SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1995
Commission file no. 1-7713
AMDAHL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-1728548
(State of incorporation) (I.R.S. Employer
Identification No.)
1250 East Arques Avenue
Sunnyvale, California 94088-3470
(Address of principal executive offices) (Zip code)
Registrant's telephone number: (408) 746-6000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X]
No [ ]
Number of shares of common stock, $.05 par value, outstanding at
May 4, 1995: 118,083,744.
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PART I. FINANCIAL INFORMATION
AMDAHL CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The following unaudited consolidated financial statements
reflect, in the opinion of management, all adjustments (which,
other than the restructuring charges described in Management's
Discussion and Analysis of Financial Condition and Results of
Operations, include only normal recurring adjustments) necessary
to present fairly the financial position as of the dates and
results of operations for the periods indicated.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to the Securities and Exchange Commission rules and
regulations. Amdahl Corporation (the Company) believes the
information included in the following report on Form 10-Q, when
read in conjunction with the financial statements and related
notes included in the Company's 1994 Annual Report to
Stockholders, not to be misleading.
The results of operations for the three months ended March 31,
1995, are not necessarily indicative of results for the entire
year ending December 29, 1995.
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<TABLE>
<CAPTION>
AMDAHL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1995 AND DECEMBER 30, 1994
----------------------------------------
(Dollars in thousands)
1995 1994
----------- -----------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 323,802 $ 358,006
Short-term investments 417,127 340,600
Receivables, net of allowances 256,964 309,927
Inventories -
Purchased materials 48,801 45,561
Systems in process 148,560 135,408
Finished goods 90,643 102,112
Prepaid expenses and deferred tax benefit 48,580 54,874
----------- -----------
Total current assets 1,334,477 1,346,488
----------- -----------
Long-term receivables and other assets 33,180 34,908
----------- -----------
Property and equipment, at cost
Leased systems 25,617 30,238
System spares 402,757 384,685
Production and data processing equipment 399,475 410,557
Office furniture, equipment, and improvements 152,738 156,195
Land and buildings 137,791 137,429
----------- -----------
1,118,378 1,119,104
Less - Accumulated depreciation
and amortization (803,462) (781,465)
----------- -----------
Property and equipment, net 314,916 337,639
----------- -----------
$ 1,682,573 $ 1,719,035
=========== ===========
Liabilities and stockholders' equity
Current liabilities:
Notes payable and short-term debt $ 9,546 $ 8,816
Accounts payable 64,370 69,603
Accounts payable -
stockholder (Fujitsu Limited) 67,285 71,214
Accrued liabilities 455,007 511,706
----------- -----------
Total current liabilities 596,208 661,339
----------- -----------
Long-term debt - stockholder (Fujitsu Limited) 80,000 80,000
----------- -----------
Long-term liabilities 46,695 49,674
----------- -----------
Deferred income taxes 52,467 51,767
----------- -----------
Stockholders' equity:
Common stock, $.05 par value -
Authorized - 200,000,000 shares
Outstanding - 117,680,000 shares in 1995
and 116,636,000 shares in 1994 5,884 5,832
Additional paid-in capital 528,676 519,856
Retained earnings 363,062 342,468
Cumulative translation adjustments 9,086 8,861
Unrealized holding gains (losses) on securities 495 (762)
----------- -----------
Total stockholders' equity 907,203 876,255
----------- -----------
$ 1,682,573 $ 1,719,035
=========== ===========
</TABLE>
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<TABLE>
<CAPTION>
AMDAHL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(In thousands, except per common share amounts)
FOR THE THREE MONTHS ENDED
MARCH 31, 1995 APRIL 1, 1994
-------------- -------------
<S> <C> <C>
REVENUES
Equipment sales $ 216,775 $ 235,716
Equipment lease, maintenance and other 154,751 143,075
-------------- --------------
371,526 378,791
-------------- --------------
COST OF REVENUES
Equipment sales 144,963 170,977
Equipment lease, maintenance and other 81,248 78,745
-------------- --------------
226,211 249,722
-------------- --------------
Gross margin 145,315 129,069
-------------- --------------
OPERATING EXPENSES
Engineering and development 42,920 55,481
Marketing, general and administrative 84,525 69,206
-------------- --------------
127,445 124,687
-------------- --------------
Income from operations 17,870 4,382
-------------- --------------
INTEREST
Income 11,298 5,036
Expense (2,774) (2,308)
-------------- --------------
8,524 2,728
-------------- --------------
Income before provision for
income taxes 26,394 7,110
PROVISION FOR INCOME TAXES 5,800 -
-------------- --------------
NET INCOME $ 20,594 $ 7,110
============== ==============
PER COMMON SHARE AMOUNTS:
Net income $ .17 $ .06
============== ==============
Average outstanding shares 119,660 117,193
============== ==============
</TABLE>
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<TABLE>
<CAPTION>
AMDAHL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(In thousands)
FOR THE THREE MONTHS ENDED
MARCH 31, 1995 APRIL 1, 1994
-------------- -------------
<S> <C> <C>
Cash and cash equivalents at beginning of period $358,006 $149,484
-------------- -------------
Cash flows from operating activities:
Net income 20,594 7,110
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 34,788 35,416
Deferred income tax provision 692 (4,362)
Gain on dispositions of assets (1,318) (4,416)
Decrease in receivables 57,040 35,060
Decrease in inventories 723 104,165
Decrease in prepaid expenses and
deferred tax benefit 5,702 373
(Increase) decrease in long-term receivables
and other assets 1,441 (186)
Decrease in accounts payable (7,824) (5,244)
Decrease in accrued liabilities (63,438) (24,100)
Decrease in long-term liabilities (2,746) (4,737)
-------------- -------------
Net cash provided by operating activities 45,654 139,079
-------------- -------------
Cash flows from investing activities:
Purchases of available-for-sale
short-term investments (70,242) -
Purchases of held-to-maturity
short-term investments (156,892) -
Proceeds from maturities of held-to maturity
short-term investments 151,864 -
Decrease in short-term investments - 7,686
Capital expenditures:
Leased systems (5,128) (6,865)
System spares (5,776) (754)
Other property and equipment (13,204) (11,559)
Proceeds from property and equipment sales 6,176 15,767
-------------- -------------
Net cash provided by (used for)
investing activities (93,202) 4,275
-------------- -------------
Cash flows from financing activities:
Increase in notes payable and short-term debt 1,403 5,375
Repayments of borrowings under revolving
credit agreement - (130,000)
Long-term borrowings - 80,000
Sale of common stock and exercise of options 8,872 2,984
-------------- -------------
Net cash provided by (used for)
financing activities 10,275 (41,641)
-------------- -------------
Effect of exchange rate changes on cash 3,069 542
-------------- -------------
Net increase (decrease) in cash
and cash equivalents (34,204) 102,255
-------------- -------------
Cash and cash equivalents at end of period $323,802 $251,739
============== =============
</TABLE>
<PAGE>
AMDAHL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The accompanying interim financial statements and related notes
should be read in conjunction with the financial statements and
related notes included in the Company's 1994 Annual Report to
Stockholders.
RELATIONSHIP WITH FUJITSU LIMITED
During the first quarter of 1995 the Company recognized equipment
sales to Fujitsu Limited (Fujitsu) under distributorship
arrangements which contributed $19,966,000 and $7,743,000 to
equipment sales and gross margin, respectively, compared to
$11,997,000 and $4,222,000 in the first quarter of 1994.
Amounts due from Fujitsu included in receivables were $26,082,000
and $21,097,000 as of March 31, 1995 and December 30, 1994,
respectively.
In January 1994 the Company and Fujitsu entered into an agreement
under which Fujitsu would provide loans to the Company in an
aggregate amount not to exceed $100,000,000. Such loans bear
interest at a rate based upon the London Interbank Offered Rate.
Any outstanding loan balance is payable to Fujitsu on January 28,
1997. At March 31, 1995 and December 30, 1994, $80,000,000 was
outstanding under this agreement. Interest expense associated
with the loan was $1,418,000 and $810,000 in the first quarters
of 1995 and 1994, respectively.
SUPPLEMENTARY CASH FLOW DISCLOSURE
Income taxes of $12,488,000 were paid by the Company in the first
three months of 1995, and income taxes of $823,000 were refunded
to the Company in the first three months of 1994. Interest paid
on all borrowings was $2,311,000 and $1,668,000 for the first
three months of 1995 and 1994, respectively.
<PAGE>
AMDAHL CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management's Discussion and Analysis should be read
in conjunction with the Management's Discussion and Analysis
included in the Company's 1994 Annual Report to Stockholders.
Results of Operations
First quarter of 1995 compared to first quarter of 1994:
Revenues decreased 2% to $371,526,000 in the first quarter of
1995 from $378,791,000 in the first quarter of 1994. Equipment
sales revenue decreased 8% in the first quarter of 1995 from the
first quarter of 1994. Revenues from storage product equipment
sales decreased 28% as a result of pricing declines. Revenues
from equipment sales of 5995M mainframe systems decreased in the
first quarter of 1995 due to a shift in the nature of
transactions, with more customers adding computing capacity
through purchases of upgrades rather than complete new systems.
In addition, 5995M prices declined, albeit at less than
historical rates, from the first quarter of 1994 to the first
quarter of 1995. Equipment sales of the older lines of mainframe
computers also decreased. Equipment sales of high performance
servers acquired under OEM arrangements with Sun Microsystems
increased significantly from the first quarter of 1994 to the
first quarter of 1995, in part offsetting the revenue decreases
discussed above. Equipment lease, maintenance and other revenues
increased 8% in the first quarter of 1995 from the first quarter
of 1994, reflecting increased maintenance revenues from a larger
customer installed base. Total revenues were also favorably
impacted by approximately $12 million by a weakened U.S. dollar,
as international revenues denominated in foreign currencies
translated into more dollars in the first quarter of 1995, when
compared to the first quarter of 1994.
The gross margin was 39% of revenues in the first quarter of 1995
and 34% in the first quarter of 1994. Gross margin on equipment
sales as a percentage of revenues increased from 27% in the first
quarter of 1994 to 33% in the first quarter of 1995, reflecting
lower manufacturing costs and because increased sales of large-
scale processor upgrades resulted in better gross margins than
sales of complete new systems. Gross margins on maintenance,
lease and other revenues as a percentage of revenues increased
from 45% in the first quarter of 1994 to 47% in the first quarter
of 1995, primarily reflecting improved gross margins in hardware
maintenance.
Operating expenses increased 2% from the first quarter of 1994 to
the first quarter of 1995 and were 34% and 33% of revenues in the
first quarters of 1995 and 1994 respectively. First quarter 1995
engineering and development expenses decreased $13 million or 23%
when compared to the first quarter of 1994 due to the impact of
the November 1993 agreement with Fujitsu for the joint
development of the next generation of IBM compatible systems.
First quarter 1995 marketing, general and administrative expenses
increased $15 million or 22%, primarily due to increased
marketing efforts directed toward the Company's newer lines of
business.
First quarter 1995 net interest income increased $5,796,000 from
the first quarter of 1994 due primarily to increased interest
income from higher average cash levels.
The effective income tax rate was 22% in the first quarter of
1995. The Company made no provision for income taxes in the
first quarter of 1994, which reflected utilization of domestic
and foreign net operating loss carryforward benefits.
Factors That May Affect Future Operating Results
As indicated in its Annual Report, market conditions for the
Company's existing storage products have become increasingly
difficult because of increased competition in the storage
marketplace. The Company has certain new product offerings under
development which will not be available until the latter half of
1995. As a consequence, the Company's inability to have
introduced these offerings sooner will have a negative impact on
its revenues for this line of business in 1995. Should any
delays in current development schedules occur, the Company's
future operating results would be further adversely affected.
Financial Condition
March 31, 1995, compared to December 30, 1994:
The Company's net cash and investment position (cash and short-
term investments minus total debt, excluding capitalized lease
obligations) improved by $41 million, from $611 million at
December 30, 1994 to $652 million at March 31, 1995, primarily
due to an increase in cash, cash equivalents and short-term
investments of $42 million.
Receivables decreased $53 million primarily due to decreased
revenues from the fourth quarter of 1994 to the first quarter of
1995.
Accrued liabilities decreased $57 million due to decreases in
payroll-related and other accruals and decreased income taxes
payable. Charges against accrued restructuring costs resulted in
a decrease in the balance from $88 million at December 30, 1994
to $83 million at March 31, 1995.
At March 31, 1995 and at December 30, 1994, $80,000,000 was
outstanding under the Fujitsu loan agreement and was classified
as long-term debt (see Notes to the Consolidated Financial
Statements).
Liquidity
The nature of the computer industry, combined with the current
economic environment, make it very difficult for the Company to
predict future liquidity requirements with certainty. However,
the Company believes that existing cash and borrowings under its
loan agreement with Fujitsu will be adequate to finance
continuing operations and investments in property and equipment,
inventories and spare parts at least through the end of 1996.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings:
Not applicable.
Item 2. Changes in Securities:
Not applicable.
Item 3. Defaults upon Senior Securities:
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders:
Not applicable.
Item 5. Other information:
Not applicable.
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
10(a) Amdahl Corporation Short-Term Executive
Incentive Performance Plan
10(b) Amdahl Corporation Long-Term Executive
Incentive Performance Plan
10(c) Amdahl Corporation 1994 Stock Incentive
Plan, as amended
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the
quarter ended March 31, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
AMDAHL CORPORATION
Date: May 15, 1995 By: /s/ E. Joseph Zemke
------------ --------------------------
E. Joseph Zemke
President and
Chief Executive Officer
Date: May 15, 1995 By: /s/ Ernest B. Thompson
-------------- ---------------------------
Ernest B. Thompson
Vice President and Controller
(Principal Accounting Officer)
EXHIBIT INDEX
Item Description
- ---- -----------
10(a) Amdahl Corporation Short-Term Executive Incentive
Performance Plan
10(b) Amdahl Corporation Long-Term Executive Incentive
Performance Plan
10(c) Amdahl Corporation 1994 Stock Incentive Plan,
as amended
27 Financial Data Schedule
Exhibit 10(a)
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:
-----------------
Exhibit 10(b)
AMDAHL CORPORATION
LONG-TERM EXECUTIVE INCENTIVE PERFORMANCE PLAN
REVISED AND RESTATED THROUGH JANUARY 25, 1995
1. PURPOSE OF THE PLAN
1.1 This Long-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 retirement income accumulation 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
through Normal Retirement Age.
2. ADMINISTRATION OF THE PLAN
2.1 The Plan shall 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:
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 Short-
Term Executive 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.
Long-Term Account: The Long-Term 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 Long-Term awards made for the 1988 and
all subsequent fiscal years.
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.
Retirement Fund Objective: Effective with the 1988
fiscal year the Committee shall establish a fixed-dollar
retirement income pool for each individual participant in order
to provide such individual with replacement income upon his/her
retirement from the Corporation following his/her Normal
Retirement Date.
Separate Account: The Separate Account of each
participant shall be the account maintained in his/her name on
the books of the Corporation to which there is credited the
participant's share of the long-term awards made for the 1986 and
1987 fiscal years.
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 were 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 Corporate Officers and other key
employees primarily responsible for the management, growth and
success of the business 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 Separate Account under the Plan and his/her
Retirement Fund Objective, whether or not that participant
remains an Active Participant for the current or any subsequent
fiscal year.
4. INCENTIVE PERFORMANCE 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 Retirement Fund Objective established for
each participant shall be reviewed periodically by the
Committee and adjusted upward and downward from time to time
by the Committee as circumstances warrant. However, in no
event shall the Retirement Fund Objective in effect for a
participant be reduced to a dollar amount such that the
portion of the Retirement Fund Objective in which the
participant is vested immediately after such reduction would
be less than the dollar amount of the Long-term Account
balance to which that participant would otherwise be
entitled under Section 6.3 were he/she to terminate Employee
status immediately before such reduction becomes effective.
(b) The Committee shall, as soon as reasonably
practicable after the aggregate long-term award for the
fiscal year has been determined, allocate to each Active
Participant who has continued in Employee status through the
last day of such year, the allocation to each Active
Participant shall be that portion of the actual long-term
award which is in the same ratio as the Retirement Fund
Objective then in effect for such Active Participant bears
to the aggregate dollar amount of the Retirement Fund
Objectives then in effect for all Active Participants in
the Plan.
(c) The long-term award allocated to each individual
Active Participant (the "Long-Term Award") shall in no event
exceed in dollar amount the sum necessary to bring the
existing balance of the Long-Term Account maintained for
such Active Participant under the Plan (as adjusted in
accordance with Sections 4.3 and 4.4 below) up to the dollar
amount of the Retirement Fund Objective then in effect for
that individual.
4.3 Once an individual becomes a participant in this
Plan, he/she may not participate in any other pension or
retirement plans sponsored by the Corporation or its Subsidiaries
(other than the Employee Savings Plan and the Individual Deferred
Compensation Program) during any fiscal year for which he/she is
eligible for a Long-Term Award. If such individual has
participated in the Accumulation Program of the Corporation's
Capital Deferred Compensation Plan prior to his/her entry into
the Plan, the balance from time to time outstanding in his/her
capital accumulation account under the Accumulation Program shall
be added to the balance of his/her Long-Term Account under this
Plan for purposes of determining whether the combined sum exceeds
the participant's Retirement Fund Objective. To the extent the
combined sum equals or exceeds the participant's Retirement Fund
Objective, no further long-term awards under the Plan shall, by
reason of the limitations of Section 4.3(c), be allocated to
his/her Long-Term Account.
4.4 Effective as November 15, 1988, the balance
credited to the participant's Long-Term Account as of the close
of the 1987 fiscal year shall be maintained as his/her Separate
Account under the Plan, and the participant shall continue to
vest in this Separate Account in accordance with the vesting
schedule in effect immediately prior to the November 15, 1988
restatement of the Plan (100% vesting when age and Years of
Service total at least 70 years with at least 10 Years of
Service, but in no event earlier than April 1, 1989). However,
no payment from the vested portion of such Separate Account shall
be made prior to the participant's attainment of age 55. The
following additional provisions shall be applicable to the
Separate Account:
(a) Until paid, the balance in the Separate Account
shall continue to accrue interest in accordance with the
applicable provisions of Section 6.1.
(b) The balance from time to time outstanding in the
Separate Account shall be added to the balance of the
participant's post-1987 Long-Term Account under the Plan for
purposes of determining whether the combined sum exceeds the
participant's Retirement Fund Objective. To the extent the
combined sum equals or exceeds the participant's Retirement
Fund Objective, no further long-term awards under the Plan
shall, by reason of the limitations of Section 4.2(c), be
allocated to his/her Long-Term Account.
(c) To the extent any portion of the Separate Account
is paid to the participant prior to his/her actual
retirement from the Corporation, the amount distributed,
together with interest imputed thereon at the rate specified
in Section 6.1 from the date of distribution, shall continue
to be treated as part of the outstanding balance of the
participant's Separate Account for purposes of applying the
provisions of Sections 4.2(c) and 4.4(b).
4.5 Should any portion of an aggregate or individual
incentive award for a particular fiscal year remain unallocated
by reason of one or more of the foregoing limitations, then such
portion shall not be allocated to any other participant (whether
for the current or any subsequent fiscal year) nor used for any
other purpose under the Plan.
5. VESTING AND PAYMENT OF LONG-TERM AWARD
5.1 The Corporation shall establish on its books a
Long-Term Account for each participant as a special deferred
compensation account to which there shall be credited each annual
Long-Term Award allocated to the participant under Section 4.2
for purposes of meeting his/her Retirement Fund Objective.
5.2 The participant's interest in his/her particular
Retirement Fund Objective (to the extent attributable to Long-
Term Awards for the 1988 and all subsequent fiscal years) shall
initially vest upon his/her Normal Retirement Date, provided the
participant continues in Employee status through such date. At
such vesting date, the participant shall be vested in that
percentage of his/her Retirement Fund Objective obtained by
multiplying his/her Years of Service by 5%.l the participant
shall vest in an additional 5% of the Retirement Fund Objective
for each Year of Service subsequently completed until he/she
becomes 100% vested upon completion of 20 Years of Service.
Should the participant terminate Employee status by reason of
death or Permanent disability prior to his/her Normal Retirement
Date, such individual shall thereupon vest in that percentage of
his/her Retirement Fund Objective obtained by multiplying his/her
Years of Service (whether or not in excess of 10 years) by 5%.
Such vesting shall occur on the basis of the Years of Service
completed by the Participant, whether or not the participant
remains in Active Participant status for one or more of those
Years of Service.
5.3 Upon the participant's termination of Employee
status on or after his/her Normal Retirement Date, benefit
payments from his/her Long-Term Account shall be made in
accordance with the following provisions:
(a) If the participant is at the time of his/her
termination of Employee status vested in 100% of his/her
Retirement Fund Objective, then the entire balance at that
time credited to his/her Long-Term Account shall be paid to
him/her in a lump sum within ninety (90) days.
(b) If the participant is at the time of his/her
termination of Employee status vested in less than 100% of
his/her Retirement Fund Objective, then the participant
shall be entitled to a lump sum payment, due within ninety
(90) days after such termination of Employee status, equal
to the lesser of (i) the dollar amount obtained by
multiplying the Retirement Fund Objective in effect for
him/her at the time by the percentage to which he/she is at
that time vested in such Retirement Fund Objective, less any
amount paid or payable to such individual from his/her
Separate Account in accordance with Section 5.5, or (ii) the
entire balance credited to his/her Long-Term Account at the
time of such termination.
(c) The participant may, by filing an irrevocable
election with the Committee at least 24 months prior to
attainment of his/her Normal Retirement Date, elect to
receive, his/her subparagraph (a) or (b) benefits in
substantially equal annual installments over a 5 or 10-year
period. To the extent such an installment payout is
elected, any unpaid balance of the Long-Term Account owed
the participant shall accrue interest at the rate specified
in Section 6.1 for the period commencing with the
participant's actual retirement date and ending with the
date of the payment.
5.4 The participant's interest in the Separate Account
attributable to the Long-Term Awards made for the 1986 and 1987
fiscal years shall vest upon the latest to occur of (i) his/her
completion of 10 Years of Service, (ii) the first date on which
the sum of the participant's age and Years of Service totals 70
years, or (iii) April 1, 1989. However, the participant's
interest in the Separate Account shall immediately vest if
his/her Employee status is terminated by reason of death or
Permanent Disability. The balance from time to time outstanding
in the Separate Account shall accrue interest in accordance with
the provisions of Section 6.1.
5.5 The balance credited to the participant's Separate
Account, to the extent vested pursuant to the provisions of
Section 5.4, shall be paid to such participant either in one lump
sum or in a series of annual installments over a designated
period of years (not to exceed ten (10) years). The method of
distribution and commencement date shall be irrevocably
designated by the participant in an election filed with the
Committee no later than the earlier of (i) eighteen (18) months
prior to the earliest date
on which he/she will vest in the Separate Account pursuant to the
provisions of Section 5.4 or (ii) the first day of the first
calendar year immediately preceding the calendar year in which
the participant's vesting date under Section 5.4 will occur. In
the absence of such a timely-filed election, the vested balance
of the Separate Account shall be paid in one lump sum upon the
participant's termination of Employee status. However, no
payment shall be made from the participant's Separate Account
prior to his/her attainment of age fifty-five (55), except to the
limited extent otherwise provided in Section 5.6.
5.6 Notwithstanding either the provisions of Section
5.5 or any election made by the participant to receive payment of
his/her Long-Term Account or the Separate Account in two or more
installments, in the event of such participant's death or
Permanent Disability (whether or not he/she is still in Employee
status), any remaining balances owed to him/her under the Long-
Term Account and Separate Account shall be paid to him/her (or to
the designated beneficiary in the event of the participant's
death) in one lump sum payment within ninety (90) days after the
date of the participant's death or Permanent Disability.
5.7 If either the Long-Term Account or the Separate
Account is to be paid in two or more annual installments, then
the amount payable at the time of each installment shall be equal
to the aggregate balance outstanding in such account at the time
of the installment payment, divided by the number of unpaid
installments (including the current installment).
6. PAYMENT OF INTEREST
6.1 Applicable Rate
(a) Pre-1988 Awards. The balance from time to
time outstanding in each Separate Account maintained
hereunder or Long-Term Awards made for the 1986 and 1987
fiscal years 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 Separate Account at that
time.
(b) Post-1987 Awards. The individual unvested
balance of the Long-Term Account to which each participant's
share of the Long-Term Awards made for the 1988 and all
subsequent fiscal years is to be allocated shall not bear
any interest during the period the participant remains in
Employee status. Any unpaid balance of the Long-Term
Account owed to such participant shall bear interest at the
Applicable Rate during any installment period in excess of
ninety (90) days which may be in effect for the payment of
such account balance.
6.2 Pro-Rated Interest
To the extent an amount is paid out of a particular account prior
to the last day of a calendar year, the interest accruable on
such amount for the portion of such calendar year preceding the
payment date shall, in accordance with Section 6.1 or Section 6.2
(whichever is applicable), 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 Upon the participant's cessation of Employee
status prior to attainment of his/her Normal Retirement Date, the
entire balance of his/her Long-Term Account and the unvested
balance of his/her Separate Account in which the participant is
not at such time vested shall be immediately forfeited, except as
otherwise specifically provided in the event of the participant's
death or Permanent Disability while in Employee status, and the
participant shall have no further rights or interest with respect
to any amounts so forfeited.
7.2 Should a Participant incur a severe financial
hardship after his/her Normal Retirement Date, the participant
may apply to the Committee for an immediate distribution of an
amount not to exceed the sum of (i) the vested balance of his/her
Separate Account and (ii) the entire balance credited to his/her
Long-Term Account, to the extent that latter balance does not
exceed the dollar amount of the vested portion of his/her
Retirement Fund Objective at that time. The Committee shall have
complete discretion to accept or reject the request.
7.3 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 Long-Term Account and Separate
Account 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 accounts under the
Plan.
7.4 The most recent restatement of the Plan became
effective with respect to the eligible employees of the
Corporation immediately upon adoption by the Board on January 25,
1995 and shall become effective with respect to the eligible
employees of one or more Subsidiaries upon adoption by the board
of directors of such Subsidiary or Subsidiaries. The board of
directors of any participating corporation may at any time amend,
suspend or terminate the Plan with respect to its participants;
provided, however, that such action shall not adversely affect
rights and interests existing under the Plan at the time of such
action.
7.5 No participant shall have the right to alienate,
pledge or encumber his/her interest in any Long-Term Account or
Separate Account maintained hereunder, and no such account shall
be subject to the claims of the participant's creditors or to
attachment, execution or other process of law.
7.6 A participant may designate a beneficiary to
receive any unpaid vested balance owed to the participant under
his/her Long-Term Account or Separate Account 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.
7.7 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.
7.8 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.
7.9 The provisions of the Plan shall be governed by
the Employee Retirement Income Security Act of 1974 (as amended)
and, to the extent not thereby pre-empted, by the laws of the
State of California without resort to the conflict-of-laws rules
of such State.
7.10 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 Articles 4 and 5 hereof.
<PAGE>
AMDAHL CORPORATION
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
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:
------------------------------
Exhibit 10(c)
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.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-29-1995
<PERIOD-END> MAR-31-1995
<CASH> 323,802
<SECURITIES> 417,127
<RECEIVABLES> 256,964
<ALLOWANCES> 0
<INVENTORY> 288,004
<CURRENT-ASSETS> 1,334,477
<PP&E> 1,118,378
<DEPRECIATION> 803,462
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<BONDS> 80,000
<COMMON> 5,884
0
0
<OTHER-SE> 901,319
<TOTAL-LIABILITY-AND-EQUITY> 1,682,573
<SALES> 216,775
<TOTAL-REVENUES> 371,526
<CGS> 144,963
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<INTEREST-EXPENSE> 2,774
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<INCOME-TAX> 5,800
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