares of common stock was made to each
individual re-elected as a non-employee Board member at the Annual
Meeting of Stockholders held on that date, provided such individual
had served as a non-employee Board member for at least twelve
months. Each grant has an exercise price of $7.125 per share, the
fair market value on the grant date, and a maximum term of ten
years measured from the grant date, subject to earlier termination
upon the optionee's cessation of Board service. Each option is
immediately exercisable for all of the option shares, but any
shares purchased under the option will be subject to repurchase by
the Company, at the original exercise price, in the event the
optionee should cease Board service prior to vesting in the shares.
The option will vest annually in two equal and successive
installments over the optionee's period of continued Board service,
with the first installment to vest one year after the automatic
grant date. However, the option will automatically vest in full
upon (i) certain changes in control or ownership of the Company or
(ii) the death or disability of the optionee while serving as a
Board member. For further information concerning the Automatic
Option Grant Program, see "Approval of Amendments to the 1994 Stock
Incentive Plan".
The 1994 Stock Incentive Plan also contains a special stock
acquisition program for the non-employee Board members pursuant to
which they may elect to apply all or any portion of their annual
retainer fee to the purchase of unvested shares of common stock.
None of the non-employee Board members applied their annual
retainer fee for the 1994 fiscal year to the acquisition of shares
under this program.
Compensation Committee Interlocks and Insider Participation
Messrs. Reinhold, Kojima and Webb and Dr. Packard, all non-
employee members of the Board, comprise the Compensation Committee.
Mr. Kojima is Director of the Board, General Manager of
Corporate Marketing and Strategy and General Manager of Digital
Media Group of Fujitsu.
Amdahl purchases both components and subassemblies for its
computer systems as well as certain other equipment and supplies
from Fujitsu. The aggregate amount of these purchases during 1994
was approximately $219 million. The Company has been advised by
Fujitsu that because of the difficulty of allocating expenditures
for research and development, creation of new manufacturing
facilities, and general and administrative costs for the production
of the computer subassemblies and other equipment sold by Fujitsu
to the Company, it is difficult to determine the relative
profitability of such sales. However, subject to the foregoing
uncertainties, Fujitsu believes that the profitability of these
sales is approximately equivalent to the profitability of sales by
Fujitsu of computer products to customers in which it has no
ownership interest. Although some of the materials and other
equipment are custom manufactured by Fujitsu for Amdahl and are not
available from third parties, Amdahl believes that the prices it
pays Fujitsu for these products are comparable to those it would
pay to an unaffiliated supplier.
Amdahl has committed to purchase a minimum number of certain
components, subassemblies and other equipment from Fujitsu. On
December 30, 1994 the aggregate remaining commitment for these
materials and equipment was approximately $126 million. Delivery
of these materials and other equipment, and the related payments,
is generally expected to occur during 1995. In addition, Fujitsu
supplies Amdahl with services and material related to the Company's
development of current and future products, including the 5995
Series of processors. The Company charged engineering and
development expense for approximately $6 million in 1994 relating
to these efforts.
Amdahl has also entered into agreements with Fujitsu or
certain of its subsidiaries for the distribution of Amdahl computer
systems in Brazil, Japan, Malaysia and Spain. In 1994 Amdahl
recognized approximately $39 million in revenue from equipment
sales to Fujitsu.
In 1993 Amdahl and Fujitsu entered into an agreement pursuant
to which Amdahl and Fujitsu agreed to participate in the joint
development of the Company's next generation of IBM compatible
systems. Under the agreement, Fujitsu will undertake primary
responsibility for the design and manufacture of these systems.
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. On December 30,
1994, $80 million in principal and $1 million in interest was
outstanding under this agreement. In 1994 the interest expense
associated with the loan was approximately $4 million.
CERTAIN TRANSACTIONS
See "Compensation Committee Interlocks and Insider
Participation" for information regarding Fujitsu.
Michael R. Hallman, who was nominated by the Board of
Directors on January 26, 1995, to serve as a member of the Board
effective at the 1995 Annual Meeting if he is elected by the
stockholders, received $163,486 in consulting fees and expense
reimbursement from Amdahl in fiscal year 1994.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
The members of the Board of Directors, the executive officers
of the Company and persons who hold more than 10 percent of the
Company's outstanding common stock are subject to the reporting
requirements of Section 16(a) of the Securities Exchange Act of
1934, which require them to file reports with respect to their
ownership of and transactions in the Company's securities.
Officers, directors and greater than 10 percent stockholders are
required to furnish the Company with copies of all reports they
file.
Based upon the copies of those reports furnished to the
Company, and written representations that no other reports were
required to be filed, the Company believes that all reporting
requirements for the fiscal year ended December 30, 1994 were met
in a timely manner by its executive officers, Board members and
greater than 10 percent stockholders, with the following
exceptions: (i) Walter B. Reinhold, member of the Board of
Directors, made one late filing of a Form 4 relating to one
transaction; (ii) Bruce J. Ryan, Senior Vice President, Chief
Financial Officer and Corporate Secretary of the Company, had a
discrepancy in the share ownership amount shown on his Form 3,
which was subsequently amended; and (iii) Edward F. Thompson,
former Vice President, Chief Financial Officer and Secretary of the
Company, made one late filing of a Form 4 relating to one
transaction.
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table provides certain summary information
concerning compensation paid or accrued by the Company and its
subsidiaries, to or on behalf of the Company's Chief Executive
Officer and each of the four other most highly compensated
executive officers of the Company (hereafter referred to as the
"named executive officers") for the last three fiscal years ended
December 25, 1992, December 31, 1993 and December 30, 1994:
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------- --------------------------------
Other Securities
Name and Annual Restricted Underlying All Other
Principal Compen- Stock Options/ Compen-
Position Year Salary($) Bonus($) sation($) Awards($)(1) SARS(#) sation($)(2)
- -------- --- -------- ------- -------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
E. Joseph Zemke
Chief Executive
Officer 1994 $644,361 $900,000 $695,000 0 $265,107
1993 $616,366 $0 $0 156,000 $3,538
1992 $521,172 $0 $175,750 78,000 $3,433
John C. Lewis
Chairman of
the Board 1994 $660,036 $250,000 $0 -0- $210,635
1993 $660,036 $0 $0 148,000 $3,538
1992 $641,192 $0 $0 109,000 $3,433
David B. Wright (3)
Vice President &
General Manager 1994 $301,823 $280,000 $238,472 (4) $0 -0- $100,969
1993 $253,491 $63,000 $59,322 $62,400 96,300 $3,538
David L. Anderson
Vice President &
General Manager 1994 $290,426 $265,000 $0 -0- $100,066
1993 $252,794 $65,000 $62,400 75,500 $0
1992 $189,120 $0 $0 50,000 $0
Orval J. Nutt
Vice President &
General Manager 1994 $269,650 $245,000 $0 -0- $96,349
1993 $241,480 $44,000 $62,400 63,500 $3,538
1992 $208,336 $0 $114,275 56,000 $3,433
</TABLE>
<PAGE>
- ---------------
(1) Restricted shares, subject to the Company's repurchase
rights, were held by the following named executive officers
with an aggregate value (closing price less consideration
paid) as of December 30, 1994: Mr. Zemke, 111,000 shares,
$1,215,450; Mr. Wright, 11,000 shares, $120,450; Mr.Anderson,
8,000 shares, $87,600; and Mr. Nutt, 12,200 shares, $133,590.
Mr. Zemke was awarded 100,000 shares in 1994, on which the
Company's repurchase rights will lapse on January 26, 1995 for
10,000 shares, January 26, 1996 for 10,000 shares, January 26,
1997 for 15,000 shares, January 26, 1998 for 15,000 shares,
January 26, 1999 for 25,000 shares and January 26, 2000 for
25,000 shares. The repurchase rights will however lapse on
50% of the remaining restricted shares should the fair market
value of the Company's common stock average or exceed $15 per
share for three continuous months. Likewise, the repurchase
rights shall lapse on 100% of the remaining restricted shares
should the fair market value of the Company's common stock
average or exceed $20 per share for three continuous months.
He was also awarded 10,000 shares in 1992, and 25,000 shares
in 1990, on which the Company's repurchase rights will lapse
in 20 percent increments over five years from the award date.
Mr. Wright, Mr. Anderson and Mr. Nutt were each awarded 12,000
shares in 1993, on which the Company's repurchase rights will
lapse in 33 percent increments over three years from the award
date. Mr. Nutt was awarded 7,000 shares in 1992, on which the
Company's repurchase rights will lapse in 20 percent
increments over five years from the award date.
Repurchase rights become exercisable by the Company upon an
officer's termination of employment and allow the Company to
repurchase, at the original purchase price paid by the officer
to the Company, any restricted shares as to which the
repurchase rights have not yet lapsed. Shares subject to the
Company's repurchase rights have the same dividend rights as
all other outstanding shares of the Company's common stock
held by the stockholders.
(2) Amounts reported as All Other Compensation for the 1994
fiscal year for each of the named executive officers include
(i) Company matching contributions to the Employee Savings
Plan in the amount of $2,250 per officer and (ii) awards
allocated to the short-term and long-term accounts maintained
for each officer under the Executive Incentive Performance
Plan. The allocation to the short-term accounts of: Mr. Zemke
for $138,797; Mr. Lewis for $109,701; Mr. Wright for $51,313;
Mr. Anderson for $50,410; and Mr. Nutt for $46,693 will be
paid in 25 percent increments over the next four years,
provided the executive remains in the Company's employ. The
allocation made to the long-term account of each officer was
as follows: Mr. Zemke, $124,060; Mr. Lewis, $98,684; Mr.
Wright, $47,406; Mr. Anderson, $47,406; and Mr. Nutt, 47,406.
The long-term account will be paid out to each named executive
officer upon his termination of employment, to the extent the
executive is vested in his long-term account at that time.
For further information concerning the vesting and payout of
accounts under the Executive Incentive Performance Plan, see
"Employment Contracts and Termination of Employment
Agreements" .
(3) Mr. Wright was first designated as an Executive Officer
by the Board of Directors on August 5, 1993.
(4) Other Annual Compensation reported for Mr. Wright is
comprised of three principal items. The first item in the
amount of $106,073 related primarily to Mr. Wright's
international service in the United Kingdom, including
reimbursement of international housing costs in the amount of
$63,334, an international service premium of $18,082 and an
international goods and service differential allowance of
$12,413. The second principal item is $98,600 of tax
reimbursement payments which the Company made to Mr. Wright
pursuant to the Company's tax equalization program for
international assignees. The third item is $33,799 related to
the Company's forgiveness of outstanding indebtedness owed by
Mr. Wright and includes $20,680 of forgiven principal, $1,137
of forgiven interest and a payment in the amount of $11,982 to
cover the income tax withholding liability incurred by Mr.
Wright in connection with the forgiveness.
Option Exercises and Holdings
The following table provides information with respect to the
named executive officers concerning the exercise of options during
the last fiscal year and unexercised options held as of the end of
the fiscal year:
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES(1)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY-End FY-End ($)(2)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($)(3) Unexercisable Unexercisable
- ---------- --------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
E. Joseph Zemke 0 0 252,800/164,000 $710,425/$762,400
John C. Lewis 21,200 $50,350 295,400/175,600 $670,738/$751,575
David B. Wright 0 0 24,920/ 65,380 $153,685/$404,653
David L. Anderson 0 0 61,400/ 70,100 $260,194/$385,713
Orval J. Nutt 0 0 70,500/ 62,500 $283,709/$332,863
</TABLE>
<PAGE>
(1) No stock appreciation rights have been granted to date.
(2) Fair market value at fiscal year end ($10.9375) less exercise
price.
(3) Fair market value at time of exercise less exercise price.
Employment Contracts and Termination of Employment Agreements
The Company currently has no employment contracts with any of
its named executive officers. However, the Company has implemented
the Executive Incentive Performance Plan, which provides benefits
some of which are not payable until termination of employment.
Under this plan executive officers and other key employees may
receive incentive awards each year based upon the Company's
progress in achieving long-term business objectives. The aggregate
annual award for all plan participants may not exceed 2 percent of
the Company's consolidated pre-tax earnings for the year. The
annual award is allocated to two separate components in effect
under the plan: a short-term incentive program and a long-term
income accumulation program. Allocations to the short-term program
are based upon each participant's compensation (salary and bonus)
for the year, with vesting and payout to occur generally over four
years beginning one year after the award date.
The long-term income accumulation program is designed to
create a source of retirement income for each participant in the
plan. The Compensation Committee determines the dollar amount of
the retirement income target applicable to each participant and
periodically adjusts that target as circumstances change. The
long-term component of each annual award to the plan is allocated
to each participant's long-term account in proportion to his or her
share of the aggregate retirement income targets in effect for all
participants at that time. Vesting in this account (including the
individual retirement income target) will begin upon the latest to
occur of (i) the participant's completion of ten years of service
with the Company, (ii) the attainment of age 55 or (iii) the
attainment of combined age and years of service totalling 70. At
that time, the participant will initially vest in the portion of
the long-term account equal to his or her years of service
multiplied by 5 percent and will vest in an additional 5 percent
upon completion of each additional year of service thereafter. Mr.
Zemke's account was modified in 1994, so that it will fully vest
when he reaches age 60. No payments will be made from the
participant's account until termination of service, and the payment
at that time may be made either in a lump sum or in annual
installments in accordance with the participant's prior election.
Special vesting provisions will apply in the event the
participant's service with the Company terminates by reason of
death or disability. In addition, the participant may receive the
entire balance credited to his or her long-term account upon
termination of service in the event that such balance is less than
the portion of the retirement income target in which the
participant is vested at that time.
No trust fund or other segregated account has been established
as an actual funding vehicle for the payment of the participant's
long-term account, and the account is simply a record entry upon
the Company's books. Accordingly, each participant is a general
creditor of the Company with respect to his or her unpaid account
balance.
On May 4, 1994 the Compensation Committee adopted Corporate
Officer Severance Guidelines ("Severance Guidelines") which apply
to the Executive Officers and Corporate Vice Presidents of the
Company (collectively, "Corporate Officers") in the event of a
termination resulting from a change in control or an involuntary
termination for reasons other than cause. A change in control
would include: (i) a merger or consolidation in which the Company
is not the surviving entity; (ii) a sale, transfer or other
disposition of all Company assets; (iii) a reverse merger in which
the Company becomes a subsidiary of another corporation; (iv) an
acquisition of 25 percent of the voting power of the Company's
outstanding securities; (v) an acquisition of sufficient shares
which increases the total holdings of a person or group to more
than 50 percent of the outstanding securities; (vi) an acquisition
of sufficient stock to elect an absolute majority of the Board of
Directors; or (vii) a hostile take-over. Under the Severance
Guidelines, severance benefits will be provided for a terminated
Corporate Officer for a period ranging from a minimum of one year,
in the event of an involuntary termination in the absence of any
change in control, to a maximum of two years should the involuntary
termination occur in connection with such a change. However, no
severance benefits will be paid if the Corporate Officer's
employment is terminated for cause. During the applicable
severance period, the Corporate Officer will receive the following
severance benefits: (i) continuation of base salary; (ii) the
average bonus that would have been paid to an officer in a
comparable position on the basis of the Company's attainment of the
performance goals established for the fiscal year or years
coincident with the severance period; (iii) continued health care
and life insurance coverage; (iv) vesting of outstanding stock
options and restricted stock awards; (v) vesting and pay-out of
installments from the Corporate Officer's short-term account under
the Executive Incentive Performance Plan; and (vi) continued
vesting in the Corporate Officer's long-term account under the
Executive Incentive Performance Plan, with subsequent payout of the
vested benefit upon the individual's eligibility for benefit
distribution under the plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Introduction
The Compensation Committee of the Board of Directors is
responsible for the administration of the compensation programs for
the Company's executive officers. These programs have been
designed to ensure that the compensation paid to the executive
officers is linked to both Company and individual performance.
Accordingly, a substantial portion of the compensation paid to each
executive officer is comprised of various components based upon
individual achievement and Company performance, such as pre-tax
profit, attainment of predetermined goals and the improvement in
the market price of the Company's stock.
The Committee met four times during 1994. At the beginning of
the year the Committee reviewed the final recommendations from the
independent consultant retained to assess the appropriateness of
the executive officer compensation programs. In evaluating the
consultant's recommendations, the Committee took into account the
need to continue the restructuring of the Company, the ongoing need
to redirect the business and product strategy of the Company and
the need to return to and maintain profitability.
The principal findings of the review are summarized below:
* The challenges faced by the Company and the market
trends identified indicate that an increased percentage of
compensation should be tied to the Company's attainment of
established performance goals.
* The variable portion of compensation should be
greater than currently allowed for in the existing programs, and
base salaries should be targeted over time at a level closer to the
median of the market rather than the traditional 75th percentile
practice.
* Bonuses should correspond to performance against
specific goals.
* The link between the increase in stockholder value
and the long term incentive program should be strengthened.
* To provide for an appropriate succession of senior
executives, the standard terms governing the vesting of benefits
under the Executive Incentive Performance Plan should be modified
for the CEO position to allow for full vesting at age 60.
It was also determined that the Compensation Principles, as
stated below, were still appropriate.
Compensation Principles
The design and implementation of all executive compensation
programs are based on a series of guiding principles derived from
Company values, business strategy and management requirements.
These principles may be summarized as follows:
* Attract and retain key executives essential to the
long-term success of the Company.
* Reward executives for long-term corporate success
by facilitating their ability to acquire an ownership interest in
the Company.
* Provide direct linkage between the compensation
payable to executives and the Company's attainment of annual and
long-term financial goals and targets.
* Emphasize reward for performance at the individual,
team and corporate level.
Base Salary
Company performance plays a minimal role in the determination
of base salary. The base salary for each executive officer is
based on several factors, including, importance of the function
performed, the scope of responsibility and the salary levels in
effect for comparable positions with the Company's principal
competitors. The weight given to each of these factors may vary
from individual to individual. In general, base salary is
determined to be competitive with the base salary levels paid by a
peer group of companies within the Company's industry which the
Committee has identified for comparative compensation purposes.
The base salary levels in effect for the Company's executive
officers for the 1994 fiscal year ranged from the 50th percentile
to the 75th percentile of the surveyed salaries for the peer group
companies. 34 of the peer group companies are included in the
Standard & Poor's Computer Systems Index (the "S & P Index") which
has been chosen as the Company's industry index for purposes of the
Company Stock Price Performance graph which follows this report.
In selecting the peer group companies to survey for comparative
compensation purposes, the Committee focused primarily on whether
those companies were actually competitive with the Company in
seeking executive talent, whether those companies had a management
style and corporate culture similar to the Company's and whether
similar positions existed within their corporate structure. For
this reason, the number of companies surveyed for compensation data
was less than the number of companies included in the S & P Index.
Annual Bonus
Annual bonuses for the 1994 fiscal year were calculated by the
use of a structured formula that used the following components:
* Company Financial Performance
Each year the Board approves the pre-tax profit goals for the
Company, and operating income and revenue goals for each line of
business. The Company's performance against these goals is
assessed by the Committee at the close of the year. The financial
performance component of the annual bonus is based on the percent
of the pre-tax profit goal achieved (or, for some executives,
percent of the operating income or revenue goal achieved for a line
of business). The award scale is nonlinear and provides the
maximum award for above target performance while reducing the award
for below target performance. The financial performance component
is not paid if less than 75% of the goal is achieved, and the
maximum bonus will be paid only if 125% or higher of the goal is
achieved.
The financial performance component of the CEO's bonus may be
equal to 30% of salary if 75% of the goal is achieved, 75% of
salary at 100% goal achievement, and 112.5% of salary at 125% or
higher goal achievement. For other senior officers, this component
of bonus may be equal to 10% of salary at 75% goal achievement,
37.5% of salary at 100% goal achievement, and 75% of salary at 125%
goal achievement.
* Individual Performance
Each executive officer's individual performance is measured
against goals established for that individual in various areas,
including leadership, planning, management and innovation. The
weight assigned to each of these factors varies from individual to
individual. The individual performance component of the CEO's
annual bonus may be equal to 25% of salary at 100% goal achievement
and may go up to a maximum of 37.5% of salary at higher than 100%
goal achievement. This component for other senior officers may be
equal to 12.5% of salary at 100% goal achievement and may go up to
a maximum of 25% of salary at higher than 100% goal achievement.
* Summary
Bonuses paid to the named executive officers were based on the
above components. All of the company financial performance goals
applicable to each of the named executive officers was exceeded.
Achievement of individual performance goals varied from individual
to individual.
Long Term Incentives
Long term incentives are provided primarily through annual
option grants, as well as by supplemental option grants, restricted
stock awards, and participation in an income accumulation program
funded out of the Company's pre-tax profits. These incentives are
intended to motivate the executive officer to improve long term
Company performance. All options currently outstanding were
granted with an exercise price equal to the market price on the
grant date and will be of no value unless the market price of the
Company's common stock appreciates, thereby aligning a part of the
executive officer's compensation with the return realized by
stockholders.
* Stock Options
Stock option grants are designed to create meaningful stock
ownership for key employees of the Company. The Committee has
established general guidelines for granting options to executive
officers, which target a fixed number of unvested option shares
based on an individual's current position with the Company,
comparability with grants made to other Company executives and an
individual's potential for growth within the Company, i.e. future
responsibilities and possible promotions over the option term.
These general guidelines determine a multiple of the individual's
salary level which may be represented by the value of unvested
options. To maintain the targeted unvested position, regular
grants of options will normally be made. The guidelines and the
granting of options within these guidelines are not normally based
on Company performance. The Committee does not always strictly
adhere to these guidelines and will occasionally vary the size of
the option grant as circumstances warrant.
Each grant allows the executive officer to acquire shares of
the Company's common stock at a fixed price per share
(traditionally the fair market value on the grant date) over a
specified period of time (up to fifteen years). The option
generally vests in equal installments over a period of five years,
contingent upon the executive officer's continued employment with
the Company. Accordingly, the option will provide a return to the
executive officer only if he or she remains employed by the Company
and the market price of the underlying securities appreciates over
the option term.
* Restricted Stock
Awards of restricted stock are not made by reference to
formulas or guidelines but are provided solely at the Committee's
discretion. Restricted stock is awarded under limited
circumstances, such as, to recognize a significant contribution to
the Company's performance, to provide an incentive to achieve
performance objectives or in connection with a significant
promotion. The vesting schedules for restricted stock awards are
tailored to meet the particular purposes of the awards, unlike the
more uniform vesting schedules utilized for stock option grants.
Restricted stock was awarded only to the Company's CEO during
1994, which is discussed below under "CEO Compensation".
Executive Incentive Performance Plan
The Executive Incentive Performance Plan is designed to retain
key executives and to provide retirement income for them through
their participation in an income accumulation program funded out of
the Company's pre-tax profits. This plan has two separate
components: a short-term incentive program which provides for
vesting and payout in four equal annual installments beginning one
year after the award, and a long-term income accumulation program.
This latter program serves as the vehicle to meet the specific
retirement income target which the Committee has established for
each participant, and vesting in this benefit will occur as the age
and years of service requirements of the plan are met.
Actual allocations to the two programs will occur only if the
Company's operations are profitable. Amounts awarded to named
executive officers for 1994 are included in the "All Other
Compensation" area of the Summary Compensation Table, with details
provided in the footnote thereto. See "Employment Contracts and
Termination of Employment Agreements" for additional information
about the plan.
CEO Compensation
In setting the compensation payable to the Chief Executive
Officer, Mr. E. Joseph Zemke, the Committee's goal is to provide a
package which is competitive with other companies in the industry
and which at the same time ties a significant percentage of his
compensation to positive Company performance and stock price
appreciation. In general, the factors utilized in determining Mr.
Zemke's compensation are similar to those applied to the other
executive officers in the manner described in the preceding
paragraphs, although achievement of Company financial performance
goals has a greater impact on his total compensation.
An independent review of CEO compensation was concluded by an
individual compensation consultant during 1994. The total
compensation packages for CEOs of 34 high technology companies were
reviewed. These companies form the same peer group taken into
account for comparative compensation purposes for all of the
Company's other executive officers. Recommendations of the
consultant included:
* Target Mr. Zemke's base salary closer to the 50th
percentile of the market.
* Place greater emphasis on the Company performance
components of his compensation package and award bonuses only if a
certain percentage of performance goals are achieved, in accordance
with the bonus plan previously described.
* Increased stock ownership should be considered to further
align the interests of management with those of the stockholders,
to improve the competitive positioning of the Company and to
provide for increased individual net worth through market
appreciation.
* Modify the vesting of benefits for the CEO under the
Executive Incentive Performance Plan to allow for full vesting at
age 60.
In establishing Mr. Zemke's base salary, it was the
Committee's intent to provide him with a level of stability and
certainty each year, and not to have this particular component of
compensation affected to a significant degree by Company
performance. His base salary for the 1994 fiscal year approximates
the 50th percentile of reported base salaries for Chief Executive
Officers from the peer group.
The next component of Mr. Zemke's compensation package, his
annual bonus, was based on Company financial performance and
individual goal achievement, as described under "Annual Bonus"
above. Because Company pre-tax profits exceeded 125% of goal, the
company financial performance component of his bonus was 112.5% of
salary. Also, based on Mr. Zemke exceeding 100% of his individual
performance goals this component of his bonus was equal to 26.8% of
salary.
The long term incentive component of Mr. Zemke's compensation
during 1994 was an award of 100,000 restricted shares made by the
Committee in January 1994. This award will vest in a series of
annual installments over six years, as long as Mr. Zemke continues
his employment with the Company. The restrictions on this grant
will lapse according to the following schedule:
<TABLE>
<CAPTION>
Shares on which
Date restrictions lapse
---- ------------------
<S> <C>
January 26, 1995 10,000
January 26, 1996 10,000
January 26, 1997 15,000
January 26, 1998 15,000
January 26, 1999 25,000
January 26, 2000 25,000
</TABLE>
However, the award contains a special feature that will
accelerate the vesting and provides a link between appreciation of
the stock price and Mr. Zemke's compensation. Should the fair
market value reach $15 per share and average or exceed that price
for one quarter, the restrictions on 50% of the shares with
unlapsed restrictions will be lifted. Further, should the fair
market value reach $20 and average or exceed that price for one
quarter, 100% of the remaining shares with unlapsed restrictions
will be freed of restrictions.
This award was made after the results of the executive pay
review had been completed and the recommendations from the external
consultant had been considered. The award places an emphasis on
Company performance due to the acceleration aspects of the vesting
schedule and also due to a higher return on the stock which is only
realized when the market price appreciates.
The Committee approved the modified vesting schedule for Mr.
Zemke's long term Executive Incentive Performance Plan account, so
that full vesting will occur at age 60.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code, enacted in 1993,
generally disallows a tax deduction to publicly held companies for
compensation paid to certain of the corporation's executive
officers, to the extent that compensation exceeds $1 million per
officer in any one year. However, compensation which qualifies as
performance-based compensation will not have to be taken into
account for purposes of this limitation. The Company has to date
taken the following actions to assure that certain elements of
compensation payable to the executive officers will qualify as
performance-based compensation.
1. At the 1994 Annual Meeting of Stockholders, the Company
obtained stockholder approval for the implementation of the 1994
Stock Incentive Plan. As a result, any compensation deemed paid in
connection with the exercise of stock options granted under that
plan which have an exercise price equal to the fair market value of
the common stock on the grant date will qualify as performance-
based compensation.
2. At the 1995 Annual Meeting of Stockholders, the
stockholders are being asked to approve the Company's Short-Term
Executive Incentive Performance Plan, pursuant to which awards
based upon the Company's consolidated pre-tax profits will be made
each year, with payout of each annual award to occur in a series of
four successive equal annual installments upon the individual
officer's continued employment with the Company. If such
stockholder approval is obtained, the payments under the plan will
also qualify as performance-based compensation.
3. The stockholders are also being asked at the 1995 Annual
Meeting to approve an amendment to the 1994 Stock Incentive Plan
which will allow the Committee to make restricted stock awards
under that plan which qualify as performance-based compensation.
Until final Treasury regulations are issued with respect to
the new $1 million limitation, the Compensation Committee will
defer any decision on whether or not to restructure other
components of the compensation paid to the executive officers so as
to qualify one or more of those components as performance-based
compensation which will not be subject to the $1 million
limitation.
Members of the Compensation Committee
Walter B. Reinhold, Chairman
Kazuto Kojima
George R. Packard
J. Sidney Webb
COMPANY STOCK PRICE PERFORMANCE
The following graph shows a five-year comparison of cumulative
total stockholder returns for the Company, the Standard & Poor's
500 Stock Index and the Standard & Poor's Computer Systems Index
from December 31, 1989 through December 31, 1994:
[GRAPH]
<TABLE>
<CAPTION>
Fiscal Year Ending
------------------
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Amdahl $100 $99 $111 $52 $43 $79
S&P 500 $100 $97 $126 $136 $150 $152
S&P Computer Systems $100 $112 $100 $73 $76 $98
</TABLE>
Notwithstanding anything to the contrary set forth in any of
the Company's previous filings under the Securities Act of 1933, or
the Exchange Act that might incorporate future filings made by the
Company under those statutes, including this Proxy Statement, the
preceding Compensation Committee Report on Executive Compensation
and the preceding Company Stock Price Performance graph shall not
be incorporated by reference into any such filings; nor shall such
report or graph be incorporated by reference into any future
filings made by the Company under those statutes.
LOANS TO EXECUTIVE OFFICERS
Amdahl makes available loans to certain officers under its
Officer Loan Program for the acquisition of shares under the
Company's outstanding employee stock options or for the payment of
tax obligations incurred in connection with the acquisition of
these shares or restricted shares. These loans may not be
outstanding for more than 120 months and bear interest at the
applicable federal rate. Loans are secured by common stock valued
at 150 percent of the principal balance.
In 1993, the Company extended to Mr. Cavalier a loan for
$400,000, for the purpose of assisting him with his relocation to
Dallas, Texas, the headquarters of Antares Alliance Group
("Antares"), of which Mr. Cavalier is President and Chief Executive
Officer. The note bears interest at 5.25%, compounded annually,
and the principal balance plus accrued interest is payable on
January 31, 2002, except to the extent previously forgiven or paid.
Under the terms of the note (i) Mr. Cavalier is required to
maintain a life insurance policy on his life naming Amdahl as a
beneficiary and in an amount equal to the unpaid principal amount
of the note; (ii) $25,000 plus one-half of the then accrued
interest is forgiven on January 31 of each year, beginning in 1995,
if Mr. Cavalier is not in default and the note has not been
accelerated; (iii) $25,000 plus one-half of the then accrued
interest is payable on January 31 of each year, beginning in 1995,
with up to one-half of Mr. Cavalier's bonus to be applied toward
such payment; and (iv) the note may be accelerated if Mr. Cavalier
is terminated for cause or for other reasons not involving a change
in control of Antares or a change in the policies of Amdahl or
Antares, and will be accelerated in the event of Mr. Cavalier's
bankruptcy.
In 1994, the Company extended a mortgage loan, secured by a
second deed of trust, to Mr. Ryan in the amount of $300,000. The
loan bears interest at 7.05%, compounded annually, and the
principal balance plus accrued interest is due and payable on
September 26, 2000, except to the extent previously forgiven or
paid. Under the terms of the note (i) accrued interest is payable
each quarter, commencing January 15, 1995; (ii) $50,000 of
principal is forgiven on September 26 of each year, beginning in
1995, if Mr. Ryan is not in default and the note has not been
accelerated; and (iii) the note may be accelerated if Mr. Ryan's
employment is terminated for any reason, if he fails to make a
payment under the note, if he breaches the terms of the Second Deed
of Trust or if the property securing the loan is sold, and will be
accelerated in the event of Mr. Ryan's bankruptcy.
In 1994, two personal loans were extended to Mr. Zemke in the
amounts of $25,000 and $18,000. These loans accrued interest at
4.88% and 5.48%, respectively and were both repaid in 1994.
The Company has extended loans of more than $60,000 to the
following individuals who were executive officers during the last
fiscal year. Except for the loans to Messrs. Cavalier and Ryan
described above, the loans on the table below were extended under
the Officer Loan Program:
<PAGE>
<TABLE>
<CAPTION>
Maximum Amount Amount
Loaned Since Outstanding on
Name December 31, 1993 March 6, 1995
- ------------------------ ----------------- --------------
<S> <C> <C>
John C. Cavalier . . . . . . . . $431,854.98 $383,721.44
Orval J. Nutt. . . . . . . . . . $130,670.09 $130,670.09
William F. O'Connell, Jr.. . . . $99,951.88 0
Anthony M. Pozos . . . . . . . . $153,982.42 $153,982.42
Bruce J. Ryan. . . . . . . . . . $305,698.75 $303,760.00
Edward F. Thompson . . . . . . . $598,490.08 0
Eugene R. White. . . . . . . . . $122,358.51 0
E. Joseph Zemke. . . . . . . . . $114,048.56 $114,048.56
</TABLE>
<PAGE>
APPROVAL OF THE RESTATED
AMDAHL CORPORATION EMPLOYEE STOCK PURCHASE PLAN
The Company's stockholders are being asked to approve the
restatement of the Employee Stock Purchase Plan (the "Purchase
Plan"), pursuant to which 2,279,512 shares of common stock are
reserved for issuance.
The Purchase Plan is intended to provide eligible employees of
the Company and its participating affiliates with the opportunity
to acquire a propriety interest in the Company through
participation in a payroll-deduction based employee stock purchase
plan under Section 423 of the Internal Revenue Code. The
restatement of the Purchase Plan was approved by the Board on
January 26, 1995 and will become effective on July 29, 1995 (the
"Effective Date"), subject to stockholder approval at the 1995
Annual Meeting. The restatement is designed to provide the Plan
Administrator with more flexibility in structuring the offering
periods and purchase intervals in effect under the Purchase Plan
and in establishing the rights and limitations governing plan
participation.
The following is a summary of the principal features of the
Purchase Plan as restated. The summary, however, does not purport
to be a complete description of all the provisions of the Purchase
Plan. Any stockholder of the Company who wishes to obtain a copy
of the actual plan document may do so upon written request to the
Corporate Secretary at the Company's principal executive office in
Sunnyvale, California.
Share Reserve
2,279,512 shares of common stock are currently reserved for
issuance under the Purchase Plan.
In the event any change is made to the outstanding shares of
common stock by reason of any recapitalization, stock dividend,
stock split, combination of shares, exchange of shares or other
change in corporate structure effected without the Company's
receipt of consideration, appropriate adjustments will be made to
(i) the maximum number and/or class of securities issuable under
the Purchase Plan, including the number issuable per participant on
any one purchase date; (ii) the class and number of securities
subject to each outstanding purchase right; and (iii) the purchase
price payable per share.
Administration
The Purchase Plan is administered by the Compensation
Committee of the Board. Such committee, as Plan Administrator, has
full authority to adopt administrative rules and procedures and to
interpret the provisions of the Purchase Plan. All costs and
expenses incurred in plan administration will be paid by the
Company without charge to participants.
Offering Periods and Purchase Periods
The Purchase Plan will be implemented in a series of
successive offering periods, each with a maximum duration (not to
exceed twenty-four (24) months) designated by the Plan
Administrator prior to the start date. The initial offering period
under the restated Purchase Plan will run from July 29, 1995 to
October 27, 1995, and the next offering period will commence on
October 28, 1995.
Each offering period will be comprised of one or more purchase
periods of such duration (not to be less than three (3) months) as
determined by the Plan Administrator prior to the start date of the
offering period. Initially, each offering period under the
Purchase Plan will consist of a single purchase period, and the
offering periods will accordingly commence on the Saturday
following the last Friday of January, April, July and October each
year, and end on the last Friday of April, July, October and
January respectively. As previously indicated, the first offering
period under the Purchase Plan, as restated, will begin on the
Effective Date and end on October 27, 1995.
Should the Plan Administrator implement an offering period
which is to include two or more successive purchase periods, then
the following special feature will be in effect under the restated
Purchase Plan. In the event the fair market value per share of
common stock on any purchase date within that offering period is
less than the fair market value per share of common stock on the
start date of that offering period, then the offering period will
immediately terminate upon the purchase of common stock on such
purchase date, and a new offering period will commence on the next
business day. The duration of that new offering period will be
established by the Plan Administrator within five (5) business days
thereafter.
Eligibility
Any individual who customarily works for more than twenty (20)
hours per week for more than five (5) months per calendar year in
the employ of the Company or any participating affiliate will
become eligible to participate in an offering period under the
Purchase Plan on the start date of any purchase period (within that
offering period) beginning on or after such individual's completion
of the minimum service requirement established by the Plan
Administrator as a condition for participation in that offering
period. Currently an individual must have been employed for one
full year prior to his or her entry into an offering period. The
date such individual enters the offering period will be designated
his or her Entry Date for that offering period.
Participating affiliates include any parent or subsidiary
corporations of the Company, whether now existing or hereafter
organized, which elect, with the approval of the Plan
Administrator, to extend the benefits of the Purchase Plan to their
eligible employees.
As of March 6, 1995, approximately 4,950 employees, including
13 executive officers, were eligible to participate in the Purchase
Plan.
Purchase Provisions
The participant will have a separate purchase right for each
offering period in which he or she participates. The purchase
right will be granted on his or her Entry Date into that offering
period and will be automatically exercised on the last business day
of each purchase period within that offering period on which the
participant remains an eligible employee.
Each participant may elect payroll deductions in any multiple
of 1% of his or her eligible earnings to the maximum percentage,
not to exceed 10%, as authorized by the Plan Administrator for the
offering period. Eligible earnings may include not only the
participant's base salary but also, at the Plan Administrator's
discretion, bonuses, overtime payments, commissions and other cash
incentive payments. On the last business day of each purchase
period, the accumulated payroll deductions of each participant will
automatically be applied to the purchase of whole shares of common
stock at the purchase price in effect for that purchase period.
However, no participant may, on any one purchase date within the
offering period, purchase more than the maximum number of shares of
common stock which the Plan Administrator establishes as the per
participant limitation prior to the start of that offering period.
Until designated otherwise by the Plan Administrator, the maximum
number of shares of common stock purchasable per participant on any
one purchase date will initially be limited to 1,000 shares.
Purchase Price
The purchase price per share at which the common stock will be
purchased on the participant's behalf on each purchase date within
the offering period will be equal to eighty-five percent (85%) of
the lower of (i) the fair market value per share of common stock on
the participant's Entry Date into that offering period or (ii) the
fair market value per share of common stock on the purchase date.
However, for each participant whose Entry Date is other than the
start date of the offering period, the clause (i) amount will not
be less than the fair market value per share of common stock on the
start date of that offering period.
Valuation
The fair market value of the common stock on any relevant date
will be the mean of the highest and lowest quoted trading prices of
the common stock on such date on the principal exchange on which
the common stock is then listed or admitted to trading, as such
prices are officially quoted by the composite tape of transactions
on the exchange. On March 6, 1995, the fair market value per share
of common stock was $10.8125.
Special Limitations
The Purchase Plan imposes certain limitations upon a
participant's rights to acquire common stock, including the
following limitations:
(i) No purchase right may be granted to any individual who
owns stock (including stock purchasable under any outstanding
purchase right) possessing 5% or more of the total combined voting
power or value of all classes of stock of the Company or any of its
affiliates.
(ii) No purchase right granted to a participant may permit
such individual to purchase common stock at a rate greater than
$25,000 worth of such common stock (valued at the time such
purchase right is granted) for each calendar year the purchase
right remains outstanding at any time.
Termination of Purchase Rights
The participant's purchase right will immediately terminate
upon his or her loss of eligible employee status or his or her
affirmative withdrawal from the offering period. A participant who
elects to withdraw from the offering period may have his or her
payroll deductions for the current purchase period either refunded
or applied to the purchase of common stock at the end of that
period. A participant who ceases to be an eligible employee will
receive an immediate refund of his or her payroll deductions for
the purchase period in which such loss of eligibility status
occurs.
Stockholder Rights
No participant will have any stockholder rights with respect
to the shares of common stock covered by his or her purchase right
until the shares are actually purchased on the participant's
behalf. No adjustment will be made for dividends, distributions or
other rights for which the record date is prior to the date of such
purchase.
Assignability
Purchase rights will not be assignable or transferable by the
participant and will be exercisable only by the participant.
Corporate Transaction
Should the Company be acquired by merger or asset sale during
an offering period, all outstanding purchase rights will
automatically be exercised immediately prior to the effective date
of such acquisition. The purchase price will be 85% of the lesser
of (i) the fair market value per share of common stock on the
participant's Entry Date into that offering period or (ii) the fair
market value per share of common stock immediately prior to such
acquisition. However, the clause (i) amount will not, for any
participant whose Entry Date for the offering period is other than
the start date of that offering period, be less than the fair
market value per share of common stock on such start date.
Amendment and Termination
The Purchase Plan will terminate upon the earlier to occur of
(i) the date on which all available shares are issued or (ii) the
date on which all outstanding purchase rights are exercised in
connection with an acquisition of the Company.
The Board may at any time alter, suspend or discontinue the
Purchase Plan. However, the Board may not, without stockholder
approval, (i) materially increase the number of shares issuable
under the Purchase Plan, except in connection with certain changes
in the Company's capital structure, (ii) alter the purchase price
formula so as to reduce the purchase price, (iii) materially
increase the benefits accruing to participants or (iv) materially
modify the requirements for eligibility to participate in the
Purchase Plan.
FEDERAL TAX CONSEQUENCES
The Purchase Plan is intended to be an "employee stock
purchase plan" within the meaning of Section 423 of the Internal
Revenue Code. Under a plan which so qualifies, no taxable income
will be recognized by a participant, and no deductions will be
allowable to the Company, upon either the grant or the exercise of
the purchase rights. Taxable income will not be recognized until
there is a sale or other disposition of the shares acquired under
the Purchase Plan or in the event the participant should die while
still owning the purchased shares.
If a participant sells or otherwise disposes of shares
purchased under the Purchase Plan within two (2) years after the
participant's Entry Date into the offering period in which the
shares were acquired or within one (1) year of the actual purchase
date of the shares, then the participant will recognize ordinary
income in the year of sale or disposition equal to the amount by
which the fair market value of the shares on the purchase date
exceeded the purchase price paid for those shares, and the Company
will be entitled to an income tax deduction, for the taxable year
in which such disposition occurs, equal in amount to such excess.
If the participant sells or disposes of the purchased shares
more than two (2) years after the participant's Entry Date into the
offering period in which the shares were acquired and more than one
year after the actual purchase date of the shares, then the
participant will recognize ordinary income in the year of sale or
disposition equal to the lesser of (i) the amount by which the fair
market value of the shares on the sale or disposition date exceeded
the purchase price paid for those shares or (ii) 15% of the fair
market value of the shares on the participant's Entry Date into the
offering period in which the shares were acquired, any additional
gain upon the disposition will be taxed as a long-term capital
gain. The Company will not be entitled to an income tax deduction
with respect to such disposition.
If the participant still owns the purchased shares at the time
of death, the lesser of (i) the amount by which the fair market
value of the shares on the date of death exceeds the purchase price
or (ii) 15% of the fair market value of the shares on the
participant's Entry Date into the offering period in which those
shares were acquired will constitute ordinary income in the year of
death.
ACCOUNTING TREATMENT
Under current accounting rules, the issuance of shares of
common stock under the Purchase Plan will not result in a
compensation expense chargeable against the Company's reported
earnings.
STOCKHOLDER APPROVAL
The affirmative vote of a majority of the shares of common
stock of the Company present or represented and entitled to vote at
the 1995 Annual Meeting is required for approval of the restatement
of the Purchase Plan. Should such stockholder approval not be
obtained, then the restated Purchase Plan will not be implemented,
and the Purchase Plan as in existence prior to the restatement will
continue to remain in effect, and purchase rights will be granted
and stock issuances will continue to be made pursuant to those
provisions of the Purchase Plan until the available reserve of
common stock under the plan is issued.
The Board of Directors recommends that the stockholders vote
FOR the approval of the restatement of the Purchase Plan. The
Board believes that it is in the best interests of the Company to
have the flexibility to structure opportunities under the Purchase
Plan which allow the Company's employees to acquire a proprietary
interest in the Company and thereby encourage such individuals to
remain in the Company's service and more closely align their
interests with those of the stockholders.
PLAN BENEFITS
The table below shows, as to each of the named executive
officers and the various indicated groups, the following
information with respect to transactions under the Company's
Employee Stock Purchase Plan effected during the period from
September 25, 1993 to January 27, 1995: (i) the number of shares of
common stock purchased under the Purchase Plan during that period
and (ii) the weighted average purchase price paid per share of
common stock in connection with such purchases.
<PAGE>
<TABLE>
<CAPTION>
Number of Weighted
Shares Average Average
Name Purchased Purchase Price
---- -------------- --------------
<S> <C> <C>
E. Joseph Zemke. . . . . . . . . . . . . . - -
John C. Lewis. . . . . . . . . . . . . . . 5,000 $6.1306
David B. Wright. . . . . . . . . . . . . . 4,664 $6.1638
David L. Anderson. . . . . . . . . . . . . 4,541 $6.1801
Orval J. Nutt. . . . . . . . . . . . . . . - -
All current executive officers as a group
(4 persons). . . . . . . . . . . . . . . 17,678 $6.2076
All employees, including current officers
who are not executive officers, as
a group (1,248 persons). . . . . . . . . 1,232,265 $5.8204
</TABLE>
<PAGE>
APPROVAL OF AMENDMENTS TO THE
AMDAHL CORPORATION 1994 STOCK INCENTIVE PLAN
Stockholders are being asked to vote on a proposal to approve
amendments to the Company's 1994 Stock Incentive Plan (the "1994
Plan") which will effect the following changes:
(i) extend the term for which the options granted under
the Automatic Grant Program to non-employee Board members may be
exercised from ten (10) years to fifteen (15) years from the date
of grant;
(ii) provide for the immediate vesting of all shares
purchased or purchasable by a non-employee Board member under the
Automatic Option Grant Program in the event such individual's
service on the Board terminates for any reason (other than removal
for cause) after his or her completion of at least four (4) years
of Board service, and allow any outstanding options held by such
non-employee Board member under the Automatic Option Grant Program
to remain exercisable for fully-vested shares until the expiration
of the option term; and
(iii) identify a series of performance goals upon which
the Plan Administrator may base the vesting of one or more shares
of common stock issued pursuant to the Stock Issuance Program.
The purpose of items (i) and (ii) is to provide a meaningful
incentive for non-employee Board members to continue to serve in
that capacity on a long-term basis by making their options under
the 1994 Plan more valuable as their period of Board service
increases. Item (iii) is designed to enable the Plan Administrator
to issue restricted stock awards under the 1994 Plan which will
qualify as performance-based compensation for purposes of the
Internal Revenue Code Section 162(m) limitation on the
deductibility of executive compensation. Performance-based
compensation is not subject to the $1 million limitation per
covered individual imposed by Section 162(m) on the deductibility
of compensation paid to certain executive officers of the Company.
As a result of the amendment, the Plan Administrator will have
the authority to award restricted shares of common stock under the
1994 Plan which will either be issued or vest only upon the
attainment of one or more objectives based upon measures that
relate to the following aspects of the Company's, a Company
subdivision's and/or an individual's performance:
- earnings per share - return on assets
- revenue - market share
- stock price - customer satisfaction
- operating income - time to market
- consolidated pre-tax profit - employee development
- operating profit margin - quality
- return on equity - cash
- inventory - employee satisfaction
- gross margin - market perception
The Board approved the amendment to the 1994 Plan on January
25, 1995, subject to approval by the stockholders at the 1995
Annual Meeting. If such stockholder approval is obtained, the item
(ii) change to the Automatic Option Grant Program will be in effect
for all outstanding automatic option grants under the 1994 Plan,
whether made before or after the date of the amendment. The item
(i) change to the maximum option term will only apply to options
granted on or after the date of the 1995 Annual Meeting.
The 1994 Plan was previously approved by the Company's
stockholders at the 1994 Annual Meeting as the successor equity
incentive program to the Company's Restricted Stock Plan and three
former stock option programs: the Stock Option Plan (1971), the
Stock Option Plan (1974) and the Non-Qualified Stock Option Plan
(1982). The three stock option plans and the Restricted Stock Plan
will be collectively referred to in this summary as the
"Predecessor Plans." All outstanding options under the
Predecessor Plans and all unvested share issuances thereunder were
incorporated into the 1994 Plan when that plan became effective on
May 5, 1994, and each of the Predecessor Plans has accordingly
terminated.
The following is a summary of the principal features of the
1994 Plan, as amended. The summary, however, does not purport to
be a complete description of all the provisions of the 1994 Plan.
Any stockholder who wishes to obtain a copy of the actual plan
document may do so by written request to the Corporate Secretary at
the Company's principal executive office in Sunnyvale, California.
Equity Incentive Programs
The 1994 Plan contains five separate equity incentive
programs: (i) a Discretionary Grant Program, under which key
employees and consultants may be granted either stock options to
purchase shares of common stock or stock appreciation rights
exercisable for cash or shares of common stock, (ii) an Automatic
Grant Program, under which option grants are made at specified
intervals to the non-employee Board members, (iii) a Salary
Reduction Grant Program, under which key employees may elect to
have a portion of their base salary reduced each year in return for
options to purchase shares of common stock at a discount from
current fair market value equal to the amount of their salary
reduction, (iv) a Stock Fee Program under which the non-employee
Board members may elect to apply all or a portion of their annual
retainer fee to the acquisition of shares of common stock, and (v)
a Stock Issuance Program, under which eligible individuals may be
issued shares of common stock directly, through the immediate
purchase of the shares, or as a bonus tied to the performance of
services or the Company's attainment of financial milestones, or
pursuant to the individual's election to receive such shares in
lieu of base salary.
Options granted under the Discretionary Grant Program may be
either incentive stock options designed to meet the requirements of
Section 422 of the Internal Revenue Code or non-statutory options
not intended to satisfy such requirements. All grants under the
Automatic Grant and the Salary Reduction Grant Programs will be
non-statutory options.
Share Reserve
As of March 6, 1995, 13,269,452 shares of common stock were
reserved for issuance over the remainder of the fifteen year term
of the 1994 Plan, including the additional 592,731 shares which
became issuable on the first trading day of the 1995 calendar year
pursuant to the annual automatic share increase provisions of the
1994 Plan. The number of shares available for issuance under the
1994 Plan will automatically increase on the first trading day of
each subsequent calendar year by an amount equal to 1% of the
shares of common stock outstanding on December 31 of the
immediately preceding calendar year. However, each such 1% annual
increase will be subject to reduction to the extent necessary to
assure that the maximum number of shares of common stock available
immediately thereafter for future option grants and direct share
issuances under the 1994 Plan will not exceed 5,000,000 shares,
subject to periodic adjustment for certain changes in the Company's
capital structure.
The shares issuable under the 1994 Plan may be drawn from
either authorized but previously unissued shares of common stock or
from reacquired shares of common stock, including shares purchased
by the Company on the open market and held as treasury shares.
Should an option expire or terminate for any reason prior to
exercise in full (including options canceled in accordance with the
cancellation-regrant provisions of the 1994 Plan), the shares
subject to the portion of the option not so exercised will be
available for subsequent issuance under the 1994 Plan. Shares
subject to any option surrendered in accordance with the stock
appreciation right provisions of the 1994 Plan and all share
issuances under the 1994 Plan, whether or not the shares are
subsequently reacquired by the Company pursuant to its repurchase
rights under the 1994 Plan, will reduce on a share-for-share basis
the number of shares of common stock available for subsequent
issuance.
In no event will any one individual participating in the 1994
Plan be granted stock options, separately exercisable stock
appreciation rights and direct stock issuances exceeding 2,000,000
shares in the aggregate over the term of the 1994 Plan, subject to
periodic adjustment for certain changes in the Company's capital
structure.
Plan Administration
The 1994 Plan (other than the Automatic Option Grant and the
Stock Fee Programs) is administered by the Compensation Committee
of the Board. The Committee is comprised of two or more non-
employee Board members appointed by the Board. Each of the Board
members currently serving on the Committee qualifies as a
"disinterested person" within the meaning of Rule 16b-3(c)(2) of
the Securities and Exchange Commission, and effective with the 1996
Annual Stockholders Meeting, the composition of the Committee will
be restructured to the extent necessary to assure that each member
qualifies as an "outside director" pursuant to the applicable
requirements of Internal Revenue Code Section 162(m).
The Compensation Committee, acting as Plan Administrator, has
complete discretion (subject to the express provisions of the 1994
Plan) to authorize stock option grants and direct stock issuances
under the 1994 Plan. However, all grants under the Automatic Grant
and the Stock Fee Programs will be made in strict compliance with
the express provisions of those programs, and no administrative
discretion will be exercised by the Plan Administrator with respect
to the grants made under such programs.
Eligibility
Officers and other key employees of the Company and its
subsidiaries (whether now existing or subsequently established) and
independent consultants and advisors to the Company and its
subsidiaries are eligible to participate in the Discretionary Grant
and Stock Issuance Programs. Officers and other key employees are
also eligible to participate in the Salary Reduction Grant Program.
Non-employee members of the Board are only eligible to participate
in the Automatic Grant and the Stock Fee Programs.
For purposes of all non-statutory option grants and direct
stock issuances under the 1994 Plan, the Company's subsidiaries
include not only the corporations of which the Company owns,
directly or indirectly, at least 50% of the outstanding capital
stock but also any partnership, joint venture or other entity of
which the Company owns, directly or through one or more other
subsidiaries, at least 50% of the outstanding capital or profits
interests.
As of March 6, 1995, 13 executive officers and approximately
1,300 other key employees were eligible to participate in the 1994
Plan, and 9 non-employee Board members were eligible to participate
in the Automatic Grant and the Stock Fee Programs.
Valuation
The fair market value per share of common stock on any
relevant date under the 1994 Plan is the mean between the lowest
and highest selling prices per share on that date on the principal
exchange on which the common stock is then listed or admitted to
trading, as the prices are officially quoted by the composite tape
of transactions on the exchange. If there are no reported sales
for such date, then the mean of the lowest and highest selling
prices for the last previous date for which such quotations exist
will determine the fair market value. On March 6, 1995, the fair
market value per share of common stock was $10.8125.
DISCRETIONARY GRANT PROGRAM
The principal features of the Discretionary Option Grant
Program may be summarized as follows:
The exercise price per share for incentive stock options will
not be less than 100% of the fair market value per share of common
stock on the grant date. For non-statutory options, the exercise
price per share may be less than, equal to or greater than such
fair market value, as the Plan Administrator deems appropriate. No
incentive stock option will have a maximum term in excess of ten
(10) years measured from the grant date, and no non-statutory stock
option will have a maximum term in excess of fifteen (15) years.
The Plan Administrator has complete discretion to grant options (i)
which are immediately exercisable for vested shares, (ii) which are
immediately exercisable for unvested shares subject to the
Company's repurchase rights or (iii) which become exercisable in
installments for vested shares over the optionee's period of
service.
The exercise price may be paid in cash or in shares of common
stock valued at fair market value on the exercise date. The option
may also be exercised for vested shares through a same-day sale
program pursuant to which the purchased shares are to be sold
immediately and a portion of the sale proceeds applied to the
payment of the exercise price for those shares on the settlement
date.
Any option held by the optionee at the time of cessation of
service will normally not remain exercisable beyond the limited
period designated by the Plan Administrator (not to exceed 36
months) at the time of the option grant. During that period, the
option will generally be exercisable only for the number of shares
of common stock in which the optionee is vested at the time of
cessation of service. For purposes of the 1994 Plan, an individual
will be deemed to continue in service for so long as that person
performs services for the Company or any parent or subsidiary
corporation, whether as an employee, non-employee board member or
independent consultant or advisor.
The Plan Administrator has complete discretion to extend the
period following the optionee's cessation of service during which
his or her outstanding options may be exercised and/or to
accelerate the exercisability or vesting of such options in whole
or in part. Such discretion may be exercised at any time while the
options remain outstanding, whether before or after the optionee's
actual cessation of service.
Any unvested shares of common stock are subject to repurchase
by the Company, at the original exercise price paid per share, upon
the optionee's cessation of service prior to vesting in those
shares. The Plan Administrator has complete discretion in
establishing the vesting schedule for any such unvested shares and
has full authority to cancel the Company's outstanding repurchase
rights with respect to those shares in whole or in part at any
time.
The optionee does not have any stockholder rights with respect
to the option shares until the option is exercised and the exercise
price is paid for the purchased shares. Options are not assignable
or transferable other than by will or by the laws of inheritance
following the optionee's death, and the option may, during the
optionee's lifetime, be exercised only by the optionee.
The Plan Administrator is authorized to issue four types of
stock appreciation rights:
- - Tandem stock appreciation rights provide the holders with the
right to surrender their options for an appreciation distribution
from the Company equal in amount to the excess of (a) the fair
market value of the vested shares of common stock subject to the
surrendered option over (b) the aggregate exercise price payable
for such shares. Such appreciation distribution may, at the
discretion of the Plan Administrator, be made in cash or in shares
of common stock.
- - Concurrent stock appreciation rights will automatically be
exercised for an appreciation distribution at the same time the
underlying stock option is exercised for the shares of common stock
subject to such rights. Accordingly, the option holder will, upon
the option exercise, receive both the purchased shares of common
stock and the appreciation distribution payable on the covered
shares. The amount of the distribution payable per purchased
option share will not exceed the fair market value of that share on
the exercise date, less the option exercise price paid for such
share. The distribution may, in the discretion of the Plan
Administrator, be made in cash or in shares of common stock.
- - Independent stock appreciation rights will be free-standing
rights not tied to any underlying stock option and will entitle the
holder upon exercise to an appreciation distribution from the
Company equal to the fair market value of the shares of common
stock subject to the exercised rights, less the base price in
effect for those shares. The base price will be determined by the
Plan Administrator at the time the rights are granted and may be
less than, equal to or greater than the fair market value of the
underlying shares of common stock on the grant date. The
appreciation distribution payable on the exercised rights may, in
the discretion of the Plan Administrator, be made in cash or in
shares of common stock.
- - Limited stock appreciation rights may be granted to officers
of the Company subject to the short-swing profit restrictions of
the federal securities laws in connection with their option grants.
Any option with such a limited stock appreciation right in effect
for at least six (6) months may be surrendered to the Company upon
the successful completion of a hostile tender offer for securities
possessing more than 50% of the combined voting power of the
Company's outstanding securities. In return for the surrendered
option, the officer will be entitled to a cash distribution from
the Company in an amount per surrendered option share equal to the
excess of (a) the price per share of common stock paid in such
hostile tender offer over (b) the exercise price payable for such
share.
The Plan Administrator has the authority to effect, on one or
more separate occasions, the cancellation of outstanding options
under the Discretionary Grant Program which have exercise prices in
excess of the then current market price of common stock and to
issue replacement options with an exercise price based on the
market price of common stock at the time of the new grant.
AUTOMATIC GRANT PROGRAM
Under the Automatic Grant Program, a 5,000 share option grant
is made to each individual who first becomes a non-employee Board
member, whether through election by the stockholders or appointment
by the Board. In addition, on the date of each Annual Stockholders
Meeting, beginning with the 1994 Annual Meeting, each individual
re-elected to serve as a non-employee Board member will
automatically be granted a stock option to purchase 5,000 shares of
common stock, provided such individual has served as a non-employee
Board member for at least twelve months. There is no limit on the
number of such additional 5,000 share option grants any one non-
employee Board member may receive over his or her period of Board
service.
Each option granted under the Automatic Grant Program is
subject to the following terms and conditions:
- - The exercise price per share will be equal to 100% of the fair
market value per share of common stock on the automatic grant date.
- - Each option granted to date has a maximum term of ten years
measured from the grant date. Upon stockholder approval of the
proposed amendments to the 1994 Plan, each option granted on or
after the date of the 1995 Annual Meeting will have a maximum term
of fifteen (15) years from the grant date.
- - Each option will be immediately exercisable for all the option
shares, but any purchased shares will be subject to repurchase by
the Company at the exercise price paid per share.
- - Each option will vest (and the Company's repurchase rights
will lapse) in two equal annual installments over the optionee's
period of Board service, with the first such installment to vest
upon the completion of one year of Board service measured from the
automatic grant date.
- - Upon the optionee's cessation of Board service for any reason
(other than removal for cause) after completion of at least four
years of continuous Board service, all shares purchased or
purchasable by such individual under the Automatic Grant Program
will immediately vest, and all outstanding options held by such
individual under the Automatic Grant Program will remain
exercisable for fully-vested option shares until the expiration of
the applicable ten (10) year or fifteen (15) year option term.
- - Should the optionee die or become permanently disabled while
serving as a Board member, then the shares of common stock subject
to each automatic option grant held by that individual optionee
will immediately vest in full, and those vested shares may be
purchased at any time within the twelve-month period following the
date of the optionee's cessation of Board service.
- - Should the optionee cease to be a Board member for any reason
(other than death or permanent disability) prior to completion of
four (4) years of Board service, then each option held by that
individual under the Automatic Grant Program will remain
exercisable for a six-month period following such cessation of
Board service. Upon the optionee's death within such six-month
period, the option will remain exercisable for a twelve-month
period and may be exercised by the personal representative of the
optionee's estate or the person to whom the grant is transferred by
the optionee's will or the laws of inheritance. In no event,
however, may the option be exercised after the expiration date of
the option term. During the applicable exercise period, the option
may not be exercised for more than the number of shares (if any) in
which the optionee is vested at the time of cessation of Board
service.
- - The shares subject to each automatic option grant will
immediately vest upon certain changes in control or ownership of
the Company, as discussed in more detail below.
- - Upon the successful completion of a hostile tender offer for
securities possessing more than 50% of the combined voting power of
the Company's outstanding securities, each automatic option grant
which has been outstanding for at least six months may be
surrendered to the Company for a cash distribution per surrendered
option share in an amount equal to the excess of (A) the highest
price per share of common stock paid in such hostile tender offer
over (B) the exercise price payable for such share.
- - The remaining terms and conditions of the option will in
general conform to the terms described above for option grants made
under the Discretionary Grant Program and will be incorporated into
the option agreement evidencing the automatic grant.
SALARY REDUCTION GRANT PROGRAM
The Plan Administrator has complete discretion in selecting
the individuals who are to participate in the Salary Reduction
Grant Program. As a condition to such participation, each selected
individual must, prior to the start of the calendar year of
participation, file with the Plan Administrator an irrevocable
authorization for the Company to reduce, by a designated multiple
of 1%, his or her base salary for the upcoming calendar year. To
the extent the Plan Administrator approves one or more salary
reduction authorizations, the individuals who filed those
authorizations will be granted options under the Salary Reduction
Grant Program.
Each option will be subject to substantially the same terms
and conditions applicable to option grants made under the
Discretionary Grant Program, except for the following differences:
- - The exercise price per share will be equal to one-third of the
fair market value per share of common stock on the grant date.
- - The number of option shares will be determined by dividing the
total dollar amount of the approved reduction in the participant's
base salary by two-thirds of the fair market value per share of
common stock on the grant date. As a result, the total spread on
the option (the fair market value of the option shares on the grant
date less the aggregate exercise price payable for those shares)
will equal the dollar amount of the reduction to the optionee's
base salary to be in effect for the calendar year for which the
grant is made.
- - Provided the optionee continues in service, the option will
become exercisable for 50% of the option shares on the last day of
June in the calendar year for which the grant is made and will
become exercisable for the balance of the option shares in a series
of six successive monthly installments on the last day of each of
the next six calendar months.
- - Should the optionee die or become disabled while in service,
the option will immediately become exercisable for that number of
option shares equal to (A) one-twelfth of the total number of
option shares multiplied by (B) the number of full calendar months
which have elapsed from the first day of the calendar year for
which the option is granted and the last day of the calendar month
during which the optionee ceases service.
- - Each option will have a term of ten years measured from the
grant date, whether or not the individual continues in service.
STOCK ISSUANCE PROGRAM
Shares may be sold under the Stock Issuance Program at a price
per share less than, equal to or greater than the fair market
value, payable in cash or through a promissory note payable to the
Company. Shares may also be issued solely as a bonus for past
services or pursuant to an irrevocable election by the individual
to receive such shares in lieu of a portion of his or her salary.
Shares awarded under the Stock Issuance Program may either be
(i) immediately vested upon issuance, (ii) subject to a vesting
tied to the participant's period of Service or (iii) subject to
issuance or vesting schedule tied to the attainment of one or more
specified objectives. The objectives upon which the issuance or
vesting of the stock award may be based will be limited to measures
that relate to aspects of the Company's, a Company subdivision's
and/or an individual's performance, which are set forth below, and
the Plan Administrator will have complete discretion to base the
issuance or vesting of the award upon the attainment of (i) one
particular objective, (ii) one of a series of alternative
objectives or (iii) any combination of two or more designated
objectives, as the Plan Administrator deems appropriate for each
performance-based issuance. The specific target for each selected
objective will be established by the Plan Administrator at the time
the awards are made. The objectives which may be utilized under
the Stock Issuance Program are as follows:
- earnings per share - return on assets
- revenue - market share
- stock price - customer satisfaction
- operating income - time to market
- consolidated pre-tax profit - employee development
- operating profit margin - quality
- return on equity - cash
- inventory - employee satisfaction
- gross margin - market perception
Unvested shares will be subject to certain transfer
restrictions and to repurchase or cancellation by the Company upon
either the participant's cessation of service prior to vesting in
those shares or the non-attainment of the applicable performance
goals. The Plan Administrator will, however, have the
discretionary authority to accelerate the vesting of one or more
issued shares, other than shares which are to vest solely upon the
Company's attainment of pre-established performance goals.
Individuals holding shares under the Stock Issuance Program will
have full stockholder rights with respect to those shares, whether
the shares are vested or unvested.
The issuance of shares of common stock pursuant to the
participant's election to receive such shares in lieu of base
salary will be subject to the following guidelines:
- - On the first trading day in January of the calendar year for
which the election is effective, the portion of base salary subject
to such election will automatically be applied to the acquisition
of common stock by dividing the elected dollar amount by the fair
market value per share on that trading day. The issued shares will
be held in escrow by the Company until the participant vests in
those shares.
- - Upon completion of each calendar month of service during the
year for which the election is in effect, the participant will vest
in one-twelfth of the issued shares, and the stock certificate for
those shares will be released from escrow.
STOCK FEE PROGRAM
Under the Stock Fee Program, each individual serving as a non-
employee Board member is eligible to elect to apply all or any
portion of the annual retainer fee otherwise payable in cash to
such individual to the acquisition of unvested shares of common
stock. The non-employee Board member must make the stock election
prior to the start of the calendar year for which the election is
to be in effect. On the first trading day in January of the
calendar year for which the election is in effect, the portion of
the retainer fee subject to such election is applied to the
acquisition of common stock by dividing the elected dollar amount
by the fair market value per share of common stock on that trading
day. The issued shares are held in escrow by the Company until the
individual vests in those shares. The non-employee Board member
has full stockholder rights, including voting and dividend rights,
with respect to all issued shares held in escrow on his or her
behalf.
Upon completion of each month of Board service during the year
for which the election is in effect, the non-employee Board member
will vest in one-twelfth of the issued shares, and the stock
certificate for those shares will be released from escrow.
Immediate vesting in all the issued shares will occur in the event
the individual dies or becomes disabled during his or her period of
Board service or certain changes in control or ownership of the
Company are effected during such period. Should the Board member
cease service prior to vesting in one or more monthly installments
of the issued shares, then those installments will be forfeited,
and the individual will not be entitled to any cash payment from
the Company with respect to the forfeited shares.
GENERAL PROVISIONS
Option/Vesting Acceleration
Outstanding options under the 1994 Plan will become
immediately exercisable, and unvested shares issued or issuable
under the 1994 Plan will be subject to accelerated vesting, in the
event of certain changes in the ownership or control of the
Company. The transactions which will trigger such option/vesting
acceleration are as follows:
Corporate Transaction: any one of the following stockholder
approved transactions:
- - a merger or consolidation in which the Company is not the
surviving entity,
- - the sale, transfer or other disposition of substantially all
of the Company's assets in liquidation or dissolution of the
Company, or
- - any reverse merger in which the Company is the surviving
entity but in which securities possessing more than 50% of the
total combined voting power of the Company's outstanding securities
are transferred to persons other than those who held such
securities immediately prior to the merger.
Change in Control: any of the following events:
- - a direct acquisition by any person (or related group of
persons) of securities possessing more than 10% of the total
combined voting power of the Company's outstanding securities,
- - the acquisition by any person (or related group of persons),
whether by tender or exchange offer made directly to the Company's
stockholders, private purchases from one or more of the Company's
stockholders, open market purchases or any other transaction, of
additional securities of the Company which increase the total
holdings of such person (or group) to a level of securities
possessing more than 50% of the total combined voting power of the
Company's outstanding securities, or
- - the acquisition by any person (or related group of persons),
whether by tender or exchange offer made directly to the Company's
stockholders, private purchases from one or more of the Company's
stockholders, open market purchases or any other transaction, of
securities of the Company possessing sufficient voting power in the
aggregate to elect an absolute majority of the members of the Board
(rounded up to the nearest whole number).
In the event of a Corporate Transaction, each option at the
time outstanding under the Discretionary Grant Program or Salary
Reduction Program will automatically become exercisable for all of
the shares of common stock at the time subject to that option and
may be exercised for any or all of such shares as fully-vested
shares. However, an outstanding option under the Discretionary
Grant Program will not so accelerate if and to the extent:
(i) such option is either to be assumed by the successor
corporation (or parent thereof) or is otherwise to be replaced by
a comparable option to purchase shares of the capital stock of the
successor corporation (or parent thereof) or (ii) the acceleration
of such option is subject to other limitations imposed by the Plan
Administrator at the time of grant. Upon the consummation of the
Corporate Transaction, all outstanding options under the 1994 Plan
will, to the extent not previously exercised by the optionees or
assumed by the successor corporation (or its parent company),
terminate and cease to be exercisable. The Plan Administrator will
have the discretion to provide for the subsequent acceleration of
any option which does not accelerate at the time of the Corporate
Transaction, in the event the optionee's service terminates within
a designated period following such Corporate Transaction.
The Company's outstanding repurchase rights under the
Discretionary Option Grant and Stock Issuance Programs will also
terminate, and the shares subject to those terminated rights will
become fully vested, upon the Corporate Transaction, except to the
extent (i) one or more of such repurchase rights are expressly
assigned to the successor corporation (or its parent company) or
(ii) such accelerated vesting is precluded by other limitations
imposed by the Plan Administrator at the time the unvested shares
are issued. The Plan Administrator will have the discretion to
provide for the subsequent termination of any repurchase rights
which remain in existence after the Corporate Transaction, in the
event the optionee's service terminates within a designated period
following such Corporate Transaction.
The Plan Administrator will also have full power and
authority, exercisable either in advance of any
actually-anticipated Change in Control or at the time of an actual
Change in Control, to provide for the acceleration of one or more
outstanding options under the Discretionary Grant Program so that
each such option will, immediately prior to the Change in Control,
become exercisable for the total number of shares of common stock
at the time subject to such option and may be exercised for any or
all of such shares as fully-vested shares. The Plan Administrator
may also provide for the automatic termination of all of the
outstanding repurchase rights held by the Company under the
Discretionary Option Grant and Stock Issuance Programs (with the
concurrent vesting of the shares subject to those terminated
rights) in the event of such Change in Control. Alternatively, the
Plan Administrator may condition such accelerated option vesting
and termination of the repurchase rights upon the optionee's
cessation of service under certain prescribed circumstances
following the Change in Control.
Upon either a Corporate Transaction or a Change in Control,
the shares of common stock subject to each outstanding option under
the Automatic Grant Program will immediately vest, and the options
will accordingly become exercisable for all of the shares of common
stock at the time subject to such option as fully-vested shares.
In addition, all unvested shares issued under the Stock Fee Program
or issued under the Stock Issuance Program in lieu of base salary
will immediately vest.
The acceleration of options or vesting in the event of a
Corporate Transaction or Change in Control may be seen as an
anti-takeover provision and may have the effect of discouraging a
merger proposal, a takeover attempt or other efforts to gain
control of the Company.
Changes in Capitalization
In the event any change is made to the outstanding shares of
common stock by reason of any recapitalization, stock dividend,
stock split, combination of shares, exchange of shares or other
change in corporate structure effected without the Company's
receipt of consideration, appropriate adjustments will be made to
(i) the maximum number and/or class of securities issuable under
the 1994 Plan and the maximum number and/or class of securities
which may remain available for future issuance in connection with
the automatic 1% increase to the share reserve to be effected each
year under the Plan, (ii) the maximum number and/or class of
securities for which any one individual may be granted stock
options and direct share issuances over the term of the 1994 Plan,
(iii) the number and/or class of securities and price per share in
effect under each outstanding option and (iv) the number and/or
class of securities for which option grants will subsequently be
made under the Automatic Grant Program per each newly-elected or
continuing non-employee Board member.
Financial Assistance
The Plan Administrator may institute a loan program in order
to assist one or more optionees in financing their exercise of
outstanding options under the Discretionary Grant or Salary
Reduction Grant Program or the purchase of shares under the Stock
Issuance Program. The form in which such assistance is to be made
available (including loans or installment payments) and the terms
upon which such assistance is to be provided is determined by the
Plan Administrator. However, the maximum amount of financing
provided to any participant may not exceed the amount of cash
consideration payable for the issued shares plus all applicable
federal, state and local taxes incurred in connection with the
acquisition of the shares. Any such financing may be subject to
forgiveness in whole or in part, at the discretion of the Plan
Administrator, over the participant's period of service.
Special Tax Election
The Plan Administrator may provide one or more holders of non-
statutory options or unvested shares under the Discretionary Grant,
Salary Reduction Grant or Stock Issuance Program with the right to
have the Company withhold a portion of the shares of common stock
otherwise issuable to such individuals in satisfaction of the
federal and state income and employment tax liability incurred by
such individuals in connection with the exercise of those options
or the vesting of the shares. Alternatively, the Plan
Administrator may allow such individuals to deliver previously
acquired shares of common stock in payment of such tax liability.
Amendment and Termination
The Board may amend or modify the 1994 Plan in any or all
respects whatsoever. However, no such amendment may adversely
affect the rights of existing optionees or holders of unvested
shares without their consent. In addition, the Board may not,
without the approval of the stockholders, (i) materially increase
the maximum number of shares issuable under the 1994 Plan, the
number of shares for which automatic option grants will be made to
newly-elected or continuing non-employee Board members or the
maximum number of shares for which any one individual may be
granted options or direct stock issuances, except to reflect
certain changes in the Company's capital structure, (ii) materially
modify the eligibility requirements for option grants or share
issuances or (iii) otherwise materially increase the benefits
accruing to participants under the 1994 Plan. The Board may
terminate the 1994 Plan at any time, and the 1994 Plan will in all
events terminate on December 31, 2008. Each stock option or
unvested share issuance outstanding at the time of such termination
will remain in force in accordance with the provisions of the
instruments evidencing such grant or issuance.
Stock Awards
The table below shows, as to each of the Company's named
executive officers and the various indicated individuals and
groups, the following information with respect to stock option
transactions and direct stock issuances effected during the period
from January 1, 1994 to May 5, 1994 under the Predecessor Plans and
from May 5, 1994 to March 6, 1995 under the 1994 Plan: (i) the
number of shares of common stock subject to options granted during
that period, (ii) the weighted average option price payable per
share, and (iii) the number of shares of common stock directly
issued without an intervening option grant and (iv) the dollar
amount paid per issued share.
<PAGE>
<TABLE>
<CAPTION>
OPTION TRANSACTIONS
Weighted Average
Options Granted Exercise Price
Name (Number of Shares) of Options Granted
- ---- ------------------ ------------------
<S> <C> <C>
E. Joseph Zemke. . . . . . . - -
John C. Lewis. . . . . . . . - -
David B. Wright. . . . . . . - -
David L. Anderson. . . . . . - -
Orval J. Nutt. . . . . . . . - -
All current executive
officers as a group who
received option grants
(1 person) . . . . . . . . . 40,000 $5.500
Keizo Fukagawa . . . . . . . 5,000 $7.125
E.F. Heizer, Jr. . . . . . . 5,000 $7.125
Kazuto Kojima. . . . . . . . - -
R. Stanley Laing . . . . . . 5,000 $7.125
Burton G. Malkiel. . . . . . 5,000 $7.125
George R. Packard. . . . . . 5,000 $7.125
Walter B. Reinhold . . . . . 5,000 $7.125
Takamitsu Tsuchimoto . . . . - -
J. Sidney Webb . . . . . . . 5,000 $7.125
All current non-employee
directors as a group who
received option grants
(7 persons). . . . . . . . . 35,000 $7.125
All individuals, including
current officers who are
not executive officers,
as a group who received
option grants (approximately
1,137 persons) . . . . . . . 314,577 $7.47
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DIRECT SHARE ISSUANCES
Name Number of Issued Shares Purchase Price Per Share
- ---- ----------------------- ------------------------
<S> <C> <C>
E. Joseph Zemke. . . . . . . . 100,000 $.05
John C. Lewis. . . . . . . . . - -
David B. Wright. . . . . . . . - -
David L. Anderson. . . . . . . - -
Orval J. Nutt. . . . . . . . . - -
All current executive
officers as a group who
received direct share
issuances (2 persons). . . . . 110,000 $.05
All employees, including
current officers who are
not executive officers
as a group (1 person). . . . . 5,000 $.05
</TABLE>
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
Option Grants
Options granted under the 1994 Plan may be either incentive
stock options which satisfy the requirements of Section 422 of the
Internal Revenue Code or non-statutory options which are not
intended to meet such requirements. The federal income tax
treatment for the two types of options differs as described below:
Incentive Options. No taxable income is recognized by the
optionee at the time of the option grant, and no taxable income is
generally recognized at the time the option is exercised. The
optionee will, however, recognize taxable income in the year in
which the purchased shares are sold or otherwise made the subject
of disposition. For federal tax purposes, dispositions are divided
into two categories: (i) qualifying and (ii) disqualifying. The
optionee will make a qualifying disposition of the purchased shares
if the sale or other disposition of such shares is made after the
optionee has held the shares for more than two years after the
grant date of the option and more than one year after the exercise
date. If the optionee fails to satisfy either of these two minimum
holding periods prior to the sale or other disposition of the
purchased shares, then a disqualifying disposition will result.
Upon a qualifying disposition of the shares, the optionee will
recognize long-term capital gain in an amount equal to the excess
of (i) the amount realized upon the sale or other disposition of
the purchased shares over (ii) the exercise price paid for those
shares. If there is a disqualifying disposition of the shares,
then the excess of (i) the fair market value of those shares on the
option exercise date over (ii) the exercise price paid for the
shares will be taxable as ordinary income. Any additional gain
recognized upon the disposition will be a capital gain.
If the optionee makes a disqualifying disposition of the
purchased shares, then the Company will be entitled to an income
tax deduction, for the taxable year in which such disposition
occurs, equal to the excess of (i) the fair market value of such
shares on the option exercise date over (ii) the exercise price
paid for the shares. In no other instance will the Company be
allowed a deduction with respect to the optionee's disposition of
the purchased shares. The Company anticipates that the
compensation deemed paid in connection with most disqualifying
dispositions of incentive stock option shares under the 1994 Plan
will be deductible by it and will not be subject to the annual $1
million limitation per covered individual on the deductibility of
the compensation paid to certain executive officers of the Company.
Non-Statutory Options. No taxable income is recognized by an
optionee upon the grant of a non-statutory option. The optionee
will in general recognize ordinary income, in the year in which the
option is exercised, equal to the excess of the fair market value
of the purchased shares on the exercise date over the exercise
price paid for the shares, and the optionee will be required to
satisfy the tax withholding requirements applicable to such income.
Special provisions of the Internal Revenue Code apply to the
acquisition of unvested shares of common stock under a non-
statutory option. These special provisions may be summarized as
follows:
- - If the shares acquired upon exercise of the non-statutory
option are subject to repurchase by the Company at the original
exercise price in the event of the optionee's termination of
service prior to vesting in those shares, then the optionee will
not recognize any taxable income at the time of exercise but will
have to report as ordinary income, as and when the Company's
repurchase right lapses, an amount equal to the excess of (i) the
fair market value of the shares on the date the repurchase right
lapses with respect to those shares over (ii) the exercise price
paid for the shares.
- - The optionee may, however, elect under Section 83(b) of the
Internal Revenue Code to include as ordinary income in the year of
exercise of the non-statutory option an amount equal to the excess
of (i) the fair market value of the purchased shares on the
exercise date over (ii) the exercise price paid for such shares.
If the Section 83(b) election is made, the optionee will not
recognize any additional income as and when the repurchase right
lapses.
The Company will be entitled to an income tax deduction equal
to the amount of ordinary income recognized by the optionee with
respect to the exercised non-statutory option. The deduction will
in general be allowed for the taxable year of the Company in which
such ordinary income is recognized by the optionee. The Company
anticipates that the compensation deemed paid upon the exercise of
non-statutory options granted under the 1994 Plan with an exercise
price equal to the fair market value of the common stock on the
grant date will be deductible and will not be subject to the annual
$1 million limitation per covered individual on the deductibility
of the compensation paid to certain executive officers of the
Company.
Stock Appreciation Rights
An optionee who is granted a stock appreciation right will
recognize ordinary income in the year of exercise equal to the
amount of the appreciation distribution. The Company will be
entitled to an income tax deduction equal to the appreciation
distribution for the taxable year in which the ordinary income is
recognized by the optionee.
Direct Stock Issuance
The tax principles applicable to direct stock issuances under
the 1994 Plan are substantially the same as those summarized above
for the exercise of non-statutory option grants.
ACCOUNTING TREATMENT
Under the current accounting rules, option grants or stock
issuances with exercise or issue prices equal to the fair market
value of the shares on the grant or issue date will not result in
any compensation expense to the Company for financial reporting
purposes. To the extent the exercise or issue price is less than
such fair market value, a compensation expense will arise which
will have to be amortized against the Company's earnings over the
vesting period in effect for the option grant or share issuance.
Such amortization is heavily front-loaded. In addition,
outstanding options will in all events be taken into account in the
calculation of earnings per share on a fully-diluted basis.
Should one or more optionees be granted stock appreciation
rights which have no conditions upon exercisability other than a
service or employment requirement, then such rights will result in
a compensation expense to be charged against the Company's
earnings. Accordingly, at the end of each fiscal quarter, the
amount (if any) by which the fair market value of the shares of
common stock subject to such outstanding stock appreciation rights
has increased from the prior quarter-end will be accrued as
compensation expense, to the extent such fair market value is in
excess of the aggregate exercise price in effect for those rights.
STOCKHOLDER APPROVAL
The affirmative vote of a majority of the outstanding shares
of the Company present or represented and entitled to vote at the
1995 Annual Meeting is required for approval of the amendment to
the 1994 Plan to (a) extend the maximum option term for grants made
under the Automatic Option Grant Program to fifteen (15) years; (b)
provide for the immediate vesting of all shares purchased or
purchasable by a non-employee Board member under the Automatic
Option Grant Program should such individual's service on the Board
terminate (other than removal for cause) following his or her
completion of at least four (4) years of continuous Board service
and to allow the outstanding options held by such individual under
the program to remain exercisable for the balance of the applicable
ten (10) year or fifteen (15) year option term; and (c) authorize
the issuance of restricted stock awards under the Stock Issuance
Program which will vest only upon the attainment of one or more
specific performance milestones established by the Plan
Administrator. If such approval is obtained, the clause (a)
amendment will apply to all options granted under the Automatic
Option Grant Program on or after the date of the 1995 Annual
Meeting, and the clause (b) amendment will apply to all options
currently outstanding under the Automatic Grant Program and all
future option grants made under that program. Should such
stockholder approval not be obtained, then the amendments to the
Automatic Option Grant Program will not become effective, and
restricted stock awards made under the 1994 Plan will not qualify
as performance-based compensation for purposes of the Internal
Revenue Code Section 162(m) limitation on the deductibility of
compensation paid by the Company to certain executive officers.
The Board of Directors recommends that the stockholders vote
FOR the approval of the amendment to the 1994 Plan. The Board
believes that it is in the best interests of the Company to
maintain an equity incentive program for the Company which will
provide a meaningful opportunity for officers, key employees and
non-employee Board members to acquire a substantial proprietary
interest in the enterprise and thereby encourage such individuals
to remain in the Company's service and more closely align their
interests with those of the stockholders.
APPROVAL OF THE AMDAHL CORPORATION
SHORT-TERM EXECUTIVE INCENTIVE PERFORMANCE PLAN
The Company has previously maintained the Executive Incentive
Performance Plan (the "Performance Plan") as a program of deferred
compensation designed to reward the Company's executive officers
and other key employees for their contribution to the Company's
financial success and to provide a meaningful incentive for them to
remain in the Company's employ. The Performance Plan has been
comprised of two separate components: (i) a short-term incentive
program, under which a portion of the Company's pre-tax profits for
each fiscal year is to be allocated to participants on the basis of
their compensation for the year and distributed in installments
over the succeeding four (4) years, and (ii) a long-term income
accumulation program designed to provide the participant with
replacement income following his or her retirement from the
Company.
By reason of Section 162(m) of the Internal Revenue Code,
which became applicable to the Company on January 1, 1994, the
compensation payable by the Company to certain executive officers
will remain deductible for federal income tax purposes only to the
extent that compensation does not exceed $1 million per covered
officer for the fiscal year. However, any compensation paid to
those officers which qualifies as performance-based compensation
will not be subject to this $1 million limitation.
The Board of Directors has reviewed the provisions of the
Performance Plan and has determined that the short-term incentive
program in effect under that Plan can be structured so as to
qualify as performance-based compensation, provided the program is
approved by the stockholders. Accordingly, on January 26, 1995,
the Board amended the Performance Plan to divide the two programs
previously in effect under that Plan into two stand-alone incentive
compensation plans: (i) the Short-Term Executive Incentive
Performance Plan and (ii) the Long-Term Executive Incentive
Performance Plan. Several additional changes were also made to
the Short-Term Executive Incentive Performance Plan (the "Short-
Term Plan") in order to assure that the compensation payable
thereunder will qualify as performance-based compensation which is
not subject to the $1 million limitation on deductibility.
Accordingly, the Board now seeks stockholder approval of the Short-
Term Plan at the Annual Meeting, and no payments will be made under
the Short-Term Plan for the 1995 fiscal year or any subsequent
fiscal year unless such stockholder approval is obtained.
The following is a summary of the principal features of the
Short-Term Plan. The summary, however, does not purport to be a
complete description of all the provisions of the Short-Term Plan.
Any stockholder of the Company who wishes to obtain a copy of the
actual plan document may do so upon written request to the
Corporate Secretary at the Company's principal executive office in
Sunnyvale, California.
Purpose
The Short-Term Plan will provide the executives with a
meaningful incentive to (i) contribute to the Company's financial
success by allowing them to share in a portion of the Company's
pre-tax profits each year and (ii) remain in the Company's employ
by conditioning the payment of their awards upon their continued
service over a period of years.
Administration
The Short-Term Plan will be administered by the Compensation
Committee of the Board. The Board members currently serving on
this Committee qualify as "disinterested persons" within the
meaning of Rule 16b-3(c)(2) of the Securities and Exchange
Commission, and effective with the 1996 Annual Stockholders
Meeting, the composition of the Committee will be restructured to
the extent necessary to assure that each member qualifies as an
"outside director" pursuant to the applicable requirements of
Internal Revenue Code Section 162(m).
Eligibility
The individuals eligible for participation in the Short-Term
Plan are limited to the Company's executive officers and other key
employees of the Company and its subsidiaries primarily responsible
for the management, growth and financial success of the Company and
recommended for participation by the Chairman of the Board. The
actual participants for each fiscal year will be selected by the
Committee. Once selected, the individual will continue to
participate for each succeeding fiscal year, unless the Committee
affirmatively elects to exclude that individual from participation
for one or more of those fiscal years.
As of March 6, 1995, 17 individuals, including 12 executive
officers, were eligible for participation in the Short-Term Plan.
Incentive Awards
The aggregate incentive award to the Short-Term Plan for each
fiscal year will be equal to 1% of the Company's consolidated pre-
tax earnings for that fiscal year, as such earnings are determined
for financial reporting purposes in accordance with generally
accepted accounting principles, consistently applied.
The incentive award will be allocated to the accounts of all
active participants who have continued in the Company's or its
subsidiaries employ through the end of the fiscal year for which
the award is made. The amount allocated to each participant's
account will be in the same proportion to his or her eligible
earnings for the year as the aggregate award bears to the aggregate
eligible earnings of all participants for that year. In no event,
however, may the amount allocated to any participant's account
exceed the lesser of (i) 25% of his or her eligible earnings for
the fiscal year or (ii) $500,000. To the extent any portion of the
incentive award for the fiscal year is not allocated by reason of
such limitation, that portion will be added to the amount to be
allocated under the Company's Long-Term Executive Incentive
Performance Plan for such year.
For purposes of the Short-Term Plan, the participant's
eligible earnings will include his or her base salary for the
fiscal year plus any cash bonus (other than awards under the Short-
Term Plan) earned for services rendered in such fiscal year and
payable in the immediately succeeding fiscal year.
Plan Accounts
The account established for each participant under the Short-
Term Plan to which his or her share of the incentive award each
fiscal year is to be allocated will be maintained solely as a book
account on the Company's records, and no segregated fund or account
maintained for the exclusive benefit of the participant will be
established. At all times the participant will simply be a general
creditor of the Company with respect to his or her account balance
under the Short-Term Plan.
The balance from time to time outstanding in the participant's
account will accrue interest each calendar year at the weighted
average rate at which interest is earned for such year on the
assets of the Company's Employee Savings Plan invested in one or
more guaranteed investment contracts thereunder during such year.
The accrued interest will be paid as vested installments are paid
from the account.
Vesting of Awards
The participant will vest in his or her allocated portion of
the incentive award in four (4) successive equal annual
installments upon completion of each year of service with the
Company over the four (4) year period measured from the allocation
date. However, the participant will immediately vest in his or her
entire account balance should he or she terminate employment with
the Company as a result of death or permanent disability or after
his or her normal retirement date.
Solely for purposes of the Short-Term Plan, the participant's
normal retirement date will be the latest to occur of (i) the first
date on which the sum of the participant's age and years of service
total at least seventy (70) years, (ii) the date on which the
participant attains age fifty-five (55) or (iii) the date on which
the participant completes ten (10) years of service.
Payment of Awards
The participant will have the election to have each vested
installment paid in cash as soon as practicable following the
vesting date or to defer receipt of that installment in accordance
with his or her prior irrevocable election filed under the
Company's Deferral Election Plan. All amounts deferred under that
latter plan will earn interest for each calendar year within the
deferral period at the same weighted average rate at which interest
is earned for each such year on the assets of the Company's
Employee Savings Plan invested in one or more guaranteed investment
contracts thereunder during that year.
Termination of Employment
Should a participant terminate employment by reason of death
or permanent disability, then his or her entire account balance
will be distributed in one lump-sum payment within ninety (90) days
after such termination. Upon the participant's retirement on or
after his or her normal retirement date, the vested balance of his
or her account will be paid in one lump sum within ninety (90)
days.
Should the participant leave the Company's employ prior to his
or her normal retirement date, then the unvested balance of his or
her account will be immediately forfeited, unless such termination
occurs by reason of the participant's death or permanent
disability.
The Compensation Committee will, however, have full power and
authority, exercisable at any time, to accelerate the vesting and
payout of one or more otherwise unvested installments credited to
the participant's account, together with all accrued interest
thereon. Each such accelerated installment will be paid in a lump
sum within thirty (30) days after Committee authorization of the
payout. However, in order to reflect the time value of money over
the period for which the installment has been accelerated, the lump
sum payment will be discounted at a market rate of interest
determined for the month in which the accelerated payment is made.
Amendment and Termination
The Board may at any time amend, suspend or terminate the
Short-Term Plan in whole or in part. However, no such action by the
Board may adversely affect the rights and interests of the
participants and their beneficiaries with respect to amounts which
the participants have accrued to date under the Short-Term Plan on
the basis of the incentive awards allocated to their accounts.
FEDERAL TAX CONSEQUENCES
Under the present federal income tax laws, participants will
realize ordinary income as vested installments are paid to them
under the Short-Term Plan. The Company will receive an income tax
deduction in the amount of such ordinary income, and the deduction
will be allowable for the fiscal year of the Company in which the
payment is made. Such deduction, however, will only be allowable
in all instances if the Short-Term Plan satisfies the requirements
of Code Section 162(m), which limits the deductibility of any
nonperformance-based compensation paid to certain corporate
executives to $1 million per covered executive. As previously
indicated, it is the Company's intention that the Short-Term Plan
be administered in a manner which maximizes the deductibility of
compensation for the Company under Section 162(m) to the extent
practicable and consistent with the Company's business
considerations.
STOCKHOLDER APPROVAL
Approval of the Short-Term Executive Incentive Performance
Plan requires the affirmative vote of the holders of a majority of
shares of common stock present or represented and entitled to vote
at the Annual Meeting. Unless the stockholders approve the Short-
Term Plan at the 1995 Annual Meeting, no amounts will be paid under
the Short-Term Plan for the 1995 fiscal year or any subsequent
fiscal year.
Because the Board of Directors believes that the Short-Term
Plan is a valuable incentive program which will serve to align the
interests of management with those of the stockholders in seeking
to maximize the Company's profitability, the Board recommends a
vote FOR the approval of the Short-Term Executive Incentive
Performance Plan.
PLAN BENEFITS
Incentive awards under the Short-Term Plan will be made only
if the Company's operations are profitable. The amount that may be
awarded pursuant to the Short-Term Plan for the 1995 fiscal year is
not currently determinable. However, the table below indicates,
for each of the executive officers named in the Summary
Compensation Table and the various indicated groups, the amount of
benefits actually distributed in the last fiscal year under the
short-term incentive program in effect under the Performance Plan
prior to the spin-off of that program into the stand-alone Short-
Term Plan.
<TABLE>
<CAPTION>
Dollar Amount of
Name Installments Paid
---- -----------------
<S> <C>
E. Joseph Zemke. . . . . . . . . . . . . . $88,146
John C. Lewis. . . . . . . . . . . . . . . $131,329
David B. Wright. . . . . . . . . . . . . . $0
Orval J. Nutt. . . . . . . . . . . . . . . $38,521
David L. Anderson. . . . . . . . . . . . . $33,986
All current executive officers
as a group (9 persons). . . . . . . . . $477,112
All employees, including current
officers who are not executive
officers, as a group (4 persons). . . . $99,389
</TABLE>
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has recommended
that Arthur Andersen LLP, independent public accountants for Amdahl
during fiscal year 1994, serve in the same capacity for the current
fiscal year. A resolution will be presented at the meeting to
ratify the Board of Directors' selection of Arthur Andersen LLP as
independent public accountants to audit the accounts and records of
Amdahl for the fiscal year ending December 29, 1995 and to perform
other appropriate services.
Representatives of Arthur Andersen LLP are expected to be
present at the Annual Meeting to make a statement if they desire
and to respond to appropriate questions.
The Board of Directors recommends a vote FOR ratification of
the selection of Arthur Andersen LLP as the Company's independent
public accountants.
STOCKHOLDER PROPOSALS
Stockholder Proposal Relating to a Nominating Committee of the
Board of Directors
The Company has been advised that the New York City Employees'
Retirement System ("Proponent"), which owns 241,090 shares of
Amdahl common stock, will introduce a proposal at the 1995 Annual
Meeting. The address of the Proponent is: The City of New York,
Office of the Comptroller, 1 Centre Street, New York, NY 10007-
2341. The proposal is as follows:
WHEREAS, the board of directors is meant to be an independent
body elected by shareholders and charged by law and shareholders
with the duty, authority and responsibility to formulate and direct
corporate policies, and
WHEREAS, this company has provided that the board may
designate from among its members one or more committees, each of
which, to the extent allowed, shall have certain designated
authority, and
WHEREAS, we believe that directors independent of management
are best qualified to act in the interest of shareholders and can
take steps necessary to seek, nominate and present new directors to
shareholders, and
WHEREAS, we believe the selection of new directors is an area
in which inside directors may have a conflict of interest with
shareholders, and
WHEREAS, we believe that an increased role for the independent
directors would help our company improve its long-term financial
condition, stock performance and ability to compete,
NOW THEREFORE BE IT RESOLVED THAT: the shareholders request
the company establish a Nominating Committee to recommend
candidates to stand for election to the board of directors. The
Committee shall be composed solely of independent directors. For
these purposes, an independent director is one who: (1) has not
been employed by the company, or an affiliate, in an executive
capacity within the last five years; (2) is not, and has not been,
a member of a company that is one of this company's paid advisors
or consultants, (3) is not employed by a significant customer or
supplier; (4) does not and did not have a personal services
contract with the company; (5) is not employed by a tax-exempt
organization that receives significant contributions from the
company; (7) has not had any business relationship that would be
required to be disclosed under regulation S-K. The Committee's
responsibilities shall include establishing procedures for the
nominating process and developing for board approval the criteria
for nomination.
Proponent's Statement of Support is as follows:
As long-term shareholders we are concerned about our company's
prospects for profitable growth. This proposal is intended to
strengthen the process by which nominees are selected. We believe
that this will strengthen the board of directors in its role of
advising overseeing and evaluating management.
The proponent urges you to vote FOR this proposal.
Amdahl's Position
Amdahl believes that its present system for nominating
candidates to serve on the Board of Directors works well and should
not be changed. The current Board is composed of two employee
directors and nine outside members which includes representation of
the Company's major stockholder.
Proponent's proposal, with its restrictive definition of
"independent director," could prevent the Company from utilizing
the very resources that are most helpful in ensuring that the best
qualified candidates are nominated. For example, Fujitsu Limited,
a major stockholder in Amdahl (approximately 44%), has years of
experience and many valuable contacts in the computer industry, and
has played an important role in the director nominating process.
Yet, under Proponent's proposal, none of Fujitsu's representatives
on the Board could be members of the Nominating Committee or
participate in this selection process. This would essentially
remove a major stockholder from any meaningful participation in
this process. The result would conflict with Proponent's stated
goal of giving more control over the process to the Stockholders.
In order to identify the best possible candidates for Board
membership, the Company utilizes all resources available to it.
These resources include the knowledge and experience of management,
directors, stockholders, and advisors and consultants, among
others. In addition, the independent Board members are, in any
event, actively involved in the process of identifying candidates
for Board membership.
The Board of Directors recommends a vote AGAINST this
proposal.
Stockholder Proposal Relating to a "High-Performance Workplace"
The Company has been advised that the Amalgamated Bank of New
York LongView Collective Investment Fund (the "Proponent"), which
owns 9,300 shares of Amdahl common stock, will introduce a proposal
at the 1995 Annual Meeting. The address of the Proponent is:
Amalgamated Bank of New York, Office of the President and Trustee,
11-15 Union Square, New York, NY 10003. The proposal is as
follows:
RESOLVED: That the stockholders of Amdahl Corporation (the
"Company" or "Amdahl") request that the Board of Directors commit
our Company to the goal of creating a high-performance workplace
based on policies of workplace democracy and meaningful worker
participation, and prepare a report to be delivered to the
stockholders of the Company no later than two months prior to the
next annual meeting of stockholders at reasonable expense
identifying the extent to which the Company is implementing a high-
performance workplace based on those policies, using the criteria
set out in the U.S. Department of Labor's (the "Labor Department")
1994 report, Road to High-Performance workplaces: A Guide to Better
Jobs and Better Business Results (the "1994 Report").
Proponent's Statement of Support is as follows:
The American workplace is undergoing significant changes and
restructuring to meet the challenges of global competition in the
21st century. Amdahl should be a leader in creating a workplace
which allows it to compete in a global marketplace.
Presently, various companies are working to create "high-
performance workplaces" through policies that emphasize employee
training, compensation linked to performance, direct employee
involvement in corporate decision-making, employment security and
a supportive work environment.
In an August 1993 report entitled High-Performance Work
Practices and Firm Performance (the "1993 Report"), the Labor
Department found that high-performance work practices are
positively related to both productivity and long-term financial
performance, and that innovative workplace practices may be crucial
to the future competitiveness of American industry.
In the 1994 Report, the Labor Department published a detailed
checklist of criteria which companies can use to measure their
progress towards achieving a high-performance workplace.
We believe that high-performance work practices will enhance
the Company's ability to attract, develop and keep good people. In
recent years, Fortune's annual survey of most admired corporations
has placed a company's ability to attract, develop and keep good
people among the top three measurements of corporate reputation.
Effective employee participation is crucial to developing a
high-performance workplace. Moreover, Congress has recognized the
value of a more supportive and productive workplace through such
laws as the Family and Medical leave Act and the Americans with
Disabilities Act.
In the 1993 Report, the Labor Department indicated that
"[t]here appears to be a widespread firm interest in using new
workplace practices." The Labor Department is encouraging
companies to create high-performance workplaces as a way to boost
American competitiveness, and it has encouraged investors to
consider workplace practices in making their decisions. Investors
may lack sufficient data to properly evaluate the Company's efforts
to create a high-performance workplace. Therefore, we request that
the Company affirm its commitment to these principles and prepare
a report on its actions for implementing them.
The proponent urges you to vote FOR this resolution.
Amdahl's Position
Proponent's proposal is unnecessary because in the Company's
opinion it already has a "high-performance workplace". Also, the
Company feels that many of the criteria in the Labor Department's
1994 Report are too vague to enable the Company to measure and
report accurately the extent to which it has fulfilled its
obligations under the proposal.
Amdahl already has many programs that emphasize employee
training, compensation linked to performance, employee involvement
and participation, employment security, and a supportive work
environment, the same workplace concerns cited in Proponent's
Supporting Statement. Quality training, the Stanford Television
Network, crosstraining, self-directed work teams, roundtables, all-
employee meetings, climate surveys, quality recognition and
employee recognition programs, reduced levels of management,
increased manager-employee ratios, electronic bulletin boards, an
open door policy, flexible benefits, the Capital Accumulation and
Employee Stock Purchase programs, job fairs, outplacement services,
health and child-care services, education reimbursement and
community involvement are only a few of the many innovative
workplace practices and programs implemented by the Company.
The proposal requires the Company to prepare a report using
the criteria set out in the 1994 Report. Proponent's Supporting
Statement refers to "a detailed checklist of criteria which
companies can use to measure their programs towards achieving a
high-performance workplace". In fact, however, the 28-page 1994
Report contains general concepts and a checklist of 43 questions,
many of which, in the Company's opinion, are too vague to be
measured in a meaningful way. For example, one question asks "How
effective are training programs?" Another asks "Are training
expenditures balanced among the Company's entire workforce?" The
Company maintains that it will not be able to report to its
stockholders the extent to which it has "implemented a high-
performance workplace" using these and other similarly vague
"criteria".
Finally, as events of the past several years have
demonstrated, it is important that Amdahl's management be able to
react quickly and decisively to rapidly changing circumstances. A
workplace program or practice implemented under certain
circumstances could become ineffective or harmful under other
circumstances. To the extent it would require Amdahl to adopt or
continue a certain workplace program or practice as part of its
commitment to the goal of creating a "high performance workplace,"
the proposal could limit the Company's flexibility in deciding what
programs or practices are best for the Company and its employees.
Amdahl is already a leader in developing workplace programs
and practices that create better jobs and business results.
Adoption of the proposal would not advance Amdahl's efforts in
these areas. The proposal would, however, be difficult to
implement, and the required report to stockholders would not, in
the Company's opinion, be meaningful. Finally, the proposal might
interfere with management's ability to react appropriately to
changing business conditions.
The Board of Directors recommends a vote AGAINST this
proposal.
FUTURE STOCKHOLDER PROPOSALS
Amdahl must receive stockholder proposals intended to be
considered at the 1996 Annual Meeting no later than November 24,
1995. These proposals may be included in next year's Proxy
Statement if they comply with applicable regulations under the
Securities Exchange Act of 1934.
INCORPORATION BY REFERENCE
According to the provisions of Schedule 14A under the
Securities Exchange Act of 1934, the following document or portion
thereof is incorporated by reference:
"Executive Officers of Amdahl" from Part 1 of the
Company's Annual Report on Form 10-K for the fiscal year
ended December 30, 1994.
The Board of Directors knows of no other matters that may be
presented for stockholder action at the meeting. However, if other
matters do properly come before the meeting, the persons named in
the proxies will vote them according to their best judgment.
By Order of the Board of Directors
/s/ Bruce J. Ryan
BRUCE J. RYAN
Senior Vice President, Chief Financial Officer
and Corporate Secretary
March 23, 1995
<PAGE>
[Map]
A graphic composed of a map of a portion of the City of San Jose
indicating the location of the Fairmont Hotel, the site of the
Company's 1995 Annual Meeting of Stockholders.
AMDAHL CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
(Restated Effective July 29, 1995)
I. PURPOSE OF THE PLAN
This Restated Employee Stock Purchase Plan (the "Plan") is
intended to promote the interests of Amdahl Corporation by
providing eligible employees with the opportunity to acquire a
proprietary interest in the Corporation through participation in
a payroll-deduction based employee stock purchase plan designed
to qualify under Section 423 of the Code.
Capitalized terms herein shall have the meanings assigned to
such terms in the attached Appendix.
II. ADMINISTRATION OF THE PLAN
The Compensation Committee of the Board in its capacity as
Plan Administrator shall have full authority to interpret and
construe any provision of the Plan and to adopt such rules and
regulations for proper administration of the Plan as it may deem
necessary or appropriate. Decisions of the Plan Administrator
shall be final and binding on all parties having an interest in
the Plan.
III. STOCK SUBJECT TO THE PLAN
A. The stock purchasable under the Plan shall be shares of
the Company's authorized but unissued or reacquired common stock,
par value of $.05 per share, including shares of common stock
purchased on the open market. As of March 6, 1995, the maximum
number of shares of common stock which may be issued over the
remaining term of the Plan shall not exceed 2,279,512 shares.
B. Should any change be made to the common stock 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, appropriate adjustments shall be made
to (i) the maximum number and class of securities issuable under
the Plan, (ii) the maximum number and class of securities
purchasable per Participant on any one Purchase Date and (iii)
the number and class of securities and the price per share in
effect under each outstanding purchase right in order to prevent
the dilution or enlargement of benefits thereunder.
IV. OFFERING PERIODS
A. Shares of common stock shall be offered for purchase
under the Plan through a series of successive offering periods
until such time as (i) the maximum number of shares of common
stock available for issuance under the Plan shall have been
purchased or (ii) the Plan shall have been sooner terminated.
B. Each offering period under the Plan shall be of such
duration (not to exceed twenty-four (24) months) as determined by
the Plan Administrator prior to the start date. The initial
offering period pursuant to this restatement shall commence on
the Effective Date and terminate on October 27, 1995; the next
offering period shall commence on October 28, 1995; and
subsequent offering periods shall commence as designated by the
Plan Administrator.
C. Each offering period shall be comprised of one or more
Purchase Periods, each of a duration (not less than three (3)
months) determined by the Plan Administrator prior to the start
date of that offering period. Until otherwise designated by the
Plan Administrator, Purchase Periods shall start on the Saturday
following the last Friday of January, April, July and October
each year and shall end on the last Friday of April, July,
October and January, respectively. The first Purchase Period
pursuant to this restatement shall begin on the Effective Date
and terminate on October 27, 1995.
D. Should the Plan Administrator implement an offering
period which includes two or more Purchase Periods, then the
following special provision shall be in effect for that offering
period:
In the event the Fair Market Value per share of common stock
on any Purchase Date within that offering period is less than the
Fair Market Value per share of common stock on the start date of
that offering period, then that offering period shall
automatically terminate immediately with the purchase of shares
of common stock on such Purchase Date, and a new offering period
shall commence on the next business day following such Purchase
Date. The duration of that new offering period shall be
established by the Plan Administrator within five (5) business
days following the start date.
E. Under no circumstances shall any offering period
commence under the Plan, nor shall any shares of common stock be
issued hereunder, until such time as (i) the Plan shall have been
approved by the Corporation's stockholders and (ii) the
Corporation shall have complied with all applicable requirements
of the Securities Act, all applicable listing requirements of
the securities exchange on which shares of the common stock are
listed for trading and all other applicable statutory and
regulatory requirements.
V. ELIGIBILITY
A. Each Eligible Employee shall be eligible to enter an
offering period under the Plan on the start date of any Purchase
Period (within that offering period) which begins on or after his
or her completion of any minimum service period established by
the Plan Administrator as a condition to participation in that
offering period, provided he or she remains an Eligible Employee
on such start date. The date such individual enters the offering
period shall be designated his or her Entry Date for purposes of
that offering period.
B. To participate in the Plan for a particular offering
period, the Eligible Employee must complete the enrollment forms
prescribed by the Plan Administrator (including a Participation
Form) and file such forms with the Purchase Plan Administrator
(or its designate) at least two weeks prior to his or her
scheduled Entry Date. However, each individual who is a
Participant in an offering period on the date such offering
period terminates pursuant to Section IV.D shall automatically be
enrolled in the new offering period which commences immediately
after such termination date, provided the Participant is an
Eligible Employee on the start date of that new offering period.
Such start date shall be the Participant's Entry Date for the new
offering period.
VI. PAYROLL DEDUCTIONS
A. The payroll deduction authorized by the Participant for
purposes of acquiring shares of common stock under the Plan may
be any multiple of one percent (1%) of the Participant's Eligible
Earnings during each Purchase Period within that offering period,
up to the maximum percentage established by the Plan
Administrator prior to the start of such offering period, but in
no event more than ten percent (10%). The deduction rate so
authorized shall continue in effect for the remainder of the
offering period, except to the extent such rate is changed in
accordance with the following guidelines:
(i) The Participant may, at any time during the offering
period, reduce his or her rate of payroll deduction to become
effective as soon as practicable after filing the appropriate
form with the Purchase Plan Administrator. The Participant may
not, however, effect more than one (1) such reduction per
Purchase Period.
(ii) The Participant may, at least two weeks prior to the
commencement of any new Purchase Period within the offering
period, increase the rate of his or her payroll deduction by
filing the appropriate form with the Purchase Plan Administrator.
The new rate (which may not exceed the prescribed maximum for
that offering period) shall become effective as of the start date
of the Purchase Period following the filing of such form.
B. Payroll deductions shall begin on the first pay day
following the Participant's Entry Date into the offering period
and shall (unless sooner terminated by the Participant) continue
through the pay day ending with or immediately prior to the last
day of that offering period. The amounts so collected shall be
credited to the Participant's book account under the Plan, but no
interest shall be paid on the balance from time to time
outstanding in such account. The amounts collected from the
Participant shall not be held in any segregated account or trust
fund and may be commingled with the general assets of the
Corporation and used for general corporate purposes.
C. Payroll deductions shall automatically cease upon the
termination of the Participant's purchase right in accordance
with the provisions of the Plan.
D. The Participant's acquisition of common stock under the
Plan on any Purchase Date shall neither limit, except to the
extent limited pursuant to Section VIII, nor require the
Participant's acquisition of common stock on any subsequent
Purchase Date, whether within the same or a different offering
period.
VII. PURCHASE RIGHTS
A. GRANT OF PURCHASE RIGHT. A Participant shall be
granted a separate purchase right for each offering period in
which he or she participates. The purchase right shall be
(iii)granted on the Participant's Entry Date into the offering
period and shall provide the Participant with the right to
purchase shares of common stock, upon the terms and conditions
set forth below, in one or more installments over the remainder
of such offering period. The Participant shall execute a
Participation Form embodying such terms and such other provisions
(not inconsistent with the Plan) as the Plan Administrator may
deem advisable.
Under no circumstances shall purchase rights be granted
under the Plan to any Eligible Employee if such individual would,
immediately after the grant, own (within the meaning of Code
Section 424(d)) or hold outstanding options or other rights to
purchase, stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the
Corporation or any Corporate Affiliate.
B. EXERCISE OF THE PURCHASE RIGHT. Each purchase right
shall be automatically exercised in one or more installments on
each Purchase Date within the offering period, and shares of
common stock shall accordingly be purchased on behalf of each
Participant (other than any Participant whose payroll deductions
have previously been refunded in accordance with the Termination
of Purchase Right provisions below) on each such Purchase Date.
The purchase shall be effected by applying the Participant's
payroll deductions for the Purchase Period ending on such
Purchase Date (together with any carryover deductions from the
preceding Purchase Period) to the purchase of whole shares of
common stock (subject to the limitation on the maximum number of
shares purchasable per Participant on any one Purchase Date) at
the purchase price in effect for the Participant for that
Purchase Date.
C. PURCHASE PRICE. The purchase price per share at which
common stock will be purchased on the Participant's behalf on
each Purchase Date within the offering period shall be equal to
eighty-five percent (85%) of the lower of (i) the Fair Market
Value per share of common stock on the Participant's Entry Date
into that offering period or (ii) the Fair Market Value per share
of common stock on that Purchase Date. However, for each
Participant whose Entry Date is other than the start date of the
offering period, the clause (i) amount shall in no event be less
than the Fair Market Value per share of common stock on the start
date of that offering period.
D. NUMBER OF PURCHASABLE SHARES. The number of shares of
common stock purchasable by a Participant on each Purchase Date
during the offering period shall be the number of whole shares
obtained by dividing the amount collected from the Participant
through payroll deductions during the Purchase Period ending with
that Purchase Date (together with any carryover deductions from
the preceding Purchase Period) by the purchase price in effect
for the Participant for that Purchase Date. However, the number
of shares of common stock purchasable per Participant on any one
Purchase Date shall not exceed the limit set forth in Section
VIII or the maximum number designated by the Plan Administrator
for that Purchase Date prior to the start date of the offering
period in which such Purchase Date occurs, subject to periodic
adjustments in the event of certain changes in the Corporation's
capitalization. Until otherwise designated by the Plan
Administrator, the maximum number of shares of common stock
purchasable per Participant on any one Purchase Date shall be
limited to one thousand (1,000) shares.
E. EXCESS PAYROLL DEDUCTIONS. Any payroll deductions not
applied to the purchase of shares of common stock on any
Purchase Date because they are not sufficient to purchase a whole
share of common stock shall be held for the purchase of common
stock on the next Purchase Date. However, any payroll deductions
not applied to the purchase of common stock by reason of the
limitation on the maximum number of shares purchasable by the
Participant on the Purchase Date shall be refunded.
F. TERMINATION OF PURCHASE RIGHT. The following
provisions shall govern the termination of outstanding purchase
rights:
(i) A Participant may, at any time at least two weeks prior
to the commencement of any new Purchase Date in the offering
period, terminate his or her outstanding purchase right by filing
the appropriate form with the Purchase Plan Administrator (or its
designate), and no further payroll deductions shall be collected
from the Participant with respect to the terminated purchase
right. Any payroll deductions collected during the Purchase
Period in which such termination occurs shall, at the
Participant's election, be refunded or held for the purchase of
shares on the next Purchase Date. If no such election is made at
the time such purchase right is terminated, then the payroll
deductions collected with respect to the terminated right shall
be refunded as soon as possible.
(ii) The termination of such purchase right shall be
irrevocable, and the Participant may not subsequently rejoin the
offering period for which the terminated purchase right was
granted. In order to resume participation in any subsequent
offering period, such individual must re-enroll in the Plan by
filing a Participation Form at least two weeks prior to the
commencement of any new Purchase Period within that offering
period.
(iii) Should the Participant cease to remain an Eligible
Employee for any reason (including death, disability or change in
status) while his or her purchase right remains outstanding, then
that purchase right shall immediately terminate, and all of the
Participant's payroll deductions for the Purchase Period in which
the purchase right so terminates shall be immediately refunded.
However, should the Participant cease to remain in active service
by reason of an approved unpaid leave of absence, then the
Participant shall have the election, exercisable until two weeks
prior to the last business day of the Purchase Period in which
such leave commences, to (a) withdraw all the funds in the
Participant's payroll account at the time of the commencement of
such leave or (b) have such funds held for the purchase of shares
at the end of such Purchase Period. In no event, however, shall
any further payroll deductions be added to the Participant's
account during such unpaid leave. Upon the Participant's return
to active service, his or her payroll deductions under the Plan
shall automatically resume at the rate in effect at the time the
leave began.
G. CORPORATE TRANSACTION. Each outstanding purchase right
shall automatically be exercised, immediately prior to the
effective date of any Corporate Transaction, by applying the
payroll deductions of each Participant for the Purchase Period in
which such Corporate Transaction occurs to the purchase of whole
shares of common stock at a purchase price per share equal to
eighty-five percent (85%) of the lower of (i) the Fair Market
Value per share of common stock on the Participant's Entry Date
into the offering period in which such Corporate Transaction
occurs or (ii) the Fair Market Value per share of common stock
immediately prior to the effective date of such Corporate
Transaction. However, the applicable limitation on the number of
shares purchasable per Participant shall continue to apply to any
such purchase, and the clause (i) amount above shall not, for any
Participant whose Entry Date for the offering period is other
than the start date of that offering period, be less than the
Fair Market Value per share of common stock on such start date.
The Corporation shall use its best efforts to provide at
least ten (10)-days prior written notice of the occurrence of any
Corporate Transaction, and Participants shall, following the
receipt of such notice, have the right to terminate their
outstanding purchase rights prior to the effective date of the
Corporate Transaction.
H. PRORATION OF PURCHASE RIGHTS. Should the total number
of shares of common stock which are to be purchased pursuant to
outstanding purchase rights on any particular date exceed the
number of shares then available for issuance under the Plan, the
Plan Administrator shall make a pro-rata allocation of the
available shares on a uniform and nondiscriminatory basis, and
the payroll deductions of each Participant, to the extent in
excess of the aggregate purchase price payable for the common
stock pro-rated to such individual, shall be refunded.
I. ASSIGNABILITY. During the Participant's lifetime, the
purchase right shall be exercisable only by the Participant and
shall not be assignable or transferable by the Participant.
J. STOCKHOLDER RIGHTS. A Participant shall have no
stockholder rights with respect to the shares subject to his or
her outstanding purchase right until the shares are purchased on
the Participant's behalf in accordance with the provisions of the
Plan and the Participant has become a holder of record of the
purchased shares.
A Participant shall be entitled to receive, as soon as
practicable after each Purchase Date, a stock certificate for the
number of shares purchased on the Participant's behalf. Such
certificate may, upon the Participant's request, be issued in the
names of the Participant and his or her spouse as community
property or as joint tenants with right of survivorship.
Alternatively, the Participant may request the issuance of such
certificate in "street name" for immediate deposit in a
designated brokerage account.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to
acquire common stock pursuant to any purchase right outstanding
under this Plan if and to the extent such accrual, when
aggregated with (i) rights to purchase common stock accrued under
any other purchase right granted under this Plan and (ii) similar
rights accrued under other employee stock purchase plans (within
the meaning of Code Section 423) of the Corporation or any
Corporate Affiliate, would otherwise permit such Participant to
purchase more than Twenty-Five Thousand Dollars ($25,000) worth
of stock of the Corporation or any Corporate Affiliate
(determined on the basis of the Fair Market Value of such stock
on the date or dates such rights are granted) for each calendar
year such rights are at any time outstanding.
B. For purposes of applying such accrual limitations, the
following provisions shall be in effect:
(i) The right to acquire common stock under each
outstanding purchase right shall accrue in one or more
installments on each successive Purchase Date during the offering
period on which such right remains outstanding; and
(ii) No right to acquire common stock under any outstanding
purchase right shall accrue to the extent the Participant has
already accrued in the same calendar year the right to acquire
common stock under one (1) or more other purchase rights at a
rate equal to Twenty-Five Thousand Dollars ($25,000) worth of
common stock, determined on the basis of the Fair Market Value of
such stock on the date or dates of grant (Entry Date), for each
calendar year such rights were at any time outstanding.
C. If by reason of such accrual limitations, any purchase
right of a Participant does not accrue for a particular Purchase
Period, then the payroll deductions which the Participant made
during that Purchase Period with respect to such purchase right
shall be refunded.
D. In the event there is any conflict between the
provisions of this Article VIII and one or more provisions of the
Plan or any instrument issued thereunder, the provisions of this
Article VIII shall be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan became effective on June 28, 1980. At the
1984 and 1986 Annual Meetings, the Corporation's stockholders
approved 1,000,000 and 500,000-share increases, respectively, in
the number of shares of common stock authorized for issuance over
the term of the Plan. At the 1992 Annual Meeting, the
Corporation's stockholders approved an additional increase of
5,000,000 shares, bringing the total number of shares of common
stock reserved for issuance over the term of the Plan to
9,500,000 shares.
B. On January 26, 1995, the Board approved this
restatement of the Plan, to become effective on July 29, 1995,
subject to approval by the Corporation's stockholders at the 1995
Annual Meeting. This restatement provides the Plan Administrator
with more flexibility in structuring the offering periods and
purchase intervals in effect under the Plan and in establishing
the rights and limitations governing plan participation. In the
event stockholder approval is not obtained at the 1995 Annual
Meeting, the Plan will continue in full force and effect in
accordance with the terms and provisions in effect immediately
prior this restatement.
C. Unless sooner terminated by the Board, the Plan shall
terminate upon the earliest of (i) the date on which all shares
available for issuance under the Plan shall have been sold
pursuant to purchase rights exercised under the Plan or (ii) the
date on which all purchase rights are exercised in connection
with a Corporate Transaction. No further purchase rights shall
be granted or exercised, and no further payroll deductions shall
be collected, under the Plan following its termination.
X. AMENDMENT OF THE PLAN
The Board may alter, amend, suspend or discontinue the Plan
at any time to become effective immediately following the close
of any Purchase Period. However, the Board may not, without the
approval of the Corporation's stockholders, (i) materially
increase the number of shares of common stock issuable under the
Plan or the maximum number of shares purchasable per Participant
on any one Purchase Date, except for permissible adjustments in
the event of certain changes in the Corporation's capitalization,
(ii) alter the purchase price formula so as to reduce the
purchase price payable for the shares of common stock purchasable
under the Plan, or (iii) materially increase the benefits
accruing to Participants under the Plan or materially modify the
requirements for eligibility to participate in the Plan.
XI. GENERAL PROVISIONS
A. All costs and expenses incurred in the administration
of the Plan shall be paid by the Corporation.
B. Nothing in the Plan shall confer upon the Participant
any right to continue in the employ of the Corporation or any
Corporate Affiliate for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the
Corporation (or any Corporate Affiliate employing such person) or
of the Participant, which rights are hereby expressly reserved by
each, to terminate such person's employment at any time for any
reason, with or without cause.
C. The provisions of the Plan shall be governed by the
laws of the State of California without resort to that State's
conflict-of-laws rules.
XII. DISPOSITION OF SHARES
A. The Plan Administrator may, in its absolute discretion,
impose, as a condition to the issuance of the shares of common
stock purchased under the Plan, the requirement that each
Participant provide the Corporation with prompt notice of any
transfer or other disposition of those shares which is effected
within two (2) years after Participant's Entry Date into the
offering period in which the shares were purchased or within one
year after the Purchase Date on which those shares were in fact
purchased. The Plan Administrator may further require the
certificate evidencing such shares to be endorsed with a legend
indicating the existence of such notice requirement and impose
appropriate stop transfer orders with respect to such certificate
in the absence of such notice.
B. The Corporation shall not record on its books of record
any transfer or other disposition of the shares of common stock
issued under the Plan which is not effected in compliance with
the foregoing notice requirement. Moreover, the Corporation may
impose, as a condition to the recordation of such transfer or
disposition, the requirement that the Participant satisfy all
federal, state and local income and employment tax withholding
obligations applicable to such transfer or disposition.
<PAGE>
Schedule A
Corporations Eligible to Participate in the
Employee Stock Purchase Plan
As of the Effective Date
Amdahl Corporation
Amdahl Federal Service Corporation
Amdahl Australia Pty., Limited
Amdahl Computersysteme Gesellschaft m.b.H.
Amdahl Belgium S.A.
Amdahl Ireland Limited
Amdahl Canada Limited
Amdahl Danmark Computer Systems A/S
Amdahl France S.A.
Amdahl Deutschland GmbH
Amdahl International Corporation, Hong Kong Branch
Amdahl Italia S.p.A.
Amdahl Nederland B.V.
Amdahl International Corporation, New Zealand Branch
Amdahl Norge A/S
Amdahl International Corporation, sucursal em Portugal
Amdahl International Corporation, Singapore Branch
Amdahl Computer Systems, Sucursal en Espana
Amdahl International Corporation U.S.A., filial, Sverige
Amdahl (Schweiz) AG
Amdahl Pacific Basin Operations, Inc. Thailand Branch
Amdahl (U.K.) Limited
<PAGE>
APPENDIX
The following definitions shall be in effect under the Plan:
A. BOARD shall mean the Corporation's Board of Directors.
B. CODE shall mean the Internal Revenue Code of 1986, as
amended.
C. CORPORATE AFFILIATE shall mean any parent or subsidiary
corporation of the Corporation (as determined in accordance with
Code Section 424), whether now existing or subsequently
established.
D. CORPORATE TRANSACTION shall mean either of the
following stockholder approved transactions to which the
Corporation is a party:
(i) a merger or consolidation 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 the persons
holding those securities immediately prior to such transaction;
or
(ii) 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.
E. CORPORATION shall mean Amdahl Corporation, a Delaware
corporation, and any corporate successor to all or substantially
all of the assets or voting stock of Amdahl Corporation, which
shall by appropriate action adopt the Plan.
F. EFFECTIVE DATE shall mean July 29, 1995. Any Corporate
Affiliate which becomes a Participating Corporation after such
Effective Date shall designate a subsequent Effective Date with
respect to its employee-Participants.
G. ELIGIBLE EARNINGS shall mean the regular base salary
paid to a Participant by one or more Participating Companies
during such individual's period of participation in the Plan,
plus (i) any commissions paid to the Participant which serve as
base salary equivalents and (ii) any pre-tax contributions made
by the Participant to any Code section 401(k) salary deferral
plan or any Code Section 125 cafeteria benefit program now or
hereafter established by the Corporation or any Corporate
Affiliate. Prior to the start date of any offering period, the
Plan Administrator may determine that the Eligible Earnings for
that offering period shall also include each of the following
items of compensation: all overtime payments, bonuses,
commissions (other than those functioning as base salary
equivalents), profit-sharing distributions and other incentive-
type payments paid to a Participant by one or more Participating
Companies. In no event, however, shall any contributions (other
than Code Section 401(k) or Code Section 125 contributions) made
on the Participant's behalf by the Corporation or any Corporate
Affiliate under any employee benefit or welfare plan now or
hereafter established be included as Eligible Earnings.
H. ELIGIBLE EMPLOYEE shall mean any person who is engaged,
on a regularly-scheduled basis of more than twenty (20) hours per
week for more than five (5) months per calendar year, in the
rendition of personal services to any Participating Corporation
as an employee for earnings considered wages under Code Section
3401(a).
I. ENTRY DATE shall mean the date an Eligible Employee
first commences participation in the offering period in effect
under the Plan. The earliest Entry Date under the Plan shall be
the Effective Date.
J. FAIR MARKET VALUE per share of common stock on any
relevant date shall be the mean between the highest and lowest
quoted trading prices per share on such date on the principal
exchange on which the common stock is then listed or admitted to
trading, as such prices are officially quoted by the composite
tape of transactions on the exchange. If there are no reported
sales for such date, then the mean of the highest and lowest
quoted trading prices for the last previous date for which such
quotations exist will determine the Fair Market Value.
K. PARTICIPANT shall mean any Eligible Employee of a
Participating Corporation who is actively participating in the
Plan.
L. PARTICIPATING CORPORATION shall mean the Corporation
and such Corporate Affiliate or Affiliates as may be authorized
from time to time by the Plan Administrator to extend the
benefits of the Plan to their Eligible Employees. The
Participating Corporations in the Plan as of the Effective Date
are listed in attached Schedule A.
M. PLAN shall mean the Corporation's Restated Employee
Stock Purchase Plan, as set forth in this document.
N. PLAN ADMINISTRATOR shall mean the Compensation
Committee of the Board in its capacity as the administrator of
the Plan.
O. PURCHASE DATE shall mean the last business day of each
Purchase Period. The initial Purchase Date shall be October 27,
1995.
P. PURCHASE PERIOD shall mean each successive period
within the offering period at the end of which there shall be
purchased shares of common stock on behalf of each Participant.
Q. PURCHASE PLAN ADMINISTRATOR shall mean the
individual(s) responsible for the day-to-day administration of
the Plan.
R. SECURITIES ACT shall mean the Securities Act of 1933,
as amended.
AMDAHL CORPORATION
1994 STOCK INCENTIVE PLAN
(As Amended through January 25, 1995)
ARTICLE ONE
GENERAL
I. PURPOSES 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 became effective upon its approval by the
Corporation's stockholders at the 1994 Annual Meeting 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 previous 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 $.05 per share, thereunder.
II. DEFINITIONS
For purposes of the Plan, the following definitions
shall be in effect:
1934 Act: the Securities and Exchange Act of 1934, as
amended.
Award: the written notification provided by the Plan
Administrator to a Participant in the Stock Issuance Program that
shares of common stock are to be issued to such individual upon
the attainment of one or more of the performance objectives
specified in Article Six.
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.
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 of common stock 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 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 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 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.
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. However, solely for purposes of the Automatic Option Grant
Program in effect under Article Three and the Stock Fee Program
in effect under Article Four, Permanent Disability or Permanently
Disabled shall mean the inability of the Optionee to perform his
or her normal duties as a Board member 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.
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, (i) 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, (ii) as a bonus tied to the performance of
services or the attainment of financial or other
objectives, or (iii) 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.
C. 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 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.
D. 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.
VI. STOCK SUBJECT TO THE PLAN
A. Shares of the Corporation's common stock, par value of
$.05 per share, (the "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 grants 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 direct stock 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. From and after the Effective Date, the total number of
shares of common stock for which any one individual participating
in the Plan may be granted stock options or concurrently or
independently exercisable stock appreciation rights and may
receive direct stock issuances shall be limited to 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.
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
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 direct 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.<PAGE>
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:
(i) 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; and
(ii) 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;
(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 irrevocable 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 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 upon the Optionee's cessation of Service,
terminate and cease to remain outstanding with respect to any
shares for which the option is not otherwise at that time
exercisable or in which the Optionee is not otherwise at that
time 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 for which the option would otherwise have become
exercisable or in which the Optionee would otherwise have vested
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
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 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 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 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 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"), (ii) Concurrent Stock
Appreciation Rights ("Concurrent Rights"), (iii) Independent
Stock Appreciation Rights ("Independent Rights") and (iv)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 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 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.
<PAGE>
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 Meetings beginning
with the 1994 Annual Meeting of Stockholders. 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. Options shall be granted under this
Article Three as follows:
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 Annual 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.
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 made under this
Article Three prior to the 1995 Annual Stockholders Meeting shall
have a maximum term of ten (10) years measured from the automatic
grant date. Each automatic grant made at the 1995 Annual
Stockholders Meeting or at any time after the date of that Annual
Meeting shall have a maximum term of fifteen (15) 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. The shares subject to the initial
automatic grant made to each non-employee Board member upon his
or her initial appointment or election to the Board shall vest,
and the Corporation's repurchase right shall lapse, in 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.
The shares subject to each additional automatic grant made to the
non-employee Board member upon his or her re-election to the
Board at one or more Annual Stockholder Meetings shall vest, and
the Corporation's repurchase right shall lapse, in two (2)
successive equal installments over the Optionee's period of
continued service as a Board member, with the first such
installment to vest upon Optionee's continuation in Board service
through the day immediately preceding the date of the first
Annual Stockholders Meeting following the grant date of the
option and with the second such installment to vest upon
Optionee's continuation in Board service through the day
immediately preceding the date of the second Annual Stockholders
Meeting following the grant date of the option.
Vesting of the option shares shall be subject to
acceleration as provided in Section II.H.3, Section II.H.4 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 or Section II.H.4 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. Except as otherwise provided in subparagraph 2, 3
or 4 below, should the Optionee cease to serve as a Board member
for any reason 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 upon the Optionee's cessation of Board
service, terminate and cease to remain outstanding with respect
to any option shares in which the Optionee is not otherwise at
that time vested under such option.
2. Should an Optionee with less than four (4) years
of service on the Board die within the six (6)-month period
following the date of his or her cessation of Board service, then
any automatic option grant held by the Optionee at the time of
his or her 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 cease to serve as a Board
member for any reason (other than removal for cause) following
his or her completion of four (4) or more years of service on the
Board, 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 those 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 Optionee's
death) shall have until the expiration date of the option term in
which to exercise such option for any or all of those vested
shares of common stock.
4. 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 those 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 Optionee's death) shall have until the
expiration date of the option term in which to exercise such
option for any or all of those vested shares of common stock.
5. In no event shall any automatic grant under this
Article Three remain exercisable after the expiration date of the
option term. Upon the expiration of the applicable post-service
exercise period under subparagraphs 1 through 4 above or (if
earlier) upon the expiration of the option term, the automatic
grant shall terminate and cease to be outstanding for any option
shares in which the Optionee is vested at the time of his or her
cessation of Board service but for which such option is 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 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.
<PAGE>
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 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 cancelled by the Corporation, 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.
<PAGE>
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.
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):
<PAGE>
A
-------------
(B x 66-2/3%) = X, 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 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.
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.
<PAGE>
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.
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.
5. In lieu of the immediate issuance of shares of
common stock under the Stock Issuance Program, the Plan
Administrator may condition the actual issuance of those shares
upon the attainment by the Corporation, any designated Subsidiary
or division of the Corporation or the individual Participant of
one or more performance objectives established by the Plan
Administrator at the time the Participant is provided with the
notice of such contingent Award.
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 Plan
Administrator shall have the authority to condition either the
actual issuance of the shares of common stock subject to an Award
made under the Stock Issuance Program or the subsequent vesting
of any unvested shares of common stock issued under the Stock
Issuance Program upon the attainment by the Corporation, any
designated Subsidiary or division of the Corporation or the
individual Participant of one or more following performance
objectives:
- earnings per share - return on assets
- revenue - market share
- stock price - customer satisfaction
- operating income - time to market
- consolidated pre-tax profit - employee development
- operating profit margin - quality
- return on equity - cash
- inventory - employee satisfaction
- gross margin - market perception
The Plan Administrator shall have complete discretion
to condition either the actual issuance of the shares of common
stock subject to the Award or the subsequent vesting of the
issued shares upon the attainment of (i) one particular
performance objective, (ii) one of a series of alternative
performance objectives or (iii) any combination of two or more
performance objectives, as the Plan Administrator deems
appropriate in each instance. The specific target for each
selected performance objective shall be established by the Plan
Administrator either (i) at the time the Award is made, if the
shares subject to that Award are not to be issued unless the
target or targets are achieved, or (ii) at the time the shares of
common stock are issued, if the subsequent vesting of those
shares is subject to the attainment of the specified target or
targets.
2. The remaining elements of the vesting schedule
applicable to any unvested shares of common stock issued under
the Stock Issuance Program, namely:
(i) any Service period to be completed by the
Participant;
(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
either (i) the Award, if the shares subject to that Award
are not to be issued until the applicable vesting
requirements are satisfied, or (ii) the Issuance Agreement
executed by the Corporation and the Participant, if the
shares are to be issued initially as unvested shares.
3. 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.
4. 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-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.
5. 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 any Service
requirement incorporated into the vesting schedule applicable to
those 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. However, the Plan Administrator shall not waive any
performance objectives specified in Section I.B.1 above which
serve as a condition to either the issuance of shares of common
stock under the Stock Issuance Program or the subsequent vesting
of any unvested shares actually issued under such Program.
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.
III. 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
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.
<PAGE>
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 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
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 became effective upon approval by the
Corporation's stockholders at the 1994 Annual Meeting held on May
5, 1994. 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.
B. On January 25, 1995, the Board approved an amendment to
the Plan, subject to approval of the Corporation's stockholders
at the 1995 Annual Meeting, to (i) extend the term for which
options granted under the Automatic Option Grant Program may be
exercised from ten (10) years to fifteen (15) years from the date
of grant, (ii) provide for the immediate vesting of all shares
purchased or purchasable by a non-employee Board member under the
Automatic Option Grant Program in the event such individual's
service on the Board terminates for any reason (other than
removal for cause) after his or her completion of at least four
(4) years of Board service, and allow any outstanding options
held by such non-employee Board member under the Automatic Option
Grant Program to remain exercisable for fully-vested shares until
the expiration of the option term, and (iii) identify a series of
performance goals upon which the Plan Administrator may condition
either the issuance of shares of common stock under the Stock
Issuance Program or the subsequent vesting of any unvested shares
actually issued under such Program. In the event that
stockholder approval is obtained at the 1995 Annual Meeting, the
item (ii) change will be in effect for all outstanding options
under the Automatic Option Grant Program, whether made before or
after the date of the amendment. The item (i) change will apply
only to options granted on or after the date of the 1995 Annual
Meeting.
C. 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.
D. 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.
E. 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 (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.
<PAGE>
ADDENDUM I
Amdahl Corporation United Kingdom Stock Option Scheme
<PAGE>
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
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:
(i) 100,000 pounds sterling;
(ii) four (4) times the Optionee's Earnings
for his current or immediately preceding tax year (whichever
is greater); or
(iii) if there are no Earnings for the
previous tax year, four (4) times the Optionee's Earnings
for the twelve (12)-month period measured from the first day
of the current tax year for which there are Earnings.
For purposes of this scheme, the term "Earnings" shall
mean the Optionee's income from the office or position of
employment which renders him eligible to receive Approved U.K.
Stock Options, but only to the extent such income is subject to
United Kingdom withholding taxes (i.e., PAYE). The term
"Earnings", however, shall not include any taxable benefits-in-
kind included in the Optionee's income pursuant to Chapter II of
Part III of the Finance Act 1976.
(e) CHANGES IN CAPITALIZATION. No change or
adjustment shall be effected pursuant to Section VI, Article One
of the Plan to (i) the number and/or class of shares or other
securities covered by an outstanding Approved U.K. Stock Option
or (ii) the exercise price payable per share under an outstanding
Approved U.K. Stock Option unless any approval required by the
Board of Inland Revenue is first obtained.
(f) AMENDMENT OF THE SCHEME. This scheme may not be
amended without prior Inland Revenue approval. Accordingly,
unless Board of Inland Revenue approval shall have been obtained
for any amendment to the Plan, the terms and conditions of this
scheme shall be determined by reference to the provisions of the
Plan as in existence prior to such amendment.
(g) SURRENDER OF OPTIONS. Notwithstanding Section III
and V, Article Two and Section III, Article Three of the Plan, no
Approved U.K. Stock Option may be surrendered for a cash or stock
payment from the Corporation.
(h) EXERCISE UPON DEATH. Notwithstanding Section I.C.
of Article Two and Section II.H. of Article Three of the Plan,
upon the Optionee's death an Approved U.K. Stock Option may (i)
in no event remain outstanding for more than one (1) year and
(ii) be exercised only by the deceased Optionee's personal
representatives.
(i) SHARE LIMITATIONS. Notwithstanding Section II.B.,
Article Seven of the Plan, no Approved U.K. Stock Option may be
granted pursuant to the provisions of this scheme to purchase
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.
AMDAHL CORPORATION
SHORT-TERM EXECUTIVE INCENTIVE PERFORMANCE PLAN
1. PURPOSES OF THE PLAN
1.1 This Short-Term Executive Incentive Performance Plan
(the "Plan") is intended to promote the interests of AMDAHL
CORPORATION (the "Corporation") and its Subsidiaries by providing
a select group of employees of the Corporation and its
Subsidiaries who are primarily responsible for the management,
growth and success of the business with the opportunity to
participate in a special cash bonus program designed to reward
them for their contribution to the Corporation's financial
success and to provide them with an incentive to continue in the
employ of the Corporation and its Subsidiaries.
2. ADMINISTRATION OF THE PLAN
2.1 The Plan shall be administered by a committee (the
"Committee") of two (2) or more non-employee members of the
Corporation's Board of Directors (the "Board") appointed from
time to time by the Board. Each member of the Committee shall be
a disinterested person who satisfies the requirements of an
"outside director" within the meaning of Section 162(m) of the
Internal Revenue Code (the "Code"). However, until the first
stockholder meeting at which members of the Board are to be
elected which is held on or after January 1, 1996, the Committee
may be comprised of two (2) or more non-employee Board members
appointed by the Board who are disinterested persons within the
meaning of Rule 16b-3(c)(2) of the Securities and Exchange
Commission. The Committee shall have full authority to
administer the Plan and shall from time to time select the
eligible employees who are to participate in the Plan.
2.2 The interpretation and construction of any provision of
the Plan and the adoption of rules and regulations for plan
administration shall be made by the Committee. Decisions of the
Committee shall be final and binding on all parties who have an
interest in the Plan.
2.3 For purposes of the Plan, the following definitions
shall be in effect:
Account: The Account of each participant shall be the
account maintained in his/her name on the books of the
Corporation to which there shall be credited the participant's
share of the awards made for each fiscal year of participation in
the Plan. The Account of each participant shall be divided into
a series of subaccounts in accordance with the provisions of
Section 5.2(b).
Active Participant: An Active Participant shall, for each
fiscal year the Plan remains in effect, be any individual
selected for participation in the Plan, whether in the current
fiscal year or in any earlier fiscal year, who has not otherwise
been excluded by the Committee from receiving an allocation of
the incentive award made under the Plan for the current fiscal
year.
Eligible Earnings: The participant's Eligible Earnings for
any relevant fiscal year under the Plan shall be equal to (i)
his/her base salary for such fiscal year plus (ii) any cash bonus
(other than awards under this Plan or the Corporation's Long Term
Incentive Performance Plan) earned for services rendered in such
fiscal year and payable in the immediately succeeding fiscal
year.
Employee: A participant shall be deemed to continue in
Employee status for so long as the participant remains in the
active employ of the Corporation or one or more of its
Subsidiaries.
Normal Retirement Date: The participant's Normal Retirement
Date shall be the latest to occur of (i) the first date on which
the sum of the participant's age and Years of Service total at
least seventy (70) years, (ii) the date on which the participant
attains age fifty-five (55) or (iii) the date on which the
participant completes ten (10) Years of Service.
Permanent Disability: A participant shall be deemed to
have terminated Employee status by reason of Permanent Disability
if he/she is unable, by reason of any physical or mental
impairment or illness expected to result in death or to continue
for a period of twenty-four (24) consecutive months or more, to
perform his/her usual duties for the Corporation or Subsidiary
employing such individual.
Subsidiary: Each corporation (other than the
Corporation) in any unbroken chain of corporations beginning with
the Corporation shall be considered to be a Subsidiary of the
Corporation, provided such corporation (other than the last
corporation in the unbroken chain) owns, at the time of
determination, stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of
the other corporations in such chain.
Year of Service: The participant shall be credited with one
Year of Service under the Plan for each twelve (12)-month period,
measured from his/her date of hire, during which he/she remains
an Employee (whether or not the months of Employee status
included within such period are rendered consecutively). Any
period intervening between the participant's termination of
Employee status and his/her subsequent rehire shall not be taken
into account for Year of Service purposes.
3. DETERMINATION OF PARTICIPANTS
3.1 The persons who shall be eligible to participate in the
Plan shall be those executive officers of the Corporation and
other key employees primarily responsible for the management,
growth and financial success of the Corporation who are
recommended for participation in the Plan by the Chairman of the
Board and approved by the Committee.
3.2 Each individual selected for participation in the Plan
shall remain an Active Participant for each fiscal year during
which that individual continues in Employee status, except to the
extent the Committee should, by appropriate resolution, elect to
exclude such individual from Active Participant status for one or
more of those fiscal years. The Committee shall have complete
discretion to exclude one or more existing participants from
Active Participant status for any fiscal year or years the
Committee deems appropriate, including the entire period the
participant continues in Employee status following such
exclusion. However, no such exclusion authorized by the
Committee shall become effective until the first day of the first
fiscal year coincident with or next following the date of the
Committee resolution authorizing such exclusion. If any
individual is excluded from Active Participant status for one or
more fiscal years, then such individual shall not receive any
allocation of the incentive awards made to the Plan for those
fiscal years. However, each participant who remains in Employee
status shall, in accordance with the applicable vesting schedule,
continue to vest with respect to any incentive awards already
allocated to his/her Account under the Plan, whether or not that
participant remains an Active Participant for the current or any
subsequent fiscal year.
4. INCENTIVE AWARDS
4.1 For each fiscal year of the Corporation for which the
Plan is in effect, the Corporation shall make an aggregate
incentive award to the Plan in an amount equal to one percent
(1%) of the Corporation's consolidated pre-tax earnings for such
fiscal year, as such earnings are determined for financial
reporting purposes in accordance with generally accepted
accounting principles, consistently applied.
4.2 The incentive award for the fiscal year shall be
allocated among the individuals who are Active Participants for
that fiscal year in accordance with the following provisions:
(a) The Committee shall, as soon as reasonably
practicable after the incentive award for the fiscal year has
been determined, allocate a portion of such award to the Account
of each Active Participant who has continued in Employee status
through the last day of such year. The allocation to each such
Active Participant shall be in the same proportion to his/her
Eligible Earnings for the fiscal year of the award as the
aggregate award bears to the aggregate Eligible Earnings of all
Active Participants for such fiscal year.
(b) The amount so allocated to each individual Active
Participant (the "Award") shall not exceed the lesser of (i)
twenty-five percent (25%) of his/her Eligible Earnings for the
fiscal year for which the Award is made or (ii) Five Hundred
Thousand Dollars ($500,000). To the extent the Award for any
fiscal year would otherwise exceed the applicable limitation for
one or more Active Participants, the excess shall be added to the
award to be allocated under the Corporation's Long-Term Executive
Incentive Performance Plan for such year.
5. VESTING AND PAYMENT OF AWARD
5.1 The interest of the participant in his/her Award for a
particular fiscal year shall vest in accordance with the
following provisions, whether or not such individual remains an
Active Participant:
(a) Upon the expiration of the one (1)-year
period measured from the day on which the Award is first
allocated to the participant pursuant to Section 4.2, the
participant shall vest in twenty-five percent (25%) of the
principal amount of such Award, provided such individual
continues in Employee status through the vesting date.
(b) On each of the next three (3) anniversaries of the
initial vesting date under subparagraph (a), the participant
shall vest in an additional twenty-five percent (25%) of the
principal amount of the Award, provided the participant continues
in Employee status through each such vesting date.
(c) The participant's interest, however, shall immediately
vest with respect to all unvested Awards credited to his/her
Account under this Plan or to his/her deferred compensation
account under the Corporation's Deferral Election Plan (the
"Deferral Plan"), if his/her Employee status is terminated by
reason of death or Permanent Disability. Such full and immediate
vesting shall likewise occur if the participant terminates
Employee status on or after attainment of his/her Normal
Retirement Date.
5.2 The following provisions shall govern the maintenance
of the Account to be established for each Active Participant who
is allocated one or more Awards under the Plan:
(a) Each participant to whom an Award is made hereunder
shall have the election to (i) receive payment of one or more
vested installments of such Award in accordance with the
provisions of this Plan or (ii) defer payment of one or more of
those vested installments to a later period pursuant to a timely-
filed election under the Deferral Plan. Except to the extent the
participant makes such a deferral election with respect to one or
more vested installments of the Award earned for a particular
fiscal year, all vested installments of that Award will be paid
in accordance with the provisions of this Plan.
(b) The Account of each participant who is to receive
payment under this Plan of one or more Awards shall be maintained
as a special deferred compensation account on the books of the
Corporation. This account shall in turn be divided into a series
of separate subaccounts ("Subaccounts"), and a separate
Subaccount shall accordingly be maintained for the installments
of each annual Award allocated to the participant under Section
4.2 and not otherwise subject to a deferred payout under the
Deferral Plan. Each of the participant's Subaccounts shall be
paid in accordance with the provisions of Section 5.4.
(c) Any installments of an Award which are the subject of a
timely-filed deferral election under the Deferral Plan shall be
paid in accordance with the deferred payout provisions of that
plan, and payment shall not be governed by the terms and
conditions of this Plan.
(d) Should the participant elect, with respect to the Award
for a particular fiscal year, to receive payment of one or more
installments of that Award under this Plan and to receive the
balance of such installments under the Deferral Plan, then the
installments which are to be paid under this Plan shall be the
last installments in which the participant vests hereunder
pursuant to the annual vesting schedule of Section 5.1 and shall
accordingly be paid hereunder as such installments vest. The
installments which are to be paid under the Deferral Plan shall
be the first annual installments which vest pursuant to the
Section 5.1 schedule and, once vested, shall be subject to
payment in accordance with the deferral election in effect for
such installments under the Deferral Plan.
5.3 Each Subaccount shall accrue interest in accordance
with the provisions of Section 6.1.
5.4 The balance credited to the participant's Subaccount
shall be paid to him/her as the installment or installments of
the Award credited to that Subaccount vest from time to time in
accordance with the vesting provisions of Section 5.1. Each
payment shall be equal in amount to the installment of the Award
in which the participant has vested, together with the accrued
interest thereon. Should a participant terminate Employee status
by reason of death or Permanent Disability while there is still
an amount outstanding in one or more of his/her Subaccounts, then
the total amount outstanding in all such Subaccounts shall be
distributed in one lump-sum payment to him/her (or the designated
beneficiary in the case of the participant's death) within ninety
(90) days after such termination of Employee status. Upon the
participant's accelerated vesting in one or more otherwise
unvested Award installments following termination of Employee
status after attainment of his/her Normal Retirement Date, the
amount so accelerated shall be paid to the participant either in
one lump sum under this Plan within ninety (90) days after such
termination of Employee status or in accordance with any deferral
election in effect for such installments under the Deferral Plan.
5.5 Upon the participant's cessation of Employee status
prior to attainment of his/her Normal Retirement Date, the
unvested balance of each of his/her Subaccounts shall be
immediately forfeited, unless such cessation of Employee status
occurs by reason of the participant's death or Permanent
Disability, and the participant shall have no further rights or
interest with respect to any amounts so forfeited.
5.6 The Committee shall have full power and authority,
exercisable in its sole discretion at any time, to accelerate the
vesting and payout of one or more otherwise unvested installments
credited to the Subaccounts maintained for the participants under
Section 5.2(b) of the Plan, together with all interest accrued to
date on those installments. Each accelerated installment shall
be paid in a lump sum within thirty (30) days after Committee
authorization of the payout. However, in order to reflect the
time value of money over the period for which the payment has
been accelerated, such payment shall be discounted by a per annum
rate, compounded semi-annually, equal to the Federal Mid-Term
Rate in effect under Internal Revenue Code Section 1274(d) for
the month in which the payment is made. Such payment shall be
subject to the Corporation's collection of all applicable Federal
and State income and employment taxes. In no event, however,
shall there be any accelerated payout of any installments
credited to the participant's Subaccounts as to which there
exists any outstanding deferral election filed by the Participant
under the Deferral Plan.
6. PAYMENT OF INTEREST
6.1 Applicable Rate. The balance from time to time
outstanding in each Subaccount shall accrue interest each
calendar year at the weighted average rate at which interest is
earned for such year on the assets of the Employee Savings Plan
invested in one or more guaranteed insurance contracts thereunder
during such year ("Applicable Rate"). The Applicable Rate shall
be calculated at the end of each calendar year, and interest
earned on outstanding account balances for such year shall be
credited to the participant's Subaccount at that time. Any
installments of an incentive award under this Plan which are to
be deferred under the Deferral Plan shall also earn interest at
the Applicable Rate for each calendar year during the deferral
period.
6.2 Pro-Rated Interest. To the extent any vested
installment of an incentive award is paid prior to the last day
of a calendar year, the interest accruable on such installment
for the portion of the calendar year preceding the payment date
shall, in accordance with Section 6.1, be calculated and credited
at the end of such year, and payment of such accrued interest
shall be made within ninety (90) days after the close of the
year.
7. GENERAL PROVISIONS
7.1 Prior to the January 1, 1995 effective date of this
Plan, the incentive awards payable under this Plan were
administered as part of the short-term incentive program in
effect under the Corporation's Executive Incentive Performance
Plan. As of the January 1, 1995 effective date, this Plan is to
be administered and maintained as a stand-alone incentive
compensation program in order to assure that the payments made
under the Plan shall qualify as performance-based compensation
under Section 162(m) of the Code, and the Plan shall accordingly
be submitted to stockholder approval at the 1995 Annual Meeting.
No awards shall be payable under this Plan for the 1995 fiscal
year or any subsequent fiscal year unless such stockholder
approval is obtained.
7.2 Except to the extent the Committee may in its sole
discretion elect to implement a so-called "Rabbi Trust" for the
payment of benefits hereunder, the obligation to pay the balance
credited to the participant's Subaccounts shall at all times be
an unfunded and unsecured obligation of the Corporation or
Subsidiary employing such individual, and the participant shall
look solely and exclusively to the general assets of the
Corporation or Subsidiary employing the participant for the
payment of his/her Account.
7.3 No participant shall have the right to alienate, pledge
or encumber his/her interest in the Account maintained on his/her
behalf hereunder, and such Account shall not, to the maximum
extent permitted by law, be subject to the claims of the
participant's creditors or to attachment, execution or other
process of law.
7.4 A participant may designate a beneficiary to receive
any unpaid balance owed to the participant under any of his/her
Subaccounts at the time of such participant's death. In the
absence of such designation, such unpaid balance shall be paid in
accordance with the participant's will or pursuant to the laws of
descent and distribution. The participant may from time to time
revoke his/her beneficiary designation and file a new beneficiary
designation. All beneficiary designations, however, must be on
the form prescribed by the Committee.
7.5 Neither the action of the Corporation in establishing
the Plan, nor any action taken under the Plan by the board of
directors of any participating company or by the Committee, nor
any provision of the Plan itself, shall be construed so as to
grant any person the right to remain in the employ of the
Corporation or any of its Subsidiaries for any period of specific
duration, and the Employee status of such individual may be
terminated at any time, with or without cause.
7.6 All costs and expenses incurred in the operation and
administration of the Plan shall be borne by the Corporation.
Payment of applicable withholding taxes on benefits paid under
the Plan shall be the responsibility of the recipients.
7.7 The Board may at any time amend, suspend or terminate
the Plan in whole or in part at any time. However, no such
action by the Board shall adversely affect the rights and
interests of the participants and their beneficiaries with
respect to amounts which the participants have accrued to date
under the Plan on the basis of the incentive awards allocated to
their Accounts. The obligations of the Corporation and its
Subsidiaries to make the payments required hereunder shall be
binding upon any successor or assign of the Corporation or any
such Subsidiary, whether by merger, consolidation, acquisition or
other reorganization. No amendment or termination of the Plan by
the Corporation or any of its Subsidiaries (or any successor or
assign) shall adversely affect or otherwise impair the rights of
participants to receive benefit payments hereunder, to the extent
attributable to Awards made prior to the date of such amendment
or termination, in accordance with the applicable vesting and
payment provisions of Article 5 hereof.
<PAGE>
AMDAHL CORPORATION
SHORT-TERM EXECUTIVE INCENTIVE PERFORMANCE PLAN
DESIGNATION OF BENEFICIARY
I hereby designate the following individual or individuals
as the beneficiary or beneficiaries of all my right, title and
interest in and to all monies in which I am vested under the
Short-Term Executive Incentive Performance Plan at the time of my
death, hereby revoking any prior designation of beneficiaries
made by me:
Name Relationship Percent of
Total
(1)
-------------- ---------------- ----------
(2)
-------------- ---------------- ----------
(3)
-------------- ---------------- ----------
(4)
-------------- ---------------- ----------
The beneficiary must survive me; otherwise, his or her
designated share is to be divided equally among the beneficiaries
who do survive me.
Signature:
-----------------
Name:
-----------------
Date:
-----------------
AMDAHL CORPORATION
PROXY
Stockholder's Proxy Solicited By
Board of Directors of the Company
The undersigned hereby appoint(s) John C. Lewis and E.
Joseph Zemke, each with power of substitution, as its proxy to
vote all of its share of Amdahl Corporation common stock, par
value of $0.05 per share, at the Annual Meeting of Stockholders
of Amdahl Corporation to be held at the Fairmont Hotel, 170 South
Market Street, San Jose, California, on Thursday, May 4 1995 at
11:00 a.m., and at any adjournment or postponement thereof.
This Proxy when properly executed will be voted in the
manner directed herein. If no direction is made, this Proxy will
be voted FOR items 1 through 5, AGAINST items 6 and 7, and in the
discretion of the proxyholder on other matters as may properly
come before the meeting. You are encouraged to specify your
choices by marking the appropriate boxes on the REVERSE SIDE.
Your shares cannot be voted unless you sign and return this card.
Election of Directors
The Board recommends a vote FOR the nominees listed below:
John C. Lewis; E. Joseph Zemke; Keizo Fukagawa;
Michael R. Hallman; E. F. Heizer, Jr.; Kazuto Kojima;
Burton G. Malkiel; George R. Packard III; Walter B.
Reinhold; Takamitsu Tsuchimoto; J. Sidney Webb.
You may withhold authority to vote for any of the nominees
by listing that nominee's name and marking the "Exceptions" box
in item 1 on the reverse side.
Amdahl Corporation
P.O. Box 11710
New York, N.Y. 10203-0710
See Reverse Side
Please ensure address appears in window of return envelope.
<PAGE>
AMDAHL
Corporation
1250 East Arques Avenue
P.O. Box 3470
Sunnyvale, California 94088-3470
March 23, 1995
Dear Amdahl Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders to be held at 11:00 a.m. on Thursday, May 4, 1995,
at the Fairmont Hotel, 170 South Market Street, San Jose,
California.
Details with respect to the meeting are set forth in the
enclosed Notice of Annual Meeting and Proxy Statement.
We urge you to communicate your voting instructions to us
by completing, dating and signing the proxy card below, detaching
it from this letter and returning it in the postage paid envelope
enclosed in this package. The giving of such proxy does not
affect your right to vote in person if you attend the meeting.
Very truly yours,
/s/ John C. Lewis
JOHN C. LEWIS
Chairman of the Board
Detach Proxy Card Here
- -----------------------------------------------------------------
The Board of Directors recommends a vote FOR items 1 through 5
and AGAINST items 6 and 7.
FOR WITHHOLD EXCEPTIONS
1. Election of Directors: [ ] [ ] [ ]
(see reverse)
Exceptions
------------------------------------------------
FOR AGAINST ABSTAIN
2. Restated Employee Stock [ ] [ ] [ ]
Purchase Plan.
3. 1994 Stock Incentive Plan [ ] [ ] [ ]
Plan Amendments.
4. Short-Term Executive [ ] [ ] [ ]
Incentive Performance Plan.
5. Ratification of the selection [ ] [ ] [ ]
of Arthur Andersen LLP as
independent public accountants
for 1995.
6. Stockholder proposal for an [ ] [ ] [ ]
independent nominating
committee.
7. Stockholder proposal for a [ ] [ ] [ ]
"high performance workplace."
Mark this box if you wish to withhold
discretionary authority to act upon such
business as may properly come before the
meeting. [ ]
Mark this box if you receive Amdahl's
Annual Report from some other source and
wish not to receive one with your Proxy
Statement in 1996. [ ]
Please sign name exactly as it appears
on this card. Joint owners should each
sign. Attorneys, trustees, executors,
administrators, custodians, guardians or
corporate officers should give full title.
Date: -------------------------, 1995
- -------------------------------------
Signature(s)
- -------------------------------------
Signature(s)
Please sign, date and return the voting
instruction card promptly using the
enclosed envelope.
Please mark boxes in blue or black ink [X]
as in the example.
